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KENDRIYA VIDYALAYA BALLYGUNGE KOLKATA
SYLLABUS 60% SYLLABUS

Unit 1: Nature and Significance of Management 1. Management-concept, objectives, and
1. Management-concept, objectives, and importance
importance 2. Levels of Management
2. Concept includes meaning and features 3. Coordination- concept and importance
3. Management as Science, Art and Profession 4. Management as Science, Art and
4. Levels of Management Profession
5. Management functions-planning, 5.
organizing, staffing,directing and
controlling
6. Coordination- concept and importance
Unit 2: Principles of Management
1. Principles of Management- concept and
significance
2. Fayol’s principles of management 1. Fayol’s principles of management
3. Taylor’s Scientific management- principles 2. Taylor’s Scientific management-
and techniques principles and techniques
Unit 3: Business Environment 1. Business Environment- concept and
1. Business Environment- concept and importance
importance 2. Dimensions of Business Environment-
2. Dimensions of Business Environment- Economic,Social, Technological, Political
Economic,Social, Technological, Political and Legal
and Legal
3. Impact of Government policy changes on
business
Unit 4: Planning 1. Concept, importance and limitation
1. Concept, importance and limitation 2. Planning process
2. Planning process 3. Objectives, Strategy,Policy, Procedure,
3. Single use and standing plans. Objectives, method Rule, budget and Programme
Strategy,Policy, Procedure, method Rule,
budget and Programme
Unit 5: Organising 1. Organising Process
1. Concept and importance Organising Process 2. Functional and divisional-difference
2. Structure of organisation- functional and 3. Difference between Delegation and
divisional- Decentralization
concept.
3. Formal and informal organisation- concept
4. Delegation: concept, elements and importance
5. Decentralization: concept and importance
Unit 6: Staffing 1. Staffing process
1. Concept and importance of staffing 2. Recruitment sources
2. Staffing as a part of Human Resource 3. Selection- process
Management- 4. Training and Development- Concept
Concept and importance, Methods of training-
3. Staffing process on the job and off the job- Induction
4. Recruitment sources
training, vestibule training,
5. Selection- process
6. Training and Development- Concept and apprenticeship training and internship
importance, Methods of training- on the job training
and off the job- Induction training, vestibule

training, apprenticeship training and internship
training
Unit 7: Directing
1. Concept and importance
2. Elements of Directing 1. Supervision –concept, function of a
3. Supervision –concept, function of a supervisor supervisor
4. Motivation-concept, Maslow’s hierarchy of 2. Motivation-concept, Maslow’s
needs, hierarchy of needs,
5. Financial and non financial incentives 3. Financial and non financial incentives
6. Leadership-concept, styles-authoritative, 4. Leadership-concept, styles-
democratic and laissez faire authoritative,
7. Communication- concept, formal and democratic and laissez faire
informal 5. barriers to effective communication,
communication; barriers to effective how to overcome the barriers
8. communication, how to overcome the barriers
Unit 8: Controlling 1. Concept and importance

1. Concept and importance
2. Relationship between planning and 2. Steps in process of control
controlling
3. Steps in process of control
Unit 9: Financial Management
1. Concept, role and objectives of 1. Financial decisions: investment,
Financial financing and dividend- Meaning and
Management factors affecting
2. Financial decisions: investment, financing 2. Financial Planning- concept and
and importance
dividend- Meaning and factors affecting 3. Capital Structure- Concept
3. Financial Planning- concept and importance 4. Fixed and Working Capital- Concept and
4. Capital Structure- Concept factors
5. Fixed and Working Capital- Concept and affecting their requirements
factors
affecting their requirements
Unit 10: Financial Markets
1. Financial Markets: Concept, Functions 1. Money market and its instruments
2. Types Money market and its instruments 2. Differentiate between primary and
3. Capital market and its types (primary and Secondary market
secondary), 3. Stock Exchange- Functions and trading
4. methods of floatation in the primary Market procedure
5. Stock Exchange- Functions and trading 4. Securities and Exchange Board of India
procedure (SEBI) - objectives and functions
6. Securities and Exchange Board of India
(SEBI) - objectives and functions
Unit 11: Marketing Management
1. Selling and Marketing- Concept 1. Marketing Management- Concept
2. Marketing Management- Concept 2. Marketing management philosophies

3. Marketing Functions 3. Marketing Mix – Concept and
4. Marketing management philosophies elements
5. Marketing Mix – Concept and elements 4. Product - branding, labelling and
6. Product - branding, labelling and packaging packaging - Concept
- 5. Price- Concept, Factors determining
Concept price
7. Price- Concept, Factors determining price 6. Physical Distribution - concept and
8. Physical Distribution - concept and components,
components, 7. Promotion – Concept and elements;
9. channels of distribution: types, choice of advertising-concept, role, objections
channels. against advertising, personal selling-
10. Promotion – Concept and elements;
concept and qualities of a good
advertising-concept, role, objections against
salesman, sales promotion- concept
advertising, personal selling-concept and
and techniques,
qualities of a good salesman, sales promotion-
concept and techniques,
11. public relations- concept and role
Unit 12: Consumer Protection

1. Concept and importance of consumer 1. Rights and responsibilities of
protection consumers
2. Consumer Protection Act 1986: 2. Redressal machinery
3. Meaning of consumer 3. Remedies available
4. Rights and responsibilities of consumers 4. Consumer awareness-Role of
5. Who can file a complaint against whom? consumer
6. Redressal machinery organizations and Non-
7. Remedies available Governmental Organizations
8. Consumer awareness-Role of consumer (NGOs).
9. organizations and Non-Governmental
Organizations (NGOs).
CHAPTER 1
NATURE AND SIGNIFICANCE
OF MANAGEMENT
Management is an art of getting things done with and through others. Management can
be defined as, the process of getting things done with the aim of achieving
organizational goals effectively and efficiently.
Basis of Difference Effectiveness Efficiency
1. Meaning It refers to completing It refers to completing

the job on time, no the job in the cost-
matter whatever the effective manner.
cost.
2. Objective To achieve end result To conduct cost-benefit

on time. analysis.
3. Main Consideration Time Cost
Characteristics of Management:
Goal oriented Process: It is a goal oriented process, which is undertaken to

achieve already specified and desired objectives by proper utilization of
available resources.
Pervasive: Management is universal in nature. It is used in all types of

organisations whether economic, social or political irrespective of its size,
nature and location and at every level.
Multidimensional: It is multidimensional as it involves management of work,

people and operations. Every organisation is established for doing some work
like school provides education, a factory produces etc. The management has to
ensure the participation, of its people in the realisation of the organisation goal.
Also management needs to conduct the various operations such as production,
sale, purchase etc.
Continuous: Management is not a process which can be performed once and

for all, but it is a continuous process. Functions of management like planning,
organising, staffing, directing and controlling continuously need to be done.
Group Activity: It is a group activity since it involves managing and

coordinating activities of different people as a team to attain the desired
objectives.
Dynamic function: It is a dynamic function since it has to adapt according to

need, time and situation of the changing environment. For example, McDonalds
made major changes in its ‘Menu’ to survive in the
Indian market.
Intangible Force: Management is such a force that cannot be seen, only its
presence can be felt. When the goals of an organisation are being realised in
accordance with its plans, we can say that the management of the organisation
is good.
Objectives of Management
Organizational objectives: It refers to the utilisation of human and physical

resources available in the organisation, considering the interest of all stakeholders.
Survival – Management of an organisation must ensure the survival of the

organisation by earning enough revenues to cover costs.
Profit – It plays an important role in facing business risks and successful

running of business activities.
Growth – Management must ensure growth which can be measured by

increase in sales of product etc.
Social objectives: It refers to the consideration of the interest of the society during
managerial activities. For e.g. - to save environment from getting polluted etc.
Personal objectives: It refers to the objectives to be determined with respect to the

employees of the organisation.
Levels of Management: Top, Middle and Operational Levels

“Levels of management” means different categories of managers, the lowest to the
highest on the basis of their relative responsibilities, authority and status.
Top Level
Consists of Chairperson, Chief Executive Officer, Chief Operating Officer or

equivalent and their team.
Chief task is to integrate and to coordinate the various activities of the business,
framing policies, formulating organisational goals & strategies.
Middle Level
Consists of Divisional or Departmental heads, Plant Superintendents and Operation

Managers etc.
Main tasks are to interpret the policies of the top management to ensure the availability of
resources to implement policies, to coordinate all activities, ensure availability of necessary
personnel & assign duties and responsibilities to them.
Lower Level/Supervisory Level
Consists of Foremen and Supervisor etc.
Main task is to ensure actual implementation of the policies as per directions,

bring workers’ grievances before the management & maintain discipline among
the workers.
Importance of Management
Achieving Group Goals: Management creates team work and coordination in the
group. Managers give common direction to individual efforts in achieving the
overall goals of the organization.
Increases Efficiency: Management increases efficiency by using resources in the best

possible manner to reduce cost and increase productivity.
Creates Dynamic organization: Management helps the employees overcome

their resistance to change and adapt as per changing situation to ensure its survival
and growth.
Achieving personal objectives: Management helps the individuals achieve their

personal goals while working towards organisational objectives.
Development of Society: Management helps in the development of society by producing

good quality pro Co-ordination
Coordination is to synchronise the various activities of an organisation. In the context
of business unit, the meaning of coordination is to balance its various activities
(purchase, sales, production, finance, personnel etc.) so that objective of business can
be easily achieved.
Lack of coordination results in overlapping, duplication, delay and chaos.
Characteristics of Coordination
Coordination integrates group efforts: It integrates diverse business activities

into purposeful group activity ensuring that all people work in one direction to
achieve organizational goals.
Coordination ensures unity of action: It directs the activities of different
departments and employees towards achievement of common goals and brings
unity in individual efforts.
Coordination is a continuous process: It is not a specific activity matter, it is
required at all levels, in all departments till the organization continues its
operations.
Coordination is all pervasive function: It is universal in nature. It synchronizes
the activities of all levels and departments as they are interdependent to maintain
organizational balance.
Coordination is the responsibility of all managers: It is equally important at all
the Three-Top, Middle and Lower levels of management. Thus it is the
responsibility of all managers that they make efforts to establish coordination.
Coordination is a deliberate function: Coordination is never established by itself
rather it is a conscious effort on the part of every manager. Cooperation is
voluntary effort of employees to help one another. Effective coordination cannot
be achieved without cooperation of group members.
QUESTIONS FOR PRACTICE

Very short answer type question (1 mark)
Q.1 “Planning, Organising, Staffing, Directing and Controlling” is the
sequence of functions in a process. Name it. (Management)
Q.2 Production Manager of Kavya Ltd. tries to produce goods with minimum
cost. Name the concept which is being focussed by management. (Efficiency)
Q.3 In order to be successful, an organization must change it according to the

needs of the environment which characteristic of management is highlighted in the
statement? (Dynamic)
Q.4 Which force binds all other functions of management? (Coordination)
Q.5 Radhika Ltd. uses environment friendly methods of production. Identify

the objective it is trying to achieve. (social objectives)
Q.6 Your uncle is serving as a foreman in a factory. At what level of

management is he working? (Lower Level)
Q.7 ‘Management provides judgement and vision’. Explain? (Dynamic)
Q.8 Identify the nature of management when it is practiced as personalised

application of existing knowledge to achieve desired results. (Management is an art)
CHAPTER – 2
PRINCIPLES OF MANAGEMENT
Concept of Principles of Management

Principles of Management are the broad and general guidelines for managerial decision
making, behaviour and action.
The management principles are derived from observation, analysis, experimental

studies and personal experiences of the managers.
Nature of Principles of Management
The nature of principles of management can be described in the following points:
Universal applicability i.e. they can be applied in all types of organizations, business
as well as non-business, small as well as large enterprises.
General Guidelines: They are general guidelines to action and decision making
however they do not provide readymade solutions as the business environment is
ever changing or dynamic.
Formed by practice and experimentation: They are developed after thorough

research work on the basis of experiences of managers.
Flexible: They can be adapted and modified by the practicing managers as per the
demands of the situations as they are manmade principles.
Mainly Behavioural: Since the principles aim at influencing complex human

behaviour they are behavioural in nature.
Cause and Effect relationship: They intend to establish cause & effect
relationship so that they can be used in similar situations.
Fayol’s Principles of Management
About Henry Fayol: Henry Fayol (1841-1925) got degree in Mining Engineering and
joined French Mining Company in 1860 as an Engineer. He rose to the position of
Managing Director in 1988. When the company was on the verge of bankruptcy. He
accepted the challenge and by using rich and broad administrative experience, he turned
the fortune of the company. For his contributions, he is well known as the “Father of
General Management”.
Principles of Management developed by Fayol

Division of work: Work is divided in small tasks/job and each work is done by a
trained specialist which leads to greater efficiency, specialisation, increased
productivity and reduction of unnecessary wastage and movements.
Authority and Responsibility: Authority means power to take decisions and

responsibility means obligation to complete the job assigned on time. Authority
and responsibility should go hand in hand. Mere responsibility without authority,
makes an executive less interested in discharging his duties. Similarly giving
authority without assigning responsibility makes him arrogant and there is fear of
misuse of power.
Discipline: It is the obedience to organizational rules by the subordinates.

Discipline requires good supervisors at all levels, clear and fair agreements and
judicious application of penalties.
Unity of Command: It implies that every worker should receive orders and
instructions from one
superior only, otherwise it will create confusion, conflict, disturbance and overlapping
of activities.
Unity of Direction: Each group of activities having the same objective must
have one head and one plan. This ensures unity of action and coordination.
Subordination of Individual Interest to General Interest: The interest of an
organization should take priority over the interest of any one individual employee.
Remuneration of Employees: Remuneration of employees should be just and

equitable so as to give maximum satisfaction to both the employees and
organisation.
The employees should be paid fair wages/salaries which would give at least a
reasonable standard of living. At the same time, it should be within the paying
capacity of the company
Centralisation and Decentralisation: Centralisation means concentration of
decisions making authority in few hands at top level. Decentralisation means
evenly distribution of power at every level of management. Both should be
balanced as no organization can be completely centralised or completely
decentralised.
Scalar Chain: The formal lines of authority between superiors and subordinates from
the highest to the lowest ranks is known as scalar chain. This chain should not be
violated but in emergency employees at same level can contact through Gang Plank by
informing their immediate superiors.
B E
C F
G Gang
Plank
Order: According to the principle of order, a right person should be placed at the
right job and a right material should be placed at the right place. According to
Fayol, every enterprise should have two different orders – material order for
physical resources and social order for human resources.
Equity: The working environment of any organization should be free from all
forms of discrimination (religion, language, caste, gender, belief or nationality) and
principles of justice and fair play should be followed. No worker should be unduly
favoured or punished.
Stability of Personnel: According to this principle, employees once selected,

should be kept at their post/position for a minimum fixed tenure. They should be
given reasonable time to show results.
Initiative: Workers should be encouraged to develop and carry out their plan for
improvements. Initiative means taking the first step with self-motivation. It is
thinking out and executing the plan.
Espirit De Corps: Management should promote team spirit, unity and harmony
among employees. Management should promote team work.
Taylor’s Scientific Management
Fredrick Winslow Taylor (1856-1915) was a person who within a very short duration
(1878-1884) rose from ranks of an ordinary apprentice to chief engineer in Midvale Steel
Company, U.S.A. Taylor conducted a number of experiments
and came to conclusion that workers were producing much less than the targeted
standard task. Also, both the parties - Management and workers are hostile towards
each other. He gave a number of suggestions to solve this problem and correctly
propounded the theory of Scientific Management to emphasize the use of scientific
approach in managing an enterprise instead of hit and trial method. For his
contributions, he is well known as the “Father of the Scientific Management”.
SCIENTIFIC MANAGEMENT
Meaning: Conduct of business activities according to standardised tools, methods and

trained personal so as to have increased output through effective and optimum
utilisation of resources. Hence it stresses that there is always one best way of doing
things.
Scientific Management attempts to eliminate wastes to ensure maximum production at

minimum cost.
Principles of Scientific Management
Science, not rule of Thumb:

There should be scientific study and analysis of each element of job rather than
adopting old rule of the thumb approach on a hit and miss method.
Encourage “thinking before doing”
Harmony, not discord:

There should be complete harmony and proper understanding between
management and workers in achieving the organisation goals.
Cooperation not individualism:

Taylor emphasised on the importance of cooperative group efforts between the
management and workers in achieving the organisation’s goal and not
individualism.
Development of workers to their greatest efficiency and prosperity: The

management should scientifically select the workers; assign job as per their
physical, mental and intellectual capabilities; and train them as per the job
requirement.
Techniques of Scientific Management
Functional Foremanship
Supervision is to be divided into several specialized functions and each function
to be entrusted to a special foreman.
Each worker will have to take orders from eight foreman in the related process
of function of production.
Stress on separating planning function from execution function.
Factory Manager
Planning Incharge Production Incharge
Instruction Route Time & cost Disciplinarian Speed Gang Repair Inspector
Card clerk Clerk clerk Boss Boss Boss
Workman
D. Motion Study
Making a thorough analysis of various motions being performed by a worker
while doing a particular task.
Identifying and determining the ideal productive movements.
Eliminate the unproductive movements and equipments.
Time study
It is the technique used to determine the standard time taken by the workmen with
reasonable skills and abilities to perform a particular task.
Here the job is divided into series of elements and the time required to
complete each element idealistically is recorded using a stop watch.
Fatigue study
Determines the amount and frequency of rest intervals required in completing
a task.
Differential Piece Wage System
Evolve a system wherein the efficient and inefficient workers are paid at
different rates. (as financial incentives act as motivators)
First a standard task is established with the aid of time and motion study, then
two rates are established. Higher, when standard output is produced and lower,
when the standard is not met.
For example: Standard task is 10 units. Rates are: Rs 50 per unit for producing
10 units or more and Rs 40 per unit for producing less than 10 units
Worker A produces 11 Units; he gets Rs 550 (11 units’ x 50 per unit)
Worker B produces 09 units; he gets Rs 360 (9 units’ x 40 per unit) This
difference of Rs 190 will motivate B to perform better.
Mental Revolution
It involves a complete change in mental outlook and attitude of workers and

management towards one another from competition to cooperation. The management
should create pleasant working conditions & workers should work with devotion and
loyalty. Instead of fighting over distribution of profits, they must focus attention on
increasing it.
Q.1 Which principle of Henry Fayol does functional foremanship violate?

(Unity of command) (1)
Q.2 A sales person is asked to finalize a deal with customer. The marketing
manager allows him to give a discount of up-to 10% but the Finance
Manager allows him to give discount of upto 25%. Which principle is
violated here? (Unity of command) (1)
Q.3 “Workers should be encouraged to develop and carry out their plan for
development.” Identify the principle of management (Fayol)involved here.
(Initiative) (1)
Q.4 Principles of Taylor and Fayol are mutually complementary. One believed
that the management should the gain with the workers while the other
suggested that employees compensation should depend upon the
earning capacity of the company and should give them a reasonable
standard of living. Identify and explain the principles of management by
Tayol and Fayol referred to in para? (1)
[Hint: Fayol – Remuneration, Taylor – Harmony not Discord (Mental

Revolution)]
Q.5 A manager should have the right to punish a subordinate for wilfully not
obeying a legitimate order but only after sufficient opportunity has been
given to his/her case. Identify the principle of management highlighted
here. (Authority and Responsibility) (1)
Q.6 Fayol insists that good sense and experience are needed to ensure
fairness to all employees who should be treated as fairly as possible.
Identify the principle of management. (Equity) (1)
Q.7 Name and explain that principle of Fayol which suggest that
communication from top to bottom should follow the official lines of
command. (Scalar chain) (3 Marks)
Q.8 The production manager of an automobile company asked the foreman to achieve a
target production of 200 scooters per day. But he did not give him the authority to
requisition tool and materials from the stores department. Can the production
manager blame the foreman if he is not able to achieve the desired target? Explain
briefly the principle relating to the situation. (No, Production Manager can’t blame
the Foreman. Principle- Authority and Responsibility)
CHAPTER - 3
BUSINESS ENVIRONMENT
Business environment means the sum total of the factors which influence the business
and over which the business has no control. The study of business environment enables
the managers to identify threats and opportunities.
Features of Business Environment

Totality of external forces: Business environment is the sum total of all the
forces/factors external to a business firm.
Specific and general forces: Business environment includes both specific and
general forces. Specific forces influence business firm directly while general
forces affect a business firm indirectly.
Components of Business Environment
Internal/Specific Environment External/General Environment

Customers Economic Environment
Owners and investors Social Environment
Suppliers Political Environment
Creditors Technological Environment
Employees and trade union Legal Environment

Competitors
Inter-relatedness: All the forces/factors of a business environment are closely

interrelated. For example, increased awareness of health care has raised the
demand for organic food and roasted snacks.
Dynamic: Business environment is dynamic in nature which keeps on changing with
the change in technology, consumer’s fashion and tastes etc.
Uncertainty: Business environment is uncertain as it is difficult to predict the
future environmental changes and their impact with full accuracy.
IMPORTANCE OF BUSINESS ENVIRONMENT
Identification of opportunities to get first mover advantage: Understanding of

business environment helps an organisation in identifying advantageous
opportunities and getting their benefits prior to competitors, thus reaping the
benefits of being a pioneer.
Identification of threats: Correct knowledge of business environment helps an
organisation to identify those threats which may adversely affect its operations. For
example, Bajaj Auto made considerable improvements in its two wheelers when
Honda & other companies entered the auto industry.
Tapping useful resources: Business environment makes available various
resources such as capital, labour, machines, raw material etc. to a business firm. In
order to know the availability of resources and making them available on time at
economical price, knowledge of business environment is necessary.
Coping with Rapid changes: Continuous study/scanning of business environment
helps in knowing the changes which are taking place and thus they can be faced
effectively.
Assistance in planning and policy formulation: Understanding and analysis of
business environment helps an organisation in planning & policy formulation. For
example, ITC Hotels planned new hotels in India after observing boom in tourism
sector.
Helps in Improving performance: Correct analysis and continuous monitoring of
business environment helps an organisation in improving its performance.
DIMENSIONS/COMPONENTS OF BUSINESS
ENVIRONMENT
Economic Environment: It has immediate and direct economic impact on a

business. Rate of interest, inflation rate, change in the income of people,
monetary policy, price level etc. are some economic factors which could affect
business firms. Economic environment may offer opportunities to a firm or it
may put constraints.
Social Environment: It includes various social forces such as customs, beliefs,

literacy rates, educational levels, lifestyle, values etc. Changes in social
environment affect an organisation in the long run. Example: Now a days
people are paying more attention towards their health, as a result of which
demand for mineral water, Diet coke etc. has increased while demand of
tobacco, fatty food products has decreased.
Technological Environment: It implies using new and advanced

ways/techniques of production. A businessman must closely monitor the
technological changes taking place in the industry as it helps in facing
competition and improving quality of the product. For Example, Digital
watches in place of traditional watches, artificial fabrics in place of traditional
cotton and silk fabrics, booking of railway tickets on internet etc.
Political Environment: Changes in political situation also affect business

organisations. Political stability builds confidence among business community
while political instability and bad law & order situation may bring uncertainty
in business activities. Ideology of the political party, attitude of government
towards business, type of government-single party or coalition government
affects the business. Example: Bangalore and Hyderabad have become the most
popular locations for IT due to supportive political climate.
Legal Environment: It constitutes the laws and legislations passed by the

Government, administrative orders, court judgements, decisions of various
commissions and agencies. Businessmen have to act according to various legislations
and their knowledge is very necessary. Example: Advertisement of Alcoholic
products is prohibited and it is compulsory to give statutory warning on advertisement
of cigarettes.

Q.1 It is the process by which government control over the industry is being
loosened. Give the term to which this statement is trying- to indicate.
(Liberalisation)
Q.2 “The understanding of business environment enables the firm to identify

opportunities.” What is meant by ‘opportunities’ here?
Q.3 “It may be difficult to know the extent of the relative impact of the social,
economic, political, technological or legal factors on change in demand of a
product in the market.” Which feature of business environment is highlighted
by this point? (Complex)
Q.4 ‘Understanding of environment by business managers enables them not only to

identify and evaluate, but also to react to the forces external to their firms.’ In
the light of this statement, explain by giving any five points why in the present
day competitive market, it is essential for a business enterprise to remain alert
and aware of its environment.
Q.5 Just after declaration of Lok Sabha Elections 2014 results, the Bombay Stock
Exchanges price index (Sensex) rose by 1000 points in a day. Identify the
environmental factor which led to this rose giving reason. Also, explain any
two other dimensions of business environment. (Political)
Q.6 Lately many companies have planned for significant investment in organised
retailing in India. Several factors have prompted their decisions in this regard-
customer income is rising. People have developed a taste for better quality
product even though they may have to pay more. The government permitted
cent percent Foreign Direct Investment in some sectors of retailing.
Identify the changes in business environment under different dimensions,

quoting the lines from the above para.
Q.7 The court issued the order that it is essential for the vehicles to be smokeless
and that any one violating this order shall have to pay a heavy fine. Abiding by
this order was necessary for the health of people. Making this strict order of the
court as the base; ‘Gyan Motors Limited’ resolved to manufacture such
vehicles by using modern technology as should not produce any smoke at all.
The government should also announce to provide help in several ways to set up
such industrial units.
Identify the three dimensions of Business Environment described in the

paragraph above by quoting the relevant lines.
Write about any one of the values for society granted by the court.
CHAPTER – 4
PLANNING
Concept
Planning is deciding in advance what to do, how to do when to do, and who is to do it.
Planning bridges the gap from where we are to where we want to go. It is one of the
basic managerial functions. Planning involves setting objectives and developing
appropriate courses of action to achieve these objectives. Thus, it is closely connected
with creativity and innovation.
Importance of Planning
Planning provides directions: By stating in advance how the work is to be done,

planning provides direction for action. If there was no planning, employees would
be working in different directions and the organization would not be able to
achieve its goals efficiently.
Planning reduces the risk of uncertainty: Planning is an activity which enables

a manager to look ahead, anticipate changes, consider the impact of changes and
develop appropriate responses.
Planning reduces wasteful activities: Planning serves as the basis of

coordinating the activities and efforts of different departments and individuals
whereby useless and redundant activities are mentioned.
Planning promotes innovative ideas: Planning is the first function of
management. Managers get the opportunity to develop new ideas and new ideas
can take the shape of concrete plans.
Planning facilities decision making: Under planning targets are laid down. The
manager has to evaluate each alternative and select the most viable option.
Planning establishes standards for controlling: Planning provides the standards

against which the actual performance can be measured and evaluated. Control is blind
without planning. Thus planning provides the basis for control
Limitations of Planning
Planning leads to rigidity: Planning discourages individual’s

initiative & creativity. The managers do not make changes according to
changing business environment. They stop taking or giving suggestions
and new ideas. Thus detailed planning may create a rigid framework in
the organization.
Planning may not work in dynamic environment: Planning is based

on anticipation of future happenings and since future is uncertain and
dynamic, therefore, the future anticipations are not always true.
Planning involves huge costs: When plans are drawn up, huge cost is
involved in their formulation.
Planning is time consuming: Sometimes plans to be drawn up take so

much of time that there is not much time left for their implementation
and it is not feasible in emergencies.
Planning does not guarantee success: The success of an enterprise is

possible only when plans are properly drawn and implement.
Sometimes managers depend on previously tried successful plans, but
it is not always true that a plan which has worked before will work
effectively again.
Planning reduces creativity: In planning, work is to be done as per

pre-determined plans. It is decided in advance what is to be done, how
it is to be done and who is going to do it. Moreover, planning is done
by top management which leads to reduction of creativity of other
levels of management.
Planning Process
Setting Objectives: The first and foremost step is setting objectives. Objectives
may be set for the entire organization and each department.
Developing premises: Planning premises are the assumptions about the likely
shape of events in future. It forecasts the obstacles, problems or limitations in the
path of the effective planning because of which the plans may deviate. Planning
premises supply relevant facts & information relating to future.
Identifying alternative courses of action: Once objectives are set and premises
are developed, the next step would be to act upon them. All the alternative courses
of action should be identified.
Evaluating alternative Courses: The next step is to weigh pros and cons of each
alternative. Each course will have many variables which have to be weighed
against each other. Example: Cost-Benefit analysis.
Selecting an alternative: After comparison and evaluation, the best alternative is

chosen for reaching organizational objectives. On the basis of merits, demerits,
resources and consequences, the best plan has to be adopted, which must be the
most feasible, profitable and with best negative consequences.
Implementing the plan: Once the plans are developed they are put into action.
Successful implementation of the plan ensures understanding and whole-hearted
cooperation of all the employees.
Follow up action: To see whether plans are being implemented, activities are
performed according to schedule. In case of any deviations, changes are made in
the plans.
TYPES OF PLAN
Standing plan or Repeatedly used plan:
The name suggests these plans are formulated once and repeatedly used. These plans
continuously guide the manager. That is why it is said that a standing plan is a standing
guide to recurring problems.
Types of Standing Plans

Objectives: Objectives are defined as ends for the achievement of which an
organization goes on working. They may be designed as the desired future
position that the management would like to reach. The first and foremost step of
the planning process is setting organizational objectives. Examples increasing
sales by 10%, Getting 20% return on Investment etc. Objectives should be clear
and achievable.
Strategy: Strategies refer to future decisions defining the organizational
directions and scope in long run. It is comprehensive plan which includes:
Long term objectives, (ii) Adopting a particular course of action, (iii)

Allocating resources necessary to achieve the objectives.
Policy: Policies refers to the general guidelines which brings uniformity in

decision-making for achievement of organizational objectives. They provide
directions to the managers of an organization. They are flexible as they may be
changed as per requirement. Example, selling goods on cash basis only,
reserving some post for women in the organization.
Procedure: Procedures are those plans which determine the sequential steps to
carry out some work/activity. They indicate which work is to be done in which
sequence/way. They help in the performance of work. Procedures are guides to
action. Example: Process adopted in the Selection of Employees.
Rule: Rules are specific statement that tell what is to be done and what not to be
done in a specified situation. They help in indicating which points are to be kept
in mind while performing task/work. Rules are rigid which ensure discipline in
the organization. Example: ‘No smoking in the office premises’. Violation of
rules may invite penalty.
Method: Methods are standardized ways or manner in which a particular task

has to be performed. There may be many ways/methods of completing a task but
that method/way must be selected by which work can be done early at the
minimum possible cost. Methods are flexible. Example, various methods of
training are adopted by an organization to train its employees like apprenticeship
training, vestibule training etc.
SINGLE USE PLAN:
These plans are connected with some special problems. After having been used once
there is no importance of these plans in future.
Types of Single Use Plan
Programme: A programme is a single use plan containing detailed statements

about project; outlining the objectives, policies, procedures, rules, tasks, physical
and human resources required to implement any course of action.
Budget: A budget is a statement of expected result expressed in numerical terms

for a definite period of time in the future.

Q1. “We do not sell on credit”. This statement is related to which type of plan.
(1)
Q.2 Planning strangulates the initiatives of the employees and compels them
to work in an inflexible manner. Which limitation of planning is highlighted
here. (1)
Q.3 Identify the type of plan which is time bound and linked with measurable
outcome? (Hint- Budget) (1)
Q.4 A company is manufacturing garments. The manager wants to increase

profits by purchasing new high speed machines or increasing the sale
price or using waste materials in manufacturing stuffed toys. He decided that
“using waste material” is the best solution for him.
Identify the concept of management involved.

Mention the steps involved in the above process by quoting the
lines from the question. (3)
Q.5 In Chak De movie, Shahrukh Khan becomes the coach of the girl’s hockey
team. He knows that he has to prepare the girls for the international hockey
matches and win the cup. For this he prepares a long term plan and thinks of
ways of how to beat the opponent team. He coaches the girls to play in
different ways like defensive, offensive, etc.
At the outset of the match, he explains who will open the match, and how the
ball will be passed by one player to another step by step.
Identify all the types of plans mentioned above State them along with lines
which refer to them in the above paragraph. (Objective, strategy,
procedure, method) (4)
Q.6 The production manager of a company received the complaint that the quality
of the goods was not good. After investigation it came to light that the
machines had become very old. That is why they were unable to achieve
standardised quality. The production manager developed several options by
way of solution to this problem. Example, getting the machines repaired,
purchasing new local machines, purchasing new imported machines, if possible
taking machines on rent etc. The CEO of the company wanted the list of
options to be smaller, so that a thorough
study could be made for them. In order to make the list of optional ways
smaller, he decided to give up all those options which required the investment
of more than 10 crores.
Identify the concept described in the paragraph given above. (Planning

Process)
What do you understand from the fact of company fixing the maximum
investment limit on options? (Developing Premises)
Q.7 Procter and Gamble Ltd. is offering a free bucket on every purchase of Tide
washing powder. In response to this Hindustan Unilever Ltd. started a new scheme
of giving free one kg of Rin Washing Powder with every purchase of five kg of
Rin washing powder. Identify the plan stated in
above paragraph and explain it. (Strategy) (3)
Q.8 “KOHINOOR FOODS Ltd. has banned smoking in the factory premises.”
Identify the plan stated in above lines.
State the features of this plan.
- Differentiate between policy and this plan. (5)
Q.9 PK Ltd. has been well known for delay in decision making and overlapping of
work done. Identify management function lacking in the
organisation and state importance of this function? (6)
Q.10 Rahul, a worker is given a target of assembling two computers per day. Due to his
habit of doing things differently, an idea struck him, which would not only reduce
the assembling time of computer but also reduce the cost of production. But instead
of appreciating his idea his supervisor scolded him and asked him to complete the
work as per prescribed technique. Identify & describe the limitation of planning
stated here?
Q.11 A company gave its sales executives, the directives that they would sell goods on
credit but told the employees to strictly inform the customers that if they will not
make payment within 1 month they will have to pay an interest of 10% per annum.
In the above given paragraph 2 types of plans have been mentioned. Identify them
and explain them with their features.
(policy, Rule) (5)
CHAPTER – 5
ORGANISING
Meaning of Organising
Thus Organizing means establishing relationship between various factors of production

and is concerned with establishing relationship amongst jobs, sections, departments &
positions.
‘Organising is the process of identifying and grouping the work to be performed,

defining and delegating responsibility and authority and establishing relationships for
the purpose of enabling people to work most effectively together in accomplishing
objectives.’
Organising process
Steps Involved in the Process of Organising
Identification and Division of Work: It involves identification and division of

total work to be done into specific activities (called jobs) in accordance with
previously determined plans. By dividing the work, the burden of work can be
shared among the employees. It facilitates specialization of work & skills.
Duplication of work can be avoided by dividing the work into manageable
activities.
Departmentalisation: The second step in organizing is to combine or group

similar or related jobs into larger units called departments, divisions or sections.
They can be grouped on the basis of functions, products, customers and
territories etc. Departmentalization is done to achieve coordination & to facilitate
unity of efforts.
Assignments of duties: Once departments have been formed each of them is

placed under the charge of an individual called departmental head (e.g.,
production manager, finance manager etc.). Jobs are then allocated to the
members of each department according to their skills and qualifications.
Establishing Reporting Relationships: Merely allocating work is not enough.
Each individual should also know from whom he has to take orders and to whom
he is accountable. It helps in coordination amongst various departments.
TYPES OF ORGANISATION STRUCTURE
Functional structure
Divisional structure
Functional Structure: In functional structure activities are grouped and

departments are created on the basis of specific functions to be performed. For
example, all the jobs related to production are grouped under production
department, sales departments etc.
Suitability
Large organizations producing one line of product.
Organizations which require high degree of functional specialization with

diversified activities.
Advantages:
Specialisation: Better decision of labour takes place which results in

specialization of functions and its consequent benefits.
Coordination is established: All the persons working within a department are

specialists of their respective jobs. It makes the co-ordination easier at
departmental level.
Helps in increasing managerial efficiency: Managers of one department

perform same type of function again and again which makes them specialized
and improves their efficiency.
Minimises cost: It leads to minimum duplication of efforts which results in

economies of scale and thus lowers cost.
Disadvantages:
Ignorance of organizational objectives: Each departmental head works according

to his own wishes. They always give more weight to their departmental objectives.
Hence overall organizational objectives suffer.
Difficulty in Inter-Departmental Coordination: All departmental heads work as
per their own wishes which leads to coordination within the department easier but
it makes inter-departmental coordination difficult.
Hurdle in complete development – because each employee specializes only

in a small part of the whole job.
Divisional Structure
Dividing the whole enterprise according to the major products to be manufactured (like
metal, plastic, cosmetics etc.) is known as divisional organization structure.
Board of
Director
Managing
Director
Cosmetics Garments Medicines Soaps
Purchase Purchase Purchase Purchase
Production Production Production Production
Marketing Marketing Marketing Marketing
Finance Finance Finance Finance
Suitability:
For the enterprises where large varieties of products are manufactured using different
productive resources. (Multi-product) Example- Tata, Reliance.
When an organisation grows and needs to add more employees, more departments
or introduce new level of management.
Advantages
Quick decision-making: Divisional manager can take any decision regarding

his division independently which makes decisions quick and effective.
Divisional results can be assessed: Divisional results (profit/loss) can be assessed

easily. On this basis any unprofitable division can be closed.
Growth and Expansion: It facilitates growth and expansion as new divisions

can be added without disturbing existing departments.
Disadvantages
Conflicts among different divisions on allocation of resources.

Duplicity of Functions: Entire set of functions is required for all divisions. It
gives rise to duplicity of efforts among divisions & increases cost.
Selfish Attitude: Every division tries to display better performance and
sometimes even at the cost of other divisions. This shows their selfish attitude.
Delegation of Authority
Meaning: It means the granting of authority to subordinates to operate within the

prescribed limits. The manager who delegates authority holds his subordinates
responsible for proper performance of the assigned tasks. To make sure that his
subordinates perform all the works effectively and efficiently in expected manner the
manager creates accountability.
Process/Elements of Delegation
Authority: The power of taking decisions in order to guide the activities of
others. Authority is that power which influences the conduct of others.
Responsibility: It is the obligation of a subordinate to properly perform the

assigned duty. When a superior issues orders, it becomes the responsibility of
the subordinates to carry it out.
Accountability: When a superior assigns some work to a subordinate, he is

answerable to his superior for its success or failure.
Importance of Decentralisation
Develops initiative amongst subordinates: It helps to promote confidence

because the subordinates are given freedom to take their own decisions.
Quick and better decisions: The burden of managerial decisions does not lie
in the hands of few individuals but gets divided amongst various persons which
helps them to take better and quick decisions.
Relieves the top executives from excess workload: The daily managerial
works are assigned to the subordinates which leaves enough time with the
superiors which they can utilize in developing new strategies.
Managerial Development: It means giving authority to the subordinates upto

the lower level to take decisions regarding their work. In this way the
opportunity to take decisions helps in the development of the organization.
Better Control: It makes it possible to evaluate performance at each level

which results in complete control overall the activities.

Q.1 This picture show that Boss of the organisation is overburdened and takes the
maximum decisions herself which results inefficient functioning.
Identify which organisational activity is missing and explain its
importance.
Identify the value which is violated in the picture.

(Hint- Delegation of Authority) (5)
Q.2 Vishal is Production Manager in an Auto Company. He held a meeting with

production unit including Supervisor, Foremen and Employees. He sets the
target to produce 1000 units in one month and assures them to give full Co-
operation. He delegates powers to operational level to achieve the targets in the
time.
Identify organisational activity which Vishal communicated to his
subordinates and explain its benefits.
2. Identify the value involved in above case. (5)
1 MARKS QUESTIONS
Q.1 “If we delegate authority, we multiply by two, if we decentralise it we multiply

it by many”. Name any one concept to which this statement is related.
Q.2 Which of the following is an ideal situation?
Authority > Responsibility
Authority = Responsibility
Q.3 ‘Identifying and dividing the work’ is the first step in the process of one of the
functions of management. Identify the functions.
3-6 MARKS QUESTIONS
Q1. A Manager increased the production target from 500 units to 700 units
per month but the authority to draw raw material was not given by him.
The employees were not able to meet the new target. Who should be
held responsible for this and which principle has been violated here?
Explain. (4)
Q2. A company is manufacturing washing machines. There is a well-defined
system of jobs which is clear and defines authority, responsibility and
accountability in the company. But people are not allowed interact
beyond their officially defined roles. As a result, the company is not able to
adopt the changing business environment. The work force is also not motivated
due to lack of social interaction. The company is facing problems of procedural
delays and inadequate recognition to creative talents.
Suggest how the organisation can overcome the problems faced by it.
Give any two benefits it will derive from your suggestion.
(4)
Q3. Ishita Ltd. is manufacturing female wears only. Now company wants to
expand its business and also wants to manufacture male wear and kids
wear for different market segments. Which type of organizational
structure should it adopt to achieve its target? Give arguments in support
of your answer. (3)
CHAPTER – 6
STAFFING
It is necessary for every organisation that they must appoint the Right person at the right position.
Manpower is the most important asset in the organisation Staffing function is concerned with bringing
right and efficient people in the organisation. Thus, “Staffing consists of Manpower planning,
recruitment, Selection, training, compensation, promotion and Maintenance of Managerial personnel.”
PROCESS OF STAFFING
Estimating Manpower Requirement: It involves the following:
Making inventory of current human resources in terms of qualification, training & skills.
Assessing future human resource needs of all departments.
Developing a programme to provide the human resources.
Job Analysis is an intensive way of finding details related to all jobs.
Recruitment: It refers to identification of the sources of manpower availability and making

efforts to secure applicants for the various job positions in an organization.
Selection: It is the process of choosing and appointing the right candidates for various jobs in an
organization through various exams, tests & interviews.
Placement and Orientation: When a new employee reports for duty, he is to be placed on the
job for which he is best suited. Placement is very important process as it can ensure “Right
person for right job”.
Orientation/Induction is concerned with the process of introducing a new employee to the
organization. The new employees are familiarized with their units, supervisors and fellow
employees. They are also to be informed about working hours, procedure for availing leave,
medical facilities, history and geography of organization and rules/regulations relating to their
wages etc.
Training and Development: Systematic training helps in increasing the skills and knowledge of
employees in doing their jobs through various methods.
Development involves growth of an employee in all respects. It is the process by which the
employees acquire skills and competence to do their present jobs and increase their capabilities
for higher jobs in future.
Performance Appraisal: It is concerned with rating or evaluating the performance of
employees. Transfers and promotions of the staff are based on performance appraisal.
RECRUITMENT
Recruitment: Recruitment may be defined as the process of searching for prospective employees and
stimulating them to apply for jobs in the organisation
\
Sources of Recruitment
Internal Sources
External Sources
Internal Sources of Recruitment
Internal sources refer to inviting candidates from within the organisation. Following are important
sources of internal recruitment: -
Transfers: It involves the shifting of an employee from one job to another, from one department to
another or from one shift to another shift.
Promotion: It refers to shifting an employee to a higher position carrying higher responsibilities,

prestige, facilities and pay.
Lay-Off: To recall the temporary workers for work is called Lay-Off, who were temporarily
separated from organization due to lack of work.
Advantages of Internal Sources Recruitment: -
Employees are motivated to improve their performance.
Internal recruitment also simplifies the process of selection & placement.
No wastage of time on the employee training and development.
Filling of jobs internally is cheaper.
Limitation of Internal Sources
The scope for induction of fresh talent is reduced.
The employee may become lethargic.
The spirit of competition among the employees may be hampered.
Frequent transfers of employees may often reduce the productivity of the organisation.
External Sources of Recruitment
When the candidates from outside the organisation are invited to fill the vacant job position then it is
known as external recruitment. The common methods of external sources of recruitments are:
Direct Recruitment: Under the direct recruitment, a notice is placed on the notice board of the
enterprise specifying the details of the jobs available.
Casual callers: Many reputed business organisations keep a data base of unsolicited applicants in
their office. This list can be used for Recruitment.
Advertisement: Advertisement in media is generally used when a wider choice is required.
Example– Newspapers, Internet, Radio, Television etc.
Employment Exchange: Employment exchange is regarded as a good source of recruitment for

unskilled and skilled operative jobs.
Campus recruitment and labour contractors can be used for the purpose.
Merits of External Sources
Qualified Personnel: By using external sources of recruitment the management can attract
qualified and trained people to apply for the vacant jobs in the organisation.
Wider Choice: The management has a wider choice in selecting the people for employment.
Fresh Talent: It provides wider choice and brings new blood in the organisation.
Competitive Spirit: If a company taps external sources, the staff will have to compete with the
outsiders.
Limitations of External Sources of Recruitment
Dissatisfaction among existing employees: Recruitment from outside may cause dissatisfaction
among the employees. They may feel that their chances of promotion are reduced.
Costly process: A lot of money has to be spent on advertisement therefore this is costly process.
Lengthy Process: It takes more time than internal sources of recruitment.
SELECTION
Selection is the process of discovering the most suitable and promising candidates and eliminating
the least promising ones to fill up the vacant positions. It is a negative process.
PROCESS OF SELECTION
Process of Selection
Preliminary Selection Employment Reference Selection Medical Job Contract of

Screening Test Interview Check Decision Exam Offer Employment
The successive stages in selection process are:
Preliminary Screening: After applications have been received, they are properly checked as regarding
qualification etc. by screening committee. A list of candidates to be called for employment tests is made and
unsuitable candidates are rejected altogether.
Selection Tests: These tests include,
Psychological tests which are based on assumption that human behaviour at work can be
predicted by giving various tests like aptitude, personality test etc.
Employment test for judging the applicant’s suitability for the job.
Employment Interviews: The main purpose of interview is

to find out suitability of the candidates.
to seek more information about the candidate.
to give the candidate an accurate picture of job with details of terms and conditions.
Reference Checks: Prior to final selection, the prospective employer makes an investigation of
the references supplied by the applicant. He undertakes a thorough search into candidate’s family
background, past employment, education, police records etc.
Selection Decisions: A list of candidate who clear the employment tests, interviews and
reference checks is prepared and then the selected candidates are listed in order of merit.
Medical/Physical Examination: A qualified medical expert appointed by organization should

certify whether the candidate is physically fit to the requirements of a specific job. A proper
physical exam will ensure higher standard of health & physical fitness of employees thereby
reducing absenteeism.
Job Offer: After a candidate has cleared all hurdles in the selection procedure, he is formally
appointed by issuing him an Appointment Letter. The broad terms and conditions, pay scale are
integral part of Appointment Letter.
Contract of Employment: After getting the job offer, the candidate has to give his acceptance. After
acceptance, both employer and employee will sign a contract of employment which contains terms &
conditions, pay scale, leave rules, hours of work, mode of termination of employment etc.
Training Methods
On the Job Method: It refers to the methods that are applied at the work place, where the
employee is actually working. It means “learning while doing”. It is economical and less time
consuming.
The following are the methods of On-the job training:
Apprenticeship Training: Under this, the trainee is placed under supervision of an
experienced person (master worker) who imparts him necessary skills and regulates his
performance. The trainee is given stipend while learning so that he/she can enjoy
“earn while you learn” scheme.
Internship Training: Under this method an educational institute enters into agreement
with industrial enterprises for providing practical knowledge to its students by sending
them to business organizations for gaining practical experience.
Induction training is a type of training given to help a new employee in settling down
quickly on the job by becoming familiar with the people, the surroundings, the job and the
business. The duration of such type of training may be from a few hours to a few days. The
induction provides a good opportunity to socialize and brief the newcomer with the
company’s overall strategy, performance standards etc. If carefully done, it saves time and
cost (in terms of effectiveness or efficiency etc.).
Off the Job Method: They are used away from the place of work. It
Meaning “learning before doing”. It is provided by experts either from within or from outside the
organisation. It is more expensive and more time consuming.
Vestibule Training: The training is given a classroom, where actual work environment is
simulated wherein employees are trained on dummy models instead of using original equipment.
This method is extremely useful when employees are required to handle expensive, delicate and
sophisticated equipment.

Q.1 “One helps in performing job better and is job oriented while other leads to overall growth of an
employee and is career oriented.” Name the two concepts. [1. Training, 2. Development]
Q.2 Manu a Chief Engineer in a Co., using highly sophisticated machines and equipments, wants that
every employee should be fully trained before using those machines and equipments. Suggest and
describe the best method of training that Manu can use. [Vestibule Training]
Q.3 Ramesh is working under the guidance of Harish, a Carpenter, for the last three years to learn the
different skills of this job. Name and explain the method of training Ramesh is undergoing.
[Apprenticeship
Training]
3-6 MARKS QUESTIONS
Q.1 An accountant is sent to learn the new software for accounting to prepare the books of accounts
faster and accurately. He was further sent for orientation to improve his motivational and
conceptual skills.
Identify and explain the two concepts explained above.
Differentiate these concepts on the basis of suitability, method

used and nature. (5)
Q.2 Under this method employee learn by doing. Employees are trained while they are performing the
job and senior worker or mentor provides them technical knowledge. But the biggest
disadvantage of this method is wastage of material and accidents.
Identify the method of training stated in above lines.
Explain any two techniques used in above said method of training.

(6)
Q.3 Name the Training Method in which:
A newly appointed employee is acquainted with the organisation.
Trainee Learns under the guidance of a master worker.
(iii) Trainee learns on the equipments he/she will be using.
Q.4 The General Manager of ‘Indemnity Ltd’ was addressing employees during ‘employee
recognition program’ function. He stressed: “employees should make all efforts to increase their
market value. To achieve this objective, they should increase their capacity and efficiency. They
should also make such endeavour as to get job satisfaction. Not only that it is equally essential
that they should concentrate on minimizing the accidents”.
Which concept of management was the General Manager stressing

in the function? (1)
(ii) Identify and explain the type of incentive discussed above. (2)
Q.5 Teja Ltd. received 22,495 applications for the post of fifty supervisors. Preliminary, screening
was done and 3,545 applications were filtered. Varies steps of selection process were taken and
finally fifty candidates as supervisor were selected. They were directly posted to their respective
posts. After one-month performance appraisal of these candidates was conducted. It was found
that out of 50, eight were not able to perform as per standards as they were facing practical
problems while handling machines.
In your opinion, what should be done to improve the performance of these eight
supervisors.
How an organisation can be benefited by improving the skill level

of employees. (5)
Q.11 Smita has been working as a assistant Manager in Johson Enterprises for the last ten years. She
was very popular amongst her colleagues because of her commitment and dedication towards the
work. When the manager senior to her retired, all her colleagues thought that now Smita would be
promoted. But to everyone’s surprise the vacant post was filled by an outside, Mrs. Rita. Smita
felt demoralised and her performance started declining. She would abstain herself often and could
not meet her targets.
Mrs. Rita was a good leader who would not only instruct her subordinates but would also guide and
inspire them. She noticed Smita’s behaviour and felt that her performance could be improved. She
started involving Smita in decision making-issues related to the organisation and made her a part of
high level joint-management committee. Smita was now punctual in office and her performance
started improving.
Identify the function of management being performed by Rita.
Name the element of the above function of management which helped Rita to improve
Smita’s behaviour.
State any three features of the element identified in (ii) above.
(5)
Q.12 Orient Ltd. expanding its business operations. All the departmental heads were asked to fill up
“Manpower Requisition form and estimate the annual requirement of – skilled and unskilled
workers”
All the departmental heads submitted the requisition forms to HR Manager. HR Manager,
compiled all such requisition forms as:
Requirement of skilled workers – 89
Requirement of unskilled workers – 265
After this, Recruitment and further selection procedure was followed.
Name and explain the methods of recruitment (03 each) which would be most
appropriate in the above case.
CHAPTER – 7
DIRECTING
Meaning
Directing as a function of management, refers to the process of instructing, guiding, counselling, motivating
and leading people in the organisation to achieve its objectives. It is the force which gives the life to the
organisational structure.
Directing comprises of:
Issuing orders by a superior to his subordinates.
Supervising the employees when they are performing job.
Motivating them to perform more effectively.
Leading them towards the achievement of overall goals of the concern.
Importance
Initiates Action: It helps to initiate action by the people in the organisation towards attainment of
desired objectives. The employees start working only when they get instructions and directions from
their superiors. It is the directing function which starts actual work to convert plans into results.
Integrates Employee’s Efforts: All the activities of the organisation are interrelated so it is
necessary to coordinate all the activities. It integrates the activities of subordinates by supervision,
guidance and counselling.
Means of motivation: It motivates the subordinates to work efficiently and to contribute their
maximum efforts towards the achievement of organisational goals by satisfying their needs.
Facilitates change: Employees often resist changes due to fear of adverse effects on their
employment and promotion. Directing facilitates adjustment in the organisation to cope with
changes in the environment. Directing instills the spirit of cooperation and commitment among
work force.
Stability and balance in the organisation: Managers while performing directing function instruct,
guide, supervise and inspire their subordinates in a manner that they are able to strike a balance
between individual and organisational interests.
Elements of Direction
Supervision Motivation
Elements of
Directing
Leadership Communication
Supervision: It means observing the subordinates at work to see that they are working in
accordance with plans and to help them in solving their problems. The important thing in
supervision is that it involves face to face contact between superiors and subordinates. Supervisor’s
position is immediately above the worker.
Motivation: In the context of an organisation motivation means stimulating employees of all levels
to work with greater enthusiasm and more efficiency for the accomplishment of the objectives of
the enterprises. It involves arousing needs and desires in people so as to initiate and direct their
behaviour in a purposive manner.
Leadership: Leadership is the activity of influencing people to strive willingly for organisational goals.
Leadership indicates the ability of an individual to maintain good interpersonal relations with followers
and motivate them to contribute for achieving organisational objectives. Managers at all levels are
expected to be the leaders of their subordinates.
Communication: It is the process of exchange of information between two or more persons to

reach common understanding.
Maslow’s Need Hierarchy-Theory of Motivation: Maslow’s Theory focuses on the needs as the basis
for motivation. It classifies human needs into five categories.
It helps managers to realise that need level of employees should be identified to provide motivation to
them. It is based on the following assumptions:
People’s behaviour is based on their needs
People’s needs are in hierarchical order.
A satisfied need can no longer motivate a person.
A person moves to the next higher level of hierarchy only when the lower need is satisfied.
Organisational examples
Pyramid representing Maslow’s Need Hierarchy

Financial and Non-Financial Incentives: Incentive means all measures which are used to motivate
people to improve performance.
Financial Incentives (which can be calculated in terms of money)
Pay and allowances: Salary is the basic monetary incentive. It includes basic pay, dearness
allowance and other allowances.
Productivity linked wage incentives: Aims at linking payment of wages to increase in
productivity.
Bonus: An incentive offered over and above the wages/salary.
Profit sharing: It means to provide a share to employees in the profits. It creates a feeling of
ownership to employees.
Co-partnership/Stock option: employees are offered company’s share of a price which is lower
than market price.
Retirement benefits: Such as provident fund, pension and gratuity etc.
Perquisites: Such as car allowance, medical help etc. these measures help to provide motivation to
the employees.
Non-Financial Incentives (which cannot be calculated in terms of money)
Status: Status means ranking of positions in the organisation. Psychological, social and esteem
needs of an individual are satisfied by the status given to their job.
Organisational climate: Employees can be motivated with favourable atmosphere.
Career advancement opportunity: Works as a tonic and encourages employees to exhibit
improved performance.
Job enrichment: If jobs are enriched and made interesting, the job itself becomes a source of
motivation to the employees.
Employees recognition programmes: Most employees feel that what they should be recognised
by the higher authorities.
Job security: Employees want their job to be secured and it is a strong motivator but on the other
hand it makes the employees lazy.
Employee participation: It means involving employees in the decision making.
Employee empowerment: Means giving more autonomy and powers to subordinates
Styles of Leadership.
A leader may use all styles over a period of time but one style tends to predominate as his normal way of
using power.
Different types of leadership style are as follows:
Autocratic or Authoritarian Leader
An autocratic leader gives orders and insists that they are obeyed. He determines the policies for the
group without consulting them.
He does not give information about future plans but simply tells the group what immediate steps they
must take.
Under this style, all decision making power is centralized in the leader. He does not give the subordinates
any freedom to influence his decisions.
It is like “bossing people around.” This style should normally be used on rare occasion.
B C D
A is the leader – (Boss – Centered – Leadership)
When should authoritarian leadership be applied?
It is best applied to situations where is little time for group decision making.
Or where the leader is the most knowledgeable member of the group.
Mr. Khanna, Manager (Operation) is always bossing people around. He never consults his team
and does not pay head to their problems, which style of leadership is he following? What values
are lacking in his style of functioning?
Charu says leadership is required only for less efficient subordinates while chanda says that
leadership is required for all. Who is correct? Why?
Democratic or Participative Leader
Democratic leader gives order only after consulting the group and works out the policies with the
acceptance of the group.
He never asks people to do things without working out the long term plans on which they are working. He
favours decision making by the group as shown in the diagram. This improves the attitude of the
employees towards their jobs and the organization thereby increasing their morale.
Using this style is of mutual benefit - it allows them (subordinates) to become part of the team and helps
leaders (seniors) to make better decisions.
is the leader (Group Centered-Leadership) When should
Participative/democratic leadership be applied?
It works best in situations where group members are skilled and eager to share their knowledge.
It is also important to have plenty of time to allow people to contribute, develop a plan and then
vote on the best course of action.
This style should NOT be used:
In situations where roles are unclear or time is of the essence, democratic leadership can lead to
communication failures and incompleted projects
Laissez Faire or Free Rein Leader
Free rein leader gives complete freedom to the subordinates. Such a leader avoids use of power. He
depends largely upon the group to establish its own goals and work out its own problems. Group members
work themselves as per their own choice and competence. The leader exists as a contact man with the
outsiders to bring information and the resources which the group requires for accomplishing the job.
Note: This is also known as laissez faire which means no interference in the affairs of others. [French
laissez means to let/allow fair means to do].
A
B C
D E
A is the leader
(Subordinate - Centered - Leadership)

Communication
It is the process of exchange of information between two or more persons to reach common
understanding.
Communication plays key role in the success of a manager. Directing abilities of manager mainly depend
upon his communication skills. That is why organization always emphasizes on improving
communication skills of managers as well as employees. Communication is important for the directing
function because all other elements of directing become possible only when there is adequate
communication.
Elements of Communication Process
Sender: Who conveys his thoughts or ideas.

Message: Ideas, feelings, suggestions, order etc.
Encoding: Converting the message into communication symbols such as words/pictures etc.
Media: Path/Channel through which encoded message is transmitted to receiver e.g., face to face,
phone call, internet etc.
Decoding: Converting encoded symbols of the sender.
Receiver: Who receives communication of the sender.
Feedback: All those actions of receiver indicating that he has received and understood the message
of the sender.
Noise: Some obstruction or hindrance to communication like poor telephone connection, inattentive
receiver.
Barriers to Effective Communication

Semantic Barriers: Concerned with problems and obstructions in the process of encoding or decoding of
message into words or impressions. Semantic barriers are as follows:
Badly expressed message: Sometimes intended meaning may not be conveyed.
Words with different meanings confuses the receiver.
Faulty translations may transfer wrong messages.
Unclarified assumption: Different interpretations may result in confusion.
Technical Jargon: Technical words may not be understood by the workers.
Psychological/Emotional barriers
1. Premature evaluation-judgement before listening leads to misunderstanding.
Lack of attention/poor listening may disappoint the employees.
Loss by transmission and poor retention: When oral communication passes through various levels it
destroys the structure of the message or leads to transmission of inaccurate message.
Distrust: If the parties do not believe each other. They cannot understand each other’s message in
its original sense.
Organisational Barriers
Factors related to organisation structure:

If organizational policy does not support free flow of information it creates problem.
Rules and regulations: Rigid rules and regulations may lead to red tapism and delay of action.
Status conscious managers may not allow subordinates to express their feelings freely.
Complexity in organization structure results in delay and distortion.
Personal Barriers: of superiors and subordinates.
Fear of challenge to authority may withhold or suppress a particular communication.

Lack of confidence of superior in his subordinates.
Unwillingness to communicate. e.g., fear of punishment/demotion.
Lack of proper incentives stops the subordinates to offer useful suggestions.
Improving Communication Effectiveness
Clarify the ideas before communication.
Communicate according to the needs of receiver.
Consult others before communicating.
Be aware of language, tone and content of message.
Ensure proper feedback. Feedback provides opportunity for suggestions and criticism.
Follow up communication helps to remove hurdles, misunderstanding of information given by

managers to subordination.
Be a good listener.
Questions for Practice
Q.1 Following communications indicate barriers to effective communication. Identify them and also
mention the measures to be taken to improve the effectiveness of communication:
The National Sales Manager during his visit to the southern zone, spoke to the sales
managers in Hindi.
During a meeting, the manager was addressing to the problem of competitors pricing
policy. The two executives were busy talking to each other about their plans for the
upcoming long weekend. The manager got distracted and forgot to inform the major
changes in company’s pricing policy.
Mohit prefers to stay away from his boss. He is always scared of, what if his boss does
not approve his suggestions.
The sales manager while addressing to fresh graduates explained the threats and opportunities
company was facing. He used lot of technical words which he had learnt in his MBA classes.
Sonu Garments Ltd. follows scalar chain very strictly. No employee, (whatsoever may be
the emergency) is allowed to
divert from the defined path of communications. (5)
Q.2 Subermanyam is a newly appointed Human Resource Manager in Times Ltd. in Punjab. He is a
Tamilian basically. He is good in Tamil and English. Most of his subordinates belong to Punjab
and they are not very much fluent in English. He feels it much difficult to make them understand
his instructions.
Identify the concerned communication barrier.
State the category of such barrier.
Explain any other category of same barrier.
Q.3 Neeraj, a sales representative of ‘Omida Ltd’ has changed seven jobs in the last one year. He is a
hard working person but is not able to finalise deals with the customers due to his inadequate
vocabulary and omission of needed words. Sometimes he uses wrong words because of which
intended meaning is nor conveyed. All this creates a misunderstanding between him and his
clients.
Identify the communication barrier discussed above.
State the category of this communication barrier.
Explain any other communication barrier of the same category. (3)
Q.4 Raju is good orator, but he lacks good listening skills. Due to it, he does not listen the instructions
given by supervisor carefully and completely. Therefore, he doesn’t complete the work as her
given instructions.
Identify the concerned communication barriers
State the category of such barriers.
3. How such barriers can be mitigated? (3)
Q.5 ‘Dr. Plus Ltd.’ a company manufacturing pharmaceuticals organised a seminar for the lower level
team of “Production Department”. The resource person emphasized on the following points:
In order to realize organisational goals, the supervisor must have the ability of influencing people to
strive willingly for mutual objectives. He should possess the art of transferring facts, ideas, feelings etc
from one person to another and making them understand them. He needs to monitor the progress of
routine work of the subordinates and guide them properly. He has to identify what excites people to
work for the attainment of a desired objective so as to induce them to act in a desired manner.
Which functions of management are referred in the above? (1)
Identify quoting lines, the elements of one of the functions referred
in above para. (4)
(Staffing, Directing)
(Leadership, Communisation, Supervision, Motivation)
Q.6 ‘Rose Ltd’ is manufacturing- Textiles, Cosmetics and Kitchenware item. The company has
recruited all female fresher’s directly from a Management Institute located in the city. Each
product is headed by different female manager.
Ms Pooja is looking after Textile. She believes in decentralisation and takes decisions regarding
different work by consulting her subordinates.
Ms Mona, head of cosmetics, takes little interest in managerial functions and the subordinates are
left on their own.
Ms Anu is heading Kitchenware items. She has kept all the authority in her own hands and makes
employees perform the work exactly as per her orders.
Which kind of organisational structure has the company adopted?

State the specific source of recruitment used by the company?
(1)
3. Identify the leadership styles practised by the 3 heads. (3)
4. State any one value adopted by the company. (1)
[Hints: 1. Divisional structure; 2. Campus recruitment; 3. Democratic, Free rein, Authoritative; 4.

Providing employment opportunities to females.]
Q.7 The psychology lecture of MBA students of ‘Ikon Institute’ was going on. The lecturer discussed
that some employees have the desire for status or ego of self-respect and recognition.
Some have the desire to be what they want to be.

Some aspire for acceptance and sense of belongingness.
Some need defence against unexpected problems in future.
1. Identify the topic of psychology lecture. (1)
Identify the desires of employees discussed above along with,
how can a manager fulfil such desires respectively. (4)
[Hints: 1.Human needs, Motivations; 2. Esteem needs, Self-actualisation, Social needs, safety/security
need]
CHAPTER – 8
CONTROLLING
Meaning & Definition
Controlling means ensuring that activities in an organization are performed as per the plans. Controlling also
ensures that an organisation’s resources are being used effectively and efficiently for the achievement of
predetermined goals.
It can be defined as comparison of actual performance with the planned performance.
The controlling functions finds out how far actual performance deviates from standards, analyses the
causes of such deviations and attempts to take corrective actions based on the same.
Controlling Process
Setting Performance Standards: Standards are the criteria against which actual performance
would be measured. Thus standards become basis for comparison and the manager insists on
following of standards.
Standards can be set in both quantitative as well as qualitative terms. Is is important that standards
should be flexible enough to be modified whenever required. Please note that standards should be
attainable and time bound.
Measurement of Actual Performance: Performance should be measured in an objective and reliable

manner which includes personal observation, sample checking. Performance should be measured in
same terms in which standards have been established, this will facilitate comparison.
Comparing Actual Performance with Standard: This step involves comparison of actual
performance with the standard. Such comparison will reveal the deviation between actual and
desired performance. If the performance matches the standards it may be assumed that everything is
under control.
Analysing Deviations: The deviations from the standards are assessed and analysed to identify the
causes of deviations.
Deviations are analysed in the light of pre-determined deviation tolerance limit and key result areas.
Critical point control (CPC): It is neither economical nor easy to have a check on all the activities of
an organisation. Hence, the manager should pay more attention on those activities which are important
and critical to the success of an organisation. These are known as Key Result Areas-
KRA’s.
Management by Exception (MBE): A manager should take corrective action when there is
exceptional deviation i.e. when they cross the permissible limit or acceptable range. Deviations
within acceptable range are ignored.
Taking Corrective Action: The final step in the controlling process is taking corrective action. No
corrective action is required when the deviations are within the acceptable limits. But where
significant deviations occur corrective action is taken.
“Comparing the actual performance with laid standard, finding out deviations and taking corrective
action is an important process of a function of management.” Name the process

Q.1 Prakash Jha wishes to fix- standard production for worker along with standard time to complete the
job. Under which function of management,
standards are fixed? (1)
Q.2 Jindal Ltd. could not achieve the target production of 15,000 cars p.a. It could produce only 14,125
cars - While analysing the reasons for deviations, it was found that workers were not efficient.
Training programmes were organised and next year, company was able to produce 15,000 units.
Production Manager is of the opinion, that with this, management ends at controlling. Do you
agree? Give reason to support
our answer. (3)
Q.3 Suppose you are the manager of ABC Clothing Ltd. It comes to your knowledge that postal
expenses have increased by 15% over the standard price and cost of labour and raw materials
has increased by 3%. Which of the two situations is more critical according to you? (1)
Q.4 ‘Tricom Ltd’ a computer hardware manufacturing company imported a new machinery for
manufacturing latest technology based computer systems. The human resource manager
determined that for operating the new machines, the company required the necessary workers
through placement agency.
After 3 months, it was reported by the production manager that the workers were not able to
meet the target production. The General Manager got annoyed and ordered inquiry for the
same. It was reported that the newly recruited workers possessed the necessary skills and
abilities but lacked the willingness to do work.
(i) Name the functions of management involved above (3)
(ii) Name the relevant concept of functions identified in (i) (2)
Which concept of management will help the company in meeting the
target production (1)
Staffing, Controlling, Directing
Recruitment, Controlling process-
Comparing actual performance
Analysing deviations
Motivation
Q.5 Mr. Ankit is the chief manager in a well-known MNC, producing shoes. He called the
production manager of his unit and told him to keep a constant watch on all the activities of
his respective unit so that there is no possibility of adverse results. As long as the company
runs its operation employees at all levels will adopt it to achieve results.
1. Identify the function of management referred above. (1)
2. Describe its three features quoting lines from the para. (3)
[Controlling (i) Goal oriented, (ii) Continuous process, (iii) Pervasive function]
Q.6 Polycons Ltd. is a firm manufacturing paper bags in Orissa. It has employed female workers in
the company and manufactures paper bags from recycle paper and there after sells them to
various firms at economic rates.
Since last 1 month, its customers(firms) are reporting of complaints received from the users
that these paper bags are unable to manage heavy weight and get torn easily.
1. Which function of management has been ignored above? (1)
Discuss the steps to be undertaken in respect of the ignored function to remedy the situation.4
CHAPTER – 9
FINANCIAL MANAGEMENT
Introduction
Money required for carrying out business activities is called business finance. Finance is needed to
establish a business, to run it, to modernize it, to expand or diversify it.
Meaning of Financial Management
Financial management is the activity concerned with the planning, raising, controlling and
administering of funds used in the business. It is concerned with optimal procurement as well as usage
of finance. It aims to reduce the cost of funds. It also aims at ensuring availability of enough funds
whenever required as well as avoiding idle finance.
Objectives of Financial Management
Primary Objective:
Wealth Maximisation: The main objective of Financial management is to maximise
shareholder’s wealth. Example- If Mr. X purchase 100 shares @ ` 100 of ABC Ltd. his wealth
in company is ` 10,000/-. After some time, the market price of share increased to ` 130/-.
Therefore, his wealth would be ` 13,000/-. His wealth increases by ` 3,000/-. If the market price
of the share decreases to ` 90/- he loses his wealth by ` 1,000/-
The market price of a company shares is linked to three basic financial decisions and
shareholder’s wealth maximisation.
Wealth of shareholders= number of shares x market price per share.
Financial Decisions:
Financial
Decision
Financial Investment Dividend

Decision Decision Decision
Decision related to: Decision related to: Decision related to:
Fixed Asset
Financial Distribution of
(capital
Dividen
Planning d
budgeting)
Capital Working Retained

Structure Capital Earning
Factors affecting Capital structure or financing decision
Trading on Equity: It refers to the increase in profit earned by the equity shareholders due to the
presence of fixed financial charges like interest. Trading on equity happens when the rate of earning of
an organisation is higher than the cost at which funds have been borrowed and as a result equity
shareholders get higher rate of dividend per share. The use of more debt along with the equity increases
EPS as the debt carries fixed amount of interest which is tax deductible.
Cash Flow Position: In case a company has strong cash flow position then it may raise
finance by issuing debts, as they are to be paid back after some time.
Interest Coverage Ratio: It refers to the number of times earning before interest and taxes of a
company covers the interest obligation. High interest coverage ratio indicates that company can have
more of borrowed funds. Formula for calculating ICR = EBIT/interest
Return on Investment: If return on investment is higher than the rate of interest on debt then
it will be beneficial for a firm to raise finance through borrowed funds.
Floatation Cost: The cost involved in issuing securities such as brokers commission, under
writer’s fees, cost of prospectus etc. is called floatation cost. While selecting the source of
finance, flotation cost should be taken into account.
Control: When existing shareholders are ready to dilute their control over the firm then new
equity shares can be issued for raising finance but in reverse situation debts should be used.
Tax Rate: Interest on debt is allowed as a deduction; thus in case of high tax rate, debt is
preferred over equity but in case of low tax rate more preference is given to equity.
Cost: The cost of raising funds from different sources are different. The cheapest source
should be selected.
Risk: The risk associated with different sources is different. More risk is associated with
borrowed funds as compared to owner’s fund as interest is paid in it and it is repaid also, after
a fixed period of time or on expiry of its tenure
Period of Finance: For permanent capital requirement, Equity shares must be issued as they
are not to be paid back and for long and medium term requirement, preference shares or
debentures can be issued.
INVESTMENT DECISION
It relates to how the firm’s funds are invested in different assets. Investment decision can be long-
term or short-term. A long term investment decision is called capital budgeting decision as they involve
huge amounts of funds and are irreversible except at a huge cost while short term investment decisions are
called working capital decisions, which affect day to day working of a business.
Factors affecting Investment Decisions
Cash flows of the project : The series of cash receipts and payments over the life of an investment
proposal should be considered and analysed for selecting the best proposal.
Investment Criteria Involved : The various investment proposals are evaluated on the basis of
capital budgeting techniques. These involve calculations regarding investment amount, interest
rate, cash flows, rate of return, risk involved in project etc.
Fixed Capital
Fixed capital refers to investment in long-term assets. Investment in fixed assets like land, plant and
machinery for longer duration and they must be financed through long-term sources of capital. Decisions
relating to fixed capital involve huge capital and are not reversible without incurring heavy losses.
Factors Affecting Requirement of Fixed Capital
Nature of Business : Manufacturing concerns require huge investment in fixed assets & thus
huge fixed capital is required for them but trading concerns need less fixed capital as they are
not required to purchase plant and machinery etc.
Scale of Operations : An organisation operating on large scale requires more fixed capital as
compared to an organisation operating on small scale.
For Example - A large scale steel enterprise like TISCO requires large investment as
compared to a mini steel plant.
Choice of Technique : An organisation using capital intensive techniques requires more

investment in plant & machinery as compared to an organisation using labour intensive
techniques.
Technology upgradation : Organisations using assets which become obsolete faster require
more fixed capital as compared to other organisations.
Growth Prospects : Companies having more growth plans require more fixed capital. In order
to expand production capacity more plant & machinery are required.
Diversification : In case a company goes for diversification then it will require more fixed capital to
invest in fixed assets like plant and machinery.
Working Capital
Working Capital refers to the capital required for day to day working of an organisation. Apart
from the investment in fixed assets every business organisation needs to invest in current assets, which
can be converted into cash or cash equivalents within a period of one year. They provide liquidity to
the business. Working capital is of two types - Gross working capital and Net working capital.
Investment in all the current assets is called Gross Working Capital whereas the excess of current
assets over current liabilities is called Net Working Capital.
Networking Capital = Current Assets- Current Liabilities

Factor affecting requirement of working capital:

Name of the Requirement of More working Requirement of
factor capital Less working
capital
Nature of Manufacturing concern because Trading concern
business of processing work. because of no
production.
Scale of Large scale operation because of Small scale
operation huge inventory. operations because
of small inventories.
Business Cycle During boom period because of During depression
more production. period because of
less production.
Seasonal factors Peak season because of more Lean season,
demand. because of low
demand.
Credit allowed to Sales on ‘credit basis’ Sales on ‘cash
customers basis’
Credit availed Purchase on ‘cash basis’ Purchase on ‘Credit
from suppliers. basis’
Inflation Vs During inflation, due to high price During deflation, due
Deflation level for raw material, wages etc. to low price level.
Operating cycle/ Long operating cycle. Short operating
Turnover of cycle.
working capital. Raw
It is the time material
period from
purchase of raw Cash work in
material to progress
realisation from
debtors.
Stock of
Debtors
finished
& B/R
product
Credit
sales
Availability of Higher lead time to acquire raw Lower lead time, so

raw material material, so higher stock of raw less stock of raw
material would be needed. material would be
needed.
Growth High growth prospects. Low growth
prospects prospects.
Level of High competition would require Low competition
competition high amount of stock keeping. would require less
amount of stock
keeping.
Productive cycle Long production cycle. Short production

cycle
Dividend Decision
Dividend refers to that part of the profit which is distributed to shareholders. A company is required
to decide how much of the profit earned by it should be distributed among shareholders and how
much should be retained. The decision regarding dividend should be taken keeping in view the
overall objective of maximising shareholder’s wealth.
Total profit
Retained
Earnings
Dividend
Factors affecting Dividend Decision
Earnings : Companies having high and stable earning could declare high rate of dividends as
dividends are paid out of current and past earnings.
Stability of Dividends : Companies generally follow the policy of stable dividend. The dividend
per share is not altered/changed in case earnings change by small proportion or increase in earnings
is temporary in nature.
Growth Prospects : In case there are growth prospects for the company in the near future
them it will retain its earning and thus, no or less dividend will be declared.
Cash Flow Positions: Dividends involve an outflow of cash and thus, availability of adequate
cash is for most requirement for declaration of dividends.
Preference of Shareholders : While deciding about dividend the preference of shareholders is

also taken into account. In case shareholders desire for dividend then company may go for
declaring the same.
Taxation Policy : A company is required to pay tax on dividend declared by it. If tax on
dividend is higher, company will prefer to pay less by way of dividends whereas if tax rates
are lower then more dividends can be declared by the company.
Stock market reaction: Increase in dividend is good news for investors and hence market
price of the shares increases in the stock market. Decrease in dividend reduces the market
price of share.
Legal constraints : Under provisions of Companies Act, all earnings can’t be distributed and
the company has to provide for various reserves. This limits the capacity of company to
declare dividend.

Q.1 HCL Company’s finance manager has decided to retain its entire profit
to meet financial requirement for its growth. Name the type of decision
involved.(Dividend) (1)
Q.2 Tata sons has debt equity ratio of 4:1 and Bajaj has 1:1 debt equity ratio.
Name the advantage, Tata sons may have over Bajaj.(Trading on equity
(1)
Q.3 Dabur India has decided to increase credit limit and duration of credit to
its customers to boost its sales. Name the type of decision involved.
(working capital) (1)
Q.4 Bharti Ltd. is a leading mobile company. It is planning to acquire Queen

Ltd’s (its close competitor) business worth Rs. 1,000 crore. Which
financial decision is involved in it? Explain it.(Investment) (3)
Q.5 Chandra Ltd. is a manufacturer of Laptops. It made a profit of 1000

crores. The director have proposed a dividend of 38%. As a finance
manager of the company. What factors would you consider while
formulating a dividend policy of the company? (Any four) (4)
Q.6 Pankaj is engaged in Warehousing - Business Identify the working

capital requirements of Pankaj stating the reason in support of your
answer. Pankaj is also planning to start his Transport business. Explain
any two factors that will affect his fixed capital requirements. (2+2)
Q.7 Name the factor due to which a petro chemical company requires much
higher investment in fixed capital than an information technology
company. However both may generate same amount of
revenue.(Nature of business) (3)
Q.8 “Ranbaxy Ltd. has been earning handsome profits since last 15 years.
Company enjoy fair goodwill in the market, so company can easily
arrange debt as well equity from the market, whenever needed.
Therefore company decided to declare dividend with a hike of 15% from,
last year.”
Which two components affecting dividend decision have been
highlighted in the above paragraph. (2+2)
(i. Stability of earning ii. Access to capital markets)
Q.9 “During annual general meeting of Prakash Ltd. CEO, Mr. Rajnesh put the expansion plan
for the coming year before shareholders and asked for suitable source of finance to finance
manager. Finance manager Mr. Kant proposed issue of debentures than equity with a plan
that they can be paid back whenever requirement of funds is over”
In the above paragraph, which component affecting financing decision

has been highlighted? Explain the component. (Flexibility) (3)
Q.10 How does ‘Trading on Equity’ affect the Capital structure of a company?
Explain with the help of a suitable example. (5)

CHAPTER – 10
FINANCIAL MARKETS
Financial Market is a market for creation and exchange of financial assets like shares, bonds etc. It
helps in mobilising savings and channelizing them into the most productive uses. It helps to link the
savers and the investors by mobilizing funds between them. The persons or institutions by which
allocation of funds is done are called Financial Intermediaries. They bring together borrowers and lenders
and make funds available to those willing to pay for their use,
Functions of Financial Markets
Mobilisation of Savings and channeling them into the most productive uses : Financial
market facilitates the transfer of savings from savers to investors and thus helps to channelize
surplus funds into the most productive use.
Helps in Price Determination : Financial Market helps in interaction of savers and investors
which in turn helps in the determination of prices of the financial assets such as shares,
debentures etc.
Provides Liquidity to Financial Assets : Financial market facilitates easy purchase and sale of
financial assets. Thus, it provides liquidity to them so that they can be easily converted into
cash whenever required.
Reduces the Cost of Transactions : Financial market provides valuable information about
securities which helps in saving time, efforts and money and thus it reduces cost of transactions.
Types of Financial Markets
Financial Markets
Capital Market Money Market

( for long term requirement) ( for short term requirement)
Market Instruments
Primary Market Secondary
market
1. Treasury Bill
(for new (Issued
2. Com. Paper
Issues of securities
3. Call Money
Shares and are
4. Certificate of Deposits
Deb.) traded)
5. Commercial Bill
Participants: Bank, Investor, Participants: R.B.I. Com.

Mut. Fund. LIC and others Bank, Invester, LIC & others
Controlled by SEBI
Money Market
It is a market for short term funds/securities whose period of maturity is upto one year. The major
participants in the money market are RBI, Commercial Banks. Non-Banking Finance Companies,
State Government, Large Corporate Houses and Mutual Funds. The main instruments of money
market are as follows:
Treasury Bills: They are issued by the RBI on behalf of the Central Government to meet its
short-term requirement of funds. They are issued at a price which is lower than their face
value and are repaid at par. They are available for a minimum amount of Rs. 25000 and in
multiples thereof. They are also known as Zero Coupon Bonds. They are negotiable
instruments i.e. they are freely transferable.
Commercial Paper: They are short term unsecured promissory notes issued by large credit
worthy companies to raise short term funds at lower rates of interest than market rates. They
are negotiable instruments transferable by endorsement and delivery with a fixed maturity
period of 15 days to one year.
This source is usually used for-

Working Capital requirements
Seasonal needs
Bridge financing)
Call Money: It is short term finance repayable on demand, with a maturity period of one
day to 15 days, used for interbank transactions. Call Money is a method by which banks
borrow from each other to be able to maintain the cash reserve ratio as per RBI. The interest
rate paid on call money loans is known as the call rate.
Certificate of Deposit: It is an unsecured instrument issued in bearer form by Commercial

Banks & Financial Institutions. They can be issued to individuals. Corporations and
companies for raising money for a short period ranging from 91 days to one year.
Commercial Bill: It is a bill of exchange used to finance the working capital requirements
of business firms. A seller of the goods draws the bill on the buyer when goods are sold on
credit. When the bill is accepted by the buyer it becomes marketable instrument and is
called a trade bill. These bills can be discounted with a bank if the seller needs funds before
the bill maturity.
Capital Market
It is a market for long term funds where debt and equity are traded. It consists of development
banks, commercial banks and stock exchanges. The capital market can be divided into two parts:
Primary Market
It deals with the new securities which are issued for the first time. It is also known as the New Issue
Market. The investors in this market are banks, financial institutions, insurance companies, mutual
funds and individuals. It has no fixed geographical location and only buying of securities takes place
in the primary market.
Methods of Floatation of New Issues in Primary Market
Offer through Prospectus/ Initial Pubic After: It involves inviting subscription from the
public through issue of prospectus. A prospectus makes a direct appeal to investors to raise
capital through an advertisement in newspapers and magazines.
Offer for Sale: Under this method security are offered for sale through intermediaries like
issuing houses or stock brokers. The company sells securities to intermediary/broker at an
agreed price and the broker resells them to investors at a higher price.
Private Placements: It refers to the process in which securities are allotted to institutional
investor and some selected individuals.
Rights Issue : It refers to the issue in which new shares are offered to the existing
shareholders in proportion to the number of shares they already possess.
e-IPOs : It is a method of issuing securities through an on-line system of stock exchange. A

company proposing to issue capital to the public through the on-line system of the stock
exchange has to enter into an agreement with the stock exchange. This is called an e-initial
public offer. SEBI’s registered brokers have to be appointed for the purpose of accepting
applications and placing orders with the company.
Secondary Market
It is also known as the stock market or stock exchange where purchase and sale of existing
securities takes place. They are located at specified places and both the buying as well as
selling of securities takes place.
Difference between Primary and Secondary Market
Basis Primary Market Secondary Market
1.Securities Only new securities are Existing securities are

traded. traded.
2.Price of Prices of securities are Prices are determined by the

securities determined by the forces of demand and
management of the supply of the securities.
company.
3.Purchase Securities are sold to Investor exchange

and sale. investors directly by the ownership of securities.
company or through
intermediary.
4. Place of There is no fixed Located at specified places.

market geographical location.
5.Medium Only buying of securities Both buying and selling of

takes place. securities can take place.
Stock Exchange/Share Market
A Stock Exchange is an institution which provides a platform for buying and selling of existing
securities. It facilitates the exchange of a security i.e. share, debenture etc. into money and vice
versa. Following are some of the important functions of a Stock Exchange:-
Providing liquidity and Marketability to Existing Securities : Stock Exchange provides a

ready and continuous market for the sale and purchase of securities.
Pricing of Securities : Stock Exchange helps in constant valuation of securities which

provide instant information to both buyers and sellers and thus helps in pricing of securities
which is based on the forces of demand & supply.
Safety of Transaction : The members of a stock exchange are well regulated, who are
required to work within the legal framework. This ensures safety of transactions.
Contributes to Economic Growth : Stock exchange provides a platform by which savings

get channelised into the most productive investment proposals, which leads to capital
formation & economic growth.
Spreading of Equity Culture : Stock exchange helps in educating public about investments
in securities which leads to spreading of Equity culture.
Providing Scope for Speculation : Stock exchange provides scope within the provisions of
law for speculation in a restricted and controlled manner.
Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are famous in India.
Trading and Settlement Procedure on a Stock Exchange
Selection of Broker: In order to trade on a Stock Exchange first a broker is selected who
should be a member of stock exchange as they can only trade on the stock exchange.
Opening Demat Account with Depository.
Placing the order: After selecting a broker, the investors specify the type and number of
securities they want to buy or sell.
Executing the order: The broker will buy or sell the securities as per the instructions of the
investor.
Settlement: Any trade taking place gets settled within 2 days of the trade date.
Difference between Capital and Money Market.
S.No. Basis Capital Market Money Market
1. Participants Financial Institutions, RBI, Banks Financial

Banks,. Corporate Institutions & finance
Entities, foreign companies
investors and
individuals
2. Instruments Equity shares, bonds Treasury Bills, Trade
preference shares and
Traded bills, commercial paper.
debentures.call money
etc
3. Investment Does not necessarily Entails huge sums of

require a huge financial
outlay money as the instruments
outlay.
are quite expensive.
4. Duration Deals in medium & Deals in short term
long-term securities
funds having maturity
having maturity period
of over one year. period upto one year.
5. Liquidity Securities are less Money market

liquid as compared to
instruments are highly
money market
liquid.
securities.
6. Expected High return Low return
return
7. Safety Capital Market Money market instruments
instruments are riskier are generally much safer
both with respect to with a minimum risk of
return and repayment. default.
Demat Account
Demat account is the abbreviation of ‘Dematerialized Account’. (Dematerialized account refers to

an account which an Indian citizen must open with the depository) participant (banks,
stockbrokers) to trade in listed securities in electronic form wherein one can hold shares of various
companies in the Dematerialized {electronic} form. Access to De-mat account requires an internet
password and a transaction password. Transfer and purchase of securities can then be initiated.
Purchase and sale of securities on the De-mat account are automatically made once transaction is
confirmed and completed.
Benefits of Demat Account
Reduces paper work.
Elimination of problems on transfer of shares such as loss, theft and delay.
Exemption of stamp duty when transfer of shares.
The concept of odd lot stand abolished.
Increase liquidity through speedy settlement.
Attract foreign investors and promoting foreign investment.
Functions of SEBI
The SEBI performs three important functions
Regulatory functions: These functions are performed by SEBI to regulate the business in
stock Exchange.
Development functions: These functions are performed by SEBI to promote and develop
activities in stock.
Protective functions: These functions are performed by SEBI to protect the interest of
investors and provide safety on investments.
Q1. Sudha Ltd. has sold 1 lakh equity shares of Rs. 10 each at Rs. 12 per
share to an investment banker, who offered them to the public at Rs. 20
each. Identify the method of floation.(offer for sale) (1)
Q2. Mohan wants to sell 50 shares of Tata Motors. Explain the trading
procedure of shares. (5)
Q3. Charu is a charactered accountant in Prakash Ltd. During the course of

meeting with directors she came to know that as against the previous
years, this year company is going to declare handsome dividend offer.
It is observed that when such news becomes public then the share-
market jumps up. Considering it, charu purchased large number of company’s shares before
this news reached the public.
Identify type of malpractice used by charu.
Name the authority which regulates such behaviour. Write any

three other functions of this authority. (5)
Q4. A company wants to set up a new branch in Chennai. For additional capital company is
planning to issue equity shares to public as there is boom period in capital market and
public will prefer to invest in shares.
While analysing the issue, finance manager found that floatation costs of the issue would be
high and company is already in liquidity crunch. Company deemed it proper to depend on
money market instruments for about six months.
Identify the method of flotation of capital, mentioned above.(IPO)
Besides above shares issue method, mention two other methods.

Use of what kind of instrument will be appropriate for the money market.
Clarify.(commercial papers)
CHAPTER – 11
MARKETING MANAGEMENT
Market: is used for a place where the buyers and sellers meet and conduct buying and selling
activities. In the traditional sense, the market means a place where buyers and sellers gather to enter
into transaction involving the exchange of goods and services but today business can be conducted
on telephone, through mail, internet etc. In modern marketing sense the term market has a broad
meaning. It refers to a set of actual and potential buyers of a product or service.
Marketer or Seller: If a customer is the seeker of satisfaction the marketer is the provider of
satisfaction. Marketer can be a person or an organisation who makes available the products or
services and offers them to the customer with an intention of satisfying the customer needs and
wants.
Marketing Management Philosophies
Production concept: Emphasis on Quantity Focus:

Availability and Affordability.
Product Concept: Emphasis on Quality
Focus: Continuously improving quality, incorporating new factors, product improvement.
Sales Concept: Emphasis on Sales volume
Focus: Attracting and persuading customers, aggressive promotional techniques.
Marketing Concept: Identify a need and fill it.
Focus: Customer satisfaction
Societal Marketing Concept: Extension of marketing concept i.e. customer
satisfaction with welfare of the society
Consider social, ethical and ecological aspects of marketing.
Differences in the Marketing Management Philosophies
Philosophies/ Production Product Selling Marketing Societal

Bases Concept Concept Concept Concept Concept
1. Starting Point Factory Factory Factory Market Market

Society
2. Main Focus Quantity of Quality, Existing Customer Customer

product performance, product needs needs and
features of society’s
product well being
Product
3. Means Availability improvements Selling Integrated Integrated

and and marketing marketing
affordability promotion
of product
4. Ends Profit Profit through Profit Profit Profit

through product quality through through through
volume of sales customer customer
production volume satisfaction satisfaction
and society
welfare
Elements of Marketing Mix
I- PRODUCT MIX
Meaning and Concept of Product: Product is anything that can be offered to a market to satisfy a
want or need.
Product mix refers to a combination of various features relating to the product or service like
quality, size, range, package, warranty etc.
PRODUCT MIX – Three components are - Branding, Packaging, Labelling.
Branding- Giving a name/a sign; a symbol etc. to a product eg.: Pepsi.
Nike:
BRANDING
Distinct Identication of a Product
Brand
Brand Name
Brand Mark
Trade Mark/Brand registered under Trade Mark Act, 1999 with Government of India
Qualities of a Good Brand Name
Simple and Short : A brand name should be simple and short as Tata, Bata
Easily Pronounceable : A brand names should be easily pronounceable as Lux, Dalda.
Suggestive : Brand name should be self explanatory, suggesting the inherent quality of the
product as Ujjala suggests more whiteness.
Distinctive: Brand name should be so distinctive that it highlights itself in
the group of other brand names such as : Tide, Perk.
Advantages of Branding
Brand name helps in advertising it in an easier way.
Brand name establishes permanent identity of the product.
Branded products can be easily identified by consumers.
Brand name promotes repurchasing.
Branding ensures a particular level of quality of the product: If there is any deviation in
the quality the customers can make a complaint to the manufacturer.
Packaging- Act of designing and producing the container or wrapper of a product. Good
packaging often helps in selling the product so it is called a silent salesman.
Levels of Packaging
Primary Package : refers to the product’s immediate container e.g. toffee in a wrapper, a
match box.
Secondary Package: refers to additional layers of protection that are kept till the product is
ready for use e.g. a Colgate toothpaste usually comes in a card board box.
Transportation Package: refers to further packaging components necessary for storage,

identification and transportation e.g. package of toffees are put into corrugated boxes for
storing at a manufacturer’s warehouse and for transportation.
PACKAGING
Group of activities related to the designing

and production of the container in which
the product is packed.
it can be different levels:
Primary Packaging
Secondary Packaging
Transportation Packaging
Labelling-
Labelling means putting identification marks on the package. Label is a carrier of information &
provides information like - name of the product, name of the manufacturer, contents of the product,
expiry and manufacturing date, general information for use, weight etc.
Labels perform following functions:
Identify the product: - It helps the customers to identify the product from
the various types available. For example: We can easily identify a Cadbury chocolate from the
various chocolates by purple colour of its label.
Describe the product and specify its contents:
The manufacturer prints all the information related to the product.
Grading of products: With the help of label, products can be graded in

different categories for example: Brook Bond Red Label, Brook Bond Yellow Label, Green
Label etc.
Helps in promotion of products :- Attractive and colourful labels excite the

customers and induce them to buy the products. For example :- 40% extra free mentioned on
detergent etc.
Providing information required by law :- There is legal compulsion to print batch no.,
contents, max retail price, weight/volume on all the products and statutory warning on the
packet of cigarettes, “Smoking is injurious to health”: In case of hazardous/poisonous material
appropriate safety warnings need to be put.
PRICE MIX
Meaning and concept of Price: Price may be defined as the amount of money paid by a buyer (or
received by a seller) in consideration of the purchase of a product or a service. Pricing is crucial for
manufacturers, customers and intermediaries. A customer will buy a product only when he perceives
that value or a product is at least equal to value of money, which he has to pay in the form of price.
Before framing any pricing policy following factors should be considered:
Pricing Objectives
to maximise profits in the short term-tend to charge maximum price.
Obtain large share of the market i.e., by maximising sales it will charge lower price.
Firm is operating in the competitive market it may charge low price for it.
Cost of Production : Needs to be fully realised before fixing prices.
Demand : High Demand and less supply may permit increase in price while low demand and
more supply may not allow increase in price.
Competition in Market : Prices of competitors need to be considered before fixing prices.
Government Policies: Products regulated by government pricing regulations need to be

priced as per government policies.
Place Mix/Physical Distribution Mix
Covers all the activities required to physically move goods from manufacturers to the
customers Important activities include:-
Order Processing : Accurate & speedy order processing leads to profit & goodwill & vice
versa.
Transportation : Add value of the goods by moving them to the place where they are
required.
Inventory control : Additional demand can be met in less time, the need for inventory will
also be low.
Ware housing : Need arises to fill the gap between the time when the product is produced &
time when it is required for consumption.
Channels of Distribution
Direct Channel — Manufacturer-Customer
Indirect Channel —
Manufacturer-Retailer-Customer.
Manufacture-wholesaler-Retailer-customer.
Manufacture → Agent → Wholesaler → Retailer → Customer
Direct Channel
Factors Determining Choice of Channels of Distribution
Choice of appropriate channel of distribution is a very important marketing decision, which affects
the performance of an organisation. Whether the firm will adopt direct marketing channels or long
channels involving a no. of intermediaries is a strategic decision.
IV. Promotion Mix
It refers to combination of promotional tools used by an organisation to communicate and persuade

customers to buy its products.
Elements of Promotion Mix
Advertising Personal Selling
Promotion Mix
Sales Promotion Public Relation

Tools/Elements of Promotion Mix
Advertising: Most commonly used tool of promotion. It is an impersonal form to

communication, which is paid by the marketers (sponsors) to promote goods and services.
Common mediums are newspaper, magazine, television & radio.
Role or Importance of Advertising
Enhancing customer satisfaction and confidence.
Helpful in increasing the demand of existing product.
Helpful to increase the market share.
Helpful in generating more employment.
Helpful in the economic development of the country.
Knowledge of various product.
No fear of exploitation.
Objections against Advertising : Though advertising is one of the most frequently used medium of
promotion of goods & services but it attracts a lot of criticism/objections against it, which are as
follows:
Increased Product Price : Which is ultimately added to product cost, manufacturers pass this
cost to ultimate customers.
Confusion to Customers : The number of advertisements shown for a single product having
different brands confuse the customers and it becomes very difficult for them to make choice.
Encouraging sale of Inferior Products : In many cases some product features are over
emphasized.
Advertisement of Bad Tastes : Events, models degrade the human dignity.
Undermines Social Values and Promotes Materialism: It induces the customers to buy
more and more products. Because of emphasis on materialism, social relationships are
distorted which brings social disorder.
Personal Selling
Personal selling consists of contacting prospective buyers of product personally i.e face to face
interaction between seller and buyer for the purpose of sale.
Features of the Personal Selling
Personal contact is established under personal selling.

Oral conversation.
Quick solution of queries.
Receipt of additional information.
Development of relationship with the prospective customers which may become important in
making sale.
Qualities of a Good Salesperson
Qualities of a Good Salesman
Physical Qualities : Physical qualities include personality health, stamina and tolerance. A
salesman can instantly connect with the customers if he is good looking and smart.
Mental Qualities : These include mainly skills, mental alertness, imagination and self
confidence.
Technical Qualities : He should have full and updated knowledge about the product he is
selling-Its features, price and variety available. He should be aware of the nature of work
carried on by the firm, he is working for.
Good communication skills : He should be able to develop a good conversation with the
customer. He should be confident while he is communicating and should be able to answer all
the queries of the customer satisfactorily.
Honesty : It is a very important quality of a good salesman. In order to establish the goodwill
of firm he must be honest and sincere in performing his duty. A salesman who resorts to
selling inferior goods, charging higher rates, providing wrong information, giving exaggerated
claims etc. will cause a decline in goodwill of the firm in the long run.
Courtesy : A Salesman who is polite and courteous generates buyer’s confidence selling
product becomes easy for him.
Persistent : “Never give up”, is the spirit that a salesman should have.
Making the customer buy maximum amount of a product is the ultimate task given to him.
Capacity to inspire trust : The salesman should have the convincing power to develop the
belief in a customer that the product he is buying is the best product in the market.
Sales Promotion
Short term incentives designed to encourage the buyers to make immediate purchase of a
product/service.
Techniques:
Rebate : Special price to clear off excess inventory.

Discounts : Price reduced to induce buyers to buy more.
Sampling : Free sample of a product to customers to try product & learn about it.
Lucky draw : Lucky draw coupon e.g. purchase an easy product & win a car etc.
Full Finance @ 0% Easy financing schemes.
Contests : Competitive events involving application of skills or luck.
Product Combination : Offering another product as gift along with the purchase of a
product.
Instant draws and assigned gift : Scratch a card and instantly win a prize with the purchase
of a TV, T. Shirt, Refrigerator etc.
Quantity Gift : Offering extra quantity of the product e.g., Buy three LUX soaps and get one
free.
Refunds: Refunding a part of price paid by customer on some proof of purchase.
Usable benefit: Purchase goods worth ` 5000 and get two movies tickets.
Public Relations
“The Chartered Institute of Public Relations” defines Public Relations as à strategic

management function that adds value to an organization by helping it to manage its reputation’
Public relations covers a wide range of tactics, usually involve providing information to independent
media sources in the hope of gaining favorable coverage. It also involves a mix of promoting
specific products, services and events and promoting the overall brand of an organization, which is
an ongoing tact. Public Relation tools include:
Press Release: A press release is an announcement of an event, performance, or other

newsworthy item that is issued to the press by a public relations professional of an
organization.
It is written in the form of a story with an attractive heading so that the media quickly grasp
and circulates the message through newspaper/radio/television/ internet.
Press Kits: It is a comprehensive package of information outlining a company’s products and

services most frequently sent to members of the press. It includes
A brief company biography.

Information of senior management. Comments from
customers.
Reprints of newspaper and magazine articles. Photos of

products.
Brochures: It is a booklet published by the organization which contains the organization’s

background, its ethics, vision, mission, its past, present and future projects, its CISP, etc. E.g.:
brochure given to new employees.
Newsletter: It is a printed publication produced at regular intervals focussing on a particular

set of people. The content of a newsletter is presented in a writing style that is less formal and
letter-like. For example, a newsletter published by a college consists of information about
activities conducted during a particular period, special achievements by students or teachers,
etc.
Events and Press support: Special events are acts of news development. The ingredients are
time, place, people, activities, drama, showmanship; one special event may have many
subsidiary events, such as luncheons, banquets, contests, speeches, and many others as part of
the build up.
Conferences and Seminars: Conferences and seminars are conducted for making people
aware about the organization. For example travel companies generally call prospective clients
and offer travel packages. The members are contacted through telephones and asked to attend
seminar.
Websites: A website acts as a window for the outside world to know an organization. So it is
designed not just to serve as a resource for members, but also to present a positive message to
non-members who are browsing through.
ROLE OF ‘PR’ IN AN ORGANISATION
Smooth functioning of business and achievement of objectives.
Building corporate image that affects favourably on its products. Up keep of parks, gardens,
sponsoring sports activities etc.
Build interest in the established product and help in launching products.
Establishing positive image if products facing adverse publicity.
Acting as a supplement of advertising in promoting new as well as existing products.

Q.1 ‘Various tools of communication are used by the marketers to promote their products.’
Why do companies use all tools at the same time?
Name and explain the most commonly used non-personal tool of promotion which is
paid for by the marketer.
Which tool of promotion will primarily be used for the following?
To promote or protect a company’s image or its individual products.
An existing product meant for mass usage by literate people.
To introduce a new product to a particular class of people through door-to-door visits.
To attract attention of the people by using incentives.
Q.2 As a project work in Business Studies subject, the Commerce students of “Knowledge School’
thought of setting up a recycling plant to recycle all the waste papers from the school and
prepare registers and exercise books to be used by the school students. They approached their
Principal who not only appreciated the idea of the students but also gave them consent for the
same. The school also decided to donate 50% of the revenue generated from the sale of
registers and excercise books to a nearby blind school.
State the product related decisions which the children have to take.
Suggest any two factors the children should keep in mind while choosing the right name
for their exercise books and registers.
Identify any two values communicated to the society by this project of

‘Knowledge School’ (5)
Q.3 Innovators Ltd. is business from manufacturing water purifier. It has already been
manufacturing water purifiers since last 10 years. Now it has come up with a latest innovation in
the field of RO purifiers which will avoid wastage of water. It knows that there are many
competitors in the field as Whirlpool, Aquaguard, Zero B, Kent, Eureka Forbes, LG etc.
(i) Which value is adopted by the company? (1)

Suggest which factors should it keep in mind while fixing the price of
purifier (any 3) (3)
(iii) Which channel of distribution should the company adopt? (1)
Which is the most appropriate sales promotion methods for this. (1)
Q.4 Mr. Akshay is the Sales Manager of Nova Ltd. Since last few months, performance of his
department has failed to reach the acceptable level. It is a matter of concern for the General
Manager. He is keen to mend this dismal situation at any cost. Mr. Akshay made efforts to
find out the causes of this situation. He found that the members of his team lacked training and
that giving incentive to the buyers was absolutely necessary. To impart training to his team
members he set up a training center and appointed a trainer for this purpose. The trainer
imparted them necessary training keeping in mind the actual situation. Besides Mr. Akshay
launched a scheme for the customers. Under this scheme, a coupon is to be issued to that
consumer who buys goods to a specified date. Later on, draw will be taken by a given date and
will be distributed among the winners.
Identify the said training and sales promotion methods. (3)

CHAPTER -12
CONSUMER PROTECTION
If consumers are asked to make greater sacrifices than industry, the country is going to have the
greatest shortage of all consumers.
Betty Furness, an American Consumer Advocate
CONSUMER PROTECTION
Protection of Consumer against the unfair trade

practices of producers and sellers
Generally consumers are exploited by:
Adulteration of Consumer Goods
Poor Quality of Goods and Services
Short Measure and Underweight Goods
Creation of Artificial Scarcity by Hoarding of Goods
Protecting consumers from unfair trade practices, adopted by the producers and sellers of goods and
services is termed as consumer protection. It not only includes educating consumers about their
rights and responsibilities, but also helps in getting their grievances redressed.
Rights of a Consumer
Consumer Protection Act, 1986 has provided six rights to the consumers, which are as follows:
Right to Safety: Consumer has the right to be protected against products, & services which
are hazardous to health & life (should use ISI marked electronic devices.
Right to be Informed: Consumer has right to have complete information about the product
before buying it.
Manufacturing Date (20th Aug., 2016)
Price (Rs. 35)
Quantity (330 ml)
Expiry Date (Best before Jan., 2017)

Right to choose: Consumer has a right to choose any product out of the available products as
per his own decision making.
Maam you can

I want to buy a buy this one
micro-wave of a
good quality
Hmm, No give
me that one
with ISI mark
Right to be heard: Consumer has the right to file a complaint to be heard in case of dissatisfaction
with goods or services (use of grievance cell)
Right to Seek Redressal: Consumer has the right to get relief in case
the product or service falls short of his expectations or is dangerous. He may be provided with
replacement/removal of defect or compensation for any loss. Various redressal forums are set
up by the Govt. at National and State level.
Right to consumer education: Consumer has the right to acquire knowledge and to be well
informed throughout life. He should be made aware of his rights and reliefs available to him in
case of the product or service falls short of his expectations. The Govt. of India has included
consumer education in the school curriculum & is making use of media to make consumers
aware of their rights.
Responsibilities/Duties of a Consumer
Consumer must exercise his rights: Consumers must be aware of their rights with regard to the
products or services they buy from the market.
Consumer must be a Cautious consumer: While buying a product or services, a consumer

should read labels carefully.
Consumer must file a complaint in an appropriate forum in case of any shortcoming in

product/service availed.
Consumer must insist on cash memo i.e a proof of purchase is required to file a complaint.
Consumer must be quality conscious. He should ask/look for ISI mark on electric goods. FPO
mark on food products, Hall mark on jewellery etc.
CONSUMER MUST BE QUALITY CONSCIOUS
Hallmark is Agmark is
standard for standard for
accurate prescribed
determination agricultural
of the precious commodities
metal and live block.
FPO aims at
standard for ISI is a
manufacture of standard for
fruit & electrical
vegetable goods.
products.
Earthen pitcher signifies the

products are environment
friendly.
Who Can File A Complaint Under CPA, 1986
A complaint before the appropriate consumer forum can be made by:
Any consumer.
Any registered consumer association.
The central or state government.

One or more consumers on behalf of numerous consumers having same interest.
A legal heir or representative of a deceased consumer.

REDRESSAL AGENCIES UNDER CONSUMER PROTECT ACT, 1986
For the redressal of consumer grievances the act provides a three–tier machinery as:
National Commission
Direct Appeal (More than 1 crore)
State Commission
Direct Appeal (20 Lakhs to 1 crore)
District Forum
Direct Appeal (upto 20 lakhs)
Redressal Agencies
DISTRICT FORUM
District forum are set up in each district by the state concerned. The important features are:
It consists of a President and two members, one of whom should be a woman, duly appointed
by State Govt.
It can receive consumer complaints of not more than Rs. 20 lakhs value.
On receiving the complaint, the district forum shall refer the complaint to the opposite party
concerned and send the sample of goods for testing in a laboratory.
The district forum after being satisfied that goods are defective or there is some unfair trade
practice can issue an order to opposite party directing him to either replace or return the price or
pay compensation. In case the aggrieved party is not satisfied with the order of district forum. He
can appeal before state forum within 30 days of passing an order.
STATE COMMISSION
It is set up in each state by the govt. concerned. The salient features are:
Each commission consists of a president and it least 2 members appointed by state Govt.
Complaints of at least Rs. 20 lakhs but not more than 1 crore can be filed with state
commission.
On receiving the complaint, the state commission can also refer the complaint to opposite
party and send the goods for testing in laboratory.
The state commission after being satisfied can order to opposite party to either replace or
repay or pay compensation.
In case the aggrieved party is not satisfied, they can appeal before national commission within 30
days of passing an order.
NATIONAL COMMISSION
It is setup by Central Govt. The provisions of act are:
It consists of a President and at least 4 members appointed by Central Govt.
All complaints are pertaining to goods and services of value more than Rs. 1 crore can be filed
with national commission.
On receiving the complaint, the national commission can also refer it to opposite party and
send goods for testing.
The National Commission has the power to issue orders for replacement or removal and to
pay the compensation for loss.
REMEDIES AVAILABLE TO CONSUMERS
To remove the defect in goods or services.
To replace the defective product with new one free from defect.
To refund the price paid for the product/service.
To pay compensation for the loss or injury suffered by the consumer due to
product/service.
To discontinue the unfair trade practice and not to repeat them.
To withdraw the hazardous goods from sale.

Role of Consumer organisations and NGO’s
Educating the general pubic about consumer rights by organising training programmes,
seminars and workshops.
Publishing periodical & other publications to educate consumers.
Providing legal assistance to consumers by providing legal advice etc.
Producing films or cassettes on food adulteration, misuse of drugs etc.
Filing complaints in appropriate consumer courts on behalf of consumers.
Encouraging consumers to take on action against unfair trade practices.
Taking an initiative in filing cases in consumer courts on behalf of consumers.


Q1. On the occasion of “Dhan Teras” Mr. Aakash went to market for purchasing utensils. He
bought pressure cooker from a shop. The shop was over - crowded on the festival, so he did
not obtain the cash - memo for the purchase and did not check its certification. Next day, his
wife used the cooker, which bursted and his wife suffered injuries.
Identify and explain the consumer liabilities which have not been discharged by Mr.
Aakash.
Mention the values which have been ignored by the seller as well as of Mr. Aakash.
Q2. Tanya purchased some household goods from a “General Store’ On reaching home, she found
that one face cream, (Rs. 250) had not been billed. She became happy that, she got it without
paying for. After checking the expiry date and other details, she started using it. Her face burnt
due to the use of cream.
Where should Tanya file the complaint for the for the cream?Justify.
Which values have been violated here?
Q3. Smriti purchased a hand blender from an electronic store and got the cash memo of Rs. 1500
which she paid for the blender. Later, she found that the actual price of the blender was Rs.
1200 but the shopkeeper had pasted a stricker of Rs. 1500 on the original price. Can Smriti
recover the extra money that she paid? What other options are available to her against the
shopkeeper?
Q4. Joseph had got a confirmed ticket of Jet Airways. The flight was later cancelled on account of
technical problem. Is it a deficiency in service? What relief can Joseph seek in this regard?
4 MARKS QUESTIONS
Q5. ‘Sehaj bought Teak wood furniture for his drawing room from “Akshay Decors” of Kirti
Nagar, Delhi for Rs. 4 lakhs. At the time of purchase the
firm assured Sehaj about the best quality of the said furniture and gave 2 years warranty starting
that if anything goes wrong, the firm shall replace it with a new one or refund the purchase
amount. But the dining table and chairs started developing cracks at various places and the polish’
became very dull within 30 days of purchase. Sehaj reported the matters to the firm and requested
a number of times to replace the furniture. The firm neither paid attention to these requests nor
replaced the furniture.
Identify the consumer rights which have been violated by the furniture manufacturer.
Where can Sehaj lodge complaint for this?
Mention the values (2) which have been violated by the firm.
BUSINESS STUDIES
(BUSINESS ENVIRONMENT)
CLASS XII
1 MARK QUESTIONS
Q1. ‘The decision made by Britain to exit European came as a shock to stock markets with
the equities and currency market briefly going into tailspin.’ Identify the decision of
business environment highlighted y the statement.
Q2. Government of India has permitted to allow oil marketing public sector undertakings to
fix their own price for petrol and diesel. Which economic reform is the reason of this
change in government’s policy?
Q3. What is ‘Business environment’?
Q4. Which policy of Indian Government has moved India towards globalisation?
Q5. What do you mean by disinvestment?
Q6. Which of the sector was given importance after independence?
Q7. What is mean y opportunities?
Q8. What is Liberalisation?
Q9. Which two factors are included in Technical environment?
Q10. Name the economic reforms introduced to free Indian business from unnecessary
controls and restrictions.
3 MARKS QUESTIONS
Q11. Enumerate the benefits of understanding business environment?
Q12. Explain the meaning of the term Privatisation? List any two reforms made under
Privatisation.
Q13. In recent times the government has increased the prices of Petrol and LPG.Which value
is being overlooked here?
Q14. What is economic and non economic environment?
Q15. Explain the features of business environment.
Q16. Enumerate the levels of business environment.
Q17. Give two examples of the impact on business organisations of changes in social
environment.
Q18. The general manager of Pasand beverages Pvt. Ltd. Said ‘We expect strong growth in
future as there is huge opportunity in packaged beverage market being fuelled by a rise
in disposable income. The changing lifestyle has led to increase in per capita
consumption in India and this presents industry players with the opportunity to tap the
huge untapped potential that this segment offers. Mango juice is amongst the favourite
and most widely accepted y customers across India. The beverages industry is expected
to see 35% to 40% growth in foreseeable future.
Quoting the lines from above passage, identify the few dimensions of business environment.
4 MARKS QUESTIONS
Q19. Identify the type or dimension of environment to which the following are related:
a) Bank reducing interest rates on housing loans.

b) An increasing number of working women.
c) Booking of A which protect consumers’ if tickets through internet.
d) Alcohol beverages are prohibited to e advertised on ‘Door Darshan’.
Q20. Explain the role of Political environment in shaping the business?
Q21. What do you understand by legal environment? Give two examples which protect
consumers’ interest.
5 MARKS QUESTIONS
Q22. State any five impact of changes in government policies on business Environment.
6 MARKS QUESTIONS
Q23. ‘Explain ‘fiscal reforms’ and ‘monetary reforms’ as per economics change initiated y
Government of India Since 1991.
Q24. Explain any five negative impacts of libralisation and globalisation on business
Q25. Explain any five positive impacts of globalisation and libralisation on business and
industries in India.
CONSUMER PROTECTION
A1. Right to be heard.
A2. Cash Memo.
A3. In the above stated right ie Right to consumer Education, a consumer should know about the
right and reliefs available to him in case a product or services fall short of his expectations.
A4. Yes, Rajiv will be able to claim the compensation as the railway have violated the Right to be
informed.
A5. The highest authority where he can appeal is National commission.
A6. AGMARK.
A7. (a) Consumer co ordination council , Delhi
(b) Consumers Association, Kolkata .
A8. State Commission.
A9. As a consumer we are not in a position to resolve our grievances when we have not fulfilled
the responsibilities of a consumer.
A10. Right to representation.
A11. When the compensation claim is Rs 25 lakh, then the legal heir or representative of a
deceased consumer can file a complaint with the state commission concerned.
A12. Reliefs available to Reena:
a) Replacement of the defective product with a new one.

b) Refund of the money paid by Reena.
c) Cessation of the manufacture of the defective product.
d) Reasonable amount of compensation.
e) To withdraw the adulterated from sale.
f) To restrict the trade practice of selling adulterated product.
A13. We should have been conscious about quality and should obtain cash memo from the seller
while purchasing goods. The remedies available are:
(1) Getting the product replaced
(2) Getting the refund of the price
(3) Compensation.
A14. In the given case, Mr. soni as a consumer was not able to fulfill his responsibility at two
fronts.
(I) He didn't go through the packing specifications mentioned on the product at the time of
purchase.
(II) Most importantly, he did not obtain the cash memo from the surer. A cash memo is a
proof of purchase and it is must for filing any complaint. Hence , he will not be able to
protect himself by the loss caused due to expired medicines.
A15. In the given case there is violation of the consumer right to know .Acc. to the amendment of
the regulations in weight and measurement Act.(2000) every product should explicitly bear a
green dot for vegetarian ingredients while brown reveals that non-vegetarian ingredients have
been used. It is also mandatory to show the dot on an advertisements electronic or press and
all posters, banners, stunts etc. hence Mr. Bharti would be able to claim the compensation.
A16. Gupta Medical Stores cannot file a complaint in the Consumer Court. This is because Gupta
Medical Stores is not a consumer as per consumer Act 1986 because they bought the goods
for re-sale/Commercial purpose.
A17. 1. Consumer must exercise his rights: Consumers must be aware of their rights with regard
to the products or services they buy from the market.
2. Consumer must be a Cautious consumer: While buying a product or services, a

consumer should read labels carefully.
3. Consumer must file a complaint in an appropriate forum in case of any shortcoming in

product/service availed.
4. Consumer must insist on cash memo i.e. a proof of purchase is required to file a complaint.
5. Consumer must be quality conscious. He should ask/look for ISI mark on electric goods.
A18.
a) The consumer right violated by the company is Right to choose.
Right to choose:A consumer should have the right to choose from a variety of products
and services at competitive price.The seller should not force the consumer to buy certain
products.
b) The following points highlight the importance of consumer protection from the point of
view of consumer:
1. Ignorance of consumer
2. Exploitation of consumer
3. Unorganised consumer.
A19. Some of the quality certification marks are:
(1) FPO (Fruit Products Order 1955) – It contains specification and quality control
requirements regarding the production and marketing of processed fruits and vegetables ,
sweetened aerated water, vinegar and synthetic syrups.
(2) ISI- On consumer durable products.
(3) Hall mark- BIS certification scheme for gold jewellery items.
(4) Earthen Pitcher –For Labeling Environment friendly products.
(5) AGMARK – It is a grade standard for agricultural commodities and like stock products.
(6) Wool mark- It signifies 100% pure wool.
A20. Importance of consumer protection:
a) Business is a means of human welfare

b) Growth with social justice
c) Single Vs Multi objectives
CONSUMER PROTECTION
1 MARK QUESTION
Q1. Manuj bought a packet of chips from a local shopkeeper and found that the ingredients given on
the label were not legible. He complained about it to the company. The company sent a written
apology stating that they will make sure that existing packets are withdrawn from the market and
new packets with legible labels are soon made available. State the consumer right which Manuj
exercised.
Q2. On the eve of Diwali Ravi purchased two kilograms of sweets from Nandan Sweets. On
consumption of sweets his wife fell sick answer to be hospitalized. Ravi wanted to file a case in
the consumer forum but could not do so because he did not have any proof of buying the sweets
from Nandan sweets. Name the document that Ravi could have obtained for filing the complaint
in the consumer forum.
Q3. ‘The consumer has the right to acquire knowledge and to be a well informed consumer throughout
life’. State what type of Knowledge is required by the consumer in the above stated ‘Right’.
Q4. Rajiv, a vegetarian was traveling in Rajdhani Express was served food and later he found out that
it had a non-vegetarian content. His sentiments were hurt. Will Rajiv be able to claim
compensation, which right of the consumer is violated?
Q5. Deepak shah purchased a car for Rs. 19 lacs from an automobile company and found its engine
defective.Despite many complaints the defect was not rectified.He filed a case in the District
forum.But he was not satisfied with the orders of the District forum and decided to appeal.Suggest
him the highest authority where he could appeal if not satisfied again by the decision of the next
higher authority.
Q6. What is the quality mark provided to agricultural commodities and live stock products?
Q7. Name any two NGO’s engaged in protecting and promoting consumer’s interest.
Q8. Saroj wants to file a complaint where the value of goods or services in question along with the
compensation claimed amounts to 25 lakhs.
Q9. Mention when as a consumer you are not in a position to resolve your grievance under consumer
protection act.
Q10. Which consumer right gives the business firms freedom to set up their own consumer service and
grievance cells?
3 MARK QUESTION
Q11. Under three –tier machinery where can a legal heir or representative of a deceased consumer file a
complaint where the compensation claim is Rs. 25 lakh.
Q12. Reena purchased one litre of pure Deshi Ghee from a shopkeeper. After using it she had a doubt
that it is adulterated. She sent it for a laboratory test which confirmed that the ghee is adultrated.
State any six relief available to Reena, if she complaints and the consumer court is satisfied about
the genuineness of the complaint.
Q13. A shopkeeper sold you some spices, claiming that they were pure. Later a laboratory test formed
that those were adulterated what precautions should you have taken before buying and what
remedies are available to you for the wrong act?
Q14. Mr. Soni a consumer purchased medicines without noticing the date of expiry . He also did not
obtain the cash memo. Do you think he will be able to protect himself by the loss caused due to
expired medicines ? give reasons in support of your answer?
Q15. Mr. Verma who was a vegetarian went to a snack bar for having French fries and later found out
that it had non-vegetarian content. Neither the advertisement nor the packing of the product
displayed that the product has non-vegetarian content. Will Mr. Verma be able to claim
compensation which right of the consumer is violated here?
Q16. Harish purchased a medicine from Gupta Medical Stores for his son, who had high fever. Even
after giving the medicine his son’s condition did not improve and he had to be hospitalized.
Doctor informed Harish that the medicine given to his son was spurious. Harish complained about
this to Gupta Medical Stores. As a result, Gupta Medical Stores decided to file a complaint
against the manufacturer in the consumer court.
Can Gupta Medical Stores do this? Give reasons in support of your answer.
4 MARK QUESTION
Q17. What are the Responsibilities/Duties of a Consumer.
5 MARK QUESTION
Q18. Archit went to buy a pen from about Archit a stationery shop. He asked the shopkeeper for a
particular brand of pen. But the shopkeeper somehow forced to buy a pen of another brand. When
Archit got back home he was not satisfied with his purchase.
On the basis of the given information answer the following questions:
a) Identify and explain the right of consumer violated in above case.

b) Briefly explain the importance of consumer Protection from the point of consumer.
6 MARK QUESTION
Q19. As a well informed consumer. what kind of quality certification marks you will. Look for before
buying ‘products? Specify any 6.
Q20 What are the importance of consumer protection?

Chapter Name: - Controlling
Q.1 State the steps in the controlling process. 5 MARKS CBSE 2016 ALL INDIA,2014 DELHI
Ans. Steps in the controlling process are:

(i) The standards of performance are set which serve as the criteria against
which actual performance will be measured.
(ii) Actual performance is measured in an objective and reliable manner in the same units in
which standards are set.
(iii) Actual performance is compared with the standards to find out the deviation.
(iv) Deviations are analysed for their causes through Critical Point Control and Management by
Exception.
(v) Corrective action is taken if deviations go beyond the acceptable limits..
Q.2 Explain any five points which highlight the importance of controlling function of
management. 5 CBSE DELHI 2016 , CBSE 2014 DELHI
Ans. Importance of controlling (Any five points with explanation):

(i) Accomplishing organisational goals.
(ii) Making efficient use of resources.
(iii) Ensuring order and discipline.
(iv) Improving employee motivation.
(v) Judging accuracy of standards.
(vi) Facilitating co-ordination in action.
Q.3 State the relationship between ‘planning’ and ‘controlling’ functions of management. 5
CBSE FOREIGN 2016
Ans. Relationship between planning and controlling: (With explanation)

(i) Controlling takes place on the basis of standards developed by planning because if the
standards are not set in advance, managers have nothing to control.
(ii) Planning without controlling is meaningless because once a plan becomes operational,
controlling ensures that events conform to the plans.
(iii) Planning is prescriptive whereas controlling is evaluative because planning prescribes an
appropriate course of action while controlling evaluates whether decisions have been
translated into desired actions.
(iv) Planning and controlling both are forward looking because while plans are prepared for
the future, controlling seeks to improve the future on the basis of the past experience.
(v) Planning and controlling are both looking back because, while planning is guided by past
experiences, Controlling compares the actual performance with the standards set in the past.
Q. 4Explain the relationship between planning and controlling.CBSE 2014 OUTSIDE DELHI
Ans. Relationship between planning and controlling:

There is a close and reciprocal relationship between planning and controlling because:
1. Controlling is blind in the absence of standardswhich are provided by planning;
2. Planning without controlling is meaningless as controlling ensures that the events conform
to the plans.
3. Planning prescribes an appropriate course of action for achieving objectives whereas
controlling evaluates
whether decisions have been translated into desiredactions.
4. Planning and controlling are both forward-looking and looking back.
Q.5 Explain the various steps in the process of controlling. CBSE 2014 OUTSIDE DELHI
Ans. Steps in the process of controlling:

(i) Setting performance standards.
(ii) Measurement of actual performance.
(iii) Comparison of actual performance with the standards and analysing deviations.
(iv) Taking corrective action.
Q.5 Explain why it is said that controlling is a forward looking as well as backward looking
function. 3 marks CBSE 2013
Ans . Controlling is forward looking because corrective action in controlling seeks t o

improve the performance in the future or to revise future plans. Controlling is looking back
because it is like a post mortem of past activities t o find out deviations from t he standards.
Q.6 Explain ‘ Taking corrective action’ as a step of Controlling process. 3 marks CBSE 2013
Ans. If the deviations are within acceptable limits no corrective action is required.
When deviations go beyond the acceptable range especially in important areas, immediate
managerial attention is required so t hat the deviations do not occur again. If the deviations
cannot be corrected through managerial action, the standards may have t o be revised.
Q.7 'I-phone India Ltd.' is a manufacturer of advanced category of mobile phones. The
company trained its engineers from Japan. It markets its mobile phones domestically as well
as internationally. The company had a substantial market share and had a loyal customer
following because of quality of its i-phone. From the last financial year the company had
been unable to achieve its targets because of competition in the market. The company is
planning to revamp its controlling system,
(i) Identify the concepts of management involved in the above para.

(ii) State the steps of the revamped controlling process to be followed by the company to
solve this problem.
(iii) Also, state any one value which the company wants to
communicate to the society. 5 MARKS CBSE 2015 COMPTT.
Ans. (i)Staffing and Controlling.
(ii) The twosteps which must be followed by the company to solve
this problem are:
(a) Analysing deviations.
(b) Taking corrective action
(iii)Value which the company wants to communicate to the
society:(Any one)
(a) Serving the society by providing quality products.
(b) Growth and development.
Q.8 A company was manufacturing 'LED bulbs' which were in great demand.
It was found that the target of producing 300 bulbs a day was not met by the
employees. On analysis, it was found that the workers were not at fault.
Due to electricity failure and shortage of workers, the company was not
able to achieve the set targets and alternative arrangements were needed.
To meet the increased demand, the company assessed that approximately
88 additional workers were required out of which 8 would work as heads of
different departments and 10 would work as subordinates under each head.
The required qualifications and job specifications were also enlisted. It was
also decided that necessary relaxation should be given to encourage women,
persons from backward and rural areas and persons with special abilities to
assume responsible positions in the organisation. All efforts were made to
match the ability of the applicants with the nature of work.
(a) Identify the functions of management discussed above.
(b) State the two steps in the process of each function discussed in the above para.
(c) List any two values which the company wants to communicate to the society. 5 MARKS
CBSE 2015
Ans. (a) Staffing and controlling.
(b) Steps in Staffing:
(i) Estimating manpower requirements which involves knowing how
many persons are needed and of what type.
'To meet the increased demand. the company assessed that....
subordinates under- each head '.
(ii) Recruitment which involves searching for prospective employees
and stimulating them to apply for jobs in the organization
Steps in controlling :(Any two)
(i) Comparison of actual performance with the standards which would
reveal the deviation between actual and desired results.
'It was found that the target of producing 300 bulbs a day was not
met by the employees '.
(ii) Analysing deviations which would help to find out the causes of deviation. On analysis, it
was found that the workers were not at fault alternative arrangements were needed.
(iii) Taking corrective action, if required.To meet the increased demand. the company assessed
that approximately .... as subordinates under each head.
(c) Values which the company wants to communicate to the society: (Any two)
(i) Using environment friendly methods of production.
(ii) Women empowerment.
(iii) Upliftment of underprivileged sections of the society.
Q.9 'A.S. Ltd.' is a large company engaged in assembly of air-conditioners.

Recently the company had conducted the 'Time' and 'Motion' study and
concluded that on an average a worker can assemble ten air-conditioners in
a day. The target volume of the company in a day is assembling of 1,000
units of air-conditioners. The company is providing attractive allowances to
reduce labour turnover and absenteeism. All the workers are happy. Even
then the assembly of air-conditioners per day is 800 units only. To find out
statement the reason the company compared actual performance of each worker and
observed through C.C.T.V. that some of the workers were busy in gossiping.
(a) Identify the function of management discussed above.
(b) State those steps in the process of the function identified which are discussed in the
above paragraph. 3 MARKS CBSE 2015
Ans.(a) Controlling.
(b) Steps discussed in the above paragraph are :
(i) Setting performance standards
'Recently the company had conducted the 'Time' .... can assemble ten
air-conditioners in a day'. OR
'The target volume of the company in a day is assembling of 1,000 units of air-conditioners'.
Setting performance standards which are the criteria against which the actual performance
would be measured.
(ii) Measurement of actual performance
'Even then the assembly of air-conditioners per day is 800 units only'.
Measurement of actual performance with the standards in an objective and reliable manner.
(iii) Comparing actual performance with the standards
' ... the company compared actual performance of each worker'
Comparing actual performance with the standards to find out the deviation, if any .
(iv) Analysing deviations.
Q10. State any five points that highlight the importance of controlling. 5 MARKS CBSE 2017
Ans. Importance of controlling (any five):
(a) Accomplishing organisational goals It helps in accomplishing organisational goals by
bringing to light, deviations if any and indicating corrective action.
(b) Making efficient use of resources It helps in making efficient use of resources by ensuring
that each activity is performed in accordance with pre-determined standards.
(c) Ensuring order and discipline It ensures order and discipline among employees by
keeping a close check on their activities.
(d) Improving employee motivation It improves employee motivation as the employees’
know well in advance the standards of performance on the basis of which they will be
appraised.
(e) Judging accuracy of standards It helps in judging accuracy of standards in the light of
changes taking place in the organisation and in the environment.
(f) Facilitating coordination in action It facilitates coordination in action as each employee
and department in governed by pre-determined standards which are well coordinated with
one another.
Q.11 Describe briefly the steps in the process of controlling. 5 MARKS CBSE 2017
Ans. Steps in the process of controlling:
(i) Setting performance standards
(ii) Measuring actual performance
(iii) Comparing actual performance with standards
(iv) Analysing deviations
• Critical Point Control
• Management by Exception
(v) Taking corrective action
Q.11 Explain briefly the relationship between controlling and planning. 5 MARKS CBSE 2017
Ans. Ans. Relationship between planning and controlling: (With explanation)
(i) Controlling takes place on the basis of standards developed by planning because if the
standards are not set in advance, managers have nothing to control.
(ii) Planning without controlling is meaningless because once a plan becomes operational,
controlling ensures that events conform to the plans.
(iii) Planning is prescriptive whereas controlling is evaluative because planning prescribes an
appropriate course of action while controlling evaluates whether decisions have been
translated into desired actions.
(iv) Planning and controlling both are forward looking because while plans are prepared for
the future, controlling seeks to improve the future on the basis of
the past experience.
(v) Planning and controlling are both looking back because, while planning is guided by past
experiences, controlling compares the actual performance with the standards.
8 YEARS AISSCE
QUESTION PAPERS
BUSINESS STUDIES
DIRECTING
Q1. Give the meaning of 'supervision' as an element of directing. (1 MARKS)
Ans. Supervision implies the process of guiding and instructing the subordinates
towards achieving the desired goals. In other words, it implies overseeing the work of
the subordinates.
Q2. Give an example of ‘Employee Recognition Programmes’ as a non financial

incentive. (1 MARK)
Ans. Examples of ‘Employee Recognition Programmes are: (i) Congratulating the

employees for good performance. (ii) Displaying employees achievements on the
notice board or company’s newsletter. (iii) Awarding best performance.
Q3. What is meant by ‘Encoding’ as an element of communication? (1 MARK)
Ans. Encoding means converting the message into communication symbols such as
words, pictures, gestures, etc.
Q4. What is meant by ‘Democratic style of leadership’? (1 MARK)
Ans. Under Democratic leadership, the leader takes decisions in consultation with the
subordinates. He takes inputs and suggestions from the members of the group and
encourages them to participate in the decision-making process.
Q5. What is meant by ‘Motivation’? (1 MARK)
Ans. Motivation refers to a process of inducing and stimulating an individual to act in

certain manner. In the context of an organisation, motivation implies encouraging and
urging the employees to perform to the best of their capabilities so as to achieve the
desired goals of the organisation.
Q6. Define ‘communication’. (1 MARK)
Ans. Communication is defined as a process wherein ideas, feelings, facts, etc., are
exchanged among people. Communication forms the basis of management and fosters
coordination among various departments and individuals in the organisation for the
smooth functioning of an organisation.
Q7. Explain the concept of Motivation and Leadership. (1 MARK)
Ans. Motivation is the process of stimulating people to action to accomplish desired

goals. It is an internal feeling. Leadership is the process of influencing people so that
they strive willingly and enthusiastically towards the achievement of group goals. It is a
continuous process.
Q8. Explain briefly any three semantic barriers to communication. (3 MARKS)
Ans. The following are three semantic barriers: a. Inappropriate vocabulary:

Sometimes due to poor vocabulary or wrong use of words by the communicator, the
information may not be clearly expressed. b. Use of words that have multiple
meanings: Sometimes, a word may have more than one meaning; or two or more
words may have the same pronunciation (such as idle and idol). In such cases, the
correct interpretation of the word remains ambiguous. c. Lack of proficiency: In certain
cases, the proficiency of a language differs among the workers and the mangers. In
such cases, a translation of the information into another language may be required to
make it understandable to the workers. However, in the process of translation some of
the words or sentences may get misinterpreted. For example, in a translation of an
instruction from English to Hindi, the meaning of certain words might change.
Q9. Avdhesh is the Managing Director of Delta Ltd. The company had established a
good name for itself and had been doing well. It was known for timely completion of
orders. The Production Manager, Ms. Priyanka was efficiently handling the
processing of orders and had a team of ten motivated employees working under her.
Everything was going on well. Unfortunately, Priyanka met with an accident.
Avdhesh knew that in the absence of Priyanka, the company may not be able to
meet the deadlines. He also knew that not meeting the deadlines may lead to
customer dissatisfaction with the risk of loss of business and goodwill. So, he had a
meeting with his employees in which accurate and speedy processing of orders was
planned. Everybody agreed to work as team because the behaviour of Avdhesh was
positive towards the employees of the organisation. Everyone put in extra time and
efforts and the targets were met on time. Not only this, Avdhesh visited Priyanka
and advised her to take adequate rest. (a) Identify the leadership style of Avdhesh
and draw a diagram depicting the style. (b) Also, identify any two values highlighted
by the behaviour of Avdhesh. (3 MARKS)
Ans. (a) Democratic or Participative Leadership style (b) Values involved (i) Positive
attitude towards employees (ii) Considerate towards employees’ health and their well-
being.
Q10. Neha was a regional sales manager in 'Good Look Garments Ltd' for ten years.
On the retirement of the marketing manager Neha applied for the same post as she
was extremely ambitious and had dedicated all her energies to obtain the post of
marketing manager. However, the top management of the company decided to fill
this post by selecting a better person from outside the company. Because of this
Neha was heartbroken and her performance declined. When the new marketing
manager joined, one of her major problems was how to motivate and inspire Neha
to her former level of performance? Suggest any three non-financial incentives that
the new marketing manager may use to motivate Neha. (3 MARKS)
Ans. The non-financial incentives that the new marketing manager may use to
motivate Neha are: 1. Job enrichment which is concerned with designing jobs that
include a greater variety of work content, require higher level of knowledge and skill,
give more autonomy and opportunity for personal growth. 2. Employee recognition
which means acknowledgement with a show of appreciation. 3. Employee
participation which means involving employees in decision making of issues related to
them. 4. Employee empowerment which means giving more autonomy and powers to
subordinates. 5. Job security which refers to providing stability to the employees about
future income and work so that they do not feel worried on these aspects and work
with greater zeal.
Q11. How directing helps in efficient and effective functioning of the organisation?
Explain by giving any three points. (3 MARKS)
Ans. Directing helps in efficient and effective functioning of the organisation because:
(i) It helps to initiate action. (ii) It integrates employees’ efforts. (iii) It guides
employees to realise their potential. (iv) It facilitates changes. (v) It brings stability and
balance in the organisation.
Q12. Explain any three functions performed by a supervisor that are vital to any
organization. (3 MARKS)
Ans. Functions performed by a supervisor are: (i) Day to day contact with the workers.
(ii) Link between workers and management. (iii) Maintains group unity. (iv) Ensures
performance of work according to targets. (v) Provides on the job training to the
workers. (vi) Builds up high morale among the workers. (vii) Gives feedback to the
workers about their performance.
Q13. Explain any three assumptions of Maslow’s Need Hierarchy Theory. (3 MARKS)
Ans. According to Maslow’s Need Hierarchy Theory, within each individual, there exists
a set of five needs that can be arranged in a hierarchy. Knowledge of these needs
helps the manager in understanding the behaviour of employees. With identification
of the needs of employees, appropriate motivation can be provided to them. The
following are the three assumptions of this theory: i. People behave as per their need.
In other words, the satisfaction of people’s needs guides their behaviour. ii. Needs of
individuals can be arranged in a hierarchical order. That is, they can be ranked from
very basic to higher levels. iii. An individual can move to a higher level need only when
the lower level need in the hierarchy is satisfied.
Q14. Rahim was working in an enterprise on daily wages basis. It was difficult for
him to fulfill the basic needs of his family. His daughter fell ill. He had no money for
his daughter’s treatment. To meet the expenses of her treatment, he participated in
a cycle race and won the prize money. The cycle company offered him a permanent
pensionable job which he happily accepted. (i) By quoting the lines from the above
para identify the needs of Rahim that are satisfied by the offer of cycle company. (ii)
Also, explain two other needs of Rahim followed by above that are still to be
satisfied. (4 MARKS)
Ans. (i) Needs of Rahim that are satisfied by the offer of cycle company are
Physiological needs and Safety/ security needs ‘The cycle company offered him a
permanent pensionable job’. (ii) The other needs followed by the above stated needs
that are still to be satisfied are: (a) Affiliation/ Belongingness needs. These needs refer
to the need for affection, sense of belonging, acceptance and friendship. (b) Esteem
needs These needs refer to the need for self respect, autonomy status, recognition
and attention.
Q15. Explain any four semantic barriers of communication. (4 MARKS)
Ans. Semantic barriers of communication: (Any four) 1. Badly expressed message. 2.

Symbols with different meanings. 3. Faulty translations. 4. Unclarified assumptions. 5.
Technical jargon. 6. Body language and gesture decoding.
OR
Explain the role of supervision as an element of directing function of management.
Ans. Role of supervision: (Any six) 1. Involves issuing instructions. 2. Facilitates control.
3. Optimal utilisation of resources. 4. Maintenance of discipline. 5. Timely feedback. 6.
Improves communication. 7. Provides motivation
Q16. Blue Birds Ltd. offers to its employees to issue shares at a price which is less
than the market price. (i) Name and explain the type of incentive offered to the
employees. (ii) Explain one more incentive of the same category. (4 MARKS)
Ans. (i) The type of incentive that is being offered in the given scenario is Stock Option.
Under this, the shares are offered to the employees of the organisation at a price
which is less than the market price. It is a financial incentive that provides the
employees with a feeling of ownership and thereby induces them to contribute more
towards the growth of an organisation. (ii) Another incentive of the same category,
i.e., financial incentives is Retirement Benefits. Many organisations offer certain
retirement benefits to their employees such as pension, gratuity and provident fund. It
provides a sense of security and stability to the employees. It also acts as a motivating
factor for them to contribute to the organisational objectives in a better manner.
Q17. Huma is working in a company on a permanent basis. As per the job agreement
she had to work for 8 hours a day and was free to work overtime. Huma worked
overtime, due to which she fell ill and had to take leave from her work. No one
showed concern and enquired about her health. She realized that she was fulfilling
only some of her needs while some other needs still remained to be fulfilled. (i) By
quoting the lines from the above para, identify the needs of Huma which she is able
to fulfill. (ii) Also explain two other needs of Huma followed by the above needs,
which still remained to be satisfied. (4 MARKS)
Ans. (i) Needs of Huma followed by the above needs, which she is able to fulfill:
Physiological needs and safety/ security needs ‘Huma is working in a company on a
permanent basis’. (ii) Needs of Huma which still remained to be satisfied are: -
Affiliation/ belongingness needs These needs refer to the need for affection, sense of
belonging, acceptance and friendship. -Esteem needs These needs refer to the need
for self respect, autonomy status, recognition and attention.
Q 18. Mr. Fernandes is the owner of Unibie Enterprises, carrying on the business of
manufacturing electrical appliances. There is a lot of discontentment in the
organisation and targets are not being met. He asked his son, Michel, who has
recently completed his MBA, to find out the reason. Michel found that all decision
making of the enterprise were in the hands of his father. Moreover, his father did
not have confidence in the competency of the empolyees. Thus the employees were
not happy. (a) Identify any two communication barriers because of which 'Unibie
Enterprise' was not able to achieve its target. (b) State one more barrier each of the
types identified in part (a) above. (5 MARKS)
Ans. (a) The two communication barriers because of which Unibie Enterprise was not
able to achieve its target are: (i) Organisational Barriers: The type of organisational
barrier because of which Unibie Enterprise was not able to achieve its targets is 'Policy
of the organisation'. If the organisation’s policy (such as following a centralised
organisational structure) does not support free flow of communication, then it
hampers the flow of communication. For instance, in a centralised organisational
structure, free flow of communication is restricted. (ii) Personal Barriers: The type of
personal barrier because of which Unibie Enterprise was not able to achieve its targets
is 'Low confidence on subordinates by the superior'. When the superior does not have
confidence on the subordinates, he is unwilling to involve them in discussions and
other matters. This leads to a communication gap between the two.
(b) Types of Organisational Barrier Rules and regulations: Rigid rules and regulations
hamper effective communication. Such rules as following strict channels of
communication (through scalar chain) make the communication process cumbersome
and lead to delays in the flow of information. Types of Personal Barrier Fear: At times,
due to difference in status and authority, the subordinates fear their superior and
often hesitate to communicate freely with them. In such cases, the communication is
suppressed.
Q 19. Prateek is working in a multi-national company in Noida. He was running

temperature for the last many days. When his blood was tested, he was found
positive for malaria. He was admitted in the hospital and a blood transfusion was
advised by the doctors as his condition was very serious. One of his collegues sent a
text message to his superior 'Mr. B. Chatterjee'. Mr. B. Chatterjee, immediately sent
a text message to the employees of the organisation requesting them to donate
blood for Prateek. When the General Manager came to know about it he ordered for
fumigation in the company premises and for cleaning the surroundings. (a) From the
above para quote lines that indicate formal and informal communication. (b) State
any two features of informal communication. (c) Identify any two values that are
being communicated to the society in the above case. (5 MARKS)
Ans. (a) i) Informal Communication- "Colleague sent a text message to his superior"
"Mr. B. Chatterjee sent a text message to the employees of organisation requesting
them to donate blood" ii) Formal Communication- "When the General Manager came
to know about it, he ordered for fumigation in the company premises and cleanliness
of the surroundings" Note: Text messages and face to face conversations are
considered as informal communication.
(b) The features of informal communication are as follows:
i) Communication that flows without following the formal defined path ii) Arises out of
social interactions among the employees (c) The two values that are being
communicated to the society are as follows: i) Cleanliness of the surroundings ii)
Sympathy for employees.
Q20. ‘The organizations which are keen on developing effective communication,

should adopt suitable measures to overcome the barriers to communication and
improve communication effectiveness.' Suggest and explain any such five measures.
(5 MARKS)
Ans. Measures to overcome communication barriers: (i) Clarify the ideas before
communicating. (ii) Communicate according to the needs of the receiver. (iii) Consult
others before communicating. (iv) Be aware of the language, tone and content of the
message. (v) Convey things of help and value to listeners. (vi) Ensure proper feedback
(vii) Communicate for present as well as future. (viii) Follow up communications (ix) Be
a good listener.
Q21. Explain the following non-financial incentives. (i) Status (ii) Organisational
climate (iii) Career advancement opportunities
OR
Explain any four psychological barriers to effective communication. (6 MARKS)
Ans. The following are some of the non-financial incentives: i. Status: Rise in status in
terms of power, authority, responsibility provides a psychological boost to the
employees. These factors act as a major incentive to motivate them. For example, a
promotion may satisfy the esteem and self-actualisation needs of an individual. ii.
Organisational climate: Certain organisational characteristics such as employee
freedom, recognition of performance, incentives and rewards play an important role in
influencing the behaviour of employees. They serve as an incentive for employees to
put in greater efforts in work. For example, if the employees get due recognition for
their performance, it encourages them to work more efficiently. iii. Career
advancement opportunities: Many a times, a challenging job endowed with greater
responsibility and requiring higher knowledge and skills enhances the interest of the
employee. It provides him with the prospects for higher personal growth and
development. Thus, it proves to be a good source of motivation for him.
OR
Sometimes psychological factors such as frustration, anger and fright may also impede
effective communication. The following are some of the psychological barriers in
communication:
i. Preconceived notions: Sometimes, due to preconceived notions regarding a

conversation, an individual might derive conclusions even before the
information is completed. This acts a barrier in effective communication.
ii. Lack of attention: At times the individual is preoccupied with something else
and therefore remains inattentive while communicating. As a result, he is not
able to effectively grasp the information provided to him. This also results in
ineffective communication.
iii. Poor retention: When communication passes through multiple stages, there
may occur a loss of information in the process. Moreover, in cases where the
information is communicated orally, it might happen that the recipient may
not be able to retain the information, thus, acting as a factor affecting
communication.
iv. Lack of trust: In case where the communicator and the recipient do not trust
each other, the message may not be perceived in the original sense by either
of the two. This in turn adversely affects the communication.
Q22. ‘Leadership is a key factor in making any organisation successful’. Do you agree
with this statement? Give any four reasons in support of your answer.
OR
‘Every action in the organisation is initiated through directing.’ Explain any four
points of importance of directing in the light of this statement. (6 MARKS)
Ans. Yes, leadership is the key factor in making any organisation successful. The
following points highlight the benefits of good leadership that ensure the long-term
success of any organisation: i. Positive contribution: Good leadership always leads to
good results. This is due to the fact that a good leader motivates his followers to strive
voluntarily for the benefit of the organisation. He makes them positively contribute
their efforts towards the efficient completion of organisational goals. ii. Cordial
environment: A leader maintains cordial relationship with his followers and supports
them whenever needed. He motivates them to work in coordination and provides
them with the required confidence and encouragement, thereby maintaining a cordial
working environment in the organisation. iii. Introduce changes: When new policies or
changes are introduced in an organisation, it is generally observed that people resist to
these changes. Herein, a leader plays an important role by persuading and clarifying
the discontentment of his employees. He also overcomes the problem of resistance by
inspiring the employees to accept the changes open-heartedly. iv. Handles conflicts: A
good leader always handles the conflicts among his team members efficiently such
that it does not affect the working efficiency of his followers. He allows them to
discuss and express their feelings along with clarifying and persuading them by
providing appropriate reasons in case of discontentment.
OR
Directing is an important function of management that needs to be performed
throughout the life of an organisation. It refers to the process wherein employees of
an organisation are instructed, motivated and guided to achieve certain goals and
objectives. The managers here not only guide the workers on what and how to
perform the actions, but also keep a check on whether their instructions are being
correctly implemented or not. Infact, every action in organisation is initiated through
directing. The following points highlight the significance of directing in an organisation:
i. Achieving objectives: Directing is a function that sets the ball rolling. In other words,
it initiates the actions for any task that needs to be performed. It helps in stimulating
people to perform the actions in order to attain the organisational objectives. For
instance, if a subordinate has a problem regarding a particular task, his superior will
direct and guide him to the solution and thereby help him to attain the working
targets. ii. Integration of efforts: Directing combines the individual efforts of
employees and channelises them in the direction of achieving the organisational goals.
It integrates the energies of all the individuals working in an organisation towards the
common goal, thereby avoiding any conflicts or misunderstandings in the working
environment. This in turn ensures that the individuals work together to attain the
prescribed targets. iii. Employee development: By guiding the employees to work in
the right direction, directing promotes employee development. In other words,
directing help the individuals to realise their real potential by providing effective
motivation and leadership, thereby encourage them to put in their best efforts in
work. iv. Facilitates changes: The business environment is dynamic in nature and keeps
changing continuously. Usually, people working in an organisation resist to such
changes. These changes may be in terms of change in policies, technology, etc. In such
cases, effective directing proves to be beneficial as proper motivation and guidance
can reduce these resistances. In this regard, a good leader plays an important role as
he clears the doubts and persuades employees to accept the changes warmly. Thus,
directing plays an important role by helping an organisation to adopt the changes that
occur in the working environment.
Q23. What is meant by leadership? Explain any four qualities of a good leader.
OR
What is meant by directing as a function of management? Describe any four points

of its importance. (6 MARKS)
Ans. Leadership implies influencing the behaviour of the employees in such a manner
that they willingly work towards achieving the objectives of the organisation. The
following are the four qualities of a good leader:
1. Physical Attributes: People with good physical features such as height, appearance
and health are attractive. A healthy and active person can himself work hard and
efficiently and thereby has the capability of being looked up to. Thus, he can induce his
subordinates as well to work and perform better.
2. Honesty: A good leader should maintain a high degree of honesty. He should be

sincere and follow ethics and values. He should be an idol for others in terms of
honesty, integrity and values.
3. Intelligence: A leader must have a good presence of mind and knowledge. He should
be competent enough to effectively examine and solve the problems encountered in
the course of work. He must also have the required intelligence to take proper
decisions based on logic and facts.
4. Inspiration: A leader should be a source of inspiration and motivation to others.

That is, he must be exemplary in terms of work, performance and values. He must be
able to develop willingness among the subordinates to work to the best of their
capabilities.
OR
Directing refers to a process where employees of an organisation are instructed,
motivated and guided to achieve certain goals and objectives. The following four
points highlight the importance of directing:
i. Initiates action: Directing is a function that sets the ball rolling. That is, it initiates the
action of any task that is to be done. The employees in an organisation cannot start
working unless they are given proper instructions and directions as to what and how
the task is to be performed. Moreover, in the process of performing the task, proper
supervision and motivation helps the employees to achieve the targets and goals.
ii. Integration of efforts: Directing combines the individual efforts of the employees
and channelises them towards the common goals of the organisation. Every
organisation is composed of a number of employees who have different jobs assigned
to them and work at different levels. It is through directing that their efforts are
coordinated and integrated towards the common goals of the organisation.
iii. Employee development: By guiding the employees to work in the right direction,
directing promotes employee development. Proper motivation and leadership
encourage the employees to work to the best of their capabilities. Directing brings
about a sense of belongingness among the employees towards the organisation and
thereby encourages them to give their best.
v. Facilitates Changes: Directing helps an organisation to adopt the changes

that occur in the working environment. Usually, people working in the
organisation resist to such changes. Effective directing, through proper
motivation and communication, helps in reducing the resistance of the
employees towards the change.
PREPARED BY SANJAY KUMAR SHAW (PGT COMMERCE)

K.V.SANTRAGACHI
Case Studies
Directing
Q. 1. Ayesha Ltd. Assured their employees that in spite of recession no worker will be retrenched
from the job.
(i) Name and explain the type of incentive offered to the employees.
(ii) Explain one more incentive of the same category.
Ans. (i) Job security
Employee‟s recognition.
Organizational climate.
Q. 2. Blue Birds Ltd. Offers to its employees issue of shares at a price which is less than the
market price.
Ans. (i) Co-partnership/Stock option.
(ii) Other incentives: (a) Pay and allowance, (b) Bonus.
Q. 3. ABC Ltd. Is not able to achieve its objective on analyzing, they found that employees were
not given their best, so he decided to announce an incentive plain, which offers various incentives
to employee workers at different level for achieving their target.
(i) Which element of directing is used by manager?
(ii) Suggest incentive suitable for:
Employees operating at lower level.
Employees operating at higher level.
Ans. (i) Motivation is missing.
(ii) (a) Lower level: offer monetary incentives.
(b) Higher level: non-monetary incentive.
Q. 4. Mr. John faced lot of problems regarding the policy on teaching. He directly consulted the
principal about his problem ignoring the Headmistress who is immediate superior of Mr. John as
he feels more free to communicate with principal.
(i) Name the pattern of communication followed by Mr. John.
(ii) State any other two patters.
Ans. (i) Mr. John is following inverted „V‟ pattern.
(ii) Other two pattern:
Wheel pattern, (b) Chain pattern.
Q. 5. Is directing required at planning stage? Name the element of directing function under
which:
(i) the superiors oversee the activities of their subordinates.
(ii) the superiors assure the subordinates that their needs will be taken care of.
(iii) the superior attempts to influence the behavior of people at work towards the realization of
specified goals.
(iv) the superior share information with the subordinates in order to reach common
understanding. (3 Marks)
Ans. No, directing is not required at planning stage since it is an executive function. It initiates
action in the organization while other functions of management (planning, organizing, staffing and
controlling) just prepare a setting for action.
Supervision (ii) Motivation (iii) Leadership (iv) Communication.
Q. 6. Amit and Mikki are working in the same organization but in different departments. One day
at lunch time Mikki informed Amit that due to computerization some people are going to be
retrenched from the organization.
Name which type of communication is this. State any two limitations of this type of
communication. (3 Marks)
Ans. Informal Communication
Limitations:
The grapevine/informal communication spreads rapidly and sometimes gets distorted. It is very
difficult to detect the source of such communication.
It also leads to generate rumours. People‟s behavior is affected by rumours and informal
discussion and sometimes may hamper work environment.
Q. 7. You are working at the middle level of management. Your superior, a top management
personnel, sent a message for you which you received and well understood. Is the
communication process complete? Give reason. (3 Marks)
Ans. No, the communication process is not complete unless and until feedback is given to the
superior. Feedback includes all those actions of the receiver indicating that he has received and
understood the message of sender. So, I must respond to communication to improve its
effectiveness, e. g., by giving a reply to letter, giving reactions to the message, etc.
Q. 8. Rakesh is working under his superior Neeraj. He always communicates useful ideas and
suggestions to his superior regarding reduction of cost, improvement in the product, etc. Neeraj
implements his suggestions and has always found favourable results, but he never appreciates
Rakesh for his suggestions. Now Rakesh decided not to communicate any suggestion or idea to
Neeraj. Identify the factor which acts as a communication barrier. (1 Marks)
Ans. Lack of proper incentives (Personal Barriers to Communication)
Q.9. Ankur is working as a production manager in an organization. His subordinate Saurabh
discussed with hi a method o production which will reduce the cost of production. But due to
some domestic problems and Ankur‟s mind being pre-occupied he is not in a position to
understand the message. Saurabh got disappointed by this. Identify the factor which acts as a
communication barrier. (1 Marks)
Ans. Lack of attention (Psychological/Emotional Barriers to Communication)
Q.10. Rajat a Sales Manager, achieved his sales target one moth in advance. This achievement
as displayed on the notice board and the CEO of the Company awarded a certificate for the best
performance to him. Name the incentive provided to Rajat. (1 Marks)
Ans. The incentive provided to Rajat is – „Recognition‟.
Q. 11. A behavior study was done on total of 100 employees of an organization. Group A (of 50
employees) were appreciated by the manager for their work and initiative for new idea. All these
employees were given option of flexible working hours and were paid wages at a higher piece
rate. On the other hand, Group B (of remaining 50 employees) was criticized for their poor
performance. Their increments were stopped and they were paid wages at a lower piece rate.
(a) Identify and explain the feature of motivation highlighted in the above case.
(b) What type of leadership is followed by the manager? Justify your answer. (4 Marks)
Ans. Motivation can be either positive or negative. Positive motivation provides positive rewards
like increase in pay, promotion, recognition, etc. Negative motivation uses negative means like
punishment, stopping increments, threatening, etc.
Autocratic leadership style. The leader‟s following is based on the assumption that reward or
punishment both can be given depending upon the result.
Q. 12. In a company, Mr. Kshitij always explains management policies to workers and brings
workers‟ problems to the notice of management. At what post does Mr. Kshitij work in this
company? (1 Marks)
Ans. Mr. Kshitij is supervisor in the company as he acts as a link between workers and
management.
Q. 13. Prachi is working in an MNC. She has been given an option to buy the shares of the
company at an amount less than the market price because of her performance as an incentive.
Identify which incentive is being given to her. (1 Marks)
Ans. Co-partnership/Stock option.
Q. 14. Ms. Snigdha, Production Manager and Mr. Sarthak, Marketing manager of an electronics
company are not on talking terms with each other. Because of that they do not transfer complete
information to each other.
(a) Identify the element of directing which becomes ineffective due to the behavior of the
managers.
(b) Also, explain the factor which led to their such behavior. (3 Marks)
Ans. (a) Communication
Distrust (Psychological barrier)
Distrust between sender and receiver causes failure of communication.If they do not believe each
other, they cannot understand each other‟s message in its original sense.
Q. 15. Huma is working in a company on a permanent basis. As per job agreement she had to
work for 8 hours a day and was free to work overtime. Huma worked overtime, due to which she
fell ill and had to take leave from her work. No one showed concern and enquired about her
health. She realized that she was fulfilling only some of her needs while some other needs still
remained to be fulfilled.
(i) By quoting the lines from the above para, identify the needs of Huma which she is able to fulfil.
(ii) Also explain two other needs of Huma followed by the above needs, which still remained to be
satisfied.
Ans. „Huma is working in a company on a permanent basis‟.
According to above line Huma is able to fulfil her following needs:
(a) Physiological needs(b) Safety or Security needs
(ii) Needs of Huma which still remained to be satisfied are:
Affiliation Need: It refers to the need for affection, since to belongingness, acceptance and
friendship.
Esteem Need: It refers to the need for self-respect, autonomy, status, recognition and attention.
Q. 16. Mr. Nath, a recently appointed production manager of Suntech Ltd. Has decided to
produce jute bags instead of plastic bags as these are banned by the government. He set a
target of producing 1000 jute bags a day. It was reported that the employees were not able to
achieve the target. After analysis he found that employees were demotivated and not putting in
their best for achieving the target. Mr. Nath‟s beaviour is good towards the employees. His
attitude is always positive. So he announced various incentive schemes for the employees like;
Installing award or certificate for best performance.
Rewarding an employee for giving valuable suggestion.
Congratulating the employees for good performance.
Identify the functions of management highlighted in the above paragraph.
State the „incentive‟ under which the employees are motivated.
State any two values which the production manager wants to communicate to the society by his
work and behavior.
Ans. Directing and Controlling
Employee recognition programme (non-monetary incentive)
Vale:
Sensitivity of environment
Good behavior towards employees.
Q. 17. NOTICE
A meeting of all supervisors is scheduled on 20th August, 2016
This notice was placed on the notice board in the reception area of XYZ Ltd. But it did not
mention clear specification regarding the time of meeting. Which barrier of communication is
referred to here? Explain any two other forms of barriers to effective communication under the
same category. (5 Marks)
Ans. Badly expressed message (Semantic barriers) – Use of wrong words, omission of needed
words, inadequate vocabulary, etc.
Symbols with different meanings: A work may have several meanings. For example, consider
these three sentences where the work „value‟ is used:
What is the value of this ring?
I value our friendship.
What is the value of learning compute skills?
Wrong perception by the receiver leads to communication problems.
Faulty translations: Sometimes, the communications originally drafted in one language (say,
English) need to be translated to the language understandable to workers (say, Hindi). If the
translator is not proficient with both the languages, communication becomes ineffective.
Q. 18. Mr. Sandeep is the marketing manager of a company manufacturing designer clothes.
One day, in the morning while leaving home he had a quarrel with a person in his neighbourhood
on some issue. That person is a criminal who could abuse his family members. Mr. Sandeep, on
that day, is very worried and angry too on the behavior of the neighood person. On that day, a
meeting was held by a team of marketing and design experts to ensure that whatever is produced
is according to market demand and tastes and fashion of the customers. But Mr. Sandeep could
not pay attention to the discussion between them.
(a) Identify the type of barriers to communication mentioned in the above para. Justify your
answer.
(b) Explain any two such barriers to communication.
Ans.
Psychological barriers.
These are related to the state of mind of both sender and receiver of communication.For
example, a worried person cannot communicate properly and an angry receiver cannot
understand the real meaning of message.
„Mr. Sandeep is very worried and angry on that day.So he could not pay attention to the
discussion in the meeting.‟
Psychological barriers to communication:
Lack of attention: the pre-occupied mind of receiver and the resulting non-listening of message
acts as a major psychological barrier.
Premature evaluation: Sometimes people form a judgement before the sender completes his
message, which causes failure of communication.
Q. 19. Mrs. Rajlaxmi is working as the Human Resource Cosultant in a firm manufacturing
cosmetic, which is facing a problem of high employee urnover. The CED of the company has
invited suggestions from her for retaining the talented employees & reducing the employee
turnover. Mrs. Rajlaxmi recommends that the good employees be rewarded in a way that it
creates a feeling of ownership among the employees and at the same time makes them
contribute towards the growth of the organization.
(a) Identify the incentive and explain its type, which has been suggested by Mrs. Rajlaxmi to the
CEO of the company.
(b) Also explain any two other incentives of the same type.
Ans.
Financial incentive.
Co-Partnership/Stock Option
Other financial incentives:
Pay and allowances: For every employee, salary is the basic financial incentive. It includes basic
pay, dearness allowance and other allowance. Pay hike and increments improve performance
level of employees.
Profit sharing: Employees are given a share in the profits of the organization. This motives them
to improve their performance and contributes to increase in profits of the organization.
Q. 20. Mr. Bhuvan is the marketing manager of the company manufacturing designer clothes.
One day in the morning while leaving home, he had a quarrel with the person in the
neighbourhood. That person abused his family and threaten to harm the family. Mr. Bhuvan got
very upset and worried. On the same day a meeting was organized in the office to finalise the
design according to market demand and taste the fashion of the customers. Mr. Bhuvan could
not pay attention to the discussion as he was thinking about the quarrel only.
(a) Identify the type of barrier to communication mention in the above para.
(b) State any other two barriers of same category.
Ans.
Psychological barrier Lack of attention.
(i)Premature evaluation
(ii) Loss by poor retention.
Q. 21. Rajiv is working as Personal Manager in a company. The specialty of the company is that
financial position of all the employees is good. The employees working here are honest punctual
and hardworking. The CEO of the company asked him to suggest a method of motivation. The
CEO asked him to suggest a method which is happily accepted by all the employees.
Rajiv spoke to many employees in this connection. Some employees suggested give more
importance to individual autonomy, another suggested good performance should be appreciated
another group suggested to award, certificate, trophies to recognize the good performance. Mr.
Rajiv mixed all and suggested a method of motivation to CEO. The CEO happily accepted that
and it was immediately implemented. With in few days the company‟s growth rate appeared to
have become fast.
Identify the functions of management indicate in the above paragraph.
Which motivation methods were suggested by different group of employees.
Which motivation method combine all the above stated and was suggested by personal
manager.
Ans.
Directing.
(i) Recognition
(ii) Autonomy
(i) Ethical behavior
(ii) Motivating employees
(iii) Taking Suggestions from employing.
Q. 22. Pramod was a supervisor at a „Annapurna Aata‟ factory. The factory was producing 200
quintals of Aata every day. His job was to make sure that the work goes on smoothly and there
was no interruption in production. He was a good leader who would give orders only after
consulting his subordinates and work out the policies with the acceptance of the group.
Identify and describe the leadership style being adopted by Pramod.
Ans. Democratic style of leadership.
A democratic leader favours decision making by the group. This improves the attitude of the
Using this style is of mutual benefit – it allows them (subordinates) to become part of the team
and helps leaders (seniors) to make better decisions.
Q. 23. Neeraj, a sales representative of „Omida Ltd‟ has changed seven jobs in the last one
year. He is a hard working person but is not able to finalise deals with the customer due to his
inadequate vocabulary and omission of needed words. Sometimes he uses wrong words
because of which intended meaning is not conveyed. All this created a mis-understanding
between him and his cliens.
(a) Identify the communication barrier discussed above.
(b) State the category of this communication barrier.
(c) Explain any other communication barrier of the same category.
Ans.
Badly expressed message
Semantic barrier, which arises from problems and obstructions in the process of encoding and
decoding of message into words or impressions.
Technical jargon; Specialists use technical language or jargon while explaining to the workings,
e.g., tariff, quotas, etc. therefore, they may not understand the actual meaning of many such
words.
Q. 24. Smita had been working as an assistant manager with „Johnson Enterprises‟ for the last
ten years. She was very popular amongst her colleagues because of her commitment and
dedication towards the work. When the manager senior to her retired, all her colleagues thought
that now Smita would be promoted. But to everyone‟s surprise the vacant post was filled by an
outsider, Mrs. Rita. Smita felt demoralized and her performance started declining. She would
abstain herself often and could not meet her targets.
Mrs. Rita was a good leader, who would not only instruct her subordinates but would also guide
and inspire them. She noticed Smita‟s hebaviour and felt that her performance could be
improved. She started involving Smita in decision making-issues related to the organization and
made her a part of high level joint-management committed. Smita was now punctual in office and
her performance started improving.
Name the element of the above function of management which helped Rita to improve Smita;s
behavior.
Ans.
Directing
Motivation
Features of motivation:
Motivation is an internal feeling: The urge, desires, aspirations or needs of people, which are
internal, influence human behavior.
Motivation produces goal-directed behavior: For example, if the employee is interested in
promotion, it helps to produce a behavior to improve performance.
Motivation can be either positive or negative: Positive motivation provides positive rewards like
increase in pay, promotion, recognition, etc. negative motivation uses negative means like
Q. 25. Rahim was working in an enterprise on daily wages basis. It was difficult for him to fulfill
the basic needs of his family. His daughter fell ill. He had no money for his daughter‟s
treatment. To meet the expenses of her treatment, he participated in a cycle race and won the
prize money. The cycle company offered him a permanent pensionable job which he happily
accepted.
(i) By quoting the lines from the above para identify the needs of Rahim that are satisfied by the
offer of cycle company.
(ii) Also, explain two other needs of Rahim followed by above that are still to be satisfied.
Ans.
Needs of Rahim that are satisfied by the offer of cycle company are Physiological and
safety/security needs.
„The cycle company offered him a permanent pensionable job‟.
The other needs followed by the above stated needs that are still to be satisfied are:
Affiliation/Belongingness needs: These needs refer to the need for affection, sense of belonging,
acceptance and friendship.
Esteem needs: These needs refer to the need for self-respect, autonomy status, recognition, etc.
Q. 26.Y Ltd. Is a bank functioning in India. It is planning to diversify into insurance business.
Lately, the government of India has allowed the private sector to gain entry in the insurance
business. Previously, it was the prerogative of LIC and GIC to do insurance business. But now
with liberalization of the economy and to make the field competitive other companies have been
given licences to start insurance business under the regulation of „Insurance regulatory and
development Authority‟.
Y Ltd. Plans to recruit high quality employees and agents and exercise effective direction to
capture a substantial part of life and non-life insurance business.
Identify how the company can supervise its employees and agents effectively.
What financial and non-financial incentives can the company use for employees and agents
separately to motivate them?
How can the company ensure that higher order needs i.e., esteem and self actualization as
specified by Maslow are met?
How can the company follow formal communication system?
How can informal communication help to supplement formal communication?
Ans.
The company will appoint supervisors who will provide on the job training to the employees and
agents. They will maintain group unity and ensure that the company gets enough insurance
business.
To the employees, the company can give pay and allowances, bonus, retirement benefits,
perquisites (e.g., car allowance),recognisation, promotion, job security etc. to motivate them for
higher performance.
To the agents, the company can give the following incentives:
Profit sharing
Stock option (i.e., giving company‟s share at a price less than market price)
Productivity linked salary (i.e., higher salary for getting more insurance business)
Participation in decision – making.
By giving recognition, autonomy status, etc. and providing growth and self-fulfillment
opportunities, the company ensures that higher order needs-esteem and self actualization needs
are met.
The company can follow formal communication system by ensuring that all communication flows
through official channels designed in the organization chart (i.e., through Scalar chain).
Information communication network (i.e., grapevine) can be used by the company to transmit
information to know he reactions of the employees and agents to the company‟s decisions and
policies. Grapevine channels can carry insurance market information rapidly.
Q. 27. Prateek is working in a multinational company in Noida. He was running a temperature for
the last many days. When his blood was tested, he was found to be positive for malaria. He was
admitted in a hospital and a blood transfusion was advised by the doctors as his condition was
very serious. One of his colleagues sent a text message to his superior, Mr. B. Chatterjee. Mr. B.
Chatterjee immediately sent a text message to the employees of the organization requesting
them to donate blood for Prateek. When the General Manager came t o know about it, he ordered
for fumigation in the company premises and cleaning the surroundings.
From the above paragraph, quote lines that indicate formal and informal communication.
State any two features of informal communication.
Identify any two values that are being communicated to society in the above case.
Ans.
(i) Informal communication: “One of his colleagues sent a text message to his superior, Mr. B.
Chatterjee. Mr. B. Chatterjee immediately sent a text message to the employees of the
organization requesting them to donate blood for Prateek.”
(ii) Formal communication: “When the general manager came to know about it, he ordered for
fumigation in the company premises and cleaning surroundings.”
The features of informal communication are as follows:
The grapevine/informal communication spreads very fast and sometimes gets distorted.
It is very difficult to detect the source of such communication.
The two values that are being communicated to the society are:
Humanity
Cleanliness
Q. 28. Roshan is the chief of „Khidmat‟ restaurant located in the city of Bangaluru. The place is
known for its exquisite Mughlai cuisine especially mutton briyani and kababs. All the food is
prepared under Roshan‟s purview. The various activities in the kitchen are initiated in
accordance to his instructions. He is very clear and specific in issuing instructions to his
subordinates in order to ensure smooth working of the department. He personally oversees the
method followed by the chefs for preparation of each dish. He misses no opportunity to praise his
subordinates for their good work. All his team members feel very happy and satisfied under his
direction. He provides constant guidance to them in order to improve upon its taste and
presentation and also encourages them to innovate and be more creative in their work.
In the above context:
Identify the various elements of directing mentioned in the above paragraph by quoting lines from
the paragraph.
Describe briefly any two points to highlight the importance of directing as a function of
management.
Ans.
The various elements of directing mentioned in the above paragraph are as follows:
Communication: „He is very clear and specific in issuing instructions to his subordinates in order
to ensure smooth working of the department.”
Supervision: “He personally oversees the method followed by the chefs for preparation of each
dish.”
Leadership: “He provides constant guidance to them in order to improve upon its taste and
presentation and also encourages them to innovate and be more creative in their work.”
Motivation: “He misses no opportunity to praise his subordinates for their good work.”
The importance of directing as a function of management is described below:
Initiates action: Directing helps to initiate action by people in the organization towards attainment
of desired objectives. It is the first execution function of management.
Integrates employees’ efforts: Directing seeks to integrate the individual efforts of employees in
the organization towards the realization of the organizational goals.
Helps to realize their potential: Directing provides effective guidance, motivation and leadership to
the employees so as to enable them to realize their potential and capabilities. (any two)
Q. 29. Neeraj has been working as a sewing machine operator in an export house for the past
ten years. His basic work is to seam the parts of a garment together, and attach buttons, hooks,
zippers, and accessories to produce clothing. Considering the fact that Neeraj is an experienced
operator, he is well versed with the fundamentals of industrial production and possesses good
communication skills. The plant superintendent in the factory recommends Neeraj‟s name to the
production manager for the post of supervisor which will fall vacant after a month on the
retirement of the present supervisor. Consequently, Neeraj is assigned the post of supervisor
and his salary is increased accordingly. Moreover, as per the policy of the export house, he is
offered free medical aid and education to his two children.
In the context of the above case:
Identify the type of source of recruitment used by the export house to fill up the post of
supervisor. Give any two advantages of using this source.
Identify the types of financial incentives offered to Neeraj by quoting lines from the paragraph.
Ans.
The internal source of recruitment has been used by the export house to fill up the post of
supervisor through promotion. The two advantages of using internal source of recruitment are
stated below.
Employees are motivated to improve their performance: When employees are promoted internally
from within an organization, it has a positive impact on their commitment and loyalty and they
tend remain satisfied with their jobs. Also, it may lead to a chain of promotion at lower levels in
the organization. As a result, it motivates the employees to improve their performance through
learning and practice.
Internal recruitment simplifies the process of selection and placement: The candidates can be
appraised more perfectly and economically as that are already working in the organization. As
the candidates are already known to the organization, it is considered to be a more reliable
method of recruitment.
The types of financial incentives offered to Neeraj are as follows:
Pay and allowances: “his salary is increased accordingly.”
Perquisites: “as per the policy of the export house, he is offered free medical aid and education to
his two children.”
Q. 30. Sunidhi has started a designer studio in the basement of her residence after completing
her masters in fashion designing. She has appointed ten employees to take care of the various
aspects of the work. She interacts regularly with each employee to tell exactly what is expected
of him/.her and what he/she needs to do to be regarded as a good performer. At the same time
she allows a free work environment wherein the employees openly chit chat with each other in
order to fulfil their social and emotional needs. Sometimes, these interactions also lead to
spreading rumours which are not authentic.
Name and explain the two types of communication being referred to in the above paragraph.
How does effective communication increases managerial efficiency?
Ans.
The two types of communication being referred to in the above paragraph are formal
communication and informal communication.
Formal communication: The communication that flows through official channels designed in the
organization structure is called formal communication. This communication may take place
between a subordinate and superior or among same team employees or managers. Usually a
written record of such communications is maintained, recorded and filed in the office. Formal
communication may be further classified as – Vertical and Horizontal.
Informal communication: Informal communication is the type of communication that takes place
without following the formal lines of communication. It is generally referred to as the „grapevine‟
because it spreads throughout the organization with its branches going out in all directions in utter
disregard to the levels of authority. The informal communication arises out of needs of
employees to exchange their views, which cannot be done through formal channels.
Effective communication increases managerial efficiency by lubricating the working of the entire
organization through quick and effective performance of managerial functions. It enables the
management to express the goals and targets, issue instructions, allocate jobs and
responsibilities and look after the performance of subordinates.
Q. 31. Gagan has joined as a Managing Director of True Help Ltd., a company engaged in the
business of providing road side assistance to the vehicle owners. He was previously working in
an automobile company. As a part of the joining incentive, the company has allotted him 400
shares of the company.
In context of the above case:
Identify the type of source of recruitment used by True Help Ltd. to fill up the post of Managing
Director.
Identify the type of financial incentive offered to Gagan. Also, state any one other method that
can be used to offer financial incentives to the employees.
Ans.
External source of recruitment has been used by True Help Ltd. to fill up the post of Managing
Director.
Co-partnership/ Stock option is the type of financial incentive offered to Gagan.
The other method that can be used to offer financial incentives to the employees is Bonus. Bonus
is an incentive offered over and above the wages/ salary to the employees.
Q. 32. Mr. Naresh is working as a Production Manager in Vohra Ltd. His subordinates are
mostly engineers and qualified technicians.
As a manager, he is very strict, does not listen to any suggestions or feedbacks given by his
subordinates. He expects them to following his instructions without any questions and does not
allow them to give suggestions.
What leadership style does the manager follow?
Is such a leadership style beneficial for the company? Explain.
State any one value being overlooked by him? (4 marks)
Ans.
Autocratic leadership
This leadership style is effective in getting productivity in many situations like in a factory where
the supervisor is responsible for production on time and has to ensure labour productivity. Quick
decision-making is also facilitated.
Value overlooked:
Respect for other‟s opinion
Initiative
FINANCIAL MARKET
01 MARK QUESTIONS
1.What is meant by Financial Market?
2.What is the Primary aim of Financial Market?
3.State two major segments of Financial Market.
4.State any one consequence of a well-performed ‘allocative Function’ of Financial market.
Answer – 1.The rate of return offered to household is higher.2.Scarce resources are allocated to
firms which offer higher productivity to the economy.
5.What is allocative function of Financial Market?
Answer – helps to link the savers and borrowers by mobilizing funds between them. It directs or
allocates funds available to the most productive investment opportunity.
6.Give the meaning of Capital Market
7.What is ‘call money’
8.What is meant by offer through prospectus?
9.Give the meaning of ‘secondary market’.
10.What is ‘demat account’.
11.In which two cases a company making an Initial Public Offer is not required to issue prospectus?
Ans-1. Offer for sale 2.private placement
12.Meca Ltd. A reputed automobile manufacturer needs Rs.10 Cr. As additional capital to expand its
business. Anu Jalan, the CEO of the Company wanted to raise funds through equity .on the other
hand the Finance Manager,Nimi Sahdev said the public issue may be expensive on account of
various mandatory and non mandatory expenses therfore, it was decided to allot the securities to
institutional Investors.
Answer- Private Placement
13.What are the listing requirements for a company in the stock exchange ?
Ans – company has to furnish detailed information about its affairs, both financial and non financial
to the stock exchange authorities.
14. Name two Depository in India.

03/04 Marks Questions
1.These Days, development of a country is also judged by its system of transferring finance from the
sector where it is in surplus to the sector where it is neede most. To give strength to the economy,
SEBI is undertaking measures to develop the capital market. In addition to this, there is no other
market in which unsecured and short term debt insturuments are actively traded everyday. These
markets together help the savers and investors in directing the available funds into their most
productive investment opportunity.
(a) Name the functions being performed by the market in the above case.
(b)Name the market segment other than the capital marketsegment in which unsecured and short
term debt instruments are traded. Also give any three pointsof difference between the two
Answer – A)allocative function (b)money market
2.Mission coach India Ltd. Is a large and credit worthy company manufacturing coaches for Indian
railways. It now wants to export these coaches to other countries and decides to invest in new
hitech machines. Since the investment is large, it requires long term finance. It decides to raise funds
by issuing equity shares the issue of Equity shares involves huge floatation cost. To meet the
expenses of floatation cost, the company decides to tap the money market.
(a) Name and explain the money market instrument the company can use for the above purpose.
(b)What is duration for which the company can get funds through this instuments ?
(c) State any other purpose for which the instruments can be used.
Answer – (a) Commercial Paper (b) 15 days to 1 year (c)seasonal and working capital needs
3.Give the meaning of’ secondary market.’
4.State the difference between Primary and Secondary Market.
5.explain the trading procedure in stock exchanges.
6.Explain the functions of SEBI.
7.What are the different methods which the company may adopt for the new public issue of shares.
Answer a) Right Issue b)public offer through prospectus c)offer for sale d)private placement
8.Close to 400 companies comprising 10% of listed entities have not shared key information like
Balance Sheet numbers, shareholding patterns with their shareholders. These companies continue
to be traded on stock exchanges despite failing to fulfill various conditions under listing agreement
with the bourses.
SEBI is considering imposition of penalties on such companies. What do you think are the values
behind SEBI taking such actions?
Answer – Objectives of SEBI

9.Explian different instruments of Money Market.
6 Marks questions
1.What are the functions of SEBI ? Explain them briefly
2.Why was the need for the establishment of the SEBI felt ? Explain the role of SEBI to fulfill this
need.
3.Explain these terms :- (a) Depository Participant (b) Depository (c) Demat Account
(d) Dematerialisation (e )Demutualisation
4. Differentiate Capital Market and Money Market.

Marking Scheme
2012
1. Correct explanation of any 5 points: ( 1x5)

I) It integrates group efforts.
II) Ensure unity of efforts.
III) Continuous process.
IV) Pervasive function.
V) Responsibility of all managers.
VI) A deliberate function.
2. 1 Mark for correct definition. 2 mark for importance.
I) Size of the organization.
II) Functional differentiation.
III) Specialisation.
2013
1. Correct explanation of five features of management. 1x5

i) Goal oriented process.
ii) Pervasive
iii) It is Multidimensional.
iv) Continuous process
v) Group activity.
vi) Dynamic function.
vii) Intangible.
2. Correct explanation of 4 objectives 1x4
VII) It integrates group efforts.
VIII) Ensure unity of efforts.
IX) Continuous process.
X) Pervasive function.
XI) Responsibility of all managers.
XII) A deliberate function.
4. Correct explanation of 5 points: 1x5
i) Creates dynamic organization.
ii) Helps in achieving personal objectives.
iii) Helps in development of society.
iv) Helps in achieving group goal.
v) Improves efficiency.
5. Lower or supervisory level 1 mark.
vi) Creates dynamic organization.
vii) Helps in achieving personal objectives.
viii) Helps in development of society.
ix) Helps in achieving group goal.
x) Improves efficiency.
7. Information should be provided. 1 mark.
Correct identification of any 2 social values 2 marks.
2014
1. 1 mark for correct meaning.
4. Correct explanation of 4 objectives. 1x4
2marks for two values
5. Correct explanation of 3 objectives 1x3 marks
2 marks for two values.
2015
1. 1 mark for correct meaning and 3 marks for three objectives.

2. Correct explanation of 3 social objectives 1x3
3. 3 marks for correct explanation with example.
4. 3 marks for correct explanation with example.
5. 3 marks for correct explanation of any three personal objectives.
xi) Creates dynamic organization.
xii) Helps in achieving personal objectives.
xiii) Helps in development of society.
xiv) Helps in achieving group goal.
xv) Improves efficiency.
8. 1 Mark for correct definition. 2 mark for importance.
i)Size of the organization.
ii) Functional differentiation.
iii) Specialisation
2016
1. Correct explanation of five features of management. 1x5
viii) Goal oriented process.
ix) Pervasive
x) It is Multidimensional.
xi) Continuous process
xii) Group activity.
xiii) Dynamic function.
xiv) Intangible.
3. 3 mark for correct explanation of efficiency.
XIII) It integrates group efforts.
XIV) Ensure unity of efforts.
XV) Continuous process.
XVI) Pervasive function.
XVII) Responsibility of all managers.
XVIII) A deliberate function.
xvi) Creates dynamic organization.
xvii) Helps in achieving personal objectives.
xviii) Helps in development of society.
xix) Helps in achieving group goal.
xx) Improves efficiency.
6. 1 mark for correct definition and 3 marks for feature of management as art.
2017
1. 3 marks for correct explanation

2. 1 mark for correct definition.
Business Studies
Nature and significance of management
Previous 6 years questions
2012
1. Explain any 5 features of co-ordination.
2. What is meant by co-ordination? Explain any 2 points of its importance in
management.
2013
1. Explain briefly any 5 feature of management.
2. Management seeks to achieve certain objectives. explain this objectives.
3. Explain any 5 features of co-ordination.
4. Describe any 5 reason which clarify that management is gaining importance
day by day.
5. At Which level of management directing takes place?
6. State any five points which highlights the importance of management.
7. Kayco ltd. Is manufacturing detergents. they decided to launch a new
range of herbal products. As they are in hurry, they have tested products
on animals only. the necessary information is missing on the package. The
management also plans to launch a new factory in a tribal area where the
required products are easily available and the labour man, women and
children are available for works at low wages in the absence of
development opportunities and schools.
a) Which values do you find for disturbing in the above Para?
b) Will the decision to install a new unit in a tribal area help society?
Highlight the social values involved in his decision.
2014
1. What is meant by “management of operations”?
2. What is meant by “management of people”?
3. What is meant by “management of work”?
4. XYZ power ltd. Setup a factory of manufacturing solar lanterns in a remote
village as there was no reliable supply of electricity in rural areas. The
revenue earned by the company was sufficient by the company day by
day, so the company decided to increase in the production to generate
higher sales. for this they decided to employee people from the near by
villages as very few job opportunities were available in that area. The
company also decided to open schools and crèches for the children’s of its
employees.
a) Identify and explain the objectives of management discussed above.
b) State any 2 values which the company wanted to communicate to
the society.
5. Mega ltd. Was manufacturing water heaters. In the 1st year of its
operations, the revenue earned by the company was just sufficient to
meet its costs. to increase the revenue, the company analysed the reason
of less revenues. After analysis the company decided:
a) To reduce the labour cost by shifting the manufacturing unit to a
backward area where labour was available at a very low rate.
b) To start manufacturing solar water heaters and reduce the
production of electric water heaters slowly .this will not only help in
covering the risks ,but also help in meeting other objectives too.
i. Identify and explain the objectives of management discussed
above.
ii. State any two values which the company wanted to
communicate to the society.
2015
1. What is meant by “management”?state any three objective of
management.
2. Explain, how management helps in the development of the society.
3. What is meant by “effectiveness” in management?
4. What is meant by “efficiency” in management?
5. How does management help in achieving personal objective? state.
6. State any four points that highlight the importance of management.
7. What is meant by co-ordination in management?
8. How does co-ordination ensure unity of action in management?
2016
1. Explain any four characteristics of management.
2. “Management is the process of getting things done”. state the meaning
of term “process” used in this statement.
3. “is management concerned only with doing the right task, completing
activities and achieving goals without taking into consideration the cost
benefit ”? give reason in support of your answer.
4. Describe any four characteristic of co-ordination.
5. Explain any 4 points of importance of management.
6. What is meant by “management ”? explains its any 3 features that
establish it as an Art.
2017
1. Volvo ltd. target to produce 10,000 shirts per months at a cost Rs.100/shirt.
The production manager achieved this target at a cost Rs.90/shirt. Do you
think the “production manager” is effective. Give one reason in support of
your answer.
2. Define co-ordination.
Questions appeared in business studies of class 12th 2017
Q. Differentiate between ‘formal’ and ‘informal ‘organization on the basis of ‘flow

of Communication’. 1marks
Ans. In a formal organization, communication takes place through the scalar chain while
in an informal organization flow of communication is not through a Planned route. It can
take place in any direction.
Give the meaning of ‘organizing as a process’. 1 marks

Ans. Organizing is the process of identifying and grouping the work to be performed,
assigning duties to job positions and establishing relationships for the purpose of
accomplishing objectives.
‘My Car Ltd.’ decided to set up its new car-manufacturing factory in the backward area
of West Bengal where very less job opportunities were available. People of that area
welcomed this effort of ‘My Car Ltd.’ The company also decided to provide facilities like
school, hospital, market etc.in the factory premises so that the people are attracted to join
the factory as workers.
‘My Car Ltd.’ started earning huge profit. Another competing company asked its
production manager Arvind to investigate the reasons of earning huge profits by ‘My Car
Ltd’. Arvind found that in both the companies there was systematic coordination among
the various activities to achieve organizational goals. Every employee knew who was
responsible and accountable to whom. The only difference was in his organization
communication took place only through the scalar chain where as ‘My Car Ltd.’ was
allowing flow of communication in all the directions as per the requirement which led to
faster spread of information as well as feed-back.
(a) Identify the type of organization which permits the flow of

Communication in all the directions in ‘My Car Ltd’.
(b) Also state an advantage of the type of organization identified in part
(a) Above.
(c) State any two values which ‘My Car Ltd.’ wants to communicate to the
society. 4 marks
Ans. (a) Informal organisation.

(b) Advantage of informal organisation: (Any one)
(i) It fulfills social needs.
(ii) It compensates for inadequacies in the formal organisation.
Q.Name the type of 'organizational structure' which promotes efficiency in
utilization of manpower. 1
marks
Ans. Functional structure is a type of organization structure which promotes
efficiency in utilization of manpower.
. 'Steelo Ltd.' decided to set-up its steel manufacturing factory in the backward area
of Orissa where very less job opportunities were available. People of that area
welcomed this effort of 'Steelo Ltd.' To attract people to work in its factory it also
decided to provide many other facilities like school, hospital, market etc. in the
factory premises. 'Steelo Ltd.' started earning huge profits. Another competing
company asked its production manager 'Aslam' to investigate the reasons of earning
huge profits by 'Steelo Ltd.' Aslam found that in both the companies there was
systematic coordination among the various activities to achieve organisational
goals. Every employee knew who was responsible and accountable to whom, The
only difference was that in his organisation communication took place only through
the scalar chain whereas 'Steelo Ltd.' was allowing flow of communication in all the
directions as per the requirement which lead to faster spread of information as well
as quick feedback.
(a) Identify the type of organisation which permits 'Steelo Ltd.' the flow of
communication in all the directions.
(b) State another advantage of the type of organisation identified in (a) above. (c)
State any two values which 'Steelo Ltd.' wanted to communicate to the society. 4
marks
Ans. (a) In Steelo Ltd., informal organization permits the flow of communication in
all the directions.
(b) The another advantage of informal organization is fulfillment of social needs. An
informal organization allows for personal communication beyond the officially
defined roles. This enables the employees to interact with like-minded colleagues.
This unofficial interaction provides a sense of belongingness among the employees
towards one another and towards the organization.
(c) The two values that ‘Steelo Ltd.’ wanted to communicate to the society are given
below. (i) Fulfilling social responsibility (ii) Working for benefits of employees
Q. To make the annual function of the school successful the principal of the school
divided all the activities into task groups each dealing with a specific area like
rehearsals, decoration, stage management, refreshments etc. Each group was placed
under the overall supervision of a senior teacher. Identify the function of
management performed by the Principal in doing so. 1 marks
Ans. Organizing
Q. State any three advantages of formal organization. 3Marks

Ans. Advantages of Formal organisation:
(a) It is easier to fix responsibility since mutual relationships are clearly defined.
(b) It avoids duplication of effort since there is no ambiguity in the role that each
member has to play.
(c) It maintains unity of command through an established chain of command
(d) It leads to accomplishment of goals by providing a framework for the operations
to be performed.
(e) It provides stability to the organisation because there are specific rules to guide
behaviour of employees.
Q. A company has been registered under the Companies Act with an authorized share
capital of Rs20,000 crores. Its registered office is situated in Delhi and manufacturing
unit in a backward district of Rajasthan. Its marketing department is situated in Bhopal.
The company is manufacturing Fast Moving Consumer Goods (FMCG).
(i) Suggest with the help of a diagram a suitable organization structure for the
company.
(ii) State any three advantages of this organization structure. 5Marks
Ans. Divisional Structure

Advantages of Divisional structure:
(i)Product specialization helps in development of varied skills.
(ii) Helps in fixation of responsibility.
(iii) Promotes flexibility as each division is autonomous. (iv) Facilitates expansion
and growth
State any one advantage of ‘Formal Organisation’. 1Mark
Ans. Advantages of formal organisation (Any one):

(i) It is easier to fix responsibility.
(ii) It avoids duplication of efforts.
(iii)It maintains unity of command
(iv) It leads to effective accomplishment of goals.
(v) It provides stability to the organisation.
Organising involves a series of steps in order to achieve the desired goals.” Explain
these steps. 6Mark
Ans. Steps in the process of organising:
(i) Identification and division of work.
(ii) Departmentalisation.
(iii)Assignment of duties to job positions.
(iv) Establishing reporting relationships.
With the help of any four points, explain the crucial role that organising plays in an
enterprise. 6Mark
Ans. Role of organising:
(i) Benefits of specialisation.
(ii) Clarity in working relationships.
(iii)Optimum utilisation of resources.
(iv) Adaptation to change.
(v) Effective administration.
(vi) Development of personnel.
(vii) Expansion and growth.
Q. State the steps in organizing process. 4 Mark
Ans (1) Identification and Division of Work:
The first step of organising is the identification and division of work. At this step, the
total work is divided into various activities.For example, the various activities of a mobile
phone manufacturing company can be like this (i) purchase of raw material, (ii) purchase
of manufactured parts, (iii) Production, (iv) stocking of goods, (v) research, (vi)
advertisement, (vii) sales, (viii) financial arrangement, (ix) maintenance of accounts, (x)
correspondence, (xi) arrangement of employees, etc.
(2) Departmentalisation:The deapartmentalisation of activities starts once the various
activities have been designed to achieve the objectives of the company. The activities of
the same nature are grouped together and assigned to a particular department (It is known
as grouping.) e.g., purchase of raw material, purchase of manufactured parts, etc. are
given to the purchase department.
(3) Assignment of Duties:At this stage, the responsibility of each individual or post is
decided, e.g., the purchase manager will be given the task of purchasing goods, the sales
manager will be given the work of sale of goods, the advertising manager will be given
the work of advertisement and in the same way the finance manager will be given the
responsibility of making financial arrangements.
(4) Establishing Reporting Relations:When two or more than two persons work for the
attainment of common goals their interrelationship must be defined very clearly.

Everybody should know as to who is his superior and subordinate?
Q. Supervisor performs a very important rule in an organization by performing

multiple function, state any six such function 6 marks
The word supervision is the combination of two words, i.e., supervision where super
means over and above and vision means seeing. So, supervision means seeing the
activities of employees from over and above.
Role of Supervisor:
Importance of Supervision/Functions of Supervisor:
1. Ensures Issuing of Instructions:
The supervisor makes sure that all the instructions are communicated to each and every
employee. The top level and middle level, plan out all the instructions but the instructions
are issued only by supervisory level management.
2. Facilitates Control:
Control means match between actual and planned output. Whenever the workers are
under constant supervision or monitoring then step by step check is kept and if they are
deviating from plan then immediate instructions are issued by the supervisor.
3. Optimum Utilisation of Resources:

When the workers are constantly monitored or observed then they always use the
resources in the best possible manner which leads to minimum wastage. But if there is no
supervision or check on workers they may result in wastage of resources.
4. Discipline:The strict supervision and guidance of supervisor encourages the

employees and workers to be more disciplined in their activities. Under the guidance of
supervisor the workers follow a fixed or strict time-table and execute the plans in right
directions.
5. Feedback:The supervisors are directly dealing with the subordinates. They give the
report regarding the working of every worker which becomes the base for the
performance appraisal for the employees
6. Improves Communication:
Supervisors issue instructions and orders to all the subordinates and make sure that these
instructions and orders are clear to all the members.
7. Improves Motivation:The relationship with the supervisor is a very good incentive to

improve the motivation level of the employees. While guiding the employees the
supervisors encourage the subordinates to perform to their best capacity.
8. Maintain group unity:Supervisor plays a key role in maintaining group unity among
workers working under him he maintains harmony among workers by solving their
disputes.
PLANNING
1 marks
1Q. Define planning.2015

Ans. Meaning: - Planning is deciding in advance what is to do, how is be done and by whom it should be
done.It bridges the gap between where we are standing and where we want to go
2Q Give the meaning of policy as a type of plan. 2014,2015

Ans . Policy: It can be defined as organization’s general response to a particular problem or situation. In
simple words, it is the organization’s own way of handling the problems
3Q. Give the meaning of objective as a type of plan.2013
Ans. Objectives: Objectives are the end towards which the activities are directed. They are the end result
of every activity.
4Q. Give the meaning of programme as a type of plan.2015
Ans. Programme: Programmes are the combination of goals, policies, procedures and rules. All these
plans together form a programme.
5Q State first two steps in the process of planning. (Sample Paper)

Ans.
Setting Objectives
Developing the planning premises
Identifying alternative courses of action
Evaluating alternative courses
Follow Up
Selecting an alternative
Implement the plan
Follow Up
3/4 marks
6Q. Give the meaning of ‘Strategy’ and ‘Rule’ as types of plans. 2013 and 2017
Ans.
Strategy
A strategy is a comprehensive plan for accomplishing an organisation’s objectives taking business
environment into consideration. It provides broad contours of an organsiation’s business and refers
tofuture decisions defining the organisation’s direction and scope in the long run.
Rule
A rule is a statement that specifies what is to be done or not to be done. It is a guide to behaviour.A rule
does not allow for any flexibility or discretion and prescribes a penalty for violation.
7Q. Give the meaning of ‘policy’ and ‘Budget’ as
types of plans.2017
Ans. Policy
Policy is a general guideline that guides thinking orchannelises energies towards a particular direction. It
defines the broad parameters within which a managermay function. It brings uniformity in decision
making and action for interpretation of strategy.
Budget A budget is a statement of expected results for a given future
Period expressed in numerical terms from where deviations can be taken care of. It is a fundamental
planning instrument as making abudget involves forecasting.
8Q. Give the meaning of ‘Objectives’ and ‘Procedure’ as types of plans. 2017
Ans. Objectives
Objectives are the end points which are numerically
expressed, that the management seeks to achieve within
a given time period. These are set by the top
management and focus on broad general issues. They
serve as a guide for overall business planning.
Procedure
It consists of sequence of routine steps performed in a
chronological order to carry out activities within a
broad policy framework. It details the exact manner in
which any work is to be performed.
2 marks+2 marks=2+2= 4 marks
9Q. Explain any three features of ‘Planning’. 2012,2013,2014,2015 ,2016 and 2017 (3/4/5 marks)
Ans. Features of planning (any three points with explanation):
(i) Focuses on achieving objectives.
(ii) Primary function of management.
(iii) Pervasive.
(iv) Continuous.
(v) Futuristic.
(vi) Involves decision-making.
(vii) Mental exercise.
10Q. Two years ago Madhu completed her degree in food technology.She worked for sometime in a
company manufacturing chutneys, pickles and murabbas. She was not happy in the company and decided
to have her own organic food processing unit for the same. She set the objectives and the targets and
formulated action plan to achieve the same. One of her objectives was to earn 10% profit on the amount
invested in the first year. It was decided that raw materials like fruits, vegetables, spices etc. will be
purchased on three months credit from farmers cultivating organic crops only. She also decided to follow
the steps required for marketing of the products through her own outlets. She appointed Mohan as a
Production Manager who decides the exact manner in which the production activities are to be carried
out.Mohan also prepared a statement showing the number of workers that will be required in the factory
throughout the year. Madhu informed Mohan about her sales target for different produts, areawise for the
about her sales target for different products, areawise for the forthcoming quarter. While working on the
production table a penalty of ₹100 per day for not wearing the caps, gloves and apron
was announced.Quoting lines from the above para identify and explain the different types of plans
discussed (2016)
Ans. The different types of plans are:
(i) Objective
‘One of her objective is to earn 10% profit on the amount invested in the
first year’.
An objective is the end which the management seeks to achieve within a
given time period.
(ii) Policy
‘It was decided that raw materials like fruits, vegetables, spices etc. will
be purchased on three months credit from farmers cultivating organic
crops only’.
Policy is a general guideline which brings uniformity in decision making
for achievement of predetermined objectives.
(iii) Procedure
‘She also decided to follow the steps required for marketing of the
products through her own outlets’.
OR
‘She appointed Mohan as a Production Manager who decides the exact
manner in which the production activities are to be carried out’.
It consists of sequence of routine steps on how to carry out activities. It
details the exact manner in which any work is to be performed.
(iv) Budget
‘Mohan also prepared a statement showing the number of workers that
will be required in the factory throughout the year’.
OR
‘Madhu informed Mohan about the sales target for different products,
areawise for the forthcoming quarter’.
A budget is plan which states expected results of a given future period in
numerical terms. It may be expressed in time, money or physical units.
(v) Rule
‘While working on the production table, a penalty of ₹100 per day for not
wearing the caps, gloves and aprons was announced’.
A rule is a statement that specifies what is to be done or not to be done.( ½ mark for identifying the
type of plan and quoting+½ mark for its explanation=1 x 5=5 marks)
11Q. Explain any three limitations of planning.(2012,2013,2014,2016 and 2017) 3/4/5 marks
Ans. Limitations of planning:
(i) Leads to rigidity
(ii) May not work in a dynamic environment.
(iii) Reduces creativity.
(iv) Involves huge costs.
(v) Time consuming.
(vi) Does not guarantee success.
12Q. Explain any three points of importance of planning. (2014,2016 and 2017) 3/4/5 marks
Ans. Importance of planning:
(i) Provides directions.
(ii) Reduces the risk of uncertainty.
(iii) Facilitates decision making.
(iv) Reduces overlapping and wasteful activities.
(v) Promotes innovative ideas.
(vi) Establishes standards for controlling.
13Q Explain method as one type of plan.2013, 2014 (3 marks)
Ans Methods: Methods are formalized way of doing routine and repetitive jobs.
1. Explain the following principles of management:
(a) Science, not rule-of-thumb.
(b) Discipline.
Ans. (a) Science not rule of thumb
- It states that there was only one best method to maximise efficiency.
- This method can be developed through scientific study and analysis
of each element of a job and should substitute ‘Rule of Thumb’.
-This standard method then should be followed throughout the
organisation.
(b) Discipline
- It is the obedience to organizational rules and employment agreement
which are necessary for the working of the organization.
-It requires good superiors at all levels, clear and fair agreement and
judicious application of penalties.
-Workers and management both should honour their commitments
towards one another without prejudice.
2. Explain the following principles of management:
(a) Scalar Chain.
(b) Harmony, not discord.
Ans. (a) Scalar chain:
Meaning
The chain of authority and communication that runs from top to bottom
and is followed by both the managers and the subordinates is called
scalar chain.
-This chain should not be violated in the normal course of formal
communication.
-In case of any emergency, a shorter route named gang plank may
be used to avoid delay in communication.
-It facilitates smooth flow of communication and unity of command in the organisation.
(Any two points from the above points along with the meaning)
(If an examinee has explained the principle with the help of a
diagram in addition to the meaning, full credit be given)
(b) Harmony Not Discord
-The principle emphasises that there should be complete harmony
between the management and the workers.
-This requires ‘Mental revolution’ on the part of both management and
workers. Both management and the workers should transform their
thinking.
-Management should share gains of the company if any with the
workers and workers should work hard and be wiling to embrace
change for the good of the company.
3. Explain any four characteristics of ‘principles of management.’
Ans. Characteristics of principles of management: (Any four points with
explanation)
(i) Universal applicability.
(ii) General guidelines.
(iii) Formed by practice and experimentation.
(iv) Flexible.
(v) Mainly behavioural.
(vi) Cause and effect relationship.
(vii) Contingent
(If an examinee has not given the headings as above but has given the
correct explanation, full credit should be given)
4. Explain ’unity of command’ and ‘equity’ as principles of general management.
Ans. Unity of command
-The principle of unity of command states that each
employee in an organisation should receive orders
from one superior only and he should be
responsible to only one superior.
-It prevents confusion regarding tasks to be done
Equity
-Equity states that there should be no discrimination
against anyone on account of sex, religion,
language, caste, belief, nationality etc.
-It emphasises kindliness and justice in the
behaviour of managers towards the workers to
ensure loyalty and devotion.
5. State the role of ‘Speed Boss’ in functional foremanship?
Ans. The role of ‘Speed Boss’ is to ensure timely and accurate completion of job.
Q. 1. In your school, you observe that books are kept in office, chalks in the library and
office records in the staff room.
1. Which principle of management is violated here and why?
2. How will that affect the achievement of school objectives?
3. As a manager, what steps will you take to rectify the shortcomings? (3 marks)
Ans.
1. The principle of „Order‟
2. In the absence of orderliness, school objectives will not be achieved efficiently and
effectively.
3. Things should be placed at appropriate places to achieve maximum efficiency with given
time framework.
Q. 2. The production manager of an automobile company asked the foreman to achieve a

target production of 200 scooters per day. But he did not give him the authority of
requisition tools and materials from the stores department. Can the production manger
blame the foreman if he is not able to achieve the desired target? Explain briefly the
principle relating to the situation. (3 marks)
Ans. No, the production manager cannot blame the foreman because he did not give him
the authority to requisition tools and materials form the stores department. Since he has no
authority, he could not fulfill his responsibility.
In this case the principle of „Authority and Responsibility‟ is violated. Fayol suggested tht
there must be a balance between authority and responsibility. Authority and responsibility
must go hand in hand. Responsibility without adequate authority will make the
subordinate ineffective, I.e., he will not be able to perform his duties properly. At the same
time giving authority without fixing responsibility may lead to misuse of of authority.
Q. 3. Soniya Ltd. was engaged in the business of manufacturing auto components. Lately, its
business was expanding due to increased demand for cars. The competition was also
increasing. In order to keep its market share intact, the company directed its workforce to
work overtime. But this resulted in many problems.
Due to increased pressure of work the efficiency of workers declined. Sometimes, the
subordinates had to work for more than one superiors. The workers were becoming
indisciplined. The spirit of teamwork, which had characterized the company previously,
had begun to wane.
Identify any three principles of management (as given by Henry Fayol) which were begin
violated, quoting the lines from the above case. (3 marks)
Ans.
1. Unity of command
“Sometimes, the subordinates had to work for more than one superiors.‟
1. Discipline
„The workers were becoming indisciplined.‟

1. Spirit de corps
„The spirit of teamwork, which had characterized the company previously, had begun to
wane.‟
Q.4 A subordinate receives order from more than one loss’ . Which principle in violated?
Ans: Unity of command.
Q5. The production manager of a company is trying to produce good with minimum cost.
Name the concept which is being focused by management. Ans: efficiency
Q. 6. Radhika opens a jewelry showroom in Jaipur after completing a course in jewelry
designing. She has employed eleven persons in her showroom. For greater productivity,
she divides the work into small tasks and each employee is trained to perform his/her
specialized job. The sales persons are allowed to close a deal with a buyer by giving a
maximum of 10% discount, whereas the decision to given any further discount rests with
Radhika as the final authority. In the earlier days of starting of the business, five of her
employees were asked to put in extra hours of work. In return she had promised to give
them a special incentive within a year. Therefore, after six months when the business was
doing well, she awarded a cash bonus to each of these employees to honour her
commitment. However, when it comes to setting the conflicts among her employees, she
tends to b e more biased towards her female employees.
1. Identify and explain the various principles of management that are being applied by
Radhika by quoting lines from the paragraph.
2. Identify and explain the principle of management which is being violated by Radhika by
quoting lines from the paragraph.
3. State any one effect of the violation of the principle of management by Radhika as
identified in part (b) of the question.
Ans.
1. The various principles of management that are being applied by Radhika are listed
below:
1. Principle of Division of work:
“For greater productivity, she divides the work into small tasks and each employee is
trained to perform his/her specialized job.”
1. Principle of Centralization and Decentralization:
“The sales persons are allowed to close a deal with a buyer by giving a maximum of 10%
discount, whereas the decision to give any further discount rests with Radhika as the final
authority.”
1. Principle of Discipline:
“Therefore, after six months when the business was doing well, she awarded a each bonus
to each of these employees to honour her commitment.”
1. The principle of management which is being violated by Radhika is Equity.
“However, when it comes to setting the conflicts among her employees, she tends to be
more biased towards her female employees.”
1. One effect of the violation of the Principle of Equity is that it may lead to job
dissatisfaction among the male workers.
Q7. Neeraj is selected for the post of software developer in an IT Company. On the first day
of his joining Mehul, his project manager tells Neeraj that during the course of his work he
will come across many such opportunities which may temp him to misuse his powers for
individual or family’s benefit at the cost of larger general interest of the company. In such
situations, he should rather exhibit exemplary behavior as it will raise his stature in the
eyes of the company. Also, for interacting with anyone in the company on official matters,
he should adopt the formal chain of authority and communication.
1. Identify and explain the various principles of management that Mehul is advising Neeraj
to follow while doing his job.
2. List any two values that Mehul wants to communicate to Neraj.
Ans.
1. The various principles of management that Mehul is advising Neeraj to follow while
doing his job are as follows:
1. Subordination of Individual Interest to General Interest:
2. Scalar Chain:
1. The two values that Mehul wants to communicate to Neeraj are:
1. Honesty
2. Self restraint
Q8. Davinder is a class twelfth commerce student in a reputed school in Punjab. Satinder is
his elder brother who is doing his Masters in Hospital administration from Delhi after
completing his B. Sc course. During vacations when Satinder comes home, Davinder shows
him the business studies project that he is preparing on the topic ‘Principles of
Management’. Satinder tells him that these principles are also a part of MBA course
curriculum at the beginner’s level as they form the core of management in practice. But he
finds these principle different from those of pure science.
1. Outline the concept of principles of management.
2. Why does Satinder find the principle of management different from those of pure
science?
3. Why do the principles of management form the core of management in practice?
Explain by giving any two points highlighting the importance of principles of management.
Ans.
1. The principles of management serve as a broad and general guideline for the managerial
decision making and action.
2. Satinder finds the principles of management different from those of pure science because
the management principles are not as rigit as principles of pure science. This is due to the
fact that they deal with the human behavior and thus, need to be applied creatively in the
light of given situation.
3. The importance of principles of management is described below:
1. Providing managers with useful insights into reality:
2. Optimum utilization of resources and effective administration:
Q.9 Nutan Tiffin Box service was started in Mumbai by Mumbai dabbawalas. The
Dabbawalas who are the soul of entire Mumbai aim to provide prompt and efficient
services by providing tasty homemade tiffin to all office goers at right time and place. The
service is uninterrupted even on the days of bad weather, political unrest and social
disturbances. Recently they have started online booking system through their website’
mydabbawals.com’. Owing to their tremendous popularity amongst the happy and satisfied
customers and members, the dabbawalas were invited as guest lecturers by top business
schools. The Dabbawalas operate in a group of 25-30 people along with a group pleader.
Each group teams up with other groups in order to deliver the tiffin on time. They are not
transferred on frequent basis as they have to remember the addresses of their customers.
They follow certain rules while doing trade-No alcohol during working hours; No leave
without permission; Wearing of white cap & carrying ID cards during business hours.
Recently on the suggestion of a few self-motivated fellow men, the dabbawalas thought out
and executed a plan of providing food left in tiff ins by customers to slum children. They
have instructed their customers to place red sticker if food is left in the tiffin, to be fed to
poor children later.
1. State any one principle of management given by Fayol & one characteristic of
management mentioned in the above case.
2. Given any two values which the Dabbawalas want to communicate to the society.
(4 marks)
Ans.
1. Principles of management (any one)
1. Stability of Personnel
2. Initiative
3. Discipline
4. Esprit de corps
Characteristic of management (any one)

1. Goal oriented
2. Group activity
2. Values that have been communicated by the Dabbawalas: (any two)

1. Fulfilling social responsibility;
2. Empathy towards disadvantaged children;
3. Team work (or any other suitable value)
Q10. ‘Aapka vidyalaya’ believes in holistic development of students and encourages team
building through a mix of curricular, co-curricular and sports activities. On its founders day
a stage performance had to be put up. A committee of ten prefects was constituted to plan
different aspect of the function. They all decided to use recycled paper for decoration.
There was a spirit of unit and harmony and all members supported each other. With
mutual trust and belongingness the programme was systematically planned and executed.
Kartik, one of the prefects realized that unknowingly the group had applied one of the
principles of management while planning and executing the programme. He was so
inspired by the success of the function that he asked his father to apply to same principle in
his business. His father replied that he was already using this principle.
1. Identify the principle of management applied for the success of the programme.
2. State any two features of management highlighted in the above para.
3. Identify any two values which ‘Aapka Vidyalaya’ communicated to the society.
(4 marks)
Ans.
1. Espirit de corps
2.
1. Management is pervasive--„ …he asked his father to apply the same principle in his
business.’
Management is pervasive as it can be applied to all types/levels of organizations.

2. Management is a group activity –„There was a spirit of unity and harmony and all
members supported each other.’
Management is a group activity because it requires team work and/or coordination of
individual efforts.
3. Values being communicated to the society: (Any two)
1. Concern for the environment.
2. Holistic development of children.
3. Teamwok
Q11. Nikita and Salman completed the MBA and started working in a multinational
company at the same level. Both are working hard and are happy with their employer.
Salman had the habit of backbiting and wrong reporting about his colleagues to impress his
boss. All the employees in the organization knew about it. At the time of performance
appraisal the performance of Nikita was judged better than Salman. Even then their boss,
Mohammed Sharif decided to promote Salman stating that being a female Nikita will not be
able to handle the complications of a higher post.
1. Identify and explain the principle of management which was not followed by this
multinational company.
2. Identify the values which are being ignored quoting the liens the above para.
(5 marks)
Ans.
1. The principle violated is EQUITY.
It advocates that there should be no discrimination against anyone on account of sex,

religion, language, caste, belief, nationality etc.
It emphasizes kindliness and justice in the behavior of managers towards the workers to
ensure loyalty and devotion.
1. The valuation which are being ignored are:
1. Good human behavior because „Salman had the habit of backing and wrong reporting
about his colleagues to impress his boss.‟
2. Gender Equality because „Their boss decided to promote Salman stating that being a
female Nikita will not be able to handle the complications of a higher post.
Q12. Sigma Ltd. is a large company manufacturing electric motors. The company has
several departments – Production, Marketing, Finance and HR. Mr. Shashank, CEO of the
company set the target sale of 10 crore in a month. To increase the sales, the marketing
manager, Mr. Ishaan insists on offering 10% discount to customers. But the finance
manager, Mr. Mohak does not approve such discount as it would mean loss of revenue.
Because of dual subordination, the sales manager, Mr. Anshik could not achieve the sales
target.
1. Which concept of management Sigman Ltd. is lacking? State it.
2. Which principle of management has been overlooked by this company? State it.
(6 marks)
Ans.
1. The company is lacking „Coordination‟.
It is the process by which the activities of different departments are synchronized to ensure
unity of action.
1. Unity of command
There should be one and only one boss for every individual employee.If an employee gets
orders from two superiors at the same time, the principle of unity of command is
violated.Consequences of violation:Authority is undermined, discipline is in jeopardy, order
is disturbed and stability is threatened.
1. Spirit de Corps
Management should promote a team spirit of unity and harmony6 among employees.It is
necessary for coordination.
Q13. ABC Ltd. is engaged in producing electricity from domestic garbage. There is almost
equal division of work and responsibility between workers and management. The
management even takes workers into confidence before taking important decisions.
All the workers are satisfied as the behavior of the management is very good.
1. State the principle of management described in the above para.
2. Identify any two values which the company wants to communicate to the society.
(3 marks)
Ans.
1. The principle of Taylor described in the above para is Cooperation, Not Individualism.
It states that there should be complete cooperation between the labour and the
management.Competition should be replaced by cooperation.
1. Values which the company wants to communicate to the society are:
1. Good behavior in human interaction.
2. Concern for the environment
Q14. Voltech India Ltd. is manufacturing LED bulbs to save electricity and running under
heavy losses.
To revive from the losses, the management thought of shifting the unit to a backward area
where labour is available at a low cost. The management also asked the workers to work
overtime without any additional payment and promised to increased to wages of the
workers after achieving its mission. Within a short period the company started earning
profits because both the management and the workers honoured their commitments.
2. Identify any two values that the company wants to communicate to the society.
(3 marks)
Ans.
1. The principle of management described in the above para is Discipline.
Discipline is the obedience to organizational rules and employment agreement which are
necessary for the working of the organization.
1. Values that the company wants to communicate to the society are:
2. Development of backward regions
Q15. Kushal Ltd. is a leading automobile company in which the various departments are
setting up their own objectives without paying any interest to the organizational objectives.
1. Which aspect of management the company is lacking? What will be its impact on the
organization?
2. Identify the principle of management which has been overlooked by this organization.
3. State any two values neglected by the people of this organization. (5 marks)
Ans.
Its different departments like production, marketing, etc. do not coordinate their work.In
the absence of coordination, there will be overlapping and chaos instead of harmony and
integration of activities. The company will fail to achieve its objectives.
1. Subordination of individual interest to general interest.
2. Values:
1. Mutual cooperation
2. Unity of action
3. Optimum utilization of resources
Q16.Telco Ltd. is manufacturing files and folders from old clothes to discourage use of
plastic fields and folders. For this, they employ people from nearby villages where very less
job opportunities are available. An employee, Harish, designed a plan for cost reduction but
it was not welcomed by the production manager. Another employee gave some suggestion
for improvement in design, but it was also not appreciated by the production manager.
(3 marks)
Ans.
1. Initiative. It means eagerness to initiate action without being asked to do so.
1. Sensitivity towards the environment
2. Creation of job opportunities
3. Development of backward regions.
Q17. Khandelwal Ltd., a tyre manufacturing concern has been established for more than ten
years. Having made good profits in the past, company wanted to expand further and hence
did not declare bonus for the previous year. The workers got agitated and trade union
declared strike and demanded bonus and other facilities. The management decided not to
give into their demands.
1. Which principle of scientific management is overlooked in the given case?
2. State any two values overlooked/ignored by the management in the above case.
(3 marks)
Ans.
1. Harmony, not Discord
2. Values overlooked are:
1. Mutual understanding
2. Empathy
3. Peace and stability
4. Law and Order
5. Sense of belongingness (any two)
Q18. Hritik is desirous of setting up a small factory to manufacture different kinds of eco-
friendly packaging materials. He proposes to adopt to logical approach to his business
rather than hit and trial method as he knows that this can result in tremendous saving of
human energy as well as wastage of time and materials. He plans to adopt paternalistic
style of management in practice in order to avoid any kind of class-conflict that may
emerge between him and the workers. Moreover, he plans to seek the opinion of his
workers before taking any important decisions and also offers incentives to them for
providing valuable suggestions for the business.
1. Identify and explain the various principle of scientific management that Hritik plans to
apply in his business.
2. List any two values that he wants to communicate to the society by offering eco-friendly
packaging material.
Ans.
1. The various principle of scientific management that Hritik plans to apply in his business
are described below:
1. Science, not Rule of Thumb:
2. Harmony, Not Discord:
3. Cooperation, Not Individualism:
1. The two values that Harit wants to communicate to the society by offering eco-friendly
packaging material are:
1. Concern for environment

2. Sense of responsibility
Q19. Gaurika has been appointed as the chief organizer of a weeklong cultural event. Being
a staunch follower of scientific management, she decides to execute her work by putting
into practice the various techniques of scientific management. On the basis of several
observations, she is able to determine that the standard time taken by the security officer
at the gat to check the credentials of each visitor is 30 seconds. So she decides to employ
two persons on this job for every function along with the other necessary support staff. She
considers the fact that every day, the functions will take place in three shifts of four hours
each, therefore it is important to give breaks to the support staff even in a single shift to
take her/his lunch etc. moreover, on introspection, she determines that the best way to
distribute refreshment boxes to the visitors will be to hand it over to them at the exit gate
as it would help to save time and eliminate any kind of confusion.
1. Identify and explain the various techniques of work study which have been put into
practice by Gaurika.
2. List any two values that Gaurika wants to communicate to the society.
Ans.
1. The various techniques of work study which have been put into practice by Gaurika are
outlined below:
1. Time Study:
2. Fatigue Study:
3. Method Study:
1. The two values that Gaurika wants to communicate to the society are:
2. Concern for employees
Q20. Study Buddy Pvt.’ Is company dealing in stationery items. In order to establish
standards of excellence and quality in materials and in the performance of men and
machines, the company adheres to benchmarks during production. Moreover, its products
are available in limited varieties, sizes and dimensions thereby eliminating superfluous
diversity of products.
3. Identify the technique of scientific management which has been adopted by ‘Study Buddy
Pvt. Ltd.’
4. Ans. Standardization and Simplification of Work is the technique of scientific
management which has been adopted by „Study Buddy Pvt. Ltd.‟
Q21 Tina and Anshu completed their MBA and started working in a multinational company
at the same level. Both are working hard. Anshu has the habit of backbiting and wrong
reporting about his colleagues to impress the boss. All the employees in the organization
know about it. At the time of performance appraisal also Tina’s performance was rated
better than Anshu. Even then their boss decided to promote Anshu stating that being a
female, Tina will not be able to handle the complications of higher post.
1. Identify and explain the principle of management that was not followed by this company.
2. Identify the values being ignore.
Ans.
1. Company is violating the “Principle of Equity.”
2. The values ignored are
1. Gender equality
2. eward for performance
3. Good human behavior.
Q22 The production department of Alpha Ltd. was not performing well on detailed
analysis, it was observed that the workers of that department were overburdened. They
were forced to work for longer hours without any break. So the management planned to
replace the production manager. They appointed Mr. Hari as the new Production Manager.
He observed the average worker and note down their times. He noted down the time they
worked and the time they required to be fresh to join back the work. Based on this
observation, he set the break intervals for workers. He gave small breaks to workers to
recharge their energy.
1. Name and explain the technique of scientific management used by Mr. Hari.
2. State the value which Mr. Hari wants to communicate to the society by allowing rest
intervals to workers.
Ans.
1. Fatigue study.
2. Value of humanity/sympathy/respect towards employees.
Q23. In the staff meeting the principal of the school raised objection that teachers start the
teacher after 5 to 10 minutes in third floor classes. He warned them as students are
complaining about this. The teachers explained the principal that when we climb steps
from ground to third floor. We get some tiredness and need 5 to 10 minutes rest before
starting the lecture. The principal planned to install a lift in school so that teachers do not
waste their energy on wasteful activity of climbing steps.
1. State the techniques of scientific management used by principal.
2. State any other technique of scientific management.
Ans.
1. “Technique of motion study.”
2. Other two techniques:
1. Functional foremanship
2. Time study.
Q24. In a factory the toolbox was kept under the table of every worker, whenever worker
needs tools he had to bend tape out tool from tool box and keep it back after use. The newly
appointed supervisor observed it and suggested to keep a stool near every worker’s chain
where toolbox can he placed so that workers do not waste their energy in bending again
and again.
1. Which technique of scientific management is used by New Supervisor.
2. State the objective of motion study.
Ans.
1. Motion study.
2. The objective of motion study is to eliminate unproductive movements of workers.
Q25. Mr. Rajiv the senior manager of Unique enterprise considered himself very wise and
used to take all the decisions himself without consulting the employees, he never used to
help any one nor he used to take help of anyone. The employees of unique enterprise were
not working efficiently and company’s profit margin started declining to tackle the
problem, the company appointed a new manager from IIM Bangalore. The new manager
after joining made a policy that all the decisions will be taken after consulting employees in
the meeting. All employees must give some suggestions and best suggestions will be
rewarded with financial and
nonfinancial incentives. This policy had a very positive effects on company.
1. State the principle of Hencry Fayol used by new manager.
2. State the technique of scientific management related to above case.
Ans.
1. Principle of initiative.
2. “Cooperation not individualism.”
KENDRIYA VIDYALAYA SANGTHAN RO-KOLKATA
01 DAY’S WORKSHOP ON CONTENT ENRICHMENT
DATE - 09-11-2017 VENUE: KV COSSIPORE
SUBJECT – BUSINESS STUDIES (054)
JITENDRA SINGH (PGT COMMERCE) KV MALDA (NHPC)
VERY SHORT ANSWER TYPE QUESTIONS (1 MARK)
1. What is meant by ‘principal of management’? (2011 & 2013)

Ans. Principal of management are broad and general guidelines for decision making and behavior
of managers.
2. State any one principal of scientific management. (2011)
Ans. Cooperation not individualism: according to this principle, all activities done by different
people must be carried on with a spirit of mutual cooperation.
3. What is determined by time study? (2014)
Ans. Time study determines the standard time taken to perform a well defined job.
4. Give the meaning of ‘mental revolution’ as suggested by F.W. Taylor. (2011)
Ans. It refers to change in attitude of management and workers towards one another from
competition to cooperation.
5. What is meant by ‘Universal Applicability’ of principles of management? (2011
Ans. It means that the principles of management are intended to apply to all types of organizations
at all places.
6. State one reason why ‘Principles of Management’ are important? (2011)
Ans. Principles of management are important because they provide useful insight to managers.
7. State the role of ‘Speed Boss’ in functional foremanship? (2016)
Ans. The role of ‘Speed Boss’ is to ensure timely and accurate completion of job.
8. “The principal of management are different from those of pure science.” state any one
difference.
Ans. The principal of management are not definite like the principles of pure science.
9. Principle of cooperation, not individualism, is an extension of which principle given by Fayol?
Ans. Principle of Harmony, not discord.
10. What is the aim of Method study?
Ans. Aim of Method study is to find one best method of doing the job.
11. What is the aim of doing motion study?
Ans. The aim of this study is to eliminate unnecessary movements so as to ensure timely
completion of work.
12. The directors of XYZ limited, an organization manufacturing computers, want to double
the sales and have given the responsibility to the sales manager. The sales manager has no
authority either to increase sales expense or appoint new salesmen. Hence, he could not
achieve this target. Identify the principle violated in this situation
Ans. Principle of Authority and Responsibility.
13. Which principle does functional foremanship violate?
Page 1 of 6
Ans. Unity of command
14. Give any one effect of principle of division of work?
Ans. Specialization, speed, accuracy.
15. A sales person is asked to finalize a deal with customer. The marketing manager allows him
to give a discount of up to 10% but the Finance Manager allows him to give discount of up to
25%. Which principle is violated here?
Ans. Unity of Command.
16. “Workers should be encouraged to develop and carry out their plans for
development.” Identify the principle of management formulated by Fayol.
Ans. Principle of Initiative
SHORT ANSWER TYPE QUESTIONS (3 OR 4 MARKS)
17. Give three points reflecting the nature of management principles.

Ans. Management principles are (any three):
(i) Universal in application.
(ii) General guidelines.
(iii) Flexible and can be applied differently under different conditions.
(iv) Formed by practice and experimentation.
(v) Establish cause and effect relationships.
18. "Principles of management achieve results economically." Explain?
Ans. Management principles help in setting realistic objectives for the business because the
objectives are set with the participation of employees. Hence, the employees work to their full
potential and their commitment level increases because objectives of organization become
their own objectives.
For example, the principle of maximum output rather than restricted one ensures
more output. More output lowers cost per unit and hence profit per unit increases.
19. Explain briefly the technique of fatigue study?
Ans. Fatigue study determines the amount and frequency of rest intervals in completing
a task. Workers cannot work at a stretch. After putting in work for a certain periods of time,
they feel tired which affects their performance. If they are allowed rest intervals, they will re-
gain their stamina and will resume their work with greater efficiency.
20. State any three reasons as to why proper understanding of management principles is
necessary.
Ans. Proper understanding of management principles is necessary because of the following
reasons (any three):
(a) They provide managers with useful insight into reality.
(b) They help in optimal utilization of resources and effective administration.
(c) They help in meeting environment requirements.
(d) They are used as basis for management training, education and research.
21. Explain the Principle of centralization and decentralization.
Ans. Centralization means concentration of authority in the hands of few people at the top,
whereas decentralization means appropriate distribution of power at every level of
Page 2 of 6
management. According to Fayol, company must be properly balanced i.e. it should neither be
completely centralized nor decentralized. There must be some element of both of
centralization and decentralization of the organization. The Panchayat system in our country is
a very good example of decentralization at the national level.
22. Define scientific management and name any three of its principles.
Ans. According to Taylor, “Scientific management means knowing exactly what you want your men
to do and seeing that they do it in the best and cheapest way”.
Three principles of scientific management are as follows:
(i) Science, not rule of thumb
(ii) Harmony, not discord.
(iii) Cooperation, not individualism.
23. Ms. Gita and Mr. Govind are Data Entry Operators in a campany having same
educational qualifications. Gita is getting Rs. 5,000 per month and Govind Rs. 6,000 per
month as salary for the same working hours.
Which principle of management is violated in the case? Name and explain the principle.
Ans. The principle of 'equity' is violated in this case. According to this principle, employees should be
given kind, fair and just treatment and there should not be any discrimination based on caste,
creed, color, sex etc. Apparently, Gita is getting less in view of being a female which is against
this principle.
24. Explain the objectives of standardization.
Ans. Standardization is done for the following reasons:
(i) To ensure that a given product range has fixed types, sizes, characteristics etc.
(ii) To bring about interchangeability, for manufactured parts, output, developments
etc. among various branches.
(iii) To set uniform standards of performance for men, machines etc.
25. An organization follows the principles of management. What are the adverse effects of each of
the following principles of management on the organization?
(i) Unity of Command
(ii) Order
(iii) Stability of tenure of personnel
Ans. Adverse effects of said principles are:
(i) Unity of Command: If this principle is followed, work gets delayed which results in
wastage of time and cost.
(ii) Order: It creates boredom among the employees due to rigidity provided by this
principle.
(iii) Stability of personnel: If employees are not rotated on different jobs frequently, they
can specialize only in a small part of the whole process of production and thus can never
become versatile.
LONG ANSWER TYPE QUESTIONS (5 OR 6 MARKS)
26. Explain the nature of management principles.

Ans. Nature of management principles can be described as follows:
Page 3 of 6
(i) Universal Applicability: The principles of management are applicable to all types of
organizations irrespective of their size and nature.
(ii) General Guidelines: They are only guidelines for action and don't provide direct or
readymade solution for a managerial problem.
(iii) Formed by practice and experimentation: The principles of management have been
developed through experimentation as well as experience and wisdom of managers.
(iv) Flexible: They are flexible i.e. they can be modified by the managers according to a given
situation.
(v) Mainly behavioural: They are mainly behavioural in nature since they are devised to
influence human behaviour.
(vi) Cause and effect relationship: The principles of management establish relationship
between cause and effect. They guide us as to what would be the effect if a particular
principle were to be applied in a given situation.
(vii) Contingent: The use of principles of management is contingent or dependent upon the
prevailing conditions.
27. Explain the importance of management principles. (2015 & 2016)
Ans. The importance of management principles can be understood by considering the following
points:
(i) Provide useful insight to manage: Principles of management help in increasing
managerial efficiency by adding to their knowledge and ability to understand the
various situations more objectively.
(ii) Optimum Utilization of Resources and effective administration: Management
principles help in organizing various activities in such a way that results in elimination of
unwanted activities and consequent wastage. Management principles help in managing
organizations effectively.
For example, Unity of Command helps to avoid confusion and conflicts Unity of Direction
ensures unity of actions to facilitate coordination
(iii) Scientific decisions: They help the mangers in taking the decisions based on the
objective assessment of a situation. Thus decisions taken are logical and free from any bias
and prejudice.
(iv) Meeting changing environment requirements: Though the principles are only
guidelines for action yet they can be modified according to the need of changing situations. Thus
principles of management help in meeting changing requirements of the environment.
(v) Fulfilling social responsibilities: Principles of management have been devised in such a
way that they help in fulfilling social responsibilities.
28. Sachin is working in a Shoe manufacturing Co. The management asked him to work
overtime so as to produce more in order to meet increase in demand in the market. But he
was not paid adequate wages for extra time and so he never contributed to his maximum.
a) Which principle of Fayol is violated in the above case?
b) Give two positive effects of following the above principle.
c) Which values can be emphasized by following the above principle?
d) Which values are ignored in the above situation?
Page 4 of 6
Ans: a) Remuneration of employees
b) i) ensure healthy atmosphere & good relations between the employees and the
management.
ii) Smooth functioning of the organization.
c) i) Motivation ii) Respect towards employees.
d) (i)Respect for employees
(ii) Motivation
(iii) Responsibility and sincerity of the employee
(iv) Initiative
(v) Co operation
29. Taylor's principles of scientific management and Fayol's principles of management are
mutually complementary." Do you agree with this view? Give any four reasons in support of
your answer.
Ans. Yes, Taylor's principles of scientific management and Fayol's principles of management are
mutually complementary because of the following reasons:
Basis Taylor Fayol

1. Personality Taylor was a scientist Fayol was a practitioner
2. Perspective Taylor's principles & techniques Fayol's principles are based
are based on bottom upward on top downward approach
approach
3. Scope and Taylor's principles & techniques Fayol's principles have
Applicability are relevant mainly with respect wider relevance in all
to production activities functional areas
4. Focus Taylor's' principles & techniques Fayol's principles are focused

are focused on workers' efficiency on improving overall
and production. management efficiency.
5. Taylor's techniques are more Fayol's principles are

Modifications specific in nature and should be more general in nature &
applied without any modification can be applied in most of
and only in specific conditions the organizations with some
modifications.
6. Expression Taylor expressed his thoughts Fayol expressed his ideas as the
and views under the theory of general theory of
scientific management management
30. Explain the technique 'Functional Foremanship'.

Ans. Functional foremanship is the extension of the principle of specialization. This technique
emphasizes on the separation of planning from execution. To facilitate it, Taylor suggested
setting up of "Planning incharge" and "production incharge".
Page 5 of 6
FUNCTIONAL FOREMANSHIP
Planning Incharge: The main function of "planning in charge" is to plan all aspects of a job to
be performed. It consists of four positions:
(i) Route clerk: He determines the sequence to perform various mechanical and manual
operations.
(ii) Instruction card clerk: He issues instructions to the workers to be followed by them.
(iii) Time and cost clerk: He is concerned with the framing of time schedule on the basis of
determined route. Also, he keeps the record of the cost of operations.
(iv) Disciplinarian: He is concerned with the coordination in each job from planning to
successful execution. He enforces rules and regulations and maintains discipline.
Production Incharge: It consists of following four specialists who are concerned with the
execution of plans.
(i) Speed Boss: He checks whether work is progressing as per schedule. He ensures timely
and accurate completion of jobs.
(ii) Gang Boss: He arranges machines, materials, tools, and equipments properly so that
workers can proceed with their work.
(iii) Repair Boss: He ensures that all machines, tools, equipments are in perfect working order.
(iv) Inspector: He ensures that the work is done as per the standards of quality set by planning
department.
Page 6 of 6
SET-1
Series GBM H$moS> Z§.
Code No. 66/1
amob Z§. narjmWu H$moS >H$mo CÎma-nwpñVH$m Ho$ _wI-n¥ð
Roll No. >na Adí` {bIo§ &
Candidates must write the Code on the
title page of the answer-book.
 H¥$n`m Om±M H$a b| {H$ Bg àíZ-nÌ _o§ _w{ÐV n¥ð> 15 h¢ &

 àíZ-nÌ _| Xm{hZo hmW H$s Amoa {XE JE H$moS >Zå~a H$mo N>mÌ CÎma -nwpñVH$m Ho$ _wI-n¥ð> na
{bI| &
 H¥$n`m Om±M H$a b| {H$ Bg àíZ-nÌ _| >25 àíZ h¢ &
 H¥$n`m àíZ H$m CÎma {bIZm ewê$ H$aZo go nhbo, àíZ H$m H«$_m§H$ Adí` {bI| &
 Bg àíZ-nÌ H$mo n‹T>Zo Ho$ {bE 15 {_ZQ >H$m g_` {X`m J`m h¡ & àíZ-nÌ H$m {dVaU nydm©•
_| 10.15 ~Oo {H$`m OmEJm & 10.15 ~Oo go 10.30 ~Oo VH$ N>mÌ Ho$db àíZ-nÌ H$mo n‹T>|Jo
Am¡a Bg Ad{Y Ho$ Xm¡amZ do CÎma-nwpñVH$m na H$moB© CÎma Zht {bI|Jo &
 Please check that this question paper contains 15 printed pages.
 Code number given on the right hand side of the question paper should be
written on the title page of the answer-book by the candidate.
 Please check that this question paper contains 25 questions.
 Please write down the Serial Number of the question before
attempting it.
 15 minute time has been allotted to read this question paper. The question
paper will be distributed at 10.15 a.m. From 10.15 a.m. to 10.30 a.m., the
students will read the question paper only and will not write any answer on
the answer-book during this period.
ì`mdgm{`H$ AÜ``Z
BUSINESS STUDIES
{ZYm©[aV g_` : 3 KÊQ>o A{YH$V_ A§H$ : 80

Time allowed : 3 hours Maximum Marks : 80
66/1 1 P.T.O.
gm_mÝ` {ZX}e :
(i) 1 A§H$ dmbo àíZm| Ho$ CÎma EH$ eãX go EH$ dmŠ` VH$ hm| &
(ii) 3 A§H$m| dmbo àíZm| Ho$ CÎma 50 – 75 eãXm| Ho$ hm| &
(iii) 4–5 A§H$m| dmbo àíZm| Ho$ CÎma bJ^J 150 eãXm| Ho$ hm| &
(iv) 6 A§H$m| dmbo àíZm| Ho$ CÎma bJ^J 200 eãXm| Ho$ hm| &
(v) EH$ àíZ Ho$ g^r ^mJ gmW-gmW hr hb H$s{OE &
General Instructions :
(i) Answers to questions carrying 1 mark may be from one word to one
sentence.
(ii) Answers to questions carrying 3 marks may be from 50 – 75 words.
(iii) Answers to questions carrying 4 – 5 marks may be about 150 words.
(iv) Answers to questions carrying 6 marks may be about 200 words.
(v) Attempt all parts of a question together.
1. {ZX}eZ Ho$ EH$ VÎd Ho$ ê$n _| ‘n`©dojU’ H$m AW© Xr{OE & 1
Give the meaning of ‘supervision’ as an element of directing.
2. ‘Am¡nMm[aH$’ VWm ‘AZm¡nMm[aH$’ g§JR>Z _| ‘g§àofU àdmh’ Ho$ AmYma na AÝVa ñnîQ>
H$s{OE & 1
Differentiate between ‘formal’ and ‘informal’ organisation on the basis of
‘flow of communication’.
3. M`Z à{H«$`m _| ‘H$m¡eb narjm’ Š`m| br OmVr h¡ ? 1

Why is ‘Aptitude Test’ conducted in the process of selection ?
66/1 2
4. ^JdVr BÝQ>aàmBµOoO EH$ à{gÕ ~«mÊS> Ho$ dmVmZwHy$bZ g§`§Ìm| Ho$ {dnUZ _| bJr EH$ H$ånZr
h¡ & H$ånZr Ho$ Mma _w»` H$m`m]  H«$`, {dH«$`, {dÎm VWm {Z`w{º$H$aU dmbm EH$
H$m`m©Ë_H$ T>m±Mm h¡ & CËnmX H$s _m±J ~‹T>Zo na H$ånZr Zo A{YH$ H$_©Mm[a`m| H$s ^Vu H$m
{ZU©` {b`m &
Cg AdYmaUm H$s nhMmZ H$s{OE Omo _mZd g§gmYZ à~§YH$ H$mo CnbãY H$_©Mm[a`m| H$s
g§»`m VWm àH$ma H$m nVm bJmZo _| ghm`H$ hmoJr Vm{H$ dh àËòH$ {d^mJ Ho$ {bE
Amdí`H$ ì`{º$`m| H$s g§»`m Ho$ ~mao _| {ZU©` bo gHo$ VWm CZH$s ^Vu H$a gHo$ & 1
Bhagwati Enterprises is a company engaged in the marketing of
air-conditioners of a famous brand. The company has a functional
structure with four main functions  Purchase, Sales, Finance and
Staffing. As the demand for the product grew, the company decided to
recruit more employees.
Identify the concept which will help the Human Resource Manager to
find out the number and type of personnel available so that he could
decide and recruit the required number of persons for each department.
5. B©em _erÝg 1960 go JwUdÎmm dmbr {gbmB© _erZm| H$m EH$ à{gÕ Zm_ Wm & {nN>bo VrZ
_mh _| CËnmXZ KQ>Zo Ho$ H$maU B©em _erÝg Ho$ ñdm_r, lr gwaoe, ì`mHw$b Wo & CÝhm|Zo
CËnmXZ à~§YH$ H$mo BgHo$ H$maU H$m nVm bJmZo H$m {ZX}e {X`m & CËnmXZ à~§YH$ Zo {d{^Þ
n`©dojH$m| H$mo CZHo$ AYrZ H$m`© H$aZo dmbo H$_©Mm[a`m| H$m {ZînmXZ à{VdoXZ V¡`ma H$aZo H$m
AmXoe {X`m &
CËnmXZ à~§YH$ Ûmam {bE JE Cg MaU H$s nhMmZ H$s{OE Omo à~§Y Ho$ EH$ H$m`© go
gå~pÝYV h¡ & 1
Isha Machines was a renowned name for quality sewing machines since
1960. Mr. Suresh, the owner of Isha Machines, was worried as the
production had declined during the last three months. He directed the
Production Manager to find out the reason. The Production Manager
ordered the different supervisors to prepare a performance report of the
workers working under them.
Identify the step taken by the Production Manager that is related to one
of the functions of management.
6. ‘ny±Or g§aMZm’ H$m Š`m AW© h¡ ? 1

What is meant by ‘Capital Structure’ ?
66/1 3 P.T.O.
7. Am¡Úmo{JH$ _erZm| H$m CËnmXZ H$aZo dmbr EH$ à{gÕ H$ånZr, grH$m {b{_Q>oS>, H$mo AnZo
ì`dgm` H$m {dñVma H$aZo hoVw ~rg H$amo‹S> énE A{V[aº$ ny±Or H$s Amdí`H$Vm h¡ & H$ånZr
Ho$ _w»` H$m`©H$mar A{YH$mar, lr A{_V Omoer g_Vm Ho$ _mÜ`_ go {dÎm EH${ÌV H$aZm
MmhVo h¢ & {dÎm à~§YH$, lr ZaoÝÐ qgh, Zo gwPmd {X`m {H$ {ZdoeH$m| H$mo A§em| H$m {dH«$`
_Ü`ñWm| Ho$ _mÜ`_ go {H$`m OmE Š`m|{H$ dh H$_ _h±Jm n‹S>oJm &
Cg {d{Y H$m Zm_ ~VmBE {OgHo$ _mÜ`_ go H$ånZr Zo A{V[aº$ ny±Or EH${ÌV H$aZo H$m
{ZU©` {b`m & 1
Sika Ltd., a reputed industrial machines manufacturer, needs Rupees
twenty crores as additional capital to expand the business. Mr. Amit
Joshi, the Chief Executive Officer (CEO) of the company wants to raise
funds through equity. The Finance Manager, Mr. Narinder Singh,
suggested that the shares may be sold to investing public through
intermediaries, as the same will be less expensive.
Name the method through which the company decided to raise additional
capital.
8. _mZgr AnZr ^VrOr, [a{Y_m, H$mo CgHo$ OÝ_-{XZ Ho$ {bE EH$ ~¡J ãrXZo Ho$ {bE ‘_oJm
ñQ>mog©’ bo JB© & dh ~hþV h{f©V hþB© O~ ~¡J Ho$ ^wJVmZ Ho$ gmW Cgo _wµâV _| EH$ n|{gb
~m°Šg {_bm &
H$ånZr Ûmam Cn`moJ H$s JB© {dH«$` àdV©Z H$s VH$ZrH$ H$s nhMmZ H$s{OE & 1
Mansi took her niece, Ridhima, for shopping to ‘Mega Stores’ to buy her a
bag for her birthday. She was delighted when on payment of the bag she
got a pencil box along with the bag free of cost.
Identify the technique of sales promotion used by the company.
9. à~§Y Ho$ gm_mÝ` {gÕmÝVm| Ho$ ê$n _| ‘{ZX}eZ H$s EH$Vm’ VWm ‘AmXoe’ H$mo g§jon _|
g_PmBE & 3
Explain briefly ‘Unity of Direction’ and ‘Order’ as principles of general
management.
10. {Z`moOZ H$s {H$Ýht VrZ {deofVmAm| H$m CëboI H$s{OE & 3
State any three features of planning.
66/1 4
11. g§àofU H$s {H$Ýht VrZ g§Ho${VH$ ~mYmAm| H$mo g§jon _| g_PmBE & 3
Explain briefly any three semantic barriers to communication.
12. am_ZmW {b{_Q>oS> ~‹S>r _mÌm _| Am°J}{ZH$ ImÚ nXmWm] Ho$ Am`mVH$ h¢ & H$ånZr Wmo‹S>r _mÌm _|
AmH$f©H$ n¡Ho$Q>m| _| nXmWm] H$m {dH«$` H$aVr h¡ & nyd© _| H$ånZr H$m {ZînmXZ AZw_mZm| Ho$
AZwê$n Wm & ZdrZV_ n¡Ho$qµOJ VH$ZrH$s H$mo Ü`mZ _| aIVo hþE, H$ånZr Zo AnZr _erZar
H$mo gwYmaZo H$m {ZU©` {b`m & BgHo$ {bE, H$ånZr Ho$ {dÎm à~§YH$, lr {dH«$mÝV Ywëb, Zo
{dÎm H$s am{e VWm g_` H$m AZw_mZ bJm`m & `h H$ånZr H$mo {Zdoe VWm {dÎm {ZU©`m| H$mo
{Za§VaVm Ho$ AmYma na Omo‹S>Zo _| ghm`H$ hmoJm &
AV:, lr {dH«$mÝV Ywëb Zo AmZo dmbo Mma dfmoª Ho$ {bE {dH«$` nydm©Zw_mZ bJmZm ewê$
{H$`m & CgZo AmZo dmbo dfm] _| bm^ AZw_mZm| go gå~pÝYV Am±H$‹S>o ^r EH${ÌV {H$E &
BgHo$ Ûmam dh AmÝV[aH$ òmoVm| go {dÎm H$s CnbãYVm gw{ZpíMV H$aZm MmhVm Wm & eof
{dÎm Ho$ {bE dh d¡H$pënH$ òmoVm| H$m nVm bJmZo Ho$ {bE à`ËZerb h¡ &
Cn`w©º$ AZwÀN>oX _| M{M©V {dÎmr` AdYmaUm H$s nhMmZ H$s{OE & Bg Vah nhMmZr JB©
{dÎmr` AdYmaUm Ho$ _hÎd Ho$ {H$Ýht Xmo {~ÝXþAm| H$m CëboI ^r H$s{OE & 3
Ramnath Ltd. is dealing in import of organic food items in bulk. The

company sells the items in smaller quantities in attractive packages.
Performance of the company has been up to the expectations in the past.
Keeping up with the latest packaging technology, the company decided to
upgrade its machinery. For this, the Finance Manager of the company,
Mr. Vikrant Dhull, estimated the amount of funds required and the
timings. This will help the company in linking the investment and the
financing decisions on a continuous basis.
Therefore, Mr. Vikrant Dhull began with the preparation of a sales
forecast for the next four years. He also collected the relevant data about
the profit estimates in the coming years. By doing this, he wanted to be
sure about the availability of funds from the internal sources. For the
remaining funds he is trying to find out alternative sources.
Identify the financial concept discussed in the above paragraph. Also,
state any two points of importance of the financial concept, so identified.
66/1 5 P.T.O.
13. ho_ÝV, JwS²>Sy> VWm Vmo{fVm _hm{dÚmb` Ho$ {XZm| go {_Ì Wo VWm dV©_mZ _| do {^Þ-{^Þ
àH$ma Ho$ ì`dgm` _| bJo hþE h¢ & do bJmVma {_bVo h¢ VWm AnZo ì`mdgm{`H$ {dMmam| na
{dMma-{d_e© H$aVo h¢, VWm Cn^moº$m g§VwpîQ>, {dnUZ à`mgm|, CËnmX {S>µOmBqZJ, {dH«$`
VH$ZrH$m|, gm_m{OH$ gamoH$mam|, BË`m{X na {Q>ßn{U`m| H$m AmXmZ-àXmZ H$aVo h¢ &
Eogr hr EH$ g^m _|, ho_ÝV Zo JwS²>Sy> VWm Vmo{fVm H$m Ü`mZ Cn^moº$mAm| Ho$ emofU H$s Amoa$
AmH${f©V {H$`m & CgZo H$hm {H$ A{YH$Va {dH«o$Vm Cn^moº$mAm| H$m {d{^Þ VarH$m| go emofU
H$aVo h¢ VWm {dnUZ Ho$$ gm_m{OH$, Z¡{VH$ d n`m©daUr` nhbwAm| na Ü`mZ Zht XoVo, O~{H$
dh Eogm Zht H$a ahm Wm & JwS>²Sy> Zo H$hm {H$ Cn^moº$mAm| H$s g§VwpîQ> Ho$ {bE do X~md _| Wo
naÝVw Cn^moº$m `m Vmo H«$` Zht H$aVo AWdm n`m©ßV H«$` Zht H$aVo h¢, `{X CÝh| BgHo$ {bE
g_w{MV g_Pm`m VWm ào[aV Zht {H$`m OmE &
Vmo{fVm Zo µOmoa XoH$a H$hm {H$ Cn^moº$mAm| H$s Amdí`H$VmAm| H$s g§VwpîQ> {H$E {~Zm H$moB©
H$ånZr AnZo CÔoí`m| H$mo àmßV Zht H$a gH$Vr & ì`dgm{``m| H$m `h H$V©ì` h¡ {H$ do
Cn^moº$mAm| H$s g§VwpîQ> H$mo Ü`mZ _| aI|, Š`m|{H$ ì`dgm` g_mO Ûmam àXÎm òmoVm| go MbVm
h¡ & CgZo `h ^r H$hm {H$ dh ñd`§ Cn^moº$mAm| H$s Amdí`H$VmAm| H$m Ü`mZ aIVr h¡ &
CZ {d{^Þ àH$ma H$s {dMmaYmamAm| H$s nhMmZ H$s{OE {OZgo CZHo$ ì`dgm` Ho$ {dnUZ
à`mgm| _| ho_ÝV, JwS²>Sy> VWm Vmo{fVm {ZX}{eV hþE & nhMmZr JB© àËòH$ {dMmaYmam H$s EH$
A{V[aº$ {deofVm, Omo Cn`w©º$ AZwÀN>oX _| Zht Xr JB© h¡, H$m ^r CëboI H$s{OE & 3
Hemant, Guddu and Toshita were friends from college days and
presently they were doing different kinds of business. They regularly
meet and discuss their business ideas, and exchange notes on customer
satisfaction, marketing efforts, product designing, selling techniques,
social concerns, etc.
In one of such meetings, Hemant drew the attention of Guddu and

Toshita towards the exploitation of consumers. He told that most of the
sellers were exploiting the consumers in various ways and were not
paying attention towards the social, ethical and ecological aspects of
marketing, whereas he was not doing so. Guddu told that they were
under pressure to satisfy the consumers but stated that the consumers
66/1 6
would not buy or not buy enough unless they were adequately convinced
and motivated for the same.
Toshita stressed that a company cannot achieve its objectives without

satisfying the needs of the customers. It was the duty of the businessmen
to keep consumer satisfaction in mind, because business is run by the
resources made available by the society. She further stated that she
herself was taking into consideration the needs of the customers.
Identify the various types of thinking that guided Hemant, Guddu and
Toshita in the marketing efforts of their business. Also, state one more
feature each of the various types of thinking identified that is not given
in the above paragraph.
14. ao{\«$OaoQ>a ~ZmZo dmbr EH$ H$ånZr, E.E_.dr. {b{_Q>oS> _| G${fVmof _wIOu Zo hmb hr _|
nX^ma J«hU {H$`m h¡ & Cgo nVm Mbm {H$ CgHo$ {d^mJ _| H$_ H$_©Mmar h¢ VWm g§JR>Z Ho$
gwMmé ê$n go H$m`© H$aZo _| Xÿgao {d^mJ CgHo$ {d^mJ Ho$ gmW gh`moJ Zht H$a aho Wo &
AV:, CgZo gw{ZpíMV {H$`m {H$ CgHo$ {d^mJ _| Amdí`H$ g§»`m _| H$_©Mmar h¢ VWm Xÿgao
{d^mJm| Ho$ gmW BgHo$ gh`moJ _| ~‹T>mdm hmo &
(H$) Cg ñVa H$s nhMmZ H$s{OE {Og na G${fVmof _wIOu H$m`©aV Wm &
(I) Bg ñVa na G${fVmof _wIOu Ûmam {H$E OmZo dmbo VrZ AÝ` H$m`m] H$m ^r CëboI
H$s{OE & 4
Rishitosh Mukerjee has recently joined AMV Ltd, a company

manufacturing refrigerators. He found that his department was
under-staffed and other departments were not cooperating with his
department for smooth functioning of the organisation. Therefore, he
ensured that his department has the required number of employees and
its cooperation with other departments is improved.
(a) Identify the level at which Rishitosh Mukerjee was working.
(b) Also, state three more functions required to be performed by
Rishitosh Mukerjee at this level.
66/1 7 P.T.O.
15. g§`wº$ amÁ` A_arH$m go AnZm CÚ{_Vm H$mog© nyam H$aZo Ho$ níMmV² g§Ho$V dmng ^maV bm¡Q>m
VWm _wå~B© Ho$ EH$ à{gÕ _mb _| ‘\$s`mo_m H$m°µ\$s’ Zm_ H$s EH$ H$m°µ\$s H$s XþH$mZ ewê$ H$s &
H$m°µ\$s H$s XþH$mZ H$s {d{eîQ>Vm H$m°µ\$s H$s {d{eîQ> gwJ§Y VWm M`Z Ho$ {bE ~hþV gr
˜we~wAm| (âbodg©) H$s àH$ma Wr & Hw$N> H$maUde ì`dgm` Z Vmo bm^àX Wm Am¡a Z hr
bmoH${à` & g§Ho$V BgH$m H$maU nVm bJmZo Ho$ {bE CËgwH$ Wm & CgZo ì`dgm` H$m gwMmé$
ê$n go Zht Mb nmZo Ho$ H$maU H$m nVm bJmZo Ho$ {bE EH$ à{gÕ à~§Y g§ñWmZ go
E_.~r.E. H$s hþB©, [a`m H$mo EH$ à~§YH$ Ho$ ê$n _| {Z`wº$ {H$`m &
[a`m Zo J«mhH$m| go à{VnwpîQ> br VWm nVm bJm`m {H$ do H$m°µ\$s H$s bmOdm~ ˜we~w H$mo ß`ma
H$aVo Wo naÝVw AmXoe H$mo nyam H$aZo H$s àVrjm _| {bE OmZo dmbo g_` go àgÞ Zht Wo &
CgZo {díbofU {H$`m VWm nVm bJm`m {H$ Hw$N> AZmdí`H$ A‹S>MZ| Wt {OÝh| Xÿa {H$`m Om
gH$Vm Wm & CgZo AmXoe Ho$ à{H«$Ù Ho$ {bE _mZH$ g_` H$m {ZYm©aU H$a {X`m & Cgo `h
^r nVm Mbm {H$ Eogr Hw$N> ˜we~wE± Wt {OZH$s _m±J A{YH$ Zht Wr & AV:, CgZo Eogr
˜we~wAm| Ho$ {dH«$` H$mo amoH$Zo H$m ^r {ZU©` {b`m & n[aUm_ñdê$n, Aën g_` _| hr [a`m
J«mhH$m| H$mo AmH${f©V H$aZo _| g\$b hmo JB© &
g_ñ`m Ho$ g_mYmZ hoVw [a`m Ûmam AnZmB© JB© d¡km{ZH$ à~§Y H$s {H$Ýht Xmo VH$ZrH$m| H$s
nhMmZ H$s{OE VWm g_PmBE & 4
Sanket, after completing his entrepreneurship course from U.S.A.
returned to India and started a coffee shop ‘Fioma Coffee’ in a famous
mall in Mumbai. The speciality of the coffee shop was the special aroma
of coffee and a wide variety of flavours to choose from. Somehow, the
business was neither profitable nor popular. Sanket was keen to find out
the reason. He appointed Riya, an MBA from a reputed management
institute as a manager to find out the causes of the business not doing
well.
Riya, took a feedback from the clients and found out that though they
loved the special unique aroma of coffee but were not happy with the long
waiting time being taken to process the order. She analysed and found
out that there were many unnecessary obstructions which could be
eliminated. She fixed a standard time for processing the order. She also
realised that there were many flavours whose demand was not enough.
So, she also decided to discontinue the sale of such flavours. As a result,
within a short period Riya was able to attract the customers.
Identify and explain any two techniques of scientific management used
by Riya to solve the problem.
66/1 8
16. {Z`moOZ Ho$ àH$mam| Ho$ ê$n _| ‘aUZr{V’ VWm ‘{Z`_’ H$m AW© Xr{OE & 4
Give the meaning of ‘Strategy’ and ‘Rule’ as types of plans.
17. ^Vu Ho$ ~mø òmoVm| Ho$ ê$n _| ‘àVrjm gyMr’ VWm ‘_µOXÿa R>oHo$Xmam|’ H$mo g§jon _| g_PmBE & 4
Explain briefly ‘Casual Callers’ and ‘Labour Contractors’ as external
sources of recruitment.
18. AmOH$b {H$gr Xoe Ho$ {dH$mg H$mo BgH$s àUmbr, {OgHo$ Ûmam {dÎm H$m Am{YŠ` Ho$ joÌm|
go CZ joÌm| _| ñWmZm§VaU Ohm± BgH$s gdm©{YH$ Amdí`H$Vm h¡, go ^r Am±H$m OmVm h¡ &$
AW©ì`dñWm H$mo _µO~yV H$aZo Ho$ {bE go~r ny±Or ~mµOma Ho$ {dH$mg Ho$ {bE Cnm` H$a ahr
h¡ & BgHo$ A{V[aº$, EH$ AÝ` ~mµOma h¡ {Og_| à{V{XZ Aa{jV VWm Aënmd{Y G$U ànÌm|
H$m à^mdnyU© VarHo$ go ì`mnma hmoVm h¡ & EH$ gmW ò ~mµOma ~MV H$aZo dmbm| VWm {ZdoeH$m|
Ho$ nmg CnbãY {dÎm H$mo BgHo$ AË`{YH$ CËnmXH$ {Zdoe Adgam| H$s Va\$ {ZX}{eV H$aZo _|
ghm`H$ hmoVo h¢ &
(H$) Cn`w©º$ pñW{V _| ~mµOma Ûmam {Zînm{XV {H$E OmZo dmbo H$m`© H$m Zm_ Xr{OE &
(I) ny±Or ~mµOma IÊS> Ho$ A{V[aº$ Cg ~mµOma IÊS> H$m Zm_ ~VmBE {Og_| Aa{jV VWm
Aënmd{Y G$U ànÌm| H$m ì`mnma hmoVm h¢ & XmoZm| Ho$ _Ü` AÝVa Ho$ H$moB© VrZ {~ÝXþ
^r Xr{OE & 4
These days, the development of a country is also judged by its system of

transferring finance from the sector where it is in surplus to the sector
where it is needed the most. To give strength to the economy, SEBI is
undertaking measures to develop the capital market. In addition to this,
there is another market in which unsecured and short-term debt
instruments are actively traded every day. These markets together help
the savers and investors in directing the available funds into their most
(a) Name the function being performed by the market in the above
case.
(b) Name the market segment other than the capital market segment
in which unsecured and short-term debt instruments are traded.
Also, give any three points of difference between the two.
66/1 9 P.T.O.
19. AdYoe, S>oëQ>m {b{_Q>oS> H$m à~§Y {ZXoeH$ h¡ & H$ånZr Zo EH$ AÀN>m Zm_ A{O©V {H$`m h¡
VWm BgH$m {ZînmXZ AÀN>m h¡ & `h AmXoem| H$mo g_` na nyam H$aZo Ho$ {bE OmZr OmVr
Wr & CËnmXZ à~§YH$, gwlr {à`§H$m, AmXoem| Ho$ à{H«$Ù H$s XoIaoI Hw$ebVmnyd©H$ H$a ahr
Wr VWm CgHo$ AYrZ Xg ào[aV H$_©Mmar H$m`©aV Wo & g^r H$m_ gwMmé ê$n go Mb aho Wo &
Xþ^m©½`de, {à`§H$m H$m EoŠgrS>oÝQ> hmo J`m & AdYoe OmZVm Wm {H$ {à`§H$m H$s AZwnpñW{V
_| H$ånZr g_` gr_m H$m nmbZ Zht H$a nmEJr & Cgo `h ^r kmV Wm {H$ g_` gr_m H$m
nmbZ Zht H$aZo na J«mhH$ Ag§VwîQ> hmo gH$Vo Wo {Oggo ì`dgm` H$s hm{Z VWm »`m{V H$s
hm{Z H$m µOmo{I_ Wm & AV:, CgZo AnZo H$_©Mm[a`m| Ho$ gmW EH$ ~¡R>H$ H$s {Og_| AmXoem|
Ho$ ghr VWm J{Verb à{H«$Ù H$m {Z`moOZ {H$`m J`m & àËòH$ EH$ Q>r_ H$s Vah H$m`©
H$aZo Ho$ {bE gh_V Wm, Š`m|{H$ g§JR>Z Ho$ H$_©Mm[a`m| Ho$ à{V AdYoe H$m ì`dhma
gH$mamË_H$ Wm & g^r Zo A{V[aº$ g_` {X`m VWm à`mg {H$E d bú`m| H$s g_` na àm{ßV
hmo JB© & `hr Zht AdYoe, {à`§H$m go {_bZo J`m VWm Cgo Amdí`H$ {dlm_ H$s gbmh
Xr &
(H$) AdYoe H$s ZoV¥Ëd e¡br H$s nhMmZ H$s{OE VWm Bg e¡br H$mo Xem©Zo dmbm EH$
{MÌ ~ZmBE &
(I) AdYoe Ho$ ì`dhma Ûmam COmJa {H$E JE {H$Ýht Xmo _yë`m| H$s ^r nhMmZ
H$s{OE & 4
Avdhesh is the Managing Director of Delta Ltd. The company had
established a good name for itself and had been doing well. It was known
for timely completion of orders. The Production Manager, Ms. Priyanka
was efficiently handling the processing of orders and had a team of ten
motivated employees working under her. Everything was going on well.
Unfortunately, Priyanka met with an accident. Avdhesh knew that in the
absence of Priyanka, the company may not be able to meet the deadlines.
He also knew that not meeting the deadlines may lead to customer
dissatisfaction with the risk of loss of business and goodwill. So, he had a
meeting with his employees in which accurate and speedy processing of
orders was planned. Everybody agreed to work as a team because the
behaviour of Avdhesh was positive towards the employees of the
organisation. Everyone put in extra time and efforts and the targets were
met on time. Not only this, Avdhesh visited Priyanka and advised her to
take adequate rest.
(a) Identify the leadership style of Avdhesh and draw a diagram
depicting the style.
(b) Also, identify any two values highlighted by the behaviour of
Avdhesh.
66/1 10
20. ZÝXamMb ZoQ>dH©$²g EÊS> Q>oŠZmobm°OrµO {b{_Q>oS>, g§`wº$ amÁ` A_arH$m _| VH$ZrH$s A{^Zd
àdV©Z H$s EH$ AJ«Ur H$ånZr, {díd H$mo Omo‹S>Zo Ho$ {bE CËnmXm| VWm g_mYmZm| H$m g¥OZ
H$aVr h¡ & BgHo$ nmg EH$ ~‹S>r emoY VWm {dH$mg Q>r_ h¡ {OgZo àW_ S>ãë`y -I Zm_H$ ñ_mQ>©
K‹S>r H$m Am{dîH$ma {H$`m h¡, Omo g_` Xem©Zo Ho$ A{V[aº$ Hw$N> ñdmñÏ` gå~ÝYr n¡am_rQ>a
O¡go öX` J{V, aº$ Mmn, BË`m{X H$m ^r n[adrjU H$aVr h¡ & {dXoe _| ~mµOma H$s ImoO
H$aZo na H$ånZr Zo nm`m {H$ Am{W©H$ {dH$mg H$s J{V H$mo ~‹T>mZo Ho$ {bE ^maV _| gwYma
à{H«$`m Mb ahr Wr & bmBgoÝg H$s A{Zdm`©Vm Ho$ CÝ_ybZ H$m bm^ CR>mZo H$m H$ånZr Zo
{ZU©` {b`m & H$ånZr `h ^r OmZVr Wr {H$ {díd Ho$ {d{^Þ Xoem| _| EH$-Xÿgao H$mo à^m{dV
H$aZo VWm nañna {Z^©aVm H$m ñVa ~‹T> J`m Wm VWm ^maV H$mo BgHo$ AÝVam©îQ´>r` ì`mnma H$m
AmYma ~Zm`m Om gH$Vm Wm & ^maVr` ~mµOma H$m A{^J«hU H$aZo Ho$ {bE H$ånZr Zo JwOamV
_| EH$ H$m`m©b` H$s ñWmnZm H$s & Wmo‹S>o hr g_` _|, H$ånZr ~mµOma H$s EH$ AJ«Ur H$ånZr
~Z JB© & H$ånZr H$s g\$bVm go Xÿgao ~hþV go {Ibm‹S>r ~mµOma _| àdoe Ho$ {bE AmH${f©V
hþE & à{V`mo{JVm Ho$ H$maU _yë`m| _| H$_r hþB© VWm Bggo J«mhH$m| H$mo bm^ hþAm &
(H$) Cn`w©º$ AZwÀN>oX _|, gaH$mar Zr{V go gå~pÝYV Xmo _w»` AdYmaUmAm| H$s MMm© H$s
JB© h¡ & BZ AdYmaUmAm| H$s nhMmZ H$s{OE VWm g_PmBE &
(I) BZ AdYmaUmAm| Ho$ ^maVr` ì`dgm` VWm CÚmoJ na n‹S>Zo dmbo {H$Ýht VrZ à^mdm|
H$mo ^r g§jon _| g_PmBE & 5
Nandrachal Networks and Technologies Ltd. is a leader in technology
innovation in U.S.A. creating products and solutions for a connected
world. It has a large Research and Development team which invented the
first smart watch W-I, which besides showing the time would also
monitor few health parameters like heart beat, blood pressure, etc. While
in search of markets abroad, the company found that in India, the reform
process was underway with the aim of accelerating the pace of economic
growth. The company decided to take advantage of the fact that licensing
requirements had been abolished. The company was also aware that
there had been increased level of interaction and interdependence among
the various nations of the world and India could be made a base for its
international trade. It set up its office in Gujarat with a view to capture
the Indian market. In a short span of time, the company emerged as a
market leader. Success of the company attracted many other players to
enter the market. Competition resulted in reduction in prices, thereby
benefitting the customers.
(a) In the above paragraph, two major concepts related to government
policy have been discussed. Identify and explain those concepts.
(b) Also, explain briefly any three impacts of those concepts on Indian
business and industry.
66/1 11 P.T.O.
21. {Z`§ÌU Ho$ _hÎd na àH$me S>mbZo dmbo {H$Ýht nm±M {~ÝXþAm| H$m CëboI H$s{OE & 5
State any five points that highlight the importance of controlling.
22. AnZo gXñ`m| _| gm_m{OH$ H$m`© H$aZo H$s AmXV S>mbZo Ho$ {bE ‘Ama.Amo. `yW Šb~’ Zo EH$
d¥Õ Aml_ _| AnZo gXñ`m| H$s `mÌm H$m Am`moOZ {H$`m & `mÌm go nVm Mbm {H$ d¥Õ
Aml_ Ho$ ghdm{g`m| H$s ahZo H$s AdñWm ñdmñÏ`H$maH$ Zht Wr & Bg{bE,
Ama.Amo. `yW Šb~ Ho$ gXñ`m| Zo n[aga H$s gµ\$mB© H$m {ZU©` {b`m & gµ\$mB© A{^`mZ Ho$
_Ü` CÝh| `h ^r _hgyg hþAm {H$ d¥Õ Aml_ H$mo ZmeH$ H$sQ> {Z`§ÌU H$s ^r Amdí`H$Vm
Wr & naÝVw d¥Õ Aml_ Ho$ Hw$N> ghdmgr BgHo$ {bE A{ZÀNw>H$$ Wo Š`m|{H$ CZH$m {dídmg Wm
{H$ ZmeH$ H$sQ> {Z`§ÌU CZHo$ {bE ñdmñÏ` gå~ÝYr naoem{Z`m± n¡Xm H$a gH$Vm h¡ & AV:,
Ama.Amo. `yW Šb~ Zo Z¡{VH$, gwa{jV VWm JÝYa{hV ZmeH$ H$sQ> {Z`§ÌU àXmZ H$aZo H$m
{ZU©` {b`m & CÝhm|Zo d¥Õ Aml_ Ho$ ghdm{g`m| H$mo àñVm{dV ZmeH$ H$sQ> {Z`§ÌU CËnmX
H$m EH$ noå\$b¡Q> {XIm`m Omo AmgmZ, H$_ IM© dmbm VWm bå~o g_` VH$ Aga aIZo
dmbm ZmeH$ H$sQ> {Z`§ÌU Wm & ghdmgr ghf© V¡`ma hmo JE VWm ZmeH$ H$sQ> {Z`§ÌU H$a
{X`m J`m & nÝÐh {XZm| Ho$ níMmV² ZmeH$ H$sQ> {Z`§ÌU H$m Aga H$_ hmoZo bJm & Ama.Amo.
`yW Šb~ Zo ZmeH$ H$sQ> {Z`§ÌU H$ånZr go gå~ÝY ñWm{nV {H$`m naÝVw do AnZo AmJ_Z
H$mo Q>mbVo aho & EH$ _mh àVrjm H$aZo Ho$ níMmV² Ama.Amo. `yW Šb~ Zo Cn^moº$m Ý`m`mb`
_| {eH$m`V XO© H$am Xr &
Cn^moº$m Ý`m`mb` {eH$m`V H$s à_m{UH$Vm Ho$ ~mao _| g§VwîQ> Wm VWm BgZo ZmeH$ H$sQ>
{Z`§ÌU H$ånZr H$mo Amdí`H$ {ZX}e Omar H$a {XE &
(H$) Ý`m`mb` Ûmam Omar {H$E Om gH$Zo dmbo {H$Ýht N>: {ZX}em| H$m CëboI H$s{OE &
(I) Ama.Amo. `yyW Šb~ Ûmam g_mO H$mo ào{fV {H$Ýht Xmo _yë`m| H$s nhMmZ H$s{OE & 5
‘RO Youth Club’ organised a visit of its members to an Old Age Home to
inculcate the habit of social work among them. The visit revealed that the
living conditions of the inmates of the Old Age Home were not hygienic.
So, the RO Youth Club members decided to clean the premises. During
their cleanliness drive, they realised that the Old Age Home also required
pest control. But some of the inmates of the Old Age Home were reluctant
66/1 12
for it because they believed that the pest control may create health
problems for them. RO Youth Club, therefore, decided to provide ethical,
safe and odourless pest control. They showed to the inmates of the Old
Age Home a pamphlet of the proposed pest control product which
promised easy, inexpensive and long-lasting pest control. The inmates
happily agreed and the pest control was carried out. The effect of the pest
control started wearing off after a fortnight. RO Youth Club contacted the
pest control company which kept on postponing their visit. After waiting
for a month, RO Youth Club filed a case in the consumer court.
The consumer court was satisfied about the genuineness of the complaint
and issued necessary directions to the pest control company.
(a) State any six directions that might have been issued by the court.
(b) Identify any two values that are being communicated by RO Youth
Club to the society.
23. ì`mdgm{`H$ BH$mB`m| H$mo gmB~a gwajm g_mYmZ àXmZ H$aZo hoVw AZyn Jm¡‹S> Zo ‘H¡$Q²>g AmB©’
Zm_ H$s EH$ H$ånZr ewê$ H$s & BgH$m CÔoí` gmB~a AmH«$_Um| H$s amoH$Wm_ H$aZm, BZH$m
nVm bJmZm, à{V{H«$`m {XImZm VWm _hÎdnyU© Am±H$‹S>m| H$mo gwa{jV aIZm h¡ & dh EH$
n[al_r gm°âQ>doà B§Or{Zà VWm gmB~a gwajm H$m {deofk Wm & CgH$s »`m{V
{XZm|-{XZ ~‹T>Vr JB© Š`m|{H$ dh Z Ho$db EH$ gË`{ZîR>m dmbm ì`{º$ Wm A{nVw dh AnZm
H$m`© nyU© B©_mZXmar VWm {ZîR>m go H$aVm Wm & ì`dgm` à{V{XZ ~‹T>Vm Mbm J`m &
dh ~hþV h{f©V hþAm O~ Cgo {dkmZ Ed§ VH$ZrH$s _§Ìmb` go EH$ ~‹S>r n[a`moOZm H$m
àñVmd àmßV hþAm & n[a`moOZm na H$m`© H$aVo g_` CgZo nm`m {H$ H$m`© H$m n[a_mU CgHo$
{bE g^r H$m`© H$s XoIaoI ñd`§ H$aZo H$mo Ag§^d ~Zm ahm Wm & AV:, CgZo Q>r_ H$m
{dñVma H$aZo H$m {ZU©` {b`m & H$ånZr Zo amÁ` Ho$ EH$ B§Or{Z`[a¨J _hm{dÚmb` Ho$ gmW
{ZH$Q> H$m g§nH©$ ~Zm aIm Wm & EH$ n[aga M`Z _| ZB© n[a`moOZm _| H$m`© Ho$ {bE Amad
VWm àm§er H$s {Z`w{º$ H$s JB© &
CgZo nm`m {H$ ZE H$_©Mmar gj_, CËgmhr VWm {dídmg`mo½` Wo & AZyn Jm¡‹S> Zo bú`m| na
Ho$pÝÐV {H$`m VWm Amad Ed§ àm§er H$s ghm`Vm go n[a`moO Zm g_` na nyar hmo JB© & `hr
Zht, AZyn Jm¡‹S> AnZo àMmbZ joÌ H$mo ~‹T>mZo _| ^r g\$b hþAm & BgHo$ gmW hr Amad
VWm àm§er H$mo {dH$mg VWm nhb H$aZo Ho$ Adga ^r àmßV hþE &
(H$) Cg AdYmaUm H$s nhMmZ H$s{OE VWm g§jon _| g_PmBE {Oggo AZyn Jm¡‹S> H$mo
Cn`w©º$ pñW{V _| CÔoí`m| na Ho$pÝÐV H$aZo _| ghm`Vm àmßV hþB© &
(I) ^mJ (H$) _| nhMmZr JB© AdYmaUm Ho$ _hÎd Ho$ {H$Ýht Mma {~ÝXþAm| H$mo ^r
g_PmBE & 6
66/1 13 P.T.O.
Anoop Gaur started ‘Cat’s Eye’, a company for providing cyber security
solutions to businesses. Its objective is to prevent, detect, respond to
cyber attacks and protect critical data. He was a hardworking software
engineer and an expert in cyber security. His reputation grew by leaps
and bounds as he was not only a person of integrity but also did his work
with utmost honesty and sincerity. The business started growing day by
day.
He was delighted when he was offered a big project by the Ministry of
Science and Technology. While working on the project he found that the
volume of work made it impractical for him to handle all the work by
himself. Therefore, he decided to expand the team. The company
maintained a close liaison with an engineering college in the State.
During a campus placement, Aarav and Pranshi were appointed to work
for the new project.
He found the new employees capable, enthusiastic and trustworthy.
Anoop Gaur was thus, able to focus on the objectives and with the help of
Aarav and Pranshi, the project was completed on time. Not only this,
Anoop Gaur was also able to extend his area of operations. On the other
hand, Aarav and Pranshi also got opportunities to develop and exercise
initiative.
(a) Identify and explain briefly the concept used by Anoop Gaur in the
above case which helped him in focussing on the objectives.
(b) Also, explain any four points of importance of the concept
identified in part (a).
24. {H$gr H$ånZr H$s H$m`©erb ny±Or H$s Amdí`H$VmAm| H$mo à^m{dV H$aZo dmbo {H$Ýht Mma
H$maH$m| H$mo g§jon _| g_PmBE & 6
Explain briefly any four factors that affect the working capital
requirements of a company.
25. _oS>r B§ñQ®>_oÝQ²> g {b{_Q>oS> {M{H$Ëgm CnH$aUm| H$m {dVaU H$aZo dmbr EH$ H$ånZr h¡ & H$ånZr
Zo hmb hr _| ewJa ñVa H$s Om±M H$aZo dmbr _erZ H$s 15000 BH$mB`m| H$m Am`mV {H$`m
Omo aº$ H$m Z_yZm {bE {~Zm ewJa ñVa H$s Om±M H$a gH$Vr h¡ & {dnUZ aUZr{V H$m
{ZYm©aU H$aZo Ho$ {bE H$ånZr Ho$ _w»` H$m`©H$mar A{YH$mar Zo {d{^Þ µOmoZ Ho$ {dnUZ
à_wIm| H$s EH$ ~¡R>H$ ~wbmB© &
66/1 14
Bg ~¡R>H$ _|, Zm°W© µOmoZ Ho$ {dnUZ à_wI, g§O`, Zo gwPmd {X`m {H$ Š`m|{H$ _erZ| n[aîH¥$V
Wt CÝh| AñnVmb Ho$ CZ H$_©Mm[a`m| H$mo, Omo _erZm| H$m Cn`moJ H$a|Jo, _erZm| Ho$ aIaImd
Ho$ {df` _| g_PmZo Ho$ {bE ì`{º$JV ê$n go AñnVmbm| _| OmZm Mm{hE & CgZo `h ^r
gwPmd {X`m {H$ BgHo$ {bE A{V[aº$ à{e{jV H$_©Mm[a`m| H$s ^Vu H$s OmE & EH$ AÝ`
µOmoZ à_wI, {hVoe, Zo ~Vm`m {H$ _erZm| Ho$ Am`mV na ~hþV am{e IM© H$s JB© Wr, AV:
H$ånZr Ho$ nmg A{V[aº$ H$_©Mm[a`m| H$mo ^wJVmZ Ho$ {bE YZ H$s H$_r Wr, O¡gm {H$ g§O`
Zo gwPmd {X`m Wm &
X{jUr µOmoZ Ho$ Zd{Z`wº$ µOmoZb à_wI, aodm§e, Zo gwPmd {X`m {H$ Š`m|{H$ AmXoe H$m
AmH$ma ~‹S>m Zht Wm, ghr M`Z H$aZo go nyd© {dVaU Ho$ _mÜ`_m| Ho$ M`Z H$mo {ZYm©[aV H$aZo
dmbo H$maH$m| H$m AÜ``Z H$aZo H$s Amdí`H$Vm Wr &
(H$) ~¡R>H$ _| {dMma {H$E JE {dVaU _mÜ`_m| Ho$ M`Z H$mo à^m{dV H$aZo dmbo H$maH$m|
H$s nhMmZ H$s{OE &
(I) ^mJ (H$) _| nhMmZ {H$E JE àËòH$ H$maH$ go gå~pÝYV Ü`mZ XoZo `mo½` AÝ`
{df`m| H$mo ^r g§jon _| g_PmBE & 6
Medi Instruments Ltd. is a company dealing in the distribution of
medical instruments. The company recently imported 15000 units of
sugar testing machines to test the sugar levels without taking blood
samples. For deciding the marketing strategy, the Chief Executive Officer
of the company called a meeting of the marketing heads of different
zones.
In the meeting, Sanjay, the North Zone Marketing Head, suggested that
since the machines were sophisticated they need to visit hospitals
personally to explain its working to the hospital staff who would be using
the machines. He also suggested that additional trained people may be
recruited for the same. Hitesh, another Zonal Head, added that since lot of
money had been spent on the import of the machines, the company was
short of funds to pay the additional staff, as suggested by Sanjay.
Revansh, a newly appointed Zonal Head of South Zone, suggested that
since the size of the order was not large, a detailed study of the factors
determining the choice of channels of distribution was required before
making the right choice.
(a) Identify the factors influencing the choice of channels of
distribution which were discussed in the meeting.
(b) Also, explain briefly the other considerations to be taken care of in
each factor identified in part (a).
66/1 15 90,000
P.T.O.
CASE STUDY BASED MATERIAL
Nature and Significance of Management
Q. 1. Dheerj is working as „Operations Manager‟ in Tifco Ltd. Name the managerial level at
which he is working. State any four functions he will perform as „Operations Manager‟ in this
company. (5 marks)
Ans. Dheeraj is working at middle level management.
Functions: The main task of Dheeraj is to carry out the plans formulated by the top managers. For this
he need to:
1. Interest the policies framed by top management,
2. Ensure that his department has the necessary personnel, assign necessary duties and responsibilities
to them.
3. Motivate them for higher productivity to achieve desired objectives, and
4. Cooperate with other departments for smooth functioning of the organization.
Q. 2. Volvo Ltd‟s target is to produce 10000 shirts per month at a cost of Rs. 100/- per shirt. The
Production Manager achieved this target at a cost of Rs. 90/- per shirt. Do you think the
„Production Manager‟ is effective? Give one reason in support of your answer. (1 mark)
Ans. Yes, the Prodcution Manager is effective because he has completed the task and achieved the goal
of producing 10000 shirts. He is efficient also as he has achieved the target at a lower cost.
Q. 3. Yash Ltd. is facing a lot of problems these days. It manufactures electronic goods like
washing machines, microwave ovens, refrigeration and air-conditioners. The company‟s margins
are under pressure and the profits and market marketing department blames production
department for producing goods, which are not of good quality to meet customers‟ expectations.
The finance department blames both production and marketing departments for declining
return on investment and bad marketing.
1. What quality of management do you think the company is lacking? Justify your answer.
2. State the importance of the concept identified in (a). (5 marks)
Ans.
1. Coordination: because production, marketing and finance departmental efforts are not coordinated
for achieving organizational objectives harmoniously. As a result, the company‟s profits and market
share are declining.
2. Importance of Coordination
1. Growth in size:
2. Functional differentiation:
3. Specialization:
Q. 4. Aman, Ahmad and Ally are partners in a firm engaged in the distribution of dairy products
in Maharashtra state. Aman is a holder of Senior Secondary School Certificate from Central
Board of Secondary Education with Business Studies as one of his elective subjects. Ahmad had
done his post graduation in History and Ally in dairy farming. One day there was a serious
discussion between Ahmad and Ally regarding the nature of management. Ahmad argued that
management was a profession whereas Ally argued against it saying that the legal and medical
professions are the only professions because they fulfill all the conditions of profession.
Aman on the basis of his knowledge of business studies explained the nature of management as a
profession to Ahmad and Ally.
Explain, how Aman would have satisfied both Ahmad and Ally. (6 marks)
Ans. Aman would have satisfied both Ahmad and Ally by giving the following explanation:
Management is a profession. However, it is not a full-fledged profession like legal, accounting or
medical professions because it does not meet the exact criteria of a profession.
The application of the features of a profession to management is examined below:
1. Ell-defined body of knowledge:
2. Restricted Entry:
3. Professional Association:
4. Ethical code of conduct:
5. Service motive:
Q. 5. To meet the objectives of the firm, the management of Bhavya Ltd. offers employment to
physically challenged persons. Identify the organizational objective it is trying to achieve. Give
reason in support of your answer. (1 mark)
Ans. Growth, since number of employees is increasing, it leads to increase in production and hence
growth of the company.
Q. 6. B Ltd. wants to modify its existing product, CD players in the market due to decreasing
sales. What decisions/steps should each level of management take to give effort to this decisions?
(6 marks)
Ans. The company wants to modify its existing product, CD players in the market because of today‟s
dynamic business environment. For this, each level of management must divide its task.
Functions of top management:
1. They must plan the technique of modification/modernization of the product. They may plan to
manufacture DVD players or Blue raw players, etc. to modernize the product.
2. They must organize and assemble necessary resources and coordinate the efforts of all the
departments towards modernization.
Functions of middle management:

1. They must implement the plans laid down by top management in their respective departments or
divisions.
2. They must interpret the plan and policies to their subordinates.
Functions of operational/supervisory management:

1. They must assign the tasks to workforce and supervise that the task is carried on in the right
direction.
2. They must maintain the quality of work and r educe the wastage by improving the motivation and
loyalty of workers.
Q. 7. Sonali is the manager of a large company manufacturing garments for kids. She plans her
winter collection in the month of August itself. Then, she ensures that there is adequate
workforce. She continuously monitors whether production is proceeding according to plans. She
asks the marketing department to prepare their promotional and advertising campaigns also.
1. Identify and explain the concept of management explained in the above para.
2. What characteristic feature does the above para highlight? State. (5 marks)
Ans.
1. Coordination
It is the force that binds all the functions of management.It is the common thread that runs through all
activities such as purchase, production, sales, finance, etc. to ensure continuity in the working of the
organization.
Coordination is not a separate function of management.It is the essence of management.It is implicit
and inherent in all functions of management.
Top management plans for the entire organization.
 According to these plans, the organizational structure is developed and staffed.
 In order to ensure that these plans are executed according to plans, directing is requires.
 Any deviation between the actual and the standard performance is corrected at the stage of
controlling.
1. Coordination is a continuous process. It begins at the planning stage and continues till controlling.
Q. 8. H. Tech Ltd. is a company producing IT services. The company‟s profits are enough for the
survival and growth. The management of the company believes that a satisfied employee creates
a satisfied customer, who in turn creates profits that lead to satisfied shareholders. So, it pays
competitive salaries and perks to its all employees. All the employees are happy working in the
organization because of personal growth and development.
The company has a strong sense of social responsibility. It has set up an engineering college in
which one-third of the students are girls to whom the company gives 50% scholarship.
Is the management of H. Tech Ltd. fulfilling its objectives? Justify your answer by giving
reasons. (6 marks)
Ans. Yes, the management of H. Tech Ltd. is fulfilling all the objectives – organizational objectives,
social objectives and personal objectives.
1. Organizational objectives
2. Social objectives
3. Personal objectives
Q. 9. Govinda Ltd. is a highly reputed company. Different functions are performed by different
individuals in this company, who are bound together in a hierarchy of relationships. Every
individual in the hierarchy is responsible for successful completion of a particular task. Mr.
Gauranga is responsible for the welfare and survival of the organization. He formulates overall
organizational goals and strategies for their achievement. MR. Nityanand ensures that quality of
output is maintained, wastage of materials is minimized and safety standards are maintained.
Mr. Sanatan assigns necessary duties and responsibilities to the personnel and motivates them to
achieve desired objectives
At what levels of management are MR. Gauranga, Mr. Nityanand and Mr. Sanatan working in
Govinda Ltd.? justify your answer. (3 marks)
Ans.
1. Mr. Gauranga is working at the top level management.
He is responsible for the welfare and survival of the organization.He formulates overall organizational
goals and strategies for their achievement.
1. Mr. Nityanand is working at the lower level management.
He ensures that quality of output is maintained, wastage of materials is minimized and safety standards
are maintained.
Mr. Sanatan is working at the middle level management.
He assigns necessary duties and responsibilities to the personnel and motivates them to achieve desired
iobjectives.
Q. 10. The management of Vrinda Ltd. strongly believes that the members of an organization
should work towards fulfilling the common organizational goals. This requires team work and
integration of efforts of all individuals, departments and specialists. This is because all the
individuals and departments depend on each other for information and resources to perform
their respective activities. Managers need to reconcile differences in approach, timing, effort or
interest. At the same time it should enable all its members to grow and develop. Thus, there is a
need to harmonize individual goals and organizational goals.
1. Identify the concept of management discussed above.
2. State any three features of the concept identified in (a).
3. Identify and explain the characteristic of management which is reflected from the above para. (6
marks)
Ans.
1. Coordination
2. Features of coordination:
1. Coordination integrates group efforts by unifying diverse interest.
2. Coordination ensures unity of action by acting as a binding force between departments.
3. Coordination is a continuous process as it begins at planning stage and continues till controlling.
1. Management is a group activity.
An organization is a group of different individuals who work together with team spirit and coordination
to achieve the goals of the organization.
Q. 11. Sanjana is the branch manager of ABC Handicrafts Pvt. The company‟s objective is to
promote the sales of Indian handloom and handicraft products. Its sells fabrics, furnishings,
ready-mades and household items are made out of traditional Indian fabrics. Sanjana decides
quantities, variety, colour and texture of all the above items and then allocates resources for their
purchase form different suppliers. She appoints a team of designers and crafts people in the
company, who developed some prints for bed covers in bright colour on silk. Although they
looked very impressive, they were more expensive than they had planned to sell. Average
customer could not afford to buy it. Praising their effort, Sanjaja suggested that they should keep
the silk bed covers for special occasions like Diwali and Christmas and offer the cotton bed
covers on a regular basis to keep costs under control.
Identify the functions of management which Sanjaja performs by quoting the lines the above
para. (5 marks)
Ans.
1. Planning: „Sanjana decides quantities, variety, colour and texture of all the above items…‟
2. Organizing:‟…allocates resources for their purchase form different suppliers.‟
3. Staffing: „She appoints a team of designers and crafts people in the company…‟
4. Directing: „Praising their effort, Sanjana suggested that they should keep the silk bed covers for
special occasions like Diwali and christman…‟
5. Controlling: „…offer the cotton bed covers on a regular basis to keep costs under control.‟
„…they were more expensive than they had planned to sell.‟

Q. 12. XYZ Power Ltd. set up a factory for manufacturing solar lanterns in a remote village as
there was no reliable supply of electricity in rural areas. The revenue earned by the company was
sufficient to cover the costs and the risks. The demand of lanterns was increasing day by day, so
the company decided to increase production to generate higher sales. For this they decided to
employ people from the nearby villages as very few job opportunities were available in that area.
The company also decided to open schools and crèches for the children of its employees.
1. Identify and explain the objectives of management discussed above.
2. The company is fulfilling the organizational and social objectives of management. (4 marks)
Ans.
1. The company is fulfilling the organizational and social objectives of management.
Organizational objectives include survival, profit and growth.

 In order to survive, XYZ Power Ltd. earns enough revenues.
 Company‟s profits are sufficient to the cover the costs and therisks.
 Since demand for lanterns was increasing day by day and so the company decided to increase
production to generate higher sales, it implies that the company exploits fully its growth potential.
Social objectives involve the creation of benefits for the society.

The company decided to employ people from the nearby villages as very few job opportunities were
available in that area.It also decided to open schools and crèches for the children of its employees.‟
1. Values:
 Providing employment opportunities in rural areas
 Concern for the environment
 Socially responsible behaviour
 Community development by opening schools and crèches for children (any two)
Q. 13. Nishtha is the marketing manager of a company selling laptops. She plans the target sale
of 2000 laptops per month. She allocates necessary resources to carry out the plan. She has six
salesmen working under her. She works with them, guiding and motivating them to achieve the
target sales. At the end of the month, after comparison of actual sales with the target sales she
found that actual sales exceeded the target sales. She rewards the efficient employees to motivate
them.
1. How does Nishtha prove the importance of management? Explain.
2. Also state any two values which she wants to communicate to the society by her behavior. (5
marks)
Ans.
1. The marketing manager, Nishtha helps in:
1. Achieving the group goals by giving a common direction to the individual effort of her subordinates
in achieving the target sale of 2000 laptops in a month.
2. Increasing efficiency of employees by rewarding them.
 She performs all the functions of management.
 She plans the target sale of 2000 laptops per months‟ – Planning
 She allocates necessary resources to carry out the plan‟ – Organizing
 She works with them, guiding and motivating them to achieve the target sales‟ – Directing
 At the end of the month, after comparison of actual sales with the target sales she found than actual
sales exceeded the target sales‟ - Controlling
1. Values:
 Sense of achievement
 Loyalty
 Belongingness (any two)
Q. 14. Sooraj works as a salesman in a company selling pet accessories and food. He has been
given a target of selling 1200 units of the food packets in a month by offering a maximum of 10%
discount to his customers. In order to meet his monthly sales target, on the last two days of the
months, he offers 15% discount to his customers.
Is Sooraj effective in his work? Explain by giving a suitable reason in support of your answer.
Ans. Yes, Sooraj is effective in his work as he has been able to meet his monthly sales target of selling
1200 units of the food packets.
Q. 15. Sujata works as a designer in n export house. As per the terms of an order received by the
export house, she has to get 100 units of denim jackets made in 15 days @ Rs. 2000 per jacket.
She is able to complete her target production in 20 days because in order to complete ithe order
in 15 days she would have made the workers work over time. As a result, the cost of production
per jacket may have increased by Rs. 100.
Is Sujata efficient in her work? Explain by giving a suitable reason in support of your answer.
Ans. Yes, Sujata is efficient in her work as she has been able to get 1000 units of denim jackets made
@ Rs. 2000 per jacket.
Q. 16. Anju and Manju are good friends. Considering the cast that the activities involved in
managing an enterprise are common to all organizations, after completing their masters in
business management, both of them take up a job at managerial level in different organizations
as per their individual areas of interest. Anju tales up a marketing job in a retail company and
strives to increase sales where as Manju joins an NGO and works diligently to realize its
objective related to providing employment to specially abled persons. Both of them have to
perform a series of continuous, composite, but separate functions. On some days, Anju may
spend more time in planning a future display layout and on another day, she may spend time in
sorting out an employee‟s problem. Both Anju and Manju make conscious efforts to build a
feeling of team spirit and coordination among diverse individuals with different needs who work
under them. The effect of their management is noticeable in their respective departments as the
targets are met according to plans, employees are happy and satisfied, and there is orderliness in
its functioning rather than chaos.
Identify the various features of management highlighted in the above paragraph by quoting lines
form it.
Ans. The various features of management highlighted in the above paragraph are stated below:
1. Management is all pervasive:
2. Management is a goal-oriented process:
3. Management is a continuous process:
4. Management is a group activity:
5. Management is an intangible force:
Q. 17. Real Alliance Ltd. is a well-known cement company in India. It is able to earn adequate
revenues to cover costs. Its capital base, number of employees and production turnover has
increased manifolds over the years. The rate of profitability of the business is also creditable. The
employees of the company are happy and satisfied with their remuneration, working conditions,
promotion policy etc. as a part of its moral obligation, the company has taken many initiatives
for providing employment to specially abled persons and promoting literacy in the villages
adopted by it.
1. Identify and explain the various types of objectives of management being fulfilled by Real
Alliance Ltd by quoting lines from the paragraph.
2. List any two values that real Alliance Ltd. wants to communicate to the society.
Ans. The various objectives of management being fulfilled by Real Alliance Ltd are stated below:
1. Organizational objectives:
1. Survival:
2. Growth:
3. Profit:
1. Personal objectives:
2. Social objectives:
3. The two value that Real Alliance Ltd. wants to communicate to the society are:
1. Social welfare
2. Respect for their employees

Q. 18. Esha works as the cost and risk management head of a company in power sector. As a
result of her excellent managerial competence, the company is able to reduce costs and increase
productivity. The company belongs to infrastructure sector, where is regular amendments are
made in the government regulations and policies. She holds regular meetings to ensure that
people in her department are not only aware of the related changes but are also able to adapt to
these changes effectively. This helps the company to maintain its competitive edge. She motivates
and leads her team in such a manner that individual members are able to achieve personal goals
while contributing to the overall organizational objective. In the process of fulfilling her duties
for the growth of the organization, she helps in providing competitive services, adopting new
technology, creating more employment opportunities etc. for the greater good of the people at
large.
Identify the various reasons that have made management so important by quoting lines from the
paragraph.
Ans. The various reasons mentioned in the above paragraph that have made management so important
are stated below:
1. Management increases efficiency as it leads to reduction in costs due to optimum utilization of
resources.
“As a result of her excellent managerial competence the company is able to reduce costs and increase
productivity.”
1. Management creates a dynamic organization so that it is able to incorporate the corresponding
changes in its working with any change in its business environment.
“The company belongs to infrastructure sector, wherein regular amendments are made in the
government regulations and policies.She holds regular meetings to ensure that people in her department
are not only aware of the related changes but are also able to adapt to these changes effectively.This
helps the company to maintain its competitive edge.”
1. Management helps in achieving personal objectives of the employees in the organization.
“She motivates and leads her team in such a manner that individual members are able to achieve
personal goals while contributing to the overall organizational objective.”
1. Management helps in the development of society by contributing effectively towards it is multiple
ways.
“In the process of fulfilling her duties for the growth of the organization, she helps in providing
competitive services, adopting new technology, creating more employment opportunities etc. for the
greater good of the people at large.
Q. 19. Ramarjuna joins an IT from as a system analyst after completing his masters in Computer
Science. As the nature of his work demands he has to work in very close coordination with all the
departmental head sin the firm, very soon Ramarjuna realizes that each departmental head has
own individual style of working. They differ greatly in their day-to-day approach to work. They
tend to deal with a given situation, an issue or a problem through a combination of their own
experience, creativity, imagination, initiative and innovation.
Identify and explain the nature of management highlighted in the above case.
Ans. In the above case, management is being considered as an art.
Art is the skillful and personal application of existing knowledge to achieve desired results. The
evaluation of management as an art is given below:
1. Existence of theoretical knowledge:
2. Personalized applications:
3. Based on practice and creativity:
Q. 20. Dharam is a well-known businessman in the field of publishing. He owes the success of his
business to his own education in business management and his team of certified management
consultants. Therefore, he decides to send both his children Danush and Damini abroad to
acquire a degree in business management in their individual area of expertise. He feels that all
over the world there is marked growth in management s a discipline, but still it is not considered
to be a full-fledged profession for certain reasons.
1. Explain the reasons because of which Dharam considers management as a discipline.
2. Critically examine the various reasons because of which management is not considered to be a
full-fledged profession.
Ans.
1. Dharam considers management as a discipline because there exist a number of theories and
principles on management which have been formulated by various management experts. It is taught in
various schools and colleges, all over the world, as a separate subject of study.
2. Management is not considered to be a full-fledged profession because of the following reasons:
1. Restricted entry:
2. Professional association:
Q. 21. Kartik joins a garment factory as a plant supervisor in Lucknow. He observes that the
output of some workers is very low as compared to the standards set for their performance. On
analyzing the reasons for the same, he finds out that a lot of time of the workers is wasted in
getting the requisite materials issued form the store. Whereas on asking, the store keeper
complains that there is no harmony in the working of the production department as a whole.
Every day the workers approach him at the least minute to procure different kinds of threads,
laces, mirrors, buttons etc. if it is not available in the store then he has to place an order with the
purchase officer. As a result, a lot of time of the workers is wasted. So, in order to integrate the
various production activities, henceforth, Kartik ensures that the store keeper is informed well
three days in advance about the requisite materials. Consequently, the store keeper is able to
keep the materials ready for the workers every morning in accordance with their requirements.
1. Identify and explain the quality of management that Kartik has introduced in the working of
the production department as a corrective measure to control the output of the workers.
2. State briefly and two points highlighting the importance of quality of management identified in
part (a).
Ans.
1. Coordination is the quality of management that Kartik has introduced in the working of the
production department as a corrective measure to control the output of the workers.
Coordination is the process which helps to integrate the efforts of different individuals with diverse
needs to secure a unity of action in the pursuit of common goals.
1. The two points highlighting the importance of coordination are stated below:
1. Growth in the size:
2. Functional differentiation:
Q. 22. Sridhar‟s father is working as a section in-charge in a government office. Identify the level
of management at which he is working? State any five functions that he has to perform at this
level.
Ans. Sridhar‟s father is working as a section in-charge in a government office. He is working at the
lower level of management.
He has to perform the following functions at this level of management:
1. He has to directly oversee the efforts of the workforce.
2. He has to serve as a link between the workers and middle level managers.
3. He has to ensure sufficient availability of resources and good quality of output.
4. He has to provide guidance and training to workers.
5. He has to ensure that good working conditions are provided to the workers.
Q. 23. Geetika is working in a private sector bank. One of her key function relates to the
formulation of the overall organizational goals and strategies of the bank. Identify the level of
management at which she is working? State any three other functions that she has to perform at
this level.
Ans. Geetika is working at the top level of management in the private sector bank. The three other
functions that she has to perform at this level are outlined below:
1. She is responsible for the success and failure of the organization.
2. She is responsible for all the business activities and its impact on society.
3. She has to coordinate the activities of different departments in pursuit of common goals.
Q. 24. Arundhati has been promoted to the post of Marketing Division Head of a soft drink
company. Identify the level of management at which she will be working henceforth. State any
four functions that she will have to perform at this level.
Ans. Henceforth, Arundhati will be working at middle level of management.
The four functions that she will have to perform at this level are stated below:
1. She had to ensure that her department has the necessary staff.
2. She has to assign duties and responsibilities to the people in her department.
3. She has to motivate the people in her department to achieve the desired objectives.
4. She has to co-operate with the other departments for ensuring smooth functioning of the
organization.
Q. 25. Bhuvan argues that management is required in all kinds of organizations where as Piyush
feels that management is not required in non-business organizations such as school, club,
hospitals, etc. who is correct?
Ans. Bhuvan, because management is pervasive.
Q. 26. Mohan has retired from the post of a foreman in a factory. At what level of management is
he working?
Ans. Supervisory or operational level.
Q. 27. „Sonu Nigam‟ the famous playback singer always spends time for practice and adds his
creativity in his singing.
Like Sonu Nigam, Mr. Rajiv, manager of Headlines Ltd. uses his creativity and practice
management principles under different situations to manage the business. The employees are
happy and satisfied as he every day reward employees for their punctuality and efficiency.
1. Identify the nature of management highlighted above.
2. Name other two aspects of nature of management.
3. Identify the values followed by Mr. Rajiv.
Ans.
1. Nature of management highlighted above is “Management as an Art”
2. The other two aspects of nature of management are:
1. Management as Science.
2. Management as Profession.
1. Values:
1. Motivating employees for discipline and punctuality.
2. Good and responsible behavior by rewarding employees.
Q. 28. Bhuvan Ltd., a garment manufacturing Company set the target production of 100
garments per month at the estimated cost of Rs. 200 per garment. Mohan, a worker worked
double shift and manufactured around 150 garments but at the estimated cost of Rs. 230 per
garment. On the other hand, Ravi another worker focus on cost and handled resources very
carefully so the manufactured 90 garments but at the estimated cost of Rs. 190 per garment.
Third worker maintained the balance and achieved target of 100 garment at the estimated cost of
Rs. 200 per garment.
1. Identify the quality possessed by Ravi, Mohan and what they are lacking.
2. What quality is possessed by third worker?
3. Which worker is preferred by management?
Ans.
1. Mohan is effective but he lacks efficiency.
Ravi is efficient but he lacks effectiveness.

1. Third worker is effective as well as efficient.
2. Management prefer third worker as management always insist on achievement of goal effectively as
well as efficiently.
Q. 29. Management of Alpha Ltd. has installed a special recycling plant to recycle the waste
instead of dumping the waste in ground. It is also providing employment opportunities to local
residents. Company started a school nearby for the children of their employees.
1. Identify the objectives company is fulfilling.
2. (ii) Quote the lines from above para which indicate those objective.
Ans.
1. Social and personal objectives
“Installed a recycle plant”:Social objective.

1. “Started a school for children of their employees”. Personal objectives.
Q. 30. Directors of Bhuvan Ltd. assigned the task of implementing the plans and policies framed
by the board to all the departmental heads. Departmental head appointed supervisors,
superintendent, executives, etc. so that work can be assigned to workers as per the plan
supervisors kept a check on workers as per the plan.
1. Identify the feature of management highlighted in above para.
2. Explain that feature.
Ans. 1. The feature highlighted in above para is “management is a group activity.”

Q. 31. Alpha Ltd. is a Company that manufacturers mobile phones and accessories. Its profits
are declining nowadays. The sales department blames production department for low quality, the
production department blames purchase department for not supplying good quality parts.
1. What quality of management is lacking in the above case?
2. Explain the nature of the concept.
Ans. (a) Coordination.

Q. 32. A group of people believes that management is a systematic body of knowledge that
explain certain general truth and is based on logical observation.
Identify and explain the nature of management discussed in above case.
Ans. Management as a Science.

Q. 33. Unique enterprises is able to achieve the target production of 5,000 units within the
prescribed time; however to achieve this target they hired extra workers on adhoc and spent
around is 40,000 extra to pay the adhoc workers sot that target production can be achieved on
time.
1. Do you think unique enterprise is effective or efficient?
2. Was their decision to hire adhoc workers to achieve the target was correct?
3. Explain the concept of management highlighted above.
Ans.
1. Unique enterprise is effective but not efficient.
2. No, the decision to hire adhoc workers and spending extra is not correct, this will reduce the
efficiency of enterprise.
3. The concept referred in this case is “Balance between effectiveness and efficiency.”
Q. 34. In an organization sales department wants to increase the sale by 20% so sales department
planned to offer extra discounts to customers. Finance department raised objection on it as they
sat it will result in loss of revenue and company may face liquidity problem.
1. Name the importance of coordination referred here.
2. State other two importance of coordination.
Ans.
1. “Functional differentiation”
2. Other two importance:
1. Size (b) Specialization.
Q. 35. Mr. Rajiv and Arun are responsible for welfare of the whole organization. Their job is
very complex they have to develop long term objectives, policies and review the work of different
heads at different level. Mr. John and Mr. Singh are responsible for the working of department
they are heading, they formulate short term departmental objectives in accordance with
organizational objectives.
Mr. Philip, Mrs. Archana, Mrs. Kamlesh and Mrs. Kavita are in direct contact with the
workforce consisting of various employees and workers. They are responsible for quality of work
and providing good working conditions to workers.
1. State the three level of management.
2. Name the persons who are involved in different level from the above para.
Ans.
1. Top level, middle level, supervisory level.
2. Top level – Mr. Rajiv and Arun
Middle level – Mr. John and Singh

Supervisory level – Mr. Philip, Mrs. Archana, Kamlesh and Kavita.
Q. 36. The manager of Alpha Ltd. is very efficient and effective and makes sure all the employees
and workers in his team perform the task on time with minimum cost. His main focus is on cost
cutting so he never listens to the demand of workers for increasing wages. He even gives no
opportunity to worker for promotion. As a result workers started becoming frustrated and
disheartened all the time.
1. Which objective of management could not be achieved by the manager.
2. State other two objectives of management.
3. State any one value ignored by the manager.
Ans.
1. Personal/Human or individual objective.
2. (i) Economic 9iik) Social
3. Value of humanity, Care.
Q. 37. The management of Amaira Ltd. strongly believes that the members of the organization
should work toward fulfilled the common organizational goals. This requires team work and
integration of efforts of all individuals departments and specialists. This is because all the
individuals and departments depend on each other for information and resources to perform
their respective activities. Manager needs to reconcile differences in approach, timing, efforts
and interest. At the same time it should enable all its members to grow and develop. Thus, there
is a need to harmonize individual goals and organizational goals.
1. Stat the concept of management discussed above.
2. State any three features of the concept identified in above para.
3. State value referred in above para.
Ans.
1. Coordination.
2. Give features of coordination.
3. Value of Harmony between employees and management.
Q. 38. Mega Ltd. manufactured water-heaters. In the first year of its operations, the revenue
earned by the company was just sufficient to meet its cost. To increase the revenue, the company
analysed the reasons behind the less revenues. After analysis, the company decided:
To reduce the labour cost by shifting the manufacturing unit to a backward area where labour
was available at a very low rate.
To start manufacturing solar water-heaters and reduce the production of electric water-
heaters slowly.
This will not only help in covering the risks but also help in meting other objectives.
1. Identify and explain the objectives of management discussed above.
2. State any two values which the company wanted to communicate to society.
Ans.
1. The objectives of management discussed above are:
1. Organizational objectives:
2. Social Objectives:
1. The two values that the company wanted to communicate to the society are:
1. Rural development
2. Environment sustainability
Q. 39. Ritu is the manager of the northern division of a large corporate house. At what level does
she work in the organization? What are he basic functions?
Ans. Ritue / grandfather / Deepak‟s father / Deeraj / Rajat, all of them are working at the middle level
of management.
Q. 40. Mr. Nitin Singhania‟s father has a good business of iron and steel. He wants to go to the
USA for his MBA but his father thinks that he should join the business. On the basis of emerging
trends, do you think that Mr. Singhania should send his son to the USA? Give any three reasons
in support of your answer.
Ans. Yes, according to me, Mr. Singhania should send his son to USA for his MBA because
management is being recognized as a profession to a great extent because of the following reasons:
1. Well defined body of knowledge:
2. Ethical code of conduct:
3. Service motive:
41. Jayant is working as Head Relationship Manager in the wealth management division of a
private sector bank. He has created an internal environment which is conducive to an effective
and efficient performance of his team of ten relationship management executives. A typical day
at work in Jayant‟s life consists of a series of interrelated and continuous functions. He decides
the targets for his department which are in line with the objectives of the organizaitonas a whole.
The future course of action for his team members is laid out well in advance. The various
resources required by the relationship managers like an Paid with GPS system, account opening
forms, brochures, details of account holders etc. are made readily available to them. The
executives are given sufficient authority to carry out the work assigned to them. Jayant works in
close coordination with the human Resource Manager in order to ensure that he is able to create
and maintain a satisfactory and satisfied work force in his department. Through constant
guidance and motivation, Jayant inspires them to realize their full potential. He offers them
various types of incentives from time to time keeping in view their diverse individual needs.
Moreover, he keeps a close watch on their individual performances in order to ensure that they
are in accordance with the standards set and takes corrective actions whenever needed.
1. Identify the concept being referred to in the following line, “He created an internal
environment which is conducive to an effective and efficient performance of his team of ten
relationship management executives.”
2. Identify and describe the various functions of the concept as identified in part (a) of the
question by quoting liens from the paragraph.
Ans.
1. The concept of management is being referred to in the following line, “He has created an internal
environment which is conducive to an effective and efficient performance of his team of ten
relationship management executives.”
2. The various functions of the management concept mentioned in the above paragraph are listed
below:
1. Planning:
2. Organizing:
3. Staffing:
4. Directing:
5. Controlling:
Q. 42. Ajay and Sanjay are childhood friends. Sanjay had lost his right hand in an accident in
childhood. They meet after a long time in a restaurant. On being asked, Sanjay tells Ajay that he
feels very discounted in managing his family business after the death of his father as it doesn‟t
match with his areas of interest. Ajay knows that Sanjay possess extraordinary skills in
management although he hasn‟t acquired any professional degree in management. Therefore, he
asks Sanjay to wind up his business in India and join him in his hotel business in Dubai as an
Assistant Manager in Sales and Marketing Division.
1. Can Sanjay be deployed at the post of Assistant Manager in Sales and Marketing Division
though he hasn‟t acquired any professional degree in management? Explain by giving suitable
justifications in support of your answer.
2. List any two values that are reflected in this act of Ajay.
Ans.
1. Yes, Sanjay can be deployed at the post of Assistant Manager in Sales and Marketing Division
although he hasn‟t acquired any professional degree in management as management is not considered
to be a full-fledged profession because of the following reasons:
1. Restricted entry:
2. Professional association:
1. The two values that are reflected in this act of Ajay are:
1. Compassion
2. Responsibility.
Q. 1. In your school, you observe that books are kept in office, chalks in the library and office
records in the staff room.
1. Which principle of management is violated here and why?
2. How will that affect the achievement of school objectives?
3. As a manager, what steps will you take to rectify the shortcomings? (3 marks)
Ans.
1. The principle of „Order‟
2. In the absence of orderliness, school objectives will not be achieved efficiently and effectively.
3. Things should be placed at appropriate places to achieve maximum efficiency with given time
framework.
Q. 2. The production manager of an automobile company asked the foreman to achieve a target
production of 200 scooters per day. But he did not give him the authority of requisition tools and
materials from the stores department. Can the production manger blame the foreman if he is not
able to achieve the desired target? Explain briefly the principle relating to the situation. (3
marks)
Ans. No, the production manager cannot blame the foreman because he did not give him the authority
to requisition tools and materials form the stores department. Since he has no authority, he could not
fulfill his responsibility.
In this case the principle of „Authority and Responsibility‟ is violated. Fayol suggested tht there must
be a balance between authority and responsibility. Authority and responsibility must go hand in hand.
Responsibility without adequate authority will make the subordinate ineffective, I.e., he will not be
able to perform his duties properly. At the same time giving authority without fixing responsibility may
lead to misuse of of authority.
Q. 3. Soniya Ltd. was engaged in the business of manufacturing auto components. Lately, its
business was expanding due to increased demand for cars. The competition was also increasing.
In order to keep its market share intact, the company directed its workforce to work overtime.
But this resulted in many problems.
Due to increased pressure of work the efficiency of workers declined. Sometimes, the
subordinates had to work for more than one superiors. The workers were becoming
indisciplined. The spirit of teamwork, which had characterized the company previously, had
begun to wane. Identify any three principles of management (as given by Henry Fayol) which
were begin violated, quoting the lines from the above case. (3 marks)
Ans.
1. Unity of command
“Sometimes, the subordinates had to work for more than one superiors.‟
1. Discipline
„The workers were becoming indisciplined.‟

1. Spirit de corps
„The spirit of teamwork, which had characterized the company previously, had begun to wane.‟
Q.4 A subordinate receives order from more than one loss’ . Which principle in violated? Ans:
Unity of command.
Q5. The production manager of a company is trying to produce good with minimum cost. Name
the concept which is being focused by management. Ans: efficiency
Q. 6. Radhika opens a jewelry showroom in Jaipur after completing a course in jewelry
designing. She has employed eleven persons in her showroom. For greater productivity, she
divides the work into small tasks and each employee is trained to perform his/her specialized job.
The sales persons are allowed to close a deal with a buyer by giving a maximum of 10% discount,
whereas the decision to given any further discount rests with Radhika as the final authority. In
the earlier days of starting of the business, five of her employees were asked to put in extra hours
of work. In return she had promised to give them a special incentive within a year. Therefore,
after six months when the business was doing well, she awarded a cash bonus to each of these
employees to honour her commitment. However, when it comes to setting the conflicts among her
employees, she tends to b e more biased towards her female employees.
1. Identify and explain the various principles of management that are being applied by Radhika
by quoting lines from the paragraph.
2. Identify and explain the principle of management which is being violated by Radhika by
quoting lines from the paragraph.
3. State any one effect of the violation of the principle of management by Radhika as identified in
part (b) of the question.
Ans.
1. The various principles of management that are being applied by Radhika are listed below:
1. Principle of Division of work:
“For greater productivity, she divides the work into small tasks and each employee is trained to
perform his/her specialized job.”
1. Principle of Centralization and Decentralization:
“The sales persons are allowed to close a deal with a buyer by giving a maximum of 10% discount,
whereas the decision to give any further discount rests with Radhika as the final authority.”
1. Principle of Discipline:
“Therefore, after six months when the business was doing well, she awarded a each bonus to each of
these employees to honour her commitment.”
1. The principle of management which is being violated by Radhika is Equity.
“However, when it comes to setting the conflicts among her employees, she tends to be more biased
towards her female employees.”
1. One effect of the violation of the Principle of Equity is that it may lead to job dissatisfaction among
the male workers.
Q7. Neeraj is selected for the post of software developer in an IT Company. On the first day of
his joining Mehul, his project manager tells Neeraj that during the course of his work he will
come across many such opportunities which may temp him to misuse his powers for individual or
family’s benefit at the cost of larger general interest of the company. In such situations, he should
rather exhibit exemplary behavior as it will raise his stature in the eyes of the company. Also, for
interacting with anyone in the company on official matters, he should adopt the formal chain of
authority and communication.
1. Identify and explain the various principles of management that Mehul is advising Neeraj to
follow while doing his job.
2. List any two values that Mehul wants to communicate to Neraj.
Ans.
1. The various principles of management that Mehul is advising Neeraj to follow while doing his job
are as follows:
1. Subordination of Individual Interest to General Interest:
2. Scalar Chain:
1. The two values that Mehul wants to communicate to Neeraj are:
1. Honesty
2. Self restraint
Q8. Davinder is a class twelfth commerce student in a reputed school in Punjab. Satinder is his
elder brother who is doing his Masters in Hospital administration from Delhi after completing
his B. Sc course. During vacations when Satinder comes home, Davinder shows him the business
studies project that he is preparing on the topic ‘Principles of Management’. Satinder tells him
that these principles are also a part of MBA course curriculum at the beginner’s level as they
form the core of management in practice. But he finds these principle different from those of
pure science.
1. Outline the concept of principles of management.
2. Why does Satinder find the principle of management different from those of pure science?
3. Why do the principles of management form the core of management in practice?
Explain by giving any two points highlighting the importance of principles of management.
Ans.
1. The principles of management serve as a broad and general guideline for the managerial decision
making and action.
2. Satinder finds the principles of management different from those of pure science because the
management principles are not as rigit as principles of pure science. This is due to the fact that they
deal with the human behavior and thus, need to be applied creatively in the light of given situation.
3. The importance of principles of management is described below:
1. Providing managers with useful insights into reality:
2. Optimum utilization of resources and effective administration:
Q.9 Nutan Tiffin Box service was started in Mumbai by Mumbai dabbawalas. The Dabbawalas
who are the soul of entire Mumbai aim to provide prompt and efficient services by providing
tasty homemade tiffin to all office goers at right time and place. The service is uninterrupted
even on the days of bad weather, political unrest and social disturbances. Recently they have
started online booking system through their website’ mydabbawals.com’. Owing to their
tremendous popularity amongst the happy and satisfied customers and members, the
dabbawalas were invited as guest lecturers by top business schools. The Dabbawalas operate in a
group of 25-30 people along with a group pleader. Each group teams up with other groups in
order to deliver the tiffin on time. They are not transferred on frequent basis as they have to
remember the addresses of their customers. They follow certain rules while doing trade-No
alcohol during working hours; No leave without permission; Wearing of white cap & carrying ID
cards during business hours.
Recently on the suggestion of a few self-motivated fellow men, the dabbawalas thought out and
executed a plan of providing food left in tiff ins by customers to slum children. They have
instructed their customers to place red sticker if food is left in the tiffin, to be fed to poor children
later.
1. State any one principle of management given by Fayol & one characteristic of management
mentioned in the above case.
2. Given any two values which the Dabbawalas want to communicate to the society.
(4 marks)
Ans.
1. Principles of management (any one)
1. Stability of Personnel
2. Initiative
3. Discipline
4. Esprit de corps
Characteristic of management (any one)

1. Goal oriented
2. Group activity
2. Values that have been communicated by the Dabbawalas: (any two)

1. Fulfilling social responsibility;
2. Empathy towards disadvantaged children;
3. Team work (or any other suitable value)
Q10. ‘Aapka vidyalaya’ believes in holistic development of students and encourages team
building through a mix of curricular, co-curricular and sports activities. On its founders day a
stage performance had to be put up. A committee of ten prefects was constituted to plan different
aspect of the function. They all decided to use recycled paper for decoration. There was a spirit
of unit and harmony and all members supported each other. With mutual trust and
belongingness the programme was systematically planned and executed. Kartik, one of the
prefects realized that unknowingly the group had applied one of the principles of management
while planning and executing the programme. He was so inspired by the success of the function
that he asked his father to apply to same principle in his business. His father replied that he was
already using this principle.
1. Identify the principle of management applied for the success of the programme.
2. State any two features of management highlighted in the above para.
3. Identify any two values which ‘Aapka Vidyalaya’ communicated to the society.
(4 marks)
Ans.
1. Espirit de corps
2.
1. Management is pervasive--„ …he asked his father to apply the same principle in his business.’
Management is pervasive as it can be applied to all types/levels of organizations.

2. Management is a group activity –„There was a spirit of unity and harmony and all members
supported each other.’
Management is a group activity because it requires team work and/or coordination of individual efforts.
3. Values being communicated to the society: (Any two)
1. Concern for the environment.
2. Holistic development of children.
3. Teamwok
Q11. Nikita and Salman completed the MBA and started working in a multinational company at
the same level. Both are working hard and are happy with their employer. Salman had the habit
of backbiting and wrong reporting about his colleagues to impress his boss. All the employees in
the organization knew about it. At the time of performance appraisal the performance of Nikita
was judged better than Salman. Even then their boss, Mohammed Sharif decided to promote
Salman stating that being a female Nikita will not be able to handle the complications of a higher
post.
1. Identify and explain the principle of management which was not followed by this multinational
company.
2. Identify the values which are being ignored quoting the liens the above para.
(5 marks)
Ans.
1. The principle violated is EQUITY.
It advocates that there should be no discrimination against anyone on account of sex, religion,
language, caste, belief, nationality etc.
It emphasizes kindliness and justice in the behavior of managers towards the workers to ensure loyalty
and devotion.
1. The valuation which are being ignored are:
1. Good human behavior because „Salman had the habit of backing and wrong reporting about his
colleagues to impress his boss.‟
2. Gender Equality because „Their boss decided to promote Salman stating that being a female Nikita
will not be able to handle the complications of a higher post.
Q12. Sigma Ltd. is a large company manufacturing electric motors. The company has several
departments – Production, Marketing, Finance and HR. Mr. Shashank, CEO of the company set
the target sale of 10 crore in a month. To increase the sales, the marketing manager, Mr. Ishaan
insists on offering 10% discount to customers. But the finance manager, Mr. Mohak does not
approve such discount as it would mean loss of revenue. Because of dual subordination, the sales
manager, Mr. Anshik could not achieve the sales target.
1. Which concept of management Sigman Ltd. is lacking? State it.
(6 marks)
Ans.
It is the process by which the activities of different departments are synchronized to ensure unity of
action.
1. Unity of command
There should be one and only one boss for every individual employee.If an employee gets orders from
two superiors at the same time, the principle of unity of command is violated.Consequences of
violation:Authority is undermined, discipline is in jeopardy, order is disturbed and stability is
threatened.
1. Spirit de Corps
Management should promote a team spirit of unity and harmony6 among employees.It is necessary for
coordination.
Q13. ABC Ltd. is engaged in producing electricity from domestic garbage. There is almost equal
division of work and responsibility between workers and management. The management even
takes workers into confidence before taking important decisions.
All the workers are satisfied as the behavior of the management is very good.
2. Identify any two values which the company wants to communicate to the society.
(3 marks)
Ans.
1. The principle of Taylor described in the above para is Cooperation, Not Individualism.
It states that there should be complete cooperation between the labour and the
management.Competition should be replaced by cooperation.
1. Good behavior in human interaction.
Q14. Voltech India Ltd. is manufacturing LED bulbs to save electricity and running under heavy
losses.
To revive from the losses, the management thought of shifting the unit to a backward area where
labour is available at a low cost. The management also asked the workers to work overtime
without any additional payment and promised to increased to wages of the workers after
achieving its mission. Within a short period the company started earning profits because both the
management and the workers honoured their commitments.
(3 marks)
Ans.
1. The principle of management described in the above para is Discipline.
Discipline is the obedience to organizational rules and employment agreement which are necessary for
the working of the organization.
1. Values that the company wants to communicate to the society are:
2. Development of backward regions
Q15. Kushal Ltd. is a leading automobile company in which the various departments are setting
up their own objectives without paying any interest to the organizational objectives.
1. Which aspect of management the company is lacking? What will be its impact on the
organization?
2. Identify the principle of management which has been overlooked by this organization.
3. State any two values neglected by the people of this organization. (5 marks)
Ans.
Its different departments like production, marketing, etc. do not coordinate their work.In the absence of
coordination, there will be overlapping and chaos instead of harmony and integration of activities. The
company will fail to achieve its objectives.
1. Subordination of individual interest to general interest.
2. Values:
1. Mutual cooperation
2. Unity of action
Q16.Telco Ltd. is manufacturing files and folders from old clothes to discourage use of plastic
fields and folders. For this, they employ people from nearby villages where very less job
opportunities are available. An employee, Harish, designed a plan for cost reduction but it was
not welcomed by the production manager. Another employee gave some suggestion for
improvement in design, but it was also not appreciated by the production manager.
(3 marks)
Ans.
1. Initiative. It means eagerness to initiate action without being asked to do so.
1. Sensitivity towards the environment
2. Creation of job opportunities
3. Development of backward regions.
Q17. Khandelwal Ltd., a tyre manufacturing concern has been established for more than ten
years. Having made good profits in the past, company wanted to expand further and hence did
not declare bonus for the previous year. The workers got agitated and trade union declared
strike and demanded bonus and other facilities. The management decided not to give into their
demands.
1. Which principle of scientific management is overlooked in the given case?
2. State any two values overlooked/ignored by the management in the above case.
(3 marks)
Ans.
1. Harmony, not Discord
2. Values overlooked are:
1. Mutual understanding
2. Empathy
3. Peace and stability
4. Law and Order
5. Sense of belongingness (any two)
Q18. Hritik is desirous of setting up a small factory to manufacture different kinds of eco-
friendly packaging materials. He proposes to adopt to logical approach to his business rather
than hit and trial method as he knows that this can result in tremendous saving of human energy
as well as wastage of time and materials. He plans to adopt paternalistic style of management in
practice in order to avoid any kind of class-conflict that may emerge between him and the
workers. Moreover, he plans to seek the opinion of his workers before taking any important
decisions and also offers incentives to them for providing valuable suggestions for the business.
1. Identify and explain the various principle of scientific management that Hritik plans to apply
in his business.
2. List any two values that he wants to communicate to the society by offering eco-friendly
packaging material.
Ans.
1. The various principle of scientific management that Hritik plans to apply in his business are
described below:
1. Science, not Rule of Thumb:
2. Harmony, Not Discord:
3. Cooperation, Not Individualism:
1. The two values that Harit wants to communicate to the society by offering eco-friendly packaging
material are:

2. Sense of responsibility
Q19. Gaurika has been appointed as the chief organizer of a weeklong cultural event. Being a
staunch follower of scientific management, she decides to execute her work by putting into
practice the various techniques of scientific management. On the basis of several observations,
she is able to determine that the standard time taken by the security officer at the gat to check
the credentials of each visitor is 30 seconds. So she decides to employ two persons on this job for
every function along with the other necessary support staff. She considers the fact that every day,
the functions will take place in three shifts of four hours each, therefore it is important to give
breaks to the support staff even in a single shift to take her/his lunch etc. moreover, on
introspection, she determines that the best way to distribute refreshment boxes to the visitors will
be to hand it over to them at the exit gate as it would help to save time and eliminate any kind of
confusion.
1. Identify and explain the various techniques of work study which have been put into practice by
Gaurika.
2. List any two values that Gaurika wants to communicate to the society.
Ans.
1. The various techniques of work study which have been put into practice by Gaurika are outlined
below:
1. Time Study:
2. Fatigue Study:
3. Method Study:
1. The two values that Gaurika wants to communicate to the society are:
2. Concern for employees
Q20. Study Buddy Pvt.’ Is company dealing in stationery items. In order to establish standards
of excellence and quality in materials and in the performance of men and machines, the company
adheres to benchmarks during production. Moreover, its products are available in limited
varieties, sizes and dimensions thereby eliminating superfluous diversity of products.
3. Identify the technique of scientific management which has been adopted by ‘Study Buddy Pvt.
Ltd.’
4. Ans. Standardization and Simplification of Work is the technique of scientific management which
has been adopted by „Study Buddy Pvt. Ltd.‟
Q21 Tina and Anshu completed their MBA and started working in a multinational company at
the same level. Both are working hard. Anshu has the habit of backbiting and wrong reporting
about his colleagues to impress the boss. All the employees in the organization know about it. At
the time of performance appraisal also Tina’s performance was rated better than Anshu. Even
then their boss decided to promote Anshu stating that being a female, Tina will not be able to
handle the complications of higher post.
1. Identify and explain the principle of management that was not followed by this company.
2. Identify the values being ignore.
Ans.
1. Company is violating the “Principle of Equity.”
2. The values ignored are
1. Gender equality
2. eward for performance
3. Good human behavior.
Q22 The production department of Alpha Ltd. was not performing well on detailed analysis, it
was observed that the workers of that department were overburdened. They were forced to work
for longer hours without any break. So the management planned to replace the production
manager. They appointed Mr. Hari as the new Production Manager. He observed the average
worker and note down their times. He noted down the time they worked and the time they
required to be fresh to join back the work. Based on this observation, he set the break intervals
for workers. He gave small breaks to workers to recharge their energy.
1. Name and explain the technique of scientific management used by Mr. Hari.
2. State the value which Mr. Hari wants to communicate to the society by allowing rest intervals
to workers.
Ans.
1. Fatigue study.
2. Value of humanity/sympathy/respect towards employees.
Q23. In the staff meeting the principal of the school raised objection that teachers start the
teacher after 5 to 10 minutes in third floor classes. He warned them as students are complaining
about this. The teachers explained the principal that when we climb steps from ground to third
floor. We get some tiredness and need 5 to 10 minutes rest before starting the lecture. The
principal planned to install a lift in school so that teachers do not waste their energy on wasteful
activity of climbing steps.
1. State the techniques of scientific management used by principal.
2. State any other technique of scientific management.
Ans.
1. “Technique of motion study.”
2. Other two techniques:
1. Functional foremanship
2. Time study.
Q24. In a factory the toolbox was kept under the table of every worker, whenever worker needs
tools he had to bend tape out tool from tool box and keep it back after use. The newly appointed
supervisor observed it and suggested to keep a stool near every worker’s chain where toolbox can
he placed so that workers do not waste their energy in bending again and again.
1. Which technique of scientific management is used by New Supervisor.
2. State the objective of motion study.
Ans.
1. Motion study.
2. The objective of motion study is to eliminate unproductive movements of workers.
Q25. Mr. Rajiv the senior manager of Unique enterprise considered himself very wise and used
to take all the decisions himself without consulting the employees, he never used to help any one
nor he used to take help of anyone. The employees of unique enterprise were not working
efficiently and company’s profit margin started declining to tackle the problem, the company
appointed a new manager from IIM Bangalore. The new manager after joining made a policy
that all the decisions will be taken after consulting employees in the meeting. All employees must
give some suggestions and best suggestions will be rewarded with financial and nonfinancial
incentives. This policy had a very positive effects on company.
1. State the principle of Hencry Fayol used by new manager.
2. State the technique of scientific management related to above case.
Ans.
1. Principle of initiative.
2. “Cooperation not individualism.”
CLASS : XII
Business Environment
Q. 1. Mr. Ajay after completing MBA from USA comes to India to start a new business under the
banner Ecom Creations Ltd. He launches a new product in a e-learning for senior Secondary
School students in Commerce stream, which already has n established market in UK and USA
but not in India. His business starts flourishing in India. Now more Indian companies entered
into the market with other subjects also.
Identify and quote the lines from above para which highlight the significance of understanding
business environment. (4 marks)
Ans.
“ Comes to India to start a new business … launches a new product in e-learning for Senior
secondary school students in Commerce stream.”
1. It helps in assisting in planning and policy formulation.
2. It helps the firm to identify opportunities and get the first mover advantage.
“ His business starts flourishing in India.”
1. It helps in improving performance.
“ Now more Indian companies entered into the market with different subjects also.”
1. It helps the firm to identify threats and early warning signals.
Q. 2. Just after declaration of Lok Sabha Elections 2014 results, the Bombay stock exchange‟s
price index (Sensex) rose by 1000 points in a day. Identify the environmental factor which led to
this rise giving reason. Also explain any two other dimensions of business environment. (5 marks)
Ans. Rise in stock market index (Sensex) is economic environment. But Political environment
(declaration of Lok Sabha Elections 2014 results)) led to this rise.
Two other dimensions of business environment:
1. Legal Environment:
2. Technological environment:
Q. 3. The court passed an order that all schools must have water purifier for the school children
as
1. Society in general is more concerned about quality of life.
2. Innovative techniques are being developed to manufacture water purifier at competitive rates.
3. Incomes are rising and children at home are also drinking purified water.
The government is also showing positive attitude towards the water purifier business.
Identify the different dimensions of business environment by quoting from the above details. (5
marks)
Ans.
1. Legal environment:
2. Social environment:
4. Economic environment:
5. Political environment:
Q. 4. „It is common now to see CD-ROM‟s, computerized information kiosks, and

Internet/Word Wide Web multimedia pages highlighting the virtues of products.‟ Name the
dimension of the business environment highlighted by this stateme. (1 mark)
Ans. Technological environment
Q. 5. Which component of business environment requires that advertisements of baby food must
necessarily inform the potential buyers that mother‟s milk is the best? (1 mark)
Ans. Legal environment.
Q. 6. It is the process by which government control over the industry is being loosened. Give the
term to which this statement is trying to indicate. (1 mark)
Ans. Liberalization
Q. 7. Due to entry of foreign firms, competition for Indian firms has increased, especially in
service industries. Name such service industries. (1 mark)
Ans. Telecommunications, airlines, banking, insurance, etc.
Q. 8. The Court passed an order to ban polythene bags as
1. The bags are creating many environmental problems which affect the life of people in general.
2. Society in general is more concerned about quality of life.
The Government decided to give subsidy to jute industry to promote this business.
Innovative techniques are being developed to manufacture jute bags at low rates.
Incomes are rising and people can afford to buy these bags.
Identify the different dimensions of Business Environment by quoting the lines from the above
particulars. (5 marks)
Ans.
3. Political environment:
5. Economic environment:
Q. 9. The government of India is seriously thinking of allowing the oil-marketing public sector
undertaking to fix their own prices for petrol and diesel. Which economic reform is the reason
for this change in the government‟s policy?
Ans. Privatisation as a reform is the reason for this change in the government policy.
Q. 10. Kapil Sharma is working as the Country Head of a company which owns a chain of malls
under the name of „Virtuoso‟ in the various parts of India. Through an analysis report of the
business environment, it has been brought to his notice that in the coming years, shopping at a
mall will not be a necessity for the buyers as purchases can be made online from anywhere and at
any time with ease and at the consumer‟s convenience. Hence, malls will have to provide much
more than shopping to be able to attract customers. So, he recommends that „Virtuoso‟ malls
should to be restructured into recreation centres, offering more spaces to socialize, host events
and concerts, and provide ample Food and Beverages options.
Consequently the share of entertainment segment and Beverages segment in the overall mall
space is increased by 20%. As a result, the company gains enormously by getting the first mover
advantage. In context of the above case:
1. Define the term „Business Environment‟.
2. Explain the terms „Threats‟ and „Opportunities‟ by quoting lines from the paragraph.
Ans.
1. The term „Business Environment‟ means the sum total of all individuals, institutions and other
forces that are outside the control of a business enterprise but that may affect its performance.
2. The term „threats‟ refers to the external environment, trends and changes that will hinder a firm‟s
performance.
“Trough an analysis report of the business environment, it has been brought to his notice that in the
coming years, shopping at a mall will not be a necessity for the buyers as purchases can be made online
from anywhere and at any time with ease and at the consumer‟s convenience.Hence, malls will have to
provide much more than shopping to be able to attract customers.”
The term „opportunities‟ refers to the positive external or changes that will help a firm to improve its
performance.
“As a result, the company gains enormously by getting the first mover advantage.”
Q. 11. “Zero Defect Zero Effect” (ZED) is a slogan coined by the Prime Minister of India,
Narendra Modi with reference to the Make in India initiative launched by the government. The
slogan reflects the efficiency of production processes, i.e. the products have no defects and the
process through which the product is made has zero adverse environmental and ecological
effects. The Zed model aims to make India the manufacturing hub of the world and prevent the
products developed in India from being rejected by the global market. Moreover, before the
initiative was launched, the limits of foreign direct investment in various sectors had been
relaxed. The application for licences was made available online and the validity of licences was
increased to three years. Various other norms and procedures were also relaxed by the
government.
In the light of the above paragraph, identify and explain the major component of New Economic
Policy of 1991 that are being referred to by quoting lines from the paragraph.
Ans. The major components of New Economic Policy of 1991 that are being referred to are as follows:
Liberalization: The economic reforms signaled the end of the licence-permit-quota raj and were
aimed at liberalizing the Indian business and industry from all unnecessary controls and restrictions.
“Moreover, before the initiative was launched, the limits of foreign direct investment in various sectors
has been relaxed.The application for licences was made available online and the validity of licences
was increased to three years. Various other norms and procedures were also relaxed by the
government.”
Globalization: Globalization means the integration of the various economies of the world leading
towards the emergence of a cohesive global economy.
“The ZED model aims to make India the manufacturing hub of the world and prevent the products
developed in India from being rejected by the global market.”
Q. 12. Over the years, e-business in our country has witnessed tremendous growth due to several
reasons. There is significant improvement in the Information Technology infrastructure over the
last decade as the Government has taken important steps in high-speed Internet connectivity. As
a result, the broadband networks have not only become better but also more affordable.
Additionally, Government is trying to make rural India connected through broadband – a great
possibility for e-business to expand the retail market by reaching out to the most remote rural
customer. Another catalyst strengthening the e-business segment is the country‟s favourable
demography. It has more than 50% of its population below the age of 25 and more than 65%
below the age of 35. It is expected that, in the year 2020, the average age of an Indian will be 29
years, compared to 37 for China and 48 for Japan, this promises for phenomenal increase in e-
business. Moreover, the penetration of the smartphone in a large section of the population has
aptly addressed the problem of compute illiteracy. Not with standing the fact that consumers also
prefer e-business due to multiple factors like convenience, time etc.
Identify and explain the various dimensions of business environment being referred to in the
above case.
Ans. The various dimensions of business environment being referred to in the above case are as
follows:
1. Political Environment:
2. Technological Environment:
3. Social Environment:
Q. 13. Beni, after completing her MBA, took up a job a multinational company named „Fortio‟.
The company was paying good salary and perks to its employees. The wages were within the
paying capacity of the company that provided the employees a reasonable standard of living. The
company also had a good work-culture and the behaviours of superiors was very good towards
their subordinates. Beni was very happy in this organization, but due to long working hours she
did not have time to cook
her meals. She had to depend on outside found, which was deteriorating her health.
She observed that this problem was faced by many of her colleagues, not only in her company
but also in many other companies. This was because of increase in the number of working
women and non-availability of hygienic home-cooked food. She identified this as a great
opportunity and decided to give up her job to supply packaged home-cooked food to office goers
at a reasonable price. At the end of the day she also distributing the left-over food in the nearby
night-shelters.
1. State the dimension of business environment being discussed above.
2. State the principle of management being followed by „Fortio‟.
3. Identify any two values being communicated by the company to the society in the above case.
(4 marks)
Ans.
1. Social environment which includes social forces like customs and traditions, values trends etc.
‘this was because of increase in the number of working women and non-availability of hygienic home-
cooked food.’
1. Remuneration of employees, which states that the overall pay and compensation should be fair to
both employees and the organization.
‘The company was paying good salary and perks to its employees.The wages were within the paying
capacity…standard of living.’
1. Values being communicated by the company to the society are: (Any two)
1. Good work culture
2. Good behavior inhuman interaction
3. Concern for the employees
4. Respect for law
Q. 14. Nakul, a manager of Zyco Ltd. always takes into account the changes taking place in
business environment while determining plans. He accepts changes readily and gives useful
suggestions to his superior, which results in reduction of costs. As a result, company‟s profits
increase. Nakul enjoys cordial relations with his co-workers and makes plans in consultation with
his team to achieve organizational goals.
1. Which characteristic of management is highlighted in the above lines?
2. Identify and state any two principles of management followed by Zyco Ltd.
3. Give any two benefits which Zyco Ltd. get by taking into account the changes taking place in
business environment, quoting the lines from the above para.
4. State any one value which Nakul wants to communicate to the society. (6 marks)
Ans.
1. Management is a dynamic function.
2.
1. Initiative
This principle indicates that the subordinates should be encouraged to give suggestions and make and
execute plans within the prescribed limits of authority.
1. Spirit de corps
This principle suggests that management should promote a team spirit of unity and harmony among the
employees.
1. Benefits of business environment:
1. It helps in assisting in planning and policy formulation.
„… takes into account the changes taking place in business environment while determining plans.‟
1. It helps in improving performance.
„He accepts changes readily and gives useful suggestions to his superior, which results in reduction of
costs.As a result, company‟s profits increase.‟
1. Value:
 Team work
 Adaptability
Q. 15. It is interesting to know that the menu items of the multinational food chains are
customized to suit the general palates of the local people in the region. When McDonald‟s started
its business in India in the year 1996, the company went through a complete localization strategy.
McDonald‟s changed its product menu to accommodate the vegetable burger given the large
vegetarian population. It also altered its store design and even reduced the product price by close
to fifteen per cent. Also, the “McAloo Tikki burger” is not available anywhere but in the Indian
outlets of McDonalds.
Identify the relevant feature of business environment being discussed above.
Ans. Relativity is the relevant feature of business environment which is being discussed above.
Q. 16. Eco-friendly products are gaining power as the consumers‟ awareness about
environmental issues has increased over the years and they are conscious about choosing
products that do not have adverse effects on the environment. They are now more conscious
about the carbon emission and climate change effects, and want themselves to be „seen‟ as a
green advocate among their peers. In such a scenario, it has become a challenge for the
companies as they have to not only meet the needs of the consumers but also ensure that their
products are safe and environment friendly. At a result, there is growing need for better and
advanced technologies to works as a catalyst in this regard.
1. Identify the relevant feature of business environment being discussed above.
2. Describe briefly any three points which highlight the importance of business environment and
its understanding by managers.
Ans.
1. Inter-relatedness is the relevant feature of business environment which is being discussed above.
2. The three points which highlighted the importance of business environment and its understanding by
managers are described below:
1. It enables the firm to identify opportunities and getting the first mover advantage: The dynamic
business environment provides numerous opportunities for a business to evolve as per the changing
needs. Therefore, early identification of the forthcoming opportunities helps an enterprise to be the first
to exploit them instead of losing them to the competitors.
2. It helps the firm to identify threats and early warning signals: sometimes the changes in the external
environment may pose as a threat and hinder a firm‟s performance. An awareness about the business
environment helps the managers to identify such threats on time and take necessary decisions and
action.
3. It helps in tapping useful resources as the enterprise designs policies that allow it to get the resources
that it needs so that it can convert those resources into outputs that the environment desires.
Q. 17. Ultra Paint Co. which is manufacturing paints has been enjoying a prominent market
position as it manufactured best quality paints, made timely payment of taxes to government. It
assembled various inputs like finance, machines, raw materials, etc. from its environment. But
since last year it has been dumping its untreated poisonous waste on the river bank which has
created many health problems for the people. As a result, the court passed an order to seal the
manufacturing unit of the company.
1. State the importance of business environment highlighted quoting the line from the above case.
2. Identify any two dimensions of business environment mentioned in the above case by quoting
lines from it.
3. State any two values which have been overlooked by the company?
(5 marks)
Ans. (a) Business environment helps in tapping useful resources.
„It assembled various inputs like finance, machines, raw materials, etc. from its environment.‟
(b) (i) Social environment
„…it has been dumping its untreated poisonous waste on the river bank which has created many health
problems for the people.‟
(ii) Legal environment
„…the court passed an order to seal the manufacturing unit of the company.‟
1. Value overlooked.
 Environment protection
 Concern for human life
 Respect for law and order
 Social responsibility
Q. 18. Philips, a company manufacturing light bulbs incurred heavy expenditure on scientific
Research and Development and discovered a technology that made it possible to produce an
energy efficient light bulb that lasts at least twenty times as long as a standard bulb. It resulted in
growth and profitability of the company.
1. Identify and state the dimension of business environment mentioned above.
2. State the importance of business environment mentioned above by quoting the lines.
3. State any one value which the company wants to communicate to the society.(4 marks)
Ans.
1. Technological environment It includes forces relating to scientific improvements and innovations
which provide new ways of producing goods and services, and new methods and techniques of
operating a business.
2. Business environment helps a firm to improve its performance. „It resulted in growth and
profitability of the company.‟
3. Value conservation of energy
Q. 19. Disco Ltd. manufactures fashionable and designer clothes. Recently it finds that the
demand for its products has been declining. After market research it was discovered that fashion
and tastes of the consumers is changing at a fast pace. Customers‟ demand is increasing. New
competitors have entered the market with new designs. It is very difficult for the company to
predict future happenings. Also, it is difficult to know the extent of the relative impact of the
social, economic, political, technological or legal factors on decrease in demand of its products in
the market.
A meeting was held in which managers from different functional levels heading Production,
Marketing, Finance, etc., for example, Chief Operating Officer, Chief Finance Officer, Vice
President (Marketing) were present to discuss how to deal with the situation. After a long
discussion, it was decided that they would study and analyze the market first to identify customer
tastes and fashion and then manufacture garments accordingly. It was also decided to increase
expenditure on advertising, after-sales services, etc.
1. Identify any two features of business environment by quoting the lines from the above case.
2. At which level of management the meeting of managers of Disco Ltd. was held?
3. Identify any two impact of government policy changes on business, quoting lines from the
above case.
4. State the importance of understanding of environment by business managers in the light of the
above para. (6 Marks)
Ans.
1. Features of business environment:
1. Dynamic nature: „fashion and taste of the consumers is changing at a fast pace.‟
2. Uncertainty: „It is very difficult for the company to predict future happening.‟
3. Complexity: „It is difficult to know the extent of the relative impact of the social, economic,
political, technological or legal factors on decrease in demand of its products in the market.
1. Top level management
2. Impact of government policy changes on business:
1. Increasing competition: „New competitors have entered the market with new designs.‟
2. More demanding customers: „Customers‟ demand is increasing.‟
3. Market orientation: „it was decided that they would study and analyze the market first to identify
customer tastes and fashion and then manufacture garments accordingly. It was also decided to
increase expenditure on advertising, after-sales services, etc.‟
1. Business environment helps the manager in coping with rapid changes.
Q. 20. The organic food market in India is grow at 25-30 per cent which reflects a clear shift in
consumer tastes and preferences. The current growth in the organic food market is driven by
multiplicity of factors like rising health consciousness, changing lifestyles, increase in disposable
income and growing availability of organic food products in shopping malls, retail outlets and online.
1. Identify and explain the features of business environment being referred to here.
2. By quoting phrases from the paragraph identify the various components of general forces which
have led to a growth in the organic food market.
Ans.
1. The features of business environment being referred to in the above case are as follows:
Dynamic nature: It is dynamic in nature and keeps on changing due to technological up gradations,
shifts in consumer preferences or increase in competition in the market.
 Inter-relatedness: All the elements of business environment are closely interrelated. Therefore, any
change is one element may necessitate corresponding changes in the other elements as well.
2. The various components of general forces which have led to a growth in the organic food market are
as follows:
1. Social: “rising health consciousness, changing lifestyles”
2. Economic: “increase in disposable income”
3. Technological: “growing availability of organic food products in shopping malls, retail outlets and
on line.”
Q. 21. Anurag, aspires to work with a socially and environmentally committed company as he
does not want to work just for monetary benefits but also the brand value of the company he
works for in the society matters a lot to him. Therefore, he has joined Cerebra Integrated
Technologies a Bengaluru-based Infotech company. The company has built India‟s largest e-
waste recycling plant. The company strives to be one of the leading players in this business which
has huge potential not only in terms of generating huge revenues and profits but also wants to
contribute to the environment issues that have become crucial worldwide. The company sees big
business in the mountains of e-waste in Bengaluru which produces 2,00,000 tonnes of e-waste a
year. The company plans to make its millions by extracting metals such as gold and platinum
from the e-waste piling up in the city. As a mobile phone, for example, is made up of a
combination of rare earth and precious metals: it contains 250 mg of silver, 24 mg of gold and
nine mg of palladium while a laptop has 1,000 mg of silver, 220 mg of gold and 500 grams of
copper.
To start the business, the company has obtained a licence from KSPCB (Karnataka State
Pollution Control Board).
1. Identify the various dimensions of business environment being referred to by quoting lines
form the paragraph.
2. List any two values which the company wants to convey to the society.
Ans.
1. The various dimensions of business environment being referred to the in the above case are as
follows:
Technological environment: Technological environment includes forces relating to scientific

improvements and innovations which provide new ways of producing goods and services and new
methods and techniques of operating a business.
Legal environment: Legal environment includes various legislations passed by the Government
administrative orders issued by government authorities, court judgments as well as the decisions
rendered by various commissions and agencies at every level of the government – centre, state or local.
Social Environment: Social environment includes the social forces like customs and traditions,
values, social trends, society‟s expectations from business, etc.
1. The two values which the Cerebra Integrated Technologies wants to convey through this initiative
are:
1. Sustainable development
2. Concern for environment.
Q. 22. After competing his education, Arun joins his father in their family business of
manufacturing cookware. As a businessman, his father is rigid in his approach and has fixed
ideas about various issues. He tends to maintain a distance from the factory workers.
However, Arun is more receptive to the needs of the workers and doesn‟t seem to believe in any
class-differences. He believes that the prosperity of their business greatly depends upon the
prosperity of their workers and vice versa. At the same time, he has a good understanding of the
business environment. Therefore, he introduces a new range of green pans that provide a healthy
cooking surface, as they are manufactured with all ceramic or silicon coating and are considered
safer than the traditional petroleum based nonstick surfaces which may contain toxic substances.
Although, the new cookware range is highly prices, he expects a ready market for it as both the
purchasing power of people and their preference for better quality products has increased over
the years.
1. Identify the nature of management which is being reflected in the different styles of
management in practice adopted by Arun and his father.
2. Name and explain the related principle of scientific management.
3. State the related dimensions of business environment.
Ans.
1. The different styles of management in practice adopted by Arun and his father reflect that
management is an art.
2. „Harmony, Not Discord‟ is the related principle of scientific management.
3. The related dimensions of the business environment are:
Economic Environment:
Social Environment:
Technological Environment:
Q. 23. Continuous and comprehensive evaluation is a process of assessment, mandated by the

right to Education Act, of India. This approach to assessment has been introduced by state
governments in India, as well as by the Central Board of Secondary Education in India. With the
introduction of (CCE) system in education there is greater focus on project based learning. As a
result, besides time and effort the students are willing to invest money to enhance the visual
appeal of their project files so as to score higher marks. In order to cash on the opportunity
Rishabh has started a small business unit to manufacture different kinds of decorative materials
for the project files. He has employed a team of four creative designers for developing the
innovative material with the help of latest technology. However, he has a prejudice against
women and therefore pays less salary to them as compared to the male staff for equal work.
1. Name any two functions of management that Rishabh will have to perform in order to manage
his business successfully.
2. Name and explain the principle of management which is being violated by Rishabh.
3. Identify the related dimensions of the business environment.
Ans.
1. The two functions of management that Rishabh will have to perform in order to manage his business
successfully are Planning and Orgnising.
2. The principle of management which is being violated by Rishabh is Equity.
3. The related dimensions of the business environment are:
1. Legal Environment
2. Political Environment
3. Economic Environment
4. Social Environment
5. Technological Environment
Q. 24. Government of India is seriously thinking to allow oil marketing public sector,
undertaking to fix their own price for petrol and diesel.
1. Name the economic reform related to this decision of government.
2. Name other two reforms recommended in new economic policy.
Ans.
1. Liberalization
2. Other two reforms: Privatization and Globalization.
Q. 25. Recently many companies have planned for significant investment in organizes retailing in
India. Various factors which have encouraged companies to take these decisions are customer
income is increasing, rise in standard of living of people. People are ready to pay high price for
quality goods, government policy of liberalization regarding MNC entry and FDI, etc.
1. Explain briefly changes in business environment under different heads that have facilitated the
companies‟ decision to plan significant investment in retailing.
2. What has been the impact of these changes with regards to globalization and privatization?
Ans.
1. Explain recent changes in various environment heads, i.e., economic, social, political, legal and
technological.
2. Explain the topic, impact of change in government policy/economic policy.
Q. 26. Two big banner movies were scheduled to be released on the same date. On the last
movement release of one of the movies has to be postponed due to opposition of a group of people
due to some unethical contents related to their religion was shown in the that movie. The other
movie released on time and made huge profit as there was no competition and movie which was
postponed suffered loss.
1. Which feature of business environment is highlighted here.
2. Identify the dimension of business environment, which delayed the release of movie.
Ans.
1. Feature highlighted in ………‟relativity‟.
2. The dimension is ……..‟social environment‟.
Q. 27. After winning the election, Prime Minister Mr. Narender Modi launched a Campaign of
„Swachh Brarat‟ and invited various celebrities to be a part of this Abhiyaan. This spread
awareness among the people in society and in general, people started becoming more careful and
aware about the cleanliness around their area. To continue its impact, a new service tax for
Swachh Bharat was also started. The government is planning to import new and better
technology to adopt new methods of treating the garbage and waste.
State the various dimension of business environment mentioned in the above para quoting the
lines from the above para.
Ans.
1. “After wining election ….. campaign of Swachh Bharat.” Political Environment
1. “People in society ….. around their area.”
3. “A new service tax ….. started.”
Economic Environment
1. “Import new technology …. Garbage.”
Technological Environment
Q. 28. Even after opening up of Indian Economy, foreign companies found it extremely difficult
to cut through the bureaucratic and red tapism in government offices. This discourages them
from investing in India.
Identify the dimension of environment mention in above para.
Ans. Political Environment.
Q. 29. Just after the declaration of Lok Sabha Elections in 2014, the Bombay Stock Exchange
Index rose by 1000 points.
Identify the dimension of business environment.
Ans. Political Environment.
Q. 30. „Mamta Rice Food Ltd‟ is a well know rice producing company. The sales have been
falling down from the beginning of the year. The managing director MR. Bhuvan is worried
about this situation. With a view to find out the solution of this problem he made a team to find
but the reasons for downfall of sales. The team conducted the survey and gave following four
reasons for the downfall of company‟s sale.
1. On account of increase in export duty made by the government, the foreign demand has gone
down.
2. Due to availability of other eatable substitute the taste of people is diverted from rice.
3. The competitor‟s imported new technology machine and are producing better quality rice.
4. Due to strain with neighbouring country‟s government and our country‟s government export
is effected.
Identify the dimension of Business Environment discussed in the above case.

Ans.
1. Economic Environment
3. Technological Environment
4. Political Environment.
Q. 31. With changes in the consumption habits of people, Neelesh, who was running a sweet shop,
shifted to the chocolate business. On the eve of Diwali, he offered chocolates in attractive
packages at reasonable prices. He anticipated huge demand and created a website chocolove.com
for taking orders online. He got a lot of orders online and earned huge profits by selling the
chocolate.
Identify and explain the dimensions of business environment discussed in the above case.
Ans. The various dimensions of business environment being referred to in the above cased are as
follows:
Q. 32. A recent rate cut in the interest on loans announced by the banks encouraged Amit, a
science student of Progressive School, to take a loan from State Bank of India to experiment and
develop cars to be powered by fuel produced form garbage. He developed such a car and
exhibited it in the Science Fair organized by the Directorate of Education. He was awarded the
first prize for his invention.
follows:
1. Economic Environment:
Q. 33. „Accent electronics Ltd.‟ was operating its business in Malaysia. The company started
exporting its products to India when the Prime Minister announced relaxation in import duties
on electronic items. The company appointed retailers in India who had direct online links with
the suppliers to replenish stocks when needed.
follows:
Q. 34. As per the directions issued by the Supreme Court, the government passed an order to ban
the sale of tobacco products within the area of 200 meters of all educational institutions as:
1. Its consumptions injurious to health.
2. People are becoming more conscious about health and fitness. This indicates the government‟s
attitude towards this business.
Identify the business environment under three different dimensions by quoting from above
paragraph.
Ans. The various dimensions of business environment being referred to the in the above case are as
follows:
1. Legal Environment:”As per the directions issued by the Supreme Court.‟
2. Political Environment: “The government passed an order to ban the sale of tobacco products within
the area of 200 meters of all educational institutions.”
3. Social Environment: “Its consumption is injurious to health and people are becoming more
conscious about health and fitness.”
Q. 35. Make in India is an initiative launched by the Government of India to encourage national
and multinational companies to manufacture their products in India. It focuses on job creation
and skill enhancement and is in twenty five sectors of the economy. Under the initiative,
brochures on these sectors and a web portal were released. The initiative aims at high quality
standards and minimizing the impact on the environment. It also seeks to attract foreign capital
investment in India.
1. Identify the various dimensions of business environment being referred to by quoting lines
from the paragraph.
2. List any two values which the Government of India wants to convey through this initiative.
Ans.
1. The various dimensions of business environment being referred to in the above case are as follows:
1. The two values which the Government of India wants to convey through this initiative are:
1. High quality standards
Q. 36. India‟s retail sector has been undergoing structural changes for the last two decades. On
one hand, the „mall culture‟ has gradually become a way of life, especially in the metros and
mini-metros. On the other hand, there is accelerated growth in e-business as customers also
prefer to buy products and services via the Interest, telephone and television. However, operating
in either of the segments is marked by the presence of strong competitors.
Identify the components of specific forces and general forces being discussed in the above
paragraph.
Ans. The components of specific forces discussed in the above paragraph are the customers and
competitors.
The components of general forces discussed in the above paragraph is the social and technological
conditions.
Q. 37. To mark the celebrations of International Family Day on 16th may 2016, Kurkure flagged
off India‟s first family food train – Kurkure Family Express at New Delhi. The train took forty
families ona fun culinary experience of a lifetime through an eight-day journey across fourteen
states in India. A whole lot of fun activities were hosted on the train by the travel and food
anchors Rocky and mayor.
The families were selected through an online campaign, „Chatpata family photos‟. The contest
attracted approximately 1,000 entries, of which 40 entries that gelled with the brand‟s image
were selected.
The core idea of the campaign was to bring families from across India together over a journey
like this. As in today‟s time, everyone is busy with their life the family members may feel
disconnected with each other.
Identify and explain the various dimensions of business environment being referred to the in the
above case by quoting lines from the paragraph.
follows:
Q. 38. In the year 2016,the State Government of Kerala had made it mandatory for anganwadis
hostels and canteens in educational institutions to secure the Food Safety and standards
Authority of India (FSSAI) licence to ensure food safety. As the educational institutions also get
categorized as food business operators in the event of the annual turnover of the hostels, they run
exceeding Rs. 12 lakh per annum. In context of the above case:
1. Identify and explain the various dimensions of business environment being referred to here.
2. List any two values which the State Government of Kerala wants to convey through this
initiative.
Ans.
1. The various dimensions of business environment being referred to in the above case are as follows:
1. The two values which the State Government of Kerala wants to convey through this initiative are:
1. High quality standards
2. Good health
Q. 39. Postage stamps have been unveiled to commemorate 140 years of existence of the
country‟s first stock exchange the Bombay Stock Exchange (BSE). The setting up of BSE is
considered to be the greatest revolution that took place in the financial markets in India as it acts
as a key driver for economic growth of a country. This is due to the fact that there exists a strong
correlation between economic growth and capital accumulation.
1. Identify the dimension of business environment of India being referred here.
2. State any three factors which broadly affected the dimension of business environment of India
as identified in part (a) of the question.
Ans.
1. Economic environment is the dimension of business environment of India being referred here.
2. The three factors which broadly affect the economic environment of India are stated below;
1. Stage of economic development of the country.
2. The economic structure in the form of mixed economy which recognizes the role of both public and
private sectors.
3. Economic planning, including five year plans, annual budgets, and so on
Q. 40. In May 2016, the government had launched a web-based application which will provide as
opportunity to all the industries dealing in hazardous waste to apply online and get online
permissions for import and export of certain categories of waste, which is for reuse, recycling or
recovery while it will also help authorities in web-based processing, generation and grant of
various types of permissions to the entrepreneurs and industries. It is also aimed at implementing
the concept of paperless and green office and provide information regarding number
authorizations or consent order granted by the State Pollution control Boards (SPCBs).
Identify the various dimensions of business environment being referred in the above case.
Ans.
1. The various dimensions of business environment being referred to the in the above case are as
follows:
3. Legal Environment:
4. Social Environment:
Q. 41. Bharat is running an ice cream parlour in a local market. Keeping in mind the changing
perceptions about health among the people, one of his employee Abhiraj suggests to him that
they should introduce a range a flavoured yogurt. Bharat accepts his suggestion as a result both
the image and the profitability of his business increases.
1. Identify the feature of management which is being highlighted.
2. State the related dimension of the business environment.
3. Name and explain the related principle of general management.
Ans.
1. The feature of management which is being highlighted is Dynamic.
2. The related dimension of the business environment is Social.
3. The related principle of general management is Initiative.
Initiative means taking the first step with self-motivation. The workers should be encouraged to
develop and carry out their plans for improvement. Suggestion system should be adopted in the
organization.
Planning
Q. 1. Laxmi Chemicals Ltd., a soap manufacturing company wanted to increase its market share
from 30% to 55% in the long run. A recent report submitted by the Research & Development
Department of the company had predicted a growing trend of herbal and organic products. On
the basis of this report the company decided to diversify into new variety of soaps with natural
ingredients having benefits and fragrances of Jasmine, Rose, Lavender, Mogra, Lemon Grass,
Greed Apple, Strawberry etc. The Unique Selling Proposition (USP) was to promote eco-friendly
living the contemporary life style. The company decided to allocate Rs. 30 crores to achieve the
objective.
Identify the type of one of the functions of management mentioned above which will help the
company to acquire dominant position in the market. (1 mark)
Ans. Strategy
Q. 2. Suhasini a home science graduate from a reputed college has recently done a cookery
course. She wished to start her own venture with a goal to provide ‘health food’ at reasonable
price. She discussed her idea with her teacher (mentor) who encouraged her. After analyzing
various options for starting her business venture, they shortlisted the option to sell ready-made
and ‘ready to make’ vegetable shakes and sattu milk shakes. Then they both weighed the pros
and cons of both the shortlisted optins.
1. Name the function of management being discussed above and give any one of its
characteristics.
2. Also briefly discuss any three limitations the function discussed in the case.(5 marks)
Ans.
1. Planning.
Characteristic of planning
Planning focuses on achieving objectives
1. Limitation of planning
1. Planning leads to rigidity:
2. Planning reduces creativity:
3. Planning is a time-consuming process:
Q. 3. A company is manufacturing garments. The manager wants to increase profits by
purchasing new high speed machines or increasing the sale price or using waste material in
manufacturing stuffed toys.
He decided that ‘using waste material’ to increase the profit is the best solution for him.
1. Identify the concept of management involved.
2. Mention the steps involved in the above process by quoting the line from the question.
3. To complete the process of the concept identified in (a), what two next steps does the manager
have to take? Explain. (6 marks)
Ans.
1. The concept of management involved is PLANNING.
2. Steps involved are:
 Setting objectives: increasing profits
 Developing planning premises: making certain assumptions about future.
 Identifying alternative courses of action:
 Purchasing new high speed machines, or
 Increasing the sale price, or
 Using waste material in manufacturing stuffed toys
 Evaluating alternatives and selecting an alternative:
1. Further steps to complete the process of planning:
 Formulating derivate plans:
 Implementing the plan and follow-up-action:
Q. 4. Two year ago, Madhu completed her degree in food technology. She worked for sometime
in a company that manufactured chutneys, pickles and murabbas. She was not happy in the
company and decided to have her own organic food processing unit for the same. She set the
objectives and the targets and formulated an action plan to achieve the same.
One of her objectives was to earn 10% profit on the amount invested in the first year. It was
decided that raw materials like fruits, vegetables, spices, etc. will be purchased on three months
credit from farmers cultivating only organic crops. She also decided to follow the steps required
for marketing of the products through her own outlets. She appointed Mohan as the Production
Manager who decided that exact manner in which the production activities were to be carried
out. Mohan also prepared a
statement showing the number of workers that will be required in the factory throughout the
year. Madhu informed Mohan about her area wise sales target for different products for the
forthcoming quarter. While working on the production table, a penalty of Rs. 100 per day for not
wearing caps, gloves and apron was announced.
Quoting lines from the above paragraph, identify and explain the different types of plans
discussed.
Ans.
The different types of plan discussed above are listed below:
1. Objectives:
“One of her objectives was to earn 10% profit on the amount invested in the first year.”
1. Policy:
“It was decided that the raw materials like fruits, vegetables, spices, etc. will be purchased on three
months credit from farmers cultivating only organic crops.”
1. Method:
“The exact manner in which the production activities are to be carried out.”
1. Procedure:
“She also decided to follow the steps required for marketing of the products through her own outlets.”
1. Rule:
“While working on the production Table, a penalty of Rs. 100 per day for not wearing caps, gloves and
aprons was announced.”
Q. 5. During partition, Kundan Lal came to Mumbai from Lahore with a lot of wealth. Keeping
in view his innate ability to visualize and create things, he decided to work as a junior assistant in
a film studio. Over a period of time, as he gained experience and his work was well acclaimed, he
decided to set up his own film studio. Initially he was himself looking into every aspect of the
business, but as his work increased manifolds and his own productivity reduced with age, he
hired Jummy as manager. Jimmy being immature in his work started giving bookings for the
studio haphazardly. He would never decide anything in advance or do any kind of forecasting of
events. This led to lot of confusions and conflicts. As a result, the goodwill earned by Kundan Lal
over the years began to decline.In context of the above case:
1. Identify and explain the function of management which Jimmy failed to perform by quoting
lines form the paragraph.
2. Describe briefly any two features of the function of management as identified in part (a).
Ans.
1. Planning is the function of management which Jimmy failed to perform.
Planning is deciding in advance what to do, how to do, when to do and who has to do it.It is one of the
basic managerial functions.Thus, it involves setting objectives and developing an appropriate course of
action to achieve those objectives.
1. The two features of the planning function of management are as follows:
1. Planning is pervasive:
2. Planning involves decision-making:
Q. 6. After completing a diploma in Bakery and Patisserie, Payal sets up a small outlet at Goa
Airport to provide a healthy food option to the travellers. To begin with, she has decided to sell
five types of patties, three type of pizzas and low sugar muffins in four flavours. Thus, by
deviding in advance what to do and how to do, she is able to reduce the risk of uncertainty and
avoid overlapping and wasteful activities. But sometimes her planning does not work due to some
unavoidable circumstances like cancellation of flights due to bad weather conditions, government
alert etc. which adversely affects her clientele.
1. Identify and explain the points highlighting the importance of planning mentioned in the above
paragraph.
2. Describe briefly the limitation of planning which adversely affects Payal’s business.
Ans.
1. The paints highlighting the importance of planning mentioned in the above paragraph are described
below:
1. Reduces the risk of uncertainty:
2. Avoiding overlapping and wasteful activities:
1. The limitation of planning which adversely affects Payal‟s business is:

1. Planning may not work in a dynamic environment:
Q. 7. Rahul, a worker, is given a target of assembling two computers per day. Due to his habit of
doing things differently, an idea struck him which would not only reduce the assembling time of
computers but would also reduce the cost of production of the computers. Rahul’s supervisor
instead of appreciating him, ordered him to complete the work as per the methods and
techniques decided earlier as nothing could be changed at that stage.
The above para describes one of the limitation of planning function of management. Name that
limitation. 1 mark)
Ans. Planning reduces creativity.
Q. 8. ABC Ltd. has a plan of increasing profits by 20%. It has devoted a lot of time and money to
this plan. But the competition starts increasing, so it could not change its plan to b eat its
competitors because huge amount of money had already been devoted to the pre-decided plan. It
caused losses to the company.
Explain any two limitations of planning highlighted in the above case. Also, quote the lines from
it. (4 marks)
Ans.
1. „ABC Ltd. has devoted a lot of time and money to its plan.‟
Planning is a time consuming process.It also involves huge costs.

„The competition starts increasing, so it could not change its plan to beat its competitors because huge
amount of money had already been devoted to the pre-decided plan.‟
Planning leads to rigidity. Following a pre-decided plan, when circumstances change, may not turn out
to be in the organization‟s interest.
Q. 9. In ‘Chak De India’ movie, Shahrukh Khan becomes the coach of the girls’ hockey team. He
knows that he has to prepare the girls for the international hockey matches and bring the world
cup after winning. For this he prepares a long-team plan and thinks the ways how to bet the
competitors. He coaches the girls to play in different ways like defensive, offensive, etc. at the
outset of a match he explains who will open the match, and how the ball will be passed by one
player to another step by step.
Identify four types of plan that are highlighted in the above case, quoting the lines from it. (4
marks)
Ans.
1. Objective „…bring the world cup after winning.‟
2. Strategy „For this he prepares long-term plan and thinks the ways how to beat the competitors.‟
3. Method „He coaches the girls to play in different ways like defensive, offensive, etc.‟
4. Procedure
„At the outset of a match he explains who will open the match, and how the ball will be passed by one
player to another step by step.‟
Q. 10. Flipkart is an e-commerce company founded in the year 2007 by Sachin Bansal and Binny
Bansal. The company is registered in Singapore, but has its headquarters in Bangaluru, India.
The company seeks to increase traffic (more clicks on their products) and boost sales and
revenue through integration of Mobile Apps, Display, Pay Per Click and search Engine
Optimization. In order to dispel the feat of people related to shopping online, Flipkart was the
first company to implement to popular ‘Cash on Delivery’ facility. All the products sold by the
company under a particular category may have different return/replacement period. Flipkart
allows multiple payment options such as cash on delivery, credit or debit card transactions, net
banking, e-gift voucher and card swipe on delivery. The company operates both ways when an
order is received. The products for which it holds inventory are dispatched by it directly. For the
products they do not store in inventory, they just send the order received by them to the supplier
who ships it. The company plans to spend about Rs. 75 crores on e-Commerce advertising in the
year 2016. Flipkart reserves the right to terminate your membership and/or refuse to provide
you with access to the website if it is brought to Flipkart’s notice or if it iis discovered that you
are under the age of 18 years. This is because as per the Indian contract Act, 1872, the minors,
un-discharged insolvents, etc. are not eligible to use the website.
In context of the above case, identify and explain the different types of plans being used by
Flipkart by quoting lines the paragraph.
Ans. The different types of plans being used by Flipkart are listed below:
1. Objectives:
“The company seeks to increase traffic (more clicks on their products) and boost sales and revenue
through integration of Mobiles Apps, Display, Pay Per Click and Search engine Optimization.”
1. Strategy:
“In order to dispel to fear of people related to shopping online, Flipkart was the first company to
implement the popular „Cash On Delivery‟ facility.”
1. Policy:
“All the products sold by the company under a particular category may have different
return/replacement period.”
1. Method:
“Flapkart allows multiple payment options such as cash on delivery, credit or debit card transactions,
net banking, e-gift voucher and card swipe on delivery.”
1. Procedure:
“The company operataes both ways when an order is received.The products for which it holds
inventory are dispatched by it directly.For the products they do not store in inventory, they just send
the order received by them to the supplier who ships it.”
1. Budget:
“The company plans to spend about Rs. 75 crores on e-Commerce advertising in the year 2016.
1. Rule:
Flipkart reserves the right to terminate your membership and/or refuse to provide you with access to
the Website if it is brought to Flipkart‟s notice or if it is discovered that you are under the age of 18
years.This is because as per the Indian Contract Act, 1872, the minors, un-discharged insolvents etc.
are not eligible to use the Website.”
Q. 11. An electronic company is facing a problem of declining market share due to increased
competition from other new and existing players in the market. Its competitors are introducing
lower price models for mass consumers who are price sensitive. For quality conscious consumers,
company is introducing new model LED TV and DVD players with added features and new
technological advancements. For this, the company raises extra funds Rs. 5 crore form banks.
Name the type of plan the company is preparing. State the steps which the company follows to
implement this plan quoting the line from the above para. (4 marks)
Ans. The type of plan needed to be prepared under this situation is „Strategy‟. Steps involved in
preparing this plan are:
(i) Determining long-term objectives:
(ii) Adopting a particular course of action:
(iii) Allocating resources necessary to achieve the objectives:
Q. 12. Arush joins as a sales manager of a company dealing in naturotherapy produces. Being
proficient in his work, he knew that without good planning he will not be able to organise, direct,
control or perform any of the other managerial functions efficiently and effectively. Only on the
basis of sales forecasting, he would assist in the preparation of the annual plans for its production
and sales. Besides, he will have to prepare sales plans regularly on weekly, monthly, quarterly
and half yearly basis. While preparing the sales forecasts, he undertakes intellectual thinking
involving foresight, visualization and issued judgement rather than wishful thinking or guess
work. Most importantly, all these planning activities will be meaningful only if they will coincide
with the purpose for which the business is being carried out.
In context of the above case, identify the various features of planning highlighted in the above
paragraph by quoting lines from it.
Ans. The features of planning highlighted in the above paragraph are explained below:
1. Planning is a primary function: “… without good planning he will not be able to organise, direct,
control or perform any of the other managerial functions efficiently and effectively.”
2. Planning is futuristic: “Only on the basis of sales forecasting, he would assist in the preparation of
the annual plans for its production and sales.”
3. Planning is continuous: “Besides, he will have to prepare sales plans regularly on weekly, monthly,
quarterly and half yearly basis.”
4. Planning is a mental exercise:
“While p reparing the sales forecasts he undertakes intellectual thinking involving foresight,
visualization and issued judgement rather than wishful thinking or guess work.”
1. Planning focuses on achieving objectives: “Most importantly, all these planning activities will be
meaningful only if they will coincide with the purpose for which the business is being carried out.”
Q. 13. Zyesha Ltd. is a company which manufactures leather bags. The CEO of the company
wants to increase their sales and earn more profits. The consulted with a management consultant
who suggested the top management of the company tow rok hard in thinking about the future in
making business prediction and achieve the targets since the business environment keeps on
changing whether in terms of technological improvement, shifts in consumer preferences or
entry of new competitors in the market.
1. Identify and state the concept of management discussed in the para.
2. State the characteristic feature of business environment highlighted in the above para. (3
marks)
Ans.
1. Planning
It involves setting objectives and developing appropriate course of action to achieve these
objectives.Dreams (e.g. increase sales, earn more profits, etc.) can be turned into reality only if
business managers think in advance on what to do and how to do it.
1. Business environment is dynamic as it keeps on changing.
Q. 14. Lira Ltd. is a company manufacturing designer socks. While making its plan, the company
takes into consideration the business environment. It constantly adapt itself to changes in
environment by making changes in its plan. However, it becomes difficult for the managers of the
company to accurately foresee future trends in the environment. Competition in the market
upsets its financial plans; then sales targets have to be revise3d and, accordingly cash budgets
also need to be modified since they are based on sales figures.
1. What characteristic features of business environment are highlighted in the above lines? State
any two.
2. State and explain the limitation of planning highlighted in the above lines.
3. Identify any two types of plan mentioned in the above pare by quoting the lines from it. (6
marks)
Ans.
1. (i) Business environment is dynamic as it keeps on changing.
(ii) Business environment is uncertain as it is difficult for the managers to accurately foresee future
trends in the environment.
1. Planning may not work in a dynamic environment.
The organisation has to constantly adapt itself to changes in environment by making changes in its
plans.However, since planning cannot foresee everything, there may be obstacles to effective planning.
1. (i) Strategy – „while making its plan, the company takes into consideration the business
environment.‟
(ii) Budget – „Competition in the market upsets its financial plans; then sales targets have to be revised
and accordingly cash budgets also need to be modified since they are based on sales figures.”
Q. 15. Pan Masala and Sons is a manufacturer of tobacco products. It decided to increase profits
by at least 20% in the next quarter. It has many options:
1. To increase the working hours of labourers without additional payment.
2. To employ children from the local community.
3. To sell its products outside the schools and colleges.
It opted the (ii) and (iii) options to achieve the target.

1. Identify the function of management described in the above para.
2. State the steps of the process involved in the function of management identified in (a) quoting
the lines from the above para.
3. State any two values neglected by the organisation (6 marks)
Ans.
1. Planning
2. Steps involved in planning process:
(i) Setting organizational objectives:

(ii) Identifying and evaluating alternative courses of action:
(iii) Selecting the best possible alternatives(s):
1. Values neglected:
 Child labour is banned.
 Bad effect on students‟ health
 Moral values.
Q. 16. A reputed car manufacturing company in NCR is facing the problem of decline in its
market share due to its internal mismanagement. Therefore it has planned to increase its
production capacity at its Gurgaon plant by manufacturing low price eco-friendly cars for price
sensitive consumers and introducing new models with added features for quality conscious
consumers. For this the company issues shares to the public and raises Rs. 150 crore.
The company purchases more machinery required to increase production.
1. Identify the type of plan the company is preparing.
2. State the steps involved in this plan quoting the lines from the above case.
3. State any one value which the company wants to communicate to the society.(5 marks)
Ans.
1. Strategy
2. Steps involved in preparing a strategy are:
(i) Determining long-term objectives:

(ii) Adopting a particular course of action:
(iii) Allocating resources necessary to achieve the objectives:
1. Value:  Sensitivity towards environment  Socially responsible behavior
17. ‘Agile Ltd.’ is a well-known automobile manufacturing company in India. The company
plans to increase the sale of its sedan cars by 20% in the next quarter. In order to achieve the
desired target, the marketing team of the company considers the impact of policy of the
government towards diesel vehicles and the level of competition in this segment of cars. They
explore the various available option like offering more discount to dealers and customers,
providing more customer friendly finance options, lucky draws on test drives, increasing
advertising, offering more of free accessories on the purchase of the car, etc. a thorough analysis
of the various available options is done keeping in view the relative viability of each option. The
company decides to pursue the option of offering more discount to dealers and customers in
order to boost the sale of sedan cars. In order to implement the plan,, they determine the various
discount packages and communicate the same to their product dealers. To make the prospective
consumers aware about the new available benefits, advertisements are made through various
sources of print and electronic media. The market analysts of the company keep a close watch on
the revenue from the sedan cars to study the effect of new initiatives by the company to promote
its sales. In context of the above case:1. Name the function of management described in the above
paragraph. 2. Identify and explain the various steps involved in process the function of
management as identified in part (a) by quoting lines from the paragraph. Ans. 1. Planning is the
function of management which is being described in the above paragraph. 2. The various steps
involved in the planning process are explained below: 1. Setting objectives: “The company plans to
increase the sale of its sedan cars by 20% in next quarter.”2. Developing Premises: “In order to achieve
the desired target the marketing team of the company considers the impact of policy of the government
towards diesel vehicles and level of competition in this segment of cars.”3. Identifying alternative
courses of action: “They explore the various available options like offering more discount to dealers
and customers, providing more customer friendly finance options, lucky draws on test drives,
increasing advertising, offering more of free accessories on the purchase of the case, etc.” 4. Evaluating
alternative courses: “A thorough analysis of the various available options is done keeping in view the
relative viability of each option.” 5. Selecting an alternative: “The company decides to pursue the
option of offering more discount to dealers and customers in order to boost the sale of sedan car.” 6.
Implement the plan: “In order to implement the plan, they determine the various discount packages and
communicate the same to their product dealers.To make the prospective consumers aware about the
new available benefits, advertisements are made through various sources of print and electronic
media.” 7. Follow up action: “The market analysts of the company keep a close watch on the revenue
from the sedan cars to study the effect of new initiatives by the company to promote its sales.”
Q. 18. Palvinder, is working as a supervisor in Alpha Ltd. To achieve the target he wants to try a
new method and different way of allocating the work. His superior did not permit him and
forced him to do the work strictly as per the plan.
(i) Name the limitation of planning indicated in above case.
(ii) Name the value overlook by Palvinder’s superior.
Ans.
1. „Planning reduces creativity.‟
2. Value of motivating and encouraging employee to increase initiative level.
Q. 19. The management of ABC Ltd. set up the target of selling 10,000 units per week and made
all their plans based on this target. But due to change in technology adapted by competitors
which reduced their cost, the ABC Ltd. could not achieve their target.
(i) Identify the limitation of planning discussed in the above para.
(ii) State any other two limitations.
Ans.
(i) Planning may not work in dynamic environment.
(ii) Any two limitations: 1. Planning reduces creativity 2. Planning involve huge cost.
Q. 20. Alpha Ltd. spent a lot of money to hire specialized people for framing their plans and
collecting important facts from environment. The company cut done their cost by cancelling the
employee’s trip for recreation.
(i) Name the limitation of planning mentioned in above para.
(ii) Name the value overlook by management.
Ans.
1. Limitation: „Planning involves huge cost.‟
2. Value overlook: Psychological need of employees.
Q. 21. ABC Ltd. announced a plan nobody would smoke in the organization premises and they
further added that certain penalty will be imposed on employees, overlooking this.
(i) Name the type of plan related to above para.
(ii) Name the feature of that plan.
(iii) Name the values emphasized by the company.
Ans.
(i) „Rule‟ is the type of plan.
(ii) Rules are very Rigid.
(iii) Values: (a) Respect towards environment
(b) Follow discipline and order.
Q. 22. Alpha Ltd. has a plan of increasing profit by 20%. The company spent lot of time and
money to frame and implement this plan. The competition start increasing, so it could not change
its plan to beat its competitors because huge amount of money is already spent. State any two
limitations of planning.
Ans.
(i) Planning involve huge cost.
(ii) Planning is time consuming.
(iii) Planning may not work in dynamic environment.
Q. 23. ‘Natural disaster like floods in Gujarat has been responsible for failure of production and
sales plans of Jindal Textile Industry.’ Which limitations of planning is highlighted in the given
statement? State any three such limitations. (3)
Ans. External limitations of planning
1. Change in government policies (e.g. tax rates, bank rate, etc.) may lead to failure of planning.
2. Changes in the strategies of competitors also lead to failure of planning many tiems.
3. Rapid technological changes may affect planning.
Case Studies
Directing
Q. 1. Ayesha Ltd. Assured their employees that in spite of recession no worker will be retrenched from
the job.
Q. 2. Blue Birds Ltd. Offers to its employees issue of shares at a price which is less than the market
price.
Q. 3. ABC Ltd. Is not able to achieve its objective on analyzing, they found that employees were not
given their best, so he decided to announce an incentive plain, which offers various incentives to
employee workers at different level for achieving their target.
principal about his problem ignoring the Headmistress who is immediate superior of Mr. John as he
feels more free to communicate with principal.
Q. 5. Is directing required at planning stage? Name the element of directing function under which:
specified goals.
(iv) the superior share information with the subordinates in order to reach common understanding. (3
Marks)
Ans. No, directing is not required at planning stage since it is an executive function. It initiates action
in the organization while other functions of management (planning, organizing, staffing and
Q. 6. Amit and Mikki are working in the same organization but in different departments. One day at
lunch time Mikki informed Amit that due to computerization some people are going to be retrenched
from the organization.
Name which type of communication is this. State any two limitations of this type of communication. (3
Marks)
Limitations:
It also leads to generate rumours. People‟s behavior is affected by rumours and informal discussion
and sometimes may hamper work environment.
Q. 7. You are working at the middle level of management. Your superior, a top management personnel,
sent a message for you which you received and well understood. Is the communication process
complete? Give reason. (3 Marks)
Ans. No, the communication process is not complete unless and until feedback is given to the superior.
Feedback includes all those actions of the receiver indicating that he has received and understood the
message of sender. So, I must respond to communication to improve its effectiveness, e. g., by giving a
reply to letter, giving reactions to the message, etc.
implements his suggestions and has always found favourable results, but he never appreciates Rakesh
for his suggestions. Now Rakesh decided not to communicate any suggestion or idea to Neeraj.
Identify the factor which acts as a communication barrier. (1 Marks)
Q.9. Ankur is working as a production manager in an organization. His subordinate Saurabh discussed
with hi a method o production which will reduce the cost of production. But due to some domestic
problems and Ankur‟s mind being pre-occupied he is not in a position to understand the message.
Saurabh got disappointed by this. Identify the factor which acts as a communication barrier. (1 Marks)
Q.10. Rajat a Sales Manager, achieved his sales target one moth in advance. This achievement as
displayed on the notice board and the CEO of the Company awarded a certificate for the best
employees were given option of flexible working hours and were paid wages at a higher piece rate. On
the other hand, Group B (of remaining 50 employees) was criticized for their poor performance. Their
increments were stopped and they were paid wages at a lower piece rate.
Ans. Motivation can be either positive or negative. Positive motivation provides positive rewards like
increase in pay, promotion, recognition, etc. Negative motivation uses negative means like punishment,
stopping increments, threatening, etc.
Q. 12. In a company, Mr. Kshitij always explains management policies to workers and brings workers‟
problems to the notice of management. At what post does Mr. Kshitij work in this company? (1 Marks)
Ans. Mr. Kshitij is supervisor in the company as he acts as a link between workers and management.
Q. 13. Prachi is working in an MNC. She has been given an option to buy the shares of the company at
an amount less than the market price because of her performance as an incentive. Identify which
incentive is being given to her. (1 Marks)
(a) Identify the element of directing which becomes ineffective due to the behavior of the managers.
Distrust between sender and receiver causes failure of communication.If they do not believe each other,
they cannot understand each other‟s message in its original sense.
Q. 15. Huma is working in a company on a permanent basis. As per job agreement she had to work for
8 hours a day and was free to work overtime. Huma worked overtime, due to which she fell ill and had
to take leave from her work. No one showed concern and enquired about her health. She realized that
she was fulfilling only some of her needs while some other needs still remained to be fulfilled.
satisfied.
Affiliation Need: It refers to the need for affection, since to belongingness, acceptance and friendship.
Q. 16. Mr. Nath, a recently appointed production manager of Suntech Ltd. Has decided to produce jute
bags instead of plastic bags as these are banned by the government. He set a target of producing 1000
jute bags a day. It was reported that the employees were not able to achieve the target. After analysis he
found that employees were demotivated and not putting in their best for achieving the target. Mr.
Nath‟s beaviour is good towards the employees. His attitude is always positive. So he announced
various incentive schemes for the employees like;
State any two values which the production manager wants to communicate to the society by his work
and behavior.
Vale:
Sensitivity of environment Good behavior towards employees.
Q. 17. NOTICE
This notice was placed on the notice board in the reception area of XYZ Ltd. But it did not mention
clear specification regarding the time of meeting. Which barrier of communication is referred to here?
Explain any two other forms of barriers to effective communication under the same category. (5
Marks)
Ans. Badly expressed message (Semantic barriers) – Use of wrong words, omission of needed words,
inadequate vocabulary, etc.
Symbols with different meanings: A work may have several meanings. For example, consider these
three sentences where the work „value‟ is used:
Faulty translations: Sometimes, the communications originally drafted in one language (say, English)
need to be translated to the language understandable to workers (say, Hindi). If the translator is not
proficient with both the languages, communication becomes ineffective.
Q. 18. Mr. Sandeep is the marketing manager of a company manufacturing designer clothes. One day,
in the morning while leaving home he had a quarrel with a person in his neighbourhood on some issue.
That person is a criminal who could abuse his family members. Mr. Sandeep, on that day, is very
worried and angry too on the behavior of the neighood person. On that day, a meeting was held by a
team of marketing and design experts to ensure that whatever is produced is according to market
demand and tastes and fashion of the customers. But Mr. Sandeep could not pay attention to the
discussion between them.
(a) Identify the type of barriers to communication mentioned in the above para. Justify your answer.
Ans.
These are related to the state of mind of both sender and receiver of communication.For example, a
worried person cannot communicate properly and an angry receiver cannot understand the real
meaning of message.
„Mr. Sandeep is very worried and angry on that day.So he could not pay attention to the discussion in
the meeting.‟
Psychological barriers to communication: Lack of attention: the pre-occupied mind of receiver and the
resulting non-listening of message acts as a major psychological barrier.
Premature evaluation: Sometimes people form a judgement before the sender completes his message,
which causes failure of communication.
Q. 19. Mrs. Rajlaxmi is working as the Human Resource Cosultant in a firm manufacturing cosmetic,
which is facing a problem of high employee urnover. The CED of the company has invited suggestions
from her for retaining the talented employees & reducing the employee turnover. Mrs. Rajlaxmi
recommends that the good employees be rewarded in a way that it creates a feeling of ownership
among the employees and at the same time makes them contribute towards the growth of the
organization.
(a) Identify the incentive and explain its type, which has been suggested by Mrs. Rajlaxmi to the CEO
of the company.
Ans.
Pay and allowances: For every employee, salary is the basic financial incentive. It includes basic pay,
dearness allowance and other allowance. Pay hike and increments improve performance level of
employees.
Profit sharing: Employees are given a share in the profits of the organization. This motives them to
improve their performance and contributes to increase in profits of the organization.
Q. 20. Mr. Bhuvan is the marketing manager of the company manufacturing designer clothes. One day
in the morning while leaving home, he had a quarrel with the person in the neighbourhood. That person
abused his family and threaten to harm the family. Mr. Bhuvan got very upset and worried. On the
same day a meeting was organized in the office to finalise the design according to market demand and
taste the fashion of the customers. Mr. Bhuvan could not pay attention to the discussion as he was
thinking about the quarrel only.
Ans.
financial position of all the employees is good. The employees working here are honest punctual and
hardworking. The CEO of the company asked him to suggest a method of motivation. The CEO asked
him to suggest a method which is happily accepted by all the employees.
Rajiv spoke to many employees in this connection. Some employees suggested give more importance
to individual autonomy, another suggested good performance should be appreciated another group
suggested to award, certificate, trophies to recognize the good performance. Mr. Rajiv mixed all and
suggested a method of motivation to CEO. The CEO happily accepted that and it was immediately
implemented. With in few days the company‟s growth rate appeared to have become fast.
Which motivation method combine all the above stated and was suggested by personal manager.
Ans.
Directing.
(i) Recognition
(ii) Autonomy
quintals of Aata every day. His job was to make sure that the work goes on smoothly and there was no
interruption in production. He was a good leader who would give orders only after consulting his
subordinates and work out the policies with the acceptance of the group.
Using this style is of mutual benefit – it allows them (subordinates) to become part of the team and
helps leaders (seniors) to make better decisions.
Q. 23. Neeraj, a sales representative of „Omida Ltd‟ has changed seven jobs in the last one year. He is
a hard working person but is not able to finalise deals with the customer due to his inadequate
vocabulary and omission of needed words. Sometimes he uses wrong words because of which intended
meaning is not conveyed. All this created a mis-understanding between him and his cliens.
Ans.
Semantic barrier, which arises from problems and obstructions in the process of encoding and decoding
of message into words or impressions.
Technical jargon; Specialists use technical language or jargon while explaining to the workings, e.g.,
tariff, quotas, etc. therefore, they may not understand the actual meaning of many such words.
Q. 24. Smita had been working as an assistant manager with „Johnson Enterprises‟ for the last ten
years. She was very popular amongst her colleagues because of her commitment and dedication
towards the work. When the manager senior to her retired, all her colleagues thought that now Smita
would be promoted. But to everyone‟s surprise the vacant post was filled by an outsider, Mrs. Rita.
Smita felt demoralized and her performance started declining. She would abstain herself often and
could not meet her targets.
Mrs. Rita was a good leader, who would not only instruct her subordinates but would also guide and
inspire them. She noticed Smita‟s hebaviour and felt that her performance could be improved. She
started involving Smita in decision making-issues related to the organization and made her a part of
high level joint-management committed. Smita was now punctual in office and her performance started
improving.
behavior.
Ans.
Directing
Motivation
Motivation is an internal feeling: The urge, desires, aspirations or needs of people, which are internal,
influence human behavior.
Motivation produces goal-directed behavior: For example, if the employee is interested in promotion, it
helps to produce a behavior to improve performance. Motivation can be either positive or negative:
Positive motivation provides positive rewards like increase in pay, promotion, recognition, etc.
negative motivation uses negative means like punishment, stopping increments, threatening, etc.
Q. 25. Rahim was working in an enterprise on daily wages basis. It was difficult for him to fulfill the
basic needs of his family. His daughter fell ill. He had no money for his daughter‟s treatment. To meet
the expenses of her treatment, he participated in a cycle race and won the prize money. The cycle
company offered him a permanent pensionable job which he happily accepted.
(i) By quoting the lines from the above para identify the needs of Rahim that are satisfied by the offer
of cycle company.
Ans.
Needs of Rahim that are satisfied by the offer of cycle company are Physiological and safety/security
needs.
Q. 26.Y Ltd. Is a bank functioning in India. It is planning to diversify into insurance business. Lately,
the government of India has allowed the private sector to gain entry in the insurance business.
Previously, it was the prerogative of LIC and GIC to do insurance business. But now with liberalization
of the economy and to make the field competitive other companies have been given licences to start
insurance business under the regulation of „Insurance regulatory and development Authority‟.
Y Ltd. Plans to recruit high quality employees and agents and exercise effective direction to capture a
substantial part of life and non-life insurance business.
What financial and non-financial incentives can the company use for employees and agents separately
to motivate them?
How can the company ensure that higher order needs i.e., esteem and self actualization as specified by
Maslow are met?
Ans. The company will appoint supervisors who will provide on the job training to the employees and
agents. They will maintain group unity and ensure that the company gets enough insurance business.
To the employees, the company can give pay and allowances, bonus, retirement benefits, perquisites
(e.g., car allowance),recognisation, promotion, job security etc. to motivate them for higher
performance.
Profit sharing
By giving recognition, autonomy status, etc. and providing growth and self-fulfillment opportunities,
the company ensures that higher order needs-esteem and self actualization needs are met.
information to know he reactions of the employees and agents to the company‟s decisions and policies.
Grapevine channels can carry insurance market information rapidly.
Q. 27. Prateek is working in a multinational company in Noida. He was running a temperature for the
last many days. When his blood was tested, he was found to be positive for malaria. He was admitted
in a hospital and a blood transfusion was advised by the doctors as his condition was very serious. One
of his colleagues sent a text message to his superior, Mr. B. Chatterjee. Mr. B. Chatterjee immediately
sent a text message to the employees of the organization requesting them to donate blood for Prateek.
When the General Manager came t o know about it, he ordered for fumigation in the company premises
and cleaning the surroundings.
Ans.
Chatterjee. Mr. B. Chatterjee immediately sent a text message to the employees of the organization
requesting them to donate blood for Prateek.”
The grapevine/informal communication spreads very fast and sometimes gets distorted. It is very
Humanity
Cleanliness
Q. 28. Roshan is the chief of „Khidmat‟ restaurant located in the city of Bangaluru. The place is known
for its exquisite Mughlai cuisine especially mutton briyani and kababs. All the food is prepared under
Roshan‟s purview. The various activities in the kitchen are initiated in accordance to his instructions.
He is very clear and specific in issuing instructions to his subordinates in order to ensure smooth
working of the department. He personally oversees the method followed by the chefs for preparation of
each dish. He misses no opportunity to praise his subordinates for their good work. All his team
members feel very happy and satisfied under his direction. He provides constant guidance to them in
order to improve upon its taste and presentation and also encourages them to innovate and be more
creative in their work.
Identify the various elements of directing mentioned in the above paragraph by quoting lines from the
paragraph.
Describe briefly any two points to highlight the importance of directing as a function of management.
Ans.
Communication: „He is very clear and specific in issuing instructions to his subordinates in order to
ensure smooth working of the department.”
Supervision: “He personally oversees the method followed by the chefs for preparation of each dish.”
Leadership: “He provides constant guidance to them in order to improve upon its taste and presentation
and also encourages them to innovate and be more creative in their work.”
Initiates action: Directing helps to initiate action by people in the organization towards attainment of
desired objectives. It is the first execution function of management.
Integrates employees’ efforts: Directing seeks to integrate the individual efforts of employees in the
organization towards the realization of the organizational goals.
Helps to realize their potential: Directing provides effective guidance, motivation and leadership to the
employees so as to enable them to realize their potential and capabilities. (any two)
Q. 29. Neeraj has been working as a sewing machine operator in an export house for the past ten years.
His basic work is to seam the parts of a garment together, and attach buttons, hooks, zippers, and
accessories to produce clothing. Considering the fact that Neeraj is an experienced operator, he is well
versed with the fundamentals of industrial production and possesses good communication skills. The
plant superintendent in the factory recommends Neeraj‟s name to the production manager for the post
of supervisor which will fall vacant after a month on the retirement of the present supervisor.
Consequently, Neeraj is assigned the post of supervisor and his salary is increased accordingly.
Moreover, as per the policy of the export house, he is offered free medical aid and education to his two
children.
Identify the type of source of recruitment used by the export house to fill up the post of supervisor.
Give any two advantages of using this source.
Ans.
The internal source of recruitment has been used by the export house to fill up the post of supervisor
through promotion. The two advantages of using internal source of recruitment are stated below.
Employees are motivated to improve their performance: When employees are promoted internally from
within an organization, it has a positive impact on their commitment and loyalty and they tend remain
satisfied with their jobs. Also, it may lead to a chain of promotion at lower levels in the organization.
As a result, it motivates the employees to improve their performance through learning and practice.
Internal recruitment simplifies the process of selection and placement: The candidates can be appraised
more perfectly and economically as that are already working in the organization. As the candidates are
already known to the organization, it is considered to be a more reliable method of recruitment.
Perquisites: “as per the policy of the export house, he is offered free medical aid and education to his
two children.”
Q. 30. Sunidhi has started a designer studio in the basement of her residence after completing her
masters in fashion designing. She has appointed ten employees to take care of the various aspects of the
work. She interacts regularly with each employee to tell exactly what is expected of him/.her and what
he/she needs to do to be regarded as a good performer. At the same time she allows a free work
environment wherein the employees openly chit chat with each other in order to fulfil their social and
emotional needs. Sometimes, these interactions also lead to spreading rumours which are not authentic.
Ans.
The two types of communication being referred to in the above paragraph are formal communication
and informal communication.
organization structure is called formal communication. This communication may take place between a
subordinate and superior or among same team employees or managers. Usually a written record of such
communications is maintained, recorded and filed in the office. Formal communication may be further
classified as – Vertical and Horizontal.
disregard to the levels of authority. The informal communication arises out of needs of employees to
exchange their views, which cannot be done through formal channels.
management to express the goals and targets, issue instructions, allocate jobs and responsibilities and
look after the performance of subordinates.
Q. 31. Gagan has joined as a Managing Director of True Help Ltd., a company engaged in the business
of providing road side assistance to the vehicle owners. He was previously working in an automobile
company. As a part of the joining incentive, the company has allotted him 400 shares of the company.
Director.
Identify the type of financial incentive offered to Gagan. Also, state any one other method that can be
used to offer financial incentives to the employees.
Ans.
Director.
The other method that can be used to offer financial incentives to the employees is Bonus. Bonus is an
incentive offered over and above the wages/ salary to the employees.
Q. 32. Mr. Naresh is working as a Production Manager in Vohra Ltd. His subordinates are mostly
engineers and qualified technicians.
subordinates. He expects them to following his instructions without any questions and does not allow
them to give suggestions. What leadership style does the manager follow?
Ans.
This leadership style is effective in getting productivity in many situations like in a factory where the
supervisor is responsible for production on time and has to ensure labour productivity. Quick decision-
making is also facilitated.
Value overlooked:
Initiative
CONTROLLING
Q. 1. Babita Ltd. is engaged in manufacturing machine components. The target production is 250
units per day per worker. The company had been successfully attaining this target until two
months ago. Over the last two months it has been observed that daily production varies between
200-210 units per worker.
1. Name the function of management and identify the step in the process of this function which
helped in finding out that the actual production of a worker is less than the set target.
2. To complete the process of the function identified in (a) and to ensure the performance as per
set targets, explain what further steps a manager has to take. (5 marks)
Ans.
1. The management function is Controlling.
“Comparing actual performance with standards” is the step involved in the process of controlling
which helped in finding out that the actual production of a worker is less than the set target.
1. A manager has to take the following two further steps to complete the process of controlling:
1. Analysing deviations
2. Taking corrective action

Q. 2. Rajeev and Sanjeev are managers in the same organization having different units. While
discussing about the function of management, Rajeev says “Planning is looking ahead whereas
controlling is looking back.” But Sanjeev says, “Planning is looking back whereas controlling is
looked ahead.” Both are giving reasons in favour of their statements.
Explain the possible reasons given by both and justify who is correct. (6 marks)
Ans. Rajeev who says, “Planning is looking ahead whereas controlling is looking back” must be giving
the following reason:
Sanjeev who says, “Planning is looking back where as controlling is looking ahead” must be giving the
following reasons.
Conclusion: Planning and controlling are both backward looking and forward looking functions.
Hence, both of them are partially correct.
Q. 3. „Saurashtra‟ is a company involved in the export of indigenous food products like chutneys
and pickles.. it has tied up with the small farmers in various states for sourcing of fruits and
vegetables. In this way it helps the small farmers to sell their produce at reasonable rates. The
company follows a practice where only significant deviations from a budget or plan are brought
to the attention of management. The degree of deviations allowed in different categories in the
budget are well defined in advance, along with the appropriate levels of managements who will
respond to the deviations in question. For example, a deviation of Rs. 20,000 or more in purchase
costs will be reported to the concerned department manager.
1. Identify the principle of management control adopted by the company. State the belief
underlying this principle.
2. List any two values that the company wants to communicate to the society.
Ans.
1. Management by exception is the principle of management control adopted by the company. It is
based on the belief that „if you try to control everything, you may end up controlling nothing.‟
2. The two values that the company wants to communicate to the society are:
1. Rural development:
2. Sense of responsibility:
Q. 4. Anubhav has set up an export house after completing his masters in fashion designing. As
the quality of the garment depends on the quality of raw materials used, he assures that the
fabric meets the requirements by conducting a series of tests for the fabrics like shrinkage test,
testing colour fastness to washing, colour fastness to light, colour fastness to perspiration etc.
through laboratory tests. Later on, at the production areas, fabric inspection is also conducted by
stopping the production process. The tests help to detect the deviations and also take corrective
action. Moreover, the ensures that complete training about production work was given to every
worker at the time of joining his export house.
1. Identify the function of management being performed by Anubhav by conducting tests to
assure for the quality of the garments manufactured in his export house.
2. Briefly explain the term „deviations.‟
3. Give any three advantages of giving training to the employees.
Ans.
1. Controlling is the function of management being performed by Anubhav by conducting tests to
assure for the quality of the garments manufactured in his export house.
2. The term „deviations‟ refers to the difference between the actual performance and planning
performance. If the actual performance is more than the planned performance, it may be said to be
positive in nature or vice-versa.
3. The benefits of training of development to an organization are as follows:
1. Training imparts systematic learning to the employees thereby helping to avoid wastage of efforts
and money and is considered better than the hit and trial method.
2. It increases the employees‟ productivity both in terms of quantity and quality, leading to higher
profits.
3. Training increases the morale of the employees and reduces absenteeism and employee turnover.
Q. 5. Atul and Ajay are good friends. They decide to set up a digital printing press together as
both of them are compute wizards. They plan to offer various types of printed products including
labels, manuals, marketing material, memo pads, business order forms, T-shirts, mugs etc. They
set standards for every aspect of their work in order to create an efficient working environment.
As per the standards, an average person types between 38 and 40 words per minute. Keeping this
in mind, they engage two typists Bitto and Raju and assign them work accordingly. Within two
days, they realize the output in terms of typing work done by Raju is too less as compared to the
desired output. On inspecting, Atul finds out that Raju‟s typing speed is between 18 and 20
words per minute only. But Raju exhibits great skills in designing work and is a good human
being. Hence, Atul and Ajay decide to retain him for doing creative work and appoint a new
typist.
1. Identify and explain the function of management being discussed here.
2. List the steps involved in the function of management as identified in part (a).
Also, quote the liens from the paragraph relating to each step.
Ans.
1. Controlling is the function of management being discussed here.
2. The steps involved in the process of controlling which are discussed in the above paragraph are: 1.
Setting standards of performance:
2. Measurement of actual performance:
3. Comparison of actual performance with the standards:
4. Analyzing deviations:
5. Taking corrective action:
Q. 6. D & D Ltd. is a large manufacturing unit. Recently, the company has conducted the „time‟
and „motion‟ studies and concluded that on an average a worker could produce 120 units per
day. However, it has been noticed that average daily production of a worker is in the range of 80-
90 units.
Which function of management is needed to ensure that the actual performance is in accordance
with the performance as per „time‟ and „motion „studies? State four features of this function of
management. (5 marks)
Ans. Controlling
Features of controlling:
1. Controlling is a goal-oriented function
2. Controlling is a pervasive function
3. Controlling is a continuous process
4. Controlling is both a backward looking as well as forward looking function.
Q. 7. „A.S. Ltd.‟ is a large company engaged in assembly of air-conditioners. Recently the

company had conducted the „Time‟ and „Motion‟ study and concluded that on an average a
worker can assemble ten air-conditioners in a day. The target volume of the company in a day is
assembling of 1,000 units of air-conditioners. The company is providing attractive allowances to
reduce labour turnover and absenteeism. All the workers are happy. Even then the assembly of
air-conditioners per day is i800 units only. To find out the reason the company compared actual
performance of each worker and observed through C.C.T.V. that some of the workers were busy
is gossiping.
1. Identify the function of management discussed above.
2. State those steps in the process of the function identified which are discussed in the above
praragraph. (3 marks)
Ans.
1. Controlling
2. Steps discussed in the above paragraph are:
1. Setting performance standards
2. Measurement of actual performance
3. Comparing actual performance with the standards
4. Analyzing deviations for their causes.
Q. 8. A company „M‟ Ltd. is manufacturing mobile phones both for domestic Indian market as
well as for export. It has enjoyed a substantial market share and also had a loyal customer
following. But latterly it has been experiencing problems because its targets have not been met
with regard to sales and customer satisfaction. Also mobile market in India has grown
tremendously and new player have come with better technology and pricing. This is causing
problems for the company. It is planning to revamp its controlling system and take other steps
necessary to rectify the problems it is facing.
1. Identify the benefits the company will derive from a good control system.
2. How can the company relate its planning with control in this line of business to ensure that its
plan are actually implemented and targets attained?
3. Give the steps in the control process that the company should follow to remove the problems it
is facing.
Ans.
1. Explain the importance of controlling.
2. Company can relate its planning with control in this line of business by following measure by
implementing an effective controlling system and following a controlling process.
3. Explain steps in the process of controlling system.
Q. 9. Alpha Ltd. was manufacturing Auto spare parts. To improve the efficiency of employees
the company provided training to their employees by inviting an expert who demonstrated the
whole process of manufacturing. The expert quoted that all deviations cannot be controlled, so
manager must know which deviation in key areas must be attended urgently as compared to
deviation in non-key area. He also suggested that human beings are bound to brake mistakes as
manager should not take strict action on every minute mistake of workers, rather he can fix a
range of deviation and take action if deviation is above the specified large.
1. Identify the functions of management referred above.
2. Name the two ways of analyzing deviation mentioned above.
3. Name the method of training used by the company.
4. Identify the value being emphasized in above para.
Ans.
1. Staffing and controlling
2. (i) critical Point Control
(ii) Management by exception

1. Apprenticeship method of training
2. Value of Humanity.
Q. 10. A critical point control (CPC) approach is followed by McDonald in the cooking and
handling process so that any food safety threat can be prevented, eliminated, or reduced to an
acceptable level. Hence, continuous monitoring of activities are undertaken to ensure that the
process is right at each critical point control. The main principle followed for cooking at
McDonald is “less amount many time” which can ensure the high quality and high fresh level of
the food. For instance, if your hamburgers have to be made, a worker cannot cook all the four
hamburgers at one time. The time figured out for making one hamburger is one hundred and
forty-five seconds. Moreover, nearly all foods in the McDonald have the specific holding time, the
holding time for hamburgers is ten minutes and for French fries is seven minutes. If it is not sold
within that time it is thrown away. Also, the temperature of the milk sent by t he supplier must b
e under 40 c, otherwise, it will be returned.
1. Name the steps involved in the controlling process which is being discussed in the above lines.
2. What do you understand by „critical point control‟? Explain.
3. How does the controlling function of management help in accomplishing organizational goals
and ensure efficient use of resources?
Ans.
1. Analyzing deviation and taking corrective action are being discussed in the above lines.
2. Since it may neither be economical nor easy to monitor each and every activity in the organization,
there for every organization identifies and states its specific key result area (KRAs) or critical points
which require tight control are likely to have a significant effect on the working of the business. Any
deviations on these points are attended to urgently by the management.
3. The two points that highlight the importance of the controlling function are listed below:
1. Accomplishing organizational goals:
2. Making efficiently use of resources:
Q. 11. Raghav started a take away eating joint in a nearby market. His business was doing well.
He ensured that the food was properly cooked, a standard taste was maintained, packing of food
was done effectively and the orders were executed on time. But unfortunately he met with an
accident and was advised three months bed rest. In his absence, his cousin Rohit took charge of
his business. When he resumed his work after three months, he realized that his clientele had
dropped. The people were not happy with the services as the quality of food had deteriorated and
the delivery time for orders had increased considerably. All this was happening because most of
his previous staff had left as Rohit used to adopt a very strict and authoritative approach
towards them.
1. List any two aspects about his business that Raghav was controlling in order to make it
successful.
2. Explain briefly any two points to highlight the importance of the controlling function.
3. Name and explain the style of leadership adopted by Rohit.
Ans.
1. The two aspects about his business that Raghav was controlling in order to make it successful are
listed below:
1. A standard taste was maintained.
2. The orders were executed on time.
1. The two points that highlight the importance of the controlling function are listed below:
1. Judging accuracy of standards:
2. Improving employee motivation:
1. Rohit had adopted an autocratic style of leadership. An autocratic leader expects strict compliance
form his subordinates with regard to the orders and instructions given by him. Therefore, it involves
only one-way communication.
Q. 12. Mr. Nath, a recently appointed production manager of Suntech Ltd. has decided to
produce jute bags instead of plastic bags as these are banned by the government. He set a target
of producing 1000 jute bags a day. It was reported that the employees were not able to achieve
the target. Mr. Nath‟s behavior is good towards the employees. His attitude is always positive. So
he announced various incentive schemes for the employees like. - installing award or certificate
for best performance.
- Rewarding an employee for giving valuable suggestions.
- Congratulating the employees for good performance.
(a) Identify the functions of management highlighted in the above paragraph.
(b) State the „incentive‟ under which the employees are motivated.
(c) State any two values which the production manager wants to communicate to the society by
his work and behavior. (5 marks)
Ans.
1. Controlling and Directing
2. Employee recognition programme (non-monetary incentive)
3. Values:
 Sensitivity to environment
 Good behavior towards employees
 Team work with employees
Q. 13. Joseph Bros. was a firm manufacturing jute lamp shades. It uses left over jute pieces from
various jute factories to manufacture economical lamp shades which are supplied to various
hotels in nearby towns: it employs men and women from nearby villages as workers for creating
good lamp shade designs.
Joseph Bros., is not able to meet its targets. Namish, the supervisor of the company, was told to
analyze the reasons for the poor performance. Namish found following problems and suggested
certain solution s in the working of the business. M the number of workers employed was les than
what was required for the work. As a result, the existing workers were overburdened. The firm
decided to search for new workers and it asked the present employees to introduce candidates or
recommend their friends and relatives to the firm. This enabled the firm in “putting people to
jobs” and assured attainment of objectives according to plans.
1. Identify the functions of management being performed by the firm in the above situation.
2. Name the concept and its source used by the firm to attract more workers for the firm.
3. State any two values being followed by Jacob Bros. (5 marks)
Ans.
1. Staffing and Controlling
2. Recruitment, External Source of Recruitment (Recommendations of employees)
3. Values being followed by Joseph Bros.:
1. Creating employment opportunities.
2. Utilizing resources efficiently by using leftover clothes.
Q. 14. A company was manufacturing „LED bulbs‟ which were in great demand. It was found
that the target of producing 300 bulbs a day was not met by the employees. On analysis, it was
found that the workers were not at fault. Due to electricity failure and shortage of workers, the
company was not able to achieve the set targets and alternative arrangements were needed.
To meet the increased demand, the company assessed that approximately 88 additional workers
were required out of which 8 would work as heads of different departments and 10 would work
as subordinates under each head. The required qualifications and job specifications were also
enlisted. It was also decided that necessary relaxation should be given to encourage women,
persons from backward and rural areas and persons with special abilities to assume responsible
positions in the organization. All efforts were made to match the ability of the applicants with the
nature of work.
1. Identify the functions of management discussed above.
2. State the two steps in the process of each function discussed in the above para.
3. List any two values which the company wants to communicate to the society (6 marks)
Ans.
1. Staffing and controlling
2. Step in Staffing
1. Estimating manpower requirements:
2. Recruitment:
1. Steps in controlling:
1. Comparison of actual performance with the standards:
2. Analyzing deviations:
3. Taking corrective action:
1. Values which the company wants to communicate to the society:
1. Using environment friendly methods of production.
2. Women empowerment.
3. Upliftment of underprivileged sections of the society.
Q. 15. Airtech Ltd. is manufacturing mobile phones both for domestic Indian market as well as
for export. It has enjoyed a substantial market share and also had a loyal customer following.
But lately it has been experiencing problems because its targets have not been met with regard to
sales and customer satisfaction. Also, mobile market in India has grown tremendously and new
players have come with better technology and pricing. This is causing problems for the company.
It is planning to revamp its controlling system and take other steps necessary to rectify the
problems ikt is facing. It also decides to offer its basis models of mobile phones at 50% discount
to the poor people.
1. State any two benefits the company with derive from a good control system.
2. How can the company relate its planning with control in this line of business to ensure that its
plan are actually implemented and targets attained.
3. Give the steps that the company should follow to remove the problems it is facing.
4. Identify any one value which the company wants to communicate to the society. (6 marks)
Ans.
1. Two benefits which the company will derive from a good control system are:
1. Accomplishing organizational goals of increasing market share and customer satisfaction.
2. Making efficient use of resources by controlling wastage and spoilage of resources; and ensuring
that each activity is performed according to the predetermined standards.
1. Controlling will improve future planning by providing information to the company derived from past
experience that its targets were not met with regard to sales and customer satisfaction.
2. The company should undertake technological up gradation of machinery, and modify the existing
process so that cost is reduced and the company can set lower price for its mobile phones to bet its
competitors.
3. Value:
 Concern about poor people
 Social responsibility
Q. 16. You are the manager of Bharti Chemicals Ltd. it is reported to you that postal expenses
have increased by 10% over standard rates and cost of raw materials has increased by 2%.
Which of the two deviations will be more critical to you? (1 mark)
Ans. Increase in cost of raw materials by 2% is more critical. (Critical Point Control)
Q. 17. Surbhi Ltd. produces safety pins on a mass scale. The company‟s policy is that at most 25
of the daily production could be defective. Over a three months period, it has been observed that
8% - 10% of the production is defective. The cause of deviation found is defective machinery.
What corrective action should be taken by the management? (1 mark)
Ans. Repair the existing machine or replace the machine if it cannot be repaired.
Q. 18. K & K Co. Ltd. is engaged in manufacturing machine components. The target production
is 200 units daily. The company had been successfully attaining this target until two months ago.
Over the last few months it has been observed that daily production varies between 150-170
units.
Identify the possible causes for the decline in production and the steps to be taken to achieve the
desired targets. (5 marks)
Ans.
Financial Management
Q. 1. Arun is a successful businessman in the paper industry. During his recent visit to his
friend‟s place in Mysore, he was fascinated by the exclusive variety of incense sticks available
there. His friend tells him that Mysore region in known as a pioneer in the activity of Agarbathi
manufacturing because it has a natural reserve of forest products especially Sandalwood to
provide for the base material used in production. Moreover, the suppliers of other types of raw
material needed for production follow a liberal credit policy and the time required to
manufacture incense sticks is relatively less. Considering the various factors, Arun decides to
venture into this line of business by setting up a manufacturing unit in Mysore.
1. Identify of the above case:
2. Identify the three factors mentioned in the paragraph which are likely to affect the working
capital requirements of his business.
Ans.
1. Investment decision has been taken by Arun. Investment decision seeks to determine as to how the
firm’s funds are invested in different assets. It helps to evaluate new investment proposals and select
the best option on the basis of associated risk and return. Investment decision can be long term or
short-term. A long-term investment decision is also called a Capital Budgeting decision
2. The three factors mentioned in the paragraph which are likely to reduce the working capital
requirements of his business are as follows:
1. Available of raw material:
2. Production cycle:
3. Credit availed:
Q. 2. „Adwitiya‟ is a company enjoying market leadership in the food brands segment. It‟s
portfolio includes three categories in the Foods business namely Snack Foods, Juices and
Confectionery. Keeping in the with the growing demand for packaged food it now plans to
introduce ready-To-Eat Foods. Therefore, the company has planned to undertake investments of
nearly Rs. 450 crores for its new line of business. As per the current financial report, the interest
coverage ratio of the company and return on investment is higher. Moreover, the corporate tax
rate is high.
1. As a financial manager of the company, which source of finance will you opt for debt or equity,
to raise the required amount of capital? Explain by giving any two suitable reasons in support of
your answer.
2. Why are the shareholder‟s of the company like to gain from the issue of debt by the company?
Ans.
1. As a financial manager of the company, I will opt for debt to raise the required amount of capital.
I support my decision by giving the following reasons:

1. Interest coverage ratio:
2. Tax rate:
1. The shareholders of the company are likely to gain from the issue of debt by the company because
the return on investment is higher. It helps a company to take advantage of trading on equity to
increase the earnings per share.
Q. 3. Computer Tech Ltd., is one of the leading information technology outsourcing services
providers in India. The company provides business consultancy and outsourcing services to its
clients. Over the past five years the company has been paying dividends at high rate to its
shareholders. However, this year, although the earnings of the company are high, its liquidity
position is not so good. Moreover, the company plans to undertake new ventures in order to
expand its business.
1. Give any three reasons because of which you think Computer Tech Ltd. has been paying
dividends at high rate to its shareholders over the past five years.
2. Comment upon the likely dividend policy of the company this years by stating any two reasons
Ans.
1. Computer Tech Ltd. has been paying dividends at high rate to its shareholders over the past five
years because of the following reasons:
1. Earnings:
2. Cash flow position:
3. Access to capital market:

1. This year the company is likely to follow a conservative dividend policy because of the following
reasons:
1. The cash flow position of the company is not god and dividends are paid in cash.
2. The company may like to retain profits to finance its expansion projects. Retained profits do not
involve any explicit cost and are considered to be the cheapest source of finance.
Q. 4. Bhuvn inherited a very large area of agricultural land in Haryana after the death of his
grandfather. He plans to sell this piece of land and use the money to set up a small scale paper
factory to manufacture all kinds of stationary items from recycled paper. Being an amateur in
business, he decides to consult his friend Subhash who works in a financial consultancy firm.
Subhash helps him to prepare a blue print of his future business operations on the basis of sales
forecast in next five years. Based on these estimates, he helps Bhuvan to assess the fixed and
working capital requirements of business.
1. Identify the type of financial service that Subhash has offered to Bhuvan.
2. Briefly state any four points highlighting the importance of the type of financial service
identified in part (a)
Ans.
1. Financial planning is the type of financial service that Subhash has offered to Bhuvan.
2. The four points highlighting the importance of financial planning are as follows:
1. It ensures smooth running of a business enterprise by ensuring availability of funds at the right time.
2. It helps in anticipating future requirements of a funds and evading business shocks and surprises.
3. It facilitates co-ordination among various departments of an enterprise like marketing and production
function, through well-defined policies and procedures.
4. It increases the efficiency of operations by curbing wastage of funds, duplication of efforts, and gaps
in planning.
Q. 5. „Madhur Milan‟ is a popular online matrimonial portal. It seeks to provide personalized
match making service. The company has 80 offices in India, and is now planning to open offices
in Singapore, Dubai and Canada to cater to its customers beyond the country. The company has
decided to opt for the sources of equity capital to raise the required amount of capital.
1. Identify and explain the type of risk which increases with the higher use of debt.
2. Explain briefly any four factors because of which you think the company has decided to opt for
equity capital.
Ans.
1. Financial risk of the company increases with the higher use of debt. This is because issue of debt
involves fixed commitment in terms of payment of interest and repayment of capital. Financial risk
refers to a situation when a company is unable to meet its fixed financial charges.
2. The factors because of which the company has decided to opt for equity capital are as follows:
1. Capital market conditions:
2. Fixed operating cost:
4. Risk:
Q. 6. Wooden Peripheral Pvt. Ltd. is counted among the top furniture companies in Delhi. It is
known for offering innovative designs and high quality furniture at affordable prices. The
company deals in a wide product range of home and office furniture through its eight showrooms
in Delhi. The company is now planning to open five new showrooms each in Mumbai and
Bangalore. In Bangalore it intends to take the space for the showrooms on lease whereas for
opening showrooms in Mumbai, it has collaborated with a popular home furnishing brand,
„Creations.‟
1. Identify the factors mentioned in the paragraph which are likely to affect the fixed capital
requirements of the business for opening new showrooms both in Bangalore and Mumbai
separately.
2. “With an increase in the investment in fixed assets, there is a commensurate increase in the
working capital requirement.” Explain the statement with reference to the case above.
Ans.
1. The fixed capital requirements of Wooden Peripheral Pvt. Ltd. for opening new showrooms in
Bangalore will be relatively less as its taking space on lease, so only rentals have to be paid.
Similarly, its fixed capital requirement for opening showrooms in Mumbai will be reduced as its going
to share the costs with another company through collaboration.
1. It’s true that, “ With an increase in the investment in fixed assets, there is a commensurate increase
in the working capital requirements,” Like in the above case, Wooden Peripheral Pvt. Ltd. is planning
to investment in new showrooms. Consequently, its requirement of working capital will increase s it
will need more money to stock goods, pay electricity bills and salaries to staff. Also, it intends to take
the space for the showrooms I Mumbai on lease so it will have to pay rentals.
Q. 7. Krishna Ltd. is manufacturing steel at its plant at Noida. Due to economic growth, the
demand for steel is also growing. The company is planning to set up a new steel plant at
Gurgaon. It needs Rs. 800 crore to start the new plant. It decides to raise Rs. 300 crore through
debentures, Rs. 200 crore through long-term loan from banks and Rs. 200 crore by issue of
equity share to the public. It decided to finance the remaining amount by utilizing its reserves
and surplus.
1. State the importance of financial planning for this company.
2. What is the capital structure of this company? Explain.
3. Identify the financial decision involved when the company decides to raise Rs. 800 crore from
different sources of funds.
4. How will the dividend decision of Krishna Ltd. be affected? Explain. (6 marks)
Ans.
1. Financial planning will help the company in avoiding business shocks and surprises. It will reduce
waste and duplication of efforts.
2. Capital structure refers to the mix between owners funds and borrowed funds. It is calculated as debt
equity ratio
i.e., Debit.
Equity
For Krishna Ltd. Debt = Debentures + Long tgerm loans from banks = 300 + 200 = Rs. 500 crore.
Equity = Share capital + Reserves and surplus (or retained earnings)
= 200 + 100 = Rs. 300 crores.
Therefore, debt equity ratio = 500 = 1.67 : 1
300
1. Financing decision
2. Since the company have growth opportunities of setting up a new steel plant at Gurgaon, it retains
Rs. 100 crore out of profits to finance the required investment. So, it is likely to pay less dividend.
However, since the company makes more debt financing than funding through equity, it implies that
cash flow position of the company is strong. Therefore, it can pay higher dividend.
Q. 8. Cost of debt is less than cost of equity. Still a company cannot go with entire debt. Why? (3
marks)
Ans. Because debt is more risky for a business, since payment of interest and return principal amount
is compulsory for the business. Any default in meeting these commitments may force the business to
go into liquidation. That is, increased use of debt increases financial risk of a business (the chance that
a firm would fail to pay interest on debt and the principal amount).
Q. 9. Amar is doing his transport business in Delhi. His buses are generally used for the tourists
going to Jaipur and Agra. Identify the working capital requirement of Amar giving reason in
support of your answer. Further Amar wants to expand and diversify his Transport business.
Enumerate any four factors that will affect his fixed capital requirements.(3Marks)
Ans. Working capital requirements of Amar would be less as it is a SERVICE industry.
Factors which will affects his fixed capital requirements are:
1. Scale of operations
2. Financing alternatives
3. Growth prospects
4. Diversification
Q. 10. Yogesh, a business man is engaged in publishing and selling of Ice-creams. Identify the
working capital requirement of Yogesh giving reason in support of your answer. (1 Mark)
Ans. Working capital requirements of Yogesh would be less as it is a TRADING business.
Q. 11. Manish is engaged in business of garments manufacturing. Identify the working capital
requirement of Manish giving reason in support of your answer. (1 Mark)
Ans. Working capital requirements of Manish would be less as it is a MANUFACTURING business.
So raw material needs to be converted into finished goods before any sales can become possible.
Q. 12. The directors of a manufacturing company are thinking of issuing Rs. 20 crores worth
additional debentures for expansion of their production capacity. This will lead to n increase in
debt equity ratio from 2 : 1 to 3 : 1. What are the risks involved in it? What factors other than
risk do you think the directors should keep in view before taking the decision? Name any four
factors. (3 Marks)
Ans. Higher use of debt increases the fixed financial charges of a business because payment of interest
and return of principal amount is compulsory. Any default in meeting these commitments may force
the business to go into liquidation. As a result, increased use of debt increases the financial risk of a
business. Financial risk is the chance that a firm would fail to meet its payment obligations.
Other factors affecting this decision are:
1. Cost
2. Cash flow position
3. Control
4. Return on investment (ROI)
Q. 13. Amit is running an „Advertising agency‟ and earning a lot by providing this service to big
industries. State whether the working capital requirement of the firm will be „less‟ or „more‟.
Give reason in support of your answer. 1 Mark)
Ans. Less working capital is required as service industries which usually do not have to maintain
inventory require less working capital.
Q. 14. Tata International Ltd. earned a net profit of Rs. 50 crores. Ankit the finance manager of
Tata International Ltd. wants to decide how to appropriate these profits. Identify the decision
that Ankit will have to take and also discuss any five factors which help him in taking this
decision. (6 Marks)
Ans. Dividend decision
Factors affecting dividend decision.
1. Earnings:
2. Stability of earnings:
3. Stability of dividends:
4. Growth opportunities:
Q. 15. Shalini, after acquiring a degree in Hotel Management and Business administration took
over her family food processing company of manufacturing pickles, jams and squashes. The
business was established by her great grandmother and was doing reasonably well. However the
fixed operating costs of the business were high and the cash flow position was week. She wanted
to undertake modernization of the existing business to introduce the latest manufacturing
processes and diversify into the market of chocolates and candies. She was very enthusiastic and
approached a finance consultant, who told her that approximately Rs. 50 lakh would be required
for undertaking the modernization and expansion programme. He also informed her that her
stock market was going through a bullish phase.
1. Keeping the above considerations in mind, name the source of finance Shalini should not
choose for financing the modernization and expansion of her food processing business. Give one
reason in support of your answer.
2. Explain any two other factors, apart from those stated in the above situation, which Shalini
should keep in mind while taking this decision. (6 Marks)
Ans.
1. Debt
Any one reason

1. Due to weak cash flow position, the firm may not be able to honour fixed cash payment obligations.
2. Increased fixed operating cost will increase the business risk therefore debt should not be issued as it
further increases the financial risk.
3. The stock market condition being bullish, the investors will prefer to buy equity shares.
1. Other factors which Shalini would keep in mind are:
1. Return on Investment
2. Tax rate
Q. 16. „Indian Logistics‟ has its own warehousing arrangements at key locations across the
country. Its warehousing services help business firms to reduce their overheads, increase
efficiency and cut down distribution time.
State with reason, whether the working capital requirements of „India Logistics‟ will be high or
low. (1 Mark)
Ans. Low, as it is a service industry, which usually do not have to maintain inventory.
Q. 17. „Sarah Ltd.‟ is a company manufacturing cotton yarn. It has been consistently earning
good profits for many years. This year too, it has been able to generate enough profits. There‟re
is availability of enough cash in the company and good prospects for growth in future. It is a well
managed organization and believes in quality, equal employment opportunities and good
remuneration practices. It has many shareholders who prefer to receive a regular income from
their investments.
It has taken a loan of Rs. 40 lakhs from IDBI and is bound by certain restrictions on the payment
of dividend according to the terms of loan agreement.
The above discussion about the company leads to various factors which decide how much of the
profits should be retained and how much has to be distributed by the company.
Quoting the lines from the above discussion identify and explain and four such factors.
(6 Marks)
Ans. Factors affecting dividend decision: (Any four)
1. Stability of earnings
It has been consistently earning good profits for many years‟.

Stability of earnings affects dividend decision as a company having stable earnings is in a position to
declare higher dividends.
1. Cash Flow position
„There is available of enough cash in the company‟.
A good cash flow positions is necessary for declaration of dividend.
1. Growth Prospects
„Good prospects for growth in the future.‟

If a company has good growth opportunities, it pays out less dividend.
1. Shareholders’ preference
„It has many shareholders who prefer to receive regular income from their investments.‟
Shareholder’s preference is kept in mind by the management before declaring dividends.
1. Contractual constraints
„It has taken a loan of Rs. Rs. 40 Lakhs from IDBI and … agreement.‟
Which taking dividend decision, companies keep in mind the restrictions imposed by the lenders in the
loan agreement.
Q. 18. Shubh Ltd. is manufacturing steel at its plant in India. It is enjoying a buoyant demand
for its products as economic growth is about 7%-8% and the demand for steel is growing. The
company has decided to set up a new steel plant to cash on the increased demand. It is estimated
that it will require about Rs. 2000 crore to set up and about Rs. 500 crore of working capital to
start the new plant.
1. State the objective of financial management for this company.
2. Identify and state the decision taken by the finance manager in the above case.
3. State any two common factors affecting the fixed and working capital requirements of Shubh Ltd. (6
Marks)
Ans.
1. Objectives of financial management of this company are:
1. To ensure availability of sufficient funds from different sources at reasonable costs.
2. To ensure effective utilization of such funds.
3. To ensure safety of funds procured by creating reserves, reinvesting profits, etc.
Value: Maximisation of shareholders’ wealth.

1. Investment decision
It relates to how the firm’s funds are invested in different assets – fixed assets and working capital.
1. Factors affecting fixed and working capital requirements of Shubh Ltd.:
1. Nature of business:
2. Scale of operations:
Q. 19. In a company profits are high and in future less scope of expansion exists. The company
has decided to distribute less amount of share of profits to its shareholders.
1. Identify of share of profits to its shareholders.
2. State any one value which is affected by the company‟s decision. (3 Marks)
Ans.
1. Dividend decision
This decision involves how much of the profit earned by the company (after paying tax) is to be
distributed to the shareholder and how much of it should be retained in the business.
1. Value affected: Shareholders’ wealth will not be maximized.
Q. 20. A company‟s earnings before interest and tax is Rs. 7 lac. It pays 10% interest on its debt.
Total investment of company is rs. 50 lac.
1. Advise company whenever it should include debt or equity to raise its capital.
2. Name the concept related to this.
3. Will be company‟s decision to raise funds from debt or equity will change if company‟s EBIT
becomes 3 lac.
Ans.
1. Company should prefer debt to raise fund as debt is gainful for equity shareholders till
ROI > Rate of Interest.

In the above case ROI = EBIT × 100
Total Income
= 7 × 100 = 14%
50
14 > 10 so debt it more suitable.
1. The concept is leverage effect or trading in equity.
2. Yes company’s decision will change if EBIT becomes 3 lac, because with 3 lac ROI will become
less than interest.
ROI = EBIT × 100 = 3 × 100 = 6%

Total Income 50
Interest = 10%
6% < 10%
So, now company must prefer equity to raise capital.
Q. 21. Storage Solution Ltd. is a large warehousing network company operating through a chain
of warehouses at 40 different locations across India. The company now intends to undertake
computerization of its owned ware houses as it seeks to provide better value added and cost
effective solutions for scientific storage and preservation services to the market participants
dealing in agricultural products including farmers, traders, etc.
1. How is the decision to undertake computerization of owned warehouses likely to affect the
fixed capital requirements of its business?
2. Name any two sources that company may use to finance the implementation of this plan.
Ans.
1. The decision to undertake computerization of owned warehouses will increase the fixed capital
requirements of its business both in present and future as after sometime, the technology being used
will become obsolete and need up gradation.
2. The company may use retained earnings and take loans from financial institutions to implement this
plan.
Q. 22. Visions Ltd. is a renowned multiplex operator in India. Presently, it owns 234 screens in 45
properties at 20 locations in the country. Considering the fact that the there is a growing trend
among the people to spend more of their disposable income on entertainment, two years back the
company had decided to add more screens to its existing set up and increase facilities to enhance
leisure, food chains etc. it had then floated an initial public offer of equity shares in order to raise
the desired capital. The issue was fully subscribed and paid. Over the year, the sales and profits
of the company have increased tremendously and it has been declaring higher dividend and the
market price of its shares has increased manifolds.
1. Name the different kinds of financial decisions taken by the company by quoting lines from the
paragraph.
2. Do you think the financial management team of the company has been able to achieve its
prime objective? Why or why not? Give a reason in support of your answer.
Ans.
1. The different kinds of financial decisions taken by the company are as follows:
1. Investment decision:
2. Financing decision:
3. Dividend decision:
1. Yes, the financial management team of the company has been able to achieve its prime objective i.e.
wealth maximization of the shareholders by maximizing the market price of the shares of the company.
Q. 23. Wireworks Ltd. is a company manufacturing different kinds of wires. Despite fierce
competition in the industry, it has been able to maintain stability in its earnings and as a policy,
uses 305 of its profits to distribute dividends. The small investors are very happy with the
company as it has been declaring high and stable dividend over past five years.
1. State any one reason because of which the company has been able to declare high dividend by
quoting line from the paragraph.
2. Why do you think small investors are happy with the company for declaring stable dividend?
Ans.
1. Stability in earnings:
“Despite fierce competition in the industry, it has been able to maintain stability in its earnings.”
1. The small investors are happy with the company for declaring stable dividend as they enjoy a regular
income on their investment.
Q. 24. Manoj is a renowned businessman involved in export business of leather goods. As a

responsible citizen, he chooses to use jute bags for packaging instead of plastic bags. Moreover,
on the advice of his friends, he decides to use jute for manufacturing aesthetic handicrafts,
keeping in view the growing demand for natural goods. In order to implement his plan, after
conducting a feasibility study, he decides to set up a separate manufacturing unit for producing
varied jute products.
1. Identify the type of investment decision taken by Manoj by deciding to set up a separate
manufacturing unit for producing jute products.
2. State any two factors that he is likely to consider while taking this decision.
Ans.
1. Capital budgeting decision has been taken by Manoj.
2. The factors affecting Capital Budgeting Decision are as follows:
1. Cash inflows:
2. Rate of return:
Q. 25. Well-being Ltd. is a company engaged in production of organic foods. Presently, it sells its
products through indirect channels of distribution. But, considering the sudden surge in the
demand for organic products, the company yis now inclined to start its online portal for direct
marketing. The financial managers of the company area planning to use debt in order to take
advantage of trading on equity. In order to finance its expansion plans, it is planning to raise a
debt capital of Rs. 40 lakhs through a loan @ 10% from an industrial bank. The present capital
base of the company comprises of Rs. 9 lakh equity shares of Rs. 10 each. The rate of tax is 30%.
1. What are the two conditions necessary for taking advantage of trading on equity?
2. Assuming the expected rate of return on investment to be same as it was for the current year
i.e. 15%, do you think the financial managers will be able to meet their goal. Show your workings
clearly.
Ans.
1. The two conditions necessary for taking advantage of trading on equity are:
 The rate of return on investment should be more than the rate of interest.
 The amount of interest paid should be tax deductible.
2.
Yes, the financial managers will be able to meet their goal as the projected EPS, with the issue of debt,
is higher than the present EPS.
Q. 26. „Ganesh Steel Ltd.‟ is a large and credit-worthy company manufacturing steel for the
Indian market. It now wants to cater to the Asian market and decides to invest in new hi-tech
machines. Since the investment is large, it requires long-term finance. It decides to raise funds by
issuing equity shares. The issue of equity shares involves huge floatation cost. To meet the
expenses of floatation cost the company decides to tap the money-market.
1. Name and explain the money-market instrument the company can use for the above purpose.
2. What is the duration for which the company can get funds through this instrument?
3. State any other purpose for which this instrument can be used.
Ans.
1. Commercial Paper:
It is a unsecured promissory note issued by large and credit worthy companies to raise short terms
funds at lower rates of interest than the prevailing market rates.
1. 15 days to one year.
2. It can also be used for seasonal and working capital needs.
Financial Markets
Q. 1. Supriya‟s grandmother who was unwell, called her and gave her a gift packet. Supriya
opened the packet and saw many crumpled share certificates inside. Her grandmother told her
that they had been left behind by her late grandfather.
As no trading is now done in physical form, Supriya wants to know the process by adopting
which she is in a position to deal with these certificates.
1. Identify and state the process.
2. Also give two reasons to Supriya
3. why dealing with shares in physical form had been stopped. (3 Marks)
Ans.
1. Dematerialization – It is a process where securities held by the investor in physical form are
cancelled and the investor gives an electronic entry or number so that she/he can hold it as an electronic
balance in an account
2. Problems with dealing in physical form - (any two)
1. Theft
2. Fake/forged transfers
3. Transfer delays
4. Paper work associated with share certificates or debentures held in physical form.
Q. 2. The directors of a company want to modernize its plant and machinery by making a public
issue of shares. They wish to approach the stock exchange, while the finance manager prefers to
approach a consultant for the new public issue of shares. Advise the directors whether to
approach the stock exchange or a consultant for new public issue of shares and why. Also advise
them about different methods which the company may adopt for the new public issue of shares.
(3 Marks)
Ans. The directors should approach a consultant for new public issue of shares. The stock exchanges
deal with sale and purchase of existing securities only, not in new issue of securities.
Different methods which the company may adopt for the new public issue of shares:
1. Offer through prospectus
2. Offer for sale
3. Private placement
4. Rights issue
5. E-IPOs.
Q. 3. Reshu‟s father has gifted her shares of a large cement company, with which he had been
working. The securities were in physical form. She already has a bank account and does not
possess any other forms of securities.
She wished to sell the shares and approached a registered broker for the purpose. Mention one
mandatory detail which she will have to provide with the broker. (1 Mark)
Ans. Permanent account Number (PAN)
Q. 4. Saqib Ltd. is a large credit worthy company operating in the Kashmir Valley. It is an
export oriented unit, dealing in exclusive embroidered shawls. The floods in the valley have
created many problems for the company. Many craftsmen and workers have been dislocated and
raw material has been destroyed. The firm is therefore, unable to get an uninterrupted supply or
raw material, and the duration of the production cycle has also increased. To add to the
problems of the organization, the suppliers of raw material who were earlier selling on credit are
asking the company, for advance payment or cash payment on delivery. The company is facing a
liquidity crisis. The CEO of the company feels that taking a bank loan is the only option with the
company to meet its short term shortage of cash. As a finance manager of the company name and
explain the alternative to bank borrowing that the company can use to resolve the crisis. (3
Marks)
Ans. Commercial Paper: It is a short term unsecured promissory note, negotiable and transferable by
endorsement and delivery with a fixed maturity period. It is issued by large and creditworthy
companies to raise short term funds at low companies tht are generally considered to be financially
strong.
Q. 5. „Ganesh Steel Ltd.‟ is a large and credit-worthy company manufacturing steel for the
Indian market. It now wants to cate to the Asian market and decides to invest in new hi-tech
machines. Since the investment is large, it requires long-term finance. It decides to raise funds by
issuing equity shares.
The issue of equity shares involves huge floatation cost. To meet the expenses of floatation cost
the company decides to tap the money market.
1. Name and explain the money-market instrument the company can use for the above purpose.
3. State any other purpose for which this instrument can be used. (4 Marks)
Ans.
1. Commercial paper
2. 15 days to one year
3. It can also be used for seasonal and working capital needs.
Q. 6. The Trading Procedure on Stock Exchange has been replaced by on-line screen based
electronic trading system. This is mainly done to eliminate problems like theft, fake/forged
transfers, transfer delays and paper work associated with share certificates or debentures in
physical form. This is a process where securities held by the investor in the physical form are
cancelled and the investor is given an electronic entry or number so that he/she can hold it as an
electronic balance in an account. This has increased the equity cult among the people.
1. Identify and state the process mentioned above.
2. What is the most important requirement for the process identified in (a)? State.
3. State any two values which you think have enhanced the equity cult in the society.
Ans.
1. Dematerialization – It is the process of holding securities in an electronic form.
2. For this, the investors has to open a „Demat account‟ with a depository participant (DP) for holding
and transferring securities in the demat form. He / She will also have to open a bank account for cash
transactions in the securities market.
3. Values:
 Fair dealings (i.e., no danger of loss, theft or forgery of share certificates)
 Transparency (i.e., participants can see the prices of all securities during real time)
 Increased efficiency of information (i.e., computer screens displays information on prices)
 Increased efficiency of operations (i.e., reduction in time, cost and risk error) (any two)
Q. 7. Sakshi Ltd, a well known real estate company has managed to carve a niche for itself in this
sector. Recently, it was revealed that the directors of the company have used price sensitive
information for their own personal interest Adequate public disclosures were also not made.
SEBI is considering action against these directors.
1. Name the term used for trading malpractice done by the directors of this company.
2. Identify any two values that the company should have adhered to in order to gain the trust of
its investors.
Ans.
1. Insider trading
2. Values:
 Protection and promotion of investors‟ interests
 Transparency
 Efficiency of information
 Efficiency of operations (any two)
Q. 8. „R‟ Limited is a real estate company which was formed in 1950. In about 56 years of its
existence the company has managed out from a niche for itself in this sector. Lately this sector is
witnessing a boom due to the fact that the Indian economy is on the rise. The income of middle
class are rising. More people can afford to buy homes for themselves due to easy availability of
loans and accompanying tax concession.
To expand its business in India and abroad the company is weighing various options to raise
money through equity offerings in India. Whether to tap equity or debt market whether to raise
money from domestic market or international market or combination of both? Whether to raise
the necessary finance from money market or capital market. It is also planning to list itself in
New York Stock Exchange to raise money through ADR.
To make its offering attractive it is planning to offer lots of financial plans, products to its
stakeholders and investors and also explain its listing at NSE after complying with the
regulations of SEBI.
1. What are the regulation so SEBI that company must comply with?
Ans. Explain regulatory functions,

Q. 9. A company require Rs. 2 crore for inventory, payment of wages, salaries, maintaining bank
balance, etc.
1. Suggest which financial market company may approach and why?
2. State the instruments to raise finance in that market.
Ans.
1. Money market is the market from where it can raise money to fulfill its requirement. The reason is
company require money for working capital i.e. maximum for 1 year and market for short-term is
money market.
2. The instrument to raise money in money market are:
1. Call money
2. Treasury bill
3. Commercial bill
4. Commercial paper
5. Certificate of deposit.
Q. 10. Few years ago, there were many malpractices, unfair trade practices and frauds and
scams were taking place in stock Exchange. All these affected investor‟s confidence, faith and
trust in Stock Exchange. The Government of India decided to set up a separate body for this
purpose who was given control of stock exchange. This separated ownership and control of stock
exchange.
1. Name the concept which separate the ownership and control of stock exchange.
2. Name the body set up by the government of India to contract the stock exchange.
3. State the objectives of that regulating body.
Ans.
1. The concept which separate ownership and control is called as demutualization.
2. The regulatory body set up by government of India is “SEBI” Securities Exchange Board of India.
3. The objectives of SEBI are:
The overall objectives of SEBI are to protect the interest of investors and to promote the development
of stock exchange and to regulate the activities of stock market.The objectives of SEBI are:
Q. 11. Mr. Vikas Mehra was the Chairman of IBM Bank. The bank was earning good profits.
Shareholders were happy as the bank was paying regular dividends. The market price of their
shares was also steadily rising. The bank was about to announce the taking over of „UK Bank‟.
Mr. Vikas Mehra knew that the share price of IBM Bank would rise on this announcement.
Being a part of the bank, he was not allowed to buy shares of the bank. He called one of his rich
friends Mukand and asked him to invest Rs. 4 crores in the shares of his bank promising him the
capital gains. As expected, after the announcement, the share prices went up by 50% and the
market price of Mukand‟s shares was now Rs. 6 crores. Mukand earned a profit of Rs. 2 crores.
He gave Rs. 1 crore to Vikas Mehra and kept Rs. 1 crore with him. On regular inspection and by
conducting enquiries of the brokers involved, the Securities and Exchange Board of India (SEBI)
was able to detect this irregularity. SEBI imposed a heavy penalty o Vikas Mehra.
Quoting lines from the above paragraph, identify and state any two functions performed by the
SEBI in the above case.
Ans. The two functions performed by SEBI in the given case are stated below:
1. Regulatory function is being performed by SEBI: “on regular inspection and conducting inquiries of
the brokers involved.”
2. Protective function is performed by SEBI: “The SEBI imposed heavy penalty on Mr. Vikas Mehra.
Q. 12. Mission Coach Ltd. is a large creditworthy company that manufactures coaches for the
Indian Railways. It now wants to export these coaches to other countries and decides to invest in
new hi-tech machines. Since the investment is large, it requires long-term finance. It decides to
raise funds by issuing equity shares. The issue of equity shares involves huge floatation cost. To
meet the expenses of floatation cost, the company decides to tap the money market.
1. Name the explain the money-market instrument the company can use for the above purpose.
3. State any other purpose for which this instrument can be used.
Ans.
1. Commercial Papers can be used for Bridge financing by Mission coach Ltd. as it is issued by large
and credit worthy companies. The instrument is in the form of an unsecured promissory note and it
freely transferable by endorsement. It is sold at discount and redeemed at par.
2. It maturity period may range from a fortnight to a year.
3. It is also used to meet the short term seasonal and working capital requirements of a business
enterprise.
Q. 13. Incorporated in 1990. Raju Dairy Ltd., is one of the leading manufacturers and marketers
of dairy-based branded foods in India. In the initial years, its operations were restricted only to
collection and distribution of milk. But, over the years it has gained a reasonable market share
by offering a diverse range of dairy based products including fresh milk, flavoured yogurt, ice
creams, butter milk, cheese, ghee, milk powders etc. in order to raise capital to finance its
expansion plans. Raju Dairy Ltd. has decided to approach capital market through a mix of Offer
for sale of Rs. 4 crore shares and a public issue of Rs. 2 crore shares.
1. Name and explain the segment of capital market being approached by the company.
2. Identify the two methods of floatation used by the company to raise the required capital. Give
one difference between them.
Ans.
1. Primary market is the segment of capital market being approached by the company. It is also known
as the new issue market as the securities are issued for the first time by the companies through this
market.
2. The two methods of floatation used by the company to raise the required capital are –
Issue through prospectus and Offer for sale.

In case of issue through prospectus, the company approaches the members of the general public
directly by issuing a prospectus whereas in case of Offer for sale, the company approaches members of
the general public indirectly through intermediaries like issuing houses, stock brokers etc.
Q. 14. Harsh works as a manager in a software company. He opened a Demat account with a
broking house in order to trade in securities with the money he received as his first performance
bonus. Since then he has been very active in stock trading under the guidance of a stock broker.
However, ,when he was hospitalized for a few days this year, his wife received several calls from
the his stock broker for permission to transact on Harsh‟s behalf. Though she told him to wait
till her husband had recovered, the stock broker went ahead and executed the transactions.
When Harsh got home from hospital, he discovered that the unauthorized transactions had led to
a loss for him.
Harsh complained to the broking house, but they claimed he had authorized the transactions.
Keeping in new, the guidelines issued by the National Stock Exchange that he had read in the
national newspaper Harsh demanded proof and threatened to file a complain. Since, the broking
house had no evidence that the deals had been authorized they made good the loss that Harsh
had incurred due to the transaction.
In the context of the above case?
1. What is a Demat account?
2. Who is acting as the depository participant for Harsh?
3. Name the document that is illegally enforceable and helps to settle the claims between the
investor and the broker.
Ans.
1. A Demat account is an account used for holding securities in electronic form.
2. The Broking house is acting as the depository participant for Harsh.
3. A contract note is a legally enforceable document that helps to settle the claims between the investor
and the broker.
Q. 15. Ketan won a cash prize of Rs. 20,000 in the National level Robotics Competition. On the
advise of his father, he visits a nearby bank to open a Fixed deposit account in his name with the
prize money. His sister Suhasini accompanied him to the bank. On reaching the bank, he notice
big banners which are placed within the premises containing information about the various
arrangements through which corporates may raise their capital through the bank. Being a
finance graduate, Suhasini explains to Ketan that banks play the role of the financial
intermediary by helping in the process of channelizing the savings of the households into the
most profitable business ventures.
1. Name another financial intermediary that helps in the process of channelizing the savings of
the households into the most productive use.
2. Also, outline any two functions of another financial intermediary as identified in part (a)
Ans.
1. Financial markets is the other financial intermediary that helps in the process of channelizing the
savings of the households into the most productive use.
Q. 16. Ragu works as a waiter in a five star hotel in Mumbai. While serving the customer he
overhears him at the table saying that the he has made profits higher than expected by investing
in securities market. So, Ragu also decides to make a nominal investment from his savings in the
stock market in pursuit of higher gains.
As a financial consultant, apprise him of the steps involved in the working of a Demat system.
Ans. Ragu will have to initiate the following steps for trading through a Demat system:
Q.17. Sumita is a professor in a reputed business institute. While explaining the procedure of
stock exchange trading, she shared with her students that many years back she had bought 200
shares of a leading automobiles company. As per the settlement procedure she paid for the shares
and received the share certificates in physical form. However, when she had sent those
certificates to the company to get them endorsed in her name, she was informed by the company
that those certificates were duplicate.
Therefore, in order to protect the investors from many such malpractices, now only screen –
based trading is done and dematerialization is compulsory.
1. What is screen based trading?
2. Give the meaning of „dematerialization‟. State any two of its advantages.
Ans.
1. Screen – based trading refers to the process of buying or selling securities online.
Q. 18. Madhav‟s is one of the India‟s most trusted brands in Indian sweets and snacks segment.
The company has manufacturing plants in Kota, Kanpur, New Delhi, and Mumbai. Madhav‟s
has its own retail chain stores and a range of restaurants in these cities. Now, the company plans
to extend its business in 12 more cities in India. In order to raise the funds, its directors have
decided to float a public issue through prospectus. Besides, it intends to raise money to meet the
floatation cost in terms of brokerage, underwriting commission, advertising etc.
1. What is the other name used for the funds required to meet floatation costs?
2. Describe briefly the short term instrument popularly used by the companies to raise for the
funds required to meet floatation costs. Who can issue them?
3. Distinguish between the two types of financial markets that the company intends to approach
to meet its financial needs.
Ans.
1. Bridge financing is the other name used for the funds required to meet floatation costs.
2. Commercial Papers
3. Capital Market and Money Market.
Q. 19. During navratras, Varun finalizes a deal to buy a new house. So, he visits a nearby branch
of „Subh Bank‟ top withdraw Rs. 10 lakhs from his account in order to pay the token money to
the seller. In the bank he observes that a large number of customers are present to make cash
with drawls, probably because it is an auspicious time to make purchases. After sometime, he
overhears one of the bank staff members telling his colleague that, “Today „Shubh Bank‟ is
likely to fall short of cash and to make up for the deficit and maintain its cash reserve ratio it will
have to approach another bank.”
1. Identify the instrument that „Shubh Bank‟ will use to meet its short term requirements of
funds.
2. State any three feature of the instrument as identified in part (a).
Ans.
1. Call money is the instrument used by „Subh Bank‟ to meet its short term requirements of funds.
2. Three features of call money.
Marketing Management
Q. 1. Zoom Udyog, a car manufacturing Co., has started its business with Zoom 800 and slowly
launched Zoom-1000, Wagon-Z, Swy-fy etc. and offered various services like after sale services,
availability of spare parts etc. Identify the element of marketing mix referred here. (1 mark)
Ans. Product
Q. 2. Radha found a worm crawling out of newly opened tetra pack of a juice manufactured by a
reputed company, Zest, Ltd. She went back to the shopkeeper from whom the pack was
purchased who directed her to call up the customer care centre. When all her efforts failed, she
went to a consumer activist group to seek help. The group decided to help Radha and taken
measures to impose restrictions on the sale of the firm‟s products of the particular batch and
urge customers to refrain from buying the products of the company. Zest Ltd. lost its image in
the market. The CEO gives the responsibility of bringing back the lost image of the company to a
Manager.
1. Identify the concept of Marketing Management which will help the Manager getting the firm
out of the above crisis.
2. Also explain the role of above identified concept by stating any two points. (4 Marks)
Ans.
1. Public Relations
2. Role of Public Relations:
1. Product Publicity:
2. Counseling:
Q. 3. The manager of Impact Enterprise, dealing in cosmetics, is facing the problem of poor sales.
Suggest the four promotional measures that he can undertake to improve the sales. Also, name
the factors affecting their choice. (4 Marks)
Ans. The manager of Impact Enterprise, dealing in cosmetics, should take the following four
promotional measures to improve the sales:
1. Advertising
2. Sales promotion
3. Personal selling
4. Publicity
Factors affecting choice of promotional tool:

1. Nature of market
2. Nature of product
3. Promotions budget
4. Objectives of promotion
Q. 4. A mobile company is launching a new high tech mobile phone in the market. Which
department is going to look into the techniques iof promoting it? (1 Mark)
Ans. Public Relations (PR) Department
Q. 5. Identify the Marketing Management philosophy adopted in the following cases:
1. Mansi, a shoe manufacturer for school students, decided to maximize her profit by producing
and distributing at large scale and thereby reducing the average cost of production.
2. Nisha, a school bag manufacturer decided to improve the product for profit maximization and
thus added a water bottle holder to the existing design.
3. Jasdeep, a dealer in school uniforms, decided to maximize his profit by using different
aggressive promotional efforts.
4. Amar is engaged in manufacturing of refrigerators. He surveyed the market and found that
customers need a refrigerator with a separate provision of water cooler in it. He decided to
launch the same refrigerator in the market. (4 Marks)
Ans.
1. Production concept
2. Product concept
3. Selling concept
4. Marketing concept
Q. 6. Identify the method of sales-promotion in the following cases:

1. A mobile company offers a discount of Rs. 1000 to clear off excess inventory.
2. A customer gets Rs. 5 off on return of an empty wrapper while making a new purchase of the
same product.
3. A Company offers a pack of 1/2kg of sugar with the purchase of a 5 kg bag of wheat flour.
4. A Company offers 40% of extra shaving cream in a pack of 500 gms.
5. Scratch a card and get a gold coin with the purchase of a cold drink.
6. Purchase goods worth Rs. 50,000 and get a holiday package worth Rs. 10,000 free. (6 Marks)
Ans.
1. Rebate
2. Refund
3. Product-combination
4. Quantity-gift
5. Instant draws and assigned gift
6. Usable Benefit / Lucky Draw
Q. 7. „Various tools of communication are used by the marketers to promote their products.‟
1. Why do companies use all tools at the same time?
2. Name and explain the most commonly used non-personal tool of promotion which is paid for
by the marketer.
3. Which tool of promotion will primarily be used for the following?
1. To promote or protect a company‟s image or its individual products.
2. An existing product meant for mass usage by literate people.
3. To introduce a new product to a particular class of people through door-to-door visits.
4. To attract attention of the people by using incentives. (6 marks)
Ans.
1. The companies use all tools at the same time because of the nature of market, nature of product,
promotion budget and objectives of promotion being different at different times.
2. The most commonly used non-personal tool of promotion which is paid for by the marketer is
advertising. It is a paid and non-personal form having an identified sponsor to promote an idea.
3. The tools of promotion used are:
1. Public Relations
2. Advertisements
3. Personal selling
4. Sales Promotion
Q. 8. Good Living Ltd. manufactures mosquito repellent tables. These tablets are packed in
strips of 12 tablets each. Each of these strips are packed in a cardboard box, 48 such boxes are
then placed in a big corrugated box and delivered to various retailers for sale. State the purpose
of packaging the tablets in a corrugated box. (1 Mark)
Ans. The packaging of tablets in a corrugated box is necessary for the purpose of storage, identification
and transportation.
Q. 9. Shreemaya Hotel in Indore was facing problem of low demand for its rooms due to off
season. The Managing Director (MD) of the hotel, Mrs. Sakina was very worried. She called
upon the Marketing Manager, Mr. Kapoor for his advice. He suggested, that the hotel should
announce an offer of „3 days and 2 Nights hotel stay package with free breakfast and one day
religious visit to Omkarehswar and Mahakaleshwar Temples‟. The MD liked the suggestion very
much. Identify the promotional tool, which can be used by the hotel through which large number
of prospective pilgrimage tourists, all over the country and also abroad, can be reached,
informed and persuaded to use the incentive. (1 Mark)
Ans. Sales Promotion
Q. 10. “Every time I travelled, people asked me to bring them chips, khakra and pickles from all
over the country,” says Anoushka. Finally, she and her colleague, Sumemet, decided to make out
of it. They launched a face book bags, asked people what they wanted, and they came up with a
list of about 100 places and tried up with two dozen vendors to begin with. They were servicing
people from Jaipur who wanted spices from Kerala, people form Panipat who wanted halwa
from Jammu and people from Delhi who ordered for fresh tea leaves form Darjeeling. Through
their business they wished to bridge the gap between sellers nd buyers. The business is now
worth millions.
Explain any two important activities that Anoushka and Sumeet will have to be involved in for
making the goods available to the customers at the right place, in the right quantity and at the
right time. (4 Marks)
Ans. Activities / Components of Physical Distribution: (any two)
1. Order processing:
2. Transportation;
3. Warehousing:
4. Inventory Control:
Q. 11. „Beauty Products Ltd‟s is a natural and ethical beauty brand famous for offering organic
beauty products for men and women. The company uses plant based materials for its products
and is the No. 1 beauty brand in the country. It not Identify the marketing management
philosophy being following by „Beauty Products Ltd.‟ (1 Mark)
Ans. Social marketing concept.
Q. 12. „Haryaram‟ is a famous chain selling a large variety of products in the Indian market.
Their products include chips, biscuits, sweets and squashes. It charges a comparatively higher
price than its competitors as it sells quality products. Besides, it offers regular discounts to its
customers and easy credit terms to its retailers. It has five of its own retail shops. It also sells its
products through various grocery stores to that the products are made available to customers at
the right place, in the right quantity and at the right time. It regularly uses different
communication tools to increase its sales.
The above para describes the combination of variables used by Hayaram to prepare its market
offering. Identify and explain the variables. (6 Marks)
Ans. The combination of variables used by Hayaram to prepare its market offering are:
1. Product ‘their products include chips, biscuits, sweets squashes.’
2. Price ‘It offers regular discounts to its customers and easy credit terms to its retailers’.
3. Place / Physical Distribution ‘It has five of its own retail shops.’ or ‘It also sells its products through
various grocery stores …right time.’
4. Promotion
‘It regularly uses different communication tools to increase its sales.’

Q. 13. „Maruti Vega Ltd.‟ entered into the market with coloured television and have now
introduced products like audio systems, air-conditioners, washing machines, etc. the company is
not only offering the products but also handling complaints and offering after-sales services.
Identify the element of marketing-mix discussed here. (1 Mark)
Ans. Product/ Product mix.
Q. 14. Radhika was a student of Business Studies of Call XII. Her father was a farmer who grew
different varieties of rice and was well-versed about various aspects of rice cultivation. He was
also selected by the government for a pilot-project on rice cultivation. As a project-work in
Business Studies she decided to study the feasibility of marketing good quality rice at a
reasonable price. Her father suggested her to use internet to gather customers‟ views and
opinions. She found that there was a huge demand for packaged organic rice. She knew that
there were no pre-determined specification in case of rice because of which it would be difficult
to achieve uniformity in the output. To differentiate the product form its competitors, she gave it
the name of Malabari Organic Rice‟ and classified it into three different varieties namely –
Popular,, Classic and Supreme, based on the quality. She felt that these names would help her in
product differentiation.
Explain the three function of marketing, with reference to the above paragraph. (6 Marks)
Ans. Functions of marketing, with reference to the above paragraph are:
1. Gathering and analyzing market information:
2. Standardization and Grading:
3. Branding:
Q. 15. A Company was marketing water purifiers which were very popular due to their quality
and after sales services provided to the customers. The company was a leading company in the
market and earning huge profits. Because of huge profits, the company ignored the after sales
services. As a result, its relations with customers got spoiled and the image of the company was
damaged in the public. The top management became concerned when the profits for the current
quarter fell steeply. On analysis, it was revealed that ignoring the after sales services was its
reasons. Therefore, the company took all possible measures to protect and promote its
favourable image in the eyes of the public. As a result, the goodwill of the company improved in
the society.
1. Name and state the communication tool used by the marketer in the above case to improve its
image.
2. Also explain role of the tool as identified in part (a)
Ans.
1. Public Relations is being used as a promotional tool by the marketer. It refers to the practice of
managing communication between an organization and its publics in order to create the maintain a
positive image about itself and its products.
2. The role of public relations as a promotional tool is described below:
1. Public relations helps to create a positive image about the company in the eyes of various interest
holders like consumers, government, suppliers etc.
2. It helps in launching new products as they may be accepted easily because of good reputation of
business.
3. It helps the business to reinstate itself in the wake of controversies or prejudices etc.
Q.16. Crackers Ltd., a fire-cracker manufacturing company launched some new products on eve
of Diwali which attracted many buyers. To meet the increased demand, the company employed
children from nearby villages. Although the product was in great demand, appropriate safety
warning for use were not mentioned on the packets that led to many accidents.
1. Identify and explain the important product-related decision that was not taken into
consideration by the company.
2. Also, identify any two values which were violated by the company.
Ans.
1. The company has ignored „Labeling‟. It is an important product-related decision.
Labeling refers to the process of designing a label for a product containing product description and the
relevant information which is likely to affect a prospective buyers decision in making a purchase.It
may vary from a simple tag to a complex graphic.
1. The two values being violated by the company are:
1. Abiding by law as child labour has been employed
2. Concern for human life as appropriate warnings were not placed on the label.
Q. 17. ABC Crackers Ltd., a fire-cracker manufacturing company, launched some new products
on the eve of Diwali in the market which attracted many buyers. To meet the increasing demand,
the company employed people from nearby villages where there was a lot of unemployment.
Because of the good behavior of the management with the employees, more and more people
wanted to join the company. As the products were in great demand in the market, a competitor
imitated the products. The products of the competitor were not accepted by the consumers as it
was a status symbol to buy the products of ABC Crackers Ltd. because of their quality.
1. Identify and explain the product-related decision because of which consumers preferred the
products of ABC Crackers Ltd.
2. Also, identify any two values which ACB Crackers Ltd. wanted to communicate to the society.
Ans.
1. Branding is the product-related decision because of which consumers preferred the products of ABC
Crackers Ltd.
Branding is the process of assigning a name (brand name), sign or symbol (brand mark) or a
combination of all to a product.Branding facilitates product differentiation, assists in advertising and
display programmes, facilitates differential pricing, promotes consumers loyalty etc.
1. The two values that ABC Crackers Ltd. wants to communicate to the society are:
1. Generating employment opportunities
2. Providing good working environment.
Q. 18. As a project work in Business Studies, the Commerce students of Himachal Public School,
Himachal Pradesh though of preparing apple jam from the apples grown in their school premises
and sell it in the school annual fete. They approached the Principal who not only appreciated the
students but also gave her consent for the same. The school decided to donate 50% of the revenue
generated from the sale to a nearby orphanage. After the school fete, the school also decided to
extend this project by providing employment to visually challenged and disadvantaged sections
of society or regular basis.
1. Explain any two product-related decisions which the students had to take.
2. Suggest any two functions that the „label‟ of the jam-bottle must perform.
3. Identify two values communicated to society by this project of Himachal Public School,
Himachal Pradesh.
Ans.
1. The two product-related decisions which the students had to take are branding and packaging.
2. The two important functions that the label of the jam – bottle must perform are:
Describe the product and specify its contents:
Helps in identification of the product or brand:
3. The two values communicated to the society by the project of Himachal Public School are:
 Generating employment opportunities
 Humanity
Q. 19. Ajay was appointed as the marketing head of Alfa Enterprise, a manufacturer of
toothpastes and toothbrushes. His target sale was 2000 units a month. Apart from thinking about
various channels of distribution to achieve the target, he himself started visiting schools in
backward areas. He found that even after taking various steps and counseling, some school
children had not started brushing their teeth. He investigated and found that they could not start
brushing their teeth. He investigated and found that they could not afford to buy toothbrush and
toothpaste. So with due permission, he started donating 200 toothbrushes and toothpastes every
month to the school.
1. Identify the channel of distribution Ajay would adopt for the distribution of toothpaste and
toothbrushes and justify it by giving one reason.
2. State any two values which Ajay ants to communicate to society.
Ans.
1. Ajay would adopt indirect channels of distribution for marketing of toothpaste and tooth brushes
because it is a consumer product. It can be easily marked through longer channels, for example
(Manufacturer – Wholesaler – Retailer – Consumer).
2. The two values that Ajay wants to communicate to the society are:
1. Good health
2. Social welfare
Q. 20. Amar is engaged in the manufacturing of refrigerators. He surveyed the market and found
that customers need a refrigerator with a separate provision of water cooler in it. He decided and
launched the same refrigerator in the market. Identify and explain the marketing philosophy
involved.
Ans. Amar is following the philosophy of marketing concept. The prime focus of marketing concept is
to „find wants and fill them‟. Therefore, the marketer first assesses the needs and preferences of its
target market and manufacturers products accordingly in order to satisfy their needs and wants
optimally. It aims at profit maximization through customer satisfaction.
Q. 21. Mansi, a shoe manufacturer for school students, decided to maximize profits by producing
and distributing shoes on a large-scale and thus reducing the average cost of production.
1. Identify the marketing management philosophy adopted by Mansi.
2. Explain this philosophy on the basis of the following:
Main Focus
Means and Ends
Ans.
1. Mansi has adopted the production philosophy.
2. Means: The production philosophy can be brought into effect by making products affordable and
widely available.
Ends: The production philosophy aims at maximizing profits through high volume of production.
Q. 22. Unilever has found a new way to make ice creams by using an ingredient called „ice
structuring protein‟ which is widely found in nature especially, in fishes which allows them to
survive in freezing arctic waters. Combining ISP with stabilizer technology allows to make ice
creams that don‟t melt so easily thereby making it more convenient for small children and
consumer in hot countries.
In the context of above case:
1. Identify the component of marketing mix being taken into consideration by the company.
2. Explain briefly the function of marketing highlighted here.
3. List any two values that the company wants to communicate to the society.
Ans.
1. The component of marketing mix being taken into consideration by the company is „Product‟.
2. Product designing and development: Every marketer strives to achieve his marketing objectives by
creating offerings to satisfy a need or a want. Therefore one of the core functions of marketing is to
develop the product in the most effective and efficient way. Every marketer endeavours to add value to
his product by introducing constant innovations in the product to enhance both its utility and
attractiveness in the eyes of the potential buyers and gain a competitive edge.
 Responsibility towards consumers
 Technological advancement.
Q. 23. Ranger India Limited, is an automobile manufacturer in India. It makes 1.5 million family
cars every year. That‟s one car every 12 seconds. It has a sales network of company approved
retailers that spreads across 600 cities.
1. Identify the type of the channel of distribution adopted by the company.
2. State the market related factors that are likely to affect the decision of a marketer about the choice of
channel of distribution.
Ans.
1. Indirect channel: One level channel f distribution adopted by the company.
2. The market related factors that are likely to affect the decision of a marketer about the choice of
channel of distribution are explained below:
1. Size of market:
2. Geographical concentration of potential buyers:
3. Quantity purchased:
Q. 24. As a global leader in the consumer electronics and entertainment industries, Sony has set
forth „Road to Zero environmental plan‟, to achieve a zero environmental effect by the year 2-
050 by producing world-class products in a manner that both protects and promotes a healthy
and sustainable planet.
1. Identify the marketing philosophy being implemented by the company.
2. Outline the main focus and end of the relevant marketing philosophy.
3. State any two values that the company wants to communicate to the society.
Ans.
1. Social marketing concept is being pursued by the company.
2. The main focus of this philosophy is on both the needs of the potential buyers as well as concern for
the society at large. The ends include profit maximization through customer satisfaction and social
welfare.
2. Welfare of the society
Q. 25. As the number of people making online purchases has increase manifolds, there is a
growing concern about the disposal and management of packaging waste. Every item bought is
delivered with excess packaging and sometimes even non-biodegradable materials are used.
1. Name the other two levels of packaging that the marketers may be using besides the immediate
package.
2. Describe briefly any two points highlighting the functions of packaging.
3. State any two factors that should be kept in mind by the marketers while designing the
packaging of its products.
Ans.
1. Secondary packaging and Transportation packaging.
2. The functions of packaging in the marketing of goods and services is explained below:
1. Product Identification:
2. Product Protection:
3. The marketers should use biodegradable packaging material and packaging should enhance the
usability of the products.
Q. 26. Rastro Inc., is a multinational corporation that creates consumer electronics, personal
computers, servers and computer software. The company also has a chain of retail stores known
as Restro Stores. Despite high competition, Restro has succeeded in creating demand for its
products, giving the company power over prices through product differentiation, innovation
advertising and ensured brand loyalty.
1. What is product differentiation?
2. Name any one function of marketing that facilitates product differentiation.
3. Identify the component of promotion mix being used by the company by Quoting lines form
the paragraph.
4. Describe briefly the pricing objective pursued by the company.
Ans.
1. Product differentiation is a strategy used by the marketers to gain an edge over its competitors by
creating a distinguished perception of the product in the minds of the potential buyers in terms of its
utilities.
2. Branding is a function of marketing that facilitates product differentiation.
3. Advertising is the component of promotion mix being used by the company “Giving the company
power over prices through product differentiation, innovative advertising and ensured brand loyalty.”
4. Attaining product quality leadership: Besides aiming at profit maximization as its pricing objective
Rastro Inc. seeks to establish a unique place for its products in the market by offering superior quality
products which can be easily distinguished from its competitors. As a result, it is able to use differential
pricing i.e. fixing up relatively higher prices for tits products.
Q. 27. Reema, Vibha and Ratna are three women entrepreneurs who are engaged in dealing with
handicraft goods under the brand name „Gujkriti‟ through a chain of retail outlets at five
different places in delhi. Their outsource all their products from tribal and rural women in the
state of Rajasthan. Reema is of the opinion that in order to increase the sale of their products,
they should advertise about it on television. But, Ratna is arguing that advertisement expenses
will add to cost of operation. Whereas Vibha is insisting that they should set up an online portal
to market their products across the globe.
1. Identify the tool of promotion being taken into consideration by Reema by quoting lines from
the paragraph.
2. How is the channel of distribution being suggested by Vibha different from the channel of
distribution being used by them presently?
3. Do you think that Ratna is justified in here argument that advertisement expenses will add to
cost of operations?
Ans.
1. The tool of promotion being taken into consideration by Reema is advertising. (Reema is of the
opinion that in order to increase the sale of their products, they should advertise about it on television.)
2. Vibha is insisting that they should set up an online portal to market their products across the globe
i.e.adopting direct marketing or zero-level channel (manufacturer – consumer). Whereas at present they
are using indirect channels of distribution i.e. one level channel (manufacturer – retailer – consumer)
by operating through a chain of retail outlets at five different places in Delhi.
3. No, Ratna is not fully justified in her argument although advertising as a tool of promotion is often
criticized on the ground that it adds to the cost of distribution which is passed on to the consumers in
the form of higher prices. Therefore, it increases the burden on the consumers. But, this argument is not
entirely true because advertisements help to increase demand for the product. In order to meet the
increased demand the production levels have to be raised. As a result, the business is able to reap
advantage of economies of scale and eventually the cost of production
per unit comes down and benefits the buyers as the product‟s prices are reduced consequently.
Q. 28. Arvind is planning to start a company manufacturing room fresheners. He intends to use
natural fruit extracts for adding fragrance to them. He estimates an investment of Rs. 20 crores
to set up the factory. As it is difficult for him to raise the entire capital amount alone, he gives a
partnership offer to his school friend, Sanjay who is an angel investor. Sanjay, after being
convinced about the feasibility of the project, accepts his offer. Sanjay tells Arvind that they
should also focus on other important decisions related to the product „room fresheners‟ besides
deciding about its features, variety and quality. Branding is one of the important such decision.
1. Name any other two important decisions related to a product.
2. Why is branding considered as an important function by the marketers? Give any one reason
3. State any four features of a good brand name.
Ans.
1. Labeling and Packaging are the two important decisions related to a product.
2. Branding is considered to be a very important decision by the marketers because it facilitates product
differentiation. Through branding the prospective buyers are able to bring about a distinction between a
company product and its substitutes available in the market. This helps the company to obtain a
desirable market share.
3. The four features of a good brand name are stated below:
1. The brand name should be short, easy to pronounce, spell, recognize and remember e.g., Ponds.
2. A brand should suggest the product‟s benefits and qualities e.g. Sunsilk.
3. A brand name should be distinctive e.g., Lotus.
4. It should be capable of being registered and protected legally.
Q. 29. Suraj is a small entrepreneur involved in the manufacturing of hair wax. He finds that cost
of production of 100 gm of hair wax is Rs. 250. He has decided to keep a margin of 15% as profit
moreover, he has assessed that there is a free competition in this product segment.
1. Identify the function of marketing being performed by Suraj.
2. State briefly the two factors that he is taking into consideration while performing the function
as identified in part (a)
Ans.
1. Pricing is the function of marketing being performed by Suraj.
2. The two factors that he is taking into consideration while performing the pricing function are as
follows.
1. Cost of product:
2. Degree of competition:
Q. 30. After doing a diploma in entrepreneurship, Farihad started his own confectionary
business. He started doing a lot of hard work and used the recipes taught by his grandmother in
various preparations. He also learnt many recipes from online sites and television programmes.
He decided to keep the price of the products low initially and also informed his customers about
the goodness of the items sold by them. However, he didn‟t mention on the package of each item
weather it contained eggs or not. As a result, vegetarian people became hesitant in buying things
from his shop as they had to verbally inquire from him about the inclusion of eggs in the
preparation of various items.
1. Name the important aspect related to the marketing of products which has been ignored by
Farihad.
2. Explain briefly any free functions performed by the aspect as identified in part (a).
3. Mention the right of consumer being violated by Farihad.
Ans.
1. The important aspect related to the marketing of products which has been ignored by Farihad is
Labeling.
2. The three important functions performed by labeling are:
1. Describes the product and specifies its contents:
2. Helps in identification of the product or brand:
3. Enables grading of products:
1. The Right to information is being overlooked by the company in the above mentioned case.
According to the right to information, a consumer has the right to get complete information about the
product he / she intends to buy including its contents, date of manufacture, date of expiry, price,
quantity, directions for use etc. Also, as per law, it is mandatory for the marketers to provide complete
information about the product / service to the buyers.
Q. 31. „Shudh Hava Ltd.‟ is engaged in manufacturing of air conditioners and desert coolers.
The company offers a wide range of products to meet the requirements of people from varied
income groups. Recently the company has developed a new product, an air purifier that
improves the quality of air by filtering out all allergens and microbes. The company introduced
the product on two variants namely „Nano Tech‟ and „Nano Tech Premium‟. In order to
persuade people to buy the product it is offering easy payment options in equal monthly
installments for different time periods. Moreover, every buyer will be offered „scratch a card‟
option to win instant gifts like decorative items, T-shirts etc. the company is also planning to
organize competitive events based on skill and luck in various malls in different cities.
1. Name and explain the „type of promotion strategy‟ adopted by the company to boost the sales
of air purifiers.
2. Also, identify the various techniques of this promotional strategy being used by the company
by quoting liens from the paragraph.
3. “The company offers a wide range of products to meet the requirements of people from varied
income group.” Name the relevant consumer right being promoted by the company.
Ans.
1. The type of promotion strategy adopted by the company to boost the sales of air purifiers is Sales
Promotion.
Sales Promotion includes the various types of short term incentives offered by a marketer to increase
the sale of a product or service.
1. The various techniques of sales promotion being used by the company are listed below:
1. Full finance @ 0% - “It is offering easy payment options in equal monthly installments for different
time periods.”
2. Instant draws and assured gifts – “every buyer will be offered „scratch a card‟ option to win instant
gifts like decorative items, T-shirts etc.”
3. Contests – “The company is also planning to organize competitive events based on skill and luck in
the various malls in the different cities.”
1. Right to Choose is the consumer right being promoted by the company
Q. 32. Nischay, after completing his masters in computer engineering decided to start his own
business. He visited his uncle Mr. Jaiprakash who has been running a successful business in web
designing. He shared with Nischay that the main reason for his success in the business lies in his
approach of building web sites according to the specifications of the clients but also providing
continuous online assistance to them and handling their grievances effectively and doing all this
at a profit. He provides these services at competitive prices. Anybody interested in getting the
web solutions can contact him through his website. Moreover, whenever the market is sluggish he
tries to create demand by offering short-term incentives to the buyers.
1. Define the term „Marketing Management‟.
2. Briefly explain the various elements of marketing mix being pursued by Mr. Jaiprakash by
quoting liens from the para.
Ans.
1. Marketing management is “the art and science of choosing target markets and getting, keeping, and
growing customers through creating, delivering, and communicating superior customer value” – Philip
Kotler
2. The various elements of marketing mix being pursued by MR. Jaiprakash area as follows:
1. Product: “his business is not only restricted to designing web sites according to the specifications of
the clients but also providing continuous online assistance to them and handling their grievances‟
effectively.”
2. Price: “doing all this at a profit. He provides these services at competitive price.”
3. Place: “Anybody interested in getting the web solutions can contact him through his website.”
4. Promotion: “Moreover, ,whenever the market is sluggish he tries to create demand by offering short-
term incentives to the buyers.”
Q. 33. In today‟s world, through social media, news spread in a flash. Moreover, if it is bad news,
it acquires a speed that is virtually impossible to stop. Hence, all corporate are more susceptible
to a tarnished image today than in any other day and age. The loss of goodwill may lead to
decreased revenue, loss of clients or suppliers and fall in market share. Over the year, therefore,
most of the companies have set up a separate department to manage the public opinions about
them. The department works in close coordination with the various interest groups like
consumers, government, suppliers etc. and strives to handle effectively if any controversies arise.
1. Identify the element of promotion mix being referred to in the above liens.
2. Briefly explain any three points highlighting the role of this element of promotion mix as
identified in part (a)
Ans.
1. The element of promotion mix being referred to in the above lines is Public Relations.
1. Public relations helps to create a positive image about the company in the eyes of various interest
holders like consumers, government, suppliers etc.
2. It helps in launching new products as they may be accepted easily because of good reputation of
business.
3. It helps the business to reinstate itself in wake of controversies or prejudices etc.
Q. 34. Traditional trade or kriana stores constitute 90% of the FMCG (fast moving consumer
goods) business in India. HUL is the market leader in FMCG with over 60 lakh outlets.
According to industry estimates, Patanjali products are currently available in two lakh
traditional retail outlets. „Availability of the product‟ is the single largest driver of FMCG sales.
A shopper research suggests that 30% - 40% consumers shift preference if their favourite brand
is not available at the store.
1. Identify the component of marketing mix being discussed in the above liens.
2. State the two main decisions related to the concept identified in part (a)
3. Name the type of channel of distribution adopted by HUL.
Ans.
1. The component of marketing mix being discussed in the above liens is place / physical distribution.
2. The two main decisions involved in physical distribution are:
1. Physical movement of goods from producers to consumers
2. Choice of channels of distribution
1. Indirect channel of distribution has been adopted by HUL. It is a two level channel i.e.
(Manufacturer – wholesaler – retailer – consumer)
Q. 35. Arun and Rukun are good friends. After doing a fashion designing course from a reputed
institute, they have set up a garment factory in the rural area of Faridabad to manufacture
trendy casual wear like jeans, T-shirts, shirts etc. under the brand name „Swatantra‟. They have
employed people from the nearby villages itself in the factory. Moreover, they wish to sell the
products through local retailers in the villages and also through “Flipkart‟.
1. Identify the elements of marketing mix being taken into consideration by Arun.
2. Name the two methods of marketing adopted by them.
3. State any two values that are being fulfilled by them.
Ans.
1. The elements of marketing mix being taken into consideration by Arun are product and place.
2. The two methods of marketing adopted by them are both direct and indirect marketing.
3. Two values that are being fulfilled by the are:
4. Generating employment
5. Raising the standard of living of the people in the village
Q. 36. Yogesh buys a new laptop for his son Mukesh on his birthday from a company owned
retail outlet. After a few months, some parts of the laptop get damaged in a road accident.
Yogesh approaches the dealer to get the damaged parts replaced with the new ones. But, he is
told that the company does not provide any after sale service to the customers. Yogesh feels very
dissatisfied as a consumer and woes that he will never buy this companies product ever again.
1. Identify the function of marketing being ignored by the company.
2. As a business advisor, suggest any two services that will be very effective in enhancing brand
loyalty for any such product.
3. Name the appropriate redressal agency that he can approach in case he decides to file a case
against the dealer.
Ans.
1. The function of marketing being ignored by the company is customer support services.
2. As a business advisor, I would suggest the introduction of the following services that will be very
effective in enhancing brand loyalty for any such product.
1. Setting up a separate department for handling consumer complaints.
2. Providing 365 days × 24 × 7 online assistance to the buyers for any maintenance or technical issues.
3. Yogesh can file a complaint in the District forum.
Q. 37. Mr. Rajiv wants to buy LCD T.V. for his family. Now he has come to Jagota Electronics,
Model Town, after coming to shop he get confused. Write the name of promotion tool which has
brought him to the shop and promotion tool needed now. Also write the four points of
importance of latter tool.
Ans. The just promotion tool which brought Rajiv to the shop is advertisement and the promotion tool
required now is personnel selling.
Q. 38. Mr. Rajiv, the sales executive of ABC Ltd. possess good marketing techniques, his
techniques involve oral presentation of message, convincing the customer with face to face
interaction, etc.
Ans.
1. Name the element of marketing mix under which the above technique fall.
2. Identify the element used by Rajiv.
3. Give any three merits of that technique:
1. Promotion
2. Personal Selling
3. Merits of Personal Selling
Q. 39. ITC started its business with Jobaico Industry later on its entered in Hotel Industry,
Consumer goods industry, stationery, etc. ITC assured quality to customer and kept company‟s
name as its identity. This help the customers in product identification and hence ensured quality.
It also built up their confidence and help in increasing their level of satisfaction.
1. Name the element of marketing mix referred in above para.
2. Name the other elements of marketing mix.
3. Name the concept which assure quality and help in identification of product.
4. Identify the value emphasized by ITC.
Ans.
1. Product Mix.
2. Other elements: Price mix, Place mix, Promotion mix.
3. Concept which help in identifying the product and assure quality is branding.
4. (a) Value of supplying quality product.
(b) Value of building confidence among customers.

Q. 40. Ajay was appointed as a marketing head of Alfa Enterprise manufactures of toothpaste
and tooth brushes. His target sale was zero units a month. Apart from thinking about various
channels of distribution to achieve the target, he himself started visiting schools in backward
areas. He found that even after taking various steps and counseling some school children had not
started brushing their teeth. He investigated and found that they could not afford to buy
toothbrush and toothpaste. So with due permission the started donating 200 toothbrush and
toothpaste to schools.
1. Identify the channels of distribution Ajay would adapt for distribution of toothbrush and
toothpaste, justify by giving reasons.
2. State any two values which Ajay want to communicate to society.
Ans.
1. The channel of distribution Ajay would adapt is indirect because he is dealing with consumer goods.
2. Values which Ajay wants to communicate to society are:
1. Charity
2. Concern for underprivileged
3. Hygience
4. Sensitivity towards health.
Q. 41. Nisha, a school bag manufacturer decided to improve the product for profit maximization
and thus added a water bottle holder to the existing design.
1. Identify the marketing management philosophy adopted by Nisha and
2. Explain this philosophy on the basis of:
1. Main focus and
2. Means and ends.
Ans. Product concept.

Q. 42. Ayesha is manufacturing lunch boxes for school-going children. To maximize profit she
decided to improve the quality and added a warmer for the lunch boxes. Due to this
improvement in the product, the sale is increasing day by day. Identify and explain the
marketing philosophy involved.
Q. 43. Mansi, a shoe manufacturer for school students, decided to maximize her profit by
producing and distributing at large scale and thereby reducing the average cost of production:
2. Explain this philosophy on the basis iof:
1. Main focus
2. Means and ends.
Ans. (i) Production concept.

(ii) Give difference,
Q. 44. Vasvi purchased a bottle of pickle from the local grocery shop. The information provided
on the bottle was not clear. She fell sick on consuming it. She filed a case in the District forum
under the Consumer Protection Act and got the relief.
1. Identify the important aspect neglected by the marketer in the above case.
2. Explain briefly the functions of the aspect identified in (a) above.
OR
Ashima purchased a bottle of tomato-sauce from the local grocery shop. The information
provided on the bottle was not clear. She fell sick on consuming it. She filed a case in the District
Forum under the Consumer Protection Act and got the relief.
1. Identify the important aspect neglected by the marketer in the above case.
Ans.
1. The marketer had overlooked the Labelling as it was not done appropriately for the product.
2. The functions of labeling are detailed below:
Q. 45. Radha found a worm crawling out of newly opened tetra pack of a juice manufactured by
a reputed company, Zest, Ltd. She went back to the shopkeeper from whom the pack was
purchased who directed her to call up the customer care centre. When all her efforts failed, she
went to consumer activist group to seek help. The group decided to help Radha and take
measures to impose restrictions on the sale of the firm‟s products of the particular batch and
urge customers to refrain from buying the products of the company. Zest Ltd. lost its image n the
market. The CEO gives the responsibility of bringing back the lost image of the company to a
Manager.
1. Identify the concept of Marketing Management which will help the Manager getting the firm
out of the above crisis.
2. Also explain the role of above identified concept by stating any two points.
Ans.
1. Public Relations.
2. Role of public relations can be discussed with respect to the functions which the department
performs: (any two)
1. Press relations
2. Product publicity
3. Corporate communication
4. Lobbying.
5. Counseling.
CASE STUDIES FOR

CONSUMER PROTECTION
Q. 1. Harish purchased a medicine from „Hari Govind Medical Stores‟ for his son who had high
fever. Even after giving the medicine his son‟s condition did not improve and he had to be
hospitalized. Doctor informed Harish that the medicine given to his son was spurious. Harish
complained about this to „Hari Govind Medical Stores‟. As a result, „Hari Govind Medical
stores‟ decided to file a complaint against the manufacturer in the consumer court. Can „Hari
Govind Medical Stores‟ do this? Give reason. (1 mark)
Ans. No, „Hari Govind Medical stores‟ cannot file a complaint against the manufacturer in the
consumer court. The Medical Stores is not a consumer since it buys medicine for re-sale or commercial
purpose.
Q. 2. Your mother purchased a colour television for Rs. 70,000 without cash-memo from an
authorized dealer of the manufacturer with a guarantee that the television will be replaced with a
new one if any of its parts becomes defective within three months from the date of purchase.
Within 10 days a part of the television was burnt and on complaining the seller refused to replace
the television. Name the redressal agency under the Consumer Protection Act where your mother
can file the complaint. (1 mark)
Ans. No, my mother cannot file a complaint against the dealer or the manufacturer in the consumer
court since she does not have cash-memo, which serves as the proof of purchase.
Q. 3. Himesh after completing his graduation started working with a multinational company in
Delhi. But due to ill health of his parents he had to go back to his village. There he noticed that
the villagers were literate but ignorant about their rights. Many vegetable vendors were using
stones as weights to sell their vegetables. Some shopkeepers were selling food items without
having „FPO mark‟. Villagers did not find anything wrong with these practices. So to create
awareness among villagers Himesh decided to publish a weekly Journal „Jan Jagriti‟. State the
„Right‟ which Himesh has exercised by doing so. (1 mark)
Ans. Right to consumer education
Q. 4. Bajaj Auto Ltd. purchased a machinery for Rs. 5 crore from Priya Ltd. and found it
defective. Despite many complaints the defect was not rectified. Suggest Bajaj Auto Ltd. the
appropriate forum to file their complaint in the three-tier machinery under the Consumer
Protection Act. (1 mark)
Ans. National Commission
Q. 5. Rahu Bali purchased a flat for Rs. 50 lacs and found it different from what was agreed. He
wants his money back. Suggest him the appropriate authority to file his complaint in the three-
tier machinery under the Consumer Protection act, 1986. (1 mark)
Ans. State Commission
Q. 6. Anurag bought an electric iron form a reputed showroom of a manufacturing company but
it caused electric shock to his wife while she was using it. Anurag claimed a compensation of Rs.
15 lakhs. Where can he file his claim? (1 mark)
Ans. District Forum
Q. 7. Rajiv purchased a diesel car for Rs. 7 lakhs from an automobile company and found its
engine being defective. Despite many complaints the defect was not rectified. Name the highest
authority to file his complaint in the three-tier machinery under the Consumer Protection Act. (1
mark)
Ans. National Commission
Q. 8. Mukul purchased a house for Rs. 30 lakhs from a housing company and found it being
defective. Despite many complaints, the defect was not rectified. He filed a complaint in state
commission but was not satisfied with its order. Where can he appeal and within how many
days? (1 mark)
Ans. National Commission, within 30 days of the passing of the order of the State Commission.
Q. 9. Shubhangi purchased a car for Rs. 1.1 crore and found its engine defective. Despite many
complaints, the defect was not rectified. She filed a complaint in National Commission but was
not satisfied with its order. Suggest her the appropriate authority where she can appeal. (1 mark)
Ans. The Supreme Court
Q. 10. Rita wants to buy a packet of juice. As an aware customer, how can she be sure about the quality
of juice she plans to buy? (1 mark)
Ans. By FPO mark label
Q. 11. Anjana wants to buy a gold ring. As an aware consumer, how can she be sure about the quality
of gold ring she is going to buy? (1 mark)
Ans. By Hallmark label
Q. 12. Pragya bought an iron of a reputed brand for Rs. 1500 but it caused an electric shock while it
was being used. Pragya wants to exercise her „Right‟. Identify the „Right under which she can be
protected. (1 mark)
Ans. Right o safety Q. 13. Siddharth went to a shopkeeper to buy soap. The shopkeeper forced him to
buy a particular brand of soap out of various available brands, irrespective of the willingness of
Siddharth. Which right of Siddharth, as a consumer, has been exploited? (1 mark)
Ans. Right to choose.
Q. 14. Ahmed wants to buy an iron. As an aware customer, how can he be sure about the quality
of iron? (1 mark)
Ans. By ISI mark label
Q. 15. Tanya purchased some household goods from a „General store‟. After reaching home she
found a face cream which she had not billed for. After checking the date of expiry and other
details, she started using it. Her face burnt due to the use of the cream. Where should Tanya file
a complaint? Justify. Under Consumer Protection Act, 1986 who can file a complaint?
(3 mark)
Ans. Tanya cannot file a complaint in any consumer court since she does not have the proof of
purchase, i.e., cash memo. She did not fulfil her responsibility of an honest consumer. She should have
gone back to the general store to get its billing. Under the Consumer Protection act, 1986, any of the
following can file a complaint:
1. Any consumer
2. Any registered consumers‟ association
3. The central Government or any State Government
4. One or more consumers on behalf of many consumers having same interest.
5. A legal representatively of a deceased consumer.
Q. 16. Akhil, a consumer purchased medicines without noticing the date of expiry. He also did
not obtain the cash memo. Do you think he will be able to protect himself by the loss caused due
to expired medicine? Give reasons to support your answer. (3 mark)
Ans. Akhil will not be able to protect himself by the loss caused due to expired medicine because he
did not fulfil his responsibility on the following grounds:
1. He did not read the labels of the packet of medicines. He did not notice the date of expiry. A
consumer should always read labels carefully to have information about prices, net weight,
manufacturing and expiry dates, etc.
2. He did not obtain the cash memo from the seller. Cash memo is a proof of purchase and it is a must
for filing a complaint in appropriate consumer court.
Q. 17. Deepak purchased a book from a book-seller and got the cash memo of Rs. 400 which he
paid for the book. Later, he found that the actual price of the books is Rs. 380 but the book-seller
has put a sticker of Rs. 400 on the original price. Can Deepak recover the extra money that he
paid? What other options are available to him against book-seller?
(4 mark)
Ans. Deepak is a responsible consumer since he has got the cash memo for the book he purchased.
Cash memo is the proof of purchase. A consumer must have the cash memo to file a complaint in a
consumer court.
In this case, the book-seller has charged for the book a price in excess of the list price. So, Deepak can
recover the extra money he paid (Rs. 20) from the book-seller.
Alternatively, Deepak can file complaint against the book-seller in a consumer court if he does not get
back Rs. 20 from the book-seller. If the consumer court is satisfied about the genuineness of the
complaint, it can issue the following directions to the bookseller.
1. To refund the price paid for the book (Rs. 400).
2. To pay adequate costs to Mr. Deepak, which he incurred for filing the complaint.
3. To discontinue the unscrupulous, exploitative and unfair trade practices and not to repeat in the
future.
Q. 18. Dushyant, who was a vegetarian, went to a snack bar for having French fries and later on
found out that it has non-vegetarian content. Neither the advertisement nor the packing of the
product displayed that the product has non-vegetarian content. Will Dushyant be able to claim
compensation? Which right of the consumer is violated? (1 mark)
Ans. Yes, Dushyant will be able to claim the compensation as the seller has violated the “right to
information”.
Q. 19. Your mother purchased a washing machine for Rs. 10000 from an authorized dealer of the
manufacturer with an oral guarantee that the machine will be replaced with a new one if any of
its parts becomes defective within 3 months from the date of purchase. The motor of the machine
was burnt within 15 days of its purchase. On complaining, the seller refused to replace the
machine. Name the redressal agency under the Consumer Protection Act where your mother can
file the complaint. (1 mark)
Ans. No, my mother cannot file a complaint against the dealer or the manufacturer in the consumer
court since she does not have cash-memo. She had purchased the washing machine with an oral
guarantee only.
Q. 20. Harsh asked for a bottle of mineral water from a shopkeeper. The maximum retail price
printed on the bottle was Rs. 20 only whereas the shopkeeper was charging Rs. 35. In spite of
many arguments the shopkeeper was not ready to sell the bottle for less than Rs. 35. Harsh was
in need of it and had no option except to buy. Identify the „Right‟ which Harsh can exercise. (1
mark)
Ans. Right to be Heard
Q. 21. Aman a degree holder in Entrepreneurship came to know about Piplantri Village located
in Rajasthan, where in 2006 an initiative was started, in which 111 trees are planted every time a
girl child is born.
To keep termites away from the trees the villagers have planted 2.5 million Aloe Vera plants
around the trees. This has turned the village into on oasis, as the planting of trees led to higher
water levels.
Aman decided to visit the village to start a business unit, for the processing and marketing of
Aloe Vera into juices, gels and other products.
However, on visiting the village Aman found that the villagers were suffering exploitation at the
hands of local merchants who were engaged in unscrupulous, exploitative trade practices like
hording and black marketing of food products and also selling unsafe, adulterated products to
the villagers.
After looking at their plight instead of a business organization he decided to set up an
organization for the protection and promotion of the consumer interest of the villagers.
State the functions that the organization established by Aman will be performing. (any six points)
(6 mark)
Ans. Functions of an NGO / Consumer organization
1. Educating the villagers / general public about consumer rights by organizing training programmes,
seminars and workshops.
2. Publishing periodicals and other publications to impart knowledge about consumer problems, reliefs
available and other matters of interest.
3. Carrying out comparative testing of consumer products in accredited laboratories to test relative
qualities of competing brands and publishing the test results for the benefit of consumers.
4. Encouraging consumers to strongly protest and take an action against exploitative and unfair trade
practices of sellers.
5. Providing legal assistance to consumers by way of providing aid, legal advice etc, in seeking legal
remedy.
6. Filing complaints in consumer courts on behalf of consumers.
Q. 22. On Sonika‟s birthday her mother gave her a pair of gold earrings. After one month
Sonika observed that the earning are losing their shine. She checked the mark on the ear-rings
and found that it was not a proper Hallmark and her mother had been cheated by the
shopkeeper. So, she filed a complaint in the district forum which rejected it. Not satisfied by the
decision of district forum, she was very much disturbed and after two months decided to appeal
further.
Can Sonika appeal against the decision of the district forum? Give reason in support of your
answer. (1 mark)
Ans. No, Sonika cannot appeal now as the appeal has to be filed within 30 days of passing of the order
by the district forum.
Q. 23. Manuj bought a packet of chips from a local shopkeeper and found that the ingredients
given on the label were not legible. He complained about it to the company. The company sent a
written apology stating that they will make sure that existing packets are withdrawn from the
market and new packets with legible labels are soon made available. State the consumer right
which Manuj exercised. (1 marks)
Ans. Right to be heard has been exercised by Manuj.
Q. 24. Suman bought a box of cheese of a reputed brand a local shopkeeper. On opening the box,
she found a piece of stone in the cheese. She reported the matter to the shopkeeper who
forwarded her complaint to the concerned company. Within a week, the representative of the
company visited Suman‟s residence with an apology and as a replacement offered her a new
cheese pack with four other varieties of cheese as compensation for the inconvenience to her.
State the consumer right with Suman exercised. (3 marks)
Ans. Right to seek redressal has been exercised by Suman.
Q. 25. Manvendra always went to a specific shop to buy all consumable and non-consumable
goods. In this shop, a variety of products of different brands were displayed nicely and the sales
person available also gave good sales presentations if required. But this shop was quite far-off
from his residence. His friend Annant always wondered why Manvendra wastes to much time in
going to that shop whereas there were many big brand shops situated near his residence having
consumable and non-consumable goods.
Annant asked Manvendra the reason of going to the particular shop. Manvendra told that he was
exercising one of his rights which he could not exercise in nearby big brand shops. State the
consumer‟s right which Manvendra had exercised. (3 marks)
Ans. Right to choose has been exercised by Manvendra.
Q. 26. Himanshu purchased a new car from „Galaxy Motors‟ for Rs. 25 lakh. He was offered
free insurance for the first servicing to be availed after the car had covered 5,000 km, 10,000 km
and 15,000 km, respectively. When Himanshu took the car for the first free servicing, he was told
that the car was not new and first service had already been availed on this car. He felt cheated
and filed a complaint in the State Commission. Being not satisfied with the decision of the State
Commission, after two months he decided to file an appeal against it.
Can Himanshu appeal against the decision of the state Commission? Give reason in support of
your answer. (4 marks)
Ans.
No, Himanshu will not be able to appeal further against the decision of State Commission in the
National Commission. This is because two months have already passed and the appeal had to be filed
within 30 days of the passing of the order by State Commission.
Q. 27. Palak went to a shopkeeper to buy a hair oil. The shopkeeper forced her to buy a
particular brand of hair-oil out of various available brands, irrespective of the willingness of
Palak. Which right of Palak, as a consumer, has been violated? Name and explain the right. (4
marks)
Ans. The Right to choose has been violated in the given case as Palak was forced by the shopkeeper to
buy a particular brand of hair oil.
According to the Right to Choose, the consumer has a right to choose from a variety of products at
competitive prices. Also, the marketers should offer a wide variety of products to buyers.
Q. 28. Anita purchased a book from Satish Book Store. While reading the book, she found that
sixteen pages were missing. She approached the seller of the book and complained about the
missing pages. The seller promised that if the publisher was ready to change the book he would
change the same. After a week, the seller informed Anita that the publisher had refused to
change the book.
Where can Anita file a complaint against the seller of the book? Give reason in support of your
answer. Also explain who is a consumer as per “Consumer Protection Act 1986”.
( marks)
Ans. Since, the value of the goods or services in question, along with the compensation claimed, does
not exceed Rs. 20 lakhs she will file a case in the District Forum.
A „consumer‟ is generally understood as a person who uses or consumes goods or avails of any
services. A person who buys goods for commercial purpose or resale will not be considered to be a
consumer.
Q. 29. Prakahar purchased an ISI mark electric iron from Bharat Electricals. While using it, he
found that it was not working properly. He approached the seller and complained about the
same. The manufacturer refused to replace and Bharat Electrical decided to file a complaint in
the consumer court.
Can Bharat Electricals do this? Why? Also explain who is a consumer as per Consumer
Protection Act, 1986.
Ans. No, Bharat Electricals will not be able to file a complaint under Consumer Protection Act 1986
because according to this act a person is not deemed to be a customer if he buys goods for resale or
commercial purpose.
Under the Consumer Protection Act 1986, a consumer is defined as:
1. Any person who buys any goods for a consideration, which has been paid or promised, or partly paid
and partly promised or under any scheme of deferred payment. It includes any uses of such goods,
when such use is made with the approval of the buyer, but does not include a person who obtains goods
for re-sale or any commercial purpose.
2. Any person who hires or avails of any service, for a consideration which has been paid or promised
or partly paid and partly promised or under any system of deferred payment. It includes any beneficiary
of services when such services are avails of such services for any commercial purposes.
Q. 30. Reena purchased on litre of pure desi ghee from a shopkeeper. After using it, she had
doubts that it was adulterated. She sent it for a laboratory test which confirmed that the ghee
was adulterated. State any six reliefs available to Reena if she complains and the consumer court
is satisfied about the genuineness of the complaint.
Ans. The six reliefs available to Reena are listed below:
1. To withdraw the hazardous goods from sale.
2. To provide replacement for the defective product.
3. To refund the price paid for the product, or the charges paid for the service.
4. To pay a reasonable amount of compensation for any loss or injury suffered by the consumer due to
the negligence of the marketer.
5. Not to offer hazardous goods for sale.
6. To issue corrective advertisement to neutralize the effect of a misleading advertisement.
QUESTION BANK (Accounting for Share Capital)
1mark
1) Can a company re-issue the Forfeited shares at discount? If yes what is maximum discount
that can be allowed at the of reissue .
2) What do you mean by forfeiture of share ?.
3) Give one example of Issue of shares in consideration other than cash except purchase of
an asset .
4) What is meant by Surrender of shares?
5) Give the meaning of registered capital of a company.
6)What is meant by paid up capital?
7)What is meant by oversubscription of shares?
8)What is meant by sweat equity shares?
9)Give the meaning of Call in Advance?
10)What is meant by issue of shares for consideration other than cash
11)What is the maximum amount of discount which may be allowed on reissue of shares?
12)Explain Private placement of shares.
13) What is meant by forfeiture of shares?
14)YLtd invited applications for issuing 10,00,000 equity shares of Rs 10 each.The public
applied for 855000 shares. Can the company proceed for the allotment of shares? Give
reasons.
___________________________________________________________
3 / 4 marks
16) What is minimum subscription?
17) Distinguish between Reserve capital and Capital Reserve.
18) Distinguish between Oversubscription and Undersubscription of shares.
19) What is meant by Issue of Shares at Premium? State the purposes for which
Securities Premium can be utilized as per CA 2013. OR
Xltd has a paid up share capital of Rs 6000000 and a balance of 1500000 in the
Securities Premium Reserve account. The company management does not want to
carry over this balance. State the purposes for which this balance can be utilized.
20) What is meant by forfeiture of shares and surrender of shares?
21) On 1/4/12 Yltd was formed with an authorized capital of Rs 1, 00,00,000 divided into
200000 shares of Rs 50 each.The company issued prospectus inviting applications for 180000
shares. The issue price was payable as : Application Rs 15: Allotment 20 ; Call Balance. The
issue was fully subscribed and the company allotted shares to all the applicants. The company
did not make the call during the year. Show the Share Capital in the Balance Sheet of the
Company as per Sch III , Part I of the Companies Act 2013 and also prepare Notes to
Accounts .
22) On 1/4/12 Xltd was formed with an authorized capital of Rs 10, 00,000 divided into
100000 shares of Rs 10 each. The company issued prospectus inviting applications
for 90000 shares. The company issued prospectus for 85000 shares. During the first
year Rs 8 were called. Ram holding 1000 shares and Shyam holding 2000 shares did
not pay first call of Rs 20 .Shyam’s shares were forfeited after the first call and later
on 1500 of the forfeited shares were reiisued at Rs 6, 8 called up. Show the Share
Capital in the Balance Sheet of the Company as per Sch III , Part I of the Companies
Act 2013 and also prepare Notes to Accounts .
23) Pass necessary journal entries for the following transactions in the books of
Rajan Ltd.
Rajan Ltd purchased a running business from Vikas Ltd for a sum of Rs 250000 payable as
Rs 220000 in fully paid equity shares of Rs 10 each and balance by a bank draft. The assets
and liabilities consisted the following:-
Machinery 90000: Debtors 30000: Stock 50000: Cash 20000 : Creditors 20000.
24) Pass necessary journal entries for the following transactions in the books of Gopal
Ltd;-
i) Purchased furniture for Rs 250000 from M/s Furniture Mart was made by issuing
equity shares of Rs 10 each at a premium of 25%.
ii) Purchased a running business from Aman Ltd for a sum of Rs 15, 00,000.The payment of
Rs 12, 00,000 was made by issue of fully paid equity shares of Rs 10 each and balance by a
bank draft. The assets and liabilities consisted of the following:-
Plant 350000: Stock 450000; Building 600000: Creditors 100000.
25) Meena Ltd issued 60000 shares of Rs 10 each at a premium of Rs 2 payable as 3

on application and the balance on 1st and final call. Application was received for 102000
shares. The directors resolved to allot as follows:
A) Applications of 60000 shares 30000 shares
B) Applicants of 40000 shares 30000 shares
C) Applicants of 2000 shares Nil
Nikhil who had applied for 1000 shares in Cat A, and Vish who was allotted 600 shares in
category B failed to pay the allotment money. Calculate the amount received on Allotment.
26) Z Ltd issued 40000 shares of Rs 10 each payable as 2 on application, 4 on allotment

and the balance in two equal instalments . Application was received for 80000 shares. The
directors resolved to allot as follows:
A) Applications of 50000 shares 30000 shares
B) Applicants of 30000 shares 10000 share

Neeraj to whom 600 shares were allotted from category (i) failed to pay the allotment
money. Calculate the amount received on Allotment.
27) Xltd forfeited 1000 shares of Rs 10 each ( 8 called up) for non payment of
allotment 5(including 2 premium) .Out of these 800 shares were reissued at 7 as
Rs 8 called up. Journalise
28).The authorized capital of XYZ Ltd. is Rs.10,00,000 divided into 1,00,000 equity share of
Rs.10 each. Out of these company issued 80,000 equity shares of Rs.10 each. The amount is
payable as follows:
On application Rs.2
On allotment Rs.5
On Final call Rs.3
The public applied for 60,000 equity shares and all the money was duly received except final
call on 500 shares held by Trina.
You are required to:
(a) Show ‘Share Capital’in the Balance Sheet of the company as at 31st March 2016 and
(b) Prepare ‘Notes to Accounts’ for the same
8 marks
29) Petromax Ltd issued 50000 shares of Rs 10 each at a premium of Rs 2 per share
payable as Rs 3 on application ,Rs 5 including premium on allotment and the balance in
equal instalments over two calls .Applications were received
92000 shares and the allotment was done as under:
A) Applicants of 40000 shares Allotted 30000 shares
B) Applicants of 40000 shares Allotted 20000 shares
C) Applicants of 12000 shares Nil
Suresh, who had applied for 2000 shares (Cat A) did not pay any money other than application
money. Chander who was allotted 800 shares (Cat B) paid the call money due along with allotment.
Journalise in the books of Petronas Ltd to record the above.
30) Moti Ltd invited applications for issuing 10,00,000 shares of 10 each at a premium of Rs 2
payable as Application 5(including premium) :Allotment 4: Final call 3 .Application for
1500000 shares were received. Application for 300000 shares were rejected and prorate
allotment was made to the remaining applicants.Excess application money was utilized
towards sum due on allotment. Mr X who applied for 24000 shares failed to pay the allotment
and call money. His shares were forfeited. Out of the forfeited shares 10000 were reissued for
Rs 8 fully paid up. Journalise
31)Xltd issued 40000 shares of Rs 10 each at a premium of Rs 2.5 payable as application 2:

allotment 4.5(including premium) and on call 6.Owing to heavy subscription the allotment was
made on pro rata basis as follows:
Applicants for 20000 shares were allotted 10000 shares
a) Applicants for 56000 shares were allotted 14000 shares
b) Applicants for 48000 shares were allotted 16000 shares
It was decided to that excess amount received on applications would be utilized on

allotment and the surplus would be refunded.
Ram to whom 1000 shares were allotted, who belongs to category (a) failed to pay allotment
money. His shares were forfeited after the call.
Journalise in the books of Xltd.

32) A company issued for public Subscription 40,000 Equity shares of Rs. 10 each at a premium
of Rs. Per share payable as under:
On Application Rs. 3 Per share
On Allotment Rs. 4Per share (including Premium)
On First call Rs. 2Per share
On Final call Rs. 3 Per share
Applications were received for 70,000 shares. Allotment was made Pro-rata to the
applicants for 50,000shares the reaming applicants being refused. Money overpaid on application
was applied towards sum due on allotment.
Mr. Ajay to whom 1600 shares were allotted failed to pay the allotment and calls money.
Mr. Vijay to whom 2000 shares were allotted failed to pay the two calls.
The share of Ajay and Vijay were subsequently forfeited after the final call was made. 3000
of the forfeited shares were re-issued at Rs. 8 per share fully paid. The re-issued shares included
all of Ajay’s shares.
Pass the Journal entries in the books of the co. record the above transactions
33) M.K. Sales Company Ltd. issued a prospectus inviting applications for 100000 shares of RS.
10 each at a premium of Rs. 2.50 per share payable as follows:
On allocation Rs. 5
On allotment Rs. 5 (including premium)
On first call Rs. 2.50
The company received applications for 150000 shares; allotment was made on pro-rata basis.
Over subscribed money received on application was adjusted with the amount due on allotment.
Mr. Hemant to whom 200 shares were allotted failed to pay the allotment money and the final
call; his shares were forfeited after the first call. Later on the shares were reissued to Mohan as
fully paid for Rs. 9 per share. Pass journal entries in the books of company for recording the
above transactions.
34) Harsh Limited invited applications for issuing 2,00,000 Equity shares of Rs.100 each at a
premium of Rs.20 per share. The amount was payable as follows:
On application Rs.30 per share
On allotment Rs.70 per share (including premium)
On first and final call the balance amount.
Applications for 2,50,000 shares were received. Shares were allotted to all the applicants
on prorate basis. The Company received all money due on allotment except Sharma who
had been allotted 1,000 shares, and his shares were immediately forfeited. Afterwards
first and final call was made. Verma did not pay the first and final call on his 2,000
allotted shares. His shares were also forfeited. 50% of the forfeited shares of both
Sharma and Verma were reissued for Rs.90 per share fully paid up.
Pass necessary journal entries.
35).Bajaj Limited invited applications for issuing 1,00,000 Equity shares of Rs.100 each at a
premium of 20%. The amount was payable as follows:
On application Rs.30 per share
On allotment Rs.50 per share
On first and final call -the balance amount .It was not made.
Applications for 1,50,000 shares were received. Shares were allotted to all the applicants on pro
rata basis. The Company received all money due except from R who applied for 3,000 shares,
could not pay on allotment . His shares were forfeited. 500 of the forfeited shares were reissued
at Rs.50 per share as Rs.60 paid up . Pass necessary journal entries
Study Materials of PGT Commerce Work shop
Class XII
Sub: Business Studies
Chapter Financial Market

Q1. What is meant by Financial Market? 1
Q2.Who is the competing intermediaries in financial system? 1
Q3. State any one consequence of well- performed allocative function of financial market 1
Q4. What is meant by dematerialization of securities? 1
Q5. What is insider trading? 1
Q6. What is a Treasury Bill ? 1
Q7. Give the meaning of Capital Market. 1
Q8.Why was SEBI set up? 1
Q9. How are Financial assets created? 1
Q.10 Reshu’s father has gifted her shares of a large cement company, with which he
had been working. The securities were in physical form. She already has a bank
account and does not possess any other forms of securities.
She wished to sell the shares and approached a registered broker for the purpose.
Mention one mandatory detail which she will have to provide with the broker. 1
Q11. Supriya’s grandmother who was unwell, called her and gave her a gift packet.
Supriya opened the packet and saw many crumpled share certificates inside. Her
grandmother told her that they had been left behind by her late grandfather.
As no trading is now done in physical form, Supriya wants to know the process by
adopting which she is in a position to deal with these certificates. 3
1. Identify and state the process.

2. Also give two reasons to Supriya
3. why dealing with shares in physical form had been stopped.
Q. 12. The directors of a company want to modernize its plant and machinery by
making a public issue of shares. They wish to approach the stock exchange, while the
finance manager prefers to approach a consultant for the new public issue of shares.
Advise the directors whether to approach the stock exchange or a consultant for new
public issue of shares and why. Also advise them about different methods which the
company may adopt for the new public issue of
shares. 3
Q. 13. Saqib Ltd. is a large credit worthy company operating in the Kashmir Valley. It is
an export oriented unit, dealing in exclusive embroidered shawls. The floods in the
valley have created many problems for the company. Many craftsmen and workers
have been dislocated and raw material has been destroyed. The firm is therefore,
unable to get an uninterrupted supply or raw material, and the duration of the
production cycle has also increased. To add to the problems of the organization, the
suppliers of raw material who were earlier selling on credit are asking the company,
for advance payment or cash payment on delivery. The company is facing a liquidity
crisis. The CEO of the company feels that taking a bank loan is the only option with
the company to meet its short term shortage of cash. As a finance manager of the
company name and explain the alternative to bank borrowing that the company can
use to resolve the crisis. 3
Q. 14. ‘Ganesh Steel Ltd.’ is a large and credit-worthy company manufacturing steel for
the Indian market. It now wants to cate to the Asian market and decides to invest in
new hi-tech machines. Since the investment is large, it requires long-term finance. It
decides to raise funds by issuing equity shares.
The issue of equity shares involves huge floatation cost. To meet the expenses of
floatation cost the company decides to tap the money market.
1. Name and explain the money-market instrument the company can use for the
above purpose.
2. What is the duration for which the company can get funds through this
instrument?
3. State any other purpose for which this instrument can be used. 3
Q.15. The Trading Procedure on Stock Exchange has been replaced by on-line screen
based electronic trading system. This is mainly done to eliminate problems like theft,
fake/forged transfers, transfer delays and paper work associated with share
certificates or debentures in physical form. This is a process where securities held by
the investor in the physical form are cancelled and the investor is given an electronic
entry or number so that he/she can hold it as an electronic balance in an account. This
has increased the equity cult among the people.
1. Identify and state the process mentioned above.
2. What is the most important requirement for the process identified in (a)?
State.
3. State any two values which you think have enhanced the equity cult in the
society.
Q. 16. Sakshi Ltd, a well known real estate company has managed to carve a niche for
itself in this sector. Recently, it was revealed that the directors of the company have
used price sensitive information for their own personal interest Adequate public
disclosures were also not made. SEBI is considering action against these directors.
1. Name the term used for trading malpractice done by the directors of this
company.
2. Identify any two values that the company should have adhered to in order to
gain the trust of its investors. 3
Q. 17. Mission Coach Ltd. is a large creditworthy company that manufactures coaches
for the Indian Railways. It now wants to export these coaches to other countries and
decides to invest in new hi-tech machines. Since the investment is large, it requires
long-term finance. It decides to raise funds by issuing equity shares. The issue of
equity shares involves huge floatation cost. To meet the expenses of floatation cost,
the company decides to tap the money market.
1. Name the explain the money-market instrument the company can use for the
above purpose.
2. What is the duration for which the company can get funds through this
instrument?
3. State any other purpose for which this instrument can be used. 3
Q. 18. Harsh works as a manager in a software company. He opened a Demat account

with a broking house in order to trade in securities with the money he received as his
first performance bonus. Since then he has been very active in stock trading under the
guidance of a stock broker. However, ,when he was hospitalized for a few days this
year, his wife received several calls from the his stock broker for permission to
transact on Harsh’s behalf. Though she told him to wait till her husband had
recovered, the stock broker went ahead and executed the transactions. When Harsh
got home from hospital, he discovered that the unauthorized transactions had led to a
loss for him.
Harsh complained to the broking house, but they claimed he had authorized the
transactions. Keeping in new, the guidelines issued by the National Stock Exchange
that he had read in the national newspaper Harsh demanded proof and threatened to
file a complain. Since, the broking house had no evidence that the deals had been
authorized they made good the loss that Harsh had incurred due to the transaction.
In the context of the above case?
1. What is a Demat account?

2. Who is acting as the depository participant for Harsh?
3. Name the document that is illegally enforceable and helps to settle the claims
between the investor and the broker. 3
Q. 19. Ketan won a cash prize of Rs. 20,000 in the National level Robotics Competition.
On the advise of his father, he visits a nearby bank to open a Fixed deposit account in
his name with the prize money. His sister Suhasini accompanied him to the bank. On
reaching the bank, he notice big banners which are placed within the premises
containing information about the various arrangements through which corporates may
raise their capital through the bank. Being a finance graduate, Suhasini explains to
Ketan that banks play the role of the financial intermediary by helping in the process
of channelizing the savings of the households into the most profitable business
ventures.
1. Name another financial intermediary that helps in the process of channelizing

the savings of the households into the most productive use.
2. Also, outline any two functions of another financial intermediary as identified in
part (a) 3
Q20. “ The stock exchange facilitates the exchange of a security” Comment. 3
Q. 21. ‘R’ Limited is a real estate company which was formed in 1950. In about 56
years of its existence the company has managed out from a niche for itself in this
sector. Lately this sector is witnessing a boom due to the fact that the Indian economy
is on the rise. The income of middle class are rising. More people can afford to buy
homes for themselves due to easy availability of loans and accompanying tax
concession.
To expand its business in India and abroad the company is weighing various options to
raise money through equity offerings in India. Whether to tap equity or debt market
whether to raise money from domestic market or international market or combination
of both? Whether to raise the necessary finance from money market or capital
market. It is also planning to list itself in New York Stock Exchange to raise money
through ADR.
To make its offering attractive it is planning to offer lots of financial plans, products to
its stakeholders and investors and also explain its listing at NSE after complying with
the regulations of SEBI.
1. What are the regulation of SEBI that company must comply with? 4
Q. 22. A company require Rs. 2 crore for inventory, payment of wages, salaries,
maintaining bank balance, etc. 4
1. Suggest which financial market company may approach and why?

2. State the instruments to raise finance in that market.
Q. 23. Few years ago, there were many malpractices, unfair trade practices and frauds
and scams were taking place in stock Exchange. All these affected investor’s
confidence, faith and trust in Stock Exchange. The Government of India decided to set
up a separate body for this purpose who was given control of stock exchange. This
separated ownership and control of stock exchange.
1. Name the concept which separate the ownership and control of stock exchange.
2. Name the body set up by the government of India to contract the stock
exchange.
3. State the objectives of that regulating body. 4
Q. 24. Mr. Vikas Mehra was the Chairman of IBM Bank. The bank was earning good
profits. Shareholders were happy as the bank was paying regular dividends. The
market price of their shares was also steadily rising. The bank was about to announce
the taking over of ‘UK Bank’. Mr. Vikas Mehra knew that the share price of IBM Bank
would rise on this announcement. Being a part of the bank, he was not allowed to buy
shares of the bank. He called one of his rich friends Mukand and asked him to invest
Rs. 4 crores in the shares of his bank promising him the capital gains.
As expected, after the announcement, the share prices went up by 50% and the market
price of Mukand’s shares was now Rs. 6 crores. Mukand earned a profit of Rs. 2
crores. He gave Rs. 1 crore to Vikas Mehra and kept Rs. 1 crore with him. On regular
inspection and by conducting enquiries of the brokers involved, the Securities and
Exchange Board of India (SEBI) was able to detect this irregularity. SEBI imposed a
heavy penalty o Vikas Mehra.
Quoting lines from the above paragraph, identify and state any four functions
performed by the SEBI in the above case. 4
Q. 25. Incorporated in 1990. Raju Dairy Ltd., is one of the leading manufacturers and
marketers of dairy-based branded foods in India. In the initial years, its operations
were restricted only to collection and distribution of milk. But, over the years it has
gained a reasonable market share by offering a diverse range of dairy based products
including fresh milk, flavoured yogurt, ice creams, butter milk, cheese, ghee, milk
powders etc. in order to raise capital to finance its expansion plans. Raju Dairy Ltd.
has decided to approach capital market through a mix of Offer for sale of Rs. 4 crore
shares and a public issue of Rs. 2 crore shares.
1. Name and explain the segment of capital market being approached by the
company.
2. Identify the two methods of floatation used by the company to raise the
required capital. Give one difference between them. 4
.
Q. 26. Ragu works as a waiter in a five star hotel in Mumbai. While serving the
customer he overhears him at the table saying that the he has made profits higher
than expected by investing in securities market. So, Ragu also decides to make a
nominal investment from his savings in the stock market in pursuit of higher gains.
As a financial consultant, apprise him of the steps involved in the working of a Demat
system. 4
27. What are the functions of a financial market? 4
Q.28. Sumita is a professor in a reputed business institute. While explaining the

procedure of stock exchange trading, she shared with her students that many years
back she had bought 200 shares of a leading automobiles company. As per the
settlement procedure she paid for the shares and received the share certificates in
physical form. However, when she had sent those certificates to the company to get
them endorsed in her name, she was informed by the company that those certificates
were duplicate.
Therefore, in order to protect the investors from many such malpractices, now only
screen – based trading is done and dematerialization is compulsory.
1. What is screen based trading?

2. Give the meaning of ‘dematerialization’. State any two of its advantages.4
Q 29. The directors of a company want to modernize its plants and machinery by
making a public issue of shares.they wish to approach the stock exchangewhile the
finance manager prefer to approach a consultant for the new public issue of shares.
Advice the directors whether to approach the stock exchange or a consultant for a new
public issue of shares. Give reason.
Also advice about the different methods which the company may adopt for the new
public issue of shares. 4
Q30. ‘Ganesh Steel Ltd.’ is a large and credit-worthy company manufacturing steel for the
Indian
market. It now wants to cater to the Asian market and decided to invest in new hi-tech
machines. Since the investment is large, it requires long-term finance. It decides to raise funds
by issuing equity shares. The issue of equity shares involves huge floatation cost. To meet the
expenses of floatation cost the company decides to tap the money-market.
(a) Name and explain the money-market instrument the company can use for the above
purpose.
(b) What is the duration for which the company can get funds through this instrument?
(c) State any other purpose for which this instrument can be used. [4]
Q. 31. During navratras, Varun finalizes a deal to buy a new house. So, he visits a
nearby branch of ‘Subh Bank’ top withdraw Rs. 10 lakhs from his account in order to
pay the token money to the seller. In the bank he observes that a large number of
customers are present to make cash with drawls, probably because it is an auspicious
time to make purchases. After sometime, he overhears one of the bank staff members
telling his colleague that, “Today ‘Shubh Bank’ is likely to fall short of cash and to
make up for the deficit and maintain its cash reserve ratio it will have to approach
another bank.”
1. Identify the instrument that ‘Shubh Bank’ will use to meet its short term
requirements of funds.
2. State any four feature of the instrument as identified in part (a). 5
Q 32. What are the functions of a Stock Exchange? 5
Q 33. What are the objectives of the SEBI? 5
Q34. Distinguish between Capital Market and Money Market. 5
Q35. “Money Market is essentially a Market for short term funds.” Discuss. 5
Q36. Diffentiate between Primary Market and Secondary Market. 5
Q37. What are the Trading Procedure of Stock Exchange? 5
Q38. Madhav’s is one of the India’s most trusted brands in Indian sweets and snacks
segment. The company has manufacturing plants in Kota, Kanpur, New Delhi, and
Mumbai. Madhav’s has its own retail chain stores and a range of restaurants in these
cities. Now, the company plans to extend its business in 12 more cities in India. In
order to raise the funds, its directors have decided to float a public issue through
prospectus. Besides, it intends to raise money to meet the floatation cost in terms of
brokerage, underwriting commission, advertising etc.
1. What is the other name used for the funds required to meet floatation costs?
2. Describe briefly the short term instrument popularly used by the companies to
raise for the funds required to meet floatation costs. Who can issue them?
3. Distinguish between the two types of financial markets that the company
intends to approach to meet its financial needs. 6
Q39 Explain the various Money Market Instruments. 6
Q40. What are the methods of floatation in Primary Market? 6
Q41. Explain the various functions of the SEBI 6

Case Studies – (Chapter - 11)
Marketing Management,
BST Class 12
Q. 1. Zoom Udyog, a car manufacturing Co., has started its business

with Zoom 800 and slowly launched Zoom-1000, Wagon-Z, Swy-fy etc.
and offered various services like after sale services, availability of spare
parts etc. Identify the element of marketing mix referred
here.
(1 mark)
Ans. Product
Q. 2. Radha found a worm crawling out of newly opened tetra pack of a
juice manufactured by a reputed company, Zest, Ltd. She went back to
the shopkeeper from whom the pack was purchased who directed her to
call up the customer care centre. When all her efforts failed, she went
to a consumer activist group to seek help. The group decided to help
Radha and taken measures to impose restrictions on the sale of the
firm’s products of the particular batch and urge customers to refrain
from buying the products of the company. Zest Ltd. lost its image in the
market. The CEO gives the responsibility of bringing back the lost
image of the company to a Manager.
1. Identify the concept of Marketing Management which will help the

Manager getting the firm out of the above crisis.
2. Also explain the role of above identified concept by stating any two
points. (4 Marks)
Ans.
1. Public Relations
2. Role of Public Relations:
1. Product Publicity:
2. Counseling:
Q. 3. The manager of Impact Enterprise, dealing in cosmetics, is facing

the problem of poor sales. Suggest the four promotional measures that
he can undertake to improve the sales. Also, name the factors affecting
their choice. (4 Marks)
Ans. The manager of Impact Enterprise, dealing in cosmetics, should take
the following four promotional measures to improve the sales:
1. Advertising
2. Sales promotion
3. Personal selling
4. Publicity
Factors affecting choice of promotional tool:
1. Nature of market
2. Nature of product
3. Promotions budget
4. Objectives of promotion
Q. 4. A mobile company is launching a new high tech mobile phone in

the market. Which department is going to look into the techniques I of
promoting it? (1 Mark)
Ans. Public Relations (PR) Department
Q. 5. Identify the Marketing Management philosophy adopted in the

following cases:
1. Mansi, a shoe manufacturer for school students, decided to

maximize her profit by producing and distributing at large scale and
thereby reducing the average cost of production.
2. Nisha, a school bag manufacturer decided to improve the product
for profit maximization and thus added a water bottle holder to the
existing design.
3. Jasdeep, a dealer in school uniforms, decided to maximize his profit
by using different aggressive promotional efforts.
4. Amar is engaged in manufacturing of refrigerators. He surveyed the
market and found that customers need a refrigerator with a separate
provision of water cooler in it. He decided to launch the same
refrigerator in the market. (4 Marks)
Ans.
1. Production concept
2. Product concept
3. Selling concept
4. Marketing concept
Q. 6. Identify the method of sales-promotion in the following cases:
1. A mobile company offers a discount of Rs. 1000 to clear off excess

inventory.
2. A customer gets Rs. 5 off on return of an empty wrapper while
making a new purchase of the same product.
3. A Company offers a pack of 1/2kg of sugar with the purchase of a 5
kg bag of wheat flour.
4. A Company offers 40% of extra shaving cream in a pack of 500 gms.
5. Scratch a card and get a gold coin with the purchase of a cold drink.
6. Purchase goods worth Rs. 50,000 and get a holiday package worth
Rs. 10,000
free. (6
Marks)
Ans.
1. Rebate
2. Refund
3. Product-combination
4. Quantity-gift
5. Instant draws and assigned gift
6. Usable Benefit / Lucky Draw
Q. 7. ‘Various tools of communication are used by the marketers to

promote their products.’
1. Why do companies use all tools at the same time?

2. Name and explain the most commonly used non-personal tool of
promotion which is paid for by the marketer.
3. Which tool of promotion will primarily be used for the following?
1. To promote or protect a company’s image or its individual products.

2. An existing product meant for mass usage by literate people.
3. To introduce a new product to a particular class of people through
door-to-door visits.
4. To attract attention of the people by using
incentives. (6 marks)
Ans.
1. The companies use all tools at the same time because of the nature of
market, nature of product, promotion budget and objectives of promotion
being different at different times.
2. The most commonly used non-personal tool of promotion which is paid
for by the marketer is advertising. It is a paid and non-personal form
having an identified sponsor to promote an idea.
3. The tools of promotion used are:
1. Public Relations
2. Advertisements
3. Personal selling
4. Sales Promotion
Q. 8. Good Living Ltd. manufactures mosquito repellent tables. These

tablets are packed in strips of 12 tablets each. Each of these strips are
packed in a cardboard box, 48 such boxes are then placed in a big
corrugated box and delivered to various retailers for sale. State the
purpose of packaging the tablets in a corrugated
box. (1 Mark)
Ans. The packaging of tablets in a corrugated box is necessary for the
purpose of storage, identification and transportation.
Q. 9. Shreemaya Hotel in Indore was facing problem of low demand for

its rooms due to off season. The Managing Director (MD) of the hotel,
Mrs. Sakina was very worried. She called upon the Marketing Manager,
Mr. Kapoor for his advice. He suggested, that the hotel should
announce an offer of ‘3 days and 2 Nights hotel stay package with free
breakfast and one day religious visit to Omkarehswar and
Mahakaleshwar Temples’. The MD liked the suggestion very
much. Identify the promotional tool, which can be used by the hotel
through which large number of prospective pilgrimage tourists, all over
the country and also abroad, can be reached, informed and persuaded
to use the incentive. (1 Mark)
Ans. Sales Promotion
Q. 10. “Every time I travelled, people asked me to bring them chips,
khakra and pickles from all over the country,” says Anoushka. Finally,
she and her colleague, Sumemet, decided to make out of it. They
launched a face book bags, asked people what they wanted, and they
came up with a list of about 100 places and tried up with two dozen
vendors to begin with. They were servicing people from Jaipur who
wanted spices from Kerala, people form Panipat who wanted halwa from
Jammu and people from Delhi who ordered for fresh tea leaves form
Darjeeling. Through their business they wished to bridge the gap
between sellers nd buyers. The business is now worth millions.
Explain any two important activities that Anoushka and Sumeet will
have to be involved in for making the goods available to the customers
at the right place, in the right quantity and at the right
time.
(4 Marks)
Ans. Activities / Components of Physical Distribution: (any two)
1. Order processing:
2. Transportation;
3. Warehousing:
4. Inventory Control:
Q. 11. ‘Beauty Products Ltd’s is a natural and ethical beauty brand

famous for offering organic beauty products for men and women. The
company uses plant based materials for its products and is the No. 1
beauty brand in the country. It not Identify the marketing management
philosophy being following by ‘Beauty Products Ltd.’ (1 Mark)
Ans. Social marketing concept.
Q. 12. ‘Haryaram’ is a famous chain selling a large variety of products in

the Indian market. Their products include chips, biscuits, sweets and
squashes. It charges a comparatively higher price than its competitors
as it sells quality products. Besides, it offers regular discounts to its
customers and easy credit terms to its retailers. It has five of its own
retail shops. It also sells its products through various grocery stores to
that the products are made available to customers at the right place, in
the right quantity and at the right time. It regularly uses different
communication tools to increase its sales.
The above para describes the combination of variables used by Hayaram
to prepare its market offering. Identify and explain the
variables. (6 Marks)
Ans. The combination of variables used by Hayaram to prepare its market
offering are:
1. Product ‘
their products include chips, biscuits, sweets squashes.’
2. Price
‘It offers regular discounts to its customers and easy credit terms to its
retailers’.
3. Place / Physical
Distribution
‘It has five of its own retail
shops.’
or
‘I
t also sells its products through various grocery stores …right time.’
4. Promotion
‘It regularly uses different communication tools to increase its sales.’

Q. 13. ‘Maruti Vega Ltd.’ entered into the market with coloured television
and have now introduced products like audio systems, air-conditioners,
washing machines, etc. the company is not only offering the products
but also handling complaints and offering after-sales services.
Identify the element of marketing-mix discussed
here. (1 Mark)
Ans. Product/ Product mix.
Q. 14. Radhika was a student of Business Studies of Call XII. Her father
was a farmer who grew different varieties of rice and was well-versed
about various aspects of rice cultivation. He was also selected by the
government for a pilot-project on rice cultivation. As a project-work in
Business Studies she decided to study the feasibility of marketing good
quality rice at a reasonable price. Her father suggested her to use
internet to gather customers’ views and opinions. She found that there
was a huge demand for packaged organic rice. She knew that there
were no pre-determined specification in case of rice because of which it
would be difficult to achieve uniformity in the output. To differentiate
the product form its competitors, she gave it the name of Malabari
Organic Rice’ and classified it into three different varieties namely –
Popular,, Classic and Supreme, based on the quality. She felt that these
names would help her in product differentiation.
Explain the three function of marketing, with reference to the above

paragraph. (6 Marks)
Ans. Functions of marketing, with reference to the above paragraph are:
1. Gathering and analyzing market information:

2. Standardization and Grading:
3. Branding:
Q. 15. A Company was marketing water purifiers which were very

popular due to their quality and after sales services provided to the
customers. The company was a leading company in the market and
earning huge profits. Because of huge profits, the company ignored the
after sales services. As a result, its relations with customers got
spoiled and the image of the company was damaged in the public. The
top management became concerned when the profits for the current
quarter fell steeply. On analysis, it was revealed that ignoring the after
sales services was its reasons. Therefore, the company took all
possible measures to protect and promote its favourable image in the
eyes of the public. As a result, the goodwill of the company improved in
the society.
1. Name and state the communication tool used by the marketer in the
above case to improve its image.
2. Also explain role of the tool as identified in part (a)
Ans.
1. Public Relations is being used as a promotional tool by the marketer. It

refers to the practice of managing communication between an
organization and its publics in order to create the maintain a positive
image about itself and its products.
1. Public relations helps to create a positive image about the company in

the eyes of various interest holders like consumers, government,
suppliers etc.
2. It helps in launching new products as they may be accepted easily
because of good reputation of business.
3. It helps the business to reinstate itself in the wake of controversies or
prejudices etc.
Q.16. Crackers Ltd., a fire-cracker manufacturing company launched

some new products on eve of Diwali which attracted many buyers. To
meet the increased demand, the company employed children from
nearby villages. Although the product was in great demand, appropriate
safety warning for use were not mentioned on the packets that led to
many accidents.
1. Identify and explain the important product-related decision that was

not taken into consideration by the company.
2. Also, identify any two values which were violated by the company.
Ans.
1. The company has ignored ‘Labeling’. It is an important product-related

decision.
Labeling refers to the process of designing a label for a product containing

product description and the relevant information which is likely to affect a
prospective buyers decision in making a purchase.It may vary from a simple
tag to a complex graphic.
1. The two values being violated by the company are:
1. Abiding by law as child labour has been employed

2. Concern for human life as appropriate warnings were not placed on the
label.
Q. 17. ABC Crackers Ltd., a fire-cracker manufacturing company,
launched some new products on the eve of Diwali in the market which
attracted many buyers. To meet the increasing demand, the company
employed people from nearby villages where there was a lot of
unemployment. Because of the good behavior of the management with
the employees, more and more people wanted to join the company. As
the products were in great demand in the market, a competitor imitated
the products. The products of the competitor were not accepted by the
consumers as it was a status symbol to buy the products of ABC
Crackers Ltd. because of their quality.
1. Identify and explain the product-related decision because of which

consumers preferred the products of ABC Crackers Ltd.
2. Also, identify any two values which ACB Crackers Ltd. wanted to
Ans.
1. Branding is the product-related decision because of which consumers

preferred the products of ABC Crackers Ltd.
Branding is the process of assigning a name (brand name), sign or symbol

(brand mark) or a combination of all to a product.Branding facilitates product
differentiation, assists in advertising and display programmes, facilitates
differential pricing, promotes consumers loyalty etc.
1. The two values that ABC Crackers Ltd. wants to communicate to the
society are:
1. Generating employment opportunities

2. Providing good working environment.
Q. 18. As a project work in Business Studies, the Commerce students of

Himachal Public School, Himachal Pradesh though of preparing apple
jam from the apples grown in their school premises and sell it in the
school annual fete. They approached the Principal who not only
appreciated the students but also gave her consent for the same. The
school decided to donate 50% of the revenue generated from the sale to
a nearby orphanage. After the school fete, the school also decided to
extend this project by providing employment to visually challenged and
disadvantaged sections of society or regular basis.
1. Explain any two product-related decisions which the students had to

take.
2. Suggest any two functions that the ‘label’ of the jam-bottle must
perform.
3. Identify two values communicated to society by this project of
Himachal Public School, Himachal Pradesh.
Ans.
1. The two product-related decisions which the students had to take are
branding and packaging.
2. The two important functions that the label of the jam – bottle must
perform are:
• Describe the product and specify its contents:

• Helps in identification of the product or brand:
3. The two values communicated to the society by the project of Himachal

Public School are:
• Generating employment opportunities

• Humanity
Q. 19. Ajay was appointed as the marketing head of Alfa Enterprise, a

manufacturer of toothpastes and toothbrushes. His target sale was
2000 units a month. Apart from thinking about various channels of
distribution to achieve the target, he himself started visiting schools in
backward areas. He found that even after taking various steps and
counseling, some school children had not started brushing their
teeth. He investigated and found that they could not start brushing their
teeth. He investigated and found that they could not afford to buy
toothbrush and toothpaste. So with due permission, he started
donating 200 toothbrushes and toothpastes every month to the school.
1. Identify the channel of distribution Ajay would adopt for the

distribution of toothpaste and toothbrushes and justify it by giving
one reason.
2. State any two values which Ajay ants to communicate to society.
Ans.
1. Ajay would adopt indirect channels of distribution for marketing of
toothpaste and tooth brushes because it is a consumer product. It can
be easily marked through longer channels, for example (Manufacturer –
Wholesaler – Retailer – Consumer).
2. The two values that Ajay wants to communicate to the society are:
1. Good health
2. Social welfare
Q. 20. Amar is engaged in the manufacturing of refrigerators. He

surveyed the market and found that customers need a refrigerator with a
separate provision of water cooler in it. He decided and launched the
same refrigerator in the market. Identify and explain the marketing
philosophy involved.
Ans. Amar is following the philosophy of marketing concept. The prime focus
of marketing concept is to ‘find wants and fill them’. Therefore, the marketer
first assesses the needs and preferences of its target market and
manufacturers products accordingly in order to satisfy their needs and wants
optimally. It aims at profit maximization through customer satisfaction.
Q. 21. Mansi, a shoe manufacturer for school students, decided to

maximize profits by producing and distributing shoes on a large-scale
and thus reducing the average cost of production.

2. Explain this philosophy on the basis of the following:
• Main Focus
• Means and Ends
Ans.
1. Mansi has adopted the production philosophy.

2. Means: The production philosophy can be brought into effect by making
products affordable and widely available.
Ends: The production philosophy aims at maximizing profits through

high volume of production.
Q. 22. Unilever has found a new way to make ice creams by using an
ingredient called ‘ice structuring protein’ which is widely found in
nature especially, in fishes which allows them to survive in freezing
arctic waters. Combining ISP with stabilizer technology allows to make
ice creams that don’t melt so easily thereby making it more convenient
for small children and consumer in hot countries.
1. Identify the component of marketing mix being taken into

consideration by the company.
2. Explain briefly the function of marketing highlighted here.
3. List any two values that the company wants to communicate to the
society.
Ans.
1. The component of marketing mix being taken into consideration by the

company is ‘Product’.
2. Product designing and development: Every marketer strives to achieve
his marketing objectives by creating offerings to satisfy a need or a
want. Therefore one of the core functions of marketing is to develop the
product in the most effective and efficient way. Every marketer
endeavours to add value to his product by introducing constant
innovations in the product to enhance both its utility and attractiveness in
the eyes of the potential buyers and gain a competitive edge.
3. The two values that the company wants to communicate to the society
are:
• Responsibility towards consumers

• Technological advancement.
Q. 23. Ranger India Limited, is an automobile manufacturer in India. It

makes 1.5 million family cars every year. That’s one car every 12
seconds. It has a sales network of company approved retailers that
spreads across 600 cities.
1. Identify the type of the channel of distribution adopted by the company.

2. State the market related factors that are likely to affect the decision of a
marketer about the choice of channel of distribution.
Ans.
1. Indirect channel: One level channel f distribution adopted by the
company.
2. The market related factors that are likely to affect the decision of a
marketer about the choice of channel of distribution are explained below:
1. Size of market:
2. Geographical concentration of potential buyers:
3. Quantity purchased:
Q. 24. As a global leader in the consumer electronics and entertainment

industries, Sony has set forth ‘Road to Zero environmental plan’, to
achieve a zero environmental effect by the year 2-050 by producing
world-class products in a manner that both protects and promotes a
healthy and sustainable planet.
1. Identify the marketing philosophy being implemented by the

company.
2. Outline the main focus and end of the relevant marketing
philosophy.
3. State any two values that the company wants to communicate to the
society.
Ans.
1. Social marketing concept is being pursued by the company.

2. The main focus of this philosophy is on both the needs of the potential
buyers as well as concern for the society at large. The ends include
profit maximization through customer satisfaction and social welfare.
3. The two values that the company wants to communicate to the society
are:

2. Welfare of the society
Q. 25. As the number of people making online purchases has increase

manifolds, there is a growing concern about the disposal and
management of packaging waste. Every item bought is delivered with
excess packaging and sometimes even non-biodegradable materials are
used.
1. Name the other two levels of packaging that the marketers may be
using besides the immediate package.
2. Describe briefly any two points highlighting the functions of
packaging.
3. State any two factors that should be kept in mind by the marketers
while designing the packaging of its products.
Ans.
1. Secondary packaging and Transportation packaging.

2. The functions of packaging in the marketing of goods and services is
explained below:
1. Product Identification:
2. Product Protection:
3. The marketers should use biodegradable packaging material and
packaging should enhance the usability of the products.
Q. 26. Rastro Inc., is a multinational corporation that creates consumer

electronics, personal computers, servers and computer software. The
company also has a chain of retail stores known as Restro
Stores. Despite high competition, Restro has succeeded in creating
demand for its products, giving the company power over prices through
product differentiation, innovation advertising and ensured brand
loyalty.
1. What is product differentiation?

2. Name any one function of marketing that facilitates product
differentiation.
3. Identify the component of promotion mix being used by the
company by Quoting lines form the paragraph.
4. Describe briefly the pricing objective pursued by the company.
Ans.
1. Product differentiation is a strategy used by the marketers to gain an

edge over its competitors by creating a distinguished perception of the
product in the minds of the potential buyers in terms of its utilities.
2. Branding is a function of marketing that facilitates product differentiation.
3. Advertising is the component of promotion mix being used by the
company “Giving the company power over prices through product
differentiation, innovative advertising and ensured brand loyalty.”
4. Attaining product quality leadership: Besides aiming at profit
maximization as its pricing objective Rastro Inc. seeks to establish a
unique place for its products in the market by offering superior quality
products which can be easily distinguished from its competitors. As a
result, it is able to use differential pricing i.e. fixing up relatively higher
prices for tits products.
Q. 27. Reema, Vibha and Ratna are three women entrepreneurs who are
engaged in dealing with handicraft goods under the brand name
‘Gujkriti’ through a chain of retail outlets at five different places in
delhi. Their outsource all their products from tribal and rural women in
the state of Rajasthan. Reema is of the opinion that in order to increase
the sale of their products, they should advertise about it on
television. But, Ratna is arguing that advertisement expenses will add
to cost of operation. Whereas Vibha is insisting that they should set up
an online portal to market their products across the globe.
1. Identify the tool of promotion being taken into consideration by

Reema by quoting lines from the paragraph.
2. How is the channel of distribution being suggested by Vibha
different from the channel of distribution being used by them
presently?
3. Do you think that Ratna is justified in here argument that
advertisement expenses will add to cost of operations?
Ans.
1. The tool of promotion being taken into consideration by Reema is

advertising. (Reema is of the opinion that in order to increase the sale of
their products, they should advertise about it on television.)
2. Vibha is insisting that they should set up an online portal to market their
products across the globe i.e. adopting direct marketing or zero-level
channel (manufacturer – consumer). Whereas at present they are using
indirect channels of distribution i.e. one level channel (manufacturer –
retailer – consumer) by operating through a chain of retail outlets at five
different places in Delhi.
3. No, Ratna is not fully justified in her argument although advertising as a
tool of promotion is often criticized on the ground that it adds to the cost
of distribution which is passed on to the consumers in the form of higher
prices. Therefore, it increases the burden on the consumers. But, this
argument is not entirely true because advertisements help to increase
demand for the product. In order to meet the increased demand the
production levels have to be raised. As a result, the business is able to
reap advantage of economies of scale and eventually the cost of
production per unit comes down and benefits the buyers as the product’s
prices are reduced consequently.
Q. 28. Arvind is planning to start a company manufacturing room

fresheners. He intends to use natural fruit extracts for adding fragrance
to them. He estimates an investment of Rs. 20 crores to set up the
factory. As it is difficult for him to raise the entire capital amount alone,
he gives a partnership offer to his school friend, Sanjay who is an angel
investor. Sanjay, after being convinced about the feasibility of the
project, accepts his offer. Sanjay tells Arvind that they should also
focus on other important decisions related to the product ‘room
fresheners’ besides deciding about its features, variety and
quality. Branding is one of the important such decision.
1. Name any other two important decisions related to a product.

2. Why is branding considered as an important function by the
marketers? Give any one reason in support of your answer.
3. State any four features of a good brand name.
Ans.
1. Labeling and Packaging are the two important decisions related to a

product.
2. Branding is considered to be a very important decision by the marketers
because it facilitates product differentiation. Through branding the
prospective buyers are able to bring about a distinction between a
company product and its substitutes available in the market. This helps
the company to obtain a desirable market share.
3. The four features of a good brand name are stated below:
1. The brand name should be short, easy to pronounce, spell, recognize

and remember e.g., Ponds.
2. A brand should suggest the product’s benefits and qualities e.g.Sunsilk.
3. A brand name should be distinctive e.g., Lotus.
4. It should be capable of being registered and protected legally.
Q. 29. Suraj is a small entrepreneur involved in the manufacturing of

hair wax. He finds that cost of production of 100 gm of hair wax is Rs.
250. He has decided to keep a margin of 15% as profit moreover, he has
assessed that there is a free competition in this product segment.
1. Identify the function of marketing being performed by Suraj.

2. State briefly the two factors that he is taking into consideration
while performing the function as identified in part (a)
Ans.
1. Pricing is the function of marketing being performed by Suraj.

2. The two factors that he is taking into consideration while performing the
pricing function are as follows.
1. Cost of product:
2. Degree of competition:
Q. 30. After doing a diploma in entrepreneurship, Farihad started his

own confectionary business. He started doing a lot of hard work and
used the recipes taught by his grandmother in various preparations. He
also learnt many recipes from online sites and television
programmes. He decided to keep the price of the products low initially
and also informed his customers about the goodness of the items sold
by them. However, he didn’t mention on the package of each item
weather it contained eggs or not. As a result, vegetarian people became
hesitant in buying things from his shop as they had to verbally inquire
from him about the inclusion of eggs in the preparation of various items.
1. Name the important aspect related to the marketing of products

which has been ignored by Farihad.
2. Explain briefly any free functions performed by the aspect as
identified in part (a).
3. Mention the right of consumer being violated by Farihad.
Ans.
1. The important aspect related to the marketing of products which has

been ignored by Farihad is Labeling.
2. The three important functions performed by labeling are:

3. Enables grading of products:
1. The Right to information is being overlooked by the company in the

above mentioned case. According to the right to information, a consumer
has the right to get complete information about the product he / she
intends to buy including its contents, date of manufacture, date of expiry,
price, quantity, directions for use etc. Also, as per law, it is mandatory
for the marketers to provide complete information about the product /
service to the buyers.
Q. 31. ‘Shudh Hava Ltd.’ is engaged in manufacturing of air conditioners
and desert coolers. The company offers a wide range of products to
meet the requirements of people from varied income groups. Recently
the company has developed a new product, an air purifier that improves
the quality of air by filtering out all allergens and microbes. The
company introduced the product on two variants namely ‘Nano Tech’
and ‘Nano Tech Premium’. In order to persuade people to buy the
product it is offering easy payment options in equal monthly
installments for different time periods. Moreover, every buyer will be
offered ‘scratch a card’ option to win instant gifts like decorative items,
T-shirts etc. the company is also planning to organize competitive
events based on skill and luck in various malls in different cities.
1. Name and explain the ‘type of promotion strategy’ adopted by the

company to boost the sales of air purifiers.
2. Also, identify the various techniques of this promotional strategy
being used by the company by quoting liens from the paragraph.
3. “The company offers a wide range of products to meet the
requirements of people from varied income group.” Name the
relevant consumer right being promoted by the company.
Ans.
1. The type of promotion strategy adopted by the company to boost the

sales of air purifiers is Sales Promotion.
Sales Promotion includes the various types of short term incentives offered
by a marketer to increase the sale of a product or service.
1. The various techniques of sales promotion being used by the company

are listed below:
1. Full finance @ 0% - “It is offering easy payment options in equal monthly

installments for different time periods.”
2. Instant draws and assured gifts – “every buyer will be offered ‘scratch a
card’ option to win instant gifts like decorative items, T-shirts etc.”
3. Contests – “The company is also planning to organize competitive events
based on skill and luck in the various malls in the different cities.”
1. Right to Choose is the consumer right being promoted by the company

Q. 32. Nischay, after completing his masters in computer engineering
decided to start his own business. He visited his uncle Mr. Jaiprakash
who has been running a successful business in web designing. He
shared with Nischay that the main reason for his success in the
business lies in his approach of building web sites according to the
specifications of the clients but also providing continuous online
assistance to them and handling their grievances effectively and doing
all this at a profit. He provides these services at competitive
prices. Anybody interested in getting the web solutions can contact him
through his website. Moreover, whenever the market is sluggish he
tries to create demand by offering short-term incentives to the buyers.
1. Define the term ‘Marketing Management’.

2. Briefly explain the various elements of marketing mix being pursued
by Mr. Jaiprakash by quoting liens from the para.
Ans.
1. Marketing management is “the art and science of choosing target markets

and getting, keeping, and growing customers through creating, delivering,
and communicating superior customer value” – Philip Kotler
2. The various elements of marketing mix being pursued by MR. Jaiprakash
area as follows:
1. Product: “his business is not only restricted to designing web sites

according to the specifications of the clients but also providing
continuous online assistance to them and handling their grievances’
effectively.”
2. Price: “doing all this at a profit. He provides these services at
competitive price.”
3. Place: “Anybody interested in getting the web solutions can contact him
through his website.”
4. Promotion: “Moreover, ,whenever the market is sluggish he tries to create
demand by offering short-term incentives to the buyers.”
Q. 33. In today’s world, through social media, news spread in a
flash. Moreover, if it is bad news, it acquires a speed that is virtually
impossible to stop. Hence, all corporate are more susceptible to a
tarnished image today than in any other day and age. The loss of
goodwill may lead to decreased revenue, loss of clients or suppliers and
fall in market share. Over the year, therefore, most of the companies
have set up a separate department to manage the public opinions about
them. The department works in close coordination with the various
interest groups like consumers, government, suppliers etc. and strives
to handle effectively if any controversies arise.
1. Identify the element of promotion mix being referred to in the above

liens.
2. Briefly explain any three points highlighting the role of this element
of promotion mix as identified in part (a)
Ans.
1. The element of promotion mix being referred to in the above lines is

Public Relations.
1. Public relations helps to create a positive image about the company in

the eyes of various interest holders like consumers, government,
suppliers etc.
2. It helps in launching new products as they may be accepted easily
because of good reputation of business.
3. It helps the business to reinstate itself in wake of controversies or
prejudices etc.
Q. 34. Traditional trade or kriana stores constitute 90% of the FMCG

(fast moving consumer goods) business in India. HUL is the market
leader in FMCG with over 60 lakh outlets. According to industry
estimates, Patanjali products are currently available in two lakh
traditional retail outlets. ‘Availability of the product’ is the single
largest driver of FMCG sales. A shopper research suggests that 30% -
40% consumers shift preference if their favourite brand is not available
at the store.
1. Identify the component of marketing mix being discussed in the

above liens.
2. State the two main decisions related to the concept identified in part
(a)
3. Name the type of channel of distribution adopted by HUL.
Ans.
1. The component of marketing mix being discussed in the above liens is

place / physical distribution.
2. The two main decisions involved in physical distribution are:
1. Physical movement of goods from producers to consumers

2. Choice of channels of distribution
1. Indirect channel of distribution has been adopted by HUL. It is a two

level channel i.e. (Manufacturer – wholesaler – retailer – consumer)
Q. 35. Arun and Rukun are good friends. After doing a fashion
designing course from a reputed institute, they have set up a garment
factory in the rural area of Faridabad to manufacture trendy casual wear
like jeans, T-shirts, shirts etc. under the brand name ‘Swatantra’. They
have employed people from the nearby villages itself in the
factory. Moreover, they wish to sell the products through local retailers
in the villages and also through “Flipkart’.
1. Identify the elements of marketing mix being taken into

consideration by Arun.
2. Name the two methods of marketing adopted by them.
3. State any two values that are being fulfilled by them.
Ans.
1. The elements of marketing mix being taken into consideration by Arun

are product and place.
2. The two methods of marketing adopted by them are both direct and
indirect marketing.
3. Two values that are being fulfilled by the are:
4. Generating employment
5. Raising the standard of living of the people in the village
Q. 36. Yogesh buys a new laptop for his son Mukesh on his birthday
from a company owned retail outlet. After a few months, some parts of
the laptop get damaged in a road accident. Yogesh approaches the
dealer to get the damaged parts replaced with the new ones. But, he is
told that the company does not provide any after sale service to the
customers. Yogesh feels very dissatisfied as a consumer and woes that
he will never buy this companies product ever again.
1. Identify the function of marketing being ignored by the company.

2. As a business advisor, suggest any two services that will be very
effective in enhancing brand loyalty for any such product.
3. Name the appropriate redressal agency that he can approach in case
he decides to file a case against the dealer.
Ans.
1. The function of marketing being ignored by the company is customer

support services.
2. As a business advisor, I would suggest the introduction of the following
services that will be very effective in enhancing brand loyalty for any
such product.
1. Setting up a separate department for handling consumer complaints.

2. Providing 365 days × 24 × 7 online assistance to the buyers for any
maintenance or technical issues.
3. Yogesh can file a complaint in the District forum.
Q. 37. Mr. Rajiv wants to buy LCD T.V. for his family. Now he has come
to Jagota Electronics, Model Town, after coming to shop he get
confused. Write the name of promotion tool which has brought him to
the shop and promotion tool needed now. Also write the four points of
importance of latter tool.
Ans. The just promotion tool which brought Rajiv to the shop is
advertisement and the promotion tool required now is personnel selling.
Q. 38. Mr. Rajiv, the sales executive of ABC Ltd. possess good
marketing techniques, his techniques involve oral presentation of
message, convincing the customer with face to face interaction, etc.
Ans.
1. Name the element of marketing mix under which the above technique fall.
2. Identify the element used by Rajiv.
3. Give any three merits of that technique:
1. Promotion
2. Personal Selling
3. Merits of Personal Selling
Q. 39. ITC started its business with Jobaico Industry later on its entered
in Hotel Industry, Consumer goods industry, stationery, etc. ITC assured
quality to customer and kept company’s name as its identity. This help
the customers in product identification and hence ensured quality. It
also built up their confidence and help in increasing their level of
satisfaction.
1. Name the element of marketing mix referred in above para.

2. Name the other elements of marketing mix.
3. Name the concept which assure quality and help in identification of
product.
4. Identify the value emphasized by ITC.
Ans.
1. Product Mix.
2. Other elements: Price mix, Place mix, Promotion mix.
3. Concept which help in identifying the product and assure quality is
branding.
4. (a) Value of supplying quality product.
(b) Value of building confidence among customers.
Q. 40. Ajay was appointed as a marketing head of Alfa Enterprise

manufactures of toothpaste and tooth brushes. His target sale was zero
units a month. Apart from thinking about various channels of
distribution to achieve the target, he himself started visiting schools in
backward areas. He found that even after taking various steps and
counseling some school children had not started brushing their
teeth. He investigated and found that they could not afford to buy
toothbrush and toothpaste. So with due permission the started
donating 200 toothbrush and toothpaste to schools.
1. Identify the channels of distribution Ajay would adapt for

distribution of toothbrush and toothpaste, justify by giving reasons.
2. State any two values which Ajay want to communicate to society.
Ans.
1. The channel of distribution Ajay would adapt is indirect because he is

dealing with consumer goods.
2. Values which Ajay wants to communicate to society are:
1. Charity
2. Concern for underprivileged
3. Hygience
4. Sensitivity towards health.
Q. 41. Nisha, a school bag manufacturer decided to improve the product

for profit maximization and thus added a water bottle holder to the
existing design.
1. Identify the marketing management philosophy adopted by Nisha

and
2. Explain this philosophy on the basis of:
1. Main focus and

2. Means and ends.
Q. 42. Ayesha is manufacturing lunch boxes for school-going

children. To maximize profit she decided to improve the quality and
added a warmer for the lunch boxes. Due to this improvement in the
product, the sale is increasing day by day. Identify and explain the
marketing philosophy involved.
Q. 43. Mansi, a shoe manufacturer for school students, decided to

maximize her profit by producing and distributing at large scale and
thereby reducing the average cost of production:

2. Explain this philosophy on the basis iof:
1. Main focus
2. Means and ends.
Ans. (i) Production concept.

(ii) Give difference,
Q. 44. Vasvi purchased a bottle of pickle from the local grocery
shop. The information provided on the bottle was not clear. She fell
sick on consuming it. She filed a case in the District forum under the
Consumer Protection Act and got the relief.
1. Identify the important aspect neglected by the marketer in the above

case.
OR
Ashima purchased a bottle of tomato-sauce from the local grocery
shop. The information provided on the bottle was not clear. She fell
sick on consuming it. She filed a case in the District Forum under the
Consumer Protection Act and got the relief.
1. Identify the important aspect neglected by the marketer in the above

case.
Ans.
1. The marketer had overlooked the Labelling as it was not done

appropriately for the product.
2. The functions of labeling are detailed below:

Q. 45. Radha found a worm crawling out of newly opened tetra pack of a
juice manufactured by a reputed company, Zest, Ltd. She went back to
the shopkeeper from whom the pack was purchased who directed her to
call up the customer care centre. When all her efforts failed, she went
to consumer activist group to seek help. The group decided to help
Radha and take measures to impose restrictions on the sale of the
firm’s products of the particular batch and urge customers to refrain
from buying the products of the company. Zest Ltd. lost its image n the
market. The CEO gives the responsibility of bringing back the lost
1. Identify the concept of Marketing Management which will help the

Manager getting the firm out of the above crisis.
2. Also explain the role of above identified concept by stating any two
points.
Ans.
1. Public Relations.
2. Role of public relations can be discussed with respect to the functions
which the department performs: (any two)
1. Press relations
2. Product publicity
3. Corporate communication
4. Lobbying.
5. Counseling.
BUSINESS STUDIES
10 QUESTIONS FOR 1,3,4,5 AND 6 MARKS EACH
NAME OF CHAPTER: PLANNING
PREPARED BY: N.G.MAJI-No.2 Kanchrapara
S.N QUESTION MARKS

1 Name the type of plan in which expected results are expressed in numerical term 1
2 Name any two external factors due to which planning may not work. 1
3 MC Donald’s Co. Does not give its franchise to any other co. which is running food business. this is 1
related to which type of plan?
4 In which step of planning process the planner make predictions and assumptions regarding future? 1
5 In which type of plan the sequence of activities to complete a job is determined 1
6 Name the type of plan in which the moves of competitors is considered 1
7 A company needs a detailed plan for its new project ‘construction of a shopping mall’ what type of 1
plan is it?
8 The planning function of management is conducted at which level of management? 1
9 Planning strangulates the initiative of the employees and compels them to work in an inflexible 1
manner”. What does it imply?
10 It helps the manager to look into future and make a choice amount various alternative courses of 1
action enumerate the importance of planning indicate here.
11 How planning reduces risk of uncertainty? 3

12 Zyesha Ltd. is a company which manufactures leather bags. The CEO of the company 3
wants to increase their sales and earn more profits. The consulted with a management
consultant who suggested the top management of the company to work hard in thinking
about the future in making business prediction and achieve the targets since the business
environment keeps on changing whether in terms of technological improvement, shifts in
consumer preferences or entry of new competitors in the market.
1. Identify and state the concept of management discussed in the para.
2. State the characteristic feature of business environment highlighted in the above

para.
13 Palvinder, is working as a supervisor in Alpha Ltd. To achieve the target he wants to try a 3
new method and different way of allocating the work. His superior did not permit him and
forced him to do the work strictly as per the plan.
(i) Name the limitation of planning indicated in above case.
(ii) Name the value overlooks by Palvinder’s superior.
14 Alpha Ltd. spent a lot of money to hire specialized people for framing their plans and 3
collecting important facts from environment. The company cut done their cost by cancelling
the employee’s trip for recreation.
(i) Name the limitation of planning mentioned in above para.
(ii) Name the value overlook by management.
15 ‘Natural disaster like floods in Gujarat has been responsible for failure of production and 3
sales plans of Jindal Textile Industry.’ Which limitation of planning is highlighted in the
given statement? State any three such limitations.
16 How does planning provide direction? (Any Three) 3
17 Planning strangulates the initiative of the employees and compels them to work in an inflexible 3
manner” Discuss.
18 Planning ensures clarity in thoughts and actions, works is carried on smoothly without interruptions. 3
Which importance of planning is mentioned here? State any two other importances.
19 It helps the manager to look into future and make a choice amount various alternative courses of 3
action enumerate the importance of planning indicate here.
20 Planning lays down the base for other functions of management which feature of planning is 3
Highlighted here? Explain.
21 ABC Ltd. has a plan of increasing profits by 20%. It has devoted a lot of time and money to 4
this plan. But the competition starts increasing, so it could not change its plan to b eat its
competitors because huge amount of money had already been devoted to the pre-decided
plan. It caused losses to the company.
Explain any two limitations of planning highlighted in the above case. Also, quote the lines
from
it.
22 In ‘Chak De India’ movie, Shahrukh Khan becomes the coach of the girls’ hockey team. He 4
knows that he has to prepare the girls for the international hockey matches and bring the
world cup after winning. For this he prepares a long-team plan and thinks the ways how to
bet the competitors. He coaches the girls to play in different ways like defensive, offensive,
etc. at the outset of a match he explains who will open the match, and how the ball will be
passed by one player to another step by step.
Identify four types of plan that are highlighted in the above case, quoting the lines from it.
23 An electronic company is facing a problem of declining market share due to increased 4

competition from other new and existing players in the market. Its competitors are
introducing lower price models for mass consumers who are price sensitive. For quality
conscious consumers, company is introducing new model LED TV and DVD players with
added features and new technological advancements. For this, the company raises extra
funds Rs. 5 crore form banks.
Name the type of plan the company is preparing. State the steps which the company
follows to implement this plan quoting the line from the above para.
24 The management of ABC Ltd. set up the target of selling 10,000 units per week and made 4
all their plans based on this target. But due to change in technology adapted by
competitors who reduced their cost, the ABC Ltd. could not achieve their target.
(i) Identify the limitation of planning discussed in the above para.
(ii) State any other two limitations.
25 ABC Ltd. announced a plan nobody would smoke in the organization premises and they 4
further added that certain penalty will be imposed on employees, overlooking this.
(i) Name the type of plan related to above para.
(ii) Name the feature of that plan.
(iii) Name the values emphasized by the company.
26 Alpha Ltd. has a plan of increasing profit by 20%. The company spent lot of time and 4
money to frame and implement this plan. The competition starts increasing, so it could not
change its plan to beat its competitors because huge amount of money is already
spent. State any two limitations of planning.
27 Planning is an activity which enables a manager to look ahead and anticipate changes. Mention the 4
Benefit of planning highlighted here.
28 “Planning involves choice “Elaborate 4
29 How does planning create rigidity? Explain. 4

30 Does planning help eliminating risk? Explain. 4
31 Jitendra a Btech graqduate decided to start a business of play school furniture and he aimed it 5
coverin 25% of the market within the year. He expected a growth of 200% in the number of
competitors in the market and change in design and fashion of such products.
He involved his designer friend Juhi and CA friend Raghu as partners and the marketing manager of
his firm in working out a course of action to achieve success.but after a year he could achieve only
50% of his target.
a) Which sentence(s) of the case highlights the function of management?
b) Identify the function also.

c) Why the firm failed to achieve it target inspite of having a fix target and course of
action?
32 Suhasini a home science graduate from a reputed college has recently done a cookery 5
course. She wished to start her own venture with a goal to provide ‘health food’ at
reasonable price. She discussed her idea with her teacher (|mentor) who encouraged
her. After analyzing various options for starting her business venture, they shortlisted the
option to sell readymade and ‘ready to make’ vegetable shakes and sattu milk
shakes. Then they both weighed the pros and cons of both the shortlisted optoins.
1. Name the function of management being discussed above and give any one of its
characteristics.
2. Also briefly discuss any three limitations the function discussed in the case.
33 Arush joins as a sales manager of a company dealing in naturotherapy produces. Being 5

proficient in his work, he knew that without good planning he will not be able to organise,
direct, control or perform any of the other managerial functions efficiently and
effectively. Only on the basis of sales forecasting, he would assist in the preparation of the
annual plans for its production and sales. Besides, he will have to prepare sales plans
regularly on weekly, monthly, quarterly and half yearly basis. While preparing the sales
forecasts, he undertakes intellectual thinking involving foresight, visualization and issued
judgement rather than wishful thinking or guess work. Most importantly, all these planning
activities will be meaningful only if they will coincide with the purpose for which the
business is being carried out.
In context of the above case, identify the various features of planning highlighted in the
above paragraph by quoting lines from it.
34 A reputed car manufacturing company in NCR is facing the problem of decline in its market 5
share due to its internal mismanagement. Therefore it has planned to increase its
production capacity at its Gurgaon plant by manufacturing low price eco-friendly cars for
price sensitive consumers and introducing new models with added features for quality
conscious consumers. For this the company issues shares to the public and raises Rs. 150
crore.
The company purchases more machinery required to increase production.
1. Identify the type of plan the company is preparing.

2. State the steps involved in this plan quoting the lines from the above case.
3. State any one value which the company wants to communicate to the society.
35 . ‘Agile Ltd.’ is a well-known automobile manufacturing company in India. The company 5

plans to increase the sale of its sedan cars by 20% in the next quarter. In order to achieve
the desired target, the marketing team of the company considers the impact of policy of the
government towards diesel vehicles and the level of competition in this segment of
cars. They explore the various available option like offering more discount to dealers and
customers, providing more customer friendly finance options, lucky draws on test drives,
increasing advertising, offering more of free accessories on the purchase of the car, etc. a
thorough analysis of the various available options is done keeping in view the relative
viability of each option. The company decides to pursue the option of offering more
discount to dealers and customers in order to boost the sale of sedan cars. In order to
implement the plan,, they determine the various discount packages and communicate the
same to their product dealers. To make the prospective consumers aware about the new
available benefits, advertisements are made through various sources of print and electronic
media. The market analysts of the company keep a close watch on the revenue from the
sedan cars to study the effect of new initiatives by the company to promote its sales.
1. Name the function of management described in the above paragraph.

2. Identify and explain the various steps involved in process the function of management
as identified in part (a) by quoting lines from the paragraph.
36 State any five features of Planning. 5

37 Explain policy and Procedure as types of planning. 5
38 State any three advantages and two disadvantages of planning. 5
39 Explain the steps involved in the process of planning. 5
40 State any five point which highlight the importance of planning. 5
41 A company is manufacturing garments. The manager wants to increase profits by 6
purchasing new high speed machines or increasing the sale price or using waste material
in manufacturing stuffed toys.
He decided that ‘using waste material’ to increase the profit is the best solution for him.
1. Identify the concept of management involved.

2. Mention the steps involved in the above process by quoting the line from the question.
To complete the process of the concept identified in (a), what two next steps does the
manager have to take? Explain.
42 Two year ago, Madhu completed her degree in food technology. She worked for sometime 6
in a company that manufactured chutneys, pickles and murabbas. She was not happy in
the company and decided to have her own organic food processing unit for the same. She
set the objectives and the targets and formulated an action plan to achieve the same.
One of her objectives was to earn 10% profit on the amount invested in the first year. It was
decided that raw materials like fruits, vegetables, spices, etc. will be purchased on three
months credit from farmers cultivating only organic crops. She also decided to follow the
steps required for marketing of the products through her own outlets. She appointed
Mohan as the Production Manager who decided that exact manner in which the production
activities were to be carried out. Mohan also prepared a statement showing the number of
workers that will be required in the factory throughout the year. Madhu informed Mohan
about her area wise sales target for different products for the forthcoming quarter. While
working on the production table, a penalty of Rs. 100 per day for not wearing caps, gloves
and apron was announced.
Quoting lines from the above paragraph, identify and explain the different types of plans
discussed.
43 During partition, Kundan Lal came to Mumbai from Lahore with a lot of wealth. Keeping in 6
view his innate ability to visualize and create things, he decided to work as a junior
assistant in a film studio. Over a period of time, as he gained experience and his work was
well acclaimed, he decided to set up his own film studio. Initially he was himself looking
into every aspect of the business, but as his work increased manifolds and his own
productivity reduced with age, he hired Jummy as manager. Jimmy being immature in his
work started giving bookings for the studio haphazardly. He would never decide anything
in advance or do any kind of forecasting of events. This led to lot of confusions and
conflicts. As a result, the goodwill earned by Kundan Lal over the years began to decline.
1. Identify and explain the function of management which Jimmy failed to perform by
quoting lines form the paragraph.
2. Describe briefly any two features of the function of management as identified in part
(a).
44 After completing a diploma in Bakery and Patisserie, Payal sets up a small outlet at Goa 6
Airport to provide a healthy food option to the travellers. To begin with, she has decided to
sell five types of patties, three type of pizzas and low sugar muffins in four flavours. Thus,
by deviding in advance what to do and how to do, she is able to reduce the risk of
uncertainty and avoid overlapping and wasteful activities. But sometimes her planning
does not work due to some unavoidable circumstances like cancellation of flights due to
bad weather conditions, government alert etc. which adversely affects her clientele.
1. Identify and explain the points highlighting the importance of planning mentioned in
the above paragraph.
2. Describe briefly the limitation of planning which adversely affects Payal’s business.
45 Flipkart is an e-commerce company founded in the year 2007 by Sachin Bansal and Binny 6
Bansal. The company is registered in Singapore, but has its headquarters in Bangaluru,
India. The company seeks to increase traffic (more clicks on their products) and boost
sales and revenue through integration of Mobile Apps, Display, Pay Per Click and search
Engine Optimization. In order to dispel the feat of people related to shopping online,
Flipkart was the first company to implement to popular ‘Cash on Delivery’ facility. All the
products sold by the company under a particular category may have different
return/replacement period. Flipkart allows multiple payment options such as cash on
delivery, credit or debit card transactions, net banking, e-gift voucher and card swipe on
delivery. The company operates both ways when an order is received. The products for
which it holds inventory are dispatched by it directly. For the products they do not store in
inventory, they just send the order received by them to the supplier who ships it. The
company plans to spend about Rs. 75 crores on e-Commerce advertising in the year
2016. Flipkart reserves the right to terminate your membership and/or refuse to provide
you with access to the website if it is brought to Flipkart’s notice or if it iis discovered that
you are under the age of 18 years. This is because as per the Indian contract Act, 1872,
the minors, un-discharged insolvents, etc. are not eligible to use the website.
In context of the above case, identify and explain the different types of plans being used by
Flipkart by quoting lines the paragraph.
46 Lira Ltd. is a company manufacturing designer socks. While making its plan, the company 6
takes into consideration the business environment. It constantly adapt itself to changes in
environment by making changes in its plan. However, it becomes difficult for the managers
of the company to accurately foresee future trends in the environment. Competition in the
market upsets its financial plans; then sales targets have to be revise3d and, accordingly
cash budgets also need to be modified since they are based on sales figures.
1. What characteristic features of business environment are highlighted in the above

lines? State any two.
2. State and explain the limitation of planning highlighted in the above lines.
Identify any two types of plan mentioned in the above pare by quoting the lines from
it.
47 Pan Masala and Sons is a manufacturer of tobacco products. It decided to increase profits 6
by at least 20% in the next quarter. It has many options:
1. To increase the working hours of labourers without additional payment.

2. To employ children from the local community.
3. To sell its products outside the schools and colleges.
It opted the (ii) and (iii) options to achieve the target.
1. Identify the function of management described in the above para.

2. State the steps of the process involved in the function of management identified in (a)
quoting the lines from the above para.
State any two values neglected by the organisation

48 How does planning help co-ordination, facilitate decision making and promotes creativity? 6
49 Though planning is an important tool of management yet it is not remedy for all types of problems.Do 6
you agree with this statement? Give any five reasons to support your answer.
50 Explain why planning is necessary for effective management. 6
STAFFING
1 MARKS QUESTIONS
1. It is described as the managerial function of filling and keeping filled the positions in the
organization structure. Which function of management is referred here?
Ans: Staffing
2. It is recruitment, selection, development, utilization, compensation and motivation of
human resources of the organization. Give the name of the concept mentioned here.
Ans: Human Resource Management.
3. It implies introducing the selected employee to other employees and familiarizing him with
the rules and policies of the organization. Name it.
Ans: Orientation.
4. What is the next step after selection?
Ans: Placement and Orientation.
5. It seeks to attract suitable applicants to apply for available jobs. Give the term.
Ans: Recruitment.
6. These are run by the Government as a source of recruitment for unskilled and skilled
operative jobs. What is being referred here?
Ans: Employment exchanges.
7. Which type of personnel is recruited by management consultancy firms?
Ans: Management consultancy firms help the organization to recruit technical, professional
and managerial personnel.
8. Harish is working as a supervisor in a company. Due to his hard work he is promoted to
the post of Production Manager. Now the post of supervisor is vacant and no one can be
transferred or promoted to this post. Name the source of recruitment the company will use to
fill up this post. State any three advantages of using this source of recruitment.
Ans: The Company will use external source of recruitment.
Advantages (with explanation):
i. Fresh talent ii. Wider choice iii. Qualified personnel
9. It is the process of identifying and choosing the best person out of a number of prospective
candidates for a job. Name it.
Ans: Selection.
10. Name the test which is used as a measure of individual’s potential for learning new skills.
Ans: Aptitude test.
11. Why is induction is not required in the internal source of recruitment.
Ans. Because employees are already well familiar with the organization.
12. State the meaning of placement as a staffing function.
Ans. Placement: Once the job offer has been accepted by the selected candidate he placed on
this new job. Proper placement of an employee reduces absenteeism Placement therefore
refers to placing the right person on the right job.
13. Name two websites which are commonly visited both by the prospective employees and
the organizations searching for suitable people.
Ans. www.naukari.com; www.jobstreet.com.
14. It is a test used for selection of employees to measure individual’s potential for learning
new skills. Mention its name and explain two other tests also.
Ans: Aptitude.
Other Tests: a) Personality Test: These tests are used judge the psychological makeup of a
person.
15. Which of type of training is a joint programme of training in which educational
institutions and business firms cooperate?
Ans: Internship training.
1
3 MARKS QUESTIONS
1.“There is no need of human resource planning as so many people are available in the
market these days.” Do you agree with this statement? Give reasons.
Ans. No, I don’t agree with this statement. There is a great need of man power planning due
to the following reasons. :
1. Organisation needs man power planning: To meet the demands of changing job
requirements due to change of technology.
2. Man power requires forecasting: Provides a basis of recruitment, transfer and

training employees.
2. ‘Internal sources of recruitment are better than external sources of recruitment.’ Do you
agree with this statement? Give any two reasons in support of your answer.
Ans. Yes, I agree with this statement.
Advantages: 1. It will assist in developing high moral of employees.
2. The candidates already working in the organization can be evaluated more economically as
the expenditure is relatively less.
3. What do you mean by Staffing? Enumerate any two features of staffing function of
management?
Ans. Staffing is a managerial function of placing the right job. Staffing is concerned with
determining the man power requirement of enterprise and includes function like recruitment
selection,training,growth, development and performance appraisal of employees.
Features
1It deals with human resources
2 It is concerned with helping employees to develop their abilities.
4. Explain Vestibule Training?
Ans. Under those methods separate Training centre to setup to give Training to the New
Employs. Actual work Environment are created in that centre and employs used the same
materialEquipmentetc.which they use while doing the actual Job. This method is generally
use critical equipment machinery
are required to handle by worker.
5. “Selection is a negative process” explain.
2
Ans. Selection is the process of selecting the most potential candidate from among those who
had applied for the Job, by going through the process of rejection of relatively unsuitable
candidates. Hence it is referred to negative process.
6. Explain the concept of “Job Rotation”?
Ans. Under this method of training, an individual is transferred from one Job to another or
from one department to another in a planned manner. It is suitable for new entrants. So that
they can interact with other employees. Trainees cultivate specialized knowledge and skills of
the entire department
7.What do you mean by off the job method of training? Enumerate various method of off the
job training?
Ans. Off the job methods of training refers to those methods under which an individual is
provided training away from the work place or in the other words it means learning before
doing.
Methods
1 Class room lectures
2 Films
3 Case study
4 Computer modeling.
8. State three advantages of External sources of recreuitment
Ans. 1.Fresh Talent : The entry of fresh talent into the organisation.
2.Wider choice : The external sources provide a wider choice of personnel to choose from.
3.Qualified personnel : Required qualifications are available for the external sources.
4.Competitive Spirit : Competitive spirits is available by external source.
9. State the limitations of External sources of recruitment.
Ans. Limitations
(i)Dissatisfaction among existing Employees.
(ii)Costly process: It is costly process. Expenses an advertising, conducting test.
(iii)Lengthy Process: It is very long process
10. Discuss “Apprenticeship” as a method of training.
Ans. Apprenticeship programme training : The workers seeking to enter skilled job (e.g.,
plumbers, electricians or iron workers, etc.) are sent for apprenticeship training
programme which is an on-the-job method of training.
In the Apprenticeship Programme, a master worker or a trainer is appointed who guides the
worker or learner regarding the skill of job. The master worker performs the job and the
trainee
(learner) observes him performing. When the learner learns all the skills, then slowly he starts
taking up the job step by step and master worker becomes the observer.
When the trainee becomes perfect in doing the job, the master worker goes and the trainee
gets
full charge of job, the master worker goes and the trainee gets full charge of job position.
· Generally, the time period, for apprenticeship programmed may very from 2 to 5 years.
· During the apprenticeship period, the trainee is paid less than a fully qualified worker
4. MARKS QUESTIONS
3
1.“The present day human resource management is a broader concept.” Explain.
Ans. The present day human resource management includes the following activites:
a. Helps the organization to achieve its goals
b .Employees the skills and knowledge of employees efficiently and effectively.
C .Enhance job satisfaction.
d. Maintain high morale and good human relations within the organization.
2. Distinguish between training and development.
Ans.
Training Development
It is used to add skills abilities of Development involves improving the

the workers capacities and capability of the managerial
personnel.
The term training is generally It is associated with the over all growth of
used to impart specific skills the executives.
among operative workers
it is to enable the employee to do It is to enable the overall growth of the

the job better employee
It is a job oriented process It is a carrier oriented process.
3. Hamish is working as a supervisor in a company. Due to his hard work he is promoted to

the post of Production Manager. Now the post of supervisor is vacant and no one can be
transferred or promoted to this post. Name the source of recruitment the company will use to
fill up this post. State any three advantages of using this source of recruitment.
Ans. The Company will use external source of recruitment.
Advantages: i. Fresh talent ii. Wider choice iii. Qualified personnel
4. Discuss any two advantages of training and development to the organization and to the
employees?
Ans.. Advantages to the Organization:-
(1) Helps in increasing productivity of workers and thus leads to increase in profit.
(2) Makes effective response to dynamic environment.
Advantages to the employees:-
(1) Employs become more efficient in handling machine and thus chances of accidents are
minimized.
(2) Training increases skills and knowledge of an employs and thus provides batter carrier
prospects to the employs.
5. Why is staffing considered an important function of management in all types of
organisation? .Give any four reasons
Ans. (i) Fulfilling jobs with competent personnel
(ii) Better performance
4
(iii) Expansion and Growth.
(iv) Optimum utilization of human resources
6. Ramesh is working under the guidance of Harish, a carpenter. For the last three years to
learn the different skills of this job. Name and explain the method of training Ramesh is
Undergoing.
Ans. “Apprenticeship Training -”. It refers to that training method where the trainee is put
under the guidance of an expert to acquire higher level of skill. Generally electricians,
plumbers and iron workers are required to undergo this training
7. Max industries wants to hire a staff for its chemical division. The personnel Department
lists out following methods of recruitment
(a) Using naukri.com to search for prospective candidates.
(b) Consider voluntary applications received earlier from various job seekers. Identify
the source of recruitment and explain it.
Ans. (a) Web Publishing. These days internet has become an important medium for
recruitment. Special websites have been created for the purpose of recruitment
through internet
(a) Casual callers: In many reputed organizations some really talented and brilliant
people continue sending their applications from time to time with hope that whenever
some need arises, they may come across an opportunity for appointment.
8. “Some learning Opportunities are designed and delivered to improve skills and abilities
of employees, whereas some other are designed to help in the growth of individuals in
all respects”. Identify and explain the two concepts explained above.
Ans. The two concepts are: - Training and Development.
Training and Development-Training refers to the process by which the aptitudes, skills
and abilities of employees to perform specific jobs are improved.
Development is the process by which the employees acquire skills and competences for
handling higher jobs in future.
9. Manu, the chief manager in a company using highly sophisticated machines and
equipments, wants that every employee should be fully trained before using the machines
and equipments. Suggest and describe the best method of training that Manu can used
for training for its employees.
Ans. The best method of training can be used here is “Vestibule Training”.
Under this method, with a view to imparting training to new employees, a separate training
center is set up. An experienced and trained trainer is appointed as an in charge of this
centre. Machines, tools and other equipments are so arranged in this centre as to present
a look of a workshop.
10. Explain Internship and Induction training methods?
Ans. Internship: It is a practical training of theoretical knowledge. Selected candidates carry
on regular studies for prescribed period and also work in some factory or office to acquire
practical knowledge.
Induction: It means introducing the selected employees to his superiors, subordinates
and colleagues and familiarizing him with the rules and policies of the organization.
5. MARKS QUESTIONS
1.Describe briefly the steps involved in the process of staffing.

5
Ans. Man power Planning: The organization estimate the total man power requirement by
considering all the departments of the organization.
Recruitment: The second step after man power planning is recruitment and selection.
Recruitment aims at attracting job applicants preposition in the organization.
Selection: Selection consists of making choice among applicants.
Placement and Orientation: It refers to placing the right person on the right job.
Induction: it is concerned with the process of introduction of a new employee to the

organization.
Training and development: It is more accurately considered as a process of skill formation

and behavioral change.
Performance appraisal
Promotion and career planning
Compensation
2. What do you meant by ‘on the job training’? Explain any three methods of ‘off the job’
training.
Ans. A) On the job training: Learning by doing by the subordinates under the
supervision of superiors at the actual work place.
B) Methods: i. Apprenticeship Programme: It is designed for higher levels of skills.
It ensures on the job training and is explained with classroom instruction in a particular
subject.
ii. Coaching: At lower levels the coaching may simply consist of trainee observing his
supervisor so as to develop the basic skills necessary for operating machine.
iii. Internship training: Technical institutes and business organizations jointly impart training
to their members.
iv. Job rotation: It is a method of training which serves the purpose of employees’
development through provision of diversified training.
4. Blue Heavens Ltd Purchased a new Hi-tech machine From Germany for manufacturing
high quality auto components in an effective manner. But during the production process,
the manager observed that the quality of production was not as per standard. On
investigation it was found that there was lack of knowledge amongst the employees of
using hi-tech machines. So, frequent visit of engineers was required from Germany.
Suggest what measures can be done to develop the skills and abilities of employees of
producing hi-tech machines.
Ans. Training of employees.

Advantages of Training.
6
1. Increase in capacity and efficiency: Through training, one learns the art of doing
a special job methodically. It increases the skill and efficiency of the employee
2. Increase in market value: Trained employees have a better market value. Increased
market value means that other organization is always willing to employ trained
personnel at higher remuneration.
3. Fewer accidents: Reduction of accidents is not only beneficial to the organization,

it also protects the life of the workers. By learning the art of operating the machine
the rate of accident can be minimized.
4. Job satisfaction: In the life of an employee, job satisfaction is most important. It
means that whatever job he is performing, he should be fully satisfied with it.
5. Difference between recruitment and selection.
Ans.
Basis Recruitment Selection

1.meaning It is process of searching and It is process of staffing which
motivating candidates to apply for a job rejects unsuitable candidates
2.sequence It proceeds selection is the process of It follows the steps of requirement
staffing in process of staffing .
3.scope It is restricted to the expense of receipt
It includes sorting of the candidates
of application .
4.purpose The basic purpose is to create a large The basic purpose is to eliminate as
pool of applicants for the job. many candidates as possible until
the most suitable candidates get
finalized.
5.positive/negati Recruitment is a positive process in the Selection is negative process in the
ve process sense that more and more applicants sense that more application are
are sought to be attracted. rejected than selected.
6. The workers of 'Vyam Ltd.' are unable to work on new and hi-tech machines imported by
the company to fulfill the increased demand. Therefore, the workers are seeking extra
guidance from the supervisor. The supervisor is overburdened with the frequent calls of
workers. Suggest how the supervisor, by increasing the skills and knowledge of workers, can
make them handle their work independently? Also state any three benefits that the workers
will derive by the decision of the supervisor.
Ans. Training of employees/ Vestibule training/ On the job training. Benefits the workers will
derive by the decision of the supervisor:
(a) It helps in promotion and career growth due to improved skills and knowledge.
(b) It helps them to earn more due to improved performance.
(c) It reduces accidents as the employees are more efficient to handle machines.
(d) It increases the morale of the employees as the employees are more satisfied
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7. A company was manufacturing 'LED bulbs' which were in great demand. It was found that
the target of producing 300 bulbs a day was not met by the employees. On analysis, it was
found that the workers were not at fault. Due to electricity failure and shortage of workers,
the company was not able to achieve the set targets and alternative arrangements were
needed. To meet the increased demand, the company assessed that approximately 88
additional workers were required out of which 8 would work as heads of different
departments and 10 would work as subordinates under each head. The required qualifications
and job specifications were also enlisted. It was also decided that necessary relaxation should
be given to encourage women, persons from backward and rural areas and persons with
special abilities to assume responsible positions in the organisation. All efforts were made to
match the ability of the applicants with the nature of work. (a) Identify the functions of
management discussed above. (b) State the two steps in the process of each function
discussed in the above para. (c) List any two values which the company wants to
Ans. (a) Staffing and controlling.
(b) Steps in Staffing:
(i) Estimating manpower requirements which involves knowing how many persons are
needed and of what type. ‘To meet the increased demand, the company assessed that ….
subordinates under each head’.
(ii) Recruitment which involves searching for prospective employees and stimulating them to
apply for jobs in the organisation. (IF AN EXAMINEE HAS ONLY IDENTIFIED
‘ESTIMATING MANPOWER REQUIREMENTS’ AS A STEP IN THE STAFFING
PROCESS, FULL CREDIT IS TO BE GIVEN) Steps in controlling: (Any two)
(i) Comparison of actual performance with the standards which would reveal the deviation
between actual and desired results. ‘It was found that the target of producing 300 bulbs a day
was not met by the employees’.
(ii) Analysing deviations which would help to find out the causes of deviation. On analysis, it
was found that the workers were not at fault….alternative arrangements were needed.
(iii) Taking corrective action, if required. To meet the increased demand, the company
assessed that approximately ….as subordinates under each head.
(c) Values which the company wants to communicate to the society: (Any two)
(i) Using environment friendly methods of production.
(ii) Women empowerment.
(iii) Upliftment of underprivileged sections of the society. (or any other correct value)
8. Which source of recruitment is needed to bring new blood in the organization ? Explain
any three advantages & any two limitations of this source.
Ans. External Source:
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Advantages: a) Wider Choice (b) Fresh Talent (c) Qualified candidates (d) Increases
competition Limitations: a) Lengthy & Expensive b) Discouragement to present employees.
(All points to be explained).
9. Zenith Ltd. is a highly reputed company and many people wanted to join this
company. The employees of this organization are very happy and they discussed
how they came in contact with this organization.
Aman said that he was introduced by the present Sales manager, Mr. John.
Benu said that he had applied through the newspaper and was appointed as H.R.
John.
Vaibhav said that he was neither related to any of the employee of the organization
nor there was any advertisement in the newspaper even then he was directly called
from HM Ahmedabad from where he was about to complete his MBA.
1. The above discussion is indicating an important function of

management. Name the function of management.
2. The management function identified in part (a) follows a particular
process. Explain the step of this process which is being discussed in the
above para.
Ans. (a) Staffing.

(b) Recruitment – It is defined as the process of researching for prospective
employees and stimulating them to apply for jobs in the organization.
Process of Recruitment :
 The various activities involved with the process of recruitment includes
(a) identification of the different sources of labour supply,

(b) assessment of their validity,
(c) choosing the most suitable source or sources, and

(d) inviting applications from the prospective candidates, for the vacancies
10. Ms. Neeta recently completed her Post-Graduate Diploma in Human

Resource Management. A few months from now a large steel manufacturing
company appointed her as its Human Resource Manager. As of now, the
company employs 800 persons and has an expansion plan in hand which may
require another 200 persons for various types of additional requirements. Ms.
Neeta has been given complete charge of the company’s Human Resource
Department.
(a) State any two functions she must be performing.
(b) What problems do you foresee in her job? What steps is she going to take to
perform her job efficiently?
Ans..
1. Ms. Neeta is must be performing these functions as a HR manager:
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1. Analysing jobs and collecting information about jobs to prepare job
descriptions.
2. Developing compensation and incentive plans
1. Since the company has an expansion plan requiring 200 more persons for
various types of additional requirements, Ms. Neeta will have to recruit and
select those persons from outside the organization. For this she will have to
invite candidates to apply for the jobs through external sources of recruitment
such s advertisements, placement agencies, recommendations of employees,
etc.
Then, Ms. Neeta will have to arrange for various types of training (e.g.
apprenticeship training, vestibule training, etc.) of the employees to make them
efficient.
She will have to handle workers’ grievances and complaints and maintain labour
relations.
She will have to provide for social security and welfare of employees.
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6. MARKS QUESTIONS
1.What is meant by ‘Selection’? Explain any five steps involved in the process of
selection of employees.
Ans. Selection is the process of carefully screening the candidates who offer themselves for
appointment so as to choose the most appropriate person for the job.
Steps : 1. The preliminary screening : A brief screening interview is conducted as the first
step in the selection process.
2. Selection test: Each candidate appears for employment test.
3. Employment Interview: Interview is a phase of testing on the basis of face to face

interaction between the interviewer and the applicant.
4. Reference and background checking: Gather more information about the candidates from
indirect personal sources.
5. Selection decision: After candidates process the tests and interview final decision for
selection is made after considering the view of concerned manager.
6. Medical Test: The selection process is not complete without the medical test.
7. Job offer: Letter of appointment mentioning the date by which a candidate has to report on
duty is handed over to the appointee.
8. Contract of employment: It includes various details such as pay, allowances, work rules
etc.
2. What is Staffing? Discuss the importance of staffing.
Ans. Meaning : It is the process of management which is concerned with obtaining and
maintaining a satisfactory and satisfied work force
Importance of Staffing
1. Obtaining competent personnel : Proper staffing helps in discovering and obtaining
competent personnel for various jobs.
2. Higher performance ; Proper staffing ensures higher performance by putting right
person on the right job.
3. Continuous survival and growth : Proper staffing ensures continuous survival
and growth of the enterprise, research & development, innovation.
4. Optimum utilization of human resources : Proper staffing helps to ensure optimum
utilization of human resources. By avoiding over manning, it prevents underutilization
of personnel and high labour costs. At the same time, it avoids disruption of work by
indicating in advance the shortages of personnel.
5. Improve job satisfaction : Proper staffing improves job satisfaction and morale of
employee through objective assessment and fair rewarding of their contribution.
6. Helps in achieving organisaional goals: The efficiency and effectiveness of an
organisation in achieving its goals is determined to a great extent on the competence,
motivation and general effectiveness of its human resources.
Human resources are the foundation of any business. The right people can help a
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business to take it to the top where the wrong people can break the business. With
efficient and competent personnel, the firm can maintain quality products and sell them
profitably.
Conclusion: Staffing function must be performed efficiently by all organizations. If
right kind of employee are not available, it will lead to wastages of materials, time,
efforts and energy, resulting in lower productivity.
It is, therefore, essential that right kind of people must be available in right number at
the right time.
3. What are the steps involved in the staffing process? Explain briefly?
Ans. 1) Enumerating man power requirement: Staffing process begins with the estimation of
man power requirement which means finding out number and type of employees need by the
organisation in future.
2) Recruitment: After man power planning, the manager tries that more and more people
should
apply for the job so that the org. can get more choice and select better candidates.
3) Placement and Orientation: Placement refers to placing the right person on the right job for
which he is selected.Orientation refers to introducing the new employees with the existing
employees.
4) Selection refers to choosing the most suitable candidate to fill the vacant job position. It is
a negative process because a number of candidates are rejected under it.
5) Training and Development: The process of training helps to improve the job knowledge
and skill of the employees. Training and Development not only motivate the employees but
these improve efficiency of work also.
6) Performance Appraisal: At this step the capability of the employees is judged and for that
his actual work performance is compared with the work assigned to him.
Performance and career planning: It is a process through which employees get better salary,
status, position and also get promotion to higher post.
7) Compensation: For deciding the compensation the works are evaluated. Compensation
must be reasonable and related with the work.
4. Mr. Rajeev is working as a Personnel Manager in a company of Delhi. Although he is not
well educated, he is an experienced person. Before this, he has worked on this post in three
large companies. His intention is always in promoting an efficient employee to a higher post
and in demoting inefficient one to a lower vacant post:
State on what source of recruitment is Mr. Rajeev concentrating. What are the benefits of
which the company is depriving itself by using this source?
Ans. (i) Mr. Rajeev is concentrating on internal source of recruitment. By using this method
the company is depriving itself of the benefits of external source of recruitment.
(ii) The benefits that the company is depriving itself are:
a) Qualified personnel: By using external source of recruitment, the management can attract
qualified and trained people to apply for vacant jobs in the organisation.
b) Fresh talent: The present employees may be insufficient or they may not fulfill the
specifications of the jobs to be filled. External recruitment provide wider choice and
brings new blood in the organisation. However, it is expensive and time-consuming.
Other benefits are as follows:
(1) Employees are motivated to improve their performance.
(2) Internal recruitment also simplifies the process of selection &
Placement.
(3) No wastage of time on the employee training and development.
(4) Filling of jobs internally is cheaper.
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5. A company X limited is setting up a new plant in India for manufacturing auto
components. India is a highly competitive and cost effective production base in this sector.
Many reputed car manufactures source their auto components from here.
X limited is planning to capture about 40% of the market share in India and also
export to the tune of at least $5 million in about 2 years of it's planned operations. To achieve
these targets it requires a highly trained and motivated workforce. You have been retained by
the company to advise it in this matter. While giving answers keep in mind the sector the
sector the company is operating.
Questions:
i. Outline the process of staffing the company should follow.
ii. Which sources of recruitment the company should reply upon. Give reasons for your
recommendation.
iii. Outline the process of selection the company should follow with reasons.
Which methods of training and development should the company initiate? Explain giving
reasons.
Ans. (i) The process of staffing the company should follow:
(a) Estimating the manpower requirements:

• The first thing in the planning processes is to estimate manpower needs. An effort is made
to assess manpower needs in advance keeping in view the production schedules, demand
forecasts, market schedules etc.
• It aiming to determine the number and type of employees required. Type refers to specific
qualification, skills or experience to be possessed by the employees.
(b) Recruitment:
• It refers to the process of finding possible candidates for a job or a function. It has been
defined as 'the process of searching for prospective employees and stimulating them to
apply for jobs in an organisation.'
• After assessing the number and type of employee required, the manager tires that more
and more people should apply for the job so that the organisation can get more choice and
select better candidates.
(c) Selection:
• It is the process of identifying and choosing the best person out of a number of
prospective candidates for a job.
• Selection process serves two important purposes:
 It ensures that the organisation gets the best among available options, and
 It enhances the self-esteem and prestige of those selected candidates and make them
realise the seriousness, with which the things are done in the organisations.
(d) Placement and Orientation:
• Orientation is introducing the selected employee to other employees and familiarizing
him with the rules and policies of the organisations.
• Placement refers to assigning specific jobs to the candidates, selected for appointment.
After selection the employee is given appointment letter and is asked to occupy the vacant
job position.
(e) Training and development:
• This step involves improving the job knowledge (by training) and competence of
employees (by development) in order to enable them to perform their job efficiently.
• Training is a process of increasing the knowledge, skills, and abilities of employees for
doing a particular job.
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• Development refers to the learning opportunities designed to help employees grow.
(ii) The company should focus on external sources of recruitment because of the following
reasons:
a) Qualified personnel: By using external sources of recruitment, the management can attract
qualified and trained people to apply for vacant jobs in the organisation.
b) Wider choice: When vacancies are advertised widely, a large number of applicants from
outside the organisation apply. The management has a wider choice while selecting the
people for employment.
c) Fresh talent: The present employees may be insufficient or they may not fulfill the
specifications of the jobs to be filled. External recruitment provide wider choice and brings
new blood in the organisation. However, it is expensive and time- consuming.
iii) The process of selection the company should follow is given along with reasons:
a) Preliminary screening:
• Preliminary screening helps the manager eliminate unqualified or unfit job seekers based
on the information supplied in the application form.
• Preliminary interviews help reject misfits for reasons, which did not appear in the
application forms.
b) Selection tests:
• An employment test is a mechanism (either a paper and pencil test or an exercise) that
attempts to measure certain characteristics of individuals.
• These characteristics range from aptitudes, such as manual dexterity, to intelligence to
personality.
c) Employment interview:
• Interview is a formal, in-depth conversation conducted to evaluate the applicant's
suitability for the job.
• The role of the interviewer is to seek information and that of the interviewee is to provide
the same. Through, in present times, the interviewee also seeks information from the
interviewer.
d) Reference and background checks:
• Many employers request names, addresses, and telephone numbers of references for the
purpose of verifying information and gaining additional information on an applicant.
• Previous employers, known persons, teachers and university professors can act as
references.
e) Selection decision:
• The final decision has to be made from among the candidates who pass the tests,
interviews and reference checks.
• The views of the concerned manager will be generally considered in the final selection
because it is he/she who responsible for the performance of the new employee.
f) Medical examination:
• After the selection decision and before the job offer is made, the candidate is required to
undergo a medical fitness test.
• The job offer is given to the candidate being declared fit after the medical examination.
G) Job offer:
• The next step in the selection process is job offer to those applicants who have passed all
the previous hurdles. Job offer is made through a letter of appointment which seeks
confirmation of his/her (applicant's) acceptance.
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• Such a letter generally contains a date by which the appointee must report on duty. The
appointee must be given reasonable time for reporting.
h) Contract of employment:
• After the job offer has been made and candidate accepts the offer, certain documents need
to be executed by the employer and the candidate. One such document is the attestation
form.
• This form contains certain vital details about the candidate, which are authenticated and
attested by him or her. Attestation form will be a valid record for future reference.
iv) Company should prefer the following methods of training and development:
a) Apprenticeship programme:
• It us a technique of training under which trainees learn the required job knowledge and
skills by doing the actual job work under the guidance of a master worker.
• Typically this apprenticeship period is from 2-5 years. During the apprenticeships period-
the trainee is paid less than a fully qualified worker.
• Under Apprenticeship Programme, the apprentices or trainees spends a prescribed amount
of time working with an experienced guide, or trainer.
• A uniform period of training is offered to trainees, in which both fast and slow learn here,
placed together. Slow learners may require additional training.
b) Vestibule training:
• Employees learn their jobs on the equipment they will be using, but the training is
conducted away from the actual work floor.
• Actual work environments are created in class room and employees use the same
materials, files and equipment.
• This is usually done when employees are required to handle sophisticated machinery and
equipment.
6. Difference between training and development.

Ans.
Basis Training Development
1.meaning It is process of imparting It is process of learning opportunities
knowledge for doing specific job designed to help employees group.
2.nature It is a job oriented process It is a carrier oriented process
3.focous It focus on training skill It focus on human ideas conceptual
4.duration Its duration is short Its duration is long.
5.purpose The basic purpose of training is to The basic purpose of development is to
enable the employees to enable the overall growth of employees.
document job or some intended
job.
6.level of trainees Training is required by superiors Development is usually required by
involved and laborers. higher managerial level.
7.scope of Training has a narrow scope Development has a wide scope as
learning because it is a part of training itself is a part of development
development
8.depth of Training means making Development means making employees
knowledge employees skillful in particular skillful in many fields.
imparted job
9.initiative in Training enables the employees to Development enables the employees to
learning do their existing or intended jobs tackle future as well as existing problems
more skillfully. more skillfully.
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7. (a)Name the concept related to
(i)searching for qualified people
(ii discovering the most suitable candidate to fill the vacant job position?
(b) Some learning opportunities are designed and delivered to improve skills and abilities
of employees whereas some other are designed to help in the growth of individuals in
all respects. Identify and explain the two concepts explained above.
Ans. (a)(i) Recruitment
(ii) Selection
(b) Some learning opportunities are designed and delivered to improve skills and abilities of
employees’ refers to TRAINING.’
Some other are designed to help in the overall growth of individuals in all
respects’ refers to DEVELOPMENT.
Training is the process by which the aptitudes, skills and abilities of the
employees to perform specific jobs are improved.
Development is the process by which the employees acquire skill and
competence for handling higher jobs in the future. It refers to learning opportunities
designed to help employees grow.
8.(a). Selection is a negative process’. Explain.
(b) Atul, is working in an organization. After every three every three month his manager
transfers him form one department to another so that the may gain a broader
understanding of all the departments of organization.
Name and explain the method of training Atul is undergoing.
Ans. (a)Selection is choosing from among the candidates the ones who best meet a position’s
requirements.
• To achieve this target, candidates are required to take a series of tests and
interviews in different stages.
• At each stage, many are eliminated and only a few move to next stage.
• The process of elimination continues till the right ones are finalized.
• The above scenario clearly establishes the fact that selection is the process In
other words, selection is the process of selecting the most potential candidates
from among those who had applied for the job by going through the process of
rejection of relatively unsuitable candidates.
Hence, it is referred to as a negative process.
(b) . Job Rotation.
• This method of training involves shifting the trainee from one department to
another or from one job to another.
• It enables the trainee to gain a Broader understanding of all parts of the business
and how the organization functions as a whole.
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• It makes it easier for organization at the tome of promotions replacements and
transfers.
9. The IT major GIPRA is terminating the employment of its senior managers, if after
evaluating their performance against pre-determined standards if it is found lacking. With this
disruption analysts say a large portion of the employees may become irrelevant unless they
learn new skills and apply the knowledge to work on emerging technologies. GIPRA is ready
to facilitate employee learning, through its in-house centers. A. Name the function of
management performed by GIPRA to maintain a satisfactory work force. B. Identify and
explain the two steps in the process of the function of management discussed above. C. Also
state any two steps of the function of management discussed, that the firm had to perform
before performing the above steps.
Ans. A. The function of management being performed by GIPRA to maintain a satisfactory

work force is Staffing. (1 mark)
B. The two steps of staffing discussed above are: a. Training and development: The
organization should facilitate employee learning by having either in-house training centers or
have forged alliances with training and educational institutes to ensure continuing learning of
their employees. The organizations also benefit. b. Performance Appraisal: All organizations
have some formal or informal means of appraising their employee’s performance.
Performance Appraisal means evaluating an employee’s current and/or past performance as
against certain predetermined standards. The performance appraisal process includes defining
the job, appraising performance, and providing feedback. (1 1/2 x2=3) (1/2 mark for
identification+1 mark for the explanation)
C. Following are the two steps in the process of staffing that the management had to perform
before performing the above steps: (Any two)
a. Estimating manpower requirements, which involves not merely knowing how many
persons the company needs but also what type.
b. Recruitment is defined as the process of searching for prospective employees and

stimulating them to apply for jobs in the organization.
c. Selection is the process of choosing from among the pool of the prospective candidates
developed at the stage of recruitment.
d. Orientation is introducing the selected employee to other employees and familiarizing him
with the rules and policies of the organization. Placement refers to the employee occupying
the position or post which the person has been selected. (1x2=2) (1 mark for each statement).
10. Training is beneficial both for the organization as well s for the employees.Explain any
three benefits of training towards the organization & any three towards the employees.Ans.
Yes, Training is beneficial to both organization & employees benefits to organization •
Systematic Learning • Employee productivity • Reduces absenteeism & Employee turnover. •
Benefits to employees • Lead to better career. • Help in earn more. • Increase the satisfaction.
(Explain all points)
RAM KUMAR SINGH(PGT COMM, KV BENGDUBI)

17
18
BUSINESS STUDIES
CLASS XII
A 1. Political environment.
A2. The reason for this change in the government’s policy is ‘Liberalisation’.
A3. Forces affecting the performance of an organisation but outside its control are called as Business
Environment.
A4. The Industrial policy of 1991.
A5. When the private sector takes over public sector, it is called disinvestment.
A6. Public sector.
A7. It refers to the positive external trends that help an enterprise to improve its performance.
A8. It mean reduction in government controls and restrictions.
A9. Innovations and Scientific Improvement.
A10. Libralisation.
A11.
a) Enabling the identification of opportunities and getting the first mover advantage.
b) Helping in the identification of threats.
c) Tapping useful resources.
A12. Privatisation refers to reducing the role of public sector and increasing the role of Private sector
for rapid development of the nation.
Two reforms:
a) Loss making or sick public sector enterprises were either closed or handed over to board of
Industrial and Financial Reconstruction.
b) Disinvestment of public sector enterprises.
A13.
a) Fall in standard of living.

b) Increase in domestic expenditure.
c) Increase in the cost of agriculture products.
A14. The economic environment consists of factors like the fiscal policy, the monetary policy, the
industrial policy, nature of the economic system, the pace of the economic development, ect. The
non economic environment refers to social, cultural, political, legal and technological factors etc.
A15. Features of business environment:
a) Totality of external forces.

b) Specific to general forces.
c) Inter-relatedness
d) Dynamic nature
e) Uncertanity
f) Complexity
g) Relativity
A16. The environment of an organisation is generally divided into three distinct levels:
a) The general environment

b) The operating environment
c) Internal environment
A17. Example are:
a) Demand for reservation in jobs for minorities and women.

b) Equal pay for equal work for male and female workers.
A18.
a) Economic environment:”We expect strong growth in future as there is huge opportunity in

packaged beverage market being fuelled y a rise in disposable income.”
b) Social environment:”The changing lifestyle has led to increase in per capita consumption in
india is and this presents industry players with the opportunity to tap the huge untapped
potential that this segment offers.”
A19.
a) Economic environment.
b) Social environment
c) Technical environment
d) Legal environment
A20. Business functions within the framework of political environment. Generally, government’s
policies change with the change of guard in power . Business is required to understand and
follow such changes and also respect the orders that judiciary gives from time to time.
For example, after gloalisation, Government of India allowed many companies to enter the
Indian market for giving boost to the different industries like food processing industries etc. That
paved the way for entry of multinationals in India on a large scale.
A21. Legal environment consists of rules and regulations framed y the Parliament, under which
business must operate.To exist and grow, business is required to follow all the rules and
regulations that constitute this environment.
Examples:
1) Advertisement of alcoholic beverage is prohibited.

2) Packets of Cigarettes should mention the statutory warning ‘Cigarette smoking is injurious to
health’.
A22. The impacts of change in government policy on business and industries are:
a) All round competition/Increasing competition

b) Uyer’s market/More demanding customers
c) World class technology/Rapidly changing technological environment.
d) Necessity for change.
e) Need for developing human resources
f) Market orientation
A23.
Fiscal Reforms
a) Measures have been taken to ring down fiscal deficit.

b) Tax reforms have been initiated to increase revenue and tax compliance
c) Reduction in direct taxes.
d) Decrease in subsidies.
Monetary Reforms
a) Phased reduction of statutory liquidity ratio.

b) Private sector banks allowed to set up new ranches.
A24.
a) Indian markets are facing challenge from massive entry of multinationals and finding
difficulty in survival.
b) Firms have to face competition from Indian players-existing as well as new entrants.
c) Indian companies are facing take over threat.
d) Past failures of the companies are not able to guide future.
e) Buyers put undue pressure on its working under the new situation.
A25.
A) Libralisation of eatblishment and growth of industrial units.Industrial licencing has been

abolished for all industrial projects except for a short list of industries.
B) Reduction of barriers in international trade.
C) Increase flow of capital from foreign countries and vice versa.
D) Free flow of latest technology.
E) Disinvestment in public sector units through the sale of their equity shares to the private
sector,therefore resulting into restructuring of industries.
Chapter – Controlling(Questions)
1 Mark question
1. What is feedback in controlling ?

2. What is the significance of standard ?
3. What is deviation in controlling ?
4. ABC Ltd. Is manufacturing auto spare parts on large scale. The company policy is that 3%
of the daily production could be defective. For last two months it is observed that about 10-
12% of production is defective. Which function of management is reinsured to correct the
above case?
5. Name the function which reviews the operations in a business unit.
4. Which two steps in the process of control are concerned with compelling events to conform
to plan ?
5. What is the last step in the process of controlling?
6. What is meant by budgetary control?
7. Name the two techniques of analyzingdeviations ?
8. How does controlling help in achieving organizational goals ?
9. What is critical point control ?
10. What do you mean by ‘key result area (KRA’s) in the context of controlling?
11. Only increase in labour cost beyond 2% should be brought to the notice of the
management. Which principle of control have been highlighted by this statement ?
3 Mark questions
Q1. “Controlling is blind without Planning’ Comment.
Q2. “Controlling is the last function of management”. Comment.
Q3. ‘If you try to control everything, you may end up controlling nothing”. Explain.
Q. 4. ‘A.S. Ltd.’ is a large company engaged in assembly of air-conditioners. Recently the
company had conducted the ‘Time’ and ‘Motion’ study and concluded that on an average a
worker can assemble ten air-conditioners in a day. The target volume of the company in a day
is assembling of 1,000 units of air-conditioners. The company is providing attractive allowances
to reduce labour turnover and absenteeism. All the workers are happy. Even then the
assembly of air-conditioners per day is i800 units only. To find out the reason the company
compared actual performance of each worker and observed through C.C.T.V. that some of the
workers were busy is gossiping.
Identify the function of management discussed above.
State those steps in the process of the function identified which are discussed in the above
paragraph.
Q5. “Planning is looking ahead and controlling is looking back”. Comment.
Page 1 of 6
Q6. There are two managers Rahim and Pankaj. Rahim is saying that ‘controlling is forward
looking’ whereas according to Pankaj ‘controlling is looking back’. Who is correct? Explain why.
Q7. Controlling function of management is a pervasive function . Explain.
Q8. What is meant by Budgetary control?
Q9. Corrective action is essence of control . Explain.
Q10. Planning is looking ahead and controlling is looking back. Explain.
4 Mark Questions
Q1. “Controlling doesn’t require any process”. Comment.
Q2. “An ideal control technique is one that check every bit of performance” comment.
Q3. Explain ‘Budgetary control’ as a technique of managerial controlling.
Q4. Y Ltd. Produces safety pins on a mass scale. The co.’s policy is that at the most 2% of the
daily production could be defective over a three months period it has been observed that 8-
10% of the production is defective.
Identify the managerial function required to correct the above situation. Briefly explain the
procedure to be followed for the purpose.
Q5.What are the advantages of Budgetary Control?
Q6. ABC Ltd. is engaged in manufacturing readymade garments. The target production is 500
shirts per day. The company has been successfully attaining this target until last three months.
The actual production has been varying between 400-450 shirts. Which management function is
needed to rectify the situation? Write any two features associated with it.
Q7.Measurement of a company’s performance may involve calculation of certain ratios like
gross profit ration, net profit ratio, return on investment ration etc.” Identify the function of
management involved in the given statement and explain the relevant st19. “Planning is the
first function and control is the last function of managerial process “ Discuss
Q8. Control moves from downward to upward whereas planning moves from top to bottom.
Discuss
Q9.Does control help in ‘judging the accuracy of standards’ and ‘improving motivation of the
employees’? Explain
Q10. What are the factors to be kept in mind while setting standards?
5 Mark Questions :
Q1. Explain the various steps involved in the process of control.
Q2. Explain the importance of controlling is an organisation.
Q3. Name and explain the concept which suggests that only significant deviations which go
beyond the permissible limit should brought to the notice of management
“There is close and reciprocal relationship between planning and controlling”. Do you agree
with this? Give reasons in support of your answer.
Page 2 of 6
Q4. Planning and controlling are mutually interrelated and inter-dependent activities. Explain.
Q5. Explain the limitations of controlling?
Q6. If planning is done carefully and accordingly other functions of management are going in
the right direction, then there is no need of the controlling function of management. Do you
agree with the statement? Give reasons in support of your answer.
Q7.(a)An effective system of controlling discourages dishonesty among employees. What

values does this statement shows.
(b) Management of company decided to install CCTV Cameras in factory .Workers resisted this
decision of management. Identify the step of Controlling in first line. Also identify value
reflected in management decision and value ignored by workers.
Q8. Explain any two Modern techniques of controlling.
Q9.D & D Ltd. is a large manufacturing unit. Recently, the company has conducted the
‘time’ and ‘motion’ studies and concluded that on an average a worker could produce
120 units per day. However, it has been noticed that average daily production of a
worker is in the range of 80-90 units.
Which function of management is needed to ensure that the actual performance is in
accordance with the performance as per ‘time’ and ‘motion ‘studies? State four
features of this function of management.
Q10.Joseph Bros. was a firm manufacturing jute lamp shades. It uses left over jute
pieces from various jute factories to manufacture economical lamp shades which are
supplied to various hotels in nearby towns: it employs men and women from
nearby villages as workers for creating good lamp shade designs.
Joseph Bros., is not able to meet its targets. Namish, the supervisor of the company,
was told to analyze the reasons for the poor performance. Namish found following
problems and suggested certain solution s in the working of the business. M the
number of workers employed was less than what was required for the work. As a
result, the existing workers were overburdened. The firm decided to search for new
workers and it asked the present employees to introduce candidates or recommend
their friends and relatives to the firm. This enabled the firm in “putting people to
jobs” and assured attainment of objectives according to plans.
Identify the functions of management being performed by the firm in the above
situation.
Name the concept and its source used by the firm to attract more workers for the firm.
State any two values being followed by Jacob Bros.
Page 3 of 6
6 Marks Question
Q1. Babita Ltd. is engaged in manufacturing machine components. The target

production is 250 units per day per worker. The company had been successfully
attaining this target until two months ago. Over the last two months it has been
observed that daily production varies between 200-210 units per worker.
Name the function of management and identify the step in the process of this function
which helped in finding out that the actual production of a worker is less than the set
target.
To complete the process of the function identified in (a) and to ensure the
performance as per set targets, explain what further steps a manager has to take.
Q2. Rajeev and Sanjeev are managers in the same organization having different
units. While discussing about the function of management, Rajeev says “Planning is
looking ahead whereas controlling is looking back.” But Sanjeev says, “Planning is
looking back whereas controlling is looked ahead.” Both are giving reasons in favour of
their statements.
Explain the possible reasons given by both and justify who is correct.
Q3. Anubhav has set up an export house after completing his masters in fashion
designing. As the quality of the garment depends on the quality of raw materials
used, he assures that the fabric meets the requirements by conducting a series of tests
for the fabrics like shrinkage test, testing colour fastness to washing, colour fastness
to light, colour fastness to perspiration etc. through laboratory tests. Later on, at the
production areas, fabric inspection is also conducted by stopping the production
process. The tests help to detect the deviations and also take corrective
action. Moreover, the ensures that complete training about production work was
given to every worker at the time of joining his export house.
Identify the function of management being performed by Anubhav by conducting tests
to assure for the quality of the garments manufactured in his export house.
Briefly explain the term ‘deviations.’
Give any three advantages of giving training to the employees.
Q4. Atul and Ajay are good friends. They decide to set up a digital printing press
together as both of them are compute wizards. They plan to offer various types of
printed products including labels, manuals, marketing material, memo pads, business
order forms, T-shirts, mugs etc. They set standards for every aspect of their work in
order to create an efficient working environment. As per the standards, an average
person types between 38 and 40 words per minute. Keeping this in mind, they engage
two typists Bitto and Raju and assign them work accordingly. Within two days, they
realize the output in terms of typing work done by Raju is too less as compared to the
desired output. On inspecting, Atul finds out that Raju’s typing speed is between 18
and 20 words per minute only. But Raju exhibits great skills in designing work and is a
good human being. Hence, Atul and Ajay decide to retain him for doing creative work
and appoint a new typist.
Identify and explain the function of management being discussed here.
List the steps involved in the function of management as identified in part (a).
Also, quote the liens from the paragraph relating to each step.
Page 4 of 6
Q5. D & D Ltd. is a large manufacturing unit. Recently, the company has conducted
the ‘time’ and ‘motion’ studies and concluded that on an average a worker could
produce 120 units per day. However, it has been noticed that average daily production
of a worker is in the range of 80-90 units.
Which function of management is needed to ensure that the actual performance is in
accordance with the performance as per ‘time’ and ‘motion ‘studies? State four
features of this function of management.
Q6. A company ‘M’ Ltd. is manufacturing mobile phones both for domestic Indian
market as well as for export. It has enjoyed a substantial market share and also had a
loyal customer following. But latterly it has been experiencing problems because its
targets have not been met with regard to sales and customer satisfaction. Also mobile
market in India has grown tremendously and new player have come with better
technology and pricing. This is causing problems for the company. It is planning to
revamp its controlling system and take other steps necessary to rectify the problems it
is facing.
Identify the benefits the company will derive from a good control system.
How can the company relate its planning with control in this line of business to ensure
that its plan is actually implemented and targets attained?
Give the steps in the control process that the company should follow to remove the
problems it is facing.
Q7. Alpha Ltd. was manufacturing Auto spare parts. To improve the efficiency of
employees the company provided training to their employees by inviting an expert who
demonstrated the whole process of manufacturing. The expert quoted that all
deviations cannot be controlled, so manager must know which deviation in key areas
must be attended urgently as compared to deviation in non-key area. He also
suggested that human beings are bound to brake mistakes as manager should not take
strict action on every minute mistake of workers, rather he can fix a range of deviation
and take action if deviation is above the specified large.
Identify the functions of management referred above.
Name the two ways of analyzing deviation mentioned above.
Name the method of training used by the company.
Identify the value being emphasized in above para.
Q8. A critical point control (CPC) approach is followed by McDonald in the cooking and
handling process so that any food safety threat can be prevented, eliminated, or
reduced to an acceptable level. Hence, continuous monitoring of activities are
undertaken to ensure that the process is right at each critical point control. The main
principle followed for cooking at McDonald is “less amount many time” which can
ensure the high quality and high fresh level of the food. For instance, if your
hamburgers have to be made, a worker cannot cook all the four hamburgers at one
time. The time figured out for making one hamburger is one hundred and forty-five
seconds. Moreover, nearly all foods in the McDonald have the specific holding time,
the holding time for hamburgers is ten minutes and for French fries is seven
minutes. If it is not sold within that time it is thrown away. Also, the temperature of
the milk sent by the supplier must be under 4 0 c, otherwise, it will be returned.
Name the steps involved in the controlling process which is being discussed in the
above lines.
What do you understand by ‘critical point control’? Explain.
Page 5 of 6
How does the controlling function of management help in accomplishing organizational
goals and ensure efficient use of resources?
Q9. Raghav started a take away eating joint in a nearby market. His business was
doing well. He ensured that the food was properly cooked, a standard taste was
maintained, packing of food was done effectively and the orders were executed on
time. But unfortunately he met with an accident and was advised three months bed
rest. In his absence, his cousin Rohit took charge of his business. When he resumed
his work after three months, he realized that his clientele had dropped. The people
were not happy with the services as the quality of food had deteriorated and the
delivery time for orders had increased considerably. All this was happening because
most of his previous staff had left as Rohit used to adopt a very strict and authoritative
approach towards them.
List any two aspects about his business that Raghav was controlling in order to make it
successful.
Explain briefly any two points to highlight the importance of the controlling function.
Name and explain the style of leadership adopted by Rohit.
Q. 10. Mr. Nath, a recently appointed production manager of Suntech Ltd. has decided
to produce jute bags instead of plastic bags as these are banned by the government.
He set a target of producing 1000 jute bags a day. It was reported that the employees
were not able to achieve the target. Mr. Nath’s behavior is good towards the
employees. His attitude is always positive. So he announced various incentive
schemes for the employees like.
- installing award or certificate for best performance.
- Rewarding an employee for giving valuable suggestions.
- Congratulating the employees for good performance.
(a) Identify the functions of management highlighted in the above paragraph.
(b) State the ‘incentive’ under which the employees are motivated.
(c) State any two values which the production manager wants to communicate to the
society by his work and behavior
*************
Page 6 of 6
Case Studies
Directing
Q. 1. Ayesha Ltd. Assured their employees that in spite of recession no worker will be retrenched
from the job.
Q. 2. Blue Birds Ltd. Offers to its employees issue of shares at a price which is less than the
market price.
Q. 3. ABC Ltd. Is not able to achieve its objective on analyzing, they found that employees were
not given their best, so he decided to announce an incentive plain, which offers various incentives
to employee workers at different level for achieving their target.
principal about his problem ignoring the Headmistress who is immediate superior of Mr. John as
he feels more free to communicate with principal.
Q. 5. Is directing required at planning stage? Name the element of directing function under
which:
specified goals.
(iv) the superior share information with the subordinates in order to reach common
understanding. (3 Marks)
Ans. No, directing is not required at planning stage since it is an executive function. It initiates
action in the organization while other functions of management (planning, organizing, staffing and
Q. 6. Amit and Mikki are working in the same organization but in different departments. One day
at lunch time Mikki informed Amit that due to computerization some people are going to be
retrenched from the organization.
Name which type of communication is this. State any two limitations of this type of
communication. (3 Marks)
Limitations:
It also leads to generate rumours. People‟s behavior is affected by rumours and informal
discussion and sometimes may hamper work environment.
Q. 7. You are working at the middle level of management. Your superior, a top management
personnel, sent a message for you which you received and well understood. Is the
communication process complete? Give reason. (3 Marks)
Ans. No, the communication process is not complete unless and until feedback is given to the
superior. Feedback includes all those actions of the receiver indicating that he has received and
understood the message of sender. So, I must respond to communication to improve its
effectiveness, e. g., by giving a reply to letter, giving reactions to the message, etc.
implements his suggestions and has always found favourable results, but he never appreciates
Rakesh for his suggestions. Now Rakesh decided not to communicate any suggestion or idea to
Neeraj. Identify the factor which acts as a communication barrier. (1 Marks)
Q.9. Ankur is working as a production manager in an organization. His subordinate Saurabh
discussed with hi a method o production which will reduce the cost of production. But due to
some domestic problems and Ankur‟s mind being pre-occupied he is not in a position to
understand the message. Saurabh got disappointed by this. Identify the factor which acts as a
communication barrier. (1 Marks)
Q.10. Rajat a Sales Manager, achieved his sales target one moth in advance. This achievement
as displayed on the notice board and the CEO of the Company awarded a certificate for the best
employees were given option of flexible working hours and were paid wages at a higher piece
rate. On the other hand, Group B (of remaining 50 employees) was criticized for their poor
performance. Their increments were stopped and they were paid wages at a lower piece rate.
Ans. Motivation can be either positive or negative. Positive motivation provides positive rewards
like increase in pay, promotion, recognition, etc. Negative motivation uses negative means like
Q. 12. In a company, Mr. Kshitij always explains management policies to workers and brings
workers‟ problems to the notice of management. At what post does Mr. Kshitij work in this
company? (1 Marks)
Ans. Mr. Kshitij is supervisor in the company as he acts as a link between workers and
management.
Q. 13. Prachi is working in an MNC. She has been given an option to buy the shares of the
company at an amount less than the market price because of her performance as an incentive.
Identify which incentive is being given to her. (1 Marks)
(a) Identify the element of directing which becomes ineffective due to the behavior of the
managers.
Distrust between sender and receiver causes failure of communication.If they do not believe each
other, they cannot understand each other‟s message in its original sense.
Q. 15. Huma is working in a company on a permanent basis. As per job agreement she had to
work for 8 hours a day and was free to work overtime. Huma worked overtime, due to which she
fell ill and had to take leave from her work. No one showed concern and enquired about her
health. She realized that she was fulfilling only some of her needs while some other needs still
remained to be fulfilled.
satisfied.
Affiliation Need: It refers to the need for affection, since to belongingness, acceptance and
friendship.
Q. 16. Mr. Nath, a recently appointed production manager of Suntech Ltd. Has decided to
produce jute bags instead of plastic bags as these are banned by the government. He set a
target of producing 1000 jute bags a day. It was reported that the employees were not able to
achieve the target. After analysis he found that employees were demotivated and not putting in
their best for achieving the target. Mr. Nath‟s beaviour is good towards the employees. His
attitude is always positive. So he announced various incentive schemes for the employees like;
State any two values which the production manager wants to communicate to the society by his
work and behavior.
Vale:
Sensitivity of environment
Good behavior towards employees.
Q. 17. NOTICE
This notice was placed on the notice board in the reception area of XYZ Ltd. But it did not
mention clear specification regarding the time of meeting. Which barrier of communication is
referred to here? Explain any two other forms of barriers to effective communication under the
same category. (5 Marks)
Ans. Badly expressed message (Semantic barriers) – Use of wrong words, omission of needed
words, inadequate vocabulary, etc.
Symbols with different meanings: A work may have several meanings. For example, consider
these three sentences where the work „value‟ is used:
Faulty translations: Sometimes, the communications originally drafted in one language (say,
English) need to be translated to the language understandable to workers (say, Hindi). If the
translator is not proficient with both the languages, communication becomes ineffective.
Q. 18. Mr. Sandeep is the marketing manager of a company manufacturing designer clothes.
One day, in the morning while leaving home he had a quarrel with a person in his neighbourhood
on some issue. That person is a criminal who could abuse his family members. Mr. Sandeep, on
that day, is very worried and angry too on the behavior of the neighood person. On that day, a
meeting was held by a team of marketing and design experts to ensure that whatever is produced
is according to market demand and tastes and fashion of the customers. But Mr. Sandeep could
not pay attention to the discussion between them.
(a) Identify the type of barriers to communication mentioned in the above para. Justify your
answer.
Ans.
These are related to the state of mind of both sender and receiver of communication.For
example, a worried person cannot communicate properly and an angry receiver cannot
understand the real meaning of message.
„Mr. Sandeep is very worried and angry on that day.So he could not pay attention to the
discussion in the meeting.‟
Psychological barriers to communication:
Lack of attention: the pre-occupied mind of receiver and the resulting non-listening of message
acts as a major psychological barrier.
Premature evaluation: Sometimes people form a judgement before the sender completes his
message, which causes failure of communication.
Q. 19. Mrs. Rajlaxmi is working as the Human Resource Cosultant in a firm manufacturing
cosmetic, which is facing a problem of high employee urnover. The CED of the company has
invited suggestions from her for retaining the talented employees & reducing the employee
turnover. Mrs. Rajlaxmi recommends that the good employees be rewarded in a way that it
creates a feeling of ownership among the employees and at the same time makes them
contribute towards the growth of the organization.
(a) Identify the incentive and explain its type, which has been suggested by Mrs. Rajlaxmi to the
CEO of the company.
Ans.
Pay and allowances: For every employee, salary is the basic financial incentive. It includes basic
pay, dearness allowance and other allowance. Pay hike and increments improve performance
level of employees.
Profit sharing: Employees are given a share in the profits of the organization. This motives them
to improve their performance and contributes to increase in profits of the organization.
Q. 20. Mr. Bhuvan is the marketing manager of the company manufacturing designer clothes.
One day in the morning while leaving home, he had a quarrel with the person in the
neighbourhood. That person abused his family and threaten to harm the family. Mr. Bhuvan got
very upset and worried. On the same day a meeting was organized in the office to finalise the
design according to market demand and taste the fashion of the customers. Mr. Bhuvan could
not pay attention to the discussion as he was thinking about the quarrel only.
Ans.
financial position of all the employees is good. The employees working here are honest punctual
and hardworking. The CEO of the company asked him to suggest a method of motivation. The
CEO asked him to suggest a method which is happily accepted by all the employees.
Rajiv spoke to many employees in this connection. Some employees suggested give more
importance to individual autonomy, another suggested good performance should be appreciated
another group suggested to award, certificate, trophies to recognize the good performance. Mr.
Rajiv mixed all and suggested a method of motivation to CEO. The CEO happily accepted that
and it was immediately implemented. With in few days the company‟s growth rate appeared to
have become fast.
Which motivation method combine all the above stated and was suggested by personal
manager.
Ans.
Directing.
(i) Recognition
(ii) Autonomy
quintals of Aata every day. His job was to make sure that the work goes on smoothly and there
was no interruption in production. He was a good leader who would give orders only after
consulting his subordinates and work out the policies with the acceptance of the group.
Using this style is of mutual benefit – it allows them (subordinates) to become part of the team
and helps leaders (seniors) to make better decisions.
Q. 23. Neeraj, a sales representative of „Omida Ltd‟ has changed seven jobs in the last one
year. He is a hard working person but is not able to finalise deals with the customer due to his
inadequate vocabulary and omission of needed words. Sometimes he uses wrong words
because of which intended meaning is not conveyed. All this created a mis-understanding
between him and his cliens.
Ans.
Semantic barrier, which arises from problems and obstructions in the process of encoding and
decoding of message into words or impressions.
Technical jargon; Specialists use technical language or jargon while explaining to the workings,
e.g., tariff, quotas, etc. therefore, they may not understand the actual meaning of many such
words.
Q. 24. Smita had been working as an assistant manager with „Johnson Enterprises‟ for the last
ten years. She was very popular amongst her colleagues because of her commitment and
dedication towards the work. When the manager senior to her retired, all her colleagues thought
that now Smita would be promoted. But to everyone‟s surprise the vacant post was filled by an
outsider, Mrs. Rita. Smita felt demoralized and her performance started declining. She would
abstain herself often and could not meet her targets.
Mrs. Rita was a good leader, who would not only instruct her subordinates but would also guide
and inspire them. She noticed Smita‟s hebaviour and felt that her performance could be
improved. She started involving Smita in decision making-issues related to the organization and
made her a part of high level joint-management committed. Smita was now punctual in office and
her performance started improving.
behavior.
Ans.
Directing
Motivation
Motivation is an internal feeling: The urge, desires, aspirations or needs of people, which are
internal, influence human behavior.
Motivation produces goal-directed behavior: For example, if the employee is interested in
promotion, it helps to produce a behavior to improve performance.
Motivation can be either positive or negative: Positive motivation provides positive rewards like
increase in pay, promotion, recognition, etc. negative motivation uses negative means like
Q. 25. Rahim was working in an enterprise on daily wages basis. It was difficult for him to fulfill
the basic needs of his family. His daughter fell ill. He had no money for his daughter‟s
treatment. To meet the expenses of her treatment, he participated in a cycle race and won the
prize money. The cycle company offered him a permanent pensionable job which he happily
accepted.
(i) By quoting the lines from the above para identify the needs of Rahim that are satisfied by the
offer of cycle company.
Ans.
Needs of Rahim that are satisfied by the offer of cycle company are Physiological and
safety/security needs.
Q. 26.Y Ltd. Is a bank functioning in India. It is planning to diversify into insurance business.
Lately, the government of India has allowed the private sector to gain entry in the insurance
business. Previously, it was the prerogative of LIC and GIC to do insurance business. But now
with liberalization of the economy and to make the field competitive other companies have been
given licences to start insurance business under the regulation of „Insurance regulatory and
development Authority‟.
Y Ltd. Plans to recruit high quality employees and agents and exercise effective direction to
capture a substantial part of life and non-life insurance business.
What financial and non-financial incentives can the company use for employees and agents
separately to motivate them?
How can the company ensure that higher order needs i.e., esteem and self actualization as
specified by Maslow are met?
Ans.
The company will appoint supervisors who will provide on the job training to the employees and
agents. They will maintain group unity and ensure that the company gets enough insurance
business.
To the employees, the company can give pay and allowances, bonus, retirement benefits,
perquisites (e.g., car allowance),recognisation, promotion, job security etc. to motivate them for
higher performance.
Profit sharing
By giving recognition, autonomy status, etc. and providing growth and self-fulfillment
opportunities, the company ensures that higher order needs-esteem and self actualization needs
are met.
information to know he reactions of the employees and agents to the company‟s decisions and
policies. Grapevine channels can carry insurance market information rapidly.
Q. 27. Prateek is working in a multinational company in Noida. He was running a temperature for
the last many days. When his blood was tested, he was found to be positive for malaria. He was
admitted in a hospital and a blood transfusion was advised by the doctors as his condition was
very serious. One of his colleagues sent a text message to his superior, Mr. B. Chatterjee. Mr. B.
Chatterjee immediately sent a text message to the employees of the organization requesting
them to donate blood for Prateek. When the General Manager came t o know about it, he ordered
for fumigation in the company premises and cleaning the surroundings.
Ans.
Chatterjee. Mr. B. Chatterjee immediately sent a text message to the employees of the
organization requesting them to donate blood for Prateek.”
The grapevine/informal communication spreads very fast and sometimes gets distorted.
It is very difficult to detect the source of such communication.
Humanity
Cleanliness
Q. 28. Roshan is the chief of „Khidmat‟ restaurant located in the city of Bangaluru. The place is
known for its exquisite Mughlai cuisine especially mutton briyani and kababs. All the food is
prepared under Roshan‟s purview. The various activities in the kitchen are initiated in
accordance to his instructions. He is very clear and specific in issuing instructions to his
subordinates in order to ensure smooth working of the department. He personally oversees the
method followed by the chefs for preparation of each dish. He misses no opportunity to praise his
subordinates for their good work. All his team members feel very happy and satisfied under his
direction. He provides constant guidance to them in order to improve upon its taste and
presentation and also encourages them to innovate and be more creative in their work.
Identify the various elements of directing mentioned in the above paragraph by quoting lines from
the paragraph.
Describe briefly any two points to highlight the importance of directing as a function of
management.
Ans.
Communication: „He is very clear and specific in issuing instructions to his subordinates in order
to ensure smooth working of the department.”
Supervision: “He personally oversees the method followed by the chefs for preparation of each
dish.”
Leadership: “He provides constant guidance to them in order to improve upon its taste and
presentation and also encourages them to innovate and be more creative in their work.”
Initiates action: Directing helps to initiate action by people in the organization towards attainment
of desired objectives. It is the first execution function of management.
Integrates employees’ efforts: Directing seeks to integrate the individual efforts of employees in
the organization towards the realization of the organizational goals.
Helps to realize their potential: Directing provides effective guidance, motivation and leadership to
the employees so as to enable them to realize their potential and capabilities. (any two)
Q. 29. Neeraj has been working as a sewing machine operator in an export house for the past
ten years. His basic work is to seam the parts of a garment together, and attach buttons, hooks,
zippers, and accessories to produce clothing. Considering the fact that Neeraj is an experienced
operator, he is well versed with the fundamentals of industrial production and possesses good
communication skills. The plant superintendent in the factory recommends Neeraj‟s name to the
production manager for the post of supervisor which will fall vacant after a month on the
retirement of the present supervisor. Consequently, Neeraj is assigned the post of supervisor
and his salary is increased accordingly. Moreover, as per the policy of the export house, he is
offered free medical aid and education to his two children.
Identify the type of source of recruitment used by the export house to fill up the post of
supervisor. Give any two advantages of using this source.
Ans.
The internal source of recruitment has been used by the export house to fill up the post of
supervisor through promotion. The two advantages of using internal source of recruitment are
stated below.
Employees are motivated to improve their performance: When employees are promoted internally
from within an organization, it has a positive impact on their commitment and loyalty and they
tend remain satisfied with their jobs. Also, it may lead to a chain of promotion at lower levels in
the organization. As a result, it motivates the employees to improve their performance through
learning and practice.
Internal recruitment simplifies the process of selection and placement: The candidates can be
appraised more perfectly and economically as that are already working in the organization. As
the candidates are already known to the organization, it is considered to be a more reliable
method of recruitment.
Perquisites: “as per the policy of the export house, he is offered free medical aid and education to
his two children.”
Q. 30. Sunidhi has started a designer studio in the basement of her residence after completing
her masters in fashion designing. She has appointed ten employees to take care of the various
aspects of the work. She interacts regularly with each employee to tell exactly what is expected
of him/.her and what he/she needs to do to be regarded as a good performer. At the same time
she allows a free work environment wherein the employees openly chit chat with each other in
order to fulfil their social and emotional needs. Sometimes, these interactions also lead to
spreading rumours which are not authentic.
Ans.
The two types of communication being referred to in the above paragraph are formal
communication and informal communication.
organization structure is called formal communication. This communication may take place
between a subordinate and superior or among same team employees or managers. Usually a
written record of such communications is maintained, recorded and filed in the office. Formal
communication may be further classified as – Vertical and Horizontal.
disregard to the levels of authority. The informal communication arises out of needs of
employees to exchange their views, which cannot be done through formal channels.
management to express the goals and targets, issue instructions, allocate jobs and
responsibilities and look after the performance of subordinates.
Q. 31. Gagan has joined as a Managing Director of True Help Ltd., a company engaged in the
business of providing road side assistance to the vehicle owners. He was previously working in
an automobile company. As a part of the joining incentive, the company has allotted him 400
shares of the company.
Director.
Identify the type of financial incentive offered to Gagan. Also, state any one other method that
can be used to offer financial incentives to the employees.
Ans.
Director.
The other method that can be used to offer financial incentives to the employees is Bonus. Bonus
is an incentive offered over and above the wages/ salary to the employees.
Q. 32. Mr. Naresh is working as a Production Manager in Vohra Ltd. His subordinates are
mostly engineers and qualified technicians.
subordinates. He expects them to following his instructions without any questions and does not
allow them to give suggestions.
What leadership style does the manager follow?
Ans.
This leadership style is effective in getting productivity in many situations like in a factory where
the supervisor is responsible for production on time and has to ensure labour productivity. Quick
decision-making is also facilitated.
Value overlooked:
Initiative
FINANCIAL MANAGEMENT
1 MARK QUESTIONS
1. Management has to decide whether a new and modern plant should be replaced with the old
one. Which type the financial decision is it.
Ans. Investment Decision.
Q.2. A company wants to establish a new unit in which a machinery of worth Rs.10 lakhs is
involved. Identify the type of decision involved in financial management?
Ans. Capital Budgeting decision or investment decision.
Q.3. A decision is taken to raise money for long-term capital needs of the business from certain
sources. What is this decision called?
Ans. Financing decision.
Q.4. What is meant by ‘Financial Risk’?
Ans. Financial risk refers to inability to meet fixed financial charges like interest payment,
preference dividend and repayment obligations.
Q.5. What kind of decisions involves distributions of profit to shareholders?

Ans. Dividend Decisions.
Q.6 Which type of dividend policy should be followed by a company having growth
opportunities? Ans. Conservative dividend policy, i.e. such company should pay less dividend.
Q.7. Identify, why the requirement of Fixed Capital for a trading concern are different from
that of a manufacturing organization.
Ans. Trading concern requires less fixed capital as compared to manufacturing organization
because trading concern requires relatively much less investment in fixed assets.
Q.8. Ankit adopted a new policy in his business: Purchase computer on credit and sell them for
cash. Will it affects the requirement of working capital?
Ans. Yes, it will reduce the need of working capital as there are no debtors due to cash sales
and there is less investment in inventory due to credit availed.
Q.9. For optimal procurement of funds, a finance manager identifies different available sources
and compares those in term of cost and associated risks. Identify and define the concept
highlighted in the above lines.
Ans. The concept is financial management and is concerned with management of flow of funds
and involves decisions relating to procurement and investment of funds, in long term and
short term assets and distribution of earning to the owner.
Q.10. How do ‘Growing Opportunities’ as a factor affect dividend decision? State.
Ans. Companies having growing opportunities in near future declare lesser dividend as
compared to companies, which do not have any growth plans.
Q.11. State how ‘Growth Prospects’ affect the working capital requirements of a company?
Ans. The firms which have sufficient possibilities of growth prospects in future require more working
capital. However, for companies with lesser prospects, less working capital is needed.
12. ‘Reliable Transport Services Ltd.’ specialises in transporting fruits and vegetables. It has a good
reputation in the market as it delivers the fruits and vegetables at the right time and at the right place.
State with reason whether the working capital requirements of ‘Reliable Transport Services’ will be high
or low.
13. Name and state the aspect of financial management that enables to foresee the fund requirements both
in terms of ‘the quantum’and‘the timings’
14. which component of capital structure determines overall financial risk?
15. Name the financial decision which affect liquidity as well as profitability of a business.
16. Rizul after leaving his job wanted to start a private ltd. Company with his son .His son was keen that
the company may start manufacturing of mobile phones with some unique features.Rizul felt that the
mobile phones are prone too quick obsolescence and heavy fixed capital investment would be required
regularly. Therefore he convinced his son to start a furniture business. Identify the factor affecting fixed
capital requirements which made Rizul to choose furniture business over mobile phones.
17. MarutiUdyog Plans to manufacture solar cars in its new plant. It has an offer from Suzuki for
collaboration. Will collaboration affect the requirement of fixed capital for MarutiUdyog?
18. Bharat Express specialises in courier services. Its “wide range of express package and parcel
services” help business firms to make sure that the goods are made available to the customers at
right place and at the right time. State with reason whether the working capital requirement of
Bharat Express will be high or low?
19. How does inflation affect working capital requirement of a company?
3 MARK QUESTIONS
20.Explain the role of operating efficiency in determing the amount of working capital.
21. What are the objectives of financial management for an organization? Give any three reasons
22. What do you mean by Financial planning? Explain its two importances
23. Financial decision is concerned with selection of fixed assets in which funds will be invested by
the business? Identify the decision and explain any three factors affecting the decision.
24. What do you mean by Financial Leverage?
25.It is essentially preparation of a blue print of an organization future operations related to

finance. Identify it. What is its main objective? Explain.
4 MARK QUESTIONS
26. Shalini, after acquiring a degree in Hotel Management and Business Administation took over her
family food processing company of manufacturing pickles, jams and squashes. The business was
established by her great grandmother and was doing reasonably well. However the fixed operating
costs of the business were high and the cash flow position was weak. She wanted to undertake
modernisation of the existing business to introduce the latest manufacturing processes and diversify
into the market of chocolates and candies. She was very enthusiastic and approached a finance
consultant, who told her that approximately Rs.50 lakh would be required for undertaking the
modernization and expansion programme. He also informed her that the stock market was going
through a bullish phase. (a) Keeping the above considerations in mind, name the source of finance
Shalini should not choose for financing the modernization and expansion of her food processing
business. Give one reason in support of your answer. (b) Explain any two other factors, apart from
those stated in the above situation, which Shalini should keep in mind while taking this decision.
27. Saksham Ltd. a firm manufacturing textiles, wished to diversify their business. They were considering
two options, either to diversify into manufacturing tooth-paste or switches. They wanted to invest in the
purchase of land, to set up a manufacturing unit in the backward areas of Gujarat, which would also lead
to the generation of employment opportunities in the area, but only after fulfilling all legal requirements
and taking appropriate steps to ensure that the environment was not polluted. The finance manager of
the company, Mr. Ramakant was asked by the management to prepare a report on the factors which
should be considered while making the above investment decision.
A. State any two factors that Mr. Ramakant would give in his report.
B. Also state any one reason which makes it important for the above decision to be made carefully.
C. And state two values being fulfilled by Saksham Ltd.
28. How do choice of technique and nature of business affect fixed capital requirement of a
company?Explain.
29. Explain the concept and the objective of Financial management.
30. What is investment decision? State three factors affecting investment decision.
31.Explain any four factors affecting dividend decision.
32. Explain the importance of financial planning.
33. Amar is doing his transport business in Delhi. His buses are generally used for the tourist
going to Jaipur and Agra. Identify the working capital requirement of Amar giving reason in
support of your answer. Further Amar wants to expand and diversify his transport business.
Enumerate any four factors that will affect his fixed capital requirement.
5 MARK QUESTIONS
34. ‘Sarah Ltd.’ is a company manufacturing cotton yarn. It has been consistently earning good
profits for many years. This year too, it has been able to generate enough profits. There is
availability of enough cash in the company and good prospects for growth in future. It is a
well managed organization and believes in quality, equal employment opportunities and
good remuneration practices.It has many shareholders who prefer to receive a regular
income from their investments. It has taken a loan of Rs.40 lakhs from IDBI and is bound
by certain restrictions on the payment of dividend according to the terms of loan in
agreement.The above discussion about the company leads to various factors which decide
how much of the profits should be retained and how much has to be distributed by the
company.Quoting the lines from the above discussion identity and explain any four such
factor.
35. . “A business that doesn’t grow dies‟, says Mr. Shah, the owner of Shah Marble Ltd. with glorious 36
months of its grand success having a capital base of Rs 80 crores. Within a short span of time, the
company could generate cash flow which not only covered fixed cash payment obligations but also
create sufficient buffer. The company is on the growth path and a new breed of consumers is eager to buy
the Italian marble sold by Shah Marble Ltd. To meet the increasing demand, Mr. Shah decided to expand
his business by acquiring a mine. This required an investment of `120 crores. To seek advice in this
matter, he called his financial advisor Mr. Seth who advised him about the judicious mix of equity (40%)
and Debt (60%). Mr. Seth also suggested him to take loan from a financial institution as the cost of
raising funds from financial institutions is low. Though this will increase the financial risk but will also
raise the return to equity shareholders. He also apprised him that issue of debt will not dilute the control
of equity shareholders. At the same time, the interest on loan is a tax deductible expense for computation
of tax liability. After due deliberations with Mr. Seth, Mr. Shah decided to raise funds from a financial
institution.
a) Identify and explain the concept of Financial Management as advised by Mr. Seth in the above
situation. b) State the four factors affecting the concept as identified in part „a‟ above which have
been discussed between Mr. Shah and Mr. Seth.
36. Kay Ltd. Is a company manufacturing textiles.It has a share capital of Rs. 60 lakhs. In the previous
year its earning per share was Rs.0.50. For diversification, the company requires additional capital
ofRs.40lakhs.Thecompany raised fundby issuing 10%Debentures for
thesame.DuringtheyearthecompanyearnedaprofitofRs.8lakhsoncapitalemployed.It paidtax@40% (a) State
whether the shareholders gained or lost, in respect of earning per share on
diversification.Showyourcalculationclearly (b) state any three factor that favour the issue of debentures by
the company as part of its capital structure.
37.“Determining the relative proportion of various types of funds depends upon various factors.”Explain
any five such factors.
38. The directors of manufacturing company are thinking of issuing Rs,20crores worth additional
debentures for expansion of their production capacity. This will lead to an increase in Debt
Equity ratio from 2:1 to 3:1. What are the risks involved in it? What factors other than risk do
you think the directors should keep in view before taking the decision? Name any four factors
39. Manish is engaged in the business of garment manufacturing. Generally, he used to sale
garments in Delhi. Identify the working capital requirement of Manish giving reason in support
of your answer. Further, Manish wants to expand and diversify his garment business. Name any
two factors that will affect his fixed capital requirement
40.How are the shareholders likely to gain with loan component in capital employed? Explain
with examples.
41. ‘Abhishek Ltd.’ is manufacturing cotton clothes. It has been consistently earning good
profits for many years. This year too, it has been able to generate enough profits. There is
availability of enough cash in the company and good prospects for growth in future. It is a
well-managed organisation and believes in quality, equal employment opportunities and
good remuneration practices. It has many shareholders who prefer to receive a regular
income from their investments. It has taken a loan of Rs.50 lakhs from I.C.I.C.I. Bank and is
bound by certain restrictions on the payment of dividend according to the terms of the loan
agreement. The above discussion about the company leads to various factors which decide
how much of the profits should be retained and how much has to be distributed by the
company.
a) Identify the financial decision
b) Quoting the lines from the above discussion, identify and explain any four factors affecting
such decision.
6 MARK QUESTIONS
42. Naveen glass ltd is into this business for 20 years. Now due to expansion plans the company
needs additional 100 crs. The finance manager is asked to decide about the capital structure
after considering the pros and cons of both the sources-Owners fund and borrowed fund.
He finds out the following facts. Cash flows of the company are unstable and he is in no
mood to choose a source in which high risk is involved. Company also wants to retain
control over the management of the affairs of the company. There is a boom period in the
economy. The above disclosures lead to various factors which decide how much to finance
from equity and how much from debt. The recent companies act has revised the tax on
companies to 20% from 15%. Amidst all this the company is also facing heavy operating
costs of salaries, rent, premiums etc. Quoting the relevant lines, identify and explain any six
such factors
43. What is the Capital structure? Explain any five factors affecting the choice of capital structure?
44. What do you mean by Working capital? Explain any four factors affecting the requirement
of working capital.
45. Which decision is concerned with rising of finance using shareholders’ funds or borrowed
funds? Identify and describe the financial decision involve in this decision. Explain any
four factors affecting that decision.
46. What do you mean by Fixed capital? Explain any four factors affecting the requirement of
fixed capital.
47. Explain Trading on Equity with the help of an illustration.
48. Krishna Ltd. is manufacturing steel at its plant at Noida. Due to economic growth, the
demand for steel is also growing. The company is planning to set up a new steel plant at Gwalior.
It needs Rs.800 crores to start a new plant. It decided to raise Rs.300 crores through debentures,
Rs.200 crores through long term loans from bank and Rs.200 crores by issue of equity shares to
the public. It decided to finance the remaining amount by utilizing its reserves & surplus.
(a) State the importance of financial planning for this company.

(b) What is the capital structure of this company. Explain.
(c) Identify the financial decision involved when the company decides to raise Rs.800 crores
from different sources of funds.
How will the dividend of Krishna Ltd. be affected? Explain
49. Viyo Ltd. is a company manufacturing textiles. It has a share capital of Rs.60 lakhs. The
earning per share in the previous year was 0.50. For diversification, the company requires
additional capital of Rs.40 lakhs. The company raised funds by issuing 10% debentures for the
same. During the current year, the company earned profit of Rs.8 lakh on capital employed. It
paid tax @40%.
(a) State whether the shareholders gained or lost, in respect of earning per share on
diversification. Show your calculation clearly.
Also state any three factors that favour the issue of debentures by the company as a part of its
capital structure
50. Tata International Ltd. Earned a net profit of Rs 50 crores .Ankit the finance manager wants
to decide how to appropriate the profits.Discuss the factors which will help him take this
decision
82
FINANCIAL MARKET
01 MARK QUESTIONS
1.What is meant by Financial Market?
2.What is the Primary aim of Financial Market?
3.State two major segments of Financial Market.
4.State any one consequence of a well-performed ‘allocative Function’ of Financial market.
Answer – 1.The rate of return offered to household is higher.2.Scarce resources are allocated to
firms which offer higher productivity to the economy.
5.What is allocative function of Financial Market?
Answer – helps to link the savers and borrowers by mobilizing funds between them. It directs or
allocates funds available to the most productive investment opportunity.
6.Give the meaning of Capital Market
7.What is ‘call money’
8.What is meant by offer through prospectus?
9.Give the meaning of ‘secondary market’.
10.What is ‘demat account’.
11.In which two cases a company making an Initial Public Offer is not required to issue prospectus?
Ans-1. Offer for sale 2.private placement
12.Meca Ltd. A reputed automobile manufacturer needs Rs.10 Cr. As additional capital to expand its
business. Anu Jalan, the CEO of the Company wanted to raise funds through equity .on the other
hand the Finance Manager,Nimi Sahdev said the public issue may be expensive on account of
various mandatory and non mandatory expenses therfore, it was decided to allot the securities to
institutional Investors.
Answer- Private Placement
13.What are the listing requirements for a company in the stock exchange ?
Ans – company has to furnish detailed information about its affairs, both financial and non financial
to the stock exchange authorities.
14. Name two Depository in India.

03/04 Marks Questions
1.These Days, development of a country is also judged by its system of transferring finance from the
sector where it is in surplus to the sector where it is neede most. To give strength to the economy,
SEBI is undertaking measures to develop the capital market. In addition to this, there is no other
market in which unsecured and short term debt insturuments are actively traded everyday. These
markets together help the savers and investors in directing the available funds into their most
(a) Name the functions being performed by the market in the above case.
(b)Name the market segment other than the capital marketsegment in which unsecured and short
term debt instruments are traded. Also give any three pointsof difference between the two
Answer – A)allocative function (b)money market
2.Mission coach India Ltd. Is a large and credit worthy company manufacturing coaches for Indian
railways. It now wants to export these coaches to other countries and decides to invest in new
hitech machines. Since the investment is large, it requires long term finance. It decides to raise funds
by issuing equity shares the issue of Equity shares involves huge floatation cost. To meet the
expenses of floatation cost, the company decides to tap the money market.
(a) Name and explain the money market instrument the company can use for the above purpose.
(b)What is duration for which the company can get funds through this instuments ?
(c) State any other purpose for which the instruments can be used.
Answer – (a) Commercial Paper (b) 15 days to 1 year (c)seasonal and working capital needs
3.Give the meaning of’ secondary market.’
4.State the difference between Primary and Secondary Market.
5.explain the trading procedure in stock exchanges.
6.Explain the functions of SEBI.
7.What are the different methods which the company may adopt for the new public issue of shares.
Answer a) Right Issue b)public offer through prospectus c)offer for sale d)private placement
8.Close to 400 companies comprising 10% of listed entities have not shared key information like
Balance Sheet numbers, shareholding patterns with their shareholders. These companies continue
to be traded on stock exchanges despite failing to fulfill various conditions under listing agreement
with the bourses.
SEBI is considering imposition of penalties on such companies. What do you think are the values
behind SEBI taking such actions?
Answer – Objectives of SEBI

9.Explian different instruments of Money Market.
6 Marks questions
1.What are the functions of SEBI ? Explain them briefly
2.Why was the need for the establishment of the SEBI felt ? Explain the role of SEBI to fulfill this
need.
3.Explain these terms :- (a) Depository Participant (b) Depository (c) Demat Account
(d) Dematerialisation (e )Demutualisation
4. Differentiate Capital Market and Money Market.

IMPORTANT QUESTION OF BUSINESS STUDIES FOR 2017-18
NATURE AND SIGNIFICANCE OF MANAGEMENT
1. ABC company is facing a lot of problems these days . it manufactures electric goods like washing
machines, refrigerators and air conditioners etc. the company’s margins are under pressure and the
profits and market share are declining.The producton department blames marketing for not meeting
sales targets and marketing blames production department for producing goods, which are not of good
quality meeting customer’s expectations . The finance department blames both production and
marketing for declining return on investment and bad marketing.
What quality of management do you think the company is lacking ?Explain the essence of it.
2. Mrs. Wason passed her MBBS examination and also passed MS examination as an eye specialist. After years
of completing her studies she joined a big hospital as an eye surgeon. Now she is performinsuccessfully since
last few years. Mr. Madan founder of CTA feels that Mrs. Wason is experiencing the aspect of science and
Ms. Sachdeva feels that she is experiencing the aspect of Art. Who is right? Give reasons in support of your
answer.
3. Dinesh is Superintendent in care india Group and Harish is working as plant Superindent in the same
company. Name the managerial levels at which Dinesh and Harish are working. Write the funtion of that
Level of manangement.
4. Shiv Nadar, chairman and CEO of HCL attributes the success of the group to its management team and their
entrepreneurial spirit which together have enabled it to handle rapid changes in the environment and
technologies. At HCL management believes that happy, satisfied and self motivated employees help in
reducing costs and increase productivity. It also has a strong sense of social responsibility and has set up
educational institutions in the field of management, engineering, computers etc.Identify and explain the
significance of understanding management by quoting relevant lines from the case study.
5. Sagar is Working at the post of Sales Manager in Facile Ltd. Last year He achieved this very easily. To
achieve this, he increased the expenditure on advertisement to almost double the previous amount.
(i) Did sales manager perform his duty efficiently and effectively? (ii) If not, then how?.
6. Vineet joined a company after completing graduation in management from a reputed business school.
During his induction training, he was informed that he would be working in production department. The
company wanted to achieve 30% increase in output in the next quarter. His general manager, a man with
decades of experience, also said that management is a complex activity. He expected Vineet to make
production plans, identify incentive schemes for workers to make their strengths effective and ensure that
there is no disruption due to technical glitch. Vineet realised very quickly that his job is a series of
continuous tasks. After one month, he was informed by the general manager that due to increase in
international demand, production targets have been raised. He called an urgent meeting of his supervisors
and senior workers. He offered them an opportunity to realise their potential and earn more by working
overtime and in multiple shifts. He was delighted that at the end of the quarter, he was able to meet the
targets, workers were happy and there was no chaos.
Identify and explain any four characteristics of management referred in above case.
1. Explain the 14 principle of management with positive effects and effects of violation introduced by Henri
Fayol.
2. F’ Limited was engaged in the business of food processing and, selling its products under a popular brand.
Lately the business was expanding due to good quality and reasonable prices. Also with more people
working the market for processed food was increasing. New players were also coming to cash in on the
new trend. In order to keep its market share in the short run the company directed its existing workforce
to work over time.But this resulted in many problems. Due to increased pressure of work the efliciency of
the workers declined. Sometimes the subordinates had to work for more than one superior resulting in
declining efficiency. The divisions that were previously working on one product were also made to work
on two or more products. This resulted in a lot of overlapping and wastage. The workers were becoming
undisciplined. The spirit of teamwork, which had characterised the company, previously was beginning to
wane. Workers were feeling cheated and initiative was declining. The quality of the products was
beginning to decline and market share was on the verge of decrease. Actually the company had
implemented changes without creating the required infrastructure. Questions.
(i) Identify and explalain the Principles of Management (out of 14 given by Henri Fayol) that were being
violated by the company.
(ii) What steps should the company management take in relation to the above principles to restore the
company to its past glory?
3. Explain technique of scientific management introduced by F.W. Taylor in the field of management.
BUSINESS ENVIRONMENT
1. Cab service company, Uber had announced that it will now allow private car owners in Delhi to offer
rides to passengers. It introduced the new feature from December 16 after Delhi government announced
its odd even formula to be implemented from January 1. Fares for shared riders will be 10-30% cheaper,
the company had said. It was followed by Ola, that announced that they too would offer ride sharing to
passengers in Delhi-NCR. Ola will offer a 50% discount on Ola Share fares over the coming month. Meru
cab has also launched its ride sharing features. It additionally gives customers who opt for the ride-
share feature, a fixed 30% discount on the estimated trip fare.
Identify points of importance of business environment highlighted.
State two impacts of change of government policy on business and industry and what actions have been
taken by companies in the above case to cope up with these changes?
2. Sunanda Papers decided to set up its industrial unit in backward village of Madhya Pradesh, due to its
strategic location i.e. easy availability of wood to make paper. Moreover, due t unemployment, cheap
labour is available in abundance. The village has no electricity so it decided to tap renewable solar
energy in place of using diesel generators to meet its power requirements. The government offered
industrial land at cheaper rate for the development of backward area and also provided subsidy for
installing solar panels.
a) Identify the dimension business environment discussed in above case by quoting

the line .
b) Also identify and explain from the given case the two benefits reaped by Sunanda
papers by understanding the business environment.
3. The court passed an order to ban polythene bags as -

a. These bags are creating many environmental problems, which affect the life of people
in general.
b. Society, in general, is more concerned about the quality of life. The government
decided to give subsidy to jute industry to promote this business. Innovative
techniques are being developed to manufacture jute bags at low rates. Incomes are
rising and people can afford to buy these bags.
Identify the different dimensions of business environment by quoting the lines from the above
particulars.
PLANNING
1. Gurpreet, Vikram and Parv are good friends. They are thinking to manufacturepapers. They mutually
decided that this manufacturing unit will be set up in a rural area of Odisha where people have a few
job opportunities and labour is available at very low rates. They also decided not to sell goods on
credit.
(i) One of the functions of management is highlighted in the above para. Name it by quoting the
line from it. Explain the process of it.
(ii) Name the type of plan highlighted in the above para by quoting the line from it.
2. Explain the importance of Planning.
ORGANISING
1. Neeraj Gupta started a company 'YoYo Ltd.' with ten employees, to assemble economical
computers for the Indian rural market. The company did very well in its initial years. AB the product was
good and marketed well, the demand went up. To increase production the company decided to recruit
additional employees. Neeraj Gupta, who was earlier taking all decisions for the company, had to
selectively disperse the authority. He believed that people are competent, capable and resourceful and
can assume responsibility for effective implementation of their decisions. This paid off and the company
was not only able to increase its production but also expanded its product range with different features.
a) Identify the concept used by Neeraj Gupta through which he was able to
steer his company to greater heights.
b) Also explain any three points of importance of this concept.
2. Difference between Functional and Divisional Structure (any eight with basis)
3. A company has been registered under the Companies Act with an authorized share capital of Rs20,000
crores. Its registered office is situated in Delhi and manufacturing unit in a backward district of Rajasthan.
Its marketing department is situated in Bhopal. The company is manufacturing Fast Moving Consumer
Goods (FMCG).
(i) Suggest with the help of a diagram a suitable organization structure for the company.
(ii) State any three advantages of this organization structure.
4. Difference between Formal and informal Organising. (any eight with basis)
5. A manager, no matter how capable he is, cannot manage to do every task on his own. Sometime it
impractical for him to handle it all by himself. As a consequence, Mr. Arjun, production manager of ABC
Ltd transfers some of his authorities like. determining the objectives, deciding future course of action
and allocating resources etc. to Mr. Akash, one of his subordinates.
(I) Name the process under which Mr. Arjun transfers some of his authority to Mr. Akash.
(ii) Name the elements of the process identified above.
(iii) Distinguish between the elements .
(iv) is Mr Arjun responsible for non achivement of target if Mr Akash fails to discharge his duties and
Why?
STAFFING
1. Gurpreet is the owner of an electronic showroom. He wants an experienced sales manager and
accounts manager. For this, he gives an advertisement. Thirty people apply for the job. He selects the
two best persons out of a number of prospective candidates for a job. Mr. Gurpreet gives sales target
to sales manager and assigns work to accounts manager. The sales manager achieved his sales
target one month in advance. His achievement was displayed on the notice board and a certificate
for the best performance was awarded to him by the owner of the showroom.
(i) Name the source of recruitment which is used by Mr. Gurpreet to fill the above posts by
quoting the line from the above para. Also state any three advantage and disadvantages of using
this source of recruitment.
(ii) Which test help Mr. Gurpreet to find out the skills and abilities possessed by the candidate
relating to the job during selection process?
(iii) Name the type of incentive awarded by Mr. Gurpreet to a sales manager.
2. It is the process of identifying and choosing the best person out of a number of prospective
candidates for a job. Name it and explain the process .
3. A Public transport corporation has hired 1000 buses for the different routes for the passengers of
metropolitan city. Most of the 3000 crewmen (drivers,conductors, helpers etc.) of these buses have
been found to be wanting in satisfactorily dealing with public and daily commuters. They seem to be
little interested in the job and the job seem to have lost all meaning to them.
(i) As manager of the public transport company what measures do you suggest to
improve the working of crewman in question?
(ii) Write the imortance of it.
(iii) What kind of method can be used to improve the dealing with public.
DIRECTING
1. Kavya is working in a company on permanent basis. As per the job agreement she had to work for 8
hours a day and was free to work overtime. Kavya worked overtime. But even after working for long
hours and putting in her best efforts, no recognition was given to her by her boss. Due to overtime she
fell ill and had to take leave from her work. No one showed concern and enquired about her health. She
realised that she was fulfilling only some of her needs while some other needs still remained to be
fulfilled.
(i) Identify and explain the needs of Kavya discussed in the above para, by quoting the lines.
(ii) Also explain two other needs of Kavya followed by the above needs, which still remained to be
satisfied.
2. Aarav was working as a supervisor with 'Neer Purifier Ltd.' which was producing water purifiers. The
target of the company was to produce 200 water purifiers every day. His job was to make sure that
work goes on smoothly and there was no interruption in production. To achieve this, he always gives
orders and insists that they are obeyed. He believes that reward or punishment both can be given
depending upon the performance. Identify and describe the leadership style being adopted by Aarav.
3. Anjali had been working with 'Tata Enterprises' for the last ten years. She was famous for her
dedication towards the work. When the Manager senior to her retired, all her colleagues thought that
now Anjali would be promoted. But to everyone's surprise the vacant post was filled by an outsider 'Miss
Monika'. Anjali felt demoralised and her performance started declining. She would absent herself often
and could not meet her targets. Miss Monika was a good leader who would not only instruct her
subordinates, but also guide and inspire them. She noticed Anjali's behaviour and felt that her
performance could be improved. She started involving Anjali in decision-making issues related to the
organisation and made her a part of a high-level joint management committee. Anjali was now punctual
to office and her performance started improving.
(a) Identify the function of management being performed by Monika (b) Name the element of the
above function of management which helped Monika to improve Anjali's behaviour. (c) State any three
features of the element identified in (b) above. (d) Suggest any three non-financial incentives that the
new manager may use to motivate Anjali.
4. The function and performance of a person that comes under a particular level of management are vital to
any organisation because he is directly related with workers whereas other managers have no direct
touch with bottom level workers.He plays a key role in maintaining group unity among workers placed
under control and sorts out internal differences and maintains harmony among workers.
Identify the name and designation of that person and explain the role and funtion in the organisation.
CONTROLLING
1. XYZ Ltd. is a very reputed company dealing with the assembly of laptops.The company takes decisons
On the basis of scientific approach and conducted the 'Time' and 'Fatique' study and concluded that on
an average a worker can assemble minimum five laptops in a day. Total fifty worker are engaged in the
factory so atleast 250 laptop must be assembled . The factory is fully neat and clean and there is
provision of free lunch at interval time. All the workers are happy. But only 200 laptops are produced
that can not be ignord . The reason the company compared actual performance of each worker and
observed through C.C.T.V. that some of the workers were busy in gossiping.
(a) Identify the function of management discussed in the above paragraph.
(b) State those steps in the process of the function identified which are discussed in the
above paragraph.
2 . “There is a close and reciprocal relationship between planning and controlling.” ExPlain thestatement.
Or
‘Planning and controlliug are interdependent and interlinked activities’. Explain.
3 . “Controlling does not give guarantee for sucess.” Do you agree with this statement and why?
BUSINESS FINANCE AND FINANCIAL MANAGEMENT
1. Tasmita Ltd is running into manufacturing business for five years. Now due to huge success the company
needs additional capital 50 crores for new project. The finance manager is asked to give the decision
regarding the finance requirement after considering the aspects including +ve and –Ve points of both the
sources-Owners fund and borrowed fund. He finds out the following facts. the company is running under
irregular cash inflow. Company also wants to retain control over the management of the affairs of the
company. There is a boom period in the economy. the company is also facing heavy operating costs of
electricity ,salaries, rent etc.Recently the Govt. Revised the taxation policy. The above analysis lead to
various factors which decide how much to finance from equity and how much from debt.
(i) Idenify the concept related to above paragraph for making decision by finance manager.
(ii) Quoting the relevant lines, identify and explain any six such factors for affecting the decision.
2. Explain the objective of financial management.

3. Suppose Company X wants to raise some money for investment purposes. The relevant facts of Company X
are:
Total Funds to be raised = 30,00‚000
Interest rate on Debt = 10%
Face value of Equity shares = 10 each
Tax rate = 30%
Eamings Before Interest and Tax (EBIT) = 4,00,000
Company X require to raise 30 Lakhs by all equity capital or including some debt along with equity. Comment
over the Financial leverage of the company under the following situation-
Situation I: When total funds are raised through Equity i.e. Debt = Nil; and Equity = 30,00,000
Situation II: When some part is raised through‘debt and balance from Equity i.e. Debt = 10,00,000; and
Equity = 20‚00‚000
Situation III: When major part is raised through debt and some from Equity i.e. Debt = 20,00,000; and Equity
= 10‚00,000.
4. What do you mean Dividend decision? Explain the factors affecting the decisions.
Or
What do you mean Capita budgeting or Investment decision? Explain the factors affecting the decisions.
5. Akash Ltd is running into manufacturing business for five years. Now due to huge success the company
needs additional capital 5 crores for new project for short period of time less than one year for day to
day activities.Identify the needs of that capital and Explain the factors affecting that capital.
Or
Akash Ltd is running into manufacturing business for five years. Now due to huge success the company
needs additional capital 50 crores for new project for long period of time more than five year for
purchase new plant.Identify the needs of that capital and Explain the factors affecting that capital.
FINANCIAL MARKET
1. The CS of Vishal Ltd. Comes to know that the company is going to take over a very reputed company Akash
Ltd in near future that will increase the price of the share of that company that why he purchases huge
number of shares from the market before the information goes to general public.
(i) Do you think this is a fair practice, if not what is called such type practice by CS?
(ii) Which regulatory body is responsible to check such type of practices and write other funtion of it.
2. Surinder Ltd issued a fresh equity shares through IPO and Mr Sonu purchased 500 shares. After five yaers
he do not wants to hold the share as the rate of dividend is not satisfactory so he wants to sell it.
(i) Which market he should apprach for the sale of share and why?
(ii) Write the function of that market.
3. Difference between Primary market and Secondary market.

4. Rajan had misplaced his number of share certificates while shifting his house. After a long time he was
able to trace his shares certificates. Now he was facing problem in selling them off. He shared his
problem with one of his relatives who told him that he would now have to get his shares converted into
electronic form and put it in an account.
1. Name the account which is required to be opened to deal in shares.
2. With whom will he have to open this account.
3. Also name two organisations which can keep those shares in electronic form.
5 . Mr. Ranjan is appointed as a director of a newly company. The company is needed to raise the capital from
The market for two purpose –
(a) For purchase of new plant and machinery
(b) For meeting floatation costs like brokerage,commossion,issue of prospectus etc.
Mr Ranjan is confused to which method and which market is approprate in the above purpose. Write
Another method of floatation of capital.
MARKETING
1. Radhika was a student of Business Studies of Class XII, her father was a farmer who grew different
varieties of rice and was well-versed about various aspects so f rice cultivation. He was also selected
by the government for pilot-project rice cultivation. As a project-work in Business studies she
decided to study the feasibility of marketing good quality rice at a reasonable price. Her father
suggested her to use internet to gather customers’ views and opinions. She knew that there were no
pre-determined specifications in case of rice because of which it would be difficult to achieve
uniformity in the output. To differentiate the product from its competitors, she gave it the name of
Malabari organic Rice and classified it into three different varieties namely- Popular, Classic and
Supreme, based on the quality. She felt that these names would help her in product
defferention.Explain the three functions of marketing, with reference to the above paragraph.
2. A TV manufacturing company is spending substantial amount of money to persuade the target customers to
buy its T.V. sets through advertisements, personal selling and sales promotion techniques. Identify the
element of marketing mix referred here.
3. Radha found a worm crawling out of newly opened tetra pack of a juice manufactured by a reputed
company, Zest Ltd. She went back to the shopkeeper from whom the pack was purchased who directed her
to call up the customer care centre. When all her efforts failed, she went to a consumer activist group to
seek help. The group decided to help Radha and take measures to impose restrictions on the sale of the
firm’s products of the particular batch and urge customers to refrain from buying the products of the
company. Zest Ltd. lost its image in the market. The CEO gives the responsibility of bringing back the lost
a) Identify the concept of Marketing Management which will help the Manager getting
the firm out of above crisis.
b) Also explain the role of above identified concept by stating any two points.
4. ABC Crackers Ltd., a fire-cracker manufacturing company launched some new products on the eve of
Diwali in the market, which attracted many buyers. To meet the increased demand the company
employed people from nearby villages where there is a lot of unemployment. Because of the good
behavior of management with the employees, more and more people wanted to join the company. As
the products were in great demand in the market, a competitor imitated the products. The products
of the competitor were not accepted by the consumers as it was a status symbol to buy the products
of ABC Crackers Ltd. Because of their quality.
a. Identify and explain the product-related decision because of which consumers preferred the
products of ABC Crackers ltd.
b. Also identify any two values which ABC Crackers Ltd. Wanted to communicate to the society.
5. Explain all the elment of marketing mix.
CONSUMER PROTECTION
1. Pankaj purchased a car from 'Abhishek Motors' for Rs. 50 lakhs. The company offered many attractive gifts
to Pankaj like - free insurance for first two years, free pick-up and drop facilities for free servicing upto
20,000 km, etc. But after a few days Pankaj noticed that the pick-up of the car was not good and there was
some problems in the engine. The company serviced the car free of cost but even then Pankaj was not
satisfied with its performance. 'Abhishek Motors' is not giving him the due response. So he filed a complaint
in the State Commission but was not satisfied with its decision also. He was very much disturbed and after
two months decided to appeal against it in further agencies.
(i)Can Pankaj appeal against the decision of the State Commission? Give reason in support of your answer.
(ii) what kind reliefs or remedies can be obtain If pankaj filed a complaint within 30 days and his claim is
accepted further agencies.
2. Explain the Rights and Responsibilites of consumer under consumer protection act 1986.
3. Who is the consumer as per consumer protection act 1986? Explain the imprtance of consumer protection.
-------------X----------------X-----------------X--------------X-----------------X--------------X--------------
NATURE AND SIGNIFICANCE OF MANAGEMENT
1 Mark questions.
1. What is management?
2. Which levels are responsible for coordination?
3. What is meant by effectiveness in management?
4. How does coordination integrate group effort?
5. Define coordination?
6. Name the level of management that is responsible for the welfare and survival of the
organization. (AI 2014)
7. At which level of management are the managers responsible for maintaining the quality
of output and the safety of standard?
8. Identify the basic characteristics of management involved in the statement. ‘The
activities involved in managing an organization are common to all the
organisations, Whether economic, social or political.’
9. What is meant by efficiency in management.
10. Why is management called an intangible force? State.
3 Marks questions:-
1. State any three organization objectives of management.

Ans.:- Survival Profit and Growth.
2. Explain any three points of importance of management.
Ans:- Growth in size , Functional differentiation and specialization.
3. ‘Management is a systematized body of knowledge that explain certain general
truth.’ Explain.
Hint:- It is a systematized body of knowledge which explains a certain general
truth.
4. Explain any three functions of top level of management.
Hint:- Framing policies, welfare and survival of the organisation and key
appointments.
5. Mr.KunalisworkingastheFinanceManagerofXYZLtd.Atwhatlevelof
managementisheworking?Stateanytwofunctionsbeingperformedbyhim?
Hint:- Heisworkingasamiddlelevelmanager. Hisfunctionsareasfollows.Works as a

linking pin between top level and supervisory
level.andDecidingvarioussourcesfromwhichrequiredfundscanberaised.
6. In order to achieve target production of 5000 units per month, a Production Manager
has to operate on double shifts. Due to power failure most of the time, the manager is
able to achieve 5000 units, but at a higher production cost.
(a). In your point of view, what is lacking in management?

(b). Identify the values emphasised by management in the above mentioned case.
Hint:- a) Efficiency
(b) Values – (i) optimum utilization of scarce resources.
(ii) sincerity
(iii) Responsible towards achieving the target.
7. Your grandfather has retired from an organization in which he is responsible for
implementing the plans developed by the top management. At which level of
management was he working? State two more function performed at this level.
Hint:- Middle level management.
8. Explain in brief any three features of management.
9. Mangement is an art? Do you agree with this statement? Give reasons in support
of your answer.
10. Is management a fullfledged profession? Give reasons in support of your answer.
4 marks questions:-
(1). Define management. Explain the features of management that establish it as a

social science.
(2). Success of every organization depends upon its management.’ Explain any four
points of importance of management.
(3). Management does not have the features of a profession.
(4). Coordination is the essence of management. Explain how?
(5).Explain how management increases efficiency and helps in the development of

society?
(6). Coordination is needed at all levels of management and is the responsibility of all
the managers. Explain how?
(7). “Management seeks to achieve certain objectives which must be derived from basic
purpose of the business’. In the light of the statement, explain organisational and social
objectives of management.
(8). ‘Science is a systemetised body of knowledge that explains certain general truths or
the operation of general laws? In the light of this statement, describe whether
management is a science.
(9). ‘The skilful and personal application of existing knowledge to achieve desired
results is called art’. In the light of this statement, describe whether management is an
art or not.
(10). Coordination is not a separate function of management. It is the essence of

management. Explain with the help of a suitable example.
5 Marks questions:-
(1). ‘Coordination is a synchronization of group efforts to achieve organization

objectives’. In the light of this statement, highlight any three features of coordination.
(2). ‘Art is concerned with personal application of knowledge’. In the light of this
statement, compare all the features of art with management and prove that it is an art.
(3). ‘Lack of proper management results in wastages of time, money and efforts’. In the
light of this statement, explain any four points of importance of management.
(4). Management is a profession like medical or legal profession. Do you agree with this
statement? Give reasons in support of your answer.
(5). ‘Management is the process of working with and through others to effectively
achieve organizational objectives by efficiently using limited resources in the changing
environment’. In the light of the above statement, explain any four features of
management.
(6). Explain in brief the functions of management.
(7). What is management? Briefly explain any four features of management.
(8). What do you mean by levels of management? What are the types of levels of
management. State any two functions of each level of management.
(9). What are the types of b objectives of management? Explain in brief the objectives of
management.
(10). Explain the features of management that do not establish it as a profession.
6 Marks questions:-
(1). Rahul Ltd., a leading Manufacturer of iron and steel decided to open up a new branch in
remote area in Rajasthan. So that unemployed youth from the rural areas could get same
opportunities as those available in the urban areas. This initiative has raised the standard of
living of people in rural areas. All children in these families are getting good education and
these families are also actively contributing the nation building through their dedicated work.
a) Identify the objective e of management highlighted in the above mentioned case.
b) Give any two advantages of following the above objective.
c) Which values can be emphasized by following the above objective?
Ans: a) Social objective.

b) Creation of benefit for society – new branch in rural area – leads to Balanced Regional
development.
c) i) Equal Opportunity for growth and development.
(ii) Social responsibility
(iii) Concern for the unemployed.
(2). Unique Ltd. is engaged in manufacturing electrical appliances. The company has been
facing lot of problems for the last few months because of chaos between two departments i.e.
Production department and sales department. Sales department blames production
Department for delayed productions. However, production department blames sales
Department for poor sales. The force that integrates the two departments is missing.
Identify the missing force in the above case and list its two characteristics.
List any two values which can be cultivated among the employees by using the
force identified in (a) above.
Ans: A) Co ordination.
Integrates group efforts.
Ensures unity of action.
b)i) cooperation – By integrating all group efforts.
ii) Unity: By ensuring that all activities aim at accomplishments of organizational
goals.
(3). Management of Global Ltd. Fulfils all its objectives and the organization is able to
work effectively and efficiently. It is using environment friendly methods of production
and disposing off the waste material either by recycling it or using the same for landfill
in such a manner that the aquatic life is not disturbed. Thus it also provides
employment opportunities to the disadvantaged sections of the society.
a) Identify the objective of management of Global Ltd. Which it wants to fulfill by

doing the above activities.
b) State any two other objectives that the management of Global Ltd. Should fulfil.
c) Identify any two values which management of Global Ltd. Can communicate
through fulfilling the objectives as stated in part (b)
d) Identify any two values which Global Ltd desires to emphasise through its above
stated activities.
Ans a) Social objective
b) i) Organisational objective. Ii) Personal objective.
c) i) Opportunity for Growth ii) Harmony among the employees of the

organization.
d) i) Waste management: By using the waste material for recycling & landfill.
ii) Responsibility towards disadvantaged sections of society. By providing

employment opportunities to the disadvantaged sections of the society.
(4). Management is a trinity of science, art and profession. Do you agree with this
statement? Give reasons in support of your answer.
(5). Give the meaning of management and explain how it creates a dynamic
organization and helps in the development of society.
(6). What is meant by coordination? How it integrates group efforts and ensures unityof
action. Explain.’
(7). ‘Management is the series of functions.’ Justify this statement.
(8). ‘Anything minus management is nothing.’ In the light of this statement explain the
importance of management in brief.
(9). ‘Management seeks to achieve certain objectivies which must be derived from basic
purpose of the business’. In the light of the above statement, explain organizational and
social objectives of management.
(10). Justify how coordination is:-
(i). a continuous process.
(ii). An all pervasive function,
(iii). A deliberate function.

CH.1-NATURE AND SIGNIFICANCE OF MANAGEMENT
Management refers to the process of creating and maintaining an environment in

which individual work together with the aim of achieving goals efficiently and
effectively.
OBJECTIVES
They are the end towards all activities of an organization are directed.
 ORGANISATIONAL OBJECTIVES-Needed to achieve economic goal of the

organization.
 SOCIAL OBJECTIVES-Which are desired to achieve for the benefit of the
society.
 PERSONAL OR INDIVIDUAL OBJECTIVES-Individual needs of the
employees.
NATURE
I. MANAGEMENT AS A SCIENCE:
 SYSTEMATIC BODY OF KNOWLEDGE-Developed after years of

knowledge. Management satisfies as it is built up by management
practioners over a considerable period of time.
 PRINCIPLES BASED ON EXPERIMENTS-Not percent applicable in
management as it deals with human beings.
 UNIVERSAL VALIDITY-Not percent applicable .it can be modified
according to the situation.
 CAUSES AND EFFECTS-not satisfies in management.
II. MANAGEMENT AS AN ART:
 EXISTENCE OF THEORETICAL KNOWLEDGE-Applicable in
management as it involves use of theoretical knowledge like
principles and techniques.
 PERSONALISED APPLICATION (OWN WAY)-Applicable in
management as every manager has its own way of managing.
 BASED ON PRACTICE AND CREATIVITY-Applicable as managers
improve their managerial skills by regular practice.
CONCLUSION--MANAGEMENT IS AN ART AS IT SATISFIES ALL ITS
CHRACTERISTICS.
MANAGEMENT: BOTH SCIENCE AND ART-Science -→systematic body of
Knowledge.
ART →Personal skills.
LEVELS OF MANAGEMENT:
COORDINATION- It refer to orderly arrangement of group efforts to provide unity of
in action in order to achieve common purpose
 Integrates group efforts.
 Unity of action.
 Continuous process.
 Pervasive function.
 Responsibilities of all managers.
CH-2-PRINCIPLES OF MANAGEMENT
FAYOL’S PRINCIPLES OF MANAGEMENT
 DIVISION OF WORK-Dividing the work into small compacts job allocating jobs
to different individual as per qualification & experience.
 AUTHORITY AND REPONSIBILITY-Should be proper balance .authority is the

right to give orders to subordinates and responsibilities is the duty which
subordinate expected to perform.
 DISCIPLINE-Obedience to rule and regulations of the organization of the

organization for systematic working.
 UNITY OF COMMAND-Receives order and be accountable to one and only one

superior.
 UNITY OF DIRECTION-One head and one plan for group having same
objectives.
 SUBORDINATION OF INDIVIDUAL INTEREST TO GENERAL INTEREST-

Interest of
the organization as a whole must prevail over the interest of individual or
employees.
 REMUNERATION OF EMPLOYEES-Over all pay & compensation should be fair

to
both employees and organization.
 CENTRALISATION& DECENTRALISTION- Must be proper balance.

*Centralization refers to concentration of authority at top level only.
*Decentralization refers to distribution of authority at all the levels.
 SCLAR CHAIN-Chain of superiors ranging from the highest authority to the

lowest level in the organization
 PRINCIPLE OF ORDER-There should be a place for everything and everyone.

 EQUITY-There should be no discrimination among the employees on the basis
of
religion, caste, sex, beliefs etc.
 STABILITY OF PERSONEL-Proper efforts to achieve stability and continuity of

tenure of personnel.
 INITIATIVE-Workers should be encouraged and given an opportunity to take

some initiative in making and executing the plan.
 ESPIRIT DE CORPS-Management should take reasonable steps to develop a

sense of belongingness and feeling of team spirit among employees.
SCIENTIFIC MANAGEMENT (F.W.Taylor) - Use of scientific, systematic objectives and

logical principles and techniques to various managerial functions.
PRINCIPLES
 Science not rule of thumb-there should be scientific study and analysis of

each element of a job in order to replace old rule of thumb approach or hit and
trial method.(thinking before doing)
 Harmony not discord-there should be complete harmony and proper

understanding between management and workers instead of individualism.
 Cooperation not individualism –there should be cooperation between

management and workers instead of individualism
 Development of worker to their greatest efficiency and prosperity- Should

aim to develop workers to their greatest efficiency and prosperity.
FAYOL vs Taylor -a comparison
Basis Henry Fayol F.W. Taylor

Formation Personal experience Observation and experiment
Focus Improving overall administration Increasing productivity of
of organization workers
Applicability Universally applicable Only for specialized situations
Perspective Top level management Lower level
Personality Known as father of general Known as father of scientific
management management
Expression General theory of administration Scientific management
CH- MANAGEMENT & BUSINESS ENVIRONMENT
ELEMENTS:-
 Economic -Which have economic impacts on business activities influence

factors such as supply, price, monetary policies, balance of payments etc.
 Social -Represents customs, beliefs, norms & ethics of a society in which

business enterprise operates
 Technological -Process related to scientific innovation and improvement which

provide new ways of producing goods and services and new methods of
techniques of operating business.
 Political -Political conditions such as political leadership, political stability

nature of government intervention and so on…
 Legal -Framework of laws and various legislations within which transactions

takes place.
NEW INDUSTRIAL POLICY
 De licensing-abolish licensing except six industries
 Decrease in role of public sector-only 4
 Disinvestment
 Liberalization of foreign capital
 Liberal policy for technical collaborations.
 Setting up of foreign investment promotion board.
 De reservation under small scale industries
• Liberalization-removal of entry and growth restriction on the private

sector enterprise.
• Privatization-transfer of ownership, management and control from public

sector enterprise to the entrepreneurs in the private sector.
• Globalization-integrating the national economy with the world economy

through removal of barriers on international trade and capital movements.
CH 4-PLANNING
FEATURES:-
 Focuses on objectives
 Pervasive
 Continuous
 Futuristic
 Decision making
 Mental exercise.
IMPORTANCE
 Provides direction
 Reduces risk
 Reduce overlapping and wasteful acts.
 Promotes innovative idea
 Facilitate decision making
 Establishes standard for controlling
ESSSENTIAL REQUIRMENTS (OR QUALITIES) OF EFFECTIVE PLANNING
 The plan should be specific.
 The plan should be logical & practical.
 The plan must be flexible in nature.
 The plan should be stable.
STEPS IN PLANNING PROCESS
 Setting up of objectives-Where to reach
 Developing premises-Making assumptions related to future conditions.
 Identifying alternative courses of action –Another option
 Evaluating alternative courses-Evaluating each course

 Selecting an alternative-Selecting the best and profitable one
 Implement the plan-putting into action
 Follow up-action review the existing plan
Standing Plan-Which can be used again and again. It’s also known as “repeated
use” plan.
 Objectives-End points towards which the activities of an enterprises are

directed
 Strategy-Unified comprehensive and integrated action plan designed to achieve

specific objectives in a specific situation/environment.
 Procedure-Chronological sequence of various steps to be taken in order to

perform an activity efficiently
 Methods-Prescribed process in which a particular operation or activity is

performed
 Rules-They are specific statements that inform what must to be done.Violation

of rules invites punishment or sanction.
Single Use Plan -Formulated to meet the requirement of a particular situation

and to accomplish specific objectives. It’s also known as “specific” plan.
 Budget-statement of expected result expressed in numerical terms over a period

of time.
 Programmes-Combination of objectives ,policies, procedures, rules, tasks, and

other element which are designed to get a systematic working in the organization
CH: ORGANISING
STEPS IN THE PROCESS OF ORGANISING
 Identification and division of work
 Deparmentation – grouping of work.
 Assignment of duties- work for different employs.
 Establishing reporting relationship- clearly defining authority and responsibility.
 Organisational structure- Network of position responsibilities and authority at

different level of organisation.
TYPES:-
FUNCTIONAL STRUCTURE: - Grouping of jobs of similar nature under on department.
DIVISIONAL STRUCTURES: - Jobs related to one product are grouped under one
department.
FORMAL & INFORMAL ORGANISATION
FORMAL ORGANIZATION:- Structures of jobs position with clearly defined position which is
designed by management to accomplish a particular jobs.
INFORMAL ORGANIZATION: - Network of social relation which emerge its own due to formal
roles and relationship among people.
Delegation of Authority:- Refers to process of sharing of task between a manager and
his subordinates.
Centralisation: Refers to concentration of decision making power at top level
management.
Decentralization: - Evenly and systematic distribution of managerial authority from
top level of management to middle and lower level.
CH-6 STAFFING
Part of process of management which is concerned with obtaining utilising
and maintaining a satisfactory and satisfied work force.
FEATURES:-
Integral part of management
Pervasive
Continuous process
Deals with people.
Wide scope.
Multiple objectives.
HRM (HUMAN RESOURCE MANAGEMENT)
The art procuring development and maintaining competent workforce to
achieve the goal of an organisation in an effective efficient manner.
STAFFING PROCESS:-
Estimating manpower - Estimating the number and types of employees required.
It Includes two kinds of analysis:-
Workload analysis-Number and type of human resources are needed to
Perform jobs jobs in the organisation..
Workforce analysis-Number and type of human resources available in the
Organization
Manpower requirement
STAFFING PROCESS:-
 Estimating manpower: number and types of employees required. Includes two
kinds of analysis-
Workforce analysis number and type of human resources are needed to perform
this job
Workload analysis number and type of human resources available with the
organization.
 Recruitment: searching Identifying and encouraging prospective candidates to

apply for job in the organisation..
 Selection: choosing the best person
 placement and orientation: assigning jobs, introducing new employees
 Training and development: motivates employees enable to perform job

efficiently
RECRUITMENT
INTERNAL SOURCES EXTERNAL SOURCES
1. direct recruitment
Transfer Promotion 2. casual callers
3. advertisement
(Shifting from (movement of employees
one job to from lower level 4. employee exchange
another) to higher level) 5. placement agencies &

management
consultants
6. campus recruitment
7. recommendations of
employees
8. labour contractors
9. advertising on
television
Selection process
 Preliminary screening-unqualified candidates are eliminated.
 Selection test-who pass preliminary screening are asked for selection test.
 Employment interview: Formal face to face conversations.
 Reference and background checks-Required to give name and address.
 Selection decision: selection by convincing managers.
 Medical examination-Required to undergo medical exams.
 Job offer: Issuing of job offer through letter of appointment.
 Contract of employment-written contract of employment
Development- Overall growth of employee.
Training- Process of increasing the knowledge skills and abilities of employees
for doing a particular job.
METHODS OF TRAINING
ON JOB TRAINING OFF JOB TRAINING
1. induction training
2. apprenticeship training 1. vestibule training
3. internship training
CH 7: Directing
Process of instructing guiding counseling and motivating and leading people in the
organization to achieve its objectives.
Features-
 Directing initiates action

 Direction takes place at every level of management
 Directing is continues process.
 Flows from top to bottom
 Deals with people
Principles of Directing
 Maximum individual contribution: create self confidence among workers.
 Harmony of objectives: Harmonies individual objectives with organizational
objectives.
 Unity of command: Receive order and instruction from one superior.
 Managerial communication: Systematic flow of communication between
superior and subordinates
 Appropriateness of direction: Appropriate direction and leadership techniques
to be used.
 Leadership-Manager should exercise good leadership while directing.
 Use of informal organization-Manager should identify informal groups and
support and the formal structure by supplement them.
 Follow through: Manager should take follow up action in order to make directing
more effective.
Elements of Directing.
 Supervision-Overseeing employees at work

 Motivation-Stimulating people to action to accomplish desired goal.
 Leadership-Process of influencing the behavior of people towards achievement of
organizational goal.
 Communication-process of exchange of ideas, view, facts, feeling between two or
more people to reach common understanding.
.
MASLOW’S HIERARCHY THEORY
Individual ex. of needs
need for growth, & self-fulfillment
need for status
need for love, friendship & social

interaction
need for physical & financial

security
need for food, shelter & clothing

Leadership style
 Autocratic or authoritative leadership-Leader centralizes all decision making

power and exercise complete control over his subordinates.
.
LEADER
A B C D
 Participative or democratic leadership-leader consults subordinates in

decision making process and encourages them to give suggestion in setting
goals and implementing decision.
A LEADER C
 Free rein or laissez faire leadership-leader gives complete freedom to the

subordinate in setting goal.
LEADER
A B
D C
Channels of Communication
 Formal communication-Official communication taking place in the
organization.
On the basis of direction:

 Downward communication-
 Upward communication-
 Horizontal or lateral communication-
 Networks of formal communication:
 Single chain network
 Wheel network
 Circular network
 Free flow network
 Inverted v network
Informal communication-Unofficial communication arises from social interaction.
 Networks of grapevine communication
 Single strand
 Gossip
 Probability network
 Cluster
CH-8-CONTROLLING
It refers to comparison of actual performance with the planned performance

and taking corrective action, in case of deviation between actual and planned
performance.
Importance
 Accomplishing organizational goal.
 Judging accuracy of standards.
 Making efficient use of resources.
 Improving employee’s motivation.
 Ensuring order andiation discipline.
 Facilitating coordination in action.
Relation between Planning and Controlling

 Both planning and controlling are interrelated and independent.
 Planning is prescriptive and controlling is evaluating.
 Planning and Controlling both look ahead and look back.
Process /Steps in controlling
Setting standards- desired performance
Measurement of actual performance
 Comparison of actual performance with standards.
 Analyzing deviations: all deviations are not equally important.
• Critical point control.Management should focus on key Result areas.

• Management by expectation:Management should Exercise control on
Exceptional cases which are significant.
 Taking corrective action. Action to remove deviations to bring conformity between
actual and planned performance.
CH-9-FINANCIAL MANAGEMENT
Management of flow of funds and involves decision related to the procurement

of funds, investment of fund in long term and short term assets and distribution of
earnings to the owner.
Financial Decision-Decision concerning financial matters of a business firms.
Three major groups:
Investment Decision- Investment of firm’s funds in different assets.
 Capital budgeting decision or long term investment decision-(Relating to fixed

assets)
 Working capital decision or short term investment decision-(Relating to current
assets)
Financing decision-Determination of sources of finance, amount to be raised from
each sources and the cost of each sources of finance.
 Shareholder’s or owners fund [eq. sh. and retained earning]
 Borrowed fund [debenture ,long term Loan]
shareholders’ and amount of profit to be retained in the business to meet investment
requirement.
FACTORS AFFECTING CAPITAL BUDGETING DECISION:-
1Cost of the project
2Cash flow position

3.Rate of return
4.Risks
5.Investment criteria
FACTORS AFFECTING DIVIDEND DECISION:-
 Earning
 Stability of earning
 Stability of dividend
 Growth opportunities.
 Cash flow position

 Shareholders preferences
 Taxation policy
 Stock market reaction.
 Access to capital market.
 Legal Constraints.
 Contractual constraints
CAPITAL STRUCTURE -
Proportion of debt and equity used for financing business operation
DEBT/EQUITY
 Ownership fund (equity)
 Borrowed fund (debt)
SOME NOTEWORTHY POINTS REPRESENTS OWNER’S FUNDS
 Debt is borrowed funds whereas equity represents owner funds
 Debts is cheaper as compare to equity.
 Debts is more risky as compare to equity
FACTORS AFFECTING CHOICE OF CAPITAL STRUCTURE
 Cash flow position.
 Interest coverage ratio.
 Cost of debt.
 Debt service ratio.
 Rate of return.
 Tax rate
 Cost of equity
 Flotation cost
FIXED AND WORKING CAPITAL

 Fixed capital:- Those assets which remain in the business for period more than
one year. E.g.- Plant & Machinery, Land & Building. Etc
 Working Capital- Part of total capital which is required for holding current
assets.
FACTORS AFFECTING REQUIREMENT OF FIXED CAPITAL :-
 Nature of business.
 Scale of operation
 Choice of technique
 Technology up gradation
 Growth prospects
 Diversification
 Financing alternatives
 Level of collaborations.
FACTORS AFFECTING REQUIREMENT OF WORKING CAPITAL
 Nature of business.
 Scale of operation
 Business cycles.
 Seasonal factors
 Production cycles.
 Credit allowed.
 Credit availed
 Operating efficiency
 Availability of raw materials.
 Growth prospects
 Level of competition.
 Inflation.
CH 10 - FINANICIAL MARKET
Financial Market:-Refers to the market which creates and exchange financial

assets.
CLASSIFICATION:-
 MONEY MARKET- Market for short term funds, which deals in monetary
assets whose period of maturity is upto one year.
• Instrument of money market
a)Treasury bill b)Commercial paper c) Call money d) Certificate of
deposit e) Commercial bill
 CAPITAL MARKET- Whole network of all organization, institution and
instruments that provide medium and long term funds
• Components of capital market
a)Primary market -For sale of securities for 1st time
b) Secondary Market -sale and purchase of previously issued securities
STOCK EXCHANGE – According to securities contracts act 1956, stock exchange refers
to an institution or body of individuals(incorporated or not), which is constituted for the
purpose of assisting, regulating or controlling the business of buying and selling or
dealing in securities.
TRADING PROCEDURE-
 Selection of broker
 Opening Demat account
 Placing the order
 Executing the order
 Settlement
Stock Exchange Board of India (SEBI)- The malpractices, scams and exploitation of
investors in the securities market led to the emergence of SEBI
FUNCTIONS OF SEBI
 Regulatory function
 Development function
 Protective function
CH 11 – MARKETING MANAGEMENT
Planning, Organizing, Directing, and Controlling activities which facilitate exchange

of goods and services
MARKETING MANAGEMENT PHILOSOPHIES –

 Production Concept- consumer favour those products, which are widely
available at an affordable price
 Product Concept- consumer favour those products which offer superior quality,
performance, and features
 Selling Concept- firm believes that aggressive selling and promotion effort will
convince a customer to buy the product
 Marketing Concept- firm can achieve the objective of profit maximization by
finding out needs and requirement of customer and satisfying them in an
effective manner
 Social Marketing Concept-Along with customers satisfaction due importance
should be given to welfare of the customer and the society
MARKETING MIX – Set of marketing tools that a firm uses to peruse its marketing
objectives in a target market
ELEMENTS OF MARKETING MIX
 PRODUCT -Anything of value which is offered to market to satisfy wants or needs

is called product
 PRICE - Amount of money which the customer have to pay to obtain the product
is called price
 PLACE -Activities that make firms product available to target customer is called
place
 PROMOTION-such activities which intend to inform customer about the product

and persuade to buy is called promotion
BARNDING – One of the most important components of product mix. A brand provides
identification to a product in the form of name, symbol, sign etc
Brand- Name, sign, or some combination of them to identify a product
 BRAND NAME – which can be spoken? Eg: names like Maggie, Nike,
Mercedes, etc
 BRAND MARK – which cannot be spoken but can be recognised in the
form of sign, symbol, or design? EG: SWOOCH SIGN NIKE etc
 Trade Mark- A brand or part of a brand that is given legal protection called
trademark. No other firm can use such name or mark in the country
 PACKAGING – Act of designing and producing the container or wrapper of

a product
Levels:
 Primary Packaging- Immediate packaging of the product
 Secondary Packaging – Additional packaging, additional layer. Eg;
Cardboard for toothpaste
 Transportation Packaging – Further packaging which is necessary to
protect the product in the process of transportation and storage
LABELLING – Label is the Information tag attached directly to the product . Labeling is
the process of attaching or putting labels on the product
Labels can be –
 SIMPLE TAG – In case of local product

 DESCRIPTIVE TAG – In case of branded product
FUNCTION OF LABELLING –
 Describe the product and specify its content

 Identify the product and brand
 Promote the product
 Provide information required by law
PRICE – Amount of money which a customer has to pay to buy a product
PROMOTION – All such activities which intend to inform customers about the product
of the company and persuade them to buy this product.
ADVRTISING –Any paid form of non personal presentation and promotion of goods and
services by an identifies sponsor
PERSONAL SELLING – Process of informing customers and persuading them to

purchase products through personal communication
SALES PROMOTION – Short term incentives which are offered t encourage the buyer
to make immediate purchase of a product or service
SALES PROMOTION ACTIVITIES
 REABTE- price less than original price .Tt is the special discount offered in
spcial occasions.
 DISCOUNT –General Reduction of certain percentage from price for limited

period
 REFUNDS – Price is refunded on showing proof of purchase
 PRODUCT COMBINATION – One product as gift with main product
 QUANTITY GIFT – Some extra quantity of the main product

 LUCKY DRAW- Offering prizes to randomly selected customer who win the lottery
.In case of instant draw assured gift prizes are offered to all customer who draw
the scratch card.
 Free sample
 Fair and exhibitions
 Prize contest
 USABLE BENEFIT- Coupon or discount voucher,Tour package
CH 12 - CONSUMER PROTECTION
LEGAL PROTECTIN TO CONSUMER:-
 The consumer protection act, 1986
 The contract act, 1982
 The sales off goods act, 1930
 The essential commodities act, 1955
 The trade mark act, 1999
 The competition act, 2002
CONSUMER RIGHTS –
 RIGHT TO SAFETY -Right to be free from injury or harmful affects/health hazards
 RIGHT TO BE INFORMED -Information about the product
 RIGHT TO CHOOSE -Freedom to choose the product.
 RIGHT TO BE HEARD - Right to raise complaint with the suppler.
 RIGHT TO SEEK REDRESSAL -Right to seek redressal of grievances And to get Remedy
From Specially organised institutions for consumer protection.
 RIGHT TO EDUCATION - Right to knowledge and awareness
CONSUMER RESPONSIBILITIES:-
 Consumer should have knowledge about the market
 Consumer must be quality conscious
 Use the product safely
 Consumer must be cautious

 Insist on cash memo
 Consumer must be honest
REDRESSAL AGENCIES –
 District forum
 State commission
 National Commission
REMEDIES /RELIEF AVAILABLE TO CONSUMER:-
 To get remove the defects from the goods supplies
 To replace to defective goods from the suppliers.
 To return/refund of the price paid for the goods or the service.
 To get compensation for adequate cost to parties.
 To discontinue the unfair trade practice.
 Not to offer the hazardous goods for sale.
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KENDRIYA VIDYALAYA BALLYGUNGE KOLKATA

SYLLABUS 60% SYLLABUS

and off the job- Induction training, vestibule

Unit 8: Controlling 1. Concept and importance

2. Marketing Management- Concept 2. Marketing management philosophies

Unit 12: Consumer Protection

1. Meaning It refers to completing It refers to completing

2. Objective To achieve end result To conduct cost-benefit

3. Main Consideration Time Cost

Goal oriented Process: It is a goal oriented process, which is undertaken to

Pervasive: Management is universal in nature. It is used in all types of

Multidimensional: It is multidimensional as it involves management of work,

Continuous: Management is not a process which can be performed once and

Group Activity: It is a group activity since it involves managing and

Dynamic function: It is a dynamic function since it has to adapt according to

Organizational objectives: It refers to the utilisation of human and physical

Survival – Management of an organisation must ensure the survival of the

Profit – It plays an important role in facing business risks and successful

Growth – Management must ensure growth which can be measured by

Personal objectives: It refers to the objectives to be determined with respect to the

Levels of Management: Top, Middle and Operational Levels

Consists of Chairperson, Chief Executive Officer, Chief Operating Officer or

Consists of Divisional or Departmental heads, Plant Superintendents and Operation

Lower Level/Supervisory Level

Consists of Foremen and Supervisor etc.

Main task is to ensure actual implementation of the policies as per directions,

Increases Efficiency: Management increases efficiency by using resources in the best

Creates Dynamic organization: Management helps the employees overcome

Achieving personal objectives: Management helps the individuals achieve their

Development of Society: Management helps in the development of society by producing

Lack of coordination results in overlapping, duplication, delay and chaos.

Coordination integrates group efforts: It integrates diverse business activities

QUESTIONS FOR PRACTICE

Q.3 In order to be successful, an organization must change it according to the

Q.4 Which force binds all other functions of management? (Coordination)

Q.5 Radhika Ltd. uses environment friendly methods of production. Identify

Q.6 Your uncle is serving as a foreman in a factory. At what level of

Q.7 ‘Management provides judgement and vision’. Explain? (Dynamic)

Q.8 Identify the nature of management when it is practiced as personalised

Concept of Principles of Management

The management principles are derived from observation, analysis, experimental

Nature of Principles of Management

The nature of principles of management can be described in the following points:

Formed by practice and experimentation: They are developed after thorough

Mainly Behavioural: Since the principles aim at influencing complex human

Fayol’s Principles of Management

Principles of Management developed by Fayol

Authority and Responsibility: Authority means power to take decisions and

Discipline: It is the obedience to organizational rules by the subordinates.

Remuneration of Employees: Remuneration of employees should be just and

Stability of Personnel: According to this principle, employees once selected,

Taylor’s Scientific Management

Meaning: Conduct of business activities according to standardised tools, methods and

Scientific Management attempts to eliminate wastes to ensure maximum production at

Principles of Scientific Management

Science, not rule of Thumb:

Harmony, not discord:

Cooperation not individualism:

Development of workers to their greatest efficiency and prosperity: The

Stress on separating planning function from execution function.

Planning Incharge Production Incharge

Identifying and determining the ideal productive movements.

Eliminate the unproductive movements and equipments.