Major operational policies of a Manufacturing Company of Anowar Jute S.pinning Mills Ltd in Bangladesh
Anowar Jute Spinning Mills Ltd. is the cash cow unit of Anowar Group of Industries with was established in 1997 and still producing jute yarn and exporting them in various country. To the behind of this success, they have a suitable operational policy practice. Without practicing accurate operational policy no company, can gain benefits. As they have hard working executives team, a better working environment, strong supervision, favorable reward system and so on, They are getting goodwill day to day. I am lucky that I have got a chance to do my internship in this company and with a interest topics. I think it will help to all who are interest to know suitable policy of a manufacturing company.
Background of the study:
Industries play a pivotal role in the economic development of every country. This is why industrialization has been adopted as a vital instrument of economic development in many developing countries. Realizing this, Government of Peoples Republic of Bangladesh has facilitated the jute Yarn Company by providing necessary loans and incentive. So, that the company can run their business smoothly. Although the jute yarns business is potential in our country. That is why their jute yearn manufacturing company producing jute yarn and exporting them in various country of the world and making contribution to the national economy of Bangladesh.
Every country like Bangladesh needs to set up necessary operational policy to rune any business. In order to get maximum benefits from such manufacturing company a suitable policies is very important. Any error in formulating policy will have an adverse impact on total business of the country.
Certain major issues confront the central management to adopting suitable policy of a country. Policy means to taking strategies to run the business. It refers to the evaluation of total process and selection between alternatives. The authority of the company prepares policy. An expert team consisting of engineer, economist and financial analyst has appraised the policy. This report critically evaluates the proposed policy through technical analysis, economic analysis and financial evaluation. When the policy is found to be technically feasible, financially rewarding and economically & commercially viable only then that policy accepted by the authority. This study will make an attempt to the operational policy Practice of Anwar Jute Spinning Mills Ltd. (AJSML).
Objectives to the study
This report examines the procumbent and marketing polices practiced in Anwar Jute Spinning Mills Ltd. (AJSML. The information about the operational policy have taken from the entrepreneur, executives, accountants, other employee of the company. The objectives of the study are to find out what are using in manufacturing company, how they are using them what are the suitable policy for the manufacturing company, how a company can formulated a suitable policy for its business, how capable they are pursuit suitable policy, how they are dealing with this policies, what kinds people are needed for formulating suitable policy, the company who are practicing accurate policy are in what position, the company who are failed to setup accurate policy for their business is what position & what aspects of a policies maker need to scrutinize & evaluate of its particular operational policy.
The objectives are summarized as follows:
Ä To get an overall idea about the existing operationa, and marketing policy of Anwar Jute Spinning Mills Ltd. (AJSML);
Ä Evaluate the particular existing operational policy;
Ä To determine the limitations or problems (if any) of the operational policy;
Ä To recommend necessary steps to over come such limitations.
Scope of the study:
This report will mainly focus on the operational policy of Anwar Jute Spinning Mills Ltd. (AJSML). The proposed study will cover the policy practice, procedures and technique followed by the company in their total purchasing and selling. Moreover the evaluation of its procurement and marketing policy of the Anwar Jute Spinning Mills Ltd. (AJSML).
Methodology of the study:
Correct and smooth completion of research work requires adherence to some rules and methodologies. Rules were followed to ease the data collection procedure. Accuracy of study depends on the information and data analysis.
The area of my study has been encompassed the operation area of Anwar Jute Spinning Mills Ltd. (AJSML) Head office at the 27, Dilkusha Commercial Area, Dhaka-1000.
To accumulate the required data I have contacted with each departmental head along with other concerned executive of Anwar Jute Spinning Mills Ltd. (AJSML) In case of industry diagnosis I have got in close with the responsible personnel of policy and procurement selection and implication Department of Anwar Jute Spinning Mills Ltd. (AJSML) to collect the information.
TYPES OF RESEARCH
In this study the descriptive type of research has undertaken to gain insights and understanding about overall procedure and policy operation of Anwar Jute Spinning Mills Ltd. (AJSML) a strong part of jute yarn manufacturing industry.
SOURCE OF INFORMATION.
The data has collected from both primary and secondary sources.
Among the primary sources the main sources are:
Ä Interview and conversation with respected personnel of Anwar Jute Spinning Mills Ltd. (AJSML)
Ä Officials’ records & documents of Anwar Jute Spinning Mills Ltd. (AJSML).
Among the secondary sources the main sources are
Ä Annual report & appraisal manual of Anwar Jute Spinning Mills Ltd. (AJSML)
Ä Annual browsure of Anwar Jute Spinning Mills Ltd. (AJSML).
Ä Journals and relevant books
Coverage of the study:
This report covers is prepared based on of the most important department named- procurement and marketing policy selection and evaluation and implementation department of Anwar Jute Spinning Mills Ltd. (AJSML).
Justification of the study:
This study have both practical and academic value. It will help to get a clear idea about the procurement and marketing policy practice in Anwar Jute Spinning Mills Ltd. (AJSML). On the other hand, the findings of this study will help to take appropriate actions and steps for the betterment of the existing practice which basically help the industrial development of the country.
Limitation of the study:
The limitation of are given below:
- Shortage of time : I could not spend sufficient time which was necessary to make the report more representative of the fact.
- Many personnel of the Anwar Jute Spinning Mills Ltd. (AJSML) reluctant to provide useful information.
- Most of the information about the topic relevant in this purpose was secret from the point of view of organization. So this kind of information could not be collected.
- It was not possible to take face to face Interview of the authority of Anwar Jute Spinning Mills Ltd. (AJSML)
- Sufficient records, publications, facts and figures are not available. These constraints narrowed the scope of the real analysis.
- For the reason of confidentiality, some useful information cannot be expressed in this report.
- It takes six months or more for complication of the procurement and Marketing policy Report but I am an Intern in the Anwar Jute Spinning Mills Ltd. (AJSML) for only three months. So to acquire a vast knowledge it is the most important limitation to me.
Literature Review :
Anwar Jute Spinning Mills Ltd. was Established in 1997, ANWAR remains as a fully export oriented organization. Current product range of ANWAR consists of high-grade jute yarn ranging from grist count2.50 lbs to 24 lbs of 15,000 M. tones per annum, with a vision to attain a production level of 30,000 M. tones per annum in jute yarn only by the year 2010. Unique innovations at ANWAR has enabled us to process natural jute yarn into bleached, dyed, coated, water repellant, fire retardant, wrought resistant, and more diversification’s, their distinctive multi system finishing process provides the flexibility to their buyers with the option of packing their spools in weight ranging from 500 gm in mini-spools, balls, and corollas spools, to 40 kg in jumbo Spools with wooden, paper or plastic centers, and finally packed in cartons, trusses, or pallets.
Mainly their customers, their suppliers, and personnel engrave their successful endeavor in jute. It is the close cooperation among them all that has enabled the development & production of individualized technical and industrial natural jute yarn for numerous applications. In accordance with specific demands of their valued customers, the deliver natural jute yarn.
Policy means to take some strategic steps to run or operate the whole process of a company accurately.
Operational Policy :
When the company takes a clear cart, specific and strategic steps to operate the are total operations then it is called operational policy.
Procurement Policy :
Procurement Policy refers to the policy which is used by the company while purchasing their raw materials, consumable items and so on. Purchase policy basically formulated by considering two thinks. One is credit purchase another is cash purchase. When a company by their required raw me trials in cash, then they follow cash purchase policy. In cash purchase, the company / purchase is more powerful. Because they purchase in cash. On the other hand, when the company purchase their requires raw materials in credit, then they follow the credit purchase policy. In credit purchase, supplies are more powerful.
When the authority formulate the purchase policy , they must consider whether the company buy their required raw materials cash or credit more.
Anwar Jute Spinning Mills Ltd. follow both types policy to buy their required raw materials.
Sales Policy :
The specific and strategic steps taken by the company for selling their products is called sales policy. They also needs to consider cash sales or credit sales, while the company formulate the sales policy for their total sales process. As Anwar Jute Spinning Mills Ltd. is fully export oriented company, they always follow export sales policy for their product. Anwar Jute Spinning Mills Ltd. mainly sales their jute yarn to foreign firms on letter of credit (L/C) when any export is occurred, to banks on behalf of both parties deal the total payment as this bank are the guaranter of both parties.
Anwar Group of Industries:
While the trading history of the Group and family started from 1834,the Industrial history of Anwar Group of Industries (AGI) stretches back almost nine decades, when Late Rahim Buskh set up an ivory button & comb manufacturing plant. In the early forties, they had the privilege of being the 1st Bengalis to setup and operate a textile unit named Anwar Silk Mills Ltd. It has been a great honor for the Group to be a part of the history of industrialization in this country. The Group has diversified into most of the important industrial and business sectors playing its part in the economic growth of Bangladesh. Anwar Group foresight and innovativeness has the distinction of being the first electrical cable, polyester fabrics, corrugated pipes and super enamel copper wire manufacturer in the country. Anwar Group of Industries also has become one of the largest corporate Business conglomerate of the Country. They had never to look back since.
Anwar Group is now one of the selected leading this country on the road to prosperity through industrialization. They are also honored to have been the promoters of the first private commercial bank (The City Bank Ltd) of Bangladesh.
Jute: (Golden fibre of Bangladesh)
Jute is an indigenous crop plant used from time immemorial for various domestic, households, and farmyard uses. Similar to that of cottons principal chemical constituent components, Jute is also the second most important natural fiber in the world, next only to cotton. Also known as the “Golden Fiber,” other important characteristics of jute include its silky luster, gold-like color, high tensile strength and low extensibility, Bangladesh has a distinct agro ecological comparative advantage in production of jute. With increasing environmental awareness, a co-friendly and biodegradable jute products are gaining popularity globally for effective retardation of ecological degradation due to the green house effect.
Over centuries, jute has developed from simple origins to an efficient raw material for industrial and technical fabrics and products. Our end product Jute Yarn, is used in widespread areas of fabric manufacturing for the automotive industry, base cloth for floor coverings, fabrics for natural fiber reinforced composites, Upholstery and home famishing, construction, agriculture, horticulture, soil saver for erosion control, Packaging and many more.
01. To their clients: Quality care and service
02. To their staff: Fulfilling, safe & rewarding work environment.
03. To the society: To keep pollution free environment
04. To Government: Bring glory for country.
The mission of Anwar Jute Spinning Mills Ltd. is to be the market leader by satisfying the needs of jute yarn and yarn related products to manufacturer with supplying a high quality jute yarn at a reasonable price.
Anwar Jute Spinning Mills Ltd. has been working as a development associate in building up the homeland for one country. Now at the outset of the twenty-first century, Anwar Jute Spinning Mills Ltd. is over more prepared for heeding the challenging demands of the new millennium. Highly qualified management team, modern management techniques and R&D have empowered the unit to be the forerunner in economic progress of the country. Anwar Jute Spinning Mills Ltd. shall be at the forefront to herald the millennium on the horizon.
Anwar Jute Spinning Mills Ltd. has built their strength on more than a century of experience. The cornerstone of the company’s success is sharing knowledge to create relevant solutions- shaping the best thinking to reflect the ideas of a new age. Their corporate strategy emphasizes speed, efficiency, flexibility and innovation in every facet of the company’s operation-from product development to manufacturing, and from procurement to distribution, Anwar Group strives to achieve the ultimate goal of satisfying its customers. Honesty, integrity and respect for people are their core values and is the basis on which they do business. Through a nation-wide commitment to advancing this objective, Anwar Group and its many partners who share this commitment, have succeeded in creating a national & international network that comprises of many subsidiaries and affiliates. they are paving the path of their journey into a new millennium for the next generation.
The Objects for which the company is established are all or any of the following and in constructing the following sub-clauses the scope of no one of such sub-clauses shall be deemed to the limited of affected by the scope of any other sub-clauses.
Objectives of the company:
(01) Uphold the interest of the client paramount.
(02) Provide visible & consistent quality service.
(03) Ensure assessable, specialized and effective care.
(04) Promote an environment of learning and research & development
(05) Embrace a culture of continuous improvement and innovation
(06) Provide a safe work environment
(07) Comply with the applicable WTO Legislation and export requirement
(08) Reduce, reuse and recycle their waste and resources
(09) Foster a culture of WTO awareness and risk Management.
(10) To form crect construct, establish, set-up, develop, promote, build, jute yarn mills, jute mills specialized jute mills, jute processes, jute twine mills, cotton mills, textile mills, specialized textile mills, jute tape mills, rayon mills, silk mills, woolen mills, fibrous mills, synthetic mills, newsprint mills, rice mills, flour mills, crushing mills, hard board mills and factories as may be allowed by the Govt. From time to time, and to do and carry on the business of spinners, weavers, manufacturers, dealers, brokers, shippers, importers, and exporters of jute yarn jute, jute goods, hessian, sacking bags, twine, carpet backing, blankets, jute cuttings, jute rejections, jute sticks, mesta, rayon, linen, silk, yarn, cloth, wool, synthetic fibres and all other fibrous materials.
(11) To carry on in Bangladesh and close where as may be hereafter determined by the company or any of the business of spinners, weavers manufacturers, balers and processors of jute, jute cuttings, jute cultivation there of, and the business of buyers, sellers exporters and importers dealers in jute, jute outings, jute sections hemp, cotton, flax and any other fibrous materials and of good of paring necking and other business that may be necessary or expedient, and to purchase and raw materials and manufactured articles;
(12) To carry on al or any of the business of spanners doubles, weavers and manufacturers of south sacking, bags, twice and other good and fabrics from jute, flax, hemp and other fibrous materials, also the business of yearn yarn merchants, bleachers, and dyers and makers of vitriol bleaching and dying materials and to purchase, comb, prepare, spin, days and deal in jute, flax hemp and other fibrous materials, and to buy, cell and deal in jute flax, hemp, cloth sacking bags, twine, synthetic yarn, rayon yarn and other goods and fabrics;
(13) To cell, export of otherwise and deal with jute, raw or manufactured and its by-products in any market whether in Bangladesh or in any part of the world.
(14) To purchase, import or otherwise deal with and any raw materials and machinery from any market in Bangladesh or any part of the world.
(15) To purchase, take or in exchange or allotment or hire or otherwise acquire reject, maintain, equip, reconstruct, repair, renovate, or adopt double or movable property including building, residential bungalows, labor lines, quarters, offices, paces of workshop, schools, dispensaries, reservation rooms, canteen, clubs, warehouses, goodwans structures, creations, workshops mills, foundries, places for manufacturing, plant, machinery spindles, looms presses, engines, tools, electric and telephone installations, accessories implements, appliances, apparatus, articles and other things found necessary or convenient for the purpose of the company and for the welfare of the employees of the company and also to expand the business of the company by purchasing, acquiring, getting transferred, adding to enlarging of all or any of the buildings, mills, factories, premises, places being the property of the company or on all or any of the lands for the time being the property of the company or in possession of the company and by expanding from time to time such sum or sums of money as may be necessary or expedient for improving adding to altering, repairing and maintaining the buildings, structures, machinery, plant and property for the time being of the company and to sell or mortgage or let out on hire all or any position of the same as may be thought desirable.
Global export network:
Anwar Jute Spinning Mills Ltd. is a fully export oriented company. They have a global export network. . The countries where the company exports their products are –Australia, Belgium, China, France, Germany, Iran, Italy, Japan, Korea, Netherlands, Turkey, Saudi Arabia, Spain, and Switzerland.
Polices Practices in Anwar Jute Spinning Mills Ltd.are as follows :
PROCUREMENT OF RAW MATERIALS:
Anwar Jute Spinning mills Ltd. mainly purchases two types of materials, such as:
1) Raw Jute and
2) Consumable Items.
Raw Jute Purchases:
Anwar Jute Spinning mills Ltd. have no raw jute plants of their own. They purchase their necessary raw jute from farmer through dealers, whole seller and their cash purchaser. They need about 72000 M. Tons raw jute per annum. 80% of total requirements are bought during the jute season. There are two seasons of jute purchasing in Bangladesh. The cultivable land of Bangladesh is not equally fertile in everywhere. In the low land area jute is planted basically in the month of April –May and harvest in July-August. Then the paikers and whole seller collect raw jute from farmers and store them for resell. On the other hand, the high land area such as the Northern side of Bangladesh plant jute in the month of August-September and harvest them in the month of November-December. The dealer, paiker and the whole seller buy raw jute from farmer and store them and sell them all over the country through their distribution channel. Anwar Jute Spinning mills Ltd. also buy their raw materials from these paiker and dealer.
Jutes are produced al-most all over Bangladesh in the period of July to September generally in the low land. But it can also be produced in the high land in Bangladesh. Approximately 10,00,000 MT jute’s are produced in every year in Bangladesh. These jute’s are used in production of different types of jute products.
From jute Anwar Jute Spinning mills Ltd. makes yarn for making clothes. Chat. Ropes, Bags and other jute related items. They also have a sister concern named Hossain Dyeing and printing mills ltd. Anwar Jute Spinning mills Ltd. colored their Yarn from their sister concern Hossain dyeing mills ltd. They have interred company transaction. Both the company work for one each another to save expenditure and production cost. Anwar Jute Spinning Mills Ltd. is situated at Meghna Ghat, Gozaria, Munshigonj. This location is selected because it has a good communication linkage both by the river and highway.
Anwar Jute Spinning Mills Ltd. generally collect raw jute from various districts in Bangladesh. These are Faridpure, Pabna, Munshigonj, Mymonsingh, sirajgonj, Rangpur, Gazipur, Jamalpur etc.
In these places the company has many dealers. They deliver 80% of the total collection of raw jute and whole seller and the rest of the 20% is collected through the purchasers of the company. Anwar Jute Spinning Mills Ltd. purchase raw jute from these dealers. Payment mode of which may be in cash or credit base. Dealers are responsible for delivery of raw jute to the Meghna Ghat. They generally deliver goods through the inland navigation.
Prices of the raw jute are fixed by the bargain purchase option. This totally depends on the current market price of raw jute. This total process is completely done by the direct observation of group Managing Director.
When the paikers send the raw jute tp the factory, then the specialist and engineers check weight, grade, select, measure moisture etc. If they find any wrong then they inform it to the head office. If they found excess moisture then they deduct it from total quantity. Authority of Anwar Jute Spinning Mills Ltd. is remains on only the Managing Director Mr. Hossain Khaled Syfullah . All the dealings made from head office according to the direction of Managing Director.
Sometimes the company pay advance to the paiker and the whole seller. The company also pays against bill with in the agreement date. If the scarcity of raw jute supply is found then the company look after carefully on the supplier. The company then pay advance to the paiker and the whole seller and also give more emphasis on the paiker and the whole seller . Company then gives special commission to the supplier. To fulfill the demand of raw jute the company takes necessary steps so that the production process should be continued. Other wise the production process will be remain stand still. If the production remains stop then the company will meet in loss. So no company wants to think that their production will stop for a single moment. By hook or cook the company try to collect their required raw jute’s.
Effect of Moisturizer:
If the moisturizer rate is high then it makes hamper for effective production. Then also the raw material becomes weak and the products do not ensure long lasting.
Grading of raw jute: Rate
Raw jute cut Crops Tk.6.70 (Per kg)
Raw jute Habizabi 6.70“
Raw jute Mesta (C)
Raw jute Mesta (SMR)
Raw jute Mesta (X) 12.49
Raw jute Tossa (C)
Raw jute Tossa (SMR) 15.64
Rae jute Tossa (X 1) 20.20
Raw jute Tossa (X 2) 17.47
Rw jute White (C) 19.54
Raw jute Whita (SMR) 15.59
Raw jute White (X) 17.99
Among of those grading of raw jute “ Tossa (X1)” is the best, “White (C)” is better and “ White (X)” is good one.
Yarn Grading Rate
Jute Yarn 10/1CB Tk.36.51 (Per kg)
Jute Yarn 10/1CRM
Jute Yarn 10/2CR
Jute Yarn 10.5/1CB
Jute Yarn 11/1CRM
Jute Yarn 11/2CRM 4.79,,
Jute Yarn 12/1CRM 33.62,,
Jute Yarn 12/2CRM 5.07,,
Jute Yarn 12.65 /1CB
Jute Yarn 1265/1CRM
Jute Yarn 12.67/5Hessina
Jute Yarn13/1 Hessian
Jute Yarn13/2CRM 31.67,,
Jute Yarn13.7/2CRM 34.00,,
Jute Yarn14/1CRM 32.00,,
Jute Yarn] 16/1CRM 27.19,,
Jute Yarn16/1 Hessian
Jute Yarn18/1CB 28.45..
Jute Yarn18/1CRR 24.82,,
Jute Yarn18/1 Hessian
Jute Yarn 22/1CRT 24.48,,
Jute Yarn24/1CRT 25.05,,
Production capacity of Anwar Jute Spinning Mills Ltd. is 20 MT per day. The company’s total operating days per year is 300 days approximately. So the total demand of purchase is 300 days x 20 MT = 6000 MT per year.
Maximum inventory purchase depends on Annual production. The company needs 6000 M. Tons of raw jute per month. But the company purchases more than 6000 (six thousand) M. Tons of raw jute to fulfill their total requirements and overcome any uncertainty. The excess purchases of raw jute is purchased for meet any uncertain demand which may be occurred for different causes, such as taking excess supply order from buyers, increase or raise market demand, destruction of raw jute kept in to the warehouse etc. The production capacity of the company 20 M. Tons per day.
Anwar Jute Spinning Mills Ltd. have two warehouses to store raw jute. Each warehouse can store 50000 MT raw jute.
Working hour of the company is eight hours per day and six day a week. Generally 300 days is measured for production day in a year. There is no chance of shortage because they buy raw jute more than they need per year and store them in a save place.
To fulfill demand and maintain production capacity they have to buy according to their need. If the rate/ price of raw jute increase, then the company will buy the same amount of raw jute but it will be adjust while costing.
The Company buy major portion of raw jute for the year during the season. They also buy some raw jute all the year round according to their need.
The consumable items that they buy for their production but jute:
General Items: Cotton tap, Drill bits, cutter, Emery paper, Flat bar, Flexible pipe, gas oxygen, hings, mala rope, M.S. plate, G.I. Tee, tube light, Valve, hand gloves, super g
lue, sohaga, rubber star coupling, Paint, various pen, pencil,
Mechanical: Ball Bearing, Roller Bearing, Nutt-Bolt, screw driver, sly wrench, S.S Net, shuttle thread, rubber chain, Round Die, Royal Bolt, steel emery,
Spade, side liver bolt, wood screw, V-Belt, U-Block Buss, washer, welding rod, Trolley wheel,
Electrical Items: Bulb, various switch, Cable, G.I. Wire, Battery of Volt, Capacitor, contractor, calling bell, fuse, socket, Magnetic contractor, circuit, cut out, holder
Oil, diesel, lubricant: Oil compressor, oil Gear, oil Hydrolic Acid, Kerosin, Tar pin, Grease, oil-spendle, Mobil, oil seal Rubber, oil Dalda, oil can.
Procurement policy already described above. The company’s policies in that case are:
- Collection of the better quality raw jute in a minimum rate for better costing of the finished goods.
- Ensure the safe transportation in the case of carriage of raw jute in the go down of the company.
- Ensure all the processes to keep the inventory in good form to decrease abnormal loss.
- To prepare a raw material purchase budget in every season.
The total production process from input to output is completely done under the careful observation. Production policies are
- To ensure the better quality of the finished products.
- To introduce TQM (Total Quality Management)
- To increase the research and development budget to introduce the different product lines.
To ensure the yearly production budget and to take maximum attempt to achieve the budgeted target.
The Company has its own vehicles, that are used to distribute and transport raw jute and finished products.
Closely related to decisions on what production activities the company itself will perform are choices of processes to be used. Broad issues in this area are:
(1) Choice of technology.
(2) Extent of division of labor.
(3) Extent of mechanization and automation.
(4) Size and decentralization of plants.
(5) Involvement in process research.
Choice of technology: In the production of many products the manager has no choice regarding the process to be used. Thus AJSML a manufacturer of yarn using jute as his primary raw materials, need be in no quandary about the process to be employed in removing the small quality of jute remaining in the cane after it phases though a jute mill. The only commercially practical method is fermentation. By allowing the jute to ferment, it can be almost completely removed and the remaining jute are then in a light and workable state. Since there is only one feasible process, the manufacturer really faces no problems in this regard and tureens his attention to the detailed methods and facilities for carrying out the process.
Extent of mechanization and automation: AJSML adopt definite policies regarding the extent to which they will automate their operations. The manufacturer of yarn for example, established a policy that operations would be mechanized from start to finish. As a result, the final product might carry the same label as appears on some jute products.
Size and decentralization of operating units: AJSML a large manufacturing companies have considerable choice in the size and location of their plants. For many years, most of them assumed that the larger the plant the more economics would be possible; transportation costs of raw materials or finished products were usually considered the limiting factors on the size of a plant. Present thinking challenges these assumption. At least the advantages of large plants are not taken for granted.
One concern that produces nine related products, for instance, has a clear-cut policy that each product is to be manufactured in a separate plant even though three of the plants employ fewer than two hundred people. Plants are to be located in relatively small communities, rather than big cities, preferable within seventy miles of the home office so as to make face-to-face contacts easy. Several of the plants have already been relocated in accordance with this policy.
How much capacity
Data from a variety of sources must be brought together to estimate the productive capacity a company needs. Sales forecasts of physical volume, policy decisions on what will be purchased instead of made, engineering estimates of machine productivity, production plans on how equipment will be used all contribute to projects on size of plant needed. In addition and overriding such data are several central management policies regarding capacity desired. These policies deal with provisions for peak versus normal requirements, backward taper of capacity, allowance for growth, and balance of facilities.
Peak versus normal load: A completely stable level of operations is virtually impossible. All types of business activity are affected by cyclical fluctuation, and most industries experience seasonal, daily, or even hourly variations in volume of business. In addition, the demand for a company’s product may increase or decrease because of wars, governmental regulations, inventions, floods, changing fancies of the consumer, and many other influences.
A leading example of AJSML that try to meet peak requirements is found in the jute yarn industry.
Most companies follow a policy of letting the customer bear part of the peak load burden.
Other means of meeting peak capacity will, of course, be incorporated in the policy regarding maximum capacity. (a) Manufacturers of tankard; durable products may manufacture stock during slack periods. This arrangement is explored in the next chapter. (b) Overtime work many be feasible for operations not already run 24 hours a day. (c) Obsolete or high-cost equipment may be maintained on a standby basis and placed in service just during the peak. (d) Some of the work may be subcontracted, although this is often difficult because potential subcontractors are likely to be busy during the same peak period. (e) Off-peak discounts, “mail early” campaigns, and other measures may be used to induce customers to avoid peak periods. These devices also involve extra expense and may be more or less satisfactory to customers. Clearly, policy guidance is needed to indicate the reliance on these various ways of responding to peak needs.
Anwar Jute spinning mills is a fully export oriented company. They don’t haves any local sales. Selling policy of the company is at first they give an announce or advertisement in internet mentioning all the information’s about the product’s quality, quantity, size, packing, pattern, price, duration time, terms and conditions. The interested firms contact with the company and sign an agreement with the company on the whole purchases process. Then the firm places an order for their requirements to the company. Then the company starts production as per order. Two banks of each country deal all the transactions in favors of exporter and importer. Some times the importer pay advanced for purchases. If the importer paid advanced the rest of amount they paid after receiving goods. If the importer makes no advance it does not make any reflection on business because most of business run on agreement and faith. Beside both the parties have their bank guarantee? Basically payment made after receiving goods. Discount or commissions are fixed when the both party make or sign on agreement. There are lots of brokers in Bangladesh who play an important role in selling of finished products. Jute Yarn is the finished goods of Anwar Jute spinning mills Ltd. the broker works as a middleman between the seller and buyer. They deal the whole process of purchases and selling. They fixed a rate of the product negotiating with buyers and also fixed a rate with sellers. Between two-fixed rates they get commission. Sometimes the broker becomes an agent of dealings the total process. They received purchases order from the buyer. According to the order, they buy or collect finished goods from various Jute Yarn Mills. They have warehouses and they keep them in to the stores. To selling through Agent is easier and comfortable. Because then the seller only has to meet and negotiate with the Agent. The price of the products determines by bargaining process. Here the exporter needs not to know the real importer. Because the Agents are the only responsible for all transaction. Obviously the importer needs not to know the real exporter. Because the importers import their necessary goods from the Agent. It is only in case of buying from the Agent. But the buyers do not buy all times through Agent. When the buyer buy through Agent then they has to pay extra payment as commission. It increases their total costs. All firms always try to have minimum costs. So importers try to buy from the manufacturers. Today is the age of Globalization, so everything can see and buy in sitting at home by using Inter net. The manufacturers now give advertisement in to the Inter net of their products. Anwar Jute spinning mills Ltd. also give advertisement of their products on Inter Net.
Anwar Jute spinning mills surely is the market leader in the market of jute yarn. Now the prospect of the jute industries is rising in Bangladesh. Government is motivating investors to invest in jute industries although the total environment for the jute industries is not so good. In the financial budgets finance minister is offering various incentives, exemptions and rebates to encourage jute industries and to create the markets for jute industries. Government reduced the income tax rate from 20% to 15% to encourage jute industries or to increase investment in jute industries. Depending on these various opportunities Anwar Jute spinning mills is making different policies for the different department of the organization. Departments of the Anwar Jute spinning mills are 1. Procurement 2. Production 3. Marketing 4. Account 5. Human Resource 6. Finance
Sales Policies – Products
Nature of policies: Certain major issues confront the central management of every company. Time and time again questions about product line, pricing, purchasing, wages, and similar basic matters arise. Policies give central management’s standing answers to these questions. Policies indicate how these recurring problems are to be resolved so as to attain basic objectives.
Policies aid the process of managing an enterprise in a number of ways: (a) With policies clearly understood, a busy executive can delegate duties to subordinates with confidence that these duties will be carried out along the general lines he wishes, (b) Each executive knows how others will act, and this makes coordination easier to achieve, (c) There will be a consistency of action taken by different members of the firm, and a consistency from time to time.
Policies should, of course, be modified when necessary to fit new conditions in the industry and within the company. Usually this should be done only after careful study and the change should be made known to all executives and operating employees affected. In many companies, clear policies exist even though they are not written; through oral training and supervision an employee learns the guideposts which channel his efforts toward desired ends. Policies, then, are not a set of inflexible rules; instead they are the living precepts which guide the company in a continuing and consistent pattern of behavior
Since our present study is focusing on central management, we shall deal with those policy issues that involve the entire company—directly or indirectly. In every company there are major questions regarding:
I. Sales policies
II. Production and purchasing policies.
III. Personnel policies
IV. Financial policies
Product policies: Continuing the analytical framework one stage further, the major questions of policies arising in connection with products usually involve diversification versus specialization of the products to be handled, product -differentiation, and frequency of design changed
DIVERSIFICATION VERSUS SPECIALIZATION
Each company must decide how many -products it will offer for sale and the variety in which these products will be offered. This is a recurring problem as markets change, competition grows, and new technology becomes available.
Expansion of a product line: The number of products offered for sale may vary greatly among companies even in one industry. For example, Anwar Jute Spinning Mills Ltd. one of the large jute yearn producing companies in Bangladesh. The production and sale of numerous lines of products having both direct and indirect connection with Its primary activity, that of butchering. In fact, the company has a large sales department selling all sorts of products) such as wool, yarn etc.
To market effectively its own brand of Anwar Jute Spinning Mills Ltd., jute yarn the company added other types of yarn made from materials that had to be secured from outside sources. These other lines have been expanded to such an extent that less than one tenth of the jute yarn now sold by the company is made of by-products of the packing operations) Actually the jute yarn plant has been moved to another city where it can more economically handle the products that are not derived from slaughtering.
In the production area, Anwar Jute Spinning Mills Ltd. entered the yarn business to provide the large quantities that were needed for jute throughout its plant. Having entered the yarn business to provide its own requirements, the company undertook the sale of yarn to outside concerns and thereby assured itself of economies of large-scale production
Apparently the initial sales were due to the enthusiasm of the salesmen for a new product and willingness on the part of the retailers to try an original stock to see how the product would sell. After this original distribution, however, most new products were discovered to have no unique appeal. Anwar Jute Spinning Mills Ltd. therefore, was found to have a large number of products for which the sales volume was inadequate to justify the cost of manufacturing, warehousing, and selling. .By careful study the company was able to reduce the number of items carried to comparatively few products that really had significant differences. It then concentrated its attention on selling these products rather than dissipating its efforts on new and unnecessary additions to its line.
Occasionally there may be specific reasons for a wide variety of products. A leading department store, for example, undertakes to show 30 colors of fine Jute Yarn ranging over the entire color spectrum. Such wide variety is perhaps, more important as a sales-promotion device than as a useful service to customers. Anwar Jute Spinning Mills Ltd. believe that consumers can be adequately served with about a tenth as main-colors and quality.
A common policy is to fix a limit on the number of items. Then any proposal for a new item must be accompanied by a recommendation for dropping an existing one. While exceptions may be necessary, this plan has the advantage of forcing attention to pruning along with justifying the new item.
Factors favoring diversification. What, then, are possible benefits a manager should look for when deciding how far to extend diversification?
In some lines the customer desires to buy a variety of products from the same source. For example, a dealer in jute supplies must offer several types and sizes of jute to meet the needs of his customers, and he may prefer, to purchase all of these from one source. If a manufacturer of jute offers him only one type, he may refuse to buy this jute because he would prefer to secure it from the same manufacturer from whom he purchases other types and sizes. Again, the retailer may desire to purchase a complete line of hosiery from one manufacturer and may refuse to buy from a manufacturer who offers only one style of product.
The effect upon a company of increasing the number of its products. Before deciding diversification is preferable to specialization for one or more of the reasons just described, a company must consider the impact of an increase in product lines.
Usually a production organization cannot produce efficiently products of widely different quality. Manufacturers of high-grade Jute yarn have found it difficult to adjust the thinking and acting of their organization to the production of cheaper products. An organization manufacturing products in which a large degree of tolerance is permissible will find it difficult to manufacture products of high quality where variations from standards must be very slight.
Another of the dangers in increasing the product line is that the ability of the management to supervise activities required in selling a large number of products will be exceeded. In many cases Anwar Jute Spinning Mills Ltd. may be capable of supervising the sales of a few products, but if new lines of products are added with which the executives are not familiar, they may spend an amount of time administering the venture that is quite out of proportion to the importance of the new products.
Sales Policies – customers
Customer policies of every company should be reviewed periodically to make sure that they are attuned to shifting markets) (The long-term changes have a major impact on customer selection. The revolution in distribution of incomes alone has had a profound effect on markets for luxury goods and for mass production items such as jute yarn.
The five-day week, with the resulting long weekend, has expanded interest in hobbies, sports apparel, and related items To cite i-till another example, the sharp drop in the number of household servants, coupled with a higher average income, has promoted women’s emancipation from household drudgery prepared foods, automatic washing machines, electric mixers, electric dishwashers, and simplified household designs are only some of the more apparent results of this shift. The mechanization of the farm, rising industrial activity in the South, new synthetic materials, and drastic changes in our foreign trade give further evidence of the dynamic nature of markets.
In the face of such changes as- these, it behooves every business administrator like Anwar Jute Spinning Mills Ltd. should keep a vigilant eye on his customer policies.
Distinction between customers and consumers:
Confusion sometime arises due to failure to distinguish between “customers” and “consumers,” The term consumer means the one who areas a product (or service) for his personal satisfaction or benefit; or in the case of industrial materials, the one who so changes the form of the product as to alter its identity. A customer, on the other hand, is anyone who buys goods. A customer may be a consumer, or he may be a dealer who will resell the product to someone else.
The habits and wishes of the ultimate consumer of a product are of vital interest to all businessmen having anything to do with the product, the major objectives of Anwar Jute Spinning Mills Ltd. is to crease consumer satisfaction by providing the original design of a Jute yarn product, during its production, and throughout its distribution, consumer satisfaction ever a controlling consideration. While Anwar Jute Spinning Mills Ltd. should always keep the consumer -in mind, nevertheless a vast number of sales are made to customers who are not final consumer:
Problem arising in the selection of customers:
In laying plan for effective relationships with consumers and customers, Anwar Jute Spinning Mills Ltd.should establish policies regarding:
(1) The types of consumers that offer the best market for company products.
2. The locations that it will seek to cover.
3. The channels of distribution to be used to reach desired crusaders in the selected areas.
4. The size of customer that will be most efficient arid strategic for the company to serve.
Bangladesh increasingly involved in world affairs, more and more companies are considering exports as a way of expanding sales. Selling in foreign markets, however, presents several special factors that should be weighed. Many countries have tariffs or import quotas that interfere with free trade. Local competition in Bangladesh is strong and local firms received favored treatment. Bangladeshi exporter must, of course, be prepared to do business in accordance with local customs and not attempt to impose Bangladesh business codes where they do not fit. Currency regulations may make withdrawal of money difficult after the goods are sold in foreign Country.
In spite of these difficulties, export business often is attractive. In analyzing foreign markets, as any other new markets, the added or incremental costs should be balanced against the added income. Once Anwar Jute Spinning Mills Ltd. has completed its product Jute and is “Jute yarn” for production, the cost per unit of turning out an added 5c/o or 10% is less than the total average cost of the basic output. If the company has idle capacity in its plant, this incremental cost may be very much louver. So, even though there are difficulties in selling abroad, the net revenue received may still be above the incremental cost.
Foreign markets may be tapped by means other than exporting. One arrangement is to license a local firm to make products with foreign partner and know-how. Another is to build a foreign plant. Neither of these plans calls for export of Bangladesh products (except perhaps, special parts that cannot be made economically in the foreign country), but Bangladesh have enabled a number of companies like Anwar Jute Spinning Mills Ltd. to secure profits from foreign operations.
Delimiting the market area: Involved in every decision regarding the location of consumers to be sought are costs of selling and of delivery.
Usually the costs of selling to customers increase as the distance of the customer from the location of the manufacturer or retailer inerc-ases. Even though Anwar Jute Spinning Mills Ltd. manufacturer may have salesmen located in the territory where the customer lives, it is more expensive to supervise salesmen working- a considerable distance from the central prince. It is also difficult to maintain intimate contact with the customer who is situated far from the central office, and as a consequence the cost of selling to such customers is higher because of greater sales resistance. Delivery costs, particularly on heavy bulky articles, may place definite limits on the territory that can be served economically.
Through brokers or agents: The broker usually performs only one major function of distribution — selling. As contrasted with the jobber, he usually sells only one type of product, or at most only a few closely related products. Although the broker is used most frequently in the distribution of producer goods, he may also be used in the distribution of consumer good. Anwar Jute Spinning Mills Ltd. also collect their raw jute and sales their product though brokers and agents.
Brokers are often used in the same way by small canneries that do not have sufficient output to justify a full-time sales force and therefore need the services of someone who is familiar with the potential market for their product. Anyone who has publicly announced his intention of buying; a house or a suburban lot knows that brokers are also used in the real-estate field. Here, again, it is difficult for buyers and sellers to get together without the aid of someone who is in close contact with the markets
Selecting a channel of distribution: Professor Thomas L. Berg suggests that selecting a channel of distribution be viewed as an organization problem and that the activities analyzed include the total distribution system. More specifically, his approach involves.
(1) Listing all actions necessary between producer and consumer— promotion, actual selling, transportation, financing, warehousing1, repackaging, risk-taking, installation and repair service, and the like.
(2) Grouping these activities into jobs that can be effectively and efficiently performed by separate firms. These firms may be banks or warehousemen who also do other things, or they may be firms exclusively involved in this particular channel. The crucial matter here is to conceive of jobs (packages of activities) that are the most effective combinations.
(3) Defining relationships between the jobs that will assure cooperation and necessary flow of information. Also define how each firm involved is to be compensated for its efforts. And work out necessary, minimum controls to be exercised by various members over other members.
(4) On the basis of this organization design (he policy adopted by the designer) developing specifications for the firms that are to fill each job.
(5) Then moving on to execution of the plan by recruiting people to take the specified jobs (some negotiation may arise here since independent firms will be participants), educating people on how the plan is to work, supervising the day-to-day operations, and exercising necessary controls.
Influence of size of company quoting low prices: The effect of a price change on competitors will depend partly on the size of the company. Price changes by a large and dominant firm in an industry are very likely to affect the prices of the entire industry. For example, Jute yarn industry all small companies follow the leadership of one or two large companies in pricing. On the other hand, it is sometimes possible for a small company to quote prices lower than those of its large competitors because its total sales volume is not important enough to the large company to warrant an adjustment of its entire price schedule. Anwar Jute Spinning Mills Ltd. have been able to increase their business by shading the prices quoted by the leading company.
Relation to costs
Selling at a normal profit above cost. Effect of high profit margins: Many managers state that they establish prices covering all costs of production and distribution plus a normal profit. Even assuming that the total cost attributable to a particular product can be determined, there still remains the question as to what constitutes a normal profit. One is tempted to believe that the profit margin will be made as large as possible without inviting competition within the field.
The jute industry, for example, has followed a policy of maintaining prices at comparatively stable levels during depressions as well as periods of prosperity. When operating at a reasonable volume, these prices permit the large jute yarn companies to realize a “normal” profit. Actually, the price has been so high that new producers have been able to enter the field and capture part of the business. In this instance maintenance of prices by large companies is said to have provided an “umbrella” under which the small companies have developed until they were strong enough to offer serious competition.
Liquidation of inventory: When goods are already produced and on hand in the form of finished inventory, it is occasionally desirable to sell them below cost. In fact, it may be desirable in special circumstances to sell such merchandise at a substantial sacrifice. Jute yarn’s manufacturer, for example, had exhausted his cash resources and needed funds for taxes and notes at the bank. Unless he secured capital from some source, bankruptcy appeared inevitable. Under these circumstances the inventory was sold at a very low price in order to raise cash.
Even firms in a strong financial condition sometimes follow a policy of selling inventory for any price it will bring. Thus, if a general decline in prices is anticipated, a firm may be better off to dispose of its stock immediately rather than carry it over a period when prices are even lower.
Effect of volume on costs and profits. Variations in average unit cost: Thus far we have assumed that costs were fixed and could be easily measured. In many companies, however, the total cost of products varies with the volume sold. A partially filled motion picture theater, for example, Anwar Jute Spinning Mills Ltd. may handle a substantial increase in patrons with little change in total operating cost. In the production of many metal products, the cost of making dies and setting up machinery for production is often half of the total expense of producing a normal volume. This flaccid expense will remain the same whether the volume is cut in half or doubled. Thus there will be a substantial variation in the average cost per unit.
Factors affecting response of volume to change in price: The total profit secured at each prices, as an be seen by the preceding table, depends upon the volume of sales as well as the average cost per unit. Clearly, the manager must estimate as best he can not only the effect of volume on the total cost but also the volume of sales that will be secured at different prices. In actual practice the response of volume to price changes depends upon many factors, some of which are considered in the following discussion.
The reaction of competitors to price changes by one company is an important factor to be considered. If an entire industry acts almost simultaneously in the adjustment of any price, then there is tittle reason to assume that one company will gain volume at the expense of its competitors because of the price change.
Another factor in the response of volume to price changes is the elasticity of the demand. We have observed that if a retail store has a big sale with prices on standard articles significantly reduced, the volume of sales will be greatly expanded. In fact, the sale of certain articles will be greatly expended. In fact, the sale of certain articles will be double and trebled. The use of jute yarn has expanded realty as its real price has declined.
Composite policies: Often companies use both competitor prices and their own costs in formulating their general pricing policy. A local manufacturer of electrical fixtures who uses price as a sales appeal, for example, follows a policy of (a) 10% below prices of a well-known competitor, except (b) this differential is narrowed to avoid selling below “cost” (total manufacturing costs at estimated sales volume), and (c) sales below “cost” are made only temporarily to close out an tem or to combat a “price leader” of a competitor. In contrast, a company producing high quality, short wave intercommunication system relies on technical service and quality to attract customers. This firm normally quotes prices on the basis of total engineering, manufacturing, and selling costs (with a liberal allowance for overhead) plus 10%. However, downward adjustments are made when it is known that the normal price is more than 20% above either of two reputable competitors.
Using accepted market prices: For some types of merchandise there are well-established prices in the market. For instance, women are accustomed to buy jute yarn at standard prices.
Anwar Jute Spinning Mills Ltd. confronted with a standard price structure must decide whether it accepts the customary price ranges.
Small usually find that they secure better results by improving the quality of their product rendered rather than by cutting prices below the accepted amount.
Sales policies – Sales promotion
Product and customer policies define the economic service of Anwar Jute Spinning Mills Ltd. is to perform and the people who are to receive this service, Along with these vital decisions must be pricing policies, which set the monetary conditions of sales.
The object of sales promotion is to induce the selected customers to buy Anwar Jute Spinning Mills Ltd’s. products at its established prices. To achieve this end, the manager should assume the point of view of his customer and consider what actions the company should take to lead the customer actually to complete the purchases of the product. Key decisions in this area are:
(1) Selecting sales appeals that are important to the customer.
(2) Determining the use that will be made of advertising
(3) Deciding the role of personal solicitation.
Most customers have an opportunity to purchases products from servile companies. Consequently, Anwar Jute Spinning Mills Ltd. must present some definite appeals to persuade the customer to purchase its products rather than those of a competitor. The most customary appeals are the following:
(d) Style or design
(e) Personality and ability of salesmen.
(f) Reputation of the company.
Building institutional goodwill:
Practically all advertising is expected to build institutional goodwill to some degree, but in some cases this may be the primary objectives. The advertising by telephone companies is largely for this purpose.
Anwar Jute Spinning Mills Ltd. one of the leading jute yarn manufacturing company has made extensive reassertion the problems of consumer buying and distributes a large number of pamphlets guiding housewives in the selection of merchandise. Intelligent expenditure of a limited income. Nevertheless, the primary purpose of the distribution of these facilities is the development of goodwill toward the company.
Enough illustrations have been given to indicate that advertising may be undertaken for widely different purposes. Central management normally does not become involved in detailed aspects of advertising, but it can and should exercise a significant in flounce on company advertising by setting policies regarding the purposes of the expenditure.
Choice of advertising media: Anwar Jute Spinning Mills Ltd. has decided on the purposes of its advertising, the media must be determined. The principal media include:
(c) Trade papers
(d) Television and radio
(f) Direct mail
This list is not intended to be complete. Other types of sales promotion that, might be included under the general heading of advertising area displays, dealer’s helps, and sampling.
Rarely does a single company use all of these media. It must select those that will accomplish its objectives most economically, AJSML used advertising primarily to influence retailers formerly spent approximately Tk. 50,00,00 annually advertising in magazines having a national circulation. A survey among retailers showed that dealers liked nationally advertised products, but that they were influenced to a greater degree by dealer helps such as counter displays and leaflets, and by cooperative advertising in local newspapers in which the name of the local dealer was mentioned along with the company’s products. The expenditure of the company on magazine advertising is now less than Tk$2, 00,000 a year.
AJSML fancied serious problems in the selection of media to build familiarity and goodwill among a large number of people. Advertising that would produce lately. For this latter purpose expenditure are confined primarily to direct-mail letters, circulars, and announcements to business executive and other people believed to be potential competitors in the near future.
Other advertising problems: Problems of advertising area by no means limited to a determination of the major purposes and selection of media. In addition, decisions must be made as to the general type of advertising to be used. Some companies feature testimonials; others employ cartoons to a large extent. Some use flashy advertisements and large print; other make they’re advertising more dignified.
Primarily these are questions of advertising techniques rather than general sales promotion policies.
Sales personnel, organization, and techniques: From these examples it is evident that AJSML adopted definite and clear-cut policies regarding its use of salesmen. It is essential that the company not only decides the extent to which salesmen are to be used but also must clearly define the purpose of their activity. Unless such a program is adopted, a considerable amount of misdirected sales effort and expense will result. The administration of a sales force involves, of course, many problems in addition to the establishment of general policies. There will be personnel policies relating to the selection, training, and compensation of these salesmen.
Coordination of production, Purchasing, and sales
Even after policies regarding integration, capacity, processes, procurement of supplies, and selection of vendors are clear, a cluster of problems on timing of purchasing and production remain.
As a basis for coordination of purchasing and production with sales, Anwar Jute Spinning Mills Ltd. should set policies regarding:
(1) Procurement for stock or “to order”.
(2) Minimum inventories.
(3) Size of production run or purchase order.
(4) Stabilization of production operations.
(5) Adjustments to anticipated price changes.
Procurement for stock or “to order”. The made-to-order policy: Coordination of procurement with sales is accomplished in some industries by buying or making goods only if the sales order is already received. The purchase of raw materials and supplies is not undertaken and production is not started until the order is actually at hand. Manufacturers of heavy machinery – or space ships – almost always follow such a make-to-order policy.
Minimum inventory: If stock is to be carried, a company must establish some general guide to assist the purchasing and production departments in determining how much inventory to have on hand at any one time. Let us look first at the more mechanistic aspects of the problems – ordering points, size of production reins, and purchase quantifies and then note two main reasons for further adjustments, namely, stabilization and speculation of price changes.
Size of production run or purchase order: When reordering in necessary, how much should be ordered? Primary considerations are economical production runs in a company’s own plant or quality discounts offered by vendors due to economic production runs in the vendor’s plant or warehouse.
Stabilization of production: The business of every company fleetness by seasons and by cycles. For example, a manufacturer of blankets may find that he sells two thirds of his products in the last half of each calendar year, and manufacture of gloves may find that he sells 45% of this products in the last three months of the year. Even articles in daily use, such as soap and conceits, have a seasonal fluctuation.
Production for stock: Faced with such a seasonal fluctuation in the volume, a company may decide to manufacturer and purchase merchandise in harmony with its sales volume so that it will not carry inventory in excess of its sales needs at any time. Most glove manufacturers, for instances, do not attempt to produce very far ahead of the season in which they will sell their gloves. Frequent changes sin style may make gloves produced in advance of the season usable, or salable only at a reduced price.
Adjustment to anticipated price changes: Many companies adjust their purchasing and production schedules in anticipation of changes in price of raw materials and finished products. When price increase are anticipated, goods will be procured in excess of immediate requirements; and when declines are forecast, inventories will be reduced. In this way the companies hope to secure additional profits by buying at lower prices goods that can be sold at higher prices.
Conclusion regarding timing of procurement: In producing and in buying, wide difference exist in anticipating customers’ actions or waiting until orders are in hand. Many companies carry larger stocks than are required for customer service to secure economic production runs or to obtain discounts from vendors. Sometimes the procurement of merchandise is adjusted in an effort to stabilize production operations, but more frequently it is adjusted in an effort to profit from anticipating price change or to assure adequate supply.
The more important factors that an executive should consider in dealing with such timing issue include:
(1) Customer requirements for specially designed merchandise or for prompt deliveries of standard merchandise.
(2) Economics possible from large production runs.
(3) Economics that may be secured from level production, including more complete utilization of facilities, maintenance of a well-trained labor force, and possible reductions in tax burdens.
(4) Expenses of carrying goods in inventory, including the storage charges, the financial cost, the insurance expense, and the determination or obsolescence of merchandise.
(5) Accuracy with which price chains may be predicted.
(6) Accuracy of prediction of the volume and nature of products demanded at a subsequent period of time.
Personnel Policies – Selection and Training
Personnel policies – a 20th century concept: Sixty years ago personnel policies and personnel departments were unknown. The hiring and firing of employees were left to the foreman or executive who had immediate supervision over the work; problems of training, compensation, and discipline were handled by numerous supervisors throughout the company largely as the saw fit. Proper treatment of employees, or the lack of it, depended primarily upon the humanitarian interests of the bosses.
Classification of personnel policies: Personnel policies deal with the operational maintenance of an efficient work force. The major policies that set the pattern of personal relations throughout a firm can be grouped under the following headings:
(4) Arrangements for work.
(5) Employee services.
(6) Industrial relations.
Selection emphases all policies a company may have regulating the choice of employees. In this broad sense it included not only the hiring of new employees but also the selection of employees to be promoted and the further problems of discharging employees. The process of selection goes on almost continuously.
Need for training: Whenever a man takes a new job, he will need at least some training. He must be familiar with his surroundings and with the names of people and things connected with his new employment.
Basic training issue: In discussions of training, as a several phases of management, there is a tendency to jump into technical details before setting up the general purposes and limits of the activity. The manager should first decide:
(1) The place training is to occupy in management activities of the company.
(2) The purposes, which are to be covered in, company training.
(3) The types of training, which will best meet these purposes.
Personnel policies – Compensation and Arrangements for work
Compensation deals with wages, salaries, honorees, and other forms of direct financial remuneration. Of course, additional kinds or remuneration, such as power and similar intangible values, often provide important incentives for human effort. But financial remuneration is the most basic from of compensation. The major compensation issues are:
(1) Amount of compensation.
(2) Method of payment.
Amount of compensation: A significant portion of the expense of almost every business enterprise consists of wages it pay to its employees.
There are there basic components in deciding how much an employee should be paid:
(1) The relation of his wages to those being paid by other employers in the area for the same kind of work.
(2) The difficulty and importance of this job compared with other job in the company.
(3) The quality of performance by the individual in this job.
Relation of wages to “the market”: Most companies seek to follow a policy of paying competitive wage rates, that is wages in line with those paid by other employers in the area. Unfortunately, this usually provides a rather crude and inaccurate basis for determining the exact amount to be paid to a specific employee. Often neither employer nor worker has reliable information regarding pay rates in other enterprises.
High usage: Some companies deliberately pay their employees a higher wage level than that prevailing in the community in an effort to secure the “cream of the crop.” For many years this was the policy of the AJSML. There is considerable difference in the ability of workers doing a given job. By effacing to pay more than the average compensation, companies hope to secure the best workers.
Low wages: There are circumstances in which the amount of compensation paid is less than the level generally prevailing in the labor market.
Industry rates: In some industries, primarily as a result for union pressure, the industry-wide wage level is more important than the wage level in the local labor market.
Recognition of differences in individual performance: Sound policy regarding external alignment of the wage level and the infernal alignment of individual jobs will go a long way towards a satisfactory wage plan for a company. A third factor should also be recognized. The quality and the quantity of work turned out by individuals on the same job are not equal. Rarely is a man recently assigned to a job as valuable to the company as his-fellow-worker who has been doing that kind of work for several years. Most companies believe it is desirable to adjust pay in recognition of the differences in individual performance.
Administration of wage plan: No wage plan, even one as well worked out as that described for the utility company, can he administered in a mechanical fashion. There are many personnel problems involved in wage and salary administration. Some of these however, are of such importance and arise of frequently it is desirable that top executives establish policies governing them.
Method of payment. Basis upon which compensation is paid: Basically, there are two ways of paying an employee. He may be paid so much per hour or per week, in which case the compensation is based on the time spent; or he may be paid on the basis of his accomplishments, that is the compensation depends upon the results. In either case the total compensation will approximate the amount fixed by policies already considered.
Use of time rates: Great many employees are paid a fixed amount for which they are expected to work a certain number of hours. This simple basis of compensation has many advantages. The employee easily understands it, and he is assured of a known income for working a given period of time.
Problem of installing incentive rates: It is only natural that the management should prefer a policy of paying by piece rates or some other incentive plan, provided an equitable and satisfactory plan can be devised. This, however, is not always possible.
Combined piece rates and time rates: Money companies, wishing to place their employees under some financial incentive, have found that the most successful arrangement is a combination of time rates and price rates.
Workers’ attitude toward incentive pay: Workers often feel that the piece-rate system places standards so high that only the most skillful men can achieve these. Workers also hesitate to work hard to secure large bonuses, because they feel that the management may cut the rate of compensation and thus force them to put forth extra effort in order to earn their original pay.
Conditions affecting sources of incentive wage policy: There are many conditions upon which the success of a policy of paying incentive wages depends. Among the most important are:
(1) The final result must truly reflect the effort of the work. In many types of work the nature of the job, the raw materials, the condition surrounding the work, and other factors outside the control of the workers are primarily responsible for the accomplishments achieved.
(2) All-important elements that are subject to the control of the worker should either be included in the compensation plan or be carefully controlled by other means.
(3) The method of computing compensation must be simple enough so that the employees can readily understand it.
(4) The effect of good performance on the amount of compensation received should become apparent quickly so that the worker will realize the importance of good performance.
(5) To confidence and the cooperation of the employee should be secured. If workers believe incentive wages are merely a device to cut wages or to increase the amount of work without added benefit to them, the plan is likely to run into snags.
Financial Policies – Use of Capital
Need of capital: The very nature of business operations requires outlays of each before customers pay for goods or services.
Effect of profits and losses on capital requirements: In any consideration of financial policies we should recognize that an accounting profit or loss and the need for additional capital in the form of cash are two different things.
Classification of financial policies: A useful way for central management of a company to view its capital problems is in terms of:
(1) Use of capital.
(2) Sources of capital.
(3) Protection of capital.
(4) Distribution of earnings.
Use of Capital
Circulating and fixed capital: Cash, inventory, and accounts receivable constitute the circulating capital of an enterprise. The expression “circulating capital” is used for the total of these amounts because the form in which the capital is invested changes frequently.
Major issues regarding the use of capital will be discussed in terms of:
(1) Regulating investment in fixed assets.
(2) Use of circulating capital.
(3) Mergers and acquisitions.
Financing of special equipment used by distributors: The Universal Company promotes a product know as vermiculite or zonolite, an usual mineral that expands many times its original size when heated and that possesses important insulating properties. This company owns the largest, known deposit of the mineral, and after some years of research has developed processes that make the use of vermiculite for insulation of homes feasible.
Long-term outlook: A paper company with a mill in northern United States became concerned about the increasing costs of its pulpwood.
Minimum rate of return: The policies just illustrated stipulate a type of fixed asset to be avoided or encouraged. a different kind of investment guide is a minimum rate of return that must be anticipated if capital is to be assigned to a proposal.
Capital budgeting: Frequently, a company has many more possible investments in fixed assets than it can prudently finance. The issue then becomes which projects to endorse and which to rejects. Capital budgeting is method for making this selection.
Discounted cash flow: Among the problems arising in the application of the capital budgeting procedure is how to compute the rate of return for each investment. The aim here is to follow a method that compares each project fairly.
Factors influencing credit policy: As suggested by the proceeding illustrations, the credit policy must be based on balance between two factors: first, the cost of extending credit, which includes interest on money, probable losses on uncorrectable accounts, and the expense of handling the account- that is, granting, Credit making collections< and maintaining necessary bookkeeping records; and second, the net profit that may be earned on sales resulting from the extension of credit. In this connection it must be remembered that no one likes to be refused credit. Therefore, turning a customer down may lose not only the net profit on the current sale, but it may also loss future sales to the same customer and his friends.
Installment credit: Installment credit is, of course, merely a variation of general customer credit.
Transferring installment accounts to banks and loan companies: The growth of installment finance companies and the entry of commercial banks into the small loan field have enabled many companies to transfer installment accounts to these specialized houses.
Financial policies – Source of capital
The principal sources of capital available to most companies may be classified under:
(2) Long-term creditors.
(3) Short-term creditors.
Owners Typical policies: The owners of a company must supply at least part of the capital at the time of its organization, and they frequently make additional contributions to meet subsequent requirements.
Long-term creditors. Borrowing as a source of capital: Capital may also be secured by borrowing it from long-or short-term creditors. Some of the problems and possible policies in connection with borrowing can be illustrated by two companies each of which sought to raise capital by this means.
Short-term creditors: The sources of capital discussed thus far provide capital for a long period of time. Short-term creditors, however, are better adapted to provide funds to meet seasonal requirements or other temporary needs. The most common short-term creditors are (a) commercial banks and (b) merchandise vendors.
The major findings of the study are
(1) From this study, I understood about the major operational policy of Anowar Jute Spinning Mills Ltd.
(2) Understanding the practices of the policies in operational aspects.
(3) Gained practical working experience.
(4) Understanding of working environment.
(5) Understanding of responsibility of policy maker.
(6) Understanding about the capability and ability of policy maker.
(7) Understanding what types of operational policy needs in various manufacturing company.
(8) Understanding how a company can adopt suitable operational policy.
(9) Understanding how a company can change their policy in different situation.
(10) Understanding how a company can gain by setting appropriate policy.
(11) Understanding what are the problems arrived in setting policy.
(12) Understanding what are solutions of this problems.
(13) Understanding what are the challenges a company faces.
(14) Understanding position of the jute yarn manufacturing company in our country.
(1) Anwar Jute Spinning Mills Ltd. can recruit expert policy maker to making excellent policy.
(2) Anwar Jute Spinning Mills Ltd. can take help of consulting firm who are related with making policy in manufacturing company.
(3) The company can hire expert from abroad to formulate, evaluate, and implement the policy for themselves
(4) The company can take various training program to train up the employees.
(5) Give excellent reward and compensation to the employee.
(6) Can share information with other manufacturing company.
(7) Maintaining good relation with supplier and importers.
(8) Invest in Research and Development Sector to development new idea of new product and improve existing product.
(9) Introduce modern technology in their total function.
(10) Introduce new machineries for better production.
(11) Give emphasis to the customer satisfaction.
It is not easy to evaluate and analysis the total operational policy of a manufacturing company. Although it is a very interesting topics. I have tried my best to collect necessary information about the to total operational policy of Anowar Jute Spinning Mills Ltd. and describe then in brief. I had a fared that how I shall complete such as difficult task. But when I entered into this sector, I found interest in it and got better cooperation of the executive of Anowar Jute Spinning Mills Ltd.. I think the knowledge about operational policy of a manufacturer company is essential for an MBA degree holder as well as all executives related with manufacturing company.
(1) Direct discussion with the employees of different department.
(2) Annual Report of Anowar Jute Spinning Mills Ltd.
(3) Internet searching.
(4) Different journal of Anowar Jute Spinning Mills Ltd.
(5) Company profile of Anowar Jute Spinning Mills Ltd.
(7) Company operational policy book
(8) Book: Business policy
By William H. Newman, James P. Logan.