Financial planning and its elements...

Financial planning and its elements Financial planning is an implement which allows evaluation of the current financial situation of the organization and predicting of its future financial performance. One of the objectives of the financial planning is to determine funds requirements and capital structure in order to understand the financial soundness of the organization. In addition to it, financial planning process helps the organizational management in framing of the financial policies for the control of the cash flow as well as in ensuring that the organization is employing its financial resources in the most efficient manner. Further, the financial planning demonstrates the direction of the organizational activities and analyses how each action has its influence on the financial stability of the organization. Also, financial planning helps the organizational management to make a decision about investments since it shows different ratios (such as equity ratio, debt ratio etc.). These ratios play an important role in the decision making process. Financial plan consists of four elements. These elements are (i) profit and loss projection, (ii) projected balance sheet, (iii) projected cash flow, and (iv) break-even analysis. These four elements are shown in Fig 1. Fig 1 Four elements of financial plan Profit and loss projection Profit and loss projection presents the plan of revenues and expenses of the organization over the specific accounting period. Profit and loss projection follows the same pattern as the profit and loss statement. Nonetheless, it reflects the data about the future. The presentation of the profit and loss statement differs from organization to organization.  However, the basic structure includes the basic five measures namely (i) gross profit, (ii) operating profit or earnings before interest and tax (EBIT), (iii) operating profit or earnings before interest, tax, depreciation and amortization (EBITDA), (iv) profit...

Marketing, Marketing Plan and its Elements...

Marketing, Marketing Plan and its Elements Marketing refers to the activities of the organization associated with promoting and selling of its products and services. It includes advertising, selling, delivering products to the customers, and market research. In fact, it is everything which the organization does to acquire customers and maintain a relationship with them. An efficient marketing cultivates sound business strategies, allows for successful innovation, increases the effectiveness of promotional strategies, and strengthens the brand image. The main purpose of the marketing is not only to maintain the relationship with existing ones but also to attract new customers. The process of interaction between the marketing men and the customers presents the dialogue between them and assumes the exchange of values. Marketing plan is one of the major and extremely significant of the organizational business planning process since it is the marketing which brings success in the long term, particularly, continuous growth in the earnings of the organization. Marketing plan has an input in defining efficiency in customer satisfaction terms.  It also helps to identify core products/services which meet the needs of the target segments of the organization. For understanding the theory related to the marketing and the marketing plan it is first necessary to understand its elements. These elements are (i) marketing mix, (ii) branding strategy, (iii) competitor and market analysis, (iv) customer decision making process, and (v) sales plan. Marketing mix Marketing mix is a theoretical framework which defines four indicators in arranging the offerings to meet the needs of the customers. These indicators are (i) product, (ii) place, (iii) price, and (iv) promotion. These indicators are also known as 4 Ps. The concept of 4 Ps is considered to be powerful due to the reason that it makes marketing process simpler and allows having...

Business plan for the organization...

Business plan for the organization Business plan for an organization is the document which determines the organizational objectives, strategies and projected actions in order to promote its survival and development within a given time frame. Business plan also focuses on two key aspects namely (i) dealing with risks, and (ii) making profits. Business planning process requires deep investigation, careful evaluation of all factors, which might have an impact on the result, and study of possible results of the actions of the organization. In addition business plan determines management actions for expansion process, designs new ways of for management action and includes revision of all the operations of the organization. Business plan enables organizational management to demonstrate to stakeholders, including founders and investors, that there is potential for considerable growth of the organization in a large market. It also illustrates that the organization is capable of achieving significant market power with a sustainable and differentiated product or service offering. Business plan consists of a comprehensive, written description of the business of the organization. It is a detailed document describing the products or services of the organization, production techniques, markets and customers, marketing strategy, human resources, organization of important activities, requirements in respect of infrastructure and supplies, financing requirements, and sources and uses of funds. Business plan describes the past and present status of the organizational business, but its main purpose is to present the future of the organization. It is normally updated frequently and looks ahead for a period of three to five years normally, depending on the type of business and the kind of the organization. It is a crucial document needed for getting funding support from financial institutions and hence it is required to be complete, sincere, factual, well-structured and reader-friendly document. There...

Influence of stakeholders on the organizational management...

Influence of stakeholders on the organizational management Stakeholders are the people or groups who have an interest, claim, or stake in the organization. Hence, stakeholders usually focus on the performance of the organization and ensure that it remains at an acceptable level. Stakeholders do not have any role in the management of the organization, but they do influence the organizational management. Stakeholders influences the decision making process. They ensure that the organizational work environment remains dynamic, stimulating, and rewarding and there are good working conditions available in the organization so that the organization can perform well. However, it is to be understood that the stakeholders have their own interests which are required to be satisfied by the organization. These interests can vary and can relate to productivity, environment, quality, technology, as well as financial, regulatory, welfare, or ethical issues etc. The organization is required to define, fully understand and address the interests of the stakeholders. This is a very delicate process which is required to be addressed with discretion since it can help the organization to achieve the long term success. The organization which does not have the ability to satisfy its stakeholders defeats the purpose of its existence. For these reasons, management is required to assess the organizational setting and its own role. The major task of the management is to build relationships and to develop a framework for partnership. This framework connects the people of the organization with one another, and with its stakeholders with the stakeholders. For doing it, management is required to identify critical relationship, develop satisfactory working relationships with several key individuals and groups involved, and finally work for the maintenance of these relationships. With the conservation of organizational resources, time, money and personnel as mandate, organizational management seeks to capitalize...

Factors influencing the cost of an item...

Factors influencing the cost of an item The term ‘item’ here can be multi-component equipment, a unit consisting of several equipments, or a project. The term ‘cost’ here means the total amount which the purchaser spends for the procurement of the item. The cost includes the amount paid to the seller through the contract entered with him and the additional expenditure incurred by the purchaser outside the contract for the procurement of the item. The contractual price is the amount which the purchaser pays to the supplier for fulfilling his obligations under the contract. While entering into a contract between the purchaser and the seller, the purchaser wants to pay the minimum price to keep his cost under control while the seller wants a price which can give him a decent profit after taking care of all the expenditure which he has to incur for the production and selling of the item. Often it may appear that the purchaser is paying a higher/lower price to the seller when compared to the price paid by another purchaser for the same item. This type of comparison is not advisable though very frequently it is being done by the purchasers, auditors and many other peoples.  In two contacts of purchase/sale of the same base item, though the supply of the base equipment can remain the same in the two contracts still the terms and conditions of the contract can differ a lot between the two contracts to influence the contractual price. For understanding the reasons for the difference in the price paid by the two purchasers for the so called same base item, it is necessary to understand the factors which are influencing the cost. These factors are (i) base date of the contract, (ii) scope of...

Understanding the Organization...

Understanding the Organization An organization consists of a system where two or more people work together to achieve a group result. In the organization organized human activities take place. These human activities are the co-operative activities of two or more persons. The organization is the process of dividing up of these activities into various tasks to be performed and the coordination of these tasks to accomplish the activities. The structure of an organization can be defined simply as the sum total of the ways in which it divides its activities into distinct tasks and then achieves coordination among them. An organization is a basic social unit which is generally established for the purpose of achieving the set objectives. The organization is considered to have several distinct features. These features can be (i) a common objectives or an accepted pattern of purpose, (ii) a set of shared values or common beliefs which provide individuals a sense of identification and belonging, (iii) a continuity of goal oriented interaction, (iv) a division of work purposely planned for achievement of the objectives, and (v) a system of authority or a chain of command to achieve conscious coordination of efforts for achieving the objectives. Organizations can be either informal or formal. An informal organization can be characterized by some of the features of the formal organization, but it lacks one or more of these features. Individuals who share a common value may meet regularly to foster some objectives, and this group can become a recognizable formal organization. Some informal groups never develop the consistent characteristics of a formal organization, however, and simply remain informal. Formal organizations almost inevitably give rise to informal organizations. Such informal groups can be regarded as spontaneous organizations which emerge since individuals are brought together...