Contributions of Peter F Drucker in the field of Management

Peter F. Drucker, often referred to as the “Father of Modern Management,” made groundbreaking contributions to the field of management that have shaped modern organizational practices. His insights, writings, and philosophies have provided a foundation for management theory and practice, focusing on effectiveness, innovation, and human-centric leadership.

  • Management by Objectives (MBO):

Drucker introduced the concept of Management by Objectives (MBO) in his 1954 book The Practice of Management. This approach emphasizes setting clear, measurable goals collaboratively between managers and employees. MBO focuses on aligning individual objectives with organizational goals, promoting accountability and performance measurement. Drucker believed that when employees understand their goals and how they contribute to the organization’s success, they are more motivated and productive.

  • The Knowledge Worker:

Drucker coined the term “knowledge worker” to describe employees who use knowledge and expertise to perform tasks rather than manual labor. He predicted that knowledge would become the most significant economic resource in the 21st century, replacing capital and labor. Drucker stressed the importance of continuously educating and empowering knowledge workers to remain competitive in an evolving global economy.

  • Decentralization and Delegation:

Drucker advocated for decentralization as a way to improve organizational effectiveness. He argued that decision-making authority should be distributed to lower levels of management where specialized knowledge exists. This approach not only empowers employees but also allows top management to focus on strategic priorities. Decentralization fosters innovation, improves responsiveness to market changes, and enhances employee engagement.

  • Customer-Centric Approach:

Drucker famously stated, “The purpose of a business is to create and keep a customer.” He emphasized that organizations should prioritize understanding and meeting customer needs above all else. Drucker believed that customer satisfaction is the foundation of long-term success and that businesses should adapt their products and services to changing market demands.

  • Innovation and Entrepreneurship:

Drucker recognized the critical role of innovation and entrepreneurship in driving organizational growth and adaptability. In his book Innovation and Entrepreneurship (1985), he outlined systematic practices for fostering creativity and turning ideas into successful ventures. He encouraged organizations to embrace change and view challenges as opportunities for growth.

  • Importance of Ethics and Social Responsibility:

Drucker stressed that businesses have responsibilities beyond profit-making. He believed in ethical management practices and the need for organizations to contribute positively to society. Drucker’s philosophy encouraged companies to balance economic goals with social and environmental responsibilities, paving the way for concepts like corporate social responsibility (CSR).

  • Management as a Discipline:

Drucker treated management as a formal discipline, elevating it from an art to a science. He emphasized the importance of understanding management principles and practices through structured study and research. His work bridged the gap between theoretical knowledge and practical application, making management accessible to professionals and academics alike.

  • Focus on Effectiveness:

Drucker differentiated between efficiency (doing things right) and effectiveness (doing the right things). He believed managers should focus on achieving the right objectives rather than simply optimizing processes. This philosophy underscored the importance of strategic thinking and prioritization in achieving organizational success.

  • Organizational Structure and Function:

Drucker explored the impact of organizational structure on performance. He emphasized designing structures that align with the organization’s objectives, encouraging flexibility and adaptability to external changes. Drucker also highlighted the importance of clear roles and responsibilities within an organization to ensure smooth functioning.

Role of Managers

Managers play a critical role in any organization. They are responsible for coordinating resources, directing people, and ensuring the achievement of organizational goals. The role of managers can be analyzed through different functions, levels, and skills, which are essential for effective management.

1. Planning:

One of the primary roles of a manager is planning. Managers are responsible for setting organizational goals and determining the best course of action to achieve them. This involves strategic planning (long-term goals), tactical planning (short-term goals), and operational planning (daily tasks). By planning, managers ensure that the organization stays on course and adapts to changes in the environment.

2. Organizing:

Once the planning phase is completed, managers move on to organizing. This involves arranging resources (human, financial, physical) in such a way that the organization can achieve its goals. Managers assign tasks, define roles and responsibilities, and establish the structure of the organization. Proper organization ensures that there is clarity, order, and efficient use of resources, reducing redundancy and waste.

3. Leading:

Leading is one of the most crucial managerial roles. It involves motivating, guiding, and influencing employees to achieve the organization’s objectives. Managers must provide clear communication, encourage collaboration, resolve conflicts, and foster a positive work environment. Leadership skills help managers align the interests of individual employees with the overall goals of the organization, leading to higher productivity and job satisfaction.

4. Controlling:

Controlling is the process of monitoring and evaluating the progress of activities to ensure they are on track with the set goals. Managers establish performance standards, measure actual performance, and take corrective actions when necessary. Controlling involves ongoing feedback, analysis of results, and adjusting plans and strategies as needed. This role helps managers maintain alignment with the organizational goals and ensures accountability at all levels.

5. Decision-Making:

Managers are constantly making decisions. These decisions can range from operational choices, such as resource allocation, to strategic decisions about long-term organizational direction. Effective decision-making involves gathering information, analyzing alternatives, and considering risks and outcomes. A manager’s ability to make sound decisions significantly impacts the success of the organization.

6. Communicating:

Communication is integral to every aspect of management. Managers need to clearly communicate goals, expectations, and changes to their teams. This ensures that all members of the organization are aligned and that misunderstandings or conflicts are minimized. Strong communication skills are also crucial for maintaining relationships with stakeholders, customers, and other organizations.

7. Interpersonal Roles:

Managers take on various interpersonal roles, such as being a leader, liaison, and figurehead. They act as bridges between the employees and higher management and ensure smooth interaction within the team. These roles help foster a sense of unity and teamwork.

P12 Operations Management BBA NEP 2024-25 3rd Semester Notes

Unit 1
Nature and Scope of Production and Operation Management VIEW
The Transformation Process VIEW
Production Analysis and Planning VIEW
Production Functions VIEW
Objective and Functions of Production Management VIEW
Responsibilities of the Production Manager VIEW
Types of Manufacturing Processes VIEW
Plant Layout VIEW
Plant Location VIEW
Routing VIEW
Scheduling VIEW
Assembly Line Balancing VIEW
Production Planning and Control (PPC) VIEW
Unit 2
Facility Location Planning VIEW
Layout Planning VIEW
Materials Management, Scope and Importance VIEW
Purchasing Function and Procedure VIEW
Store-keeping VIEW
Material Planning Function VIEW
Inventory Control VIEW
Relevant Costs, Economic Lot Size, Reordering Point VIEW
ABC analysis VIEW
Economic Order Quantity (EOQ) Model VIEW
Buffer Stock VIEW
Unit 3
Productivity Definition and Concept, Factors affecting Productivity VIEW
Productivity Measurement VIEW
Productivity Improvements VIEW
New Product Development and Design VIEW
Stages of Product Development VIEW
Conjoint Analysis VIEW
Techniques of Product Development: Standardization, Simplification and Specialization VIEW
Automation VIEW
Unit 4
Development of efficient Work Methods VIEW
Material Flow Process Chart, Man Flow Process Chart VIEW
Principles of Motion Economy VIEW
Comparison of Alternate Work Methods VIEW
Maintenance of Production Facilities VIEW
Quality Control and Inspection VIEW
Cost of Quality VIEW
TQM VIEW
Quality Standards ISO 9000 VIEW
Sampling Inspection VIEW
Control charts for Attributes and Variables charts VIEW

Principles and Practices of Management Bangalore North University BBA SEP 2024-25 1st Semester Notes

Unit 1
Management Definition, Nature and Significance VIEW
Differences between Management and Administration VIEW
Levels of Management VIEW
Role of Managers VIEW
Managerial Skills VIEW
Evolution of Management Thought: Classical, Behavioural, Quantitative, Systems, Contingency VIEW
Modern approaches VIEW
Functional areas of Management VIEW
Management as a Science, an Art or a Profession VIEW
Functions of Management VIEW
Principles of Management: VIEW
Henri Fayol’s Principles of Management VIEW
FW Taylor Principles of Scientific Management VIEW
Contributions of Peter F Drucker in the field of Management VIEW
Unit 2
Planning Meaning VIEW
Nature and Importance, Purpose of Planning VIEW
Types of Plans: Strategic, Tactical, and Operational VIEW
Planning process VIEW
Decision Making, Meaning, Importance VIEW
Steps involved in decision making VIEW
Management by Objectives VIEW
Management by Exception VIEW
Unit 3
Organising, Meaning and Purpose, Principles VIEW
Delegation of Authority VIEW
Departmentation, Committees VIEW
Centralization vs. Decentralization of Authority and Responsibility VIEW
Span of Control VIEW
Staffing, Meaning, Nature and Importance VIEW
Staffing process VIEW
Unit 4
Direction, Meaning and Nature of directing VIEW
Principles of direction VIEW
Communication Meaning, Importance, Process VIEW
Barriers to Communication, Steps to overcome Communication barriers VIEW
Types of Communication VIEW
Unit 5
Controlling Meaning VIEW
Steps in Controlling VIEW
Essentials of Sound Control system VIEW
Techniques of Control VIEW
Coordination, Meaning, Importance and Principles of Co-ordination VIEW

Corporate Administration Bangalore North University B.Com SEP 2024-25 1st Semester Notes

Unit 1  
Company, Introduction, Meaning, Definition, Features, Historical backdrop VIEW
Important Provisions of 2013 Companies Act VIEW
Kinds of Companies:  
One Person Company (OPC) VIEW
Private Company VIEW
Public Company VIEW
Company Limited by Guarantee VIEW
Company Limited by Shares VIEW
Holding Company VIEW
Subsidiary Company VIEW
Government Company VIEW
Listed Company VIEW
Statutory Company VIEW
Registered Company VIEW
Foreign Company VIEW
Unit 2  
Promotion: Meaning VIEW
Promoters VIEW
Functions of Promoters VIEW
Position of Promoters VIEW
Rights and Duties of Promoters  
Incorporation: Meaning, Procedure VIEW
Certificate of Incorporation VIEW
Effects of Registration, Capital Subscription, and Commencement of business VIEW
Documents of Companies:  
Memorandum of Association, Meaning, Clauses, Provisions and Procedures for Alteration VIEW
Doctrine of Constructive Notice VIEW
Articles of Association, Definition, Contents VIEW
Distinction between MOA and AOA VIEW
Subscription Stage VIEW
Meaning and Contents of Prospectus, Statement in lieu of Prospectus VIEW
Red Herring Prospectus VIEW
Issue of Shares VIEW
Allotment of Shares VIEW
Forfeiture of Shares VIEW
Book- Building Process VIEW
Concept of ASBA VIEW
Reverse Book-Building VIEW
Commencement Stage, Documents to be filed; e-filing VIEW
Registrar of Companies VIEW
Certificate of Commencement of Business VIEW
Unit 3  
Corporate Governance, Introduction, Meaning, Definitions, Importance VIEW
Corporate Ethics VIEW
Corporate Social Responsibility VIEW
Key Managerial Personnel (KMP):  
Managing Director VIEW
Whole time Directors VIEW
Chief Financial Officer VIEW
Resident Director, Independent Director VIEW
Auditors: Appointment, Powers, Duties, Responsibilities VIEW
Audit Committee VIEW
CSR Committee VIEW
Company Secretary: Meaning, Types, Qualification, Appointment, Position, Rights, Duties, Liabilities and Removal or dismissal VIEW
Institute of Company Secretaries of India (ICSI): Introduction to ICSI, Establishment, Operations and its Role in the Promotion of Ethical Corporate Practices VIEW
Unit 4  
Corporate Meetings: Introduction, Importance VIEW
Resolutions VIEW
Minutes of meeting VIEW
Requisites of a Valid meeting: Notice, Quorum, Proxy VIEW
Voting: Postal Ballot and e-voting VIEW
Role of a Company Secretary (CS) in convening the Meetings VIEW
Types of Meetings:  
Annual General Meeting VIEW
Extra-ordinary General Meeting VIEW
Board Meeting, Committee Meetings VIEW
Secretarial compliances regarding drafting of the Minutes for various Meetings VIEW
Meeting through Video Conferencing and Virtual Meetings VIEW
Unit 5  
Winding-up: Introduction and Meaning, Modes of Winding up VIEW
Consequence of Winding up VIEW
Official Liquidator VIEW
Role and Responsibilities of Liquidator VIEW
Defunct Company VIEW
Insolvency Code VIEW
Administration of NCLT, NCLAT & Special Courts VIEW

Legislative Provisions of Corporate Governance in Companies Act 1956

Provisions of the Act

Article 3 of the act describes the definition of a company, the types of companies that can be formed e.g. public, private, holding, subsidiary, limited by shares, unlimited etc. Further on in Article 10 E it explains about the constitution of board of company, it explains the companies’ name, the jurisdictions, tribunals, memorandums and the changes that can be made. Article 26 and further on explains about the article of association of the company which a very important part when forming a company and various amendments that can be made. Article 53 to 123,it explains about the shares, the shareholders their rights, it explains about debentures, share capital, their procedure and powers within the company. Article 146 to 251 it explains about the management and administration of the company and the provisions registered office and name. Article 252 to 323 elaborates on the provisions of duties, powers responsibility and liability of the directors in the company which is a very integral part of the company when it is formed. Article 391 to 409 explains about the arbitration, the prevention and obsession of the company Article 425 to 560 it explains the procedure of winding up of a company, the preventions the rights of shareholders, creditors, methods of liquidations, compensation provided and ways of winding up the company. Article 591 and further on explains about setting up companies outside India and their fees and registration procedure and all.

An overview of Companies Act 1956

Companies Act 1956 explains about the whole procedure of the how to form a company, its fees procedure, name, constitution, its members, and the motive behind the company, its share capital, about its general board meetings, management and administration of the company including an important part which is the directors as they are the decision makers and they take all the important decisions for the company their main responsibility and liabilities about the company matter the most. The Act explains about the winding of the business as well and what happens in detail during liquidation period.

Company objective and legal procedure based on the Act

The basic objectives underlying the law are:

  • A minimum standard of good behaviour and business honesty in company promotion and management.
  • Due recognition of the legitimate interest of shareholders and creditors and of the duty of managements not to prejudice to jeopardize those interests.
  • Provision for greater and effective control over and voice in the management for shareholders.
  • A fair and true disclosure of the affairs of companies in their annual published balance sheet and profit and loss accounts.
  • Proper standard of accounting and auditing.
  • Recognition of the rights of shareholders to receive reasonable information and facilities for exercising an intelligent judgment with reference to the management.
  • A ceiling on the share of profits payable to managements as remuneration for services rendered.
  • A check on their transactions where there was a possibility of conflict of duty and interest.
  • A provision for investigation into the affairs of any company managed in a manner oppressive to minority of the shareholders or prejudicial to the interest of the company as a whole.
  • Enforcement of the performance of their duties by those engaged in the management of public companies or of private companies which are subsidiaries of public companies by providing sanctions in the case of breach and subjecting the latter also to the more restrictive provisions of law applicable to public companies.

Companies Act empowerment and mechanism

In India, the Companies Act, 1956, is the most important piece of legislation that empowers the Central Government to regulate the formation, financing, functioning and winding up of companies. The Act contains the mechanism regarding organizational, financial, and managerial, all the relevant aspects of a company. It empowers the Central Government to inspect the books of accounts of a company, to direct special audit, to order investigation into the affairs of a company and to launch prosecution for violation of the Act. These inspections are designed to find out whether the companies conduct their affairs in accordance with the provisions of the Act, whether any unfair practices prejudicial to the public interest are being resorted to by any company or a group of companies and to examine whether there is any mismanagement which may adversely affect any interest of the shareholders, creditors, employees and others. If an inspection discloses a prima facie case of fraud or cheating, action is initiated under provisions of the Companies Act or the same is referred to the Central Bureau of Investigation. The Companies Act, 1956 has been amended from time to time in response to the changing business environment.

Causes for success and failure of start-ups in India

According to the Startup India Portal, India has about 50,000 start-ups and is the 3rd largest ecosystem in the world. Start-ups are now emerging in tier-II and tier-III cities, such as Pune, Ahmedabad, and Kochi. Further, there is an increase in the investment flows from Chinese, Japanese, and Singapore based investors.

Causes for success

Reasons responsible for the growth of start-ups are:

  • Large Indian Market:

India’s diversity in culture, religion, and language has helped start-ups to create diversified products, according to the needs of a particular community. This becomes their Unique Selling Proposition, which in-turn entices investors to fund the start-up.

  • Fast-moving business environment:

In an uncertain and changing business ecosystem, the companies are under constant pressure to innovate to find a footing in the market. Sometimes, other companies invest or buy the start-ups to increase their own uniqueness.

  • Easy access to funds

The government has set up funds for easy startups in the form of venture capital.

  • Apply for tenders

New companies can apply for government tenders. They are excluded from the “related knowledge/turnover” standards appropriate for typical organizations explaining government tenders.

  • Reduction in cost

The government additionally gives arrangements of facilitators of licenses and brand names. They will give top-notch Intellectual Property Rights Services including quick assessment of licenses at lower expenses.

The government will bear all facilitator charges and the startup will bear just the legal expenses.

  • Tax holidays for three years

New companies will be excluded from income tax for a very long time, they get a certificate from the Inter-Ministerial Board (IMB).

  • R&D facilities

In the R&D area, seven new Research Parks will be set up to give offices to new businesses.

  • Tax saving for investors

Individuals putting their capital additions in the endeavor subsidizes arrangement by the government will get an exemption from capital increases. Thus, this will assist new companies to convince more investors.

  • Choose your investor

After this arrangement, the new companies will have an alternative to pick between the VCs, giving them the freedom to pick their investors.

  • Easy exit

Now, talking about the easy exit then if there should be an occurrence of exit, a startup can close its business within 90 days from the date of use of winding up.

  • No time-consuming compliances

For saving time and money numerous compliances have been facilitated for startups.

  • Meet other entrepreneurs

The government has proposed to hold 2 startup fests yearly both broadly and universally to empower the different partners of a startup to meet.

Causes for failure

Lack of focus

When Bill Gates and Warren Buffet were asked about one factor that was responsible for their success, both replied with one word: focus. To understand how focus can help, let’s look at an example.

Grubhub is a food delivery startup. From the beginning, the company decided to focus only on food delivery. There are a lot of other services that a company like that could offer- pickup of food, catering, and more, but the founders chose to focus on just delivery. The result? They could execute technically and operationally and grow the business successfully.

Lack of funds

In 2018, bike rental startup, Tazzo, shut shop. The reason, as given by one of its funding partners, was a failed product-market fit that led to drying up of funding. Even though the startup had raised a considerable amount of funds, the lack of a profitable business model led to the startup shutting down.

Lack of Product Market Fit

There is no one “Fits in all” formula. It has deeper layers to it. This is more of a framework than a goal. Many-a-times, startups fail to validate their product ideas in the existing market scenario. In today’s competitive world, it is important to bring in a product or service that is both problem-solving and fulfils the customer’s expectations in every way, be it price-related or output-related. You don’t want to be wasting your time and efforts on creating something for which there is ‘no market need’!

Lack of innovation

According to a survey, 77% of venture capitalists think that Indian startups lack innovation or unique business models. A study conducted by IBM Institute for Business Value found that 91% of startups fail within the first five years and the most common reason is – lack of innovation.

Although India is said to have the third-largest startup ecosystem, it doesn’t have meta-level startups such as some of the big names like Google, Facebook, and Twitter. Indian startups are also known for replicating global startups, rather than creating their own startup models.

Among the most innovative Indian startups would be startups like ChaiPoint, Ola, Saathi, and Swiggy, according to a list of 50 most innovative companies in the world.

Fear of Startup Failure

While this fear lives in almost every entrepreneur, some tend to simply stop taking risks. Decision-making is hindered as the key goal becomes to not make even one wrong decision at any costs, thus limiting the startup’s gamut. Such fear can not only restrain but also motivate entrepreneurs when directed in a positive way. Having a negative approach from the start can influence thoughts and behaviour badly.

Poorly Harmonised Team

Any well-to-do startup requires a wide range of expertise in its team of employees and management. It is not hard to find technically proficient people these days. However, it is very difficult to find people who know how to get along with others and can be counted on when managers are not looking over their shoulders. Skills and work approach of the founder and his/her team should complement each other efficiently. Working for a startup can create a sort of pressure for the employees too, but as a founder you need to maintain quality communication with them and exchange thoughts eagerly.

Some important provisions of Banking Regulation Act of 1949

Different types of banks, such as commercial banks, cooperative banks, rural banks, and private sector banks exist in India. The Reserve Bank of India (RBI) is the governing body for regulating and supervising the banks. Banking Regulation Act, 1949 is an Act that provides a framework for regulating the banks of India. The Act came into force on 16th March 1949. This Act gives RBI the power to control the behaviour of banks. This Act was passed as Banking Companies Act, 1949. It did not apply to Jammu and Kashmir until 1956. This Act monitors the day-to-day operations of the bank. Under this Act, the RBI can licence banks, put ​​regulation over shareholding and voting rights of shareholders, look over the appointment of the boards and management, and lay down the instructions for audits. RBI also plays a role in mergers and liquidation.

Objectives of the Banking Regulation Act, 1949

  • To meet the demand of the depositors and provide them security and guarantee.
  • To provide provisions that can regulate the business of banking.
  • To regulate the opening of branches and changing of locations of existing branches.
  • To prescribe minimum requirements for the capital of banks.
  • To balance the development of banking institutions.

Provisons

  1. Prohibition of Trading (Sec. 8):

According to Sec. 8 of the Banking Regulation Act, a banking company cannot directly or indirectly deal in buying or selling or bartering of goods. But it may, however, buy, sell or barter the transactions relating to bills of exchange received for collection or negotiation.

  1. Non-Banking Assets (Sec. 9):

According to Sec. 9 “A banking company cannot hold any immovable property, howsoever acquired, except for its own use, for any period exceeding seven years from the date of acquisition thereof. The company is permitted, within the period of seven years, to deal or trade in any such property for facilitating its disposal”. Of course, the Reserve Bank of India may, in the interest of depositors, extend the period of seven years by any period not exceeding five years.

  1. Management (Sec. 10):

Sec. 10 (a) states that not less than 51% of the total number of members of the Board of Directors of a banking company shall consist of persons who have special knowledge or practical experience in one or more of the following fields:

(a) Accountancy;

(b) Agriculture and Rural Economy;

(c) Banking;

(d) Cooperative;

(e) Economics;

(f) Finance;

(g) Law;

(h) Small Scale Industry.

The Section also states that at least not less than two directors should have special knowledge or practical experience relating to agriculture and rural economy and cooperative. Sec. 10(b) (1) further states that every banking company shall have one of its directors as Chairman of its Board of Directors.

  1. Minimum Capital and Reserves (Sec. 11):

Sec. 11 (2) of the Banking Regulation Act, 1949, provides that no banking company shall commence or carry on business in India, unless it has minimum paid-up capital and reserve of such aggregate value as is noted below:

(a) Foreign Banking Companies:

In case of banking company incorporated outside India, aggregate value of its paid-up capital and reserve shall not be less than Rs. 15 lakhs and, if it has a place of business in Mumbai or Kolkata or in both, Rs. 20 lakhs.

It must deposit and keep with the R.B.I, either in Cash or in unencumbered approved securities:

(i) The amount as required above, and

(ii) After the expiry of each calendar year, an amount equal to 20% of its profits for the year in respect of its Indian business.

(b) Indian Banking Companies:

In case of an Indian banking company, the sum of its paid-up capital and reserves shall not be less than the amount stated below:

(i) If it has places of business in more than one State, Rs. 5 lakhs, and if any such place of business is in Mumbai or Kolkata or in both, Rs. 10 lakhs.

(ii) If it has all its places of business in one State, none of which is in Mumbai or Kolkata, Rs. 1 lakh in respect of its principal place of business plus Rs. 10,000 in respect of each of its other places of business in the same district in which it has its principal place of business, plus Rs. 25,000 in respect of each place of business elsewhere in the State.

No such banking company shall be required to have paid-up capital and reserves exceeding Rs. 5 lakhs and no such banking company which has only one place of business shall be required to have paid- up capital and reserves exceeding Rs. 50,000.

In case of any such banking company which commences business for the first time after 16th September 1962, the amount of its paid-up capital shall not be less than Rs. 5 lakhs.

(iii) If it has all its places of business in one State, one or more of which are in Mumbai or Kolkata, Rs. 5 lakhs plus Rs. 25,000 in respect of each place of business outside Mumbai or Kolkata? No such banking company shall be required to have paid-up capital and reserve excluding Rs. 10 lakhs.

  1. Capital Structure (Sec. 12):

According to Sec. 12, no banking company can carry on business in India, unless it satisfies the following conditions:

(a) Its subscribed capital is not less than half of its authorized capital, and its paid-up capital is not less than half of its subscribed capital.

(b) Its capital consists of ordinary shares only or ordinary or equity shares and such preference shares as may have been issued prior to 1st April 1944. This restriction does not apply to a banking company incorporated before 15th January 1937.

(c) The voting right of any shareholder shall not exceed 5% of the total voting right of all the shareholders of the company.

  1. Payment of Commission, Brokerage etc. (Sec. 13):

According to Sec. 13, a banking company is not permitted to pay directly or indirectly by way of commission, brokerage, discount or remuneration on issues of its shares in excess of 2½% of the paid-up value of such shares.

  1. Payment of Dividend (Sec. 15):

According to Sec. 15, no banking company shall pay any dividend on its shares until all its capital expenses (including preliminary expenses, organisation expenses, share selling commission, brokerage, amount of losses incurred and other items of expenditure not represented by tangible assets) have been completely written-off.

But Banking Company need not:

(a) Write-off depreciation in the value of its investments in approved securities in any case where such depreciation has not actually been capitalized or otherwise accounted for as a loss;

(b) Write-off depreciation in the value of its investments in shares, debentures or bonds (other than approved securities) in any case where adequate provision for such depreciation has been made to the satisfaction of the auditor;

(c) Write-off bad debts in any case where adequate provision for such debts has been made to the satisfaction of the auditors of the banking company.

Floating Charges:

A floating charge on the undertaking or any property of a banking company can be created only if RBI certifies in writing that it is not detrimental to the interest of depositors Sec. 14A. Similarly, any charge created by a banking company on unpaid capital is invalid Sec. 14.

  1. Reserve Fund/Statutory Reserve (Sec. 17):

According to Sec. 17, every banking company incorporated in India shall, before declaring a dividend, transfer a sum equal to 20% of the net profits of each year (as disclosed by its Profit and Loss Account) to a Reserve Fund.

The Central Government may, however, on the recommendation of RBI, exempt it from this requirement for a specified period. The exemption is granted if its existing reserve fund together with Securities Premium Account is not less than its paid-up capital.

If it appropriates any sum from the reserve fund or the securities premium account, it shall, within 21 days from the date of such appropriation, report the fact to the Reserve Bank, explaining the circumstances relating to such appropriation. Moreover, banks are required to transfer 20% of the Net Profit to Statutory Reserve.

  1. Cash Reserve (Sec. 18):

Under Sec. 18, every banking company (not being a Scheduled Bank) shall, if Indian, maintain in India, by way of a cash reserve in Cash, with itself or in current account with the Reserve Bank or the State Bank of India or any other bank notified by the Central Government in this behalf, a sum equal to at least 3% of its time and demand liabilities in India.

The Reserve Bank has the power to regulate the percentage also between 3% and 15% (in case of Scheduled Banks). Besides the above, they are to maintain a minimum of 25% of its total time and demand liabilities in cash, gold or unencumbered approved securities. But every banking company’s asset in India should not be less than 75% of its time and demand liabilities in India at the close of last Friday of every quarter.

  1. Liquidity Norms or Statutory Liquidity Ratio (SLR) (Sec. 24):

According to Sec. 24 of the Act, in addition to maintaining CRR, banking companies must maintain sufficient liquid assets in the normal course of business. The section states that every banking company has to maintain in cash, gold or unencumbered approved securities, an amount not less than 25% of its demand and time liabilities in India.

This percentage may be changed by the RBI from time to time according to economic circumstances of the country. This is in addition to the average daily balance maintained by a bank.

Again, as per Sec. 24 of the Banking Regulation Act, 1949, every scheduled bank has to maintain 31.5% on domestic liabilities up to the level outstanding on 30.9.1994 and 25% on any increase in such liabilities over and above the said level as on the said date.

But w.e.f. 26.4.1997 fortnight the maintenance of SLR for inter-bank liabilities was exempted. It must be remembered that at the start of the preceding fortnights, SLR must be maintained for outstanding liabilities.

  1. Restrictions on Loans and Advances (Sec. 20):

After the Amendment of the Act in 1968, a bank cannot:

(i) Grant loans or advances on the security of its own shares, and

(ii) Grant or agree to grant a loan or advance to or on behalf of:

(a) Any of its directors;

(b) Any firm in which any of its directors is interested as partner, manager or guarantor;

(c) Any company of which any of its directors is a director, manager, employee or guarantor, or in which he holds substantial interest; or

(d) Any individual in respect of whom any of its directors is a partner or guarantor.

Note:

(ii) (c) Does not apply to subsidiaries of the banking company, registered under Sec. 25 of the Companies Act or a Government Company.

  1. Accounts and Audit (Sees. 29 to 34A):

The above Sections of the Banking Regulation Act deal with the accounts and audit. Every banking company, incorporated in India, at the end of a financial year expiring after a period of 12 months as the Central Government may by notification in the Official Gazette specify, must prepare a Balance Sheet and a Profit and Loss Account as on the last working day of that year, or, according to the Third Schedule, or, as circumstances permit.

At the same time, every banking company, which is incorporated outside India, is required to prepare a Balance Sheet and also a Profit and Loss Account relating to its branch in India also. We know that Form A of the Third Schedule deals with form of Balance Sheet and Form B of the Third Schedule deals with form of Profit and Loss Account.

It is interesting to note that a revised set of forms have been prescribed for Balance Sheet and Profit and Loss Account of the banking company and RBI has also issued guidelines to follow the revised forms with effect from 31st March 1992.

According to Sec. 30 of the Banking Regulation Act, the Balance Sheet and Profit and Loss Account should be prepared according to Sec. 29, and the same must be audited by a qualified person known as auditor. Every banking company must take previous permission from RBI before appointing, re­appointing or removing any auditor. RBI can also order special audit for public interest of depositors.

Moreover, every banking company must furnish their copies of accounts and Balance Sheet prepared according to Sec. 29 along with the auditor’s report to the RBI and also the Registers of companies within three months from the end of the accounting period.

Material Flow Process Chart, Man Flow Process Chart

Material Flow Process Chart is a tool used in industrial engineering and operations management to visually represent the movement and handling of materials throughout the production process. It provides a clear and systematic depiction of how raw materials are transformed into finished products by tracking their movement, handling, storage, and processing stages. The material flow process chart helps identify inefficiencies, bottlenecks, and areas for improvement in the overall workflow of materials within an organization.

Purpose of Material Flow Process Chart:

  • Optimization of Material Movement:

The primary goal of the material flow process chart is to minimize unnecessary material movement, which directly reduces cost, time, and potential damages to the materials. It ensures that materials are only handled when and where they are needed.

  • Identification of Bottlenecks:

It helps identify bottlenecks or stages in the material handling process where delays or inefficiencies occur. This allows for strategic decision-making to improve the overall flow.

  • Cost Reduction:

By streamlining material handling processes and reducing unnecessary storage, businesses can lower inventory holding costs and waste, contributing to overall cost savings.

  • Improved Workflow:

The material flow process chart simplifies the analysis of material movement, offering a clearer understanding of workflows, which is essential for improving layout, reducing transportation costs, and speeding up production.

Components of Material Flow Process Chart:

  • Inputs and Outputs:

The chart begins with the raw materials or components that are input into the system. It outlines where these materials are sourced and where they are headed within the production process. The output is the final product or goods ready for distribution.

  • Operations:

This part of the chart represents the various operations or activities that the materials undergo during the production process, including processing, assembly, testing, etc.

  • Storage:

Locations where materials are stored during production are indicated on the chart. This includes warehouses, stockrooms, and work-in-progress storage. It helps optimize the layout by ensuring that materials are stored close to the point of use.

  • Transport:

The chart tracks how materials are transported from one stage of production to another, including forklifts, conveyors, and manual handling.

  • Time and Sequence:

The flow chart includes time indicators to show how long materials stay at each point in the process and the sequence in which materials move through the system.

Types of Symbols Used in Material Flow Process Charts:

  • Circles: Represent a storage or waiting point.
  • Rectangles: Represent a process or operation that materials go through.
  • Arrows: Show the direction of material movement.
  • Dotted Lines: Indicate inspection or testing steps.

These symbols provide a standardized method for illustrating the material flow process.

Applications of Material Flow Process Chart

  • Manufacturing: In industries like automotive or electronics manufacturing, material flow process charts help visualize how raw materials move through different stages of production.
  • Logistics and Warehousing: In warehouses, these charts can track the movement of goods and inventory to ensure that the process is streamlined and efficient.
  • Retail: Material flow charts can also help in retail operations by tracking the movement of inventory through different stages of the supply chain.

Man Flow Process Chart

Man Flow Process Chart is a similar tool used to analyze and improve human work methods within an organization. It focuses on how workers perform tasks within a process, capturing the sequence and movement of the human resources involved. This chart is primarily used to evaluate labor efficiency and identify areas where the work methods, worker movements, or task sequence can be optimized to improve productivity and reduce unnecessary fatigue or time loss.

Purpose of Man Flow Process Chart:

  • Improving Work Methods:

The primary objective of the man flow process chart is to ensure that workers perform their tasks using the most efficient methods, minimizing unnecessary movements and reducing fatigue.

  • Eliminating Wastes:

Much like material flow charts, man flow process charts help in identifying wastes related to human work, such as excessive walking, waiting, or unclear task sequencing.

  • Labor Efficiency:

By simplifying the work process, improving task design, and identifying repetitive or unnecessary movements, the chart helps in increasing worker productivity and reducing idle time.

  • Optimal Utilization of Manpower:

It helps ensure that workers are not under-utilized or overburdened. It enables managers to allocate resources effectively and ensure that each worker’s skills are used optimally.

Components of Man Flow Process Chart:

  • Work Activities: The chart shows each step of the work process that an individual performs, starting from receiving the task to completing it. It includes the actions performed and their sequence.
  • Worker Movements: This includes all the movements made by the worker, such as walking, reaching, or handling materials. The chart outlines these movements and evaluates whether they can be minimized or eliminated.
  • Time Taken: Time spent on each task or movement is recorded to identify areas that can be reduced or optimized. The timing helps in determining whether a task is unnecessarily time-consuming.
  • Interactions: The chart also includes interactions with other workers, machines, or equipment. It identifies potential issues related to coordination, waiting times, or communication gaps between workers.

Types of Symbols in Man Flow Process Chart

  • Ovals: Represent the start and end points of a task or operation.
  • Rectangles: Represent actions or operations that the worker performs.
  • Arrows: Indicate the flow of activities or movement of workers between tasks.
  • Dotted Lines: Represent waiting times or periods of inactivity.

Applications of Man Flow Process Chart:

  1. Manufacturing: In manufacturing settings, it helps optimize worker tasks to ensure that the labor force is used efficiently and that operations are streamlined.
  2. Service Industry: In service environments, such as hospitals or restaurants, this chart helps analyze worker interactions with customers and other staff, identifying areas where process improvements can lead to faster service delivery and enhanced customer satisfaction.
  3. Warehousing: In warehouses, it can help identify unnecessary movements or poorly designed workflows that lead to inefficiencies and delays in fulfilling orders.
  4. Administrative Work: Man flow charts can also be used in offices or administrative work to evaluate office tasks, scheduling, and coordination among workers.

Key differences Between Material Flow Process Chart and Man Flow Process Chart

Basis of Comparison Material Flow Process Chart Man Flow Process Chart
Focus Material Movement Human Movement
Purpose To depict material movement To show movement of workers
Elements Depicted Materials, stocks, work-in-progress Workers, tasks, operations
Usage Used in production planning Used in work-study and analysis
Objective Optimize material handling Improve worker productivity
Process Tracks material from start to end Tracks human tasks and activities
Types of Movement Physical transfer of materials Worker movement in operations
Graphical Representation Shows material flow and storage Shows worker movements on tasks
Application Manufacturing and production Time and motion study
Scope Narrow focus on material management Broader focus on labor management
Impact on Efficiency Increases material handling efficiency Increases workforce productivity
Tools Used Material flow charts, diagrams Man flow charts, layout planning
Focus Area Inventory management and logistics Ergonomics and work environment
Nature of Analysis Analyzes material requirements and stock levels Analyzes worker time, actions, and effort
Time Consideration Focuses on time taken for material transport Focuses on time spent by workers during tasks

Principles of Motion Economy

Principles of Motion Economy focus on optimizing the efficiency of workers by reducing unnecessary movements, ensuring that work is done in the simplest, most effective manner. These principles are vital in industrial engineering and work-study techniques to enhance productivity and reduce fatigue. Frank and Lillian Gilbreth, pioneers in time and motion study, developed these principles.

1. Use of the Human Body:

  • Principle: The human body should perform the least number of motions to accomplish a task. Movements should be made with the least effort, and motions should be performed smoothly without fatigue.
  • Application: When lifting objects, the body should be used to its full advantage. For example, lifting an object should involve the legs and not the back, as it is more efficient and reduces strain.
  • Objective: Minimize unnecessary muscle strain and increase the speed of work without tiring the worker.

2. Arrangement of Tools and Equipment:

  • Principle: Tools and equipment should be arranged in the most efficient order. The workstation should be designed so that tools and materials are within easy reach.
  • Application: In a production setting, tools should be placed at arm level or within easy reach to avoid excessive movement. This includes placing the frequently used tools closest to the worker.
  • Objective: Reduce unnecessary reaching, bending, or moving to get tools, enhancing work speed and reducing fatigue.

3. Standardization of Tools and Equipment:

  • Principle: Use standard tools and equipment wherever possible to reduce the complexity and time spent on adjustments.
  • Application: Standardized tools mean workers do not have to adapt to new or multiple tools frequently. For example, using the same screwdriver for different screws minimizes tool changes and learning time.
  • Objective: Increase efficiency by reducing the time spent on switching tools, making adjustments, and training workers.

4. Avoidance of Unnecessary Motions:

  • Principle: Unnecessary motions such as twisting, reaching, or bending should be eliminated.
  • Application: When a worker is moving materials, the process should be streamlined so that the worker does not make extra movements. For example, materials should be positioned at the correct height to avoid bending or stretching.
  • Objective: Reducing fatigue, preventing injury, and enhancing efficiency.

5. Use of Both Hands Simultaneously:

  • Principle: Whenever possible, use both hands simultaneously to perform tasks. This ensures that tasks are done faster and with more control.
  • Application: Tasks like assembling components should involve both hands rather than using one hand at a time, increasing the speed and accuracy of the work.
  • Objective: Improve productivity by making use of both hands for the task at hand, minimizing idle time.

6. Elimination of Unnecessary Motions:

  • Principle: Avoid movements that do not add value to the process or task.
  • Application: For example, when transferring materials from one point to another, workers should avoid extra motions, like walking in circles or moving objects unnecessarily.
  • Objective: Cut down on time wastage, reduce errors, and prevent unnecessary wear and tear on the body.

7. Workplace Layout:

  • Principle: The arrangement of workstations should follow a logical and systematic order to make work flow smoothly.
  • Application: In a factory, tools, materials, and the workstation should be arranged in the order that best supports the steps of the task. For example, an assembly line where parts are passed in a specific sequence reduces wasted motion.
  • Objective: Streamline operations, avoid unnecessary movement between workstations, and maintain a continuous workflow.

8. Minimization of Hand Movements:

  • Principle: The hand movement should be minimized, and each movement should be purposeful.
  • Application: For instance, in assembly line work, workers should be trained to complete tasks with minimal hand movements. Each motion should be intentional and productive, not repetitive or redundant.
  • Objective: Speed up work processes and reduce worker fatigue.

9. Work Simplification:

  • Principle: Tasks should be simplified to reduce the number of steps and motions required.
  • Application: For example, if assembling a product requires 10 steps, finding ways to combine or eliminate redundant actions can simplify the task. Tools or equipment may be redesigned to make steps easier.
  • Objective: Simplification leads to greater efficiency, reduces errors, and makes the process less taxing on workers.

10. Proper Posture:

  • Principle: Workers should be encouraged to maintain a good posture while performing tasks to avoid strain and improve efficiency.
  • Application: In physical tasks, workers should be trained to maintain an ergonomic posture that prevents bending, slouching, or twisting, which can lead to injury and inefficiency.
  • Objective: Maintaining proper posture helps reduce worker fatigue, prevents long-term health issues, and increases productivity.
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