This topic is prepared keeping in view the requirement of D. Pharm students

1. Drug Store & Business Management
Chapter-1
Introduction
Mrs. R. H. Mishal
Incharge HOD, D. Pharm
Sir Dr. M. S. Gosavi College of Pharmaceutical
Education & Research, Nashik.

2. Drug Store & Business Management
Divided into two parts
Part I
Commerce
Part II
Accountancy

3. COMMERCE
Includes-
 Forms of business organizations
 Channels of Distribution
 Drug House Management
 Inventory Control
 Sales Promotion
 Banking & Finance

4. ACCOUNTANCY
Includes-
 Accounting Concepts & Conventions
 Recording of Business Transactions
 Financial Statements & Their Analysis
 Budgeting

5. Business Activities
Business is divided into two major sections.
 Industry
 Commerce

6. COMMERCE
 Commerce is that aspect of business activity which is
concerned with the distribution of goods and services
produced by the industry.
 Commerce serves as a valuable link between the
producer and the consumers.

7.  James Stephenson defined commerce as “Commerce embraces all
those processes which help to break the barrier between producers
and consumers. It is the sum total of those processes which are
engaged in the removal of hindrances of persons (trade), place
(transport and insurance) and time (warehousing) in the exchange
(banking) of commodities”.
 Components or subdivision of commerce:
 Trade
 Aids to trade

8. TRADE
 Trade means buying, selling and exchange of
goods or services for money or money’s worth.
 Trade may be described as the nucleus of
commercial activity.
 Dealers or distributors for the distribution of goods
from the production unit to the consumers at far
off places are known as traders.

9. Classification of Trade
Trade
Domestic
Wholesale Retail
International
Import Export Entreport

10. Internal / Domestic Trade
 It is also known as home trade and consists of sale and exchange of goods
within the boundaries of a country.
 Internal trade may be local trade, state trade or interstate trade.
 Internal trade is further classified into:
 Wholesale trade: wholesalers buy the goods in large quantities directly from
the manufacturers and sell them in smaller quantities to retailers who are in
direct contact with the consumers
 Retail trade : When the goods are distributed in small quantities to the
consumers it is known as retail trade.

11. International/ Foreign Trade
 When the goods or services are
exchanged between two or more than
two countries then it is known as
foreign trade.
 Foreign trade may be further classified
as:
 Import trade: When the trader brings
the goods from foreign countries to his
own country it is known as import
trade.

12. International/ Foreign Trade
 Export trade: When the goods of one country are
sold in other country it is known as export trade.
 Entreport trade: Entreport trade is also known as
re-export trade. It involves the import of foreign
goods of one country with the idea of exporting the
same to other countries and making profit in the
process.

13. Aids To Trade Or Functions Of Commerce Or Branches Of
Commerce.
Various branches of commerce are given below:
1. Transport
2. Warehousing
3. Banking
4. Insurance
5. Packaging
6. Advertising and publicity

14. Transport
 Transport removes the hindrances of place.
 It is the process of carrying the goods and persons from one place to another.
 It assists trade by moving goods from the place of its production to locations
where they are to be sold for consumption.
 A well knit transport system plays a very important role in the economic
development, social welfare and political integration of any country.

15. Transport
 There are various modes of transport available for moving the goods, drugs and
pharmaceuticals from one place to another which includes road, rail, air, water, pipeline
transport etc. Out of all these modes of transport, railways are considered as the most
effective means of movement of goods because:
 (a) It is cheaper for bulky goods to be carried over long distances.
 (b) The goods are safer than in road transport since they are carried in covered wagons and
not in make- shift arrangements like in road transport.
 (c) Since the railways are government controlled so the freights are less.

16. Storage (Warehousing)
 Storage is a process of keeping, holding and
preserving the goods which are to be used at a later
stage.
 When this process is done at a large scale and in a
specialized manner it is termed as warehousing.
 Warehousing removes hindrance of time in trade
by storing the goods which may be supplied to the
consumers as and when required.
 Warehouses are the places where goods are stored.

17. Storage (Warehousing)
 Storage facilities are provided by three types of warehouses:
 Private warehouses: Operated by big business concerns or wholesalers for the storage
of their own stocks.
 Public warehouses: Operated by business firms which provide storage facilities to the
general public for a certain charges.
 Bonded warehouses: Are licensed to accept imported goods for storage until the
payment of custom duties are made. These are situated at ports.

18. Storage (Warehousing)
 The storage of goods is necessary due to the following reasons:
 To maintain stability in prices.
 To ensure availability of goods throughout the year inspite of the fact that same is
produced only during a particular season.
 To ensure continuous availability of goods in the market, its proper storage is
essential.
 Certain goods such as drugs & chemicals need to be properly stored to prevent
their destruction or damage.

19. Banking
 Hindrance of finance is removed by banking.
 Finance or capital is the life blood of any business.
 A large amount of money is required for the production
and marketing of goods and services.
 The finance can be raised from own resources,
commercial banks, shares, debentures, financial
institutions, trade creditors etc.

20. Banking
 Banking system provides the following services to its
customers:
 It provides loans and advances for purchase of raw
materials and machinery.
 It also provides overdraft facilities.
 It allows the facilities of discounting of bills.
 It provides foreign exchange, issuing letters of credits etc. thus
giving assistance to foreign trade.

21. Insurance
 Insurance removes the hindrance of risks.
 Any business activity entails various types of risks. Eg:
fire, accidents, theft, storm, floods, earthquake, price
reduction, changes in demand and supply conditions,
dishonesty of employees and partner(s), strikes, lockouts
and pilferage etc.
 All the above mentioned risks are covered by insurance
companies provided the necessary insurance has been
done and premiums have been regularly paid.
 An insurance company performs a useful service by
compensating the traders for the losses due to fire, theft,
flood or other natural calamities etc

22. Insurance
 Insurance is of following types:
 Life insurance: provides for payment of a stipulated sum of money to the insured person
on expiry of a specified number of years or on his /her earlier death.
 Fire insurance: The insurance company undertakes to make a payment equal to the value
of goods/ lost or damage suffered as a result of fire.
 Marine insurance: The risks covered are loss or damage to the insured vessel, cargo or
passengers during transportation on the high seas.
 General insurance: covers risk of loss due to theft or specified happenings.

23. Packaging
 Packaging removes hindrance or risk of spoilage.
 Packing refers to the wrapping, crating, filling and compression
etc. of goods whereas packaging is concerned with the creation
and designing of proper package for different products.
 Proper packaging is also essential according to Drugs and
Cosmetic Act and Rules, 1945.
 It helps in identification of product if it is packed with a
particular mark and design.
 Proper packaging also avoids deterioration of product.
 It also ensures the supply of products of right quantity, right
quality and weight to the consumers.

24. Advertising & Publicity
 Advertising and publicity removes the hindrance of knowledge or information gap
about the availability and uses of goods between traders and consumers.
 The main objective of advertisement is to create demand and to increase the sales.
 The various methods used for advertisement are TV, radio, newspapers,
magazines, wall posters, pamphlets, free samples, trade fairs, exhibitions,
balloons and window display etc. The majority of pharmaceutical products are
ethical products and their direct advertisement is prohibited according to Drugs
and Magic Remedies (objectionable Advertisement) Act.
 However, general/ home remedies products such as pain balm, inhalers, iodex,
antiseptic creams and other products which do not require a prescription for their
purchase can be advertised by any of the direct methods of advertisement.

25. Elements of Economics
 The word ‘economics’ is derived from two Greek words ‘Oikos’ (household) and
‘Nemein’ (management). Thus economics means the management of household.
 Economics is a social science, concerned with the employment of scarce resources of
society, having alternative uses to produce goods and services.
 According to Dr. Marshall, ‘Economics is a study of mankind in the ordinary business of
life. It examines that part of individual and social action which is most likely closely
connected with the attainment and use of material requisites of well being.
 Basically, business is an economic activity. Economic activities are those activities which
are concerned with the acquiring and use of wealth.

26. Elements of Economics
 There are three main branches of economics:
 Descriptive economics: It describes the relevant facts about an economic
field, such as Indian agriculture, Industry, foreign trade etc.
 Economic theory: It explains the functioning of an economic system, for
example, it explains as too how prices of products and productive services
are determined.
 Applied economics: An economic analysis is made with a view to
ascertaining the causes and significance of economic events.

27. Elements of Economics
 In order to study the elements of economics the following aspects of economics may be taken into consideration:
 Economic activities
 Economic system
1. Economic activities:
 To satisfy the various needs with limited resources the following economics can be adopted:
 In an industrial house drug store economy can be adopted in the purchase of raw materials / drugs i.e. only the
required raw materials and that too according to economic order quantity are purchased. The limited numbers of
technical and non- technical persons are employed.
 Only those types of products and services are produced which are economical and profitable.
 Buying and selling of goods and services should be done economically i.e. at the time of buying any product
minimum rate should be quoted but at the time of selling a product it must be sold by taking into consideration the
margin of profit.

28. Elements of Economics
 Different types of economic activities:
People are engaged in different types of economic activities to earn money which is called occupations.
 The occupations which are generally adopted by human beings are classified into following three
groups:
 Business: Business means that economic activity which is primarily done with the purpose of earning
profit. It involves production of goods and services on a regular basis and carries an element of risk.
 Profession: Profession means an occupation which involves rendering of personal services of a
specialized nature based on professional education training and knowledge. For example: Physician,
Pharmacist.
 Employment: Employment means a personal service rendered by a person to an organization under a
contract of employment or service.

29. Economic System
 An economic system denotes the economic relationships which arise in the community from
the organization or mode of production and distribution.
 The economic system should be simple and easy for human beings to satisfy their wants but
it all depends on the kind of economic system which is adopted by a particular country that
how the resources are allocated, prices are fixed etc.

30. Types of Economic Systems
a) Capitalist system:
 According to capitalist system there is freedom of every kind.
 The producers are free to acquire any property and produce any product.
 The consumers are free to use any product and in any amount to satisfy their wants.
 They are also at liberty to spend their income in any way they like.
 According to this system the means of production and distribution are generally in the hands of private owners who operate them to
earn profits.
 In this system role of government is to protect the producers and consumers so as to avoid unhealthy competition among producers and to provide
essential services to the public economically.
 Advantages:
 Better economic development.
 Increased production.
 Improvement in science and technology sphere.

31. Types of Economic Systems
 Social system
 According to this system the large and basic industries are owned and controlled by the
government.
 Even the distribution is also controlled by the government.
 Advantages:
 Reduction of inequality of income.
 Fair distribution of consumer goods.

32. Types of Economic Systems
 Mixed economy
 In mixed economy the activities of both the systems i.e. capitalist
system and social system are used.
 It means some economic activities are controlled by the government
and some economic activities are kept open for the public.

33. Pharmaceutical Management
 Management denotes the process of conducting & managing different business activities.
 Management is the art & science of organizing and directing human efforts applied to
control the forces and utilize the materials of nature for the benefit of man.
 Management is a science because it proves, predicts, defines, measures & utilizes
knowledge. At the same time it is an art because it feels, guesses, describes, expresses,
communicates & practices. It is also a profession because it requires skill & knowledge and
the development of a positive mental attitude.
 Management is forecasting, planning, organizing, commanding, coordinating and
controlling.

34. Levels of Management

35. Functions of Management
There are basically five primary functions of management.
These are:
1. Planning
2. Organizing
3. Staffing
4. Directing
5. Controlling

36. Planning
 Planning is future-oriented and determines an organization’s direction. It is a rational and
systematic way of making decisions today that will affect the future of the company. It
involves predicting of the future as well as attempting to control the events. It involves the
ability to foresee the effects of current actions in the long run in the future. An effective
planning program incorporates the effect of both external as well as internal factors. The
external factors are shortages of resources; both capital and material, dynamic technological
advancements, increased governmental regulation regarding community interests, unstable
international political environments, etc.
 The internal factors that affect planning are limited growth opportunities due to saturation
requiring diversification, changing patterns of the workforce, more complex organizational
structures, decentralization, etc

37. Organizing
 Organizing requires a formal structure of authority and the direction and flow of
such authority through which work subdivisions are defined, arranged and
coordinated so that each part
relates to the other part in a united and coherent manner so as to attain the
prescribed objectives.
 Thus the function of organizing involves the determination of activities that need
to be done in order to reach the company goals, assigning these activities to the
proper personnel, and delegating the necessary authority to carry out these
activities in a coordinated and cohesive manner.

38. Staffing
 Staffing is the function of hiring and retaining a suitable work-force for the enterprise both at
managerial as well as non-managerial levels. It involves the process of recruiting, training,
developing, compensating and evaluating employees and maintaining this workforce with
proper incentives and motivations. Since the human element is the most vital factor in
the process of management, it is important to recruit the right personnel.
 This function is even more critically important since people differ in their intelligence,
knowledge, skills, experience, physical condition, age and attitudes, and this complicates the
function. Hence, management must understand, in addition to the technical and operational
competence, the sociological and psychological structure of the workforce.

39. Directing
 The directing function is concerned with leadership, communication, motivation, and
supervision so that the employees perform their activities in the most efficient manner
possible, in order to achieve the desired goals.
 The leadership element involves issuing of instructions and guiding the subordinates about
procedures and methods.
 The communication must be open both ways so that the information can be passed on to
the subordinates and the feedback received from them.
 Motivation is very important since highly motivated people show excellent performance
with less direction from superiors.
 Supervising subordinates would lead to continuous progress reports as well as assure the
superiors that the directions are being properly carried out.

40. Controlling
 The function of control consists of those activities that are undertaken to ensure that the events
do not deviate from the pre-arranged plans. The activities consist of establishing standards for
work performance, measuring performance and comparing it to these set standards and taking
corrective actions as and when needed, to correct any deviations.
 The controlling function involves:
 a. Establishment of standard performance.
 b. Measurement of actual performance.
 c. Measuring actual performance with the pre-determined standard and finding out the
deviations.
 d. Taking corrective action.

41. Co-ordinating
 Coordination is the process of synchronising the diverse functions of domains
and securing unity of action. It is compared to chariot driven by multiple
horses. The charioteer has to drive all die horses in one direction. Similar is
the case of an organization.
 The CEO is charioteer like Lord Krishna in Mahabharat. It is a conscious and
rational process of pulling together various department of an organization and
unifying them into a team to accomplish goals in an effective manner.

42. Industry
 The term ‘Industry’ refers to that part of business activity which relates to
production processing or fabrication of products..
 The goods are called Consumer goods if used by final consumers and
Capital or Producer goods if used in production of other goods.

43. Classification:
 On the basis of types of goods produced

44. On the basis of types of goods produced
Genetic Industries
 Producing and multiplying certain
species of plants and animals for the
purpose of earning profit from their sale.
 Eg: Breeding farms, Poultry farms.
Extractive Industries
 concerned with extraction or drawing out
the products from natural sources such as
soil, air or water.
 Eg: Oil exploration, Forestry, Agriculture.

45. On the basis of types of goods produced
Construction Industries
 Engaged in construction of roads,
buildings, canals, bridges, dams etc.
Manufacturing Industries
 Engaged in production of goods wherein
the raw materials or semi manufactured
goods are converted into finished products.
 Eg: Pharmaceutical industry

46. Classification of Manufacturing industries
Analytical industries:
 Engaged in manufacturing of products
by analysing and separating differerent
elements from the same material. For
example, fractional distillation of
crude oil refinery industries.
Processing industries:
 raw materials are processed through
different stages of production to
produce final product. For example
drugs, pharmaceutical industries,
paper, sugar industries etc.
Synthetic industries:
 where two or more than two materials
are mixed together in a manufacturing
process to make a new product.
Products like various chemicals, drugs,
soaps, cosmetics, fertilizers are
produced by synthetic industries.
Assembling industries:
 where the parts or components are
assembled to make a useful product. For
example production of cars, scooters,
television, computers etc.

47. Based on size & investment
 Light industries: These industries involve a small capital investment and have a
short duration production cycle.
 Eg: Industries involved in the production of collapsible tubes, rubber tubes, tin
containers etc.
 Heavy industries: These industries need a big capital investment and also involve
a longer production cycle.
 Eg: Iron and Steel industries.

48. Based on capital employed
 Large scale industries: involves higher capital, large number of
workers, machinery and tools.
 Small scale industries: Capital involved is not more than 10 lakhs
in plant and machinery.

49. Official classification of industries:
 The industries are classified according to the type of products
produced by them as given under the, First schedule to the industries
(Development and Regulation) Act, 1951 by the government. For
example, Drugs and Pharmaceuticals, Medical and Surgical
appliances, Cosmetic and Toilet preparations.

50. THANK YOU