Business Studies Class Xii Revised Support Material
Business Studies Class Xii Revised Support Material
Business Studies Class Xii Revised Support Material
Always keep some time for revision while budgeting time. In the rush to
complete the paper, some basic spelling mistakes or forgotten, halfattempted questions may spoil all the effort.
Apply FRT (Fast reading technique) i.e. to revise more in less time.
Also be careful not to spend too much time on 1 question at the cost
of other questions.
While trying to understand HOTS questions keep in mind chapterwise allotment of marks for each chapter. Sometimes this helps to
guess the chapter from which the hots question is given.
It also
Refer latest CBSE sample question papers along with previous year
Board Question Papers.
Topics deleted by
the CBSE
No Change
No Change
Economic
Environment in India
Topics added by
CBSE
No Change
No Change
No Change
Old
New
marks marks
07
05
07
06
05
05
Features of planning
5
6
No Change
No Change
Role Of supervisor
Qualities of good
leader
Techniques of
controlling:
Budgetary control
Importance of
Financial
management
Distinction
Between Capital
Market and
money Market
NSEI and OTCEI
Role of marketing
Marketing and
selling
Nature and
classification of
product
Function of
channel of
distribution
Limitation of
advertising
importance of
personal selling
Merits and
limitations of
sales promotion
publicity
NO change
NO change
9
10
11
12
13
07
06
10
08
08
06
10
08
06
06
.NO Change
12
12
08
08
.Qualities of a good
salesmen
.Public relations
14
14
NO change
.Project work
Total marks
06
00
100
06
10
100
SYLLABUS
Annexure-'M'
One Paper
Unit wise Weightage
Unit
s
BUSINESS STUDIES
CLASS XII
3 Hours
90 Marks
Perio
ds
Marks
5
6
5
6
8
6
8
6
50
12
8
14
6
40
90
Note: The Question Paper will include value based question(s) to the extent of 4
marks from any of the units.
Part A: Principles and Functions of Management
Unit I: Nature and significance of Management
(Periods 12)
Levels of management
planning,
organizing,
staffing,
(Periods
(Periods
(Periods
Unit 7: Directing
(Periods 16)
(Periods
(Periods
(Periods
(Periods
(Periods
(Periods
Max. Marks
Content Unit
Marks
2.
Principles of Management
3.
Business Environment
4.
Planning
5.
Organizing
6.
Staffing
7.
Directing
8.
Controlling
Total (A)
50
Financial Management
12
10.
Financial Markets
11.
Marketing
14
12.
Consumer Protection
Total (B)
40
90
1.
Very short
answer
type (VSA)
12
12
2.
Short answer
type I
(SAI)
18
3.
16
4.
20
5.
24
6.
Total
30
90
C. Scheme of Options
There will be no overall choice. However, there is an internal choice in
every question of 6 marks
D.
E.
Percentage
1.
Easy
30%
2.
Average
50%
3.
Difficult
20%
Typology of Questions
Very Short
Answer (1)
Short Answer
Question(3,4)
Long Answer
I & II(5,6)
TOTAL
Unit-1(5)
5(1)
5(1)
Unit-2(6)
3(2)
6(2)
Unit-3(5)
5(1)
5(1)
3(2)
6(2)
Unit-4(6)
Unit-5(8)
4(2)
8(2)
Unit-6(6)
1(1)
5(1)
6(2)
Unit-7(8)
1(2)
6(1)
8(3)
Unit-8(6)
1(1)
5(1)
6(2)
Unit-9(12)
1(2)
4(1)
6(1)
12(4)
Unit-10(8)
1(2)
6(1)
8(3)
Unit-11(14)
1(2)
3(2)
Unit-12(6)
1(2)
4(1)
6(3)
12(12)
34(10)
44(8)
90(30)
6(1)
14(5)
BUSINESS STUDIES
Class XII (2012-13)
Max. Marks 90
Time - 3 Hrs.
General Instructions: 1. Answers to questions carrying 1 mark may be from one word
to one sentence.
2. Answer to questions carrying 3 marks may be from 50 to 75
words.
3. Answer to questions carrying 4-5 marks may be about 150
words
4. Answer to questions carrying 6 marks may be about 200
words.
5. Attempt all parts of a question together.
(1)
(1)
(1)
(1)
(1)
(1)
(1)
Q12. When can a consumer make an appeal in the Supreme Court under
The Consumer
(1
Protection Act 1986?
)
Q13. State any three characteristics of principles of
management.
(3)
Q14
.
Explain the following principles of Scientific Management:a)
(3)
(3)
(3)
(3)
(4)
Q21. State any four factors which help in determining the working Capital
requirements of a Company. (4)
asked you to design the capital structure of the company. State any six
factors that you would consider while doing so.
OR
Every manager has to take three major decisions while performing the
finance
function. State these decisions.
(6)
Q29.
Q30.
b)
c)
ii)
iii)
to
particular
class
(6)
of
Marking Scheme
1. Induction Training refers to the process of introducing the selected
employees to other employees and familiarizing him with the rules and
policies of the
organisation.
(1)
2. Democratic Style of Leadership is leadership in which, a leader
consults with his subordinates on proposed actions and decisions and
encourages them to
participate in decision making.
(1)
3. The Incentive provided to Rajat is - Recognition
(i) Comparison of actual performance with
4. standards.
(ii) Taking corrective action.
(1)
( x 2 = 1)
(+
=1 )
10. Promotion mix refers to combination of promotion tools used by an
organisation to
achieve its objectives.
(1)
11 .Consumer Protection refers to the act of providing adequate protection to
consumers against the unscrupulous, exploitative and unfair trade
practices of manufacturers and service providers.
(1)
12. An order passed by the National Commission in a matter of its original
Jurisdiction is appealable before the Supreme Court.
(1 )
13.
Taylor believed that there was one best method of maximising efficiency.
This method could be developed through study and analysis. The Method
so developed should substitute the Rule of Thumb through the
organisation. Scientific method involves investigation of traditional
methods through work study, unifying the best practices and developing a
standard method which would follow throughout the organisation. This
can result in tremendous saving of time and materials. In the present
context the use of internet has brought about dramatic improvement in
internal efficiencies and consumer satisfaction.
(ii) Cooperation, not Individualism
There should be complete cooperation between employees and
management instead of individualisation. It is an extension of Principle
of harmony not Discord. Management should not close its ears to
constructive suggestion by employees but should reward their
suggestions which result in substantial reduction in costs. Workers
should be a part of management and a part of all important decisions.
Workers on the other hand should desist making unreasonable
demands. When there is open communication system and goodwill there
will be no need for trade unions. There should be almost equal division
of work and responsibility between employees and management.
Management
employees.
15.
should
help,
encourage
and
They serve as the guide for overall planning and are usually set
by the top management.
They need to be expressed in specific terms.
(3)
(3)
(i)
Marketing Planning
SNO Basis
Functional
Formation
It is based upon
Functions
Managerial
Development
Responsibility
Suitability
Divisional
It is based upon product lines
and is supported by functions
Difficult, as each
Easier Autonomy as well as
functional
the
manager has to report to chance to perform multiple
manager
functions help in managerial
development
Difficult to fix on any one Easy to fix responsibility for
department
performance
Suitable for medium
sized
firms having a single
product or small number
of
related products
(1x4=
4
(iv)
(v) The duration and the length of the production cycle affect the
amount of funds required for material and expenses and
consequently affect the working capital requirement of a firm.
Firms with longer processing cycles lead to higher working capital
requirement of a business.
(vi)
(vii) To the extent the firm avails credit on purchases, the working
capital requirement is reduced.
(viii) Operating Efficiency of a firm may reduce the level of raw
materials, finished goods and debtors resulting in lower
requirement of working capital.
(ix) Difficulty in availability of raw material and larger lead time will
make the firm store larger quantity of material and larger shall be
the amount of working capital required.
(or any other correct factor)
22.(A)
The disturbing value in the above para are: any two
(x2=1)
testing on animals is banned.
no information about the products on package is violation of
Right to Information.
Yes, the decision of installing a new unit in tribal area
will definitely help in the upliftment and development of
Stability
Peace
Attitude of elected government representatives that impact the
business entrepreneurs.
Example of Political Environment affecting the functioning of a business
enterprise is Even after opening up of the Indian Economy in 1991, foreign companies
found it extremely difficult to cut through the bureaucratic red tape to get
permits for doing business in India, which discouraged them from
investing in our country.
Legal Environment includes various
Legislations
Administrative orders
Court judgement
Decisions rendered by various agencies at every level of
government (centre, state or local)
Every Management is required to obey the law of the land.
Example of Legal Environment affecting the functioning of a business
enterprise isAdvertisements for packets of cigarettes must carry the Statutory
Warning, Cigarette Smoking is Injurious to Health. ((1 +1 )+(1 +1
)=5)
25. The Companies do not always use internal Sources of recruitment
despite of them being economical because of the following reasons:
(any five)
(i)
(ii) The employees may become lethargic if they are sure of time
bound promotions.
(iii) Spirit of competition among the employees may be hampered.
(iv) Frequent transfers of employees
productivity of the organisation.
may
often
reduce
the
(ii)
(1+1x5=
6)
OR
Directin
g
(1 mark)
Importance
1. Initiates action.
2. Integrates employees efforts
3. Guides employees
4. Facilitates introduction of changes
5. Brings stability and balance
(1/2 mark for the heading +1/2 mark for the explanation=1mark)
(1+1x5=6)
28.
(i)
Selection of a Broker
firms
or
corporate
books.
The
broker
charges
interacts
Your
with
the
Depository
investors
Participant
through
will
depository
maintain
your
Rebate
Refund
Product - combination
Quantity - gift
Instant draws and assigned gift
Lucky Draw
OR
(1x6=6)
(a). 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.
(b). The most commonly used non-personal tool of promotion which is
paid for by the marketer is advertising. The explanation should
include:
It is a paid and non-personal form having an identified sponsor to
promote an idea.
Public Relations
(ii)
Advertisements
(iii)
Personal Selling
(2x3=6)
CHAPTER I
NATURE AND SIGNIFICANCE OF MANAGEMENT
Linking of Class XI syllabus:
1. In sole proprietorship business, the owner him-self manages
his business.
2. In Partnership business all partners or any one partner on
behalf of other partners can manage the business.
3. In HUF Karta manages the business.
Objectives
objectives
of
on
MEANING/CONCEPT OF MANAGEMENT:
Management is the process of getting things done with the aim of
achieving goals effectively and efficiently.
Process: refers to the primary function like planning, organising,
staffing, directing and controlling performed by the management
to get things done.
Effectiveness: means completing the right task to achieve the
deputed goal within the time frame.
Efficiency: means completion of task using minimum resources
2.
DEFINITION OF MANAGEMENT:
Management is the process of working with and through others to
effectively achieve the organisational objectives by efficiently using
limited resources in the changing environment.
Kreitner
3.
Functions of management:
IMPORTANCE OF MANAGEMENT
Aids in achievement of individual and organisational goals
Increases efficiency
Enhances optimum utilisation of resources
Creates a dynamic organisation
LEVELS OF MANAGEMENT
promotion of workers
8.
As a Profession:
Well defined body of knowledge.
Existence of code of conduct
Professional association (AIMA)
Restricted entry
Fees as remuneration for their services
As a Science:
Arranged, organised systematic body of knowledge
Universal validity
Principles arrived at after experimentation
9.
COORDINATION Meaning.
It is the synchronisation of various activities and efforts
in an organisation providing the required amount of quality,
timing and sequence; thus ensuring the achievement of the
planned goal with minimum content.
10.
FEATURES OF COORDINATION:
11.
12.
IMPORTANCE OF COORDINATION
Ensures unity of action
Erases interdepartmental conflicts
Promotes harmonious implementation of plans
Helps in maintaining a high degree of morale amongst
employees
13.
Planning,
Oraganizing,
Staffing,
Directing
and
controlling is the sequence of functions in a process.
Name it.
Ans. Management
2.
Ans. Management
3.
Ans. Efficiency
5.
6.
"Management is a group activity". Give reasons for
statement.
Ans. An organisation is a collection of diverse individuals with needs
and purposes but they work towards fulfilling the common
organisational goals.
7.
Management of operations.
ii)
iii)
Higher level need which includes personal growth and
development.
5.
iii)
6.
iv)
v)
ii)
iii)
iv)
v)
vi)
It
It
It
It
is
is
is
is
a continuous process.
an all pervasive function
the responsibility of all managers.
a deliberate function.
(iii)
(iv)
(v)
(vi)
ii)
iii)
Higher level need which includes personal growth and
development.
5.
-1
price.
ii)
Using environment friendly methods of
production
iii)
Generation of employment opportunities.
2.
-1
Mark
3.
- 3 or 4
-3
other discipline.
8.
CHAPTER - 2
PRINCIPLES OF MANAGEMENT
CONCEPT MAPPING
Concept :
2.
3.
Provides managers with useful insights into reality through improved knowledge, ability, understanding and
improved guidance to the managers.
c) Method study
d) Motion study
e) Time study
Here the job is divided into series of elements and the time
required to complete each element idealistically is recorded
using a stop watch.
f) Fatigue Study
Determines the amount and frequency of rest intervals required
in completing a task.
g) Differential Piece wage system
Henry Fayol
F.W Taylor
1. Basis of
formation
2. Focus
Personal Experience
3. Applicability
Universally applicable
Applicable only to
specialised situations
4. Perspective
5. Personality
6. Human
element
More importance
attached to increasing
the production than to
the human element
7. Emphasis
Greater emphasis on
tools and standardisation
of work i.e. General
Theory of Administration
8. Unity of
Command
Improvement in the
overall
Observations and
experimentation
Concentrates on
improving the
Ans. This it means that they are applicable to all kinds of organizations.
4.
Ans. Flexibility.
5.
Ans.
6.
Ans. (i) Science, not Rule of Thumb. (ii) Harmony, not Discord.
7.
The
directors
of
XYZ
limited,
an
organisation
manufacturing computers, want to double the sales and
have given the responsibility to the sales manager. The
Universal in
application.
(ii)
General guidelines.
(iii)
conditions.
(iv)
(v)
4.
"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
organisation become their own objectives.
6.
(ii)
(iii)
(ii)
(iii)
etc.
7.
Unity of Command
(ii
)
Or
de
r
(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.
11. Explain how principles of management
(cbse 2012)
Taylor
Fayol
1. Personality
2. Perspective
3. Scope and
Applicability
4. Focus
5.Modific
ations
6. Expression
2.
Principles of Science
They are rigid.
Workers
should be encouraged to develop and
carry out their plans for development. Identify the
principle of management formulated by Fayol.
- 1 Mark
7.
How
do
management
principles
ensure
optimum
utilization of resources and effective administration? - 3
or 4 Mark
- 3 or 4
-3
- 5 or 6
E
F
G
H
level.
(iii)
CHAPTER - 3
BUSINESS ENVIRONMENT
CONCEPT MAPPING
Meaning
Nature
forces
complexity
(g) Relativity
Importance : (a) first mover advantage (b) early warning signal (c)
tapping useful resources (d) coping with rapid change (e)
planning
and
policy
formulation
(f)
improving
performance
Dimensions : (a) economic (b) social (c) technological (d) political (e)
legal
Liberalisation :Liberating industry from licensing and other regulations.
MEANING:
It is the sum total of all individuals or institutions
comprising of consumers, competitors, suppliers government,
courts, media and also the forces like economic, social, political,
legal and technological that are outside the ambit and control of
business enterprise but that which can affect its performance.
2.
4.
Economic Environment :
Refers to all those forces that have economic impact on
Ans. While purchasing they get a better quality and wider choice of
Ans. When the private sector takes over public sector, it is called
disinvestment.
7.
Give one measure taken by Indian Government to introduce
liberalisation.
Ans.
8.
Public sector.
11.
What was the responsibility given to private sector after
independence ?
Ans. Developing consumer goods industry was the responsibility gives
to private sector.
12.
14.
1.
two
important
Ans. The sum total of all external factors which are outside the control
of business enterprises is termed as Business Environment.
Factors may be social, political, economic etc.
2.
Explain the specific and general forces of business
environment ?
Ans. Business environment comprises of both specific and general
forces. Specific forces refer to those forces that are having direct
effect on the day to day working of the business viz. customers,
competitors, investors etc. General forces refer to social, political,
legal and other forces which are having an indirect effect on the
operations of a business.
3.
Enumerate the benefits of understanding business
environment.
Ans. The benefits of understanding business environment are:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
4.
Improvement in performance.
6.
Monetary policy
Capital market reforms
Phasing out of Subsidies and Price controls
QUESTIONS ( 5 OR 6 MARKS)
Ans. Business environment is the sum total of all external factors that
influence the functioning of a business enterprise.
The components of general environment are:
(i) Economic environment:
Economic environment consists of factors having economic
dimensions such as fiscal policy, monetary policy, industrial policy
etc.
Impact: Banking sector reforms have led to attractive deposit
avenues and easier credit policy. Likewise reforms in leasing &
financial institutions are also catalyzing company's economic
growth.
(ii) Social environment: It discriminates characteristics of the
society in which an enterprise exists. It consists of literary rates,
(ii)
Corporate vulnerability.
(iii)
Increased competition.
(iv)
(vi)
(iii)
(iv)
(v)
(vi)
(x)
6.
Explain any five negative impacts of liberalization and
globalization.
Ans. Following are the negative effects of liberalization and globalization.
(i) Threats from multinational companies (MNCs)
With the arrival of multinationals it is becoming difficult for
small and medium business units to even survive. The massive
entry and consolidation to multinationals in the Indian markets is
a challenge that has already forced some business enterprises to
take the exit route.
(ii) Destabilization of protected environment
With easier entry of multi-national companies, Indian
business environment is fast losing its protective shield. The new
entrepreneurial freedom is creating problems for the existing
players. Even manufacturers of Maruti car could not retain their
market share and had to remodel their products and announce
heavily price reductions from time to time.
(iii) Decline in public sector
Public sector is losing markets and their capacity utilization
has declined, hampering thereby pace of country's technological
and economic growth.
(iv) Sellers' market turned into buyers' market
With the entry of foreign goods .and services, shortage of
goods, which is boon for the sellers, has now turned into surplus.
Resultantly, sales/margin to many sellers have come down
substantially. Buyers are now free to buy any product of their
choice at a price they can afford.
(v) Fall in the value of rupee
Indian rupee has been devaluing against DOLLAR, EURO and
many other foreign currencies. This phenomenon has forced even
some established exporters to encash their stake partly/fully.
QUESTIONS WITH DIFFERENT DIFFICULTY LEVELS
1.
3.
1 Mark
Ans. Environmental
scanning helps
an enterpriseto
recognize qualitative information in advance, which can be
used to prepare it for facing likely challenges. For
example, if any new multinational company is entering
the Indian market, the manager of an Indian firm
dealing with same product, as that of the multinational
company, should take it as a warning signal. He should take
measures like improving the quality of his product, heavy
advertisement etc. to face the challenge.
10. What is meant by liberalization? List the impact of changes
in government policy On business and industry.
-3
or 4 Marks
Ans. Indian economy has gradually become more liberal and
global since 1991. Liberalization refers to the removal of various
outdated rules, regulations etc. and providing more helpful norms for
the business to grow, particularly in the fields of exports and
imports.
Some of the impacts of changes in government policy on business
and industry are as under:
(i)
(ii)
(iii)
(iv)
(v)
Increasing competition.
More demanding Customers
Rapidly changing technological environment
Necessity for change.
Need for developing human resource.
12.
(ii)
Diversification.
(iii)
(iv)
Brand building.
(v)
(vi)
Capital restructures.
(ii)
(iii)
(iv)
Hutch by Vodafone.
(FDI).
There is prompt clearance of foreign investment proposals.
Tax concessions are given to units in Special Economic Zones
(SEZs).
There is broadband facility in telecom sector.
Abolition of industrial registration schemes.
(ii) New Trade Policy:
There is liberalization of import policy.
Deemed exporters are entitled to special import licenses.
There are greater concessions to Export Oriented Units (EOU)
and units in Export Promotion Zones (EPZ).
Credit is now less expensive and many imports are duty free.
Simplification of procedures related to export promotion.
Removal of export quotas & reduction in import duties.
(iii) Fiscal Reforms
Measures have been taken to bring down fiscal deficit.
Tax reforms have been initiated to increase revenue and tax
compliance.
Reduction in direct and indirect taxes.
Decrease in subsidies.
(iv) Monetary Reforms
Phased reduction of statutory liquidity ratio (SLR).
Private sector banks allowed to set up new branches.
Banks have now been allowed to access capital market for
raising capital.
Permission for disinvestment (up to 49% of total equity).
(v) Capital Market Reforms
Ceiling on rate of interest on debentures and bonds abolished.
FIIs can access capital markets.
Private sector can set up mutual funds.
Bonus issues have been made more liberal.
alliance,
mergers
and
consolidation
of
CHAPTER - 4
PLANNING
CONCEPT MAPPING
Concept
Types
method
Present
Position
Here
we Planning
Future
position
where we
want to
reach
Definition Planning seeks to bridge the gap between where we are and
where we want to go. Planning is a trap to capture the future.
Importance of planning.
i) Provides direction- By stating in advance the future course of
action of what is to be done and how it is to be done. By stating in
advance it facilitates unity of direction.
ii) Reduces the risk of uncertainty- By predicting future events
and preparing the organization to anticipate the future and face
unexpected events.
iii) Facilitates decision making-planning helps the manager to look
into the future and make a sound judgment or choice from among
the various alternatives.
iv)
vi.
vii. The human element can give way to errors or mistakes through
wrong assumptions.
viii. It is prone to external influences which can reduce its impact
like natural calamity, technology changes, policy changes,
competition.
iv.
Types of plans:
(A)
Objectives
Strategies
Policies
Procedures
Methods and
Rules
(B)
Single use or Special or Adhoc Plans: These plans are connected
with some special problem. These plans end the moment the
problems are solved. After having been used once there is no
importance of these plans and in future, whenever they are needed
they are re-created. These plans include
1. Budget and
2. Programme.
Differences between Standing and Single-use Plans
Basis
Standing Plans
1. Period
2. Object
3.Types
Single-use Plans
These plans are for a short
period and are repeatedly
formulated in case of need.
These plans are designed to
run successfully some
particular activities
They are of two types i.
Budgets and ii. Programmes
4.Scope
5. Basis
1)
Objectives - Are the ends which the management seeks to achieve by
its operation.
2)
3)
Policies - are general statements which guide thinking in decision
making.
They are based on objectives.
They guide managerial action and decisions.
They exist at all levels and departments of the organization.
4)
5)
6)
7)
required and the budget to implement any course of action.. All these
plans together form a programme.
8)
1.
What is planning?
Ans. Planning.
3.
Ans. Planning.
4.
One of the functions of Management is considered as base' for
all other functions.
Name that function.
Ans. Planning
5.
Ans. Forecasts.
9.
Define 'Objective'?
Ans. Objectives are desired future position that the management would like
to reach.
Define 'Rules'.
Ans.
3.
(ii)
Ans. Planning is always for the future and never for the past. It involves
peeping in to future, analyzing and preparing plans accordingly. Thus,
planning is futuristic as it helps in meeting likely future events
effectively and efficiently to best advantage of the organisation.
For example, on the basis of sales forecasts, annual plans for
production and sales are drawn.
7.
Ans. An organisation is successful only when the plans are effectively drawn
and implemented.
A plan must be converted into action otherwise it becomes
meaningless. Generally, it is seen that managers are in the habit of
depending on previously tried and tested successful plans. But this
practice sometimes does not work and may actually lead to failure
instead of success.
10. Enumerate the steps involved in the planning process.
Ans. Steps of planning are as follows:
(i)
Setting up of objectives
Ans. Procedures are routine steps framed to carry out activities. These are
plans that determine the order of any work performance. Procedures
are generally meant for insiders and define the chronological sequence
of doing any work for attaining predetermined objectives.
14.
Ans. Methods are standard ways of doing planned jobs for attaining the
objectives. They are more detailed than procedures. Methods are
helpful in simplification, standardization and systematization of work.
For doing different jobs, different methods can be adopted.
For example, for imparting training to employees at different levels,
different methods of training can be used viz for higher level lectures or
seminars and for supervisory level on the job training can be used.
15.
Ans. Rules can be defined as statements that tell us what is to be done and
what is not to be done. Deviations from rules are not permitted unless
a policy decision is taken. They enforce rigidity and there is fine or
penalty if they are not followed.
For example, prohibition on sale of tobacco within certain radius of
an educational institution is a rule to be followed by all.
16.
Ans. It has been rightly said that defining organizational objectives is the first
step in the process of planning. Other steps in the process of planning a
as follows:
(i)
(ii)
(iii)
(iv)
Selecting an alternative
This step involves the selection of the most optimum and
realistic plan with least negative results.
(v)
(vi)
Follow up
Under this step, it is monitored whether the plans are being
implement and whether the activities are being performed according to
the schedule.
2.
Ans.
DIFFERENCE BETWEEN PROCEDURES AND RULES
Basis
Procedures
1.
Meaning
2. Nature
3. Purpose
4. Scope
Rules
Rule is a code of
conduct governing or
restricting flexibility
or discretion
Procedures are specified
Rules do not place
in chronological order.
activities in chronological
order
The purpose of procedure is to The purpose of rule
facilitate and simplify the
is to s maintain
operation and eliminate
discipline in an
The scope of procedures is
wide because it has Its own
rules and regulations.
Ans. Procedures consist of series of steps whereas policies are guidelines for
decision making.
4.
A company needs a detailed plan for its new project?
Construction of a Shopping
Mall'. What type of plan is it?
Mark
-1
Ans. Programme
5.
Give anyone difference between Policy and Rule.
1 Mark
"These
are
general
statements
that
guide
thinking
and
- 3 or 4
1.
3.
12. How can (i) Political climate and (ii) Policies of competitors
obstruct planning?
-3or4 Marks
Ans. (i) Obstruction in planning due to political climate
When the government regulates the business practices or introduces
new trade
policies, the plans of business enterprises may get upset. Also political
instability affects business plans.
For example, change in the taxation policy.
(ii) Obstruction in planning due to policies of competitors
The policies of competitors may lead to change in business policies.
For example, discounting policies of the competitors may
lead to change in pricing policy of a business enterprise.
13. What do you mean by planning premises?
Marks
- 3 or 4
15.
- 5 or 6 Marks
Ans.
DIFFERENCE BETWEEN PROCEDURES AND RULES
Basis
Procedures
1. Meaning
flexibility or
2. Nature
3. Objective
4. Managers
Discretion
Rules
CHAPTER -5
ORGANISING
Concept Mapping:1. Concept and importance.
2. Organizing Process.
3. Structure of organization functional and divisional
4. Formal and informal organization.
5. Delegation: concept, elements and importance.
6. Decentralization: concept and importance.
KEY CONCEPT IN NUTSHELL
development.
Divisional
structure
groups
organization
is
designed
by
the
management
to
achieve
Departmentalisation
3) Assignment of duties
Functional Structure
It is based on functions
Functional Specialisation
Difficult to fix on a
Divisional Structure.
It is based on product lines
Product Specialisation
Easy to fix responsibility
Cost
Co ordination
departments
Economical
Difficult for multi product
Costly
Easy, because all functions
company
Managerial
Difficult, as each
department.
Easier, autonomy as well as
Development
management
development.
5/6 M
A): Advantages:
1).All activities associated with one product. It can be easily integrated.
2).Decision making is faster.
3).Performance can be easily assessed remedial action can be taken
4). It facilitates expansion and growth as new divisions can be added.
Disadvantages:
1).This gives rise to duplication of effort among its divisions.
a) Informal Organisation
b) Formal Organisation.
5/6M
a) Formation
members
b. Purpose
c. structure
d. Behavior of
.Ans:
Basis
Formation
Functional Structure
Deliberately Planned
Divisional Structure.
Emerges Spontaneously
Purpose
To achieve
among people
To satisfy social and
Structure
organizational goals
Well defined structure
cultural needs
Does not have a clear-cut
Standards of behavior
structure
Mutual consent among
It is stable
members
Neither stable nor
predictable.
No such punishment.
Behavior of members
Stability
Adherence to rules
lead to penalties
10). Which term denotes The number of subordinates that can be
effectively managed by a superior?
1M
Ans: -Span of control.
11) What are the elements of delegation of authority?
1M
Ans: Responsibility, Authority, Accountability.
12) Distinguish between authority and responsibility on the basis of:
3M
a. Direction of flow
b. Delegation
c. Origin
Basis
Direction of flow
Authority
Authority flows
Responsibility
Responsibility flows
Delegation
downwards
Authority can be
upwards
Responsibility is
delegated
delegated.
Origin
Arises from law
Arises from authority.
13) A manager is of the view that he is not responsible for the
quality of work that he has delegated to his subordinate. Do you
agree with his view points? Justify your answer by giving arguments.
4M
A: No I do not agree with managers view point.
The reasons are as follows:
i)
ii)
iii)
iv)
1M
iii) withdrawal of
authority.
Ans:
Basis
Purpose
Delegation
It means getting things
Decentralisation
To prepare the organization for
Parties
activities
It indicates relationship between
involved
Withdraw
subordinate
The delegated authority
other departments
Withdrawal of authority is difficult
al of
authority
delegator
QUESTIONS WITH DIFFERENT DIFFICULTY LEVELS
1.
after
Identification
and
division
of
work
and
Departmentalization.
3M
necessary
because
the
entire
work
cannot
be
done
by
individual
sales,
4M
4M
A: Informal organization:
Advantages:
1. It brings feeling of belongingness.
2. Informal organization satisfies social and cultural needs.
3. It provides useful channel of communication.
8. It merely means the granting of authority to subordinates to
operate within prescribe limits. Mention the concept referred here.
1M
A: Delegation of Authority
9. Delegation provides a ready workforce to take up leading positions
in new ventures. Which importance of delegation is stated here?
A: Facilitation of growth
1M
10. Authority can be delegated but accountability cannot.
Explain
the statement.3M
A: According to the principle of absolute responsibility, authority can be
delegated but responsibility cannot be delegated by a manager. The manager
remains responsible to his own superior for the task which he may assign to his
subordinates. Every superior is responsible for the acts of this subordinates to
whom he delegates authority for any work.
11. The Marketing Manager of an organization has been asked to
achieve a target sales of 100 generators per day. He delegates the
task to 10 sales managers working under him. Two of them could not
achieve their respective targets. Is the marking manager
responsible? Briefly explain the relevant principle in support of your
answer.
4M
CHAPTER -6
STAFFING
6 Marks
CONCEPT MAPPING:
1. Concept and importance of staffing.
2. Staffing as a part of Human Resource Management.
3. Staffing process:
a. Recruitment sources
b. Selection process
4. Training and development concept and importance.
5. Methods of training on the job and off the job induction
training, vestibule training, apprenticeship training and
internship training.
It is the responsibility of all managers to directly deal and select people to work
for the organization. When the manager performs the staffing function his role
is slightly limited. In small organizations managers may perform all duties
related to employees salaries, welfare and working conditions.
Bus as organizations grow and number of persons employed increases, a
separate department called the human resource department is formed which
has specialists in the field to manage people. Human resource management
includes many specialized activities and duties which the human resource
personnel must perform.
RECRUITMENT:
Recruitment refers to the process of finding possible candidates for a job
or function. It has been defined as the process of searching for
prospective employees and stimulating them to apply for jobs in an
organisation.
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
SOURCES OF RECRUITMENT:
1) Internal Sources
2) External Sources
INTERNAL SOURCES:
Transfers: It involves shifting of an employee from one job to another,
one department to another or from one shift to another, without a
substantive change in the responsibilities and status of the employee
Promotions: Promotion leads to shifting an employee to a higher
position, carrying higher responsibilities, facilities, status and pay.
Promotion is a vertical shifting of employees
MERITS OF INTERNAL SOURCES:
Employees are motivated to improve their performance
Simplifies the process of selection and placement
Transfer is a tool of training the employees to prepare them for higher
jobs.
Fresh Talent
Competitive Spirit
Lengthy process
Costly process
Selection:
Selection is the process of identifying and choosing the best person out
of a number of prospective candidates for a job. Towards this purpose,
the candidates are required to take a series of employment tests and
interviews.
Process of Selection:
Preliminary Screening: Preliminary screening helps the manager
eliminate unqualified or unfit job seekers based on the information
supplied in the application forms.
Selection Tests: An employment test is a mechanism (either a paper and
pencil test or an exercise) that attempts to measure certain cha-
Intelligence Tests
Aptitude Test
Personality Tests
Trade Test
Interest Test
Selection Decision: The final decision has to be made from among the
candidates who pass the tests, interviews and reference checks.
Medical Examination: After the selection decision and before the job
offer is made, the candidate is required to undergo a medical fitness
test.fit candidates are give the job.
The rapid changes taking place during the last quarter century in our
highly sophisticated and complex society have created increased
pressures for organisations to readapt the products and services
produced, the manner in which products and services are produced and
offered, the types of jobs required and the types of skills necessary to
complete these jobs.
Benefits to the organisation:
wastage of efforts and money is minimised.
leading to higher profits.
increases employee morale and reduces absenteeism and employee
turnover.
It helps in obtaining effective response to fast changing environment.
potential capacities so that they become not only good employees but
better men and women
KEY CONCEPTS QUESTIONS WITH ANSWERS
1) Staffing makes for higher performance by putting right person on
the right job. Is this statement true or false?
1M
A)True
2)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.
3M
A) No, I dont 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.
3) Human resource management is a part of staffing. Do you agree?
1M
A) No.
4) The present day human resource management is a broader
concept. Explain4 M
A) 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.
5) why is induction is not required in the internal source of
recruitment.
1M
A) Because employees are already well familiar with the organization.
6) State the meaning of placement as a staffing function.
1M
A) 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.
7) Describe briefly the steps involved in the process of staffing.
5/6M
A) 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
8) Name two websites which are commonly visited both by the
prospective employees and the organizations searching for suitable
people.
1M
A) www.naukari.com; www.jobstreet.com
9) 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. 3M
A) 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.
10) Name the concept which relates to the following:
a)Searching of prospective candidates.
a. Recruitment
b. Selection.
Iv.
v. Interest test
12) What is meant by Selection? Explain any five steps involved in
the process of selection of employees.
6M
A)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:
test.
13) Training and Development are one and the same thing. Do you
agree?
A) No they are different
14) Distinguish between training and development.
4M
A)
Training
Development
it is to enable the
employee to do the job
better
15)
9.It is the process of identifying and choosing the best person out of a
number of prospective candidates for a job. Name it.
1M
A: Selection.
10. Name the test which is used as a measure of individuals potential
for learning new skills.
A: Aptitude test.
1M
A: Internship training
17. Trainee is put under the guidance of a master worker to acquire a
higher level of skill, for example to become plumber, electrician, etc.
Which method of training is referred here?
1M
A: Apprenticeship programme
CHAPTER -7
DIRECTING
CONCEPT MAPPING:
Elements of Directing
-
Leadership Styles:
I. Autocratic Leadership Style:(a).Meaning: It refers to that leadership style in which the leader tends to run
the show all by him-self.
(b).Characteristics: (i) Centralized Authority, (ii) Single man Decision, (iii)
Wrong Belief Regarding Employee, (iv) Only Downward Communications.
(c). Advantages: (i) Quick and Clear Decisions, (ii) Satisfactory Work, (iii)
Necessary for Less Educated Employees.
(d).Disadvantages: (i) Lack of Motivation, (ii) Agitation by Employees, (iii)
Possibility of Partiality.
II. Democratic Leadership Style :(a). Meaning: It refers to that leadership style in which the leader consult with
his sub ordinates before making any final decisions.
(b).Characteristics: -(i)Cooperative Relations,(ii)Belief in Employees, (iii) Open
Communication.
(c ).Advantages : (i) High Morale, (ii)Creations of More Efficiency and
Productivity, (iii) Availability of Sufficient Time for Constructive Work.
(d).Disadvantages: (i) Requirement of Educated Subordinates, (ii) Delay in
Decisions, (iii)Lack of Responsibility in Managers.
III. Laissez-faire or Free-rein Leadership Style: (a). Meaning : It refers to that leadership style in which the leader gives his sub
ordinates complete freedom to make decisions.
(b)Characteristics (i)Full faith in subordinates, (ii) Independent Decision-making
system,(iii) Decentralisation of Authority (iv)Self-Directed Supervisory and
Controlled.
(c). Advantages.(i)Development of Self-confidence in Sub ordinates, (ii) Highlevel Motivation,(iii)Helpful in Development and Extension of the Enterprise.
(d). Disadvantages.(i).Difficulty in Cooperation, (ii)Lack of Importance of
Managerial Post, (iii) Suitable only for Highly Educated Employees.
Communication: Communication refers to process of exchange of ideas
between or among persons and creates understanding. Communication
process involves the elements of source, encoding, channel, receiver, decoding
and feedback.
Formal Communications refers to all official communications in the form of
orders, memos, appeal, notes , circular, agenda, minutes etc.
Informal Communications are usually in the form of rumours, whispers etc.
They are unofficial, spontaneous, unrecorded, spread very fast and usually
distorted.
Barriers may exist for effective communications. Some of these barriers
include-semantic barriers, organizational barriers, language barriers,
transmission barriers, psychological barriers and personal barriers.
Manager should take appropriate measures to overcome these barriers and
promote effective communication in the organization such as
Improving communication effectiveness:
4) communication
4M
6M
i. Motivation sets in motion the action of people: Motivation builds the will to
work among employees and puts them into action.
ii. Motivation includes the efficiency of work performance: Performance of
employees dependence not only on individual abilities but also on his
willingness.
iii. Motivation ensures achievement of organizational goals: If employees are
not motivated, no purpose can be served by planning organizing and staffing.
iv. Motivation creates friendly relationships: Motivation creates friendly and
supportive relationships between employer and employees.
V .Motivation leads to stability in the employees: Motivation helps in reducing
absenteeism and turnover.
vi. Motivation helps to change negative / indifferent attitudes of an employee
Q8).All managers are leaders, but all leaders are not managers. Do
you agree with this statement? Give any three reasons in support of
your answer.
3/4 M
Leadership
Management
Leadership originates out of Management originates
individual influence
Formal Rights
Follower &
rights
A leader has followers
formal rights
A manager has
subordinates
subordinates
1M
A: Poor listening skills of people.
Q18). Give any one measure to improve communication.
1M
A: Communicate according to the needs of receiver.
Q19). What do you mean by grapevine? Explain two types of
grapevine along with diagram.
A: Grapevine: The network or pathway of informal communication is known as
grade point communication.
Two types of grapevine communication
Gossip
Q20).
Single Strand
Directing
2)
1M
A)
3)
How?
1M
A) a) Stopping increments
b) Treating
Bonus
9)
1M
Communication.
12)
Decoding
13)
V.
4M
A)
CHAPTER 8
CONTROLLING
CONTROLLING
CONCEPT MAPPING:
6 MARKS
Process of Controlling
Controlling is pervasive
2. Process of Controlling:
1. Setting performance standards: Standards are the Criteria against which
actual performance would be measured. Standards serve as bench marks.
They can be set in both quantitative as well as qualitative.
2. Measurement of actual performance: Performance should be measured
in an objective and reliable manner.
3. Comparing actual performance with standards:
Plans are
On the contrary,
Explain
Ans: It is neither economical nor easy to keep a check on each and every
activity in an organisation. Controlling should focus on key result areas (KRAs)
only which are critical to the success of the orgnisation.
19. Planning is the first function and control is the last function of
managerial process Discuss
3M
20. Control moves from downward to upward whereas planning moves
from top to bottom. Discuss
3M
21.. Controlling is a continuous activity in an organisation.
3M
*22.. What are the factors to be kept in mind while setting standards?
3M
Ans:
i) Standards should be in measurable terms
ii) Standards should be flexible to change
iii) They may be in qualitative or quantitative
iv) They should be stated in clear terms without any ambiguity
**23. Measurement of a companys 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
step.
3M
Hint: Controlling, Step: Measurement of actual performance.
24. How does controlling help in achieving objectives and
improving employee morale?
3M
Hint: Refer importance of Controlling
25. Controlling is an indispensable function of management. Do you
agree? Give four reasons in support of your answer.
5M
Hint: Importance of Controlling
26.If planning is done carefully and accordingly other functions of
management are going in the right direction, then there is need of the
controlling function of management. Do you agree with the
Defective Process
is
FINANCIAL MANAGEMENT
CONCEPT MAPPING:
12 MARKS
v) All items in the profit and loss account e.g., interest, expenses, depreciation
etc.
Objectives of Financial Management: Maximisation of owners wealth is
sole objective of financial management. It means maximization of the market
value of equity shares. Market price of equity share increases if the benefits
from a decision exceed the cost involved.
FINANCIAL DECISIONS
available sources. The main sources of funds for a firm are shareholders funds
and borrowed funds. Shareholders funds refer to equity capital and retained
earnings. Borrowed funds refer to finance raised as debentures or other forms
of debt.
Factors Affecting Financing Decision:a) Cost: The cost of raising funds through different sources is different. A
prudent financial manager would normally opt for a source which is the
cheapest.
(b) Risk: The risk associated with different sources is different.
(c) Floatation Costs: Higher the floatation cost, less attractive the source.
(d) Cash Flow Position of the Business: A stronger cash flow position may
make debt financing more viable than funding through equity.
(e) Level of Fixed Operating Costs: If a business has high level of fixed
operating costs (e.g., building rent, Insurance premium, Salaries etc.), It must
opt for lower fixed financing costs. Hence, lower debt financing is better.
Similarly, if fixed operating cost is less, more
f) Control Considerations: Issues of more equity may lead to dilution of
managements control over the business. Debt financing has no such
implication. Companies afraid of a takeover bid may consequently prefer debt
to equity.
g) State of Capital Markets: Health of the capital market may also affect the
choice of source of fund. During the period when stock market is rising, more
people are ready to invest in equity. However, depressed capital market may
make issue of equity shares difficult for any company.
DIVIDEND DECISION:-The decision involved here is how much of the profit
earned by company (after paying tax) is to be distributed to the shareholders
and how much of it should be retained in the business for meeting the
investment requirements.
FACTORS AFFECTING DIVIDEND DECISION:a) Earnings: Dividends are paid out of current and past earning. Therefore,
earnings is a major determinant of the decision about dividend.
(b) Stability of Earnings: Other things remaining the same, a company
having stable earning is in a position to declare higher dividends. As against
this, a company having unstable earnings is likely to pay smaller dividend.
c) Stability of Dividends: It has been found that the companies generally
follow a policy of stabilising dividend per share.
(d) Growth Opportunities: Companies having good growth opportunities
retain more money out of their earnings so as to finance the required
investment.
(e) Cash Flow Position: Dividends involve an outflow of cash. A company
may be profitable but short on cash. Availability of enough cash in the
company is necessary for declaration of dividend by it.
(f) Shareholder Preference: While declaring dividends, managements
usually keep in mind the preferences of the shareholders in this regard.
(g) Taxation Policy: The choice between payment of dividends and retaining
the earnings is, to some extent, affected by difference in the tax treatment of
dividends and capital gains.
(h) Stock Market Reaction: Investors, in general, view an increase in
dividend as a good news and stock prices react positively to it. Similarly, a
decrease in dividend may have a negative impact on the share prices in the
stock market.
(i) Access to Capital Market: Large and reputed companies generally have
easy access to the capital market and therefore may depend less on retained
earnings to finance their growth. These companies tend to pay higher
dividends than the smaller companies which have relatively low access to the
market.
FINANCIAL PLANNING
Financial Planning is essentially preparation of financial blueprint of an
organisationss future operations. The objective of financial planning is to
ensure that enough funds are available at right time.
OBJECTIVES
(a) To ensure availability of fundswhenever these are required: This
include a proper estimation of the funds required for different purposes such as
for the purchase of long-term assets or to meet day- to- day expenses of
business etc.
(b) To see that the firm does not raise resources unnecessarily: Excess
funding is almost as bad as inadequate funding.
IMPORTANCE OFFINANCIAL PLANNING
(i) It tries to forecast what may happen in future under different business
situations. By doing so, it helps the firms to face the eventual situation in a
better way. In other words, it makes the firm better prepared to face the
future.
(ii) It helps in avoiding business shocks and surprises and helps the company in
preparing for the future.
(iii) If helps in co-ordinating various business functions e.g., sales and
production functions, by providing clear policies and procedures.
(iv) Detailed plans of action prepared under financial planning reduce waste,
duplication of efforts, and gaps in planning.
(v) It tries to link the present with the future.
(vi) It provides a link between investment and financing decisions on a
continuous basis.
(vii) By spelling out detailed objectives for various business segments, it makes
the evaluation of actual performance easier.
CAPITAL STRUCTURE: Capital structure refers to the mix between owners
and borrowed funds.
Option 1
and
2,00,00,000
------------2,00,00,000
60,00,000
1,40,00,000
Option 2
2,00,00,00
0
15,00,00
0
1,85,00,00
0
55,50,00
0
1,29,50,00
0
Rate of
20,00,000
Rs. 7
10,00,000
Rs.12.95
CHAPTER 10
FINANCIAL MARKETS
8Marks
CONCEPT MAPPING:
required.
4. Reduce the cost of transactions:
information about securities being traded in the market. It helps to save time,
effort and money.
Instruments:
1. Treasury Bill (T-bills):
borrowing by the Government of India maturing in less than one year. They
are also known as Zero Coupon Bonds.
2. Commercial Paper:
funds at lower rates of interest than market rates. It usually has a maturity
period of 15 days to one year.
3. Call Money:
maturity period of one day to fifteen days, used for inter-bank transactions. It
is a method by which banks borrow from each other to be able to maintain the
cash reserve ratio.
4. Certificate of Deposit (CD): It is a unsecured, negotiable short-term
instruments in bearer form, issued by commercial banks and development
financial institutions.
companies.
5. Commercial Bill (Trade Bill): It is a short-term , negotiable, selfliquidating instrument which is used to finance the credit sales of firms. The
bill can be discounted with a bank if the seller (drawer) needs funds before the
bill maturity.
Secondary Market
1. It is the market for existing
securities.
2. Securities are exchanged
between investors.
3. It promotes capital formation
indirectly.
4. Both buying and selling of
securities can take place in the
stock exchange / stock market.
5. There is a specified location.
6. Prices are determined by
demand and supply for the
Methods of Floatation:
Following are the methods of raising capital from the primary market :
securities.
2.Offer for sale: under this method the sale of securities takes place in
two steps. In the first step the company sells the entire lot of shares to
the intermediary firms of stock brokers at an agreed price .In the second
step, the intermediary resells these shares to investors at a higher price.
mandatory requirement.
STOCK EXCHANGE
regulated and its dealings are well defined according to the existing legal
frame work. This ensures that the investing public gets a safe and fair deal on
the market.
4. Contributes to Economic Growth: A stock exchange is a market in which
existing securities are re-sold or traded. Through this process of disinvestment
and re-investment savings get channelized into their most productive
investment avenues. This leads to capital formation and economic growth.
5. Spreading of Equity Cult: The exchange can play a vital role in ensuring
wider share ownership by regulating new issues, better trading practices and
taking effective steps in educating the public about investments.
6. Providing Scope for Speculation: The stock exchange provides sufficient
scope within in the provisions of law for speculative activity in a restricted and
controlled manner.
TRADING PROCEDURE:The procedure for purchase and sale of securities in a stock exchange involves
the following steps:
4. Selection of broker
The first step is to select a broker who will buy/sell securities on behalf of
the investor. This is necessary because trading of securities can only be
done through SEBI registered brokers who are the members of a stock
exchange. Brokers may be individual, partnership firms or corporate
books. The broker charges brokerage / commission for his services.
5. Opening demat account
The next step is to open a demat account. Demat (Dematerialised)
account refers to an account which an Indian citizen must open with the
depository participant (banks, stock, brokers) to trade in listed securities
in electronic form.
The securities are held in the electronic form by a depository. At present,
there are two depositories in India NSDL (National Securities Depository
Ltd.) and CDSL (Central Depository Services Ltd.)
Depository interacts with the investors through depository participants.
Your Depository Participant will maintain your securities account
balances and intimate to you the status of your holding from time to
time.
6. Placing the order
The next step is to place the order with the broker. The order can be
communicated to the broker either personally or through telephone, cell
phone, e-mail etc.
The instructions should specify the securities to be bought or sold and
the price range within which the order is to be executed. Only the
securities of listed companies can be traded on the stock exchange.
6. Executing the order
According to the instructions of the investor, the broker buys or sells
securities.
The broker then issues a contract note. A copy of the contract note is
sent to the client. The contract note contains the name and the price of
the securities, names of the parties, brokerage charged. It is signed by
the broker.
7. Settlement
This is the last stage in the trading of securities done by the brokers on
behalf of their clients. The mode of settlement depends upon the nature
of the contract.
Equity spot market follows a T+2 rolling settlement. This means that any
trade taking place on Monday gets settled by Wednesday. All trading on
stock exchanges takes place between 9:55 am and 3:30 pm. Indian
Standard Time, Monday to Friday. Delivery of shares must be made in
dematerialized form, and each exchange has its own clearing house,
which assumes all settlement risk.
DEPOSITORY SERVICES :It refers to that service through which the transfer of ownership in shares takes
place by means of book entry without the physical movement of shares.
PARTICIPANTS OF DEPOSITORY SERVICES:
i. DEPOSITORY:-A Depository is an institution which holds the
shares of an investor in electronic form. At present , there
are two depository institutions in India :
1. NSDL National Securities Depository Limited.
2. CDSL Central Depository Services Limited.
ii. DEPOSITORY PARTICIPANT: A Depository Participant (DP)
is an agent of the depository. He functions as a mediator
between the issuing company and the investors through the
depository.. He opens the accounts and maintains the
securities account balance of the investors and conveys
them the status of their holding from time to time.. As per
SEBI guidelines, banks, stock brokers etc can become
depository participants.
iii. INVESTOR: He is a person who wants to deal in shares and
whose name is recorded with a Depository.
iv. ISSUING COMPANY: It is that organization which issues the
securities. The issuing company sends a list
of the
shareholders to the depositories.
DMAT/Demat ACCOUNT:
Dematerialization (popularly known as DMat) is the process of converting a
share certificate from its physical form to electronic form and credit the same
number of holdings to the DMat A/c which the investor opens with a depository
participant.
DMat Account refers to that account which is opened by the investors with
depository participant to facilitate trading in shares.
BENEFITS OF DEPOSITORY SERVICES and
DMAT ACCOUNT:
i)
ii)
iii)
iv)
v)
It is a body corporate
Protective Functions:
(i) SEBI prohibits fraudulent and unfair trade practices in the securities market
such as
(a) Price Rigging Making manipulations with the sole objective of inflating or
depressing the market price of securities.
(b) Misleading statements: SEBI prohibits misleading statements which are
likely to induce the sale or purchase of securities.
(ii) SEBI Prohibits insider trading. An insider is a person connected with the
company who is reasonably expected to have access to price sensitive
information in respect of securities of a company which is not available to
public at large.
a) Companies cannot roll over the debenture holders, funds unilaterally and
cannot change terms -
term.
iiii) Instruments
iv) Liquidity
4M
33. What is meant by Primary Market? Explain any two methods of
floating new issued in the Primary Market.
4M
34. To promote orderly and healthy growth of securities market and
protection of investors, Securities and Exchange Board of India was
set up With reference to this statement explain the objective of
Securities and Exchange Board of India.
4M
35. What is meant by Financial Market Explain any two functions of
Financial Market?
4M
5M
5M
ii) Its activities are divided into five departments. Each department is headed
by an executive director.
iii) The head office of SEBI is at Mumbai and it has branch offices at Kolkata,
Chennai and Delhi
iv) SEBI has formed two advisory committees to deal with primary and
secondary markets.
v) These committees consist of market players, investors associations and
eminent persons.
Objectives of the two Committees are:
i) To advise SEBI to regulate intermediaries
ii) To advise on issues related to development of primary market in India.
iii) To advise SEBI on disclosure requirements of companies
iv) To advise for changes in the legal framework for simplification and
transparency in the primary market.
v) To advise the board on matters relating to regulation and development of
secondary market in India.
CHAPTER 11
MARKETING MANAGEMENT
14 Marks
LINKING CLASS XI SYLLABUS:
Business TradeAids to tradeMarketing/Advertising.
CONCEPT MAPPING:
1. Market, Consumer, Seller / Marketer meaning
2. Marketing Meaning, Features
3. Marketing Management Philosophies
4. Marketing Functions
5. Marketing Mix product, price, place and promotion
6. Advertising meaning, features, merits and limitations..
7. Objections to advertising
8. Sales promotion meaning and variety of Tools / methods used.
9. Personal selling Concept and qualities of a good salesman
10. Public Relations concept and role.
Selling Concept
Marketing Concept
Starting point
Factors
Market
Main Focus
Attracting consumers
Consumer satisfaction
Means
Ends
MARKETING
sales
satisfaction
MANAGEMENT:
It
deals
with
planning,
organizing
and
c. Goodwill
d. Profitable sales volume through customer satisfaction
e. To determine marketing mix that will satisfy the needs of the customers
f. To generate adequate profits for the growth of the business
MARKETING FUNCTIONS:
1.
Marketing research
2.
Marketing planning
3.
4.
5.
6.
Branding
7.
8.
9.
Transportation
10.
11.
12.
Pricing
13.
Fixing
14.
Risk taking
1. Product Mix
2. Price Mix
3. Place Mix
4. Promotion Mix
MEANING OF MARKETING MIX:
It refers to the combination of four basic elements, product, price,
promotion and the place known as the four Ps of marketing.
PRODUCT: Total number of products and items that a particular seller
offers to the market is called market mix.
a. Branding
b. Trade mark
c. Packaging
d. Labelling
PRICE MIX: It is the worth of a product or service in monetary terms :
Factors considered before fixing price are
a) Company objectives
b) Cost
c) Competition
d) Customer demand
PLACE MIX : It refers to a set of decisions that need to be taken in order
to make the product available to the consumers for purchase and
consumption.
Channels of distribution.
Physical distribution
Cost and service trade off in Logistics
PROMOTION MIX: It is concerned with activities that are undertaken to
communicate with both customers and participate in the channel of
distribution such that sales goals are realized.
ACTIVITIES INVOLVED IN PHYSICAL DISTRIBUTION OF GOODS
a. Transportation
b. Inventory
c. Warehousing
d. Order processing
FACTORS TO BE KEPT IN MIND BEFORE PRICING
a. Cost of production
b. Demand for product
c. Price if competitive firms
d. Purchasing power if customers
e. Government regulations
f. Objective
CHARACTERISTICS OF GOOD BRAND NAME :
1. Simple and short
2. Easily pronounceable
3. Suggestive
4. Distinctive
VARIOUS LEVELS OF CHANNELS OF DISTRIBUTION
1. Direct channel / Zero level channel
2. Indirect channels
a. One level channel Manufacturer to Retailer
b. Two level channel Manufacturer to Wholesaler to Retailer
c. Three level channel Manufacturer to Agent Wholesaler
Retailer - Consumer
FUNCTIONS OF PACKAGING:
a) Protection
b) Identification
c) Convenience
FUNCTIONS OF LABELLING:
a) Identification
b) Classification
c) Promotion
ADVANTAGES OF BRANDING:
a) Brand name helps in advertising in easier way
b) Brand name establishes the permanent identify of the product.
c) Brand name promotes repurchasing.
d) Competition becomes easier with the help of brand loyalty.
ADVERTISING:
It
is
defined
as
any
paid
form
of
non-personal
1) Mass reach
2) Enhancing customer satisfaction
3) Expressiveness
4) Economical
b) Impersonal presentation
c) Speedy and mars communication
d) Identified sponsor
OBJECTIONS TO ADVERTISEMENT
a) Adds to Costs: Advertising costs are passed on to the consumers in
the form of high prices.
b) Some Advertisements are in bad taste.
1)
Personal interaction
2)
3)
Better response
4)
Relationship
PUBLIC
RELATIONS
More credible.
ii)
Economical Medium
iii)
Image building.
iv)
a) News
b) Speeches
c) Events
d) Written Materials
e) Public service activities
1M
1M
1M
11.
1M
12.
1M
13.
1M
1M
15.
3/4M
16.
3/4M
17.
3/4M
18.
Comment
3/4M
3/4M
20.
3/4M
21.
24.
5/6M
27.
5/6M
28.
What do you mean by marketing management? Explain its
objectives.5/6M
29.
30.
promotion?
5/6M
31.
6M
CHAPTER - 12
CONSUMER PROTECTION
6 Marks
ManufacturerWholesalerRetailerConsumerProtection
CONCEPT MAPPING:
d) National commission :
e) 1) It is appointed by the Central Government
2) It has the jurisdiction to hear complaints involving a sum
exceeding Rs. 1 crore.
3) It can file an appeal with the Supreme Court within 30 days
ROLE
of
Consumer
Organisations
and
Non-Government
Organisations (NGOs)
1. Education Consumers
2. Collecting data on different products and Testing them
3. Filing suit on belief if consumers
4. Helping Educational institutions
5. Promoting network of consumer association.
6. Extending support to Government
NGOs : Non-Government Organisations are those organizations which aim
at promoting the welfare of the people with non-profit concept. They are
taking up various aspects of consumer exploitation.