KVS

(RAIPUR REGION)
brings for its students
STUDY MODULE
For Case studies in
CLASS-XII Business Studies (2015-16)
Under the leadership of
Ms.P.B.S.Usha
Deputy Commissioner
(Chief Patron)

Mr. Tajuddin Saikh

Assistant commissioner
(Patron)

Mr. Girish Chand

Principal, KV-Nabarangpur
(Patron)

Content Formation
Dr. Lokesh Bajpai, PGT-Commerce,
KV , Chirimiri, SCEL

Sh. S.S. Thakur, PGT-Commerce,

KV, Balaghat

Sh. B.K.Patal, PGT-Commerce,

KV, Jhgarakhand
 Nature and Significance of Management

Case 1- ABC Ltd. is having a lot of problems these days. It

manufactures white goods like washing machines, refrigerators and
air conditioners. The companys margins are under pressure and the
profits and market share are declining. The production department
blames marketing for not meeting sales targets and marketing blames
production department for producing goods, which are of sub
standard quality not meeting customers expectations. The finance
department blames both production and marketing for declining
return on investment and bad marketing.
(a) What quality of management do you think the company is lacking?
Explain briefly.
(b) What steps should the company management take to bring the
company
back on track?

ANS. (a) ABC Ltd. is lacking Coordination. Since production, marketing

and finance departments are not working unitedly, but acting as
independent units. Due to which they are unable to achieve organizational
goals and are blaming each other for decrease in sales and profit margin.
But for achieving the goals of the organization, they have to work unitedly.
So management needs to take following steps to bring the company back
on track:
(i) Each department must understand that managerial functions are
performed in a better way with the help of coordination and coordination
is the essence of management and it is needed to perform each and every
function and level of management.
(ii) Each department must be given realistic goal after considering
strengths and weaknesses of each department.
(iii) all department heads be made part of goal setting process.

Case 2: Ram Ltd., a leading manufacturer of iron and steel decided to

open up a new branch in the remote area of Rajasthan so that
unemployed youth from the rural areas could get same opportunities
as those available in the urban areas. This innovative step has raised
the standard of living of people in rural areas. All children in these
families are getting good education and these families are also
actively contributing in the nation building through their dedicated
work.
(i) Identify the objective of management highlighted in the above-
mentioned case.
(ii) Identify and explain the principle of management highlighted in
the given case.

Ans. (i) Social objectives of management: Objectives which are desired to

be achieved for the benefit of the society is known as social objectives.
(ii) Equity: Equity refers to fair treatment to all workers in an organization.
Fair
treatment involves kindness and justice on the part of superiors while
dealing with their subordinates.

Principles of Management
Case 1- M & F Ltd. is doing the business of food processing and, selling
its products under a popular brand PURE enjoying good quality with
reasonable prices. So, Company is expanding its business and at the
same time new players are also coming to cash in this new trend. In
order to keep its market share intact the company directed its
existing workforce to work overtime. But this resulted in many
problems. Due to increased pressure of work the efficiency of the
workers declined. Sometimes the subordinates had to work for more
than one superior resulting in declining efficiency. The divisions that
were previously working on one product were also made to work on
two or more products. This resulted in a lot of overlapping and
wastage of resources. Sometimes the workers are feeling frustrated
and disobeying, even the managers are not taking interest to solve the
problems due to distrust on each other. The quality of the products is
beginning to decline and market share is also start to decrease.
Actually the company had implemented changes without creating the
required infrastructure. So, now you need to identify the Principles of
Management that are being violated by the company. Explain these
principles in brief and what steps should the management take in
relation to the above Principles to restore the company to its path of
profit?

Ans. (i) The principles violated by the company are:

(a) Unity of command (as subordinates had to work for more than
one superior).
(b) Unity of direction (as divisions were made to work on two or
more products,
which leads to wastage and overlapping).
(c) Discipline (as workers are disobeying).
(d) Espirit de Corps (as the spirit of working in team decreases due
to distrust).
(e) Initiative (as managers are not taking any interest to solve the
problem).
(a) Unity of command:
According to Fayol, there should be one and only one boss for every
individual
Employee. If an employee gets orders from two superiors at the same
time the principle of unity of command is violated.
(b) Unity of direction:
According to this principle, there should be one head and one plan for a
group of activities having the same objectives. It is necessary to direct
the efforts of all the members of the group towards common goals under
the direction of one head.
(c) Discipline:
Discipline is the obedience to organisational rules and employment
agreement
which are necessary for the working of the organisation. According to
Fayol, discipline requires good superiors at all levels, clear and fair
agreements and judicious application of penalties.
(d) Espirit de Corps:
It refers to team spirit. Managers must take steps to develop a sense of
belonging among the members of a work group.This principle
emphasises the need for teamwork. It facilitates the development of an
atmosphere of mutual trust and understanding among employees and
minimises the need to use penalties for default.
(e) Initiative:
Workers should be encouraged to develop and carry out their plans for
improvements. Initiative means taking the first step with self-motivation.
An organisation should encourage desire and initiative among its
managers
and employees by extending opportunities and freedom to contribute their
best.

The company management may take the following steps:

(a) The managers must ensure that a superior gives orders to only one
subordinate to avoid dual subordination.
(b) The rising pressure on workers must be cut down.
(c) Division of work must be done to ensure specialisation.
(d) All similar activities are put under one plan and each plan is headed by
one
head.
(e) Workers should be made to work with team spirit.
(f) Workers should be given the initiative to participate in the working of
the
organisation and those giving good suggestions must be rewarded.
(g) The Company should introduce scientific management with regard to
production.
(h) Differential Piece wage system should be implemented, in order to
motivate the workers.

Case 2: The production manager assigned a target of producing 1,000

TV sets in the month of September among the group of 10 workers. They
mutually decided to produce 100 TV sets each. Among them 3 of the
workers of the group fell sick. The other worker refused to divide his
work among and concentrated only on the production of their own
individual target of production the group target of 1,000 TV sets could
not be achieved.
(i) Which characteristic of management is violated in the above para?
(ii) Name and explain the principle of Fayol which is violated in the
above
para.
Ans. (i) Management is a group activity:
(a) An organization is a collection of diverse individuals with different needs.
(b) Every member of the group has a different purpose for joining the
organization but as members of the organization they work towards fulfilling
the common organizational goal.
(c) This requires team work and coordination of individual effort in a
common
direction.

(ii) Espirit de corps: It refers to team spirit. Managers must take steps to
develop a sense of belonging among the members of a work group.

Case for practice

Case: XYZs company established a factory to manufacture mobile phones. The

factory was neither having proper lightning & sanitation facilities nor was the
company site in hygine place. All the machines were kept in single room & also
not placed properly which gives too much problem while working. Mr. A, the
owner of the company also did not appoint skilled labour so that he could save
some labour cost. He laid down all the plans and procedure to be followed by
all. Production in charge was asked to follow the plan to produce target of
50,000 mobile phones. Mr A also told the production manager that if he failed
to achieve the target within a month he will lose his job.
Production manage was confused as there was no proper setup of machines and
even the workers were not trained to manufactured mobile phones.
Questions :
A. Name the scientific principle that should have been followed before starting
production?
B. State the principle of management violated?

Case : A company 'D' limited was engaged in manufacturing of Auto

Components. Lately the business was expanding due to good quality and
reasonable prices. But suddenly the profit of the company started declining
due to some conflict between the employees. In order to maximise the profit
the company would want to get maximum output from its employees at a
competitive salary. But on the other hand some employees converted
themselves into a union and they started demanding for the maximum salary
with the least working, which is not admissible to other employees and the
company.

Q.1. Identify the principles of management that were being violated by the
employees and company?

Q.2. what steps should company management take in relation to the above
principles?

Business Environment
Case 1-Lately many companies have planned for significant investment in
organized retailing in India. Several factors have prompted their decision in
this regard. Customers income is rising .people have developed the taste for
better quality products. The government is liberalized to economic policies in
this regards and has permitted even 100% FDI in some sectors of retailing.

On the basis of above condition, identify changes in business environment

under different heads economic, social, technological , political and legal
that have facilitated the companies decisions to plan significant investment
in organized retailing.
Ans: 1. The changes in business environment under different heads are:
(i) Economic change: Customer income is rising.
(ii) Social change: The aspiration levels have increased.
(iii) Technological change: People have developed a taste for better quality
products even though they may have to pay more.
(iv) Political change: The government has also liberalised its economic
policies.
(v) Legal change: Cent percent foreign direct investment in some sectors of
retailing has been now permitted.

2. The impacts of these changes with regard to globalisation and

privatisation are:
(i) Increasing competition: As a result of changes in the rules of industrial
licensing and entry of foreign firms, competition for Indian firms has
increased especially in service industries like telecommunications, airlines,
banking, insurance, etc. which were earlier in the public sector.
(ii) More demanding customers: Customers today have become more
demanding because they are well-informed.
(iii) Rapidly changing technological environment: Increased competition
forces the firms to develop new ways to survive and grow in the market.
New technologies make it possible to improve machines, process, products
and services. The rapidly changing technological environment creates
tough challenges before smaller firms.
(iv) Necessity for change: In a regulated environment of pre-1991 era, the
firms could have relatively stable policies and practices. After 1991, the
market forces have become turbulent as a result of which the enterprises
have to continuously modify their operations.
(v) Need for developing human resource: Indian enterprises have suffered
for long with inadequately trained personnel. The new market conditions
require people with higher competence and greater commitment. Hence
the need for developing human resources.
(vi) Market orientation: Earlier firms used to produce first and go to the
market for sale later. In a fast changing world, there is a shift to market
orientation in as much as the firms have to study and analyse the market
first and produce goods accordingly.
(vii) Loss of budgetary support to the public sector: The central
governments
budgetary support for financing the public sector outlays has declined over
the
years. The public sector undertakings have realised that, in order to survive
and grow, they will have to be more efficient and generate their own
resources.
 Case 2- M/S Sheep & sons plans to produce meat articles. The local
population is against meat. The company irrespective to their feeling takes
you the production of such meat. Finally it finds that there is heavy stock of
meat is left and there is no further chance of its sales.

(a) Which type of business Environment has not been considered in above
case?
(b) Explain the relevant business Environment with a suitable example.

Ans: (a) Social Environment .

It represents the customs and traditions, values, culture, social trends,

beliefs, norms and ethics of a society in which business enterprises operate.

(b) A business is a part of the society in which it operates. The buying and
consumption habits of the people, their languages, customs, preferences,
tastes etc. are the factors that influence the business. Businessmen should
be alert enough to visualize the factors that directly or indirectly affect
their organization. Cooperation between business and society will see
business boom and will help growth of professional managers. The failure
of any business organization in adapting to changes in the social
environment will lead to dissatisfaction amongst its customers and
rejection of its products. This shift of demand can even endanger the very
survival of a business. For example, equal pay for male and female workers,
demand for reservation in jobs for minorities and women etc.

Case3: Mention four examples of acquisitions and mergers and also write
relevant dimension of business environment.

Ans: (i) SRF buy Ceat's Rayon Tyre Cord.

(ii) Parle's take-over by Coke.
(iii) Godrej has bought over Goodnight.
(iv) Hutch by Vodafone

Relevant dimensions of business environment are Liberalisation and Globalisation.

Case 4 : LMN Industries is facing a lot of opposition as it pays less
salary to female workers as compared to male workers for equal
work.
(i) One of the objectives of management is not followed here. Name it.
(ii) Which dimension of business environment is being violated in the
given
Situation?
(iii) Identify and explain the principle of management which is not
followed by Sethi Industries.

Ans. (i) Social objective of the management is not followed here.

(ii) Social dimension:

(a) Social environment of a business refers to the broad characteristics of
the society in which a business enterprise operates.
(b) The social environment of business includes the social forces like
customs and traditions, values, social trends, societys expectations from
business, etc. Social values and attitudes are changing very fast.

(iii) Equity: Equity refers to fair treatment to all workers in an

organization. Fair treatment involves kindness and justice on the part of
superiors while dealing with their subordinates.

Case 5: Indians mostly being vegetarians as per the studies of KFC has
planned to introduce veg rice meals in its menu.
(i) Which characteristic of management is highlighted in the given
statement?
(ii) Name and explain the dimension of business environment which is
Responsible for this step of KFC.

Ans. (i) Dynamic:

(a) Management is a dynamic function and has to adapt itself to the
changing
environment.
(b) An organization interacts with its external environment which consists
of various social, economic and political factors.
(c) In order to be successful, an organization must change itself and its
goals
according to the needs of the environment. For example, McDonalds, the
fast
food giant made major changes in its menu to survive in Indian market.
(ii) Social environment:
(a) Social environment of a business refers to the broad characteristics of
the society in which a business enterprise operates.
(b) The social environment of business include the social forces like
customs and traditions, values, social trends, societys expectations from
business, etc. Social values and attitudes are changing very fast.

Case 6 : -You Are General Manager Of a Company. Find Out Environmental

Changes That Have adverse effect on The Company. List the Steps taken By
You to Cope With these changes In current scenario.

Ans.
Challenges or adverse effects may include
Increasing competition, more demanding customers, problems of
Human Resources, Market Orientations, and Loss of Budgetary support to the
public sector.
In todays business environment a business can cope with this changes only
by
1. Appointing qualified Professional experts.
2. By adopting the latest technology keeping in mind the global
competition.
3. By building or creating a brand image in the minds of customers.
4. By understanding the requirements and needs of the customers and
always try to satisfy the customers.
5. By keeping their employees satisfied by paying them fair compensation.

Case 7 - Roshinee is the owner and manager of textile industry, which is her
family business. Last year she attended the seminar on the topic
globalization. She found the topic relevant and helps her expanding the
business by conducting operations worldwide.
Why she considers the topic relevant?
What will be the positive impact of opting globalization?

Ans:
(a) She considers the topic relevant because she want to expand her
business which is possible only by study and knowledge about
globalization. It will increase economic integration and provide
strong opportunity to explore in the market.
(b) Globalization will help to enter in to trade and commerce by
adapting and linking the economy of a country with the economies
of other countries by free trade and free mobility of capital and
labour etc.
 Case for self practice

Case :- A Foreign Based MNC was allowed to set Up Its Cold Drink Plants at
several Place in India. Different flavours of its drink are liked by Many
Indians. The Companys name has now become a lip word and It has
launched Intensive advertisement though T.V. and various Papers.
In What Respect is This MNC Beneficial to India?
What are its harmful effects?
Under Which Policy Was This MNC allowed To Enter in India?

Hints 1 Write some merits of Globalization.

2 Write some limitations of Globalization.
3 Under Foreign trade policy / Globalization

PLANNING
Case.1- the CEO of ABC Ltd. an automobile enterprise dreams of his company
becoming the best player in future, for which he sets the objectives, forecasts
the future and develops various courses of action.
Q1. Identify the management function which is highlighted here.
Q2. What are the various values the CEO is striving to achieve?

Answers:
1. Planning is the Management function
2. The values the above mentioned paragraph highlight are:
a) Hard work helps individuals to turn their dreams into reality
b) Initiative, confidence, commitment
Case.2- An Tej auto company Ltd. is facing a problem of declining market share
due to increased competition from other new and existing players in the
market. Its competitors are introducing lower priced models for mass
consumers who are price sensitive. For quality conscious consumers, the
company is introducing new models with added features and new
technological advancements.
Questions
1. Prepare a model business plan for the company to meet the existing
challenge. You need not be very specific about quantitative parameters. You
may specify which type of plan you are preparing.
2. Identify the limitations of such plans.
3. How will you seek to remove these limitations?

Ans. (i) Company can make use of strategy as a type of plan. The various steps
involved in preparing this plan are:
(a) The company should set up its objectives after considering quality
expectations of consumers and technological changes.
(b) Like its rival, it can cut down its prices without compromising the quality.
(c) It may use sales promotional tools like full finance and rebate to capture the
market share again.
(ii) The limitations of such plan are:
(a) It is a costly process.
(b) It is a time consuming process.
(c) It may not work in a dynamic environment.
(d) It may lead to rigidity in operations.
(iii) The given limitations can be overcome through following measures:
(a) An organisation can keep a strict watch on time limit to achieve the target.
(b) Amount to be spent should be pre-planned by preparing budgets.
(c) Environment should be properly scanned to minimise the risk of competition.
(d) Plan should be flexible, so that there is a scope for initiative and creativity.

Case.3- Ram ,Mohan and Shyam are good friends. After completed B.Com
they are thinking to manufacture papers. They mutually decided that this
manufacturing unit will be set up in a rural area of Chhattisgarh where people
have a few job opportunities and labour is available at very low rates. They
also decided not to sell goods on credit.
Questions:
(i) One of the functions of management is highlighted in the above para. Name
it by quoting the line from it.
(ii) Name the type of plan highlighted in the above para by quoting the line
from it.
(iii) Explain any three limitation of such functions of management.
(iv) Which type of organizational structure would you recommend for
this
Manufacturing unit? State any two reasons.

Ans. (i) Planning: They are thinking to manufacture papers.

(ii) Policy: They also decided not to sell goods on credit.

(a) Policies are general statements that guide thinking or channelize energies
towards a particular direction. Policies in general are formulated at top
management level.

(iii) Limitations of planning are as follows:

a) It is a costly process.
b) It is a time consuming process.
c) It may not work in a dynamic environment.
It may lead to rigidity in operations.

(iv) Organizational structure:

(a) Occupational specialisation is ensured.
(b) Promotes control and coordination

Case.4- Mrs. Gupta is the principal of a reputed school in Delhi. She decides to
conduct a meeting of all the staff members in the conference hall. In a meeting
she instructs the admission department that in the upcoming session the
school will give admission to those students who secured more than 85%
marks. She also assigns duties, authority and creates accountability of the
person whom work has been handed over. In addition to this, she tells to new
teachers what is to be done and what is not to be done in specific situations.
Questions:
(i) Name the types of plan highlighted in the above para by quoting lines from
it.
(ii) name the functions of management which are highlighted in above para
by quoting lines from it and explain any three importance of any one
function.
(iii) Name the process through which Smt. Gupta assigns duties,
authority and creates accountability of the person whom work has
been handed over. Also, explain any two points which highlight the
importance of this process.

Answer. (I) types of plan:

 a) Rule: She tells to new teachers what is to be done and what is not to be
done in specific situations.
b) Policy: she instructs to the staff members that, they will give admission to
those students who secured more than 85% marks.
(II) (A) functions of management:
a) Planning: prepare admission guideline for upcoming session.
b) Organising: assigning duties, authorities and creating the authority and
responsibility relationship among them.
(B) importance of planning:
a) Planning provides directions.
b) Planning facilitates decision making.
c) Planning promotes innovative ideas. OR
Importance of organising
a) Clarity in working relationships
b) Effective administration
c) Expansion of growth.
(iii) Delegation.
Two points which highlight the importance of this process are:
(a) Effective management/Reduces workload of managers:
Delegation of authority permits a manager to share his workload with his
subordinates. By passing on some of his work to the subordinates, the
managers are able to function more efficiently as they get more time to
concentrate on important matters. Freedom from routine work provides
them with opportunities to excel in new areas.
(b) Employee development:
As a result of delegation, employees get more opportunities to utilise
their
talent and it may explore their hidden abilities. It allows them to develop
those skills which will enable them to perform complex tasks and assume
those responsibilities which will improve their career prospects. It makes
them better leaders and decision makers.

Thus, delegation helps in preparing better future managers. Delegation

empowers the employees by providing them with the chance to use their
skills, experience and develop themselves for higher positions.

CASE-5. Management cannot be seen but felt. Do you think planning which is
the primary function of management can be seen? How can we measure or
evaluate the effectiveness of sound planning? Mention any five parameters
that declare whether the plan turns out to be a success or a failure.

Answer. (i) No, planning cannot be seen

(ii) The Parameters are:

(a) Whether planning reduces the risk of uncertainty or not?

(b) Whether planning promotes innovative ideas or not?
(c) Whether planning provides directions or not?
(d) Whether planning reduces overlapping of wasteful activities or not?
(e) Whether planning minimises cost and time or not?

CASE-6. A Toy company Ltd. Manufacturing garments. The manager wants to

increase the profits by
Purchasing new high speed machine; or
Increasing the sale price; or
Using waste material in the manufacturing stuffed toys.
He decided that `using waste material` to increase the profit is the best
solution for him.
Question:
1. Identify the concept of management involved.
2. Mention the steps involved in the above process.

Answer:
1. Planning.
2. The steps involved are:
Identifying alternative course of action,
Evaluating alternative courses and
Selecting an alternative.

CASE-7. Mr. Nagar a worker is given a target of assembling two computers per
day. Due to his habit of doing things differently, an idea struck him which
would not only reduce the assembling time of computer but would also reduce
the cost of production of the computers. Rohit`s supervisor instead of
appreciating him, ordered him to complete work as per the methods and
techniques decided earlier as nothing could be changed at that stage.
Questions:
One of the limitation of planning functions of management is describes in
the above Para. Name and explain it by quoting the line from it.

Answer: Explained the limitation is `Planning reduce creativity`. Rohit`s habit of

doing things differently. But his supervisor instruct to him that, work done as
per the methods and techniques.
 Case 8: Mr. Ajaya after completing MBA from USA comes to India to start a
new business under the banner Ecom Creation Ltd. He launches a new
product in e-learning for Senior Secondary School Students in Commerce
stream, which already has as established market in UK and USA but not in
India. His business starts flourishing in India. Now more Indian companies
entered into the market with other subject also.

Identify and quote the lines from above para which highlighted the
significance of understanding business environment.

Ans:- (a) Comes to India to start a new business and launches a new
product in e-learning for Senior Secondary School Students in
Commerce stream it help in :
i. Assisting in planning and policy formulization.
ii. It enables the firm to identify opportunities and getting the
first mover advantage.
(b) His business starts flourishing performance.
i. It helps in improving performance.
(c) Now more Indian companies entered into the market with
different subject also.
i. It helps the firm to identify threats and early warning
signals.

Organising

Case 1 : A company, which manufactures a popular brand of toys, has

been enjoying good market reputation. It has a functional
organisational structure with separate departments for Production,
Marketing, Finance, Human Resources and Research and Development.
Lately to use its brand name and also to cash on to new business
opportunities
it is thinking to diversify into manufacture of new range of electronic
toys
for which a new market is emerging.
Questions.
Prepare a report regarding organisation structure giving concrete
reasons
with regard to benefits the company will derive from the steps it should
take.

Ans: The organisation structure suitable is Divisional structure.

The report is as under:
By : XYZ
The organisation enjoys good market reputation. The company is encashing
its brand name and reputation. Its venturing into manufacture of a new
range of electronic toys. This organisation has got multiple divisions, it should
appoint divisional heads for each division. This will ensure product
specialisation. Adapting such structure will ensure flexibility and easy
fixation of responsibility. The change of structure will also help the business
enterprise to make these divisional heads accountable.
So, in a nutshell this new structure will ensure growth and expansion for the
organisation.

Case 2 : company manufacturing sewing machines set up in 1940 by the

British promoters follows formal organisation culture in totality. It is
facing lot of problems in delays in decision making.
As the result it is not able to adapt to changing business environment.
The work force is also not motivated since they cannot vent their
grievances except through formal channels, which involve red tape.
Employee turnover is high. Its market share is also declining due to
changed circumstances and business environment.
Questions.
(i) You are to advise the company with regard to change it should bring
about
in its organisation structure to overcome the problems faced by it.
(ii) Give reasons in terms of benefits it will derive from the changes
suggested
by you.
(iii) In which sectors can the company diversify keeping in mind the
declining
market for the product the company is manufacturing?
Ans. (i) To overcome the problems faced, the company should encourage
informal organisation.

(ii) The benefits it will derive are:

(a) Faster communication and quick feedback: It follows an
independent
channel of communication as there is no Prescribed lines of communication
to be followed. Thus, the informal organisation leads to faster spread of
information as well as quick feedback.
(b) Fulfill social needs: It helps to fulfill the social needs of the members
and
allows them to find like-minded people. This enhances their job satisfaction
since it gives them a sense of belongingness in the organisation.
(c) Fulfillment of organisational objectives: It contributes towards
fulfillment
of organisational objectives by compensating for inadequacies in the formal
organisation. For example, employees reactions towards plans and policies
can
be tested through the informal network.

(iii) The company can diversify into interlocking machines, automatic

buttoning units, embroidery machines.

Case 3: A Jee Ltd. manufacturing cosmetics, which has enjoyed a

preeminent position in business, has grown in size. Its business was
very good till 1991. But after that, new liberalised environment has
seen entry of many MNCs in the sector. With the result the market share
of jee Limited has declined. The company had followed a very
centralised business model with Directors and divisional heads making
even minor decisions. Before 1991, this business model had served the
company very well as consumers had no choice. But now the company is
under pressure to reform.
Questions.
(i) What organisation structure changes should the company bring
about in
order to retain its market share?
(ii) How will the changes suggested by you help the firm? Keep in mind
that
the sector in which the company is FMCG.

Ans. (i) The company should shift from centralised to decentralised

structure. It would ensure quick decision-making, motivate the subordinates
and ensure effective communication.
(ii) Even in Fast moving consumer goods (FMCG) industry, there is need for
decentralisation. By using decentralisation, a company gets following
benefits.
(a) Develops initiative among subordinates:
Decentralisation helps to promote self-reliance and confidence amongst
the subordinates. This is because when lower managerial levels are given
freedom to take their own decisions they learn to depend on their own
judgment. It also keeps them in a state wherein they are constantly
challenged and have to develop solutions for the various problems they
encounter. A decentralisation policy helps to identify those executives who
have the necessary potential to become dynamic leaders.

(b) Develops managerial talent for the future:

Formal training plays an important part in equipping subordinates with
skills that help them rise in the organisation but equally important is the
experience gained by handling assignments independently.
Decentralisation gives them a chance to prove their abilities and creates
a reservoir of qualified manpower who can be considered to fill up more
Challenging positions through promotions. It also helps to identify those
who may not be successful in assuming greater responsibility. Thus, it is a
means of management education as well as an opportunity for trained
manpower to use its talent in real-life situations.
(c) Quick decision-making:
The management hierarchy can be looked upon as a chain of
communication.
In centralised organisation, every decision is taken by the top management,
the flow of information is slow as it has to traverse many levels. Response
also takes time. This reduces the speed of decision-making and makes it
difficult for an enterprise to adapt to dynamic operating conditions.
In a decentralised organisation, however, since decisions are taken
at levels
which are nearest to the points of action and there is no requirement
for
approval from many levels, the process is much faster. There are also
less
chances of information getting distorted because it doesnt have to go
through
long channels.
(d) Relief to top management:
Decentralisation is required to reduce the burden of top executives when
it
increases due to increase in the size and complexity of the organisation.
In a decentralised organization, top executives have enough time to plan
ahead, develop new strategies and concentrate on coordination and
control.
Since they are not burdened by the routine problems and complexities of
administrative details.

Case 4: National Ltd has grown in size. It was a market leader but with
changes in business environment and with entry of MNCs its market share is
declining. To cope-op with the situation CEO starts and delegating some of his
authority to the General Manager, who also felt himself overburdened and
with the approval of CEO disperses some his authority to various levels
throughout the organization. Identify the concept of management discussed
above.

Ans: - Decentralization.

Case 5 : A company manufacturing washing machine. There is a well

defined system of jobs with a clear and definite authority, responsibility
and accountability in the company. But people are not allow to interact
byond their officially defined roles. As a result the company not able to
adopt to the changing business environment. The workshop is also not
motivated due to lack of social interaction. The company facing problems
of procedural delays and inadequate recognition to creative talents.

(a) Suggest how the organization can overcome the problem faced by it.
(b) Give any two benefits it will derive from your suggestion.

Ans:- (i) Introduction of informal organization.

(ii) Two benefits the firm will derive are:

(a) Faster spread of communication and quick feedback.

(b) It helps to fulfil the social needs of the members and enhances their job
satisfaction.
 (c) Fulfilment of organizational objectives.

Case 6: R is the managing director of Ujala a company which manufactures

soft toys. The organizational structure has separate department for
production, finance, marketing and human resources.
Name the organization structure of the organization.
State any two advantages and two disadvantages of such structure.

Ans: a) Functional organization structure.

Write any 2 merits and 2 demerits of such organization structure.

Case7: -Nikita is the CEO of a firm which manufactures womens

garments. Her company has now diversified operations into womens health
care products and cosmetics for women. She seeks your advice about
selecting suitable organizational structure.

Ans:- Divisional organization structure.

Cases for practice

Case 1:-K runs a beauty clinic which has its head office in Kanaught place and
branches at 7 centers all over Delhi. For her branches she has appointed
managers, assistants managers and supervisors who take impendent
decisions regarding working of their branches but work under overall control
under K.

a) Name the organizational set up chosen by her.

b) Give 4 advantages of such set up.
(Hint: Decentralization)
Case 2:- S Ltd is engaged in the production of marble products. The members
of the organization have friendly relations among them. Which type of
organization exists in S Ltd?
Explain any 3 benefits of developing such organization.
(Hint: Formal Organization)

Staffing

Case 1: An Auto company is setting up a new plant in India for

manufacturing auto components. India is a highly competitive and cost
effective production base in this sector. Many reputed car
manufacturers source their auto components from here.
Co. is planning to capture about 40% of the market share in India
and also export to the tune of at least $6 million in about 2 years of its
planned operations. To achieve these targets it requires a highly
trained and motivated workforce. You have been retained by the
company to advise it in this matter. While giving answers keep in mind
the sector the company is operating.
Questions.
(i) Outline the process of staffing the company should follow.
(ii) Which sources of recruitment the company should rely upon. Give
reasons for your recommendation.
(iii) Outline the process of selection the company should follow with
reasons.
(iv) Which methods of training and development should the company
initiate? Explain giving reasons.

Ans. (i) The process of staffing the company should follow:

(a) Estimating the manpower requirements, keeping in view the
production schedules, demand forecasts, market schedules etc. It aims to
determine the number and type of employees required. Type refers to
specific qualification, skills or experience to be possessed by the
employees.
(b) Recruitment: the process of searching for prospective employees and
stimulating them to apply for jobs in an organisation. After assessing the
number and type of employee required, the manager tries
that more and more people should apply for the job so that the
organisation can get more choice and select better candidates.
(c) Selection: It is the process of identifying and choosing the best person
out of a number of prospective candidates for a job.
(d) Placement and orientation
(e) Training and development

(ii) The company should focus on external sources of recruitment because

of the following reasons:
(a)Qualified personnel
(b) Wider choice
(c) Fresh talent
(d) Competitive spirit

(iii) The process of selection the company should follow is given along with
reasons:
(a) Preliminary screening (b) Selection tests (c) Employment
interview (d) Reference and background checks
(e) Selection decision (f) Medical examination (g) Job offer
(h) Contract of employment

(iv) Company should prefer the following methods of training and

development:
(a) Apprenticeship programme
(b) Vestibule training

Case 2 : A major insurance company handled all recruiting, screening

and training processes for data entry/customer service
representatives. Their competitor was attracting most of the
qualified, potential employees in their market. Recruiting was made
even more difficult by the strong economy. This resulted in the client
having to choose from candidates who had the soft skills needed for
the job, but lacked the proper hard skills and training.
Questions.
(i) As an HR manager, what problems do you see in the company?
(ii) How do you think it can be resolved?

Ans. (i) (a) Labour turnover seems a major problem. Therefore, the
organisation will be reduced into an empty shell of jobs.
(b) Recruitment of candidates has become more difficult.
(c) Less trained employees are hired and consequently it resulted in
reduced
productivity.
(d) The employees became more prone to accidents.

(ii) The following steps can be taken to solve the problems:

(a) employees can be retained in the organisation by using incentives like
attractive remuneration and other financial incentives like perquisities so
that the competitors are not successful in their attempt to attract the
companys personnel.
(b) Recruitment can be done using methods like advertisements,
promotions and
employee recommendation so as to ease the recruitment process.
(c) Employees should be given On the job training so as to help them
acquire hard skills. Job rotations can be used to make employees enhance
their productivity.

Case 3 : Zenith Ltd. is a highly reputed company and many people wanted to
join this company. The employees of this organization are very happy and they
discussed how they came in contact with this organization.

Aman said that he was introduced by the present Sales Manager, Mr.
John.
Benu said that he had applied through the newspaper and he was
appointed as H.R Manager.
Vaibhav said that he was neither related to any of the employee of the
organization nor there was any advertisement in the newspaper even
then he was directly called from IIM Ahmadabad from where he was
about to complete his MBA.
(a) The above discussion is indicating an important function of
management. Name the function of management.
(b) The management function identified in part (a) follows a particular
process. Explain the step of this process which is being discussed in
the above para.
 Ans:- a) Staffing.
a) Recruitment: it is defined as the process of researching for
prospective employees and stimulating them to apply for jobs in
the organization.
Case 4 : Blue Heaven Ltd. purchased a new hi-tech machine from Germany
for manufacturing high quality auto components in a cost effective manner.
But during the production process, the manager observed that the quality
of the production was not as per standard. On investigation it was found
that there was a lack of knowledge amongst the employees of using this
high tech machines. So frequent visit of engineers was required from
Germany. This resulted in high over head charges.

Suggest what can be done to develop the skills and abilities of

employees for producing high quality products by using these hi-
tech machines. Also state how the employees or the organization
will benefit from your suggestion.

Ans- Training of employees

Benefits to the organization or employees:

(i) Avoid wastage of effort and money

(ii) Enhance employees productivity
(iii) Equips future managers.
(iv) Increase employee morale and reduces absenteeism
(v) Obtaining effective response to fast changing environment.
(vi) Improve skill and knowledge of the individual.
(vii) Increased performance by the individual.
(viii) Employee more efficiently handle machines

Case for practice

CASE : - Ms. Maya recently completed her post graduate diploma in
human resource management. A few months from now a large still
manufacturing company appointed her as its human resource manager. As
of new, the company employs 800 persons & has an expansion plan in hand
which may require another 200 persons for varies types of additional
requirements. Ms. Maya has been given complete charge of the companys
human resource department.Based on this case answer the following
question.

Questions:-

1. Point out what functions is the supposed to perform?

2. What problems do you foresee in her job?

What steps is the going to take to perform her job efficiently

DIRECTING
Case 1: Smart bank functioning in India. It is planning to diversify into
insurance business. Lately, the government of India has allowed the
private sector to gain entry in the insurance business. Previously, it was
the prerogative of LIC and GIC to do insurance business. But now with
liberalisation of the economy and to make the field competitive other
companies have been given licenses to start insurance business under
the regulation of Insurance Regulatory and Development Authority.
Bank plans to recruit high quality employees and agents and exercise
effective direction to capture a substantial part of life and non-life
insurance business.
Questions.
(i) Identify how the company can supervise its employees and agents
effectively. What benefits will the company derive from effective
supervision?
(ii) What financial and non-financial incentives can the company use
for employees and agents separately to motivate them. What benefits
will the company get from them?
(iii) How can the company ensure that higher order needs i.e., esteem
and self actualisation as specified by Abraham Maslow are met?
(iv) Give a model of formal communication system that the company
can follow. Identify the barriers in this model. How can they be
removed?
(v) How can informal communication help to supplement formal
communication model given by you in answer to question (v)?

Ans. (i) Company can supervise its employees and agents by appointing a
supervisor. Supervisor will not only supervise the employees but will also
guide and direct their efforts towards the objectives. Benefits from effective
supervision are:
(a) Maintains day-to-day contact
(b) Link between workers and management
(c) Maintains group unity
(d) Ensures performance
(e) Provides training

(ii) (a) Financial incentives: Financial incentives refer to incentives which

are in direct monetary form or measurable in monetary terms and serve to
motivate people for better performance. The financial incentives generally
used in organisations are listed below:
Pay and allowances, -linked wage incentives,

Profit sharing,Co-partnership/stock option,Retirement benefits, and

Perquisites
(b) Non-financial incentives: Psychological, social and emotional factors
also play an important role in providing motivation. Non-financial
incentives mainly focus on these needs. Some of the important non-
financial incentives are discussed below:
Status, Organisational climate,Career advancement opportunity,
Job enrichment,Employee-Recognition programmes,Job security,
Employee participation and Employee empowerment .
Incentives will benefit the company as incentives help to motivate the
Employees and motivated employees work positively for achieving the
organisational objectives.

(iii) Higher order needs are not satisfied with money alone. To satisfy
esteem and self actualisation needs, motivators like autonomy status,
appreciation from others, challenging jobs, opportunities for innovation,
etc. play an important role.

(iv) The company can follow free flow model of formal communication
system as flow of communication is very fast in this network.
The barriers are: (a) Semantic Barriers. (b) Psychological Barriers.
(c) Organisational Barriers. (d) Personal Barriers.
Measures to remove the barriers:
(a) Clarifying the ideas before communication.
(b) Communicate according to the needs of receiver.
(c) Consult others before communicating.
(d) Be aware of languages, tone and content of message.
(e) Convey things of help and value to listeners.
(vi) Company should use positive aspects of informal communication and
minimise its negative aspects. Thus, the importance of informal
communication lies in the advantages it adheres to the organisation.
Advantages of Informal Communication:
(a) It helps the employees to develop friendly and social relationship in the
organisation.
(b) It helps them to communicate on the matters which cannot be
discussed through formal communication.
(c) Informal communication is often repeated and understood easily.
(d) It helps the managers to fill the communication gap, if any, in the flow of
information through formal communication.
(e) It is fast and the urgent matters can be transmitted easily without any
delay.

CASE 2. X is the owner of an electronic showroom. He wants an experienced

sales manager and accounts manager. For this, he gives an advertisement.
Thirty people apply for the job. He selects the two best persons out of a number
of prospective candidates for a job. X gives sales target to sales manager and
assigns work to accounts manager. The sales manager achieved his sales
target one month in advance. His achievement was displayed on the notice
board and a certificate for the best performance was awarded to him by the
owner of the showroom.
Questions:
(i) Name the source of recruitment which is used by X to fill the above posts by
quoting the line from the above para. Also state any one advantage of using
this source of recruitment.
(ii) Which test help X to find out the skills and abilities possessed by the
candidate relating to the job during selection process?
(iii) Name the type of incentive awarded by X to a sales manager.
(iv) Which need of a sales manager, according to the Maslows Need Hierarchy
Theory of Motivation is satisfied by giving such type of incentives?

Answer.
(i) External Recruitment: He wants an experienced sales manager and accounts
manager. For this, he gives an advertisement. External sources of recruitment
include personnel outside the organization.
(ii) (a) Trade test: This test measures the existing skills of the individual. They
measure the level of knowledge and proficiency in the area of professions or
technical training.
(b) Interest test: Every individual has fascination for some job rather than the
other. Interest tests are used to know the pattern of interests or involvement of
a person.
(iii) Employee recognition: Employees work should be recognized and
appreciated. Recognition means acknowledgement with appreciation.
Employees feel motivated if appreciation is given to them.
(iv) Esteem needs/Ego needs: These include factors such as self-respect,
autonomy status, recognition and attention.

CASE 3. Ms. Mamta is promoted to the post of principal in G.S. Alag Public
School, Delhi. Ruchika and Amit are business studies teachers as well as good
friends. One day at lunch they were discussing the behavior of the newly
appointed principal. The Principal sets the target for the subject teachers
without discussing it with them. She firmly tells them that if the task is not
completed within given time period then strict action will be taken against
them. On the next day, one of the teachers explains some problems to the
principal but she does not grasp the message due to some reasons. At the end
of the given time period, the principal has been told that a few teachers could
not complete their task.
Questions:
(i) Name the source of recruitment which is used by schools management to
fill the post of principal by quoting the line from the question.
(ii) Identify the type of communication used by Ruchika and Amit in the above
para.
(iii) Which style of leadership is followed by Ms. Mamta?

Answer.
(i) Internal recruitment:
(a) Ms. Mamta is promoted to the post of principal in G.S. Alag Public School,
Delhi. Internal sources of recruitment include personnel already on the payroll
of the organization.
(b) Recruitment out of internal sources refers to the recruitment for jobs for
within the organization.
(ii) Informal communication: Communication taking place without following the
formal lines of communication is said to be an informal communication.
(iii) Autocratic leadership:
(a) Under this, autocratic leader gives order and expects his subordinates to
obey those orders.
(b) He keeps all the authorities concerned in his control and takes all decisions
without consulting the subordinates.

CASE 4. Explain the various needs of Maslows Need Hierarchy theory.

Which of the needs are satisfied in the following cases?
(i) When employees are given training?
(ii) When financial incentives like bonus and co-partnership are given to them?
(iii) When authority is delegated to them?

Answer.
(i) Safety needs and self-actualisation needs,
(ii) Physiological needs, safety needs:
(iii) Ego needs self-actualisation needs:

CASE 5. Mr. Ashok, a Production Manager of an Auto-mobile company is a not

able to communicate and provide guidance to the workers of a factory due to
overload of the work. So he decides to appoint a person who will be able to
spend more time with the workers.

Questions:

1. Identify the element of directing which helps the production manager to

reduce his workload.
2. Write any two importance of such element which identify in above.

Answers:

1. Supervision
2. A) Provides a link between the workers and management
B) Motivating of workers.

CASE 6. Sunita had been working as trainer with Global enterprises. She was
popular amongst the employees. She was quite an ambitious person. When
the executive engineer (her boss) retired, she applied for that post.
Management of Global Enterprises decided to fill the vacant position by an
outside. She felt demotivated and her performance declined. When the new
executive engineer joined, she saw that Sunita had been working with
company for a long time and she needed motivation to improve her
performance.

Questions:
1. Why did Sunita`s performance decline? Explain, by quoting the line in
above para.
2. Why did management of Global Enterprises hire the executive engineer
from outside?
3. What was required to improve Sunita`s Performance?
Answers:
1. Management of Global Enterprises decided to fill the vacant position by
an outside. So her performance declined although she felt that she was
competent to do the same.
2. The management may not have found Sunita competent enough to cope
up with the new designation responsibilities and work profile.
3. Sunita needed appropriate direction and motivation to improve her
performance.

CASE 7: Mr. Vimal , a sales manager, achieved his sales targets one month in
advance. His achievement was displayed on the notice board and a certificate
for the best performance was awarded to him by the CEO of the Co.
Questions:
1) Name the type of incentive offered to the employees.
2) Explain any two other such types of incentives.
3) What values can be generated among the workers by adopting this
incentive?
Answers:
1) Recognition (under non- financial incentive)
2) The two other non-financial incentive are:
Job security
Employee participation
3) The values are:
Motivation
Sense of appreciation
Encouragement
Inspiration to other workers

CASE 8 . Nippon Ltd. an organization manufacturing generators. The

marketing manager delegates the task to five sales representatives working
under him. Among them the three sales representatives was able to achieve
their respective targets. As a result the marketing manager talks to the CEO of
the company to recognize the performance of the three sales representatives.
The company decides to upgrade their cadre and their salary package also.
Questions:
1. Name and explain the element of directing function which the company
assures the three representatives to achieve their targets.
2. What values does the company inculcate to the other two sales
representatives?
Answers:
1. Explain the element of directing `Motivation`.
2. Values are:
Commitment
 Hard work
Responsibility
Cooperation

Controlling

Case 1 : Mr. Nath, a recently appointed production manager of Suntech Ltd.

has decided to produce Jute bags instead of Plastic bags as these are
banned by the government. He set a target of producing 1000 jute bags a
day. It was reported that the employees were not able to achieve the
target. After analysis he found that the employees were de-motivated and
not putting their best for achieving the target. Mr. Naths behavior is good
toward the employees. His attitude is always positive. So he announced
various incentive schemes for the employees like:-

Installing award or certificate for best performance.

Rewarding an employee for giving valuable suggestions.
Congratulating the employees for good performance.
(a) Identify the functions of managements highlighted in the
above paragraph.
(b) State the incentive under which the employees are motivated.
(c) State any two values which the Production manager wants
to communicate to the society by his work and behavior.

Ans:- (a) Controlling and directing.

(b) Employee recognition programme (non-monetary incentive).

(c) Value (any two).

Sensitivity to environment;
Good behavior towards employee;
 Team work with employee;

Case 2-Rajat limited produces hosiery items for export purposes. john
player a foreign import company, has sent a complaint that the cloth used in
the shirts in the January 2015 dispatched is substandard.

a) What management function is responsible in above case?

b) Explain the process of above function.

Ans: (a) Controlling

(B)Steps in contolling process:-

1- Setting Performance Standards

2- Measurement of Actual Performance
3-Comparing Actual Performance with Standards
4-Analysing Deviations:
(a) Some deviation in performance can be expected in all activities. It is,
therefore, important to determine the acceptable range of deviations.
(b) Also, deviations in key areas of business need to be attended more
urgently as compared to deviations in certain insignificant areas. Critical
point control and management by exception should be used by a manager in
this regard.Critical Point Control: It is neither economical nor easy to
keep a check on each and every activity in an organisation. Control should,
therefore, focus on key result areas (KRAs) which are critical to the success of
an organisation. These KRAs are set as the critical points. If anything goes
wrong at the critical points, the entire organisation suffers.
Management by Exception:Management by exception, which is often
referred to as control by exception, is an important principle of management
control based on the belief that an attempt to control everything results in
controlling
nothing. Attempt to control everything results in controlling nothing.
Thus, only significant deviations which go beyond the permissible limit
should be brought to the notice of management.
Step 5: Taking Corrective Action:
(a) The final step in the controlling process is taking corrective action. No
corrective action is required when the deviations are within acceptable limits.
(b) However, when the deviations go beyond the acceptable range, especially
in the important areas, it demands immediate managerial attention so that
deviations do not occur again and standards are accomplished.
(c) Corrective action might involve training of employees if the production
target could not be met.
(d) Similarly, if an important project is running behind schedule, corrective
action might involve assigning of additional workers and equipment to the
project and permission for overtime work

Case 3 : -Rajeev and Sanjeev are managers in the same organization heading
different units. While discussing about the function of management. Rajeev
says that planning is looking ahead. Whereas controlling is looking back
but sanjeev says you are wrong because planning is looking back whereas
controlling is looking ahead.
a)Both are giving reasons in favour of their statements explain.
b) Explain the possible reasons given by both and justify who is correct?
Ans: a - Rajeev is saying that planning is looking ahead because plans are
always made for future On the other hand , Sanjeev is saying that planning is
looking back because while making plans for future, past experience and
knowledge are required. So, both are right in their statement.
b- Both are correct, because planning and controlling are considered looking
backward and forward. Though planning is looking ahead but when we plan for
future we are guided by past experience also. Similarly while controlling we
measure the past performance and if we find any deviation we take the
corrective actions. Therefore planning and controlling both are looking
backward and forward.

Case for practice:

Case : pranav is appearing as a factory manager in a washing machine

manufacturing company. He was given a target of producing 500 washing
machines per month. He knew that the essence of management is to achieve
desired result. But he does not know how to ensure that work goes on
according the plans guide him by explaining the process. So that he is able to
achieve the desired result.
identify the functions of management to which this process is related?
Explain three importance of above functions.
(hint: Controlling)
 Financial Management

Case 1: IJK Ltd. is planning to modernise its plant and machinery.

(i) Name this kind of investment decision.
(ii) Explain any three factors affecting the investment decision.
(iii) Which kind of market is feasible for this organization?
(iv) How can securities be floated in such a market?

Ans. (i) Capital budgeting decision: A long-term investment decision is

called a capital budgeting decision.
(ii) The three factors affecting the investment decision are:
(a) Cash flows of the project:
(b) The rate of return:
(c) The investment criteria involved:
The decision to invest in a particular project involves a number of
calculations
regarding the amount of investment, interest rate, cash flows and rate of
return.
There are different techniques to evaluate investment proposals which
are
known as capital budgeting techniques. These techniques are applied to
each
proposal before selecting a particular project.

(iii) Primary Market: Primary market is also known as the new issue
market. It deals with the new securities being issued for the first time.

(iv) Securities can be floated in primary market through the following:

(a) Offer through prospectus:
(b) Offer for sale:
(c) Private placement:
Private placement is the allotment of securities by a company to
institutional
investors( like LIC, UTI etc.) and some selected individuals. It helps to
raise capital more quickly than a public issue.The cost of raising finance
through private placement of securities is lower than that through public
issue of securities. Small companies which cannot afford to raise
resources from the public issue, may opt for the private placement.
(d) Right issue:
This is a privilege given to existing shareholders to subscribe to a new
issue
of shares according to the terms and conditions of the company. The
shareholders are offered the right to buy new shares in proportion to
the number of shares they already possess.

Case 2 : -K is the financial director of a newly established company "fast wire

and cables". The management seeks him advice on type of capital structure it
should maintain and how it should raise capital.
(a) State what type of decision K should take to advice the management.
(b) Explain any 3 factors which affect such decision.

Ans: a) Financing Decision.

b) explain any 3 factors like- Cost of raising funds, Risk factor, Cost of
floatation, Cash flow position, Control consideration, Fixed operating cost etc.
case 3 : - In a meeting, General manager is of the view that profit
maximization is the main objective of financial management , while you as a
finance manager believe that -wealth maximization is the most important
objective. Justify your position to convince the board member by giving
suitable reasons.

Ans:
Profit maximization implies procuring the optimum amount of finance by
creating minimum liabilities on the companies and by utilizing the finance in
the best possible way. While wealth maximization means increase in the
market value of shares.
Wealth of a company can be maximized only if funds are economically used.
Hence wealth maximization become the most important objective since it
includes profit maximization and represents the long term interest of
shareholders.
Case 4 :- You are finance manager of a company. The board of director has
asked you to determine the working capital requirement for the company.
state the factor that you would consider while determining the requirements
of working capital for the company.

Ans: factor for determining the working capital requirement:-

Size of business, Nature of business, Operating cycle, Rapidity of turnover,

Seasonal factors, Availability of raw material etc.
 Financial Markets

Case 1 : Supriyas grandmother who was unwell, called her and gave a gift
packet. Supriya opened the packet and saw many crumpled share
certificates inside. Her grandmother told her that they had been left behind
by her late grandfather.

As no trading is now done in physical form, Supriya wants to know the

process by adopting which she is in a position to deal with certificates.

a) Identify and state the process.

b) Also give two reasons to Supriya, why dealing with shares in physical
form had been stopped.

Ans:- (a) De-materialization : It is process where securities held by the

investor in physical form are cancelled and the investor gives an
electronic entry or number so that she/he can hold it as an
electronic balance in an account. So, she needs to open D-mat A/c
with DP.
(b) Problem with dealing in physical form (Any two) :
i- Theft.
ii. Fake/forged transfers.
iii. Transfer delays.
iv. Paper work associated with share certificates or debentures
held in physical form.

Case 2 : R Limited is a real estate company which was formed in 1950.

In about 56 years of its existence the company has managed to carve
out a niche for itself in this sector. Lately, this sector is witnessing a
boom due to the fact that the Indian economy is on the rise. The incomes
of middle class are rising.
More people can afford to buy homes for themselves due to easy
availability
of loans and accompanying tax concessions.
To expand its business in India and abroad the company is weighing
various
options to raise money through equity offerings in India. Whether to
tap
equity or debt market, whether to raise money from domestic market or
international market or Combination of both?, whether to raise the
necessary
finance from money market or capital market. It is also planning to list
itself
in New York Stock Exchange to raise money through ADRs. To make its
offerings attractive it is planning to offer host of financial plans
products
to its stakeholders and investors and also expand its listing at NSE after
complying with the regulations of SEBI.
(i) What are the regulations of SEBI that the company must comply
with?
(ii) How does the SEBI exercise control over R Limited in the interest of
investors?

Ans. (i) Company must comply with the following regulations of SEBI:

Regulatory functions of SEBI

(a) Registration of brokers and sub-brokers and other players in the market.
(b) Registration of collective investment schemes and Mutual funds.
(c) Regulation of stock brokers, portfolio exchanges, underwriters and
merchant brokers and any business in other securities market.
(d) Calling for information by undertaking inspection, conducting enquires
and
audits of stock exchanges and intermediaries.
(e) Regulation of takeover bids by companies.
(f) Levying fee or other charges for carrying out the purposes of the Act.

(ii) SEBI controls R Limited in the interest of investors by exercising

following protective functions:

(a) Prohibition of fraudulent and unfair trade practices like making

misleading
statements, manipulations, price rigging, etc.
(b) Controlling insider trading and imposing penalties for such practices.
(c) Undertaking steps for investor protection.
(d) Promotion of fair practices and code of conduct in securities market.

Case 3 : Energy Supplier Ltd. is a newly established company. The

company needs fixed capital to buy fixed assets like land, building,
plant machinery, etc.
(i) Name the market from where the company can raise the funds.
Also explain any two methods of issuing securities in this market.
(ii) Explain any two factors which affect the requirements of fixed
capital.

Ans. (i) Primary market is also known as the new issue market. It deals
with the new securities being issued for the first time.
Two methods of issuing securities are as follows:
(a) Offer through prospectus:
This involves inviting subscription from the public through issue of
prospectus.
A prospectus makes a direct appeal to investors to raise capital, through
an
advertisement in newspapers and magazines .Public issue involves a
large number of intermediaries, such as bankers, brokers and
underwriters.
(b) Offer for sale:
Under this method, securities are not issued directly to the public but are
offered for sale through intermediaries like issuing houses or stock
brokers.
In this case, a company sells securities at an agreed price to brokers who,
in turn, resell them to the investing public.

(ii) Factors affecting fixed capital:

(a) Nature of the business:
The type of business has a bearing upon the fixed capital requirements.
For
Example, a trading concern needs lower investment in fixed assets
compared
with a manufacturing organization; since it does not require to purchase
Plant and machinery etc.
(b) Scale of Operations: A larger organization operating at a higher scale
needs
bigger plant, more space etc. and therefore, requires higher investment in
fixed
assets when compared with the small organization.
 MARKETING
CASE 1. It is one of the elements of market mix which contains one of the most
important decisions that a marketer has to take to promote sales. This decision
was taken by Mr. Mukund, Marketing manager of Intel Ltd. which facilitated
the customers in product identification and hence ensured quality. It also built
up their confidence and help in increasing their level of satisfaction. Apart
from this, they provide educational scholarships for poor children in the
society.
Questions:
a) Identify the element of marketing mix.
b) Name any two values being emphasised by ensuring quality products for
customers and by running an orphanage home.
ANSWER:
a) The element of marketing mix. `Promotion`.
b) The two values are:
Respect
Humanity
Social responsibility etc.

CASE 2. Jasbir read in the newspaper that there is a special offer on the purchase of LCD T.V.
He went to Vikram Electronics. He purchased goods according to his need and satisfaction.
He is not forced by any sales person to purchase any product.
Questions:
(i) Name the promotional tool which has bought him to the shop.
(ii) State any two qualities of a good salesman.
(ii) Name and explain the consumer rights highlighted in the above para.

Ans. (i) Advertisements.

(ii) Honesty, convincing ability.
(iii) Right to choose:
(a) Every consumer has the right to choose the product at competitive prices which are fair
and reasonable.
(b) He must have access to the variety of goods available and must be able to compare the
relative qualities and prices of similar products

CASE -3. Mr. Rakesh working in a limited company as a sales manager. He

decided, that goods and services must be made available to the customer at
the right place, in right quantity and the right time.
Questions:
a) One of the elements of marketing mix is highlighted in the above para.
Name it by quoting the line from it.
b) Explain the components of such element of marketing mix.
Answers:
 a) Place mix
b) The components of place mix are:
Order processing
Transportation
Warehousing
Inventory control.

CASE 4. Elder Pharmaceuticals is a leading company engaged in manufacturing

cough syrups. The company packs the syrups first in glass bottle and then in a
cardboard box. As the syrups are demanded all over the world, 20 boxes of
syrups are packed in corrugated boxes and distributed to various chemists and
hospitals.
Questions:
a) Identified the three levels of packaging is highlighted in the above para.
Name it by quoting the line from it.
a) What is the basic purpose of packing the cardboard boxes in corrugated
boxes?
Answers:
a) The three levels of packaging are:
Primary package `Pack the syrups first in glass bottle`. And
Secondary packaging `then in a cardboard boxes.
Transportation packaging `20 boxes of syrups packed in corrugated boxes for
transportation and storage purpose`.
b) The basic purpose is to protect the product in the process of transportation and
storage.

CASE -5. Radha found a worm crawling out of newly opened tetra pack of a
juice manufactured by a reputed company, Zest Ltd. She went back to the
shopkeeper from whom the pack was purchased who directed her to call up
the customer care centre. When all her efforts failed, she went to customer
activist group to seek help. The group decided to help Radha and take measure
to impose restrictions on the sale of the firm`s products of the particular batch
and urge customers to refrain from buying the products of the company. Zest
Ltd. lost its image in the market. The CEO gives the responsibility of bringing
back the lost image of the company to a manager.
Questions:
1. Identify the concept of marketing management which will help the
manager getting the firm out of the above crisis.
2. Also explain the role of above identified concept by stating any two
points.
Answers:
1. Public Relations
2. Role of public relations are:
Press relation
Counselling
Product publicity
 Corporate communication etc.

CASE 6. Mr. David, working as Sales executive in Mahalaxmi Ltd. possesses

good marketing techniques. His techniques involve oral presentation of
message in the form of conversation with prospective customers for the
purpose of making sales.
Questions:
1. Name the promotional tool used by Mr. David.
2. Identify the values which can be inculcated by using the technique in the
above case.
ANSWER:
1. Personal selling
2. Values are:
Confidence.
Customer Relations
Creating goodwill

CASE -7. ABC believed that it could maximise its profits by producing hair dye
at large scale. Similarly XYZ Ltd. Who also sold hair dye laid more emphasis on
society and customer need rather than quantity of product? XYZ company
grew within few years and reached the heights of business environment while
ABC Ltd. Suffered losses and closed down.
Questions:
1. What could be the possible reason for closing down?
2. How ABC ltd. Overcome its depressed position?
3. Which market management philosophy do you think both the
companies followed?
Answers:
1. ABC Ltd. Laid more emphasis on quantity rather than customer satisfaction and quality
of product.
2. It should lay more emphasis on customer satisfaction.
3. Marketing philosophy followed by:
The ABC Ltd. production concept and
The XYZ Ltd. societal concept.

CASE-8. In the sales promotion meeting, Mr. Ashutosh, sales executive of

flornce Ltd., raised several queries regarding branding and labelling of their
products. His queries, however,were overlooked by Mr. Jitin, sales manager
and Mr. Pankaj, production manager as they thought they were not so
important.
Questions:
1. Who do you think is right?
2. Why do you think branding and labelling are important?
3. What do you think are the important points to be considered in mind
while branding?
Answers:
1. Ashutosh.
2. Branding and labelling help in advertising and promotion of the products.
3. Brand name should be easy to pronounce, suggestive, distinctive, adaptable, versatile
etc.

CASE-9. Mi Si sold their car at a discount of Rs. 25000 for a limited period to
clear off stock, while H Ltd. started with a scheme of giving a laptop with every
purchase of their car.
Questions:
1. What promotional technique did H Ltd. apply?
2. Which promotional tool was used by both the companies?
3. What is basic purpose of both the companies?
4. What promotional technique of promotion did MSi apply?
5. Explain any two other tools of promotion.
Answers:
1. Product combination.
2. Sales promotional tools
3. To increase their sales
4. Rebate.
5. The other promotional tools are:
Usable benefits.
Lucky draw

Case 10: Zoom Udyog, a car manufacturing Co., has started its business with
Zoom 800 and slowly launched Zoom 1000, Wagon Z, Swy-fy, etc. and
offered various services like after service, availability of spare parts, etc.
Identify the element of marketing mix referred here.

Ans:- Product mix

Case 11: Radha found a worm crawling out of newly opened tetra pack of
juice manufactured by a reputed company, Zest Ltd. she went back to the
shopkeeper from whom the pack was purchased who directed her to call
up the Customer Care Centre. When all her effort failed, she went to a
consumer activist group to seek help. The group decided to help Radha and
take measures to impose restriction on the sale of the firm product of the
 particular batch and urge customers to refrain to buying the products of
the company. Zest Ltd. lost its image in the market. The CEO gives the
responsibility bringing back the lost image of the company to a manager.

(a) Identify the concept of the marketing management, which will help
the managers getting the firm out of the above crisis.
(b) Also explain the role of above identify concept by stating any two
points.

Ans: - (a) Public Relations.

(b) Role of public Relation can be discussed with respect to the

following points:

(i) Press Relations.

(Ii) Product Publicity.
(iii) Corporate Communication.
(iv) Lobbying.
(v) Counselling.

Consumer Protection

Case:1- Himesh after completing his graduation started working with a

multinational company in Delhi. But due to ill health of his parents he had
to go back his village. There he noticed the villagers were literate but
ignorant about their rights. Many vegetable vendors were using stones as
weights to sell their vegetables. Some shopkeepers were selling food items
without having FPO mark. So, to create awareness among villagers
Himesh decided to publish weekly journal jan jagriti. State the right
which Himesh has exercised by doing so.

Ans: - Right to consumer education.

Case2 : Now, filing complaint is just a click away. Filing a complaint in a
consumer courts going to get a lot easier by the end of this year,
virtually. No matter which part of the country youre in, its going to
happen at the click of a mouse.
The project, called Confonet (Computerisation and Computer
Networking
of Consumer Fora), is being executed on a turnkey basis by the National
Informatics Centre (NIC).
Online registration of complaints, the government hopes, will promote
e-governance, transparency, efficiency and streamlining of consumer
fora,
said an official in the Consumer Affairs Ministry. Of Rs.48.64 crore set
aside
for the project, the government has released Rs.30.56 crore so far, the
official
added. Besides software development and testing, networking and
project
implementation, integration and site preparation, it will include
purchase of
hardware for all the 583 district for a, 35 state commissions and the
National
Commission, the official said. At present, computer systems and system
software have been delivered to 25 state commissions and 300 district
for a
never mind the fact that its sometimes a long wait before the hardware
is
finally unpacked and set up in some of the districts. Meanwhile, training
of
staff, sometimes in the classroom and sometimes through e-learning
sessions,
are in full swing.
But just setting up an online complaint filing system wont ensure a
strong
consumer protection movement in the country for that were
working on
GenNext and the best way to do that is to go to schools, the official said.
The government is, therefore, involving school children to form
consumer
clubs so as to involve them in various consumer welfare activities. Part
of
the funding for running the club is to come from various state
governments,
with an equally matching grant from the Centre.

Questions.
(i) What new measure is the Ministry of Consumer Affairs taking to
make filing of complaint easy?
(ii) What role can you as a student play to contribute to the cause of
consumer
protection?
(iii) What scenario of consumer protection do you foresee when the
measures
proposed in the above news report are implemented?
Ans. (i) (a) The project, called Confonet (Computerisation and Computer
Networking of Consumer Fora), is being executed on a turnkey basis by the
National Informatics Centre (NIC).
(b) Online registration of complaints.
(c) Besides software development and testing, networking and project
implementation, integration and site preparation.
(d) Computer systems and system software have been delivered to 25 state
commissions and 300 district fora.
(e) Training of staff, sometimes in the classroom and sometimes through e-
learning sessions, are in full swing.
(ii) As a student, the following steps can be taken:
(a) We can educate the general public about consumer rights by organising
workshops and seminars.
(b) A student may spread awareness about the duties of a rational consumer.
(c) Students can also protest against unfair trade practises.
(d) Educate consumers about various consumer logos.
(iii) (a) It will ease the process of consumer grievance handling.
(b) Online registration of complaints, will promote transparency and
efficiency.
(c) Through training of staff, cases of systematic learning can be improved
and
consumer can be satisfied.
(d) Malpractices can be curbed.

Case 3: Subhash Ltd. is manufacturing cosmetics. They decide to

launch a new range of herbal products. As they are in a hurry so they
have tested the products on rats only. The necessary information is
missing on the package.
(i) Name and explain the consumer rights violated in the given para.
(ii) According to you, a label should contain what kind of information?

Ans. (i) Right to be informed:

(a) Consumers have the right to be informed about the quality, quantity,
purity,
durability, standard and price of the products.

(b) They must be informed about the following:

How to use the products?
What safety measures or precautions are to be taken to avoid loss or
injury?
What is the date of expiry of products like medicines?

(c) A consumer must be given adequate information so that he may assess

whether the item he buys is worth the money he spends.
(ii) Details of the product like:
(a) Batch no. (b) Date of Manufacturing
(c) Price (d) Date of expiry
(e) Net weight (f) Ingredients

Case4 : Jasbir read in the newspaper that there is a special offer on the
purchase of LCD T.V. He went to Vikram Electronics. He purchased
goods according to his need and satisfaction. He is not forced by any
sales person to purchase any product.

(i) Name the promotional tool which has bought him to the shop.
(ii) State any two qualities of a good salesman.
(ii) Name and explain the consumer rights highlighted in the above
para.

Ans. (i) Advertisements.

(ii) Honesty, convincing ability.
(iii) Right to choose:
(a) Every consumer has the right to choose the product at competitive
prices which are fair and reasonable.
(b) He must have access to the variety of goods available and must be able
to compare the relative qualities and prices of similar products.

Cases for practice

Case: A consumer Raj bought a refrigerator of Rs. 25000 with a guarantee of 2

years. But he did not paid in lump sum. At the time of purchase he paid Rs. 5000
only and remaining Rs. 20000 in the installment of Rs. 2000 per month. He was
not given a bill for that but only a receipt for the payment. After the functioning
of 3 months the compressor of refrigerator stopped functioning and also there
were some more defects in it. So Raj goes to agency and wants to replace it but
the salesman disagreed and said to repair it but Raj wants the other one. Then he
appeals in the consumer court by showing his receipts of payment for refrigerator
and guarantee card bearing no. 421. Consumer court ordered the Agency to
replace the refrigerator and also to pay compensation for the inconvenience to
Raj.

Questions :-

1. What type of case can be filed in which type of consumer court?

2- Why bills and receipts are important?

Case: Ram baught a car with insurance & warranty card of 2 years .

He enjoyed so much with properly working car, but after 1.5 year the car was
not responding properly. Its A.C and sound system were not working
properly. So he went to the service centre. Even though the transaction falls in
the warranty period but service centre tried to make him fool. Then he walked
to consumer court for relief. Ram filed a case against the service provider .

According to Consumer Protections Act , each consumer should be entertained

properly. But in this case Ram was not at all entertained properly.

Questions :-

1- Explain the reasons as to why consumers protection is needed .

2- Which act is enumerated in the above case?

__________ END ___________________________