Plus Two BS Part I & Ii Short Note & Expected Questions - Binoy 2023 (1) - PDF

Plus Two
BUSINESS STUDIES
Part-1
Examination Help File -2023
Short but Complete Note
Expected Questions (Unofficial)
Chapter wise Weightage (2023)
Wish You all success
“Nothing can stop you from reaching your goals as long as you
work hard. Your goals are simply dedication and determination
away”
Prepared By:
Binoy George, HSST, MKNM HSS, Kumaramangalam, Thodupuzha
N
Question Paper Design
Weightage to Units
Name of the Subject : Business Studies
Year : Second
Sl No Unit Score Score %
1 Nature and significant of management 7 6.7
2 Principles of management 9 8.6
3 Business environment 6 5.8
4 Planning 8 7.8
5 Organising 7 6.7
6 Staffing 12 11.5
7 Directing 14 13.5
8 Controlling 6 5.8
9 Financial Management 13 12.5
10 Marketing 17 16.3
11 Consumer protection 5 4.8
Weightage to Type of Questions
Sl No Question Pattern Score Score %
1 Objective type questions 16 15
2 Descriptive type questions 88 85

Plus Two Business Studies – Short Note Chapter-1
Chapter-1 Weightage
to this
Nature and Significance of Management Chapter-7
Scores
Definition- Management
According to Mary Parker Follet “Management is the art of getting things done
through others”
According to modern concept “Management is the process of getting things done

through others with the aim of achieving desired common goals effectively and
efficiently”.
Effectiveness Vs Efficiency in management
The two terms ‘Effectiveness’ and ‘Efficiency’ are different but they are inter-related.
Effectiveness means accomplishment of goals in allotted time whereas
efficiency means accomplishment of goals at minimum possible cost through
optimum utilization of resources.
Difference between Effectiveness and Efficiency
Point of Effectiveness Efficiency

difference
Meaning Achieving targets on timeTargets are achieved with minimum resources and
cost
Focus Completion of work Optimum utilization of resources
Purpose It is concerned with end It is concerned with cutting down the cost
result
Characteristics or Features of Management
1. Management is a goal-oriented process
Management always aims at achieving the organizational objectives.
2. Management is pervasive
Management is a universal phenomenon. Management is necessary for all the

organizations irrespective of its size, nature and functions.
3. Management is a continuous process
Management is a continuous or never-ending process. Management functions like

planning,organizing,staffing,directing and controlling are performed by all managers
on a continuous basis.
11-02-2023 1 Binoy George

4. Management is a group activity
The management functions cannot be performed in isolation. Each individual performs

his role at his department and their efforts are directed towards a common goal.
5. Management is a dynamic function
Management has to make change in goal, objectives and other activities according to
changes taking place in the environment.
6. Management is an intangible force
Management cannot be seen but its presence can be felt when targets are achieved
according to plans. Efficiency of management of an organization can be felt in the
form of high profit, disciplined staff etc.
Objectives of Management
Management objectives can be classified into organizational objectives, social objectives
and personal objectives.
1.Organizational Objectives
Organizational objective aims at prosperity and growth of the organization. The three
important organizational objectives of a manager are:
a. Survival –Survival is the basic objective of every organization. It is possible only when it
is able to cover its cost and earn profit.
b. Profit – Management must ensure that the organization makes a decent profit. Profit is
essential to cover cost and risk of the business.Actually profit is the reward for risk bearing.
Profit is the sun, which enlighten every corner of the business.
c. Growth – The success of any organization is measured by the growth rate and growth is
measured in terms of sales,number of branches,number of products,number of employees
etc.
2. Social Objectives
A business organization has to fulfill some social responsibility. Social objectives of the
organization deal with the commitment of the organization towards the society. The major
social objectives of organizations are:
➢ Supply quality goods at reasonable price

➢ Generation of employment opportunities
➢ Using environmental friendly methods of production.
➢ Pays reasonable wages to workers.
➢ Ensure decent return to shareholders as dividend.

➢ Provide financial support to society
3. Personal objectives
Personal objectives are concerned with the employees of the organization. The main
individual objectives of management are:
➢ Pay competitive salary and perks

➢ Give opportunities for Personal growth and development (Promotion, training
etc)
➢ Provide good and healthy working conditions to employees.
Importance/ Significance of Management

1. Management helps in achieving group goals
Management gives a common direction to individual effort in achieving group goals of

an organistion. Management insists on efficiency and effectiveness in the work
through planning ,organizing,staffing,directing and controlling.
2. Management creates a dynamic environment
All organizations working in an environment which is changing frequently. The

employees in the organization are generally resists to adapt changes. Efficient
management motivates employees to adopt changes by convincing them about the
benefits of it.
3. Management helps in the development of the society
An effective management honours its commitment to all interested parties like owners,
employees, investors, government and general public.
4. Management helps in achieving personal objectives
An efficient management is one who brings maximum prosperity for business man as
well as workers. Through motivation and leadership, management helps individuals
to develop team spirit, cooperation and commitment to group success, thereby
achieving personal objectives. Employees can earn more by producing more.
Nature of Management-it is an art, science or profession?
The debate on whether management is an art or science or profession is very old.

Some authors advocates that management is an art, some authors argue that
management is science and some others argue that it is a profession.

I. Management as an Art:
Art can be defined as systematic body of knowledge which requires skill, creativity
and practice to get perfection. It can be acquired through study, observation and
experience. Main features of an art are as follows:
1. Systematic body of knowledge-. In case of every art, there is systematic and

organized study materials available to acquire theoretical knowledge. Literature on
dancing, public speaking etc. is widely recognized. Like in case of art, in management
also, there is several books have been published giving knowledge about different
aspects of management.
2. Personalised application- Art is a very personalized concept. Personal skill is

important in management also. For example, even though different dancers are
trained by the same trainer, some of them excel by adding their natural talents. In
management also all managers learn the same theories and principles, but their
efficiency depends on how well they use these principles under different situations by
applying their creativity and skill.
3. Perfection through constant practice- Success of an art is mainly depends on

practice. Artist gains perfection through constant practice. As in case of art, the
managers become more perfect from their experience.
Conclusion: On comparing the features of art with management we find all the features
of art are present in management so we can call management as an art of getting the
things done by others.
II. Management as Science
A group of management experts are of the view that management is a science.

Science may be defined as a systematic body of knowledge based on logically
observed findings facts and events.

The basic features of science are as follows:
1. Systematised body of knowledge
Science is a systematic and organized body of knowledge. Its principles are based on
a cause-and-effect relationship. Management also has some principles and it also
establishes cause and effect relationship, example, division of work leads to
specialization.
2. Principles based on experimentation: Scientific principles are first developed

through observation and then tested through repeated experimentation under
controlled conditions. In case of management also,its principles are developed after
years of research and experimentations.
3. Universal validity-Scientific principles have universal application and validity. They

can be applied in all situations and at all times. Management principles are not exact
like scientific principles because they can’t be blindly applied in all situations. They
have to be modified according to persons and situations.
4. Principles based on observation Like scientific principles, management

principles are also derived through observation and repeated experimentation. So,
this feature of science is present in management also. Since management deals with
human beings, the outcome of these experiments is not accurately predicted.
Therefore, management can be called an inexact science.
Conclusion: No doubt, management is science, but being a social science, its results
are not definite and exact as that of physics and Chemistry. In case of Physics or
chemistry, scientific principles are applied in physical materials; they will respond
identically and get the identical result in all situations. So, we can say management is
a science, but not a pure science, it is a social science.
III. Management as a profession
Profession can be defined as an occupation backed by special knowledge and

training, in which entry is restricted. A profession has the following characteristics:

1. Well defined body of knowledge

2. Restricted entry
3. Professional association
4. Code of conduct
Let us compare the features of profession with features of management.
1. Well defined body of knowledge-All professions are based on well-defined body

of knowledge that can be acquired through instruction. In management also there is a
systematic body of knowledge involving formal methods of training. There are many
institutions that provide education and training in the field of management. This feature
of profession is present in management also.
2. Restricted Entry-To become a professional one must pass the prescribed

examination such as CA, MBBS, LLB etc. But in management there is no such strict
restriction till now. Anyone can be appointed as a manager. So, the second criterion
has not been strictly met in case management.
3. Professional Association-All professions are affiliated to a professional

association which regulates entry, grants certificate of practice, and formulates and
enforces a code of conduct. There are several associations of practicing managers in
India, like the All-India Management Association that has laid down a code of conduct
to regulate the activities of their members. However, there is no compulsion for
managers to be members of such an association.
4. Code of conduct- All professionals should follow the code of conduct laid down by
the concerned professional body. In management All India Management Association
(AIMA) has laid down code of conduct to regulate the activities of their members. But
there is no compulsion for the managers to follow the same. Therefore, this feature is
not present in management.
On comparing the features of profession with management we can conclude that

presently all the features of profession are not present in management but very soon,
may be the next decade, these will be included in the management with statutory

backing. So we can say management is on the path of becoming a profession. Today

it may not be recognized as a full- fledged profession like doctor or a Chartered
Accountant.
Levels of Management
Management does not refer to a single individual but it refers to a group of persons.
There are several persons in every organization who occupy different positions
(levels) and perform different responsibilities. Levels of management mean the
hierarchy of organization representing the relationships among managers and
subordinates on the basis of their relative authority status and responsibility.
Organisational hierarchy is essential to fix authority – responsibility relationship. The
levels of management determine a chain of command.
There are three levels in the hierarchy of an organization. They are:-
i. Top Level
ii. ii. Middle Level
iii. iii. Lower Level
I. Top Level Management

Top level management consists of the highest-level officials of an organization. Top level
management include Chairman, President, Vice President Chief Operating Officer (COO),

Chief Executive Officer (CEO) etc. These top managers formulate overall organizational
goals and strategies. Important decisions are taken at this level. Top level management
performs administrative functions more than the managerial functions.
Functions of Top Level Management

➢ Determining the objectives of business
➢ Framing the plans and policies to achieve the set objectives.
➢ Coordinating the activities of different departments according to the
overall objectives of the organization.
➢ Assembling the required resources like fiancé, fixed assets etc to carry
on the activities of an organization.
➢ Maintains liaison with outside parties like
government,workers,competitors,media etc.
➢ Analysing the business environment and its implications for the survival
of the firm.
II. Middle Level Management

Middle level management consists of departmental heads like production manager,
purchase manager, sales manager etc.They are responsible for implementing the plans and
strategies developed by top level managers. They receive orders and instructions from top
managers and get the work done through lower managers. They act as a link between top
management and supervisory management.
Functions of Middle Level Management
➢ Implement the policy decision taken by the top management

➢ Organizing the activities of their concerned department.
➢ Middle level management selects and appoints employees of their department.
➢ Motivating employees based on their performance.
➢ Middle level managers keep a watch on the activities of lower level managers
and they prepare their performance appraisal reports.
III. Lower level / Supervisory level / first line Management

This level consists of supervisors, foreman, inspectors; clerk etc.Lower level managers
actually carry on the work according to the plans of top and middle level management. These
managers are directly related to workers. They pass on the instructions to workers and they
attend and solve the problems of workers. They act as a link between middle level managers
and workers.

Functions of Lower Level Management
➢ Planning of day-to-day work

➢ Assigning duties to individual workers.
➢ Ensuring safety of workers, machines, tools, and equipment’s.
➢ Supervising the workers and assisting them by explaining work procedures.
➢ Evaluating the operating performance.
➢ Preventing wastage and misuse of raw material, machines, etc.
➢ Ensuring standard of quality and steady flow of output.
➢ Providing on-the-job training to workers.
➢ Responsible for maintaining discipline among the workers.
Functions of Management
The activities which a manager performs are called functions of management.

Regardless of size, nature and type of organization, all managers have to perform
some basic functions .They are:-
1. Planning:-It is the first function performed by all managers. Planning means

deciding in advance what to do, how to do, when to do and who is going to do it.
Planning bridges the gap between where we stand today and where we want to reach.
Planning is a process of thinking before doing. Planning is the base of all other
functions of management.
2. Organising- After setting up of plans next function of management is to organize

the activities and establishing an organizational structure to execute the plan. Setting
up organizational structure means deciding the framework of working how many units
or departments are needed, how many posts or designations are needed in each
department, how to distribute the authority and responsibility among different people.
3. Staffing- Staffing refers to procure suitable employees to fill various jobs in the
enterprise. Its aim is to place the right person for the right job and at the right time.
Staffing includes recruitment of employees, their selection, placement, training,
promotion, transfer, remuneration etc.
4. Directing – Directing is the process of instructing, guiding, motivating and leading

people in the organization to achieve its objectives. Directing is said to be the heart of
management process. Supervision, motivation, leadership and communication are the
four major activities related to directing.
5. Controlling – This is the last function of management. The task of controlling

involves establishing standards of performance, measuring the current performance,
comparing this with the established standards and taking corrective action where any
deviation is found.

Coordination
[Coordination is the process by which managers synchronize/coordinate the activities of different
departments to ensure unity of action. For example, suppose in a water tank manufacturing company,
its sales department has received an order of 500 units. It cannot execute the order unless production
department produces 500 units. The production department cannot produce 500 units unless
purchase department purchases raw materials and provides the same to production department.
Thus, if production and sales plans are not properly coordinate, objectives in respect of these activities
of the enterprise cannot be efficiently accomplished.]
Coordination is the process by which managers synchronize/coordinate the activities

of different departments to ensure unity of action It is rightly said that coordination is
the orderly arrangement of group efforts to provide unity of action in the pursuit of
common purpose. Coordination is needed at all levels of management and for all
functions of management. Coordination is considered as the essence of
management because it is the force that connects all other managerial functions.
Coordination: The Essence of Management
Coordination brings unity of action and integrates different activities of organization.

Coordination is considered as the essence of management because of following
reasons
1. Coordination is needed to perform all the functions of management: In

planning coordination is required between main plan and supportive plans of different
departments. In directing coordination is required between superior and subordinates.
Thus it is the key to all managerial functions.
2. Coordination is required at all levels of management: Top level requires

coordination to integrate all the activities of an organization to achieve organizational
goals. Middle level requires coordination to balance the activities of different
departments. Lower level requires coordination to integrate the activities of workers
towards achievement of organizational objectives.
3. Coordination is the most important function of an organization: Any company

which fails to coordinates its activities cannot survive and run successfully for a long
period of time. There should be coordination of activities of different departments
which work independently.
Thus, we can say that coordination is not a simple function of management but
it is the essence of management. Coordination ensures that planned objectives are
achieved with a minimum of conflict.

Features of Coordination
Coordination Integrate Group Efforts: The concept of coordination always applies to

group efforts. There is no need for coordination when only single individual is working.
Coordination gives a common focus to group effort thereby unifying their diverse activities.
Coordination ensures unity of action: Coordination always focus on unifying the efforts of
different individuals working in various departments because conflicting efforts may cause
damage to organization.
Coordination is a continuous process: Coordination is not a onetime function; it is a
continuous process. It begins with planning and continues to controlling.
Coordination is the responsibility of all managers: Coordination is a function which every
manager performs in an organization. Top level managers coordinate the overall plans and
policies of organization, middle level try to coordinates the departmental activities and lower
level coordinates the activities of workers.
Importance of coordination
The need for coordination arises because of the following reasons:
1. Growth in size: The need for coordination increases with the increase in size of
organization.In large organization there are more number of persons working, each
individual has his own needs and objectives, so there is more need to harmony
individual goals and organizational goals through coordination.
2. Functional Differentiation: The functions of an organization are divided into
various departments like production, finance, marketing, human resources etc. All
these departments have their own objectives, policies, strategies etc.So, there may
arise conflict between them. Therefore, coordination is needed to ensure unity of
action of various departments.
3. Optimum Utilization of Resources: Coordination helps to avoid duplication,
overlapping and misuse of resources. Through coordination every department know
the operations of various departments and its stage wise progress. For the smooth
running, production department should coordinate with sales department.
4. Specialisation
Modern organisations are characterized by a high degree of specialization. All

individuals/specialists have their own goals which are more important to them than the
organization’s goals. Coordination helps to reconcile the departmental/specialists’
goal with organizational goals.
Prepared by, BINOY GEORGE, HSST, MKNM HSS, Kumaramangalam, Thodupuzha

Expected Questions:
1. Management is
a. An art b. Science c. Both art and science d. None of these
2. Find the odd one:
a. Management is a goal-oriented process b. Management is all pervasive
c. Management is multi dimensional, d. Management by Exception
3. Which one of the following is not an organizational objectives of management.
a.Growth b. Survival c. Employment opportunity d. profit
4. Management is
a. Exact Science. b. Pure science. c. Inexact Science. d. None of these.
5. ” Management is a science”.- Give any two reasons to justify this statement.
6. Management is considered as an art. Express your views in this regard
7. Do you think management has the characteristics of a full fledged profession?
8. Mr. Ashok is working as a supervisor in Lunnar Rubbers.
a. Name the level management he is working
b. List out any three functions performed by him
9. Following is the managerial personnel working in an organization. Place them in
appropriate tiers of of the given pyramid.
Supervisor, CEO, General Manager, Foreman, Purchase Manager, Section
Officer,Deputy Manager, Managing Director
Hint:Deputy Manager (Middle Level), Section Officer (Lower level)

10. “Coordination is the essence of managent”. Comment

11. All the functional departmental heads come under this category of management.
1. Identify the level of management
2. What are the general functions performed by this level of maangement
12. Management is a continuous process. It is one of the feature of management. State
any other three features of management. (3 score)
Online Test Paper Series – Business studies

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Plus Two Business studies Chapter-2 – Short Note
Chapter-2 Weightage
to this
Principles of Management Chapter-9
(Short Note) Scores
Nature/characteristics of Management Principles

1. Universal applicability
The principles of management are applicable to all types of organization irrespective
of their size and nature.
2. General guidelines
Management principles are not static or absolute statements..
3. Formed by practice and experimentation
These principles of management have been developed by experience and collective
wisdom of managers.
4. Flexibility
Management principles are flexible and can be modified by the manager according to
the requirements of the situation.
5. Behavioral in nature
The management principles are formed to guide and influence the behavior of
employees.
6. Contingent/Dependent
Management principles are dependent upon the situation prevailing in organization.
Their application and effect depend upon the nature of organization.
Significance/Importance of management principles
1. Providing managers with useful insights into reality

These principles guide managers to take right decision at the right time.
2. Optimum utilization of resources and effective administration
Principles of management equip managers to foresee the cause and effect
relationships of their decisions and actions. Therefore, the wastage associated with
trial-and-error approach is reduced.
3. Scientific decisions
Management principles help managers to take thoughtful decisions.
www.binoygeorgeonline.blogspot.org 1 Binoy George (13-2-2023)

4. Meeting changing environment requirement

Management principles help the managers in implementing the changes in the right
direction and right level in the organization.
5. Fulfilling social responsibility
Principles of management have been developed in such a way that they help in
fulfilling social responsibilities.
6. Base for management training, education and research
Management principles are used as a basis for management training; education and
research.
Henry Fayol’s Principles of Management

Henri Fayol (1841-1925) was a French management theorist is rightly treated as the”
Father of General Management”.
14 Principles of Management developed by Henri Fayol

Fourteen principles of management developed by Fayol are:
1. Principle of Division of Work

2. Principle of Authority and Responsibility
3. Principle of Discipline
4. Principle of Unity of Command
5. Principle Unity of Direction
6. Principle of Subordination of Individual Interest to General Interest
7. Principle of Remuneration of Employees
8. Principle of Centralisation and Decentralisation
9. Principle of Scalar Chain
10. Principle of Order
11. Principle of Equity
12. Principle of Stability of Tenure of Personnel
13. Principle of initiative
14. Principle of Esprit De Corps (Union is Strength)
1. Principle of Division of Work

According to this principle the total work in an organization is to be divided into
small tasks and each task should be assigned to individual worker according to
his ability and qualification. Division of work leads to specialization.

2. Principle of Authority and Responsibility

Authority means the power to take decision. Responsibility means the
obligation to complete the job assigned on time. According to this principle
there must be balance (parity) between the authority and responsibility.
3. Principle of Discipline
Discipline means obedience, respect of authority and observance of established
rules. According to Fayol,discipline is required not only on the part of workers
but also on the part of management people. To ensure discipline requires good
superiors at all levels, clear and fair agreements and careful application of
penalties.
4. Principle of Unity of Command
According to Fayol there should be one and only one boss for every individual
employee. An individual employee should receive orders from one and only
one superior at a time and be answerable to only one superior. If there is more
than one superior, there can be contradictory orders.
5. Principle Unity of Direction
Unity of direction means there must be a single plan and a single head for the
activities with the same objectives. Each group of organizational activities that
have the same objective should be directed by one manager using one plan.
The efforts of all members of the organization should be directed towards a
common goal.
Difference between Unity of Command and Unity of Direction
Basis Unity of Command Unity of Direction
Meaning This principle states that one This principle states each group
subordinate should get orders of activities having the same
from and report to one boss. objective must have one head
and one plan.
Aim To prevent dual subordination To prevent overlapping of
activities
Implications It affects an individual It affects the entire organization
employee
Display It represents relationship It represents relationship of
Relationship between superior and activities as per organizational
subordinate. plans and goals.
Need It is needed to fix the It is needed for sound
responsibility of each person in organization of activities.
the organization.

6. Principle of Subordination of Individual Interest to General Interest

The interest of an organistion should take priority over the interest of any one
individual employee. According to Fayol the primary focus is on the
organizational objectives and not on those of the individual.
7. Principle of Remuneration of Employees
According to this principle, remuneration to the employees should be fair for
both employees and the organization. The remuneration should be sufficient to
keep employees motivated and productive. At the same time, it should be
within the paying capacity of the company.
8. Principle of Centralisation and Decentralisation
Centalisation means concentration of authority in few hands at the top level.
Decentralisation means delegation or distribution of authority throughout all
the levels of the organization. When the power to take decision is given to the
person performing the job, it is called as ‘Decentralisation’. According to Fayol
an organization must not be completely centralized or decentralized, there
should be a match between the two depending upon the, size, nature and
location of business. Decentralisation helps the top management to reduce
their burden of handling each and every affair of the organization and at the
same time it will motivate the lower level employees.
9. Principle of Scalar Chain
According to Fayol, Scalar Chain refers to the chain of authority and

communication that runs from top to bottom and should be followed by
managers and their subordinates.

In case of emergency workers lower in the authority chain can directly contact
the persons of higher authority or those working in other scalar chains. Gang
Plank is a shorter route and has been provided so that communication is not
delayed. Quick communication is possible through Gang Plank.
10. Principle of Order

According to Fayol, there must be a fixed place to keep every material and
things used in the organization. So that no time and energy is wasted in search
of any material or any person. It will ensure smooth and systematic working of
organization.
11. Principle of Equity
According to Fayol the principle of equity should be followed at every
level.Equity refers to kind,fair and just treatment to employees.Employees will
put their maximum efforts only when they are treated with kindness and
justice.
12. Principle of Stability of Tenure of Personnel
According to this principle, employees once selected, should be kept at their
post for a minimum fixed term (tenure). They should be given reasonable time
to show results. A feeling of insecurity for the job, the employees cannot
contribute their maximum.
13. Principle of initiative
Fayol suggested that employees in the organization must be given an
opportunity to take some initiative in making and executing a plan. Initiative
gives freedom to its employees to suggest their new ideas, experiences and
more convenient methods of work. It gives more satisfaction to employees..
14. Principle of Esprit De Corps (Union is Strength)
According to Fayol management should promote a team spirit in the
organization and all the employees must consider themselves as member of the
organization.A manager should replace ’I’ with ‘We’ in all his conversations
with workers to foster team spirit.Fayol put emphasis on team work because
team contribution is always better than individual contribution.

F.W.Taylor’s Scientific Management

Frederick Winslow Taylor was an American mechanical engineer. Taylor is regarded as
father of Scientific Management.
Scientific Management is the application of science for each and every element of
management. Scientific management insists on replacement of rule of thumb by
science. It means decision in the organization should be taken on the basis of
scientific studies.Scientific management includes:
1) Scientific study and analysis of work

2) Scientific selection and training of employees.
3) Standardization of raw materials, tools and working conditions.
4) Reasonable remuneration to employees.
5) Integration and co-ordination of available resources.
According to Taylor “Scientific Management consists in knowing what you (i.e.

management) want men to do exactly; and seeing to it that they do it in the best
and the cheapest manner.”
Taylor’s Scientific Management is based on certain Principles. These principles are

applied in practice with the help of certain Techniques.
Principles of Scientific Management

Taylor’s Scientific Management is based on certain principles, which are
discussed below.
1. Science, not rule of thumb
2. Harmony, Not Discord (Conflict)
3. Co-operation, not individualism
4. Scientific selection, training and development of workers
5. Maximum, not restricted output
1. Science, not rule of thumb

According to this principle, Taylor insists that each job performed in the
organization should be based on scientific enquiry and not on the basis of rule
of thumb. In rule of thumb decisions are taken on the basis of practical
knowledge and not on the basis of scientific calculations. Taylor advocated the
following studies to be made regarding jobs:-
a) Method study-To identifies the best possible method of doing a
particular job.

b) Time study-observing and recording time required for every piece of

work and operation.
c) Motion Study-It helps to eliminate the unproductive and unnecessary
motions/movements and it help to reduce the time to complete a
particular job efficiently.
d) Fatigue study-Fatigue study helps to determine the amount and
frequency of rest intervals required for a worker during a particular job.
2. Harmony, Not Discord (Conflict)
According to Taylor in an organization there should be complete harmony
between the management and workers. Both should realize that each one is
important. To achieve this, Taylor advocated complete ‘Mental Revolution ‘on
the part of both management and workers. Management should share the
gains of the company with workers and at the same time workers must
contribute their level best for the organization.
3. Co-operation, not individualism
According to this principle, there should be complete cooperation between the
employees and the management instead of individualisam.Competition should
be replaced by cooperation. For all important decisions taken by the
management, workers should be taken into confidence. At the same time,
workers, should not go for strike and should not make unreasonable demands
on the management.
4. Scientific selection, Training and Development of workers Industrial efficiency
depends upon the efficiency of workers. Workers efficiency depends upon
proper selection, training and assigning duties according to their qualification.
To increase efficiency, they should be given the required training. This will
ensure the greatest efficiency and prosperity for both company and workers.
5. Maximum, not restricted output
Both the management and workers should try to achieve maximum output in
place of restricted output. This will be benefited to both the parties. Maximum
output will result in higher wages for the workers and greater profit for the

management. With increased productivity consumers get quality products at

just and fair prices.
Techniques of Scientific Management
Principles of Scientific Management are applied in practice with the help of certain
techniques. Various techniques of Scientific Management are discussed
below:-
1. Functional Foremanship
2. Standadisation and simplification of work
3. Work Study:
4. Differential Piece Wage System
1. Functional Foremanship
In this technique Taylor suggested the division of factory into two departments-
Planning Department and Production Department. Through this planning is
separated from execution. So that ‘Planning in charge’ can concentrate only on
planning the job of workers and ‘production in charge’ can concentration only
on execution of job. Taylor said foreman must be intelligent, educated,
energetic, honest and profession expert. All these qualities can’t be found in
one person so Taylor stressed on having minimum eight experts (Foremen),four
under each department to order and guide workers.
Fig: 1. Functional Foremanship

The eight functional experts suggested by Taylor are:

Under planning department:
1) Route Clerk-This foreman is responsible for determining the sequence
of steps for completing a particular job or task.
2) Instruction Card Clerk-He issues instruction to the workers to be
followed by them.
3) Time and Cost clerk-He records the time taken for completion of a job
and also prepares cost sheet for every job.
4) Disciplinarian-He ensures that each job is being performed in a
disciplined manner.
Under Production Department:
1) Gang Boss-He arranges all the machines, tools and other resources
required for performance of the job so that there is no delay.
2) Speed Boss-This foreman assures timely completion of work.
3) Repair Boss-This foreman taken care of the maintenance of machines.
4) Inspector-This foreman keeps a check on quality control of the output.
2. Standardization and Simplification of Work
Standardisation refers to the process of setting standards for every business
activity. It may be standardization of process, raw materials,time,product etc.
Simplification aims at eliminating unnecessary diversity of products.
3. Work Study:
Work study is a systematic, objective oriented, analytical and critical assessment

of the performance of workers in various operations in a workshop. Its
various aspects are:
(a) Method study (b) Motion Study (c) Time Study (d) Fatigue Study
3(a) Method Study
Method study is a technique to know the one best way of doing a particular
job. The objective of method study is to reduce the cost of production and
improve the quality level of customer satisfaction.

3 (b) Motion Study
Motion study refers to the study of various movements, like sitting, standing,
holding, turning, changing position etc., of workers, while performing a
particular job. The main objective of this study is to identify the motions which
are productive, incidental and unproductive. This study helps in eliminating the
unnecessary movements.
3 (c) Time Study

Time study determines the standard time taken by a workman to perform a
given task. The standard time is fixed by taking several readings of a specific
task. Its purpose is to decide how much time is normally required by the
workers to perform a certain job and thus to determine the number of workers
to be employed for a fair day’s work.It also helps in calculating labour costs and
framing suitable incentive schemes.
3 (d) Fatigue Study

Fatigue study intends to find out the number and frequency of rest intervals
that must be provided to a worker in completing a job efficiently. It is human
tendency that a person feels physically and mentally tired if she/ he is made to
work continuously without any rest.
4. Differential Piece Wage System
Differential piece rate system is a system of wages’ payment in which efficient

and inefficient workers are paid at different rates. Taylor has suggested two
types of wages for similar work. Higher wages for efficient workers & lower
wages for inefficient workers. Taylor classified the workers as efficient or
inefficient on the basis of their performance.
For example, Narmada Ltd. gives Rs. 2 per piece if in one day 25 or more units
are produced and Rs. 1.50 per unit if in one day less than 25 units are produced.
A worker who is producing 24 units will get Rs.36 (24×1.50) whereas a worker
producing 25 units will get Rs. 50 (25×2). So he will be motivated to produce at
least 25 units because failure to meet target by just one unit will result in loss
of Rs. 14 for him.
Worker Standard Actual Wage Rate Wage
Output output (Rs) (Rs)
A 25 24 1.5 36
B 25 25 2 50

Advantages:
1. It discriminates between efficient and inefficient workers
2. Reward efficient workers.
3. Penalise inefficient worker
4. Motivate the workers towards higher productivity.
Mental revolution. Mental Revolution is a change in thinking both on the part of

management and workers. Success of implementation of scientific
management depends on the mental revolution of management and
workers. Mental revolution involves a change in the attitude of workers and
management towards one another from competition to cooperation. Both should
realise that they require one another. Both should aim to increase the size of surplus.
Management should share a part of surplus with workers. Workers should also
contribute their maximum effort so that the company makes profits. This attitude will
be good for both of them and also for the company. If mental revolution not take
place, all the measures suggested in scientific management system would be
useless.
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Expected Questions
1. Which among the following is not a contribution by F.W. Tailor)
(a). Differential Piece Rate System. (b) Time study.(c) Scalar Chain.(cl).
Functional Formanship. Ans:(c) Scalar Chain.
2. ‘One subordinate must receive orders from only one superior at a time’.
Which principles of management referred here? Ans: Unity of command
3. Identify the management which states that ‘union is strength’
Ans: Esprit de corps
4. Foreman is example of …………… level management.
Ans: Lower level
5. Mr.Sathyan , the production manager of a firm, instructs Mr.Santhosh,worker,
to produce 60 units of a product per day. Mr.Mathew, the assistant
production manager , instructs Mr.Santhosh to produce 90 units. Which is the
management principle violated here?
Ans: Unity of command
6. ------------- is the father of modern mangement. A .Peter F Drucker. b. Henry
Fayol. c. F.W. Tailor. d. Mary Parker. Ans: b. Henry Fayol.
7. Find the odd one relating to the features of management principle. a.
Universal. b. Flexible. c. Behavioural . d. Rigidity
Ans: d. Rigidity
8. Who wrote the famous book,‘General and Industrial Management’
a.Peter F Drucker. b. Henry Fayol. c. F.W. Tailor. d. Mary Parker.
Ans: b. Henry Fayol
9. “I am always with the workers and giving them direct and immediate guidance
and controlling them in the performance of their tasks”. Who am I?
Ans: Supervisor (Lower-level managers)
10. Which techniques of Taylor separates ‘planning’ and’ execution’ functions?
Ans: Functional Foremanship
11. Identify the shortest route of communication in the scalar chain.
Ans: Gank Plank
12. The study of movement of operations of a worker.
a. Method study b. Motion study c. Work study d. Time study Ans: Motion
Study
13. Name the technique advised by Taylor to give more salary to an efficient
worker?
Ans: Differential piece wage system

14. Superiors should be impartial while dealing with their subordinates.

a. Which management principle is meant here?
b. Who advocated this principle?
15. Management principles never remain static in its application mode. They can
be applied with variation under different conditions in different ways. Identify
the nature of management principles referred above.
Ans: Flexibility
16. “ Iam always with the subordinates, giving them direct and immediate
guidance and controlling them in the performance of their tasks”. Who am I?
Ans: Supervisor
17. Smt. Shantha is the owner of a ladies ready made garments unit and 40
workers employed there. They were divided in to 4 groups according to skill
and ability. Each group was given separate jobs like dress designing, cloth
cutting, stitching and embroidering. Now, this is one of the leading unit in the
town.
a. Name the general management principle suggested by Henry Fayol
contributed to the success of the unit.
b. State any one merit of this principle
c. Briefly explain this principle
18. “Fayol’s ‘Unity of Command’ and Taylor’s ‘Functioal foremanship’ are
contradictory”. Do you agree?. Give reason. (2 Score)
Ans: No. At a glance one may feel both are conflicting but in actual practice
they are not contradictory. Each specialist foremen give direction only on their
specific area.
19. List out the various techniques and methods of scientific management
developed by F W Taylor (4 scores)
20. Name the four techniques of Scientific management? (2 Score)
a) Functional Foremanship
b) Standadisation and simplification of work

c) Work Study
d) Differential Piece Wage System
21. Math the following (Score-4)
A B
Functional Foremanship Frequency of rest intervals required
Efficient and inefficient workers To eliminate unnecessary

movements
Motion study Inspector
Fatigue Study Differential piece wage system
Ans:
A B
Functional Foremanship Inspector
Efficient and inefficient workers Differential piece wage system
Motion study To eliminate unnecessary

movements
Fatigue Study Frequency of rest intervals required
22. Explain the technique ‘Functional Foremanship’ developed by F W Taylor.

23. Draw a figure showing’ functional foremanship’ as advocated by F W Taylor to
ensure specialization in the organization. (5 Score)

24. Match the following:

A B
Gang Boss Records the time taken for completion

of a job
Inspector Draft and issue instruction to workers
Time and Cost Clerk Keeps a check on quality control of the

output
Instruction card clerk Determining the sequence of steps for

completing a particular job.
Route Clerk Arranges machines, tools and other

resources for the smooth operations
Ans:
A B
Gang Boss Arranges machines, tools and other

resources for the smooth operations
Inspector Keeps a check on quality control of the

output
Time and Cost Clerk Records the time taken for completion
of a job
Instruction card clerk Draft and issue instruction to workers
Route Clerk Determining the sequence of steps for

completing a particular job.
25. Mr. Radhakrishnan, the owner of manufacturing units likes to implement

scientific management techniques in his business. What are the important
principles he has to follow?
26. Explain the principle ‘Scalar Chain’.


A B
Division of work Scientific management
No Scope for Rule of Thumb Employees are treated with kindness

and justice
Change in the attitude of Subordinates report to only one boss

management and workers
Unity of Command Specialisation
Equity Mental Revolution
Ans:
A B
Division of work Specialisation
No Scope for Rule of Thumb Scientific management
Change in the attitude of Mental Revolution

management and workers
Unity of Command Subordinates report to only one boss
Equity Employees are treated with kindness

and justice
28. Explain the term “Mental revolution” in relation to scientific management.

29. Explain the concept ‘ Gang Plank’. (3 Score)
This is a shorter route of communication. According to this concept, in case of
emergency, two executives of the organization of different departments
at the same level can communicate directly, so that speedy decisions and
actions could be taken.
In this example, if there is an emergency, then employee

‘E’ can directly communicate with employee ‘O’ through
‘Gang plank’ as shown in the diagram.

30. Explain the technique ‘Differential Piece Wage System’ with an example. (6
Score)
31. What is meant by motion study and fatigue study.?
32. Briefly explain about principles (Any 8) of management as contributed by
Henri Fayol. (8 Score)
33. Explain any 3 techniques of scientific management?
34. Briefly explain the techniques of Scientific management as propounded by
F.W.Taylor (8 Scores)
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Plus Two Business Studies 1 Chapter-3 Short Note
Chapter-3
Weightage to
Business Environment (Short Note) this Chapter-
Meaning of Business Environment 6 Scores

Business environment is the surroundings in which business exists. It is the sum total of all individuals,
institutions and other forces that are outside the control of a business enterprises but that may affect
its performance.
Environmental Scanning
Business environment is the surroundings in which business exists. The complete awareness and
understanding of business environment is known as environment scanning. Environmental scanning is
essential for the success of a business.
Features of Business environment
1. Internal and External forces
The environment of business comprises of internal and external factors. Internal environment includes
plans and policies, employees, business objectives etc. The external environment includes customers,
suppliers, Government, society etc.
2. Uncertainty
Business environment is largely uncertain. It is very difficult to predict the changes of business
environment.
3. Complexity
Business environment is very complex as it is very difficult to know the relative impact of the social,
economic, political, technological factors change in demand of a product in the market.
4. Business lacks control over environment
Business lacks control over external environment. It can’t change its external environment, only way
to adjust with it.
5. Environment is dynamic
Business environment is a constantly changing process. No environment remains constant or static for
a longer period of time.
6. Relativity
Business environment is a relative concept since it differs from country to country or even state to
state.
10-02-2023 Binoy George

Dimensions/Elements/Factors of Business Environment
Dimensions of business environment means all the factors, forces and institutions which have direct
or indirect influence over the business activities:
1. Economic Environment
2. Social Environment
3. Political Environment
4. Technological environment
5. Legal environment
1. Economic Environment
It consists of economic factors that influence the business of a country. It includes factors such as
inflation, tax and interest rates, unemployment, competition, fiscal and monetary policies.
For example, If the interest rate in a country is high, it will increase the cost of finance of the business.
Examples for changes of economic environment:
➢ Introduction of competitors
➢ Changes in demand and fashion
➢ Changes in price of raw material/labour costs
➢ Business cycles-Boom/depression
➢ Inflation rate
➢ Unemployment rate
➢ Interest rates
➢ GDP
2. Social Environment
It describes the characteristics of the society in which the business organization exists. Social
environment consists of religious aspects, language, customs, traditions, beliefs, tastes, Life
expectancy,preference, consumption habit etc. Social trends present various opportunities and
threats to business enterprises. For example, the health-and fitness trend has become popular in these
days.
Major elements of social environment:
➢ Education system and literacy rate

➢ Consumption habits

➢ Expectation from the work force

➢ Health conscious of consumers
3. Political Environment
It is the outcome of a combination of various ideologies advocated by various political parties. It

includes political conditions such as general stability and peace in the country and the political attitude
of the elected government towards business etc.
For example, it is very difficult to start a new business in countries like Afganistan,Iraq,Syria etc due to
uncertain political situation prevailing there.
Example for political environment changes:
➢ General election and changes in Government

➢ Political stability
➢ Ideology of political parties
➢ Attitude of the government towards business.
➢ The nature of relationship our country with foreign countries.
➢ The constitution of the country
➢ Industrial policy 1991
4. Technological environment
It includes forces relating to scientific improvements and innovations, which provide new products,
new production method and new style of operation of a business etc. For instance, Companies
introduced new models of cars time to time, introduction of online trading system, introduction of net
banking etc.
Example for changes in technological environment:
➢ New inventions
➢ New distribution systems like online market
➢ New payment system like net banking
➢ New advertisement media like internet, social media etc.
➢ Online meeting, training etc.
5. Legal environment
Legal environment consists of the legal frame work within which the business has to function. It
consists of legislation passed by the government, administration orders, court judgment etc.
For example:- The Government has made it compulsory to display a health warning on outside of the
cigarette package as “Cigarette smoking is injurious to health”.
Examples of legal environmental changes: -
Government of India passed various Act Like
➢ Consumer Protection Act-1986

➢ Competition Act 2002
➢ Trade Union Act 1926
➢ Factories Act-1948
➢ Workmen’s Compensation Act-1923
➢ Implementation of GST in 2017
➢ Companies Act 2013

Importance of Understanding of Business Environment

A good understanding of environment by the business managers enables them not only to identify
and evaluate, but also to react to the forces external to their firms. In the present day of competitive
market, it is essential for a business to remain alert and aware of its environment.
1) It helps the firm to identify opportunities and get the first mover advantage:
Early identification of opportunities helps an enterprise to exploit them, otherwise it will be exploited
by our competitors.
2) It helps a firm to identify threats and early warning signals
Environmental awareness can help managers to identify various threats on time and serve as an early
warning signal.
3) It helps in assisting in planning and policy formulation
Since business environment provides both opportunities and threats for the firm, its understanding
and analysis can be the basis for planning and policy formulation.
4) Coping with changes

The business must be aware of the ongoing changes in the business environment; it may be changes in
the customer requirements, emerging trends, new government policies, technological changes etc. If the
business is aware of these changes then it can take possible measures to exploit the situation or it can
take remedial measures to survive.
5) It helps in improving performance
With continuous scan of business environment firms can easily improve their performance. By making
changes in the internal environment matching to external environment, organization can prosper and
improve their market share
Economic Environment in India

Economic environment is the most important dimension of Business Environment. The important
economic factors which have impact on Business firms are:
1. Economic structure: Indian economy is a mixed economy. In a mixed economy, business

policies are taken by considering both profit objectives and welfare of people.
2. Economic Policies: Government’s important economic policies which influence business
decisions are Industrial Policy, Fiscal policies, monetary policy, tax policies like introduction of
GST etc. In 1991, July Indian Government declared a new Industrial Policy which sought to
liberate the Indian industry from licensing system(liberalization), significantly reduce the role
of public sector(privatization) and encourage foreign participation in industrial development
(globalization). Liberal policies offer more opportunities to businessmen whereas strict
policies put constraints.
3. Economic Planning: It include Annual Budget, Five Years Plan, NITI Aayog (National Institution
for Transforming India). These plans also influence business decisions.
4. Economic Indicators: The common economic indicators are National Income, Per Capital
Income, Balance of Payment, Value of Export Import, GDP, GNP etc.
5. Infrastructure: It refers to basic services or facilities necessary to carry on business activities
in a country, i.e. Financial institutions, banking infrastructure, communication facilities,
transportation system etc.

Features of New Economic Policy 1991
The 1991 industrial policy contained the root of the liberalization, privatization and globalization drive
made in the country in the later period. The policy has brought changes in the following aspects of
industrial regulation:
1. Abolition of Industrial Licensing --

In a major move to liberalise the economy, the new industrial policy abolished all industrial licensing
except for certain industries related to security and strategic concerns, and social reasons. Till 1991, 17
industries were reserved for the public sector. Now there are only 3 industries for which licensing is
compulsory. These are atomic energy, arms and rail transport.
2. Public Sector’s Role Diluted

Most of the industries reserved for public sector under earlier policy were dereserved. Industrial policy
1991 seeks to restrict the role of public sector and opened the door to private sector. The government
identified strategic and priority areas for the public sector to concentrate. Similarly, loss making PSUs
were sold to the private sector. The government has adopted disinvestment policy for the
restructuring of the public sector in the country.
3. Free Entry to Foreign Investment and Technology
Another major feature of the economic reform measure was it has given welcome to foreign
investment and foreign technology. Foreign investment including FDI and FPI were allowed.
4. Amendment of MRTP Act
To take away restrictions on investment by business firms under Monopolistic and Restrictive Trade
Practices (MRTP) Act
The major changes or impact of the Economic Policy 1991 are:

The industrial policy of 1991 is the big reform introduced in Indian economy since independence. The
new policy contained policy directions for reforms and thus for LPG (Liberalisation, Privatisation and
Globalisation)
Liberalisation
It means liberating economy from unnecessary controls and regulations and making the economy
more competitive. Through liberalization, in India, business system is now free from unnecessary
licence,permit ,quota etc. The 1991 policy introduced the following measures of liberalization:
a) Abolishing licensing requirements in most of the industries except a short list.
b) Freedom in deciding the scale of business activities.
c) Removal of restriction on the movement of goods and services.
d) Freedom in fixing the prices of goods and services
e) Reduction in tax rate and lifting of unnecessary control over the economy.
f) Simplifying the procedure for import and export.

g) Making it easier to attract foreign capital and technology to India.
Privatisation
Privatisation means transfer of ownership and or management of enterprise from public sector to
private sector.Privatization refers to giving greater role to private sector and reducing the role of
public sector. Privatization is the opposite of nationalization. To achieve this Govt. adopted the policy
of planned ‘disinvestment’.
To execute the policy of privatization government took the following steps:
Disinvestment of public sector- It means that Govt. has been selling out shares of these industries to
private sector.
Sale of shares of PSU’s- Indian Govt. started selling shares of PSU’s to public and financial institution
Eg- Govt partially sold shares of Cochin Shipyard to general public/financial institutions.
Minimisation of public sector- Previously Public sector was given the importance with a view to help
in industrialization and removal of poverty. But in 1991 policy government gave greater role to the
private sector than public sector. Number of industries reserved for public sector was reduces from
17 to 3.
Globalisation
Globalisation refers to integration of various economies of world. In globalization entire world is
considered as a single market. It means the mixing of the domestic economy with the rest of the world
with regard to foreign investment, trade, production and financial matters. Globalization leads to free
movement of people, goods, and services across boundaries. Globalization paves the way to many MNC
to Indian market.
Example-Pepsi, Coca-Cola, McDonald’s, and Kentucky Fried Chicken (KFC Chicken).
Steps taken for globalization:
Reduction in tariffs- Custom duties and tariffs imposed on imports and exports are reduced
gradually just to make India economy attractive to the global investors.
Liberalisation on foreign capital policy- The Central Government has abolished FERA (Foreign
Exchange Regulation Act) and enacted FEMA (Foreign Exchange Management Act).
Liberal trade procedure-Import export procedures were simplified.
Features of a Truly Globalised Economy
➢ Free flow of goods and services across nations

➢ Free flow of capital across nations
➢ Free flow of people across borders
➢ A common acceptable mechanism for the settlement of disputes
Disinvestment
Disinvestment means selling of Government’s share in a public sector enterprise to private sector.
Disinvestment may lead to privatization. When the Government sells only less than 50 per cent of its

total stock, it is called merely disinvestment and in this case control and management of the business
enterprise remains in the hands of Government. If government sells more than 50 % of its stake in a
company to private sector it leads to privatization of that firm.
Objectives of Disinvestment
➢ To reduce the financial burden of the government
➢ To introduce competition and market discipline.
➢ To increase growth of the firm
➢ To increase efficiency of management
Demonetisation
Demonetisation is an act of cancelling the legal tender status of a currency unit in circulation. The
aim of demonetisation was to control corruption, use of high denomination notes for illegal activities;
and especially the accumulation of ‘black money’ generated by income that has not been declared to
the tax authorities.
Features Demonetisation
1. It is a tax administration measure.

2. It is a method to check tax evasion
3. It is a method to channelize savings into the formal financial system-
4. Demonetization has been used as a tool to stabilize a currency and fight inflation
5. It is an effective method to create less-cash or cash-lite economy.
6. It is an effective method to push informal economic activity into more transparency and away
from black markets.
Note: Total currency in circulation is at Rs 17.82 lakh crore of which nearly
86%(around 15.32 lakh crore) were ₹500 and ₹2,000 notes.
Impact of Industrial Policy 1991 at a glance:

BEFORE-1991 AFTER-1991
Import License needed for Import license Abolished
any Import
Average 100% Import Duty Import Duty Average Less
Than 10%
Foreign Exchange Not Foreign Exchange Freely
P V Narasimha Rao & Manmohan Singh Allowed Available
Eminent personalities behind 1991 Policy

Expected Questions
1. Find the odd one.

A. Competition b. Unemployment .c. Tax and interest rate. d. Tradition.
2. Life expectancy is one of the key elements that influences
a. Legal Environment b. Economic Environment c. Social Environment
3. The sum total of all the factors beyond the control of a business unit that
influence the business is termed as--------- (Business Environment)
4. ------ means free movement of goods , capital and labour across the globe. a.
Liberalisation .b. Privatization . c. Globalisation .d None of these.
5. What is environmental scanning?(2)
6. There is heavy demand for fast food restaurants in Kerala due to life the life
style of the people. Identify and describe the business environment affected
here. (3)
7. Classify the following environmental factors into economic, social and legal
factors.
Tax rates, Labour laws, Level of education, Human rights,Liberalisation,
Customs and beliefs, Trademarks Act, Foreign Trade (4)
8. Fill appropriately as per hint given:
(a) Political ideology of government Political Environment
(b) Change in life style ?
(c) Consumer Protection Act ?
(d) Stability of Government ?
(e) Change in interest rate ?
(f) Invention of driverless car ?
9. Classify the following items into appropriate elements of business
environment (4)
a. Literacy Rate b. Public Debt c. Rate of savings and investments d. Birth and
death rate

10. Match the following (5)

A B
Technological Environment Unemployment rate
Legal Environment Consumption habits
Economic Environment Attitude of the government towards
business
Political Environment Online Purchase
Social Environment Companies Act 2013
11. What is meant by globalization? (3 Score)
12. Explain with example - ‘Economic Environment’ of a business? (4 Score)
13. Briefly explain the following: a.Liberalisation b. Privatisation (4)
14. Match the following (5)
A B
Introduction of online trading Social Environment
Increasing the numbers of fast Economic Environment
food restaurants
GST Implemented Political Environment
RBI Increased Repo Rate Economic Environment
Legal Environment
15. ‘Business environment or environmental scanning helps in the identification

of threats and early warning signals’. Explain the importance of business
environment. (5 Score)
16. Explain with example, various dimensions of business environment. (8 Score)
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HSE II Business Studies Chapter-4 Short
Chapter-4 Weightage to
this Chapter-
PLANNING (Short Note) 8 Scores
Meaning of Planning
Planning is the first function of management. Planning means thinking in
advance what is to be done, when it is to be done, how it is to be done and by
whom it should be done. Planning is the process of thinking before doing.
Planning bridges, the gap between where we are standing today and where we
want to reach. Planning involves setting up of objectives and developing
appropriate courses of action to achieve these objectives.
Features of Planning
1. Planning focus on achieving objectives
Planning involves setting up of objectives and developing appropriate courses
of action to achieve these objectives.
2. Planning is a primary function of management
Planning is the primary or basic function of management. All other managerial
functions are performed within the frame work of plans drawn.
3. Planning is pervasive
Planning is required at all levels of management. It is not an exclusive function
of top management or of any particular department.
4. Planning is continuous
Planning is a never ending or continuous process. Plans are prepared for a
specific period of time, may be for a month, a quarter, or a year. At the end of
that period there is need for a new plan to be drawn on the basis of new
requirements and future conditions. Hence, planning is a continuous process.
5. Planning is futuristic (Forward-looking)
Planning essentially involves looking ahead and preparing for the future. In
other words, planning relates to future.
6. Planning is a mental exercise
Planning is a mental exercise involving creative thinking and imagination.
7. Planning involves decision making
Planning essentially involves choice from among various alternatives. The need
for planning arises only when alternatives are available.

Importance/Advantages of Planning
It is difficult to manage operations without formal planning. It is important for an
organisation to move towards achieving goals. The major benefits of planning
are given below:
1. Planning provides directions
By stating in advance how work is to be done planning provides direction for
action. If there were no planning, employees would be working in different
directions and organization would not be able to achieve its desired goal.
2. Planning reduces the risks of uncertainty
Planning enables these enterprises to predict future events and prepare to face
unexpected events. With the help of planning, manager can identify potential
dangers and take steps to overcome them.
3. Planning reduces overlapping and wasteful activities
Planning serves as the basis of coordinating the activities and efforts of different
divisions, departments and individuals. It helps in avoiding confusion and
misunderstanding.
4. Planning promotes innovative ideas
Planning requires high thinking and it is an intellectual process. So, there is a
great scope of finding better ideas, better methods and procedures to perform
a particular job.
5. Planning facilitates decision making
As in planning goals are set in advance and predictions are made for future.
These predictions and goals help the manager to take fast decisions.
6. Planning establishes standards for controlling
Through planning management decides the standard of performance in
advance. With the help of these standards, comparison can be made with the
actual. If there is any deviation with the standard, proper steps can be taken to
correct it. Therefore, we can say that planning is a prerequisite for controlling..
7. Planning improves efficiency
Planning results in systematic and smooth functioning of the company because
planning is concerned with the predetermined course of action. The
predetermination of action avoids confusion and clashes and wastage of scarce
resources.

Limitations of planning
The major limitations of planning are given below:
1. Planning leads to rigidity
Once a well-defined plan is drawn, managers may not be able to change it. The
business environment change rapidly but mangers are committed to execute
the predefined plan. It may not bring positive result to the business
2. Planning may not work in a dynamic environment
The business environment is dynamic as it keeps on changing. In dynamic
conditions, the plans become outdated or irrelevant even before they are
implemented.
3. Planning reduces creativity
Planning is an activity which is done by the top management. Usually the rest
of the members are blind followers of the plan.
4. Planning involves huge costs
Planning is an expensive process. Collection, analysis, and evaluation of the
different information, facts etc. involve a lot of expenses.
5. Planning is a time-consuming process
Planning process is a time-consuming process because it take long time to
evaluate the alternatives and select the best one.
Managers have a tendency to rely on previously tried and tested successful
plans. But, It is not always true that a plan which has worked before, will work
effectively again.
Planning process
Planning involves certain logical steps. They are:
1. Setting Objectives
The first and foremost step is setting objectives. Objective must be specific and
clear. Objectives may be set for the entire organisation or for each department.
They give direction to all departments.
2. Developing premises
Planning is concerned with the future which is uncertain and every planner is
using assumptions about future. These assumptions are called premises.
Premises are the base on which plans are made. Accurate assumptions/
premises become essential for successful plans.

3. Identifying various alternative courses of action

Once objectives are set and assumptions are made, then the next step is to act
upon them. There are alternative ways to achieve the stated objectives. All the
alternative courses of action should be identified.
4. Evaluating alternative courses of action
In this stage, management will evaluate the merits and demerits of various
alternatives in the light of various objectives of the business and planning
premises. Alternatives are evaluated in the light of its risk, return, feasibility etc.
5. Selecting an alternative
After analyzing the merits and demerits, the most appropriate alternative is
selected.
6. Implementing the plan
Implementing the plan means putting the plan into action so as to achieve the
objective of the business.
7. Follow-up
To see whether plans are being implemented and activities are performed
according to schedule is also part of the planning process. Monitoring the plans
is equally important to ensure that objectives are achieved.
Setting Objectives
Developing Premises
Identifying Alternative courses of Action
Evaluating Alternative Courses
Selecting an Alternative
Implementing the Plan
Follow-up Action
Fig: Planning Process

Types of plans
Plans can be classified into several types based on the use and length of the
planning period. There are two types of plan-standing plans and single-use
plans
1. Standing Plan
A standing plan is a business plan that is intended to be used many times. It is
developed to guide managerial decisions and actions that tend to be recurring. It is
used over a long period, sometimes indefinitely, and is altered as circumstances
change. Such a plan greatly enhances efficiency in routine decision-making. Standing
plans include:
a) objectives,
b) strategy
c) policy
d) procedure
e) method
f) rules.
2. Single-use Plan
A single-use plan, otherwise known as a specific plan, is used for nonrecurring, one-
time situations in business. Such a course of action is not likely to be repeated in
future, i.e., they are for non-recurring situations. A single-use plan is meant to solve
one particular problem and then be discarded.The duration of this plan may depend
upon the type of the project. It may be a week or a month.
Single use plan includes:
a) budgets
b) programmes
c) projects .
The single-use plan becomes obsolete after its intended and specific use.
Single-Use Plans Standing Plans

A single use plan is developed for a A standing plan is used for activities
one –time event or projects. that occur regularly over a period of
➢ They are for non-recurring time.
situations ➢ It is designed to ensure that
➢ Its duration may be a week, internal operations of an
month and sometimes only a organization run smoothly
day,e.g a seminar ➢ Such plan enhances efficiency
➢ It is useless when the project or in routine decision making.
event is over

➢ Single use plans include- ➢ It is usually developed once but

Budgets,Programmes and used over and over again with
projects necessary modifications from
➢ Example-Budget for events like time to time to meet business
Asianet Film Award Night or needs as required.
Annual General Meeting of ➢ Standing plans include
Shareholders. Policies,Procedures,Methods
and Rules
➢ Example-Selection procedure
for a particular post in a
company
Types of Standing Plans

1. Objectives
Objectives are the ends toward which activities are aimed. It is the desired
future position that the management would like to reach. Objectives are the
goals, aims or purpose that the organization wishes to achieve. Objectives need
to be expressed in specific terms i.e., they should be measurable in quantitative
terms.
Examples:
1. An organization may have an objective of increasing sales by 10%
2. Reduction in quality rejects from existing 5% to 2%.
3. Crossing 30,000 crore marks in sales 2020
4. An organization may have an objective of increasing its profit by 10%
2. Strategy
strategy is a comprehensive plan for accomplishing an organisation objectives.
This comprehensive plan will include three dimensions, (i) determining long
term objectives, (ii) adopting a particular course of action, and (iii) allocating

resources necessary to achieve the objective. A business objective without a

strategy is just a dream.
For example, a company’s marketing strategy
Example: Objective is to increase company’s profit by 10%.To achieve
this objective, company can adopt strategies like create and launch
new products or models, introduce new distribution channels like
online sale, select new advertisement media like internet marketing,
implement new sales promotion techniques etc.
3. Policy
Policies are the general guidelines for conducting an action. It ensures
uniformity in decision making. Policies define boundaries within which
decisions can be made. Policy is a standing plan.
Example:
The management of Union Bank of India decided to promote employees
on the basis of merit only. (Example for policy)
Recruitment Policy
Sales Policy (Selling product only on cash basis or only wholesale)
Mobile phone policy (Allow in working hours or not)
4. Procedure
They are step by step instructions, which explain how activities are
carried out in an orderly way. They are specified in a chronological order.
It describes the exact manner in which the work is to be performed.
Procedures are rigid; there is no possibility for deviation. Procedure is a
standing plan.
Example-Methods of selecting employees, placement of order,
Procedure for selection of employees, procedure to produce a product
5. Method
Method deals with the best way to perform a particular task. Selection of
proper method saves time, money and effort and increases efficiency.
Methods are helpful in the simplification, standardization and
systematization of work. Method is a standing plan.
Example: Method of wage payment, methods of production, methods
of valuation of stock etc.
6. Rule
Rules are specific statements that inform what is to be done and what is
not to be done.They do not allow any deviations/ flexibility. Rules are
made for the purpose of creating discipline in the organization. Rules
is a standing plan.
Example: No smoking, no admission without permission, Office open
at 9 AM

Types of single use plans

1. Programmes
Programmes are detailed statements about a project. Programme is the
combination of objectives, policies, procedures, rules, tasks, human and
physical resources required, budgets etc to carry out a given work. The
same programme may not be used for achieving other goals.
Example:Programmes for construction of shopping mall,programmes for
opening a new department in our business.
2. Budget
Budget is a recorded plan of action expressed in quantitative terms. A
budget is a statement of expected results expressed in numerical terms.
It may be expressed in time, money or physical units.It is an instrument
of both planning and controlling.
Budget preparation involves forecasting; therefore, it comes under
planning. Budget is a control device because budget helps to compare
actual figures with budgeted figure and take corrective action if
necessary.
Example-Cash budget, sales budget
Types of plans in a nut shell
Standing Plan- to deal with situations that can occur again and again
1. Objectives- Objectives are the ends toward which activity is aimed.

2. Strategy- It is the combination of all the decisions taken and actions performed by the business
to accomplish the business goals.
3. Policy- Policies are the general guidelines for conducting an action.
4. Procedure- Procedure is a series of steps, taken together, to achieve a desired result.
5. Method- A method is the prescribed way in which a task has to be performed considering the
objectives.
6. Rule- Rules are specific statements that inform what is to be done and what is not to be done.
Single Use Plan- It is one-time plan specifically designed to achieve a particular goal.
1. Programme- Programmes are detailed statements about a project, includes combination of

policies, procedures, rules, tasks, budgets etc.
2. Budget- Budget is a projection designed to define the anticipated costs and results in numerical
terms of single project.
**************
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Prepared by, BINOY GEORGE, HSST Commerce, MKNM HSS, Kumaramangalam, Thodupuzha

Expected Questions:
1. ”I am the first function of management”. Who am I?
a. Organising b. Staffing. c. Planning d. Directing. Ans:c. Planning
2. Identify the management function which insists on "thinking before doing".
Ans: Planning
3. ‘No Smoking’ in the factory is an example of :
a. Rule b. Method c. Policy d. Procedure ANS: Rule
4. “ A firm decided to increase its sale by 20%”. Identify the type of plan.
a. Policy . b. Rule . c. Procedure. d. Objectives Ans: Objectives.
5. All the plans are based on certain assumptions about future. It is called----
Ans: Planning Premises
6. Identify the first step in planning.
a. Setting Objectives. b. Developing Premises c. Selecting an alternative. d.
Implementing the plan Ans: Setting Objectives
7. A company needs a detailed plan for its new project ‘Construction of shopping
mall’. What types of plan is it? Ans: Programme
8. All management plans are based on certain assumptions. Suggest the suitable
term to describe.
Ans: Planning Premises
9. “Promotion is based on merit only”.Which type of plan is mentioned here.
Ans: Policy
10. The last steps in the planning process is:
a. Choice of alternative b. developing premises c. Follow-up action d.
Implementing the plan
Ans: Follow-up action
11. "A policy is a guide to thinking and step to decision making." Do you agree
with this statement? Justify your answer. Give two examples of the policies of
a firm.
12. What is planning? Features of planning?

13. What do you mean by ‘Planning Premises’?

14. Explain briefly the steps in the process of planning?
15. List out different types of standing plans and single use plans on a diagram.
16. State the difference between single use plans and standing plans .?
17. What is a single use plan? Explain about different types of single use plans?
Single-use Plan
18. “Planning is a costly process”. Do you agree? Justify your answer.
19. Explain the following plans:
a. Objectives b. Procedure c. Programmes
20. What is standing plans? Explain briefly about different types of standing
plans?
21. Match the following
A B
Selection Process of Employees Policy
Promotion based on seniority only Programme
Casual leave o 2 per month for Method
employees
Coference for managers Rule
Time wage system Procedure
22. Math the Following

A B
Objective Steps in selecting employees
Policy Implement new sales promotion
techniques
Strategy Make a profit of 30%on capital
invested
Procedure Different payment options in online
trade
Method No credit, only cash sales
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Plus Two Business Studies Chapter-5 Short Note
this Chapter-
ORGANISING (Short Note) 7 Scores
Once the plans have been laid down and objectives specified therein, the next step is to
organise resources in a manner which leads to the accomplishment of objectives.
Organising refers to the process of identifying and grouping various activities and bringing
together various resources for the achievement of specific goals. Organisation in an
enterprise means the integration and coordination of individual efforts to achieve the
predetermined goal of the business enterprise.
Definition
Organising can be defined as the “process of identifying and grouping different activities
in the organisation and bringing together the physical, financial and human resources to
establish most productive relations for the achievement of specific goal of organisation”
[ Suppose twelve students work for the school library in the summer vacations. One afternoon
they are told to unload a shipment of newly purchased books, stock the bookshelves, and then
dispose of all waste (packaging, paper etc). If all the students decide to do it in their own way, it
will result in mass confusion. However, if one student supervises the work by grouping students,
dividing the work, assigning each group their quota and developing reporting relationships among
them, the job will be done faster and in a better manner. ]
From the above description, the following steps emerge in the process of organising:
Steps in the process of organising

1. Identification and division of work
The first step in the process of organising is identifying and dividing the total work that has
to be done in accordance with previously determined plans..
2. Grouping the job and departmentalisation:

Once work has been divided into small and manageable activities then those activities
which are similar in nature are grouped together and put under one department. The
process of grouping the activities of similar nature is called departmentalisation.
3. Assignment of duties:
Once departments have been formed, it is necessary to define the work of different job
positions and allocate work to members of the department on the basis of their skills and
qualifications. It is essential for effective performance.

4. Establishing reporting relationships:

The last step in the organisation process is defining the relationship among the people in
the organisation in clear terms. Each individual should know from whom he has to receive
orders and to whom he is answerable/accountable.
Importance of organising
1. Benefits of specialisation
In organising the total work is divided into smaller units and activities of similar nature
are grouped together. Division of work leads to specialisation.
2. Clarity in working relationships

A good organisational structure clarifies the authority responsibility relationship and
specify the line of communication.
3. Optimum utilization of resources
Organising leads to the proper usage of all material, financial and human resources.
The proper assignment of jobs avoids overlapping of work and also makes possible
the best use of resources.
4. Adaptation to change
Properly designed organisation structure is flexible. It can be modified according to the
changes in the business environment.
5. Effective administration
Organising helps in effective administration by providing a clear description of jobs and
related duties.
6. Development of personnel
Organising helps in development of personnel by delegation of work to subordinates.
7. Expansion and growth

Through organisation, management can multiply its strength.

Organisation Structure
Proper coordination in a large organisation is difficult without a proper organisation
structure. The organisation structure can be defined as the framework within which
managerial and operating tasks are performed. It specifies the relationships between
people, work and physical resources. The organisation structure of a firm can be
displayed with the help of a chart.
Benefits of an adequate organisational structure:
1) It will result in increased profitability of the enterprise by ensuring proper

coordination among human, physical and financial resources.
2) A proper organisational structure is essential to ensure a smooth flow of
communication and better control over the operations of a business
enterprise
Span of Management (Span of control)

Span of management refers to the number of subordinates that can be effectively
managed by a superior or how many subordinates are under one superior. Span of
management determines the levels of management in the structure. The span of control
depends upon the capacity and intelligence level of managers and employees.
If routine job has to be performed then there can be wide span but for challenging jobs
narrow span of control is preferred. A tall structure of organisation is the one that has
multiple levels of hierarchy. A tall structure of organisation has narrow span of
management.

Here
Span of
Control is
9
Q. A tall structure has -------
a. Narrow span of management.
b. Wide span of management.
c. No span of management.
D .Less levels of management.
Ans: a Narrow span of management.
Types of organisation Structures

The type of structure adopted by an organisation will vary with the nature and types of
activities performed by an organisation. The organisational structure can be classified
under two categories which are as follows:
(i) Functional structure and

(ii) Divisional structure
I. Functional Structure
It is an organisational structure wherein jobs of similar nature are grouped into major
functions and these major functions are organised as separate departments. This kind of
organisational structure classifies people according to the function they perform in the
organisation.

Fig: Functional structure
CEO
Purchase Production Marketing Finance

Manager Manager Manager Manager
Staff-1 Staff-1 Staff-1 Staff-1
Advantages of Functional structure

1. Specialisation
In a functional structure job of similar nature are grouped together. It provides
specialisation which makes optimum utilisation of manpower.
2. Easy supervision
The supervisor becomes familiar with the type of task to be performed because all tasks
are related to one function only. As a result, he can easily supervise his department.
3. Increasing managerial efficiency

Managers of one department are performing same type of function again and again which
help to increase their managerial and operational efficiency. It ensures increased profit
also.
4. Effective training
This type of structure makes training of employees easier as the focus is only on a limited
range of skills. For examples, employees of production department are given training of
production techniques only.
5. Lower cost
It leads to minimum duplication of effort which results lower cost.
Disadvantages of Functional structure

1. Emphasis on departmental objectives
Due to separation, each department head emphasis on the performance of his function
and lacks emphasis on the overall objectives of the company.
2. Problem in coordination
Co-ordination of the activities of different departments is not practically easy.
3. Conflict between departments

Since interest of different departments differs, there will be interdepartmental conflicts
which are harmful to organisational interest.
4. Obstacle to the all-round development of managers

Specialisation is an obstacle to the all-round development of managers. Managers
develop only in a specific area.
Suitability of Functional structure
➢ It is most suitable when the size of the organisation is large.

➢ Firms producing a single line of product.
➢ It is suitable where there is high degree of specialisation is required.
II. Divisional Structure
Divisional structure is an organisational structure wherein grouping of activities or
departmentalisation is on the basis of product line or areas. Each unit has a divisional
manager responsible for performance. Each divisional head is required to look after all
function related to the product or market territory. There are separate divisions for different
products and each division having functions like production, marketing, finance etc.
Chairman
Reliance Industries
Ltd
Product-1 Product-2 Product-3

Petrochemicals Supermarket Communication
Purchase Purchase
Production Production
Finance Finance
Fig: Divisional structure

Fig: Divisional structure
[Example:
V.Guard Ltd a leading company in Kerala is engaged in diversified business namely electrical,
textiles, amusement parks etc. Each of this have different departments namely marketing,
production, finance, research and development etc. In this case the company should adopt
‘Divisional Structure’ because product specialisation helps growth and facilitates diversification
of enterprise. It promotes flexibility and initiative because each division functions as an
autonomous unit which leads to faster decision making.]
Advantages of Divisional structure

1. Product specialisation
Here all activities related to one type of product are grouped under one department.
Attention on individual product line permits its growth and facilitates diversification of
enterprise.
2. Coordination becomes easy

Activities like purchase, production, marketing etc. related to a particular product line are
integrated easily in this structure.
3. Helps in fixation of responsibility
Divisional structure helps in fixation of responsibility in cases of poor performance of the

division and appropriate remedial action can be taken.
4. It promotes flexibility and initiative

It promotes flexibility and initiative because each division functions as an autonomous unit
which leads to faster decision making.

Disadvantages of divisional structure

1. Conflict may arise among different divisions
Managers in each division may focus on their own product ignoring the interest the interest
of the organisation. There may be conflict with different divisions regarding allocation of
resources, priorities etc.
2. Chances of duplication
There may be duplication of activities which leads to high operating cost.Example-
advertisement expenses, transportation cost etc.
3. Selfish attitude
Every division tries to display better performance sometimes even at the cost of other
divisions. This shows their selfish attitude. Consequently, it hits the interest of the concern
as a whole.
Suitability
➢ Divisional structure is suitable where large variety of products are manufactured.

➢ It is suitable for organisations needing product specialisation.
➢ Growing companies which plan to add more line of products in future.
Difference between Functional and Divisional Structure

Basis Functional Structure Divisional Structure
Formation Formed on the Formed on the basis of
basis of function products
Accountability Difficult to make Easy to fix accountability, as
accountable as departments departments work
are interdependent independently
Specialisation Functional specialisation is Product specialisation is
followed followed
Coordination Difficult for a multi-product Easy, because all functions
company related to a particular product
are integrated in one division.
Cost Functions are not duplicated, Duplication of resources in
hence economical various departments, hence
costly

Managerial Less chance as manager More chance as managers

development becomes specialised in one perform multi-functions
function only
Autonomy of Less autonomy More autonomy
operations
Formal and Informal Organisation

I. Formal Organisation
Formal organisation refers to the organisation structure which is designed by the
management to achieve organisational goals. Formal organisation structure clearly
defines the job to be performed by each individual. It also clearly specifies authority and
responsibility assigned to individuals in the organisation. It forms a chain of superior
subordinate relationship that can be represented in a chart. In formal organisation,
communication takes place only through ‘Scalar chain’. The structure in a formal
organisation can be functional or divisional.
Fig: Formal Organisation

Definition
According to Louis Allen “The formal organisation is a system of well-defined jobs, each
bearing a definite measure of authority, responsibility and accountability”
Example: A company is manufacturing TV. There is well defined system of jobs with a
clear and definite authority, responsibility accountability in the company. But people are
not allowed to interact beyond their officially defined roles.
Feature of Formal Organisation

1. Deliberately created
It is deliberately planned and created by top management to facilitate the smooth
functioning of the organisation.
2. Defines superior subordinate relationship

It specifies the relationships among various job positions and the nature of their
interrelationship. This clarifies who has to report to whom. The authority, responsibility
and accountability of each level are clearly defined.
3. Official lines of communication

Formal organisational structure creates a scalar chain of communication in the
organisation
4. Emphasis of work
It places more emphasis on work to be performed rather than on inter-personal
relationships among the employees. It does not consider emotional aspect.
5. Rules and procedures

It lays down standard behaviours by rules.
Advantages of Formal Organisation

1. Easy to fix responsibility
It is easier to fix responsibility since mutual relationships are clearly defined.
2. No overlapping of work
In formal organisation structure work is systematically divided among various departments
and employees. So, there is no chance of duplication or overlapping of work.

3. Ensures unity of command

Formal organisational structure ensures unity of command by clearly defines superior
subordinates’ relationship, i.e. who reports to whom.
4. Systematic working
Formal organisation structure results in systematic and smooth functioning of an
organisation. It is helpful to achieve organisational objectives.
5. Co-ordination
Formal organisational structure ensures proper coordination of activities of various
departments.
Limitations of Formal Organisation

1. Delay in action
While following scalar chain and chain of command actions get delayed in formal
structure.
2. No scope for creativity

Rigid policies never allow deviation. So, in formal organisation, there is no scope for
creativity.
3. Emphasis on work only

Formal organisational structure gives importance to work only, it ignores human relations.
No consideration is given to sentiments or social values.
II. Informal Organisation

Informal organisation is voluntary and independent organisation, developed automatically
between individuals of a formal organisation to satisfy their social and human needs. It
develops within the formal organisation as a result of the cultural and social needs of
members. This organisation is formed informally between workers on the basis of
friendship and common interest, which may or may not be work related.
For example, managers and subordinates taking part in cricket matches on Sundays or
meeting in cafeteria for morning coffee.

Features of informal organisation

1. Informal organisation structure gets created automatically and is not deliberately
created by management.
2. It is formed by employees to get psychological satisfaction.
3. Informal organisation does not have fixed line of communication.
4. Source of information cannot be known under informal structure as any person can
communicate with anyone in the organisation
5. The relationship is based upon friendship and common interest.
6. The existence of informal organisational structure depends on the formal
organisation structure because people working at different job positions interact
with each other to form informal structure.
Informal organisations
Advantages of Informal Organisation

1. Fast Communication
Informal structure does not follow scalar chain so there can be faster spread of
communication
2. Fulfils social needs

Informal organisation helps to fulfil social needs of the members. This enhances their job
satisfaction.
3. Correct Feedback
Through informal structure the top-level managers can know the real feedback of
employees on various policies and plans.
4. Complementary to formal organisation

It removes the weakness of formal organisation. It supports formal organisation in
administration. Thus; it is complementary to formal organisation.

5. Meet the personal need

It is a social structure formed to meet personal needs of the members of the group. Such
needs cannot be met by the formal structure.
Disadvantages of Informal organisation

1. Spread Rumours
Most of the information passed through informal structure is rumours or gossip which can
mislead the employees.
2. More emphasis to individual interest

Informal organisation emphasises more on individual interests and satisfaction rather than
organisational interests.
3. May bring negative results

If informal organisation opposes the policies and changes of management, then it
becomes very difficult to implement them in organisation.
Informal organisation cannot be altogether eliminated from an organisation. The

knowledge of such groups can be used to gather their support and consequently lead to
improved organisational performance. Instead of opposing them, management should
skilfully take advantage of both the formal and informal organisation so that work
continues smoothly.
Formal Organisation Vs Informal Organisation

Basis Formal Organisation Informal Organisation
Formation Deliberately planned and It arises as a result of social
created by top management interaction among employees
Purpose To achieve predetermined To satisfy social and cultural
goals of the organisation needs and fulfil common interest.
Structure It has a well-defined structure of Does not have a clear-cut
jobs and relationships structure
Flow of Communication takes place Communication does not take
communication through the ‘Scalar chain’ place through a planned route,
it can take place in any direction
Authority Authority arises by virtue of Authority arises out of
position in management personal qualities
Nature Rigid Flexible

Leadership Managers are leaders Leaders may or may not be

managers. They are chosen by the
group.
Behaviour Standards of behaviour are laid There is no set of behaviour
down by rules pattern
Delegation of authority
In every organisation, managers are assigned lot of work and manager alone cannot
perform all the work. So, he must share his duties with subordinate managers. Delegation
refers to the downward transfer of authority from a superior to a subordinate. It is a
pre-requisite to the efficient functioning of an organisation because it enables a manager
to use his time on high priority activities.
The delegation of authority works from a higher level to lower level and not vice versa.
That means a boss can assign his work to his employees, but the employees can’t give
their work to their boss.
Delegation can be defined as “A process of entrusting responsibility and authority to the

subordinates and creating accountability on those employees who are entrusted
responsibility and authority”.
Delegation does not mean abdication (handing over). The manager shall still be
accountable for the performance of the assigned tasks..
Elements of Delegation
There are three elements of delegation:
1. Authority
2. Responsibility
3. Accountability
1. Authority
Authority means power to take decision. In formal organisation authority originates by
virtue of an individual’s position in an organisation. Authority is highest at the top level.
Authority flows from top to bottom, i.e., the superior has authority over the subordinate.
To carry on the responsibilities every employee needs to have some authority. Authority
can be delegated. So, when managers passing some their responsibilities to the
subordinates, they should also pass some of the authorities too. Authority determines the
superior subordinate relationship.

2. Responsibility
Responsibility is the obligation of a subordinate to properly perform the assigned duty. It
arises from a superior–subordinate relationship because the subordinate is bound to
perform the duty assigned to him by his superior. Thus, responsibility flows upwards.
Responsibility cannot be fully delegated.
There must be parity with authority and responsibility. If authority granted is more than
responsibility, it may lead to misuse of authority, and if responsibility assigned is more
than authority it may make a person ineffective.
3. Accountability
Accountability implies being answerable for the final outcome/result. The subordinate is
held accountable to superiors. The subordinate has to give explanations before his
superiors, if any failure happened in the delegated job. Accountability arises from
responsibility. Accountability flows upwards. Accountability cannot be delegated.
Note: It may be stated that authority is delegated, responsibility is accepted and

accountability is imposed. Responsibility is derived from authority while accountability is
from responsibility.
Elements of Delegation –A Comparison

Basis Authority Responsibility Accountability
Meaning Right to command Obligation to Answerability for outcome
perform an assigned of the assigned task
task
Flow Flows downward Flows upward Flows upwards
from superior from subordinate to from subordinates to
to subordinates superior superior
Origin Arises from Arises from Arises from responsibility
formal position delegated authority
Delegation Can be delegated Cannot be Cannot be delegated at
entirely delegated all

Importance of Delegation
1. Effective management
With the process of delegation, the managers can pass all their routine work to the
subordinates and concentrate on important work. This would increase his effectiveness.
2. Motivation of employees
Delegation implies grant of authority to subordinates. So, they have a sense of
recognition. They are motivated to work for higher performance.
3. Employee development
As a result of delegation, employees get opportunities to utilise their talent. It makes them
better leaders and decision makers.
4. Helping the expansion of business

If the enterprise expands well trained, experienced and competent persons readily
available to take up the positions. It will give advantages to the business.
5. Better co-ordination
Delegation enables managers and subordinates to establish relationship with each other.
Clarity in reporting helps to develop and maintain effective coordination.
6. Basis of management hierarchy

Delegation of authority establishes superior subordinate relationships, which are the basis
of hierarchy of management. This hierarchy determines who has to report to whom.
Centralisation and Decentralisation

I. Centralisation
Centralisation refers to concentration of authority at top level. An organisation is
centralised when the decision the making authority is in the hands of top-level
management only.
II. Decentralisation
Decentralisation refers to systematic delegation of authority throughout all the levels
of management and in all the departments. An organisation is said to be decentralised
when managers at middle and lower levels are given the authority to take decision and
actions on matters relating their respective areas of work. Top management retains only
the authority for taking major decisions and also retain the authority for overall
coordination and control of the organisation.
Importance of Decentralisation
1. Develop initiative among subordinates
Decentralisation helps to promote self-reliance and confidence amongst the subordinates.
Decentralisation gives an opportunity to lower-level managers to take decisions.
2. Quick decision making

Decentralisation promotes quick decision making, as subordinates have enough authority
to take decision without consulting with their superiors.
3. Relief to top management

Decentralisation permits the top executives to share his excessive workload with his
subordinates. This helps the top management to utilise his valuable time on more
important matters.
4. Facilitates growth
Decentralisation enables the managers at the lower level as well as the departmental
heads to perform to their full potential and sense of healthy competition among the
departments. It will contribute a lot to the development of the organisation.
5. Democratic system
Decentralisation shares authority and responsibility between managers. It avoids
concentration of power, which is a democratic approach towards management.
6. Better control
Decentralisation facilitates evaluation of performance at every level. Departments can be
individually held accountable for their results.

Delegation Vs Decentralisation
Basis Delegation Decentralisation
Nature Delegation is a compulsory actDecentralisation is optional,
because no individual can It is a policy decision.
perform all tasks on his own
Scope It has narrow scope as it is It has wider scope as it
limited to superior and implies extension of delegation
his immediate subordinate to the lowest level.
Purpose To reduce the workload of To increase the role of
the manager the subordinates in the organisation by
giving them autonomy
Requirement Yes, it is very necessary No, it is an optional philosophy
Freedom Very little freedom Considerable freedom to
of action to the subordinates the subordinates
Centralised organisations:
where decisions are made by a
few people at the centre of the
organisation
Decentralised organisations:
Decisions are taken by managers

at middle and lower levels on
matters relating their respective
*****************************
areas of work
“If you love life, don’t waste time, for time is what life is made up of.”-Bruce Lee
Prepared by, Binoy George, HSST, MKNM HSS Kumaramangalam, Thodupuzha, Idukki (Dt.)

Expected Questions
1. The form of organization known for giving rise to romours is called---------

Ans: Informal organization
2. The number of subordinates that can be effectively managed by a superior is called --
--- Ans: Span of management/ span of control
3. “ It is the right to give orders and power to exact obedience.” This is called----.
a. Authority, b. Responsibility c. Accountability. d. None of these. Ans: a. Authority
4. Granting authority to subordinatesto operate within the prescribed limit is called------
a. Delegation b. Co-ordination c. Controlling d. Planning Ans: Delegation
5. ------------- is the out come of the organisation process. Ans: Organisation structure
6. Which of the following doesn't follow the scalar chain ?
a. Divisional structure .b. Functional structure. c. Formal organisation. d. Informal
organisation. Ans: Informal organisation.
7. -----------organisation has no written rules and does not have fixed line of
communication.
a. Formal organization b. Informal organization c. None of the above
Ans: Informal organisation
8. Grouping of activities on the basis of function is called.................. a. Functional
organisation. b. Divisional organisation. c. Centralisation. d. Decentralisation.
Ans: Functional organisation
9. Span of control refers to:
a. Number of managers
b. Period of appointment of managers
c. Number of subordinates under a manager
d. None of these Ans: Number of subordinates under a manager
10. A tall organization structure has a ----------
a. Wide span of management b. Narrow span of management c. No span of
management Ans: Narrow span of management

11. To satisfy social, cultural needs and to fulfil common interests, people organize
themselves. What is the technical term for this type of organization?
Ans: Informal organisation
12. Briefly explain the term ‘Organisationl structure’ ? (3)
13. Explain the term ‘functional structure’ and ‘divisional structure’? (6)
14. List out any two advantages of Functional structure of organization?
15. List out any two advantages of divisional structure of organization?
16. Distinguish between functional structure and divisional structure of organising (5)
17. Name any two elements of delegation? (2)
18. Mr. John is the principal of a higher secondary school. He decided to give some of his
charges to vice-principal Mrs.Rose. Which function of management is used here?
Explain (5 Score)
19. Explain by giving any 5 reasons why organising is considered as important function in
an organisation?
20. What is a divisional structure? Discuss its advantages and disadvantages? (8)
21. What do you mean by informal organization. How far formal organization differ from
informal organization? (6)
22. Decentralisation is extending delegation to the lowest level. Comment. Give any three
differences between delegation of authority and decentralisation? (6 Score)
23. Distinguish between centralisation and decentralisation?
24. Decentralisation is extending delegation to the lowest level. Comment.

www.binoygeorgeonline.blogspot.org

+2 Business Studies Chapter-6 Short Note
Chapter-6
Weightage to
this Chapter-
Staffing (Short Note) 12 Scores
Staffing means recruitment and selection of competent personnel to fill various positions in the
organisation structure. Staffing process involves manpower planning, job analysis, recruitment,
selection, placement and orientation, training of personnel, performance appraisal, promotion ,
transfer and compensation. An organisation can achieve its objectives only when it has the right
persons in the right positions.
Definition
According to French Wendell “Staffing is the recruitment, selection, development, utilisation,
compensation and motivation of human resources of the organisation”
Importance of Staffing
1. Helps in obtaining competent personnel
Efficient staffing discovers the talented, experienced and qualified staffs which prove to be an
asset for the enterprise.
2. Ensure Maximum Productivity
Staffing ensures higher productivity by placing right person on the right job by proper
recruitment and selection.
3. Optimum utilisation of manpower : It ensures optimum utilisation of human resources by
avoiding over staffing or shortage of staff.
4. Improve the job satisfaction and morale of employees
Staffing function does not end only with appointment of employees. It includes training,
promotion, compensation etc.
Staffing Process
The process of staffing consist of the following steps:
1. Estimating the manpower requirements

2. Recruitment
3. Selection
4. Placement and orientation
5. Training and development
6. Performance appraisal
7. Promotion and career planning
8. Compensation

1. Estimating the Manpower Requirements
It is process of determining the number and types of staff required by an organisation. In manpower
planning there are two types of study is necessary- workload analysis and work force analysis.
2. Recruitment
Recruitment is the process of searching for prospective employees and stimulating them to apply for
jobs in the organisation. In other words, recruitment means discovering the source of employees.
Recruitment is called a positive process because it encourages maximum number of people to apply
for jobs.
3. Selection
Selection is the process of choosing the best person for a particular job. Selection starts where
recruitment ends. Selection is a negative process as it involves rejection of unsuitable candidates.
4. Placement and orientation
Placement refers to the posting of the selected employees in the post for which he is selected. After
selection, the employee is given appointment letter and is asked to occupy the vacant job position.
This is called posting.
Orientation refers to introducing the selected employee to his superiors, subordinates and colleagues
and familiarising him with the rules and policies of the organisation. The employee is given a brief
presentation about the organisation and introduced to his colleagues.
5. Training and Development
Training means giving expertise. It is the art of increasing the knowledge and technical skills of an
employee for doing a particular job efficiently.
Development is a much wider concept compared to training. Where training aims increasing one’s
skills and abilities to do a particular job, developments aims at the overall development of a person
and equips him to handle higher jobs of the organisation in future. Training and development not only
motivate employees but these improve efficiency of work also.
6. Performance Appraisal
Performance appraisal means evaluating an employee’s current/past performance as against certain

pre-determined standards. It is examining whether an employee’s performance is according to the
predetermined standards. The employee is informed in advance what the standards are expected from
him and is examined whether he has attained the standards. An employee’s wages, promotion and
training depend on performance appraisal.

7. Promotion and career planning
Promotion refers to the shifting of an employee from a lower position to a higher position with higher
status, greater responsibilities, better facilities and better pay. Promotions are an integral part of
people’s career. Generally on the basis of feedback report of employees’ performance, they are given
promotion and opportunities for career development.
8. Compensation
Compensation refers to all forms of pay or reward given to the employees. It is the reward for the
efforts of employees. It may be direct financial payments like wages, salaries, incentives,
commissions, bonus etc. and indirect payments like employer paid insurance, medical facilities,
travelling facilities etc.
Recruitment
Recruitment may be defined as “the process of searching for prospective employees and stimulating
them to apply for jobs in an organisation. Recruitment refers to the process of finding possible
candidates for a job. Information about job vacancies of an organisation can be informed to the job
seekers through news paper advertisement, online advertisement etc.
Sources of recruitment
There are two sources of recruitments-
1. Internal sources
2. External sources
1. Internal sources
Internal sources refer to inviting candidates from within the organisation. There are two important
sources of internal recruitment, namely
(a) Transfers
(b) Promotions
(a) Transfers: Transfers involve shifting an employee from job to another, one department to
another or one shift to another .Transfer will not have any change in position, responsibility or
remuneration of an employee. Transfer does not affect the total number of employees in the
organisation.
For Example, transfer of clerk from Union Bank Kumaramangalam branch to Union Bank, Kottayam
branch.
(b) Promotion: Promotion is the shifting of an employee from a lower job position to a higher job
position. Promotion gives an employee a higher position and remuneration as well as greater
responsibilities. It helps to improve motivation, loyalty and satisfaction level of employees.
For example, promotion of clerk to accountant position, LD clerk to UD clerk
Advantages of internal sources of recruitment
1. It is an economical source-It is an economical source of recruitment as no time and money has

to be spent on advertising vacancies or on conducting tests and interviews.
2. It motivates employees-It motivates employees to improve their performance ..
3. It simplifies the process of selection and placement-Selection is very easy as candidates are
already known to the organisation.
4. Better performance of employees-To get promotion employees show better performance.
5. Adjustment of surplus staff-Transfer has the benefit of shifting work force from the surplus
departments to those where there is shortage of staff.
6. No need for induction training-In case of internal source of recruitment, there is no need for
induction training , as the employees are already familiar with the organisation.
7. Automatic training-Through transfer employees get training also in the form of job rotation.

Disadvantages of internal sources of recruitment
1. In complete source of recruitment-It is an incomplete source of recruitment because the existing

staff may be insufficient or they may not fulfil the eligibility criteria of the jobs to be filled.
2. Reduced productivity-Frequent transfers of employees may often reduce the productivity of the
organisation.
3. Hindrance for induction of fresh talents-Internal source of recruitment reduces the scope for
induction of fresh talents into the firm.
4. Not suitable for new enterprises-A new enterprise can’t use internal sources of recruitment.
5. Lack of competition among employees-The spirit of competition among the employees may be
hampered because employees are likely to expect automatic promotion by seniority. performance is
not a matter at all.
2. External Sources of Recruitment
External sources of recruitment refer to recruiting employees from outside the organisation. External
sources of recruitment requires when the existing staff may be insufficient or they may not fulfil the
eligibility criteria of the jobs to be filled. External recruitment provides wide choice and brings new
blood in the organisation. The external sources of recruitment are: -
1. Direct Recruitment
2. Casual Callers
3. Media advertising
4. Employment Exchanges
5. Placement Agencies
6. Management Consultants
7. Campus Recruitment
8. Recommendations by the Existing Employees
9. Web Publishing

1. Direct Recruitment-Sometimes, the organizations paste notice at the gate of their office or
factories stating the vacant job positions. The people who are interested in those jobs walk in for the
interview. This method of recruitment is most suitable for unskilled job positions like sweeper, peon
etc.
2. Casual Callers-Qualified candidates send their bio-data to the institutions even when applications
are not called for. Institutions keep a database of such unsolicited applicants and consider them for
appointment when vacancies arise.
3. Media advertising-The most common and popular method of external recruitment is advertising
about the vacant job position. Advertisement in TV, newspapers and journals etc.will attract a large
number of applicants.
4. Employment Exchange-Employment exchanges run by government helps to match personnel

demand and supply by serving as link between job seekers and employers. It is suitable for unskilled
and skilled jobs.
5. Placement Agencies-Placement agencies provide nation-wide service of matching demand and

supply of work force. These agencies invite the bio data and record from various job seekers and send
them to suitable clients. These agencies charge fee for providing such service.
6. Management Consultants-Management consultants help the organizations to recruit technical,

professional and managerial personnel .They specialize in middle level and top level executive
placements.
7. Campus Recruitment-Sometimes the senior managers of the organizations visit various

professional collages, technical institutions to get fresh graduates or the people with the latest
technological know-how. The organizations prefer fresh graduates because they can be mould
according to the requirement of the organization.
8. Recommendations by the Existing Employees-Many firm encourage their employees to

recommend the names of their relatives and friends to fill the vacant job position. Such appointments
are usually done at lower levels.
9. Web publishing-In internet there are certain websites specifically designed to provide information
regarding job seekers and companies which have vacant job position. These websites can be visited
by job seekers as well as companies. Example: Naukri.com, Monster.com etc.
Advantages of External sources of recruitment

1. Wider choice-Through external recruitment the organisation gets wider choice.
2. Fresh Talent-With external recruitment fresh and new talent come to the organisation.
3. Latest technological knowledge-Through campus selection organisation can get employees with
latest technological knowledge.
4. Competitive Spirit-Through external recruitment when out-sliders join the organisation, this
develops a completive spirit in existing employees of organisation.
Disadvantages of External sources of recruitment

1. Dissatisfaction among existing employees-It may lead to dissatisfaction among the existing staff
as it reduces their chances of promotion.
2. Costly Process-It is costly process as a lot of money has to be spent on advertisement and
processing of applications.
3. Lengthy Process-Recruitment from external sources takes a long time. The business has to notify
the vacancies and wait for applications to initiate the selection process.
Difference between internal sources and external sources
Basis Internal sources External sources

Meaning Internal sources refer to inviting External sources of recruitment
candidates from within the refer to recruiting employees from
organisation. outside the organisation
Time It is less time-consuming It is more time consuming
Economy It is more economical It is costly
Choice There is limited choice There is wider choice
Morale of the existing This method boosts up the morale This method brings down the
employees of existing employees morale of existing employees
Basis It is generally based on seniority It is strictly based on merit and
cum merit qualifications
Quality of recruitment Quality of recruitment is not as- There is wider choice, so quality
superior as in case of external of recruitment is superior.
source of recruitment because of
the limited choice
Selection
Selection is the process of identifying and choosing the best person out of a number of prospective
candidates for a job. Towards this purpose, the candidates are required to take a series of employment
tests and interviews. At every stage many are eliminated and a few moves on to the next stage until
the right person is found. Selection is a negative process as it involves rejection of unsuitable
candidates.

Process of Selection
The important steps in the process of selection are as follows:
1. Preliminary Screening or screening through bio-data
2.Selection Tests
3. Employment Interview
4. Reference and Background Checks
5. Selection decision
6. Medical examination
7. Job offer
8. Contract of employment
1. Preliminary Screening or screening through bio-data: This is the first stage in the selection
procedure. Preliminary screening helps the manager to eliminate unqualified or unfit candidates based
on the information furnished in the application forms.
2. Selection Tests-Selection test have been developed as an objective means of measuring the
qualities, abilities and the skills of the candidates in terms of job specifications. The common types
of tests conducted by the organisations are:
i. Intelligent test-To measure the level of intelligence. It is an indicator of a person’s learning

ability or the ability to make decisions and judgments.
ii. Aptitude test-To measure individual’s potential for learning new skills. It indicates the
person’s capacity to develop.
iii. Personality test-Personality test is conducted to find out the human behaviour of the
candidate. It gives clues of a person’s emotions, reactions, maturity, value, system, etc.
iv. Trade test-These tests measure the existing skills of the individual. The difference between
aptitude test and trade test is that the former measures the potential to acquire skills and the
later the actual skills possessed.
v. Interest test-This test is conducted to find out the type of job in which candidate has more
interest as every individual has fascination for some job than the others.

3. Employment Interview- The candidates who qualify the test are called for interviews. The
interview has many advantages over written test because in interviews you can find out the confidence
level of the candidate along with his professional knowledge. Interview gives chance to candidate to
clarify their queries regarding salary, working conditions, posting etc.
4. Reference and background checks: Many employers request names, addresses, and telephone
numbers of references for the purpose of verifying information and, gaining additional information
on an applicant. Previous employers, known persons, teachers and university professors can act as
references
5. Selection decision-The candidate who pass the test, interview and reference check are included
in the selection list and the managers select the most suitable candidates from the list.
6. Medical examination-After the selection decision and before the job offer is made, the candidate
is required to undergo a medical fitness test.
7. Job offer- After a candidate has cleared all the hurdles in the selection procedure, he is formally
appointed. He will be issued an appointment letter and is asked to join before a specific date.
8. Contract of employment-After the job offer has been made and the candidate accepts the offer, it
refers to signing of contract of employment between employer and employee. The common contents
of the contract of employment are the duties, responsibilities, pay, allowances, hours of work and
disciplinary rules etc.
Difference between Recruitment and Selection
Recruitment Selection
It is the process of searching for the suitable It is the process of selecting the most
candidates eligible candidates.
Its main aim is to attract more candidates Its main aim is to eliminate those who are
not qualified.
Recruitment is a positive process Selection is a negative process
It is a simple process It is a complex process
Training and Development
Training-Training means to impart information and skills through instructions. It is a method of
increasing the knowledge, skills and aptitudes of an employee for performing a particular job. Its
purpose is to enable them to do their job better.
Development-Development refers to overall growth of the employee. It focuses on personal growth

and successful employee’s development. Development is much wider in concept as compared to
training. Where training aims at increasing one’s skills and abilities to do a particular job,
development aims at the overall development of a person and equip him to handle higher jobs of the

organisation in future. Development converts a person to become not only good employees but also
better men and women.
Difference between Training and Development
Basis Training Development

Concept It is a method of imparting It is the process for overall growth of the
knowledge or skill for performing a employees. Development is concerned
job. with technical, human and conceptual skill
Suitability Training is more suitable for Development is more suitable for
technical staff managerial staff
Focus Its focus is to improve work Its focus is personality development of the
efficiency employees
Period It is a short term process It is a long term process
Methods In training on-the-job methods of In development off the job methods of
used training are preferred training are preferred.
Cantered Work cantered Employee cantered
Importance of training and development

Now a day’s jobs have become more complex which require the employees to get themselves trained
to improve their skills. Therefore the importance of employee training has increased. Training and
development benefits not only the employees but also the organisation
Benefits of Training and Development
Benefits to the organisation Benefits to the employees

It enhances employee productivity Training provides better career opportunities
for the employees
It reduces the wastage of efforts and money Improvement in performance helps the
employees to earn more
Training increases employee morale and It increases the job satisfaction and morale of
reduces absenteeism and employer turnover employees
Training helps to develop future managers It reduces the chances of accidents in the work
place
Training Methods
Training methods are broadly categorised into two groups:
1.On-the-Job Training
2. Off-the- Job Training
On the job methods are applied at the work place where the employee is actually working, while off
the job methods are carried out away from work place. On the job training means learning while
doing. Off the job training means learning before doing.

1. On -the -job training
In this method a worker learns by doing the work under the guidance of a supervisor. ‘Learning while
doing’ is the principle followed by this system. The worker learns his work in the actual work
environment. Different methods of on the job training are:
1. Apprenticeship programmes-Here trainees are placed under the guidance of a senior worker
in the organisation. It is a common practice to refer candidates from technical institutions to
reputed organisations to have an apprentice training for about 6 months. People who want to
enter skilled works, e.g, plumbers, electricians, mechanic etc. are required to undergo such
training.
2. Coaching-In this method, the senior manager guides and instructs the trainee as a coach. The
coach sets mutually agreed goals and suggests how to achieve these goals. The coach
periodically reviews the progress made by the trainees and suggests changes required, if
any.Here, teaching about the job is emphasized rather than doing the job.
3. Internship training-Internship is an agreement between the professional institutions and the
corporate sector where professional institutions send their students to various companies so
that they can practice the theoretical knowledge acquired by them through professional
institutions. Under this training programme the organisation gets people with fresh ideas and
latest knowledge and the organisations have to pay very less amount of salary which is called
stipend. E.g,CA students gain practical knowledge from a Chartered Accountant.
4. Job Rotation:-This kind of training involves shifting the trainee from one department to
another or from one job to another. This enables the trainee to gain a broader understanding of
all jobs of the business.
2. Off-the-job training
Off-the-job training means training the employees by taking them away from their work position
which means employees are given a break from the job and sent for training. It is a process of ‘learning
before doing’. Different methods of off-the -job training are:
1. Class Room Lectures/Conferences: Top level manager holds conference and shares his
views with employees. This is a very easy method and is adopted at all levels of training. With
the help of audio-visual aids training can be made more interesting.

2. Films-Showing films are also a very effective method in certain cases. Films can give
important information on various techniques through demonstrative skill.
3. Case Study-In case study, trainees are given an imaginary/real problem or situation. They are
asked to find out the solutions to the problems given to them. Trainees study the cases to
determine problems, analyse causes, develop alternative solutions, select what they believe to
be the best solution and implement it.
4. Computer modelling-Under this method a computer is programmed to show real problems of
job and how to overcome such problems. In this method the employees can learn a lot without
incurring much cost.
5. Vestibule training-In this method, actual work environments is created in a class room.
Employees use the same materials and equipment’s here. It is a costlier method and it is usually
carried out when employees are required to handle sophisticated machinery and equipment.
Here the learner gets both theoretical and practical knowledge.
6. Programmed instructions-Here, the information to be obtained by a trainee is broken into
meaning full units. The training goes through these units in the sequential order i.e., simple to
complex. It will help the trainees to acquire the knowledge very easily.
Distinguish between on-the-job training and off-the-job training
On-the-job training Off-the-job training

On the job training is given to workers while Off-the-job training given to workers outside
they are engaged in the work the actual place of work
In on the job training, at the time of learning, At the time of training, workers do not
workers also contribute towards production. contribute towards organisational goals
It does not require any extra costs in the form It requires extra cost in the form of tools,
of tools, equipments, etc for training purpose. equipments, place etc., for training purpose.
In on the job training, trainee gets practical Here, theoretical knowledge is imparted more
training more but lacks in theoretical training than practical skill

Prepared by, BINOY GEORGE, HSST, MKNM HSS, Kumaramangalam, Thodupuzha, Idukki Dt.
Expected Questions
1. The managerial function of putting the right person on the right job is------
Ans: Staffing
2. Mr. Kuruvila wishes to start a medium type business unit. He decided to employ 30
candidates for different posts. Which source of recruitment he can adopt.
a. Internal source only
b. External source only
c. Both internal and external
d. Neither internal nor external
Ans: External source only (it is a new business)
3. ------ refers to the employee occupying the position or post for which the person has been
selected.
a. Orientation. b. placement .c. Training. d. Recruitment Ans:Placement

4. Shift to another job without a substantive change in the responsibilities and status of the
employee.
a. Promotion b. Transfer c. External source d. Vertical shift
Ans: Transfer
5. This test is used to measure the individual’s potential for learning new skill is----
a. Trade test. b. Aptitude test. c. Personality test. d. Intelligence test. Ans: Aptitude test
6. Find the odd one out.
A. Promotion. b. Advertisement. c. Employment Exchange d. Casual callers.
Ans: Promotion
7. ------ is a horizontal movement of employees in staffing function.
a. Employment exchange. b. Promotion. c. Transfer. d. Campus recruitment. Ans: Transfer
8. Identify the test which is conducted to measure the existing skill of an employee.
a. Aptitude test
b. Psychological test
c. Intelligence test
d. Trade Test
Ans: Trade Test
9. -----------is the managerial function of filling and keeping filled the positions in the
organisation structure. a. Staffing. b. Organising. c. Planning. d. Controlling.
Ans: Staffing.
10. Mr.Rajan , the newly appointed General Manager of Devi Hotels Ltd. want to appoint a
driver for his official vehicle. Suggest a suitable test to be conducted to select the
candidates and justify the answer.
Ans: Trade test-These tests measure the existing skills of the individual
11. ------ and ----- are the two internal sources of recruitment
Ans: Transfer and promotion
12. Which one of the following functions is not related with staffing function?
a. Recruitment of employees
b. Compensation of employees
c. Selection of employees
d. Motivation of employees.
Ans: Motivation of employee
13. Recruitment tends to be a ---------activity.
a. Negative
b. Positive
c. Negative or positive
d. None of these
Ans: Positive
14. Assessment of the number and type of human resources required for the various jobs and
accomplishment of organisatinal objectives.
a. Workforce analysis b. workload analysis c. Job rotation d. job description
Ans: Workload Analysis
15. Joint programme of training in which educational institution and business firms cooperate.
a. Coaching b. Apprenticeship programme c. Case Study d. Internship training
Ans: Internship training
16. Evaluating an employee’s current and/or past performance as against certain predetermined
standards
a. Career planning b. Performance appraisal c. Job specification d. Training
Ans: Performance appraisal
17. A notice placed on the notice board of the enterprise specifying the details of the jobs
available:
a. Casual callers b. Direct recruitment c. Advertisement d. Campus recruitment
Ans: Direct recruitment
18. Maria, the newly appointed staff of KK Ltd, is given training in accounts, purchase,
production and quality control sections in each week. Identify the training method.
Ans: Job rotation
19. This helps new employee to familiarize with rules and policies of an organization.
a. Identify the staffing function
b. Give a very brief note about it. (2. Score)
Ans: a. Orientation b. Orientation refers to introducing the selected employee to his superiors,
subordinates and colleagues and familiarising him with the rules and policies of the
organisation. The employee is given a brief presentation about the organisation and introduced
to his colleagues.
20. Method used for training employees where actual work environment are created.
a. Identify the training method
b. Is it on the job or off the job training method? (2 Score)
Ans: a. Vestibule Training b. Off the job training
21. Big business firms conducted interviews in educational institutions collect bio-data and
make a list of suitable candidates
a. Identify the source of recruitment
b. Is it an external or internal source of recruitment?
Ans: Campus recruitment b. External Source of recruitment
22. Give a short note about ‘vestibule training’.
Vestibule training-In this method, actual work environments is created in a class room.
Employees use the same materials and equipments here. It is a costlier method and it is
usually carried out when employees are required to handle sophisticated machinery and
equipment. Here the learner gets both theoretical and practical knowledge.
A B
Intelligence Measure the existing skill
Aptitude test Provides a person’s emotions, reactions, maturity etc
Personality test Measure the level of intelligence quotient
Trade test Pattern of involvement of a person
Interest test Potential for learning new skills

Ans:
A B
Intelligence Measure the level of intelligence quotient
Aptitude test Potential for learning new skills
Personality test Provides a person’s emotions, reactions, maturity etc
Trade test Measure the existing skill
Interest test Pattern of involvement of a person
24. Distinguish between work load analysis and work force analysis? (3 Score)
Workload Analysis helps to asses the number and types of employees/human resources
required to do various jobs in an organization.
Work force Analysis reveals the number and type of workforce already available in an
organization.
25. Distinguish between Recruitment and Selection? (4 Score)
Recruitment Selection
Recruitment is the process of searching for Selection is the process of choosing the best
prospective employees and stimulating person for a particular job with right
them to apply for jobs in the organisation. qualification from applicant received
through recruitment
Positive process Negative process
Its purpose is to create a large pool of It aims at elimination of unsuitable
applicants candidates.
Process is simple Process is complex
26. Give a short note about placement and orientation? (3 Score)

Placement means post a candidate as employee by giving appointment letter and ask him to
occupy the assigned position in an organisation.
Orientaion: Orientation means introducing the new employee to his superiors, subordinates
and colleagues and familiarising him with the working conditions, rules and policies of an
organisation.
27. Give any three-difference e between Training and Development?(3 Score)
Training Development
Training refers to the process for Development is a much wider concept
increasing knowledge, aptitude, skills compared to training, training focus only on
and abilities of employees to perform a a particular job but developments aim at
particular job the overall development of a person.
It is a job-oriented process It is a career-oriented process
It enables the employee to do a It enables the overall growth of the
particular job better employee.
Narrow concept Wider concept

28. Differentiate between on-the-job training and off- the- job training? (3 Score)
On-the-job training Off-the-job training
In this method a worker learns by doing Off-the-job training given to workers
the work under the guidance of a outside the actual place of work
supervisor.
In on-the-job training, trainee also At the time of training, trainee do not
contribute towards production. contribute towards organisational goals.
‘Learning while doing’ is the principle It is a process of ‘Learning before doing’
followed by this system.
In on-the-job training, trainee gets Here, theoretical knowledge is imparted
practical training more but lacks in more than practical skill
theoretical training

A B
Recruitment Eliminated until the right person is found
Promotion Horizontal movement of employees
Selection Create a pool of prospective job candidates
Development Vertical shift of an employee
Transfer Help employee to grow
Ans:
A B
Recruitment Create a pool of prospective job candidates
Promotion Vertical shift of an employee
Selection Eliminated until the right person is found
Development Help employee to grow
Transfer Horizontal movement of employees
23. Classify the following as On -the -job training and On -the -job training
Computer modelling, Apprenticeship programmes, Vestibule training, Coaching, Internship
training,Job Rotation, , Case Study, Programmed instructions
On-the-job Training Off-the-job Training
1. Apprenticeship programmes Class Room Lectures
Coaching Computer modelling
Internship training Case Study
Job Rotation Vestibule training
Programmed instructions

24. Classify the following as internal and external sources of recruitment
a. Advertisement
b. Transfer
c. Promotion
d. Campus recruitment
e. Employment Exchange
f. Job contractors
Ans:
Internal Sources External Sources

Transfer Advertisement
Promotion Campus Recruitment
Employment Exchange
Job contractors
25. Sunil,a personnel manager claims that external sources of recruitment are better than
internal sources of recruitment. Give your views. (3 Score)
26. Mrs. Sabitha sent an application to the post of an assistant manager in Kozhikode FM
Radio.Explain the process that Mrs. Sabitha has to undergo before she is to be selected to
that post.
27. Mr.Prakash seeks new employees for his business. Name any two external sources of
recruitment.
28. Draw a chart showing different sources of recruitment? (5 Score)
A B
Internship Training Trainee learned by answering questions or filling the
blanks
Vestibule Training Trainee gains a broader understanding of all parts of
the business
Programmed Instructions Training employees on sophisticated machinery and
equipment
Job rotation Superior guides and instructs as a coach
Coaching Classroom teaching are better understood by
practicing in a factory
Ans:
A B
Internship Training Classroom teaching are better understood by
practicing in a factory
Vestibule Training Training employees on sophisticated machinery
and equipment
Programmed Instructions Trainee learned by answering questions or filling
the blanks
Job rotation Trainee gains a broader understanding of all parts
of the business
Coaching Superior guides and instructs as a coach
30. Explain any 4 external sources of recruitment (8 Scores)
31. Describe any 5 seps involved in the process of staffing ( 5 Scores)
32. List any two merits of training to employees.
33. Explain the following types of training: (4 Scores)
a. Vestibule Training
b. Apprenticeship Training
34. Explain about any 3 external sources of recruitment? (6 score)
35. “Staffing fills the job position in the organisation”.
a. Is this statement correct
b. Write any 3 importance of staffing
36. In classroom debate Jayan argues that recruitment and selection are same. Madhu argues
that both are different.
a. Whom do you support? Give justification.
b. If you are supporting Madhu, which one comes first?
37. “Incentives contribute to the performance of the employees”.
a. Do you agree with the statement. Justify your view points
b. Mention the various monetary incentives (3 Scores)
38. TCS Ltd. selected 30 fresh Software Engineers for the company. The personnel management
decided to give training to the new employees at the work place itself. Which method of
training is mentioned here? Explain its different ways. Also explain the importance of training.
(8 Scores)
39. Sources of recruitment which encourages and motivates the existing employees and creates
a sense of loyalty among them. Identify the recruitment source and explain briefly its various
sources.
40. List out any 5 differences between internal and external sources of recruitment
Internal sources External sources

Recruitment of employee from within Recruitment of employee from outside the
the organization is known as internal organization is known as external sources
sources
It is less time-consuming It is more time consuming
It is more economical It is costly
There is limited choice There is wider choice
This method boosts up the morale of This method brings down the morale of
existing employees existing employees
It is generally based on seniority cum It is strictly based on merit and
merit qualifications
41. In a classroom discussion Amitha said that internal source is better for selection of
employees while Sumitha said, external source is the better choice with whom do you
agree? Give any three reasons for it. ( 4 Scores)
42. Of the two systems of training, one is"learning while doing' while the other is 'learning
before doing'. Identify and explain the two types with one example each for both the
methods (Hint : on-the-job training & off-the-job training)
43. Explain briefly about any 4 selection tests. (6 Score)
44. Mr. Hari started an industrial unit in Tamil Nadu His son Manu your friend appointed as H. R
Manager. Manu appointed 25 staff in different posts Advise Manu, about different types of
training possible here. (4 Scores)
45. Mr. Thankavelu started an industrial unit in Chennai. Your brother Shekaran is appointed as
as the HR Manager of that company.Shekaran appointed 50 staff in different posts. Advise
Shekaran about different types of on-the-job training possible here. (6 Score)
46. Explain the procedures for selection of employees (Hint: Selection process, 8 Scores)
47. What are the steps involved in the process of staffing? Explain. (8 Score)
48. Explain the various on the job training methods. ( 8 Scores)
49. This management function begins with work force planning and putting people to job.
(a) Name the management function.
(b) Explain its first four steps/process. (8 Scores)
(a. Staffing, b. Staffing Process)
Prepared by Binoy George, HSST, MKNM HSS Kumaramangalam, Thodupuzha

https://binoygeorgeonline.blogspot.com/p/plus-two.html

+2 Business Studies Chapter-7
Chapter-7
Weightage to this
DIRECTING(Short Note) chapter-14 Scores
Directing - Meaning
Directing means instructing, guiding, supervising, motivating and leading the
subordinates to contribute to the best of their capabilities for the achievement of
organizational goals. If the subordinates are not properly guided, supervised and
motivated, they will become inactive, inefficient and gloomy. Directing is the heart of
management in action.
Through staffing function, the right person is placed at the right position in an
organization. But actual work begins only when these persons get instructions from
their superiors. The main motive of directing is bringing efficiency in performance.
Directing convert plans into performance.
Definition
According to Earnest Dale, “Direction is telling people what to do and seeing that they
do it in the best possible manner”.
Characteristics of directing
1. Directing Initiates Action:
Other managerial functions like planning, organizing, staffing etc. create a base for
action. But directing starts action in the organization.
2. It is a continuous process:
A manager cannot rest after issuing orders and instructions. He has to continuously
guide, supervise and motivate his subordinates.
3. Directing takes place at every level:
Directing is a pervasive function as it is performed by managers at all levels and in all
locations.
4. Directing flows From Top to Bottom:
Directions are given by managers to their subordinates. Directing starts from top level
and flows to lower level.
Importance of Directing
Directing is the heart of management. The importance of directing in the organization
can be understood by the following points:
www.binoygeorgeonline.blogspot.org 1 Binoy George 20-02-2023

1. Initiates action: Direction is known as management-in-action. Planning,

organizing and staffing functions create a condition for taking appropriate actions. The
actual work of the organization starts with directing function.
2. Integrates employee’s efficiency: Through, directing managers integrates
individual and group goals with organizational objectives.
3. Guides employees to realize their potential: Through directing a good leader
can always identify the potential of his employees and motivate them to extract work
up to their full potential.
4. Facilitates introduction of changes: Generally, people have a tendency to resist
changes in the organization. But effective directing through motivation,
communication and leadership helps to reduce such resistance and develop
cooperation in the organization.
5. Ensures stability and balance: Generally, when the employees working at
different levels, they develop different attitudes and the balance between their
attitudes is made by directing function.
Principles of Directing
Directing is a complicated process, it involves many complexities. A manager has to
deal people with diverse background and expectations. So, the manager has to follow
some principles which may guide him in the process of directing. They are:
1. Maximum individual contribution: Directing technique should be made in such
a way that they must help every individual to contribute his maximum potential for
the achievement of the organizational objectives. A good motivation plan with
monetary and non-monetary rewards can motivate an employee to contribute his
maximum efforts for the organization.
2. Harmony of objectives: According to this principle, directing should provide
harmony between the organizational objectives and the individual objectives of the
employees.
3. Unity of command: This principle insists that an employee in the organization
should receive orders and instructions only from one superior at a time. To avoid
confusion and to give no chance of excuse to employee, the orders must come from
one boss only.
4. Appropriate technique: According to this principle, appropriate motivational
and leadership technique should be used while directing the people based on
subordinate needs, capabilities and other situational variables.

5. Managerial communication: Effective managerial communication across all

levels in the organization makes direction effective.
6. Strategic use of informal organization: In every organization, there exists
informal groups or organizations within every formal organization.The manager
should be aware of it and make use of such organizations for effective directing.
7. Effective leadership: A manager must possess the qualities of a good leader. He
must guide and counsel his subordinates not only on work problems but also on their
personal problems.
8. Follow up: Mere issue of orders and instructions is not enough. Managers
should make follow-ups to ensure whether the instructions and orders are
implemented properly.
Elements of Direction
Directing involves four components/elements. They are:
1. Supervision
2. Motivation
3. Leadership
4. Communication
I. Supervision
Supervision means overseeing the subordinates at work. Supervision is instructing,
guiding and controlling the work force with a view to see that they are working
according to plans, policies and instructions. Supervision actually takes place
continuously at all levels of the organization. Top level management supervises the
performance of the middle level management who in turn supervises the
performances of the lower-level management. The person who supervises the
performance of the subordinates is called supervisor.
Importance/Role/Functions of Supervision/Supervisor
1. Maintains day to day contact: The supervisor maintains day to day contact with
the workers. He acts as a guide, friend, and philosopher to the workers.
2. Act as a link between workers and management: Supervisor act as link
between workers and management. It helps to avoid misunderstandings and conflicts
among the management and workers.
3. Provides on the job training: Supervisor provides good on- the-job training to
the workers and builds efficient team of workers.

4. Ensures performance of work: Supervisor ensures performance of work

according to the targets set. He takes responsibility for tasks achievement and
motivates his workers effectively.
5. Gives feedback: Supervisor analyze the work performed and gives feedback to
the workers. He suggests ways and means of developing work skills.
2. Motivation
The term motivation is derived from the word ‘motive’. Motivation can be defined as
stimulating, inspiring and inducing the employees to perform to their best capacity.
Motivation is the process of making subordinates to act in a desired manner to achieve
certain organizational goals.
While discussing about motivation, we need to understand three interrelated terms-
motive, motivation and motivators.
A. Motive: - A motive is an inner state or desire which activates and directs the
behavior of an individual to achieve certain goal. Some such motives are hunger,
security; recognition etc. It causes restlessness as he wants to fulfill his motive.
Example: Individual search for food to fulfill the motive of hunger.
B. Motivation: - It is the process inducing people to perform to their best ability
to accomplish the organizational goals.
C. Motivators: -Motivators are the incentives or techniques used to motivate the
people in an organization. Common motivators used by the managers are increment,
bonus, promotion, respect etc.
Features of motivation
Motivation comprises the following features:
1. An internal feeling: Motivation is an internal feelings like desire, need etc. E.g.
Desire for getting selection to a particular football club.
2. Motivation produces goal-oriented behavior: It induces people to behave in
such a manner, so that they can achieve their goals.
For e.g., if a student has a motive to get full A+ in all the subjects, he will study well to
achieve that goal.
3. Motivation can be positive or negative: To motive employees, the managers
use various motivators. Some are positive and some are negative. The positive
motivation provides positive rewards like increase in salary, promotion and awards;
etc. The negative motivation provides negative rewards like warning, punishment and
demotion etc.

4. Complex process: Motivation is a complex process, as it tries to influence

human behavior differs from person to person. Motivational facts have no uniform
impact on individuals.
5. Continuous process: Satisfaction of one need gives rise to another need. So, it
is a continuous and never ending one.
Need and Importance of motivation

1. Motivation improves performance of employees: Motivation improves
performance level of employees as well as the organization. A motivated worker
performs in a better way than the others.
2. Ensures positive attitude of employees: Motivation helps to change the
negative attitude of employees to positive attitude.
3. Reduce employee turnover: Motivation helps to reduce employee turnover and
thereby saves cost of new recruitment and training.
4. Motivation helps to reduce absenteeism in the organization: If adequate
motivation is provided, work becomes a source of pleasure and workers will be regular
in their work.
5. Better organizational image: To motivate the workers, monetary and non-
monitory incentives are to be provided.
Maslow’s Need Hierarchy Theory of Motivation

Abraham Maslow, an eminent U. S psychologist developed a theory of motivation
based on the hierarchy of needs. According to him, there are five kinds of needs. They
care: -
1. Basic physiological needs: These needs are most basic in the hierarchy and are
termed primary needs. Hunger, thirst, shelter, sleep and sex are some examples of
these needs. In the organizational context, basic salary helps to satisfy these needs.
2. Safety/Security Needs: These needs provide security and protection from
physical and emotional harm. Examples: job security, stability of income, Pension plans
etc.
3. Affiliation/Belonging Needs: These needs refer to affection, sense of
belongingness, acceptance and friendship.
4. Esteem Needs: These include factors such as self-respect, autonomy status,
recognition and attention.

5. Self Actualisation Needs: It is the highest level of need in the hierarchy. It refers
to the drive to become what one is capable of becoming. These needs include growth,
self-fulfillment and achievement of goals.
Maslow’s theory is based on the following assumptions:

(i) People’s behaviour is based on their needs. Satisfaction of such needs
influences their behaviour.
(ii) People’s needs are in hierarchical order, starting from basic needs to other
higher level needs.
(iii) A satisfied need can no longer motivate a person; only next higher level need
can motivate him.
(iv) A person moves to the next higher level of the hierarchy only when the lower
need is satisfied. Maslow’s Theory focuses on the needs as the basis for motivation.
This theory is widely recognised and appreciated.
Maslow’s theory helps managers to realise that need level of employee should be
identified to provide motivation to them.
Financial and Non-Financial Incentives

Incentive means all measures which are used to motivate people to improve
performance. These incentives may be broadly classified a s financial and non-
financial.

1. Financial Incentives: Financial incentives are those incentives which are offered
in terms of cash. The financial incentives generally used in organisations are listed
below:
(i) Pay and allowances: For every employee, salary is the basic monetary
incentive. It includes basic pay, dearness allowance and other allowances.
(ii) Productivity linked wage incentives: In this scheme, wages of employees are
linked with their productivity (Piece wage system)
(iii) Bonus: It is a kind of yearly payment to employees over and above normal
salary. Bonuses may be awarded by a company as an incentive or to reward good
performance.
(iv) Profit Sharing: In this scheme a part of the profit of a company is shared among
the workers in addition to their regular wages. This serves to motivate the employees
to improve their performance and contribute to increase in profits.
(v) Co-partnership/ Stock option: Under these incentive schemes, employees are
offered company shares at a fixed price which is lower than market price. The
allotment of shares creates a feeling of ownership to the employees and makes them
to contribute for the growth of the organisation.
(vi) Retirement Benefits: Several retirement benefits such as provident fund,
pension, and gratuity provide financial security to employees after their retirement.
This acts as an incentive when they are in service in the organisation.
(vii) Perquisites: In many companies’ perquisites and fringe benefits are offered
such as car allowance, housing, medical aid, and education to the children etc., over
and above the salary.
2. Non-Financial Incentives: The incentives which cannot be calculated in terms of

money are called non-financial incentives. All the needs of individuals can’t be satisfied
by money alone. Psychological, social and emotional factors also play important role
in providing motivation. Non-financial incentives mainly focus on these needs. Some
of the important non-financial incentives are discussed below:
1. Status:. Social and esteem needs of an individual are satisfied by status given
to their job.
2. Organisational Climate: Organisational climate indicates the characteristics
which describe an organization. It refers to the relation between the superiors and
subordinates. Some of these characteristics are–individual autonomy, consideration
to employees etc.

3. Career Advancement Opportunity: Every individual wants to grow to the

higher level in the organisation. Promotion works as a tonic and encourages
employees to exhibit improved performance.
4. Job Enrichment Job enrichment is concerned with offering challenging jobs,
autonomy to perform job and provide the opportunity for personal growth and a
meaningful work experience. If jobs are enriched and made interesting, the job itself
becomes a source of motivation to the individual.
5. Employee Recognition programmes: Most people have a need for evaluation
of their work and due recognition. Examples of employees recognition are
congratulating employee for good performance, displaying the achievement of
employee, etc.
6. Job security: Employees want their job to be secure. They want certain stability
about future income and work.
7. Employee participation: It means involving employees in decision making of
the issues related to them.
8. Employee Empowerment: Empowerment means giving more autonomy and
powers to subordinates.
3. Leadership
Leadership is the process of influence the behaviour of people at work towards the
achievement specific goal.The leaders always play a key role for the success and
excellence of any organisation. Can you imagine Mircrosoft without Bill Gates, Infosys
without Narayana Murthy or V-Guard without Kochouseph Chittilappilly

Importance of Leadership
1. Influences the behaviour of people
Leadership influences the behaviour of people and makes them to positively
contribute their energies for the benefit of the organisation.
2. Good interpersonal Relations
A leader maintains personal relations and helps followers in fulfilling their needs.
3. Facilitates changes in the organisation
Leader plays a key role in introducing required changes in the organisation.
4. Resolve conflicts among employees
A leader handles conflicts effectively and does not allow adverse effects resulting from
the conflicts.
5. Provide training to employees
Leader provides training to their subordinates.
Leadership Style
There are several bases for classifying leadership styles. The most popular
classification of leadership styles is based on the use of authority. Depending on the
use of authority, there are three basic styles of leadership:
(i) Autocratic
(ii) Democratic, and
(iii) Laissez-faire
1. Autocratic or Authoritarian leader
An autocratic leader exercise complete control over subordinates. An autocratic leader
gives orders and expects his subordinates to obey those orders. In this style
communication is only one-way with the subordinate.
Advantages:
1) This leadership style is effective in getting productivity.
2) Quick decision-making is possible
3) Complete control over subordinates.
Dis advantages:
1) This leadership style leads to frustration and low morale among employees.
2) Motivational level of subordinates goes down

3) Creativity among the subordinates goes down
2. A democratic leader
In democratic style leadership, leader takes decisions in consultation and participation
with his subordinates. This kind of leadership style is more common now-a-days.
Advantages:
1) It improves the decision-making ability of subordinates
2) This style improves the job satisfaction and the morale of employees.
Dis advantages:
1) Delay in decision making
2) Consultation with subordinates may be considered as a sign of incompetence
on the part of the leader.
3. Laissez faire or Free-rein leader
In this style of leadership, leaders give his subordinates the complete freedom to take
the decisions. Such a leader does not believe in the use of power unless it is absolutely
essential.
Advantages:
1) Maximum scope for the development of subordinates.
2) This style increases the job satisfaction and morale of employees.
Dis advantages:
1) Subordinate may not get timely support and guidance from leader.
2) Subordinates may work in different directions and result in disharmony.
4. Communication
Directing abilities of a manager mainly depend upon his communication skills.
Communication is the process of exchange of information between two or more
persons to reach common understanding.
Elements of Communication
Communication process involves elements like source, encoding, media/channel,
receiver, decoding, noise and feedback. The elements involved in communication
process are explained below:

Fig: Communication Process

(i) Sender:
Sender means person who conveys his thoughts or ideas to the receiver. The sender
represents source of communication.
(ii) Message:
It is the content of ideas, feelings, suggestions, order etc., intended to be
communicated. It is the subject matter of communication.
(iii) Encoding:
It is the process of converting the message into communication symbols such as words,
pictures, gestures etc.
(iv) Media:
It is the path through which encoded message is transmitted to receiver. The channel
may be in written form, face to face, phone call, Internet etc.
(v) Decoding
It is the process of converting encoded message into readable language to understand
the message to the receiver.
(vi) Receiver:
The person who receives communication of the sender and understands the message.
(vii) Feedback:
It includes all those actions of receiver indicating that he has received and understood
message of sender.
(viii) Noise:
Noise means some obstruction or hindrance to communication. This hindrance may
be caused to sender, message or receiver.
Some examples of noise are:
(a) Unclear symbols that lead to faulty encoding.

(b) A poor telephone connection.

(c) An inattentive receiver.
(d) Faulty decoding (attaching wrong meanings to message).
(e) Prejudices obstructing the poor understanding of message.
Importance of Communication
(i) Acts as basis of coordination:
Communication provides coordination among departments, activities and persons in
the organisation.
(ii) Helps in smooth working of an enterprise:
Communication is the foundation of all group activities. The job of a manager is to
coordinate the human and physical elements of an organization to achieve
organizational goal.
(iii) Acts as basis of decision making:
Communication provides needed information for decision making. In its absence, it
may not be possible for the managers to take any meaningful decision.
(iv) Increases managerial efficiency:
Communication is essential for quick and effective performance of managerial
functions.
(v) Promotes cooperation and industrial peace:
The two-way communication promotes cooperation and mutual understanding
between the management and workers
(vi) Establishes effective leadership:
Communication is the basis of leadership. Effective communication helps to influence
subordinates.
(vii) Boosts morale and provides motivation:
An efficient system of communication enables management to motivate, influence
and satisfy the subordinates. Communication helps to boost morale of employees and
managers.

Formal and Informal Communication

Communication taking place within an organisation may be broadly classified as
formal and informal communication.
Formal Communication
Formal communication flows through official channels designed in the organisation
chart. This communication may take place between a superior and subordinate, a
subordinate and superior or among same cadre employees or managers. The
communications may be oral or written but generally recorded and filed in the office.
Formal communication may be further classified
A. Vertical Communication
B. Horizontal Communication
Vertical communication flows vertically i.e., upwards or downwards through formal
channels. Upward communications refer to flow of communication from subordinate
to superior whereas downward communication indicates communication from a
superior to subordinate.
Example: - The examples of upward communication are – application for grant of
leave, submission of progress report, request for grants etc.
Example: Examples of downward communication are – sending notice to employees
to attend a meeting, ordering subordinates to complete an assigned work, passing on
guidelines framed by top management to the subordinates etc.
Horizontal or lateral communication takes place between one division and another.
For example, a production manager may contact marketing manager to discuss about
schedule of product delivery, product design, quality etc.
Different types of communication networks
Different types of communication networks may operate in formal organisation. Some
of the popular communication networks are presented and discussed in given figure.
(i) Single chain:
This network exists between a supervisor and his subordinates. Since many levels exist
in an organisation structure, communication flows from every superior to his
subordinate through single chain.

(ii) Wheel:
In wheel network, all subordinates under one superior communicate through him only
as he acts as a hub of the wheel. The subordinates are not allowed to talk among
themselves.
(iii) Circular:
In circular network, the communication moves in a circle. Each person can
communicate with his adjoining two persons. In this network, communication flow is
slow.
(iv) Free flow:

In this network, each person can communicate with others freely. The flow of
communication is fast in this network.
In this network, a subordinate is allowed to communicate with his immediate superior

as well as his superiors superior. However, in later case, only prescribed
communication takes place.
Informal Communication
Communication that takes place without following the formal lines of communication
is said to be informal communication. It is the communication between people of an
organization on the basis of their social relations.Informal communication is also called
‘grapevine’ because the origin and direction of this information transferred is not easy

to locate as in case of a vineyard. There is no fixed direction and for the flow of
information under informal communication.
Example: Workers chit chating in a canteen about the behaviour of the superior,
discussing about rumours that some employees are likely to be transferred are some
examples of informal communications.
Informal channels are used by the managers to transmit information so as to know the
reactions of his/her subordinates. An intelligent manager should make use of positive
aspects of informal channels and minimise negative aspects of this channel of
communication.
Different Types of Grapevine Network (Informal Communication)
1. Gossip:
In gossip network, one person tells many. Here one person communicates with all on
non-selective basis.
2. Single Stand Network

In single stand pattern each individual communicates to the other in sequence.
3. Probability Network
In probability network the individual communicates randomly with other individuals.

4. Cluster Network
In cluster, the individual communicates with only those people whom he trusts. Of
these four types of networks, cluster is the most popular in organisations.
Barriers to Communication
Communication barriers are the factors that obstruct the effectiveness of
communication. These barriers may prevent a communication or filter part of it or
carry incorrect meaning due to which misunderstandings may be created. The barriers
to communication in the organisations can be broadly grouped as:
A. Semantic barriers
B. Psychological barriers
C. Organisational barriers
D. Personal barriers.
A. Semantic barriers
These are concerned with the meaning of words and symbols. Sometimes the same
words and symbols can be understood differently by different people in the
organization. These are discussed below:
1. Badly expressed message
Sometimes intended meaning may not be conveyed by a manager to his subordinates.
This is due to inadequate vocabulary, usage of wrong words, omission of needed
words etc.
2. Symbols with different meanings
A word may have several meanings. Receiver has to perceive one such meaning for
the word used by communicator. Example-Prize, price, right, write etc.

3. Faulty translations
Sometimes the communications originally drafted in one language (e.g., English) need
to be translated to the language understandable to workers (e.g., Hindi). If the
translator is not an expert, he may make mistake in translation.
4. Unclarified assumptions
Some communications may have certain assumptions which are subject to different
interpretations.
5. Technical jargon
It is usually found that specialists use technical words while explaining to persons who
are not specialists in the concerned field. Therefore, they may not understand the
actual meaning of many such words.
6. Body language and gesture decoding
Every movement of body communicates some meaning. The body movement and
gestures of communicator matters so much in conveying the message. If there is no
match between what is said and what is expressed in body movements,
communications may be wrongly conveyed.
B. Psychological barriers
Emotional or psychological factors acts as barriers to communicators. For example, a
worried person cannot communicate properly and an angry receiver cannot
understand the real meaning of message. Some of the psychological barriers are:
(i) Premature evaluation
Sometimes people evaluate the meaning of message before the sender completes his
message.
(ii) Lack of attention
The pre-occupied mind of receiver and the resultant non-listening of message acts as
a major psychological barrier.
(iii) Loss by transmission and poor retention
When communication passes through various levels, successive transmissions of the
message results in loss of, or transmission of inaccurate information. This is more so
in case of oral communication.
(iv) Distrust Distrust between communicator and communicate acts as a barrier. If
the parties do not believe each other, they cannot understand each other’s message
in its original sense.
C. Organisational barriers
The factors related to organisation structure, authority relationships, rules and
regulations may, sometimes, act as barriers to effective communication. Some of
these barriers are:
(i) Organisational policy
If the organisational policy is not supportive to free flow of communication, it may
hamper effectiveness of communications.
(ii) Rules and regulations
Rigid rules and huge procedures may be a hurdle to communication.
(iii) Status
Status of superior may create psychological distance between him and his
subordinates.
(iv) Complexity in organisation structure
In an organisation where there are number of managerial levels, communication gets
delayed and distorted as number of filtering points are more.
(v) Organisational facilities
Facilities like frequent meetings, suggestion box, complaint box, social and cultural
gathering, transparency in operations etc., will encourage free flow of communication.
Lack of these facilities may create communication problems.
D. Personal barriers:
The personal factors of both sender and receiver may exert influence on effective
communication. Some of the personal barriers of superiors and subordinates are
mentioned below:
(i) Fear of challenge to authority
If a superior perceives that a particular communication may adversely affect his
authority, he or she may withhold or suppress such communication.
(ii) Lack of confidence of superior on his subordinates
If superiors do not have confidence on the competency of their subordinates, they
may not seek their advice or opinions.

(iii) Unwillingness to communicate

Sometimes, subordinates may not be prepared to communicate with their superiors,
if they perceive that it may adversely affect their interests.
(iv) Lack of proper incentives
If there is no motivation or incentive for communication, subordinates may not take
initiative to communicate. For example, if there is no reward or appreciation for a good
suggestion, the subordinates may not be willing to offer useful suggestions.
Improving Communication Effectiveness
Organisations should adopt suitable measures to overcome the barriers and improve
communication effectiveness. Some such measures:
(i) Clarify the ideas before communication
The message to be communicated must be absolutely clear in the mind of the sender.
(ii) Communicate according to the needs of receiver
The level of understanding of receiver should be crystal clear to the communicator.
Manager should adjust his communication according to the education and
understanding levels of subordinates.
(iii) Consult others before communicating
Before actually communicating the message, it is advisable to consult others.
(iv) Be aware of languages, tone and content of message
The contents of the message, tone, language used, manner in which the message is to
be communicated are the important aspects of effective communication. The
language used should be understandable to the receiver and should not offend the
sentiments of listeners.
(v) Convey things of help and value to listeners
While conveying message to others, it is better to know the interests and needs of the
people with whom you are communicating. If the message directly or indirectly relates
to such interests, it will certainly attract response from communicatee.
(vi) Ensure proper feedback
Communication process is incomplete unless the feedback is received from the
receiver. This will cause the receiver to become more responsive.

(vii) Communicate for present as well as future

Communication process must meet the needs of present as well as future
requirements of the organization.
(viii) Follow up communications
There should be regular follow up and review on the instructions given to
subordinates.
(ix) Be a good listener
Manager should be a good listener. Patient and attentive listening solves half of the
problems.
Prepared By, Binoy George, HSST, MKNM HSS, Kumaramangalam, Idukki Dt
Expected Questions
1. It is the process of converting the message into communication symbols such
as words, pictures, gestures etc. are called----------
a. Encoding d. Decoding c. Communicating d. None of these Ans: Encoding
2. Which one of the following is not an element of direction?
(a) Motivation (c) Delegation (b) Communication (d) Supervision
Ans:Delegation
3. -----------refers to the process of instructing, guiding,counselling, motivating and
leading people in the organisation to achieve its objectives.
a. Directing .b. Planning. c. Organising. d. Staffing. Ans:Directing.
4. The starting point of communication process is ------
a. Sender. b. Receiver. c. Messages. d. Encoding. Ans: Sender.
5. The motivation theory which classifies needs in hierarchical order is developed

by:
(a) Fred Luthans (c) Abraham Maslow (b) Scott (d) Peter F. Drucker
Ans: Abraham Maslow
6. Which among the following is a non-financial incentive?
a. Bonus b. Profit sharing c. Pay and allowance d. Status Ans: Status
7. Rearrange the needs in the order of Maslow’s Need Hierarchy theory of human
needs.
Ans:
8. ------------ refers to process of exchange of ideas between or among persons and

create understanding.
a. Communication. b. Supervision .c Motivation. d Leadership.
Ans: Communication
9. -----is the process of influencing people to strive willingly for group objectives.
a. Supervision b. Motivation c. Leadership d. Directing. Ans: Leadership
10. Which one is an example of upward communication?
a. Circular b. Complaint c. Memo d. Notice Ans : Complaint
11. Which one of the following is not a semantic barrier of communication?
a. Technical Jargons .b Faulty translations .c Badly expressed messages .d
Lack of attention Ans: Lack of attention
12. The process of converting the message into communication symbols is known
as- (a) Media (c) Feedback (b) Encoding (d) Decoding Ans: Encoding
13. Which of the following is a financial incentive?

(a) Promotion (b) Job Security (c) Stock Incentive (d) Employee Participation
Ans: Stock Incentive
14. Which of the following is not an element of communication process?
(a)Decoding (c) Channel (b) Communication (d) Receiver Ans: Communication
15. The communication network in which all subordinates under a supervisor
communicate through supervisor only is:
(a) Single chain (c) Wheel (b) Inverted (d) Free flow Ans: Wheel
16. Observing what is being done by subordinates.
a. Activity b. Motivation c. Leadership d. Supervision Ans: Supervision
17. Grapevine relates to ---------
a. Formal communication. b. Informal communication. c. Formal organisation
.d. Informal Organisation. Ans: Informal communication.
18. The lowest level need in the need hierarchy of Abraham Maslow.
a. Affiliation .b Self Actualisation .c Esteem .d Physiological Needs.
Ans: Physiological Needs.
19. “It is the process of stimulating subordinates to act for accomplishingdesired
goals”.Identify it. Ans: Motivation
20. The highest level need in the need Hierarchy of AbrahamMaslow:
(a) Safety need (b) Belongingness need (c) Self actualisation need (d)
Prestige need Ans: Self actualization need
21. Technique used to motivate people in an organization.
a. Motivators b. Motive c. Motivation d. Desire Ans: Motivators
22. What do you mean by ‘Noise’ in communication? Give examples? (2 Score)
23. Give a chart showing the communication process. (5 Score)
24. Explain different network of grapevine communication?
25. Name the elements of directing? (2 Score)


A B
Esteem Needs Shelter
Safety Needs Friendship
Physiological Needs Insurance against risk
Social Needs Self-fulfilment
Prestige
Ans:
A B
Esteem Needs Prestige
Safety Needs Insurance against risk
Physiological Needs Shelter
Social Needs Friendship
27. Based on Abraham Maslow’s theory ‘Recognition and attention’ is a factor

a. Belonging need b. Esteem Needs c. Safety needs d. Self-actualization needs
Ans: Esteem Needs
28. “Desire to become everything one is capable of becoming”. Which is the need
that Maslow mean here? Ans: Self Actualisation Need
29. Obstruction or hindrance to communication may be caused to sender, message
or receiver is called------
a. Media b. Communication c. Noise d. Decoding Ans Noise
30. Overseeing the subordinates at work is called --------
a. Controlling b. Motivation c. Supervision d. Leadership
Ans: Supervision
31. What is meant by ‘motivation’ as an element of directing? (2 Score)
32. Write a short note of supervision? (2 Score)
33. Write a short note about:
a. Motive
b. Motivation
c. Motivator

34. Write a brief note about the elements of directing (4 Score)

35. Explain about various measures to improve communication effectiveness?
36. Describe any 4 organisational barriers of communication? (4 Score)
37. Explain various financial and non financial incentives used to motivate
employees of a company? (8 Scores)
38. Write a brief note about any 4 semantic barriers of communication?
39. Discuss Maslow’s Need Hierarchy theory of motivation? (8 Score)
40. What are the common barriers to effective communication? (8 Scores)
41. Classify the following needs into Basic Physiological, Safety Needs, Belonging
Needs and Esteem Needs
a. Recognition b. Friendship c. Job Security d. Hunger e. Stability of Income f
Self Respect
Ans:
Need Type of Need
a. Recognition Esteem Needs
b. Friendship Belonging Needs
c. Job Security Safety Needs
d. Hunger Basic Physiological Needs
e. Stability of Income Safety Needs
f. Self Respect Esteem Needs
To get detailed study notes, presentations & updates,

visit: https://binoygeorgeonline.blogspot.com/p/plus-
two.html

this chapter-6
Controlling
Managerial functions start with planning and ends with controlling. Controlling means
ensuring that activities in an organization are performed as per plans. The controlling function
finds out how far actual performance deviates from standards, analyses the causes of such
deviations and attempts to take corrective actions based on the same. Without proper
control even the best plan will not give the desired result. Controlling is a pervasive function.
Features of controlling:
➢ Controlling is a goal-oriented process
➢ It is a pervasive function
➢ It is a backward-looking function. Controlling evaluates the past performance on the
basis of pre-determined goals.
➢ Controlling is futuristic also. Controlling process helps in formulation of future plans.
Importance of Controlling
(i) Accomplishing organisational goals:
Controlling measures, the actual performance with standards and make corrective action on
deviations.
(ii) Judging accuracy of standards:
A good control system keeps a careful check on the changes taking place in the organization.
This helps to review and revise the standards in the light of such changes.
(iii) Making efficient use of resources:
Controlling helps a manager to reduce wastage and spoilage of resources.
(iv) Improving employee motivation:
A good control system ensures that employees know well in advance what they are expected
to do and what are the standards of performance on the basis of which they will be evaluated.
This will motivate them and helps them to give better performance.
(v) Ensuring order and discipline:
Controlling creates an atmosphere of order and discipline in the organisation.
(vi) Facilitating coordination in action:
Each department and employee is governed by predetermined standards which are well
coordinated with one another. This ensures that overall organisational objectives are
accomplished.
20-02-2023 www.binoygeorgeonline.blogspot.org 11 Binoy George

Limitations of Controlling
Controlling function of management is suffers from the following limitations.
(i) Difficulty in setting quantitative standards:
Controlling will be effective only when standards are fixed in quantitative terms. Control
system loses some of its effectiveness when standards cannot be defined in quantitative
terms. Employee morale, job satisfaction and human behaviour etc. can’t be fixed in
quantitative terms.
(ii) Little control on external factors:
Generally, an enterprise cannot control external factors such as government policies,
technological changes, competition etc.
(iii) Resistance from employees:
Control is often resisted by employees. They see it as a restriction on their freedom.
(iv) Costly affair:
Control is a costly affair as it involves a lot of expenditure, time and effort.
Relationship between Planning and Controlling
Planning and controlling are inseparable twins of management. A system of control
presupposes the existence of certain standards. These standards of performance which serve
as the basis of controlling are provided by planning. Once a plan becomes operational,
controlling is necessary to monitor the progress, measure it, discover deviations and initiate
corrective actions. Thus, planning without controlling is meaningless. Similarly, controlling is
blind without planning. If the standards are not set-in advance, managers have nothing to
control. The relation between planning and controlling will be clear from the following points.
➢ When there is no plan, there is no basis of controlling.
➢ Future plans are made perfect by correcting the deviations, which are identified
through controlling.
➢ Planning is clearly a prerequisite for controlling.
➢ Planning means deciding in advance what is to be done, how it is to be done, who
should do it etc. Controlling ensures that things are done as per plan.
➢ It is utterly foolish to think that controlling could be accomplished without planning.
➢ Planning is basically an intellectual process involving thinking and analysis to discover
an appropriate course of action for achieving objectives. Controlling, on the other
hand, checks whether decisions have been translated into desired action.
➢ Planning is prescriptive whereas, controlling is evaluative.
The relationship between planning and controlling is that one helps the other.
1. Planning based on facts makes controlling easier and effective

2. Controlling improves future planning by providing information derived from past

experience.
‘Planning is looking ahead while controlling is looking back’. Comment
Planning is looking ahead while controlling is looking back. However, the statement is only
partially correct. Plans are prepared for future and are based on forecasts about future
conditions. Therefore, planning involves looking ahead and is called a forward-looking
function. On the contrary, controlling is like a postmortem of past activities to find out
deviations from the standards. In that sense, controlling is a backward-looking function.
However, controlling is forward looking also because it does not end by comparing the past
performance with the standards. It also involves finding the reason for deviation and suggest
measures so that these deviations do not occur future. Planning is backward looking also in
the sense that it is guided by the past experiences and the corrective actions initiated by the
control functions. Thus, planning and controlling are both backward-looking as well as a
forward-looking function.
Controlling Process
Controlling is a systematic process involving the following steps.
1. Setting performance standards
2. Measurement of actual performance
3. Comparison of actual performance with standards
4. Analysing deviations
5. Taking corrective action
Step 1: Setting Performance Standards:
The first step in the controlling process is setting up of performance standards. Standards are
the criteria against which actual performance would be measured.
Step 2: Measurement of Actual Performance:
Once performance standards are set, the next step is measurement of actual performance.
There are several techniques for measurement of performance. These include personal
observation, sample checking, performance reports, etc.
Step 3: Comparing Actual Performance with Standards:
This step involves comparison of actual performance with the standard. Such comparison will
reveal the deviation between actual and desired results. Comparison becomes easier when
standards are set in quantitative terms.

Step 4: Analysing Deviations:

Some deviation in performance can be expected in all activities. It is, therefore, important to
determine the acceptable range of deviations. All deviations need not be brought to the
notice of top management.
Step 5: Taking Corrective Action:
The final step in the controlling process is taking corrective action. 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.
Controlling Process in a chart
Fig: Controlling process
Management by Exception (MBE)/ Control by Exception

It is one of the important principles of control. This principle implies that only major
exceptions (deviations) from the established standard should be reported to the top
management. This idea is based on the concept “an attempt to control everything results
controlling nothing”. Manager should not waste his time and energy in finding solutions for
minor deviations rather he should concentrate on removing deviations of high degree.
Deviations within the acceptable range (i.e,minor deviations) are ignored.
For Example, if a garment factory establishes that defects in 100 garments, i.e, 5% defects
permissible. If the defect is between 1 to 5%, it need not be reported to the management. If
the defects are 6% or more than that it must be reported.
Prepared by, Binoy George, HSST, MKNM HSS, Kumaramangalam,Thodupuzha, Idukki Dt.

Expected Questions
1. Which function of management consists of the following elements?

a. Determining standards
b. Measuring performance
c. Comparing performance with standards
d. Taking corrective action
Ans: Controlling
2. ------is the criteria against which actual performance is measured.
Ans: standard
3. Identify the principle which indicates that only significant deviations from standards
require the attention of management. Ans: Management by exception
4. The first step in controlling process is---------
a. Corrective action b. Fixing Standards c. Analysing Deviations d. Measuring the
actual performance Ans: Fixing Standards
5. An efficient control system helps to
(a) Accomplishes organisational objectives (b) Boosts employee morale
(c) Judges accuracy of standards (d) All of the above Ans :All of the above
6. Arrange the steps in the process of control in its sequence:
(1) Measurement of performance (2) Taking corrective action (3) Comparison of
actual performance with standard (4) Establishment of standard
Ans: Establishment of standard -----Measurement of performance------
Comparison of actual performance with standard------Taking corrective action
7. Controlling function of an organization is
a. Forward looking b. Backward looking c. Forward as well as backward looking d.
none of the above Ans: Forward as well as backward looking
8. Explaining the meaning of controlling. (3 Score)
9. Planning without control is like a ship without a captain. Do you agree with this
Discuss the relationship between planning and control

10. Just as traffic signals are essential to make our roads accident free, management
controls are necessary for the smooth functioning of the organisation.
a. State your opinion about this statement.
b. Briefly explain the steps in control process.
11. .“Controlling is an important function of management”. Identify and explain the
importance of controlling.
12. Explain the importance of standards in control process.
13. “An attempt to control everything results controlling nothing”. Explain (5 Score)
14. Explain the various steps involves in the process of control. (6 Score)
15. Prepare a seminar paper in ‘ Steps in control process’.
16. Prakash and Thomas are two managers of KK Ltd. Prakash view is that controlling is
forward looking whereas Thomas argues that controlling is backward looking. In your
opinion who is correct? Explain
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presentations & updates, visit:
Binoy George https://binoygeorgeonline.blo
MKNM HSS
gspot.com/p/plus-two.html
Kumaramangalam
Idukki Dt

Sample
Question
Paper
I. Answer any Eight questions from 1 to 10 each carries 1 score (8x1=8) 1 മതൽ 10 വരരയള ഏരതങങലല 8 ചചചദദങൾ‌ക ക ഉതരല എഴതക
1. Which one of the following is not an organizational objective of ഉതരല നൽകക. ഓചരചനങനല 1 ചസചർ വവതല. (8x1=8)
management.
(a) Growth (b) Survival 1. ചുവടടെ ചചേർതത്തിരത്തിക്കുന്നവയത്തിൽ മമാചനേജജ്ടമനത്തിടന സസംഘടെനേമാപരമമായ
(c) Employment opportunity (d) Profit ലകക്ഷ്യമലമാതതജ് ഏതമാണജ്
(എ) വളർച്ച (ബത്തി) അതത്തിജജീവനേസം
(സത്തി) ടതമാഴത്തിൽ അവസരങ്ങൾ സൃഷത്തിയജ്ക്കുക (ഡത്തി) ലമാഭസം ചനേടുക
2. Workers should be encouraged to develop to carry out their plans for 2. പദ്ധതത്തികൾ ടമച്ചടപ്പെടുത്തുന്നതത്തിനേമായത്തി ടതമാഴത്തിലമാളത്തികടള
improvements. ചപമാതമാഹത്തിപ്പെത്തിക്കണസം. ഫചയമാൾ നേത്തിർചദ്ദേശത്തിച്ച മമാചനേജജ്ടമനജ് തതതസം തത്തിരത്തിച്ചറത്തിയുക.
Identify the principle of management formulated by Fayol. (എ) ഇകതത്തിറത്തി (ബത്തി) ഉചദക്ഷ്യമാഗസ്ഥരുടടെ സ്ഥത്തിരത (സത്തി) ഇനേത്തിചഷക്ഷ്യറജീവജ് (ഡത്തി) ഓർഡർ
(a) Equity (b) Stability of personnel
(c) Initiative (d) Order
3. നേമ്മൾ എവത്തിടടെ നേത്തിൽക്കുന്നു എന്നുസം എവത്തിചടെക്കമാണജ് ചപമാചകണ്ടടതന്നുസം
3. The function of management which bridges the gap between where we തമ്മത്തിലുള്ള വത്തിടെവജ് നേത്തികത്തുന്ന മമാചനേജജ്ടമനത്തിടന പവർതനേമമാണജ്
are and where we want to go (എ) ആസൂത്രണസം (ബത്തി) സസംഘമാടെനേസം
(a) Planning (b) Organising (സത്തി) മമാർഗനേത്തിർചദ്ദേശസം (ഡത്തി) നേത്തിയനത്തിക്കൽ
(c) Directing (d) Controlling
4. തമാടഴ നേലത്തിയത്തിരത്തിക്കുന്നവയത്തിൽ സതയചമവ രൂപജീകരത്തിക്കുന്ന സസംഘടെനേ രൂപസം
4. Which of the following organisation formed spontaneously ഏതമാണജ്
(a) Functional (b) Divisional (എ) ഫങജ്ഷണൽ (ബത്തി) ഡത്തിവത്തിഷണൽ
(c) Formal (d) Informal (സത്തി) ഔപചേമാരത്തികസം (ഡത്തി) അനേനൗപചേമാരത്തികസം
5. Which type of training is provided to the new employees of an 5. പുതത്തിയതയമായത്തി നേത്തിയമത്തിതരമായമാ ജജീവനേക്കമാർക്കജ് സ്ഥമാപനേതത്തിടല നേത്തിയമങ്ങളസം
organisation in order to familiarise them with the organisational rules and നേയങ്ങളസം പരത്തിചേയടപ്പെടുത്തുന്നതത്തിനേജ് നേൽകുന്ന പരത്തിശജീലനേമമാണജ്
policies. (എ) ടവസത്തിബബ്യൂൾ പരത്തിശജീലനേസം
(a) Vestibule training (b) Apprenticeship training (ബത്തി) അപനജീസജ്ഷത്തിപ്പെജ് പരത്തിശജീലനേസം
(സത്തി) ഇചനൺഷത്തിപ്പെജ് പരത്തിശജീലനേസം
(c) Intern-ship training (d) Induction training (ഡത്തി) ഇൻഡകജ്ഷൻ പരത്തിശജീലനേസം
6. Which of the following is not an assumption of Maslow’s Need 6. ചുവടടെ നേലത്തിയത്തിരത്തിക്കുന്നവയത്തിൽ മമാചസമായുടടെ അവശക്ഷ്യ ചശ്രേണത്തി
hierarchy theory? സത്തിദ്ധമാന്തതത്തിടന അനുമമാനേമലമാതതജ് ഏതമാണജ്?
(a) People’s behaviour is not based on their needs
(എ) ആളകളടടെ ടപരുമമാറസം അവരുടടെ ആവശക്ഷ്യങ്ങടള അടെത്തിസ്ഥമാനേമമാക്കത്തിയുള്ളതല
(b) Satisfaction of needs influences their behaviour (ബത്തി) ആവശക്ഷ്യങ്ങളടടെ സസംതൃപത്തി അവരുടടെ ടപരുമമാറടത സതമാധജീനേത്തിക്കുന്നു
(c) A satisfied need can no longer motivate a person (സത്തി) സസംതൃപമമായ ഒരു ആവശക്ഷ്യതത്തിനേജ് ഒരു വക്ഷ്യകത്തിടയ പചചേമാദത്തിപ്പെത്തിക്കമാൻ
കഴത്തിയത്തില
(d) A person moves to the next higher level of the hierarchy only when the (ഡത്തി) ഒരു വക്ഷ്യകത്തി അടെത്തിസ്ഥമാനേ ആവശക്ഷ്യങ്ങൾ തൃപത്തികരത്തിക്കുചമമാൾ മമാത്രചമ ഉന്നത
lower need is satisfied തലതത്തിലുള്ള ആവശക്ഷ്യങ്ങളത്തിചലക്കു നേജീങ്ങുന്നുള്ളു
7. പവർതനേങ്ങൾ ആസൂത്രണതത്തിനേജ് അനുസൃതമമായത്തി നേടെക്കുന്നു എന്നജ്

7. It is the process of ensuring that events conform to plans. ഉറപ്പെമാക്കുന്ന പകത്തിയയമാണത്തിതജ്.
(a) Planning (b) Controlling
(എ) ആസൂത്രണസം (ബത്തി) നേത്തിയനണസം
(c) Organising (d) Directing
(സത്തി) സസംഘമാടെനേസം (ഡത്തി) സസംവത്തിധമാനേസം
8. A decision is taken to distribute certain parts of the profit to shareholders 8. നേത്തികുതത്തി അടെച്ചതത്തിനേജ് ചശകമുള്ള ലമാഭതത്തിടന ചേത്തില ഭമാഗങ്ങൾ ഓഹരത്തി
after paying tax. The type of decision referred here is ഉടെമകൾക്കജ് വത്തിതരണസം ടചേയമാൻ തജീരുമമാനേസം എടുക്കുന്നു. ഇവത്തിടടെ
(a) Investment decision (b) Financing decisions പരമാമർശത്തിച്ചത്തിരത്തിക്കുന്നതു ഏതജ് തരസം സമാമതത്തിക തജീരുമമാനേസം ആണജ്
(c) Dividend decision (d) Capital budgeting decision (എ) നേത്തിചകപ തജീരുമമാനേസം (ബത്തി) ഫത്തിനേമാൻസത്തിസംഗജ് തജീരുമമാനേങ്ങൾ
(സത്തി) ഡത്തിവത്തിഡനജ് തജീരുമമാനേസം (ഡത്തി) മൂലധനേ ബജറത്തിസംഗജ് തജീരുമമാനേസം
9. Which one of the following is not an element of marketing mix 9. ഇനേത്തിപ്പെറയുന്നവയത്തിൽ ഏതമാണജ് മമാർക്കറത്തിസംഗജ് മത്തിശ്രേത്തിതതത്തിടന ഘടെകമലമാതതജ്
(a) Price (b) Product (എ) വത്തില (ബത്തി) ഉൽപ്പെന്നസം (സത്തി) വത്തിതരണസം (ഡത്തി) ഉൽപ്പെമാദനേസം
(c) Physical distribution (d) Production

10. On what grounds you cannot claim compensation from the product 10. ഒരു ഉല്പന്നതത്തിടന നേത്തിർമ്മമാതമാവത്തിൽ നേത്തിന്നുസം തമാടഴ പറയുന്ന എന്തജ്
manufacturer? കമാരണതമാലമാണജ് നേഷപരത്തിഹമാരസം ഈടെമാക്കമാൻ കഴത്തിയമാതതു?
(a) Manufacturing Defect (b) Defect in design (എ) നേത്തിർമ്മമാണ വവകലക്ഷ്യസം (ബത്തി) രൂപകൽപ്പെനേയത്തിടല അപമാകത
(സത്തി) സ്പഷജ്ടെജീകരണതത്തിൽ നേത്തിന്നുള്ള വക്ഷ്യതത്തിയമാനേസം
(c) Deviation from specification (d) Damaged by consumer
(ഡത്തി) ഉപചഭമാകമാവത്തിനേമാൽ ഉണ്ടമാകുന്ന ചകടുപമാടുകൾ
Answer any five questions from 11 to 16. Each carries 2 Score (2x5 11 മതൽ 16 വരരയള ഏരതങങലല 5 ചചചദദങൾ‌ക ക ഉതരല എഴതക
=10) ഉതരല നൽകക. ഓചരചനങനല 2 ചസചർ വവതല. (5x2=10)
11. “Coordination is the essence of Management ”. Comment
11. "ഏചകമാപനേമമാണജ് മമാചനേജജ്ടമനത്തിടന അന്തസത" അഭത്തിപമായസം
ചരഖടപ്പെടുത്തുക.
12. Identify the type of business environment referred in the 12. തമാടഴ പറയുന്ന സന്ദർഭങ്ങളത്തിൽ പരമാമർശത്തിച്ചത്തിരത്തിക്കുന്ന ബത്തിസത്തിനേസജ്
following cases. അന്തരജീകതത്തിടന തരസം തത്തിരത്തിച്ചറത്തിയുക.
(a) change in taste and fashion of customers
(b) change in fiscal policy (എ) ഉപചഭമാകമാക്കളടടെ അഭത്തിരുചേത്തിയത്തിലുസം ഫമാഷനേത്തിലുമുള്ള മമാറസം
(ബത്തി) സർക്കമാരത്തിടന ധനേനേയതത്തിടല മമാറസം
13. ആസൂത്രണതത്തിടന ഏടതങത്തിലുസം രണ്ടജ് പമാധമാനേക്ഷ്യസം എഴുതുക.
13. write any two importance of planning.
14. ഒരു സ്ഥമാപനേതത്തിടന ധർമങ്ങടള അടെത്തിസ്ഥമാനേമമാക്കത്തിയുള്ള (ഫങജ്ഷണൽ)
14. Draw a chart showing the functional structure of an organisation
ഘടെനേ കമാണത്തിക്കുന്ന ഒരു ചേമാർടജ് വരയ്ക്കുക
15. write two examples of financial incentives. 15. സമാമതത്തിക ചപമാതമാഹനേങ്ങൾക്കു രണ്ടജ് ഉദമാഹരണങ്ങൾ എഴുതുക.
16. Explain the term Management by exception as a tool of 16. "വക്ഷ്യതത്തിയമാനേസം വത്തിശകലനേസം ടചേയ്യുന്നതത്തിനുള്ള ഒരു ഉപകരണമമാണജ് സവത്തിചശക
analysing deviation. ചമഖലയത്തിടല മമാചനേജജ്മനജ് ". വത്തിശദജീകരത്തിക്കുക
III. Answer any 5 questions from 17 to 22. Each carries 3 Score (3x5 III. 17 മതൽ 22 വരരയള ഏരതങങലല 5 ചചചദദങൾ‌ക ക ഉതരല എഴതക
=15) ഉതരല നൽകക. ഓചരചനങനല 3 ചസചർ വവതല. (5x3=15)
17. Universal applicability is one of the natures of Management
principles. State any other three nature of management principle 17. മമാചനേജജ്ടമനജ് തതതങ്ങളടടെ സതഭമാവങ്ങളത്തിടലമാന്നമാണജ് സമാർവത്രത്തിക
പചയമാഗകമത. മമാചനേജജ്ടമനജ് തതതതത്തിടന മചറടതങത്തിലുസം മൂന്നജ് സതഭമാവങ്ങൾ
എഴുതുക
17. Briefly explain any three type of selection test used in staffing
17. ഒരു സ്ഥമാപനേതത്തിടല ജജീവനേക്കമാടര തത്തിരടഞ്ഞെടുക്കുന്നതത്തിനേജ് ഉപചയമാഗത്തിക്കുന്ന
process. ഏടതങത്തിലുസം മൂന്നജ് തരസം ടസലകൻ ടടെസജ്( ടതരടഞ്ഞെടുപ്പെജ് പരജീകകൾ)
സസംകത്തിപമമായത്തി വത്തിശദജീകരത്തിക്കുക.
18. Supervision is one of the important element of directing
Explain the other three important elements of direction. 18. മമാർഗനേത്തിർചദ്ദേശതത്തിടല പധമാനേ ഘടെകങ്ങളത്തിടലമാന്നമാണജ് ചമൽചനേമാടസം
മമാർഗനേത്തിർചദ്ദേശതത്തിടല മറജ് മൂന്നജ് പധമാനേ ഘടെകങ്ങൾ വത്തിശദജീകരത്തിക്കുക.
19. ആസൂത്രണവസം നേത്തിയനണവസം മമാചനേജജ്ടമനത്തിടന ചവരജ്പത്തിരത്തിയമാത
19. Planning and controlling are in separable twins of Management.
Explain the relationship between the two ഇരടകളമാണജ്. ഈ രണ്ടു ധർമങ്ങൾ തമ്മത്തിലുള്ള ബനസം വത്തിശദജീകരത്തിക്കുക.
20. സമാമതത്തിക തജീരുമമാനേസം എടുക്കുക എന്നതജ് ഒരു ഫത്തിനേമാൻഷക്ഷ്യൽ മമാചനേജരുടടെ

20. Taking financial decision is the key function of financial manager. പധമാനേ പവർതനേമമാണജ് ഒരു ഫത്തിനേമാൻഷക്ഷ്യൽ മമാചനേജർ എടുക്കുന്ന മൂന്നജ് പധമാനേ
State the three important financial decisions taken by a financial സമാമതത്തിക തജീരുമമാനേങ്ങൾ ഏടതലമാസം ആണജ്
manager
21. write any three differences between marketing and selling. 21. വത്തിൽപ്പെനേയുസം വത്തിപണനേവസം തമ്മത്തിലുള്ള ഏടതങത്തിലുസം മൂന്നജ് വക്ഷ്യതക്ഷ്യമാസങ്ങൾ
എഴുതുക
IV. 22 മതൽ 26 വരരയള ഏരതങങലല 4 ചചചദദങൾ‌ക ക ഉതരല എഴതക

IV. Answer any Four questions from 22 to 26. Each carries 4 Score ഉതരല നൽകക. ഓചരചനങനല 4 ചസചർ വവതല. (4x4=16)
(4x4=16)
22. Mr Anil working as a sales Department Head in X Y Z Ltd. 22. X Y Z ലത്തിമത്തിറഡത്തിൽ വത്തിൽപ്പെനേ വത്തിഭമാഗസം തലവനേമാണജ് ശ്രേജീ അനേത്തിൽ
a) Name the level of management he is working a) ശ്രേജീ അനേത്തിൽ പവർതത്തിക്കുന്ന മമാചനേജജ്ടമനത്തിടന തമാളസം ഏടതന്നു തത്തിരത്തിച്ചറത്തിയുക
b) List out any three functions performed by him
b) അചദ്ദേഹസം നേത്തിർവഹത്തിക്കുന്ന ഏടതങത്തിലുസം മൂന്നജ് ധർമങ്ങൾ പടത്തികടപ്പെടുത്തുക
23. “For the success of an enterprise environmental scanning is
Inevitable.” 23. "ഒരു ബത്തിസത്തിനേസത്തിടന പരത്തിസ്ഥത്തിതത്തി പഠനേസം ആ സ്ഥമാപനേതത്തിടന
State any four benefits having good understanding of business വത്തിജയതത്തിനേജ് അനേത്തിവമാരക്ഷ്യമമാണജ്." ബത്തിസത്തിനേസജ് പരത്തിസ്ഥത്തിതത്തിയുടടെ ആഴതത്തിലുള്ള
environment. അറത്തിവജ് ബത്തിസത്തിനേസത്തിനേജ് നേൽകുന്ന ഏടതങത്തിലുസം നേമാലജ് ഗുണങ്ങൾ പടത്തികടപ്പെടുത്തുക
24. List out the important steps involved in the process of organising
24. സസംഘമാടെനേ പകത്തിയയത്തിടല പധമാനേ ഘടങ്ങൾ പടത്തികടപ്പെടുത്തുക
25. State and explain any four factors which affect the capital 25. ഒരു കമനേത്തിയുടടെ മൂലധനേ ഘടെനേടയ ബമാധത്തിക്കുന്ന ഏടതങത്തിലുസം നേമാലജ്
structure of a company ഘടെകങ്ങൾ വത്തിശദമമാക്കുക.
26. ഏടതങത്തിലുസം നേമാലജ് ഉപചഭമാക്തൃ അവകമാശങ്ങൾ സസംകത്തിപമമായത്തി
26. Briefly explain any four consumer rights
വത്തിശദജീകരത്തിക്കുക
V. Answer any 3 questions from 27 to 30. Each carries 5 Score V. 27 മതൽ 30 വരരയള ഏരതങങലല 3 ചചചദദങൾ‌ക ക ഉതരല എഴതക
(3x5=15) ഉതരല നൽകക. ഓചരചനങനല 5 ചസചർ വവതല. (3x5=15)
27. Identify the management principles state in the following cases.

27. തചരഴപറയന സനർഭങളങരല മചചനരജനക തതതങൾ തങരങചറങയക. i)
i) One head and one plan for a group of actions having the same
objective ഒചര ലകദചതചരടയള ഒര കടല പവർതനങൾകക ഒര തലവല ഒര
ii) The communication from top to bottom should follow the official പദതങയല മചതമചയങരങകണല
line of command ii) ചമൽതടങൽ നങനല കവഴക തടങചലകള ആശയവങനങമയല ഔചദദചഗങക
iii) kindliness and justice in the behaviour of managers towards the ആശയവങനങമയ ശലഗലകക അനസരങചചയങരങകണല
subordinates.
iii) കവഴചദദചഗസചരചടള മചചനജർമചരരട രപരമചറതങൽ ദയയല നവതങയല
iv) One subordinate should receives orders from one superior at a
time ഉണചയങരങകണല .
v) Eeverything have a place and everything must be in its place iv) ഒര സമയല ഒര കവഴചദദചഗസൻ ഒര ചമലചദദചഗസനങൽ നങനക മചതചമ
ആജകൾ സതവകരങകചവ
v) എലചതങനല ഒര സചനമണക, എലചല അതങരന സചനതക ആയങരങകണല
28. Briefly explain the important steps involved in the process of
planning
28. ആസതണ പകങയയങൽ ഉൾരപടങരങകന പധചന ഘടങൾ സലകങപമചയങ
വങശദവകരങകക
29. Financial planning is an important part of overall planning of every
29. എലച ബങസങനസക സചപനതങരനയല ആസതണതങരന ഒര പധചന
business Enterprises list out the importance of financial planning in an
ഭചഗമചണക സചമതങക ആസതണല. ഒര സചപനതങരല സചമതങക
organisation
ആസതണതങരന പചധചനദല പടങകരപടതന.
30. Match the following. 30. ചചരലപടങ ചചർകക
A B
1 Promotion A Classification of products A B
ഉൽപ്പെന്നങ്ങളടടെ വർഗജീകരണസം
2 Branding B Physical movement of goods 1 ചപചതചഹനല A
2 ബചൻഡങലഗക B ചേരക്കുകളടടെ ഭനൗതത്തികമമായ മമാറസം
3 Grading C Advertising
3 തരലതങരങകൽ C പരസക്ഷ്യസംടചേയൽ
4 Physical distribution D Product differentiation
5 Transportation E Channel of distribution 4 വങതരണല D ഉൽപ്പെന്നങ്ങടള ചശ്രേണത്തിയത്തിലമാക്കുക
5 ഗതചഗതല E വത്തിതരണ ചേമാനേൽ
VI. 31 മതൽ 33 വരരയള ഏരതങങലല 2 ചചചദദങൾ‌ക ക ഉതരല എഴതക

VI. Answer any 2 questions from 31 to 33. Each carries 8 Score ഉതരല നൽകക. ഓചരചനങനല 8 ചസചർ വവതല. (2x8=16)
(2x8=16)
31. List out and explain the important steps involved in selection 31. ജവവനകചരരട തങരരഞടകൽ പകങയയങൽ ഉൾരപടങരങകന പധചന
process. ഘടങൾ പടങകരപടതങ വങശദവകരങകക.
32. With the help of a diagram briefly explain the different elements 32. ഒര ചരഖചചങതതങരന സഹചയചതചരട ആശയവങനങമയ പകങയയരട
of communication process വങവങധ ഘടകങരള സലകങപമചയങ വങശദവകരങകക .
33. ഒര സചപനതങൽ ഉപചയചഗങകന രണക പധചന വങൽപന ചപചതചഹന

33. The two important promotional tools used by an organisation are മചർഗങളചണക പരസദവല വദകങഗത വങൽപനയല
advertising and personal selling a) പരസദതങരനയല വദകങഗത വങൽപനയരടയല ആശയല ഹസതമചയങ
a) Briefly explain the concept of advertising and personal selling വങശദവകരങകക
b) പരസദവല വദകങഗത വങൽപനയല തമങലള ഏരതങങലല നചലക
b) State any four difference between advertising and personal വദതദചസങൾ പറയക
selling
Plus Two
BUSINESS STUDIES
Part-2
(Chapters 9,11 & 12)
Examination Help File -2023
Short but Complete Note
Expected Questions (Unofficial)
Chapter wise Weightage (2023)
Wish You all success
“Nothing can stop you from reaching your goals as long as you
work hard. Your goals are simply dedication and determination
away”
Prepared By:
Binoy George, HSST, MKNM HSS, Kumaramangalam, Thodupuzha
N
Question Paper Design
Weightage to Units
Name of the Subject : Business Studies
Year : Second
Sl No Unit Score Score %
1 Nature and significant of management 7 6.7
2 Principles of management 9 8.6
3 Business environment 6 5.8
4 Planning 8 7.8
5 Organising 7 6.7
6 Staffing 12 11.5
7 Directing 14 13.5
8 Controlling 6 5.8
9 Financial Management 13 12.5
10 Marketing 17 16.3
11 Consumer protection 5 4.8
Weightage to Type of Questions
Sl No Question Pattern Score Score %
1 Objective type questions 16 15
2 Descriptive type questions 88 85

+2 Business Studies Chapter-9 Short Note with expected questions
this chapter-
Financial Management (Short Note) 13 Scores
Finance is needed to establish a business, to run it, to modernise it, to expand, or

diversify it. Finance is required to buy various assets, to meet the day-to-day expenses
of the business etc. Availability of adequate finance is essential for the smooth
functioning of the business. Without finance neither any business can be started nor
successfully run. That is why finance is called the life blood of the business.
Financial Management
Financial management is concerned management of flow of funds and involves

decisions related to procurement of funds, investment of funds in long term and short
term assets and distribution of earnings to owners. It is a science of money
management. The primary aim of financial management is to maximise
shareholders’ wealth.
Importance of Financial Management

1. Estimate size of the total financial requirements
It is the duty of the financial manager to decide how much fund needed to start
a business. Over and under estimation will adversely affect the working of a
firm.
www.binoygeorge.blogspot.org 1 Binoy George(24-02-2023)

2. Decide the size and composition of fixed assets.

The amount and type of fixed asset investment is decided by the financial
manager.
3. Decide the size and composition of current assets.
The quantum of current assets and its breakup into cash, inventory and
receivables are also influenced by financial management decisions.
4. Decide the sources of funds
Companies raise adequate finance from different sources. Some of them are
owners fund and others are borrowed funds. It is the duty of the financial
management to take appropriate decision in this regard.
Finance Function/ Financial Decisions

Financial management is concerned with taking three important financial decisions
namely, investment decision, financing decision and dividend decision.
1. Investment decision
2. Financing decision
3. Dividend decision
I. Investment Decisions
The investment decision relates to how the firm’s funds are invested in different
assets. The decision may relate to investment in assets which are long term or short
term.The decision of investing funds in the long term assets or fixed assets like plant
and machinery, land and building etc is known as Capital Budgeting. The decision
of investing fund in current assets or short term assets is termed as Working Capital
Management.
Capital Budgeting
A long-term investment decision is known as Capital Budgeting. It involves long
term investment decision such as purchase of new machinery, replacement of
machinery, new plants, introduction of new products etc. These decisions involve
huge amount of investment, affect the earning capacity and are irreversible except at
a high cost.
Features of capital budgeting:
➢ Huge Funds
➢ High Degree of Risk
➢ Difficult Decision
➢ Long Term Effect

➢ Irreversible Decision
Factors affecting capital budgeting / long term investment decisions

There are certain factors which will affect capital budgeting decisions:
1. Cash flow of the project

Cash flows should be carefully analysed and evaluated before making a capital
budgeting decision.
2. The rate of return
The most important criterion is the rate of return of the proposed project. These
calculations are based on the expected returns from each proposal and the
assessment of the risk involved.
3. Risk Involved
The degree of risk involved in each project should be assessed before making
a long term investment.
4. Investment criteria involved
There are different capital budgeting decisions techniques to evaluate
investment proposals. These techniques are Net Present Value, Discounted
Cash Flow, Payback Period Method etc.
5. Competitive Strategy
Competitors strategy is also an influencing factor while taking long term
investment decisions .
6. Demand Forecast
Analysis of demand for a long period must be undertaken before capital
budgeting decision.
II. Financing Decision
Financing decision relates to the quantum of finance to be raised from various
long-term sources. Mainly there are two sources of funds
1. Owners Fund
2. Borrowed Funds.
Owners’ funds consists of equity capital and retained earnings. Borrowed

funds are in the form of debentures and other forms of debts like loans, bonds
etc. The financial manager has to decide the proportion of funds to be raised
from either sources, based on their basic characteristics.
Factors Affecting Financing Decisions

The financing decisions are affected by various factors. Important among them
are as follows:
1. Cost
The costs of raising funds through different sources are different. The finance
manager always prefers the source with minimum cost.
2. Risk
The risk associated with each of the sources is different. More risk is associated
with borrowed fund as compared to owners fund.
3. Floatation Cost
Higher the floatation cost, less attractive the source. Floatation cost involves
brokers commission, underwriters commission, expenses on prospectus etc.
4. Cash Flow Position of the Company
A stronger cash flow position may make debt financing more viable than funding
through equity.
5. Fixed Operating Costs
If a business has high fixed operating costs (e.g., building rent, Insurance
premium, Salaries, etc.), It must reduce fixed financing costs.
6. Control Considerations
Issues of more equity share may lead to dilution of management’s control over
the business. Companies afraid of a takeover bid would prefer debt to equity.
III. Dividend Decision
Dividend decision is related with the distribution of dividend. Dividend is that
portion of profit which is distributed to shareholders. The decision involved here
is how much of the profit earned by company (after paying tax) is to be
distributed to the shareholders as dividend and how much of it should be
retained in the business.
Factors Affecting Dividend Decision
1. Amount of Earnings
Dividend is paid out of current and past earning. Therefore, earnings are a
major determinant of the decision about dividend.
2. Stability of Earnings
If a company has stable earnings, it will provide high dividends to its
shareholders.
3. Growth Opportunities
Companies having good growth opportunities retain more money out of their
earnings so as to finance the required investment. The dividend in growth
companies is, therefore, smaller, than that in the non– growth companies.

4. Cash Flow Position

The payment of dividend involves an outflow of cash. Companies declare high
rate of dividend only when they have surplus cash.
5. Shareholders’ Preference
While declaring dividends, managements must keep in mind the preferences of
the shareholders in this regard.
6. Taxation Policy
If tax on dividend is higher, it is better to pay less dividend. So taxation policy of
government also influences dividend decision.
7. Stock Market Reaction
Rate of dividend and stock market reaction are directly related. Therefore,
management should take into account the impact of dividend policy on the
equity shareprice,while taking a decision about it
8. Access to Capital Market
Large and reputed companies generally have easy access to the capital market
and, therefore, may depend less on retained earnings to finance their growth.
9. Legal Constraints
Certain provisions of the Companies Act place restrictions on payouts as
dividend. Such provisions must be adhered to while declaring the dividend.
10. Contractual Constraints
While granting loans to a company, sometimes the lender may impose certain
restrictions on the payment of dividends in future.
CAPITAL STRUCTURE
Capital Structure is the combination of long-term sources of funds in a firm’s
capital. It represents the proportion of owners capital and debt capital in the total
capital of a firm. Owners’ capital consist of equity share capital, preference share
capital, retained earnings etc. Borrowed funds consists of loans, debentures,
public deposits etc.
Financial Leverage
The proportion of debt in the overall capital of a firm is called Financial

Leverage or Capital Gearing. When the proportion of debt in the total capital is

high then the firm is called highly levered firm but when the proportion
of debts in the total capital is less, then the firm will be called low levered firm.
Trading on Equity
In favorable financial leverage situation [Return on Investment (ROI) is higher than the cost of
debt] company’s often employ fixed cost securities such as debentures and
preference shares in the capital structure so as to increase the return on equity
capital. Such practice is called Trading on Equity.
Factors Affecting Capital Structure
Capital structure of an organization is affected by several factors. Some of the

factors affecting capital structure are:
1. Cash Flow Position

Cash flow position of a company is a very important factor that determines the capital
structure of a business. A company uses more debt if it can generate enough cash
inflows to pay interest on debts.
2. Cost of capital
Generally debt is a cheaper source of finance as compared to shares because

interest is a deductible expense. Cost of capital is an important factor that
determines the capital structure of a company.
3. Control
Further issue of equity share may dilute the control of existing equity share holders.
It may also consider while designing capital structure.
4. Floatation Cost
Floatation cost is the cost incurred by the company to issue different securities.
Floatation cost is an influencing factor that determines the capital structure.
5. Flexibility
Issuing debenture and preference shares introduce flexibility. A good financial
structure is flexible.

6. Stock Market Conditions
Conditions of the stock market also influence design of the capital structure. During
the boom, investors are ready to take a risk and invest in equity shares.
7. Interest Coverage Ratio

Interest Coverage Ratio is the number of times earnings before interest and taxes of a
company cover the interest obligation. High-Interest coverage ratio indicates that
company can have more of borrowed funds.
8. Return on Investment
It will be beneficial for a firm to raise finance through borrowed funds if the return on
investment is higher than the rate of interest on the debt. This situation is known as
favorable financial leverage situation.
9. Tax Rate
Since interest is a deductible expense, cost of debt is affected by the tax rate. A higher
tax rate, thus, makes debt relatively cheaper and increases its attraction than equity.
10.Risk consideration
Financial risk refers to a position when a company is unable to meet its fixed financial
charges namely interest payment, preference dividend and repayment obligations. If a
firm’s business risk is lower, its capacity to use debt is higher and vice-vers
11. Regulatory framework
Provisions of the Companies Act, SEBI guidelines etc are to be followed while
designing capital structure.
FINANCIAL PLANNING
Financial Planning is a vital part of Financial Management. Financial Planning is the

process of planning your finance for future. Financial planning is the plan needed for
estimating the fund requirements of a business and determining the sources for the
same.
Importance of financial planning
1. It helps the company to prepare for the future

Financial planning forecast what may happen in future under different business
situations. In other words, it makes the firm better prepared to face the future.

2. Helps in coordination
Financial planning makes possible a closer cooperation between various
departments of the firm.
3. Helps in avoiding business shocks and surprises
By anticipating the financial requirements financial planning helps to avoid
shock or surprises which otherwise firms have to face in uncertain situations.
4. Base for Financial control
Financial planning act as base for checking the financial activities by comparing
the actual revenue with estimated revenue and actual cost with estimated cost.
5. Reduce wastage
Detailed plans of action prepared under financial planning reduce waste,
duplication of efforts, and gaps in planning.
6. Ensuring Liquidity
Financial planning maintains the balance between inflow and outflow of funds
and ensure liquidity of funds throughout the year
Fixed Capital
The capital invested in fixed assets like land and building, plant and machinery,
furniture and fixtures etc is known as fixed capital or block capital. Managing fixed
capital is related to investment decision and it is also called capital budgeting.
Importance of Fixed Capital Management/ Capital Budgeting

Capital budgeting decisions are very important because of the following reasons:
1. Large amount of fund involved
Purchase of fixed assets involve huge amount of fund. Therefore detailed analysis
should be undertaken before such decisions.
2. Long Term Investment
Investment in fixed assets is for a long period and brings return in future.Thus, this
investment is also known as block capital.
3. Irreversible in nature
These decisions once taken are not reversible without incurring heavy losses.

4. Risk involved
Fixed capital decisions are full of risk because of two reasons-these refer to a long
period and secondly involve huge investment. As such expected profits for several
years are to be anticipated and these estimates may turn out to be wrong.
Factors affecting the Requirement of Fixed Capital

Some of the factors affecting the requirement of fixed capital are as follows:
1. Nature of business
The nature of business determine how much fixed capital is required.eg,a
manufacturing concern needs more fixed capital as compared to a trading concern.
2. Scale of operations
A larger organization operating at a higher scale needs bigger plant, more space
etc.and therefore requires more fixed capital as compared to small organization.
3. Technique of production
Companies using capital intensive techniques require more fixed capital.
4. Growth prospects
Higher growth of an organization at present as well as anticipated future requires
higher investment in fixed assets and they require larger fixed capital.
5. Diversification
When a firm diversifies its activities, requirements of fixed capital will increase. It
requires more investment in fixed assets for the new project.
6. Technology up gradation
In certain industries, assets become obsolete very soon. So they require more fixed
capital to replace old fixed assets like machinery, computers etc.
7. Financing alternatives
An enterprise which procures fixed assets on lease requires lesser fixed capital than
on outright purchase.
8. Level of collaboration
By collaborating with others, some firms uses another’s facility or jointly establishes
a facility for common use. Such collaboration reduces the investment in fixed assets
for each one of the participants.
Eg..Banks share ATM facility, Telecom companies mobile tower sharing etc

Working Capital
The capital invested in current assets like stock, debtors, bills receivables, short term
securities, cash and bank balance for meeting day to day expenses is known as working
capital. It represents investment for a short period and changes its form from time to time.
These assets are expected to get converted into cash or cash equivalents within a period of
one year. These provide liquidity to the business. Insufficient investment in current assets
may make it more difficult for an organisation to meet its payment obligations.
Factors affecting the Requirement of working capital

1. Nature of business
The basic nature of a business influences the amount of working capital required.
2. Scale of operations
There is direct link between the working capital and scale of operations. Big
organizations requires more working capital as compared to small organizations.
3. Business cycle
Different phases of business cycle influence the requirement of working capital. In
boom period organization requires larger amount of working capital as compared to
depression period.
4. Operating Cycle
The amount of working capital directly depends upon the length of operating cycle. If
operating cycle is long then more working capital is required and vice versa.
5. Seasonal factors
Some business is seasonal in their operations. In peak season, due to higher level of
activity more amount of working capital will be required.
6. Credit allowed
Those enterprises which sell goods on cash basis need little working capital but those
who provide credit facilities to the customers need more working capital.
7. Credit availed
A business may get credit facility from suppliers of goods. More the credit facility,
lesser would be the requirement of working capital.

8. Availability of raw materials

If raw materials required for the business are available freely and regularly, a firm
needs to maintain only lesser amount of working capital.
9. Reorder period
Time gap between placement of order and receipt of raw materials is relevant. Longer
the reorder period, larger shall be the amount of working capital requirements.
10. Level of competition

In order to face competition, more stock is required . So requirements of working
capital is also high.
11. Inflation
Inflation leads to rise in price. In such a situation more capital is required than before
in order to maintain the previous scale of production and sales
Chapter-9
Financial Management
1. The primary aim of financial management is…………
a. Profit maximization b. wealth Maximization c. Capital budgeting d. None of
these
Ans: Wealth Maximization
2. Select the wrong pair from the following:
a. Interest – debenture
b. Building – Working Capital
c. Mix of debt and equity – Capital structure
d. Dividend - Share Capital
Ans: b. Building – Working Capital
3. Long term investment decisions are also called……….
a. Working capital decisions b Dividend decisions c. Financing decision d. Capital
budgeting decision Ans: Capital budgeting decision
4. Mr. Joseph is appointed as the Finance Manager of Venus Exporting Company Ltd. As
the Finance Manager, point out two important decisions he has to take.
Ans: Investment decision, Finance decision, Dividend decision.
5. Zero working capital means
a. Current asset > Current Liability
b. Current asset = Current Liability
c. Current asset - Current Liability
d. Current asset < Current Liability
Ans: b. Current asset = Current Liability
6. The cheapest source finance is…………….

a. Debenture b. Preference share c. equity share d. Retained earnings
Ans: Retained earning
7. What is fixed capital?
The capital invested in fixed assets like land and building, plant and machinery,
furniture and fixtures etc.are known as fixed capital or block capital
8. Which capital is mentioned in the following statements?
a. Investment in long term assets
b. Investment in short term assets
Ans: a. Fixed Capital, b. Working capital
9. What is meant by capital structure? (2 Score)
Capital Structure is the combination of long-term sources of funds in a firm’s capital.
It represents the proportion of debt capital and equity capital in the total capital of a
firm.
10. Give the meaning of ‘Investment decision’ and ‘Dividend’ decision. (5 Score)
Investment decision: The investment decision relates to how the firm’s funds are
invested in different assets. The decision may relate to investment in assets which are
long term or short term. The decision of investing funds in the long term assets
is known as Capital Budgeting and current asset is known as Working
Capital Management.
Dividend decision: Dividend decision is related with the distribution of dividend.
Dividend is that portion of profit which is distributed to shareholders. The decision
involved here is how much of the profit earned by company (after paying tax) is to be
distributed to the shareholders as dividend and how much of it should be retained in
the business.
11. ‘It is the capital required for meeting the permanent or long term needs of the
businesses’.
a. Identify it
b. Explain briefly the factors determining it? (8 Score)
12. What is working capital? What are the factors affecting requirements of working
capital? (Any 5) (8 Score)
13. What is dividend decision? Explain any five factors affecting this decision?
14. What is meant by capital budgeting? Explain in brief, the factors that determine the
capital budgeting decision of a firm. (8 score)
15. Capital structure is the ratio between owned capital and borrowed capital. Several
factors to be considered in determining an appropriate capital structure of a business.
Explain about the various factors that affect the capital structure decisions. (8 Score)

OR
Q. "It refers to the mix or components of long-term sources of funds"
(a) Identify the concept referred above.
(b) What are the factors to be considered while determining capital structure?
(March 2009)
16. Explain the concept Trading on equity?

Trading on Equity: In favorable financial leverage situation [Return On Investment (ROI) is
higher than the cost of deb] company’s often employ fixed cost securities such as debentures
and preference shares in the capital structure so as to increase the return on equity
capital. Such practice is called Trading on Equity.
17. The main source of finance of K.K.Ltd. is Equity Capital of 8,00,000. The company also
uses fixed interest bearing sources of debentures of 3,00,000 and long-term loans of
2,00,000 with an intention to enhance the return to equity shareholders. Identify the
concept of Financial Management used in this context.
Ans: Trading on equity


+2 Business Studies,Chapter-11 Short Note and Expected Questions
Chapter-11
Weightage to
Marketing this chapter -

17 Scores
Marketing
Marketing is a process through which goods and services exchange from producers to
consumers in such a way that maximizes the satisfaction of consumer needs. It involves
efforts to discover the needs and wants of customers and tries to develop products and
services which would satisfy them.
Features of marketing
Marketing is the process through which goods and services move from concept (Idea)
to customer.
1. Needs and Wants
Marketing is the process of fulfilling the needs and wants of the consumers.
2. Creating a Market Offering
It refers to providing complete information about the product like price, size, availability
etc.
3. Customer Value
Buyers take a buying decision based on their view about the value of a product or service in
satisfying their needs. So what is needed on the part of the marketer is that of adding value to
the product.
4. Exchange Mechanism
Literal meaning of marketing is exchanging things. Marketing has two sides-buyer and seller.
The seller gives goods and services and in exchange the buyer gives money or something
equivalent to it.
Difference between Selling and marketing
Generally people consider selling and marketing as synonymous of each other. But
actually two are different concepts. Selling is just a part of marketing activities.
Marketing is a wider term, it includes sales also.
www.binoygeorgeonline.blogspot.org 1 Binoy George(25-02-2023)

Distinction between selling and marketing
Point of Selling Marketing

Differences
Process Selling process starts after Marketing involves efforts to discover

production and it is concerned with the needs and wants of customers
transfer of goods from sellers to and tries to develop products and
consumers. services which would satisfy them.
Objective Maximize profit through sales Maximize profit through customer

volume satisfaction
Start and Selling starts after production and Marketing starts much before
end ends with the sales production and continuous even after
sale
Strategies Selling involves efforts like Marketing involves efforts involving

promotion and influence strategies in respect of product
promotion ,pricing and physical
distribution
Focus Focuses on seller’s needs Focuses on customer’s needs
Supremacy In selling process producer is the In marketing process consumer is the

king king
Demand It creates demand for the product Demand is created by producing

creation through advertisement and sales product according to the needs of
promotion measures. consumers.
Scope Scope of selling is limited; it is only a Scope of marketing is wider; it consists

part of marketing. of number of activities. It includes sales
also.

Marketing Management
Marketing management is a functional area of management concerned with planning,

organizing, directing and controlling the activities related to the marketing of goods and
services to satisfy the customers’ wants.
According to Philip Kotler ”marketing management as the art and science of choosing
target markets and getting, keeping and growing customers through creating, delivering
and communicating superior customer value management”
Functions of Marketing
1. Identify Consumer Needs
Most important function of marketer is to gather and analyse market information. This will
help to identify the needs of customers.
2. Marketing Planning
Another important activity or area of work of a marketer is to develop appropriate

marketing plans so that the marketing objectives of the organization can be achieved.
3. Product designing and Development
The next target is to develop products according to the needs of the consumer.
4. Standardisation and Grading
Standardisation refers to producing goods of predetermined specifications such as quality,

price, packaging etc., which ensures uniformity in products. This will facilitate purchasing
by description. Grading is the process of classifying products into different classes on the
basis of some characteristics such as quality, size, weight etc.
5. Packing and Labeling
Packaging and labeling are considered as the pillars of marketing. They are not only to
protect and identify the goods but are great marketing tools.

6. Branding
Branding is the process of giving a name, sign, symbol or design used to identify the
products of one firm and to differentiate them from those of the competitors.
7. Setting up Customer Support Services
In present day marketing, customer is the king. So developing customer support services
such as handling customer complaints, after sale services, technical support etc.are very
important function in marketing.
8. Pricing
The price of a product will largely determine its success or failure. Pricing is also an
important function of marketing.
9. Promotion
There are four major promotion methods – advertising, personal selling, sales promotion
and publicity. It is an important function of marketing to set the best promotion mix.
10. Physical Distribution
Another important function of marketing manager is making plans regarding distribution

of goods. Physical distribution includes decisions like choice of channel of distribution,
maintaining inventory, storage, ware house etc.
11.Transportation
The marketing manager must analyse its transportation needs after taking into account
various factors such as nature of the product, cost and the geographical boundaries of its
market.
Marketing Mix (Elements of marketing/ 4 P’s of marketing)

Marketing mix is a set of four decisions which needs to be taken before launching any
product. It refers to the set of actions, or tactics, that a company uses to promote its
brand or product in the market. The 4Ps make up a typical marketing mix - Price,
Product, Promotion and Place. The four basic elements of marketing mix are inter-
related and inter-dependent.

Elements of Marketing Mix(Four Ps of marketing)

The four main elements of marketing mix are:
➢ Product mix
➢ Price mix
➢ Place mix
➢ Promotion mix
1.Product Mix: Product means goods or services or anything of value, which is offered
to the market for sale. Product mix is the most important component of marketing mix,
which involves planning, developing and producing the right type of goods and services
needed by the consumer. The most important factor influencing the success of a product
is the quality of the product itself
2. Price mix: Price refers to the value that is put for a product. Price of a product
depends on costs of production, ability of the market to pay, competition etc. Price is
the crucial element of marketing mix because customer is very sensitive to this element.
3.Place mix
Place mix constitutes taking decisions regarding how the product will be available for
the customers for the actual sale. There are two important decisions relating to this
aspect.
a. Decision regarding channel of distribution- It decides whether goods are to be

marketed through wholesalers, retailers, own branches or any other way
b. Decision regarding physical movement of goods, i.e, logistic management.
4. Promotion mix:
It involves all activities concerned with informing the consumers about a product and
persuading them to buy the product. Such activities include (1) Advertising (2)
Personal selling (3) Sales promotion (4) Publicity.
Nature and Classification of products
Product means goods or services which are offered to the market for exchange.
Products may be broadly classified into two-
(1) Consumer products
(2) Industrial products. These can be further classified as follows:

I. Consumer Products
Consumer products are those products which are purchased by the ultimate
consumers for satisfying their personal needs. Consumer goods are ultimately
consumed, rather than used in the production of another good.
Examples-Soap, Shoes, TV, Tooth pastes etc.
The consumer products can be further classified on the basis of two important factors:
(A) Durability of the product
(B) To the extent of shopping efforts involved.
A. On the basis of durability of the product

On the basis of their durability, the consumer products can be classified into three
categories— Durable, Non-durable and Services.
➢ Durable products:-The goods which are used for a longer period of time are known
as durable goods.
For example, refrigerator, washing machine, radio, etc.
➢ Non-durable products:- Those consumer goods which are normally consumed in
one or few uses are called non-durable goods.They are purchased very frequently.
Example toothpaste, soap, books, pen etc.
➢ Services: - Services are intangible in form. By services we mean those activities,
benefits or satisfactions, which are offered for sale.
Example.Dry cleaning, watch repairs, hair cutting, postal services, services offered
by a doctor, an architect and a lawyer.
B. On the basis of shopping efforts involved
➢ Convenience Product:-Convenience product are those consumer products that
people usually purchase frequently, immediately and with less purchasing efforts
are called convenience products.
Examples.Soap, bread, match box ,toothpaste ,magazines, pen, ice cream etc.

➢ Shopping products: - Shopping products are those consumer goods, in the

purchase of which buyers devote considerable time, to compare the quality, price,
style, suitability, etc., at several stores, before making final purchase.
Examples of shopping products are clothes, shoes, jewellery, furniture, radio,
television, etc.
➢ Specialty Products: - Specialty products are those consumer goods which have
certain special features because of which people make special efforts in their
purchase. These products are costly and their unit price is very high, the demand
for these products is relatively inelastic
Example- rare collection of art works, painting etc.,
Characteristics of the specialty products
2. Industrial Products
Industrial products are those products, which are used as inputs in producing
other products.
Examples: engines, lubricants, machines, tools, etc.
Classification of Industrial goods
Important components of Product Mix
A. Branding:
A brand is the identification of a product. It can be in the form of name, symbol, design
etc.Examples Close-up, Colgate, Fruity, Bata etc.The process of giving a name or a
symbol to a product is called branding. Branding helps in identifying and
distinguishing ones product from the competitor’s products.
Various terms related to branding are:

1) Brand: A brand is the identification of a product it can be in the form of name,

symbol or both etc.Eg Nike,Close-up,Pepsi etc.
2) Brand Name: The part of the brand which can be spoken is called brand
name, it is the verbal part of a brand. Example HYUNDAI
3) Brand Mark: The part of the brand which can’t be spoken but can be
recognized is known as brand mark.Example Red & Blue ball of Pepsi,logo of
Hyundai,logo of apple’s etc.
4) Trade Mark: Trade mark is a legal version of a brand. When a brand gets registered
and legalized it is called trade mark.
.
Features of a good brand name

While selecting a brand name attention must be paid to the following:
1. Brand name should be short and simple: The brand name should be short and
simple. Example Pepsi,Lux,Fanta,Innova etc
2. Suggest product’s benefits: A brand name should suggest the product’s benefits
and qualities. Example ‘Ujala’ suggests brightness, Reliance etc.
3. The brand name should be unique and distinctive: The brand name should be
unique and should not lose its identity. Example Vicks,Jeep,Lux etc
4. Meaningful: The brand name should be meaningful from the view points of other
languages and culture.
5. Legal protection: The brand name should be capable of being registered and
protected legally.
Advantages of branding- To Manufacturers

Branding a product helps manufacturers in the following ways.
1. Helps in making product differentiation: Branding helps a firm in distinguishing its

product from the products of competitors.
2. Helps in advertising: With the brand name advertising become more effective.
3. Easy introduction of new products: The companies which use their company’s
name as brand name can easily introduce new product into the market.
4. Differential pricing: With established brand name a firm can easily charge high
price for its products as compared to competitor’s products.
Example: prices of i Phone, price of BMW cars
Advantages of branding-To Customers

Branding a product helps consumers in the following ways.

1. Helps in identification of products: Branding helps the customers to select the
products easily.
2. Status Symbol: Now a day’s use of branded goods adds to the status of customers
and adds to their confidence level.
Example Uses of BMW car, i phone,Parker pen, RADO watch etc.
3. Ensures Quality: Branding ensures a certain level of quality of the product. It create
confidence in the mind of consumers and helps increasing the level of satisfaction.
B.Packaging
Packaging is the process of designing and producing appropriate wrapper, container or
bag for the product. Packaging plays an important role in the marketing success or failure
of products. Packaging is essential for displaying necessary information regarding a
particular product. Packaging used as a promotional tool. Sometimes, it works even
better than advertising.Package acts as a silent salesman.
Different levels of packaging

There can be three different levels of packaging. They are:
1) Primary packaging – It refers to the product’s immediate container. Example tooth

paste tube.
2) Secondary package – It refers to additional layers of protection that are kept till the
product is ready for use. Example toothpaste tube usually comes in a card board
box.
3) Transportation package – It refers to further packaging of products necessary for
storage and transportation.
For example a tooth paste manufacturer may send the goods to retailers in corrugated
boxes containing 20 or 100 units.
Functions / Importance of Packaging

1. Product Protection –. Packaging protects the product from sun, rains, moisture,
insects etc.
2. Product identification – With the help of packaging customers can easily identify a
product.
3. Facilitating the use of the product –Proper package is helpful to handling and using
the product to consumers.
Example Shampoo package, shaving cream package etc.
4. Product Promotion – Beautiful packages attract the consumers.
5. Rising the standard of health – Packaging helps in preventing adulteration as the
product is properly packed.
6. Product Differentiation – Packaging creates product differentiation.

C.Labelling
Labelling means putting identification marks on the package. It provides information like
name of the product, name of the manufacturer; weight, price etc.
Functions performed by label

1. Describe the product and specify its contents – One of the most important
functions of labels is to describe the product, its usage, manufacturing and expiry
dates, price etc.
2. Identification of the product or brand – The label helps the customers to identify
the product
3. Helps in grading – With the help of label products can be graded in different
categories. For example milma’s milk packets in different colours.
4. Promote sales – Attractive and colorful labels attract customer and induce him to
buy the product.
5. Providing information required by law – Labelling also provides information
required by law.
Eg statutory warning on the packet of cigarettes.
Pricing
Price refers to the value that is put for a product. It depends on costs of production,
segment targeted, ability of the market to pay, competition and other direct and indirect
factors. Price is the crucial element of marketing mix because customer is very
sensitive to this element. Little variation in the price may shift your customer to
competitor’s product.
Factors affecting price determination
1. Cost of the product – The price of the product is affected by its cost. The price must
cover all production cost and fair return of profit.
2. Extent of competition in the market – When a firm does not face any competition
then it can enjoy complete freedom in fixing the price.
3. Customer demand – If the demand of the product is inelastic the marketer can charge
higher price without much loss of the market demand.
4. Government and legal regulation –The firm will have to follow the price policy of the
government.
5. Objective of the firm –If the objective of company is profit maximization, then
generally high price is fixed whereas the companies having the objective sales
maximization prefer low price to increase the sales and capture a big share in the
market.
6. Marketing methods used – Price determination is also affected by the distribution
system, quality of salesmen employed, the type of packaging etc..
Pricing strategies

Broadly there are two pricing strategies. They are:-
• Price skimming
• Penetration pricing
1. Price skimming – Under this strategy a high introductory price is charged for an
innovative product and later on the price is reduced when more companies enter the
market with same type of product.
2. Penetrating pricing – This strategy means using lower initial price to capture a large
market. Penetration pricing is attractive when price elasticity of demand is high and
easy substitutes of that product are available..
Place Mix/ Physical Distribution of Goods

Place mix refers to important decisions related to physical distribution of goods and
services.In case of physical distribution, there are two important decisions relating to
this aspect:
1. Regarding channels of distribution
2. Regarding physical movement of goods.
1. Channels of distribution
Channels of distribution refer to the team of merchants, agents, and business
institutions who help in the physical movement of goods from the place of production
to the place of consumption. Channels of distribution make shopping easy for
consumer . The common type of channels of distributions are, wholesaler and retailer.
Functions of Distribution Channels

1. Sorting
Middlemen procure goods from various manufactures and then repack them
according to quality, size or price.
2. Accumulation
This function involves accumulation of goods into larger homogeneous stocks, which
help in maintaining continuous flow of supply.
3. Variety
Middlemen produce goods from various manufactures and assemble them at one
place. They provide variety to consumers.
4. Allocation
Allocation involves breaking homogenous stock into smaller, marketable lots.
5. Promotion
Promotion techniques are generally used by producers but middlemen also offer some
sales promotional tools to attract the customers.
6. Risk Taking
In the process of distribution of goods the merchant middlemen take title of the goods
and thereby assume risks on account of price and demand fluctuations, spoilage,
destruction, etc.

Types of Channels
The major types of channels are as follows:
1. Direct Channel (Zero Level)
2. Indirect Channels
I. Direct Channel (Zero Level)
The most simple and the shortest mode of distribution is direct distribution, where in
the goods are made directly available by the manufacturers to customers,
without involving any intermediary. This is also called zero level channels.
II. Indirect Channels
When a manufacturer use one or more intermediary to move goods from the point
of production to the point of consumption, the distribution network is called indirect.
This may take any of the following forms:
1. Manufacturer-Retailer Consumer (One Level Channel): In this form of
arrangement one intermediary i.e., retailers is used between the manufacturers and
the customers.
For example, Maruti Udyog sells its cars and vans through company approved
retailers. This type of distribution network enables the manufacturers to cover wide
area of market while retaining control over the Channels.
2. Manufacturer-Wholesaler-Retailer -Consumer (Two Level Channel): This is the
most commonly adopted distribution network for most consumer goods like soaps,
oils, clothes, rice, sugar and pulses. Here the wholesaler and retailer function as
connecting links between the manufacturer and consumer
3. Manufacturer-Agent-Wholesaler-Retailer-Consumer (Three Level Channel): In
this case, manufactures use their own selling agents who connect them with
wholesalers and then the retailers.
Factors Determining Choice of Channels
The choice of channels depends on various factors, which are discussed as follows:
1. Product Related Factors:
Following are the product related factors which help in deciding the channels of
distribution:
a) Value of product-If the unit value of the product is high, direct sales from
company is preffered.If product is less costly, longer channels are preferred.
b) Nature of Product- The customized product or product produced according to
the instruction of customers required direct marketing .
c) Perishable products- Direct selling is used for perishable products.
d) Product complexity- Technically complex product requires expert advice and
guidance so direct sale is preferred.
2. Company Related Factors:
The important company characteristics affecting the choice of channels of distribution
include the financial strength of the company and the degree of control it wants to
hold on other channel members.
a.) Finance
Direct selling involves lot of funds to be invested in fixed assets. If the firm has plenty
of funds it may go for direct distribution.
b.) Degree of control
If the management want to greater control on the channel members, short channels
are preferable.

3. Competitive Factors
The choice of channel is also affected by the channel selected by competitors in the
same industry.
4. Market Factors
The choice of channel is also influenced by market related factors. These factors are:
a. Nature of market- In case of industrial products, the number of buyers is small, short
channels are preferable.
b. Size of the market- If the numbers of customers are large then more intermediaries
are required and vice versa.
c. Geographical concentration- When buyers are concentrated in a limited area the
directing selling is preferred and vice versa.
d. Size of order- if the size of order is small, as in case of most consumer products,
large number of intermediaries may be used.
II. Physical Distribution (Logistic Management) of Goods

It is an important responsibility of the marketers to make the product physically
available at a place where the customers would like them to buy. The physical
handling and movement of goods from place of production to the place of distribution
is referred to as physical distribution.It is an important element of marketing mix.
Important activities involved in the physical distribution include transportation,
warehousing, material handling, and inventory control.
Components of Physical Distribution
The main components of physical distribution are explained as follows:
1. Order Processing:
Order processing means the time and steps involved between taking order from
customer and delivery of goods as per order. There is direct relation between the time
taken in order processing and satisfaction of customers .
2. Transportation:
Transportation adds value to the goods by moving them to place where they are
required. There are various means of transpiration available i.e. rail road, air, water,
pipeline etc.These modes are evaluated and compare on the basis of speed, flexibility,
cost, availability etc.
3. Warehousing
The company must compare the cost involved in using warehouse and the benefits.
4. Inventory control
Maintain inventory involves costs. The firm must compare the benefits of inventory
and the cost involved .On the basis of such evaluation, the business should maintain
optimum level of inventory.
Advertising
Adverting is the paid form of non-personal presentation and promotion of idea, goods
or services by an identified sponsor. Advertising provides information regarding
benefits, price, availability etc of goods and services. Common modes of
advertising are news papers, magazines, television and radio.
Features of adverting
1. Paid Form: Advertising is a paid form of communication. That is, the sponsor has
to bear a cost to communicate with customers.
2. Impersonality: There is no direct face to face contact between customers and the
advertiser. It is therefore, referred to as impersonal method of promotion.

3. Identified Sponsor: Advertising is undertaken by some identified individual or
company like Malayalamanorama, Asianet, Times of India etc.
Advantages of advertising
1. Creates demand – Advertising helps to create demand by making people aware of
new products and new uses of existing products.
2. Provides economies of scale – Advertising facilitates large scale production. Large
scale production, leads to low cost of production per unit.
3. Educates consumers and makes shopping easier – Advertising educates
consumers by providing useful information about the product. Advertising makes
shopping easier for them.
4. Facilitates introduction of new products
Advertising helps in introduction of new products by communicating the positive
features of newly introduced products.
5. Enhance customer satisfaction and confidence
Advertising media informs the consumers about the utility and uses of the product.
Improvement in the quality of the product – The manufacturers of advertised
goods go on improving their product, so that their reputation may be maintained in the
market.
6. Availability of the product at fair price – Advertising helps to increase sales and
thereby reduced cost of production.
7. Encouragement to press work – Regular advertisement helps the press in
reducing cost of publication.
Limitations of Advertising
Despite many benefits drawn from advertising, it suffers from a severe criticism
advanced by different segments of society.
1. Increased price of the product
Advertising increases the cost of the product as the expenses on it form the part of
the total cost of the product..
2. Multiplication of needs
Advertising creates artificial demand for the product and induces people to buy those
products which are not needed by them.
3. Harmful for the society
Sometimes advertisements are un-ethical. Most often, these carry indecent language
and virtually nude photographs in order to attract the customers. This adversely affects
the social values.

4. It leads to monopoly
Advertising sometimes leads to monopoly in a particular brand . By investing large

sums in advertising big producer eliminates small producers from the market. This
leads to exploitation of consumers.
5. Advertising may act against the freedom of press
Mass media earn huge income from advertisements. The press is often prevented
from reporting against advertising companies.
6. Small Businesses Have Restricted Access

Small businesses cannot properly advertise their products due to limited resources..
7. Advertising encourages unnecessary competition
There is a distinction between informative advertising and competitive advertising.

Competitive advertising is primarily meant to shift demand from one brand to another
brand. In this case the advertisement has not created any additional demand.
Therefore, such advertising is undesirable
Objections to Advertising
Though advertising is one of the most frequently used medium of promotion of goods
and services, it attracts lot of criticism.
1. Advertising increases cost
Advertising unnecessarily adds to the cost of product, which is ultimately passed on

to the buyers in the form of high prices.
2. Confuses the Buyers
Another criticism against advertisement is that so many products are being advertised
which makes similar claims .The buyer gets confused as to which one is true and
which one should be relied upon.
3. Encourages Sale of Inferior Products
Advertising does not distinguish between superior and inferior products and persuade
people to purchase even the inferior products.
Personal selling / Salesmanship

Personal selling means selling personally. This involves face to face interaction
between seller and buyer for the purpose of sale. Companies appoint sales persons
to contact prospective buyers and make them aware about the product and persuade
the customer to buy the product.

Features of personal selling
1. Personal Interaction – In personal selling the buyers and sellers have face to face
interaction.
2. Two way communications – In personal selling the sellers give information about
the product; at the same time the buyer get a chance to clarify his doubts. It is suitable
for sale of complex products where buyer wants to interact with the manufacturer.
3. Relationship – When the seller and buyer comes together this may improve
relationship between customer and seller.
4. Better response – When the seller is personally explaining the utilities of product to
the customers then customer do pay some attention and listen to the information.
5. Better convincing – Personal selling is most effective form of promotion because

with this sales person can convince the buyer by demonstration the use of product
and making changes in the product according to the need of customer.
Sales promotion
Sales promotion refers to short term use of incentives or other sales promotional
activities that stimulate the customer to buy the product. Sales promotion activities
include offering free samples, cash discounts, sales contests, free gifts,
dealer discount etc.
Sales promotion techniques / Methods / Tools
The business enterprise adopts different measures to promote sales .These
measures are mentioned as under.
1. Sampling – It means offering free sample of product to potential customers at the
time of launch of a new product.
Example:HUL’s Surf Excel samples.
2. Rebate – It means offering product at special prices, to clear off excess inventory.
The rebate is the amount of the purchase price refunded by the seller to the buyer. It is
available to specific customers and only for a limited period.
Example an offer to sell Maruti Alto car at a discount of Rs.10,000, for a limited
period.Rs.30,000 rebate to Electric vehicles.

3. Discount – It is a practice of offering products at a price less than the list price.
Example Woodland’s offer of discount upto 30 % for shirts.
4. Refund – It means refunding a part of price paid by customer on presenting some

proof of purchase, eg, on return of empty foils or wrappers get a refund of Rs.5.
5. Contests – some firms hold contests for consumers .Consumers who buy the firm’
s product are given an opportunity to participate in the contest .
Example Bournvitta Quiz contest, drawing competition etc.
6. Lucky draw – At the time of purchase, a coupon is given which is to be deposited in

a box after filling the name. After a particular period the winner is selected by lucky
draw method.
7. Quantity gift – It means offering extra quantity of the same product as gift along
with the purchase of a product.
Example “Buy two, get one free”. Gillette shaving cream’s offer 33% extra etc.
In this case the same product will get the extra volume.
8. Product combinations – It means offering another product as gift along with the
purchase of a product .
Example Buy a 32” LED TV and get a DVD player free or buy a TV of 25+ and Get
a Vacuum Cleaner Free’
9. Financing – It is technique of sales promotion in which easy finance schemes are

offered.
For example sellers of electronics goods commonly offer “Full finance @ 0%, 12
easy installments”.
Publicity
Publicity is a non-paid form of non-personal communication. It is just like

advertisement except that advertisement is a paid form whereas publicity in non-paid
form. For example, some events are covered and reported by media at free of cost.
Features of publicity
➢ Unpaid form of communication
➢ There is no identified sponsor ,when message is given to general public.
Public Relations
Public relations means maintaining public relations with the public.Public relations
involve a variety of programmes designed to promote or protect a company’s image
and its individual products in the eyes of the public. Their main task is to disseminate
information and build goodwill about the business.
Tools to improve public relations
The company can use the following tools to improve their relations with public:
1. News-Sometimes companies get involved in such kind of activities or make such

policies so that they get some positive coverage in news.
2. Speeches-The speeches given by the leaders of corporate sectors influence

various members of public specially banks, share holders etc.
3. Press conference- Events refer to organizing press conferences, multimedia

presentation etc.
4. Annual Reports- Sometimes written materials such as Balance Sheet, annual

reports, brochures etc.are circulated to various parties to improve and maintain
public image of the company.
5.Public service activities- Some business houses often associate themselves with
various social service projects such as women welfare programmes,charity shows,
planting trees on road side, running schools, hospitals etc.
Example for public relation: Reliance Industries Ltd published its annual result for
the year 2019-20 on 30th April. All media reported this news very prominently.

Difference between Advertising and Personal selling
Basis Advertising Personal selling

Nature Impersonal form of Personal form of
communication communication
Cost Cost per person reached is Cost per person is quite
very low high
Flexibility Not flexible, the message Highly flexible
can’t be adjusted to the
needs of the buyer
Feedback Lacks direct feedback Direct and immediate
feedback
Media used Use mass media such as Make use of salespersons.
,newspaper etcTV,Radio,
Reach Reaches masses Limited number of people
Time / Coverage It can cover the market in a It takes lot of time to cover
short time the entire market
Suitability It is more useful in Useful in selling industrial
marketing to the ultimate products or to
consumers who are large in intermediaries such as
number dealers who are few in
numbers.
Prepared by BINOY GEORGE, HSST, MKNM HSS KUMARAMANGALAM, THODUPUZHA, Idukki Dt.
Expected Questions
Marketing
(Expected Questions)
1. -----is the paid form of non-personal communication.

Ans: Advertisement
2. --------is a non-paid form of non-personal communication. Ans: Publicity
3. --------- is known as silent salesman in marketing.
a. Labelling. b. Advertisement. c. Packaging. d. Grading. Ans: Packaging
4. Marketing mix is the combination of 4 P’s which constitutes the core of company’s
marketing system. What are they?
Product, price, place and promotion
5. Find the odd one and state the reason.
a. Rebate b. Discounts c. Dividend d. Free gifts
Ans: Dividend, others are related to sales promotion
6. Television is an example of ------
b. Convenience Products, b. Shopping Products, c. Speciality Products, d. Non-durable
products.
Ans: Shopping Product
7. Mrs.Rekha is a producer of pickles and sells them directly to the households. The above
mentioned situation is an example of-------channel level.
a. One b. Two c. Three d. Zero Ans :d
8. Short term incentives designed to encourage the buyers to make immediate purchase of a
product or service is known by the name----
a) Personal selling b) Sales promotion c) Branding d) Labelling Ans: b)
9. ------ is the registered brand
a. Trade mark. b. Brand . c. Brand name. d. None of these. Ans:Trade mark
10. Advertising falls under which one of the following elements of marketing mix:
a. Promotion b. Place c. Price d. Product Ans: Promotion
11. List out any 2 sales promotional activities.
Ans: Free samples, coupons, rebate, discount, lucky draw (any 2)
12. Short term incentives designed to encourage the buyers to make immediate purchase of a
product or service is known by the name
a. Personal selling b. Sales promotion c. Branding d. Labelling
Ans: Sales promotion
13. Find the odd one and state the reason.
a. Rebate b. Discount c. Dividend d. Free gift
Ans: Dividend, all others are related to sales promotion
14. State any two characteristics of a good brand name. (Score 2) March 2019
15. What do you mean by the term marketing? Explain its different functions.
(Score 8) March 2016
16. The aim of 'marketing' and 'selling' is to maximise profit. Yet they differ in their approach.
Differentiate between these two by pointing out four differences. (Score 4) March 2015
17. Packaging is called a silent salesman. Give reason. (Score 2) June 2019
18. Explain the 4 P's in Marketing. (Score 4) March 2018
19. What is advertising? Explain its three advantages and three disadvantages?
20. Explain different sales promotion techniques?
21. “Advertising misleads customers and increase the cost of product”
Do you agree with the statement? Give reasons. (8 Score)
22. “Sales promotion are those marketing activities other than personal selling advertising and
publicity”. Do you agree with this statement? What are the objectives of sales promotion?
Explain various sales promotion techniques at consumer level. (Score 8) June 2015
23. “Packaging performs a number of functions in the marketing of Goods.” Give the
important functions of packaging. (Score 3) March 2017
24. Mr. Raju is a newly appointed salesman in marketing department. He has no clear idea
about the factors to be considered while fixing the price of a product. Being a commerce
student can you help him? (March, 2009)
25. What is branding? Describe the features of good brand name?
26. Explain with example: Consumer products and its classifications
27. Packaging is called as the silent salesman in the market. Why?
28. Classify the following products as: Convenience Product,Shopping Products and Specialty
Products:
Shoes ,Soap, , rare painting ,TV, Car, Tooth brush, Mobile Phone,
,bread,clothes,jewellery,rare collection of art works, pen
Ans:
Convenience Product Shopping Products Specialty Products
Soap TV rare painting
Tooth brush Car rare collection of art
Bread Mobile Phone works
pen Shoes
jewellery
Clothes
29. What do you mean by ‘personal selling’?

Ans:Personal selling / Salesmanship
Personal selling means selling personally. This involves face to face interaction
between seller and buyer for the purpose of sale. Companies appoint sales persons
to contact prospective buyers and make them aware about the product and persuade
the customer to buy the product.
30.Explain any 4 sales promotion techniques? (5 Score)

31. What is branding? Describe the features of good brand name?
32. Explain various factors that affect price of a product?
OR
“It is the process of giving name or sign or symbol in a product”. Identify the definition
and explain its advantages to the marketers and consumers? (8)
identified individual or company like Malayalamanorama, Asianet, Times of India etc.

33.Marketing is the process through which goods and services move from concept (Idea)
to customer. What are the important functions of marketing? (8 Score)
16. “Advertising misleads customers and increase the cost of product”
Do you agree with the statement? Give reasons. (8 Score)
20. What do you mean by ‘Channels of Distribution’? What functions do they play
in the distribution of goods and services? Explain
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Consumer Protection
It is the world of competition. Due to huge competition in the market, businessmen indulge
in unfair trade practices like adulterating products, manipulating weights, reducing quality,
introducing duplicates, giving misleading advertisements etc. to increase sales and profits.
So, Government of India passed ‘Consumer Protection Act’ in 1986 in order to protect the
interest of Indian consumers.
Importance of Consumer Protection

Consumer Protection has a wide agenda. It not only includes educating consumers about
their rights and responsibilities, but also helps in getting their grievances redressed. It is not
only beneficial for consumers but it is equally importance for the businessmen also.

A-From the point of view of Consumers
1. Consumer Ignorance:
Consumers are not aware about their rights and reliefs available to them. It becomes necessary
to educate them about the same.
2. Unorganised Consumers:
Consumers need to be organised in the form of consumer organisations which would protect
their interests.
3. Widespread Exploitation of Consumers:
Businessmen exploits consumers by adulterating products, manipulating weights, reducing

quality, introducing duplicates and giving misleading advertisements etc. Strict law is
essential to protect consumers from the exploitation of businessmen.

B-From the point of view of businessmen
1. Long-term Interest of Business:
Satisfied customers not only lead to repeat sales but also provide good feedback to
prospective customers and thus, help in increasing the customer-base of business.
2. Business uses Society’ s resources:
Business organisations use resources which belong to the society. So, it is the obligation of
the business to protect the interest of the society members.

3. Social Responsibility:
It is the responsibility of the business to protect the interest of the customers because
business firms earns money by selling goods and services to customers.
4. Moral Justification:
It is the moral duty of any business to take care of consumer’s interest and avoid any form of
their exploitation.
5. Government Intervention:
If a business does not voluntarily serve the needs and interest of consumers, it would invite
Government intervention.
Legal Protection to Consumers

Indian legal framework consists of a number of regulations which provide protection to
consumers. Some of these regulations are as under:
1. The Consumer Protection Act(CPA), 1986:
The Consumer Protection Act, 1986 provides safeguards to consumers against defective
goods, unfair trade practices and other exploitation.
2. The Indian Contract Act, 1872:
The Act is formed to bind/fix people on their promises made in a contract. The Act also
specifies the remedies available to parties in case of breach of contract.
3. The Sale of Goods Act, 1930:
The Act provides some safeguards and reliefs to the buyers of the goods in case the goods
purchased do not comply with implied conditions or warranties.
4. The Essential Commodities Act, 1955:
The Act aims at controlling production, supply and distribution of essential commodities.
The Act also provides for action against anti-social activities like hoarding, black marketing,
adulteration etc.
5. The Standards of Weights and Measures Act, 1976:
It provides protection to consumers against the malpractice of under-weight or under-
measure of products.
6. The Trade Marks Act, 1999:
The Act prevents the use of fraudulent marks on products and thus, provides protection to
the consumers against such products.

7. The Competition Act, 2002:

This Act has repealed and replaced the Monopolies and Restrictive Trade Practices Act, 1969.
The Act provides protection to the consumers against the evils of competition.
8. The Bureau of Indian Standards Act, 1986:
According to this Act IS marks and BIS certifications are ensured for the quality products.
9. The Agricultural Produce (Grading and Marking) Act, 1937:
The Act prescribes grade standards for agricultural commodities and live-stock products.
10. T h e P r e v e n t i o n o f Food Adulteration Act, 1954:
The Act aims to check adulteration of food articles and ensure their purity so as to maintain
public health.
The Consumer Rights

The Consumer Protection Act (CPA) provides for six rights of consumers: -
1. Right to safety
2. Right to be informed
3. Right to choose
4. Right to be heard
5. Right to seek Redressal
6. Right to Consumer Education
1. Right to safety
The consumer has the right to be protected against goods and services which are dangerous
to his life and health.
For instance, goods which are manufactured with substandard products. Manufacturing
defects of vehicles, pressure cooker etc. may endanger the life of consumers.
2. Right to be informed
The consumer has the right to have complete information about the product he intends to
buy including its ingredients, date of manufacture, price, quantity, directions for use, etc. It
implies that the producer should disclose all the material facts regarding his products.
3. Right to Choose:
The consumer has the freedom to choose from a variety of products at competitive prices.

4. Right to be Heard:
The consumer has a right to file a complaint and to be heard in case of dissatisfaction with a
good or a service.
5. Right to seek Redressal:
The consumer has the right to get compensation when consumers are cheated or exploited.
6. Right to Consumer Education:
The consumer has the right to acquire knowledge and to be a well-informed consumer
throughout life. He should be aware about his rights and the reliefs available to him in case
of a product or service falling short of his expectations.
Consumer responsibilities
A consumer should keep in mind the following responsibilities while purchasing, using and
consuming goods and services.
I. Awareness about goods and services
Be aware about various goods and services available in the market so that an intelligent
and wise choice can be made.
II. Quality Alert
Buy only standardised goods as they provide quality assurance. Thus, look for ISI mark on
electrical goods, FPO mark on food products, Hallmark on jewelry etc.
III. Risk Conscious
Learn about the risks associated with products and services, follow manufacturer’s
instructions and use the products safely.
IV. Get to know the product
Read labels carefully so as to have information about prices, net weight, manufacturing
and expiry dates, etc.
V. Understand the transaction
Assert yourself to ensure that you get a fair deal.
VI. Insist on cash memo
Ask for a cash memo on purchase of goods or services. This would serve as a proof of the
purchase made.

VII. Be honest in dealings

Be honest in your dealings. Choose only from legal goods and services and discourage
unscrupulous practices like black-marketing, hoarding etc.
VIII. File Complaints
File a complaint in an appropriate consumer forum in case of a shortcoming in the quality
of goods purchased or services availed. Do not fail to take an action even when the
amount involved is small.
Ways and Means of consumer Protection

There are various ways in which the objective of consumer protection can be achieved.
1. Self-regulation by business:
Enlightened business firms realise that it is in their long-term interest to serve the customers
well. Socially responsible firms follow ethical standards and practices in dealing with their
customers.
2. Business associations:
Associations like Federation of Indian Chambers of Commerce of India (FICCI) and
Confederation of Indian Industries (CII) have laid down their code of conduct which lay down
for their members the guidelines in their dealings with the customers.
3. Consumer awareness:
A consumer, who is well-informed about his rights and the reliefs available to him, would be
in a position to raise his voice against any unfair trade practices or unscrupulous exploitation.
4. Consumer organisations:
Consumer organisations play an important role in educating consumers about their rights and
providing protection to them. These organisations can force business firms to avoid
malpractices and exploitation of consumers.
5. Government:
The government can protect the interests of the consumers by enacting various measures.
For example, the GOI has set up a toll-free national consumer Helpline Number 1800114000
(9:30 am – 5:30 pm) for this purpose. Government of India passed Consumer Protection Act
1986.
Redressal agencies under the Consumer protection Act

In India under the Consumer Protection Act, consumer grievances are redressed by the three-
tire machinery at the district level, state level and national level.

I. District Forum
II. State commission
III. National Commission
1. District Forum:
A complaint can to be made to the appropriate District Forum when the value of the goods
or services in question, along with the compensation claimed, does not exceed Rs. 20 lakhs
(Now Up to 1 Crore).The District Forum shall pass an order after considering the test report
from the laboratory and hearing to the party against whom the complaint is filed. In case the
aggrieved party is not satisfied with the order of the District Forum, he can appeal before the
State Commission within 30 days of the passing of the order.
2. State commission:
A complaint can to be made to the appropriate State Commission when the value of the
goods or services in question, along with the compensation claimed, exceeds Rs. 20 lakhs but
does not exceed Rs. 1 crore ( Now I Crore to 10 Crores). The appeals against the orders of a
District Forum can also be filed before the State Commission. The State Commission shall pass
an order after considering the test report from the laboratory and hearing to the party against
whom the complaint is filed. In case the aggrieved party is not satisfied with the order of the
State Commission, he can appeal before the National Commission within 30 days of the
passing of the order.
3. National Commission
A complaint can to be made to the National Commission when the value of the goods or
services in question, along with the compensation claimed, exceeds Rs. 1 crore(Now it is
above Ten Crores). The appeals against the orders of a State Commission can also be filed
before the National Commission. The National Commission shall pass an order after
considering the test report from the laboratory and hearing to the party against whom the
complaint is filed.
Who can file a complaint?
A complaint before the appropriate consumer forum can be made by:
(i) Any consumer can file a complaint on his/her own and does not need the services
of advocate/ professionals
(ii) Any registered consumers’ association
(iii) The Central Government or any State Government
(iv) One or more consumers, on behalf of numerous consumers having the same
interest
(v) A legal heir or representative of a deceased consumer

(vi) A complaint under Section 2 (b) of the Consumer Protection Act 1986.
Relief available
If the consumer court is satisfied about the genuineness of the complaint, it can issue one or
more of the following directions to the opposite party.
1) To remove the defect in goods or deficiency in service.
2) To replace the defective product with a new one, free from any defect.
3) To refund the price paid for the product, or the charges paid for the service.
4) To pay a reasonable amount of compensation for any loss or injury suffered by the
consumer due to the negligence of the opposite party
5) To pay punitive damages in appropriate circumstances.
6) To withdraw the hazardous goods from sale.
7) To issue corrective advertisement to neutralise the effect of a misleading
advertisement.
8) To pay adequate costs to the appropriate party.
Role of consumer organisations and NGOs

In India, several consumer organisations and non-governmental organisations (NGOs) have
been set up for the protection and promotion of consumers’ interests. Non governmental
organisations are non-profit organisations which aim at promoting the welfare of people.
Consumer organisations and NGOs perform several functions for the protection and
promotion of interest of consumers. These include:
(i) Educating the general public about consumer rights by organising training
programmes,
(ii) Publishing periodicals and other publications to impart knowledge about consumer
problems, legal reporting, reliefs available and other matters of interest.
(iii) Carrying out comparative testing of consumer products in accredited laboratories to
test relative qualities of competing brands and publishing the test results for the
benefit of consumers.
(iv) Encouraging consumers to strongly protest and take an seminars and workshops.
action against unfair trade practices of sellers.
(v) Providing legal assistance to consumers by way of providing aid, legal advice etc. in
seeking legal remedy.
(vi) Filing complaints in appropriate consumer courts on behalf of the consumers.
Some of the important consumer organisations and NGOs engaged in protecting and
promoting consumers’ interests include the following.
(i) Consumer Coordination Council, Delhi
(ii) Common Cause, Delhi

(iii) Voluntary Organisation in Interest of Consumer Education (VOICE), Delhi

(vi) Consumer Guidance Society of India (CGSI), Mumbai
Prepared by, Binoy George, HSST, MKNM HSS, Kumaramangalam, Thodupuzha,Idukki Dt.
Expected Questions:
1. Which of the following is not a consumer right?
a. Right to safety b. Right to education c. Right to choose d. Right to get goods at a
lower rate Ans: d
2. Mr.John purchased a mobile phone for Rs.20,000 with one year warranty. Before the
expiry period the phone get damaged. When she approached to the he rfused to
replace or repair it.
a. Is the act of the shopkeeper is fair?
b. Where should he lodge her complaint?
Ans: a. No b. District Forum
3. In which year Consumer Protection Act was enacted?
a. 1976 b 1979 c. 1986 d 1992 Ans: 1986
4. What is the maximum amount of compensation that can be claimed in District
Consumer Forums?
a. 100 lakhs b. 50 lakhs c. 40 lakhs d. 30 lakhs Ans: 100 Lakhs
5. List out any two consumer rights?
Ans: Right to safety, right to choose, right to be informed, right to be heard, right to
consumer education, right to seek redressal
1. Explain any three rights of a consumer
2. Explain any 5 responsibilities of a consumer
3. A number of unfair trade practices are commonly found in the market. State any 3 of
them.
4. State the Redressal Agencies under Consumer Protection Act.
5. Explain the redressal mechanism available to consumers under the Consumer
Protection Act, 1986.
6. List the Laws passed in India for consumer protection.
: Note-1, Note-2, Note-3

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visit:https://binoygeorgeonline.blogspot.com/p/plus-two.html

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Plus Two

Examination Help File -2023

Short but Complete Note

Expected Questions (Unofficial)

Chapter wise Weightage (2023)

Wish You all success

work hard. Your goals are simply dedication and determination

Sl No Unit Score Score %

1 Nature and significant of management 7 6.7

2 Principles of management 9 8.6

3 Business environment 6 5.8

9 Financial Management 13 12.5

11 Consumer protection 5 4.8

Weightage to Type of Questions

Sl No Question Pattern Score Score %

1 Objective type questions 16 15

2 Descriptive type questions 88 85

According to modern concept “Management is the process of getting things done

Effectiveness Vs Efficiency in management

Difference between Effectiveness and Efficiency

Point of Effectiveness Efficiency

1. Management is a goal-oriented process

Management always aims at achieving the organizational objectives.

Management is a universal phenomenon. Management is necessary for all the

3. Management is a continuous process

Management is a continuous or never-ending process. Management functions like

11-02-2023 1 Binoy George

4. Management is a group activity

The management functions cannot be performed in isolation. Each individual performs

5. Management is a dynamic function

6. Management is an intangible force

➢ Supply quality goods at reasonable price

11-02-2023 2 Binoy George

➢ Provide financial support to society

➢ Pay competitive salary and perks

Importance/ Significance of Management

Management gives a common direction to individual effort in achieving group goals of

2. Management creates a dynamic environment

All organizations working in an environment which is changing frequently. The

3. Management helps in the development of the society

4. Management helps in achieving personal objectives

Nature of Management-it is an art, science or profession?

The debate on whether management is an art or science or profession is very old.

11-02-2023 3 Binoy George

1. Systematic body of knowledge-. In case of every art, there is systematic and

2. Personalised application- Art is a very personalized concept. Personal skill is

3. Perfection through constant practice- Success of an art is mainly depends on

II. Management as Science

A group of management experts are of the view that management is a science.

11-02-2023 4 Binoy George

The basic features of science are as follows:

1. Systematised body of knowledge

2. Principles based on experimentation: Scientific principles are first developed

3. Universal validity-Scientific principles have universal application and validity. They

4. Principles based on observation Like scientific principles, management

III. Management as a profession

Profession can be defined as an occupation backed by special knowledge and

11-02-2023 5 Binoy George

1. Well defined body of knowledge

Let us compare the features of profession with features of management.

1. Well defined body of knowledge-All professions are based on well-defined body

2. Restricted Entry-To become a professional one must pass the prescribed

3. Professional Association-All professions are affiliated to a professional