What is Theory of Firm

A firm is to be considered as an effective tool for the production and distribution of goods and services, in the very common and least level the theory of the firm show case the responsibilities and relationship of any company towards the factors which are either the directly or indirectly involved.

In the theory of the business the goal and object of the business is defined in which the firm is predicted with the nature of the firm’s existence, behavioral structure and its relationship with market, theory of firm mainly rely on the two things that how to face future uncertainty and tries to hypotheses the future expected value of the firm.

The factors which are directly and indirectly involved with the company are discussed below:


The Customer puts a major impact on the company as Firm is Directly involved with the customers as it is the customer for whom the company produces the products and it is customer who purchase the product of the company and with the satisfaction with the company’s product customer by purchasing more and more products of the company it increase the sale of the company and ultimately it increase the profit of the company.


Supplier is factor through which company receives the raw materials and produces the products for the general public to satisfy the ends and want of the customers, supplier is a factor which makes enable to any company to utilize the resources such as machinery, land, working force and anything by providing raw material the supplier has a great impact on the company specially in the price matter as if there is less bargain from the supplier the cheaper the price will be of product.


In the management there is a position named as manager, the person who hold this position is responsible for the managing organization committed employees, those persons who are committed with the company the manager is a leader who leads them by just indicating the way towards success but he also do not let down those persons who by morally are down he encourage themselves and try to bring them in the main stream.


Another factor which has great impact on the company is the society from where the company avails the potential and competitive work force and the responsibility of company toward the society is to provide them a qualitative and reasonable priced products.

What are the Objects for Pricing Decision

The price is decided for a particular unit or product of any company by the authorities with the involvement all the factors of market, keeping in the view of the quality of the product and other factors like supplier as well, the decision is made for pricing a product is obliviously is to make the more profit but there are some other reasons as well for which the price is maintained.

Prince Stability in Different season and Different Place:

Price must be stable of any product it should not vary time to time, season to season, place to place which can be known as unique price these things are specially maintained by the brands but yes the fluctuation of price is truth the fluctuations takes price in the commercial areas, weather and so on.

Achieving a Target Return:

To achieve the target or rate of return in investment the money is fixed with a particular agency or financial institutions who offer very good rate of return on the saving of an amount of money.

Computing the Market:

In the market there are different types of prices are fixed as it is famous saying for the market that it is like a boxing ring in which price captures the market by fixing a fair price, prices are fixed accordingly like low, high, introductory and sometimes competitive when it is required.

Buying Pattern of the Customers:

In this phase the particular customer age is kept in mind that who is your customer, Age difference of the consumers either you are launching for the kids, youth, or old aged persons who is going to purchase the product of the company.

Long Run Welfare of Firm:

Fixing a reasonable price so your product and firm can run for a long time no seasonal charges no placement charges will keep the belief of customers on company’s product in this way it is very easy to survive in the market less fluctuation will allow you to remain in the main stream of the market for a longer period of time.

Social and Ethical Contribution:

Though fixing a price a fair price is how you are serving the society should be a price to which the society who is your customer must accept and encourage you remain in the market through the purchase of products of the company.

Resource Mobilization:

Resources are to be mobilized as it can increase or we must plough back some money from profit so it can grow our business.

Procedure Followed by the New Entrepreneurs

Everyone can start a business, there is no limit of age and without education, experience, a person can start a business.
When a person wants to do business, it is not necessary that have lot of money and degree, only investing small amount is sufficient to start but this amount should be used wisely.

Different steps to start your business, these important steps will help in every new business to start

Appraise yourself

Ask some questions from yourself like what kind of business you want to start, how you will manage this all, how you will manage the loss in business and how you will invest or save the profit, after knowing the answers of all these questions you are somehow able for startup.

2-Taking ideas
Collect the new and latest ideas about business which are going on now a day or we can say assemble the modern ideas from others.
Best ideas can be taken from experienced one because they suffer from losses in their business.

After collecting all the ideas, now chose the best one or that, which you feel easy to run

3-Make a plane

Making of some strategies in any business is the key for success in business, so writing plane is necessary.

Write a plane on paper what you are going to do, from start to end, like how much you invest, what are the strategies and policies of market now a day, and write about the competitors in market for product, it is just like summary of over all work.

4- Investing in business

For investing in business, you can take loan from banks because it is the start of business and it happens with every fresher, or you can ask to family or friends to help you, after profiting you will easily invest in next one and then no hurdle you feel.

After taking ideas, making planes, this is the most important step for establishment of a new activity or a business.


Advertisement is also mandatory for your business because the product you launch in the market is new and no one knows it until or unless you provide the knowledge about it, now it’s up to you that what kind of way you take to advertise your product either you invest to media for your endorsement or you will pay to artiest for banners.

What are the different Techniques for Pricing?

Companies adopt so many methods for the attraction and to get intentions of the customers to themselves to raise the sale and ultimate benefit is to raise the profit of a company, there are different techniques that are used by the managers to get attention of its customers which are described as below:

Psychological Pricing: it is a kinds of pricing technique which is set by the experts in which the experts play the game with the customers by offering them Odd and Even Prices such as some companies offer their product with the rate of $98 now in this method customer psychological feels that this is less or cheap price it is not much like $100.

Prestige price is also known as the psychological price in which the prices of goods are kept high for the period of time, in which the appearance of the quality is shows as high.

Customary Price: It is kinds of technique in which prices of the products or units are set according to the market trend, the purchasing power of the market is focused and according to the ground reality the quality of product is compromised and it is also set with expectations of the customers.

Sometimes customers feels that as if the living standard, the purchasing power of the customers are high and rich the products are offered in that manner, they quality of the products are high and goods are luxurious, and if their living standard is low and they do not have such potential purchasing power the customer except such price from the companies who offer products.

Price Lining: In this pricing techniques the products are offered of all levels from low quality product to high quality product including all the sizes of the products, say for suppose there is a single company which offer the shampoo for hairs now the size are the very tiny bottle, small bottle and the large bottle in this sometimes the quality is also compromised.

Dual Pricing: For one product which is same of the quality same of the size different rates are charged for that particular product suppose in a market the price of a product A is $10 but after few step you will find the same product same of the size charge $15 for that product, this is due to commercializing of the area, prices are charged according to the different areas, the expenses of the lightening, pleasant atmosphere, decorations such things are also charged with the product prices.

Responsibilities of Pharmaceutical Companies

Every company holder has some responsibility towards their work and they make sure that their product must be safe and pure.

Pharmaceutical companies are working on minute cells for the safety of humans so their responsibilities are very much high, for this they made some plane, strategies, policies, rules and regulation.

Working for life is very much difficult because little mistake can destroy the whole population, so pharmaceutical companies make sure that their product is safe and secure.

Every pharmaceutical company has three main departments to run
their company properly;

1-Production department
2-Quality assurance department
3-Quality control department

Responsibility of production department

Manufacturing of product is done in production department Everything is checked properly before manufacturing like all the machinery, equipment’s, ingredients, area, uniforms of workers.

They maintain the humidity, temperature, pressure of that area where they are going to start the manufacturing of product, for this they place the devices to control all these parameters.

The product is manufacture in very controlled manner because slight mistake can spoil all the production.

Responsibility of production department is to control all the parameter properly so the production is safe and usable for human life.

Responsibility of Quality assurance department

The major responsibility of Quality assurance department is to keep an eye on every step of production to assure the quality of product.

They check from dispensing to marketing of the product and give approval that the product is manufactured under the supervision of quality assurance department.

These are all the responsibilities of Quality assurance department

Responsibility of Quality control department

Quality control department is the head of all departments, everything is approved by the quality control department, even quality assurance department take permission for giving any type of approval.

The main responsibility of Quality control department is to check every sample with their own equipment’s and techniques and then they give the permission to quality assurance department for final approval.

Under the supervision, check and balance of all these departments a product is manufactured and all these departments give their best to fulfill their responsibility.

Marketing responsibility

It is the responsibility of company that the product is reaches to the stores, hospitals in a same way it is packed and their appearance is maintained.

For marketing the products, manufacturers set some symposiums, seminars, and provides the information about their product, it is just like a way to advertise their product.

Why the Financial Manager is required and What are its functions?

Financial Manager is an individual whose primary responsibility is to keep the company financially sound and healthy, a company who is having huge amount involved the special person is hired in order to make proper use and allocation of these funds.

In the companies mostly in the large companies like corporate companies these companies do not have much capital of their own, the company borrows money from the different financial institutions like bank and also they do offer the bonds in general public.

Once the money is received from the sources the acquisition of money is not such a big deal but to utilize that money in a proper manner is an issue, the money which is borrowed it has be repaid as well otherwise it will not be an easy task to repay the debt.

The financial manager is a person who makes an estimation regarding the financial need for a company that how much amount is need for any requirement, financial managers make the decisions regarding the structure of the capital and they have also responsibility to select the source of the finance either the finance should be asked from the general public in the shape of shares and bonds or it must be borrowed from the financial institution as a loan.

Once the capital is acquired now the next step for a Financial Manager is to select the pattern of investment, investing the complete amount in a single project can be risky here the investment in different areas must be a wise decision because if unfortunately the project could not get much success as expected its requirement can be filled from the shared investment.

Here the proper management of the cash is much valued the financial managers implement such plans in order to control the cash flow of the company, the proper use of surplus amount can lead company to success.

The functions of Financial Manager can include to forecast the financial planning and the methods for the acquisition of funds, investment of those acquired funds and help in the valuation of decision.

Companies which are specially joint stock company in these companies financial manager has to decide regarding the mean either it should be a short term loan or the long term loan in order to make sure that the funds are not borrowed in surplus.

How to do an External Analysis for a Company

An organization is an open system with its dual affects it interacts and respond to both the environment.

An External Analysis is a process in which identifying and analyzing of external factor are involved that can have impact on organization, two factors internal and external are included, in the external factors which are wider in business environment which can affect the business where as the internal analysis is that is within the boundaries of a company.

There are two environment in which organization revolves around and affected and have a very huge impact on the organization, two organizations which are named as General Environment and Specific Environment.

In the General Environment there are multiple factors outside of the organization which have an impact on the organization as the organization is an open system in which the economy of a country, demography of a country, technological development and political factors are involved.

On the other hand in the specific environment an organization’s current rivalry, potential entrains, bargaining power of the buyers and the bargaining power of the supplier and substitute product these are the factor which have an impact on the organization.

For an organization the political scenario is important in general environment as it is the politicians who decide the trade policy, the governments changes day by day according to their tenure some parties provide soft policy for the businessman and some very harsh by putting huge amount of taxes.

In the demography and socio-cultural factor it relates to the structure of the population the age, race, the income of the population, and other statistics are focused.

Economy and Technological factor of an organization is also important layer for organization the ups and downs in the economy of a country and the new and sudden development of technology is also have a great impact.

In the specific environment the current rivalry of the organization who is the competitor with your producing product who also produces the same products which are can be known as substitute products they are also having a good impact as they can minimize the prices of their product the chance of loosing customer rises.

Potential Entrains plays a huge role in the market as they just enter in the market and flourishes in a way that left behind all the companies already working with that products.

The bargaining power of the both supplier and buyer also have an impact sometimes the supplier ask for its own wish price and sometimes they make delay in providing supplies and the customers sometimes they do not have much purchasing power to afford qualitative products they do ask for the bargaining which is not good for organizational culture.

What Makes and Organization A World Class Organization?

For everything in this world there are some standard to meet in order to prove themselves near to perfection some are international standards and some according to their socio culture depends on the policies followed within the state.

Today we are going to describe some effective and necessary factors which can lead any company to become a world class organization which are discussed below:

* Strong Customer Focus: You might have heard that a customer is a king he has all the options available every time , a customer is not loyal to anybody he is loyal to his satisfaction only if he is satisfied with your company he will be continuing purchasing the products of your company but once he lost its satisfaction from your company he will not even think for a second to switch from your company to elsewhere.

An organization must be a customer focus he should understand the needs of the customer, he should be aware of the fashion, trend and luxuries that can satisfy the customer and can lead your company to become leading company in the industry.

* Continual Learning and Improving: A company must not say that they are the best, they must continue improving themselves day by day, if any mistake happens to their product he should not have any hard feelings for anybody they must learn from that must and try not to do the same mistake again.

* Creative Human Resource Management: The management of the company must a critical thinking regarding its products and its human development as well, it is the staff or the employees of the company who do efforts to create such service which give the help to generate humongous profit to company, it is also one of the benefit for the company to care for their employees as to attract the general public in a sense that they will have sympathy with the company that ethically company behavior to its employees is in such manner definitely they do care for their customers as well.

* Egalitarian Climate: MacDonald’s, KFC, Pizza Hut these are the perfect examples for any company that how they attract their customer to come and buy their product MacDonald’s with their special playgrounds for kids attract its customer specially the family towards them.

The other companies must also adopt such techniques that can attract them to come to you and buy you product like the atmosphere of your company should be decorated the new furniture, the design of the building, sitting arrangement etc.

Different Jobs of Different Partners in a Business

Partnership is mainly concerned with the division of almost everything division of work, division or share of loss and share of profit as well, division of work is probably the most effect factor for any business as in this element the business avails the not only the benefit of more profit but it also helpful for the other party to rest and give time to its family and friends.

There are so many kinds of partner whose work is divided according to their settlement written on the partnership deed or agreement, some of them are described here below:

* General or Active Partner: it is a partner who contribute its capital with a company or business and it also provide its physical and mental services to business by his will by personal management of issues of the company he shows the role of his efforts to company for which he is known as general or active partner for the company.

In the agreement the Active Partner is liable to receive a monthly pay for his personal activation in the management, the time that a partner gives to business with the consent of partners the pay or salary or the pay of a partner is decided, an active partner is liable to debt as well.

* Sleeping or Inactive Partner: A sleeping partner is who only contribute his money or capital to a business with no personal activity, he do not take any part in the management of business, inactive partner is also known as dormant partner, with activation and inactivation of partner is decided before the commencement of the partnership and it is clearly written in the partnership deed that these particular duties are of the partner to follow, the sleeping partner receives profit according to the earning of the company but he do not receives the extra pay that an active partner receives for his time and effort provided to a business but he is also liable for the debt.

* Nominal Partner: This is the only partner who do not make any investment to a business he is an employee of the business but his activities his personal appearance and efforts shows himself as a partner to business he is the representative of the business, he contribute only his name to business. (in such kind of business only famous personalities are involved).

For the nominal partners company or business uses their name and fame for which the famous personalities are paid a very handsome amount.

Industry and Commerce the Two Phases in Business

The word industry is originated from the Latin language word Industria whose meaning is to intelligent way of doing things.

On the other hand Commerce is also originated from Latin language who by literal meaning is known said to be as com + merx here the com meaning is with and merx meaning is merchandise the meaning occurs that it is involved in the dealing of merchandise.

The products which are produced or manufactured at different industries are traded or distributed for the purpose of earning profit with the techniques and aid of commerce.

In the Industry there are mainly the two types of industries which are known as the primary industry and the secondary industry, Primary industry which is also known as the 1st hand goods and the secondary industry is known as final goods.

In the primary industry it deals with the extraction of raw material from the earth or the minerals or resources which are obliviously the God Gifted the primary industry is involved in the extraction of raw material from such gifts and the conversion takes place in the secondary industries.

There are some products in which different parts are assembled, with the assembling of those parts a complete product can be manufactured such as Car, Motorcycle, Air Conditions, Refrigerator and other such products whose parts are manufactured at primary industries and these all parts are assembled at the secondary industries and a shape is given to that product.

Goods are semi-finished at primary industries and then given finished touch at the secondary industry, almost every product has an involvement of both the industries in the raw material where inputs are provided from those the different parts are manufactured then to be converted in secondary industry.

The Example for the assembling of goods can be the Shoes, buildings, Road, Dam

In Industry there is a branch which is known as genetic industry who is mainly concerned with the plants and animals where certain species are mixed with the object to earn profit such as forestry and livestock.

Syntheses industry which comes in the category of primary industry the different types of things are mixed into each other in order to make a single product such as Tea, Cold Drink and other, in the tea there is an involvement of Milk, Water, Tea and Sugar to present a single product there are other products as well in which different ingredients are mixed to produce a single product.