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Chapter 4 Service Sector and Business
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4.3 Communication Communication is a vital function of management. The range of communication systems can be divided into to two broad categories - internal communication and external communication. Internal communication is mainly carried out thorugh company’s mail service, messenger system, internal telephone network and closed circuit televisions.
External communication is provided by postal service, telephone and telegram service, e-mail etc.
Post and telecommunication Postal service is generally provided by government controlled postal department. It also provides telegram and parcel services. Postal services are the most traditional channels of communication. Today private operators are providing similar services with higher efficiency. Development in communication technologies have made the postal services almost out dated.
Telephone Telephone facilities have been traditionally a reserved area of business for the government. There is increased privatization in this area of business and the services have become more efficient and cheaper. The main draw back of telephone system is lack of proof of communication.
Fax Fax machines are electronically operated communication devise. They are connected to telephone lines. Fax machines can communicate letters as well as pictures.
Internet Internet is the largest computer network scattered all over the world. Communication through internet is faster and cheaper than any other mean of communication.
E-mail or electronic mail is used to send and receive messages. In addition to normal letters e-mail is capable of sending pictures and electronic files as attachments. E-mail also can be used to send bulk mail to millions of people at the same time.
Extranet The concept of extranet technology is to enable manufacturers, suppliers and customers to establish protected sections of the internet. This section is virtual private network.
Voice mail It is a computer based system for receiving and delivering incoming telephone calls. Voice mail system automatically responds to incoming calls and gives voice message to callers to redirect their calls to concerned persons or departments. Voice mail service also records messages from callers.
Unified Messaging Services It refers to a combined communication service which covers voice messages, SMS, Phone call, Fax and many other forms of communication.
4.4 Warehousing Warehousing is the commercial function of storage of goods. Warehousing is concerned with providing storage facilities keep goods until the customers place orders for goods. It performs many valuable functions in business.
Functions of warehousing Following are the most important functions of warehousing: 1. Storage of goods The basic function of warehousing is to store goods for meeting the demand as and when it arrives. Warehousing creates time utility by supplying goods when there is high demand or scarcity.
2. Price stabilization Warehousing helps to stabilize price of goods in the market. Warehousing enables keeping of surplus goods to meet the demand when there is short supply. This way it reduces the price fluctuation.
3. Risk bearing Once goods are handed over to the warehouse, it is the responsibility of the warehouse to take care of goods. Thus the risk of loss of damage to goods in storage is borne by warehouse.
1. Financing Warehouses grant loans on the security of goods stored in the warehouse. Banks also finance on the basis of warehouse receipt.
2. Breaking bulk The warehouses gereally help in repacking the goods in smaller marketable quantities. This way warehouses facilitate easy retail business.
3. Distribution centre Warehouses deliver goods to the buyers as per instructions from the owner of the goods.
Types of warehouses
1. Private Warehouses Private warehouses are owned by large business houses or wholesalers for the storage of their own goods. They are privately owned and managed. Private warehouses are economically feasible when business requires such a facility for continuous supply of goods into the market. It is also essential that the owner of such a warehouse is able to utilize the entire facilities for his own business. When highly specialized facilities are essential to meet the technical requirements of goods, only private warehouse is feasible.
2. Cooperative warehouses These warehouses are owned and controlled by the cooperative societies. In India the National Cooperative Development Corporation is setting up warehousing facilities in many parts of the country. In addition, cooperative marketing societies also set up warehousing facilities on local basis. 3. Government warehouses These are warehouses owned and controlled by the government. These are warehouses set up by the Central and State Governments in India. In addition, warehouses belonging to Food Corporation, State Trading Corporation etc. also belong to this category.
4. Public Warehouses A public warehouse is one which provides warehousing facility to public for a fee. Public warehouses are licensed by the state and their charges are regulated by the government. They are generally constructed near ports, railway stations or other convenient transport points. These warehouses are of great help to small businessmen who do not require a large private warehouse. Even large manufacturers make use of public warehouses to keep stock of goods at different locations for convenient distribution.
Suitability of public warehouses
Public warehouses are suitable in the following cases: a. When a manufacturer does not have sufficient storage space of his own b. In case of manufacturers of seasonally produced goods such as sugar c. When goods are produced in large quantity in expectation of rise in prices d. In times of unexpected fall in demand e. In case the storage space is needed only for a part of a year it is cheaper to have it on rent rater than own it. f. When storage space is needed quickly or unexpectedly g. If warehouse receipt is required for securing bank loan.
5. Bonded Warehouse Bonded warehouses are licensed by the government to keep imported goods before the paying customs duty by the importer. Normally an importer cannot remove goods from the port without paying customs duty. However if the importer agrees to keep the goods in bonded warehouse he can secure special permission from the customs authorities to remove these goods to a bonded warehouse. The owners of these warehouses have to give an undertaking that they will collect duties from the importer before allowing the goods to be removed from the warehouse. Bonded warehouses provide some control to the importer on the goods. He can take out goods in small quantities by paying duty only for the part of goods that are taken out. These warehouses may be owned by port authorities or private entities. They have to work under close supervision and control of customs authorities.
End of Chapter 4
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