Business Studies
Business Studies
HYDERABAD REGION
STUDY /SUPPORT MATERIAL
BUSINESS STUDIES FOR CLASS XII
CHIEF PATRON
AND
REVISED UNDER THE GUIDANCE OF SH. B.A.RANGASRI
ASSISTANT COMMISSIONER, KVS, HYDERABAD REGION
of other questions.
Wherever any process is asked to be explained, write all the steps
possible.
Answer those questions first, which you know very well.
Underline all the sub-headings.
Draw small cartoons /diagrams with small captions wherever fits
suitable.
Attempt HOTS questions at the last.
Utilize the QP paper reading time to plan writing strategies instead
It also
Topics deleted by
the CBSE
No Change
No Change
Economic
Environment in India
Features of planning
5
6
No Change
No Change
8
9
10
11
Role Of supervisor
Qualities of good
leader
Techniques of
controlling:
Budgetary control
Importance of
Financial
management
Distinction
Between Capital
Market and
money Market
NSEI and OTCEI
Role of marketing
Marketing and
selling
Nature and
classification of
product
Function of
Old
New
marks marks
07
05
07
06
05
05
07
06
10
08
08
06
10
08
06
06
.NO Change
12
12
08
08
.Qualities of a good
salesmen
.Public relations
14
14
12
13
channel of
distribution
Limitation of
advertising
importance of
personal selling
Merits and
limitations of
sales promotion
publicity
NO change
NO change
NO change
.Project work
Total marks
06
00
100
06
10
100
Annexure-'M'
SYLLABUS
BUSINESS STUDIES
One Paper
Unit wise Weightage
Unit
s
CLASS XII
3 Hours
90 Marks
Perio
ds
Marks
5
6
5
6
8
6
8
6
50
12
8
14
6
40
90
Note: The Question Paper will include value based question(s) to the extent of 4
marks from any of the units.
Part A: Principles and Functions of Management
Unit I: Nature and significance of Management
(Periods 12)
Levels of management
planning,
organizing,
staffing,
(Periods
(Periods
(Periods
Unit 7: Directing
(Periods 16)
(Periods
(Periods
(Periods
(Periods
(Periods
(Periods
Max. Marks
Content Unit
Marks
2.
Principles of Management
3.
Business Environment
4.
Planning
5.
Organizing
6.
Staffing
7.
Directing
8.
Controlling
Total (A)
50
Financial Management
12
10.
Financial Markets
11.
Marketing
14
12.
Consumer Protection
Total (B)
40
90
No. of question
Total Marks
1.
Very short
answer
type (VSA)
12
12
2.
Short answer
type I
(SAI)
18
3.
16
4.
20
5.
24
6.
Total
30
90
C. Scheme of Options
There will be no overall choice. However, there is an internal choice in
every question of 6 marks
D.
E.
Percentage
1.
Easy
30%
2.
Average
50%
3.
Difficult
20%
Typology of Questions
Very Short
Answer (1)
Short Answer
Question(3,4)
Long Answer
I & II(5,6)
TOTAL
Unit-1(5)
5(1)
5(1)
Unit-2(6)
3(2)
6(2)
Unit-3(5)
5(1)
5(1)
3(2)
6(2)
Unit-4(6)
Unit-5(8)
4(2)
8(2)
Unit-6(6)
1(1)
5(1)
6(2)
Unit-7(8)
1(2)
6(1)
8(3)
Unit-8(6)
1(1)
5(1)
6(2)
Unit-9(12)
1(2)
4(1)
6(1)
12(4)
Unit-10(8)
1(2)
6(1)
8(3)
Unit-11(14)
1(2)
3(2)
Unit-12(6)
1(2)
4(1)
6(3)
12(12)
34(10)
44(8)
90(30)
6(1)
14(5)
BUSINESS STUDIES
Class XII (2012-13)
Max. Marks 90
Time - 3 Hrs.
General Instructions: 1. Answers to questions carrying 1 mark may be from one word
to one sentence.
2. Answer to questions carrying 3 marks may be from 50 to 75
words.
3. Answer to questions carrying 4-5 marks may be about 150
words
4. Answer to questions carrying 6 marks may be about 200
words.
5. Attempt all parts of a question together.
(1)
(1)
(1)
(1)
(1)
(1)
(1)
Q12. When can a consumer make an appeal in the Supreme Court under
The Consumer
(1
Protection Act 1986?
Q13. State any three characteristics of principles of
management.
Q14
.
Explain the following principles of Scientific Management:a)
)
(3)
(3)
(3)
(3)
(3)
(4)
Q21. State any four factors which help in determining the working Capital
requirements of a Company. (4)
asked you to design the capital structure of the company. State any six
factors that you would consider while doing so.
OR
Every manager has to take three major decisions while performing the
finance
function. State these decisions.
(6)
Q29.
Q30.
b)
c)
ii)
iii)
To introduce a new
people through
door-to-door visits.
product
to
particular
class
(6)
of
Marking Scheme
1. Induction Training refers to the process of introducing the selected
employees to other employees and familiarizing him with the rules and
policies of the
organisation.
(1)
2. Democratic Style of Leadership is leadership in which, a leader
consults with his subordinates on proposed actions and decisions and
encourages them to
participate in decision making.
(1)
3. The Incentive provided to Rajat is - Recognition
(i) Comparison of actual performance with
4. standards.
(ii) Taking corrective action.
(1)
( x 2 = 1)
(+
=1 )
10. Promotion mix refers to combination of promotion tools used by an
organisation to
achieve its objectives.
(1)
11 .Consumer Protection refers to the act of providing adequate protection to
consumers against the unscrupulous, exploitative and unfair trade
practices of manufacturers and service providers.
(1)
12. An order passed by the National Commission in a matter of its original
Jurisdiction is appealable before the Supreme Court.
(1 )
13.
Taylor believed that there was one best method of maximising efficiency.
This method could be developed through study and analysis. The Method
so developed should substitute the Rule of Thumb through the
organisation. Scientific method involves investigation of traditional
methods through work study, unifying the best practices and developing a
standard method which would follow throughout the organisation. This
can result in tremendous saving of time and materials. In the present
context the use of internet has brought about dramatic improvement in
internal efficiencies and consumer satisfaction.
(ii) Cooperation, not Individualism
There should be complete cooperation between employees and
management instead of individualisation. It is an extension of Principle
of harmony not Discord. Management should not close its ears to
constructive suggestion by employees but should reward their
suggestions which result in substantial reduction in costs. Workers
should be a part of management and a part of all important decisions.
Workers on the other hand should desist making unreasonable demands.
When there is open communication system and goodwill there will be no
need for trade unions. There should be almost equal division of work and
responsibility between employees and management. Management
(3)
(3)
(i)
Marketing Planning
SNO Basis
Functional
Formation
It is based upon
Functions
Managerial
Development
Responsibility
Suitability
Divisional
It is based upon product lines
and is supported by functions
Difficult, as each
Easier Autonomy as well as
functional
the
manager has to report to chance to perform multiple
manager
functions help in managerial
development
Difficult to fix on any one Easy to fix responsibility for
department
performance
Suitable for medium
sized
firms having a single
product or small number
of
related products
(1x4=
4
(iv)
(v) The duration and the length of the production cycle affect the
amount of funds required for material and expenses and
consequently affect the working capital requirement of a firm.
Firms with longer processing cycles lead to higher working capital
requirement of a business.
(vi)
(vii) To the extent the firm avails credit on purchases, the working
capital requirement is reduced.
(viii) Operating Efficiency of a firm may reduce the level of raw
materials, finished goods and debtors resulting in lower
requirement of working capital.
(ix) Difficulty in availability of raw material and larger lead time will
make the firm store larger quantity of material and larger shall be
the amount of working capital required.
(or any other correct factor)
22.(A)
The disturbing value in the above para are: any two
(x2=1)
testing on animals is banned.
no information about the products on package is violation
of Right to Information.
Yes, the decision of installing a new unit in tribal area will
definitely help in the upliftment and development of
Stability
Peace
Attitude of elected government representatives that impact the
business entrepreneurs.
Example of Political Environment affecting the functioning of a business
enterprise is Even after opening up of the Indian Economy in 1991, foreign companies
found it extremely difficult to cut through the bureaucratic red tape to get
permits for doing business in India, which discouraged them from
investing in our country.
Legal Environment includes various
Legislations
Administrative orders
Court judgement
Decisions rendered by various agencies at every level of
government (centre, state or local)
Every Management is required to obey the law of the land.
Example of Legal Environment affecting the functioning of a business
enterprise isAdvertisements for packets of cigarettes must carry the Statutory
Warning, Cigarette Smoking is Injurious to Health. ((1 +1 )+(1 +1
)=5)
25. The Companies do not always use internal Sources of recruitment
despite of them being economical because of the following reasons:
(any five)
(i)
(ii) The employees may become lethargic if they are sure of time
bound promotions.
(iii) Spirit of competition among the employees may be hampered.
(iv) Frequent transfers of employees
productivity of the organisation.
may
often
reduce
the
(ii)
(1+1x5=
6)
OR
Directin
g
(1 mark)
Importance
1. Initiates action.
2. Integrates employees efforts
3. Guides employees
4. Facilitates introduction of changes
5. Brings stability and balance
(1/2 mark for the heading +1/2 mark for the explanation=1mark)
(1+1x5=6)
28.
(i)
Selection of a Broker
of
partnership
stock
firms
or
exchange.
corporate
Brokers
books.
may
The
be
individual,
broker
charges
interacts
with
the
investors
through
depository
Rebate
Refund
Product - combination
Quantity - gift
Instant draws and assigned gift
Lucky Draw
OR
(1x6=6)
(a). The companies use all tools at the same time because of the nature of
market, nature of product, promotion budget and objectives of
promotion being different at different times.
(b). The most commonly used non-personal tool of promotion which is
paid for by the marketer is advertising. The explanation should
include:
It is a paid and non-personal form having an identified sponsor to
promote an idea.
Public Relations
(ii)
Advertisements
(iii)
Personal Selling
(2x3=6)
CHAPTER I
NATURE AND SIGNIFICANCE OF MANAGEMENT
Linking of Class XI syllabus:
1. In sole proprietorship business, the owner him-self manages
his business.
2. In Partnership business all partners or any one partner on
behalf of other partners can manage the business.
3. In HUF Karta manages the business.
Objectives
objectives
of
on
MEANING/CONCEPT OF MANAGEMENT:
Management is the process of getting things done with the aim of
achieving goals effectively and efficiently.
Process: refers to the primary function like planning, organising,
staffing, directing and controlling performed by the management
to get things done.
Effectiveness: means completing the right task to achieve the
deputed goal within the time frame.
Efficiency: means completion of task using minimum resources
2.
DEFINITION OF MANAGEMENT:
Management is the process of working with and through others to
effectively achieve the organisational objectives by efficiently using
limited resources in the changing environment.
Kreitner
3.
Functions of management:
IMPORTANCE OF MANAGEMENT
Aids in achievement of individual and organisational goals
Increases efficiency
Enhances optimum utilisation of resources
Creates a dynamic organisation
LEVELS OF MANAGEMENT
promotion of workers
8.
As a Profession:
Well defined body of knowledge.
Existence of code of conduct
Professional association (AIMA)
Restricted entry
Fees as remuneration for their services
As a Science:
Arranged, organised systematic body of knowledge
Universal validity
Principles arrived at after experimentation
9.
COORDINATION Meaning.
It is the synchronisation of various activities and efforts
in an organisation providing the required amount of quality,
timing and sequence; thus ensuring the achievement of the
planned goal with minimum content.
10.
FEATURES OF COORDINATION:
11.
12.
IMPORTANCE OF COORDINATION
Ensures unity of action
Erases interdepartmental conflicts
Promotes harmonious implementation of plans
Helps in maintaining a high degree of morale amongst
employees
13.
Planning,
Oraganizing,
Staffing,
Directing
and
controlling is the sequence of functions in a process.
Name it.
Ans. Management
2.
Ans. Management
3.
Ans. Efficiency
5.
6.
"Management is a group activity". Give reasons for
statement.
Ans. An organisation is a collection of diverse individuals with needs
and purposes but they work towards fulfilling the common
organisational goals.
7.
Management of operations.
ii)
iii)
Higher level need which includes personal growth and
development.
5.
iii)
6.
iv)
v)
It
It
It
It
It
It
(iii)
(iv)
(v)
(vi)
causes.
To organize educational, health and vocational training
programmes.
iii)
Higher level need which includes personal growth and
development.
5.
1.
-1
price.
ii)
Using environment friendly methods of
production
iii)
Generation of employment opportunities.
2.
-1
Mark
3.
- 3 or 4
-3
8.
CHAPTER - 2
PRINCIPLES OF MANAGEMENT
CONCEPT MAPPING
Concept :
2.
3.
Provides managers with useful insights into reality through improved knowledge, ability, understanding and
improved guidance to the managers.
4.
c) Method study
d) Motion study
e) Time study
Here the job is divided into series of elements and the time
required to complete each element idealistically is recorded
using a stop watch.
f) Fatigue Study
Determines the amount and frequency of rest intervals required
in completing a task.
g) Differential Piece wage system
Henry Fayol
Personal Experience
Improvement in the
overall
F.W Taylor
Observations and
experimentation
Concentrates on
improving the
3. Applicability
Universally applicable
Applicable only to
specialised situations
4. Perspective
5. Personality
6. Human
element
More importance
attached to increasing
the production than to
the human element
7. Emphasis
Greater emphasis on
tools and standardisation
of work i.e. General
Theory of Administration
8. Unity of
Command
Ans. This it means that they are applicable to all kinds of organizations.
4.
Ans. Flexibility.
5.
Ans.
6.
Ans. (i) Science, not Rule of Thumb. (ii) Harmony, not Discord.
7.
The
directors
of
XYZ
limited,
an
organisation
manufacturing computers, want to double the sales and
have given the responsibility to the sales manager. The
sales manager has no authority either to increase sales
expense or appoint new salesmen. Hence, he could not
achieve this target. Identify the principle violated in this
situation.
15.
tested. For example, two units, one unit involving one superior
and one subordinate and other unit involving two superiors
and one subordinate, were taken. It was found that unit having
one superior and one subordinate performed better. As a result, it
led to formation of principle of "unity of command."
From the above it can be concluded that observations and
experiments result in the formulation of management principles
which therefore are evolutionary. Hence, derivation of
management principles can be said to be a matter of Science. It
is worth mentioning here that even though derivation of
management principles is a matter of science, their application
remains a matter of art. The success of managers depends upon
how skillfully they put these principles into practice.
3.
Give three points reflecting the nature of management
principles.
Ans. Management principles
are (any three):
(i)
Universal in
application.
(ii)
General guidelines.
(iii)
conditions.
(iv)
(v)
4.
"Principles of management achieve results economically."
Explain?
Ans. Management principles help in setting realistic objectives for the
business because the objectives are set with the participation of
employees. Hence, the employees work to their full potential and
their commitment level increases because objectives of
organisation become their own objectives.
For example, the principle of maximum output rather than
restricted one ensures more output. More output lowers cost per
unit and hence profit per unit increases.
5.
Define scientific management and name any three of its
principles.
6.
(ii)
(iii)
(ii)
(iii)
etc.
7.
Unity of Command
(ii
)
Or
de
r
(iii) Stability of tenure of personnel
Ans. Adverse effects of said principles are:
(i) Unity of Command: If this principle is followed, work gets
delayed which results in wastage of time and cost.
(ii) Order: It creates boredom among the employees due to
rigidity provided by this principle.
(iii) Stability of personnel: If employees are not rotated on
different jobs frequently, they can specialize only in a small part of
the whole process of production and thus can never become
versatile.
11. Explain how principles of management
(cbse 2012)
i) Help the managers in taking scientific decisions
ii) Provide the managers with useful insights into real world
situations
Ans. Explanation of relevant sub-headings from significance of principles of
management.
Taylor
Fayol
1. Personality
2. Perspective
3. Scope and
Applicability
4. Focus
Fayol's
principles
are
focused on improving
overall
management
efficiency.
5.Modific
ations
6. Expression
Taylor
expressed
his
thoughts and views under
the theory of scientific
management
2.
Principles of Science
They are rigid.
Workers
should be encouraged to develop and
carry out their plans for development. Identify the
principle of management formulated by Fayol.
- 1 Mark
7.
How
do
management
principles
ensure
optimum
utilization of resources and effective administration? - 3
or 4 Mark
- 3 or 4
-3
- 5 or 6
E
F
G
H
level.
(iii)
CHAPTER - 3
BUSINESS ENVIRONMENT
CONCEPT MAPPING
Meaning
Nature
forces
complexity
(g) Relativity
Importance : (a) first mover advantage (b) early warning signal (c)
tapping useful resources (d) coping with rapid change (e)
planning
and
policy
formulation
(f)
improving
performance
Dimensions : (a) economic (b) social (c) technological (d) political (e)
legal
Liberalisation :Liberating industry from licensing and other regulations.
MEANING:
It is the sum total of all individuals or institutions
comprising of consumers, competitors, suppliers government,
courts, media and also the forces like economic, social, political,
legal and technological that are outside the ambit and control of
business enterprise but that which can affect its performance.
2.
4.
Economic Environment :
Refers to all those forces that have economic impact on
Ans. While purchasing they get a better quality and wider choice of
Ans. When the private sector takes over public sector, it is called
disinvestment.
7.
Give one measure taken by Indian Government to introduce
liberalisation.
Ans.
8.
Public sector.
11.
What was the responsibility given to private sector after
independence ?
Ans. Developing consumer goods industry was the responsibility gives to
private sector.
12.
14.
1.
two
important
Ans. The sum total of all external factors which are outside the control
of business enterprises is termed as Business Environment. Factors
may be social, political, economic etc.
2.
Explain the specific and general forces of business
environment ?
Ans. Business environment comprises of both specific and general
forces. Specific forces refer to those forces that are having direct
effect on the day to day working of the business viz. customers,
competitors, investors etc. General forces refer to social, political,
legal and other forces which are having an indirect effect on the
operations of a business.
3.
Enumerate the benefits of understanding business
environment.
Ans. The benefits of understanding business environment are:
4.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
6.
8.
List the various changes initiated by the Government of
India since 1991.
Ans. Various changes initiated by the Government of India since
1991 are as follows:
(i) New industrial policy
(ii) New trade policy
(iii) Fiscal reforms
(iv)
(v)
(vi)
Monetary policy
Capital market reforms
Phasing out of Subsidies and Price controls
QUESTIONS ( 5 OR 6 MARKS)
Ans. Business environment is the sum total of all external factors that
influence the functioning of a business enterprise.
The components of general environment are:
(i) Economic environment:
Economic environment consists of factors having economic
dimensions such as fiscal policy, monetary policy, industrial policy
etc.
Impact: Banking sector reforms have led to attractive deposit
avenues and easier credit policy. Likewise reforms in leasing &
financial institutions are also catalyzing company's economic
growth.
(ii) Social environment: It discriminates characteristics of the
society in which an enterprise exists. It consists of literary rates,
educational levels, customs and demographic distribution etc.
Impact : Equal pay for equal work for both male and female
workers, reservation of jobs for minorities etc.
(iii) Political environment
(ii)
Corporate vulnerability.
(iii)
Increased competition.
(iv)
(iii)
(iv)
(v)
(vi)
6.
Explain any five negative impacts of liberalization and
globalization.
1 Mark
4.
Ans. Environmental
scanning helps
an enterpriseto
recognize qualitative information in advance, which can be
used to prepare it for facing likely challenges. For
example, if any new multinational company is entering
Increasing competition.
More demanding Customers
Rapidly changing technological environment
Necessity for change.
Need for developing human resource.
(ii)
Diversification.
(iii)
(iv)
Brand building.
(v)
(vi)
Capital restructures.
(ii)
(iii)
(iv)
Hutch by Vodafone.
alliance,
mergers
and
consolidation
of
CHAPTER - 4
PLANNING
CONCEPT MAPPING
Concept
Types
method
Present
Position
Here
we are
Planning
Bridges
this gap
Future
position
where we
want to
reach
Definition Planning seeks to bridge the gap between where we are and
where we want to go. Planning is a trap to capture the future.
Importance of planning.
i) Provides direction- By stating in advance the future course of
action of what is to be done and how it is to be done. By stating in
advance it facilitates unity of direction.
ii) Reduces the risk of uncertainty- By predicting future events
and preparing the organization to anticipate the future and face
unexpected events.
iii) Facilitates decision making-planning helps the manager to look
into the future and make a sound judgment or choice from among
the various alternatives.
iv)
vi.
vii. The human element can give way to errors or mistakes through
wrong assumptions.
viii. It is prone to external influences which can reduce its impact
like natural calamity, technology changes, policy changes,
competition.
iv.
Types of plans:
(A)
Objectives
Strategies
Policies
Procedures
Methods and
Rules
(B)
Single use or Special or Adhoc Plans: These plans are connected
with some special problem. These plans end the moment the
problems are solved. After having been used once there is no
importance of these plans and in future, whenever they are needed
they are re-created. These plans include
1. Budget and
2. Programme.
Differences between Standing and Single-use Plans
Basis
Standing Plans
1. Period
2. Object
3.Types
Single-use Plans
These plans are for a short
period and are repeatedly
formulated in case of need.
These plans are designed to
run successfully some
particular activities
They are of two types i.
Budgets and ii. Programmes
4.Scope
5. Basis
1)
Objectives - Are the ends which the management seeks to achieve by
its operation.
2)
3)
Policies - are general statements which guide thinking in decision
making.
They are based on objectives.
They guide managerial action and decisions.
They exist at all levels and departments of the organization.
4)
5)
6)
7)
required and the budget to implement any course of action.. All these
plans together form a programme.
8)
1.
What is planning?
Ans. Planning.
3.
Ans. Planning.
4.
One of the functions of Management is considered as base' for
all other functions.
Name that function.
Ans. Planning
5.
Ans. Forecasts.
9.
Define 'Objective'?
Ans. Objectives are desired future position that the management would like
to reach.
Define 'Rules'.
Ans.
3.
example the top management lays down the plans for the organisation
as a whole. Middle level management has to make plans for each
department and the plans regarding the daily operations of an
organisation are laid down by operational management.
6.
Ans. Planning is always for the future and never for the past. It involves
peeping in to future, analyzing and preparing plans accordingly. Thus,
planning is futuristic as it helps in meeting likely future events
effectively and efficiently to best advantage of the organisation.
For example, on the basis of sales forecasts, annual plans for
production and sales are drawn.
7.
Ans. An organisation is successful only when the plans are effectively drawn
and implemented.
A plan must be converted into action otherwise it becomes
meaningless. Generally, it is seen that managers are in the habit of
depending on previously tried and tested successful plans. But this
practice sometimes does not work and may actually lead to failure
instead of success.
10. Enumerate the steps involved in the planning process.
Ans. Steps of planning are as follows:
(i)
Setting up of objectives
Ans. Procedures are routine steps framed to carry out activities. These are
plans that determine the order of any work performance. Procedures
are generally meant for insiders and define the chronological sequence
of doing any work for attaining predetermined objectives.
14.
Ans. Methods are standard ways of doing planned jobs for attaining the
objectives. They are more detailed than procedures. Methods are helpful
in simplification, standardization and systematization of work. For doing
different jobs, different methods can be adopted.
For example, for imparting training to employees at different levels,
different methods of training can be used viz for higher level lectures or
seminars and for supervisory level on the job training can be used.
15.
Ans. Rules can be defined as statements that tell us what is to be done and
what is not to be done. Deviations from rules are not permitted unless
a policy decision is taken. They enforce rigidity and there is fine or
penalty if they are not followed.
For example, prohibition on sale of tobacco within certain radius of
an educational institution is a rule to be followed by all.
16.
Ans. It has been rightly said that defining organizational objectives is the first
step in the process of planning. Other steps in the process of planning a
as follows:
(i)
(ii)
(iii)
(iv)
Selecting an alternative
This step involves the selection of the most optimum and realistic
plan with least negative results.
(v)
(vi)
Follow up
Under this step, it is monitored whether the plans are being
implement and whether the activities are being performed according to
the schedule.
2.
Ans.
DIFFERENCE BETWEEN PROCEDURES AND RULES
Basis
Procedures
1.
Meaning
2. Nature
3. Purpose
4. Scope
Rules
Rule is a code of
conduct governing or
restricting flexibility
or discretion
Procedures are specified
Rules do not place
in chronological order.
activities in chronological
order
The purpose of procedure is to The purpose of rule
facilitate and simplify the
is to s maintain
operation and eliminate
discipline in an
The scope of procedures is
wide because it has Its own
rules and regulations.
Ans. Procedures consist of series of steps whereas policies are guidelines for
decision making.
4.
A company needs a detailed plan for its new project?
Construction of a Shopping
Mall'. What type of plan is it?
Mark
-1
Ans. Programme
5.
Give anyone difference between Policy and Rule.
1 Mark
- 3 or 4
1.
3.
12. How can (i) Political climate and (ii) Policies of competitors
obstruct planning?
-3or4 Marks
Ans. (i) Obstruction in planning due to political climate
When the government regulates the business practices or introduces
new trade
policies, the plans of business enterprises may get upset. Also political
instability affects business plans.
For example, change in the taxation policy.
(ii) Obstruction in planning due to policies of competitors
The policies of competitors may lead to change in business policies.
For example, discounting policies of the competitors may
lead to change in pricing policy of a business enterprise.
13. What do you mean by planning premises?
Marks
- 3 or 4
15.
- 5 or 6 Marks
Ans.
DIFFERENCE BETWEEN PROCEDURES AND RULES
Basis
Procedures
1. Meaning
flexibility or
2. Nature
3. Objective
4. Managers
Discretion
Rules
CHAPTER -5
ORGANISING
Concept Mapping:1.
2.
3.
4.
5.
6.
conflict
of interest,
inflexibility
and restriction
in
managerial
development.
Divisional
structure
groups
activities
on the basis
of Product.
The
Formal
organization
is
designed
by
the
management
to
achieve
Departmentalisation
3) Assignment of duties
Functional Structure
It is based on functions
Functional Specialisation
Difficult to fix on a
Divisional Structure.
It is based on product lines
Product Specialisation
Easy to fix responsibility
Cost
Co ordination
departments
Economical
Difficult for multi product
Costly
Easy, because all functions
company
Managerial
Difficult, as each
department.
Easier, autonomy as well as
Development
management
development.
5/6 M
A): Advantages:
1).All activities associated with one product. It can be easily integrated.
2).Decision making is faster.
3).Performance can be easily assessed remedial action can be taken
4). It facilitates expansion and growth as new divisions can be added.
Disadvantages:
1).This gives rise to duplication of effort among its divisions.
2).Manages in each department focus on their own product without thinking
the rest of the organization.
3).There may not be full utilization of different equipments
4).Conflict may arise among different division.
8) Name the type of organization in which:
1M
a. Friendly relationship exists among the members.
b. Official relationship exists among the members.
A:
a) Informal Organisation
b) Formal Organisation.
5/6M
a) Formation
members
b. Purpose
c. structure
d. Behavior of
.Ans:
Basis
Formation
Functional Structure
Deliberately Planned
Divisional Structure.
Emerges Spontaneously
Purpose
To achieve
among people
To satisfy social and
Structure
organizational goals
Well defined structure
cultural needs
Does not have a clear-cut
Standards of behavior
structure
Mutual consent among
It is stable
members
Neither stable nor
predictable.
No such punishment.
Behavior of members
Stability
Adherence to rules
lead to penalties
10). Which term denotes The number of subordinates that can be
effectively managed by a superior?
1M
Ans: -Span of control.
11) What are the elements of delegation of authority?
1M
Ans: Responsibility, Authority, Accountability.
12) Distinguish between authority and responsibility on the basis of:
3M
a. Direction of flow
b. Delegation
c. Origin
Basis
Direction of flow
Authority
Authority flows
Responsibility
Responsibility flows
Delegation
downwards
Authority can be
upwards
Responsibility is
delegated
delegated.
Origin
Arises from law
Arises from authority.
13) A manager is of the view that he is not responsible for the quality
of work that he has delegated to his subordinate. Do you agree with
ii)
iii)
iv)
1M
iii) withdrawal of
authority.
Ans:
Basis
Purpose
Delegation
It means getting things
Decentralisation
To prepare the organization for
Parties
activities
It indicates relationship between
involved
Withdraw
subordinate
The delegated authority
other departments
Withdrawal of authority is difficult
al of
authority
delegator
QUESTIONS WITH DIFFERENT DIFFICULTY LEVELS
1.
after
Identification
Departmentalization.
and
3M
division
of
work
and
because
the
entire
work
cannot
be
done
by
individual
sales,
4M
4M
Explain
the statement.3M
A: According to the principle of absolute responsibility, authority can be
delegated but responsibility cannot be delegated by a manager. The manager
remains responsible to his own superior for the task which he may assign to his
subordinates. Every superior is responsible for the acts of this subordinates to
whom he delegates authority for any work.
11. The Marketing Manager of an organization has been asked to
achieve a target sales of 100 generators per day. He delegates the
task to 10 sales managers working under him. Two of them could not
achieve their respective targets. Is the marking manager
responsible? Briefly explain the relevant principle in support of your
answer.
4M
13.
CHAPTER -6
STAFFING
6 Marks
CONCEPT MAPPING:
1. Concept and importance of staffing.
2. Staffing as a part of Human Resource Management.
3. Staffing process:
a. Recruitment sources
b. Selection process
4. Training and development concept and importance.
5. Methods of training on the job and off the job induction
training, vestibule training, apprenticeship training and
internship training.
KEY CONCEPT IN NUTSHELL
MEANING OF STAFFING:
Staffing has been described as the managerial function of filling and keeping
filled, the positions in an organization structure. Staffing is identifying the
requirement of workforce followed by recruitment, selection, placement,
promotion, appraisal and development of personnel, to fill the roles designed
into the organization structure.
NEED AND IMPORTANCE OF STAFFING:
In any organization, there is a need for people to perform work. The staffing
function of management fulfills this requirement and finds the right people for
the right job. The staffing function has assumed greater importance these days
because of rapid advancement of technology, increasing size of organization
and complicated behavior of human beings. The ability of an organization to
achieve its goals depends upon the quality of its human resources.
Staffing as a part of human resource management:
Staffing is a function which all managers need to perform. It is a separate and
specialized function and there are many aspects of human relations to be
considered.
It is the responsibility of all managers to directly deal and select people to work
for the organization. When the manager performs the staffing function his role
is slightly limited. In small organizations managers may perform all duties
related to employees salaries, welfare and working conditions.
Bus as organizations grow and number of persons employed increases, a
separate department called the human resource department is formed which
has specialists in the field to manage people. Human resource management
includes many specialized activities and duties which the human resource
personnel must perform.
RECRUITMENT:
Recruitment refers to the process of finding possible candidates for a job
shortage of staff
Qualified Personnel
Wider Choice
Fresh Talent
Competitive Spirit
Lengthy process
Costly process
Selection:
Selection is the process of identifying and choosing the best person out
of a number of prospective candidates for a job. Towards this purpose,
the candidates are required to take a series of employment tests and
interviews.
Process of Selection:
Preliminary Screening: Preliminary screening helps the manager
eliminate unqualified or unfit job seekers based on the information
supplied in the application forms.
Selection Tests: An employment test is a mechanism (either a paper and
pencil test or an exercise) that attempts to measure certain characteristics of individuals. These characteristics range from aptitudes,
such as manual dexterity, to intelligence to personalities.
Important Tests Used for Selection of Employees
Intelligence Tests
Aptitude Test
Personality Tests
Trade Test
Interest Test
Selection Decision: The final decision has to be made from among the
candidates who pass the tests, interviews and reference checks.
Medical Examination: After the selection decision and before the job
offer is made, the candidate is required to undergo a medical fitness
test.fit candidates are give the job.
a. Recruitment
b. Selection.
Iv.
v. Interest test
12) What is meant by Selection? Explain any five steps involved in
the process of selection of employees.
6M
A)Selection is the process of carefully screening the candidates who offer
themselves for appointment so as to choose the most appropriate person for
the job.
Steps : 1. The preliminary screening : A brief screening interview is
conducted as the first step in the selection process.
13) Training and Development are one and the same thing. Do you
agree?
A) No they are different
14) Distinguish between training and development.
4M
A)
Training
Development
it is to enable the
employee to do the job
better
15)
9.It is the process of identifying and choosing the best person out of a
number of prospective candidates for a job. Name it.
1M
A: Selection.
10. Name the test which is used as a measure of individuals potential
for learning new skills.
A: Aptitude test.
1M
A: Preliminary Screening
12. what is formal, in-depth conversation conducted to evaluate the
applicants suitability for job called.
1M
A: Employment interview.
13. Why is selection considered as negative process?
1M
A: Because it is a process in which a person is selected and the others are
rejected.
14. It is a test used for selection of employees to measure individuals
potential for learning new skills. Mention its name and explain two
other tests also.
1M
A: Aptitude.
Other Tests: a) Personality Test: These tests are used judge the psychological
makeup of a person.
b) Interest Test: These tests identify individual likes and dislikes in relation to
work.
15.It is the process of increasing the knowledge and skills of an
employee for doing a particular job. Which process is referred to
here?
1M
A: Training
16.Which of type of training is a joint programme of training in which
educational institutions and business firms cooperate?
1M
A: Internship training
17. Trainee is put under the guidance of a master worker to acquire a
higher level of skill, for example to become plumber, electrician, etc.
Which method of training is referred here?
1M
A: Apprenticeship programme
CHAPTER -7
DIRECTING
CONCEPT MAPPING:
Elements of Directing
- Supervision-concept, functions of a supervisor.
- Motivation-concept, Maslows hierarchy of need: Financial and non-
financial incentives.
Leadership-concept, styles-authoritative, democratic and laissez
faire.
Communication- concept, formal and informal communication;
barriers to effective communication, how to overcome the barriers.
(3)Leadership (4)Motivation
Concept of Supervision: Supervision refers to monitoring the progress of
Leadership Styles:
I. Autocratic Leadership Style:(a).Meaning: It refers to that leadership style in which the leader tends to run
the show all by him-self.
(b).Characteristics: (i) Centralized Authority, (ii) Single man Decision, (iii)
Wrong Belief Regarding Employee, (iv) Only Downward Communications.
(c). Advantages: (i) Quick and Clear Decisions, (ii) Satisfactory Work, (iii)
Necessary for Less Educated Employees.
(d).Disadvantages: (i) Lack of Motivation, (ii) Agitation by Employees, (iii)
Possibility of Partiality.
II. Democratic Leadership Style :(a). Meaning: It refers to that leadership style in which the leader consult with
his sub ordinates before making any final decisions.
(b).Characteristics: -(i)Cooperative Relations,(ii)Belief in Employees, (iii) Open
Communication.
(c ).Advantages : (i) High Morale, (ii)Creations of More Efficiency and
Productivity, (iii) Availability of Sufficient Time for Constructive Work.
(d).Disadvantages: (i) Requirement of Educated Subordinates, (ii) Delay in
Decisions, (iii)Lack of Responsibility in Managers.
III. Laissez-faire or Free-rein Leadership Style: (a). Meaning : It refers to that leadership style in which the leader gives his sub
ordinates complete freedom to make decisions.
(b)Characteristics (i)Full faith in subordinates, (ii) Independent Decision-making
system,(iii) Decentralisation of Authority (iv)Self-Directed Supervisory and
Controlled.
(c). Advantages.(i)Development of Self-confidence in Sub ordinates, (ii) Highlevel Motivation,(iii)Helpful in Development and Extension of the Enterprise.
(d). Disadvantages.(i).Difficulty in Cooperation, (ii)Lack of Importance of
Managerial Post, (iii) Suitable only for Highly Educated Employees.
Communication: Communication refers to process of exchange of ideas
between or among persons and creates understanding. Communication
process involves the elements of source, encoding, channel, receiver, decoding
and feedback.
4) communication
4M
6M
A: i. Esteem Needs: these needs are needs for self esteem and need for other
esteem .For Example: Self-respect, self-confidence etc.
ii. Self-actualization Needs: This is the needs to be what one is capable of
becoming and includes needs for optimal development.
Q7).It is through motivation that managers can inspire their
subordinates to give their best to the organisation. In the light of
this statement, explain, in brief, the importance of motivation.
5/6M
A: Importance of motivation:
i. Motivation sets in motion the action of people: Motivation builds the will to
work among employees and puts them into action.
ii. Motivation includes the efficiency of work performance: Performance of
employees dependence not only on individual abilities but also on his
willingness.
iii. Motivation ensures achievement of organizational goals: If employees are
not motivated, no purpose can be served by planning organizing and staffing.
iv. Motivation creates friendly relationships: Motivation creates friendly and
supportive relationships between employer and employees.
V .Motivation leads to stability in the employees: Motivation helps in reducing
absenteeism and turnover.
vi. Motivation helps to change negative / indifferent attitudes of an employee
Q8).All managers are leaders, but all leaders are not managers. Do
you agree with this statement? Give any three reasons in support of
your answer.
3/4 M
Leadership
Management
Leadership originates out of Management originates
individual influence
Formal Rights
Follower &
rights
A leader has followers
formal rights
A manager has
subordinates
subordinates
1M
A: Poor listening skills of people.
Q18). Give any one measure to improve communication.
1M
A: Communicate according to the needs of receiver.
Q19). What do you mean by grapevine? Explain two types of
grapevine along with diagram.
A: Grapevine: The network or pathway of informal communication is known as
grade point communication.
Two types of grapevine communication
Gossip
Q20).
Single Strand
Directing
2)
1M
A)
3)
4)
How?
1M
b) Treating
Bonus
9)
1M
Communication.
12)
Decoding
13)
V.
4M
CHAPTER 8
CONTROLLING
CONTROLLING
CONCEPT MAPPING:
6 MARKS
Process of Controlling
Controlling is pervasive
2. Process of Controlling:
It is utterly foolish to
Plans are
On the contrary,
Important questions are shown with * mark and the Most important
questions are shown with ** mark
Explain
*22.. What are the factors to be kept in mind while setting standards?
3M
Ans:
i) Standards should be in measurable terms
ii) Standards should be flexible to change
iii) They may be in qualitative or quantitative
iv) They should be stated in clear terms without any ambiguity
**23. Measurement of a companys performance may involve
calculation of certain ratios like gross profit ration, net profit ratio,
return on investment ration etc. Identify the function of
management involved in the given statement and explain the relevant
step.
3M
Hint: Controlling, Step: Measurement of actual performance.
24. How does controlling help in achieving objectives and
improving employee morale?
3M
Hint: Refer importance of Controlling
25. Controlling is an indispensable function of management. Do you
agree? Give four reasons in support of your answer.
5M
Hint: Importance of Controlling
26.If planning is done carefully and accordingly other functions of
management are going in the right direction, then there is need of the
controlling function of management. Do you agree with the
statement? Give reasons in support of your answer.
5M
Hint: Importance of Controlling
**27. There is close and reciprocal relationship between Planning and
Controlling Explain this statement through an example.
5M
28. There are two managers of a company Rahul and Rohit. Rahul is
saying that Planning is looking ahead whereas controlling is looking
back. On the other hand, according to Rohit planning is looking back
whereas as controlling is looking ahead. Who is correct and why?
5M
Hint: Both are correct.
Defective Process
conform
to
plans. Planning
without
controlling
is
FINANCIAL MANAGEMENT
CONCEPT MAPPING:
12 MARKS
value of equity shares. Market price of equity share increases if the benefits
from a decision exceed the cost involved.
FINANCIAL DECISIONS
1. Cash flows of the project: If anticipated cash flows are more than the cost
involved then such projects are considered.
2. The rate of return: The investment proposal which ensures highest rate
of return is finally selected.
3. The investment criteria involved: Through capital budgeting techniques,
investment proposals are selected.
Financing Decision: - It refers to the quantum of finance to be raised from
various sources of long-term of finance.
available sources. The main sources of funds for a firm are shareholders funds
and borrowed funds. Shareholders funds refer to equity capital and retained
earnings. Borrowed funds refer to finance raised as debentures or other forms
of debt.
Factors Affecting Financing Decision:a) Cost: The cost of raising funds through different sources is different. A
prudent financial manager would normally opt for a source which is the
cheapest.
(b) Risk: The risk associated with different sources is different.
(c) Floatation Costs: Higher the floatation cost, less attractive the source.
(d) Cash Flow Position of the Business: A stronger cash flow position may
make debt financing more viable than funding through equity.
(e) Level of Fixed Operating Costs: If a business has high level of fixed
operating costs (e.g., building rent, Insurance premium, Salaries etc.), It must
opt for lower fixed financing costs. Hence, lower debt financing is better.
Similarly, if fixed operating cost is less, more
f) Control Considerations: Issues of more equity may lead to dilution of
managements control over the business. Debt financing has no such
implication. Companies afraid of a takeover bid may consequently prefer debt
to equity.
g) State of Capital Markets: Health of the capital market may also affect the
choice of source of fund. During the period when stock market is rising, more
people are ready to invest in equity. However, depressed capital market may
make issue of equity shares difficult for any company.
DIVIDEND DECISION:-The decision involved here is how much of the profit
earned by company (after paying tax) is to be distributed to the shareholders
and how much of it should be retained in the business for meeting the
investment requirements.
FACTORS AFFECTING DIVIDEND DECISION:a) Earnings: Dividends are paid out of current and past earning. Therefore,
earnings is a major determinant of the decision about dividend.
(b) Stability of Earnings: Other things remaining the same, a company
having stable earning is in a position to declare higher dividends. As against
this, a company having unstable earnings is likely to pay smaller dividend.
c) Stability of Dividends: It has been found that the companies generally
follow a policy of stabilising dividend per share.
(d) Growth Opportunities: Companies having good growth opportunities
retain more money out of their earnings so as to finance the required
investment.
(e) Cash Flow Position: Dividends involve an outflow of cash. A company
may be profitable but short on cash. Availability of enough cash in the
company is necessary for declaration of dividend by it.
(f) Shareholder Preference: While declaring dividends, managements
usually keep in mind the preferences of the shareholders in this regard.
(g) Taxation Policy: The choice between payment of dividends and retaining
the earnings is, to some extent, affected by difference in the tax treatment of
dividends and capital gains.
(h) Stock Market Reaction: Investors, in general, view an increase in
dividend as a good news and stock prices react positively to it. Similarly, a
decrease in dividend may have a negative impact on the share prices in the
stock market.
(i) Access to Capital Market: Large and reputed companies generally have
easy access to the capital market and therefore may depend less on retained
earnings to finance their growth. These companies tend to pay higher
dividends than the smaller companies which have relatively low access to the
market.
(j) Legal Constraints: Certain provisions of the Companys Act place
restrictions on payouts as dividend. Such provisions must be adhered to while
declaring the dividends.
(k) Contractual Constraints: While granting loans to a company, sometimes
the lender may impose certain restrictions on the payment of dividends in
future.
FINANCIAL PLANNING
Financial Planning is essentially preparation of financial blueprint of an
organisationss future operations. The objective of financial planning is to
ensure that enough funds are available at right time.
OBJECTIVES
(a) To ensure availability of fundswhenever these are required: This
include a proper estimation of the funds required for different purposes such as
for the purchase of long-term assets or to meet day- to- day expenses of
business etc.
(b) To see that the firm does not raise resources unnecessarily: Excess
funding is almost as bad as inadequate funding.
IMPORTANCE OFFINANCIAL PLANNING
(i) It tries to forecast what may happen in future under different business
situations. By doing so, it helps the firms to face the eventual situation in a
better way. In other words, it makes the firm better prepared to face the future.
(ii) It helps in avoiding business shocks and surprises and helps the company in
preparing for the future.
(iii) If helps in co-ordinating various business functions e.g., sales and
production functions, by providing clear policies and procedures.
(iv) Detailed plans of action prepared under financial planning 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) By spelling out detailed objectives for various business segments, it makes
the evaluation of actual performance easier.
CAPITAL STRUCTURE: Capital structure refers to the mix between owners and
borrowed funds.
profitability and risk of the business in the long run. These long-term assets last
for more than one year.
Rate of
Option 1
and
2,00,00,000
------------2,00,00,000
60,00,000
1,40,00,000
20,00,000
Rs. 7
Option 2
2,00,00,00
0
15,00,00
0
1,85,00,00
0
55,50,00
0
1,29,50,00
0
10,00,000
Rs.12.95
**15. State why the working capital needs for a Service-industry are
different from that of a Manufacturing industry.
1M
Ans. Service industries need less working capital because they do not require
any inventory. They do not have any manufacturing process.
**16. Name any two essential ingredients of sound working capital
management.
1M
Ans. Inventory, debtors
**17. Cost of debt is lower than the cost of equity share capital Give
reasons why even then a company cannot work only with the debt.
1M
Ans. A company cannot exist without equity share capital
*18. What is meant by Gross working capital?
1M
Ans. Total investment on current assets (Current liabilities should not be
deducted)
19. Name that portion of current assets which is financed by fixed
liabilities.
1M
Ans. Net working capital
20. Why is working capital needed? Give any one reason.
1M
Ans. It is required to meet day to day expenses.
21. Discuss two objectives of financial planning.
3M
22. What is financial risk? Why does it arise?
3M
23. Define current assets and give four examples.
3M
24. Financial management is based on three broad financial decisions.
What are these?
3M
**25. What is the main objective of financial management?
3M
26. Discuss about working capital affecting both liquidity as well as
profitability of a business.
3M
Hint: The working capital should neither be more or less than required. Both
these situations are harmful. It is considered as a necessary evil.
27. How does cost of capital affect the capital structure of a company?
3M
*28. Sound Financial Management is the key to the prosperity of
business: Explain
3M
Hint: Role of financial management
*29. Explain the factors affecting the investing decision of a company.
3M
30. State the two important objectives of financial planning.
3M
Hint: i) To ensure timely availability of finance ii) To ensure proper balance of
finance.
31. Explain the meaning of Fixed Capital. Explain any two factors that
determine the fixed capital of a company.
3M
32. What is the role of Leasing in determining the requirement of
fixed capital?
3M
33. Fixed capital decisions involve more risk How?
3M
34. How scale of operations affect the requirement of fixed capital?
3M
35. Length of production cycle affects the working capital
requirements of an organisation. Explain
3M
36. How are Growth Prospects related with the requirement of
working capital?
3M
37. How does Risk consideration affect the capital structure
decision?
3M
38. How Capital Structure of other companies affects the capital
structure decision?
3M
39. What do you mean by Financial Leverage?
3M
Hint: Trading on equity
40. Explain the Earnings Before Interest and Taxes - EBIT
3M
41. Share Capital is better than debt capital In the favour of this
statement explain one factor which affects the capital structure.
3M
Hint: Cash flow position or other relevant point which favours equity capital
42. When debt capital is cheaper than the equity capital, why dont
companies go for debt capital alone?
3M
Hint: A public company cannot be incorporated without equity share capital
43. How the control of existing shareholders affects? How this
situation can be avoided?
3M
Hint: This situation can be avoided by raising debt capital rather than equity
capital
44. Tax benefit is available only in case of payment of interest and
not on the payment of preference dividend Why
3M
Hint: Interest on debt only tax deductable expense but not preference
dividend.
45. Capital structure decision is essentially optimization of riskreturn relationship Comment
4M
46. A Capital budgeting decision is capable of changing the financial
fortune of a business. Do you agree? Why or Why not?
4M
47. What is the importance of capital budgeting decisions?
4M
**48. To avoid the problems of shortage and surplus of funds what is
required in financial management? Name the concept and explain its
any three points of importance.
4M
Hint: Financial Planning.
49. Explain briefly any four points of the role of financial
management.
4M
50. To tackle the uncertainty in respect of availability and timings of
funds what is required? Name the concept involved and explain its
three points of importance.
4M
Hint: Financial planning
**51. Name the process which helps in determining the objectives,
policies, procedures, programmes and budgets to deal with the
financial activities of an enterprise. Explain its three points of
importance.
4M
Hint: Financial Planning
64. How are shareholders likely to gain with a loan component in the
capital employed? Briefly explain
5M
Hint: Trading on equity
**65. Determining the overall cost of capital and the financial risk of
the enterprise depends upon various factors. Explain any five such
factors.
5M
Hint: Factors affecting capital structure
**66. You are a Finance Manager of a newly established company. The
Directors have asked you to determine the amount of Fixed Capital
requirement for the company. Explain any four factors that you will
consider while determining the fixed capital requirement for the
company.
6M
**67. What is working capital? How is it calculated? Discuss five
important determinants of working capital requirements.
6M
**68. Explain any six factors which affect the capital structure of a
company.
6M
**69. What is fixed capital management? Explain any five factors
determining the amount of fixed capital.
6M
70. What is meant by financial management? Explain its role.
6M
**71. Explain any six factors affecting the financing decision of a
company.
6M
72. Explain any six factors affecting the dividend decision of a
company.
6M
73. What do you mean by financial planning? Discuss the importance
of financial planning in financial management.
6M
74. The Board of Directors has asked you to design the capital
structure of the company. Explain any six factors that you would
consider while doing so.
6M
75. Determination of capital structure of a company is influenced by
a number of factors Explain any four such factors
6M
CHAPTER 10
CONCEPT MAPPING:
FINANCIAL MARKETS
8Marks
required.
4. Reduce the cost of transactions:
information about securities being traded in the market. It helps to save time,
effort and money.
Instruments:
1. Treasury Bill (T-bills): It is basically an instrument of short-term borrowing
by the Government of India maturing in less than one year.
known as Zero Coupon Bonds.
2. Commercial Paper:
funds at lower rates of interest than market rates. It usually has a maturity
period of 15 days to one year.
3. Call Money:
maturity period of one day to fifteen days, used for inter-bank transactions. It
is a method by which banks borrow from each other to be able to maintain the
cash reserve ratio.
4. Certificate of Deposit (CD): It is a unsecured, negotiable short-term
instruments in bearer form, issued by commercial banks and development
financial institutions.
companies.
5. Commercial Bill (Trade Bill): It is a short-term , negotiable, self-liquidating
instrument which is used to finance the credit sales of firms. The bill can be
discounted with a bank if the seller (drawer) needs funds before the bill
maturity.
Secondary Market
1. It is the market for existing
securities.
2. Securities are exchanged
between investors.
3. It promotes capital formation
indirectly.
4. Both buying and selling of
securities can take place in the
stock exchange / stock market.
5. There is a specified location.
6. Prices are determined by
demand and supply for the
security in the stock exchange.
7. Securities may be bought and
sold many times but not the first
time.
Methods of Floatation:
Following are the methods of raising capital from the primary market :
securities.
2.Offer for sale: under this method the sale of securities takes place in
two steps. In the first step the company sells the entire lot of shares to
the intermediary firms of stock brokers at an agreed price .In the second
step, the intermediary resells these shares to investors at a higher price.
mandatory requirement.
STOCK EXCHANGE
regulated and its dealings are well defined according to the existing legal
frame work. This ensures that the investing public gets a safe and fair deal on
the market.
4. Contributes to Economic Growth: A stock exchange is a market in which
existing securities are re-sold or traded. Through this process of disinvestment
and re-investment savings get channelized into their most productive
investment avenues. This leads to capital formation and economic growth.
5. Spreading of Equity Cult: The exchange can play a vital role in ensuring
wider share ownership by regulating new issues, better trading practices and
taking effective steps in educating the public about investments.
6. Providing Scope for Speculation: The stock exchange provides sufficient
scope within in the provisions of law for speculative activity in a restricted and
controlled manner.
TRADING PROCEDURE:The procedure for purchase and sale of securities in a stock exchange involves
the following steps:
4. Selection of broker
The first step is to select a broker who will buy/sell securities on behalf of
the investor. This is necessary because trading of securities can only be
done through SEBI registered brokers who are the members of a stock
exchange. Brokers may be individual, partnership firms or corporate
books. The broker charges brokerage / commission for his services.
5. Opening demat account
The next step is to open a demat account. Demat (Dematerialised)
account refers to an account which an Indian citizen must open with the
depository participant (banks, stock, brokers) to trade in listed securities
in electronic form.
The securities are held in the electronic form by a depository. At present,
there are two depositories in India NSDL (National Securities Depository
Ltd.) and CDSL (Central Depository Services Ltd.)
Depository interacts with the investors through depository participants.
Your Depository Participant will maintain your securities account balances
and intimate to you the status of your holding from time to time.
6. Placing the order
The next step is to place the order with the broker. The order can be
communicated to the broker either personally or through telephone, cell
phone, e-mail etc.
The instructions should specify the securities to be bought or sold and
the price range within which the order is to be executed. Only the
securities of listed companies can be traded on the stock exchange.
DEPOSITORY SERVICES :It refers to that service through which the transfer of ownership in shares takes
place by means of book entry without the physical movement of shares.
PARTICIPANTS OF DEPOSITORY SERVICES:
i. DEPOSITORY:-A Depository is an institution which holds the
shares of an investor in electronic form. At present , there
are two depository institutions in India :
1. NSDL National Securities Depository Limited.
2. CDSL Central Depository Services Limited.
ii. DEPOSITORY PARTICIPANT: A Depository Participant (DP)
is an agent of the depository. He functions as a mediator
between the issuing company and the investors through the
depository.. He opens the accounts and maintains the
securities account balance of the investors and conveys
them the status of their holding from time to time.. As per
SEBI guidelines, banks, stock brokers etc can become
depository participants.
iii. INVESTOR: He is a person who wants to deal in shares and
whose name is recorded with a Depository.
DMAT/Demat ACCOUNT:
Dematerialization (popularly known as DMat) is the process of converting a
share certificate from its physical form to electronic form and credit the same
number of holdings to the DMat A/c which the investor opens with a depository
participant.
DMat Account refers to that account which is opened by the investors with
depository participant to facilitate trading in shares.
BENEFITS OF DEPOSITORY SERVICES and
DMAT ACCOUNT:
i)
ii)
iii)
iv)
v)
It is a body corporate
Protective Functions:
(i) SEBI prohibits fraudulent and unfair trade practices in the securities market
such as
(a) Price Rigging Making manipulations with the sole objective of inflating or
depressing the market price of securities.
(b) Misleading statements: SEBI prohibits misleading statements which are
likely to induce the sale or purchase of securities.
(ii) SEBI Prohibits insider trading. An insider is a person connected with the
company who is reasonably expected to have access to price sensitive
information in respect of securities of a company which is not available to
public at large.
term.
Regulatory Functions:
i. SEBI registers and regulates the working of mutual funds.
ii. SEBI regulates takeover of companies
iii. SEBI conducts inquires and audit of the stock exchange.
iv. SEBI registers and regulates the working of stock brokers, Sub Brokers,
Brokers to an issue, and Registrars to an issue, share transfer agents and such
other intermediaries in the stock market.
v. SEBI regulates the business in stock exchanges and securities market.
vi. SEBI has notified rules and regulations and a code of conduct to regulate the
intermediaries in the securities market such as underwriters, merchants,
brokers etc.,
vii. Levying fee or other charges for carrying out the purposes of the Act.
Questions (with some hints wherever necessary)
Important questions are shown with * mark and the Most important
questions are shown with ** mark
26. Nature of capital market can be well explained with the help of its
features. State any three such features of capital market.
3M
*27. What are the objectives of SEBI?
3M
28 . Explain the scope of capital market.
4M
Hint :i) Uses of funds ii) Suppliers of funds iii) Capital market
instruments iv) Financial intermediaries.
**28.. Distinguish between primary market and secondary market.
4M
**29 what are the functions of financial markets?
4M
30. What is meant by Primary Market? Briefly explain the concept of
Rights issue for existing companies.
4M
31. Define stock exchange. Explain any two features of stock
exchange.
4M
*32. Distinguish between Capital Market and Money Market on the
basis of
iiii) Instruments
iv) Liquidity
4M
33. What is meant by Primary Market? Explain any two methods of
floating new issued in the Primary Market.
4M
34. To promote orderly and healthy growth of securities market and
protection of investors, Securities and Exchange Board of India was
set up With reference to this statement explain the objective of
Securities and Exchange Board of India.
4M
35. What is meant by Financial Market Explain any two functions of
Financial Market?
4M
5M
5M
CHAPTER 11
MARKETING MANAGEMENT
14 Marks
LINKING CLASS XI SYLLABUS:
Business TradeAids to tradeMarketing/Advertising.
CONCEPT MAPPING:
1. Market, Consumer, Seller / Marketer meaning
2. Marketing Meaning, Features
3. Marketing Management Philosophies
4. Marketing Functions
5. Marketing Mix product, price, place and promotion
6. Advertising meaning, features, merits and limitations..
7. Objections to advertising
8. Sales promotion meaning and variety of Tools / methods used.
9. Personal selling Concept and qualities of a good salesman
10. Public Relations concept and role.
KEY CONCEPTS IN NUTSHELL
MARKET :It refers to a place where the buyers and sellers meet each other for
sale and purchase of the commodity.
CUSTOMER :Customers refers to the people or organization that seek
satisfaction of their needs and wants.
SELLER OR MARKETEER :The sellers or marketers offer a variety of entities
to customers.
MARKETING :Marketing makes goods and services more useful to the society
by creating place, time and possession utilities.
FEATURES OF MARKETING :
a.
b.
c.
d.
Selling Concept
Marketing Concept
Starting point
Factors
Market
Main Focus
Attracting consumers
Consumer satisfaction
Means
Ends
MARKETING
sales
satisfaction
MANAGEMENT:
It
deals
with
planning,
organizing
and
It
It
It
It
It
is goal diverted
determines the appropriate marketing mix if the firm.
is a functional area of management
is a specialized job
is the marketing concept in action
OBJECTIVES :
a. Creation of demand
b. Market share
c.
d.
e.
f.
Goodwill
Profitable sales volume through customer satisfaction
To determine marketing mix that will satisfy the needs of the customers
To generate adequate profits for the growth of the business
MARKETING FUNCTIONS:
1.
Marketing research
2.
Marketing planning
3.
4.
5.
6.
Branding
7.
8.
9.
Transportation
10.
11.
12.
Pricing
13.
Fixing
14.
Risk taking
1.
2.
3.
4.
Product Mix
Price Mix
Place Mix
Promotion Mix
Branding
Trade mark
Packaging
Labelling
Company objectives
Cost
Competition
Customer demand
Cost of production
Demand for product
Price if competitive firms
Purchasing power if customers
Government regulations
Objective
Brand name
Brand name
Brand name
Competition
ADVERTISING:
It
is
defined
as
any
paid
form
of
non-personal
1) Mass reach
2) Enhancing customer satisfaction
3) Expressiveness
4) Economical
4) Low effectiveness
Features: a) Paid form
b) Impersonal presentation
c) Speedy and mars communication
d) Identified sponsor
OBJECTIONS TO ADVERTISEMENT
a) Adds to Costs: Advertising costs are passed on to the consumers in
b)
c)
d)
e)
1)
Personal interaction
2)
Two way communication
3)
Better response
4)
Relationship
QUALITIES OF A GOOD SALES MAN:
i) Physical Qualities personality , stamina, health,tolerance
ii) Mental Qualities mental alertness, sharp memory, initiative,
imagination and self confidence.
iii) Social Qualities Socialbilty, tact, sound character, sweet
nature.
Quantity deals
Contents
Packaged premium
Container premium
Premium Gifts
Sampling
Free in mail premiums
PUBLIC
RELATIONS
Meaning: Public relations are the deliberate, planned and sustained effort
to establish and maintain understanding between an organization and its
public.
More credible.
Economical Medium
Image building.
Boosts the sales of the organization.
a)
b)
c)
d)
e)
News
Speeches
Events
Written Materials
Public service activities
1M
1M
1M
11.
1M
12.
1M
13.
1M
14.
1M
15.
3/4M
16.
3/4M
17.
3/4M
18.
Comment
3/4M
3/4M
20.
3/4M
21.
22.
5/6M
27.
5/6M
28.
What do you mean by marketing management? Explain its
objectives.5/6M
29.
promotion?
31.
5/6M
6M
ii. Customers health should be given top priority rather than earining
profits.
iii. Human values are missing .
CHAPTER - 12
CONSUMER PROTECTION
6 Marks
ManufacturerWholesalerRetailerConsumerProtection
CONCEPT MAPPING:
d) National commission :
e) 1) It is appointed by the Central Government
2) It has the jurisdiction to hear complaints involving a sum
of
Consumer
Organisations
and
Non-Government
Organisations (NGOs)
1. Education Consumers
2. Collecting data on different products and Testing them
3. Filing suit on belief if consumers
4. Helping Educational institutions
5. Promoting network of consumer association.
6. Extending support to Government
NGOs : Non-Government Organisations are those organizations which aim
at promoting the welfare of the people with non-profit concept. They are
taking up various aspects of consumer exploitation.