Advantages Of Standardization

Business , Marketing
The main advantages of standardization can be studied as follows:

Benefits Or Advantages Of Standardization To The Customers

1. Better Quality Products

Standardization ensures uniformity and consistency of the product quality. Consumers can buy standardized products without any doubt and hesitation.

2. Using Method

Composition of product and using instructions are given by the manufacturers. So, consumers can use such products easily

3. Fixed Price

Standardized goods are properly packaged and labeled. Customers can get information about price of such products with the help of description provided. So, sellers cannot cheat buyers.

4. Buying Decision

With the help of advertisement and other sources (other buyers and users) customers can get various information (such as price, size, weight, quality, uses, durability etc.) easily. So, buyers can make buying decision without inspecting the goods.

Advantages Or Benefits Of Standardization To The Sellers And Manufacturers

1. Selling Facility

Standardized goods can be sold easily without giving any instructions or suggestions because consumers can buy those products by looking description and sample. So, sellers can sell such products easily.

2. Market Expansion

Standardization helps to attracts more customers because of uniformity and consistency in quality and price of the product. It helps to increase demand of the product. So, company can widen its market.

3. Customer Retention

It helps to increase image and goodwill of the business. Good image and goodwill promotes customer loyalty and customer retention.

4. Mass Production

It promotes mass production because of customer retention, high demand and market expansion. Mass production helps to reduce the cost of production. Manufacturers can also enjoy the benefits of economies of scale.
advantages of standardization

Benefits Or Advantages Of Standardization To The Society

1. Standard Quality Goods

Because of mass production, people can buy better quality products at reasonable price.

2. Employment Opportunity

Company should increase its production capacity because of market expansion and high demand. It should hire more employees. So, unemployed people can get job opportunity. It helps to reduce the unemployment rate in the society.

3. Better Standard Of Living

People can afford high quality products at lower price. Employment opportunity helps to increase the income of the society. So, standardization helps to improve the standard of living.
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Advantages And Disadvantages Of Market Segmentation

Business , Marketing

 Benefits Or Advantages Of Market Segmentation


The main advantages of market segmentation can be highlighted as follows:


1. Market Identification 


It is the process of dividing the market into different segments and grouping the potential customers on the basis of demography, psychography, geography and behavior. It helps the marketer to identify the proper market and the right group of customers.


2. Market Specialization


Market segmentation helps to understand the needs, wants and desire of the customers. Marketers try to offer suitable products and services by developing right products, right price, suitable promotional techniques and better distribution channel to satisfy targeted customers. So, it promotes market specialization.


3. Market Expansion


Market expansion is possible with the help of geographic segmentation. So, it provides an opportunity to break into new market.


4. Customer Retention


Products and services are designed as per the needs and interests of the customers. So, market segmentation leads to customers satisfaction. Satisfied customers become loyal to the company. Therefore, it promotes customer life cycle and customer retention.


5. Better Strategies


It helps the marketers to design better marketing strategies, proper utilization of resources and better allocation of budget to satisfy the needs of the market. Better marketing strategy also help to deal properly with the competitors also.


6. Suitable For


Market segmentation is suitable for small and newly established firms because they cannot compete with large companies in the entire market.


Disadvantages Of Market Segmentation


The main drawbacks or disadvantages of market segmentation can be highlighted as follows:


1. Increased Costs


It requires more efforts, time and money for research and development, promotion and distribution. Costs also increase because of different marketing strategies in different market segments. Inventory costs also increase because of larger inventory of goods. So, market segmentation increases overall costs of the company.


advantages disadvantages market segmentation

2. Wrong Selection 


It works properly if right and relevant market segments are selected . There may exist a chance of selection of wrong, irrelevant and very small segments . In such situation, company fails to identify right group of customers and cannot sell its products or services properly.


3. Change In The Market


Characteristic of market changes according to the change in the behavior, buying habit and income of the customers. Marketers may face difficulties because of these changes in the market. 

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Advantages And Disadvantages Of Process Costing

Accounting , Business

Merits Or Advantages Of Process Costing


The main advantages of process costing can be highlighted as follows:


1. Simple Method Of Costing


Process costing is very simple method of computing costs of each stage or process of production. Because of homogeneous products, average cost of product can be calculated easily in less time.


2. Periodic Calculation Of Cost


Cost of each process and per unit cost of finished products can be determined periodically at short intervals with less clerical and paper works. 


3. Suitability


Process costing is suitable for standardized products, large scale production, identical or homogeneous products etc.


4. Better Managerial Control


Cost and performance of each process or department can be evaluated regularly at short intervals. With the help of standard costing, management can take appropriate steps to minimize unnecessary costs and wastage. So, process costing facilitates the management for better control.


advantages disadvantages process costing

5. Flexible Method


Manufacturing firms can add or remove process as per their needs and requirements in order to control the cost of production. So, process costing facilitates flexibility in the production process.


Demerits Or Disadvantages Of Process Costing


The main disadvantages of process costing can be highlighted as follows:


1. Historical Value


This costing method uses historical or past cost data. So, it may not provide accurate cost information for better control.


     

      Also Read:

Advantages And Disadvantages Of Activity Based Costing

Advantages And Disadvantages Of Job Order Costing

Advantages And Disadvantages Of Standard Costing


2. Inaccuracy


There exists a chance of inaccuracy or error while estimating the cost of work in progress or finished goods because it is based on average cost.


3. Unsuitability


Process costing is not suitable for diverse products. It is suitable only for identical products.


4. Difficulty In Average Cost


It is very difficult and complex to find out average cost if the company manufactures more than one type of products.

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Advantages And Disadvantages Of Delegation Of Authority

Business , Management
Benefits Or Advantages Of Delegation Of Authority

The main advantages of delegation of authority can be studied as follows:

1. Specialization

Authorities and responsibilities are delegated as per the skills, abilities, knowledge and experience of subordinates. So, delegation of authority promotes specialization and division of work in the organization.

2. Reduce Pressure And Workload

In delegation, routine routine tasks are assigned to middle level and lower level managers. It reduces the pressure, stress and workload of top level manager. Manager get enough time to conduct other important creative and productive activities.

3. Quick Decisions

Lower level managers get the authority to make decisions which helps to improve their decision making power. They do not need to consult top managers to take decision which ensures prompt decisions at the workplace.

4. Employee Development

Delegation of authority helps to develop skills and capabilities of subordinates. It helps them to perform challenging jobs which helps to develop managerial qualities.

5. On-the-job Training

Delegation of authority is a kind of on-the-job training where subordinates can learn, improve skills and develop managerial abilities at the workplace.

6. Better Understanding

It helps to build trust and better understanding between managers and subordinates in the organization. It promotes effective communication and sense of team spirit while performing the job.

7. Expansion And Diversification

Delegation creates well-trained, dedicated and competent team of subordinates. So, it is helpful for expansion, growth and diversification of organization.

8. Suitability

Delegation of authority is suitable for large organizations with different departments, branches and units with various organizational activities.

Drawbacks Or Disadvantages Of Delegation Of Authority

The major disadvantages of delegation can be studied as follows:

1. Misunderstanding And Conflict

Because of lack of proper communication and coordination, there exists a chance of misunderstanding and conflict between managers and subordinates. It may negatively affect the performance and productivity of the firm.

2. Poor Results

It authority and responsibility is delegated to unskilled and incompetent subordinate, then the organization cannot achieve desired results because of poor performance.

3. Misuse Of Power

Another drawback of delegation is that the subordinate can misuse his.her power by taking wrong decisions for personal benefit.

4. Burden On Subordinates

Delegation of authority increases the workload and stress of subordinates. Pressure of work may lose interest and lower the motivation towards the job.
advantages and disadvantages of delegation of authority
5. Lack Of Self Confidence

Superior tries to delegate boring and not properly defined tasks to the subordinates. In most cases, very limited power is given to them which reduce the self confidence of the employees.

6. Low Quality Of Work

If authority is not delegated properly to the proper person, then the quality of work will be affected. It negatively affects productivity, goodwill and image of the business.

7. Not Suitable

Delegation of authority is not suitable for small firms with limited organizational activities.

Pros And Cons Of Delegation Of Authority In Short

Pros:
- It reduces the burden of  top management
- It motivates middle and lower level managers
- It encourages specialization in the workstation
- It facilitates quick and sound decisions
- It facilitates growth and diversification
- It provides learning opportunity for subordinates

Cons:
- It increases the burden of middle and lower level of management
- There is a possibility of confusion, misunderstanding and conflict because of the lack of proper communication between managers and subordinates
- It is not suitable for unskilled and incompetent employees
- It may reduce self confidence and motivation of employees if authority is not delegated properly
- It is not applicable for small organizations
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Advantages And Disadvantages Of Test Check

Accounting , Business
Merits Or Advantages Of Test Check

The main advantages of test check can be highlighted as follows:

1. Reduce Work Load

It is a checking of partial records from books of accounts. It examines only certain financial transactions because it is difficult to check all financial transactions included in the books of accounts. So, it reduces work load and task of auditing can be performed quickly.

2. Saving Of Time And Labor

Checking of large volume of transactions takes more time and energy. In test checking, only selected transactions are examined which saves time and labor.

3. Cost Saving

Test check reduces the work load, time and energy. It means audit task can be completed in less time with less effort. So, it lowers the cost of audit.

4. Suitable For Big Firms

It is suitable for big business houses with large volume of financial transactions because it is very difficult to test each and every transactions.

     Also Read: 

5. Accuracy And Reliability

Sample transactions are selected very carefully and intelligently with special attention. So, it ensures accuracy and reliability of checking of records.

Demerits Or Disadvantages Of Test Check

The main disadvantages of test check can be highlighted as follows:

1. Chance Of Errors

In test checking, financial transactions are examined on random basis. So, there exists a high chance of frauds and errors undetected in the books of accounts.
advantages and disadvantages of test check
2. Not Suitable For Small Companies

Test check is not suitable for small business firms with less numbers of financial transactions.

3. Internal Check And Internal Control

If there is no strict internal check and internal control system in the organization, it is not possible to conduct internal check because it may report false data.

4. Doubtful And Suspicious

Audit report is prepared on the basis of few sample transactions examined by internal check. So, it is always doubtful and suspicious for auditor.

Pros And Cons Of Test Checking In Short

Pros:
- It minimizes time, effort and cost of audit
- It is suitable for big business firms having large volume of financial transactions of similar types
- It reduces the workload of both accounting staff of the company and the auditor

Cons:
- It is not applicable for small business firms having less volume of transactions
-  Auditor may fail to detect errors, frauds and loopholes because he/she does not examine all transactions
- Test check cannot be conducted if there is no proper internal check system in the company
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Advantages And Disadvantages Of Routine Checking

Accounting , Business
Benefits Or Advantages Of Routine Checking

The main advantages of routing checking can be described as follows:

1. Detection Of Errors

Routine checking involves the examination of debit and credit totals, ledger postings and account balances. Books of accounts are carefully checked so that errors and frauds can be easily located.

2. Arithmetical Accuracy

As we know that it discovers errors and frauds in the books of accounts, it helps to correct mistakes quickly and maintain records up-to-date. So, routine checking ensures arithmetical accuracy of financial records.

3. Basis For Final Audit

All the records and books of accounts are already examined which saves time and labor of auditor while conducting final audit. So, it is a basis for final audit.

4. Simple And Easy

It is a very simple task that can be carried out by a staff having the knowledge of simple accounting rules. So, it is very easy to conduct routine checking job.

   Also Read: 

5. Internal Control

Routine checking is a regular process that shows recording of transactions and operational efficiency of the firm. So, it helps the management for internal control.

Drawbacks Or Disadvantages Of Routine Checking

The main disadvantages of routine checking can be described as follows:

1. Planned Errors

It discovers only some small and unplanned errors occurred in the books of accounts. Planned errors and frauds cannot be disclosed by routine checking. It is very difficult to locate errors of principle and compensating errors by conducting routine checking. 

2. Not Useful For All Business

It is not useful for those firms which apply self-balancing system. Routine checking is not appropriate for small firms with limited number of transactions.

3. Not Reliable

It is carried out by junior staff. There is a chance of carelessness at work. So, its result may not be reliable.

4. Monotonous

It is time consuming and monotonous process. Accounting staff may get bored and lose interest in his/her job.
advantages disadvantages routine checking
Pros And Cons Of Routine Checking In Short

Pros:
- It ensures arithmetical accuracy of records in original entries
- It helps to discover errors and frauds in the books of account
- It is helpful for conducting final audit
- It requires less cost, time and effort to conduct routine checking

Cons:
- It cannot discover planned errors and frauds
- It is boring and monotonous process
- It is not suitable for small business firms having limited volume of financial activities
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