ORGANISATION OF COMMERCE & MANAGEMENT

FYJC - Chapters 5, 6, 7 and 8 Date: __ / __ / ____

Total Marks: 50 Total time: _______

Q1. Fill in the blanks. (5M)

(i) Privatisation implies reduction in the role of public sector.

(ii) Business environment has tremendous impact on business.

(iii) Management is dynamic in nature.

(iv) Marketing includes promotion.

(v) International trade has more trade barriers as compared to internal trade.

Q2. Match the columns. (5M)

A B
Business Environment SWOT
Management as an art Need of creativity
International trade WTO
Middle level management Interpretation of policies
Marketing 4 Ps
Q3. Distinguish Between: (Any 2)
(a) Top level management & Lower level management
TOP LEVEL MANAGEMENT
1. Decides the organisational objectives.
2. Mainly concerned with ‘thinking’
3. Possesses analytical skills for planning
the organisational activities.
4. Appoints leaders at the middle level
management.
5. Evaluates the performance of various
departments.
(b) Liberalisation & Privatisation
LIBERALISATION
1. Refers to the relaxation or removal of
unnecessary restrictions on businesses.
2. The main aim of Liberalisation is to
give freedom to businesses to a
certain extent.
3. Abolished the licensing requirements
for most of the industries.
4. Six industries are still under the
licensing formalities.
5. Opening of basic telecommunications
services to the private sector.
(10M)
LOWER LEVEL MANAGEMENT
1. Decides the day-to-day objectives.
2. Mainly concerned with ‘doing’.
3. Possesses technical skills for
implementation of plans.
4. Guides, instructs and directs the
subordinates.
5. Looks after the maintenance of
machinery, equipments, etc.
PRIVATISATION
1. Refers to the transfer of ownership of
a business, enterprise, agency or public
services from the public sector
(Government) to the private sector.
2. The main aim of Privatisation is to let
the private sector play a larger role in
nation building.
3. Diluted the stake of the government
in the public sector organisations
through the policy of planned
disinvestment.
4. Three sectors are still reserved for
the government.
5. Selling of various businesses owned
by the government agencies.
(c) Selling & Marketing

SELLING
1. Means accepting money or money’s
worth for the transfer of ownership of
title of products to the buyers.
2. Begins with production of goods in
industry.
3. Focuses on product and production.
4. Makes profit through sales volume.
5. Lays more emphasis on the needs of
the seller.
6. Selling is a part of marketing.
7. Depends on aggressive advertisement
and sales promotion activities.
8. Supply is more important in selling.
MARKETING
1. Is an economic process by means of
which good and services are exchanged
and their values are determined in terms
of money.
2. Begins with understanding wants and
desires of customers.
3. Focuses on customer needs.
4. Expects profit through customer
satisfaction.
5. Lays more emphasis on the needs of
the customer.
6. Marketing is a broader concept and
includes selling.
7. Depends on developing suitable
Marketing-Mix (4 Ps)
8. Demand is more important in
marketing.

Q4. True or False with reasons (Any 2) (10M)

Q4. (i) Globalisation results into unequal competition.

Ans: This statement is FALSE due to the following reasons:
1. Globalisation implies freedom to set up and operate business, buy and sell in any
part of the world.
2. It narrows the differences between the domestic and international market.
3. Direct foreign private participation is possible.
4. Betterment in the industrial development of a country, thereby leading to
economic development.
5. Exchange of new ideas and human resources across nations is possible.
The above factors result in competition, thereby giving equal opportunities to all
businesses.
Q4. (ii) Management is required even for a very small business.
Ans: This statement is TRUE due to the following reasons:
1. Every business wants to achieve goals and managements helps a business to leap
towards its goals.
2. Optimum utilization of resources and efficiency can be achieved through
management.
3. Good management motivates the human resources.
4. A stable organisation can be achieved through proper management.
5. Management ensures coordination, which is the indispensable for all businesses.
Thus, management is required in business, irrespective of the size or nature of
business.

Q4. (iii) The analysis of business environment is not at all important for businesses.
Ans: This statement is FALSE due to the following reasons:
1. Analysis of business environment provides numerous opportunities.
2. Awareness of the business environment helps organisations to identify various
threats in time and serves as an early signal.
3. Understanding the business environment makes the management sensitive to
the changing needs and expectations of customers.
4. In today’s competitive world, turbulent market conditions, less brand loyalty,
more demanding customers, etc compel businesses to examine the situation and
develop a suitable course of action.
5. On the basis of the analysis of business environment, a business can formulate
suitable plans, policies and strategies for future course of action.
Thus, the analysis of business environment is absolutely important for
businesses.
Q5. Short notes (Any 2) (10M)

Q5. (i) Features of management.

Ans: The following are the features of management:
1. Management is goal oriented:
Management is done keeping in mind a certain goal, a purposeful activity.
Managers take efforts to ensure that it is fulfilled.

2. Management is a group activity:

Management is always done by a group and for a group. The definition of
management also emphasizes on getting things done through people. It clearly
indicates that management is team work.

3. Management is universal:
This refers to the fact that management is applicable to all organisations,
irrespective of their size, nature and products. Management is also required at all
the three levels in an organisation (top, middle and lower level management).

4. Management is a continuous process:

Continuity is an essential part of management because it is done constantly
throughout the activity. Management is necessary to begin and run the
organisation constantly and smoothly.

5. Management is intangible:
Management cannot be seen because it has no physical existence. Although we
cannot see management, we can clearly see the results of management in profit,
sales revenue, smooth functioning, good employer-employee relations, etc.

6. Management is dynamic:
Since the ancient times, management has changed to suit the changing situation.
Management is not static but dynamic in nature, and adopts suitable changes to
achieve the goals. For example: After the changes in India in 1991, businesses
also changed drastically so as to adapt.

7. Management is situational:
Managerial decisions are taken to handle a particular situation. Decisions are
taken based on certain management principles, theories and techniques. But,
usually, no two situations can be exactly the same. The situational priorities and
 conditions are taken into consideration. Thus, the techniques used in one
situation may not be useful in another similar situation.

Q5. (ii) Need of Privatisation.

Ans: Privatisation refers to the transfer of ownership of a business, enterprise, agency
or public services from the public sector (Government) to the private sector. The need
of Privatisation is as mentioned below:
1. More efficiency:
Efficiency refers to generating the best possible results with the least inputs. The
private sector works towards a goal of profit making and this leads to better
efficiency as compared to the public sector.

2. Less political interference:

Political interference is reduced leading to faster decision making. Absence of
‘red tape’ (hurdles or difficulties on procedural system run by Government) also
aids better economic and commercial decisions.

3. Reduction in labour problems:

The government employees are protected by strong unions which often cause
strikes and agitations. This is avoided in the private sector where efficiency and
commitment to work are rewarded.

4. Accountability:
In the private sector, responsibility and accountability is clearly defined. This is
absent in the public sector where fixing of responsibility is often avoided by
passing the buck. Greater accountability certainly results in more efficient
functioning.

5. Capital Market discipline:

The private sector is under continuous scrutiny by financial experts. Their ability
to raise capital from the market majorly depends on their performance.
Q5. (iii) Scope and Importance of International Business.
Ans: International business is the process of focusing on the resources of the globe and
the objective of the organisations is on global business opportunities and threats, so as
to produce, sell or exchange goods across the globe.
International business constitutes the following:
1. Import and export of goods:
Exporting means selling tangible goods to foreign countries and importing means
purchasing of tangible goods from foreign countries.

2. Import and export of services:

This includes trading of intangible goods. Intangible goods here refer to various
services like communication, construction and engineering, educational and
financial services, entertainment and recreation, lodging and boarding, travel and
tourism, transportation, professional services, etc. Due to the intangible aspect of
services, this trade is also known as ‘invisible trade’.

3. Licensing and Franchising:

Licensing is the permission given by one party to another party in a foreign
country to produce and sell goods, to use their trademark, patent or copyrights.
For this, a fee is charged. Example: Pepsico and Coca Cola.
Franchising is a term used in the context of provision of services. It is similar to
Licensing. Example: McDonalds.

4. Foreign investments:
This involves investments of funds abroad in exchange for financial returns.
Foreign investment can be of two types:
Direct Investment or FDI (Foreign Direct Investment) takes place when an
organisation directly invests in assets such as plant and machinery in foreign
countries. This investment is done with a view to undertake production and
marketing of goods and services in foreign countries.
Portfolio Investment is an investment that an organisation makes into another
organisation by acquisition of its shares of providing loans. It can earn dividend
on shares or interest on loans.
Q6. Long answer (Any 1) (10M)

Q6. (i) Write features, objective and functions of the WTO.

Ans: The features and objectives of the WTO are as mentioned below:
1. The WTO is the only global organisation dealing with the rules of trade between
nations. This is done by preparing agreements signed by the bulk of the world’s
trading nations and ratified in their parliaments.
2. The main goal of WTO is to help producers of goods and services, exporters and
importers conduct their business.
3. The WTO assures consumers and producers that they can enjoy secure supplies
and greater choice of finished products, components, raw materials and services
they can use.
4. The WTO aims at creating a more prosperous, peaceful and accountable
economic world.
5. The WTO has 153 members, representing more than 95% of total world trade
and 30 observers. India is a founder member of the WTO.
6. The WTO is managed by a ministerial conference, meeting every two years; a
general council, which implements the conference’s policy decisions and is
responsible for the day-to-day administration; and a director-general who is
appointed by the ministerial conference.
7. The WTO’s headquarters is in Switzerland.
The functions of the WTO are as mentioned below:
1. Administering the WTO agreements
2. Forum for trade negotiation
3. Handling trade disputes
4. Monitoring national trade policies
5. Technical assistance and training for developing countries
6. Cooperation with other international organisations
Q6. (ii) Define Marketing. Explain the functions of marketing.
Ans: The American Marketing Association defines marketing as “Performing the
business activities that direct the flow of goods and services from producer to
consumers or users”
Paur Mazur defines marketing as “The creation and delivery of a standard of living to
the society”
Marketing plays a crucial and indispensable role in the business world. The functions of
marketing are given below:
1. Buying:
Buying is an important function of marketing and it is the first step in the process
of marketing. Buying refers to the purchase of a commodity having a specific
price from a seller to fulfill business needs. Every trading concern needs efficient
and economical buying to get adequate profit. The lists of specific requirements
are to be prepared and suppliers are contacted.

2. Selling:
Selling is another important function of marketing. It involves the transfer of title
of goods to the buyer. It is very important from the point of view of the seller,
consumer and the general public. The objective of profit making is achieved
through the sale of goods. The selling function in marketing creates demand for
the product, expansion of market in anticipation of demand.

3. Transportation:
Transportation involves the movement of goods and services from the place of
production to the place of consumption. It primarily creates place-utility. It is of
great importance to obtain the benefits of regional specialisation of production,
division of labour and large scale production. Large scale production is possible
because of the fastest modern transportation for sending raw materials to the
industries and finished goods to the market.

4. Warehousing:
The warehousing function creates time-utility. Storage is absolutely essential to
keep the goods from the time they are produced until they are needed for the
ultimate consumers. At present, the goods are produced in anticipation of
demand and therefore, it is essential for the producer to store the goods
systematically till the time of their sale. The storage function is made effective by
establishing warehouses. Storage also helps to keep a steady flow of
commodities in the market throughout the year.
5. Financing:
Availability of adequate finance at a reasonable cost to capital is very essential for
the smooth functioning of marketing activities. Finance is the life-blood of an
organisation. Hence, all the departments are in need of regular supply of
business.

6. Market Research:
Modern marketing requires a lot of accurate and adequate information from
time to time for various purposes. The proper analysis of such information
enables a business organisation to know what to do, when to do it, how exactly
to do it and who are the best people to get it done. Market research also helps an
organisation to identify the preferences of customers, which is one of the most
important aspects for an organisation to succeed.

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