Factors Affecting Decentralization Of Authority

Decentralization is influenced by some factors that are as follows:

1. Philosophy Of Top Level Management

Decentralization of authority is known as the philosophy of scientific management. If the management is supportive, decentralization will prevail.

2. Size Of The Organization

Decentralization is suitable for large sized organization with multiple operations. Large firms with various departments and employees should practice decentralization of authority. Small organization with limited resources cannot afford decentralization.

3. Dispersal Of Operation

Decentralization Of Authority is highly influenced by the dispersal of operation. It is very necessary if the coverage area of the organization is wide. 

4. Caliber And Capacity Of Lower Levels

Decentralization is not necessary if lower level managers are capable to handle jobs and make decisions effectively. So, skill, knowledge and capacity of low and middle level managers affect the decentralization process.

5. Environmental Influence

It is another key factor that affects decentralization of authority. Technical environment, competition, government policy, tax policy etc. influence decentralization.

6. Cost Factors

Cost is very important factor that directly influence decentralization of authority. If decision related cost is higher, it is not wise to delegate authority to the subordinates.

7. Availability Of Managerial Manpower

If there are more capable and skill managers, it is easy to practice decentralization of authority. Shortage of managerial manpower forces the organization to practice centralized authority.

8. Control Technique

Decentralization of authority is possible of there is effective and scientific control system in the organization. In the lack of effective control, it is not possible  to practice decentralization. 

Difference Between Delegation And Decentralization Of Authority

The major differences between delegation of authority and decentralization are as follows:

1. Meaning 
Delegation: Transferring the rights and responsibility from top level management to the lower level subordinates.
Decentralization: It is systematic distribution of authority and decision making power to the middle and lower level of management.

2. Possibility
Delegation: Delegation of authority is possible with or without decentralization.
Decentralization: Decentralization is impossible without delegation of authority.

3. Technique
Delegation: Delegation of authority is management technique.
Decentralization: Decentralization of authority is management philosophy.

4. Relationship
Delegation: Superior and immediate subordinate relationship.
Decentralization: Top level management and various sections or departments relationship.

5. Process
Delegation: It is a process in the organization and a cause of decentralization.
Decentralization: It is the end result of delegation process or effect of delegation of authority.

6. Need
Delegation: It is important for all types of organizational.
Decentralization: It is not essential for all types of organizational structure.

7. Purpose
Delegation: It is practiced to minimize the burden of top level manager.
Decentralization: Decentralization helps in preparing organizational participants. 

8. Control
Delegation: Top executive who is delegating the authority exercises controlling the organization.
Decentralization: Departmental heads exercise controlling in decentralization. 

9. Withdrawal
Delegation: Easy to withdraw delegated authority at any time.
Decentralization: Difficult to withdraw authority until the end result.

10. Acceptance
Delegation: Subordinates can refuse delegation of authority.
Decentralization: Less chance of refusing decentralization of authority.

11. Usage
Delegation: It is useful for all types of organizations.
Decentralization: It is not useful for small and medium sized organizations.

12. Accountability
Delegation: Top level manager is accountable.
Decentralization: Departmental heads and functional managers are accountable.

13. Responsibility
Delegation: Responsibility lies with the top manager and is not delegated.
Decentralization: Responsibility is transferred to the departmental heads.

14. Parties
Delegation: It includes top level management and subordinates.
Decentralization:  It includes all level managers of different sections and departments. 

Need And Importance Of Decentralization

Decentralization is needed because of the following benefits:

1. Relief To Top Management

In decentralization, authority and responsibility is systematically distributed among different levels of employees. It reliefs top level management from the burden of daily operation. It helps them to focus on future plans and policy. 

2. Facilitates Managerial Development

Decentralization encourages lower and middle level managers for future promotion. Lower and middle level managers can get opportunity to learn by doing. They get chance to handle different assignments and make decisions independently. It helps to enhance their skills.

3. Better And Quick Decision Making

Decentralization ensures better and quick decision making in the organization. Lower and middle level managers have the right to take decision independently. They do not have to wait for the decision of top management.

4. Better Control

Better control is possible in decentralization process because authority if delegated to lower and middle level managers for controlling their subordinates and departments. 

5. Environmental Adaptation

Decentralization helps to adopt internal or external environmental changes by coping challenges.

6. Higher Employee Morale

Decentralization shares authority at lower levels. It is a power sharing process. This process helps to empower lower level employees.

7. Facilitates Growth

Decentralization facilitates growth by providing freedom to lower level managers. It encourages the subordinates to work properly. It helps to increase productivity and creates chance for expansion and growth.

Difference Between Authority And Responsibility

The key differences Between authority and responsibility are as follows:

1. Meaning 

Authority: It denotes legal right to command.
Responsibility: It denotes the obligation to carry out the duty.

2. Origin

Authority: It originates at the top level or formal position.
Responsibility: It originates from superior-subordinate relationship. It is liable position.

3. Delegation

Authority: It can be delegated as per the need of the organization.
Responsibility: Responsibility cannot be delegated. 

4. Flow

Authority: It flows downwards.
Responsibility: Responsibility cannot be delegated.

5. Objectives

Authority: Making decisions
Responsibility: To carry out duties.

6. Continuity

Authority: It is continuous process in management.
Responsibility: It comes to an end after performing the given task.

7. Sense

Authority: Giving orders. Therefore, authority indicates a sense of power.
Responsibility: Following orders. Therefore, it indicates sense of duty.

Meaning And Features Of Responsibility

Meaning Of Responsibility

Responsibility is the obligation to carry out the assigned job effectively and efficiently within the time. It cannot be delegated. It is a personal obligation. It makes the person more responsible. It fixes their duties for assigned job. A manager can delegated the authority but cannot delegate his responsibilities to somebody else. The person who delegates authority for work should also make the subordinates responsible. Responsibility densess the role of the employees in the organization. Responsibility reduces the conflicts and confusions. The level who works on the top level has high responsibility. The other employees must consult with him for discharging their day-to-day activities. Some other employees may have the responsibility of general supervision only. The person who has got the authority should fulfill his duties and responsibilities. So, responsibility is legally to morally obliged to take care of their discharged duties. Therefore, a responsible person should always discharge their duties properly.

Features Of Responsibility

Following are the main characteristics of responsibility: 

1. Responsibility cannot be delegated in any condition.

2. Responsibility shows the relation between top level management and lower level employees.

3. Responsibility is connected with duties and tasks.

4. Responsibility is always linked with authority.

5. Responsibilities flows from downward to upward. 

Types Of Authority

Authority can be classified as follows:

1. Line Authority

It is also known as top to bottom authority as it flows from to bottom level. Line authority can be easily delegated and withdrawn easily as per the need of the organization. Departmental heads or managers posses line authority.

2. Staff Authority

Employees with staff authority do not have decision making power. They only support, assist, and advised the line manager. Staff authority gives the suggestive opinions and advice to the line authority but they do not have the power of giving decision. Decision can be made by line authority only. The legal advisers, consultants and the assistants to the manger posses staff authority.

3. Functional Authority

This is the function based authority. Managers of functional authority are the experts and specialists. They can supervise the work of subordinates related to their functions in all departments. This authority can be given to the specialists for their specific task only. Quality control managers and personnel managers posses functional authority.

Meaning And Features Of Authority

Meaning Of Authority

Authority is a legal power to command. It provides right to make decision. It is a freedom provided by the organization to command, guide, and to influence subordinates to achieve specific objectives of the organization. 
Therefore, authority is a legal right of superior of the organization to handle subordinates. It includes commanding, guiding, directing and influencing subordinates along with responsibility.

Features Of Authority

Followings are the notable characteristics of authority:

1. Legal Power
 Authority is a legal power of superior which helps him to influence and guide others.

2. Right To Make Decision
Authority ensures the right to make decision in favor of the organization.

3. Right To Command
Authority is a legal power to command subordinate level employees.

4. Right To Control
Authority is a right to control subordinates and other organizational functions in order to get better result.

5. Dominance
Authority is dominance by nature because it is a command of leader to the subordinates.

6. Accountability 
The person or superior possessing authority is also responsible to higher level authority. So, he should be accountable for his work.

7. Basis Of Getting Things Done
Authority is right to motivate, affect and influence people and their performance in order to achieve better result. So, it is a basis of getting things done.

8. Can Be Added Or Reduced
Authority can be added or reduced as per the needs and also can be fully withdrawn or delegated to others.

Advantages And Disadvantages Of Time Based Departmentation

Advantages Of Time Based Departmentation

Followings are the main benefits of time based departmentation:

1. Time based departmentation follows division of work.

2. This type of departmentation maintains good coordination by grouping employees into different shifts.

3. Responsibility and authority is delegated to the shift head or in-charge. 

4. Time based departmentation make maximum utilization of resources.

5. It follows the principle of specialization.

6. There is no work burden for managers and employees.

Disadvantages Of Time Based Departmentation.

Followings are the main drawbacks of time based departmentation:

1. This is costly method of departmentation.

2. Entire shift may face problem due to the problem of one shift.

3. There is very difficult to maintain effective coordination and proper communication among different shift.

4. Time based departmentation faces the problem of conflict between managers and employees of different shifts.

5. This type of departmentation is not suitable for all types of organization, especially to small and medium sized firms.

Advantages And Disadvantages Of Departmentation By Process

Advantages Of Process Departmentation 

Followings are the main benefits of process departmentation:

1. In process departmentation, there is proper division of work. So, it is effective form of departmentation.

2. Top level management is oriented towards the best result. So, there is proper operation.

3. Departmentation by process follows the principles of specialization.

4. There is clear authority and responsibility in each department.

5. This type of departmentation facilitates proper and optimum use of resources.

6. Because of specialization and division of work production process is effective in process departmentation.

Disadvantages Of Process Departmentation

Followings are the major drawbacks of process departmentation:

1. There is high chance of conflict in process departmentation.. 

2. This type of departmentation is only suitable for large manufacturing firms.

3. It is difficult to maintain effective coordination.

4. Whole process may be affected due to problem in one process.

5. It is hard to maintain unity of command.

6. Departmentation by process is very costly.

Advantages And Disadvantages Of Departmentation By Territory

Advantages Of Departmentation By Territory

Territory-based departmentation has the following advantages:

1. Territory-based departmentation helps to expand business operation into different geographical location.

2. The regional staffs get opportunity to improve their skills and experience.

3. Local people can get job opportunity by departmentation by territory.

4. In this type of organization, coordination can be established between the organization, employees and locals.

5. Territory-based departmentation helps to fulfill local demand.

6. There is lower cost of production in this type of departmentation.

7. Departmentation by territory adopt the environmental changes.

8. This type of departmentation facilitates face-to-face communication which helps to be familiar with local people.

Disadvantages Of Departmentation By Territory

Territory-based departmentation suffers from the following drawbacks:

1. Departmentation by territory is more costly than other forms if departmentation. Although the cost of production is low, administrative expenses and other expenses are very high.

2. It needs more people with managerial skills.

3. There is a problem of effective control in this type of departmentation.

4.There may exists the chance of integration of different regional offices in this type of departmentation.

5. This is complex form of departmentation.

6. Territory-based departmentation suffers from the possibility of duplication

Advantages And Disadvantages Of Customer Departmentation

Advantages Of Departmentation By Customers

Followings are the major benefits of customer departmentation:

1. This type of departmentation emphasis on customer satisfaction by providing  better products and services.

2. Product departmentation identifies key customers, their needs and tastes and try to satisfy them.

3. Product departmentation ensures expertness and specialization to benefit customers.

4. Product departmentation adopts different environmental changes according to the situation.

5. Managers are more responsible of each departments and products.

6. Customers departmentation create goodwill and good image in front of the clients.

Disadvantages Of Departmentation By Customers

Followings are the major drawbacks for customer departmentation:

1. It is very difficult for top management to maintain proper coordination between different departments and functional areas.

2. In customer departmentation, there is high chance of duplication of different activities.

3. There is a chance of staffs being idle in this type of departmentation. 

4. Due to over focus on customers satisfaction, there is possibility of wastage of other resources of organization.

Advantages And Disadvantages Of Departmentation By Product And Services

Advantages Of Product Departmentation

Major benefits of departmentation by product and services are as follows:

1. Product departmentation follow the principle of specialization in a product or services. It ensures better quality of the product.

2. Because of specialization it ensures optimum utilization of human and non human resources.

3. Large manufacturing firms can be benefited from product departmentation.

4. Departmentation by product and service helps in evaluating the performance of each department. This helps to control organization easily.

5. Top level manager has enough time for planning and decision making because all departments are handled by departmental managers.

6. Production departmentation is flexible in nature. It is easy to add new product line if needed. 

7. Product departmentation helps to improve skill and talent of managers.

Disadvantages Of Product Departmentation

Major drawbacks of departmentation by products and services are as follows:

1. There is high chance of conflict between different departments.

2. Due to low demand, resources may not be fully utilized.

3. Top level management has to face difficulty to control production division.

4. Departmental managers and supervisors may ignore overall organizational objectives because they focus only on their department.

5. It is very costly and not suitable for small and medium sized firms

Advantages And Disadvantages Of Functional Departmentation

Advantages Of Functional Departmentation

Following are the major benefits of advantages of departmentation by function:

1. Simplicity
Functional departmentation is simple and common form of departmentation. It is very easy to establish and operate.

2. Specialization
Functional departmentation follows the principle of specialization. Special knowledge and skill helps high level operation of the organizational functions.

3. Better Coordination
Functional departmentation facilitates better coordination among departments, different functions and employees,

4. Optimum Utilization Of Resources
Functional departmentation focuses on the optimum utilization of both human and non-human resources. This ensures positive outcome to the organization.

Disadvantages Of Functional Organization

Functional Departmentation suffers from the following disadvantages:

1. Conflict
In functional departmentation, there is very high chance of conflict among departments and other functional areas.

2. Slow Decision Making
Because of numbers of specialists and experts and many departments, decision making process is slow in this type of departmentation.

3. High Supervision Cost
There are many supervisors in this type of organization. So, supervision costs is very high.

4. Lack Of Innovation And Creativity
Functional departmentation emphasis on high level speed production by the help pf specialists and skilled employees. It emphasis on mass production and expansion. But it ignores innovation and creativity.

5. Difficult To Monitor
It is very difficult to monitor performance in this type of departmentation.

Meaning And Importance Of Departmentation


Departmentation means grouping and dividing similar organizational activities into smaller units on logical basis. It is a process of identifying, analyzing, arranging and grouping the jobs into small and flexible units for different departments and sections. 

Departmentation helps to increase the efficiency of the organization. Division of work helps to manage and complete work effectively. It helps to control overall organizational activities easily.

Therefore, departmentation is very useful to promote efficiency, maintain coordination, increase responsibility and control overall activities of the firm.

Importance And Advantages Of Departmentation
Benefits and importance of departmentation are as follows:

1. Systematic Division Of Work

Departmentation simplifies the job with systematic division of work. So, it ensures effective functioning of the organization.

2. Specialization

Departmentation ensures specialization of because of work division.

3. Better Control

Departmentation ensures administrative, financial ad managerial control by dividing jobs and personnel in systematic manner.

4. Efficiency

Departmentation helps to boost organization's efficiency because of division of work, specialization and effective control.

5. Management Development

Departmentation simplifies managerial tasks. It helps managers to perform effectively.

6. Chance Of Expansion

Because of specialization, work division, effective control and efficiency, organizational functions can be performed with high level of speed. So, there is a huge scope of mass production and expansion of business.

Difference Between Line Organization And Functional Organization

Major differences between line organization structure and functional organization structure are as follows:

1. Nature

Line Organizational Structure: It is simple and very easy to operate.
Functional Organizational Structure: It is complex type of organizational structure.

2. Specialization

Line Organizational Structure: This type of organization is not specialized or follows low level of specialization.
Functional Organizational Structure: It is fully specialized form of organization. It hires specialists and experts for business operation.

3. Unity Of Command
Line Organizational Structure: Unity of command is strictly followed in line organization.
Functional Organizational Structure: Unity of command is not properly followed in functional organization.

4. Discipline

Line Organizational Structure: Discipline is strictly maintained in this type of organization.
Functional Organizational Structure: There is a loose discipline or lack of discipline in functional organizational structure.

5. Authority

Line Organizational Structure: This type of organization follows scalar chain system or vertical authority.
Functional Organizational Structure: It follows functional or diagonal authority system.

6. Economy

Line Organizational Structure: It is very economical form of organizational structure.
Functional Organizational Structure: This type of organization is very costly due to specialists and experts.

7. Work Load For Top Management

Line Organizational Structure: Top level management has more work load due to single authority and responsibility. 
Functional Organizational Structure: Top level does not have more work load because responsibility and authority is divided among department heads and specialists.

8. Coordination

Line Organizational Structure: There is possibility of effective coordination because of only one superior.
Functional Organizational Structure: There may be a problem of coordination due to many supervisors, experts and specialists.

9. Decision Making

Line Organizational Structure: Decisions are taken by top level management or line manager.
Functional Organizational Structure: Decisions are made by departmental heads and experts.

10. Suitability
Line Organizational Structure: It is suitable for small organizations with limited operations.
Functional Organizational Structure: It is suitable for medium and large scale organizations with multiple operations.

Disadvantages Of Functional Organization

Drawbacks or disadvantages of functional organizational structure are as follows:

1. Lack Of Unity Of Command

In functional organization, subordinates or lower level employees have to obey the instructions of number of bosses. So, there is no proper unity of command and conflict may be arise between workers and supervisors.

2. Lack Of Coordination

Due to poor unity of command, there exists lack of coordination in functional organizational structure. This may lead to poor organizational performance. 

3. Indiscipline

It is very difficult to maintain discipline in functional organization structure because confusion and conflict us created in the minds of employees due to multiple bosses. They cannot properly follow the instructions of many superiors.

4. Costly

High cost is another drawback of functional structure. The organization has to spend huge amount of money due to high remuneration of specialists and experts and high amount of clerical works.

.5 Difficulty In Fixing Responsibility

Because of lack of unity of command, poor coordination, lack of initiative and weak discipline, fixing of responsibility is very difficult in functional organizational structure.

Benefits Of Functional Organization

Advantages of functional organizational structure are as follows

1. Highly Specialized

Functional organization hires experts and specialists to perform different types of jobs. Each department is specialized and ensures a division of labor.

2. More Efficiency

Experts and specialists can perform the given task more effectively and efficiently because they can understand the work better than normal employees. So, the organization can be benefited. 

3. Less Burden To The Top Management

Departmental heads handle overall operating functions of related department. So, top level management has enough time for policy making and decision making function. 

4. Economy

Due to specialization, it facilitates large scale production. It results economy.

5. Better Control

Due to joint supervision of work (by departmental head and top level management), it is easy to control whole organizational activities.

6. Scope For Development

This type of organization provides different training and conducts other development programs to the superiors and subordinates. It helps them to improve their skills and opportunity for future development.

7. Division Of Work
Functional organization practice division of work. It segregates physical and mental functions. Works are performed by skilled employees of related field. This helps to boost the performance and brings positive output. 

8. Scope For Expansion And Mass Production

In functional organization, expansion is possible because of capable managers and supervisors. Mass production is also possible because of high level of work speed of experts.

Difference Between Line Organization And Line And Staff Organization

Following are the main differences between line organization structure and line and staff organization structure:

1. Authority

Line Organization: Totally centralized authority
Line And Staff Organization: centralized authority with the involvement of specialists for guidance.

2. Unity Of Command

Line Organization: There is unity of command because subordinates have superiors to command.
Line And Staff Organization: There is also unity of command but line authorities are not forced to implement the experts in opinions and advice.

3. Nature

Line Organization: Simple form of organization with clear division of authority and responsibility.
Line And Staff Organization: Complex form of organization creating confusion about authority and responsibility.

4. Discipline

Line Organization: Discipline is maintained strictly in this type of organization structure.
Line And Staff Organization: Liberalness in discipline.

5. Provision Of Expert

Line Organization: No provision of experts.
Line And Staff Organization: Yes, there is a provision of experts and functional specialists in this structure of organization.

6. Suitability

Line Organization: Suitable and effective for small and middle sized organization.
Line And Staff Organization: Suitable and effective for big firms.

7. Cost/Economy

Line Organization: It is economical in nature.
Line And Staff Organization: It is costly than line organization structure.

8. Possibility Of Conflict

Line Organization: No chance of conflict
Line And Staff Organization: High chance of conflict among line and staff authority.

9. Decision Making

Line Organization: Decisions are taken by top management in this organizational structure.
Line And Staff Organization: Decisions are made by experts and specialists.

10. Types Of Personnel

Line Organization: One type of personnel for line authority.
Line And Staff Organization: Two types of personnel(line and staff authority).

Disadvantages Of Line And Staff Organization

Drawbacks or disadvantages of line and staff organization structure are as follows: 

1. Problem Of Conflict

In line and staff organization structure, there is high chance of conflict between line and staff authorities due to misunderstanding. This may affect productivity of the organization.

2. Confusion

Confusion is another drawback of line and staff organization. Confusion is created due to lack of proper delegation of responsibility between line and staff authority. This definitely hampers the efficiency and productivity of the organization.

3. Expensive

This type of organization is costly than line organization structure. Line and staff organization hires experts and specialists and they are paid more remuneration. This increases administrative cost. So, this type of organization structure is not suitable for small firms.

4. Lack Of Coordination

Lack of coordination is another glaring defect of line and staff organization structure. Due to confusion and lack of proper communication, there is a chance of misinterpretation.  

5. Burden For Management

It is complicated for the top level management to handle the subordinates of line and staff. This hampers smooth operation.

Advantages Of Line And Staff Organization

Major advantages or benefits of line and staff organization structure are as follows:


In line and staff organization structure, planning function is undertaken by the staff officers and line managers handle the doing functions through specialized staff personnel.

2. Better Discipline

Better discipline can be maintained in line and staff organization structure because of proper unity of command. It also helps to maintain stability in the organization.

3. Flexibility

Line and staff organization is flexible by its nature. New departments can be created and staffs can be added according to the need of the organization. 

4. Better Coordination

Better coordination is possible in line and staff organization due to the full support of staff authority.

5. Decision Efficiency

In line and staff organization, decisions are made by specialists and experts of related field. Therefore, decision making is effective in this type of organization structure.

6. Balanced Workload

Because of better coordination, specialization and proper division of work, there is balanced work load and less burden to the line executives.

7. Advancement Opportunity

In line and staff organization, different training and development programs are conducted with the help of experts and specialists. This provides scope of advancement to the employees. 

Pricing Terminologies

A business firm pays money for raw materials and other necessary supplies, manufactures different products and sells. They deduct all expenses from the income received from such sales.The remainder becomes their profit. Here some important terminologies have been given. E.g. Gross sales, net sales, cost of good sold, gross margin or profit, operating expenses, mark-up etc.

1. Gross Sales

The total sales or total amount received by a business firm from sales of goods is called gross sales. A gross sales becomes an important point of financial statement of a business firm. In this sales is multiplied by per unit price of the goods to find out sales amount. For example, price of a book is $ 20, if total 150 books have been sold out, then 150x$20 = $3000. Here, $3000 is gross sales.

2. Net Sales

Net sales are calculated by deducting sales returned (if sold out goods is returned back) and discount (if given to customers) from gross sales amount. For example, 5 books were returned back, so sales return is 5x30=$150. If total discount is given $50, then sales return $150+Discount $50= $200 should be deducted from gross sales, hence net sales= $3000-200= $2800.

3. Cost Of Goods Sold

A firm has to bear different expenses in the process of selling goods to customers. Under this include cost for production or purchase, cost of distribution, cost for promotional activities. While calculating selling cost, purchase cost is added to the stock remained at the beginning of the current year. Then distribution cost and promotional costs are added to it to find out the total cost of the goods available for sale. And then the final stock remained at the end of the current year is deducted from the total cost. Hence, the cost of goods sold comes out.

4. Gross Margin Or Profit

At first, cost of production or purchase and selling cost added together, then this amount is deducted from the amount of gross sales. The outcome is gross margin or profit. Indirect expenses need not be deducted. Net profit is calculated by deducting all kind of expenses. But if the expense exceeds the amount received from sales, then it is net loss.

5. Operating Expenses

All the expenses made on different activities in the process of sales and distribution of goods, such as selling expenses, salary to salesmen, commission, transportation charge, promotional cost, administrative and miscellaneous expenses etc. are operating expenses. For calculating net profit, the total operating expenses should be deducted from gross sales.

6. Mark-up

Mark-up is the difference between cost of good sold and selling price. For producers, per unit profit margin of the goods sold is mark-up. Similarly, for wholesalers, the amount that comes out from deducting the discount on purchasing price is the mark-up, and for retailers, the difference between purchasing price and selling price is mark-up

Modern Concept Of Marketing

In the present day business world, the meaning of marketing is not limited to sales or distribution of products; besides sales of goods, other numerous important functions can also be included in marketing. Marketing should pay attention to satisfy the needs and wants of customers. Considering with the customer-oriented concept, marketing is taken in broad sense. According to this concept the function of marketing starts before production of goods and continues even after final sale. Although being a sub-system of the entire business system, marketing equally affects all the business decisions. Production depends mainly on marketing.

We can study some important definitions given by the scholars of marketing as follows:

Cinduff and Still define marketing as- " Marketing is the business process by which products are matched with markets and through which transfers of ownership are effected."

This definition has given emphasis to match products with market. That means to identify the needs and wants of potential consumers and to supply the products, which can satisfy their needs and wants. The word 'matching' emphasizes to match production and consumption, that means- " only the goods which can be produced can be sold out and so only the goods which can be sold out should be produced." If a business firm produces goods or services by studying and identifying the needs and wants of potential customers, it becomes successful to achieve its objective.

Nowadays, marketing has been highly influenced by consumerism. No business can be operated without consumers. The main objective of marketing is to identify consumers' needs and interests and provide them maximum satisfaction as possible.

William J. Stanton, Etzel and Walker have defined marketing as- " Marketing is a total system of business activities designed to plan, price, promote and distribute want satisfying products, services, and ideas to target markets in order to achieve organizational objectives."

This definition applicable to the non-profit making and profit making organizations has emphasized the systems approach of management. The entire system of business activities should be customer-oriented; and the customers should be given satisfaction in an effective way by identifying their needs. Marketing program starts from generating ideas for products and does not end until the customers are fully satisfied even after the final sale of the products. For the successful implementation of this definition, marketing should pay attention to maximize profitable sale in long run. So, for the success in business, an organization should give satisfaction to the customers in order to maintain their expectation for products or services and receive their purchase-order regularly.

In this way, marketing has been taken in broad sense. The old concept limited to buying and selling of goods cannot work in the present business environment. The new concept of marketing has become an integrated process to identify human needs, evaluate and supply or satisfy them. Before producing any goods, the subjects such as taking decisions what to produce, when to produce, how much price to determine, how to supply to ultimate consumers etc. are all concerned with marketing. Marketing starts from generating ideas to produce goods according to the interest of customers, and it does not end until they are fully satisfied even after final sale. So, the activity of marketing is also a dynamic process that goes on continuously.

Old Concept Of Marketing

In old concept, marketing is economic process related with the exchange of goods and services in monetary value. This shows that the scope of marketing is limited to only buying and selling of goods and their advertisement. According to this old concept, the function of marketing starts only after production of goods and automatically ends when they are sold out. The old concept maintains that the main objective of marketing is to supply goods or services from producer to consumers and earn profit by selling them. For this, advertisement and different sales promotional techniques are used.

Different scholars have defined marketing in narrow sense:

Prof.Pyle has defined marketing as " Marketing comprises both buying and selling activities."
This definition has limited marketing within buying and selling activities.

Duddy and Revzan have defined marketing as " Marketing is the economic process bu which goods and services are exchanged and their values determined in terms of money prices."
This definition seems to limit marketing to buying and selling goods or services and determining their prices, i.e. exchanged activities.

According to the above mentioned definitions, marketing includes all the activities carrying products or services from producers to consumers. It includes selling goods or services, or exchanging them for monetary profit. The narrow meaning of marketing represents product-oriented concept, which gives emphasis to sell of goods produced by any business organization rather than to the needs, interests and wants of customers. This concept was true during the time when there was scarcity of goods and monopoly of sellers' market.

But in the present era of business competition, product-oriented concept of marketing is not appropriate. This concept maintains the function of marketing starts from production of goods or services and ends with sale. But in the changed business environment, the function of marketing starts before the production of any goods or services. Anticipation of customers' demand, needs and interest should be made before developing and producing any goods. Taking decision on price, market and other promotional activities are also the functions of marketing. The task of marketing does not end after the final sale. If any business organization wants to receive purchase-orders from customers again and again, it should fully satisfy the customers as the success of business depends on the customers' satisfaction. For these reasons, the old concept of marketing has become outdated. In other words, the concept of marketing has changed. Consumer-oriented concept has developed in the place of old product-oriented concept. Now, it is believed that the customers are the real force to direct business and their satisfaction is the ultimate goal of business activities.

Problems Of Agricultural Marketing

The problems of agricultural marketing are as follows:

1. Lack Of Organized Market
Majority of farmers live in villages. Organized markets have not developed in villages to sell their products. So, there are no markets to supply neither agricultural products to the customers, not agricultural inputs to the farmers in rural areas. So, agricultural market has remained unorganized.

2. Predominance Of Intermediaries
Agricultural market is totally controlled by intermediaries. They have predominance in determining prices, buying and selling of agricultural product. So, neither the farmers can get reasonable prices of their products, nor the customers can get the products at cheap prices. Intermediaries buy agro-products at cheap prices from farmers and sell to consumers at high prices. So, agricultural market has been seriously affected by exploitation of intermediaries.

3. Lack Of Standardization And Grading
Farmers produce various kinds of goods. But they are not standardized and graded according to their quality. Rather there is malpractice of adulteration of standard and inferior quality goods. Bad quality products are mixed with good quality and sold at high price.

4. Lack Of Warehousing
There is no proper warehousing facility for storing agricultural products. The farmers have the compulsion to sell their products at cheap price on the one hand, the quality of goods declines and quantity decreases due to the leakage on the other. Similarly, as there is no adequate facility of transportation, farmers cannot get reasonable prices of their products.

5. Lack Of Transportation Facility
There is no transportation facility in every part of the countries. If there is transportation facility, agricultural market can get expanded. Due to the lack of transport facility, it becomes impossible. Although the importance of agricultural market is paramount in every village, there is lack of transport facility.

6. Lack Of Marketing Skill
Because of the lack of proper education, the small farmers and businessmen have no marketing skill. Small farmers, businessmen are not skilled in determining price, storing, packaging and grading the agricultural products. AS a result, they have not got benefits from agricultural occupation.

7. Lack Of Effective Peasants' Organization
There are many peasants organizations affiliated to one or the other political organization. But they are not concerned with the farmers' occupational interest. There is lack of peasants' organization which would focus its attention on occupational interest of peasants.So, real farmers are always exploited.

8. Lack Of Market Information
There is lack of institutional body to give information to the farmers about the production situation, price, demand and changes in price, market situation etc. of the agricultural products. Farmers are exploited or cheated by local landlord, moneylenders and agro-businessmen due to their wrong information.

9. Lack Of Minimum Price Fixation System
There is lack of minimum price fixation system of the agricultural products. As a result, farmers have to suffer exploitation.

In this way, absence of organized market, predominance of intermediaries, lack of standardization and grading, lack of warehouse and transportation facility, absence of effective peasants' organization, lack of market information, lack of minimum price fixation system etc. are the problems of agricultural marketing.

Features Of Agricultural Marketing

The features of agricultural marketing can be discussed as follows:

1. Perishable Products

Agricultural products are dealt with in agricultural market. Most of the agricultural products are of perishable nature. Fruits, green vegetables, fish, meat, milk, other dairy products etc. perish within shorter time. But some other remain fresh for a little longer. So, proper management of storage, distribution and transportation should be made according to the nature of products.

2. Continuous Demand

Most of agricultural goods are produced in certain seasons. But they are necessary for consumption round the year. So, warehouse management should be made effective for regular supply of such goods.

3. Fluctuation In Price

Since balance cannot be maintained in demand and supply of agricultural products, price remains fluctuating in agricultural markets. Supply rises high and price falls low in harvesting time. Bu in off-season, supply falls low then prices rise high. 

4. Presence Of Intermediaries

Producer's predominance prevails over industrial products but intermediaries' predominance prevails over agricultural products. Intermediaries buy agricultural products at low price directly from the farmers at the time of harvest. They keep the collected products in warehouse and sell them at high prices. So they take responsibility of market management. They perform all the functions of marketing such as collecting, standardizing, pricing, storing of agricultural product. So, farmers cannot get reasonable price for their products.

5. Inelastic Demand

Agricultural products are of compulsory for daily life. Any change in their price does not affect much. An increase or decrease in prices does not affect demand for agricultural products. So, demand remains inelastic in agricultural market.

6. Elastic Supply

Supply of agricultural products remains elastic, even if demand remains inelastic. Supply is affected by the change of price of agricultural products. If price of agricultural products rises, then supply also increases together. If price decreases, supply also decreases.

In this way, buying and selling of perishable goods, continuous demand, fluctuation in prices, presence of intermediaries, elastic supply etc. are the important features of agricultural marketing.

Types Of Agent Wholesalers

Agent wholesalers can be classified into two classes as brokers and agents:

1. Broker
Broker helps to have contact between buyer and seller temporarily. Compared to other middlemen, work of broker is limited. Brokers do not involve in financial arrangement or physical ownership. They do not bear any special risk. Their job is to find out buyers and sellers and help them to have exchange agreement. The party taking service pays brokerage-fee to brokers.

Brokers deal in different goods and services. Some deal in foodstuff, some deal in land and houses, some deal in securities (bond, shares), insurance etc.

i. Foodstuff Broker
Food brokers make arrangement to sell foodstuff to retailers, merchant wholesalers, industrial buyers and food processors. Buyers and sellers use food brokers to work according to the changes in the situation of food markets and to take help in grading, to have negotiation, inspection of goods etc. 

ii. Real Estate Broker
Real estate brokers help buyers and sellers in buying or selling land and houses. They bring buyers and sellers together, make them negotiate in buying and selling. They do not represent buyer or seller permanently. They involve in advertisement and other promotional activities to increase their activities. 

iii. Other Brokers
In this class include securities and insurance brokers. Security brokers brings buyers and sellers together selling or buying securities i.e shares, bonds etc. Insurance brokers also help insurance company and customers to come together to buy and sell insurance policies.

2. Agent
Agent is middleman in the channel of distribution, who works as a permanent representative of buyer or seller. Under this include producers' agent, sales agent, commission agent etc.

i. Manufacturer's Agent
The sellers appointed by a producer/manufacturer to distribute their products in certain geographical region are called manufacturer's agents.Such agents sell the products in the condition and price fixed by the manufacturer and take fixed commission. The special feature of manufacturer's agent is that they can represent different manufacturers at a time and conduct their business together in the goods of different product lines. But the goods produced by different manufacturers should not be competitive of one another. Manufacturers' agent help producers to expand their market.

ii. Sales Agent
Selling agents take responsibility to sell or distribute different products or all products of certain product line of a producer. Sales agents provide different services such as credit facility, delivery facility, storage facility etc. and also involve in promotional activities. But they do not get rights and ownership of goods. Mostly, sales agents are used to sell caned foods, household appliances, clothes, metal goods etc.

iii. Commission Merchants
Commission merchants do not get ownership of goods, but keep physical control over the goods received from producers. They receive goods from producers and supply to market, sell at good price, and take the fixed commission, pay the rest amount to producers. The commission merchants get authority and price and other sales related terms and conditions. Commission agents make arrangements for delivery of goods and provide transport facility. Such merchants mainly deal in agro-products, sea foods, artistic goods, furniture etc. Their business is seasonal or for short term.

Types Of Merchant Wholesalers

Merchant wholesalers can be classified in full-service wholesaler and limited service wholesaler:

1. Full-service Wholesaler
Full-service wholesalers perform all the functions of a wholesaler. They provide various services to customers. They buy and sell goods, divide them, make arrangements of transportation and warehouse, make arrangement of finance, provide credit facility, bear risk, help in promotional activities, collect market information etc. They provide different facilities to both producers and retailers.

Full-service merchandise wholesalers can be divided in three classes as follows:

i. General Merchandise Wholesaler
General merchandise wholesaler deals in various kinds of goods. This type of wholesaler purchases medicines, construction materials, perishable and non-perishable foodstuffs, cosmetics, clothes, sports and electrical goods, furniture, etc. stores and sells them. Such wholesalers could be found more in the initial stage of development of marketing. But nowadays, this type of wholesaler can be found rarely in this stage of growing specialization.

ii. Limited-line Wholesaler
Limited-line wholesaler deals in the good of only certain product line. Foodstuff product line wholesaler deals in foodstuffs, tea, coffee, cooking oil, caned fruits, fishes etc. The wholesaler who deals in electrical goods sells bulbs, tubes, wire, holders, heaters etc. General merchandise wholesaler deals in various types of goods of all product lines, while the limited line wholesaler deals in only goods of certain line. But we can find similarity in the services provided by both types of wholesalers.

iii. Specialty Wholesaler
Specialty wholesaler deals in only one special goods of particular product line. The wholesaler who deals in only oil, or electrical goods, or medicines, or so on can fulfill the special needs of customers. Specialty wholesaler can deal in only the product of certain producer. This type of wholesaler can provide high-level technical advice and services to both producer and customers. So, nowadays, popularity of this type of wholesaler is increasing.

2. Limited Service Wholesaler 
Limited service wholesaler is such a merchant wholesaler who takes rights and ownership of goods. But he performs only some selected functions of those that are generally performed by a wholesaler. This type of wholesaler does not perform all the functions like a full service wholesaler. Limited service wholesaler performs only some limited functions, which can fulfill special needs.

Limited service wholesalers can be divided into cash and carry wholesaler, truck wholesaler, rack jobber, drop shipper, mail-order wholesaler etc.

i. Cash-and-carry Wholesaler
Cash and carry wholesalers are such a limited service wholesalers who neither sell goods on credit to customers, nor provide transport facility. Retailers and other customers go to their warehouse of cash and carry wholesalers taking means of transportation by themselves, load the goods they want and pay cash to the wholesalers. Mostly, such intermediaries deal in limited product line of goods, e.g. foodstuffs, construction materials, electrical goods, office supplies etc.

ii. Truck Wholesaler
Truck wholesalers provide transportation facility for carrying goods to the customers for inspection and selection. Generally, such wholesalers use a certain regular route and give facilities to retailers or customers to determine their needs. These type of middlemen sell goods in small quantity. They make arrangement of transportation of goods for customers on their own ownership. Truck wholesalers sell perishable goods such as fruits, fish, vegetables etc. to small food stores. Such wholesalers also sell chips, tobacco made goods, etc. They play an important role in markets. The main feature of truck wholesalers is to provide limited services for hand cash. Their warehouse is truck itself.

iii. Rack Jobbers
Rack jobbers are those wholesalers who buy and keep stock of goods for retailers. They don't have their own warehouse. They carry goods by their own means of transportation, fill in retailers' racks, display them, even they keep inventory/record of stick goods of retailers. Retailer's job is to provide place for goods. Rack jobbers also take back unsold goods. Retailers sell such goods. Rack jobbers supply goods such as dolls, foodstuffs, medicines and other goods of short life cycle. Rack jobbers bear risk of producers and retailers by supplying to customers. Because of the rack jobbers' service, retailers do not have to bother about purchasing of goods or about unsold goods.

iv. Drop Shipper
Drop shipper wholesalers take ownership of goods, sign sales contract but they do not take responsibility for physical transportation or delivery. They receive order from industrial users, other wholesalers and retailers for large amount of goods. They order producers for necessary volume of goods. Then the producers directly send goods to customers. Drop shippers take right and ownership of goods. Physical stock of goods remains with the producer or in public warehouse. Such wholesalers help in exchanges through sales activities. They may or may not provide credit facility but they do not transport goods.

v. Mail-order Wholesalers
Mail-order wholesalers sell goods to retailers, industrial users and institutional customers on the basis of the catalog sent to them through mail. The customers study the catalogues and send order for necessary goods. Then wholesalers supply demanded goods to them through mail. As the mail order wholesalers occupy a nominal place of the entire wholesaling, it is taken to be separate class due to its unique features. Generally, mail order wholesalers sell cosmetics, special goods, motor parts, etc. to retailers and other customers through mail. They also sell light consumer goods in small quantity through mail.