Advantages of Work Sampling

The benefits or advantages of work sampling method are as follows:

Image credits © Prof. Mudit Katyani.

1. Work sampling gives an unbiased result since workmen are not under close observation.
2. A work sampling study may be interrupted at any time without affecting the results.
3. Work sampling can be conducted by anyone with limited training. There is no need to have experts.
4. Team work can be studied by work sampling and not by the time-study.
5. Work sampling is economical and less time-consuming than time study. This is because more than one worker can be studied at the same time. Secondly, observer needs not to be present himself for a long time.

Disadvantages of Work Sampling

The limitations or disadvantages of work sampling method are as follows:

Image credits © Prof. Mudit Katyani.

1. Work sampling is not economical for short cycle jobs. It is also uneconomical to study a single worker or even small group of workers.
2. Unlike time study, it does not allow a small breakdown of activities and delays.
3. Working men may change their normal method of working when they see an observer. Therefore, the results from the work study may not be accurate.
4. In work sampling method, the observations are limited or insufficient. So, the results may not be accurate.
5. This method normally does not record the workers' speed of working.

Classification of Performance Dimensions

A dimension is a measurable extent of any kind. It is usually measured in terms of various extends like shape, size, quality and quantity.

The performance dimensions can be classified into following:

1. Quantity - which is the primary dimension of performance.
2. Quality - which is the secondary dimension of performance.

Image below depicts this classification of performance dimensions.

Image credits © Prof. Mudit Katyani.

1. Quantity is Primary Dimension of Performance

Quantity of output is the primary dimension of performance.

Examples of “How primary dimension (Quantity) is measured?”:

1. Manufacturing unit : A primary dimension for a manufacturing unit is the quantity of output produced within a given time period. Higher the output more is the efficiency of workers.
2. Company : A primary dimension of quantity can also be applied to a measure company’s efficiency. For example, a car manufacturing company may fix the performance dimension of producing at least 10 cars in a day. If the output is more than 10 cars, then the company is considered to be operating efficiently.
3. Service sector : In a service sector, it is difficult to fix such a standard because here it is hard to measure performance in terms of quantity. However, it can be expressed as the number of customers served. For example, a hotel can measure its performance by finding out how many customers it serves daily.

2. Quality is Secondary Dimension of Performance

Quality of output is the secondary dimension of performance.

If most of the output is made as per the quality standards, then the quality of output is good.

Quality standards are expressed as a percentage of units that are allowed as defective.

Companies that want a Six Sigma standard must see that not even three units in a million are defective.

With competition increasing day by day, companies are giving a lot of importance to the quality of the product. By giving warranty/guarantee for their products, companies are using quality as a sales promotion tool.

Companies must use modern techniques to improve their product quality. They must provide better value for the consumer's money by focusing on the quality of their products.

Guidelines for determining performance dimensions

Guidelines for determining performance dimensions are depicted below.

The dimensions of performance must be as follows:

1. Performance dimensions (Quantity & Quality) must be fixed in advance.
2. Dimensions must be clearly defined and easily understood by employees.
3. They must be consistent with the image or goodwill of the company.
4. Quality standards must be laid down even for inputs.
5. Workers must be properly trained about performance dimensions of company.
6. Mission statement and philosophy of an organization must include it.

Now let's discuss guidelines for determining performance dimensions.

1. Fixed in advance

Performance dimensions about quality and quantity must be specified or fixed in advance. This will guide the employees because they know exactly how much quality and quantity of output they have to produce individually and collectively, before they start making the goods.

2. Clear and easy to understand

The shape, size, quality, weight, etc. must be clearly defined. It must be simple and easy to understand for the employees who will implement it. Implementation will be effective only if the employees understand the performance dimension.

3. Consistent with image

Performance dimensions, whether quantity or quality depends on the image or goodwill of the company.

For example, a mineral water company focuses on quality by highlighting the seal of the cap nf the bottle to remove doubts that the bottle may be refilled.

4. Quality standards for inputs

If the performance dimensions for output have to be achieved it is necessary to fix standards for inputs. The suppliers must be informed about the quality standard for raw material.

5. Training of performance dimensions

It is necessary to train the workers about performance dimensions of the company. This will help them to work effectively towards achieving organizational and individual goals.

6. Must be in mission statement

Performance dimensions must be included in the mission statement and philosophy of the organization.

For example, a mission statement of a college can focus on providing good quality of education. This must be shown in the policies, programs, courses, etc. of the college.

What is Productivity? Definition ↓

According to Peter Drucker,

“Productivity means the balance between all factors of production that will give the greatest output for the smallest effort.”

The meaning of productivity is shown in the following diagram.

Image credits © Prof. Mudit Katyani.

Meaning of Productivity ↓

Productivity is the relationship between output and input. It is expressed or measured as a ratio of output and input.

Productivity equals output divided by input.

Two simple examples of productivity measurement:-

1. Productivity of a manufacturing unit can be measured in terms of the number of goods-produced in some fixed amount of time (usually in hours).
2. Generally, in service industry, productivity is measured in terms of income generated by an employee for his or her's organization.

Nowadays, organizations give more importance to productivity and less importance to efficiency.

Higher productivity indicates the following:-

1. Best utilization of the available human and material resources.
2. Minimum wastage and losses of materials.
3. Quantitative and qualitative production of goods at lower cost.

Relationship Between Production Planning and Control

Production planning and control are closely related to one another. They go hand in hand and are supplementary in character.

Ten points explain the relationship between production planning and control:

Image credits © Prof. Mudit Katyani.

1. Meaning.
2. Goals.
3. Course of action.
4. Work performance.
5. Operations.
6. Resources.
7. Directions.
8. Weaknesses.

Let's discuss “How production planning and control are related?”

1. Meaning

According to Ray Wild,

“Production planning is concerned with the determination, acquisition and arrangement of all facilities necessary for future operations.”

Fixing goals of production and estimating resources required to achieve this goal is called production planning. It forecasts individual step in the production process. It helps to achieve production goals effectively, promptly and economically.

According to James Lundy,

“The production control function involves the co-ordination and integration of the factors of production for optimum efficiency.”

Production control is done after production planning. It implements the production plan. It directs, co-ordinates and controls the production. It helps to achieve the production goals. It helps to have maximum production at minimum cost. It also helps to have timely delivery of goods.

2. Goals

1. Production planning fixes the goals for production.
2. Production control achieves these goals.

3. Course of action

1. Production-planning fixes the plans, strategies, etc.
2. Production control puts these plans, strategies, so on; into action, i.e. it implements the plans, strategies, etc.

4. Work performed

1. Production planning decides who should do the work and when.
2. Production control ensures that each department complete its work on schedule.

5. Operations

1. Production planning decides the operations which are required for production.
2. Production control regulates and supervises the operations required for production.

6. Resources

1. Production planning estimates the resources that are required for production.
2. Production control makes available resources that are required for production.

7. Directions

1. Production planning shows the directions.
2. Production control follows these directions.

8. Weaknesses

1. Production-planning makes modifications (changes) in the production plans to remove the weakness in the production process.
2. Production control collects information about the production process. It finds out the weaknesses in the production process and informs the production planners about it.

Conclusion

The process of production planning and control is a continuous one. Since, control starts where planning ends and planning starts where control ends.

Functions of Production Planning and Control

Functions of production planning and control are listed and explained below.

The importance or functions of production planning and control:

1. Utilizes resources effectively.
2. Makes flow of production steady.
3. Estimates production resources.
4. Maintains necessary stock levels.
5. Coordinates departmental activities.
6. Minimizes wastage of resources.
7. Improves labor efficiency.
8. Helps to face competition.
9. Provides better work environment.
10. Facilitates quality improvement.
11. Customer satisfaction.
12. Reduces production costs.

Now let's discuss above listed functions of production planning and control.

1. Utilizes resources effectively

1. Production planning and control result in effective utilization of plant capacity, equipment and resources.
2. It results in low-cost and high-returns for the organization.

2. Makes flow of production steady

1. Production planning and control ensure a regular and steady flow of production.
2. All machines are put to their optimum use.
3. This helps in achieving a continuous production of goods.
4. This also helps to provide a regular supply of goods to consumers.

3. Estimates production resources

1. roduction planning and control help to estimate the resources like men, materials, machines, etc.
2. The estimate is made based on sales forecast.
3. So, production is planned to meet sales requirements.

4. Maintains necessary stock levels

1. Production planning and control prevent over-stocking and under-stocking of materials.
2. Necessary stocks are maintained.
3. Stock of raw-material is maintained at a proper level in order to meet production demands.
4. Stock of finished goods is also maintained to meet regular demands from customers.

5. Coordinates departmental activities

1. Production planning and control helps to co-ordinate the activities of different departments.
2. Consider, for an example, the marketing department co-ordinates with production department to sell the goods.
3. This results in profit to the organization.

6. Minimizes wastage of resources

1. Production planning and control ensure proper inventory of raw-materials and effective handling of materials.
2. This helps to minimize the wastage of raw materials.
3. It also ensures production of quality goods. This results in minimal rejects.
4. So, it results in minimum wastage.

7. Improves labor efficiency

1. There is maximum utilization of manpower.
2. Training is provided to the workers.
3. The profits are shared with the workers in form of increased wages and other incentives.
4. Workers are motivated to perform their best. This results in improved labor efficiency.

8. Helps to face competition

1. Production planning and control help to give delivery of goods to customers in time.
2. This is because of regular flow of quality production.
3. So, the company can face competition effectively, and it can capture the market.

9. Provides better work environment

1. Production planning and control provide a better work environment to workers.
2. They get better work facilities, proper working hours, leave and holidays, increased wages and other incentives.

10. Facilitates quality improvement

1. Production planning and control facilitate quality improvement because the production is checked regularly.
2. Quality consciousness is developed among the employees through training, suggestion schemes, quality circles, etc.

11. Customer satisfaction

1. Production planning and control help to give a regular supply of goods and services to consumers at competitive market price.
2. This results in customer satisfaction.

12. Reduces production costs

1. Production planning and control make optimum utilization of resources, and it minimizes wastage.
2. It also maintains an optimal level of inventories.
3. Overall, this reduces the production costs.

Steps in Production Planning and Control

According to the British Standards Institute, there are four stages, steps, techniques or essentials in the process of production planning and control.

The four stages or steps in production planning and control are:

1. Routing,
2. Scheduling,
3. Dispatching, and
4. Follow-up.

Initial two steps i.e. Routing and Scheduling, relate to production planning.

Last two steps i.e. Dispatching and Follow-up, relate to production control.

Now let's continue our discussion further to understand each step in detail.

1. Routing

Routing is the first step in production planning and control.

Routing can be defined as the process of deciding the path (route) of work and the sequence of operations.

Routing fixes in advance:

1. The quantity and quality of the product.
2. The men, machines, materials, etc. to be used.
3. The type, number and sequence of manufacturing operations, and
4. The place of production.

In short, routing determines ‘What’, ‘How much’, ‘With which’, ‘How’ and ‘Where’ to produce.

Routing may be either very simple or complex. This depends upon the nature of production. In a continuous production, it is automatic, i.e. it is very simple. However, in a job order, it is very complex.

Routing is affected by the human factor. Therefore, it should recognize human needs, desires and expectations. It is also affected by plant-layout, characteristics of the equipment, etc.

The main objective of routing is to determine (fix) the best and cheapest sequence of operations and to ensure that this sequence is followed in the factory.

Routing gives a very systematic method of converting raw-materials into finished goods. It leads to smooth and efficient work. It leads to optimum utilization of resources; namely, men, machines, materials, etc. It leads to division of labor. It ensures a continuous flow of materials without any backtracking. It saves time and space. It makes the work easy for the production engineers and foremen. It has a great influence on design of factory's building and installed machines.

So, routing is an important step in production planning and control. Production planning starts with it.

Read article on procedure of routing in production.

2. Scheduling

Scheduling is the second step in production planning and control. It comes after routing.

Scheduling means to:

1. Fix the amount of work to do.
2. Arrange the different manufacturing operations in order of priority.
3. Fix the starting and completing, date and time, for each operation.

Scheduling is also done for materials, parts, machines, etc. So, it is like a time-table of production. It is similar to the time-table, prepared by the railways.

Time element is given special importance in scheduling. There are different types of schedules; namely, Master schedule, Operation schedule and Daily schedule.

Scheduling helps to make optimum use of time. It sees that each piece of work is started and completed at a certain predetermined time. It helps to complete the job systematically and in time. It brings time coordination in production planning. All this helps to deliver the goods to the customers in time. It also eliminates the idle capacity. It keeps labor continuously employed.

So, scheduling is an important step in production planning and control. It is essential in a factory, where many products are produced at the same time.

3. Dispatching

Dispatching is the third step in production planning and control. It is the action, doing or implementation stage. It comes after routing and scheduling.

Dispatching means starting the process of production. It provides the necessary authority to start the work. It is based on route-sheets and schedule sheets.

Dispatching includes the following:

1. Issue of materials, tools, fixtures, etc., which are necessary for actual production.
2. Issue of orders, instructions, drawings, etc. for starting the work.
3. Maintaining proper records of the starting and completing each job on time.
4. Moving the work from one process to another as per the schedule.
5. Starting the control procedure.
6. Recording the idle time of machines.

Dispatching may be either centralized or decentralized:

1. Under centralized dispatching, orders are issued directly by a centralized authority.
2. Under decentralized dispatching, orders are issued by the concerned department.

4. Follow-up

Follow-up or Expediting is the last step in production planning and control. It is a controlling device. It is concerned with evaluation of the results.

Follow-up finds out and removes the defects, delays, limitations, bottlenecks, loopholes, etc. in the production process. It measures the actual performance and compares it to the expected performance. It maintains proper records of work, delays and bottlenecks. Such records are used in future to control production.

Follow-up is performed by ‘Expediters’ or ‘Stock Chasers’.

Follow-up is necessary when production decreases even when there is proper routing and scheduling. Production may be disturbed due to break-downs of machinery, failure of power, shortage of materials, strikes, absenteeism, etc.

Follow-up removes these difficulties and allows a smooth production.

Steps or Procedure of Routing in Production

Following image depicts main steps or procedure of routing in production.

Following important steps are involved in the procedure of routing:

1. Product analysis determines what to manufacture and purchase.
2. Product-analysis is done again to determine materials required for production.
3. Fix the manufacturing operations and their sequences.
4. Decide the number of units to be manufactured in a batch (lot).
5. Estimate the margin of scarp in each lot of production.
6. Analyze the production cost.
7. Prepare production control forms for effective routing.
8. Prepare a separate route-sheet for each order.

Now let's discuss above steps in routing.

1. Product analysis

Product analysis is the first step in the routing procedure. This is done to find out what parts (goods) should be manufactured and what parts should be purchased. This depends mainly on the relative cost. It also depends on other factors such as technical consideration, purchase policies, availability of personnel, availability of equipment, etc. Generally, during less-busy periods; most of the parts are manufactured in the factory. However, during the busy period, many parts are purchased from outside.

2. Determine required materials

Product-analysis is done again to find out what materials are required for production and their quantity and quality.

3. Fix manufacturing operations

The next step in the routing procedure is to fix (decide) the manufacturing operations and their sequences. The detailed production procedure is then scheduled (planned). Information required for this is derived from technical experience and by analyzing the machine capacity.

4. Determine size of batch

The number of units to be manufactured in any one lot (group or batch) should be decided. This is done concerning customers' orders. Necessary provision should also be made for rejections during the production process.

5. Estimate margin of scrap

The amount of scrap in each lot, should be estimated. Generally, a scrap margin is between 2% to 5% of production.

6. Analyze the production cost

Estimating the cost of manufactured goods is actually the function of costing department. However, the routing section provides necessary data to the costing department that enables it to analyze the production cost.

7. Prepare production control forms

Production Control forms such as Job Cards, Inspection Cards, Tool Tickets, etc. should be prepared. These forms should contain complete information for effective routing.

8. Prepare route sheet

Route sheet is prepared on a production control form. It shows the part number, description of the part and the materials required. It is prepared by a route clerk. Separate route-sheet is required for each part of a customer's order.

Difference between Intermittent and Continuous Production System

Difference between intermittent and continuous production system; based on 10 points.

Image credits © Prof. Mudit Katyani.

1. Nature of product.
2. Flexibility of process.
3. Scale of production.
4. Per unit cost.
5. Range of products.
6. Instructions.
7. Staff.
8. Storage of final products.
9. Location change.
10. Capital invested.

Now let's distinguish intermittent and continuous production system.

1. Nature of product :
   1. In intermittent production system, goods are produced based on customer orders and not for stocking.
   2. In continuous production system, goods are produced based on demand forecast and for stocking.
2. Flexibility of process :
   1. In intermittent production system, production process is flexible. The product design goes on changing.
   2. In continuous production system, production process is not flexible. It is standardized. The same product is manufactured continuously.
3. Scale of production :
   1. In intermittent production system, goods are produced on a small scale, so there is no economies of scale.
   2. In continuous Production System, goods are produced on a large scale, so there are economies of large-scale production.
4. Per unit cost :
   1. In intermittent production system, cost per unit may be higher because production is done on a small-scale.
   2. In continuous production system, cost per unit may be lower because production is done on large-scale.
5. Range of products :
   1. In intermittent production system, wide ranges of products are manufactured.
   2. In continuous production system, normally one particular type of product is manufactured.
6. Instructions :
   1. In an intermittent production system, many detailed instructions must be provided depending upon the customer's specification.
   2. In continuous production system, single set of instructions is sufficient for operation. Here, there is no need to repeat the instructions.
7. Staff :
   1. Intermittent production system requires staff with high technical skills and abilities.
   2. Continuous production system requires more managerial skills and less technical skills.
8. Storage of final products :
   1. In an intermittent production system, there is no need to store and stock the final products, because items are produced as per customer's orders.
   2. In a continuous production system, there is a need to store and stock the final products until they are demanded in the market.
9. Location change :
   1. In an intermittent production system, change in location is easy.
   2. In a continuous production system, change in location is difficult.
10. Capital invested :
    1. In an Intermittent production system, capital invested is small.
    2. In a continuous production system, capital invested is very huge.

Factors that Affect Productivity

The factors that affect productivity are depicted and listed below.

Image Credits © Prof. Mudit Katyani.

The main factors that affect productivity are:-

1. Technical factors : Technical factors are the most important ones. These include proper location, layout and size of the plant and machinery, correct design of machines and equipment, research and development, automation and computerization, etc. If the organization uses the latest technology, then its productivity will be high.
2. Production factors : The production of all departments should be properly planned, coordinated and controlled. The right quality of raw-materials should be used for production. The production process should be simplified and standardized. All this will increase the productivity.
3. Organizational factor : A simple type of organization should be used. Authority and Responsibility of every individual and department should be defined properly. The line and staff relationships should also be clearly defined. So, conflicts between line and staff should be avoided. There should be a division of labor and specialization as far as possible. All this will increase the productivity.
4. Personnel factors : The right individual should be selected for suitable posts. After selection, they should be given proper training and development. They should be given better working conditions and work-environment. They should be properly motivated; financially, non-financially and with positive incentives. Incentive wage policies should be introduced. Job security should also be given. Opinion or suggestions of workers should be given importance. There should be proper transfer, promotion and other personnel policies. All this will increase the productivity of the organization.
5. Finance factors : Finance is the life-blood of modem business. There should be a better control over both fixed capital and working capital. There should be proper Financial Planning. Capital expenditure should be properly controlled. Both over and under utilization of capital should be avoided. The management should see that they get proper returns on the capital which is invested in the business. If the finance is managed properly the productivity of the organization will increase.
6. Management factors : The management of organization should be scientific, professional, future-oriented, sincere and competent. Managers should possess imagination, judgement skills and willingness to take risks. They should make optimum use of the available resources to get maximum output at the lowest cost. They should use the recent techniques of production. They should develop better relations with employees and trade unions. They should encourage the employees to give suggestions. They should provide a good working environment, and should motivate employees to increase their productivity. Efficient management is the most significant factor for increasing productivity and decreasing cost.
7. Government factors : The management should have a proper knowledge about the government rules and regulations. They should also maintain good relations with the government.
8. Location factors : Productivity also depends on location factors such as Law and order situation, infrastructure facilities, nearness to market, nearness to sources of raw-materials, skilled workforce, etc.

Importance of Location Planning

Location planning decisions are very important for all types of business units. This is because it affects the cost, selling price, and demand of the product. It is a non-recurring heavy expenditure. Large companies take the help of different professionals like lawyers, accountants, environmentalist, etc. for selecting the proper location of plant.

The need or importance of location planning is depicted and listed below.

Image Credits © Prof. Mudit Katyani.

Following points discuss the importance of location planning:

1. Expansion : If the company wants to expand and diversify its activities, it will have to search for a new-location for setting up its new business unit. In this case, it will need a location planning.
2. Cost advantages : If an existing plant is not near a market place, it will increase the transport cost. This will also increase the cost of the product. So, to avoid this, the company will search for a new plant location which is near the market. Such location of plant must be convenient to the employees and must have a regular supply of water and electricity. Overall, this will result in reduction of the cost of production.
3. Discovery of raw-material : Generally, a plant must be located at a place where raw-material is available. For example, if oil and gas are found at some place, then a new petrochemical plant has to be set up there for processing purpose.
4. Additional facilities : Plant location-related decisions will have to be taken if the organization wants additional facilities. New facilities may be necessary to improve the quality of work, to meet rising demands, etc.
5. Mergers : Mergers, joint-ventures, and Amalgamations may lead to start a new unit at a new-location. It may even require closure of an existing plant unit. In mergers, production is mostly started at a new place as per the new-agreement.
6. Political and social changes : Each political party has its own philosophy. Political changes can lead to changes in economic policies of the government. This may make the existing location unattractive for doing business. Social changes may require production of eco-friendly goods. This may require a change in location.
7. Increasing product demand : Demand for the company's product may increase at other places, especially in abroad countries. So, the company will have to start a branch in another state or in foreign countries. This would lead to a search for new location of plant.
8. Avail tax benefits : Government may announce some tax benefits for starting a business in rural areas. This may motivate entrepreneurs to start their business units in remote areas.

Benefits of higher productivity

The following image depicts a list of nine benefits of higher productivity.

Image credits © Prof. Mudit Katyani.

The nine main benefits of higher productivity are:

1. Higher profit,
2. Employees welfare,
3. Better return
4. Nice relations,
5. Customer satisfaction,
6. Good credit rating,
7. Goodwill,
8. Better credit terms, and
9. Low turnover.

Now let's discuss briefly these important benefits of higher productivity.

1. Higher profit : Higher productivity enables the company to produce more output. This results in more profit to it. This profit can be used for expansion and other activities.
2. Employees welfare : Higher productivity brings more profit to the company. This profit can be used to provide better facilities and working conditions to the employees. So, it results in welfare of the employees.
3. Better return : The company gets better return on investment due to higher productivity. So, they pay a better dividend (share of profit) to the shareholders. The market price of the share will also increase.
4. Nice relations : Higher productivity results in nice relations between the management and the employees. Good working conditions, facilities and incentives motivates employees to give their best to the organization.
5. Customer satisfaction : Higher productivity results in better customer satisfaction. This is because customers are provided with good-quality products at low prices. Satisfaction of customers will result in their loyalty towards the company.
6. Good credit rating : Higher productivity results in a good credit rating by financial institutions. This will enable the company to get cheap funds from the market to meet working and fixed capital requirements.
7. Goodwill : Due to higher productivity, the company will have a good corporate image (goodwill) in the minds of social entities. This includes: The shareholders, government, suppliers, financial institutions, customers, etc.
8. Better credit terms : Higher productivity helps the company to get better terms from the suppliers. The suppliers may give better credit terms due to its goodwill.
9. Low turnover : Higher productivity enables the company to provide better facilities and working conditions to the employees. This will make the employees loyal. Hence, employee turnover and absenteeism will reduce.

Problems in Measuring Productivity

The difficulties or problems in measuring productivity are listed below

Image Credits © Prof. Mudit Katyani.

1. Difficulty in measuring output : The output of an industry may be measured in terms of volume (units) or value (dollars). It is very difficult to combine both these factors.
   1. If the output is homogeneous (similar), then the productivity can be measured in terms of volume.
   2. If the output is not homogeneous, then the productivity can be measured in terms of value.
   3. However, if some units are homogeneous and other non-homogeneous, then the industry will face difficulties in measuring productivity.
   Similarly, it is very difficult to find out whether the by-products and work-in-progress should be included in output or not. If it is included, then it is very hard to find its value.
2. Difficulty in measuring inputs : Most industries do not have proper records of the inputs of land, labor, capital and machines. Even if such records are available, it is very difficult to calculate the exact number of man hours worked i.e. the input of labor.
3. Factorial productivity :
   • Factorial Productivity means to calculate the productivity of different factors of production separately.
   • Some management experts say that a single factor of production cannot produce anything by itself. Therefore, it has no productivity. A single factor of production has productivity only if it is combined with other factors of production.
   • Therefore, according to these management experts, the concept of factorial productivity is meaningless.
4. Changing conditions : There is a continuous change in the price of inputs and outputs, quality of raw-materials, machines and tools, quality of labor, etc. All this creates difficulties in measuring productivity.
5. Service sector : It is very difficult to measure the productivity of service sectors like Banking, Insurance, Education, etc. This is because the output of the service sector is intangible.
6. Different periods : It is very difficult to compare the productivity of two different periods. For example, comparison of productivity during a war period with a peace period is meaningless.
7. Difficulty in measuring man-hours : It is difficult to find out the exact number of productive man-hours. This is because wages paid to the employees also includes the cost of idle time.
8. Technological change : Changes in technology will cause a change in the nature and quality of output. Therefore, measurement of productivity will become difficult.

Definition of Scheduling

The definition of scheduling as quoted by an eminent scholar is as follows:

According to Richard Lansburgh and William Spriegel,

“Scheduling involves establishing the amount, of work to be done and the time each element of the work will start, or the order of work. This includes allocating the quality and rate of output of the plant or department and also the date or order of starting of each unit of work at each station along the route prescribed.”

Lansburgh and Spriegel gave scheduling definition in their book ‘Industrial Management’ published in 1995.

According to James L. Lundy,

“Scheduling consists of the assignment of starting and completion times for the various operations to be performed.”

James Lundy defined scheduling in his book ‘Effective Industrial Management,’ first published in 1957.

According to Bethel, Atwater, Smith and Stackman (Jr),

“Scheduling is that phase of production control which rates the work in the order of its priority and then provides for its release to the plant at the proper time and in the correct sequence. Thus, it is concerned with when work shall be performed on a product or part.”

This definition is referred from a book titled ‘Industrial Organization and Management,’ first published in 1945. This book is a collective work of Franklin S. Atwater, Lawrence L. Bethel, Harvey A. Stackman (Jr) and George H. E. Smith.

According to Leon Alford and Henry Beatty,

“Fitting specific jobs into a general time-table so that orders may be manufactured in accordance with contracted liability, or in mass production, so that each component may arrive at and enter into assembly in the order and at the time required.”

Alford and Beatty expressed above quote in their work titled ‘Principles of Industrial Management’ published in 1951.

Meaning of Scheduling

The meaning of scheduling can be grasped from the following points:

1. Scheduling is the last step in production planning alone. However, it is the second step in production planning and control.
2. It comes after routing. It is a time-table of production. It gives the starting and completion date and time for each operation of job (task or work). It is just like a railway time-table.
3. The production process is divided into many different jobs. Scheduling arranges all these jobs in the order of priority. That is, it tells which job must be done first, which job must be done second and so on. Then it fixes starting and completion date and time for each job.
4. It gives a lot of importance to the time element in the production process.
5. It is also done for materials, parts, machines, etc.

The main purpose or objective of scheduling is to see that all production operations are completed in a given time. If the production is completed in an allotted time, only, then, the delivery of goods can be made on time. If this happens, it will increase the goodwill of the company.

The functions or procedure of scheduling is as follows:

1. Make a list of all the production activities.
2. Fix the starting time for each activity.
3. Fix the finishing time for each activity.
4. Prepare the time-table.

This article on scheduling is continued in the following post:

1. Factors affecting scheduling.

The kinds of scheduling are listed below:

1. Master scheduling : The date of completion of production is assigned or fixed along with stage wise operation schedule.
2. Operation scheduling : The time required to do some amount of work (task or job) with a given machine or process is fixed.
3. Detail operation scheduling : First, all details necessary to do some amount of work with a given machine or process are identified. Later, time required to complete each detail operation of work is fixed.

Factors Affecting Scheduling

The following chart depicts various factors affecting scheduling.

The factors that affect scheduling are grouped into two categories viz;

1. Internal factors : Affect an entity (e.g. a company) from within.
2. External factors : Influence an entity (e.g. an organisation) from outside.

Factors affecting scheduling internally are:

1. Stock of finished goods kept by company.
2. Process intervals of each product.
3. Type of machines available.
4. Availability of personnel.
5. Availability of materials.
6. Manufacturing facilities available in the company.
7. Economic production runs (EPR) or optimum lot size.

Factors that affect scheduling externally are:

1. Consumer demand.
2. Consumer delivery dates.
3. Inventories (stock of goods) with dealers and retailers.

Now let's discuss internal and external factors influencing scheduling.

Internal Factors Affecting Scheduling

Followings are the internal factors affecting scheduling:

1. Finished goods inventories : Scheduling depends on how much stock of finished goods is kept by the company. Most companies keep, one month's supply of each product, as stock. If the company's product is fast moving or slow moving, then scheduling will have to be changed.
2. Process intervals : It depends on the process intervals of each product. Process interval is the time required to produce a product. Different products have different process intervals. For example, the process interval of a car is more than that of a soap. Scheduling will be different for each process interval.
3. Type of machines available : It also affected by the type of machines available. If the company has old and outdated machines, the schedule must keep provisions for the breakdown of machines. Modern and computerized machines makes scheduling very easy.
4. Availability of personnel : Scheduling also depends on the availability of personnel. If the company has untrained and inexperienced employees, then they will take more time to produce a product. So, the schedule must keep provisions for this. A faster schedule will be required for trained and experienced employees.
5. Availability of materials : It is also affected by the availability of materials. If a regular supply of materials is available, then the company can do normal-scheduling. However, if the supply of materials is irregular, the schedule must be made flexible. That is, when the supply is good then the schedule will be fast and vice versa.
6. Manufacturing facilities : Scheduling depends on the manufacturing facilities available in the company. This includes space for new machines, employees, etc. It also includes the availability and supply of electricity and water, which may be required for production. If all the required infrastructure is available, then the production schedule can be fast and vice versa.
7. Economic production run (EPR) : It also depends on the economic production runs. Economic production runs (EPR) means the optimum lot size. That is, how many items must be produced in one lot in order to minimize the cost of production. If the company produces more or less than the optimum lot size, then the cost of production will increase. There are many formulas for calculating optimum lot size. Scheduling must be done only after calculating the optimum lot size.

External Factors Affecting Scheduling

The external factors affecting scheduling are as follows:

1. Consumer demand : Scheduling also depends on the consumer demand. Consumer demand can be found out by sales forecast. So, the production schedule is prepared according to the sales forecast. However, it has to be adjusted (changed) when the actual demand is different from the sales forecast.
2. Consumer delivery dates : The production schedule also depends on the consumer delivery dates. The consumer is the most important person in a business. So, this factor must be given more importance than other factors. The production schedule must be made in such a way that it will guarantee timely delivery to the consumers. In case of seasonal goods, production must be spread out throughout the year; so, there will not be too much pressure in demand season.
3. Dealers and retailers inventories : It also depends on the stock of goods (inventories) with dealers and retailers. The production manager must find out how much stocks is held by dealers and retailers. He must also know why they are keeping this stock. Are they keeping this stock to meet current demand? If yes, then normal-scheduling can be done. However, if they are keeping stock in anticipation of future demand, the scheduling will have to be slowed down because there will be fewer orders in the future.

Factors Affecting Plant Location

Plant location must be selected properly by entrepreneurs while planning to set up their business units. While taking such a decision, they must consider some important factors.

The following image depicts important factors affecting a plant location.

Image credits © Prof. Mudit Katyani.

The ten main factors that affect a plant location are as follows:

1. Law and order situation,
2. Availability of infrastructure facilities,
3. Good industrial relations,
4. Availability of skilled workforce,
5. Social infrastructure,
6. Investor friendly attitude,
7. Nearness to market,
8. Nearness to raw-materials' source,
9. Nearness to supportive industries and services, and
10. Must meet safety requirements.

Now let's discuss above factors affecting the location of a plant.

1. Law and order situation

Plant location must be at that place where law and order situation is in control. Entrepreneurs give a lot of importance to this factor while locating a business unit in any state or region. If a state has bad law and order situation, then the business must not be located within that state, unless it has other important factors such as availability of heavy or bulky raw materials.

2. Availability of infrastructure facilities

Plant location which is selected must have proper infrastructure facilities. Without good infrastructure facilities, it will be difficult to do business efficiently. The infrastructure facilities are the backbone of all industries. Without it, business cannot be done.

Crucial infrastructure facilities that help industries to grow:

• Transport and communications,
• Banking and insurance services,
• Regular fuel supply,
• Continuous supply of electricity and water, etc.

3. Good industrial relations

Plant location must be at those places where good industrial-relations are maintained. Industrial relations become bad, because of militant and selfish trade unions. Entrepreneurs do not want to locate their business at places where anti-social elements are rampant, although there are other favorable factors such as good infrastructure facilities, cheap labor, etc.

4. Availability of skilled workforce

Plant location must be convenient and easily accessible to skilled workforce. Most businesses require skilled-labor force such as engineers, management experts, computer programmers, etc. The entrepreneurs must consider the availability of competent and skillful-workforce at a particular place to locate their business.

5. Social infrastructure

Plant location must have good a social infrastructure. There is a need for social-infrastructure not only for employees but also for the development of their families. The availability of social-infrastructure will increase the employees' welfare.

There must be suitable social infrastructure facilities like;

• Education institutions,
• Hospitals and health centers,
• Community centers like worship place, garden, meditation center, etc.
• Recreation facilities like theaters, clubs, communication facilities, etc.

6. Investor friendly attitude

Plant location must be in those states whose governments have an investor-friendly attitude. Government must give attractive incentives and concessions to those who start business units in their states. There must not be any bureaucratic control for starting a business.

An investor-friendly attitude will not only attract investment, but will also result in the overall development.

7. Nearness to market

Plant location must be near a market. Every business unit depends on a market for selling its goods and services. The goods and services must reach the market on time, and it must be available to the consumers at a low price. Therefore, this factor is given importance while selecting location of a plant.

Locating a plant near the market is preferred, when the product is fragile (easily breakable), perishable, heavy or bulky and when quick service is required.

8. Nearness to raw-materials' source

Plant location must be usually near to the source of raw-material. Raw-materials' costs are about 50% of the total cost. So, it is important in the business to get the raw materials in time and at a reasonable price. Therefore, a business must be located close to the source of raw material, especially in the case of “Gross Materials.”

Gross Materials are those which lose weight in the production process. Examples of Gross Materials are sugarcane, iron ore, limestone, so on.

However, if the raw material is a “Pure Material,” then the business may be located away from the source of raw materials.

Pure Materials are those which add their weight to the finished product. Examples of Pure materials are cotton textiles, bakeries, silk fabrics, etc.

9. Nearness to supporting industries

Plant location must be near its supporting industries and services. If it purchases spare parts from an outside agency, then these agencies must be located very close to the business. If not, the business will have to spend a lot of extra money on transport. It will also be difficult, to control the quality of the spare parts because of the distant location.

10. Must meet safety requirements

Plant location must meet all essential safety requirements. Due to air, water and sound pollution, some factories have a bad effect on the health of the people. Therefore, these factories must be located away from residential areas. Safety of environment must also be given priority in this regards.

10. Miscellaneous factors

Following miscellaneous factors also affect a plant location:

• Availability and cost of land,
• Suitability of land - soil and topography,
• Climatic conditions,
• Location of a similar unit, etc.

Definition of Product Quality

Before we proceed to understand, “what is product quality?” First, let's focus on the definition of quality.

It is not easy to define the word Quality since it is perceived differently by the different set of individuals. If experts are asked to define quality, they may give varied responses depending on their individual preferences. These may be similar to following listed phrases.

According to experts, the word quality can be defined either as;

1. Fitness for use or purpose.
2. To do a right thing at first time.
3. To do a right thing at the right-time.
4. Find and know, what consumer wants?
5. Features that meet consumer needs and give customer satisfaction.
6. Freedom from deficiencies or defects.
7. Conformance to standards.
8. Value or worthiness for money, etc.

Dr. Joseph Juran coined a short definition of quality as;

“Product's fitness for use.”

Juran's definition of quality is quite simple and popular one. However, it doesn't directly convey an in depth meaning of quality needed by managers who are faced to decide on selecting a right course of action.

To understand Juran's concept of quality, managers must study distinctions made in the following figure.

Image credit and reference © “Juran's Quality Handbook,” 5^th Edition.

Hence, based on the above discussion, definition of product quality can be stated as follows:

“Product quality means to incorporate features that have a capacity to meet consumer needs (wants) and gives customer satisfaction by improving products (goods) and making them free from any deficiencies or defects.”

Meaning of Product Quality

Product quality mainly depends on important factors like:

1. The type of raw materials used for making a product.
2. How well are various production-technologies implemented?
3. Skill and experience of manpower that is involved in the production process.
4. Availability of production-related overheads like power and water supply, transport, etc.

Product quality has two main characteristics viz; measured and attributes.

1. Measured characteristics includes features like shape, size, color, strength, appearance, height, weight, thickness, diameter, volume, fuel consumption, etc. of a product.
2. Attributes characteristics checks and controls defective-pieces per batch, defects per item, number of mistakes per page, cracks in crockery, double-threading in textile material, discoloring in garments, etc.

Based on this classification, we can divide products into good and bad.

So, product quality refers to the total of the goodness of a product.

The five main aspects of product quality are depicted and listed below:

1. Quality of design : The product must be designed as per the consumers' needs and high-quality standards.
2. Quality conformance : The finished products must conform (match) to the product design specifications.
3. Reliability : The products must be reliable or dependable. They must not easily breakdown or become non-functional. They must also not require frequent repairs. They must remain operational for a satisfactory longer-time to be called as a reliable one.
4. Safety : The finished product must be safe for use and/or handling. It must not harm consumers in any way.
5. Proper storage : The product must be packed and stored properly. Its quality must be maintained until its expiry date.

Company must focus on product quality, before, during and after production:

1. Before production, company must find out the needs of the consumers. These needs must be included in the product design specifications. So, the company must design its product as per the needs of the consumers.
2. During production, company must have quality control at all stages of the production process. There must have quality control for raw materials, plant and machinery, selection and training of manpower, finished products, packaging of products, etc.
3. After production, the finished-product must conform (match) to the product-design specifications in all aspects, especially quality. The company must fix a high-quality standard for its product and see that the product is manufactured exactly as per this quality standard. It must try to make zero defect products.

Importance of Product Quality

Image depicts importance of product quality for company and consumers.

1. For company : Product quality is very important for the company. This is because, bad quality products will affect the consumer's confidence, image and sales of the company. It may even affect the survival of the company. So, it is very important for every company to make better quality products.
2. For consumers : Product quality is also very important for consumers. They are ready to pay high prices, but in return, they expect best-quality products. If they are not satisfied with the quality of product of company, they will purchase from the competitors. Nowadays, very good quality international products are available in the local market. So, if the domestic companies don't improve their products' quality, they will struggle to survive in the market.

Social responsibility of business

The social responsibility of business means various obligations or responsibilities or duties that a business-organization has towards the society within which it exists and operates from.

Generally, the social responsibility of business comprises of certain duties towards entities, which are depicted and listed below.

1. Shareholders or investors who contribute funds for business.
2. Employees and others that make up its personnel.
3. Consumers or customers who consumes and/or uses its outputs (products and/or services).
4. Government and local administrative bodies that regulate its commercial activities in their jurisdictions.
5. Members of a local community who are either directly or indirectly influenced by its activities in their area.
6. Surrounding environment of a location from it operates.
7. The general public that makes up a big part of society.

The social responsibility of business comprises of the following obligations:

1. A business must give a proper dividend to its shareholders or investors.
2. It must provide fair wages and salaries with good working conditions.
3. It must provide a regular supply of good quality goods and/or services to its consumers/customers at reasonable prices.
4. It must abide by all government rules and regulations, supports its business-related policies and should pay fair taxes without keeping any delays or dues.
5. It must also contribute in betterment of a local community by doing generous activities like building schools, colleges, hospitals, etc.
6. It must take immense care to see that its activities neither directly nor indirectly create a havoc on the vitality of its surrounding environment.
7. It should maintain a stringent policy to curb or control pollution in regard to contamination of air, water, land, sound and radiation leakages. Here, to do so, it must hire experienced professional individuals who are experts in their respective fields.
8. It should also offer social-welfare services to the general public.

The core objectives of social responsibility of business are as follows:

1. It is a concept that implies a business must operate (function) with a firm mindset to protect and promote the interest and welfare of society.
2. Profit (earned through any means) must not be its only highest objective else contributions made for betterment and progress of a society must also be given a prime importance.
3. It must honestly fulfill its social responsibilities in regard to the welfare of society in which it operates and whose resources & infrastructures it makes use of to earn huge profits.
4. It should never neglect (avoid) its responsibilities towards society in which it flourishes.

Now let's discuss, how the survival, growth and success of business are linked and dependent on sincere execution of its social responsibilities.

Note: Refer above figure and try to co-relate articles given in this image with following points of justification.

1. Shareholders or investors

Social responsibility of business towards its shareholders or investors is most important of all other obligations.

If a business satisfies its funders, they are likely to invest more money in a project. As a result, more funds will flow in and the same can be utilized to modernize, expand and diversify the existing activities on a larger scale. Happy financiers can fulfill the rising demand of funds needed for its growth and expansion.

2. Personnel

Social responsibility of business towards its personnel is important because they are the wheels of an organization. Without their support, the commercial institution simply can't function or operate.

If a business takes care of the needs of its human resource (for e.g. of office staff, employees, workers, etc.) wisely, it will boost the motivation and working spirit within an organization. A happy employee usually gives his best to the organization in terms of quality labor and timely output than an unsatisfied one. A pleasant working environment helps in improving the efficiency and productivity of working people. A good remuneration policy attracts new talented professionals who can further contribute in its growth and expansion.

Thus, if personnel is satisfied, then they will work together very hard and aid in increasing the production, sales and profit.

3. Consumers or customers

Social responsibility of business towards its consumers or customers matters a lot from sales and profit point of view. Its success is directly dependents on their level of satisfaction. Higher their rate of satisfaction greater are the chances to succeed.

If a business rolls out good-quality products and/or delivers better quality services that too at reasonable prices, then it is natural to attract lots of customers. If the quality-price ratio is maintained well and consumers get worth for their money spend, this will surely satisfy them. In a long run, customer loyalty and retention will grow, and this will ultimately lead to profitability.

4. Government

Social responsibility of business towards government's regulatory bodies or agencies is quite sensitive from the license's point of view. If permission is not granted or revoked abruptly, it can result in huge losses to an organization. Therefore, compliance in this regard is necessary.

Furthermore, a business must also function within the demarcation of rules and policies as formulated from time to time by the government of state or nation. It should respect laws and abide by all established regulations while performing within the jurisdiction of state.

Some examples of activities a business can do in this regard:

• Licensing an organization,
• Seeking permissions wherever necessary,
• Paying fair taxes on time,
• Following labor, environmental and other laws, etc.

If laws are respected and followed, it creates a goodwill of business in eyes of authorities. Overall, if a government is satisfied it will make favorable commercial policies, which will ultimately open new opportunities and finally benefit the organization sooner or later.

Therefore, satisfaction of government and local administrative bodies is equally important for legal continuation of business.

5. Local community

Social responsibility of business towards the local community of its established area is significant. This is essential for smooth functioning of its activities without any agitations or hindrances.

A business has a responsibility towards the local community besides which it is established and operates from. Industrial activities carried out in a local-area affect the lives of many people who reside in and around it. So, as a compensation for their hardship, an organization must do something or other to alleviate the intensity of suffering.

As a service to the local community, a business can build:

• A trust-run hospital or health center for local patients,
• A primary and secondary school for local children,
• A diploma and degree college for local students,
• An employment center for recruiting skilled local people, etc.

Such activities to some-extend may satisfy the people that make local community and hence their changes of agitations against an establishment are greatly reduced. This will ensure the longevity of a business in a long run.

6. Environment

Social responsibility of business with respect to its surrounding environment can't be sidelined at any cost. It must show a keen interest to safeguard and not harm the vitality of the nature.

A business must take enough care to check that its activities don't create a negative impact on the environment. For example, dumping of industrial wastes without proper treatment must be strictly avoided. Guidelines as stipulated in the environmental laws must be sincerely followed. Lives of all living beings are impacted either positively or negatively depending on how well their surrounding environment is maintained (naturally or artificially). Humans also are no exception to this. In other words, health of an environment influences the health of our society.

Hence, environmental safety must not be an option else a top priority of every business.

7. Public

Finally, social responsibility of business in general can also contribute to make the lives of people a little better.

Some examples of services towards public include:

• Building and maintaining devotional or spiritual places and gardens for people,
• Sponsoring the education of poor meritorious students,
• Organizing events for a social cause, etc.

Such philanthropic actions create a goodwill or fame for the business-organization in the psyche of general public, which though slowly but ultimately pay off in a due course of time.

The world is recognizing the importance of social responsibility of business.

Scope of social responsibility of business

Earlier, we discussed the introduction of the social responsibility of business. In this starting article, we tried to grasp the basic understanding of its concept. Now as a continuation to this series let's discuss further.

The scope of social responsibility of business mainly covers its obligations or duties towards four social groups.

These are as follows:

1. Shareholders or investors,
2. Employees or workers,
3. Consumers or customers and
4. Community.

These groups are the four areas of social responsibility of business.

The main concern of a business is to fulfill its responsibilities towards these four social groups.

The social responsibility of business towards shareholders or investors:

• Provide reasonable return on their investment.
• Protect their investment.
• Increase the market value of their shares by making a fair profit and by building a good image of the business.
• Regularly provide an up-to-date, accurate and full information on the working of business.
• Treat all shareholders fair and equally well without any bias or partiality.
• Take necessary steps to expand the business.
• Carry out research and development (R&D) activities to innovate and improve products and/or services.

The social responsibility of business towards employees or workers:

• Pay fair wages or salaries.
• Provide pleasant working conditions and better work environment.
• Make provisions for the welfare of labour and old age security (OAS) pension program.
• Arrange training and educational programs for skills enhancement and improve job performance.
• Appreciate their job well done and also recognize their talents.
• Allow their participation in management and also consider their opinions in matters of decision making.
• Provide proper and effective grievance redressal mechanism for employees.
• Introduce schemes for sharing profit with employees.
• Allow workers to execute their right to form associations or trade unions.
• Introduce schemes for recreation or entertainment of workers.
• Treat them with dignity and respect and not as work slaves.
• Give them a meaningful work that suits their individual expertise or skills.
• Guarantee them their social, religions, cultural, and political freedom.

The social responsibility of business towards the consumers or customers:

• Provide quality goods and/or services at reasonable prices.
• Provide a good after sales services and customer support.
• Accurately describe and don't falsify any information related to the products and/or services.
• Guard against adulteration, poor quality, lack of service and courtesy, misleading and dishonest advertising.
• Make research and development (R&D) to introduce new products and/or services and enhance their quality.
• Take appropriate steps to remove imperfections in the distribution system, including black marketing, profiteering and other anti-social elements.
• Provide consumers an opportunity to get heard and resolve their grievances as early as possible.
• Provide protection against monopoly and restrictive trade practices.
• Understand the needs & wants of customers and try best to satisfy them.

The social responsibility of business towards community is as follows::

• Take essential steps to maintain proper ecological balance of the surrounding environment.
• Prevent environmental degradation caused due to haphazard and unchecked pollution of air, water and land.
• Keep goodness and safety of infrastructure with regular maintenance, repairs and upgradation, wherever necessary.
• Rehabilitate the population displaced due to business operations, if any.
• Take initiative in the conservation of scare resources and try to find out their alternatives and substitutes wherever possible.
• Contribute in the development of socially-backward areas.
• Promote ancillary, small-scaled and cottage industries.
• Make possible contribution to promote education and control population.
• Assist in the overall developments of the locality.
• Improve the efficiency of business operations.
• Contribute help in events of disasters like occurrence of any natural calamities, to help victims.
• Provide health care facilities for local community, especially for children, women and senior citizens.
• Provide day-care centers for children of working mothers.
• Provide equal opportunity of employment.
• Make provisions for social accountability.
• Maintain good relationship between business and society.
• Cooperate with government and non-governmental organizations in their efforts to enhance the development and betterment of the society.

So the coverage or scope of social responsibility of business mainly covers its obligations towards above four social groups.

Functions of advertising agency

Advertising agency is an independent service-rendering organization. It delivers various services and performs many functions for its clients, who are advertisers. It is mainly involved in activities like planning, preparing and placing of ads in media. It also performs non-advertising functions for them. It offers them advisory and creative services. It does so to make a profit.

Following image depicts the major functions of advertising agency.

Eleven main functions of ad agency are as follows:

1. Attracting clients,
2. Research function,
3. Advertising planning,
4. Creative function,
5. Media selection,
6. Advertising budget,
7. Coordination,
8. Sales promotion,
9. Marketing research,
10. Non-advertising functions, and
11. Public relations.

Now let's discuss above main functions of an advertising agency.

1. Attracting clients

Advertising agency needs clients (advertisers). Without them, it cannot survive.

Ad agency always tries to attract clients usually by giving ads in trade journals. It also seeks their attention by offering them various services. It offers expert, cheap and quick services. It maintains good relations with them. It tries to give them full satisfaction. It strives harder to attain their goodwill and customer-loyalty.

2. Research function

Advertising agency gathers information related to the client's product.

It collects following information about a product under its research function:

• Features, quality, advantages and limitations of a product,
• Present and future market possibilities,
• Competition in the market,
• Situation in the market,
• Distribution methods,
• Buyers' preferences, so on.

Ad agency analyses (studies) all this collected information properly and draws conclusions for its research. It helps in planning an advertising campaign, selecting proper media and creation function.

3. Advertising planning

Advertising agency plans the entire ad campaign of its client.

Advertising planning is a primary function of an ad agency. It is done when its research function is completed. That is, after analyzing the client's product, its competitors, market conditions, etc. It is done by experts who use their professional experience to make a result-oriented advertising-plan.

After making the advertising plan, it is shown to the client. If the client likes and approves it, then the plan is executed (put into action).

4. Creative function

Advertising agency put the advertising-plan into action under its creative function.

Creation of ads is the most important function of an ad agency. Generally, it involves activities like:

• Copy writing,
• Drawing photographs,
• Making illustrations, layouts, an effective ad message, etc.

These jobs are done by experts like copy writers, artists, designers, etc. These people are highly skilled and creative. They make an advertisement more appealing. Attractive ads help to increase the sales of the product.

The ad agency must always use fresh ideas for creating ads. It must neither use old tactics nor copy the ad-campaign of other products.

5. Media selection

Advertising agency helps an advertiser to select a proper media (ad platform) to promote his advertisement effectively.

Media selection is a highly specialized function of an ad agency. It must select the most suitable media for its client's ad. It must choose media, which has a potential to give best results for the lowest cost. It must select more than one media for the ad. For example, an advertisement can be put on television, the Internet, newspapers, magazines, etc.

After selecting the media, the ad agency must maintain goods contacts with the media.

6. Advertising budget

Advertising agency helps an advertiser to prepare his ad budget. It helps him to use his budget economically and make the best use of it.

Without a proper advertising budget, there is a risk of client's funds getting wasted or lost. If an advertiser suffers a loss, he may not bring new projects. As a result, there is a possibility of losing a potential client that can bring more business to an ad agency.

7. Coordination

Advertising agency brings a good coordination between the advertiser, itself, media and distributors. This is a very important function. If coordination is proper, it will increase the sales of the product.

8. Sales promotion

Advertising agency performs sales promotion. It helps an advertiser to introduce sales promotion measures for the dealers and consumers. This helps to increase the sales of the product.

9. Marketing research

Advertising agency helps its clients to solve their marketing problems. It does so by conducting a marketing research for them.

10. Non-advertising functions

Advertising agency also performs many non-advertising functions:

• It fixes the prices of the product,
• It determines the discounts,
• It designs the product,
• It also designs its package, trade marks, labels, etc.

These non-advertising services help an advertiser to increase its sales.

11. Public relations

Advertising agency does the public relations (PR) work for its clients. It increases the goodwill between its clients and other parties like consumers, employees, middlemen, shareholders, etc. It also maintains good relations between the client and media owner.