Other Diseconomies

Confusion Although related to the problems of bureaucratization the diseconomies that fall into this category arise from a different phenomenon: the tendency for a facility, as it grows in size, to be assigned more and more products, processes and specializations. As mentioned in our earlier discussion of the difference between size and scale, combining dissimilar activities does not reduce complexity, it merely locates it under the same roof.  Unless this complexity is managed carefully, the firm can begin to work at cross purposes and even dissolve into chaos. Our observations suggest that the number of people whose role is primarily

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Financial Policies and Strategies of an Organization

Financial policies and strategies of an organization are concerned with the raising and utilization of funds. The basic purpose is to ensure adequate and regular supply of capital to the organization, keeping the present and future requirements of business in mind. Capital   of course should not only be adequate but should also be judiciously employed. Wasteful use of capital is as bad  as inadequate capital. Hence, while estimating fixed and working capital requirements the types of securities to be issued, the sources to be exploited financial managers should bear in view the proper use of funds. While finalising financial plans,

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Your Starting Point – Position

To the military strategists position is a crucial element in any campaign plan.  The general who doesn’t know where he or she is in relation to the  enemy – whether in terms of geography,  knowledge of forces, lines of supply, weather, or other factors —  is simply setting people up to be killed. On the battlefield, being in the wrong place at the wrong time can be a fatal error because no matter how brilliantly an army may perform in a face to face encounter it will never get a fair chance to do so if its leaders don’t know

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Building a Good Portfolio

You have set a financial goal and your adviser has told you how much you should save regularly. You have also agreed that you will invest in mutual funds in a systematic manner. Now come the tough decision of selecting the funds. Should you trust the list given by the adviser? What should you look for? Let me provide some tips. I will restrict myself to equity funds here and deal with debt funds at a later date. Identifying equity mutual funds is as important as pruning and maintaining them. First your requirement is to invest in the equity market.

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Measuring the Cost of Living Index

The goal of the consumer price Index is to measure changes in the cost of living. In other words, the consumer price Index tries to gauge how much incomes must rise to maintain a constant standard of living. The consumer price index, however, is not a perfect measure of the cost of living. Three problems with the index are widely acknowledged but difficult to solve. The first problem is called substitution bias. When prices change from one year to the next, they all do not change proportionately: Some prices rise more than others. Consumers respond to these differing price changes

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Consumer Price Index

In 2005, the median player on the New York Yankees was paid $5.8 million and shortstop   was paid $26 million. At first, this fact might lead you to think that baseball has become vastly more lucrative over the past seven decades. But as everyone knows, the prices of goods and services have also risen. In 1931, a nickel would buy an ice-cream cone, and a quarter would buy a ticket at the local movie theatre. Economists use gross domestic product (GDP) to measure the quantity of goods and services that the economy is producing. This article examines how economists measure

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Updating Financial Transactions Online

Many banks are offering free on line services to know your banking and other transactions through the bank. Earlier this facility was offered only by International banks. Now even the Nationalised banks are also offering this facility. This is  in addition to facilities like ATM to their customers. To ease and update yourself about your financial transactions availability of online services being offered by various financial institutions. Public Provident Fund (PPF) account If your PPF account is at an SBI branch, you can skip multiple trips to the bank to invest your money. Log in to your Net Banking account

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Income and Expenditure

When you finish studies and start looking for a full time job, your experience will, to a large extent, be shaped by prevailing economic conditions.  In some years, firms throughout the economy are expanding their production of goods and services, employment is rising and jobs are easy to find. In other years, firms are cutting back production employment is declining and finding a good job takes a long time.  Not surprisingly any college graduate would rather enter the labour force in a year of economic expansion than in a year of economic contraction. Changes in economic conditions are widely reported

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Public Sector Banks (PSBs)

PSBs as the early birds in the banking industry enjoyed the first mover advantage for a painfully long time in India. They have set up shop in every nook and corner of the country with consistent support and continued blessings from the Governments. They have grown in stature and position through an extensive branch network. They had a pre-conceived basket of products and services made available to the general public. A product-centric approach with government sponsored social banking focus very little room for them to really care about the credit side of the ledger. Mass banking and social banking were

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Gross Domestic Product (GDP)

Gross domestic product is the market value of all final goods and services produced within a country in a given period of time. This definition might seem simple enough. But in fact, many subtle issues arise when computing an economy’s GDP. Let’s therefore consider each phrase in this definition with some care. GDP is the market value …. You have probably heard the proverb, ‘You can’t compare apples and oranges’. Yet GDP does exactly that. GDP adds together many different kinds of products into a single measure of the value of economic activity.  To do this, it uses market prices.

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Invest in Multiple Assets for Risk Aversion

Pick multi-asset funds if you are a risk-averse investor with a long term horizon but find out the limitations before doing so. Most investors are confused about risk factors. Given the prevailing uncertainty the question uppermost in their minds: where should I put my money to create long term wealth? There is no obvious and easy solution to this uncertainty because there is a high degree of uncertainty in judging the assets, asset class that is likely to perform well over a given period of time. This year, a different story might play out. How can investors ensure that they

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More Automation in Banking

Adding zing to the debit card The debit cards versus credit cards war has intensified with IDBI Bank launching its Magic Card for salary account holders. This debit card can also be used as a credit card if you need cash, but at a much lower interest rate than regular credit cards. You can get ready cash of up to three times your salary, in addition to the balance in your account. Of course, the overdraft facility itself is old news – there are plenty of debit cards offering this today. However, not only do these cards charge about the

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