KALYAN CITY BLOG

What is Finance? Meaning Before we begin, first let’s understand the origin of word “ FINANCE .” If we trace the origin of finance, there is evidence to prove that it is as old as human life on earth. The word finance was originally a French word. In the 18 th century, it was adapted by English speaking communities to mean “ the management of money .” Since then, it has found a permanent place in the English dictionary. Today, finance is not merely a word else has emerged into an academic discipline of greater significance. Finance is now organized as a branch of Economics. management of money . A tukar barang trading system is also a type of finance. Thus, we can say, Finance is an art of managing various available resources like money, assets, investments, securities, etc. At present, we cannot imagine a world without Finance. In other words, Finance is the soul of our economic activities. To perform any economic activity, we need certain resources, which are to be pooled in term

What is Financial Planning? Meaning Financial planning means to prepare the financial plan. A financial plan is also called capital plan . A financial plan is an estimate of the total capital requirements of the company. It selects the most economical sources of finance. It also tells us how to use this finance profitably. Financial plan gives a total picture of the future financial activities of the company. Financial Planning is the mathematical sum of following parameters: Financial Resources (FR) + Financial Techniques (FT) = Financial Planning. A financial plan contains answers to the following questions: How much finance (short-term, medium-term and long-term) will be required by the company? From where this finance will be acquired (gathered)? In other words, what are the sources of finance? That is, owned capital (promoter contribution, share capital) and borrowed capital (debentures, loans, overdrafts, etc.). How the company will use this acquired finance? That is, app

Canons Basic Principles of Financial Planning First let us revise the meaning of words Canons and Financial Planning . Canons are the basic (fundamental) principles (rules or standards) laid down by an authoritative entity (either by an authoritative individual or institution, etc.) on something (may be either a concept or theory or procedure or practice, etc.) with an intention to refine, improve, standardize and optimise its mode of operation. Financial Planning tells us how to prepare a financial or capital plan. The canons or principles of a financial plan are briefly discussed as follows: Image Credits © Sameer Akrani. Long-term corporate objectives : The financial plan must consider the long-term objectives of the company. The amount of capital received, the sources of funds and the application (use) of funds must be decided only after considering the objectives of the company. Simple : A financial plan must not be complex. It must be simple to understand and easy to use

What are the Rights of Shareholders? First let's understand the meaning of words, rights and shareholders. Rights represent something that is due to an individual or any government body by nature, law, tradition, etc. Shareholders are those people who invest funds in the share capital of a company. In a company, the ownership is separated from the management . The shareholders are the owners of a company, and they collectively enjoy following important yet limited rights. The principal rights of shareholders are depicted in the following image. The four main rights of shareholders are as follows: Shareholders have a right to receive income. They also have a right to vote in the meetings of the company. They enjoy a right to appoint a proxy (authorized representative) on their behalf. They possess legal (statuary) rights to challenge the order of the company's management in the court of law, if such an order is not in favour of their interests. Now let's discuss

Benefits of financial planning The benefits of financial planning are depicted below. Image credits © Prof. Mudit Katyani. The financial planning is beneficial in terms of following points: Forecast of cash flows. Raising finances. Managing the flow of internal funds. Facilitate cost control. Facilitate pricing of product. Forecasting profits. Measuring required returns. Managing assets. Managing funds. Managing Cost. Miscellaneous importance. Now let's discuss the importance of financial planning. 1. Forecast of cash flows Financial planning is necessary for the day to day operations of the business which results in discharging the obligations as and when they arise. This involves forecasting of cash inflows and cash outflows from the ordinary (regular transactions) and unexpected (irregular transactions such as bulk orders, discounts, etc.) business opportunities. 2. Raising finances Financial planning is important to plan for raising (mobilizing) finance from

What is Production Management? Meaning Production management means planning, organising, directing and controlling of production activities. Production management deals with converting raw materials into finished goods or products. It brings together the 6M's i.e. men, money, machines, materials, methods and markets to satisfy the wants of the people. business management. It is also called " Production Function ." Production management is slowly being replaced by operations management. The main objective of production management is to produce goods and services of the right quality, right quantity, at the right time and at minimum cost. It also tries to improve the efficiency. An efficient organisation can face competition effectively. Production management ensures full or optimum utilisation of available production capacity. Definition of Production Management According to Elwood Spencer Buffa , "Production management deals with decision-making related to pr

Functions of Production Management Functions of production management are depicted, listed & explained below. The components or functions of production management are as follows: Selection of Product and Design, Selection of Production Process, Selecting Right Production Capacity, Production Planning, Production Control, Quality and Cost Control, Inventory Control, and Maintenance and Replacement of Machines The above functions of production management are briefly discussed below. 1. Selection of Product and Design Production management first selects the right product for production. Then it selects the right design for the product. Care must be taken while selecting the product and design because the survival and success of the company depend on it. The product must be selected only after detailed evaluation of all the other alternative products. After selecting the right product, the right design must be selected. The design must be according to the customers' r

What are Production Strategies? Meaning Production strategies are broad long-term action plans. They are made for achieving the main objectives of organisation . Production strategies tell us what the production department must do to achieve the top aims of the organisation. It provides a road map for the production department. investment to be made for production, the technology to be used for production, the pembinaan to be given to the production staff, the production schedule to be followed, etc. It also decides about the goods and services to be produced and when to introduce them in the market. It is the top level of management that first fixes the main objectives of the organisation. Then top-level managers make strategies for achieving these objectives. Generally, there are two types of strategies, viz., Business Strategies are strategies made for the entire organisation. It covers all departments of the organisation. These are made by the top-level management. Functiona

Developing and Implementing Production Strategy Steps for developing and implementing production strategies are as follows: Image Credits © Moon Rodriguez. Fixing organisational objectives Developing production and other strategies Selecting the production strategy to be used Selecting the production process Selecting production infrastructure Implementing production strategies Now let's discuss above individual steps one by one in brief. 1. Fixing organisational objectives First, the top-level management fixes the main objectives of the organization . The objectives give direction to the organization. They make the boundaries for strategies. All the strategies must be made within these boundaries. Strategies are the action plans which are designed to achieve the main objectives of the organization. 2. Developing production and other strategies After fixing the main objectives of the organization, the management makes strategies for achieving these objectives. The t

Different Types of Production Strategies The different types of production strategies are grouped, listed and explained under following three categories, viz., The types of production strategies under Business Strategies are as follows: Differentiation strategy Cost leadership strategy Market segmentation strategy The production strategies under Competitive Priorities are as follows: Price or cost strategy Quality strategy Delivery strategy Product mix or flexibility strategy Service strategy Eco-friendly products The production strategies under Competitive Advantages are as follows Flexible response strategy Low cost strategy The types of production strategies listed above are discussed as follows: 1. Differentiation strategy Under a differentiation strategy, the company tries to be different and unique from its competitors. It may offer better quality, quantity, pricing, appearance, and after sales-service, when compared to its competitors. It may offer more features

What is Strategic Planning for Production? Definition The definition of strategic planning for production is quoted below. "Strategic planning for production implies focusing on the alignment of production management within an organization with its corporate and business strategies to gain a strategic advantage." Image Credits © Motion media works . Meaning of Strategic Planning for Production Strategic planning for production is a broad overall planning. It is done before production planning. Strategic planning for production is different from production planning. Strategic planning gives only a broad view whereas production planning gives overall essential details of production. Strategic planning for production is done after considering the latest objectives of the organization and the current environmental conditions. It is a guide for tomorrow's decisions and results. All other production plans are based on this plan. Strategic planning for production coordina

Modes of Strategic Planning There are three different modes of strategic planning . These are depicted in a diagram, listed and explained as follows: Image Credits © Moon Rodriguez. 1. Entrepreneurial Mode In entrepreneurial mode, strategic planning is done by one person. He takes the full responsibility of planning for the production department. That is, he does production planning on behalf of the production department. He has entrepreneurial skills. That is, he is good in planning , organizing , motivating , etc. He is also a strong and bold leader . 2. Adaptive Mode In adaptive mode, the production managers go on changing his plans according to the changes in the environment. He first makes a big plan, then he breaks it into smaller plans. This is done to adjust with the dynamic environment. Then he tries to combine all these plans to make a strategic production plan. In this method , the production manager is not at peace. He works in a disorganized environment. Therefore

What is Production Planning? Meaning Production planning means to fix the production goals and to estimate the resources which are required to achieve these goals. It prepares a detailed plan for achieving the production goals economically, efficiently and in time. It forecasts each step in the production process. It forecasts the problems, which may arise in the production process. It tries to remove these problems. It also tries to remove the causes of wastage. Image Credits © Pietroizzo . Production planning provides answers for two major questions, viz., What work should be done? How much time will be taken to perform the work? So, production planning decides the ways and means of production. It shows the direction. It is based on sales forecasting. It is a prerequisite of production control. Definition of Production Planning According to Ray Wild , production planning is defined as follows: "Production Planning is concerned with the determination, acquisition and a

What is Production Forecasting? Definition The definition of production forecasting is quoted in following statement. "Production forecasting is estimating the future demand for products and services and the resources necessary to produce the output.." Image Credits © Steve Pepple . Now let's discuss and understand the meaning of production forecasting. Meaning of Production Forecasting Production forecasting means to estimate the future demand for goods and services. It also estimates the resources which are required to produce those goods and services. These resources include human resources, financial and material resources. So, production forecasting means to estimate the 6M's of management . The production manager first estimates the future market or demand for the companies goods and services. Then he estimates the Men (human resources), Money (financial resources), Materials, Machines and Methods, which will be required to produce those goods and servic

Steps in Production Forecasting Process Steps in a production forecasting process are depicted in the image below. Image Credits © Moon Rodriguez. The stages or steps in a production forecasting process are listed as follows: Fix the forecasting objectives. Decide what to forecast? Determine the time frame. Collect the data for forecasting. Select the forecasting model Build and test the forecasting model. Prepare the forecasts. Prepare the forecasts. Compare events with the forecasts. Now let's discuss each step of production forecasting process one by one. 1. Fix the forecasting objectives The production manager must first fix the forecasting objectives. That is, he must know exactly why he is doing production forecasting. Forecasting objectives answers the question like, why are we forecasting? Here, the answer to this question may be; we are doing forecasting to help us in marketing planning, or we are doing forecasting to help us in the plant capacity planning,

Golden Rules of Investment Before we proceed let’s revise the meaning of words viz., rules and investment in context of this article. Rules are sets of certain principles or conditions that guide, direct, refine, control, and govern something or someone. Investment is a continuous course of action(s), for exploring the various fiscal alternatives to maximize the wealth. Golden rules of investment used for its evaluation are depicted below. The main principles or golden rules of investment are as follows: Growth is an appreciation or raise or an increase in the market value of the investment. Returns mean an increase in the revenue or income earning capacity of an investment. Liquidity is the realized value or sale value of the investment made as on today. Now let's briefly discuss each golden rule of investment. 1. Growth Growth is an appreciation or raise or an increase in the market value of the investment. An increase in the value is one of the positive factors o