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Decision Making process
 Identifying a Problem:
 Identifying Decision Criteria:
 Allocating Weights to the Criteria:
 Developing Alternatives:
 Analyzing Alternatives:
 Selecting an Alternative:
 Implementing the Alternative:
 Evaluating decision Effectiveness:
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Identifying a problem
 Every Decision start with a problem. Swedish college
students need new computer for lab because their old
ones are not perfect working and increase number of
computer. Now we have a problem purchase new
computer.
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Identifying Decision Criteria
 First of identified a problem , he or she must
identifying the criteria that are important or relevant
to resolving the problem. So administration decides
after careful consideration that Memory and Storage
Capabilities Battery , Warranty, display Quality.
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Allocating Weights to the Criteria
 Memory Storage
 Battery Life
 Carrying Weights
 Warranty
 Display Quality
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10
8
6
4
3
Allocating weights To The Criteria
HP
Dell
Apple
Memory storage B/L
10
3
10
7
8
7
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W
8
6
8
Display/Q
5
10
7
Developing Alternatives
 The forth step in the decision-making process requires
the decision maker to list alternatives that could
resolve the problem.
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Analyzing Alternatives
HP
Memory storage
100
B/L
24
W
32
Display /Q Total
15
171
Apple
80
56
32
21
189
Dell
100
56
24
21
201
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Selecting Alternatives
 The six step in the decision-making process is
choosing the best alternative or the one that generated
the highest total. So best alternatives is Dell. So
administration decided to purchase dell computer.
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Implementing the Alternative
In the decision making process, after assessment all
feature select best alternative is Dell computer. So
purchase the Dell computer.
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Evaluating Decision Effectiveness
 The Last step in the decision-making process involves
evaluating the outcome or result of the decision to see
whether the problem was resolved. If the evaluation
shows that problem still exists, then administration
needs to assess what went wrong.
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Strategic Management process
 Identifying the Organization's Current Mission, Goals,
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and Strategies:
Doing an External Analysis
Doing an internal Analysis
Formulating Strategies
Implementing Strategies
Evaluating Results
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Identifying the organization current
Mission, Goals, and Strategies
 Every organization needs a mission a statement of its
purpose. Defining the mission forces managers to
identify what it’s business to do. In this step
organization set the current mission, goals and
strategies.
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Doing an External Analysis
 Analyzing the external environment including all
competitors, distributers, buyers, suppliers ,Location ,
demographic, Political/Legal, social, technology and
Global Components.
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Doing an Internal Analysis
 The internal analysis, which provides important
information about an organization’s specific resources
and capabilities. An Organization’s resources are its
assets include financial, physical, human and
intangible that it use to develop, manufacture, and
deliver product to customer.
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Formulating Strategies
 As
managers formulate strategies They should
consider the realities of the external environment and
their available resources and capabilities in order to
design strategies that will help an organization achieve
its goals.
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Implementing Strategies
 Once strategies is formulated and the must be
implemented. No Matter how effectively an
organization has planned its strategies, performance
will suffer if the strategies are not implement properly.
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Evaluating Results
 The final step in the strategic management process is
evaluating results. How effective have the strategies
been at helping the organization reach its goals. After
assessment management understand strategy is good
or bad.
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Components of a Mission
Statement
 Customer
 Markets
 Concern for survival, growth, and profitability:
financial Stability
 Philosophy: What are the firm basic belief, values.
 Product or services
 Technology
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Components of a Mission
Statement
 Self Concept: Major competitive advantage and core
competencies.
 Concern for Employees: Are employee a valuable asset
of the firm.
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Types of Organization
 Sole Proprietorship organization
 Partnership Organization
 Joint Stock Organization
(a) Private Limited Company
(b) Public Limited Company
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Sole Proprietorship Organization
 A single person own it. In this type of organization the
individual owner supplies the capital needed to run
the organization. He alone enjoys the profit and is
responsible to pay all the losses or Liabilities.
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Advantages/Disadvantages
 Availability of capital for investment is limited
 The proprietor acts strictly to his decisions
 Disadvantages:
 Limited amount of capital can be invested.
 In case of loss, investor has to bear it alone.
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Partnership
 A partnership organization is one, which is formed by
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a group of persons with mutual understanding and
confidence. The maximum number of shareholders is
20.
Advantages:Liabilities are divided
Capital is much greater than in the sole proprietorship
organization.
Disadvantages:The major disadvantage lies in the situation when the
partners do not trust each other.
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Joint Stock Companies
 These companies have limited liabilities. In this
system the capital is contributed by a large number of
persons. It is voluntary association of individuals for
profit, have a capital share divided into transferable
shares of different values. Each share has equal value.
The person who purchase the share is called
shareholders. The managing body known as Board of
Directors is elected by these shareholders.
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Advantages / Disadvantages
 Advantages:
 Liabilities are Limited
 Great potentials of expansion
 Good managing capabilities can be exercised
 Disadvantages:
 Large numbers of legal formalities are to be fulfilled
 Decision Taken is very difficult.
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Private Limited Companies
 Two or more persons can form this type of company.
The maximum number of membership is 50. The
government does not interfere the working of the
system.
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Public Limited Company
 The public limited company authorized by after the
approval of Governments. Check and balance .The
public limited company is subjected to grater control
and supervision of the Government, which is
necessary protect the interest of the people's. The
shares of these companies are offered in the stock
exchange.
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Types Of Share
There are two types of shares
(a) Common Shares
(b)Preferred Shares
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Common stocks
 Common Stocks: As the name suggests, t
his type of stocks are quite common. It is the basic stock
a corporation issues. Buying a common stock will give
you an advantage of owning the equity in the company.
It has varied dividends/ or returns. Not only this, as
one of the shareholders in the company, you have your
say in voting for the board members as well.
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Preferred Stocks
 Preferred Stocks: These stocks are usually between
Common stock and bond. These stocks represent
some degree of ownership in a company but usually
don’t come with the same voting rights. Each share of
preferred stock is normally paid a guaranteed dividend
which receives first priority over common stock
holders in the event of liquidation. Preferred
shareholders always receive their dividends first and,
in the event the company goes bankrupt, preferred
shareholders are paid off before the common
stockholders.
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Preferred Stocks Types
 The Preferred Stocks are further sub-divided into 4 categories:
 Cumulative Preferred Stocks: This is more of a savings stock.
In the case of cumulative stocks, if for some reason the dividends
cannot be paid out one year, it is added to the dividends the
following year and paid out in one larger amount.
 Non-cumulative Preferred Stocks: In this case, the dividends
skipped one year are not added to the following years’ dividends.
 Callable/ Participating Preferred Stocks: These shares may
receive higher than normal dividend payments if the company
turns a larger than expected profit.
 Convertible Preferred Stocks: This type gives you
(stockholder) the right to convert your stocks into a fixed
number of common stocks irrespective of market price.
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Joint venture
 An association of two or more individuals or companies
engaged in a business enterprise for profit without
actual partnership or incorporation; also called a joint
adventure.
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Stock Exchange
 Definition:
 Organized and
regulated financial market where securities (bonds, notes,
shares) are bought and sold at prices governed by
the forces of demand and supply. Stock exchanges basically
serve as (1) primary
markets where corporations, governments, municipalities,
and other incorporated bodies can
raise capital by channelingsavings of the investors into
productive ventures; and (2) secondary markets where
investors can sell their securities to other investors for cash.
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stock exchange
 all listed and trading parties. Trades in the older exchanges are
conducted on the floor (called the 'trading floor') of the
exchange
itself,
by
shouting orders and instructions (called open outcry system).
On
modern
exchanges,
trades
are
conducted
over telephone or online. Almost all exchanges are
'auction
exchanges'
where
buyers enter competitive bids and sellers enter competitive
orders through a trading day. Some European exchanges,
however, use 'periodic auction' method in which round-robin
calls are made once a trading day. The first stock exchange was
opened in Amsterdam in 1602; the three largest exchanges in the
world are (in the descending order) New York Stock Exchange
(NYSE), London Stock Exchange (LSE), and the Tokyo Stock
Exchange (TSE). Called also stock market.
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Theory of Production
 Production theory is the study of production, or the
economic process of converting inputs into
outputs. Production uses resources to create
a good or service that is suitable for use, gift-giving in
a gift economy, or exchange in a market economy. This
can include manufacturing, storing, shipping,
and packaging. Some economists define production
broadly as all economic activity other
than consumption.
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Theory of Production
 They see every commercial activity other than the final
purchase as some form of production.
 Production is a process, and as such it occurs through
time and space. Because it is a flow concept,
production is measured as a “rate of output per period
of time”. There are three aspects to production
processes.
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Factor Of production
 DefinitionSave to FavoritesSee Examples
 Resources required for generation of product
or services, generally classified into four major groups:
(1) Land (including all natural resources), (2) Labor (including
all human resources), (3) Capital (including all man-made
resources), and (4) Enterprise (which brings all
the previous resources together for production).
 These factors are classified also
as management, machines, materials, and money (this, the 4
Ms), or other such nomenclature. More recently, knowledge has
come to be recognized as distinct from labor, and as a factor of
production in its own right.

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Land
 Land including all natural resources. Land is a natural
& primary factor of production. Land is not created by
mankind but it is a gift of nature. So it is called as
natural factor of production. Land mean surface of
earth.
 On the surface (Agricultural land)
 Below the Surface (Mineral, resources, rocks, ground
water etc)
 Above the surface (climate, rain , space monitoring
etc)
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Characteristics and Feature of Land
 Land is free gift of nature: Land is free gift of nature to
mankind. It is not a man-mad factor but it is a natural
factor.
 Land is primary factor of production:
 Land has perfectly inelastic supply: Fixed in quantity.
Neithe it can be increased nor decreased. Simply, you
can not change size of the earth. But from individual
point of view, its supply is relatively elastic.
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Labour
 What is Labour and Labourer ? Meaning ↓
 Usually, the term 'Labour' is used for 'worker'. But,
technically, it is not correct. Labour and Labourer
(worker) are two different things.
Labour is an ability to work. Labour is a broad concept
because it includes both physical and mental labour
(as per above picture). Labour is a primary or human
factor of production. It indicates human resource.
 Labourer is a person who owns labour. So labourer
means worker. It is a person engaged in some work.
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Depreciation
 Depreciation is computed at the end of an accounting
period (usually a year), using a method best suited to the
particular asset. When applied to intangible assets, the
preferred term is amortization.
 2. Commerce: The decline in the market value of an asset.
 3. Economics: The decrease in the economic potential of an
asset over its productive or useful life.
 4. Foreign exchange: The reduction in the exchange
value of a currency, either by a government or due to
weakening of the underlying economy in a floating
exchange
rate
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Depreciation
 de·pre·ci·a·tion
 noun1.decrease in value due to wear, decay, decline in
price ,etc.
 2.such a decrease as allowed in computing the value of
property for tax purposes.
 3.a decrease in the purchasing or exchange value of mo
ney.
 4.a lowering in estimation.
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Bank
 An establishment authorized by a government to
accept deposits, pay interest, clear checks,
make loans, act as an intermediary in financial
transactions, and provide other financial services to
its customers.
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Bank
 Definition of 'Bank'
 A financial institution licensed as a receiver of
deposits. There are two types of banks:
commercial/retail banks and investment banks. In
most countries, banks are regulated by the national
government or central bank.
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Banking
 A company's financial dealings with an institution
that provides business loans, credit, savings and
checking accounts specifically for companies and
not for individuals. Business banking is also
known as commercial banking and occurs when a
bank, or division of a bank, only deals with
businesses. A bank that deals mainly with
individuals is generally called a retail bank, while a
bank that deals with capital markets is known as
an investment bank.
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Commercial Bank
 Definition of 'Commercial Bank'
 A financial institution that provides services, such as
accepting deposits, giving business loans and auto loans,
mortgage lending, and basic investment products like
savings accounts and certificates of deposit. The traditional
commercial bank is a brick and mortar institution with
tellers, safe deposit boxes, vaults and ATMs. However, some
commercial banks do not have any physical branches and
require consumers to complete all transactions by phone or
Internet. In exchange, they generally pay higher interest
rates on investments and deposits, and charge lower fees
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Characteristics / Features of a
Bank
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Characteristics / Features of a Bank ↓
1. Dealing in Money

Bank is a financial institution which deals with other people's money i.e. money given by depositors.
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2. Individual / Firm / Company

A bank may be a person, firm or a company. A banking company means a company which is in the
business of banking.
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3. Acceptance of Deposit
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A bank accepts money from the people in the form of deposits which are usually repayable on
demand or after the expiry of a fixed period. It gives safety to the deposits of its customers. It also acts
as a custodian of funds of its customers.
4. Giving Advances

A bank lends out money in the form of loans to those who require it for different purposes.
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Bank ↓
 5. Payment and Withdrawal

A bank provides easy payment and withdrawal facility to its customers in the form of
cheques and drafts, It also brings bank money in circulation. This money is in the form of
cheques, drafts, etc.
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6. Agency and Utility Services
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A bank provides various banking facilities to its customers. They include general utility
services and agency services.
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7. Profit and Service Orientation

A bank is a profit seeking institution having service oriented approach.
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8. Ever increasing Functions

Banking is an evolutionary concept. There is continuous expansion and diversification as
regards the functions, services and activities of a
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production
 The processes and methods used to
transform tangible inputs (raw materials, semifinished goods, subassemblies) and intangible inputs
(ideas, information, knowledge)into goods or services.
Resources are used in
 this process to create an output that is suitable for use
or has exchange value.
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Six Sigma
 Six Sigma is a management philosophy developed by
Motorola that emphasizes setting extremely high
objectives, collecting data, and analyzing results to a fine
degree as a way to reduce defects in products and services.
The Greek letter sigma is sometimes used to denote
variation from a standard. The philosophy behind Six
Sigma is that if you measure how many defects are in a
process, you can figure out how to systematically eliminate
them and get as close to perfection as possible. In order for
a company to achieve Six Sigma, it cannot produce more
than 3.4 defects per million opportunities, where an
opportunity is defined as a chance for nonconformance.
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Break- Even Analysis
 An analysis to determine the point at which revenue
received equals the costs associated with receiving the
revenue. Break-even analysis calculates what is known
as a margin of safety, the amount that revenues exceed
the break-even point. This is the amount that revenues
can fall while still staying above the break-even point.
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 monetary value
 Definition[Save to Favorites][See Examples]
 The value or worth that
a product or service would bring to someone if sold.
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