Subject Topic : FINANCIAL MANAGEMENT

10 Marks
1. Objectives and Functions of Financial Management

Objectives:

 Profit Maximization: Aim to maximize the company's profits, ensuring efficient use
of resources.
 Wealth Maximization: Focus on increasing the shareholders' wealth, measured by
the market value of shares.
 Liquidity Management: Ensure the company has sufficient cash flow to meet its
short-term obligations.
 Risk Management: Identify and mitigate financial risks to safeguard the company's
assets.

Functions:

 Financial Planning: Estimating capital requirements and determining the best

sources of funds.
 Investment Decisions: Evaluating and selecting investment opportunities that align
with the company's objectives.
 Financing Decisions: Determining the optimal capital structure by balancing debt and
equity.
 Dividend Decisions: Deciding the portion of profits to be distributed as dividends and
the portion to be retained.
 Financial Control: Monitoring and controlling financial activities to ensure efficient
use of resources.

2. Sources of Finance (Short-term and Long-term)

Short-term Sources:

 Trade Credit: Credit extended by suppliers allowing businesses to purchase goods

and pay later.
 Bank Overdrafts: Allow businesses to withdraw more than their account balance up
to an agreed limit.
 Cash Credit: Short-term loan provided by banks to meet working capital needs.
 Commercial Paper: Unsecured promissory notes issued by companies to raise short-
term funds.
 Bills of Exchange: Written orders used to pay for goods and services, often used in
international trade.

Long-term Sources:

 Equity Capital: Funds raised by issuing shares to the public or private investors.
  Debentures: Long-term debt instruments issued by companies to borrow funds.
 Term Loans: Loans provided by banks or financial institutions for a fixed term.
 Venture Capital: Investment in start-ups and small businesses with high growth
potential.
 Retained Earnings: Profits reinvested into the company rather than distributed as
dividends.

3. Significance of Venture Capital and Private Equity

Venture Capital (VC):

 Early-Stage Funding: Provides capital to start-ups and emerging companies with

high growth potential.
 Risk-Taking: VC firms assume higher risks in exchange for potential high returns.
 Value Addition: Beyond funding, VC firms offer strategic guidance and networking
opportunities.
 Exit Strategy: VCs aim for profitable exits through IPOs or sales to larger firms.

Private Equity (PE):

 Established Companies: Invests in mature companies to enhance value and

profitability.
 Control Acquisition: PE firms often acquire controlling stakes to implement strategic
changes.
 Operational Improvements: Focus on restructuring, cost-cutting, and strategic
guidance.
 Exit Strategy: PE firms seek exits through sales, mergers, or public offerings.

4. Capital Budgeting Techniques

 Net Present Value (NPV): Calculates the difference between present value of cash
inflows and outflows. A positive NPV indicates a profitable investment.
 Internal Rate of Return (IRR): The discount rate that makes the NPV of an
investment zero. A project is acceptable if IRR exceeds the required rate of return.
 Payback Period: Time taken to recover the initial investment from cash inflows.
Shorter payback periods are preferred.
 Profitability Index (PI): Ratio of present value of future cash flows to initial
investment. A PI greater than 1 indicates a profitable investment.

5. NPV or IRR Calculation Example

Problem:
A company is considering an investment that requires an initial outlay of ₹1,00,000 and is
expected to generate annual cash inflows of ₹30,000 for 5 years. The required rate of return is
10%.

Solution:

 NPV Calculation:

NPV = Σ (Cash inflow / (1 + r)^t) - Initial investment

NPV = (₹30,000 / (1 + 0.10)^1) + (₹30,000 / (1 + 0.10)^2) + ... + (₹30,000 / (1 +

0.10)^5) - ₹1,00,000

NPV ≈ ₹30,000 × 3.7908 - ₹1,00,000 = ₹1,13,724 - ₹1,00,000 = ₹13,724

Since NPV is positive, the investment is considered profitable.

6. Steps in the Capital Budgeting Process

1. Identification of Investment Opportunities: Recognize potential projects or

investments.
2. Project Evaluation: Assess the feasibility and profitability of each opportunity.
3. Selection of Projects: Choose projects that align with the company's strategic
objectives.
4. Capital Allocation: Determine the amount of capital to be invested in selected
projects.
5. Implementation: Execute the projects according to the planned schedule.
6. Monitoring and Control: Track the progress and performance of projects.
7. Post-Completion Audit: Evaluate the outcomes and learn from the experience.

7. Calculation of Cost of Capital Using Different Sources

Problem:

A company has the following capital structure:

 Equity (E): ₹5,00,000

 Debt (D): ₹3,00,000

The cost of equity (Re) is 12%, the cost of debt (Rd) is 8%, and the corporate tax rate (Tc) is
30%. Calculate the Weighted Average Cost of Capital (WACC).

Solution:

The formula for WACC is:

WACC=(EE+D×Re)+(DE+D×Rd×(1−Tc))\text{WACC} = \left( \frac{E}{E + D} \times R_e \right) + \left( \
frac{D}{E + D} \times R_d \times (1 - T_c) \right)

Substituting the given values:

WACC=(5,00,0005,00,000+3,00,000×12%)+(3,00,0005,00,000+3,00,000×8%×(1−0.30))\text{WACC}
= \left( \frac{5,00,000}{5,00,000 + 3,00,000} \times 12\% \right) + \left( \frac{3,00,000}{5,00,000 +
3,00,000} \times 8\% \times (1 - 0.30) \right) WACC=(0.625×12%)+(0.375×8%×0.70)\text{WACC} =
(0.625 \times 12\%) + (0.375 \times 8\% \times 0.70) WACC=7.5%+2.1%=9.6%\text{WACC} = 7.5\% +
2.1\% = 9.6\%

Therefore, the WACC is 9.6%.

8. EBIT-EPS Analysis with Illustration

Explanation:

EBIT-EPS analysis helps in determining the optimal capital structure by comparing the
Earnings before Interest and Taxes (EBIT) to Earnings per Share (EPS) under different
financing plans.

Illustration:

Consider a company with the following data:

 EBIT: ₹1,00,000
 Interest on Debt: ₹20,000
 Number of Shares: 10,000

Plan A (All Equity):

 Equity Capital: ₹1,00,000

 EPS: ₹1,00,00010,000=₹10\frac{₹1,00,000}{10,000} = ₹10

Plan B (Debt Financing):

 Debt: ₹50,000
 Interest: ₹20,000
 EPS: ₹1,00,000−₹20,00010,000=₹8\frac{₹1,00,000 - ₹20,000}{10,000} = ₹8

Analysis:

 Plan A results in higher EPS but no tax shield.

 Plan B offers a tax shield on interest but has higher financial risk.

The optimal capital structure balances the benefits of debt (tax shield) with the risks
associated with increased leverage.
9. Significance of Leverage in Financial Decisions

Explanation:

Leverage refers to the use of debt to finance a company's assets. It magnifies both potential
returns and potential risks.

Significance:

 Increased Returns: Leverage can amplify returns on equity if the return on assets
exceeds the cost of debt.
 Tax Shield: Interest on debt is tax-deductible, reducing the company's taxable
income.
 Risk Amplification: High leverage increases financial risk, especially if the company
faces downturns in business conditions.
 Cost of Capital: Optimal leverage can lower the overall cost of capital, enhancing
firm value.

Note: Over-leveraging can lead to financial distress and should be managed carefully.

10. Theories of Capital Structure

1. Modigliani-Miller Theorem:

 Proposition I: In a perfect market, the value of a firm is unaffected by its capital

structure.
 Proposition II: The cost of equity increases linearly with leverage, offsetting the
benefits of debt.

2. Trade-Off Theory:

 Firms balance the tax advantages of debt with the bankruptcy costs associated with
high leverage to determine an optimal capital structure.

3. Pecking Order Theory:

 Firms prefer internal financing first, then debt, and issue equity as a last resort, due to
asymmetric information and signalling effects.

4. Market Timing Theory:

 Firms time their financing decisions based on market conditions, issuing equity when
stock prices are high and debt when interest rates are low.
11. Determinants of a Sound Dividend Policy

Factors Influencing Dividend Policy:

 Profitability: Higher profits enable higher dividends.

 Cash Flow Position: Sufficient cash reserves are necessary for dividend payments.
 Growth Opportunities: Companies with high growth prospects may retain earnings
to fund expansion.
 Stability of Earnings: Firms with stable earnings are more likely to pay consistent
dividends.
 Tax Considerations: Tax treatment of dividends versus capital gains can influence
dividend policy.
 Shareholder Preferences: The preferences of shareholders regarding dividends
versus capital gains.
 Legal Restrictions: Legal constraints on dividend payments.

12. Classification and Sources of Dividends

Classification:

 Interim Dividends: Paid before the annual general meeting, based on interim
financial results.
 Final Dividends: Declared at the annual general meeting, based on annual financial
results.

Sources:

 Retained Earnings: Profits not distributed as dividends in previous years.

 Current Year Profits: Earnings generated in the current financial year.
 Sale of Assets: Proceeds from selling non-core assets.
 Borrowings: Funds raised through loans or debt instruments.

13. Factors Affecting Working Capital and Its Forecasting

Factors:

 Nature of Business: Seasonal businesses require more working capital during peak
seasons.
 Production Cycle: Longer production cycles increase working capital requirements.
 Credit Policy: Liberal credit policies can lead to higher receivables and increased
working capital.
 Inventory Management: High levels of inventory increase working capital needs.
 Operating Efficiency: Efficient operations reduce the need for working capital.

Forecasting:
  Percentage of Sales Method: Estimating working capital as a percentage of
projected sales.
 Operating Cycle Method: Analysing the time taken to convert raw materials into
cash.
 Regression Analysis: Using historical data to predict future working capital needs.

Problem:

If a company expects sales of ₹10,00,000 and the working capital to sales ratio is 20%, the
required working capital is:

Working Capital=₹10,00,000×20%=₹2,00,000\text{Working Capital} = ₹10,00,000 \times 20\% =

₹2,00,000

14. Sources of Working Capital Financing

Short-Term Sources:

1. Trade Credit: Credit extended by suppliers allowing businesses to purchase goods

and pay later.
2. Bank Overdrafts: Allow businesses to withdraw more than their account balance up
to an agreed limit.
3. Cash Credit: Short-term loan provided by banks to meet working capital needs.
4. Commercial Paper: Unsecured promissory notes issued by companies to raise short-
term funds.
5. Bills of Exchange: Written orders used to pay for goods and services, often used in
international trade.

Long-Term Sources:

1. Equity Capital: Funds raised by issuing shares to the public or private investors.
2. Debentures: Long-term debt instruments issued by companies to borrow funds.
3. Term Loans: Loans provided by banks or financial institutions for a fixed term.
4. Venture Capital: Investment in start-ups and small businesses with high growth
potential.
5. Retained Earnings: Profits reinvested into the company rather than distributed as
dividends.

15. Cash, Receivables, and Inventory Management

Cash Management:

 Objective: Ensure sufficient liquidity to meet day-to-day operations without holding

excessive cash.
 Techniques:
 o Cash Budgeting: Forecasting cash inflows and outflows to plan for surpluses
or deficits.
o Cash Conversion Cycle: Time taken to convert investments in inventory and
other resources into cash flows from sales.
o Cash Flow Forecasting: Predicting future cash requirements to avoid
shortages or surpluses.

Receivables Management:

 Objective: Optimize the collection of accounts receivable to maintain liquidity.

 Techniques:
o Credit Policy: Establishing criteria for extending credit to customers.
o Collection Period: Monitoring the average time taken to collect receivables.
o Aging Analysis: Categorizing receivables based on the length of time
outstanding.
o Discounts for Early Payment: Offering incentives for customers to pay
early.

Inventory Management:

 Objective: Maintain optimal inventory levels to meet customer demand without

overstocking.
 Techniques:
o Economic Order Quantity (EOQ): Determining the optimal order quantity
that minimizes total inventory costs.
o Just-in-Time (JIT): Ordering inventory to arrive just as it is needed in the
production process.
o ABC Analysis: Classifying inventory items based on their importance and
value.
o Inventory Turnover Ratio: Measuring how often inventory is sold and
replaced over a period.

Subject : HUMAN RESOURCE MANAGEMENT

1. Functions of Human Resource Management

Human Resource Management (HRM) encompasses various functions aimed at optimizing

employee performance and ensuring organizational success. Key functions include:

 Recruitment and Selection: Identifying staffing needs and hiring suitable candidates.
 Training and Development: Enhancing employee skills and knowledge.
 Performance Management: Evaluating and improving employee performance.
  Compensation and Benefits: Designing competitive salary structures and benefits.
 Employee Relations: Maintaining positive employer-employee relationships.
 Compliance: Ensuring adherence to labour laws and regulations.
 Strategic HR Planning: Aligning HR strategies with organizational goals.

These functions collectively contribute to building a motivated and efficient workforce.

2. Strategic Human Resource Management (SHRM)

Strategic Human Resource Management (SHRM) involves aligning HR practices with the
strategic objectives of the organization. Key aspects include:

 Talent Acquisition: Attracting and retaining skilled employees.

 Training and Development: Equipping employees with necessary skills for future
roles.
 Performance Management: Setting clear expectations and evaluating performance.
 Succession Planning: Preparing for future leadership needs.
 Employee Engagement: Fostering a committed and motivated workforce.

SHRM ensures that HR contributes to achieving long-term business goals.

3. Need and Scope of Human Resource Audit

A Human Resource Audit is a systematic review of HR policies, procedures, and practices to

assess their effectiveness. Its need and scope include:

 Compliance: Ensuring adherence to labour laws and regulations.

 Efficiency: Identifying areas for process improvement.
 Alignment: Ensuring HR practices align with organizational goals.
 Risk Management: Identifying potential legal or operational risks.

Regular audits help in optimizing HR functions and mitigating risks.

4. Process and Importance of Human Resource Planning

Human Resource Planning (HRP) is the process of forecasting an organization's future

human resource needs. The process includes:

 Forecasting Demand: Estimating future staffing requirements.

 Analysing Supply: Assessing the availability of internal and external candidates.
 Identifying Gaps: Recognizing discrepancies between demand and supply.
 Developing Strategies: Formulating plans to bridge the gaps.
HRP is crucial for ensuring that the organization has the right number of employees with the
right skills at the right time.

5. Recruitment and Selection Process with Merits and Demerits

The recruitment and selection process involves attracting and choosing candidates for
employment. Steps include:

 Job Analysis: Determining the requirements of the job.

 Sourcing Candidates: Advertising job openings and sourcing applicants.
 Screening: Shortlisting candidates based on qualifications.
 Interviews: Assessing candidates' suitability through interviews.
 Selection: Choosing the most suitable candidate.

Merits:

 Ensures a good fit between the candidate and the job.

 Reduces turnover by selecting the right candidates.

Demerits:

 Time-consuming and costly process.

 Potential for bias in selection.

6. Employee Life Cycle from Placement to Resignation

The employee life cycle encompasses all stages an employee goes through in an organization:

 Recruitment: Attracting and hiring the right talent.

 On-boarding: Integrating new employees into the organization.
 Development: Providing training and growth opportunities.
 Retention: Implementing strategies to keep employees engaged.
 Separation: Managing resignations, retirements, or terminations.

Managing each stage effectively ensures a positive employee experience and organizational
success.

7. Types and Importance of Training Methods in an Organization

Training methods are approaches used to enhance employees' skills and knowledge. Common
types include:

 On-the-Job Training: Learning by performing tasks under supervision.

  Off-the-Job Training: Structured programs away from the work environment.
 E-Learning: Online courses and modules.
 Simulations: Replicating real-world scenarios for practice.

Effective training methods lead to improved performance, increased productivity, and

employee satisfaction.

8. Process of Career Management with Examples

Career management involves planning and managing one's career path. The process includes:

 Self-Assessment: Identifying strengths, weaknesses, and interests.

 Goal Setting: Establishing short-term and long-term career objectives.
 Skill Development: Acquiring necessary skills and qualifications.
 Networking: Building professional relationships.
 Job Search: Exploring and applying for suitable opportunities.

For example, an employee may pursue additional certifications to qualify for a managerial
position.

9. Contribution of Training and Development to Employee Growth

Training and development programs play a vital role in employee growth by:

 Enhancing Skills: Equipping employees with the latest skills and knowledge.
 Career Advancement: Preparing employees for higher responsibilities.
 Job Satisfaction: Increasing confidence and job satisfaction.
 Organizational Success: Contributing to overall business performance.

Investing in training and development leads to a competent and motivated workforce.

10. Various Methods of Performance Appraisal with Examples

Performance appraisal is a systematic process to evaluate and document an employee's job

performance. Various methods include:

1. Graphic Rating Scale: This method involves rating employees on a scale for various
traits like reliability, initiative, and teamwork. For example, a scale from 1 to 5 where
1 is 'Poor' and 5 is 'Excellent'.
2. 360-Degree Feedback: Feedback is gathered from an employee's supervisors, peers,
subordinates, and sometimes clients. This holistic approach provides a comprehensive
view of performance.
 3. Management by Objectives (MBO): Employees and managers set specific,
measurable goals together. Performance is evaluated based on the achievement of
these objectives.
4. Behaviourally Anchored Rating Scale (BARS): This method combines elements of
critical incidents and graphic rating scales. It uses specific behavioural examples to
define each level of performance.
5. Critical Incident Method: Managers record specific instances of effective or
ineffective behaviour and use these incidents as a basis for evaluation.
6. Self-Assessment: Employees evaluate their own performance, which can then be
discussed with supervisors. This encourages self-reflection and personal development.
7. Peer Review: Colleagues assess each other's performance. This method is particularly
useful in team-based environments.
8. Assessment Centre’s: Employees undergo a series of exercises and simulations that
mimic job tasks. Their performance is observed and evaluated by assessors.

Each method has its advantages and is chosen based on the organization's needs and the
specific role being evaluated.

11. Role of Feedback in Performance Management

Feedback is a critical component of performance management, serving several key purposes:

 Clarification of Expectations: Regular feedback helps employees understand what is

expected of them and how their performance aligns with organizational goals.
 Motivation and Engagement: Constructive feedback can motivate employees to
improve their performance and increase engagement.
 Development and Growth: Feedback identifies areas for improvement, allowing
employees to develop new skills and competencies.
 Recognition and Reinforcement: Positive feedback reinforces desired behaviour’s
and acknowledges employee contributions.
 Continuous Improvement: Ongoing feedback fosters a culture of continuous
improvement, leading to enhanced organizational performance.

Effective feedback should be timely, specific, and constructive, focusing on behaviour’s and
outcomes rather than personal attributes.

12. Effectiveness of MBO as an Appraisal Tool

Management by Objectives (MBO) is an appraisal method where employees and managers

set specific, measurable goals together. Its effectiveness includes:

 Alignment with Organizational Goals: Ensures that individual objectives are

aligned with the company's strategic goals.
 Clear Expectations: Provides clear performance expectations, reducing ambiguity.
 Employee Involvement: Encourages employee participation in goal setting,
increasing commitment and motivation.
  Measurable Outcomes: Facilitates objective assessment of performance based on
goal achievement.

However, challenges include:

 Time-Consuming: The process of setting and reviewing goals can be time-intensive.

 Overemphasis on Quantitative Goals: May neglect qualitative aspects of
performance.
 Potential for Short-Term Focus: Employees might focus on short-term goals at the
expense of long-term objectives.

Despite these challenges, MBO remains a widely used and effective appraisal tool when
implemented thoughtfully.

13. Process of Wage and Salary Calculation

Wage and salary calculation involves determining the compensation an employee receives for
their work. The process includes:

1. Job Analysis: Assessing the responsibilities, skills, and requirements of the job.
2. Job Evaluation: Determining the relative worth of the job within the organization.
3. Market Survey: Researching industry standards and competitor compensation
packages.
4. Salary Structure Development: Creating pay grades and ranges based on job
evaluation and market data.
5. Individual Compensation Determination: Assigning a specific salary or wage to the
employee based on their experience, qualifications, and performance.
6. Benefits and Allowances: Incorporating additional compensation elements like
bonuses, health insurance, and retirement plans.
7. Compliance with Legal Standards: Ensuring adherence to labour laws and
regulations regarding minimum wage, overtime, and other compensation-related
matters.

Regular reviews and adjustments are necessary to maintain competitiveness and fairness in
compensation.

14. Types of Rewards and Incentives with Examples

Rewards and incentives are used to motivate employees and recognize their contributions.
Types include:

 Monetary Rewards:
o Bonuses: One-time payments for achieving specific goals or milestones.
o Raises: Permanent increases in salary based on performance or tenure.
o Profit Sharing: Distributing a portion of company profits among employees.
  Non-Monetary Rewards:
o Recognition Programs: Awards or public acknowledgment of achievements.
o Career Development Opportunities: Providing training or advancement
prospects.
o Flexible Work Arrangements: Offering options like remote work or flexible
hours.
 Intrinsic Rewards:
o Job Enrichment: Enhancing job roles to increase responsibility and
satisfaction.
o Autonomy: Allowing employees more control over their work.

Effective reward systems align with organizational goals and employee values, fostering
motivation and loyalty.

15. Role of Compensation in Employee Motivation and Retention

Introduction

Compensation encompasses the total rewards employees receive for their work, including
base salary, bonuses, benefits, and non-monetary perks. A well-structured compensation
system is crucial for motivating employees and retaining top talent.

Motivation

1. Fair and Competitive Pay: Employees expect compensation that reflects their skills,
experience, and job responsibilities. Fair pay leads to higher job satisfaction and
motivation. Conversely, perceived inequities can lead to dissatisfaction and decreased
motivation.
2. Performance-Based Incentives: Bonuses, commissions, and profit-sharing link
compensation to individual or team performance. These incentives encourage
employees to excel and align their efforts with organizational goals.
3. Non-Monetary Rewards: Benefits such as health insurance, retirement plans, and
paid time off contribute to overall job satisfaction and well-being, indirectly
motivating employees.

Retention

1. Attracting Talent: Competitive compensation packages help attract skilled

professionals. A well-compensated workforce is more likely to stay with the
organization, reducing turnover rates.
2. Employee Engagement: Employees who feel fairly compensated are more engaged
and committed to their roles. Engaged employees are less likely to seek opportunities
elsewhere.
3. Long-Term Commitment: Retention bonuses, stock options, and other long-term
incentives encourage employees to remain with the company for extended periods.
These incentives align employees' interests with the company's success.

Conclusion
Compensation is a fundamental element in human resource management that directly
influences employee motivation and retention. Organizations that offer fair, competitive, and
performance-linked compensation are better positioned to attract and retain top talent, leading
to sustained organizational success.

Subject Topic: INNOVATION AND

ENTREPRENEURSHIP

1. Entrepreneurial Scene in India

India's entrepreneurial landscape has evolved significantly, driven by a young population,

digital transformation, and supportive government policies. Cities like Bengaluru, Delhi, and
Mumbai have emerged as start-up hubs, fostering innovation in sectors such as fin-tech, Ed-
tech, and health-tech. Initiatives like Start-up India and Stand-Up India have provided
financial support and mentorship to budding entrepreneurs. The rise of platforms like Shark
Tank India has further encouraged entrepreneurial spirit by showcasing success stories and
offering funding opportunities.

India's entrepreneurial landscape is dynamic, driven by innovation, technology, and a spirit of

resilience. Here's a brief overview with notable examples:

1. Tech-Driven Start-ups

 Ola Electric: Founded by Bhavish Aggarwal, Ola Electric has become a leader in
electric mobility, aiming to revolutionize urban transportation with sustainable
solutions.
 Moglix: Rahul Garg's Moglix is a B2B e-commerce platform that has transformed the
industrial supply chain, achieving a valuation of $2.6 billion by 2022.

2. EdTech Innovations
  Byju's: Co-founded by Byju Raveendran and Divya Gokulnath, Byju's has become a
global leader in online education, reaching millions of students worldwide.

3. Consumer Goods & E-Commerce

 Mama earth: Varun and Ghazal Alagh launched Mama earth to offer toxin-free
personal care products, rapidly expanding into a trusted brand across India.
 Nykaa: Founded by Falguni Nayar, Nykaa has redefined beauty retail in India,
becoming the first unicorn start-up led by a woman.

4. Agriculture & Sustainability

 Seed Basket: Chandana Gade started Seed Basket from her balcony, providing
quality seeds for home gardening. With an investment of ₹1 lakh, her business now
serves over 30,000 customers and has a turnover of ₹1 crore.

5. Government Initiatives

 Stand-Up India Scheme: Launched in 2016, this initiative supports women and
SC/ST entrepreneurs by providing loans between ₹10 lakh and ₹1 crore for setting up
Greenfield enterprises in manufacturing, trading, or services sectors.

These examples highlight India's diverse entrepreneurial ecosystem, where innovation meets
opportunity across various sectors.

2. Case Histories of Two Successful Indian Entrepreneurs

Ritesh Agarwal (OYO Rooms): At 19, Ritesh founded OYO Rooms, a network of budget
hotels. Starting with a single hotel in 2013, OYO expanded rapidly, becoming one of the
world's largest hotel chains. His focus on standardizing budget accommodations and
leveraging technology played a pivotal role in OYO's success.

Divya Gokulnath (BYJU'S): Co-founder of BYJU'S, Divya transformed the education

sector by offering interactive learning solutions. Under her leadership, BYJU'S grew from a
small start-up to a global Ed-tech giant, amassing millions of users worldwide. Her
commitment to quality education and innovative teaching methods has been instrumental in
the company's growth.

3. Entrepreneur vs. Intrapreneur

Aspect Entrepreneur Intrapreneur

Definition Owns and operates a business venture Innovates within an existing organization
 Aspect Entrepreneur Intrapreneur

Risk Bears full financial and operational risk Limited risk, as part of a larger entity

Resources Manages all resources independently Utilizes company's resources and support

Example Ritesh Agarwal (OYO Rooms) Google employees developing new products

4. Creating and Identifying Opportunities for Innovation

Opportunities for innovation can be identified through:

 Market Research: Analysing consumer needs and gaps in the market.

 Trend Analysis: Observing emerging technologies and societal shifts.
 Problem-Solving: Addressing existing challenges with novel solutions.
 Collaboration: Engaging with diverse teams to generate creative ideas.

For instance, the rise of remote work during the COVID-19 pandemic led to innovations in
virtual collaboration tools and platforms.

5. Licensing and Patent Rights in Innovation

Licensing allows innovators to grant permission to others to use their inventions, typically in
exchange for royalties. Patents provide exclusive rights to an inventor for a specific period,
usually 20 years, preventing others from making, using, or selling the invention without
consent. In India, the Indian Patent Office oversees the granting and protection of patents.
These mechanisms encourage innovation by ensuring creators can benefit financially from
their inventions.

6. Creating New Technological Innovations and the Role of Intrapreneurship

The process involves:

 Idea Generation: Brainstorming and research to develop new concepts.

 Development: Designing and prototyping the technology.
 Testing: Evaluating functionality and feasibility.
 Implementation: Deploying the technology in real-world scenarios.

Intrapreneurship plays a crucial role by fostering an environment within organizations where

employees are encouraged to innovate and develop new technologies, as seen in companies
like Google with its 20% innovation time policy.
7. Opportunity Identification, Recognition, Screening, and Seizing

 Identification: Spotting potential opportunities through research and observation.

 Recognition: Assessing the viability and relevance of the identified opportunity.
 Screening: Evaluating the opportunity against criteria like market demand,
feasibility, and profitability.
 Seizing: Taking action to capitalize on the opportunity, such as launching a product or
service.

Successful entrepreneurs often iterate through these steps to refine their business models and
offerings.

8. Conducting Feasibility Analysis for New Ventures

Feasibility analysis involves assessing the viability of a new business idea through:

 Market Feasibility: Evaluating demand, competition, and target audience.

 Technical Feasibility: Assessing the technical requirements and capabilities.
 Financial Feasibility: Estimating start-up costs, revenue projections, and funding
sources.
 Operational Feasibility: Analysing the operational processes and logistics.

This comprehensive analysis helps in making informed decisions and minimizing risks.

9. Marketing Feasibility for New Products

Marketing feasibility examines:

 Market Demand: Understanding customer needs and preferences.

 Competitive Analysis: Identifying existing competitors and their offerings.
 Pricing Strategy: Determining optimal pricing based on cost and market standards.
 Distribution Channels: Selecting appropriate channels to reach the target audience.
 Promotional Strategies: Planning marketing campaigns to create awareness and
drive sales.

This analysis ensures that the product meets market expectations and has a potential customer
base.

10. Process of Developing a Business Plan

Introduction:
A business plan is a comprehensive document that outlines a company's objectives,
strategies, and financial forecasts. It serves as a roadmap for the business and is essential for
securing investors and guiding operations.

Key Components:

1. Executive Summary: A brief overview of the business, including its mission, vision,
and the value proposition.
2. Business Description: Details about the company, its products or services, market
needs, and the business model.
3. Market Analysis: Research on industry trends, target market demographics, and
competitive landscape.
4. Organization and Management: Structure of the company, detailing the
management team and their roles.
5. Products or Services Line: Information on the products or services offered,
including their lifecycle and benefits.
6. Marketing and Sales Strategy: Plans for promoting and selling the product or
service, including pricing, advertising, and sales tactics.
7. Funding Request: If seeking funding, details on the amount needed, potential future
funding requirements, and how funds will be used.
8. Financial Projections: Financial forecasts including income statements, cash flow
statements, and balance sheets for the next three to five years.
9. Appendix: Additional documents such as resumes, permits, lease agreements, legal
documentation, and other relevant materials.

Conclusion:
A well-structured business plan not only provides a clear direction for the business but also
instils confidence in potential investors and stakeholders.

11. Guidelines for Preparing and Presenting a Business Plan

Preparation:

1. Research Thoroughly: Understand the market, industry trends, and customer needs.
2. Define Clear Objectives: Set specific, measurable, achievable, relevant, and time-
bound (SMART) goals.
3. Develop a Realistic Financial Plan: Ensure financial projections are based on
realistic assumptions and data.
4. Highlight Unique Selling Proposition (USP): Clearly define what sets your business
apart from competitors.

Presentation:

1. Be Concise: Keep the presentation focused and to the point.

2. Use Visual Aids: Incorporate charts, graphs, and slides to illustrate key points.
3. Know Your Audience: Tailor the presentation to the interests and concerns of the
audience.
4. Practice Delivery: Rehearse the presentation to ensure smooth delivery and
confidence.
Conclusion:
Effective preparation and presentation of a business plan can significantly increase the
chances of securing funding and support.

12. Sample Business Plan Format for a Small Enterprise

1. Executive Summary:
Briefly describe the business, its mission, and the products or services offered.

2. Company Description:
Provide detailed information about the business, including its legal structure, ownership, and
the market needs it addresses.

3. Market Research:
Analyse the target market, customer demographics, and competitive landscape.

4. Marketing Strategy:
Outline plans for pricing, promotion, and distribution of products or services.

5. Operational Plan:
Describe the day-to-day operations, including location, facilities, and equipment.

6. Management and Organization:

Detail the management team, their roles, and responsibilities.

7. Financial Plan:
Include income statements, cash flow projections, and balance sheets.

8. Appendices:
Provide any additional information or documents relevant to the business.

Conclusion:
This format serves as a comprehensive guide for structuring a business plan for a small
enterprise.

13. Role of Banks and Credit Appraisal Process in New Ventures

Role of Banks:

 Funding Source: Provide loans and credit facilities to new ventures.

 Financial Advice: Offer guidance on financial management and planning.
 Risk Assessment: Evaluate the financial viability and risks associated with the
venture.

Credit Appraisal Process:

 1. Application Review: Examine the loan application and business plan.
2. Financial Analysis: Assess the financial health of the business, including cash flow
and profitability.
3. Risk Assessment: Identify potential risks and mitigation strategies.
4. Decision Making: Based on the analysis, decide on loan approval and terms.

Conclusion:
Banks play a crucial role in supporting new ventures through financial assistance and
advisory services.

14. Institutional Arrangements for Entrepreneurship Encouragement

Government Initiatives:

 Start-up India: A flagship initiative by the Government of India to promote

entrepreneurship through funding support and simplified regulations.
 Kerala Start-up Mission: A state-level agency dedicated to fostering
entrepreneurship and incubation activities in Kerala.

Educational Institutions:

 Entrepreneurship Cells: Many universities and colleges have established

entrepreneurship cells to mentor and support student start-ups.

Private Sector Initiatives:

 Incubators and Accelerators: Private organizations that provide resources,

mentorship, and funding to start-ups.

Conclusion:
A collaborative ecosystem involving government, educational institutions, and the private
sector is essential for nurturing entrepreneurship.

Capital Structure

Definition:
Capital structure refers to the mix of debt and equity a company uses to finance its operations
and growth. It determines the financial leverage of the company and affects its risk and return
profile.

Components:

 Debt: Includes loans, bonds, and other borrowings that must be repaid with interest.
 Equity: Represents ownership in the company, including common stock, preferred
stock, and retained earnings.
Importance:

 Risk Management: Balancing debt and equity helps manage financial risk.
 Cost of Capital: The right mix can minimize the company's weighted average cost of
capital (WACC).
 Financial Flexibility: A well-structured capital base provides flexibility for future
financing.

Examples:

 Amazon: Utilizes a balanced mix of debt and equity, leveraging its strong cash flows
to fund expansion without over-relying on debt.
 Tesla: Initially relied heavily on equity financing to fund research and development,
later incorporating debt to support rapid growth.

Working Capital Management

Definition:
Working capital management involves managing a company's short-term assets and liabilities
to ensure sufficient liquidity to carry out day-to-day operations.

Components:

 Cash Management: Ensuring adequate cash flow to meet operational needs.

 Inventory Management: Balancing inventory levels to meet demand without
overstocking.
 Receivables Management: Efficient collection of accounts receivable to maintain
cash flow.
 Payables Management: Managing accounts payable to optimize cash outflows.

Importance:

 Liquidity: Ensures the company can meet its short-term obligations.

 Operational Efficiency: Streamlines operations by maintaining optimal levels of
assets and liabilities.
 Profitability: Efficient management can reduce costs and improve profitability.

Examples:

 Apple Inc.: Maintains a strong working capital position through efficient inventory
management and robust cash reserves.
 Toyota: Uses just-in-time inventory systems to minimize inventory costs and improve
cash flow.

Conclusion:
A well-balanced capital structure and effective working capital management are crucial for a
company's financial health and operational success. They enable the company to manage
risks, minimize costs, and ensure liquidity, thereby supporting sustainable growth and
profitability.

Subject Topic : MARKETING MANAGEMENT

1. Evolution of Marketing Management Philosophies

Introduction:
Marketing management philosophies have evolved over time to align with changing market
dynamics and consumer expectations.

Key Phases:

 Production Concept (Pre-1920s): Emphasized mass production and economies of

scale, assuming that consumers favoured widely available and affordable products.
 Product Concept (1920s–1940s): Focused on product quality and innovation,
believing that superior products would naturally attract customers.
 Selling Concept (1950s–1960s): Prioritized aggressive sales techniques to persuade
customers to purchase existing products.
 Marketing Concept (1950s–1970s): Shifted focus to understanding and meeting
customer needs and wants, leading to customer-centric strategies.
 Societal Marketing Concept (1970s–2000s): Introduced the idea of balancing
company profits, customer satisfaction, and societal welfare.
 Holistic Marketing Concept (2000s–Present): Emphasizes integrated marketing
strategies that consider all stakeholders and the broader environment.
 Conclusion:
The evolution reflects a transition from a product-centric to a customer and society-
oriented approach, highlighting the importance of adaptability in marketing strategies.

2. Major Challenges Faced by Marketers in the Digital Age

Introduction:
The digital age has transformed marketing, presenting new opportunities and challenges.

Key Challenges:

 Data Privacy Concerns: Increasing regulations and consumer awareness around data
protection.
 Ad Fatigue: Consumers are overwhelmed by excessive digital advertisements,
leading to decreased engagement.
 Platform Dependency: Over-reliance on platforms like Google and Facebook can be
risky due to algorithm changes.
 Cybersecurity Threats: Rising incidents of data breaches and hacking affecting
brand trust.
 Keeping Up with Technology: Rapid technological advancements require constant
adaptation and investment.

Conclusion:
Marketers must navigate these challenges by adopting ethical practices, diversifying
strategies, and staying informed about technological trends.

3. Comparison: Traditional Marketing vs. E-Marketing vs. Social Media

Marketing

Traditional Marketing:

 Channels: TV, radio, print media.

 Reach: Broad, less targeted.
 Cost: Generally higher.(Wikipedia)
 Engagement: Limited interaction with consumers.

E-Marketing:

 Channels: Websites, emails, search engines.

 Reach: Global, more targeted.
 Cost: More cost-effective than traditional methods.
 Engagement: Allows for personalized communication.

Social Media Marketing:

 Channels: Platforms like Facebook, Instagram, Twitter.

 Reach: Highly interactive and community-driven.
 Cost: Varies; can be low with organic strategies.
 Engagement: High, with real-time interactions and feedback.

Conclusion:
While traditional marketing offers broad reach, e-marketing and social media marketing
provide more targeted, cost-effective, and interactive platforms for engaging with consumers.
4. Marketing Management Process

Introduction:
The marketing management process involves planning, executing, and monitoring marketing
strategies to achieve organizational goals.

Steps:

1. Market Research: Gathering and analyzing data about market trends, consumer
behavior, and competitors.
2. Market Segmentation: Dividing the market into distinct groups based on
demographics, psychographics, and behavior.
3. Targeting: Selecting the most appropriate segments to focus marketing efforts on.
4. Positioning: Crafting a unique image and value proposition for the product in the
minds of the target audience.
5. Marketing Mix (4Ps): Developing strategies for Product, Price, Place, and
Promotion.
6. Implementation: Executing the marketing plan through coordinated actions.
7. Control and Evaluation: Monitoring performance and making necessary
adjustments to strategies.

Conclusion:
A systematic approach to marketing management ensures alignment with business objectives
and responsiveness to market dynamics.

5. Role of Marketing Research in Decision Making

Introduction:
Marketing research provides critical insights that inform strategic and tactical decisions.

Key Roles:

 Identifying Market Opportunities: Helps in recognizing unmet needs and potential

areas for growth.
 Understanding Consumer Behaviour: Provides data on consumer preferences,
motivations, and purchasing patterns.
 Evaluating Marketing Performance: Assesses the effectiveness of marketing
campaigns and strategies.
 Risk Reduction: Informs decisions, reducing uncertainty and potential risks.
 Competitive Analysis: Offers insights into competitor strategies and market
positioning.

Conclusion:
Marketing research is essential for making informed decisions that align with market
demands and organizational goals.
6. Techniques of Sales Forecasting

Introduction:
Sales forecasting predicts future sales to aid in planning and decision-making.

Techniques:

 Qualitative Methods: Expert opinions, Delphi method, market research.

 Quantitative Methods: Time series analysis, regression analysis, moving averages.
 Causal Models: Identifying relationships between sales and influencing factors.

Examples:

 Time Series Analysis: Analysing historical sales data to predict future trends.
 Market Research: Conducting surveys to gauge consumer interest and potential
sales.

Conclusion:
A combination of methods enhances forecasting accuracy, guiding effective marketing
strategies.

7. Major Factors Affecting Consumer Buying Behaviour

Introduction:
Consumer buying behaviour is influenced by various factors that affect purchasing decisions.

Factors:

 Cultural: Culture, subculture, and social class.

 Social: Family, reference groups, and social roles.
 Personal: Age, occupation, lifestyle, and economic situation.
 Psychological: Motivation, perception, learning, beliefs, and attitudes.

Examples:

 Cultural: Preference for vegetarian food in certain cultures.

 Psychological: Brand loyalty influencing repeat purchases.

Conclusion:
Understanding these factors helps marketers tailor strategies to meet consumer needs
effectively.

8. Process of Market Segmentation, Targeting, and Positioning (STP)

Introduction:
The STP model helps in identifying and reaching the right customers.

Steps:

1. Segmentation: Dividing the market into distinct groups based on characteristics.

2. Targeting: Selecting the segment(s) to focus marketing efforts on.
3. Positioning: Crafting a unique image and value proposition for the product in the
minds of the target audience.

Examples:

 Segmentation: Dividing the market based on age, income, or lifestyle.

 Positioning: Positioning a product as a premium offering in the market.

Conclusion:
The STP process ensures that marketing strategies are aligned with consumer needs and
preferences.

9. Concept and Strategies of Competitive Marketing

Introduction:
Competitive marketing involves strategies to outperform competitors and gain market share.

Strategies:

 Cost Leadership: Offering products at the lowest cost to attract price-sensitive

customers.
 Differentiation: Providing unique products that stand out from competitors.
 Focus: Targeting a specific market segment effectively.

Examples:

 Cost Leadership: Walmart's strategy of offering low-priced products.

 Differentiation: Apple's unique product designs and features.

Conclusion:
Adopting the right competitive strategy helps businesses achieve a sustainable competitive
advantage.

10. Product Decisions in Consumer and Industrial Products

Introduction:
Product decisions vary between consumer and industrial products based on usage and buyer
behaviour.
Consumer Products:

 Convenience Goods: Low-priced items bought frequently.

 Shopping Goods: Products that require comparison before purchase.
 Specialty Goods: Unique products with brand loyalty.

Industrial Products:

 Materials and Parts: Raw materials used in production.

 Capital Items: Long-lasting goods like machinery.
 Supplies and Services: Operating supplies and maintenance services.

Examples:

 Consumer: Smartphones, clothing, groceries.

 Industrial: Industrial machinery, raw materials, office supplies.

Conclusion:
Understanding the differences aids in making appropriate product decisions for each market.

11. Various Pricing Strategies Adopted by Companies

Introduction:
Pricing strategies are crucial in determining a product's market position and profitability.

Strategies:

 Penetration Pricing: Setting a low price to enter a competitive market and gain
market share.
 Price Skimming: Setting a high price initially and lowering it over time.
 Psychological Pricing: Pricing that considers the psychological impact on
consumers.
 Discount and Allowance Pricing: Reducing prices to encourage purchases.

Examples:

 Penetration Pricing: Netflix's initial low subscription fees.

 Price Skimming: Apple's pricing strategy for new iPhone models.

Conclusion:
Choosing the right pricing strategy aligns with business objectives and market conditions.

12. Product Life Cycle Strategies with Suitable Examples

Introduction:
The Product Life Cycle (PLC) describes the stages a product goes through from introduction
to decline.

Stages and Strategies:

1. Introduction:
o Strategy: Focus on awareness and product trials.
o Example: Launch of a new smartphone model.
2. Growth:
o Strategy: Increase market share and differentiate from competitors.
o Example: Apple's iPhone gaining popularity.
3. Maturity:
o Strategy: Maximize profit while defending market share.
o Example: Coca-Cola maintaining its market position.
4. Decline:
o Strategy: Decide whether to rejuvenate, discontinue, or harvest the product.
o Example: Discontinuation of older mobile phone models.

Conclusion:
Understanding the PLC helps in making informed decisions about product strategies at each
stage.

13. Components of the Promotion Mix with Examples

Introduction:
The promotion mix consists of various tools that a company uses to communicate with its
target audience.

Components:

1. Advertising:
o Definition: Paid, non-personal communication through various media.
o Example: Television commercials for a new product launch.
2. Sales Promotion:
o Definition: Short-term incentives to encourage purchase.
o Example: Discount coupons or limited-time offers.
3. Public Relations:
o Definition: Building and maintaining a positive image.
o Example: Press releases or community events.
4. Personal Selling:
o Definition: Direct interaction between a sales representative and a potential
buyer.
o Example: Salesperson demonstrating a product in a store.
5. Direct Marketing:
o Definition: Direct communication with targeted individuals.
o Example: Email newsletters or catalogue mailings.
Conclusion:
An effective promotion mix ensures that the message reaches the target audience through
appropriate channels.

14. Types of Distribution Channels and Their Management

Introduction:
Distribution channels are the pathways through which products reach consumers.

Types:

1. Direct Distribution:
o Description: Manufacturer sells directly to the consumer.
o Example: Apple selling products through its own retail stores.
2. Indirect Distribution:
o Description: Involves intermediaries like wholesalers and retailers.
o Example: Procter & Gamble distributing products through supermarkets.
3. Hybrid Distribution:
o Description: Combination of direct and indirect channels.
o Example: Dell selling computers online and through retail partners.

Management:

 Channel Selection: Choosing the appropriate distribution method.

 Channel Motivation: Incentivizing intermediaries to perform effectively.
 Channel Control: Monitoring and guiding channel partners to ensure alignment with
company goals.

Conclusion:
Effective distribution channel management ensures product availability and customer
satisfaction.

15. Consumer Protection and Awareness in the Marketplace

Introduction:
Consumer protection involves safeguarding buyers from unfair trade practices and ensuring
their rights are upheld.

Key Aspects:

1. Consumer Rights:
o Definition: Entitlements that protect consumers' interests.
o Example: Right to safety, right to be informed, right to choose.
2. Consumer Awareness Programs:
 oDescription: Initiatives to educate consumers about their rights and
responsibilities.
o Example: "Jago Grahak Jago" campaign in India.
3. Regulatory Bodies:
o Role: Organizations that enforce consumer protection laws.
o Example: Central Consumer Protection Authority in India.
4. Grievance Redressal Mechanisms:
o Purpose: Platforms for consumers to file complaints and seek resolutions.
o Example: E-Daakhil portal for online consumer complaints.

Conclusion:
Consumer protection and awareness are vital for maintaining trust and fairness in the
marketplace.

Subject Topic : OPERATIONS MANAGEMENT

1. Production Design and Types of Production Processes

Production Design is the process of planning and developing the form and structure of a product. It
ensures functionality, manufacturability, and cost-effectiveness.

Types of Production Processes:

 Job Production: Customized items (e.g., luxury yachts).

 Batch Production: Group of identical items (e.g., bakery products).
 Mass Production: Large-scale standardized output (e.g., cars).
 Continuous Production: Non-stop operations (e.g., electricity generation).
 Project-based Production: One-time large projects (e.g., bridge construction).

2. Plant Capacity and Capacity Planning

Plant Capacity is the maximum output a plant can produce under normal conditions.

Capacity Planning: It involves determining future capacity requirements and ensuring sufficient
resources.
Types:

 Long-Term: Facility size, location.

 Medium-Term: Workforce and machine planning.
 Short-Term: Scheduling and inventory control.

Example: A bakery forecasts an increase in demand during holidays and increases oven usage
accordingly.

3. Make or Buy Decision and Crossover Chart

Make or Buy Decision helps decide whether to manufacture in-house or outsource.

Factors Considered: Cost, quality, capacity, control.

Crossover Chart: Graph showing cost of making vs. buying over different quantities. Helps identify
the break-even point where both options cost the same.

Example: If buying is cheaper below 1,000 units but making is cheaper beyond that, the firm chooses
accordingly.

4. Plant Location: Factors & Analysis Techniques

Factors for Plant Location:

 Proximity to market
 Raw materials
 Labour availability
 Transportation
 Government policies

Techniques:

 Factor Rating Method: Assigning weights and scores to factors.

 Load-Distance Method: Minimizing transportation distance.
 Centre of Gravity: Finding a location that minimizes weighted distances.

5. Ergonomics in Job Design and Layout Planning

Ergonomics adapts jobs and equipment to fit human capabilities.

Importance in Job Design:

  Reduces fatigue and injuries
 Enhances productivity
 Improves job satisfaction

Layout Planning:

 Workstations designed to reduce strain

 Proper lighting, height, and spacing

Example: Adjustable chairs and screens for office workers to prevent posture issues.

6. Facility Layout and Material Handling

Facility Layout Types:

 Product Layout: Assembly line (e.g., automobile plant)

 Process Layout: Grouped by similar functions (e.g., hospital)
 Fixed-Position Layout: Product stays; resources move (e.g., aircraft)
 Cellular Layout: Workstations arranged in a cell to process similar items.

Material Handling Equipment:

 Conveyors, forklifts, cranes, automated guided vehicles.

7. Inventory Models and EOQ Example

Inventory Models:

 EOQ (Economic Order Quantity): Minimizes total inventory cost.

 ABC Analysis: Prioritizes inventory based on value.
 VED Analysis: Used in healthcare; classifies inventory by criticality.

EOQ Formula:
EOQ=2DSHEOQ = \sqrt{\frac{2DS}{H}}EOQ=H2DS
Where:

 D = Demand
 S = Ordering cost
 H = Holding cost

Example:
D = 10,000 units, S = ₹100/order, H = ₹2/unit
EOQ = √(2×10000×100 / 2) = √1,000,000 = 1,000 units
8. Just-In-Time (JIT) & Supply Chain

JIT is an inventory strategy to receive goods only when needed.

Implications on Supply Chain:

 Reduces inventory cost

 Requires reliable suppliers
 Enhances quality focus
 Minimizes waste

Example: Toyota’s JIT system emphasizes zero-inventory and zero-defects.

9. Maintenance Procedure & Group vs Individual Replacement

Maintenance Procedure:

 Inspection
 Fault diagnosis
 Repair
 Testing
 Documentation

Group Replacement: Replacing all items at once (e.g., all light bulbs in a stadium)

Individual Replacement: Replacing only failed items

Comparison:

 Group is cost-effective for inexpensive items with high failure rates.

 Individual is better for expensive or long-lasting items.

10. Time Study, Work Sampling, and Standard Time

 Time Study: Uses stopwatch to determine task time.

 Work Sampling: Observes random work snapshots to determine time distribution.
 Standard Time:
Standard Time=Observed Time×Rating Factor+Allowances\text{Standard Time} = \
text{Observed Time} × \text{Rating Factor} + \
text{Allowances}Standard Time=Observed Time×Rating Factor+Allowances

Example: If observed time is 5 min, rating factor is 1.1, and allowances are 10%:
Standard Time = 5 × 1.1 + 0.5 = 6.0 minutes
11. Control Charts for Variables and Attributes

Variables Control Charts: Used for measurable data.

 X-bar Chart: Monitors mean

 R-chart: Monitors range

Attributes Control Charts: Used for count data.

 p-chart: Proportion defective

 c-chart: Count of defects

Diagram: Graph with centreline (CL), upper control limit (UCL), and lower control limit (LCL).

12. Work Study and Job Sequencing

Work Study: Enhances productivity through method study and work measurement.

Objectives:

 Increase efficiency
 Reduce fatigue
 Improve method

Job Sequencing: Determines the order in which jobs are processed.

Methods:

 FCFS (First Come First Serve)

 SPT (Shortest Processing Time)
 EDD (Earliest Due Date)

13. Nature and Types of Services & Service Organization Design

Nature of Services:

 Intangible
 Inseparable from provider
 Variable
 Perishable

Types of Services:

 Professional (law, medical)

 Mass services (banking, telecom)
  Personal services (salon, gym)

Service Design:

 Facility layout
 Customer interaction level
 Process structure

14. Service Blueprinting

Definition: Visual representation of service delivery process.

Components:

 Customer actions
 Front-stage interactions
 Back-stage processes
 Support processes

Example: Blueprint for a restaurant includes reservation, seating, ordering, kitchen prep, and billing.

Benefits:

 Identifies bottlenecks
 Enhances customer experience
 Improves training and consistency

15. Service Operations Management – Facility Layout & Waiting Line

Analysis

Facility Layout in Services:

 Designed for customer flow and comfort (e.g., banks, hospitals)

 Open layouts for fast service; private layouts for confidential services

Waiting Line Analysis:

 Models customer queues to improve service efficiency

 Uses queuing theory (e.g., single-server, multi-server models)

Application: Reduces wait time in hospitals, banks, and retail.