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BY SIR MAHAVEER SINGH BHARDWAJ
MB0042- MANAGERIAL ECONOMICS
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Question1. Define the term Business Cycle and also explain the phases of business or trade cycle in brief.
Answer:
Definition of Business cycle
The term business cycle refers to a wave-like fluctuation in the overall level of economic activity; particularly in national output, income, employment, and prices that occur in a more or less regular time sequence. It is the rhythmic fluctuations in the aggregate level of economic activity of a nation. Different writers have defined business cycles in different ways. Business cycles are an alternation of periods of prosperity and depression of good and bad trade. Such cycles consist of recurring alternations of expansion and contraction in the aggregate economic activity, the alternating movements in each direction being self-reinforcing and pervading virtually all parts of the economy. A trade cycle is composed of periods of good trade characterized by rising prices and low unemployment percentages, alternating with periods of bad trade characterized by falling prices and high unemployment percentages.
Explanation of Phases of business cycle
Basically, a business cycle has only two parts - expansion and contraction or prosperity and depression. Peaks and troughs are the two main mark-off points of a business cycle. The expansion phase starts from revival and includes prosperity and boom. The contraction phase includes recession, depression, and trough. In between these two main parts, we come across a
few other interrelated transitional phases. In its broader perspective, a business cycle has five phases. They are as follows.
1. Depression, contraction, or downswing It is the first phase of a trade cycle. It is a protracted period in which business activity is far below the normal level and is extremely low. Depression is a state of affairs in which the real income consumed or volume of production per head and the rate of employment are falling and are sub-normal in the sense that there are idle resources and unused capacity, especially unused labor.
2. Recovery or revival Depression cannot last long. After a period of depression, recovery starts. It is a period wherein economic activities receive stimulus and recover from the shocks. This is the lower turning point from depression to revival towards upswing. Depression carries with itself the seeds of its own recovery. After sometime, the rays of hope appear on the business horizon. Pessimism is slowly replaced by optimism. Recovery helps to restore the confidence of the entrepreneurs and create a favorable climate for business Ventures
3. Prosperity or full-employment The recovery once started gathers momentum. The cumulative process of recovery continues till the economy reaches full employment. Full employment may be defined as a situation where in all available resources are fully employed at the current wage rate. Hence, achieving full employment has become the most important objective of almost all economies. Now, there is all-round stability in output, wages, prices, income, etc. Prosperity is a state of affair in which the real income consumed and produced and the level of employment are high or rising and there are no idle resources or unemployed workers or very few of either. During the period of prosperity, an economy experiences a lot of changes
4. Boom or overfull employment or inflation The prosperity phase does not stop at full employment. It gives way to the emergence of a boom. It is a phase wherein there will be an artificial and temporary prosperity in an economy. Business optimism stimulates further investment leading to rapid expansion in all spheres of business activities during the stage of full employment, and unutilized capacity gradually disappears. Idle resources are fully employed. Hence, a rise in investment can only mean increased pressure for the available workforce and materials. Factor inputs become scarce commanding higher remuneration. This leads to a rise in wages and prices. The production costs go up. Consequently, higher output is obtained only at a higher cost of production. Once full employment is reached, a further increase in the demand for factor inputs will lead to an increase in prices rather than an increase in output and income. The demand for loanable funds increases, leading to a rise in the interest rates. Now, there will be hectic economic activity. Soon a situation develops in which the number of jobs exceed the number of workers available in the market. Such a situation is known as overfull employment or hyper-employment. During this phase:
5. Recession – a turn from prosperity to depression The period of recession begins when the phase of prosperity ends. It is a period of time during which the aggregate level of economic activity starts declining. There is contraction or slowing down of business activities. After reaching the peak point, demand for goods decline. Overinvestment and production creates imbalance between supply and demand. Inventories of finished goods pile up. Future investment plans are given up. Orders placed for new equipment’s and raw materials and other inputs are cancelled. Replacement of worn out capital is postponed. The cancellation of orders for the inputs by the producers of consumer goods creates a chain reaction in the input market. Incomes of the factor inputs decline creating demand recession. In order to get rid of their high inventories and to clear off their bank obligations, producers reduce market prices. In anticipation of further fall in prices, consumers postpone their purchases. Production schedules by firms are curtailed and workers are laid-off. The banks curtail credit. Share prices decline, and there will be slackness in stock and financial market. Consequently, there will be a decline in investment, employment, income, and consumption. Liquidity preference suddenly develops. Multiplier and accelerator work in the reverse direction. Unemployment sets in the capital goods industries and with the passage of time, it spreads to other industries also. The process of recession is complete. The wave of pessimism gets transmitted to other sectors of the economy.
The whole economic system thereby runs into a crisis. A detailed study of the various phases of a business cycle is of paramount importance to the management of a business. It helps the management to formulate various anti-cyclical measures to be taken up to check the adverse effects of a trade cycle and create the necessary conditions for ensuring stability in business.
Question 2. Monopoly is the situation there exists a single control over the market producing a commodity having no substitutes with no possibilities for anyone to enter the industry to compete. In that situation, they will not charge a uniform price for all the customers in the market and also the pricing policy followed in that situation.
Answer:
Define Monopoly
Monopoly means existence of a single seller in the market. Monopoly isthat market form in which a single producer controls the whole supply of a single commodity which has no close substitutes. Monopoly may be defined, as a condition of production in which a single firm has the power to fix the price of the commodity or the output of the commodity. It is a situation there exists a single control over the market producing a commodity having no substitutes with no possibilities for any one to enter the industry to compete.
Features of monopoly
Anti-thesis of competition – Absence of competition in the market creates a situation of monopoly and hence, the seller faces no threat of competition.
Existence of a single seller – There will be only one seller in the market who exercises single control over the market.
Absence of substitutes – There are no close substitutes for the seller’sproduct with a strong cross elasticity of demand. Hence, buyers have noalternatives.
Control over supply – Seller will have complete control over output andsupply of the commodity.
Price maker – The monopolist is the price maker and in taking decisions on price fixation, he or she is independent. He or she can set the price to the best of his or her advantage. Hence, the monopolist can either charge a high price for all customers or adopt price discrimination policy if there are different types of buyers.
Entry barriers – Entry of new firms is difficult. Hence, monopolist will not have direct competitors in the market.
Firm and industry is same – There will be no difference between the firm and an industry.
Nature of firm – The monopoly firm may be a proprietary concern, partnership concern, Joint Stock Company or a public utility which pursues an independent price-output policy.
Existence of super normal profits – There will be opportunities for supernormal profits under monopoly, because market price is greater than the cost of production.
Kinds of Price Discrimination
Price Discrimination under Monopoly
Generally, the monopolist will not charge a uniform price for all the customers in the market. If it is beneficial to segment the market into homogenous groups, different methods will be followed under different
Circumstances. The policy of price discrimination refers to, the practice of a seller to charge different prices for different customers for the same commodity, produced under a single control without corresponding differences in cost. When a monopoly firm adopts this policy, it will become a discriminatory monopoly.
Kinds of price discrimination:
Three kinds of price discrimination are commonly seen. It is as follows:
1. Discrimination of the first degree – Under price discrimination of thefirst degree, the producer exploits the consumers to the maximum possible extent,
2.Discrimination of the second degree – In case of discrimination of the second degree, the monopolist charges different prices for markets of the same commodity, but not at a maximum possible rate but at a lower rate. 3.Discrimination of the third degree – In case of discrimination of the third degree, the markets are divided into many sub-markets or subgroups.
1. Personal differences
This refers to charging different prices for the same commodity due topersonal differences arising out of ignorance and irrationality of consumers, preferences, prejudices and needs.
2. Place
Markets may be divided on the basis of entry barriers, for example, price ofgoods will be high in the place where taxes are imposed. Price will be low in the place where there are no taxes or low taxes.
3. Different uses of the same commodity
When a particular commodity or service is meant for different purposes, different rates may be charged depending upon the nature of consumption. For example, different rates may be charged for the consumption of electricity for lighting, heating and productive purposes in the industry and in agriculture.
4. Time
Special concessions or rebates may be given during festival seasons or on important occasions.
5. Distance
Railway companies and other transporters, for example, charge lowerrates/km if the distance is long and higher rates if the distance is short.
6. Special orders
When the goods are made to order, it is easy to charge different prices to different customers. In this case, a particular consumer will not know the price charged by the firm for other consumers.
7. Nature of the product
Prices charged also depends on the nature of products, for example, railways charge higher prices for carrying coal and luxuries and lower prices for cotton, necessities of life, etc.
8. Quantity of purchase
When customers buy large quantities, discount will be allowed by the sellers. When small quantities are purchased, discount may not be offered.
9. Geographical area
Business enterprises may charge different prices at the national and international markets..
10. Discrimination on the basis of income and wealth
For example, a doctor may charge higher fees for rich patients and lower fees for poor patients.
11. Special classification of consumers
For example, transport authorities such as railways and roadways show concessions to students and daily travelers.
12. Age
Cinema houses in rural areas and transport authorities charge different rates for adults and children.
13. Preference or brands
Certain goods will be sold under different brand names or trademarks in order to attract customers.
14. Social and/or professional status of the buyer
A seller may charge a higher price, for those customers who occupy higher positions and have a higher social status and a lower price for others.
15. Urgency of the buyer
If a customer is in a hurry, higher price would be charged. Otherwise, normal price would be charged.
16. Discrimination on the basis of sex
In selling certain goods, producers may discriminate between male and female buyers by charging low prices to females.
17. Peak season and off peak season services
Hotel and transport authorities charge different rates during peak season and off-peak seasons.
Question 3.Fiscal policy is a package of economic measures of the government regarding public expenditure, public revenue, public debt or borrowings. It is very important since it refers to the budgetary policy of the government. Explain the fiscal policy and its instruments in detail.
Answer:
Definition of Fiscal policy
The term “fisc” in English language means “treasury”, and the policy related to treasury or government exchequer is known as fiscal policy. Fiscal policy is a package of economic measures of the Government regarding public expenditure, public revenue, public debt or public borrowings. It concerns itself with the aggregate effects of government expenditure and taxation on income, production and employment. In short, it refers to the budgetary policy of the government.
Fiscal policy is concerned with the manner in which all the different elements of public finance, while still primarily concerned with carrying out their own duties (as the first duty of a tax is to raise revenue), may collectively be geared to forward the aims of economic policy.” It involves alterations in government expenditures for goods and services or the level of tax rates. Unlike monetary policy, these measures involve direct government interference in the market for goods and services (in case ofpublic expenditure) and direct impact on private demand (in case of taxes).
Instruments of fiscal policy
1. Public revenue: It refers to the income or receipts of public authorities. It is classified into two parts - tax-revenue and non-tax revenue. Taxes are the main source of revenue to a government. There are two types of taxes. They are direct taxes such as personal and corporate income tax, property tax, expenditure tax, and indirect taxes such as customs duties, excise duties, sales tax (now called VAT). Administrative revenues are the bi-products of administrate functions of the government. They include fees, licence fees, price of public goods and services, fines, escheats and special assessment.
2. Public expenditure policy: It refers to the expenditure incurred by the public authorities like central, state and local governments. It is of two kinds: development or plan expenditure and non-development or nonplan expenditure. Plan expenditure includes income-generating projects like development of basic industries, generation of electricity, development of transport and communications and construction of dams. Non-plan expenditure includes defence expenditure, subsidies, interest payments and debt servicing changes.
3. Public debt or public borrowing policy: All loans taken by the government constitutes public debt. It refers to the borrowings made by the government to meet the ever-rising expenditure. It is of two types, internal borrowings and external borrowings.
4. Deficit financing: It is an extraordinary technique of financing the deficits in the budgets. It implies printing of fresh and new currency notes by the government by running down the cash balances with the central bank. The amount of new money printed by the government depends on the absorption capacity of the economy.
5. Built in stabilisers or automatic stabilisers (BIS): The automatic or built-in stabilisers imply automatic changes in tax collections and transfer payments or public expenditure programmes so that it may reduce the destabilising effect on aggregate effective demand. When income expands, automatic increase in taxes or reduction in transfer payments or government expenditures will tend to moderate the rise in income. On the contrary, when the income declines, tax falls automatically and transfers and government expenditure will rise and thus built-in stabilisers cushion the fall in income.
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Question 4. Explain the various methods of forecasting demand.
Answer:
Define Demand forecasting
Demand forecasting seeks to investigate and measure the forces that determine sales for existing and new products. Generally b companies plan their business - production or sales in anticipation of future demand. Hence, forecasting future demand becomes important. The art of successful business lies in avoiding or minimizing the risks involved as far as possible and facing the uncertainties in a most befitting manner.
Methods of Demand Forecasting
Demand forecasting is a highly complicated process as it deals with the estimation of future demand. It requires the assistance and opinion of experts in the field of sales management.
METHODS OF DEMAND FORECASTING
A.SURVEY METHODS STATISTICAL METHODS
1. Consumers interview Method
a) Survey of buyers’ intentions through questionnaire
b) Direct Interview Method
I. Complete Enumeration Method
II. Sample Survey Method
2. Collective Opinion Method
3. Expert Opinion method
4. End-Use Method
B STATISTICAL METHODS
1. Trend projection method
2. Economic Indicators
a) Survey of buyer’s intentions or preferences
It is one of the oldest methods of demand forecasting. It is also called “Opinion surveys”.
Under this method, consumer-buyers are requested to indicate their preferences and willingness about particular products.
The success of the survey method depends on many factors including:
1. The nature of the questions asked
2. The ability of the surveyed
3. The representative of the samples
4. Nature of the product
5. Characteristics of the market
6. Consumer-buyers’ behaviour, their intentions, attitudes, thoughts,motives, honesty etc.
7. Techniques of analysis
8. Conclusions drawn, etc
b) Direct interview method
Experience shows that due to varied reasons, many customers do not respond to questionnaires addressed to them, even if it is simple. Hence, an alternative method is developed. Under this method, customers are directly contacted and interviewed. Direct and simple questions are asked to them.
ii) Sample survey method or the consumer panel method
Experience of the experts show that it is impossible to approach all customers therefore, careful sampling of representative customers is essential. Hence, another variant of complete enumeration method has been developed, which is popularly known as sample survey method. Under this method, different cross sections of customers that make up the bulk of the market are carefully chosen. Only such consumers, who are selected from the relevant market through some sampling method, are interviewed
c) Collective opinion method or opinion survey method
This is a variant of the survey method. This method is also known as “Salesforce polling” or “Opinion poll method”. Under this method, sales representatives, professional experts,
d) Delphi method or experts opinion method
This method was originally developed at Rand Corporation in the late 1940’s by Olaf Helmer, Dalkey and Gordon. This method was used to predict future technological changes
e) End use or input – output method
Under this method, the sale of the product under consideration is projected on the basis of demand surveys of the industries using the given product as an intermediate product. The demand for the final product is the end-user demand of the intermediate product used in the production of the final product.
B.Statistical Methods
In this section, we will discuss the statistical method. It is the second most popular method of demand forecasting. It is the best available technique and most commonly used method in recent years.
Trend projection method
An old firm operating in the market for a long period will have the accumulated previous data on either production or sales pertaining to different years. If we arrange them in chronological order, we get ‘time series’. It is an ordered sequence of events over a period of time pertaining to certain variables.
The heart of this method lies in the use of time series. Changes in time series arise on account of the following reasons:
1. Secular or long run movements – Secular movements indicate the general conditions and direction in which graph of a time series move in relatively a long period of time.
2. Seasonal movements – Time series also undergo changes duringseasonal sales of a company. During festival season, sales clearanceseason, etc., we come across most unexpected changes.
3. Cyclical Movements – It implies change in time series or fluctuations inthe demand for a product during different phases of a business cycle likedepression, revival, boom, etc.
4. Random movements – When changes take place at random, we call them irregular or random movements. These movements imply sporadicchanges in time series occurring due to unforeseen events such as floods, strikes, elections, earth quakes, droughts and similar natural calamities. Such changes take place only in the short run. Still, they have their own impact on the sales of a company. An important question in this connection is how to ascertain the trend in time series? A statistician, in order to find out the pattern of change in timeseries, may make use of the following methods.
1. The least squares method
2. The free hand method
3. The moving average method
4. The method of semi-averages
The method of least squares is more scientific, popular and thus, more commonly used when compared to the other methods. It uses the straight-line equation Y= a + bx, to fit the trend to the data.
Question 5. Define monopolistic competition and explain its characteristics.
Answer:
Definition of monopolistic competition
Perfect competition and monopoly are two extreme forms of market situations, rarely to be found in the real world. Generally, markets are imperfect. Prof. Chamberlin is the main architect of the theory of Monopolistic Competition. This market exhibits the characteristics of both perfect competition and monopoly. Since modern markets are combined and integrated with monopoly power and competitive forces, they are called as Monopolistic Competition. It is a market structure in which a large number of small sellers sell differentiated products which are close, but not perfect substitutes for one another.
Characteristics of monopolistic competition
1. Existence of a large number of firms Under Monopolistic Competition, the number of firms producing a product will be large.
2. Market is characterised by imperfections
Imperfections may arise due to advertisements, differences in transport cost, irrational preferences of consumers,
3.Each firm produces a very close substitute for the existing brands of a product. Thus, differentiation provides ample opportunity for a firm to enter with the group or an industry.
4. Element of monopoly and competition
Every firm enjoys some sort of monopoly power over the product it produces.
5. Similar products but not identical Under monopolistic competition, the firm produces commodities which are similar to one another but not identical or homogenous.
6. Non-price competition
In this market, there will be competition among “Mini-monopolists” for their products and not for the price of the product. Thus, there is “product competition” rather than “price competition”.
7. Definite preference of the consumers
Consumers will have definite preference for particular variety or brands loyalty owing to the special features of a product produced by a particular firm.
8. Product differentiation
The most outstanding feature of monopolistic competition is product differentiation. Firms adopt different techniques to differentiate their products from one another. It may take mainly two forms:
a. Real product difference:
It will arise – i. When products are produced from materials of higher quality, durability and strength.
ii. When products are extraordinary on the basis of workmanship, higher cost of material, colour, design, size, shape, style, fragrance, etc.
iii. When personal care is taken to produce the products.
Producers adopt different methods to differentiate their products from that of
other close substitutes in the following manner:
i. Proper location of sales depots in busy and prestigious commercial centres.
ii. Selling goods under different trade marks, patenting rights, different brands and packing them in attractive wrappers or containers.
iii. Providing convenient working hours to customers.
iv. Home delivery of goods with no extra cost.
v. Courteous treatment to customers, quick and prompt delivery of goods in time and developing cordial, personal and friendly relations with them.
vi. Offering gifts, discounts, lucky dip schemes, special prices, guarantee of repairs and other free services, guarantee of products, fair dealings, sales on credit or credit cards and debit cards, etc.
vii. Agreement to take back goods if they are unsatisfactory.
viii. Air conditioned stores, etc.
9. Selling costs
All those expenses which are incurred on sales promotion of a product are called as selling costs. In the words of Prof. Chamberlin – “selling costs are those which are incurred by the producers (sellers) to alter the position or shape of the demand curve for a product”. In short, selling costs represents all those selling activities which are directed to persuade buyers to change their preferences so as to maximise the demand for a given commodity.
distributing pamphlets, cinema slides, radio, T.V., newspaper advertisements (informative and manipulative advertisements),etc.
10. The concept of industry and product groups
11. More elastic demand curve
Product differentiation makes the demand curve of the firm much more elastic. It implies that a slight reduction in the price of one product,
Question 6. When should a firm in perfectly competitive market shut down its operation?
Answer:
Define perfect competition
A perfectly competitive market is one in which the number of buyers and Sellers are large, all engaged in buying and selling a homogeneousproduct without any artificial restriction and, possessing perfect knowledge of the market at a time. According to Bilas, “the perfect competition is characterised by the presence of many firms; they all sell the same product which is identical. ThePure Competition is a part of perfect competition. Competition in themarket is said to be pure when the following conditions are satisfied:
· Prevalence of a large number of buyers and sellers.
· The commodity supplied by each firm is homogeneous.
· Free entry and exit of firms.
· Absence of any kind of monopoly element.
Under these conditions, no individual producer is in a position to influence
The market price of the product. According to Prof. E.H. Chamberlin –“Under Pure Competition, as the individual seller’s market is completely merged with the general one, he can sell as much as he pleases at the going price”. Further, he remarks, “Pure competition means unalloyed by monopoly elements. It is a much simpler and less exclusive concept than perfect competition”.
Prof. Joel Dean, after going through the features of pure competition, observes that, “Pure competition does exist in reality but it is a rare phenomenon”. Hence, it is stated that it is possible to come across pure competition in our life, for example, in the markets for rice, wheat, cotton,jowar, fruits, vegetables, eggs, etc., where there are a large number of sellers and buyers and practically all goods are identical. If we look at the present market, we notice that even in these cases, there is a possibility offorming cartels by sellers to influence the market price. Now, we shall turn our attention to perfect competition.
Explanation about the reason for the firm’s shut down in perfect competition
A competitive firm will reach equilibrium position at a point where short run MR equals MC. At this point, equilibrium output and price is determined. The firm in the short run will have only temporary equilibrium. The short run equilibrium price is not a stable price. It is also called as a sub – normal price.
If price is above the AVC and below the AC, it is called as “Loss minimisation” zone. If the price is lower than AVC, the firm is compelled to stop production altogether. While analysing short term equilibrium output and price, apart from making reference to SMC and AVC, we have to consider AC also. If AC = price, there will be normal profits. If AC is greater than price, there will be losses and, if AC is lower than price, then there will be supernormal profits. In the short run, a competitive firm can be in equilibrium at various pointsE1, E2 and E3 depending upon cost conditions and market price. At these various unstable equilibrium points, though MR = MC, the firm will be earning either supernormal profits or incurring losses or earning normal profits.
In the case of the firm:
1. At OP4 price, the firm will neither cover AFC nor AVC and hence it has to wind up its operations. It is regarded as shut-down point.
2. At OP1 price, OQ1 is the equilibrium output. E1 indicates the price or AR = AVC only. It does not cover fixed costs. The firm is ready to suffer this loss and continue in business with the hope that the price may go up in the future.
3. At OP2 price, OQ2 is the equilibrium output. E2 indicates the price = AR = AC. At this point MR is also equal to MC. At this level of output, total average revenue = total average cost. Hence, the firm is earning only normal profits. It is also known as Break - even point of the firm, a zone of no loss or no profit. The distance between two equilibrium points E2 and E1 indicates loss-minimisation zone.
4. At OP3 price, OQ3 is the output produced by the firm. At E3, MR = MC. But AR is greater than AC. For OQ3 output, the total cost is OQ3AB. The total revenue is OQ3E3P3. Hence, P3E3AB is the total supernormal profits. Thus, in the short run, a firm can either incur losses or earn supernormal profits. The main reason for this is that the producer does not have adequate time to make all kinds of adjustments to avoid losses in the short run.In case of the industry, E indicates the position of equilibrium where short run demand is equal to short run supply. OR indicates short run price and OQ indicates short run demand and supply.
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END OF PROJECT
MB0043 –Human Resource Management
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Question 1. What do you mean by Human Resource Management? Describe the functions of Human Resource Management?
Answer:
Definition of Human Resource Management :
One of the most useful definitions of Human Resources Management (HRM) is “ HRM involves all management decisions and practices that directly affect or influence the people or Human resources who work for the organization”. - By Fisher,
Functions of Human Resource Management :
HRM functions can be broadly classified into the following two categories:
1. Managerial functions
2. Operative functions
1. Managerial functions of HR department
The managerial functions of HR department include the following:
· Planning – Future course of action; it also includes identifying human resource requirements and forecasting personnel needs
· Organising – Division of labour; assignment of responsibility is part of the organization’s functions.
· Staffing – It is the process of obtaining and maintaining capable and Competent personnel in various positions at all levels, i.e., manpower planning, recruitment, selection, placement and induction.
· Directing – It is the process of directing all the available resources towards the common organizational goals.
· Controlling – It is the measurement and rectification of activities to ensure that the events conform to plans.
2.Operative functions of HR department
The Operative functions of HR department include the following:
Employment – Employment is the first operative function of HRM. This involves procuring and employing individuals with suitable knowledge, skills, experience and aptitude necessary to perform various jobs.
The various functions of employment are:
a) Job analysis – To ensure the satisfactory performance of an employee, his skills, abilities and motives to perform a job must match the requirements of the job.
b) HR planning – HR planning involves forecasting the human resource requirements of an organisation and the future supply of human resources, and making suitable adjustments between the two in correlation with the organisational plans.
c) Recruitment – Recruitment is the process of seeking and attracting prospective candidates against a vacancy in the organisation.
d) Selection – The purpose of employment selection is to choose the right candidate for a job.
e) Placement – After a selected candidate conveys his or her acceptance of the offer of employment made by an organisation, his or her placement has to be decided based on the needs of the organisation.
f) Induction – Introducing a new employee to the organisation, the organisation’s business, its culture, values and beliefs, and practices and procedures is termed as induction.
B.HR Development – HR development concentrates on developing the workforce so that both the employees and the organization in turn can achieve their goals. It focuses on strengthening the skills, knowledge and aptitudes of the employees.
a) Performance appraisal – This is the process of evaluating the performance of an employee on the job and developing a plan for the employee’s improvement.
b) Training – Training is the systematic development of knowledge, skills and attitudes required to perform a given task or job successfully, in an individual.
c) Management development – It is the concept of developing the employees of an organisation to meet future changes and challenges.
d) Career planning and development – Career planning and development refers to identifying one’s career goals and formulating plans for achieving them through various means such as education and work experience.
C .Compensation – Compensation includes all the rewards that an employee receives during the course of his or her job–for his or her contributions to the organisation. Compensation encompasses base salary, incentives, bonus and benefits, and is based on job evaluation.
a) Job evaluation – Job evaluation is a systematic determination of the value of each job in relation to other jobs in the organisation, in the industry and in the market. Human
b) Wage and salary administration – Wage and salary administration is the process of formulating and operating a suitable wage and salary programme.
c) Incentives – Incentives are the rewards that an employee earns in addition to regular wages or salary based on the performance of the individual, the team or the organisation.
d) Fringe benefits – Fringe benefits are monetary and non-monetary benefits given to employees during their employment, and sometimes, also in the post-employment period.
D.Employee relations – Employee relations deals with the employees, in the organizational context, as a social group that contributes to the organisation. It includes:
a) Increasing employee productivity.
b) Keeping the employees satisfied and motivated
c) Developing team building, team management, and leadership skills in employees.
d) Designing and implementing a fast and suitable grievance management system.
e) Ensuring discipline among the employees by prompt action to correct deviations.
f) f) Supporting employees by counseling and developing them into complete individuals and responsible citizens.
g) Enhancing the quality of both work and personal life of the employees.
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Question 2. Discuss the elements of a career Planning Programme. Explain some of the benefits of career Planning Program to an Organization?
Answer:
Elements of a Career Planning Programme
There are four distinct elements of career planning programme: Individual assessment and need an Organisational assessment and opportunity a
Need – opportunity alignment
Career counselling
1.Individual assessment and need analysis
Many people begin their careers without any formal assessment of their abilities, interests, career needs and goals. This phenomenon of people entering their jobs, occupations and careers with little attention to career Planning and then feeling disengaged is known as career drift.
2.Organisational assessment and opportunity analysis
For an employee’s goals and aspirations to be fulfilled, a basic requirement is that the goals must be realistic and achievable.
3.Need – opportunity alignmentThe organisation plays an important role in helping the employee make this alignment.
4.Career counselling
This is the final stage of career planning. The supervisor as well as the HR department, has to counsel the employee regarding the available opportunities, the employee’s aspirations and of course, his competencies
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Question 3. What do you mean by HRIS? Explain the components of HRIS. Describe the different applications of HRIS in Human Resource Management.
Answer:
Meaning of HRIS:
Information is the unrefined material of planning. A quality planning effort cannot be done without proper and adequate information. Information is provided in an organisation by an inter-related set of procedures and process known as an information system.
Components of HRIS
HRIS performs three interconnected activities as a database:
i) Receiving inputs in the form of data from different sources.
ii) Storing and processing data with the purpose of transforming them into meaningful information
iii) Generating output in different forms, as required by the users
Input
Data Storage and Processing
Output
Input
Input refers to all employee-related data. HR policies, procedures, corporate goals and information about the statutory provisions entered into HRIS for conversion into the desired form of output.
Data processing
Data processing refers to the storing and processing of data by a computer with the help of the software that issues instructions for processing.
Output
Output refers to the generation of reports in the form desired by the users.
Different Applications of an HRIS :
Applicant tracking system – Many organisations are now gradually adopting and installing applicant tracking system software. The purpose of this system is to give support to recruitment process and to streamline the overall recruitment process.
Training and development system – The purpose of a training and development system is to help the employees gain new knowledge. HRIS facilitates workplace e-learning by the employees as part of their training programme.
Compensation management system – The compensation management system aims at computing employee payments through an integrated payroll system.
Performance management system – The main goal of the performance management system is to track employee performance reviews and due dates for next reviews.
Manpower planning system – The manpower planning system manages the employee inventory and supports several HR activities.
Succession planning system – The succession planning module brings the identified and selected employees into the succession channel.
Grievance management system – The grievance management assists the management in pre-empting employee grievance by analysing the nature, sources and frequency of earlier grievances.
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Question 4 “Discipline in the board sence means orderliness – the opposite of confusion.” What do you mean by Discipline? Explain the basic guidelines of disciplinary Policy.
Answer:
Discipline is employee self-control which prompts him/her to willingly cooperate with the organisational standards, rules, objectives, etc.Discipline is best defined as the observation of principles, rules or any other laid down procedures, practices, written or otherwise in the organisation by the employees or group of employees, to whom these apply, for smooth and effective functioning of the organisation.
In its most practical form, employee misconduct does not mean strict and technical observance of rigid rules and regulations. It simply means working, cooperating and behaving in a normal and orderly way, as responsible adults.
The principles for maintenance of discipline.
1. Location of responsibility:
The responsibility of creating awareness regarding discipline is entrusted with every individual in the organisation. In case of employee indiscipline, the line manager issues only verbal and written warnings.
2. Proper formulation and communication of rules:
The employees are expected to conform to rules and regulations, and behave in a responsible manner. It is essential that these rules and regulations are carefully formulated.
3. Rules and regulations should be reasonable:
Today’s organisations pay a lot of attention, and rightly so, towards formulating equitable polices that protect employee as well as the organisation’s values and rights. Often organisations involve employee representatives in formulating these policies and guidelines.
4. Equal treatment:
An employee should realise the consequence of his/her inappropriate behaviour and if he/she is going against the norms or the rules. 5. Disciplinary action should be taken in private:
While the policies governing the acceptable code of conduct are communicated publicly, the reprimand for non-compliance needs to be carried out in private.
6. Importance of promptness in taking disciplinary action:
As goes the popular saying – justice delayed is justice denied. If the action for review and reprimand is taken long after a violation of a policy/rule has happened, it loses its positive and corrective influence.
7. Innocence is presumed:
Again as per the fundamental rights of a human being, an individual is presumed to be innocent until he proven to be guilty.
8. Get the facts:
Before taking any disciplinary action, it is important to ensure that records of the offence and any previous warnings are reviewed closely.
9. Action should be taken in a non-threatening atmosphere:
Based on appropriate evidence management can take proper action against the accused employee.
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Question 5. Suppose you have joined as an HR and you have been assigned a task to carry out the grievance handling procedure in your organization. What according to you are the causes of grievance? Describe the detail the grievance handling Procedure.
Answer:
Grievances can arise out of the day to day working relations in an organisation. Relations with supervisors and
colleagues also determine employee’s job satisfaction.
Grievances may occur for a number of reasons:
a. Economic: Wage fixation, over time bonus, wage revision etc.Employees may feel that they are paid less when compared to others.
b. Work environment: Poor physical conditions of workplace, tightproduction norms, defective tools and equipment, poor quality ofmaterials, unfair rules, lack of recognitions etc.
c. Supervision: Relates to the attitude of the supervisor towards the employee such as perceived notion of bias, favoritism, nepotism, caste affiliations, regional feelings etc.
d. Work group: Employee is unable to adjust with his colleagues, suffers from feelings of neglect, humiliations.
e. Miscellaneous: These include issues related to certain violations with respect to promotions, safety methods, transfer, disciplinary rules, fines, granting leave, medical facilities, etc.
The grievance handling procedure.
The following guidelines may help a supervisor while dealing with grievance:
ü Treat each case as important and get the grievance in writing.
ü Talk to the employee directly. Encourage him/her to speak the truth.Give him/her a patient hearing.
ü Discuss in a private place. Ensure confidentially if necessary
Handle each case within a time-frame
· Examine company provisions in each case, Identify violations, if any, Donot hold back the remedy if the company is wrong. Inform your supervisor about all grievances.
· Gather information from the union representative, what he has to say, what he wants etc. Give short replies, uncovering the truth as well as provisions. Treat him properly.
· Control your emotions, your remark and behavior
· Maintain proper records and follow up the action taken in each case The essential requirements of a good grievance procedure are:
· Legality sustainable
· It should be ensured by the organisation that its grievance procedure is in conformity with the existing laws of nation.
· The procedure cannot violate any of the rights of the employees guaranteed by the law.
· Mutually acceptable
· In order to be effective, the grievance procedure must enjoy theconfidence of all the relevant parties, i.e., the management and the unions. It should not be like a battleground. Procedure must ensureequity, justice and openness.
Easily understandable
· The grievance procedure must be reasonably simple and easily understandable.
· Known to all the employees of the organisation.
· If someone has some grievance, then he/she should know who is to be contacted.
Highly flexible
· The grievance procedure should be flexible enough to respond to the reported grievance quickly. The number of stages in the grievance procedure should be kept to the minimum.
Sufficiently knowledgeable:
· The managers, supervisors, union leadersand others dealing with employee grievance must be well-trained in the grievance handling procedure.
Question 6. Write Short Notes on the following:
A) Competency Mapping
B) Flexi Time
Answer:
A) Competency Mapping :
Employee skills, knowledge and abilities are not sufficient to achieve the desired goals. Additional skills such as mind-set, values, belief and commitment are required by employees to achieve their desired performance. Thus competency is the sum of knowledge, skills, attitude and personality of an individual as required for performing current and future organisational needs.
The steps involved in competency mapping with an end result of job evaluation include the following:
1) Conduct a job analysis by asking incumbents to complete a Position Information Questionnaire (PIQ). This can be provided for incumbents to complete or you can conduct one-on-one interviews using the PIQ as a guide
2) Using the results of the job analysis, you are ready to develop a competency based job description
3) With a competency based job description, you are on your way to begin mapping the competencies throughout your human resources processes.
4) Taking the competency mapping one step further, you can use the results of your evaluation to identify in what competencies individuals need additional development or training.
Competency Assessment
B) Flexi Time :
Flexi time is a scheme where an organisation gives its employees the opportunity of a flexible working hours arrangement.
Under flexi time, there is normally a core period of the day when employees must be at work (e.g., between 10 A.M. and 4 P.M.),
An example of a typical flexi time day is below:
· Begin work between 07.00 – 10.00 (flexitime)
· Must be there between 10.00 – 12.00 (core time).The hours employees work between these times are credited to their flexi time balance. For example, if the employees work a 35-hour week, then, over four weeks, they will be obliged to work for 140 hours. If they work more than the
Benefits of flexi time
Utilising a flexi time policy in an organisation can benefit everyone involved– employers, employees and their families.
Benefits to an organisation
Introducing flexible working hours could bring the following benefits in a business:
· Reduces stress and fatigue, and unfocussed employees.
· Increases employee satisfaction and production.
· Greater staff retention and increased ability to attract new staff.
Recruitment costs are thus reduced.
· Ability to attract a higher level of skills because the business is able toattract and retain a skilled and more diverse workforce.
· Work time visits to doctor/dentist are in employees’ time.
· Measures employee’s attendance – you only pay for the time in attendance (delayed arrival caused by traffic congestion, delayed trains etc. are at employee’s expense).
· An incentive to complete the tasks the same day, instead of being carried forward to the next day, since extra hours worked count towards the final target..
· Increased customer satisfaction and loyalty as a result of the above
Benefits to Employees
§ Increased opportunity to fit other commitments and activities with work, and make better use of their free time
§ Better control of their workloads and manage a better balance between life and work. Allows the employees to schedule their travel; time to avoid congestion
§ Allows employees bank time to be used for leisure/personal activities.
§ Avoid the stress of commuting at peak times if their start and finish times are staggered or if they work from home.
§ Personal matters can be sorted without having to take time off.
§ Helpful for people caring for children or other dependants, others also may find flexible working helpful too.
Disadvantages of Flexi Tim :Administration of the system may make demands upon a HR department and create additional workload.
END OF ASSIGNMENT
असाइनमेंट्स के लिए कॉल करे 8400000606 या e-mail करें [email protected]
BY SIR MAHAVEER SINGH BHARDWAJ
MB0042- MANAGERIAL ECONOMICS
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Question1. Define the term Business Cycle and also explain the phases of business or trade cycle in brief.
Answer:
Definition of Business cycle
The term business cycle refers to a wave-like fluctuation in the overall level of economic activity; particularly in national output, income, employment, and prices that occur in a more or less regular time sequence. It is the rhythmic fluctuations in the aggregate level of economic activity of a nation. Different writers have defined business cycles in different ways. Business cycles are an alternation of periods of prosperity and depression of good and bad trade. Such cycles consist of recurring alternations of expansion and contraction in the aggregate economic activity, the alternating movements in each direction being self-reinforcing and pervading virtually all parts of the economy. A trade cycle is composed of periods of good trade characterized by rising prices and low unemployment percentages, alternating with periods of bad trade characterized by falling prices and high unemployment percentages.
Explanation of Phases of business cycle
Basically, a business cycle has only two parts - expansion and contraction or prosperity and depression. Peaks and troughs are the two main mark-off points of a business cycle. The expansion phase starts from revival and includes prosperity and boom. The contraction phase includes recession, depression, and trough. In between these two main parts, we come across a
few other interrelated transitional phases. In its broader perspective, a business cycle has five phases. They are as follows.
1. Depression, contraction, or downswing It is the first phase of a trade cycle. It is a protracted period in which business activity is far below the normal level and is extremely low. Depression is a state of affairs in which the real income consumed or volume of production per head and the rate of employment are falling and are sub-normal in the sense that there are idle resources and unused capacity, especially unused labor.
2. Recovery or revival Depression cannot last long. After a period of depression, recovery starts. It is a period wherein economic activities receive stimulus and recover from the shocks. This is the lower turning point from depression to revival towards upswing. Depression carries with itself the seeds of its own recovery. After sometime, the rays of hope appear on the business horizon. Pessimism is slowly replaced by optimism. Recovery helps to restore the confidence of the entrepreneurs and create a favorable climate for business Ventures
3. Prosperity or full-employment The recovery once started gathers momentum. The cumulative process of recovery continues till the economy reaches full employment. Full employment may be defined as a situation where in all available resources are fully employed at the current wage rate. Hence, achieving full employment has become the most important objective of almost all economies. Now, there is all-round stability in output, wages, prices, income, etc. Prosperity is a state of affair in which the real income consumed and produced and the level of employment are high or rising and there are no idle resources or unemployed workers or very few of either. During the period of prosperity, an economy experiences a lot of changes
4. Boom or overfull employment or inflation The prosperity phase does not stop at full employment. It gives way to the emergence of a boom. It is a phase wherein there will be an artificial and temporary prosperity in an economy. Business optimism stimulates further investment leading to rapid expansion in all spheres of business activities during the stage of full employment, and unutilized capacity gradually disappears. Idle resources are fully employed. Hence, a rise in investment can only mean increased pressure for the available workforce and materials. Factor inputs become scarce commanding higher remuneration. This leads to a rise in wages and prices. The production costs go up. Consequently, higher output is obtained only at a higher cost of production. Once full employment is reached, a further increase in the demand for factor inputs will lead to an increase in prices rather than an increase in output and income. The demand for loanable funds increases, leading to a rise in the interest rates. Now, there will be hectic economic activity. Soon a situation develops in which the number of jobs exceed the number of workers available in the market. Such a situation is known as overfull employment or hyper-employment. During this phase:
5. Recession – a turn from prosperity to depression The period of recession begins when the phase of prosperity ends. It is a period of time during which the aggregate level of economic activity starts declining. There is contraction or slowing down of business activities. After reaching the peak point, demand for goods decline. Overinvestment and production creates imbalance between supply and demand. Inventories of finished goods pile up. Future investment plans are given up. Orders placed for new equipment’s and raw materials and other inputs are cancelled. Replacement of worn out capital is postponed. The cancellation of orders for the inputs by the producers of consumer goods creates a chain reaction in the input market. Incomes of the factor inputs decline creating demand recession. In order to get rid of their high inventories and to clear off their bank obligations, producers reduce market prices. In anticipation of further fall in prices, consumers postpone their purchases. Production schedules by firms are curtailed and workers are laid-off. The banks curtail credit. Share prices decline, and there will be slackness in stock and financial market. Consequently, there will be a decline in investment, employment, income, and consumption. Liquidity preference suddenly develops. Multiplier and accelerator work in the reverse direction. Unemployment sets in the capital goods industries and with the passage of time, it spreads to other industries also. The process of recession is complete. The wave of pessimism gets transmitted to other sectors of the economy.
The whole economic system thereby runs into a crisis. A detailed study of the various phases of a business cycle is of paramount importance to the management of a business. It helps the management to formulate various anti-cyclical measures to be taken up to check the adverse effects of a trade cycle and create the necessary conditions for ensuring stability in business.
Question 2. Monopoly is the situation there exists a single control over the market producing a commodity having no substitutes with no possibilities for anyone to enter the industry to compete. In that situation, they will not charge a uniform price for all the customers in the market and also the pricing policy followed in that situation.
Answer:
Define Monopoly
Monopoly means existence of a single seller in the market. Monopoly isthat market form in which a single producer controls the whole supply of a single commodity which has no close substitutes. Monopoly may be defined, as a condition of production in which a single firm has the power to fix the price of the commodity or the output of the commodity. It is a situation there exists a single control over the market producing a commodity having no substitutes with no possibilities for any one to enter the industry to compete.
Features of monopoly
Anti-thesis of competition – Absence of competition in the market creates a situation of monopoly and hence, the seller faces no threat of competition.
Existence of a single seller – There will be only one seller in the market who exercises single control over the market.
Absence of substitutes – There are no close substitutes for the seller’sproduct with a strong cross elasticity of demand. Hence, buyers have noalternatives.
Control over supply – Seller will have complete control over output andsupply of the commodity.
Price maker – The monopolist is the price maker and in taking decisions on price fixation, he or she is independent. He or she can set the price to the best of his or her advantage. Hence, the monopolist can either charge a high price for all customers or adopt price discrimination policy if there are different types of buyers.
Entry barriers – Entry of new firms is difficult. Hence, monopolist will not have direct competitors in the market.
Firm and industry is same – There will be no difference between the firm and an industry.
Nature of firm – The monopoly firm may be a proprietary concern, partnership concern, Joint Stock Company or a public utility which pursues an independent price-output policy.
Existence of super normal profits – There will be opportunities for supernormal profits under monopoly, because market price is greater than the cost of production.
Kinds of Price Discrimination
Price Discrimination under Monopoly
Generally, the monopolist will not charge a uniform price for all the customers in the market. If it is beneficial to segment the market into homogenous groups, different methods will be followed under different
Circumstances. The policy of price discrimination refers to, the practice of a seller to charge different prices for different customers for the same commodity, produced under a single control without corresponding differences in cost. When a monopoly firm adopts this policy, it will become a discriminatory monopoly.
Kinds of price discrimination:
Three kinds of price discrimination are commonly seen. It is as follows:
1. Discrimination of the first degree – Under price discrimination of thefirst degree, the producer exploits the consumers to the maximum possible extent,
2.Discrimination of the second degree – In case of discrimination of the second degree, the monopolist charges different prices for markets of the same commodity, but not at a maximum possible rate but at a lower rate. 3.Discrimination of the third degree – In case of discrimination of the third degree, the markets are divided into many sub-markets or subgroups.
1. Personal differences
This refers to charging different prices for the same commodity due topersonal differences arising out of ignorance and irrationality of consumers, preferences, prejudices and needs.
2. Place
Markets may be divided on the basis of entry barriers, for example, price ofgoods will be high in the place where taxes are imposed. Price will be low in the place where there are no taxes or low taxes.
3. Different uses of the same commodity
When a particular commodity or service is meant for different purposes, different rates may be charged depending upon the nature of consumption. For example, different rates may be charged for the consumption of electricity for lighting, heating and productive purposes in the industry and in agriculture.
4. Time
Special concessions or rebates may be given during festival seasons or on important occasions.
5. Distance
Railway companies and other transporters, for example, charge lowerrates/km if the distance is long and higher rates if the distance is short.
6. Special orders
When the goods are made to order, it is easy to charge different prices to different customers. In this case, a particular consumer will not know the price charged by the firm for other consumers.
7. Nature of the product
Prices charged also depends on the nature of products, for example, railways charge higher prices for carrying coal and luxuries and lower prices for cotton, necessities of life, etc.
8. Quantity of purchase
When customers buy large quantities, discount will be allowed by the sellers. When small quantities are purchased, discount may not be offered.
9. Geographical area
Business enterprises may charge different prices at the national and international markets..
10. Discrimination on the basis of income and wealth
For example, a doctor may charge higher fees for rich patients and lower fees for poor patients.
11. Special classification of consumers
For example, transport authorities such as railways and roadways show concessions to students and daily travelers.
12. Age
Cinema houses in rural areas and transport authorities charge different rates for adults and children.
13. Preference or brands
Certain goods will be sold under different brand names or trademarks in order to attract customers.
14. Social and/or professional status of the buyer
A seller may charge a higher price, for those customers who occupy higher positions and have a higher social status and a lower price for others.
15. Urgency of the buyer
If a customer is in a hurry, higher price would be charged. Otherwise, normal price would be charged.
16. Discrimination on the basis of sex
In selling certain goods, producers may discriminate between male and female buyers by charging low prices to females.
17. Peak season and off peak season services
Hotel and transport authorities charge different rates during peak season and off-peak seasons.
Question 3.Fiscal policy is a package of economic measures of the government regarding public expenditure, public revenue, public debt or borrowings. It is very important since it refers to the budgetary policy of the government. Explain the fiscal policy and its instruments in detail.
Answer:
Definition of Fiscal policy
The term “fisc” in English language means “treasury”, and the policy related to treasury or government exchequer is known as fiscal policy. Fiscal policy is a package of economic measures of the Government regarding public expenditure, public revenue, public debt or public borrowings. It concerns itself with the aggregate effects of government expenditure and taxation on income, production and employment. In short, it refers to the budgetary policy of the government.
Fiscal policy is concerned with the manner in which all the different elements of public finance, while still primarily concerned with carrying out their own duties (as the first duty of a tax is to raise revenue), may collectively be geared to forward the aims of economic policy.” It involves alterations in government expenditures for goods and services or the level of tax rates. Unlike monetary policy, these measures involve direct government interference in the market for goods and services (in case ofpublic expenditure) and direct impact on private demand (in case of taxes).
Instruments of fiscal policy
1. Public revenue: It refers to the income or receipts of public authorities. It is classified into two parts - tax-revenue and non-tax revenue. Taxes are the main source of revenue to a government. There are two types of taxes. They are direct taxes such as personal and corporate income tax, property tax, expenditure tax, and indirect taxes such as customs duties, excise duties, sales tax (now called VAT). Administrative revenues are the bi-products of administrate functions of the government. They include fees, licence fees, price of public goods and services, fines, escheats and special assessment.
2. Public expenditure policy: It refers to the expenditure incurred by the public authorities like central, state and local governments. It is of two kinds: development or plan expenditure and non-development or nonplan expenditure. Plan expenditure includes income-generating projects like development of basic industries, generation of electricity, development of transport and communications and construction of dams. Non-plan expenditure includes defence expenditure, subsidies, interest payments and debt servicing changes.
3. Public debt or public borrowing policy: All loans taken by the government constitutes public debt. It refers to the borrowings made by the government to meet the ever-rising expenditure. It is of two types, internal borrowings and external borrowings.
4. Deficit financing: It is an extraordinary technique of financing the deficits in the budgets. It implies printing of fresh and new currency notes by the government by running down the cash balances with the central bank. The amount of new money printed by the government depends on the absorption capacity of the economy.
5. Built in stabilisers or automatic stabilisers (BIS): The automatic or built-in stabilisers imply automatic changes in tax collections and transfer payments or public expenditure programmes so that it may reduce the destabilising effect on aggregate effective demand. When income expands, automatic increase in taxes or reduction in transfer payments or government expenditures will tend to moderate the rise in income. On the contrary, when the income declines, tax falls automatically and transfers and government expenditure will rise and thus built-in stabilisers cushion the fall in income.
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Question 4. Explain the various methods of forecasting demand.
Answer:
Define Demand forecasting
Demand forecasting seeks to investigate and measure the forces that determine sales for existing and new products. Generally b companies plan their business - production or sales in anticipation of future demand. Hence, forecasting future demand becomes important. The art of successful business lies in avoiding or minimizing the risks involved as far as possible and facing the uncertainties in a most befitting manner.
Methods of Demand Forecasting
Demand forecasting is a highly complicated process as it deals with the estimation of future demand. It requires the assistance and opinion of experts in the field of sales management.
METHODS OF DEMAND FORECASTING
A.SURVEY METHODS STATISTICAL METHODS
1. Consumers interview Method
a) Survey of buyers’ intentions through questionnaire
b) Direct Interview Method
I. Complete Enumeration Method
II. Sample Survey Method
2. Collective Opinion Method
3. Expert Opinion method
4. End-Use Method
B STATISTICAL METHODS
1. Trend projection method
2. Economic Indicators
a) Survey of buyer’s intentions or preferences
It is one of the oldest methods of demand forecasting. It is also called “Opinion surveys”.
Under this method, consumer-buyers are requested to indicate their preferences and willingness about particular products.
The success of the survey method depends on many factors including:
1. The nature of the questions asked
2. The ability of the surveyed
3. The representative of the samples
4. Nature of the product
5. Characteristics of the market
6. Consumer-buyers’ behaviour, their intentions, attitudes, thoughts,motives, honesty etc.
7. Techniques of analysis
8. Conclusions drawn, etc
b) Direct interview method
Experience shows that due to varied reasons, many customers do not respond to questionnaires addressed to them, even if it is simple. Hence, an alternative method is developed. Under this method, customers are directly contacted and interviewed. Direct and simple questions are asked to them.
ii) Sample survey method or the consumer panel method
Experience of the experts show that it is impossible to approach all customers therefore, careful sampling of representative customers is essential. Hence, another variant of complete enumeration method has been developed, which is popularly known as sample survey method. Under this method, different cross sections of customers that make up the bulk of the market are carefully chosen. Only such consumers, who are selected from the relevant market through some sampling method, are interviewed
c) Collective opinion method or opinion survey method
This is a variant of the survey method. This method is also known as “Salesforce polling” or “Opinion poll method”. Under this method, sales representatives, professional experts,
d) Delphi method or experts opinion method
This method was originally developed at Rand Corporation in the late 1940’s by Olaf Helmer, Dalkey and Gordon. This method was used to predict future technological changes
e) End use or input – output method
Under this method, the sale of the product under consideration is projected on the basis of demand surveys of the industries using the given product as an intermediate product. The demand for the final product is the end-user demand of the intermediate product used in the production of the final product.
B.Statistical Methods
In this section, we will discuss the statistical method. It is the second most popular method of demand forecasting. It is the best available technique and most commonly used method in recent years.
Trend projection method
An old firm operating in the market for a long period will have the accumulated previous data on either production or sales pertaining to different years. If we arrange them in chronological order, we get ‘time series’. It is an ordered sequence of events over a period of time pertaining to certain variables.
The heart of this method lies in the use of time series. Changes in time series arise on account of the following reasons:
1. Secular or long run movements – Secular movements indicate the general conditions and direction in which graph of a time series move in relatively a long period of time.
2. Seasonal movements – Time series also undergo changes duringseasonal sales of a company. During festival season, sales clearanceseason, etc., we come across most unexpected changes.
3. Cyclical Movements – It implies change in time series or fluctuations inthe demand for a product during different phases of a business cycle likedepression, revival, boom, etc.
4. Random movements – When changes take place at random, we call them irregular or random movements. These movements imply sporadicchanges in time series occurring due to unforeseen events such as floods, strikes, elections, earth quakes, droughts and similar natural calamities. Such changes take place only in the short run. Still, they have their own impact on the sales of a company. An important question in this connection is how to ascertain the trend in time series? A statistician, in order to find out the pattern of change in timeseries, may make use of the following methods.
1. The least squares method
2. The free hand method
3. The moving average method
4. The method of semi-averages
The method of least squares is more scientific, popular and thus, more commonly used when compared to the other methods. It uses the straight-line equation Y= a + bx, to fit the trend to the data.
Question 5. Define monopolistic competition and explain its characteristics.
Answer:
Definition of monopolistic competition
Perfect competition and monopoly are two extreme forms of market situations, rarely to be found in the real world. Generally, markets are imperfect. Prof. Chamberlin is the main architect of the theory of Monopolistic Competition. This market exhibits the characteristics of both perfect competition and monopoly. Since modern markets are combined and integrated with monopoly power and competitive forces, they are called as Monopolistic Competition. It is a market structure in which a large number of small sellers sell differentiated products which are close, but not perfect substitutes for one another.
Characteristics of monopolistic competition
1. Existence of a large number of firms Under Monopolistic Competition, the number of firms producing a product will be large.
2. Market is characterised by imperfections
Imperfections may arise due to advertisements, differences in transport cost, irrational preferences of consumers,
3.Each firm produces a very close substitute for the existing brands of a product. Thus, differentiation provides ample opportunity for a firm to enter with the group or an industry.
4. Element of monopoly and competition
Every firm enjoys some sort of monopoly power over the product it produces.
5. Similar products but not identical Under monopolistic competition, the firm produces commodities which are similar to one another but not identical or homogenous.
6. Non-price competition
In this market, there will be competition among “Mini-monopolists” for their products and not for the price of the product. Thus, there is “product competition” rather than “price competition”.
7. Definite preference of the consumers
Consumers will have definite preference for particular variety or brands loyalty owing to the special features of a product produced by a particular firm.
8. Product differentiation
The most outstanding feature of monopolistic competition is product differentiation. Firms adopt different techniques to differentiate their products from one another. It may take mainly two forms:
a. Real product difference:
It will arise – i. When products are produced from materials of higher quality, durability and strength.
ii. When products are extraordinary on the basis of workmanship, higher cost of material, colour, design, size, shape, style, fragrance, etc.
iii. When personal care is taken to produce the products.
Producers adopt different methods to differentiate their products from that of
other close substitutes in the following manner:
i. Proper location of sales depots in busy and prestigious commercial centres.
ii. Selling goods under different trade marks, patenting rights, different brands and packing them in attractive wrappers or containers.
iii. Providing convenient working hours to customers.
iv. Home delivery of goods with no extra cost.
v. Courteous treatment to customers, quick and prompt delivery of goods in time and developing cordial, personal and friendly relations with them.
vi. Offering gifts, discounts, lucky dip schemes, special prices, guarantee of repairs and other free services, guarantee of products, fair dealings, sales on credit or credit cards and debit cards, etc.
vii. Agreement to take back goods if they are unsatisfactory.
viii. Air conditioned stores, etc.
9. Selling costs
All those expenses which are incurred on sales promotion of a product are called as selling costs. In the words of Prof. Chamberlin – “selling costs are those which are incurred by the producers (sellers) to alter the position or shape of the demand curve for a product”. In short, selling costs represents all those selling activities which are directed to persuade buyers to change their preferences so as to maximise the demand for a given commodity.
distributing pamphlets, cinema slides, radio, T.V., newspaper advertisements (informative and manipulative advertisements),etc.
10. The concept of industry and product groups
11. More elastic demand curve
Product differentiation makes the demand curve of the firm much more elastic. It implies that a slight reduction in the price of one product,
Question 6. When should a firm in perfectly competitive market shut down its operation?
Answer:
Define perfect competition
A perfectly competitive market is one in which the number of buyers and Sellers are large, all engaged in buying and selling a homogeneousproduct without any artificial restriction and, possessing perfect knowledge of the market at a time. According to Bilas, “the perfect competition is characterised by the presence of many firms; they all sell the same product which is identical. ThePure Competition is a part of perfect competition. Competition in themarket is said to be pure when the following conditions are satisfied:
· Prevalence of a large number of buyers and sellers.
· The commodity supplied by each firm is homogeneous.
· Free entry and exit of firms.
· Absence of any kind of monopoly element.
Under these conditions, no individual producer is in a position to influence
The market price of the product. According to Prof. E.H. Chamberlin –“Under Pure Competition, as the individual seller’s market is completely merged with the general one, he can sell as much as he pleases at the going price”. Further, he remarks, “Pure competition means unalloyed by monopoly elements. It is a much simpler and less exclusive concept than perfect competition”.
Prof. Joel Dean, after going through the features of pure competition, observes that, “Pure competition does exist in reality but it is a rare phenomenon”. Hence, it is stated that it is possible to come across pure competition in our life, for example, in the markets for rice, wheat, cotton,jowar, fruits, vegetables, eggs, etc., where there are a large number of sellers and buyers and practically all goods are identical. If we look at the present market, we notice that even in these cases, there is a possibility offorming cartels by sellers to influence the market price. Now, we shall turn our attention to perfect competition.
Explanation about the reason for the firm’s shut down in perfect competition
A competitive firm will reach equilibrium position at a point where short run MR equals MC. At this point, equilibrium output and price is determined. The firm in the short run will have only temporary equilibrium. The short run equilibrium price is not a stable price. It is also called as a sub – normal price.
If price is above the AVC and below the AC, it is called as “Loss minimisation” zone. If the price is lower than AVC, the firm is compelled to stop production altogether. While analysing short term equilibrium output and price, apart from making reference to SMC and AVC, we have to consider AC also. If AC = price, there will be normal profits. If AC is greater than price, there will be losses and, if AC is lower than price, then there will be supernormal profits. In the short run, a competitive firm can be in equilibrium at various pointsE1, E2 and E3 depending upon cost conditions and market price. At these various unstable equilibrium points, though MR = MC, the firm will be earning either supernormal profits or incurring losses or earning normal profits.
In the case of the firm:
1. At OP4 price, the firm will neither cover AFC nor AVC and hence it has to wind up its operations. It is regarded as shut-down point.
2. At OP1 price, OQ1 is the equilibrium output. E1 indicates the price or AR = AVC only. It does not cover fixed costs. The firm is ready to suffer this loss and continue in business with the hope that the price may go up in the future.
3. At OP2 price, OQ2 is the equilibrium output. E2 indicates the price = AR = AC. At this point MR is also equal to MC. At this level of output, total average revenue = total average cost. Hence, the firm is earning only normal profits. It is also known as Break - even point of the firm, a zone of no loss or no profit. The distance between two equilibrium points E2 and E1 indicates loss-minimisation zone.
4. At OP3 price, OQ3 is the output produced by the firm. At E3, MR = MC. But AR is greater than AC. For OQ3 output, the total cost is OQ3AB. The total revenue is OQ3E3P3. Hence, P3E3AB is the total supernormal profits. Thus, in the short run, a firm can either incur losses or earn supernormal profits. The main reason for this is that the producer does not have adequate time to make all kinds of adjustments to avoid losses in the short run.In case of the industry, E indicates the position of equilibrium where short run demand is equal to short run supply. OR indicates short run price and OQ indicates short run demand and supply.
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END OF PROJECT
MB0043 –Human Resource Management
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Question 1. What do you mean by Human Resource Management? Describe the functions of Human Resource Management?
Answer:
Definition of Human Resource Management :
One of the most useful definitions of Human Resources Management (HRM) is “ HRM involves all management decisions and practices that directly affect or influence the people or Human resources who work for the organization”. - By Fisher,
Functions of Human Resource Management :
HRM functions can be broadly classified into the following two categories:
1. Managerial functions
2. Operative functions
1. Managerial functions of HR department
The managerial functions of HR department include the following:
· Planning – Future course of action; it also includes identifying human resource requirements and forecasting personnel needs
· Organising – Division of labour; assignment of responsibility is part of the organization’s functions.
· Staffing – It is the process of obtaining and maintaining capable and Competent personnel in various positions at all levels, i.e., manpower planning, recruitment, selection, placement and induction.
· Directing – It is the process of directing all the available resources towards the common organizational goals.
· Controlling – It is the measurement and rectification of activities to ensure that the events conform to plans.
2.Operative functions of HR department
The Operative functions of HR department include the following:
Employment – Employment is the first operative function of HRM. This involves procuring and employing individuals with suitable knowledge, skills, experience and aptitude necessary to perform various jobs.
The various functions of employment are:
a) Job analysis – To ensure the satisfactory performance of an employee, his skills, abilities and motives to perform a job must match the requirements of the job.
b) HR planning – HR planning involves forecasting the human resource requirements of an organisation and the future supply of human resources, and making suitable adjustments between the two in correlation with the organisational plans.
c) Recruitment – Recruitment is the process of seeking and attracting prospective candidates against a vacancy in the organisation.
d) Selection – The purpose of employment selection is to choose the right candidate for a job.
e) Placement – After a selected candidate conveys his or her acceptance of the offer of employment made by an organisation, his or her placement has to be decided based on the needs of the organisation.
f) Induction – Introducing a new employee to the organisation, the organisation’s business, its culture, values and beliefs, and practices and procedures is termed as induction.
B.HR Development – HR development concentrates on developing the workforce so that both the employees and the organization in turn can achieve their goals. It focuses on strengthening the skills, knowledge and aptitudes of the employees.
a) Performance appraisal – This is the process of evaluating the performance of an employee on the job and developing a plan for the employee’s improvement.
b) Training – Training is the systematic development of knowledge, skills and attitudes required to perform a given task or job successfully, in an individual.
c) Management development – It is the concept of developing the employees of an organisation to meet future changes and challenges.
d) Career planning and development – Career planning and development refers to identifying one’s career goals and formulating plans for achieving them through various means such as education and work experience.
C .Compensation – Compensation includes all the rewards that an employee receives during the course of his or her job–for his or her contributions to the organisation. Compensation encompasses base salary, incentives, bonus and benefits, and is based on job evaluation.
a) Job evaluation – Job evaluation is a systematic determination of the value of each job in relation to other jobs in the organisation, in the industry and in the market. Human
b) Wage and salary administration – Wage and salary administration is the process of formulating and operating a suitable wage and salary programme.
c) Incentives – Incentives are the rewards that an employee earns in addition to regular wages or salary based on the performance of the individual, the team or the organisation.
d) Fringe benefits – Fringe benefits are monetary and non-monetary benefits given to employees during their employment, and sometimes, also in the post-employment period.
D.Employee relations – Employee relations deals with the employees, in the organizational context, as a social group that contributes to the organisation. It includes:
a) Increasing employee productivity.
b) Keeping the employees satisfied and motivated
c) Developing team building, team management, and leadership skills in employees.
d) Designing and implementing a fast and suitable grievance management system.
e) Ensuring discipline among the employees by prompt action to correct deviations.
f) f) Supporting employees by counseling and developing them into complete individuals and responsible citizens.
g) Enhancing the quality of both work and personal life of the employees.
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Question 2. Discuss the elements of a career Planning Programme. Explain some of the benefits of career Planning Program to an Organization?
Answer:
Elements of a Career Planning Programme
There are four distinct elements of career planning programme: Individual assessment and need an Organisational assessment and opportunity a
Need – opportunity alignment
Career counselling
1.Individual assessment and need analysis
Many people begin their careers without any formal assessment of their abilities, interests, career needs and goals. This phenomenon of people entering their jobs, occupations and careers with little attention to career Planning and then feeling disengaged is known as career drift.
2.Organisational assessment and opportunity analysis
For an employee’s goals and aspirations to be fulfilled, a basic requirement is that the goals must be realistic and achievable.
3.Need – opportunity alignmentThe organisation plays an important role in helping the employee make this alignment.
4.Career counselling
This is the final stage of career planning. The supervisor as well as the HR department, has to counsel the employee regarding the available opportunities, the employee’s aspirations and of course, his competencies
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Question 3. What do you mean by HRIS? Explain the components of HRIS. Describe the different applications of HRIS in Human Resource Management.
Answer:
Meaning of HRIS:
Information is the unrefined material of planning. A quality planning effort cannot be done without proper and adequate information. Information is provided in an organisation by an inter-related set of procedures and process known as an information system.
Components of HRIS
HRIS performs three interconnected activities as a database:
i) Receiving inputs in the form of data from different sources.
ii) Storing and processing data with the purpose of transforming them into meaningful information
iii) Generating output in different forms, as required by the users
Input
Data Storage and Processing
Output
Input
Input refers to all employee-related data. HR policies, procedures, corporate goals and information about the statutory provisions entered into HRIS for conversion into the desired form of output.
Data processing
Data processing refers to the storing and processing of data by a computer with the help of the software that issues instructions for processing.
Output
Output refers to the generation of reports in the form desired by the users.
Different Applications of an HRIS :
Applicant tracking system – Many organisations are now gradually adopting and installing applicant tracking system software. The purpose of this system is to give support to recruitment process and to streamline the overall recruitment process.
Training and development system – The purpose of a training and development system is to help the employees gain new knowledge. HRIS facilitates workplace e-learning by the employees as part of their training programme.
Compensation management system – The compensation management system aims at computing employee payments through an integrated payroll system.
Performance management system – The main goal of the performance management system is to track employee performance reviews and due dates for next reviews.
Manpower planning system – The manpower planning system manages the employee inventory and supports several HR activities.
Succession planning system – The succession planning module brings the identified and selected employees into the succession channel.
Grievance management system – The grievance management assists the management in pre-empting employee grievance by analysing the nature, sources and frequency of earlier grievances.
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Question 4 “Discipline in the board sence means orderliness – the opposite of confusion.” What do you mean by Discipline? Explain the basic guidelines of disciplinary Policy.
Answer:
Discipline is employee self-control which prompts him/her to willingly cooperate with the organisational standards, rules, objectives, etc.Discipline is best defined as the observation of principles, rules or any other laid down procedures, practices, written or otherwise in the organisation by the employees or group of employees, to whom these apply, for smooth and effective functioning of the organisation.
In its most practical form, employee misconduct does not mean strict and technical observance of rigid rules and regulations. It simply means working, cooperating and behaving in a normal and orderly way, as responsible adults.
The principles for maintenance of discipline.
1. Location of responsibility:
The responsibility of creating awareness regarding discipline is entrusted with every individual in the organisation. In case of employee indiscipline, the line manager issues only verbal and written warnings.
2. Proper formulation and communication of rules:
The employees are expected to conform to rules and regulations, and behave in a responsible manner. It is essential that these rules and regulations are carefully formulated.
3. Rules and regulations should be reasonable:
Today’s organisations pay a lot of attention, and rightly so, towards formulating equitable polices that protect employee as well as the organisation’s values and rights. Often organisations involve employee representatives in formulating these policies and guidelines.
4. Equal treatment:
An employee should realise the consequence of his/her inappropriate behaviour and if he/she is going against the norms or the rules. 5. Disciplinary action should be taken in private:
While the policies governing the acceptable code of conduct are communicated publicly, the reprimand for non-compliance needs to be carried out in private.
6. Importance of promptness in taking disciplinary action:
As goes the popular saying – justice delayed is justice denied. If the action for review and reprimand is taken long after a violation of a policy/rule has happened, it loses its positive and corrective influence.
7. Innocence is presumed:
Again as per the fundamental rights of a human being, an individual is presumed to be innocent until he proven to be guilty.
8. Get the facts:
Before taking any disciplinary action, it is important to ensure that records of the offence and any previous warnings are reviewed closely.
9. Action should be taken in a non-threatening atmosphere:
Based on appropriate evidence management can take proper action against the accused employee.
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Question 5. Suppose you have joined as an HR and you have been assigned a task to carry out the grievance handling procedure in your organization. What according to you are the causes of grievance? Describe the detail the grievance handling Procedure.
Answer:
Grievances can arise out of the day to day working relations in an organisation. Relations with supervisors and
colleagues also determine employee’s job satisfaction.
Grievances may occur for a number of reasons:
a. Economic: Wage fixation, over time bonus, wage revision etc.Employees may feel that they are paid less when compared to others.
b. Work environment: Poor physical conditions of workplace, tightproduction norms, defective tools and equipment, poor quality ofmaterials, unfair rules, lack of recognitions etc.
c. Supervision: Relates to the attitude of the supervisor towards the employee such as perceived notion of bias, favoritism, nepotism, caste affiliations, regional feelings etc.
d. Work group: Employee is unable to adjust with his colleagues, suffers from feelings of neglect, humiliations.
e. Miscellaneous: These include issues related to certain violations with respect to promotions, safety methods, transfer, disciplinary rules, fines, granting leave, medical facilities, etc.
The grievance handling procedure.
The following guidelines may help a supervisor while dealing with grievance:
ü Treat each case as important and get the grievance in writing.
ü Talk to the employee directly. Encourage him/her to speak the truth.Give him/her a patient hearing.
ü Discuss in a private place. Ensure confidentially if necessary
Handle each case within a time-frame
· Examine company provisions in each case, Identify violations, if any, Donot hold back the remedy if the company is wrong. Inform your supervisor about all grievances.
· Gather information from the union representative, what he has to say, what he wants etc. Give short replies, uncovering the truth as well as provisions. Treat him properly.
· Control your emotions, your remark and behavior
· Maintain proper records and follow up the action taken in each case The essential requirements of a good grievance procedure are:
· Legality sustainable
· It should be ensured by the organisation that its grievance procedure is in conformity with the existing laws of nation.
· The procedure cannot violate any of the rights of the employees guaranteed by the law.
· Mutually acceptable
· In order to be effective, the grievance procedure must enjoy theconfidence of all the relevant parties, i.e., the management and the unions. It should not be like a battleground. Procedure must ensureequity, justice and openness.
Easily understandable
· The grievance procedure must be reasonably simple and easily understandable.
· Known to all the employees of the organisation.
· If someone has some grievance, then he/she should know who is to be contacted.
Highly flexible
· The grievance procedure should be flexible enough to respond to the reported grievance quickly. The number of stages in the grievance procedure should be kept to the minimum.
Sufficiently knowledgeable:
· The managers, supervisors, union leadersand others dealing with employee grievance must be well-trained in the grievance handling procedure.
Question 6. Write Short Notes on the following:
A) Competency Mapping
B) Flexi Time
Answer:
A) Competency Mapping :
Employee skills, knowledge and abilities are not sufficient to achieve the desired goals. Additional skills such as mind-set, values, belief and commitment are required by employees to achieve their desired performance. Thus competency is the sum of knowledge, skills, attitude and personality of an individual as required for performing current and future organisational needs.
The steps involved in competency mapping with an end result of job evaluation include the following:
1) Conduct a job analysis by asking incumbents to complete a Position Information Questionnaire (PIQ). This can be provided for incumbents to complete or you can conduct one-on-one interviews using the PIQ as a guide
2) Using the results of the job analysis, you are ready to develop a competency based job description
3) With a competency based job description, you are on your way to begin mapping the competencies throughout your human resources processes.
4) Taking the competency mapping one step further, you can use the results of your evaluation to identify in what competencies individuals need additional development or training.
Competency Assessment
B) Flexi Time :
Flexi time is a scheme where an organisation gives its employees the opportunity of a flexible working hours arrangement.
Under flexi time, there is normally a core period of the day when employees must be at work (e.g., between 10 A.M. and 4 P.M.),
An example of a typical flexi time day is below:
· Begin work between 07.00 – 10.00 (flexitime)
· Must be there between 10.00 – 12.00 (core time).The hours employees work between these times are credited to their flexi time balance. For example, if the employees work a 35-hour week, then, over four weeks, they will be obliged to work for 140 hours. If they work more than the
Benefits of flexi time
Utilising a flexi time policy in an organisation can benefit everyone involved– employers, employees and their families.
Benefits to an organisation
Introducing flexible working hours could bring the following benefits in a business:
· Reduces stress and fatigue, and unfocussed employees.
· Increases employee satisfaction and production.
· Greater staff retention and increased ability to attract new staff.
Recruitment costs are thus reduced.
· Ability to attract a higher level of skills because the business is able toattract and retain a skilled and more diverse workforce.
· Work time visits to doctor/dentist are in employees’ time.
· Measures employee’s attendance – you only pay for the time in attendance (delayed arrival caused by traffic congestion, delayed trains etc. are at employee’s expense).
· An incentive to complete the tasks the same day, instead of being carried forward to the next day, since extra hours worked count towards the final target..
· Increased customer satisfaction and loyalty as a result of the above
Benefits to Employees
§ Increased opportunity to fit other commitments and activities with work, and make better use of their free time
§ Better control of their workloads and manage a better balance between life and work. Allows the employees to schedule their travel; time to avoid congestion
§ Allows employees bank time to be used for leisure/personal activities.
§ Avoid the stress of commuting at peak times if their start and finish times are staggered or if they work from home.
§ Personal matters can be sorted without having to take time off.
§ Helpful for people caring for children or other dependants, others also may find flexible working helpful too.
Disadvantages of Flexi Tim :Administration of the system may make demands upon a HR department and create additional workload.
END OF ASSIGNMENT