Kendriya Vidyalaya Sangathan

Jaipur Region

Last Minutes Revision Material

Class: XII {2020-21}

Subject: Business Studies

UNDER THE ABLE GUIDANCE OF

Hon. Mr. B. L. Morodia
Deputy Commissioner
KVS RO JAIPUR

Mr. D. R. Meena Mr. Mukesh Kumar Dr. R. K. Meena

Assistant Commissioner Assistant Commissioner Principal
KVS RO JAIPUR KVS RO JAIPUR K. V. No. 1 Ajmer

Prepared by:
Mrs. RENUKA JAIN {PGT-COMM, KV1 JAIPUR}
Mr. LALIT TANWAR {PGT-COMM, KV2 AFS JODHPUR}
Mr. ROHIT BATRA {PGT-COMM, KV JHALAWAR}
Ms. ANJU CHEEMA {PGT-COMM, KV PHULERA}
Mr. GOVERDHAN VORA {PGT-COMM, KV1 UDAIPUR}
 UNIT- I – 16 MARKS (CHAPTER- 1, 2 & 3)
Chapter 1-Nature and Significance of Management
Meaning of Management: Management is defined as a process of getting things done with the aim of achieving goals
effectively and efficiently.
Effectiveness vs. Efficiency
Being effective or doing work effectively basically means finishing the given task in given time.
Efficiency means doing the task correctly and with minimum cost.
Characteristics/Features of Management
(i) Management is a goal-oriented process (ii) Management is all pervasive (iii) Management is multidimensional (work,
people, operations) (iv) Management is a continuous process (v) Management is a group activity (vi) Management is a
dynamic function (vii) Management is an intangible force
Objectives of Management
(i) Organisational Objectives (Survival, Profit, Growth)
(ii) Social objectives (Non-business/ social obligation-e.g. Employment Opportunities)
(iii) Personnel objectives (e.g. Competitive salaries and perks for employees)
Importance/Significance of Management
(i) Management helps in achieving group goals (ii) Management increases efficiency
(iii) Management creates a dynamic organisation (iv) Management helps in achieving personal objectives
(v) Management helps in the development of society
Functions/Elements/Process of Management
(i) Planning (ii) Organising (iii) Staffing (iv) Directing (v) Controlling

Nature of Management
(A) Management as an Art: (i) Existence of theoretical knowledge (√) (ii) Personalised application (√) (iii) Based on
practice and creativity (√) (Management can be said to be an art since it satisfies the all criteria)
(B) Management as a Science: (i) Systematised body of knowledge (√) (ii)Principles based on experimentation (√-
human beings) (iii) Universal validity (Χ) (Since management deals with human beings and human behaviour, the
outcomes of these experiments are not capable of being accurately predicted or replicated. Therefore, management
can be called an inexact science/soft science/social science.)
(C) Management as a Profession: (i) Well-defined body of knowledge (√) (ii) Restricted entry (Χ) (iii) Professional
association (Χ) (iv) Ethical code of conduct (Χ) (v) Service motive (Χ) (Management does not meet the exact criteria
of a profession.) {* Fit (√) and Not Fit (Χ)}
Levels of Management
(i) Top Level Management (Responsible for all the activities of the business and for its impact on society. e.g.
Chairman, Chief Executive Officer, Chief Operating Officer, President and Vice-President)
Functions: (a) Integrate diverse elements and coordinate the activities. (b) Responsible for the welfare and survival of the
organisation. (c) Analyse the business environment (d) Formulate Organisational goals and strategies.
(ii) Middle Level Management: (Link between top and lower level managers, known as division heads, e.g. Production
Manager, responsible for implementing and controlling plans and strategies and activities of first line managers.)-
Functions: (a) Interpret the policies. (b) Ensure that their department has the necessary personnel, (c) Assign necessary
duties and responsibilities, (d) Motivate personnel (e) Co- operate with other departments.
(iii) Supervisory or Operational Level Management: (e.g. Foremen and supervisors, known as First Line Managers)-
Functions: (a) Oversee the efforts of the workforce. (b) Pass on instructions to the workers.(c) Ensures quality of output
is maintained, wastage of materials is minimised and safety standards are maintained.

Coordination — The Essence of Management: The process by which a manager synchronises the activities of different
departments is known as coordination. Coordination is the force that binds all the other functions of management.
Characteristics/Features of Coordination: (i) Coordination integrates group efforts (ii) Coordination ensures unity of
action (iii) Coordination is a continuous process (iv) Coordination is an all pervasive function (v) Coordination is the
responsibility of all managers (vi) Coordination is a deliberate function.
Importance/Significance of Coordination:
(i) Growth in size (ii) Functional differentiation (iii) Specialisation

Chapter 2-PRINCIPLES OF MANAGEMENT

A managerial principle is a broad and general guideline for decision-making and behaviour.
Techniques vs. Principles:
Techniques are procedures or methods, which involve a series of steps to be taken to accomplish desired goals.
Principles are guidelines to take decisions or actions while practicing techniques.

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 Nature of Principles of Management Significance of Principles of Management
(i) Universal applicability (i) Providing managers with useful insights into reality
(ii) General guidelines (ii) Optimum utilisation of resources and effective administration
(iii) Formed by practice and experimentation (iii) Scientific decisions
(iv) Flexibile (iv) Meeting changing environment requirements
(v) Mainly behavioural (v) Fulfilling social responsibility
(vi) Cause and effect relationships (vi) Management training, education and research
(vii) Contingent
Taylor’s Scientific Management: Scientific management means knowing exactly what you want men to do and seeing
that they do it in the best and cheapest way.

Principles of Scientific Management

(i) Science not Rule of Thumb: One best method to maximise efficiency that can be developed
through study and analysis.
(ii) Harmony, Not Discord: Complete harmony between the management and workers, mental
revolution on the part of both management and workers.
(iii) Cooperation, Not Individualism: Competition should be replaced by cooperation.
(iv) Development of Each and Every Worker training and selection should be scientifically done.
Person to His or Her Greatest Efficiency
and Prosperity:

Techniques of Scientific Management

Functional Foremanship Extension of the principle of division of work and
in contradiction to unity of command.
Standardisation and Standardisation refers to the process of setting standards of process, raw material,
Simplification of Work time, product, machinery, methods or working conditions.
Simplification aims at eliminating superfluous varieties, sizes and dimensions.
Motion Study Study of movements like lifting, putting objects, sitting and changing positions, etc.
Unnecessary movements are sought to be eliminated.
Time Study Standard time taken to perform a well-defined job.
Fatigue Study Seeks to determine the amount and frequency of rest intervals in completing a task.
Differential Piece Wage Differentiate between efficient and inefficient workers on the basis of these
System standards and given different rate of wage payment.

Fayol’s Principles of Management

(i) Division of Work Specialization, work can be performed more efficiently.
(ii) Authority and Responsibility Balance between authority and responsibility.
(iii) Discipline Obedience to organisational rules and employment agreement.
(iv) Unity of Command One and only one boss for every individual employee. Dual
subordination should be avoided.
(v) Unity of Direction One head and one plan.
(vi) Subordination of Individual The interests of an organization should take priority over the interests of
Interest to General Interest any one individual employee.
(vii) Remuneration of Employees Fair to both employees and the organisation.
(viii)Centralisation and Balance subordinate involvement through decentralization with managers’
Decentralisation retention of final authority through centralisation.
(ix) Scalar Chain The formal lines of authority from highest to lowest ranks are known as
scalar chain. Gang Plank is a shorter route so that communication is not
delayed
(x) Order ‘A place for everything (everyone) and everything (everyone) in its
(her/his) place’.
(xi) Equity No discrimination against anyone on account of sex, religion, language,
caste, belief or nationality etc.
(xii) Stability of Personnel Selected employees should be kept at their post/ position for a minimum
fixed tenure. Employee turnover should be minimized.
(xiii) Initiative Workers should be encouraged to develop and carry out plans for
improvements.
(xiv) Esprit De Corps Promote a team spirit of unity and harmony among employees.

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 Chapter-3 BUSINESS ENVIRONMENT
Meaning: 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.
Features/Characteristics Importance/Significance
(i) Totality of external forces (Aggregative in nature) (i) It enables the firm to identify opportunities and
getting the first mover advantage.
(ii) Specific (Such as investors, customers, competitors and (ii) It helps the firm to identify threats and early
suppliers) and General Forces (such as social, political, warning signals.
legal and technological conditions)
(iii) Inter-relatedness (Aggregative in nature closely (iii) It helps in tapping useful resources: convert
interrelated.) those resources into outputs that the
environment desires.
(iv) Dynamic nature (Keeps on changing) (iv) It helps in coping with rapid changes
(v) Uncertainty (Difficult to predict future happenings) (v) It helps in assisting in planning and policy
formulation
(vi) Complexity (Easier to understand in parts but difficult (vi) It helps in improving performance
to grasp in its totality.)
(vii) Relativity (Differs from country to country and even
region to region.)
Dimensions/Elements/Types of Business Environment
(i) Economic Interest rates, inflation rates, changes in disposable income of people, stock market indices,
value of rupee, role of private and public sectors, rates of growth of GNP and per capita
income at current and constant prices, Rates of saving and investment, Volume of imports
and exports, Balance of payments, foreign exchange reserves, Agricultural and industrial
production trends, Expansion of transportation and communication facilities, Money
supply, Public debt (internal and external).
(ii) Social Customs and traditions, values, social trends, society’s expectations , product innovations,
lifestyles, occupational distribution and consumer preferences, quality of life, Life
expectancy, Expectations from the workforce, presence of women in the workforce, Birth
and death rates, Population shifts, Educational system and literacy rates, Consumption
habits, Composition of family
(iii) Technological Scientific improvements, innovations, upgradation, new methods and techniques etc.
(iv) Political Political conditions such as general stability and peace, Degree of Politicisation of business
and economic issues, Dominant ideologies of major political parties, nature, morality and
profile of political leadership and thinking of political Personalities, extent government
intervention, nature of relationship with foreign countries
(v) Legal Various legislations passed by the Government Administrative orders issued by government
authorities, court judgments
Prepared By: Mrs. Renuka (KV 1, Jaipur) Checked By: Ms. Anju Cheema (KV, Phulera)

UNIT- II – 14 MARKS (CHAPTER- 4 & 5)

Chapter 4- PLANNING
PLANNING: - Planning is the process of deciding in advance the future courses of action i.e.
What is to be done? When is to be done?
How is to be done? By whom it is to be done? Etc.
FEATURES OF PLANNING
(i) Focuses on achieving objectives (ii) Primary function of management (iii) Pervasive
(iv) Continuous Process (v) Futuristic (vi) Involves decision making (vii) Mental exercise
IMPORTANCE OF PLANNING
1 Planning provides directions By stating in advance how work is to be done planning provides direction for
action.
2 Planning reduces the risks of By deciding in advance, the tasks to be performed, planning shows the way to
uncertainty deal with changes and uncertain events.
3 Planning reduces overlapping In Planning the work of each person and department is clearly decided. It helps
and wasteful activities in avoiding confusion and misunderstanding.
4 Planning promotes innovative During discussions for planning, new ideas may be presented by
ideas managers/individuals.
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 5 Planning facilitates decision During planning the manager has to evaluate each alternative. This helps them in
making taking decision for selection of best alternative.
6 Planning establishes Planning provides the goals or standards against which actual performance is
standards for controlling measured for controlling.
LIMITATIONS OF PLANNING (Le I Re Do Do T.C.)
1 Leads to Rigidity Managers have to work according to pre-decided plan they may not be in a position
to change it.
2 Involves Huge Cost Planning includes expenses for collection of information, salary of specialists for
analysis, paper work, board meeting etc.
3 Reduces Creativity Middle management and other decision makers are neither allowed to deviate from
plans nor are they permitted to act on their own. It reduces their creativity.
4 Does Not Work in Business environment changes very frequently. It becomes difficult to accurately
Dynamic Environment assess future trends in the environment
5 Does Not Guarantee of Generally, manager rely on previous successful plans. Such type of planning may not
Success give success.
6 Time Consuming Process Conducting meetings and discussions for preparing plans takes a lot of time.
PROCESS OF PLANNING (Set DIES ImFo)
1 Setting Objectives Objectives may be set for the entire organisation and each department or unit
within the organisation.
2 Developing Premises Planning is concerned with the future which is uncertain and every planner is
using conjuncture about what might happen in future.
3 Identifying alternative courses Once objectives are set, assumptions are made. Then the next step would be to
of action find out various alternative to achieve the goal.
4 Evaluating alternative courses The next step is to weigh the pros and cons of each alternative.
5 Selecting an alternative This is the real point of decision making. The best plan has to be adopted for
implementation.
6 Implementing the plan This is concerned with putting the plan into action.
7 Follow-up action Monitoring the plans are equally important to ensure that objectives are
achieved.

Chapter 5- ORGANISING

ORGANISING: - Organising is the process of defining and grouping the activities of the enterprise and establishing
authority relationship among them.
IMPORTANCE OF ORGANISING
1. Benefits of specialisation Because of the specific workers performing a specific job on a regular basis.
Repetitive performance of a particular task leads to Specialisation.
2. Clarity in working The establishment of working relationships clarifies who is to report to whom.
relationships
3. Optimum utilisation of Organising provides a clear description of jobs and related duties. This helps to
resources avoid confusion and duplication.
4. Adaptation to change It allows the organisation structure to be suitably modified to accommodate
environmental changes.
5. Effective administration Organising provides a clear description of jobs and related duties. This helps to
avoid confusion and duplication.
6. Development of personnel Effective delegation allows the managers to reduce their workload by assigning
routine jobs to their subordinates. It gives them time to explore areas for growth.

PROCESS OF ORGANISING (IDAE)

I Identification and division of work
D Departmentalisation
A Assignment of duties
E Establishing authority and reporting relationships

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SPAN OF MANAGEMENT: - Span of Management refers to the number of subordinates that can be effectively
managed by a superior.
CENTRALISATION OF AUTHORITY: - When all the authorities are kept with Top Level management, it is known
as centralisation of authority.
ORGANISATION STRUCTURE: - Organising structure can be defined as the framework within which managerial
and operating tasks are performed. (Two Types – Functional and Divisional Structure)
FUNCTIONAL STRUCTURE DIVISIONAL STRUCTURE
The organisation structure which is created on the The organisational structure which is created on the basis of
basis of grouping of similar functions. different products.
Advantages (Le Le MAP) Advantages (Pro Pro Fa Fa Fi)
1. Leads to occupational specialisation 1.. Product specialisation
2. Leads to minimal duplication 2.. Promotes flexibility and initiative
3. Makes training of employees easier 3.. Facilitates expansion and growth
4. Attention on every function 4.. Faster decision making
5. Promotes control and coordination within a 5.. Fixation of responsibility-Divisional heads are
department accountable for profits
Limitations (Less Conflict Leads to Problems) Limitations (Ignore Duplicate Conflict)
1. Less emphasis on overall enterprise objectives 1.. Conflict among different divisions
2. Conflict of interests 2.. Duplication of activities
3. Leads to inflexibility 3.. Ignore organisational interests
4. Problems in coordination
Suitability: Suitability:
It is most suitable when the size of the organisation It is suitable for those business enterprises where a Large
is large, has a diversified activities and operations variety of products are manufactured using different
require a high degree of specialisation. productive resources. Suitable for growing organisations.

DELEGATION OF AUTHORITY: Delegation DECENTRALISATION OF AUTHORITY: -

refers to the downward transfer of authority from a Decentralisation of authority is delegation of authority to all
superior to subordinate to reduce the workload of the levels of management. It means distribution of authority
the superior. up to the lowest level.
Difference Between
Delegation Basis Decentralisation
Compulsory act because no individual 1. Nature Optional policy decision. It is done at the discretion of
can perform all tasks on his own. the top management.
More control by superiors hence less 2. Freedom Less control over executives hence greater freedom of
freedom to take own decisions. of action action.
It is a process followed to share tasks. 3. Status It is the result of the policy decision of the top
management.
Narrow scope as it is limited to superior 4. Scope Wide scope as it implies extension of delegation to the
and his immediate subordinate. lowest level of management.
To reduce the workload/burden of the 5. Purpose To increase the role of the subordinates in the
superior. organisation or to give more autonomy to subordinates.
Importance of Delegation Importance of Decentralisation (Q De De Re F,B)
1. Effective management 1.. Quick decision making
2. Employee development 2.. Develops managerial talent for the future
3. Motivation of employees 3.. Develops initiative among subordinates
4. Basis of management hierarchy 4.. Relief to top management
5. Facilitates growth 5.. Facilitates growth
6. Better coordination 6.. Better control

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 Elements of Delegation of Authority (Three elements)
Basis Authority Responsibility Accountability
Meaning Authority refers to the right of an Responsibility is the obligation Delegation of authority,
individual to command his of a subordinate to properly undoubtedly empowers an
subordinates and to take action perform the assigned duty. employee to act for his superior
within the scope of his job but the superior would still be
position. accountable for outcome.
Delegation Can be delegated. Cannot be entirely delegated. Cannot be delegated at all.
Origin Arises from formal position. Arises from delegated authority. Arises from responsibility
Flow Flows downward from superior to Flows upward from subordinate Flows upward from subordinate
subordinate. to superior. to superior
Prepared by: Mr. LALIT TANWAR (KV No. 2, AFS, JODHPUR) Checked by: Mr. ROHIT BATRA( K.V. JHALAWAR)
UNIT- III– 20 MARKS (CHAPTER- 6,7 & 8)
CHAPTER: 6 -STAFFING
Meaning: “Staffing consist of Estimating Manpower requirement, Recruitment, Selection, Training, Compensation,
Promotion of managerial personal.”
Staffing Process Explanation
1. Estimating Man-power Finding out number and types of employee. It Includes-
Requirement a) Work Load Analysis- Number and types of persons required,
b) Work Force Analysis- Persons Available to do the job.
2. 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.
3. Selection It is the process of choosing and appointing the right candidates for various
jobs in an organization through various exams, tests & interviews.
4. Placement and Orientation Placement is telling the employee it’s place of work. Orientation refers to
introducing a new employee to the organization.
5. Training and Development 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.
6. Compensation Payment of salary and wages to employee.
7. Performance Appraisal/Report Checking the performance of the employee on pre-decided standards.
8. Promotion Hierarchically upward movement of the employee.
Types or Sources of Recruitments: Internal Recruitment and External Recruitment
1.Transfers Shifting of an employee from one job to another, from one department to another
2.Promotions Internal It refers to shifting an employeeto a higher position carrying higher responsibilities,
prestige, facilities and pay.
3. Direct A notice is placed on the notice board of the enterprise specifying the details of the
Recruitment jobs available.
4.Casual callers Many reputed business organizations keep a data base of unsolicited applicants in their
office. This list can be used for Recruitment of candidate in future.
5.Advertisement Example–Newspapers, Periodicals, Internet, Radio, Television etc.
6.Employment A good source of recruitment for unskilled and skilled operative jobs. It is managed by
Exchange External Government.
7.Campus Companies go to the Campuses of reputed technical and non-technical colleges and
Recruitment institutions for recruitment.
8. Web Certain websites specifically designed for providing information regarding job seekers
publishing and companies which have vacancies.
9. Placement Placement agencies provides nation-wide services of matching demand and supply of
Agencies and work force. These agencies run by private people. Generally, Placement Agencies
Management place middle and lower level workers and Management Consultant place Top level
consultant managers.

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 SELECTION PROCESS
1. Preliminary Screening After applications have been received, they are properly checked for qualification,
age, gender etc.by screening committee.
2. Selection Tests Includes intelligence tests, aptitude test, personality test, trade and interest tests.
3. Employment Interviews Face to face interaction between employer and candidate to check candidate’s
personality confidence, knowledge.
4. Reference Checks Prior to final selection, the prospective employer makes an investigation of the
references supplied by the applicants.
5. Selection Decisions A list of candidates who clear the employment tests, interviews and reference
checks is prepared and then the selected candidates are listed in order of merit.
6. Medical Examination Is done to check medical conditions of employee before his joining.
7. Job Offer Formally appointed by issuing him an Appointment Letter.
8. Contract of Employment After acceptance, both employer and employee will sign a contract of employment
contains terms & conditions, pay scale, leave etc.
TYPES OF SELECTION TESTS
1. Intelligence tests To check intelligence quotient and ability to take decisions and learning new skills.
2. Aptitude test To check person’s ability to learn new jobs.
3. Personality test To check the emotions, reactions, maturity and value system of the candidate.
4. Trade test To check the existing knowledge.
5. Interest tests To know the pattern of interest or involvement of a person.
METHODS OF TRAINING
1. Apprenticeship Trainee/worker is required to work under trainer/master worker for a specific period of
training time and acquire skills. It Is used for training of plumbers, electrician.
2. Internship It is an agreement between corporate sector and professional institutions to send their
students to companies to practice theoretical knowledge they learned in professional bodies.
3. Induction or This is a process of welcoming the employee when he joins the company.
Orientation
4. Vestibule Workers work on same types of equipment but away from actual work place.
training
IMPORTANCE OF TRAINING
IMPORTANCE TO EMPLOYEE IMPORTANCE TO COMPANY/ORGANIZATION
Better carrier option Reduce learning time
Earning more Better performance of employees
Boost and morale of employees help in solving man power requirements
Less chance of accidents Attitude formation
Help in adoption of change
DIFFERENCE BETWEEN TRAINING AND DEVELOPMENT
Base Training Development
Concept Teaching of technical skills Teaching technical human and conceptual skills
Nature Focus on developing skills which are Development of hidden skills
already possessed by employee
Duration Short term and fixed period It is a long-term process
Centered It is work centered It is people centered.
Method used On the job and off the job method Normally off the job methods.
CHAPTER-7 DIRECTING
Directing is telling people what to do and seeing that they do it best of their ability.
ELEMENTS OF DIRECTING
SUPERVISION To see, instruct, guide, monitoring and observing the employees.
MOTIVATION Stimulating, inducing employees to perform to their best of ability.
LEADERSHIP It is a process of influencing the behavior of employees at work towards the
achievement of the goals of the organization.
COMMUNICATION It is the exchange of ideas, views, message information, between two or more persons
using different methods to create common understanding.

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 MASLOW’S THEORY OR NEED BASE THEORY OF MOTIVATION

S.No Stage Explanation (Ba S Be E S or Ba Sa Social EsSe)

1 Basic Physiology needs Includes needs for survival and maintenance of life. Like food shelter and clothing.
2. Safety needs It deals with future needs and safety of human life.
3. Social/Belonging needs It deals with need for love, affection and companionship.
4. Esteem needs It deals with demand of respect for themselves in a group.
5. Self-actualization It deals with realization of one’s full potential. It includes growth self fulfilment and
needs achievement of goal.

ASSUMPTIONS OF MASLOW’S THEORY

1. Behavior of people depends upon their needs. Human behavior can be changed motivated by fulfilling their needs.
2. Generally, needs flow in hierarchy i.e. starting from Physiology needs to self actualisation needs.
3. A satisfied need can no longer motivated a person, only the next higher need can motivate him.
4. A person can move to higher level need only when the lower need is satisfied.

FINANCIAL AND NON-FINANCIAL INCENTIVES

S.N. Incentive Type Explanation

1 Pay and Allowance Regular salary payment and various allowances
2. Profit Sharing Sharing of profit by management with employees.
3 Co-Partnership Offering of shares to employees and lower rate in form of ESOPs.
/Stock Option
4. Bonus It is one-time extra reward offered to the employee for higher
Financial performance.
5. Commission As a percentage of sales given to sales person for achieving the sales
targets
6 Retirement Some organizations offer benefits like gratuity, pension, provident fund
Benefits etc. at the time of retirement of employee
7. Perks/Fringe Special benefits like medical facilities, free education for children, housing
Benefits facilities.
8. Status Refers to Rank, authority, responsibilities, recognition and prestige.
9. Organizational It refers to relationship between superior and subordinate. It directly
Climate influences the behavior of employee.
Non-
10. Career financial Promotional opportunities given to employees. It improves the skills of
Advancement employees.
11. Job Enrichment Making the job of employees more interesting to avoid boredom in job by
offering more varieties and challenges in job.

STYLES OF LEADERSHIP
S.N. Basis Autocratic/ Democratic/ Laissez Faire/
Authoritative Participative Free Rein
1. Decision Only leaders make Leaders make decision in Subordinates make the decisions
Making the decisions. consultation with subordinate
2. Communication Only one way i.e. Two-way of communication Free flow of communication
downward.
3. Motivation Fear and punishment Reward and involvement Self-direction and self-control.
technique (negative motivation) (positive motivation)
4. Delegation of No delegation Delegation of authority to some Complete delegation of
authority extent authority
5. Focus Leader control Group control Individual centered
6. Role of leader Provides directions Maintains team work Provides support and resources

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 COMMUNICATION
Difference between formal and informal communication.
S.N. Basis Formal Communication Informal Communication
1. Meaning Official communication at official place It is communication taking place among
between people who are officially related employees of the organization to full fil their
with each other. social needs
2. Flow Generally, it is upward, downward and It flows in all directions.
horizontally.
3. Verbal or written Generally, it is written. It is mostly verbal.

4. Scope for rumors Under this there is no scope for rumors as it There is great chance of rumors as it has no
is mostly written direction
5. Scalar chain It follows scalar chain It does not follow scalar chain.
6. Purpose It is for official purposes only It is for social purposes only.

CHAPTER-8 CONTROLLING
Controlling is a process of comparison of actual performance with the planned performance. If there is any
difference or deviations finding out the reasons for it and taking corrective actions to remove those deviations.
PROCESS OF CONTROLLING
S.N. POINT EXPLANATION
1 Setting Up of It means parameter against which the actual performance will be measured. Standards
Standards should be clearly defined and expressed in numeric terms so that all can understand
/Targets them.
2 Measuring of Actual Actual performance is measured by evaluating the work done by employees. While
Performance measuring the performance quantitative & qualitative aspect kept in mind.
3 Compare The manager compares the actual performance with planned performance. The
Performance Against differences between two is known as deviation. It could be positive when actual
Standards performance is more than planned performance and negative vis-à-vis.
4 Analysing Deviations All deviations need not to be brought to the notice of the management. A range of
deviations has to be established and cases beyond the range are reported to the
management. To analyze the deviations Critical point control and Management by
Exception are used.
CRITICAL POINT CONTROL (CPC): It means keep focus on some KEY
RESULT AREA (KRA)- which are critical to success of the organization. if there is
deviation in these areas then it must be attended urgently. For example, if cost of
production increased by Rs. 2 and cost of postage by Rs 10. Cost of production has
more impact on organization than cost of postage. Thus, for an organization KRA will
be cost of production.
MANAGEMENT BY EXCEPTION (MBE): If a manager tries to control everything
he will end up controlling nothing. The deviations beyond the specific range in KRA
should be handled by manger and managers should not waste time in controlling
everything. For example, if increase in cost of production is acceptable up to Rs. 5 then
management will not take the action in above case. Otherwise, it will take action to
control the cost.
5 Taking Corrective After knowing the reasons for deviations, the management takes all necessary steps to
Action/Measures remove them so that planned performance and actual performance are matched.
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 IMPORTANCE OF CONTROLLING
S.N. IMPORTANCE EXPLANATION
1 Help in Achieving Goals Organizations are formed to achieve a particular goal. Controlling helps in
achieving the goals by ensuring proper implementation of plans.
2 Judging Accuracy of The With the help of controlling accuracy of standards are judged.
Standards
3 Making Efficient Use of Like traffic signal controlling guides the organization in efficient use of
Resources resources. It directs the resources from unproductive to productive use.
4 Improving Employees An effective control system communicates the goals/standards in advance to
Motivation the employees. A good controlling system thus motivate the employees.
5 Ensure Order and Discipline A good controlling system ensures order and discipline in the organization.
6 Facilitate Co-Ordination in A good controlling system maintain equilibrium in means and end. It makes
Action. sure that proper direction is taken.
Prepared by: Mr. ROHIT BATRA Checked by: Mr. LALIT TANWAR
K.V. JHALAWAR K.V. NO. 2 AFS JODHPUR

UNIT - 4 – 15 MARKS (Chapter 9&10)

CHAPTER- 9 FINANCIAL MANAGEMENT
Business Finance - Money required for carrying out business activities.
Financial Management- It is concerned with optimal procurement as well as the usage of finance.
The role of financial management- 3. The amount of long-term and short- term funds to be
1.The size and the composition of fixed assets . used
2.The quantum of current assets and its break-up into 4. Break-up of long-term financing into debt, equity etc:
cash, inventory and receivables 5. All items in the Profit and Loss Account, e.g., Interest,
Expense, Depreciation.
Objectives of financial management- (To maximise shareholders’ wealth). It is achieved through- (a)Ensuring
effective utilisation of funds. (b)Ensuring safety of funds procured by creating reserves, reinvesting profits, etc.
Investment Decision- The investment decision, therefore, relates to how the firm’s funds are invested in different assets.
Factors affecting Capital Budgeting Decision B) The rate of return: maximum returns with minimum
A) Cash flows of the project: Expectation to generate risk.
cash inflows C) The investment criteria involved: calculations
regarding the investment, interest rate, cash flows and
rate of return
Financing Decision- It involves identification of various available sources as shareholders’ funds and borrowed
funds.
Shareholders’ funds refer to the total of equity capital and the retained earnings.
Borrowed funds refer to the total of finance raised through debentures or other forms of debt.
Factors Affecting Financing Decisions-
Sr. Factors Situation Debt/ Equity FINANCIN
G
1 Cost cheapest debt DECISIONS

2 Risk low equity INVESTMENT FINANCIAL DIVIDEND

3 Floatation cost low debt DECISIONS DECISIONS DECISIONS

4 Cash flow position Reduce equity Capital Working Dividend Retained

budgeting capital DEBT EQUITY Distributio Distributio
outflow decisions decisions n n

5 Fixed operating cost Reduce equity

6 Control considerations No dilution debt
7 State of capital market Bullish Equity
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.
Sr. Factors Expected Situation Distribution of dividends/
Retained earnings
1 Amount of Earnings High More dividends
2 Stability Earnings Stable Higher dividends
3 Stability of Dividends Dividend policy Regular dividends
4 Growth Opportunities Available Less dividends
5 Cash Flow Position Reduce cash outflow Less dividends
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 6 Shareholders’ Preference Desirable distribution Higher dividends
7 Taxation Policy Higher tax less dividends
8 Stock Market Reaction Bullish Higher dividends
9 Access to Capital Market Large Reputed companies Higher dividends
10 Legal Constraints provisions of the Companies Act less dividends
11 Contractual Constraints imposed by the lender less dividends

Financial Planning- A Financial blueprint of an organisation’s future operations.

Twin objectives of financial Importance of financial planning-
planning- It helps in:
(a) To ensure availability of (i) Forecasting & avoiding business shocks and surprises.
funds whenever required: (ii) Co-ordinating various business functions.
(b) To see that the firm does not (iii) Reducing waste, duplication of efforts, and gaps in planning.
raise resources unnecessarily. (iv) Providing a link between investment and financing decisions on a
continuous basis.
(v) Making the evaluation of actual performance easier.

EBIT-EPS ANALYSIS
This is a situation of favourable financial leverage. This is a situation of unfavourable financial leverage
Situation Situation Situation Situation Situation Situation
i ii iii i ii iii
EBIT 4,00,000 4,00,000 4,00,000 EBIT 2,00,000 2,00,000 2,00,000
INTEREST NIL 1,00,000 2,00,000 INTEREST NIL 1,00,000 2,00,000
(@10%) 4,00,000 3,00,000 2,00,000 (@10%) 2,00,000 1,00,000 NIL
EBT (1,20,000) (90,000) (60,000) EBT (60,000) (30,000) (NIL)
TAX (@30%) 2,80,000 2,10,000 1,40,000 TAX (@30%) 1,40,000 70,000 NIL
EAT 3,00,000 2,00,000 1,00,000 EAT 3,00,000 2,00,000 1,00,000
NO. OF 0.93 1.05 1.40 NO. OF SHARES 0.47 0.35 NIL
SHARES EPS
EPS (EARNINGS
(EARNINGS PER SHARE)
PER SHARE)
Capital Structure refers to the mix between owners and borrowed funds. These shall be referred as equity and debt in the
subsequent text. It can be calculated as debt-equity ratio or as the proportion of debt out of the total capital. The
proportion of debt in the overall capital is also called Financial Leverage.
Trading on Equity refers to the increase in profit earned by the equity shareholders due to the presence of fixed financial
charges like interest.
Factors affecting the choice of Capital Structure-
S.N. Factors Expected Situation Choose Debt/ Equity
1 Cash Flow Position Reduce fixed payment equity
obligations
2 interest coverage ratio higher Increase debt
3 Debt service coverage ratio higher Increase debt
4 return on investment higher Increase debt
5 cost of debt low Higher debt
6 Tax rate higher Increase debt
7 Cost of equity high Reduce debt
8 Floatation costs high Increase borrowing
9 risk consideration low equity
10 Flexibility maintain equity
11 Control No dilution debt
12 Stock Market conditions Bullish Equity
13 Capital structure of other companies industry norms Debt – Equity Ratio

Financial Risk is the chance that a firm would fail to meet its payment obligations.
Fixed Capital decisions - Investment decisions or Capital Budgeting Decisions which affect the growth, profitability
and risk of the business in the long run.

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Factors affecting the Fixed Capital requirement -
Sr. Factors Expected Situation Importance of
Requirement of F. C.
1 Nature of Business trading concern less Fixed Capital or
2 Scale of Operations large more Capital Budgeting
Decisions -
3 Choice of Technique Capital intensive more
(i) Long-term
4 Technology Upgradation obsolescence more
growth
5 Growth Prospects opportunities more
(ii) Large amount of
6 Diversification Expansion more funds involved
7 Financing Alternatives Leasing/ Credit facilities less (iii)Risk involved
8 Level of collaboration sharing less (iv) Irreversible
decision
Working Capital Decisions- An investment decision which facilitates smooth day-today operations of the
organisation. For Example-levels of cash, inventory and receivables.
Factors affecting the Working Capital requirement -
S. N. Factors Affecting Requirement of W. C.
1 Nature of Business Trading concern less
2 Scale of Operations large more
3 Business Cycle long more
4 Seasonal Factor On season more
5 Production Cycle long more
6 Credit Allowed liberal policy more
7 Credit Availed Credit purchases/ Trade Credit less
8 Operating Efficiency efficiencies lower
9 Availability of Raw Material easy lower
10 Growth Prospects Opportunities/Expansion/Increase more
11 Level of competition Higher level more
12 Rate of Inflation High more

CHAPTER- 10 FINANCIAL MARKETS

Financial Market - A market for the creation and exchange of financial assets. such as -equity shares, debentures and
bonds.
Functions of Financial Market-
1. Mobilisation of savings and channeling them into the most productive FINANCIAL
MARKET

uses. MONEY MARKET CAPITAL MARKET

2. Facilitating Price Discovery

PRIMARY MARKET SECONDARY MARKET
3. Providing Liquidity to Financial assets
4. Reducing the cost of transactions

Money Market- The money market is a market for short term funds which deals in monetary assets whose period of
maturity is upto one year. Money Market Instruments
SR. Instruments Meaning
1 Treasury Bill TB are Zero Coupon Bonds issued by the Reserve Bank of India in the form of a
promissory note.
2 Commercial CP is a short-term unsecured promissory note, negotiable and transferable by
Paper endorsement and delivery with a fixed maturity period.
3 Call Money It is a method by which banks borrow from each other to be able to maintain the cash
reserve ratio.
4 Certificate of CD are unsecured, negotiable, short-term instruments in bearer form, issued to
Deposit individuals, corporations and companies by commercial banks and development
financial institutions.
5 Commercial bill It is a short-term, negotiable, self-liquidating instrument which is used to finance the
credit sales of firms. Example- Bills of Exchange
Capital Market- It refers to facilities and institutional arrangements through which long-term funds, both debt and
equity are raised and invested.

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 SN Basis Capital Market Money Market
1 Participants Financial institutions, banks, corporate entities, RBI, banks, financial institutions and
foreign investors and ordinary retail investors finance companies
2 Instruments Equity shares, debentures, bonds, preference T-bills, trade bills reports, commercial
shares paper and certificates of deposit.
3 Investment It does not necessarily require a huge financial Transactions entail huge sums of money
Outlay outlay as the instruments are quite expensive
4 Duration Long term Short term
5 Liquidity Liquid investments because they are marketable Enjoy a higher degree of liquidity as
on the stock exchanges. there is formal arrangement for this.
6 Safety Riskier Safer
7 Expected Higher return Comparatively less returns
return
Methods of Floatation of securities in Primary Market-
S.N. (EPOOR) 5 Meaning
METHODS
1 e-IPOs 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.
2 Private It is the allotment of securities by a company to institutional investors and some
Placement selected individuals.
3 Offer through It invites subscription from the public through issue of prospectus by making a direct
Prospectus appeal to investors to raise capital, through an advertisement in newspapers and
magazines.
4 Offer for Sale Here securities are not issued directly to the public but are offered for sale through
intermediaries
5 Rights Issue It is a privilege given to existing shareholders to subscribe to a new issue of shares.

S.N. Basis Primary Market Secondary Market

1 Trading securities New securities Existing securities
2 Participants Sold by the company Exchanged between investors.
3 Capital formation directly indirectly
4 Buy/Sale Only buying Both the buying and the selling
5 Price determination By the management of the company. By demand and supply of securities
6 Geographical Not Fixed Local area.
location
Stock Exchange- It is an institution which provides a platform for buying and selling of existing securities.
Functions of a Stock Exchange- Trading and Settlement Procedure- It is on-line, screen-
1. Providing Liquidity and Marketability to Existing based electronic trading system.
Securities Sr. Steps in Trading procedure
2. Pricing of Securities 1 Selection of broker
3. Safety of Transaction 2 Opening of Demat account with the depository.
4. Contributes to Economic Growth 3 Placing an order
5. Spreading of Equity Cult 4 Executing the order
6. Providing Scope for Speculation 5 Settlement. (T+2)
Dematerialisation- 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 she/he can hold it as an electronic balance in an account.
Depositories- The investor has to open a demat account with an organisation called a depository. For Example- NSDL &
CDSL.
Securities and Exchange Board of India (SEBI)- (Established on 12 April 1988 & given statutory status through an Act
in 1992.)
Objectives of SEBI-1. To regulate stock exchanges and the securities industry to promote their orderly functioning.
2. To protect the rights and interests of investors, particularly individual investors and to guide and educate them.
3. To prevent trading malpractices and achieve a balance between self regulation by the securities industry and its
statutory regulation.
4. To regulate and develop a code of conduct and fair practices by intermediaries like brokers, merchant bankers etc., with
a view to making them competitive and professional.
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 Functions of SEBI- B. Development Functions 1. Training of
A. Regulatory Functions 1. Registration of brokers intermediaries of the securities market. 2.Conducting
and sub brokers and other players in the market. 2. research and publishing information useful to all
Registration of collective investment schemes and market participants. 3.Undertaking measures to
Mutual Funds. 3. Regulation of stock brokers, portfolio develop the capital markets by adapting a flexible
exchanges, underwriters and merchant bankers and the approach.
business in stock exchanges 4. Regulation of takeover
bids by companies. 5.Calling for inspection, conducting C. Protective Functions 1. Prohibition of fraudulent
enquiries and audits of stock exchanges and and unfair trade practices like making misleading
intermediaries. 6. Levying fee or other charges for statements, manipulations, price rigging etc.
carrying out the purposes of the Act. 7.Performing and 2.Controlling insider trading and imposing penalties
exercising such power under Securities Contracts for such practices. 3.Undertaking steps for investor
(Regulation) Act 1956, as may be delegated by the protection. 4.Promotion of fair practices and code of
Government of India. conduct in securities market.
PREPARED BY: Ms. ANJU CHEEMA (PGT-COMM) KV PHULERA
CHECKED BY: Mr. GOVERDHAN VORA(PGT-COMM) KV NO.1 UDAIPUR

UNIT- V – 15 MARKS (CHAPTER- 11 &12)

Chapter: 11 MARKETING MANAGEMENT
CONCEPT:- Marketing management refers to planning, organising, directing and control of the activities which
facilitate exchange of goods and services between producers and consumers or users of products and services.
MARKETING INVOLVES:-
(i) Choosing a target market (II) Create demand for the products (iii) Create superior values for CUSTOMERS.
Q. What can be Marketed?
Ans:- Physical Products, Services, Ideas, Persons, Place, Experience, Properties, Events, Information, Organisations
Marketing Management Philosophies:-
Differences in the Marketing Management Philosophies
Philosophies/ Production Product Selling Marketing Societal - Marketing
Bases Concept Concept Concept Concept Concept
1. Starts Factory Factory Factory Market Market ,Society
2. Main Focus Quantity of Quality, Existing Customer Customer needs and
product performance, product needs society’s well being
features of product
3.Means Availability and Product Selling and Integrated Integrated marketing
affordability of improvements promoting marketing
product
4. Ends Profit though Profit through Profit through Profit through Profit through customer
volume of product quality sales volume customer and social welfare
production satisfaction

Functions of 1. Gathering and 4. Standardisation and 7. Customer Support 10. Physical

Marketing Analysing Market Grading Services Distribution
Information 5. Packaging and 8. Pricing of Product 11. Transportation
2. Marketing Planning Labelling 9. Promotion 12. Storage
3 . Product Designing 6. Branding &
and Development Warehousing
Marketing Mix:- The marketing mix consists of various elements, which have broadly been classified into four
categories, popularly known as four Ps of marketing.
These are: (i) Product, (ii) Price, (iii) Place, and (iv) Promotion.
1. Product: Product means goods or services or ‘anything of value’, which is offered to the market for sale.
PRODUCT MIX:- It refers to all the decisions relating to product. It mainly includes branding, packaging and labelling.
Elements of Product:- a) Branding :- The process of giving a name or a sign or a symbol etc., to a product is called
branding.(It affects Brand, Brand Name, Brand Mark, Trade Mark)
Characteristics of Good Brand Name:-
(i) The brand name should be short, easy to pronounce, spell, recognise and remember.
(ii) A brand name should suggest the product’s benefits and qualities. It should be appropriate to the product’s function.
(iii) A brand name should be distinctive.
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b) Packaging refers to the act of designing and producing the container or wrapper of a product.
Levels of Packaging:- 1. Primary Package: 2. Secondary Packaging: 3 Transportation Packaging:
Importance of Packaging:- (i) Rising Standards of Health and Sanitation; (ii) Self Service Outlets;
(iii) Innovational Opportunity; (iv) Product Differentiation

Functions of Packaging:- (i) Product Identification; (ii) Product Protection (iii) Facilitating Use of the Product;
(iv) Product Promotion

c) Labelling:- Labelling in the marketing refers to designing the label to be put on the package. indicating some
information about the quality or price, to complex graphics that are part of the package, like the ones on branded products.
Functions of labelling: 1. Describe the Product and specify its contents; 2. Identification of the Product or brand;
3. Grading of Products 4. Helps in Promotion of Products
5. Providing Information Required by Law.
2. Price: Price is the amount of money customers have to pay to obtain the product.

Factors affecting Price Determination: I. Product cost; II. The Utility and Demand;
III. Extent of Competition in the Market; IV. Government and Legal Regulations; V. Pricing Objectives
3. Place: Place or Physical Distribution include activities that make firm’s products available to the target customers

4. Promotion: Promotion of products and services include activities that communicate availability, features, merits, etc.,
of the products to the target customers and persuade them to buy it.

Promotion Mix refers to combination of promotional tools used by an organisation to achieve its communication
objectives. These include: (i) Advertising, (ii) Personal Selling, (iii) Sales Promotion, and (iv) Publicity. These tools are
also called elements of promotion mix .
(i) Advertising:- It is an impersonal form of communication, which is paid for by the marketers (sponsors) to
promote some goods or service. The most common modes of advertising are ‘newspapers’, ‘magazines’,
‘television’, and ‘radio’. The important distinguishing features of advertising are as follows: (i) Paid Form; (ii)
Impersonality; (iii) Identified Sponsor.
(ii) Personal Selling :-Personal selling involves oral presentation of message in the form of conversation with
one or more prospective customers for the purpose of making sales.
(iii) Sales Promotion – It refers to short- term incentives, which are designed to encourage the buyers to make
immediate purchase of a product or service.
(iv) Publicity :-Publicity generally takes place when favourable news is presented in the mass media about a
product or service:- (i) Publicity is an unpaid form of communication; (ii) There is no identified sponsor.
Public Relations:- Relations of an Organisation with the public.

Role of Public Relations:-

1. Press Relations: Information about the organisation needs to be presented in a positive manner in the press.
2. Product Publicity: New products require special effort to publicise them and the company has to sponsor such
programmes.
3. Corporate Communication: This is usually done with the help of newsletter, annual reports, brochures, articles
and audio-visual materials
4. Lobbying: The organisation has to deal with government officials and different ministers in charge of corporate
affairs, industry, finance with respect to policies.

The major differences between Advertising and Personal Selling are as follows:
BASIS ADVERTISING PERSONAL SELLING
Meaning Advertising is an impersonal form of Personal selling is a personal form of
communication communication
Flexibility Advertising is inflexible as the message can’ t be Personal selling is highly flexible as the message
adjusted to the needs of the buyer can be adjusted.
Cost per In advertising the cost per person reached is very The cost per person is quite high in the case of
person low personal selling
Direct Advertising lacks direct feedback Personal selling provides direct and immediate
feedback feed back.

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 Chapter 12 CONSUMER PROTECTION

Meaning and concept of Consumer Protection: The Consumer Protection Act (CPA) 1986 seeks to protect and promote
the consumers’ interest through speedy and inexpensive redressal of their grievances. The scope of the Act is very wide. It
is applicable to all types of undertakings, big and small, whether in the private or public sector, or in the co-operative sector,
whether a manufacturer or a trader, and whether supplying goods or providing services. The Act confers certain rights to
consumers with a view to empowering them and to protect their interests.

Meaning of Consumer:-A ‘consumer’ is generally understood as a person who uses or consumes goods or avails of any
service. Under the Consumer Protection Act, a consumer is defined as:

(a) 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 user 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.

(b) 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
availed of with the approval of the person concerned, but does not include a person who avails of such services for any
commercial purpose.

Rights of a Consumer:-
1. Right to Safety: The consumer has a right to be protected against goods and services which are hazardous to life and
health.
2. Right to be Informed: The consumer has a right to have complete information about the product he intends to buy
including its ingredients, date of manufacture, price, quantity, directions for use, etc
3. Right to Choose: The consumer has the freedom to choose from a variety of products at competitive prices.
4. Right to be Heard: The consumer has a right to file a complaint and to be heard in case of dissatisfaction with a good
or a service.
5. Right to seek Redressal: The consumer has a right to get relief in case the product or service falls short of his
expectations.
6. Right to Consumer Education: The consumer has a right to acquire knowledge and to be a well-informed consumer
throughout life.

Responsibilities of consumer:- (vi) Be honest in your dealings. Choose only legal goods
(i) Be aware about various goods and services available in and services.
the market so that an intelligent and wise choice can be vii) Ask for a cash memo on purchase of goods or
made. services.
(ii) Buy only standardised goods as they provide quality viii) File a complaint in an appropriate consumer forum in
assurance. Thus, look for ISI mark on electrical goods, case of a shortcoming in the quality of goods purchased or
FPO mark on food products, Hallmark on jewellery, etc. services availed.
(iii) Learn about the risks associated with products and ix) Form consumer societies which would play an active
services. part in educating consumers and safeguarding their
(iv) Read labels carefully so as to have information about interests.
prices, net weight, manufacturing and expiry dates, etc. x) Respect the environment. Avoid waste, littering and
(v) Assert yourself to ensure that you get a fair deal. contributing to pollution.

Who can file a complaint?

(i) Any consumer can file a complaint on his/her own and (iv) One or more consumers, on behalf of numerous
does not need the services of advocate/ professionals; consumers having the same interest; and
(ii) Any registered consumers’ association; (v) A legal heir or representative of a deceased consumer.
(iii) The Central Government or any State Government;

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3 Tier Redressal Machinery:-

1. District Forum: The District Forum consists of a President and two other members, one of whom should be a woman.
They all are appointed by the State Government concerned. A complaint can to be made to the appropriate District Forum
when the value of the goods or services in question, along with the compensation claimed, does not exceed Rs. 20 lakhs.

2. State Commission: Each State Commission consists of a President and not less than two other members, one of whom
should be a woman. They are appointed by the State Government concerned. A complaint can to be made to the
appropriate State Commission when the value of the goods or services in question, along with the compensation claimed,
exceeds Rs. 20 lakhs but does not exceed Rs. 1 crore.

3. National Commission: The National Commission consists of a President and at least four other members, one of
whom should be a woman. They are appointed by the Central Government. A complaint can be made to the National
Commission when the value of the goods or services in question, along with the compensation claimed, exceeds Rs. 1
crore.

Remedies available to a Consumer: -

Relief Available If the consumer court is satisfied about (vi) To discontinue the unfair/ restrictive trade practice
the genuineness of the complaint, it can issue one or more and not to repeat it in the future.
of the following directions to the opposite party. (vii) Not to offer hazardous goods for sale.
(i) To remove the defect in goods or deficiency in service. (viii) To withdraw the hazardous goods from sale.
(ii) To replace the defective product with a new one, free (ix) To cease manufacture of hazardous goods and to
from any defect. desist from offering hazardous services.
(iii) To refund the price paid for the product, or the (x) To pay any amount (not less than 5% of the value of
charges paid for the service. the defective goods or deficient services provided), to be
(iv) To pay a reasonable amount of compensation for any credited to the Consumer Welfare Fund or any other
loss or injury suffered by the consumer due to the organisation/person, to be utilised in the prescribed
negligence of the opposite party. manner.
(v) To pay punitive damages in appropriate (xi) To issue corrective advertisement to neutralise the
circumstances. effect of a misleading advertisement.
(xii) To pay adequate costs to the appropriate party.

Prepared By: Mr. Goverdhan Vora (PGT-Commerce) KV No.1 Udaipur

Checked By : Ms. Anju Cheema (PGT-Commerce) KV Phulera

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