Marketing Finnance Notes

Topics: Marketing, Depreciation, Generally Accepted Accounting Principles Pages: 22 (6289 words) Published: September 23, 2010

Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.’ The new one is: ‘The strategic business function that creates value by stimulating, facilitating and fulfilling customer demand. It does this by building brands, nurturing innovation, developing relationships, creating good customer service and communicating benefits. By operating customer-centrically, marketing brings positive return on investment, satisfies shareholders and stake-holders from business and the community, and contributes to positive behavioural change and a sustainable business future. ...........................


THE FIRM AS AN ECONOMIC UNIT: in order to survive and grow, a firm or business unit has to be economically viable- it has to run as a viable economic unit. In the first instance, the firm has to acquire or make available to available itself some resources. Only then, through planned, systematic, efficient and effective use of such resources can the firm produce some results. The resources and results may be described as input and output respectively. The balancing of such inputs and outputs should eventually leave some surplus. The surplus is called profit in commercial organizations. When profit does not accrue, the firm cannot be called an economically viable unit. Another interesting point to note that both resources and results are external to business and only through management skills can resources be exploited to produce results favourable to the business unit.

Resources are of various types. They are chiefly:

1. Men
2. Materials
3. Machines
4. Market and
5. Money

Each one of these resources needs efficient management. This is how different functions of management have been developed.

1. Men: Personnel Management
2. Materials: Materials Management
3. Machines: Productions Management / Operations Management 4. Market : Marketing Management
5. Money: Financial Management

Pivotal Role of Money / Pivotal Finance: Money is one of the most important resources. But the pivotal role of money is evident from the fact that, besides itself being a resource, money can also acquire other resources as well as measure the changes in them. It necessarily follows that the firm has to acquire finance first and then other resources.

The well known age “Money is what money does” illustrate this pivotal role of money.


Business Entity Concept: Treating each business unit as an independent entity, quite distinct from its owners.

Money Measurement Concept : Taking cognizance of only such transactions as are amenable to strict monetary measurement.

Accounting records state only those facts about a business firm, which can be expressed in monetary terms. In other words, business events and facts that cannot be expressed in monetary terms, howsoever important they may be, are excluded.

For example, the death of the managing director who was guiding the destiny of the company since its inception, the emergence of a better product at a lower price in the market, the emergence of a new technology and so on (though very significant from the future perspective of business) are ignored.

The operational implication of the Money Measurement Concept is that financial statements do not provide all information about the business.

Continuity or going concern approach: The Going Concern Concept implies that the firm will continue to operate in the foreseeable future. The operational implication of this assumption is that assets are not shown in Balance Sheet at their realisable market value, which implies liquidation value.

Instead, evaluation of assets is with reference to the value of goods and services they are likely to produce in future years to come....
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