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Class 12 AHSEC 2024 Business Studies Question Paper Solved English Medium
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BUSINESS STUDIES
2024
BUSINESS STUDIES OLD QUESTION PAPER SOLVED
1. (a) At what level of management a managing director works?
Ans: A managing director works at the top level of management in a company. The managers at the top level of management of an organization are responsible for its survival and welfare.
(b) What is meant by fatigue study?
Ans: Fatigue study refers to the long working hours with sufficient breaks which results lower stress and high outcome.
(c) What is policy?
Ans: A plan of action adapted or chosen by a government, a company or an organization to meet their goals is known as policy.
Or
Give an example of policy
Ans: Code of conduct, fix working hours.
(d) What is meant by money supply in the economy?
Ans: Money supply means the total amount of money in circulation in an economy of a Country at a given time. It includes all the cash, coins, and also the bank balances.
(e) Responsibilities flow upward/downward. (Choose the correct word)
Ans: Upward.
(f) Selection is a positive process.
Ans: Negative.
2. What is the significance of dividend decision?
Ans: The significance of dividend decision are:
(i) Maximizing owners’ wealth: It is capital gain for shareholders.
(ii) Providing sufficient financing: tt helps to maintain the cashflow.
Or
What is trademark?
Ans: A trademark is a word, phrase, symbol, design, or combination of two or more than two, that identifies a business or its products or services. A trademark is a form of intellectual property it provide safety to the organization from being copied by the other competitor organization.
3. Write two significances of packaging.
Ans: The two significance of packaging are as follows:
(i) Packaging keep the goods fresh and increase longevity.
(ii) Packaging helps the customer to know the product as the product details are leveled on packaging.
4. Write two responsibilities of a consumer to safeguard his interest.
Ans: The two responsibilities of a consumer to safeguard own interest are:
(i) Right to Safety Consumers must be aware of misleading marketing done by some organization, and also have the knowledge to choose the right product.
(ii) A consumer must ensure that he gets a fair deal on the basis of quality, quantity and price.
5. What is deviation in controlling?
Ans: Deviation in controlling refers to the difference between the original performance and the standard performance which was set by the organization to meet its goal faster. When actual performance is lower than the pre- planned performance, it is also known as deviation.
6. Write three features of formal communication.
Ans: Communication is a two-way process which involves transferring of messages or any kind of information from one person or group to another.
There are two type of communication: formal and informal communication.
The three features of formal communication are as follows –
(i) Structured channels: It follows a set of channels and format to ensure the message or the information reaches to the desired person.
(ii) Written Records: In Formal communication the information are archived for future uses.
(iii) professional tone: In formal communication proper language are being used to convey the information in serious manner.
7. Write the features of organising.
Ans: The features of organizing are:
(i) Division of work: The division of work refers to assigning the responsibilities for each organizational activity to a specific individual or group of people. It also increases the efficiency and effectiveness of employees in an organization.
(ii) Co-ordination: In an organization it is important to maintain co –ordination among the various department. It creates good relationship among employees and ensures mutual co-operation among individuals.
(iii ) Goal oriented: Organization has a goals and everyone should work for the achievement of the goals.
Or
Write the elements of planning promises.
Ans: Here are the elements of planning promises:
(i) Purpose: Every plan needs a clear purpose – a well-defined reason behind the action. Without a purpose, it’s like wandering in a maze without a destination. it provides a clear direction for decision-making, aligning resources and efforts toward achieving desired outcomes. Purpose ensures all plans are focused, coherent, and aligned with the organization’s mission and long-term vision.
(ii) Goals: Goals are the milestones you set to measure your progress towards your purpose. They bring structure to your plan and help you stay focused on what matters most. They provide a clear focus for planning, help prioritize actions, and guide resource allocation. Well-defined goals ensure all efforts are aligned with the organization’s overall purpose and vision.
(iii) Strategies: Strategies are the routes you map out to achieve your goals. Like a GPS guiding you on the best path to your destination, strategies provide you with a roadmap to success. A well-defined strategy ensures that planning is purposeful and coherent, aligning efforts across departments. It guides decision-making and helps anticipate future needs. Strategies also offer flexibility, allowing businesses to adapt to changing conditions while staying focused on their long-term objectives.
(iv) Action Plans: Action plans transform strategies into actionable steps. They break your big-picture strategies into smaller, manageable tasks. hey detail what needs to be done, who will be responsible, when tasks should be completed, and the resources required. Action plans provide a clear roadmap for implementation, ensuring that strategies are executed efficiently. They help break down large objectives into manageable tasks, prioritize actions, and establish deadlines.
8. Write three important socio-cultural factors that affect business.
Ans: Here are three important socio-cultural factors that affect business:
(i) Cultural Norms and Values: Cultural norms, values, and lifestyle influence consumer buying patterns.These include the beliefs, values, attitudes, and practices that are prevalent in a society. Businesses must understand and respect these cultural norms to effectively market their products and services. Understanding local tastes, traditions, and social habits is crucial for businesses to tailor products and marketing strategies to meet the expectations of different customer groups.
(ii) Social Trends: These are the patterns of behavior that are currently popular in society. Businesses need to stay updated with these trends to remain relevant and competitive. or instance, a culture that values sustainability may push companies to adopt eco-friendly practices, while a culture that prioritizes innovation may foster rapid technological advancements.
(iii) Demographic Factors: This includes the age, gender, income level, education level, and occupation of the population. These factors influence the types of products and services that are in demand. Businesses must adapt to shifting demographics to remain relevant, such as targeting youth markets, or developing products for an aging population.
OR
Write three differences between ‘time study’ and ‘motion study.
Ans: Differences between ‘time study’ and ‘motion study are:
| Time study | Motion study |
| Aims to determine the standard time required for performing a task or operation. | Aims to simplify the method of performing a task by reducing unnecessary movements and optimizing the work process. |
| Measures how fast a worker performs a task by observing and timing him or her | Analyzes the task and breaks it down into individual motions to identify unnecessary or inefficient moves |
| The study that determines the standard time taken to perform a job is known as Time Study. | The study o movements like lifting, putting objects, sitting and changing positions, etc., is know as Motion Study. |
9. Write three important functions of top-level management.
Ans: important functions of top-level management are:
(i) Strategic Planning: Top-level management is responsible for formulating long-term goals and strategies to guide the organization’s growth and direction. Strategic planning is the process by which business owners or those in company leadership roles identify end goals and outline a list of steps to meet those goals. They assess market trends, competition, and internal capabilities to make critical decisions that align with the company’s vision and mission.
(ii) Controlling: This function is concerned with measuring performance and taking action if it does not comply with predetermined targets. It ensures targets are adequately met and makes the necessary changes if they are not. It may require feedback or corrective action. By maintaining oversight, top-level management can ensure that resources are used efficiently, risks are minimized, and the organization stays on track to achieve its strategic goals. Controlling helps maintain accountability and ensures the long-term success and stability of the organization.
(iii) Policy Formulation: Policy Formulation is a key function of top-level management, involving the creation of guidelines, rules, and principles that direct the organization’s activities. They establish organizational policies that set the framework for decision-making and operations. These policies govern areas such as employee behavior, corporate social responsibility, and resource allocation, ensuring consistency and alignment with the company’s objectives. By setting clear policies, top-level management ensures that the organization’s operations align with its long-term objectives, values, and external regulatory requirements. This function helps maintain organizational stability, streamline processes, and create a cohesive strategy for achieving business goals.
Or
Write three factors of primary market.
Ans: Here are the three factors of primary market:
(i) Company fundamentals: Company fundamentals refer to the core aspects that determine a firm’s financial health and operational efficiency. Before investing, it’s crucial to research and evaluates the company’s financial statements, management team, industry trends, and growth potential. Evaluating fundamentals helps assess a company’s stability, growth potential, and investment worthiness in business studies and decision-making.
(ii) Purpose of investment: Determine your investment goals and objectives, as well as your risk tolerance, before investing in the new issue. They also enable businesses to acquire assets, improve competitiveness, and meet long-term goals like innovation and market leadership.
(iii) Market conditions: Market conditions refer to the external factors influencing a business’s operations, including demand-supply dynamics, competition, consumer preferences, economic trends, and regulatory policies. Consider the overall market conditions, as well as any specific risks associated with the company or industry, before investing. Understanding market conditions helps businesses adapt strategies, identify opportunities, and mitigate risks in a competitive and ever-changing environment.
10. Explain the techniques of scientific management.
Ans: The techniques of scientific management are:
(i) Time and Motion Study: Taylor conducted studies to analyze the time required for specific tasks and the movements involved. A Time and Motion Study is conducted to review individual tasks that are carried out in the workplace, identifying specifically how long each task currently takes (the time side of the study) and what physical activity it involves (the motion side of the study). This allowed him to identify the most efficient methods for completing tasks, eliminating unnecessary motions and reducing time.
(ii) Standardization of Tools and Procedures: Business process standardization involves establishing and implementing consistent methods, procedures, and standardized processes across an organization to achieve consistency, and operational efficiency. Scientific management advocates for using standardized tools, methods, and procedures across workers to ensure consistency and reduce variation in performance. A standardized process is one that is repeatable and easy to copy from one person or task to another.
(iii) Task Specialization: Task specialization refers to the condition in which the components of a work process are divided into various minute tasks and only a limited number of tasks are assigned to an individual job. Workers are assigned specific tasks based on their skills and the optimal work method identified through analysis. This helps in improving efficiency and reducing training time.
(iv) Scientific Selection and Training of Workers: Scientific selection involves selecting a right person for a right job. Instead of allowing workers to be selected arbitrarily, scientific management emphasizes selecting workers based on their capabilities and providing them with proper training to perform tasks efficiently. There should be opportunities for advancement to do the job to the fullest realisation of his normal capabilities.
(v) Incentive Systems: Incentive management is the practice of offering incentives like pay, extra time off, or a gift to employees that meet certain benchmarks or perform specific behaviors.Taylor proposed linking workers’ compensation to their performance. This incentive system encourages workers to increase their productivity.
(vi) Division of Labor: Division of labor is an important economic concept that refers to the separation of tasks in a production process.The work is divided into smaller, specialized tasks, allowing workers to focus on specific functions, improving efficiency.
Or
Distinguish between selling and marketing.
Ans: Distinguish between selling and marketing are:
| Basic of difference | Selling | Marketing |
| Meaning | Selling is any transaction in which money is exchanged for a good or service. During a sales negotiation, the seller attempts to convince or “sell” the buyer on the benefits of their offer. | Marketing refers to the activities a company undertakes to promote the buying or selling of its products or services. Marketing includes advertising and allows businesses to sell products and services to consumers, other businesses, and organizations. |
| Focus | Focuses primarily on the transaction between the seller and the buyer. The objective is to close the sale. | The key focus of marketing is providing offerings that have value. Focuses on creating long-term relationships with customers and understanding their needs. It aims to build customer satisfaction and loyalty over time. |
| Timeframe: | Has a short-term focus, aiming to complete a sale in a specific moment. | Has a long-term focus, aiming to build brand equity and create lasting relationships with customers. |
| Scope | More narrow in scope, as it primarily involves the act of selling goods or services. The scope of selling is limited to the transfer of ownership of products from the seller to the consumer. | Broader, encompassing the entire process from understanding customer needs to delivering and promoting the product. While many people think of marketing as just advertising, it’s much more than that. |
| Customer Orientation | Primarily focuses on the seller’s perspective, concentrating on persuading the customer to buy the product.Customer orientation is a business approach that puts the needs of the customer over the needs of the business. | Centers around the customer’s needs and wants, aiming to create a product that satisfies those needs. The goal of customer-oriented companies is to satisfy customer’s needs to retain them for longer. Customer orientation also helps companies attract customers to their offer naturally. |
11. Write five functions of money market.
Ans: Here are five key functions of the money market:
(i) Financing industry: The financing of industry is a vital function of the money market, providing short-term funds to businesses for operational needs, inventory management, and working capital requirements. They help industries secure short-term loans to meet their working capital requirements through the system of finance bills, commercial papers, etc. Industries generally need long-term loans, which are provided in the capital market. However, the capital market depends upon the nature of and the conditions in the money market. The short-term interest rates of the money market influence the long-term interest rates of the capital market. Thus, money market indirectly helps the industries through its link with and influence on long-term capital market. This function fosters industrial growth and contributes to overall economic development.
(ii) Helps the Government: The money market plays a crucial role in helping governments manage their short-term financing needs. By issuing Treasury bills, the government can obtain short-term capital from the money market at a minimal rate of interest rather than financing from RBI. The money market acts as a tool for implementing monetary policy, enabling central banks to regulate liquidity in the economy. This function supports fiscal stability and ensures that the government can meet its financial obligations promptly and effectively.
(iii) Profitable investments: The money market enables commercial banks to use their excess reserves in profitable investments. Instruments like Treasury bills, commercial paper, and certificates of deposit provide low-risk, interest-bearing opportunities with high liquidity. Investors benefit from the flexibility to access their funds quickly while earning income, making these instruments attractive for short-term financial goals. In the money market, the excess reserves of commercial banks are invested in near money assets (e.g., short-term bills of exchange), which are easily converted into cash. Thus, commercial banks earn profits without sacrificing liquidity. By providing a variety of investment options tailored to different risk appetites and liquidity needs, the money market fosters efficient capital allocation, ensuring funds are productively employed while minimizing idle cash reserves.
(iv) Competent application of monetary policies: The money market plays a vital role in the competent application of monetary policies by serving as a conduit for central banks to implement their strategies effectively. By its monetary policies, RBI may effectively regulate its banking system and can give guidance to the development of commerce and industry. Competent application of monetary policies is thus effectively managed by the Reserve Bank of India. It also provides a mechanism for transmitting monetary policy effects to broader financial markets, ensuring stability and efficiency. Thus, the money market is crucial for achieving macroeconomic goals like growth and price stability.
(v) Self-sufficiency of commercial banks: Self-sufficiency of commercial banks is a key function of the money market, enabling banks to manage their short-term liquidity needs effectively. Developed money markets help commercial banks to become self-sufficient. In an emergency, when commercial banks have scarcity of funds, they need not approach the central bank and borrow at a higher interest rate. This self-sufficiency of commercial banks is a key function of the money market, enabling banks to manage their short-term liquidity needs effectively.
Or
Write five features of capital market.
Ans: Features of capital market are:
(i) Risk management: Risk management is a significant feature of the capital market, enabling investors and issuers to manage financial risks effectively. It provides tools and mechanisms for investors to manage and mitigate risks. Investors can diversify their portfolios to reduce exposure to individual asset failures, while derivatives like options and futures allow for hedging against price volatility and interest rate changes. For issuers, the capital market ensures access to long-term funding at competitive rates, minimizing financing risks.
(ii) Provides Long Term Investment: The capital market facilitates the mobilization of long-term funds for businesses and governments through the issuance of equity shares, bonds, and debentures. The capital market supplies the funds required for long and medium investment. The capital market does not make use of short-term savings of less than one year. These instruments cater to investors seeking stable, long-term returns while supporting organizations in financing infrastructure, expansion, and development projects. By channeling savings into productive investments, the capital market promotes economic growth and wealth creation.
(iii) Diverse investment opportunities: The capital market offers various investment options, including stocks, bonds, derivatives, and commodities. This allows investors to diversify their portfolios and allocate funds based on risk tolerance and investment goals. This diversity allows investors to choose from various asset classes based on their risk tolerance, investment horizon, and return expectations. Investors can select from equity shares for potential high returns, corporate or government bonds for fixed income, or mutual funds for diversification.
(iv) Capital formation: One of its key functions is facilitating capital formation for businesses and governments. Capital formation in the capital market refers to the process of raising long-term funds for investment in productive assets, contributing to economic growth.Through initial public offerings (IPOs) and secondary offerings, companies can raise funds by selling shares to investors. This capital infusion enables businesses to expand operations, invest in research and development, and create new job opportunities. The capital market facilitates this by providing a platform for issuing securities like stocks, bonds, and debentures, allowing businesses and governments to access the capital required for expansion, infrastructure development, and innovation.
(v) Liquidity: Liquidity is a key feature of the money capital market, reflecting the ease with which financial instruments can be bought or sold without significantly affecting their prices. It is more liquid as compared to real estate or commodity market because they have various institutions like banks, mutual funds, retail investors, hedge funds, etc. which helps the investors in easily exiting from the market as the investors can sell their investments whenever they want. In the capital market, instruments like stocks and bonds are relatively less liquid but still provide avenues for investors to access funds over longer horizons. This liquidity ensures that both markets function efficiently, offering flexibility for issuers and investors while promoting financial stability and growth.
(vi) Market efficiency: It aims to achieve efficiency by ensuring that the prices of financial instruments reflect all available information. This efficiency is driven by transparency, liquidity, and competition. Investors can make informed decisions based on the latest market data, reducing information asymmetry and promoting fair and efficient trading. Liquidity, transparency, and the presence of numerous buyers and sellers contribute to market efficiency, allowing participants to buy or sell securities quickly at competitive prices. Efficient markets foster investor confidence, support economic stability, and drive growth by optimizing capital distribution and utilization.
(vii) Long-term investment opportunities: The capital market offers opportunities for long-term investment and wealth creation. Investors can participate in IPOs, invest in growth-oriented stocks, or purchase bonds with longer maturities. These options allow individuals and institutions to plan for their future financial goals, such as retirement or education expenses.
12. Write five objectives of financial management.
Ans: Here are the five objectives of financial management:
(i) Profit Maximization: Profit maximization refers to a business’s primary goal of achieving the highest possible financial returns by increasing revenues and minimizing costs.The finance manager is responsible to achieve optimal profit in the short run and long run of the business. The manager must be focused on earning more and more profit. While profit maximization can drive growth and attract investors, it may sometimes conflict with long-term objectives like sustainability or social responsibility. Modern businesses often balance profit maximization with other goals to maintain a positive reputation and ensure long-term success.
(ii) Financial Requirements Planning: Financial Requirements Planning (FRP) as a profit maximization strategy involves systematically forecasting and allocating financial resources to align with a company’s profit goals. Through financial management, one can also correctly and effectively estimate the various requirements of a business such as funds needed to start or expand, contingency funds, marketing, operational expenses, working capital, and capital expenditures. By analyzing cash flows, budgeting, and financial performance, FRP ensures resources are optimally utilized to enhance profitability. Financial managers assess these funding requirements and make sure that the business has the necessary resources when they are needed, and that there is no significant shortage or surplus. It integrates strategic financial decisions with operational planning, enabling businesses to adapt to market dynamics and achieve sustainable profit growth while maintaining financial stability.
(iii) Wealth Maximization: Wealth maximization emphasizes short-term gains, aiming to maximize a company’s earnings in a specific period. It prioritizes immediate benefits, sometimes neglecting risks and long-term sustainability. Shareholders are the actual owners of the company. Hence, the company must focus on maximizing the value or wealth of shareholders. It considers factors like cash flow, risk management, and the time value of money, aiming for sustained growth in market value. The finance manager should try to distribute maximum dividends among the shareholders to keep them happy and to improve the goodwill of the company in the financial market. Better performance means a higher value of shares in the financial market. In nutshell, the finance manager focuses on maximizing the value of shareholders. While profit maximization centers on immediate earnings, wealth maximization aligns with broader financial health and sustainable prosperity for stakeholders.
(iv) Maintenance of Liquidity: Maintenance of liquidity as a profit maximization strategy involves ensuring a company has sufficient cash or liquid assets to meet short-term obligations while optimizing resource allocation to enhance profitability. To maintain the proper cash flow, the manager must keep an eye over all the inflows and outflows of money to reduce the risk of underflow and overflow of cash. The finance manager is responsible to maintain an optimal level of liquidity in the organization. Liquidity provides financial stability, enabling the company to capitalize on investment opportunities, avoid costly borrowing, and manage unforeseen expenses. Balancing liquidity with profitability requires minimizing idle cash while ensuring operational needs are met. Healthy cash flow means a higher possibility of survival and success of the business. Because it helps the business to deal with uncertainty, timely payment of dues, getting cash discounts, making day-to-day payments without delays, etc.
(v) Improved Efficiency: Improved efficiency as a profit maximization strategy involves streamlining operations, reducing waste, and optimizing resource utilization to lower costs and increase productivity. Financial management is also beneficial in increasing the efficiency of all sections and departments of the organization. If the finance is effectively distributed to all the departments then they will work efficiently. Improved efficiency also strengthens competitiveness by enabling companies to deliver better value to customers while maintaining or increasing profit margins, ensuring sustainable growth in a highly competitive market.
Or
Discuss the relationship between planning and controlling.
Ans: Planning and controlling are interdependent management functions essential for organizational success. Planning is the base of controlling function, as controlling involves measurement of performance against the standards to analyse deviations and take corrective action. Planning without controlling is meaningless because, in the absence of controlling, it is impossible to monitor the progress and keep a check on the proper implementation of plans. Thus, without controlling, planning will fail to achieve objectives. Thus, controlling is impossible without planning. Planning involves setting objectives, devising strategies, and determining the resources needed to achieve goals. Controlling, on the other hand, ensures that activities align with the plan by monitoring performance, identifying deviations, and implementing corrective actions. Effective planning provides a clear roadmap, while controlling ensures adherence to that plan. The relationship is cyclical: controlling informs future planning by highlighting gaps, successes, or emerging challenges, leading to continuous improvement. Together, they create a feedback loop that helps organizations adapt, maintain focus, and achieve their objectives efficiently. Planning is a blueprint of the course of action to be followed in the future. It is also a mental exercise that requires imagination, foresight and sound judgment. It is thinking before doing. It is a preparatory step, and it refers to detailed programs regarding the future course of action. In fact, it is the basic management functions that involve forecasting.
13. Discuss the importance of communication in modern business organisation.
Ans: The importance of communication in modern business organisation are:
(i) Enhanced Collaboration: Enhanced collaboration refers to the improved ability of individuals or groups to work together effectively towards a common goal, leveraging their diverse skills, perspectives, and strengths.
Clear communication fosters teamwork by ensuring all members understand objectives, roles, and expectations.
(ii) Effective Decision-Making: Timely and accurate information flow supports informed and swift decisions. A decision is an act of selection or choice of one action from several alternatives.
(iii) Conflict Resolution: Open communication channels help address misunderstandings and conflicts constructively. When a dispute arises, the best course of action is to use negotiation to resolve the problem.
(iv) Employee Engagement: Improved discretionary effort offered by engaged individuals is one huge benefit of employee engagement initiatives. Those with high engagement levels often perform above expectations and develop meaningful relationships with their peers, contributing to improved outcomes for everyone involved.Transparent communication builds trust, motivates employees, and fosters a sense of belonging.
(v) Customer Relations: Positive customers relations refer to long-term relationships that benefit both the customers and the business. Strong communication ensures excellent customer service, building loyalty and reputation. Such relations can help your business connect with customers on a much more personal level where you no longer treat them as transactions but see them as partners in your growth.
14. Write various steps involved in staffing process.
Ans: Steps involved in staffing process are:
(i) Planning the Manpower Requirements: Planning manpower requirements in the staffing process involves analyzing an organization’s current and future workforce needs to ensure the right number of employees with the necessary skills are available. It also helps in determining the skills and qualifications required for a specific job in the organisation. takes into account factors like workload, employee turnover, and industry trends. Proper manpower planning ensures efficient resource allocation, minimizes overstaffing or understaffing, and supports strategic growth. By aligning workforce planning with organizational objectives, businesses can enhance productivity, reduce costs, and maintain a competitive edge in the market.
(ii) Recruitment of Employees: Recruitment is a critical step in the staffing process, involving the identification, attraction, and selection of suitable candidates to meet an organization’s workforce needs. The process begins with understanding job requirements, including qualifications, skills, and experience necessary for a role. Once the requirement is evaluated, the next step involves the searching of prospective persons that are eligible for the job and inviting applicants to apply for the positions. In this process, the employer advertises about the openings in the organisation through various media, which makes it easy for the applicants to get to know about the job vacancy and the required skills. It sets the foundation for a successful and efficient staffing process.
(iii) Selection of Employees: The selection process helps in screening the employees and identifying the deserving candidate who will be suitable for a specified job. It begins with a clear definition of job requirements, including qualifications, skills, experience, and personal attributes. The process typically includes advertising vacancies, reviewing applications, conducting interviews, and administering tests to assess suitability. Therefore, it can be said that the main objective of selection is to identify the right employee for the right job. The goal is to match the right candidate with the right job to enhance productivity, foster organizational culture, and achieve business objectives. Effective selection ensures long-term success by building a skilled and motivated workforce.
(iv) Training and Development: Training and development requirements in the staffing process focus on equipping employees with the skills, knowledge, and competencies needed for their roles.Once the placement is done, the next step involves the training and development of employees. Training is an integral part of the staffing process, and it helps the employees to develop their skills and knowledge. By integrating training and development into staffing, organizations improve employee performance, job satisfaction, and retention, creating a competitive, adaptable workforce capable of thriving in dynamic business environments.
(v) Remuneration to Employees: Remuneration to employees is a critical aspect of the staffing process, ensuring fair and competitive compensation to attract, retain, and motivate talent. It is the compensation given to the employees in monetary terms in exchange for the work they do for the organization. It is given according to work done by the employees. Remuneration to employees is a critical aspect of the staffing process, ensuring fair and competitive compensation to attract, retain, and motivate talent.
15. Write five fundamental features of management.
Ans: Here are the five fundamental features of management:
(i) Goal-Oriented Process: The success of any management activity is assessed by its achievement of the predetermined goals or objective. Management is a purposeful activity. Management focuses on achieving specific organizational goals. Every activity, decision, and plan is aligned with attaining desired outcomes efficiently and effectively. The success of management is measured by the extent to which organization goals are achieved. Management is not a stereotype activity but is ever changing. It is a complex and dynamic activity.
(ii) Planning and Decision-Making: Planning is the process of selecting a future course of action, where Decision-making means selecting a course of action. Planning and decision-making, organizing, leading and controlling are all interrelated. Management involves formulating strategies, setting objectives, and making informed decisions to ensure smooth operations and future readiness. Planning and decision making is the most important step of all managerial functions.
(iii) Organizational Structure: Organizational structure is defined as the framework of roles, responsibilities, authority relationships, and communication channels within an organization. Management establishes a framework for roles, responsibilities, and authority, creating a hierarchy to facilitate coordination and efficient use of resources.
(iv) Dynamic and Continuous Process: Management is an ongoing process. It involves continuous handling of problems and issues. Management is an ongoing process that adapts to changing environments, market conditions, and organizational needs to maintain relevance and competitiveness. It is concerned with identifying the problem and taking appropriate steps to solve it. E.g. the target of a company is maximum production.
(v) Coordination and Collaboration: Management integrates efforts across all levels and departments of an organization to ensure teamwork, minimize conflicts, and achieve synergy in accomplishing objectives. Coordination is an orderly arrangement of efforts to provide unity of action in the fulfillment of common objective whereas co-operation denotes collective efforts of persons working in an enterprise voluntarily for the achievement of a particular purpose.
16. Write the economic reforms that have been initiated by Govt. of India since 1991.
Ans: The economic reforms in India in 1991 led to the liberalisation of the economy and significant improvement in its growth rate. These reforms started under the then Prime Minister of India, Narasimha Rao, and it had three main objectives – Liberalisation, Privatisation and Globalisation (LPG). These reforms began with the introduction of the New Economic Policy under then Finance Minister Dr. Manmohan Singh, aimed at overcoming the economic crisis. Key reforms included the devaluation of the rupee, reduction of import tariffs, and dismantling of the License Raj, which had restricted industrial growth. The government also encouraged foreign direct investment (FDI), leading to increased global integration. Public sector enterprises were privatized, and economic liberalization fostered the growth of sectors such as information technology and services. Tax reforms, including the introduction of the Goods and Services Tax (GST) in 2017, and measures to enhance ease of doing business, were also pivotal in transforming India’s economic landscape, making it one of the world’s fastest-growing economies.
Or
Explain the features of an efficient planning process.
Ans: The features of an efficient planning process are:
(i) Planning focuses on achieving objectives: Companies are set up with a common goal in view. Explicit purposes are placed out in the projects along with the ventures to be initiated to accomplish the goals. Therefore, planning is helpful. This focus on objectives helps in maintaining purpose and direction throughout the planning and implementation stages.
(ii) Risk Management: Anticipating potential risks and having contingency plans in place are crucial features of a good planning process. This helps to mitigate the impact of uncertainties.
(iii) Planning is a primary function of management: Planning puts down the foundation for other operations of management. All other managerial duties are conducted within the structure of the ideas outlined. Consequently, planning leads to other operations. This is also mentioned as the supremacy of planning.
(iv) Goals Decided for Future: One of the features of planning is that it is aimed for upcoming events and activities. These are planned ahead of time so that people can work in a coordinated environment towards its success. With adequate planning, one can achieve the goals decided for the future. These goals provide direction and purpose, ensuring that efforts are focused on achieving specific objectives.
(v) Timely Implementation: The plan must have a clear timeline for implementation. This ensures that tasks are completed in a structured manner and deadlines are met.
17. Discuss various steps Involved in the process of organising.
Ans: Following are the steps Involved in the process of organising:
(i) Identification and Division of Work: The first step in the process of organising involves identifying and dividing the work that has to be done in accordance with previously determined plans. It involves breaking down the overall objectives of the organization into smaller, manageable tasks. Each task is identified based on its nature and requirements, ensuring that all essential activities are accounted for without overlap. By dividing work, the organization can assign specific tasks to individuals or teams based on their skills and expertise, promoting specialization and efficiency. Work is divided into manageable tasks so that duplication can be avoided and workload can be shared among employees.
(ii) Departmentalisation: It is a crucial step in the process of organising, where similar or related activities are grouped into distinct departments or units to ensure efficient management and coordination. Once, work has been divided into small and manageable activities, then those activities which are similar in nature, are grouped together. This process is called departmentalisation. Departments can be created on the basis of products, functions and territory. Departmentalisation fosters better coordination, clear authority-responsibility relationships, and effective resource utilization.
(iii) Assignment of Duties: It is a critical step in the organizing process where specific tasks are allocated to individuals or teams based on their skills, expertise, and roles. Once the departments are created, each department is placed under the charge of an individual, called departmental head. Then, each job is allocated to an individual, according to his knowledge and skill. There should be a proper match between the nature of jobs and the ability of an individual. Proper assignment considers the employee’s capabilities, experience, and workload to enhance productivity. Clear role definitions prevent duplication of effort and confusion, ensuring accountability and focus.
(iv) Establishing Reporting Relationships: In the organisation, each employee has some authority as well as responsibility. It involves specifying who reports to whom, creating a clear chain of command. It is necessary that every individual must know whom he has to take orders from and to whom he is answerable. This creates superior subordinate hierarchy and helps in coordinating various activities in the organisation. Vertical relationships determine authority and supervision, while horizontal relationships focus on coordination among peers.
Or
Discuss the need and importance of stuffing functions of management.
Ans: The need and importance of stuffing functions of management are:
(i) Better performance: The performance of an organization depends on the quality of persons employed in the organization. The function of staffing is significant because it ensures higher performance by putting the right person in the right job at the right time.
(ii) Optimum utilization of human resources: The staffing process helps to ensure optimum use of human resources by avoiding overstaffing. It prevents the underutilization of personnel and higher labor cost. It also helps in avoiding disruption of work by indicating in advance the shortage of personnel.
(iii) Morale Boost and Motivation: An efficient staffing system is not solely about filling positions; it’s about recognizing and appreciating the efforts of employees. By acknowledging and rewarding performance, whether through monetary incentives or non-monetary recognition, staffing creates an environment where employees feel valued and appreciated.
18. Explain the rights and responsibilities of a consumer under the Consumer Protection Act.
Ans: Rights of a Consumer are:
(i) The right to be protected against the marketing of goods, products or services which are hazardous to life and property.
(ii) The right to be informed about the quality, quantity, potency, purity, standard and price of goods, products or services, as the case may be, so as to protect the consumer against unfair trade practices. Right to access accurate information about products and services to make informed choices.
(iii) Right to select from a variety of products at competitive prices.
(iv) The right to seek redressal against unfair trade practice or restrictive trade practices or unscrupulous exploitation of consumers; and Right to voice complaints and seek redress for grievances.
(v) The right to be educated and consumer awareness about consumer rights and responsibilities.
Responsibilities of a Consumer are:
(i) Consumers should be aware of their rights and duties and make informed choices.
(ii) Learn about the risks associated with products and services, follow manufacturer’s instructions and use the products safely.
(iii) Consumer should be well concerned about what they want and need and therefore make independent choices.
(iv) It is the consumer’s responsibility to express and file a complaint about their dissatisfaction with goods or services in a sincere and fair manner.
(v) Consumers should assist in the improvement of products and services by providing feedback or participating in consumer forums.
Or
Discuss any eight factors that should be taken into consideration while determining working capital requirement.
Ans: Here are eight important factors to consider while determining working capital requirements:
(i) Nature of Business: The requirement of working capital also varies among the enterprises depending upon the nature of the business. Different businesses have varying needs for working capital depending on their industry. For example, manufacturing businesses may require more working capital due to the need for raw materials and inventory, while service-oriented businesses may need less. In both these types of businesses, the value of current assets is 80% to 90% of the value of total assets. The investment in current assets is relatively smaller in the case of hotels and restaurants because they mostly have cash sales, and only small amounts of debtors’ balances.
(ii) Production Cycle: Production cycle is a set of steps and methods of converting raw materials into finished goods to fulfil customer orders or meeting market demand, by streamlining the production process and optimizing the cost of production while maintaining product quality and design specifications that meet client requirements on time.The length of the production cycle affects the amount of working capital needed. Longer production cycles require more working capital, as the funds are tied up in inventory and production processes for an extended period.
(iii) Credit Policy: A business credit policy outlines the credit department’s clearly stated governing principles involving trade credit. An effective credit policy should align your corporate goals with business procedures and help your company reduce bad debt and write-offs. The company’s credit policy, particularly regarding the credit terms offered to customers (e.g., credit period and receivables collection), influences the working capital requirement. A lenient credit policy leads to higher receivables and thus more working capital needs. It should also serve to strengthen your company’s payment cycles and lead to increased profitability.
(iv) Inventory Management: Inventory management is the part of supply chain management that aims to always have the right products in the right quantity for sale, at the right time. The level of inventory a business maintains directly impacts working capital. Businesses with high inventory turnover may require less working capital, while those with slower-moving inventory may need more capital to sustain operations. Good inventory management can help you track your inventory in real time to streamline this process.
(v) Sales Volume and Growth: Sales volume reflects the count of products a company sells and is a major factor to consider while measuring a company’s success. An increase in sales volume, especially during growth phases, leads to a higher working capital requirement, as more funds are needed to meet the demand for raw materials, inventory, and additional labor.
(vi) Operating Efficiency: Efficient management of day-to-day operations can help reduce working capital needs. Businesses that can quickly convert their raw materials into finished goods and collect payments faster will need less working capital. By eliminating non-value-added activities and streamlining production processes, businesses can achieve higher efficiency and lower operating costs. This approach not only improves the operational efficiency rate but also enhances overall business performance.
(vii) Seasonality: Businesses with seasonal fluctuations in demand may experience peak periods where higher working capital is required to finance additional inventory and operations during busy seasons. Conversely, off-season periods may require less working capital.
(viii) External Factors: Economic conditions, inflation, interest rates, and government regulations can all affect working capital needs. They can be physical, political, social, economic, technological, environmental, or cultural in nature. These elements can positively or negatively affect the performance and decision-making processes of individuals, businesses, and governments. To better understand the implications of external factors, we will explore how they manifest in business, personal life, and international relations. For example, inflation can increase the cost of raw materials, requiring a business to allocate more working capital to purchase inventory.
For Old Course
Questions in Lieu of Project work
Answer any four from the following:
19. Write five external sources of recruitment.
Ans: Following are the five external sources of recruitment:
(i) Media Advertisement: Media advertisement as an external source of recruitment involves using mass communication platforms such as newspapers, magazines, television, radio, and online channels to attract potential candidates for job openings. The ads in newspapers, professional journals, give a comprehensive detail about the organization, type, and nature of job position, skills required, qualification and experience expected, etc. This helps an individual to self-evaluate himself against the job requirements and apply for the jobs which best suits him. This method is cost-effective for reaching specific demographics and allows businesses to showcase their brand. The widespread reach and visibility make it an effective tool for recruiting talent, particularly for positions requiring unique or niche skills.
(ii) Employment Exchange: The employment exchange is the office run by the government wherein the details about the job seekers such as name, qualification, experience, etc. is stored and is given to the employers who are searching for men for their organizations. Employers can notify Employment Exchanges about job vacancies, and the exchange matches these with registered candidates based on their qualifications and skills. This method ensures transparency and provides opportunities for unemployed individuals to secure jobs. It is particularly beneficial for recruiting in public sector organizations or for roles requiring compliance with local employment laws or government guidelines.
(iii) Direct Recruitment: Direct recruitment is a method of sourcing candidates from external pools by directly engaging with potential employees without intermediaries. Organizations use this approach to fill positions quickly, especially for entry-level or temporary roles. It often involves placing notices on company premises, hosting open interviews, or advertising job openings at events like job fairs. Sometimes organisations paste notices at the gate of their office or factory or workshop stating the vacant job positions. The people who are interested in those jobs walk in for an interview. This method of external recruitment is most suitable for unskilled job positions, For example, sweeper, peon, etc.
(iv) Casual Callers: The casual callers, also called as unsolicited applications are the job seekers who come to the well-renowned organizations casually and either mail or drop in their job applications seeking the job opportunity. As an external source of recruitment, casual callers provide employers with a ready pool of potential candidates. This approach is cost-effective and convenient, especially for positions with recurring vacancies or high turnover. Organizations can maintain a database of these applicants for future reference, allowing them to quickly fill positions when needed without undergoing a lengthy recruitment process.
(v) Labor Contractors: This is the most common form of external recruitment wherein the labor contractors who are either employed with the firm or have an agreement to supply workers to the firm for the completion of a specific type of a task. Labor contractors serve as external sources of recruitment by acting as intermediaries between employers and workers. This method is again used for hiring the unskilled and semi-skilled workers. The contractor keeps in touch with the workers and sends them to the places where their need arises. In doing so, the contractors get the commission for each worker supplied. Employers often rely on labor contractors for temporary, seasonal, or specialized labor needs. This approach offers flexibility and cost savings but can pose challenges related to worker accountability and compliance with labor laws. Contractors play a crucial role in bridging labor demand and supply efficiently.
20. Explain the terms ‘Authority’, ‘Responsibility’ and ‘Accountability.
Ans: Authority: Authority refers to the legitimate power or right assigned to individuals or groups to make decisions, issue orders, and enforce obedience within an organization. Authority is the power given to a person for carrying out certain activities and tasks by an organisation. The person given the authority by the organisation determines the position he/she holds for making decisions, commanding people, giving directions, and making use of resources for carrying out certain tasks. It is an essential element of organizational structure, enabling the efficient delegation of tasks and responsibilities. Authority flows downward in a hierarchy, where superiors grant subordinates the power to perform certain tasks. Authority according to Koontz and Weihrich, the right in a position (and, through it, the right of the person occupying the position) to exercise discretion in making decisions affecting others. For example, a manager may have the authority to allocate resources or approve budgets.
Responsibility: Responsibility refers to an obligation to perform certain functions in order to achieve certain results. Responsibilities in the workplace are duties that an individual or department carries out on a regular basis. When an employee or manager is responsible for a task, you can hold them accountable in case the task isn’t carried out or praise them for a job well done. It arises when authority is delegated, and the individual accepting the task is expected to execute it to the best of their ability. Responsibility is a two-way process, requiring both clarity of expectations and accountability for outcomes. For instance, a team leader is responsible for meeting project deadlines and ensuring quality.
Accountability: The term “accountability” refers to the acceptance of responsibility for honest and ethical conduct toward others. Accountability is the obligation to explain, justify, and accept the consequences of one’s actions or decisions. In the corporate world, a company’s accountability extends to its shareholders, employees, and the wider community in which it operates. In a wider sense, accountability implies a willingness to be judged on performance. It ensures that individuals or groups answer for their responsibilities and the authority they hold. Accountability flows upward in an organizational hierarchy. For example, employees report their performance to managers, who, in turn, are accountable to higher executives for the team’s success or failure.
21. Write five limitations of planning.
Ans: Here are five limitations of planning:
(i) Planning leads to rigidity: Planning can lead to rigidity in business as it involves setting predetermined objectives, strategies, and action plans, which may limit flexibility.Planning discourages individual’s initiative & creativity. The managers do not make changes according to changing business environment. They stop taking or giving suggestions and new ideas. Over-reliance on planning might cause businesses to resist necessary adjustments, leading to inefficiency or missed opportunities. Additionally, adherence to detailed plans can slow down responses to emerging challenges, making the organization less competitive in fast-changing markets. Effective planning should balance structure with adaptability.
(ii) Planning may not work in dynamic environment: Planning may struggle in dynamic environments due to rapid changes, uncertainty, and unpredictable factors like market trends or technological shifts. Planning is based on anticipation of future happenings and since future is uncertain and dynamic, therefore, the future anticipations are not always true.
(iii) Planning involves huge costs: Planning involves significant costs due to the resources required, including time, manpower, and financial investment. When plans are drawn up, huge cost is involved in their formulation in terms of money and efforts. Additionally, implementing and monitoring plans may require new tools or training, making planning a costly process, especially if changes demand frequent revisions
(iv) Planning is time consuming: Planning is time-consuming as it requires detailed analysis, forecasting, and decision-making. Sometimes plans to be drawn up take so much of time that there is not much time left for their implementation and it is not feasible in emergencies.
(v) Planning does not guarantee success: Planning does not guarantee success because unforeseen factors like market changes, economic instability, or competition can disrupt even well-crafted plans. The success of an enterprise is possible only when plans are properly drawn and implement. Sometimes managers depend on previously tried successful plans,
22. What are different sources of working capital? Briefly discuss.
Ans: Working capital, essential for daily operations, is primarily sourced through equity financing and debt financing. Equity financing, which includes funds invested by business owners or shareholders, It is involves funds contributed by business owners or shareholders, offering a stable and long-term source of capital without repayment obligations. Debt financing includes short-term loans, lines of credit, and borrowings from banks or financial institutions, providing quick liquidity to meet immediate needs. and debt financing, which includes short-term loans, lines of credit, and other borrowings from banks or financial institutions. It is strengthens financial stability, debt financing enables flexibility for managing seasonal or unexpected expenses. A balanced approach between these two sources ensures businesses maintain smooth operations, manage cash flow effectively, and support growth initiatives without financial strain. These sources provide essential liquidity for operations.
23. Write the features of new issue market.
Ans: The features of new issue market:
(i) In this market, funds move directly from investors to the issuing companies, bypassing intermediaries like stock exchanges.
(ii) A new issue is a method of obtaining capital for a business. Companies can choose between issuing debt (i.e. borrowing) or issuing equity (i.e. stock) (i.e., selling a portion of the organization).
(iii) On receiving the money from new issues, the company will issue the security certificates to the investors.
(iv) It is the market for new long term capital. The securities are issued by company for the first time directly to the investors.
(v) Operations in the NIM are regulated by governing bodies like the Securities and Exchange Board of India (SEBI) or the SEC in the United States, ensuring transparency and investor protection.
(vi) The amount obtained by the company after the new issues are utilized for expansion of the present business or for setting up new ventures.
(vii) The new issue would be scrutinized using the debt route (i.e., issuing bonds) depending on the issuer’s creditworthiness to repay its commitments and entire economic capacity. Issuing bonds could be a choice that is not easily accessible if the company is a startup with no sales.
(viii) External finance for long term such as loan from financial institutions is not included in new issue market. There is an option called “going public” in which the borrowers in new issue market raise capital for converting private capital into public capital.
(ix) It facilitates companies in raising funds by issuing new shares or bonds to finance expansion, diversification, or other business needs.
Direct Issuance to Investors: Securities are sold directly by the issuing company to investors, without being traded on a stock exchange initially.
Intermediaries Involvement: Investment banks, underwriters, brokers, and financial institutions play a crucial role in managing the issue process.
(x) Investments in the primary market involve high risk due to the lack of historical data on the securities but also offer the potential for high returns.
24. Write five objectives of entrepreneurship development programme.
Ans: Following are the main objectives of entrepreneurship development programme:
(i) An EDP’s main goal is to encourage entrepreneurship and the expansion of small and medium-sized businesses (SMEs). These initiatives provide people the skills and resources they need in order to inspire and enable them to achieve their entrepreneurial goals.
(ii) Provide practical training on business management, financial planning, marketing, and operational techniques to ensure participants are well-prepared for entrepreneurial ventures.
(iii) Offer continuous mentoring, networking opportunities, and resources to help budding entrepreneurs successfully navigate the challenges of starting and growing their businesses.
(iv) Enterprise development objectives encompass identifying and evaluating opportunities, commercializing a concept, developing entry strategies, constructing a business plan, finding capital, initiating the business, growing the business.
To increase the supply of entrepreneurs for quick industrial development.
(v) Motivating and guiding various individuals for launching their own new businesses and startups. Thus, becoming a contributor to the economy. To reach risk mitigation to the youth of the nation. Encourage the establishment of new enterprises that contribute to job creation, increased productivity, and overall economic growth.
