(Subject Notes) Business Studies

Nature & Significance of Management

Explain the term management in brief? 2 marks
Management is coordinating all the resources of an organization through the process of
controlling, organising, motivating and planning (COMP) in order to achieve its goals.
This process starts at the top and continues in more or less degree at every level of the
organization.
State any two characteristic features of management?
Distinct activity:

Management is a distinct activity, which consists of communicating, organizing,

motivating, planning, leading, staffing, controlling, decision making, etc.
It can be studied, experimented and practiced.

Intangible: Management is intangible i.e. it cannot be seen but it can be felt through the
performance of the workers. Mismanagement if any is quickly noticed and is a sign of
poor management. While efficient management reflects the efforts of the workers.
Explain briefly any two OBJECTIVES OF MANAGEMENT 2 marks
Organizational objectives:

The primary organizational objective of the management of any business should

be to attain maximum output with minimum resources and least wastage.
This generates high profits, reduces costs and maximizes prosperity.

Individual objectives:

Each employee that joins an organization wants to satisfy his individual

objectives, which means he would like to have good salary, develop his
personality, get peer and social recognition. If his individual objectives are not
satisfied, he will lose interest in his work and performance of organizational
objectives may suffer.
Hence while formulating corporate objectives, management should also consider
individual objectives

Briefly explain MANAGEMENT AS A PROCESS. 2 marks Marking scheme

Management is regarded as a process because it consists of o Setting up objectives for an enterprise; and
o

Taking a series of steps such as planning, coordinating, directing,

organizing and staffing (PC-DOS) to ensure that these objectives are
achieved.

This process starts at the top and continues in more or less degree at every level of
the organization.

MANAGEMENT AS A GROUP has the responsibility of an enterprise. Explain .

2 marks

Management as a GROUP refers to the Board of Directors or Executive Directors

who are responsible for effectively managing the affairs of the business by
guiding and controlling the work of other managers such as production, sales,
finance, personnel, quality control managers, etc.
This approach focuses on a team rather than individuals.
This is because it is believed that management as a team can contribute more
effectively and efficiently than an individual.

Management is a learned DISCIPLINE. Comment

Discipline is a subject that can be studied, organized and taught. (SOT)

It should meet the basic requirements such as:o

It should be acceptable

It should be capable of discovering knowledge, which can be verified,

passed on to others and can be successfully applied.

A large number of schools, colleges & universities have introduced management

courses.

It has got experts, thinkers and philosophers of the subject.

These experts are devoted to impart their skill of the subject to learners of the
discipline.

They follow a code of conduct prescribed for them.

As such we can conclude that management is a discipline

Explain in brief MANAGEMENT AS AN ACTIVITY 2 marks

Management is a human activity that (PC-DOS) plans, controls, directs and

organizes the efforts of all employees in the best interest of the organization and
society.
For this the human and physical resources should be integrated in such a way that
there is minimum waste of material, time and energy.
It takes decisions on the following activities:
o

The goals of the organization

The activities to achieve the goals of the organization.

The people who will perform those activities of the organization.

The allocation of resources for the various activities of the organization.

It leads by doing oneself what it wants others to do; and

It directs the subordinates by showing & encouraging them to do things

the right way.

Who are considered to be the operative management in an organization? State any

two functions of lower level management 2 marks

The first line/operative or low level management includes supervisors, foreman

and Inspectors.
They are a link between middle level management and workers
They have the following functions (any 2 functions)
o

They represent the workers grievances before the management

They procure tools, materials required for the job

They assign duties to workers and guide them in handling their jobs

They prevent wastage of materials by negligent workers

Who are regarded as MIDDLE LEVEL MANAGEMENT in a business

organisation? 2 marks

Middle management consists of departmental heads and other executive officers

of different departments
They execute the policies framed by the top management.

They are a link between the top management and supervisory or lower level of
management

State any two functions of middle level management 2 marks

Their functions are as follows: (any two functions)

They plan the operations of their department

They prepare the organizational set up of their department.

Find out suitable personnel and assign duties to them for execution of their
department functions.

Your grandfather has retired as a director. At what level of management was he

working? What functions do you think he was performing? State any two.
Or
Who are regarded as Top Management in a business organization? State any two
functions of Top management? 2 marks
Top management is the 3rd line of management, which consists of Chairman, Directors,
Managing Director, General Manager and other top-level executives required to achieve
the goals of the enterprise.
The functions of top management are:

Determine the objectives of the enterprise.

Frame the policies of the enterprise

What is meant by Balancing in coordination? 2 marks

Or
State any two elements of coordination
The key elements of coordination are as follows: (BIT)
Balancing: The activities of one department must be properly balanced and supported by
other departments in order to achieve optimum results.
Integration: It is the unification of all diverse group efforts, which are brought together
to produce best possible results. This results in better performance of the firm.
Timing: The business activities should be planned in such a way that the functions of
every employee and department are performed according to a time schedule.

What is administration 2 marks

Administration means: (LIDS)

Laying out broad programs, major projects, etc

Identifying general purposes

Determining policies

Setting up major objectives

Administration is part of management. Comment? 5 marks

Some authors suggest that management is a wider concept than administration or

administration is part of management.
According to this view, management involves
o

Responsibility to make policies

Responsibility for planning, organizing, directing, controlling &

supervising (PC-DOS)

Thus it is found that management begins with the administrative function at the
top. As one moves down the levels of organization, managerial functions become
more and more important.

Management and Administration mean the same thing Explain this view 5 marks

Management and Administration are synonymous i.e. they are both identical and
carry the same meaning.
In practice, administration involves management and management involves
administration. Both are complementary as well as supplementary to each other.
Every officer has to perform both administrative and management functions at all
levels.
Both aim at achieving the desired goal of the business of maximising output at
minimum cost and wastage.

Administration comes first and management follows it Comment. 5 marks,

Some authors suggest that administration is a wider concept than management or

administration comes first and management follows it.
According to this view,
o

Administration determines the policies while management executes those

policies

Administration lays down the objectives of the organization while

management has to direct the organization to operate under the broad
policies laid down by administration in order to achieve those objectives.

Is management becoming a profession? Discuss in light of emerging trend?

Yes, management is by and large becoming a profession. This can be seen by referring to
the following emerging trends in business:
1. All big companies appoint professional managers at all levels.
2. Many Indian companies take initiative to replace family members by professional
mangers.
3. Proprietary managers are becoming more interested in acquiring latest knowledge
and technique of management. They are sending their relatives abroad to do
managerial course.
In conclusion, it may be said that managers at the top level do not satisfy all the
requirements of profession but management is becoming a profession.

II - Nature & Significance Of Management

What do you understand by principles of management?

They are statements of fundamental truth

They provide guidelines which help management to take decisions and action

They are derived by observation and experimental studies

They establish cause and effect relationship

How are management principles derived? 3 marks

Management principles are derived by observation and experimental studies as follows:
Observation:
Management principles are derived by observing and analysing the events management
have to face in actual practice. For example the principle of division of labour was
derived after it was observed that dividing the work based on the workers knowledge and
experience, resulted in improved performance.
Experimental Studies:

By conducting experimental studies. For example suppose we wish to conduct an

experimental study to confirm the correctness of the principle of unity of command
which states that no subordinates should receive orders from more than one boss, we take
two groups of employees one having only one boss and the other having two bosses.
After some time it will be noted that the group with one boss is doing better than the
other. This confirms that the principle of unity of command is correct.
State any 3 reasons why proper understanding of management principles is
necessary?
Or
Explain briefly any 3 points establishing the NEED/IMPORTANCE of management
principles?3 marks Marking Scheme
Management principles are needed for the following reasons: (OCE)
Optimum use of resources:
The management principle of science, not rule of the thumb suggest that every task
should be done with minimum effort and energy and additional work can be done with
the saved energy. By saving time, efforts and energy activities can be made economical
and enhance the productivity of the resources.
Change in technology:
The management principle of division of labour helps management in identifying in
which activity technology has changed. If there is no division of labour then confusion
may prevail about what and how much to change and the firm might find it difficult to
face competition and might in extreme case run out of business.
Effective Administration:

The principle of scalar chain helps the enterprise to communicate with

people at different levels
Unity of direction removes confusion in minds of employees; and

Unity of command avoids dual subordination.

Thus these principles help management in managing their organisations

effectively.

Besides the above, management principles also provide guidelines to

managers to:

Effectively handle complex problems.

Clearly understand the nature and scope of their work

To make optimum use of the resources.

To take scientific decisions to meet changing conditions.

Explain 3-4 points that highlight nature/characteristics of principles of management

3 or 4 marks
The following characteristics highlight the nature of management principles: (FUEL)
Flexibility:
Management principles are flexible guidelines and can be modified in different ways in
different situations depending upon the knowledge and experience of an employee and
importance of decisions that have to be taken.
Universal application: Taylors techniques of mgt are UNIVERSALLY
APPLICABLE. Do you agree? Give any four reasons in support of your answer 4
marks - Important

Management principles are effective in:

o Both business enterprises as well as government organisations. (All social,
economic, political, cultural or even religious organisations apply
management principles for the successful operations of their activities)
o

All types or sizes of organisation

All types of problems

Any type of group action be it the army unit, hospital, etc

Example: Delegation of authority in any nature of business is considered as key to

organisational success universally because it empowers people to take decisions
on the spot.

Hence it can be concluded that the principles of management are universal and it
is possible to transfer them from one organisation to another and from one
country to another.

Evolutionary:
Management principles are developed either from organised quantitative facts or from
long experiences of leaders and scholars of management thoughts. Therefore they are
evolutionary in nature.

Limited application:
Application of principles of management in real life is affected by certain limiting factors
such as nature, size, form of business, etc.
An organisation follows the principles of management. Learn the
(a) principles
(b) positive effects, or (c) adverse effects and
(c) examples if any of
each of the following principles of management on the organisation? 3 marks Important
Which principle of management is violated if subordinate is asked to receive orders
from two seniors? Explain with a suitable example. Name any two ADVERSE
EFFECTS that may take place due to this violation - 4 marks CBSE, 2005 (2)
Fayols principle of UNITY OF COMMAND is violated. This principle implies that an
employee should receive orders from only one superior. If he gets orders from more than
one superior at a time then he will be confused as to which superiors orders should be
carried out first.
Adverse Effects: If this principle is violated it may lead to confusion, indiscipline, delay
in performance, difficulty in satisfying seniors and difficulty in fixing responsibility.
Therefore to avoid this confusion, dual subordination should be ruled out.
Example: If a salesman gets instructions from marketing as well as production
department at the same time. He may get instructions from production manager to go
slow in selling the product as there is a power cut in the factory and goods are not being
produced fast enough.
On the other hand the marketing manager may insist he sell as per schedule to reach the
target. In such a situation, it may be difficult for the salesman to carry out the orders of
two
people, as their instructions are contradictory. Unity of command therefore helps in
avoiding such contradictory issues.
Which principle of management envisages that each group of activities having the
same objectives must have one head and one plan? Explain the principle with a
suitable example. What are the positive effects of this principle 3 marks
UNITY OF DIRECTION

This principle calls of one manager one plan for a group of activities having
the same objective so that the efforts of all employees are directed towards
common goals.

The positive effect of this principle is that it ensures unity of action and facilitates
coordination.

Example: Suppose an automobile company has three divisions cars, scooters

and three wheelers. Now each division must have its own targets since each
product has its own market and problems. Each division must plan its target as per
its environmental conditions to achieve better results.
(I mark for naming the principle + 1 mark for each point of explanation + 1 mark
for example)

What do you mean by the principle SUBORDINATION OF INDIVIDUAL

INTEREST TO GROUP/GENERAL INTEREST CBSE-2005 Set 1. 3 marks
According to this principle of Fayol, management should reconcile the interest of an
individual with those of the group. However if they differ, then the group interest should
supersede that of the individual interest.
Example: If a manager gets an order for supply of a product at his own initiative and due
to which the company benefits immensely.
Positive Effect: The principle suggests that the profit should be shared by all since one
person cannot alone meet an order.
State the principle of ESPIRIT DE CORPS? What is the positive effect of this
principle? 3 marks CBSE-2000, CBSE-2005 Set 1

Espirit de corps means spirit of cooperation.

It means harmony, mutual understanding and team spirit among workers.

If there is team spirit, everyone comes forward to help others.

It helps to develop an atmosphere of mutual trust and understanding and a sense

of belong among workers, which inspires them to work harder and improve
quality of work.

Employees up to the standard should be rewarded and those who are not up to the
standard should be given an opportunity to improve their performance.

Positive Effect: When esprit de corps is present the need to penalise the
defaulting person is minimised

Explain FAYOLS Principle of DIVISION OF WORK (2 marks)

State the adverse effects on the violation of the principle of division of work V. Imp

According to this principle of Fayols, every task should be divided into small
task and assigned to the right person who is capable of doing that job. He should
also be trained for doing that job. This is called division of labour.
This principle applies to all kinds of work managerial as well as technical

Positive Effect: A person holding the same post and doing the same job will over
time specialise in that job and improve his performance, efficiency and result in
increased output.

Adverse Effects: If this principle is violated it leads to

(a) inefficiency (b) delay in work (c) increase in costs (d) decrease in output.

Explain FAYOLS PRINCIPLE OF DISCIPLINE (2 marks)

According to Fayol, discipline means respect for agreements that are directed at
achieving energy, application, obedience and outward mark of respect (EARO).
Fayol says that discipline requires:
o

Good supervisors at all levels

Agreements should be clear and fair

Penalties should be fairly imposed

However Fayol does not support wrong use of authority to enforce discipline such
as warnings, fines, suspensions, dismissal, etc.

Example: If a company has entered into agreement with employees regarding

their wages for 5 years then the company should honour it. Likewise, employee
should also honour the commitments made by them.

An organisation follows the principles of management. What are the POSITIVE

EFFECTS of each of the following principles of management on the organisation (3
will be asked) -3 marks (30-40 words) V. Important
(a) Unity of Direction
Positive effect: of this principle is that it ensures unity of action and facilitates
coordination
(b) Espirit de corps
Positive Effect: When esprit de corps is present the need to penalise the defaulting person
is minimised
(c) Subordination of individual interest to general interest

Positive Effect: This principle suggests that the profit should be shared by all since one
person cannot alone meet an order.
(d) Scalar chain
Positive Effect: This will produce quicker results in sorting out problems in one or two
sittings and avoid lengthy time procedure, danger of miscommunication, distortion or
even danger of being killed in the process.
(e) Equity
Positive Effect: If similar treatment is assured to people performing similar jobs and the
management is always kind, fair and just in its dealing with its subordinates, it earns the
respect, loyalty and devotion of the employees and they are motivated to put in their best
efforts.
(f) Division of work:
Positive Effect: A person holding the same post and doing the same job will over time
specialise in that job, improve his performance, efficiency and result in increased output
An organisation follows the principles of management. What are the ADVERSE
EFFECTS of each of the following principles of management on the organisation?
V. Important
(a) Unity of command
Adverse Effect: If this principle is violated it may lead to confusion, indiscipline, delay in
performance, difficulty in satisfying seniors and difficulty in fixing responsibility.
Therefore to avoid this confusion, dual subordination should be ruled out.
(b) Unity of order
Adverse Effect: When there is no arrangement for things and people, the organisation
will not be able to achieve its objectives in time. Effective utilisation of physical and
human resources will not be possible.
(c) Stability of tenure of personnel
Adverse Effect: If this principle is violated, it will lead to high labour turnover rate and
will increase the cost of selection and training of the employees
(g) Division of work
Adverse Effects: If this principle is violated it leads to

(a) inefficiency (b) delay in work (c) increased costs (d) decreased output.
(h) Remuneration of personnel
Adverse Effects: If fair remuneration is not paid to the workers, it will create a sense of
dissatisfaction among workers leading to various problems such as trade unions, strikes,
high labour turnover rate, etc
Explain Fayols view on REMUNERATION OF PERSONNEL? 2 marks

In Fayols view, remuneration of employees should be fair and reasonable which

will satisfy both employers and employees.
It will stimulate the workers to work more and better.

Wages should be determined on the basis of

work assigned

cost of living

financial position of the business; and

average wage rate for similar work in the industry.

Adverse Effects: If fair remuneration is not paid to the workers, it will create a
sense of dissatisfaction among workers leading to various problems such as trade
unions, strikes, high labour turnover rate, etc.

Why did Fayol suggest the idea of GANG PLANK? What light does it throw on
the nature of Fayols principles? 5 marks
What is GANG-PLANK? Show it through a diagram 3 marks
Gang-plank is the technique of shortening the route of communication which is usually
followed through all channel of hierarchy. Fayol suggested that in case of urgencies, by
jumping the prescribed line of authority, these officials could deal with one another at one
sitting and sort out several problems quickly.
How can Fayols PRINCIPLES OF EQUITY and order be applied in work
situation?-4 marks. Illustrate with an example. (CBSE-1996, CBSE-2001)
Or
Which principle of management aims at securing the loyalty and devotion of the
employees by giving them kind, fair and just treatment? Explain this principle with
a suitable example -4 marks

The principle of equity suggest that similar treatment is assured to people

performing similar jobs. Example two typists should be paid the same wage
rate.
An effective management is always kind, fair and just in its dealing with its
subordinates. This way it earns the respect, loyalty and devotion of the employees
and they are motivated to put in their best efforts.

However the principle of equity should be applied at all levels. Workers should be
treated at par at every level.

For example: There should be no discrimination with regards to position, sex, age
etc while granting medical leave to the employees.

Name the function of management, which concentrates on employing and retaining

the right person at the right place. Explain why this function is important in any
organisation.
Or
If an organisation does not provide the right place for physical and human resources
in the organisation., which principle is violated? What are the consequences of it?
Principle of ORDER:
If an organisation does not provide the right place for physical and human resources in
the organisation, the PRINCIPLE OF ORDER is violated.
The principle of order is concerned with proper arrangement of things and people. This
principle can be divided into two:
Material order: An orderly arrangement of things is called material order. There should
be an orderly arrangement of physical factors of production like land, raw material, tools
and equipment. This means that there should be a specific place for everything. Every
piece of land and every article should be used properly, economically and in the best
possible way.
Social order: An orderly arrangement of people is called social order. This includes
employees. Right man for the right job will ensure effective use of man power resources.
Right place for everything and for everyone should therefore be the guiding principle for
every management.
Adverse Effect: When there is no arrangement for things and people, the organisation
will not be able to achieve its objectives in time. Effective utilisation of physical and
human resources will not be possible.

Explain the principle of INITIATIVE through a suitable example - 3 marks

(CBSE-2000)

Freedom to think and execute a plan is known as initiative.

Employees at all level should be allowed to take initiative in work related matters.

Encouraging initiative is likely to motivate employees to work better and harder.

However initiative should not be confused with disrespect to authority. For

example: if any employee is given the initiative to make suggestions but once the
decision is taken on any issue then there is no scope for disobedience.

Fayol points out the danger and costs of unnecessary labour turnover in one of his
principles. Name and explain the principle.(CBSE-2000) (2004)
Or
Illustrate the principle of STABILITY OF TENURE through a suitable example
3 marks
Fayol emphasised in his principle STABILITY OF TENURE that employees should
not be shifted from their position frequently. The period of service should be fixed. It
takes time for an employee to get used to his work and he cannot render useful service if
he is removed before he gets accustomed to the work assigned to him.

Production requires team-work. If the members of the team go on changing the

entire production process will be disturbed.
An effective management will ensure that trusted, trained and experienced
personnel do not leave the organisation, unless it is unavoidable such as illness,
retirement or death of an employee.
Stability of job creates a sense of belonging among the workers and so they are
motivated to improve the quantity and quality of work.
Adverse Effect: If principle of stability of tenure is violated, it will lead to high
labour turnover rate and will increase the cost of selection and training of the
employees.

Define Scientific Management? 2 marks

According to F.W.Taylor who is regarded as the father of scientific management,

Scientific Management is the art of knowing exactly what you want your men to
do and seeing that they do it in the cheapest way.
It means conducting business activities according to standardised tools, methods
and trained personnel in order to increase the output, improve its quality and
reduce cost and wastage.

Explain any two principles of Scientific Management.

Or
Describe in brief TAYLORS PRINCIPLES of (i) science not rule of the thumb and
(ii) separation of planning and operational work - 4 marks. (any two out of 5 taylors
principles will be asked- 4 marks) Important
Science not rule of thumb 2 marks

In traditional management rule of thumb was prevailing. This was also known
as Trial and errors method or Hit or miss method
This principle meant that go on trying, failing and wasting the resources and
finally perfecting the job.

Workers were careless because no specific amount of work was expected from
them. Even the employer did not know the real worth of his employee. Everything
was left to Trial and Errors method.

Taylor introduced the scientific method in which he emphasized that Rule of the
thumb does NOT involve thinking before doing and that each job in the
organisation should NOT be performed based on intuition, experience and hit and
miss methods.

According to scientific method the causes, effects and exact measures of effort
and output should be kept in view for any work to be performed. This forms the
core of scientific management.

Separation of planning and operational work: - 2 marks

According to Taylor, planning operations should be separated from operational

operations.
He stressed that managers should concentrate on planning the job of the workers
while workers potential should be developed to the fullest extent for their own
benefit as well as the prosperity of the company.
For this purpose there has to be a scientific selection of workers and they should
be trained to adopt new methods of work.

Harmony not discord -2 marks

According to Taylor those who work together should work in harmony i.e. there
should be mutual give and take and proper understanding among the managers
and workers. This is because group efforts contribute more than an individuals
efforts.

Managers should adopt an enlightened attitude and share the productive gains
with the workers and workers on their part should work with discipline and
loyalty.

Maximum not restricted output 2 marks

Continuous productivity is one of the principles of scientific management.

According to this principle, production should not be curtailed and management
and labour should both be interested in increasing productivity.

Conflict between management and labour arises mainly on division of surplus.

The best solution is to increase the size of the surplus so that both can have a
larger share.

Cooperation not individualism: - 2 marks

Scientific management works on cooperation between workers and management

and among workers themselves.
Management can earn higher profits if workers produce better quality, low cost
goods.
Workers can earn higher wages if management provides standard materials,
standard tools, standard working conditions and training in standard methods.

Explain method study as a technique of Scientific Management? 2 marks (CBSE2004)

Method study is concerned with methods of performing a job.

There are various methods to perform the same job with different costs
requirements. Taylor suggested that management should find out one best way to
perform the task.

For example The methods of manufacturing shoes may be manual or

mechanical but the cost of labour and capital to manufacture shoes according to
each method may vary. Management has to decide which method to use before it
starts manufacturing.

The objective of method study is to minimise production costs by a proper

mixture of factors of production in order to achieve desired result.

Method study should be done right at the planning stage of the job.

What role do motion studies play in setting the standard task? 2 marks

Motion study is the technique that closely observes the movement of the
body/machines required to perform a job so that unnecessary movements can be
eliminated and the best way of doing a job is determined.
Upon a close examination of bodys wasteful motions it is possible to find
o

which motions are productive

which are unproductive

which motions are incidental i.e. going to the store

Through motion study Taylor was able to design suitable tools & equipment and
educate workers on their use.

Define fatigue study on the basis of meaning and purpose? 2 marks

Fatigue study helps in setting the time interval and frequency of rest period in
completing a task.
A person will be tired and less productive if he works without rest interval for a
long period of time. If he is allowed rest intervals he will regain stamina and work
with increased efficiency.

What is the role of time study in setting the standard task or help to improve the
efficiency of workers.? Give two points in support of your answer? 2 marks

Time study measures the standard time taken for a qualified worker to perform a
well -defined job.
Time study is done with the help of a time measuring device.

Objective of time study is to:

Determine number of workers to be employed

Determine cost of labour

Frame suitable incentive schemes

Benefit of time study:

o

It helps to determine the fair days work of an employee

It creates time consciousness in a worker

It eliminates idle time

It helps in reducing costs

Distinguish between Time Study and Motion Study 3 marks (Pre Semester 2003)
TIME STUDY

MOTION STUDY

It measures the standard time taken for a It studies movements of body/machine to

qualified worker to perform a well
perform a job
defined job.
The purpose is to decide how much time The purpose is to avoid wasteful motions and to
is normally required to perform a certain determine the best way of doing a job
job
It measures the work provides a yardstick It eliminates and reduces wasteful and useless
to decide between efficient and inefficient motions.
workers

What is Mental Revolution 2 marks.

According to Taylor, mental revolution means that both workers and management
should completely change their attitude regarding relation between themselves
and their work.
Management and workers usually suspect each other and try to trick each other.

Workers all the time feel that management exploits them by extracting a lot of
work from them and paying meagre wages. Management on the other hand feels
that workers always grumble about the workload and deliberately slow down their
work, damage equipments, tools and show indifference to quality of products.

Mental revolution requires that such a feeling of suspicion or prejudice should be

rooted out.

Management should provide good working conditions and resolves all problems
scientifically. Similarly workers on their part should work with discipline and
loyalty.

Instead of fighting for dividing the surplus profit, management and workers
should cooperate to increase it.

Do you agree with the view that Taylors principles of scientific management and
Faylors principles of management are mutually complementary. Give any 4
reasons. (3-4 marks)

Or
List 4 distinctions between Fayols contribution and Taylors theory (Important) 3-4
marks
Yes, they are mutually complementary since no organization can function effectively
without mutual cooperation of managers and employees.
The comparative evaluation of their contributions is given below. (FEES)
Focus:

Taylor tried to improve the productivity of workers and eliminate all kinds of
wastes.
Fayol tried to develop the principles to ensure better management.

Emphasis:

Taylors principles were more applicable at shop level with emphasis on tasks of
workers and supervisors.
Fayols principles were more applicable at general management level with
emphasis on efficiency of managers and administration

Expression:

Taylor used the expression scientific management

Fayol used the expression general theory of administration.

Starting point:

Taylor wanted to improve the efficiency of lowest level and then move upwards
while formulating the principles of scientific management.

Fayol began from the top level and moved downwards with emphasis on unity of
direction, command and coordination.

Business Environment
What is meant by business environment? 2 marks

Business environment means forces and institutions which the members of a firm must
deal with in order to achieve the objectives of the organization.
Forces include politic, economic, social, technological, etc (PEST) and Institutions
include (competitors, customers, suppliers, etc)
The environment provides both constraints and opportunities. Discuss with
examples

An environment provides constraints (restrictions), which could be in the form of

economic conditions, customs, government regulations, availability of natural
resources, labour supply.
Example: Despite many initiatives, foreign direct investment in India is not
picking up in the country because of political and bureaucratic reasons.
On the other hand, environment also provides the firms numerous opportunities in
the form of unmet and changing needs of the customer and market.
Example: the growing demand for air conditioners has attracted many new
domestic as well as multinational firms in the industry

What is meant by environment scanning? 2 marks

Environment scanning is a process by which organizations monitor their relevant

environment so that they can consider the impact different events, trends, issues,
expectations have on its strategic management process.
Example in the Union Carbide gas leakage incident in Bhopal in Dec-1984,
The accident and the holocaust that resulted, was an event
The consciousness on the part of the Regulatory Authorities regarding the safety
from hazardous exposure to chemicals, was the trend
The rising concern about environmental pollution was the issue
expectations of the public from the government was to amend the laws to
include safety measures and stricter enforcement through various mechanisms.

Briefly discuss two dimensions of general environment? Classify business

environment in two major categories and give one example of each? 2 marks
The two dimensions of general environment are:
Economic environment : includes fiscal, monetary and industrial policies, etc
Non economic environment : includes social, cultural, political, legal, technological
factors, etc
Explain economic environment? 2 marks
Economic environment consists of (BIG PICCED)

Balance of payment
Inflation rate

Gross national product (GNP)

Productivity

Interest rate

Consumer Income

Corporate Profit

Employment rates

Debt & Spending

Give two examples of the factors and influences that operate in the Indian
ECONOMIC ENVIRONMENT and which have had an impact on all business
organizations 2 marks
a. Rapid increase of production capacity after partial decontrol of cement in 1982.
b. Banking sector reforms led to attractive deposit avenues, easier credit terms,
better service and above all an effective and reliable banking system
c. Due to changes in economic and fiscal policies, entry for financial institutions and
banks in stock trading became easier.
What is meant by SOCIAL ENVIRONMENT of business? 2 marks

Social Environment describes the characteristics of the society in which the firm
exist.
The following form a part of the social environment:
o

Customs, Age, Beliefs, Lifestyle, Educational levels (CABLE)

Literacy rates, Values, Demographic distribution & mobility of population

(VLDM)

Managers should remember that although the attributes of the society may change
slowly or quickly but they will eventually change.

They should study the social traits of the area before moving in that area
otherwise the cost of ignoring the taste, preference, customs, traditions taboos of
the society could be very high.

Examples:
o

Vicks Vaporub is a popular pain balm. If it is used as a mosquito repellant

in some tropical areas due to sheer ignorance, the adverse effects can be
very severe.

Similarly, the slogan of Pepsi Cola come alive in some languages is

translated as come out of the grave. Therefore due to this slogan, the
product failed to pick up.

Give 2 examples of factors and influences that operate in the Indian SOCIAL
ENVIRONMENT and which have had an impact on all business organizations? 2
marks
1. Demand to reserve jobs for minorities and women.
2. Equal pay to men and women for equal work performed.
3. When there is an increase in middle class families, there is a continuous demand
for various consumer goods and they also influence investment in the corporate
sector.
Explain briefly five ways in which Indian managers are responding to changes in the
business environment (Sample paper) 5 marks - V. V. Important for Yr-2006 Board
Following are the ways in which companies are responding to change in business
environment.
1. Acquisition & Mergers:
o Mergers, acquisition, takeovers, amalgamations (MATA) are a common
feature of post liberalized economy.
o

The purpose of these acquisitions and mergers were to achieve entry,

dominance in the market, access to technology, etc.

Examples: Mergers between ACC Gujarat, Ambuja Cement, Hindustan

Aluminum Co and Indian Aluminum Co are examples of merger. Reliance
gaining control over management of L&T is an example of acquisition.

2. Consolidation of Multinational
Due to liberatisation policy, many multinationals have entered India through joint
ventures.
For example General Motors entered through a joint venture with Hindustan
Motors. Ford entered with Mahindra & Mahindra. Multinationals are also entering
the core sectors of the Indian economy.

3. Brand building
Branding means putting the manufacturers name, a picture, etc on the package of
the product. Brands create awareness of a product and hence in todays
competitive world, brands have come to occupy an important place. Many
companies increased their expenditure to enhance their brands. For example
heavy expenditure was incurred on launching of Korean brands such as Hyundai,
LG, Samsung, etc. Indian companies are also doing likewise.
4. Distribution & Selling
o

Selling goods through direct marketing of products such as Tupperware,

Amway is a recent development.

This has increased the selling cost of Indian companies more than foreign
company because a large amount is being spent on advertisement.

Capital Structures
o

Capital structure of companies has changed more to equity than debt. This is
because in the past equity was dominant but thanks to crooks in the stock markets,
they have shaken the investors confidence by so many false new issues in the
past, companies now have to rely more on debt than equity.

Indian companies such as Reliance have also started moving towards global
market for equity and debt capital

- Planing -

Planning Syllabus (Only 1 Knowledge Q with choice will come as a 6 marks question) at the Bo

Define Planning? 1 mark (part of the question)

Planning means

making decisions with regards to goals to be achieved and

the methods to be adopted to achieve those goals.

Explain briefly 6 steps in PLANNING PROCESS OR in FORMULATION OF A

PLAN 6
DCDCFPF : the steps should be answered in sequence
1. Defining objectives
1st step-of the management is to develop a plan and set some clear and specific
objectives, which should stipulate the areas where organized planning must occur.
2. Choosing alternatives:
2nd step - the manager should ascertain as many available alternatives as possible
for reaching those objectives and he should explore all those alternatives without
going into the merits and demerits of those alternatives.
3. Developing planning premises:
3rd step - the manager should list all the premises (assumptions) for each
alternative and then determine the feasibility of using any one alternative to reach
its objectives.
4. Choosing the best alternative:
4th step - the manager should evaluate all the alternatives + the premises on which
the alternatives are based so that the unreasonable alternatives can be eliminated
from further consideration and the best alternative can be decided to achieve the
objectives of the organization.
5. Forming supportive (derivative) plans: (Explain the meaning of supporting
plans with the help of a suitable example?
After forming the main plan, secondary plans are derived in order to support and
expedite the achievement of the main plan. These secondary plans are known as
derivative or supportive plans.
For example once the production plan is prepared, secondary plan would be to
buy equipment, raw material, recruit and train staff, develop new product, etc.
These derivative plans are formed on the basis of the main plan and therefore
support it.
6. Putting the plan into action:
Once plans are developed, they are ready to be put into action. The organization
does not benefit from the planning process until this step is carried out.
For example if the firm decides to promote sales through advertising, then the
company should engage an advertising agency to go ahead with the advertising
otherwise the company will not achieve its desired results.
7. Following up:
Once the plan is put into action, it should be monitored because in the course of
implementing the plan, many adjustments may be required in order to achieve the
given objective.
NOTE: if any additional correct point is added at any relevant stage without

violating the sequence, full credit should be given. If sequence is not maintained,
2 marks are deducted
Planning is not a guarantee of success of a business . Comment
Or
Why does planning sometimes fail in spite of the best effort of management? 5
marks
Or
Explain the LIMITATIONS of planning? 5 marks (First Semester 2003)
Or
Explain rigidity as a limitation of planning 3 marks (Board Exams - 1998, 2004) Imp
Anagram for Planning Limitations = RIP CUT
Rigidity:

Planning leads to rigidity. This has an adverse effect on the initiative to be taken
by the managers.
For example due to a sudden change in the economic environment, a manager
may have to change the course of action to achieve the desired result. But the
manager may not be able to take the initiative if it is not in the plan in which case
rigidity in planning may prove costly to the organization.
Rigidity may be internal as well as external.

Inaccurate:
Planning is based on the future, which is uncertain and beyond the control of the
organization. Predicting the future is difficult. Any plan based on inaccurate information
may not be very useful to the organization.
Psychological barriers:
There are some inbuilt psychological barriers. For example-people prefer the present
rather than the future, as the future is relatively uncertain. Also planning involves change
and adjustment to such changes and people tend to resist change.
Costly:

Planning is an expensive exercise as it involves time and money to prepare

estimates, collect information and evaluate various courses of action.
Often there may be need to hire the services of experts for the purpose of
planning.
Thus, planning can be beneficial only if the benefits to be derived from it are
more than the costs.

Unsuitable:
In planning there are set policies, procedures to be strictly followed under all
circumstances. However, this is against the very concept of business. Business is a
dynamic activity faced with opportunities and problems. If it follows a set course of
action, there may be risks of failure.
Time consuming:
Planning requires time to think, analyze the situation and then design the final plan. In
case of emergencies it is necessary to take on the spot decisions. In such situations, time
is a precious commodity and any delay caused by planning may deprive the business of a
profitable opportunity.
Explain in brief, the meaning of Goals & Objectives & Rules as types of plans and
give any four examples of each.
Or
Explain the types of plans? This Q comes as a choice
Goals are collective ends towards that an organization direct their energies and
activities.
Examples:
1. The goal of a car company can be to provide good quality and economically
priced automobiles to the public.
2. Improvement in communication system
3. Improvement in customer relationship
4. Improvement in sales of specific product
Objectives are the ends towards which activity is aimed. They are the results to be
achieved. An objective should meet the following five requirements
1. It should relate to a single specific topic
2. It should relate to a result and not to an activity to be performed

3. It should be measured in quantitative terms whenever feasible

4. It should have a deadline for achievement
Rules are rigid instructions. They are specific statements and guide to behaviour. They
indicate what should and should not be done. In rules, there is no scope for discretion.
Explain the term policy and procedure as types of plans and give any four points
of distinction between them. 6 marks
Policy is a general statement of an organization which specifies its intention to respond
to a specific problem or situation .
Example: McDonald has a policy that it will not grant franchise to an individual who
already owns another fast food restaurant.
Likewise a school admission office may have a policy that admission will be granted only
to those applicants who have secured 60% and above
Procedure is a guide to action. It contains steps in chronological order for handling
future activities.
Example: McDonald has a procedure that explains exactly how Big Macs are to be
cooked, how long they can stay in the warming rack, etc.

Distinguish between (Any four points): 6 marks

POLICIES

PROCEDURES

It is a guide to thinking and steps to decision It is a guide to action and contains steps in
making
chronological order to handle future
activities
They are general statements
They are specific statements
Flexible

Rigid

Scope for discretion

No scope for discretion

Decided by top level management

Decided by middle & low level management

There may be different policies for different There are same procedures for all
departments
departments
They are not dependent on procedures
They are dependent on policies

Marking Scheme Policies and Rules (Important)

POLICIES

RULES

General statements

Specific statements

Flexible

Rigid

Scope for discretion

No scope for discretion

Guide to decision making

Guide to behaviour

Lay down management attitude

Indicates what should or should not be done

Example : McDonald's has a policy that it Example: McDonald restaurant has a rule
will not grant franchise to an individual who which prohibits customers from using its
already owns another fast food restaurant. telephone

- Organising Define Organising and enumerate 3 steps involved in the process of organising?

Organising means identifying and grouping various activities into jobs and then
sub grouping these jobs into sections and departments.

It is bringing together financial, physical & human resources and establishing

productive relations among them for achieving specific goals.

The organising process involves the following steps:

Division of work:
1st step divide the work since one individual cannot do the entire work. If work is
divided it leads to specialisation of work and skill.
Grouping Jobs and Departmentation:

The 2nd step is to group similar jobs into departments, divisions or sections such
as marketing, financing, manufacturing, etc.

This brings about coordination and facilitates unity of effort.

The departments so created are linked together on the basis of their

interdependence.

Establishing authority relationships:

3rd step is to create an authority structure among various job holders

This links the various job holders by authority-responsibility relationship.

Define Organising as a structure? Enumerate any three CONSIDERATIONS to be

kept in mind while building an organisational structure. - 4 marks
Definition:

An organisation structure define:

o job positions,
o

the roles assigned to them ;and

the authority relationships among the various job positions.

It facilitates work-flow in the organisation.

Considerations (any 3)
The following considerations should be kept in mind while building an organisation
structure
Job design:

Manager has to first design the jobs

Then specify which task is to be included in each job

Then decide which person will do which job

Departmentation:
Once the jobs are defined they must be grouped together to form a department as
coordination becomes easier if similar jobs are under one department and one manager.
Span of Control:
After the departments are formed, how many people and jobs the manager will manage is
the next decision. The manager is responsible for coordinating a particular number of
jobs, which is called the span of control.

Delegation of Authority:
As jobs have been assigned, some degree of authority is required to get the job
completed.
Explain how organising helps in Specialization and Co-ordination
Or
Describe IMPORTANCE OR OBJECTIVES of organising as a function of Mgt? 6
marks
Organising function is important because it leads to: (SCARS)
Specialisation:

Activities should be grouped based on their similarity and convenience.

This leads to efficiency, specialisation and speedy performance of task.

Clarifies authority and responsibility:

If each manager is aware of his respective powers and privileges, his area of activity,
whom he can order and for which task, it helps to minimize conflicts and confusion.
Avoids duplication of work
Organising helps to avoid duplication of work and overlapping of responsibilities. This is
because specific jobs are assigned to individuals and work groups.
Role clarity:

The organising process clarifies what role a person doing a job is supposed to
perform.
It is quite often spelt out in a written document called job description.

This helps to

Avoid duplication of work

Finding right person for the right job.

Source of support and security:

Organising is a source of support, security and satisfaction to managers and employees in
performing the task assigned to them. Each member enjoys a definite status in the firm.

FUNCTIONAL AND DIVISIONAL STRUCTURE: (Important sub chapter)

Define functional organisation? 1 mark (part of the question)
Grouping together the entire work into major functional departments and entrusting these
departments to functional specialists is known as functional structure of the organisation.
In an electrical manufacturing company, there are four main activities Production,
Marketing, Finance and Personnel. The General Manager is planning to structure
the organisation. Which type of organisation structure should be adopt and why?
Give two reasons.

This company should adopt the functional structure because:

Each major function is organised as a separate department viz. marketing,

production, finance, personnel, etc.
This promotes division of work which leads to specialisation

Ensures effective utilisation of workforce

Supervision and coordination becomes easy since each individual manager is

specialised in his job.

State any 3 advantages of functional structure of organizing - 3 marks Marking

Scheme

Promotes division of work which leads to specialisation

Ensures effective utilisation of workforce

Supervision and coordination becomes easy since each individual manager is

specialised in his job.

State any 3 limitations of functional structure of organising 3 marks

As each function is separate and each departmental head is concerned with the
performance of his department, conflicts may arise and the overall objectives of
the organisation suffer.
In large functional organisations, taking quick decisions & coordination becomes
difficult

It becomes difficult to hold a particular department accountable if any problem

arises.

For example, if a product fails the production, sales and research departments may point
accusing fingers at each other.

XYZ Limited is manufacturing chemicals and textiles. What type of organization

structure would suit the requirement of such an organisation? And why?

Divisional organisational structure would suit the requirements of XYZ Limited.

In divisional organisational structure, activities and personnel are grouped on the

basis of different products manufactured by the firm.
This allows each division to specialise in its areas of operation

Decision can be taken quickly and effectively

Each division can concentrate on each product line. This will result in efficiency
and economy in its operation

State any 3 advantages of DIVISIONAL STRUCTURE of organising 3 marks

Each division can specialise in its areas of operation.

Decision can be taken quickly and effectively.

Can concentrate on each product line, which leads to efficiency and economy in
its operation.

State any 3 disadvantages of divisional structure of organising 3 marks

As each division has its own production, marketing and finance arrangements, it
involves heavy expenditure on human and physical resources.
Managers in each department focus only on their own product without thinking of
the rest of the organisation.

Full utilisation of equipments may not be there in different departments.

It is not suitable for small and medium sized companies.

DELEGATION OF AUTHORITY: (Meaning, Importance & Elements) Imp sub

chapter
Define delegation of authority?
The manager cannot perform the entire work assigned to him alone. So while he himself
does jobs that are unique to the position he holds, he shares routine work and authority
with competent subordinates to operate within prescribed limits. The sharing of this
routine authority and responsibility with the subordinates is delegation of authority.
Explain briefly the ELEMENTS/PROCESS OF DELEGATION OF AUTHORITY?
Marking Scheme - 4 marks
Or
Delegation of authority is a process involving authority, responsibility and
accountability Explain this statement in brief. 4 marks Important
Delegation means entrusting responsibility and authority to another person and creating
accountability. Thus the process of delegation of authority has the following three
important elements:
Responsibility:

Responsibility can be delegated. It is the first step in the delegation process.

A manager assigns certain tasks to his subordinates because he alone cannot
perform all those tasks.

However he only assigns the task to his subordinate but not the responsibilities for
their performance.

The responsibility for proper performance of such task continues to rest with him.

Authority:

Besides assignment of duties, the subordinates are also granted authority to

perform those duties properly.
Authority refers to the powers and rights to use financial, physical and human
resources as well as the right to decide to act or not to act.
Authority is needed perform a given responsibility because without authority it
may be very difficult and even impossible to carry out the given task.

Accountability:
The process of delegation is complete when the subordinate to whom the duties are
assigned and authority is delegated is made accountable for properly performing his
duties and for properly exercising the authority delegated to him.
Authority can be delegated but responsibility cannot. Explain the statement in
brief
Or
Responsibility can be delegated but accountability is absolute Explain. 6 marks
According to the principle of absolute responsibility, authority can be delegated but
responsibility and accountability cannot be delegated by a manager. The manager is
responsible or accountable to his own superior for both, the tasks that he has assigned his
subordinates and the acts of his subordinates. In other words only authority can be
delegated but responsibility and accountability is absolute.
Example: if a foreman fails to get 100 units produced by the workers on any day, he is
responsible to his superior. He cannot escape by saying that the workers were at fault.
Similarly, the factory manager remains responsible to his superior for the work he
entrusted to this foreman. He cannot escape from the responsibility by passing on the
blame to his foreman.
Why is it necessary to delegate authority? Give three reasons?
(Importance/advantages of delegation of authority)
Or
Delegation of authority helps in reducing the workload of managers and in
motivating the subordinates. Explain this statement 6 marks V. Important
It is necessary to delegate authority due to the following reasons:

It reduces the workload of managers. By sharing some of his own work with
the subordinates, the manager is able to concentrate on more important jobs. This
way he increases his own effectiveness and that of his subordinates. When
delegation of authority takes place at all levels of the organisation it leads to
proper division of work and assignment to all managers in a systematic manner.
It establishes a superior-subordinate relationship. The flow of authority from
top to lower level of management is directed and controlled by the process of
delegation. This gives meaning and content to the flow of authority and to
managerial jobs.

It increases morale of the subordinates: Delegation helps the subordinate to

develop their capabilities to handle new and more challenging jobs. This gives
him job satisfaction. it increases his morale, self confidence and efficiency to get
promotion.

Explain the term decentralization in brief? 3 marks

Decentralisation means delegating authority at all management levels and all

departments of the organisation to take decision and appropriate action on tasks
assigned to them.
In a decentralized organisation, while top management have authority to frame
policies and take major decisions; middle and lower level managers have
authority for taking decisions on tasks assigned to them.
Example: In an organisation, major decisions on products, line of business, capital
investment, etc are made by top management while marketing manager for
example is authorised to decide on prices of products, distribution channels,
methods of advertising the products and organising sales campaigns. Top
management does not interfere with his authority. However, marketing manager is
required to keep in view the overall policies of the organisation while making
decisions concerning matters within his authority. This organisation may be
regarded as a decentralized one.

The concept of decentralisation is related to the concept of delegation. Explain

this statement in brief. 4 marks

Decentralization refers to the dispersal of authority to take decisions to the lower

level of an organisation where the problem arises.
Delegation means entrustment of responsibility and authority from one individual
to another. The concept of decentralisation is wider in scope and coverage.
Decentralisation is completed only when the fullest possible delegation is made to
all or most of the people who are delegated a specific kind of work or
responsibility.

Explain the concept of delegation and decentralisation bringing out its distinction
Or
Dist between: (All points are important as any 3 are specifically asked in the CBSE
paper 3 marks or 6 marks

Scope

DELEGATION OF AUTHORITY
DECENTR
Scope is limited to the manager and his Scope is wider than delegation as it invol
immediate subordinates in the work unit. in all functions of the organisation.

Significance

It is entrusting authority from one person

It is an extension of delegation to the low
to another
Delegation is compulsory in every
Decentralisation is optional and is decide
organisation at every level.
not want it.

Freedom of Action

Manager exercises control over activities

Managers of work units have greater free
of subordinate
close supervision by their superiors but h
performance targets set by top manageme

Essentiality

Organisation cannot function without

Organisation can function without decent
delegation of authority
Responsibility cannot be delegated
Responsibility can be delegated
Delegated authority can be withdrawn by
Cannot be easily withdrawn as introduced
delegator.

Responsibility
Grant of Authority

- Staffing 2-3 marks Q should not exceed 30-40 words

4-5 marks Q should not exceed 60-80 words
6 marks Q should not exceed 100 words
Staffing Syllabus (one 6 marks question comes as a choice and one 4 marks question
comes on wage and time piece system) 6+4=10 marks
Define staffing as a function of management? (DASTOD)

Staffing is the process of determining the manpower needed to meet the

objectives of the organisation.
Apprising and selecting candidates to fill these requirements; and

Training, orienting and developing (TOD) new and existing staff.

Explain briefly 6 steps in the STAFFING PROCESS ?6 mks

(maintain the sequence. 2 marks will be deducted if sequence is not maintained)

Following are the important steps involved in the staffing process:

Manpower planning:

Man power planning tries to assess manpower requirements in advance keeping

the production schedules, market fluctuations, demand forecasts, etc. in the
background.
The focus of manpower planning is to get the right number of qualified people at
the right time.
Manpower requirements are estimated through job analysis.

Job analysis: (What is job analysis?)

Job analysis means a careful study of the tasks and responsibilities involved in a
job.
The relation of one job with another job

The conditions under which the job is to be done; and

The capabilities of the job-holder to perform the job satisfactorily.

Recruitment: (Define recruitment?)

Recruitment is the process of finding and attracting candidates to fill up vacant

positions in the organisation.
The process begins when new recruits are sought and ends when their applications
are submitted.
Both internal and external sources may be used to recruit staff.

Selection: (Define selection?)

Selection is choosing from among the applications the most suitable candidates to
fill up the vacancies in the organisation.
It involves comparing and evaluating candidates in the light of qualifications
required to perform the job.
It consists of application, test, interview, medical examination, reference check,
etc.

Training (Define Training)

Training means providing new recruits with required knowledge and skills
relating to their jobs.

Training increases workers knowledge, ability, competence & makes them more
useful.

Every new recruit has to undergo a period of training in different departments till
he is found to have sufficient knowledge of the important types of work.
Subsequently he is given the job that he is best suited for.

Placement & Orientation

Placement means asking the candidates to occupy the position in the organisation
for which they have been selected.
Orientation means taking the new recruits round the office/plant and introducing
them to all employees and to the rules and policies of the organisation.
Orientation enables new recruits to adjust themselves to the work environment.

Why are external sources of recruitment better than internal sources of

recruitment? Explain briefly, any six reasons 6 marks
Or
What are the merits of external sources of recruitment?

Wide choice is possible as many applications can be obtained from external

source.
Fresh candidates infuse new blood and new ideas into the enterprise

Internal employees have to compete with fresh external candidates, which proves
to be advantageous to the firm.

Internal source is not capable of meeting entire requirements of the enterprise so it

has to depend on external sources also.

Explain in brief any 6 external sources of recruitment of employees?

( for naming each source + mark for explanation) - Imp
All firms cannot meet all their manpower requirements from internal sources alone.
Therefore recruitment from outside sources is necessary. These sources are:
Recommendation of present employees:
Many firms encourage their employees to recommend their relatives/friends for
employment because they believe this policy will prove to be a valuable asset

in maintaining goodwill of the present employees; and

in finding reliable candidates.

Factory Gate:
In times of severe unemployment and when unskilled workers and casual workers are
required, workers are recruited from a large number of job seekers that assemble
everyday at the factory gate.
Notices:
Notices or posters placed at a central location in the workshop, office or at the factory
gate help in identifying suitable candidates for the job.
Jobbers & Contractors: (Agents)
Many industries in India secure their manpower requirements through jobbers and
contractors. These jobbers and contractors keep in touch with the potential labourers in
the villages and on payment of a commission, bring them to the places where workers are
needed.
Waiting list:
Many firms receive casual applications either through mail or personal visits to the firms.
These applications are kept in record and can prove to be an excellent source of
recruitment.
Personnel Consultants:
If the personnel policy of the firm permits, a firm can opt to use the services of a
personnel or management consultancy firm that is specialised in recruitment purposes.
Media advertising:
Advertising is a popular method of recruiting staff. The benefit is that the firm can use the
most appropriate newspaper or journal to advertise the vacancy and also get the best
candidate to fill up the vacancy.
EXPLAIN THE STEPS IN THE SELECTION PROCESS 6 MARKS
(Any six in sequence with suitable explanation 1 mark to be deducted if proper
sequence is not followed)
Code to remember Select APATIR (The Personnel Manager scrutinises the candidates
application then arranges a preliminary interview, then makes candidate fill the form,
gives a test, interviews, lastly request references and medical check ups).
Application scrutiny:

Every person who applies for the job may not possess the qualifications that the job
demands. Hence the applications are carefully screened and those who do not possess the
required qualifications are eliminated from the list of candidates that will be called for a
preliminary interview.
Preliminary interview:
A brief preliminary interview is conducted in which questions relating to the job for
which vacancies are being filled up, are asked. If the applicant is successful in the
preliminary interview, he or she will be asked to fill an application form.
Application form:
The candidates selected in the preliminary interview have to fill up blank application
forms. Sometimes the applicant may also have to attach his or her photograph to the
application form. These applications are then maintained in the records of the Personnel
Department.
Testing: (list the different types of test used in the selection process)
The candidates are then tested and there are large number of tailor made or standardised
tests available for this purpose. These include the following tests:

Trade test - to discover the job skills of the prospective candidate

Performance test to check the proficiency of the applicant. For example a
typist/steno is tested on the speed of her typing/shorthand.

Psychological test to check the intelligence, attitude, aptitude, achievements,

emotions, interests and other such qualities of the candidate.

Interview:

Interview is especially important for skilled and technical jobs.

In an interview the candidate is evaluated for poise, appearance and to get more
information than what is stated in the application form.

Since a pool of interviewers interview the candidate, wide judgement of all

experts becomes available.

References/medical checks:

After the interview, the candidate may have to provide unbiased references to
assess the character and reputation of the candidate.
The candidate has to then undergo a medical examination to check the physical
fitness.

On satisfactory conclusion of the above process, a letter of appointment is issued

to the successful candidate and a reasonable time is given to join the organisation.

Distinguish between: (all points V. Imp)

On the basis of Purpose/Objective, level of persons involved, depth of knowledge,
etc
(Imp)
Purpose/Objective

TRAINING

DEVELOPMENT

It imparts technical skills

It imparts technical, human and

conceptual skills
Level of persons involvedIt is useful for non managerial It is useful for managerial
personnel
personnel
It develops skills already
possessed by personnel

It develops hidden skills and

talents

It uses on the job training

It uses off the job training

Scope of learning

It has limited scope of

imparting skills to workers

Duration

Short duration as it is job

oriented

It has wider scope associated

with overall development of
executives
Long duration as it is career
oriented

Depth of knowledge
Imparted
Initiative in learning

Explain briefly any six reasons as to why the training of employees is necessary?

Training helps to improve the performance of both new and experienced

employees.
It qualifies employees for promotion to hold more responsible jobs.

It reduces the learning time and ensures higher productivity from new employees.

It reduces absenteeism, turnover, accidents and grievances.

It helps in economic and better utilisation of raw materials, tools and equipment.

It helps employees to acquire new knowledge and job skills. This increases their
market value and earning power. It also increases their job security with existing
employer.

It is difficult for a company to get sufficient skilled workers, training therefore

solves this manpower problem by establishing its own apprentice training
programme.

It helps to mould the attitude of employees and obtains better cooperation and
greater loyalty from employees.

EXPLAIN JOB ROTATION, VESTIBULE TRAINING AND INTERNSHIP

AS METHODS OF TRAINING? 6 MARKS
Or
What are the METHODS used for training of workers? 6 marks CBSE-1992
Job Rotation: (on the job training)
Under this method, an employee is periodically rotated from one job to another to acquire
knowledge and general background of all the jobs.
Advantage: New comers get knowledge of several business situations.
Drawback: It prevents specialisation of a particular job.
Apprenticeship training: (on the job training)
It is a practical form of training whereby the trainee is placed under the control and
supervision of an experienced person. He observes how the work is done and thus learns
from him. He is in a way assistant to the experienced person. People seeking to enter
skilled trades like plumber, electrician, etc. are often required to undergo this training
under the guidance of a master worker.
Vestibule training: (Off the job training)
Under this method, employees learn their jobs on the equipment they will be using, but
the training is conducted away from the actual work floor. It is generally used to train
employees on sophisticated modern equipments and machinery.
Internship training (Off the job training)
This refers to a joint programme of training in which technical institutes and business
enterprises cooperate to enable the students to gain practical training of the theoretical
knowledge gained in the classroom. Classroom principles are better understood against a
practical background in a factory. It is not a service contract but during this period
normally a stipend is paid to the student.
What is meant by INCENTIVE?

Incentive means
o Paying a guaranteed minimum remuneration irrespective of whether there
has been an output or not.
o

Plus paying additional remuneration for larger output

For saving time

For reducing costs; and

For better workmanship

Your subordinate expect new source of motivation at every subsequent stage.

Suggest any 4 MONETARY AND ANY 3 NON MONETARY SOURCES, giving a
sentence for each source, how it will inspire them
Or
Explain the various types of INCENTIVES which may be used to motivate
employees with suitable examples ( 6 marks)
There are two types of incentives monetary and non-monetary incentives.
Monetary incentives (financial incentives):

They are monetary benefits paid in cash or kind or both.

They are generally used to motivate workers and non-managerial employees.

The various sources of monetary incentives are:

o

Profit sharing incentives given to workers for higher productivity and

greater profitability.

Co partnership- workers get their usual wages + a share in profits + a

share in management of the company.

Bonus It is a one time reward in cash, kind or any other form offered to
workers for higher performance

Suggestion system: It is an incentive given to a worker when his

suggestions results in either increased profits or reduced costs. The amount
of reward varies according to the value of the suggestions.

Non-Monetary incentives: (non financial incentives)

They do not involve cash but satisfy ego and self -esteem.
They are generally used to motivate higher level of management.

The various sources of non monetary incentives are: (sarp)

Supervisory relationship: coordination with supervisors enhances

commitment to work and motivates employees to work efficiently and
effectively.

Assigning Challenging jobs Repetitive work creates monotony in work.

In order to create interest in the work, employees should be assigned
challenging jobs. When the challenging tasks are successfully performed,
it gives a sense of satisfaction to the employees, which should also be
suitably rewarded.

Recognition Praise or recognition has a great impact when given on

received and helps in improving the attitude of employee and motivates
them to perform better.

Participation in management decisions: employees should be

encouraged to participate in management decisions. Good suggestions and
comments from employees should be acknowledged and implemented.

4 marks definite question on time rate and piece rate wage system (v. important)
You are the representative of workers in a factory and want to impress upon the
management the need for introducing time rate system in place of piece-rate system
of wage payment. What four reasons would you like to give to the management to
justify your point of view? Explain in brief.
(Give any four advantages of time rate wage system)
As a workers representative, I would prefer the time rate wage system due to its
following advantages:

It is simple to calculate the wages and therefore easily understood by workers.

It provides stable income to employees so they can plan their expense budgets.

Workers are therefore not in a hurry to complete the job and can therefore pay
more attention to quality of their work. There is no rough handling of machinery,
tools and equipment.

As the workers work sincerely and honestly, constant supervision is not required
which reduces production and administration costs.

It is favoured by trade unions as workers are treated at par on the basis of their
output and efficiency.

The workers of a factory are demanding the introduction of time wage system in
place of the existing piece-rate system of wage payment. The management is not
prepared to accept this demand of the workers. Why, in your opinion, is the
management opposing this demand? Explain in brief any four reasons.

The management is opposing the introduction of time wage system due to the following
reasons: (write the disadvantages of time wage system) any 4

In time wage system, both efficient and inefficient workers get equal
remuneration for same job. There is no incentive for efficient workers to work
better in terms of quality and quantity of output. Efficiency will neither result in
extra remuneration nor promotion for them. As a result there is quality of work is
low.
It is difficult to assess a workers efficiency, as there is no record of his
performance.

Time wage system treats workers at par. As such trade unions pressurise
management to accept their demands. If they do not accept the demands it leads to
industrial unrest, strikes, riots and lockouts, etc.

Constant supervision of workers is required which increases cost of production

There is the tendency for workers to go slow and hence production suffers.

Skilled workers are not required.

What are the advantages of piece rate system?

It provides an incentive to produce more.

It ensures fairness by correlating wages and productivity.

Cost of supervision is less as workers do not need to be supervised.

When is TIME wage payment method suitable? {Hint all work that requires time
to do the work is time wage system} Go through all they are important

When high degree of skill is required

Where production process is complicated and intricate

Where quality is more important than quantity.

Where mental work is involved such as administration, management and policy

making.

When workers are recruited on group basis

When machines used are delicate and expensive

When workers have no control over their output (control is by machine)

When there is no clear relationship between effort and output

Where units of output CANNOT be measured

When output of learners CANNOT be expected to reach the minimum standard

Which method of wage payment time rate or piece rate would you adopt under
each of the following situations? Give reasons in support of your answer 4 marks
CBSE 2004 Set 1, 2 and 3 (V. Important)
When production process is complicated and (intricate) or requires a high degree of
skill.
Time rate is more suitable as the job requires a high degree of skill. The workers would
not be in a hurry to complete their job and would maintain the degree of skill and quality
desired.
Where quality is of supreme importance
Time-rate wage payment method.
The workers are not in a hurry to complete the job If it was piece rate workers would
hurry to complete the job and would not maintain the quality desired.
When a collective effort of group of individuals is necessary for computation of a job
Time rate wage system will be adopted because in collective effort where it is difficult to
measure precisely the output of individual workers this system is more suitable
When skilled personnel is engaged in tasks requiring high quality workmanship
Time wage system is suitable as workers are not in a hurry to complete their work to get
more wages.
When workers have no control over the rate of output
Or
Where the output of learners CANNOT be expected to reach the minimum standard
Or
Where rate of output is determined solely by machine and not by operation
Time rate wage payment method
As there is no standard unit of output and rate of output is determined solely by machine
and not by operator or measurement technique.
Where there is NO clear relationship between effort and output.

Time rate wage payment method.

Because here it is not possible to pay the worker according to her work done by him as
output of each worker cannot be separately identified.
Where time factor is not important
Time rate wage system as time factor is not significant which means quality is preferred
over quantity.
Where delays in work are beyond employers control
Time rate wage system as delay in work is not in control of employer.
When the nature of work requires close supervision.
Time rate wage system because quality is more important than quantity
State any five situations when is PIECE wage payment method suitable? (Learn all are
important) -4 marks CBSE 1999

When the units of output can be measured

The job is standardised (of repetitive nature), work flow is regular and delays are
few and consistent

There is a clear relationship between efforts of employees and quantity of output

Quality is less important than quantity

Employees are efficient and do not require constant supervision

Which method of wage payment time rate or piece rate would you adopt under
each of the following situations? Give reasons in support of your answer 4 marks
CBSE 2004 Set 1, 2 and 3 (V. Important)
Where units of output can be measured;
Piece rate wage payment method.
As there is clear relation between effort and output. OR
As wages can be easily calculated on the basis of output produced by the worker.
Where quantity of work is measured, inspected and counted
Piece rate wage system is suitable in order to differentiate between efficient and non
efficient workers and to motivate them.
When the job is standardised. OR method of production is standardised

Piece rate wage payment method is suitable as output of each worker can be measured
When workflow is regular
Piece rate wage system
As the workflow is regular and delays are few and consistent, here output of each worker
can be easily measured and workers can easily be paid according to the efforts and work
done by him.
Where there is clear relationship between efforts and output.
Piece rate wage system
Because here it is possible to pay the worker according to the work done by him as
output of each worker can be separately identified.
Where quality is less important than quantity (i.e. when quantity is more imp than
quality)
Piece rate wage payment method.
Because worker is in a hurry to complete the work as he gets wages based on quantity
produced.
Therefore quality will not be maintained.
Where the work is of a repetitive nature and there is no need to increase the
production.
Where work is of repetitive nature and there is no need to increase the production, no
supervision is required, no skilled personnel is required, quality is not important, in such
cases piece rate system is more suitable

Directing - V. Imp. Chapter

2 and 3 marks which should not exceed (30-40 words)
DIRECTING:
Define Direction as a function of management? 2 marks (Important)

Directing consists of supervision, motivation, leadership & communication

(SMCL)
It involves issuing orders and instructions by managers to subordinates

Guiding and inspiring them

Supervising their affairs

Leading and motivating them to efficiently achieve the desired goals of the
organisation.

Write two elements of directing? 2 marks

Answer: give definitions of any two elements viz. supervision, motivation and leadership
and communication
Enumerate any two FEATURES of directing?
Or
Enumerate any 2 points of IMPORTANCE OF DIRECTING as a function of
management.
Direction helps to facilitate changes and motivate subordinates (any two points) - FM
Facilitates changes:
Directing helps to make adjustments in the organisation and cope with the changing
conditions through communication and leadership.
Motivates subordinates
Directing helps to motivate subordinates to work efficiently and contribute their
maximum efforts towards achieving the goals of the organisation.
Initiates action:

All the activities of the organisation are initiated through direction.

The aim of direction is to activate employees to work towards achieving the goals

Without direction all other managerial functions like (PCOS) planning,

coordination, organising and staffing will be ineffective as plans will not be
implemented in the desired manner.

SUPERVISION
Define Supervision 2 marks

Supervision means overseeing the employees at work.

It means monitoring, instructing, guiding and observing (MIGO) the subordinates

in their task to ensure that both plans and procedures are implemented.

Supervision normally refers to individuals who supervise the operations. He

may be a Foreman, Overseer, Superintendent, Section Officer or Section Incharge. Who is a supervisor?

IMPORTANCE OF SUPERVISION:
Explain any 4 points how supervision is an important element of directing 6 marks
Or
Explain how supervision facilitates control improves communication and helps
in optimum utilisation of resources sample papers 3 marks (Important)
The following points highlight the importance of supervision as an element of directing:
Facilitates control:
Supervision/supervisor facilitates control by

monitoring the work in progress against plan schedule,

checking the methods being used

evaluating actual performance at regular intervals; and

taking action, if necessary

Optimum utilisation of resources:

If the work is supervised while the work is in progress

It leads to minimum wastage of time and resources.

It ensures time and plan schedules are adhered to; and

If there are any deviations, immediate remedial measures can be taken.

This results in efficient utilisation of resources.

Improves communication:

Issuing orders and instructions leads to clear communication to subordinates

regarding what is to be done.
During monitoring, supervisors take feedback on progress of work and conditions
in which work is being carried out. This improves communication and leads to

better understanding of the needs, aspirations and problems of the individuals at

different levels of the organisation.
A supervisor is not at all required in an organisation? Do you agree? Give reasons to
support your answer (Answer importance of supervisor)
Or
The post of supervisor should be abolished in the hierarchy of managers. React 3
marks
(Hint: Give importance of supervision)
Or
Enumerate any 2-3 FUNCTIONS OF SUPERVISOR (3 points) PIG - V. Imp.
Plans the work:
The supervisor analyses the work of his department and then assign the work to different
workers according to their abilities. He also makes arrangements of the tools, equipment,
raw material to ensure there is a steady flow of work.
Issues orders & Controls Output

The supervisor issues orders and instructions to the workers by telling them what
and how to do the work.
He controls their output and compares their performance with the prescribed
standard

Grievance handling and liaison between management & workers:

The supervisor maintains a close contact with the workers and handles their grievances.
He reports the workers problems to top management. He also explains the management
policies and passes on management instructions to the workers.
LEADERSHIP:
Define Leadership? 2 marks

Leadership means influencing the behaviour of the people at work towards

realising the specified goals.
It is the ability to use non-coercive (no force) influence on the motivation,
activities and goals (MAG) of others in order to achieve the objectives of the
organisation.

Ramesh, a supervisor in a factory always expects that his subordinates should obey
him. He is not prepared to listen to any suggestion made by workers. Do you think
this quality of Ramesh will help him to become a good leader? Why? 2 marks
No, this quality of Ramesh will not help him to become a good leader, as it is the duty of
the supervisor to listen to any suggestions/grievances of workers and try to understand
their problems. He should evaluate the suggestions and implement them to the extent
possible by bringing it to the notice of top management.
All managers are leaders but all leaders are not manager. Do you agree with this
statement? Give any 3 reasons in support of your answer.
Or
Sometimes Managership and Leadership are regarded as synonymous. Is this true?
No, it is not true.

A manager may NOT be a leader because:

o He may NOT be able to win the trust and confidence of his subordinates
o

They may NOT look up to him for guidance, assistance and support (gas)

If a manager possesses leadership qualities, he is able to:

o

Influence the behaviour of his subordinates in such a way that they will be
willing to cooperate towards achieving the goals of the organisation.

He will be able to inspire and motivate them to work with zeal and
enthusiasm

In this context, it is also possible that a leader may not be a manager. He may not
hold a managerial position but still employees look towards him for guidance,
assistance and support (gas).

Explain the IMPORTANCE of leadership as a directing function of management?

3 marks Practice Paper-4 (V. Important) - 3marks
Or
Leadership is the source of motivation. Do you agree? Give three reasons in
support of your answer. 3 marks (give 3 reasons)
Or

Leadership is required only for less efficient subordinates. Do you agree? Give 3
reasons in support of your answer? (Answer: No, I do not agree give importance of
leadership
(In short leadership -Guides, inspires, secures cooperation and creates confidence in
employees)

Guides and inspires employees: Leadership helps in guiding and inspiring

employees to perform well and directs the potential abilities of the employees
towards achieving the desired goals.
Secures cooperation: Leadership secures cooperation of employees by
persuading them to cooperate and work enthusiastically, confidently and
diligently towards achieving the goals of the organisation.
Creates confidence:By his exemplary conduct, a leader creates confidence,
provides psychological support and infuses spirit of enthusiasm in the employees.

Effectiveness of leadership depends on the qualities of the leader. Explain any four
such qualities of a leader.
Or
Efficiency and productivity depend upon the QUALITY OF LEADERSHIP. Do
you agree with this statement? Give any 3 reasons in support of your answer. (Yes)
Or
What are the QUALITIES required by a good leader (any 3 skills)
Judgement skills:
A good leader should be able to examine problems in right perspective.
His judgement and decision making abilities should be superior to others.
He should be able to form opinions and judge based on facts and not be prejudiced
Communication skills:
A good leader should be able to communicate the goals and procedures of the
organisation clearly, precisely and effectively to the subordinates. Only then will it be
possible for him to convince, persuade and stimulate subordinates to action.
Listening skills:
People tend to avoid a leader who does not listen. Hence a good leader in one who can
listen to other peoples problems. He should be able to create a culture whereby people

can be frank with him and give him information and also give him feedback about
himself, which can help him to improve himself.
Inspiring skills:
A good leader should be able to inspire people to deal with the why question. He
should not just command and control but be able to lead the people and get them involved
to work together as a team.
MOTIVATION:
Define motivation as an element of directing? 2 marks sample paper V. Imp

Motivation is a mental state.

Motivation in management means stimulating people to action in order to achieve
the desired goals.

It arouses the desires in the people to initiate and direct their behaviour in
purposeful manner.

How does motivation improve the efficiency of workers in an organisation? Give

any 3 points.

Motivation infuses willingness in employees to achieve a high level of

performance.
A motivated employee feels pleasure in performing their duties. This helps to
improve productivity, reduce cost of operations and secure overall efficiency.
Motivation is essentially goal directed. Therefore, more the subordinates are
motivated higher are the chances of achieving the goals of the organisation.

Effectiveness of motivation contributes to the success of an organisation? How?

Explain giving any four points.
Or
Why is it important to motivate employees in an organisation? Give any 3 reasons
Motivation is important in the organisation due to the following reasons:
Motivation improves workers efficiency

Motivation infuses willingness in employees to achieve a high level of

performance.
A motivated employee feels pleasure in performing their duties. This helps to
improve productivity, reduce cost of operations and secure overall efficiency.

Motivation is essentially goal directed. Therefore, more the subordinates are

motivated higher are the chances of achieving the goals of the organisation.

Reduction in resistance to change

Employees normally resist changes in the organisation. However if employees are
motivated they are likely to support the change even if it means more efforts on their part.
This is because they identify their own progress with the prosperity of the organisation.
Reduction in employee turnover:
Motivation secures loyalty of the employees and creates confidence in them. As a result
employee turnover is reduced. This results in maintaining stability in work force.
Motivation facilitates achievement of organisation goals
By motivating employees through suitable rewards in the form of money, promotion,
recognition of efficient work, management can secure the cooperation of subordinates to
contribute their best efforts towards fulfilling their assigned tasks and thus achieve the
goals of the organisation.
Explain any 4 NEEDS that motivate an employee to work?
Or
State any three types of needs that govern human motivation? 3 marks
Or
Briefly explain Abraham Maslows HIERARCHY OF NEEDS? PESS
Physiological needs:
It includes basic needs required for survival and maintenance of human life such as food,
clothing, shelter, water and other necessities of life.
ESTEEM NEEDS: (Define v. imp)
It includes a desire for self-image and self respect on one hand and respect, recognition
from others. These needs are satisfied by recognising good performance of employees,
providing challenging job assignments, good job titles, nice office, extra authority, etc.
Security needs:
People want physical, economical as well as social security. They want security for
themselves, their property and a safe environment to live in.

Physical security : includes protection against fire, accidents, disease, crime etc.
Economical security : includes having a permanent job and money to fulfil basic needs
on a permanent basis.
Social security : includes need for security in old age, illness, disability, etc.
Social needs:
It includes a desire to give and receive love and affection and the need to be accepted by
the peers. These needs are satisfied by friendship, family and community relations
outside the workplace.
COMMUNICATION
Define the term Communication? 2 marks

Communication means exchange of messages between two or more persons.

These messages could mean idea, opinions, facts, information, instructions and
anything that conveys a meaning.

These messages may be conveyed in words, pictures, and actions or gestures

Effective communication takes place only when the receiver is able to interpret
the message as desired by the sender and responds to it.

What do you mean by noise. How does it interfere in the communication process
3 marks
When there is a disrupted interference anywhere in the communication process, it is
termed as noise.

Examples:
o Someone coughing,
o

two people talking close at hand,

a truck driving,

a letter being lost in the mail,

a telephone line going dead or one of the persons being called away before
the communication process is completed.

Noise may also arise because a manager is not able to express himself well or if
the listener is not being attentive or memos are poorly written and therefore hard
to read.

However if communication is two-way, the communicator can find out if the

message was received and if has produced the intended response.

Enumerate any 3 advantages of informal communication from the point of view

of members of an organization and from the point of view of management 3 marks
Advantages of informal communication from view of members are:

Employees can develop friendly relations and derive social satisfaction through
informal exchange of ideas and information
Employees can give a free and frank expression of their views, which cannot be
done through official channels.
It helps employees who are not linked through the official chain of command to
communicate.

Advantages of informal communication from view of management are:

It helps to communicate those messages, which is not possible through official

channel.
It can be used for speedy communication in emergency

It reduces tensions in employer-employee relations & provides emotional relief to

workers.

Employees reactions and attitudes can be easily ascertained.

Difference between:

FORMAL
COMMUNICATION

INFORMAL
COMMUNICATION

Channel

It follows established line of

command

It arises as a result of personal

relations

Nature

It is rigid and cannot be

modified

It is flexible as it arises as a
result of social interaction

Expression

It is mostly in written form

It is mostly in oral form

Responsibility

It is easy to fix responsibility

in formal communication

As the source cannot be

traced, it is difficult to fix
responsibility

Needs

It serves organizational needs

It serves organizational as well

as individual needs

Records

Records are kept for future

reference

No records are kept

Speed

It is usually slow

It is usually fast

Explain any four factors that are likely to disrupt effective communication? 3
marks
Or
Enumerate 4 barriers of communication? 2 or 3 marks (PCS) - Important
The following are the factors that are likely to disrupt effective communication:
Predispositions:
Sometimes the person who receives the message may be biased or predisposed i.e. he
may ignore the suggestions for change from the subordinate because he thinks the
subordinate is always complaining about something.
Poor listening skills:
Some people are poor listeners. When someone is talking to them they are distracted.
This problem occurs both with superiors and subordinates.
Complex Organisation structure:
An organisation having a long chain of command also acts as a barrier to effective
communication
Selective reception:

Selective reception takes place when people tend to hear only what they want to hear and
block out that part of the information that disagrees with what they believe. As a result
communication gets distorted.
Status difference:
Effectiveness of communication can be adversely affected when status of communicator
is not equal.

- Controlling Control without its process is a meaningless exercise. Explain this statement
Or
Comparing the actual performance with laid standards, finding out the deviations
and taking corrective action is an important process of a management function
name and explain this PROCESS.- 5 marks (Ans: Controlling process)
Or
Describe in brief the various steps in the process of control - 5 marks (CBSE-2003)
Following are the 4 steps in controlling process: (Establishing, Measuring, Comparing &
Taking)
Establishing standards:

1st step is to establish standards of performance against which actual results can
be evaluated.
These standards are the yardsticks of performance and clearly specify what should
be accomplished.

Measuring performance:

2nd step is to measure actual performance of the entire workforce in the

organisation.
For easy comparison, actual performance should be expressed in the same terms
as planned standards.

Comparing performance with standards:

3rd step involves finding deviations and the causes of such deviations
Minor deviations should not be reported to top management, as they are
acceptable. But major deviations must be reported so that remedial measures can
be taken.

Taking corrective action:

4th and final step in the controlling process is find out the deviations and take
corrective action to prevent recurrence of deviations.
There are three actions a manager may take after comparing actual performance
with established standards.
o

Let the situation remain as it is.

Correct the deviation by improving the performance

Revise the standard set earlier.

(Subject Notes) Business Studies

- Financial Management State 5 factors that determine/affect the CAPITAL STRUCTURE of a company?
(very important)
Financial leverage:
The financial manager should carefully examine how the use of the proposed financing
mix will affect the risk and returns of the owners.
The financial leverage used by the company will depend on the amount of risk the
company would like to take.
Flexibility:
The capital structure of the company should be flexible enough to Adapt to changing conditions whenever required.

Raise additional funds without undue delay and cost.

Legal framework:

The Companies Act and SEBI provide guidelines from time to time on how the
shares and debentures should be issued to the public.
The finance manager of the company must be aware of all these rules and
regulations and carefully consider these guidelines while deciding on the capital
structure of the company.

Market conditions:
The conditions in the capital market also influence to a certain extent the decisions
regarding capital structure. It may not affect the capital structure initially but when the
company requires additional funds then the appropriate time for issuing the shares or
debentures should be considered.
Control:

If the owners want to maintain a tight control over the company it should obtain
its funds through loans because debenture and preference shareholders do not
have a right to manage the affairs of the company.
However if the owners want to dilute the control, they can raise funds through
issue of equity shares, as equity share holders have a right to vote.

One of the EFFECTS OF UNDER CAPITALIZATION is that the market value of

shares goes up. But still under capitalization is not considered good for the Co.
Why?
Effects of under capitalization on the company: (increases, goodwill, credit worthiness
competition and demand for higher salaries)

Increases creditworthiness and goodwill of the company as market value of shares

goes up due to high profitability
An under capitalized company earns more than the prevailing rate of profit in the
industry. But this may induce competitors to enter the same line of business and
pose a threat to the company.

The employees demand higher salaries, which may lead to dissatisfaction and
labour tension.

Secret reserves are built.

Exceptionally high rate of profit may induce Government to impose heavy tax,
which leads to reduction in company profits.

If you have to choose between two situations of over capitalization and under
capitalization, which one will you prefer and why?
(Ans: I would prefer under capitalization due to the following reasons)
Or
Both under capitalization and over capitalization are evils, but under capitalization
is lesser evil. Do you agree? Give reasons for your answer 5 points (5 marks 100
words)

Yes, I agree with the above statement.

Over capitalization means that capital is not being effectively used and the
earnings are less and do not justify the amount of capital that is employed in the
business i.e. a fair return is not realized on capitalization.

Under utilization on the other hand means that the rate of profit earned on capital
invested is higher than the return enjoyed by similar companies in the same
industry or when the value of assets is more than the amount of capital.

Under capitalization has its own evil consequences but it is not as fatal as in the
case of over capitalization because:
o

Under capitalization is a condition that cannot exist for long.

Higher earnings attract competition.

Government intervention in the form of higher taxes leads to reduction in

company profits.

The economy takes care of an under capitalized company and because of

its pulls and pressures, the company comes back to normal.

On the other hand, over capitalization is a serious problem. To overcome the ill
effects of over capitalization, the company will have to be completely reorganized
and the consequence of this have to be faced by the shareholders and creditors.

Hence we can conclude that under capitalization is a lesser evil.

(if student conveys suitable meaning in any format, full credit should be given)

Explain briefly any 5 factors to be considered while determining the requirements of

WORKING CAPITAL of a business enterprise? CBSE-2004(2) (C) 5 marks
Anagram COINS required for working capital
Credit policy:

Less working capital is required if a liberal credit policy is followed i.e. when suppliers
grant the firm credit for supply of raw materials, etc.
Operating cycle:
Operating cycle refers to the manufacturing cycle, which converts raw material to
finished goods. If the operating cycle is long then more working capital is required and
vice versa.
Inventory policy:
If the business requires keeping a large stock of inventory, working capital requirement
will be more and vice versa.
Nature of business:
The amount of working capital required depends on the nature of business of the
enterprise. Trading companies require less working capital than manufacturing companies
because in trading companies or retail shops:

the transactions are mostly done in cash

length of the operating cycle is small,

time gap between goods acquired and sold is less; and

turnover is high

Seasonal operations:
If the products have a steady demand in the market throughout the year, then the working
capital requirements remain constant in a business. However when demands for products
are seasonal sales increases. To cater to this increase in sales, there is a demand to
produce more. Hence more working capital is required during this time
Explain in brief any 5 factors that should be taken into consideration while
determining the long-term DIVIDEND POLICY 2004 (set 3) 2004 Compartment
(Sets 1 and 3),
(Anagram to remember this answer is: There are LEGAL RESTRICTIONS for ISSUE
OF BONUS SHARES as the company has to CONSIDER THE CAPITAL MARKET and
follow a STABLE DIVIDEND POLICY for FINANCIAL REQUIREMENTS OF THE
COMPANY) - FLICS
Legal restrictions:
According to the Companies Act, a company

Cannot pay dividends from its paid up capital

Can use its profits for other purposes only after it has made depreciation for
payment of dividends.

Issue of Bonus shares:

Sometimes companies issue bonus shares (also known as stock dividend) instead of cash
dividends. This helps to increase the number of shares of the shareholder as well as the
capital base of the company. It keeps investors happy. The issue of bonus shares is an
integral part of the dividend policy.
Capital market considerations:
When a company needs funds for investment it has two options open:

If the company has easy access to capital market then it can afford to pay more
dividends and raise additional equity by tapping the capital market; or
If the company has limited access to capital market, then it can pay low dividends
to its shareholders and rely on retained earnings for funding its investments.

Stable dividend policy:

Most companies, shareholders and even financial institutions like UTI, IDBI prefer to
invest in companies that follow a stable dividend policy because:

It has a favourable impact on the market value of the shares

It removes the uncertainty in the minds of the investors

It satisfies their desire for current income

Financial requirements of the company:

If the company has many investment opportunities then it should pay low
dividends to its shareholders and reinvest its profits in the business.
It is cheaper to use retained earnings to finance the projects, as they do no involve
floatation costs and any legal formalities.
Mature companies normally have few investment opportunities and so declare
high dividends while growth companies, which are always in need of funds to
finance their assets, normally declare low dividends.

- Capital Market -

What is meant by capital market? Describe its nature. 4 marks

It is a market where all organizations, financial institutions and instruments

provide long and medium term funds to the business sector.
The two major components of capital market are
o

Primary (new issue market)

Secondary market (stock exchange).

The nature of capital market can be understood from the following points:

It acts a link between savers and borrowers who need funds to invest profitably
and efficiently.
It helps firms to procure finances for long-term investments such as buying plant
& machinery, building, etc.

It obtains its funds through issue of various securities such as equity shares,
bonds, debentures and innovative securities like zero interest bonds and deep
discount bonds.

It functions thru various intermediaries such as underwriters, bankers, stock

brokers, etc.

It includes both individual investors and institutional investors such as UTI, LIC,
IDBI, etc

State any four PROTECTIVE functions of SEBI? (What is insider trading)?

It prohibits insider trading. It prevents insiders such as directors, promoters who

have access to price sensitive information regarding securities of the company
(which is not available to the public) to make individual profits through trading of
securities.
It prohibits fraudulent and unfair trade practices in the security market like
making misleading statements and price rigging. (Manipulating with the sole
intention of inflating or deflating the market price of securities is termed as price
rigging)

It promotes fair practices and code of conduct in the securities market.

Example: Looks after the interest of the debenture holders in terms of any mid
term revision of interest rate, etc.

It takes steps to educate investors.

SEBI is a REGULATORY authority of the securities market. Do you agree? Explain

in brief any four reasons in support of your answer. 4 marks - CBSE-2005 Set 1, 2.
OR V. Imp

It carries out audit of the share markets

It regulates takeover of companies

It regulates the business being conducted in the share market.

It registers and regulates the working of brokers, sub brokers, transfer agents,
merchant banks, underwriters, etc.

It registers and regulate the credit rating agency, venture capital funds and mutual
funds

State any two developmental functions of SEBI 4 marks CBSE-2004 Set 1 V. Imp

It promotes trading of intermediaries of the securities market.

It adopts a flexible approach to develop the capital market.

You are a finance expert. One of your friends comes to you and tells you that the
capital market and money market are one and the same, whereas you differ with
him. How would you convince him? Give any 4 reasons. 4 marks CBSE-2004 Set
1,2.3
Or
Dist between: Capital Market and Money Market on the basis of: participants,
instruments traded, investment outlay and safety 4 will be asked (4 marks CBSE
2005 Set 2) V. Imp

Basis
Participants

CAPITAL MARKET

MONEY MARKET

Participants are financial

institutions, banks, corporate
entities, foreign investors and
ordinary retail investors from
the public

Participants are institutions

such s RBI, Banks, Financial
Institutions and finance
companies

Traded

Equity shares, debentures,

bonds, preference shares, etc

Treasury bills, trade bills,

commercial papers, certificates
of deposit

Investment outlay

Does not require huge

Requires huge investment

Instruments

investment outlay as value of outlay as instruments are quite

units of securities is low
expensive
Safety

Risky both in terms of returns Safer with minimum risk of

and principal repayment
default

Duration

Deals in medium and long termDeals in short term securities

securities
from 1 day up to 1 year

Liquidity

Low liquidity

High degree of liquidity

Expected returns

Generally yields high returns

Generally yields low returns

Dist between: 4 marks

NSEI and OTCEI on the basis of: size of company, securities traded, settlement,
objective.

Basis

NSE(I)

OTCE(I)

Size of company

Paid up capital 3 crores &

above

Paid up capital 30 lakhs and

above

Securities traded

Trades in Equity, debentures, Equity, debentures, etc

treasury bills, PSU, bonds, etc

Settlement

Payment within 15 days of

transaction

Objective

Nationwide, ringless
Serves as an exchange for
transparent trading facility for securities of small companies
both capital and money market

Payment within 7 days of the

transaction

Dist between: Primary and Secondary Market on any 4 basis

Basis

Primary Market(New Issue Secondary Market(Stock

Market)
Exchange)

Securities trading

It is a market for new securitiesIt is a market for existing

securities
Sale of securities

Securities are sold to investors Securities are exchanged

directly by the company or
between investors without
through their intermediary
involvement of the company

Flow of funds

It directly promotes capital

formation as flow of funds is
from savers to investors

Location

It has no fixed geographical It has a fixed location and fixed

location. Shares can be traded working hours
from anywhere

Prices

Prices are determined by

management of the company

It indirectly promotes capital

formation as it enhances
liquidity of shares

Prices are determined by

demand and supply of the
securities

The directors of a company want to modernize its plants and machinery by making
a public issue of shares. They wish to approach stock exchange, while the finance
manager prefers to approach a consultant for the new public issue of shares. Advise
the directors whether to approach stock exchange or a consultant for new public
issue of shares and why? Also advise about the different methods that the company
may adopt for the new public issue of shares.
The directors should approach the consultant for the new public issue of shares. The
reason being that as stock exchange is a secondary market, which deals in existing
securities while the company wants to make a public issue of shares.
The following are the methods for the new public issue of shares.
Public issue through prospectus:

Under this method, the company issues a prospectus to invite the public to invest
in its securities.
The prospectus provides the following details
o

purpose for which funds are being raised

past financial performance of the company

background and experience of promoters

This information helps the investing public to evaluate the earning potential and
risk of the proposed investment.

Offer for sale:

The sale of securities takes place in two steps:

o In the first step the company sells all the shares to intermediaries at an
agreed price.
o

In the second step the intermediaries resell these securities to investors at a

higher price.

The advantage of this method is that the company is saved from the tedious
process involved in making a public issue.

(1 mark for correct advice + 1 mark for reason + 1 mark for each correct method =
1=1=2=4 marks)

- Consumer Protection 2-3 marks Q should not exceed 30-40 words

4-5 marks Q should not exceed 60-80 words
6 marks Q should not exceed 100 words
Consumer Protection (2+4 = 6 marks)
(a) The rationale of consumer protection concept, aspect and need
(b) Importance of Consumer Protection
(c) Consumer rights and responsibilities
(d) Ways and Means of Consumer Protection
(e) Role of Consumer Organizations
Explain briefly the meaning of consumer with reference to Consumer Protection
Act 1986 - 2 marks
The Act defines consumer as:

1. One who buys goods or hires services for consideration.

2. One who uses the goods or hired services with the approval of the buyer or hirer
of the service.
3. One who uses the goods/services to earn livelihood by self-employment.
What are the salient features of Consumer Protection Act? 4 marks

The Act applies to all goods and services unless specially exempted by Union
Government
It covers all sectors public, private or cooperative
Provisions of the Act are compensatory in nature
It enshrines all consumers rights - to choose, to be heard, to be informed, to
safety, education and redressal (CHISER)
It empowers consumers seeking discontinuance of traders malpractices, defective
goods, service deficiencies or withdrawal of hazardous goods from the market.

What does Consumer Protection refer to?

It refers to protection of consumers against anti consumer trade practices by

producers/traders.
These anti trade include adulteration, sub standard quality, overcharging, making
misleading claims in advertisements, etc
The essence of consumer protection is curbing such practices through legislative
and other measures

Giving any six points, explain the need/importance for consumer protection? OR
Why is consumer protection needed in India 6 marks
Business is a means of human welfare:
Business serves the customer and therefore it is a means and not an end in itself. Hence it
is in the interest of both the consumer and the businessman to ensure that the business is
run well because ignoring the interest of the consumer may be a sure death of the
business.
Growth with social justice:
We are a secular country and growth with social justice is the cornerstone of our
economic philosophy. Exploitation of consumers is against the directive principles of
State Policy laid down in our Indian Constitution.
Single versus multiple objectives:
Business works for all stakeholders consumers, shareholders, employees, government,
and the public. It is both a social and economic institution. Therefore it cannot just make

profit by ignoring the interest of the society. For the survival and growth of business it
must work for the interest of the stakeholders in general and consumers in particular.
Power Centre:
Business has considerable influence over society and government. Therefore it has to set
standards regarding food, dress habits, living styles, etc which will not damage the cause
of society and serve the interest of a few persons only.
Self interest:

Due to liberalization and globalization, firms have to compete with

multinationals. Unless they become customer oriented and provide right quality,
quantity and price they cannot satisfy a customer and without customer
satisfaction no business can survive for long and will be out beaten by
competition from multinationals.
Moreover, Government has enacted laws to protect the interest of the consumers.
Hence if a firm violates the laws they are likely to lose their goodwill and clients
permanently.

Ethical obligations:
Firms that adapt ethical values, attain glories in the business world. Business without
ethical values is nothing but a criminal activity and no civil society will tolerate a
business without ethical values for long.
( mark for naming each point and mark for each explanation)
Explain in brief any six rights of consumers as provided under the Consumer
Protection Act, 1986 6 marks
Or
Explain the following rights: (6 marks)
The right to safety
It refers to the right to be protected against products, production processes and services
which are hazardous to health or life. It includes concern for consumers immediate and
long term needs.
The right to be informed
Consumers have a right to be informed about the quality, quantity, potency, purity,
standard and price of goods or services so that they can make the right decision and
protect themselves against malpractices.

The right of choice

The consumer has the right to be assured of a choice of various goods and services of
satisfactory quality and competitive price.
Right to representation (or right to be heard)
It is a right and the responsibility of civil society to ensure consumer interest prevails
while formulating and executing policies which affect the consumers, as well as right to
be heard while developing or producing a product or service.
Right to seek redressal of aggrievances.
The consumer has the right go to court if he has been unscrupulously exploited against
unfair or restrictive trade practices and receive compensation for supply of unsatisfactory
or shoddy goods.
The right to consumer education
It is the right to acquire knowledge and skills to be an informed consumer because it is
easier for the literate to know their rights and to take actions to influence factors that
affect consumers decisions. The Union and State Governments have accepted the
introduction of consumer education in school curriculum.
Right to basic needs
It is the right to receive the eight basic necessities that are required to survive and lead a
dignified life. These eight basic necessities include food, clothing, shelter, health care,
sanitation, education, energy and transportation.
Right to healthy environment
It is the right to be protected against environmental pollution and environmental
degradation so as to enhance the quality of life of both the present and future generation.
Explain any six responsibilities of a consumer ( 6 marks)
It is the responsibility of the consumer to:

Be aware of his rights and exercise them with regard to products purchased or
services rendered.
Be quality conscious and thoroughly examine the product before purchasing it.
o Check the quality mark i.e. AGMARK, ISI, PDS, BIS, etc.
o Ask for a guarantee card if there is one.
Insist on a cash memo which is required as proof of purchase in case of a
complaint.

File a complaint for redressal of grievance however small, to discourage

malpractices.
Do not get carried away by advertisements but check the actual use of the product
with that given in the advertisement. If there is a discrepancy, it should be brought
to the notice of the sponsor.
Form Consumer Awareness organizations, which can be represented at various
committees formed by the government for the welfare of the consumers.

Mr. Soni a consumer purchased medicines without noticing the date of expiry. He
also did not obtain the cash memo. Do you think he will be able to protect himself by
the loss caused due to expired medicine? Give reasons to support your answer. 4
marks
No, Mr. Soni cannot protect himself from the above loss due to the following reasons:
1. He should have been a cautious consumer and should have thoroughly examined
the product including the expiry date of the medicine before purchasing it and not
depended on the seller.
2. He should have insisted on a cash memo, which is required as proof that he has
purchased the medicine from that particular trader, failing which he cannot sue for
compensation.
Explain any six ways and means of consumer protection followed in India 6 marks
The following are some of the ways and means of consumer protection followed in India:
Lok Adalats: How do Lok Adalat & publicity measures help in protecting the consumer?
6 marks

The Consumer can approach the Adalat with his grievance. The issue is discussed
and decision is taken on the spot. This saves time and money
Lok Adalat has become a speedy, effective and economical redressal system.
Indian Railways, Delhi Transport Corp, Delhi Development Authority, Delhi
Vidhyut Board, etc hold Lok Adalat from time to time to sort out problems faced
by users.

Publicity Measures: How do Lok Adalat & publicity measures help in protecting the
consumer? 6 marks

15th March is celebrated as World Consumer Right Day all over the world ever
year.
In 1995 this day was organized at Vigyan Bhawan, New Delhi.
In addition, the Ministry with the help of DAVP undertook a massive outdoor
publicity program such as displaying hoardings, banners, bus panels, etc.
Telecasting on consumer protection is also done by Doordarshan on a fortnightly
basis.

Public Interest Litigations: (Under what circumstances can a public interest litigation
be filed?
The Indian legal system does not provide legal services to large segments of the
population such as the poor, environmentalists, consumers, minorities, etc. Thus the
Public Interest Litigations legally represents such groups with the result that any
individual or organization can approach the court for remedial action for effective
implementation of the law, environmental protection or any other social evils like bonded
labour, etc.
Environmentally Friendly Products:

The Ministry of Environment and Forests has introduced an Eco-Mark scheme.

It is a label that has a symbol of an earthen pitcher. If this label appears on a
product, it means that the manufacturer has satisfied the conditions laid down
regarding the production processes and used environmental friendly materials.
This scheme has been started with consumer items like soap, detergents, paints,
food items, edible oil, etc.
This scheme is consumer oriented so that people manufacture, use and dispose off
products which are least harmful to the environment.

Redressal Forums & Consumer Protection Councils:

Under the Consumer Protection Act 1986 a judicial machinery such as the District
Forums, State and National Commissions have been set up to provide speedy, effective
and economical redressal of consumer grievances and disputes.
National Youth Award on consumer protection:
To encourage consumers and youths to participate in the field of consumer protection,
every year the Union Ministry gives two national awards National Award on Consumer
Protection and National Youth Award on Consumer Protection. The Ministry also gives a
National Woman Award to involve women in outstanding work in the field of consumer
protection.
Consumer Welfare Fund :
The Revenue Department of the Union Ministry of Finance has passed the Central excise
and Customs laws (Amendment) Act 1991. According to this Act, a consumer welfare
fund is created and the excess amount of excise/custom duties which is not refundable to
manufacturers or importers is credited into this fund and used for:

Promoting the welfare of the consumers.

Community based rural awareness projects
Setting up a consumer guidance bureau to handle complaints, counseling and
guidance

Setting up consumer product testing laboratories.

( mark for naming each means + mark for its explanation)

Which type of complaints can be lodged by consumers?

The Act provides that consumers can lodge complaints and claim compensations with
respect to :

Traders malpractices,
Defective goods; and
Service deficiencies. These include services in connection with banking,
entertainment, financing, insurance, transport, supply of gas and electricity,
medical services, boarding and lodging. (clue: BEFITS medical, boarding &
lodging)

What type of judicial machinery is there to deal with consumer grievances and
disputes?

The Act further provides that the consumer can approach the following 3-tier
judicial machinery depending upon the amount of loss involved

District Forum
if loss is up to Rs. 20 lakhs
State Commission if loss is between Rs.20 lakhs to Rs 1 crore
National
if loss is more than Rs. 1 crore
Commission
The complaint must be disposed off as speedily as possible within 3 months or
within 5 months if testing or analysis of goods is required to be done.
The consumer has the right to file an appeal within 30 days with the next higher
forum if he feels justice has not be done to him.
The prescribed fee to file an appeal is as follows:
o State Commission - 50% of the amount payable or Rs. 25,000 whichever
is less
o National Commission 50% of the amount payable or 35 % whichever is
less

What are the remedies/reliefs available to consumers under the Consumer

Protection Act 1986? Discuss 6 marks
The relief/remedies available to the consumer are:

Replacement of goods

Price refund

Compensation against loss

or injury
Removal of service

Discontinuation of unfair or restricted trade

practices
Withdrawal/discontinue the sale of hazardous
goods
Paying adequate cost to parties

deficiency
Explain the role of Consumer Organisations/Non govt. Organisations
Or
Explain in brief any six functions of consumer organizations in the area of consumer
protection. 6 marks

Bringing out journals, brochures, monographs

Arranging conferences, seminars, workshops on consumer problems and solutions
Supporting government agencies against malpractices, adulterated & hazardous
goods.
Investigating into problems of consumers
Collecting data on different products and testing them
Filing suits and petitions in the court on behalf of the consumers
Organizing protests against price rigging, adulteration, underweight selling, etc
Encouraging consumers to boycott defective bad quality goods

In what type of activities is Consumer Coordinating Council involved?

It is the main body of the Consumer Organizations of India.

It conducts several programmes on consumer education for activists, etc
It has published training manuals on
Consumer Protection Act
Water, Food and Public Distribution System
o Health drugs and cosmetics
o Road Transport and Railways

Explain the role of press in consumer protection? 6 marks

The press has been responding to consumer needs in several ways even much
before the Consumer Protection Act was enacted.
Besides publishing articles, columns etc. it has rescued harassed consumers. For
example the Indian Express was the first newspaper to start a column on
consumer complaints. It not only published the problems and grievances of
consumers but also forwarded them to the concerned authorities for redress. In
many cases the results were published and consumers were able to get their
grievances settled.
The success and popularity of the Indian Express column, motivated other
newspapers to follow suit and today almost all newspapers, including regional
language newspapers, publish consumer complaints on a weekly basis.

Explain the role of universities and schools in consumer protection?

Indira Gandhi National Open University (IGNOU) has developed a

comprehensive syllabus, which provides the basic framework for other
universities to develop a curriculum for consumer education.
The Kakitaya University in Andhra Pradesh is offering a one-year post graduate
course in consumer law.
The Maharashtra Open University in Pune is offering courses in consumer
education.
CBSE has published a Teachers Manual on consumer education for students.
Many other voluntary consumer organizations have mushroomed but due to lack
of resources their contribution in this field has been insignificant. There is
therefore an urgent need of an apex (main) Consumer Organisation that will help
to coordinate the activities of these voluntary organizations in India.

- Consumer Protection 2 questions of 6 marks come as choice

Giving any 6 points, explain the IMPORTANCE for consumer protection?
Business is a means of human welfare:

Business serves the customer and therefore it is a means and not an end in itself.
It is in the interest of both the consumer and the businessman to ensure that the
business is run well because ignoring the interest of the consumer may be a sure
death of the business.

Growth with social justice:

We are a secular country and growth with social justice is the cornerstone of our
economic philosophy.
Exploitation of consumers is against the directive principles of State Policy laid
down in our Indian Constitution.

Stakeholder approach:

The success and survival of business depends on the efforts made by all
stakeholders such as consumers, shareholders, employees, government, and the
public.
Therefore for its survival and growth business must work for the interest of the
stakeholders in general and consumers in particular.

Power Centre:

Business has considerable influence over society and government. Therefore it has to set
standards regarding food, dress habits, living styles, etc which will not damage the cause
of society and serve the interest of a few persons only.
Self interest:

Due to liberalization and globalization, firms have to compete with

multinationals. Unless they become customer oriented and provide right quality,
quantity and price they cannot satisfy a customer and without customer
satisfaction no business can survive for long and will be out beaten by
competition from multinationals.
Moreover, Government has enacted laws to protect the interest of the consumers.
Hence if a firm violates the laws they are likely to lose their goodwill and clients
permanently.

Ethical obligations:
Business without ethical values is nothing but a criminal activity and no civil society will
tolerate a business without ethical values for long.
( mark for naming each point and mark for each explanation)
Explain in brief any six rights of consumers as provided under the Consumer
Protection Act, 1986 6 marks Important
Or
Explain the following rights: (6 marks) Any 3 will be asked
Clue: CHISER choice, heard, informed, safety, education, redressal.
Right to choose
The consumer has the right to be assured of a choice of various goods and services of
satisfactory quality and competitive price.
Right to representation (or right to be heard)
It is a right and the responsibility of civil society to ensure consumer interest prevails
while formulating and executing policies which affect the consumers, as well as right to
be heard while developing or producing a product or service
Right to be informed

Consumers have a right to be informed about the quality, quantity, potency, purity,
standard and price of goods or services so that they can make the right decision and
protect themselves against malpractices.
Right to safety
It refers to the right to be protected against products, production processes and services
which are hazardous to health or life. It includes concern for consumers immediate and
long term needs.
The right to consumer education
It is the right to acquire knowledge and skills to be an informed consumer because it is
easier for the literate to know their rights and to take actions to influence factors that
affect consumers decisions.
Right to seek redressal of aggrievances.
The consumer has the right go to court if he has been unscrupulously exploited against
unfair or restrictive trade practices and receive compensation for supply of unsatisfactory
or shoddy goods.
Right to basic needs
It is the right to receive the eight basic necessities that are required to survive and lead a
dignified life. These eight basic necessities include food, clothing, shelter, health care,
sanitation, education, energy and transportation.
Right to healthy environment
It is the right to be protected against environmental pollution and environmental
degradation so as to enhance the quality of life of both the present and future generation.
Explain any six responsibilities of a consumer ( 6 marks)
It is the responsibility of the consumer to: (Important)

Be aware of his rights and exercise them with regard to products purchased or
services rendered.
Be quality conscious and thoroughly examine the product before purchasing it.
o

Check the quality mark i.e. AGMARK, ISI, PDS, BIS, etc.

Ask for a guarantee card if there is one.

Insist on a cash memo which is required as proof of purchase in case of a

complaint.

File a complaint for redressal of grievance however small, to discourage

malpractices.

Do not get carried away by advertisements but check the actual use of the product
with that given in the advertisement. If there is a discrepancy, it should be brought
to the notice of the sponsor.

Form Consumer Awareness organizations, which can be represented at various

committees formed by the government for the welfare of the consumers.

Explain any 4- 6 ways & means of consumer protection followed in India 6 marks
The following are some of the ways and means of consumer protection followed in India:
Lok Adalats: How do Lok Adalat & publicity measures help in protecting the consumer?
6 marks

The Consumer can approach the Adalat with his grievance. The issue is discussed
and decision is taken on the spot. This saves time and money

Publicity Measures: How do Lok Adalat & publicity measures help in protecting the
consumer? 6 marks

15th March is celebrated as World Consumer Right Day all over the world ever
year.
In 1995 this day was organized at Vigyan Bhawan, New Delhi.

In addition, the Ministry with the help of DAVP undertook a massive outdoor
publicity program such as displaying hoardings, banners, bus panels, etc.

Telecasting on consumer protection is also done by Doordarshan on a fortnightly

basis.

Public Interest Litigations: (Under what circumstances can a public interest litigation
be filed?

The Indian legal system does not provide legal services to large segments of the
population such as the poor, environmentalists, consumers, minorities, etc.
Therefore the Public Interest Litigations legally represents such groups for
effective implementation of the law, environmental protection or any other social
evils like bonded labour, etc.

Environmentally Friendly Products:

The Ministry of Environment and Forests has introduced an Eco-Mark scheme.

It is a label that has a symbol of an earthen pitcher. If this label appears on a
product, it means that the manufacturer has satisfied the conditions laid down
regarding the production processes and used environmental friendly materials.
This scheme is consumer oriented so that people manufacture, use and dispose off
products which are least harmful to the environment.

Redressal Forums & Consumer Protection Councils:

Under the Consumer Protection Act 1986 a judicial machinery such as the District
Forums, State and National Commissions have been set up to provide speedy, effective
and economical redressal of consumer grievances and disputes.
National Youth Award on consumer protection:

To encourage consumers and youths to participate in consumer protection, the

Union Ministry every year gives two national awards National Award on
Consumer Protection and National Youth Award on Consumer Protection.
The Ministry also gives a National Woman Award to involve women in
outstanding work in the field of consumer protection.

Consumer Welfare Fund :

A consumer welfare fund has been created according to the Central excise and Customs
laws (Amendment) Act 1991. The excess amount of excise/custom duties which is not
refundable to manufacturers or importers is credited into this fund and used for:

Promoting the welfare of the consumers.

Community based rural awareness projects

Setting up a consumer guidance bureau to handle complaints, counseling and

guidance

Setting up consumer product testing laboratories.

What are the remedies/reliefs available to consumers under the Consumer

Protection Act 1986? Discuss 6 marks Important
The relief/remedies available to the consumer are:

They can have the goods replaced

They can get a price refund

They can be compensated against loss or injury

Discontinuation of unfair or restricted trade practices

Withdrawal/discontinue the sale of hazardous goods

Paying adequate cost to parties

Removal of service deficiency

Explain the role of Consumer Organizations/Non govt. Organizations (any 6 points)

Or
Explain in brief any six functions of Consumer Organizations in the area of
consumer protection. CBSE 2005 Set 1,2,3 6 marks (Clue: BASIC FOE)

Bringing out journals, brochures, monographs

Arranging conferences, seminars, workshops on consumer problems and solutions

Supporting government agencies against malpractices, adulterated & hazardous

goods.

Investigating into consumers problems

Collecting data on different products and testing them

Filing suits and petitions in the court on behalf of the consumers

Organizing protests against price rigging, adulteration, underweight selling, etc

Encouraging consumers to boycott defective bad quality goods