Imputed Costs vs Opportunity Costs.

Opportunity cost is a cost associated with a decision that includes both the explicit and implicit(or imputed) costs. The unique aspect of opportunity cost is that it also includes costs associated with making an alternate decision. The costs associated with an alternative are called implicit costs. The accounting cost of making a decision is called the explicit cost.

While explicit, or accounting, costs are fairly easy to calculate, implicit costs are not as easy. Measuring the cost of the best foregone alternative can be not as easy as anticipated. By reading this Wiki right now, you are paying an implicit cost of your next best alternative. This can and often will be different for everyone. For you, it may be that the next best alternative instead of reading this is watching television. For someone else, it may be surfing the internet.

IMPUTED COST
A cost that is represented by lost opportunity in the use of a company's own resources, excluding cash. These are intangible costs that are not easily accounted for. For example, the time and effort that an owner puts into the maintenance of the company|company rather than working on expansion.

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Rights Shares VS Bonus Shares

Bonus shares means new shares given free of cost to all the existing shareholders of the company, in proportion to their holdings. For example, a company announcing bonus issue of 1:5, is issuing one (new) bonus share for every five shares held by the shareholders of the company.

Rights issues are a proportionate number of shares available to all the existing shareholders of the company, which can be bought at a given price (usually at a discount to current market price) for a fixed period of time. For example, a company announcing rights issue of 2:3 at Rs. 100 per share (current share price Rs. 130 per share), is issuing two (new) rights shares for every three shares held by the shareholders of the company at Rs. 100 per share. The rights shares can also be sold in the open market. If not subscribed to, the rights shares lapse on closure of the offer.

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Difference between FIFO and LIFT methods of Inventory valuation.

Inventory management is a crucial function for any product-oriented business. "First in, First Out," or FIFO, and "Last in, First Out," or LIFO, are two common methods of inventory valuation among businesses. The system you choose can have profound effects on your taxes, income, logistics and profitability. Here are the major differences between the two. - See more at:

FIFO

Companies operating on the principle of "First in, First Out" value inventory on the assumption that the first goods purchased for resale became the first goods sold. In some cases, this may not be true, as some companies stock both new and old items.
Due to the fluctuations of the economy and the risk that the cost of producing goods will rise over time, businesses using FIFO are considered to be more profitable — at least, on paper. For example, a grocery store purchases milk at regular intervals to stock its shelves. As customers purchase milk, the stockers push the oldest product to the front of the fridge and replace newer milk behind those cartons. The cartons of milk with the nearest expiration dates are thus the ones first sold, whereas the later expiration dates are sold after the older product. This ensures that older products are sold before they perish or become obsolete, and then become profit lost.
Companies that sell perishable products or units subject to obsolescence, such as food products or designer fashions, commonly follow the FIFO method of inventory valuation.
Anil Melwania, CPA with New York accounting firm 212 Tax & Accounting Services, said that because prices rise in the long term, the choice of accounting method can significantly affect valuations.
"FIFO gives us a better indication of the value of ending inventory on the balance sheet, but it also increases net income, because inventory that might be several years old is used to value the cost of goods sold," Melwania told Business News Daily. "Increasing net income sounds good, but remember that it also has the potential to increase the amount of taxes that a company must pay."
For businesses needing to impress investors, this becomes an ideal method of valuation, until the higher tax liability is considered. Because FIFO results in a lower recorded cost per unit, it also records a higher level of pre-tax earnings. And, with higher profits, companies can likewise experience higher taxes.

LIFO

The "Last In, First Out" method of inventory entails using current prices to count a measure called "the cost of goods sold," as opposed to using what was paid for the inventory already in stock. If the price of such goods has increased since the initial purchase, the "cost of goods sold" measure will be higher and thereby reduce profits and tax burdens. Nonperishable commodities like petroleum, metals and chemicals are frequently subject to LIFO accounting.
"LIFO isn't a good indicator of ending inventory value, because the leftover inventory might be extremely old and, perhaps, obsolete," Melwani said. "This results in a valuation much lower than today's prices. LIFO results in lower net income because cost of goods sold is higher. So [there is a] lower taxable income. By using more recent inventory in valuation, your cost basis is higher on current income statements. This reduces gross profit and ultimately net income. This is the implication of LIFO, and many companies prefer LIFO because lower profit reporting means a reduced tax burden."
As an example of how LIFO works, a website development company might purchase a plugin for $30 and then sell the finished product at $50. However, several months later, that asset is increased in price to $35. When the company then writes off profits, it would use the most recent price of $35 as part of LIFO. In tax statements, it would then appear as if the company made a profit of only $15. By using LIFO, a company would appear to be making less money than it actually did, and therefore have to report less in taxes.
The principle of LIFO is highly dependent on how the price of goods fluctuates based on the economy. If a company holds inventory for a long period of time, holding on to product may prove quite advantageous in hedging profits for taxes. LIFO allows for higher after-tax earnings due to the higher cost of goods. At the same time, these companies risk the cost of goods going down in the event of an economic downturn and causing the opposite effect for all previously purchased inventory.

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What are intangible assets of a firm ? Why are they shown in the Balance Sheet ? What is meant by amortisation of such assets ? Give reason for the same.

An asset that is not physical in nature. Corporate intellectual property (items such as patents, trademarks, copyrights, business methodologies), goodwill and brand recognition are all common intangible assets in today's marketplace. An intangible asset can be classified as either indefinite or definite depending on the specifics of that asset. A company brand name is considered to be an indefinite asset, as it stays with the company as long as the company continues operations. However, if a company enters a legal agreement to operate under another company's patent, with no plans of extending the agreement, it would have a limited life and would be classified as a definite asset.

While intangible assets don't have the obvious physical value of a factory or equipment, they can prove very valuable for a firm and can be critical to its long-term success or failure. For example, a company such as Coca-Cola wouldn't be nearly as successful were it not for the high value obtained through its brand-name recognition. Although brand recognition is not a physical asset you can see or touch, its positive effects on bottom-line profits can prove extremely valuable to firms such as Coca-Cola, whose brand strength drives global sales year after year.

Why are they shown in the Balance Sheet ?

The balance sheet aggregates all of a company's assets, liabilities, and shareholders' equity. Since an intangible asset is classified as an "asset," it should appear in the balance sheet. However, this is not always the case.

The reason for the variable treatment of intangible assets is that the accounting standards mandate that a business cannot recognise any internally-generated intangible assets (with some exceptions), only acquired intangible assets. This means that any intangible assets listed on a balance sheet were most likely gained as part of the acquisition of another business, or they were purchased outright as individual assets.
For example, if a company conducts expensive research for many years and eventually creates a valuable patent from this research, all of the associated cost is charged to expense as incurred - no intangible asset can be capitalised. However, if the same organisation were to buy the patent from another company, it could recognise the fair value of the patent in its balance sheet, because it bought the patent.
One effect of this accounting treatment is that many corporations that have spent inordinate amounts of cash over the years to develop valuable brands and patents have not capitalised any of the associated costs; their balance sheets do not reflect the real value of their intangible assets. This can be misleading when an outsider is trying to gain an understanding of the value of a business by perusing its financial statements.
Though intangibles do not appear on the balance sheet in many instances, this can also work in favour of a company. First, the entity does not have to absorb an ongoing amortisation charge to reflect the ongoing consumption of the value of these assets, since the entire cost was charged to expense up front. Also, the accounting standards state that a sudden loss in the value of an asset can trigger an impairment charge, which can adversely impact profits. Again, since the cost of these assets was written off up front, the organisation has no intangible assets that could be subject to such a charge.

What is meant by amortisation of intangible assets?

The amortisation of intangibles involves the consistent reduction in the recorded value of an intangible asset over time. Amortisation refers to the write-off of an asset over its expected period of use (useful life).

KEY POINTS[edit]

• Intangible assets are amortised using the straight line amortization method.
  
• Goodwills an intangible asset that is not amortised, but is instead tested for impairment on an annual basis.
  
• The economic or useful life of an intangible asset is based on an estimate made 
  
• by management and is subject to change under certain market conditions.

For example, ABC International acquires another company, and as a result recognises a customer list asset in the amount of $1,000,000. ABC elects to amortise this intangible asset over the next five years at a rate of $200,000 per year. After one year, the carrying amount of the asset has been reduced to $800,000, but ABC now estimates that the asset has a market value of only $300,000 and a remaining useful life of just two years. Accordingly, ABC incurs a $500,000 impairment charge to write down the value of the asset to $300,000, and then re-sets the associated amortisation to be $150,000 in each of the next two years. After that time, the customer list asset will have a carrying amount of zero in the accounting records of ABC.

Reasons for amortisation

If an intangible asset has a finite useful life, you should amortise it over that useful life. The amount to be amortised is its recorded cost, less any residual value. However, intangible assets are usually not considered to have any residual value, so the full amount of the asset is usually amortised. If there is any pattern of economic benefits to be gained from the intangible asset, then you should adopt an amortisation method that approximates that pattern. If not, the customary approach is to amortise it using the straight-line method.

Once amortisation begins, it is rarely changed unless there is evidence that the value of the intangible asset being amortised has become impaired. If so, there is an immediate write-down in the remaining value of the intangible asset in the amount of the impairment. At that point, you must evaluate whether the useful life of the asset has also changed, and modify the amortisation calculation to incorporate not only the new useful life, but also the remaining (reduced)carrying amount of the asset.

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What do you understand by Internal Audit ? How do the functions of an internal auditor differ from that of External Auditor ?

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

Internal auditing is a catalyst for improving an organisation's governance, risk management and management controls by providing insight and recommendations based on analyses and assessments of data and business processes. With commitment to integrity and accountability, internal auditing provides value to governing bodies and senior management as an objective source of independent advice. Professionals called internal auditors are employed by organisations to perform the internal auditing activity.

The scope of internal auditing within an organisation is broad and may involve topics such as an organisation's governance, risk management and management controls over: efficiency/effectiveness of operations (including safeguarding of assets), the reliability of financial and management reporting, and compliance with laws and regulations. Internal auditing may also involve conducting proactive fraud audits to identify potentially fraudulent acts; participating in fraud investigations under the direction of fraud investigation professionals, and conducting post investigation fraud audits to identify control breakdowns and establish financial loss.
Internal auditors are not responsible for the execution of company activities; they advise management and the Board of Directors (or similar oversight body) regarding how to better execute their responsibilities. As a result of their broad scope of involvement, internal auditors may have a variety of higher educational and professional backgrounds.
Internal Auditor vs. External Auditor
Internal auditors work within an organisation and report to its audit committee and/or directors. They help to design the company’s organising systems and help develop specific risk management policies. They also ensure that all policies implemented for risk management are operating effectively. The work of the internal auditor tends to be continuous and based on the internal control systems of a business of any size.
External auditors are independent of the organisation they are auditing. They report to the company’s shareholders. They provide their experienced opinion on the truthfulness of the company’s financial statements and perform work on a test basis to monitor systems in place.

The Differences
There are three key differences in the activities of internal and external auditors. Each is discussed in depth below:
Appointment
External auditors are appointed by the shareholders of a company, although this usually comes through discussion with directors. External auditors must be appointed from a different company independent of their own whilst internal auditors are usually employees of the organisation.Keeping clients happy as an external auditors often more difficult than internally as you already know those around you in the second instance.
Objectives
The objectives for an external auditor are usually defined by statute whilst management will set the objectives for internal audits. External auditors generally have free reign to examine and assess every aspect of the system whilst management can pinpoint and highlight certain areas they want internal auditors to focus on. There are various types of internal audit.

Responsibility
External auditors are responsible to the owners of the company which could be anybody from its owners to the shareholders to the government or general public. Internal auditors are responsible solely to the company’s senior management.

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Human Resource accounting

Human resources are considered as important assets and are different from the physical assets. 
Physical assets do not have feelings and emotions, whereas human assets are subjected to various types of feelings and emotions. In the same way, unlike physical assets human assets never gets depreciated.
Therefore, the valuations of human resources along with other assets are also required in order to find out the total cost of an organisation. In 1960s, Rensis Likert along with other social researchers made an attempt to define the concept of human resource accounting (HRA).

The American Association of Accountants (AAA) defines HRA as follows: ‘HRA is a process of identifying and measuring data about human resources and communicating this information to interested parties’.

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Training methods

Different methods of training are as follows

1. On the job training (OJT)
   In this method a trainee is placed on the job and then taught the necessary skills to perform his job. Thus in this method the trainee learns by observing and handling the job under the guidance and supervision of instructor or a supervisor. Thus it is also called the learning by doing method. Techniques like coaching, committee assignments and job rotation fall under this method. Job instruction training, (JIT) is also a popular form of the job training. JIT is used for imparting or improving motor skills with routine and repetitive operations. While on the job training allows a trainee to learn in the real environment and handled real machines. It is also cost effective as no extra space equipment personnel or other training facilities are required for imparting this training. The employees also learn the procedures and rule and regulations in this training. There are some limitations also in this method. The noise at the real work places makes it difficult for the new employee to concentrate and there is danger that the employee under training might cause damage to equipment or other material.
2. Vestibule training
   In this method a training centre which is known as vestibule is set up where real job conditions are created and expert trainers train the new employees with equipment and machines that a identical with the ones that employees will be using at their work place. This allows the trainees to concentrate on their training because there is no noise of the real work place. As the same time the interest of the employee remains quite high as real work place conditions are simulated in this training. It also saves new employees from a possible injury or any damage to the machines at the real work place. Vestibule training is beneficial for training a large number of employees in a similar type of job. But vestibule training involves the lot of expenditure as experts trainers along with the class room and equipment are required to simulate the real work place environment which is very difficult to create
3. Apprenticeship
   It is the oldest and most commonly used method of training in technical areas and crafts and trades where the skills of the job are learnt over a long period of time. The industrial training institutes (ITI) provide this kind of training in India. The apprenticeship act 1962 requires the employers in certain industries to train a particular number of persons in specific trades. For trades like mechanist, tool makers, carpenters weaver, Jeweller, Engraver, this type of training is very helpful. Apprenticeship helps in maintaining a skilled work force and is a combination of both theory and practical. It also results in high level of loyalty by the employees and increases their chances for growth but it is time consuming and extensive method. Many persons leave this training in between because of the long training duration.
4. Class room training
   It is provided in company class rooms or educational institution through lectures audio visual aids, case studies and group discussion. It is very helpful and teaching problems solving skills and new concepts. It is also useful in orientations and safety training programs. For teaching new technologies to software professionals, class room training is often used.
5. Internship
   It involves training the colleges or universities pass outs about the practical aspects of their study. This method of training provides a chance to the students to implement the theoretical concepts that they have learnt during their study. Thus it balances the theoretical and practical aspects of the study. Professional likes chartered accountants, MBA’s, company secretaries and doctors are given training through this method.

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Define and discuss the need for Human Resource Planning in an organisation. Briefly discuss various approaches to HRP

Need for and Importance of HRP:

The need for human resource planning in organisation is realised for the following reasons:
1. Despite growing unemployment, there has been shortage of human resources with required skills, qualification and capabilities to carry on works. Hence the need for human resource planning.
2 Large numbers of employees, who retire, die, leave organisations, or become incapacitated because of physical or mental ailments, need to be replaced by the new employees. Human resource planning ensures smooth supply of workers without interruption.
3. Human resource planning is also essential in the face of marked rise in workforce turnover which is unavoidable and even beneficial. Voluntary quits, discharges, marriages, promo­tions and seasonal fluctuations in business are the examples of factors leading to workforce turnover in organisations. These cause constant ebb and flow in the work force in many organisations.
4. Technological changes and globalisation usher in change in the method of products and distribution of production and services and in management techniques. These changes may also require a change in the skills of employees, as well as change in the number of employ­ees required. It is human resource planning that enables organisations to cope with such changes.
5. Human resource planning is also needed in order to meet the needs of expansion and diver­sification programmes of an organisation.
6. The need for human resource planning is also felt in order to identify areas of surplus personnel or areas in which there is shortage of personnel. Then, in case of surplus personnel, it can be redeployed in other areas of organisation. Conversely, in case of shortage of personnel, it can be made good by downsizing the work force.
Human resource planning is important to organisation because it benefits the organisation in several ways.

Various approaches to HRP

1. Quantitative Approach

It is also known as top down approach of HR planning under which top level make and efforts to prepare the draft of HR planning. It is a management-driven approach under which the HR planning is regarded as a number's game. It is based on the analysis of Human Resource Management Information System and HR Inventory Level. On the basis of information provided by HRIS, the demand of manpower is forecasted using different different quantitative tools and techniques such as trend analysis, mathematical models, economic models, market analysis, and so on. The focus of this approach is to forecast human resource surplus and shortages in an organisation. In this approach major role is played by top management.

2. Qualitative Approach

This approach is also known as bottom up approach of HR planning under which the subordinates make an effort to prepare the draft of HR planning.Hence, it is also called sub-ordinate-driven approach of HR planning. It focuses on individual employee concerns. It is concerned with matching organisational needs with employee needs. Moreover, it focuses on employee's training, development and creativity. Similarly, compensation, incentives, employee safety, welfare, motivation and promotion etc. are the primary concerns of this approach. In this approach, major role is played by lower level employees.

3. Mixed Approach

This is called mixed approach because it combines both top-down and bottom-up approaches of HR planning. In fact, the effort is made to balance the antagonism between employees and the management. Hence, it tends to produce the best result that ever produced by either of the methods. Moreover, it is also regarded as an Management By Objective(MBO) approach of HR planning. There is a equal participation of each level of employees of the organisation.

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Define and differentiate between Job Analysis, Job Description and Job Evaluation. Select an appropriate job evaluation method and create a plan for evaluating jobs of scientists in different grades.

Job Analysis:

Job analysis is the process of gathering and analysing information about the content and the human requirements of jobs, as well as, the context in which jobs are performed. This process is used to determine placement of jobs. Under NU Values the decision-making in this area is shared by units and Human Resources. Specific internal approval processes will be determined by the unit's organisational leadership.
Job analysis defines the organisation of jobs within a job family. It allows units to identify paths of job progression for employees interested in improving their opportunities for career advancement and increasing compensation.

Job Description:

The job description is a written statement that describes the work that is to be done and the skills, knowledge and abilities needed to perform the work. Each job has a description identifying the duties, qualifications, decision-making, interactions, supervision received/exercised and impact of the position. Where necessary, the description also includes special physical or patient care requirements.

Job Evaluation:

A job evaluation is a systematic way of determining the value/worth of a job in relation to other jobs in an organisation. It tries to make a systematic comparison between jobs to assess their relative worth for the purpose of establishing a rational pay structure.
Job evaluation needs to be differentiated from job analysis. Job analysis is a systematic way of gathering information about a job. Every job evaluation method requires at least some basic job analysis in order to provide factual information about the jobs concerned. Thus, job evaluation begins with job analysis and ends at that point where the worth of a job is ascertained for achieving pay equity between jobs.

Job Analysis VS Job Description VS Job Evaluation

BASIS OF COMPARISON	JOB ANALYSIS	JOB DESCRIPTION	JOB EVALUATION
Meaning	A deep research on a particular job to ascertain every small details about it, is known as Job Analysis.	A comprehensive job summary depicting the job contents in short but in an exhaustive manner.	Job Evaluation is an attempt of assessing the relative utility of a particular job in an organisation.
What is it?	Process	Statement	Process
Concept	A process of determining all the necessary requirements and aspects of a job.	A concise statement of what a job demands.	A process to evaluate and assess.
Incorporates	Tasks, responsibilities, skill, abilities, working conditions and adaptabilities of a certain job.	Duties and Responsibilities, authority, purpose and scope of a specific job.	Non-Analytical system and Analytical system.
Mode	Oral or Written	Written	Oral or Written
Advantage	Helpful in Recruitment and Selection of manpower	Helpful in ascertaining whether an applicant is eligible as per the set standards.	Helps in removing inequalities in the wage system, making a comparative analysis of each job etc.

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What is 'Product Life Cycle' ? How Marketing Mix Decisions have to be adjusted at different stages of PLC (Product Life Cycle) ?

The theory of a product life cycle was first introduced in the 1950s to explain the expected life cycle of a typical product from design to obsolescence, a period divided into the phases of product introduction, product growth, maturity, and decline. The goal of managing a product's life cycle is to maximise its value and profitability at each stage. Life cycle is primarily associated with marketing theory.

INTRODUCTION

This is the stage where a product is conceptualised and first brought to market. The goal of any new product introduction is to meet consumers' needs with a quality product at the lowest possible cost in order to return the highest level of profit. The introduction of a new product can be broken down into five distinct parts:

• Idea validation, which is when a company studies a market, looks for areas where needs are not being met by current products, and tries to think of new products that could meet that need. The company's marketing department is responsible for identifying market opportunities and defining who will buy the product, what the primary benefits of the product will be, and how the product will be used.
• Conceptual design occurs when an idea has been approved and begins to take shape. The company has studied available materials, technology, and manufacturing capability and determined that the new product can be created. Once that is done, more thorough specifications are developed, including price and style. Marketing is responsible for minimum and maximum sales estimates, competition review, and market share estimates.
• Specification and design is when the product is nearing release. Final design questions are answered and final product specs are determined so that a prototype can be created.
• Prototype and testing occur when the first version of a product is created and tested by engineers and by customers. A pilot production run might be made to ensure that engineering decisions made earlier in the process were correct, and to establish quality control. The marketing department is extremely important at this point. It is responsible for developing packaging for the product, conducting the consumer tests through focus groups and other feedback methods, and tracking customer responses to the product.
• Manufacturing ramp-up is the final stage of new product introduction. This is also known as commercialisation. This is when the product goes into full production for release to the market. Final checks are made on product reliability and variability.

In the introduction phase, sales may be slow as the company builds awareness of its product among potential customers. Advertising is crucial at this stage, so the marketing budget is often substantial. The type of advertising depends on the product. If the product is intended to reach a mass audience, than an advertising campaign built around one theme may be in order. If a product is specialised, or if a company's resources are limited, then smaller advertising campaigns can be used that target very specific audiences. As a product matures, the advertising budget associated with it will most likely shrink since audiences are already aware of the product.

Techniques used to exploit early stages make use of penetration pricing (low pricing for rapid establishment) as well as "skimming," pricing high initially and then lowering price after the "early acceptors" have been lured in.

GROWTH

The growth phase occurs when a product has survived its introduction and is beginning to be noticed in the marketplace. At this stage, a company can decide if it wants to go for increased market share or increased profitability. This is the boom time for any product. Production increases, leading to lower unit costs. Sales momentum builds as advertising campaigns target mass media audiences instead of specialised markets (if the product merits this). Competition grows as awareness of the product builds. Minor changes are made as more feedback is gathered or as new markets are targeted. The goal for any company is to stay in this phase as long as possible.

It is possible that the product will not succeed at this stage and move immediately past decline and straight to cancellation. That is a call the marketing staff has to make. It needs to evaluate just what costs the company can bear and what the product's chances for survival are. Tough choices need to be made—sticking with a losing product can be disastrous.

If the product is doing well and killing it is out of the question, then the marketing department has other responsibilities. Instead of just building awareness of the product, the goal is to build brand loyalty by adding first-time buyers and retaining repeat buyers. Sales, discounts, and advertising all play an important role in that process. For products that are well-established and further along in the growth phase, marketing options include creating variations of the initial product that appeal to additional audiences.

MATURITY

At the maturity stage, sales growth has started to slow and is approaching the point where the inevitable decline will begin. Defending market share becomes the chief concern, as marketing staffs have to spend more and more on promotion to entice customers to buy the product. Additionally, more competitors have stepped forward to challenge the product at this stage, some of which may offer a higher-quality version of the product at a lower price. This can touch off price wars, and lower prices mean lower profits, which will cause some companies to drop out of the market for that product altogether. The maturity stage is usually the longest of the four life cycle stages, and it is not uncommon for a product to be in the mature stage for several decades.

A savvy company will seek to lower unit costs as much as possible at the maturity stage so that profits can be maximised. The money earned from the mature products should then be used in research and development to come up with new product ideas to replace the maturing products. Operations should be streamlined, cost efficiencies sought, and hard decisions made.

From a marketing standpoint, experts argue that the right promotion can make more of an impact at this stage than at any other. One popular theory postulates that there are two primary marketing strategies to utilise at this stage—offensive and defensive. Defensive strategies consist of special sales, promotions, cosmetic product changes, and other means of shoring up market share. It can also mean quite literally defending the quality and integrity of your product versus your competition. Marketing offensively means looking beyond current markets and attempting to gain brand new-buyers. Relaunching the product is one option. Other offensive tactics include changing the price of a product (either higher or lower) to appeal to an entirely new audience or finding new applications for a product.

DECLINE

This occurs when the product peaks in the maturity stage and then begins a downward slide in sales. Eventually, revenues will drop to the point where it is no longer economically feasible to continue making the product. Investment is minimised. The product can simply be discontinued, or it can be sold to another company. A third option that combines those elements is also sometimes seen as viable, but comes to fruition only rarely. Under this scenario, the product is discontinued and stock is allowed to dwindle to zero, but the company sells the rights to supporting the product to another company, which then becomes responsible for servicing and maintaining the product.

Marketing Mix Decisions at different stages of PLC

A product life cycle is the typical stages a product goes through during its lifetime. The product life cycle is broken down into five different stages, which include the development, introduction, growth, maturity and decline stages of the product. Characteristics for each stage differ and in response to the different needs of the product as it moves through its life cycle, the market mix (various marketing tactics) used during these stages differ as well. Understanding the product life cycle can help business owners and marketing managers plan a marketing mix to address each stage fully.

Development Stage

During the development stage, the product may still be just an idea, in the process of being manufactured or not yet for sale. In this stage, the marketing mix is in the planning phase, so rather than implementing marketing strategies, the product producer is researching marketing methods and planning on which efforts the company intends on using to launch the product. The marketing mix for this stage includes ways to bring awareness of the product to potential customers through marketing campaigns and special promotions.

Introduction Stage

As the product hits the market, it enters the introduction stage of the product life cycle. Because it is a new product that customers are not yet aware of, the product sales during the introduction stage are generally low. At this time, marketing expenses are generally high because it requires a lot of effort to bring awareness to the product. The marketing mix during this stage of the product life cycle entails strategies to establish a market and create a demand for the product.

Growth Stage

As customers become aware of the product and sales increase, the product enters into the growth stage of the product life cycle. Marketing tactics during the growth stage requires branding that differentiates the product from other products in the market. Marketing the product involves showing customers how this product benefits them over the products sold by the competition; also known as building a brand preference.

Maturity Stage

As the product gains over its competition, the product enters the maturity stage of the product life cycle. The marketing mix during this stage involves efforts to build customer loyalty, typically accomplished with special promotions and incentives to customers who switch from a competitor's brand.

Decline Stage

Once a product market is over saturated, the product enters into the decline stage of the product life cycle. This is the stage where the marketing mix and marketing efforts decline. If the product generated loyalty from customers, the company can retain customers during this stage, but does not attract new sales from new customers. For the marketing mix that remains during the decline stage, the focus is generally on reinforcing the brand image of the product to stay in a positive light in the eyes of the product's loyal customers.

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Define Marketing Management. Discuss its importance and scope in today's dynamic competitive environment.

Marketing management is the organisational discipline which focuses on the practical application of marketing orientation, techniques and methods inside enterprises and organisations and on the management of a firm's marketing resources and activities.

Marketing management facilitates the activities and functions which are involved in the distribution of goods and services.

According to Philip Kotler, “Marketing management is the analysis, planning, implementation and control of programmes designed to bring about desired exchanges with target markets for the purpose of achieving organisational objectives.

It relies heavily on designing the organisations offering in terms of the target markets needs and desires and using effective pricing, communication and distribution to inform, motivate and service the market.” Marketing management is concerned with the chalking out of a definite programme, after careful analysis and forecasting of the market situations and the ultimate execution of these plans to achieve the objectives of the organisation.

Further, their sales plans to a greater extent rest upon the requirements and motives of the consumers in the market. To achieve this objective, the organisation has to pay heed to the right pricing, effective advertising and sales promotion, distribution and stimulating the consumers through the best services.

To sum up, marketing management may be defined as the process of management of marketing
programmes for accomplishing organisational goals and objectives. It involves planning, implementation and control of marketing programmes or campaigns.

Importance and scope of Marketing Management:

Marketing management has gained importance to meet increasing competition and the need for improved methods of distribution to reduce cost and to increase profits. Marketing management today is the most important function in a commercial and business enterprise.

The following are the other factors showing importance of the marketing management:

(i) Introduction of new products in the market.

(ii) Increasing the production of existing products.

(iii) Reducing cost of sales and distribution.

(iv) Export market.

(v) Development in the means of communication and modes of transportation within and outside the country.

6. Rise in per capita income and demand for more goods by the consumers.

The scope of marketing deals with the question, ‘what is marketed?’ According to Kotler, marketing people are involved with ten types of entities.

1. Goods:

Physical goods constitute the major part of a country’s production and marketing effort. Companies market billions of food products, and millions of cars, refrigerators, television and machines.

2. Services:

As economies advance, a large proportion of their activities is focused on the pro­duction of services. Services include the work of airlines, hotels, car rental firms, beauticians, software programmers, management consultants, and so on. Many market offerings consist of a mix of goods and services. For example, a restaurant offers both goods and services.

3. Events:

Marketers promote events. Events can be trade shows, company anniversaries, entertainment award shows, local festivals, health camps, and so on. For example, global sporting events such as the Olympics or Common Wealth Games are promoted aggressively to both companies and fans.

4. Experiences:

Marketers create experiences by offering a mix of both goods and services. A product is promoted not only by communicating features but also by giving unique and interesting experiences to customers. For example, Maruti Sx4 comes with Bluetooth technology to ensure connectivity while driving, similarly residential townships offer landscaped gardens and gaming zones.

5. Persons:

Due to a rise in testimonial advertising, celebrity marketing has become a business. All popular personalities such as film stars, TV artists, and sportspersons have agents and personal managers. They also tie up with PR agencies for better marketing of oneself

6. Places:

Cities, states, regions, and countries compete to attract tourists. Today, states and coun­tries are also marketing places to factories, companies, new residents, real estate agents, banks and business associations. Place marketers are largely real estate agents and builders. They are using mega events and exhibitions to market places. The tourism ministry is also aggressively promoting tourist spots locally and globally.

7. Properties:

Properties can be categorised as real properties or financial properties. Real property is the ownership of real estates, whereas financial property relates to stocks and bonds. Properties are bought and sold through marketing.

Marketing enhances the need of ownership and creates possession utility. With improving income levels in the economy, people are seeking better ways of saving money. Financial and real property marketing need to build trust and confidence at higher levels.

8. Organisations:

Organisations actively work to build image in the minds of their target public. The PR department plays an active role in marketing an organisation's image. Marketers of the services need to build the corporate image, as exchange of services does not result in the owner­ship of anything. The organisation's goodwill promotes trust and reliability. The organisation's image also helps the companies in the smooth introduction of new products.

9. Information:

Information can be produced and marketed as a product. Educational institutions, encyclopaedias, non-fiction books, specialised magazines and newspapers market information. The production, packaging, and distribution of information is a major industry. Media revolution and increased literacy levels have widened the scope of informa­tion marketing.

10. Idea:

Every market offering includes a basic idea. Products and services are used as platforms for delivering some idea or benefit. Social marketers widely promote ideas. Maruti Udyog Limited promoted safe driving habits, need to wear seat belts, need to prohibit children from sitting near the driver’s seat, and so on.

By: Unknown On 07:47

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Auto regressive models

A stochastic process used in statistical calculations in which future values are estimated based on a weighted sum of past values. An autoregressive process operates under the premise that past values have an effect on current values. A process considered AR(1) is the first order process, meaning that the current value is based on the immediately preceding value. An AR(2) process has the current value based on the previous two values.
Autoregressive processes are used by investors in technical analysis. Trends, moving averages and regressions take into account past prices in an effort to create forecasts of future price movement. One drawback to this type of analysis is that past prices won't always be the best predictor of future movements, especially if the underlying fundamentals of a company have changed.

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Step function

In mathematics, a function on the real numbers is called a step function (or staircase function) if it can be written as a finite linear combination of indicator functions of intervals. Informally speaking, a step function is a piecewise constant function having only finitely many pieces. The graph of a step function looks like a series of small steps.

(q) More than type ogive

(r) Subjectivist's criterion in decision making

(s) Double sampling

Double sampling is a sampling method which makes use of auxiliary data where the auxiliary information is obtained through sampling. More precisely, we first take a sample of units strictly to obtain auxiliary information, and then take a second sample where the variable(s) of interest are observed. It will often be the case that this second sample is a subsample of the preliminary sample used to acquire auxiliary information.
The double sampling method was developed as a modification of the weight-estimate method, to attempt to overcome the lack of precision among observers and the possibility of unchecked drift in an individual's estimate of biomass over time. In concordance with the weight-estimate method, data is collected by using defined weight-units for each species to visually estimate the biomass in each quadrant. However, a small second calibration data set is also collected, by clipping and weighing selected quadrants after estimation. Regression analysis is used to compare estimated and harvested values of the calibration samples, to determine if tended to underestimate or overestimate the visual estimation, and to provide the appropriate adjustments to be made to all field samples.
The number of samples selected for the calibration data set depends on the observer's ability to furnish accurate visual estimates, the sample variance of biomass estimates, the diversity of species on the site, and time restrictions. Ideally, calibration data should encompass the range of biomass values and the majority of species encountered during sampling. Fewer calibration samples are needed when the observer's visual estimates closely reflect harvested weights. However, the observer's proficiency cannot be confirmed until after the calibration quadrants are clipped and weighed! Clipping one out of every 5 - 10 quadrants for inclusion in the calibration data set provides a reliable calibration in most situations.
Data is usually collected form multiple quadrants located along a transect, so that the transect is the sample unit. Therefore, data must be collected from several transects to determine the precision of the sample, for statistical analysis of biomass data.

The double sampling method is regularly used to determine biomass in range inventory or monitoring programs. It is a little slower than the weight-estimate method and still requires extensive training in the preliminary stages, but these disadvantages are well compensated by improvements in accuracy and precision. By only clipping a selection of quadrants, it is more efficient than harvesting to determine biomass.

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Cluster vs. Stratum

Cluster sampling and stratified sampling are two different sampling methods. The main difference between them is that a cluster is treated as sampling unit. Hence, in the first stage, analysis is done on a population of clusters. In stratified sampling, the elements within the strata are analysed.

Cluster Sampling
In this mode of sampling, the naturally occurring groups are selected for being included in the sample.
Its main use is in market research. In this method, the total population is divided into samples or groups after which, a sample of the groups is selected.
After this process, relevant and required data from all the elements of all the groups is collected.
At times, instead of collecting information from each group, information can be collected from a sub-sample of the elements.
If the variation is between the members of the groups and not between the actual groups, then this technique will work the best.
Before you start using this methods on clusters, make sure that the clusters are collectively exhaustive and mutually exclusive.
Stratified Sampling
In this technique, a sample is divided into stratum and on random basis.
Different stratum are created, which will allow the usage of different sampling percentage in each stratum.
These stratum are nothing but simple groups, which consists of a number of elements.
On these stratum, simple random selection is performed.
Make sure that every element is assigned only one stratum. This method is known to produce weighted mean whose variability is less than that of arithmetic mean of a simple random sample of the population.
Even in stratified sampling, the strata should be collectively exhaustive and mutually exclusive.
This will help in applying random or systematic sampling in each of the stratum. This will also help in the reduction of errors.
Cluster Vs. Stratified

Cluster Sampling

Application: It is used when natural groupings are evident in a statistical population.

Choice: It can be chosen if the group consists of homogeneous members.

Advantage: The method is cheaper as compared to the other methods.

Disadvantage: The main disadvantage is that it introduces higher errors.
Stratified Sampling

Application: In this method, the members are grouped into relatively homogeneous groups. This allows greater balancing of statistical power of tests.

Choice: It is a good option for heterogeneous members.

Advantages: This method ignores the irrelevant ones and focuses on the crucial sub populations. You can opt for different techniques. This also helps in improving the efficiency and accuracy of the estimation.

Disadvantage: It requires a choice of relevant stratification variables, which can be tough at times. When there are homogeneous subgroups, it is not very useful, and its implementation is expensive. If not provided with accurate information about the population, then an error may be introduced.

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Quantiles

Quantiles are values taken at regular intervals from the inverse function of the cumulative distribution function (CDF) of a random variable. Dividing ordered data into q essentially equal-sized data subsets is the motivation for q-quantiles; the quantiles are the data values marking the boundaries between consecutive subsets. The quantiles can be used as cutoff values for grouped data in approximately equal size groups. Quantiles can also be applied to continuous data, providing a way to generalise rank statistics to continuous variables.

A kth q-quantile for a random variable is a value x such that the probability that the random variable will be less than x is at most k/q and the probability that the random variable will be greater than x is at most (q−k)/q = 1−(k/q). There are q−1 of the q-quantiles, one for each integer k satisfying 0 < k < q. In some cases the value of a quantile may not be uniquely determined, as can be the case for the median of a uniform probability distribution on a set of even size.

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Absolute value function

Absolute Value Function The absolute value of a real number x, |x|, is ?x if x≥0
|x|= −x if x<0



|2| = 2, |−2| = −(−2) = 2

The absolute value function is used to measure the distance between two numbers. Thus, the distance between x and 0 is |x − 0| = |x|, and the distance between x and y is |x − y|. Thus, the distance from −2 to −4 is |−2−(−4)| = |−2+4| = |2| = 2, and the distance from −2 to 5 is |−2 − 5| = |−7| = 7. 

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Bernoulli Process

A Bernoulli process is a sequence of Bernoulli trials in which:

• the trials are independent of each other,
  
• there are only two possible outcomes for each trial, arbitrarily labeled "success" or "failure"
  
• the probability of success is the same for each trial.
  

One of the simplest and most used examples of a Bernoulli process is a sequence of coin tosses where, for example, a "head" would constitute a success.

As a random process, we will regard a "success" as the occurrence of an event. There is no value judgement involved in this term, for example suppose a manufacturing machine was observed over a period of time, and we were interested in how many days the machine had broken down. If the probability of breaking down was the same each day, then we could use a Bernoulli process to model this, where the machine breaking down at least once on a particular day would constitute "success" or an event. It is unlikely that the factory owner would think of this as a successful outcome!

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Determinant of a Square Matrix

A determinant is a real number associated with every square matrix. I have yet to find a good English definition for what a determinant is. Everything I can find either defines it in terms of a mathematical formula or suggests some of the uses of it. There's even a definition of determinant that defines it in terms of itself.
The determinant of a square matrix A is denoted by "set A" or | A |. Now, that last one looks like the absolute value of A, but you will have to apply context. If the vertical lines are around a matrix, it means determinant.
The line below shows the two ways to write a determinant.

3	1	=	set		3	1
5	2				5	2

Determinant of a 2×2 Matrix

The determinant of a 2×2 matrix is found much like a pivot operation. It is the product of the elements on the main diagonal minus the product of the elements off the main diagonal.

a	b	= ad - bc
c	d

Properties of Determinants

• The determinant is a real number, it is not a matrix.
  
• The determinant can be a negative number.
  
• It is not associated with absolute value at all except that they both use vertical lines.
  
• The determinant only exists for square matrices (2×2, 3×3, ... n×n). The determinant of a 1×1 matrix is that single value in the determinant.
  
• The inverse of a matrix will exist only if the determinant is not zero.
  

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Box-Jenkins Models for Time Series

A mathematical model designed to forecast data within a time series. The Box-Jenkin model alters the time series to make it stationary by using the differences between data points. This allows the model to pick out trends, typically using auto regresssion, moving averages and seasonal differencing in the calculations.

Autoregressive Integrated Moving Average (ARIMA) models are a form of Box-Jenkins model.

Estimations of the parameters of the Box-Jenkins model is very complicated and is most often achieved through the use of software. The model was created by two mathematicians, George Box and Gwilym Jenkins, and outlined in their 1970 paper, "Time Series Analysis: Forecasting and Control."

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Multi-stage sampling & Multi-phase sampling

Multistage sampling refers to sampling plans where the sampling is carried out in stages using smaller and smaller sampling units at each stage.[1]
Multistage sampling can be a complex form of cluster sampling... Cluster because sampling is a type of sampling which involves dividing the population into groups (or clusters). Then, one or more clusters are chosen at random and everyone within the chosen cluster is sampled.
Using all the sample elements in all the selected clusters may be prohibitively expensive or unnecessary. Under these circumstances, multistage cluster sampling becomes useful. Instead of using all the elements contained in the selected clusters, the researcher randomly selects elements from each cluster. Constructing the clusters is the first stage. Deciding what elements within the cluster to use is the second stage. The technique is used frequently when a complete list of all members of the population does not exist and is inappropriate.
In some cases, several levels of cluster selection may be applied before the final sample elements are reached. For example, household surveys conducted by the Australian Bureau of Statistics begin by dividing metropolitan regions into 'collection districts' and selecting some of these collection districts (first stage). The selected collection districts are then divided into blocks, and blocks are chosen from within each selected collection district (second stage). Next, dwellings are listed within each selected block, and some of these dwellings are selected (third stage). This method makes it unnecessary to create a list of every dwelling in the region and necessary only for selected blocks. In remote areas, an additional stage of clustering is used, in order to reduce travel requirements.[2]
Although cluster sampling and stratified sampling bear some superficial similarities, they are substantially different. In stratified sampling, a random sample is drawn from all the strata, where in cluster sampling only the selected clusters are studied, either in single- or multi-stage.

Multi-phase sampling

A sampling procedure in which some information is collected from the whole sample and additional information is collected, at the same time or later, from sub samples of the entire sample (i.e. some units provide more information than others).
A multi-phase sample collects basic information from a large sample of units and then, for a sub sample of these units, collects more detailed information. The most common form of multi-phase sampling is two-phase sampling (or double sampling), but three or more phases are also possible.

Multi-phase sampling is useful when the frame lacks auxiliary information that could be used to stratify the population or to screen out part of the population.

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