FINANCIAL MANAGEMENT 2009

2. Types of debentures? 

Debentures are divided into different categories on the basis of:

(1) Convertibility of the instrument (2) Security
Debentures can be classified on the basis of convertibility into:

· Non Convertible Debentures (NCD): These instruments retain the debt character and can not be converted in to equity shares

· Partly Convertible Debentures (PCD): A part of these instruments are converted into Equity shares in the future at notice of the issuer. The issuer decides the ratio for conversion. This is normally decided at the time of subscription.

· Fully convertible Debentures (FCD): These are fully convertible into Equity shares at the issuer's notice. The ratio of conversion is decided by the issuer. Upon conversion the investors enjoy the same status as ordinary shareholders of the company.

· Optionally Convertible Debentures (OCD): The investor has the option to either convert these debentures into shares at price decided by the issuer/agreed upon at the time of issue.

On basis of Security, debentures are classified into:

· Secured Debentures: These instruments are secured by a charge on the fixed assets of the issuer company. So if the issuer fails on payment of either the principal or interest amount, his assets can be sold to repay the liability to the investors

· Unsecured Debentures: These instrument are unsecured in the sense that if the issuer defaults on payment of the interest or principal amount, the investor has to be along with other unsecured creditors of the company

3. Features of Term Loans

a) MATURITY – The maturity period of term loans is typically longer in case of sanctions by financial institutions in the range of 6-10 years in comparison to 3-5 years of bank advances. However, they are rescheduled to enable corporate borrowers tide over temporary financial exigencies.

b) NEGOTIATED – The term loans are negotiated loans between the borrowers and the lenders. They are akin to private placement of debentures in contrast to their public offering to investors.

c) SECURITY – Term loans typically represent secured borrowing. Usually assets, which are financed with the proceeds of the term loan, provide the prime security. Other assets of the firm may serve as collateral security.

d) INTEREST PAYMENT AND PRINCIPAL REPAYMENT – The interest on term loans is a definite obligation that is payable irrespective of the f

inancial situation of the firm.

5. Cash Budget Mean?

An estimation of the cash inflows and outflows for a business or individual for a specific period of time. Cash budgets are often used to assess whether the entity has sufficient cash to fulfill regular operations and/or whether too much cash is being left in unproductive capacities.

8. Acceptance Rule of Project:

A project can be accepted if NPV is positive i.e. NPV > 0; 

Can be ejected when NPV is negative i.e. NPV < 0. If NPV = 0, a project may be accepted.

NPV = 0 implies that project generates cash flows at a rate just equal to the opportunity cost of capital.

The NPV method can be used to select between mutually exclusive projects; the one with the higher NPV should be selected.

13. A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year[1], as the raising of short-term funds takes place on other markets (e.g., the money market). The capital market includes the stock market (equity securities) and the bond market (debt).

The primary market is that part of the capital markets that deals with the issuance of new securities.

Features of primary markets are:

This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM).

·       In a primary issue, the securities are issued by the company directly to investors.

·       The company receives the money and issues new security certificates to the investors.

·       Primary issues are used by companies for the purpose of setting up new business or for expanding or modernizing the existing business.

·       The primary market performs the crucial function of facilitating capital formation in the economy.

·       The new issue market does not include certain other sources of new long term external finance, such as loans from financial institutions. Borrowers in the new issue market may be raising capital for converting private capital into public capital; this is known as "going public."

·       The financial assets sold can only be redeemed by the original holder.

Methods of issuing securities in the primary market are:

ü Initial public offering;

ü Rights issue (for existing companies);

ü Preferential issue.

The secondary market, also called aftermarket, is the financial market where previously issued securities and financial instruments such as stock, bonds, options, and futures are bought and sold

A market where investors purchase securities or assets from other investors, rather than from issuing companies themselves. The national exchanges - such as the New York Stock Exchange and the NASDAQ are secondary markets.

A newly issued IPO will be considered a primary market trade when the shares are first purchased by investors directly from the underwriting investment bank; after that any shares traded will be on the secondary market, between investors themselves. In the primary market prices are often set beforehand, whereas in the secondary market only basic forces like supply and demand determine the price of the security.

HUMAN RESOURCE MANAGEMENT & INDUSTRIAL RELATIONS

1.

6. Both recruitment and selection are the two phases of the employment process. The differences between the two are:

• The recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organisation WHEREAS selection involves the series of steps by which the candidates are screened for choosing the most suitable persons for vacant posts.

• The basic purpose of recruitments is to create a talent pool of candidates to enable the selection of best candidates for the organisation, by attracting more and more employees to apply in the organisation WHEREAS the basic purpose of selection process is to choose the right candidate to fill the various positions in the organisation.

• Recruitment is a positive process i.e. encouraging more and more employees to apply WHEREAS selection is a negative process as it involves rejection of the unsuitable candidates.

• Recruitment is concerned with tapping the sources of human resources WHEREAS selection is concerned with selecting the most suitable candidate through various interviews and tests.

• There is no contract of recruitment established in recruitment WHEREAS selection results in a contract of service between the employer and the selected employee.

8. A learning curve is a graphical representation of the changing rate of learning (in the average person) for a given activity or tool. Typically, the increase in retention of information is sharpest after the initial attempts, and then gradually evens out, meaning that less and less new information is retained after each repetition.

The learning curve can also represent at a glance the initial difficulty of learning something and, to an extent, how much there is to learn after initial familiarity.

9.         A performance appraisal, employee appraisal, performance review, or (career) development discussion is a method by which the job performance of an employee is evaluated (generally in terms of quality, quantity, cost, and time) typically by the corresponding manager or supervisor.

A performance appraisal is a part of guiding and managing career development. It is the process of obtaining, analyzing, and recording information about the relative worth of an employee to the organization. Performance appraisal is an analysis of an employee's recent successes and failures, personal strengths and weaknesses, and suitability for promotion or further training. It is also the judgement of an employee's performance in a job based on considerations other than productivity alone.

10. The Critical Incident Technique (or CIT) is a set of procedures used for collecting direct observations of human behavior that have critical significance and meet methodically defined criteria. These observations are then kept track of as incidents, which are then used to solve practical problems and develop broad psychological principles. A critical incident can be described as one that makes a significant contribution—either positively or negatively—to an activity or phenomenon. Critical incidents can be gathered in various ways, but typically respondents are asked to tell a story about an experience they have had.

           

Critical Incident Technique is a flexible method used in 5 major areas.

·         Determining and reviewing the incident

·         Fact-finding

·         Identify the issues

·         Resolve the issues based on various possible solutions

·         Evaluation, whether the solution that was selected will solve the root cause of the situation and will cause no further problems.

11. Employee stock ownership plans (ESOPs) are set up by companies as a kind of employee benefit trust. An ESOP is a type of employee benefit plan designed to invest primarily in employer stock.

12. Collective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements which regulate working conditions. Collective agreements usually set out wage scales, working hours, training, health and safety, overtime, grievance mechanisms and rights to participate in workplace or company affairs

            Collective bargaining consists of the process of negotiation between representatives of a union and employers in respect of the terms and conditions of employment of employees, such as wages, hours of work, working conditions and grievance-procedures, and about the rights and responsibilities of trade unions.

14 . HUMAN RESOURCE PLANNING

HRP offers an accurate estimate of the number of employees required with matching skill requirements to meet organisational objectives. HRP is a forward looking function as human resource estimates are made well in advance.

The HRP is a four step process:

·         Demand forecasting

·         Supply forecasting

·         Estimating manpower gaps and

·         Formulating HR plans.

The demand for human resources is influenced by several factors

16. Job rotation is an approach to management development where an individual is moved through a schedule of assignments designed to give him or her a breadth of exposure to the entire operation.

At the senior management levels, job rotation - frequently referred to as management rotation, is tightly linked with succession planning - developing a pool of people capable of stepping into an existing job. Here the goal is to provide learning experiences which facilitate changes in thinking and perspective equivalent to the "horizon" of the level of the succession planning.

In many cases senior managers seem unwilling to risk instability in their units by moving qualified people from jobs where the lower level manager is being successful and reflecting positively on the actions of the senior manager.

20. The term ‘industrial relations’ refers to the collective relations between employers and employees as a group. It underscores the importance of compromise and accommodation in place of conflict and controversy in resolving disputes between labour and management.

Sound industrial relations are essential for ensuring industrial peace and improved productivity. Cordial labour management relations enable the employer to secure cooperation and commitment from employees quite easily.  It is not, however, easy to promote and maintain sound industrial relations. Certain conditions should exist for the maintenance of harmonious industrial relations:

v              Existence of strong, well organised and democratic employees' unions

v              Existence of sound and organised employers' unions

v              Spirit of collective bargaining and willingness to resort to voluntary            negotiations

v              Maintenance of industrial peace

           

23. Merits and demerits of hiring people from within

Merits

(i)         Economical: The cost of recruiting internal candidates is minimal. No expenses are incurred on advertising.

   (ii)            Suitable: The organisation can pick the right candidates having the requisite skills. The candidates can choose a right vacancy where their talents can be fully utilised.

(iii)       Reliable: The organisation has knowledge about the suitability of a candidate for a position. ‘Known devils are better than unknown angels!’.

(iv)       Satisfying: A policy of preferring people from within offers regular promotional avenues for employees. It motivates them to work hard and earn promotions. They will work with loyalty, commitment and enthusiasm.

Demerits

(i)         Limited choice: The organisation is forced to select candidates from a  limited pool. It may have to sacrifice quality and settle for less qualified candidates.

   (ii)            Inbreeding: It discourages entry of talented people, available outside an organisation. Existing employees may fail to behave in innovative ways and inject necessary dynamism to enterprise activities.

(iii)       Inefficiency: Promotions based on length of service rather than merit, may prove to be a blessing for inefficient candidates. They do not work hard and prove their worth.

(iv)       Bone of contention: Recruitment from within may lead to infighting among employees aspiring for limited, higher-level positions in an organisation. As years roll by, the race for premium positions may end up on a bitter note.

Merits and demerits of hiring people from outside

Merits

Wide choice: The organisation has the freedom to select candidates from a large pool. Persons with requisite qualifications could be picked up.

Injection of fresh blood: People with special skills and knowledge could be hired to stir up the existing employees and pave the way for innovative ways of working.

Motivational force: It helps in motivating internal employees to work hard and compete with external candidates while seeking career growth. Such a competitive atmosphere would help an employee to work to the best of his abilities.

Long term benefits: Talented people could join the ranks, new ideas could find meaningful expression, a competitive atmosphere would compel people to give of their best and earn rewards, etc.

Demerits

Expensive: Hiring costs could go up substantially. Tapping multifarious sources of recruitment is not an easy task, either.

Time consuming: It takes time to advertise, screen, to test and to select suitable employees. Where suitable ones are not available, the process has to be repeated.

Demotivating: Existing employees who have put in considerable service may resist the process of filling up vacancies from outside. The feeling that their services have not been recognised by the organisation, forces them to work with less enthusiasm and motivation.

Uncertainty: There is no guarantee that the organisation, ultimately, will be able to hire the services of suitable candidates. It may end up hiring someone who does not ‘fit’ and who may not be able to adjust in the new set-up.

25. 360 Degree Appraisal

Feedback is provided by subordinates, peers, and supervisors."360" refers to the 360 degrees in a circle, with an individual figuratively in the center of the circle. It also includes a self-assessment and, in some cases, feedback from external sources such as customers and suppliers or other interested stakeholders. It may be contrasted with "upward feedback," where managers are given feedback by their direct reports, or a "traditional performance appraisal," where the employees are most often reviewed only by their managers.

The results from 360-degree feedback are often used by the person receiving the feedback to plan training and development. Results are also used by some organizations in making administrative decisions, such as pay or promotion. When this is the case, the 360 assessment is for evaluation purposes, and is sometimes called a "360-degree review." However, there is a great deal of controversy as to whether 360-degree feedback should be used exclusively for development purposes, or should be used for appraisal purposes as well (Waldman et al., 1998). There is also controversy regarding whether 360-degree feedback improves employee performance, and it has even been suggested that it may decrease shareholder value

BUSINESS, GOVERNMENT AND INDIAN SOCIETY

WHAT IS THE BUSINESS –GOVERNMENT –SOCIETY FIELD?

In the universe of human endeavor, we can distinguish subdivisions of economic, political, and social activity - that is, business, government, and society – in every civilization throughout time.  Interplay among these activities creates an environment in which business operate, the business-government-society (BGS) filed is the study of this environment and its importance for managers.

Business: It is a Profit-making activity that provides products and services to satisfy human needs.

Government: Structures and processes in society that authoritatively make and apply policies and rules.

Society: A network of human relations composed of ideas, institutions, and material things.

• Ideas: An intangible object of thought.
• Value: An enduring belief about which fundamental life choices are correct.
• Institution: A formal pattern of relations that links people together to accomplish a goal.
• Material things: Tangible artifacts of a society that shapes and are shaped by ideas and institutions.

Importance of BGS TO Managers

• Ø To understand the role of Business in society
• Ø To understand the business power in society
• Ø It becomes criteria for managerial decisions
• Ø To understand  the extent of corporate responsibility
• Ø To know the ethical duties of managers and the need for regulations
• Ø To succeed in meeting business objectives
• Ø To excel in managerial performance
• Ø To monitor the non-economic environment by taking stock of the situation before anything happens.
• Ø By recognizing that a company operates not only within markets but within a society is critical.
• Ø To think beyond profit, to understand the forces governing social responsibility
• 
  

Nature of business

• Society cannot do without business as much as business needs society.
  
• The Purpose of Business goes beyond earning of profit;
• a)     Business is an important institution in society
• b)    Be it for the supply of goods and services
• c)     Creation of Job opportunities 
• d)    Offer better quality of life
• e)     Contributing to economic growth of the country.

BUSINESS TODAY

·        Modern business is dynamic

·        Today’s business is characterized by diversification

BUSINESS IN THE NEAR FUTURE

• ·        Large organizations are replaced by mini organization
• ·        File pushing and paper shuffling will be done by information technology
• ·        Flat organization
• ·        Authority structure will flow downward
• ·        No definite job – jobs change for 5 years
• ·        Remuneration will depend on one’s contribution to organization.

BUSINESS GOALS

• ·        Profit
• ·        Growth
• ·        Power-economic and political power.
• ·        Employees satisfaction and development
• ·        Quality products and Services
• ·        Market leadership
• ·        Challenging
• ·        Joy of creation
• ·        Service to society.

BUSINESS ENVIRONMENT

Ø Business environment refers to all external forces, which have a bearing on functioning of business.

Ø Environmental factors “are largely if not totally , external and beyond the control of individual industrial enterprises and their management.

Ø Business environment poses threats to a firm or offers immense opportunities for potential market exploitation.

TYPES OF ENVIRONMENT

1.     Technological environment

2.     Economic environment

3.     Political environment

4.     Natural environment

5.     Global or International environment

6.     Socio-cultural environment

B) Models of BGS relationships

The Market Capitalism Model

Some scholars, such as Dahl (1998), argue that democracy and market capitalism are fundamentally not compatible, because market capitalism creates inequalities and that inequalities can lead to political unrest. In this situation, some citizens have undue advantages, as Adams would say, and the fairness of government and of the law is compromised.

Some hold the view that expecting business organizations to embrace social responsibility is a weak attempt to make capitalism compatible with democracy. When businesses do openly engage in social responsibility, cynics accuse the leaders of these organizations of simply making use of their good actions to market themselves as solid citizens.

MANAGEMENT INFORMATION SYSTEMS 2009 ENDSEM

1 . Enterprise collaboration systems is a type of information system (is). ECS is a combination of groupware, tools, internet, extranets and other networks needed to support enterprise-wide communications, such as the sharing of documents and knowledge to specific teams and individuals within the enterprise.

Some examples of enterprise communication tools include e-mail, videoconferencing, collaborative document sharing, project management tools and others.

The objective of an ECS is to provide each user with the tools for managing communications, documents and other information that individuals need to manage their own tasks efficiently in their departments.

3. Information systems play a vital role in the e-business and e-commerce operations, enterprise collaboration and management, and strategic success of businesses that must operate in an internetworked global environment. Thus, the field of information systems has become a major functional area of business administration.

4. Data is raw material & unorganized facts that need to be processed

When data are processed, organized, structured or presented in a given context so as to make them useful, they are called information.

5. A transaction processing system is a type of information system. TPSs collect, store, modify, and retrieve the transactions of an organization.

6. Stands for "garbage in, garbage out." it means that if invalid data is entered in a computer program, the resulting output will also be invalid.

So if a program asked you to enter a letter of the alphabet and you enters a number you will get an error. Because we computer users aren't always smart enough to enter valid data, programmers have to take extensive measures to prevent gigo errors.

8. Knowledge based system - software that uses artificial intelligence or expert system techniques in problem solving processes. It incorporates a store (database) of expert knowledge with couplings and linkages designed to facilitate its retrieval in response to specific queries, or to transfer expertise from one domain of knowledge to another.

10. A system which seeks to merge the activities associated with human resource management (HRM) and information technology (IT) into one common database through the use of enterprise resource planning (ERP) software. The goal of HRIS is to merge the different parts of human resources, including payroll, labor productivity, and benefit management into a less capital-intensive system than the mainframes used to manage activities in the past. Also called Human Resource Management Systems (HRMS)

12. In Simple Words Metadata Would Be "Data About Data Contents" Metadata Describes Other Data. It Provides Information About A Certain Item's Content.

For Example, An Image May Include Metadata That Describes How Large The Picture Is, The Color Depth, The Image Resolution, When The Image Was Created, And Other Data. A Text Document's Metadata May Contain Information About How Long The Document Is, Who The Author Is, When The Document Was Written, And A Short Summary Of The Document.

17. Data mining, a branch of computer science, is the process of extracting patterns from large data sets by combining methods from statistics and artificial intelligence with database management. Data mining is seen as an increasingly important tool by modern business to transform data into business intelligence giving an informational advantage. It is currently used in a wide range of profiling practices, such as marketing, surveillance, fraud detection, and scientific discovery.

19. GDSS are used to assist groups of decision makers who have common or overlapping responsibilities, such as executive committees, task forces, and work teams. Some of these tools are designed to be used directly when the group is convened. One example is tallying and processing group member preferences, and then presenting output for the participants to discuss.

A videoconference is a set of interactive telecommunication technologies which allow two or more locations to interact via two-way video and audio transmissions simultaneously. It has also been called 'visual collaboration' and is a type of groupware.

Videoconferencing differs from videophone calls in that it's designed to serve a conference rather than individuals. It is an intermediate form of videotelephony, first deployed commercially by AT&T during the early 1970s using their Picture phone technology.

STOCK MARKET DOWN DUE TO TSUNAMI

Richter Scale showed 8.9 .. This was one of the Strongest 
earth quake in 140 Years in Japan .. 

Reports Said ... Markets across the world showed a negative trend ....

Around 300 dead bodies has been found in the coastal city of Sindai.

World Market at 7:50 p.m IST - Friday , March 11, 2011

Oil prices went down by about 3 $.Gold Prices were almost stable as was considered as 'Safe Heaven' investment.