F.Y. BCOM Semester-I Commerce PDF

F.Y.BCOM SEMESTER-I COMMERCE Business and Trends 1.1 Introduction Concept of business, functions, scope and significance, traditional and modern concept, Challenges faced by businesses in India. 1.2 Objectives of business: Classification of business objectives, reconc...

F.Y.BCOM SEMESTER-I COMMERCE Business and Trends 1.1 Introduction Concept of business, functions, scope and significance, traditional and modern concept, Challenges faced by businesses in India. 1.2 Objectives of business: Classification of business objectives, reconciliation of Economic and social objectives. 1.3 Trends in Business; Strategic alternatives in changing scenario, restructuring strategies and turnaround essentials, steps to implement turnaround. 1.1 INTRODUCTION Business is derived from the English word “bisig” literally means a state of being “busy”. It is a part of social system. Every action taken in a business is related to the external world around it. Every individual in a society is related to the business activity. It is a gainful human activity. It is concerned with creation, exchange and possession of wealth. Business is an economic activity. It is concerned with the use of resources to produce goods or services. It also involves exchange of things. Every individual has to satisfy the wants of food, clothing and shelter for survival, No one can produce all the things which he or she wants to use. Therefore we have to depend upon others i.e. businessmen. Even a businessman has to buy goods from other businessmen for his own consumption. Thus, business activities are concerned with production, and distribution of goods and services. MEANING OF BUSINESS According to B.O. Wheelar, “Business is an institution organised and operated to provide goods and services to society under the incentive of private gain.” According to L.H. Haney, “Business is a human activity directed towards producing or acquiring wealth through buying and selling activities.” NATURE/FEATURES OF BUSINESS The main important features of business are as follow: 1. Economic activity: Business is a form of an economic activity. It is the fruitful occupation for millions of people around the world like traders, bankers, industrialists, manufacturers and many more including professionals and those employed. 2. Regularity in dealing: Business activity is carried out regularly. It is not merely sale or exchange but the regularity or continuity of such dealings that constitutes business. A single transaction does not constitute business. The production or exchange of goods or services for a price is undertaken regularly and continuously in business. 3. Profit motives: Business is an income-oriented activity. Every businessman expects profit from the transactions. The main object of business is to earn profit. Businessman earns profit from the business transactions and the buyer satisfies his wants of goods and services. 4. Organized activity: Business is an organised activity concerned with production and distribution of goods and services. A firm must conduct consumer research to identify consumer needs and wants. There is a constant need to monitor customer needs and wants, and accordingly produce and distribute goods and Service. Business has to be conducted systematically with continuous research and development. It should be organized in a systematic manner so that business objectives can be achieved successfully. 5. Degree of scale: Business can be undertaken at varied degree of seals of operation. Some firm like Sole trading concerns may undertake business on a small scale and that too in a local area. However, some firms, like joint stock companies may undertake business on a large scale, even at a global level. 6. Risk and Uncertainties: Business activities are always risky and uncertain. A business is likely to suffer huge loss due to a number of possible reasons such as change in fashion, tastes, preferences, government policies, technology, recession in the economy, natural calamities etc. All business risks can’t be insured. A business, however, can minimise risks through proper foresight and planning. 7. Societal Interest: At present, business firms place emphasis on “societal concept” of business. Business makes efforts to preserve and promote customers’ and society’s well-being. Business unit try to achieve a balance between profit + Consumer satisfaction + public Interest. Therefore, increasing efforts are made to produce eco-friendly products to satisfy consumer. 8. Social Responsibility: Professional business firms are conscious of their social responsibility. The firm try to fulfil their social responsibility towards various groups. It needs the support of the groups i.e., investors, employees, consumers, creditors and so on. It can’t function without an active participation from these social groups. This feature of business in getting more importance in today’s era of a globalization. 9. Customer Satisfaction: Modern business world is a consumer oriented. Customer is the King and Centre of all marketing activities. Professional business firms adopt customer-oriented approach in their business operations. Business firms give importance not only to profit earning but also to customer satisfaction. Customers would be satisfied only when they get real value for their purchases. Business firms have to take care of not only customer satisfaction but also have to delight the customers by providing better and additional services. 10. Creative: Modern business is creative in nature. These days, consumers can’t be satisfied with the same type of goods and services. Hence business organizations have to be innovative or constantly search new ideas and proposals. 11. Dynamic: Business is a dynamic activity. There is a certainty of change in business Dynamic forces are at work from day to day. Within business new products, methods, innovations in management cause ever changing adjustment of policies and administration. From outside forces such as government regulation, war, changing consumer income and new development in science and an art. 12. Government Control: Business organizations are subject to government control. The government of each country enacts laws and regulations to control and regulate business activities. Business organisations are expected to adhere to such laws. 13. Buying and Selling: All business activities are directly or indirectly connected with transfers or buying and selling of goods and services. Business is useful to buyers and sellers. Businessmen as Seller of goods and services, provide convenience and satisfaction to buyers through provision of form utility, place utility and time utility. In return for the supply of utilities, businessmen receive profit benefit from the buyers. FUNCTIONS OF BUSINESS Functions refer to series of activities or tasks performed to achieve pre-determined objectives. For the smooth conduct of business activities, there is a need to perform certain important functions. These functions are as follows. 1. Purchase and store keeping: Business firms have to make a series of purchases for conducting business activities. Such purchases include the buying of raw materials, components, spare parts, movable and immovable, assets relating to the functioning of the business activity. Traders purchase finished goods in order to sell these. An allied function would be to store the raw materials purchased for which a separate and special facility has to be provided. Care must be taken to maintain proper inventory of materials. Over stocking of material block the working capital on the other hand, under-stocking blocks the production cycle. Further, there must be a proper stock of finished goods so as to distribute them as per the delivery schedules. 2. Production: Production means conversion of raw material in to semi-finished or finished product. The production department deals with activities like design of the operations system (product design, process design, and location of facilities, facilities layout and capacity planning) and operation and control decisions (routing, loading, scheduling, dispatching and expediting). 3. Marketing Function: This function is concerned with, Controlling the level and composition of demand. If deals with creating and maintaining demand for goods and services produced by the production department. It determines physical attributes of the product, fixes its price, motivates consumers to buy the same through advertisement, personal selling and Sales promotion and determines the path through which goods will be transferred from sellers to buyers. 4. Finance Function: This function deals with obtaining and effectively utilising funds necessary for efficient Operations. It ensures that right amount of finance, at right cost and at right time is available for carrying out business Operations. It also deals with investment of funds in long-term assets and short-term assets to ensure smooth business functioning. 5. Personnel Function: This function deals with effective utilisation of human resource. It aims at selecting right persons at the right place i.e., jobs and motivating them to work through team work and co-operate to achieve organizational goal. They have to do the work with commitment and loyalty. 6. Research and Development: Research and Development plays an important role in product development. It helps to bring out product modifications and product innovations. Business firms need to spend a good amount of time on research and development activities. Many professional business firms set up a separate department for research and development activities to make change in the business as per the requirement. 7. Public Relations: There is a need to maintain good public relations with the various sections of the public. Therefore, it makes a good sense to maintain separate department to look after public relations, especially in the case of large firms. It handles public queries, media queries, interviews, complaints etc. It develops the good public relation and bring positive image in the minds of the customer about the business, firm. 8. Sales Function: The Sales department works in close co-ordination with the marketing department. The sales department is concerned with the Selling activities of the firm. It books orders from the customers and then distributes the goods through the distribution channels. This is one of the most important functions of business, through which satisfied the consumers’ needs and wants. Scope of business : Business has a very wide scope. It includes large number of activities. These activities may be grouped under Two broad categories i.e. Industry and commerce. The Scope of business shown in the following table. I. Industry : The term industry refers to that part of business activity which directly concerns itself with production, processing or fabrication of goods and services. It creates form utility. In industry, raw materials are converted in to finished products, which  can be used for consumption. Some industries manufacture consumer goods while others manufacture capital goods. Following are the various types of industries:- a) Primary Industries: -These industries are engaged in the production of primary goods, such as rice, cotton, fish etc. The best examples of this type of industries are Agriculture, fishing etc. b) Genetic Industries: `Genetic industry involves breeding and reproduction of plants and animals for the purpose of sale. Poultry, Plant nurseries, sericulture etc. are examples of genetic industry. The price of products available from such activities is generally less. c) Extractive Industries: Extractive industries extract valuable minerals, ores etc. from the natural elements like soil, water and air. These industries are concerned with the discovery and utilisation of natural resources such as minerals and forests. d) Manufacturing Industries: Manufacturing industries are concerned with the conversion of raw material into finished goods. They create form utility. The products of primary and extractive industries such as cotton, iron-ore, crude oil, etc. are used as a raw material in these industries. e) Construction Industries: Construction industries are concerned with the construction work like construction of bridges, dams, canals, roads, harbours, building etc. These industries do not operate in factory buildings but at the site allotted. f) Service Industries: Service industries produce intangible goods i.e., goods which can’t be seen or touches for example transport, insurance, banking etc. These services are essential and useful for the expansion of business. II. Commerce: Commerce involves all those activities which facilitate transfer of ownership and movement of goods from the centres of production to the centres of consumption. In other word it involves all forms of trade and the services that assist trading. Commerce includes trade and aids to trade. A) Trade: Trade means buying and selling of goods and services. It involves transfer of ownership of goods from the seller to buyer against money. In other words, trade is an exchange of goods and services for a price which the consumers are ready to pay. Consumers may be an individuals, government and industries who need raw materials. 1. Internal Trade: Internal trade is also known as home trade. It is conducted within the country. It can be at local level, regional level or national level. a) Wholesale trade: It involves buying in large quantities from producers and selling in smaller lots to retailers. The wholesaler is a link between manufacturers and retailers. b) Retail Trade: Retail trade involves buying in smaller lots from the wholesaler’s and selling in very small quantities to the consumers for personal consumption. The retailer is the last link in the chain of distribution. He established a link between wholesaler and Consumers 2. External Trade: The trade carried on between the traders of two different countries is called external trade. It is also called as international trade or foreign trade. It includes following trade. a) Export Trade: Export trade involves selling of goods from one country to another. For example, when goods are sold from India to America. b) Import trade: Import trade involves buying of goods from a Seller of another country. For example, a buyer from India purchases goods from a seller of China. c) Entrepot trade: When goods are imported from one country and then re-exported to some other country, it is called entrepot. For example, an Indian trader may buy goods from Bangladesh and then sell it to Pakistan. B) Aids-To-Trade : Aids to trade constitute another component of commerce. Aids to trade include various agencies which are useful for the conduct of trading activities. There are as follows. a) Warehousing : There is a time gap between production and consumption. However, goods which are produced at one time are not consumed at the same time. Hence, it becomes necessary to make arrangement for storage or warehousing. Agricultural commodity like wheat and rice are seasonal in nature but are consumed throughout the year. On the other hand, goods such as Umbrellas and woollen cloths are produced throughout the year but are demanded only during particular seasons. Therefore, goods need to be stored in warehouses till they are demanded. b) Transport: There is a place gap from the place of production to the place of consumption. Goods are produced in one part of the country and Consumption in other parts of the nation. Transport fills the place gap. It meets out the gap between producer and consumer. It helps the manufacturer to expand their markets from local to regional, regional to national and national to global. c) Communication: Communications facilitates transfer of information. It involves transfer of messages from one person to another and from one place to another. It can be in oral or writing form of information. Oral communication can take place through telephone or personally. Written communication is possible through letter, fax, e-mail etc. It facilitates quick transfer of messages to take important decisions quickly. d) Insurance: Insurance reduces the problem of risks. Business is subject to risks and uncertainties. These are inevitable in the field of business. Risks may be due to fire, theft, accident or any other natural calamity. Insurance companies who act as risk bearer cover risks. Insurance tries to reduce risks by spreading them out over a greater number of people. The rate of premium depends upon the type of risks and the period for which the risk is covered. e) Banking: Banking solves the problem of payment and facilitates exchange between buyers and sellers. Lending and borrowing the funds are the traditional functions of the banks. Banks provide short-, medium- and long-term loans to the needy people. Other functions have started gaining importance such as merchant banking, development banking, credit cards etc. This has further facilitated to trade. f) Advertising: Advertising as a powerful marketing tool of communication is highly useful to the manufacturer, retailers, consumers and the society at large. Advertising is basically designed to inform, create interest and induce people to act in a particular way. It can be used for communicating both commercial and non- commercial messages. It creates awareness of the product and builds a good brand image in the minds of consumer and society at large. g) Salesmanship: Salesmanship refers to personal presentations by the firm’s sales force for the purpose of making sales and building customer relationships. It facilitates personal selling. The salesmen provide information to the buyers. They convince and persuade buyers to buy goods. h) Mercantile Agents: In the process of distribution, producers and consumers are unable to have direct contact, as consumers are spread over a vast area; mercantile agents remove this difficulty of personal contact. Mercantile agents are the intermediaries who form a link between the buyers and the sellers. They do not carry business in their own name. These are several types of mercantile agents such as brokers, commission agents, auctioneers, underwriters, insurers, etc. SIGNIFICANCE OF BUSINESS Business is useful to the society in general and the business firms and consumers in particular as it creates utilities. Let us see the benefits it offers to various groups. There are as follows. I. Significance of Business to the Firms: Business plays very important role to business firms. The manufacturer, marketers, traders and even service providers get benefit from business. Following are the significance of business-to-business firms. a) Accomplishment of objectives: Business helps the firms to achieve its various objectives. It creates utility by creating goods and services. These goods and services are consumed by the people for the satisfaction of needs and wants. Thus, with increased sales firms can achieve the objectives, like increase in sales, increase in profit etc. Besides earning profits firms are able to achieve its other objectives such as increase in market share, growth and expansion, creating goodwill etc. b) Improvement of knowledge and skill: Managing business, interacting with people, trying to develop new methods and techniques etc. It helps in improving the knowledge and skills of the employer and employees involved in business. This ultimately benefits to the business organisation as the overall functioning of the business firm improves. c) Expansion of business: Healthy and sound business practices help the organisation to grow and expand its activities. Firm can introduce new and better products in the market and can expand its activities. Firm can also expand its area of market operations. Market expansion can be right from local to international level. d) Product Development: Business undertakes marketing research and product research activities regularly for the purpose of product development. Due to these research and development activities, firms are able to introduce new, innovative and better products in the market. Thus, advanced products benefit to the consumers as well as business firms. e) Improve Relations: Sound business practices improve relations of a firm with various sections of the society. Business firms need to maintain good relations with dealers, suppliers, customers, government authorities, media people, and society in general. The survival and success of business is depending upon the business relations with the stakeholders f) Corporate Image: Business helps the organisation to create and improve corporate image in the market. Business can create a good reputation about itself in the minds of employees, shareholders, investors, consumers, government and general public. Corporate image is vital to any organisation, as it enhances marketing, financial and social value of a firm. Corporate image helps the forms for long term Survival. g) Optimum Utilisation of Resources: Resources are the basic inputs which are necessary to produce goods and services. The resources are limited and in short supply. Hence, it should be used in such a way that it will ensure minimum use and maximum output. In achieving its goals business ensures optimum use of scarce resources by utilising it in most profitable areas. Sound business practices enable a firm to make optimum use of resources. h) Increase in market Share: Every organisation desire of increasing its share in the market. Increase in market share brings in more profits, more respect, better image and increase in market value of shares. Sound business practices enable a firm to increase in market share and create more goodwill in the market. i) Increase in profit: Every business is subject to risk and uncertainties. Profit is the reward for their risks undertaken by the businessman with the help of business activities a business firm able to earn profits. Profits play a role of return on the investment done by businessman. II) Significance of Business to Consumer: Business plays a significant role in respect of consumer. Following are the significance of business to consumers. a) Better quality of goods and services: Now a days, competition has increased tremendously. To face this competition, firms try to make every possible effort to improve the quality of goods and services. Business firms make available quality goods and services required by consumers. Business provides better quality of goods and services to the prospective buyers b) Reasonable price: Today’s market is a consumers’ market where supply exceeds demand for products. In order to attract consumers, business firms offer quality goods and services at competitive prices. They try to offer value for money. Business provides goods and services at right prices. c) Better facilities and Services: Every business wants to survive in the competitive business world. It tries to provide better facilities and services to the customers at low cost. The services like after sale-service, free home delivery, extended warranties, Sale on instalment basis, zero rate of Interest etc. are provided by the business firms. Due to these facilities and services customers are benefited to a great extent. d) Customer Satisfaction: Modern business has become consumer oriented. Moreover, in order to survive and grow, business organisations thrive to provide consumer satisfaction. Their objective is to retain the old customers as well as to find new customer. Some professional business firms go a step forward to delight its customers by providing additional facilities. e) Higher Standard of Living: Business generate employment in areas of production, distribution, banking, transport and so on. This increases the level of income and create additional demand for product in the market. This in how business generate demand which in turn result in more jobs and income which finally result in satisfying the number of human wands and increase their standard of living. III) Significance of business to society: Business plays a significance role towards the society. Following are the significance of business to the society. a) Economic Growth: Business activities facilitate economic growth in the country. It undertakes expansion and diversification activities. New products and services are offered to consumers constantly. New business firms are set up thereby leading to accelerated rate of growth. b) Regional Development: Business firms facilitate to bring about regional development. Government encourages business firms to start operations in under developed areas by giving tax benefits, duty concessions and so on. This leads to a balanced regional development. c) Revenue to the Government: Business firms provide substantial revenue to the government. Business sector provides revenue through taxes, duties, customs duty, sales tax, corporate tax, Octroi etc. contribute to the income of the government. The government can also generate revenue by way of profits earned by public sector units. d) Employment Opportunity: Business provides employment to number of people. It provides employment in the activities such as production, distribution, marketing, promotion of products, and so on. It is thus a source of employment to the people. A large section of the population of the world earns its regular income by means of business. e) Social Welfare: Business helps in social welfare of the society. It can be in the form of starting schools and Colleges, providing donations for starting hospitals, sponsoring various sports and cultural events and so on. In other words, they undertake various social welfare programmes and thereby reduce the burden of the government. f) Capital Formation: Business facilitates capital formation in the country. Capital formation takes place as a result of savings and investment in the country. All those connected with business i.e., business firms, employees, traders, service providers and other save part of their income earned from business. These savings are put into investments. These investments lead to capital formation in the country. g) Global Relations: Business helps to maintain good and cordial relations with other countries. This is because of foreign trade. Foreign trade enables countries to be dependent on each other, which in turn helps to develop good and friendly relations among participating countries. Sound business tries to build a cordial relation with other countries. traditional and modern concept 1] Traditional Concept: The traditional concept states that the business aims to make a profit through the production and marketing of products. Also, Products can be of various types. Furthermore, the traditional concept states that the objective of the business is to earn profit through the production and marketing of products. For example, the main objective of the business of material goods, services, ideas, information, etc. is to get maximum profit according to the traditional concept. 2] Modern concept: Consumer satisfaction is the focal point of the modern concept of business. The modern concept states that a business earns profit through customer satisfaction. Business without consumers is not business. Also, it develops long-term relations with customers. The business should earn profit with social responsibility. It should care about the welfare of society and consumers. it must work within the law. Furthermore, Profits can exist made by maintaining social accountability. It attempts to incorporate every aspect of human civilization. It sees modern business as a socio-economic institution that is always responsible to society. DIFFERENCE BETWEEN TRADITIONAL AND MODERN CONCEPTOF BUSINESS/ENTERPRISE: Difference between Traditional and Modern Concept of Business: Business is concerned with producing and distributing goods and services to make a profit. These are two Concepts: The traditional concept of business and the Modern concept of business. A regular process of exchange of goods and services that involves risk and uncertainty. Business is an economic activity aim at meeting needs through the supply of goods and services to customers and their satisfaction. Traditional Concept of business Modern concept of business a) Meaning: As per the traditional As per the modern concept, business concept, business means production means provision of goods and services and marketing of goods and services for for the satisfaction and welfare of private gain consumers and the society at large b) Scope: The Scope of business was The scope of business covers national restricted to local market and even global market c) Objectives: The Objectives of The Objectives of business is consumer business was profit. Business was satisfaction and service to society. treated as the end in itself. It was Business is treated as a means to serve production and distribution for earning the society and rise social welfare. profit. d) Position of Consumer: Consumers Consumers are given priority and were neglected and were taken for business is adjusted as per the needs granted. They were exploited for and expectations of consumers. profiteering. No attention was given to Consumer welfare is given special consumer welfare. attention. e) Social Orientation: Social Business is treated as social institution orientation to business was absent. with social obligation. f) Social Responsibility: The concept Business accepts and honors social of social responsibility was absent. responsibilities. It is treated as an Business was not socially responsible. integral part of social system. g) Nature of concept: It is treated as It is treated as dynamic and broad old, outdated and narrow concept as concept as it is given social orientation. business is treated merely as profit It is for the satisfaction of human wants making activity. h) Role of profit: Profit was the sole Profit is given secondary position. Profit purpose in business. Profit alone was through service is the guiding principle the guiding principle in business. in business. i) Type of Orientation: Traditional Modern concept is social oriented i.e. concept was businessman oriented i.e. consumer oriented. Special importance profit oriented. Limited importance was to consumer satisfaction and social given to consumers and social welfare. welfare and not merely to profit making Challenges faced by businesses in India : Starting a business is a significant achievement for many entrepreneurs, but maintaining one is the larger challenge. There are many common challenges every business faces, whether they are large or small. These include hiring the right people, building a brand, developing a customer base, and so on. 1. Starting a business in India: It can take between one and four months to complete all the required procedures, with fees and add-on costs dependent on the size and type of business being registered. 2. Land acquisition in India: Land acquisition remains complex, because of the difficulties in establishing legal ownership and a 'clean' holding for purchase. There may be litigations due to inheritance, fragmented holdings, and demands by sellers to be paid in cash. Establishing true land ownership is fraught with issue. 3. Infrastructure: There is not much focus on infrastructural development, boosting road transport, creating dependable power generation, and modernising state-owned railways. Roads, ports, railways, and solar energy are vibrant investment opportunities. But whilst the investment is much needed, it will be several years until it comes to fruition. In the meantime, an infrastructure straining at the seams poses a challenge to distribution and logistics. 4. Recruitment in India: Accessing the right skills can be a challenge, as can staff retention and high levels of employee turnover. Employment laws in India are complex although again, the government is seeking to improve the legislative hurdles to employing indigenous Indians, and foreign nationals. At present, there is a huge variety of laws, ranging from payment of gratuities to gender discrimination. 5. Taxation systems in India: India's tax structure is complex. Laws, rules, and practices can be confusing, and companies who don't seek specialised help may overpay some taxes and underpay others. India has among the highest corporate tax rates in the world, but the effective tax liability differs across industry and sector. The GST implemented is one of the most complex with the second highest tax rate in the world. 6. Risk of bribery and corruption: Companies operating or planning to invest in India face high corruption risks. Although the government has increased efforts to counter corruption, it is still a serious issue, particularly prevalent in the judiciary, police, public services, and public procurement sectors. 7. Price sensitivity: A keen price is rated above the qualities of a product, and Indian consumers are price-sensitive, seeking the cheapest rather than the product with the most attributes. You will be expected to negotiate on the price for your goods, and to give a discount. 8. High Competition: Making a business stand out in today’s competitive market is one of the biggest challenges facing businesses. Products and services can be easily replicated and maintaining the USP is difficult. Hence, businesses need to look beyond the product. Simple things like improving customer service, making the product exclusive and offering convenience in the form of home deliveries can help a business stand out. 1.2 Objectives of business:  Every business unit should have certain well-defined Objectives. It should conduct various activities in order to achieve such objectives. Profit making, social recognition and business growth are some universal business Objectives. Objectives indicate the destination towards which the business unit desire to move. Running a business unit without well-defined objectives is like travelling without fixed destination. Objectives are the end points towards which the organisation has to move forward. They provide the spotlights over the route along which business activities are to be organized and efforts are to be directed. Business Objectives are not stable over a long period. In fact, they are redefined from time to time as per the environmental changes DEFINITION: According to D. E. Mc. Farland, “Objectives are the goal, aims or purposes that organisations wish to achieve over varying period of time. CLASSIFICATION OF BUSINESS OBJECTIVES A) Organic Objectives or Threefold Objectives of business: The organic objectives also called as three-fold objectives of business. Organic objectives are the primary objectives relating to a firm. Every firm has to give attention to three basic objectives. These Objectives are as follows: 1) Survival: Survival is the basic objective of every organisation. Other objectives can be thought of only if the organisation survives. Due to globalization, liberalization and privatization, the business environment has become extremely competitive. Further, technological advancements and changing consumer behaviour has made the business environment complex. This has made survival extremely difficult. Constant monitoring of the business situation and strategic planning are necessary for survival in the competitive business environment. 2) Growth: Growth is the second major organic business Objective. Business should grow in all directions over period of time. Growth takes place through expansion or diversification. Expansion involves increase in business by introducing a product which is similar to the existing product line of the business. While diversification involves introducing a product which is totally different. Growth brings more profit, opportunities for advancement, better utilisation of resources, reputation and goodwill etc. In fact, growth is required for survival ‘Grow or Perish’ is the requirement of the day which means if the organisation is not able to grow it will be droop out from the market. 3) Recognition and Prestige: Every business organisation desires to have social recognition and prestige. This objective is partly economic and partly social. Prestige of an organisation is due to standard quality of its products, regularity in their supply, reasonable prices and satisfactory service to customers. Recognition indicates public confidence on an organisation. Such recognition is possible only after a long period of useful service to the society Business organisations are not satisfied only with profit and growth. It desires to create goodwill and good image in the market. It has publicity and promotional value. A business organisation wants popularity among consumer’s, dealers, employees and local community. For this, it has to provide financial support to social, cultural and other activities. In addition, it must be fair and liberal with different social groups. B) Economic Objectives of business: The main economic objective of business is profit. To earn profit, there are several other economic objectives, which are to be accomplished. The important-economic objectives of business are as follows. 1) Profit: The main economic objective of business is to earn profit. Business activity is primarily undertaken for earning profit. It enables a business to realise other objectives of business. Profit is the main motive of all business activities and is necessary for survival, growth and prestige of an enterprise. Profit is an indicator of business performance and a sign of efficiency. It is a reward for bearing risk and uncertainty in business. It is a lubricant which keeps the wheels of business moving. 2) Creation of Wealth: Creation of wealth is one of the important objectives of business. Creating wealth involves increasing the wealth of the shareholders. It happens only if the business grows steadily whereby the shareholders get higher dividends and there is an appreciation in the market value of the shares. 3) Creation of Customer: The purpose of business is to create a customer. Customer is the foundation of a business. Business has an important human obligation. Profit can’t be earned only by producing the goods. Every businessman has to find customers for high goods or services. Thus, the objective of the business should be to identify the customer for their goods and services. This requires creation of customer in the market and distributes goods and services 4) Innovation: Innovation means to bring new methods, new ideas and concepts and modern efficient techniques. It means something new and creative. It is useful in improving quality, reducing costs and satisfying the customer better. It is a continuous process. In order to survive and succeed in today’s competitive business environment, a business organisation needs to be innovative. 5) Utilisation of Resources: Effective utilization of resources is the most important economic objective of a business enterprise, it is expected to utilise available resources fully i.e., to the optimum level. The resources available with an enterprise may be limited but they must be utilized fully. The production capacity of plant, machinery, and equipment must be used fully wastages of all kinds should be avoided or minimized. Modern technology should be used for more production and Superior quality production. It leads to bring down the cost of production. 6) Expansion of Market: A business firm may aim at entering in to new market. i.e., domestic as well as in international market. This would enable the firm to survive during recession grow and also gain reputation not only in the domestic markets but also in the international market. A business enterprise may increase its market share by effective distribution network, maintaining good relations with dealers, effective advertising and publicity, providing effective and efficient after-sale-service, effective sales promotion etc. 7) Growth of business: Growth of business activities is one of the economic objectives of business. Growth is desirable for more production and turnover in business. Business expansion also gives advantages of large-scale operations. Introduction of new products, setting new production unit, and use modern techniques of production are some methods useful for the growth of business activities. Such growth is necessary for meeting market competition. 8) New product Introduction: A firm may aim at introducing new product lines or brands. The introduction of new products or brands would help the organisation in several ways i.e. increase its overall market share face the competition effectively in the market, earn good amount of profit and so on. C) Social Objectives Business : Business is a part of a social System. A social system involves people and their Organisations in mutual relationship to each other. Business is an integral part of society. Following are the social objectives of business 1) Social Objectives towards Customers: The Survival and success of any business organisation depends on its consumers. One universally accepted social objective of business is to satisfy consumers by providing goods and services as per their needs and expectations. Business activities are essential for meeting the needs of consumers. Business has to supplied quality good at reasonable price to the customer. 2) Social Objectives towards Employees: The Social Objective of a business firm towards its employees is to treat them with respect and provide them with the right compensation and facilities. Business should provide better wages, working conditions, good treatment to the employees. It also provides monetary and non- monetary benefits for satisfaction of the employees. This also ensures industrial peace and harmony. 3) Social Objectives towards shareholders: Shareholders invest their money in the business in the form of shares, debentures bonds etc. The basic objective is that the shareholder should receive a fair, return on their investment. The Objective of the business is to utilise efficiently the money of the shareholder and give them fair return on their investment in the form of dividend an interest. 4) Social Objectives towards Government: A business organisation can’t function smoothly without the support and co-operation of the Government. Hence, it becomes necessary on the part of the organisation to fulfil its social duties towards the government. These include payment of taxes and duties, following the rules and regulations framed by the face the competition effectively in the market, earn good amount of profit and so on. 5) Social Objectives towards Suppliers: The suppliers can play an important role in the success of an organisation by Supplying the right quality and quantity of material at the right time. Therefore, a business firm needs to have social objectives towards supplier in respect of timely payment of dues. Helping the suppliers in their financial requirements by making advance payments. 6) Social objectives towards Dealers: Dealers assist business firm by promoting and pushing goods and services in the market at the right time at the right place. It is one of the basic social objectives that goods of special quality be produced and supplied. If this basic demand of the society is met, the business may survive in the long run. 7) Social Objectives towards Society: Business organisation gain profit because of the support of the society. Naturally, they are expected to provide financial support for various social, educational and cultural activities. This is also necessary for maintaining cordial relations with the society. Business organizations must also support social welfare programmes. D) Human Objectives of business: One of the objectives of business is to look after the interest of the people who make business successful. It has been widely recognised that human beings should be treated as an individual. Businessman should have parental approach towards human being. Following are the human Objectives of business. 1) Fair wages: Employees should be treated as human beings first and then as workers. The employees should be paid fair wages. Apart from this, they should also be given other monetary and non-monetary benefits, incentives and other facilities 2) Better working condition: The working conditions provided to the employees must be hygienic. Good lighting ventilation, good recreation facilities, better labour management relations etc. provide a healthy work atmosphere. This is necessary so that the health of the workers is not adversely affected. 3) Worker’s participation in the management: Worker’s participation in the management has been recognised. Their representation in the management may create healthy co-operation. The problems and disputes can be solved on human grounds. This enables both employees and managers to understand each other’s problems and improve relations. 4) Human Resources Development: The management must undertake human resource development programmes. Necessary training should be given to the employees to improve their skills. Suitable conditions should be created to enable them to use their latest talents like creativity, communication skills, decision-making ability etc. This develops their overall personality, which ultimately benefits to the organisation. 5) Job Satisfaction: Business enterprise should provide challenging and interesting job opportunities to the employees. If Jobs are routine and less challenging, then it brings boredom and may lead to labour turnover and absenteeism. Jobs can be made more challenging and interesting through techniques like job enlargement, job enrichment, Job rotation etc. Sometimes promotions and transfers can also be used to bring job satisfaction. 6) Motivation: The employees should be motivated to work hard. This can be done by offering monetary and non-monetary benefits to them. Monetary rewards include high salaries, housing allowance, car allowance etc. while non-monetary incentives include appreciation, recognition, promotions, Job title etc 7) Welfare facilities: The Organisation should provide to its employee’s proper welfare facilities like canteen facilities, transport facilities, sports and recreation facilities, education facilities and so on. E) National Objectives of business: National objectives are the more Specific objectives of business. These are aimed at fulfilment of national needs and aspirations. The government has to implement the national plans and policies in accordance with the accepted priorities. Business organisation should consider these priorities, policies and plans making business decisions. Following are the important national objectives of business. 1) Social Justice: Social justice means providing equal opportunities to all, protecting the interest of neglected, unorganised and economically backward sections of the society and prevention of any sort of exploitation. For example, a business organisation should do social justice to its handicapped workers, and women employees. 2) Development of small-scale industries: Small-scale industries are those that require less capital and generate more employment. In the present era of globalization, this sector is adversely affected; In order to boost this industry, big business organizations should assist the growth of small-scale industries by purchasing raw material from them. 3) Self Sufficiency: Every business organisation should make use of available natural resources and human resources for economic development. It should reduce the countries dependence on foreign countries by producing goods indigenously or by promoting exports and reducing imports. 4) Production as per National Priorities: Business organizations must make efforts to provide the basic requirement of life i.e., food, clothing and shelter at reasonable prices. In other words, every business organisation should set its objectives after considering national priorities. Secondly, efforts should be made to reduce the nation’s dependence on foreign countries. This could be done by undertaking production indigenously, promoting exports and reducing imports. 5) Social welfare: Business Organisation may also support directly or indirectly welfare schemes in the society. The welfare schemes that business has to adopted i.e., adopting schools in backward areas, providing funds for rural development activities such as construction of roads, irrigation etc. organizing health camps etc. 6) Development of Backward Areas: Business organisation can contribute towards development of backward areas of the nation. This can be done by setting up industries in such areas. Also, financial and technical assistance can be provided to units in such backward areas. The government, too, encourages the development of backward areas by providing lots of incentives such as tax holidays, low rates of taxation, tax exemptions and so on. 7) National Integration and communal Harmony: Business organisation is referred as corporate citizens. Therefore, they should work for national integration and communal harmony. They should not support anti-social elements or communal forces who work against national integration. This is one of the most important national objectives of business. 8) Creation of Employment opportunities: Business creates employment opportunities either directly or indirectly. In a country like India where unemployment and disguised employment are at a very high level, it is advisable for the industries to adopt wherever possible labour-intensive techniques so as to employ a greater number of people and thereby reduce the number of people below the poverty line Reconciliation of Economic and social objectives. Business is a part of society and therefore, it has to meet its social obligations along with its economic objectives. It has to balance its economic and social objectives in order to satisfy the various parties or groups i.e., consumers, employees, shareholders, Government, Suppliers, Competitors and society. The economic and social objectives can be reconciled as under: - 1) Profit and consumer price: An important economic objective is to earn more profit. This could be done not by charging high price but by increasing efficiency, reducing wastages, putting the available resources to optimum use, innovations etc. such strategies on the part of the management would enable them to charge reasonable price for the products. This is how a balance can be brought about between the economic objective of earning profit and the social objective of charging a reasonable price. 2) Profit and Research and Development: A Business organisation needs to earn profit. A part of the profit needs to be invested in research and development. This would help the organisation to improve the quality. Improvement in quality would not only bring customer satisfaction but also higher sales to the business organisation. 3) Business expansion and social Interest: Business organisation should bring expansion of business activities not merely for-profit maximisation but for serving the customer better. However, expansion of business for securing the benefits of large- scale operations and passing on same portion of benefit to consumers is desirable. Expansion for generation of employment opportunities is also economically and socially desirable. 4) Profit and After-Sale-Service: Business organisation needs to focus on after sale service, especially in the case of consumer durables. A part of the profit must be spent in training the after-sale-service work force. Additional after-sale-service work force may be appointed by the firm to provide better service to the customers. 5) Profit and shareholders’ Interest: Shareholders expect higher dividend, which is possible only if the profit is high. When the organisation earns higher profits, the employees may demand higher wages. Business organisation need to accept this fact and pay higher wages to the employees by co-relating their performance with the pay. This would motivate the employees to put in their best efforts. Simultaneously, the organisation should also pay higher dividend to the shareholders for the risk undertaken by them by investing in the company. Thus, reconciliation between the two objectives could be brought out. 6) Profit and Employees welfare: Business organisation makes profits due to the efficiency of its work force. Therefore business organisation needs to spend a part of its profits for the welfare of its employees by providing better facilities such as improved working conditions, additional welfare facilities, and increase in salaries etc. 7) Profit and Social Development: Business organisation spends some part of profit for the social development activities. such as donations to schools, colleges, trusts etc. contributions to government at the time of natural calamities, floods, famines etc, and for such other social activities. 8) Business expansion and Suppliers: Business organisation needs support of suppliers for its business expansion plans. It should not try to exploit the suppliers. There are a good number of cases, where large business organisation exploits suppliers by delaying payment, demanding unreasonable higher discount etc DISTINGUISH BETWEEN ECONOMIC AND SOCIAL OBJECTIVES : Economic objectives Social objectives 1) Meaning: Economic objectives relate Social objectives relate to social to financial aspects and are directly responsibilities and are directly related related to the survival, stability and to welfare of different social groups. growth of business. 2) Coverage: Economic objectives Social objectives include regular and include reasonable profit making, continuous supply of goods and growth, introduction of innovation, services, raising social welfare, support reduction in the cost of production and to community, pollution control and marketing, business stability, prestige justice to investors, consumers and and recognition employees 3) Closer to enterprises: Economic Social objectives are closer to the objectives are closer to enterprises as society at large as they are useful for they are useful for their survival. raising social welfare.  4) Priority: Economic objectives are Social objectives are treated as treated as primary objectives by secondary objectives by business business organisation organisation. 5) Historical background: Economic Social objectives are recent in origin but objectives have a long history and are are not accepted in the right spirit by the universally accepted by the business business community. community since long. 6) Effects/Benefits: Economic Social objectives raise social welfare objectives bring industrial growth and and offer justice to different social create employment opportunities groups 7) Role: Economic objectives bring Social objectives bring social support financial soundness to business and recognition to business organisation. organisation. 8) Scope: Economic objectives are Social objectives are wide in scope as limited in scope as they are related to they are related to different social an individual enterprise groups 9) Effect of neglect: Neglect of Neglect of social objectives leads to economic objectives brings financial non-co-operation from social groups. difficulties. Even the survival of an This may also lead to social criticism enterprise may come in danger. and social control. 1.3 Trends in Business Business trends are new developments in a market or industry that affect the business environment. They're typically new ways that businesses hope to achieve their goals or improve their performance among their competitors. Trends include what products you can offer, how manufacturing and other processes operate, how you can gain funding and how you can connect with customers. There are several different types of business trends that are important in the current environment, although many trends can fit into several categories.. Some examples of types of trends include the following: Technological innovation continues to inspire significant developments, especially in communications and data analysis. Financial innovation is also important as businesses continue to find new ways to raise capital, fund expansion and charge customers for their products. Small business innovation is significant as smaller businesses are often more agile and adaptable than larger businesses. Behavioural trends rely on customer and employee data, as the demographics of the country change and people respond to broader trends in society. Indian economy had experienced major policy changes in early 1990’s. The new economic reform, popularly known as Liberalization, Privatisation and Globalization i.e. LPG model aimed at making the Indian economy as fastest growing economy and globally competitive.  Strategic alternatives in changing scenario Strategic alternatives are strategies that a business develops to set the direction, for which human and material resources will be applied, for a greater chance of achieving selected goals. Generally, a company develops strategic alternatives when it's struggling and seeking a new direction to increase profits, or even simply to save itself from dissolution or bankruptcy. Organisation need to adopt certain strategy William F. Glueck in his book “strategic management” has identified the strategic alternatives into four broad groups. 1) Stability strategy: Stability strategy refers to maintaining status quo of existing business operations. It implies continuing the current activities of the firm without any significant change. It aims at slow growth rate. A firm is said to be following a stability strategy. If it is satisfied with the same consumer groups and maintaining the same market share, satisfied with incremental improvements of functional performance and the management does not want to take any risk that might be associated with expansion or growth. Stability strategy is preferred by small businesses or firms in a mature stage of development stability strategy is pursues doing well. It is less risky, easier and more comfortable. 2) Growth strategy : ‘Growth strategy’ refers to a strategic plan formulated and implemented for expanding a firm’s business. Growth strategy is the much-talked and publiced strategy in the present Indian environment. Growth means an increase in the size or scale of operations of a firm usually accompanied by increase in its resources and output. Business growth is a natural process of adaptation and development that occurs under favourable conditions. In life of any organisation, growth is necessary at some point of time. As a matter of fact, growth is precondition for the survival of a business firm. Growth strategies can be divided into two broad categories i.e., Internal growth and external growth. a) Internal growth: It is growth within the organisation with the help of its internal resources. It is planned and slow increase in the size and resources of the firm. Internal growth is slow and involves comparatively little change in the existing organisation structure. Internal growth strategies include. i) Intensification / expansion ii) Diversification iii) Modernization b) External Growth: External growth is fast and allows immediate utilisation of acquired assets. External growth strategies include: i) Merger and amalgamations ii) Acquisitions and takeovers iii) Foreign Collaboration and Joint ventures. 3) Retrenchment Strategy: Retrenchment strategy, though less frequently used has been pursued by various companies successfully. In retrenchment strategy, unattractive and unwanted areas of business are sequenced gradually. It is a planned exercise to get rid of unprofitable parts of business which helps the organisation to focus on most profitable and promising areas of business. Retrenchment strategies can be divided in to two board categories i.e., divestment strategy and liquidation strategy. a) Divestment strategy: Divestment involves the sale or liquidation of a portion or a major division, or segment of the business unit. It is usually a part of revival, rehabilitation and restructuring plan. b) Liquidation strategy: A retrenchment strategy considered the most extreme and unattractive is liquidation, Strategy, which involves closing down a firm and selling its assets. It is considered as the last resort because it leads to serious consequences such as loss of employment, termination of opportunities where a firm could pursue any future activities and the stigma of failure. 4) Combination Strategy: Combination strategy refers to the combination of stability, expansion and retrenchment strategy applied either simultaneously or sequentially. In every combination, two or more business units come together and adopt uniform policies for achieving common objectives. Combinations are useful for eliminating risks and uncertainties of business. A combination is a “revolution against risks.” Combination strategies involves. 1) Horizontal combinations 2) Vertical combinations 3) Allied combinations 4) Service combinations 5) Mixed combinations Restructuring strategies Restructuring refers to rebuilding or reorganising a business firm. It’s a strategy that may be found useful in all the different phases of the firm’s life cycle initial period, growth, maturity and decline. It may also be found useful in postponing the death of the firm i.e., the dissolution or liquidation of the company. NEED FOR RESTRUCTURING: Following are important reasons for restructuring the business enterprise. 1) Sickness of the unit: Whenever a unit becomes sick and is found economically unstable then there is a need for restructuring. Sick unit interested to revive take efforts to restructure. 2) Disinvestment: As a measure of restructuring some companies sell a part of their assets in order to get rid of loss-making unit or to invite new partner. Alternatively, a company may dispose of some part of equity holding in favour of foreign collaboration 3) Intention to retire: The existing promoters may be tried of carrying on with the same business. So, they may think of retiring and changing the line of business by either entering into export business or any other promising area. Any such move may result into restructuring. 4) To avoid competition: Competition for small companies reduces the margin of profit affecting the normal growth. So, in order to avoid competition, the competing units prefer to join hands. Thus, restructuring helps to face or avoid competition. 5) Perceived opportunity: Some promoters have strong financial resource which they want to invest in a profitable business such investments give great opportunity to both, the new promoter and the old one. This happens to be a restructuring programme for the old promoter. 6) Fast growth: Whenever there is increase in sales, production, profit and assets of the company. It is said that the company is growing. Sometimes technical and structural limitations act as hurdles for internal growth. In such as situation companies have an option for external growth by taking over or joining hands with other companies. 7) Finance: Restructuring in the form of merger or takeover can be used to solve the problem of finance. A company lacking financial resource can join hands with a stable and financially sound company. The funds can be used for modernisation and revive back. 8) Economic of scale: When two companies join together their scale of operation increases. They can make a better and optimum utilisation of all available resource’s development facilities, marketing and distribution activities etc. This helps them to reduce the overhead cost and production cost. Reduction in overall cost eventually helps to face competition in the market The following are the various strategies of corporate restructuring. 1) Merger: A merger refers to a combination of two or more companies into one company. It may involve absorption or consolidation. In absorption, one company acquires another company, and in a consolidation, two or more companies join to form a new company. Mergers may be classified as follows: a) A horizontal merger b) A vertical merger c) A conglomerate. 2) Amalgamation: Amalgamation is a restructuring process in which two or more companies are liquidated and new company is formed to acquire business. In simpler terms, it means that a new company is formed that buys the business of minimum two companies. Amalgamations are considered to be a safe route for sick units who want to save their existence. Many other companies facing possible bankruptcy also opt for amalgamation. 3) Acquisitions / Takeovers : Acquisitions refers to a situation where one firm acquires the assets and liabilities of another firm. The shareholders of the dissolved firm are paid either cash or given shares in acquiring company. Takeover is a form of acquisition which requires to acquiring of controlling interest of a company with or without the consent of the owners. 4) Joint ventures: Joint venture is a form of business combination. Here, two or more companies form a temporary partnership for a special purpose. Here, two companies arrive at an agreement on certain issues of mutual interest. New company is not created but suitable working arrangements are agreed upon. Such agreements are beneficial to combining units. It is a fast and economic route for gaining increase competitiveness to combining units 5) Portfolio restructuring: Portfolio restructuring means making additions to or disposals from company’s business. In simple words, it is decomposition of a portfolio’s asset mix by selling off undesired asset types i.e., equities, debt or cash. Simultaneously, other types of securities are bought. Portfolio restructuring can be done by divestitures and demergers. It is basically involves modifying the business portfolio through divestitures and demergers. 6) Financial restructuring: Financial restructuring involves a significant change in the financial structure of the firm and / or the pattern of ownership and control. Some of the ways of financial restructuring are going public, Debt-equity swap, leveraged buyout, buyback of shares and so on. 7) Organisational restructuring: Organisational restructuring has become a common practice amongst firms in order to match the growing competition in market. It denotes changing the organization structure of the company for the betterment of business. Some of the forms of organisational restructuring are regrouping of business, business process re-engineering, downsizing and out sourcing. 8) Rehabilitation schemes: A sick firm can be revived to improve its financial position by adopting revival schemes some of the important revival schemes are settlement with creditors, divestment, strict control over costs, streamlining of operations, provision of additional capital and so on. 9) Privatisation: Privatisation refers to a process that reduces the involvement of the government or public sector in the economic activities of a nation. It involves disinvestment of public sector partially or fully by selling its equity to private parties. TURNAROUND Turnaround strategy can be referred as converting a loss-making unit into a profitable one. According to dictionary of marketing (by D.H. Collin) “Turnaround means making the company profitable again.” Turnaround is possible only when the company restructure its business operations. Turnaround strategy is a broader strategy and it can include divestment strategy- where a firm decides to divest or get out of certain business and sells off units or divisions. Normally, the turnaround strategy aims at improvement in declining sales or market share and profits. The declining sales or market share may be due to several factors both internal and external to the firm. Some of these factors may include high cost of materials, lower price utilization for the goods and services, increased competition, recession, managerial inefficiency, etc. Essentials of a successful Turnaround strategy : A business can’t be turned around without proper planning and the support of the employees, shareholders etc. Following are the essentials of a successful turnaround strategy. 1) Effective leadership: To make turnaround successful, there is a need to have good leadership at all levels, especially at the top-level management. The CEO needs to be committed and dedicated to the organisation. He needs to be a dynamic person with creative skills to handle the turnaround situation. If need to be, the Board of Directors may change the CEO, and appoint a new leader to handle the situation. 2) Change of management: The present management should accept the responsibility of the present state of affairs of the company. A new CEO with experience and maturity should be appointed for executing the turnaround strategy effectively. A change in management may bring in new and better ideas which would help the company to come out of red. 3) Relevant to the enterprise: Turnaround strategy prepared should be directly related to the problems faced by the enterprise. A good turnaround strategy should be able to deal with the difficulties directly and effectively. For this, the reasons responsible for the sickness of the enterprise should be studied in depth so as to find out suitable remedial measures. 4) Availability of Resources: There must be availability of required resources to make turnaround effective. The turnaround strategy would require proper amount of cash to meet working capital needs and certain fixed capital needs. The business unit may also require skilled manpower to handle newly introduced technical Jobs. 5) Proper planning and execution: A good turnaround strategy should contain comprehensive remedial plan and arrangements for its execution. The strategy prepared should have solutions to the basic problems before the enterprise. In addition, necessary funds should be given to those concerned with the execution of the strategy. This facilitates execution of the strategy within a time frame. 6) Proper communication: It is essential that the management takes into confidence various groups like the employees, creditors, shareholders and others connected with the sick unit. This is possible through effective communication with these groups. Any information regarding turnaround strategy must be quick, clear and complete. An effective and prompt communication is necessary in order to reduce and remove their objection and reluctance to the turnaround programme. 7) Viability of business: The nature of business needs careful consideration before the introduction of turnaround strategy. Sometimes, the business activity may not have bright future due to changed business environment. A business enterprise engaged in such activity is bound to face difficulties from time to time. In short, viability of business activity is an essential requirement of a good turnaround strategy. 8) Good management: Turnaround would be successful if it is handled by determined and motivating managers. The top managers must be objective oriented. Self-confident, positive in outlook, innovative and creative in thinking and highly active with a good foresight to foresee whether their strategies would be positive in future or not. Steps in turnaround strategy : To manage turnaround strategy and to make it successful, the following are the steps that may be followed by business firms. 1) Setting up of a turnaround committee: The business firm may set up a turnaround committee or a team to deal with the turnaround strategy. The committee may involve top management personnel, consultant and may include employees’ representative. At time, business firms appoint a new CEO to deal with turnaround strategy. The CEO may take the help of some top management personnel to manage the turnaround strategy. 2) Identify problematic areas: The problematic areas should be analysed. It could be obsolete technology used by the company, under-utilization of production capacity, or continuous decline in sale of some product etc. Only when the problems are identified properly, then organisation can work for proper solutions. 3) Detailed Investigation of problem: The turnaround team needs to make a detailed investigation of the various problems. The turnaround team may undertake the activities i.e., discuss with workers to know the problems, conduct consumer research, conduct dealers’ survey etc. 4) Enlist critical areas: The critical areas which have been identified should be investigated further and list covering those should be prepared. On the basis of their intensity the most important problem should be given top priority and remaining ones should be enlisted in descending order. 5) Prepare restructuring plan: A comprehensive restructuring plan should be prepared. While doing so, the strengths and weaknesses of the organisation should be taken into account. 6) Implement the plan: Thereafter, the plan must be implemented. For example, if the company wants to restructure human resource, it must first identify surplus employees. If possible, they must be retained. If not, they should be retrenched. For this the company must make available necessary funds in the form of gratuity, pension, provident fund etc. to be paid to them. 7) Review: The turnaround strategy needs to be monitored at different phases. Monitoring of implementation is a must to ensure early revival. It required; the company may adopt additional measures to overcome the turnaround strategy. By Bhoomika L. 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