Wat-Pi Primer 2014

Disclaimer: The information shared is purely to help the candidates prepare for their interview/WAT round and Management
Canvas shall not be held responsible for any misuse of the information.
Contents:
1. 2. 3. 4. 5. 6. CURRENT AFFAIRS TOPICS ............................................................................................................ 4 GUIDELINES FOR WAT PHASE OF SELECTION ...................................................................... 6 ECONOMICS ....................................................................................................................................... 9 FINANCE ........................................................................................................................................... 16 MARKETING..................................................................................................................................... 21 OPERATIONS MANAGEMENT ...................................................................................................... 24
Disclaimer: The information shared is purely to help the candidates prepare for their interview/WAT round and Management Canvas shall not be held responsible for any misuse of the information.
1. CURRENT AFFAIRS TOPICS

Disclaimer: The list of questions/topics given below is not meant to be comprehensive. It is only meant to provide guidelines/focus on certain key areas. Keeping abreast with the current affairs in the national and international circles in the area of polity, economy, business, sports, etc are of paramount importance.
1. CIIs Business Confidence Index revealed signs of economic turnaround 2. International Petroleum Conference 2014 to be held in New Delhi 3. USA government shutdown 4. Arvind Kejriwal and AAP party: viability of populist measures 5. UK to overtake Germany as Europes largest economy by 2030: CEBR report 6. RBI launched Inflation Indexed Saving Bonds 7. CRISIL said Fiscal deficit to touch 5.2% in FY14 8. Union Government launched e-inclusion project to spread e-literacy 9. Public Sector Banks directed by the Union Finance Ministry to act as Insurance Brokers 10. Indian economy before and after Raghuram Rajan changes made 11. Revising section 377 India one step forward two steps back 12. Division of states- in light of the Andhra Pradesh Reorganization Bill 2013 13. RBI moves to curb black money implications 14. Davos 2014: Economic growth, income inequality, key themes 15. FDI in retail: the U- turn 16. Jet Etihad, Nokia Microsoft, Tata Singapore Airlines 17. Mars orbiter mission ISRO India defeating China 18. Minority status to Jain community Impacts 19. Quantitative easing USA 20. Key Awards and Winners 21. Land Acquisition Bill 2013 22. Companies law Amendment 2013 23. General Elections 2014 Challenges and Challengers for the next PM 24. Muzaffarnagar Riots 25. Key Fiscal indicators, GDPs, current interest rates, repo rates 26. Recipients of Padma Bhushan, Padma Shri, awards 27. Emergence of China in the global arena 28. Current state of mid African countries (Libya, Egypt, Syria which had political leadership crisis
2. GUIDELINES FOR WAT PHASE OF SELECTION
WAT, as you all know is Written Ability Test. It has 2 sections/parts in it 1) 2) Summary part Article part
Summary part: Anything can be asked to summarize in this section. Word limit must be adhered to. Skills that are tested are the identification of critical parts in the passage, forming suitable paragraphs, good vocabulary, and contraction of detailed ideas as per space and word limit and the concise and clear description of the central theme of the passage. [Caution: No extra sheets are provided for this, hence it is advised that you dont clu tter the space provided and try to avoid scratch work]
Article Part : Articles to be written usually are those which are currently trending, hence it is advised that you start reading newspapers from now on and also brush up the news items from last 3 months newspapers. Magazines like Forbes, Entrepreneur, and Economist will aid you in this process. We have identified a set of topics, which you are advised to go through once: 1. AAP Will the AAP survive long enough in its idealistic mode to have any influence on the rules of conducting politics in India? Are the AAP's measures more populist than realistic? Can AAP recent success in Delhi Elections be emulated in the Lok Sabha elections too? Should they focus on LS at all or should they work on getting a stronghold in Delhi first?
2. Next PM? Narendra Modi/Rahul Gandhi/Arvind Kejriwal/Others
3 Safety of females: State of affairs of women safety in the country. Has anything changed at all since Nirbhaya? Is India a safe destination for foreigners? What happened to Atithi Devo Bhavah? Another female alleges sexual harassment by a former Supreme Court Judge.
4. Devyani Khobragade India-US standoff and India's measures justified?
5. GSLV-D5 launch puts India in select club of spacefarers. Is this spending a wise decision when so many Indians die of cold, hunger and disease?
6. Jan Lokpal Bill Can it really curb corruption? What can?
7. Muzaffarnagar riots Riots are refreshed in our memory every few years. Are we really moving ahead at all? What about the victims now? Who is to be blamed this time?
8. 'No discrimination based on caste, creed, religion, sex, etc.,' says our Constitution. Is any of it even remotely true? Does even the Constitution believe that?
9. Airlines Industry What led to the Kingfisher doom? Why did the business top-notches let the situation get this bad? Indian airlines in general - Indigo and Air India, the revenue model, the road ahead.
10. Is MBA losing its sheen? Is there value addition? If no, why are people opting for it and why are they being paid so much for it? If yes, then why does industry say otherwise?
3. ECONOMICS
Basics of Economics The story of Modern Economics as taught at the Institutes of higher learning begins from a certain book, An enquiry in to the Nature and Causes of the Wealth of Nations, written by the Father of Modern Economics, Adam Smith. This Social Science deals with the decisions made by individuals and nations given that they have only scarce resources at their disposal. These resources can be money, skill, time (for an individual) and natural resources, labor and capital for a nation. Opportunity cost is a key concept in economics, and is described as "the basic relationship between scarcity and choice". Opportunity cost is the cost of any activity measured in terms of the value of the next best alternative foregone (that is not chosen).
Microeconomics The Economist's Dictionary of Economics defines Microeconomics as "The study of economics at the level of individual consumers, groups of consumers, or firms. It involves the determination of price through the optimizing behavior of economic agents, with consumers maximizing utility and firms maximizing profit." Thus, Microeconomics seeks to answer questions like, how does the change of a price of good influence a family's purchasing decisions? If my wages rise, will I be inclined to work more hours or less hours? This brings us to the 2 basic laws of Economics:
The Law of Demand If all other factors remain equal, the higher the price of a good, the less people will demand that good. The amount of a good that buyers purchase at a higher price is less because as the price of a good goes up, so does the opportunity cost of buying that good. As a result, people will naturally avoid buying a product that will force them to forgo the consumption of something else they value more.
The Law of Supply The higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at higher price increases revenue.
Equilibrium: When supply and demand are equal (i.e. when the supply function and demand function intersect) the economy is said to be at equilibrium. At the given price, suppliers are selling all the goods that they have produced and consumers are getting all the goods that they are demanding. As you can see on the chart, equilibrium occurs at the intersection of the demand and supply curve. At this point, the price of the goods will be P* and the quantity will be Q*. These figures are referred to as equilibrium price and quantity. However, in the real market place equilibrium can only ever be reached in theory, so the prices of goods and services are constantly changing in relation to fluctuations in demand and supply.
Macroeconomics The Economist's Dictionary of Economics defines Macroeconomics as "The study of whole economic systems aggregating over the functioning of individual economic units. More specifically, it is a study of national economies and the determination of national income." A variety of measures of national income and output are used in economics to estimate total economic activity in a country or region:
Gross Domestic Product (GDP): It is defined as "the value of all final goods and services produced in a country in 1 year". Thus, GDP = consumption + investment + (government spending) + (exports imports)
Gross National Product (GNP) It is defined as "the market value of all goods and services produced in one year by labour and property supplied by the residents of a country." GNP = GDP + NR (Net income from assets abroad (Net Income Receipts)) GDP per capita (per person) is often used as a measure of a person's welfare. Countries with higher GDP may be more likely to also score highly on other measures of welfare, such as life expectancy. In addition, other measures of welfare such as the Human Development Index (HDI), Index of Sustainable Economic Welfare (ISEW), Genuine Progress Indicator (GPI), gross national happiness (GNH), and sustainable national income (SNI) are also used. Purchasing Power Parity (PPP) asks how much money would be needed to purchase the same goods and services in two different countries, and uses that to calculate an implicit foreign exchange rate. Using that PPP rate, an amount of money thus has the same purchasing power in different countries. One of the most common uses of PPP is in lessening the misleading effects of shifts in a national currency. This is particularly an issue when calculating a nation's Gross Domestic Product (GDP) The Big Mac Index (first published in The Economist) is an informal way of measuring the purchasing power parity (PPP) between two currencies. The Big Mac was chosen because it is available to a common specification in many countries around the world thus enabling a comparison between many countries' currencies. The Big Mac PPP exchange rate between two countries is obtained by dividing the price of a Big Mac in one country (in its currency) by the price of a Big Mac in another country (in its currency). This value is then compared with the actual exchange rate; if it is lower, then the first currency is under-valued (according to PPP theory) compared with the second, and conversely, if it is higher, then the first currency is over-valued. Similarly, we also have the Starbucks Tall Latte Index.
Exchange-rate regime The exchange-rate regime is the way a country manages its currency in relation to other currencies and the foreign exchange market. To understand this, we must look at the various policy actions of the Central Bank (RBI for India, The Federal Bank for the US)
Fiscal policy: is the use of government expenditure and revenue collection (taxation) to influence the economic activity. Monetary policy on the other hand, attempts to stabilize the
economy by controlling interest rates and spending. The two main instruments of fiscal policy are government expenditure and taxation. Changes in the level and composition of taxation and government spending can impact the following variables in the economy: Aggregate demand and the level of economic activity; The pattern of resource allocation; The distribution of income The mechanisms to control liquidity: Interest Rates
What is Bank rate? Bank Rate is the rate at which central bank of the country allows finance to commercial banks. Bank Rate is a tool, which central bank uses for short-term purposes. Any upward revision in Bank Rate by central bank is an indication that banks should also increase deposit rates as well as Base Rate / Benchmark Prime Lending Rate. Thus any revision in the Bank rate indicates that it is likely that interest rates on your deposits are likely to either go up or go down, and it can also indicate an increase or decrease in your EMI. Bank Rate increased to 9.50% from 6.00% as a part of the technical adjustment w.e.f. from the close of business day of 13/02/2012.
What is Cash Reserve Ratio (CRR)? Banks in India are required to hold a certain proportion of their deposits in the form of cash. However, actually Banks dont hold these as cash with themselves, but deposit such case with Reserve Bank of India (RBI) / currency chests, which is considered as equivalent to holding cash with RBI. This minimum ratio (that is the part of the total deposits to be held as cash) is stipulated by the RBI and is known as the CRR or Cash Reserve Ratio. Thus, when a banks deposits increase by Rs100, and if the cash reserve ratio is 6%, the banks will have to hold additional Rs 6 with RBI and Bank will be able to use only Rs 94 for investments and lending / credit purpose. Therefore, higher the ratio (i.e. CRR), the lower is the amount that banks will be able to use for lending and investment. This makes it an instrument in the hands of a central bank through which it can control the amount that banks lend. Thus, it is a tool used by RBI to control liquidity (money supply) in the banking system. RBI has announced reduction in CRR from 6.00% to 5.50% w.e.f. 28/01/2012 (announced on 24/01/2012 in the review of the third quarter monetary policy of 2011-12
What is Statutory Liquidity Ratio (SLR)? SLR indicates the minimum percentage of deposits that the bank has to maintain in form of gold, cash or other approved securities. Thus, we can say that it is ratio of cash and some other approved securities to liabilities (deposits). It regulates the credit growth in India.
What are Repo and Reverse Repo rates? Repo (Repurchase) rate is the rate at which the RBI lends shot-term money to the banks against securities. If banks are short of funds they can borrow rupees from the Reserve Bank of India (RBI) at the repo rate, the interest rate with a 1 day maturity. When the repo rate increases borrowing from RBI becomes more expensive. Reverse Repo rate is the rate at which banks park their short-term excess liquidity with the RBI. The banks use this tool when they feel that they are stuck with excess funds and are not able to invest anywhere for reasonable returns. This reverse repo rate is always lower (by a 100 basis points or 1 per cent) than the repo rate. Thus, we can conclude that Repo Rate signifies the rate at which liquidity is injected in the banking system by RBI, whereas Reverse repo rate signifies the rate at which the central bank absorbs liquidity from the banks Currently, the repo rate is 8.5% Now that we are clear about these, lets come back to the exchange rates. The basic types are, a floating exchange rate, where the market dictates movements in the exchange rate; a pegged float, where a central bank keeps the rate from deviating too far from a target band or value, via the policy actions we have discussed above; and a fixed exchange rate, which ties the currency to another currency, mostly more widespread currencies such as the U.S. dollar or the euro or a basket of currencies. Before the 1970s fixed exchange rate systems were followed. Today, the market determined floating exchange rates are the norm [1].
Inflation and Related terms: In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects erosion in the purchasing power of money
Deflation generally refers to falling prices and is often caused by a reduction in money supply or credit. Deflation could also be caused by reductions in government, personal, or investment spending and often has the side effect of increasing unemployment in an economy. Stagflation is a sluggish economy coupled with a high rate of inflation and unemployment. Stagflation occurs when an economy isnt growing but prices are, which is not a good situation for a country to be in. The word was coined during the inflationary period of the 1970s in the US. India also has recently experienced it a couple of years ago. Hyperinflation is basically a very high level of inflation that eventually spirals out of control until the value of the currency becomes practically worthless. A recent example is Zimbabwe. Also, Germany experienced it in the post second world war period.
Measurement of scale of inflation Inflation can be measured in the following 2 ways: Inflation based on changes in consumer prices for specific baskets of goods, also known as consumer price index (CPI) Inflation based on changes in average prices of goods traded in wholesale market, called as wholesale price index (WPI)
India is amongst few countries of the world, which uses WPI to measure the inflation in the economy. WPI is calculated on weekly basis unlike CPI that is calculated on a monthly basis. WPI in India includes a total of 435 commodities classified as below: Primary articles (food articles non-food articles and minerals) Fuel ,power ,light ,lubricants and manufactured products like food products , beverages , tobacco , textiles ,leather and leather products)
WPI is calculated on base year and WPI base year is assumed to be 100. Though WPI is not an accurate indicator of inflation, India has still not moved to the CPI measure of inflation. This is because, in India, there are four different types of CPI indices (CPI Industrial Workers; CPI Urban Non-Manual Employees; CPI Agricultural labourers; and CPI Rural labour), and that makes switching over to the Index from WPI fairly risky and unwieldy. For more information: http://www.investopedia.com/ http://www.rbi.org.in/ http://www.economist.com/economics-a-to-z http://www.bloomberg.com/news/economy/
4. FINANCE
An Introduction A managers actions in a firm should always be towards maximizing shareholders wealth. In nutshell, financial manager has to ensure the generation of cash flows now and in the future. The financial system basically handles interactions between fund surplus units and fund deficit units. It comprises of financial markets (Capital & Money markets), financial instruments (Bond, stock etc.) and a variety of intermediaries (financial institutions). Financial Markets: Capital Markets:
It is the market where long term debt instruments (e.g. bonds) and equity securities (e.g. shares) are issued and traded. The primary market is for issuance of new securities; for example a company coming up with an IPO (Initial public offer) while secondary market is for trading (buying and selling) of already issued securities; for example stock exchanges.
Capital Market Securities
o Common stock: represents a fractional ownership in the company that issued it. The holders receive dividends as declared by the board of directors, entitled to voting rights on the selection of board members and other matters related to company, and stand at the very end of the line in terms of distributions of assets in case of liquidation (closure) of company. o Preferred Stock: is similar to common stock but with few exceptions. The holders are paid a specified dividend, carry limited or no voting rights and stand in the line ahead of common shareholders with respect to any payment of dividends and any distribution of assets in case of liquidation. o Bond: is a capital market debt security. A bond has a face value at which it is issued, a maturity date on which it will be repurchased by the company and an annual fixed interest rate at which a fixed amount will be paid to the holder periodically.
A few notable variations of bonds: o Zero-coupon bond: No stated interest rate and makes no periodic payments. Instead, it is issued at discount to face value, which is paid at maturity.
o Convertible bond: Is generally issued at an interest rate lower than the market rate. It contains a provision whereby the holder can convert the bond into a specified number of common shares at a specified price.
Money Market: Money market refers to the market where large corporations and government raise short term money by selling various debt instruments. Similar to capital market, money market also has a primary as well as secondary market. The main purpose of money market is to enable corporations to raise money for their short term needs to get through seasonal business cycles or for other purposes. Money market is treated as a safe place because of high liquid nature of securities and their short maturities. Unlike capital market, individual players dont invest in money market as the value of investments is large.
Money Market Instruments Treasury Bills (T-Bills): T-Bills are short term borrowing instruments of the central government of the country issued through the central bank (RBI in India). They are virtually zero risk instruments, and hence returns are not so attractive. Another use of these instruments is to absorb liquidity from the market by contracting money supply. Commercial Paper: Commercial paper is a short term unsecured promissory note issued by corporate and financial institutions at a discount to its face value. They yield higher returns as compared to T-Bills as they are relatively less secure. Only firms with high credit ratings will find buyers without offering any substantial discounts. Commercial papers are actively traded in secondary market. Certificate of Deposit (COD): COD is a promissory note issued by a bank in form of a certificate entitling the bearer to receive interest. The returns are higher than T-Bills because it assumes higher level of risk. Derivatives: A derivative is a financial instrument which doesnt have a value of its own, but derives its value from some other asset, which is called as an underlying asset. Derivatives are tools to reduce a firms risk exposure, the process is known as hedging. Forwards and Futures are simple derivatives while Options and Swaps are more complicated ones.
Forwards: A forward contract is an agreement between two parties to buy/sell the underlying asset at a predetermined future date for a price that is specified today. It is susceptible to counter party risk. Futures: A future contract is a forward contract formally traded on organized exchanges. It is traded in large values in regulated environment and almost free of counter party risk. Like forward contracts, future contracts are obligations for buyer and seller. Most common financial futures are stock futures and index futures. Options: An option is a right to the holder but not an obligation to buy or sell the underlying asset at a specified exercise price at a specified date in future. There are three parties to an option: writer (seller), holder (buyer) and the exchange. There are two types of options: Call option is an option to buy and Put option is an option to sell. Swaps: A swap is an agreement between two parties to exchange cash flows over a period of time. Two most popular swaps are currency swaps and interest rate swaps. Currency swap involves an exchange of cash payments in one currency for cash payments in another currency. Interest rate swap allows a company to borrow capital at fixed (or floating) and exchange its interest payments with interest payments at floating rate (or fixed rate).
Some other finance terms: Venture capital (VC): It is a means of equity financing for rapidly growing private companies. It comes under private equity market. VC provides the finances for the start-up, supporting research & development, expansion of a growing private company. The venture capitalist is the general partner and makes all the investment decisions for the firm. He receives a profit share (usually 25%) and a management fee (usually 2% of the fund). Initial Public Offering (IPO) and Follow on Public OFFERING (FPO): The basic difference between Initial Public Offer (IPO) and Follow on Public Offer (FPO) is as the names suggest IPO is for the companies which have not listed on an exchange and FPO is for the companies which have already listed on exchange but want to raise funds by issuing some more equity shares. IPO is the first stock sale of the company to the public. Usually, companies come up with an FPO to restructure their business (Debt and Equity) or to raise funds for new businesses. Rights Issue: An issue of common stock to the existing shareholders of the company is known as rights issue. This privilege extended to existing shareholders is known as preemptive right. Rights can be exercised within a stipulated time, after which they expire.
Frequently Asked Questions What are the typical roles of a financial manager? A financial manager is responsible for providing financial advice and support to colleagues and clients so as to enable them to make sound business decisions. The role of financial manager is more than simple accounting; it is multifunctional. Typical roles and titles: Controller, Treasurer, Risk Manager, Credit Manager, Cash Manager, etc. For more details, please visithttp://www.qfinance.com/balance-sheets-checklists/defining-the-financial-managers-role
Is CFA needed before starting MBA? CFA is not at all a prerequisite for doing MBA. Not having a CFA certification is not a disadvantage for any candidate applying for MBA.
Is work life balance always compromised for a finance manager? There are some profiles like investment banking which demand high amount of employees ti me over work, but most of other profiles like corporate finance allow you to have a work life balance as any other manager in marketing or operations profile would have.
Is finance a glorified version of mathematics or does it demand some subjective analysis too? It is a normal misconception that a finance manager would always be working with numbers. A finance manager must understand all the aspects of business so that they can adequately advise the senior management in strategic decision making.
5. MARKETING
Financial success of an organization often depends on how it markets its products and, more importantly, the organization itself. For a firm to make profit or, what they call, meet its bottom line there must always be a top line. The American Marketing Association defines Marketing as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. In layman terms, marketing is the art of identifying and anticipating consumer needs and satisfying them by delivering the goods and services that they value eventually achieving the objectives of the firm and of the society. Marketing is everything a company does to acquire and retain a customer. What does the job of a typical marketer entail? A marketers job is to study the market and determine the best way to reach the customers profitably. It begins with working with the rest of the company to determine the prospective product needs of the customer which involves research and planning. It is followed by the vital task of marketing the product to the end consumer profitably. This involves delivering the products value to the customer through advertising and selling. A career in marketing often starts from a sales profile as it is the only platform to understand the customer and his needs, up close and personal. Marketing concept: A simple but important idea that firms follow, marketing concept implies that an organization aims all its efforts at satisfying its customers profitably. What is the difference between marketing and sales? Marketing is not the art of selling products. In fact, the aim of marketing is to understand the customer so well that the product fits him and sells itself, thus making selling superfluous. Selling then remains as only the tip of the marketing iceberg! Marketing Sales Marketing is everything that a firm does to Selling is everything a firm does to influence a reach its customers and to generate leads. customer to buy a product of service, or in other words, close the sale. Marketing is often a longer process of building Selling is the short term process of matching a brand for the product and the company. It the right customer to the value offered. involves finding the right product for satisfying the customers needs.
What is the difference between advertising and marketing? The institute of Practitioners in Advertising (IPA), the body which represents advertising agencies, defines advertising as the means of providing the most persuasive possible selling message to the right prospects at the lowest possible cost. At the most fundamental level, marketing differs from advertising in that marketing is to create a product that would satisfy prospective customer demands. The role of advertising, on the other hand, is to create a demand for an existing product.
What is a brand? In Principles of Marketing, by Philip Kotler and Gary Armstrong a brand is defined as a name, term, sign symbol or a combination of these, that identifies the maker or seller of the product . A Brand is an offering from a known source. All companies strive to build a strong, favorable and unique brand.
What is the difference between price, value and satisfaction? Value reflects the sum of perceived tangible and intangible benefits and costs to customers. Value increases with quality and decreases with price. However, other factors can also play a vital role in our perceptions of value. Satisfaction reflects a persons judgments of products perceived performance in relation to expectations.
What are the four Ps of marketing? The four Ps, often synonymous with the marketing mix, entails price, promotion, product and place. The four Ps have expanded to the seven Ps with the recent addition of process, physical evidence and people. This tool is vital in determining a brands unique selling point. Note: A candidate is not expected to know the exact definitions but is required to understand the concept behind each of these terms. This note has been prepared with the aim of providing an exhaustive coverage of the same. The candidate however should concentrate on having plausible answers for a few (indicative but not exhaustive) questions substantiating his interest in marketing. Why are you interested in Marketing and (or) sales? How would you connect your graduation background with a prospective career in marketing? Which brand/product/advertisement has left a lasting impression upon you? Why do you think you would suit a marketing profile?
6. OPERATIONS MANAGEMENT
What is Operations Management? Operations Management (OM) deals with management of the firms operations to produce/offer goods/services. In simple terms, it is the study of how a manager can make the business operation more efficient (in terms of resources used) and how he can make it more effective (in terms of creating value to the customer). The operations function is one of the 3 primary functions within a business, the other two being finance and marketing.
What are the main topics covered in OM? Some of the main topics covered in OM are - Product and Process Design, Capacity Planning, Demand forecasting, Inventory management, Production Scheduling and Control, Quality Management, Project Management, Services Management, Supply chain management and Strategy in operations.
What is the difference between goods and services? The essential difference between services and goods is that a service is an intangible process, while a good is the physical output of the process. For example, a shop floor that manufactures plastic bottles provides goods while a bank that is issuing a loan to its customer is providing a service.
What is a production process? A production system is defined as a user of resources to transform inputs into some desired output. For a plant that manufactures tyres, raw material, labour and capital can be inputs while the finished rubber tyre will be the output. The steps through which the raw material is converted into a finished good can be referred to as the process. A simple parameter to measure efficiency of a process is productivity. In a broad sense, productivity is the ratio of goods/services produced to resources used (output to input).
Bottleneck A bottleneck is defined as any resource whose capacity is less than the demand placed on it. A bottleneck is a constraint within the system that limits the rate of flow of output. A bottleneck is often created in a process when capacity is constrained. The primary objective of a manager in the operations department is to eliminate the bottleneck that exists in the process. By removing this inefficiency, the manager can increase profits by reducing time to produce.
Inventory Management An inventory is the stock of an item or a resource used by an organization. Many companies have wide ranging inventories such as pencils, paper clips, machines, computers etc. Inventory is maintained to prevent a risk of shortage or to increase flexibility in the operations process. Sometimes, companies build inventory to reduce the cost incurred while ordering. By ordering a large amount of stock, the company might get a discount from its vendor. This saves total input cost and hence creates profits. At the same time, the operations manager has to ensure that the cost incurred for holding the inventory is not too high. For example, a company which sells fruits cannot order in bulk and avail discounts as the fruits might require an expensive storage facility to keep them fresh.
Planning and forecasting As an operations manager, material requirement planning or demand estimation needs to be done on a regular basis. This is to ensure that the company meets the customers requirements within time. The plans may be short-range plans (less than 3 months) or long range plans (over 1 year). Efficient planning will lead to reduction in costs due to sudden variations in demand. Planning and scheduling is a popular exercise undertaken by companies that manufacture seasonal products.
FAQs What are the typical roles of a manager in the Operations department?
Some of the important roles are production control, quality assurance, purchasing, inventory planning and control, supply chain management and logistics.
Do Operations Managers always work in factories?
No. There are several service related companies which hire managers to handle their operations. Operations Managers are hired in sectors such as banking, transportation, insurance, communication and many others.
Is it true that profiles given in Operations are usually mundane and repetitive, and that the salaries offered are very low?
Any role offered will be mundane if the candidate does not have an interest in pursuing it. The same holds true for Operations. The salaries offered are not always low and are often comparable to those offered in other functions.
How is the role of an Operations Manager different from that of a General Manager?
Here is a good link that will answer the above questionhttp://www.operationsmanager.com/operations-manager-roles-in-the-company/differencebetween-operations-managers-and-general-managers/
What are the traits required to be successful as a manager in Operations?
Basically, one needs to have a good understanding of the process. A flair for number-crunching and data analysis would be an added bonus. But most of all, an interest in the field is crucial.
Tip - Go through the subjects like Industrial Engineering if taught to you. If not, you only need to know why you are interested in Operations Management, some related concepts to your work (if relevant) and why you want to shift to a career in Operations.
References Operations Management for Competitive Advantage by Chase, Jacobs and Aquilano Reading on Zeroing in on Operations

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Disclaimer: The information shared is purely to help the candidates prepare for their interview/WAT round and Management

1. CURRENT AFFAIRS TOPICS

2. GUIDELINES FOR WAT PHASE OF SELECTION

2. Next PM? Narendra Modi/Rahul Gandhi/Arvind Kejriwal/Others

4. Devyani Khobragade India-US standoff and India's measures justified?

6. Jan Lokpal Bill Can it really curb corruption? What can?

Capital Market Securities

Do Operations Managers always work in factories?

Here is a good link that will answer the above questionhttp://www.operationsmanager.com/operations-manager-roles-in-the-company/differencebetween-operations-managers-and-general-managers/

What are the traits required to be successful as a manager in Operations?

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