Category: Commerce Notes PPT

Before we start with the concept of promotion, let us have a brief idea of the 4Ps of marketing within which it belongs. 

Marketing mix captures all the components that are instrumental in the promotion of a brand and helps to differentiate it from the competitors. The major components of the model are – Product, Price, Promotion and Place. 

We will be focusing on the aspect of Promotion. 

Promotion Meaning 

Promotion involves the co-ordinated attempts to establish information channels for presenting its services or goods to the targeted customer base. It is understood to be the communication of the organisation with the marketplace through planned and controlled programs. 

Promotion mix comprises of multiple elements that should be taken under review at periodic intervals. Modifications may become necessary if the promotion mix is to be consistent with the existing business environment. 

Elements of Promotion 

The major elements of promotion mix include the following –

Advertising involves an impersonal mode of communication in lieu of payment for the promotion of products or services. It is one of the most commonly used elements of promotion. 

The characteristics of advertising are –

1. Impersonality 

There is no face-to-face contact between the target customers and advertiser, which leads to the impersonal nature of the promotion.

2. Paid Form 

The communication that is spearheaded by the advertising agency incurs a cost that is paid by the sponsors. 

Advertising can be done over various media. The dominant forms of advertising are seen in –

1. Print Advertisement 

The advertising happens over physically printed media, for instance, newspapers and magazines. It is through these print media prospective consumers are reached.

2. Television Advertisement 

These are the commercial advertisements that are aired over designated slots in television.  

In case of personal selling, there is direct interaction with prospective customers in the form of oral presentation for sales. By this method, salespersons increase product awareness. This communication is a paid form.

The characteristics of personal selling are –

1. Personal Nature 

Both the buyer and the seller engages in a direct dialogue with respect to the particular product or service.

2. Business Relationship Development 

The face-to-face interaction helps in building a relationship between the salesperson and prospective customers in the course of making the pitch. 

The promotional activities that are particularly designed to lead prospective customers in making the immediate purchase of the service or goods are referred to as sales promotion. Sales promotion usually acts as a support for other promotional activities such as personal selling and advertising. 

The Characteristics of Sales Promotion are –

1. Beneficial for New Product Launch 

In the course of launching a new product, sales promotional measures are likely to attract the customers to deviate from their usual purchase patterns, and opt for the newly launched product. 

2. Retaining Attention 

Sales promotions are most likely to include different incentives that attract the attention of prospective customers.

3. Assisting in Total Promotional Measures

Sales promotions make the total promotional efforts robust, making it far more effective.

Sales promotion activities can be undertaken in various methods. A few of those have been mentioned below –

1. Discounts

The products are offered at a price which is less than the listed price. For example, Nike offers up to 30% discounts during season end sale.

2. Rebates

Excess inventory is cleared off at a special price called rebates. For example, automobile manufacturers offer reduced prices at the year-end to clear off the stock.

3. Product Combinations

The offer may include a combination of two or more products at the price of a single unit. For example, two hand towels can be bought at the price of one towel.

4. Refunds

A part of the price may be refunded against the proof of purchase provided by the customer. For example, dark chocolate may be refunded if three empty wrappers of milk chocolates are provided. 

5. Sampling 

A free sample may be offered to test the product quality or to induce a preference for the product. For example, before launching a new flavour of potato chips, potential customers may be offered free samples. 

It is a strategic communication method between an organisation and the concerned public. Public image of an organisation is favourably maintained in this process. 

Public relations efforts are critical for shaping the image of an organisation as well as building the brand. Within PR firms’, different persons have specialised roles for handling various organisational needs.

There are Various Ways to Maintain Public Relations –

• Customer relations 

• Community relations 

• Investor relations 

• Media relations 

Here is A Quiz to Test Your Knowledge – 

1. Which Among The Following is Benefit of Television Advertising?

1. Audiences can be aimed at various times of the day

2. Less expensive than all other advertising 

3. The entire target audience will be able to see the advertisement 

4. A most effective way of communicating consumer information

2. Which of The Following Does Not Fall Under the Ambit of Product Promotion?

1. Offering discount vouchers for increasing sales 

2. Product redesign to make it up-to-date

3. Sales representative doing personal selling 

4. Advertisement for a new product

3. Which is The Best Method for Advertising Product Technical Details?

1. Radio 

2. Business newspaper

3. Cinema advertisements 

4. Posters and billboards 

[Refer to the solutions of the quiz at the end of the article]

To know more about this topic, you can refer to a vast number of online materials available in ’s online platform. Do not forget to install the app in your device now!

Throughout the world and in South Asia’s booming economies, Non-Profit Organisations have emerged in significant numbers. Abbreviated as NPOs, these entities mainly serve social causes which are overlooked by governments and the private sector.

Some famous NPOs in India include HelpAge India and CRY. International NPOs like The Salvation Army and the Red Cross Society are instantly recognisable names.

Such entities need to prepare Receipts and Payments accounts so that they can have a firm grasp of their financial position. Here, we shall learn what these accounts are, along with some of their characteristics.

What are Receipt and Payment Accounts?

Simply put, a receipt and payment account is a summarised and abridged cash-book prepared for a pre-selected period of time. Such an account presents brief details of all cash transactions done during that specified period. Most NPOs prepare this account when a calendar year ends.

Later, armed with some extra information, an income and expenditure (I&E) account is framed. It must be noted here that a receipt and payment account does not reflect the true financial viability of a Non-Profit. Only an I & E account can do that.

Receipt and payment accounts are necessary to fulfil various governmental oversight norms. They also highlight the direction in which an NPO is going financially.

Task for Students: You can easily go online and research about the largest NPOs in India and the world. Read about what they do, how they give back to societies across the planet, and how their funds are allocated.

Characteristics of an R&P Account

It must be remembered that this type of account summarises the receipts and payments in the daily cash book. It cannot reflect the true or actual financial status of the NPO.

Here are some of the main features of these accounts.

• Receipts and Payments Accounts are simply summaries of cash books. They are later incorporated at the end of a Financial Year to complete final accounts.

• All cash that is received will go to the debit side. All cash which has been paid throughout the year will go to the credit side.

• Both payments in cash and receipts are considered and clubbed. Their nature, capital or revenue does not matter.

• An R&P account will only reflect cash transactions.

• Students of commerce must remember that such accounts tend to have a debit balance. However, if there is any overdraft, it will be reflected in the credit balance.

• All Receipts and Payments accounts will reflect cash in hand and closing cash in the bank without exception.

• Some non-cash items may, at times, appear in an R&P Account. These might include accrued incomes, any outstanding expenses and depreciation. These have been shown in a case study below.

Visit ’s other sections to get an idea of why some non-cash elements are added in a receipt and payment account. You will also see aspects of other accounts which NPOs generally maintain.

An R&P account follows a standardised format. For transparency and agility in accounting processes, all NPOs worldwide follow the Receipt and Payment Format given here.

R&P Account Format

Now that you have a receipts and payments format, here is a solved example for students of commerce.

Solved Example of Receipt and Payment Account

Here is an R & P account for a fictitious company ABC Exports.

Question

Draw up an R & P account for ABC Exports for FY 2019-2020 with the data provided.

Solution:

Based on standard Receipts and Payments Format, here is the balanced table of accounts.

For FY 2019-2020

 Debit    Credit

Task for you: Visit the website of any known NPO and check their accounts. You will get first-hand knowledge of how receipts and payments accounts work in real life. Also, to know the intricate drivers of a nation’s economy, check our website and best-in-class study materials. You can also download the app.

The account which is used to record the transactions related with payment and receipts. For example, if any person pays cash for buying an item then it will be recorded in the receipt account; similarly, when a person receives money through cheque or bank draft that transaction will be recorded as an underpayment account. 

The balance of these two accounts should always be equal because every time there is receipt of an amount so automatically there must have been some payment by somebody else. If we take the cases where only one type of instrument i.e., either receipt or payments are used then also both types of accounts should keep the same balance otherwise accounting fails as well as business fails due to internal contradiction between its own records. It can not enjoy benefits of money without having its equal payment partner who is ready to accept the benefit in return. The accounting rules for these accounts are not very complex like other business transactions but still you need to learn it carefully because if there is any mistake then consequences can be severe and long-lasting in nature.

Payment and Receipt Account is Important to Study in Following Ways:

1. It will help you to understand the basic concepts of double-entry bookkeeping.

This is the first and very important step for every accountant because all other complex accounting procedures are based on this simple concept. Once you have understood it then everything else becomes easy for you.

2. Receipt and Payment Account also Helps in Understanding Following:

Cash basis accounting:

In cash basis accounting, only payments and receipts that involve cash are recorded in books of accounts. This method is not as popular as accrual basis accounting but still some businesses use it due to its simplicity. Transactions under this system are usually easier to track and manage.

Accrual Basis Accounting:

Under accrual basis accounting, all economic transactions whether they involve cash or not are recorded in books of accounts. This method is mostly used because it provides more accurate information about business transactions and allows the company to make better financial decisions.

Here are Some Tips to Study Receipt and Payment Account:

1) Know what you are looking for- You need to know what information is contained within your Receipt and Payment Account before you start searching for it. For example, are you looking at transactions from last week or last month? Do you want all transactions or just those above $50?

2) Look at trends- Is there a trend developing over time where money continues to be withdrawn but no new funds enter the account? If so then this could be an early warning sign of financial trouble ahead. Similarly, if you notice that transactions are gradually increasing each month then this could be a sign of growing business activity. Both of these trends can help inform your financial decision making.

3)Keep track of regular payments: There will likely be some regular payments made out of the Receipt and Payment Account such as rent, loan repayments, etc. Make sure to keep track of these so that you can ensure they are made on time.

4) Check for any one off transactions: There may be some irregular transactions you need to keep track of such as a major purchase or an investment. Again, record these so that they can be managed appropriately in the future.

5) Make sure all receipts match payments: Ensure that there aren’t large discrepancies between your receipts and payments which could indicate theft or fraud. If this is the case you should speak with someone from finance immediately!

6) Keep up to date records- Quite often people don’t have much information about their Receipt and Payment Account because it has been left untouched by many generations before them who were not interested in accounting practises at all times . Therefore make sure to keep up to date records of your account so that you can always be in the know.

7) Compare budget with actual figures- Once you have gathered all the relevant data from your Receipt and Payment Account, compare it against your budgeted figures. This will help give you an idea whether or not you are on track to achieving your financial goals. If not, then adjustments may need to be made.

8) Review notes often- The best way to learn is through repetition so make sure to review your notes on the Receipt and Payment Account often. This will help embed the information in your mind making it easier for you to use when needed.

Writing a good resume is a prerequisite for getting the job of one’s choice. There are many resume writings tips that would certainly help a person in writing his resume. Resume writing is nothing but a form of presentation of a person’s personal, academic, and professional profile, in an organized and formal manner which plays a very important role in job appointments alongside the interview. There are various important points that one must keep in mind while writing a resume, and a few resume writing tips would always help you in putting together a decent resume and increase the chance of getting the job of your choice. You must have sufficient practice of resume writing and proofread the resume before submitting it. 

The Elements of Resume Writing

For effective resume writing, one should always keep certain points in mind which would help in writing a good resume. The first thing to keep in mind is the heading of the resume, which would occupy the topmost part and attract attention before anything else in the document. This part should have the person’s name, email address, other contact information, and communication address. While writing a resume, a summary is very important. The summary comprises the various skills and achievements that a person has in the form of a short paragraph with a few sentences. The professional experience follows the summary, which would comprise the experience that a person has in the relevant field. The educational qualifications, hobbies, and skills should also be highlighted. One must always proofread to ensure quality, and make sure the resume is free of grammatical and spelling errors. 

Resume Writing Format

Since a resume contains a lot of information about a person, the format is very important to ensure the information is conveyed in a systematic and organized manner. Resume writing tips would help in deciding the best resume writing template. The three types of resume include combination, functional, and chronological resume, which is accompanied by a cover letter. The chronological resume format is most frequently used which lists the career, and achievements of a person chronologically, from present to past. The functional resume focuses more on the skills of a person than the work experience of that person and is ideal for those who are just starting with their career. The combination resume is as the name suggests a combination of the previous two formats and states the skills as well as the strengths of the candidate and is a balanced view of the two.

Other Types of Resume

There are three additional formats of resumes that are less commonly used. The Infographic resume employs various design elements to display information and uses various layout, colours, and font styles. Targeted resume displays only the required skills and information and is a very specific approach. Other unorthodox resume formats use graphs, charts, etc. to make a resume that can either be in a written or a video format.

Cover Letter

A cover letter must accompany a resume and is a description of the candidate, and his or her interests along with the reasons for wanting to join the particular organization. The cover letter provides an opportunity to the candidates to describe his or her variation in interests, aspirations and preferences. Thereby, it allows the candidate to elaborate upon the information provided in the resume. The cover letter is similar to a normal letter having the contact details, introduction, body, and conclusion.

Resume Writing Example

Following a resume writing example is the best resume writing tip that would help the candidate write a good resume. A resume writing example is as follows.

Raja Das

70 B MG road, Mumbai

Pincode-400702

9876543221

name@domain.com

Objective: To get a job as an engineer at M.S. Chemicals

Education: Carnegie Mellon University. New York

B.Sc. Chemical engineering

Jersey High School, New Jersey

High School Diploma, May 2016

Experience: 

• UG research at the University of Houston, 2015.

• Have attended various student meetings.

• Done various presentations on Chemistry.

Skills: 

• Proficient in Excel, Word, PowerPoint, Origin Lab.

• Knows English, French, Hindi.

Project:

Used Python to design a racing game.

Honours:

College reporter of the year-2017

Did You Know?

Some resume writing tips are bound to help you write a proper resume. Firstly, you must carefully choose a resume format and adhere to that format throughout the resume. The application status should also be kept in mind and choose the format accordingly. One should always be honest while writing a resume since providing wrong information may have adverse consequences. 

Solved Example

Q1. Why Does Experience Play an Important Role in Deciding the Resume Format?

Ans: The resume of a fresher would have only academic details while an experienced person would provide career experience alongside academic qualifications.

With the increasing importance of the human aspect and growing intricacies in the management of labour issues, the place of personnel management in the management set up in any organisation is very important. In every organisation, a separate department is set up as personnel management in which a personnel manager is designated as the head of the department.

According to Flippo, ‘Personnel Management is planning, organising, compensation, integration and maintenance of people to contribute to organisational, individual and societal goals.

Role of The Personnel Manager

Human resources are one of the most important and true assets of any company. Retaining this asset should be of prime importance for the company. Here, a personnel manager plays an important role as he or she is the link between management and employees. 

His role can be summarised as:

• He becomes a counsellor whenever required. He counsels the employees with the issues and grievances that they are facing which is affecting their productivity.

• He acts as a representative. Since he is in direct contact with the workers, he becomes a spokesman in committees. He heads the company during training programs as well.

• He is an advisor to the line managers and assists them in dealing with and solving various personnel matters of the staff.

• The policies of the personnel are formulated effectively by the personnel manager. Hence, he is assisting the top management.

• He acts like a mediator – A linking pin between employees and management.

• He ensures consistent administration of the personnel policies of the organisation.

Functions of a Personnel Manager

The main four functions of a personnel manager are as below:

• Planning of Manpower

• Recruitment 

• Selection

• Training and Development

Manpower Planning

Manpower planning is also termed human resource planning. It involves ascertaining the right number of people required for the right kind of job at the right place and at the right time that fulfils the goals of the organisation. Human resource planning should be a systematic approach to be effective. A procedure is set out for this. The procedure is as follows:

• Study of the current manpower inventory

• Forecasting of required manpower for future

• Developing manpower programs

• Designing training programs

Recruitment

Recruitment is an approach to haunt the future employees of the organisation and stimulate the right and qualified people to apply for the opportunities open for them in the organisation.

Recruitment is of two types:

1. Internal Recruitment

2. External Recruitment

Internal Recruitment

As the name suggests, this type of recruitment takes place internally, within the organisation. Sources for internal recruitment are readily available to an organisation. The sources can be transfers, re-employment of the ex-employees and promotions. Internal recruitment is advantageous as the current employees get motivated with a better opportunity or promotion given. However, the downside of internal recruitment is that it refrains the new talent outside the organisation and all the manpower cannot be filled through internal recruitment. Hence, the organisation needs to hire manpower from outside.

External Recruitment

External recruitment means recruiting or hiring from outside the organisation. This kind of recruitment involves a lot of planning, time and money. The different sources from which external recruitment can happen are advertisement, employment agencies, recommendations, educational institutions, etc.

Selection

How well an employee performs and an organisation’s success depends on how effective the selection process is. The selection process is the process of narrowing down the most suitable and qualified employee for the job opening in the organisation. An organisation saves a lot of money and time in training when it hires the right candidate for the right job.

The employment selection process takes place in the following order:

1. Preliminary Interviews: This process involves removing unqualified candidates who do not meet the required criteria for the job opening in the organisation. Preliminary interviews are also called screening interviews.

2. Application Blanks: This is the next process for those who clear the preliminary interview. They are asked to fill in the application blanks. It has the data record of the candidates such as name, age, previous employment details, qualification, etc.

3. Written Tests: This is the process where a candidate’s aptitude is tested. The written test involves testing their reasoning skills, their knowledge on the subject given, personality traits, etc.

4. Employment Interview: This process is a one-on-one, face-to-face interview with the potential candidate. A panel of interviewers from the organisation discuss with the potential candidate to assess his personality and to know if he is best suited for the required opening in the organisation. This should happen with utmost honesty from the interviewer’s side and the judgement should be unbiased.

5. Medical Examination: Once the candidate gets selected in the one-on-one interview, he or she should undergo the medical test to make sure he is physically fit for the job given.

6. Appointment Letter: After the reference check of the employee is done, a formal appointment letter is handed to the employee which contains details like the package, benefits from the company, leave policy, joining date, etc.

Training and Development

Training and development is an ongoing and never-ending process in the organisation. However, a new employee gets thorough training on the skills and knowledge that is specifically required for the job that has been offered to him. The company trains the employee to enhance the skills and capabilities to do a particular job. Training increases the productivity and effectiveness of the employee. This process involves a lot of planning, money and time.

Other Functions of a Personnel Manager

The functions mentioned above are the four major functions of a personnel manager but the role and responsibility of a personnel manager are vast and so it is important for students to have a brief about the other functions that are performed by the personnel manager. 

A personnel manager performs counselling as the main function in an organisation. The personnel manager is always available for the employees to discuss any issues they are facing; it could be personal or career-related. A personnel manager has a fair understanding of topics related to health, family, finance, etc. 

A personnel manager helps the management to initiate policies related to employees and the work environment. Not only policies are initiated but also formatted if needed. These two roles of initiating and formatting existing policies are one of the other functions performed by the personnel manager. These policies are mostly related to employee welfare, salary and compensation, appraisals and the overall betterment of the organisation. 

A personnel manager is well equipped with laws and practises around human resources and is capable of giving guidance and advice to the senior management or line managers in case of any concerns. There are a lot of challenges that are faced by line managers daily and the same have to be addressed aptly. Human resource point of view becomes crucial in these situations. 

A personnel manager is a link between the employees and the organisation. A personnel manager needs to understand the concerns of the employee and pass the concerns over to the management so they can be discussed and resolved by the management. 

A personnel manager does not only pass the concerns from the employees to the management but also relays any new policies or information from the management to the employees directly as the personnel manager has a better understanding of the overall situation and is in a position to answer any questions the employees would have about the policy or information relayed. 

A personnel manager has to make a lot of quick and correct decisions for the smooth functioning of the organisation. As the personnel manager initiates policies there is decision making involved in initiating policy and the impact it has on the employees as well as the management. A personnel manager has to be quick with his decision and also should be able to justify the decisions if questioned raised by employees or the management. 

A personnel manager ensures there is a healthy environment at work and employees have a pleasant feeling rather than a disturbed environment. There are instances when there could be disagreements or arguments amongst employees or between the management and employees or an employee. The personnel manager acts as a mediator and resolves these arguments on healthy grounds without being biassed or judgemental. 

A personnel manager always works towards the welfare of the employees and the management. Various facilities are made available to the employees and management and a smooth running of these facilities is ensured by the personnel manager as well. Facilities like transport, cafeteria, etc. 

The Scatter diagram method is a simple representation that is popularly used in commerce and statistics to find the correlation between two variables. These two variables are plotted along the X and Y axis on a two-dimensional graph and the pattern represents the association between these given variables. The study of such a graphical representation involving two variables and using such a diagram is known as scatter diagram analysis.

Students must be very particular while plotting such graphs. Scatter diagrams in statistics and commerce are a vital tool that requires precision since their analysis depends on such representations.

 

Interpretation of Scatter Diagram

Two variables involved in a study are represented on the X and Y axis. These variables can be taken as independent variables, though this makes the second variable dependent on this former one. Correspondingly, all these points are plotted on the graph and their totality is termed as a scatter diagram. 

After plotting all these points on a graph, the generated profiles of these scatter plots are used to draw an extrapolation. Consequently, students can also calculate the correlation of coefficient of this given data using their plotted representation. Notably, scatter diagram correlation is a quantitative measure of random variables and their association with each other.

 

Types of Scatter Diagrams

While understanding its various types, it is important to describe the scatter diagram with examples for a better understanding of the students. Notably, though there can be many representations, each of which suggests different types of correlation, the most common and vital ones are explained below.

 

Students Should Note the Relevant Graphs Properly

1. Perfect Positive Correlation: A scatter diagram is known to have a perfect positive correlation if all the plotted points are on a straight line when represented on a graph.

Additionally, students must also note that all these points form a straight line which is rising from its lower-left corner to the top right corner. This can be seen in the representation below.

2. Perfect Negative Correlation: Among scatter diagram examples, a perfect negative correlation is reciprocal of the previous type. Here, every plotted point lies on a straight line without exception too.

However, unlike in the case of positive correlation, here this plotted point creates a line which is approaching from the top left corner towards the bottom right corner. Students can see its representation in this diagram given below.

3. High Degree of Positive Correlation: If a scatter diagram represents a high degree of positive correlation then all its plotted points are roughly along a straight line, even though they do not clearly create a line. This representation typically forms a band-like structure which is rising from the bottom left corner towards the top right corner. Typically, these graphs look like the representation below.

4. High Degree of Negative Correlation: Much like the 2 perfect correlations, high degrees of positive and negative correlation are reciprocal of each other. Representing the scatter diagram meaning and values, in the event of a high degree of negative correlation, every plotted point forms a band that falls from top left corner to the right bottom corner. These graphs look like the one below.

5. Low Degree of Positive Correlation: Students who have understood these above-mentioned graphs and their representations can easily understand that in the case of a low degree of correlation, be it positive or negative, these plotted points are scattered. 

Among the importance of scatter diagrams, a low degree of correlation is also a vital analysis since it suggests incoherence. In a low degree of positive correlation, despite being scattered, these points are found to be slowly rising from its left bottom corner to its top-right corner. The diagrams of such representations look like the below-mentioned representation.

6. Low Degree of Negative Correlation: Much like the representation immediately above, low degrees of negative correlation are represented on a graph with scatter points. However, despite being scattered, these points have a general tendency of falling from the top left corner of a graph to its bottom right corner. This can be seen in this representation below.

7. No Correlation: While scattering diagram definition looks to find the correlation between variables, students must note that there can be representations that are incoherent and scattered. This is also a valid analysis since it shows that the 2 given variables are not correlated. In such cases, these plotted points are scattered haphazardly across a graph, like in this representation below.

Much like these various types of scatter diagrams, there are many topics and figures in standard 10 + 2 commerce which are vital for students. Subsequently, offers detailed study material accompanied with questionnaires that help students ace their curriculum. Furthermore, also offers live classes which are a great option to clear any doubt regarding these chapters.

 

How to Create a Scatter Diagram?

It’s relatively easier to create a scatter diagram using an Excel spreadsheet than making the data table on paper. However, the same steps are followed in both cases.

 

Let us take a look at the steps to create a scatter diagram:

1. Record the data in a tabular form either in excel or by hand on paper. The table should have both the variables with their respective values and data range.

2. Draw a graph showing the independent variable on the x-axis and the dependent variable on the y axis.

3. Mark a dot on the graph where the values of both the variables intersect.

4. Observe the pattern, if there is any. If the dots form an obvious line or a curve. It indicates that the variables are correlated.

5. Divide the graph into four equal quadrants and observe the data points in each quadrant. If there are X points on the graphs, count X/2 points from top to bottom and left to right to make the quadrant.

6. Count the number of dots that are there in each quadrant.

7. Find the lesser sum and the total number of dots in the sum of diagonally opposite quadrants.

In such case:

A = dots in upper left + dots in lower right

B = dots in upper right + dots in lower left

Q = the lesser value of A and B

N = A + B

8. Analyse the table to know the relation between the variables: if Q=N, the pattern is the result of mere chance.

The ruling methods are of various kinds in various countries and socialism is one of them. Socialism refers to the concept of giving ownership to the government as a whole, regarding all activities of that particular country. Similarly, if the government controls the economic activities, then it is termed as a socialist economy, and the system, which is following it, is called a socialist financial system. 

Definition and Origin

Scholars give the socialist economy’s definition in various ways. However, the concept of socialism refers to giving the authority of controlling and regulating all economic activities to ensure national equality. Karl Marx had introduced this idea in his “communist manifesto”. 

Features of Socialist Economy

Suppose a country is following various principles and norms which direct to the socialist economy’s meaning. In that case, those characteristics are considered as features of a Socialist Economy, and the government is socialistic. Let us have a glimpse of the features.

• Ownership Should be Collective: It is the primary feature of socialism that explains the ownership of all the goods of production is for the government and not for any individual.

• Equality: Socialism aims to attain equality between rich and poor. The eradication of class, caste, skin colour, will be achieved with the principles of socialism.

• Planning: As the government has the power, it sets some goals and makes necessary plans to achieve the goals. It helps in the growth of the economy.

• Competition: Compared to a capitalist country, there is no place for competition in the concept of socialism. It looks like solo business and profit are sharable to the whole country.

• Positive Power: As the government plays a vital role in all the activities like decision making, financial issues, policies, production, it should be utilized positively. The government should not misuse it.

• Work and Wages: In socialism, the government should delegate work based on the individual’s ability and provide wages according to their needs, to achieve and maintain transparency.

• Social Welfare: The motto of socialism is to achieve social welfare. It refers to the growth of society, especially for poor people. There should be no lower class and higher class.

• Absence of Marketers: If the government plays monotony, there is no scope for marketing and advertising sales. If the options are less, then the occupancy will be more.

• Income Distribution: The equal distribution of income among all the citizens will discard the difference between rich and poor. Education, hospitals, and other facilities are open and equal to the entire nation.

These are the several features of the Socialist Economy. Whenever a country follows all these, then it is the best socialist country and stands top of the world.

Examples of Socialist Economy

The countries which can understand what a socialist economy is and implement it in their systems, are treated as socialist economy examples.

Many of the countries follow the principles of combined economies. Some states are capitalistic, but countries like Norway, Sweden, Denmark, Iceland, and Finland follow socialism strictly. They are purely socialistic countries.

These five Nordic countries are examples of the Socialist Economy. They distribute the income equally according to their hard work and contribution. They consider health and education are more critical subjects for utilizing the maximum of savings. The best part is the involvement of common people in decision-making.

Types of Socialism

We have several types of socialism. Every type focuses on various aspects of socialism.

• Democratic Socialism: Here, the produced goods can be managed by the elected committee. They will plan for the distribution of consumer goods provided by the government.

• Revolutionary Socialism: The revolution should be on capitalism and need not be violent.

• Libertarian Socialism: People should gain freedom from colour, caste, creed, and also be equal economically, socially, and politically.

• Fabian Socialism: It is a completely non-violent method used in the 19th century by the British government. They adapt to socialism through peace.

• Utopian Socialism: Its main motto is equality. They will give priority to high scale industrialization.

• Christian Socialism: The teachings of Christianity implies brotherhood, and the same bonding is encouraged by socialism.

• Green Socialism: It is another type of socialism that focuses on improving natural resources to a great extent. So that the scarcity of food does not occur, and the country may have peace forever.

• Market Socialism: In this Socialism, as the workers get control over production, they can sell at the free market at affordable prices and can share the profit among all—no space for creating artificial demand.

These are the various types of socialism, but none changes the socialist economy’s meaning. Thus, every country should come forward to adopt socialism and achieve peace and harmony for the nation.

Learn About Socialist Economy Through

The concept of a socialist economy falls under the broad subject matter of business economics. It’s an important chapter for getting familiar with the different types of economies. 

  covers everything about the socialist economy on its website.

• To begin with the introduction of the topic, it’s essential that students learn a standard definition of the concept. In this way, they will be able to connect the definition with the other related concepts. 

• The website of also mentions a brief,  short yet clear introduction of the topic to help you be in your study mode and concentrate well. 

• Following this, Experts at have formulated a paragraph that specifically informs about the very origin of the socialist economy. It will provide you with the details about when and who introduced the economy. Students can use these details while writing their answers. It will help them to stand out and score well on the exams. 

• Before coming to the types, Experts