UNITICORPORATEORGANISATION[JOINTSTOCKCOMPANY,TYPESOF

COMPANIES,FORMATIONOFCOMPANIESANDMULTINATIONALCORPORATIONS]

QUESTIONSBANKOBJECTIVEQUESTIONS
1. DefineCompany. 2. Whatdoyoumeanbyseparatelegalentity?/CorporateExistence. 3. Explainperpetualsuccession/whydoesaco.enjoyperpetualexistence? 4. Stateessentialfeaturesofprivatecompany. 5. Whatisonemanco.? 6. WhatismeantbylimitedliabilityinJ.S.Co.? 7. Whoaretheadministratorsofco.law? 8. UnderwhichactCO.sinIndiaareregistered? 9. Explaincommonseal. 10. Companyhasnationalitybutnocitizenship.Explain. 11. List the circumstances under which a limited company may dispense with the word limitedfromitsname? 12. Whatismeantbyindexofmembers? 13. Listanytwomainprivilegesofprivatecompany. 14. Whatisthemin.andmax.Limitofmembersinprivateandpublicco. 15. WhatismeantbydemocraticmanagementinJ.S.CO? 16. Whenisacompanyborn? 17. Listtwoadvantagesofholdingcompany. 18. WhatarethelimitationsinGovernmentCompany?(any2) 19. Whatisimportantincontenttonameinprivateandpubliccompany? 20. Explaincorporateveilincompanyformoforganization. 21. Differentiate private and public company on the basis of transferability of shares and rightissue. 22. Whatisthequorumforboardmeetinginpublicandprivatecompany? 23. Whyjointstockscompanyformoforganizationsopopular. 24. Explainfollowingcompanieswithtwoexampleseach. Charteredcompany companylimitedby privatedeemedtobepublicco. guarantee Statutorycompany foreigncompany publiccompany Registered holdingcompany privatecompany company Indiancompany Defunctcompany governmentcompany Co.limitedbyshare MNCs Indiancompany 25. Inwhatwaysco.maybepromoted? 26. ListthestepsfortheformationofJ.S.Co. 27. Definepromoter 28. Explainpromotion 29. Mentionthestepspromotionofco. 30. Statemainfunctionsperformedbypromoter 31. Whatistheroleofpromoterinco? 32. Explainlegalpositionofpromoter 33. Underwhatcircumstancesdoestheliabilityofpromoterceases 34. Whatisthemaximumceilingofremunerationtopromoter 35. Inwhatdifferentwayspromoterremunerated? 36. Listthequalitiesofsuccessfulpromoter.

37. Mentionthedocumentsusedforincorporation 38. Statetheauthorizedgroupofpeoplefordeclarationatincorporation 39. Differentiatecertificateofincorporationandcertificateofcommencement. 40. WhatisthesignificanceoftableA.C.D.EOFA/A 41. ExplainsignificanceofsubscriptionclauseofMoA. 42. DifferA/AandtableA 43. StatelegaleffectofMoAandA/A 44. Stateultravires 45. Statethedeclarationatthetimeofcommencement 46. Explainminimumsubscription. 47. Whatisofferforsale 48. Whenisstatementinlieuofprospectusfiled 49. StatethecontentofcapitalclauseofMoA. 50. DiscussbrieflyrelationshipofMoAandA/A 51. Defineprospectus 52. Whathappenwhenminimumsubscriptionisnotraised 53. Stateconditionwhichareessentialforgrantofcommencementcertificate 54. StatesignificanceofobjectclauseofMoA. 55. Given2reasonsforissuingaprospectus. 56. Giveany2legalprovisionsregardinganissueofprospectus. 57. WhataretheoptionsavailableforpublicCo.regardingitsarticles? 58. Towhomiscertificateofcommencementissued 59. Whocanbeapromoterofacompany 60. Whatstatutorydeclarationisrequiredforincorporation. 61. DefineArticleofassociation 62. Differentiateprospectusandofferforsale 63. ExplainUnderwritingofsecurities 64. Whatisfloatationofcompany 65. Explainpreliminaryexpenses. 66. Whatisamisleadingprospectus 67. Whatisleasefinancing? 68. ExplainCIN 69. Mentionbenefitsofjointventure. 70. Stateadditionalrequirementsofapublicco.afterincorporationtoobtainacertificate ofcommencement? 71. Explainshelfprospectus 72. Whatdoyoumeanbyredherringprospectus?

SUBJECTIVE
1. Discussthestepsforfloatation/stagesofformationofaCo. 2. What is the role of promoter a Co. form of organization / Explain steps or stages in promotionofCo.

3. Explainvariousfunctionsofperformedbypromoter 4. Describevariousdocumentsofincorporation 5. Whatarethestepsinvolvedinregistration/incorporationofaCo. 6. HowcanapublicCo.commenceitsbusinessdiscussthesteps 7. ExplainM/Awithitsclauses 8. Diff.M/AandA/A 9. WhatisA/Astateitscontent 10. Defineprospectuswithitscontent 11. Elaborate factors taken into consideration for scanning of prospectus from investors pointofview. 12. Definejointstockcompanyexplainitsessentialfeatures 13. DifferentiatepartnershipandJ.S.Co. 14. ElaboratereasonsforpopularityofJ.S.Co.InIndia. 15. WhatleadstotheoriginofJ.S.Co?. 16. Explaindiff.typesofcompanies. 17. Differentiateprivateandpubliccompany 18. Briefoutvariousexemptionstoprivatecompaniesundercompanylaw. 19. ExplainholdingCo.anditsadvantages 20. DiscussdifferentformsofTransnationalCo.workinginIndiawithexamples 21. Whythereisneed/objectiveforgovernmentformingcompany? 22. ExplainvariousreasonsforthegrowthofM.N.Cs 23. Discussbenefitsandlimitationsofgovernmentcompanies. 24. Defineprivatecompany.Explainitsadvantagesanddisadvantages. 25. InWhatwaystransnationalcompaniesareharmfulforhosts? 26. Commentonpubliccompanies/J.S.Co.Inreferencetoitsmeritsanddemerits. 27. Privatecompaniesarecompromisebetweenpartnershipandpubliccompanyexplain. 28. Explaintheobjectivesofajointstockcompany. 29. Explaindifferenttypesofpromoters. 30. ExplainfeaturesofM.N.Cs 31. Givethemeritsanddemeritsofmultinationals

MANAGERIALPERSONNELUNITIIOBJECTIVEQUESTIONS
1. 2. 3. 4. 5. 6. STATE2METHODSOFAPPOINTMENTOFM.D MENTION2DISQUALIFICATIONSOFADIRECTOR GIVE2QUALIFICATIONSOFADIRECTOR WHATISAMAXIMUMTENUREOFAM.D? WHOISANALTERNATEDIRECTOR? UNDERWHATCIRCUMSTANCESCANTHECENTRALGOVERNMENTAPPOINTAM.D

 7. STATE2POINTOFDISTINCTIONBETWEENM.DANDMANAGER 8. EXPLAINRETIREMENTBYROTATION 9. HOWCANTHEDIRECTOROFACOMPANYBEREMOVEDFROMHISOFFICEBEFORETHEEXPIRY OFTHETERM 10. WHATISTHEMAXIMUMNUMBEROFDIRECTORREQUIREDINAJOINTSTOCKCOMPANY? 11. MENTIONMETHODSOFAPPOINTMENTOFDIRECTORSOFACOMPANY 12. IDENTIFYTHEDIRECTORSWHOCANNOTBEREMOVEDBYTHESHAREHOLDERSINTHEAGM 13. GIVETHELIMITATIONS/RISTRICTIONSONTHEPOWERSOFBOARDOFDIRECTORS 14. HOWARETHEFIRSTDIRECTORSOFCOMPANYAPPOINTMENT 15. WHATISTHELIMITONTHENUMBEROFDIRECTORSHIPOFAPUBLICCOMPANY? 16. HOWISANADDITIONALDIRECTORAPPOINTMENT 17. WHENISACASUALDIRECTORAPPOINTMENT? 18. DEFINEDIRECTOR 19. WHATISTENUREOFOFFICEOFAMANAGER? 20. EXPLAINQUALIFICATIONSHARES 21. WHAT IS MAXIMUM AND MINIMUM NUMBER OF DIRECTORS A JOINT STOCK COMPANY CAN HAVE? 22. WHATISTHEMAXIMUMREMUNERATIONPAYABLETOAM.D? 23. ELABORATEREMUNERATIONTODIRECTORS/MANAGERIALPERSONNEL? 24. DEFINEMANAGER 25. DIFFERENTIATEMemberANDSHAREHOLDER 26. STATE2RIGHTSOFSHAREHOLDERS 27. EXPLAINBOARDMEETING 28. GIVE2DISQUALIFICATIONOFM.D 29. EXPLINWHOLETIMEDIRECTOR 30. STATEDIFFERENTTYPESOFMEETINGS 31. EXPLAINQUORUM 32. DIFFERENTIATEORDINARYANDSPECIALRESOLUTION 33. WHATISTHELIMITONNUMBEROFMANAGINGDIRECTORSHIPOFACOMPANY? 34. DEFINEM.D 35. WHAT ARE THE PROVISIONS OF COMPANIES ACT RELATING TO THE APPOINTMENT OF THE DIRECTORSOFACOMPANYBYTHIRDPARTY? 36. WHATARETHELIABILITIESOFADIRECTOR? ESSAYTYPEQUESTIONS 1.DISCUSSFIVEDUTIESOFDIRECTORS 2.EXPLAINPOWERSOFAPERSONOCCUPYINGTHEPOSITIONOFDIRECTOR,BYWHATEVERNAME CALLED. 3.WHATARETHEDIFFERENTMETHODSOFAPPOINTMENTOFADIRECTOR? 4.HOWDOESTHEOFFICEOFADIRECTORFALLVACANT 5.EXPLAINPARTTIMEDIRECTORANDFULLTIMEDIRECTOR 6.MENTIONFEATURESOFM.DSPOSITION 7.DISCUSSTHEROLESANDFUNCTIONSOFDIRECTORS 8.HOWCANTHEDIRECTORSOFACOMPANYBEREMOVEDFROMTHEREOFFICE? 9.GIVETHECOMPOSITIONOFTHEBOARDOFDIRECTORS. 10.EXPLAINTHEPATTERNOFCOMPANYMANAGEMENTININDIA

UNITIII [FINANCEFINANCING, FINANCIAL INSTITUTIONS, MUTUAL FUNDS AND COMMERCIALBANKS]

SHORTANSWERQUESTIONS 1. Whatismeantbyparticipatingpreferenceshares? 2. Whyarepreferencesharessocalled? 3. ExpandthetermsICICIandIFCI. 4. explainunderwritingcommission

5. Mentiontwodisadvantagesofdebenturesfromcompanyspointofview. 6. Mention2advantagesofcrossingofcheque. 7. State2advantagesofpublicdepositsfromcompanyspointofview. 8. mention2situationswhencustomermaydishonorcustomerscheque 9. whatare2advantagesofploughingbackofprofit 10. distinguishbetweenbearerdebentureandregistereddebenture 11. expandIDBIandSFCs 12. Give2differencebetweensharesanddebentures 13. State2advantagesofmutualfund. 14. Distinguishbetweenfixedandcurrentaccount 15. State2functionsofcommercialbank 16. Mention2factorsaffectingrequirementofworkingcapitalofanorganization 17. Whatareclosedendedmutualfunds? 18. MentionanytwofunctionsofIDBI. 19. Distinguishbetweenoverdraftandloan. 20. Whataregrowthfunds? 21. Identify2sourcesofvariableworkingcapital 22. Whatareconvertibledebentures 23. Give2sourcesoflongtermcapital 24. Mention2advantagesofpreferencesharesfromthepointofviewofshareholders 25. Whatiscirculatingcapital/workingcapital? 26. MentionthemainobjectiveofICICI. 27. StatethepurposeforwhichtheSFCsweresetup. 28. Whatareretainedearnings 29. Whatistheimportanceoffinanceforabusiness 30. Explaindifferentsourcesofraisingfixedcapital 31. WhataretheobjectivesofDFCs 32. Explainrightshares 33. Mentiondifferentsourcesofraisingpermanentworkingcapital 34. Whatdoyoumeanbybonusshares 35. Differentiatebank 36. Explaincheque 37. Givetwoadvantagesofopeningabankaccount 38. Definemutualfund 39. WhatarethefunctionsperformedbytheIFCI 40. WhenandwherewasthefirstSFCsetup?ElaboratemanagementofICICI 41. WhatisIDBI 42. WhenandwhywastheUTIestablished? [5] 43. Givethemainformsinwhichfinancialassistancefromabankmaybeavailable 44. Identifytwosourcesofshorttermcapital 45. Whatismeantbycashcredit 46. Explaintradecredit 47. Mentionfoursourcesoffinanceforaproprietaryformofbusinessorganization 48. Explainfactoring 49. Whatisfixedcapital 50. Enumerate two factors which bring out the importance of working capital in a business 51. Mentiondifferenttypesofsharecapital

52. Bywhatactaremutualfundsgoverned 53. Listdifferenttypesofdebtfunds 54. Explainpublicdebtinstrument 55. Givethreepointsinsupportofbanksroleineconomicdevelopmentofthecountry 56. Describemainfeaturesofsavingbankaccount 57. Classifythecapitalrequirementofbusiness 58. Whatisunderwritingcommission 59. Differentiateequityandpreferenceshares 60. Differentiatesubscribedandpaidupcapital 61. Statedifferenttypesofsharecapitalwhichacompanymayissueundercompanys act 62. Explainsharewarrantandsharecertificate 63. Howcanthesharesofcompanybeforfeited 64. Explainfixedandfloatingchargeonassets 65. Definedebentures 66. Statetwoadvantagesofmediumtermcapital 67. Explainfairweatherfriend 68. Giveanytwowayswhendebenturescoreovershares 69. Canpubliclimitedcompanyraiseanyamountofmoneybyissueoequityshares 70. Distinguishbetweenreservecapitalandcapitalreserve 71. Differentiateowedcapitalandownedcapital 72. Differentiateshareandstock 73. Whatpurposeisservedbylongandshorttermcapital 74. Explaincapitalization 75. Canworkingcapitalbenegative 76. Explaintimedeposit 77. Explainbankersliability 78. Whatisthesignificanceofthewordnotnegotiableincheque 79. Differentiategeneralandspecialcrossing 80. Statestepsforopeningabankaccount. 81. WhataretheobjectivesofDFIs. 82. Differentiateshareholderandstakeholder 83. Bringouttheimportanceoffixedcapital. 84. Differentiatebearerchequeandordercheque 85. Differentiateredeemableandirredeemabledebentures.

Subjectivequestions
1. 2. 3. 4. 5. 6. Definecapitalization.Explainfactorsaffectingcapitalplan. Whatdoyoumeanbyfixedcapital?Enumeratefactorsaffectingit. Discussvariousfactorsaffectingworkingcapital. Discussvarioussourcesofraisingshorttermcapital Definesharesanddifferentiateitwithdebentures Classifydifferenttypesofpreferencesharesandexplainthem

7. Write short note on a)public deposits b)retained earnings/ploughing backofprofit 8. Discusstypesofdebentures 9. Enumeratefundbasedandfeebasedservicesofcommercialbanks. 10.Mentiontheconditionsfordishonoringofcustomerscheque 11.Explain specialized financial institutions. Discuss advantages and disadvantagesofborrowingfromtheseinstitutions. 12.Writeshortnoteona)mutualfundsb)underwritingofshares 13.Explainschemes/typesofmutualfunds 14.Discusstypesofdeposits. 15.Givemeritsanddemeritsofraisingcapitalbyissuingshares. 16.Writeshortnoteona)IFCIb)SFC 17.Howdoesabankgiveloansandadvances 18.Discussmeritsanddemeritsofraisingfundsfrombanks 19.Explainagencyandgeneralutilityfunctionsofcommercialbanks 20.Explainadvantagesanddisadvantagesofpreferenceshares. 21.Discussfivedifferencesbetweenequityandpreferenceshares 22.Discusstherole/importanceofworkingcapitalinabusinessconcern 23.Whataretherightsenjoyedbyshareholders. 24.Bringoutmeritsanddemeritsofraisingdebenturecapitalforacompany 25.Whatarethedifferenttypesofworkingcapital 26.Differentiatefixedandworkingcapital 27.Whatarethedifferenttypesofbank 28.Differentiateopenendandcloseendfund 29.Writeshortnoteona)ICICIb)IDBI 30.A)WriteshortnoteonUTI B)Differentiateequityandpreferenceshares 31.A)Differentiatesavingaccountandcurrentaccount B)Discusstheobjectivesofinstitutionalfinance

UNIT 4 MANAGEMENT [MANAGEMENT, FUNCTIONS OF MANAGEMENT,

PRINCIPLESOFMANAGEMENT]SHORTANSWERQUESTION 1. Explainfunctional/scientificschool/classical/asaprocessdefinitionofmanagement. 2. Defineneoclassical/humanrelationdefinitionofmanagement. 3. Explaindecisionmakingandleadershipconceptofmanagement. 4. Writemodernconcept/integratedconceptofmanagement. 5. ListfiveMsofmanagement. 6. Explainmanagementasadiscipline. 7. Giveanytwoobjectivesofmanagement. 8. Managementisallpervading.Explain. 9. Explainmanagementasadynamicfunction. 10. Managementisbothscienceandanart.Explain.

11. Listtwofeaturesofmanagement. 12. Differentiateadministrationandmanagement. 13. Classifylevelsofmanagement. 14. Listfourfunctionsofmiddlelevelmanagement. 15. Definemanagementasanactivity. 16. Managementisnotmanipulation.Explain. 17. Brieflyexplaintwoimportanceofmanagement. 18. Coordinationisafunctionofmanagement. 19. Whatismanagementinpreparation? 20. Whatismanagementinaction? 21. ExplainPODSCORB. 22. Explaintwointernallimitationsofplanning. 23. Givetwoexternallimitationofplanning. 24. Mentionstepsoforganizing. 25. Whatismanning? 26. Explainactuating. 27. Whatstepsareinvolvedinprocessofmotivation? 28. Differentiatecoordinationandcooperation. 29. Statetwobenefitsofplanning. 30. Classifyorganization. 31. Statethesignificanceofleadershipinmanagement. 32. Explainhoweffectivemanagementdependsoncommunication. 33. Managementisagroupactivity.Explain. 34. Defineleadership. 35. Whatarethestepsincontrolling? 36. Whoisknownasfatherofscientificmanagement? 37. Differentiatedecentralizationanddelegationofauthority. 38. Explaintwofeaturesofmanagementprinciples. 39. ClassifybusinessactivitiesasperHenryFayol. 40. Whataretheessentialqualitiesofmanager? 41. Writeneedsformanagementprinciples? 42. Differentiateunityofcommandandunityofdirection. 43. Explainscalarchain. 44. Whoisthefatherofmodernmanagement? [8] 45. NamemanagementprinciplesstatedbyTaylor. 46. Definefinancialadministration. 47. Explainpersonaladministration. 48. Whataretheobjectivesofbudgeting? 49. Enumeratelevelsofmanagement. 50. Explainmanagementisuniversal. 51. Whycoordinationisessenceofmanagement? 52. Explainmanagementasagroup. 53. Explainreporting. 54. Howisprincipleofstabilityoftenureimportanttoanorganization? 55. WhatismeantbyorderasaprincipleinFayolsmanagement?

Subjectivequestions

1. Definemanagementandexplainitsessentialfeatures. 2. Elaboratedifferentconceptofmanagement. 3. Discussmanagementobjectives. 4. Explainimportanceofmanagementinmodernbusinessworld 5. Managementisanartofgettingthingsthroughandwithpeople.Discuss. 6. Commentonmanagementasaprocess 7. Managementisscienceaswellasanart.Explain. 8. Writeashortnoteonmanagementasaprofession? 9. Discussmanagementasanactivity. 10. Elaboratemanagementfunctions 11. Explainplanningwithitsstepsandlimitation 12. Planningislookingaheadandcontrollingislookingbackward.Discuss 13. Coordinationisanessenceofmanagement.Explain 14. Discussdirectingasfunctionofmanagement. 15. Writeshortnoteona)personalmanagementb)organizingfunction 16. DiscussCoordinationasfunctionofmanagement. 17. Discussuniversalityofmanagementprinciples 18. ElaborateTaylormanagementprinciples. 19. Explain following principles of managementa) authority and responsibility b) divisionofworkc)equityd)espiritdecorpse)principleofdiscipline 20. Discusssignificance/importance/needofmanagementprinciples 21. DifferentiateFayolandTaylorconcepts 22. ElaborateTaylormanagementprinciples 23. Discussthenatureofmanagementprinciples 24. Writeaboutmanagementscope 25. Explainfollowingmanagementprinciplesa)initiativeb)centralization 26. Whyhasmanagementinmodernbusinesshasbecomeveryimportant 27. Discussdifferentlevelsofmanagement [9] UNIT5COMMUNICATION OBJECTIVEQUESTIONS 1. Whatiscommunication? 2. Defineinformalcommunication/grapevine/bushtelegraph 3. Classifyformalcommunication 4. Whatisfeedbackintheprocessofcommunication? 5. Givefourformsofverbalcommunication 6. Explainvideoconferencing 7. Mentiontwokeyobjectivesofcommunication 8. Givetwopointofdifferencebetweenupwardanddownwardcommunication 9. Mentiontwodemeritsoforalcommunication 10. Statetwolimitationsofwrittencommunication 11. Whatisgesturalcommunication 12. Statetwoimportanceofcommunication 13. Enumeratetwoadvantagesoforalcommunication 14. Stateanytwodevicesdevelopedinrecentpastforrapidandefficientcommunication

15. Mentiontwodisadvantagesoforalcommunication 16. Statetwomainfeaturesofcommunication 17. Givetwoadvantagesofwrittencommunication 18. Explainformalcommunication 19. Give reason why communication is one of the most vital factors in efficient management 20. Statetwomethodsofcommunication 21. Mention two reasons why communication is necessary for the development of commerce 22. Mentionanytwodirectionsoftheflowincommunication 23. Whataretheelementsofcommunication 24. Statetwobarriersofcommunication 25. Statetheconditionswhenwrittencommunicationismoreimportant 26. Whenisverbalcommunicationmostsuitable 27. Differentiateinternalandexternalcommunication 28. Explainhorizontalcommunication 29. Writeaboutdiagonalcommunication 30. Differentiateupwardanddownwardcommunication

Subjectivequestions
1. Explaincommunicationwithitsimportance 2. Differentiateinformalandformalcommunication 3. Differentiatewrittenandverbalcommunication 4. Findouttheusualbarrierstocommunicationandmethodstoovercome 5. Explainprinciplesofeffectivecommunication 6. Discussthereasonsforgrowingimportanceofcommunication 7. Whataretheessentialsofanidealcommunication 8. Writeshortnoteona)writtencommunicationb)downwardcommunication 9. Givecharacteristicsofcommunication 10. Whataretheobjectivesofcommunication 11. Explaindifferenttypesofcommunicationandgivethemeritsanddemeritsofeach 12. Whatarethemodes/devicesofcommunication

UNIT6 MARKETING [MARKETING, ADVERTISING, SALES PROMOTION AND SALESMANSHIP]

SHORTANSWERQUESTIONS 1. Givetwoimportanceofpackaging 2. Statecontentsoflabeling 3. Giveadvantageofbranding 4. Definesalespromotion 5. Listtwoobjectivesofsalespromotion 6. Explaintwodealersalespromotionmethods 7. Mentiontwocustomerssalespromotionmethods 8. Givefourcharacteristicsofadvertisement 9. Whatismuraladvertising 10. Explaintwobenefitsofadvertisementtomiddlemen 11. Whatisadvertisingmedia 12. Explainmediamix 13. Statefourformsofdirectmailadvertising

14. Giveanytwolimitationsofpressadvertising 15. Whatisanadvertisingagency 16. Explainadvertisingappeal 17. Givetwoadvantagesofadvertisingagency 18. Definesalesmanship 19. Givetwocharacteristicsofsalesmanship 20. Mentiontwoobjectivesofpersonalselling 21. Explainrelationshipbetweenadvertising,personalsellingandsalespromotion 22. Differentiateadvertising,personalsellingandsalespromotion 23. Givefourqualitiesofsalesman 24. ExpandAIDCAM 25. Explainfilmadvertising 26. Whatiscollectiveadvertising 27. Explaincompetitiveadvertising 28. Differentiatebrandandtrademark 29. Differentiatepackingandpackaging 30. Differentiatestandardizingandgrading 31. Explainpricingasafunctionofmarketing 32. Explainpromotionalmix 33. Givetwoadvantageofbuyingandassembling 34. GivefullformofISIandAGMARK 35. Classifymarketingfunction 36. Differentiatesellingandmarketing 37. Differentiateadvertisementandpublicity 38. Givephysicalfunctionofmarketing 39. Classifyexchangemarketingfunctions 40. Mentiontwofactorswhichinfluencetheselectionofadvertisingmedia 41. Whatarethetwomainformsofaudiovisualadvertising 42. Mentiontwofunctionsofadvertisingagency 43. Identifytwoadvantagesofpersonalselling 44. Enumeratetwovocationalqualitiesofsalesman 45. Definemarketing 46. Explaintraditionalconceptofmarketing 47. Mentiontwoobjectivesofadvertisingagency 48. Mentiontwolimitationsofdirectmailadvertising 49. Whatismeantbypostsaleactivityofsalesmanship 50. Definemarketresearch SUBJECTIVEQUESTIONS

1. Discussthekeyfunctionsofmarketing 2. Examinethefunctions/objectivesofadvertisement. 3. Advertisingisasocialwaste.discuss 4. Discusstheobjectivesandsignificanceofsalesmanship 5. Whatarethedesiredqualitiesofsalesman 6. Definemarketingandexamineitskeyobjectivesandimportance 7. Whatarethefeaturesandsignificanceofadvertisement 8. Explaintheobjectives/functionsofsalespromotion 9. Elaboratethestepsinpersonalsellingprocess 10. Writeanoteonadvertisingagency 11. Discussdifferentformsofadvertisementmedia 12. Explainfactorsaffectingadvertisingmedia 13. Explainfacilitatingfunctionsofmarketing 14. Explaintypesofadvertising 15. Writeabriefnoteoncodeofadvertisingpractices 16. Discusstechniquesofsalespromotion 17. Discussthemesofadvertising/advertisingappeal 18. Discussconceptsofmarketing

COMMERCEATAGLANCE
CORPORATEORGANICATION

Companyjointstockcompanyitisanartificialpersoncreatedbylaw, having separate legal entity with perpetual succession and a common seal. Features/characteristics 1. Artificial personco. is created by law; it does not have physical existence. It comes into existence by the process of incorporation undercompaniesact. 2. Separate legal entitythe identity of company is different from its members in the eye of law. Members and directors can be debtors andcreditorsatthesametime.Companycansue,holdpropertyand enterintocontractsinitsownname 3. Perpetual successionDue to free transferability of shares company continuity is not affected. Members may come or go but company goes on for ever. Death, lunacy and insolvency of members and directorsdoesnoteffectsthecontinuityofthecompany

4. Common sealit is an official signature /substitute to signature of a company. It is a rubber stamp with the name of company and its head office address engraved in it. Every legal document of a company must b witnessed by two directors or a director and a companysecretaryalongwithasealtomakeitalegaldocument 5. Limited liabilityliability of members is to the extent of unpaid amount on its nominal value if limited by shares. However the liabilityofcompanyremainsunlimited 6. Democratic management Company is managed by board of directorswhoaretheelectedrepresentativesofmembers. Voluntary association/corporate finance and corporate existence readitoncefrombook Advantages/benefits/significance/importance[brief explanation of each] 1. Largefinancialresources 2. Stability 3. Freetransferabilityofshares 4. Professionalmanagement 5. Diffusedrisk 6. Limitedliability 7. Scopeforgrowthandexpansion 8. Social benefitsit leads to employment generation, wide choice for customers, higher standard of living, and quality product at reasonable price, capital formation and source for government revenue Demerits/limitation/disadvantages[briefexplanationofeach] 1. Toomanylegalformalities 2. Delayindecisions 3. Lack of personal touch/separation between ownership and management/corporateveil 4. Speculation 5. Oligarchyinmanagement 6. Socialevilsduetocompaniesestablishmentproblemslikepolitical interference,industrialunrest,monopoly,pollutionandaregional imbalancearises. Objectivesofcompanies[briefexplanationofeach] 1. Todeveloprapidindustrialization 2. Toundertakelargescaleoperation 3. Toutilizeresources 4. Tomobilizeidleresources 5. Tomakecountryselfreliant 6. Tohelpinthegrowthofsocialsectorandruraleconomy 7. Togenerateemployment

Suitabilityofcompanies[briefexplanationofeach] 1. Forbasicandkeyindustrieslikeshipbuilding 2. Forbusinessinvolvinghighrisklikeairlinesconcerns 3. Toescapeunlimitedliability 4. The law makes the company organization obligatory like banking business 5. Whenlargescalebusinessiscruciallikeconstructionindustries basis partnership Company Meaning Relation between 2 or An artificial person created more partners who have by law with separate legal agreed to share profit of entity, perpetual succession a business carried on by andcommonseal. all or any of them acting forall. Registration Optional, registered Compulsory, registered under Indian partnership under Indian companies act act1932 1956 Liability Partners liability is Members liability is unlimited unlimited Management Managedbypartners Managed by board of directors No.ofpeople Min2, max10 [banking], Private [250] [excluding 20[nonbanking] pastorpresentemployees] Public[7unlimited] transferability Partners cannot transfer Members can transfer their theirinterestwithoutthe shares consentofallmembers Typesofcompanies Onthebasisofmodeofincorporation Chartered companycos. Established by royal charter, king, queen or headofthestate.Ex.bankofEngland Statutory companycos. Established under a special act passed in the parliamentorbystatelegislature.Ex.LIC,UTI Registered company established under registration under companies act. In INDIA under Indian companies act 1956 or any other previous Indiancompaniesact Onthebasisofcontrol Holding companyco. which directly or indirectly through medium of anothercompanyholds Morethan50%ofissuedequitycapitalofthecompanyor Morethan50%ofvotingrightsinthecompanyor Right to appoint majority composition of board of directors in the company.Ex.Unileverlimited

Subsidiarycompanycompanywhose More than 50% of issued equity capital is with another company or Morethan50%ofvotingrightsiswithanothercompanyor Right to appoint majority composition of board of directors is with anothercompany.Ex.HUL GovernmentCompany:Co.inwhichnotlessthan51%ofpaidupcapital is held by Central Government or by one or more state governments. E.g.SAIL Onthebasisnationality IndiancompanyCo.incorporatedunderIndiancompanysact1956or anypreviousactofIndia. Foreign company C0. Incorporated in any other nation but has its businessunitinIndia. Onthebasisofliability Company limited by shares: Liability of members is to an extent of unpaidamountonthefacevalueofshares. Companylimitedbyguarantee:Liabilityofmembersislimitedtosuch amountastheyagreetocontributetotheassetsofthecompanyinthe eventofitswindingup.Itmayormaynothavesharecapital Unlimitedcompany:Liabilityofeverymemberisunlimitedandextends tohispersonalproperty. Onthebasisofpublicinterest Privatecompany:Acompanywhichbyitsarticles: (a) Restrictstherightofitsmemberstotransfershares. (b) Limits the no. of members to 50 (excluding past or present employee) (c) Prohibits general public to subscribe for its shares or public deposits. (d) Min.paidupcapitalisonelacs. Publiccompany:Acompanywhich: (a) Minimumpaidupcapitaloffivelacs. (b) No.limitonno.ofmembers. (c) Openinvitationtgeneralpublictosubscribesharesordeposit. (d) Freetransferabilityofshares. Multinational Company: Company has production, distribution and marketing activities in two or more Countries apart from country in which it is incorporated. It can be established in form of branches, subsidiary,franchise,Jointventure,TurnKeyProjects. Sl. Basis PrivateCompany PublicCompany No 1 Min. & Max. no. of Min:2,Max:50(excluding Min: 7, Max:

2 3 4 5 6

members MinPaidupcapital Transferability of shares Minimum no. Directors PublicInvitation Commencement formalities

pastorpresentemployee) Onelacs Restricted 2

Unlimited 5lacs Free 3

Lastwordofname

Prohibited Free&Open Only after obtaining Acopyof certificateofincorporation prospectusor statementinlieu ofprospectusand statutory declaration. PrivateLimited Limited

Privileges/LegalexemptionofPrivateCompany 1. StatutoryMeetingandReport:Notcompulsorytoholdstatutorymeetingand submitstatutoryreport. 2. IndexofMembers:Notneededtomaintainindexofmembers 3. Quorum:Forgeneralmeeting2membersandforboardmeeting2directors. 4. Min.Capital(paidup):Min.paidupcapitalof1lac. 5. Commencement of Business: Not needed to acquire certificates of commencement. 6. Minimumno.ofmembers:Tocommenceonly2membersneeded. 7. Minimumno.ofDirectors:Only2directorsneeded 8. Prospectusorstatementinlieuofprospectus:Notneeded Advantages/BenefitsofPrivateCompany[briefexplanationofeach] 1. Easyformation 2. Secrecycanbemaintained 3. QuickDecisions 4. Greaterflexibility 5. Personaltouch 6. Limitedliability Disadvantages/DemeritsofPrivateCompany[briefexplanationofeach] 1. LimitedResources 2. PoorProtectiontomembers 3. Novaluationofinvestment 4. Restrictionontransferabilityofshares 5. Lesserpublicconfidence

GovernmentCompany Advantages:[briefexplanationofeach] 1. Easyformation 2. InternalAutonomy 3. Flexibilityofoperations 4. EfficientManagement 5. Collaboration 6. PublicAccountability 7. Sensitivetoconsumerneeds 8. Developmentofneglectedsector Disadvantages:[briefexplanationofeach] 1. PoliticalInterference 2. Boardfloodedwithyesmen 3. RedTapism 4. BeurocraticManagement/Indifferent/inefficient 5. LackofAccountability 6. Stereotypedmethod ObjectivesofGovt.Company:[briefexplanationofeach] 1. TodevelopbasicandkeyIndustries 2. TomobilesPublicSavings 3. Togenerateemployment 4. ToensurebalancedEconomicdevelopment 5. ToreduceDependence 6. Tocontrolmonopoly 7. Toprovideandfulfillconsumerneeds NecessitiesofGovt.Company:[briefexplanationofeach] 1. RapidIndustrialization 2. Capitalformation 3. Employment 4. Balanceddevelopment 5. SelfReliance 6. Socialisticpatternofsociety 7. Consumerwelfare Characteristics:[briefexplanationofeach] 1. Incorporation 2. Separatelegalentity 3. Ownership 4. Mgt. 5. FinancialAutonomy 6. Accountability

HOLDINGCOMPANY[briefexplanationofeach] 1. Avoidanceofrisk 2. Easytoform 3. CreatesGoodwill 4. Economyinoperation 5. Financialstrength Privatedeemedtobepublic: 1. Where25%ormorethepaidupsharecapitalofPvt.Companyisheldbyone ormorebodiescorporate.or 2. Wheretheaverageannualturnoverofaco.forpast3consecutiveyearRs.25 crore.or 3. Whereaprivatecompanyholdsatleast25%ofpaidupcapitalofapublicco.

FORMATIONOFCOMPANY 4stepsofformation/floatation[briefexplanationofeach] (a.) Promotion (b.) Incorporation (c.)Capitalsubscription (d.) Commencement Promoter: Any individual, firm, co. or association who performs or identifies business opportunities, ideas, analyses its prospects and assembles various factorsfortheformationofacompany Promotion: First stage in formation which involves conceiving of idea, preliminary and detailed investigation, assembling various factors for commencementofbusinessinaco. Steps of Promotion / Role of Promoter / Functions of Promoter: [brief explanationofeach] a. DiscoveryofIdea b. PreliminaryInvestigation c. DetailedInvestigation d. Assembling e. FinancingofProposition Note:Ifroleandfunctionsbothareaskedstatethegivenpointswithexplanationfor roleandselfexplanatorysentencesforfunctions. TypeofPromoters:[briefexplanationofeach] a. Professionalpromoters b. Accidentalpromoters c. Financialpromoters d. Technicalpromoters e. Specializedinstitutionsaspromoters f. Governmentaspromoter

Legalpositionofpromoter:Fiduciarypositionpositionoftrustandconfidence Remuneration:nomaximumceiling,itisasperAOA.Formsofremunerationareas follows a. Shares b. SellhisownassetsathigherpricestotheCo. c. Chargecommissiononpurchaseofassets d. Nomax.Ceilingusuallygovt.putsalimit. Qualities: 1. Imaginative 2. Organizingability 3. Vision 4. Resourceful LiabilityofPromoters:Promoterispersonallyliableforallcontracts.ItceasesifItis expressedinthepreliminarycontracts a. Thatthecompanyadoptsthosecontracts b. Thateitherpartymayrescinditifco.doesntadoptthecontract. Incorporation:Steps a. Preliminaries approval of name, appointment of banker, solicitor members,directorsetc. b. Preparation & filing of documents MOA, AOA, Form 1 (Statutory declaration), Form 18 (Registered office details), Form 29 (list of directors)andForm32(consentofdirectors) c. PaymentofNecessaryfee:onthebasisofauthorizedcapitaloftheco. d. Registrationofacompanyscrutinizingofdocumentsbyregistrarand recording e. ObtainingcertificateofIncorporation:Issueofcertificatedatemention oncertificateisdateofBirthofco. Certificateofincorporation:Conclusiveevidencethatcompanyisdulyincorporated andhasbecomeabodycorporatewithseparateentityhavingperpetualsuccession andCommonSeal. Form1(Statutorydeclaration):thatallformalitiesaredulycompliedwith.Signedby advocateofSupremeCourt,highcourt,acharteredaccountantpracticinginIndia orpersonnamedasdirector,MD,CSormanager. Form18(Registeredofficedetails)noticeofregisteredofficeaddresstobefiled.If notdecidedonlythenameofstatemaybesubmitted.Within30daysofthedateof incorporationcompleteaddresstobefiled. M.O.A.:MemorandumofAssociationacharterdocumentwhichsetsoutthe constitutionofthecompany.BindsCompanywithoutsideworldandanythingdone beyondobjectstatedinobjectclauseisUltraViresandthusisnullandvoid. Clauses:1)NameClause:nameoftheco.withwordPvt.LtdorLtd. 2)SituationClause/DomicileClause:Addressofregisteredofficeandname ofState 3)ObjectsClause:objectivesa)Mainobjectb)otherobjects

4)LiabilityClause:Liabilityofmemberstoanextentofunpaida/monface valueofsharesorguaranteeda/mtobepaidatthetimeofwindingupofCo. 5)CapitalClause:AuthorizedCapitaldividedintonoofunitswiththeface valueofshares 6)AssociationClause:declarationbysubscribersforbeingdesirousof formaCo.withnameofmembersaddress,no.ofshareallottedandwitness signatureMin2inPvt.Co.and7inPublicco. UltraVires:UltraisbeyondViresisscope:Ultraviresisbeyondthescope.anything donebeyondthescopeofobjectclauseofmemorandumisultraviresandthusis nullandvoid. A.O.A.:ArticlesofAssociationbyelawsofthecompanycontainingrulesand regulationfortheinternalaffairofthecompany. TableA:ModelsetofarticlesgiveninscheduleIofIndiancompaniesactcontaining 99articles.Itmaybeadoptedbypublicco.Ltd.byshareswithouthavingitsown articles. TableC:ModelsetofAOAforCo.Ltd.byguaranteenothavingsharecapital. TableD:ModelsetofAOAforCo.Ltd.byguaranteehavingsharecapital TableE:ModelsetofAOAforCo.ForUnlimitedCompany. ContentofAOA 1. RulesandRegulationsregardingcallsonshares 2. RulesandRegulationsregardingtransfer,transmissionandforfeitureofshare. 3. RulesandRegulationsregardingGeneralMeetings,proceedingsofmeetings 4. RulesandRegulationsregardingBoardmeetingsanditsproceedings 5. RulesandRegulationsregardingAppointmentandremovalofdirectors 6. RulesandRegulationsregardingDividends,reserves,capitalizationofprofits. 7. Provisionsforvotingandstatutoryrightsofmembers. 8. Provisionsforvotingwindingupofcompany 9. ProvisionsforvotingappointmentofM.D.CEO.,ManagerandSecretaryofCo. 10.ProvisionforvotingandCommonSeal. 11.Sharecapitalandvariationofrightsfordiff.typesofshares. LegaleffectsofA.O.A.:BindsCo.Tomembers;memberstoCo.,membersinter se(eachother) DISTINCTIONBETWEENMOAANDAOA BASIS M.O.A A.O.A Meaning Content Charterorfundamentaldocument Clausescapital,name,object, subscription,liabilitydomicile Bindscompanytooutsideworld Byelawsofcompany Rulesandregulationfor internalaffairsofco. Bindsco.tomembers,

Binding

force

members tocompanyand membersinterse canbealteredbyordinaryor specialresolution

Alteration

Notpossibleinordinarycourse, specialresolutionsneededand approvalofCo.lawboard

Significance CompulsoryforeveryCo.tohaveits own Status Supremeandfundamental Document,subordinatetocosact

OptionalforpublicLTDco.as canadopttableA Sub ordinatetobothMOA andco'sact. Canberatifiedbymembersif beyondscope.

Legaleffect beyondthescopeisultraviresand thusisnullandvoid

CapitalSubscription:3rdstageinformationofpubliccompanyandnotrequiredfor pvt.Company.Itincludesappointmentofunderwriters,listingofcompanyinStock Market,openingBanka/c,finingminimumsubscriptiona/m,draftingofprospectus andallotmentofshares. Commencement:steps(1)Filingandpreparationofdocuments a) Ifprospectusnotissued(i)acopyofstatementinlieuofprospects (ii)StatutorydeclarationforQualificationshares b) IfProspectusissued:(i)acopyofprospectus (ii)Statutorydeclarationbydirectorthat;minimum subscriptionisacquired;directorshaveagreedtopayfor qualificationsharesandnomoneyisliabletoberefunded. (2)ObtainingCertificateofCommencement:Scrutinyandissueofcertificate.Itisa conclusiveevidenceofthefactthatcompanyhascompliedwithalllegalformalities andisentitledtocommencebusiness Prospectus:Anydocument,notice,circular,advertisementinvitinggeneralpublicfor thesubscriptionofshares,debenturesorothersecurities.Itisneededbypublic companyLtd.byshares.Itmustbeissuedwithin90daysofsubmittingtoregistrar. ShelfProspectus:ProspectusissuedbyPublicfinancialinstitutions,publicsector banksandScheduledbanks. RedHerringProspectus:prospectusissuedbycompaniesraisingcapitalbythe processofbookbuilding.

Abridgedprospectus:memorandumcontainingfeaturesofprospectus.Itmust accompanyeveryapplicationformissuedtothepublicforsubscribingsecurities Offerforsaleordeemedprospectus:Noticeforsaleofsharesorsecuritiespublished bybulkallotteeslikeunderwriters. Statementinlieuofprospectus:documentrequiredbyaco.whenpublicisnot invitedforsubscriptionofsharesorsecuritiesinplaceofprospectus.Thisdocument isrequiredwhencapitalcanberaisedinternallyorprivately.Itmustbefiledwith registraratleast3daysbeforetheallotmentofsecurities.Contentissameas prospectus. Informationmemorandum:processundertakenpriortothefilingofprospectusby whichdemandforthesecuritiesproposedtobeissuedbythecompanyiselicited andthepriceandthetermsofissueisassessedbycircularornotice. CONTENTOFPROSPECTUS:(1)Nameandaddressofthecompany. (2)NatureofbusinessandmainobjectsofCompany. (3)CapitalstructureoftheCompany. (4)Particularsaboutunderwriters,bankers,promotersetc. (5)Dateofopeningandclosingofsubscriptionlist. (6)InformationaboutmaterialcontractswithManagerialpersonnel. (7)ContingentandoutstandingLiabilities. (8)Consentandopinionofexperts,managerialpersonnel. (9)Riskfactor. (10)Statutoryinformationsvotingrights,transferandtransmissionofsecuritiesetc. MinimumSubscription:90%ofissuedcapitalwhichmustberaisedbypublicco. ltd.byshareswithin120daysofissueofprospectus.Ifnotraised,itmustbe refundedtoinvestorswithinnexttendays130daysofissueofprospectus.Amount intheopinionofdirectororpromoterissufficientforpreliminaryexpensesand contracts. WaysofPromotingACompany:i)convertingasolebusinessorafirmintoa company(ii)establishmentanewcompanyaltogether(iii)Amalgamation Scanningofprospectus:(1)Natureofbusiness:investorsshouldexaminedemand andsupply,degreeofcompetition,presentvalueofitsassetsandscopeof expansion. (2)Management:standingpositionofpromotersanddirectors.Theirexperienceand integrity (3)Capitalplan:adequacyofproposedissue,minimumsubscription,rightsof shareholders. (4)Materialcontracts:detailsofcontractswithvendors,underwriters,directorsetc. (5)MarketComments:studyofpressreviewsandfinancialcircles.

(6)Nameofassociates:reputationofcompanybankers,auditors,brokers,financial institutionsetc. (7)Propertypurchased:natureandvalueofpropertyacquiredandmodeof paymenttobeconsidered.

MultinationalCorporation
TransNationalCompany/MNC/MultinationalCompany/Globalgrant Meaning:Acompanyorcorporationwhichhasproductionoranddistributionunits inmorethantwonationsapartfromthecountryinwhichitisincorporatede.g. Glaxo,nestleetc. Characteristics:(a)Productionor/anddistributionunitsinmorethantwonations (b)Normallyverylargeinsize.(c)Itcanbeinvariousformsbranches,subsidiaries (d)largesizeturnkeyprojects,jointventure,franchising(e)transferofresources(f) dispersionintegratedstructure(g)Internationalmanagement Objectives:[briefexplanationofeach] (1)Toexploitnaturalresources. (2)Tomitigatetheimpactofhomecountryregulations (3)TotakeadvantageofgovernmentConcessions (4)Tofightcompetitions (5)Toreducecostofproductive (6)Tocircumventreducetariffwallsregulations (7)Totakeadvantageoftechnologicalexpertise. FORMS:[briefexplanationofeach] 1. Branches 2. Subsidiarycompanies 3. Jointventure advantages theresourcesoflocalandforeignfirmsareprovedtogetherto complementeachother ForMNCwhichwantsexpansioninoverseasmarketwheresubsidiaries areprohibited Theycanusemanagementskillsandmarketpositionoflocalfirms WherelocalgovernmentneednotallowMNCforcompletecontrolon theventure Privilegesandinfluenceoflocalauthoritiescanbeutilised

4. Franchise 5. TurnkeyProjects Merits Economiesoflargescale operations GeneratesEmployment Transferoftechnology 1

Demerits Maximization ofProfits

2 3

2 3

Exploitationofresources Politicalinterference(threatto national) Back datedtechnology Outflowoffinancialresources CurrencyManipulations Disturbdomesticindustry ForeignMonopoly Adversebalanceofpayment

4 5 6 7 8 9 10

ManagerialRevolution Philiptodomesticindustries Expansionofmarket Higherstandardofliving Growthofancillaryunits ForeignCapital Developinginfrastructureand Agriculture Improvesbalanceoftrade throughimpostpromotionand impostsubstitution Researchanddevelopment activities

4 5 6 7 8 9

10 Distortion ofculture

11

12

Briefexplanationforeach ReasonsforthegrowthMNCs[briefexplanationofeach] (a) FinancialSuperiorities (b) TechnicalSuperiorities (c) MarketingSuperiorities (d) ManagerialSuperiorities (e) ProductInnovation DISTINCTIONBETWEENMNCs,Soleproprietorship,Partnership Basis MNCs Sole Partnership

Proprietorship Act ForeignexchangeMgt act Shareholders Boardofdirectors extendsinmorethan twonations LargeScale Nospecificact IndianPartnership act1932 Partners Partners Largerthansole proprietorship MediumScale

Ownership Management Operationalarea

individual individual localarea coverage SmallScale

Scaleof operations Liability TechnicalSkills

Limited Veryhigh

Unlimited Verylimited

Unlimited Moderate

ManagerialPersonnel
BoardofDirectors:electedrepresentativesofshareholders,toporganof management.Mininpublic3directorsMin.inPrivate2directors WhocanbeadirectorOnlyanindividual;nobodycorporateorfirmshallbe appointedasdirector Qualification:(1)Mustbeanindividual(ii)Soundmind(iii)Abovetheageof25yrs. Andbelow70yrs.(iv)Solvent(v)shouldnotholddirectorshipofmorethan15public co. Disqualifications:1Unsoundmind2)anundischargedinsolvent3)apersonwho hasappliedforadjudicationasaninsolvent4)apersonconvictedbyacourtofmoral turpitude(5)disqualifiedtobeadirectorbyanorderofthecourt. Limitonno.ofdirectorships:Apersoncannotholdmorethan15directorshipsata time. Role: 1. Entrepreneurialrole:takesinitiative,calculatesrisksetc. 2. Decisionalrole:policymakers,rulesandregulations 3. Developmentrole:enhancefacilities,resourcesetc 4. Leadershiprole:supervision,instruction,directionetc. 5. Trusteeshiprole:actsascustodianofcompanyswealth 6. Cocoordinatingrole:integratedivisions,departments,branchesetc. Appointment:

1. Bypromoter:firstdirectors;ifnot,signatoriesofmemorandumarefirst directors 2. ByMembers:Subsequentdirectors,2/3ofdirectors,retirebyrotation, Qualificationshare. 3. BythirdParty:1/3ofdirectors,bydebentureholders,banks,andfinancial institutions,notrequiredtoholdqualificationsharesorretirebyrotation. 4. ByBoard:ifauthorizedbyarticlesAlternatedirectors,Casualdirectors, additionaldirectors 5. ByCentralgovernment:onapplicationfrom100membersor10%votingright members.Tenureis3years RetirebyRotation:Directorsappointedbymembersfallunderrotational ring.2/3rdoftotaldirectorretirebyrotationoutofwhich1/3rdretireevery year. Legalpositionofdirectors:[briefexplanationofeach] 1. Astrustee 2. AsAgent 3. AsManaging 4. Asanemployee 5. Asofficeroradministrator Rightsofdirectors: 1. Toattendboardmeeting 2. TobuyShares 3. ToinspectbooksofAccounts 4. ToreceiveRemuneration,Boardfeeetc. 5. Toexercisepowerinboardmeetingvotingrights 6. Toreceivecompensation Functionsofdirectors: 1. Determinetheoveralllongtermobjectivesandgeneralpoliciesofco. 2. Approveoverallbudgetsandprogrammeoftheco. 3. Designanddevelopcontrolsystemfortheco. 4. Decidesandcreatestheframeworkfororganizationstructureoftheco. 5. Selectschiefexecutivesandotherkeyexecutivesoftheco. 6. Makesimportantcontractsforthepurchaseandsaleofpropertyonbehalfof theco. 7. Issuesordersandinstructionstochiefexecutives 8. Evaluatingperformanceandtakingcorrectiveactions 9. Reviewingandrevisingtheplansoftheco. 10.Regulatingthecapitalexpenditureandfinancialplansofthecompany PowersofDirectors:General/StatutorytobeexercisedinBoardMeeting 1. Toissueshares,debenturesetc. 2. Tofillupcasualvacancies,additionalandalternatedirectors. 3. Tomakecallsonshares

4. ToTransmitorforfeitshares 5. Torecommenddividendsorissuebonusshares 6. Todecidethetermsandconditionsforissueofsecurities 7. Toborrowmoneythroughissueofdebenturesandpublicdeposits 8. Toinvestcompanyfundsadmakeloans 9. Todelegatecertainpowertoothers 10.ToappointM.D.,Managerandotheremployees Restrictedpowers/limitationsonpowers 11.Toborrowmoneymorethanthepaidupcapitalofthecompany 12.TodonateforcharitablepurposeexceedingRs.50,000/ 13.Toissuebonusshares DutiesofDirectors: 1. DutyofattendBoardMeetings:mustattendallBoardMeetings 2. Dutytodiscloseinterest:mustdisclosehisinteresttotheBoard 3. Dutytofilereturnsofallotment:mustfileareturnofallotmentwithina periodof30days 4. Dutyofreasonablecare:Displaycareinperformance 5. Dutyofgoodfaith:AstrusteetoactbonafideinthebestinterestoftheComp. 6. Dutynottodelegate:performworkpersonally 7. Dulytoactwithinthispowers RemunerationofDirectors:Totalmanagerialpersonnelremunerationis11/%ofnet profitoraspercompanysarticles. Parttimedirectors,iftheco.hasaM.D 1% Parttimedirectorinanyothercase 3% M.Dorwholetimedirector 5% M.Dorwholetimedirectorwhenmore 10% thanone Totalmanagerialremuneration 11% VacationofofficeofaDirector 1. Whenadirectorfailstoobtainhisqualificationshareswithintwomonthsof appointment 2. Whenadirectorfailstopaythecallsduewithinsixmonths 3. Whenadirectorceasestoholdqualificationshares 4. Whenadirectorisadjudicatedinsolvent 5. WhenadirectorisfoundtobeofunsoundmindbyanyCourt. 6. WhenadirectorfailstodisclosehisinterestinanycontractoftheBoardof Directors. 7. Whenadirectorremainsabsentfrom3consecutivemeetingsoftheBOD 8. Whenadirectorisconvictedofanyoffenceinvolvingmoralturpitude. 9. Whenheisremovedfromthepostbymembers

10.WhendirectorcontravenesanyprovisionsofLawregulatingconditionsof employment. 11.Whenadirectorisdebarredbyanycourtfromholdingofficeonaccountof fraud. Circumstanceswhencentralgovt.mayremovedirectors 1Guiltoffraud2Misfeasance3persistentnegligence4defaultincarryingouthis obligationandfunctionundertheact5breachoftrust ParttimeDirectorisadirectorwhoisnotanemployeeoftheco.anddoesnot devotemuchtimeforthesupervisionofco'saffairs.Suchdirectorsareinvitedto board/generalmeetingsofthememberstofacepolicydecisionregardingbusiness ormgtoftheco. RemovalofDirectors:1.ByMembers:givingspecialnotice,passingordinary resolutioningeneralmeetingofmembersnoticeatleast14daysbeforemeeting. Theycannotremovedirectors(1)appointedbyCentralgovt.(2)bythirdparty(3)by proportionalrepresentation 2.ByCentralGovt.:onrecommendationofcompanylawboardongroundsof frauds,breachofduty,breachoftrustornegligence,businessnotconductedon soundbusinessprinciples.Applicationfrom10%votingrightsmembersor100 membersforremoval. 3.ByCompanyLawboard:onapplicationfrommembersforpreventionof oppressionofminorityormismanagementofaffairsofco. FulltimeDirector/wholetimeDirector: Meaning:Whoisinwholetimeemployment,appointedbyB.O.D.ontheapprovalby shareholdersinAnnualGeneralmeetingbypassingspecialresolutions? Qualification:(1)Hemustbeanindividual(2)HemustbeamemberofB.O.D. Appointment:ByB.O.D.onapprovalbyshareholders Termofoffice:TillretirementNofixtenure Power/Duties:1.toactastechnicalDirectorMarketingDirectorEtc 2.Toactonfulltimebasisforperformingadministrativeactivities. 3.Tohaveindependentchargeofoneparticulardivisionsordepartment. ManagingDirector:(M.D.) Meaning:Adirector/whobyvirtueofanagreementwiththecompanyora resolutionpassedbytheco.ingeneralmeetingorbyitsB.O.D.orbyvirtueofits M.O.A.orAOAisentrustedwithsubstantialpowerofManagementwhichwouldnot otherwisebeexercisablebyhimandincludeadirectoroccupyingthepositionof M.D.bywhatevernamecalled. Appointment:1byagreementwithco.2.Byresolutioningeneralmeeting3.By B.O.D.inboardmeeting

4.ByvirtueofMOAorAOA. TermofOffice:5yrs.Atatime.Hecanbereappointed No.ofM.directorship:oneco.attimeinordinarycourse2.ByapprovalofB.O.D. andmorethantwoco.onapprovalofCentralgovt.morethantwocompanies. No.ofM.D.:AcompanycanhavemorethanoneM.D.inaCo. Qualification:1.Mustbeanindividual2.Mustbeamemberofboarddirector. Disqualification:1.Isundischargedinsolventorhasbeenadjudgeinsolventatany time 2.Hasbeenconvictedbycourtofanoffenceinvolvingmoralturpitudeatanytime. Remuneration:5%ofnetprofitifoneM.D.MorethanoneM.D.than10%ofnet profitoftheco. Appointment,reappointmentandremovalofM.D.requirethepriorapprovalof Centralgovt. Apublicco.mustappointitsfirstM.D.within3monthsofitsincorporation. Powers/Duties/FunctionsofM.D 1. HeperformsManagerialfunctions 2. Attendsboardmeetings. 3. Exercisessubstantialpowersofmanagement. 4. Allocatingresourcesandorganizingactivitiesunderthesupervisionsand controloftheBoard. 5. Providingableanddynamicleadershipandaffixingsignatureonallco. documents,contractsbindingetc. RoleofM.D.: 1. Trusteeshiproleconsideredastrusteeandactsaccordinglyformoneywhich theyreceiveandwhichisunderthere 2. DecisionalRole:M.D.isentrustedwithsubstantialpowersofmanagement whichwouldnototherwisebeexercisablebyhim. 3. LeadershipRole:M.D.isthepolicymemberoftheco.foritsdaytoday activitiesandthushedirectssupervisorsandleaders. 4. CoordinationRole:AsacoordinatorM.D.integratesvariousdivisionsand departmentswhichareunderhissubstantialpowerthemanagingstaffofthe co. 5. AgencyRole:M.D.actsasonagentforaco.tocarryonitsbusinessunder directors,supervisorsandcontrolofB.O.D. BoardMeeting:PeriodicalmeetingofB.O.D.wheredirectorscanexercisetheir powers.Theremustbe4meetinginafinancialyroronemeetingeveryquarterly. QuorumforBoardMeeting:PrivateCo.2DirectorsPublicCo.2Directorsor1/3 oftotalnoofdirectorsinaco.whicheverinhigherfractiontoberoundedofto+1) QuorumforgeneralMeeting:Private:2MembersPublic:5Members RightsofMembers/shareholders:

1. 2. 3. 4. 5. 6.

ToappointDirectors Tovoteingeneralmeetings Toremovedirectors Toreceivedividend ToreceivenoticeforAGM ToparticipateinresolutionspassedinAGM BASIS MANAGINGDIRECTOR Power Substantialpowers Tenure No.ofcos

Appointment existence compensation BASIS appointment

WHOLETIMEDIRECTOR Powerentrustedasper termsofappointment 5yearsatatime Nostatutorylimit 1co.inordinarycourse, Onecompanyatatime 2withboardconsent andmorethan2by approvalofcentralgovt. Byvirtueofagreement, ByB.O.Donapprovalof byresolution,byB.O.D shareholders EitherM.Dormanager WTDandMDorWTD andmanager entitled Nosuchprovision

status powers compensation Noofcompanies

MANAGINGDIRECTOR Underagreementor resolutionsorMOAor AOA Mustbeadirectorfirst Substantialpowersof management Entitledtoreceivefor lossofoffice Canbeof1or2cos simultaneouslyby approvalofboard

MANAGER Undercontractof serviceorotherwise Mayormaynotbea director Wholeorsubstantially thewholeoftheaffairs Nosuchprovision Onecompanyatatime

BASIS Meaning

WHOLETIMEDIRECTOR Whoisinwholetime employment,appointed byB.O.D.onthe approvalby

PARTTIMEDIRECTOR isadirectorwhoisnot anemployeeoftheco. anddoesnotdevote muchtimeforthe

shareholdersinAnnual Generalmeetingby passingspecial resolutions

appointedbyB.O.D.on theapprovalby shareholdersinAnnual Generalmeetingby passingspecial resolutions Power Toactonfulltimebasis Statutorypowerstobe forperforming exercisedatboard administrativeactivities. meeting Remuneration 5%ifone10%ifmore 1%or3%oraspercos thanone articles Termofoffice Nofixedterm,till Retirebyrotation retirement Chiefexecutive:appointedbyboardofdirectorsfortranslatingtheplansand policiesoftheboardintoactions.Heactsasalinkbetweentheboardand shareholders.Hismainfunctionsare 1. translatingtheplansandpoliciesoftheboardintodepartmentalpolicies 2. finalizingbudgetproposalsforsubmissiontotheboard 3. allocatingresourcesandorganizingactivities 4. arrangingselectionanddevelopmentofexecutives 5. providingableanddynamicleadership 6. evaluatingperformanceofdepartments 7. maintainingpublicrelationsandcontactswithgovernmentandother agencies Organsofcompanymanagement: boardofdirectors managingdirector departmentalmanager secretary legaladvisor

Appointment

supervisionofco's affairs.Suchdirectors areinvitedtoboard/ generalmeetingsofthe memberstofacepolicy decisionregarding businessormgtofthe co. Appointedbymembers intheAGM

Compositionofboardofdirectors: relativeproportionbetweenfulltimeexecutivesofthecompanyandpart timedirectors specializeddirectorsaswellasgeneraldirectorsarealsoneeded idealboardshouldconsistsofbothyoungpersonsaswellasmatureand experiencedirectors membersofdirectorsshouldhavematchingoutlookandtemperament theboardmustincludeactiveaswellasnominaldirectors MANAGEMENT

Meaning: It is a distinct process consisting of planning, organizing, commanding, coordinating and controlling, performed to determine and accomplish objectives. It is an art of getting things done through and with people. Concepts: 1. As and activity - Art of getting things done through and with people informally organized groups.

2. As a process: To manage is to forecast and plan, to organize, to command, to coordinate and to control. 3. As a Discipline: Management is a separate branch of knowledge which is studied as a separate field. It includes several courses - such as financial Management, Marketing management, Personnel Management etc. 4. As A group: Management technically indicates all the people who carry out managerial activities. It indicates top management of the organization. Thus B.O.D., C.E.O., Board of Trustees, M.D. etc. constitute management. 5. As Leadership: Management is the art and science of decision making and leadership. It includes guiding, leading, motivation, co-coordinating. 6. As integration concept: to achieve coordination of the human and material resources essential in the effective and efficient attainment of objectives Characteristics / features: [brief explanation] 1. It is goal oriented 2. It is universal 3. It is a group activity 4. It is science as well as an art 5. It is all pervading 6. It is intangible 7. It is a district entity. Nature of Management: [brief explanation] (1) As a science a. Systematic body of knowledge b. Cause and effect c. Universal Validity d. Experiments and universal application (2) As an art a. Practical knowledge b. Creativity c. Personal skill d. Practice and experience (3) As a profession a. Specialized body of knowledge b. Formal education and training c. Professional Association d. Restricted entry e. Code of conduct Note: - Thus the true nature of management is it is a soft science or an inexact science, pure art and an on growing profession.

Objective of MANAGEMENT: [brief explanation] To utilize resources to its optimum To secure growth and prosperity To promote research and development To improve discipline and morale To facilitate correct decision making To minimize uncertainties To ensure quality goods at reasonable price. Reasons for growing imp of Mgt. [brief explanation] o Growing size and complexities of business o Increasing competition in the market

o o o o o o

Growing specialization of work Development of trade unions Use of capital initiative technology In govt. Interference in business Scarcity of resources Social obligation Difference between Administration and Management Administration Determination of objectives and policies

2 3 4 5

Management Creating an internal environment of planning, organizing, directly, staffing and controlling to achieve desired goods. Nature Executive function or doing function Level of Concerned with top middle and authority Lower level Use of term generally in business enterprises Relative importance

Basic Meaning

Decision making function thinking function Concerned with top level.

Usually in govt. officer, Social, cultural, military organization Element of mgt. as one descends Element of administration as one to lower levels of mgt. progress to higher levels of mgt.

Levels of Management : 1) Top level (T.L)- B.O.D, C.E.O., M.D. To established overall long term goals - To lay down overall policies 2) Middle level (M.L) Departmental Managers, - To transmit order, suggestions, policies etc - To inspire operation managers towards better performance. 3) Lower level (L.L)- Supervisors, section officers superintendents etc - To assign jobs to subordinated - To assist and advise subordinate - To arrange resources Importance of Management [brief explanation] 1. Accomplishment of objectives and group goals Max. production at min. cost 2. Optimum utilization of resources 3. Cost Reduction 4. Co-ordinate human efforts 5. National development- Beneficial to business and society 6. Higher standard of living 7. Maintain dynamic equilibrium Scope of Management: It has very wide scope as comprise various functional areas like production Management, Marketing Mgt, financial Mgt, Personnel Mgt. Purchasing Mgt, office Mgt. etc. Functions of Management: 1. Management in preparation It refers to all those functions of mgt. which involves preparation for actual work. It includes- Planning and organizing. 2. Management in Action: - It refers to functions of mgt. involving getting the actual work done. It includes direction, staffing, co-coordinating, controlling. PODSCORB- P-Planning, O-Organizing, D-Directing, S-Staffing, Co-Co-coordinating, RReporting, B-Budgeting. 1- Functions of Management:

Planning To assess the future and make provisions for it. Basic function of mgt. which involves thinking or looking ahead. It includes- what is to be done, how it is to be done, when it is to be done, where it is to be done and by whom it is to be done. Steps- Collecting informations- Defining objectives- Discovering alternative course of action- evaluating alternatives- choosing best alternative-periodic review Advantages- Focuses attention on mgt. objectives minimizes uncertainties. Avoids wastage and saves time. Promotes co-ordination and effective control. Limitations- Internal- non- availability of information, uneconomical, time consuming, External- Govt. policies, natural calamities, technological changes, competitor actions. 2- ORGANISING: Meaning: The process of developing or creating harmonious structure of authority responsibility relationships for achievement of organization goals. Steps- Identification of activities- Grouping of activities- Assigning of activitiesdelegating of authority-co-ordination. Advantages- Facilitates growth, permits optimum use of human resources, encourages team work, initiative and creating thinking. 3- Staffing- It is also known as manning or personnel mgt. It is a process of matching jobs with individual to ensure right man for right job at al levels in the enterprises to achieve organizational goals. Steps:- Manpower planning- Recruitment and selection- Training and development Placement and orientation- appraisal, promotion and transfer-Remuneration. Advantages: Improves quality and quantity of output. Improves job satisfaction, Manpower planning and depth helps in finding and employing suitable persons for various positions. Optimum utilization of human resources. 4- Directing- It is also known as commanding or actuating. It is the process of guiding, supervising, motivating and leading the subordinates to contribute for the achievement of organizational goal. Steps- Supervision-Communication leadership- Motivation. Supervision: overseeing subordinate at work by superiors. Steps- Scheduling of work- instructing and guiding the workers- providing necessary technical guidance to workers- maintaining discipline. Advantage: Secures better work. Co-operation and goodwill of the sub-ordinates. ensures effective delegation of authority. Communication: Process of passing information between two or more persons to achieve desired organization goals. Advantage: Life blood of modern business. Promotes managerial efficiency. Develops spirit of co-operation. Motivation: Act of stimulating someone or oneself to get desired course of action. It involves providing effective leadership- inspiring people to co-operate- effective communication and providing climate for sub-ordinates development. It can be in form of monetary or non-monetary incentives, bonus promotions etc. Advantage: Core of mgt, increase in efficiency and productivity. Faster team spirit. job satisfaction to sub ordinates to make the best utilization of then talent and other resources. Leadership: Process of influencing the behaviors of the people in one's own way. It is basically a process of motivation.

Steps: Interprets objectives - suggests right course of action - stimulating and guiding. Significance: assists in achievement of organizational goals, base for motivation, actuates sub-ordinates to work with zeal and enthusiasm. 5 CONTROLLING: It is the process of measuring performance, comparing it with standards and taking corrective actions wherever necessary. Steps: Setting standards - measuring performance- finding cause of division - taking corrective actions. Advantages: Ensures satisfactory performance- ensures proper Implementation of plans. facilitates delegation of authority and co-ordination. 6 CO-0RDINATION : Process of harmonizing, synchronizing and unifying individual efforts towards common objectives. Elements / Characteristics 1. It is orderly arrangement of group effort 2. It is continuous and dynamic process 3. it secures unity of action 4. It is created through deliberate efforts 5. it is a managerial responsibility Importance: 1. Eliminates conflicts between different groups and departments Provides balance between persons having different abilities and interests Combines different resources to secure better results, Integrates needs & interests of government, customer and employees NOTE: 1. Co-ordination is an essence of management 2. Planning is looking ahead and controlling is looking backward 3. Management as an activity 4. management as process All the above discuss statements must be prepared from notes already given.

PRINCIPLES OF MANAGEMENT A fundamental statement of basis truth that provides a guide to thought and action which establishes cause and effect relationships originated as a result of past experience and accomplishments. Features: BRIEF EXPLANATION 1. Universal 2. It is Dynamic 3. It deals with human limitations 4. It is Relative not absolute 5. It has cause and effect relationships 6. All principles are of equal importance Need: BRIEF EXPLANATION 1. To increase efficiency 2. To crystallize the true nature of management 3. To improve research

4. To attain social goals 5. To Train Managers Significance: BRIEF EXPLANATION 1. Increases efficiency 2. Crystallizes true nature of management 3. Improves research 4. Attains social goals 5. Trains Managers 6. Evaluates managerial behaviors F.W. TAYLORS SCIENTIFIC MANAGEMENT PRINCIPLES Father Scientific mgt. is the art of knowing exactly what you want your men to do and then seeing that they do it in the best and cheapest way. 1. Science not Rule of thumb 2. Harmony not Discord 3. Minimum not Restricted Output 4. Division of work and responsibility 5. Scientific Selection, Training and Development of workers. Statement and cause and effects from notes Fayol's MODERN Principles Of Mgt- Henry Fayol Classification of Business activities-Technical, Commercial, Financial, Security, Accounting, Managerial. Elements of Mgt function- Planning, Organizing, Commanding, Co-coordinating, controlling Managerial Qualities and Training- Physical, Mental, Moral, Educational, Technical, Experience. Principles: - (14) Statement and cause and effects from notes Division of work Authority and responsibility Discipline Unity of Command Unity of direction Remuneration Centralizations Sub-ordination of individual interest to general interest Scalar Chain gang plank Order Equity Stability of tenure Initiative Esprit de corps Comparative study between Taylor and Fayol concepts Basics Taylor Fayol 1 Personality Scientist Practitioner 2 Techniques Scientific observations General principles of mgt.

3 4

Perspective Focus

and measurement Operative levels Productivity

Top level of mgt. Improving overall

Note: Explanation of principles of mgt. as statement and cause and effect to be prepared from notes.

Universalityofmanagementprinciples HenriFayolrevealsthatformaltraininginmanagementandcooperationbetween employersandemployeeshasbeenhelpfulindevelopingprofessionalmanagement. ItissaidthatHenryFayolstheoryistooformaltakestoobroadaviewof managementprocessButhisprincipleshavestoodthetestoffiveandarestill acceptedashecareofmanagementtheory. Universalityofmanagementprinciplesmeansofprinciplesofmanagementare applicableinalltypesoforganizations 1. Managerialknowledgeandskillscanbetransferredfromoneorganisationor countrytoanother. 2. Theremustbesomegeneralprinciplesobservedcommonforallorganizations whichrequirecoordinationofhumanandphysicalresources. 3. Fundamentalmanagementprinciplesareapplicableinallkindsofhuman activitiesfromsimplestworktogreatcorporationinvolvinggroup. 4. Applicationofmanagementprincipleshoweverdifferfromoneorganisationto anotherdependinguponthecultureandneededofparticularorganisation. 5. Theconceptofuniversalityhasbeensupportedbymanymanagerialexperts likefulltaylor,knoontzandDennelletc. 6. AccordingtoTaylor,fundamentalmanagementprinciplesareapplicable everywhere. 7. Managementisviewedbroadlyashumanactivityisuniversal,management principlesarenecessarytoobtainandtoprepareresources,theresources neededforhumansurvival. 8. Allundertakingsrequireplanningorganizingcommending,controllingand coordinatingandtofunctionproperlyallmustobserve.Thesamegeneral principles. 9. Asamanagereachmustatonetimeoranothercarryoutalltheduties characterizedofmanagers.Thisistheprincipleofuniversalityofmanagerial functions.

10.Aspecifictechniqueorapproachofmanagementmaydifferfromcultureto cultureorformcountrytocountrybutmanagementfundamentalsare universallyapplicable. While practices and applications will vary widely from one situation to another, fundamentalconceptsandprinciplesofmanagementandofhumanrelationswill remainmuchthesomeevenwhentheytakeeffectindifferentcombinations.For e.g.: An experienced military officer move to a senior position in business indicatesthatherearegeneralskillandprinciplesofmanagementofwork. FINANCING Capitalization:Itcomprisesownershipcapitalandborrowedcapitalofacompany foritslongtermindebtedness.Theprocessofdeterminingthecapitalstructureofa businessincludesdeterminationoftotalcapitalrequirementandselectionof methodsofraisingit. NeedforCapital: 1. Topromoteandoperatetheenterpriseeconomically 2. Tooperateefficiently 3. Toacquirefixedassetsandpurchaserawmaterial 4. Toadoptmoderntechnologyandmeetcontingencies. 5. Toexpandexistingoperationsandavailbusinessopportunities. TypesofCapital: 1. LongtermCapital:fundsrequiredforlongperiodoftimeformorethan5yrs. Objectives:1.Toacquirefixedassetslikeland,buildingetc. 2.Tofinancepermanentworkingcapital Sources:ownershipcapitalshares,Retainedearnings,preferencesharecapital BorrowedCapitalDebentures,Loans,fromfinancialInstitutions 2)MediumTermCapital:fundsrequiredtobeinvestedinthebusinessfora mediumperiod(exceeding1yrsbutnotexceeding5yrs.) Objectivesorpurpose:1)Tomeetexpensesonmodernizationofplantand machineryandadoptionofnewmethodsetc. 2.Tomeetexpensesforchangeintechnologyorincreasingcompetition Sources:LoansfromcommercialBanks,Publicdeposits,Retainedearnings, Redeemabledebentures,Loansfromfinancialinstitutions. 3) Shorttermcapital:fundsrequiredtobeinvestedinthebusinessforashort periodusuallyforoneyear. Purpose:Tomeetdaytodayoperatingexpenses 1. Forholdingstocksofrawmaterials,spareparts,workinprogressetc. 2. Toconvertcashintoinventoryoffinishedgoods,receivablesintocash. Sources:Cashcreditinstallmentcredit,factoring,Loansfromcommercialbank,Bank overdraft,discountingbillsofexchangetradecredit.

4) FixedCapital:fundsrequiredforacquisitionoffixedassetsLandand Buildings.Plantandmachinery,furnitureandfixtureetc.Itisraisedthrough Longtermsourcesoffinancesuchasshares,debenturesetc. Factorsaffectingfixedcapital:briefexplanation 1. NatureofBusiness 2. SizeofBusiness 3. NatureofProducts 4. DiversityofProductslines 5. Modeofacquiringfixesassets 6. MethodofProduction 7. Intangibleassets(investmentinacquiringgoodwilletc) WorkingCapital:Liquidfundsrequiredforthedaytodayoperationsofan enterprises.Itistheexcessofcurrentassetsovercurrentliabilitiesalsoknownas circulatingcapitalorrevolvingcapital. Types:(1)PermanentWorkingCapital:a/mofworkingcapitalrequired permanentlytooperatetheminimumlevelofbusinessactivity.Itislockedup permanentlyincurrentassets. a) Initialworkingcapital:partofpermanentworkingcapitalrequiredatthe timeofcommencementofbusiness. b) Regularworkingcapital:partofpermanentworkingcapitalrequiredfor continuousbusinessoperations (2)VariableWorkingCapital(VWC):Workingcapitalrequiredmeetingseasonalor specialneedsofbusinessorinadditiontopermanentworkingcapital. a)Seasonalworkingcapital:VWCrequiredduringparticularseasonto buybulkrawmaterialorpayextralabours. b)Specialworkingcapital:VWCrequiredmeetingcontingenciesor emergencieslikestrikes,changeindemandorfashionetc. Importance: 1. HighCreditworthiness 2. Smoothworkingofenterprises 3. Goodsrelationswithemployees 4. Timelypaymentofduesanddividends 5. Obtainingcashandtradediscounts Factorsaffectingworkingcapital:briefexplanation 1. Natureofbusiness 2. SizeofBusiness 3. RapidityofTurnover 4. TermsofPurchaseandsale 5. Cyclicalfluctuations 6. Businesscycleormanufacturingcycle/gestationperiod 7. Seasonalvariationandregularincome

FactorsaffectingCapitalRequirement(capitalplan):briefexplanation 1. SizeofBusiness 2. NatureofBusiness 3. Basiccapitalneedsofbusiness 4. Capitalgearing 5. Tradingonequity 6. Controlofenterprise 7. Costoffinancing Ownershipcapitalorownedcapital:Fundscontributedbytheownerwhichis generallylimitedandcannotberaisedbeyondcertainlimit,Itincludessharecapital, Retainedearningsetcforcompany. OwedCapitalorBorrowedCapital:Fundsobtainedinabusinessconcernfrom externalsourceswhichinvolvesperiodicalpaymentsofinterestofspecificrateand paymentofa/m(principalsum)aswell.Itincludesdebentures,publicdeposits, discountingbillsofexchangeetc Sourceoffinance Forsoleproprietorshipbusiness Ownershipcapital Friendsandrelatives Commercialbanks Financialinstitution Forpartnershipfirm Contributionofpartners Loansfrompartners Friendsandrelatives Commercialbank Financialinstitutions Forjointstockcompany Shares,debentures,commercialbanks,financialinstitutions,tradecredit,cash credit,bankoverdraft,discountingbills,factoring,installmentcredit,customer advances,publicdeposits,retainedearnings,bankloans. SHARES:itisoneoftheunitsintowhichthesharecapitalofaco.canbedivided.it isashareinthesharecapitalofco. Types: 1. Preferenceshares2.Equityshares3.Deferredshares Equityshares:Shareswhichcarrynopreferenceright,andisrepaidatlast.they bearmaximumriskandenjoysvotingrightandcontroloverthemgtoftheco.

Meritsfromthepointofview Brief Demeritsfromco'spointofview ofco. explanation

1 Sourceofpermanentcapital

Riskoflossofcontrol/ manipulationofcontrolby powerfulgroup Notradingonequity Dangerofovercapitalization Costly

2 Nochargeonassets 3 Nofixedobligation 4 massappeal 5 Noburdenonearnings 6 Sourceofstrength

2 3 4

Meritsfrominvestorspointof Brief Demeritsfrominvestorspointof view: explanation view 1 2 3 4 Uncertaintyofearnings HighRisks Unhealthyspeculation Nosecurity

1 Votingrights 2 HighDividends 3 HighLiquidity 4 LimitedLiability 5 Rightissueofshares

Preferenceshares:sharewhichcarrycertainprivilegesorpreferentialrights 1. Right to receive dividend at stipulated rate before any dividend is paid to equityshares 2. Righttoreceivepaymentofcapitalonwindingupofthecompanybeforethe capitalofequityshareholdersisreturned Types: 1. CumulativePreferenceshares:arrearsofdividendaccumulate. 2. NonCumulativePreferenceshares:noaccumulationofdividend 3. Participating Preference shares: in addition to preferential rights right to participateinsurplusprofitsandsurplusassets 4. Nonparticipating Preference shares: no participation on surplus profits or assets

5. RedeemablePreferenceshares:whichcanberepaidafterstipulatedperiod 6. IrredeemablePreferenceshares:whichcannotberedeemedorrepaidbefore windingup 7. ConvertiblePreferenceshares:canbeconvertedintoequityshares 8. NonconvertiblePreferenceshares:cannotbeconvertedintoequityshares Merits of preference share to Demerits of preference shares to company company Appealtocautiousinvestors burden Nointerferenceinmanagement Notapermanentsource Nochargeonassets Lowappeal Tradingonequitypossible Costlysource Noburden Merits of preference share to Demerits of preference shares to investors investors Stableandregulardividend Lackofvotingrights Lessrisk Nocapitalappreciation Preferentialrights Noincreaseofdividend Goodforcautiousinvestors Accumulationofdividend briefexplanationforeach basis Preferenceshares Equityshares Degreeandrateofrisk Lowandfixed Highandfluctuating rights Limitedvotingrights Fullvotingrights Nominalvalue high Low dividend Prior to equity Afterpreferenceshares shareholders Appealtoinvestors Cautious and Boldandadventurous conservative Marketvalue Doesnotfluctuates Fluctuates refundofcapital Prior to equity capital at Refund after every windingup obligations DeferredShares:sharescarryingdisproportionatevotingrights.Thistypeofshares can not be issued by public company. Dividend and return of capital is after all classesofsharesarepaid. Debentures: it is an acknowledgement of debts. A written instrument as an undertaking to repay the specified sum with interest on or before the prescribed date.Itisissuedundercommonseal. Types: 1. Secureddebentures:nosecurityonanyasset 2. UnsecuredDebentures:assetsmortgagedonitsissuefixedorfloating

3. RedeemableDebentures:repayableonapredetermineddate 4. Irredeemable Debentures: repayable only at the time of winding up of the company 5. Registered Debentures: recorded in the register .can only be transferred by transferdeed 6. Bearer Debentures: no records in the register, can be transferred by mere delivery 7. ConvertibleDebentures:canbeconvertedintoequityshares 8. Nonconvertibledebentures:cannotbeconvertedintoequities Meritsofdebenturestocompany Demeritsofdebenturestocompany Tradingonequitypossible Permanentburdenofinterest Freedomofmanagement Reduction on credit understanding Economical Chargeonassets Taxbenefit Limitedresource flexibility Meritsofdebenturestoinvestors Demeritsofdebenturestoinvestors bettersecurity novotingright Regularfixedreturn Highprice Appealtocautiousinvestors unattractive briefexplanationforeach basis shares Debentures meaning Thatisashareintheshare it is an acknowledgement capitalofco. ofdebts Status Ownersandownedcapital Creditors and borrowed capital Yield Fluctuatingdividend Fixed interest irrespective ofprofit Votingrights Enjoyvotingright Novotingrights Orderofrepayment Unsecured Usuallysecured Termsofrepayment Usuallyirredeemable Redeemable Risk Highrisk,nosecurity Lowrisk Termsofissue Subjecttolegalrestriction Nolegalrestrictions Public deposits: ( fair weather friend)when general public was invited by the company to deposit their savings for a period of not less than six months and not exceeding3yearsatatime.PermissionfromR.B.Iisnecessarywheretotaldeposits shouldnotexceedspaidupcapital Meritstocompany Demeritstocompany nosecurityneeded fixedobligation Tradingonequitypossible Uncertain(fairweatherfriend) Nointerferenceinmanagement uneconomical

Availability of public money for industrialgrowth Elasticityincapitalstructure briefexplanation Meritstoinvestors Demeritstoinvestors Easyinvitation Highrisk Relativelyhigherreturn Novotingright briefexplanation LoansfromSpecializedinstitution Advantages disadvantages Lowcost/economical Chargeonassets Advantageoftradingonequity Lengthyprocedure Largerfunds Sharinginmanagement Longterm Convertibility Managerialassistance Nepotismandfavoritismtobig industrialconcerns Developmentalassistance Easyrepayment Underwritingfacility Retainedearnings:ploughingbackofprofit:processofretainingapartofprofityear afteryearandreinvestingthesameinbusiness.Itisasourceofselffinancing. advantages Disadvantages Nointerferenceinmanagement Unreliable Noobligation/nolegalformalities Unfairtoshareholders Taxbenefits Illbalancedindustrialgrowth Increasescreditworthiness Economical Independenceofmarket briefexplanation Bankloans:sourceofmediumandshorttermfinance. advantages Disadvantages Flexibility Chargeonassets Widechoice Uncertain Easyrepayment Toomanylegalformalities Nointerferenceinmanagement costly briefexplanation Shorttermsources: 1. Cashcredit:agreementunderwhichaborrowerisallowedtoborrowuptoa certainlimit,whereborrowerhastopayinterestonlyona/mactually withdrawnorutilized.Sourceofcapitalbycommercialbank

2. Bankoverdraft:Sourceofshorttermfinancebycommercialbank.Customer havingcurrenta/cisallowedtooverdrawhisaccountuptoaspecifieda/m. interestischargedona/mactuallyoverdrawn. 3. Bankloans:lumpsuma/mcreditedinthenameofcustomer(borrower)tobe repaidinnumberofinstallmentswhereinterestischargedonthewholea/m fromthedateofsanction.Itisalsotermedasoutrightloanandisasourceof mediumtermloan 4. Discountingbillsofexchange:Sourceofshorttermfinancebycommercial bank.Wherebankchargessomecommissionforthisserviceandpaylessthan thefacevalueofcreditinstrument(billofexchange).Incaseofbaddebts sellerremainsliable. 5. Factoring:sourceofshorttermcapitalandisalsoknownasaccounts receivablefinancing.Raisingcapitalthroughthesaleormortgageofbook debts.Thebankorfinancialinstitutionsmakeadvanceupto60%ofaccounts receivable.Baddebtlosses,ifanyarebornebythecompanyitself. 6. Installmentcredit:sourceofshorttermfinancewherethebusinessconcern hastopayapartofpriceofgoodsorassetspurchasedatthetimeofdelivery andthebalanceistobepaidinnumberofinstallments.Theinterestischarged onthebalancedueandisincludedininstallment. 7. Tradecredit/mercantilecredit:creditextendedbysupplierstothebuyersat alllevelsofproductionanddistributionprocessforperiodrangingfrom15 daystothreemonthswherebuyer/companyreceivessupplieswithoutpaying immediately.Simple,convenientmethodwithnoformalitiestoreputedfirms. flexibleandeconomical Termsrelatedtofinancing: 1. Capitalgearing:determinationofsomeproperratiobetweentwoormore methodsofraisingcapital.Itmaybehighorlowgearedaccordingtothe smallorhighproportionofequitycapitalovertotalcapitalresp. 2. Tradingonequity:itistheadditionalprofitearnedbytheequity shareholdersoverothersourcesofraisingfunds.Priorityshouldbegivento debtsoverequitiestokeepthechannelofissuingfurthersharesalways openincaseofgrowthofthecompany. 3. Underwritingofshares:anagreementbetweenthecompanyand underwriterlikefinancialagencyunderwhichunderwriteragreestobuy thatpartoftheissuewhichisnotsubscribedtobythepublicin considerationofaspecifiedcommission. 4. Bonusshares:sharesissuedbycompanydirectorsatthetimeofpayment ofdividend.Whencompanydeclaresdividendbutnotpaysincash,rather informofequivalentsharesareissued. 5. Rightshares:sharesissuedbypubliclimitedcompaniesatthetimeof furtherissueofshares,suchnewsharesaretobeofferedtotheexisting equityshareholdersonproratabasis.

6. Stock:fullypaidshareareconvertedintostocks 7. Capitalmarket:concernedwithlongtermfinance,mobilizingindividual andcorporatesavingsforindustries,tradeandgovernment. 8. Moneymarket:itdealswithsupplyofshorttermfinancialrequirementsof tradeandindustrycomprisingcommercialbanks,cooperativebanksand exchangebanks 9. Hybridsecurity:itmeansanysecuritywhichhasacharacterofmorethan onetypeofsecurities.E.g.preferencesharesastheycarryfeaturesof equitiesaswellasdebentures 10.Transferandtransmissionofshares:buyingandsellingofsharesin secondarymarketamongstshareholdersistransferwhereasautomatic transferofsharestolegalrepresentativesofexistingshareholdersinthe eventofdeath,insolvencyorlunacyistransmission 11.Forfeitureofshares:extinctionofmembershipasasortofpenaltyforthe nonpaymentofcallsonfixeddatescanbeforfeitedbydirectors,if authorizedbyarticles. 12.Sharecapitalthemax.Amountofownershipcapitalwhichthecompanyis authorizedtoraisebywayofpublicsubscription. 13.Issuedcapitaltheamountofcapitalwhichisactuallyissuedtothepublic forthesubscriptionintheformofshares 14.Subscribedcapitalthatpartofissuedcapitalforwhichapplicationsare receivedfromthepublic 15.Calledupcapitaltheamountontheshareswhichisactuallydemandedby thecompanytobepaidbythesubscription 16.Reservecapitalthatpartofuncalledcapitalwhichisnotcallablebythe company,exceptintheeventofwindingupofthecompany 17.Paidupcapitalthatpartofcalledupcapitalwhichisactuallypaidbythe members 18.Callsinarrearsthatpartofcalledupcapitalwhichrepresentsthetotal paymentyettobepaidbythemembersoncalls 19.Methodsofdeterminationofcapitalrequirement 1.Estimationmethodassessmentoftotalcapitalrequirementofabusiness bydetailedinvestigation.thisisdoneonthebasisofreportsofspecialistsand experts 2.Comparisonmethodcalculationofcapitalrequirementonthebasisof analysisandresultsbasedonstatisticsofothersimilarnaturebusiness concern. Costtheory Earningtheory 20.Publicdebtinstruments:instrumentissuedbygovernmenttoitsshort termandmediumtermfinancialrequirements.Theyaretheborrowingsof governmentandtheinstrumentissuedforprocuringfundsaremonitoredby RBIorotheragenciesofgovernmentlikefinancialinstitutions,postofficesetc.

incomeearnedonsuchinstrumentsbyinvestorsisexemptedfromincometax andwealthtaxetc.uptocertainlimit.E.g.nationaldefencegoldbonds, nationalplancertificates,postofficecashcertificate,reliefbonds,capital investmentbonds,treasurysavingsdepositcertificatesetc Specializedfinancialinstitutionsfromnotes Mutualfund Associationortrustwhichcollectssavingsfrominvestorsinformofunitsfor commonfinancialgoals,toinvestindiversifiedcorporatesecuritiesportfolio. Organizationstructure[briefexplanationofeach] Sponsor Mutualfundtrust AssetManagementCompany Types OpenendunitsaresoldandpurchasedperpetuallyonthebasisofNAV Closedendschemeshavingstipulatedmaturityperiod Balancedfundinvestsinbothbonds,debenturesandequitiestoprovidegrowth andincome Equityfundmutualfundschemeinvestinginequitysharesofvariouscompanies Giltfundinvestsingovernmentsecurities Debtfundinvestmentinbondsanddebentures Growthfundschemedealingincapitalappreciationsecurities Incomefundschemesdealinginsecuritieswhichyieldregularincometoinvestors Domesticfundschemeswhichmobilizefundswithinnation Offshorefundschemeswhichmobilizefundsfromforeigninvestors advantages Disadvantages Reducedrisk Highcost Highliquidity Suppressinginformation Highreturn Restrictsinvestmentopportunities Taxrelief Restrictedliquidity Transparency Professionalmanagement Briefexplanationforeach COMMERCIALBANK Functionsofcommercialbanks AcceptingDeposits:(fundbasedactivity) CurrentMoneycanbedepositedorwithdrawnatanytime,overdraftfacility, nointerestpaid,forcurrentaccountholders. Recurringamountpaideverymonthinregularinstallments&specifiedtime period.Withdrawlonlyaftermaturityincludinginterests.Interestrateis higherthansavingbutlessthanfixedde

Savinginterestpaidonminimummonthlybalance.Withchequefacility. Moneycanbedepositedanyno.oftimebutwithdrawnrestricted.Lowrateof interest. Fixedlumpsumisdepositedforspecifiedtime.Withdrawalonlyafter maturity.Highestinterestprovided Grantingloansandadvances(fundbasedactivity) Outrightloans/bankloans Discountingbillsofexchange Overdraft Cashcredit Agencyfunction(feebasedactivity) Collectionofcheque,billsetc Realizingdividendinteresthouserentetc Paymentofinsurancepremium,taxes,telephonebillsetc Buyingandsellingofsecurities,bondsetc Remittancefacilitieslikebankdraft Servesasguarantor Generalutilityfunction(feebasedactivity): Issuingcircularnotes,draft,travelerscheque Receivingvaluablesforsafecustody Underwritingsecurities Adviceonfinancialmatters Issuingletterofcredit Providingcreditinformation Dealinginforeignexchange Bankersliabilityrelationshipbetweenbanker&itsconsumeristhatofa debtor&creditor&thusbanksareexpectedtoactingoodfaith,without negligence.Ifbankwrongfullyrefusestohonourchequethanthebankeris liableforlosstotheconsumer. Cheque:Anordergivenbytheconsumertomakepaymentofcertainamount ofmoneytospecifiedperson.Itisanunconditionalorder&negotiable instrument. Types:opencheque:Itisalsoknownasbearercheque&canbepresentedfor paymentbyanyholderatbankcounter.Itcanbetransferredbymeredelivery. Ordercheque:payableonlytothepersonwhosenameismentioned.Itcanbe transferredbyendorsement. Crossedcheque:payableonlythroughcollectingbankwithtwotransversal parallellinesdrawnacrossitsfacewithwithorwithoutanyword.Payment onlytotheaccountofthepersonnamedtherein Generalcrossing:drawingtwoparalleltransversallineswithorwithoutwords onthefaceofthecheque Specialcrossing:whenthenameofbankerismentionedwithinthetwo parallellineswithorwithoutanyotherword.

Significance/advantageofcrossing: Preventspaymenttoawrongperson. Facilitatestracingoftherecipientofthemoney. Assuressafetyincirculation. SignificanceofwordNotnegotiable Itdoesnotrestrictsthetransferabilitybutthetransfereeofthechequewillnotget thebettertitlethanthatofatransferor Dishonoringofcheque 1. Whenbalanceisinsufficientincustomerscheque 2. Whenthechequeisstale 3. Whenmoneydepositedcannotbewithdrawnondemand.Eg.Incaseoffixed deposit 4. Whenaccountisinjointnameandchequeisnotsignedbyall 5. Whencustomerhascountermandedpaymentofthecheque 6. Whenthebankerhasreceivedprohibitoryorderfromcourt 7. Whenthechequeispostdated 8. Whencustomerhasinformedaboutthelossofchequetothebank 9. Whennoticeofcustomersdeath,insolvencyhasbeenreceived 10.Whencustomerclosesaccountbeforethechequeispresented Openingofbankaccount Formtobefilled Specimensignatureandphotographincaseofco.signaturesof authorizedpersons,incaseofpartnershipsignaturesofpartners References Initialdeposit Issueofpassbook Enclosureofdocumentsaddresssproof,Ageproof Incaseofcompanycopyofmemorandum,AOA,balancesheet,auditors report, Incaseofpartnershippartnershipdeed Typesofbanks Centralbank Commercialbank Exchangebank Industrialbank Agriculturalbank Cooperativebank

COMMUNICATION Meaning: Process of transmitting or exchanging of information message, ideas opinion or emotions between two or more persons to obtain elicit action and feedback. Characteristics:briefexplanationforeach 1. Twoormorepersons. 2. Continuousprocess 3. Pervasivefunction 4. Flowsinalldirection 5. Itinvolvesseveralmedia 6. Itisatwowayprocess 7. Itincludesfeedback 8. Itestablishesinthepersonalrelationship Elements:Sender,Receiver,Message,encoding,decoding,channel,feedback Objectives:briefexplanationforeach 1. Toexchangeinformation 2. Tomotivateemployees 3. Toeducatepeople 4. Tochangepeoplesattitude,behaviorsandaction 5. Tofillupgapsbetweenlevelsofdecisionsandlevelsofimplementation 6. Toobtainfeedback 7. Topromoteefficiency Importance:briefexplanationforeach 1. ActsasBasisofdecisionmakingandplanning 2. Efficientandsmoothrunningofanenterprise 3. FacilitatesCoordination 4. Motivationandmoralebuilding 5. Createsmutualtrust,harmony,peaceandconfidence 6. DemocraticManagement/EffectiveLeadership. 7. BindsPeopletogether/Publicrelations Principles:

1. Principle of Clarity: a great deal of clarity is needed about objectives of

communicationandmessagetobecommunicated.Itmustcontainclarityof expressionandclarityofthought. 2. PrincipleofCompleteness:Inbusinesscommunication,completenessoffacts is absolutely necessary.Checking ofwho, what, when, where, why and how helpstomakemessagecomplete 3. Principle of Conciseness: message should be as brief as possible without affectingtheappropriateness,clarity,correctness,completenessorcourtesy 4. PrincipleofCorrectness:businesscommunication shouldgivecorrect factsin correctlanguageatcorrecttimeandincorrectstyle. 5. Principle of Courtesy: message must show friendly behavior towards others. This can be done by prompt answers, apologize sincerely for an omission, thankgenerouslyforafavourandavoidirritatingexpressions 6. Principle of Consideration: sender must show consideration for the receiver. Thiscanbedonebyemphasizingonthepositiveandpleasantfacts,imparting integritytomessages. 7. Principle of correct channel: communicator must know which medium will provetobethemostsuitableforthispurpose. Need:briefexplanationforeach 1. HugeBusinessOrganizations 2. GlobalizationsandMNCsestablishments 3. Publicrelations 4. Govt.formalities&contactswithotherstakeholders 5. Coordination 6. Jobprospect TYPES/Channels 1. FORMALCOMMUNICATION:Flowofinformation which follows officially established chain of command. It can be upward or downward or horizontal anddiognal. Advantages: 1. Orderlyandsystematic 2. Possibletofixresponsibility 3. Facilitatesfunctions 4. NodistortionofMessage 5. Facilitatescoordination Disadvantages/Limitations: 1. Timeconsuming 2. Lackofpersonalinvolvement 3. Rigidity

2. INFORMAL COMMUNICATION: Grapevine / bush telegraph: Flow of Communicationthroughsocialinteractionsorinterpersonalrelationswithout followingchainofcommand. Advantages: 1. Servessocialneeds 2. Fasterorlesstimetaking 3. Providesemotionalrelief 4. ProvidesPsychologicalandmoralsupport 5. Helpstoknowemployeesattitudesandreactions. Disadvantages: 1. Greatchanceofdistortion 2. Leadstorumors 3. Erraticandunsystematic 4. Difficulttracingthesource 5. Chancesofleakage Sl. Basis Formal Informal No. 1 Meaning Following chain of Independent off the official command lineofcommand 2 Speed Slow Fast 3 Nature Well planned, systematic Unplanned, erratic, andauthorized unauthorized 4 Flexibility Rigid Flexible 5 Content Workrelatedmatters Work related or social matters 6 Accuracy Accurate Oftendistorted 7 Method Usuallywritten Usuallyverbal 3. VERTICAL COMMUNICATION : Communication which takes place between persons occupying superior and subordinate positions in organization hierarchy.ItmaybeupwardorDownward. (a.) Downward Communication: Which takes placer from higher level to lowerlevel M.D.ManagerDepartmentalheademployees. Thisistocommunicateplans,policies,rules,procedures,orders,instructions. Advantages: 1. Basisofsupervisionofcommunication 2. Helpsinexplainingplans&policies 3. Disadvantages: 1. Loosestheveryobjectiveofcommunication 2. Maybedistorted (b.) Upward Communication : Flow of information from lower levels (subordinates)tohigherlevel

(Superiors).ThisistocommunicateReports,suggestions,appealetc. WorkersSupervisor Factory Manager Departmental head G.M.M.D. Advantages: 1. Providesfeedback 2. Createsconfidenceandtrustinsuperiors 3. Revealswhatemployeesthinkoforg.andmgt. Disadvantages: 1. Pronetodistortion 2. Itiscausedbystatusdifferences 4. HORIZONTAL COMMUNICATION: flow of information between two or more personsholdingequalranksinthesameordifferentdepartments.This is done to coordinate the activities of different departments. This is donetoCoordinateactivitiesofdifferentdepartmentsandtoresolve interrelatedproblemofdifferentdepartments. PurchaseManagerSalesManager Merits: 1. Facilitatescooperationandcoordination 2. Resolvesproblemofwastageoftime,money,labourandmaterials. Demerits: 1. Differencesinopinion,approachandvision 2. Intergrouprivalrybecomespotentialconflicts DIAGONAL COMMUNICATION: Transmission of information between persons holdingdifferentranksindifferentdepartments. Cost Accountant Sales Representative Merits: 1. Speeduptheflow 2. Mustattimes(inseparable) Demerits: 1. Createsconfusionandconflict 2. Contradictsunityofcommand METHODSOFCOMMUNICATION:(Media) Written Communication: Flow of communication in black and white i.e. in written form.Itincludesletters,notices,reports,manualsetc. Advantages: 1. FacilitatesVerification

2. EnsuresUniformity 3. PermanentRecord 4. Economicalforlengthymessages 5. Messagecanbetransmittedtolargeno.ofpeopleatsametime. Disadvantages: 1. Timeconsuming 2. Lackspersonaltouch 3. Secrecydifficult 4. Immediatefeedbacknotpossible Suitability: 1. Whenmessageislengthy 2. Whenreliablerecordforfuturereferenceistobemaintained 3. Wheninformationistobesenttolargeno.ofpeopleatsametime 4. When specific instructions are to be given and it is necessary to fix responsibility 5. Wheninformationistoberetainedforrepeateduseinfuture Verbal Communication / Oral: Transmission of message is verbally or spoken words.Itincludesdirectpersonaltalk,directcollectivetalks,AndTelephonicetc. Advantages: 1. Permitsclarificationsanddoubts 2. Fasterandsavestime 3. Secrecymaintained 4. Givespersonaltouch 5. Permitsimmediatefeedback Disadvantages: 1. Lessreliable 2. Noverification 3. Norecordforfuture 4. Greaterchanceofdistraction 5. Notforlengthmessages Suitability: 1. Whentimeavailableisless 2. Whenpromptandquickreactionisrequired 3. Toinstructorcounselingofsubordinatesisrequired 4. Whenproblemsaretobediscussedingroups 5. Whendealingwithtradeunions Sl. Basis Written Verbal No. 1 Forms Letters,noticesetc. Meetings,interviewetc. 2 Meaning Flowofmessageinblack Flow of message in spoken andwhite words

3 4 5 6 7 8

Effectiveness Less as lacks personal touch Time Moreandexpensive Secrecy Lack Record Provides Flexible Less,Rigid Feedback Spotnotpossible

More,haspersonaltouch Lessandeconomical Ensures Noevidence more Promptpossible

Gestural Communication: Communication through body language. It includes silence, shaking of hands etc. It is useful in interpersonal communication and supplementsoralcommunication. BARRIERSTOCOMMUNICTIONbriefexplanationforeach 1. Physicalbarriers 2. Personalbarriers 3. Semanticbarriers 4. Statusbarriers 5. Inattentiveness 6. Prematureevaluation OVERCOMINGBARRIERS:briefexplanationforeach 1. WelldraftedMessage 2. AppropriateLanguage 3. Controloveremotions 4. Twowaycommunication 5. Opendoorpolicy 6. Selectingeffectivecommunicationchannel TOOLSINCOMMUNICTION:briefexplanationforeach 1. CellularPhone(Mobile) 2. Electronicsmail(email) 3. TelexandFax 4. Videoconferencing 5. Internetsurfing(emarketing,ecommerce) 6. Audioandcomputerconferencing.

MARKETING PRODUCT ORIENTED/TRADITIONAL CONCEPT: Performance of those marketing activitiesthatdirectstheflowofgoodsor/andservicesfromproducerstoconsumers orusers Factoryproductssellingandpromotionprofitsthroughsalesvolume CONSUMER ORIENTED MODERN CONCEPT: process of discovering and translating consumer need intogoodsor/andservicesandto createexchangeswithpotential consumersandusersthatsatisfycustomersandorganizationalobjective. Target marketdiscovery of idea integrating marketingprofits through customersatisfaction Features: 1. Itiscustomeroriented 2. Itisanintegratedapproachasharmonizesvariousdepartments 3. Anongoingprogrammeofmarketingresearchisnecessary 4. Itrequiresmarketingplanningandcontrol 5. Itstartsfromdiscoveryofideaandendsaftercustomersatisfaction Sl. Basis Marketing(Modern Selling(Traditional No. Concept) concept) 1 Meaning Performance of those Process of discovering and marketing activities that translating consumer need directs the flow of goods into goods or /and services or/and services from and to create exchanges producers to consumers with potential consumers and users that satisfy orusers customers and organizationalobjective. 2 Nature Aims at achieving Promotionalefforts organization goals through satisfaction of customers 3 Orientation Consumeroriented Productoriented 4 Begging Begins before production Begins after production and ends after customer endswithsale

5 6

Objective Scope

satisfaction Profit through consumer Profitthroughsalesvolume satisfaction Wide Narrow

OBJECTIVES:briefexplanationforeach 1. ToSecurecustomersatisfaction 2. Tobringorganizationintegration&coordination 3. Toearnprofit 4. Toservethesociety 5. ToenhancegoodwillorPromotereputation IMPORTANCE:briefexplanationforeach 1. Sourceofrevenue 2. FoundationofallBusinessactivities 3. Satisfactionofconsumerneeds 4. Imprudentofstandardofliving 5. Employmentopportunities 6. Developmentofnation 7. BasisofdecisionMaking FUNCTIONS: Exchangefunctions 1. Buying and Assembling: procurement of raw materials, components and finishedgoodsthroughinspection,bysample,bydescriptionandbygrade. advantages 1. Itassistsinproductionthroughpurchaseofrawmaterials. 2. Itfacilitatestradersforfulfillingrequirementofconsumers Assembling involves collection of goods already purchased from different sourcesatonecommonplace. advantages 1. Reducescostoftransportationandhandling. 2. Permitslargescaleselling. 3. Reduceswarehousingcost. 4. Facilitatesstandardizationandgrading. 5. Regularizessupplies 2. Selling & Distribution: process of finding customers, creating demand and transferring the goods for value or money. It includes negotiating terms for sale,salesforecasting,choiceofchannelofdistributionetc. Physicalfunctions 3. Transportation:Physicalmeansofcarryinggoodsfromoneplacetoanother. advantages 1. Removesbarriersofdistance. 2. Helpstostabilizeprices

4. Storageorwarehousing:Holdingandpreservationofgoodsfromthetimeof productiontotimeofconsumption. advantages 1. Createstimeutility. 2. Equalizesdemandandsupply Facilitatingfunctions 5. Advertising:fromchapter 6. SalesPromotion:fromchapter 7. Salesmanship:fromchapter 8. Branding&Trademark:processofassigningname,symbol,etctoaproduct todifferentiateitfromotherproducts. advantages 1. Helpstocreateloyaltytotheproduct. 2. Givesseparateidentitytoproducts. Trademarkistheregisteredbrand. advantages 1. Itprotectsproductfromimitations 9. Standardizingandgrading:Processofsettingupbasicmeasuresorstandards to which products must conform. It reflects features of products in terms of design,weight,colour,etc. advantages 1. Fetchbetterpricetosellers. 2. Easilyvaluedandpricefluctuationsarereduced Gradingistheprocessofsortingproductsintowelldefinedstandards. advantages 1. Enablestodirectthegoodstowardsthemarketbestsuited. 2. Facilitatestradeasbuyingcanbedonebygrade. 10.Market research : Systematic and scientific investigation of all marketing activitiestofindanswerstovariousmarketingproblems.Itincludesgathering, recording and analyzing of data to facilitate decision making through trade journals,consumerassociations,wholesalersandretailers. advantages 1. Potentialdemandforaproductcanbeestimated. 2. Competitivestrengthandbrandimagecanbejudged. 3. Newmarketcanbedevelopedforsale. 4. Necessaryimprovementscanbemadeinproductdesigning;packageetc. 5. discoveryofunsatisfiedneedscanbeestablished. 11.Packing and packaging & labeling : Packing refers to wrapping, crating or compressing into appropriate containers for protection and convenient handlingduringstorageandtransportation. advantages 1. Handlingofgoodseasier.

2. Protectgoodsfromdamageduringtransportation. Packaging refers to designing of case, container etc. for making products convenient. Protective,economicalandattractiveforcustomers. advantages 1. Meansofselfadvertising. 2. Increases durability of product and helps to attracts the attention of customers. Labelingreferstoputtinginformationaboutproductonpackages. 1. Indicatesbrand,grade,quality,etc.carryinstructionsforcustomers. 12.Pricing:Processoffixingthepriceormoneyvalueofaproduct.Itisinfluenced bycost of production, degree of competition, nature of product, policies of firmetc. advantages 1. Satisfiescustomers. 2. Yieldsprofit 13.Productplanninganddevelopment:Designinganddevelopingtherighttype ofproducts. advantages 1. Offersmaximumsatisfactiontoconsumers. 2. Introductionofnewproducts. 3. Improvementofexistingproducts. 4. Droppingofunprofitableitems. 14.Risktaking:Financialrisksinherentintheownershipofgoodsheldforsalein anticipation of demand. It arises due to changes in demand, fall in prices, spoilageinstorageetc. advantages 1. Protects the business men against many risks like loss due to theft, dishonestyofemployeesetc. 2. developstherisktakingability. SALESPROMOTION Meaning: those marketing activities other than personal selling, advertising and publicitythatstimulatesconsumerpurchasinganddealereffectivenesswithvarious noncurrentsellingeffortsnotinanordinaryroutine.Itincludesdisplays,discounts, showsandexhibitionsetc. Features

1. Itconsistsofnonrecurringpromotionefforts 2. Itcomprisesnonroutineactivities 3. Itcoversshorttermincentiveschemes 4. Itisdirectedatbothcustomersanddealers 5. Itseekstoachieveimmediateincreaseinsales Objectives 1. Tostimulatedemand 2. Tostablisesales 3. Tosecureresponseindesiredmanner 4. Tomaintainrelations 5. Tofacilitatesmarketingcontrol Function/role 1. Stimulatesdemand 2. Stabilizessales 3. Securesresponseindesiredmanner 4. Maintainsrelations 5. Facilitatesmarketingcontrol METHODS 1. Dealerssalespromotionmethods 1. Advertising allowances: Free display materials, banners, signboards are distributedtodealers 2. Free training and seminars: train dealers in the techniques of operating and handlingtheproduct 3. Special trade discounts: free deals and discounts are allowed to dealers for boostingsalesduringoffseason. 4. Displaysanddemonstration:specialdisplaysareheldindealershops 5. Incentives: bonuses, expensive prizes and gifts are offered to encourage dealers to take specific interest so as to increase their product sales. Prize contestsmaybeorganizedtopromotesales 2. Customerssalespromotionmethods 1. Freesamples 2. Coupons 3. Prizecontest 4. Exchangeoffer 5. Premiumorprizes 6. Clearancesalesordiscounts 7. Fairsandexhibitions 8. Tradingstamps

Salesmanship(PersonalSelling) Meaning:Itisthemarketingactivitywhichinvolvesdirectandpersonalcontactof thesellerorhisrepresentativeswithprospectivebuyer.Itisfacetofacepersuasive communicationbetweensellerandbuyertoachievemarketingobjectives. Features: 1. Itisafacetofaceandoralcommunication 2. Itisanartofpersuasionthatconveyshumanneedsintodemand 3. Itisbothscienceandanart 4. Ininvolvescontactwithlimitedbuyers 5. Itrequiresflexibleapproach Objectives: Tohandleobjectionsandqueries Toprovidedfeedback Toexplorehiddenwants Topromotesales Toeducatecustomers. Importance: Toconsumers Providesknowledgetocustomers Assistsinselectingproducts Itcommunicatesgrievancesandsuggestionsofconsumerstoproducers Itenablesconsumerstogetqualityproducts Tobusinessmen/dealers HelpsinSalesandprofits Helpstofacecutthroatcompetition Providesvaluablefeedbacks BuildGoodwill Locatesprospectivecustomersandcreatesdemand Tosociety Stimulatesconsumptionandaccelerateproduction Createsemploymentopportunity Helpstoraisestandardofliving Generatesrevenueforgovernment Itisthebasisofcommerce Steps: Locatingcustomers

Presalepreparation Salespresentation Convincingcustomers Sale Additionalsale AIDCAM_ attention, interest, desire, convincing customers, action and more sales Qualities: PhysicalattributeSoundhealth,Cheerfuldisposition MentalattributeAptitude,patience SocialattributeSincere&courteous,Tact&confidence VocationalattributeLeadership,optimism Technicalknowledge of product, of customers, of company, of competitors andofsellingtechniques ADVERTISING Meaning Any paid form of nonpersonal presentation and promotion of ideas, goodsandservices,byanidentifiedsponsor. Features: Paidform Nonpersonalpresentation Identifiedsponsor Canbewritten,oralorvisual Canbedonebyvariousmedia Objectives:briefexplanationforeach Tocreatedemand Towidenmarket Tobuildgoodwill Toovercomecompletion Toeducatecustomers Toassistsalespersons Tointroducenewproduct Importance:ToManufactures Steadydemand(Minimizesseasonalfluctuation) Highersalesvolume Goodwillcreation Supportssalesmen Introductionofnewproducts ToConsumers Educatescustomers Fairprices Improvesquality Convenience

Unproducednewproducts ToDealers Bycreatingawarenessofadvertisedproducts ByProvidingreadymarket Byreducingsalesefforts Byencouragingrepeatedbuyingofadvertisedgoods Increasessalesvolume ToSociety Generatesemployment Standardofliving Encouragesresearchanddevelopment Supportspress/media Nationdevelopment Functionbriefexplanationforeach Createsdemand Eliminatesmiddlemen Improvesgoodwill Competitionstrategy Introductionofnewproducts Supportssalesmen Demerits/Disadvantagesbriefexplanationforeach Price Artificialleaving Deceptiveadvertising Growthofmonopolies Unethical Changes,preferenceswithoutdemand Wastageofnationalrecourse basis meaning Advertising Any paid form of non personal presentation and promotion of ideas, goods and services, by an identifiedsponsor Less costly and less time consuming Less, commonmessage Notavailableimmediately Tocreatedemand Masssellingtechnique Salesmanship It is the marketing activity which involves direct and personal contact of the seller or his representatives with prospective buyer more More,specificmessage Immediatefeedback Tomakesales Individualsellingtechnique

Costandtime flexibility feedback objective coverage

AdvertisingMedia(Differentforms) media newspap magazine Directmail radio er forms press Press, Catalogues, Audio journal brochures meaning Advertisi ngdone through printing

televisio n Audio& Visual, films Advertising Advertisem Advertisem Short done entthrough entthrough advertisi through lettersetc. spoken ngfilms to words made printing and residences of shown customers Very limited Long wide Veryshort Higher Limited timeliness limited Very short Higher Timeline ssata higher cost

outdoor Mural posters Advertisem entin formsof billboards, electric signsat public places local Longest Moderately high Little timeliness

Circulati on Life Cost Timeline ss

wide short Moderat e Useof current events possible

limited Long High

Selectivit Regional y and linguist selectivit y Audienc Limited e tothe literate

Moderate toHigh Maximum Lackof timeliness, timeliness, selectionof and absenceof right newsvalue message andtime Higher Higher selectivity selectivity

Sameasin news papers

Local Local selectivit selectivity y

Limitedin scope

Very limited

Universal appeal

Flexibilit y

High

Low

Highest

Limited

Limited tolocal people whoown TVand goto cinema Higher

Limitedto local population

High

Repetitiv Daily evalue repetitio n possible

Dependson Frequent Weekly, fortnightly frequency repetition ormonthly ofmailings possible repetition same audience Nosecrecy Complete secrecy

secrecy

No secrecy

effective ness

suitabilit y

Most effective dueto personal touch undivided attention andfull explanation Suitable Suitablefor Suitablefor forgoods specialty products having products withwell wide defined market market Effective in locating prospects and supportin gsales force Effective for technical goodsand consumer durables

Repetitio nin every showbut notto thesame audience Nosecrecy No dueto secrecy universal possible appeal Notevery Very effective effective becauseof dueto combina shortlife, tionof short sound message and andshort picture memory Very suitablefor articlesof dailyuse Most appropri atefor goodsof local consump tion

Prospect seesit whenever heorshe passesbyit

Nosecrecy maintained

High memorizing value

Very suitablefor popularizin gabrand

basis meaning

regularity techniques necessity control focus

Salespromotion Those marketing activities other than personal selling, advertising and publicity that stimulates consumer purchasing and dealer effectiveness with various non current selling efforts not in an ordinaryroutine. Repetitiveandroutine NonRepetitiveandnonroutine Cinema,hoardingsetc. Freesamples,contestsetc Essential and basic Additional and supplementary ingredientofmarketing ingredient Bymedia Bycompany Inform, persuade and Supplements advertising and remindcustomers personalselling

Advertising Any paid form of non personal presentation and promotion of ideas, goods and services, by an identifiedsponsor

TypeofAdvertising: 1. Onthebasisofpurpose Persuasiveadvertising:advertisingintendedtopersuadecustomerstobuythe product or services of the advertiser. It describes its superiority over competitiveproducts.Ex.Surfexcel Informative advertising: advertising to make consumers of the existence of certain products or services and their basic properties. Ex. Reduce fuel expenditurebyPCRA 2. Onthebasisofsponsorship Competitive advertising: advertisement on individual basis in order to increasetheirindividualsharesinthemarket.Ex.Softdrinks Collective advertising: when producers of different brands of the same productjointlysponsoradvertisingoftheproduct.Ex.Buywoolcarryingwool markastrademark Advertising theme/appeal: central idea intended to trigger desired action from customers.Itisheartofadvertisingcopy. Themeofcomfort:theappealtocustomeristhatuseoftheproductwillmakelife comfortable. Theme of prestige: possession of such items will provide distinctive status and a senseofpride Theme of health: use of such items will bring good health. Usually taken for food productsordrugs. Themeofbeauty:thisinstinctsappealtoyoungmenandwomen,usuallytakenfor cosmetics. Themeoffear:thisthemeisusedforinsurance,safetyvaluesetc Themeofaffection:thisisusedtoadvertiseproductsmeantforchildren,friendsetc. Codeofadvertisingpractice ASCIadvertisingstandardscouncilofIndiahasformulatedcodeofconductstocheck misleadingadvertisementswhichareasfollows: 1. Shouldnotoffendagainstmoralityandreligioussusceptibilitiesofpeople 2. Noadvertisementshouldbepermitted which isagainstanyprovisionofthe constitutionofIndia 3. No advertisementshould be permitted which would adversely affect friendly relationswithforeignstates. 4. No advertisement should be permitted which will tend to incite people to crime 5. Noadvertisementshouldbepermittedforbettingtipsandguidebooks 6. Advertisers or their agents must be prepared to produce evidence to substantiateanyclaimorillustrations 7. Advertisements should not contain disparaging reference to another product orservices

8. Visual and verbal representation of actual and comparative prices and costs mustbeaccurate. Sl. No. 1 2 3 4 Basis Scope Meaning Sponsor Advertisement Wide Paidformofpublicity Identifiedsponsor Publicity

Narrow Nonpaidformofadvertising May or may not have identifiedsponsor Control Sponsor exercises direct Controllieswithmedia control over length and frequencyofmessage Approach Limitedinformation Greater versatility than advertisement

AdvertisingMediaFactorsaffecting Natureofproduct ExtentofMarket Objectiveofadvertisement Cost Mediausedbycompetitors Typeofaudience Scientific advertising: Well planned, organized, coordinate and controlled advertisingbasedonfactors,likelytoaffectthesuccessofbusinessandpromoteits saleseffectivelyandeconomically. Advertising copy: advertisement which advertiser wants to convey. Copy writers prepareadvertisingcopy. AdvertisingAgency: Meaning: specialized service organization which plans, designs and executes advertising campaigns for and on behalf of its clients in return for a fee or commission.E.g.Lintas,clarion Organizationstructure Accountmanagementgroup:planningandcontrollingadvertisingcampaign Creativedepartment:designingandpreparingtheadvertisement Productiondepartment:selectionofmodel,shootingandpictureisdonetoproduce advertisement Media department: selection of appropriate medium for transmitting message economicallyandeffectively Marketingdepartment:merchandisingandpublicrelationactivities Researchdepartment:marketingresearchanddatamaintenance Administrative department: office work including correspondence, financial and accounting

Functions:briefexplanationforeach 1. Creatingadvertisement 2. Producingadvertisement 3. Placing 4. Marketresearch 5. Expertadvice 6. Publicity Advantages: 1. Providesexpertandspecializedadvice 2. Betterqualityadvertisements 3. Timely presentation of advertisements due to close association with media owners 4. Helpsinallocationofadvertisingfundsefficiently 5. Variousserviceslikepackagedesigning,marketresearchetc. MarketingMix:Arrangementofvariousmarketingactivitiesinsystematicmanner soastoachievemarketingobjectives. Promotional Mix: Blending various sales activities like product planning & development,personalselling,advertising,salespromotionetc.inproperproportion soastoproducecoordinatessalesprogramisknownasPromotionalMix.Ithelpsto accomplishsellingobjectives MediaMix:Selectionofparticularsadvertisingmediumortwoormoreadvertising mediatoaccomplishadvertisingobjectives. Transitadvertising:advertisementpaintedonmetalsheetswhicharefixedonbuses, railwaysorothermovingvehicles.Itisaformofoutdooradvertising