(i)
How does change in social environment affect a
business?
Ans: Social environment consists
of all the social and cultural forces within which business operates. It
consists of social set-up, cultural, moral , ethical values of society,
standard of living, tastes, preferences, education levels etc. It exercises
significant influence on the businesses. Demand of branded consumer items is
increasing rapidly as people often spend more in order to boost up their social
image. Life styles and needs of people are changing with the change in social
environment.
(ii)
State two importance of controlling.
Ans: The two importance of controlling are as follows:
(a) Facilitates decision making:
Controlling helps in deciding future course of action when there is deviation
between standard and actual performance.
(b) Facilitates Co-ordination: control
helps in co-ordination of activities through unity of action. Every manager
will try to co-ordinate the activities of his subordinate in order to achieve
departmental goals.
iii) What do you mean by
“Encoding and “Decoding” in the process of communication?
Ans: Encoding and Decoding are
important elements or steps in the process of communication. Encoding is the
use of appropriate verbal or non-verbal language for transmitting the message.
The sender translates the idea or message into a language (words, symbols or
gestures) which is easily understandable by the receiver.
Decoding- means the conversion of the message by the receiver into
meaningful terms. The receiver interprets the message to derive its meaning.
The effectiveness of communication depends on how the receiver decodes the
message.
iv) Name two supply functions of
marketing?
Ans: The two supply functions of
marketing are as follows:
(a) Transportation: Goods are used for
consumption or use purpose and these must reach the consumers in proper time.
Transportation is considered to be an important function of marketing as it
creates place utility by eliminating barrier of distance between producer and
consumer.
(b) Storage & Warehousing: Storage or
warehousing is considered to an important function of marketing since it
creates time utility as it preserves goods and brings equalization of demand
and supply by bridging the gap between the time of production and time of
consumption.
(v) What
is meant by Installment credit?
Ans: Instalment credit is a method
of lending where assets are sold and the payments are received in instalments.
Banks may help their clients in purchasing some assets from manufacturers or
suppliers. The payment is made by the bank to the seller on behalf of its
clients. Bank recovers the amount from the client in pre-decided instalments.
Each instalment includes interest and part of principal amount. The amount of
loan is recovered through instalments.
(vi) Give two advantages of public
deposits from company’s view point.
Ans: The two advantages of public
deposits from company’s view point are as follows:
(a) Loans
without mortgage of assets: The company is not required to mortgage its assets
with the investors.
(b) Non-
interference in the management: Depositors do not have a right to participate
in the management of the company.
(vii) Explain the concept of
“Authority” and “Responsibilty”.
Ans: Authority and Responsibility
are important elements in the process of delegation.
Authority is the grant of authority
by the superior to the subordinate so that the assigned task is accomplished. The
subordinate can only accomplish the work when he has the authority required for
completing the task. Authority is the power to order or command, delegated from
superior, to enable the subordinate to discharge his responsibility.
Responsibility: Responsibilty is the
assignment of work or duty to the subordinate. The superior asks his
subordinate to perform a particular task in a given period of time. It is the
description of the role assigned to the subordinate.
(viii) Mention any two specific
differences between product and service.
Ans:
|
Product
|
Service
|
|
(a) Products
are tangible in nature and can be stored.
(b) Products
are separable form source.
Example: T.V. , washing machine, refrigerator,
furniture, vehicle, etc.
|
(a)
Services are intangible in nature and cannot
be stored.
(b)
Service is inseparable form. source.
Example: electricity,
transportation, insurance, banking etc.
|
(ix) What is meant by “principle of
equity” as laid down by Henry Fayol?
Ans: Equity means justice and
kindliness. Fayol was of the opinion that to encourage workers to fulfill their
duties with devotion and loyalty management should deal with employees with
equity-based kindness and justice. There should neither be nepotism and
favourtism and all should be given just and fair treatment.
(x) Expand the term i) EXIM Bank-
Export and Import Bank ii) AGMARK-
Agricultural Mark iii) ISI- Indian
Standard Institution iv) IRCI-
Industrial Reconstruction Corporation of India .
SECTION-B
(60
Marks)
(Answer
any five questions)
QUESTION
2
(a)
Planning and Controlling are mutually
interdependent. Explain. [5]
Ans: Planning is looking ahead. It
is taken before taking up any activity. Planning is essential as it forms the
basis of judging actual performance. The standards for performance are set at
the level of planning and then efforts are made to reach them. Controlling
helps in knowing whether the performance goes as per the standards. In case of
any deviations between standard performance and actual performance, remedial
measures are taken at the earliest.
Planning and controlling are closely
interrelated and interdependent functions of management. Without planning there
is no basis for controlling. Planning is prerequisite for controlling.
Controlling may not prove effective unless actual performance are measured and
compared with standard performance. These standard or predetermined goals are
laid down in planning. Plans provide the standards for controlling. Similarly,
planning serves no purpose in absence of controlling. Controlling helps to
observe the deviation and take remedial action to achieve the desired goal.
Control is necessary to ensure that the planned results are achieved.
Controlling improves future planning by providing useful information. Thus, we
can conclude that planning and controlling are inseparable twins of management.
(b)
Explain
any four functions of a
supervisor.[4]
Ans: The functions of supervisor can
be discussed as below:
(i)
Issuing
Orders and Instructions: The supervisor issues orders and instructions for
the execution of work. Supervisor helps the new employees to get familiar with
the work environment and provides job training to them.
(ii)
Motivating
workers: Supervisor motivates the worker towards better work performance
and creates enthusiasm and team spirit among them by appreciation and recognition
of job well done.
(iii)
Guiding
Subordinates: Supervisor has to guide and advise his subordinates. He has
to make the subordinates familiar with the plans and policies of management.
(iv)
Handling
Grievances: The supervisor listens to the grievances and complaints of
workers. He serves as a link between the workers and the management. He
communicates the grievances and suggestions of workers to higher authorities.
(c) Discuss any four factors to be
considered in determining the suitable capital structure of a company. [4]
Ans: Capital structure means the
types of securities to be issued and the proportionate that make up the
capitalization. The factors which must be considered in determining the
suitable capital structure can be discussed as follows:
(i)
Growth
and Stability of Sales: The capital structure of a firm is highly
influenced by the growth and stability of its sale. If the sales of a firm are
expected to remain fairly stable it can raise a higher level of debt.
(ii)
Cost of
Capital: Cost of capital refers to the minimum return expected by its
suppliers. The capital structure should provide for the minimum cost of
capital. While formulating a capital structure an effort must be made to
minimize the overall cost of capital.
(iii)
Nature
and Size of a firm: A public utility concern has a different capital structure as compared to
other manufacturing concerns. Public utility concern use more debt because of
stability and regularity of earnings while a concern which cannot provide
stable earnings will have to rely on equity capital.
(iv)
Flexibility:
Capital structure of a firm should be capable of being adjusted according to
the needs of the changing conditions. Business concerns should be able to
additional funds without any difficulty and delay.
QUESTION
3
(a)
“Coordination is an essence of management”.
Comment. [5]
Ans: Refer class notes.
(b)
State any four differences between a share and a
debenture. [4]
|
Share
(a) Shareholders
are the owners of the company.
(b) Shareholders
have full voting rights.
(c) Shareholders
are paid dividend out of profits.
(d) Shares
are not redeemable except redeemable preference shares.
|
Debenture
(a)
Debenture holders are the creditors of the
company.
(b)
Debenture holders do no have voting rights.
(c)
Debenture holders are paid interest
irrespective of profits.
(d)
Debentures are usually redeemable.
|
(c)
Mention any three factors that influence the
price determination of a product. [3]
Ans: The three factors that influence the
price determination of a product are as follows.
(i)
Demand:
The demand for a product or service influences the price. When the demand for a
product is more then higher price may be charged. On the other hand a lower
price may be charged if demand for the product is low.
(ii)
Cost Factor:
The cost of a product is an important element in price fixation. Every price
should cover the cost of production.
(iii)
Objectives:
If the objective of the firm is to maximize profits then it will try to charge
higher price. On the other hand if the objective of the firm is to increase its
market share and to maximize sales then price will fixed lower.
QUESTION
4
(a) Discuss
any four methods of providing loans and advances by commercial banks. [4]
Ans: Commercial banks lend money
to businessmen and other persons in the following forms:
(a) Cash credits: Banks may allow the
borrower to borrow money up to a certain limit against the security of stock or
marketable instruments. The borrower is required to pay interest on the amount.
The borrower can also keep the surplus funds in the bank and also enables him
draw funds as and when required.
(b) Bank Overdraft: Banks may allow the
customers to overdraw from their deposit accounts with a specified limit
usually for a short period of time. The bank charges interest on the overdrawn
balances. This facility is usually provided to the financially sound customers.
(c) Discounting of Bills: Customers can get
financial assistance from the banks by discounting their bills of exchange,
promissory notes etc. Banks usually pay a price lower than their face value.
Bank charges discount in terms of interest for the unexpired period i.e. date
of discounting up to the date of maturity of the bill.
(d) Loans and advances: Banks provide loans
to individual or business concern on easy terms and conditions against the
security of assets or on the personal security of the borrower. The borrower
may repay the loans in instalments or in lump sum on the expiry of the period.
(b) Explain
the steps involved in “Organizing” as a function of management.
Ans: Organizing process consists
of following steps:
(a) Identification and division of work:
The first step in organizing is to divide the total work to be done into
specific jobs. Division of work is necessary since the entire work cannot be
done by a single person. Division of work facilitates specialization of efforts
and skills.
(b) Grouping jobs or activities: Once the
total work is divided the next step is to classify or group them into
manageable units and place them under the charge of one manager. Similar or related
activities should be combined and grouped.
(c) Assigning duties: Each group of
activities is assigned to an individual best suited to perform it as per the
qualification, experience, skills etc. Right men should be right responsibility
and there should be proper match between job requirements and capabilities of
employees.
(d) Delegation of adequate authority: This
helps managers to distribute their work load to others. Delegation lessens the
burden of top executives and facilitates quick decision making.
(e) Defining responsibility relationship:
It is necessary to define the relationship between two or more persons who have
been working together for a common goal. Each individual should know who his
superior is, from whom he has to take instructions and whom to report.
(f) Providing proper physical facilities:
Proper infrastructural facilities like quality materials, proper machines,
proper work environment must be provided to the workers for getting the work
done in efficient manner.
(g) Proper coordination: The activities and efforts of different
groups, individuals must be coordinated. Coordinated effort of individuals
ensures that the organizational goals are achieved.
(h) Proper communication: Effective
communication is vital for success in management. Coordination is possible only
through a proper communication system.
(c) Examine
the methods by which the objectives of consumer protection can be achieved. [4]
Ans: There are three alternative
ways by which the objective of consumer protection can be achieved:
(a)
Consumers’
self help (i.e. consumers’ union)
The consumers can form a common
platform. There can be consumer forums which can settle their grievances.
Consumers’ can also form an association which can help in educating consumers,
awakening consumers and helps them to fight against the malpractices of
producers and sellers.
(b) Self discipline by the manufacturers and
traders: The traders and businessmen should adopt fair and just business
practices. They should avoid malpractices and monopolistic trade practices.
They should provide transparent information about the products and should avoid
the temptation of making extra profits by cheating consumers.
(c) Enactment of laws by the government:
The government should regulate business practices in order to protect
consumers. The governments of India
have passed different Acts in order to regulate production, supply, price,
quantity, quality, distribution etc. Examples: Drugs Control Act, 1950, MRTP
Act, 1969, Consumer Protection Act, 1986 etc.
QUESTION
5
(a)
Explain in brief “motivation” as an element of
directing. [2]
Ans: Motivation is the process of
inspiring subordinates to act in a desired manner so as to achieve
organizational goals. The term motivation has been derived from the word
“motive” which is an inner state that energizes, activates or moves behaviour
towards goals.
(b)
Explain three merits and three demerits of line
and staff organization. [6]
Ans: The three merits of line and
staff organization are as follows:
(i) Specialization: Line and staff
organization introduces specialization in a systematic manner. Persons with
specialized knowledge are appointed to help officers.
(ii)Better
discipline: The unity of command is maintained in this type of
organization. The staff personnel do not interfere with the executive work of
line officers.
(iii) Growth and expansion: The line and
staff organization is suitable for growth and expansion. The burden of line
staff is eased by the appointment of specialists.
The three demerits of line and staff organization are as
follows:
(i) Conflict between
line and staff personnel: There is a possibility of conflict between line
and staff personnel. The staff officers feel ignored at the hands of line
officers.
(ii) Lack of responsibility:
There is lack of responsibility for staff officials. They are not accountable
for the actual results of operations.
(iii) More dependence
on staff: The line officer becomes habituated for advice on staff. They
refer everything to staff for advice. Over-dependence on staff will make line
officers less effective.
(c) Briefly explain any three factors to be considered while
preparing a suitable capital plan.
Ans: The three factors to be considered while preparing a
suitable capital plan are as follows:
- Cost of Fixed Assets: Fixed assets include land and building, plant and machinery, furniture and fittings, equipments, etc. The requirements of capital largely depend upon the amount required to be invested in these assets.
- Cost of Current Assets: Current assets are those assets which in the ordinary course of business can be converted into cash within a short period.
- Cost of establishing the business- Expenses incurred in the setting up of the organization and operating losses that are generally incurred in the initial periods of a concern are included under cost of establishing the business.
QUESTION
6
(a)
Briefly outline the social and cultural
environment of the business.[3]
Ans: The social tradition and cultural heritage can influence business
decisions. Socio-cultural changes (such as social values, beliefs of people,
traditions, customs and conventions, family structure and values system,
literacy and education, work culture, awareness of rights, materialism in
society, change in life style etc affect the strategies of all business
enterprises.
(b)
Explain the principles of scientific management
as laid down by F.W. Taylor. [6]
Ans: Refer previous notes.
(c)
Explain three categories of consumer goods based
on consumer’s purchasing behavior. [3[
Ans: The three categories of consumer goods are as follows:
1. Convenience goods: Goods which are
frequently purchased and are relatively inexpensive and for which buyers exert
minimal purchasing effort are known as convenience goods. Example- bread, tea,
biscuits soaps, newspaper, soft drinks, etc.
2. Shopping goods: Goods for which buyers
spend considerable effort in planning the purchase are known as shopping goods,
Examples- Refrigerators, colour TVs, computers, cameras etc. Shopping goods
fairly last long and are not purchased as frequently as the convenience goods.
3. Speciality Goods: Goods which possess
unique characteristics and for which buyers devote considerable purchasing
effort. It possess brand loyalty and the buyers are not willing to substitute
products. Example- watches, shoes, clothes, etc.
QUESTION
7
(a) Explain
the difference between consumer oriented marketing and product oriented
marketing. [3]
Ans: The difference between consumer oriented marketing and product
oriented marketing are as follows:
|
Consumer
Oriented Marketing
|
Product
Oriented Marketing
|
|
It
is also known as Modern concept and is more than a mere physical transfer of
goods.
|
It
is also known as Traditional concept and consists of those activities which
effect transfer in ownership of goods.
|
|
It
is much broader concept and focuses attention on the consumers and
satisfaction of their needs. Marketing begins with much before production and
continues after sales(after sale service)
|
It
is a narrow concept and marketing begins after the goods are produced and
comes to an end with their sale.
|
|
Marketing
is considered to be two way traffic wherein the marketer provides
satisfaction and consumer provides feedback or response to the efforts of the
marketer.
|
Marketing
is considered to be one way traffic i.e. focuses only on transfer of goods
from producers to consumers. It emphasizes more on the physical process of
distributing goods and services.
|
(b) Discuss
the objectives of communication. [5]
Ans:
The objectives of communication are as follows:
1. Promotion of managerial efficiency:
Communication helps in the smooth operation of the management process.
2. Motivation to employees: It helps in
motivating the employees and encourages them to accept new ideas for the
completion of the work. It leads to better employer employee relations.
3. Job satisfaction to employees: The
employees get better education, training and knowledge about the modern methods
of production due to modern communication systems.
4. Quick implementation of decisions:
Effective communication system helps to implement decisions quickly.
5. Cooperation through understanding: It
encourages employees to put forth genuine efforts in performing work. It
ensures efficiency in work in all aspects.
(c) Mention
the sources of finance for i) Sole Proprietorship ii) Partnership and iii)
Joint Stock Company forms of business organization. [4]
Ans: Sole Proprietorship: In these form of business the proprietor
himself contributes the capital. The capital depends on the financial position
of the proprietor. The business is carried on a small scale hence less capital
is required in such undertaking. The proprietor can raise loans from outside
sources to a limited extent.
2. Partnership: The capital
base of partnership form of business is bigger than that of a sole trader
business since the business is carried on a medium scale. The partners
contribute capital of the business as per an agreed ratio. A partnership firm
can also raise loans from banks and financial institutions.
3. Joint Stock Company: A
public company can raise huge resources by issuing securities like shares,
debentures and bonds and by accepting public deposits. In addition it can raise
loans from banks and financial institutions to meet its short term and long
term financial needs. However, a private limited company cannot raise capital
from the public.
QUESTION
8
Write short notes on: [4X3=12]
(a) Management
by exception.
Ans: Refer class notes.
(b) Classification
of working capital.
Ans: Working capital refers to the
capital required to meet the day to day expenses of the business. It is represented
by excess of current assets over current liabilities. Working capital can be
classified into permanent working capital and temporary working capital.
Permanent working capital refers to the minimum amount which is
required in the form of working capital and to operate at a minimum level of
activity. It is generally financed from long term sources and is locked up in
current assets. It can further be sub divided into initial working capital and
regular working capital.
Temporary working capital: Temporary working capital refers to that
part of working capital which is needed over and above the permanent working
capital. It is fluctuating in nature and is known as variable working capital.
The amount of working capital depends on the (a) the extent of extra demand
during season time and (b) exigencies of the urgent circumstances. It can
further be sub- divided into seasonal
working capital and special working capital.
(c) Tangible
and intangible planning premises.
Ans: Tangible premises are those premises which can quantified or
expressed in quantitative terms (i.e. working days, volume of production, sales
volume, etc). It can be measured and expressed in quantitative terms.
Intangible premises are those factors which cannot be quantified.
It is of qualitative nature (i.e. goodwill of the concern, honesty of
employees, motivation among the workers etc)
(d) Money
market and Capital market.
Ans: Money
market is a specialized market which provides short term finances (less than a
year) to business enterprises through a network of banking systems. Example-
call market, Treasury bills etc.
Capital market is a specialized market which provides long
term finance to business enterprises.
