BST NOTES CH 01 NATURE AND SIGNIFICANCE OF MANAGEMENT

MANAGEMENT – MEANING:
Management is defined as a process of getting things done with the aim of achieving goals effectively and efficiently.
Successful organisations do not achieve their goals by chance but by following a deliberate process called management.
Elements of Management:

PROCESS EFFECTIVENESS EFFICIENCY

Process means the primary functions Effectiveness means doing the right Efficiency means doing the task
or activities that management task, completing activities and correctly and with minimum cost /
performs to get things done - achieving goals / the end result. minimum resources.
planning, organising, staffing,
directing and controlling.

FUNCTIONS OF MANAGEMENT:
1. PLANNING:
Planning is one of the basic managerial functions about deciding in advance what to do and how to do.
It involves setting objectives and developing appropriate courses of action to achieve these objectives.
Planning bridges the gap between where we are and where we want to go.
2. ORGANISING:
Organising is the process of identifying and grouping the work to be performed, defining and delegating responsibility
and authority, and establishing relationships for the purpose of enabling people to work most effectively together in
accomplishing objectives. It brings order out of chaos, removes conflict and creates environment suitable for teamwork.
3. STAFFING:
Staffing means obtaining and utilising right man for the right job at the right time with right qualification and
maintaining satisfied work force. Staffing means filling and keeping filled the positions in the organisation.
4. DIRECTING:
Directing refers to the process of instructing, guiding, counselling, motivating and leading people in the organisation to
achieve its objectives. The elements of directing are supervision, motivation, leadership and communication.
5. CONTROLLING:
Controlling is the management function of monitoring organisational performance towards the attainment of
organisational goals. The task of controlling involves establishing standards of performance, measuring current
performance, comparing this with established standards and taking corrective action where any deviation is found.

CHARACTERISTICS / FEATURES OF MANAGEMENT: (MGDCPIG)

(i) Management is a goal-oriented process:
An organisation’s basic goals should be simple and clearly stated. Different organisations have different goals.
Management unites the efforts of different individuals in the organisation towards achieving these goals
(ii) Management is all pervasive:
The activities involved in managing an enterprise are common to all organisations whether economic, social or political.
Petrol pump, hospital, school needs to be managed. What managers do in India, USA, Germany or Japan is the same.
(iii) Management is multidimensional:
(a) Management of work: All organisations performs some work in term of goals to be achieved.
(b) Management of people: It implies dealing with employees as individuals with diverse needs and as group of people.
(c) Management of operations: A production process converts input into the output for consumption.
(iv) Management is a continuous process:
The process of management is a series of continuous, composite, but separate functions (planning, organising, directing,
staffing and controlling). These functions are simultaneously performed by all managers all the time.
(v) Management is a group activity:
An organisation is a collection of different individuals with different needs but they work towards a common
organisational goal. This requires team work and coordination of individual effort in a common direction.
(vi) Management is a dynamic function:
Management is a dynamic function and has to adapt itself to changing environment. An business interacts with external
environment - social, economic and political factors. Ex: McDonalds made changes in menu to survive in Indian market.
(vii) Management is an intangible force:
Management is an intangible force that cannot be seen but its presence can be felt in the way the organisation
functions. The effect of management is noticeable in an organisation when targets are met, employees are happy and
satisfied, and there is orderliness instead of chaos.
IMPORTANCE/ SIGNIFICANCE OF MANAGEMENT: (DPSEG)
(i) Management helps in achieving group goals:
Management is required for achieving the goals of the organisation.
The manager gives a common direction to the individual effort in achieving the overall goal of the organisation.
(ii) Management increases efficiency:
The aim of a manager is to reduce costs and increase productivity through better planning, organising, directing, staffing
and controlling the activities of the organisation.
(iii) Management creates a dynamic organisation:
All organisations have to function in an environment which is constantly changing.
Management helps people adapt to these changes so that the organisation maintains its competitive edge.
(iv) Management helps in achieving personal objectives:
A manager motivates and leads his team to achieve personal goals and overall organisational objective.
It also helps individuals to develop team spirit, cooperation and commitment to group success.
(v) Management helps in the development of society:
An organisation has multiple objectives to serve the purpose of the different groups. It helps to provide good quality
products, creates employment opportunities, adopts new technology and leads to growth and development.

OBJECTIVES OF MANAGEMENT:
(i) Organisational / Economic Objectives: These are survival, profit and growth.
a) Survival: The basic objective of any business is survival, an organisation must earn enough revenues to cover costs.
b) Profit: Management has to make a profit for continued successful operation to cover costs and risks of the business.
c) Growth: A business needs to grow in the longrun by increasing sales volume, number of employees, the number of
products, capital investment, etc.
(ii) Social objectives:
It involves the creation of benefit for society by consistently creating economic value for various constituents of society.
It includes using environmental friendly methods of production, giving employment opportunities to underpreviledged
sections of society and providing basic amenities like schools and healthcare, etc.
(iii) Personnel objectives:
Organisations are made up of people who have different personalities, backgrounds, experiences and objectives to
satisfy their diverse needs. Management must provide competitive salaries, perks, peer recognition, personal growth
and development. Management has to reconcile personal goals with organisational objectives.

LEVELS OF MANAGEMENT:
(i)Top Management:
The job of the top manager is complex and stressful, demanding long hours and commitment to the organisation.
They include Chairman, Chief Executive Officer, Chief Operating Officer, Chief Finance Officer, President ,Vice-president.
(a) They integrate diverse elements and coordinate the activities of different departments.
(b) They are responsible for the welfare and survival of the organisation.
(c) They analyse the business environment and its implications for the survival of the firm.
(d) They formulate overall organisational goals and strategies for their achievement.
(e) They are responsible for all the activities of the business and for its impact on society.
(ii) Middle Management:
They are link between top and lower level managers, include division head, production, sales, marketing manager, etc.
(a) interpret and implement the policies framed by top management.
(b) ensure that their department has the necessary personnel.
(c) assign necessary duties and responsibilities to them.
(d) motivate them to achieve desired objectives.
(e) cooperate with other departments for smooth functioning of the organisation.
(iii) Lower level / Supervisory / Operational Management:
They include Foremen, Supervisors and First line managers.
(a) Supervisors directly oversee the efforts of the workforce.
(b) Their authority and responsibility is limited according to the plans drawn by the top management.
(c) They interact with the actual work force and pass on instructions of the middle management to the workers.
(d) They help to maintain quality of output, safety standards and reduce wastage of materials.
(e) The quality of workmanship and the quantity of output depends on hard work, discipline and loyalty of the workers.
NATURE OF MANAGEMENT – SCIENCE, ART AND PROFESSION:

MANAGEMENT AS A SCIENCE:
(i) Systematised body of knowledge:
Science is a systematic body of knowledge. Its principles are based on a cause and effect relationship.
Management also has its own theory and principles that have developed over a period of time.
(ii) Principles based on experimentation:
Scientific principles are developed through observation and experimentation.
The principles of management are also based on experimentation and observation in different types of organisations.
(iii) Universal validity:
Scientific principles have universal validity and application. Since the principles of management are not as exact as the
principles of science, their application and use is not universal. They have to be modified according to a given situation.
Conclusion:
Management can be called an inexact science.

MANAGEMENT AS AN ART:
(i) Existence of theoretical knowledge:
Art has theoretical knowledge, literature on dancing, public speaking, acting or music.
Management also has literature on marketing, finance and human resources.
(ii) Personalised application:
The use of knowledge varies from individual to individual as art is a personalised concept.
Ex: Two dancers, two speakers, two actors or two writers will always differ in their art.
A manager applies his knowledge to a given situation in his own unique and innovative manner.
(iii) Based on practice and creativity:
All art is practical and involves the creative practice. A manager achieves perfection after long practice. He applies his
knowledge in a personalised and skillful manner in a given situation which gives rise to different styles of management.
Conclusion:
Management is both an art and a science are therefore not mutually exclusive, but complement each other.

MANAGEMENT AS A PROFESSION:
(i) Well-defined body of knowledge:
All professions are based on a well-defined body of knowledge that can be acquired through instruction.
Management is based on a systematic body of knowledge and well-defined principles acquired at colleges, professional
institutes, books and journals.
(ii) Restricted entry:
The entry to a profession is restricted through an examination or an educational degree. There is no restriction being
appointed as manager. Anyone can be called a manager irrespective of the educational qualifications possessed.
(iii) Professional association:
All professions are regulated by a professional association for entry, certificate of practice and code of conduct. To be
able to practice, lawyers have to become members of the Bar Council of India.
There are associations of practising managers in India, like the AIMA (All India Management Association). There is no
compulsion for managers to be members of such an association.
(iv) Ethical code of conduct:
All professions are bound by a code of conduct which guides the behaviour of its members. All doctors take the oath of
ethical practice at the time they enter the profession. All India Management Association has laid down a code of
conduct to regulate the activities of their member but it is not compulsory for managers to be members of such an
association or follow the code of conduct.
(v) Service motive:
The basic motive of a profession is to serve their client’s interests by dedicated service. Lawyer tries to get justice for his
client. The basic purpose of management is to help the organisation achieve its stated goal. This may be profit
maximisation, service for a hospital, serve society by providing good quality products at reasonable prices.
Conclusion:
Management is not a full fledged profession. It is a developing profession.

COORDINATION – MEANING:
The process by which a manager synchronises the activities of different departments is known as coordination.
Coordination is the force that binds all the other functions of management. This provides the requisite amount, quality,
timing and sequence of efforts which ensures that planned objectives are achieved with a minimum of conflict.
Coordination — The Essence of Management:
Coordination is not a separate function of management but is implicit and inherent in all functions of an organisation.
(a) The process of coordinating activities begins at planning stage where top management plans for entire organisation.
(b) According to these plans the organisational structure is developed.
(c) To fulfil the roles in the organisation structure, staffing is required.
(c) In order to ensure that these plans are executed according to plans directing is required.
(d) Any discrepancies between actual and standard performance are taken care of at the stage of controlling.
Characteristics of Coordination:
(i) Coordination integrates group efforts:
Coordination unifies diverse interests into purposeful work activity.
It gives a common focus to group effort to ensure that performance is as per plans.
(ii) Coordination ensures unity of action:
The purpose of coordination is to secure unity of action in the realisation of a common purpose.
It acts as the binding force between departments and ensures achievement of the organisational goals.
(iii) Coordination is a continuous process:
Coordination is not a one-time function but a continuous process.
It begins at the planning stage and continues till controlling.
(iv) Coordination is an all pervasive function:
Coordination is required at all levels of management due to the interdependence of different departments.
In the absence of coordination there is overlapping and chaos instead of harmony and integration of activities.
(v) Coordination is the responsibility of all managers:
Coordination is the function of every manager in the organisation. Top level managers need to coordinate with their
subordinates to ensure that the overall policies for the organisation are duly carried out. Middle level management
coordinates with both the top level and first line managers. Operational level management coordinates the activities of
its workers to ensure that work proceeds according to plans.
(vi) Coordination is a deliberate function:
A manager has to coordinate the efforts of different people in a conscious and deliberate manner. Cooperation without
coordination lead to wasted effort and coordination without cooperation lead to dissatisfaction among employees.
Importance / Significance of Coordination:
(i) Growth in size:
As organisations grow in size, the number of people employed by the organisation also increases. It becomes necessary
to ensure that all individuals work towards the common goals of the organisation. Therefore, for organisational
efficiency, it is important to harmonise individual goals and organisational goals through coordination.
(ii) Functional differentiation:
Functions of an organisation are divided into departments, divisions and sections. Separate departments of finance,
production, marketing, human resources have their own objectives, policies and style of working. Coordination helps in
linking the activities of various departments.
Ex: The marketing department wants to increase sales by 10 per cent by offering discounts. But, the finance department
may not approve of such discounts as it means loss of revenue.
(iii) Specialisation:
Modern organisations employ a number of specialists who think they are qualified to evaluate, judge and decide
according to their specialisation. They do not take advice or suggestions from others. It leads to conflict among
specialists and others. Coordination is required to reconcile differences in approach, interest, opinion of the specialists.
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BST NOTES CH 02 PRINCIPLES OF MANAGEMENT
Principles of Management – MEANING:
Principle of Management are broad and general guidelines for decision making and behaviour.
Management principles are not as rigid as principles of pure science.
Techniques are methods, principles are guidelines to take decisions.
Values are general rules for behaviour, principles are basic truths / guidelines for behaviour.

Nature of Principles of Management:

(i) Universal applicability:
The principles of management apply to all types of organisations – business / non-business, small / large, public / private
sector, manufacturing / services sectors.
The extent of their applicability depends on the nature of business activity and scale of operations.
(ii) General guidelines:
The principles are guidelines but do not provide readymade, straitjacket solutions to all managerial problems.
This is because real business situations are very complex and dynamic.
(iii) Formed by practice and experimentation:
The principles of management are formed by experience and collective wisdom of managers as well as experimentation.
Ex: Experience says that discipline is important for accomplishing goals.
(iv) Flexibile:
The principles of management are not rigid, which have to be followed absolutely.
They are flexible and can be modified by the manager when the situation so demands.
(v) Mainly behavioural:
Principles of management aim at influencing behaviour of human beings.
They help in understanding the relationship between human and material resources for achieving organisational goals.
(vi) Cause and effect relationships:
The principles help to establish cause and effect relationship so that they can be used in similar situations.
They tell us if a particular principle was applied in a particular situation, what would be its likely effect.
(vii) Contingent:
The application of principles of management is dependent upon the prevailing situation at a particular point of time.
The application of principles has to be changed as per requirements.

Significance/ Importance/ Benefits of Principles of Management:

(i) Providing managers with useful insights into reality:
The principles provide managers with useful insights into real world situations by learning from past mistakes.
It increases knowledge, ability, understanding of managerial situations, save time by solving routine problems quickly.
(ii) Optimum utilisation of resources and effective administration:
Resources both human and material have to be put to optimum use to give maximum benefit with minimum cost.
The wastages due to trial-and-error approach can be reduced.
(iii) Scientific decisions:
Decisions must be based on facts, thoughtful and justifiable.
Management decisions must be timely, realistic, measurable, logical, free from bias and prejudice.
(iv) Meeting changing environment requirements:
The principles are general guidelines which can be modified to meet changes in the environment.
They are flexible to adapt to dynamic business environment.
(v) Fulfilling social responsibility:
Business must fulfill their social responsibilities because of increased awareness of the public.
Management theory and principles have developed according to these demands.
(vi) Management training, education and research:
Principles of management are the basis for management training, education and research for courses like MBA, BBA.
New management techniques have been developed - Operations Research, cost accounting, Just in Time, Kanban, etc.

Principles of General Management given by HENRI FAYOL:

(i) Division of Work:
Work is divided into small tasks / jobs, each performed by a specialist or trained employee.
This leads to specialisation, efficient and effective output.
Ex: Company have separate departments for finance, marketing, production and human resource etc.
(ii) Authority and Responsibility:
Authority is the right to give orders and responsibility is the corollary of authority.
There should be a balance between authority and responsibility because more authority may lead to abuse of
managerial power and less authority may lead to incomplete work.
A manager should have the right to punish a subordinate for wilfully not obeying a legitimate order but only after giving
sufficient opportunity to a subordinate for presenting his case.
(iii) Discipline:
Discipline is the obedience to organisational rules and employment agreement.
Discipline requires good superiors at all levels, clear and fair agreements and judicious application of penalties.
Workers and management both must honour their commitment if they have entered into an agreement to pay extra
wages for extra hours of work to revive the company out of loss.
(iv) Unity of Command:
There should be one and only one boss for every individual employee because he is responsible to only one superior.
If an employee gets orders from two superiors at the same time there will be confusion regarding tasks to be done.
Dual subordination should be avoided because authority is undermined, discipline is in jeopardy, order disturbed and
stability threatened. The principle resembles military organisation.
(v) Unity of Direction:
All the units of an organisation should move towards the same objectives to ensure unity of action.
Each group of activities having the same objective must have one head and one plan.
It prevents overlapping of activities.
(vi) Subordination of Individual Interest to General Interest:
The interests of an organization (owners, shareholders, creditors, debtors, financers, tax authorities, customers and the
society) should take priority over the interests of any one individual employee.
A manager must show exemplary behaviour and should not misuse his powers for individual/ family benefit at the cost
of interest of the company.
(vii) Remuneration of Employees:
The remuneration should be fair, just and equitable to both employees and the organisation to ensure good relations
between workers and management.
The wages should give a reasonable standard of living to the employees and it should be within the paying capacity of
the company.
(viii)Centralisation and Decentralisation:
Centralisation means concentration of decision-making authority and decentralisation means dispersal of authority.
The degree of centralisation will be different in different organisations.
Generally, large organizations have more decentralisation than small organisations.
(ix) Scalar Chain:
Organisations should have a formal scalar chain of authority and communication that runs from top to bottom.
The scalar chain should not be violated in the normal course of formal communication.
Incase of an emergency, a shorter route gang plank can be used so that communication is not delayed.
(x) Order:
There must be a fixed place for everything (everyone) and everything (everyone) must be present in its place.
It means orderliness which will lead to increased productivity and efficiency.
(xi) Equity:
There should be no discrimination against anyone on basis of gender, religion, language, caste, belief or nationality etc.
There should be kindliness and justice in the behaviour of managers towards workers to ensure loyalty.
Lazy personnel should be dealt with sternly to send the message that everyone is equal in the eyes of the management.
(xii) Stability of Personnel:
Employee turnover should be minimized to reduce cost of recruitment, selection and training.
Personnel should be selected and appointed after due and vigorous procedure.
Stability of tenure means after selection employees, they should be kept at their post for a minimum fixed period and
be given reasonable time to show results.
(xiii)Initative:
Initiative means taking the first step with self-motivation.
But it does not mean going against the established practices of the company for the sake of being different.
Company should have an employee suggestion system to reward suggestions which helps to reduce cost/time.
(xiv) Esprit De Corps:
Management should promote team spirit and teamwork among employees.
A manager should replace ‘I’ with ‘We’ in all his conversations with workers.
It will help to increase mutual trust and belongingness and minimise the need for using penalties.
Principles of Scientific Management – F W TAYLOR:
(i) Science not Rule of Thumb:
Taylor believed that there was only one best method to maximise efficiency.
This method can be developed through study and analysis and must be followed throughout the organisation.
The method should substitute rule of thumb method.
(ii) Harmony, Not Discord:
Mental revolution means management and workers should transform their thinking towards each other.
They should realise the importance of each other and there must not be class-conflict.
When there is complete harmony, the trade unions will not think of going on strike.
Management should share the gains of the company with the workers because prosperity of the employer depends on
prosperity of the employees.
(iii) Cooperation, Not Individualism:
This principle is an extension of ‘Harmony not discord’ where competition should be replaced by cooperation.
Workers should not go on strike or make unreasonable demand on the management.
Management and workers should realise that they need each other.
Management should not close its ears to constructive suggestions made by the employees and reward suggestions
which helps to reduce cost.
(iv) Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity:
Each person should be scientifically selected and work must be assigned according to his capabilities.
To increase efficiency, workers should be given training to learn the ‘best method’ developed through scientific analysis.
Efficient employees produce and earn more to ensure greatest efficiency and prosperity for both company and workers.

Techniques of Scientific Management – F W TAYLOR:

1. Functional Foremanship:
Functional foremanship is an extension of the principle of division of work.
Each worker will have to take orders from the eight foremen at the shop floor / factory level.
FACTORY MANAGER
PLANNING INCHARGE (technical mastery, intelligence, grit) PRODUCTION INCHARGE (energy and good health)
instruction card clerk - draft instructions for the workers speed boss - responsible for timely and accurate completion of job
route clerk - specify the route of production gang boss - keeping machines and tools etc., ready for operation by workers
time and cost clerk - prepare time and cost sheet repair boss - ensure proper working condition of machines and tools
disciplinarian - ensure discipline Inspector - check the quality of work

2. Standardisation and Simplification of Work:

Standardisation means setting standards for every business activity - process, raw material, time, product, machinery,
methods or working conditions. The objectives of standardisation are:
(i) To reduce a given line or product to fixed types, sizes and characteristics.
(ii) To establish interchange ability of manufactured parts and products.
(iii) To establish standards of excellence and quality in materials.
(iv) To establish standards of performance of men and machines.
Simplification means eliminating unnecessary varieties, sizes and dimensions of products while standardisation implies
devising new varieties instead of the existing ones.
It results in saving cost of labour, machines, reduce inventories, fuller use of equipment and increased turnover.

3. WORK STUDY – METHOD, MOTION, TIME AND FATIGUE STUDY:

a) Method Study:
The objective of method study is to find out one best way of doing the job, minimise the cost of production and
maximise the quality and satisfaction of the customer.
Right from procurement of raw materials till the final product is delivered to the customer every activity is part of
method study.
Motion Study:
Motion study refers to the study of movements like lifting, putting objects, sitting and changing positions, etc.
On close examination of body motions, it is possible to find out:
(i) Productive motions (ii) Incidental motions (iii) Unproductive motions.
Unnecessary movements must be eliminated so that it takes less time to complete the job.
Time Study:
It determines the standard time taken to perform a well-defined job.
The standard time is fixed for the task by taking several readings with the help of time measuring devices.
The objective of time study is to determine the number of workers to be employed, incentive schemes and labour costs.
Fatigue Study:
A person feels tired if he does not rest while working.
The rest intervals helps to regain stamina and work again with the same capacity which result in increased productivity.
Fatigue study helps to determine the amount and frequency of rest intervals in completing a task.
The causes for fatigue are long working hours, unsuitable work, bad relations with boss or bad working conditions etc.

4. Differential Piece Wage System:

Taylor wanted to differentiate between efficient and inefficient workers.
To reward efficient workers he introduced different rate of wage payment for those who performed above standard and
for those who performed below standard.
Ex: Standard output per worker per day = 10 units
Wage rate 1 = Rs. 50 per unit. Wage rate 2 = Rs. 40 per unit.
Worker A produces 11 units, Wages of worker A = 11*50= Rs. 550 per day.
Worker B produces 9 units, Wages of worker B = 9*40 = Rs. 360 per day.
The difference of Rs. 190 will motivate the inefficient worker to perform better.

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BST NOTES CH 03 BUSINESS ENVIRONMENT:
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.
BUSINESS ENVIRONMENT FEATURES/ CHARACTERISTICS:
1. Totality of external forces:
Business environment is the sum total of all things external to business firms.
2. Specific and general forces:
Business environment includes both specific and general forces.
Specific forces (investors, customers, competitors and suppliers) affect individual firms directly.
General forces (social, political, legal and technological conditions) affect all business indirectly.
3. Inter relatedness:
Different elements of business environment are closely interrelated.
Ex: increased life expectancy of people and awareness for health care have increased the demand for health products
and services like soft drinks, fat-free cooking oil and health resorts.
4 Dynamic nature:
Business environment keeps on changing in terms of technological improvement, change in consumer taste, entry of
new competition in the market, etc.
5. Uncertainity:
It is very difficult to predict future happenings because environment is changing too frequently.
6. Complexity:
Business environment includes interrelated and dynamic forces.
It is easier to understand in parts but becomes difficult to understand in total.
7. Relativity:
Business environment differs from country to country and even region to region.
Political conditions in the USA differ from those in China or Pakistan.
Demand for sarees is high in India but it is low in France.
BUSINESS ENVIRONMENT IMPORTANCE/ SIGNIFICANCE:
1. It enables the firm to identify opportunities and getting the first mover advantage:
Opportunities means positive external changes.
Early identification of opportunities helps to be the first to exploit them.
Ex: Maruti Udyog became the leader in the small car market because it was the first to recognise the need for small cars
due to high petroleum prices and a large middle class population in India.
2. It enables the firm to identify threats and early warning signals:
Threats means changes that will hinder a firm’s performance.
It help managers to identify threats on time and serve as an early warning signal.
Ex: An Indian firm can improve the quality of the product, reduce cost of the production, aggressively advertise when it
finds out that a foreign multinational is entering the Indian market.
3. It helps in tapping useful resources:
A business uses inputs (finance, machines, raw materials, power, water, labour, government) to supply outputs (goods /
services for customers, taxes to government, return on investment to investors).
This can be done by understanding what resources are available in the environment and convert them into outputs.
4. It helps in coping with rapid changes:
All sizes and all types of enterprises are dynamic because changes are taking place at a fast pace.
The manager must examine the environment and develop suitable courses of action to cope with these changes.
5. It helps in assisting in planning and policy formulation:
Environment is a source of both opportunities and threats for a business.
Understanding the environment helps in deciding future course of action and training guidelines for decision making.
6. It helps in improving performance
The future of a business depends on what is happening in the environment.
Continuous monitoring of environment and adopting suitable practices helps to improve their present and future
performance.
BUSINESS ENVIRONMENT TYPES/DIMENSIONS/ ELEMENTS/ COMPONENTS:
1. ECONOMIC ENVIRONEMENT:
It includes - interest rate, tax rate, demand, supply, inflation, savings, export-import, investment outlay, changes in
disposable income, stock market indices, value of rupee, role of private and public sectors, GNP and per capita income,
balance of payments, foreign exchange reserves, etc.
2. SOCIAL ENVIRONMENT:
It includes - values, customs, traditions, festivals, birthrate, deathrate, literacy rates, lifestyle, life expectancy , quality of
life, educational system, occupational distribution, expectations from the workforce, shifts in the presence of women,
population shifts, composition of family , consumption habits, consumer preferences, attitudes towards product
innovations, etc.
3. POLITICAL ENVIRONMENT:
It includes - constitution of the country, relationship of one country with another, attitude of government towards a
business, political peace, stability / unrest, prevailing political system, politicisation of business and economic issues,
ideologies and values of political parties, government intervention in business, etc.
4.TECHNOLOGICAL ENVIRONMENT:
It includes - scientific improvements and innovations, new ways of production, new methods and techniques of
operating a business, advances in computers and electronics, computerised information kiosks, World Wide Web
multimedia pages, lasers, robotics, biotechnology, technological upgradation, artificial intelligence, etc.
5. LEGAL ENVIRONMENT:
It includes - legislations passed by the government, administrative orders, court judgments, decisions by commissions
and agencies at centre, state or local level.
It also includes Companies Act 2013, Consumer Protection Act 1986, Competition Act 2002, Factories Act 1948, etc.
Ex: Advertisements on cigarettes packet includes statutory warning ‘Cigarette smoking is injurious to health’.
Advertisements of baby food inform the buyer that mothers milk is the best.

Demonetisation - MEANING:
The Government of India, made an announcement on November 8, 2016 that Rs500 and Rs1,000 were demonetised
(ceasing to be legal tender) with immediate effect.
This led to eighty six per cent of the money in circulation invalid.
The aim of demonetisation was to stop corruption, black money, counterfeiting, funding of illegal activities.
DEMONETISATION -Features:
1. It is a tax administration measure because people with black money had to declare their unaccounted money and pay
taxes at a penalty rate.
2. It is a shift on the part of the government because tax evasion will no longer be tolerated or accepted.
3. It helps in channelizing savings into the formal financial system and banks offer new deposits schemes to provide
loans at lower interest rates.
4. It helps to create a less-cash or cash-lite economy and improving tax compliance with the help of digital transactions
(cell phones, Point-of-Sale (PoS) machine and internet connectivity).
5. The impact of demonetisation was decline in - cash transactions, private wealth, real estate prices and increase in -
bank deposits, financial savings, tax collection, etc.

QUICK REVISION - Business Environment – Features, Importance & Types

SL BUSINESS ENVIRONMENT BUSINESS ENVIRONMENT BUSINESS ENVIRONMENT TYPES/DIMENSIONS/

NO. CHARACTERISTICS IMPORTANCE/ SIGNIFICANCE ELEMENTS/ COMPONENTS
1 Totality of external forces It enables the firm to identify ECONOMIC – interest rate, tax rate, demand,
opportunities and getting first supply, inflation, savings, export-import,
mover advantage investment outlay, etc.
2 Specific and general forces It enables the firm to identify SOCIAL – values, customs, traditions, festivals,
threats and early warning signals birthrate, deathrate, lifestyle, consumption habits,
etc.
3 Inter relatedness It helps in tapping useful resources POLITICAL – constitution of the
country,relationship of one country with another,
attitude of government towards a business,
political peace, stability / unrest, etc
4 Dynamic nature It helps in coping with rapid TECHNOLOGICAL – new inventions, innovations,
changes technological upgradation, robotics, artificial
intelligence, computer networks, etc.
5 Uncertainity It helps in assisting in planning and LEGAL – order by district, state/ high and supreme
policy formulation court, acts, etc.
6 Complexity It helps in improving performance -
7 Relativity - -

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BST NOTES CH 04 PLANNING

PLANNING MEANING:
Planning is one of the basic managerial functions about deciding in advance what to do and how to do.
It involves setting objectives and developing appropriate courses of action to achieve these objectives.
Planning bridges the gap between where we are and where we want to go.

PLANNING FEATURES:
1. Planning focuses on achieving objectives:
Planning is purposeful because it helps to achieve predetermined organisational goals.
2. Planning is a primary function of management:
Planning precedes other functions and it lays down the base for other functions of management.
3. Planning is pervasive :
Planning is required at all levels of management and in all departments of the organisation.
The top level plans for the whole organisation, middle level for departments and lower level for day-to-day operations.
4. Planning is continuous:
Plans are made for a specific period of time (for a month/ a quarter/ a year) it is implemented and is followed by
another plan, and so on.
At the end of that period, a new plan is to be made for future period.
5. Planning is futuristic:
Planning is a forward looking function based on forecasting.
Through forecasting of future events and conditions, plans are made.
6. Planning involves decision making:
Planning means choosing from various alternatives.
Planning involves evaluation of alternatives and choosing the most appropriate one.
7. Planning is a mental exercise:
Planning requires application of mind, foresight, intelligent imagination and sound judgement.
It is an intellectual activity which requires logical and systematic thinking rather than guess work.

PLANNING IMPORTANCE:
1. Planning promotes innovative ideas:
New ideas can take the shape of concrete plans.
Planning guides all future actions leading to growth and prosperity of the business.
2. Planning provides directions:
If there was no planning, employees would be working in different directions.
It provides direction for how work is to be done, what action should be taken and in which direction.
3. Planning reduces the risks of uncertainty:
Changes cannot be eliminated but they can be anticipated and managerial responses can be developed.
Planning helps to anticipate changes and show the way to deal with changes.
4. Planning reduces overlapping and wasteful activities:
It helps in avoiding confusion and misunderstanding by providing clarity in thought and action.
It helps to minimise wasteful activities and take corrective measures.
5. Planning establishes standards for controlling:
Planning is a prerequisite for controlling because it provides standards for measuring actual performance.
By comparing actual performance with standard, managers can find out if there is any deviation which can be corrected.
6. Planning facilitates decision making:
Planning means choosing from various alternatives.
Planning helps in taking rational decisions by evaluating alternatives and choosing the most appropriate one.

PLANNING LIMITATIONS:
1. Planning involves huge costs:
It means involving huge costs in terms of time and money for expenses on boardroom meetings, discussions with
professional experts and preliminary investigations, etc.
Sometimes, the costs may be higher than the benefits derived from the plans.
2. Planning is a time-consuming process:
Sometimes plans to be drawn up take so much of time that there is not much time left for their implementation.
3. Planning leads to rigidity:
Following a pre-decided plan, when circumstances have changed, may not be in the organisations interest.
It creates rigidity if managers are not given flexibility to cope with the changed circumstances.
4. Planning reduces creativity:
Planning is done by the top management and the rest of the members just implements these plans.
As a consequence, middle and lower management are not allowed to deviate from plans or act on their own.
5. Planning may not work in a dynamic environment:
The business environment is dynamic because of changes in economic, political, physical, legal and social factors.
It becomes difficult to cope up with the rapid changes because planning cannot foresee everything.
6. Planning does not guarantee success:
Managers have a tendency to use previous year tried and tested successful plans.
If a plan has worked before it may not work again because present circumstances might have changed and so planning
is not a solution to all problems.

PLANNING PROCESS – (7) STEPS:

Step 1: Setting Objectives:
It means setting objectives clearly for the entire organisation and each department/ unit.
It is the end result of activities to be achieved within a given time period.
Eg: Increase sales by 10% in the next quarter.
Step 2: Developing premises:
The manager is required to make certain assumptions about the future called premises. Assumptions are the base
material upon which plans are drawn. Accurate forecasts can be made for success of plans about the demand, policy
change, interest rates, prices of capital goods, tax rates etc.
Step 3: Identifying alternative courses of action:
All the alternative courses of action should be identified which could be either routine or innovative.
If the project is important, then more alternatives should be generated and discussed amongst the members.
Step 4: Evaluating alternative courses:
The positive and negative aspects of each alternative is evaluated based on their feasibility and consequences.
The risk-return calculations of earnings, interest, taxes, dividends are made with the help of accurate forecasts.
Step 5: Selecting an alternative:
This is the point of decision making where the best plan which is feasible, profitable and with least negative
consequences is selected.
A combination of plans based on permutations and combinations may also be selected instead of one best course.
Step 6: Implementing the plan:
This is the step where other managerial functions also come into the picture.
It means putting the plan into action by organising for labour and purchase of machinery.
Step 7: Follow-up action:
It means to see whether activities are being performed according to the plans.
Monitoring the plans is important to ensure that objectives are achieved.

Types of Plans:
1.Objectives:
It is the end result of activities to be achieved within a given time period.
They are set by the top management in quantitative terms, in the form of a written statement.
Eg: an organisation has to increase sales by 10% in the next quarter.
They are not classified as standing plan or Single use plan.
2.Strategy:
It is a comprehensive plan.
It includes – long term objectives, course of action and allocating resources.
It is made by considering the business environment and the competition in the market.
They are not classified as standing plan or Single use plan.
3.Policy:
They are general statement.
They help a manager to take decisions and in implementing strategies.
For eg: recruitment policy, pricing policy, sales policy, credit policy, etc.
They are classified as standing plan.
4.Procedure
They are routine steps in chronological / sequential order on how to carry out activities.
They help to implement policies.
Eg:- procedure for placing the order for the raw materials.
They are classified as standing plan.
5.Methods
It is a manner in which one step of the procedure is performed.
Method may be different for different tasks.
Selection of proper method helps to save time, money and efforts.
They are classified as standing plan.
6.Rule
Rules are specific statements.
They are the simplest type of plans.
They do not allow for any flexibility.
It tells that a certain action must or must not be taken.
It can be changed by taking a policy decision.
EX: NO SMOKING IN OFFICE PREMISES.
They are classified as standing plan.
7.Budget
A budget is a numerical statement of expected results.
It includes future facts and figures.
Budget is also a control device.
Ex: a sales budget, cash budget.
They are classified as single use plan.
8.Programme
Programmes are detailed statements about a project.
Programmes will include the entire gamut of activities – (objectives, policies, procedures, rules, tasks, human and
physical resources required and the budget.)
They are classified as single use plan.
________________________________________________________________________
Hint: Written statement – Objectives, general statement – Policy, Specific statement – Rule, Numerical statement – Budget, Detailed
statement – Programme, Comprehensive plan – Strategy, Routine steps in chronological order – procedure, manner in which one
step is performed – Method. Objectives – end result, Budget – expected results.

DIFFERENCE BETWEEN SINGLE USE PLAN AND STANDING PLAN

SL NO. SINGLE USE PLANS STANDING PLANS

1 It is developed for a one time event or a project. It is used for activities that occur regularly.
2 For non recurring situation For smooth internal operation
3 It is discarded when the project is over. It is modified from time to time.
4 It may be for a day, a week or a month It improves decision making
5 It includes Budget, Programme It includes Policy, Procedure, Method and Rule

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BST NOTES CH 05 ORGANISING:

ORGANISING MEANING:
Organising is the process of identifying and grouping the work to be performed, defining and delegating responsibility
and authority, and establishing relationships for the purpose of enabling people to work most effectively together in
accomplishing objectives.
Organising is a process by which the manager brings order out of chaos, removes conflict among people over work and
creates an environment suitable for teamwork.

ORGANISING PROCESS – (4) STEPS:

(i) Identification and division of work:
It means identifying and dividing the work into manageable activities.
It helps to avoid duplication and the burden of work can be shared among the employees.
(ii) Departmentalisation:
Once work has been divided into small and manageable activities then those activities which are similar in nature are
grouped together to facilitate specialisation.
Ex:Territory (north, south, west, etc.) and products (appliances, clothes, cosmetics etc).
(iii) Assignment of duties:
It means define the work of different job positions and allocate work to various employees.
Jobs are allocated to the members according to their skills and competencies.
(iv) Establishing authority and reporting relationships:
Each individual should also know who he has to take orders from and to whom he is accountable.
The establishment of clear relationships helps to create a hierarchal structure in the organisation.

ORGANISING – IMPORTANCE / SIGNIFICANCE / BENEFITS:

(i) Benefits of specialisation:
Organising leads to a systematic allocation of jobs, reduces the workload and increases productivity.
Repetitive performance of a particular task helps a worker to become a specialist.
(ii) Clarity in working relationships:
The establishment of working relationships clarifies who is to report to whom.
It helps in fixing responsibility and authority to be exercised by an individual.
(iii) Optimum utilisation of resources:
Organising leads to the proper usage of all material, financial and human resources.
It helps to avoid overlapping and duplication of work, prevents confusion and reduces the wastage of resources and
efforts.
(iv) Adaptation to change:
Organising allows a business to accommodate changes in the business environment.
It also provides stability and continue to survive and grow inspite of changes.
(v) Effective administration:
Organising provides a clear description of jobs and related duties which helps to avoid confusion and duplication.
Management becomes easy and brings effectiveness in administration.
(vi) Development of personnel:
Organising helps the managers to reduce their workload by assigning routine jobs to their subordinates.
It gives them the time to explore areas for growth and innovate to strengthen the company’s competitive position.
(vii) Expansion and growth:
Organising helps in the growth and diversification by adding more job positions, departments and product lines.
New geographical territories can be added to increase customer base, sales and profit.

ORGANISATION STRUCTURE MEANING:

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.
SPAN OF MANAGEMENT:
It refers to the number of subordinates that can be effectively managed by a superior.
The span of management gives shape to the organisational structure and determines the levels of management.

TYPES OF ORGANISATION STRUCTURES: - FUNCTIONAL AND DIVISIONAL:

1. FUNCTIONAL STRUCTURE- MEANING:
Functional structure means grouping of jobs of similar nature based on functions as separate departments.
All departments report to a coordinating head.
Ex: A manufacturing firm includes production, purchase, marketing, accounts and personnel departments.
Suitability:
It is suitable when the organisation is - large size, has diversified activities and require high degree of specialisation.

SL NO ADVANTAGES DISADVANTAGES
1 It leads to occupational / functional Less emphasis on overall organisational interest and
specialisation to improve performance. objectives than departmental interests of functional head.
2 It promotes control and coordination. Leads to problems in coordination between departments.
3 It helps in increasing managerial and Interdepartmental conflicts arise between departments.
operational efficiency and increased profit.
4 It reduces duplication of efforts and lowers Functional heads do not get training for top management
cost through economies of scale. positions and this may lead to inflexibility.
5 It makes training of employees easier. -
6 Different functions get due attention. -

DIVISIONAL STRUCTURE -MEANING:

Divisional structure includes units or divisions on the basis of different products manufactured.
Each division includes functions like production, marketing, finance, purchase, etc.
Ex: A large company may have divisions like cosmetics, clothing, etc.
Suitability:
It is suitable where a large variety of products are manufactured using different productive resources.
When an organisation grows and needs to add more employees, create more departments and introduce new levels of
management, it will decide to adopt a divisional structure.

SL NO ADVANTAGES DISADVANTAGES
1 Product specialisation prepares divisional head for Conflict may arise among different divisions for
higher positions because he gains experience in all allocation of funds.
functions related to a product.
2 Helps in fixing responsibility for poor performance of a It may lead to increase in costs due to duplication
division because divisional heads are responsible for of activities across products.
profits, revenues and costs.
3 It promotes flexibility, initiative and quick decision Manager may gain power and ignore
making. organisational interests.
4 It facilitates expansion and growth by adding new -
divisions and staff for new product line.

COMPARATIVE VIEW: FUNCTIONAL AND DIVISIONAL STRUCTURE:

BASIS FUNCTIONAL STRUCTURE DIVISIONAL STRUCTURE
Formation Formation is based on functions Formation is based on product lines and is supported
by functions.
Specialisation Functional specialisation. Product specialisation.
Responsibility Difficult to fix on a department. Easy to fix responsiblity for performance.
Managerial Difficult, as each functional manager has to Easier, autonomy as well as the chance to perform
Development report to the top management. multiple functions helps in managerial development.
Cost Functions are not duplicated hence Duplication of resources so costly.
economical
Coordination Difficult for a multiproduct company. Easy, because all functions related to a particular
product are integrated in one department

TYPES OF ORGANISATION - FORMAL AND INFORMAL ORGANISATION:

FORMAL ORGANISATION – MEANING:
Formal organisation refers to the organisation structure which is deliberately designed by the management to
accomplish a particular task.
The structure in a formal organisation can be functional or divisional.
 FORMAL ORGANISATION – ADVANTAGES FORMAL ORGANISATION - DISADVANTAGES
(a) It is easier to fix responsibility. (a) There may be delay in decision making.
(b) There is no confusion in role and duties (b) It may lead to rigidity and reduce creative talent.
which helps to avoid duplication of effort.
(c) Unity of command and chain of command (c) More emphasis is given on work than human relationships. It
is maintained. does not provide a complete picture of how an organisation works.
(d) It leads to accomplishment of goals. -
(e) It provides stability to the organisation. -

INFORMAL ORGANISATION – MEANING:

Network of social relationships among employees is called informal organisation.
It emerges from within the formal organisation when people interact beyond their officially defined roles.
Informal organisation has no written rules and does not have fixed lines of communication.
Ex: Groups formed with common interest in cricket matches, meet in cafeteria for coffee, interested in dramatics, etc.

INFORMAL ORGANISATION – ADVANTAGES INFORMAL ORGANISATION - DISADVANTAGES

(a) Faster spread of information and quick feedback. (a) Spreads rumours which may go against the interest
of the formal organisation.
(b) It helps to fulfill the social needs of employees, (b) Difficulty in implementing changes if the informal
increases job satisfaction and gives them a sense of organisation opposes them which may delay or restrict
belongingness. growth.
(c) It helps to fulfil organisational objectives by -
compensating for inadequacies in the formal organisation.

FORMAL AND INFORMAL ORGANISATION: A COMPARATIVE VIEW:

BASIS FORMAL ORGANISATION INFORMAL ORGANISATION
Meaning It is created by the management Arises out of interaction among employees
Origin Arises out of rules and policies Arises out of social interaction
Authority Arises out of position in management Arises out of personal qualities
Behavior It is directed by rules There is no set behaviour pattern
Flow of Communication Through the scalar chain. In any direction not through scalar chain.
Nature Rigid Flexible
Leadership Managers are leaders. Leaders are chosen by the group who may or
may not be managers.

DELEGATION – MEANING:
Delegation means downward transfer of authority from a superior to a subordinate.
It is impractical for a manager to do all tasks by himself, so he must delegate authority and focus on high priority
activities.
Delegation does not mean abdication. The manager shall still be accountable for the performance of the assigned tasks.
The authority granted to a subordinate can be taken back and redelegated to another person.
ELEMENTS OF DELEGATION:
BASIS AUTHORITY RESPONSIBILITY ACCOUNTABILITY
Meaning Right to command. Obligation to perform an Answerability for outcome of the
assigned task. assigned task.
Delegation Can be delegated. Cannot be entirely delegated. Cannot be delegated at all.
Origin Arises from formal Arises from delegated Arises from responsibility.
position . authority.
Flow Flows downward from Flows upward from Flows upward from subordinate to
superior to subordinate. subordinate to superior. superior

DELEGATION – IMPORTANCE / SIGNIFICANCE / BENEFITS:

(i) Effective management:
It is impractical for a manager to do all tasks by himself, so he must delegate authority for doing routine work to
subordinates and focus on high priority activities and excel in new areas.
(ii) Employee development:
Delegation empowers the employees to use their skills, gain experience and develop themselves for higher positions.
Delegation helps in preparing better future managers.
(iii) Motivation of employees:
Responsibility for work builds the self-esteem of an employee and improves his confidence.
He tries to improve his performance as it involves trust of superior and commitment of subordinate.
(iv) Facilitation of growth:
Delegation helps in the expansion of an organisation by providing a ready workforce for new ventures.
Trained and experienced employees help to set up new projects and new branches.
(v) Basis of management hierarchy:
Delegation of authority establishes superior-subordinate relationships, which are the basis of hierarchy of management.
It determines who has to report to whom.
(vi) Better coordination:
Delegation define the powers, duties and answerability in an organisation.
Effective coordination among the departments, levels and functions of management can be maingained by avoiding
overlapping and duplication of efforts.

DECENTRALISATION MEANING:
Decentralisation refers to delegation of authority throughout all the levels of the organisation.
Those organisations in which decision making authority lies with the top management are centralised organisations
whereas those in which such authority is shared with lower levels are decentralised organisations.
DECENTRALISATION – IMPORTANCE / SIGNIFICANCE / BENEFITS:
(i) Develops initiative among subordinates:
Decentralisation helps to promote self-reliance and confidence amongst the subordinates.
It encourages lower managerial levels to take their own decisions.
(ii) Develops managerial talent for the future:
Formal training equips subordinates to handle assignments independently.
Decentralisation gives a chance to qualified manpower fill up more challenging positions through promotions.
(iii) Quick decision making:
In centralised organisation the flow of information is slow because every decision is taken by the top management.
In a decentralised organisation quick decisions can be taken at all levels and there is no requirement for approval from
many levels.
(iv) Relief to top management:
Decentralisation reduces the amount of direct supervision by a superior over the activities of a subordinate.
Decentralisation gives top management more time for important policy decisions than operational decisions.
(v) Facilitates growth:
Decentralisation helps to increase the productivity and the organisation is able to generate more returns which can be
used for expansion purposes.
(vi) Better control:
Decentralisation makes it possible to evaluate performance at each level and the departments can be individually held
accountable for their results.
Decentralisation should used with caution as it can lead to organisational disintegration.

DELEGATION AND DECENTRALISATION: A COMPARATIVE VIEW:

BASIS DELEGATION DECENTRALISATION
Nature Delegation is compulsory. Decentralisation is an optional policy decision.
Freedom of More control by superiors and less Less control over executives and more freedom of action.
action freedom to take own decisions.
Status It is a process to share tasks. It is the result of the policy decision of the top
management.
Scope It has narrow scope. It has wide scope.
Purpose To lessen the burden of the manager. To increase the role of the subordinates.

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BST NOTES CH 06 STAFFING
STAFFING – MEANING:
Staffing means obtaining, utilising and maintaining satisfied work force.
Staffing means filling and keeping filled the positions in the organisation.
STAFFING – IMPORTANCE / SIGNIFICANCE / BENEFITS:
(i) It helps in obtaining right person for various jobs;
(ii) It improves performance, by putting right person on the right job;
(iii) It ensures the continuous survival and growth of the organisation.
(iv) It helps to ensure optimum utilisation of the human resources by avoiding overstaffing and understaffing.
(v) It improves job satisfaction and morale of employees through reward system.

STAFFING – HUMAN RESOURCE MANAGEMENT (HRM):

HRM includes many specialised activities and duties:
Recruitment, i.e., search for qualified people
Analysing jobs, collecting information about jobs to prepare job descriptions.
Developing compensation and incentive plans.
Training and development of employees for career growth.
Maintaining labour relations and union management relations.
Handling grievances and complaints.
Providing for social security and welfare of employees.
Defending the company in law suits and avoiding legal complications.

STAFFING PROCESS – STEPS (8):

(i) Estimating the Manpower Requirements:
Workload analysis helps to find the number and types of human resources required.
Workforce analysis helps to find out the number and type available.
There may be understaffing, overstaffing or optimally staffed.
The employee is removed or transferred if there is overstaffing and in case of undertaffing recruitment will be done.
(ii) Recruitment:
It means searching for prospective employees and motivating them to apply for jobs for vacant post.
The job description for the vacancy is given in the advertisement on the factory/ office gate / print / electronic media.
Recruitment can be internal and external.
(iii) Selection:
It means choosing the best candidate from the pool of the prospective candidates.
It increases the self-esteem and prestige of the selected candidates.
It includes selection tests, employment interviews, employment contract, job offer, etc.
(iv) Placement and Orientation:
Placement means the employee occupying the position for which he has been selected.
Orientation means introducing the selected employee to other employees (superiors, subordinates and colleagues) and
familiarising him with the rules and policies of the organisation.
(v) Training and Development:
Training is a job oriented process for increasing knowledge and skills of employees to do the current job better.
Development is a career oriented process of learning and growth for the overall growth of the employee.
(vi) Performance Appraisal:
After training of employees their current and/or past performance is evaluated against predetermined standards.
The performance includes defining the job, appraising performance and providing feedback.
(vii) Promotion and career planning:
Managers must encourage employees to grow and realise their full potential.
Promotions means higher positions with more authority, responsibility, pay and job satisfaction.
(viii) Compensation:
It means wage / salary and reward plans for the employees.
Direct financial payments includes wages, salaries, incentives, commissions and bonuses.
Indirect payments includes employer paid insurance and vacations.

SELECTION PROCESS – STEPS (8):

(i) Preliminary Screening:
It means eliminating unqualified or unfit job seekers based on the information in the application.
It helps to reject the misfit application forms.
(ii) Selection Tests: It helps to measure the characteristics of individuals through:-
(a) Intelligence Tests: It measures the level of intelligence quotient, learning ability, decisions making and judgments.
(b) Aptitude Test: It measures the potential for learning new skills, capacity to develop and future success score.
(c) Personality Tests: It measures person’s overall personality, emotions, reactions, maturity and value system etc.
(d) Trade Test: It measures the existing skills, level of knowledge and proficiency of professions or technical training.
(e) Interest Tests: It measures fascination for some job, the pattern of interests or involvement of a person.
(iii) Employment Interview:
It means formal, in-depth conversation to evaluate the applicant’s suitability for the job.
The interviewer and interviewee tries to get information from each other.
(iv) Reference and Background Checks:
The employers request names, addresses, and telephone numbers of references (previous employers, known persons,
teachers and university professors) for the purpose of verifying information and getting additional information about
the applicant.
(v) Selection Decision:
The final decision has to be made from among the candidates who pass the tests, interviews and reference checks.
The concerned department manager will make the final selection because he will be responsible for the performance of
the new employee.
(vi) Medical Examination:
After the selection decision and before the job offer is made, the candidate is required to undergo a medical fitness test.
The job offer is given to the candidate being declared fit after the medical examination.
(vii) Job Offer:
Job offer is given to those applicants who have passed all the previous steps.
It is a letter of appointment/ confirm his acceptance.
It includes date by which the appointee must report on duty by giving reasonable time for reporting.
(viii)Contract of Employment:
When the candidate accepts the offer, he submits attestation form including the details about him after self attestation.
Attestation form will be a valid record for future reference.
The contract of employment includes - Job Title, Duties, Responsibilities, Date when continuous employment starts and
the basis for calculating service, rates of pay, allowances, hours of work, leave rules, sickness, grievance procedure,
disciplinary procedure, work rules, termination of employment.

RECRUITMENT – TYPES – INTERNAL AND EXTERNAL:

SL NO. INTERNAL RECRUITMENT – MEANING EXTERNAL RECRUITMENT – MEANING

1 Recruitment means to attract suitable Recruitment seeks to attract suitable applicants to apply for available jobs
applicants to apply for available jobs from from outside the organisation.
within the organisation.
2 Types – Transfers and Promotions Types – Advertisement, Advertisement on television, Web Publishing,
Direct Recruitment, Labour Contractors, Employment Exchange, Casual
callers, Campus recruitment, Recommendation from employees,
Placement agencies and management consultants.

INTERNAL RECRUTIMENT – TYPES:

SL NO TRANSFER – MEANING PROMOTION – MEANING

1 It means shifting the employee from one job / It means filling higher jobs by promoting employees from
department / shift to another. lower jobs.
2 It is horizontal movement of employees. It is vertical movement of employees
3 There are changes in duties and responsibilities, There is higher responsibilities, facilities, status and pay.
working condition but no change in salary and status
of the employee.
4 Transfer is useful when there is over-staffing - It has a psychological impact over the employees because a
shortage in one branch may be filled through transfer promotion at the higher level may lead to promotions at
from other branch or department. lower levels also.
5 It helps to avoid termination It improves motivation, loyalty and satisfaction of employees.
6 It helps in training of employees for different jobs. It means shifting an employee to a higher position.

INTERNAL RECRUITMENT – MERITS AND LIMITATIONS:

 SL NO INTERNAL SOURCES – MERITS INTERNAL SOURCES – LIMITATIONS
1 It helps to increase learning, peace, motivation, loyalty, The spirit of competition among the
commitment, performance and satisfaction of employees employees may be reduced.
through promotion at a higher level.
2 It is simple, accurate, reliable and economical process of The employees may become lethargic if they
selection and placement because the candidates are already are sure of timebound promotions.
working and known to the organisation.
3 Transfer helps in training the employees and prepare them It reduces the scope for bringing fresh talent
for higher jobs. Induction training for existing employees is or infusion of new blood because of
not required. ‘inbreeding’.
4 Transfer is useful when there is over-staffing - shortage in one Frequent transfers of employees may often
branch may be filled through transfer from other branch or reduce the productivity of the organisation.
department.
5 It is cheaper as compared to external sources. A new enterprise cannot use internal
sources of recruitment.

EXTERNAL RECRUITMENT – MERITS AND LIMITATIONS:

SL NO EXTERNAL SOURCES – MERITS EXTERNAL SOURCES – LIMITATIONS

1 Competitive Spirit: It encourages the existing staff to compete Dissatisfaction among existing staff: Existing
with the outsiders by working harder and better performance. employees may feel that their chances of promotion
are reduced which lead to dissatisfaction and
frustration among them.
2 Wider Choice: When vacancies are advertised, the Lengthy process: Notifying the vacancies and
management has a wider choice while selecting the people out waiting for response is a time consuming process.
of large number of applicants.
3 Fresh Talent: The existing employees may not be sufficient or Costly process: It is very costly because a lot of
suitable for the jobs to be filled. It allows to bring new blood in money has to be spent on advertisement and
the organisation. processing of applications.
4 Qualified Personnel: It helps to attract qualified and trained -
people to apply for vacant jobs.

EXTERNAL RECRUITMENT –TYPES:

1. Advertising on Television: It 4. Direct Recruitment: A notice is placed 7. Placement Agencies and Management
means telecasting of vacant on the notice-board of the enterprise Consultants: It provides a nationwide service in
posts over Television. about the jobs available. matching demand and supply for technical,
The requirements of the job, the Jobseekers assemble outside the premises professional and managerial personnel.
qualities required to do it and on the specified date and selection is done They maintain data bank of a large number of
profile of the organisation are on the spot. people with different qualifications and skills.
advertised. It is useful for unskilled or semi-skilled They specialise in middle level and top level
(casual / badli workers) on daily wage placements and advertise the jobs on behalf of
basis. their clients.
It is inexpensive method. They charge fee for their services.
It is suitable when there is a rush of work
or when permanent workers are absent.
2. Advertisement: It means 5. Labour Contractors: Labour contractors 8. Campus Recruitment: Recruitment from
advertisement in newspapers, maintain close contacts with labourers educational institutions help in recruitment for
trade and professional journals. and they can provide the required number technical, professional and managerial jobs.
It is useful for wider choice in the of unskilled workers at short notice. Many big organisations maintain a close liaison
senior positions. Workers are recruited through labour with the universities, vocational schools and
More information about the contractors who are themselves management institutes to recruit qualified
organisation and job can be employees of the organisation. personnel.
given. Disadvantage -If the contractor himself
Disadvantage -It may bring in a decides to leave the organisation, all the
flood of response, and from workers employed through him will also
unsuitable candidates. leave.
3. Web Publishing: It means 6. Employment Exchange: They are run by 9. Recommendations of Employees: It means
websites are designed for the the Government for recruitment of applicants are introduced by present
providing information about job unskilled and skilled operative jobs. employees, or their friends and relatives.
seekers and job opening. Such applicants are likely to be good employees
because their background is sufficiently known.
 It is used both by the prospective In some cases, compulsory notification of It is useful because the present employees
employees and the organisations vacancies to employment exchange is know both the company and the candidates
searching for suitable people. required by law. and they would try to satisfy both.
Ex: Naukri.com It is the link between job-seekers and
employers.
Disadvantage - The records are not up to
date and many candidates referred by
them are not suitable.
- - 10. Casual Callers:
Many reputed business organisations keep a
database of applicants in their offices.
It is a valuable source of manpower.
It can be used to fill the vacancies as they arise.
It is less costly compared to other sources.

TRAINING AND DEVELOPMENT – DIFFERENCE:

SL NO. TRAINING DEVELOPMENT
1 It is a process of increasing knowledge and skills. It is a process of learning and growth.
2 It is to enable the employee to do the current job It is to enable the overall growth of the
better. employee.
3 It is a job oriented process. It is a career oriented process.

TRAINING – BENEFITS / IMPORTANCE / SIGNIFICANCE / ADVANTAGES / MERITS:

SL NO. BENEFITS TO THE ORGANISATION BENEFITS TO THE EMPLOYEES
1 Reduces wastage of efforts and money through systematic Reduces accidents because the employee is more
learning over hit and trial methods. efficient to handle machines.
2 Increases employee productivity (quantity and quality) leading Increases employee performance and help him to
to higher profits. earn more.
3 Prepares the future manager who can take over in case of Prepares the employee for better career due to
emergency. improved skills and knowledge.
4 Increases employee morale by reducing absenteeism and Increases employee morale and satisfaction.
employee turnover.
5 Helps to adapt with changes in technological and economic -
environment.

TRAINING – METHODS – ON THE JOB AND OFF THE JOB

SL NO. ON THE JOB TRAINING OFF THE JOB TRAINING
1 On-the-Job methods refer to the methods that are applied to Off-the-Job methods are used away from the work
the workplace, while the employee is actually working. place.
2 It means learning while doing. It means learning before doing.
3 Ex: Apprenticeship training, Internship training. Ex: Vestibule training.

TRAINING – TYPES:
APPRENTICESHIP INTERNSHIP VESTIBULE INDUCTION
a) It is on the job training a) It is on the job training a) It is off the job training a) It can be both on the job and
method. method. method. off the training.
b) In this method the trainee is b) It is a joint programme of b) In this method, employees b) In this method, the new
under the guidance of a master training - educational institutions learn their jobs on the equipment employee is introduced to other
worker to get a higher level of and business firms. they will be using, away from the employees (superiors,
skill. actual work floor. subordinates and colleagues) and
familiarised with the
sorroundings, the job and the
rules and policies of the
organization.
c) It is suitable for skilled jobs, b) It is suitable for getting c) It is suitable for learning to c) It helps the new employee in
like plumbers, electricians or practical knowledge and skills. handle sophisticated machinery settling down quickly into the
iron-workers. Ex: CA, CS, MBA students. and equipment. job.
d) Training is given for a d) Selected candidates carry on d) Actual work environments are d) The duration may be from a
prescribed amount of time. regular studies for the prescribed created in a class room and few hours to a few days.
period. employees use the same
materials, files and equipment

*************************************************************************************************
BST NOTES CHAPTER 07 DIRECTING

DIRECTING – MEANING:
Directing refers to the process of instructing, guiding, counselling, motivating and leading people in the organisation to
achieve its objectives.
DIRECTING – Characteristics/ FEATURES:
(i) Directing initiates action
(ii) Directing takes place at every level of management wherever superior – subordinate relations exist.
(iii) Directing is a continuous process.
(iv) Directing flows from top to bottom.
DIRECTING – IMPORTANCE / SIGNIFICANCE / BENEFITS:
(i) Directing helps to initiate action by people for achieving organisational objectives.
(ii) Directing integrates employees individual efforts in such a way to contribute to the organisational performance.
(iii) Directing guides employees to fully realise their potential and capabilities by motivating and effective leadership.
(iv) Directing facilitates introduction of needed changes in the organisation.
(v) Directing helps to bring stability and balance among various groups, activities and the departments.
DIRECTING – ELEMENTS:
Supervision (ii) Motivation (iii) Leadership (iv) Communication

DIRECTING – ELEMENT 1 – SUPERVISION – MEANING:

It means overseeing what is being done by subordinates and giving instructions to ensure optimum utilisation of
resources and achievement of work targets.
The supervisor is directly related with workers whereas other managers have no direct touch with bottom level workers.

DIRECTING – ELEMENT 2 - MOTIVATION MEANING:

Motivation means a process of stimulating people to action to accomplish desired goals.
MOTIVATION FEATURES:
(i) Motivation is an internal feeling (urge, drives, desires, aspirations, needs) which influence human behaviour.
(ii) Motivation produces goal directed behaviour.
ii) Motivation can be either positive (increase in pay, promotion, recognition) or negative (increase in pay, promotion,
recognition).
(iv) Motivation is a complex process because it may not have uniform effect on all the members.
Maslow’s Need Hierarchy Theory of Motivation – ASSUMPTIONS:
(i) People’s behaviour is based on their needs. Satisfaction of such needs influences their behaviour.
(ii) People’s needs are in hierarchical order, starting from basic needs to other higher level needs.
(iii) A satisfied need cannot motivate a person; only next higher level need can motivate him.
(iv) A person moves to the next higher level need only when the lower need is satisfied.
Maslow’s Need Hierarchy Theory of Motivation:
(i)Basic Physiological Needs:
These needs are hunger, thirst, shelter, sleep.
Basic salary helps to satisfy these needs.
(ii) Safety/Security Needs:
These needs means protection from physical and emotional harm.
Job security, stability of income, Pension plans etc., helps to satisfy these needs.
(iii) Affiliation/Belonging Needs:
These needs means affection, sense of belongingness, acceptance and friendship.
(iv) Esteem Needs:
These needs means self-respect, autonomy, status, recognition and attention.
(v) Self Actualisation Needs:
It is the highest level of need to become what one is capable of becoming.
It means growth, self-fulfillment and achievement of goals.
INCENTIVES – TYPES – FINANCIAL AND NON FINANCIAL INCENTIVE:
FINANCIAL INCENTIVE MEANING:
Financial incentives are direct monetary incentive to motivate people for better performance.
These incentives may be provided on individual or group basis.
FINANCIAL INCENTIVE – TYPES:
(i)Pay and allowances:
Salary is the basic monetary incentive.
It includes basic pay, dearness allowance and other allowances and includes regular increments.
(ii) Productivity linked wage incentives:
The business pays high wages when the worker / labourer produces more number of units.
It can be provided at individual or group level.
(iii) Bonus:
Bonus is an incentive offered over and above the wages/ salary to the employees.
(iv) Profit Sharing:
It means employees get share in the profits of the organisation. It motivates the employees to improve their
performance and contribute to increase in profits.
(v) Co-partnership/ Stock option:
The employees are given company shares at a set price which is lower than market price.
It creates a feeling of ownership to the employees and makes them to contribute for the growth of the organisation.
(vi) Retirement Benefits:
Many retirement benefits such as provident fund, pension, and gratuity provide financial security to employees after
their retirement.
(vii) Perquisites:
In many companies perquisites and fringe benefits are given such as car allowance, housing, medical aid, and education
to the children, etc., over and above the salary.
Non-Financial Incentives – MEANING:
Psychological, social and emotional needs are satisfied by non financial incentive.
Sometimes, monetary aspect may be involved in non-financial incentives as well.
NON FINANCIAL INCENTIVE - TYPES
(i)Status:
Status means ranks and positions - The authority, responsibility, rewards, recognition, perquisites and prestige of job.
It satisfies Psychological, social and esteem needs of an individual.
(ii) Organisational Climate:
Organisational climate includes individual freedom, rewards, consideration to employees, risk-taking, etc.) which
distinguish one organisation from the other.
They influence the behaviour of individuals in the organisation.
(iii) Career Advancement Opportunity:
Managers should promote employees to the higher level jobs.
A skill development programme and good promotion policy will encourage employees to improve performance.
(iv) Job Enrichment:
Jobs must be interesting and a meaningful work.
It includes variety of work content, more knowledge, freedom and responsibility; personal growth.
(v) Employee Recognition programmes:
Recognition means giving acknowledgment and appreciation.
Congratulating the employee, displaying on the notice board or in the company news letter, award / trophies or
certificate , mementos, complimentaries like T-shirts, rewarding an employee for giving valuable suggestions.
(vi) Job security:
Employees want their job to be secure and stable for future income and work.
When people feel that they will not lose their jobs, they may become more satisfied.
(vii) Employee participation:
It means involving employees in decision making in the issues related to them.
This can be done through joint management committees, work committees, canteen committees etc.,
(viii) Employee Empowerment:
Empowerment means giving more autonomy (freedom) and powers to the subordinates.
It increases use of skills and talents in the job performance.

SL NO FINANCIAL INCENTIVE NON FINANCIAL INCENTIVE

1 PAY AND ALLOWANCE STATUS
2 PRODUCTIVITY LINKED WAGE INCENTIVES JOB ENRICHMENT
3 PROFIT SHARING JOB SECURITY
4 PERQUISITES EMPLOYEE RECOGNITION PROGRAMME
5 CO-PARTNERSHIP/ STOCK OPTION EMPLOYEE PARTICIPATION
6 BONUS EMPLOYEE EMPOWEREMENT
7 RETIREMENT BENEFITS CAREER ADVANCEMENT OPPORTUNITY
8 - ORGANISATIONAL CLIMATE
DIRECTING – ELEMENT 3 - LEADERSHIP:
LEADERSHIP MEANING:
Leadership is the process of influencing people to strive willingly for group objectives.
LEADERSHIP STYLES:
Depending on the use of authority, there are three basic styles of leadership.
Depending upon the situation a leader may choose a combination of these styles when required.
(i) Autocratic or Authoritarian (Dogmatic):
An autocratic leader gives orders and expects his subordinates to obey those orders.
It is one-way communication as the leader does not wish to be contradicted.
Reward or punishment both can be given depending upon the result.
It helps to increase productivity and quick decision-making.
(ii) Democratic or Participative:
A democratic leader makes decisions in consultation with his subordinates and encourage them to participate in
decision-making.
They exercise more control by using forces within the group.
It helps to make better decisions and increases employees morale.
(iii) Laissez faire or Free-rein
The leader does not use power unless it is required.
The subordinates are given freedom to set their own objectives and ways to achieve them.
The leader is there to support and supply the required information to complete the task.

DIRECTING – ELEMENT 4 - COMMUNICATION MEANING:

The word communication has been derived from the Latin word ‘communis’ which means common.
Communication is defined as a process of exchange of information (ideas, views, facts, feelings) between people to
create common understanding.
COMMUNICATION – ELEMENTS:
(i) Sender: Sender is source of communication who conveys his thoughts to the receiver.
(ii) Message: It is the ideas, feelings, suggestions, order, etc., to be communicated.
(iii) Encoding: It is the process of converting the message into communication symbols (words, pictures, gestures etc.)
(iv) Media: It is the path through which encoded message is transmitted to receiver in written form, face to face, phone
call, Internet etc.
(v) Decoding: It is the process of converting encoded symbols of the sender.
(vi) Receiver: The person who receives communication of the sender.
(vii) Feedback: It includes all actions of receiver indicating that he has received and understood message of sender.
(viii)Noise: Noise means some obstruction or hindrance to communication which may be caused to sender, message or
receiver. Examples: ambiguous symbols, poor telephone connection, inattentive receiver, faulty decoding (attaching
wrong meanings to message), prejudices and gestures and postures.
COMMUNICATION – TYPES
1.FORMAL COMMUNICATION:
a) Formal communication flows through official channels – scalar chain.
b) It takes place between a superior and subordinate, a subordinate and superior or among same level employees or
managers.
c) The communications may be oral or written.
d) It is recorded and filed in the office.
e) Formal communication classified as – Vertical (upwards or downwards) and Horizontal or lateral communication
(takes place between one division and another).
Advantage 1 - It follows formal lines (scalar chain) of communication.
Advantage 2 - It helps in finding source of communication.
Advantage 3 - It is authentic method of communication.
Disadvantage 1 - There may be delay in communication.
Disadvantage 2 - The message gets distorted due to transmission trough many levels.
2. INFORMAL COMMUNICATION:
a) It means communication that takes place without following the formal lines of communication.
b) It is also called ‘grapevine’ because it spreads throughout the organisation.
c) It takes place in all directions.
d) It arises out of needs of employees to exchange their views, which cannot be done through formal channels.
e) Ex: Workers chit chatting in a canteen about the behaviour of the superior, discussing about rumours that some
employees are likely to be transferred.
Advantage 1 - It spreads rapidly and sometimes message gets distorted.
Advantage 2 - It helps to know the reactions and feedback of subordinates.
Advantage 3 - It satisfies social needs of employees.
Disadvantage 1 - It also leads to generation of rumours.
Disadvantage 2 - It is difficult to detect the source of such communication.
Disadvantage 3 - It is not authentic.
NOTE: An intelligent manager should make use of positive aspects of informal channels and minimise negative aspects
of this channel of communication.

BARRIERS TO COMMUNICATION
1.Semantic barriers / Linguistics barriers:
i) Badly expressed message:
Sometimes intended meaning may not be conveyed by a manager to his subordinate due to inadequate vocabulary,
usage of wrong words, omission of needed words, etc.
(ii) Symbols with different meanings:
A word may have several meanings as receiver may perceive differently.
Ex: ‘value’ gives different meaning in different contexts:
(a) What is the value of this ring?
(b) I value our friendship.
(c) What is the value of learning computer skills?
(iii) Faulty translations:
Sometimes the message in one language (e.g., English) need to be translated to the language understandable to workers
(e.g., Hindi). If the translator is not proficient with both the languages, mistakes may occur.
(iv) Unclarified assumptions:
Some certain assumptions are subject to different interpretations.
Ex: A boss may mean transport, food, accommodation of the guest but instruct his subordinate as - “Take care of our
guest”. The subordinate may interpret that guest should be taken to hotel with care.
(v) Technical jargon:
Sometimes specialists use technical jargon while explaining to persons who are not specialists. Therefore, they may not
understand the actual meaning of many such words.
(vi) Body language and gesture decoding:
The body movement and gestures of communicator matters so much in conveying the message. If there is no match
between what is said and what is expressed in body movements, communications may be wrongly perceived.
2.Psychological barriers:
(i) Premature evaluation:
Sometimes people evaluate the meaning of message before the sender completes his message due to pre-conceived
notions or prejudices.
(ii) Lack of attention:
When the receiver’s mind is pre-occupied, he will not listen to the message. Ex: An employee explains about his
problems to the boss who is pre-occupied with an important file and the employee is disappointed.
(iii) Loss by transmission and poor retention:
When communication passes through many levels, it results in loss and incorrect information, more in case of oral
communication. Sometimes people cannot retain information for a long time if they are not attentive or not interested.
(iv) Distrust:
If the parties (sender and receiver) do not believe in each other, they cannot understand each others message in its
original sense.
3.Personal barriers:
(i) Fear of challenge to authority:
If a superior thinks that a particular communication may affect his authority, he may suppress such communication.
(ii) Lack of confidence of superior on his subordinates:
If superiors do not have confidence on competency of their subordinates, they may not ask for their advice or opinions.
(iii) Unwillingness to communicate:
Sometimes, the subordinates may not communicate with their superiors, if they think that it may affect their interests.
(iv) Lack of proper incentives:
Sometimes subordinates may not give useful suggestions, if there is no motivation or incentive (reward or appreciation).
4. ORGANISATIONAL BARRIER:
(i) Organisational policy:
Sometimes, the organisational policy, does not support free flow of communication due to centralisation.
(ii) Rules and regulations:
Rigid rules and procedures may result in delay in communication due to official channels of communication.
(iii) Status:
A status conscious manager also may not allow his subordinates to express their feelings freely due to psychological
distance between him and his subordinates.
(iv) Complexity in organisation structure:
In an organisation where there are many managerial levels, communication gets delayed and distorted.
(v) Organisational facilities:
Facilities like frequent meetings, suggestion box, complaint box, social and cultural gathering, transparency in
operations, etc., will encourage free flow of communication. Lack of these facilities create communication problems.

SL NO. SEMANTIC / LINGUISTIC (STFUBB) PSYCHOLOGICAL PERSONAL ORGANISATIONAL

1 Badly expressed message Premature Fear of challenge to ORGANISATIONAL
evaluation authority POLICY

2 Body language and gesture Distrust Unwillingness to ORGANISATIONAL

decoding communicate FACILITIES
3 Faulty translations Lack of attention Lack of proper COMPLEXITY IN
incentives ORGANISATIONAL
STRUCTURE
4 Symbols with different meanings Loss by transmission Lack of confidence of RULES AND
and poor retention superior on his REGULATIONS
subordinates
5 Technical jargon - - STATUS
6 Unclarified assumptions - - -
NOTE THE DIFFERENCE BETWEEN FOLLOWING BARRIERS:
Symbols with different meanings
= Faulty translations (Different language)
= Unclarified assumptions (different interpretation)
Unwillingness to communicate (subordinate does not speak – affect interest)
= Fear of challenge to authority (superior does not speak – affect authority)
Lack of confidence of superior on his subordinates (superior does not seek advice / opinion)
= Status (superior does not allow subordinate to express feelings)
Organisational policy (no free flow of communication - centralisation)
= Rules and regulations (delay in communication - official channels of communication)
= Complexity in organisation structure (delay and distortion in communication – many managerial levels)

Measures to Improve Communication Effectiveness:

(i) Clarify the ideas before communication:
The problem should be clear to executive himself. He must study in depth, analyse and state clearly to subordinates.
(ii) Communicate according to the needs of receiver:
Manager should adjust his communication according to the education and understanding levels of subordinates.
(iii) Consult others before communicating:
Before communicating the message, involve others in developing a plan for communication. It may help to get ready
acceptance and willing cooperation of subordinates.
(iv) Be aware of languages, tone and content of message:
The contents, tone, language and the manner should be understandable to the receiver and should not offend their
sentiments. The message should stimulate response from the listeners.
(v) Convey things of help and value to listeners:
The interests and needs of the receiver relates directly or indirectly evoking response from communicatee.
(vi) Ensure proper feedback:
The communicator may ask questions regarding the message conveyed and encourage the receiver to respond.
(vii) Communicate for present as well as future:
Communication must meet the existing commitments and future goals of the enterprise.
(viii)Follow up communications:
There should be regular follow up and review on instructions given to subordinates to remove hurdles in instructions.
(ix) Be a good listener:
Manager should be patient and attentive listener and solve half of the problems. Managers should also give indications
of their interest in listening to their subordinates.
________________________________________________________________________________________________
BST NOTES CH 08 CONTROLLING

CONTROLLING MEANING:
Controlling is the management function of monitoring organisational performance towards the attainment of
organisational goals. The task of controlling involves establishing standards of performance, measuring current
performance, comparing this with established standards and taking corrective action where any deviation is found.
Controlling is not the last function of management because it brings back the management cycle back to the planning
function.

CONTROLLING – FEATURES / CHARACTERISTICS / NATURE:

1. Controlling is a goal oriented function.
2. Controlling is an all pervasive (Top, middle and Operational Level) function.
3. Controlling is both a backward looking as well as forward looking function.
4. Controlling is a continuous function.

CONTROLLING IMPORTANCE / SIGNIFICANCE / BENEFITS:

(i) Accomplishing organisational goals:
It measures the progress of actual performance by taking corrective action on the deviations, if any.
It guides the organisation on the right track to achieve the organisational goals.
(ii) Judging accuracy of standards:
It helps the management to verify whether the standards set are accurate and objective.
It also helps to review and revise the standards based on the changes in the business environment.
(iii) Making efficient use of resources:
It helps to reduce wastage and spoilage of resources.
All activities are performed according to the predetermined standards which ensures resources are used effectively and
efficiently.
(iv) Improving employee motivation:
It informs the employees in advance what they are expected to do and on what standards they will be appraised.
It motivates them and helps them to give better performance.
(v) Ensuring order and discipline:
It helps to maintain order and discipline in the organisation. It helps to minimise dishonest behaviour of the employees
by keeping a close check (using computer monitoring) on their activities.
(vi) Facilitating coordination in action:
Controlling provides direction to all activities for achieving organisational goals.
Each department and employee is guided by predetermined standards which are well coordinated with one another.

CONTROLLING PROCESS – STEPS (5):

Step 1: Setting Performance Standards:
Standards are benchmarks which can be set in both quantitative and qualitative terms.
It is advisable to set realistic standards in quantitative terms for easy comparison.
Step 2: Measurement of Actual Performance:
Measurement of actual performance can be done after the task is completed or during the performance, based on the
nature of task. It should be done in reliable manner through - personal observation, sample checking, performance
reports, accounting ratios, etc.
Step 3: Comparing Actual Performance with Standards:
Comparison of actual performance with the standard is done to find out the deviation between actual and desired
results. Comparison becomes easier when standards are set in quantitative terms.
Step 4: Analysing Deviations:
The principles of controlling includes – CPC and MBE.
1. Critical Point Control:
It is neither economical nor easy to keep a check on each and every activity in an organisation.
The Manager should focus on key result areas (KRAs) if anything goes wrong at the critical points.
EX: If the labour cost increases by 5% and postal charges increases by 15%, the manager should take action on increase
in labour cost.
2. Management by Exception:
An attempt to control everything results in controlling nothing.
Only deviations which go beyond the permissible limit requires immediate managerial action.
Ex: A mobile manufacturing company produces 100 units per day and if 2/100 units are found defective, it is within
acceptable range and when 50/100 units are found defective then it is beyond acceptable range and requires immediate
managerial action.
Step 5: Taking Corrective Action:
Corrective action is not required when the deviations are within acceptable limits.
When the deviations go beyond the acceptable range, immediate managerial action is required like - training of
employees, assigning of additional workers and equipment, revising the standards, repairing / replacing existing
machine, upgrading technology etc.

RELATIONSHIP BETWEEEN CONTROLLING AND PLANNING:

1. Controlling is blind without planning because controlling means comparing actual performance on the basis of
standards provided by planning.
2. Planning without controlling is meaningless because controlling helps to ensure that actual performance is as per
plans.
3. Planning and controlling are forward-looking functions because plans are made for future and in controlling
corrective actions are taken to avoid deviations in future.
4. Planning and controlling are backward-looking functions because planning is guided by past experiences and
reference from previous years plans, while controlling is like a postmortem of past activities to find out deviations from
the standards.
5. Planning is prescriptive because it tells us what to do and how to do. Controlling is evaluative because it monitors
actual performance.

CONTROLLING – QUICK REVISION

SLNO FEATURES IMPORTANCE STEPS RELATIONSHIP

1 Controlling is a goal oriented function. Accomplishing Step 1: Setting Controlling is blind
organisational goals Performance without planning.
Standards
2 Controlling is an all pervasive (Top, Judging accuracy of Step 2: Planning is
middle and Operational Level) standards Measurement of meaningless without
function. Actual Performance controlling.
3 Controlling is both a backward looking Making efficient use Step 3: Comparing Planning and
as well as forward looking function. of resources Actual Performance controlling- forward
with Standards looking functions.
4 Controlling is a continuous function. Improving employee Step 4: Analysing Planning and
motivation Deviations – CPC controlling-
(KRA) & MBE backward looking
functions.
5 - Ensuring order and Step 5: Taking Planning is
discipline Corrective Action prescriptive,
controlling is
evaluative.
6 - Facilitating - -
coordination in
action

***********************************************************************************************
BST NOTES CH 09: FINANCIAL MANAGEMENT:

FINANCIAL MANAGEMENT – MEANING:

Financial Management is concerned with optimal procurement as well as the usage of finance.
Objectives of Financial Management:
1. The objective of financial management is to maximise the current price of equity shares of the company or to
maximise the wealth of owners / shareholders of the company.
2. It aims aims at reducing cost of funds procured, keep risk under control and effective investment of such funds.
3. It also aims at ensuring availability of enough funds whenever required and avoiding idle finance.
Importance / Role of Financial Management:
Good financial management aims at mobilising financial resources at lower cost and invest in most profitable activities.
(i) The size and the composition of fixed assets of the business block this amount.
(ii) The amount of current assets and working capital requirement increases when investment in fixed assets increases.
(iii) The amount of long-term and short- term funds to be used is based on a choice between liquidity and profitability.
(iv) The amounts of debt, equity and preference share capital are affected by the financing decision.
(v) Higher amount of debt means higher interest payment, higher equity means higher payment of dividend.

FINANCIAL PLANNING – MEANING:

The process of estimating the fund requirement of and specifying the sources of funds is called financial planning.
Financial planning is the financial blueprint done for three to five years and begins with sales forecast. Ex: Budgets.
Objective of Financial Planning:
(a) To ensure availability of funds whenever required, time at which they are to be made available and their sources.
(b) To see that the firm does not raise resources unnecessarily as idle funds add to the cost.
Importance of Financial Planning:
(i) It helps in forecasting what may happen in future under different business situations.
(ii) It helps in avoiding business shocks and surprises.
(iii) If helps in co-ordinating sales and production functions, by providing clear policies and procedures.
(iv) It helps to reduce waste, duplication of efforts and gaps in planning.
(v) It tries to link the present with the future.
(vi) It provides a link between investment and financing decisions on a continuous basis.
(vii) It helps to make the evaluation of actual performance easier.

FINANCIAL DECISIONS – MEANING:

Financial management is concerned with the solution of three major issues relating to investment, financing and
dividend decision. It includes –
1. Financing decision
2. Investment decision and
3. Dividend decision.

1. FINANCING DECISION – MEANING:

Financing decision is the decision about how much money is to be raised from owner funds and borrowed funds.
It determines the overall cost of capital and the financial risk of the firm. A firm must have a judicious mix of both debt
and equity in making financing decisions, which may be debt, equity, preference share capital, and retained earnings.
Factors Affecting Financing Decisions:
(a) Cost:
The cost of raising funds through different sources are different.
A finance manager would opt for a source which is the cheapest.
(b) Risk:
The risk associated with each of the sources is different.
A finance manager would opt for a source which is less risky.
(c) Floatation Costs:
Higher the floatation cost, less attractive the source.
A finance manager would opt for a source which has low floatation cost.
(d) Cash Flow Position of the Company:
Debt financing can be used when the cash flow position of the firm is stronger than funding through equity.
(e) Fixed Operating Costs:
Debt financing can be used when the fixed operating cost is less.
If a business has high fixed operating costs (building rent, Insurance premium, Salaries) lower debt must be used.
(f) Control Considerations:
Issues of more equity shares may lead to dilution of management’s control over the business.
Debt financing can be used when companies do not want dilution of control.
(g) State of Capital Market:
When stock market is rising, more people invest in equity.
When the capital market is depressed, it may be difficult to issue equity shares for any company.

2. INVESTMENT DECISION – MEANING:

A firm has to choose where to invest their resources, to earn the highest possible return for their investors.
The investment decision relates to how the firm’s funds are invested in different assets.
Types of Investment decision - Longterm and short-term:
(i) Long term investment decision / Capital Budgeting decision – Meaning:
It involves investment in new machine to replace an existing or acquiring new fixed asset or opening a new branch, etc.
The size of assets, profitability and competitiveness are all affected by capital budgeting decisions.
They need to be taken with utmost care because huge amounts are involved and are irreversible except at a huge cost.
Factors affecting Long term investment or Capital Budgeting Decision:
(a) Cash flows of the project:
When a company takes an investment decision involving huge amount it expects to generate cash flows over a period.
These cash flows are in the form of a series of cash receipts and payments over the life of an investment.
The amount of these cash flows should be carefully analysed before considering a capital budgeting decision.
(b) The rate of return:
The rate of return calculations are based on the expected returns from each proposal and the assessment of the risk.
Suppose, there are two projects, A and B (with the same risk involved), with a rate of return of 10 per cent and 12 per
cent, respectively, then project B should be selected.
(c) The investment criteria involved:
The decision to invest in a project involves calculations of the amount of investment, interest rate, cash flows and rate
of return. Different techniques are applied to evaluate investment proposals for selecting a particular project.
(ii) Short term investment decision / Working capital decision – Meaning:
It involves decisions about the levels of cash, inventory and receivables.
These decisions affect the day-to-day working of a business, the liquidity and profitability of a business.
For sound working capital management the following factor are required:
a) Efficient cash management
b) Inventory management and
c) Receivables management.

3. DIVIDEND DECISION – MEANING:

Dividend is that portion of profit which is distributed to shareholders. The decision regarding dividend should be taken
considering the overall objective of maximising shareholder’s wealth. The decision involves how much profit is to be
distributed to shareholders and how much should be retained in the business.
Factors Affecting Dividend Decision:
(a) Amount of Earnings:
Dividends are paid out of current and past earning. Therefore, earnings is the basis for the decision about dividend.
(b) Stability Earnings:
More dividend is paid by company having stable earning. Less dividend is paid by a company having unstable earnings.
(c) Stability of Dividends:
Companies follow a policy of stabilising dividend per share. More dividend is paid when the earning potential has gone
up. Dividend rate is not changed if the change in earnings is small.
(d) Growth Opportunities:
Companies having good growth opportunities retain more money out of their earnings to finance the required
investment. Less dividend is paid by growth companies, more dividend is paid by the non– growth companies.
(e) Cash Flow Position:
The payment of dividend involves an outflow of cash. A company may be earning profit but may be short on cash.
Availability of enough cash in the company is necessary for declaration of dividend.
(f) Shareholders’ Preference:
While declaring dividend, management must keep in mind preferences of shareholders. If shareholders desire that at
least a certain amount is paid as dividend, company must declare the same because shareholders depend upon a
regular income from their investments.
(g) Taxation Policy:
The dividends are free of tax in the hands of shareholders, a dividend distribution tax is levied on companies.
Less dividend is paid if tax on dividend is higher. More dividend is paid if tax rates are lower.
(h) Stock Market Reaction:
The possible impact of dividend on share price is considered by management while taking a decision about it. Increase
in dividend is a good news and stock prices react positively, decrease in dividend have a negative impact on share prices.
(i) Access to Capital Market:
Large and reputed companies have easy access to capital market and depend less on retained earning to finance their
growth. These companies pay higher dividends than smaller companies which have relatively low access to market.
(j) Legal Constraints:
Certain provisions of the Companies Act place restrictions on payment of dividend.
Such provisions must be adhered to while declaring the dividend.
(k) Contractual Constraints:
While granting loans to a company, sometimes the lender may impose certain restrictions on the payment of dividends
in future. The companies must not violate the terms of the loan agreement in this regard.

FIXED CAPITAL - MEANING:

Fixed capital refers to investment in long-term assets which last for more than one year.
It is also called capital budgeting decisions as it involves investment of huge amounts.
These decisions once taken, are not reversible without incurring heavy losses.
Examples of fixed assets are land, building, plant and machinery, research and development, etc.
Factors affecting the Requirement of Fixed Capital
1. Nature of Business:
More fixed capital is required for manufacturing firm while trading concern needs lower investment in fixed assets,
since it does not require to purchase plant and machinery, etc.
2. Scale of Operations:
More fixed capital is required for a larger organisation operating at a higher scale needs bigger plant, more space etc.
compared with the small organisation.
3. Choice of Technique:
More fixed capital is required for a capital-intensive organisation with higher investment in plant and machinery. Labour
intensive firms require less investment in fixed assets and requires less fixed capital.
4. Technology Upgradation:
More fixed capital is required for business, where assets become obsolete sooner and requires their replacements
faster. Ex: Computers become obsolete faster and are replaced much sooner than furniture.
5. Growth Prospects:
More fixed capital is required for business where there is opportunity for higher growth, higher investment in fixed
assets, higher capacity and higher demand. It also includes opening of new branches.
6. Diversification:
More fixed capital is required for a firm to diversify its operations into new product lines.
Ex: A textile company is diversifying and starting a cement manufacturing plant.
7. Financing Alternatives:
Less fixed capital is required when leasing facilities is available for taking an asset on lease rental basis and using it. By
doing so, it avoids huge sums required to purchase it.
8. Level of Collaboration:
Less fixed capital is required when organisations share each other’s facilities.
The investment in fixed assets reduces for each one of the participating organisations through collaboration.
Ex: A bank may use another’s ATM or some of them may jointly establish a particular facility.

WORKING CAPITAL – MEANING:

Working capital investment facilitates smooth day-today operations of the business.
Current assets are more liquid, get converted into cash within a period of one year but provide low return.
Ex: Cash in hand/Bank, Bills receivable, Debtors, Finished goods, Work in progress, Raw materials and Prepaid expenses.
Current liabilities are those payment obligations which are due for payment within one year;
Ex: bills payable, creditors, outstanding expenses and advances received from customers, etc.
Net working is the excess of current assets over current liabilities (NWC = Current Assets - Current Liabilities).
Factors Affecting the Working Capital Requirements
1. Nature of Business:
More working capital is required for a manufacturing organisation while a trading organisation needs less working
capital because there is usually no processing and do not have to maintain inventory.
2. Scale of Operations:
More working capital is required for organisations which operate on a higher scale because the inventory and debtors
required is high while less working capital is required for organisations which operate on a lower scale.
3. Business Cycle:
More working capital is required during boom period, when there is more sales and more production.
Requirement for working capital will be lower during the period of depression when there is less sales and production.
4. Seasonal Factors:
More working capital is required during peak season, because of higher level of activity.
Less working capital is required during lean season as the level of activity will be lower.
5. Production Cycle:
Production cycle is the time span between receipt of raw material and conversion into finished goods. More working
capital is required for business having a longer production cycle than a business having a shorter processing cycle.
6. Credit Allowed:
More working capital is required for firms that allow different credit terms to their customers.
A liberal credit policy results in higher amount of debtors, increasing the requirement of working capital.
7. Credit Availed:
Just as a firm allows credit to its customers it also may get credit from its suppliers.
Less working capital is required for a firm that avails the credit on purchases.
8. Operating Efficiency:
Less working capital is required for firms who manage their operations with high degree of efficiency.
Such efficiencies may reduce the level of raw materials, finished goods and debtors resulting in lower working capital.
9. Availability of Raw Material:
Less working capital is required if the raw materials are available freely and continuously, with lower leadtime.
More working capital is required to maintain high stock if lead time is high and raw materials are not easily available.
10. Growth Prospects:
If the growth potential of a concern is perceived to be higher, it will require larger amount of working capital so that it is
able to meet higher production and sales target whenever required.
11. Level of Competition:
More working capital is required when there is high level of competition and larger stocks of finished goods is required
to meet urgent orders from customers. Competition may also force firm to extend liberal credit terms.
12. Inflation:
More working capital is required with higher rate of inflation and rising prices.
Larger amounts of working capital are required to maintain a constant volume of production and sales.

CAPITAL STRUCTURE – MEANING:

Capital structure is the mix between owners(equity) and borrowed(debt) funds, proportion of debt out of total capital.
A capital structure is optimal when the proportion of debt and equity increases the shareholders’ wealth.
Financial leverage means the proportion of debt in the overall capital.
Favourable financial leverage means the use of debt increases the earning per share, EPS.
Unfavourable financial leverage means the use of debt reduces the earning per share, EPS.
Trading on Equity refers to the increase in profit earned by the equity shareholders due to the use of debt.
Factors affecting the Choice of Capital Structure:
1. Cash Flow Position:
Size of projected cash flows must be considered before borrowing. Cash flows must cover fixed cash payment
obligations (operations,fixed assets, payment of interest, repayment of principal) and there must be sufficient buffer.
2. Interest Coverage Ratio (ICR):
The interest coverage ratio may be calculated as follows: ICR = EBIT / Interest.
The higher the ratio, lower shall be the risk of company failing to meet its interest payment obligations.
3. Debt Service Coverage Ratio (DSCR):
DCSR = (profit after tax+ depreciation + interest + non cash exp) / (pref div + interest + repayment obligation).
A higher DSCR indicates better ability to meet cash commitments and can use more debt in its capital structure.
4. Return on Investment (RoI):
RoI is an important factor of the company’s ability to use debt financing / trading on equity.
If the RoI is higher, the company can choose to use trading on equity (ability to use more debt) to increase its EPS.
5. Cost of debt:
A firm’s ability to borrow at a lower rate increases its capacity to employ higher debt.
Thus, more debt can be used if debt can be raised at a lower rate.
6. Tax Rate:
A higher tax rate makes debt relatively cheaper and increases use of debt over equity.
If the firms are borrowing @ 10%, the tax rate is 30%, the after tax cost of debt is only 7%.
7. Cost of Equity:
For maximum shareholders’ wealth, debt can be used only upto a level because more debt means high financial risk.
If debt is used beyond a point, cost of equity may go up, share price may decrease inspite of increased EPS.
8. Floatation Costs:
Public issue of shares and debentures, loan from a financial institution involves cost of raising funds.
These considerations may affect the choice between debt and equity.
9. Risk Consideration:
If the total risk (business and financial risk) is lower, its capacity to use debt is higher and vice-versa.
Financial risk refers to a position when a company is unable to meet its fixed financial charges.
Operating / Business risk depends upon fixed operating costs, high fixed operating costs means higher business risk.
10. Flexibility:
If a firm uses its debt potential to the full, it loses flexibility to issue further debt.
To maintain flexibility, it must maintain some borrowing power to take care of unforeseen circumstances.
11. Control:
Issues of more equity shares may lead to dilution of management’s control over the business.
Debt financing can be used when companies do not want dilution of control.
12. Regulatory Framework:
Every company operates within SEBI guidelines.
The choice of the source of finance depends upon the ease of completing the procedures for raising the funds.
13. Stock Market Conditions:
If the stock markets are bullish, equity shares are more easily sold even at a higher price.
During a bearish phase, a company, may find raising of equity capital more difficult and it may opt for debt.
14. Capital Structure of other Companies:
A useful guideline in the capital structure planning is the debt equity ratios of other companies in the same industry.
Care however must be taken that the company does not follow the industry norms blindly.

NUMERICAL:
QUE 1: Total capital Rs 30 lakhs , EBIT – Rs 4 lakhs, interest – 10% , tax rate – 30 %.
DEBT:
Situation 1 – Nil
Situation 2 – Rs 10 lakhs
Situation 3 – Rs 20 lakhs
Ans:
Roi = EBIT/ TOTAL CAPITAL
= 400000/3000000*100
= 13.33%.
Thus, loan is cheaper.

PARTICULARS Situation 1 Situation 2 Situation 3

EBIT 400000 400000 400000
Less: interest @ 10% Nil 100000 200000
EBT 400000 300000 200000
Less: Tax @ 30% on EBT 120000 90000 60000
EAT 280000 210000 140000
No. of shares (FV Rs 10) 300000 200000 100000
EPS = EAT / no. of shares 0.93 1.05 1.40

Conclusion:
a) Situation 3 is most favourable.
b) Financial leverage – favourable.
c) Trading on equity – is possible.
QUE 2:
Total capital Rs 30 lakhs , EBIT – Rs 2 lakhs, interest – 10% , tax rate – 30 %.
DEBT:
Situation 1 – Nil
Situation 2 – Rs 10 lakhs
Situation 3 – Rs 20 lakhs
Ans:
Roi = EBIT/ TOTAL CAPITAL
= 200000/3000000*100
= 6.67%.
Thus, loan is costlier.

PARTICULARS Situation 1 Situation 2 Situation 3

EBIT 200000 200000 200000
Less: interest @ 10% Nil 100000 200000
EBT 200000 100000 Nil
Less: Tax @ 30% on EBT 60000 30000 Nil
EAT 140000 70000 Nil
No. of shares (FV Rs 10) 300000 200000 100000
EPS = EAT / no. of shares 0.47 0.35 Nil

Conclusion:
a) Situation 1 is most favourable.
b) Financial leverage – unfavourable.
c) Trading on equity – is not possible.
**************************************************************************************************
BST NOTES CH 10: FINANCIAL MARKETS:

FINANCIAL MARKET – MEANING:

A financial market helps to link the savers and the investors by mobilizing funds between them.
It performs allocative function which means allocating savings into their most productive investment opportunity.

FIANCIAL MARKET TYPES - Money Market and Capital Market:

BASIS MONEY MARKET CAPITAL MARKET

1. Duration It is a short term market with investment period of It is a medium and long term market with
one year. investment period more than one year.
2. Participants Participation include RBI, banks, financial The participants are financial institutions,
institutions and finance companies. banks, corporate entities, foreign investors
and ordinary retail investors.
3. Instruments It includes treasury bills,commercial bill, callmoney It includes equity shares, debentures, bonds,
commercial paper and certificates of deposit. preference shares etc.
4. Investment Huge sums of money is involved as the instruments The unitvalue is low (Rs 10, Rs 100) and this
outlay are quite expensive. helps individuals with small savings to invest.
5. Liquidity There is a higher degree of liquidity because Less liquidity because a seller may not easily
Discount Finance House of India (DFHI) provides find a buyer for selling his shares.
liquidity for money market instruments.
6. Safety It is safer with a minimum risk due to short term It is riskier with respect to returns and
investment and financial soundness of participants principal repayment. Issuing companies and
- government, banks and highrated companies. promoters may defraud investors.

Difference between Primary Market and Secondary Market:

PRIMARY MARKET SECONDARY MARKET
1. A new or an existing company sells new securities to 1. There is trading of existing securities only.
investors.
2. Securities are sold by the company to the investor 2. The existing securities are exchanged between investors. The
directly or through an intermediary . company is not involved at all.
3. The flow of funds is from savers to the company – direct 3. Increases liquidity of shares –helps indirect capital formation
capital formation.
4. Investor can only buy the securities in the primary 4. Investor can buy and sell securities in the secondary market
market
5. The prices are fixed by the company 5. The prices are fixed by demand and supply forces.
6. There is no fixed geographical location 6. Located at specified places

Meaning of 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 a Stock Exchange:
1. Providing Liquidity and Marketability to Existing Securities:
The stock exchange creates a continuous market for buying and selling securities.
It gives investors the chance to disinvest and reinvest through liquidity and easy marketability to existing securities.
2. Pricing of Securities:
Share prices on a stock exchange are determined by the forces of demand and supply.
Through constant valuation the prices of securities are determined.
3. Safety of Transaction:
The membership and dealings of a stock exchange is well- regulated according to the existing legal framework.
This ensures that the investing public gets a safe and fair deal on the market.
4. Contributes to Economic Growth:
Savings get channelised into their most productive investment options through disinvestment and reinvestment.
In a stock exchange existing securities are resold or traded which leads to capital formation and economic growth.
5. Spreading of Equity Cult:
The stock exchange can play an important role in educating the public about investments, regulating new issues and
better trading practice.
6. Providing Scope for Speculation:
It provides scope within the provisions of law for speculative activity in a restricted and controlled manner.
A certain degree of healthy speculation is necessary to ensure liquidity and price continuity in the stock market.
TRADING PROCEDURE – STOCK EXCHANGE / SECONDARY MARKET
STEP 1 SELECTION OF A BROKER:
In this step, the investor has to select a SEBI registered broker.
The broker helps the investor to buy & sell securities in the stock exchange.
STEP 2 OPEN A DEMAT ACCOUNT:
Dematerialisation means process of converting physical share certificates into electronic form.
Rematerialisation means process converting electronic share certificates back into physcial form.
Demat account means the account which maintains the securities of the investor in electronic form.
The two depositories in India are - National securities depository limited and Central depository services limited.
Depository participant is an intermediary between the investor and the depository who is authorized to maintain the
accounts of dematerialized shares. To open a demat account, the investor must submit id proof, address proof, pan
card, aadhar card, etc. and link his bank account with his demat account.
STEP 3 PLACING ORDER:
In this step, the investor places the order with the broker.
He specifies the name of the company whose securities has to be bought or sold, number of securities to be bought or
sold and the price range. The investor can place the order over a phone call, personal visit or email.
STEP 4 EXECUTION OF ORDER:
In this step, the broker will execute the order as per the instructions of the investor and issues trade confirmation slip.
The broker will prepare a contract note with the following details – name of the company whose securities are bought /
sold, number of securities bought / sold, the price and his commission.
STEP 5 SETTLEMENT:
Settlement has to be done in t+2 days where T means the transaction day.
When the investor buys securities – his demat account gets credited and his bank account gets debited.
When the investor sells securities his demat account gets debited and his bank account gets credited.

Securities and Exchange Board of India (SEBI) – MEANING:

SEBI was established by the Government of India on 12 April 1988 under the Ministry of Finance.
It is an administrative body to promote orderly and healthy growth of securities market and for investor protection.
The SEBI was given a statutory status on 30 January 1992 by the Securities and Exchange Board of India Act, 1992.
Objectives of SEBI:
1.To regulate stock exchanges and the securities to promote their orderly functioning.
2.To protect the rights and interests of investors and to guide and educate them.
3.To prevent trading malpractices and achieve a balance between self and statutory regulation.
4.To regulate and develop a code of conduct and fair practices for brokers, merchant bankers etc., and make them
competitive and professional.
Functions of SEBI:
Protective Functions:
1.Prohibition of fraudulent and unfair trade practices like misleading statements, manipulations, price rigging etc.
2.Controlling insider trading and imposing penalties for such practices.
3.Undertaking steps for investor protection.
4.Promotion of fair practices and code of conduct in securities market.
Development Functions:
1.Training of intermediaries of the securities market.
2.Conducting research and publishing information useful to all market participants.
3.Undertaking measures to develop the capital markets by adapting a flexible approach.
Regulatory Functions:
1.Registration of brokers and subbrokers and other players in the market.
2.Registration of collective investment schemes and Mutual Funds.
3.Regulation of stock brokers, portfolio exchanges, underwriters and merchant bankers and any other securities market.
4.Regulation of takeover bids by companies.
5.Calling for information, inspection, enquiries and audits of stock exchanges and intermediaries.
6.Levying fee or other charges under the Act.
7.Performing and exercising such power as may be delegated by the Government of India.
________________________________________________________________________________________________
BST NOTES CH 11 MARKETING MANAGEMENT

MARKETING – MEANING:
Phillip Kolter has defined marketing as a social process by which individual groups obtain what they need and want
through creating offerings and freely exchanging products and services of value with others.
FEATURES OF MARKETING:
1. Needs and Wants:
Needs are basic to human beings and wants are potential satisfiers of needs.
A marketer’s job is to identify needs of the target customers and develop products and services that satisfy such needs.
Ex: Basic need for food may be satisfied by dosa for a South Indian and chapatti and vegetables for a North Indian.
2. Creating a Market Offering:
It means a complete offer for a product with features like size, quality, taste, etc., at price, a location, etc.
Ex: A cell phone in four different versions of size of memory, television viewing, internet, camera, etc., for price between
Rs5,000 - Rs20,000 (depending on the model selected) is available at shops in all metropolitan cities.
3. Customer Value:
The buyers make buying decisions on the value of the product in satisfying their need, in relation to its cost. A product
will be purchased only if it is giving greatest benefit for the value of money. The job of a marketer is to add to the value
of the product so that the customers prefer it over the competing products and decide to purchase it.
4. Exchange Mechanism:
Exchange refers to the process through which two or more parties come together to get the desired product from
someone offering the same by giving something in return. Exchange is the essence of marketing.
(i) Involvement of at least two parties viz., the buyer and the seller.
(ii) Each party should be capable of offering something of value to the other.
(iii) Each party should have the ability to communicate and deliver the product or service.
(iv) Each party should have freedom to accept or reject other party’s offer.
(v) The parties should be willing to enter into transaction with each other on voluntary basis rather than compulsion.

MARKETING MANAGEMENT PHILOSOPHIES / CONCEPTS / THEORIES:

BASIS PRODUCTION PRODUCT SELLING MARKETING SOCIETAL

MEANING Producing goods Producing high Convincing Identifying and It is an extension
in large quality products, customers to buy satisfying needs of marketing
quantities at improving quality the product of customers by concept.
affordable prices and adding new through developing Emphasis is on
and efficient features. aggressive selling products consumer
distribution. and promotion. according to satisfaction and
their needs. welfare of the
society.
STARTING POINT Factory Factory Factory Market Market, Society
MEANS Availability and Product Selling and Integrated Integrated
profitability improvements promoting marketing marketing
ENDS Profit through Profit through Profit through Profit through Profit through
volume of product quality sales volume customer customer
production satisfaction satisfaction and
social welfare
Main focus Quantity of Quality, features Existing product Customer needs Customer’s
product of product needs and
society’s well
being

FUNCTIONS OF MARKETING:
1. Gathering and Analysing Market Information:
It is necessary to identify the needs of the customers, the available opportunities, threats, strengths and weaknesses of
the organisation and help in deciding what opportunities can best be pursued by it for marketing its products.
2. Marketing Planning:
A marketer must develop appropriate marketing plans covering the plan for increasing level of production, promotion of
the products and specify the action programmes to achieve these objectives.
Ex: a marketer of colour TV aims at increasing his market share to 20 per cent in the next three years.
3 . Product designing and Development:
The design of the product contributes to making 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.
Ex: A motorbike is attractive with features like cost, mileage, design, shape, style, etc.
4. Standardisation and Grading:
Standardisation means producing goods of predetermined specifications (quality, price and packaging) which helps in
achieving uniformity in the output and reduces the need for inspection, testing and evaluation of the products.
Grading means classification of products into different groups, on basis of characteristics, quality, size for agricultural
products, wheat, oranges, etc. Grading ensures that goods belong to a particular quality and helps in getting higher
prices for high quality output.
5. Packaging and Labelling:
Packaging refers to designing and developing the package for the products. Labelling refers to designing and developing
the label to be put on the package. The label may vary from a simple tag to complex graphics.
Packaging and labelling are considered as the pillars of marketing.
6. Branding:
A marketer has to decide whether the firm’s products will be marketed under brand name or generic name. Generic
name refers to the name of the whole class of the product. Ex: book, camera. The process of giving a name, sign, symbol
to a product which helps in identifying and distinguishing products from the competitors’ products is called branding.
It helps in creating product differentiation, building customer’s loyality and in promoting its sale.
7. Customer Support Services:
It includes after sales services, handling customer complaints and adjustments, procuring credit services, maintenance
services, technical services and consumer information. They aim at providing maximum satisfaction to the customers, in
bringing repeat sales and developing brand loyality for a product.
8. Pricing of Product:
Price is the amount of money paid by a buyer to the seller in consideration of the purchase of a product.
Pricing is used to regulate the demand of a product, if the price is increased demand falls and vice-versa.
Pricing is an effective competitive weapon which affect the revenue and profits of a firm.
9. Promotion:
Promotion refers to the use of communication for informing potential customers about a product and persuading them
to buy it. Promotion mix is combination of promotional tools used by an organisation to achieve communication
objectives. These elements are advertising, personal selling, sales promotion and public relation.
10. Physical Distribution:
Once goods are manufactured, packaged, branded, priced, and promoted, these must be made available to customers
at the right place, in right quantity and at the right time. The physical handling and movement of goods from place of
production to the place of distribution is referred to as physical distribution.
11. Transportation:
Transportation is the means of carrying goods and raw materials from the point of production to the point of sale.
It creates place utility because if goods are physically made available, the sale can be completed.
Ex: Tea produced in Assam has to be transported to Tamil Nadu, Punjab, Haryana, Rajasthan, where it is consumed.
A firm has to analyse its mode of transportation based on nature of the product, cost and location of target market.
12. Storage or Warehousing:
Warehousing means storing and assorting products to create time utility. There is difference between the time of
production and consumption. More number of warehouses, lesser would be the time taken in serving customers but the
cost of warehousing will be high and vice-versa. The firm has to balance between the cost of warehousing and the level
of customer service. For longterm storage products (agricultural) the warehouses are located near production sites. For
bulky, hard to ship (machinery, automobiles), perishable products (bakery, meat, vegetables) it is located near market.

MARKETING MIX - MEANING:

It is a set of marketing tools for achieving marketing objectives in the target market.
It includes 4’ps:- Product, Price, Place (Physical Distribution) and Promotion.
Product:
It may be tangible/intangible product (goods /services). It is a bundle of utilities to satisfy needs of the customers.
Price:
It is the value or amount of money paid by the buyer to the seller for the product. It is a competitive weapon.
It determines the demand , sales and profit of the business.
Place/Physical Distribution:
It helps in the movement of goods and services from manufacturers to consumers. It creates place utility through order
processing, transportation, warehousing, and inventory control.
Promotion:
It helps to communicate and convince the customers to buy their product by creating product awareness.
This can be done through advertising, personal selling, sales promotion and public relation.

ELEMENT 1 – PRODUCT – MEANING:

A product is a bundle of utilities, which is purchased because of its capability to provide satisfaction of certain need.
A buyer buys a product for the benefit it provides - (i) functional benefits (ii) psychological benefit (iii) social benefits.
Ex: Motorcycle provides functional utility of transportation, satisfies the need for prestige and esteem and provides
social benefit by acceptance from a group, by riding a motorbike.
PRODUCT MIX – BRANDING, PACKAGING AND LABELLING:
BRANDING:
A marketer has to decide whether the firm’s products will be marketed under brand name or generic name. Generic
name refers to the name of the whole class of the product. Ex: book, camera. The process of giving a name, sign, symbol
to a product which helps in identifying and distinguishing products from the competitors’ products is called branding.
1. Brand:
A brand is a name, term, sign, symbol, design or combination of them, used to identify products of one seller or group of
sellers and differentiate them from those of competitors. Brand has two components—brand name and brand mark.
2. Brand Name:
That part of a brand, which can be spoken, is called a brand name. It is the verbal component of a brand.
3. Brand Mark:
That part of a brand which can be recognised but which is not utterable is called brand mark. It is a symbol, design,
distinct colour scheme or lettering.
4. Trade Mark:
A brand or part of a brand that is given legal protection against its use by other firms is called trademark. The firm,
which got its brand registered, gets exclusive right for its use. No other firm can use such name or mark in the country.
Characteristics of Good Brand Name:
(i) It should be short, easy to pronounce, spell, recognise and remember e.g., Ponds, VIP, Rin, Vim, etc.
(ii) It should suggest the product’s benefits and qualities. It should be appropriate to the product’s function.
(iii) It should be distinctive.
(iv) It should be adaptable to packing, labelling, advertising media and to different languages.
(v) It should be versatile to accommodate new products, which are added to the product line.
(vi) It should be capable of being registered and protected legally.
(vii) It should have staying power, it should not get out of date.

PACKAGING - MEANING:
Packaging refers to the act of designing and producing the container or wrapper of a product.
Packaging determines success or failure of many products, particularly the consumer non-durable products.
Levels of Packaging:
1. Primary Package:
It refers to the product’s immediate container. Sometimes the primary package is kept till the consumer is ready to use
the product (plastic packet for socks) in other cases, it is kept throughout the entire life of product (toothpaste tube).
2. Secondary Packaging:
It means additional layers of protection that are kept till product is ready for use. Ex: a tube of shaving cream comes in a
card board box, when consumers start using shaving cream, they will dispose off the box but retain the primary tube.
3. Transportation Packaging:
It refers to further packaging components necessary for storage, identification or transportation.
Ex: a toothpaste manufacturer may send the goods to retailers in corrugated boxes containing 10, 20, or 100 units.

FUNCTIONS OF PACKAGING AND LABELLING:

FUNCTIONS OF PACKAGING FUNCTIONS OF LABELLING

1. Product Protection 1. Describe the Product and specify its contents
2. Product Identification 2. Identification of the Product or brand
3. Facilitating Use of the Product 3. Grading of Products
4. Product Promotion 4. Helps in Promotion of Products
- 5. Providing Information Required by Law
LABELLING - MEANING:
It means designing the label to be put on the package. It may be a simple tag attached to the product in unbranded
products (sugar, wheat, pulses) with information about the quality, price. It can also be complex graphics that are part
of the package on branded products. They provide information about the product, its contents, method of use, etc.

ELEMENT 2 – PRICE – MEANING:

Price is the amount of money paid by a buyer to the seller in consideration of the purchase of a product.
Pricing is used to regulate the demand of a product, if the price is increased demand falls and vice-versa.
Pricing is an effective competitive weapon which affect the revenue and profits of a firm.
Factors affecting Price Determination:
1. Product cost:
The cost sets the minimum level or the floor price at which the product may be sold. This includes the cost of producing,
distributing and selling the product. Total Costs are the sum total of the fixed, variable and semi-variable costs.
The business aims at earning a margin of profit over and above the costs.
2. The Utility and Demand:
While the product costs set the lower limits of the price, the utility of product and the intensity of demand sets the
upper limit of price. The buyer may be ready to pay price equal to the utility from the product. The seller would try to
cover the costs. According to the law of demand, consumers purchase more units at a low price than at a high price.
3. Extent of Competition in the Market:
The price will reach upper limit if there is lesser degree of competition. In free competition, the price will be at lowest
level. Prices, quality and tfeatures of the competitive products must be examined carefully, before fixing the price.
4 . Government and Legal Regulations:
In order to protect the interest of public against unfair practices in the field of price fixing, Government can intervene
and regulate the price of commodities. Government can declare a product as essential product and regulate its price.
Ex: Government may declare cancer treatment tablet as essential commodity and regulate its price.
5. Pricing Objectives:
(a) If firm wants to maximise profits in the short run, it would charge maximum price, for maximising profit in the long
run, it would charge lower price.
(a) If a firms wants to obtain larger share of the market, it will keep the price at lower levels.
(b) If a firm wants to survive in intense competition or introduction of a more efficient substitute by a competitor, it may
discount its products, run promotion campaign to liquidate its stock.
(c) If a firm wants to obtain quality leadership, it will charge higher prices for high quality and high cost of R&D.
6. Marketing Methods Used:
Price fixation is also affected by distribution system, quality of salesmen employed, quality and amount of advertising,
sales promotion efforts, the type of packaging, product differentiation, credit facility and customer services provided.
Ex: If a company provides free home delivery, it has some of flexibility in fixing prices.

ELEMENT 3 – PLACE OR PHYSICAL DISTRIBUTION – MEANING:

Once goods are manufactured, packaged, branded, priced, and promoted, they must be made available to customers at
the right place, in right quantity and at the right time. The physical handling and movement of goods from place of
production to the place of distribution is referred to as physical distribution.
The two major decisions include:
(a) decision regarding channels of distribution or the marketing intermediaries like wholesalers and retailers to be used
(b) managing inventory level, storage, warehousing and transportation of goods from one place to the other.
Components of Physical Distribution:
1. Order Processing:
Order placement is the first step. Orders flow from customers to the manufacturers. A good physical distribution system
should be accurate and speedily process orders, otherwise, goods would reach the customers late or in wrong quantity
or specifications. This would result in customer dissatisfaction, with the danger of loss of business and goodwill.
2. Transportation:
Transportation is the means of carrying goods and raw materials from the point of production to the point of sale.
It creates place utility because if goods are physically made available, the sale can be completed.
Ex: Tea produced in Assam has to be transported to Tamil Nadu, Punjab, Haryana, Rajasthan, where it is consumed.
A firm has to analyse its mode of transportation based on nature of the product, cost and location of target market.
3. Warehousing:
Warehousing means storing and assorting products to create time utility. There is difference between the time of
production and consumption. More number of warehouses, lesser would be the time taken in serving customers but the
cost of warehousing will be high and vice-versa. The firm has to balance between the cost of warehousing and the level
of customer service. For longterm storage products (agricultural) the warehouses are located near production sites. For
bulky, hard to ship (machinery, automobiles), perishable products (bakery, meat, vegetables) it is located near market.
4. Inventory Control:
Deciding about the level of inventory is important because higher the level of inventory, higher will be the level of
service to customers but the cost of carrying the inventory will also be high.
Thus, a balance is to be maintained in respect of the cost and customer satisfaction.
TYPES OF CHANNELS OF DISTRIBUTION:
1. Producer-customer (Direct channel-zero level):
This is the simplest, shortest, fastest and economical channel in which no middlemen is involved. A producer sell directly
to consumers through door-to-door sales persons, direct mail or through his own retail stores. Big firms use this channel
to cut distribution costs and to sell industrial products of high value. Small producers and producers of perishable
commodities also sell directly to local consumers.
2. Producer-retailer-customer (Indirect-one level):
It involves only one middlemen, retailer and is suited for distribution of consumer durables and products of high value.
The producer sells his product to big retailers who buy in large quantities and in turn sell to the ultimate consumers.
3. Producer-wholesaler-retailer-customer (Two levels):
This is the most common and traditional channel of distribution used for the products with widely scattered market.
The producer sells to wholesalers, who in turn sell it to retailers and retailers finally sell to the ultimate consumers.
It is suitable for the producers with limited finance, narrow product line and need promotional support of wholesalers.
4. Producer-agent-wholesaler-retailer-customer (Three levels):
It is the longest channel involving three middlemen and is suitable for wider distribution of various industrial products.
When the producer wants to be fully relieved of problem of distribution, he hands over entire output to selling agents.
The agents distribute to a few wholesalers, wholesaler to number of retailers who finally sell to the ultimate consumers.

ELEMENT 4 – PROMOTION - MEANING:

Promotion refers to the use of communication with the twin objective of informing potential customers about a product
and persuading them to buy it.
Promotion Mix - MEANING:
Promotion mix is combination of promotional tools used by an organisation to achieve communication objectives.
These tools / elements of promotion mix: (i) Advertising (ii) Personal Selling (iii) Sales Promotion and (iv) Public relation.

(i) Advertising:
Advertising is the most common and an impersonal form of communication paid for by sponsors to promote products.
The most common modes of advertising are newspapers, magazines, television and radio.
Features of advertising:
(a) Paid Form: Advertising is a paid form of communication, the sponsor has to bear the cost of communicating.
(b) Impersonal: No direct face-to-face contact between prospect and advertiser. It creates a monologue, not a dialogue.
(c) Identified Sponsor: Advertising is undertaken by some identified individual or company, who bears the cost of it.
Merits of advertising:
(a) Mass Reach: A large number of people can be reached over a vast geographical area.
(b) Customer Satisfaction and Confidence: Creates confidence, comfort, assurance and satisfaction among buyers.
(c) Expressiveness: Art, designs and graphics with special effects simple products and messages look very attractive.
(d) Economy: Very economical as overall cost of advertising spreads over many units, per-unit cost of reach comes low.

(ii) Personal Selling:

It is a personal form of communication which involves oral presentation of message in the form of conversation with
one or more prospective customers. Companies appoint salespersons to contact prospective buyers and create
awareness about the product and develop product preferences with the aim of making sale.
Features of Personal selling:
(a) Personal Form: Direct face-to-face dialogue, an interactive relationship between the seller and the buyer.
(b) Development of Relationship: Salesperson develop personal relationships with the prospective customers.
Merits of Personal selling:
(a) Flexibility: Sales presentation can be adjusted to fit the specific needs of the individual customers.
(b) Direct Feedback: Possible to take a direct feed back from the customer.
(c) Minimum Wastage: Wastage of efforts can be minimised by deciding the target customers before making contact.
(iii) Sales Promotion:
Sales promotion refers to short- term incentives, which are designed to encourage the buyers to make immediate
purchase of a product or service.
Commonly used sales Promotion activities:
Rebate, discount, refunds, product combinations, quantity gift, instant draws and assigned gift, lucky draw, usable
benefit, full finance @ 0%, cash discounts, sales contests, free gift offers, free sample distribution, etc.
Merits of Sales Promotion:
(a) Attention Value: Attract attention of the people because of the use of incentives.
(b) Useful in New Product Launch: It induces people to try the new product.
(c) Synergy in Total Promotional Efforts: Supplement the personal selling and advertising efforts used by a firm.

(iv) Public Relations:

Public relations involve a variety of programmes designed to promote or protect a company’s image and its individual
products in the eyes of the public and ensure that negative publicity does not take place at all. It can be performed by
the marketing department, a separate department or any outside public relations agency.
Role of Public Relations includes: Publicity, press release, corporate communication, lobbying, counselling, brand
awareness, building credibility, etc.
_________________________________________________________________________________________________
BST NOTES CH 12 CONSUMER PROTECTION

CONSUMER PROTECTION MEANING:

Under the Consumer Protection Act 2019, the Government of India has given legal protection to safeguard interests of a
consumer because he is said to be a KING in the free market economy.
The market forces have changed from a caveat emptor (let the buyer beware), to caveat venditor (let the seller
beware). The consumer has to be protected from the risk due to unsafe products, adulterated food product, misleading
advertisements, sale of spurious products, overpricing, hoarding, black-marketing, etc.

CONSUMER PROTECTION – IMPORTANCE / SIGNIFICANCE / BENEFITS:

SL NO FROM CUSTOMER POINT OF VIEW FROM BUSINESS POINT OF VIEW

1 Unorganised Consumers: Long-term Interest of Business:
Consumers need to be organised in the form of Business must aim at long-term profit maximisation
consumer organisations. through customer satisfaction.
These organisations must become powerful to protect Satisfied customers help in repeat sales, provide good
and promote the interests of consumers. feedback and increase the customer-base.
2 Consumer Ignorance: Business use s Society’s Resources:
To create consumer awareness, it becomes necessary Business must supply products and services which are in
to educate them about their rights and reliefs public interest because they use resources which belong
available to them. to the society.
3 Widespread Exploitation of Consumers: Social Responsibility:
The consumer has to be protected from the risk due to Business make money by selling goods and services to
unsafe products, adulterated food product, misleading consumers.
advertisements, sale of spurious products, overpricing, They must take care of interest of all stakeholders –
hoarding, black-marketing, etc. consumers, investors, employees, government, etc.
4 - Moral Justification:
It is the moral duty of business to take care of consumer’s
interest and avoid exploitation.
They must avoid unscrupulous, exploitative and unfair
trade practices.
5 - Government Intervention:
When a business uses unfair trade practices, the
government will take action.
This can harm the image of the company.
It is advisable that business voluntarily follows social
responsibility.

SCOPE OF The Consumer Protection Act, 2019

(a) The Consumer protection Act 2019 protects and promotes the consumers’ interest through:
1. Giving certain rights to consumers.
2. Speedy and inexpensive redressal of their grievances.
(b) It extends to the whole of India.
(c) It is applicable to all types of businesses - a manufacturer/ trader - supplying goods/services including e-commerce.
Who is A Consumer? MEANING OF CONSUMER:
(a) A ‘consumer’ is a person who uses goods or avails of any service.
(b) Under the Consumer Protection Act 2019, a consumer is a person who buys any goods 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.
(c) It includes any user of goods / services if such use is made with the approval of the buyer.
(d) It applies to both offline and online transaction through electronic means or by teleshopping or direct selling or
multilevel marketing.
(e) It does not include any person who obtains goods or services for resale or commercial purpose.
WHO CAN FILE A COMPLAINT?
(i) a consumer; or
(ii) any voluntary consumer association registered under any law for the time being in force; or
(iii) the Central Government or any State Government; or
(iv) the Central Authority; or
(v) one or more consumers, where there are numerous consumers having the same interest; or
(vi) in case of death of a consumer, his legal heir or legal representative; or
(vii) in case of a consumer being a minor, his parent or legal guardian;
AGAINST WHOM A COMPLAINT CAN BE FILED?
1. The seller, manufacturer or dealer of goods which are defective. (Defect means any fault, imperfection or
shortcoming in the Quality, quantity or purity of goods.)
2. The provider of services if they are deficient in any manner. (Deficiency means any imperfection, shortcoming or
Inadequacy in the quality, nature and manner of performance of Services.)

Consumer Rights:
1. Right to Safety:
The consumer has a right to be protected against goods and services which are hazardous to life, health and property.
Consumers should use only standardised goods (ISI-electrical goods, FPO-food products, Hallmark on jewelry, etc.) as
they provide quality assurance.
2. Right to be informed:
The consumer has a right to have complete information about the product (its ingredients, date of manufacture, price,
quantity, directions for use, etc.) he wishes to buy.
It is legal requirement to provide such information on the package and label of the product.
3. Right to be assured (RIGHT TO CHOOSE):
The consumer has the freedom to use variety of products at competitive prices.
The marketers should offer a wide variety of products in terms of quality, brand, prices, size, etc. and allow the
consumer to make a choice from amongst these.
4. Right to be heard:
The consumer has a right to file a complaint and be heard if he is dissatisfied with a good /service.
Business firms have set up their own consumer service and grievance cells.
Consumer organisations are also helping consumers in redressal of their grievances.
5. Right to seek redressal:
The consumer has a right to get relief against unfair trade practices in case the product or a service falls short of his
expectations.
The Consumer Protection Act 2019 provides relief in the form of - replacement of the product, removal of defect,
compensation paid for any loss or injury suffered by the consumer, etc.
6. Right to Consumer Education:
The consumer has a right to well informed about his rights, responsibilities and the reliefs in case of a product or service
falling short of his expectations.
Many consumer organisations and some businesses are educating consumers in this respect.

Responsibilities of Consumers:
1. Be aware about various goods and services available in the market so that an intelligent and wise choice can be made.
2. Buy only standardised goods as they provide quality assurance. Thus, look for ISI mark on electrical goods, FPO mark
on food products, Hallmark on jewelry, etc.
3. Learn about the risks associated with products and services, follow manufacturer’s instructions and use the products
safely.
4. Read labels carefully to know about prices, net weight, manufacturing and expiry dates, etc.
5. Assert yourself to ensure that you get a fair deal.
6. Be honest in your dealings. Choose only from legal goods and services and discourage unfair trade practices like black-
marketing, hoarding, etc.
7. Ask for a cash memo on purchase of goods or services. This is a proof of the purchase made.
8. File a complaint in an appropriate consumer forum if there is shortcoming in the quality of goods or services. Do not
fail to take an action even when the amount involved is small.
9. Form consumer societies to educate consumers and safeguarding consumer interests.
10. Respect the environment. Avoid waste, littering and contributing to pollution.

RELIEFS / REMEDIES AVAILABLE TO CONSUMERS:

(i) To remove the defect in goods or deficiency in service.
(ii) To replace the defective product with a new one, free from any defect.
(iii) To refund the price paid for the product, or the charges paid for the service.
(iv) To pay a reasonable amount of compensation for any loss or injury suffered by the consumer due to the negligence
of the opposite party.
(v) To pay punitive damages in appropriate circumstances.
(vi) To discontinue the unfair/ restrictive trade practice and not to repeat it in the future.
(vii) Not to offer hazardous goods for sale.
viii) To withdraw the hazardous goods from sale.
(ix) To cease manufacture of hazardous goods and to desist from offering hazardous services.
(x) Compensate for any loss or injury suffered by consumer under product liability action and withdraw hazardous
products from being offered for sale etc.

THREE TIER Redressal Agencies / Mechanism Under The Consumer Protection Act:

DISTRICT COMMISSION STATE COMMISSION NATIONAL COMMISION

a) The District Forums are set up by the State a) It is established by the a) The National Commission has
Government. respective state government territorial jurisdiction over the
b) District commission has a jurisdiction to entertain and function at the state whole country.
complaints where value of goods or services paid as capital. b) National Commission has a
consideration does not exceed one crore rupees. b) State Commission has a jurisdiction to entertain
c) If on the first hearing or at later stage, it appears to jurisdiction to entertain complaints where value of goods
district commission that settlement can be done, it may complaints where value of or services paid as consideration
direct them to give their consent for settlement through goods and services paid as exceeds ten crores of rupees.
mediation within five days and the provisions relating to consideration exceeds one c) If any of the parties are not
mediation shall apply. crore but does not exceed ten satisfied by the order of National
d) If the settlement fails then the complaint proceeds. crore rupees. Commission can appeal against
e) If the complaint is about defect in goods the c) If any of the parties are not such order to the Supreme Court
commission obtains the sample of goods, seal it and refer satisfied by the order of State of India within a period of thirty
to the appropriate authority for analysis. Commission can appeal days of such order.
f) In case of services, the dispute is settled based on the against such order to the
evidence (document / records) from the service provider. National Commission within a
g) If any of the parties are not satisfied by the order of period of thirty days of such
District Commission can appeal to the State Commission order.
within a period of forty five days from the date of order.

Role of Consumer Organisations And Ngos in India:

(i) Educating the general public about consumer rights through training, seminars and workshops.
(ii) Publishing periodicals and publications about consumer problems, legal reporting, reliefs available and other matters
of interest.
(iii) Carrying out laboratary testing of consumer products qualities and publishing the test results for the benefit of
consumers.
(iv) Encouraging consumers to protest and take action against unfair trade practices of sellers.
(v) Providing legal assistance and advice to consumers in seeking legal remedy.
(vi) Filing complaints in appropriate consumer courts on behalf of the consumers.
(vii) Taking an initiative in filing cases in consumer courts in the interest of the general public.
(viii) Consumer unity and Trust Society (CuTS), Jaipur.
***********************************************************************************************
BST TESTSERIES CH01: NATURE AND SIGNIFICANCE OF MANAGEMENT MM: 25

1. The objective of management which consistently creates economic value for various constituents of society is
_______________________.
(a) Both Social and Personal objective (b) Personal objective
(c) Social objective (d) Organisational objective

2. Prem has recently started a business to sell computers. He hired a shop in Nehru Place in New Delhi, where he
assembles various components to make computers and supplies them as per order. He performs a series of composite
but separate functions simultaneously and ensures that computers are delivered in time as per orders. These functions
are performed by all managers at all times. The feature of management highlighted above is _____________.
(a) Management is a group activity (b) Management is dynamic
(c) Management is pervasive (d) Management is a continuous process

3. ‘Even where members of a department willingly cooperate and work, a manager has to coordinate the efforts of
different people in a conscious manner.’ Identify the characteristic of coordination discussed above.
(a) Coordination is an all-pervasive function (b) Coordination is a continuous process
(c) Coordination is a deliberate function (d) Coordination ensures unity of action

4. Identify the level of management whose basic task is to cooperate with the activities of other departments according
to the overall objectives of the organisation.
(a) Top (b) middle (c) lower (d) operational

5. A production manager was able to produce the desired output on time but by paying additional overtime wages to
employees. In this case the manager was ______________.
(a) Effective only (b) Neither effective nor efficient
(c) Both effective and efficient (d) Efficient only

6. Name the process of working with and through others to effectively achieve organisational objectives by efficiently
using limited resources in a changing environment.
(a) Management (b) Planning (c) Organising (d) Controlling

7. Name the process which provides the requisite amount, quality, timing and sequence of efforts and ensures that
planned objectives are achieved with a minimum of conflict.
(a) coordination (b) communication (c) delegation (d) management

8. “Any one can be called a manager irrespective of the educational qualification possessed.” Identify the characteristic
of the profession that Management does not fulfil in the statement being discussed above.
(a) Ethical code of Conduct (b) Restricted Entry (c) Professional Association (d) Service Motive

9. ___________________________is the process by which the manager brings order out of chaos, removes conflict
among people over work or responsibility sharing and creates an environment suitable for teamwork.
(a) Planning (b) Organising (c) Staffing (d) Controlling

10. Tammana has two kids- Yash and Yashika, studying in different schools. On comparing the two schools, Tamanna
realizes that the management of Yash’s school is better in many ways, like the syllabus for each term is completed well
in advance, the results for the weekly exams are given on time, the teachers seem to be more joyful and contended and
so on.
(a) Identify the feature of management highlighted above.
(b) Explain two other features of management. (3)

11. The purchase, production and sales managers at Sharda Ltd, a firm manufacturing readymade garments are
generally at a conflict, as they have their own objectives. Usually each thinks that only they are qualified to evaluate,
judge and decide on any matter, according to their professional criteria.
(a) Name the concept which will be required by the CEO Mr. Raman, to reconcile the differences in approach, interest or
opinion in the organisation.
(b) Explain any two characteristics of the concept identified in part (a) above. (3)
12. Ramesh Automibles aims to produce and sell 1,00,000 cars in 2019. To achieve this objective the production
department strives for timely production and sales department takes all possible steps to sell them. Due to combined
efforts of all departments, the company is able to achieve its target.
(a) Which significance of management is highlighted in the given case?
(b) Explain three other significance of management. (4)

13. Jayant is working as Head relationship manager in the wealth managerment division of a private sector Bank. He has
created an internal environment which is conducive to an effective and efficient performance of his team of his team of
ten relationship management executives. A typical day at work in Jayant’s life consists of a series of interrelated and
continuous functions. He decides the targets for his department which are in line with the objectives of the organisation
as a whole. The future course of action for his team members is laid out well in advance. The various resources required
by the relationship managers like an iPad with a GPS system, account opening forms, brochures, details of account
holders, etc. are readily made available to them. The executives are given sufficient authority to carry out the work
assigned to them. Jayant works in close coordination with the Human resource manager in order to ensure that he is
able to create and maintain a satisfactory and satisfied workforce in his department. Through constant guidance and
motivation, Jayant inspires them to realise their full potential. He offers them various types of incentives from time to
time keeping in view their diverse individual needs. Moreover, he keeps a close watch on their individual performance
in order to ensure that they are in accordance with the standards set and takes corrective actions whenever needed.
In the context of the above case:
(a) Identify the concept being referred to in the following line, “ He has created an internal environment which is
conducive to an effective and efficient performance of his team of his team of ten relationship management
executives.”
(b) Identify and describe the various functions of the concept as identified in part (a) of the question by quoting lines
from the paragraph. (6)
BST TESTSERIES CH02: PRINCIPLES OF MANAGEMENT MM: 25

1. The principle of ___________________ states that there should be a place for everything and everyone in an
organization.
(a) Equity (b) Order (c) Discipline (d) Initiative

2. ‘One head One plan’ is concerned with the following principle of Fayol.
(a) Unity of Direction (b) Division of work (c) Equity (d) Discipline

3. _______________________________________eliminate superfluous varieties, sizes and dimensions of products.

(a) Simplification (b) Method study (c) Fatigue study (d) Motion study

4. Which principle of Taylor advocates scientific enquiry as opposed to hit and trial approach?
(a) Science, not rule of thumb (b) Functional foremanship (c) Method study (d) Motion study

5.How are the principles of management formed?

(a) In a labarotary (b) by experience of managers
(c) by experience of customers (d) by propogation of social scientists.

6.What is meant by ‘mental revolution’, according to Taylor?

(a) Assign job to workers as per their physical, mental and intellectual capabilities.
(b) Differentiate between efficient and inefficient workers.
(c) Adopt a suggestion system.
(d) Change in the attitude / thinking of management and workers towards each other.

7. 'She/ he keeps machines, materials, tools, etc., ready for operations by concerned workers.' Whose work is described
by this sentence under functional foremanship?
(a) Instruction Card clerk (b) Repair Boss (c) Gang Boss (d) Route Clerk

8. This principle is against dual subordination.

(a) Unity of direction (b) Scalar chain (c) Unity of command (d) Initiative

9. In what two departments did Taylor divide the work of a factory manager?
(a) Planning and finance (b) Planning and research
(c) Planning and production (d) Planning and marketing

10. Appliances India Ltd is engaged in manufacturing and distribution of home appliances since 1987. It has a good
name in the market as the company is producing good quality appliances. It has separate departments for
manufacturing, finance, sales, maintenance services and technical services to achieve specialisation. Since the areas of
operation of the company have increased and customers have become more demanding, the company decided to
modify the existing principle of management to meet the changing requirements of the environment.
Identify and explain the general principle of management which the company wants to modify to meet the changing
requirements. (3)

11. Karan Nath took over ‘D’north Motor Company’ from his ailing father three months ago. In the past the company
was not performing well. Karan was determined to improve the company’s performance. He observed that the methods
of production as well as selection of employees in the company were not scientific. He believed that there was only one
best method to maximize efficiency. He also felt that once the method is developed, the workers of the company should
be trained to learn that ‘best method’. He asked the Production Manager to develop the best method and carry out the
necessary training. The Production Manager developed this method using several parameters right from deciding the
sequence of operations, place for men, machines and raw materials till the delivery of the product to the customers.
This method was implemented throughout the organization. It helped in increasing the output, improving the quality
and reducing the cost and wastage.
(a) Identify the technique of scientific management followed by the Production Manager in the above case.
(b) Explain any two other techniques of scientific management which falls under the same category as identified in (a).
(3)
12. ‘Principles of management establish a relation between human and material resources in accomplishing
organisational goal.’
(a) Identify the feature of principles of management given in the above statement.
(b) Also explain any three other features of principles of management. (4)

13. Rajat is the owner of a fast food cafe. His main goal was to reduce the cost with increased output. To begin with, he
wanted to develop a standard method which would be followed throughout the organisation. So, he investigated
traditional methods through work study and unified the best practice. Rajat believed that each person should not only
be scientifically selected but also be given the required training to increase efficiency. For this he set up a Special
Training Unit. At the factory, the ingredients were strategically placed to reduce the time taken excess movement. The
standard time and other parameters were determined on the basis of work study and Rajat rewarded the workers for
meeting the standard output. By using scientific management Rajat was able to lead his cafe to great success.
Identify and explain the two principles and two techniques of scientific management followed by Rajat in the above case
by quoting the lines. (6)
BST TESTSERIES CH03: BUSINESS ENVIRONMENT MM: 25

1. Which component of general environment of business prohibits the advertisement of alcoholic beverages?
(a) Economic (b) Social (c) Political (d) Legal

2. Match the following:

(a) increased life expectancy of people and increased (i) Inter relatedness
awareness for health care have increased the demand for
many health products and services like soft drinks, fat-
free cooking oil, and health resorts.
(b) it may be difficult to know the extent of the relative (ii) Relativity
impact of the social, economic, political, technological or
legal factors on change in demand of a product in the
market.
(c) Political conditions in the USA, for instance, differ (iii) Complexity
from those in China or Pakistan. Similarly, demand for
sarees may be fairly high in India whereas it may be
almost non-existent in France.

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

3. Just after the declaration of Lok Sabha elections, 2014 results the Bombay Stock exchange’s price index (sensex) rose
by 1000 points in a day. Identify the environmental factor which led to this rise.
(a) Economic (b) Social (c) Political (d) Legal

4. Many business are using social media like facebook and twitter to promote themselves.
This is an example of which dimension of business environment?
(a) Economic (b) Social (c) Technological (d) Political

5. According to consumer protection act, 2019, manufacturers are under an obligation to provide all the relevant
information (MRP, ingredients, manufacturing date, expiry date, etc.) about the product.
Which dimension of business environment is highlighted in the above statement?
(a) Economic (b) Social (c) Political (d) Legal

6. In order to be ahead of its global competitor ’Awasthi Telecom’ has decided upon its future course of action through
reframing spectrum and aggressive fabrication of towers.
Identify the related point with reference to importance of understanding business environment.
a) It helps in assisting in planning and policy formulation
b) It helps in coping up with rapid changes
c) It helps in improving performance
d) It enables the form to identify opportunities and getting the first mover advantage

7. Statement I: Business environment is a complex phenomenon.

Statement II: Political instability builds up confidence among the business people to invest in the long term projects.
Choose the correct option from the options given below:
a. Statement I is true and II is false b. Statement II is true and I is false
c. Both the statements are true d. Both the statements are false

8. By being aware of the changes in business environment, enterprises can identify ___________ and strategise ways to
capitalize on them.
a) Opportunities b) Threats c) Warning signals d) Policies

9. Keeping in view the increased expectations of corporates and increased awareness for self development among
people, Anu has started a Personality Development institute in Kasauli. The institute offers multiple courses on personal
grooming, confidence building and public speaking. Name the related feature of business environment.
a) Dynamic nature b) Relativity c) Uncertainty d) Interrelatedness
10. Name the General forces and Specific forces of business environment affecting business. (3)

11. Mr Ajay after completing MBA from USA comes to India to start a new business under the banner ECom Creations
Ltd. He launches a new product in e-learning for Senior Secondary School students in commerce stream which already
has established market in the UK and USA but not in India. His business starts flourishing in India. Now more Indian
companies entered into the market with other subjects also.
Identify and quote the lines from above para which highlight the significance of understanding business environment.(3)

12. National Digital Library of India (NDL India) is a pilot project initiated by the HRD ministry. 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.
Explain the dimensions of business environment highlighted above. (4)

13. The government of India announced Demonetization of ` 500 and ` 1,000 currency notes with effect from the
midnight of November 8, 2016. As a result, the existing ` 500 and ` 1,000 currency notes ceased to be legal tender from
that date. New currency notes of the denomination of ` 500 and ` 2,000 were issued by Reserve Bank of India after the
announcement. This step resulted in a substantial increase in the awareness about and use of Point of Sale machines, e-
wallets, digital cash and other modes of cashless transactions. Also, increased transparency in monetary transactions
and disclosure led to a rise in government revenue in the form of tax collection.
a. Enumerate the dimensions of business environment highlighted above.
b. State any four features of Demonetization. (6)
BST TESTSERIES CH04: PLANNING MM: 25

1. “Changes or events cannot be eliminated but they can be anticipated and managerial responses to them can be
developed.” is suggested by the following importance of planning:
(a) Planning facilitates decision making (b) Planning promotes innovative ideas
(c) Planning provides direction (d) Planning reduces the risks of uncertainty.

2. Planning results in decreasing _______ .

(a) Coordination (b) Proper use of resources (c) Future uncertainities (d) Control

3. Planning cannot foresee everything, and thus, there may be obstacles to effective planning.
Identify the related limitation of planning.
(a) Planning leads to rigidity (b) Planning may not work in a dynamic environment
(c) Planning does not guarantee success (d) Planning reduces creativity.

4. Rearrange the following steps to create the planning process:

i. Monica took into account the change in government policy, tax rate and other factors.
ii. Monica carefully found out the pros and cons of the various options she had to achieve her target.
iii. Monica carefully monitors the plan on regular intervals.
iv. Monica found out that she could achieve her goal by offering discount, reducing quality to cut cost, making more
variety to cater to different needs of customers.
v. After a lot of thought process Monica selected the option of making more variety to cater to the needs of customers.
vi. Monica decided to increase the profit of the organisation by 30%.
a. v-iii-vi-i-iv-ii b. v-iii-vi-iv-i-ii c. iii-vi-i-ii-v-iv d.vi-i-iv-ii-v-iii

5. Which of the following statements is not true with reference to planning?

(a) Planning is a pre-requisite for controlling
(b) Planning does not lead to rigidity
(c) Planning enables a manger to look ahead and anticipate changes.
(d) Planning facilitates co-ordination among departments and individuals in the organisation.

6. James, an employee with Team Computers Pvt Ltd. is given a target of assembling three computers per day. Due to
his habit of doing things differently an idea struck him which would reduce the assembling time of computer as well as
the cost of production. His superintendent instead of appreciating his idea, scolded him and asked him to complete the
work as per standard methodology. Identify the limitation of planning reflected in above situation.
(a) Planning leads to rigidity (b) Planning may not work in a dynamic environment
(c) Planning does not guarantee success (d) Planning reduces creativity.

7. “We do not supply to our clients on credit.” Identify the type of plan highlighted by the statement.
(a) Policy (b) Procedure (c) Rule (d) Method

8. Kamal is working in an organisation and he has been given the responsibility to create a plan for the launch of the
new product created by the company. Identify the type of plan he will create?
(a) Policy (b) Procedure (c) Programme (d) Strategy

9. From the statement given below identify which statement is not related to an importance of Planning:
I: Planning provides direction
II: Promotes innovative ideas
III: It is cheap to make plans
IV: Plans that are successful can be used again with the guarantee to succeeding again.
a. only III b. only IV c. only II and IV d. only III and IV

10. Identify and explain the steps in the process of planning from the following:
(a) This is the step in the process of planning which the manager will have to have to follow, using conjecture about
what might happen in the future.
(b) This is the step in the process of planning which is considered the “real point of decision making”.
(c) This is the step where other managerial functions also come into the picture. (3)
11. A company gave its sales executive the directive that they could sell the goods on credit. Also it told them very
clearly to inform the customer that if upto one month they did not make the payment, after the completion of this
period they would have to pay interest at the rate of 10% for the whole period.
Identify and explain the two types of plans mentioned in the above para by quoting the relevant lines. (3)

12. Mona inherited a 30-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 produc tion, sales and
marketing, through sales forecasting she realised 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.
Identify and explain the features of one of the function of management by quoting lines from the above para. (4)

13. In 2019 alone, Swiggy has launched operations in 300 towns and cities. Swiggy follows a two step sequence while
expanding to a small town. First, it provides more laborious training to restaurants and delievery partners compared to
their counterparts in the city. Second, it focuses on building scale in operations and increase the restaurant’s reach to a
larger base of consumers, including optimizing kitchens, resource planning among others.
(a) Identify and explain the type of plan being describe in the above lines.
(b) Explain any two types of plans which comes in the category of Single use plans. (6)
BST TESTSERIES CH05: ORGANISING MM: 25

1. A Company has its registered office in Delhi, manufacturing unit at Gurgaon and marketing and sales
department at Faridabad. The company manufactures consumer products. The type of organization structure
the company should adopt to achieve its target is ________________.
(a)Functional (b) Divisional (c) Formal (d) Informal

2. Aradhana and Gandharv are heads of two different departments in ‘Yumco Ltd.’ They are efficient
managers and are able to motivate the employees of their respective departments to improve performance.
However, their drive to excel in their own sphere of activity instead of giving emphasis on objectives of the
enterprise has hindered the interaction between the departments that Aradhana and Gandharv are heading.
Often there are inter-departmental conflicts and they have become incompatible. This has proved to be
harmful in the fulfillment of the organizational objectives. The situation has deteriorated to such an extent
that the CEO of ‘Yumco Ltd.’ has hired a consultant, Rashmi, to resolve the problem. After studying the
situation closely, Rashmi found that the problem has arisen due to inflexibility and a narrow perspective on
the part of both Aradhana and Gandhrav. She is of the view that this situation is a result of the type of
organizational structure ‘Yumco Ltd.’ has adopted. Identify the organization structure adopted by ‘Yumco Ltd.’
(a) Functional (b) Divisional (c) Formal (d) Informal

3. ______________gives shape to the organisation structure.

a) Extent of delegation (b) Span of Management (c) No of employees (d) Planning

4. ___________________ refers to the downward transfer of authority from a superior to a subordinate.

a. delegation b. decentralisation c. accountability d. responsibility

5. "Behaviour of employees can be fairly predicted since there are specific rules to guide them." This is an
advantage of one of the concept. Identify it.
(a) Formal organisation (b) Informal organisation (c) Delegation (d) Decentralisation

Read the following text and answer questions No. 6-9 on the basis of same:
Harneet Industries is a company manufacturing office furniture. The company had seperate heads for
production, marketing and finance. The work is divided into manageable activities so that duplication of work
can be avoided and the work can be shared among the employees. The company chose to diversify its
operations to improve its growth potential and increase market share. The manager of Harneet Industries is
overburdened with routine work and is unable to concentrate on core issues of the company. To overcome
this problem, he entrusted some of his responsibility and authority to his immediate subordinate to share
some of his routine work.

6. Name the process by which the manager of Harneet Industries brings order out of chaos , removes conflict
among people over work or responsibility sharing and creates an environment suitable for teamwork.
a) Planning b) Controlling c) Staffing d) Organising

7. Before diversification, which structure Harneet Industries had adopted?

(a)Functional (b) Divisional (c) Decentralised (d) Centralised

8. The work is divided into manageable activities so that duplication of work can be avoided and the
burden of work can be shared among the subordinates. Identify the step of organisation process.
(a) Identification and division of work (b) Departmentalisation
(c) Assignment of duties (d) Establishing reporting relationship
9. To overcome this problem, he entrusted some of his responsibility and authority to his immediate
subordinate to share some of his routine work. Which concept of management is used by the manager?
a. delegation b. decentralisation c. accountability d. responsibility

10. Soft cell Ltd. has divided the whole of its business into five departments. Now the company’s general
manager is telling all the employees what jobs are to be done by them. While giving the jobs to the
employees, the nature of job and the ability of the persons is taken into account. This also has been pre-
determined who will report to whom. The two stages of the process of management is discussed in the above
paragraph. Identify the function of management and explain its stages. (3)

11. Voltage fluctuations have been common and quite high in India. They harm our electrical appliances 22
like television, refrigerators and air conditioners, often leaving them in a permanently damaged condition. N-
Guard Company decided to manufacture stabilizers for North India where the voltage fluctuation ranges from
220V and 230V. Once the demand for the North India was taken care of, they decided to launch stabilizers of
varying voltages from 90 V -260V for meeting the requirements of voltage fluctuations in other regions of
India also. Three engineers were appointed for South, West and East regions of India, as the voltage was
different in all the three regions. Though all the engineers were appointed to manufacture stabilizers but the
product differed from region to region.
(a) Identify the organisational structure of NGuard Company.
(b) Explain its any two merits. (3)

12. Differentiate between formal and informal organisation on any four basis. (4)

13. Amit Miglani ,is a senior bank manager of a reputed Bank branch situated at Golf Links Delhi .He has
complete authority of approving high value queued up cash transactions passed by the clerical staff in his
branch. He announced that banks will remain open this Saturday and Sunday and its staff will do over time till
21:00 hours for the next 3 days to clear the rush, Fearing a jump in footfalls to deposit or withdraw cash
following the demonetization of Rs. 500 and Rs.1000 bank notes. Due to heavy rush of customers in the
branch the senior manager is unable to approve all these cash transactions himself. Amit Miglani who was
earlier taking all decisions for the bank had to selectively disperse the authority. He believed that that clerical
staff members are competent, capable and resourceful and can resume responsibility for effective
implementation of their decisions.
a) Identify the concept of management being followed by announcement by government of India.
b) State the significance of the concept identified in part (a)above. (6)
BST TESTSERIES CH06: STAFFING MM: 25

1. The essential objective of this concept is to create a pool of the prospective job candidates. Both internal
and external sources can be used for the same. Identify the concept.
(a) Selection (b) Placement (c) Orientation (d) Recruitment

2. Many employers request names, addresses and telephone numbers of references for the purpose of
verifying information and gaining additional information of an applicant. This is under the reference and
background checks step of selection process.
Arrange the next four steps of the selection process from the options given below:
a) Job offer
b) Selection decision
c) Medical examination
d) Contract of employment
(a) b-a-c-d (b) d-a-c-b (c) b-c-a-d (d) a-c-d-b

3. The workers of a factory remain idle because of lack of knowledge of hi-tech machines. Frequent visits of
engineer is made which causes high overhead charges.
The method of training by which this problem can be removed is ____________________.
a) apprenticeship (b) internship (c) vestibule (d) induction

4. Astra Builders has to deliver the flats to its buyers on time. Due to this there is a sudden rush of work.
Therefore, the company needs to arrange workers to work at the sites at a short notice. The source of
recruitment which may be used by the company to tap the casual vacancy is _____________.
a. Direct recruitment b. Advertisement
c. Recommendation of employees d. Employment Exchange

5. Biru Nandan, Chairman of Lalit group of companies founded ‘Biru University’ for undergraduate and
postgraduate courses in diverse disciplines. The Information Technology department of the Lalit Power Ltd.,
had few vacancies related to Cyber security. The Human Resource Department of the Company decided to
recruit fresh engineering graduates from ‘Biru University’ for the same.
Identify the type of source of recruitment.
(a) Casual callers (b) Consultancy firms (c) Campus recruitment (d) Direct recruitment

6. ‘Moga Industries Ltd.’ approached a well-established university in the city of Madurai to recruit qualified
personnel for various technical and professional jobs. They selected Tanya, Ritu, Garima and Chetan for
various vacancies in the organization. After the selection and placement, ‘Moga Industries Ltd.’ felt the need
to increase the skills and abilities, and the development of the positive attitude of the employees to perform
their specific jobs better. The company also realized the learning new skills would improve the job
performance of the employees. Hence, the company decided to take the actions for the same.
Name the step of the staffing process regarding which the company decided to take action.
(a) Selection (b) Placement (c) Training (d) Recruitment

7. Identify the source of recruitment which cannot be used when the existing staff is either insufficient or does
not fulfil the eligibility criteria of the jobs to be filled.
(a) On the job (b) Off the job (c) Internal (d) External

8. Name the two concepts which are part of the exercise which would reveal whether a company is
understaffed, overstaffed or optimally staffed.
(a) Promotion and career planning (b) Workload and workforce analysis
(c) Placement and orientation (d) Training and development
9. In an interview with a leading news channel, Mr. Rakesh Kwatra, CEO of ‘Get My Job” has suggested that
the Companies which want more and more people to apply for jobs in their organisation should make the
process of applying for jobs easier and candidate friendly. It is for this reason, he said, that most progressive
companies today have a short application process. He also said that the application form filled by the
candidate is very important as it is the information supplied in the application forms, which helps the manager
in eliminating unqualified or unfit job seekers. The company can create a mechanism that attempts to
measure certain characteristics of individuals like aptitude, manual dexterity, and intelligence to personality.
The candidate may then be called for an in-depth conversation to evaluate their suitability for the job. Name
the process.
(a) Selection (b) Placement (c) Training (d) Promotion

10. After passing his Secondary School Examination David left the school at the age of 15 years and started
getting training under his father. His father, a renowned electrician had worked for many companies. He
everyday started accompanying his father on work and watched him carefully while working. David was a
good learner and learnt the technique of work quickly. Now his father started passing on the tricks of the
trade to David. With the passage of time David acquired the required level of skill and became a well known
electrician at Indore. Big business houses started calling him for electrical wiring.
a) Name the method of training discuss in the above para.
b) State any three benefits which David could get on being trained. (3)

11. Nishant, the director of a government company is planning to manufacture bags for the utilisation of
waste material from one of his garment units. He has decided that this manufacturing unit will be set up in a
rural area of Odisha where people have very few job opportunities and labour is available at very low rates.
He has also thought of giving equal opportunities to men and women. For this he wants four different heads
for Sales, Accounts, Purchase and Production. He gives the advertisement and shortlist 10 candidates per post
after conducting different selection tests.
Identify and state the next three steps for choosing the best candidate out of the candidates shortlisted. (3)

12. How can internal sources of recruitment be better than external sources of recruitment?
Give four reasons in support of your answer. (4)

13. The IT major GIPRA is terminating the employment of its senior managers, if after evaluating their
performance against predetermined standards if it is found lacking. With this disruption analysts say a large
portion of the employees may become irrelevant unless they learn new skills and apply the knowledge to
work on emerging technologies. GIPRA is ready to facilitate employee learning, through its in-house centers.
(a) Name the function of management performed by GIPRA to maintain a satisfactory work force.
(b) State the significance of the function identified in part (a)above. (6)
BST TESTSERIES CH07: DIRECTING MM: 25

1. Match list I with list II:

List I List II
i) Application for grant of leave. a) Horizontal communication
ii) production manager may discuss with the marketing manager about b) Upward communication
quality of product, its design and schedule of delivery.
iii) Passing on guidelines framed by top management to the c) Downward communication
subordinates.

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

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

2. People needs are in hierarchical order starting from basic needs to other higher level needs.
Arrange the needs in hierarchical order given by Maslow:
a) Esteem needs
b) Basic Physiological needs
c) Self actualisation needs
d) Safety/Security need
e) Belongingness needs
(a) a, c, b, d, e (b) b, d, e, a, c (c) b, e, a, d, c (d) e, b, d, a, c

3. Rigid rules and cumbersome procedures may be a hurdle to communication.

Identify the communication barrier reflected in the above statement.
a) Psychological barrier (b) Organisational barrier (c) Personal barrier (d) Semantic barrier

4. At Support.com, there is no reward or appreciation for a good suggestion. Thus, the subordinates are not
willing to offer any useful suggestions to their superiors.
Identify the type of barrier to communication that has been created in the firm due to this.
a. Semantic barrier b. Personal barrier c. Organisational barrier d. Psychological barrier

5. M.R.Sarthi, the Ex-chairman of Swadesh Ltd, built up his successor before retiring. Following the norms set
up by himself, he handed over the reins of the company to the co-founder Mr. Shravan, who had the potential
to bring about change in the behaviour of others. Name the concept of management which was the reason
why M.R.Sarthi chose Mr. Shravan to be his successor.
a. Motivation b. Leadership c. Communication d. Staffing

6. Sandhya is a successful manager at Manisons Enterprises. She has a team of twelve people working under
her. She encourages them to set their own objectives and take decisions. She respects their opinions and
supports them, so that they can perform their duties and accomplish organizational objectives. To manage
and exercise effective control she uses forces within the group. As an intelligent manager, at times, she also
make use of positive aspects of informal communication. This way, she is able to unify diverse interests and
ensure the targets are met. There are many theories and styles of influencing people’s behavior. Identify the
style used by Sandhya which is based on the use of authority.
(a) Autocratic (b) Dogmatic (c) Democratic (d) Laissez faire

7. Sara worked in a call center. Her team manager did not wish to be contradicted and gave rewards
depending on the result. State one benefit of the style of leadership being followed by Sara’s team manager.
(a) Quick decision (b) High employee morale (c) Autonomy (d) Promotion
8. Ram Murthy, the CEO of ‘Goodcare Hospitals’, a leading chain of hospitals, decided to reward the good
work of the doctors of this organization. For this he instituted two running trophies. A ‘Healthcare Achievers
Trophy’ to acknowledge and appreciate the tireless efforts of the doctors who rendered selfless services to
the patients and another ‘Beti Bachao Trophy’ to recognize the outstanding work done by the doctors in
saving the girl child.
Identify the incentive provided by ‘Goodcare Hospitals’ to its doctors through running trophies.
(a) Employee participation (b) Employee recognition programme
(c) Employee empowerment (d) Job enrichment

9. Name the process of exchange of information between two or more persons to reach common
understanding.
(a) Supervision (b) Motivation (c) Leadership (d) Communication

10. At present, apart from the basic pay and allowances as a part of compensation, the employees and
employers contribute 12% of basic wages each towards EPF scheme and Employees Pension Fund scheme. A
proposal to reduce the contribution by employers and employees to 10% of basic pay and dearness allowance
was listed on the agenda for a recent meeting of EPF Organization held. The stakeholders expressed their
reservations about it and they feel that it should be continued at 12%.
Identify and explain any two needs as suggested by Maslow’s Need Hierarchy Theory, which will not be
satisfied by the incentives. (3)

11. Mr. Pawan Kumar, the CEO of an E-Commerce start up, which was facing the problem of huge employee
turnover, decided to hold a meeting with the managers to discuss the issue. While addressing the managers in
the meeting, he advised them to take certain measures which focus on psychological, social and emotional
factors, in order to motivate employees. Explain any two such measures discussed by him, when he suggested
that job should be made interesting so that the job itself becomes a source of motivation, employees should
be congratulated for good performance, also, stability regarding future income and work should be provided
to employees, in order to develop a positive attitude among the subordinates. (3)

12. State any four barriers to communication which are concerned with problems and obstructions in the
process of encoding and decoding the message into words or impressions. (4)

13. Sadaf is the Chief Executive Officer of a reputed company. She introduced appropriate skill development
programmes and a sound promotion policy for the employees of her company. To motivate and retain the
best talent in the company, she designed the jobs of the managers to include greater variety of work content.
a) Identify and explain the element of one of the functions of management discussed in the above paragraph.
b) State the features of the element as identified in part (a) above. (6)
BST TESTSERIES CH08: CONTROLLING MM: 25

1. “Measurement of a company’s progress may involve calculation of certain ratios like gross profit ratio, net
profit ratio, and return on investment etc. at periodic intervals”. Identify the step in the process of the
function.
a. Setting performance standard b. Measurement of actual performance
c. Analysing deviation d. Taking corrective action

2. Arrange the following steps of controlling process in a proper order:

i) Analysing deviations
ii) Setting standards
iii) Comparison between planned performance and actual performance
iv) Measurement of actual performance
(a) (i), (ii), (iii), (iv) (b) (ii), (iv), (iii), (i) (c) (ii), (iii), (i), (iv) (d) (ii), (i), (iii), (iv)

3. Which of the following is not the importance of Controlling ?

(a) Accomplishing organisational goals (b) Creates a dynamic organisation
(c) Facilitating coordination in action (d) Judging accuracy of standards

4. An important project at AMB consultants is running behind schedule by a month. This has upset their
clients and might affect the reputation of the company in the long run. No managerial action like assigning
more workers, equipment or giving overtime has been able to solve the problem. What managerial action
may now be taken by the company to avoid such a situation from arising in the future?
(a) Get permission for further overtime work (b) Revise the schedule
(c) Assigning additional workers and equipment to the project (d) Both B&C.

5. Vinber Ltd. set up a manufacturing unit at Bhiwadi at Himachal Pradesh to manufacture electric geysers and
supply them to dealers all over the country. Their production target was 500 geysers per week. It was decided
by the management that variation in production upto 10 units would be acceptable. At the end of the first
week, the production was 450 geysers. The next week, production increased to 470 geysers. A week later,
production was 460 geysers. On investigation, it was found out that fluctuation in production was due to
irregular supply of electricity. The above para discusses some of the steps of one of the functions of
management. Identify the step not discussed in the above para.
a. Setting performance standard b. Measurement of actual performance
c. Analysing deviation d. Taking corrective action

6. Radha started a home cooked food delivery Dabba service. Her mother, who is a great cook, decided to
help her. They relied on friends and family for orders and then on word of mouth. As a step in the process of
ensuring that activities are performed as per her plan of supplying healthy, good quality, reasonable food and
earning profit, she decided to keep both qualitative and quantitative benchmarks towards which she would
strive to work. A function of management is being discussed above.
An important characteristic of this function of management is :
a. It is the first function of management b. It is the Last function of management
c. It is both forward looking and backward looking. d. It is required only in business organizations.

7. Karan, a manager in a Multinational company, is aware of the fact that his performance standards are set
and incentives are only given if he will meet the set standards. What importance of controlling is highlighted
in the above paragraph ?
(a) Improving employee motivation (b) Ensure order and discipline
(c) Efficient use of resources (d) Facilitate coordination in action
8. The term used to indicate the difference between standard performance and actual performance is
called________.
a) Performance standards b) Deviations c) Key result areas d) None of these

9. Raman and Vasudev were two employees who were embezzling an import-export company in Varanasi
where they were working. The finance manager of the company Sampat Singh became suspicious of the two
employees when he realized that their activities were not being performed as per the plans. He installed a
software program that could secretly log every single stroke of the suspects’ computer keys and send an
encrypted email report to the Cyber police. The police were able to catch the two dishonest employees red
handed and arrest them. Identify the function of management being discussed above.
a. Staffing b. Coordination c. Controlling d. Organizing

10. Explain the relationship between planning and controlling. (3)

11. Priya is a regional manager of XYZ. Ltd. She is a hardworking employee and is trying to reduce wastage of
resources in her company. She has set standards for performance of different activities and is ensuring that
targets are met according to these standards with minimal wastage of resources. She has set up CCTV
cameras which helps her to keep a close check on the activities of the subordinates and know how the
employees are performing. She also rewards the employees with a bonus when these standards are met. She
is trying her best to ensure a good performance of her team this year through the application of an important
function of management.
Explain the features of the function of management highlighted above. (3)

12. Explain “Critical point control” and “Management by exception” with respect to Analyzing deviations, a
step in the process of controlling. Give a suitable example. (4)

13. Textile manufacturer Super textiles reported 43% fall in its profits in the fourth quarter ended 31 March
2017, which is beyond the acceptable range 25% decided by the company. This was due to higher fuel cost
and lower yield on account of demonetization. The company aims to implement cost saving measures by
restructuring contracts and its business processes to meet its targets in the future.
(a) Name the function of management discussed above.
(b) Explain its any five significance. (6)
BST TESTSERIES CH09: FINANCIAL MANAGEMENT MM: 25

Read the following text and answer the following questions 1-4 on the basis of the same:
Mr. A. Bose is running a successful business. Mr. Bose is the owner of R. K. Cement Ltd. Mr. Bose decided to
expand his business by acquiring a Steel Factory. This required an investment of Rs. 60 crores. To seek advice
in this matter, he called his financial advisor Mr. T. Ghosh who advised him about the judicious mix of equity
(40%) and Debt (60%). Employ more of cheaper debt may enhance the EPS. Mr. Ghosh also suggested him to
take loan from a financial institution as the cost of raising funds from financial institutions is low. Though this
will increase the financial risk but will also raise the return to equity shareholders. He also apprised him that
issue of debt will not dilute the control of equity shareholders. At the same time, the interest on loan is a tax
deductible expense for computation of tax liability. After due deliberations with Mr. Ghosh, Mr. Bose decided
to raise funds from financial institution.

1. Identify the concept of Financial Management as advised by Mr. Ghosh in the above situation.
A) Capital Budgeting B) Capital Structure C) Dividend Decision D) Working Capital Decision

2. In the above case Mr. Ghosh suggested to raised more fund from debt. Higher debt-equity ratio results in:
A) Lower financial risk B) Higher degree of operating risk C) Higher degree of financial risk D) Higher
Earning of profit.

3. “Mr. T. Ghosh who advised him about the judicious mix of equity (40%) and Debt (60%)” The proportion of
debt in the overall capital is called___________.
A) Working Capital B) Financial Leverage C) Total Assets D) None of these

4. Employ more of cheaper debt may enhance the EPS. Such practice is called:
A) Equity Trading B) Financial Leverage C) Investment Decision D) Trading on Equity

5. Vikrant joins his father’s business of Organic masalas, near Kotgarh in Himachal after completing his MBA.
In order to capture a major share of the market, he decided to sell the product in small attractive packages by
using the latest packaging technology. His father suggested that they hire financial consultants to estimate the
amount of funds that would be required for the purpose & timings when it would be required. The concept
being discussed by Vikrant’s father, links which financial decision with the investment decision.?
(a)Dividend decision (b) Financial Planning (c) Capital structure decision (d) Financing decision

Read the following text and answer the following questions 6-9 on the basis of the same:
Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to
international market. For this purpose the company needs additional Rs.80,00,000 for replacing machines
with modern machinery of higher production capacity. It involves committing the finance on a long term
basis. These decisions are very crucial for any business since they affect its earning capacity in the long run.
The company wishes to raise the required funds by issuing debentures. The debt can be issued at an
estimated cost of 10%. The EBIT for the previous year of the company was Rs. 8,00,000 and total capital
investment was Rs. 1,00,00,000. Instead of issuing 10% Debenture the Company can issue Equity Shares for
raising the fund. The financial manager of the company would normally opt for a source which is the
cheapest.

6. What is the other name of long term decision?

(a) Capital Budgeting (b) Gross working capital (c) Financial management (d) Working Capital

7. A decision for replacing machines with modern machinery of higher production capacity is a:
(a) Financing decision (b) Working capital decision (c) Investment decision (d) Dividend decision
8. A decision for raising fund of Rs. 80,00,000 either from 10% Debenture or Equity Shares is a:
(a) Financing decision (b) Working capital decision (c) Investment decision (d) Dividend decision

9. The financing decisions are affected by various factors. Which one of the following factor is discussed in the
above case? Choose the correct option.
(a) Cash Flow Position of the Company (b) Cost (c) Amount of Earnings (d) Taxation Policy

10. The Return on Investment (ROI) of a company ranges between 10-12% for the past three years. To finance
its future fixed capital needs, it has the following options for borrowing debt: Option ‘A’ :Rate of interest 9%
Option ‘B’ : Rate of interest 13% Which source of debt, ‘Option A’ or ‘Option B’, is better? Give reason in
support of your answer. Also state the concept being used in taking the decision. (3)

11. Vansh Limited is a large and reputed company which manufactures ventilators. After the outbreak of
‘COVID-19’ in 2020 the company witnessed an increase in revenue by 40%. It has plans to further increase its
production capacity and also start production of PPE kits, sanitisers and masks in 2022. The Finance manager
of the Company Mr. Rajiv feels confident about the future of the company and its liquidity position. Discuss
the meaning of Dividend Decision and in the light of the above statement explain any two factors which
should be considered by ‘Vansh Limited’ while formulating the dividend policy of the company. (3)

12. Aarohan Ltd. an automobile manufacturer was diversifying into manufacturing two-wheelers. They knew
that India is on a growth path and a new breed of consumer is eager for a first vehicle. The market responded
very well to the new product. The company did not have to allow credit, as it had advance orders from four to
six months with deposits paid. Also, due to efficiency in managing their operations as soon as a vehicle was off
the assembly line, it was out to the dealers. Identify and explain the factors discussed above which helped the
firm in managing its working capital efficiently. (4)

13. Vedansh Limited has a share capital of ₹10,00,000 divided into shares of ₹100 each . For expansion
purpose ,the company requires additional funds of ₹ 5,00,000 . The management is considering the following
alternatives for raising funds :
Alternative 1: Issue of 5000 Equity shares of ₹100 each.
Alternative 2: Issue of 10% Debentures of Rs. 5,00,000.
The company’s present Earnings Before Interest and Tax ( EBIT) is ₹4,00,000 p.a.
The Tax rate is 50%.
(a) Assuming that the rate of Return of Investment remains the same after expansion, which alternative
should be used by the company in order to maximise the returns to the equity shareholders.
(b) Show the working. (6)
BST TESTSERIES CH10: FINANCIAL MARKETS MM: 25

1. Match the various terms of Financial Markets Column - I with their respective Statements in Column-II:
Column - I Column - II
a) Financial market i) It is also known as the Stock market
b) Primary market ii) It is a market for creation and exchange of financial assets.
c ) Secondary market iii) It is also known as New issue market
(a) (ii), (iii), (i) (b) (i), (iii), (ii) (c) (iii), (ii), (i) (d) (i ), (ii), (iii)

2. Which of the following statements is false about Secondary market?

(a) Ownership of existing securities is exchanged between investors. The company is not involved at all.
(b) This market indirectly promotes capital formation.
(c) Both buying and selling of securities takes place in this market.
(d) Prices are determined by the management of the company.

3. When is trade confirmation slip given to the investor?

(a) On settlement of an order (b) On placing an order (c) On execution of an order (d) None of the above

4. Which of the following statements is false about Primary market?

(a) Securities are sold by the company to the investor directly or through an intermediary.
(b) The flow of funds is from savers to investors, i.e, this market directly promotes capital formation.
(c) Only buying of securities takes place in this market, securities cannot be sold there.
(d) Prices are determined by demand and supply for the security.

5. Raghav’s friend Raman works as a Chartered Accountant in Solutions Ltd. Raman in a meeting with the
Board of Directors of the Company came to know that the firm would soon be declaring a Bonus issue which
would result in increase in the price of shares. Considering this, Raman advised Raghav to purchase the shares
of Solutions Ltd., who acted on his advice and bought the shares before time. Which function of SEBI can
control such malpractices?
(a) Protective functions (b) Regulatory functions (c) Development functions (d) All the above.

6. It serves as an intermediary between the investor and the depository who is authorised to maintain the
accounts of dematerialised shares.
(a) Depository (b) Stock exchange (c) Depository participant (d) None of these

7. ________________ is a number assigned to each transaction by the stock exchange and is printed on the
contract note.
a. Client code number b. Unique order code
c. Permanent account number d. Depository participant number

8. Which of the following statements is incorrect?

(a) Providing liquidity to securities is one of the functions of stock exchange.
(b) Process of holding shares in electronic form is known as Dematerialization.
(c) Securities Exchange Board of India performs the regulatory function of controlling insider trading and
imposing penalties for such practices.
(d) Capital market consists of Commercial banks, Development banks and stock exchanges.

9. SEBI recently called for information and issued a show cause notice to NSE and its officials seeking
explanation on the Preferential Access allegations at the Exchange’s Co-location facility.
State the function that SEBI performed by doing so.
(a) Protective functions (b) Regulatory functions (c) Development functions (d) All the above.
10. State any three objectives of the Securities Exchange Board of India. (3)

11. “Stock exchange not only contributes to the economic growth but performs many other functions.”
Explain any three such functions. (3)

12. Differentiate between Primary market and Secondary market on any four basis. (4)

13. Name and explain the market in which instruments with a maturity period of less than one year are dealt.
(6)
BST TESTSERIES CH11: MARKETING MANAGEMENT MM: 25

1. A major decision area under one of the functions of marketing is the decision regarding marketing
intermediaries to be used. Name the function.
(a) Physical Distribution (b) Gathering and analysing market information
(c) Promotion (d) Transportation

2. Which of the following statements is incorrect?

(a) Marketing is a social process.
(b) Focus of the marketing activities is on customer needs.
(c) Marketing is merely a post production activity.
(d) Marketing mix is a wider term than product mix.

3. In order to get feedback about its recently launched immunity boosting ayurvedic medicine, Atulya limited
conducted an online survey using a questionnaire, to gather customer views and opinions.
Identify the marketing function being used by Atulya Limited.
(a) Standardisation (b) Product Designing
(c) Customer support service (d) Gathering and analysing market information

4. Which component of Product Mix is termed as the silent salesman?

(a) Branding (b) Packaging (c) Labelling (d) Promotion

5. “You don’t close a sale, you open a relationship, if you want to build a long term successful enterprise”.
Identify the promotion tool referred in this line.
a. Advertisement b. Personal Selling c. Sales Promotion d. Public Relation

6. Identify the function of marketing management that ‘provides quality assurance and consistency to
consumers.
a. Gathering market information b. Product designing and development
c. Standardization and grading d. Packaging and labelling

7. A market of colour TV having 10% of the current market share in the country aims at enhancing his market
share to 20% in the next 3 years. Which marketing function has been highlighted in a aforesaid statement?
a) Gathering and analysing market information b) Standardization and grading
c) Customer support service d) Marketing planning

8. Paytm gold, a gold offering by Digital payments from Paytm has generated high demand since its launch in
April 2017 primarily in tier II and tier III cities because customers in these locations did not have access to high
quality gold at attractive prices in the shops. Identify the element of marketing mix because of which the
buyers in tier II and tier III cities were unable to make a purchase.
a) Product b) Price c) Place d) Promotion

9. Karan had started the business of reducing exclusive home decor items under the brand name ‘Eleganza’
15 years back. Over the years, he has diversified into new segments like home furnishing, furniture and
Kitchenware. However, all the products are being sold under the same brand name ‘Eleganza’ as it appears to
be apt for all of them.
Identify the related feature of a good brand name being described in the given case .
a) Short and easy to pronounce, spell and remember b) Reflects the functions of the product
c) Distinctive/easily identifiable d) Versatile, can be used for brand extension
10. Mansi, manufactures shoes for school kids. She decides to maximize her profit by producing and
distributing on large scale as it reduces cost of production. Nisha, manufactures school bags, she decides to
improve the product to maximize profit. She added a water bottle holder to the existing design.
Identify the philosophies used by Mansi and Nisha and differentiate between them. (3)

11. Mohit purchased a bottle of jam from the local grocery shop. The information provided on the bottle was
not clear. He felt sick on consuming it. He filled a case with the District form under Consumer protection Act
and got relief.
a. Identify the important aspect neglected by the marketer in the above case.
b. State briefly the function of the aspect identified in (a) above. (3)

12. Discuss the factors to be considered for taking decision about the element of marketing mix which is
considered as a competitive weapon and determines the demand, sales and revenue of the firm. (4)

13. Raman after completing his Masters in computer engineering decided to start his own business. He visited
his uncle Mr Jaiprakash who has been running a successful business in web designing. He shared with Raman
that the main reason for his success in the business lies in his approach of building a lifetime relation with his
clients. Therefore his business is not only restricted to designing website according to the specifications of the
clients but also providing continuous online assistance to them and handling effectively and doing all this at a
profit. He provides these services at competitive prices. Anybody interested in getting the web solutions can
contact him through his website. Moreover whenever the market is sluggish he tries to create demand by
offering short term incentives to the buyers.
Briefly explain the various elements of marketing mix being pursued by Mr. Jaiprakash by quoting lines from
the para. (6)
BST TESTSERIES CH12: CONSUMER PROTECTION MM: 25

Read the following text and answer the following questions 1-4 on the basis of the same :
Piyali purchased an ISI marked Heater from Bharti Appliances. She made Cash Payment. But failed to get a
Cash Memo. While making use of the heater she observed that it was not working properly. She contacted the
shopkeeper immediately and told him the problem. Shopkeeper paid no heed to her complaint. Rather he
marked that the good in question was not bought from his shop. Piyali had no evidence of proving that the
heater was purchased from his shop only. She discussed the problem with her friend Sohini who advised her
to approach Consumer Forum and lodge the complaint. Piyali was convinced with the idea of lodging the
complaint against the shopkeeper but due to lack of cash memo it was difficult for her to proceed.

1. Identify the Right of the consumer as referred to in the above paragraph.

A. Right to be Informed B. Right to Safety C. Right to be Heard D. Right to Choose

2. Identify the responsibility of the consumer referred in the above case.

A. Quality Conscious B. Must Obtain Cash Memo C. Cautious Consumer D. Ready to Lodge Complaint

3. Piyali cannot lodge a complaint against the shopkeeper. Why?

A. She do not have the right B. She was aware of the fact
C. She do not have the Cash Memo D. She was happy with the product

4. Under which Act Piyali can seek to protect her rights being a consumer?
A. Consumer Protection Act, 1986 B. Consumer Protection Act, 1968
C. The Indian Contract Act, 1872 D. The competition Act, 2002

5. Who cannot file a complaint in the consumer court?

a. Individual consumer b. Consumer association that has not been registered
c. Central government d. State government

6. Amrit filed a case against ‘Volvo Ltd.’ in the state commission. But he was not satisfied with the orders of
the state commission. Name the authority to which he can appeal against the decision of the state
commission after 3 months.
a. District forum b. State commission c. National commission d. None of the above
OR
Sheela went to a free eye camp & got her eyes operated for cataract. The surgery was not done properly, due
to which she lost her vision. Where can she file a complaint under consumer protection act?
a. District forum b. State commission c. National commission d. None of the above

7. Sumit purchased an ISI marked washing machine of a famous brand ‘MG’ from TG Electronics Ltd. The
shopkeeper asked him to wait for two days for installation of the machine. His friend, Vivek, was very fond of
experimenting with new electronic products. He told Sumit that there is no need to wait for the company’s
representative to install the machine and that he could do it. So, both of them installed the machine without
following the manufacturer’s instructions. Initially, the machine worked effectively and the wash was good.
But after two days, the machine started stopping in between the wash cycle. Sumit and Vivek tried their best
to start the machine but failed in their efforts. Sumit, therefore, approached TG Electronics Ltd., which
refused to provide any service on the plea that installation of the machine was not done by the company.
Identify the responsibility.
a) take cash memo b) follow manufacturer’s instructions c) get fair deal d) read labels carefully
8. Identify the right of a consumer under CPA,1986 which Consumer organizations help a consumer to claim
by performing the function of “encouraging consumers to strongly protest and take an action against
unscrupulous, exploitative and unfair trade practices of sellers”.
A. Right to be Informed B. Right to Safety C. Right to be Heard D. Right to seek redressal

9. Aarushi purchased a pack of biscuits. When she opened it, she felt the biscuits were stale. She carefully
read the label on the pack of biscuits which mentioned : ‘‘If you are not satisfied with the product quality,
write to our Customer Care Cell at Bell Foods Pvt. Ltd. B/321, Jalandhar, Punjab.’’
The biscuit company has set up its own consumer service and grievance cell to promote and protect which
right of consumers provided by Consumer Protection Act, 1986?
A. Right to be Informed B. Right to Safety C. Right to be Heard D. Right to Choose

10. Madhav purchased a smart phone for 30,000 from a mobile phone seller on his verbal commitment that
the smart phone will be replaced in case of any defect, within a span of six months. The phone started
creating technical issues in spite of proper maintenance and upkeep of the phone. The seller denied taking
any action on the complaint made by Madhav. Name the redressal agency under the Consumer protection
Act, 2019 where Madhav can file his complaint. Give reason in support of your answer. (3)

11. Enumerate any three rights of a consumer under the Consumer Protection Act, 2019.
OR
Enumerate any three responsibilities of a consumer under the Consumer Protection Act, 2019. (3)

12. Answer the following questions as per the Consumer Protection Act, 2019:
(a) Who is a Consumer?
(b) Who can file a complaint and against whom? (4)

13. State the role of Consumer Organisations and NGOs in India for the protection and promotion of
consumer interest. (6)
BST TESTSERIES - AK CH01: NATURE AND SIGNIFICANCE OF MANAGEMENT MM: 25
1. The objective of management which consistently creates economic value for various constituents of society is
_______________________.
(a) Both Social and Personal objective (b) Personal objective (c) Social objective (d) Organisational objective
2. Prem has recently started a business to sell computers. He hired a shop in Nehru Place in New Delhi, where he
assembles various components to make computers and supplies them as per order. He performs a series of composite
but separate functions simultaneously and ensures that computers are delivered in time as per orders. These functions
are performed by all managers at all times. The feature of management highlighted above is _____________.
(a) Management is a group activity (b) Management is dynamic
(c) Management is pervasive (d) Management is a continuous process
3. ‘Even where members of a department willingly cooperate and work, a manager has to coordinate the efforts of
different people in a conscious manner.’ Identify the characteristic of coordination discussed above.
(a) Coordination is an all-pervasive function (b) Coordination is a continuous process
(c) Coordination is a deliberate function (d) Coordination ensures unity of action
4. Identify the level of management whose basic task is to cooperate with the activities of other departments according
to the overall objectives of the organisation.
(a) Top (b) middle (c) lower (d) operational
5. A production manager was able to produce the desired output on time but by paying additional overtime wages to
employees. In this case the manager was ______________.
(a) Effective only (b) Neither effective nor efficient
(c) Both effective and efficient (d) Efficient only
6. Name the process of working with and through others to effectively achieve organisational objectives by efficiently
using limited resources in a changing environment.
(a) Management (b) Planning (c) Organising (d) Controlling
7. Name the process which provides the requisite amount, quality, timing and sequence of efforts and ensures that
planned objectives are achieved with a minimum of conflict.
(a) coordination (b) communication (c) delegation (d) management
8. “Any one can be called a manager irrespective of the educational qualification possessed.” Identify the characteristic
of the profession that Management does not fulfil in the statement being discussed above.
(a) Ethical code of Conduct (b) Restricted Entry (c) Professional Association (d) Service Motive
9. ___________________________is the process by which the manager brings order out of chaos, removes conflict
among people over work or responsibility sharing and creates an environment suitable for teamwork.
(a) Planning (b) Organising (c) Staffing (d) Controlling
10. Tammana has two kids- Yash and Yashika, studying in different schools. On comparing the two schools, Tamanna
realizes that the management of Yash’s school is better in many ways, like the syllabus for each term is completed well
in advance, the results for the weekly exams are given on time, the teachers seem to be more joyful and contended and
so on. (a) Identify the feature of management highlighted above.
(b) Explain two other features of management. (3)
ANS: (a) Management is an intangible force
(b) Management is a continuous process: The process of management is a series of continuous, composite, but
separate functions (planning, organising, directing, staffing and controlling). These functions are simultaneously
performed by all managers all the time.
Management is a group activity: An organisation is a collection of different individuals with different needs but they
work towards a common organisational goal. This requires team work and coordination of individual effort in a common
direction.
11. The purchase, production and sales managers at Sharda Ltd, a firm manufacturing readymade garments are
generally at a conflict, as they have their own objectives. Usually each thinks that only they are qualified to evaluate,
judge and decide on any matter, according to their professional criteria.
(a) Name the concept which will be required by the CEO Mr. Raman, to reconcile the differences in approach, interest or
opinion in the organisation.
(b) Explain any two characteristics of the concept identified in part (a) above. (3)
ANS: (a) Coordination
(b) Coordination is a continuous process: Coordination is not a one-time function but a continuous process.
It begins at the planning stage and continues till controlling.
Coordination is an all pervasive function: Coordination is required at all levels of management due to the
interdependence of different departments. In the absence of coordination there is overlapping and chaos instead of
harmony and integration of activities.
12. Ramesh Automibles aims to produce and sell 1,00,000 cars in 2019. To achieve this objective the production
department strives for timely production and sales department takes all possible steps to sell them. Due to combined
efforts of all departments, the company is able to achieve its target.
(a) Which significance of management is highlighted in the given case?
(b) Explain three other significance of management. (4)
ANS: (a) Management helps in achieving group goals
(b) Management increases efficiency: The aim of a manager is to reduce costs and increase productivity through better
planning, organising, directing, staffing and controlling the activities of the organisation.
Management creates a dynamic organisation: All organisations have to function in an environment which is constantly
changing. Management helps people adapt to these changes so that the organisation maintains its competitive edge.
Management helps in achieving personal objectives: A manager motivates and leads his team to achieve personal goals
and overall organisational objective. It also helps individuals to develop team spirit, cooperation and commitment to
group success.
13. Jayant is working as Head relationship manager in the wealth managerment division of a private sector Bank. He has
created an internal environment which is conducive to an effective and efficient performance of his team of his team of
ten relationship management executives. A typical day at work in Jayant’s life consists of a series of interrelated and
continuous functions. He decides the targets for his department which are in line with the objectives of the organisation
as a whole. The future course of action for his team members is laid out well in advance. The various resources required
by the relationship managers like an iPad with a GPS system, account opening forms, brochures, details of account
holders, etc. are readily made available to them. The executives are given sufficient authority to carry out the work
assigned to them. Jayant works in close coordination with the Human resource manager in order to ensure that he is
able to create and maintain a satisfactory and satisfied workforce in his department. Through constant guidance and
motivation, Jayant inspires them to realise their full potential. He offers them various types of incentives from time to
time keeping in view their diverse individual needs. Moreover, he keeps a close watch on their individual performance
in order to ensure that they are in accordance with the standards set and takes corrective actions whenever needed.
(a) Identify the concept being referred to in the following line, “ He has created an internal environment which is
conducive to an effective and efficient performance of his team of his team of ten relationship management
executives.”
(b) Identify and describe the various functions of the concept as identified in part (a) of the question by quoting lines
from the paragraph. (6)
ANS:(a) Management
(b) (i) Quote - He decides the targets for his department which are in line with the objectives of the organisation as a
whole. The future course of action for his team members is laid out well in advance.
Planning - Planning is one of the basic managerial functions about deciding in advance what to do and how to do. It
involves setting objectives and developing appropriate courses of action to achieve these objectives. Planning bridges
the gap between where we are and where we want to go.
(ii) Quote - The various resources required by the relationship managers like an iPad with a GPS system, account
opening forms, brochures, details of account holders, etc. are readily made available to them. The executives are given
sufficient authority to carry out the work assigned to them.
ORGANISING - Organising is the process of identifying and grouping the work to be performed, defining and delegating
responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively
together in accomplishing objectives. It brings order out of chaos, removes conflict and creates environment suitable for
teamwork.
(iii) Quote - Jayant works in close coordination with the Human resource manager in order to ensure that he is able to
create and maintain a satisfactory and satisfied workforce in his department.
STAFFING - Staffing means obtaining and utilising right man for the right job at the right time with right qualification and
maintaining satisfied work force. Staffing means filling and keeping filled the positions in the organisation.
(iv) Quote - Through constant guidance and motivation, Jayant inspires them to realise their full potential. He offers
them various types of incentives from time to time keeping in view their diverse individual needs.
DIRECTING - Directing refers to the process of instructing, guiding, counselling, motivating and leading people in the
organisation to achieve its objectives. The elements of directing are supervision, motivation, leadership and
communication.
(v) Quote - Moreover, he keeps a close watch on their individual performance in order to ensure that they are in
accordance with the standards set and takes corrective actions whenever needed.
CONTROLLING - Controlling is the management function of monitoring organisational performance towards the
attainment of organisational goals. The task of controlling involves establishing standards of performance, measuring
current performance, comparing this with established standards and taking corrective action where any deviation is
found.
BST TESTSERIES – AK CH02: PRINCIPLES OF MANAGEMENT MM: 25

1. The principle of ___________________ states that there should be a place for everything and everyone in an
organization.
(a) Equity (b) Order (c) Discipline (d) Initiative

2. ‘One head One plan’ is concerned with the following principle of Fayol.
(a) Unity of Direction (b) Division of work (c) Equity (d) Discipline

3. _______________________________________eliminate superfluous varieties, sizes and dimensions of products.

(a) Simplification (b) Method study (c) Fatigue study (d) Motion study

4. Which principle of Taylor advocates scientific enquiry as opposed to hit and trial approach?
(a) Science, not rule of thumb (b) Functional foremanship (c) Method study (d) Motion study

5.How are the principles of management formed?

(a) In a labarotary (b) by experience of managers
(c) by experience of customers (d) by propogation of social scientists.

6.What is meant by ‘mental revolution’, according to Taylor?

(a) Assign job to workers as per their physical, mental and intellectual capabilities.
(b) Differentiate between efficient and inefficient workers.
(c) Adopt a suggestion system.
(d) Change in the attitude / thinking of management and workers towards each other.

7. 'She/ he keeps machines, materials, tools, etc., ready for operations by concerned workers.' Whose work is described
by this sentence under functional foremanship?
(a) Instruction Card clerk (b) Repair Boss (c) Gang Boss (d) Route Clerk

8. This principle is against dual subordination.

(a) Unity of direction (b) Scalar chain (c) Unity of command (d) Initiative

9. In what two departments did Taylor divide the work of a factory manager?
(a) Planning and finance (b) Planning and research
(c) Planning and production (d) Planning and marketing

10. Appliances India Ltd is engaged in manufacturing and distribution of home appliances since 1987. It has a good
name in the market as the company is producing good quality appliances. It has separate departments for
manufacturing, finance, sales, maintenance services and technical services to achieve specialisation. Since the areas of
operation of the company have increased and customers have become more demanding, the company decided to
modify the existing principle of management to meet the changing requirements of the environment.
Identify and explain the general principle of management which the company wants to modify to meet the changing
requirements. (3)
Ans: Division of Work: Work is divided into small tasks/ jobs. A trained specialist who is competent is required to
perform each job. Thus, division of work leads to specialisation. According to Fayol, “The intent of division of work is to
produce more and better work for the same effort. In business work can be performed more efficiently if it is divided
into specialised tasks; each performed by a specialist or trained employee. This results in efficient and effective output.
Thus, in a company we have separate departments for finance, marketing, production and human resource
development etc. All of them have specialised persons. Collectively they achieve production and sales targets of the
company. Fayol applies this principle of division of work to all kinds of work – technical as well as managerial.

11. Karan Nath took over ‘D’north Motor Company’ from his ailing father three months ago. In the past the company
was not performing well. Karan was determined to improve the company’s performance. He observed that the methods
of production as well as selection of employees in the company were not scientific. He believed that there was only one
best method to maximize efficiency. He also felt that once the method is developed, the workers of the company should
be trained to learn that ‘best method’. He asked the Production Manager to develop the best method and carry out the
necessary training. The Production Manager developed this method using several parameters right from deciding the
sequence of operations, place for men, machines and raw materials till the delivery of the product to the customers.
This method was implemented throughout the organization. It helped in increasing the output, improving the quality
and reducing the cost and wastage.
(a) Identify the technique of scientific management followed by the Production Manager in the above case.
(b) Explain other three techniques of scientific management which falls under the same category as identified in (a). (3)
Ans: a) Method Study:
The objective of method study is to find out one best way of doing the job, minimise the cost of production and
maximise the quality and satisfaction of the customer.
Right from procurement of raw materials till the final product is delivered to the customer every activity is part of
method study.
(b) (i) Motion Study:
Motion study refers to the study of movements like lifting, putting objects, sitting and changing positions, etc.
On close examination of body motions, it is possible to find out:
(i) Productive motions (ii) Incidental motions (iii) Unproductive motions.
Unnecessary movements must be eliminated so that it takes less time to complete the job.
(b) (ii) Time Study:
It determines the standard time taken to perform a well-defined job.
The standard time is fixed for the task by taking several readings with the help of time measuring devices.
The objective of time study is to determine the number of workers to be employed, incentive schemes and labour costs.

12. ‘Principles of management establish a relation between human and material resources in accomplishing
organisational goal.’
(a) Identify the feature of principles of management given in the above statement.
(b) Also explain any three other features of principles of management. (4)
Ans: (a) Mainly behavioural:
Principles of management aim at influencing behaviour of human beings.
They help in understanding the relationship between human and material resources for achieving organisational goals.
(b) (i) Cause and effect relationships:
The principles help to establish cause and effect relationship so that they can be used in similar situations.
They tell us if a particular principle was applied in a particular situation, what would be its likely effect.
(b) (ii) Contingent:
The application of principles of management is dependent upon the prevailing situation at a particular point of time.
The application of principles has to be changed as per requirements.
(b) (iii) Flexibile:
The principles of management are not rigid, which have to be followed absolutely.
They are flexible and can be modified by the manager when the situation so demands.

13. Rajat is the owner of a fast food cafe. His main goal was to reduce the cost with increased output. To begin with, he
wanted to develop a standard method which would be followed throughout the organisation. So, he investigated
traditional methods through work study and unified the best practice. Rajat believed that each person should not only
be scientifically selected but also be given the required training to increase efficiency. For this he set up a Special
Training Unit. At the factory, the ingredients were strategically placed to reduce the time taken excess movement. The
standard time and other parameters were determined on the basis of work study and Rajat rewarded the workers for
meeting the standard output. By using scientific management Rajat was able to lead his cafe to great success.
Identify and explain the two principles and two techniques of scientific management followed by Rajat in the above case
by quoting the lines. (6)
Ans: The two scientific principles are:
Quote: To begin with, he wanted to develop a standard method which would be followed throughout the organisation.
(i) Science not Rule of Thumb:
Taylor believed that there was only one best method to maximise efficiency.
This method can be developed through study and analysis and must be followed throughout the organisation.
The method should substitute rule of thumb method.
Quote: Rajat believed that each person should not only be scientifically selected but also be given the required training
to increase efficiency.
(ii) Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity:
Each person should be scientifically selected and work must be assigned according to his capabilities.
To increase efficiency, workers should be given training to learn the ‘best method’ developed through scientific analysis.
Efficient employees produce and earn more to ensure greatest efficiency and prosperity for both company and workers.
The two scientific techniques are:
Quote: At the factory, the ingredients were strategically placed to reduce the time taken excess movement.
(i) Motion Study:
Motion study refers to the study of movements like lifting, putting objects, sitting and changing positions, etc.
On close examination of body motions, it is possible to find out:
(i) Productive motions (ii) Incidental motions (iii) Unproductive motions.
Unnecessary movements must be eliminated so that it takes less time to complete the job.
Quote: Rajat rewarded the workers for meeting the standard output.
(ii) Differential Piece Wage System:
Taylor wanted to differentiate between efficient and inefficient workers.
To reward efficient workers he introduced different rate of wage payment for those who performed above standard and
for those who performed below standard.
Ex: Standard output per worker per day = 10 units
Wage rate 1 = Rs. 50 per unit. Wage rate 2 = Rs. 40 per unit.
Worker A produces 11 units, Wages of worker A = 11*50= Rs. 550 per day.
Worker B produces 9 units, Wages of worker B = 9*40 = Rs. 360 per day.
The difference of Rs. 190 will motivate the inefficient worker to perform better.
BST TESTSERIES - AK CH03: BUSINESS ENVIRONMENT MM: 25

1. Which component of general environment of business prohibits the advertisement of alcoholic beverages?
(a) Economic (b) Social (c) Political (d) Legal

2. Match the following:

(a) increased life expectancy of people and increased (i) Inter relatedness
awareness for health care have increased the demand for
many health products and services like soft drinks, fat-
free cooking oil, and health resorts.
(b) it may be difficult to know the extent of the relative (ii) Relativity
impact of the social, economic, political, technological or
legal factors on change in demand of a product in the
market.
(c) Political conditions in the USA, for instance, differ (iii) Complexity
from those in China or Pakistan. Similarly, demand for
sarees may be fairly high in India whereas it may be
almost non-existent in France.

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

3. Just after the declaration of Lok Sabha elections, 2014 results the Bombay Stock exchange’s price index (sensex) rose
by 1000 points in a day. Identify the environmental factor which led to this rise.
(a) Economic (b) Social (c) Political (d) Legal

4. Many business are using social media like facebook and twitter to promote themselves.
This is an example of which dimension of business environment?
(a) Economic (b) Social (c) Technological (d) Political

5. According to consumer protection act, 2019, manufacturers are under an obligation to provide all the relevant
information (MRP, ingredients, manufacturing date, expiry date, etc.) about the product.
Which dimension of business environment is highlighted in the above statement?
(a) Economic (b) Social (c) Political (d) Legal

6. In order to be ahead of its global competitor ’Awasthi Telecom’ has decided upon its future course of action through
reframing spectrum and aggressive fabrication of towers.
Identify the related point with reference to importance of understanding business environment.
a) It helps in assisting in planning and policy formulation
b) It helps in coping up with rapid changes
c) It helps in improving performance
d) It enables the form to identify opportunities and getting the first mover advantage

7. Statement I: Business environment is a complex phenomenon.

Statement II: Political instability builds up confidence among the business people to invest in the long term projects.
Choose the correct option from the options given below:
a. Statement I is true and II is false b. Statement II is true and I is false
c. Both the statements are true d. Both the statements are false

8. By being aware of the changes in business environment, enterprises can identify ___________ and strategise ways to
capitalize on them.
a) Opportunities b) Threats c) Warning signals d) Policies

9. Keeping in view the increased expectations of corporates and increased awareness for self development among
people, Anu has started a Personality Development institute in Kasauli. The institute offers multiple courses on personal
grooming, confidence building and public speaking. Name the related feature of business environment.
a) Dynamic nature b) Relativity c) Uncertainty d) Interrelatedness
10. Name the General forces and Specific forces of business environment affecting business. (3)
Ans: Specific and general forces:
Business environment includes both specific and general forces.
Specific forces (investors, customers, competitors and suppliers) affect individual firms directly.
General forces (social, political, legal and technological conditions) affect all business indirectly.

11. Mr Ajay after completing MBA from USA comes to India to start a new business under the banner ECom Creations
Ltd. He launches a new product in e-learning for Senior Secondary School students in commerce stream which already
has established market in the UK and USA but not in India. His business starts flourishing in India. Now more Indian
companies entered into the market with other subjects also.
Identify and quote the lines from above para which highlight the significance of understanding business environment.(3)
Ans:
(a) Quote: He launches a new product in e-learning for Senior Secondary School students in commerce stream which
already has established market in the UK and USA but not in India.
It enables the firm to identify opportunities and getting the first mover advantage:
Opportunities means positive external changes.
Early identification of opportunities helps to be the first to exploit them.
Ex: Maruti Udyog became the leader in the small car market because it was the first to recognise the need for small cars
due to high petroleum prices and a large middle class population in India.
(b) Quote: Now more Indian companies entered into the market with other subjects also.
It enables the firm to identify threats and early warning signals:
Threats means changes that will hinder a firm’s performance.
It help managers to identify threats on time and serve as an early warning signal.
Ex: An Indian firm can improve the quality of the product, reduce cost of the production, aggressively advertise when it
finds out that a foreign multinational is entering the Indian market.
(c) Quote: His business starts flourishing in India.
It helps in improving performance:
The future of a business depends on what is happening in the environment.
Continuous monitoring of environment and adopting suitable practices helps to improve their present and future
performance.

12. National Digital Library of India (NDL India) is a pilot project initiated by the HRD ministry. 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.
Explain the dimensions of business environment highlighted above. (4)
Ans:
(a) POLITICAL ENVIRONMENT:
It includes - constitution of the country, relationship of one country with another, attitude of government towards a
business, political peace, stability / unrest, prevailing political system, politicisation of business and economic issues,
ideologies and values of political parties, government intervention in business, etc.
(b) TECHNOLOGICAL ENVIRONMENT:
It includes - scientific improvements and innovations, new ways of production, new methods and techniques of
operating a business, advances in computers and electronics, computerised information kiosks, World Wide Web
multimedia pages, lasers, robotics, biotechnology, technological upgradation, artificial intelligence, etc.

13. The government of India announced Demonetization of ` 500 and ` 1,000 currency notes with effect from the
midnight of November 8, 2016. As a result, the existing ` 500 and ` 1,000 currency notes ceased to be legal tender from
that date. New currency notes of the denomination of ` 500 and ` 2,000 were issued by Reserve Bank of India after the
announcement. This step resulted in a substantial increase in the awareness about and use of Point of Sale machines, e-
wallets, digital cash and other modes of cashless transactions. Also, increased transparency in monetary transactions
and disclosure led to a rise in government revenue in the form of tax collection.
a. Enumerate the dimensions of business environment highlighted above.
b. State any four features of Demonetization. (6)
Ans:
(a) (i) TECHNOLOGICAL ENVIRONMENT:
It includes - scientific improvements and innovations, new ways of production, new methods and techniques of
operating a business, advances in computers and electronics, computerised information kiosks, World Wide Web
multimedia pages, lasers, robotics, biotechnology, technological upgradation, artificial intelligence, etc.
(a) (ii) LEGAL ENVIRONMENT:
It includes - legislations passed by the government, administrative orders, court judgments, decisions by commissions
and agencies at centre, state or local level.
It also includes Companies Act 2013, Consumer Protection Act 1986, Competition Act 2002, Factories Act 1948, etc.
Ex: Advertisements on cigarettes packet includes statutory warning ‘Cigarette smoking is injurious to health’.
Advertisements of baby food inform the buyer that mothers milk is the best.
(b) DEMONETISATION -Features:
1. It is a tax administration measure because people with black money had to declare their unaccounted money and pay
taxes at a penalty rate.
2. It is a shift on the part of the government because tax evasion will no longer be tolerated or accepted.
3. It helps in channelizing savings into the formal financial system and banks offer new deposits schemes to provide
loans at lower interest rates.
4. It helps to create a less-cash or cash-lite economy and improving tax compliance with the help of digital transactions
(cell phones, Point-of-Sale (PoS) machine and internet connectivity).
BST TESTSERIES - AK CH04: PLANNING MM: 25

1. “Changes or events cannot be eliminated but they can be anticipated and managerial responses to them can be
developed.” is suggested by the following importance of planning:
(a) Planning facilitates decision making (b) Planning promotes innovative ideas
(c) Planning provides direction (d) Planning reduces the risks of uncertainty.

2. Planning results in decreasing _______ .

(a) Coordination (b) Proper use of resources (c) Future Uncertainities (d) Control

3. Planning cannot foresee everything, and thus, there may be obstacles to effective planning.
Identify the related limitation of planning.
(a) Planning leads to rigidity (b) Planning may not work in a dynamic environment
(c) Planning does not guarantee success (d) Planning reduces creativity.

4. Rearrange the following steps to create the planning process:

i. Monica took into account the change in government policy, tax rate and other factors.
ii. Monica carefully found out the pros and cons of the various options she had to achieve her target.
iii. Monica carefully monitors the plan on regular intervals.
iv. Monica found out that she could achieve her goal by offering discount, reducing quality to cut cost, making more
variety to cater to different needs of customers.
v. After a lot of thought process Monica selected the option of making more variety to cater to the needs of customers.
vi. Monica decided to increase the profit of the organisation by 30%.
a. v-iii-vi-i-iv-ii b. v-iii-vi-iv-i-ii c. iii-vi-i-ii-v-iv d.vi-i-iv-ii-v-iii

5. Which of the following statements is not true with reference to planning?

(a) Planning is a pre-requisite for controlling
(b) Planning does not lead to rigidity
(c) Planning enables a manger to look ahead and anticipate changes.
(d) Planning facilitates co-ordination among departments and individuals in the organisation.

6. James, an employee with Team Computers Pvt Ltd. is given a target of assembling three computers per day. Due to
his habit of doing things differently an idea struck him which would reduce the assembling time of computer as well as
the cost of production. His superintendent instead of appreciating his idea, scolded him and asked him to complete the
work as per standard methodology. Identify the limitation of planning reflected in above situation.
(a) Planning leads to rigidity (b) Planning may not work in a dynamic environment
(c) Planning does not guarantee success (d) Planning reduces creativity.

7. “We do not supply to our clients on credit.” Identify the type of plan highlighted by the statement.
(a) Policy (b) Procedure (c) Rule (d) Method

8. Kamal is working in an organisation and he has been given the responsibility to create a plan for the launch of the
new product created by the company. Identify the type of plan he will create?
(a) Policy (b) Procedure (c) Programme (d) Strategy

9. From the statement given below identify which statement is not related to an importance of Planning:
I: Planning provides direction
II: Promotes innovative ideas
III: It is cheap to make plans
IV: Plans that are successful can be used again with the guarantee to succeeding again.
a. only III b. only IV c. only II and IV d. only III and IV

10. Identify and explain the steps in the process of planning from the following:
(a) This is the step in the process of planning which the manager will have to have to follow, using conjecture about
what might happen in the future.
(b) This is the step in the process of planning which is considered the “real point of decision making”.
(c) This is the step where other managerial functions also come into the picture. (3)
Ans:
(a) Step 2: Developing premises:
The manager is required to make certain assumptions about the future called premises. Assumptions are the base
material upon which plans are drawn. Accurate forecasts can be made for success of plans about the demand, policy
change, interest rates, prices of capital goods, tax rates etc.
(b) Step 5: Selecting an alternative:
This is the point of decision making where the best plan which is feasible, profitable and with least negative
consequences is selected.
A combination of plans based on permutations and combinations may also be selected instead of one best course.
(c) Step 6: Implementing the plan:
This is the step where other managerial functions also come into the picture.
It means putting the plan into action by organising for labour and purchase of machinery.

11. A company gave its sales executive the directive that they could sell the goods on credit. Also it told them very
clearly to inform the customer that if upto one month they did not make the payment, after the completion of this
period they would have to pay interest at the rate of 10% for the whole period.
Identify and explain the two types of plans mentioned in the above para by quoting the relevant lines. (3)
Ans:
(a) Policy:
They are general statement.
They help a manager to take decisions and in implementing strategies.
For eg: recruitment policy, pricing policy, sales policy, credit policy, etc.
They are classified as standing plan.
(b) Rule
Rules are specific statements.
They are the simplest type of plans.
They do not allow for any flexibility.
It tells that a certain action must or must not be taken.
It can be changed by taking a policy decision.
EX: NO SMOKING IN OFFICE PREMISES.
They are classified as standing plan.

12. Mona inherited a 30-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 realised 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.
Identify and explain the features of one of the function of management by quoting lines from the above para. (4)
Ans:
(a) Quote: She decided to venture into agriculture, for this purpose she set out spe cific goals, objectives.
Planning focuses on achieving objectives:
Planning is purposeful because it helps to achieve predetermined organisational goals.
(b) Quote: Hence, she prepared an annual plan for production, sales and marketing, through sales forecasting she
realised that farmers were growing only one or two crops.
Planning is futuristic:
Planning is a forward looking function based on forecasting.
Through forecasting of future events and conditions, plans are made.
(c) Quote: 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.
Planning is a mental exercise:
Planning requires application of mind, foresight, intelligent imagination and sound judgement.
It is an intellectual activity which requires logical and systematic thinking rather than guess work.
(d) Quote: She presented a plan to the Farmers Union, where after harvesting the primary crops, seasonal
vegetables and foods could be grown.
Planning involves decision making:
Planning means choosing from various alternatives.
Planning involves evaluation of alternatives and choosing the most appropriate one.

13. In 2019 alone, Swiggy has launched operations in 300 towns and cities. Swiggy follows a two step sequence while
expanding to a small town. First, it provides more laborious training to restaurants and delievery partners compared to
their counterparts in the city. Second, it focuses on building scale in operations and increase the restaurant’s reach to a
larger base of consumers, including optimizing kitchens, resource planning among others.
(a) Identify and explain the type of plan being describe in the above lines.
(b) Explain any two types of plans which comes in the category of Single use plans. (6)
Ans:
(a) Strategy:
It is a comprehensive plan.
It includes – long term objectives, course of action and allocating resources.
It is made by considering the business environment and the competition in the market.
They are not classified as standing plan or Single use plan.
(b) (i) Budget:
A budget is a numerical statement of expected results.
It includes future facts and figures.
Budget is also a control device.
Ex: a sales budget, cash budget.
They are classified as single use plan.
(b) (ii) Programme:
Programmes are detailed statements about a project.
Programmes will include the entire gamut of activities – (objectives, policies, procedures, rules, tasks, human and
physical resources required and the budget.)
They are classified as single use plan.
BST TESTSERIES CH05: ORGANISING MM: 25

1. A Company has its registered office in Delhi, manufacturing unit at Gurgaon and marketing and sales
department at Faridabad. The company manufactures consumer products. The type of organization structure
the company should adopt to achieve its target is ________________.
(a)Functional (b) Divisional (c) Formal (d) Informal

2. Aradhana and Gandharv are heads of two different departments in ‘Yumco Ltd.’ They are efficient
managers and are able to motivate the employees of their respective departments to improve performance.
However, their drive to excel in their own sphere of activity instead of giving emphasis on objectives of the
enterprise has hindered the interaction between the departments that Aradhana and Gandharv are heading.
Often there are inter-departmental conflicts and they have become incompatible. This has proved to be
harmful in the fulfillment of the organizational objectives. The situation has deteriorated to such an extent
that the CEO of ‘Yumco Ltd.’ has hired a consultant, Rashmi, to resolve the problem. After studying the
situation closely, Rashmi found that the problem has arisen due to inflexibility and a narrow perspective on
the part of both Aradhana and Gandhrav. She is of the view that this situation is a result of the type of
organizational structure ‘Yumco Ltd.’ has adopted. Identify the organization structure adopted by ‘Yumco Ltd.’
(a) Functional (b) Divisional (c) Formal (d) Informal

3. ______________gives shape to the organisation structure.

a) Extent of delegation (b) Span of Management (c) No of employees (d) Planning

4. ___________________ refers to the downward transfer of authority from a superior to a subordinate.

a. delegation b. decentralisation c. accountability d. responsibility

5. "Behaviour of employees can be fairly predicted since there are specific rules to guide them." This is an
advantage of one of the concept. Identify it.
(a) Formal organisation (b) Informal organisation (c) Delegation (d) Decentralisation

Read the following text and answer questions No. 6-9 on the basis of same:
Harneet Industries is a company manufacturing office furniture. The company had seperate heads for
production, marketing and finance. The work is divided into manageable activities so that duplication of work
can be avoided and the work can be shared among the employees. The company chose to diversify its
operations to improve its growth potential and increase market share. The manager of Harneet Industries is
overburdened with routine work and is unable to concentrate on core issues of the company. To overcome
this problem, he entrusted some of his responsibility and authority to his immediate subordinate to share
some of his routine work.

6. Name the process by which the manager of Harneet Industries brings order out of chaos , removes conflict
among people over work or responsibility sharing and creates an environment suitable for teamwork.
a) Planning b) Controlling c) Staffing d) Organising

7. Before diversification, which structure Harneet Industries had adopted?

(a)Functional (b) Divisional (c) Decentralised (d) Centralised

8. The work is divided into manageable activities so that duplication of work can be avoided and the
burden of work can be shared among the subordinates. Identify the step of organisation process.
(a) Identification and division of work (b) Departmentalisation
(c) Assignment of duties (d) Establishing reporting relationship
9. To overcome this problem, he entrusted some of his responsibility and authority to his immediate
subordinate to share some of his routine work. Which concept of management is used by the manager?
a. delegation b. decentralisation c. accountability d. responsibility

10. Soft cell Ltd. has divided the whole of its business into five departments. Now the company’s general
manager is telling all the employees what jobs are to be done by them. While giving the jobs to the
employees, the nature of job and the ability of the persons is taken into account. This also has been pre-
determined who will report to whom. The two stages of the process of management is discussed in the above
paragraph. Identify the function of management and explain its stages. (3)
Ans: Organising.
STEP 3 - Assignment of duties:
It means define the work of different job positions and allocate work to various employees.
Jobs are allocated to the members according to their skills and competencies.
STEP 4 - Establishing authority and reporting relationships:
Each individual should also know who he has to take orders from and to whom he is accountable.
The establishment of clear relationships helps to create a hierarchal structure in the organisation.

11. Voltage fluctuations have been common and quite high in India. They harm our electrical appliances 22
like television, refrigerators and air conditioners, often leaving them in a permanently damaged condition. N-
Guard Company decided to manufacture stabilizers for North India where the voltage fluctuation ranges from
220V and 230V. Once the demand for the North India was taken care of, they decided to launch stabilizers of
varying voltages from 90 V -260V for meeting the requirements of voltage fluctuations in other regions of
India also. Three engineers were appointed for South, West and East regions of India, as the voltage was
different in all the three regions. Though all the engineers were appointed to manufacture stabilizers but the
product differed from region to region.
(a) Identify the organisational structure of NGuard Company.
(b) Explain its any two merits. (3)
Ans:
(a) Functional Structure.
(b) (i) It leads to occupational / functional specialisation to improve performance.
(b) (ii) It promotes control and coordination.

12. Differentiate between formal and informal organisation on any four basis. (4)
Ans:
BASIS FORMAL ORGANISATION INFORMAL ORGANISATION
Meaning It is created by the management Arises out of interaction among employees
Origin Arises out of rules and policies Arises out of social interaction
Authority Arises out of position in management Arises out of personal qualities
Behavior It is directed by rules There is no set behaviour pattern

13. Amit Miglani ,is a senior bank manager of a reputed Bank branch situated at Golf Links Delhi .He has
complete authority of approving high value queued up cash transactions passed by the clerical staff in his
branch. He announced that banks will remain open this Saturday and Sunday and its staff will do over time till
21:00 hours for the next 3 days to clear the rush, Fearing a jump in footfalls to deposit or withdraw cash
following the demonetization of Rs. 500 and Rs.1000 bank notes. Due to heavy rush of customers in the
branch the senior manager is unable to approve all these cash transactions himself. Amit Miglani who was
earlier taking all decisions for the bank had to selectively disperse the authority. He believed that that clerical
staff members are competent, capable and resourceful and can resume responsibility for effective
implementation of their decisions.
a) Identify the concept of management being followed by announcement by government of India.
b) State the significance of the concept identified in part (a)above. (6)
Ans:
(a) Decentralisation.
(b) DECENTRALISATION – IMPORTANCE:
(i) Develops initiative among subordinates:
Decentralisation helps to promote self-reliance and confidence amongst the subordinates.
It encourages lower managerial levels to take their own decisions.
(ii) Develops managerial talent for the future:
Formal training equips subordinates to handle assignments independently.
Decentralisation gives a chance to qualified manpower fill up more challenging positions through promotions.
(iii) Quick decision making:
In centralised organisation the flow of information is slow because every decision is taken by the top management.
In a decentralised organisation quick decisions can be taken at all levels and there is no requirement for approval from
many levels.
(iv) Relief to top management:
Decentralisation reduces the amount of direct supervision by a superior over the activities of a subordinate.
Decentralisation gives top management more time for important policy decisions than operational decisions.
(v) Facilitates growth:
Decentralisation helps to increase the productivity and the organisation is able to generate more returns which can be
used for expansion purposes.
BST TESTSERIES - AK CH06: STAFFING MM: 25

1. The essential objective of this concept is to create a pool of the prospective job candidates. Both internal
and external sources can be used for the same. Identify the concept.
(a) Selection (b) Placement (c) Orientation (d) Recruitment

2. Many employers request names, addresses and telephone numbers of references for the purpose of
verifying information and gaining additional information of an applicant. This is under the reference and
background checks step of selection process.
Arrange the next four steps of the selection process from the options given below:
e) Job offer
f) Selection decision
g) Medical examination
h) Contract of employment
(a) b-a-c-d (b) d-a-c-b (c) b-c-a-d (d) a-c-d-b

3. The workers of a factory remain idle because of lack of knowledge of hi-tech machines. Frequent visits of
engineer is made which causes high overhead charges.
The method of training by which this problem can be removed is ____________________.
a) apprenticeship (b) internship (c) vestibule (d) induction

4. Astra Builders has to deliver the flats to its buyers on time. Due to this there is a sudden rush of work.
Therefore, the company needs to arrange workers to work at the sites at a short notice. The source of
recruitment which may be used by the company to tap the casual vacancy is _____________.
a. Direct recruitment b. Advertisement
c. Recommendation of employees d. Employment Exchange

5. Biru Nandan, Chairman of Lalit group of companies founded ‘Biru University’ for undergraduate and
postgraduate courses in diverse disciplines. The Information Technology department of the Lalit Power Ltd.,
had few vacancies related to Cyber security. The Human Resource Department of the Company decided to
recruit fresh engineering graduates from ‘Biru University’ for the same.
Identify the type of source of recruitment.
(a) Casual callers (b) Consultancy firms (c) Campus recruitment (d) Direct recruitment

6. ‘Moga Industries Ltd.’ approached a well-established university in the city of Madurai to recruit qualified
personnel for various technical and professional jobs. They selected Tanya, Ritu, Garima and Chetan for
various vacancies in the organization. After the selection and placement, ‘Moga Industries Ltd.’ felt the need
to increase the skills and abilities, and the development of the positive attitude of the employees to perform
their specific jobs better. The company also realized the learning new skills would improve the job
performance of the employees. Hence, the company decided to take the actions for the same.
Name the step of the staffing process regarding which the company decided to take action.
(a) Selection (b) Placement (c) Training (d) Recruitment

7. Identify the source of recruitment which cannot be used when the existing staff is either insufficient or does
not fulfil the eligibility criteria of the jobs to be filled.
(a) On the job (b) Off the job (c) Internal (d) External

8. Name the two concepts which are part of the exercise which would reveal whether a company is
understaffed, overstaffed or optimally staffed.
(a) Promotion and career planning (b) Workload and workforce analysis
(c) Placement and orientation (d) Training and development
9. In an interview with a leading news channel, Mr. Rakesh Kwatra, CEO of ‘Get My Job” has suggested that
the Companies which want more and more people to apply for jobs in their organisation should make the
process of applying for jobs easier and candidate friendly. It is for this reason, he said, that most progressive
companies today have a short application process. He also said that the application form filled by the
candidate is very important as it is the information supplied in the application forms, which helps the manager
in eliminating unqualified or unfit job seekers. The company can create a mechanism that attempts to
measure certain characteristics of individuals like aptitude, manual dexterity, and intelligence to personality.
The candidate may then be called for an in-depth conversation to evaluate their suitability for the job. Name
the process.
(a) Selection (b) Placement (c) Training (d) Promotion

10. After passing his Secondary School Examination David left the school at the age of 15 years and started
getting training under his father. His father, a renowned electrician had worked for many companies. He
everyday started accompanying his father on work and watched him carefully while working. David was a
good learner and learnt the technique of work quickly. Now his father started passing on the tricks of the
trade to David. With the passage of time David acquired the required level of skill and became a well known
electrician at Indore. Big business houses started calling him for electrical wiring.
a) Name the method of training discuss in the above para.
b) State any three benefits which David could get on being trained. (3)
ANS:
(a) Apprenticeship training
(b)
BENEFITS TO THE EMPLOYEES
Reduces accidents because the employee is more
efficient to handle machines.
Increases employee performance and help him to
earn more.
Prepares the employee for better career due to
improved skills and knowledge.
Increases employee morale and satisfaction.

11. Nishant, the director of a government company is planning to manufacture bags for the utilisation of
waste material from one of his garment units. He has decided that this manufacturing unit will be set up in a
rural area of Odisha where people have very few job opportunities and labour is available at very low rates.
He has also thought of giving equal opportunities to men and women. For this he wants four different heads
for Sales, Accounts, Purchase and Production. He gives the advertisement and shortlist 10 candidates per post
after conducting different selection tests.
Identify and state the next three steps for choosing the best candidate out of the candidates shortlisted. (3)
ANS:
STEP 3: Employment Interview:
It means formal, in-depth conversation to evaluate the applicant’s suitability for the job.
The interviewer and interviewee tries to get information from each other.
STEP 4: Reference and Background Checks:
The employers request names, addresses, and telephone numbers of references (previous employers, known persons,
teachers and university professors) for the purpose of verifying information and getting additional information about
the applicant.
STEP 5: Selection Decision:
The final decision has to be made from among the candidates who pass the tests, interviews and reference checks.
The concerned department manager will make the final selection because he will be responsible for the performance of
the new employee.
12. How can internal sources of recruitment be better than external sources of recruitment?
Give four reasons in support of your answer. (4)
ANS:

SL NO INTERNAL SOURCES – MERITS

1 It helps to increase learning, peace, motivation, loyalty, commitment, performance and satisfaction of
employees through promotion at a higher level.
2 It is simple, accurate, reliable and economical process of selection and placement because the
candidates are already working and known to the organisation.
3 Transfer helps in training the employees and prepare them for higher jobs. Induction training for existing
employees is not required.
4 Transfer is useful when there is over-staffing - shortage in one branch may be filled through transfer from other
branch or department.
5 It is cheaper as compared to external sources.

13. The IT major GIPRA is terminating the employment of its senior managers, if after evaluating their
performance against predetermined standards if it is found lacking. With this disruption analysts say a large
portion of the employees may become irrelevant unless they learn new skills and apply the knowledge to
work on emerging technologies. GIPRA is ready to facilitate employee learning, through its in-house centers.
(a) Name the function of management performed by GIPRA to maintain a satisfactory work force.
(b) State the significance of the function identified in part (a)above. (6)
ANS:
(a) Staffing
(b) STAFFING – IMPORTANCE / SIGNIFICANCE / BENEFITS:
(i) It helps in obtaining right person for various jobs;
(ii) It improves performance, by putting right person on the right job;
(iii) It ensures the continuous survival and growth of the organisation.
(iv) It helps to ensure optimum utilisation of the human resources by avoiding overstaffing and understaffing.
(v) It improves job satisfaction and morale of employees through reward system.
BST TESTSERIES - AK CH07: DIRECTING MM: 25

1. Match list I with list II:

List I List II
i) Application for grant of leave. a) Horizontal communication
ii) production manager may discuss with the marketing manager about b) Upward communication
quality of product, its design and schedule of delivery.
iii) Passing on guidelines framed by top management to the c) Downward communication
subordinates.

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

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

2. People needs are in hierarchical order starting from basic needs to other higher level needs.
Arrange the needs in hierarchical order given by Maslow:
f) Esteem needs
g) Basic Physiological needs
h) Self actualisation needs
i) Safety/Security need
j) Belongingness needs
(a) a, c, b, d, e (b) b, d, e, a, c (c) b, e, a, d, c (d) e, b, d, a, c

3. Rigid rules and cumbersome procedures may be a hurdle to communication.

Identify the communication barrier reflected in the above statement.
a) Psychological barrier (b) Organisational barrier (c) Personal barrier (d) Semantic barrier

4. At Support.com, there is no reward or appreciation for a good suggestion. Thus, the subordinates are not
willing to offer any useful suggestions to their superiors.
Identify the type of barrier to communication that has been created in the firm due to this.
a. Semantic barrier b. Personal barrier c. Organisational barrier d. Psychological barrier

5. M.R.Sarthi, the Ex-chairman of Swadesh Ltd, built up his successor before retiring. Following the norms set
up by himself, he handed over the reins of the company to the co-founder Mr. Shravan, who had the potential
to bring about change in the behaviour of others. Name the concept of management which was the reason
why M.R.Sarthi chose Mr. Shravan to be his successor.
a. Motivation b. Leadership c. Communication d. Staffing

6. Sandhya is a successful manager at Manisons Enterprises. She has a team of twelve people working under
her. She encourages them to set their own objectives and take decisions. She respects their opinions and
supports them, so that they can perform their duties and accomplish organizational objectives. To manage
and exercise effective control she uses forces within the group. As an intelligent manager, at times, she also
make use of positive aspects of informal communication. This way, she is able to unify diverse interests and
ensure the targets are met. There are many theories and styles of influencing people’s behavior. Identify the
style used by Sandhya which is based on the use of authority.
(a) Autocratic (b) Dogmatic (c) Democratic (d) Laissez faire

7. Sara worked in a call center. Her team manager did not wish to be contradicted and gave rewards
depending on the result. State one benefit of the style of leadership being followed by Sara’s team manager.
(a) Quick decision (b) High employee morale (c) Autonomy (d) Promotion
8. Ram Murthy, the CEO of ‘Goodcare Hospitals’, a leading chain of hospitals, decided to reward the good
work of the doctors of this organization. For this he instituted two running trophies. A ‘Healthcare Achievers
Trophy’ to acknowledge and appreciate the tireless efforts of the doctors who rendered selfless services to
the patients and another ‘Beti Bachao Trophy’ to recognize the outstanding work done by the doctors in
saving the girl child.
Identify the incentive provided by ‘Goodcare Hospitals’ to its doctors through running trophies.
(a) Employee participation (b) Employee recognition programme
(c) Employee empowerment (d) Job enrichment

9. Name the process of exchange of information between two or more persons to reach common
understanding.
(a) Supervision (b) Motivation (c) Leadership (d) Communication

10. At present, apart from the basic pay and allowances as a part of compensation, the employees and
employers contribute 12% of basic wages each towards EPF scheme and Employees Pension Fund scheme. A
proposal to reduce the contribution by employers and employees to 10% of basic pay and dearness allowance
was listed on the agenda for a recent meeting of EPF Organization held. The stakeholders expressed their
reservations about it and they feel that it should be continued at 12%.
Identify and explain any two needs as suggested by Maslow’s Need Hierarchy Theory, which will not be
satisfied by the incentives. (3)
ANS:
(i) Affiliation/Belonging Needs:
These needs means affection, sense of belongingness, acceptance and friendship.
(ii) Esteem Needs:
These needs means self-respect, autonomy, status, recognition and attention.

11. Mr. Pawan Kumar, the CEO of an E-Commerce start up, which was facing the problem of huge employee
turnover, decided to hold a meeting with the managers to discuss the issue. While addressing the managers in
the meeting, he advised them to take certain measures which focus on psychological, social and emotional
factors, in order to motivate employees. Explain any two such measures discussed by him, when he suggested
that job should be made interesting so that the job itself becomes a source of motivation, employees should
be congratulated for good performance, also, stability regarding future income and work should be provided
to employees, in order to develop a positive attitude among the subordinates. (3)
ANS:
(i) Job Enrichment:
Jobs must be interesting and a meaningful work.
It includes variety of work content, more knowledge, freedom and responsibility; personal growth.
(ii) Job security:
Employees want their job to be secure and stable for future income and work.
When people feel that they will not lose their jobs, they may become more satisfied.

12. State any four barriers to communication which are concerned with problems and obstructions in the
process of encoding and decoding the message into words or impressions. (4)
ANS:
i) Badly expressed message:
Sometimes intended meaning may not be conveyed by a manager to his subordinate due to inadequate vocabulary,
usage of wrong words, omission of needed words, etc.
(ii) Symbols with different meanings:
A word may have several meanings as receiver may perceive differently.
Ex: ‘value’ gives different meaning in different contexts:
(a) What is the value of this ring?
(b) I value our friendship.
(c) What is the value of learning computer skills?
(iii) Faulty translations:
Sometimes the message in one language (e.g., English) need to be translated to the language understandable to workers
(e.g., Hindi). If the translator is not proficient with both the languages, mistakes may occur.
(iv) Unclarified assumptions:
Some certain assumptions are subject to different interpretations.
Ex: A boss may mean transport, food, accommodation of the guest but instruct his subordinate as - “Take care of our
guest”. The subordinate may interpret that guest should be taken to hotel with care.

13. Sadaf is the Chief Executive Officer of a reputed company. She introduced appropriate skill development
programmes and a sound promotion policy for the employees of her company. To motivate and retain the
best talent in the company, she designed the jobs of the managers to include greater variety of work content.
a) Identify and explain the element of one of the functions of management discussed in the above paragraph.
b) State the features of the element as identified in part (a) above. (6)
ANS:
(a) MOTIVATION MEANING:
Motivation means a process of stimulating people to action to accomplish desired goals.
(b) MOTIVATION FEATURES:
(i) Motivation is an internal feeling (urge, drives, desires, aspirations, needs) which influence human behaviour.
(ii) Motivation produces goal directed behaviour.
ii) Motivation can be either positive (increase in pay, promotion, recognition) or negative (increase in pay, promotion,
recognition).
(iv) Motivation is a complex process because it may not have uniform effect on all the members.
BST TESTSERIES - AK CH08: CONTROLLING MM: 25

1. “Measurement of a company’s progress may involve calculation of certain ratios like gross profit ratio, net
profit ratio, and return on investment etc. at periodic intervals”. Identify the step in the process of the
function.
a. Setting performance standard b. Measurement of actual performance
c. Analysing deviation d. Taking corrective action

2. Arrange the following steps of controlling process in a proper order:

i) Analysing deviations
ii) Setting standards
iii) Comparison between planned performance and actual performance
iv) Measurement of actual performance
(a) (i), (ii), (iii), (iv) (b) (ii), (iv), (iii), (i) (c) (ii), (iii), (i), (iv) (d) (ii), (i), (iii), (iv)

3. Which of the following is not the importance of Controlling?

(a) Accomplishing organisational goals (b) Creates a dynamic organisation
(c) Facilitating coordination in action (d) Judging accuracy of standards

4. An important project at AMB consultants is running behind schedule by a month. This has upset their
clients and might affect the reputation of the company in the long run. No managerial action like assigning
more workers, equipment or giving overtime has been able to solve the problem. What managerial action
may now be taken by the company to avoid such a situation from arising in the future?
(a) Get permission for further overtime work (b) Revise the schedule
(c) Assigning additional workers and equipment to the project (d) Both B&C.

5. Vinber Ltd. set up a manufacturing unit at Bhiwadi at Himachal Pradesh to manufacture electric geysers and
supply them to dealers all over the country. Their production target was 500 geysers per week. It was decided
by the management that variation in production upto 10 units would be acceptable. At the end of the first
week, the production was 450 geysers. The next week, production increased to 470 geysers. A week later,
production was 460 geysers. On investigation, it was found out that fluctuation in production was due to
irregular supply of electricity. The above para discusses some of the steps of one of the functions of
management. Identify the step not discussed in the above para.
a. Setting performance standard b. Measurement of actual performance
c. Analysing deviation d. Taking corrective action

6. Radha started a home cooked food delivery Dabba service. Her mother, who is a great cook, decided to
help her. They relied on friends and family for orders and then on word of mouth. As a step in the process of
ensuring that activities are performed as per her plan of supplying healthy, good quality, reasonable food and
earning profit, she decided to keep both qualitative and quantitative benchmarks towards which she would
strive to work. A function of management is being discussed above.
An important characteristic of this function of management is :
a. It is the first function of management b. It is the Last function of management
c. It is both forward looking and backward looking. d. It is required only in business organizations.

7. Karan, a manager in a Multinational company, is aware of the fact that his performance standards are set
and incentives are only given if he will meet the set standards. What importance of controlling is highlighted
in the above paragraph ?
(a) Improving employee motivation (b) Ensure order and discipline
(c) Efficient use of resources (d) Facilitate coordination in action
8. The term used to indicate the difference between standard performance and actual performance is
called________.
a) Performance standards b) Deviations c) Key result areas d) None of these

9. Raman and Vasudev were two employees who were embezzling an import-export company in Varanasi
where they were working. The finance manager of the company Sampat Singh became suspicious of the two
employees when he realized that their activities were not being performed as per the plans. He installed a
software program that could secretly log every single stroke of the suspects’ computer keys and send an
encrypted email report to the Cyber police. The police were able to catch the two dishonest employees red
handed and arrest them. Identify the function of management being discussed above.
a. Staffing b. Coordination c. Controlling d. Organizing

10. Explain the relationship between planning and controlling. (3)

ANS:
1. Controlling is blind without planning because controlling means comparing actual performance on the basis of
standards provided by planning.
2. Planning without controlling is meaningless because controlling helps to ensure that actual performance is as per
plans.
3. Planning and controlling are forward-looking functions because plans are made for future and in controlling
corrective actions are taken to avoid deviations in future.

11. Priya is a regional manager of XYZ. Ltd. She is a hardworking employee and is trying to reduce wastage of
resources in her company. She has set standards for performance of different activities and is ensuring that
targets are met according to these standards with minimal wastage of resources. She has set up CCTV
cameras which helps her to keep a close check on the activities of the subordinates and know how the
employees are performing. She also rewards the employees with a bonus when these standards are met. She
is trying her best to ensure a good performance of her team this year through the application of an important
function of management.
Explain the features of the function of management highlighted above. (3)
ANS:
1. Controlling is a goal oriented function.
2. Controlling is an all pervasive (Top, middle and Operational Level) function.
3. Controlling is both a backward looking as well as forward looking function.

12. Explain “Critical point control” and “Management by exception” with respect to Analyzing deviations, a
step in the process of controlling. Give a suitable example. (4)
ANS:
Step 4: Analysing Deviations:
The principles of controlling includes – CPC and MBE.
1. Critical Point Control:
It is neither economical nor easy to keep a check on each and every activity in an organisation.
The Manager should focus on key result areas (KRAs) if anything goes wrong at the critical points.
EX: If the labour cost increases by 5% and postal charges increases by 15%, the manager should take action on increase
in labour cost.
2. Management by Exception:
An attempt to control everything results in controlling nothing.
Only deviations which go beyond the permissible limit requires immediate managerial action.
Ex: A mobile manufacturing company produces 100 units per day and if 2/100 units are found defective, it is within
acceptable range and when 50/100 units are found defective then it is beyond acceptable range and requires immediate
managerial action.

13. Textile manufacturer Super textiles reported 43% fall in its profits in the fourth quarter ended 31 March
2017, which is beyond the acceptable range 25% decided by the company. This was due to higher fuel cost
and lower yield on account of demonetization. The company aims to implement cost saving measures by
restructuring contracts and its business processes to meet its targets in the future.
(a) Name the function of management discussed above.
(b) Explain its any five significance. (6)
ANS:
(a) Controlling
(b) CONTROLLING IMPORTANCE / SIGNIFICANCE / BENEFITS:
(i) Accomplishing organisational goals:
It measures the progress of actual performance by taking corrective action on the deviations, if any.
It guides the organisation on the right track to achieve the organisational goals.
(ii) Judging accuracy of standards:
It helps the management to verify whether the standards set are accurate and objective.
It also helps to review and revise the standards based on the changes in the business environment.
(iii) Making efficient use of resources:
It helps to reduce wastage and spoilage of resources.
All activities are performed according to the predetermined standards which ensures resources are used effectively and
efficiently.
(iv) Improving employee motivation:
It informs the employees in advance what they are expected to do and on what standards they will be appraised.
It motivates them and helps them to give better performance.
(v) Ensuring order and discipline:
It helps to maintain order and discipline in the organisation. It helps to minimise dishonest behaviour of the employees
by keeping a close check (using computer monitoring) on their activities.
BST TESTSERIES - AK CH09: FINANCIAL MANAGEMENT MM: 25

Read the following text and answer the following questions 1-4 on the basis of the same:
Mr. A. Bose is running a successful business. Mr. Bose is the owner of R. K. Cement Ltd. Mr. Bose decided to
expand his business by acquiring a Steel Factory. This required an investment of Rs. 60 crores. To seek advice
in this matter, he called his financial advisor Mr. T. Ghosh who advised him about the judicious mix of equity
(40%) and Debt (60%). Employ more of cheaper debt may enhance the EPS. Mr. Ghosh also suggested him to
take loan from a financial institution as the cost of raising funds from financial institutions is low. Though this
will increase the financial risk but will also raise the return to equity shareholders. He also apprised him that
issue of debt will not dilute the control of equity shareholders. At the same time, the interest on loan is a tax
deductible expense for computation of tax liability. After due deliberations with Mr. Ghosh, Mr. Bose decided
to raise funds from financial institution.

1. Identify the concept of Financial Management as advised by Mr. Ghosh in the above situation.
A) Capital Budgeting B) Capital Structure C) Dividend Decision D) Working Capital Decision

2. In the above case Mr. Ghosh suggested to raised more fund from debt. Higher debt-equity ratio results in:
A) Lower financial risk B) Higher degree of operating risk
C) Higher degree of financial risk D) Higher Earning of profit.

3. “Mr. T. Ghosh who advised him about the judicious mix of equity (40%) and Debt (60%)” The proportion of
debt in the overall capital is called___________.
A) Working Capital B) Financial Leverage C) Total Assets D) None of these

4. Employ more of cheaper debt may enhance the EPS. Such practice is called:
A) Equity Trading B) Financial Leverage C) Investment Decision D) Trading on Equity

5. Vikrant joins his father’s business of Organic masalas, near Kotgarh in Himachal after completing his MBA.
In order to capture a major share of the market, he decided to sell the product in small attractive packages by
using the latest packaging technology. His father suggested that they hire financial consultants to estimate the
amount of funds that would be required for the purpose & timings when it would be required. The concept
being discussed by Vikrant’s father, links which financial decision with the investment decision.?
(a)Dividend decision (b) Financial Planning (c) Capital structure decision (d) Financing decision

Read the following text and answer the following questions 6-9 on the basis of the same:
Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to
international market. For this purpose the company needs additional Rs.80,00,000 for replacing machines
with modern machinery of higher production capacity. It involves committing the finance on a long term
basis. These decisions are very crucial for any business since they affect its earning capacity in the long run.
The company wishes to raise the required funds by issuing debentures. The debt can be issued at an
estimated cost of 10%. The EBIT for the previous year of the company was Rs. 8,00,000 and total capital
investment was Rs. 1,00,00,000. Instead of issuing 10% Debenture the Company can issue Equity Shares for
raising the fund. The financial manager of the company would normally opt for a source which is the
cheapest.

6. What is the other name of long term decision?

(a) Capital Budgeting (b) Gross working capital (c) Financial management (d) Working Capital

7. A decision for replacing machines with modern machinery of higher production capacity is a:
(a) Financing decision (b) Working capital decision (c) Investment decision (d) Dividend decision
8. A decision for raising fund of Rs. 80,00,000 either from 10% Debenture or Equity Shares is a:
(a) Financing decision (b) Working capital decision (c) Investment decision (d) Dividend decision

9. The financing decisions are affected by various factors. Which one of the following factor is discussed in the
above case? Choose the correct option.
(a) Cash Flow Position of the Company (b) Cost (c) Amount of Earnings (d) Taxation Policy

10. The Return on Investment (ROI) of a company ranges between 10-12% for the past three years. To finance
its future fixed capital needs, it has the following options for borrowing debt: Option ‘A’ :Rate of interest 9%
Option ‘B’ : Rate of interest 13% Which source of debt, ‘Option A’ or ‘Option B’, is better? Give reason in
support of your answer. Also state the concept being used in taking the decision. (3)
ANS:
Option A is better.
Because ROI 10-12 % is more than Rate of interest on loan @ 9%.
This is a situation of favourable financial leverage. In such cases, companies often employ more of cheaper debt to
enhance the EPS. Such practice is called Trading on Equity which refers to the increase in profit earned by the equity
shareholders due to the presence of fixed financial charges like interest.

11. Vansh Limited is a large and reputed company which manufactures ventilators. After the outbreak of
‘COVID-19’ in 2020 the company witnessed an increase in revenue by 40%. It has plans to further increase its
production capacity and also start production of PPE kits, sanitisers and masks in 2022. The Finance manager
of the Company Mr. Rajiv feels confident about the future of the company and its liquidity position. Discuss
the meaning of Dividend Decision and in the light of the above statement explain any two factors which
should be considered by ‘Vansh Limited’ while formulating the dividend policy of the company. (3)
ANS:
DIVIDEND DECISION – MEANING:
Dividend is that portion of profit which is distributed to shareholders. The decision regarding dividend should be taken
considering the overall objective of maximising shareholder’s wealth. The decision involves how much profit is to be
distributed to shareholders and how much should be retained in the business.
Factors Affecting Dividend Decision:
(a) Amount of Earnings:
Dividends are paid out of current and past earning. Therefore, earnings is the basis for the decision about dividend.
(b) Growth Opportunities:
Companies having good growth opportunities retain more money out of their earnings to finance the required
investment. Less dividend is paid by growth companies, more dividend is paid by the non– growth companies.

12. Aarohan Ltd. an automobile manufacturer was diversifying into manufacturing two-wheelers. They knew
that India is on a growth path and a new breed of consumer is eager for a first vehicle. The market responded
very well to the new product. The company did not have to allow credit, as it had advance orders from four to
six months with deposits paid. Also, due to efficiency in managing their operations as soon as a vehicle was off
the assembly line, it was out to the dealers. Identify and explain the factors discussed above which helped the
firm in managing its working capital efficiently. (4)
ANS:
Factors Affecting the Working Capital Requirements
1. Nature of Business:
More working capital is required for a manufacturing organisation while a trading organisation needs less working
capital because there is usually no processing and do not have to maintain inventory.
2. Credit Allowed:
More working capital is required for firms that allow different credit terms to their customers.
A liberal credit policy results in higher amount of debtors, increasing the requirement of working capital.
3. Operating Efficiency:
Less working capital is required for firms who manage their operations with high degree of efficiency.
Such efficiencies may reduce the level of raw materials, finished goods and debtors resulting in lower working capital.
4. Growth Prospects:
If the growth potential of a concern is perceived to be higher, it will require larger amount of working capital so that it is
able to meet higher production and sales target whenever required.

13. Vedansh Limited has a share capital of ₹10,00,000 divided into shares of ₹100 each . For expansion
purpose ,the company requires additional funds of ₹ 5,00,000 . The management is considering the following
alternatives for raising funds :
Alternative 1: Issue of 5000 Equity shares of ₹100 each.
Alternative 2: Issue of 10% Debentures of Rs. 5,00,000.
The company’s present Earnings Before Interest and Tax ( EBIT) is ₹4,00,000 p.a.
The Tax rate is 50%.
(a) Assuming that the rate of Return of Investment remains the same after expansion, which alternative
should be used by the company in order to maximise the returns to the equity shareholders.
(b) Show the working. (6)
ANS:
Rate of Return of Investment is 4,00,000/10,00,000 X 100=40%
EBIT after expansion = 40% X 15,00,000=6,00,000
Calculation of EPS
Plan 1 Plan 2
EBIT 6,00,000 6,00,000
(-)Interest - 50,000
EBT 6,00,000 5,50,000
(-)Tax(50%) 3,00,000 2,75,000
EAT. 3,00,000 2,75,000
No. Of shares. 15000. 10000
EPS. 20 27.5

The company should use Plan 2 in order to increase the return to the equity shareholders.
BST TESTSERIES - AK CH10: FINANCIAL MARKETS MM: 25

1. Match the various terms of Financial Markets Column - I with their respective Statements in Column-II:
Column - I Column - II
a) Financial market i) It is also known as the Stock market
b) Primary market ii) It is a market for creation and exchange of financial assets.
c ) Secondary market iii) It is also known as New issue market
(a) (ii), (iii), (i) (b) (i), (iii), (ii) (c) (iii), (ii), (i) (d) (i), (ii), (iii)

2. Which of the following statements is false about Secondary market?

(a) Ownership of existing securities is exchanged between investors. The company is not involved at all.
(b) This market indirectly promotes capital formation.
(c) Both buying and selling of securities takes place in this market.
(d) Prices are determined by the management of the company.

3. When is trade confirmation slip given to the investor?

(a) On settlement of an order (b) On placing an order (c) On execution of an order (d) None of the above

4. Which of the following statements is false about Primary market?

(a) Securities are sold by the company to the investor directly or through an intermediary.
(b) The flow of funds is from savers to investors, i.e, this market directly promotes capital formation.
(c) Only buying of securities takes place in this market, securities cannot be sold there.
(d) Prices are determined by demand and supply for the security.

5. Raghav’s friend Raman works as a Chartered Accountant in Solutions Ltd. Raman in a meeting with the
Board of Directors of the Company came to know that the firm would soon be declaring a Bonus issue which
would result in increase in the price of shares. Considering this, Raman advised Raghav to purchase the shares
of Solutions Ltd., who acted on his advice and bought the shares before time. Which function of SEBI can
control such malpractices?
(a) Protective functions (b) Regulatory functions (c) Development functions (d) All the above.

6. It serves as an intermediary between the investor and the depository who is authorised to maintain the
accounts of dematerialised shares.
(a) Depository (b) Stock exchange (c) Depository participant (d) None of these

7. ________________ is a number assigned to each transaction by the stock exchange and is printed on the
contract note.
a. Client code number b. Unique order code
c. Permanent account number d. Depository participant number

8. Which of the following statements is incorrect?

(a) Providing liquidity to securities is one of the functions of stock exchange.
(b) Process of holding shares in electronic form is known as Dematerialization.
(c) Securities Exchange Board of India performs the regulatory function of controlling insider trading and
imposing penalties for such practices.
(d) Capital market consists of Commercial banks, Development banks and Stock exchanges.

9. SEBI recently called for information and issued a show cause notice to NSE and its officials seeking
explanation on the Preferential Access allegations at the Exchange’s Co-location facility.
State the function that SEBI performed by doing so.
(a) Protective functions (b) Regulatory functions (c) Development functions (d) All the above.
10. State any three objectives of the Securities Exchange Board of India. (3)
ANS:
Objectives of SEBI:
1.To regulate stock exchanges and the securities to promote their orderly functioning.
2.To protect the rights and interests of investors and to guide and educate them.
3.To prevent trading malpractices and achieve a balance between self and statutory regulation.

11. “Stock exchange not only contributes to the economic growth but performs many other functions.”
Explain any three such functions. (3)
ANS:
Functions of a Stock Exchange:
1. Providing Liquidity and Marketability to Existing Securities:
The stock exchange creates a continuous market for buying and selling securities.
It gives investors the chance to disinvest and reinvest through liquidity and easy marketability to existing securities.
2. Pricing of Securities:
Share prices on a stock exchange are determined by the forces of demand and supply.
Through constant valuation the prices of securities are determined.
3. Safety of Transaction:
The membership and dealings of a stock exchange is well- regulated according to the existing legal framework.
This ensures that the investing public gets a safe and fair deal on the market.

12. Differentiate between Primary market and Secondary market on any four basis. (4)
ANS:
Difference between Primary Market and Secondary Market:

PRIMARY MARKET SECONDARY MARKET

1. A new or an existing company sells new securities to 1. There is trading of existing securities only.
investors.
2. Securities are sold by the company to the investor 2. The existing securities are exchanged between investors. The
directly or through an intermediary . company is not involved at all.
3. The flow of funds is from savers to the company – direct 3. Increases liquidity of shares –helps indirect capital formation
capital formation.
4. Investor can only buy the securities in the primary 4. Investor can buy and sell securities in the secondary market
market

13. Name and explain the market in which instruments with a maturity period of less than one year are dealt.
(6)
ANS:
BASIS MONEY MARKET
1. Duration It is a short term market with investment period of one year.
2. Participants Participation include RBI, banks, financial institutions and finance companies.
3. Instruments It includes treasury bills,commercial bill, callmoney commercial paper and certificates of
deposit.
4. Investment outlay Huge sums of money is involved as the instruments are quite expensive.
5. Liquidity There is a higher degree of liquidity because Discount Finance House of India (DFHI)
provides liquidity for money market instruments.
6. Safety It is safer with a minimum risk due to short term investment and financial soundness of
participants - government, banks and highrated companies.
BST TESTSERIES - AK CH11: MARKETING MANAGEMENT MM: 25

1. A major decision area under one of the functions of marketing is the decision regarding marketing
intermediaries to be used. Name the function.
(a) Physical Distribution (b) Gathering and analysing market information
(c) Promotion (d) Transportation

2. Which of the following statements is incorrect?

(a) Marketing is a social process.
(b) Focus of the marketing activities is on customer needs.
(c) Marketing is merely a post production activity.
(d) Marketing mix is a wider term than product mix.

3. In order to get feedback about its recently launched immunity boosting ayurvedic medicine, Atulya limited
conducted an online survey using a questionnaire, to gather customer views and opinions.
Identify the marketing function being used by Atulya Limited.
(a) Standardisation (b) Product Designing
(c) Customer support service (d) Gathering and analysing market information

4. Which component of Product Mix is termed as the silent salesman?

(a) Branding (b) Packaging (c) Labelling (d) Promotion

5. “You don’t close a sale, you open a relationship, if you want to build a long term successful enterprise”.
Identify the promotion tool referred in this line.
a. Advertisement b. Personal Selling c. Sales Promotion d. Public Relation

6. Identify the function of marketing management that ‘provides quality assurance and consistency to
consumers.
a. Gathering market information b. Product designing and development
c. Standardization and grading d. Packaging and labelling

7. A market of colour TV having 10% of the current market share in the country aims at enhancing his market
share to 20% in the next 3 years. Which marketing function has been highlighted in a aforesaid statement?
a) Gathering and analysing market information b) Standardization and grading
c) Customer support service d) Marketing planning

8. Paytm gold, a gold offering by Digital payments from Paytm has generated high demand since its launch in
April 2017 primarily in tier II and tier III cities because customers in these locations did not have access to high
quality gold at attractive prices in the shops. Identify the element of marketing mix because of which the
buyers in tier II and tier III cities were unable to make a purchase.
a) Product b) Price c) Place d) Promotion

9. Karan had started the business of reducing exclusive home decor items under the brand name ‘Eleganza’
15 years back. Over the years, he has diversified into new segments like home furnishing, furniture and
Kitchenware. However, all the products are being sold under the same brand name ‘Eleganza’ as it appears to
be apt for all of them.
Identify the related feature of a good brand name being described in the given case .
a) Short and easy to pronounce, spell and remember b) Reflects the functions of the product
c) Distinctive/easily identifiable d) Versatile, can be used for brand extension
10. Mansi, manufactures shoes for school kids. She decides to maximize her profit by producing and
distributing on large scale as it reduces cost of production. Nisha, manufactures school bags, she decides to
improve the product to maximize profit. She added a water bottle holder to the existing design.
Identify the philosophies used by Mansi and Nisha and differentiate between them. (3)
ANS:
BASIS PRODUCTION PRODUCT
MEANING Producing goods Producing high
in large quality products,
quantities at improving quality
affordable prices and adding new
and efficient features.
distribution.
STARTING POINT Factory Factory
MEANS Availability and Product
profitability improvements
ENDS Profit through Profit through
volume of product quality
production
Main focus Quantity of Quality, features
product of product

11. Mohit purchased a bottle of jam from the local grocery shop. The information provided on the bottle was
not clear. He felt sick on consuming it. He filled a case with the District form under Consumer protection Act
and got relief.
a. Identify the important aspect neglected by the marketer in the above case.
b. State briefly the function of the aspect identified in (a) above. (3)
ANS:
(a) LABELLING
(b)
FUNCTIONS OF LABELLING
1. Describe the Product and specify its contents
2. Identification of the Product or brand

12. Discuss the factors to be considered for taking decision about the element of marketing mix which is
considered as a competitive weapon and determines the demand, sales and revenue of the firm. (4)
ANS:
Factors affecting Price Determination:
1. Product cost:
The cost sets the minimum level or the floor price at which the product may be sold. This includes the cost of producing,
distributing and selling the product. Total Costs are the sum total of the fixed, variable and semi-variable costs.
The business aims at earning a margin of profit over and above the costs.
2. The Utility and Demand:
While the product costs set the lower limits of the price, the utility of product and the intensity of demand sets the
upper limit of price. The buyer may be ready to pay price equal to the utility from the product. The seller would try to
cover the costs. According to the law of demand, consumers purchase more units at a low price than at a high price.
3. Extent of Competition in the Market:
The price will reach upper limit if there is lesser degree of competition. In free competition, the price will be at lowest
level. Prices, quality and tfeatures of the competitive products must be examined carefully, before fixing the price.
4 . Government and Legal Regulations:
In order to protect the interest of public against unfair practices in the field of price fixing, Government can intervene
and regulate the price of commodities. Government can declare a product as essential product and regulate its price.
Ex: Government may declare cancer treatment tablet as essential commodity and regulate its price.

13. Raman after completing his Masters in computer engineering decided to start his own business. He visited
his uncle Mr Jaiprakash who has been running a successful business in web designing. He shared with Raman
that the main reason for his success in the business lies in his approach of building a lifetime relation with his
clients. Therefore his business is not only restricted to designing website according to the specifications of the
clients but also providing continuous online assistance to them and handling effectively and doing all this at a
profit. He provides these services at competitive prices. Anybody interested in getting the web solutions can
contact him through his website. Moreover whenever the market is sluggish he tries to create demand by
offering short term incentives to the buyers.
Briefly explain the various elements of marketing mix being pursued by Mr. Jaiprakash by quoting lines from
the para. (6)
ANS:
(a) Quote: He visited his uncle Mr Jaiprakash who has been running a successful business in web designing.
Product:
It may be tangible/intangible product (goods /services). It is a bundle of utilities to satisfy needs of the customers.
(b) Quote: He provides these services at competitive prices.
Price:
It is the value or amount of money paid by the buyer to the seller for the product. It is a competitive weapon.
It determines the demand , sales and profit of the business.
(c) Quote: Anybody interested in getting the web solutions can contact him through his website.
Place/Physical Distribution:
It helps in the movement of goods and services from manufacturers to consumers. It creates place utility through order
processing, transportation, warehousing, and inventory control.
(d) Quote: Moreover whenever the market is sluggish he tries to create demand by offering short term
incentives to the buyers.
Promotion:
It helps to communicate and convince the customers to buy their product by creating product awareness.
This can be done through advertising, personal selling, sales promotion and public relation.
BST TESTSERIES - AK CH12: CONSUMER PROTECTION MM: 25

Read the following text and answer the following questions 1-4 on the basis of the same :
Piyali purchased an ISI marked Heater from Bharti Appliances. She made Cash Payment. But failed to get a
Cash Memo. While making use of the heater she observed that it was not working properly. She contacted the
shopkeeper immediately and told him the problem. Shopkeeper paid no heed to her complaint. Rather he
marked that the good in question was not bought from his shop. Piyali had no evidence of proving that the
heater was purchased from his shop only. She discussed the problem with her friend Sohini who advised her
to approach Consumer Forum and lodge the complaint. Piyali was convinced with the idea of lodging the
complaint against the shopkeeper but due to lack of cash memo it was difficult for her to proceed.

1. Identify the Right of the consumer as referred to in the above paragraph.

A. Right to be Informed B. Right to Safety C. Right to be Heard D. Right to Choose

2. Identify the responsibility of the consumer referred in the above case.

A. Quality Conscious B. Must Obtain Cash Memo C. Cautious Consumer D. Ready to Lodge Complaint

3. Piyali cannot lodge a complaint against the shopkeeper. Why?

A. She do not have the right B. She was aware of the fact
C. She do not have the Cash Memo D. She was happy with the product

4. Under which Act Piyali can seek to protect her rights being a consumer?
A. Consumer Protection Act, 1986 B. Consumer Protection Act, 1968
C. The Indian Contract Act, 1872 D. The competition Act, 2002

5. Who cannot file a complaint in the consumer court?

a. Individual consumer b. Consumer association that has not been registered
c. Central government d. State government

6. Amrit filed a case against ‘Volvo Ltd.’ in the state commission. But he was not satisfied with the orders of
the state commission. Name the authority to which he can appeal against the decision of the state
commission after 3 months.
a. District forum b. State commission c. National commission d. None of the above
OR
Sheela went to a free eye camp & got her eyes operated for cataract. The surgery was not done properly, due
to which she lost her vision. Where can she file a complaint under consumer protection act?
a. District forum b. State commission c. National commission d. None of the above

7. Sumit purchased an ISI marked washing machine of a famous brand ‘MG’ from TG Electronics Ltd. The
shopkeeper asked him to wait for two days for installation of the machine. His friend, Vivek, was very fond of
experimenting with new electronic products. He told Sumit that there is no need to wait for the company’s
representative to install the machine and that he could do it. So, both of them installed the machine without
following the manufacturer’s instructions. Initially, the machine worked effectively and the wash was good.
But after two days, the machine started stopping in between the wash cycle. Sumit and Vivek tried their best
to start the machine but failed in their efforts. Sumit, therefore, approached TG Electronics Ltd., which
refused to provide any service on the plea that installation of the machine was not done by the company.
Identify the responsibility.
a) take cash memo b) follow manufacturer’s instructions c) get fair deal d) read labels carefully
8. Identify the right of a consumer under CPA,1986 which Consumer organizations help a consumer to claim
by performing the function of “encouraging consumers to strongly protest and take an action against
unscrupulous, exploitative and unfair trade practices of sellers”.
A. Right to be Informed B. Right to Safety C. Right to be Heard D. Right to seek redressal

9. Aarushi purchased a pack of biscuits. When she opened it, she felt the biscuits were stale. She carefully
read the label on the pack of biscuits which mentioned : ‘‘If you are not satisfied with the product quality,
write to our Customer Care Cell at Bell Foods Pvt. Ltd. B/321, Jalandhar, Punjab.’’
The biscuit company has set up its own consumer service and grievance cell to promote and protect which
right of consumers provided by Consumer Protection Act, 1986?
A. Right to be Informed B. Right to Safety C. Right to be Heard D. Right to Choose

10. Madhav purchased a smart phone for 30,000 from a mobile phone seller on his verbal commitment that
the smart phone will be replaced in case of any defect, within a span of six months. The phone started
creating technical issues in spite of proper maintenance and upkeep of the phone. The seller denied taking
any action on the complaint made by Madhav. Name the redressal agency under the Consumer protection
Act, 2019 where Madhav can file his complaint. Give reason in support of your answer. (3)
ANS:
Madhav cannot file a complaint in any of the consumer court under the COPRA, 2019.
Reason:
Any verbal commitment made for guarantee cannot be accepted as a proof in the consumer court.
Madhav has failed to perform his responsibility to - Ask for a cash memo on purchase of goods or services which is
a proof of the purchase made.

11. Enumerate any three rights of a consumer under the Consumer Protection Act, 2019.
ANS:
Consumer Rights:
1. Right to Safety:
The consumer has a right to be protected against goods and services which are hazardous to life, health and property.
Consumers should use only standardised goods (ISI-electrical goods, FPO-food products, Hallmark on jewelry, etc.) as
they provide quality assurance.
2. Right to be informed:
The consumer has a right to have complete information about the product (its ingredients, date of manufacture, price,
quantity, directions for use, etc.) he wishes to buy.
It is legal requirement to provide such information on the package and label of the product.
3. Right to be assured (RIGHT TO CHOOSE):
The consumer has the freedom to use variety of products at competitive prices.
The marketers should offer a wide variety of products in terms of quality, brand, prices, size, etc. and allow the
consumer to make a choice from amongst these.
OR
Enumerate any three responsibilities of a consumer under the Consumer Protection Act, 2019. (3)
ANS:
Responsibilities of Consumers:
1. Be aware about various goods and services available in the market so that an intelligent and wise choice can be made.
2. Buy only standardised goods as they provide quality assurance. Thus, look for ISI mark on electrical goods, FPO mark
on food products, Hallmark on jewelry, etc.
3. Learn about the risks associated with products and services, follow manufacturer’s instructions and use the products
safely.

12. Answer the following questions as per the Consumer Protection Act, 2019:
(c) Who is a Consumer?
(d) Who can file a complaint and against whom? (4)
ANS:
(a) Who is A Consumer? MEANING OF CONSUMER:
(a) A ‘consumer’ is a person who uses goods or avails of any service.
(b) Under the Consumer Protection Act 2019, a consumer is a person who buys any goods 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.
(c) It includes any user of goods / services if such use is made with the approval of the buyer.
(d) It applies to both offline and online transaction through electronic means or by teleshopping or direct selling or
multilevel marketing.
(e) It does not include any person who obtains goods or services for resale or commercial purpose.
(b) WHO CAN FILE A COMPLAINT?
(i) a consumer; or
(ii) any voluntary consumer association registered under any law for the time being in force; or
(iii) the Central Government or any State Government; or
(iv) the Central Authority; or
(v) one or more consumers, where there are numerous consumers having the same interest; or
(vi) in case of death of a consumer, his legal heir or legal representative; or
(vii) in case of a consumer being a minor, his parent or legal guardian;
(c) AGAINST WHOM A COMPLAINT CAN BE FILED?
1. The seller, manufacturer or dealer of goods which are defective. (Defect means any fault, imperfection or
shortcoming in the Quality, quantity or purity of goods.)
2. The provider of services if they are deficient in any manner. (Deficiency means any imperfection, shortcoming or
Inadequacy in the quality, nature and manner of performance of Services.)

13. State the role of Consumer Organisations and NGOs in India for the protection and promotion of
consumer interest. (6)
ANS:
Role of Consumer Organisations And Ngos in India:
(i) Educating the general public about consumer rights through training, seminars and workshops.
(ii) Publishing periodicals and publications about consumer problems, legal reporting, reliefs available and other matters
of interest.
(iii) Carrying out laboratary testing of consumer products qualities and publishing the test results for the benefit of
consumers.
(iv) Encouraging consumers to protest and take action against unfair trade practices of sellers.
(v) Providing legal assistance and advice to consumers in seeking legal remedy.
(vi) Filing complaints in appropriate consumer courts on behalf of the consumers