Factor affect business environment

The business environment or the external forces acting on the business consists of a large number of forces.

These are.

     1.     Demographic

     2.     Economic

     3.     Geographical

     4.     Ecological

     5.     Social and Cultural

     6.     Political & Legal

     7.     Technological

1. Demographic Factors:

Demography is a study of human population with reference to its size, density, distribution and other connected vital statistics. This information is very essential in modern days for planning and development and also for framing laws relating to society and business. The density of population, the extent of their standard of living, the level of their education and the nature of their occupation etc., greatly influence the type of business the entrepreneurs could undertake. The business units require customers for its survival and growth; naturally business can thrive in populace regions, though now-a day’s transportation helps a lot in bringing the commodities to the scarcely populated areas.

2. Economic Factors:

The business enterprise is affected by various economic forces which cannot be controlled by the business. These economic forces, can be divided into two categories, ie. Demand Force and Competitive Force. For a business firm to survive and thrive, it should have adequate demand for its products. At the same time, the firm has to complete with the rival firm producing similar products or substitute products.

Economic forces affecting demand:

For customers to buy the commodity of the firm, they should have the ability to buy and willingness to buy. The ability to buy a commodity depends on the income of the customer, to be very precise, the disposable income of the customer. Out of the total income, the individual has to pay taxes due to the government and the disposable income will be less if the taxes are high. Secondly, if the individual wants to save more, the amount for spending will be less. Thus, the ability to buy a commodity depends on the a) Total income earned out of the employment of the individual b) The taxes of the government and c) The savings of the individual.

An increase in tax will reduce the demand for the commodity. The attitude of the individual towards ‘Saving’ will affect the demand. A change in ‘Price’ of the commodity will affect the demand. Expectation of a further change in price or change in taxes will also affect the demand.

 Competitive forces: The competitive tools are price cutting, advertisement, product     

  differentiation, marketing strategies and consumer service.

     Price cutting: Price cutting or price reduction is a method which has to be adopted very cautiously, as it may ultimately lead to price-war between firms competing, resulting in reduction of profits.

   Advertisement: Advertisements in modern days have become a very powerful tool in persuading the consumers of a product to a particular brand. In monopolistic competition, a large share of the market is entrenched by firms making effective and aggressive advertisement.

      Product differentiation: A firm tries to get competitive strength by differentiating its product from those of its rivals. By having special design, colour, packing and features, the firm tries to get competitive edges.

   Marketing strategies and Consumer Service: Modern firm adopt various types of marketing strategies to create market for their products. Installment system, credit system, hire-purchase, etc., are the prominent ways by which firms try to cut through the poor segments of the society and convert them their customers. Besides customer service like, free door delivery, quick service, after sales service, guarantee from defects up to a certain period are adopted to have more and more demand for their commodities.

3. Geographical and Ecological Environment:

·     Geographical conditions, to a greater extent, influence the type of industries and business in a region. Generally, the people of a particular geographical region will have similar tastes, preferences and requirements. The geographical situation, the physical feature, the climate, rainfall, humidity, the vegetation, etc., decide the type of living in a particular region and only those industries which could cater to the needs of the people, could develop. In other words, geographical conditions exert profound influence on the location of the business.

·     Ecological is a study “dealing with the interaction of living organism with each other and with their non-living environment”. It is a science telling about the relationship of all living beings. (ie., human beings, animals, plants) with non- living beings (air, water, soil represented by atmosphere, rivers, lakes, mountains and land).

4. Social and Cultural Environment:

Social and Cultural attitudes of a region influence the business organizations of the region influence the business organizations of the region in a verity of ways. The business practices and the management technique of the organization should cope with the social and cultural attitudes of the people.

The modern business is a social system in itself, but it is also part of a larger social system represented by society in general. Clearly, there should be some reciprocal relationship between business and this larger society. To put it shortly, the business should adopt itself to the social and cultural environment.

It is the class structure of the society. It tells about the social roles and organizations and the development of social institutions. The class-structure depend upon the occupation of the people, their education, income level, social status, their mobility, their attitude towards living, work and social relationship and above all, their attitude towards business.

Every society develops its own ‘culture’ which means how the members of that society behave and interact with each other in society, as well as outside society. The term culture includes values, norms, customs, ethics, goals and other accepted behaviour patterns.

5. Political and Legal Environment:

Political Environment:

All business firms are directly affected to a greater or lesser degree by the government and its programmes. Political forces will decide the nature of business, programmes and projects to be undertaken for the development of the country. These political forces can be classified as long term forces, quick changes, cyclical changes and regional factors.

  Long term forces denote the secular trends in business activities due to the political conditions prevailing and the adoption of a particular line of policy in business.

    Quick Changes consist of sudden political changes due to army coup or revolt or capturing of the government machinery by the dissident group. The quick change may also be the result of proclamation of ‘emergency’ or ‘Martial Law’ due to sudden outbreak of war with a belligerent nation. In all these cases, the business manager has to take quick decisions to adopt his business to the changed environment.

   Cyclical Changes denote periodical anticipated changes like ’General Election’ which may change the government and consequent change in plans and programmes as well as priorities by the new Government.

Regional Factors the regional consideration may dominate the political scene. Development of agricultural or development of an industrially backward region may draw the attention of politicians and government. Consequently, special legislations or policies will be framed to help the backward regions or sector. In such changes, the business has to adopt itself by studying and estimating the risks and dangers involved in taking decisions.

Legal Environment:

Business in a country can be started and nurtured to grow into big business only within the legal system of the country. In this connection, all countries of the word have a separate set of laws for the control and direction of business. The business law of the country is a complex system of regulations and intervention that form the legal environment of the business. All business managers should have the knowledge of business law for taking management decision.

6. Technological Environment

Technology means “the systematic knowledge of the industrial arts”. ‘Technique’ denotes the method of performance. These two are increasingly used in modern literature on industrial production. The present age is the age of technology. Technology affects the business in two ways.

    Its impact on the society and

    Its impact on business operation.

Corporate Social Responsibility

                                      

Every business enterprise is an integral part of the society. It uses the scarce resources of the society to continue and grow. Hence, it is important that no activity of business is injurious to the long run interests of the society. However, it is observed that, in practice, there are a few socially undesirable aspects of business such as, polluting the environment, non-payment of taxes, manufacturing and selling adulterated products, giving misleading advertisement and so on. This has resulted in the development of the concept of social responsibility of business whereby the owners and managers of business are made conscious about the responsibilities of their business towards the community and its customers, workers etc.

MEANING OF SOCIAL RESPONSIBILITY

Social responsibility of business refers to the obligation of business enterprises to adopt policies and plans of actions that are desirable in terms of the expectation, values and interest of the society. It ensures that the interests of different groups of the public are not adversely affected by the decisions and policies of the business.

SOCIAL RESPONSIBILITIES TOWARDS DIFFERENT GROUPS

It needs to be noted that the responsibilities of those who manage the business cannot be limited to the owners. They have to take into account the expectations of other stakeholders like the workers, the consumers, the government and the community and public at large.

Let us now look at the responsibilities of the business towards all these groups.

(a) Responsibility towards the shareholders or owners: The shareholders or owners are those who invest their money in the business. They should be provided with a fair return on their investment. You know that in case of companies it takes the form Business dividends. It has to be ensured that the rate of dividend is commensurable with the risk involved and the earnings made. Besides dividends, the shareholders also expect an appreciation in the value of shares. This is governed primarily by company’s performance.

(b) Responsibility towards the Employees: A business enterprise must ensure a fair wage or salary to the workers based on the nature of work involved and the prevailing rates in the market. The working conditions must be good in respect of safety, medical facilities, canteen, housing, leave and retirement benefits etc. They should also be paid reasonable amount of bonus based on the business earnings. Preferably, there should also be a provision for their participation in management

(c) Responsibility towards the Consumers: A business enterprise must supply quality goods and services to the consumers at reasonable prices.  It should avoid adulteration, poor packaging, misleading and dishonest advertising, and ensure proper arrangement for attending to customer complaints and grievances.

(d) Responsibility towards the Government: A business enterprise must follow the guidelines of the government while setting up the business. It should conduct the business in lawful manner, pay the taxes honestly and on time. It should not indulge in any corrupt practices or unlawful activities.

(e) Responsibility towards the Community:  Every business is a part and parcel of our community. So it should contribute towards the general welfare of the community.

It should preserve and promote social and cultural values, generate employment opportunity and contribute towards the upliftment of weaker sections of the society. It must take every step to protect the physical and ecological environment of the society. It should contribute to the community development programmers like public health care, sports, cultural programmers.

Business Environment

Meaning

Understanding the environment within which the business has to operate is very important for running a business unit successfully at any place. Because, the environmental factors influence almost every aspect of business, be it its nature, its location, the prices of products, the distribution system, or the personnel policies. Hence it is important to learn about the various components of the business environment, which consists of the economic aspect, the socio-cultural aspects, the political framework, the legal aspects and the technological aspects etc. In this chapter, we shall learn about the concept of business environment, its nature and significance and the various components of the environment. In addition, we shall also acquaint ourselves with the concept of social responsibility of business and business ethics.

The term ‘business environment’ connotes external forces, factors and institutions that are beyond the control of the business and they affect the functioning of a business enterprise. These include customers, competitors, suppliers, government, and the social, political, legal and technological factors etc.  While some of these factors or forces may have direct influence over the business firm, others may operate indirectly. Thus, business environment may be defined as the total surroundings, which have a direct or indirect bearing on the functioning of business. It may also be defined as the set of external factors, such as economic factors, social factors, political and legal factors, demographic factors, technical factors etc., which are uncontrollable in nature and affects the business decisions of a firm.

Feature of business environment

features of business environment can be summarized as follows.

(a) Business environment is the sum total of all factors external to the business firm and that greatly influence their functioning.

(b) It covers factors and forces like customers, competitors, suppliers, government, and the social, cultural, political, technological and legal conditions.

(c) The business environment is dynamic in nature, that means, it keeps on changing.

(d) The changes in business environment are unpredictable. It is very difficult to predict the exact nature of future happenings and the changes in economic and social environment.  .

(e) Business Environment differs from place to place, region to region and country to country. Political conditions in India differ from those in Pakistan. Taste and values cherished by people in India and China vary considerably.

Importance of business environment

There is a close and continuous interaction between the business and its environment. This interaction helps in strengthening the business firm and using its resources more effectively.

As stated above, the business environment is multifaceted, complex, and dynamic in nature and has a far-reaching impact on the survival and growth of the business. To be more specific, proper understanding of the social, political, legal and economic environment helps the business in the following ways:

(a) Determining Opportunities and Threats: The interaction between the business and its environment would identify opportunities for and threats to the business. It helps the business enterprises for meeting the challenges successfully.

(b) Giving Direction for Growth: The interaction with the environment leads to opening up new frontiers of growth for the business firms. It enables the business to identify the areas for growth and expansion of their activities.

(c) Continuous Learning: Environmental analysis makes the task of managers easier in dealing with business challenges. The managers are motivated to continuously update their knowledge, understanding and skills to meet the predicted changes in realm of business.

(d) Image Building: Environmental understanding helps the business organisations in improving their image by showing their sensitivity to the environment within which they are working. For example, in view of the shortage of power, many companies have set up Captive Power Plants (CPP) in their factories to meet their own requirement of power.

(e) Meeting Competition: It helps the firms to analyse the competitors’ strategies and formulate their own strategies accordingly.

(f) Identifying Firm’s Strength and Weakness: Business environment helps to identify the individual strengths and weaknesses in view of the technological and global developments.

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Factor affect business environment 
Corporate Social Responsibility

Manufacturing Process

The nature of the process of production required by these three different types of production system are distinct and require different conditions for their working. Selection of manufacturing process is also a strategic decision as changes in the same are costly. Therefore the manufacturing process is selected at the stage of planning a business venture. It should meet the basic two objectives i.e. to meet the specification of the final product and to be cost effective.

Type of manufacturing process

The manufacturing process is classified into four types.

(i) Jobbing production

(ii) Batch production

(iii) Mass or flow production

(iv) Process Production

(i) Jobbing Production:  Herein one or few units of the products are produced as per the requirement and specification of the customer. Production is to meet the delivery schedule and costs are fixed prior to the contract.

(ii) Batch Production: In this, limited quantities of each of the different types of products are manufactured on same set of machines. Different products are produced separately one after the other.

(iii) Mass or flow production: Under this, the production run is conducted on a set of machines arranged according to the sequence of operations. A huge quantity of same product is manufactured at a time and is stocked for sale. Different product will require different manufacturing lines. Since one line can produce only one type of product, this process is also called as line flow.

(iv) Process Production: Under this, the production run is conducted for an indefinite period.

Factors affecting the choice of manufacturing process

Following factors need to be considered before making a choice of manufacturing process.

(a) Effect of volume/variety: This is one of the major considerations in selection of manufacturing process. When the volume is low and variety is high, intermittent process is most suitable and with increase in volume and reduction in variety continuous process become suitable. The following figure indicates the choice of

process as a function of repetitiveness. Degree of repetitiveness is determined by dividing volume of goods by variety.

(b) Capacity of the plant: Projected sales volume is the key factor to make a choice between batch and line process. In case of line process, fixed costs are substantially higher than variable costs. The reverse is true for batch process thus at low volume it would be cheaper to install and maintain a batch process and line process becomes economical at higher volumes.
(c) Lead time: The continuous process normally yields faster deliveries as compared to batch process. Therefore lead-time and level of competition certainly influence the choice of production process.

(d) Flexibility and Efficiency:The manufacturing process needs to be flexible enough to adapt contemplated changes and volume of production should be large enough to lower costs.

Hence it is very important for entrepreneur to consider all above mentioned factors before taking a decision regarding the type of manufacturing process to be adopted as for as SSI are concerned they usually adopt batch processes due to low investment.

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Production Planning and Control

Product Design

European Union Crisis

The main aim of EU was to establish economic Integration but due to some reasons it had led Global Economic Crisis. Eurozone Debt crisis has resulted from a combination of complex factor.The reason for Euro zone crisis are discussed as follows:

1: Rising government debt levels

Government debt of Eurozone, Germany and crisis countries compared to Eurozone GDP Government deficit of Eurozone compared to USA and UK In 1992, members of the European Union signed the Maastricht Treaty, under which they pledged to limit their deficit spending and debt levels. However, a number of EU member states, including Greece and Italy, were able to circumvent these rules and mask their deficit and debt levels through the use of complex currency and credit derivatives structures.

2: Monetary policy inflexibility

Since membership of the eurozone establishesable to "print money" in order to pay creditors and ease their risk of default. (Such an option is not available to a state such as France.) By "printing money" a country's currency is devalued relative to its (euro zone) trading partners, making its exports cheaper, in principle leading to an improving balance of trade, increased GDP and higher tax revenues in nominal terms.

3: Trade imbalances

 During 1999-2007, the  countries (Portugal, Ireland, Italy and Spain) had far worse balance of payment positions. Whereas German trade surpluses increased as a percentage of GDP after 1999, the deficits of Italy, France and Spain all worsened. More recently, Greece's trading position has improved in the period November 2010 to October 2011 imports dropped 12% while exports grew 15% (40% to non-EU countries in comparison to October 2010).

4: Loss of confidence

Prior to development of the crisis it was assumed by both regulators and banks that sovereign debt from the eurozone was safe. Banks had substantial holdings of bonds from weaker economies such as Greece which offered a small premium and seemingly were equally sound. As the crisis developed it became obvious that Greek, and possibly other countries, bonds offered substantially more risk. 

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European Union

Objective and Function of European Union

Objective and Function of European Union

Objective of European Union

   1:Elimination of custom duties among member states.
  2:Elimination of obstacles to the free flow of import and export of goods and    services among member nations
   3:Free movement of capital and people within the block.
  4:Acceptance of common agricultural policies, transport policies,health and safety regulations  and educational degrees.
   5:Common measures for consumer protection.
  6:Common laws to maintain competition throughout the community and to fight monopolies or illegal cartels.
   7:Regional funds to encourage the economic development of certain countries.
 8:Greater monetary and fiscal co-ordination among member states and certain common monetary and fiscal policies. 
    Function of European Union:
    1: Internal Market:     
    Two of the original core objectives of the European Economic Community were the development of a common market, subsequently renamed the single market, and a customs union between its member states. The single market involves the free circulation of goods, capital, people and services within the EU,[ and the customs union involves the application of a common external tariff on all goods entering the market. Once goods have been admitted into the market they cannot be subjected to customs duties, discriminatory taxes or import quotas, as they travel internally.
    2: Competition:
    The EU operates a competition policy intended to ensure undistorted competition within the single market. The Commission as the competition regulator for the single market is responsible for antitrust issues, approving mergers, breaking up cartels, working for economic liberalisation and preventing state aid.
    3:Monetary union:
      The euro is designed to help build a single market by, for example: easing travel of citizens and goods, eliminating exchange rate problems, providing price transparency, creating a single financial market, price stability and low interest rates, and providing a currency used internationally and protected against shocks by the large amount of internal trade within the euro zone. Since its launch the euro has become the second reserve currency in the world with a quarter of foreign exchanges reserves being in euro. The euro, and the monetary policies of those who have adopted it in agreement with the EU, are under the control of the European Central Bank (ECB).
     4:Financial supervision:
   The European System of Financial Supervisors is an institutional architecture of the EU's framework of financial supervision composed by three authorities: the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority. The aim of this financial control system is to ensure the economic stability of the EU.
    5:Energy:
      The EU has had legislative power in the area of energy policy for most of its existence; this has its roots in the original European Coal and Steel Community. The EU has some key points in its energy policy: increase competition in the internal market, encourage investment and boost interconnections between electricity grids; diversify energy resources with better systems to respond to a crisis; use existing energy supplies more efficiently while increasing use of renewable energy; and finally increase funding for new energy technologies.


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      European Union
      European union crisis

European Union

European Union is a umbrella organisation including the European countries that have European eliminated economic, trade and immigration between the member countries of the union. The European union is a unique economic and political partnership between 27 European countries.

History of European Union:

European union was created after math of the second world war. The treaty of paris, creating the European coal and steel community in 1951 with six member: Belgium, France, Italy, Luxumberg, Netherland and West Germany.

In 1957 the same six countries sign the treaties of rome, creating the European economic community and European atomic energy community.

On 1 November 1993, under the third Delors Commission, the Maastricht Treaty became effective, creating the European Union with its pillar system including foreign and home affairs alongside the European Community.

1995:  Austria, Finland and Sweden join the European Union (EU).

1999: Europe’s single currency – the euro  – is officially launched and 11 EU Member States adopt it as their official currency, forming what is known as the euro zone.

2001: Greece joins the euro zone.The Treaty of Nice is signed, introducing reforms to the EU’s institutions to prepare for the expansion of the Union with the admission of ten new Member States in 2004.

2002: The euro becomes a reality on 1 January, when euro notes and coins replace national currencies in 12 of the 15 countries which are members of the EU: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. A ‘convention on the future of Europe’ is launched, with 105 members representing national governments and parliaments in the Member States and countries waiting to join the EU, the European Commission and the European Parliament.

Currency:

The euro is also the most widely used currency in the EU, which is in use in 17 member states known as the Eurozone. All other member states, apart from Denmark and the United Kingdom, which have special opt-outs, have committed to changing over to the euro once they have fulfilled the requirements needed to do so.

European Union Headquater:

European union headquater is in Brussels, Belgium .

It Selected as the headquarters of the European Union  because of its centralized location in Europe.

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Objective and function of european
European union crisis

Product Design

Product design is a strategic decision as the image and profit earning capacity of a small firm depends largely on product design. Once the product to be produced is decided by the entrepreneur the next step is to prepare its design. Product design consists of form and function. The form designing includes decisions regarding its shape, size, color and appearance of the product. The functional design involves the working conditions of the product. Once a product is designed, it prevails for a long time therefore various factors are to be considered before designing it. These factors are listed below: -

(a) Standardization

(b) Reliability

(c) Maintainability

(d) Servicing

(e) Reproducibility

(f) Sustainability

(g) Product simplification

(h) Quality Commensuration with cost

(i) Product value

(j) Consumer quality

(k) Needs and tastes of consumers.

Above all, the product design should be dictated by the market demand. It is an important decision and therefore the entrepreneur should pay due effort, time, energy and attention in order to get the best results.

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Production Planning and Control

Production Planning And Control

Once the entrepreneur has taken the decisions regarding the product design and production processes and system, his next task is to take steps for production planning and control, as this function is essentially required for efficient and economical production. One of the major problems of small scale enterprises is that of low productivity small scale industries can utilise natural resources, which are otherwise lying. Small scale sector can play an important role, similar to the one played by small scale industries in other developed countries.

Benefits to small Entrepreneur

Production planning and control can facilitate the small entrepreneur in the following ways

(1) Optimum Utilisation of Capacity:

With the help of Production Planning and Control [PPC] the entrepreneur can schedule his tasks and production runs and thereby ensure that his productive capacity does not remain idle and there is no undue queuing up of tasks via proper allocation of tasks to the production facilities. No order goes unattended and no machine remains idle.

(2) Inventory control:

Proper PPC will help the entrepreneur to resort to just- in- time systems and thereby reduce the overall inventory. It will enable him to ensure that the right supplies are available at the right time.

(3) Economy in production time:

PPC will help the entrepreneur to reduce the cycle time and increase the turnover via proper scheduling.

(4) Ensure quality:

A good PPC will provide for adherence to the quality standards so that quality of output is ensured. To sum up we may say that PPC is of immense value to the entrepreneur in capacity utilization and inventory control. More importantly it improves his response time and quality. As such effective PPC contributes to time, quality and cost parameters of entrepreneurial success. 

Steps in Production Planning And Control

Production Planning and Control (PPC) is a process that comprises the performance of some critical; functions on either side, viz., planning as well as control. 

Production planning: Production planning may be defined as the technique of foreseeing every step in a long series of separate operations, each step to be taken at the right time and in the right place and each operation to be performed in maximum efficiency. It helps entrepreneur to work out the quantity of material

manpower, machine and money requires for producing predetermined level of output in given period of time.

Routing: Under this, the operations, their path and sequence are established. To perform these operations the proper class of machines and personnel required are also worked out. The main aim of routing is to determine the best and cheapest Production Planning and control sequence of operations and to ensure that this sequence is strictly followed. In small enterprises, this job is usually done by entrepreneur himself in a rather adhoc manner. Routing procedure involves following different activities.

(1) An analysis of the article to determine what to make and what to buy.

(2) To determine the quality and type of material

(3) Determining the manufacturing operations and their sequence.

(4) A determination of lot sizes

(5) Determination of scrap factors

(6) An analysis of cost of the article

(7) Organization of production control forms.

Scheduling: It means working out of time that should be required to perform each operation and also the time necessary to perform the entire series as routed, making allowances for all factors concerned. It mainly concerns with time element and priorities of a job. The pattern of scheduling differs from one job to another which is explained as below:

Production schedule: The main aim is to schedule that amount of work which can easily be handled by plant and equipment without interference. Its not independent decision as it takes into account following factors.

(1) Physical plant facilities of the type required to process the material being scheduled.

(2) Personnel who possess the desired skills and experience to operate the equipment and perform the type of work involved.

(3) Necessary materials and purchased parts.

Master Schedule: Scheduling usually starts with preparation of master schedule which is weekly or monthly break-down of the production requirement for each product for a definite time period, by having this as a running record of total production requirements the entrepreneur is in better position to shift the production from one product to another as per the changed production requirements. This forms a base for all subsequent scheduling acclivities. A master schedule is followed by operator schedule which fixes total time required to do a piece of work with a given machine or which shows the time required to do each detailed operation of a given job with a given machine or process.

Manufacturing schedule: It is prepared on the basis of type of manufacturing process involved. It is very useful where single or few products are manufactured repeatedly at regular intervals. Thus it would show the required quality of each product and sequence in which the same to be operated

Scheduling of Job order manufacturing: Scheduling acquires greater importance in job order manufacturing. This will enable the speedy execution of job at each center point.

As far as small scale industry is concerned scheduling is of utmost importance as it brings out efficiency in the operations and s reduces cost price. The small entrepreneur should maintain four types of schedules to have a close scrutiny of all stages namely an enquiry schedule, a production schedule, a shop schedule and an arrears schedule out of above four, a shop schedule is the most important most suited to the needs of small scale industry as it enables a foreman to see at a glance.

1. The total load on any section

2. The operational sequence

3. The stage, which any job has reached.

Loading: The next step is the execution of the schedule plan as per the route chalked out it includes the assignment of the work to the operators at their machines or work places. So loading determines who will do the work as routing determines where and scheduling determines when it shall be done. Gantt Charts are most commonly used in small industries in order to determine the existing load and also to foresee how fast a job can be done. The usefulness of their technique lies in the fact that they compare what has been done and what ought to have been done.

Most of a small scale enterprise fail due to non-adherence to delivery schedules therefore they can be successful if they have ability to meet delivery order in time which no doubt depends upon production of quality goods in right time. It makes all the more important for entrepreneur to judge ahead of time what should be done, where and when thus to leave nothing to chance once the work has begun.

Production control: Production control is the process of planning production in advance of operations, establishing the extract route of each individual item part or assembly, setting, starting and finishing for each important item, assembly or the finishing production and releasing the necessary orders as well as initiating the necessary follow-up to have the smooth function of the enterprise. The production control is of complicated nature in small industries. The production planning and control department can function at its best in small scale unit only when the work manager, the purchase manager, the personnel manager and the financial controller assist in planning production activities. The production controller directly reports to the works manager but in small scale unit, all the three functions namely material control, planning and control are often performed by the entrepreneur himself production control starts with dispatching and ends up

with corrective actions.

Dispatching: Dispatching involves issue of production orders for starting the operations. Necessary authority and conformation is given for:

1. Movement of materials to different workstations.

2. Movement of tools and fixtures necessary for each operation.

3. Beginning of work on each operation.

4. Recording of time and cost involved in each operation.

5. Movement of work from one operation to another in accordance with the

route sheet.

6. Inspecting or supervision of work

Dispatching is an important step as it translates production plans into production.

Follow up: Every production programme involves determination of the progress of work, removing bottlenecks in the flow of work and ensuring that the productive operations are taking place in accordance with the plans. It spots delays or deviations from the production plans. It helps to reveal detects in routing and scheduling, misunderstanding of orders and instruction, under loading or overloading of work etc. All problems or deviations are investigated and remedial measurer are undertaken to ensure the completion of work by the planned date.

Inspection: This is mainly to ensure the quality of goods. It can be required as effective agency of production control.

Corrective measures: Corrective action may involve any of those activities of adjusting the route, rescheduling of work changing the workloads, repairs and maintenance of machinery or equipment, control over inventories of the cause of deviation is the poor performance of the employees. Certain personnel decisions

like training, transfer, demotion etc. may have to be taken. Alternate methods may

be suggested to handle peak loads.

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Product Design
Manufacturing process

Accounting as an aid to management

The main object of Accounting is to record financial transaction systematically in the books of accounts and to find out profit-loss and financial position of a business. Ascertainment of profit-loss and financial position, interpretation and analysis of accounts and statements, development of accounting system, collection of statistical and economic data, formulation of financial principles and financial planning and controlling result as per plan etc. are the main function of accounting. In the modern age accounting is directly related with financial management. The function of management are planning, organizing, collecting business elements, motivating, coordinating and budgeting etc. 

Accounting helps the management in the following ways:

(1)Planning: Proper planning is very much needed for successful completion of various management activities. These planning – cash planning, sales planning, procurement planning, determining quantity of stock, development of planning, fixing up target – profit et are very much dependent on accounting data and information.

(2)Organization: Accounting plays a very vital role in proper execution of the important function of management-organization. Accounting helps management-organization by providing information like percentage of profit over capital, capital investment position, management efficie3ncy in controlling etc.

(3)Motivation: Labor-employees are to be motivated for achieving expected performance. Financial help is one of the main motivating factors of work. The management is to be aware of financial position of the business for providing financial benefits. Accounting helps the management by providing necessary information for taking proper decision.

(4)Co-ordination: One of the main function of the management is to achieve the final target of the business by coordinating various activities of different departments. Accounting helps in coordinating various activities of different department of the business.

(5)Control: The main function of the modern management are planning and controlling. Controlling is essential for completion of activities according to plan. Accounting can help management much in controlling. 

(6)Preparation of final accounts: The management’s responsibility is to communicate operating results for a certain period and financial position of a business concern to the owners and parties concerned.

(7)Media of communication: Accounting plays a vital role as a media in communicating various information of different departments, business and management plan of action to various departments.

(8)Budgeting: Preparation of various budgets is essential to run the business successfully. The historical information which is needed in preparation of budget is supplied by accounting.

(9)Professional advice: An efficient and honest accountant helps the management with valuable professional advice for the development of its business. In the modern age with the complexities of business management has also become complex. In this aspect the role of accounting is very important. Accounting is an essential tool of management.