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BCOC 132
BUSINESS ORGANISATION AND
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MEDIUM: ENGLISH | 2022-2023

SESSION: FOR JULY 2022 – DEC
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W_INFORMER
 

  Bachelor of Commerce
 
B.Com
 

  CHOICE BASED CREDIT SYSTEM

 

 
BCOC – 132: Business Organisation and Management
 

 
ASSIGNMENT
 
2022-23
 

  Valid from 1st July 2022 to 30th June 2023

 
First Semester
 

 
School of Management Studies
 
Indira Gandhi National Open University
   
Maidan Garhi, New Delhi -110068
 

 
 BACHELOR OF COMMERCE
CHOICE BASED CREDIT SYSTEM
BCOC – 132: Business Organisation and Management

ASSIGNMENT: 2022-23

Valid from 1st July 2022 to 30th June 2023

Dear Students,

As explained in the Programme Guide, you have to do one Tutor Marked Assignment in this
Course. The assignment has been divided into three sections. Section A Consists of long answer
questions for 10 marks each, Section B consists of medium answer questions for 6 marks each
and Section C consists of short answer questions for 4 marks each.

Assignment is given 30% weightage in the final assessment. To be eligible to appear in the
Term-end examination, it is compulsory for you to submit the assignment as per the schedule.
Before attempting the assignments, you should carefully read the instructions given in the
Programme Guide.

1. Those students who are appearing in December 2022 exams. They should download the
new assignment and submit the same latest by 15 October 2022.

2. Those students who are appearing in June 2023 Term End Examination they have to
submit latest by in 15 March 2023.

You have to submit the assignment of all the courses to the Coordinator of your Study Centre.
 TUTOR MARKED ASSIGNMENT

COURSE CODE : BCOC-132

COURSE TITLE : Business Organisation and Management
ASSIGNMENT CODE : BCOC-132/TMA/2022-23
COVERAGE : ALL BLOCKS
Maximum Marks: 100

Note: Attempt all the questions.

Section-A
(This section contains long answer questions of 10 marks each)

Q.1 What is lease financing? What are two types of lease financing? (10)
Q.2 Briefly discuss the process of innovation. Mention various types of (10)
innovation.

Q.3 What are the steps involved in the communication process? Briefly explain (10)
the major elements in the communication process.

Q.4 “Non-financial incentives are as strong motivators as the financial ones” (10)
Critically examine this statement in the light of need-priority model and
two-factor theory of motivation.

Q.5 Explain various marketing concepts under which business enterprises (10)
conduct their marketing activity.

Section-B
(This section contains medium answer questions of 6 marks each)

Q.6 What do you mean by leadership style? Briefly explain the basic styles of (6)
leadership.
Q.7 Write a short note on National Skill Development Corporation (NSDC). (6)
Q.8 Explain McGregor’s Participation Theory of motivation. (6)
Q.9 Discuss the marketing concepts under which business enterprises conduct (6)
their marketing activity.
Q.10 Explain the Role and Functions of SEBI. (6)
Section-C
(This section contains short answer questions of 4 marks each)

Q.11 Explain the concept of One Person Company. (4)

Q.12 Differentiate between PERT and CPM. (4)
Q.13 How is Primary market different from Secondary market? (4)
Q.14 Explain the barriers of effective communication. (4)
Q.15 What is outsourcing? How is it distinguished from off-shoring? (4)
 SECTION - A

(This section contains long answer questions of 10 marks each)

Q.1 What is lease financing? What are two types of lease financing?

Ans. A lease is a contractual agreement whereby one party i.e., the owner of an
asset grants the other party the right to use the asset in return for a periodic
payment. In the lease financing the asset is given on rent for specified period. The
owner of the assets is known as the Lessor. The party whom the asset is given is
called the Lessee. The fixed amount is paid by Lessee to the Lessor for the use of
the asset which is known as lease rental. The lease contract is signed, which
stipulates the terms and conditions for regulation of the lease arrangements. The
asset is given back after the expiry of lease period. This finance may be used for
modernisation and diversification of the organisation. Lease financing may be
suitable for the business related to fast changing technological developments. The
Lessee shall compare the cost of buying the asset and the cost of leasing the asset
for entering to lease financing.

Types of Lease

a) Finance Lease: The Lessor transfers substantially all the risks and rewards of
ownership of assets to the Lessee for lease rentals. The Lessee is brought in the
same condition as he/she would have been if he/she had purchased the asset.
There are two phases of finance lease. The first phase is known as primary phase.
The primary phase is non-cancellable period. The Lessor recovers his investment
through the rent of the lease. The primary period may last for indefinite period of
time. The lease rental for the secondary period is smaller than that of primary period.

Features of Finance Lease

1) In the lease financing, the Lessee gets a right to use an asset.

2) The Lessor charges lease rent during the primary period of lease. The amount of
the lease rent may recover the investment.

3) The amount of lease rent for secondary period is less.

4) The maintenance of asset is done by the Lessee.

5) The Lessor do not take the risk and reward related to asset.

6) The investment of Lessor is ensured because the lease is no cancellable.

b) Operating Lease: Lease which is not finance lease is called operating lease. In
case of operating lease, the risks and rewards incidental to the ownership of asset
are not transferred by the Lessor to the Lessee. The term of such lease is much less
than the economic life of the asset. The Lessee may not recover the total investment
through lease rental during the primary period of lease. The Lessor usually provides
advice to the Lessee for repair, maintenance and technical knowhow of the leased
asset. Thus, the operating lease is also referred as service lease.

Features of Operating Lease

1) The term of lease is less than the economic life of the asset.

2) The Lessee can terminate the lease at a short notice. The penalty is not charged
for termination.

3) The technical knowhow is provided by the Lessor.

4) The Lessor bears the risks and rewards.

5) Gives leasing an asset to different Lessee. The leasing facilitates Lessor recovery
of investment.

Q.2 Briefly discuss the process of innovation. Mention various types of

innovation.

Ans. The process of innovation has five basic steps. These steps are follows:

1) Idea Generation and Mobilisation

2) Advocacy and Screening

3) Experimentation

4) Commercialisation

5) Diffusion and Implementation

1) Idea Generation and Mobilisation: The very first step of the process of
innovation stresses on generating an idea and then floating it. A new idea can be
new or can be created to improve an existing idea. A very popular example is that of
Apple. Apple Inc. waited for three years to introduce iPod after MP3 players were
introduced. The idea was generated when MP3 players came into existence but the
organisation waited before launching the product. During this step the customers,
employees, public at large and partner/supplier innovation should be considered.

2) Advocacy and Screening: The second step involves screening of ideas. The
idea with maximum opportunity and having a futuristic outlook is chosen. The
screening is preceded by advocacy. The idea generators do not have skills to
advocate their ideas so it is important for the managers working in the field to
facilitate the idea which can then be considered for screening,

3) Experimentation: This is the testing stage where the selected ideas are tested in
the targeted market. The testing can be continuous or in phases wherein the
advocates and screeners can revaluate the idea. Time is the most important factor in
this case. A very good example is Amazon. Amazon in 2007 came up with the idea
of launching grocery delivery service and it tested the experiment in the suburbs of
Seattle. Once it was ensured that the experiment is successful then it launched it in
other parts of the country.

4) Conunercialisation: The main aim of this step is to create a market value for the
idea and focus on its potential impact. The innovated product can be launched in the
target market only when it meets the demands of the customers.
5) Diffusion and implementation: This step involves two stages ie. Diffusion and
implementation. Diffusion is the stage where an organisation accepts the innovation
and implementation is the stage when the idea is developed or produced. If the
above steps are applied along with proper resources, the innovation may be
successful.

Types of Innovation: Innovation can be broken down into two dimensions:

Technology and Market and based on these dimensions there are following four
types of innovation (Lopez, 2015):

 Incremental Innovation
 Disruptive innovation
 Architectural Innovation
 Radical Innovation

1) Incremental Innovation: This is the most popular type of innovation which

utilises the existing technology thereby increasing the value to the customer. Usually
all types of organisations at one point of time engage in incremental innovation. For
example Facebook. This social network company since its inception in 2004 has
used incremental innovation in different forms.

2) Disruptive Innovation: This type of innovation is also known as stealth (secret)

innovation. This uses new technology processes to the organisations current market.
It is secretive in nature as this technology tend to be inferior to the existing
technology in the market and is more expensive. The new technology initially is quite
hard to use till it surpasses the old technology and disrupts all existing organisations.
In this case the organisation going in for new technology gains a competitive
advantage. Apple's iPhone is an example of disruptive innovation wherein it
disrupted the mobile phone market.

3) Architectural Innovation: This type of innovation takes the lessons, skills and
overall technology and applying the same in the different market. Organisations in
computer business like IBM, Dell ete. Have been using sustaining technologies with
little modification to suit the design. This type of innovation is less risky.

4) Radical Innovation: This kind of innovation usually gives birth to new ideas
consuming the old ones thereby creating a revolutionary technology. A good
example of the same is crowd funding as a mode of financing being used by
entrepreneurs. The organisations use various types of innovation which best suits
their needs.

Q.3 what are the steps involved in the communication process? Briefly explain
the major elements in the communication process.

Ans. The process of communication implies the existence of a sender, a receiver, a

message and a motivating climate for it. The process includes the following steps:

1) Clear perception of the idea or problem: No message can be transmitted

properly unless the idea or problem is formulated with clarity of HH and perception
on the part of the communicator. It is only on the basis of clear thinking that the
communicator can decide on the means to be adopted to convey the message.
2) Participation of others involved: The next step is to secure the participation of
other persons in the decision to communicate a message. This may be helpful in
clarifying the ideas through interaction with others, gathering new ideas and
suggestions, and in creating a motivating climate for securing positive response to
the message.

3) Transmission of the message: What to communicate, to whom, when and how

are expected to be decided before actual transmission of the message. Actual
transmission involves preparing the matter and the form of communication (known
as ‘encoding’ the message) and selecting the medium or means of communication
(oral or written) keeping in view the nature of person or group to be addressed.

4) Motivating the receiver of the message: The communicator cannot depend on

the message alone to get an appropriate response from the receiver. He must
ensure that the receiver of the message is not only able to interpret the message
correctly but is also prepared to act according to it. Thus, apart from the clarity of the
message, it must inspire the receiver to do or behave as desired by the sender of the
message.

5) Evaluation of the effectiveness of communication: After the message has

been transmitted and accepted by the receiver, it remains for the communicator to
ascertain and evaluate the nature of impact of the communication. This determines
whether and to what extend the receiver has positively responded to the message.

Elements in the Communication Process: The process of communication may be

better understood if we take into account the basic elements in the communication
process.

Elements of Communication Process:

Let us now discuss them one by one.

1) Communicator: The communicator plays an important role in the process of

communication as the message originates from him. Communicators may include:
managers, subordinates, clients, customers, as well as outside parties.

2) Encoding: Encoding the matter to be communicated is the second element. It

refers to preparing the subject of communication (idea, fact, information, etc.) in a
suitable language.

3) Message: The encoded message needs to be transmitted by appropriate means.

It may be in verbal or written form depending on the purpose in view.

4) Medium: The medium of communication carries the message from the

communicator to the receiver. Face-to-face verbal communication, use of telephone,
intercom facilities, issue of memorandum, notice, circulars, statements, telegraph,
telex, etc. are the various means available as media of communication. Besides,
non-verbal media like signals, gestures, etc. may also be used. The choice of
medium is an important aspect of communication, since proper medium also
determines its effectiveness.
5) Decoding: Decoding refers to the conversion of the message by the receiver into
meaningful terms so as to make it understandable. This is another important element
of communication for the receiver's response and depends upon his understanding
of the content and purpose of the message.

6) Receiver: The receiver of the message has an equally vital role to play as the
communicator. Indeed, communication to be effective must be receiver oriented. The
ability of the receiver for decoding and understanding the message contribute to a
positive response from the receiver.

7) Feedback: The actual response of the receiver to the message communicated to

him is known as ‘feedback’. This is an important element of the communication
process. It reduces the possibility of a difference De tn a od at interpretation of the
message by the receiver. Two-way communication requires feedback to the initial
message sent and enables the sender to check whether the message received has
been properly in hack by the receiver.

Q.4 “Non-financial incentives are as strong motivators as the financial ones

"Critically examine this statement in the light of need-priority model and two-
factor theory of motivation.

Ans. The physiological and security needs are satisfied with the help of money, it
ceases to be a motivating force; that is why it is regarded as a maintenance factor.
oa employees have other needs also. They want status and recognition in society;
they want to satisfy their ego needs and they want to achieve something in their
lives. In order to motivate the employees having these needs, management may use
the following non-financial incentives:

1) Competition: If there is healthy competition among individual employees, groups

of employees, it leads them to achieve their personal or group goals. Hence,
competition acts as a non-financial incentive.

2) Praise or Appreciation of work done: Recognition of satisfactory performance

acts as a non-financial incentive since it satisfies one's ego needs. Sometimes
appreciation of work done is more effective than any other incentive. However, this
incentive should be used with great care because praising an incompetent employee
creates resentment among competent employees.

3) Knowledge of the results: Knowledge of the results of work accomplished leads

to employee satisfaction. A worker feels happy if he is informed about performance.
He derives satisfaction when his superior appreciates the work he has done. In
modern industry, the production workers have no contact with the consumers and so
they cannot get the reaction of the consumers. However, they can be motivated to a
greater extent if they are told the rating of their performance.

4) Workers’ participation in management: Participation in management Motivation

provides strong motivation to the employees. It gives them psychological satisfaction
that their voice is heard. Participation in management provides for two-way
communication and so imbibes a sense of importance.

5) Suggestion system: Suggestion system is an incentive which satisfies many

needs of the employees. Many organisations which use the suggestion system make
use of cash awards for useful suggestions. They sometimes publish the worker's
name with his photograph in the company's magazine. This motivates the employees
to be in search for something which may be of greater use to the organisation.

6) Opportunity for growth: Opportunity for growth is another kind of incentive. If the
employees are provided opportunities for their advancement and growth and to
develop their personality, they feel very much satisfied and become more committed
to organisation goals.

Q.5 Explain various marketing concepts under which business enterprises

conduct their marketing activity.

Ans. There are five different marketing concepts under which business enterprises
conduct their marketing activity. These concepts are;

 Production concept
 Product concept
 Selling concept
 Marketing concept
 Societal concept

Let us learn them in detail

1) Production Concept: This is probably the oldest concept. Some businessmen

believe that the consumers are interested only in low priced, easily and extensively
available goods. The finer points of the product are not very important to them. So
the producers believe they must concentrate only in efficient (economical) and
extensive (large scale) production. A company which believes in this approach
concentrates on achieving high production efficiency and wide distribution coverage.
Organisations may adopt this concept in two types of situations:

 When the demand for the product is higher than the supply, you can sell more
if you increase production. Here the main concern of the management is to
find ways to increase production to bridge the demand and supply gap.
 When the cost of the product is high and increase in production is going to
bring down the cost due to economies of scale.

The organisations which adopt this concept are typically production oriented
concerns. Production and engineering departments play an important role in this
situation. Such organisations have only sales departments to sell the product at a
price set by production and finance departments.

2) Product Concept: As against the production concept, some organisations believe

in product concept. The product concept implies that consumers favour those
products that offer the most quality, performance and features. They also believe
that consumers appreciate quality features and will be willing to pay ‘higher’ price for
the ‘extra’ quality in the product or service made available. Hence, those companies
which believe in this concept concentrate on product and its improvement. But, while
improving the product they rarely take into consideration the consumers’ satisfaction
and his multifarious needs. Even when new products are planned, the producer is
concerned more with the product and less with its uses or the consumer needs. For
example, a biscuit manufacturer produced a new brand of biscuits with good
ingredients, colour, packaging, etc., without taking into account consumer tastes and
preferences. This may fail in the market if the buscuit does not taste good to the
ultimate consumer.

3 Selling Concept: Sometimes the main problem of the enterprise is not more
production, but to sell the output. Similarly, a better product may not assure success
in the market. Hence, selling assumes greater importance. So some producers
believe that aggressive persuasion and selling is the crux of their business success,
and without such aggressive methods they cannot sell and survive. Therefore,
attention is paid to find ways and means to sell. They also believe that customers left
to themselves will not buy enough of organisation's products and services, and
hence considerable promotional effort is justified. Thus, the selling concept assumes
that consumers on their own will not buy enough of organisation's products, unless
the organisation undertakes aggressive sales and promotional efforts. Many
insurance agents, sales persons of certain electrical gadgets, health drinks, soft
drinks, and fund raisers for social or religious causes come under this category. Sale
is the index of success of marketing as well as production efforts. The marketers
who believe in sales concept often forget that the consumers buy goods to fulfill
certain needs. After the sale, what happens or how the consumer feels is not their
concern. They may not expect the customer to come again to buy the product. They
may go to new target consumers rather than building up a network of satisfied
customers. Some firms facing with excess production also adopt selling concept.
There are fair as well as unfair persuasive means adopted in this process. But the
purpose behind all such action is selling; more. Sales executives or sales
department assumes greater importance in sales concept compared with production
concept and product concept.

4 Marketing Concept: In an evolutionary process, many organisations have come

to change their focus and to see their marketing tasks in a broader perspective.
Marketing concept is considered a business philosophy wider in its implications.
Under the marketing concept, the organisation considers the needs and wants of
consumers as the guiding spirit and the delivery of such goods and services which
can satisfy the consumer needs more efficiently and effectively than the competitors.
It is also said that the marketing concept is consumer orientation with the objective of
achieving long run profits. It is a modern marketing philosophy for dynamic business
growth. In other words, under this concept, the task of marketing begins in finding
what the consumer wants, and produce a product which will meet that want and
provide maximum satisfaction. Implicitly, the consumer is the boss or king who
dictates. The focus which moved from the product to selling, now rests with the
Consumer. When organisations practice the marketing concept, all their activities
(manufacturing, finance, research and development, quality control, distribution,
selling, etc.) are directed to satisfy the consumer. Consumer satisfaction becomes a
single value which becomes the core of corporate culture in such organisations.
Companies produce what consumers want and, thus, satisfy consumers and make
profits. Those companies which have attained a certain maturity and which could see
far beyond the immediate future adopt this concept. Some companies may not adopt
this concept because they feel that this may result in the decline of sales or profits in
the short run and the long run profits in any case are unpredictable or uncertain. The
companies which want to make 'quick-bucks' also do not adopt this concept. Even
the departments within the organisation may not fully cooperate since they may not
be ‘convinced’ about the advantages of following the marketing concept. In spite of
these hurdles, it is now a world-wide experience. Companies which are successful,
enjoy goodwill and grow in the long run are companies which have adopted the
marketing concept as their business philosophy. These companies realised that a
satisfied customer is the best advertiser for their product. Their profits are generated
from the satisfaction of the customer and not only from the product or their selling
efforts. In an economy like India with shortages in many goods as well as lack of
resistance from the consumers, the firms which practice the first three concepts also
survive.

5 Societal Concept: With the growing awareness of the social relevance of

business, there is an attempt to make marketing also relevant to the society. In a
sense, marketing is not a business activity alone but must take into account the
social needs. Excessive exploitation of resources, environmental deterioration and
the customer movements in particular have necessitated the recognition of the
relevance of marketing to the society. Marketing then must be a socially responsible
or accountable activity. The societal concept holds that the business organisation
must take into account the needs and wants of the consumer's satisfaction as well as
the society's wellbeing, The societal concept is an extension of the marketing
concept to cover the society in addition to the consumer. In effect, a company which
adopts the societal concept has to balance the company profit, consumer
satisfaction and interests of the society. The problem is almost the same as that of
social responsibility of business. What is good for the society is a question to be
decided. A voluntary acceptance of this concept is desirable for the long run survival
of private business. An effective implementation of the societal concept will certainly
enhance the goodwill of the business house. The business enterprises which believe
in this cone pt will produce and market those goods and services which are
beneficial to the society, those that do not pollute the environment, and give full
value for the money spent.

SECTION - B

(This section contains medium answer questions of 6 marks each)

Q.6 What do you mean by leadership style? Briefly explain the basic styles of
leadership.

Ans. The dominant behaviour pattern of a leader-manager in relation to his

subordinates is known as leadership style. There are three basic styles of leadership
as follows:

 Autocratic or Authoritative Style

 Democratic or Participative Style and
 Laissez-faire or Free-rein Style.

Autocratic or Authoritative Style: An autocratic leader centralises power and

decision-making in himself and exercises complete control over the subordinates. In
this style, subordinates are compelled to follow the orders of the leader under threat
of penalties. They have no opportunity to take part in goal-setting, or take initiative or
make suggestions. They are subject to close supervision and, thus have a tendency
to avoid responsibility. The autocratic manager has little concern for the well-being of
employees, who suffer from frustration and low morale. They do not have any sense
of belonging to the organisation and try to work as little as possible.

Limitations: It should be clear from the above that there are several limitations of
the autocratic style of leadership.

 It results in low morale due to the inner dissatisfaction of employees.

 Efficiency of production goes down in the long run.
 It does not permit development of future managers from among capable
subordinates.

Despite the above limitations, autocratic leadership can be successfully applied in

the following situations:

 When subordinates are incompetent and inexperienced.

 The leader prefers to be active and dominant in decision-making,
 The company endorses fear and punishment for disciplinary techniques.
 Theresa little room for error in final accomplishment.
 Under conditions of stress when great speed and efficiency are required.

Since the leader-manager takes all decisions in autocratic style, there is uniformity
and consistency in decision-making.

Democratic or Participative Style: The democratic style is also known as

participative style. In this style, decisions are taken by the leader in consultation with
the subordinates and with their participation in the decision making process. The
participative leader encourages subordinates to make suggestions and take initiative
in setting goals and implementing decisions. This enables subordinates to satisfy
their social and ego needs, which in turn, lead to their commitment to the
organisation goals and higher productivity. Frequent interaction between the
manager and subordinates helps to build up mutual faith and confidence. Several
benefits can be derived from the participative style of leadership as listed below:

 It helps subordinates to develop their potential abilities and assume greater

responsibilities.
 It provides job satisfaction and improves the morale of employees.
 The group performance can be sustained at a high level due to the satisfied
and cohesive nature of the group.

However, the democratic style cannot be regarded as the best style under all
circumstances. Its limitations are as follows:

 Decisions taken through consultation may cause delay and require

compromises to meet different viewpoints.
 A few vocal individuals may dominate the decision-making process.
 No one individual may take the responsibility for implementing the decision
taken by the group as a whale.

Despite the above limitations, democratic style is suitable in the following situations:

 When subordinates are competent and experienced,

 The leader prefers participative decision-making process.
  Rewards and involvement are used as the primary means of motivation and
control.
 The leader wishes to develop analytical and self-control abilities in his
subordinates.

Laissez Faire Leadership Style: Laissez faire leadership style is just the opposite
of autocratic style. A manager, who adopts this style, completely gives up his
leadership role. The subordinate group is allowed to make decisions and it is left to
the members of the group to do as they like. The role of any leader is absent. The
group members enjoy full freedom as regards goal-setting and acting on it. Hence,
there is chaos and mismanagement of group goals. However, laissez faire
leadership is found to be quite suitable where the subordinates are well-trained,
competent and the leader manager is able to fully delegate the powers of decision-
making and action to the subordinate’s Laissez faire style is suitable in the following
situations:

 When leader is interested in delegating decision-making fully.

 Subordinates are well trained and highly knowledgeable.
 Organisation goals have been communicated. Despite a few suitability, this
style should be adopted rarely because it may lead to chaos and
mismanagement.

Robert Tannenbaum and Warren Schmidt depicted a broad range of leadership

styles on a continuum which moves from authoritarian or boss-centred leader
behaviour at one end to democratic or subordinate-centred behaviour at the other
end. Although the leader continuum approach provides a wide range of leader's
behaviour. It identifies the number of behavioural alternatives available to a
manager. Moreover, the success of the leadership style depends on the modification
of the leader to the needs of the situation. Its major limitation is that it supports one-
dimensional thinking. It has been found that employee’s orientation and task-
orientation are not opposite ends on a continuum.

Q.7 Write a short note on National Skill Development Corporation (NSDC).

Ans. The National Skill Development Corporation (NSDO) was set up as a part of
National Skill Development Mission of MSDE as a public private partnership
company. The aim of NSDC is to facilitate the skills landscape in India. The concept
of NSDC is based on three pillars. These are:

 Create: To facilitate in establishing quality vocational training institutions.

 Fund: To provide funds in form of grants and equality.
 Enable: To ensure the sustainability of support systems required for skill
development which includes industry operated sector skill councils (SSCS).

The vision and mission of NSDC is as follows:

Vision of NSDC: To fulfill the growing need in India for skilled manpower across the
existing gap between the demand and supply of skills.

Mission: The mission of NSDC is as follows (https://nsdcindia.org/vision mission);

  Upgrade skills to international standards through significant industry
involvement and develop necessary frameworks for standards, curricular and
quality assurance.
 Enhance, support and coordinate private sector initiatives for skill
development through appropriate Public-Private Partnership (PPP) models;
strive for significant operational and financial involvement from the private
sector.
 Play the role of a “Market-maker” by bringing financing particularly in sectors
where market mechanism are ineffective or missing
 Prioritise initiative that can have a multiplier or catalytic effect as opposed to
one-off impact. Keeping in view the vision and mission of its main objective is
NSDC
 To contribute significantly to the overall target of skilling up of people in India,
mainly by fostering private sector initiatives in programmes and to provide
funding.

The objective of NSDC includes all three pillars on the basis of which it was formed.
MSDE through NSDC has taken up number of initiatives to collaborate with industry
under the larger mandate of Skill Indian Mission. NSDC has a simple —window
facilitation system which offers a platform for industries to partner on different
initiatives like Corporate Social Responsibility (CSR). It works in partnership with
varied set of stakeholders like corporates, NGOs, government organisations etc. to
structure skill development projects which have high impact. NSDC since its
inception has collaborated with NALCO, SBI card, GE Power, NTPC etc. to fulfil
CSR commitments under the companies (CSR) Rules, 2013 NSDC is also providing
certification through National Skills Qualification Framework (NSQF) for skill
development programmes. All this is done to align all the skill development
programmes across the nation. After going through the vision, mission and objective
of NSDC, it can be said that NSDC has been facilitating the mandate of skill
development mission under PPP model.

Q.8 Explain McGregor’s Participation Theory of motivation.

Ans. Douglas McGregor formulated two sets of assumptions about human beings
based on the participation of workers. The first set of assumptions are contained in
Theory X and the second set of assumptions are contained in Theory Y. In the
Theory X, McGregor proceeds with the assumption that the average human being
has inherent dislike for work and will avoid it if he can. The managers of such
employees think that “most people must be coerced, contributed, directed,
threatened with punishment to get them put forth adequate efforts towards the
achievement of organisational objectives.” Theory X presumes that people by nature:

1. Lack integrity.

2. Are fundamentally lazy and desire to work as little as possible.

3. Avoid responsibility.

4. Are not interested in achievement.

5. Are incapable of directing their own behaviour.

6. Are indifferent to organisational needs.

7. Prefer to be directed by others.

8. Avoid making decision whenever possible.

9. Are not very bright.

McGregor described Theory X as the traditional theory of how the workers are and
what management must do to manage them. Workers have to be persuaded and
pushed into performance. Workers may be made to work only through autocratic
leadership. After describing Theory X, McGregor questioned if this view of human
behaviour is correct. He propounded theory Y which, he felt better represents the
human behaviour. Under theory Y, it is assumed that people by nature:

1. Have integrity.

2. Work towards objectives to which they are committed.

3. Assume I their commitments.

4. Desire to achieve.

5. Are capable of directing their own behaviour.

6. Want their organisation to succeed.

7. Are not passive and submissive

8. Will make decisions within their commitments.

In developing theory Y, McGregor made the following assumptions:

1) Engaging in physical and mental efforts — as natural as play or rest. The average
human being does not inherently dislike work.

2) External control and the threat of punishment are not the only mean of directing
efforts towards organisational objectives. Man will exercise self direction and self-
control in the service of objectives to which he is committed.

3) Commitment to objectives follows the rewards associated with their achievement.

The most significant of such rewards namely satisfaction of ego and self-
actualisation needs, can be the direct result of efforts toward organisational
objectives.

4) The average human being learns, under proper conditions, not only to accept but
to seek responsibility. Avoidance of responsibility, lack of ambition and emphasis on
security are generally consequences of experience and not inherent human
characteristics.

5) The capacity to exercise a relatively high degree of imagination, ingenuity, and

creativity in the solution of organisational problems is widely, not narrowly,
distributed in the population.
6) Under the conditions of modem industrial like the intellectual potentialities of the
average human being are only partially utilised.

The assumptions of McGregor's theory Y suggest a new approach to management.

It lays greater emphasis on cooperation between management and workers. The
managers following this theory aim at getting maximum output with minimum degree
of control. Generally, no conflict is visible between the organisational goals and
individual goals. Thus, the efforts of employees which are in their best interest are
also in the interest of the organisation. Theory Y has proved to be useful in such
management practices as job enrichment, decentralisation and participative
management. However these techniques are applicable in organisations where self-
motivated, self-controlled mature and responsible people work. According to
McGregor, researches in the behavioural sciences have shown that the assumptions
of theory Y are more valid than the practices of theory X.

Appraisal: McGregor's contribution should be analysed in the proper perspective. All

that he postulated and sought to dramatize through his theory X and theory Y is to
outline the extremes to draw the fencing within which the organisational or enterprise
man is seen to behave. No enterprise man would belong either to theory X or theory
Y. He shares the traits of both, with emphasis shifting, from one set of properties to
the other with changing moods and impulses (needs Hk motives) with the varying
environment.

McGregor’s contribution should be analysed in the proper perspective. All that he

postulated and sought to draw ties through his theory X and theory to outline he
extremes to draw the fencing ‘within which the organisational or enterprise man is
seen to behave. No enterprise man would belong either to theory X or theory Y. He
shares the traits of both, with emphasis shifting from one set of properties to the
other with changing moods and impulses (needs and motives) and with the varying
Environment.

One might get the impression that theory X is bad and theory Y is good. This is not
true because the assumptions under these theories are attitudes or predispositions
of managers towards people. They are not behaviour patterns. Thus, although the
‘best’ assumptions for a manager to have may be theory Y, it may not be advisable
to behave consistently with these assumptions about human nature. He may find it
necessary to behave in a very directive manner (as if he had theory X assumptions)
with some people in the short-run to help to be matured and self-motivated as per
theory

Q.9 Discuss the marketing concepts under which business enterprises

conduct their marketing activity.

Ans: - There are five different marketing concepts under which business enterprises
conduct their marketing activity. These concepts are;

 Production concept
 Product concept
 Selling concept
 Marketing concept
 Societal concept
Let us learn them in detail

1) Production Concept: This is probably the oldest concept. Some businessmen

believe that the consumers are interested only in low priced, easily and extensively
available goods. The finer points of the product are not very important to them. So
the producers believe they must concentrate only in efficient (economical) and
extensive (large scale) production. A company which believes in this approach
concentrates on achieving high production efficiency and wide distribution coverage.
Organisations may adopt this concept in two types of situations:

 When the demand for the product is higher than the supply, you can sell more
if you increase production. Here the main concern of the management is to
find ways to increase production to bridge the demand and supply gap.
 When the cost of the product is high and increase in production is going to
bring down the cost due to economies of scale.

The organisations which adopt this concept are typically production oriented
concerns. Production and engineering departments play an important role in this
situation. Such organisations have only sales departments to sell the product at a
price set by production and finance departments.

2) Product Concept: As against the production concept, some organisations believe

in product concept. The product concept implies that consumers favour those
products that offer the most quality, performance and features. They also believe
that consumers appreciate quality features and will be willing to pay "higher price for
the ‘extra’ quality in the product or service made available. Hence, those companies
which believe in this concept concentrate on product and its improvement, but, while
improving the product they rarely take into consideration the consumers' satisfaction
and his multifarious needs. Even when new products are planned, the producer is
conceded more with the product and less with its uses or the consumer needs. For
example, a biscuit manufacturer produced a new brand of biscuits with good
ingredients, colour, packaging, etc., without taking into account consumer tastes and
preferences. This may fail in the market if the biscuit does not taste good to the
ultimate consumer.

3) Selling Concept: Sometimes the main problem of the enterprise is not more
production, but to sell the output. Similarly, a better product may not assure success
in the market. Hence, selling assumes greater importance. So some producers
believe that aggressive persuasion and selling is the crux of their business success,
and without such aggressive methods they cannot sell and survive. Therefore,
attention is paid to find ways and means to sell. They also believe that customers left
to themselves will not buy enough of organisation's products and services, and
hence considerable promotional effort is justified. Thus, the selling concept assumes
that consumers on their own will not buy enough of organisation's products, unless
the organisation undertakes aggressive sales and promotional efforts. Many
insurance agents, sales persons of certain electrical gadgets, health drinks, soft
drinks, and fund raisers for social or religious causes come under this category. Sale
is the index of success of marketing as well as production efforts. The marketers
who believe in sales concept often forget that the consumers buy goods to fulfil
certain needs. After the sale, what happens or how the consumer feels is not their
concern. They may not expect the customer to come again to buy the product. They
may go to new target consumers rather than building up a network of satisfied
customers. Some firms facing with excess production also adopt selling concept.
There are fair as well as unfair persuasive means adopted in this process. But the
purpose behind all such action is selling more. Sales executives or sales department
assumes greater importance in sales concept compared with production concept and
product concept.

4) Marketing Concept: In an evolutionary process, many organisations have come

to change their focus and to see their marketing tasks in a broader perspective.
Marketing concept is considered a business philosophy wider in its implications.
Under the marketing concept, the organisation considers the needs and wants of
consumers as the guiding spirit and the delivery of such goods and services which
can satisfy the consumer needs more efficiently and effectively than the competitors.
It is also said that the marketing concept is consumer orientation with the objective of
achieving long run profits. It is a modern marketing philosophy for dynamic business
growth. In other words, under this concept, the task of marketing begins with finding
what the consumer wants, and produce a product which will meet that want and
provide maximum satisfaction. Implicitly, the consumer is the boss or king who
dictates. The focus which moved from the product to selling, now rests with the
consumer. When organisations practice the marketing concept, all their activities
(manufacturing, finance, research and development, quality control, distribution,
selling, etc.) are directed to satisfy the consumer. Consumer satisfaction becomes a
single value which becomes the core of corporate culture in such organisations.
Companies produce what consumers want and, thus, satisfy consumers and make
profits. Those companies which have attained a certain maturity and which could see
far beyond the immediate future adopt this concept. Some companies may not adopt
this concept because they feel that this may result in the decline of sales or profits in
the short run and the long run profits in any case are unpredictable or uncarted. The
compares which want to make quick-bucks also do not adopt this concept. Even the
departments within the organisation may not fully cooperate since they may not be
‘convinced’ about the advantages of following the marketing concept. In spite of
these hurdles, it is now a world-wide experience. Companies which are successful,
enjoy goodwill and grow in the long run are companies which have adopted the
marketing concept as their business philosophy. These companies realised that a
satisfied customer is the best advertiser for their product. Their profits are generated
from the satisfaction of the customer and not only from the product or their selling
efforts. In an economy like India with shortages in many goods as well as lack of
resistance from the consumers, the firms which practice the first three concepts also
survive.

5) Societal Concept: With the growing awareness of the social relevance of

business, there is an attempt to make marketing also relevant to the society. In a
sense, marketing is not a business activity alone but must take into account the
social needs. Excessive exploitation of resources, environmental deterioration and
the customer movements in particular have necessitated the recognition of the
relevance of marketing to the society. Marketing then must be a socially responsible
or accountable activity. The societal concept holds that the business organisation
must take into account the needs and wants of the consumer's satisfaction as well as
the society's wellbeing. The societal concept is an extension of the marketing
concept to cover the society in addition to the consumer. In effect, a company which
adopts the societal concept has to balance the company profit, consumer
satisfaction and interests of the society. The problem is almost the same as that of
social responsibility of business. What is good for the society is a question to be
decided. A voluntary acceptance of this concept is desirable for the long run survival
of private business. An effective implementation of the societal concept will certainly
enhance the goodwill of the business house. The business enterprises which believe
in this concept will produce and market those goods and services which are
beneficial to the society, those that do not pollute the environment, and give full
value for the money spent.

Q.10 Explain the Role and Functions of SEBI.

Ans. The stock market has grown over the year. The malpractices such as price
rigging, new issue unofficial premium, delay in delivery of shares, stock exchange
rules and regulations violation and others have also been noticed. Therefore,
Government of India took decision to set-up a regulatory body SEBI (Securities
Exchange Board of India). SEBI is the regulator for the securities market in India. It is
known as Securities Exchange Board of India. The regulation facilitates smooth
functioning of security market. The statutory powers of SEBI are as follows:

 It protects interests of the investors in securities.

 It promotes the development of the securities market.
 It regulates the securities market.

SEBI may conduct enquiries, audits and inspection as well as adjudicate offences. It
may register and regulate the market Intermediaries. It may also penalise in case of
violation of the Act. SEBI aims at the development of orderly security markets.

Purpose and Role of SEBI: SEBI was formed to keep check on the malpractices
and protect the interest of investors. It focused on protecting the interest of issuers,
investors and Intermediaries as discussed below:

 Issuers: SEBI provides safe market place to Issuers for raising the finance
fairly and easily.
 Investors: SEBI aimed at protecting the investors and supplying them
accurate information.
 Intermediaries: Professionally competitive market is provided by SEBI for the
Intermediaries.

Objectives of SEBI: The objectives of the SEBI are:

 The activities of stock exchange are regulated.

 The rights of investors are protected. Safety is ensured for their investment.
 Establishes the balance between self-regulation and statutory regulations.
 Development and regulation of Code of Conduct for brokers, underwriters and
others.

Functions of SEBI: The functions of SEBI are:

 Protective functions: SEBI aims at protecting the interest of the investors. It

provides safety of investment. The malpractices, fraudulent activities and
 unfair trade practices are curbed. It promotes fair practices and provides code
of conduct for fair operations.
 Developmental functions: SEBI promotes training for securities market
Intermediaries. Stock Exchanges are encouraged to adopt flexible and
adoptable approach.
 Regulatory functions: SEBI regulates the business in Stock Exchange.
Regulations, Rules and Code of Conduct have been prepared to regulate the
operations of the Intermediaries. It regulates the working of Ha brokers,
mutual funds, take-over of companies, etc. It also conducts audit of Stock
Exchange.

SECTION - C

(This section contains short answer questions of 4 marks each)

Q.11 Explain the concept of One Person Company.

Ans. Section 2(62) of the Companies Act, 2013 defines ‘One Person Company’ to
mean a company with only one person as its member. Section 3(1) (c) provides that
a company may be formed for any lawful purpose by one person, where the
company to be formed is to be One Person Company, that is to say, a private
company by subscribing his name to a memorandum and complying with the
requirements of the Act in respect of registration.

An OPC may be registered as ‘limited by shares’ or ‘limited by guarantee’

However, the memorandum of One person Company shall indicate the name of the
other person, with his prior written consent in the prescribed form (Form No. INC.3),
who shall, in the event of the subscriber's death or his incapacity to contract become
the member of the company and the written consent of such person shall also be
filed with the Registrar at the time of incorporation of the One Person Company
along with its memorandum and articles. Such other person may withdraw his
consent in such manner as may be prescribed. On the death of the promoter
member of an OPC, the person nominated by such promoter member shall be the
person recognised by the company as having title to all the shares of the member
and shall be entitled to the same dividends and other rights and liabilities to which
such sole promoter member of the company was entitled or liable. The member of
One Person Company may at any time change the name of such other person by
giving notice and shall intimate the Registrar any such change within such time and
in such manner as may be prescribed. The words “One Person Company” shall be
mentioned in brackets below the name of such company, wherever its name is
printed, affixed or engraved

Relaxations available to OPCs:

Relaxations given to an OPC include:

There is no need to prepare a cash-flow statement [Section 2(40)].

 The annual return can be signed by the Director and not necessarily a
Company Secretary (Section 92).
 There is no necessity for an Annual General Meeting (AGM) to be held
(Section 96).
  Specific provisions related to general meetings and extraordinary general
meetings would not apply (Sections 100 to 111).
 Compliance can be said to have been done if the resolutions are entered in
the minutes’ book of the company (Section 122).
 It would suffice if one director signs the audited financial statements (Section
134).
 Financial statements can be filed within six months from the close of the
financial year as against 30 days (Section 137).
 An OPC needs to hold only one meeting of the Board of Directors in each half
of a calendar year and the gap between the two meetings should not be less
than ninety days (Section 173).

Special Provisions Applicable to OPCs: Where the OPC limited by shares or by

guarantee enters into a contract with the sole member of the company who is also
the director of the company, the company shall, unless the contact is in writing,
ensure that the terms of the contract or offer are contained in a memorandum or are
recorded in the minutes of the first meeting of the Board of Directors of the company
held next after entering into contract (Section 193). This will not apply to contracts
entered into by Company in the ordinary course of its business.

As per the Rules Framed by the Central Government:

1. Only a natural person who is an Indian citizen and resident in India shall be
eligible to incorporate a One Person Company or be appointed as a nominee for the
sole member of a One person Company. The term “resident in India” means a
person who has stayed in India for a period of not less than 182 days during the
immediately preceding 1 financial year (Rule No. 3.1).

2. No person shall be eligible to incorporate more than a One Person Company or

become nominee in more than one such company (Rule No. 3.2.).

3. No minor shall become member or nominee of the One Person Company or can
hold share with beneficial interest (Rule no. 3.4).

4. Such Company cannot be incorporated or converted into a company under

section 8 of the Act (Rule No 3.5) or carry out Non-Banking Financial Investment
activities including investment in securities of anybody corporate (Rule No. 3.6).

5. Where the paid up share capital of a One Person Company exceeds 50 lakh
rupees and its average annual turnover during the relevant period exceeds 2 crore
rupees, it shall cease to be entitled to continue as a One Person Company.

6. Conversion of One Person Company into a private company or a public company:

One Person company can get itself converted into a Private or Public company after
increasing the minimum number of members and directors to 2 or minimum of 7
members and 3 directors as the case may be, and by maintaining the minimum paid-
up capital as per requirements of the Act for such class of company and by making
due compliance of section 18 of the Act for conversion i.e. Conversion of companies
already registered.

Q.12 Differentiate between PERT and CPM.

Ans. PERT: The key to success of most organisations is to clearly examine the
projects or activities for the achievement of an objective within stipulated time and
cost. Management is then required to determine detailed activities and their
interrelationships, to estimate resources required and the time needed to complete
these activities as per schedule, and to monitor and control the time and cost of the
project.

Network analysis is a technique which is concerned with minimising the total

completion time of the project, as well as minimising the over-all project costs. The
network analysis is eminently suitable to projects which are not routine or repetitive
and which may be conducted only once or a few times, such as construction of
buildings, dams, research and development, marketing of new products, building a
ship, construction of factories, missile production, etc. PERT and CPM are the two
very popular types of network analysis used in modem management.

PERT is basically a technique of project which is useful in the Se managerial

functions related to planning, scheduling, controlling, ete. The first and most
important condition for using PERT is the breaking up of the project into jobs or
activities and determining the order of precedence for these jobs that is, deciding
which jobs are to be completed before another can be started.

CPM: CPM was developed by the engineers of the Du Pont Company in the 1950s
for its application in all scheduling work, construction projects, research and
development programmes and in many other situations that require estimates of time
and performance. It calls for dividing a programme or project into its elementary
parts in their chronological order of sequence. By reaching a project into
interconnecting parts, the CPM technique is helpful in finding out the more strategic
elements of a plan for the purpose of better designing, planning, coordinating and
controlling the entire project.

Let us examine the concept of critical path to appreciate the significance of the
Control critical path method as a technique of control.

In a network of activities one can enumerate a number of sequences of operations

(paths) from starting event to end event of the project. Each sequence contains
different combinations of activities with different durations. The study of the duration
of various paths in a project can tell us the minimum time in which a particular project
can be completed. The sequence of activities (path) for which the duration is the
maximum indicates the minimum duration for the completion of the project. This path
is known as the ‘Critical Path’ being the path of maximum duration and reflects the
minimum time necessary for the completion of the project. The critical path is so
called because any delay in the completion of the activities lying on this path would
cause a delay in the whole project. To finish the project in time, the activities lying on
the critical path should be given top Priority.

Q.13 How is Primary market different from Secondary market?

Ans. In primary market, the issue is carried out through public issues or private
placement. A public issue does not restrict in investing. In private placement, the
issue is provided to select people. In terms of the Companies Act, 1956, an issue
becomes public if it results in allotment to more than 50 persons. This means an
issue of less than 50 persons falls in private placement. There are two types of
security issuers. These are: (i) Corporate entities, who issue mainly shares,
debentures, etc. and (ii) the Government, who mainly issue debt securities like dated
securities, treasury bills and others.

In the Secondary market, the trade may also take place for future date, this is known
as forward market. In this market, securities are traded for future delivery and
payment. There are two types of forward market i.c. Futures and Options. In future
market, standardised securities are traded for future delivery and settlement. These
Futures are on an underlying asset i.e. an index or a security or even a commodity.
In Options, securities are traded for conditional future delivery. There are two types
of Options. These are put and call Options. A Call Options allows the owner to buy a
security from the writer of the Option at a predetermined price. A Put Option allows
the owner to sell a security to the writer of Options at a predetermined price. These
Options also derive their value from underlying security. NSE and the Bombay Stock
Exchange (BSE) provide trading of derivatives of securities.

Q.14 Explain the barriers of effective communication.

Ans. Effective communication implies that the message transmitted by the sender is
understood, Accepted and acted upon by the receiver for the intended purpose. In
actual practice, one or more factors often stand in the way of effective
communication. These are obstacles or barriers, which create confusion,
misunderstanding and may even lead to breakdown of the communication process.
The following types of barriers are commonly found to create problems in
organisations.
 1. Multiplicity of Organisational Layers: The structure of organisation
often causes Messages to be distorted, stopped or absorbed
particularly when there are many layers or levels in the hierarchy. In
upward communication, the message tends to be distorted as it passes
through intermediate levels. Information may be withheld at a particular
level or passed on with changes. This is done if it is likely to have the
effect of carrying an unfavourable impression to higher levels about the
performance of the manager at that level. Downward flow of
communication may also be distorted at intermediate levels to suit the
convenience or serve the interest of managers concerned. This is
known as filtering’ of the message.

2. Language Barrier: The language used for communicating a message

may create problems due to the difficulty of interpreting words or due to
lack of clarity of expression. People with different educational and cultural
background and intellectual ability may find it hard to understand the
message due to jargon used by the sender. In such cases, the same word
may be attributed different meanings by the sender and receiver of the
message. This is known as the problem of semantics.

3. Status Barrier: Status relationships in an organisation may also be a

serious obstacle to effective communication. People placed in superior and
subordinate positions have difference in status on account of their respective ranks
in the hierarchy. It is due to the status different that subordinates often suppress or
withhold information which may not be liked by their superiors, or pass on distorted
information to please their superiors. No subordinate likes to reveal his mistakes to
his superior. Similarly, the status consciousness of the Superior prevents him from
fully communicating information which may adversely reflect of his ability or
judgement.

4. Physical Distance as a Barrier: In large organisations, the physical distance

between the sender and the receiver of any message may become an obstacle to
effective communication This is because it is difficult to evaluate whether the
receiver has understood, accepted and acted on the message sent to him if his
workplace is far away from that of the sender.

5. Emotional and Psychological Barriers: When people have strong attitudes and
feelings, they are emotionally affected by messages received which do not conform
to their attitudes. Hence, they tend to either reject or refuse to accept such
messages. The sender may also distort a message if he feels strongly about it or is
under emotional stress at the time. Psychological barriers often arise due to lack of
mutual trust and confidence. Similarly when subordinates have a favourable image
of the superior they are psychologically more inclined to accept and respond
positively to his messages. It does not happen if they have an unfavourable image.
The image is built on the basis of experience and interaction between the superior
and the subordinate. Any communication which purports to bring about a change in
the existing state of affairs also creates psychological barriers since people generally
do not like a change particularly when its effects are uncertain.

Q.15 What is outsourcing? How is it distinguished from off-shoring?

Ans. In simple terms, outsourcing refers to the act of contracting a third party
company to carry out certain functions of your business. Outsourcing can be done
for the sake of reducing operating costs as outsourcing is more cost effective than
hiring an in-house team.

Outsourcing turned into a well-known business technique back in the late 8os and
mid-90s to battle rising work costs and an inexorably worldwide commercial centre.
Basically, outsourcing is the way toward utilising outsider specialist co-ops to deal
with certain business capacities. At one time, outsourcing was constrained to huge,
global enterprises. Be that as it may, today organisations of all sizes can take the
advantages of outsourcing much of the time, the advantages of outsourcing are not
an enhancement procedure they are a need. Frequently the main plausible approach
to develop your business, launch an item, or oversee activities is to appoint certain
errands to an outside merchant.

As discussed above, outsourcing alludes to an association contracting work out to an

outsider, while off-shoring alludes to completing work in an altemate nation, for the
most part, to use cost focal points. The greatest contrast is that while outsourcing
can be (and regularly is) off-shored, offshoring may not constantly include re-
appropriating.