1 INDUSTRIAL PROFILE India is a diverse country where different states have different consumption patterns and customs. Competition has become the key word in today‟s scenario. Till 1970‟ s and 80‟s Maggie and Kissan were the major ketchup brands but after liberalization Heinz entered Indian market which offered tough competition. These major giants are also facing competition from many local players like Tops, Cremica and other local brands. The ketchup market in India is estimated to be around Rs 220 crore, largely dominated by Nestle‟s Maggi that owns 47% of the market and the Kissan that owns 26%. Up to mid eighties Kissan was the number one brand in Tomato Ketchup and around that time the competition came from Maggi -- a Nestle‟s brand Maggi launching several varieties of Tomato Ketchup there was a growth in the market. With Kissan and Maggi fighting neck to neck other smaller but established brands like Dipy's from Herbert sons, Volfruit from Voltas, Noga of Nagpur Orange Federation and SunSip of Wimco gradually disappeared from the market. Delmonte now has joined hands with Paoma Industries, the manufacturers of Rasna Brands of soft drink concentrate and is expected to launch Tomato Ketchup shortly. At a time when Kissan had become generic to tomato sauce, Maggi came in with its sauces range. Maggi was the upstate new corner who came in with a loud aggressive national burst. It did not come in with one, but with a range of sauces in order to increase market share and expand the market by offering more usage occasions, bring consumers with different needs into the Maggi Sauces fold and weaning away users of different brands to Maggi. From a market share of 14% in 1985, Maggi Sauces now enjoys a share of about 50% of the market.
Transcript
1
INDUSTRIAL PROFILE
India is a diverse country where different states have different consumption patterns and
customs. Competition has become the key word in today‟s scenario. Till 1970‟ s and
80‟s Maggie and Kissan were the major ketchup brands but after liberalization Heinz
entered Indian market which offered tough competition. These major giants are also
facing competition from many local players like Tops, Cremica and other local brands.
The ketchup market in India is estimated to be around Rs 220 crore, largely dominated by
Nestle‟s Maggi that owns 47% of the market and the Kissan that owns 26%. Up to mid
eighties Kissan was the number one brand in Tomato Ketchup and around that time the
competition came from Maggi -- a Nestle‟s brand
Maggi launching several varieties of Tomato Ketchup there was a growth in the market.
With Kissan and Maggi fighting neck to neck other smaller but established brands like
Dipy's from Herbert sons, Volfruit from Voltas, Noga of Nagpur Orange Federation and
SunSip of Wimco gradually disappeared from the market. Delmonte now has joined
hands with Paoma Industries, the manufacturers of Rasna Brands of soft drink
concentrate and is expected to launch Tomato Ketchup shortly. At a time when Kissan
had become generic to tomato sauce, Maggi came in with its sauces range. Maggi was the
upstate new corner who came in with a loud aggressive national burst. It did not come in
with one, but with a range of sauces in order to increase market share and expand the
market by offering more usage occasions, bring consumers with different needs into the
Maggi Sauces fold and weaning away users of different brands to Maggi. From a market
share of 14% in 1985, Maggi Sauces now enjoys a share of about 50% of the market.
2
COMPANY PROFILE
Name :-
Lucky Canning co.
Address :-
204, Mahalaxmi Industrial Estate,
Dr. Hedgware Road, Bamroli Road,
Surat-395 002. Gujarat
Customer care no. : -
0261-2634384
This company was established in 1948. This company is run by three partners namely as:
1) Firoz hasanwala
2) Zoyeb patangwala
3) Sefudin
This three are the current business partners and owners of the company. All the partners
are engineers and they only handle all the structure of the business .the business running
is only over Gujarat. They do not sell their products outside Gujarat. The raw material
required for the manufacturing products is purchased from the local area only.
There are only 15 – 20 employees in each site. Whatever the company runs on a small
scale but they do it in a much disciplined way. 8- Hours shift of every employees. They
prefer only single shift. They get the employees which know the culture, life styles about
the area what are their requirements are they adjustable or not. They prefer “sons of soil”.
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1. INTRODUCTION OF FINANCE DEPARTMENT
A. DEFINITION OF FINANCE
“Finance is that administrative area or set of administration function in an organization
which relates the arrangement of cash and credit so that organization may have the means
to carry out its objective as satisfactory as possible
Blood is important part of human beings. And money is blood for sound business. Money
is the life-blood at modern business. Money is required to purchase expensive machinery,
and day-to-day expenses on raw materials, labor, and operational and administrative
needs at business, execution at expansion.
B. IMPORTANCE OF FINANCE
I. To meet contingencies:-
Funds are always required to meet the ups and downs of business and unforeseen
problems. Suppose, some manufacturer anticipates
Shortage of raw materials after a period. Obviously he would like to stock raw materials.
But he will be able to do so only when money would be available.
II. To promote sales:-
In this era of competition, lot of money is required to be spent on activities for promoting
sales like advertisement, personal selling, home delivery of goods etc.
III. To avail of business opportunities:-
Funds are also required to avail of business opportunities. Suppose a company wants to
submit a tender but some minimum amount is enquired to be deposited along with the
application. In the case of non-availability of funds it would not be possible for the
company to apply.
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C. FUNCTION OF FINANCE
There are 4 function of finance.
i) INVESTMENT DECISION
ii) FINANCING DECISION
iii) DIVIDEND DECISION
iv) LIQUIDITY DECISION
I. INVESTMENT DECISION
There is broad agreement that the correct cut-off rate or the required rate return on
investment is the opportunity cost capital. The opportunity cost capital is the excepted
rate of return that an investor could earn by investing his or her money in financial assets
of equivalent risk. However, there are problem in computing the opportunity cost of
capital in practice from the available data and information. A decision maker should be
aware these problems.
II. FINANCING DECISION
Finance decision is the second important function to be performed by the financial
manager. Broadly, he or she must decide when from and how to acquire funds to meet the
firm‟s investment needs.
The mix of debt and equity is known as the firm‟s capital structure. The financial
manager must strive to obtain the best financing mix or the optimum capital structure for
his or her firm. The firm‟s capital structure is considered optimum when the market value
of shares is maximized.
III. DIVIDEND DECISION
Dividend decision is the third major financial decision. The financial manager must
decide whether the firm should distribute all profits, or retain them, or distribute a portion
and retain the balance. The proportion of profits distribute as dividend as called the
dividend- payment ratio and retain portion of profits is known as the retention ratio.
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IV. LIQUIDITY DECISION
Investment in current assets the firm‟s profitability and liquidity. Current assets
management that affects a firm‟s liquidity is yet another important finance function.
Current assets are managed efficiently for safeguarding the firm against the risk of
illiquidity. Lack of liquidity in extreme situations can lead to the firm‟s insolvency.
The profitability-liquidity trade-off requires that financial manager should techniques of
managing current assets. He or she should estimate firm‟s needs for current assets and
make sure that funds would be made available when needed.
2. CAPITAL STRUCTURE OF COMPANY
There are two types of sources of working capital, like Long term And Short term fund,
which show here:
Types of sources of working capital
SOURCES OF FUNDS
LONG TERM
FUND
SHORT TERM
FUND
EXTERNAL INTERNAL
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1) Long term Fund
a. Issue of share
b. Loan
c. Debenture
f. Commercial Paper
2) Short term Fund:
1. Internal
1. Depreciation
2. Taxation Provision
3. Accrued Expenses
2. External
1. Trade credit
2. Credit paper
3. Raw material
4. Debaters
5. Security of Employees
6. Loans from Directors
As we early seen that LUCKY SAUCE Company is financially strong so it can easily get
both types of funds.
The LUCKY SAUCE Company also uses this source of WC for their production. The
company use these sources to gain fund, which is following hear.
Debtors
Raw material
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1. Debtors:
The company uses these sours of the working capital. The company gets long fund
for its customer. The company sells its product to customer for one month credit.
2. Raw material:
The company sells its raw material, which is not use in the fabrics and get lot of
fund for its Working capital.
A. Working Capital Management Analysis
Any type of business enterprise needs two types of capital fixed capital and working
capital, capital investment in fixed assets like, land, plant, capital and a part pf the total
capital investment in current assets like stock, debtors, bills receivables, cash and bank is
known as working capital. In order to keep the working capital is essential. It is the
working capital that keeps the wheel of the business running. That is why it is said that
working capital is the life blood of the business running adequate working capital is
essential. However, working capital more than or less than required proves to be harmful.
Therefore to keep the total working capital and its component parts at satisfactory level
its proper management is of much importance.
I. MANAGEMENT OF CASH
Cash is the important current assets for the operations of the business. Cash is the basic
input needed to keep the business running on a continuous basis, it is also the ultimate
output expected to be realized by selling the service or product manufactured by the firm.
The firm should keep sufficient cash, neither more nor less. Cash shortage will disrupt the
firm‟s manufacturing operations while excessive cash will simply remain idle, without
contributing anything towards the firm‟s profitability. Thus, a major function of the
financial manager is to maintain a sound cash position
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II. Inventory Management
For many business firms Inventory is one of the visible and tangible of doing business.
Raw materials, work in process and finished goods all represent various form of
inventory. In simple words, inventory refers to stocks of good necessary to do business.
Another component of working capital is inventory. The factory is very big kitchen
which requires hundreds or thousands of items for manufacturing different products.
Such items include the stock of raw materials, goods in process, finished goods and other
consumable stores. The management of inventory is important because a substantial part
of working capital remains invested in inventory and different types of costs are
associated with it. Situations like under stocking, overstocking, purchasing in small
quantities or large quantities etc. always prove to be very costly. From the view point of
scientific storage of different items also inventory management is important.
Types of inventory
Inventories can be classified into three categories:
(1) Raw Materials: These are the goods which have not been so far committed to
production in a manufacturing business firm. They include unprocessed basic raw
materials, finished components or spare parts or intermediate goods to be used as raw
materials.
(2) Working in process: This refers to those materials which have been committed to
processes but not yet been completed.
(3) Finished goods: These are processed and completed products a waiting for sale.
They are the final product or output of the production process in a manufacturing
firm. They are merchandise inventory for wholesalers and retailers.
In the with LUCKY SAUCE Company, the Production manager & Finance manger both
are take decision about inventory separately.
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3. RATIO ANALYSIS
1. Gross profit ratio :-
This ratio establishes the relationship between gross profit on sales and net sales i terms
of percentage indicating the percentage of gross profit earned on sales.
Gross Profit
Gross Profit Ratio = ------------------- × 100
Net Sales
Years Gross profit
(a)
Net sales
(b)
Ratio (%)
(a/b)
(%) of
changes
07-08 3908.31 46044.16 8.49 -
08-09 3451.06 40347.01 8.55 0.70 %
09-10 4481.98 44459.79 10.08 17.89 %
10-11 6948.76 45167.17 15.38 52.57 %
11-12 8376.6. 52431.08 15.98 3.90 %
[Rs in lacks]
Interpretation :
The gross profit of the company is incresing day by day. It is increase to 15.98 % in
2011-12 as comapre to 2010-11 i.e 15.38 %.
0 0.7
17.89
52.57
3.9
0
10
20
30
40
50
60
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
(%) of changes
(%) of changes
10
2. Net profit ratio :-
This ratio establishes the relationship between the amount of net profit or net income and
the amount of sales revenue.
Net Profit
Net Profit Ratio = ------------------- × 100
Net Sales
Years Net profit
(a)
Net sales
(b)
Ratio (%)
(a/b)
(%) of
changes
07-08 837.40 46044.16 1.82 -
08-09 593.50 40347.01 1.47 19.23 %
09-10 2061.84 44459.79 4.63 214.96 %
10-11 2926.51 45167.17 6.48 39.95 %
11-12 3858.95 52431.08 7.36 13.58 %
[Rs in lacks]
Interpretation :
The net profit of the company is incresing day by day. In 2008-09 it was decrease to
1.47% but company take corrective action so that it continuously increase from that time.
19.23
214.96
39.9513.58
0
50
100
150
200
250
2007-2008 2008-2009 2009-2010 2010-2011
(%) of changes
(%) of changes
11
3. Operating ratio :-
This ratio takes into account the aggrerate of manufacturing cost of goods sold and other
operating expenses on the one hand, and the net sales revenue on the other.
cost of good sold + Operating Expenses
Operating Ratio = ---------------------------------------------------- × 100
sales revenue
Years C O G S + O E
(a)
Sales revenue
(b)
Ratio (%)
(a/b)
(%) of
changes
07-08 45457.99 46044.16 90.49 -
08-09 40386.36 40347.01 83.57 -7.64 %
09-10 42945.68 44459.79 82.43 -1.36 %
10-11 41528.41 45167.17 76.11 -7.66 %
11-12 48091.61 52431.08 91.72 20.50 %
[Rs in lacks]
Interpretation:
Sales revenue is increasing in 2011-12, lower operating ratio shows the higher operating
profit and vice versa. For manufacturing concerned an operating ratio between 75% &
80% is expected.
0
-7.64
-1.36
-7.66
20.5
-10
0
10
20
30
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
(%) of changes
(%) of changes
12
4 Stock turnover ratio :-
Inventory turnover ratio which is also called stock turnover ratio or stock velocity
establishes the relationship between the cost of goods sold during a given period and the
average of the costs of openaing and closing stocks.
Cost of goods sold
Stock Turnover Ratio = --------------------------
average inventory
[Rs in lacks]
Years Cost of Goods Sold
(a)
Avg. Inventory
(b)
Ratio
(a/b)
(%) of
changes
07-08 42387.08 7186.88 5.90 -
08-09 37528.80 6546.48 5.73 -2.88 %
09-10 40525.54 5530.16 7.33 27.92 %
10-11 37506.16 5653.43 6.63 -9.54 %
11-12 43573.96 5500.88 7.92 19.45 %
Interpretation:
A higher inventory turnover ratio is better than a lower inventory turnover ratio. A higher
ratio implies good inventory management and an indication of under investment lower
inventory turnover ratio indication of excessive inventory and over investment in invento
0
-2.88
27.92
-9.54
19.45
-20
-10
0
10
20
30
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
(%) of changes
(%) of change
13
3.2 BALANCE SHEET RATIO
1. Current ratio :-
The ability of a company to meet its short-term commitment is normally assessed by
comparing current assets with current liabilities. The current ratio establishes the
relationship between the current assets and the current liabilities. The ideal ratio is 2:1.
Current assets
Current Ratio = --------------------------
Current liabilities
Years Current Assets
(a)
Current Liabilities
(b)
Ratio
(a/b)
(%) of
Changes
07-08 14916.44 3630.93 4.11 -
08-09 13495.96 4008.77 3.37 -18 %
09-10 10101.54 3178.01 3.18 -5.63 %
10-11 13759.64 4093.50 3.37 5.97 %
11-12 9921.08 5721.94 1.73 -48.66 %
[Rs in lacks]
Interpretation :
In last five years the current ratio is between 3.18 to 4.11 which was very good for the
company. But in the last year it was 3.37 while it was highest in the 2007-08 i.e. 4.11 so
compnay should take corrective action for increase the ratio.
0
-18
-5.63
5.97
-48.66-60
-40
-20
0
20
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
(%) of changes
(%) of change
14
2. Liquidity ratio :-
A liquidity ratio is also known as acid-test ratio, therefore, used as a complementary ratio
to the current ratio. The ratio is concerned with the establishment of relaionship between
the liquid assets and the liquid liabilities. The ideal ratio is 1:1
Liquidity Assets
Liquidity Ratio = ------------------------
Curent Liabilities
Years Liquidity Ratio
(a)
Current Liabilities
(b)
Ratio
(a/b)
(%) of
changes
07-08 7455.46 3630.93 2.05 -
08-09 7863.99 4008.77 1.96 -4.39 %
09-10 4673.20 3178.01 1.47 -25 %
10-11 7881.12 4093.50 1.93 31.29 %
11-12 4797.84 5721.94 0.84 -56.47 %
[Rs in lacks]
Interpretation :
Liquidity ratio from 2007-08 to 2010-11 it is satisfied because it is greater than 1:1 but
last year i.e. 2011-12 there is 0.84 it was less than satisfactory level. So company should
take corrective action for the improve this ratio.
0
-4.39
-25
31.29
-56.47-80
-60
-40
-20
0
20
40
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
(%) of changes
(%) of changes
15
3. Debt equity ratio :-
This ratio is calculated to measure the relative proportion of outsiders‟s funds invested in
the company. This ratio determined to ascertain the soundness of long term financial
policies of that company and is also known as external-internal equity ratio.
Long term debt
Debt Equity Ratio = ----------------------------
Shareholder fund
Years Long term debt
(a)
Shareholder fund
(b)
Ratio
(a/b)
(%) of
changes
07-08 5238.49 35284.66 0.15 -
08-09 7417.12 32682.88 0.23 53.33 %
09-10 8304.24 34053.66 0.24 4.34 %
10-11 8846.48 30482.55 0.29 20.83 %
11-12 9645.26 30908.01 0.31 6.89 %
[Rs in lacks]
Interpretation :
In last five years the debt equity ratio is between 0.15 to 0.31 which shows that the claim
of creditors are less than that of owners but the claims of creditors is increases in last five
years.
0
53.33
4.34
20.83
6.89
0
10
20
30
40
50
60
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
(%) of changes
(%) of changes
16
4. Propritory ratio :-
This ratio shows the relationship between shareholder‟s fund and total assets. The result
clearly shows the share of owners in the total assets of the company. When the
proprietary ratio is substracted from one, the resultant figure represents the share of
outsider‟s claim on the assets of the company.
shareholder fund
Propritory Ratio = --------------------------
total assets
Years Shareholder fund
(a)
Total assets
(b)
Ratio
(a/b)
(%) of
changes
07-08 35284.66 50676.34 0.70 -
08-09 32682.88 46590.91 0.70 0 %
09-10 34053.66 46828.82 0.73 4.28 %
10-11 30482.55 52184.81 0.58 -20.54 %
11-12 30908.01 58004.16 0.53 -8.62 %
[Rs in lacks]
Interpretation :
In last five years the propritory ratio is between 0.58 to 0.73. It was almost stable during
last four years but in 2011-12 it was 0..53 which shows a greater risk to creditors.
0 0
4.28
-20.54
-8.62
-25
-20
-15
-10
-5
0
5
10
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
(%) of changes
(%) of changes
17
5. Capital gearing ratio :-
The term capital gearing is used to describe the relationship between fixed interest
bearing securities, and the equity shareholder‟s funds. Therefore this ratio establishes a
meaningful relationship between the funds bearing fixed interest on the one hand, and the
equity shareholder‟s funds on the other.
Fixed interest bearing fund
Capital Gearing Ratio = ---------------------------------------
equity share capital
Years Fixed int. Fund
(a)
Equity capital
(b)
Ratio
(a/b)
(%) of
changes
07-08 5238.49 3829.06 1.37 -
08-09 7417.12 3829.06 1.94 41.60 %
09-10 8304.24 3829.06 2.17 11.85 %
10-11 8846.48 3829.06 2.31 6.45 %
11-12 9645.26 3829.06 2.52 9.09 %
[Rs in lacks]
Interpretation :
The capital gearing ratio is between 1.37 to 2.52 during last five years. In 2011-12 it was
2.52, the capital gearing is said to be high, this position is under capitalisation.
0
41.6
11.856.45 9.09
0
20
40
60
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
(%) of changes
(%) of changes
18
3.3 INTER-STATEMENT RATIO
1 Return on investment ratio :-
This ratio is an indicator of the earnign capicity of the capital employed in the business.
This ratio reflects the overall efficiency with which capital is used.
PATI
Return on Investment Ratio = --------------------------
capital employed
Years Profit after tax &
interest
(a)
Capital
employed
(b)
Ratio
(a/b)
(%) of
changes
07-08 837.40 33771.26 2.48 -
08-09 593.50 31193.36 1.90 -23.38 %
09-10 2061.84 31445.76 6.56 245.26 %
10-11 2926.51 38007.83 7.70 17.37 %
11-12 3858.95 41543.08 9.29 20.64 %
[Rs in lacks]
Interpretation :
The return on investment is higher in last year i.e 7.70 times which is good sign for the
company but it was very low in 2008-09 which is increase in couple of years.
0
-23.38
245.26
17.37 20.64
-100
0
100
200
300
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
(%) of changes
(%) of changes
19
2 Return on propritory fund ratio :-
This is an important ratio as it shows the amount of profit available to the shareholders
which determines the rate of dividend.
EAT
Return on Propritory Fund Ratio = ------------------------ × 100
shareholder fund
[Rs in lacks]
Years Earnings after tax
(a)
Shareholder fund
(b)
Ratio
(a/b)x100
(%) of
Changes
07-08 837.40 35284.66 2.37 -
08-09 593.50 32682.88 1.82 -23.20 %
09-10 2061.84 34053.66 6.05 232.41 %
10-11 2926.51 30482.55 9.60 58.67 %
11-12 3858.95 30908.01 12.48 30 %
Interpretation :
The return on propritory fund ratio of last five years shows that sharholders gate 12.48
profit which is very good for company‟s image. But it was very low in 2008-09 i.e. 1.82.
0
-23.20%
232.41%
58.67%
30%
-0.5
0
0.5
1
1.5
2
2.5
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
(%) of changes
(%) of changes
20
3 Net profit to total assets ratio :-
This ratio establishes the relationship between the net profit and otal assets. This ratio
tries to findout how efficient the company was in utilizing the funds to generate or earn
profit.
Net profit
Net Profit to Total Assets Ratio = ------------------
Total assets
Years Net profit
(a)
Total assets
(b)
Ratio
(a/b)
(%) of
changes
07-08 837.40 50676.34 0.02 -
08-09 593.50 46590.91 0.01 -50 %
09-10 2061.84 46828.82 0.04 300 %
10-11 2926.51 52184.81 0.06 50 %
11-12 3858.95 58004.16 0.07 16.66 %
[Rs in lacks]
0
-50
300
5016.66
-100
-50
0
50
100
150
200
250
300
350
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
(%) of changes
(%) of changes
21
4 Creditors turnover ratio :-
This ratio, also known as payable turnover ratio establishes the relationship between the
net credit purchases and the average trade creditors.
Creditors
Creditors Turnover Ratio = ----------------------------- × 365
net credit purchase
Years Creditors
(a)
Credit purchase
(b)
Ratio
(a/b)
(%) of
changes
07-08 2322.75 26805.11 31.63 -
08-09 2631.58 19599.14 13.43 -57.54 %
09-10 1696.07 24158.08 7.02 -47.72 %
10-11 2575.36 23612.85 10.91 55.41 %
11-12 2473.88 29673.28 8.33 -23.64 %
[Rs in lacks]
Interpretation :
Creditor turnover ratio was 8.33 times in 2011-12 which shows that the disbursment of
money is faster in the company. It was very slow in 2007-2008 when ratio was 31.63
times.
0
-57.54-47.72
55.41
-23.64
-80
-60
-40
-20
0
20
40
60
80
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
(%) of changes
(%) of changes
22
5 Debtors turnover ratio :-
Debtor turnover ratio, also known as receivables turnover ratio or debtors velocity
establishes the relationship between the net credit sales of the year and the average
receivable.
Debtors
Debtors Turnover Ratio = ----------------------- × 365
Net credit sales
[Rs in lacks]
Years Debtors
(a)
Credit sales
(b)
Ratio
(a/b)x365
(%) of
Changes
07-08 6673.30 46044.16 52.90 -
08-09 6532.28 40347.01 59.09 11.70
09-10 3120.00 44459.79 25.61 -56.65
10-11 3423.73 45167.17 27.67 8.04
11-12 3797.57 52431.08 26.43 -4.48
Interpretation :
Debtor turnover ratio was 26.43 times in 2011-12 which shows speady collection of
money. But it was lower in 2009-10 i.e. 25.6. so company should take corrective
measures
011.7
-56.65
8.04
-4.48
-80
-60
-40
-20
0
20
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
(%) of changes
(%) of changes
23
"Management is the development of people and not the direction of the things.....
Management and Personnel Administration are one and the same. They should never be
separated"
[Lawrwnce A Appley]
Manpower is the most important resource of any organization. Broadly speaking
Personnel Management is a link between top management and workers or it is like a
bridge between employers and employees and it is consider with human relationship
within the organization
personnel manager has to do the calculation of how many people will require in the firm
and at which post other is acquiring right place, right place & in right number. It also
analyzes each job to determine the nature of work, the qualification necessary; the
amount of supervision required, etc.
Human Resource Management is that part of management which is concerned with
people at work & their relationship within the organization. The term Human Resource
Management refers to the management of personnel in the organization of any company
to achieve the predetermined goals. The duty of the personnel manager is to look after the
personnel department and various functions of the personnel like recruitment, selection,
promotion, transfer, etc.
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1. HR VISION OF THE COMPANY
To be a leader and take advantage of our leadership position in all food product
categories
We are looking forward to steady well defined growth with our focus on consultancy and
business services for our customer.
Making lives of people involved more meaningful, interesting, exciting and Comfortable
by helping them meet their self actualization needs and other social needs.
To achieve collection spirit for to cover competence environment.
To upgrade “quality of work life of employees”
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2. HR MISSION
To ensure satisfaction to the workers so that they are freely ready to work.
To attain maximum individual development.
To improve efficiency of the human resources.
To cover all over Gujarat boundaries.
To cover maximum market of Gujarat
To achieve collection spirit for to cover competence environment.
To upgrade “Quality of work life of employees”
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3. HR MANAGEMENT ACTIVITIES
Organization planning
Human Resource planning
i. Job Analysis
ii. Job Description
iii. Job Specification
Acquisition of human resource
Managing Performance
Motivational activities
Training & Development Activities
Compensation and Benefits
Health and Safety Provision
Organization Development
Encouraging participation in management
Grievance procedure etc.
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4. HUMAN RESOURCE PLANNING – PROCESS
"The process of determining manpower requirement and the means for meting those
requirements in order to carry out the integrated plan of the organization."
[Terry Coleman]
“Human resource planning is the process of forecasting a firm‟s future demand for and
supply of the right type of people in the right time”
The ongoing process of systematic planning to achieve optimum use of an organization's
most valuable asset - its human resources. The objective of human resource (HR)
planning is to ensure the best fit between employees and jobs, while avoiding manpower
shortages or surpluses. The three key elements of the HR planning process are forecasting
labor demand, analyzing present labor supply, and balancing projected labor demand and
supply.
The HR plan needs to be flexible enough to meet short-term staffing challenges, while
adapting to changing conditions in the business and environment over the longer term.
Human resource planning is also a continuous process.
The key areas of HRM Process are
1) Human resource planning
2) Attraction – also called as recruitment
3) Selection
4) Direction
5) Training and development
6) Performance appraisal
7) Promote, demote or transfer regarding to performances
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HR PROCESS CHART
[Human resource planning chart]
A. FORECASTING THE FUTURE DEMAND FOR HUMAN RESOURCE:
The first step of human resource planning in Evershine Appliances is to forecast the
future demand of employees. The existing job design and analysis may thoroughly be
reviewed keeping in view the future capabilities, knowledge and skills of present
employees. One of the important aspects of demand forecasting is the forecasting of the
quality of human resource in skills, knowledge value, capabilities etc…in addition to
quantity of human resource.
B. ESTIMATING THE HUMAN RESOURCE SUPPLY:
The first step of forecasting the future supply of human resources is to obtain the data and
information about the present human resource inventory.
EXISTING INVENTORY: The data relating to present human resource
inventory in terms of human resources components, number, designation-wise
and department-wise should be obtained. Principal dimensions of human resource
inventory are:
Measuring Performan
ce
Developing Strategy
Plans
Comparing the
forcasting with the
HR supply
Estimating the HR supply
Forcasting the future
demand for HR
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1) Head counts regarding total, department-wise, sex-wise, designation-
wise, skill-wise, pay roll-wise etc.
2) Job family inventory includes number and category of employees of
each job family, i.e., all jobs related to the same category like clerks,
cashiers etc., each sub-job family, i.e., all jobs having common job
characteristics like production engineer and maintenance engineer
etc.
3) Age inventory includes age-wise number and category of employees.
It indicates age-wise imbalance in present inventory which can be
correlated in future selections and promotions.
C. COMPARING THE FORECAST WITH THE HUMAN RESOURCE
SUPPLY:
After forecasting the future demand and the supply of human resource, the comparison of
both the data is being done.
D. DEVELOPING STRATEGY PLANS:
The next step is to developing the strategy plans according the result which is found by
the comparison of both the data of human resource demand and supply. If there is deficit
in supply of human resource, company found the resource from which they can fill the
demand. They can also fill the jobs by the redeployed the employees in other
jobs/departments, where the surplus of employees is estimated. And if there is surplus of
human resource in company then the estimated demand, the company has to plan for
redeployment, redundancy of employees etc.
E. MEASURING PERFORMANCE:
After deciding the strategy plans, company measuring the performance of employees and
according to that information applies the plans.
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5. RECRUITMENT
Once the manpower required has been determined, recruitment is the next logical step in
staffing process. In general Recruitment means to invite prospective candidates for
joining your organization.
“Recruitment is the process of searching for perspective employees and stimulating them
to apply for jobs in the organization.”
[According to Edward Flippo]
Recruitment process of the company:-
In Lucky sauce, Recruitment is done in following ways:
1) Internal Source
Internal sources refer to the employees within the organization whenever vacancy arises
somebody from within the organization may be looked for by giving promotion.
Present employees
Former employees
Friends and relatives of present employees
2) External Sources
External sources means recruiting the personnel from outside the organization for these
they give Advertisement in newspaper, periodicals by giving detail about the job
requirement, salary, perquisites, duties and responsibilities, etc.
Educational institutes
Employment exchanges
Labor unions
Casual applicants
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6. SELECTION
“Selection is the process of choosing the individuals who possess the necessary
skills, abilities and personality to successfully fill specific jobs in the organization.”
Selection process of the company:-
1) Primary Interview
At this stage, to short out the unqualified and unskilled candidate because of lack of
certain requirement in education, age, experience, knowledge etc. It is important because
unqualified are list out. So that company can save time and expenditure behind them.
2) Written Test
They also take written test, which includes logical reasoning, general English, numerical
questions, general knowledge, aptitude test i.e. aptitude is for checking whether the
candidate is capable to work in the field or not and also to check his depth in the relevant
field. Communication skill and presentation skill are checked for that essay writing is
also included in this test.
Prilimary Interview
Wrriten Test
Personal Interview
Final Approval
Placement
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3) Personal Interview
After going through written test, in lucky sauce, they take their aptitude and attitude test
on the basis of their hobbies and other social interest. They give more importance to these
two points with other relevant questions of relevant fields.
4) Final Approval
When all tests, interviews, etc. are over a summary report is prepared and is for tended to
the authority with suggestions for his approval or advice.
5) Placement
The selected candidate is placed on job for which he/she is selected.
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7. TRAINING AND DEVELOPMENT
“Training is a short term process utilizing a systematic & organized procedure by which
non managerial personnel learn technical knowledge & skilled.”
“Training is a process of increasing the knowledge and skill for doing a particular job.” It
is organization by which people learn knowledge and skill for definite purpose. The basic
purpose of training is to fill the gap between job requirement and present knowledge level
of employee.
In the LUCKY SAUCE Company, Training for the newly recruited and selected
employee depends on the amount of experience that the employee is having previously in
other organization. Generally the employees are given 15 to 20 days training in which
they are given the information regarding the company background, different strategies of
the company and then the employee is given the information regarding the sales
department.
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A. INDUCTION TRAINING
Induction training is the process of familiarizing the newly appointed employee about the
job they have to perform, colleagues with whom they have to work, the superiors from
whom they have to receive instructions and also about the history of the company its
vision and mission, management philosophy and practice and rules-regulation and
policies of the company.
“Induction is the process of receiving and welcoming an employee when he first joins the
company and giving him the basic information he needs to settle down quickly and
happily and start work.”
According to Armstrong
In LUCKY SAUCE when any new employee is selected then first he is taken for a tour
of the manufacturing plant. There he is explained various processes and he meet with
different employees and finally the head inducts the new employee in his place.
F. EXECUTIVE TRAINING
Managers have to make decision. Some decision are routine and simple but some
decision have fore reaching implication affecting the fate of the company, there for all the
department manager are expected to make natured decision company expert to train
executive expert teaches executive how to set goal and how to achieve it.
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8. PROMOTION
“Promotion means the advancement of an employee to a better job -betters in terms of
greater responsibilities more prestige or status, greater skill and especially, increased rate
of pay or salary.”
[According to Pigors and Myers]
Due to Promotion, he feels a sense of respect for the employer for appreciation of his
work and his morale and enthusiasm also increases.
As LUCKY SAUCE is a small scale industry and as such there are not much more fficer,
deputy manager, personnel officer, asst. personnel officer etc. that they can give
promotion. Promotion is not given in Lucky Canning co. because all the workers have to
do same type of work there are no prospect for higher post and thus they are not having
promotional policy.
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9. TRANSFER
Transfer means shifting of the employee from on job to another any change in status or
salary.
“Transfer as a change in job where the new job is substantially equal to the old one in
term of pay, status and responsibilities.”
[According to Edwin B. Flippo]
As LUCKY SAUCE has no other branch so they cannot transfer the employee. But can
terminate, it means can restrict out from the company if he does not follows the rules and
does not work will as per the organization needs and thus are not having transfer policy.
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10. PERFORMANCE APPRAISAL
“Performance Appraisal is the process of obtaining, analyzing and recording
information about the relative worth of an employee. Performance Appraisal and Merit
rating are used synonymously.”
“Performance Appraisal is the systematic, periodic and an impartial rating of an
employee‟s excellence in matters pertaining to his/her present job and potential for a
better job.” It is the process of obtaining, analyzing and recording information about the
relative worth of an employee.
[According to Flippo]
Advantages of Performance Appraisal of company‟s point of view are as follows.
To effect promotion based on components based on competence and
performance.
To confirm the services of probationary employee upon the completion of the
probation period satisfactory.
To check training and development needs of employee. To decide upon the
pay-raise where regular pay scale have not fixed.
To decide upon the pay-raise where regular pay scale have not fixed.
To let the employee know where they stand as far as their performance is
concerned and to help them with constrictive criticism and guidance for
the purpose of their development.
To improve communication
Performance Appraisal can used to determine whether human resource program
such as selection, training and transfers have been effective or not.
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Essential of Performance Appraisal system in the Lucky Canning co.. are below here: -
Clear objectives.
Standardization training
Job relatedness
Feedback and participation
Individual differences
Review and appeal
In this way Performance Appraisal system is very useful to company.
Process of the Performance Appraisal in the Lucky Canning co..
There are five types of the Recruitment process uses in Lucky Canning co.. which are
below here;
A. ESTABLISHING PERFORMANCE STANDARDS :-
The first step in the process of performance appraisal is the setting up of the standards
which will be used to as the base to compare the actual performance of the employees.
This step requires setting the criteria to judge the performance of the employees as
successful or unsuccessful and the degrees of their contribution to the organizational
39
goals and objectives. The standards set should be clear, easily understandable and in
measurable terms. In case the performance of the employee cannot be measured, great
care should be taken to describe the standard.
B. COMMUNICATING THE STANDARDS :-
Once set, it is the responsibility of the management to communicate the standards to all
the employees of the organization. The employees should be informed and the standards
should be clearly explained to them. This will help them to understand their roles and to
know what exactly is expected from them. The standards should also be communicated to
the appraisers or the evaluators and if required, the standards can also be modified at this
stage itself according to the relevant feedback from the employees or the evaluators.
C. MEASURING THE ACTUAL PERFORMANCE :-
The most difficult part of the Performance appraisal process is measuring the actual
performance of the employees that is the work done by the employees during the
specified period of time. It is a continuous process which involves monitoring the
performance throughout the year. This stage requires the careful selection of the
appropriate techniques of measurement, taking care that personal bias does not affect the
outcome of the process and providing assistance rather than interfering in an employees
work.
D. COMPARING THE ACTUAL WITH THE DESIRED PERFORMANCE :-
The actual performance is compared with the desired or the standard performance. The
comparison tells the deviations in the performance of the employees from the standards
set. The result can show the actual performance being more than the desired performance
or, the actual performance being less than the desired performance depicting a negative
deviation in the organizational performance. It includes recalling, evaluating and analysis
of data related to the employee‟s performance.
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E. DISCUSSING RESULTS :-
The result of the appraisal is communicated and discussed with the employees on one-to-
one basis. The focus of this discussion is on communication and listening. The results,
the problems and the possible solutions are discussed with the aim of problem solving
and reaching consensus. The feedback should be given with a positive attitude as this can
have an effect on the employees‟ future performance. The purpose of the meeting should
be to solve the problems faced and motivate the employees to perform better.
F. DECISION MAKING
The last step of the process is to take decisions which can be taken either to improve the
performance of the employees, take the required corrective actions, or the related HR
decisions like rewards, promotions, demotions, transfers etc.
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11. WAGES, SALARY & PAYROLL SYSTEM OF COMPANY
Wages may be defines as the price paid for the use of labor. Thus, wages are the
compensation for the services rendered by the employees to the organization, wages
include salaries but there is a slight difference. Wages are directly related to production
only while salary is the compensation for services rendered by the persons whose output
is difficult to measure. The chief executive officer is responsible for developing the wage
and salary policies and procedures to administer the wages and salaries.
Any company pays wages and salaries at different rates to different workers. Usually the
workers are paid on monthly basis but some workers are paid on contract basis. Other
than salaries employees are given allowances like PF, Bonus, etc.
In LUCKY SAUCE, there is rise in salary every year. Based on different category of
employee the wages is given from 5000 to 15000 to all workers on monthly basis and
every year bonus is given on Diwali time.
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12. INCENTIVE SYSTEM
BONUS
A Lucky Canning co. also gives bonus to their employees as per the Bonus Act 1965 by
government of India. Minimum 8.33 % and maximum 20 % of wages and salary are
allowing as bonus in the organization. A Lucky Canning co. gives 10 % of wages and
salary as bonus to their employees at every Diwali.
HOLIDAYS
Lucky Canning co. provides its workers 30-35 Holidays in the year. If the employees are
not using it. It gives the benefit to employees in cash.
MEDICAL EXPENSE
Company has done medical expenditure for its worker. When worker are injured during
work time, company provide medical facility.
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13. WELFARE ACTIVITIES
According to the Arthur James Todd, “Employee Welfare means anything done for the
comfort and improvement, intellectual or social of the employees over and above the
wages paid, which is not a necessity of the industry.”
According to the Oxford dictionary employee welfare or labors welfare means “the
efforts to make life worth living for workmen.”
Welfare Activities
Welfare activities mean those activities which are doing always in favor of employees. It
means the special extra facilities given to employees from company.
Lucky Canning co.. Company Provides such kind of facilities to employees which are as
follow.
1. Provide good condition of equipment and also provide better environment for
work
2. Company provides individual changing room, store room, rest room etc.
a. First aid box provided to all department.
b. Safety devices like helmet, glows, safety shoot are provided by the company
in production area units.
There are two type of welfare activates
1. Intramural
2. Extramural
1. Intramural: - These Services are provided within the establishment. These
include washing & bathing facilities, rest room, uniform, medical
aid, recreation facilities.
2. Extramural: - These services are provided outside the establishment. These
include housing accommodation, transport, maturity benefits,
sport‟s field, holiday home, etc.
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“Production is the process of converting the raw materials and/or the order inputs into the
products for the further production or finishes goods or service so that the utility of the
input is created or enhance (by change in physical form or chemical property or
mechanical property) and the need of consumer are satisfied.”
Example:- consumer goods, industrial good & services of transport, medical treatment,
education, banking insurance, post & telegram.
PRODUCTION MANAGEMENT:-
“Production management means creating & maintaining an environment in which
individual working together in groups willingly contributes their best to produce the
specified good or services by optimum utilization of raw material and other inputs so as
to timely satisfy the needs of the customer.”
1. RAW MATERIAL PURCHASE POLICY
There is no any special purchasing policy of a company for purchasing raw material. It
mainly pays the attention on quality of a raw material for products. They purchase raw
material from “sardar market” with their regular terms and conditions. It is the only
suppliers from where firm purchases raw material from so many years. It is the official
and reliable market on whom management trust for raw material.
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2. MATERIAL HANDLING EQUIPMENT
A. WASHER MACHINE
Basic Information:
Model NO.: CXJ-2
Additional Information:
Trademark: HUANYU
Standard: ISO
Origin: China
Product Description
For washing tomato and preliminary selection
Capacity: 2 tone/hour
Power: 1.67kw
Overall dimensions: 2350*910*1600mm
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B. STEAM JACKETED KETTLE
Basic Information:
Model NO.: ss304
Additional Information:
Trademark: YIDA
Standard: ISO
Origin: China
Product Description
Stainless steel jacketed kettle is used for frying, boiling and concentration. And we could
also add the mixing device to the machine according to the customer‟s requirements.
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C. CRUSHER MACHINE
Basic Information:
Material: Farm Product
Type: Stir Mixing
Additional Information:
Trademark: jiadi
Origin: Shanghai China
Product Description
The structure is hammer slice type so the crusher cannot damage the seed and guarantee
the color and flavor. Compared with abroad centrifugal crusher, this machine can get
smaller particle size of tomato peel which increases the lycopene of tomato products.
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Closed form hopper type designing to avoid the splashing of the material which can make
the material crush adequately.
Model Capacity
(kg)
Power
(kw)
Diminution Material
JD-PS-15 15000 7.5 1600×850
×2450
304/Q235
D. GLASS BOTTLE LABELING MACHINE
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Basic Information:
Model NO.: HY-150
Additional Information:
Trademark: Hunayu
Standard: 3000*1700*1600mm Packing Size
Origin: China
Product Description
This machine is suitable for labeling all kind of regular or irregular containers. It can
label double single label, which is high speed and high precision.
1) Double sides labeling machine.
2) Servo motor
3) PLC control system
4) High precision
5) Easy to operate and top quality
Feature:
1) It can label one or two labels, the user can choose it freely.
2) It can work with printer or code machine.
3) It can separately or works connecting with conveyor.
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3. PROCESS OF PRODUCTION
Since the company is small they are going to Manufacture on the small scale region only.
There are certain steps which show there way of making:-
Step:-1 selection of raw material
Ripe tomatoes are taken. Green and unripe tomatoes are discarded as it would discolor
the final product. The tomatoes are first washed. Here rinsing of tomatoes is not enough
because mold filaments and other micro-organisms found in their cracks and wrinkle
folds and stem cavities are not easily dislodged.
step:1• selection of raw material
step: 2• washing of raw material
step: 3• boiling and juice extraction
step: 4• Addition of preservatives
step: 5• cooking and packing
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Step:-2 washing of raw material
The washer is first receives the tomatoes in a tank, holding them for a sufficient length of
time to soak and to loosen the dirt, and then submits all parts to a thorough spray under
strong pressure.
Step 3:- boiling and juice extraction
After washing, the tomatoes are trimmed, cut into small pieces before boiling. The
tomato pieces are boiled in their own juice in steam jacketed kettles for 3 to 5 minutes to
facilitate pulping. The juice is extracted by passing the cooked tomatoes through a pulper.
The juice is normally contains solids at 5.66% and a specific gravity of 1.024
Step:-4 Addition of preservatives
The ketchup is prepared by concentrating the juice obtained from the pulper. Spices, salt,
sugar, vinegar, onions, garlic, etc are to be added to the extent, it contains not less than
12% tomato solids and 28% total solids. The following recipe is used to manufacture
ketchup.
The spices are loosely tied in a muslin bag and is placed in the juice and boiled till The
desired consistency is obtained Add sugar and salt to the vinegar and stir. Add the mix to
the ketchup and stir thoroughly to form a homogenous
Step:-5 cooking and packing
When the ketchup has been cooked, it is passed through a sieve to remove any fibrous
material or external contaminants. The ketchup should be bottled at 190 degrees
Fahrenheit to prevent darkening of its color and loss of vitamin contents during Storage.
On cooling, the ketchup shrinks in volume, producing thereby a high degree Of vacuum
in the bottle. Sometimes a black ring is formed on the surface of the Ketchup bottle. This
is known as "black neck". It is because of the oxidation of the Iron compounds which
enter into the ketchup from the boiling equipment and from the metal of the cap through
the action of acetic acid.
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4. QUALITY CONTROL
Quality is measure of totality of attributes of a product or service which impart it
functional or aesthetic value so as to satisfy the needs of end customers for a given price
paid by them.
Quality control is the system of policies, procedures and guidelines which establish and
maintain the specified standards of quality.
LUCKY SAUCE PVT LTD also controls the equality of its ketchup. The main
objectives behind controlling quality of its ketchup are as follows:
To satisfy the functional or aesthetic needs of end users of goods or services.
To clear define top management‟s commitments towards quality and production
To design the product which has features as required to satisfy the needs.
To make supervision more effective.
To involve and train employees in quality control activities.
To balance the costs of inspection of quality and benefit of quality control
To balance between customer requirement and organization‟s capability to meet
them.
Quality policy of Lucky Canning co..
To satisfy customer need and expectation.
Striving for continuous improvements through implementation of ISO
9001:2000.
Establishing, Communicating and reviewing measurable quality objections.
Developing and improving employee skills through effective training.
Maintaining safe working practices.
In Lucky Canning co.. the system of checking the quality of goods when it is in
progress, the exports keep on their eye on the every activity of the machine. They check
the every activity of machine. They have the computerized system in which they can
easily know in which machine the problem is occurs. And then they solved it.
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5. MAINTENANCE POLICY
Maintenance is very important and necessary. In some company they use corrective
maintenance or in some company they do regular maintenance.
In LUCKY SAUCE PVT LTD, they use the regular maintenance system. They do
maintenance at every week. The manager is checks all the parts of the machinery at every
week. And in between if any problem occurs they suddenly try to solve it.
6. STORAGE DEPARTMENT
It is an extremely important cost that ever appears in accounting record. Components of
this cost may be observed in several ways e.g. , in a profit making concern, sales lost as a
result of stock out, or, there may be additional costs resulting from back ordering.
Another component may be loss of goodwill due to delay in supply of finished goods.
Sometimes, in production system, a part shortage may cause idle labor on a production
line of subsequent incremental labor cost to perform operation out of sequence, usually at
a higher than normal cost. Such type of costs may also be considered as a shortage cost.
Industrial or institutional storage of material is also systematic & well documented.
Because of this reason following expenses are incurred in storage of material.
To receive the pack goods from the production department and store in warehouse.
To receive the delivery order from the marketing department.
Arrange the goods as per the order.
Make the list of the boxes that will be dispatched.
To make invoice.
To give order to load the goods in the truck.
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7. WASTAGE CONTROL
Waste management is the collection, transport, processing or disposal, managing and
monitoring of waste materials. The term usually relates to materials produced by human
activity, and the process is generally undertaken to reduce their effect on health, the
environment or aesthetics. Waste management is a distinct practice from resource
recovery which focuses on delaying the rate of consumption of natural resources. All
wastes materials, whether they are solid, liquid, gaseous or radioactive fall within the
remit of waste management.
This is classified into two parts:
1. Avoidable waste.
2. Unavoidable waste.
Avoidable wastes play a very important role in production management. A firm who
can gets control on it‟s wastage than there is increase in its profit.
Unavoidable waste, in these types of waste there is no control of production
management on it. The firm must has to face this waste.
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A market is one of many varieties of systems, institutions, procedures, social relations
and infrastructures whereby parties engage in exchange. While parties may exchange
goods and services by barter, most markets rely on sellers offering their goods or services
(including labor) in exchange for money from buyers. It can be said that a market is the
process by which the prices of goods and services are established.
Marketing management is a process of planning and executing the conception, pricing,
promotion and distribution of adequate machine and it has a very strong manufacturing
infrastructure.
For a market to be competitive there must be more than a single buyer or seller. It has
been suggested that two people may trade, but it takes at least three persons to have a
market, so that there is competition on at least one of its two sides. However, competitive
markets rely on much larger numbers of both buyers and sellers.
1. MARKETING ENVIRONMENT
A. INTRODUCTION OF MARKETING
We use a large variety of goods and services in our daily life. These include items like,
toothpaste, toothbrush, soap, oil, clothes, food items, telephone, electricity and many
more. How do all these goods and services reach our home? Obviously the business
houses that produce the goods and services have to ensure that these are to be sold, and so
they have to make the consumers/users aware of their products and place them at points
convenient to the consumers. This involves a number of activities such as product
planning, pricing, promotion, use of middlemen (wholesalers, retailer etc.) for sale,
warehousing, transportation etc. All these activities taken together are termed as
Marketing.
Management definition
It is the process of planning and executing the conception, pricing, promotion and
distribution of ideas, goods and services to create exchanges that satisfy individual and
organizational goals.
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Social definition
A societal process by which individuals and groups obtain what they need and want
through creating, offering and freely exchanging products and services of value with
others
We know that the businessman produces goods and services for our use. These are not
Necessarily produced at the places where they are consumed or used. Even in villages,
Now-a-days you find the products manufactured all over India and in other countries.
This implies that the manufacturers must be making efforts to ensure that their products
are in demand and reach the ultimate consumers all over the globe. So, when you go to
the market to buy a readymade shirt you find that there are several options available to
you in terms of quality of cloth used, design, color, price etc. and you can buy what suits
you most. This also implies that the manufactures assess the needs of the consumers, their
tastes and preferences and plan the products accordingly. Not only that, they also ensure
that people are aware about the product and its features. All these activities are said to be
part of marketing function of any organization. Thus, marketing refers to the process of
ascertaining consumers‟ needs and supplying various goods and services to the final
consumers or users to satisfy those needs.
The American Marketing Association defines marketing as an “organizational function
and set of processes for creating, communicating and delivering value to customers and
for managing customer relationships in ways that benefit the organization and its
stakeholders.”
Basically, marketing is the performance of business activities that direct the flow of
goods and services from producers to consumers or users.
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B. IMPORTANCE OF MARKETING
Marketing is important to the business, consumer as well as the society. This is evident
from the following
(a) Marketing helps business to keep pace with the changing tastes, fashions, preferences
of the customers. It works out primarily because ascertaining consumer needs and wants
is a regular phenomenon and improvement in existing products and introduction of new
product keeps on taking place. Marketing thus, contributes to providing better products
and services to the consumers and improve their standard of living.
(b) Marketing helps in making products available at all places and throughout the year.
We are able to get Kashmir shawls and Assam Tea all over India and get seasonal fruits
like apple and oranges round the year due to proper warehousing or proper packaging.
Thus, marketing creates time and place utilities.
(c) Marketing plays an important role in the development of the economy. Various
functions and sub-functions of marketing like advertising, personal selling, packaging,
transportation, etc. generate employment for a large number of people, and accelerate
growth of business.
(d) Marketing helps the business in increasing its sales volume, generating revenue and
ensuring its success in the long run.
(e) Marketing also helps the business in meeting competition most effectively.
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C. OBJECTIVE OF MARKETING
After knowing the points of importance of marketing let us discuss on the basic
objectives of marketing.
I. Provide satisfaction to customers
All marketing activities are directed towards customer satisfaction. Marketing starts With
ascertaining consumer needs and produce goods that satisfy those needs most Effectively.
Not only that the pricing and distribution functions of marketing are also planned
accordingly
II. Increase in demand
Through advertising and other sales promotional efforts, marketing aims at creating
additional demand for their products. Satisfied customers also help in creating new
customers. For example, if you buy a „gel pen‟ and feel satisfied, next time also you will
buy the same pen and obviously when you tell others about it they will also feel like
giving it a try.
III. Provide better quality product to the customers
This is a basic objective of marketing. The business houses try to update and upgrade
their knowledge and technology to continuously provide better products. If they do not do
so, they will be phased out through competition.
IV. Create goodwill for the organization
Another objective of marketing is to build a good public image and create goodwill for
the organization. This helps in maintaining loyalty to the product and accepting new
products of the same company.
V. Generate profitable sales volume
The ultimate objective of all marketing efforts is to generate profitable sales volumes for
the business. Taking care of customer needs and wants by providing the required goods
and services at prices they can afford, and at places and timing that are convenient to
them ultimately lead to increased sales and profits.
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2. SEGMENTATION, TARGETING, POSITIONING
A. SEGMENTATION
Research plays an important role in segmentation as segmentation analysis requires a
range of data form a wide variety of sources on markets, customers‟ attitudes, motives
and behavior as well as competitor information.
B. TARGETING – TARGET MARKET
Targeting is the next step in the sequential process and involves a business making choices
about segment(s) on which resources are to be focused. There are three major targeting
strategies: undifferentiated, concentrated, and differentiated. During this process the
business must balance its resources and capabilities against the attractiveness of different
segments.
The LUCKY SAUCE PVT LTD, targets the customer‟s status. Company made the
different flavors sauces according to the test and preferences of the customers.
C. POSITIONING
Positioning follows on logically from the segmentation and targeting stages. Customer
perceptions are central to the product position especially in relation to the competition‟s
offering. The product or service has to satisfy key customer requirements and this has to be
clearly communicated to customers. A tool that helps marketers understand customer
perceptions of their brand is perceptual mapping and a position approach can be used to
develop a clear positioning strategy. However, a number of positioning problems can arise.
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3. CONSUMER BUYING BEHAVIOR
Consumer buying behavior can be defined as acts of individuals in obtaining and using a
product or services including the decision processes that precede and determine these acts
There are two types of customers. One is the individual customers who buy for self and
family consumption. The second is industrial or organization customers who buy the
plant and machinery tools and equipment, raw-materials, spare parts and consumables as
inputs for industrial production. For the marketer it is essential to study the buying
behavior of both- consumer and the industrial buyer. The last item which is produced by
the lucky sauce, is mostly used by end users (consumers), so that is why there is concept
of consumer buying behavior
A. CONSUMER BUYING PROCESS
Buying behaviors of the consumer depends upon his involvement in the product.
However general observation and research indicate that generally consumers for reaching
to buying decision undergo a behavioral process consisting of consecutive five steps as
under
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I. NEED RECOGNITION: - problem recognition or identification of need is the
starting point of buying behavior process. The buyer senses difference between
his actual state and a desired state. First the consumer identifies his/her need. It
includes what kind of the product they want or need to feel satisfaction and
produce their product.
II. INFORMATION SEARCH: - The second level is the active information search.
In this stage after deciding the product consumer will start gathering information
about the product. Every consumer will pass two stage of information gathering:
Heightened attention:- in this consumer is not having detailed
knowledge about the product the consumer will become more
receptive to information
Active information search:- After knowing about the product
consumer will enter into second stage active information gathering
in which consumer will take active part and start searching for
information. He/ she may start collecting material, meeting to
friend, relatives, neighbors, families. Etc
III. EVALUATION OF ALTERNATIVES:- after preparing the list of alternative
product the consumer undertakes the evaluation process. There are no set criteria
for the evaluation of the product. However consumer tries to evaluate the product
on the basis of its features.
Expectancy- value model or Compensatory model
Attributes
Brands
Test Quantity
(Kg)
Price
(Rs)
Durability
(month)
Lucky 5 1 60 9
Kissan 4 1 91 9
Maggi 2 1 90 9
[Test: 1- excellent, 10- poor]
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IV. PURCHASE DECISION:- in the third evaluation stage the consumer form
References among the alternative brands. The consumer may also form the
intention to buy the most preferred brand.
V. POST PURCHASE SATISFACTION:- satisfaction is the differences between
consumer expectation and performance. After purchasing the product, if the
performance of the product is not matching with an expectation of a consumer
then consumer will not be satisfied. If performance matches with an expectation
then consumer will be satisfied. If performance off the product exceeds
expectation then consumer will be very satisfied.
4. 4 PS OF MARKETING
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A. PRODUCT
1) INTRODUCTION
In general, the product is defined as a "thing produced by labor or effort" or the "result of
an act or a process”. Product is something produced by human or mechanical effort or by
a natural process.
“A set of attributes in the form of physical product or services and ideas offered to the
consumer for the satisfaction f his needs. It includes physical product, services, ideas,
personalities, place and organization.”
-Philip Kotler
2) PRODUCT MIX
The product mix of a company, which is generally defined as the total composite of
products offered by a particular organization, consists of both product lines and
individual products. A product line is a group of products within the product mix that are
closely related, either because they function in a similar manner, are sold to the same
customer groups, are marketed through the same types of outlets, or fall within given
price ranges.
“Product mix is also called as product assortment which is the set of all product lines and
items that a particular seller offers for sale to buyers.”
WIDTH
SAUCE
D
E
P
T
H
Tomato ketchup
Tikhameetha
Tangy sauce
Red chilly
Green chilly
Soya sauce
Vinegar
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Width: The width of a product refers to how many different product lines the company
carries. The above table shows a product width of 7 lines.
Length: The length of the product refers to the total number of items in the mix.
Depth: The depth of a product refers to how many variants are offered of each product
in the line.
3) PRODUCT LIFE CYCLE
A new product progresses through a sequence of stages from introduction to growth,
maturity, and decline. This sequence is known as the product life cycle and is associated
with changes in the marketing situation, thus impacting the marketing strategy and the
marketing mix.
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I. INTRODUCTION STAGE
In the introduction stage, the firm seeks to build product awareness and develop a market
for the product. The impact on the marketing mix is as follows:
Product branding and quality level is established and intellectual property
protection such as patents and trademarks are obtained.
Pricing may be low penetration pricing to build market share rapidly, or high
skim pricing to recover development costs.
Distribution is selective until consumers show acceptance of the product.
Promotion is aimed at innovators and early adopters. Marketing communications
seeks to build product awareness and to educate potential consumers about the
product.
II. GROWTH STAGE
In the growth stage, the firm seeks to build brand preference and increase market share.
Product quality is maintained and additional features and support services may
be added.
Pricing is maintained as the firm enjoys increasing demand with little
competition.
Distribution channels are added as demand increases and customers accept the
product.
Promotion is aimed at a broader audience.
III. MATURITY STAGE
At maturity, the strong growth in sales diminishes. Competition may appear with similar
products. The primary objective at this point is to defend market share while maximizing
profit.
Product features may be enhanced to differentiate the product from that of
competitors.
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Pricing may be lower because of the new competition.
Distribution becomes more intensive and incentives may be offered to encourage
preference over competing products.
Promotion emphasizes product differentiation.
IV. DECLINE STAGE
As sales decline, the firm has several options:
Maintain the product, possibly rejuvenating it by adding new features and finding
new uses.
Harvest the product - reduce costs and continue to offer it, possibly to a loyal
niche segment.
Discontinue the product, liquidating remaining inventory or selling it to another
firm that is willing to continue the product.
Currently, Lucky sauce is existence at the growth stage.
Because,
Company added new product feature and maintain its quality.
Company maintains its price and enjoys increasing demand with little
competition.
Channel of distribution are added and customer accept the product.
4) PACKAGING AND LABELING
Packaging means, “The wrapping of goods before they are transported or stored or
delivered to a consumer.”
In the other hand, “packaging is the sub-division of the packaging function of
marketing.” Packaging has been defined as, „an activities which is concerned with
protection, economy, convenience and promotional consideration”
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We can define packaging as: “all the activities of designing and producing the container
is called the package”
The packaging has three levels, they are following:-
Primary package
Secondary package
Shipping package
LABELING
“Label is a part of product, which carries verbal information about the product or the
seller. It may be a part of a package, or it may be a tag attached directly to the product.”
Label may be small slip or a printed statement.
In LUCKY SAUCE PVT LTD, company labeling can be done accordingly its product.
Following are the labels of different products.
I. TOMATO KETCHUP :-
Tomato pulp, sugar, Salt Acidity regulator (e- 260, e -330), Sterilizing agents (e- 415, e -
1442), Red chili powder, Growad spices and spices extract contains permitted class – 2,
Preservative (e – 211)
Nutrition 100gm
Energy 130 kal.
Protein 1 kg
Carbohydrate 33kg
Total sugar 20 g
Sodium 1.3 g
Fat 0 g
The packing is available in 300gm, 500gm, 1 kg, 1.2 kg, and 5 kg.
