Meaning of Sales Organisation. Steps in setting up Sales Organisation.

Q. What do you mean by Sales Organisation? Explain the various steps in setting up Sales Organisation. 

Ans. MEANING OF SALES ORGANISATION: Whenever two or more persons perform activities for the purpose of achieving any objective together, a necessity to distribute the work among them arises and the coordination between the different activities is made. The organising element is required to fulfill this necessity. Thus, organization is a coordinated effort of different individuals working in an enterprise to achieve its goals. Industrial marketing organisation in an enterprise means the integration and coordination of individual marketing efforts to achieve the cherished goals of the business enterprise. Industrial marketing organisation is a time tested mechanism that enables people to live and work together. With the help of industrial marketing, organizing the task is allocated among the employees according to their specialization. Each employee gets the work of his own interest and therefore, they perform their work efficiently. This leads to the expansion and growth of the business enterprise.

DEFINITIONS OF INDUSTRIAL MARKETING ORGANIZATION

According to C.L. Bolling. “An industrial marketing organization is one where functions of marketing department have been carefully planned and coordinated towards the objective of selling the product to the customers, the whole efforts being effectively supervised and managed so that each function is carried out in the desired manner.”

According to H.R. Tosdal, “An industrial marketing organization consists of human beings working together for the marketing of products manufactured by the firm or marketing of commodities which have been purchased for resale.”

STEPS IN SETTING UP SALES ORGANISATION: 

1. Setting the Objectives: The first step in the process of setting industrial marketing organization is to set its objectives. Top management defines the long term objectives for the enterprise like profit maximization, improving reputation, increasing size of enterprise, etc. Marketing department sets specific objectives for achieving the long term objectives set by the top management. These objectives can be: (a) To increase sales, (b) To control selling expenses, (c) To increase market share, (d) To increase profit through customer satisfaction.

2. Defining Necessary Marketing Activities: After having learnt about the objectives of the marketing organization, necessary functions are required to be performed to achieve the determined objectives. The necessary marketing activities can be personal selling. sales promotion, publicity, advertising, marketing research, distribution of goods and services, etc.

3. Grouping Marketing Activities into Jobs, Positions: After identifying various marketing activities to be performed to achieve marketing objectives, the next step is to classify and group the similar and related tasks into various jobs or positions. Some of the marketing activities are crucial in nature; these are classified as high level jobs. Others are of routine nature and are classified as lower level jobs. For proper coordination and control, jobs of similar nature are brought together to form departments.

4. Assignment of Duties: After dividing the various activities into different positions, various persons are assigned the charge of these positions. The jobs are is assigned to the marketing personnel according to their capabilities and specialization. While assignment of job, the principle of 'right man on right job' is followed. The work to be performed by every individual is clearly defined and made known to him. In order to avoid misunderstandings, duplication or overlapping in the work, every one should know what he is required to do.

5. Establishing Reporting Relationship: In this step, every individual is given the authority required to carry out the responsibility assigned to him. A hierarchical structure, i.e., a chain of command is created through successive delegation of authority. Reasonable powers are delegated to heads and supervisory staff to enable them to do their task with ease and efficiency.

What do you mean by Sales Organisation? Explain the various steps in setting up Sales Organisation. 

Material Management: Functions, Challenges.

 Q. Discuss the functions of ‘Materials Management’. Mention the challenges of Materials Management in today’s competitive business. 

Ans. Materials management is ideal for industries who track the flow and manage the materials in their enterprises. The functions of materials management are as follows: 

1) Material Requirement Planning: The material require planning includes production scheduling and inventory control. It is a control system through which adequate inventory levels can be maintained to assure the adequate and required material can be provided as and when needed. This is not suitable for job shops or for continuous processes that are tightly linked with each other. MRP system meets the following three objectives:

i) To ensure that materials are available for production and products are available for delivery to customers.

ii) To maintain lowest possible level of inventory.

iii) To plan manufacturing activities, delivery schedules and purchasing activities.

Or 

The basic function of material management is material requirement planning. This planning can be done with the help of computer and it includes production and inventory control scheduling.

2) Purchasing or Procuring of Materials: The materials department is supposed to provide the right material at right time in right quantity at right price. The department should procure the material from the right source. For this the materials department is to select the best sources of supply from the available alternatives. 

3) Storage of Materials: Once the material is received, its physical control, preservation, minimization of obsolescence, loss or theft or damage should be safeguarded through efficient handling. Proper records should be maintained and stocking is done in stores at proper locations. Storing function also includes inspection of material purchased and issuing of materials. This function also includes coding of items, preparing indexes showing code number and place or room number or godown number or cupboard number or preparation of bin-cards etc. 

Or 

The storage of various types of materials and spare parts as inventory is very important before delivering it to the end users and to different production centres for use by them. Proper records....... same as above.

4) Issue of Materials: Issue of materials mean supply of material from store to those various departments of the organisation who demands it. For this purpose, the department is to submit requisition slip to the store. On the basis of requisition slip, the storekeeper will issue the material to the concerned department.

5) Inventory Control: Inventory control involves the procurement, care and disposition of materials. Inventory includes raw materials, work-in-progress, and finished goods. The reasons for inventory control may be for maintaining the continuity of production and sale, minimising the stock-out cost, controlling the investment of working capital in stock, etc. Therefore, it is necessary to ensure the sufficient goods on one hand to avoid stock-outs and the safeguard the wastage of material on the other to protect the capital. Different techniques like EOQ, minimum and maximum stock levels, reorder level, ABC analyses, stock register, etc., can be followed. The process of inventory control involves the following:

(i) Determination of optimum levels of inventory,

(ii) Determination of level of control required.

(iii) Designing the inventory control system

(iv) Establishing the inventory control organisation.

6) Material Handling: After receiving the materials, the stores incharge has to check the weight and inspect the quality of them. If it is found right, then he stores them properly so that it can be issued to factory when needed for production. Material handling involves movement, packaging, transfer and delivery of materials starting from receiving of materials to final distribution of finished goods to consumers.

7) Disposal of Scrap: Scrap is the waste that either has no economic value or only the value of its basic material content by selling that. It includes wastage, spoilage, used and repairable tools, oils, equipment, etc. In addition, it also includes the obsolete parts. It is the duty of the materials manager to dispose off or selling of those materials by inviting tenders from scrap dealers or through auction.

8) Vendor Evaluation and Vendor Rating: Under this system, evaluation of a supplier is

done through recording and ranking of performance in terms of a variety of issues including quality of materials and delivery performance. This process is necessary for effective purchasing. Vendor rating is the result of a formal vendor valuation system vendors or suppliers are given standing, status or title according to their attainment of some level of performance such as delivery, lead time, quality, price, etc. The purpose of vendor rating is to improve the quality level of the suppliers performance and to use the results of the evaluation in the qualification system and when awarding contracts.

9) Purchase Analysis and Research: Analysis  and research in the purchase is the systematic investigation of all related aspects. It also includes the investigation of all sources of supply and selection of best and suitable material from the various available materials. This function also includes the analysis and research of the fact that how the prices of materials can be reduced and the quality can be improved. What can be the alternative sources of supply in case of short supply of material, etc.

10) Transport and Traffic Management: Materials manager supervise many aspects of transportation systems including planning, logistics, maintenance and repair. These managers focus on getting materials, people and goods from one place to another while considering safety, efficiency and cost. Transport management helps in enlarging the market for finished goods. Under the transport management, the materials manager has to arrange the safe, rapid and economical transportation for incoming and outgoing materials. It will help in increasing the number of perfect orders, improve the quality of customer service, etc.

CHALLENGES OF MATERIALS MANAGEMENT: The materials management has to face the following challenges: 

1) What to Stock?: The first and the most important challenge faced by materials management is what items need to be stocked? Which items are available on demand and which are not available. Whether the goods can be arranged from alternative vendors or not. 

2) How Much to Stock?: After deciding the goods to be stocked the materials manager has to decide how much stock is to be maintained in the store. For this purpose, they have to calculate minimum and maximum inventory levels, reorder points safety stocks economic order quantity, etc., for each type of raw material separately. 

3) Inventory Turnover: Inventory turnover ratio is very important from the view point

of profitability and liquidity. Higher ratio indicates that the less amount is locked up in inventory and as quickly as the stock is converted into sales, it will result in profits. Therefore materials management has to fix the desired turnover ratio. They also have to develop the techniques for improving the ratio without impacting maintenance and operations.

4) Forecasting of Demand: Materials planning is done on the basis of short-term sales forecast. Hence the materials planners have to always find out how much material will be required because neither the material supply should be in short nor in excess.

5) Government Policies: If the material is to be imported from other countries. Then the materials department may have to depend on the import policy of the government, foreign exchange availability, credit availability, etc.

6) Scarce Financial Resources: Scarce financial resource is the another challenge for materials management as on the one hand money/finance is limited and on the other hand sufficient material should be available for production on right time. Thus the materials manager has to maintain the balance between the two and has to arrange the material within limited resources.

7) Storage Space: Storage space is the another challenge for materials management. As everyone knows the prices of land and building are rising, therefore the management may allocate a little space for storage. The materials manager has to keep the stock of raw-materials and spare parts in the allocated space.

8) Obsolete and Surplus Material: The presence of obsolete and surplus material is a problem for all the companies. Obsolete materials may exist due to change in engineering activities. Whereas surplus material may be due to over procurement, uncontrolled production operations and inefficiency. In both the cases firm has to bear the expenses for space as well as for wastage of material. The materials manager has to plan for reducing such type of costs.

9) Selection of Appropriate Vendors: The another challenge for materials manager is the selection of appropriate vendors. Evaluation of suppliers is a process that leads companies to select their desired suppliers. It has two objectives, to reduce all costs of purchasing and to increase the overall value of engineering. Thus the materials manager has to maintain a balance between the cost and quality.

10) Managing Information: The materials manager has to keep himself updated always regarding new materials, new spare parts, new machinery, new techniques so that they could be implemented in the organisation.

Discuss the functions of ‘Materials Management’. Mention the challenges of Materials Management in today’s competitive business. 

Best Judgement Assessment.

Q. What is meant by the expression ‘Best Judgement Assessment’? Under what circumstances can recourse be had to this method of assessment? Are there any remedy open to the assessee against such assessment? 

Ans. MEANING OF BEST JUDGEMENT ASSESSMENT: In Best Judgement Assessment, assessing officer should really base the assessment on the best of his judgement. The law states he must act honestly not vindictively (बदला लेते हुए). He must make fair estimate of the income for the proper assessment. For that, he must be able to take into consideration the local knowledge and repute in regard of assessee’s circumstances and his own knowledge regarding previous returns and assessments of the assessee and other matters which he thinks will help him in making proper assessment. It is purely a guess work. It is also known as ex-parte assessment. If appeal is file against Best Judgement Assessment, the assessing officer shall have to disclose the basis of a judgement befote appellate authority. 

Best Judgement Assessment can be compulsory or discretionary. 

Compulsory Best Judgement Assessment: Sec. 144 empowers the Assessing Officer to make assessment to the best of his judgement in the following circumstances:

(i) Where assessee has failed to file voluntarily return u/s 139(1) or no return has been made in response of the notice of the Assessing Officer.

(ii) Where there has been failure to comply with the terms of notice issued u/s 142(1) requesting the assessee to produce the books of accounts or he fails to get his accounts audited u/s 142(2A).

(iii) To verify the correctness of the return, assessing officer serve the notice upon the assessee u/s 143(2) asking him to attend the office or to produce the evidences in support of the return but the assessee does not comply with the terms of such notice. 

Consequences of Best Judgement Assessment: There are four consequences of a Best Judgement Assessment: 

(i) The assessee becomes liable to penalties u/s 272A. 

(ii) The assessee becomes liable to prosecution u/s 276CC and 276D.

(iii) A refund may not be granted.

(iv) The assessee is prevented (रोक दिया जाता है) from bringing on record any new facts before the appellate authority if appeal is filed under best judgement assessment. 

Remedies against Best Judgement Assessment: If assessee is in opinion or feels that excess tax has been imposed by the assessing officer then–

(i) He can appeal to the Commissioner (appeal) against the order of assessing officer.

(ii) He can appeal to the Tribunal against the order of Commissioner (appeal).

(iii) He may go to high court.

(iv) He may apply to the Commissioner for revision.

Discretionary Best Judgement Assessment: If assessing officer is in the opinion that the accounts maintained by the assessee are incorrect or no proper system employ for maintaining accounts ot income has not been computed in proper way, he can make the assessment at his own discretion.

Define an Entrepreneur. Explain the characteristics and functions of entrepreneur.

 Q. Define an Entrepreneur. Explain the characteristics and functions of entrepreneur.

Ans. MEANING OF ENTREPRENEUR: The word ‘Entrepreneur’ is derived from the French word ‘entreprendre’ which means to undertake. Thus, entrepreneur is the person who undertakes the risk of new enterprise. 

The meaning of the term entrepreneur varies from person to person and from period to period. To a layman, an entrepreneur is a person who starts his own budiness or industry and organises different factors of production and marketing processes for the purpose of earning profits. It has also different meaning from different area of subject. To an economist, an entrepreneur is a person who combines the different factors of production for enhancing his values and initiates changes. To a psychologists, he is a person who ventures in the dark and deep area of uncertainty and unknown opportunities and explores new possibilities. To a businessman, he is a person who peruses his capabilities aggressively and explores new opportunities amidst changing environment. In many countries, the entrepreneur is often associated with a person who starts his own new and small business. Business may be manufacturing, transport, trade and other self employed vocations in the service sector. 

DEFINITION OF AN ENTREPRENEUR: An entrepreneur is someone who utilises land & labour, invests in capital and resources and aims at producing goods or delivering services. 

1) Richard Cantillon was the first person to use the term entrepreneur to refer to economic activities. He defined an entrepreneur as– “An entrepreneur is the agent who buys factors of production at a certain price in order to combine these into a product with a view to sell it at uncertain prices.” 

2) According to F.H. Knight, “Entrepreneurs are a specialised group of persons who bear risk and deal with uncertainty.” 

CHARACTERISTICS OF AN ENTREPRENEUR: Some common characteristics of the entrepreneur can be commitment, leadership, risk bearing, motivator, confident etc. The important features are as follows:

1) Calculated Risk Taker: Every business situation involves the possibility of profit or loss. An entrepreneur always goes for a calculated risk taker. He accepts the risk as a challenge. He acoids the low risk situation due to absence of challenge but ar the same time he does not involve himself in highly risky situation as he knows the chances of failure. He maintains the balance between two situations and goes for achievable/affordable challenges. He prefers to take realistic risk because he wants to succeed. So, an entrepreneurs are not risk taker rather they are risk eliminators. They work in such a way that obstacles that come in the way of their project can be removed. 

2) Desire for Responsibility: This is a fundamental characteristic of an entrepreneur who feels deep sense of personal responsibility for the results of the project he starts. He prefers to control over the resource, which he uses for achieving self determined goals. 

3) High level of Energy: or Hard working: Entrepreneur is more energetic than the ordinary man. Hard work and long working hours are common feature of an entrepreneur. They are inspired by inner urge and by the motivational stories of great achievers. The young intelligent and creative entrepreneur like to work 12 hours or more a day just to avoid having to work 8 hours a day for some one else. 

4) Innovator: An innovative entrepreneur sees the opportunity for introducing a new technique or a new product or a new market. He explores new market and organises the enterprise. He exploits the invention commercially and thus produces new and better goods which give him profit and satisfaction. 

5) Creative: Creativity is a special ability to find new ideas implementing such changes in an acceptable way. Further successful innovation depends upon the creativity. It is one of the most important requirements of an entrepreneur to be creative. 

6) Commitment and Determination: Entrepreneurs generally have high level of energy due to which they are committed to the successful execution of their plan. They are devoted to their business with a deep sense of determination for success. Both commitment and determination is generally seen in their action. 

7) Future orientation (Vision): Entrepreneur looks beyond the present and concerns himself with considering what can be done in the future rather than brooding on what was done in the past. They do not like to sit back. They stay focused on the future. They work with a vision for growth, committed to constructive change. 

8) Self confidence and Optimistic: Entrepreneurs direct their abilities towards the accomplishment of goals with ups and down in the strength. They have to face many ups and down in the business. But they believe in themselves and handle the situation confidently. They work with a positive approach and optimistic attitude. Entrepreneurs not only maintain their confidence and optimism, but they also raise the level of their team members also. 

9) Organiser: An entrepreneur knows now to bring together the right people for accomplishing a task. He effectively and efficiently combines jobs and people and transforms his vision-into reality.

10) Integrity and Reliability: Entrepreneurs do not like to be controlled by others. They prefer to work independently specially for themselves. They like to take initiative for solving the problem. They always own the responsibility for the outcome of the project with which they are associated.

11) Socially Responsible: Entrepreneur remains fully aware abut his responsibility towards society. He understands that fact the society also expects from him. He tries to do so by creating employment opportunities, by creating new product, innovative products, quality products, fair price and quality assurance etc. He does things in an effective and efficient way. Proper Utilisation of resources made by him, i.e. also considered as a contribution to society. So, the old concept of making profit for only himself is no more followed or accepted these days.

12) Flexibility: Entrepreneur keeps himself updated regarding changes in the environment. He is capable of adapting himself to the varying demands of business and customers. He clearly understands that rigidity (inability to change) may lead to failure in today fast changing global economy.

13) Technically Competent: Technological change is the prime mover in the process of economic growth. Inventions and innovation have led the process of development in the world. The success of an enterprise largely depends upon the adoption of the present prevailing technology. Entrepreneurs are technically competent these days. They generally have a reasonable level of technical knowledge. They keep themselves updated in the changing pattern of production, suited to their requirement. 

14) Communication Ability: Communication plays an important role in the success of an enterprises. Entrepreneurs these days possess the quality of good communication. They are well equipped with the importance of communication and the use of latest technology in the process of communication.

15) Tolerance for Ambiguity: Entrepreneur tend to have a high tolerance for ambiguity, especially in the face of uncertainty and unknown outcomes. They handle the uncertainty with their will and skill by making bold decisions. They face the adversity bodly and bravely.

FUNCTIONS OF AN ENTREPRENEUR: Entrepreneur is a person who performs many useful functions. He undertakes a venture, assumes risks and earns profits. Some of his most important functions are as under: 

1) Assumption of Risk: Risk taking or uncertainty bearing implies assuming the responsibility for loss that may arise due to unforeseen contingencies of the future. A business risk also involves the risk due to possibility of change in the taste of consumers, technique of production, new invention etc. The entrepreneur has to bear these high degree of risks. He assumes all possible risks of the business. Thus, risk assumption and risk bearing is the most important function of an entrepreneur. He tries to reduce risk with his initiatives, knowledge and skills and good decisions. 

2) Business Decision: Entrepreneur has been stated as a decision maker also. He has to decide the nature and type of goods to be produced or services to be rendered in the society. He decides the specific industry into which he will work and get a reasonable return. He has to decide the best possible method of production. He makes suitable changes in the size of business, its location, technique of production and does everything that is needed for the maintenance and development of the business.

3) Managerial Functions: Entrepreneur has to perform a lot of managerial functions in his enterprise. There are different types of managerial functions that an entrepreneur has to perform and these are based on the size and activities of the enterprises. These functions include formulation of production plan, arrangement of finance, purchase of raw material. procurement of production facilities, organisation of sales, personnel management and so on. Further administrative functions of recruitment, selection, etc. This is considered to be very tough job. However, in a large establishment, these managerial functions can be delegated to the paid subordinates.

4. Functions of Innovation: According to Schumpeter, an entrepreneur is basically an innovator who introduces new combinations of means of production. It is the entrepreneur who conceives the idea for the improvement in the quality of product line. He considers the economic viability and technological feasibility of the total project. It is this function of the entrepreneur which injects the elements of dynamism into the economic system.

Thus, Generally, an entrepreneur performs many useful functions for the development of the society and it satisfies the needs of the various stakeholders in the enterprises.

Define an Entrepreneur. Explain the characteristics and functions of entrepreneur.