के ीय िव ालय संगठन

KENDRIYA VIDYALAYA SANGATHAN

STUDENT STUDY MATERIAL

BUSINESS STUDIES(054)
XII

(2022-23)
 INSPIRATION

HON’BLE SHRI B. L. MORODIA,

DEPUTY COMMISSIONER
KVS RO JAIPUR

SHRI D. R. MEENA, SHRI M. R. RAWAL, DR. R.K. MEENA

ASSTT. COMMISSIONER ASSTT. COMMISSIONER PRINCIPAL,
KVS RO JAIPUR KVS RO JAIPUR KV NO1 AJMER

SUBJECT EXPERTS

MR. AJAY SHARMA MS. KAVITA CHANDNA MS. VISHAKHA

BANSAL

MR. K. L. MEENA MR. DEEPAK AWASTHI MS. KIRAN TIWARI

 INDEX

S. No. Unit Topic Page No.

1 Syllabus for CBSE Exam (2022-23) 4-4

2 1. Nature and significance of management Revision Material 5-12
Questions- Ans 12-17
3 2. Principle of Management Revision Material 18-21
Questions- Ans 21-26
4 3. Business environment Revision Material 27-29
Questions- Ans 29-33
5 4. Planning Revision Material 34-36
Questions-Ans 36-39
6 5. Organising Revision Material 40-44
Questions-Ans 45-47
7 6. Staffing Revision Material 48-52
Questions-Ans 52-56
8 7. Directing Revision Material 57-62
Questions-Ans 62-65
9 8. Controlling Revision Material 66-68
Questions-Ans 68-70
10 9. Financial Management Revision Material 71-73
Questions-Ans 74-74
11 10. Financial Market Revision Material 75-77
Questions-Ans 78-78
12 11. Marketing Management Revision Material 79-82
Questions-Ans 82-84
13 12. Consumer Protection Revision Material 85-89
Questions-Ans 89-90

SAMPLE PAPER Q.P Ans

Paper-1 91 98
Paper-2 102 108
Paper-3 112 118
Paper-4 120 127
Paper-5 130 137

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 BUSINESS STUDIES

CLASS XII
SYLLABUS
Session 2022-23

TIME : 3 HOURS THEORY : 80

PROJECT : 20

Units Periods Marks

PART – A : Principles and Functions of Management
1. NATURE AND SIGNIFICANCE OF MANAGEMENT 12
2. PRINCIPLES OF MANAGEMENT 14 16
3. BUSINESS ENVIRONMENT 12
4. PLANING 14
14
5. ORGANISING 15
6. STAFFING 16
7. DIRECTIING 15 20
8. CONTROLLING 12
TOTAL 110 50
PART – B : Business Finance and Marketing

9. FINANCIAL MANAGEMENT 20 15
10. FINANCIAL MARKETS 18
11. MARKETING MANAGEMENT 30 15
12. CONSUMER PROTECTION 12

PART – C : PROJECT WORK (One) 30 20

TOTAL 110 50

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 CHAPTER 1
NATURE AND SIGNIFICANCE OF MANAGEMENT

Revision Notes
 Meaning of management
Management is the PROCESS of getting the things done through others to achieve organisational
objectives EFFICIENTLY and EFFECTIVELY.
OR
Management is the process of Planning, Organizing, Staffing, Directing and Controlling to accomplish
organizational objectives through the coordinated use of human and material resources.
Three important concepts identified from the above meaning of management are:
1. PROCESS:
2. EFFICIENCY
3. EFFECTIVENESS

 PROCESS:
Management is called a process because management consist of series of interrelated functions
that are performed by all the managers to accomplish the objectives of organization.
These functions are Planning, Organising, Staffing, Directing and Controlling.

 EFFICIENCY AND EFFECTIVENESS

EFFICIENCY: Efficiency means doing the task correctly at minimum cost.
EFFECTIVENESS: Effectiveness means completing the task correctly within the given time.
Efficiency and Effectiveness are two sides of the same coin.
OR
Relation between Efficiency and Effectiveness
Although efficiency and effectiveness are different but they are interrelated. It is important for
management to be both i.e. effective and efficient.
 Example of effective and not efficient
A business produces targeted 800 units but at a higher cost which exceed the given budget. In this case the
business entrepreneur is effective but not efficient.
 Example of efficient and not effective
A business saves the cost by producing less than targeted units and produces only 700 units. In such a case
business entrepreneur is efficient but not effective.
Therefore, if the business has to be effective and efficient then it has to produce 800 units with minimum
cost and within given time.

CONCLUSION:
It is important for the management to achieve the goals (EFFECTIVE) with minimum
resources(EFFECIENTLY) as far as possible while maintaining the balance between Efficiency and
Effectiveness.
 CHARACTERISTICS OF MANAGEMENT
1. Goal oriented Process:
 It is a goal oriented process, which is undertaken to achieve already specified and desired
objectives.
 The goals should be simple and clearly stated.
 Different organisations have different goals.
2. Pervasive:
 Management is pervasive in nature. It is used in all types of organizations whether economic,
social or political and at every level.

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  The way to manage may differ in different organisations.
 The difference is due to differences in culture, traditions and history.
3. Multidimensional: It is multidimensional in three ways:
i) Management of Work:
 Management translates the work of organisation in terms of goals to be achieved and assigns
the means to achieve it.
ii) Management of People: People/ Human resources are greatest of organisation.
Management of people is done in two ways:
a) It implies dealing with employees as individuals
b) Dealing with individuals as a group of people.
iii) Management of operations:
 Every organisation has some production process.
 It includes flow of input material and technology and other operations to translate them into
output.
 To manage the operations both work and people are to be managed.
4. Continuous:
 All the functions of management are being performed by all managers simultaneously.
 The process of management continues till an organisation exists for attaining its objectives.
5. Group Activity:
It is a group activity since it involves managing and coordinating activities of different people with
different needs and purposes of joining organisation as a team to attain the common organisational
objectives.
6. Dynamic function:
It is a dynamic function since it has to adapt to the changes in social, economic, political,
technological and legal dimensions of business environment to run the organisation successfully.
7. Intangible Force : It is an intangible force as it cannot be seen but its presence and effect can be felt
in the form of results like
 Whether the objectives are met
 Whether employees are happy, satisfied and motivated.
 Whether there is orderliness instead of chaos.

 OBJECTIVES OF MANAGEMENT
(A) Organizational Objectives : These are the primary objectives of organisation. It includes the
economic objectives of:
a) Survival : In order to survive an organisation must earning enough revenues to cover cost.
b) Profit : Profit is essential to cover cost and risk of the business. It provides incentive for
successful operations of the business.
c) Growth : To remain in industry management should fully use the growth potential of
organisation. Growth of a business can be measured in terms of:
 Sales volume
 Increase in number of employees
 Increase in number of products
 Increase in capital investment.
(B) Social Objectives: It involves giving benefits to society like
 using environmental friendly practices
 giving employment to disadvantaged sections of society
 giving basic amenities like schools and crèches to employees.
(C) Personal Objectives: Employees working in the organisation have individual needs like:
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  Financial needs like salary and perks.
 Social needs like recognition
 Higher level needs like personal growth and development.

The diverse personal objectives of people working in the organization have to be reconciled
with organizational objectives by the management.

 IMPORTANCE OF MANAGEMENT
(1) Achieving Group Goals: Management helps in achieving group goals. Manager gives
common direction to the individual effort in achieving the overall goal of the organisation.

(2) Increases Efficiency: Management increases efficiency by using resources in the best possible
manner to reduce cost and increase productivity through better planning, organising, staffing,
directing and controlling.

(3) Creates Dynamic Organisation: Business environment is constantly changing. Management

helps people adapt these changes so that the organisation is able to maintain its competitive
edge.

(4) Achieving Personal Objectives: Management helps in achieving personal objectives of

individuals working in the organisation by contributing to the overall goals of organisation
through motivation and effective leadership.

(5) Development of Society: Management helps in the development of society by:

 producing good quality products & services
 creating employment opportunities and
 adopting new technology.

 NATURE OF MANAGEMENT
It can be explained under three heads:

I) Management as an Art
Art refers to skillful and personal application of existing knowledge to achieve desired results. It
can be acquired through study, observation and experience.

The features of management as an art are as follows.

1) Existence of theoretical knowledge:
 Art involves the existence of theoretical knowledge. For eg: literature in music, acting,
dancing etc is widely recognized.
 The various areas of management like marketing, sales, finance etc involves a lot of
literature. It can be studied as a discipline.
2) Personalized Application:
 Individuals make use of basic knowledge in his own personal way. For eg- two singers
having same basic knowledge of music will sing differently.
 A manager skillfully applies the acquired knowledge according to the situation in his own
unique way.
3) Based on practice and creativity:
 Art involves creative practice of acquired knowledge in order to be expert in his/ her field.
 A manager over a period of time gains lot of experience and formulates his own theories &
ways for use in given situation.

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Conclusion
Management possess all the features of an art which strengthen the view that management is an art.

II) Management as a Science

Science is a systematized body of knowledge that explains certain general truths or the operations
of general laws.

The features of management as a science are as follows.

(1) Systematized body of knowledge:
 Science has its own systematic theory and principles based on cause & effect relationship.
Example: Law of gravitation.
 Management is also a systematic body of knowledge having its own theory & principles.
Eg: Fayol’s principles of management.
(2) Principles based on experimentation:
 Scientific Principles have been developed through observation & experimentation under
controlled conditions. Eg- If we boil water at 100◦ C it will evaporate.
 Mgt principles are also developed over a period of time on basis of experimentation &
observation. But since it deals with human behaviour the results are not so exact.
(3) Universal Validity:
 Scientific principles are universal i.e. they are true under each & every situation. Eg-
Principle of Gravitation.
 Principles of Management are not universal. They have to be modified according to the
situation.

Conclusion:
In the absence of two main features i.e. ‘Principles based on Experimentation’ & ‘Universal
Validity’, Management cannot be considered as perfect science, rather it is a Social Science/ Soft
Science/ Inexact Science.

III) Management As A Profession

Profession is a well defined body of knowledge which can be acquired through training and
instruction and it follows ethical standards. For eg: Doctors, Advocates etc.

The features of management as a profession are as follows.

1) Well-defined body of knowledge:
 All professions are based on a well-defined body of knowledge that can be acquired
through instruction.
 Management has also grown as a discipline having a systematic body of knowledge and
well defined principles.
2) Restricted entry:
 The entry to a profession is restricted through an examination or through acquiring an
educational degree.
 But there is no restriction on any one being appointed as manager irrespective of the
educational qualification possessed by him/her. Hence this criterion is not fully satisfied in
management.
3) Professional association:
 All professions are affiliated to a professional association which regulates entry, grants
certificate of practice and formulates and enforces a code of conduct.
 There is no compulsion for managers to be members of any management association.
Hence this criterion is not fully satisfied in management.
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 4) Ethical code of conduct:
 All professions are bound by a code of conduct which guides the behaviour of its
members.
 There is no compulsion for managers to be members of any management association and
abide by the code of conduct.
Hence this criterion is not fully satisfied in management.
5) Service motive:
 The basic motive of a profession is to serve their client’s interests by rendering dedicated
and committed service.
 The basic motive of management is to strive for profits. Though in order to survive in long
run they have to fulfill their social responsibilities too.
Hence this criterion is not fully satisfied in management.

Conclusion:
Management does not fulfill the exact criteria of profession. Hence, it cannot be recognized as a
fully fledged profession.
Though it is on the path of becoming a profession in near future.

 LEVELS OF MANAGEMENT:
Management is a universal term used for certain functions performed by individuals in an
enterprise who are bound together in a hierarchy of relationships.
This authority-responsibility relationship binds individuals as superiors and subordinates and
gives rise to different levels in an organisation.

There are three levels of management:

Top, Middle and Operational/Lower levels.

1.Top Level :
It consist of managers at the highest level in management hierarchy.
Responsible for welfare and survival of the organization.
Consist of – Chairman, Managing Director(MD), Board Of
Directors(BOD), Chief Executive Officer(CEO), Chief Operating Officer,
Chief Financing Officer, President, Vice President, General Manager etc.

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 FUNCTIONS OF TOP MANAGEMENT:
a) To integrate diverse elements and coordinate the activities of different departments
according to overall objectives of organization.
b) To work for the welfare and survival of the organization.
c) To analyses the business environment and its implications for the survival of the firm.
d) To formulate the overall goals of the organization and the strategies to achieve them.
e) They are responsible for the activities of the business and their impact on the society.

2. Middle Level:

Middle Level managers act as link between Top management & Supervisory Management.
They are subordinate to top level mangers and superior to low level managers.
Responsible for implementing & controlling plans & strategies formulated by top level..
Consist of- Division Head like Factory head, Plant Superintendent etc. and
Departmental Heads like Finance manager, marketing manager etc.

FUNCTIONS OF MIDDLE MANAGEMENT

The main functions are:
a) To implement and control plans and strategies developed by the top level managers.
b) They are responsible for all the activities of first line managers.

To perform the above functions the other sub functions performed by middle level managers are:
a) Interpret the policies framed by top management.
b) Ensure enough personnel for their departments.
c) Assign duties and responsibilities to them.
d) Motivate them to achieve their desired objectives.
e) Cooperate with other departments to ensure smooth functioning of the organization.
3. Lower Level / Supervisory Level:
Also called Operational Level Management.
First line managers oversee the work force & actually carry out operational work in an
organization.
Consist of – Supervisor, Foremen, Inspector, First Line Managers. etc.

FUNCTIONS OF SUPERVISORY MANAGEMENT

a) They act as a link and pass on the instructions of the middle management to the workers.
b) Put their efforts for the maintenance of quality of output.
c) Minimise the wastage of materials.
d) They maintains safety standards at work place.
e) Oversee the efforts of workforce and act as guide to them.
f) Ensures discipline among the workers.
g) Provide training

 THE FIVE FUNCTIONS OF MANAGEMENT:

1. Planning: Planning is the function of determining in advance what is to be done and who is to
do it.
2. Organizing: Organizing is to assign duties, grouping tasks, establishing authority and allocating
resources required to carry out a specific plan.
3. Staffing: Staffing is finding the right people for the right job.
4. Directing: Directing is leading, influencing and motivating employees to perform the tasks
assigned to them.

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 5. Controlling: Controlling is monitoring the organizational performance towards the attainment
of organizational goals.
 COORDINATION:
Coordination is the force which synchronizes(binds) all the functions of management and
activities and efforts of different departments of the organisation.

 CHARACTERISTICS OF COORDINATION

 Integrates group efforts: It unites and gives common focus to group efforts to ensure that
performance is as per plans & turns them into a purposeful work.

 Ensure unity of action: It acts as the binding force between various departments and ensure that
all efforts are focused towards achieving common organizational goals.

 Continuous process: It is a never ending process. It begins at planning stage and continues till
controlling.

 Pervasive function: It is needed in all departments and at all levels because of various
interdependent activities. Without coordination there is overlapping and chaos instead of harmony
and integration of activities.

 Responsibility of all managers: It is the responsibility of all top level, middle level and lower
level managers and no one can avoid this responsibility to ensure the smooth functioning of the
organization,

 Deliberate functions: A manager has to deliberately coordinate the activities of the workers to
ensure that work proceeds according to plans. It gives direction to the willing spirit of workers.

 IMPORTANCE OF COORDINATION

 Growth in size: Individuals come from different backgrounds with different interest, habits,
experiences etc. So coordination ensures that individuals work towards the common organizational
goals.

 Functional differentiation: There are various departments in an organization performing different

functions. Coordination synchronies activities of all departments so they proceed together in a
single direction instead of working as independent units.

 Specialisation: An organization employs different specialists due to complexities of modern

technology and diversified tasks to be performed. Coordination helps to reconcile the difference in
approaches, interest or opinion of different specialist hired in an organization.

 COORDINATION – ESSENCE OF MANAGEMENT

“ Like a thread in a garland, coordination is a part of all management functions”.

“Coordination is the Essence of Management”.
The above two statements means that Coordination is needed in all functions of Management.
The above statements can be explained as follows:
 Planning – Coordination is required between

 The main plans and organisational objectives.

 The master plan and various departmental plans.

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  Organising – Coordination is required between authority delegated and responsibility given.

 Staffing – Coordination is needed to maintain balance between the work assigned to an individual
and his capabilities and abilities.

 Directing – Coordination is needed between

 Instructions given and work expected from an employee.

 Needs of an employee and incentives offered to him/her.

 Controlling – Coordination is needed between actual performance and standard performance or

expected results.

 Needed at all levels of Management-

 Top level - Needs coordination to integrate activities of the whole organisation for accomplishing
the organizational goal

 Middle level - Coordination of the efforts within and among different departments.

 Lower level - Coordination in the day to day activities of workers to ensure work progresses as per
plans.

SHORT ANSWER TYPE OF QUESTIONS (1 MARK)

1. Aaradhya explains the policies of superiors to the employees and ensures a touch of co-
operation among all the departments. At which level of management was he working:
(a) Top level management
(b) Middle level management
(c) Lower level management
(d) None of these
Ans- b

2. The goal of the Gopika retail store is to increase sales and the goal of the Spastics Society of India
is to impart education to children with specialneeds. Management unites the efforts of different
individuals in the organization towards achieving these goals. Identify the characteristics of
management discussed above.
(a) Management is all pervasive
(b) Management is a goal oriented process
(c) Management is multi-dimensional
(d) Management is a continuous process
Ans-b

3. Why management is called an intangible force? State.

Ans- It is an intangible force as it cannot be seen but its presence and effect can be felt in the form of
results.

4. Lalit’s Ltd. target is to produce 10,000 geometry boxes per month at a cost of Rs. 100 per box.
The production manager achieved this target at a cost of Rs.90 per box. Do you think the
production manager is effective? Give one reason in support of your answer.
Ans- Yes, the production manager is effective because he has been able to achieve the target.

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 5. Management of Sooraj Ltd. has installed a special recycling plant to recycle the waste instead of
dumping the waste in ground. It is also providing employment opportunities to local residents.
Identify the objective company is fulfilling.
Ans- Social objectives.
“Installed a recycle plant”
“Started a school for children of their employees”

6. A.R. Rehman is the first Indian to win the Oscar award for his composition ‘Jai Ho’. His
composition of music is unique and different as he has used the singing notes in a manner that is
entirely his own interpretation. Like A. R. Rehman, Jeet General Manager of Meera Ltd., uses his
knowledge ofmanagement in a unique and different manner and all the employees working under his
guidance are happy and satisfied. He rewards his employees who come to office on time.
Identify the nature of management highlighted above.
Ans- Management is an art.

7. In order to be successful, an organization must keep a pace with changing trend in the market
and must change its goals according to the needs of the environment”. Which characteristic of
management is highlighted in the statement?
Ans- Management is a ‘Dynamic Function’

8. To meet the objectives of the firm, the management of Bharat Ltd. offers employment to physically
challenged persons. Identify the organizational objective it is trying to achieve.Give reason in support
of your answer.
Ans- Growth, since number of employees is increasing, it leads to increase in production and hence
growth of the company.

9. Sonika argues that management is required in all kinds of organizations where as Reena feels
that management is not required in non-business organizations such as school, club, hospitals, etc.
who is correct?
Ans- Sonika, Because management is pervasive.

10. Sarthak has retired from the post of a foreman in a factory. At what level of management is he
working?
Ans- Supervisory or operational level.

11. Occupation which is backed by specialized knowledge and training and to which entry is regulated by
a representative body.
(i) Science
(ii) Art
(iii) Profession
(iv) All of Above
Ans- (iii)

12. It means dividing and grouping the activities and specifying working relationships of the employees
in the organizations.
(i) Staffing
(ii) Organising
(iii) Directing
(iv) Controlling
Ans- (ii)

13. “The aim of a manager is to reduce costs and increase productivity with minimizing wastage.”
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 Identify the importance of management
(i) It increases efficiency
(ii) Management creates dynamic organization
(iii) Management helps in development of society
(iv) Maintaining a sound organizational structure
Ans- (i)

14. Coordination unifies the diverse interest of various people in such a manner that the work proceeds
without any hindrance towards common goals. Identify the feature of coordination.
(i) Coordination integrates group efforts
(ii) Coordination ensures unity of action
(iii) Coordination is a continuous process
(iv) Coordination is deliberate function
Ans- (i)

15. “Explains certain general truth and is based on logical observation.” Identify and explain the nature
of management discussed.
Ans- Management as a Science.

16. Identify the concept of management absent in the picture below.

Ans- Coordination.

SHORT ANSWER TYPE OF QUESTIONS (THREE MARKS)

1. Madhuri the famous dancer always spends time in practice and adds her creativity in her dancing.
Like her, Mr. Ronit, HR manager of Superior Ltd. uses his creativity in managing the employees
of organization and practice management principles in different situations. The employees are
happy and satisfied as he listens to their grievances and suggestions very calmly and reward them
for their punctuality and efficiency.
a) Identify the nature of management highlighted above.
b) Name other two aspects of nature of management.

Ans- a) Nature of management highlighted above is “Management as an Art”

b) The other two aspects of nature of management are:
 Management as Science.
 Management as Profession

2. Vedika Mittal is working in a real estate company. One of her key function relates to the

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 formulation of the overall organizational goals and strategies for the company. Identify the level
of management at which she is working? State any three other functions that she has to perform
at this level.
Ans- Anjali Sharma is working at the top level of management in the private sector bank. The three
other functions that she has to perform at this level are outlined below:
 She is responsible for the success and failure of the organization.
 She is responsible for all the business activities and its impact on society.
 She has to coordinate the activities of different departments in pursuit of common goal

3. Vikrant, the manager of Zest Ltd. is very efficient and effective and makes sure all the employees
and workers in his team perform the task on time with minimum cost. His main focus is on cost
cutting so he never listens to the demand of workers for increasing wages. He even gives no
opportunity to worker for promotion. As a result workers are dissatisfied and disheartened all
the time.
a) Which objective of management could not be achieved by the manager?
b) State other two objectives of management
Ans- a) Personal/Human or individual objective.
b) Economic (ii) Social objective( with explanation)

SHORT ANSWER TYPE OF QUESTIONS (FOUR MARKS)

1. Varun Ltd., a leading electronic company is facing a lot of problems these days. It manufactures
electronic goods like washing machines, microwave ovens, refrigeration and air-conditioners. The
company’s margins are under pressure and the profits and market marketing department blames
production department for producing goods, which are not of good quality to meet customers’
expectations. The finance department blames both production and marketing departments for declining
return on investment and bad marketing.
a) What quality of management do you think the company is lacking? Justify your answer.
b) State the importance of the concept identified in (a).
Ans- Coordination: because production, marketing and finance departmental efforts are not coordinated
for achieving organizational objectives harmoniously. As a result, the company’s profits and market
share are declining.
Importance of coordination:
 Growth in size
 Functional differentiation
 Specialization

2. Identify the characteristics of management in the following cases:

a) It creates an environment of productive relations, keeps all stakeholders happy and satisfied.
b) All regional sales manager worked towards achievement of companies annual sales targets..
c) Management sets targets and unites efforts of all individuals to accomplish them.
d) A business needs to manage all activities from its start to finish.
Ans- a) Intangible force
b) Group activity
c) Goal oriented
d) Continuous

3. State the functions performed by middle level management.

Ans- Functions required to be performed by Middle level(Any Four)
1. To interpret the policies framed by the top management.
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 2. To ensure that their department has the necessary personnel.
3. To assign necessary duties and responsibilities to the employees of their respective
Departments for implementation of the plan.
4. To motivate employees of their respective departments to achieve the
desired objectives.
5. To co-operate with other departments for smooth functioning of the organization.

LONG ANSWER TYPE OF QUESTIONS (SIX MARKS)

1. Panna Ltd. is a well-known paper making company in India. It is able to earn adequate revenues to
cover costs. Its capital base, number of employees and production turnover has increased manifolds
over the years. The rate of profitability of the business is also creditable. The employees of the
company are happy and satisfied with their remuneration, working conditions, promotion policy etc.
As a part of its moral obligation, the company has taken many initiatives for providing employment
to specially abled persons and promoting literacy in the villages adopted by
it. In the context of the above case:
Identify and explain the various types of objectives of management being fulfilled by Panna Ltd by
quoting lines from the paragraph.
Ans- An organization strives to achieve:
I) Organisational objectives:
 Survival: “It is able to earn adequate revenues to cover costs.”
 Growth: “Its capital base, number of employees and production turnover has increased
manifolds over the years.”
 Profit: “The rate of profitability of the business is also creditable.”
II) Personal objectives: These objectives relate to the needs of the employees of the organization
which must be given due consideration.“The employees of the company are happy and
satisfied with their remuneration, working conditions, promotion policy etc.”
III) Social objectives: It is expected that every organization should undertake certain initiatives
for the welfare of the society at large. “As a part of its moral
obligation, the company has taken many initiatives for providing employment to especially
abled persons and promoting literacy in the villages adoptedby it.”

2. The management of Parvati Ltd. strongly believes that the members of an organization should work
towards fulfilling the common organizational goals. This requires team work and integration of
efforts of all individuals, departments and specialists. This is because all the individuals and
departments depend on each other for information and resources to perform their respective
activities. Managers need to reconcile differences in approach, timing, effort or interest. At the same
time it should enable all its members to grow and develop. Thus, there is a need to harmonize
individual goals and organizational goals.
a) Identify the concept of management discussed above.
b) Explain any five features of the concept identified in (a).
Ans- a) Coordination
b) Features of coordination:
i.It integrates group efforts into purposeful work activity.
ii.It ensures unity of action as it acts as a binding force between and among Departments.
iii.It is a continuous on-going process as it is required till an organization exists.
iv.It is all pervasive as it is required at all levels of management.
v.It is the responsibility of all managers however the scope of their operations
varies.
vi.It is a deliberate function.

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 3. Radhika is the branch manager of ABC Handicrafts Pvt. The company’s objective is to promote the
sales of Indian handloom and handicraft products. Its sells fabrics, furnishings, ready-mades and
household items are made out of traditional Indian fabrics. Radhika decides quantities, variety,
colour and texture of all the above items and then allocates resources for their purchase form
different suppliers. She appoints a team of designers and crafts people in the company, who
developed some prints for bed covers in bright colour on silk. Although they looked very
impressive, they were more expensive than they had planned to sell. Average customer could not
afford to buy it. Praising their effort, Radhika suggested that they should keep the silk bed covers for
special occasions like Diwali and Christmas and offer the cotton bed covers on a regular basis to
keep costs under control.
Identify the functions of management which Radhika performs by quoting the lines the above para.
Ans-
1. Planning: ‘Radhika decides quantities, variety, colour and texture of all the above items…’
2. Organizing:’…allocates resources for their purchase form different suppliers.’
3. Staffing: ‘She appoints a team of designers and crafts people in the company…’
4. Directing: ‘Praising their effort, Radhika a suggested that they should keep thesilk bed
covers for special occasions like Diwali and Christmas
5. Controlling: ‘…offer the cotton bed covers on a regular basis to keep costs under
control.’‘…they were more expensive than they had planned to sell.’
4. Aman, Ahmad and Ally are partners in a firm engaged in the distribution of dairy products in
Maharashtra state. Aman is a holder of Senior Secondary School Certificate from Central Board
of Secondary Education with Business Studies as one of his electivesubjects. Ahmad had done his
post graduation in History and Ally in dairy farming. One day there was a serious discussion
between Ahmad and Ally regarding the nature of management. Ahmad argued that management
was a profession whereas Ally argued against it saying that the legal and medical professions are
the only professions because they fulfill all the conditions of profession. Aman on the basis of his
knowledge of business studies explained the nature of management as a profession to Ahmad
and Ally. Explain how Aman would have satisfied both Ahmad and Ally.
Ans-
Aman would have satisfied both Ahmad and Ally by giving the following explanation:
Management is a profession. However, it is not a full-fledged profession like legal, accounting or
medical professions because it does not meet the exact criteria of a profession. The application of
the features of a profession to management is examined below:
1. Well-defined body of knowledge
2. Restricted Entry
3. Professional Association
4. Ethical code of conduct
5. Service motive.

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Page 17 of 141
 CHAPTER:-2
PRINCIPLES OF MANAGEMENT
Revision notes:
Concept of Principles of Management
- Managerial principles are the general guidelines for decision-making and behaviour.
- Framed on the basis of standard human behaviour patterns but applied as per the need or demand of a
situation.
- Help managers to perform managerial activities more effectively and efficiently.

Principles of management v/s Principles of Pure Science

- Management principles are flexible and updated to meet the changing demands of the environment.
- Management principles are related to human behaviour thus they need to be used creatively.
- Management principles cannot be tested in any laboratory.
- Application of same principle may give different results in different situations.

Principles of Management v/s, Techniques of Management

Management principles are the guidelines to take decisions whereas techniques are procedures to implement
decisions.

Principles of Management v/s, Values

- Values are the acceptable or desirable behaviour of individuals whereas Principles of Management are the
guidelines for human behaviour.
- Values are related to individual behaviour in society but the Principles of Management are the technical rules
related to work situations.
- Values are part of Principles of Management but Values may not include Principles of Management.

Nature of Principles of Management

Management principles are based on observations, experimentations and the personal experiences of managers.
The nature of principles of management can be stated as:
(1) Universal Applicability
Principles of Management are applicable at all levels of an organisation and in all types of organisations.
(2) General Guidelines
Principles of Management provide broad guidelines to solve business problems in general.
(3) Formed by practice and experimentation
The principles of management are formed on the basis of experiences, observations and analysis of events in the
past.
(4) Flexible
The principles of management are the guidelines or tools which managers may use as their discretion.
(5) Mainly Behavioral
Principles of Management though explain the relationship between human and material resources but they
influence human behaviour the most while accomplishing organisational goals.
(6) Cause and effect relationship
Principles of management intent to provide the cause and effect relationship of the principles if applied in a
specific situation.
(7) Contingent
The application of principles of management are dependent on situations and time at which such situations
happen

14 Fayol’s Principle of Management

1-Division of work- The entire work of the organization should be divided into small specialised tasks and
each tasks should be performed by a specialist or a trained employee.
2-Authority and Responsibility-Authority means the right to give orders and obtain obedience.
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Responsibility means obligation to perform the of a subordinate to properly perform the
3- Discipline-Discipline is the obedience to organisational rules and employment agreement which are
necessary for the working of the organisation. .
4-Unity of command-lt means that there should be one and only one boss for every individual employee.
Dual subordination should be avoided.
5-Unity of direction-lt means that all the units of an organisation should be moving towards the same
objectives through coordinated and focused efforts.
6-Centralisation and Decentralisation-The concentration of decision-making authority is called centralisation.
The dispersal of decision-making authority among more than one person is known as decentralisation.
7-Scalar Chain-The formal lines of authority from highest to lowest ranks are known as scalar chain. Gang
plank-Gang plank is a shorter route and has been provided so that communication.is not delayed in an
emergency.
8-Order-lt means that a place for everything (everyone) and everything (everyone) in its (his/her) place.
9-lnitiative-lnitiative means taking the first step with self-motivation. lt is thinking out and executing the plan.
10-Remuneration- Principle of remuneration implies that every employee in the organization should be given
fair and adequate remuneration for their works.
11-Equity-Principle of equity implies similar treatment with all the employees in the organization.
12-Subordination of individual interest to general interest-In the organization, there are personal interest of
individuals as general interest of the organization as a whole. This principle means the interest of the must be
given preference over the individual interest.
13-Stability of Tenure-Personnel should be selected and appointed after due and rigorous (Extremely
through/carefully) procedures. Employees once selected to kept at their post for a minimum fixed period.
14-Esprit De corps-Management should promote a team spirit of unity and harmony among employees.

Significance of Principles of Management

(1)Providing managers with useful insights into reality-They provide ideas, hints or guidelines to solve
similar problems.
(2) Optimum utilisation of resources and effective administration-The cause and effect relationship helps
managers to foresee the effect of their decisions and actions thus, enables them to use resources most
effectively.
(3) Scientific decisions-Principles based on experiments, observations and logic provide objective assessment
of a situation.
(4) Meeting changing environment requirements-The managers can modify principles to meet the needs of
dynamic business environment.
(5) Fulfilling social responsibility-By incorporating values as part of principles has enabled businesses to
fulfill social responsibilities.
(6) Management training, education and research-The principles of management and the managerial
experiences are used as case studies to train employees or for further modification or development of principles
already applied.

Taylor's Principles of Scientific Management

(1)Science Not Rule of Thumb
This principle states that maximum productivity can be achieved only by following standard methods of
production and the standard methods must be developed by evaluating the different methods followed in the
past and selecting the best possible method. Production techniques cannot be followed using hit
and trial method.
(2) Harmony, Not Discord
This principle states that management and workers must have good understanding and faith amongst each other.
The combined efforts of management and workers help an organisation to achieve its goals.
(3) Cooperation, Not individualism
This principle states that each individual in the organisation must work with the final aim of achieving
organisational goals. Management and workers must work as a team to be effective and efficient.
(4) Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity
This principle states that organisations must appoint such people who possess the mental, physical and
intellectual capabilities required for the job. It must also provide continuous on the job training for employees to
improve their productivity and achieve growth.
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Taylor's Techniques of Scientific Management
Functional Foremanship
As per this technique, the planning and execution should be treated as two separate functions and each function
should be handled by a separate in-charge. Each in-charge must be assisted by four specialized personnel who
would give instructions to workers.
Assistants of Planning in-charge would be-
i-Instruction card clerk-For drafting instructions for workers.
ii-Route clerk-To specify the production route.
iii-Time and cost clerk-For preparing time and cost sheet.
iv-Disciplinarian-For maintaining discipline in the factory.

Assistants of Production in-charge would be-

i-Speed boss-Will ensure that jobs is completed accurately and on time.
ii-Gang boss-Responsible to keep machines and tools ready for operations.
iii-Repair boss-Responsible for keeping the machines and tools in proper working conditions
iv-Inspector-Responsible to maintain the quality of work.

Standardisation and Simplification of work

Standardisation of work means setting standards with respect to process followed, time taken, raw material
used, working conditions for each business activity.
Objectives of standardisation:
-To produce products of fixed types, sizes and characteristics.
-To establish interchangeability of manufactured parts and products.
-To establish standards of excellence and quality in materials.
-To establish standards of performance of men and machines.

Simplification of work means simplifying work by eliminating needless varieties, sizes, dimensions etc. of
products produced to utilize resources optimally and reduce labour and overhead costs.

Method Study
-Finds the best possible way of doing a particular job
-Decides sequence of operations and placement of human and physical resources while producing goods.
-Aims to minimize cost of production and maximize efficiency, quality, productivity and customer satisfaction.
Motion Study
-It is a study of movements undertaken while doing a job like lifting, putting objects, sitting and changing
positions etc.
-It designs the best method to perform repeated jobs.
-It eliminates unnecessary movements to complete the task in minimum time with greater efficiency.
-Body motions can be (i) productive motions (ii) incidental motions and (iii) unproductive motions.
Through motion study the unproductive motions can be eliminated.
Time Study
-It determines the standard time for performing a well-defined job or a repeated activity.
-Standard time is fixed by using the average of time taken to perform same activity several times.
Fatigue Study
-It determines the amount and frequency of rest intervals required to complete a task without getting physically
or mentally tired.
-The breaks in between work help workers to regain stamina to work with the same energy.
Differential Piece Wage System
-It suggests that workers should be paid wages at different rates to recognize and reward efficiency and penalize
inefficiency.
-Under this system different wage rates are determined to make payments to workers for performance as per
standard output, above standard output and below standard output.

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Mental Revolution: It involves a complete change in mental outlook and attitude of workers and management
towards one another from competition to cooperation. The management should create pleasant working
conditions & workers should work with devotion and loyalty. Instead of fighting over distribution of profits,
they must focus attention on increasing it.

Q. No. Questions
1. A worker directly contact to CEO of the company with a complaint regarding working condition in the
factory. Which of the following principle is being violated here?
(a) Unity of command
(b) Scalar chain
(c) Unity of direction
(d) Discipline
Answer-(b) Scalar chain.

2. Goyal company limited manufacturer’s motorcycle and cars. It has two separate divisions for both of them.
Each division has its own in-charge, plans and execution resources. On the account of the working of two
divisions overlap. Which principle of management violated by the Goyd company limited.
(a) Unity of command
(b) Scalar chain
(c) Unity of direction
(d) Discipline
Answer-(d) Discipline

3. Nimita and Salim completed their MBA and started working in multinational companies at the same level.
Both are working hard and are happy with their employer. Salim had the habit of backbiting and wrong
reporting about his colleagues to impress his boss. All the employees in the organisation knew about it. At a
time of performance appraisal the performance of Nimita was judged better than Salim. Even then their boss,
Mohammed Shaif decided to promote
Salim stating that being a female Nimita will not be able to handle the complaints of a higher post. Identify the
principle of management which is not followed by the multinational company.
(a) Unity of command
(b) Scalar chain
(c) Principle of Equity
(d) Discipline
Answer-(c) Principle of Equity

4. Lian limited a large company. manufacturing electric motors. The company has several departments
production marketing finance and HRM. Mr. Shashi, CEO of the company set the target sale of Rs.10,00,000 in
the month. To increase the sale, the marketing management, Mr. Ishu, insist on offering 10% discount to the
customer. But the finance manager, Mr. GanMohak, does not approve such discount as it would means loss of
the revenue. Because of dual subordination, the sales manager, Mr. Ansh, could not achieve the sales target.
Which principle of management has been overlooked by the company.
(a) Unity of command
(b) Scalar chain
(c) Principle of Equity
(d) Discipline
Answer-(a) Unity of command

5. Sona Ltd. Is leading automobile company in which the various departments are setting up their own
objectives without paying any interest to the organisational objectives.
Which principle of management violated by the Sona limited.
(a) Unity of command
(b) Subordination of individual interest to general interest.
(c) Unity of direction
(d) Discipline
Page 21 of 141
Answer- (b) Subordination of individual interest to general interest.

6. She/he keeps machines, materials, tools etc. ready for operations by concerned workers.
Whose work is described by this sentence under functional foremanship.
(a) Gang Boss
(b) Repair Boss
(c) Speed Boss
(d) Disciplinarian
Answer- (a) Gang Boss

7. Mr. Goyal, HR, manager of a company, select each person scientifically, assigns work to its employees
according to his/her physical, mental and intellectual capability, He also gives them to required training so that
they may produce more and earn more. This will ensure their prosperity for the both company and the workers.
Identify the principal of management highlighted in the above case.
(a) Development each and every person to his her greater efficiency and prosperity
(b) Subordination of individual interest to general interest.
(c) Produce more and earn more
(d) Physical, mental and intellectual capability development of workers
Answer- (a) Development each and every person to his her greater efficiency and prosperity.

8. Gagan is working as a production manager in SSM limited engaged in manufacturing of CFL bulbs. There
are no class conflicts between the manager and workers. The working conditions are very good. The company
is earning huge profit. As a policy matter, management is sharing the gain with the workers because they
believe that the prosperity of the employees and company cannot exist for long time without the prosperity of
the company cannot exist for a long term without employees’ prosperity.
Identify the principle of management described in the above paragraph.
(a) Science, not rule of thumb
(b) Principal of Scientific management
(c) Principle of Fatigue Study
(d) Harmony not discard
Answer-.(d) Harmony not discard

9. Assertion (A): Techniques are procedures or methods which involves series of steps to be taken to desired
goals.
Reason (R) principles are the guideline to take decisions or action while practicing techniques.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) (A) is true but (R) is false.
(d) (A) is false but (R) is true.
Answer- (a) Both (A) and (R) are true and (R) is the correct explanation of (A)

10. Match the following-

a-Framing rules and regulation and meeting i-Principle of unity of Direction

commitment by subordinates and superiors.
b-One unit one plan and unification of efforts ii-Principle of Order
towards one direction.
c-No wastage of time in search of a person and iii-Principle of Equity
material.
d-Fair, kind and just treatment to employees and no iv- Principle of Discipline
discrimination of employees.

(a) a-iii, b-iv, c-i, d-ii

(b) a-iv, b-i, c-ii, d-iii
(c) a-ii, b-iii, c-iv, d-i
(d) a-iv, b-iii, c-ii, d-i
Page 22 of 141
 Answer-(b) a-iv, b-i, c-ii, d-iii

11 ……………are procedure or methods, which involve a series of steps to be taken to accomplish desired
goals. …………are the guideline to take decisions or actions while practicing techniques.
(a) Order, Discipline
(b) Principles, Techniques
(c) Techniques, Principles
(d) Discipline, Order
Answer-(c) Techniques, Principles

12 ………….principle result is systematic working and improve the efficiency by removing confusion and
chaotic conditions and………….principle result in coordination of activities of different personnel’s.
(a) Principle of Unity of Command, Principal of Unity of Direction
(b) Principle of Order, Principal of Stability of Personnel
(c) Principle of Decentralization, Principal of Centralization
(d) Principal of Unity of Direction, Principle of Unity of Command
Answer-(a) Principle of Unity of Command, Principal of Unity of Direction

Short and Long Answer Type Questions

1. Mr. Neeraj, the salesman in Progress Ltd., designed a new cost saving advertisement technique ‘ through his
personal experience and suggests the same to his sales manager but it was not appreciated by his sales
manager and he also warned him not to come with any suggestions in future. Which principle of Fayol is
being overlooked by the sales manager? What should have been the appropriate way of response by the sales
manager?

Ans. Principle of Fayol is being overlooked by the sales manager is Initiative.

The appropriate way of response by the sales manager: salesmen should be encouraged to develop and carry
out their plan for improvements

2. The production manager assigned a target of producing 1,000 TV sets in the month oi April to , group of 10
workers. They mutually decided to produce 100 W sets each. Among them, Vishal (one of the worker in the
group) fall sick. The other workers refused to divide his work among themselves and concentrated only on
the production of their own individual target of production. As a result target of 1,000 TV sets could not be
achieved.

(a) Name the principle of Fayol which is violated in the given case.
(b) What does it state?
(c) What should have been the appropriate course at action.

Ans.

a) Principle of Fayol which is violated in the given case is Espirit De Corps

b) Espirit de corps ‘means unity is strength‘. Fayol emphasized on team work and harmony among
employees. He suggested that every employee in the organization must consider himself as a part or
member of a team and try to achieve the team goal. A manger should replace I with we in
organizational communication.
c) Other workers should divide his work among themselves and concentrate on the production of group targets
rather than their own individual target.

3. Rama" Ltd. was engaged in the business of manufacturing auto components. Lately, its business was
expanding due to increased demand for cars. The competition was also increasing. .In order to keep its
market share intact, the company directed its workforce to work overtime. But this resulted in lot of
problems. Due to increased pressure of work the efficiency of workers declined. Sometimes the subordinates

Page 23 of 141
 had to work for more than one superiors. The workers were becoming undisciplined. The spirit of teamwork,
which had characterised the company previously, had begun to wane.

Identify any three principles of management which were being violated, quoting the lines from the above case.

Ans.
Principle violated Line quoted
Unity of command Sometimes the subordinates had to work for
more than one superiors..
Discipline The workers were becoming undisciplined.
Espirit De Corps The spirit of teamwork, which had
characterised the company previously, had
begun to wane

4. 'Puneet Constructions Ltd’. had never given any importance to the suggestions of its employees. All the
employees in the company considers themselves superior than the other. They neither help anybody nor get
help from anybody. Last year, Mr. Shivam was appointed as Chief Manager of the company. He was an
MBA from IMM Ahmedabad and also seven-year experience of the same post. Immediately after taking
charge he decided to deal with both the problems of the company. He convened a meeting of all the
employees and said, "All the employees are free to give their suggestions. Besides, the one who gives the
best suggestion will be awarded a prize. In addition, he advised them to discard ego and extend help in each
other’s work. We will have to give it the shape of a movement. Those who participate in this movement will
be promoted at the earliest." Shivam proved to be a good leader.

Identify and explain the principles of management discussed above by quoting the lines.

Ans.

Principle of Line quoted Explanation

management
Initiative All the employees are  Workers should be encouraged to develop and carry
free ……… best out their plans for improvements according to
suggestion will be Fayol. Initiative means taking the first step with
awarded a prize. self-motivation.
 Initiative ‘means eagerness to initiate action without
being asked to do so. According to Fayol,
employees should be allowed to think and execute
plans, to bring about improvements in work related
matters.
 However initiative does not imply freedom to do
whatever people like. They must observe discipline.
So once the decisions are taken by management,
every employee must follow it whether it is
according to his suggestions or not
Espirit De Corps In addition, he advised  Espirit de corps ‘means unity is strength‘.
…….. each other’s  Fayol emphasized on team work and harmony
work among employees. He suggested that every
employee in the organization must consider himself
as a part or member of a team and try to achieve the
team goal.
 A manger should replace I with we in
organizational communication.

5. 'New Delhi Ltd.’ is a famous services providing company. Mr. Aman Malhotra is its Managing Director. He
Page 24 of 141
 continuously motivates his Research and Development department that new and latest methods of doing
work be explored. The provisions has also been made to give reward to those employees who will participate
in a particular exploration. He also believes that two groups working on managerial and non-managerial
posts are similar to two wheels of an organisational vehicle. If this vehicle (organisation) is to be driven in a
right way then both the wheels should be property aligned. Mr. Aman is a successful leader. Among his
employees, he has instilled the feeling that no decision will be taken without consulting the subordinates. To
excel in this field, is the main motive of Mr. Aman and he paid lot of attention to training of employees.

Identify the principles of scientific management discussed above by quoting the lines.
Principle of scientific management Line quoted
Science and not rule of thumb He continuously motivates his Research and Development
department that new and latest methods of doing work be
explored.
Harmony and not discord He also believes that two ………. wheels should be
property aligned.
Co-operation and not individualism The provisions has also been made to give reward to those
employees who will participate in a particular exploration.
Development of each and every person to his/her he paid lot of attention to training of employees
greatest efficiency and prosperity

Additional Questions
Q. 1. In your school, you observe that books are kept in office, chalks in the library and office records in the
staff room.
1. Which principle of management is violated here and why?
2. How will that affect the achievement of school objectives?
3. As a manager, what steps will you take to rectify the shortcomings?
Ans.1. The principle of ‘Order’
2. In the absence of orderliness, school objectives will not be achieved efficiently and effectively.
3. Things should be placed at appropriate places to achieve maximum efficiency with given time
framework.

Q. 2. The production manager of an automobile company asked the foreman to achieve a target production of
200 scooters per day. But he did not give him the authority of requisition tools and materials from the stores
department. Can the production manger blame the foreman if he is not able to achieve the desired target?
Explain briefly the principle relating to the situation.
Ans. No, the production manager cannot blame the foreman because he did not give him the authority to
requisition tools and materials form the stores department. Since he has no authority, he could not fulfill his
responsibility.
In this case the principle of ‘Authority and Responsibility’ is violated.

Q. 3. Soniya Ltd. was engaged in the business of manufacturing auto components. Lately, its business was
expanding due to increased demand for cars. The competition was also increasing. In order to keep its market
share intact, the company directed its workforce to work overtime. But this resulted in many problems. Due to
increased pressure of work the efficiency of workers declined. Sometimes, the subordinates had to work for
more than one superior. The workers were becoming indiscipline. The spirit of teamwork, which had
characterized the company previously, had begun to wane.
Identify any three principles of management (as given by Henry Fayol) which were beginning violated, quoting
the lines from the above case.
Ans.1. Unity of command “sometimes, the subordinates had to work for more than one superior.’
2. Discipline ‘The workers were becoming indiscipline.’
3. Esprit de corps

Q. 4. The production manager of Harsh Ltd. instructs a salesman to go slow in selling the product, where the
marketing manager is insisting on fast selling to achieve the target. Which principle of management is being
violated in this case?
Ans. Unity of command
Page 25 of 141
Q. 5. Kanika and Priyanka are typists in a company having same educational qualifications. Kanika is getting
Rs. 16000 per month and Priyanka Rs. 10000 per month as salary for the same working hours. Which principle
of management is violated in this case?
Ans. Principle of equity

Q. 6. Rishabh, a manager, very often speaks to people at all levels, passing on instructions regarding his
department and also the other departments. Which principle of management is being overlooked?
Ans. Principle of Scalar Chain.

Q. 7. The management and workers have entered into an agreement that workers will do overtime to cover up
looses of the company. In return, the manager will increase the wages. But management later refused to
increase the wages. Name the principle violated in this situation.
Ans. Principle of discipline

Q. 8. In Simran Ltd., an employee has the objective of maximizing his salary, but the organizational objective is
to maximize output at competitive cost. There was some dispute on this for a while. Eventually, the
organization’s interest was given priority over employees’ interest. Name the principle related to this situation.
Ans. Principle of subordination of individual interest to general interest.

Q. 9. Neeraj is selected for the post of software developer in an IT Company. On the first day of his joining
Mehul, his project manager tells Neeraj that during the course of his work he will come across many such
opportunities which may temp him to misuse his powers for individual or family’s benefit at the cost of larger
general interest of the company. In such situations, he should rather exhibit exemplary behavior as it will raise
his stature in the eyes of the company. Also, for interacting with anyone in the company on official matters, he
should adopt the formal chain of authority and communication.
In context of the above case:
Identify and explain the various principles of management that Mehul is advising Neeraj to follow while doing
his job.
ANS. The various principles of management that Mehul is advising Neeraj to follow while doing his job are as
follows:
1. Subordination of Individual Interest to General Interest:
2. Scalar Chain.

Q. 10. Davinder is a class twelfth commerce student in a reputed school in Punjab. Satinder is his elder brother
who is doing his Masters in Hospital administration from Delhi after completing his B. Sc course. During
vacations when Satinder comes home, Davinder shows him the business studies project that he is preparing on
the topic ‘Principles of Management’. Satinder tells him that these principles are also a part of MBA course
curriculum at the beginner’s level as they form the core of management in practice. But he finds this principle
different from those of pure science. In context of the above case:
1. Outline the concept of principles of management.
2. Why does Satinder find the principle of management different from those of pure science?
3. Why do the principles of management form the core of management in practice?
Explain by giving any two points highlighting the importance of principles of management.
Ans.1. The principles of management serve as a broad and general guideline for the managerial decision
making and action.
2. Satinder finds the principles of management different from those of pure science because the
management principles are not as rigid as principles of pure science. This is due to the fact that
they deal with the human behavior and thus, need to be applied creatively in the light of given
situation.
3. The importance of principles of management is described below:
Providing managers with useful insights into reality:
Optimum utilization of resources and effective administration:

Page 26 of 141
 CHAPTER – 3
BUSINESS ENVIRONMENT
QUICK REVISION
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 of Business Environment

1. Totality of external forces: Business environment is the sum total of all things external to business firms
and so it is aggregative in nature.
2. Specific and general forces: Business Environment consist of
a) Specific Forces - such as investors, customers, competitors and suppliers which affect
individual enterprises directly and immediately in their day-to day working.
b) General forces- such as social, political, legal and technological conditions which have impact
on all business enterprises and thus may affect an individual firm only indirectly.
3. Inter- relatedness: All the elements of business environment are closely interrelated. For example-
Health awareness among people has raised the demand for fat free cooking oil, gym etc.
4. Dynamic nature: It keeps on changing due to technological upgradations, shifts in consumer
preferences or increase in competition in the market.
5. Uncertain: It is uncertain as it is not possible to accurately predict future happenings, especially
when environment changes are taking place too frequently as in the case of information technology or
fashion industries.
6. Complexity: It is complex in nature as it is relatively easier to understand in parts but difficult to
understand in its totality because it consists of numerous interrelated and dynamic conditions or forces
which arise from different sources.
7. Relativity: It is a relative concept since it differs from country to country and even region to region.
Example- Demand for sarees may be high in India but almost nil in France.

Importance of Business Environment

1. It enables the firm to identify opportunities and getting the first mover advantage:
 Opportunities are the positive external trends/ changes that helps the firm to improve the
performance.
 Business Environment helps any business enterprise to grab the opportunities in market instead of
losing them to its competitors.
2. It helps the firm to identify threats and early warning signals
 Threats are negative external factors which are likely to hinder a firm’s performance.
 Business Environment helps the business enterprise to identify the threats timely and deal with
them.
3. It helps in tapping useful resources:
 An enterprise depends on its environment for various inputs (resources) required for carrying out
various activities. Like- Finance, raw material labour etc.
 It will get all such inputs from its environment only when it returns the output in the form of
goods & services to customers, taxes to govt., return to investors etc.
 Therefore, an enterprise designs policies that allow it to get the resources that it needs so that it
can convert those resources into outputs that the environment desires.

4. It helps in coping with rapid changes:

 There are various changes that takes place in business environment like: *Changes in
technology
*Changes in customer’s tastes & preferences
*Turbulent market conditions
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 *Fragmentation of markets etc
 So, to cope up (deal) with these changes the managers must understand and examine the
environment and develop appropriate courses of action.

5. It helps in assisting in planning and policy formulation:

 Business environment is the source of both opportunities and threats for the business.
 So, its understanding and analysis can be the basis for –
*Deciding the future course of action (planning)
* Training guidelines for decision making (policy formulation).
6. It helps in improving performance of an enterprise:
 The future of an enterprise is dependent on and affected by what is happening in its
environment.
 So, continuous monitoring of the environment and adopting suitable business practices will help
to improve both their present and future performance as well as gives success for a longer
period.

DIMENSIONS OF BUSINESS ENVIRONMENT/

Factors Constituting the General Environment of Business

Dimensions of the business environment include economic, social, technological, political and legal conditions
which are considered relevant for decision-making and improving the performance of an enterprise.
Economic Social Technological Political Legal
Environment Environment Environment Environment Environment

Interest rates Customs and Scientific General stability Legislations passed

Traditions improvements and peace in the by the Government
Inflation/Deflation country
rates Social values Innovations Administrative
social trends New ways of Specific attitudes orders issued by
Changes in producing goods and that elected government
disposable income services government authorities
Society’s representatives
Stock market expectations from hold towards Court judgments
business New methods and
indices techniques of business
operating business. Decisions rendered
Value of rupee Quality of Life Political System in by various
Country commissions and
Role of Private Computerized agencies at every
and public sector Women Kiosks Relation of our level of the
Empowerment country with government—
Savings & World Wide Web foreign countries. center, state or local.
Investments Birth & Death (WWW)
Rates Political thoughts
GDP,NDP, GNP & practices of
Online Ticket political Parties
Population Booking
Balance of
POS( Point of sale
Payment
Education & machines)
Literacy Rates E wallets, digital
Import- Export
cash

DEMONETISATION
Meaning:
The withdrawal of a coin, note or precious metal from use as legal tender.
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  Government of India made an announcement of Demonetization on November 8, 2016.
 Currency notes of Rs. 500 and Rs. 1,000 were demonetized.

Features:
1. A tax administration measure: All the people with black money had to declare their unaccounted
(undeclared) income and pay taxes at penalty rate.
2. No tax evasion: Through demonetization government of India gave a message that tax evasion will no
longer be tolerated or accepted.
3. Channelizing savings into the formal financial system: The new deposit schemes offered by banks
will provide base loans at lower interest rates.
4. Created less -cash economy or cash – lite economy: Demonetization facilitated the payments through
online system and thereby increased bank deposits and created less cash economy.

SHORT ANSWER TYPE QUESTIONS (1 MARK)

1. Which of the following is a feature of demonetization?
(a) Tax administration measure
(b) Channelizing savings into the formal financial system
(c) Development of less-cash economy
(d) All of the above
Ans- d

2. Give two examples each of specific forces general forces.

Ans- Specific forces- Competitors, customers General forces-Political forces, social forces

3. Identify the dimension of business environment given in the picture below

Ans- Economic Dimension

4. Business environment differs from country to country and even region to region. Which characteristics of
business environment are highlighted here?
Ans- Relativity

5. To ensure the uninterrupted working of the organisation, the Senior manager took the meeting of all the
subordinates through Google Meet. Which dimension of business environment is discussed here?
Ans- Technological Dimension

6. With change in consumption habits of people, Vishesh who was running asweets shop shifted to chocolate
business. On the eve of Diwali he offered chocolates in attractive packages at reasonable prices. He
anticipated huge demand and created a website chocolove.com for taking online orders. Identify the
dimensions of business environment discussed above.
Ans- Social environment, Technological environment, Economic environment

7. Identify the dimension of business environment in the following-

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 a) Replacing old machinery with new one to meet the requirements of pollution control regulations.
b) Availability of e-books

Ans- a) Legal environment b) Technological environment

8. “It is very difficult to predict the future happenings, especially when environment changes are taking place
too frequently.”
Which characteristic of business environment is discussed I the above sentence?
a) Dynamic
b) Inter related
c) Uncertain
d) Complex
Ans- c

SHORT ANSWER TYPE QUESTIONS (3/4 MARKS)

1. Looking at the severe pandemic situation of Covid-19, the entire education system has adjusted itself
with online teaching, online examination, developing creative way of teaching etc. Which point of
importance of business environment does it reflect? Identify. Explain any two other importance of
business environment also.
Ans- Coping with rapid changes
The other two importance:
i) Identify opportunities and get first mover advantage
ii) Early warning signal

2. XYZ Ltd. a book publishing house published books on coding language for kids before any other
publishing house could print it. What advantage will this publishing house get? Explain it.
Ans- Benefits of first mover advantage will be enjoyed by XYZ Ltd.
The study of Business Environment helps us to know about opportunities available. A company which is
more conscious about changes taking place becomes the first supplier and innovator and hence can be the
greatest beneficiary.

3. Explain any two aspects of political environment.

Ans-
 General stability and peace in the country
 Specific attitudes that elected government representatives hold towards business

4. Mr. Akshay after completing MBA from USA comes to India to start a new business under the
banner Electric Creations Ltd. He launches a new product in e-learning for senior Secondary
School students in Commerce stream, which already has an established market in UK and USA
but not in India. His business starts flourishing in India. Now more Indian companies entered
into the market with other subjects also.
Identify and quote the lines from above paragraph which highlight the significance of
understanding business environment.
Ans-
 “Comes to India to start a new business … launches a new product in e-learning for Senior secondary
school students in Commerce stream.”
i. It helps in assisting in planning and policy formulation.
ii. It helps the firm to identify opportunities and get the first mover advantage.
 “His business starts flourishing in India.”
i. It helps in improving performance.
 “Now more Indian companies entered into the market with different subjects also.”
i. It helps the firm to identify threats and early warning signals.

5. The court passed an order that all schools must have water purifier for the school children as
society in general is more concerned about quality of life. society in general is more concerned about
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 quality of life. to manufacture water purifier at competitive rates. Incomes are rising and children at
home are also drinking purified water. The government is also showing positive attitude towards the
water purifier business.

Identify the different dimensions of business environment by quoting from the above details.
Ans-

a) Legal environment: “The court passed an order…..”

b) Social environment: “society in general is more concerned about quality of life……”
c) Technological environment: “society in general is more concerned about quality of life….”
d) Economic environment: “Incomes are rising…..”
e) Political environment: “The government is also showing positive attitude…”

6. Eco-friendly products are gaining power as the consumers’ awareness about environmental issues
has increased over the years and they are conscious about choosing products that do not have
adverse effects on the environment. They are now more conscious about the carbon emission
and climate change effects, and want themselves to be ‘seen’ as a green advocate among their
peers. In such a scenario, it has become a challenge for the companies as they have to not only
meet the needs of the consumers but also ensure that their products are safe and environment
friendly. As a result, there is growing need for better and advanced technologies to works as a
catalyst in this regard.
a) Identify the relevant feature of business environment being discussed above.
b) Describe briefly any three points which highlight the importance of business environment and its
understanding by managers.
Ans-
a) Inter-relatedness is the relevant feature of business environment which is being discussed above.
b) The three points which highlighted the importance of business environment and its understanding by
managers are described below:
(i) It enables the firm to identify opportunities and getting the first mover advantage
(ii) It helps the firm to identify threats and early warning signals
(iii) It helps in tapping useful resources

LONG ANSWER TYPE QUESTIONS (6 MARKS )

1. The organic food market in India is growing at 25-30 per cent which reflects a clear shift in consumer
tastes and preferences. The current growth in the organic food market is driven by multiplicity of
factors like rising health consciousness, changing lifestyles, increase in disposable income and growing
availability of organic food products in shopping malls, retail outlets and
online. In context of the above case:
a) Identify and explain the features of business environment being referred to here.
b) By quoting phrases from the paragraph identify the various components of general forces
which have led to a growth in the organic food market
Ans
a) The features of business environment being referred to in the above case are asfollows:
 Dynamic nature: It is dynamic in nature and keeps on changing due to technological up-
gradations, shifts in consumer preferences or increase in competition in the market.
 Inter-relatedness: All the elements of business environment are closely interrelated. Therefore,
any change is one element may necessitate corresponding changes in the other elements as well.

b) The various components of general forces which have led to a growth in the organic food
market are as follows:
 Social: “rising health consciousness, changing lifestyles”
 Economic: “increase in disposable income”
 Technological: “growing availability of organic food products in shoppingmalls, retail outlets and
online.”

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 2. Naman and Govind after finishing their graduation under vocational stream decided to start their own
travel agency which will book Rail Tickets and Air Tickets on commission basis. They also thought of
providing tickets within ten minutes through the use of internet. They discussed the idea with their
Professor Mr. Mehta who liked the idea and suggested them to first analyze the business environment
which consists of investors’, competitors and other forces like social, political etc. that may affect their
business directly or indirectly. He further told them about the technological improvements and shifts in
consumer preferences that were taking place and hence they should be aware of the environmental
trends and changes which may hinder their business performance. He emphasized on making plans
keeping in mind the threat posed by the competitors, so that they can deal with the situation effectively.
This alignment of business operations with the business environment will result in better performance.

a) Identify and state the component of business environment highlighted in the above Para.
b) State any two features of business environment as discussed by Professor Mehta with Naman
and Govind.
c) Also state one point of importance of business environment as stated by Professor Mehta in
the above situation.
Ans-
a) Technological Environment is the component of business environment highlighted in the above
Para. Technological Environment includes forces relating to scientific improvements and
innovations which provide new ways of producing goods and services and new methods and
techniques of operating a business.
b) The two features of business environment as discussed by Professor Mehta with Naman and Govind
are as follows:
 Dynamic nature: It is dynamic in nature and keeps on changing due to technological up gradations,
shifts in consumer preferences or increase in competition in the market.
 Inter-relatedness: All the elements of business environment are closely
Inter-related. Therefore, any change is one element may necessitate corresponding changes in
the other elements as well.
c) The two points of importance of business environment as stated by Professor Mehta in the above
situation are described below:
i) It enables the firm to identify opportunities and getting the first mover advantage.
ii) It helps the firm to identify threats and early warning signals.

3. As per the directions issued by the Supreme Court, the government passed an order to ban the sale of
tobacco products within the area of 200 meters of all educational institutions as:
a) Its consumption is injurious to health.
b) People are becoming more conscious about health and fitness.
c) This indicate the government’s attitude towards this business.
Identify the business environment under three different dimensions by quoting from above paragraph.
Ans- The various dimensions of business environment being referred to in the above case are as follows:
a) Legal Environment: “As per the directions issued by the Supreme Court.’
b) Political Environment: “The government passed an order to ban the sale oftobacco products
within the area of 200 meters of all educational institutions.”
c) Social Environment: “Its consumption is injurious to health and people are becoming more
conscious about health and fitness.”

4. What do you mean by business environment? Explain the key

components of business environment.
Ans- Business environment is the sum total of all external factors that influence the functioning of a
business enterprise.
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 The components of general environment are:
(i) Economic environment: Economic environment consists of factors having
economicdimensions 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 catalysing company's economic growth.
(ii) Social environment: It discriminates characteristics of the society in which an enterprise exists. It
consists of literary rates, educational levels, customs and demographic distribution etc.
Impact : Equal pay for equal work for both male and female workers, reservation of jobs for
minorities etc.
(iii) Political environment: It consists of the political forces responsible for the management of
public affairs and their influence on business.
Impact : Government allowed Pepsi to enter Indian market again for giving boost to the food
processing industry.
(iv) Technological environment: It comprises of the various processes, techniques, approaches etc. by
which an organization transforms inputs into output.
Impact : Digital watches have pushed out traditional watches.
(v) Legal Environment : It characterizes various governmental rules, regulations and legislations
etc. that all members of business community must follow.

***********************************************************************************************

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 CHAPTER-4
PLANNING
QUICK REVISION

Meaning of Planning –
Planning is deciding in advance what to do and how to do.

Features of Planning:-
1) Planning focuses on achieving objectives: specific goals are set out in the plans along with activities to
be undertaken to achieve the goals.
2) Planning is futuristic: it involves looking ahead and preparing for the future to meet future events
effectively.
3) Planning involves decision making: it involves evaluation of each alternative course of action and
choose the most appropriate one.
4) Planning is a mental exercise: as it is an intellectual activity of thinking rather than doing. It requires
application of mind involving foresight, intelligent imagination and sound judgment.
5) Planning is the primary function of management: as it lays down the basis for all other functions of
management. All other managerial functions are performed within the framework of the plans drawn.
Thus, planning precedes other functions. This is also referred to as the ‘primacy of the planning'.
6) Planning is pervasive: it is required in all type of organisations, at all levels of management and in all
departments of an organisation. Top management undertakes planning for the whole organisation.
Middle management does the departmental planning. At the lowest level, day-to-day operational
planning is done by supervisors.
7) Planning is continuous: plan is framed and implemented for a specific period of time and is followed
by another plan and so on.

Importance of Planning: -
1) Provides direction: Planning provides directions by deciding in advance what action should be taken. If
there was no planning, employees would be working in different directions and the organisation would
not be able to achieve its desired goals.
2) Reduces the risks of uncertainty: Planning reduces the risk of uncertainty by anticipating changes and
developing managerial responses to them. Planning cannot eliminate changes/ uncertainties but can
predict them and prepare contingency plans to deal with them.
3) Reduces overlapping & wasteful activities: Planning reduces overlapping Ann wasteful activities by
coordinating the activities of different divisions, department and individuals.
4) Promotes innovative ideas: Planning promotes innovative ideas requiring Application of mind and
foresight. It is the most challenging activity for the management as it guides all futures plan actions
leading to growth and prosperity of the business.
5) Facilitates decision making: Planning facilitates decision making by making a choice from among the
alternative courses of action.
6) Establishes standards for controlling: Planning establishes standards against which actual
performance is measured. (A comparison of actual performance with the standards helps to identify that
deviations and to take correct corrective action. Thus, planning is a prerequisite for controlling.)

Limitations of Planning: -
1) Planning leads to rigidity: Plan is drawn with specific targets in a specific timeframe. Once the plans
are drawn, the managers may not be able to change them. It may not be in the best interest of the
organisation when circumstances change.
2) Planning may not work in a dynamic environment : the organisation has to constantly adapt itself
to changes.
3) Planning reduces creativity: it is Mostly done by the top management; rest of the members just carry
out orders and think on the same lines as other. They are neither allowed to deviate from plans nor are
they permitted to act on their own.

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 4) Planning involves huge costs in terms of time and money. Sometimes cost incurred may not justify
the benefits derived from the plan.
5) Planning is time consuming and sometimes not much time is left for its implementation.
6) Planning does not guarantee success unless it is translated into action. Managers have a tendency to
rely on previously tried and tested successfully plans which may create a false sense of security and
lead to failure.

Process of planning

Steps in Planning Process:-

( Note for students: Sequence to be remembered and strictly followed )
1) Setting objectives: First step-Objectives may be set for the entire organisation and each department or
unit within the organisation . They specify what the organisation wants to achieve.
2) Developing Premises: Planning premises are the assumptions made about the future. Assumptions are
made in the form of forecasts, existing plans or any past information about policies. Forecast about the
demand for the product, policy change, interest rates etc. Planning premises are base material upon
which plans are to be drawn.
3) Identifying alternative courses of action: There may be many ways to achieve the objectives, all the
alternatives courses of action should be identified.
4) Evaluating alternative courses of action: The next step is to weigh the pros and cons of each
alternative. The positive and negative aspects of each alternative tobe evaluated in the light of their
feasibility & consequences.
5) Selecting an alternative: This is the real point of decision making. The best plan has to be adopted and
implemented. The idea plan would be the most feasible, profitable and with least negative
consequences.
6) Implementing the plan: It means putting the plan into action. This is the step where other managerial
function also come into the picture. i.e., doing what is required.
7) Follow up action: To see whether the plans are implemented and activities are performed according to
schedule. Monitoring the plans is equally important to ensure that objectives are achieved.

Types of Plans.

Single use Plans: Developed for one time event, for non-recurring situations include programme, budget
Standing Plans: Used for recurring activities, ensure smooth operations, enhances efficiency, include
policy, procedure, method, rule

Objectives: End results, set by top management, should be measurable in quantitative terms, in the form of
written statement, example: Increase in sales by 10% by six month

Strategy: comprehensive plan, provides broad contours, defines organisation’s direction and scope in long
run, three dimensions includes i) determining long term objectives ii) adopting a particular course of action
iii) allocating resources necessary to achieve objective. Example: Sales promotion techniques, which
channels of distribution to be used.

Policy: General statements guide thinking towards a particular direction, provide basis for interpreting
strategy, define broad parameters. Example: Purchase Policy- From how many suppliers company should
purchase., Pricing policy, Recruitment policy.

Procedure: The exact manner in which any work is to be performed, specified steps to be followed,
sequence of steps to be taken, chronological order.

Method: The prescribed ways or manner in which a task has to be performed, proper method saves time,
increases efficiency, systematic way.

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 Rule: Specific statements, not flexible, certain action must or must not be taken, no compromise, simplest
types of plans.
Programme: Detailed statements about project, include entire gamut of activities, the minutest details are
worked out. Example: opening of new department.
Budget: Statement of expected results expressed in numerical terms, quantifies future facts, comes under
planning also a control device. Example: sales budget.

MCQ
1) It requires application of mind involving of mind involving foresight ,intelligent imagination and sound
judgement. Which feature of planning is being highlighted?
(a) Planning is pervasive
(b) Planning is a mental exercise
(c) Planning is futuristic
(d) Planning is futuristic
Answer . (b)

2) Should the company make or buy its requirements, transport services printing stationery, water and
power supply etc.? How should vendors be selected for procuring supplies?
(a) Procedure
(b) Rule
(c) Budget
(d) Policy
Answer: (d)

3) Which of the following is a limitation of Planning?

(a) Planning Provides Direction
(b) Planning Facilitates decision- Making
(c) Planning promotes innovative idea
(d) Planning may not work in dynamic environment
Answer: (d)

4) Given below are the steps of planning Process

1. Setting objectives
2. Developing Premises
3. Identifying alternative courses of action
4. Follow up
5. Selecting an alternative
6. Implementing the plan
7. Evaluating Alternative course of action
Which one of the following is the right sequence of the process?
(a) 7,2,5,1,6,3,4
(b) 2,5,7,9,1,3,6
(c) 1,3,6,7,5,2,4
(d) 1,2,3,7,5,6,4
Answer : (d)

5) At what managerial level planning is needed?

a) Top level c ) All the Levels
b) Lower Level d) Middle Level
Answer : (c)

6) Which one of the following is not a step of planning:

a) Setting objectives
b) Developing Premises
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 c) Assignment of duties
d) Follow up
Answer : (c)

7) Planning may not work in …………………….. Environment.

(a) Stable
(b) Dynamic
(c) Both
(d) None of the above
Answer : (b)

8) In this type of Plan , the sequence of activities to complete a job is determined :

(a) Method
(b) Rule
(c) Procedure
(d) Strategy
Answer : (c)

9) This type of plan provides organisation scope in long run:

(a) Method
(b) Strategy
(c) Procedure
(d) Rule
Answer : (b)

10) A manager is required to make certain assumptions about the future which may be in the form of forecast.
This step of planning is known as
(a) Follow-up
(b) Developing Premises
(c) Evaluating alternative courses of action
(d) Identifying alternative courses of action
Answer : (b)

11) Planning is deciding in advance- what to do. The step of planning process is:
(a) Follow-up
(b) Developing premises
(c) Implementation of plan
(d) Setting objectives
Answer : (d)

12) Amit is planning to start a publishing house. He wants to introduce new writers in the field of business
studies, accountancy, economics etc. Therefore, he is constantly interacting school teachers and encouraging
them to write their innovative ideas and techniques. This will make his publication available of more
alternatives. The step of planning being described in the given lines is……..
(a) Identifying alternative courses of action
(b) Selecting the best course of action
(c) Evaluating the courses of action
(d) Follow up action
Answer : (a)

13) Which of the following statement is not correct with respect to planning?
a) Planning is closely connected with creativity and innovation
b) It is one of the basic managerial functions
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 c) It involves decision making decisions
d) Planning can eliminate business risk.
Answer : (d)

14) Standing plans are used in:

a) Non recurring activities
b) Recurring activities
c) Not concerned with recurring/ non recurring nature of activities.
d) Both a and b
Answer : (b)

15) The most feasible, profitable and with least negative consequences alternative is finalized . Identify the Step
of Planning process highlighted here.
a) Identifying alternative courses of action
b) Selecting the best course of action
c) Evaluating the courses of action
d) Follow up action
Answer : (b)

16) Formation of major plan and framing of overall policies is the task of top level managers whereas
departmental managers form plan for their respective departments. And lower level managers make plans to
support the overall objectives and to carry on day to day activities. Identify the feature of planning highlighted
above:
(a) Planning is continuous
(b) Planning is futuristic
(c) Planning is pervasive
(d) Planning involves decision making
Answer : (c)

Very short answer type (1 Mark)

Q1. Why Planning is considered as pervasive function of management?
Q2 . Why is Planning called a forward looking or futuristic?
Q3. What is the next step in the planning process after selective an alternative course of action?
(Implementing the plan)
Q4. Name the Plan which is considered as the simplest of all. (Rule)
Q5. Name the Plan that decide how a particular activity is to be performed for greater efficiency.
(Method)
Q6. Name the the of plan that is also a control device from which deviations can be ascertained. (Budget)
Q7. Planning may fail due to change in social , economic and technological environment. Which limitation of
planning is discussed here? s ( may not work in dynamic environment)
Q8. Name the type of plan those can be used over a long period of time. ( Standing Plan)
Q9. Planning is the function of top management only. True / false
Q10. Explain any one of the following features of planning- i) Planning is continuous , ii) planning is
futuristic
Short answer type
1. Explain any three features of Planning
2. Explain any three point of importance of Planning.
3. Sushrutu (p) ltd is a manufacturing firm of different surgical items. There was an increase in masks due
to Pandemic . heavy production was intended to be planned but this could be done ossnly in board of
directors meeting and with after consulting specialists. This took lot of time . There was a chance to loose
the opportunity as the time was passed . As a result there was fall in demand due to relax in pandemic
situations. Identify the Limitation of Planning Discussed above.
Hint:Time consuming

4. Discuss any three limitations of planning.

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5. Identify the types of plans: Identify the types of plans:
A. Sameer is a senior middle level manager. He is busy in allocating resources to his staff, he has also
finalised the objectives and decided the course of action to be followed. He is expecting energy in his staff
for the whole season but he will have to be caucious.
B. Amit is giving a speech to the workers of his factory. He is the owner of a toy manufacturing factory and
has 112 workers. He tells them that this year’s target of production is 23 lakh toys.
C. On the wall of ‘Health is Wealth’ hospital a board is hanging. On this board. It is written ‘We care for the
health of senior citizens as our top most priority’. This hospital is known for treating people aged more
than 60 years.
D. Pratham calls his new subordinates for a meeting. He is a top level manager. He arranges for a power point
presentation to train his subordinates who are all middle level managers. He tells them the way of doing
task of treating suppliers through a new software system to be installed within next 20 days.
E. Kartik takes a meeting and guides his employees in a type of plan which is chronological in nature and is
situation specific. It is a collection of various methods in a step wise sequence.
F. Vijay has given a detailed statement of expected results in numerical terms. This plan is conveyed to the
subordinates by him in a special meeting.
Answer:
The different types of plans are:
A. Strategy
B. Objective
C. Policy
D. Method
E. Procedure
F. Budget
Long answer type
Q1) Mr.Rajveer an automobile engineer , was not satisfied with his present job as head of workshop in a
leading automobile company. He is an ambitious person want more growth and earning opportunities. So
he decided to set up his own workshop. After proper research he set his own targets and formulated
course of action to achieve those targets. One of his targets was to earn 12 % profit on the amount
invested in the first year. He decided that spare parts, loose tools, lubricants, etc. will be purchased on two
months credit from suppliers. He appointed Mr. Ramesh as the workshop in charge who decided that
exact manner in which the repairs and service to be provided .Mr. Ramesh also prepared a statement
showing the number of mechanics that will be required in the workshop throughout the year. Rajveer
informed Mr. Ramesh about his quarter-wise revenue targets for whole year. While working in
workshop, a penalty of Rs. 500 per day wearing helmets and gloves was declared. Quoting lines from the
above paragraph, identify and explain the different types of plans discussed.
Hint (Objective, Policy, Method, Rule)

Q2 ) Mr Anil decided to start a FMCG goods company named bharat products with an ambitious target of
reaching out of 70% of the Indian consumers within 3 years. He chose this business with a belief that An
Indian customer wants Indian brands with quality and their purchasing power is increasing rapidly. To
achieve this target, he had some options like acquire a running FMCG company business or make ties
with small producers or start independent action with self production and aggressive marketing. He
assessed the proposals of different companies on various parameters i.e., EPS, Tax liabilities, Dividend
paid etc. and their future projection . he knew the at projections may not remain the same if country’s
economic policies get modified.
The above paragraph discusses some of the steps of one of the functions of management . By quoting the
lines from the above paragraph , explain theses steps in chronological order.
Hint: “reaching out of 70% ...... within 3 years” - Setting Objectives ,
“Indian customer wants Indian brands ..... is increasing rapidly” -Developing premises,
“he had some options ........... aggressive marketing” -Identifying alternative course of action,
He assessed the proposals .............. and their future projection - Evaluating alternative courses)

Page 39 of 141
 CHAPTER 5
ORGANISING
QUICK REVISION

Organising:
Meaning: Organising essentially implies a process which coordinates human efforts , assembles resources and
integrates both into a unified whole to utilised for achieving specified objectives.

Importance of Organising
1) Benefits of specialization: In organizing every individual is assigned apart of total work and not the
whole task. This division of work into smaller units and repetitive performance leads to specialization.
Thus organizing promotes specialization which in turn leads to efficient & speedy performance of tasks.
2) Clarity in working relationship: It helps in creating well defined jobs and also clarifying the
limits of authority and responsibility of each job. The superior-subordinate relationship is clearly
defined in organizing.
3) Effective Administration: It provides a clear description of jobs and related duties which helps to avoid
confusion and duplication. Clarity in working relationships enables proper execution of work which
results ineffective administration.
4) Optimum utilization of resources :The proper assignment of jobs avoids overlapping/duplication of
work. This helps in preventing confusion and minimizing the wastage of resources and efforts.
5) Adaptation to Change: The process of organising allows a business enterprises to accommodate
changes. It allows the organisation structure to be suitably modified and the revision of inter-
relationship amongst managerial levels.
6) Development of Personnel: Sound organization encourages initiative and relative
thinking on part of the employees. When managers delegate their authority, it reduces their workload so
they can focus on more important issues related to growth & innovation. This also develops the
subordinates‟ ability and helps him to realize his full potential.
7) Expansion and growth :It helps in growth & diversification of an enterprise by adding more job
positions ,departments, products lines, new geographical territories etc

Process of organizing.

1) Identification and division of work: The first step in the process of organising involves identifying and
dividing the work that has to be done in accordance with previously determined plans. The work is
divided into manageable activities so that duplication can be avoided and the burden of work can be
shared among the employees.
2) Departmentalisation: Once work has been divided into small and manageable activities then those
activities which are similar in nature are grouped together. Such sets facilitate specialisation. This
grouping process is called departmentalisation. Departments can be created using several criteria as a
basis. Examples of some of the most popularly used basis are territory (north, south, west, etc.) and
products (appliances, clothes, cosmetics etc).
3) Assignment of duties: It is necessary to define the work of different job positions and accordingly
allocate work to various employees. Once departments have been formed, each of them is placed under
the charge of an individual, Jobs are then allocated to the members of each department in accordance to
their skills and competencies.
4) Establishing authority and reporting relationships: Merely allocating work is not enough. Each
individual should also know who he has to take orders from and to whom he is accountable. The
establishment of such clear relationships helps to create a hierarchal structure and helps in coordination
amongst various departments.

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 Organizational Structure
The organisation structure can be defined as the framework within which managerial and operating tasks are
performed. It specifies the relationships between people, work and resources. It allows correlation and
coordination among human, physical and financial resources and this enables a business enterprise to
accomplish desired goals.
The span of management, to a large extent gives shape to the organisational structure. Span of management
refers to the number of subordinates that can be effectively managed by a superior. This determines the
levels of management in the structure
An organisation structure provides the framework which enables the enterprise to function as an integrated unit
by regulating and coordinating the responsibilities of individuals and departments.

Types of organisational structure

• Functional structure : Grouping of jobs of similar nature under functional and organising these major
functions as separate departments creates a functional structure.

Suitability:
(1) Large organizations producing one line of product.
(2) Organizations which require high degree of functional specialization with diversified activities.

Advantage:
(a) Specialization: Better decision of labour takes place which results in specialization of functions and its
consequent benefits.
(b) Coordination is established: All the persons working within a departmental are specialists of their
respective jobs. It makes the co-ordination easier at departmental level.
(c) Helps in increasing managerial efficiency: Managers of one department are performing same type of
function again and again which makes them specialized and improves their efficiency.
(d)Minimizes cost: It leads to minimum duplication of effort which results in economies of scale and thus
lowers cost.

Disadvantages:
(a) Ignorance of organizational objectives: Each departmental head works according to his own wishes.
They always give more weight to their departmental objectives. Hence overall organizational objectives
suffer.
(b) Difficulty in Inter-departmental Coordination: All departmental heads work as per their own wishes
which leads to coordination within the department easier but it makes inter-departmental coordination
difficult.
(c) Hurdle in complete development – because each employee specializes only in a small part of the whole
job.

• Divisional structure: It refers to the division of whole enterprise on the basis of different products. Each
division is multifunctional because within each division functions like production, marketing, finance,
purchase, etc.
Suitability:
This structure is suitable in organizations producing multi product or different lines of products requiring
product specialization. Also growing companies which intend to add more lines of products in future adopt this
structure.

Advantages:
(a) Quick decision-making: Divisional manager can take any decision regarding his division independently
which makes decisions quick and effective.
(b) Divisional results can be assessed: Division results (profit/loss) can be assessed easily. On this basis any
unprofitable division can be closed.
(c) Growth and Expansion: It facilitates growth and expansion as new divisions can be added without disturbing
existing departments.

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Disadvantages:
(a) Conflicts among different divisions on allocation of resources.
(b) Duplicity of Functions: Entire set of functions is required for all divisions. It gives rise to duplicity of efforts
among divisions & increases cost.
(c) Selfish Attitude: Every division tries to display better performance and sometimes even at the cost of other
divisions. This shows their selfish attitude.

Difference between Functional and Divisional structure

Basis Functional Structure Divisional Structure

Formation It is based on functions. It is based on products .
It is difficult to fix on a department. It is easy to fix responsibility for
Responsibility performance.
Specialisation Functional specialization Product specialisation.
Managerial It is difficult ,as each functional It is easier, autonomy as well as the chance to
Development Manager has to report to the top perform multiple functions helps in managerial
management. development.
Cost It is economical as the functions are It is costly as there is duplication of
Not duplicated. Resources in various departments.
It is easy, because all functions related to a
Coordination It is difficult for a multi product company. particular product are
Integrated in one.
It is most suitable when the size of the It is suitable for those business enterprises where
organisation is large, has diversified a large variety of products are manufactured
Suitability activities and operations require a high using different productive resources.
degree of specialisation.

 Formal organization : Formal organization refers to the organization structure which is designed by the
management. It clearly specifies the boundaries of authority and responsibility.
Advantages:
i) Easy to fix responsibility, ii) No ambiguity, iii) Unity of command is maintained,
iv) Leads to effective accomplishment of goals, v) Provides stability

Limitations:
i) formal organization may lead to procedural delays, ii) Poor organization practices may not provide adequate
recognition to creative talent, iii) It does not provide the complete picture of how an organization works.

 Informal organization: Interaction among people at work gives rise to a network of social relationship
among employees called the informal organization. Informal organization emerges within the formal
organization.
Advantages: i) Faster spread of information, ii) fulfill the social needs , iii) contributes towards the fulfilment
of organizational objectives.

Disadvantages: i) when spreads rumors, it becomes destructive ii) Management may not be successful in
implementing changes if the informal organization opposes them.

Difference between Formal and Informal Organisation

Basis formal organization Informal organization
Meaning Structure of authority relationship Network of social relationships arising out
is created by the management. of interaction among employees.
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 Origin Arises as a result of company rules Arises as a result of s social interaction.
and policy.
Authority Arises by virtue of position in Arises out of personal qualities.
management .
Behaviour It is directed by rules There is no set behavior pattern
Flow of Communication takes place Flow of communication is not through a
communication through scalar chain. planned route. It can take lace in any
direction.
nature Rigid. Flexible.
Leadership Managers are leaders. Leaders may or may not be the managers.
They are chosen by the group.
Delegation: Delegation refers to the downward transfer of authority from a superior to a subordinate. It is a
pre-requisite to the efficient functioning of an organisation because a manager can use his time on high priority
activities. It also satisfies the subordinate’s need for recognition and provides them with opportunities to
develop and exercise initiative
Elements of delegation
1. Authority: The power of taking decisions in order to guide the activities of others. Authority is the power
that influences the others.
2. Responsibility: It is the obligation of a subordinate to properly perform the assigned duty. When a superior
issues orders, it becomes the responsibility of the subordinate to carry it out.
3. Accountability: When a superior assigns some work to a subordinate, he is answerable to his superior for its
success or failure.

Difference between Authority, Responsibility and Accountability:

Basis Authority Responsibility Accountability
Authority refers to the right Responsibility is the Accountability implies being
of an individual to obligation of a subordinate to answerable for the final outcome,
command his subordinates properly perform the assigned one authority has been delegated
Meaning
and to take action within duty. and responsibility accepted, one
the scope of his position. cannot deny accountability.
Delegation Can be delegated. Cannot be entirely delegated. Cannot be delegated at all.
Origin Arises from formal position Arises from delegated Arises from responsibility.
in the organization. authority.
Flow Flows downward from Flows upward from Flows upward from subordinate to
superior to subordinate to superior. superior.
subordinate.

Importance of Delegation
1. Effective Management: By empowering the employees, the managers are able to function more efficiently
as they get more time o concentrate on important matters.
2. Employee Development: Employees get more opportunities to utilise their talent and this may give rise to
latent abilities in them.
3. Motivation of employees: When superior entrusts a subordinate with a task it is not merely the sharing o
work but involves trust on the superior’s part and commitment on the part of subordinate. Subordinate feels
encouraged.
4. Facilitation of growth: Delegation helps in the expansion of an organisation by providing a ready work
force to take up leading positions in new ventures.
5. Basis of management hierarchy: Delegation of authority establishes superior- subordinate relationship,
which are the basis of hierarchy of management.
6. Better coordination: The elements of delegation (authority, responsibility, accountability) help to define
the powers duties and answerability to the various positions in an organisation.

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Decentralization:
It is defined as even and systematic distribution of authority among hierarchical Under this, the authority is
transferred to the level where it is to be exercised, so the numbers of centers for taking decisions increases. It
should be noted that ‘Decentralization’ is an extension of delegation.

Importance of Decentralisation
1) Develops initiative among subordinates: Decentalisation helps to promote self reliance and
confidence amongst the subordinates. This s because when lower managerial levels are given freedom
they learn to depend on their own judgment. This policy helps to identify those executives who have the
necessary potential to become dynamic leaders.
2) Develops Managerial talent for future: Decentralisation gives subordinates the chance to prove their
abilities and creates a reservoir of qualified manpower.
3) Quick decision making: In a decentralised organization , since decisions are taken at levels which are
nearest to he points of action and there is no requirement o approval from many levels, the process is
much faster
4) Relief to Top management: Decentralisation leaves the top management with more time which they
can devote to important policy decisions rather than occupying their time with both policy as well as
operational decisions.
5) Facilitates growth: Decentralisation awards greater autonomy to lower levels of management as well
as divisional and departmental heads . This allows them to function in a manner best suited to their
department. Consequently, Productivity level increase and the organization is able to generate more
returns which can be used for expansion purposes
6) Better control: Decentralisation makes it possible to evaluate performance at each level and the
departments can be individually held accountable for their results

Difference between Delegation and Decentralisation

S.
No. Basis Delegation of authority Decentralisation
It is a compulsory act because no It is an optional policy decision and is
1. Nature Individual can perform all tasks on his Only implemented at the discretion of the top
own. management.
The subordinates have less freedom to The control over executives is less hence they
2. Freedom of take own decisions as there is more have a greater freedom of action.
action control is exercised by the superiors.
It is the result of the policy decision of the top
3. Status It is a process followed to share tasks. management.
It has narrow scope as it is limited to It has wide scope as it implies extension of
4. Scope superior and his immediate delegation to the lowest level of management.
subordinate.
To increase the role of the subordinates in the
5. Purpose To lessen the burden of the manager. organisation by giving them more autonomy.

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 Very short answer type question
1. What does the term span of management refer to?

2. In an Garment manufacturing company , there are four main activities Production, finance, marketing,
personnel. Which type of organization structure should company adopt?

3. Which of the following is not an importance of organising?

a) Increase cost
b) Clarity in working relationship
c) Adaptation to change
d) None of the above
Answer : (a)

4. Span of management refers to:

(a) Numbers of managers (c) Number of total employees
(b) Number of subordinate under a superior (d) Number of Directors
Answer : (b)

5. Which of the following is not an element of delegation:

(a) Authority (c) Decentralisation
(b) Responsibility (d) Accountability
Answer : (c)

6.“Creating departments on the basis of products” which organizational structure is discussed here?
(a) Divisional (b) Informal (c) functional (d) Decentralised
Answer : (a)

7. A tall Structure has a :

(a) Narrow span (b) Wide Span (c) No span (d) All of the above
Answer : (a)

8. Identify the type of organisational structure which makes training of employees easier, as the focus is only on
a limited range of skills.
a) Network structure
b) Divisional structure
c) Functional structure
d) Matrix structure
Answer : (c)

9. Which of the following is not a merit of divisional structure?

a) It promotes product specialisation.
b) It ensures that different functions get due attention.
c) It promotes flexibility and faster decision making.
d) It facilitates expansion and growth as new divisions can be added
Answer : (b)

10. Which of the following is not part of organising process?

a) Grouping of activities
b) Departmentalisation
c) Decentralisation
d) None of the above
Answer : (c)

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 Short answer type Question
(1) A Company named Vivan cements has decided to start a factory in the Gurugram. The company has
recognised the amount of work to be done in number of hours. The company has found out that it will take
48000 hours of man work and has subsequently divided the number of hours for different operations.
Responsibility of the recognized amount of work has been given to different individuals according to their
capabilities.
Which function of management is highlighted above? Identify the two steps of this function indicated above.
Hints: a) The function- ‘Organising’ , b) Step 1: Identification and division of work
Step 2: Assignment of duties.
(2) Discuss the element of delegation .
(3) State any three points of importance of organizing.
(4) What is meant by functional structure of organization?
(5) A company is manufacturing Bikes. there is a well defined system of jobs with a clear and definite
authority, responsibility and accountability in the company but people are not allowed to interact beyond their
officially defined goals as a result the companies not able to adapt to the changing business environment the
work force is also not motivated due to lack of social interaction. a company is facing problems of procedural
delays and inadequate recognition to creative talents.
suggest how the organisation can overcome the problems faced by it give any two benefits it will derive from
your suggestion Hint: Informal Org.

Long answer type Questions

(1) The Sunrise limited is on a large scale public limited company. Mr Dwaraka Prasad is the CEO of the
company. He directs the marketing manager that he can take decisions to spend up to 2 lakh in order to
improve the performance of his division. for example if the marketing manager wishes to run and advertising
campaign with then the limit of 1 lakh then this decision can be taken without the consent of the CEO. this
authority is not delegated to the remaining department. after continuous requests of other departmental
managers they are provided with this authority.
a) what would you call the authority given to the marketing manager to take decisions up to 1 lakh ?
b) what does the change introduce and organisation with the delegation of authority to all department
manager's?
c) Eplain the concepts identified in ( a) and (b)
Hints: a) Delegation , b) Decentralisation

(2) Ms Nidhi is the owner of a factory where she makes shoes. She plans to grow the company by branching
into leather bags in addition to western wear because it has been doing well. Her business offers formal clothes,
making it a full-service provider of business attire. She may then pitch her company as the one-stop shop for
working women. Which kind of structure, and why, would you advise for the expanding organisation? Identify
four benefits of this organisational structure.
Hints: Divisional structure

(3) Identify the type of organisation structure in the following cases:

a) Abrezza is a manufacturing company based upon functions and has important departments like Finance,
Marketing, Poduction etc.
b) Sreeja is a well known CEO. In her organisation she allows for autonomy and opportunity to perform
multiple functions in order to develop managerial skills in her employees.
c) Aniket is an owner of a reputed manufacturing company. However in his firm it is difficult to fix
responsibility on a particular department.
d) Suresh runs a company in Jaipur. The company is known for its product specialisation and has a lot of
reputation in the market.
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 e) Rahul tubes is a city based growing company. Recently it has won award for being the most economical
company as the functions are not duplicated in it.
f) Synchronisation of efforts is easy in sunlastic Ltd. as all the related functions related to a particular product
are integrated within one department.
Hints:
a) Functional structure
b) Divisional structure
c) Functional structure
d) Divisional structure
e) Functional structure
f) Divisional structure

(4) In a fast growing company, the HR department made the decision to use a novel approach to managing
employee performance. They made the decision to provide each employee with a balance score card so that
they could track their performance. The top management could leave the decision making on the employees..
The management's strategy changed as a result, making it simpler to evaluate staff members and departments.
The speed at which decisions were made increased because they were no longer to be made by the senior
management alone. The organization's changes were now apparent to the senior management. It was clear that
they could now relax, have a seat, and concentrate on other things. Identify the concept discussed above. And
explain the advantages of identified concept. Hint: Decentralisation

(5) ANG Ltd. made the decision to locate its Cement manufacturing facility in a rural area of Telangana where
there were few employment possibilities. The locals in that area supported ANG Ltd.'s endeavour. It also chose
to build a school, hospital, market, and other amenities on the plant grounds in an effort to draw people to work
there. ANG Ltd. began to make large profits. A different rival company ordered Mahendra, its Regional
manager, to look into ANG Ltd.'s reasons for making such large profits. Mahendra discovered that there was
systematic coordination between the various tasks in both companies in order to accomplish organisational
objectives. Each employee understood their own responsibilities and lines of authority. The main difference
was that " ANG Ltd." allowed flow of communication in all directions as needed, but communication in his
organisation only occurred through the scalar chain.
a) Identify the type of organization which permits ‘ANG Ltd.’ the flow of communication in all the directions.
b) Explain the advantages of the type of organization identified in (a) above.
Hint: Informal Organisation

(6) Differentiate between functional structure and divisional structure.

(7) Differentiate between Informal and formal organisation.
(8) Differentiate between Delegation and Decentralisation.
(9) What is divisional structure ? discuss its advantages and limitations

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 CHAPTER-6
STAFFING
QUICK REVISION

Meaning: Staffing is a process of recruiting right people at the right job. It is described as the managerial
function of filling and keeping filled the positions in the organization structure.
(Key words: Human element of organization, Personnel, manpower or human resources.)
Importance:
1. Discovering Competent Personnel: Proper staffing helps in discovering and obtaining competent personnel
for various jobs.
2. High Performance: Proper staffing ensures higher performance by putting right person on the right job.
3. Continuous growth of enterprise: Proper staffing ensures continuous survival and growth of the enterprise.
4. Optimum utilization of human resources: It prevents under-utilization and over manning of personnel and
thus reduces labour cost.
5. Higher job satisfaction: It improves job satisfaction and morale of employees.

Staffing as a part of Human Resource Management:

The scope of Human Resource
Management is wider than staffing. It involves staffing, keeping personnel records, providing expert service
and other works. It facilitates procurement and placement of right people on the right jobs. The nature of
staffing as a part of HRM is discussed in following points:
1. Staffing is people centered and is relevant in all types of organization and with all categories of personnel
from top to bottom.
2. It is duty of every manager to perform the staffing activities. In many enterprises, Personnel Department is
established to provide assistance to managers in performing their staffing function.
3. Staffing function is concerned with training, development and performance appraisal of human resources.

Process of Staffing: :(Important for 4 mark type )

1. Estimating Manpower Requirement: Drafting work force requirements in an organization, defining the
job related activities and recruiting personnel’s with a specific set of skill knowledge, qualification and
experience. For this purpose company takes following three steps:(Important for 1 mark )

a) Work load analysis enables the enterprise to assess the number and type of employees necessary for the
completion of a work.
b) Work force analysis enables the enterprise to know the number and type of existing employees. It helps
determining whether an enterprise is overstaffed or under staffed and also enables an organization to make
necessary steps to take corrective action.
(Hint : “force”used for filled positions)
c) comparison. After comparison new staff is appointed or excess employees are either removed or
transferred.

2. Recruitment: Recruitment may be defined as the process of searching for prospective employees and
stimulating them to apply for jobs in the organization. Both internal and external sources may be used for
searching employees. It is called a positive process as it invites more and more people to apply.

3. Selection: It is the process of choosing and appointing the right candidates for right job in an organization
by conducting various exams, tests and interviews. It ensures that the organization gets the best organization
candidate. The selection process enhances the self-esteem and prestige of the selected candidates. It is called
a negative process as rejections are more than selections.

4. Placement and Orientation: :(Important for 1 mark type )

Orientation is, thus, introducing the selected employee to other employees and familiarizing him with the
rules, regulations and policies of the organization. Placement refers to the employee occupying the position

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 or post for which the person has been selected.

5. Training and Development: Systematic training helps in increasing the skills and knowledge of
employees in doing their jobs through various methods. Development involves growth of an employee in all
aspects such as performance, knowledge etc.
(Acronym: Early Riser saves POcket and Time = ERPOT)
In most of the organizations there is a separate human resource departments which perform staffing
function but in small scale organizations it is performed by line managers only so in small organizations the
following steps are also followed:
1. Performance Appraisal: Performance appraisal means evaluating an employee’s current and/or past
performance as against certain predetermined standards. Once an employee has undergone training, his/
her performance is evaluated. It is concerned with continuous evaluation of the performance of
employees in an organization.
2. Promotion and Career Planning: Promotion means being placed in positions increased responsibility.
Promotion and career planning is very important to boost the morale of employees and motivate them to
utilize their full potential.
3. Compensation: Compensation refers to all forms of payment made by an enterprise to their employees.
E.g. salaries, incentives, commission etc.

Recruitment: Recruitment may be defined as the process of searching for prospective employees and
stimulating them to apply for jobs in an organization.
(Key words: Searching for prospective candidates, inviting applications inducing people to apply for job, a
positive process.)

SOURCES OF RECRUITMENT
A. Internal Sources of Recruitment: Internal sources refer to inviting candidates from within the
organization.
1. Promotion: it means shifting of employees from one job position to the other next level. It increases the
compensation, Salary or prestige of the employee.
2. Transfer: It means shifting of employees from one job position to other at the same level of authority.
Generally with the transfers there is no change in the compensation level and authority level there is no
change even in the rank responsibilities and prestige. Only the place of working is changed promotion.

Advantages of Internal Sources Recruitment:

(1) Employees are motivated to improve their performance.
(2) Internal recruitment also simplifies the process of selection & placement.
(3) No wastage of time on the employee training and development.
(4) Filling of jobs internally is cheaper.
Limitation of Internal Sources
(1) The scope for induction of fresh talent is reduced.
(2) The employee may become lethargic.
(3) The spirit of competition among the employees may be hampered.
(4) Frequent transfers of employees may often reduce the productivity of the organization.

B. External Sources of Recruitment: When the candidates from external sources are invited to fill in the
vacant job position then it is known as external recruitment. The common methods of external sources of
recruitments are: :(Important for 1/3 mark type )

1. Direct Recruitment: Under the direct recruitment, a notice is put up on the notice board of the
enterprise specifying the details of the jobs available.
2. Casual callers: Many reputed business organizations keep a data base of unsolicited applicants in their
office. This list can be screened and best candidate is selected.
3. Advertisement: Advertisement media is used when a wider range of candidates to choice are required.
Example– Newspapers, Internet, Radio, Television etc.
4. Employment Exchange: Employment exchange run by government is regarded as a good source of
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 recruitment for unskilled and skilled operative jobs.
5. Placement Agencies and Management consultants: Placement agencies provide a nationwide service in
matching personnel demand and supply.
6. Campus Consultants: Campus recruitment means recruitment of candidates directly from management
and technical institutions and universities.
7. Labour Contractors: Labour contractors maintain close contacts with labourers and they can provide
the required number of unskilled workers at short notice.
8. Advertising on Television: The practice of telecasting of vacant posts over Television is gaining
importance these days.
9. Web Publishing: There are certain websites specifically designed and dedicated for the purpose of
providing information about both job seekers and job opening.
10. Recommendations of Employees: Applicants introduced by present employees, or their friends and
relatives may prove to be a good source of recruitment.

Merits of External Sources:

1. Qualified Personnel: By using external source of recruitment the management can
attract qualified and trained people to apply for the vacant jobs in the organization.
2. Wider Choice: The management has a wider choice in selecting the people for
employment.
3. Fresh Talent: It provides wider choice and brings new blood in the organization.
4. Competitive Spirit: If a company taps external sources, the staff will have to compete
with the outsiders.
Limitations of External Sources of Recruitment:
1. Dissatisfaction among existing employees: Recruitment from outside may cause
dissatisfaction among the employees. They may feel that their chances of promotion are
reduced.
2. Costly process: A lot of money has to be spent on advertisement therefore this is costly
process.
3. Lengthy Process: It takes more time than internal sources of recruitment.

Selection: It is the process of choosing from the pool of the prospective job candidates developed at the stage
of recruitment. It finds the best out of the available stuff. It’s called a negative process as the rejections are more
than the selections.
(Key words: Choosing the prospective candidates, negative process, looking for the qualities of different
candidates)
Process of Selection: (Important for 4/6 mark )
1. Preliminary Screening: Preliminary screening helps the manager eliminate unqualified or unfit job
seekers based on the information supplied in the application forms.
2. Selection Tests: These tests include:(Important for 1 mark type )
(a) Intelligence Tests: It tests a person’s ability to make decisions and adjustments.(I.Q. test)
(b) Aptitude Tests: It is a measure of individual’s potential for leaning new skill.
(c) Personality Tests: personality tests provide clues to a person’s emotion, behaviour and
approach towards an issue or work.
(d) Trade Tests: It measures the existing working skills of an individual.
(e) Interest Tests: It allows knowing the Pattern of interests and involvement of a person in some
other types of jobs.
3. Employment Interviews: It is an in-depth formal conversation conducted to find out suitability of the
candidate for a specific post to seek more information about the candidate. It gives the candidate an
accurate picture of job with details of terms and conditions and to clarify his doubts.
4. Reference Checks: The prospective employer checks the authenticity of the references given by the
applicant. They conduct a search into candidate’s family background, past employment, education,
police records etc.
5. Selection Decisions: A list of candidates who clear the tests and interviews are generally considered for
the final selection based on manager’s opinion.
6. Medical/Physical Examination: A medical expert or a certified clinic appointed by organization has to
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 certify whether the candidate is physically fit to the requirements of a specific job. A proper physical
exam will ensure higher standard of health & physical fitness of employees thereby reducing
absenteeism.
7. Job Offer: After selection procedure and medical examination, he/she is formally appointed by issuing
him an Appointment Letter.
8. Contract of Employment: After getting the job offer, the candidate has to give his acceptance. Both
employer and employee has to sign a contract of employment which contains terms & conditions, pay
scale, leave rules, hours of work, mode of termination of employment etc.
(ACRONYM : Pehle STudent ko EMPty CHEque SE MEDICAL JOB ka CONTRACT mila aur wo select
ho gya)

Training and development: :(Important for 3/4 marks )

Training is an act of increasing the knowledge and technical skills of an employee for doing a particular
job efficiently. Both existing employees and new employees get acquainted with their jobs and this
increases the job related skills.
(Key words: Imparting skill to improve performance of job related to job or work performed by an
individual update knowledge and competency of employees.)
Development refers to the learning opportunities designed to help employees grow. It covers not only
those activities, which improve job performance but also those which bring about growth of the
personality.
(Key words: Overall growth of an employee, include all round growth and not restricted to job
performance.)
BENEFITS TO ORGANISATION:
1. Systematic learning leads to wastage of efforts and money.
2. Increases productivity thereby leading to increase in profit.
3. Equips the future managers to handle emergencies.
4. Increases employee morale and reduces absenteeism.
5. Effective response to changing environment.
BENEFITS TO EMPLOYEE:
1. Better career opportunities due to improved skills and knowledge.
2. Higher earning leads to higher earnings.
3. Improves efficiency in handling machines.
4. Improves satisfaction and morale of employees.
Training Development
It is a process of increasing knowledge and It is a process of learning and growth.
skills
It is to enable the employee to do the job It is to enable the overall growth of the Employee
better
It is a job-oriented process. It is a career-oriented process

Training Methods:
(A) On the Job Method: It refers to the methods that are applied at the work place, where the employee is
actually working. It means learning while doing.
1. Apprenticeship Programme: Apprenticeship programmers put the trainee under the guidance of a
master worker. The trainee receives stipend while learning so that he/she can enjoy “earn while you
learn” scheme. The trainee is placed under the supervision of an experienced person who imparts him
the necessary skills and regulates his performance.
(Key words: Learning by doing, suitable for technical works.)

2. Induction/Orientation training means to acquaint the newly appointed employees with their job
and the organisation. Under this, new employees are introduced both to their superior and subordinates
so that they can work with them as a team. Apart from this, he/she is informed about the objectives and
policies of the organisation. He/She is also informed about their own authorities and responsibilities. In
short, the purpose of induction is to accommodate new employees in the new environment
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 expeditiously.

3. Internship Training: The educational institutes enter into a contract with business firms or
corporate for providing practical knowledge to its students by sending them to business organizations
for gaining practical experience.
(Key words: classroom sessions with practical training)

(B) Off the job methods: Off-the-job training as the name itself indicates, refers to training conducted
away from the actual work setting. There may be a special site in the organization itself or in a non-
organizational location elsewhere (for example, vocational school or university). Off-the-job training is
particularly useful and appropriate for certain managerial skills such as interpersonal abilities and also for
certain production jobs where machinery is employed to control the pace of work-an example may be the
assembly-line operation and is also useful for some technical jobs where teaching expertise is found
elsewhere.
1. Vestibule Training: :(Important for 1/3 mark)
Employees learn their jobs on the equipment they will be using, but the training is conducted away
from the actual work floor. It is an attempt to duplicate as nearly as possible the actual conditions of
the work-place. The learning conditions are carefully controlled. The trainees can concentrate on
training because they are not under any pressure of work. Their activities do not interfere with the
regular process of production. Thus vestibule training is very must suitable where a large number of
persons are to be trained arid where mistakes are likely to occur which will disturb the production
schedules.
(Key words: Duplicate training or dummy training, using dummy models for sophisticated and
expensive machineries)

Questions:
Short answer type
Q1- Mention briefly the important sources of recruitment.
Ans- The two very important sources of recruitment in any organization are; internal sources and External
Sources.

Q2- Why Aptitude test is conducted during the process of selection?

Ans: An aptitude test is conducted to measure and scale the applicant’s potential for learning a skill.

Q3- Why ‘employment interview’ is conducted by an organisation in the process of selection?

Ans- Organizations conduct employee interviews in order to assess the applicant’s feasibility for the position
and to check if the person is suitable for the prescribed job post.

Q4- Mention the advantages of training to the individual and to the organization.
Ans- Training is an important part of the job that aims at improving and growing the aptitude and knowledge of
a person as prescribed in the job description. It benefits the organisation through the improved skills and output
of the employee.

Q.5. Mention any two differences between training and development.

Q.6. What is meant by ‘estimating manpower requirement’ as a step in the process of staffing?
Ans. ‘Estimating manpower requirement’ means finding out the number and their types of persons or
employees needed by the organisation in near future.
Q.7. Name the components of staffing function.
Ans: Recruitment, Selection and Training

Q8. What is the term refers to the employee occupying the position or post for which the person has been
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selected?
Ans: Placement.

Q9. Which analysis would reveal the number and type of human resource available within the organization and
how many are required to perform various jobs in the organization?
Ans : Workforce analysis and work load analaysis.

Q10. It is the process of choosing from the pool of the prospective job candidates developed at the stage of
recruitment.
Ans : Selection

Q.11. The quality of production is not as per standards on investigation. It was observed that most of the
workers were not fully aware of the proper operation of the machinery. What could be the way to improve the
accuracy?
Ans: training

Q.12. Name the process of introducing the selected employees to other employees and family with the rules and
policies of the organization?
Ans : Orientation/induction

Q.13. Why selection is considered as negative process?

Ans : Because it involves rejection of unfit candidates and the number of rejected candidates is more than the
number of selected candidates

Q.14. Which source of recruitment is needed to bring new blood and talent in the organization? Explain any
two advantages of it.
Ans : External sources.

Q.15. “Our assets walk out of the door each evening, we have to make sure that they come back the next morning.” These
are words of Mr. Narayana Murthy, CEO, Infosys. At a time when organizations were debating the strategic importance
of their human resources. This statement relates to which function of management. Explain the importance of this
function.
Ans. Staffing.
Q.16. What is the relation between staffing and HRM?
Ans. HRM is wider than staffing as staffing is the part of HRM.

Questions of 3 or 4 marks:

Q. 1. Name the methods of recruitment in the following cases:

1. A company gets applications on and off even without declaring any vacancy. However, as and when the
vacancy arises, the company makes use of such applications.
2. Casual vacancies of unskilled or semi-skilled jobs when there is a rush of order or when some permanent
workers are absent.
3. Recruitment by which most of the senior positions of the industry as well as commerce are filled.
Ans. 1.Casual callers
2. Direct recruitment
3. Advertisement

Q.2. Zara Ltd. purchased a new hi-tech machine from England for manufacturing high quality auto
components in a cost effective manner. But during the production process, the manager observed that the
quality of production was not as per standard. On investigation it was found that there was lack of knowledge
amongst the employees of suing these hi-tech machines. So, frequent visit of engineers was required form
Germany.This resulted in high overhead charges.
Suggest what can be done to develop the skills and abilities of employees for producing high quality products

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by using these hi-tech machines. Also state how the employees or the organization will benefit from your
suggestion.
Ans. Training of employees, (Benefits to the organization or employees)

Q. 3. Navyug runs an NGO under the name ‘Sakasham’ in Kolkata . The organization is engaged in offering
waste paper recycling services to all kinds of institutions in the West Bengal . It also manufactures custom
made paper stationery out of recycled paper on order for the interested institutions at a very competitive price.
The website of ‘Sakasham’ provides a link to a Careers site where in the people desirous of joining the NGO
can use simple Job Search to find the right opportunity for them. The NGO also keeps a database of unsolicited
applicants in its office so that job seekers may be notified of future opportunities when they arise. In context of
the above case:
Identify the two sources of external recruitment being used by the NGO ‘Sakasham by
quoting lines from the paragraph.
Ans. The two sources of external recruitment being used by the NGO ‘Sakasham are as follows:
1. Web Publishing:
2. Casual Callers:

Q. 4. The workers of ‘Smart Tech Ltd.’ are unable to work on new computerized machines imported by the
company to fulfill the increased demand. Therefore, the workers are seeking extra guidance from the supervisor
and the supervisor is overburdened with the frequent calls of workers.
Suggest how the supervisor, by increasing the skills and knowledge of workers, can make
them handle their work independently. Also state any three benefits that the workers will derive by the decision
of the supervisor.
Ans. Training of employees.

Q. 5. Shefali is doing a course in fashion designing form an institute of repute. As a part of the course, she has
been asked to take on-the-job training in an export house for a fortnight in order to gain an insight about various
practical aspects related to designing. Shefali, through the references from her senior, joins an export house
owned by an upcoming designer, Anjum.
In context of the above case:
1.Name and explain the type of training which Shefali has been asked to undertake.
2.Explain briefly any one method for providing off-the-job training.
Ans. 1. Internship Training. 2. Vestibule training.

Q.6. Read the following and identify the concept behind it and explain its benefits:
1. It is a managerial decision-making process as to predict which job applicants will be successful if hired.
2. It is the process of differentiating between applicants in order to identify and hire those with a greater
likelihood of success in job.
3. It is the process of choosing from among the candidates from within the organization on from the outside, the
most suitable person for the current position or for the future position.
Ans. Selection is the process being referred to in all the three statements.
It is the process of identifying and choosing the best person out of a number of prospective candidates for the
job. Selection process serves two important purposes:
1. It ensures that the organization gets the best among the available.
2. It enhances the self-esteem and prestige of those selected.

Long answer type 6 mark type ( Hots)

Q.1. Akhil, the director of a garments company, is planning to manufacture bags for the utilization of waste
material for one of his garments unit. He decided that this manufacturing unit will be set up in a rural area
of Orissa, where people have less job opportunities and labour is available at a very low rate. He also
thought of giving equal opportunities to men and women.
For this, he selected M kumar, Jasmeet Kaur, Rehan and Mukul as heads of sales, accounts, purchases
and production departments.

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 Identify and state the next two steps that Akhil has to follow in the staffing process after selecting the
above heads.
Ans. (i) Selection is done in the third step, The next two steps are as follows:
Step 1-Placement and orientation in this step, employee occupies the position or is placed, for which
he/she has been selected.
Step 2-Training and development.

Q. 2. Anupam has started an advertising agency in Gwalior. One of the pages on his company’s website
contains the following information, “Welcome to all the visitors of this page who are looking for an
opportunity to make a career in the field of advertising. The openings are available in the company at various
levels, so don’t miss the chance.” This page includes a link to provide further details about the vacancies
available in terms of the desired qualifications, experience, personality characteristics and so on. Through a
continuous assessment of the number and types of human resources necessary for the
performance of various jobs and accomplishment of organizational objectives and in relation to the number and
type available, he gets the information on this page updated.
In context of the above case
1. Identify and explain the steps in the staffing process being carried out by Anupam by quoting lines from the
paragraph.
2. Name the concept that relates to the details about the vacancies available in terms of the desired
qualifications, experience, and personality characteristics and so on.
Ans. 1.The two steps in the staffing process being carried out by Anupam are as follows:
a) Estimating he Manpower Requirements
b) Recruitment
2. Job descriptions the concept that relates to the details about the vacancies available in terms of the
desired qualifications, experience, and personality characteristics and so on.

Q. 3. Akshara the Managing Director of a toy manufacturing company is planning to produce now the toys of
high quality that will not harm the children. She has decided that this manufacturing unit will be set up in a
rural area of Madhya Pradesh where people have very few job opportunities and labour is available at very low
rates. She has also thought of giving equal opportunities to men and women, for this she wants for different
heads for sales, accounts, purchase and production. She gives an advertisement and shortlisted 10-15 candidates
per post after conducting different selection tests. Identify and state the next three steps for choosing the best
candidates out of the candidates shortlisted.
Ans. 1. employment interview
2. checking references and background
3. selection decision

Q.4. Smart age Public School had a vacancy of an English teacher looking for a smart creative and one who
have all the qualities of an English teacher. An advertisement was given in all leading dailies since the
response was huge the school exam end all the application forms and rejected the candidates who did not
have the necessary qualifications there after a test was conducted to measure the existing skills of the
candidates after that it was followed by a formal in-depth conversation with the principal of the school and
the panel of English experts.
Explain the steps that have been performed by smart age Public School in the process of identifying and
choosing the best candidate give the name and also the meaning of the test which was conducted by the
school.
Ans: steps are;
1. Preliminary screening
2. Selection tests
3. Employment interview.

Q.5. Company Tejas Limited is setting up a new plant in India for manufacturing auto components. India is
highly competitive and cost-effective production based in the sector so Tejas Limited is planning to capture
about 50% of the market share in India and also export to the tune of at least $10 million in about 5 years
of its planned operations. To achieve these targets it requires a highly trained and motivated workforce

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 outline the process of staffing.
1. The company should follow which sources of recruitment?
2. Which sources of recruitment should the company rely upon? Give reasons for your recommendation.
3. Which methods of training and development should company initiate explain giving reasons?
Ans: 1. Staffing process
2. External sources
3. Apprenticeship training, vestibule, internship training
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 CHAPTER-7
DIRECTING
QUICK REVISION

Meaning:- Directing refers to the process of instructing, guiding, counselling, motivating and leading people in
the organisation to achieve its objectives.

Features : a. Directing initiates action.

b. Continuing function.
c. Takes place at every level.
d. Flows from top to bottom.
e. Performance oriented.

Importance:

1. Directing Initiates Action: It helps in initiating action by the people in the organization towards attainment
of desired objectives.
2. Directing Integrates Employee’s Efforts: Coordination of all the employees activities is very necessary .
thus, It ensures the individuals work for organizational goals
3. Motivation and Leadership: It motivates the subordinates by showing leadership qualities to work
efficiently and to contribute their maximum efforts towards the achievement of organizational goals.
4. Directing Facilitates Change: Employees often resist changes due to fear of adverse effects on their
employment and promotion .Effective directing through motivation communication and leadership help
employees to cope with changes in the environment.
5. Directing helps in Stability and Balance in the organization: Effective directing fosters cooperation and
commitment among employees and helps them to striking a balance between variousactivities and
departments.

Elements of Directing;

(i) Supervision: Implies overseeing the work of subordinates by their superiors. It is an act of watching
& guiding worker’s activities.
(ii) Motivation: It means the process of making subordinates to act in a desired manner toachieve certain
organizational goals.
(iii) Leadership: Leadership is the process of influencing the behavior of people by making themstrive
voluntarily towards achievement of organizational goals.
(iv) Communications: is the process of passing information, experience, opinion etc. from oneperson to
another.

Motivation:
Motivation means incitement or inducement to act or move.
Motivation is the process of stimulating people to action to accomplish desired goals.Three key terms = motive,
motivation, motivators
Motive: Inner state that energizes, activates and directs behavior towards goals. Arises out ofunsatisfied needs
and causes restlessness.
Motivation: Process of stimulating people to action to accomplish desired goals. Motivators: Technique used to
motivate people. E.g. = bonus, promotion, recognition etc.

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FEATURES OF MOTIVATION:
1. Internal feeling : Desire to have a car, recognition in the society etc. are the internal feeling of an
individual which lead him to be motivated
2. Produces goal oriented behaviour: If an employee is interested in promotion he will try to improve his
performance, hence motivation produces goal-directed behavior.
3. Motivation can be positive or negative: Better pay, promotion, recognition, assigning important jobs
with more responsibilities etc. are positive motivations, whereas punishment, cutting increments,
scolding etc. are negative means of motivation.
4. Complex process: Because of individual differences among the employees, a uniform type of motivation
may not satisfy all people in the organization.
Maslow's Need Hierarchy Theory of Motivation
This theory was given by Abraham Maslow in 1943, and is based on human needs.
Assumptions
 Satisfaction of needs influences people's behaviour.
 Needs are in hierarchical order.
 Once need is satisfied only, the next higher need can motivate individuals.
 Satisfaction of lower-level needs motivates to move to the next level of need.
1. Basic Physiological Needs: These are the most basic need such as food, shelter, sleep etc. In the
organizational context, basic salary helps to satisfy these needs.
2. Safety/ Security Need: Provide security from physical and emotional harm E.g. Job security,
stability Etc.
3. Affiliation/Belonging Need: These needs refer to affection, sense of belongingness, acceptance and
friendship for mental satisfaction.
4. Esteem Needs: These include factors such self-respect, prestige, autonomy status,recognition and
attention.
5. Self-Actualization Needs: It is the highest level of need in the hierarchy. It refers to the driveto
become what one is capable of becoming.

Financial and Non-Financial Incentives

Incentives are the means to satisfy an employee's needs and motives. These can be:
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  Financial
 Non-Financial

Financial Incentive:
Incentives offered to employees which are either in direct monetary form or can be valued inmonetary
terms.

Types of Financial Incentives

1. Pay and allowances: These include salary, dearness allowance and other allowances paid to employees.
2. Productivity linked wage incentives: Wages paid at different rates to increase productivity.
3. Bonus: Incentive offered above the wages or salary.
4. Profit Sharing: Providing a fixed percentage of profit to employees.
5. Co-partnership/ Stock option: Shares offered to employees at a price which is lower than the market
price.
6. Retirement benefits: Benefits offered after retirement such as provident fund, pension, etc.
7. Perquisites: Benefits over and above the salary offered such as car allowance, housing, medical
aid,etc.

Non-Financial Incentives
Incentives which are given to provide psychological and emotional satisfaction rather than monetary
satisfaction.

Types of Non-Financial Incentives

1. Status: It is the level of authority, responsibility and recognition an employee commands in the
organization.
2. Organizational climate: Characteristics influencing an individual's behaviour such as individual
autonomy, reward orientation, consideration to employees, etc.
3. Career advancement opportunity: Opportunities of growth and development in the organization to
the higher level.
4. Job enrichment: It refers to a variety of work offered to challenge the knowledge and skills of highly
motivated employees.
5. Employee recognition programmes: It involves recognising and appreciating the contribution of
employees in public.
6. Job security: It refers to the certainty and stability offered in a job about future income and work.
7. Employee participation: Involvement of employees in the decision making process, seeking their
advice or suggestions.
8. Employee empowerment: Opportunities provided to employees to take decisions independently and
perform jobs assigned to them.

Leadership
Leadership is the process of influencing the behaviour of people in such a way that they voluntarilywork
towards the achievement of organizational objectives.

Features of Leadership
 It is the ability of an individual to influence others.

 It tries to transform the behaviour of the subordinates.

 It indicates interpersonal relationship between leader and followers.

 It is exercised to achieve organizational goals.
 It is a continuous process.

Leadership Styles
1. Autocratic leadership: in this style of leadership, a leader takes all the decisions on his own and gives
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 orders to his or her subordinate to implement them.
2. Democratic leadership: In this style of leadership a leader takes decisions after consulting with
subordinates and encourages them to participate in decision making.
3. Laissez faire leadership: In this style of leadership a leader gives freedom to his subordinate to take
decisions and execute work assigned to them and the leader acts as observer or guide.

Communication
It is the process of exchange of information between two or more people with an aim to create common
understanding.

Elements of Communication Process

1. Sender: The person who conveys his thoughts or ideas.
2. Message: Content intended to be communicated.
3. Encoding: Process of converting message into communication.
4. Media: Path through which an encoded message is transmitted to the receiver.
5. Decoding: It is the process of converting the encoded message in a readable format.
6. Receiver: The person who receives a communication message from the sender.
7. Feedback: It refers to the information or suggestions provided by the receiver to the sender in context to
the communication or message he received.
8. Noise: The hindrances and obstruction to communication.

Formal and Informal Communication

The process of communication within an organization may be
 Formal
 Informal.

Formal communication
 It flows through official channels designed in the organization chart to communicate officialinformation
between employees.
 Formal communication is classified as:
 Vertical communication: It is the formal two-way communication between superior andsubordinate
and the communication flows upward or downward.
 Horizontal communication: It is the formal two-way communication between employees working at
the same level of authority.

Informal communication
Communication between employees who are not officially related to each other is called informal
communication, this type of communication may flow in any direction thus it is also called 'grapevine'.
The informal communication spreads information rapidly and sometimes generates rumours.

Grapevine Network
Grapevine communication, also known as informal communication, is a communication that develops as a
result of social interaction among employees and spreads without following the formal communication path.
The types of grapevine communication networks are as follows.

Barriers to effective communication

Any type of hurdle, block or bottleneck in the path of communication is called barriers to effective
communication
Type of barriers
1. Semantic barriers

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 2. Psychological barriers
3. Organisational barriers
4. Personal barriers
1. Semantic barriers The word Semantic means the meanings of words and sentences. The barriers in the
process of encoding and decoding of message into words or expressions.
The types of semantic barriers are discussed below :
1. Badly Expressed Message : The message to be communicated must be stated in simple and
clear words.
2. Words or Symbols with Different Meanings : A word or symbol may have different meanings. The
receiver is required to understand the meaning of the word used by the sender in the same sense
for which sender has used it. For example: If a superior says, this is the ideal (Perfect) method,
and subordinate interprets as “This is the idle (Useless) method”, then communication error takes
place.
3. Faulty Translations : Sometimes the communication originally drafted in one language (e.g English)
needs to be translated to the language understandable by the workers (e.g Hindi). If the translator is not
proficient with both the languages, communication may be misunderstood.
4. Unclarified Assumptions: Not giving clear and specific instructions. For example “Take care of guest”.
To the boss it means travel, accommodation, food etc., whereas the subordinate may interpret it as the
guest should be taken to the hotel with care.
5. Body language and gesture decoding: If what is said and what is expressed through body movements
and gestures differ, communication may be misunderstood.
2. Psychological Barriers : The barriers which are created due to state of mind of sender and receiver.
1. Premature Evaluation: Here the receiver comes to conclusion without fully going through the message.
2. Lack of attention: If the receiver or the sender are not attentive while communication, the message will
be misunderstood. For example Suppose an employee explains his problem to a manager while he is
very busy with the preparation of a report for his superior, he will be less attentive and does not grasp
the message, and the employee get disappointed
3. Loss of transmission : When a communication is passed through various levels, there is a possibility of
loss in communication. Similarly people cannot retain all that is received as information for a long
time .
4. Distrust: If the sender and receiver don’t believe each other, they cannot understand message in true
sense.
3. Organisational Barriers: The complex organizational structure with scalar chain restricts free and
frequent communication that are called organizational barrier.
1. Organizational Policy: If an organization is highly centralized, it is not supportive to free flow of
communication.
2. Rules and regulations: Communication strictly through the chain of command may cause delays .
3. Status: Some superiors may not be ready to talk freely with the subordinates. Similarly subordinates
also not feel confident to talk freely with the superiors. They pass information what superiors would
like to hear and hold back unpleasant facts.
4. Complexity in organizational structure: Too many levels in the management may cause delay and
distortion.
5. Organizational facilities: If proper facilities are not provided such as intercom, public addressing
system, complaint box, suggestions box etc. the communication may not flow freely.

4. Personal Barriers : These are related to the personal factors of both the sender and the receiver.
1. Fear of challenge of authority: If a superior feels that a particular communication may adversely
affect his authority, he will hold it or suppress it.
2. Lack of confidence: When superiors do not have confidence on the competence of their subordinates,
the process of communication hampered. In such case superiors may not seek advice, opinions and
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 suggestions of subordinate.
3. Unwillingness to communicate: Subordinates may also be unwilling to communicate with their
superiors on the fear that it will adversely affect their interest.
4. Lack of proper incentive: If there is no reward or appreciation for the suggestions of subordinates;
they will not ready to communicate.
Improving communication effectiveness
1. Clarify the idea before communication: it is the duty of the communicator to clarify the message clearly
before he is going to communicate the same.
2. Consider the needs of sender: The sender must understand the capacity of the receiver and he must
know what type of information the receiver needs and in what form.
3. Consult other before communication: It is better to consult with others in developing a plan for
communication.
4. Beware of content, language and tone of message: The language and tone used by the sender should be
stimulating to evoke response from the listeners.
5. Convey thing which are valuable to receiver: It is better to know the interest and needs of communicates
while communicating a message.
6. Ensure proper feedback: The sender should take efforts to have feedback from the listeners time to time
7. Communicate for present and future: The communication should aim at present and future goals of the
organization.
8. Follow up communication: Proper follow up and review of instructions given to subordinates will help
to remove hurdles if any.
9. Be a good listener: Careful listening is a prerequisite for effective communication.

QUESTIONS
Q1: Obedience of order and discipline is found in
a. Autocratic leadership
b. Democratic leadership
c. Free rein leadership
d. Paternalistic leadership (Ans. a)

Q2: Alok is view supervisor of Ram, Rahim and Khan. He consults all his subordinates while framing work
schedules, they provide suggestions and Alok consider such suggestions if they are productive. Which
leadership style is followed by Alok?
(a) Democratic style (b)Autocratic style
(c)Free rein style (d)none of the above (Ans. a )

Q3. Zurko was working as a clerk in Hindustan Ltd. since last three and a half years. He was working with full
diligence. His boss noticed his performance and gave him “Confirmation letter”. Which kind of Zurko’s
need was Satisfied. (Ans. Safety needs)

Q4. Rajat a sales Manager, achieved his sales target one moth in advance. This achievement as
displayed on the notice board and the CEO of the Company awarded a certificate for the best
performance to him. Name and explain the incentive provided to Rajat. (Ans. Recognition)

Q5. In autocratic leadership style only --------------- communication is done with subordinates.
(One way communication)

Q6. Lack of proper incentive’ is a barrier to communication.Identify the type of

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barrier to which it belongs-
a. Personal barrier
b. Organizational barrier
c. Psychological barrier
d. Semantic barrier (Ans. a)

Q7. Which of the following is the appropriate order of hierarchy of needs according to Abraham Maslow?
a. Safety Needs → Physiological needs → Affiliation needs → Esteem Needs → Self Actualization needs
b. Physiological needs → Safety Needs → Affiliation needs → Esteem Needs → Self Actualization needs
c. Affiliation needs → Safety Needs → Psychological needs → Esteem Needs→ Self Actualization needs
d. Physiological needs → Safety Needs → Esteem Needs → Affiliation needs → Self Actualization need.
(Ans. b)

Q8. Ayesha Ltd. Assured their employees that in spite of recession no worker will beretrenched from the job.
a. Name and explain the type of incentive offered to the employees.
b. Explain one more incentive of the same category.
(Ans a. Job security
b. Status, Job enrichment etc)

Q9. A behavior study was done on total of 100 employees of an organization. Group A (of 50 employees) were
appreciated by the manager for their work and initiative for new idea. All these employees were given
option of flexible working hours and were paid wages at a higher piece rate. On the other hand, Group B
(of remaining 50employees) was criticized for their poor performance. Their increments were stopped and
they were paid wages at a lower piece rate.
(a) Identify and explain the feature of motivation highlighted in the above case.
(b) What type of leadership is followed by the manager? Justify your answer.
(Ans a. Motivation can be positive or negative b. Autocratic leadership style)

Q10. ABC Ltd. Is not able to achieve its objective on analysing, they found that employees were not given
their best, so he decided to announce an incentive plan, which offers various incentives to employee
workers at different level for achieving their target.
(i) Which element of directing is used by manager?
(ii) Suggest incentive suitable for:
a.Employees operating at lower level.
b.Employees operating at higher level.
(Ans (i) Motivation (ii) a. Non monetary incentive for lower level b. Monetary incentives for higher
level)
Q11. Lakhan, an expert in the area of Financial Management, sent an e-mail to his subordinate Thomas about
a new project for a client in France. Though, the mail was in English, a language known to Thomas, he
was not able to understand the actual meaning of many words used in the mail. He was also not a
specialist in the field of Financial Management. Not only this, some portions of the mail were translated
from French to English in such a manner that many mistakes crept in, causing different meaning to the
message.
(a) Identify two specific barriers to communication in Lakhan’s e-mail.
(b) State any two measures which can be taken by Lakhan to overcome the barriers
identified in part (a)above to improve in future the effectiveness of his communication.
(Ans. a. Faulty translations , Technical jargon
b.(1)Lakhan should communicate according to the needs, education and understanding level of
subordinates. (2) He should take proper feedback to improve communication process.

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Q12. Roshan is the chief of “Mehmaan‟ restaurant located in the city of Bengaluru. The place is known for
its exquisite Mughlai cuisine especially mutton biryani and kababs. All the food is prepared under
Roshan’s purview. The various activities in the kitchen are initiated in accordance to his instructions. He
is very clear and specific in issuing instructions to his subordinates in order to ensure smooth working of
the department. He personally oversees the method followed by the chefs for preparation of each
dish. He misses no opportunity to praise his subordinates for their good work. All his team members feel
very happy and satisfied under his direction. He provides constant guidance to them in order to improve
upon its taste and presentation and also encourages them to innovate and be more creative in their work.
In the above context:
a) Identify the various elements of directing mentioned in the above paragraph by quoting lines
from the paragraph.
b) Describe briefly any two points to highlight the importance of directing as a
function of management.
(Ans. (a) The various elements of directing mentioned in the above paragraph are as follows:
Communication: “He is very clear and specific in issuing instructions to his subordinates in order to
ensure smooth working of the department.”
Supervision: “He personally oversees the method followed by the chefs for preparation of each dish.”
Leadership: “He provides constant guidance to them in order to improve upon its taste and
presentation and also encourages them to innovate and be more creative in their work.”
Motivation: “He misses no opportunity to praise his subordinates for their good work.”
(b)The importance of directing as a function of management is described below: Initiates action:
Directing helps to initiate action by people in the organization towardsattainment of desired objectives.
It is the first execution function of management.
Integrates employees’ efforts: Directing seeks to integrate the individual efforts ofemployees in the
organization towards the realization of the organizational goals.
Helps to realize their potential: Directing provides effective guidance, motivation andleadership to the
employees so as to enable them to realize their potential and capabilities.

Q13. Three friends, Rajat, Raman and Ansh, after completing their MBA from a reputed business school at
Mumbai, were discussing about the type of organizationthey would like to join. Rajat was very clear that
he would like to take up a government job as it gives stability about the future income and work which
will help him to work with greater zeal. It will also provide him pension when he will retire from his
service. Raman wanted to work in a company, which has appropriate skill development plans for its
employees and helps the employees to grow to higher levels in the organisation. In addition to this, the
company should also provide facilities like housing, medical aid, etc. Ansh said that he would prefer to
work in an organisation, which has the culture of individual autonomy, is considerate to employees and
provides the employees with opportunity for personal growth and a meaningful work experience.
(a)Identify the various financial and non-financial incentives discussed by the three friends in the above
conversation.
(b)Explain three other non-financial incentives which were not discussed by any one of them.
(Ans. (a) Financial incentives: Retirement benefits, Perquisites ; Non financial incentive: job security,
Career advancement opportunity
(b)Other non financial incentives: job enrichment, Employee recognition, Employee participation etc
Q14. Smitha had been working as an Assistant Manager with “Johnson Enterprises‟ for the last ten years. She was
very popular amongst her colleagues because of her commitment and dedication towards the work. When
the manager senior to her retired, all her colleagues thought that now Smitha would be promoted. But to
everyone’s surprise the vacant post was filled by an outsider, Mrs. Rita. Smitha felt demoralized and her
performance started declining. She would abstain herself often and could not meet her targets.
Mrs. Rita was a good leader, who would not only instruct her subordinates but would also guide and
inspire them. She noticed Smitha’s behavior and felt that her performance could be improved. She started
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 involving Smitha in decision making- issues related to the organization and made her a part of high-level
joint- management committed. Smitha was now punctual in office and her performance started
improving.
a. Identify the function of management being performed by Rita.
b. Name the element of the above function of management which helped Rita to improve
Smitha’s behavior.
c. State any three features of the element identified in (ii) above.
(Ans. (a) Directing (b) Motivation
( c) 1. Internal feeling 2. Goal oriented behaviour 3. Complex process

Q15. Kunal joined as a shop level manager in the Production department of a textile company in the year
2005. Because of his good work, he became the DeputyProduction Manager of the company in the
year 2010. He had status and prestige and was well respected by all in the company.On 1st March, 2019,
he was promoted as the General Manager of the company. Kunal was very happy on his promotion as
now he had become what he was capable of becoming. As a good manager, Kunal decided to motivate
his subordinates, after understanding the Need Hierarchy theory which is based on various assumptions.
He realised that people’s behaviour is based on their needs and the manager can influence the
behaviour of his employees by satisfying their needs.
(a) One of the assumptions of Need Hierarchy theory is stated in the above paragraph. State the
other three assumptions of this theory.
(b) State the needs of Kunal which are being satisfied through promotion.
(Ans. (a) 1. People needs are in hierarchical order.
2. A satisfied need can no longer motivate a person .
3. A Person moves to the next higher level need only when the lower level need is satisfied.
(b) Esteem needs, Self actualization needs

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 CHAPTER-8
CONTROLLING
QUICK REVISION

Meaning-:(Important for 1 mark type )

It is the last function of management that measures the actual performance, compares it with the planned
standards and correcting deviations to ensure the achievement of pre-determined objectives of the organisation.
(Key words: Ensures work as per plan or Blue-print, Deviations between Actual and Standard output, both
backward and forward looking.)
Scope of Controlling: it’s scope is wider because it does not come to an end just after comparing actual
and standard outputs but to the next step it locates for the causes of deviations and then rectifying it accordingly
hence it has two aspects/types.
(a)Strategic control-It refers to the control of standards set to attain and to check the efficiency of strategies
and plans to avoid underestimation and overestimation of standards as both can cause deviation at the time of
comparison.
(b) Operational control –This aspect is related to controlling of operational activities, it finds out whether the
difference is due to inefficiency of managerial or other activities and then take suggestive measures.

Nature/Characteristics:
1. Goal oriented function-All the activities of the organisations are performed to attain the objective of the
organisation so controlling makes sure that the work is done as per the plan.
2. All pervasive/universal function-It is not only performed by top level management but at every level
middle as well as supervisory level and irrespective of type of organisation economic or non economic it is
performed.
3. Continuous function-This is not the function that is performed once or twice but it’s carried out regularly
like all other functions till the organisation survives.
4. Both backward looking as well as forward looking: (Important for 1 mark type )
-looking backward means assessment of actual performance and looking forward means taking corrective
measures to remove the deviations and achieving targets.

Importance: :(Important for 3 marks )

1. Helps to achieve organisational goal: This function measures the progress towards the goals of organisation
and ensures that all the activities take place as per the plan. If any deviation is find its rectified immediately to
bring back the work again on track. In this way it guides everyone to be on right path and to hit the target.
2. Judges the accuracy of standards: Using strategic control the accuracy of set standards can be checked .In
case of any difference standards can be revised time to time.
3. Helps to make efficient use of resources: When all the activities are performed according to the plan then it
reduces wastage of resources, avoids overlapping of activities and improves efficiency and in this way it
ensures efficient use of resources.
4. It improves employee’s motivation: A good controlling system helps the employees to know their targets
that are to be accomplished and they know very well that their performance will help them to grab the
opportunities in future so it motivates them to achieve their goals and improve the performance.
5. Ensures order and discipline: It helps to reduce the dishonest behaviour on the part of employees by
keeping a close check on their activities through CCTV or using other ways of monitoring. This maintains order
and discipline in the organisation.
6. Facilitates coordination in action: It provides directions to all the activities and efforts. It maintains
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coordination among various departments and the activities by making a balance between the objective and the
resources available.

Relationship between planning and controlling:

Both the functions are inseparable and are supplementary to each other. The relation between both is explained
in the following points;
1. Nature and concept. Planning is basic function that decides future actions in advance and controlling
ensures the work as per plan.
2. Planning and controlling are both dependent on each other. Planning and controlling are inter-
related to each other. Planning sets the goals for the organization and controlling ensures their
accomplishment. Planning decides the control process and controlling provides sound basis for
planning.
3. Both backward looking as well as forward looking- Planning is always for future so its forward
looking and before making new plans always past experiences are considered as a base so its backward
looking too.controlling looks backward means assessment of actual performance and looking forward
means taking corrective measures to remove the deviations and achieving targets.
4. Planning is prescriptive whereas controlling is evaluative. Planning involves intellectual process of
thinking but controlling evaluates overall desired actions are followed successfully or not.

Process of controlling: (Important for 4 marks type )

1. Setting –up of targets/standards: Standards are the parameters against which the actual output is compared.
This gives a base to the comparison so it must be achievable, time-bound and measurable. High or very high
standards can’t be achieved and low or very low can miss lead the organisation about the capabilities of
employees so in this case standards are of no use. As far as possible the standards must be set for short period
of time or can be bifurcated in short-terms so that it can be controlled easily. Where the measurement of work is
not possible in quantities then some qualitative standards must be set to check it.
2. Measuring actual performance: Then next step in this process is to measure the actual output after proper
evaluation. Qualitative standards are easily measurable but the quality should be never ignored to maintain the
quantitative standards.
3. Comparing actual and standard outputs: After the measurement of actual performance the comparison is
done between planned outputs and actual outputs. If no deviation is found then this function comes to an end
but in case of mismatch the causes of mismatch is located. Minor deviations can be ignored but if it’s major
then it must be paid proper attention immediately.
4. Analysing deviations: (important for 3/4 marks)
We have seen that after comparison we can find deviations. The deviations from the standards are assessed to
identify the acceptable range of deviations.
The deviations must be divided in two categories these are as follows:
(a) Critical Point Control: Control should focus on key result areas (KRAs) which are critical to the success
of an organization. These KRAs are set as the critical points and if any deviation is found in these critical
areas that must be seen urgently without any delay because its ignorance can cause a huge loss to the
organization.
(b) Management by Exception: Management by exception is often called as control by exception, is an
important principle of management control, based on the belief that an attempt to control everything results
in controlling nothing. In short, everything cannot be controlled at the same times so the deviations beyond
the specific range should only be handled by managers and minor can be ignored. Managers should save
their time and energy to find solutions of major deviations.
5. Taking corrective measures: The final step in the controlling process is taking corrective action. No

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corrective action is required when the deviation are within the acceptable limits. But where significant
deviations occur corrective action is necessary.
6. Getting the feedback: This process doesn’t end by taking corrective measures but after it the very important
step is taken by receiving the feedback. Here in this report the reasons of deviations or inefficiency and its
corrective measures are mentions so that in future this will help at the time of making plan of New Year.
(Acronym : SETh TArachand k MAP m Compass se ANA DEVI ka Temple FEEl kro control kro)
Meaning of Deviation: it means difference between standard output and actual output. It can be positive or
negative.
Positive deviation: standard output<Actual output
Negative deviation: standard output>Actual output

QUESTIONS:
Q.1. This concept of Control Management is based on the belief that if you try to control everything, you may
end up controlling nothing.
Ans. Management by exception

Q.2. Which two steps in the process of controlling are concerned with compelling events to conform to plan?
Ans. Step 1-Comparison of actual performance with standards. Step -2 Taking corrective actions.

Q3. Why is controlling considered to be a backward looking?

Ans. Controlling involves evaluation of past activities to find out deviations from standards so it is a backward
looking function.

Q.4. In a marketing firm, the Financial Manager pays more attention towards an increase of 3% in the
marketing cost as compared to a 15% increase in the courier expenses. Identify the concept being used by the
manager.
Ans. Critical point control

Q.5. Akash has set up a small business unit for the manufacturing of detergent. In order to market the detergent
in the local residential areas, he has appointed a team of ten salesmen. Each salesman is expected to sell at least
250 units of the detergent within 10 days. As per their performance they will be rewarded. Identify the point of
importance of controlling being highlighted in the above case.
Ans. It helps in improving employee’s motivation.

Q.6. Vandana runs a logistic company. The Tour In charges of each trip in the company are expected to submit
a report to the Event Manager on the completion of every trip. Identify the step in the controlling process being
described in the above lines.
Ans. Measurement of actual performance.

Q.7. In an artificial plants manufacturing unit, the standard output set for a worker is 50 units per day. Dinesh
produces 48 units in one day. What do you mean by the term ‘deviation’ and what is the value of deviation in
the given case?
Ans. it means difference between standard output and actual output and the value is Negative 2

Q.8. ‘Vinayaka Exports’ is a company involved in the export of indigenous food products like chutneys and
pickles and murrabbas. It has tied up with the small farmers in various states for sourcing of fruits and
vegetables. In this way it helps the small farmers to sell their produce at reasonable rates. The company follows
a practice where only significant deviations from a budget or plan are brought to the attention of management.
The degree of deviations allowed in different categories in the budget is well defined in advance, along with the
appropriate levels of managements who will respond to the deviations in question. For example, a deviation of
Rs. 20,000 or more in purchase costs will be reported to the concerned department manager.
In context of the above case identify the principle of management control adopted by the company. State the
belief underlying this principle.
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Ans. Management by exception is the principle of management control adopted by the company. It is based on
the belief that ‘if you try to control everything, you may end up controlling nothing.’

Q.9. You are the manager of Amazing Wives Ltd. it is reported to you that postal expenses have increased by
10% over standard rates and cost of raw materials has increased by 2%. Which of the two deviations will be
more critical to you?
Ans. Increase in cost of raw materials by 2% is more critical. (Critical Point Control)

Q. 10. Suraksha Ltd. produces safety pins on a mass scale. The company’s policy is that at most 25 of the daily
production could be defective. Over a three months period, it has been observed that 8% - 10% of the
production is defective. The cause of deviation found is defective machinery. What corrective action should be
taken by the management?
Ans. Repair the existing machine or replace the machine if it cannot be repaired.

Long answer type:

Q. 1. Bita Ltd. is engaged in manufacturing machine components. The target production is 250 units per day per
worker. The company had been successfully attaining this target until two months ago. Over the last two
months it has been observed that daily production varies between 200-210 units per worker.
1. Name the function of management and identify the step in the process of this function which helped in
finding out that the actual production of a worker is less than the set target.
2. To complete the process of the function identified in (a) and to ensure the performance as per set targets,
explain what further steps a manager has to take.
Ans. The management function is Controlling. “Comparing actual performance with standards” is the step
involved in the process of controlling which helped in finding out that the actual production of a worker is less
than the set target.
1. A manager has to take the following two further steps to complete the process of controlling:
1. Analysing deviations
2. Taking corrective action

Q. 2. Bikram has set up an export house after completing his masters in fashion designing. As the quality of the
garment depends on the quality of raw materials used, he assures that the fabric meets the requirements by
conducting a series of tests for the fabrics like shrinkage test, testing colour fastness to washing, colour fastness
to light, colour fastness to perspiration etc. through laboratory tests. Later on, at the production areas, fabric
inspection is also conducted by stopping the production process. The tests help to detect the deviations and also
take corrective action. Moreover, they ensure that complete training about production work was given to every
worker at the time of joining his export house. In context of the above case:

1. Identify the function of management being performed by Bikram by conducting tests to assure for the
quality of the garments manufactured in his export house.
2. Briefly explain the term ‘deviations.’
3. Give any three advantages of giving training to the employees.
Ans.1. Controlling is the function of management being performed by Bikram by conducting tests to assure for
the quality of the garments manufactured in his export house.
2. The term ‘deviations’ refers to the difference between the actual performance and planning
performance. If the actual performance is more than the planned performance, it may be said to be
positive in nature or vice-versa.
3. Mention three benefits of training of development to an organization

Q. 3. Good Luck ltd. is a large manufacturing unit. Recently, the company has conducted the ‘time’ and
‘motion’ studies and concluded that on an average a worker could produce 120 units per day. However, it has
been noticed that average daily production of a worker is in the range of 80-90 units.
Which function of management is needed to ensure that the actual performance is in accordance with the
performance as per ‘time’ and ‘motion ‘studies? State four features of this function of management.
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Ans. Controlling
Features of controlling:
1. Controlling is a goal-oriented function
2. Controlling is a pervasive function
3. Controlling is a continuous process
4. Controlling is both a backward looking as well as forward looking function.

Q. 4. Mani and Jay are good friends. They decide to set up a digital printing press together as both of them are
compute wizards. They plan to offer various types of printed products including labels, manuals, marketing
material, memo pads, business order forms, T-shirts, mugs etc. They set standards for every aspect of their
work in order to create an efficient working environment. As per the standards, an average person types
between 38 and 40 words per minute. Keeping this in mind, they engage two typists Bitto and Raju and assign
them work accordingly. Within two days, they realize the output in terms of typing work done by Raju is too
less as compared to the desired output. On inspecting, Mani finds out that Raju’s typing speed is between 18
and 20 words per minute only. But Raju exhibits great skills in designing work and is a good human being.
Hence, Mani and Jay decide to retain him for doing creative work and appoint a new typist.
In context of the above case:
1. Identify and explain the function of management being discussed here.
2. List the steps involved in the function of management as identified in part (a).
Also, quote the liens from the paragraph relating to each step.
Ans. 1. Controlling is the function of management being discussed here.
2. The steps involved in the process of controlling which are discussed in the above paragraph are:
1. Setting standards of performance:
2. Measurement of actual performance:
3. Comparison of actual performance with the standards:
4. Analyzing deviations:
5. Taking corrective action:

Q. 5. A company ‘Maple Leaf ’Ltd. is manufacturing mobile phones both for domestic Indian market as well as
for export. It has enjoyed a substantial market share and also had a loyal customer following. But latterly it has
been experiencing problems because its targets have not been met with regard to sales and customer
satisfaction. Also mobile market in India has grown tremendously and new player have come with better
technology and pricing.
This is causing problems for the company. It is planning to revamp its controlling system and take other steps
necessary to rectify the problems it is facing.
1. Identify the benefits the company will derive from a good control system.
2. How can the company relate its planning with control in this line of business to ensure that its plan is
actually implemented and targets attained?
3. Give the steps in the control process that the company should follow to remove the problems it is facing.
Ans.1. Explain the importance of controlling.
2. Company can relate its planning with control in this line of business by following measure by
implementing an effective controlling system and following a controlling process.
3. Explain steps in the process of controlling system.

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 CHAPTER-9
FINANCIAL MANAGEMENT
QUICK REVISION -(4,4 option)
POINTS TO BE COVERED AS PER CBSE BOARD EXAM:
 Concept, Role and objectives of Financial Management.
 Financial decisions: investment, financing and dividend decision And factors affecting
* Concept and importance of Financial planning.
* Concept and factors affecting Capital Structure.
* Concept and factors affecting Fixed and working capital requirement.

FINANCIAL MANAGEMENT * It may be defined as planning, organizing, directing and controlling the
financial activities of the organization.
* It is concerned with management of flow of funds and involves
* Decisions relating to procurement of funds(Financing decision)
* Investment of funds in long term and short term(Investment decision) and
* Distribution of earnings to the owners(Dividend decision).

ROLE OF FINANCIAL MANAGEMENT

 To determine the capital requirement of business (both long and short term)
 To determine capital structure of the company.
 To decide about allocation of funds into profitable avenues.
 To decide about appropriation of profits
 To exercise overall financial controls in order to promote liquidity,safety and profitability.
OBJECTIVES OF FINANCIAL MANAGEMENT
* WEALTH MAXIMISATION
* Profit maximization
* Safety of funds
* Efficient utilization of funds
* Meeting financial commitments

Financial Decisions : There are there types of financial decisions

1. Investment Decision
2. Financing Decision
3. Dividend Decision
INVESTMENT DECISION
It is concerned with investment of firm’s funds in different proposals on the basis of associated risk and
return. It can be categorized as:
1 CAPITAL BUDGETING DECISION/LONG TERM INVESTMENT DECISIONS
2 WORKING CAPITAL DECISIONS/SHORT TERM INVESTMENT DECISIONS

CAPITAL BUDGETING DECISIONS-relate to decision taken to invest in fixed assets.

These decisions are very crucial because:
(a) They affect the earning capacity of firm over the long run
(b) These decisions normally involve huge outflow of funds
(c) These decisions are irreversible except at a huge cost.
WORKING CAPITAL DECISIONS—relate to investment in current assets(like cash ,inventories,debtors etc)
*These decisions affect the day to day working,liquidity and profitability of the business.
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FACTORS AFFECTING :
1 CASH FLOWS OF THE PROJECT—when a firm takes an investment decision involving huge amount,
expected cash receipts and payments over the life of an investment should be carefully analysed.
2 RATE OF RETURN-The firm should compare the rate of return expected from different investment
projects.
3 INVESTMENT CRITERIA—Different types of ratio analysis should be done to evaluate the feasibility of
the proposed projects in the same industry.

##FINANCING DECISION---deals with determination of sources of finance, amount to be raised from each
source and the cost of each source of finance.(in order to decide a judicious mix of both debt and equity.
The main sources of finance are:
(i) Shareholders’or Owners’ Funds: They consist of equity capital and retained earnings.
(ii) Borrowed funds: They refer to finance raised as debentures or other forms of debt.

COMPARISON OF DEBT AND EQUITY

1 Interest has to be paid regardless of profit Shareholders do not expect any commitment
earned regarding the payment of returns.
2 There is some amount of financial risk in The floatation cost on raising equity capital is
debt financing high
3 The cost of debt is less than equity The shareholder expect higher returns for
assuming higher risks
FACTORS AFFECTING FINANCING DECISION:
(1) COST-the source of finance which involves the least cost should be chosen.
(2) RISK INVOLVED—in raising the debt capital is higher than equity
(3) Floatation cost—should also be considered while taking the decision
(4) CASH FLOW POSITION—if it is good, company can opt for debt else equity.
(5) BOOM IN CAPITAL MARKET—Then it is easy for the company to raise equity capital.
##DIVIDEND DECISION---involves (i) deciding the amount of profit to be distributed among shareholders
and(ii) the amount of profit to be retained in the business to meet investment requirements.
FACTORS AFFECTING DIVIDEND DECISION:
(1) EARNING-If earnings are high, dividend are paid at higher rate.
(2) GROWTH OPPORTUNITY-A company planning to pursue a growth opportunity is likely to pay lower
dividends
(3) TAX RATE—If tax rate is high, the company is likely to pay less dividend
(4) LEGAL CONSTRAINTS—should be considered at the time of dividend payment by a company.
(5) SHAREHOLDERS PREFERENCE-if they prefer regular income in the form of dividends, the company
is likely to maintain a dividend payout ratio.
##FINANCIAL PLANNING—is the process of (i) Estimating the fund requirement of a business and (ii)
Specifying the sources of funds
Keyword –Financial blueprint

TWIN OBJECTIVES OF FINANCIAL PLANNING:

(i) To ensure availability of funds as per the requirements of business.
(ii) To see that the enterprise does not raise resources needlessly.
IMPORTANCE OF FINANCIAL PLANNING
1 It ensures smooth running of business enterprise by ensuring availability of funds at the right time.
2 It helps in avoiding business shocks and surprises and improves the chances of financial success.
3 It helps in achieving coordination between various functions by providing clear policies and procedures.
4 It prevents duplication of efforts and gaps in planning by preparing detailed plans of action
5 It provides link between investment and financing decisions on continuous basis
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##CAPITAL STRUCTURE—refers to proportion of debt and equity used for financial business
operations.
#TRADING ON EQUITY/FINANCIAL LEVERAGE—raises the return(Earning per share) of equity
shareholders by making use of fixed cost securities(Debt) in the capital structure. It happens because:
 Cost of debt is lower than cost of equity for a firm as lender’s risk is lower than risk of shareholder.
 Interest paid on debt is a deductible expense for computation of tax liability whereas, dividend are paid
out of after tax profits.

Particulars Situation I Situation II Situation III

Total Funds 30,00,000 30,00,000 30,00,000
Capital structure
Equity 30,00,000 20,00,000 10,00,000
Debt Nil 10,00,000 20,00,000
EBIT 4,00,000 4,00,000 4,00,000
10% Interest on debt Nil (1,00,000) (2,00,000)
Earnings before Tax 4,00,000 3,00,000 2,00,000
30% Tax rate (1,20,000) (90,000) (60,000)
Earning after Tax 2,80,000 2,10,000 1,40,000
No. of shares 3,00,000 2,00,000 1,00,000
EPS 0.93 1.05 1.40
 DOES EPS ALWAYS RISE WITH INCREASE IN DEBT?
No, EPS does not always rise with increase in debt. It is possible only when
ROI> Cost of debt
If ROI < Cost of debt then EPS will fall with increased use of debt.

##FIXED AND WORKING CAPITAL

Fixed Capital—is the money invested in fixed assets, which is to be used over a long period of time.

Working capital—refers to that part of total capital, which is required for holding current assets.
1Nature of business Manufacturing-More Trading—Less working
working capital capital
2 Scale of operations Large Small
3 Business cycle Boom Recession
4Credit allowed Liberal policies-More Strict policies—Less
working capital working capital
5 Inflation High-more working capital Low working capital

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 QUESTION BANK
Q.1 Sunil Grover is working as a financial manager in ‘Amusement Production ltd’ Keeping in line with the
growth and expansion plan of the company, it has been decided to make an investment of Rs 100 crores. Out
of which Rs 20 crores will be required to meet the working capital requirements that will commensurate
with the project. It has been decided to raise the capital through an optimal mix of debt and equity to keep
the cost of capital and financial risk low. Moreover, it has been decided that 20% of the profit inflow from
the project will be distributed as dividends,
Identify and explain the three major decisions relating to the financial management which are being
mentioned in the above paragraph
Ans Investment, financing and dividend decision will be explained in these.

Q.2 Explain any four factors that can affect the working capital requirements of company.
Ans Factors such as Cash flow position, ICR, Cost of debt, flexibility etc

Q.3 How the return on equity can be increased by including debt in capital structure?
Ans Concept of trading on equity with example will be discussed here

Q.4 A sound capital budgeting decisions may have profound effect on the fortune pf a business. Explain
Ans Points like Long term growth and effects, Large amount of funds Involved, Risk involved, Irreversible
decision will be discussed

Q.5 Aakriti has decided to set up a designer studio in a posh market in Udaipur. Through a survey she has
assessed that the level of competition in this segment Describe briefly any four factors which Aakriti has
not assessed so as to likely affect her pricing decisions.
Ans Factors---Product cost, Govt and legal regulations, Marketing methods used, Extent of competition in
the market will be discussed here.

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 CHAPTER-10
FINANCIAL MARKETS

QUICK REVISION-(1(4),3(1 with option)

MEANING—It is a market for the creation (new issue of securities) and exchange (sale of existing securities)
of financial assets
PURPOSE---It serves as an intermediary between the surplus sector(households which have savings) and
deficit sector(business firms which needs funds).
FUNCTIONS:
1 It performs allocative function by mobilization of savings and channelizing them into the most productive
avenues.
2 It helps to determine the price for the financial assets through the market forces of demand and supply.
3 It provides liquidity to the financial assets by providing ready markets
4 It provides a common platform for exchange of securities resulting in reduction of cost of transactions by
saving time,efforts and money spent in locating buyers and sellers
TYPES/SEGMENTS OF FINANCIAL MARKET:
1 MONEY MARKET
2 CAPITAL MARKET

MONEY MARKET
(a) It is a market for short term funds (whose maturity period is upto one year)
(b) The instruments in money market carry low risk as the expected return is low on them.
(c) Since the cost of securities may be high,investments in the money market may require huge capital
outlay.
(d) The main participants are RBI,COMMERCIAL BANKS,MUTUAL FUNDS
(e) It has no physical location but is an activity conducted over the telephone and through the internet.
Instruments of Money Market- Call Money, Treasury Bills, Commercial Paper, Certificate of Deposits,
Commercial bill
CAPITAL MARKET—It refers to facilities and institutional arrangements through which long term funds,
both debt and equity are raised and invested.
FEATURES OF CAPITAL MARKET:
(1) It is a market for long term funds(equity shares, preference shares, debentures ,bonds etc)
(2) The main participants in capital market are development banks, commercial banks and stock exchanges.
(3) Since the cost of securities may be low, investment can be made in the capital market with less capital
(4) The securities in capital market enjoy good liquidity.
(5) The instruments in capital market carry high risk as the expected return on them is high.

TYPES OF CAPITAL MARKET:

(1) Primary Market
(2) Secondary Market
##PRIMARY MARKET—It is also known as NIP (new issue market) as the securities are issued for the first
time by the companies through this market.

Method of floatation in primary Market-

Offer through prospectus, Offer for sale, private placement, E-IPO, Right Issue

FEATURES:
(1) Only buying of securities takes place
(2) Prices of the securities are determined by the company
(3) It involves dealings between the company and the investors
(4) There is no fixed location of primary market.

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 (5) Funds raised may be used for setting up new projects, expansion, diversification, modernization of
existing projects, mergers and takeover etc.
#DIFFERENCE BETWEEN CAPITAL MARKET AND MONEY MARKET
Basis Capital market Money Market
Duration It is a market for long term funds It is a market for short term funds
Participants Banks, Financial institutions, corporate Institutional investors
bodies
Investment outlay Since the cost of securities may be low, Investment in the money market
investment can be made in the capital requires huge capital outlay
market can be done with less capital
Liquidity The securities in capital market enjoy The securities in money market enjoy
good liquidity high liquidity as The Discount Finance
House of India (DFHI)works as a
compulsory market maker
Risk and Return The instruments in capital market carry The instruments in money market carry
high risk as the expected return is high on low risk as the expected return is low
them. on them.

##COMPARATIVE TABLE OF PRIMARY AND SECONDARY MARKET

S.No Primary Market(New Issue Market) Secondary market(Stock Exchange)
1 There is sale of securities by new companies or There is trading of existing shares only
new issues of securities by existing companies to
investors
2 Securities are sold by the company to the Ownership of existing securities is
investors directly or through an intermediary exchanged between investors.
3 The flow of funds is from savers to investors i.e It promotes capital formation indirectly.
it directly promotes capital formation
4 Only buying of securities takes place,securities Both buying and selling of securities can
cannot be sold there take place on the stock exchange.
5 Prices are determined and decided by the Prices are determined by demand and supply
management of the company. for the security
6 There is no fixed geographical location. Located at specified places.

##STOCK EXCHANGE
According to Securities Contracts (Regulation ) Act,1956,”Stock Exchange means any body of individuals,
whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of
buying and selling or dealing in securities”

#FUNCTIONS OF STOCK EXCHANGE

(1) Ensures liquidity and marketability of existing securities by providing a ready market.
(2) Helps in determining the prices of the securities through the forces of demand and supply.
(3) It promotes the habit of saving and investment among the general public.
(4) It provides a legal framework for fair and safe dealings
(5) It provides scope for healthy speculation.
#DEMATERIALISATION—refers to the process of holding securities in electronic form.
#Depository—is the organization with which an investor has to open a D-Mat account to hold securities in
electronic form.

#STEPS IN THE TRADING AND SETTLEMENT PROCEDURE

STEP 1—The investor approaches a registered broker or sub broker for trading

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 The investor has to sign a broker-client agreement and a client registration form(furnishing details
and mandatory information about himself).
After completion of the above formalities, the broker opens a trading account in the name of the investor.
STEP 2—The investor has to open a demat account with a depository participant and bank account for
trading transactions in cash.
STEP 3—The investor then places an order to buy or sell shares with the broker by giving clear instructions
about desired quantity and price.
The broker will issue an order confirmation slip to the investor.
STEP 4—The broker will then execute the order through screen based trading by considering the best
available deal.
STEP 5—The broker will issue a trade confirmation slip to the investor.
STEP 6—Within 24 hrs after the deal is executed the broker issues a contract note.(legal document used to
settle claims between investor and broker.)
This contract note includes unique order code for that transaction.
STEP 7—Since the settlement cycle is T+2 therefore, within two days of receiving the Contract note, the
investor has to pay cash or deliver shares sold.
The broker can then forward it to the exchange. This is called pay-in-day.
STEP 8—On the T+2 day, cash will be paid or shares by intermediaries
will be delievered as the case may be by the exchange to the other broker. This is called pay-out day.
STEP 9—In case of purchase of securities, the amount will be transferred electronically to the investor’s
demat account.

##SECURITIES AND EXCHANGE BOARD OF INDIA(SEBI)

*It is the regulator for the securities market in India.
*It was established in the year 1988 by the Government of India.
* It was to function under the overall administrative control of Ministry of Finance of the Government of
India.
#OBJECTIVES OF SEBI
(1) To prevent trading malpractices in the securities market.
(2) To protect the rights and interest of investors
(3) To regulate and develop a code of conduct and fair practices .
(4) To regulate stock exchanges and the securities market to promote their orderly functioning.
#FUNCTIONS OF SEBI
1 PROTECTIVE FUNCTIONS
(a) SEBI prohibits fraudulent and unfair trade practices in the securities market.
(b) Promotion of fair practices and code of conduct in securities market.
(c) Undertaking steps for investor protection.
(d) Controlling insider trading and imposing penalties for such malpractices.
2 DEVELOPMENTAL FUNCTIONS
(a) Ensuring training of intermediaries of securities market.
(b) Conducting research and publishing useful information .
(c) Facilitating flexibility in the working of capital markets.
3 REGULATORY FUNCTIONS
(a) Registration and regulation of brokers, sub brokers in the financial market.
(b) Registration of collective investment schemes and Mutual Funds
(c) Conducting enquiries and audits of stock exchanges
(d) Regulation portfolio exchanges, underwriters and dealing in the stock exchanges.
Regulation of take over bids by the companies.

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 QUESTION--BANK
Q.1 Financial market_______ financial assets.
(a) Creates (b) Exchanges
© Creates and exchanges (d) None of the above
Ans ( c)
Q.2 Money market deals in_____ securities
A. Short Term
B. Long Term
C. Both
D. None of Above
Ans. A
Q.3 SEBI can call for information by undertaking inspection, conducting enquiries and audit of stock
exchanges and intermediaries. Identify the related function of SEBI.
Ans Regulatory function

Q.4 K Ltd is planning to raise an issue of 3,000 non convertible debentures of face value of Rs 10 lakh
aggregating Rs 300 crore through private placement Name the type of financial market being approached by the
company.
Ans Secondary market

Q.5 The index of NSE is called _____________

A. INDEX
B. NIFTY
C. SENSEX
D LISTING
Ans -B

Q.6 Describe briefly the classification of financial markets

Ans Capital and Money market ,further classified into Primary and Secondary market

Q.7 Name the document prepaid in the process of online trading of securities i.e legelly enforceable and help to
settlement disputes between the investor and the broker.
Ans – Contract note

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 CHAPTER-11
Marketing Management
QUICK REVISION
Marketing Management: - It deals with planning, organizing and controlling the activities related to the
marketing of goods and services to satisfy the consumer‘s wants. Its aim to achieve the organizational goals at
minimum cost by: -Analysing and planning marketing activities, implementing the marketing plans, setting
control mechanism, marketing management philosophy/Concept, product concept, production concept, selling
concept, marketing concept and social concept.

FEATURES OF MARKETING
Need and want: A need is state of deprivation i.e., lack of something say when we feel hungry food becomes
our Need. A Want is culturally defined object which satisfies the Need. Like, need for food can be satisfied by
Roti or Rice depending upon culture, mood etc. The job of a marketer is to identify the need and develop
products to satisfy the need of the customer.
Creating a market offering: it means offering a product or service by specifying its features shape size,
colours etc.
Customer value: it means adding the value to the product to satisfy the need of the consumer. Like, adding
new pocket to carry a bottle in a design of school bag.
Exchange mechanism: The process of marketing involves exchange of products and services for money or
money’s worth. It has four dimensions. A) presence of at-least two parties. B) both parties must have something
viewed valuable by each other. C) both parties are free to accept or reject the offer. D) each party feels desirable
to deal with the other.

Functions of Marketing:-
a) Gathering and analysing market information (market research)
b) Marketing planning
c) Product planning development
d) Standardization and grading
e) Packaging and labelling
f) Branding
g) Customer support services
h) Pricing of products
i) Promotion & Selling
j) Physical distribution
k) Transportation
l) Storage and warehousing.51

Marketing Management philosophies:-

1. Production Concept: - Some companies believe that it is easy to sell the products when products are
inexpensive and are easily available. So the firms following production concept focus on lowering the cost of
production by means of mass production and distribution but the drawback of this concept is that customers
don‘t always buy products which are inexpensive and available.
Main Focus: Large-scale production to decrease the cost.

2. Product concept:- Product concept stresses on quality of production rather than quantity of production.
Product improvement is considered the key to success under it.
Main Focus: Good quality, added features in product.

3. Selling Concept:- Selling concept believes that in order to make a customer buy a product he or she
need to be convinced and customers can be convinced by undertaking some aggressive selling and
promotional efforts.
Main Focus: To sell whatever is produced by using intensive promotional technique.

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4. Marketing Concept: - Marketing concept concentrates on the need of the customers. The concept
says that product should be designed and produced keeping in mind the need of the customer and try to
satisfy the need better than the competitor‘s product.
Main Focus: Customer satisfaction.

5. Societal concept: - Marketing concept is satisfying the need s of customers in the best possible
manner but then also it has attracted criticism from people who are concerned about society and
environment. They argue that companies should not blindly follow the goal of customer satisfaction.
Main Focus: Customer satisfaction with in ethical and ecological boundaries of our society

Marketing Mix
Marketing mix refers to the ingredients or the tools or the variables which the marketer mixes in order to
interact with a particular market.

Elements of Marketing Mix:

Product + Price + Place + Promotion = Marketing Mix.
A. PRODUCT: - The product element of the marketing mix signifies the tangible or intangible product
offered to the customer which is the satisfier of the need. Product is a bundle of utilities.
Product Mix:-Product mix includes all those decisions related to the product such as quality, design,
packaging of product etc.
Important components of Product Mix:-
(i) Branding: - Branding is the process of giving a name of or a sign or a symbolto a product. Such as
Polo, LG, Nike, Sony etc.

ASSOCIATED TERMS WITH BRANDING

• Brand: A brand is the identification of a product. It can be in form of name, symbol, design or
combination of all. For example, Surf, Dettol etc.
• Brand mark: The part of brand which cannot be spoken but can be recognized is known as Brand
Mark. For example, Pepsi’s Red and Blue Ball.
• Brand name: The part of brand which can be spoken is called Brand Name. in the other words we can
say that it is the verbal part of Brand.
• Trade mark: A part of brand which is given legal protection. No other business can use this part.
Qualities of a good brand name:-
a) Brand name should be short & Simple, so that anyone can remember, spell it.
b) Brand name should be easy to pronounce.
c) Brand name should be suggestive i.e. must suggest the utility of the product eg, Hazmola
d) Brand name should be unique and distinctive.
e) Brand name should be selected after considering its meaning in other languages and cultures.
Advantages of branding:
a) It helps in product differentiation.
b) It helps in advertising the product.
c) It helps in differential pricing.
d) It helps in introducing a new product.

Packaging:- Packaging is a set of tasks or activities which are concerned with the designing,
production of an appropriate wrapper, container or bag for the product.

Levels of Packaging:–
a) Primary Packaging:-It refers to the product‘s immediate container, Like-toothpaste tube.
b) Secondary Packaging: - It refers to the additional package, which provides additional layer
protection to the product. Like- Card board box for toothpaste.
c) Transportation Packaging:-These are packaging‘s used for storing or transporting the goods. Like
corrugated boxes used to shift Ruffle Lays etc.

Functions of packaging:- It helps in Product identification, Product protection, Facilitating use of the
Product ,Product promotion, Convenient to store, Rising standard of health and sanitation etc.
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Labelling: - Labelling means putting identification marks on the package. Label is the carrier of information.
Label performs following functions:-
a) It helps in describing the product and specify its contents.
b) It helps in identify the product among all products.52
c) It helps in grading the product.
d) It helps in promoting sales
f) It helps in providing information required by law/legal requirement.

B. PRICE: - Price is the value which a buyer passes on to the seller in lieu of the product or service provided.

Price Mix:–It includes all those factors which are considered while fixing the price of a product.

The factors kept in mind while fixing the price of a commodity or services:-
1. Pricing objective:-What is the objective of firm as a very important factor which helps in deciding the
price. Apart from profit maximisation, the pricing objective of a firm may include:
a) Price Maximization, b)Obtaining market shares, c) Surviving in a competitive market etc.
2. Product cost:-The price of the product must be able to cover the total cost of product.
3. Extend of competition in the market: - A firm fixes price of a product as per the competition faced by
them.
4. Customer’s demand and utility: - When demand of the product is inelastic i.e. no or very less
substitutes are available then company can fix up high price.
5. Government and legal regulations: - To protect the interest of general public, the government has all
the right to control the prices of various products and services by including the products in the category
of essential commodities.
6. Marketing methods used:-The price of the product also gets affected by various techniques of method
of marketing used to promote the products.

c. PHYSICAL DISTRIBUTION
Place Mix: refers to important decision related to physical distribution of goods and services. These decisions
are deciding the (I) channels of distribution and (ii) physical movement of goods.
Channel of distribution: refers to the people of middlemen who help in distributing the goods. These are the
firms and individuals who help in transferring the goods from place of manufacturing to place of consumption.
The common types of channels of distributions are Wholesaler and Retailer.

Components of distribution channels:

1) Sorting and grading: i.e., repack them according to quality size or prize.
2) Accumulation: middlemen maintain a large stock of goods so that there is smooth supply of goods.
3) Variety: Middlemen maintain variety of goods. They procure goods from various manufacturers and
assemble them at one place.
4) Packing: Generally, middlemen buy the goods in bulk and then they repack them in small lots.
5) Promotion: middlemen also offer some sales promotional tools to attract the customers.
6) Risk taking: Middlemen maintain large stock of goods they transport goods, transport from one place to
other then middlemen bear the risk of spoilage or damage of goods.

Types of distribution level

1. Zero level/ Direct Level: it is a case when firms sell their product directly to customers without
adopting any intermediary. It may include: sales by salesmen, mail order house, through internet,
teleshopping.
2. One level channel: in this only one intermediary is adopted i.e. The retailer. Firms supply the product
to retailer who sells the product direct to customer.

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 3. Two level channels: This is most commonly used distribution path where two intermediaries are
adopted by firms to sell the products i.e., the wholesaler and retailer. The manufacturer sells the goods
to wholesaler who sells in small lot to retailers who supply it to ultimate customer.
4. Three level channels: In this path one more middleman is added so there are three intermediaries
involved, these are distributors, wholesalers and retailer. When products are distributed in deep corners
of the country then distributors are appointed are wise.

D. PROMOTION:-It is concerned with activities that are undertaken to communicate with customers &
distribution channels to enhance the sales of the firm.
Promotion Mix: - Promotional techniques are used to create product awareness amongst the potential
target customers and persuade them to purchase the product. Like- advertising, personal selling, publicity and
sales promotion etc.
Elements of Promotion Mix-
1-Advertising,
2-Personal Selling,
3- Sales Promotion and,
4-Public relations.
1. Advertising:- It is defined as any paid form of non-personal presentation and promotion of
ideas, goods or services by an Identified Sponsor.
Merits of Advertising:-
a) Mass Reach b) Expressiveness
c) Economical d) Enhancing customer satisfaction & confidence.-
2. Personal Selling: - It means selling personally. This involves face-to-face interaction between seller
and buyer for the purpose of sale.
3. Sales promotion: - It refers to short term use of incentives or other promotional activities that
stimulate the customer to buy the product.
4. Public relations: - Public relations means maintaining public relations with public. By maintaining
public relations companies create goodwill. Examples- news, speeches by corporate leaders, organizing events
like sports Events, concerts, seminars etc.

CASE STUDIES:
Question 1.
Shyam bought a pain relieving ointment after seeing it being displayed in the chemist‘s shop. The
ointment tube was packed in card board box. Identify the different levels of packaging of the pain
relieving medicine, when it was purchased by Shyam. Also state the functions of packaging.
Ans:-
Different levels of packaging of the pain relieving medicine are:
Ointment tube; Primary packaging
Cardboard box: Secondary packaging
Functions of Packaging (any Three)
(i) It helps in product identification.
(ii) It helps in protection of the product from spoilage, breakage, leakage, damage etc.
(iii) It facilitates use of the product to the consumers through appropriate sizes and shapes.
(iv) It helps in promotion of the product as a good package attracts the attention of the people at the
time of purchase.

Question 2.
An important task in the marketing of goods relates to designing the label as it provides useful and
detailed information about the products‖. In the light of this statement, draw a label for ―Tea‖ and
highlight the important information to be provided on it.
Ans: Student must give information such as- MRP, Date of manufacturing, Date of expiry, Brand
name, Batch no.., Contents, etc. on label.
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Question 3.
Various tools of communication are used by the marketers to promote their products.‘
(i) Why do companies use all tools at the same time?
(ii) Name and explain the most commonly used non-personal tool of promotion which is paid for by the
marketer.
(iii) Which tool of promotion will primarily be used for the following?
(a) To promote or protect a company‘s image or its individual products.
(b) An existing product meant for mass usage buy literate people.
(c) To introduce a new product to a particular class of people through door-to-door visits.
(d) To attracts attention of the people by using incentives.
Ans:
(i) Synergy in Total Promotion Efforts.
(ii) Advertisement.
(ii) (a) Public Relation (b) Advertisement
(c) Personal Selling (d) Sales Promotion

Question 4.
ITC started its business with Jobaico industry, later on its entered in hotel industry, consumer goods industry,
stationery, etc. ITC assured quality to customer and kept company‘s name as its identity. This helps the
customers in product identification and hence ensure quality it also built up their confidence and help in
increasing their level of satisfaction.
(i) Name the element of marketing mix referred in above para.
(ii) Name the other element of marketing mix.
(iii) Name the concept which assure quality and help in identification of product.
Ans: (i) Product Mix
(ii) Other element: Price mix, Place mix.
(iii) Concept which help in identifying the product and assure quality is branding

1. What is marketing? What functions does it play with process of exchange of goods and services?
Explain.
Ans: Marketing is a total system of business activities designed to plan, price, promote and distribute want
satisfying goods and services to present and potential customers. Marketing is concerned with exchange of
goods and services from producer to consumers which involves many activities.
(i) Gathering and Analysing Market Information
This is done to identify the needs of the customers and take various decisions for the successful marketing of
the products and services.
(ii) Marketing Planning
Another important activity or area of work of a marketer is to develop appropriate marketing plans, so that the
marketing objective of the organisation can be achieved.
(iii) Product Designing and Development
The design of the product contributes to make the product attractive to the target customers.
A good design can improve performance of a product and also give it a competitive advantage in the market.
(i) Standardisation and Grading
Standardisation refers to producing goods of predetermined specification which helps in achieving uniformity
and consistency in the output which reduces the need for inspection, testing and evaluation of the products.
Grading is the process of classification of products into different groups, on the basis of its features such as
quality, size etc. It ensures that goods belong to a particular quality helps in realising higher prices for high
quality output.
(ii) Packaging and Labelling
Packaging refers to designing the package for the products. Labelling refers to designing the label to be put on
the package. Packaging provides protection to the product and also helps in its promotion. Labelling helps in
self service.
(iii) Branding
Brand names help in creating product differentiations i.e., how the product can be distinguished from its
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competitors.
(iv) Customer Support Service
Marketing management relates to developing customer support service such as after sales services, handling
customer complaints. All these aim at provides customer satisfaction which is a key to marketing success.

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 CHAPTER-12
CONSUMER PROTECTION
QUICK REVISION

Consumer Protection
● Consumer protection refers to safeguarding consumers from manufacturersor sellers that engage in
anti-consumer trade activities.
● Earlier Approach
The previous approach was of ‘caveat emptor’, which literally translates to "let the buyer beware."
● Present Approach
However, presently the approach is of ‘caveat venditor’, which literally translates to "let the seller beware."
● Exploitative and unfair trading practices, such as defective and dangerous items, adulteration, false and
misleading advertising, hoarding, and black- marketing, expose consumers to dangers. As a result,
effective consumer protection against such acts is required.
Importance of Consumer Protection
A. From Consumer’s Point of View
1. Consumer Ignorance: The majority of consumers are unaware of their rights and remedies, and as
a result, they are constantly exploited. Consumer protection is required to protect consumers from
such exploitative practices.
2. Widespread Exploitation of Consumers: Consumers are abused on a huge scale through a variety
of unfair trade practices, and consumer protection is necessary to safeguard them.
3. Unorganized Consumers: Consumers in India are still unorganised, and there are few consumer
organisations that would advocate for them.

B. From Business Point of View

1. Business utilises societal resources: Every business utilises societal resources, and it is their job to
operate in the society's best interests.
2. Long-term business interests: It is in the business's best interests to keep its customers happy.
Customers must be satisfied in order to win the global competition. Satisfied consumers lead to
repeat purchases, which helps to expand the company's customer base.

3. Government Intervention: If a firm engages in any type of unfair commercial practices, the
government will take action against it, harmingthe company's reputation.
4. Social Responsibility: A business has social duties to a variety of stakeholders, including owners,
employees, the government, and customers. As a result, shoppers should be able to purchase high-
quality goods at affordable pricing.
5. Moral Justification: Any firm has a moral obligation to behave in the best interests of its
customers and prevent exploitation and unfair trade practices such as faulty and unsafe products,
adulteration, false and misleading advertising, hoardings, black marketing, and so on.

The Consumer Protection Act, 2019

● The Consumer Protection Act of 2019 aims to safeguard and promote consumers' interests by resolving
their complaints in a timely and cost- effective manner. It came into force on July 20th 2020.
● It covers the entire country of India, except the State of Jammu and Kashmir..
● It applies to all types of enterprises, whether they are manufacturers or traders, and whether they sell
goods or services, including e-commerce companies.
● The Act gives consumers specific rights in order to empower them and defend their interests.

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Scope of the Act
The scope of this act is broad and covers a wide range of activities. This act covers all the undertakings;
● Both large and small scale undertakings.
● All three sectors are covered, namely private, public, and cooperative.
● It is applicable to e-commerce companies as well.
● It is applicable to whole of India.
● All goods, services and trade practices are a part of this act, until specifically exempted.

Consumer
A consumer is defined as someone who buys or receives consumer goods or services against a payment. It
includes anyone who benefits from such services, but it excludes anyone who uses such services for financial
gain.
Under the Consumer Protection Act 2019, a consumer is a person who buys anygoods or avails services for a
consideration, which has been paid or promised, or partly paid and partly promised, or under any scheme of
deferred payment.

Consumer Rights
1. Right to Safety: Consumers have the right to be safeguarded against items and services that are
harmful to their health and well-being. The consumers are righteous to get quality products, and they
can also demand quality assurance from the seller for the same. Such as ISI, FPO, AGMARK,
Hallmark etc are quality marks for industrial items, food products, agricultural products, gold
respectively.
2. Right to be Informed: Before purchasing a product, the consumer has the right to get complete
information about it, regarding the quality, quantity, ingredients, purity, price etc.
3. Right to Choose: Consumers have the right to choose any product from the available options based on
their own preferences. Hence no seller has the right to influence the consumer into purchasing a certain
product through unacceptable means
4. Right to Seek Redressal: If a product or service fails to meet the consumer's expectations or is
dangerous, the consumer has the right to seek redressal. The consumer may be entitled to a
replacement or repair of the problem, aswell as reimbursement for any losses.
5. Right to Consumer Education: Consumers have the right to learn and be well-informed throughout
their lives. He should be informed of his rights and remedies in the event that the goods or service does
not meet his expectations. The Indian government has integrated consumer education in school
curriculum and is using the media to educate consumers about their rights. For example, efforts like
Jaago Grahak Jaago is one such measure toeducate the consumers
6. Right to be Heard: The consumer has the right to provide his opinion regarding the product and
services, as well as he has the right to to be heardin such cases. Hence the consumer has a right to file a
complaint if he thinks that his rights have been violated. Also various consumer cells have been opened
up in India so as to provide them the right to be heard.

Consumer Responsibilities
Consumers have the following responsibilities:
● Be knowledgeable: Be knowledgeable about the numerous items on the market so that you can make
an informed and educated decision.
● Standardised products: Purchase just standardised products to ensure quality. Look for the ISI mark
on electrical goods, the FPO label on food products, and the Hallmark on jewellery, among other
things.
● Follow Instructions: Follow the product's instructions and learn about the hazards linked with it, then
use it safely.
● Cautious Purchasing: Carefully read labels for information on prices, net weight, manufacturing,
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 expiration dates, and so on.
● Assert Yourself: Assert yourself to guarantee that you obtain a fair bargain, and fair price of the
product.
● Honesty: Be truthful in interactions and buy only legal goods and services, thus discouraging buying
from sellers who follow unethical methods such as black marketing and hoarding.
● Cash Memo: When purchasing products or services, request a cash memo. This will serve as proof of
the transaction.
● Consumer Societies: Establish consumer societies that will actively participate in consumer education
and protection.
● Take action whenever needed: In the event of a defect in the quality of items purchased or services
received, file a complaint with an appropriate consumer forum. Even if the sum involved is modest,
don't hesitate to take action.
● Avoid Littering: Respect and value the environment, and avoid any activitythat would adversely affect
it.

Redressal Under the Consumer Protection Act

a. Who can file a complaint under CPA, 2019
● a consumer; or
● any voluntary consumer association registered under any law for the time being in force; or
● the Central Government or any State Government; or
● the Central Authority; or
● one or more consumers, where there are numerous consumers having the same interest; or
● in case of death of a consumer, his legal heir or legal representative; or
● in case of a consumer being a minor, his parent or legal guardian;

b. Against whom a complaint can be filed?

● In case of any defective good supplied, a complaint can be filed against the manufacturer or seller or
dealer.
● For any deficient services rendered, a complaint can be filed against the provider of services.

c. Redressal Agencies
As per Consumer Protection Act, 2019, The statute establishes a three–tiersystem for resolving consumer
complaints, as follows:

District Commission Complaints upto 1 crore

State Commission Complaints exceeding 1 crore,but

upto 10 crores

National Commission Complaints exceeding 10 crores

A. District Commission
The state concerned establishes district forums in each district. Thefollowing are the key
characteristics:
● It is made up of a President and two members, one of whom must be awoman, who are officially
nominated by the state government.
● The value of consumer complaints should not exceed Rs. 1 crore.

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 ● Upon receiving the complaint, the district forum shall forward it to theopposing party and submit
the items or sample to a laboratory for testing.
● If the district forum determines that the goods are defective or thatthere has been unfair
trading practices, the opposite party may be
ordered to repair or return the items or pay compensation. If any of theparty is not satisfied with
the district forum's decision, they have 45 days to file an appeal with the state forum from the date
of order.

B. State Commission
The government establishes a state commission in each state. Thefollowing are the key
characteristics:
● Each commission has a president and at least two members appointedby the state government,
one of whom should be a woman.
● The total worth of the products or services, including the compensation sought, is greater than
Rs. 1 Crore but less than Rs. 10 crore.
● Upon receiving a complaint, the state commission may submit the matter to the opposing
party and send the items to a laboratory forexamination.
● After being satisfied, the state commission might require the other party to replace, reimburse,
or pay compensation. If any of the partiesis not pleased with the judgement, they can file a
complaint with the national commission within 30 days of the order being issued.

C. National Commission
Central government sets the National commission. The provisions are:
● It is made up of a President and at least four members chosen by thecentral government, one of
whom should be a woman.
● All complaints relating to products and services with a compensation value above Rs. 10 crore
can be filed with the national commission.
● When the national commission receives a complaint, it can also refer it to the opposing party and
send items for testing.
● The National Commission has the authority to issue orders for product replacement and loss
compensation, among other things.
● If any of the parties is not pleased with the decision taken, they can file a complaint with the
Supreme Court of India within 30 days of the orderbeing issued.

d. Reliefs Available To The Consumer

● Removal of flaws in the goods.
● Removal of the deficiencies in the services.
● Replacement of damaged goods with new ones that are free of flaws.
● Refunding the complainant for the price paid by him.
● Payment of an appropriate amount of compensation for any loss or injurythat has occurred.
● In suitable circumstances, payment of punitive damages.
● Discontinuance or abandonment unfair/restrictive trade practices.
● Discontinuance of the sale of hazardous goods and services.
● Payment to the consumer welfare fund (not less than 5%) which is to beused in the prescribed
manner.
● Run corrective advertisements to counteract the effect of misleadingadvertisements.
● Reimburse all parties for their expenses.
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 Role of NGO’s and Consumer organizations:
There are a number of NGO’s and consumer organizations active in India who are working for
consumer protection. Their roles involve:
● Raising awareness of consumer rights among the general public.
● Educating consumers through periodicals and other publications.
● Providing consumers with legal help, such as legal counsel.
● Filing complaints on behalf of consumers in competent consumer tribunals.
● Inspiring consumers to take action against unfair business practices.
● Taking the initiative to file cases on behalf of consumers in consumer courts.

Case Studies:-
QUESTIONS
1. Anita buys a packet of dry cake from a cake shop without asking for the bill. The pack does not bear any
information other than the name of shop. After reaching home she finds the cake to be stale. (a) Identify the
consumer right that has been violated. (b) Explain any one consumer right other than identified in point (a). (c)
State any three responsibilities that a consumer must keep in mind while purchasing any good.
(5)
Ans. (a) Right to Information (b) Any one consumer right other than ‘Right to Information’ (c) Consumer
Responsibilities (State any three)

2. Bhavya visited his friend, Raghav. On his returning from Raghav’s home, Raghav booked a taxi for Bhavya from
‘Ganga Travels’. The taxi driver drove UBAR Co. car very fast and his behaviour was rude with Bhavya. Bhavya
told about this to Raghav who in turn complained to the proprietor of ‘Ganga Travels’.
(a) Can Raghav file a complaint against UBAR Co.? Give reason.
(b) Can Bhavya file a complaint against UBAR Co.? Give reason.
(c)Can Ganga travels file a complaint against UBAR Co.? Give reason. (3)
Ans.
(a) Yes, Raghav can file a complaint against UBAR Co. since he is a ‘consumer’ as per the definition of a
‘consumer’ under the Consumer Protection Act, 2019. A consumer includes “any beneficiary of such services with the
approval of the person concerned….”
(b) Yes, Bhavya can also file a complaint against UBAR Co. since he is a ‘consumer’ as per the definition of a
‘consumer’ under the Consumer Protection Act, 2019 “A consumer is any person who hires or avails of any services for a
consideration, which has been paid or promised, or partly paid and partly promised, or under any system of deferred
payment.”
(c)No, ‘Ganga Travels’ cannot file a complaint against UBAR Co. since it is not a consumer as per the
definition of a ‘consumer’ under the consumer protection Act, 2019- “A consumer does not include any person who avails
of such services for any commercial purposes.”

3. Archana is a pure vegetarian. She went to a popular food chain shop and asked for a packaged ‘Veg-Biryani’.
While eating the same she noticed that it had some nonvegetarian content. Neither the advertisement nor the label
on the package showed that the product had non-vegetarian content. Identify and explain the consumer right
which Archana can claim for compensation as per the provisions of Consumer Protection Act, 2019.
(3)
Ans. Right to seek redressal (Explain)
4. Sudhanshu saw a weight reducing electric machine advertisement on the television. He purchased it and decided
to use it. The moment he plugged the machine he got an electric shock. As a result he died instantly. His relatives
suggested Vedant, Sudhanshu’s son to file a case claiming compensation of ₹50 lakh. (a)Who can file a case
against the company? (b)Where should the complaint be filed and why? (3)
Ans. (a) A complaint in a consumer court can be filed by Vedant, legal heir or representative of the deceased
consumer, Sudhanshu or any registered consumers’ association, etc.
(b)The complaint can be filed at the District Commission since the amount of compensation claimed does not
exceed ₹1 crore.
5. Anchal purchased a food processing machine for ₹10,000 from ‘Kajal Machinery Pvt. Ltd.’ She found that the
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machine was not working properly. Despite many complaints, the defect was not rectified by Kajal Machinery Pvt. Ltd.
(a)Identify the consumer right that has been violated by Kajal Machinery Pvt. Ltd.
(b)Suggest the appropriate Consumer Disputes Redressal Commission (CDRC) where Anchal can file her complaint.
(c)Can she appeal to the Supreme Court if she is not satisfied with the order of the appropriate CDRC? Give reason
in support of your answer. (3)
Ans. (a) Right to be heard (b)District Commission; because the District CDRC will entertain complaints where value
of goods and services does not exceed ₹1 crore. (c)Yes; because appeals from a District CDRC will be heard by the State
CDRC. Appeals from the State CDRC will be heard by the National CDRC. Final appeal will lie before the Supreme
Court.

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 KENDRIYA VIDYALAYA SANGATHAN, REGIONAL OFFICE, JAIPUR
SAMPLE PAPER NO – 1 (2022-23)
SUBJECT:- BUSINESS STUDIES (054)
MM:- 80 TIME:- 3 HOURS
General instructions :
1 This question paper contains 34 questions.
2. Marks are indicated against each question.
3. Answers should be brief and to the point.
4. Answers to the questions carrying 3 marks may be from 50 to 75 words.
5. Answers to the questions carrying 4 marks may be about 150 words.
6. Answers to the questions carrying 6 marks may be about 200 words.
7. Attempt all parts of the questions together.
1. Rajat is running food catering business in South Mumbai. Due to great taste in the food the 1
demand is increasing at a greater speed. And he is thinking about expansion of his business for
which he is planning different departments for production, distribution, purchase, finance,
marketing etc. suggest the suitable type of organizational structure to him out of given below:-
a) Divisional Structure
b) Functional Structure
c) Formal Organization
d) None of the above
2. 1
Read the following statements: Assertion and Reason. Choose one of the correct alternatives
given below:
(A) Legal environment includes various legislations passed by the Government administrative
orders issued by government authorities, court judgments as well as the decisions rendered by
various commissions and agencies at every level of the government— center, state or local
(R) An adequate knowledge of rules and regulations framed by the Government is a pre-
requisite for better business performance
(a) Both Assertion(A) and Reason(R) are True and Reason(R)is the correct explanation of (A)
(b) Both Assertion(A) and Reason(R) are True and Reason(R)is not the correct explanation
of(A)
(c) Assertion(A) is True but Reason(R) is False
(d) Assertion(A) is False but Reason(R) is True
3. (I) Delegation of authority is inevitable and decentralization is voluntary.
(II) Scope of delegation of authority is limited and the scope of decentralization is broad.
Both the above statements are:
(a) True
(b) False
(c) Statement (I) is True and Statement (II) is False
(d) Statement (I) is False and Statement (II) is True
4. On the 8th of November,2016,the government of India made an announcement to demonetize 1
high value currency notes of denomination of Rs 500 and Rs 1,000 with immediate effect,
ceasing to be legal tender, except for few specified purposes, under the act of demonetization .
Which particular dimension of the business environment is indicated in the act to curb the evil
effect of corruption referred to above?
(a) Legal Environment
(b) Social Environment
(c) Technological Environment
(d) Political Environment
5. Mr. Harshit Sharma and Ms. Ranju Suvarna both are fast friends and working as managers in 1
Mata Fabrics Ltd. They are playing a very important role in the company. Through their efforts
quality output is maintained, wastage of material is minimized and safety standards are

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 maintained. Identify the management level at which are they working.
(a) Top Management
(b) Middle Management
(c) Supervisory Management
(d) None of these
6. “It is difficult to predict future happenings, especially when environment is changing too 1
frequently.” Identify this feature of management.
7. It is interesting to know that the menu items of the multinational food chains are customized to 1
suit the general palates of the local people in the region. When McDonald‘s started its business
in India in the year 1996, the company went through a complete Localization strategy.
McDonald‘s changed its product menu to accommodate the vegetable burger given the large
vegetarian population. It also altered its store design and even reduced the product price by
close to fifteen per cent. Also, the ―McAloo Tikki burger is not available anywhere but in the
Indian outlets of McDonalds.
Identify the relevant feature of business environment being discussed above.
(a) Dynamic
(b) Complex
(c) Relativity
(d) Uncertainty
Priya plans her winter collection in the month of August itself. She has to then ensure that there 1
8. is adequate workforce and continuously monitor whether production is proceeding according to
plans. Her marketing department also has to be briefed in time to prepare their promotional and
advertising campaigns. Identify the characteristic of coordination to which the above case is
related.
(a) Coordination is an all pervasive function
(b) Coordination is a deliberate function
(c) Coordination is a continuous process
(d) Coordination ensures unity of action
9. Mr. Pradeep Kumar is working at the post of C.E.O. in ‘Vastram Udyog Ltd.’ He called a 1
meeting of the top-level officials. In the meeting, important decisions regarding the employees’
training were taken, which were as follows: For the employees working at the supervisory level,
on-the job training shall be followed; but for the top-level and middle-level employees, seminars
and lectures shall be organised.
To which ‘type of plan’ the decisions taken by Mr. Pradeep are related in the above event?
(a) Procedure
(b) Strategy
(c) Method
(d) Rule
10. Lata Machines Ltd. was a renowned name for quality sewing machines since 1952. Mr. Rajesh , 1
the owner of Lata machines, was worried as the production had declined during the last three
months. He directed the Production Manager to find out the reason. The Production Manager
ordered the different supervisors to prepare a performance report of the workers working under
them.
Identify the step taken by the Production Manager that is related to one of the functions of
management.
(a) Setting standards
(b) Measurement of actual performance
(c) Analysing deviations
(d) Taking corrective action
11. A purchase manager of a company has to purchase 700 tons of raw materials. Apart from the 1
other suppliers in the market, his close relative also supplies that raw material. The manager
purchases the raw material from the firm of his close relative at a rate higher than the market
rate. Which principle of management has been violated in this situation?
(a) Unity of command
(b) Unity of direction
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 (c) Subordination of individual interest to general interest
(d) Equity
12. Most of the companies are using Amazon, Flipkart, Snapdeal etc. for selling their products 1
directly tocustomers. It helps in eliminating wholesalers and retailers to sell their products.
Identify the element of marketing mix affected by it.
(a) Product Mix
(b) Price Mix
(c) Promotion Mix
(d) Place Mix
13. Stock exchanges provide an opportunity to the investors to disinvest and invest. Identify the 1
related function of the stock exchange.
(a) Providing scope for speculation.
(b) Providing liquidity and marketability to existing securities.
(c) Pricing of security.
(d) Spreading of equity cult

14. Identify the correct sequence of steps to be followed in the trading procedure at Stock Exchange 1
(a) Opening a trading account and Demat account, Placing an order, Settlement of order,
Execution of order
(b) Settlement of order, Opening a trading account and Demat account, Placing an order,
Execution of order
(c) Opening a trading account and Demat account, Placing an order, Execution of order,
Settlement of order
(d) Placing an order, Opening a trading account and Demat account, Execution of order,
Settlement of order

15. Assertion (A) A firm sets lower price per unit to increase profit in long run. 1
Reasoning (R) Lower price increases demand for the product and market area to earn greater
profit through sales .
(a) Both are correct and (R) is the correct explanation of (A)
(b) Both are correct but (R) is not the correct explanation of (A)
(c) Both statements are incorrect
(d) (A) is correct but (R) is incorrect
16. It acts like a bank and keeps securities in electronic form on behalf of the investor, 1
(a) Depository Participant
(b) Depository
(c) Stock exchange
(d) None of the above
17. On visiting a supermarket to buy a pack of moisturizer, Harshita noticed that the packaging of 1
most of the beauty products exhibited a photograph of a celebrity.
Identify the related function of packaging being described in the given case.
(a) Facilitates the use of product
(b) Assists in promotion of the product
(c) Helps in product identification
(d) Provides protection to the product
18. Within 3 years of it’s incorporation, Futuristic Limited has created a very positive reputation 1
about itself and its products in the eyes of general public by participating extensively in various
social welfare programs. Identify the component of promotion mixing described in the given
lines.
(a) Advertising
(b) Personal selling
(c) Public relation
(d) Sales promotion
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19. KTG Limited has launched a new range of air conditioners in order to add value to the usability 1
of the product. The new range of air conditioners has an inbuilt air purifier and is available in
attractive colors.
Identify the type of marketing philosophy being described in the above lines.
(a) Product concept
(b) Production concept
(c) Marketing concept
(d) Societal marketing concept
20. ………………………is a legal document as it help to settle disputes/ claims between investor 1
and the broker.
(a) Credit note
(b) Contract note
(c) Both a) and b)
(d) None of the above
21. Arjun joins an IT firm as a system analyst after completing his master’s degree in Computer 3
Science. As the nature of his work demands he has to work in very close coordination with all
the departmental heads in the firm, very soon Arjun realizes that each departmental head has
own individual style of working. They differ greatly in their day-to-day approach to work. They
tend to deal with a given situation, an issue or a problem through a combination of their own
experience, creativity, imagination, initiative and innovation.
In the context of the above case: Identify and explain the nature of management highlighted in
the above case.
22. Manthan has started an advertising agency in Hyderabad. One of the pages on his company’s 3
website contains the following information, “Welcome to all the visitors of this page who are
looking for an opportunity to make a career in the field of advertising. The openings are
available in the company at various levels, so don’t miss the chance.” This page includes a link
to provide further details about the vacancies available in terms of the desired qualifications,
experience, personality characteristics and so on. Through a continuous assessment of the
number and types of human resources necessary for the performance of various jobs and
accomplishment of organizational objectives and in relation to the number and type available,
he gets the information on this page updated.
In context of the above case:
a) Identify and explain the steps in the staffing process being carried out by Manthan by
quoting lines from the paragraph.
b) Name the concept that relates to the details about the vacancies available in terms of the
desired qualifications, experience, personality characteristics and so on.
23. Explain the two concepts a manager must consider while dealing with deviation effectively? 3
OR
Which principle of management control is based on the belief “ an attempt to control everything
may end up by controlling nothing”?
24. The Trading Procedure on Stock Exchange has been replaced by on-line screen based electronic 3
trading system. This is mainly done to eliminate problems like theft, fake/forged transfers,
transfer delays and paper work associated with share certificates or debentures in physical form.
This is a process where securities held by the investor in the physical form are cancelled and the
investor is given an electronic entry or number so that he/she can hold it as an electronic balance
in an account. This has increased the equity cult among the people.
(a) Identify and state the process mentioned above.
(b) What is the most important requirement for the process identified in (a)? State.

OR

Few years ago, there were many malpractices, unfair trade practices and frauds and scams were
taking place in stock Exchange. All these affected investor’s confidence, faith and trust in Stock
Exchange. The Government of India decided to set up a separate body for this purpose who was
given control of stock exchange. This separated ownership and control of stock exchange.
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 (a) Name the body set up by the government of India to contract the stock exchange.
(b) State any two of the objectives of that regulating body.
25. The workers of Swayam Ltd. are unable to work on newly hi-tech machineries imported by the 4
company to meet the demand for new and advanced products. Therefore the workers are
seeking extra guidance and support to use the machines. Suggest the supervisor of the company
how to increase the skill and knowledge of workers so that they can independently work on the
machines.
Also state the three benefits the workers are going to get by the decision of the supervisor.

OR
Briefly explain the steps in selection process starting from employment interview and so on.
26. Nusrat , a sales representative of “ Omega Ltd.”, has changed 5 jobs during last 12 months. He 4
is a skilled and hard working person but is not able to finalise deals with the customers due to
the inadequate vocabulary and omission of needed words. Sometimes he uses wrong words
because of which the correct meaning is not conveyed which ultimately creates confusion
between him and his clients.
(a) Identify and explain the communication barrier discussed in the given situation.
(b) State the category of communication barrier related to above case.
(c) Explain any other communication barrier of the same category.

OR
Mrs. Riddhima is working as the Human Resource Consultant in a firm manufacturing
cosmetic, which is facing a problem of high employee turnover. The CEO of the company has
invited suggestions from her for retaining the talented employees & reducing the employee
turnover. Mrs. Riddhima recommends that the good employees be rewarded in a way that it
creates a feeling of ownership among the employees and at the same time make them contribute
towards the growth of the organization.
(a) Identify the incentive and explain its type, which has been suggested by Mrs. Riddhima to
the CEO of the company.
(b) Also explain any two other incentives of the same type.
27. Smedha had been working as an assistant manager with ‘Ramson Enterprises’ for the last ten 4
years. She was very popular amongst her colleagues because of her commitment and dedication
towards the work. When the manager senior to her retired, all her colleagues thought that now
Smedha would be promoted. But to everyone’s surprise the vacant post was filled by an
outsider, Mrs. Rituja. Smedha felt demoralized and her performance started declining. She
would abstain herself often and could not meet her targets. Mrs. Rituja was a good leader, who
would not only instruct her subordinates but would also guide and inspire them. She noticed
Smedha’s behavior and felt that her performance could be improved. She started involving
Smedha in decision making-issues related to the organization and made her a part of high level
joint-management committee. Smedha was now punctual in office and her performance started
improving.
(a) Identify the function of management being performed by Rituja.
(b) Name the element of the above function of management which helped Rituja to improve
Smedha’s behavior.
(c) State any three features of the element identified in (b) above.
28. Briefly explain any four factors affecting the designing of “ Capital Structure” of a joint stock 4
company.
29. Heeral , a finance manager in MFB Ltd. making investment in a new machine to replace an 4
existing one and acquiring new fixed asset for opening a new branch. These decisions are very
crucial for any business since they affect its earning capacity in the long run. She is also
thinking about the allocation of funds for the business.
a) Identify and explain the concept referred to in the above paragraph.
b) Write any two factors affecting the concept, so identified.
30. Radhika purchased one litre of pure desi ghee from a well-known retail store. After using it, she 4
had doubts that it was adulterated. She sent it for a laboratory test which confirmed that the ghee
Page 95 of 141
 was adulterated. State any four (04) reliefs available to Radhika if she complains and the
consumer court is satisfied about the genuineness of the complaint.
31. Harmandeep is desirous of setting up a small factory to manufacture different kinds of eco- 6
friendly packaging materials. He proposes to adopt to logical approach to his business rather
than hit and trial method as he knows that this can result in tremendous saving of human energy
as well as wastage of time and materials. He plans to adopt paternalistic style of management in
practice in order to avoid any kind of class-conflict that may emerge between him and the
workers. Moreover, he plans to seek the opinion of his workers before taking any important
decisions and also offers incentives to them for providing valuable suggestions for the business.
In context of the above case:
Identify and explain the various principle of scientific management that Harmandeep plans to
apply in his business.

OR

Briefly explain the following principles given by Henry Fayol:-

a) Unity of direction
b) Esprit de corps
c) Initiative
d) Fair remuneration
32. ‘Agile Ltd.’ is a well-known automobile manufacturing company in India. The company plans 6
to increase the sale of its sedan cars by 20% in the next quarter. In order to achieve the desired
target, the marketing team of the company considers the impact of policy of the government
towards diesel vehicles and the level of competition in this segment of cars. They explore the
various available option like offering more discount to dealers and customers, providing more
customer friendly finance options, lucky draws on test drives, increasing advertising, offering
more of free accessories on the purchase of the car, etc. a thorough analysis of the various
available options is done keeping in view the relative viability of each option. The company
decides to pursue the option of offering more discount to dealers and customers in order to boost
the sale of sedan cars. In order to implement the plan,, they determine the various discount
packages and communicate the same to their product dealers. To make the prospective
consumers aware about the new available benefits, advertisements are made through various
sources of print and electronic media. The market analysts of the company keep a close watch
on the revenue from the sedan cars to study the effect of new initiatives by the company to
promote its sales.
In context of the above case:
a) Name the function of management described in the above paragraph.
b) Identify the various steps involved in process the function of management as identified
in part (a) by quoting lines from the paragraph.

OR

Tanisha, a home science graduate from a reputed college, has recently done a cookery course.
She wished to start her own venture with a goal to provide health food at reasonable prices.
After analyzing various options for starting her business venture, she short listed the option to
sell readymade digestive cookies or healthy light snacks. Then, she weighed the pros and cons
of both the short listed options.
a) Name the function of management being discussed above and
b) Discuss any two of its characteristics.
c) Also briefly discuss any three limitations of the function discussed in the case.
33. Raj Industries is a company manufacturing office furniture. The company chose to diversify its 6
operations to improve its growth potential and increase market share. As the project was
important many alternatives were generated for the purpose and were thoroughly discussed
amongst the members of the organization. After evaluating the various alternatives Umesh, the
Managing Director of the company decided that they should add ‘Home Interiors and
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 Furnishings’ as a new line of business activity which will include curtains, wall papers,
cushions, rugs and many more.
a) Name and define the framework, which the diversified organization should adopt, to
enable it to cope with the emerging complexity?
b) Give any two reasons in support of your answer.
c) State any two limitations of this framework.
34. After acquiring the necessary knowledge and skills on starting and Aloe Vera farm, Ashok 6
wanted to be the leading manufacturer of Aloevera products worldwide. He observed that the
products were expensive as the demand of the products was more than the supply. He was also
keen to promote the methods and practices that were economically viable, environmentally
sound and at the same time protecting public health.
Ashok's main consideration was about the amount of money paid by the consumers in
consideration of purchase of Aloevera products. He also thought that competitors prices and
their anticipated reactions also be considered for this.
After gathering and analyzing information and doing correct marketing planning, he came to
know that the consumers compare the value of a product to the value of money they are required
to pay. The consumers will be ready to buy a product when they perceived that the value of the
product is at least equal to the value of money which they would pay. Since he was entering into
a new market, he felt that he may not be able to cover all costs. He knew that in the long run the
business will not be able to survive unless all costs are covered in addition to a minimum profit.
He examined the quality and features of the products of the competitors and the anticipated
reactions of the consumers. Considering the same he decided to add some unique features to the
packaging and also decided to provide free home delivery of the products.
The above case related to a concept which is considered to be an effective competitive
marketing weapon . In conditions of perfect competition most of the firms compete with each
other on this concept in the marketing of goods and services.
a) Identify the concept.
b) Explain briefly the five factors discuss in the above case related to the concept so
identify it.

Page 97 of 141
 KENDRIYA VIDYALAYA SANGATHAN, REGIONAL OFFICE, JAIPUR
MARKING SCHEME OF SAMPLE PAPER NO – 1 (2022-23)
SUBJECT:- BUSINESS STUDIES (054)
MM:- 80 TIME:- 3 HOURS
1. b) Functional structure 1
2. a) Both Assertion(A) and Reason(R) are True and Reason(R)is the correct explanation of (A) 1
3. (a) True 1
4. (a) Social Environment 1
5. (c) Supervisory Management 1
6. Uncertainty 1
7. (c) Relativity 1
8. c) Coordination is a continuous process 1
9. c) Method 1
10. b) Measurement of actual performance 1
11. c) Subordination of individual interest to general interest 1
12. d) Place Mix 1
13. b) Providing liquidity and marketability to existing securities. 1
14. (c) Opening a trading account and Demat account, Placing an order, Execution of order, 1
Settlement of order
15. a) Both are correct and (R) is the correct explanation of (A) 1
16. (b) Depository 1
17. (b) Assists in promotion of the product 1
18. (c) Public relation 1
19. (a) Product concept 1
20. (b) Contract note 1
21. In the above case, management is being considered as an art. 1+
Art is the skillful and personal application of existing knowledge to achieve desired results. 2=
The evaluation of management as an art is given below: 3
1. Existence of theoretical knowledge
2. Personalized applications
3. Based on practice and creativity (any 2)
22. a) The two steps in the staffing process being carried out by Manthan are as follows: 3
-Estimating the Manpower Requirements:
-Recruitment:
b) Job description is the concept that relates to the details about the vacancies available
in terms of the desired qualifications, experience, personality characteristics and so
on.
23. 1. Critical Point Control 3
2. Management by Exception
(1/2 mark for identifying each point and 1 mark each for explanation)
OR
Principle of Management by exception.
(1 mark for identification and 2 marks for explanation)
24. a) Dematerialization – It is the process of holding securities in an electronic form. 3
b) For this, the investors has to open a ‘Demat account’ with a depository participant
(DP) for holding and transferring securities in the demat form. He / She will also have
to open a bank account for cash transactions in the securities market.
OR
a) The regulatory body set up by government of India is “SEBI i.e. Securities Exchange
Board of India”.
b) The objectives of SEBI are: The overall objectives of SEBI are to protect the interest
of investors and to promote the development of stock exchange and to regulate the
activities of stock market.
25. The concept identified is- Training. 4
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 Any three benefits of training:-
a) Better career option
b) More earnings/ more productivity
c) Boost up the morale of employees
d) Less chances of accidents
(1 for identification+ ½ mark for heading and ½ mark for explanation)
OR
Steps in selection process
a) Employment interview
b) Reference and background checking
c) Selection decision
d) Medical examination
(1/2 mark for heading and ½ mark for explanation)
26. a) Badly expressed message 4
b) Semantic barrier- relates to encoding and decoding of message into communication
symbols
c) Faulty translation, symbols with different meanings, technical jargon, body language,
unclarified assumptions, symbols with different mmeanings. (any one)
OR
a) Financial incentive.- Co-Partnership/Stock Option
b) Other financial incentives:
1. Pay and allowances: For every employee, salary is the basic financial incentive. It
includes basic pay, dearness allowance and other allowance. Pay hike and increments
improve performance level of employees.
2. Profit sharing: Employees are given a share in the profits of the organization. This
motives them to improve their performance and contributes to increase in profits of
the organization.
27. a) Directing 4
b) Motivation
c) Features of motivation:
i) Motivation is an internal feeling: The urge, desires, aspirations or needs of
people, which are internal, influence human behavior.
ii) Motivation produces goal-directed behavior: For example, if the employee is
interested in promotion, it helps to produce a behavior to improve performance.
iii) Motivation can be either positive or negative: Positive motivation provides
positive rewards like increase in pay, promotion, recognition, etc. negative
motivation uses negative means like punishment, stopping increments,
threatening, etc.( any two)
28. Factors for designing the “ Capital Structure”:- 4
a) Cash flow position
b) Interest coverage ratio
c) Debt service coverage ratio
d) Return on investment
e) Cost of debt
f) Tax rate
g) Cost of equity
h) Floatation costs
i) Risk consideration
j) Flexibility
k) Control consideration
l) Regulatory framework
m) Stock market condition
n) Capital structure of other companies
( explain any 04 points out of the above given points- ½ marks for heading and ½ marks for

Page 99 of 141
 explanation)
29. a) Capital budgeting decision:- this decision relates to careful selection of assets in 4
which funds will be invested by the firm. Also known as “Investment Decision”.
b) Factors affecting Capital budgeting decision:-
i) Cash flow of the project
ii) Return on investment
iii) Investment criterion
30. a) To withdraw the hazardous goods from sale. 4
b) To provide replacement for the defective product.
c) To refund the price paid for the product, or the charges paid for the service.
d) To pay a reasonable amount of compensation for any loss or injury suffered by the
consumer due to the negligence of the marketer.
e) Not to offer hazardous goods for sale.
f) To issue corrective advertisement to neutralize the effect of a misleading
advertisement
(write any 04)
31. The various principle of scientific management that Harmandeep plans to apply in his 6
business are described below:
a) Science, not Rule of Thumb:
b) Harmony, Not Discord:
c) Cooperation, Not Individualism:
OR
a) Unity of direction
b) Esprit de corps
c) Initiative
d) Fair remuneration (1.5 marks for each point)
32. a) Planning is the function of management which is being described in the above 6
paragraph.
b) The various steps involved in the planning process are explained below:
i) Setting objectives: “The company plans to increase the sale of its sedan cars
by 20% in next quarter.”
ii) Developing Premises: “In order to achieve the desired target the marketing
team of the company considers the impact of policy of the government
towards diesel vehicles and level of competition in this segment of cars.”
iii) Identifying alternative courses of action: “They explore the various available
options like offering more discount to dealers and customers, providing more
customer friendly finance options, lucky draws on test drives, increasing
advertising, offering more of free accessories on the purchase of the case,
etc.”
iv) Evaluating alternative courses: “A thorough analysis of the various available
options is done keeping in view the relative viability of each option.”
v) Selecting an alternative: “The company decides to pursue the option of
offering more discount to dealers and customers in order to boost the sale of
sedan car.”
vi) Implement the plan: “In order to implement the plan, they determine the
various discount packages and communicate the same to their product dealers.
To make the prospective consumers aware about the new available benefits,
advertisements are made through various sources of print and electronic
media.”
vii) Follow up action: “The market analysts of the company keep a close watch on
the revenue from the sedan cars to study the effect of new initiatives by the
company to promote its sales.”

OR

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 a) Planning is the function of management which is being discussed above.
b) 1) Planning involves decision-making:
2) Planning contributes to objectives
c) The limitations of planning are described below:
a) Planning may not work in a dynamic environment:
(b) Planning reduces creativity:
(c) Planning involves huge costs:
(1+2+3=6)
33. a) Divisional Structure :- when activities are grouped together on the basis of different 6
products/ product lines produced by the company then it is known as divisional
structure.
b) Reason in support of the answer (any two)
1. Product Specialization helps in the development of varied skills in a divisional
head and this prepares him for higher positions.
2. Divisional heads are accountable for profits, as revenues and costs related to
different departments can be easily identified and assigned to them.
3. It promotes flexibility and initiative because each division functions as an
autonomous unit which leads to faster decision making.
4. It facilitates expansion and growth as new divisions can be added without
interrupting existing operations by merely adding another divisional head and staff
for the new product line.
c) Limitations of the Divisional Structure: (Any two)
1. Conflict may arise among different divisions with reference to allocation of
funds.
2.It may lead to increase in costs since there may be a duplication of activities
across products.
3. Divisional interests may supersede organizational interests.
34. a) Price mix/ pricing of a product 6
b) Factors discussed in the above case are:-
i) Product cost
ii) Utility and demand
iii) Extent of competition
iv) Marketing methods used
v) Pricing objectives

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 KENDRIYA VIDYALAYA SANGATHAN, REGIONAL OFFICE, JAIPUR
SAMPLE PAPER NO – 2 (2022-23)
SUBJECT:- BUSINESS STUDIES (054)
MM:- 80 TIME:- 3 HOURS
General instructions :
1 This question paper contains 34 questions.
2. Marks are indicated against each question.
3. Answers should be brief and to the point.
4. Answers to the questions carrying 3 marks may be from 50 to 75 words.
5. Answers to the questions carrying 4 marks may be about 150 words.
6. Answers to the questions carrying 6 marks may be about 200 words.
7. Attempt all parts of the questions together.
1. As the span of management increases in an organisation, the number of levels of management in 1
the organization:-
(a) Increases
(b) Decreases
(c) Remains unaffected
(d) None of the above

2. In order to boost and double India’s export of goods and services to over USD 1,000 billion by 1
2025, it is important to lower effective corporate tax rate, bring down cost of capital and
simplify regulatory and tax framework. Identify the related dimension of business environment.
(a) Social dimension and Legal dimension
(b) Technological dimension and Political dimension
(c) Political dimension and Social dimension
(d) Economic dimension and Legal dimension

3. Palm Ltd. is an enterprise selling electronic equipments. The co. has decided to buy LED 1
screens only from vendors/ suppliers using Japanese techniques of manufacturing. This is
related to which type of plan?
(a) Objectives
(b) Policy
(c) Strategy
(d) Rule
4. Rajarajan and Co. is a big business unit. Mr. Rajarajan has already defined the objectives and 1
policies of the business very clearly in order to run his business successfully. He has an intimate
relationship with the buyers, sellers and competitors etc., and in case of any difference of
opinion, he takes the situation under his own control at the earliest possible. He fully knows
about the business environment and its importance. He also knows that the business
environment is not the only factor related to business, but it includes the factors like economic,
social, political, and technological and several other factors which are present outside the
business. That is why the advantage of business environment can be taken only when a sharp
eye is kept on all its factors.
Identify the feature of business environment stated in the above event.
(a) Dynamic Nature
(b) Inter-relatedness
(c) Totality of External Forces
(d) Specific and General Forces
5. Assertion (A): Management helps in creating dynamic organisation. 1
Reason (R): Management helps people to adopt changes so that the organization is able to
maintain its competitive edge.
Options:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).

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 b) Both Assertion (A) and Reason (R) are true and Reason (R) is not correct explanation of
Assertion (A).
c) Assertion (A) is true but Reason (R) is false.
d) Assertion (A) is false but Reason (R) is true.
6. The growing awareness about healthcare has led to an increase in the demand for healthcare 1
products and services in the country. Identify the feature of business environment being
described in the above case.
(a) Dynamic nature
(b) Uncertainty
(c) Relativity
(d) Interrelatedness
7. Identify the related dimension of business environment from the given image. 1

(a) Economic dimension

(b) Technological dimension
(c) Social dimension
(d) Political dimension
8. “The aim of a manager is to reduce costs and increase productivity with minimizing wastage.” 1
Identify the importance of management
(a) Management increases efficiency
(b) Management creates dynamic organization
(c) Management helps in development of society
(d) Maintaining a sound organizational structure
9. Naman selected the brand name for his new product line after carefully assessing the various 1
available alternatives. The feature of planning being highlighted in the given lines is……….
(a) Planning involves decision-making
(b) Planning is futuristic
(c) Planning is pervasive
(d) Planning is continuous
10. Which of the following statements does not highlight the relationship between planning and 1
controlling?
(a) Planning and controlling are separable twins of management.
(b) Planning without controlling is meaningless, controlling without planning is blind.
(c) Planning is prescriptive, controlling is evaluative.
(d) Planning and controlling are interrelated and interdependent.

11. Rishi has joined as a Creative Head in an entertainment company. He always ensures that the 1
work has been divided into small and manageable activities and also the activities of similar
nature are grouped together. Identify the related step in organising process being mentioned in
the above lines.
(a) Identification and division of work
(b) Departmentalization
(c) Assignment of duties
(d) Establishing reporting relationships

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12. The term ‘Consumer protection’ reflects as if it protect only the consumers from various 1
exploitative trade practices, but in reality it also benefits the business organization. Comment.

13. Which of the following statements is not true with regard to stock exchange? 1
(a) It provides a platform for pricing of securities.
(b) It curbs the marketability of the securities.
(c) By providing a ready market, it extends liquidity to the securities.
(d) It provides a platform for buying and selling of old securities.

14. Stock Exchange works as a mechanism for valuation of securities through the forces of demand 1
and supply. Identify the related function of performed by the stock exchanges.
(a) Providing liquidity and marketability to existing securities.
(b) Safety of transaction.
(c) Pricing of securities.
(d) Spreading of equity cult.

15. What product will be produced, with what features and at what price shall it be sold, or where 1
shall it be made available for sale will depend on what the customers want, like a refrigerator to
make curd. Identify the marketing philosophy adopted.
(a) Product Concept
(b) Selling Concept
(c) Production Concept
(d) Marketing Concept

16. It is a legally enforceable document which is issued by a stock broker within 24 hours of the 1
execution of a trade order.
(a) PAN number
(b) Unique Order Code
(c) Contract Note
(d) None of the above

17. Guneet went to a shop and expressed her desire to buy a copper water bottle only of Prestige 1
company. Identify the component related to branding being described in the above case.
(a) Trademark
(b) Generic name
(c) Brand name
(d) Brand mark

18. Name the promotional tool used as a short term incentive to encourage the buyers to make 1
immediate purchase of a product or service.

19. Pragati Limited has chalked out an action plan in order to increase its market share in the 1
international market by 20% in the next one year. The action plan contains the details about how
the production levels will be increased, promotional activities will be carried out and so on.
Identify the type of marketing function being described in the given lines.
(a) Gathering and analyzing market information
(b) Marketing planning
(c) Product designing and development
(d) Packaging and labeling

20. If Naman has sold 500 shares of X Ltd. On Monday then on which day his transaction will be 1
settled and under which system?

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21. Chandrika Bhattacharya is working in OLX limited, a company manufacturing room heaters. 3
She is responsible for all the activities of the business and for its impact on society. Her job
demands long hours and commitment to the organization.
a) Identify the level at which Chandrika Bhattacharya is working.
b) State two more functions required to be performed by Chandrika Bhattacharya at this level.
22. Mohit Gupta is working with “Yellow security services limited.” He is also recruiting security 3
guards for the company. The company provides security services in Delhi and Noida at short
notice to various companies. The guards are recruited on temporary basis. The guards provided
by this company are known for their honesty and punctuality. Mohit Gupta is well known in his
village for providing employment to unskilled people.
a) Name the source of recruitment used by yellow security.
b) Also state any two disadvantages of this source of recruitment.
23. The last step in the process of one of the function of management is “taking corrective actions”. 3
Briefly explain the last 2 steps in chronological order that are taken in the process of the
function before this step.

OR

Briefly explain any three points of importance of Controlling function of management.

24. Differentiate between Primary Market and Secondary Market on the following basis:- 3
a) Type of securities
b) Capital formation
c) Entry
OR
Differentiate between Money Market and Capital Market on the following basis:-
a) Participants
b) Instruments
c) Liquidity

25. Ali Mohd. The CEO of Super Ltd believes that the human resource is the most important asset 4
of the firm. He believes that no organization can be successful unless it can fill and keep filled
the various positions provided for in the structure with the right kind of people. Identify the
function of management being discussed and state the benefits to the organization that its proper
application in the firm will ensure.
26. Kavita recently joined as the human resource director of Arjun Vidyamandir School, a senior 4
secondary educational institute. She observed that the school had an experienced medical team
on its payroll. They regularly offered useful suggestions which were neither appreciated nor
rewarded by the school authorities. Instead the school outsourced the task of maintenance of
health records of the students and paid them a good compensation for their services. Because of
this, the existing medical team felt disheartened and stopped giving useful suggestions.
a) Identify the communication barrier discussed above.
b) State the category of this communication barrier.
c) Explain any other two communication barriers of the same category.
27. Pramod is a supervisor at ‘Shyam Breads and Biscuits Factory’. The factory produces 20,000 4
packets of bread and biscuits every day. As a supervisor Promod ensures that work goes on
smoothly and there is no interruption in production. He is a good leader who gives orders only
after consulting his subordinates, working out the policies with the acceptance of the group.
a) Identify and explain the leadership style being adopted by Pramod.
b) Explain any other leadership style also.
28. Explain any four factors that can affect the working capital requirement of a company. 4

29. Xyz limited is registered with an authorised capital of Rs. 10 crore. The paid up capital of the 4
company is Rs. 6 crore. The company was facing shortage of funds. The management of
company decided to raise funds by issue of 1,00,000 equity shares of Rs. 100 each. The issue
Page 105 of 141
 was fully subscribed. After this it was realised that the funds raised were in excess of actual
requirement.
a) Identify and define the concept which was not considered by the company before deciding
the amount of funds to be raised.
b) State its two objectives also.
30. Pankaj purchased a car from “Abhishek motors” for rupees 80 lakh. The company offered many 4
attractive gifts to Pankaj like --free insurance for first 2 years, free pick up and drop facilities for
free servicing up to 20000 km, etc. But after a few days Pankaj notice that the pickup of the car
was not good and there was some problems in the engine. The company serviced the car free of
cost but even then Pankaj was not satisfied with its performance. Abhishek motors is also not
giving him the due response. So he filed the complaint in the district commission but was not
satisfied with its decision also. He was very much disturbed and after 20 days from the date of
decision he decided to appeal against it.
Can Pankaj appeal against the decision of the district commission?
Give reason in support of your answer. Which of the consumer right is exercised by him?
Mention the financial limits of original jurisdiction of state commission.
31. Damini D'Souza took over the reins of “Kinsa retails” as its managing director in India. Kinsa 6
Retail with its headquarters at Japan has been in retail business for the last 40 years. It has
regional offices in many countries with each regional office taking care of the shops in that
particular region. As it is a large organization, the regional officers have been given the powers
to decide and spend funds sanctioned to them by the headquarter for the welfare of the
customers of their region. Kinsa Retail wants the highest possible standards of ethical conduct
being followed for which a code of conduct is in place for putting values into practice. All
employees as well as board members are required to act in accordance with the highest
standards of personal and professional integrity when acting on behalf of the company. Non
compliance involves a heavy penalty including termination of employment.
State the two principles of general management being followed by Kinsa retail in the above
situation.
OR

Explain any four points highlighting the importance of principles of management.

32. Megha limited holds an Annual Management Programme every year in the month of March in 6
which the top managerial personal formulate the plans for the next year by analysing and
predicting the future to meet future events effectively.
As they are responsible for providing direction to the organization, facts are thoroughly checked
through scientific calculations. Detailed plans are prepared after discussion with professional
experts. Preliminary investigations are also undertaken to find out the viability of the plan.
Since it is an intellectual activity requiring intelligent imagination and sound judgment, it is
mainly done by the top management. Usually rest of the members just implement the plans,
middle level managers are neither allowed to deviate from the plans nor are they permitted to
act on their own. The top management ensures that the expenses incurred in formulating the
plans justify the benefits derived from them.
State two limitations and two features of planning discussed about by quoting the lines.

OR
Explain importance of planning.
33. OMX Ltd. decided to set-up its steel manufacturing factory in the backward area of Chattisgarh, 6
where very less job opportunities were available. People of that area welcomed this effort of
OMX Ltd. To attract people to work in its factory, it also decided to provide many other
facilities like a school, hospital, market, etc. in the factory premises. OMX Ltd. started earning
huge profits. Another competing company asked its production manager Amit to investigate the
reasons of earning huge profits by OMX Ltd. Amit found that in both the companies, there was
systematic coordination among the various activities to achieve the organizational goals. Every
employee knew who was responsible and accountable to whom. The only difference was that in
his organization, communication took place only through the scalar chain whereas OMX Ltd.
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 was allowing the flow of communication in all the directions as per the requirement which led
to faster spread of information as well as quick feedback.
a) Identify and define the type of organization which permits OMX Ltd. the flow of
communication in all the directions.
b) State any two advantages and two disadvantages of the type of organization identified in
part (a) above.
34. Lakshita is a part of top management of a well reputed company and always remain on tours. 6
Every time she visit to her relatives or friends, people ask her to bring them chips, khakra and
pickles from all over the country. Finally, she and her colleague, Aakash, decided to make a
business opportunity out of it. They launched a face book page, asked people what they wanted,
and they came up with a list of about 100 places having speciality food items and tried up with
almost 20 vendors to begin with. They started providing services to people from Rajasthan who
wanted spices from Kerala, people form Gujarat who wanted halwa from Jammu and people
from Delhi who ordered for fresh tea leaves form Darjeeling. Through their business they tried
to bridge the gap between sellers and buyers. The business is now worth millions.
a) Identify and explain the element of marketing mix that Lakshita and Aakash will have to
be involved in for making the goods available to the customers at the right place, in the
right quantity and at the right time.
b) Briefly explain the components related to the concept identified above.

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 KENDRIYA VIDYALAYA SANGATHAN, REGIONAL OFFICE, JAIPUR
MARKING SCHEME OF SAMPLE PAPER NO – 2 (2022-23)
SUBJECT:- BUSINESS STUDIES (054)
MM:- 80 TIME:- 3 HOURS
1. b) Decreases 1
2. d) Economic dimension and Legal dimension 1
3. b) Policy 1
4. (c) Totality of External Forces 1
5. a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation 1
of Assertion (A).
6. d) Interrelatedness 1
7. b) Technological dimension 1
8. a) Management increases efficiency 1
9. a) Planning involves decision-making 1
10. a) Planning and controlling are separable twins of management. 1
11. b) Departmentalization 1
12. Any one Importance from organization point of view 1
13. b) It curbs the marketability of the securities. 1
14. c) Pricing of security. 1
15. Production Concept 1
16. c. Contract Note 1
17. c. Brand name 1
18. Sales promotion 1
19. b. Marketing planning 1
20. Wednesday, Rolling settlement system on T+2 basis. 1
21. a) Chandrika Bhattacharya is working at top level 3
b) Functions of top level of management :-
1. To co-ordinate the activities of different departments.
2. To be responsible for welfare and survival of the organization.
3. To formulate overall organisational goals and strategies for their achievement.
4. To be responsible for all the activities of the business and fore its impact on the society.
22. a) External source of recruitment /labour contractor 3
b) Disadvantages of external source of recruitment
i) It may lead to dissatisfaction among existing employees as they may feel that the
chances of promotion are reduced.
ii) It is a lengthy process as the vacancies have to be notified and applications
received before selection.
iii) It is a costly process as lot of money spent on advertisement and processing of
applications.
23. The three steps in controlling function are :- 3
a) Measurement of actual performance
b) Comparing actual performance with the pre established standards and finding
deviations if any
c) Analysing the deviations

OR
Importance of controlling:- ( any three)
a) Helps in achieving organizational goals
b) Judging accuracy of standards
c) Making efficient use of resources
d) Improving employees motivation
e) Ensures order and discipline
f) Facilitates coordination in action

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24. Difference between primary and secondary market:- 3
Basis Primary market Secondary market
a) Type of There is sale of new It is a market for existing and
securities securities. second hand securities.

b) Capital Direct capital formation as No direct capital formation as

formation funds get transferred from funds gets transferred between
surplus units to deficit units. surplus units only.
c) Entry All types of companies enter Only listed company’s securities
into this market to raise are exchanged in secondary
capital. market.
d) Pricing of Prices of securities are fixed Prices of securities are fixed by
securities by the management of the the demand and supply forces of
company. the market.

OR
Basis Capital market Money market
a) Participants Participants are financial Participants are financial
institutions, banks, public institutions, banks, public and
and private companies, private companies but foreign
foreign investors, retail investors, and retail investors
investors etc. don’t participate.
b) Instruments Equity shares, preference Treasury bills, commercial
shares, bonds, debentures papers, call money, certificate of
and other innovative deposits etc.
securities.
c) Liquidity These securities are less Money market securities are
liquid than money market. highly liquid.
d) Safety of Investment in capital market Less risky due to short duration
investment is risky in terms of principal and the financial soundness of
investment as well as issuers.
returns.
25. (i) The function of management is STAFFING .Any three importance 4
26. a) The communication barrier discussed in the above paragraph is Lack of proper 4
incentives.
b) It is a type of Personal barrier.
c) Other communication barriers of the same category are: (any two+ with suitable
explanation)
a) Fear of challenge to authority
b) Lack of confidence of superior on his subordinates
c) Unwillingness to communicate.
27. a) Democratic or participative leader: A democratic leader will develop action plans and 4
make decisions in consultation with his subordinates. He will encourage them to
participate in decision making. This kind of leadership style is more common now-a-
days, since leaders also recognise that people perform best if they have set their own
objectives. They also need to respect the others opinion and support subordinates to
perform their duties and accomplish organisational objectives. They exercise more
control by using forces within the group.
b) Any one among these
i) Autocratic / Authoritative leadership style
ii) Free rein leadership style
iii)
28. Factors affecting working capital requirement:- ( any four) 4
a) Length of operating cycle
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 b) Nature of business
c) Scale of operation
d) Business cycle fluctuation
e) Seasonal factors
f) Technology and production cycle
g) Credit allowed
h) Credit avail
i) Operating efficiency
j) Availability of raw material
k) Level of competition
l) Inflation
m) Growth prospects
29. a) Financial planning: - the process of estimating the fund requirements of a business and 4
specifying the sources of funds is called financial planning.
b) To ensure availability of funds whenever these are required
To see that firm does not raise resource unnecessarily.
30. Yes, 4
Pankaj can file a case against the decision of District Commission as he applied within 30 days
of the decision. He exercised the right to seek redressal. The limit is more than 1 crore and
upto 10 crores.
31. 1. Discipline: - Discipline refers to obedience to organisational rules and employment 6
agreement that are necessary for the working of the organization. It requires good
supervisors at all levels, clear and fair agreement and judicious application of penalties.
2. Centralization and Decentralisation:-Centralisation and decentralization suggest that
there is a need to balance subordinate involvement through decentralization with
managers retention of final authority through centralization.

OR
Importance of management principles:-
i) Providing managers with useful insight into reality
ii) Optimum utilization of resources
iii) Scientific decisions
iv) Meeting changing economic requirement
v) Effective administration
vi) Fulfilling social responsibility
vii) Management training , education and research
(explain any 4 points)
32. a) Two limitations of planning discuss above :- 6
i) Planning reduces creativity as it is mostly done by the top management rest of
the member’s just carry out orders and think on the same lines as others.
ii) Planning involves huge cost in terms of time and money. The cost incurred
sometimes may not justify the benefits derived from the plans.
b) Two features of planning discussed above are:-
i) Planning is futuristic as it involves looking ahead and preparing for the future
to meet future events effectively to the best advantage of the organization.
ii) Planning is a mental exercise as it requires application of mind involving
farsight, intelligent imagination and sound judgement. It is an intellectual
activity of thinking rather than doing.

OR
Importance of Planning
a) 1. Planning provides direction: Planning ensures that the goals or objectives are clearly
stated so that they act as a guide for deciding what action should be taken and in which
direction. If goals are well defined, employees are aware of what the organisation has to do
and what they must do to achieve those goals.
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 b) Planning reduces the risks of uncertainty: Planning is an activity which enables a manager
to look ahead and anticipate changes. By deciding in advance, the tasks to be performed,
planning shows the way to deal with changes and uncertain events. Changes or events cannot
be eliminated but they can be anticipated and managerial responses to them can be developed.
c) Planning reduces overlapping and wasteful activities: Planning serves as the basis of
coordinating the activities and efforts of different divisions, departments and individuals. It
helps in avoiding confusion and misunderstanding. Since planning ensures clarity in thought
and action, work is carried on smoothly without interruptions. Useless and redundant activities
are minimised or eliminated.
d) Planning promotes innovative ideas: Since planning is the first function of management,
new ideas can take the shape of concrete plans. It is the most challenging activity for the
management as it guides all future actions leading to growth and prosperity of the business.
e) Planning facilitates decision making: Planning helps the manager to look into the future and
make a choice from amongst various alternative courses of action. The manager has to
evaluate each alternative and select the most viable proposition. Planning involves setting
targets and predicting future conditions thus helping in taking rational decisions.
f) Planning establishes standards for controlling: Planning provides the goals or standards
against which actual performance is measured. By comparing actual performance with some
standard, managers can know whether they have actually been able to attain the goals. If there
is any deviation it can be corrected. Therefore, we can say that planning is a prerequisite for
controlling.
33. a) Informal Organisation:- The network of social and friendly groups forms another 6
structure which fulfills the psychological needs of workforce and spontaneously
created within the framework of formal structure.
b) Advantages :- ( any two)
i) Fast communication
ii) Fulfills social needs
iii) Correct feedback
Disadvantages:- ( any two)
i) Spread rumours
ii) No systematic working
iii) May bring negative results
iv) More emphasis on individual interest
34. a) Physical distribution:- It is concerned with making the goods and services available at 6
the right place, so that people can purchase the same. There are two important
decisions relating to this aspect—
i) Physical movement of goods from producers to consumers
ii) Regarding the channels or using intermediaries in the distribution process.
b) Components of Physical Distribution:
1. Order processing:
2. Transportation;
3. Warehousing:
4. Inventory Control:

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 KENDRIYA VIDYALAYA REGIONAL OFFICE- JAIPUR
SAMPLE QUESTION PAPER – 3 (2022-23)
TIME: 3 HRS. SUBJECT - BUSINESS STUDIES (054) MAX. MARKS: 80

General instructions :
1 This question paper contains 34 questions.
2. Marks are indicated against each question.
3. Answers should be brief and to the point.
4. Answers to the questions carrying 3 marks may be from 50 to 75 words.
5. Answers to the questions carrying 4 marks may be about 150 words.
6. Answers to the questions carrying 6 marks may be about 200 words.
7. Attempt all parts of the questions together.
1. Which technique is used by Taylor for distinguishing efficient and inefficient workers? 1
(a) Motion Study (b) Method Study
(c) Work Study (d) Differential Piece Wage System

2. National Digital Library of India (NDL India) is a pilot project initiated by the HRD ministry. 1
It works towards developing a framework of virtual repository of learning resources with a
single-window search facility. It provides support to all academic levels including researchers,
life-long learners and differently-abled learners free of cost. State the dimensions of business
environment highlighted above.
(a) Economical and Social Environment
(b) Technological and Social Environment
(b) Political and Social Environment
(c) Legal and Economical Environment

3. The growing awareness about healthcare has led to an increase in the demand for healthcare 1
products and services in the country. Identify the feature of business environment being
described in the above case.
(a) Dynamic nature (b) Uncertainty
(c) Relativity (d) Interrelatedness

4. In a marketing firm, the Financial Manager pays more attention towards an increase of 3% in 1
the marketing cost as compared to a 15% increase in the courier expenses. Identify the concept
being used by the manager.
(a) Management by exception (b) Critical point control
(c) Corrective action (d) None of the above

5. Which of the following is a feature of demonetisation? 1

(a) Tax administration measure
(b) Channelising savings into the formal financial system
(c) Development of less-cash economy
(d) All of the above

6. Which of the following is a feature of the formal organisation? 1

(a) It satisfies the social needs of the employess.
(b) The standards of behaviour evolve from group norms
(c) Scalar chain of command is not followed
(d) It is deliberately created by the management

7. Explain the meaning of the business environment. 1

8. Rohan works as a production manager in Global Enterprises Limited. He has been given the 1
task of getting 1000 units of hand woven table mats manufactured at the cost of ₹150 per unit
within 10 days. In order to be acknowledged as an effective manager, he must ensure that
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 (a) The cost of production does not exceed ₹150 per unit
(b) The work is completed within 10 days even at higher cost per unit
(c) The cost of production is less than ₹150 per unit
(d) All of the above

9. From the pictorial presentation given below, identify the objective violated by the 1
management.

10. National Vritech Ltd. has grown in size. It was a market leader but with changes in business 1
environment and with the entry of MNCs, its market share is declining. To cope up with the situation,
the CEO starts delegating some of his authority to the General Manager, who also felt himself
overburdened and with the approval of CEO disperses some of his authority to various levels
throughout the organisation. Identify the concept of management discussed above.
11. Which of the following is not a demerit of divisional structure? 1
(a) It is an expensive structure to maintain since there may be a duplication of activities across
products
(b) All functions related to a particular product are integrated with one department
(c) Conflict may arise among different divisional heads due to different interests
(d) Authority provided to the managers to supervise all activities related to a particular division
may lead to undesirable consequences
12. Identify the correct sequence of steps to be followed in the trading procedure at the Stock 1
Exchange.
(a) Opening a trading account and Demat account, Placing an order, Settlement of order,
Execution of order
(b) Settlement of order, Opening a trading account and Demat account, Placing an order,
Execution of order
(c) Opening a trading account and Demat account, Placing an order, Execution of order,
Settlement of order
(d) Placing an order, Opening a trading account and Demat account, Execution of order,
Settlement of order.

13. On this day, the exchange will deliver the share or make payment to the other broker, _____. 1
(a) Pay-in day (b) Pay-out day
(c) Transaction day (d) None of the above

14. Identify the process of overseeing the work of the subordinates and giving instructions to 1
ensure optimim utilisation of resources and achievement of work targets.

15. ___ is the deliberate action of an organisation for promoting goodwill between itself and the 1
society.
(a) Marketing mix(b) Advertising
(c) Public relations(d) Selling

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16. Under which of the following conditions does a business need not maintain high level of 1
inventory?
(a) When higher level of customer services need to be provided
(b) When high degree of accurate sales forecast can be made
(c) When the responsiveness of the distribution system is low
(d) All of the above

17. Heena is planning to set up a small manufacturing unit for manufacturing eco-friendly 1
packaging material. She has decided to market her products through the conventional channel
of distribution, which involves wholesalers and retailers. Identify the channel of distribution
being adopted by the company.
(a) Zero level channel (b) One level channel
(c) Two level channel(d) Three level channel
18. Match the following: 1
Column A Column B
(i) Personal Selling (a) Activities carried to encourage immediate purchase

(ii) Advertising (b) Communicates with large number of potential customers.

(iii) Sales Promotion (c ) Provides expert advice and guidance about the product.
(a) i(c), ii(b), iii(a) (b) i(a), ii(b), iii(c)
(c) i(b), ii(c), iii(a) (d) i(b), ii(a), iii(c)
19. Stock Exchange works as a mechanism for the valuation of securities through the forces of demand and 1
supply. Identify the related function performed by the stock exchanges.
(a) Providing liquidity and marketability to existing securities
(b) Safety of transaction
(c) Pricing of security
(d) Spreading of the equity cult
20. Identify the feature/s of money market: 1
(a) Highly Liquid (b) Negotiable instruments
(c) Short term capital(d) All of the above

21. Why is management considered a multi-faceted concept? 3

22. Explain how controlling helps in 3
(i)Accomplishing organisational goals; and
(ii)Judging accuracy of standards.
OR
‘Controlling is forward and backward looking’. Explain.
23. Vinod - The Human Resource Manager, Umesh - The Assistant manager and Ashok - The 3
Marketing Head of Hitashi Enterprises Ltd. decided to leave the company.
The Chief Executive Officer of the company called the Human Resource Manager, Vinod and
requested him to fill-up the vacancies before leaving the organization. Vinod suggested that his
subordinate Rajesh is very competent and trustworthy. If he could be moved up in the
hierarchy, he would do the needful. The Chief Executive Officer agreed for the same. Rajesh
contacted 'Zenith Recruiters' who advertised for the post of marketing head for 'Hitachi
Enterprises Ltd.'. They were able to recruit a suitable candidate for the company. Umesh's
vacancy was filled-up by screening the database of unsolicited applications lying in the office.
(a) Name the internal/external sources of recruitment used by 'Hitashi Enterprises Ltd." to fill
up the above stated vacancies.
24. The stock market regulator,Securities and Exchange Board of India,was established by Govt. of 3
India with the aim of performing twin objectives. Name and explain these two functions.
OR
What is meant by primary market? Explain any of its two difference with secondary markets.
25. Resolutions Pvt. Ltd. is a publishing company. Its book on Business Studies for class XII is in 4

Page 114 of 141

 great demand. As a result, the employees in the marketing department are always racing
against time. The employees have to work overtime and on holidays to cater to the demand.
Managers in the marketing department are under stress as they have to handle more than two
territories. The work stress has led to dissatisfaction among the employees and managers.
1. Name and explain the step of staffing process which has not been performed properly.
2. State the next two stages immediately following the step identified in part ‘a’.
OR
Nishant, the director of a garment company, is planning to manufacture bags for the utilisation
of waste material from one of his garments unit. He has decided that his manufacturing unit
will set-up in a rural area of Odisha where people have very few job opportunities and labour is
available at very low rates. He also thought of giving equal opportunities to men and women.
For this, he wanted four different heads for sales, accounts, purchase and production. He gave
an advertisement and short listed ten candidates per post after conducting different selection
tests. Identify and state the next four steps for choosing the best candidate out of the short-
listed candidates.
26. Mrs. Rajlaxmi is working as the Human Resource Consultant in a firm that manufactures 4
cosmetics, which is facing a problem of high employee turnover. The CEO of the company has
invited suggestion from her for retaining the talented employees and reducing the employee
turnover. Mrs. Rajlaxmi recommends that the good employees be rewarded in a way that it
creates a feeling of ownership among the employees and at the same time, makes them
contribute towards the growth of the organisation.
1. Identify the incentive and explain its type which has been suggested by Mrs. Rajlaxmi
to the CEO of the company.
2. Also explain any two other incentives of the same type.

27. Mr. Shubhendu Bose is the owner of Bikmac Enterprises carrying on the business of 4
manufacturing various kinds of biscuits. There was a lot of discontentment in the organisation
and the targets were not being met. He asked his son, Naval, who had recently completed his
MBA, to find out the reason.
Naval found that all the decision-making of the enterprise were in the hands of his father. His
father didn’t believe in his employees. As a result, both the employer and the employees were
not able to understand each others’ messages in the same sense. Thus, the employees were not
happy and targets were not met.
1. Identify any two communication barriers and category also because of which Bikmac
Enterprises was not able to achieve its target.
2. State one more barrier each of the types identified in (1) above.
Or
Organisation keen on developing effective communication should adopt suitable measures to
overcome the barriers and improve communication effectiveness. Suggest any four such
measures
28 Amazing Duniya’ is a tourist agency. It also has a group of hotels. The company offers new 4
types of schemes to the potential customers. Amit was offered a scheme of staying in a hotel
for 6 days and 5 nights for free. However when he reached the destination he was told that
every room of the hotel was booked. He told them that he was told earlier that his room was
booked. He even showed them the confirmation he received on his mail.
1. Can Amit file a complaint against the tourist agency?
2. Will he get a relief in this case?
3. Name the relief he will get.
4. Which consumer right has been violated in this case?
29. Well-being Ltd. is a company engaged in production of organic foods. Presently, it sells its 4
products through indirect channels of distribution. But, considering the sudden surge in the
demand for organic products, the company is now inclined to start its online portal for direct
marketing. The financial managers of the company are planning to use debt in order to take
advantage of trading on equity. In order to finance its expansion plans, it is planning to raise a
debt capital of Rs. 40 lakhs through a loan @ 10% from an industrial bank. The present capital
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 base of the company comprises of Rs. 9 lakh equity shares of Rs. 10 each. The rate of tax is
30%.
In the context of the above case:
Assuming the expected rate of return on investment to be same as it was for the current year
i.e. 15%, do you think the financial managers will be able to meet their goal. Show your
workings clearly.
30. Arun is a successful businessman in the paper industry. During his recent visit to his friend’s 4
place in Mysore, he was fascinated by the exclusive variety of incense sticks available there.
His friend tells him that Mysore region is known as a pioneer in the activity of Agarbathi
manufacturing because it has a natural reserve of forest products especially Sandalwood to
provide for the base material used in production. Moreover, the suppliers of other types of raw
material needed for production follow a liberal credit policy and the time required to
manufacture incense sticks is relatively less. Considering the various factors, Arun decides to
venture into this line of business by setting up a manufacturing unit in Mysore.
In context of the above case:
1. Identify and explain the type of financial decision taken by Arun.
2. Identify the two factors mentioned in the paragraph which are likely to affect the
working capital requirements of his business.
31. Identify the general principle and scientific techniques of management from the following 6
statements:
(a) Which says: “ We should not have multiple bosses, as it will lead to divided
responsibility”
(b) The boss expects his colleagues to get work out of subordinates without giving them
any power.
(c) Superior distributes the work amongst his subordinates, either according to capability or
proportionately.
(d) Aims to find the most optimum way of doing the work.
(e) Determine the movement involve in performing the job.
(f) One group, one plan of action and one head.
OR
Hritik is desirous of setting up a small factory to manufacture different kinds of eco-friendly
packaging materials. He proposes to adopt a logical approach to his business rather than hit and
trial method as he knows that this can result in tremendous saving of human energy as well as
wastage of time and materials. He plans to adopt paternalistic style of management in practice
in order to avoid any kind of class-conflict that may emerge between him and the workers.
Moreover, he plans to seek the opinion of his workers before taking any important decisions
and also offers incentives to them for providing valuable suggestions for the business.
In context of the above case:
Identify and explain the various principle of scientific management that Hritik plans to apply in
his business.
32 ‘Indian Drugs and Pharmaceuticals Ltd.’ is engaged in the manufacturing and distribution of 6
medicines. The company has set-up an objective of increasing its sales turnover by 20%. To
achieve this objective the company has decided to diversify into baby health care products.
Since the company has already set its objectives and developed the premises based on the
same, it wants your help for the remaining steps to be taken in this process. Explain the next
four steps.
OR
‘Serious Business’ is a balloon manufacturing firm. With the arrival of foreign firms it is
feeling the pressure of improving its business strategy. Because of the firm’s advance planning
it could not suddenly bring changes in its plans as the whole organisation had started
implementing the decided plan. But this year the organisation wants to ensure success.
However, the firm knows that the external environment is changeable and continues to vary in
a fast manner. The organisation wants to prepare in advance for a better future. It has decided
to allocate a portion of its budget specifically for proper planning as it knows there are going to
be expenses like Expert’s fee, survey charges, etc.
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 Which limitations of planning have been identified in the above case?
33. Identify the marketing management philosophy involved in the following cases: 6

(i) Aman microwaves produce microwaves but they do not try to understand the needs
of the customers. Their main focus is always on the quality of the product but never
on customer requirement. They try’ to include as many features as possible in their
product. This year they have added a special type of alarm in their product which is
a unique feature. The alarm is available in ten varieties. However, the customers say
that the product is not of much use to them as it consumes a lot of electricity.
(ii) Ravi coolers is a very progressive company. The owners of the company feel that
unless and until they contribute to society it is worthless to exist as a company. In a
recent move by the government the organisation has decided to help it. The
organisation will be making five teams of hired environmentalists from foreign
countries. This team will help the local people clean the portions of a polluted river
in the country. The costs of this project will be borne by the company.
(iii) A company decides to do promotion for a new chips flavour. For this many contests
are organized in different colleges. The youth is the target market for the chips
makers. However, there hasn’t been proper research about the liking of the flavour
among the youth. The company has launched this product based only on intuition.
The company has decided to go ahead with the promotional campaign even if there
is a negative response from the buyers.
(iv) Rajesh is a manager in a company. His main area of focus is to generate revenue for
the company through repeated sales. He decides to develop a product for the
company which can generate revenue in the long run. For this he meets a team of
R&D (Research & Development) of his company. After a long meeting they decide
to do survey. Based on the survey a product is made to fulfill needs pf the
customers. The product later produces a lot of revenue through repeated sales in the
long run.
(v) Geetika scooters are the leading manufacturers of scooters in the industry. They
have the first mover advantage in the industry. When they started manufacturing
scooters no other company was doing it. They manufacture scooters and the middle
class purchases them in a high number. With each passing year the number of
scooters sold is increasing. The company’s main concern usually is to produce
maximum number of scooters. Company’s profit is governed by the maximum
number of scooters they produce.
(vi) An Air Conditioner manufacturing company is busy these days in adding features to
its products. This is being done to increase its customer base. The company has not
done any research to see which types of features are liked and which are in excess.
It is only making its product loaded with new features. The needs of the customers
are not considered. When asked why they are not doing proper research to know the
expectations of the customers they replied that they have full faith on the
performance of their Air Conditioners.

34. Ishita works as a corporate event coordinator in an event management company. She has been 6
made an overall official incharge for organizing a painting exhibition for one of the clients of
the company. For ensuring that the exhibition takes place successfully, she identifies the
various activities involved and divides the whole work into various task groups like marketing
committee, decoration committee and reception committee. In order to facilitate coordination
within and among committees, she appoints a supervisor of each group. Each member in the
group is asked to report to their respective supervisors and all the supervisors are expected to
work as per Ishita’s orders.
In context of the above case:
1. Identify the function of management being performed by Ishita.
2. Describe briefly the various steps involved in the performance of the function of
management as identified in part (1) of the question.
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 MARKING SCHEME
SAMPLE PAPER 3 (BUSINESS STUDIES- 054)
1. (d) Differential Piece Wage system
2. (b) Technological and Social Environment
3. (d) Interrelatedness
4. (b) Critical point control
5. (d) All of the above
6. (d) It is deliberately created by the management
7. Correct meaning.
8. (b) The work is completed within 10 days even at higher cost per unit
9. Social objective
10. Decentralisation
11. (b) All functions related to a particular product are integrated with one department
12. (c) Opening a trading account and Demat account, Placing an order, Execution of order, Settlement
of order
13. (b) Pay-out day
14. Supervision
15 (c) Public relations
16. (b) When high degree of accurate sales forecast can be made
17. (c) Two level channel
18. (a) i(c), ii(b), iii(a)
19. (c) Pricing of security
20. (d) All of the above
21. Management is considered as a multi-faceted concept because it has three main dimensions. These
are
(i) Management of Work (ii) Management of People (iii) Management of Operations
22. (1 ½ marks for each correct explanation) Or
3 marks for correct explanation in 50-60 words
23. The internal/external sources of recruitment used by 'Hitachi Enterprises Ltd."
Promotion: Placement Agencies and Management Consultants: Casual Callers:
24. (i) Developmental and
(ii) Regulatory function
Also explain one sub part of each function
Or
Correct meaning and differences
25. 1. Estimation of manpower requirements:
a) Recruitment b) Selection or
The next four steps are as follows:
i) Employment Interview ii) Reference and Background Checks
iii) Selection Decision iv) Medical examination
26. 1. Co-partnership / stock option
2. The two other financial incentives are described below:
Retirement Benefits
Perquisites
27. 1. The two communication barriers because of which Bikmac Enterprises was not able to
achieve its targets are: (i) Organisational barriers: Organisational Policy
(ii) Psychological barriers: Distrust
2. Organisational barriers: Status, Psychological barriers: Premature evaluation
Or
Any four measures to overcome barriers
28. 1. Yes, he can file a complaint against the tourist agency as he has got the confirmation as the
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 proof.
2. Yes, he will get a relief as he has proof of confirmation of his booking. He will get relief as
his time and money (Fare charges for travelling purpose) are wasted.
3. The relief he will get is ‘he will be compensated for the loss of time and money and also for
filing the complaint’. The second relief will be directed towards the company which will
have to stop this wrong trade practice for future.
4. The consumer right which has been violated here is ‘Right to be Informed’.
29.

Situation 1 Situation 2
Sources
Amount (in Rs.) Amount (in Rs.)
Equity shares 90,00,000 90,00,000
10 % Debentures NIL 40,00,000
Total Capital 90,00,000 1,30,00,000
EBIT 13,50,000 19,50,000
Less: Interest — – (4,00,000)
EBT 13,50,000 15,50,000
Less: Tax @ 30% – (4,05,000) – (4,65,000)
EAT 9,45,000 10,85,000
No. of shares of Rs. 10 each 9,00,000 9,00,000
9,45,000/9,00,000 10,85,000/9,00,000
EPS
= 1.05 = 1.21
Yes, the financial managers will be able to meet their goal as the projected EPS, with the issue of
debt, is higher than the present EPS.
30. 1. Investment decision
2. The two factors mentioned in the paragraph which are likely to reduce the working
capital requirements of his business are as follows:
(i) Availability of raw material (ii) Production cycle (iii) Credit availed
31. (a) Unity of command (b) Authority and responsibility (c) Division of work (d) Method study
(e)Motion study (f) Unity of direction

OR

1. The various principle of scientific management that Hritik plans to apply in his business are
described below:
a) Science, not Rule of Thumb b) Harmony, Not Discord c) Cooperation, Not
Individualism
32 1. Identifying alternatives. 2. Evaluating alternative 3.Selecting an alternative. Implementing the
plan.
OR
1. Planning leads to rigidity. 2. It may not work in a dynamic environment.3.Planning involves
huge costs.
33. (i) Product concept (ii) Societal Marketing concept (iii) Selling concept
(iv) Marketing concept (v) Production concept (vi) Product concept
34. 1. Organising function
2. The steps involved in the process of organizing are as follows:
a) Identification and Division of Work b) Departmentalisation
c) Assignment of Duties d) Establishing Reporting Relationship

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 KENDRIYA VIDYALAYA REGIONAL OFFICE- JAIPUR
SAMPLE QUESTION PAPER – 4 (2022-23)
SUBJECT - BUSINESS STUDIES (054)
TIME: 3 HRS. MAX. MARKS:80
General instructions :
1 This question paper contains 34 questions.
2. Marks are indicated against each question.
3. Answers should be brief and to the point.
4. Answers to the questions carrying 3 marks may be from 50 to 75 words.
5. Answers to the questions carrying 4 marks may be about 150 words.
6. Answers to the questions carrying 6 marks may be about 200 words.
7. Attempt all parts of the questions together.
1. Management is equally important to run a political organisation as it is to run an economic 1
organisation. Which feature of management is being reflected in the given statement?
(a) Management is goal oriented(b) Management is multidimensional
(c) Management is all pervasive(d) Management is a group activity
2. India continues to be a lower-middle-income country along with 46 others, while Sri Lanka 1
has climbed to the upper-middle-income group for the fiscal year (FY) 2020, according to the
World Bank’s classification of countries by income levels, released on July 1, 2019. Identify
the related dimensions of the business environment.
(a) Social dimension (b) Technological dimension
(c) Economic dimension (d) Political dimension
3. Both managers and workers should change their attitudes towards each other for the effective 1
and efficient achievement of organizational objectives. Identify the technique referred by
Taylor in the given statement.
4. Management is considered to be a soft science because 1
(a) The principles of management deals with human behaviour
(b) The principles of management have universal application
(c) Different principles of management are brought into effect differently by different
managers
(d) It is not important for the practicing managers to be a member of a professional
association.
5. Ajanta Foods Ltd. is engaged in the trading of ‘Noodles’. It has its registered office in 1
Kolkata, manufacturing unit in Solan and marketing department at Delhi. Which type of
organisational structure the company should adopt to achieve its target?
(a) Functional Structure (b) Divisional Structure
(c) Formal Structure (d) Informal Structure

6. ________ refers to negative and unfavourable external factors that are likely to create hurdles 1
for a firm:-
(a) Opportunities (b) Warning (c) Threats (d) None of these
7. To make the annual function of the school successful the principal of the school divided all the 1
activities into task groups each dealing with a specific area like rehearsals, decoration, stage
management, refreshments etc. Each group was placed under the overall supervision of a
senior teacher. Identify the function of management performed by the Principal in doing so.
(a) Planning (b) Organising. (c) Staffing (d) Controlling
8. Which one of the following is a part of economic environment? 1
(a) Public debt(b) Lifestyle of people(c) Technological changes(d) Level of education
9. Differentiate between formal and Informal organization on the basis of authority. 1

10. Investors and customers are the two components of specific forces of business environment. 1
(True/False)
11. Which of the following statements does not highlight the relationship between planning and 1
controlling?
(a) Planning and controlling are separable twins of management.
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 (b) Planning without controlling is meaningless; controlling without planning is blind.
(c) Planning is prescriptive, controlling is evaluative.
(d) Planning and controlling are interrelated and interdependent.
12 Stock exchanges provide an opportunity for investors to disinvest and invest. Identify the 1
related function of the stock exchange.
(a) Providing scope for speculation (b) Providing liquidity and marketability to existing
securities
(c) Pricing of security (d) Spreading of the equity cult
13 Identify the correct sequence of steps involved in the communication process. 1
(a) Sender, Message, Encoding, Media, Decoding, Feedback, Receiver
(b) Sender, Decoding, Receiver, Feedback, Message, Encoding, Media
(c) Sender, Message, Encoding, Media, Decoding, Receiver, Feedback
(d) Sender, Media, Decoding, Receiver, Message, Encoding, Feedback
14. Secondary package refers to 1
(a) First layer of protection (b) Transportation package
(c) Additional layers of protection (d) Immediate container

15. Identify the type of financial market where the new securities are issued. 1
16. Under which of the following situations is a company not likely to fix a lower price for its 1
product?
(a) When the competition has introduced a substitute product
(b) If the demand for a product is inelastic
(c) When the company wants to attain market share leadership
(d) When the demand for the product is low
17. A company wanted to raise funds so it reached out to facilities institutional arrangements 1
through which long term funds (debt + equity) were raised and invested. A lot of thinking was
done whether the company should have gone for debt or equity. Which concept of financial
market is highlighted in the starting of the case?
18. Advertising is the function of marketing which is concerned with the cost and location of 1
target market.(True/False)?
19. ABC Ltd. issued prospectus for the subscription of its shares for Rs. 500 crores in 2021. The 1
issue was oversubscribed by 20 times. The company issued shares to all the applicants on pro-
rata basis. Later SEBI inspected the prospectus and found some misleading statement about
the management of the company in it. SEBI imposed a penalty of Rs. 5 crores and banned its
three executive directors for dealing in securities market for three years. Identify the function
and its type performed by SEBI in the above case.
20. _________ is the component of physical distribution which bridges the time gap between 1
production and consumption of goods.
(a) Order processing(b) Transportation(c) Warehousing(d) Inventory control
21. XYZ Ltd. is a management oriented company. Time and again all the employees learn from 3
their seniors various ways of dealing with diverse situations. They are provided training
whenever required. They are also given incentives both financial as well as non financial. The
result is employees see their development in the organisation. The organisation tries to behave
as a responsible constituent of society and creates good quality products. It has a very good
Page 121 of 141
 image in the market. The training modules are superb and the employees always try to find
unique ways of providing solutions in the context of rapidly changing business environment.
This has helped the organisation to adjust frequently in a very good manner.
Which importance of management are highlighted here? Also identify the lines.
22. Adarsh is trying to reduce wastage of resources in his company. He is trying to do it in the 3
best possible manner. He has set standards for performance of different types of activities and
is doing his level best to perform according to these set standards to minimize wastage of
resources. Things are not going to be over for him as he will have to look into other aspects
too. He has set up a good monitoring system which helps him know how do employees are
performing according to set standards as when the employees meet these standards they will
be given incentives. He is hoping to pull out a good performance from his team this year.

1. Which function of management has been referred to in the above case?

2. Which benefits of this function of management have been highlighted in the above
case?

OR
Peter is a production manager in a tire manufacturing company. Recently he noticed that his
team could not achieve the target production of 80 units per day. Instead on an average the
production touched the target of only 65 units. On thorough analysis he found out that the
deviation between standard production and actual production is far beyond acceptable range,
on overall analysis he also found out that there has been a marginal increase in office
stationery expenses. Moreover, he detected that the machine installed for the purpose of
manufacturing was not able to perform at its best Being a management expert suggest Peter
how he should deal with the existing problem.
23. Explain any three objectives of SEBI. 3
OR
Raman who is a broker in a stock exchange has to face challenging questions from society.
His own family sometimes asks him to think about his decision to become a broker. He
however, has full faith in the stock exchange. He knows that the membership of a stock
exchange is properly regulated abiding the legal system and the public doing investment is
safe in making deals. His children one day asked him the reason behind the ups and downs in
the stock market. He clarified their doubt by telling them that forces of supply and demand
decide the prices of securities in the secondary market. Off late he has decided to write a book
on the functioning of stock exchange and its significance in the Indian economy. He is trying
to highlight in his book how through the process of investment and disinvestment existing
securities are sold and resold and savings are channelized into the most productive
opportunities. Definitely Raman is justifying his presence in his job.
Identify and briefly explain the functions of Stock Exchange discussed in the above case.
24. A company manufactures very sophisticated switch gears used in automatic cars. For this the 3
company uses hi-tech machines. Most of the times the workers of the factory remain idle
because of lack of knowledge regarding the use of these hi-tech machines. The frequent visits
by the engineers and constant supervision of the foreman results into high overhead charges.
Explain the way by which this problem can be overcome. Also state how this helps the
employees.

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25. Anjana chemicals are looking for qualified and talented people to apply for vacant jobs in the 4
organisation. With the passage of time the organisation has learned a lot with its experience. It
knows when it goes for final selection of candidates; it will have to
design different tests. They want to test the employees on the basis of their decision making
ability. The company wants to ensure proper testing of the recruited candidates. After this the
candidates will be judged on the basis of in-depth formal conversation.
After the selection the candidates are placed and trained. Employees have to be trained on the
equipment they will be using but this training will take place away from the workplace.
1. Which type of recruitment should the company depend upon?
2. Which type of test should be conducted done by the organisation to suit their need?
3. Which stage in the selection process is highlighted after the written test?
4. What type of training is given to the candidates?

OR
Sharmila, a very able HR manager, is called by her boss. He tells her to judge whether there is
under manning or over manning in the organisation. She takes her work sincerely and finds
out that the total number of employees in the organisation is less than required. Then she starts
a process of searching potential employees for the organisation. In her efforts to do so she
adopts three ways:
1. She goes to various MBA colleges to find out new talent.
2. She talks to the existing employees for information about candidates in their know-
ledge who can be recruited in the organisation.

a) Which type of analysis is done by Sharmila?

b) Which process is started by Sharmila to meet the problem of under manning?
c) Identify different types of sources of external recruitment highlighted in the above
case.

26. ‘Brightest Papers’ is a leading paper manufacturing company. The enthusiasm level of 4
employees in this organisation is very high. The management has applied a process of
directing where the financial and non financial needs of the employees are identified and are
satisfied accordingly. The result has been amazing for the organisation. The output levels of
the employees have touched a new high. Recently an award was also given to the HR
department of the organisation for doing its job in the best manner in the industry. Two years
back when the organisation had not applied this process the employees were leaving the
organisation and were not loyal but now the situation has changed and there has been increase
in the number of applicants for various jobs in the company. The organisation believes that its
best resource is the human. The idea is to maximize the output of the human resources. There
are many steps taken to increase the input of the employees and for this the work environment
is made interesting in order to increase their regularity which has obviously increased the
labour input during the recent years. The company is now among the most inspiring
organisations in the industry.
1. Which element of directing has been applied by the management?
2. Which benefits of this element are highlighted in the above case?

OR

Identify the Maslow’s needs applicable in the following cases of organisational set up:
1. Virendra works in an organisation. He is part of the organisation for last 20 years.
During all these years in spite of his best performance in the organisation he hasn’t yet
reached the post of vice president.
2. Vandana works in a software firm. She goes to office which is situated at a distance of
20 kms from her house. Her husband earns very well and is a pilot with a leading
Airline. Though she belongs to a good earning family yet she has decided to keep on
going to her job which she feels helps her gain acceptance in her social circle.

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 3. Kavita has recently passed out from a decent MBA college with her major in marketing.
A lot of money of her parents has been spent for paying her education fee. Now she has
applied for a job in a company of reputation. Her main concern is good salary which
will give her financial security.
4. Mehak has been an outstanding student throughout her life. She did her graduation from
a very good college. When the placement started she decided to withdraw her name. A
month later she started her own NGO which provided education to poor children. Her
NGO sets targets of educating a definite number of poor students and she feels if she is
able to achieve a goal of teaching 5,000 students by the end of 5 years she will be very
successful.

27. Wooden Peripheral Pvt. Ltd. is counted among the top furniture companies in Delhi. It is 4
known for offering innovative designs and high quality furniture at affordable prices. The
company deals in a wide product range of home and office furniture through its eight
showrooms in Delhi. The company is now planning to open five new showrooms each in
Mumbai and Bangalore. In Bangalore it intends to take the space for the showrooms on lease
whereas for opening showrooms in Mumbai, it has collaborated with a popular home
furnishing brand, ‘Creations.’
1. Identify the factors mentioned in the paragraph which are likely to affect the fixed
capital requirements of the business for opening new showrooms both in Bangalore
and Mumbai separately,
2. “With an increase in the investment in fixed assets, there is a commensurate increase in the
working capital requirement.” Explain the statement with reference to the case above.
OR
‘Abhishek Ltd.’ is manufacturing cotton clothes. It has been consistently earning good profits
for many years. This year too, it has been able to generate ^ profits. There is availability of
enough cash in the company and good prospects for growth in future. It is a well managed
organisation and believes in quality, equal employment opportunities and good remuneration
practices. It has many shareholders who prefer to receive a regular income from their
investments.
It has taken a loan of Rs.50 lakhs from I.C.I.C.I Bank and is bound by certain restrictions on
the payment of dividend according to the terms of the loan agreement.
The above discussion about the company leads to various factors which decide how much of
the profits should be retained and how much has to be distributed by the company. Quoting
the lines from the above discussion, identify and explain any four such factors.
28. Somnath Ltd. is engaged in the business of export of garments. In the past, the performance of 4
the company had been upto the expectations. In line with the latest technology, the company
decided to upgrade its machinery. For this, the Finance Manager, Dalmia estimated the
amount of funds required and the timings. This will help the company in linking the
investment and the financing decisions on a continuous basis. Dalmia therefore, began with
the preparation of a sales forecast for the next four years. It also collected the relevant data
about the profit estimates in the coming years. By doing this, he wanted to be sure about the
availability of funds from the internal sources of the business. For the remaining funds he is
trying to find out alternative sources from outside. Identify and Explain the financial concept
discussed in the above Para. Also state the objectives to be achieved by the use of financial
concept, so identified.
29. Aman, a degree holder in Entrepreneurship came to know about Piplantri Village located in 4
Rajasthan, where in 2006 an initiative was started in which 111 trees are planted every time a
girl child is born.
To keep termites away from the trees the villagers have planted 2.5 million Aloe Vera plants
around the trees. This has turned the village into an oasis, as the planting of trees led to higher
water levels.
Aman decided to visit the village to start a business unit, for the processing and marketing of
Aloe Vera into juices, gels and other products.
However, on visiting the village Aman found that the villagers were suffering exploitation at
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 the hands of local merchants who were engaged in unscrupulous, exploitative trade practices
like hoarding and black marketing of food products and also selling unsafe and adulterated
products to the villagers.
After looking at their plight, instead of a business organisation, he decided to set up an
organisation for the protection and promotion of the consumer interest of the villagers.
State the functions that the organisation established by Aman will be performing. (Any six
points).
30. Nikhil runs a small dhabba on the Jaipur highway. He is very rigid and follows a strict policy 4
of punishment like cutting the salary, stopping increments or giving job termination threats to
his workers for any kind of discrepancies in their work. He does not seek advice or opinions
from his workers, as he does not have any confidence on the competence of his workers. Also,
the workers are not willing to offer useful suggestions as they do not expect any motivation or
incentive for taking such initiatives. As a result, the labour turnover is high and his business
has been adversely affected.
In the above context:
1. Name and explain the style of leadership adopted by Nikhil.
2. Identify the type of communication barrier created by Nikhil due to which the workers
suppress their need to communicate with him.
31. Suresh works in a bulb manufacturing company. Each bulb which is manufactured is of 6
standard size and quality. Further if there is any unrequired type of bulb manufactured then its
production is stopped. Last month when the company came to know that 10watt bulbs were no
more liked by customers, their production was stopped. He works in the purchase department.
His job is to purchase the filaments required to make bulbs. This time when he purchases the
filament he gets the instruction from the seller that some special care needs to be taken in the
first hour of fixing the filaments inside the bulb. Suresh knows this information should be
given immediately to the production department before the assembling process starts.
However he finds that his company’s policies only allow him to give the message to his
immediate boss who will further pass this message to his boss. The passing of this message
will continue till it reaches the desired person in the production department.
Which technique of management is followed here? Also name the principle of management
followed here by the company? Which option is now available to Suresh since the company is
not allowing him to interact with the concerned worker in the production department? Explain
all the concepts identified above.
OR

Example Pvt. Ltd. is an organisation which is governed by people who are egoistic and
consider themselves as the most intelligent. All the suggestions made by the workers are not
even attended which has resulted in many strikes during last couple of months. The result is
lack of productivity. However recent reports from the organisation say that there is a training
module going on for the employees so that their individual development can take place to the
maximum. Some training modules are thought of being implemented. This may take the
organisation out of its current bad performance. This training module which is now to be
followed at the main branch will be later given a uniform format and will be applied to all
branches of the organisation. .
Identify the scientific principle of management which is violated initially and the principle of
scientific management which is followed later on. Which concept of scientific management is
discussed in the last part of the above case?
32. Aman Chadha started ‘Bulls Eye’ a company for providing cyber security solutions to 6
businesses. Its objective is to prevent, detect and respond to cyber attacks and protect critical
data. He was a hardworking software engineer and an expert in cyber security. His reputation
grew by leaps and bounds as he was not only a person of integrity but also did his work with
utmost honesty and sincerity.
The business started growing day by day.
He was delighted when he was offered a big project by the Ministry of Defence. While
working on the project, he found that the volume of work made it impractical for him to
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 handle all the work by himself. He decided to expand the team. The company maintained a
close liaison with a local engineering college. During a campus placement, Ishan and Vrinda
were appointed to work for the new project.
He found the new employees capable, enthusiastic and trustworthy. Aman Chadha was thus,
able to focus on objectives and with the help of Ishan and Vrinda, the project was completed
on time. Not only this Aman Chadha was also able to extend his area of operations. On the
other hand Ishan and Vrinda also got opportunities to develop and exercise initiative,
1. Identify and briefly explain the concept used by Aman Chadha in the above case
which helped him in focusing on objectives.
2. Also, state any four points of importance of the concept identified in (a) above.
33. Two years ago Madhu completed her degree in food technology. She worked for sometime in 6
a company manufacturing chutneys, pickles and murabbas. She was not happy in the company
and decided to have her own organic food processing unit for the same. She set the objectives
and the targets and formulated action plan to achieve the same. One of her objective was to
earn 10% profit on the amount invested in the first year. It was decided that raw materials like
fruits, vegetables, spices, etc. will be purchased on three months’ credit form farmers
cultivating organic crops only. She also decided to follow the steps required for marketing of
the products through her own outlets. She appointed Mohan as a production Manager who
decides the exact manner in which the production activities are to be carried out. Mohan also
prepared a statement showing the number of workers that will be required in the factory
throughout the year. Madhu informed Mohan about her sales target for different products, area
wise for the forthcoming quarter. While working on the production table a penalty of Rs 100
per day for not wearing the caps, gloves and apron were announced.
Quoting lines from the above para identify and explain the different types of plans discussed.
OR
‘Dhulai’ is a washing machine manufacturing company. The company decides to enter into
music system manufacturing industry. The company has a committed top management. It
knows that there are various challenges in the market where its decisions regarding the new
industry might fail. Still the top management doesn’t want to waste a lot of resources on its
plans. It knows that sometimes plans take more time in making than getting implemented.
However, the company wants to proceed with a positive approach. It has decided to study all
the aspects of its competitors, to set all its objectives and to allocate the required resources.
The company did well in its previous business. At that time they took planning very seriously
as they knew everything the company would do had to be based on concrete plans. The
company will start its operations from next month.
Which function of management has been discussed in the above case? Which limitations of
planning have been highlighted in the above case? Which type of plan is indicated in the
above case? Which feature of planning is highlighted above?
34. Atul was a pen manufacturer. He used to make ball point pens in a small factory in the 6
basement of his house. Daily he would go to the market place and distribute pens to the
retailers. Some of the pens were sold by him of his own by meeting persons on road. He had
not kept any name for his pens. They were just blue, black and red pens. One of his friends
suggested him to keep a good name of his pens. He kept his own name and started selling pens
with the name of Atul Pens. Then there were three categories of pens – Atul Red, Atul blue
and Atul black. Gradually his business started to pick up even more and he made good
revenue.
1. Which function of marketing is highlighted in the above case? Explain.
2. Which element of promotion mix has been highlighted in the above case? Also
quote the lines.
3. What two types of product names related terms do you see in the above case?
4. Which of the above two identified names was better? Why?

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 MARKING SCHEME
SAMPLE PAPER 4 (BUSINESS STUDIES- 054)
1. (c) Management is required in all types: economic, social or political, and sizes of organisations.
2. (c) Economic dimension
3. Mental revolution
4. (a) The principles of management deals with human behaviour
5. (a) Functional Structure
6. (c) Threats
7. (b) Organising.
8. a) Public debt
9 Correct difference on the basis asked
10 True
11 (a) Planning and controlling are separable twins of management.
12 (b) Providing liquidity and marketability to existing securities.
13 (c) Sender, Message, Encoding, Media, Decoding, Receiver, Feedback
14. (c) Additional layers of protection
15. Primary market
16. (b) If the demand for a product is inelastic
17. Capital Market
18. False; transportation is the function of marketing.
19. Protective function has been performed by SEBI in the above case. And the type of Protective
function is Prohibition of fraudulent and unfair trade practices.
20. (c) Warehousing
21. 1. Development of personnel.
2. Development of society.
3. Helps in becoming dynamic organisation.

22. 1. Controlling.
2. The benefits of controlling highlighted in the above case are:
o Controlling helps in efficient utilisation of resources.
o Controlling helps in improving employee motivation.
Or
Peter should follow the following principles of managerial control while analysing deviations:
1. Critical point control.
2. Management/Control by Exception.
23. Three functions
OR
1. Ensures safety of transactions
2. Helps in deciding pricing of securities.
3. Contributes to economic growth.
24. Benefits of training to employees:
25. 1. The company should depend upon external recruitment to meet its needs.
2. The type of test needed by the organisation to suit their need is intelligence test.
3. The stage in the selection process which is highlighted after the written test is employee
interview.
4. The type of training given to the candidates is vestibule training.
OR
1. The type of analysis done by Sharmila is workforce analysis.
2. The process started by Sharmila to meet under manning is recruitment.
3. The different types of sources of external recruitment highlighted in the above case are:
 Campus recruitment. She goes to various MBA colleges to find out new talent.
 Employee recommendation. She talks to the existing employees.
26. 1. Motivation.
2. The benefits of Motivation highlighted in the above case are:

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 o Motivation helps in increasing the performance level of the employees
o Motivation helps in reducing the employee turnover
o Motivation helps in reducing absenteeism in the organisation.

OR
1. Esteem need. 2. Affiliation need. 3. Basic physiological need. 4. Self actualization
need.
27. 1. Factor is availability of finance and leasing facility

The fixed capital requirements of Wooden Peripheral Pvt. Ltd. for opening new showrooms
in Bangalore will be relatively less as its taking space on lease, so only rentals have to be
paid.
Similarly, the factor is Level of collaboration/joint ventures. Its fixed capital requirement for
opening showrooms in Mumbai will be reduced as its going to share the costs with another
company through collaboration.
2. It’s true that,” With an increase in the investment in fixed assets, there is a commensurate
increase in the working capital requirement.” Like in the above case, Wooden Peripheral Pvt.
Ltd. is planning to invest in new showrooms. Consequently, its requirement of working
capital will increase as it will need more money to stock goods, pay electricity bills and
salaries to staff. Also, it intends to take the space for the showrooms in Mumbai on lease so it
will have to pay rentals.
OR
Factors affecting divided decision:
1. ‘Consistently earning good profits’. It relates to the stability of earnings of the company
2. ‘There is availability of enough cash in the company’. The above line reflects the cash flow
position
3. ‘It has many shareholders who prefer to receive a regular income’. Shareholders’ preference
4. ‘It has taken a loan of Rs.50 lakhs from I.C.I.C.I Bank and is bound by certain restrictions

28. Financial planning. The objectives to be achieved by the use of financial concept are stated below:
 To ensure availability of funds whenever required.
 To see that the firm does not raise resources unnecessarily
29. The key functions highlighting the role of a consumer association are listed below:
 Educating the general public about consumer rights by conducting training programs, conf.
 Publishing periodicals and other publications to give knowledge about consumer problem.
 Carrying out comparative testing of consumer products in accredited laboratories.
 Encouraging consumers to strongly protest and take an action against unscrupulous,
exploitative
 Providing legal assistance to consumers by way of providing aid, legal advice etc.
 Filing complaints in appropriate consumer courts on behalf of the consumers.

30. 1. The autocratic style of leadership. 2. Personal barriers have been created by Nikhil (i)Lack
of confidence of superior on his subordinates, (ii) Lack of proper incentives
31. The technique of management which is followed here is Standardization (Each bulb which is
manufactured is of standard size and quality) and Simplification (Further if there is any unrequired
type of bulb manufactured then its production is stopped).
The principle of management which is followed here is Scalar Chain.
The option which is now available to Suresh is the use of Gang Plank as this is an emergency
situation
OR
The principle of management which is violated initially is Cooperation not Individualism
The principle of management which is followed later on is Development of Each and Every
Person to His or Her Greatest Efficiency and Prosperity.
The concept of management which is discussed in the last part of the case is Standardisation.

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32. The concept used by Aman Chadha in the above case is delegation. Importance of delegation:
a) Effective management. b) Employee development. c) Motivation of
subordinates. (iv)Facilitates organisational growth. v) Basis of management
hierarchy.
33. The different types of plans are:

1. ‘One of the objective was to earn 10% profit on the amount invested in the first year.’-
Objective. 2. ‘Raw materials like fruits, vegetables, spices, etc. will be purchased on three months
credit from farmers cultivating organic crops only- Policy. 3. ‘To follow the steps required for
marketing of the products.’ -Procedure. 4. ‘Statement showing the number of workers that will be
required in the factory throughout the year.’- Budget. 5. ‘Penalty of Rs. 100 per day for not wearing
the caps, gloves etc.’- Rule.

OR
The function of management which is discussed in the above case is ‘Planning’. The various
limitations of planning highlighted above are: 1. Planning does not guarantee success. 2. Planning
involves huge costs. 3. Planning is a time consuming process.
The type of plan indicate above is ‘Strategy’.
The feature is a primary function of management.
34. 1. Branding 2. Personal Selling
3. The two types of names you see in the above case are—Generic name (When he had kept no
name for his pens and was just selling them as pens) and Brand name (When he had kept the name
of his pens as Atul pens). 4. Brand name was better. The reason being that people can identify
products with their makers only by a name which helps in association with the product; a generic
name can’t differentiate between two makers.

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 KENDRIYA VIDYALAYA SANGATHAN, REGIONAL OFFICE, JAIPUR
SAMPLE PAPER NO – 5 (2022-23)
SUBJECT:- BUSINESS STUDIES (054)
MM:- 80 TIME:- 3 HOURS
General instructions :
1 This question paper contains 34 questions.
2. Marks are indicated against each question.
3. Answers should be brief and to the point.
4. Answers to the questions carrying 3 marks may be from 50 to 75 words.
5. Answers to the questions carrying 4 marks may be about 150 words.
6. Answers to the questions carrying 6 marks may be about 200 words.
7. Attempt all parts of the questions together.
1. It refers to the framework within which managerial and operating tasks are performed. 1
Identify the concept discussed in the statement.
2. ……………………is considered a major element of the Political environment. 1
a) The extent and nature of government intervention in business.
b) Planned outlay in public and private sectors
c) Expectations from the workforce
d) Administrative order issued by government authorities.
3. In the recent few years, the ‘Online business’ has become very much in vogue. Now, sitting 1
at home, we can get information about the seller
Assertion(A): While authority is delegated, responsibility is imposed, accountability is
assumed.

Reason(R): Authority can be delegated by a manager to a subordinate, which means

granting of authority to subordinate to operate within prescribed limits. Responsibility is
the obligation of a subordinate to properly perform the assigned duty. Accountabilityimplies
being answerable for the final outcome.

Choose the correct option:

(a) Both Assertion (A) and Reason (R) are true.

(b) Both Assertion (A) and Reason (R) are false.
(c) Assertion (A) is true Reason (R) are false.
(d) Assertion (A) is False Reason (R) are true.

4. Identify the correct sequence of steps involved in the planning process. 1

(a)Evaluating alternative courses, Identifying alternative course of actions, Setting
objectives, Developing premise

(b)Setting objectives, Identifying alternative course of actions, Evaluating alternative

courses, Developing premises
(c) Setting objectives, Developing premises, Identifying alternative course of actions,
Evaluating alternative courses
(d) Setting objectives, Developing premises, Evaluating alternative courses , Identifying
alternative course of action.

5. Unlike profession such as medicine or law, which require a practicing doctor or lawyer to 1
possess valid degrees, nowhere in the world it is mandatory for a manager to possess any
such degree .But professional knowledge and training is considered to be desirable
qualification. Since there is greater demand for those who possess degrees or diplomas from
reputed institutions.
Identify the feature of profession to which the above case is related:
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 1. Well defined body of knowledge
2. Restricted entry
3. Professional association
4. Service motive
6. According to the World Health Organization, 39% of adults are overweight. Overthe last 1
40 years, the prevalence of obesity has tripled around the world. With over half of consumers
drinking at least one sugary drink on a given day, regulations towards the beverage sector are
likely to become increasingly onerous. In the U.K.,for example, a sugar tax was introduced
in 2018 on beverages containing morethan 5% sugar. Identify the related dimensions
of business environment.
(a) Legal Environment
(b) Social Environment
(c) Both (a) and (b)
(d) None of the above

7. Looking at the severe pandemic situation of Covid-19, the entire education system has 1
adjusted itself with online teaching, online examination, developing creative way of teaching
etc. Which point of importance of business environment does it reflect?
(a) Early warning signal
(b) Tapping useful resources
(c) Coping with rapid changes
(d) Identify the opportunity and become first mover advantage.

8. Coordination unifies the diverse interest of various people in such a manner that the work 1
proceeds without any hindrance towards common goals. Identify the feature of
coordination.
(a) Coordination integrates group efforts
(b) Coordination ensures unity of action
(c) Coordination is a continuous process
(d) Coordination is deliberate function
9. Two years ago Rohini completed his degree in food technology then she decided to open her 1
own organic food processing unit. She set the objective and targets and formulated an action
plan to achieve the same.
It was decided that raw material like fruits, vegetables, spices etc. will be purchased at three
month’s credit from farmers cultivating only organic crops.
The type of plan discussed in above case is:
(a) Objective
(b) Policy
(c) Procedure
(d) Strategy

10. Prakash has set up a small business unit for the manufacturing of detergent. In order to 1
market thedetergent in the local residential areas, he has appointed a team of ten
salesmen. Each salesman is expected to sell at least 200 units of the detergent within a
week’s time. Identify the point of importance of controlling being highlighted in the
above case.
(a) Controlling helps in judging accuracy of standards.
(b) It ensures efficient use of resources.
(c) It helps in improving employee motivation.
(d) It facilitates co-ordination in action.
11. Which principle of Fayol is being followed by the manager? 1

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 (a) Equity
(b) Initiative
(c) Discipline
(d) Order

12. Madhubala is planning to launch an online education portal. In order to understand the 1
varied needs of the students, she conducted an online survey. Based on the feedback of the
survey, she has decided to offer educational packages to the prospective buyers.
Identify the type of marketing concept being described in the given lines.
(a) Product concept
(b) Production concept
(c) Marketing concept
(d) Societal marketing concept
13. ABC Ltd. has Debt Equity ratio of 3:1 whereas XYZ Ltd. has Debt Equity ratio of 1:1. 1
Name the advantage ABC Ltd will have over XYZ Ltd, when the rate of interest is lower
than the rate of return on investment of the company.
(a) Trading on equity
(b) Low risk
(c) Low cost of equity
(d) Greater flexibility
14. 1
Which of the following is not an importance of financial planning?
(a) It helps in avoiding business shocks and surprises.
(b) If helps in coordinating various business functions.
(c) If helps to reduce waste, duplication of efforts and gaps in planning.
(d) It tries to delink the present with the future.
15. In order to get feedback about its new product launch, Taggi Limited conducted an 1
online survey through a short questionnaire. Identify the marketing function being
mentioned in the given line.
(a) Gathering and analyzing market information
(b) Marketing planning
(c) Product designing and development
(d) Packaging and labelling
16. Name the document prepared in the process of online trading of securities that is legally 1
enforceable and help to settle disputes/claims between the investor and the Broker.
17. Assertion : A brand or part of a brand that is given legal protection is called brand mark 1
Reason: decisions related to product come under promotion mix.
(a) Assertion is true, reason is false
(b) Assertion is false, reason is also false

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 (c) Assertion and reason both are true and reason explains assertion
(d) Assertion and reason both are true but reason doesn’t explain assertion
18. A consumer products manufacturing company is offering a number of consumer products 1
like toiletries, detergent powder, food products etc. The element of marketing mix referred
here.
(a) Price mix
(b) Product mix
(c) Place mix
(d) Promotion mix
19. ‘My Bakery’, a biscuit manufacturing company, launched biscuits with different 1
flavours based on quality and features like ‘Crunchy biscuits’, ’Sweet potato’, ‘Coffee Jolly’
etc. The labels on the package of the biscuits are with pictures and different colours
indicatingand specifying the flavours of the biscuits and their contents.
Identify the function of labelling discussed above.
(a) Describes the product and specifies its contents.
(b) Helps in grading of products
(c) Both (a) and (b)
(d) None of the above
20. Stock exchanges provide an opportunity to the investors to disinvest and invest. Identify the 1
related function of the stock exchange.
(a) Providing scope for speculation.
(b) Providing liquidity and marketability to existing securities.
(c) Pricing of security.
(d) Spreading of equity cult
21. Identify the characteristics of management in the following cases: 3
(a)It creates an environment of peace and happiness, keeps all stakeholders happy and
satisfied in the organization.
(b)All regional sales manager of GOODLUCK LTD worked towards achievement of
company annual sales targets of 50m toys.
(c)Management sets targets and unifies efforts of all individuals to accomplish them.
22. Explain : 3
1. Apprenticeship training
2. Internship training
3. Induction training
23. Which two steps in the process of controlling are concerned with compelling events to 3
confirm to plan? Explain.
OR
Which principle of management control is based on the belief “an attempt to control
everything may end up by controlling nothing”?
24. The Trading Procedure on Stock Exchange has been replaced by on-line screen based 3
electronic trading system. This is mainly done to eliminate problems like theft, fake/forged
transfers, transfer delays and paper work associated with share certificates or debentures in
physical form. This is a process where securities held by the investor in the physical form are
cancelled and the investor is given an electronic entry or number so that he/she can hold it as
an electronic balance in an account. This has increased the equity cult among the people.
b) Identify and state the process mentioned above.
c) What is the most important requirement for the process identified in (a)?
State.

OR
Few years ago, there were many malpractices, unfair trade practices and frauds and scams
were taking place in stock Exchange. All these affected investor’s confidence, faith and trust
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 in Stock Exchange. The Government of India decided to set up a separate body for this
purpose who was given control of stock exchange. This separated ownership and control of
stock exchange.
a) Name the body set up by the government of India to contract the stock exchange.
b) State any two objectives of that regulating body.

25. Nisha Sethi was working as a Human Resource Manager in a famous consultancy firm, 4
KLI Global Services. Her job included preparing job descriptions, recruitment,
developing compensation and incentive plans and facilitating employee learning. They
had entered into alliances with institutes to ensure continuouslearning of their employees.
With the jobs becoming more and more complex, KLI Global Services invested large amount of
money in making the employees learn the skills necessary to complete the jobs. Identify the
concept used by KLI Global services and State any three points, how this investment is likely to
benefit the organization.
OR
‘Ready for job’ is a popular job engine. In an interview with a leading news channel , Mr
Ramesh CEO OF ‘Ready for job’ has suggested that the companies which want more and
more people to apply for the jobs in their organization should make the process for applying
the job easier and candidate friendly.
Name and explain the next four steps which follow the step, in the process of staffing
function of Management.
26. A company has employees from different countries. They speak different languages. Once 4
the management decided to draft the message of congratulating the employees of the New
York in their native languages. For this they had to translate the same message in different
languages. On the 5th of January there was a strike by people belonging to a particular
country showing resentment on the wrong language used in the greetings.
(a) Identify and state the communication barrier discussed above.
(b) State the category of this communication barrier.
(c) Explain any two other communication barriers of the same category.
OR
Roshan is the chief of “Mehmaan‟ restaurant located in the city of Bengaluru. The place
is known for its exquisite Mughlai cuisine especially mutton biryani and kababs. All the food
is prepared under Roshan’s purview. The various activities in the kitchen are initiated in
accordance to his instructions. He is very clear and specific in issuing instructions to his
subordinates in order to ensure smooth working of the department. He personally oversees
the method followed by the chefs for preparation of each dish. He misses no opportunity
to praise his subordinates for their good work. All his team members feel very happy and
satisfied under his direction.
In the above context:
a) Identify any two elements of directing mentioned in the above paragraph by quoting
lines from the paragraph.
b) Describe briefly any two points to highlight the importance of directing as
function of management.
27. Three friends Rohan, Mayank , Rahul after completing their MBA from business school at 4
Mumbai, were discussing about the type of organization they would like to join. Rohan
was very clear that he would like to take up a government job as it gives stability about the
future income and work which will help him to work with greater zeal. It will also provide
him pension when he will retire from his service. Mayank wanted to work in a company,
which has appropriate skill development plans for its employees and helps the employees
to grow to higher levels in the organisation. In addition to this, the company should also
provide facilities like housing, medical aid, etc. Rahul said that he would prefer to work in
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 an organisation, which has the culture of individual autonomy, is considerate to employees
and provides the employees with opportunity for personal growth and a meaningful work
experience.
(a) Explain two financial and two non-financial incentives discussed by the three friends
in the above conversation.

28. Briefly explain any four factors that will affect the capital structure of a company. 4

29. 4
‘Tie a knot’ is a popular online matrimonial website. It seeks to provide personalized match
making service. The company has 80 offices in India, and is now planning to open offices in
Singapore, Dubaiand Canada to cater to its customers beyond the country. The company has
decided to opt for the sources of equity capital to raise the required amount of capital.
In context of the above case:
(a) Identify and State the type of risk which increases with the higher use of debt.
(b) Explain briefly any three factors that will kept in mind by financial manager while
taking such decision.
30. Ansh purchased a pack of sweets for his son from a shop in the nearby market. After 4
consuming those sweets, the condition of his son deteriorated and he had to be
hospitalized. Later on through a laboratory test, it was certified that the sweets were
adulterated.
(a) State any one precaution that he should have taken while purchasing packed sweets.
(b) Name the appropriate redressal agency that he can approach in case he decides
to file a case against the shopkeeper.
(c) Write any two remedies available to him.
31. 'New Delhi Ltd.’ is a famous services providing company. Mr Aman Malhotrais its 6
Managing Director. He continuously motivates his Research and Development
department that new and latest methods of doing work be explored. The provisions
has also been made to give reward to those employees who will participate in a
particular exploration. He also believes that two groups working on managerial and
non-managerial posts are similar to two wheels of an organisational vehicle. If this
vehicle (organisation) is to be driven in a right way then both the wheels should be
property aligned. Mr. Aman as a managing director wants the continuous
development of his company, for this he paid lot of attention to training of
employees.
Identify and explain three principles of scientific management discussed in the above
paragraph
OR
Briefly explain the following principles given by Henry Fayol:-
a) Espirit de corps
b) Equity
c) Order
d) Discipline

32. Suhasini, a home science graduate from a reputed college, has recently done a cookery 6
course. She wished to start her own venture with a goal to provide ‘health food’ at
reasonable prices. She discussed her idea with her teacher (mentor) who encouraged her.
After analysing various options for starting her business venture, they short listed the
option to sell readymade and ‘ready to make’ vegetable shakes and sattu milk shakes. Then,
they weighed the pros and cons of both the short listed options.

On the basis of above para, answer the following:

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 (a) Name the function of management being discussed above.
(b) Also briefly discuss any f i v e limitations of the function discussed in the
case
OR
Jyoti inherited a 10-acres ancestral land from her grandparents. She decided to venture into
agriculture, for this purpose she set out specific goals, objectives. Everything was a challenge
because she was not aware about farming. She learned every activity and, in the process,
thought of assisting other farmers as well. She eventually launched her own company Agro
limited. She wanted to be sure that the activities effectively met the best interest of the
company and the farmers. Hence, she prepared an annual plan for production, sales and
marketing, through sales forecasting she realized that farmers were growing only one or two
crops. On account of this the land remained idle for the rest of the year. She identified and
evaluated different alternatives through which the farms could be utilized throughout the
year. She used her foresight and systematic thinking, based on analysis of all fixed
analysis of all the facts and examined and evaluated all the alternatives. She presented a plan
to the Farmers Union, where after harvesting the primary crops, seasonal vegetables and
foods could be grown.
Quoting the lines from above para Identify and explain the features of planning discussed
33. A company X limited manufacturing cosmetics, which has enjoyed a pre-eminent position in 6
business, has grown in size. Its business was very good till 1991. But after that, new
liberalized environment has seen entry of many MNC’s in the sector.

With the result the market shares of X limited has declined. The company had followed a
very centralized business model with directors and divisional heads making even minor
decisions. Before 1991, this business model had served the company very well as
consumers has no choice. But now the company is under pressure to reform.
(a) What organization structure changes should the company bring about in order to
retain its market share?
(b) How will the changes suggested by you help the firm?

34. Natasha, Saurabh and Adarsh were friends from college days and now they are doing 6
different kinds of business. Natasha started a manufacturing company and has decided to
identify the needs of the customers to start successful marketing of the foot wears produced
by it and for this the company is doing SWOT analysis (Strength Weakness Opportunity
and Threat). Saurabh is a distributor of tea to different places. He has opened a company
which deals in tea selling. He has categorized his tea to be sold into three different
categories Red, Yellow and Green. Adarsh started a Refrigerator manufacturing
company and currently is spending substantial amount of money to persuade the target
customers to buy its refrigerators through advertisements, personal selling and sales
promotion techniques. They regularly meet and discuss their business ideas and exchange
notes on customer satisfaction, marketing efforts, product designing, selling techniques,
social concerns, etc. In one of such meetings, Adarsh told Natasha and Saurabh that his
competitor, with an established brand name has launched a new product in the same name.
This is helping his competitor save a lot of expenses on building reputation and giving an
excellent start to the product. The new product is doing amazingly well and has caught

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attention of the newspapers. Since the product is enjoying a lot of fame the customers are
ready to pay high prices for it in comparison to the same product launch by Adarsh's
company
(a) Identify and explain the functions of marketing performed by Natasha and Saurabh.
(b) Name and state the concept of marketing highlighted by Adarsh in the meeting.
(c) Identify and State the element of marketing mix used by Adarsh in his manufacturing
company in above para.

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 KENDRIYA VIDYALAYA SANGATHAN, REGIONAL OFFICE, JAIPUR
MARKING SCHEME OF SAMPLE PAPER NO – 5 (2022-23)
SUBJECT:- BUSINESS STUDIES (054)
MM:- 80 TIME:- 3 HOURS
1 (b) Organisation structure 1
2 (a) The extent and nature of government intervention in business 1
3 (d) Assertion (A) is False Reason (R) are true. 1
4 (c) 1
5 Restricted entry 1
6 (c ) Both (a) and (b) 1
7 (c) Coping with Rapid changes 1
8 (b) Coordination ensures unity of action 1
9 (b) Policy 1
10 (c) It helps in employee’s motivation. 1
11 (b) Initiative 1
12 c) Marketing concept 1
13 (a)Trading on equity 1
14 (d) It tries to delink the present with the future. 1
15 (a)Gathering and analyzing market information 1
16 Contract note 1
17 (b) Assertion is false, reason is also false 1
18 (a) Product mix 1
19 (c )both (a) and (b) 1
20 (b)Providing liquidity 1
21 (a) Intangible force 3
(b) Group activity
(c) Goal oriented
22 Correct explanation of all three 3
23 1. Comparison of actual performance with standards. 3
2. Taking corrective action
( 1/2 mark for identifying each point and 1 mark each for explaination)
OR
Principle of Management by exception.
(1 mark for identification and 2 Marks for correct Explanation.
24 a) Dematerialization – It is the process of holding securities in an electronic form. 3
b) For this, the investors has to open a ‘Demat account’ with a depository participant (DP)
for holding and transferring securities in the demat form. He / She will also have to
open a bank account for cash transactions in the securities market.
OR
a) The regulatory body set up by government of India is “SEBI i.e. Securities Exchange
Board of India”.
b) The objectives of SEBI are: Protective function, development function, Regulatory
function (any two)
25 The concept identified is- Training 4
Any three benefits of training:-
a)
( 1 for identification+ ½ mark for heading and ½ mark for explanation)
OR
Steps in selection process
a) Selection
b) Placement and orientation
c) Training and development
d) Performance appraisal

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 (1/2 mark for heading and ½ mark for explanation)
26 a) Faulty Translation 4
b) Semantic barrier- relates to encoding and decoding of message into communication
symbols
c) Badly expressed message, symbols with different meanings, technical jargon, body
language, unclarified assumptions, symbols with different meaning. (any two)
OR
a) Communication “He is very clear and specific in issuing instructions to his
subordinates in order to ensure smooth working of the department”
Motivation “He misses no opportunity to praise his subordinates for their good work.
All his team members feel very happy and satisfied under his direction.
Supervision “He personally oversees the method followed by the chefs for
preparation of each dish” (any two ½ Marks for identification and ½ for quoting lines
)

b) Any two importance of directing

(i) Initiates action
(ii) Judging accuracy of standards
(iii) Employees Motivation
(iv) Integrates employees efforts
(v) Balance in the organisation

27 Financial incentives are: 4

1 .Retirement benefits 2. Fringe benefits
Non- financial incentives are:
1. Job security 2. Career advancement opportunity 3. Status 4. Organisational climate
(any two)
(1/2 marks for identification ½ marks for explanation)
28 Factors for designing the “ Capital Structure”:- 4
a) Cash flow position
b) Interest coverage ratio
c) Debt service coverage ratio
d) Return on investment
e) Cost of debt
f) Tax rate
g) Cost of equity
h) Floatation costs
i) Risk consideration
j) Flexibility
k) Control consideration
l) Regulatory framework
m) Stock market condition
n) Capital structure of other companies
( explain any 04 points out of the above given points- ½ marks for heading and ½ marks for
explanation)
29 a) Financial Risk- Unable to pay interest on borrowed fund. 4
b) Factors affecting Finacing decision:- (Any three)
iv) Cost
v) Flotation cost
vi) Fixed operating cost
vii) State of capital market
viii) Control considerations
ix) Risk
30 (a) Ansh should check for the Quality assurance marks like FPO/FSSAI on its label while 4

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 purchasing the product
(b) District forum
(c) 1. To refund the price paid for the product
2. To pay reasonable amount of compensation for any loss or injury suffered by the
consumer due to the negligence of the opposite party.
31 The various principle of scientific management that Mr Aman applying in his business are 6
described below:
a) Science, not Rule of Thumb:
b) Harmony, Not Discord:
c) Development of each and every employee to his/her maximum efficiency (2 Marks for
each )
OR
a) Espirit de corps
b) Equity
c) Order
d) Discipline (1.5 marks for each point)
32 a) Planning is the function of management which is being described in the above 6
paragraph.
b) The limitations of planning are described below:
a) Planning may not work in a dynamic environment:
(b) Planning reduces creativity:
(c) Planning involves huge costs:
(d) Planning does not guarantee success.
(e) Planning Leads to rigidity (1+5=6)
OR
(B) 1. Planning is futuristic “,she prepared an annual plan for production, sales and
marketing, through sales forecasting”
2. Planning focuses of achieving objective “She decided to venture into agriculture,
for this purpose she set out specific goals, objectives”
3. Planning involves decision making “she identified and evaluated different
alternatives through which the farms could be utilized throughout the year”.
(1/2 marks for identification,1/2 marks for quoting lines,1 marks for explanation)
33 (a) Decentralization 6
(b) Benefits are :
1. Develops initiative amongst subordinates: It helps to promote confidence because the
subordinates are given freedom to take their own decisions.
2. Quick and better decisions: The burden of managerial decisions does not lie in the hands
of few individuals but gets divided among various persons which helps them to take better
and quick decisions.
3. Relieves the top executives from excess workload: The daily managerial works are
assigned to the subordinates which leaves enough time with the superiors which they can
utilize in developing new strategies.
4. Managerial Development: It means giving authority to the subordinates up to the lower
level to take decisions regarding their work. In this way the opportunity to take decisions
helps in the development of the organization.
5.Better Control: It makes it possible to evaluate performance at each level which results in
complete control over all the activities. (1+5=6)

34 (a) Marketing function performed by Natasha- Gathering and analyzing market 6

information , Marketing function performed by Saurabh- Grading(1 marks for
identification and 1 for explanation)

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 (b) Branding (1/2 marks for identification and ½ for stating it)
(c) Promotion Mix(1/2 marks for identification and ½ for stating it)

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