Tag: Scope

  • Configuration Management: Meaning Importance Benefits Scope

    Configuration Management: Meaning Importance Benefits Scope

    What does mean Configuration Management? Configuration Management (CM) is a framework designing interaction for building up and keeping up the consistency of an item’s exhibition, useful, and actual credits with its necessities, plan, and operational data for the duration of its life. Also, The CM interaction broadly utilizes military designing associations to oversee changes all through the framework lifecycle of complex frameworks, for example, weapon frameworks, military vehicles, and data frameworks. Outside the military, the CM cycle additionally utilizes IT administration management as characterized by ITIL, and with other area models in the structural designing and other mechanical designing sections; for example, streets, spans, trenches, dams, and structures.

    Here is the article explain Configuration Management (CM): Meaning, Definition, Importance, Benefits, Limitations, and Scope.

    It is an indispensable piece of any remaining Service Management measures. With current, exact, and thorough data pretty much all segments in the framework the management of Change, specifically, is more powerful and effective. Change management can coordinate with Configuration Management. As a base, it suggests that the logging and usage of Changes done heavily influence by a thorough Configuration Management framework and that the effective evaluation of Changes finishes with the guide of the Configuration Management framework. All Change solicitations ought to thusly enter in the configuration management information base (CMDB) and the records refreshed as the Change demand advances through to execution.

    The Configuration management framework distinguishes connections between a thing that will change and some other parts of the foundation, consequently permitting the proprietors of these segments to associate with the effect appraisal measure. At whatever point a change makes to the foundation, related CM records ought to refresh in the CMDB. Where conceivable, this best defines by the utilization of coordinated instruments that update records consequently as Changes are made.

    Meaning and Definition of Configuration Management:

    A configuration management (CM) framework utilize to monitor an association’s equipment, programming, and related data. Also, This incorporates programming adaptations and updates introduced on the association’s PC frameworks. CM likewise includes logging the organization delivers having a place with the equipment gadgets utilized. Programming is accessible for the following undertakings.

    What Is Configuration Management? Here’s my definition of configuration management: it’s the control of guaranteeing that all product and equipment resources that an organization claims know and follow consistently; any future changes to these resources know and follow. Also, You can consider configuration management like a consistently modern stock for your innovation resources, a solitary wellspring of truth.

    With that characterized, we should discuss how it works practically speaking. Configuration management typically ranges from a couple of territories. It frequently identifies with various thoughts, such as making “programming pipelines” to fabricate and test our product’s ancient rarities. Or then again it may identify with expressing “framework as-code” to catch in code the present status of our foundation. Furthermore, it could mean fusing configuration management instruments, for example, Chef, Puppet, and Ansible to store the present status of our workers.

    Importance and Benefits of Configuration Management:

    What the World Resembles With Configuration Management; Before we investigate various instruments for configuration management, we need to understand what results in we’ll get for our endeavors. What are the results of very much executed configuration management? How about we cover the benefits.

    Catastrophe Recovery:

    On the off chance that the most noticeably terrible occurs, configuration management guarantees that our resources are effectively recoverable. Also, The equivalent applies to rollbacks. Configuration management makes it with the goal that when we’ve put out awful code, we can return to the condition of our product before the change.

    Uptime and Site Reliability:

    The expression “site dependability” alludes to how frequently your administration is up. I’ve worked at organizations where each second of vacation would cost thousands—regularly tens or even many thousands. Eek! A regular reason for personal time is terrible organizations, which can be brought about by contrasts in running creation workers to test workers. With our configuration oversaw appropriately, our test surroundings can imitate creation, so there’s less possibility of an awful astonishment.

    Simpler Scaling:

    Provisioning is the demonstration of adding more assets (typically workers) to our running application. Configuration management guarantees that we understand what a decent condition of our administration is. That way, when we need to build the number of workers that we run, it’s just an instance of clicking a catch or running a content. Also, The objective is true to make provisioning a non-occasion. These are only a portion of the benefits of configuration management. In any case, there are some different ones, as well. You’ll encounter quicker onboarding of new colleagues, simpler cooperation among groups, and an all-inclusive programming lifecycle of items/resources, among different benefits.

    For what reason is configuration management significant?

    Configuration management helps designing groups fabricate hearty and stable frameworks using apparatuses that naturally oversee and screen updates to configuration information. Also, Complex programming frameworks make out of segments that contrast in the granularity of size and unpredictability. For a more solid model think about microservice engineering. Each assistance in microservice engineering utilizes configuration metadata to enroll itself and instate. A few instances of programming configuration metadata are:

    • Particulars of computational equipment asset portions for CPU, RAM, and so forth.
    • Endpoints that determine outside associations with different administrations, information bases, or areas.
    • Insider facts like passwords and encryption keys.

    It’s simple for these configuration esteems to turn into an idea in retrospect, prompting the configuration to get disordered and dissipated. Envision various post-it notes with passwords and URLs blowing around an office. Also, Configuration management settles this test by making a “wellspring of truth” with a focal area for configuration.

    Their Stages:

    Git is an awesome stage for overseeing configuration information. Moving configuration information into a Git archive empowers form control and the store to go about as a wellspring of truth. Variant control likewise takes care of another configuration issue: startling breaking changes. Also, Overseeing startling changes using code audit and form control assists with limiting personal time. Configuration esteems will regularly add, eliminate, or change. Without rendition control, this can cause issues.

    One colleague may change an equipment portion esteem with the goal that the product runs all the more proficiently on their own PC. At the point when the product subsequently conveys to a creation climate, this new configuration may have a problematic impact or may break. Form control and configuration management tackle this issue by adding permeability to configuration changes.

    At the point when a change makes to configuration information, the form control framework tracks it, which permits colleagues to survey a review trail of alterations. Configuration rendition control empowers rollback or “fix” usefulness to configuration, which keeps away from sudden breakage. Variant control applied to the configuration can quickly return to a last known stable state.

    Limitations or Scope of Configuration Management:

    Configuration Management covers the recognizable proof, recording, and detailing of IT parts, including their adaptations, constituent segments, and connections. Things that ought to be heavily influenced by Configuration Management incorporate equipment, programming, and related documentation. Given the definition above, it ought to be certain that Configuration management isn’t inseparable from Asset Management, albeit the two orders connect.

    Resource Management is a perceived bookkeeping measure that incorporates devaluation of bookkeeping. Also, Resource Management frameworks keep up subtleties on resources over a specific worth, their specialty unit, and their area. Configuration Management likewise keeps up connections between resources; which Asset Management normally doesn’t. A few associations start with Asset Management and afterward proceed onward to Configuration Management.

    The essential exercises of Configuration Management are as per the following:
    • Planning or Arranging; Arranging and characterizing the purpose, scope, objectives, strategies, and methodology, and the hierarchical and specialized setting, for Configuration Management.
    • Identification or Recognizable proof; Choosing and distinguishing the configuration structures for all the framework’s CIs, including their ‘proprietor’, their interrelationships, and configuration documentation. It incorporates apportioning identifiers and rendition numbers for CIs, marking everything, and entering it on the Configuration management data set (CMDB).
    • Control; Guaranteeing that solitary approved and recognizable CIs acknowledge and record, from receipt to removal. It guarantees that no CI adds, adjust, supplant, or eliminated without proper controlling documentation; for example, an affirmed Change demand, and a refreshed determination.
    • Status bookkeeping or accounting; The announcing of all current and chronicled information worried about every CI for the duration of its life cycle. This empowers Changes to CIs and their records to be discernible; for example following the status of a CI as it changes starting with one state then onto the next for example ‘underdevelopment’, ‘being tried’, ‘live’, or ‘removed’.
    • Confirmation & review or Verification & audit; A progression of surveys and reviews that confirm the actual presence of CIs and watch that they accurately record in the Configuration management framework.

    Configuration Management interfaces straightforwardly with frameworks improvement, testing, Change Management, and Release Management to join new and refreshed item expectations. Control ought to pass from the task or provider to the specialist organization at the planned time with precise configuration records.

    How does configuration management work?

    For a configuration management framework to work; it needs some type of system in which to store the data it administers. Initially, this was known as the configuration management information base (CMDB); ITIL v3 presented the idea of a configuration management framework (CMS) to supplant the CMDB. The CMDB advances the idea of a particular solid vault, while the CMS gives a conceptualized arrangement of CMDBs that demonstration together to help the requirements of this administration cycle. Both exhibit preferences over a static CM bookkeeping page or a book record that requires critical manual upkeep and can’t coordinate base work processes and best practices.

    Each assistance management device conveys with a supporting information storehouse. Without the administration interaction of configuration management approving its substance; the vault is essentially an operational data set with unsubstantiated information, not a CMDB or CMS. Robotized configuration review and confirmation segments qualify a vault for being utilized as an approved gold wellspring of resources. A manual review is additionally conceivable.

    Interaction and Support:

    A CM interaction and its supporting storehouse, CMDB or CMS, face the test of covering and repudiating information from sources across the endeavor. A configuration management plan should incorporate an approach to consolidate and accommodate CIs to introduce a solitary perspective or sole wellspring of truth.

    As the CMDB develops and contains more configuration things; it gets conceivable to anticipate the effect of configuration changes, a vital part of change management. By following conditions, for instance, directors can decide the effect that equipment, programming, organization, or another blackout may have on different frameworks or assets.

    In any event, when configurations are very much recorded and deliberately authorized; configuration management should represent the truth of occasional changes; for example, programming overhauls and equipment revives. Framework and structural changes might be needed to fix security and upgrade execution. This makes change demands essential to the CM practice. This may be similarly basic as opening a specific port on a firewall to oblige an application’s new element or migrating at least one occupied workers on the neighborhood organization to improve the presentation of different applications on the subnet.

    Configuration Management Meaning Definition Importance Benefits Limitations and Scope Image
    Configuration Management: Meaning, Importance, Benefits, and Scope; Image from Pixabay.
  • Inventory Management: Meaning, Objectives, Benefits, Scope

    Inventory Management: Meaning, Objectives, Benefits, Scope

    Inventory management, in straightforward terms, is the way toward following the supply of different items. This may incorporate completed items made by your organization or even the crude material; which might be needed for the creation of completed products. Inventory management is an incredibly basic capacity for the smooth satisfaction of orders got by the organization. In this post, we will comprehend the objectives of inventory management from top to bottom.

    Here is the article explain Inventory Management: Meaning, Definition, Motive, Purpose, Objectives, Importance, Benefits, Limitations, and Scope.

    Inventory is perhaps the most significant part of any plan of action. A nearby tab on the development of inventory can represent the deciding moment of your business; and, that is the reason business visionaries consistently underline powerful inventory management. While a couple of entrepreneurs do comprehend the importance and essentialness of the following inventory routinely; some neglect to understand its importance in making their business fall through the concealed breaks.

    Meaning and Definition of Inventory Management:

    Inventory management is a cycle of following the items. This incorporates all the inventory management until it arrived at the last buyer; it incorporates completed items fabricated by the organization and the crude material which might be needed for the creation of completed merchandise. At the point when we come to discuss the Importance of Inventory Management in the present situation; it to a great extent applies to fabricate, discount, and retail firms.

    It is very vital to comprehend the essentials of inventory control and management to fulfill the requirements and needs of the intended interest group. They additionally cause the firm to sort out the item execution and plan out the following creation cycle appropriately. Additionally, it likewise encourages resolving the issues, for example, over-loading, understocking of the merchandise and cheats, and other such errors.

    Motive or Purpose or Objectives of Inventory Management:

    The following are a portion of the significant objectives of inventory management.

    Smooth satisfaction of orders:

    This is quite possibly the main objectives of inventory management. A circumstance where you have a request for your completed items close by however you can’t satisfy the request because of the lack of inventory isn’t ideal. It does not simply put the satisfaction of the request in danger yet it addition hurts the standing of your organization because of deferral in submitted satisfaction timetables. To ensure such a circumstance doesn’t happen, inventory should be appropriately kept up consistently, and an inventory management framework helps in doing likewise.

    Allow us to comprehend this better with the assistance of a model. Assume you are a book distributor. You have a request in the hand of providing 100 books to a retailer in the city. At the point when the salesman takes the request from the retailer, he doesn’t think about the inventory accessible. He simply takes the request and passes it to the stockroom for satisfaction. At the distribution center, you understand that there are just 50 titles accessible against a request for 100.

    This will affect no this single request yet additionally your future business relationship with that retailer. Such issues can be settled by utilizing an inventory management framework where there are numerous clients with various jobs appointed to every one of them-chipping away at a similar framework.

    Reduce misfortunes because of burglary, wastage, and so forth:

    This is another significant goal of inventory management. In many associations, the measure of inventory that is being overseen is tremendous right from secured crude material to the completed products. All this inventory requires to be overseen extra cautiously so that there is an insignificant misfortune because of robbery, wastage, and so on

    On the off chance that the inventory isn’t dealt with appropriately, occurrences of robbery and other undesired occasions won’t go to anybody’s notification. Allow us to take a model. You maintain an eCommerce business of selling portable adornments having an inventory of 1000+ one kind SKU’s. Additionally, at some random point, as expected, there are many items dispatched from your distribution center to the clients using the messenger.

    Simultaneously, numerous bundles are returning to your distribution center as returns, undelivered shipments; and, so on There must be an appropriate inventory management framework following every one of them. In its nonappearance, regardless of whether any distribution center staff part doesn’t check an internal passage in the framework for a shipment got back from the client and simply takes it; it very well might be a misfortune to the organization because of burglary.

    Know when to scale or psychologist the creation of merchandise:

    On the off chance that you are a maker of items; you would be now realizing that there times when you simply need to scale the creation to satisfy the market need and diminish the creation particularly when the pinnacle season closes. Inventory management can help you know precisely when to scale up or down your creation as you get an exact image of the number of items that are right now lying in your inventory anytime. To represent this better, let us think about a model. You have a private venture fabricating umbrellas.

    You can’t simply continue creating umbrellas going all out the entire year since the interest for umbrellas is just during specific months of the year. Having an inventory global positioning framework set up reveals to you precisely the number of made umbrellas are accessible with you anytime on an ongoing premise. This encourages you to settle on a decision on scaling up the creation or psychologist it towards the finish of the period.

    Keep interested in inventory at least potential levels:

    Organizations, particularly private ventures need satisfactory turning out capital for their everyday working. No business can stand to continue delivering products without having purchasers for them and keep the stirring capital tied up in the stocks. Inventory management encourages you to address this problem area and keep your interest in inventory at the least conceivable level.

    For this, you can utilize inventory management programming to follow the inventory levels at some random point as expected. You can choose and save an edge for each item, similar to say ten units. At the point when the inventory check falls underneath this amount; really at that time do you take up the creation movement for that item? This causes you to keep your interests in inventory at least potential levels without harming your top line.

    Clear off the sluggish merchandise:

    Much of the time, not all the merchandise delivered by you would be taking off the rack. There would be much merchandise that is sluggish on the lookout; however, you as of now have heaps of these in your inventory. Any sort of business can’t simply keep their working capital obstructed in such kind of merchandise. Tidying up such sluggish products is another target of inventory management. Allow us to consider that you are a maker of pieces of clothing. You got a fabricated around 100 distinct styles like a piece of your mid-year assortment.

    As the season closes, you understand that around 10 of these styles have neglected to get a reaction on the lookout and are not moving off the racks. Since you would prefer not to keep your interest in these things; you accept a call to write down the costs by half to sell them on a benefit no misfortune premise. Taking a particularly educated choice is conceivable just when you have an appropriate inventory management framework set up which dissects deals examples and discloses to you which are your sluggish products.

    Analyze item deals designs:

    This can be one of the auxiliary objectives of inventory management. Dissecting item deal designs is significant with the goal that you can make future deals presumptions; and, see which are the quick and the sluggish merchandise.

    Inventory management encourages you all together in this since you precisely know the progression of items all through your distribution center. You can even fare information according to your necessities for any given time span. Truth be told, most present-day inventory management as of now has the usefulness of breaking down item Deadealsigns. You should simply just choose the item class or individual items alongside the time span and create reports at a tick on the catch.

    Importance and Benefits of Inventory Management:

    The importance of inventory management can’t be focused on enough particularly for eCommerce and online retail marks. Exact inventory following permits brands to satisfy orders conveniently and precisely. Inventory management in organizations should develop as the organization grows. With an essential arrangement set up that improves the way toward regulating and overseeing inventory, including constant information of inventory conditions and levels; organizations can accomplish inventory management benefits that include:

    Exact Order Fulfillment:

    With a successful inventory management framework, you can without much of a stretch track the stock in the stockroom. Say farewell to overloading, loading out of date things, understocking, and begin zeroing in on causing your image to get one of the central members in the market space. Build up a powerful arrangement with the assistance of productive bookkeeping programming and dodge erroneously took care of requests, exceptional yield volumes, and a deficiency of client base.

    Better Inventory Planning and Ordering:

    Finding some kind of harmony between the interest and supply is amazingly critical for organizations, in this manner, inventory management gives help in better arranging and requesting stock things. Envision having a tremendous interest in a specific item yet not having enough material to supply the equivalent. Sounds like your most noticeably terrible bad dream, isn’t that so? Itemized inventory management mitigates these issues, permitting stockroom administrators to invigorate inventory just when required. It’s both space and financially savvy.

    Expanded Customer Satisfaction:

    Since a methodical and powerful inventory global positioning framework will give you a thorough perspective on your stock close by; it yields expanded consumer loyalty. In the retail area, clients disdain late conveyances or “unavailable” warnings and ultimately stay away for the indefinite future to the site to satisfy their shopping needs. In any case, great inventory management prompts orders to be satisfied all the more rapidly and dispatched out to clients quicker. The improved cycles can help eCommerce and online retail marks fabricate a solid collection with purchasers – and keep them returning for additional.

    Coordinated Warehouse:

    A decent inventory management methodology prompts a coordinated satisfaction community. A coordinated distribution center outcomes in the more effectively present and future satisfaction plans. This likewise incorporates cost-reserve funds and improved item satisfaction for organizations using the stockroom for overseeing inventory.

    Limit the Blockage of Financial Resources:

    The importance of inventory control is to limit the blockage of monetary assets. It diminishes the pointless tying up of capital in abundance inventories and improves the liquidity position of the firm. With a legitimate inventory following module, entrepreneurs can settle on snappy choices about the stock lying in the stockroom all the more shrewdly.

    Limitations or Scope of Inventory Management:

    The following limitations or scope of Inventory management below are;

    • Oversee Inventory: Inventory management assists with dealing with the supply of the organization; it gives appropriate subtleties of the items what sort of crude material; what are the sizes we require, and so on to the buying division.
    • Less Storage: When the inventory management gives appropriate data to management; they purchase as per them which encourages the organization to store fewer items.
    • Improve Productivity: Inventory management assists with improving the efficiency of the machines and labor. Workers know about stocks and the amount need to create.
    • Increment Profits: Inventory management assists with improving the benefits of the organization; it assists with giving appropriate data about stocks; which saves the superfluous costs on stocks.
    Inventory Management Meaning Definition Motive Purpose Objectives Importance Benefits Limitations Scope Image
    Inventory Management: Meaning, Definition, Motive, Purpose, Objectives, Importance, Benefits, Limitations, and Scope; Image from Pixabay.
  • What is the Scope of Control? 12 perfect Explanation

    What is the Scope of Control? 12 perfect Explanation

    Scope of Control; Control ensures that there is effective and efficient utilization of organizational resources so as to achieve the plan goals. Control is a primary goal-oriented function of management in an organization. It is a process of comparing the actual performance with the set standards of the company to ensure that activities are performing according to the plans and if not then taking corrective action. Controlling measures the deviation of actual performance from the standard performance, discovers the causes of such deviations and helps in taking corrective actions.

    What is the Scope of Control? 12 perfect Explanation.

    Controlling is an important function of management which all the managers are requiring to perform. According to Brech, “Controlling is a systematic exercise which is called as a process of checking actual performance against the standards or plans with a view to ensure adequate progress and also recording such experience as is gained as a contribution to possible future needs.” The purpose of controlling is to ensure that everything occurs in conformities with the standards. An efficient system of control helps to predict deviations before they actually occur.

    Scope of Control - List
    Scope of Control – List

    For effective control, it is important to know what are the critical areas where control would exercise. The identification of these areas of control enhances the management to;

    • Delegate authority and fixing up of responsibility.
    • Reduce the burden of supervising each activity in detail, and.
    • Have a means of securing satisfactory results.

    Though controls are needs in every area where performance and results directly and Vitally affect the survival and prosperity of the organization, these areas need to be specifically spelled out. What is Control and Organizational Factors? easy Explanation.

    The following discussion points out the problems and methods of control in each major area.

    In Policies:

    Policies are formulating to govern the behavior and action of personnel in the organization. These may write or otherwise, policies are generally controlling through policy manuals, which are generally preparing by top management. Each individual in the organization is expecting to function according to policy manuals.

    In Organization:

    Organization charts and manuals are using to keep control over organization structure. Organization manuals attempt at solving organizational problems and conflicts, making long-range organizational planning possible, enabling rationalization of the organization structure, helping in proper designing and clarification of each part of the organization, and conducting a periodic check of facts about organization practice.

    In Personnel:

    Generally, the personnel manager or head of the personnel department, whatever his designation maybe, keeps control over personnel in the organization. Sometimes, a personnel committee is constituting to act as the ail instrument of control over key personnel.

    In Wages and Salaries:

    Control over wages and salaries are finishing by having a program of job evaluation, and wage and salary analysis. The functions are carrying on by personnel and industrial engineering departments. Often the wage and salary committee is constituting to provide help to these departments.

    In Costs:

    Control over costs is exercising by making a comparison between standard costs and actual costs. Standard costs are set in respect of different elements of costs. Cost control is also supplementing by a budgetary control system, which includes different types of budgets. Controller’s department provides information for setting standard costs, calculating actual costs, and pointing out differences between these two.

    In Methods and Manpower:

    Control over methods and manpower is keeping to ensure that each individual is working properly and timely. For this purpose, periodic analysis of the activities of each department is conducting. The functions perform, methods adopt, and time-consuming by every individual is studied to eliminate nonessential functions, methods, and time. Many organizations create separate department or section known as organization and methods’ to keep control over methods and manpower.

    In Capital Expenditure:

    Control over capital expenditure is exercising through the system of evaluation of projects, ranking of projects on the basis of their importance, generally on the basis of their earning capacity. A capital budget is preparing for the business as a whole. The budget committee or appropriation committee reviews the budget. For effective control over capital expenditure, there should be a plan to identify the realization of benefits from capital expenditure and to make comparison with anticipated results. Such a comparison is important in the sense that it serves as an important guide for future capital budgeting activities.

    In-Service Departments:

    Control over service departments is effecting either; 1) through budgetary control within Operating departments, or 2) through putting the limits upon the amount of service an individual department can ask, or 3) through authorizing the head of the service department to evaluate the request for service made by other departments and to use his discretion about the quantum of service to render to a particular department: Sometimes, a combination of these methods may use.

    In-Line of Products:

    A committee whose members are drawn from production, sales, and research departments exercise control over the line of products. The committee controls through studies about market needs. Efforts are making to simplify and rationalize the line of products.

    In Research and Development:

    Control over research and development is exercising in two ways: by providing a budget for research and development and by evaluating each project keeping in view savings, sales, or profit potentialities. Research and development is a highly technical activity are also controlling indirectly. Improving the ability and judgment of the research staff through training programs and other devices does this.

    In Foreign Operations:

    Foreign operations are controlling in the same way as domestic ones. The tools and techniques applied are the same. The only difference is that the chief executive of foreign operations has a relatively greater amount of authority.

    In External Relations:

    The public relations department regulates external relations. This department may prescribe certain measures to follow by other departments while dealing with external parties.

    What is the Scope of Control 12 perfect Explanation
    What is the Scope of Control? 12 perfect Explanation

    #Overall Control:

    Control over each segment of the organization contributes to the overall organizational control. However, some special measures are devising to exercise overall control. This is done through budgetary control project profit and loss account and balance sheet. Integrating and coordinating budgets prepared by each segment prepare a master budget. The budget committee reviews such budget This budget acts as an instrument for overall control. Profit and loss account and balance sheet are also using to measure the overall results.

  • Top 12 Scope of Production Management; Explain Each!

    Top 12 Scope of Production Management; Explain Each!

    The scope of production management is indeed vast. Commencing with the selection of location, production management covers such activities as the acquisition of land, constructing the building, procuring and installing machinery, purchasing and storing raw materials and converting them into saleable products. Production management is mainly associated with factory management crept with the development of the factory system.

    Here are the Top 12 Scope of Production Management; Explain Each.

    Before the evolution of the factory system, manufacturing activities were carried on by a single person that posed no or very insignificant problem of production and therefore the question of production management did not arise. But with the inception of the factory system, the situation changed and so many problems of production were begun to creep up and necessity arose to tackle with the problems of quality control, layout facilities, meeting the schedules and organization of production activities.

    Thus the scope of production management began to develop. In the early stage, the stress was on controlling the labor costs because labor cost was the major element of the total cost of production. With the continuing development of the factory system, the trend towards mechanization and automation developed and it resulted in the increased costs of indirect labor higher than the direct labor costs.

    So concerns found it difficult to run the business in these circumstances and evolved many controlling devices to regulate the cost of production. They had developed devices like designing and packing of products, indirect labor cost control, production & inventory control, and quality control. Since the level of production has increased tremendously, so many other production problems have added to its scope.

    In the present era of intense competition, the scope of production management is very wide. The production department in an enterprise is not only concerned with the full exploitation of production facilities but also the human factor that indirectly affects the production, utilization of latest techniques of production and the production of quality goods to the satisfaction of customers of the product.

    The various activities that form the scope of production function can study in the following broad areas;

    Capacity Planning:

    This deals with the procurement of productive resources. Capacity refers to a level of output of the conversion process over a period of time. Full capacity indicates the maximum level of output. Capacity is planned for short-term as well as for the long term.

    Process industries pose challenging problems in capacity planning, requiring in the long run, expansion, and contraction of major facilities in the conversion process. Some tools that help us in capacity planning are marginal costing (Break Even Analysis), learning curves, linear programming, and decision trees.

    Production Planning:

    The decisions in production planning include preparation of short-term production schedules, plan for maintaining the records of raw materials, finished and semi-finished stock, specifying how the production resources of the concern are to employ over some future time in response to the predicted demand for products and services.

    Production planning takes a given product or line of products and organizes in advance the manpower, materials, machines, and money required for a predetermined output in a given period of time. Thus, production planning is a management technique which attempts to gain the best utilization of a firm’s manufacturing facilities. It is gained by the integration and coordination of the manpower, machines, materials and plant services employed in the manufacturing cycle.

    Production control:

    After planning, the next managerial production function is to control the production according to the production plans because production plans can’t activate unless they are properly guiding and controlling. For this purpose, the production manager has to regulate work assignment, review work process, check and remove discrepancies, if any, in the actual and planned performances.

    According to Soriegel and Lansburgh;

    “Production control is the process of planning production in advance of operations; establishing the exact route of each individual item, part or assembly; setting, starting and finishing dates for each important item, assembly, and the finished products; and releasing the necessary orders as well as initiating the required follow-up to affect the smooth functioning of the enterprise.”

    Thus production control involves the following stages :

    • Planning: Setting targets of production.
    • Routing: To decide the route or flow-of production activity.
    • Dispatching: To issue materials and authorizations for the use of machines and plant services.
    • Follow-up: It compares the actual production with the targeted production. Deviations are found out and corrected and reasons are investigated.

    Inventory Control:

    Inventory control deals with the control over raw- materials, work-in-progress, finished products, stores, supplies, tools, and so are included in production management. The raw materials, supplies, etc. should purchase at the right time, of the right quality, in the right quantity, from the right source, and at the right price.

    This five ‘R’s consideration enables scientific purchases. Store-keeping is also an important aspect of inventory control. The raw materials, work-in-progress, finished goods, supplies, tools, etc. should store efficiently. The different levels of inventory should manage properly and the issue of materials to departments should make promptly and effectively. Proper records should also keep for various items of inventory control.

    The production manager has to look after the inventory control activities at three levels;

    • Control of inventories such as raw materials, purchased parts, finished goods, and supplies through the inventory control technique.
    • The control of the flow of materials into the plants through the technique of judicious purchasing, and.
    • Control of work-in-progress through production control.

    Quality control:

    The other important decision taken by the production manager concerns quality control. Product quality refers to the composite product characteristics of engineering and manufacturing that determines the degree to which the product in use will meet the expectations of the customers. Quality control can ensure the techniques of inspection and statistical quality control.

    Maintenance and Replacement:

    In this, we cover preventive methods to avoid machine break-downs, maintenance, policies regarding the repair and replacement decisions. Maintenance manpower is to schedule and repair jobs are to a sequence. There are some preventive replacements also. Machine condition is to constantly monitor. Effective maintenance is a crucial problem for India which can help better capacity utilization and make operations systems productive enough.

    Cost Reduction and Control:

    Cost reduction ultimately improves productivity. The industry becomes competitive. Essentially cost reduction and cost elimination are productivity techniques. Value engineering, budgetary control, standard costing, cost control of labor and materials, etc. help to keep costs optimal. All Production decisions are subject to control measures, after receiving proper feedback.

    The control function is exercised over the quantity to produce, the quality expected, the time needed, inventory consumed & carried and costs incurred. Control system is designed after a Due cost-benefit analysis. Controls should selective. A self-controlling cybernetic system though preferable is not possible in all complex industries.

    Environmental changes ultimately affect all the systems of the organization. A dynamic environment makes it compulsory to adopt the production system to the changes in technology and other factors of the environment. Product mix, the composition of products, the introduction of new products, changing the layout system is some of the representative decisions which respond to environmental feedback.

    Product Selection and Design:

    The product mix makes the production system either efficient or inefficient. Choosing the right products, keeping the mission and overall objectives of the organization in mind are the key to success. Design of the product, which gives it enough functional and aesthetic value, is of paramount importance. It is the design of the product which makes the organization competitive or noncompetitive. Value engineering does help to retain enough features while eliminating unnecessary ones.

    Activities Relating to Production System Designing:

    Decision-related to the production system design is one of the most important activities of production management. This activity is related to production engineering and includes problems regarding the design of tools and jigs, the design, development and installation of equipment and the selection of the optimum size of the firm. All these areas require the technical expertise on the part of the production manager and his staff.

    Facilities Location:

    The selection of an optimum plant location very much depends upon the decision taken regarding production engineering. A wrong decision may prove disastrous. The location should as far as possible cut down the production and distribution cost. There are diverse factors to consider for selecting the location of a plant.

    Method Study:

    The next decision regarding production system design concerns the use of those techniques which are concerned with the work environment and work measurement. Standard methods should devise for performing repetitive functions efficiently. Unnecessary movements should eliminate and suitable positioning of the workers for different processes should develop. Such methods should devise with the help of time study and motion study. The workers should train accordingly.

    Top 12 Scope of Production Management Explain Each
    Top 12 Scope of Production Management; Explain Each. #Pixabay.

    Facilities Layout and Materials Handling:

    Plant layout deals with the arrangements of machines and plant facilities. The machines should so arrange that the flow of production remains smooth. There should not be overlapping, duplication or interruption in the production flow. Product layout, where machines are arranging in a sequence requiring for the processing of a particular product, and process layout, where machines performing the similar processes are grouping together are two popular methods of the layout.

    The departments are laid out in such a way that the cost of material handling is reducing. There should be a proper choice of materials handling the equipment. These days, computer software is available for planning the process layout (e.g. CRAFT, CORELAP, etc.). Group Technology (G.T.), Cellular Manufacturing Systems (CMS) and Flexible Manufacturing Systems (FMS) have made our concepts of layout planning undergo a tremendous change.

    Apart from these factors, the production system designer should pay full attention to two other important problems, viz. (1) the human factor, i.e., the impact of production systems on the workers operating it and (2) research and development activities. These two problems have a vital impact on production system designing.

  • Business Economics; Definition, Nature, Scope, and Importance

    Business Economics; Definition, Nature, Scope, and Importance

    Business Economics, also know as Managerial Economics, is the application of economic theory and methodology to business with their pdf. Also, Economics is the study of human beings (e.g., consumers, firms) in producing and consuming goods and services amid a scarcity of resources. Managerial or business economics apply a branch of organizing and allocating a firm’s scarce resources to achieve its desired goals. Discuss Business Economics – the topic is Meaning, Definition, Nature, Scope, and Importance PDF.

    Here is the article to explain, Business Economics Meaning, Definition, Nature, Scope, and Importance PDF.

    Business involves decision-making. Decision-making means the process of selecting one out of two or more alternative courses of action. Also, The question of choice arises because the basic resources such as capital, land, labor, and management are limiting and can employ in alternative uses.

    The decision-making function thus becomes one of making choices and taking decisions that will provide the most efficient means of attaining the desired end, say, profit maximation. Also, Different aspects of the business need the attention of the chief executive.

    He may call upon to choose a single option among the many that may be available to him. It would be in the interest of the business to reach an optimal decision- the one that promotes the goal of the business firm. A scientific formulation of the business problem and finding its optimal solution requires that the business firm is equipped with a rational methodology and appropriate tools.

    Definition of Business Economics:

    Different author by different definitions are below;

    According to McNair and Meriam,

    “Managerial Economics consists of the use of Economic modes of thought to analyze business situations.”

    According to M. H. Spencer and L. Siegelman,

    “Managerial Economics is the integration of economic theory with business practice for the purpose of facilitating decision making and forward planning.”

    According to Hauge,

    “Managerial Economics is concerned with using the logic of economics, mathematics & statistics to provide effective ways of thinking about business decision problems.”

    Business Economics or Managerial Economics generally refers to the integration of economics theories with business practices with their pdf. Also, Economics provides various conceptual tools like – Demand, Supply, Price, Competition, etc. They apply these tools to the management of the business. In this sense, business economics also is known as applied economics.

    Therefore, define business economic as that discipline which deals with the application of economic theory to business management. Also, Business economic thus lies on the borderline between economics and business management and serves as a bridge between the two disciplines.

    Nature of Business Economics:

    How to explain the Nature of Business Economics? Traditional economic theory has developed along two lines; viz., normative, and positive. Also, Normative focuses on prescriptive statements and helps establish rules aimed at attaining the specified goals of the business.

    Positive, on the other hand, focuses on the description it aims at describing how the economic system operates without staffing how it should operate. The emphasis in business economics is on normative theory. Also, they seek to establish rules which help business firms attain their goals; which indeed is also the essence of the word normative.

    However, if the firms are to establish valid decision rules; they must thoroughly understand their environment. Also, This requires the study of positive or descriptive theory. Thus, they combine the essentials of the normative and positive economic theory; the emphasis being more on the former than the latter.

    Scope of Business Economics:

    As regards the scope of business economics, no uniformity of views exists among various authors. The scope of business economics (micro and macro variety) is a wider one since it “uses the logic of Economics, Mathematics, and Statistics to provide effective ways of thinking about business decision problems.” Because of this saying of Prof. D. C. Hague, we can argue that there are links between managerial economics and management science. The boundaries between the two subjects are not clear-cut but overlapping.

    However, the following aspects are said to generally fall under business economics.

    1. Forecasting and Demand Analysis.
    2. Cost Analysis and Production Analysis.
    3. Pricing Decisions, policies, and practices.
    4. Profit Management, and.
    5. Capital Management.

    These different aspects are considered to involve in the subject matter of business economics.

    Forecasting and Demand Analysis:

    A business firm is an economic organization that transforms productive resources into goods to sell in the market. Also, A major part of business decision-making depends on accurate estimates of demand.

    A demand forecast can serve as a guide to management for maintaining and strengthening market position and enlarging profits. Also, Demand analysis helps identify the various factors influencing the product demand and thus provides guidelines for manipulating demand.

    Also, Demand analysis and forecasting provided the essential basis for business planning and occupy a strategic place in managerial economics. How to learn the main topics covered are; Demand Determinants, Demand Distinctions, and Demand Forecasting.

    Cost Analysis and Production Analysis:

    A study of economic costs, combined with the data drawn from the firm’s accounting records, can yield significant cost estimates which are useful for management decisions. An element of cost uncertainty exists because all the factors determining costs are not known and controllable.

    Discovering economic costs and the ability to measure them are the necessary steps for more effective profit planning, cost control, and sound pricing practices. Production analysis is narrower, in scope than cost analysis.

    Production analysis frequently proceeds in physical terms while cost analysis proceeds in monetary terms. The main topics covered under cost and production analysis are; Cost concepts and classification, Cost-output Relationships, Economies and diseconomies of Scale, Production function, and Cost control.

    Pricing Decisions, Policies, and Practices:

    Pricing is an important area of business economics. Also, Price is the genesis of a firm’s revenue, and as such its success largely depends on how correctly the pricing decisions are taken.

    The important aspects dealt with under-pricing include. Also, Price Determination in Various Market Forms, Pricing Method, Differential Pricing, Product-line Pricing, and Price Forecasting.

    Pricing is a very important area of managerial economics. Also, Price is the origin of the revenue of a firm. As such the success of a business firm largely depends on the accuracy of the price decisions of that firm. The important aspects dealt under the area, are as follows:

    • Price determination in various market forms.
    • Pricing methods, and.
    • Differential pricing product-line pricing and price forecasting.
    Profit Management:

    Business firms are generally organized to make profits and in the long run, profits earned are taken as an important measure of the firm’s success. If knowledge about the future were perfect, profit analysis would have been a very easy task.

    However, in a world of uncertainty, expectations do not always realize. So, profit planning and measurement constitute a difficult area of business economics. The important aspects covered under this area are; Nature and Measurement of profit, Profit policies, and Technique of Profit Planning like Break-Even Analysis.

    Capital Management:

    Among the various types of business problems, the most complex and troublesome for the business manager are those relating to a firm’s capital investments. As well as, Relatively large sums are involved and the problems are so complex that their solution requires considerable time and labor.

    Often the decision involving capital management are taken by the top management. Briefly Capital management implies planning and control of capital expenditure. The main topics dealt with are; Cost of capital Rate of Return and Selection of Projects.

    Business Economics Definition Nature Scope and Importance
    Business Economics Meaning, Definition, Nature, Scope, and Importance PDF. #Pixabay.

    Importance of Business Economics:

    The significance or importance of business economics can discuss as under:

    It also incorporates useful ideas from other disciplines such as psychology, sociology, etc. If they are found relevant to decision making. Also, they take the help of other disciplines having a bearing on the business decisions about various explicit and implicit constraints subject to which resource allocation is to optimize.

    They concern with those aspects of traditional economics which are relevant for business decision making in real life.

    These are adapting or modifying to enable the manager to make better decisions. Thus, business economic accomplishes the objective of building a suitable tool kit from traditional economics. It helps in reaching a variety of business decisions in a complicated environment.

    Certain examples are;

    • What products and services should produce?
    • What input and production technique should use?
    • How much output should produce and at what prices it should sell?
    • What are the best sizes and locations of new plants?
    • When should equipment replace? and.
    • How should the available capital allocate?

    They take cognizance of the interaction between the firm and society; and, accomplish the key role of an agent in achieving its social and economic welfare goals. It has come to realize that business, apart from its obligations to shareholders, has certain social obligations.

    Also, they focussing attention on these social obligations as constraints subject to which business decisions are taken. It serves as an instrument in furthering the economic welfare of society through socially-oriented business decisions.

  • Public Finance: Meaning, Definition, Scope, and Divisions

    Public Finance: Meaning, Definition, Scope, and Divisions

    What does Public Finance mean? It is a study of income and expenditure or receipt and payment of government. Meaning, Definition, Scope, and Divisions – The concept of Public Finance. Professor Bastable, an English economist defines public finance as a subject that deals with the expenditure and income of the public authorities of the state. Both the aspects (income and expenditure) relate to the state’s financial administration and control. Read and share the given article in Hindi.

    Here explains the concept of Public Finance; its points – Meaning, Definition, Scope, and Divisions.

    Dalton defined the subject as one which concerns itself with the income and expenditure of public authorities and the adjustment of one to the other. Also, It learns that the study of the subject chiefly centers around different aspects of government revenues and government expenditure about the state’s economy and people.

    It deals with the income raised through revenue and expenditure spend on the activities of the community and the term “finance” is a money resource i.e. coins. But the public collects names for an individual within an administrative territory and finance.

    Meaning of Public Finance:

    In public finance, we study the finances of the Government. Thus, it deals with the question of how the Government raises its resources to meet its ever-rising expenditure. As Dalton puts it,” public finance is “concerned with the income and expenditure of public authorities and with the adjustment of one to the other.”

    Accordingly, the effects of taxation, Government expenditure, public borrowing, and deficit financing on the economy constitute the subject matter of public finance. Thus, Prof. Otto Eckstein writes “Public Finance is the study of the effects of budgets on the economy, particularly the effect on the achievement of the major economic objects growth, stability, equity, and efficiency”.

    Further, it was thought that the Government budget must balance. Public borrowing was recommended mainly for production purposes. During a war, of course, public borrowing was considered legitimate but it was thought that the Government should repay or reduce the debt as soon as possible. Public authorities undertake activities for individuals living within an administrative territory. Also, Finance usually means income and expenditure.

    So it means income and expenditure of the public authorities and adjustment of one to the other.

    So we knew that:

    • When we talk of public we mean public authorities.
    • Public authorities include central government, state government, and local governing bodies.
    • When we talk about finance, we mean income and expenditure.
    • It is the fiscal science that implies the science of public treasury.
    • So it is a study of income and expenditure of the public authorities and adjustment of one to the other, and.
    • Objectives of public finance (objectives like higher growth, better distribution of wealth, income, property, economic stability, etc) can secure through taxation, public expenditure, public debt management fiscal federalism, and fiscal administration. Also, Public revenue, public expenditure, public debt management, fiscal administration, and fiscal federalism are the main branches of public finance.

    Definition of Public Finance:

    Different economists have defined public finance differently. Some of the definitions are given below.

    According to R.A. Musgrave says,

    “The complex problems that center on the revenue-expenditure process of government is traditionally known as public finance.”

    According to prof. Dalton,

    “Public finance is one of those subjects that lie on the borderline between economics and politics. It is concerned with the income and expenditure of public authorities and with the mutual adjustment of one another. The principal of public finance are the general principles, which may be laid down with regard to these matters.”

    According to Adam Smith,

    “Public finance is an investigation into the nature and principles of the state revenue and expenditure.”

    According to Findlay Shirras,

    “Public finance is the study of principles underlying the spending and raising of funds by public authorities.”

    According to H.L Lutz,

    “Public finance deals with the provision, custody, and disbursements of resources needed for the conduct of public or government function.”

    According to Hugh Dalton,

    “Public finance is concerned with the income and expenditure of public authorities, and with the adjustment of the one to the other.”

    The scope of Public Finance:

    The scope of public finance is not just to study the composition of public revenue and public expenditure. It covers a full discussion of the influence of government fiscal operations on the level of overall activity, employment, prices, and growth process of the economic system as a whole.

    According to Musgrave, the scope of public finance embraces the following three functions of the government’s budgetary policy confined to the fiscal department:

    • The Allocation Branch.
    • The Distribution Branch, and.
    • The Stabilisation Branch.

    These refer to three objectives of budget policy, i. e., the use of fiscal instruments:

    • To secure adjustments in the allocation of resources.
    • To secure adjustments in the distribution of income and wealth, and.
    • Also, To secure economic stabilization.

    Thus, the function of the allocation branch of the finance department is to determine what adjustments in allocation need, who shall bear the cost, what revenue and expenditure policies to be formulated to fulfill the desire objectives.

    The function of the distribution branch is to determine what steps need to bring about the desired or equitable state of distribution in the economy and the stabilization branch shall confine itself to the decisions as to what should be done to secure price stability and to maintain full employment level.

    Further, modern public finance has two aspects:
    • The positive aspect, and.
    • Normative aspect.

    In its positive aspect: The study of Government finance is concerned with what are sources of public revenue, items of public expenditure, constituents of the budget, and formal as well as effective incidence of the fiscal operations.

    In its normative aspect: Norms or standards of the government’s financial operations are laid down, investigated, and appraised. The basic norm of modern finance is general economic welfare. On normative consideration, it becomes a skillful art, whereas, in its positive aspect, it remains a fiscal science.

    The main scope of public finance may summaries’ as under:

    • Revenue.
    • Expenditure.
    • Debt.
    • Financial Administration, and.
    • Economic Stabilisation.

    Now, explain;

    Public Revenue:

    Public revenue concentrates on the methods of raising public revenue, the principles of taxation, and its problems. In other words, all kinds of income from taxes and receipts from the public deposit include in public revenue. It also includes the methods of raising funds. It further studies the classification of various resources of public revenue into taxes, fees, and assessment, etc.

    Public Expenditure:

    In this part of Government finance, we study the principles and problems relating to the expenditure of public funds. This part studies the fundamental principles that govern the flow of Government funds into various streams.

    Public Debt:

    In this section of public-finance, we study the problem of raising loans. The public authority or any Government can raise income through loans to meet the shortfall in its traditional income. The loan raised by the government in a particular year is the part of receipts of the public authority.

    Financial Administration:

    Now comes the problem of organization and administration of the financial mechanism of the Government. In other words, under financial or fiscal administration, we are concerned with the Government machinery which is responsible for performing various functions of the state.

    Economic Stabilization:

    Now, a day’s economic stabilization and growth are the two aspects of the Government economic policy which got a significant place in the discussion on public finance theory. This part describes the various economic policies and other measures of the government to bring about economic stability in the country.

    Public Finance Meaning Definition Scope and Divisions
    Public Finance: Meaning, Definition, Scope, and Divisions, #Pixabay.

    Divisions of Public Finance:

    Public finance broadly divides into four branches. These are Public Expenditure, Public Revenue, Public Debt, and Financial Administration. Under Public Expenditure, we study the various principles, effects, and problems of expenditure made by the public authorities.

    Under the branch of Public Revenue, we study the various ways of raising revenues by the public bodies. We also study the principles and effects of taxation and how the burden of taxation distribute among the various classes in society. Public Debt is the study of the various principles and methods of raising debts and their economic effects.

    It also deals with the methods of repayment and management of public debt. The branch of Financial Administration deals with the methods of budget preparation, various types of budgets, war finance, development finance, etc.

    Need for Public Finance:

    We all know that the existence of a large and growing public sector is a reason enough to study public-finance. Adam Smith in his monumental work. The Wealth of Nations laid out the basic jobs of the government.

    The government is to play an important role in providing for the defense of the nation, the administration of justice, and in the provision of those goods and services not wholly to be the result of the ordinary private activity. Adam Smith also had an acute awareness of the problems that would associate with raising the funds needed to finance these obligations.

    His four maxims of taxation remain today a guide in designing a nation’s revenue structure. The four maxims focus attention on matters of economic efficiency as well as equity.

    Conclusion:

    So, The word public refers to general people and the word finance means resources. So public finance means resources of the masses, how they collect and utilize. Thus, Public Finance is the branch of economics that studies the taxing and spending activities of government.

    The discipline of public finance describes and analyses government services, subsidies, and welfare payments, and the methods by which the expenditures to these ends cover through taxation, borrowing, foreign aid, and the creation of money. From the above discussion, we can say that the subject matter of public finance is not static, but dynamic which is continuously widening with the change in the concept of state and functions of the state.

    As the economic and social responsibilities of the state are increasing day by day, the methods and techniques of raising public income, public expenditure, and public borrowings are also changing. Because of the changed circumstances, it has given more responsibilities in the social and economic field.  Read and share the given article (सार्वजनिक वित्त: अर्थ, परिभाषा, क्षेत्र और विभाजन) in Hindi.

  • Financial Accounting Importance, Nature, and Limitations

    Financial Accounting Importance, Nature, and Limitations

    Financial accounting Importance, Nature, and Limitations; It is a system that collects information, processes, and reports about changes in the performance, financial status, and financial status of an entity. A person’s ability to track the financial transactions of a person’s business, during which, he knows as financial accounting skills as a result of his operation. Do you study to learn: If Yes? Then read the lot. Let’s Study Financial Accounting Importance, Nature, and Limitations.

    Every Company Current year or the end of the year want to know the financial status of the business. Financial Accounting Importance, Nature, and Limitations.

    It is done by recording, summarizing, and presenting all such financial figures in the form of financial reports or statements using standardized guidelines. Such financial statements generally include balance sheets, income details, and cash flow details; which summarize a company’s performance over time. Financial accounting skills generally do not include the ability to report the value of a company but can provide enough information for the evaluation of others.

    Definition of Financial Accounting:

    Financial Accounting concerns with providing information to external users. It refers to the preparation of general-purpose reports for use by persons outside a business enterprise, such as shareholders (existing and potential), creditors, financial analysts, labor unions, government authori­ties, and the like. Financial accounting is oriented towards the preparation of financial statements which summarise the results of operations for selected periods of time and show the financial position of the business at particular dates.

    Every entity, whether for-profit or not-for-profit; aims at creating maximum value for its stakeholders. The goal of maximum value addition best achieves; when there is a mechanism to monitor the management and the board of directors. Financial accounting helps in such monitoring by providing relevant, reliable, and timely information to the stakeholders.

    Inputs to a financial accounting system include business transactions that are supported by source documents, such as invoices, board resolutions, management memos, etc. These inputs are processed using generally accepted accounting principles (GAAP). The processed information is reported through standardized financial statements.

    Importance of Financial Accounting:

    Financial accounting is integral to companies of all sizes because it helps in the following importance below are: They are three important points.

    1. Communication of information externally.
    2. Communicate information internally, and.
    3. Comparison through analysis.
    First Point:

    This point explains Communication on information externally. The statements and reports generated by financial accounting use to communicate information about the overall health and well-being of the company to external parties. Such external users may include suppliers, banks, and leasing companies, etc. who are not part of the company but require all this information to analyze the progress of the company and compare it with their expectations.

    Second Point:

    This point explains Communicate on information internally. A company’s finance team or its employees who are interested in stock-based compensation etc. constitute the internal users of the information generated by financial accounting practices. The reports generated with the help of financial accounting skills are helpful for this purpose as well.

    Last Point:

    This point explains Comparison through analysis. Since financial accounting requires the use of standardized guidelines, the financial statements generated by all companies are comparable, providing a standard method of analysis.

    Scope and Nature of Financial Accounting:

    The following points are important to understand the scope and nature of financial accounting:

    Contents:

    The end product of the financial accounting process is the financial statements that communicate useful information to decision-makers. The financial statements reflect a combination of recorded facts, accounting conventions, and personal judgments of the preparers. There are three primary financial statements for a profit-making entity in India, viz., the Income Statement (statement of revenues, expenses, and profit), and the Balance Sheet (like the statement of assets, liabilities, and owner’s equity) and cash flow statement. The accounting information generated by financial accounting is quantitative, formal, structured, numerical, and past-oriented material.

    Accounting System:

    The accounting system includes the various techniques and procedures used by the accountant (preparer) in measuring, describing, and communicating financial data to users. Journals, ledgers, and other accounting techniques used in processing financial accounting information depend upon the concept of the double-entry system. This technique includes generally accepted accounting princi­ples (GAAP). The standard of generally accepted accounting principles includes not only broad guidelines of general application but also detailed practices and procedures.

    Measurement Unit:

    Financial accounting primarily concerns with the measurement of economic resources and obligations and changes in them. Financial accounting measures in terms of monetary units of a society in which it operates. For example, the common denominator or yardstick used for accounting measurement is the rupee in India and the dollar in the U.S.A. The assumption is that the rupee or the dollar is a useful measuring unit.

    Users of Financial Accounting Information:

    Financial accounting information intends primarily to serve external users. Some users have a direct interest in the reported information. Examples of such users are owners, credi­tors, potential owners, suppliers, management, tax authorities, employees, customers. Some users need financial accounting information to help those who have a direct interest in a business enterprise.

    Examples of such users are financial analysts and advisers, stock exchanges, financial press and reporting agencies, trade associations, labor unions. These user groups having direct/indirect interests have different objectives and diverse informational needs. The emphasis in financial accounting has been on general-purpose information which, obviously, is not intended to satisfy any specialized needs of individual users or specific user groups.

    Users or Role in Financial Accounting:

    The most basic motives or objectives of financial accounting is the preparation of general-purpose financial statements; which are financial statements meant for use by stakeholders external to the entity; who do not have any other means of getting such information, i.e. people other than the management. These stakeholders include:

    Investors and Financial Analysts:

    Investors need the information to estimate the intrinsic value of the entity and to decide whether to buy, hold, or sell the entity’s shares. Equity research analysts use financial statements to conduct their research on earnings expectations and price targets.

    Working as Employee groups:

    Employees and their representative groups interest in information about the solvency and profitability of their employers to decide about their careers, assess their bargaining power and set a target wage for themselves.

    Lead as Lenders:

    Lender’s interest in the information enables them to determine whether their loans and the interest earned on them will pay when due.

    Suppliers and other trade creditors:

    Suppliers and other creditors interest in the information that enables them to determine whether amounts owing to them will pay when due and whether the demand from the company is going to increase, decrease, or stay constant.

    One of the Customers:

    Customers want to know whether their supplier is going to continue as an entity; especially when they have a long-term involvement with that supplier. For example, Apple interests in the long-term viability of Intel because Apple uses Intel processors in its computers and if Intel ceases operations at once; Apple will suffer difficulties in meeting its own demand and will lose revenue.

    His also Governments and their agencies:

    Governments and their agency’s interest in financial accounting information for a range of purposes. For example, the tax collecting authorities, such as IRS in the USA, interest in calculating the taxable income of the tax-paying entities and finding their tax payable. Antitrust authorities, such as the Federal Trade Commission, interest in finding out whether an entity engages in monopolization.

    The governments themselves interest in the efficient allocation of resources; and, they need financial accounting information of different sectors and industries to decide on federal and state budget allocation, etc. The bureaus of statistics are interested in calculating national income, employment, and other measures.

    Also Public:

    The public interests in an entity’s contribution to the communities in which it operates; its corporate social responsibility updates; its environmental track record, etc.

    Limitations of Financial Accounting:

    Financial accounting is significant for management as it helps them to direct and control the firm activities. It also helps business management in determining appropriate managerial policies in different areas, such as production, sales, administration, and finance.

    Financial accounting suffers from the following limitations which have been responsible for the emergence of cost and manage­ment accounting:

    • Financial accounting does not provide detailed cost information for different departments, processes, products, jobs in the production divisions. Management may need information about different products, sales territories; and, sales activities which are also not available in financial accounting.
    • Financial accounting does not set up a proper system of controlling materials and supplies. Undoubtedly, if material and supplies do not control in a manufacturing concern; they will lead to losses on account of misappropriation, misutilization, scrap, defectives, etc.
    • The recording and accounting for wages and labor are not done for different jobs, processes, products, departments. This creates problems in analyzing the costs associated with different activities.
    • It is difficult to know the behavior of costs in financial accounting as expenses not classify as direct; and, indirect and therefore cannot classify as controllable and uncontrol­lable. Cost management which is the most important objective of all business enterprises; cannot achieve with the aid of financial accounting alone.
    • Financial accounting does not possess an adequate system of standards to evaluate the per­formance of departments and employees working in departments. Standards need to develop for materials, labor, and overheads so that a firm can compare the work of workers, supervisors, and executives with what should have been done in an allotted period of time.
    Other limitations:
    • Financial accounting contains historical cost information that accumulates at the end of the accounting period. The historical cost is not reliable for predicting future earnings, solvency, or overall managerial effectiveness. Historical cost information is relevant but not adequate for all purposes.
    • Financial accounting does not provide information to analyze the losses due to various factors; such as idle plant and equipment, seasonal fluctuations in the volume of business, etc. It does not help management in taking important decisions about the expansion of business, dropping of a product, alternative methods of production, improvement in product, etc.
    • Also, Financial accounting does not provide the necessary cost data to determine the price of the product being manufactured or the service being rendered to the consumers.

    Despite the above limitations, financial accounting has utility and is an important and conceptually rich area. Because of growing business complexities and advances in knowledge of human behavior and decision processes; the scope and methods of financial accounting are chang­ing. Financial accounting theory and practice will probably broaden and improve considerably in the future.

    Financial Accounting Importance Nature and Limitations
    Financial Accounting Importance, Nature, and Limitations.
  • Financial Accounting: Meaning, Nature, and Scope

    Financial Accounting: Meaning, Nature, and Scope

    Financial accounting is a specialized branch of accounting that keeps track of a company’s financial transactions. Define with Explain it each one Concept of Financial Accounting Discuss the topic, Financial Accounting – Meaning, Definition, Nature, Scope, and Disadvantages of Limitations. Using standardized guidelines, the transactions record, summarize, and present in a financial report or financial statements such as an income statement or a balance sheet. Companies issue financial statements on a routine schedule. The statements are considered external because they are given to people outside of the company, with the primary recipients being owners/stockholders, as well as certain lenders. It also learns Accountability in Financial Management.

    Learn, Explain Financial Accounting: Meaning, Nature, Scope, and Disadvantages. 

    If a corporation’s stock is publicly traded, however, its financial statements [Hindi] (and other financial reporting) tend to widely circulate, and information will likely reach secondary recipients such as competitors, customers, employees, labor organizations, and investment analysts. It’s important to point out that the purpose of financial accounting is not to report the value of a company. Rather, its purpose is to provide enough information for others to assess the value of a company for themselves.

    Because external financial statements are used by a variety of people in a variety of ways, financial accounting has common rules known as accounting standards and as generally accepted accounting principles (GAAP). In the U.S., the Financial Accounting Standards Board (FASB) is an organization that develops accounting standards and principles. Corporations whose stock publicly trade must also comply with the reporting requirements of the Securities and Exchange Commission (SEC), an agency of the U.S. government. The similarity between Financial and Management Accounting.

    Meaning of Financial Accounting: 

    Accounting is the process of recording, classifying, summarizing, analyzing, and interpreting the financial transactions of the business for the benefit of management and those parties who are interested in business such as shareholders, creditors, bankers, customers, employees, and government. Thus, it concerns with financial reporting and decision-making aspects of the business.

    The American Institute of Certified Public Accountants Committee on Terminology proposed in 1941 that accounting may be defined as,

    “The art of recording, classifying and summarizing in a significant manner and in terms of money, transactions, and events which are, in part at least, of a financial character and interpreting the results thereof.”

    Financial Accounting:

    The term ‘Accounting’ unless otherwise specifically stated always refers to ‘Financial Accounting’. It is commonly carrying on in the general offices of a business. It concerns with revenues, expenses, assets, and liabilities of a business house. Also, they have the two-fold objective, viz,

    • To ascertain the profitability of the business, and
    • To know the financial position of the concern.

    Nature and Scope of Financial Accounting:

    Financial accounting is a useful tool to manage and to external users such as shareholders, potential owners, creditors, customers, employees, and government. It provides information regarding the results of its operations and the financial status of the business.

    The following are the functional areas of financial accounting:-

    1] Dealing with financial transactions:

    Accounting as a process deals only with those transactions which are measurable in terms of money. Anything which cannot be expressed in monetary terms does not form part of financial accounting however significant it is.

    2] Recording of information:

    Accounting is the art of recording financial transactions of a business concern. There is a limitation on human memory. It is not possible to remember all transactions of the business. Therefore, the information is recorded in a set of books called Journal and other subsidiary books and it is useful for management in its decision-making process.

    3] Classification of Data:

    The recorded data arrange in a manner to group the transactions of similar nature at one place so that full information of these items may collect under different heads. This is done in the book called ‘Ledger’. For example, we may have accounts called ‘Salaries’, ‘Rent’, ‘Interest’, Advertisement’, etc. To verify the arithmetical accuracy of such accounts, the trial balance prepare.

    4] Making Summaries:

    The classified information of the trial balance uses to prepare a profit and loss account and balance sheet in a manner useful to the users of accounting information. As well as, the final accounts prepare to find out the operational efficiency and financial strength of the business.

    5] Analyzing:

    It is the process of establishing the relationship between the items of the profit and loss account and the balance sheet. Also, the purpose is to identify the financial strength and weaknesses of the business. It also provides a basis for interpretation.

    6] Interpreting financial information:

    It is concerned with explaining the meaning and significance of the relationships established by the analysis. It should be useful to the users, to enable them to take correct decisions.

    7] Communicating the results:

    The profitability and financial position of the business as interpreted above communicate to the interest parties at regular intervals to assist them to make their conclusions.

    Disadvantages or Limitations of Financial Accounting:

    The concerns with the preparation of final accounts. Also, the business has become so complex that mere final accounts are not sufficient for meeting financial needs. It is like a post-mortem report. At the most, it can reveal what has happened so far, but it cannot exercise any control over the past happenings.

    The disadvantages of financial accounting are as follows:-

    1. It records only quantitative information.
    2. Records only the historical cost. The impact of future uncertainties has no place in financial accounting.
    3. It does not take into account price level changes.
    4. It provides information about the whole concern. Product-wise, process-wise, department-wise, or information of any other line of activity cannot obtain separately from financial accounting.
    5. Cost figures do not know in advance. Therefore, it is not possible to fix the price in advance. It does not provide information to increase or reduce the selling price.
    6. As there is no technique for comparing the actual performance with that of the budgeted targets, it is not possible to evaluate the performance of the business.
    7. It does not tell about the optimum or otherwise of the quantum of profit made and does not provide the ways and means to increase the profits.
    In other words;
    1. In case of loss, whether loss can reduce or convert into profit using cost control and cost reduction? It does not answer this question.
    2. Does it not reveal which departments are performing well? Which ones are incurring losses and how much is the loss in each case?
    3. It does not provide the cost of products manufactured
    4. There are no means provided by financial accounting to reduce the wastage.
    5. Can the expenses reduce which results in the reduction of product cost and if so, to what extent and how? No answer to these questions.
    6. It is not helpful to the management in taking strategic decisions like a replacement of assets, an introduction of new products, discontinuation of an existing line, expansion of capacity, etc.
    7. It provides ample scope for manipulation like overvaluation or undervaluation. This possibility of manipulation reduces reliability.
    8. It’s technical. A person not conversant with accounting has little utility of the financial accounts.

    Financial Accounting Meaning Nature and Scope

  • Financial Services: Meaning, Features, and Scope

    Financial Services: Meaning, Features, and Scope

    Financial services can be defined as the products and services offered by institutions. The Concept of Financial Services is Explain – their Meaning, Definition, Functions, Characteristics or Features, and Scope. Like banks of various kinds for the facilitation of various financial transactions and other related activities in the world of finance like loans, insurance, credit cards, investment opportunities, and money management as well as providing information on the stock market and other issues like market trends.

    Explain and Learn, Financial Services: Meaning, Characteristics or Features, and Scope.

    Meaning of Financial Services is the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual managers and some government-sponsored enterprises.

    Their companies are present in all economically developed geographic locations and tend to cluster in local, national, regional and international financial centers such as London, New York City, and Tokyo.

    Definition of Financial Services:

    Services and products provided to consumers; and businesses by financial institutions such as banks, insurance companies, brokerage firms, consumer finance companies, and investment companies all of which comprise the financial services industry.

    Facilities such as savings accounts, checking accounts, confirming, leasing, and money transfer, provided generally by banks, credit unions, and finance companies. Financial Services may simply define as services offered by financial and banking institutions like the loan, insurance, etc.

    The financial services concerns with the design and delivery of financial instruments and advisory services to individuals and businesses within the area of banking and related institutions, personal financial planning, investment, real assets, and insurance, etc.

    Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are banks, credit card companies, insurance companies, consumer finance companies, stock brokerages, investment funds, and some government-sponsored enterprises.

    Functions of Financial Services: 

    The following functions of financial services below are;

    • Facilitating transactions (exchange of goods and services) in the economy.
    • Mobilizing savings (for which the outlets would otherwise be much more limited).
    • Allocating capital funds (notably to finance productive investment).
    • Monitoring managers (so that the funds allocated will spend as envisaged).
    • Transforming risk (reducing it through aggregation and enabling it to carry by those more willing to bear it).

    Characteristics and Features of Financial Services:

    The following Characteristics and Features of Financial Services below are;

    1] Customer-Specific: 

    They are usually customer focused. The firms providing these services, study the needs of their customers in detail before deciding their financial strategy, giving due regard to costs, liquidity and maturity considerations. Financial services firms continuously remain in touch with their customers, so that they can design products that can cater to the specific needs of their customers.

    The providers of financial services constantly carry out market surveys so they can offer new products much ahead of need and impending legislation. Newer technologies are being used to introduce innovative, customer-friendly products and services which indicate that the concentration of the providers of financial services is on generating firm/customer-specific services.

    2] Intangibility: 

    In a highly competitive global environment, brand image is very crucial. Unless the financial institutions providing financial products; and services have a good image, enjoying the confidence of their clients, they may not be successful. Thus institutions have to focus on the quality and innovativeness of their services to build up their credibility.

    3] Concomitant: 

    Production of financial services and the supply of these services have to be concomitant. Both these functions i.e. production of new and innovative services and supplying of these services are to perform simultaneously.

    4] The tendency to Perish: 

    Unlike any other service, they do tend to perish and hence cannot be stored. They have to supply as required by the customers. Hence financial institutions have to ensure proper synchronization of demand and supply.

    5] People-Based Services: 

    Marketing of financial services has to be people-intensive and hence it’s subjected to the variability of performance or quality of service. The personnel in their organizations need to select based on their suitability and trained properly so that they can perform their activities efficiently and effectively.

    6] Market Dynamics: 

    The market dynamics depends to a great extent, on socioeconomic changes such as disposable income, the standard of living and educational changes related to the various classes of customers.

    Therefore, they have to constantly redefine and refine taking into consideration the market dynamics.

    The institutions providing their services, while evolving new services could be proactive in visualizing in advance what the market wants, or being reactive to the needs and wants of their customers.

    The Scope of Financial Services: 

    The following scope of Financial services, and cover a wide range of activities. They can broadly classify into two, namely:

    1] Traditional Activities: 

    Traditionally, the financial intermediaries have been rendering a wide range of services encompassing both capital and money market activities. They can group under two heads, viz.

    • Fund based activities and
    • Non-fund based activities.
    A. Fund based activities:

    The traditional services which come under fund based activities are the following:

    • Underwriting or investment in shares, debentures, bonds, etc. of new issues (primary market activities).
    • Dealing with secondary market activities.
    • Participating in money market instruments like commercial papers, certificates of deposits, treasury bills, discounting of bills, etc.
    • Involving in equipment leasing, hire purchase, venture capital, seed capital, etc.
    • Dealing in foreign exchange market activities. Non-fund based activities
    B. Non-fund based activities: 

    Financial intermediaries provide services-based on non-fund activities also. This can calls “fee-based” activity. Today customers, whether individual or corporate, not satisfy mere provisions of finance. They expect more from their companies. Hence a wide variety of services, are being provided under this head.

    They include:
    • Managing the capital issue i.e. management of pre-issue and post-issue activities relating to the capital issued by the SEBI guidelines and thus enabling the promoters to market their issue.
    • Making arrangements for the placement of capital and debt instruments with investment institutions.
    • The arrangement of funds from financial institutions for the client’s project cost or his working capital requirements.
    • Assisting in the process of getting all Government and other clearances.

    2] Modern Activities: 

    Besides the above traditional services, the financial intermediaries render innumerable services in recent times. Most of them are like the non-fund based activities. Because of the importance, these activities have been in brief under the head “New-financial-products-and-services”. However, some of the modern services provided by them are given in brief hereunder.

    1. Rendering project advisory services right from the preparation of the project report until the raising of funds for starting the project with necessary Government approvals.
    2. Planning for M&A and assisting with their smooth carry out.
    3. Guiding corporate customers in capital restructuring.
    4. Acting as trustees to the debenture holders.
    5. Recommending suitable changes in the management structure and management style to achieve better results.
    6. Structuring the financial collaborations/joint ventures by identifying suitable joint venture partners and preparing joint venture agreements.
    7. Rehabilitating and restructuring sick companies through an appropriate scheme of reconstruction and facilitating the implementation of the scheme.
    More things…
    1. Hedging of risks due to exchange rate risk, interest rate risk, economic risk, and political risk by using swaps and other derivative products.
    2. Managing in-portfolio of large Public Sector Corporations.
    3. Undertaking risk management services like insurance services, buy-back options, etc.
    4. Advising the clients on the questions of selecting the best source of funds taking into consideration the quantum of funds required, their cost, lending period, etc.
    5. Guiding the clients in the minimization of the cost of debt and the determination of the optimum debt-equity mix.
    6. Promoting credit rating agencies for rating companies that want to go public by the issue of the debt instrument.
    7. Undertaking services relating to the capital market, such as 1) Clearing services, 2) Registration and transfers, 3) Safe custody of securities, 4) Collection of income on securities.

    Financial Services Meaning Features and Scope
    Financial Services Meaning Features and Scope, Image credit from ilearnlot.com.