Business Organization and Office Management ( Study Material Unit 1 to 5)

 Unit -1

Introduction – meaning - Nature and scope of Business – Forms of Business Organisation                          

Sole Trader, Partnership Firm, Joint Stock Company and co-operative Society – Public Enterprises.  

 

Meaning for Business

Business is an organization comprising people who strive together to achieve common objectives and goals. It is important for a business organization to have a vision that implies what it intends to achieve in the future and values that represent the organization’s integrity.

 

Definition for Business

According to F. C. Hooper, “The whole complex field of commerce and industry, the basic industries, processing and manufacturing industries, the network of ancillary services, distribution, banking, insurance, transport and so on, which serve and interpenetrate the work of business as a whole, are business activities.”

 

Nature of Business

Business is derived from ‘busy-ness,’ i.e. keeping oneself occupied with one or the other work, but it is much more than just being busy.

 

To have a better understanding of what a business is, we must go through the following points:

 

Ø  Regular Process: It is an activity which is performed repeatedly to generate profit.

Ø  Economic Activity: The whole sole purpose is maximising wealth.

Ø  Creates Utility: The goods or service must be such that it creates form utility – conversion of products in a consumable form, time utility – making the goods and services available when needed; and place utility – availability of goods or services wherever required, for the consumers.

Ø  Capital Requirement: Any venture requires fund depending on the size and its type.

Ø  Deals in Goods and Services: It is related to manufacturing and offering goods for sale or catering services.

Ø  Risk: All businesses have a risk factor or uncertainties of failure and loss.

Ø  Profit Earning Motive: The initial motive of a businessman is making a profit out of his venture.

Ø  Satisfaction of Consumer’s Need: It is concerned with the fulfilment of the customer’s demands and needs.

Ø  Involves Buyer and Seller: There are majorly two parties involved, the customer and the merchandise.

Ø  Social Obligations: It has some social responsibilities, like creating job opportunities, dealing with licensed products, etc.

 

Scope of Business

Following business components play an important role in the scope of business:

 

Industry

The word “Industry” refers to the business activities which are linked with the extraction and production or manufacturing of products. The product formed by an industry is either used by the vital consumers or again by the industry. If the product is used by the consumer it is called consumers’ goods such as clothes.

 

If the product is used again by the industry it is called the producer’s goods or capital goods. In a case when a product produced by the industry is further processed into finished products for other purposes they are called intermediate goods. e.g. plastic.

 

The industry is further divided into types on the basis of business activity:

Extractive Industries

The industries which extract, raise and manufacture raw materials from above or under the Earth’s surface are known as Extractive Industries and they include mining, fisheries, forestry and agriculture, etc.

 

Genetic Industries

The industries which are involved in reproducing and multiplying certain species of animals and plants and sell them in the market to earn a profit are named as Genetic Industries. These industries include cattle breeding farms, poultry farms and plant market, etc.

 

Constructive Industries

The industries which are involved in the construction of building, canals, bridges, dams and roads, etc. are called Constructive Industries.

 

Service Industries

The industries which are involved in manufacturing the intangible goods which cannot be seen but felt such as services of professionals like doctors, lawyers are examples of Service Industries.

 

Commerce

The second component of the scope of business is Commerce. It involves the buying and selling of goods and all the activities which are associated with the transfer of goods from the production source to the ultimate consumers or destination. The ranges of activities related to Commerce take place through:

 

Trade

The process of buying and selling goods is called Trade. It is the process of exchanging goods and services amongst the buyers and sellers and both of them earn profits. Trade can be classified into two types; internal and external.

 

Internal Trade: The process of buying and selling goods within a country is called internal trade. The internal trade can be either wholesale trade or retail trade.

Wholesale Trade: In wholesale trade, the goods are purchased in bulk from the producers and sell them to the retailers. These retailers then sell these goods to the final consumers.

Retail Trade: In the retail trade, the retailer sells goods and services to the final consumers.

External Trade: The process of buying and selling goods between the two countries is called external trade. The external trade has two types; import trade and export trade.

The elements which help in the purchasing of goods and services are called aid to trade. There are certain constituents that are essential for the progress of the trade and are as follows:

 

Transport

By using different ways of transport, the goods are transported from industry to the consumers. It includes railways, ships, airlines, etc.

 

Insurance

Insurance is very important to aid to trade. Insurance reduces the risk of damage to goods due to fire, flood or earthquake, etc. by paying a good amount in this regard.

 

Warehousing

Warehouses are used to keep the goods and are released and are delivered to the market when demanded. Thus, warehousing plays an important part to overcome the barrier of time and helps the goods reach the consumers in a short span of time.

 

Banking

Commercial banks play an important role in financing trade activities. They provide funds to the traders for stock holding and transporting the goods. They also support the producers in purchasing and receiving at both national and international levels. The banks also offer credit facility in the form of cash credit, overdrafts and loans to the traders.

 

Advertisements

Advertisements play an important part in selling the good to the consumers. The advertisement is either shown on television or printed in newspaper or magazines etc. and help the consumers to choose their desired product. Thus, advertisements are very important for the seller as well.

 

 

 

Importance of Business

Business is a self-employment opportunity for a person to become self-independent and master of his ideas. It is not only beneficial to the owner but also makes an impact on society.

 

To get a detailed understanding of the importance of trading activities to the owner and the society, let us go through the following points:

 

Revenue Generation: It is the key to revenue generation for the business owner since it brings in profit and proves to be a source of income for the owner.

Economic Growth: It is essential for the economic growth of a country since high revenue means higher tax collection.

Improves Standard of Living: A country with more industrial units and companies experience a higher rate of employment and better living standards.

Bulk Production: Manufacturing units involve large-scale production, which ultimately reduces the cost of production, and people get a continuous supply of goods at a reasonable price.

Innovation: It involves brainstorming and generation of new ideas which opens up the way for innovation and creativity.

Generates Employment: It is a long-term process which requires the human resource to function correctly. Therefore, it creates job opportunities.

Market Expansion: A good strategy and high customer satisfaction lead to a strong customer base aiming at market expansion.

 

Forms of Business Organisation

The five forms of business organizations include the following:

 

Partnership

Corporation

Sole proprietorship

Cooperative

Limited liability company

 

Partnership

You can classify a business partnership as either general or limited. General partnerships allow both partners to invest in a business with 100% responsibility for any business debts. They don't require a formal agreement. In comparison, limited partnerships require owners to file paperwork with the state and compose formal agreements that describe all of the important details of the partnership, such as who is responsible for certain debts.

 

Some advantages of partnerships include:

 

Easy to establish: Compared to other business structures, partnerships require minimal paperwork and legal documents to establish.

 

Partners can combine expertise: With more than one like-minded individual, there are more opportunities to increase their collaborative skillset.

 

Distributed workload: People in partnerships commonly share responsibilities so that one person doesn't have to do all the work.

Disadvantages to consider:

 

Possibility for disagreements: By having more than one person involved in business decisions, partners may disagree on some aspects of the operation.

 

Difficulty in transferring ownership: Without a formal agreement that explicitly states processes, business may come to a halt when partners disagree and choose to end their partnership.

 

Full liability: In a partnership, all members are personally liable for business-related debts and may be pursued in a lawsuit.

An example of a partnership is a business set up between two or more family members, friends or colleagues in an industry that supports their skill sets. The partners of a business typically divide the profits among themselves.

 

Corporation

A corporation is a business organization that acts as a unique and separate entity from its shareholders. A corporation pays its own taxes before distributing profits or dividends to shareholders. There are three main forms of corporations: a C corporation, an S corporation and an LLC, or limited liability corporation.

 

Advantages of corporations include:

 

Owners aren't responsible for business debts: In general, the shareholders of a corporation are not liable for its debts. Instead, shareholders risk their equity.

 

Tax exemptions: Corporations can deduct expenses related to company benefits, including health insurance premiums, wages, taxes, travel, equipment and more.

 

Quick capital through stocks: To raise additional funds for the business, shareholders may sell shares in the corporation.

Disadvantages include:

 

Double taxation for C-corporations: The corporation must pay income tax at the corporate rate before profits transfer to the shareholders, who must then pay taxes on an individual level.

 

Annual record-keeping requirements: With the exception of an S-corporation, the corporate business structure involves a substantial amount of paperwork.

 

Owners are less involved than managers: When there are several investors with no clear majority interest, the management team may direct business operations rather than the owners.

 

Common examples of corporations include a business organization that possesses a board of directors and a large company that employs hundreds of people. About half of all corporations have at least 500 employees.

 

Sole proprietorship

This popular form of business structure is the easiest to set up. Sole proprietorships have one owner who makes all of the business decisions, and there is no distinction between the business and the owner.

 

Advantages of a sole proprietorship include:

 

Total control of the business: As the sole owner of your business, you have full control of business decisions and spending habits.

 

No public disclosure required: Sole proprietorships are not required to file annual reports or other financial statements with the state or federal government.

 

Easy tax reporting: Owners don't need to file any special tax forms with the IRS other than the Schedule C (Profit or Loss from Business) form.

 

Low start-up costs: While you may need to register your business and obtain a business occupancy permit in some places, the costs of maintaining a sole proprietorship are much less than other business structures.

Disadvantages include:

 

Unlimited liability: You are personally responsible for all business debts and company actions under this business structure.

 

Lack of structure: Since you are not required to keep financial statements, there is a risk of becoming too relaxed when managing your money.

 

Difficulty in raising funds: Investors typically favor corporations when lending money because they know that those businesses have strong financial records and other forms of security.

Some typical examples of sole proprietorships include the personal businesses of freelancers, artists, consultants and other self-employed business owners who operate on a solo basis.

Cooperative

A cooperative, or a co-op, is a private business, organization or farm that a group of individuals owns and runs to meet a common goal. These owners work together to operate the business, and they share the profits and other benefits. Most of the time, the members or part-owners of the cooperative also work for the business and use its services.

 

Advantages of a cooperative include:

 

Greater funding options: Cooperatives have access to government-sponsored grant programs, like the USDA Rural Development program, depending on the type of cooperative.

 

Democratic structure: Members of a cooperative follow the "one member, one vote" philosophy, meaning that everyone has a say, regardless of their investment in the co-op.

 

Less disruption: Cooperatives allow members to join and leave the business without disrupting its structure or dissolving it.

Disadvantages include:

 

Raising capital: Larger investors may choose to invest in other business structures that allow them to earn a larger share, as the cooperative structure treats all investors the same, both large and small.

 

Lack of accountability: Cooperatives are more relaxed in terms of structure, so members who don't fully participate or contribute to the business leave others at a disadvantage and risk turning other members away.

Many cooperatives exist in the retail, service, production and housing industries.

 Examples of businesses operating as cooperatives include credit unions, utility cooperatives, housing cooperatives and retail stores that sell food and agricultural products.

 

Limited liability company

The most common form of business structure for small businesses is a limited liability company, or LLC, which is defined as a separate legal entity and may have an unlimited amount of owners. They are typically taxed as a sole proprietorship and require insurance in case of a lawsuit. This form of business is a hybrid of other forms because it has some characteristics of a corporation as well as a partnership, so its structure is more flexible.

 

Some advantages of an LLC include:

 

Limited liability: As the name states, owners and managers have limited personal liability for business debts, whereas individuals assume full responsibility in a sole proprietorship or partnership.

 

Pass-through taxation: Owners of LLCs may take advantage of "pass-through" taxation, which allows them to avoid LLC and corporation taxes, and owners pay personal taxes on business profits.

 

Flexible management: LLCs lack a formal business structure, meaning that their owners are free to make choices regarding the operation of their businesses.

Some disadvantages include:

 

Associated costs: The start-up costs associated with an LLC are more expensive than setting up a sole proprietorship or partnership, and there are annual fees involved as well.

 

Separate records: Owners of LLCs must take care to keep their personal and business expenses separate, including any company records, whereas sole proprietorships are less formal.

 

Taxes: In regards to unemployment compensation, owners may have to pay it themselves.

Common examples of limited liability companies include start-ups and other small businesses. Family-owned businesses and companies with a small number of members may operate as an LLC because it is a flexible business model that allows members to be active or passive in their roles.

 

 

Unit -2

Location of Business – factors influencing location Localization of industries –  size of firms Source   of   Finance   –   Shares,   Debentures,   Public Deposits, Bank Credit and Trade Credit – Merits and demerits.

 

Meaning for Location

Location refers to the choice of region and the selection of a particular site for setting up a business or factory.

 

But the choice is made only after considering the cost and benefits of different alternative sites. It is a strategic decision that cannot be changed once taken.

 

If at all changed only at considerable loss, the location should be selected as per its requirements and circumstances. Each plant is a case in itself.

 

A business person should try to attempt at the optimum or ideal location. An ideal location is one where the cost of the product is kept to a minimum, with a large market share, the least risk, and the maximum social gain.

 

It is the place of maximum net advantage or which gives the lowest unit cost of production and distribution, for achieving this objective, this purpose.

 

What is Business Location Analysis?

Location analysis is a dynamic process where entrepreneur analyses and compares the appropriateness or otherwise of alternative sites to select the best site for a given enterprise.

 

It consists of the following:

 

Demographic Analysis

It involves the study of population in the area in terms of total population (in no.), age composition, per capita income, educational level, occupational structure, etc.

 

Trade Area Analysis

It is an analysis of the geographic area that provides continued clientele to the firm. He would also see the feasibility of accessing the trade area from alternative sites.

 

Competitive Analysis

It helps to judge the nature, location, size, and quality of competition in a given trade area.

 

Traffic Analysis

To have a rough idea about the number of potential customers passing by the proposed site during the working hours of the shop, the traffic analysis aims at judging the alternative sites in terms of pedestrian and vehicular traffic passing a site.

 

Site Economics

Alternative sites are evaluated in terms of establishment costs and operational costs under this.

 

Costs of the establishment are the cost incurred for permanent physical facilities. Still, operational costs are incurred for running a business on day to day basis, they are also called as running costs.

 

Objectives of Business Location Analysis

 

The location of a business must be decided to keep in mind the following objectives:

 

To hold minimum investment and operational cost

The foremost objective in selecting an ideal location is to ensure minimum investment and lower operational costs.

 

This could be achieved if the business is located in a place where raw materials, labor, transport, and power are easily, regularly, and sufficiently available.

 

To ensure the smooth operation of the business.

Another objective of the ideal location is to ensure the smooth operation of the business.

 

This could be achieved if the business is located in a place where the services of banking, communication, transport, repairs, and maintenance are available easily and regularly.

 

To promote employee welfare.

If the business is located where the educational recreational, medical, and religious needs of employees are met, they will certainly feel attached to the enterprise. They would develop loyalty and commitment to it.

 

To co-ordinate with Government Policies.

The entrepreneur, while selecting a location, must ensure that his decision does not conflict with the government policy of balanced regional development.

 

Factors to be Considered in Selecting a Business Location

Selecting the ideal business location is guided by four main factors, namely:

 

Nature and Type of Business

The nature and type of your business is the single greatest determinant of where the business should be located. Businesses that rely on walk-in customers from the public are the most affected, the main ones being in the service industry.

 

If your business relies heavily on walk-in clients as opposed to businesses that prospect, then location is everything. Getting your location wrong can spell doom for your business.

 

In the restaurant business, for example, there are three “main” rules when setting up. These are “LOCATION, LOCATION, and LOCATION.”

 

This example underscores the importance of a great location for restaurants.

 

A study of McDonald’s reveals this to be true. Senior management at MacDonald’s will tell you that they are burger salespeople, but their business is real estate.

 

Therefore, businesses such as restaurants, supermarkets, liquor stores, Ice cream parlors, and the like must be located in easily accessible areas with high levels of human traffic.

 

In contrast, businesses such as law firms, accountants, software firms, and so forth, which do not rely on high levels of human traffic, can be located in posh offices within office blocks.

 

Budget

The amount of money you can afford to obtain premises must, of course, come into play. Most first time entrepreneurs will be renting due to budget constraints.

 

Always try and secure premises that provide the best value for your money, considering the nature of business.

 

Space required

Certain types of businesses require very large amounts of space.

 

For example, car dealerships and car rentals require a large space to park their vehicles. This may mean looking for an out of cheap town location.

 

Special facilities needed

Certain types of businesses require special facilities to carry out their business effectively. For example, IT companies have some very special mechanical, electrical, plumbing, and fire suppression requirements.

 

Server rooms and computer areas need dedicated cooling units. These must be taken into consideration before settling on a business location.

 

At one point, we may want to determine the size of the business. This helps in knowing whether it’s growing or not.

 

Also, you ascertain it to plan its various requirements. If you know the size of your firm, then you’re able to determine its efficiency. Any enterprise is the ether; small, medium or large size.

 

Size of the Firm

 

 

The size of a business unit means the size of a business firm.

 

It means the scale or volume of operation turned out by a single firm. The study of the size of a business is important because it significantly affects the efficiency and profitability of the firm.

 

One of the most important entrepreneurial decisions in organizing a business is realizing its ‘size’ as it affects in company and profitability of business enterprises.

 

The term’ size of business’ refers to the scale of organization and operations of a business enterprise. It is essential here to have a clear understanding of the terms’ size’ of the ‘plant’ size of ‘firm’ and the size of the industry.’

 

A ‘plant’ means an establishment of the manufacturing of goods. It represents a production unit where the due provision of all the activities facilitating the production process as made.

 

A ‘firm’ means as an organization that owns manages and controls a plant or number of plants and also arranges for the marketing of products, provision of finance, and other facilities to run the organization.

 

The term industry’ implies the aggregate of all firm which manufacture similar types of products.

 

Measures of Size

Business firms vary in size-small, medium, and large. To measure the size of a business unit, the standards of measurement can be grouped into the following two categories.

 

Measures About Input

This includes capital employed, net worth, total assets, labor employed, and raw material and power consumed.

 

Capital employed

The capital includes owned capital and borrowed capital. The larger the amount of capital employed, the larger the size of the firm.

 

Net worth

Net worth is the excess of assets over liabilities, as shown in the balance sheet of a firm.

 

However, for all practical purposes, it refers to the amount of paid-up capital plays reserves and surpluses built up during business.

 

This measure is appropriate for comparing the size of different firms in an industry or to measure the rate of growth for a particular firm.

 

Total assets

Another measure of size if the size of the total assets of a firm.

 

The value of total assets is calculated by taking into account the amount invested in fixed (land, building, plant, and machinery), current (cash, short-term securities, stock, debtors, etc.) and intangible assets (goodwill, planet, rights, etc.).

 

Labor employed

The number of laborers employed in a firm is another measure commonly employed to measure the size of the business, which is producing similar types of goods and which are in the same stage of development.

 

Amount of raw materials and power consumed.

The quantity or value of raw materials and power used is yet another measure that can be used to adjudge a firm.

 

Measure About Output

This includes a volume of output, the value of output, and value-added.

 

The volume of output

The number of goods produced or services rendered may also serve as a good basis for comparison between firms. The greater the number of goods and services produced, the larger the size.

 

Value of Output

The monetary value of goods and services produced by a firm also serves as a basis for measuring the size of a firm.

 

Value Added

A useful variation or combination of the two output criteria is the measure of net value-added, calculated by deducting the costs of production from the value of production.

 

It must be mentioned here that no one measure is fully comprehensive, and the accuracy, adequacy, and utility of each standard will depend upon three factors – nature of industry and character of its output, the uniformity and accuracy of data available, and the purpose for which it is required.

 

On the whole, the output seems to be the best indicator to measure the size of the firm.

 

Factors Affecting the Size of the Firm

The main factors that affect the size of the firm are as follows:

 

Nature of Industry

The nature of the industry has a direct influence on the size of the firm. Manufacturing industries are, by and large, bigger compared to trading and service firms.

 

Manufacturing industries heavy machinery, produce goods on a large scale, make higher capital investments, and therefore large.

 

Nature of Products

When the product is less standardized, the size of the firm is often small when the product is standardized, complex, and durable; the size of the firm is often big.

 

Capital employed

When the capital involved is large, and the firm can raise it, the size of the firm is large, when the capital involved in small, the size of such a unit will be small.

 

Size of the market

If the size of the market is large for the product, the firm will also be large and vice-versa.

 

Quality of management

The competence and integrity of management largely determine the size of a business unit. If the management is competent to manage the complex tasks of modern business, the firm can afford to be large.

 

Factors Determining Size of the Firm

Every business is striving towards attaining the optimum size. Usually, any business starts as a small entity, and then during its operating period, it expands till it reaches the optimum size.

 

Capital Investment Factor

The capital employed by shareholders in the form of share capital, reserves, and surplus (net worth) determines the size of the business. It is mainly used to compare two firms or more that are producing similar or differentiated products.

 

Number of Employees

The number of employees employed by any business determines its size. This is done by comparing the wages paid to employees with other businesses.

 

This factor is used where firms produce similar goods. If you use it in comparing firms that are producing differentiated products, then you end up with false results.

 

Power Used

The amount of power used determines the size of the business. Business firms don’t rely on this factor as it is inaccurate because of the amount of power used by any business may be more or less.

 

Raw Materials Used

The annual consumption of raw materials of any firm determines its size. It used only on those firms that are producing similar products.

 

The volume of the output

This factor is used for those firms that are producing homogeneous goods.

 

The capacity of Plant

It is used by firms that produce similar products.

 

Total Assets

The total assets of any business determine its size. The value of all assets (current and fixed) is taken as a means of measure. It is used in both similar and differentiated firms.

 

Value of Output

This is another factor that determines the size of any firm; however, this method is only effective in cases where firms produce a variety of products and where price levels remain constant.

 

In all these factors, the volume of output is the most effective and reliable factor in measuring the size of any business unit.

 

 

 

 

 

Sources of Finance

A source or sources of finance, refer to where a business gets money from to fund their business

activities.

 

Shares

Share capital is the money invested in a company by the shareholders. Share capital is a long-term source of finance. In return for their investment, shareholders gain a share of the ownership of the company. An illustration of an example company share ownership structure is shown below:

 

 

Shareholders benefit from the protection offered by limited liability – they are only liable for the amount they invest in share capital rather than the overall debts of the company.

 

The founding entrepreneur is very likely to invest in the share capital of the start-up. This is a common method of financing a start-up. Ideally the founder will try to provide all the share capital of the company, retaining 100% control over the business.

 

A key point to note is that the entrepreneur may use a variety of personal sources (e.g. cash, personal investments) to finance the purchase of shares.

 

Once the investment has been made, it is the company that owns the money provided.

 

The shareholder obtains a return on this investment through dividends (payments out of profits) and/or increases in the value of the company when it is eventually sold.

 

A start-up company can also raise finance by selling shares to external investors – this is typically to a business angel or venture capitalist.

 

Debentures

Debentures are a long-term source of finance. A debenture is a form of bond or long-term loan which is issued by the company. The debenture typically carries a fixed rate of interest over the course of the loan.

 

Debentures exist as an alternative form of investing in a company that is more secure than investing in shares because interest payments must be made by the company. They can also include a security that will guarantee the investment even if it defaults and there are two different ways for the debenture to be secured. However, debenture holders have no share in the company itself.

 

If a company borrows money, it will give its creditor a document to evidence the existence and terms of the loan. This document is called a debenture. Under the debenture, the capital sum borrowed is repayable at a future date.

 

During the period of the loan, the company has to pay interest to the creditor. In order to improve their chances of recovering the debt from the company in the event of its collapse, a creditor may take a charge over some or all of the assets of the company. This increases the creditor's chance of being repaid on the insolvency of the company.

 

Accordingly, although there is no requirement that a debenture must be secured by a charge over some or all of the company's assets, most debentures will include some form of security for practical reasons.

 

Public Deposits

Public deposits refer to the unsecured deposits invited by companies from the public mainly to finance working capital needs. A company wishing to invite public deposits makes an advertisement in the newspapers.

 

Any member of the public can fill up the prescribed form and deposit the money with the company. The company in return issues a deposit receipt. This receipt is an acknowledgement of debt by the company. The terms and conditions of the deposit are printed on the back of the receipt. The rate of interest on public deposits depends on the period of deposit and reputation of the company.

 

A company can invite public deposits for a period of six months to three years. Therefore, public deposits are primarily a source of short-term finance. However, the deposits can be renewed from time-to-time. Renewal facility enables companies to use public deposits as medium-term finance.

 

Public deposits of a company cannot exceed 25 per cent of its share capital and free reserves. As these deposits are unsecured, the company having public deposits is required to set aside 10 per cent of deposits maturing by the end of the year. The amount so set aside can be used only for paying such deposits.

 

Thus, public deposits refer to the deposits received by a company from the public as unsecured debt. Companies prefer public deposits because these deposits are cheaper than bank loans. The public prefers to deposit money with well-established companies because the rate of interest on public deposits is higher than on bank deposits. Now public sector companies also invite public deposits. Public deposits have become a popular source of industrial finance in India.

 

The merits of public deposits are as follows:

 

There is no need of creation of any charge against any of the assets of the company for raising funds through public deposits.

·         The company can get advantage of trading on equity since the rate of interest and the period for which the public deposits have been accepted are fixed.

·         Public deposit is a less costly method for raising short-term as well as medium-term funds required by the companies, because of less restrictive covenants governing this as against bank credits.

·         No questions are asked about the uses of public deposits.    

·         Tax leverage is available as interest on public deposits is a charge on revenue.

Demerits

·         This mode of financing, sometimes, puts the company into serious financial difficulties. Even a slight rumor about the inefficiency of the company may result in a rush of the public to the company for getting premature payments of the deposits made by them.

·         Easy availability of fund encourages lavish spending.

·         Public deposits are unsecured deposits and in the event of a failure of the company, depositors have no assurance of getting their money back.

 

Trade Credit

What is Trade Credit?

A trade credit is an agreement or understanding between agents engaged in business with each other that allows the exchange of goods and services without any immediate exchange of money. When the seller of goods or services allows the buyer to pay for the goods or services at a later date, the seller is said to extend credit to the buyer.

Understanding Trade Credit

Trade credit is usually offered for 7, 30, 60, 90, or 120 days, but a few businesses, such as goldsmiths and jewelers, may extend credit for a longer period. The terms of the sale mention the period for which credit is granted, along with any cash discount and the type of credit instrument being used.

 

For example, a customer is granted credit with terms of 4/10, net 30. This means that the customer has 30 days from the invoice date within which to pay the seller. In addition, a cash discount of 4% from the stated sales price is to be given to the customer if payment is made within 10 days of invoicing.

 

Trade credit extended to a customer by a firm appears as accounts receivable and trade credit extended to a firm by its suppliers appears as accounts payable. Trade credit can also be thought of as a form of short-term debt that doesn’t have any interest associated with it.

 

Advantages

Ø  An agreement can be very easy to organise

Ø  An agreement is relatively easy to maintain, as long as the conditions are met

Ø  Can be used by most business, for supplies of goods or services

Ø  Businesses are protected by late payment legislation

Ø  A potentially low-cost form of working capital finance.

Disadvantages

Ø  Possible loss of early payment discount

Ø  Failure to comply with the conditions could lead to the loss of a supplier

Ø  Provision of cashflow advantage rather than additional finance

Ø  Your own customers may ask for favourable trade credit terms and therefore cut into any cashflow advantage

Ø  Cannot be used by all businesses, such as online retailers

Ø  There are no guarantees, as customers may pay late.

 

Bank Credit

Bank Credit Meaning

Bank credit is usually referred to as a loan given for business requirements or personal needs to its customers, with or without a guarantee or collateral, with an expectation of earning periodic interest on the loan amount. The principal amount is refunded at the end of loan tenure, which is duly agreed and mentioned in the loan covenant.

 

In today’s world, demands are continuously increasing, but means to fulfill those demands are limited; hence borrowing money will enable as the source to finance varied needs of a business, profession, and personal.

 

Bank credit is given to borrowers on the fulfillment of the necessary documentation required by the bank. Interest rates, terms of repayment are duly mentioned in the loan covenant. Documentation to bank includes financial statements, income tax returns, projected financial statements for three to five years, and changes based on the type of loan and from person to person.

 

Characteristics of Bank Credit

The following are characteristics of bank credit.

 

Ø  Borrower: Person who borrows money.

Ø  Lender: The person who lends money is usually the bank.

Ø  Rate of Interest: Rate of interest can be fixed or floating rate of interest. The floating rate of interest is based on benchmark rates like LIBOR or MIBOR.

Ø  Terms of Repayment: These are mentioned in the loan covenant and strictly adhered to avoid the prepayment penalty.

Ø  Mode of Loan: Normally given in cash but sometimes will be given in the form of raw material, fixed assets

Purpose of Bank Credit

The following are the purpose of the loan.

 

Ø  Educational Loans: These are given for pursuing higher education, repayment of which is due after completion of education. Interest gets accumulated for the loan.

Ø  Housing Loans: These are given to buy home. The repayment of principal and interest is based on EMI principal. House is collateral for such loans, and excessive documentation is required.

Ø  Vehicle Loans: These are given to purchase vehicles like car, tempo, two-wheeler, auto, truck. Normally assets are hypothecated to Bank unless and until final installment due is paid. You often see “we banked …. Bank” written on the backside of cars. This indicates a loan is taken from “… Bank”.

Ø  Vendor Financing: This is an arrangement provided by the Bank to pay to vendors as per agreed credit terms, and in turn, the borrower will pay to the Bank after say 60 days or 90 days. The bank charges a rate of interest to the borrower for paying in advance to suppliers. The advantage of this is minimal documentation required by the Bank.

Ø  Letter of Credit Facility: Like vendor financing but predominantly used while importing goods or making payments to overseas vendors. Terms of repayment, rate of interest is mutually agreed between the parties.

Advantages

The different advantages related to bank credit are as follows.

 

Ø  The loan is not repayable on demand. Terms of repayment, rate of interest are pre-decided; hence cashflows can be managed in a better way.

Ø  It helps businesses and individuals when there is a need for funds.

Ø  Interest payments can be negotiated and paid only for a certain period, and the balance period borrower will pay only the principal.

Ø  The cost of debt is lower than the cost of equity; hence the appropriate proportion of debt in the portfolio enhances returns to equity shareholders by leveraging the cost of debt

Disadvantages

The different disadvantages related to bank credit are as follows.

Ø  A borrower may have to surrender ownership of an asset if installments are not paid in time.

Ø  Bank charges one-time processing fees that need to be paid upfront.

Ø  There is a pre-payment penalty if the borrower pays the loan in advance.

Ø  Companies should maintain the right debt-equity ratio. If there is a significant reliance on loans by the Companies, then in the event of crises, it will be difficult to pay interest.

 

 

 

 

 

 

 

 

 

Unit-3

Office – Introduction – Meaning – Functions and Significance – Office Layout and Office Accommodation – Filling and indexing. Office Management – Elements – Functions – Rule for office manager – Functions of Office Manager

 

Meaning & Definition of an office

Meaning

Office is an important pace of the organization where different functions are performed to achieve the objectives of the organization. It is the integral part of any business. If business starts to be rigid and complex, office helps by simplifying the activities and promotes the expansion of business. It is set up to handle the information and daily transactions in s systematic way.

 

Definition

 The definition of office can be interpreted in two ways. They are traditional and modern viewpoint. In traditional view, office is defined as the place where clerical functions like receiving, recording, processing and supplying information are performed. In modern view it is defined as the part of organization which involves in performing all management as well as administrative functions such as planning, policy making, organizational activities, coordination and communicating in order to achieve the objectives of the organization.

 

Functions of an office

1. Primary or basic functions

2. Auxiliary or administrative management functions

 

1. Primary or basic functions       

 

An office basically performs those functions that are related to information management. It helps in receiving, recording, arranging, analyzing and transmitting information.

 

 

A. Receiving and collecting information

Receiving and collecting different types of information from the different types of sources is the primary function of an office. The information is received from two sources. They are internal and external. Letters, invoices, circulars, notices, memos are the internal sources and supplier, customers, government, banks are the external sources

 

B. Processing and arranging information

It is the most significant function of an office. The information collected and recorded cannot be readily used for the decision-making and other purposes in the organization. Therefore, it must be processes and arranged. Processing information involves preparing notes, sorting, editing t. all information are to be arranged in a systematic way.

 

C. Supplying information

After arranging and analyzing information it is ready to supply in the management. It provides necessary information to its member whenever it I required. This information helps in decision-making process.

 

D. Retention of records

Retention is defined as the preservation of records for future reference. It involves collection, preservation, classification and protection of records for future reference. It is maintained in files, computers etc. Every record has a life span. It is protected according to its importance. Retention of record depends upon nature of organization. The efficiency of office depends upon the way records are retained

 

2. Auxiliary or administrative management function

 

A. Management process

To make any business successful there must be good management. Office helps in effective management. It includes planning, organizing, staffing, directing and controlling. It helps in smooth functioning of the organization.

 

B. Public relations

There must be good public relation of the organization. The main purpose of public relation is to make the organization look trust worthy to all people who deal with it in all its action.

 

C. Development of office system and procedure

Every office develops a definite office system and a fixed routine. It helps in smooth flow of office work. The system is also known as procedure of office work.

 

D. Safe guarding the assets

All assets, movable and immovable, documents and office records must be guarded and protected. They can protest these assets through insurance policies, locker etc.

 

E. Form designing and control:

An office designs, develops and prepares many types of form needed for office management. It helps to get maximum benefits. These office forms are important tools for collection and storage of information.

 

F. Purchasing stationery and supplies

Office stationery and supplies are essential for doing work. It helps in increasing the efficiency and improving quality of works done. Office should pay attention in purchasing right type of stationery and supplies

 

G. Purchasing office furniture and machine

Office requires various types of office furniture and machine for efficient performance. The quantity, quality, consistency and completeness of work basically depend upon the ability and quality if assets like office furniture and machine.

 

H. Personnel function

Office is also related to recruiting, training, placing, promoting the employees. Employees help in the success of the organization.

 

Importance of office

Some importance of an office are as follows:

 

1. Information center

An office is an information center which provides information relating to business transactions. Such information is very useful. It is used by management for the purpose of planning, organizing, staffing, directing and controlling.

 

2. Channel of communication

Office not only keeps record of information but also plays the role of reliable channel of communicating the information. It is required for smooth functioning of the organization.

 

3. Coordinating center

The success of business depends on the proper coordination of people and activities of the organization. It keeps relations with all departments and deal with information necessary for effective coordination; it is a mechanism or coordination.

 

4. Control center

An office acts as a control center. Controlling is the important function of management. It helps to monitor plans and policies which help in the implementation of proper working environment. It helps to prevent from unwanted deviations. It provides data for managing and correcting deviations.

 

5. Service center

An office works as a service center. It provides services to all the department of an organization. It provides necessary information to all the department of an organization. Business cannot operate successfully without better service system and office fulfills this requirement.

 

6. Memory center

An office is the storehouse of records. It keeps the records of past and present. It provides necessary information for future. It helps to report letters, circulars, notifications, policies etc. It is known as ‘brain’ of organization.

 

7. Help employees

An office provides wages, salaries to their employees. They also keep records of workers attendance, leave due, provident fund, and calculation of overtime. They also help to maintain the relationship between management and workers.

 

8. Office as intermediary

An office works as a middleman between department and outsiders. It links with supplier, customers, shareholders, government and general public. These office activities enhance the image of the firm.

 

Meaning of Office Layout

Office layout means the systematic arrangement of office equipment, machines and furniture and providing adequate space to office personnel for regular performance of work with efficiency.

 

Definition of Office Layout

According to Littlefield,

 

“Office layout is the arrangement of equipment within the available floor space”.

 

According to Hicks and Place,

 

“The problem of layout relates to the arrangement in the space involved so that all the equipment, supplies, procedures and personnel can function at maximum efficiency”.

 

Therefore, the main task of office manager is the proper allocation of space to each section by considering the interlinking of other sections, so that the activities of different sections can be coordinated and controlled easily. Faulty or improper arrangement of furniture, equipment and space for employees leads to unnecessary wastage of time and energy and increase in the cost of office operations.

 

Objectives of Office Layout

The main objectives of office layout are as follows

 

1. Effective utilization of available floor space and smooth flow of work.

 

2. Both power and telephone service is made available whenever necessary.

 

3. Office supervision is made more easy and convenient.

 

4. Good working conditions should be provided to each employee

 

5. The reception room should be very near to the main gate or entrance so that the visitors may feel easy and convenient.

 

6. A sense of belonging and loyalty should be made in the minds of office employees.

 

7. Employee’s satisfaction should be the outcome of proper office layout.

 

8. There should be a free flow of communication among employees.

 

9. All the sections can not work independently. Hence, the office layout ensues the interlinking of each sections according to their needs.

 

10. There must be an adequate space between desks, tables and chairs for free movement of employees.

 

11. Noise and disturbing operations should be segregated within the office.

 

12. Some sections require privacy. The sections may be interview section and inquiry section. Interview section is dealing with recruitment of staff and inquiry section is dealing with progress and performance of the existing staff.

 

13. Frequent mutual consultation and interference between clerks should be avoided.

 

14. The room of the manager should be arranged in such a manner that he can easily observe the activities of staff for exercising control on them.

 

15. The external noise and disturbance should be avoided by fixing double glazed windows and doors.

 

16. Changes may be made in the office layout if the volume of work is increased in future and requires facilities.

 

17. Staff doing confidential work should be provided adequate privacy.

 

18. There must be sufficient, natural or artificial light.

 

19. Adequate safety of valuable documents and records should be ensured.

 

How to design an efficient office layout?

An efficient layout of an office can be designed only by the manager. When, the office manager should consider the following matters.

 

·         Space available.

·         Number of workers.

·         Volume of work.

·         Nature of work.

·         Number of workers in designation wise.

Types of machine and equipment used.

Flow of work.

Physical appearance.

The shape of an office is an important consideration. The building or office space may be square, rectangular, long and narrow or L or U shaped. Generally, square or rectangular space is better than long or narrow space. The reason is that the latter requires much floor crossing.

 

Principle of office layout

Ø Principle of flow of work:

It is the layout which helps for smooth and effective flow of office works. Simple, easy and prompt work flow and essential for work progress

Ø Principle of free movement and observation:

Office layout should allow the free movement of employees. There should also be proper supervision and observation of works of movement too

Ø Principle of effective supervision:

There should be free supervision of flow of works, movement of personnel, cost, wastage, balance of budget, quality of office works etc.

Ø Principle of departmental relationships:

For the office layout related departments are inter related and those inter related departments should be placed side by side.

Ø Principle of flexibility:

Office should be flexible enough to facilitate the expansion in the future.

Ø Principle of maximum utilization:

As the time flows, there is increase in cost of every thing as per the situation of the economy if the country and the area where office is established. There are very fewer cases of deflation basically in developing countries. Therefore, when office is set up then there must be maximum utilization of employees, materials, space, machines and resources. There should be reduction of wastage.

Ø Principle of pleasing appearance:

Interior design, lighting, ventilation and cleanliness should be maintained. Office must be well furnished and pleasing enough to make it attractive to all the customers and visitors

 

Ø Principle of good ventilation:

Office must have enough doors, windows, and ventilation for constant supply of fresh air.

Ø Principle of good lighting:

Office should try to provide natural light that is sunlight. Dark places should be avoided for establishment of office.

Ø Principle of safety:

An office layout must be based on the safety. It should reduce office accidents like theft, fire, damage and so on. Office machine must be implemented properly

Ø Principle of service facilities:

There must be provisions of good canteen, lights, lifts, telephone, and toilets.

Ø Principle of providing private offices:

In an office. Separate rooms should be provided to some important employees. If the work is confidential in nature then private room should be provided. It is better to use movable partition to provide privacy

 

Advantages of an efficient office Layout

The following advantages can be derived by having planned layout.

 

·         No waste of time and energy of office personnel.

·         Promotes efficiency of staff.

·         Proper utilization of floor space.

·         Easy supervision.

·         Speed in inter – communication.

·         Better use of office machines and equipment.

Types of Office Layout

Office layout may be classified into two categories, They are

 

1. Process Layout: In process layout, both equipment and employees are arranged according to the sequence of operations. For example, the filing section may be located next to the despatch section and so on.

 

2. Group Layout: In group layout, employees are placed in a separate partition  where similar activities are carried on and office machines are fitted with another section. For example, all computers are fitted in separate room i.e, computer room.

 

Meaning of office accommodation

It is the process of selecting appropriate building in a favorable location, establishing different sections and departments, proving or arranging resources in a scientific way. The purpose of office accommodation is to create sound working environment and to bring efficiency and rapidness in office work. It is important for both employees and outsider. Office employees spend a long time office. Bad accommodation can cause boredom and frustration among employees. Bad environment also may cause bad impression to outsiders.

 

Selection of office building

 1. Shape and size of office building

It is one of the major factors that should be considered while selecting office building. It should have adequate space to accommodate all machines, equipment, and employee with furniture and enough space for flexibility. It should be considered taking the base of both present and future needs.

 

2. Lighting and ventilation

An office building should have adequate lighting and ventilation. It helps a lot to increase efficiency and enhance worker’s morale. Well lighted and ventilated accommodation puts less pressure on the employees and also reduces the physical and mental strain and consequently the efficiency is higher.

 

 

 

3. Convenience to customers and employees

While selecting office building it should consider the convenience of customer and employees. It should not be far from the related trade center, must have proper toilet and canteen services and food hospitality and utilities.

 

4. Cost

The cost of building effects on total budget of organization. The building purchased or built must be within the budget of organization. There should be balanced between requirement of space, capacity of the organization and the cost for covering the expanses.

 

5. Flexibility

Flexibility of office building in its shape and size should be considered while selecting the office building. It must also match the nature of organization.

 

6. Layout facility

The efficiency of men and machine depend upon the layout. The proper layout makes office attraction. For this furniture, machine and other goods are necessary. This also helps in the internal arrangement of office.

 

Selection of office location:

 Nearness to customer: The office should be accessible to customers. They do not like long distances to make business inquiries. The office should be accessible to other parties who are in regular contact.

 Nearness to related business: It is desirable to locate the office near the offices of related business. It should be established in the same line of trade.

 Availability of infrastructure: The infrastructure should be available in office location. It consists of transport, communication, power, water and parking facilities.

 Nature of business: The nature of business affects location of office. Office of manufacturing business in located near the source of raw materials, labor and service facilities. Office of trading and banking business is located in commercial centers near the customers. Office of perishable goods business is located near the market for such goods.

 Availability of human resources: Needed human resources should be available for office. They can be skilled, semi-skilled and unskilled. All facilities must be available for employees

 Environment: The office location should have healthy environment. It should not be near polluted rivers or waste disposal sites. It should be free from noise, dust and pollution.

 Cost of space: Sufficient space should be available at reasonable cost for the office. Space should be available for future expansion.

 Government laws: The selection of location should comply with government laws and regulation at national and local levels.

 

Meaning of filing

It is the process of classifying, arranging and storing record so that they can be located when required. It is also the process of collecting and arranging records or their copies in such a way so that whenever it is needed it could be found very easily. All office receives letters and dispatches that are kept for the future use. They are to be stored in a safe place. For that filing is required. It is an important part of management that helps to decide about anything in a legal and systematic way. It is the process of arranging and protecting records so that they may be found and delivered easily when needed for future.

 

Purposes:

Ø  It helps to keep all records together so the history of office can be understood.

Ø  It helps to provide safety place for storage of necessary documents in order to use and locate them when required.

Ø  To make records readily and easily available.

Ø  It can be used as evidence in case of dispute

Ø  It helps in some legal formalities.

Ø  It is shown as profit or legal evidence.

Ø  It can be presented as a legal document in court.

Ø  It helps to make future plans. Past records are the base of future records

Ø  Some importance of filing:

 

Ø  It helps in increasing efficiency of office because filing helps in providing records in required time to make quick decisions

Ø  Filing helps in protection of important documents from fire, dust, insects, theft and mishandling.

Ø  Previous records are base of past records, and they are used as an immediate reference.

Ø  It helps in documentation of proof and legal evidence in the time of disputes

Ø  It helps in formulation of future planning

Ø  It helps in providing legal proofs to fulfill legal formalities

Ø  It helps in handling customers and correspondence carefully to maintain the goodwill of the office

Ø  It helps in taking feedback.

 

Types of filing system

1. Traditional system

It is old method of filing. It is used in small and medium scale organizations. There are 4 types of traditional filing. They are

 

A. Wire fling

It is also known as spike filing. It is the oldest filing method. In this method a piece of wire is fixed in wooden stand and that stand is kept on table or hanged somewhere. The letters and documents are inserted inside the spike. Whenever letters and documents are required for reference all subsequent letter are taken out. It used to be used in banks, retailer shop, hospitals etc.

 

Advantages of wire filing

 

Ø  It is very simple

Ø  It is the cheapest method.

Ø  It uses less space

Ø  It uses less time

Disadvantages of wire filing

 

Ø  Used only in small and medium scale organization

Ø  Limited number of documents can only be filed

Ø  The documents are not protected by fire, dust, water etc.

Ø  It is inconvenient

Ø  There is possibility of leakage.

B. Pigeon hole filing

This filing is also known as docket filing. A small cabinet is used for filing. The holes look like pigeonhole and each hole is given alphabet label. Letters and documents are kept into related holes. It is usually kept in post office. Here, the unnecessary files are destroyed.

Advantages of pigeonhole filing

 

Ø  It is simple and easy

Ø  It protects files from dust and water.

Ø  It is economical

Ø  It takes less time

Disadvantages of pigeonhole filing

Ø  It is only suitable for small organization

Ø  The cabinets are small

Ø  Only limited number of documents can be kept

Ø  It is difficult to keep old records

C. Cardboard filing

It is one of the popular traditional methods of filing. In this, a thick cardboard file and folding sheet are placed one upon another. The two ends are tied with each other with the help of rubber. The papers are kept in chronological order. It is used for few transactions. The files can be kept in cabinet for protection

Advantages of cardboard filing

Ø  It is simple and easy

Ø  It is economical

Ø  It helps in fast recording of documents

Ø  It requires less space

 

Disadvantages of cardboard filing

Ø  It is useful only for few records

Ø  It needs cabinet for protection

Ø  It is time-consuming

Ø  There is chance of loss of documents

D. Box filing

In this filing method, boxes are made up of wood or cardboard. The spring clips are fixed inside the box to hold papers. Whenever letters and documents are required for reference all subsequent letters are taken out. The documents are kept chronologically one upon another.

Advantages of box filing

Ø  It is simple and easy

Ø  It protects the documents from fire, dust, insects, water and so on.

Ø  It is cheap

Ø  It is convenient

Disadvantages of box filing

Ø  The spring becomes very loose because o constant use

Ø  Sometimes papers can’t be held properly

Ø  It is difficult to locate documents timely.

2. Modern filing system

Filing system is very simple. Traditional system of filing didn’t fulfill the requirement of the business. So it has been replaced with modern filing system. Modern filing system is the improvement of traditional method of filing. It can be classified into 2 types. They are

A. Horizontal filing

In this system, the documents or letters are chronologically placed in folders one upon another in a horizontal way. It is of two types. They are

I. Flat file

It is made up of cardboard or thick paper. Each flat file is attached with a pair of metal clips or laces on the left-hand side of it to tightly hold the papers. Pair of holes is made on the left-hand side of the paper using a punching machine. Then the papers are inserted into the clips or laces and the clips are locked or the laces are tied up to tightly hold the papers. The papers are chronologically placed one upon another in a flat position in a file.

 

II. Arch level file

It is made up of cardboard or thick plastic. The metal arches are made for holding papers or documents. Pair of holes is made on the left-hand side of the paper using a punching machine. Then the papers are inserted into the arches and the arches are locked to tightly hold the papers. The papers are chronologically placed one upon another in a flat position in a file in alphabetical order. In these papers can be taken out or inserted without disturbing other papers.

Advantages of horizontal filing

Ø  It is simple to understand and easy to operate

Ø  The papers are chronologically placed in alphabetical order which helps in easy location of documents

Ø  The documents are protected by fire, dust, water etc

Ø  It requires less space

 Disadvantages of horizontal filing

Ø  The files are kept one over another, so they are difficult to locate.

Ø  It is time-consuming.

Ø  It is difficult to take papers out and insert them in.

Ø  It has less expansion and flexibility.

Vertical filing:

It is the most popular type of filing in modern offices. In this method, documents are kept on upright position in especially pre prepared folders or files. The folders or files are made up of cardboard or papers which are folded in the middle to hold the documents in them.  Documents are placed in a chronological order without punching and typing them up in a pair of clips. It requires following tools and equipments.

1. Folders

They are made up of strong cardboard papers to hold the documents. The back of the folder is higher than the front part. They are placed in cabinet and their external part is visible.

2. Cabinet or drawer

It is necessary to keep the folders properly. Folders are kept vertically inside it. The size of drawer is dependent upon the number of papers to be kept in it. Generally 5000 papers are kept in one drawer.

 

3. Guide cards

The files are kept in a drawer of filing cabinet. A guide cared is placed between the folders to divide the drawer.

Advantages of vertical filing:

Ø  It is easy to file the documents

Ø  It is economical

Ø  It is flexible

Ø  It provides safety to the documents

Ø  It maintains the secrecy of the documents

Disadvantages of vertical filing

Ø  It is costly compared to horizontal filing

Ø  There is more chance of wearing and tearing of letters and documents

Ø  There are chances of mixing up of files.

Suspension filing:

It is an improved form of vertical filing. In this filing, drawer containing documents are fitted metal frames in which folders are fitted with hinges or hooks to suspend the file. Here, the headings or caption are found in the folder. It is the best method of filing. It contains all the merits of vertical filing method. In this filing when the drawer is opened all files names can be clearly seen. It contains folders and cabinet which is expensive. Therefore, it is its disadvantage.

 

Lateral filing

It is modified version of suspension filing; it is one of the most popular forms of filing system used in modern offices. In this filing system, envelope type of folders are used which is made up of metal strip. It uses hinges or hooks that can hold papers better than shelf. The top of the folder is fitted with an indicator. It is useful for larger organization. It uses less space and folders are also quickly located. It is less expensive and can also expand its space

 

Open shelf filing

In this stage, high shelf is used to keep folders. The files are laterally kept in open shelves in numerical order. In some cases, files are horizontally kept in the shelves. Guide cards can be used in between folders. The open shelves may be of any height. It may even touch the ceiling of 9-10 feet. It includes all merits of lateral filing. The main disadvantage is that it lacks secrecy and safety. It is not suitable for small offices.

 

Some qualities of good filing system:

Simple: It should be easy and simple to be understood by the entire employees.

Economy: Filing should be cheap and must come under the budget of the organization. The installation and operation cost should be low.

Compactness: It should be compact and should not take unnecessary space

Accessibility: Files and folders must be preserved for future and must be easily accessible.

Suitable: It should be suitable for any kind o organization. It should meet the requirement of business

Flexible: It should be flexible enough. It must be dynamic and changeable according to the needs of an organization

Safety: A good filing system must preserve all the necessary documents from insects, dust, fire, water and so on

Indexing: A good filing system must have proper indexing

Classification: The files should be classified in a proper way so that it helps in easy location.

Concept of indexing

Simply, index means indicator or guide. It is anything that indicates guides or points out something. In record management, indexing is defined as indicator or guide for locating, files folders or records. It is the list of names, subjects, or dates which indicate the exact location of letter and documents preserved in files and folders. It helps to provide required information in time. An index should not be confusing. It should be easy to access records.

Purposes

Ø  To indicate right position of files and folders

Ø  To find files, folders easily

Ø  To help in quick location of files and folders

Ø  It provides future reference

Ø  To increase efficiency of filing

 

Types of indexing are listed below:

1. Book index

It is mostly found in register books, notebooks etc. It is simple type of indexing. In this index, book is market with alphabets on the right side of the paper in such a way so that all alphabets can be seen at a glance. Here, name of persons or documents are arranges in alphabetical order. All the related files are kept in same alphabetical section. For example, telephone diary.

Advantages

Ø  Simple method

Ø  Economic

Ø  Safety

Disadvantages

Ø  Inflexible

Ø  Problem of alphabetical order

Ø  Inconvenient

2. Loose-leaf index

It is improved form of book index. In this type of indexing, instead of using hard hound register book, book sheets or paper are used in which alphabets are market on the rig hand side of the pages. It is very flexible and cheap. It is simple to operate an easy to understand. New sheet can be easily added and can be removed easily. But there is chance of misplacement of sheets.

 

3. Vowel indexing

 

It is improved form of book index. It is generally used by large organizations. Index book is maintained on the basis of vowels. Pages are firstly selected by initial letter and then by vowel occurred after the initial letter. For example Gandhi will be recorded in section “g” and in vowel “a”. It is time-consuming. It is difficult to search when many names begin with each alphabet.

 

4. Visible card indexing

 

Here, cards are arranged in flat tray or metal frame. Each card is attached to metal hinge. Name address and other documents are visible by touching other cards. Trays are attaché vertically to metal stands. Details can be written or typed in front and back of cards. Less space is used and cards can be easily located. It saves the time. It is flexible

 

5. Wheel index

 

It is modern form of visible index. It is suitable for big organization. Here, cards are mounted round the hub of wheel. A single wheel can hold as many as 5000 cards. In these cards can taken out or inserted without disturbing other cards. It is arranged alphabetically. Wheels are rotated to find card.

 

Advantages

Ø  Speedy performance

Ø  Requires less space

Ø  Flexible in nature

Ø  It saves time

Disadvantages

Ø  It is costly

Ø  It is not suitable for small organization

6. Strip card index

 

One line entry is made in narrow strip made up of thick cardboard paper which is fitted in a frame in such a way that all the strips fitted in the frame are visible at a glance. It is flexible and expensive. There is lack of secrecy and is difficult to operate.

Qualities of good indexing:

 

Simple: It should be easy and simple to be understood by the entire employees.

Economy: Indexing should be cheap and must come under the budget of the organization. The installation and operation cost should be low.

Flexible: It should be flexible enough. It must be dynamic and changeable according to the needs of an organization

Compactness: It should be compact and should not take unnecessary space

Safety: A good indexing system must preserve all the necessary documents from insects, dust, fire, water and so on.

Accessibility: Files and folders must be preserved for future and must be easily accessible.

 

Meaning of Office Management

Office management refers to the process of planning, organizing, guiding, communicating, directing, coordinating and controlling the activities of a group of people who are working to achieve business objectives efficiently and economically.

 

Office management is not only necessary to business organization but also essential to non-business organization. In modern internet society also, there is a need of direction to the individual efforts towards common purpose or objective. The direction is given from a place i.e. office.

 

The process can be treated as office management. A business is carried on by businessman with the help of group of persons. This group of persons has different interest, talent and motto. So, it is the function of office management to organize, guide and control the activities of such group of persons to achieve business objectives.

 

Definition of Office Management:

 

Office management can been defined as the art of guiding, directing coordinating and controlling the salaried people of an organization in order to achieve specified objective within a time schedule.

 

Elements of Office Management

Elements of office management are termed as pillars of a building. If pillar is strong, certainly, the building is also strong. Hence, efficient functioning of office management is based on the elements of office management. Following are the essential elements of office management.

 

 

 

1. Personnel

 

Office personnel are actually performing the office work. Generally, the selection and placement of office personnel is carried on by the office manager in small organization. In large organization, staffing is carried on by the human resource management department.

 

In both the case, the office work is to be performed by allocating the work to each individual according to their efficiency, guide the personnel to do the work with the help of means available in an office within a specified time and control the activities of office personnel. The office manager has to do all these activities.

 

2. Means

Means refers to tools used to perform the office work. Means include pen, pencil, eraser, paper, ink, office forms, typewriter, computer, printer, calculator and the like. Adequate tools have been supplied in an office and put them to the most efficient and economical use for achieving objectives.

 

3. Environment

The nature of business determines the environment of an office. The various office works have to be carried on under a particular condition or environment. A working environment is created and maintained for the smooth performance of office work. It is the duty and responsibility of an office manager to bring suitable environment by adopting various procedures and practice.

 

4. Purpose

The office personnel must be aware of the purpose for which a particular work is carried on and the impact of such work on others’ performance. The office manager teaches the purpose to office personal. If not so, the performance of office work does not bring the most efficient and economical use of office resources and achieve the objectives.

 

Following are the main functions of office management:

 

1. Planning

 

Office management defines future road map of the office. It decides in advance about future activities of office. It sets objectives for the office and chooses actions to achieve those objectives. Office management is future oriented. It sets standards of performance for an office.

 

2. Organizing

 

 Organizing is another major function of office management. Office management assigns office jobs to people and positions. The steps taken are:

- It groups similar office jobs

 

- It creates positions in office. Jobs are assigned to people and positions

 

- Authority and responsibility of each position is defined

 

- Coordination mechanism is established

 

3. Human resource management (Staffing)

 

Staffing is another important function of office management. It hires people to fill office positions. It is concerned with hiring, training, using and retaining people.

 

4. Directing

 

Office management guides and supervises office employees to perform job. It involves leading, communicating, motivating and coordinating.

 

5. Controlling

 

Another key function of office management is controlling. It measures actual office performance with standards. Corrective actions are taken for deviations in office performance.

 

Important Functions or Role of an Office Manager

Since the office work is basically a service function, office manager performs a significant role in the performance of office work. The main functions of an office manager are explained below.

 

1. Staffing

An office manager is requested to recruit and select the office staff by the top management. For this purpose, he determines the number of staff required, their qualification and experience if any, decide the sources of recruitment, receiving applications, conduct the interviews and tests and finally select the right personnel.

 

2. Leadership

He has complete control over the work done in an office. An office manager is necessary for smooth, efficient and performance of office work economically in an organization. Being a leader of office, he is in charge of public relations and helps other departments to achieve their goals set forth.

 

3. Training

The need of training has been decided by office manager. Besides, the training programmes are also devised and imparted to the new recruits as well as existing staff. Orientation training programme has been provided to new staff and refresher course programme is provided to existing staff.

 

4. Coordination

The various activities of office staff are coordinate by the office manager. He has to bring coordination between the top management and the workers. He must please both the parties.

 

 

 

5. Work Measurement

An office manager devices methods of work measurement in terms of the output of the staff. It is a difficult task. The reason is that the office work cannot be measured in physical terms. Hence, it is the duty of office manager to decide the accepted norms of work measurement.

 

6. Motivation

The efficiency of staff is increased by providing proper motivation. The type of motivation can be decided by the office manager. The right type of motivation ensures effective and economical performance of work and lead to the promotion of the staff.

 

7. Discipline

The implementation of rules and regulation of office is in the hands of office manager. There should not be personal bias while implementing rules and regulations. He also attends to the grievances of office staff. In this way discipline is maintained.

 

8. Accounting

He has thorough knowledge on accounting. Every figure should be kept in finger tips.

 

9. Stationery Control

Office manager has to exercise proper control on stationery purchase and issue. For this purpose, he has to frame clear cut procedure for the purchase, for the issue and storage of office stationery.

 

10. Secretarial Services

All the accounts books are kept under the custody of office manager. An officer manager is responsible to conduct meetings, drafts reports and minutes etc. on behalf of secretary. In this way, he does the functions of secretary.

 

11. Costing

In small organization, an office manager is responsible to maintain costing records and do the costing work.

 

12. Organizer

The office work has been assessed and assigned to office staff according to their knowledge, ability, experience, qualification and the like by the office manager.

 

13. Supervisor

An office manager is head of office. Hence, it is the duty of office manager to supervise the office correspondences, procedures, policy implementation, record maintenance, filing, indexing and the like.

 

There is no hard and fast rule for determining the functions of office manager. Generally, the type and size of an organization are the deciding factors of functions of office manager. The functions of office manager vary from time to time and from office to office. The office manager is expected to perform his functions within the limit of authority and responsibility entrusted to him by the employer.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unit -4

Office Machines and Equipment – Data Processing system – EDP  uses and limitations – office furniture.

 

Office machine

The rapid increase in the industrial activities has increased office work to the highest level. The machines were invented to reduce monotony and increase the efficiency of works done. They help to save time and labor. In modern offices, business completely depends upon the office machine and equipment. It increases the level of operation, improves the performances, safeguards the files, and increases the accuracy. Purchase, repair and maintenance of office machines require big investment. It is the duty of office manager to select the right type of machine. If they don’t select it properly then the office work won’t be efficient and effective.

 

Importance of office machine

1.      To save labor: properly designed office machine saves labor. It helps in saving labor cost. Machines work faster than men. Total wage bill can be reduced.

2.      To save time: machines work faster than men. The office machine helps to save time. The speed of official work is increased with the help of machine. It helps in completion of work in a faster way. It increases efficiency and effectiveness of work.

3.      To provide accuracy: office machines works accurately. It increases in accuracy in all types of works. It reduces the error, fatigue and helps in supervision

4.      To reduce chance of fraud: there may be barrier inside the organization. Machines help to check for the accuracy and correct method of works done t also keeps systematic records of all employees. Thus, it helps in reducing the fraud

5.      To retrieve monotony of work: some jobs are routine in nature. They are repetitive in nature. Repetitive works are monotonous. Office machine s help in retrieving the monotony of the employees

6.      To improve quality of work: office machines help to maintain the neatness, accuracy and quality of work done.

7.      To increase goodwill: when there is saving of labor and time and increment of accuracy of works done, then there are fewer chances of errors and fraud which improves the quality of work done and helps in satisfaction of customer and the employees. This helps in increasing the goodwill of the office

8.      To lower operating cost: office machines reduce the operational cost. It helps to reduce the wage bill. It also helps in reducing the excessive filing cost.

 

What Is Data Processing?

Data in its raw form is not useful to any organization. Data processing is the method of collecting raw data and translating it into usable information. It is usually performed in a step-by-step process by a team of data scientists and data engineers in an organization. The raw data is collected, filtered, sorted, processed, analyzed, stored, and then presented in a readable format.

 

Data processing is crucial for organizations to create better business strategies and increase their competitive edge. By converting the data into a readable format like graphs, charts, and documents, employees throughout the organization can understand and use the data.

 

Data Processing Cycle

The data processing cycle consists of a series of steps where raw data (input) is fed into a process (CPU) to produce actionable insights (output). Each step is taken in a specific order, but the entire process is repeated in a cyclic manner. The first data processing cycle's output can be stored and fed as the input for the next cycle.

 

 

 

 

 

 

Generally, there are six main steps in the data processing cycle:

 

Step 1: Collection

The collection of raw data is the first step of the data processing cycle. The type of raw data collected has a huge impact on the output produced. Hence, raw data should be gathered from defined and accurate sources so that the subsequent findings are valid and usable. Raw data can include monetary figures, website cookies, profit/loss statements of a company, user behavior, etc.

 

Step 2: Preparation

Data preparation or data cleaning is the process of sorting and filtering the raw data to remove unnecessary and inaccurate data. Raw data is checked for errors, duplication, miscalculations or missing data, and transformed into a suitable form for further analysis and processing. This is done to ensure that only the highest quality data is fed into the processing unit.

 

Step 3: Input

In this step, the raw data is converted into machine readable form and fed into the processing unit. This can be in the form of data entry through a keyboard, scanner or any other input source.

 

Step 4: Data Processing

In this step, the raw data is subjected to various data processing methods using machine learning and artificial intelligence algorithms to generate a desirable output. This step may vary slightly from process to process depending on the source of data being processed (data lakes, online databases, connected devices, etc.) and the intended use of the output.

 

Step 5: Output

The data is finally transmitted and displayed to the user in a readable form like graphs, tables, vector files, audio, video, documents, etc. This output can be stored and further processed in the next data processing cycle.

 

Step 6: Storage

The last step of the data processing cycle is storage, where data and metadata are stored for further use. This allows for quick access and retrieval of information whenever needed, and also allows it to be used as input in the next data processing cycle directly.

 

Types of Data Processing

There are different types of data processing based on the source of data and the steps taken by the processing unit to generate an output. There is no one-size-fits-all method that can be used for processing raw data.

 

Batch Processing: Data is collected and processed in batches. Used for large amounts of data.

Eg: payroll system

 

Real-time Processing : Data is processed within seconds when the input is given. Used for small amounts of data.

 

Eg: withdrawing money from ATM

 

Online Processing : Data is automatically fed into the CPU as soon as it becomes available. Used for continuous processing of data.

 

Eg: barcode scanning

 

Multiprocessing : Data is broken down into frames and processed using two or more CPUs within a single computer system. Also known as parallel processing.

 

Eg: weather forecasting

 

Time-sharing : Allocates computer resources and data in time slots to several users simultaneously.

 

Data Processing Methods

There are three main data processing methods - manual, mechanical and electronic.

 

Manual Data Processing

In this data processing method, data is processed manually. The entire process of data collection, filtering, sorting, calculation and other logical operations are all done with human intervention without the use of any other electronic device or automation software. It is a low-cost method and requires little to no tools, but produces high errors, high labor costs and lots of time.

 

Mechanical Data Processing

Data is processed mechanically through the use of devices and machines. These can include simple devices such as calculators, typewriters, printing press, etc. Simple data processing operations can be achieved with this method. It has much lesser errors than manual data processing, but the increase of data has made this method more complex and difficult.

 

Electronic Data Processing

Data is processed with modern technologies using data processing software and programs. A set of instructions is given to the software to process the data and yield output. This method is the most expensive but provides the fastest processing speeds with the highest reliability and accuracy of output.

 

Advantages of EDP

Electronic Data Processing (EDP) is the digital management of databases, typically stored on a shared server and allow simultaneous access to all parties. There are several distinct advantages to employing EDP:

 

·         Speed. Information stored and managed via EDP can be retrieved almost instantly on a well-maintained internal network or even the Internet.

·         Efficient. Summary documents and related materials such as invoices, reports, and statements can be automatically and quickly generated via EDP.

·         Economic. Once an Electronic Data Processing system is created and implemented, over time it reduced the costs of managing data by a significant margin.

·         Reduced Labor. Duplication of effort and repeated entries due to mistakes in manual data entry are reduced or eliminated by EDP.

Office furniture

Office furniture is an important part of office management; it is mostly used for indoor activity. Employees working in the office should be provided with comfortable and convenient furniture so that they can work efficiently. The major and most popular office furniture are chair, table, cabinets, cupboards, sofas, racks etc. office furniture are common in all offices. Office furniture should have good design which can help the office to look attractive ad pleasant. In a well  furnished office, employees feel comfortable and are motivated for work

 

Importance of office furniture

·         It increases the efficiency of work

·         It makes the office more attractive and pleasant.

·         It helps to maintain the prestige of office

·         It provides better working environment for the employees

·         It helps in reducing the fatigue.

·         It helps in protection of documents from fire, dust, insects etc.

·         It helps in proper storage of files

 

Factors to be considered while selecting office machines and furniture are listed below:

 

·         Need of machines: before selecting any machine its degree of need is to be checked thoroughly. The alternates available to the machine also should be analyzed

·         Cost: cost of machine is a very important factor to be considered before selecting any machine. The machine should be within the budget of an office

·         Operating cost: capital cost and operating cost should be taken into account. Similarly, maintenance cost, repair cost, and space required for the machine also should be analyzed

·         Durability: office machine should be original, durable and lost lasting. Office machines are very expensive and it is not possible to purchase new machine every year. Therefore, the machine to be purchased must be free from problem of frequent break down. This also saves in repair cost

·         Easy to operate and flexible: office machine should be easy to operate and flexible. There shouldn’t be need of any additional training and specialization for handling of office machine. Machine should be usable for numerous purposes too

·         Servicing: office machines require regular repair and maintenance. The spare parts of the machines should be easily available in the market. Likewise, the servicing facilities should be readily available.

·         Quality and speed: office machine should be of higher quality. It should be speedy in nature,

Factors to be considered for selecting office furniture

·         Cost: cost of furniture is a very important factor to be considered before selecting any machine. The furniture should be within the budget of an office.

·         Design: design of furniture relates with height and width, color, number of drawers, and so on. No matter what, furniture should support the space and must facilitate the works done.

·         Durability: office furniture should be made up of steel rather than wood because steel furniture is compatible and lost lasting. Office furniture can be expensive and it is not possible to purchase new furniture every year because it doesn’t even support the space. Therefore, the furniture to be purchased must be free from problem of breakage.

·         Multiple uses: furniture should be usable for numerous purposes in the office.

·         Uniform: furniture in the office must have uniform quality and cost. They must have lower cost of maintenance.

·         Safety: office furniture should be safe. Glass topped and sharp cornered furniture are relatively unsafe.

·         Saving space: choice of furniture also depends upon the space occupied by furniture. Such furniture should be selected which would occupy minimum office space. Bulky and space occupying furniture indirectly add office cost.

·         Comfort: office furniture should be comfortable. Comfortable furniture will result in increased efficiency of the employees

·         Portability: the furniture being portable can be easily shifted from one room to another, one building to another and form one location to another.

 

 

 

 

 

 

 Unit -1

Introduction – meaning - Nature and scope of Business – Forms of Business Organisation                          

Sole Trader, Partnership Firm, Joint Stock Company and co-operative Society – Public Enterprises.  

 

Meaning for Business

Business is an organization comprising people who strive together to achieve common objectives and goals. It is important for a business organization to have a vision that implies what it intends to achieve in the future and values that represent the organization’s integrity.

 

Definition for Business

According to F. C. Hooper, “The whole complex field of commerce and industry, the basic industries, processing and manufacturing industries, the network of ancillary services, distribution, banking, insurance, transport and so on, which serve and interpenetrate the work of business as a whole, are business activities.”

 

Nature of Business

Business is derived from ‘busy-ness,’ i.e. keeping oneself occupied with one or the other work, but it is much more than just being busy.

 

To have a better understanding of what a business is, we must go through the following points:

 

Ø  Regular Process: It is an activity which is performed repeatedly to generate profit.

Ø  Economic Activity: The whole sole purpose is maximising wealth.

Ø  Creates Utility: The goods or service must be such that it creates form utility – conversion of products in a consumable form, time utility – making the goods and services available when needed; and place utility – availability of goods or services wherever required, for the consumers.

Ø  Capital Requirement: Any venture requires fund depending on the size and its type.

Ø  Deals in Goods and Services: It is related to manufacturing and offering goods for sale or catering services.

Ø  Risk: All businesses have a risk factor or uncertainties of failure and loss.

Ø  Profit Earning Motive: The initial motive of a businessman is making a profit out of his venture.

Ø  Satisfaction of Consumer’s Need: It is concerned with the fulfilment of the customer’s demands and needs.

Ø  Involves Buyer and Seller: There are majorly two parties involved, the customer and the merchandise.

Ø  Social Obligations: It has some social responsibilities, like creating job opportunities, dealing with licensed products, etc.

 

Scope of Business

Following business components play an important role in the scope of business:

 

Industry

The word “Industry” refers to the business activities which are linked with the extraction and production or manufacturing of products. The product formed by an industry is either used by the vital consumers or again by the industry. If the product is used by the consumer it is called consumers’ goods such as clothes.

 

If the product is used again by the industry it is called the producer’s goods or capital goods. In a case when a product produced by the industry is further processed into finished products for other purposes they are called intermediate goods. e.g. plastic.

 

The industry is further divided into types on the basis of business activity:

Extractive Industries

The industries which extract, raise and manufacture raw materials from above or under the Earth’s surface are known as Extractive Industries and they include mining, fisheries, forestry and agriculture, etc.

 

Genetic Industries

The industries which are involved in reproducing and multiplying certain species of animals and plants and sell them in the market to earn a profit are named as Genetic Industries. These industries include cattle breeding farms, poultry farms and plant market, etc.

 

Constructive Industries

The industries which are involved in the construction of building, canals, bridges, dams and roads, etc. are called Constructive Industries.

 

Service Industries

The industries which are involved in manufacturing the intangible goods which cannot be seen but felt such as services of professionals like doctors, lawyers are examples of Service Industries.

 

Commerce

The second component of the scope of business is Commerce. It involves the buying and selling of goods and all the activities which are associated with the transfer of goods from the production source to the ultimate consumers or destination. The ranges of activities related to Commerce take place through:

 

Trade

The process of buying and selling goods is called Trade. It is the process of exchanging goods and services amongst the buyers and sellers and both of them earn profits. Trade can be classified into two types; internal and external.

 

Internal Trade: The process of buying and selling goods within a country is called internal trade. The internal trade can be either wholesale trade or retail trade.

Wholesale Trade: In wholesale trade, the goods are purchased in bulk from the producers and sell them to the retailers. These retailers then sell these goods to the final consumers.

Retail Trade: In the retail trade, the retailer sells goods and services to the final consumers.

External Trade: The process of buying and selling goods between the two countries is called external trade. The external trade has two types; import trade and export trade.

The elements which help in the purchasing of goods and services are called aid to trade. There are certain constituents that are essential for the progress of the trade and are as follows:

 

Transport

By using different ways of transport, the goods are transported from industry to the consumers. It includes railways, ships, airlines, etc.

 

Insurance

Insurance is very important to aid to trade. Insurance reduces the risk of damage to goods due to fire, flood or earthquake, etc. by paying a good amount in this regard.

 

Warehousing

Warehouses are used to keep the goods and are released and are delivered to the market when demanded. Thus, warehousing plays an important part to overcome the barrier of time and helps the goods reach the consumers in a short span of time.

 

Banking

Commercial banks play an important role in financing trade activities. They provide funds to the traders for stock holding and transporting the goods. They also support the producers in purchasing and receiving at both national and international levels. The banks also offer credit facility in the form of cash credit, overdrafts and loans to the traders.

 

Advertisements

Advertisements play an important part in selling the good to the consumers. The advertisement is either shown on television or printed in newspaper or magazines etc. and help the consumers to choose their desired product. Thus, advertisements are very important for the seller as well.

 

 

 

Importance of Business

Business is a self-employment opportunity for a person to become self-independent and master of his ideas. It is not only beneficial to the owner but also makes an impact on society.

 

To get a detailed understanding of the importance of trading activities to the owner and the society, let us go through the following points:

 

Revenue Generation: It is the key to revenue generation for the business owner since it brings in profit and proves to be a source of income for the owner.

Economic Growth: It is essential for the economic growth of a country since high revenue means higher tax collection.

Improves Standard of Living: A country with more industrial units and companies experience a higher rate of employment and better living standards.

Bulk Production: Manufacturing units involve large-scale production, which ultimately reduces the cost of production, and people get a continuous supply of goods at a reasonable price.

Innovation: It involves brainstorming and generation of new ideas which opens up the way for innovation and creativity.

Generates Employment: It is a long-term process which requires the human resource to function correctly. Therefore, it creates job opportunities.

Market Expansion: A good strategy and high customer satisfaction lead to a strong customer base aiming at market expansion.

 

Forms of Business Organisation

The five forms of business organizations include the following:

 

Partnership

Corporation

Sole proprietorship

Cooperative

Limited liability company

 

Partnership

You can classify a business partnership as either general or limited. General partnerships allow both partners to invest in a business with 100% responsibility for any business debts. They don't require a formal agreement. In comparison, limited partnerships require owners to file paperwork with the state and compose formal agreements that describe all of the important details of the partnership, such as who is responsible for certain debts.

 

Some advantages of partnerships include:

 

Easy to establish: Compared to other business structures, partnerships require minimal paperwork and legal documents to establish.

 

Partners can combine expertise: With more than one like-minded individual, there are more opportunities to increase their collaborative skillset.

 

Distributed workload: People in partnerships commonly share responsibilities so that one person doesn't have to do all the work.

Disadvantages to consider:

 

Possibility for disagreements: By having more than one person involved in business decisions, partners may disagree on some aspects of the operation.

 

Difficulty in transferring ownership: Without a formal agreement that explicitly states processes, business may come to a halt when partners disagree and choose to end their partnership.

 

Full liability: In a partnership, all members are personally liable for business-related debts and may be pursued in a lawsuit.

An example of a partnership is a business set up between two or more family members, friends or colleagues in an industry that supports their skill sets. The partners of a business typically divide the profits among themselves.

 

Corporation

A corporation is a business organization that acts as a unique and separate entity from its shareholders. A corporation pays its own taxes before distributing profits or dividends to shareholders. There are three main forms of corporations: a C corporation, an S corporation and an LLC, or limited liability corporation.

 

Advantages of corporations include:

 

Owners aren't responsible for business debts: In general, the shareholders of a corporation are not liable for its debts. Instead, shareholders risk their equity.

 

Tax exemptions: Corporations can deduct expenses related to company benefits, including health insurance premiums, wages, taxes, travel, equipment and more.

 

Quick capital through stocks: To raise additional funds for the business, shareholders may sell shares in the corporation.

Disadvantages include:

 

Double taxation for C-corporations: The corporation must pay income tax at the corporate rate before profits transfer to the shareholders, who must then pay taxes on an individual level.

 

Annual record-keeping requirements: With the exception of an S-corporation, the corporate business structure involves a substantial amount of paperwork.

 

Owners are less involved than managers: When there are several investors with no clear majority interest, the management team may direct business operations rather than the owners.

 

Common examples of corporations include a business organization that possesses a board of directors and a large company that employs hundreds of people. About half of all corporations have at least 500 employees.

 

Sole proprietorship

This popular form of business structure is the easiest to set up. Sole proprietorships have one owner who makes all of the business decisions, and there is no distinction between the business and the owner.

 

Advantages of a sole proprietorship include:

 

Total control of the business: As the sole owner of your business, you have full control of business decisions and spending habits.

 

No public disclosure required: Sole proprietorships are not required to file annual reports or other financial statements with the state or federal government.

 

Easy tax reporting: Owners don't need to file any special tax forms with the IRS other than the Schedule C (Profit or Loss from Business) form.

 

Low start-up costs: While you may need to register your business and obtain a business occupancy permit in some places, the costs of maintaining a sole proprietorship are much less than other business structures.

Disadvantages include:

 

Unlimited liability: You are personally responsible for all business debts and company actions under this business structure.

 

Lack of structure: Since you are not required to keep financial statements, there is a risk of becoming too relaxed when managing your money.

 

Difficulty in raising funds: Investors typically favor corporations when lending money because they know that those businesses have strong financial records and other forms of security.

Some typical examples of sole proprietorships include the personal businesses of freelancers, artists, consultants and other self-employed business owners who operate on a solo basis.

Cooperative

A cooperative, or a co-op, is a private business, organization or farm that a group of individuals owns and runs to meet a common goal. These owners work together to operate the business, and they share the profits and other benefits. Most of the time, the members or part-owners of the cooperative also work for the business and use its services.

 

Advantages of a cooperative include:

 

Greater funding options: Cooperatives have access to government-sponsored grant programs, like the USDA Rural Development program, depending on the type of cooperative.

 

Democratic structure: Members of a cooperative follow the "one member, one vote" philosophy, meaning that everyone has a say, regardless of their investment in the co-op.

 

Less disruption: Cooperatives allow members to join and leave the business without disrupting its structure or dissolving it.

Disadvantages include:

 

Raising capital: Larger investors may choose to invest in other business structures that allow them to earn a larger share, as the cooperative structure treats all investors the same, both large and small.

 

Lack of accountability: Cooperatives are more relaxed in terms of structure, so members who don't fully participate or contribute to the business leave others at a disadvantage and risk turning other members away.

Many cooperatives exist in the retail, service, production and housing industries.

 Examples of businesses operating as cooperatives include credit unions, utility cooperatives, housing cooperatives and retail stores that sell food and agricultural products.

 

Limited liability company

The most common form of business structure for small businesses is a limited liability company, or LLC, which is defined as a separate legal entity and may have an unlimited amount of owners. They are typically taxed as a sole proprietorship and require insurance in case of a lawsuit. This form of business is a hybrid of other forms because it has some characteristics of a corporation as well as a partnership, so its structure is more flexible.

 

Some advantages of an LLC include:

 

Limited liability: As the name states, owners and managers have limited personal liability for business debts, whereas individuals assume full responsibility in a sole proprietorship or partnership.

 

Pass-through taxation: Owners of LLCs may take advantage of "pass-through" taxation, which allows them to avoid LLC and corporation taxes, and owners pay personal taxes on business profits.

 

Flexible management: LLCs lack a formal business structure, meaning that their owners are free to make choices regarding the operation of their businesses.

Some disadvantages include:

 

Associated costs: The start-up costs associated with an LLC are more expensive than setting up a sole proprietorship or partnership, and there are annual fees involved as well.

 

Separate records: Owners of LLCs must take care to keep their personal and business expenses separate, including any company records, whereas sole proprietorships are less formal.

 

Taxes: In regards to unemployment compensation, owners may have to pay it themselves.

Common examples of limited liability companies include start-ups and other small businesses. Family-owned businesses and companies with a small number of members may operate as an LLC because it is a flexible business model that allows members to be active or passive in their roles.

 

 

Unit -2

Location of Business – factors influencing location Localization of industries –  size of firms Source   of   Finance   –   Shares,   Debentures,   Public Deposits, Bank Credit and Trade Credit – Merits and demerits.

 

Meaning for Location

Location refers to the choice of region and the selection of a particular site for setting up a business or factory.

 

But the choice is made only after considering the cost and benefits of different alternative sites. It is a strategic decision that cannot be changed once taken.

 

If at all changed only at considerable loss, the location should be selected as per its requirements and circumstances. Each plant is a case in itself.

 

A business person should try to attempt at the optimum or ideal location. An ideal location is one where the cost of the product is kept to a minimum, with a large market share, the least risk, and the maximum social gain.

 

It is the place of maximum net advantage or which gives the lowest unit cost of production and distribution, for achieving this objective, this purpose.

 

What is Business Location Analysis?

Location analysis is a dynamic process where entrepreneur analyses and compares the appropriateness or otherwise of alternative sites to select the best site for a given enterprise.

 

It consists of the following:

 

Demographic Analysis

It involves the study of population in the area in terms of total population (in no.), age composition, per capita income, educational level, occupational structure, etc.

 

Trade Area Analysis

It is an analysis of the geographic area that provides continued clientele to the firm. He would also see the feasibility of accessing the trade area from alternative sites.

 

Competitive Analysis

It helps to judge the nature, location, size, and quality of competition in a given trade area.

 

Traffic Analysis

To have a rough idea about the number of potential customers passing by the proposed site during the working hours of the shop, the traffic analysis aims at judging the alternative sites in terms of pedestrian and vehicular traffic passing a site.

 

Site Economics

Alternative sites are evaluated in terms of establishment costs and operational costs under this.

 

Costs of the establishment are the cost incurred for permanent physical facilities. Still, operational costs are incurred for running a business on day to day basis, they are also called as running costs.

 

Objectives of Business Location Analysis

 

The location of a business must be decided to keep in mind the following objectives:

 

To hold minimum investment and operational cost

The foremost objective in selecting an ideal location is to ensure minimum investment and lower operational costs.

 

This could be achieved if the business is located in a place where raw materials, labor, transport, and power are easily, regularly, and sufficiently available.

 

To ensure the smooth operation of the business.

Another objective of the ideal location is to ensure the smooth operation of the business.

 

This could be achieved if the business is located in a place where the services of banking, communication, transport, repairs, and maintenance are available easily and regularly.

 

To promote employee welfare.

If the business is located where the educational recreational, medical, and religious needs of employees are met, they will certainly feel attached to the enterprise. They would develop loyalty and commitment to it.

 

To co-ordinate with Government Policies.

The entrepreneur, while selecting a location, must ensure that his decision does not conflict with the government policy of balanced regional development.

 

Factors to be Considered in Selecting a Business Location

Selecting the ideal business location is guided by four main factors, namely:

 

Nature and Type of Business

The nature and type of your business is the single greatest determinant of where the business should be located. Businesses that rely on walk-in customers from the public are the most affected, the main ones being in the service industry.

 

If your business relies heavily on walk-in clients as opposed to businesses that prospect, then location is everything. Getting your location wrong can spell doom for your business.

 

In the restaurant business, for example, there are three “main” rules when setting up. These are “LOCATION, LOCATION, and LOCATION.”

 

This example underscores the importance of a great location for restaurants.

 

A study of McDonald’s reveals this to be true. Senior management at MacDonald’s will tell you that they are burger salespeople, but their business is real estate.

 

Therefore, businesses such as restaurants, supermarkets, liquor stores, Ice cream parlors, and the like must be located in easily accessible areas with high levels of human traffic.

 

In contrast, businesses such as law firms, accountants, software firms, and so forth, which do not rely on high levels of human traffic, can be located in posh offices within office blocks.

 

Budget

The amount of money you can afford to obtain premises must, of course, come into play. Most first time entrepreneurs will be renting due to budget constraints.

 

Always try and secure premises that provide the best value for your money, considering the nature of business.

 

Space required

Certain types of businesses require very large amounts of space.

 

For example, car dealerships and car rentals require a large space to park their vehicles. This may mean looking for an out of cheap town location.

 

Special facilities needed

Certain types of businesses require special facilities to carry out their business effectively. For example, IT companies have some very special mechanical, electrical, plumbing, and fire suppression requirements.

 

Server rooms and computer areas need dedicated cooling units. These must be taken into consideration before settling on a business location.

 

At one point, we may want to determine the size of the business. This helps in knowing whether it’s growing or not.

 

Also, you ascertain it to plan its various requirements. If you know the size of your firm, then you’re able to determine its efficiency. Any enterprise is the ether; small, medium or large size.

 

Size of the Firm

 

 

The size of a business unit means the size of a business firm.

 

It means the scale or volume of operation turned out by a single firm. The study of the size of a business is important because it significantly affects the efficiency and profitability of the firm.

 

One of the most important entrepreneurial decisions in organizing a business is realizing its ‘size’ as it affects in company and profitability of business enterprises.

 

The term’ size of business’ refers to the scale of organization and operations of a business enterprise. It is essential here to have a clear understanding of the terms’ size’ of the ‘plant’ size of ‘firm’ and the size of the industry.’

 

A ‘plant’ means an establishment of the manufacturing of goods. It represents a production unit where the due provision of all the activities facilitating the production process as made.

 

A ‘firm’ means as an organization that owns manages and controls a plant or number of plants and also arranges for the marketing of products, provision of finance, and other facilities to run the organization.

 

The term industry’ implies the aggregate of all firm which manufacture similar types of products.

 

Measures of Size

Business firms vary in size-small, medium, and large. To measure the size of a business unit, the standards of measurement can be grouped into the following two categories.

 

Measures About Input

This includes capital employed, net worth, total assets, labor employed, and raw material and power consumed.

 

Capital employed

The capital includes owned capital and borrowed capital. The larger the amount of capital employed, the larger the size of the firm.

 

Net worth

Net worth is the excess of assets over liabilities, as shown in the balance sheet of a firm.

 

However, for all practical purposes, it refers to the amount of paid-up capital plays reserves and surpluses built up during business.

 

This measure is appropriate for comparing the size of different firms in an industry or to measure the rate of growth for a particular firm.

 

Total assets

Another measure of size if the size of the total assets of a firm.

 

The value of total assets is calculated by taking into account the amount invested in fixed (land, building, plant, and machinery), current (cash, short-term securities, stock, debtors, etc.) and intangible assets (goodwill, planet, rights, etc.).

 

Labor employed

The number of laborers employed in a firm is another measure commonly employed to measure the size of the business, which is producing similar types of goods and which are in the same stage of development.

 

Amount of raw materials and power consumed.

The quantity or value of raw materials and power used is yet another measure that can be used to adjudge a firm.

 

Measure About Output

This includes a volume of output, the value of output, and value-added.

 

The volume of output

The number of goods produced or services rendered may also serve as a good basis for comparison between firms. The greater the number of goods and services produced, the larger the size.

 

Value of Output

The monetary value of goods and services produced by a firm also serves as a basis for measuring the size of a firm.

 

Value Added

A useful variation or combination of the two output criteria is the measure of net value-added, calculated by deducting the costs of production from the value of production.

 

It must be mentioned here that no one measure is fully comprehensive, and the accuracy, adequacy, and utility of each standard will depend upon three factors – nature of industry and character of its output, the uniformity and accuracy of data available, and the purpose for which it is required.

 

On the whole, the output seems to be the best indicator to measure the size of the firm.

 

Factors Affecting the Size of the Firm

The main factors that affect the size of the firm are as follows:

 

Nature of Industry

The nature of the industry has a direct influence on the size of the firm. Manufacturing industries are, by and large, bigger compared to trading and service firms.

 

Manufacturing industries heavy machinery, produce goods on a large scale, make higher capital investments, and therefore large.

 

Nature of Products

When the product is less standardized, the size of the firm is often small when the product is standardized, complex, and durable; the size of the firm is often big.

 

Capital employed

When the capital involved is large, and the firm can raise it, the size of the firm is large, when the capital involved in small, the size of such a unit will be small.

 

Size of the market

If the size of the market is large for the product, the firm will also be large and vice-versa.

 

Quality of management

The competence and integrity of management largely determine the size of a business unit. If the management is competent to manage the complex tasks of modern business, the firm can afford to be large.

 

Factors Determining Size of the Firm

Every business is striving towards attaining the optimum size. Usually, any business starts as a small entity, and then during its operating period, it expands till it reaches the optimum size.

 

Capital Investment Factor

The capital employed by shareholders in the form of share capital, reserves, and surplus (net worth) determines the size of the business. It is mainly used to compare two firms or more that are producing similar or differentiated products.

 

Number of Employees

The number of employees employed by any business determines its size. This is done by comparing the wages paid to employees with other businesses.

 

This factor is used where firms produce similar goods. If you use it in comparing firms that are producing differentiated products, then you end up with false results.

 

Power Used

The amount of power used determines the size of the business. Business firms don’t rely on this factor as it is inaccurate because of the amount of power used by any business may be more or less.

 

Raw Materials Used

The annual consumption of raw materials of any firm determines its size. It used only on those firms that are producing similar products.

 

The volume of the output

This factor is used for those firms that are producing homogeneous goods.

 

The capacity of Plant

It is used by firms that produce similar products.

 

Total Assets

The total assets of any business determine its size. The value of all assets (current and fixed) is taken as a means of measure. It is used in both similar and differentiated firms.

 

Value of Output

This is another factor that determines the size of any firm; however, this method is only effective in cases where firms produce a variety of products and where price levels remain constant.

 

In all these factors, the volume of output is the most effective and reliable factor in measuring the size of any business unit.

 

 

 

 

 

Sources of Finance

A source or sources of finance, refer to where a business gets money from to fund their business

activities.

 

Shares

Share capital is the money invested in a company by the shareholders. Share capital is a long-term source of finance. In return for their investment, shareholders gain a share of the ownership of the company. An illustration of an example company share ownership structure is shown below:

 

 

Shareholders benefit from the protection offered by limited liability – they are only liable for the amount they invest in share capital rather than the overall debts of the company.

 

The founding entrepreneur is very likely to invest in the share capital of the start-up. This is a common method of financing a start-up. Ideally the founder will try to provide all the share capital of the company, retaining 100% control over the business.

 

A key point to note is that the entrepreneur may use a variety of personal sources (e.g. cash, personal investments) to finance the purchase of shares.

 

Once the investment has been made, it is the company that owns the money provided.

 

The shareholder obtains a return on this investment through dividends (payments out of profits) and/or increases in the value of the company when it is eventually sold.

 

A start-up company can also raise finance by selling shares to external investors – this is typically to a business angel or venture capitalist.

 

Debentures

Debentures are a long-term source of finance. A debenture is a form of bond or long-term loan which is issued by the company. The debenture typically carries a fixed rate of interest over the course of the loan.

 

Debentures exist as an alternative form of investing in a company that is more secure than investing in shares because interest payments must be made by the company. They can also include a security that will guarantee the investment even if it defaults and there are two different ways for the debenture to be secured. However, debenture holders have no share in the company itself.

 

If a company borrows money, it will give its creditor a document to evidence the existence and terms of the loan. This document is called a debenture. Under the debenture, the capital sum borrowed is repayable at a future date.

 

During the period of the loan, the company has to pay interest to the creditor. In order to improve their chances of recovering the debt from the company in the event of its collapse, a creditor may take a charge over some or all of the assets of the company. This increases the creditor's chance of being repaid on the insolvency of the company.

 

Accordingly, although there is no requirement that a debenture must be secured by a charge over some or all of the company's assets, most debentures will include some form of security for practical reasons.

 

Public Deposits

Public deposits refer to the unsecured deposits invited by companies from the public mainly to finance working capital needs. A company wishing to invite public deposits makes an advertisement in the newspapers.

 

Any member of the public can fill up the prescribed form and deposit the money with the company. The company in return issues a deposit receipt. This receipt is an acknowledgement of debt by the company. The terms and conditions of the deposit are printed on the back of the receipt. The rate of interest on public deposits depends on the period of deposit and reputation of the company.

 

A company can invite public deposits for a period of six months to three years. Therefore, public deposits are primarily a source of short-term finance. However, the deposits can be renewed from time-to-time. Renewal facility enables companies to use public deposits as medium-term finance.

 

Public deposits of a company cannot exceed 25 per cent of its share capital and free reserves. As these deposits are unsecured, the company having public deposits is required to set aside 10 per cent of deposits maturing by the end of the year. The amount so set aside can be used only for paying such deposits.

 

Thus, public deposits refer to the deposits received by a company from the public as unsecured debt. Companies prefer public deposits because these deposits are cheaper than bank loans. The public prefers to deposit money with well-established companies because the rate of interest on public deposits is higher than on bank deposits. Now public sector companies also invite public deposits. Public deposits have become a popular source of industrial finance in India.

 

The merits of public deposits are as follows:

 

There is no need of creation of any charge against any of the assets of the company for raising funds through public deposits.

·         The company can get advantage of trading on equity since the rate of interest and the period for which the public deposits have been accepted are fixed.

·         Public deposit is a less costly method for raising short-term as well as medium-term funds required by the companies, because of less restrictive covenants governing this as against bank credits.

·         No questions are asked about the uses of public deposits.    

·         Tax leverage is available as interest on public deposits is a charge on revenue.

Demerits

·         This mode of financing, sometimes, puts the company into serious financial difficulties. Even a slight rumor about the inefficiency of the company may result in a rush of the public to the company for getting premature payments of the deposits made by them.

·         Easy availability of fund encourages lavish spending.

·         Public deposits are unsecured deposits and in the event of a failure of the company, depositors have no assurance of getting their money back.

 

Trade Credit

What is Trade Credit?

A trade credit is an agreement or understanding between agents engaged in business with each other that allows the exchange of goods and services without any immediate exchange of money. When the seller of goods or services allows the buyer to pay for the goods or services at a later date, the seller is said to extend credit to the buyer.

Understanding Trade Credit

Trade credit is usually offered for 7, 30, 60, 90, or 120 days, but a few businesses, such as goldsmiths and jewelers, may extend credit for a longer period. The terms of the sale mention the period for which credit is granted, along with any cash discount and the type of credit instrument being used.

 

For example, a customer is granted credit with terms of 4/10, net 30. This means that the customer has 30 days from the invoice date within which to pay the seller. In addition, a cash discount of 4% from the stated sales price is to be given to the customer if payment is made within 10 days of invoicing.

 

Trade credit extended to a customer by a firm appears as accounts receivable and trade credit extended to a firm by its suppliers appears as accounts payable. Trade credit can also be thought of as a form of short-term debt that doesn’t have any interest associated with it.

 

Advantages

Ø  An agreement can be very easy to organise

Ø  An agreement is relatively easy to maintain, as long as the conditions are met

Ø  Can be used by most business, for supplies of goods or services

Ø  Businesses are protected by late payment legislation

Ø  A potentially low-cost form of working capital finance.

Disadvantages

Ø  Possible loss of early payment discount

Ø  Failure to comply with the conditions could lead to the loss of a supplier

Ø  Provision of cashflow advantage rather than additional finance

Ø  Your own customers may ask for favourable trade credit terms and therefore cut into any cashflow advantage

Ø  Cannot be used by all businesses, such as online retailers

Ø  There are no guarantees, as customers may pay late.

 

Bank Credit

Bank Credit Meaning

Bank credit is usually referred to as a loan given for business requirements or personal needs to its customers, with or without a guarantee or collateral, with an expectation of earning periodic interest on the loan amount. The principal amount is refunded at the end of loan tenure, which is duly agreed and mentioned in the loan covenant.

 

In today’s world, demands are continuously increasing, but means to fulfill those demands are limited; hence borrowing money will enable as the source to finance varied needs of a business, profession, and personal.

 

Bank credit is given to borrowers on the fulfillment of the necessary documentation required by the bank. Interest rates, terms of repayment are duly mentioned in the loan covenant. Documentation to bank includes financial statements, income tax returns, projected financial statements for three to five years, and changes based on the type of loan and from person to person.

 

Characteristics of Bank Credit

The following are characteristics of bank credit.

 

Ø  Borrower: Person who borrows money.

Ø  Lender: The person who lends money is usually the bank.

Ø  Rate of Interest: Rate of interest can be fixed or floating rate of interest. The floating rate of interest is based on benchmark rates like LIBOR or MIBOR.

Ø  Terms of Repayment: These are mentioned in the loan covenant and strictly adhered to avoid the prepayment penalty.

Ø  Mode of Loan: Normally given in cash but sometimes will be given in the form of raw material, fixed assets

Purpose of Bank Credit

The following are the purpose of the loan.

 

Ø  Educational Loans: These are given for pursuing higher education, repayment of which is due after completion of education. Interest gets accumulated for the loan.

Ø  Housing Loans: These are given to buy home. The repayment of principal and interest is based on EMI principal. House is collateral for such loans, and excessive documentation is required.

Ø  Vehicle Loans: These are given to purchase vehicles like car, tempo, two-wheeler, auto, truck. Normally assets are hypothecated to Bank unless and until final installment due is paid. You often see “we banked …. Bank” written on the backside of cars. This indicates a loan is taken from “… Bank”.

Ø  Vendor Financing: This is an arrangement provided by the Bank to pay to vendors as per agreed credit terms, and in turn, the borrower will pay to the Bank after say 60 days or 90 days. The bank charges a rate of interest to the borrower for paying in advance to suppliers. The advantage of this is minimal documentation required by the Bank.

Ø  Letter of Credit Facility: Like vendor financing but predominantly used while importing goods or making payments to overseas vendors. Terms of repayment, rate of interest is mutually agreed between the parties.

Advantages

The different advantages related to bank credit are as follows.

 

Ø  The loan is not repayable on demand. Terms of repayment, rate of interest are pre-decided; hence cashflows can be managed in a better way.

Ø  It helps businesses and individuals when there is a need for funds.

Ø  Interest payments can be negotiated and paid only for a certain period, and the balance period borrower will pay only the principal.

Ø  The cost of debt is lower than the cost of equity; hence the appropriate proportion of debt in the portfolio enhances returns to equity shareholders by leveraging the cost of debt

Disadvantages

The different disadvantages related to bank credit are as follows.

Ø  A borrower may have to surrender ownership of an asset if installments are not paid in time.

Ø  Bank charges one-time processing fees that need to be paid upfront.

Ø  There is a pre-payment penalty if the borrower pays the loan in advance.

Ø  Companies should maintain the right debt-equity ratio. If there is a significant reliance on loans by the Companies, then in the event of crises, it will be difficult to pay interest.

 

 

 

 

 

 

 

 

 

Unit-3

Office – Introduction – Meaning – Functions and Significance – Office Layout and Office Accommodation – Filling and indexing. Office Management – Elements – Functions – Rule for office manager – Functions of Office Manager

 

Meaning & Definition of an office

Meaning

Office is an important pace of the organization where different functions are performed to achieve the objectives of the organization. It is the integral part of any business. If business starts to be rigid and complex, office helps by simplifying the activities and promotes the expansion of business. It is set up to handle the information and daily transactions in s systematic way.

 

Definition

 The definition of office can be interpreted in two ways. They are traditional and modern viewpoint. In traditional view, office is defined as the place where clerical functions like receiving, recording, processing and supplying information are performed. In modern view it is defined as the part of organization which involves in performing all management as well as administrative functions such as planning, policy making, organizational activities, coordination and communicating in order to achieve the objectives of the organization.

 

Functions of an office

1. Primary or basic functions

2. Auxiliary or administrative management functions

 

1. Primary or basic functions       

 

An office basically performs those functions that are related to information management. It helps in receiving, recording, arranging, analyzing and transmitting information.

 

 

A. Receiving and collecting information

Receiving and collecting different types of information from the different types of sources is the primary function of an office. The information is received from two sources. They are internal and external. Letters, invoices, circulars, notices, memos are the internal sources and supplier, customers, government, banks are the external sources

 

B. Processing and arranging information

It is the most significant function of an office. The information collected and recorded cannot be readily used for the decision-making and other purposes in the organization. Therefore, it must be processes and arranged. Processing information involves preparing notes, sorting, editing t. all information are to be arranged in a systematic way.

 

C. Supplying information

After arranging and analyzing information it is ready to supply in the management. It provides necessary information to its member whenever it I required. This information helps in decision-making process.

 

D. Retention of records

Retention is defined as the preservation of records for future reference. It involves collection, preservation, classification and protection of records for future reference. It is maintained in files, computers etc. Every record has a life span. It is protected according to its importance. Retention of record depends upon nature of organization. The efficiency of office depends upon the way records are retained

 

2. Auxiliary or administrative management function

 

A. Management process

To make any business successful there must be good management. Office helps in effective management. It includes planning, organizing, staffing, directing and controlling. It helps in smooth functioning of the organization.

 

B. Public relations

There must be good public relation of the organization. The main purpose of public relation is to make the organization look trust worthy to all people who deal with it in all its action.

 

C. Development of office system and procedure

Every office develops a definite office system and a fixed routine. It helps in smooth flow of office work. The system is also known as procedure of office work.

 

D. Safe guarding the assets

All assets, movable and immovable, documents and office records must be guarded and protected. They can protest these assets through insurance policies, locker etc.

 

E. Form designing and control:

An office designs, develops and prepares many types of form needed for office management. It helps to get maximum benefits. These office forms are important tools for collection and storage of information.

 

F. Purchasing stationery and supplies

Office stationery and supplies are essential for doing work. It helps in increasing the efficiency and improving quality of works done. Office should pay attention in purchasing right type of stationery and supplies

 

G. Purchasing office furniture and machine

Office requires various types of office furniture and machine for efficient performance. The quantity, quality, consistency and completeness of work basically depend upon the ability and quality if assets like office furniture and machine.

 

H. Personnel function

Office is also related to recruiting, training, placing, promoting the employees. Employees help in the success of the organization.

 

Importance of office

Some importance of an office are as follows:

 

1. Information center

An office is an information center which provides information relating to business transactions. Such information is very useful. It is used by management for the purpose of planning, organizing, staffing, directing and controlling.

 

2. Channel of communication

Office not only keeps record of information but also plays the role of reliable channel of communicating the information. It is required for smooth functioning of the organization.

 

3. Coordinating center

The success of business depends on the proper coordination of people and activities of the organization. It keeps relations with all departments and deal with information necessary for effective coordination; it is a mechanism or coordination.

 

4. Control center

An office acts as a control center. Controlling is the important function of management. It helps to monitor plans and policies which help in the implementation of proper working environment. It helps to prevent from unwanted deviations. It provides data for managing and correcting deviations.

 

5. Service center

An office works as a service center. It provides services to all the department of an organization. It provides necessary information to all the department of an organization. Business cannot operate successfully without better service system and office fulfills this requirement.

 

6. Memory center

An office is the storehouse of records. It keeps the records of past and present. It provides necessary information for future. It helps to report letters, circulars, notifications, policies etc. It is known as ‘brain’ of organization.

 

7. Help employees

An office provides wages, salaries to their employees. They also keep records of workers attendance, leave due, provident fund, and calculation of overtime. They also help to maintain the relationship between management and workers.

 

8. Office as intermediary

An office works as a middleman between department and outsiders. It links with supplier, customers, shareholders, government and general public. These office activities enhance the image of the firm.

 

Meaning of Office Layout

Office layout means the systematic arrangement of office equipment, machines and furniture and providing adequate space to office personnel for regular performance of work with efficiency.

 

Definition of Office Layout

According to Littlefield,

 

“Office layout is the arrangement of equipment within the available floor space”.

 

According to Hicks and Place,

 

“The problem of layout relates to the arrangement in the space involved so that all the equipment, supplies, procedures and personnel can function at maximum efficiency”.

 

Therefore, the main task of office manager is the proper allocation of space to each section by considering the interlinking of other sections, so that the activities of different sections can be coordinated and controlled easily. Faulty or improper arrangement of furniture, equipment and space for employees leads to unnecessary wastage of time and energy and increase in the cost of office operations.

 

Objectives of Office Layout

The main objectives of office layout are as follows

 

1. Effective utilization of available floor space and smooth flow of work.

 

2. Both power and telephone service is made available whenever necessary.

 

3. Office supervision is made more easy and convenient.

 

4. Good working conditions should be provided to each employee

 

5. The reception room should be very near to the main gate or entrance so that the visitors may feel easy and convenient.

 

6. A sense of belonging and loyalty should be made in the minds of office employees.

 

7. Employee’s satisfaction should be the outcome of proper office layout.

 

8. There should be a free flow of communication among employees.

 

9. All the sections can not work independently. Hence, the office layout ensues the interlinking of each sections according to their needs.

 

10. There must be an adequate space between desks, tables and chairs for free movement of employees.

 

11. Noise and disturbing operations should be segregated within the office.

 

12. Some sections require privacy. The sections may be interview section and inquiry section. Interview section is dealing with recruitment of staff and inquiry section is dealing with progress and performance of the existing staff.

 

13. Frequent mutual consultation and interference between clerks should be avoided.

 

14. The room of the manager should be arranged in such a manner that he can easily observe the activities of staff for exercising control on them.

 

15. The external noise and disturbance should be avoided by fixing double glazed windows and doors.

 

16. Changes may be made in the office layout if the volume of work is increased in future and requires facilities.

 

17. Staff doing confidential work should be provided adequate privacy.

 

18. There must be sufficient, natural or artificial light.

 

19. Adequate safety of valuable documents and records should be ensured.

 

How to design an efficient office layout?

An efficient layout of an office can be designed only by the manager. When, the office manager should consider the following matters.

 

·         Space available.

·         Number of workers.

·         Volume of work.

·         Nature of work.

·         Number of workers in designation wise.

Types of machine and equipment used.

Flow of work.

Physical appearance.

The shape of an office is an important consideration. The building or office space may be square, rectangular, long and narrow or L or U shaped. Generally, square or rectangular space is better than long or narrow space. The reason is that the latter requires much floor crossing.

 

Principle of office layout

Ø Principle of flow of work:

It is the layout which helps for smooth and effective flow of office works. Simple, easy and prompt work flow and essential for work progress

Ø Principle of free movement and observation:

Office layout should allow the free movement of employees. There should also be proper supervision and observation of works of movement too

Ø Principle of effective supervision:

There should be free supervision of flow of works, movement of personnel, cost, wastage, balance of budget, quality of office works etc.

Ø Principle of departmental relationships:

For the office layout related departments are inter related and those inter related departments should be placed side by side.

Ø Principle of flexibility:

Office should be flexible enough to facilitate the expansion in the future.

Ø Principle of maximum utilization:

As the time flows, there is increase in cost of every thing as per the situation of the economy if the country and the area where office is established. There are very fewer cases of deflation basically in developing countries. Therefore, when office is set up then there must be maximum utilization of employees, materials, space, machines and resources. There should be reduction of wastage.

Ø Principle of pleasing appearance:

Interior design, lighting, ventilation and cleanliness should be maintained. Office must be well furnished and pleasing enough to make it attractive to all the customers and visitors

 

Ø Principle of good ventilation:

Office must have enough doors, windows, and ventilation for constant supply of fresh air.

Ø Principle of good lighting:

Office should try to provide natural light that is sunlight. Dark places should be avoided for establishment of office.

Ø Principle of safety:

An office layout must be based on the safety. It should reduce office accidents like theft, fire, damage and so on. Office machine must be implemented properly

Ø Principle of service facilities:

There must be provisions of good canteen, lights, lifts, telephone, and toilets.

Ø Principle of providing private offices:

In an office. Separate rooms should be provided to some important employees. If the work is confidential in nature then private room should be provided. It is better to use movable partition to provide privacy

 

Advantages of an efficient office Layout

The following advantages can be derived by having planned layout.

 

·         No waste of time and energy of office personnel.

·         Promotes efficiency of staff.

·         Proper utilization of floor space.

·         Easy supervision.

·         Speed in inter – communication.

·         Better use of office machines and equipment.

Types of Office Layout

Office layout may be classified into two categories, They are

 

1. Process Layout: In process layout, both equipment and employees are arranged according to the sequence of operations. For example, the filing section may be located next to the despatch section and so on.

 

2. Group Layout: In group layout, employees are placed in a separate partition  where similar activities are carried on and office machines are fitted with another section. For example, all computers are fitted in separate room i.e, computer room.

 

Meaning of office accommodation

It is the process of selecting appropriate building in a favorable location, establishing different sections and departments, proving or arranging resources in a scientific way. The purpose of office accommodation is to create sound working environment and to bring efficiency and rapidness in office work. It is important for both employees and outsider. Office employees spend a long time office. Bad accommodation can cause boredom and frustration among employees. Bad environment also may cause bad impression to outsiders.

 

Selection of office building

 1. Shape and size of office building

It is one of the major factors that should be considered while selecting office building. It should have adequate space to accommodate all machines, equipment, and employee with furniture and enough space for flexibility. It should be considered taking the base of both present and future needs.

 

2. Lighting and ventilation

An office building should have adequate lighting and ventilation. It helps a lot to increase efficiency and enhance worker’s morale. Well lighted and ventilated accommodation puts less pressure on the employees and also reduces the physical and mental strain and consequently the efficiency is higher.

 

 

 

3. Convenience to customers and employees

While selecting office building it should consider the convenience of customer and employees. It should not be far from the related trade center, must have proper toilet and canteen services and food hospitality and utilities.

 

4. Cost

The cost of building effects on total budget of organization. The building purchased or built must be within the budget of organization. There should be balanced between requirement of space, capacity of the organization and the cost for covering the expanses.

 

5. Flexibility

Flexibility of office building in its shape and size should be considered while selecting the office building. It must also match the nature of organization.

 

6. Layout facility

The efficiency of men and machine depend upon the layout. The proper layout makes office attraction. For this furniture, machine and other goods are necessary. This also helps in the internal arrangement of office.

 

Selection of office location:

 Nearness to customer: The office should be accessible to customers. They do not like long distances to make business inquiries. The office should be accessible to other parties who are in regular contact.

 Nearness to related business: It is desirable to locate the office near the offices of related business. It should be established in the same line of trade.

 Availability of infrastructure: The infrastructure should be available in office location. It consists of transport, communication, power, water and parking facilities.

 Nature of business: The nature of business affects location of office. Office of manufacturing business in located near the source of raw materials, labor and service facilities. Office of trading and banking business is located in commercial centers near the customers. Office of perishable goods business is located near the market for such goods.

 Availability of human resources: Needed human resources should be available for office. They can be skilled, semi-skilled and unskilled. All facilities must be available for employees

 Environment: The office location should have healthy environment. It should not be near polluted rivers or waste disposal sites. It should be free from noise, dust and pollution.

 Cost of space: Sufficient space should be available at reasonable cost for the office. Space should be available for future expansion.

 Government laws: The selection of location should comply with government laws and regulation at national and local levels.

 

Meaning of filing

It is the process of classifying, arranging and storing record so that they can be located when required. It is also the process of collecting and arranging records or their copies in such a way so that whenever it is needed it could be found very easily. All office receives letters and dispatches that are kept for the future use. They are to be stored in a safe place. For that filing is required. It is an important part of management that helps to decide about anything in a legal and systematic way. It is the process of arranging and protecting records so that they may be found and delivered easily when needed for future.

 

Purposes:

Ø  It helps to keep all records together so the history of office can be understood.

Ø  It helps to provide safety place for storage of necessary documents in order to use and locate them when required.

Ø  To make records readily and easily available.

Ø  It can be used as evidence in case of dispute

Ø  It helps in some legal formalities.

Ø  It is shown as profit or legal evidence.

Ø  It can be presented as a legal document in court.

Ø  It helps to make future plans. Past records are the base of future records

Ø  Some importance of filing:

 

Ø  It helps in increasing efficiency of office because filing helps in providing records in required time to make quick decisions

Ø  Filing helps in protection of important documents from fire, dust, insects, theft and mishandling.

Ø  Previous records are base of past records, and they are used as an immediate reference.

Ø  It helps in documentation of proof and legal evidence in the time of disputes

Ø  It helps in formulation of future planning

Ø  It helps in providing legal proofs to fulfill legal formalities

Ø  It helps in handling customers and correspondence carefully to maintain the goodwill of the office

Ø  It helps in taking feedback.

 

Types of filing system

1. Traditional system

It is old method of filing. It is used in small and medium scale organizations. There are 4 types of traditional filing. They are

 

A. Wire fling

It is also known as spike filing. It is the oldest filing method. In this method a piece of wire is fixed in wooden stand and that stand is kept on table or hanged somewhere. The letters and documents are inserted inside the spike. Whenever letters and documents are required for reference all subsequent letter are taken out. It used to be used in banks, retailer shop, hospitals etc.

 

Advantages of wire filing

 

Ø  It is very simple

Ø  It is the cheapest method.

Ø  It uses less space

Ø  It uses less time

Disadvantages of wire filing

 

Ø  Used only in small and medium scale organization

Ø  Limited number of documents can only be filed

Ø  The documents are not protected by fire, dust, water etc.

Ø  It is inconvenient

Ø  There is possibility of leakage.

B. Pigeon hole filing

This filing is also known as docket filing. A small cabinet is used for filing. The holes look like pigeonhole and each hole is given alphabet label. Letters and documents are kept into related holes. It is usually kept in post office. Here, the unnecessary files are destroyed.

Advantages of pigeonhole filing

 

Ø  It is simple and easy

Ø  It protects files from dust and water.

Ø  It is economical

Ø  It takes less time

Disadvantages of pigeonhole filing

Ø  It is only suitable for small organization

Ø  The cabinets are small

Ø  Only limited number of documents can be kept

Ø  It is difficult to keep old records

C. Cardboard filing

It is one of the popular traditional methods of filing. In this, a thick cardboard file and folding sheet are placed one upon another. The two ends are tied with each other with the help of rubber. The papers are kept in chronological order. It is used for few transactions. The files can be kept in cabinet for protection

Advantages of cardboard filing

Ø  It is simple and easy

Ø  It is economical

Ø  It helps in fast recording of documents

Ø  It requires less space

 

Disadvantages of cardboard filing

Ø  It is useful only for few records

Ø  It needs cabinet for protection

Ø  It is time-consuming

Ø  There is chance of loss of documents

D. Box filing

In this filing method, boxes are made up of wood or cardboard. The spring clips are fixed inside the box to hold papers. Whenever letters and documents are required for reference all subsequent letters are taken out. The documents are kept chronologically one upon another.

Advantages of box filing

Ø  It is simple and easy

Ø  It protects the documents from fire, dust, insects, water and so on.

Ø  It is cheap

Ø  It is convenient

Disadvantages of box filing

Ø  The spring becomes very loose because o constant use

Ø  Sometimes papers can’t be held properly

Ø  It is difficult to locate documents timely.

2. Modern filing system

Filing system is very simple. Traditional system of filing didn’t fulfill the requirement of the business. So it has been replaced with modern filing system. Modern filing system is the improvement of traditional method of filing. It can be classified into 2 types. They are

A. Horizontal filing

In this system, the documents or letters are chronologically placed in folders one upon another in a horizontal way. It is of two types. They are

I. Flat file

It is made up of cardboard or thick paper. Each flat file is attached with a pair of metal clips or laces on the left-hand side of it to tightly hold the papers. Pair of holes is made on the left-hand side of the paper using a punching machine. Then the papers are inserted into the clips or laces and the clips are locked or the laces are tied up to tightly hold the papers. The papers are chronologically placed one upon another in a flat position in a file.

 

II. Arch level file

It is made up of cardboard or thick plastic. The metal arches are made for holding papers or documents. Pair of holes is made on the left-hand side of the paper using a punching machine. Then the papers are inserted into the arches and the arches are locked to tightly hold the papers. The papers are chronologically placed one upon another in a flat position in a file in alphabetical order. In these papers can be taken out or inserted without disturbing other papers.

Advantages of horizontal filing

Ø  It is simple to understand and easy to operate

Ø  The papers are chronologically placed in alphabetical order which helps in easy location of documents

Ø  The documents are protected by fire, dust, water etc

Ø  It requires less space

 Disadvantages of horizontal filing

Ø  The files are kept one over another, so they are difficult to locate.

Ø  It is time-consuming.

Ø  It is difficult to take papers out and insert them in.

Ø  It has less expansion and flexibility.

Vertical filing:

It is the most popular type of filing in modern offices. In this method, documents are kept on upright position in especially pre prepared folders or files. The folders or files are made up of cardboard or papers which are folded in the middle to hold the documents in them.  Documents are placed in a chronological order without punching and typing them up in a pair of clips. It requires following tools and equipments.

1. Folders

They are made up of strong cardboard papers to hold the documents. The back of the folder is higher than the front part. They are placed in cabinet and their external part is visible.

2. Cabinet or drawer

It is necessary to keep the folders properly. Folders are kept vertically inside it. The size of drawer is dependent upon the number of papers to be kept in it. Generally 5000 papers are kept in one drawer.

 

3. Guide cards

The files are kept in a drawer of filing cabinet. A guide cared is placed between the folders to divide the drawer.

Advantages of vertical filing:

Ø  It is easy to file the documents

Ø  It is economical

Ø  It is flexible

Ø  It provides safety to the documents

Ø  It maintains the secrecy of the documents

Disadvantages of vertical filing

Ø  It is costly compared to horizontal filing

Ø  There is more chance of wearing and tearing of letters and documents

Ø  There are chances of mixing up of files.

Suspension filing:

It is an improved form of vertical filing. In this filing, drawer containing documents are fitted metal frames in which folders are fitted with hinges or hooks to suspend the file. Here, the headings or caption are found in the folder. It is the best method of filing. It contains all the merits of vertical filing method. In this filing when the drawer is opened all files names can be clearly seen. It contains folders and cabinet which is expensive. Therefore, it is its disadvantage.

 

Lateral filing

It is modified version of suspension filing; it is one of the most popular forms of filing system used in modern offices. In this filing system, envelope type of folders are used which is made up of metal strip. It uses hinges or hooks that can hold papers better than shelf. The top of the folder is fitted with an indicator. It is useful for larger organization. It uses less space and folders are also quickly located. It is less expensive and can also expand its space

 

Open shelf filing

In this stage, high shelf is used to keep folders. The files are laterally kept in open shelves in numerical order. In some cases, files are horizontally kept in the shelves. Guide cards can be used in between folders. The open shelves may be of any height. It may even touch the ceiling of 9-10 feet. It includes all merits of lateral filing. The main disadvantage is that it lacks secrecy and safety. It is not suitable for small offices.

 

Some qualities of good filing system:

Simple: It should be easy and simple to be understood by the entire employees.

Economy: Filing should be cheap and must come under the budget of the organization. The installation and operation cost should be low.

Compactness: It should be compact and should not take unnecessary space

Accessibility: Files and folders must be preserved for future and must be easily accessible.

Suitable: It should be suitable for any kind o organization. It should meet the requirement of business

Flexible: It should be flexible enough. It must be dynamic and changeable according to the needs of an organization

Safety: A good filing system must preserve all the necessary documents from insects, dust, fire, water and so on

Indexing: A good filing system must have proper indexing

Classification: The files should be classified in a proper way so that it helps in easy location.

Concept of indexing

Simply, index means indicator or guide. It is anything that indicates guides or points out something. In record management, indexing is defined as indicator or guide for locating, files folders or records. It is the list of names, subjects, or dates which indicate the exact location of letter and documents preserved in files and folders. It helps to provide required information in time. An index should not be confusing. It should be easy to access records.

Purposes

Ø  To indicate right position of files and folders

Ø  To find files, folders easily

Ø  To help in quick location of files and folders

Ø  It provides future reference

Ø  To increase efficiency of filing

 

Types of indexing are listed below:

1. Book index

It is mostly found in register books, notebooks etc. It is simple type of indexing. In this index, book is market with alphabets on the right side of the paper in such a way so that all alphabets can be seen at a glance. Here, name of persons or documents are arranges in alphabetical order. All the related files are kept in same alphabetical section. For example, telephone diary.

Advantages

Ø  Simple method

Ø  Economic

Ø  Safety

Disadvantages

Ø  Inflexible

Ø  Problem of alphabetical order

Ø  Inconvenient

2. Loose-leaf index

It is improved form of book index. In this type of indexing, instead of using hard hound register book, book sheets or paper are used in which alphabets are market on the rig hand side of the pages. It is very flexible and cheap. It is simple to operate an easy to understand. New sheet can be easily added and can be removed easily. But there is chance of misplacement of sheets.

 

3. Vowel indexing

 

It is improved form of book index. It is generally used by large organizations. Index book is maintained on the basis of vowels. Pages are firstly selected by initial letter and then by vowel occurred after the initial letter. For example Gandhi will be recorded in section “g” and in vowel “a”. It is time-consuming. It is difficult to search when many names begin with each alphabet.

 

4. Visible card indexing

 

Here, cards are arranged in flat tray or metal frame. Each card is attached to metal hinge. Name address and other documents are visible by touching other cards. Trays are attaché vertically to metal stands. Details can be written or typed in front and back of cards. Less space is used and cards can be easily located. It saves the time. It is flexible

 

5. Wheel index

 

It is modern form of visible index. It is suitable for big organization. Here, cards are mounted round the hub of wheel. A single wheel can hold as many as 5000 cards. In these cards can taken out or inserted without disturbing other cards. It is arranged alphabetically. Wheels are rotated to find card.

 

Advantages

Ø  Speedy performance

Ø  Requires less space

Ø  Flexible in nature

Ø  It saves time

Disadvantages

Ø  It is costly

Ø  It is not suitable for small organization

6. Strip card index

 

One line entry is made in narrow strip made up of thick cardboard paper which is fitted in a frame in such a way that all the strips fitted in the frame are visible at a glance. It is flexible and expensive. There is lack of secrecy and is difficult to operate.

Qualities of good indexing:

 

Simple: It should be easy and simple to be understood by the entire employees.

Economy: Indexing should be cheap and must come under the budget of the organization. The installation and operation cost should be low.

Flexible: It should be flexible enough. It must be dynamic and changeable according to the needs of an organization

Compactness: It should be compact and should not take unnecessary space

Safety: A good indexing system must preserve all the necessary documents from insects, dust, fire, water and so on.

Accessibility: Files and folders must be preserved for future and must be easily accessible.

 

Meaning of Office Management

Office management refers to the process of planning, organizing, guiding, communicating, directing, coordinating and controlling the activities of a group of people who are working to achieve business objectives efficiently and economically.

 

Office management is not only necessary to business organization but also essential to non-business organization. In modern internet society also, there is a need of direction to the individual efforts towards common purpose or objective. The direction is given from a place i.e. office.

 

The process can be treated as office management. A business is carried on by businessman with the help of group of persons. This group of persons has different interest, talent and motto. So, it is the function of office management to organize, guide and control the activities of such group of persons to achieve business objectives.

 

Definition of Office Management:

 

Office management can been defined as the art of guiding, directing coordinating and controlling the salaried people of an organization in order to achieve specified objective within a time schedule.

 

Elements of Office Management

Elements of office management are termed as pillars of a building. If pillar is strong, certainly, the building is also strong. Hence, efficient functioning of office management is based on the elements of office management. Following are the essential elements of office management.

 

 

 

1. Personnel

 

Office personnel are actually performing the office work. Generally, the selection and placement of office personnel is carried on by the office manager in small organization. In large organization, staffing is carried on by the human resource management department.

 

In both the case, the office work is to be performed by allocating the work to each individual according to their efficiency, guide the personnel to do the work with the help of means available in an office within a specified time and control the activities of office personnel. The office manager has to do all these activities.

 

2. Means

Means refers to tools used to perform the office work. Means include pen, pencil, eraser, paper, ink, office forms, typewriter, computer, printer, calculator and the like. Adequate tools have been supplied in an office and put them to the most efficient and economical use for achieving objectives.

 

3. Environment

The nature of business determines the environment of an office. The various office works have to be carried on under a particular condition or environment. A working environment is created and maintained for the smooth performance of office work. It is the duty and responsibility of an office manager to bring suitable environment by adopting various procedures and practice.

 

4. Purpose

The office personnel must be aware of the purpose for which a particular work is carried on and the impact of such work on others’ performance. The office manager teaches the purpose to office personal. If not so, the performance of office work does not bring the most efficient and economical use of office resources and achieve the objectives.

 

Following are the main functions of office management:

 

1. Planning

 

Office management defines future road map of the office. It decides in advance about future activities of office. It sets objectives for the office and chooses actions to achieve those objectives. Office management is future oriented. It sets standards of performance for an office.

 

2. Organizing

 

 Organizing is another major function of office management. Office management assigns office jobs to people and positions. The steps taken are:

- It groups similar office jobs

 

- It creates positions in office. Jobs are assigned to people and positions

 

- Authority and responsibility of each position is defined

 

- Coordination mechanism is established

 

3. Human resource management (Staffing)

 

Staffing is another important function of office management. It hires people to fill office positions. It is concerned with hiring, training, using and retaining people.

 

4. Directing

 

Office management guides and supervises office employees to perform job. It involves leading, communicating, motivating and coordinating.

 

5. Controlling

 

Another key function of office management is controlling. It measures actual office performance with standards. Corrective actions are taken for deviations in office performance.

 

Important Functions or Role of an Office Manager

Since the office work is basically a service function, office manager performs a significant role in the performance of office work. The main functions of an office manager are explained below.

 

1. Staffing

An office manager is requested to recruit and select the office staff by the top management. For this purpose, he determines the number of staff required, their qualification and experience if any, decide the sources of recruitment, receiving applications, conduct the interviews and tests and finally select the right personnel.

 

2. Leadership

He has complete control over the work done in an office. An office manager is necessary for smooth, efficient and performance of office work economically in an organization. Being a leader of office, he is in charge of public relations and helps other departments to achieve their goals set forth.

 

3. Training

The need of training has been decided by office manager. Besides, the training programmes are also devised and imparted to the new recruits as well as existing staff. Orientation training programme has been provided to new staff and refresher course programme is provided to existing staff.

 

4. Coordination

The various activities of office staff are coordinate by the office manager. He has to bring coordination between the top management and the workers. He must please both the parties.

 

 

 

5. Work Measurement

An office manager devices methods of work measurement in terms of the output of the staff. It is a difficult task. The reason is that the office work cannot be measured in physical terms. Hence, it is the duty of office manager to decide the accepted norms of work measurement.

 

6. Motivation

The efficiency of staff is increased by providing proper motivation. The type of motivation can be decided by the office manager. The right type of motivation ensures effective and economical performance of work and lead to the promotion of the staff.

 

7. Discipline

The implementation of rules and regulation of office is in the hands of office manager. There should not be personal bias while implementing rules and regulations. He also attends to the grievances of office staff. In this way discipline is maintained.

 

8. Accounting

He has thorough knowledge on accounting. Every figure should be kept in finger tips.

 

9. Stationery Control

Office manager has to exercise proper control on stationery purchase and issue. For this purpose, he has to frame clear cut procedure for the purchase, for the issue and storage of office stationery.

 

10. Secretarial Services

All the accounts books are kept under the custody of office manager. An officer manager is responsible to conduct meetings, drafts reports and minutes etc. on behalf of secretary. In this way, he does the functions of secretary.

 

11. Costing

In small organization, an office manager is responsible to maintain costing records and do the costing work.

 

12. Organizer

The office work has been assessed and assigned to office staff according to their knowledge, ability, experience, qualification and the like by the office manager.

 

13. Supervisor

An office manager is head of office. Hence, it is the duty of office manager to supervise the office correspondences, procedures, policy implementation, record maintenance, filing, indexing and the like.

 

There is no hard and fast rule for determining the functions of office manager. Generally, the type and size of an organization are the deciding factors of functions of office manager. The functions of office manager vary from time to time and from office to office. The office manager is expected to perform his functions within the limit of authority and responsibility entrusted to him by the employer.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unit -4

Office Machines and Equipment – Data Processing system – EDP  uses and limitations – office furniture.

 

Office machine

The rapid increase in the industrial activities has increased office work to the highest level. The machines were invented to reduce monotony and increase the efficiency of works done. They help to save time and labor. In modern offices, business completely depends upon the office machine and equipment. It increases the level of operation, improves the performances, safeguards the files, and increases the accuracy. Purchase, repair and maintenance of office machines require big investment. It is the duty of office manager to select the right type of machine. If they don’t select it properly then the office work won’t be efficient and effective.

 

Importance of office machine

1.      To save labor: properly designed office machine saves labor. It helps in saving labor cost. Machines work faster than men. Total wage bill can be reduced.

2.      To save time: machines work faster than men. The office machine helps to save time. The speed of official work is increased with the help of machine. It helps in completion of work in a faster way. It increases efficiency and effectiveness of work.

3.      To provide accuracy: office machines works accurately. It increases in accuracy in all types of works. It reduces the error, fatigue and helps in supervision

4.      To reduce chance of fraud: there may be barrier inside the organization. Machines help to check for the accuracy and correct method of works done t also keeps systematic records of all employees. Thus, it helps in reducing the fraud

5.      To retrieve monotony of work: some jobs are routine in nature. They are repetitive in nature. Repetitive works are monotonous. Office machine s help in retrieving the monotony of the employees

6.      To improve quality of work: office machines help to maintain the neatness, accuracy and quality of work done.

7.      To increase goodwill: when there is saving of labor and time and increment of accuracy of works done, then there are fewer chances of errors and fraud which improves the quality of work done and helps in satisfaction of customer and the employees. This helps in increasing the goodwill of the office

8.      To lower operating cost: office machines reduce the operational cost. It helps to reduce the wage bill. It also helps in reducing the excessive filing cost.

 

What Is Data Processing?

Data in its raw form is not useful to any organization. Data processing is the method of collecting raw data and translating it into usable information. It is usually performed in a step-by-step process by a team of data scientists and data engineers in an organization. The raw data is collected, filtered, sorted, processed, analyzed, stored, and then presented in a readable format.

 

Data processing is crucial for organizations to create better business strategies and increase their competitive edge. By converting the data into a readable format like graphs, charts, and documents, employees throughout the organization can understand and use the data.

 

Data Processing Cycle

The data processing cycle consists of a series of steps where raw data (input) is fed into a process (CPU) to produce actionable insights (output). Each step is taken in a specific order, but the entire process is repeated in a cyclic manner. The first data processing cycle's output can be stored and fed as the input for the next cycle.

 

 

 

 

 

 

Generally, there are six main steps in the data processing cycle:

 

Step 1: Collection

The collection of raw data is the first step of the data processing cycle. The type of raw data collected has a huge impact on the output produced. Hence, raw data should be gathered from defined and accurate sources so that the subsequent findings are valid and usable. Raw data can include monetary figures, website cookies, profit/loss statements of a company, user behavior, etc.

 

Step 2: Preparation

Data preparation or data cleaning is the process of sorting and filtering the raw data to remove unnecessary and inaccurate data. Raw data is checked for errors, duplication, miscalculations or missing data, and transformed into a suitable form for further analysis and processing. This is done to ensure that only the highest quality data is fed into the processing unit.

 

Step 3: Input

In this step, the raw data is converted into machine readable form and fed into the processing unit. This can be in the form of data entry through a keyboard, scanner or any other input source.

 

Step 4: Data Processing

In this step, the raw data is subjected to various data processing methods using machine learning and artificial intelligence algorithms to generate a desirable output. This step may vary slightly from process to process depending on the source of data being processed (data lakes, online databases, connected devices, etc.) and the intended use of the output.

 

Step 5: Output

The data is finally transmitted and displayed to the user in a readable form like graphs, tables, vector files, audio, video, documents, etc. This output can be stored and further processed in the next data processing cycle.

 

Step 6: Storage

The last step of the data processing cycle is storage, where data and metadata are stored for further use. This allows for quick access and retrieval of information whenever needed, and also allows it to be used as input in the next data processing cycle directly.

 

Types of Data Processing

There are different types of data processing based on the source of data and the steps taken by the processing unit to generate an output. There is no one-size-fits-all method that can be used for processing raw data.

 

Batch Processing: Data is collected and processed in batches. Used for large amounts of data.

Eg: payroll system

 

Real-time Processing : Data is processed within seconds when the input is given. Used for small amounts of data.

 

Eg: withdrawing money from ATM

 

Online Processing : Data is automatically fed into the CPU as soon as it becomes available. Used for continuous processing of data.

 

Eg: barcode scanning

 

Multiprocessing : Data is broken down into frames and processed using two or more CPUs within a single computer system. Also known as parallel processing.

 

Eg: weather forecasting

 

Time-sharing : Allocates computer resources and data in time slots to several users simultaneously.

 

Data Processing Methods

There are three main data processing methods - manual, mechanical and electronic.

 

Manual Data Processing

In this data processing method, data is processed manually. The entire process of data collection, filtering, sorting, calculation and other logical operations are all done with human intervention without the use of any other electronic device or automation software. It is a low-cost method and requires little to no tools, but produces high errors, high labor costs and lots of time.

 

Mechanical Data Processing

Data is processed mechanically through the use of devices and machines. These can include simple devices such as calculators, typewriters, printing press, etc. Simple data processing operations can be achieved with this method. It has much lesser errors than manual data processing, but the increase of data has made this method more complex and difficult.

 

Electronic Data Processing

Data is processed with modern technologies using data processing software and programs. A set of instructions is given to the software to process the data and yield output. This method is the most expensive but provides the fastest processing speeds with the highest reliability and accuracy of output.

 

Advantages of EDP

Electronic Data Processing (EDP) is the digital management of databases, typically stored on a shared server and allow simultaneous access to all parties. There are several distinct advantages to employing EDP:

 

·         Speed. Information stored and managed via EDP can be retrieved almost instantly on a well-maintained internal network or even the Internet.

·         Efficient. Summary documents and related materials such as invoices, reports, and statements can be automatically and quickly generated via EDP.

·         Economic. Once an Electronic Data Processing system is created and implemented, over time it reduced the costs of managing data by a significant margin.

·         Reduced Labor. Duplication of effort and repeated entries due to mistakes in manual data entry are reduced or eliminated by EDP.

Office furniture

Office furniture is an important part of office management; it is mostly used for indoor activity. Employees working in the office should be provided with comfortable and convenient furniture so that they can work efficiently. The major and most popular office furniture are chair, table, cabinets, cupboards, sofas, racks etc. office furniture are common in all offices. Office furniture should have good design which can help the office to look attractive ad pleasant. In a well  furnished office, employees feel comfortable and are motivated for work

 

Importance of office furniture

·         It increases the efficiency of work

·         It makes the office more attractive and pleasant.

·         It helps to maintain the prestige of office

·         It provides better working environment for the employees

·         It helps in reducing the fatigue.

·         It helps in protection of documents from fire, dust, insects etc.

·         It helps in proper storage of files

 

Factors to be considered while selecting office machines and furniture are listed below:

 

·         Need of machines: before selecting any machine its degree of need is to be checked thoroughly. The alternates available to the machine also should be analyzed

·         Cost: cost of machine is a very important factor to be considered before selecting any machine. The machine should be within the budget of an office

·         Operating cost: capital cost and operating cost should be taken into account. Similarly, maintenance cost, repair cost, and space required for the machine also should be analyzed

·         Durability: office machine should be original, durable and lost lasting. Office machines are very expensive and it is not possible to purchase new machine every year. Therefore, the machine to be purchased must be free from problem of frequent break down. This also saves in repair cost

·         Easy to operate and flexible: office machine should be easy to operate and flexible. There shouldn’t be need of any additional training and specialization for handling of office machine. Machine should be usable for numerous purposes too

·         Servicing: office machines require regular repair and maintenance. The spare parts of the machines should be easily available in the market. Likewise, the servicing facilities should be readily available.

·         Quality and speed: office machine should be of higher quality. It should be speedy in nature,

Factors to be considered for selecting office furniture

·         Cost: cost of furniture is a very important factor to be considered before selecting any machine. The furniture should be within the budget of an office.

·         Design: design of furniture relates with height and width, color, number of drawers, and so on. No matter what, furniture should support the space and must facilitate the works done.

·         Durability: office furniture should be made up of steel rather than wood because steel furniture is compatible and lost lasting. Office furniture can be expensive and it is not possible to purchase new furniture every year because it doesn’t even support the space. Therefore, the furniture to be purchased must be free from problem of breakage.

·         Multiple uses: furniture should be usable for numerous purposes in the office.

·         Uniform: furniture in the office must have uniform quality and cost. They must have lower cost of maintenance.

·         Safety: office furniture should be safe. Glass topped and sharp cornered furniture are relatively unsafe.

·         Saving space: choice of furniture also depends upon the space occupied by furniture. Such furniture should be selected which would occupy minimum office space. Bulky and space occupying furniture indirectly add office cost.

·         Comfort: office furniture should be comfortable. Comfortable furniture will result in increased efficiency of the employees

·         Portability: the furniture being portable can be easily shifted from one room to another, one building to another and form one location to another.

 

 

 

 

 

 

This is the link for BOOM Unit 1 to 5 Study Material. For more details find the below link.

https://docs.google.com/document/d/16eaL6xjLPF5G6cO0hLdHyYncCa-_D2TO/edit?usp=sharing&ouid=104098168248409575451&rtpof=true&sd=true