ALLAMA IQBAL OPEN UNIVERSITY

Course Managerial AccountingCode (8508)Semester Spring, 2015Level MBA Marketing (3½ Years)Tutor Sir Muhammad AbdullahName waQas ilYasRoll # BA 582702

Assignment # 02Topic =How Does an Organization Work Out the Labor Costing?

1 | P a g e

ACKNOWLEDGEMENT

All gratitude and thanks to almighty “ALLAH” the gracious, the most merciful and beneficent who gave me courage to undertake and complete this task. I am very much obliged to my ever caring and loving parents whose prayers have enabled to reach this stage. I am grateful to almighty ALLAH who made me able to complete the work presented in this report. It is due to HIS unending mercy that this work moved towards success. I am highly indebted to my course instructor for providing me an opportunity to learn about the “which is vital ingredient” of MBA program. I am very grateful to my teacher (Sir Muhammad Abdullah) for providing me guideline for the completion of this report. I feel great pride and pleasure on the accomplishment of this report.

2 | P a g e

ABSTRACT

This report is the Practical part of the most vital practice of our MBA-Marketing program. The sole objective of my activity is to familiarize with the practical manipulation of business organization. This report has been written to know how big organizations like Bata Pakistan Limited manage their teams to achieve their common goals. In the first phase of the report there is the general introduction about the company and then different terms have been explained, then the mission, values, different services and different strategies of the organization have been explained. In the next part, SWOT analysis of the firm have been done by the help of which it is identified that what are the strong areas of the company and where it lacks so that it can improve, and then in the end most important my experience while visiting in the Bata Pakistan Limited.

3 | P a g e

DEDICATION This report is dedicated to the greatest man in the world that shows us the right path. Who is the great patron of the mankind that is Holy Prophet Hazrat Muhammad (PBUH). I would also like to dedicate this small effort of extract to my Parents and Teachers. They have always been a shining star to look upon, to give light and to show me the directions whenever I am lost. May Allah give them more strength and long life to guide me forever. Ameen!

4 | P a g e

Table of Contents

Introduction of Topic 06Practical Review of Company 10Vision Statement 11Mission Statement 11Application of Topic 12SWOT Analysis 13 Conclusion 14Recommendations 14References 14

5 | P a g e

Introduction of Topic:How Does an Organization Work out the Labour Costing?

Labour cost is one of the important elements of production. Wage, Salaries and other incentives of employee remuneration constitute a very large component of operating costs. Remuneration of employees is a vital factor not only affecting the cost of production but also industrial relations of the organization.No organization can expect to attract and attain qualified and motivated employees unless it pays them fair remuneration. Employee remuneration. Therefore. Influences vitally the growth and profitability of the company. For employees. Remuneration is more than a means of satisfying their physical needs. Wages andSalaries have significant influence on our distribution of income. Consumption. Savings. Employment and prices. Thus. Employee remuneration is a very significant issue from the viewpoint of employers. Employees and the nation as whole.

Objectives of an Ideal Wage SystemAn ideal wage system is required to achieve the following objectives:(1) The wage system should establish a fair and equitable remuneration.(2) A sound wage system helps to attract qualified and efficient worker by ensuring an adequate Payment.

6 | P a g e

(3) It assists to improve the motivation and moral of employees which in turn lead to higher Productivity.(4) It enables effective control of labour cost.(5) An Ideal wage system helps to improve union-management relations. It should reduce Grievances arising out of wage inequities.(6) It should facilitate job sequences and lines of promotion wherever applicable.(7) An ideal system seeks to project the image of a progressive employer and to comply with legal Requirements relating to wages and salaries.

Principles of an Ideal Wage SystemThe following principles should be adopted for an ideal wage system(1) Differences in pay should be based on differences in job requirements.(2) Follow the principle of equal pay for equal work.(3) The scheme should be based on work study, and the work contents of various jobs should be stabilized.(4) Recognize individual differences in ability and contributions.(5) The scheme should not be very costly in operation.(6) The scheme should be flexible.(7) The scheme should encourage productivity.(8) The scheme should not undermine co-operation amongst the workers.(9) The scheme should be sufficient to ensure for the worker and his family reasonable standard of living.

Method of Remuneration

There are two basic methods of wage payment: (1) Time Wage System and (2) Piece Wage System.Under time wage system. Wages are paid on the basis of time spent on the job irrespective of the amount of work done. This is known as Time Rate or Day Wage System. The unit of time may be a day, a week, a fortnight or a month. Under piece wage system, remuneration is based on the amount of work done or output of a worker. This is known as "Piece Rate System" or "Payment by Result." Thus. A workman is paid in direct proportion to his output. A variety of bonus and premium

7 | P a g e

plans have been designed to overcome the drawbacks of two basic methods of wage payments. A system of incentive plans also takes into consideration the primary principles of these two basic plans known as Incentive or Bonus or Premium Plan.

The following are the important methods of remuneration which may be grouped into:(1) Time Rate Systems.(2) Piece Rate Systems.(3) Bonus System (or) Incentives Schemes.(4) Indirect Monetary Incentives.(5) Non-Monetary Incentives.

These may be further classified as under:

(1) Time Rate Systems: This is also termed as "Day Wage System" or "Flat Rate System." Under this system, wages are paid to the workers on the basis of time spent on the job irrespective of the quantity of work produced by the workers. Payment can be made at a rate per day or a week, a fortnight or a month. (a) At Ordinary Levels (b) At High Wage Levels (c) Guaranteed Time Rates.

(2) Piece Rate Systems: This is also known as "Piece Wage System" or "Payment by Result." Under this system, wages of a worker are calculated on the basis of amount of work done or output of a worker. Accordingly, a worker is paid in direct proportion to his output. (a) Straight Piece Rate (b) Piece Rates with Guaranteed Time Rate (c) Differential Piece Rates: (i) Taylor's Differential Piece Rate System (ii) Merrick Differential Piece Rate System (iii) Gantt Task and Bonus Plan.

(3) Bonus System or Incentive Schemes: Incentive schemes of wage payment are also known as Premium Bonus Plans. Introduced in order to increase production with ensuring

8 | P a g e

proper industrial climate. Wage incentive plans may be of two types: (1) Individual Incentive Plans and (2) Group Incentive Plans.Under individual incentive plans, remuneration can be measured on the performance of the individual worker. In the case of the group incentive scheme earnings can be measured on the basis of the productivity of the group of workers or entire work force of the organization. Various types of incentive schemes are combinations of time and piece rate systems.

(1) Individual incentive plans (1) Halsey Premium Plan (2) Halsey-Weir Premium Plan (3) Rowan Plan (4) Barth Variable Sharing Plan (5) Emerson Efficiency Plan (6) Bedaux Point Premium System (7) Accelerating Premium Plan (8) Group or Collective Bonus Plans. (2) Types of Group Incentive Plans (1) Budgeted Expenses Bonus Plan (2) Priest Man Bonus Plan (3) Towne's Gain-sharing Plan (4) Scanlon Plan.

(4) Indirect Monetary Incentives: Incentive schemes are regarded beneficial to both employers and workers. In this regard, under indirect monetary incentives by giving them a share of profit and introducing co-partnership schemes or as they have become partners in the business in order to make a very profitable enterprise. (1) Profit Sharing (2) Co-partnership.

(5) Non-Monetary Incentives: Under this system, employees are provided better facilities, instead of additional monetary payments. Some of the examples of non-monetary incentives are free education for children, rent free accommodation, medical facilities, canteen facilities, welfare facilities, and entertainment facilities etc.

9 | P a g e

Practical study Bata Pakistan Limited

Since 1942 Bata Pakistan has been rendering its services to its valued customers by offering quality products. It was incorporated in Pakistan as Bata Shoe Company (Pakistan) Limited in 1951 and went public to become Bata Pakistan Limited in the year 1979.Since its inception, the company has not only maintained a good reputation of manufacturing high quality footwear for all segments but has also been designing shoes in accordance with the changing fashions and trends. Bata Pakistan is serving its valued customers through a strong retail network comprising of more than 400 retail outlets, 467 registered wholesale dealers, 13 wholesale depots, 28 wholesale distributors and 41 DSP wholesale franchise across the country. Besides catering local market, Bata Pakistan also shows its presence in an international footwear market through its export department which is constantly exploring new potential market in order to earn foreign exchange.

Being a multinational company Bata Pakistan has played a vital role in the economic progress of Pakistan. It has introduced sophisticated technology and business skills to the country and provided direct and indirect employment to about 10,000 people. Along with its own manufacturing capacity Bata

10 | P a g e

Pakistan is also outsourcing its products nationally and internationally to meet the demands of its valued customers. As the corporate social responsibility is an integral part of every business and Bata Pakistan fulfills its CSR by patronizing various charitable organizations and also take part in rehabilitation of society during the natural disasters.

Moreover Bata Pakistan is also operating an international program under the name of Bata Children program, which aims to create a brighter future for the children of the community in which we operate. Under this program Bata Pakistan encourages and supports under privileged children by providing shoes, donations and also arranging different healthy activities for them which add values in their lives. Bata has always been the market leader and in order to maintain its leadership it has invested millions of rupees in updating its systems and equipment during the last few years. This will enable the company to expand, modernize and develop its operations and in the process provide additional employment opportunities. Bata the market leader is well equipped to cater the customer’s demands and to meet future challenges. 

Vision of the Foundation To grow as a dynamic, innovative and market driven domestic manufacturer and distributor, with footwear as our core business, while maintaining a commitment to the country, culture and environment in which we operate.

Mission of the foundation To be successful as the most dynamic, flexible and market responsive organization, with footwear as its core business.

11 | P a g e

Review of theoretical and practical situation with respect to topic Bata Industrials is a specialized division of Bata Pakistan Limited catering to footwear needs of various industries and institutions. Large industries and private/public institutions are sold safety footwear for their workers by Bata Industrials Division directly and through specialized distributors. Whilst comfort and durability are essential properties of our footwear, we provide special features like impact resistance, heat resistance, oil resistance, lightweight etc. depending upon specific industry requirements like steel, oil, cement etc. In addition, we provide excellent quality canvas PT shoes, miner's shoes etc. to meet specific requirements of army, police forces and mining industry. For corporate offices, we have a selected range of regular wear occupational shoes for management level people working in an industry or construction environment. The single overriding goal is: To guarantee the wearers of our shoes optimum safety, health and comfort. This philosophy has won Bata industrials an outstanding reputation in the better class of safety footwear. In Bata use the Method of Time based systems. Worker Salary Average is 15,000 Per Mouth.Overtime is Also Given on Average Basis.Incentives is 4 Bonus in one Year.Sick Leaves and Causal if they didn’t entertain with leave whole year company give them rupees and on leaves equal to average salary and average is calculated with 5 weeks back salary and give accommodation and medical.

12 | P a g e

SWOT AnalysisStrength

Professional and well trained Labour. Wider space for healthy work. Stronger ambition. Higher Cooperative Workforce.

Weaknesses Difficult to maintain same environment in each

Department. Low job satisfaction. Loss of Cost When Hire New Labour.

Threats Offer Competitive Wages & Benefits. Leak the Information & Polices When Labour Leaves.

Opportunities Bata HR Department Makes Back Up Systems when

Employee Leaves an Organization. Supervisor Makes Good Relation with Labour to Work

Better. Level up the Wages Slabs for Untrained Labour.

13 | P a g e

Conclusion This internship proved to be very helpful for me. It was my first experience, which was obviously very tough, but it will be very beneficial for in my coming future.As a whole Bata is a good organization to work in but there are certain departments that need improvements. It is surviving in the Factory sector with some strengths and weaknesses. I am of the view that if the management of Bata should have to take some decisions before time, because in the 21st century only those organizations can survive who are utilizing all their resources efficiently and effectively.

Recommendations

The management should try to decrease job insecurity among the Labour.

Training program should be started for internees and newly appointed Labour.

There should be transport facility for the Labour. The number of Labour should be increased in order to

decrease the workload.

References:www.bata.pk

www.kse.com.pk www.lse.com.pk

Personal observationsWikipediaRelevant text book of AIOU Discussion by Bata Branch ManagerTeacher discussion

14 | P a g e