BUSINESS STUDIES NOTES CHAPTER WISE Chapter I Nature & Significance Of Management (2+5 =7-marks) Explain the term

m management in brief? 2 marks Management is coordinating all the resources of an organization through the process of controlling, organising, motivating and planning (COMP) in order to achieve its goals. This process starts at the top and continues in more or less degree at every level of the organization. State any two characteristic features of management? Distinct activity: Management is a distinct activity, which consists of communicating, organizing, motivating, planning, leading, staffing, controlling, decision making, etc. It can be studied, experimented and practiced.

Intangible: Management is intangible i.e. it cannot be seen but it can be felt through the performance of the workers. Mismanagement if any is quickly noticed and is a sign of poor management. While efficient

management reflects the efforts of the workers. Explain briefly any two OBJECTIVES OF MANAGEMENT 2 marks Organizational objectives: The primary organizational objective of the management of any business should be to attain maximum output with minimum resources and least wastage. This generates high profits, reduces costs and maximizes prosperity.

Individual objectives: Each employee that joins an organization wants to satisfy his individual objectives, which means he would like to have good salary, develop his personality, get peer and social recognition. If his individual objectives are not satisfied, he will lose interest in his work and performance of organizational objectives may suffer. Hence while formulating corporate objectives, management should also consider individual objectives

Briefly explain MANAGEMENT AS A PROCESS.

Management is regarded as a process because it consists of -

Setting up objectives for an enterprise; and o Taking a series of steps such as planning, coordinating, directing, organizing and staffing (PC-DOS) to ensure that these objectives are achieved. This process starts at the top and continues in more or less degree at every level of the organization.
o

MANAGEMENT AS A GROUP has the responsibility of an enterprise.

Management as a GROUP refers to the Board of Directors or Executive Directors who are responsible for effectively managing the affairs of the business by guiding and controlling the work of other managers such as production, sales, finance, personnel, quality control managers, etc. This approach focuses on a team rather than individuals. This is because it is believed that management as a team can contribute more effectively and efficiently than an individual.

Management is a learned DISCIPLINE. Comment

Discipline is a subject that can be studied, organized and taught. (SOT) It should meet the basic requirements such as:o It should be acceptable o It should be capable of discovering knowledge, which can be verified, passed on to others and can be successfully applied.

A large number of schools, colleges & universities have introduced management courses. It has got experts, thinkers and philosophers of the subject. These experts are devoted to impart their skill of the subject to learners of the discipline. They follow a code of conduct prescribed for them. As such we can conclude that management is a discipline

Explain in brief MANAGEMENT AS AN ACTIVITY

Management is a human activity that (PC-DOS) plans, controls, directs and organizes the efforts of all employees in the best interest of the organization and society. For this the human and physical resources should be integrated in such a way that there is minimum waste of material, time and energy. It takes decisions on the following activities: o The goals of the organization o The activities to achieve the goals of the organization. o The people who will perform those activities of the organization. o The allocation of resources for the various activities of the organization. o It leads by doing oneself what it wants others to do; and o It directs the subordinates by showing & encouraging them to do things the right way.

Who are considered to be the operative management in an organization? State any two functions of lower level management

The first line/operative or low level management includes supervisors, foreman and Inspectors. They are a link between middle level management and workers They have the following functions (any 2 functions) o They represent the workers grievances before the management o They procure tools, materials required for the job o They assign duties to workers and guide them in handling their jobs o They prevent wastage of materials by negligent workers

Who are regarded as MIDDLE LEVEL MANAGEMENT in a business organisation? 2 marks

Middle management consists of departmental heads and other executive officers of different departments They execute the policies framed by the top management. They are a link between the top management and supervisory or lower level of management

State any two functions of middle level management 2 marks Their functions are as follows: (any two functions) They plan the operations of their department They prepare the organizational set up of their department. Find out suitable personnel and assign duties to them for execution of their department functions.

Your grandfather has retired as a director. At what level of management was he working? What functions do you think he was performing? State any two. Or Who are regarded as Top Management in a business organization? State any two functions of Top management? 2 marks Top management is the 3rd line of management, which consists of Chairman, Directors, Managing Director, General Manager and other top-level executives required to achieve the goals of the enterprise. The functions of top management are: Determine the objectives of the enterprise.

Frame the policies of the enterprise

What is meant by Balancing in coordination? 2 marks Or State any two elements of coordination The key elements of coordination are as follows: (BIT) Balancing: The activities of one department must be properly balanced and supported by other departments in order to achieve optimum results. Integration: It is the unification of all diverse group efforts, which are brought together to produce best possible results. This results in better performance of the firm. Timing: The business activities should be planned in such a way that the functions of every employee and department are performed according to a time schedule. What is administration 2 marks Administration means: (LIDS) Laying out broad programs, major projects, etc Identifying general purposes Determining policies Setting up major objectives

Administration is part of management. Comment? 5 marks

Some authors suggest that management is a wider concept than administration or administration is part of management. According to this view, management involves o Responsibility to make policies o Responsibility for planning, organizing, directing, controlling & supervising (PCDOS) Thus it is found that management begins with the administrative function at the top. As one moves down the levels of organization, managerial functions become more and more important.

Management and Administration mean the same thing Explain this view 5 marks

Management and Administration are synonymous i.e. they are both identical and carry the same meaning. In practice, administration involves management and management involves administration. Both are complementary as well as supplementary to each other. Every officer has to perform both administrative and management functions at all levels. Both aim at achieving the desired goal of the business of maximising output at minimum cost and wastage.

Administration comes first and management follows it Comment. 5 marks,

Some authors suggest that administration is a wider concept than management or administration comes first and management follows it. According to this view, o Administration determines the policies while management executes those policies o Administration lays down the objectives of the organization while management has to direct the organization to operate under the broad policies laid down by administration in order to achieve those objectives.

Is management becoming a profession? Discuss in light of emerging trend? Yes, management is by and large becoming a profession. This can be seen by referring to the following emerging trends in business: 1. All big companies appoint professional managers at all levels. 2. Many Indian companies take initiative to replace family members by professional mangers. 3. Proprietary managers are becoming more interested in acquiring latest knowledge and technique of management. They are sending their relatives abroad to do managerial

course. In conclusion, it may be said that managers at the top level do not satisfy all the requirements of profession but management is becoming a profession. Chapter : 2: Chapter 2 Principles Of Management (3+4 =7 mark) What do you understand by principles of management?

They are statements of fundamental truth They provide guidelines which help management to take decisions and action They are derived by observation and experimental studies They establish cause and effect relationship

How are management principles derived? 3 marks Management principles are derived by observation and experimental studies as follows: Observation: Management principles are derived by observing and analysing the events management have to face in actual practice. For example the principle of division of labour was derived after it was observed that dividing the work based on the workers

knowledge and experience, resulted in improved performance. Experimental Studies: By conducting experimental studies. For example suppose we wish to conduct an experimental study to confirm the correctness of the principle of unity of command which states that no subordinates should receive orders from more than one boss, we take two groups of employees one having only one boss and the other having two bosses. After some time it will be noted that the group with one boss is doing better than the other. This confirms that the principle of unity of command is correct. State any 3 reasons why proper understanding of management principles is necessary? Or Explain briefly any 3 points establishing the NEED/IMPORTANCE of management principles?3 marks Marking Scheme Management principles are needed for the following reasons: (OCE) Optimum use of resources: The management principle of science, not rule of the thumb suggest that every task should be done with minimum effort and energy and additional work can be done with

the saved energy. By saving time, efforts and energy activities can be made economical and enhance the productivity of the resources. Change in technology: The management principle of division of labour helps management in identifying in which activity technology has changed. If there is no division of labour then confusion may prevail about what and how much to change and the firm might find it difficult to face competition and might in extreme case run out of business. Effective Administration:
o

The principle of scalar chain helps the enterprise to communicate with people at different levels Unity of direction removes confusion in minds of employees; and Unity of command avoids dual subordination. Thus these principles help management in managing their organisations effectively. Besides the above, management principles also provide guidelines to managers to: Effectively handle complex problems. Clearly understand the nature and scope of their work To make optimum use of the resources.

To take scientific decisions to meet changing conditions.

Explain 3-4 points that highlight nature/characteristics of principles of management 3 or 4 marks The following characteristics highlight the nature of management principles: (FUEL) Flexibility: Management principles are flexible guidelines and can be modified in different ways in different situations depending upon the knowledge and experience of an employee and importance of decisions that have to be taken. Universal application: Taylors techniques of mgt are UNIVERSALLY APPLICABLE. Do you agree? Give any four reasons in support of your answer 4 marks - Important Management principles are effective in: o Both business enterprises as well as government organisations. (All social, economic, political, cultural or even religious organisations apply management principles for the successful operations of their activities) o All types or sizes of organisation

All types of problems o Any type of group action be it the army unit, hospital, etc Example: Delegation of authority in any nature of business is considered as key to organisational success universally because it empowers people to take decisions on the spot. Hence it can be concluded that the principles of management are universal and it is possible to transfer them from one organisation to another and from one country to another.
o

Evolutionary: Management principles are developed either from organised quantitative facts or from long experiences of leaders and scholars of management thoughts. Therefore they are evolutionary in nature. Limited application: Application of principles of management in real life is affected by certain limiting factors such as nature, size, form of business, etc. An organisation follows the principles of management. Learn the (a) principles (b) positive effects, or (c) adverse effects and (c) examples if any of

each of the following principles of management on the organisation? 3 marks - Important Which principle of management is violated if subordinate is asked to receive orders from two seniors? Explain with a suitable example. Name any two ADVERSE EFFECTS that may take place due to this violation - 4 marks CBSE, 2005 (2) Fayols principle of UNITY OF COMMAND is violated. This principle implies that an employee should receive orders from only one superior. If he gets orders from more than one superior at a time then he will be confused as to which superiors orders should be carried out first. Adverse Effects: If this principle is violated it may lead to confusion, indiscipline, delay in performance, difficulty in satisfying seniors and difficulty in fixing responsibility. Therefore to avoid this confusion, dual subordination should be ruled out. Example: If a salesman gets instructions from marketing as well as production department at the same time. He may get instructions from production manager to go slow in selling the product as there is a power cut in the factory and goods are not being produced fast enough. On the other hand the marketing manager may insist he sell as per schedule to reach

the target. In such a situation, it may be difficult for the salesman to carry out the orders of two people, as their instructions are contradictory. Unity of command therefore helps in avoiding such contradictory issues. Which principle of management envisages that each group of activities having the same objectives must have one head and one plan? Explain the principle with a suitable example. What are the positive effects of this principle 3 marks UNITY OF DIRECTION

This principle calls of one manager one plan for a group of activities having the same objective so that the efforts of all employees are directed towards common goals. The positive effect of this principle is that it ensures unity of action and facilitates coordination. Example: Suppose an automobile company has three divisions cars, scooters and three wheelers. Now each division must have its own targets since each product has its own market and problems. Each division must plan its target as per its environmental conditions to achieve better results. (I mark for naming the principle + 1 mark for each point of explanation + 1 mark for example)

What do you mean by the principle SUBORDINATION OF INDIVIDUAL INTEREST TO GROUP/GENERAL INTEREST CBSE-2005 Set 1. 3 marks According to this principle of Fayol, management should reconcile the interest of an individual with those of the group. However if they differ, then the group interest should supersede that of the individual interest. Example: If a manager gets an order for supply of a product at his own initiative and due to which the company benefits immensely. Positive Effect: The principle suggests that the profit should be shared by all since one person cannot alone meet an order. State the principle of ESPIRIT DE CORPS? What is the positive effect of this principle? 3 marks CBSE2000, CBSE-2005 Set 1

Espirit de corps means spirit of cooperation. It means harmony, mutual understanding and team spirit among workers. If there is team spirit, everyone comes forward to help others. It helps to develop an atmosphere of mutual trust and understanding and a sense of belong among workers, which inspires them to work harder and improve quality of work.

Employees up to the standard should be rewarded and those who are not up to the standard should be given an opportunity to improve their performance. Positive Effect: When esprit de corps is present the need to penalise the defaulting person is minimised

Explain FAYOLS Principle of DIVISION OF WORK (2 marks) State the adverse effects on the violation of the principle of division of work V. Imp According to this principle of Fayols, every task should be divided into small task and assigned to the right person who is capable of doing that job. He should also be trained for doing that job. This is called division of labour. This principle applies to all kinds of work managerial as well as technical Positive Effect: A person holding the same post and doing the same job will over time specialise in that job and improve his performance, efficiency and result in increased output. Adverse Effects: If this principle is violated it leads to (a) inefficiency (b) delay in work (c) increase in costs (d) decrease in output.

Explain FAYOLS PRINCIPLE OF DISCIPLINE (2 marks)

According to Fayol, discipline means respect for agreements that are directed at achieving energy, application, obedience and outward mark of respect (EARO). Fayol says that discipline requires: o Good supervisors at all levels o Agreements should be clear and fair o Penalties should be fairly imposed However Fayol does not support wrong use of authority to enforce discipline such as warnings, fines, suspensions, dismissal, etc. Example: If a company has entered into agreement with employees regarding their wages for 5 years then the company should honour it. Likewise, employee should also honour the commitments made by them.

An organisation follows the principles of management. What are the POSITIVE EFFECTS of each of the following principles of management on the organisation (3 will be asked) -3 marks (30-40 words) V. Important (a) Unity of Direction Positive effect: of this principle is that it ensures unity of action and facilitates coordination (b) Espirit de corps

Positive Effect: When esprit de corps is present the need to penalise the defaulting person is minimised (c) Subordination of individual interest to general interest Positive Effect: This principle suggests that the profit should be shared by all since one person cannot alone meet an order. (d) Scalar chain Positive Effect: This will produce quicker results in sorting out problems in one or two sittings and avoid lengthy time procedure, danger of miscommunication, distortion or even danger of being killed in the process. (e) Equity Positive Effect: If similar treatment is assured to people performing similar jobs and the management is always kind, fair and just in its dealing with its subordinates, it earns the respect, loyalty and devotion of the employees and they are motivated to put in their best efforts. (f) Division of work: Positive Effect: A person holding the same post and doing the same job will over time specialise in that job, improve his

performance, efficiency and result in increased output An organisation follows the principles of management. What are the ADVERSE EFFECTS of each of the following principles of management on the organisation? V. Important (a) Unity of command Adverse Effect: If this principle is violated it may lead to confusion, indiscipline, delay in performance, difficulty in satisfying seniors and difficulty in fixing responsibility. Therefore to avoid this confusion, dual subordination should be ruled out. (b) Unity of order Adverse Effect: When there is no arrangement for things and people, the organisation will not be able to achieve its objectives in time. Effective utilisation of physical and human resources will not be possible. (c) Stability of tenure of personnel Adverse Effect: If this principle is violated, it will lead to high labour turnover rate and will increase the cost of selection and training of the employees (g) Division of work

Adverse Effects: If this principle is violated it leads to (a) inefficiency (b) delay in work (c) increased costs (d) decreased output. (h) Remuneration of personnel Adverse Effects: If fair remuneration is not paid to the workers, it will create a sense of dissatisfaction among workers leading to various problems such as trade unions, strikes, high labour turnover rate, etc Explain Fayols view on REMUNERATION OF PERSONNEL? 2 marks

In Fayols view, remuneration of employees should be fair and reasonable which will satisfy both employers and employees. It will stimulate the workers to work more and better. Wages should be determined on the basis of o work assigned o cost of living o financial position of the business; and o average wage rate for similar work in the industry. Adverse Effects: If fair remuneration is not paid to the workers, it will create a sense of dissatisfaction among workers leading to various problems such as trade unions, strikes, high labour turnover rate, etc.

Why did Fayol suggest the idea of GANG PLANK? What light does it throw on the nature of Fayols principles? 5 marks Or Illustrate SCALAR CHAIN with suitable example? 3 marks V. Important

Fayol's Scalar Chain

According to Fayol, scalar chain is a chain of superiors ranging from highest to lowest rank of authority. Under normal circumstances every communication should follow the proper channel and pass through every link in the scalar chain. Example: The above figures shows the scalar chain linking mangers at lower levels with top management. If E wants to make contact with O for some work he has to move through a long route i.e. D, C, B, A, L, M, .N and finally to O without breaking the chain of command. This will cost lots of time of E. Positive Effect : In case of urgencies however, the prescribed route can be violated and gangplank (direct contact) between the two concerned

authorities may be established. This will produce quicker results in sorting out problems in one or two sittings and avoid lengthy time procedure, danger of miscommunication, distortion or even danger of being killed in the process. The idea of gang-plank throws light on the flexibility of Fayols principles.

What is GANG-PLANK? Show it through a diagram 3 marks Gang-plank is the technique of shortening the route of communication which is usually followed through all channel of hierarchy. Fayol suggested that in case of urgencies, by jumping the prescribed line of authority, these officials could deal with one another at one sitting and sort out several problems quickly. How can Fayols PRINCIPLES OF EQUITY and order be applied in work situation?-4 marks. Illustrate with an example. (CBSE-1996, CBSE-2001) Or Which principle of management aims at securing the loyalty and devotion of the employees by giving them kind, fair and just treatment? Explain this principle with a suitable example -4 marks

The principle of equity suggest that similar treatment is assured to people performing similar jobs. Example two typists should be paid the same wage rate.

An effective management is always kind, fair and just in its dealing with its subordinates. This way it earns the respect, loyalty and devotion of the employees and they are motivated to put in their best efforts. However the principle of equity should be applied at all levels. Workers should be treated at par at every level. For example: There should be no discrimination with regards to position, sex, age etc while granting medical leave to the employees.

Name the function of management, which concentrates on employing and retaining the right person at the right place. Explain why this function is important in any organisation. Or If an organisation does not provide the right place for physical and human resources in the organisation., which principle is violated? What are the consequences of it? Principle of ORDER: If an organisation does not provide the right place for physical and human resources in the organisation, the PRINCIPLE OF ORDER is violated. The principle of order is concerned with proper arrangement of things and people. This principle can be divided into two:

Material order: An orderly arrangement of things is called material order. There should be an orderly arrangement of physical factors of production like land, raw material, tools and equipment. This means that there should be a specific place for everything. Every piece of land and every article should be used properly, economically and in the best possible way. Social order: An orderly arrangement of people is called social order. This includes employees. Right man for the right job will ensure effective use of man power resources. Right place for everything and for everyone should therefore be the guiding principle for every management. Adverse Effect: When there is no arrangement for things and people, the organisation will not be able to achieve its objectives in time. Effective utilisation of physical and human resources will not be possible. Explain the principle of INITIATIVE through a suitable example - 3 marks (CBSE-2000)

Freedom to think and execute a plan is known as initiative. Employees at all level should be allowed to take initiative in work related matters. Encouraging initiative is likely to motivate employees to work better and harder. However initiative should not be confused with disrespect to authority. For example: if any employee is given the initiative to make suggestions but once the decision is taken on any issue then there is no scope for disobedience.

Fayol points out the danger and costs of unnecessary labour turnover in one of his principles. Name and explain the principle.(CBSE-2000) (2004) Or Illustrate the principle of STABILITY OF TENURE through a suitable example 3 marks Fayol emphasised in his principle STABILITY OF TENURE that employees should not be shifted from their position frequently. The period of service should be fixed. It takes time for an employee to get used to his work and he cannot render useful service if he is removed before he gets accustomed to the work assigned to him. Production requires team-work. If the members of the team go on changing the entire production process will be disturbed.

An effective management will ensure that trusted, trained and experienced personnel do not leave the organisation, unless it is unavoidable such as illness, retirement or death of an employee. Stability of job creates a sense of belonging among the workers and so they are motivated to improve the quantity and quality of work. Adverse Effect: If principle of stability of tenure is violated, it will lead to high labour turnover rate and will increase the cost of selection and training of the employees.

Define Scientific Management? 2 marks

According to F.W.Taylor who is regarded as the father of scientific management, Scientific Management is the art of knowing exactly what you want your men to do and seeing that they do it in the cheapest way. It means conducting business activities according to standardised tools, methods and trained personnel in order to increase the output, improve its quality and reduce cost and wastage.

Explain any two principles of Scientific Management. Or Describe in brief TAYLORS PRINCIPLES of (i) science not rule of the thumb and (ii) separation of planning and operational work - 4 marks. (any two out

of 5 taylors principles will be asked- 4 marks) Important Science not rule of thumb 2 marks

In traditional management rule of thumb was prevailing. This was also known as Trial and errors method or Hit or miss method This principle meant that go on trying, failing and wasting the resources and finally perfecting the job. Workers were careless because no specific amount of work was expected from them. Even the employer did not know the real worth of his employee. Everything was left to Trial and Errors method. Taylor introduced the scientific method in which he emphasized that Rule of the thumb does NOT involve thinking before doing and that each job in the organisation should NOT be performed based on intuition, experience and hit and miss methods. According to scientific method the causes, effects and exact measures of effort and output should be kept in view for any work to be performed. This forms the core of scientific management.

Separation of planning and operational work: - 2 marks

According to Taylor, planning operations should be separated from operational operations. He stressed that managers should concentrate on planning the job of the workers while workers

potential should be developed to the fullest extent for their own benefit as well as the prosperity of the company. For this purpose there has to be a scientific selection of workers and they should be trained to adopt new methods of work.

Harmony not discord -2 marks

According to Taylor those who work together should work in harmony i.e. there should be mutual give and take and proper understanding among the managers and workers. This is because group efforts contribute more than an individuals efforts. Managers should adopt an enlightened attitude and share the productive gains with the workers and workers on their part should work with discipline and loyalty.

Maximum not restricted output 2 marks

Continuous productivity is one of the principles of scientific management. According to this principle, production should not be curtailed and management and labour should both be interested in increasing productivity. Conflict between management and labour arises mainly on division of surplus. The best solution is to increase the size of the surplus so that both can have a larger share.

Cooperation not individualism: - 2 marks

Scientific management works on cooperation between workers and management and among workers themselves. Management can earn higher profits if workers produce better quality, low cost goods. Workers can earn higher wages if management provides standard materials, standard tools, standard working conditions and training in standard methods.

Explain method study as a technique of Scientific Management? 2 marks (CBSE-2004)

Method study is concerned with methods of performing a job. There are various methods to perform the same job with different costs requirements. Taylor suggested that management should find out one best way to perform the task. For example The methods of manufacturing shoes may be manual or mechanical but the cost of labour and capital to manufacture shoes according to each method may vary. Management has to decide which method to use before it starts manufacturing. The objective of method study is to minimise production costs by a proper mixture of factors of production in order to achieve desired result. Method study should be done right at the planning stage of the job.

What role do motion studies play in setting the standard task? 2 marks

Motion study is the technique that closely observes the movement of the body/machines required to perform a job so that unnecessary movements can be eliminated and the best way of doing a job is determined. Upon a close examination of bodys wasteful motions it is possible to find o which motions are productive o which are unproductive o which motions are incidental i.e. going to the store Through motion study Taylor was able to design suitable tools & equipment and educate workers on their use.

Define fatigue study on the basis of meaning and purpose? 2 marks

Fatigue study helps in setting the time interval and frequency of rest period in completing a task. A person will be tired and less productive if he works without rest interval for a long period of time. If he is allowed rest intervals he will regain stamina and work with increased efficiency.

What is the role of time study in setting the standard task or help to improve the efficiency of workers.? Give two points in support of your answer? 2 marks

Time study measures the standard time taken for a qualified worker to perform a well -defined job. Time study is done with the help of a time measuring device.

Objective of time study is to: o Determine number of workers to be employed o Determine cost of labour o Frame suitable incentive schemes Benefit of time study: o It helps to determine the fair days work of an employee o It creates time consciousness in a worker o It eliminates idle time o It helps in reducing costs

Distinguish between Time Study and Motion Study 3 marks (Pre Semester 2003) TIME STUDY MOTION STUDY It measures the standard It studies movements of time taken for a qualified body/machine to perform a worker to perform a well job defined job. The purpose is to decide The purpose is to avoid how much time is normally wasteful motions and to required to perform a determine the best way of certain job doing a job It measures the work It eliminates and reduces provides a yardstick to wasteful and useless decide between efficient motions. and inefficient workers What is Mental Revolution 2 marks.

According to Taylor, mental revolution means that both workers and management should

completely change their attitude regarding relation between themselves and their work. Management and workers usually suspect each other and try to trick each other. Workers all the time feel that management exploits them by extracting a lot of work from them and paying meagre wages. Management on the other hand feels that workers always grumble about the workload and deliberately slow down their work, damage equipments, tools and show indifference to quality of products. Mental revolution requires that such a feeling of suspicion or prejudice should be rooted out. Management should provide good working conditions and resolves all problems scientifically. Similarly workers on their part should work with discipline and loyalty. Instead of fighting for dividing the surplus profit, management and workers should cooperate to increase it.

Do you agree with the view that Taylors principles of scientific management and Faylors principles of management are mutually complementary. Give any 4 reasons. (3-4 marks) Or List 4 distinctions between Fayols contribution and Taylors theory (Important) 3-4 marks Yes, they are mutually complementary since no organization can function effectively without mutual cooperation of managers and employees.

The comparative evaluation of their contributions is given below. (FEES) Focus: Taylor tried to improve the productivity of workers and eliminate all kinds of wastes. Fayol tried to develop the principles to ensure better management.

Emphasis: Taylors principles were more applicable at shop level with emphasis on tasks of workers and supervisors. Fayols principles were more applicable at general management level with emphasis on efficiency of managers and administration

Expression: Taylor used the expression scientific management Fayol used the expression general theory of administration.

Starting point: Taylor wanted to improve the efficiency of lowest level and then move upwards while formulating the principles of scientific management.

Fayol began from the top level and moved downwards with emphasis on unity of direction, command and coordination.

Chapter : 3 Business Environment (2+ 5 = 7 Marks) What is meant by business environment? 2 marks Business environment means forces and institutions which the members of a firm must deal with in order to achieve the objectives of the organization. Forces include politic, economic, social, technological, etc (PEST) and Institutions include (competitors, customers, suppliers, etc) The environment provides both constraints and opportunities. Discuss with examples

An environment provides constraints (restrictions), which could be in the form of economic conditions, customs, government regulations, availability of natural resources,

labour supply. Example: Despite many initiatives, foreign direct investment in India is not picking up in the country because of political and bureaucratic reasons. On the other hand, environment also provides the firms numerous opportunities in the form of unmet and changing needs of the customer and market. Example: the growing demand for air conditioners has attracted many new domestic as well as multinational firms in the industry

What is meant by environment scanning? 2 marks

Environment scanning is a process by which organizations monitor their relevant environment so that they can consider the impact different events, trends, issues, expectations have on its strategic management process. Example in the Union Carbide gas leakage incident in Bhopal in Dec-1984, The accident and the holocaust that resulted, was an event The consciousness on the part of the Regulatory Authorities regarding the safety from hazardous exposure to chemicals, was the trend The rising concern about environmental pollution was the issue expectations of the public from the government was to amend the laws to include safety measures and stricter enforcement through various mechanisms.

Briefly discuss two dimensions of general environment? Classify business environment in two major categories and give one example of each? 2 marks The two dimensions of general environment are: Economic environment : includes fiscal, monetary and industrial policies, etc Non economic environment : includes social, cultural, political, legal, technological factors, etc Explain economic environment? 2 marks Economic environment consists of (BIG PICCED)

Balance of payment Inflation rate Gross national product (GNP) Productivity Interest rate Consumer Income Corporate Profit Employment rates Debt & Spending

Give two examples of the factors and influences that operate in the Indian ECONOMIC ENVIRONMENT and which have had an impact on all business organizations 2 marks

a. Rapid increase of production capacity after partial decontrol of cement in 1982. b. Banking sector reforms led to attractive deposit avenues, easier credit terms, better service and above all an effective and reliable banking system c. Due to changes in economic and fiscal policies, entry for financial institutions and banks in stock trading became easier. What is meant by SOCIAL ENVIRONMENT of business? 2 marks

Social Environment describes the characteristics of the society in which the firm exist. The following form a part of the social environment: o Customs, Age, Beliefs, Lifestyle, Educational levels (CABLE) o Literacy rates, Values, Demographic distribution & mobility of population (VLDM) Managers should remember that although the attributes of the society may change slowly or quickly but they will eventually change. They should study the social traits of the area before moving in that area otherwise the cost of ignoring the taste, preference, customs, traditions taboos of the society could be very high. Examples: o Vicks Vaporub is a popular pain balm. If it is used as a mosquito repellant in some tropical areas due to sheer ignorance, the adverse effects can be very severe.

Similarly, the slogan of Pepsi Cola come alive in some languages is translated as come out of the grave. Therefore due to this slogan, the product failed to pick up.

Give 2 examples of factors and influences that operate in the Indian SOCIAL ENVIRONMENT and which have had an impact on all business organizations? 2 marks 1. Demand to reserve jobs for minorities and women. 2. Equal pay to men and women for equal work performed. 3. When there is an increase in middle class families, there is a continuous demand for various consumer goods and they also influence investment in the corporate sector. Explain briefly five ways in which Indian managers are responding to changes in the business environment (Sample paper) 5 marks - V. V. Important for Yr2006 Board Following are the ways in which companies are responding to change in business environment.
1.

Acquisition & Mergers: o Mergers, acquisition, takeovers, amalgamations (MATA) are a common feature of post liberalized economy.

The purpose of these acquisitions and mergers were to achieve entry, dominance in the market, access to technology, etc. o Examples: Mergers between ACC Gujarat, Ambuja Cement, Hindustan Aluminum Co and Indian Aluminum Co are examples of merger. Reliance gaining control over management of L&T is an example of acquisition. 2. Consolidation of Multinational Due to liberatisation policy, many multinationals have entered India through joint ventures. For example General Motors entered through a joint venture with Hindustan Motors. Ford entered with Mahindra & Mahindra. Multinationals are also entering the core sectors of the Indian economy. 3. Brand building Branding means putting the manufacturers name, a picture, etc on the package of the product. Brands create awareness of a product and hence in todays competitive world, brands have come to occupy an important place. Many companies increased their expenditure to enhance their brands. For example heavy expenditure was incurred on launching
o

of Korean brands such as Hyundai, LG, Samsung, etc. Indian companies are also doing likewise. 4. Distribution & Selling o Selling goods through direct marketing of products such as Tupperware, Amway is a recent development. o This has increased the selling cost of Indian companies more than foreign company because a large amount is being spent on advertisement. Capital Structures
o

Capital structure of companies has changed more to equity than debt. This is because in the past equity was dominant but thanks to crooks in the stock markets, they have shaken the investors confidence by so many false new issues in the past, companies now have to rely more on debt than equity. Indian companies such as Reliance have also started moving towards global market for equity and debt capital

Chapter 4 Planning (6 Marks) (Planning Syllabus (Only 1 Knowledge Q with choice will come as a 6 marks question) at the Board Exam on the following) Define Planning? 1 mark (part of the question) Planning means making decisions with regards to goals to be achieved and the methods to be adopted to achieve those goals.

Explain briefly 6 steps in PLANNING PROCESS OR in FORMULATION OF A PLAN 6 DCDCFPF : the steps should be answered in sequence Defining objectives 1st step-of the management is to develop a plan and set some clear and specific objectives, which should stipulate the areas where organized planning must occur. 2. Choosing alternatives: 2nd step - the manager should ascertain as many available alternatives as possible for reaching those objectives and he should explore all those
1.

alternatives without going into the merits and demerits of those alternatives. 3. Developing planning premises: 3rd step - the manager should list all the premises (assumptions) for each alternative and then determine the feasibility of using any one alternative to reach its objectives. 4. Choosing the best alternative: 4th step - the manager should evaluate all the alternatives + the premises on which the alternatives are based so that the unreasonable alternatives can be eliminated from further consideration and the best alternative can be decided to achieve the objectives of the organization. 5. Forming supportive (derivative) plans: (Explain the meaning of supporting plans with the help of a suitable example? After forming the main plan, secondary plans are derived in order to support and expedite the achievement of the main plan. These secondary plans are known as derivative or supportive plans. For example once the production plan is prepared, secondary plan would be to buy equipment, raw material, recruit and train staff, develop new product, etc. These derivative plans are formed on

the basis of the main plan and therefore support it. 6. Putting the plan into action: Once plans are developed, they are ready to be put into action. The organization does not benefit from the planning process until this step is carried out. For example if the firm decides to promote sales through advertising, then the company should engage an advertising agency to go ahead with the advertising otherwise the company will not achieve its desired results. 7. Following up: Once the plan is put into action, it should be monitored because in the course of implementing the plan, many adjustments may be required in order to achieve the given objective. NOTE: if any additional correct point is added at any relevant stage without violating the sequence, full credit should be given. If sequence is not maintained, 2 marks are deducted Planning is not a guarantee of success of a business . Comment Or Why does planning sometimes fail in spite of the best effort of management? 5 marks Or

Explain the LIMITATIONS of planning? 5 marks (First Semester 2003) Or Explain rigidity as a limitation of planning 3 marks (Board Exams - 1998, 2004) - Imp Anagram for Planning Limitations = RIP CUT Rigidity: Planning leads to rigidity. This has an adverse effect on the initiative to be taken by the managers. For example due to a sudden change in the economic environment, a manager may have to change the course of action to achieve the desired result. But the manager may not be able to take the initiative if it is not in the plan in which case rigidity in planning may prove costly to the organization. Rigidity may be internal as well as external.

Inaccurate: Planning is based on the future, which is uncertain and beyond the control of the organization. Predicting the future is difficult. Any plan based on inaccurate information may not be very useful to the organization. Psychological barriers: There are some inbuilt psychological barriers. For example-people prefer the

present rather than the future, as the future is relatively uncertain. Also planning involves change and adjustment to such changes and people tend to resist change. Costly: Planning is an expensive exercise as it involves time and money to prepare estimates, collect information and evaluate various courses of action. Often there may be need to hire the services of experts for the purpose of planning. Thus, planning can be beneficial only if the benefits to be derived from it are more than the costs.

Unsuitable: In planning there are set policies, procedures to be strictly followed under all circumstances. However, this is against the very concept of business. Business is a dynamic activity faced with opportunities and problems. If it follows a set course of action, there may be risks of failure. Time consuming: Planning requires time to think, analyze the situation and then design the final plan. In case of emergencies it is necessary to take on the spot decisions. In such situations, time is a precious commodity and any delay caused by planning may deprive the business of a profitable opportunity.

Explain in brief, the meaning of Goals & Objectives & Rules as types of plans and give any four examples of each. Or Explain the types of plans? This Q comes as a choice Goals are collective ends towards that an organization direct their energies and activities. Examples: 1. The goal of a car company can be to provide good quality and economically priced automobiles to the public. 2. Improvement in communication system 3. Improvement in customer relationship 4. Improvement in sales of specific product Objectives are the ends towards which activity is aimed. They are the results to be achieved. An objective should meet the following five requirements 1. It should relate to a single specific topic 2. It should relate to a result and not to an activity to be performed

3. It should be measured in quantitative terms whenever feasible 4. It should have a deadline for achievement Rules are rigid instructions. They are specific statements and guide to behaviour. They indicate what should and should not be done. In rules, there is no scope for discretion. Explain the term policy and procedure as types of plans and give any four points of distinction between them. 6 marks Policy is a general statement of an organization which specifies its intention to respond to a specific problem or situation . Example: McDonald has a policy that it will not grant franchise to an individual who already owns another fast food restaurant. Likewise a school admission office may have a policy that admission will be granted only to those applicants who have secured 60% and above Procedure is a guide to action. It contains steps in chronological order for handling future activities. Example: McDonald has a procedure that explains exactly how Big Macs are to be

cooked, how long they can stay in the warming rack, etc. Distinguish between (Any four points): 6 marks POLICIES PROCEDURES It is a guide to thinking and It is a guide to action and steps to decision making contains steps in chronological order to handle future activities They are general They are specific statements statements Flexible Rigid Scope for discretion No scope for discretion Decided by top level Decided by middle & low management level management There may be different There are same policies for different procedures for all departments departments They are not dependent onThey are dependent on procedures policies Marking Scheme Policies and Rules (Important) POLICIES RULES General statements Specific statements Flexible Rigid Scope for discretion No scope for discretion Guide to decision making Guide to behaviour Lay down management Indicates what should or attitude should not be done Example : McDonald's has Example: McDonald a policy that it will not grant restaurant has a rule which

franchise to an individual prohibits customers from who already owns another using its telephone fast food restaurant.

Chapter 5 Organizing (4+ 3+3 or 6 or 6 = 10 marks)

Define Organising and enumerate 3 steps involved in the process of organising?

Organising means identifying and grouping various activities into jobs and then sub grouping these jobs into sections and departments. It is bringing together financial, physical & human resources and establishing productive relations among them for achieving specific goals. The organising process involves the following steps:

Division of work:

1st step divide the work since one individual cannot do the entire work. If work is divided it leads to specialisation of work and skill. Grouping Jobs and Departmentation:

The 2nd step is to group similar jobs into departments, divisions or sections such as marketing, financing, manufacturing, etc. This brings about coordination and facilitates unity of effort. The departments so created are linked together on the basis of their interdependence.

Establishing authority relationships:

3rd step is to create an authority structure among various job holders This links the various job holders by authorityresponsibility relationship.

Define Organising as a structure? Enumerate any three CONSIDERATIONS to be kept in mind while building an organisational structure. - 4 marks Definition: An organisation structure define: o job positions, o the roles assigned to them ;and

the authority relationships among the various job positions. It facilitates work-flow in the organisation.
o

Considerations (any 3) The following considerations should be kept in mind while building an organisation structure Job design: Manager has to first design the jobs Then specify which task is to be included in each job Then decide which person will do which job

Departmentation: Once the jobs are defined they must be grouped together to form a department as coordination becomes easier if similar jobs are under one department and one manager. Span of Control: After the departments are formed, how many people and jobs the manager will manage is the next decision. The manager is responsible for coordinating a particular number of jobs, which is called the span of control. Delegation of Authority:

As jobs have been assigned, some degree of authority is required to get the job completed. Explain how organising helps in Specialization and Co-ordination Or Describe IMPORTANCE OR OBJECTIVES of organising as a function of Mgt? 6 marks Organising function is important because it leads to: (SCARS) Specialisation: Activities should be grouped based on their similarity and convenience. This leads to efficiency, specialisation and speedy performance of task.

Clarifies authority and responsibility: If each manager is aware of his respective powers and privileges, his area of activity, whom he can order and for which task, it helps to minimize conflicts and confusion. Avoids duplication of work Organising helps to avoid duplication of work and overlapping of responsibilities. This is because specific jobs are assigned to individuals and work groups. Role clarity:

The organising process clarifies what role a person doing a job is supposed to perform. It is quite often spelt out in a written document called job description. This helps to o Avoid duplication of work o Finding right person for the right job.

Source of support and security: Organising is a source of support, security and satisfaction to managers and employees in performing the task assigned to them. Each member enjoys a definite status in the firm. FUNCTIONAL AND DIVISIONAL STRUCTURE: (Important sub chapter) Define functional organisation? 1 mark (part of the question) Grouping together the entire work into major functional departments and entrusting these departments to functional specialists is known as functional structure of the organisation. In an electrical manufacturing company, there are four main activities Production, Marketing, Finance and Personnel. The General Manager is planning to structure the organisation. Which type of organisation structure should be adopt and why? Give two reasons.

This company should adopt the functional structure because:

Each major function is organised as a separate department viz. marketing, production, finance, personnel, etc. This promotes division of work which leads to specialisation Ensures effective utilisation of workforce Supervision and coordination becomes easy since each individual manager is specialised in his job.

State any 3 advantages of functional structure of organizing - 3 marks Marking Scheme

Promotes division of work which leads to specialisation Ensures effective utilisation of workforce Supervision and coordination becomes easy since each individual manager is specialised in his job.

State any 3 limitations of functional structure of organising 3 marks

As each function is separate and each departmental head is concerned with the performance of his department, conflicts may

arise and the overall objectives of the organisation suffer. In large functional organisations, taking quick decisions & coordination becomes difficult It becomes difficult to hold a particular department accountable if any problem arises. For example, if a product fails the production, sales and research departments may point accusing fingers at each other.

XYZ Limited is manufacturing chemicals and textiles. What type of organization structure would suit the requirement of such an organisation? And why?

Divisional organisational structure would suit the requirements of XYZ Limited.

In divisional organisational structure, activities and personnel are grouped on the basis of different products manufactured by the firm. This allows each division to specialise in its areas of operation Decision can be taken quickly and effectively Each division can concentrate on each product line. This will result in efficiency and economy in its operation

State any 3 advantages of DIVISIONAL STRUCTURE of organising 3 marks

Each division can specialise in its areas of operation. Decision can be taken quickly and effectively. Can concentrate on each product line, which leads to efficiency and economy in its operation.

State any 3 disadvantages of divisional structure of organising 3 marks

As each division has its own production, marketing and finance arrangements, it involves heavy expenditure on human and physical resources. Managers in each department focus only on their own product without thinking of the rest of the organisation. Full utilisation of equipments may not be there in different departments. It is not suitable for small and medium sized companies.

DELEGATION OF AUTHORITY: (Meaning, Importance & Elements) Imp sub chapter Define delegation of authority? The manager cannot perform the entire work assigned to him alone. So while he himself does jobs that are unique to the position he holds, he shares routine work and authority with competent subordinates to operate within prescribed limits. The sharing of this

routine authority and responsibility with the subordinates is delegation of authority. Explain briefly the ELEMENTS/PROCESS OF DELEGATION OF AUTHORITY? Marking Scheme - 4 marks Or Delegation of authority is a process involving authority, responsibility and accountability Explain this statement in brief. 4 marks Important Delegation means entrusting responsibility and authority to another person and creating accountability. Thus the process of delegation of authority has the following three important elements: Responsibility: Responsibility can be delegated. It is the first step in the delegation process. A manager assigns certain tasks to his subordinates because he alone cannot perform all those tasks. However he only assigns the task to his subordinate but not the responsibilities for their performance. The responsibility for proper performance of such task continues to rest with him.

Authority:

Besides assignment of duties, the subordinates are also granted authority to perform those duties properly. Authority refers to the powers and rights to use financial, physical and human resources as well as the right to decide to act or not to act. Authority is needed perform a given responsibility because without authority it may be very difficult and even impossible to carry out the given task.

Accountability: The process of delegation is complete when the subordinate to whom the duties are assigned and authority is delegated is made accountable for properly performing his duties and for properly exercising the authority delegated to him. Authority can be delegated but responsibility cannot. Explain the statement in brief Or Responsibility can be delegated but accountability is absolute Explain. 6 marks According to the principle of absolute responsibility, authority can be delegated but responsibility and accountability cannot be delegated by a manager. The manager is responsible or accountable to his own superior for both, the tasks that he has assigned his subordinates and the acts of his subordinates. In other words only authority

can be delegated but responsibility and accountability is absolute. Example: if a foreman fails to get 100 units produced by the workers on any day, he is responsible to his superior. He cannot escape by saying that the workers were at fault. Similarly, the factory manager remains responsible to his superior for the work he entrusted to this foreman. He cannot escape from the responsibility by passing on the blame to his foreman. Why is it necessary to delegate authority? Give three reasons? (Importance/advantages of delegation of authority) Or Delegation of authority helps in reducing the workload of managers and in motivating the subordinates. Explain this statement 6 marks V. Important It is necessary to delegate authority due to the following reasons:

It reduces the workload of managers. By sharing some of his own work with the subordinates, the manager is able to concentrate on more important jobs. This way he increases his own effectiveness and that of his subordinates. When delegation of authority takes place at all levels of the organisation it leads to proper division of work and assignment to all managers in a systematic manner.

It establishes a superior-subordinate relationship. The flow of authority from top to lower level of management is directed and controlled by the process of delegation. This gives meaning and content to the flow of authority and to managerial jobs. It increases morale of the subordinates: Delegation helps the subordinate to develop their capabilities to handle new and more challenging jobs. This gives him job satisfaction. it increases his morale, self confidence and efficiency to get promotion.

Explain the term decentralization in brief? 3 marks

Decentralisation means delegating authority at all management levels and all departments of the organisation to take decision and appropriate action on tasks assigned to them. In a decentralized organisation, while top management have authority to frame policies and take major decisions; middle and lower level managers have authority for taking decisions on tasks assigned to them. Example: In an organisation, major decisions on products, line of business, capital investment, etc are made by top management while marketing manager for example is authorised to decide on prices of products, distribution channels, methods of advertising the products and organising sales campaigns. Top management does not interfere with his authority. However, marketing manager is required to keep in view the overall policies of

the organisation while making decisions concerning matters within his authority. This organisation may be regarded as a decentralized one. The concept of decentralisation is related to the concept of delegation. Explain this statement in brief. 4 marks

Decentralization refers to the dispersal of authority to take decisions to the lower level of an organisation where the problem arises. Delegation means entrustment of responsibility and authority from one individual to another. The concept of decentralisation is wider in scope and coverage. Decentralisation is completed only when the fullest possible delegation is made to all or most of the people who are delegated a specific kind of work or responsibility.

Explain the concept of delegation and decentralisation bringing out its distinction Or Dist between: (All points are important as any 3 are specifically asked in the CBSE paper 3 marks or 6 marks DELEGATION DECENTRALIZATION OF AUTHORITY Scope Scope is limited Scope is wider than to the manager delegation as it and his involves delegation of immediate authority at all levels

Significance

Decentralisation is optional and is decided by the top management if it wants or does not want it. Freedom of Manager Managers of work Action exercises control units have greater over activities of freedom of action. subordinate They are not kept under close supervision by their superiors but have to work under guidelines and performance targets set by top management Essentiality Organisation cannot function Organisation can without function without delegation of decentralisation. authority Responsibility Responsibility cannot be Responsibility can be delegated delegated

subordinates in the work unit. It is entrusting authority from one person to another Delegation is compulsory in every organisation at every level.

and in all functions of the organisation. It is an extension of delegation to the lowest level in the firm.

Grant of Authority

Delegated authority can be withdrawn by delegator.

Cannot be easily withdrawn as introduced by top management.

Chapter 6 Staffing (10 marks) Staffing Syllabus (one 6 marks question comes as a choice and one 4 marks question comes on wage and time piece system) 6+4=10 marks Define staffing as a function of management? (DASTOD)

Staffing is the process of determining the manpower needed to meet the objectives of the organisation. Apprising and selecting candidates to fill these requirements; and Training, orienting and developing (TOD) new and existing staff.

Explain briefly 6 steps in the STAFFING PROCESS ?6 mks (maintain the sequence. 2 marks will be deducted if sequence is not maintained) Following are the important steps involved in the staffing process: Manpower planning: Man power planning tries to assess manpower requirements in advance keeping the production schedules, market fluctuations, demand forecasts, etc. in the background. The focus of manpower planning is to get the right number of qualified people at the right time. Manpower requirements are estimated through job analysis.

Job analysis: (What is job analysis?) Job analysis means a careful study of the tasks and responsibilities involved in a job.

The relation of one job with another

job The conditions under which the job is to be done; and The capabilities of the job-holder to perform the job satisfactorily.

Recruitment: (Define recruitment?) Recruitment is the process of finding and attracting candidates to fill up vacant positions in the organisation. The process begins when new recruits are sought and ends when their applications are submitted. Both internal and external sources may be used to recruit staff.

Selection: (Define selection?) Selection is choosing from among the applications the most suitable candidates to fill up the vacancies in the organisation. It involves comparing and evaluating candidates in the light of qualifications required to perform the job. It consists of application, test, interview, medical examination, reference check, etc.

Training (Define Training)

Training means providing new recruits with required knowledge and skills relating to their jobs. Training increases workers knowledge, ability, competence & makes them more useful. Every new recruit has to undergo a period of training in different departments till he is found to have sufficient knowledge of the important types of work. Subsequently he is given the job that he is best suited for.

Placement & Orientation Placement means asking the candidates to occupy the position in the organisation for which they have been selected. Orientation means taking the new recruits round the office/plant and introducing them to all employees and to the rules and policies of the organisation. Orientation enables new recruits to adjust themselves to the work environment.

Why are external sources of recruitment better than internal sources of recruitment? Explain briefly, any six reasons 6 marks Or

What are the merits of external sources of recruitment?

Wide choice is possible as many applications can be obtained from external source. Fresh candidates infuse new blood and new ideas into the enterprise Internal employees have to compete with fresh external candidates, which proves to be advantageous to the firm. Internal source is not capable of meeting entire requirements of the enterprise so it has to depend on external sources also.

Explain in brief any 6 external sources of recruitment of employees? ( for naming each source + mark for explanation) - Imp All firms cannot meet all their manpower requirements from internal sources alone. Therefore recruitment from outside sources is necessary. These sources are: Recommendation of present employees: Many firms encourage their employees to recommend their relatives/friends for employment because they believe this policy will prove to be a valuable asset in maintaining goodwill of the present employees; and in finding reliable candidates.

Factory Gate: In times of severe unemployment and when unskilled workers and casual workers are required, workers are recruited from a large number of job seekers that assemble everyday at the factory gate. Notices: Notices or posters placed at a central location in the workshop, office or at the factory gate help in identifying suitable candidates for the job. Jobbers & Contractors: (Agents) Many industries in India secure their manpower requirements through jobbers and contractors. These jobbers and contractors keep in touch with the potential labourers in the villages and on payment of a commission, bring them to the places where workers are needed. Waiting list: Many firms receive casual applications either through mail or personal visits to the firms. These applications are kept in record and can prove to be an excellent source of recruitment. Personnel Consultants: If the personnel policy of the firm permits, a firm can opt to use the services of a personnel or management consultancy firm that is specialised in recruitment purposes. Media advertising:

Advertising is a popular method of recruiting staff. The benefit is that the firm can use the most appropriate newspaper or journal to advertise the vacancy and also get the best candidate to fill up the vacancy. EXPLAIN THE STEPS IN THE SELECTION PROCESS 6 MARKS (Any six in sequence with suitable explanation 1 mark to be deducted if proper sequence is not followed) Code to remember Select APATIR (The Personnel Manager scrutinises the candidates application then arranges a preliminary interview, then makes candidate fill the form, gives a test, interviews, lastly request references and medical check ups). Application scrutiny: Every person who applies for the job may not possess the qualifications that the job demands. Hence the applications are carefully screened and those who do not possess the required qualifications are eliminated from the list of candidates that will be called for a preliminary interview. Preliminary interview: A brief preliminary interview is conducted in which questions relating to the job for which vacancies are being filled up, are asked. If the applicant is successful in the preliminary

interview, he or she will be asked to fill an application form. Application form: The candidates selected in the preliminary interview have to fill up blank application forms. Sometimes the applicant may also have to attach his or her photograph to the application form. These applications are then maintained in the records of the Personnel Department. Testing: (list the different types of test used in the selection process) The candidates are then tested and there are large number of tailor made or standardised tests available for this purpose. These include the following tests: Trade test - to discover the job skills of the prospective candidate Performance test to check the proficiency of the applicant. For example a typist/steno is tested on the speed of her typing/shorthand. Psychological test to check the intelligence, attitude, aptitude, achievements, emotions, interests and other such qualities of the candidate.

Interview:

Interview is especially important for skilled and technical jobs. In an interview the candidate is evaluated for poise, appearance and to get more information than what is stated in the application form. Since a pool of interviewers interview the candidate, wide judgement of all experts becomes available.

References/medical checks: After the interview, the candidate may have to provide unbiased references to assess the character and reputation of the candidate. The candidate has to then undergo a medical examination to check the physical fitness. On satisfactory conclusion of the above process, a letter of appointment is issued to the successful candidate and a reasonable time is given to join the organisation.

Distinguish between: (all points V. Imp) On the basis of Purpose/Objective, level of persons involved, depth of knowledge, etc (Imp) TRAINING DEVELOPMENT Purpose/Objective It imparts It imparts technical skills technical, human and conceptual skills

Level of persons It is useful for nonIt is useful for involved managerial managerial personnel personnel Depth of It develops skills It develops knowledge already hidden skills and Imparted possessed by talents personnel Initiative in It uses on the job It uses off the job learning training training Scope of learning It has limited It has wider scope scope of associated with imparting skills to overall workers development of executives Duration Short duration as Long duration as it is job oriented it is career oriented Explain briefly any six reasons as to why the training of employees is necessary?

Training helps to improve the performance of both new and experienced employees. It qualifies employees for promotion to hold more responsible jobs. It reduces the learning time and ensures higher productivity from new employees. It reduces absenteeism, turnover, accidents and grievances. It helps in economic and better utilisation of raw materials, tools and equipment. It helps employees to acquire new knowledge and job skills. This increases their market value

and earning power. It also increases their job security with existing employer. It is difficult for a company to get sufficient skilled workers, training therefore solves this manpower problem by establishing its own apprentice training programme. It helps to mould the attitude of employees and obtains better cooperation and greater loyalty from employees.

EXPLAIN JOB ROTATION, VESTIBULE TRAINING AND INTERNSHIP AS METHODS OF TRAINING? 6 MARKS Or What are the METHODS used for training of workers? 6 marks CBSE-1992 Job Rotation: (on the job training) Under this method, an employee is periodically rotated from one job to another to acquire knowledge and general background of all the jobs. Advantage: New comers get knowledge of several business situations. Drawback: It prevents specialisation of a particular job. Apprenticeship training: (on the job training) It is a practical form of training whereby the trainee is placed under the control and supervision of an experienced person. He observes how the work is done and thus

learns from him. He is in a way assistant to the experienced person. People seeking to enter skilled trades like plumber, electrician, etc. are often required to undergo this training under the guidance of a master worker. Vestibule training: (Off the job training) Under this method, employees learn their jobs on the equipment they will be using, but the training is conducted away from the actual work floor. It is generally used to train employees on sophisticated modern equipments and machinery. Internship training (Off the job training) This refers to a joint programme of training in which technical institutes and business enterprises cooperate to enable the students to gain practical training of the theoretical knowledge gained in the classroom. Classroom principles are better understood against a practical background in a factory. It is not a service contract but during this period normally a stipend is paid to the student. What is meant by INCENTIVE?

Incentive means o Paying a guaranteed minimum remuneration irrespective of

whether there has been an output or not. o Plus paying additional remuneration for larger output For saving time For reducing costs; and For better workmanship Your subordinate expect new source of motivation at every subsequent stage. Suggest any 4 MONETARY AND ANY 3 NON MONETARY SOURCES, giving a sentence for each source, how it will inspire them Or Explain the various types of INCENTIVES which may be used to motivate employees with suitable examples ( 6 marks) There are two types of incentives monetary and non-monetary incentives. Monetary incentives (financial incentives):

They are monetary benefits paid in cash or kind or both. They are generally used to motivate workers and non-managerial employees. The various sources of monetary incentives are: o Profit sharing incentives given to workers for higher productivity and greater profitability. o Co partnership- workers get their usual wages + a share in profits + a share in management of the company.

Bonus It is a one time reward in cash, kind or any other form offered to workers for higher performance Suggestion system: It is an incentive given to a worker when his suggestions results in either increased profits or reduced costs. The amount of reward varies according to the value of the suggestions.

Non-Monetary incentives: (non financial incentives)

They do not involve cash but satisfy ego and self -esteem. They are generally used to motivate higher level of management. The various sources of non monetary incentives are: (sarp) o Supervisory relationship: coordination with supervisors enhances commitment to work and motivates employees to work efficiently and effectively. o Assigning Challenging jobs Repetitive work creates monotony in work. In order to create interest in the work, employees should be assigned challenging jobs. When the challenging tasks are successfully performed, it gives a sense of satisfaction to the employees, which should also be suitably rewarded. o Recognition Praise or recognition has a great impact when given on received and

helps in improving the attitude of employee and motivates them to perform better. Participation in management decisions: employees should be encouraged to participate in management decisions. Good suggestions and comments from employees should be acknowledged and implemented.

4 marks definite question on time rate and piece rate wage system (v. important) You are the representative of workers in a factory and want to impress upon the management the need for introducing time rate system in place of piece-rate system of wage payment. What four reasons would you like to give to the management to justify your point of view? Explain in brief. (Give any four advantages of time rate wage system) As a workers representative, I would prefer the time rate wage system due to its following advantages: It is simple to calculate the wages and therefore easily understood by workers. It provides stable income to employees so they can plan their expense budgets. Workers are therefore not in a hurry to complete the job and can therefore pay more attention to quality of their work. There is no rough handling of machinery, tools and equipment.

As the workers work sincerely and honestly, constant supervision is not required which reduces production and administration costs. It is favoured by trade unions as workers are treated at par on the basis of their output and efficiency.

The workers of a factory are demanding the introduction of time wage system in place of the existing piece-rate system of wage payment. The management is not prepared to accept this demand of the workers. Why, in your opinion, is the management opposing this demand? Explain in brief any four reasons. The management is opposing the introduction of time wage system due to the following reasons: (write the disadvantages of time wage system) any 4 In time wage system, both efficient and inefficient workers get equal remuneration for same job. There is no incentive for efficient workers to work better in terms of quality and quantity of output. Efficiency will neither result in extra remuneration nor promotion for them. As a result there is quality of work is low. It is difficult to assess a workers efficiency, as there is no record of his performance.

Time wage system treats workers at par. As such trade unions pressurise management to accept their demands. If they do not accept the demands it leads to industrial unrest, strikes, riots and lockouts, etc. Constant supervision of workers is required which increases cost of production There is the tendency for workers to go slow and hence production suffers. Skilled workers are not required.

What are the advantages of piece rate system? It provides an incentive to produce more. It ensures fairness by correlating wages and productivity. Cost of supervision is less as workers do not need to be supervised.

When is TIME wage payment method suitable? {Hint all work that requires time to do the work is time wage system} Go through all they are important When high degree of skill is required Where production process is complicated and intricate

Where quality is more important than quantity. Where mental work is involved such as administration, management and policy making. When workers are recruited on group basis When machines used are delicate and expensive When workers have no control over their output (control is by machine) When there is no clear relationship between effort and output Where units of output CANNOT be measured When output of learners CANNOT be expected to reach the minimum standard

Which method of wage payment time rate or piece rate would you adopt under each of the following situations? Give reasons in support of your answer 4 marks CBSE 2004 Set 1, 2 and 3 (V. Important) When production process is complicated and (intricate) or requires a high degree of skill. Time rate is more suitable as the job requires a high degree of skill. The workers would not be in a hurry to complete their job and would maintain the degree of skill and quality desired.

Where quality is of supreme importance Time-rate wage payment method. The workers are not in a hurry to complete the job If it was piece rate workers would hurry to complete the job and would not maintain the quality desired. When a collective effort of group of individuals is necessary for computation of a job Time rate wage system will be adopted because in collective effort where it is difficult to measure precisely the output of individual workers this system is more suitable When skilled personnel is engaged in tasks requiring high quality workmanship Time wage system is suitable as workers are not in a hurry to complete their work to get more wages. When workers have no control over the rate of output Or Where the output of learners CANNOT be expected to reach the minimum standard Or

Where rate of output is determined solely by machine and not by operation Time rate wage payment method As there is no standard unit of output and rate of output is determined solely by machine and not by operator or measurement technique. Where there is NO clear relationship between effort and output. Time rate wage payment method. Because here it is not possible to pay the worker according to her work done by him as output of each worker cannot be separately identified. Where time factor is not important Time rate wage system as time factor is not significant which means quality is preferred over quantity. Where delays in work are beyond employers control Time rate wage system as delay in work is not in control of employer. When the nature of work requires close supervision. Time rate wage system because quality is more important than quantity

State any five situations when is PIECE wage payment method suitable? (Learn all are important) -4 marks CBSE 1999

When the units of output can be measured The job is standardised (of repetitive nature), work flow is regular and delays are few and consistent There is a clear relationship between efforts of employees and quantity of output Quality is less important than quantity Employees are efficient and do not require constant supervision

Which method of wage payment time rate or piece rate would you adopt under each of the following situations? Give reasons in support of your answer 4 marks CBSE 2004 Set 1, 2 and 3 (V. Important) Where units of output can be measured; Piece rate wage payment method. As there is clear relation between effort and output. OR As wages can be easily calculated on the basis of output produced by the worker. Where quantity of work is measured, inspected and counted Piece rate wage system is suitable in order to differentiate between efficient and non efficient workers and to motivate them.

When the job is standardised. OR method of production is standardised Piece rate wage payment method is suitable as output of each worker can be measured When workflow is regular Piece rate wage system As the workflow is regular and delays are few and consistent, here output of each worker can be easily measured and workers can easily be paid according to the efforts and work done by him. Where there is clear relationship between efforts and output. Piece rate wage system Because here it is possible to pay the worker according to the work done by him as output of each worker can be separately identified. Where quality is less important than quantity (i.e. when quantity is more imp than quality) Piece rate wage payment method. Because worker is in a hurry to complete the work as he gets wages based on quantity produced. Therefore quality will not be maintained. Where the work is of a repetitive nature and there is no need to increase the production.

Where work is of repetitive nature and there is no need to increase the production, no supervision is required, no skilled personnel is required, quality is not important, in such cases piece rate system is more suita

Chapter 7 Directing - V. Imp. Chapter (2+3+3=8 marks)

2 and 3 marks which should not exceed (30-40 words) DIRECTING: Define Direction as a function of management? 2 marks (Important)

Directing consists of supervision, motivation, leadership & communication (SMCL) It involves issuing orders and instructions by managers to subordinates Guiding and inspiring them Supervising their affairs Leading and motivating them to efficiently achieve the desired goals of the organisation.

Write two elements of directing? 2 marks Answer: give definitions of any two elements viz. supervision, motivation and leadership and communication

Enumerate any two FEATURES of directing? Or Enumerate any 2 points of IMPORTANCE OF DIRECTING as a function of management. Direction helps to facilitate changes and motivate subordinates (any two points) - FM Facilitates changes: Directing helps to make adjustments in the organisation and cope with the changing conditions through communication and leadership. Motivates subordinates Directing helps to motivate subordinates to work efficiently and contribute their maximum efforts towards achieving the goals of the organisation. Initiates action: All the activities of the organisation are initiated through direction. The aim of direction is to activate employees to work towards achieving the goals Without direction all other managerial functions like (PCOS) planning, coordination, organising and staffing will be ineffective as plans will not be implemented in the desired manner.

SUPERVISION Define Supervision 2 marks

Supervision means overseeing the employees at work. It means monitoring, instructing, guiding and observing (MIGO) the subordinates in their task to ensure that both plans and procedures are implemented. Supervision normally refers to individuals who supervise the operations. He may be a Foreman, Overseer, Superintendent, Section Officer or Section In-charge. Who is a supervisor?

IMPORTANCE OF SUPERVISION: Explain any 4 points how supervision is an important element of directing 6 marks Or Explain how supervision facilitates control improves communication and helps in optimum utilisation of resources sample papers 3 marks (Important) The following points highlight the importance of supervision as an element of directing: Facilitates control: Supervision/supervisor facilitates control by monitoring the work in progress against plan schedule, checking the methods being used evaluating actual performance at regular intervals; and taking action, if necessary

Optimum utilisation of resources: If the work is supervised while the work is in progress It leads to minimum wastage of time and resources. It ensures time and plan schedules are adhered to; and If there are any deviations, immediate remedial measures can be taken.

This results in efficient utilisation of resources. Improves communication: Issuing orders and instructions leads to clear communication to subordinates regarding what is to be done. During monitoring, supervisors take feedback on progress of work and conditions in which work is being carried out. This improves communication and leads to better understanding of the needs, aspirations and problems of the individuals at different levels of the organisation.

A supervisor is not at all required in an organisation? Do you agree? Give reasons to support your answer (Answer importance of supervisor) Or

The post of supervisor should be abolished in the hierarchy of managers. React 3 marks (Hint: Give importance of supervision) Or Enumerate any 2-3 FUNCTIONS OF SUPERVISOR (3 points) PIG - V. Imp. Plans the work: The supervisor analyses the work of his department and then assign the work to different workers according to their abilities. He also makes arrangements of the tools, equipment, raw material to ensure there is a steady flow of work. Issues orders & Controls Output The supervisor issues orders and instructions to the workers by telling them what and how to do the work. He controls their output and compares their performance with the prescribed standard

Grievance handling and liaison between management & workers: The supervisor maintains a close contact with the workers and handles their grievances. He reports the workers problems to top management. He also explains the management policies and passes on management instructions to the workers.

LEADERSHIP: Define Leadership? 2 marks

Leadership means influencing the behaviour of the people at work towards realising the specified goals. It is the ability to use non-coercive (no force) influence on the motivation, activities and goals (MAG) of others in order to achieve the objectives of the organisation.

Ramesh, a supervisor in a factory always expects that his subordinates should obey him. He is not prepared to listen to any suggestion made by workers. Do you think this quality of Ramesh will help him to become a good leader? Why? 2 marks No, this quality of Ramesh will not help him to become a good leader, as it is the duty of the supervisor to listen to any suggestions/grievances of workers and try to understand their problems. He should evaluate the suggestions and implement them to the extent possible by bringing it to the notice of top management. All managers are leaders but all leaders are not manager. Do you agree with this statement? Give any 3 reasons in support of your answer. Or Sometimes Managership and Leadership are regarded as synonymous. Is this true? No, it is not true.

A manager may NOT be a leader because: o He may NOT be able to win the trust and confidence of his subordinates o They may NOT look up to him for guidance, assistance and support (gas) If a manager possesses leadership qualities, he is able to: o Influence the behaviour of his subordinates in such a way that they will be willing to cooperate towards achieving the goals of the organisation. o He will be able to inspire and motivate them to work with zeal and enthusiasm In this context, it is also possible that a leader may not be a manager. He may not hold a managerial position but still employees look towards him for guidance, assistance and support (gas).

Explain the IMPORTANCE of leadership as a directing function of management? 3 marks Practice Paper-4 (V. Important) - 3marks Or Leadership is the source of motivation. Do you agree? Give three reasons in support of your answer. 3 marks (give 3 reasons) Or

Leadership is required only for less efficient subordinates. Do you agree? Give 3 reasons in support of your answer? (Answer: No, I do not agree give importance of leadership (In short leadership -Guides, inspires, secures cooperation and creates confidence in employees)

Guides and inspires employees: Leadership helps in guiding and inspiring employees to perform well and directs the potential abilities of the employees towards achieving the desired goals. Secures cooperation: Leadership secures cooperation of employees by persuading them to cooperate and work enthusiastically, confidently and diligently towards achieving the goals of the organisation. Creates confidence:By his exemplary conduct, a leader creates confidence, provides psychological support and infuses spirit of enthusiasm in the employees.

Effectiveness of leadership depends on the qualities of the leader. Explain any four such qualities of a leader. Or Efficiency and productivity depend upon the QUALITY OF LEADERSHIP. Do you agree with this statement? Give any 3 reasons in support of your answer. (Yes) Or

What are the QUALITIES required by a good leader (any 3 skills) Judgement skills: A good leader should be able to examine problems in right perspective. His judgement and decision making abilities should be superior to others. He should be able to form opinions and judge based on facts and not be prejudiced Communication skills: A good leader should be able to communicate the goals and procedures of the organisation clearly, precisely and effectively to the subordinates. Only then will it be possible for him to convince, persuade and stimulate subordinates to action. Listening skills: People tend to avoid a leader who does not listen. Hence a good leader in one who can listen to other peoples problems. He should be able to create a culture whereby people can be frank with him and give him information and also give him feedback about himself, which can help him to improve himself. Inspiring skills:

A good leader should be able to inspire people to deal with the why question. He should not just command and control but be able to lead the people and get them involved to work together as a team. MOTIVATION: Define motivation as an element of directing? 2 marks sample paper V. Imp

Motivation is a mental state. Motivation in management means stimulating people to action in order to achieve the desired goals. It arouses the desires in the people to initiate and direct their behaviour in purposeful manner.

How does motivation improve the efficiency of workers in an organisation? Give any 3 points.

Motivation infuses willingness in employees to achieve a high level of performance. A motivated employee feels pleasure in performing their duties. This helps to improve productivity, reduce cost of operations and secure overall efficiency. Motivation is essentially goal directed. Therefore, more the subordinates are motivated higher are the chances of achieving the goals of the organisation.

Effectiveness of motivation contributes to the success of an organisation? How? Explain giving any four points.

Or Why is it important to motivate employees in an organisation? Give any 3 reasons Motivation is important in the organisation due to the following reasons: Motivation improves workers efficiency Motivation infuses willingness in employees to achieve a high level of performance. A motivated employee feels pleasure in performing their duties. This helps to improve productivity, reduce cost of operations and secure overall efficiency. Motivation is essentially goal directed. Therefore, more the subordinates are motivated higher are the chances of achieving the goals of the organisation.

Reduction in resistance to change Employees normally resist changes in the organisation. However if employees are motivated they are likely to support the change even if it means more efforts on their part. This is because they identify their own progress with the prosperity of the organisation. Reduction in employee turnover:

Motivation secures loyalty of the employees and creates confidence in them. As a result employee turnover is reduced. This results in maintaining stability in work force. Motivation facilitates achievement of organisation goals By motivating employees through suitable rewards in the form of money, promotion, recognition of efficient work, management can secure the cooperation of subordinates to contribute their best efforts towards fulfilling their assigned tasks and thus achieve the goals of the organisation. Explain any 4 NEEDS that motivate an employee to work? Or State any three types of needs that govern human motivation? 3 marks Or Briefly explain Abraham Maslows HIERARCHY OF NEEDS? PESS Physiological needs: It includes basic needs required for survival and maintenance of human life such as food, clothing, shelter, water and other necessities of life. ESTEEM NEEDS: (Define v. imp) It includes a desire for self-image and self respect on one hand and respect,

recognition from others. These needs are satisfied by recognising good performance of employees, providing challenging job assignments, good job titles, nice office, extra authority, etc. Security needs: People want physical, economical as well as social security. They want security for themselves, their property and a safe environment to live in. Physical security : includes protection against fire, accidents, disease, crime etc. Economical security : includes having a permanent job and money to fulfil basic needs on a permanent basis. Social security : includes need for security in old age, illness, disability, etc. Social needs: It includes a desire to give and receive love and affection and the need to be accepted by the peers. These needs are satisfied by friendship, family and community relations outside the workplace. COMMUNICATION

Define the term Communication? 2 marks

Communication means exchange of messages between two or more persons. These messages could mean idea, opinions, facts, information, instructions and anything that conveys a meaning. These messages may be conveyed in words, pictures, and actions or gestures Effective communication takes place only when the receiver is able to interpret the message as desired by the sender and responds to it.

What do you mean by noise. How does it interfere in the communication process 3 marks When there is a disrupted interference anywhere in the communication process, it is termed as noise.

Examples: o Someone coughing, o two people talking close at hand, o a truck driving, o a letter being lost in the mail, o a telephone line going dead or one of the persons being called away before the communication process is completed. Noise may also arise because a manager is not able to express himself well or if the listener is not being attentive or memos are poorly written and therefore hard to read. However if communication is two-way, the communicator can find out if the message was

received and if has produced the intended response. Enumerate any 3 advantages of informal communication from the point of view of members of an organization and from the point of view of management 3 marks Advantages of informal communication from view of members are: Employees can develop friendly relations and derive social satisfaction through informal exchange of ideas and information Employees can give a free and frank expression of their views, which cannot be done through official channels. It helps employees who are not linked through the official chain of command to communicate.

Advantages of informal communication from view of management are: It helps to communicate those messages, which is not possible through official channel. It can be used for speedy communication in emergency It reduces tensions in employeremployee relations & provides emotional relief to workers.

Employees reactions and attitudes can be easily ascertained.

Difference between: FORMAL INFORMAL COMMUNICATION COMMUNICATION Channel It follows established line of command It arises as a result of personal relations

Nature

It is rigid and It is flexible as it cannot be modified arises as a result of social interaction It is mostly in written form It is mostly in oral form As the source cannot be traced, it is difficult to fix responsibility It serves organizational as well as individual needs

Expression

Responsibility It is easy to fix responsibility in formal communication Needs It serves organizational needs

Records

Records are kept No records are kept for future reference

Speed It is usually slow It is usually fast Explain any four factors that are likely to disrupt effective communication? 3 marks Or

Enumerate 4 barriers of communication? 2 or 3 marks (PCS) - Important The following are the factors that are likely to disrupt effective communication: Predispositions: Sometimes the person who receives the message may be biased or predisposed i.e. he may ignore the suggestions for change from the subordinate because he thinks the subordinate is always complaining about something. Poor listening skills: Some people are poor listeners. When someone is talking to them they are distracted. This problem occurs both with superiors and subordinates. Complex Organisation structure: An organisation having a long chain of command also acts as a barrier to effective communication Selective reception: Selective reception takes place when people tend to hear only what they want to hear and block out that part of the information that disagrees with what they believe. As a result communication gets distorted.

Status difference: Effectiveness of communication can be adversely affected when status of communicator is not equal.

Chapter 8 Controlling (5 marks) Control without its process is a meaningless exercise. Explain this statement Or

Comparing the actual performance with laid standards, finding out the deviations and taking corrective action is an important process of a management function name and explain this PROCESS.- 5 marks (Ans: Controlling process) Or Describe in brief the various steps in the process of control - 5 marks (CBSE-2003) Following are the 4 steps in controlling process: (Establishing, Measuring, Comparing & Taking) Establishing standards: 1st step is to establish standards of performance against which actual results can be evaluated. These standards are the yardsticks of performance and clearly specify what should be accomplished.

Measuring performance: 2nd step is to measure actual performance of the entire workforce in the organisation. For easy comparison, actual performance should be expressed in the same terms as planned standards.

Comparing performance with standards:

3rd step involves finding deviations and the causes of such deviations Minor deviations should not be reported to top management, as they are acceptable. But major deviations must be reported so that remedial measures can be taken.

Taking corrective action: 4th and final step in the controlling process is find out the deviations and take corrective action to prevent recurrence of deviations. There are three actions a manager may take after comparing actual performance with established standards. o Let the situation remain as it is. o Correct the deviation by improving the performance o Revise the standard set earlier.

Chapter 9 Financial Management (5+5 = 10 Marks) 6080 words State 5 factors that determine/affect the CAPITAL STRUCTURE of a company? (very important) Financial leverage: The financial manager should carefully examine how the use of the proposed financing mix will affect the risk and returns of the owners.

The financial leverage used by the company will depend on the amount of risk the company would like to take. Flexibility: The capital structure of the company should be flexible enough to Adapt to changing conditions whenever required. Raise additional funds without undue delay and cost.

Legal framework: The Companies Act and SEBI provide guidelines from time to time on how the shares and debentures should be issued to the public. The finance manager of the company must be aware of all these rules and regulations and carefully consider these guidelines while deciding on the capital structure of the company.

Market conditions: The conditions in the capital market also influence to a certain extent the decisions regarding capital structure. It may not affect the capital structure initially but when the company requires additional funds then the

appropriate time for issuing the shares or debentures should be considered. Control: If the owners want to maintain a tight control over the company it should obtain its funds through loans because debenture and preference shareholders do not have a right to manage the affairs of the company. However if the owners want to dilute the control, they can raise funds through issue of equity shares, as equity share holders have a right to vote.

One of the EFFECTS OF UNDER CAPITALIZATION is that the market value of shares goes up. But still under capitalization is not considered good for the Co. Why? Effects of under capitalization on the company: (increases, goodwill, credit worthiness competition and demand for higher salaries) Increases creditworthiness and goodwill of the company as market value of shares goes up due to high profitability An under capitalized company earns more than the prevailing rate of profit in the industry. But this may induce competitors to enter the same

line of business and pose a threat to the company. The employees demand higher salaries, which may lead to dissatisfaction and labour tension. Secret reserves are built. Exceptionally high rate of profit may induce Government to impose heavy tax, which leads to reduction in company profits. If you have to choose between two situations of over capitalization and under capitalization, which one will you prefer and why? (Ans: I would prefer under capitalization due to the following reasons) Or Both under capitalization and over capitalization are evils, but under capitalization is lesser evil. Do you agree? Give reasons for your answer 5 points (5 marks 100 words)

Yes, I agree with the above statement. Over capitalization means that capital is not being effectively used and the earnings are less and do not justify the amount of capital that is employed in the business i.e. a fair return is not realized on capitalization. Under utilization on the other hand means that the rate of profit earned on capital invested is higher than the return enjoyed by similar companies in the same industry or when the

value of assets is more than the amount of capital. Under capitalization has its own evil consequences but it is not as fatal as in the case of over capitalization because: o Under capitalization is a condition that cannot exist for long. o Higher earnings attract competition. o Government intervention in the form of higher taxes leads to reduction in company profits. o The economy takes care of an under capitalized company and because of its pulls and pressures, the company comes back to normal. On the other hand, over capitalization is a serious problem. To overcome the ill effects of over capitalization, the company will have to be completely reorganized and the consequence of this have to be faced by the shareholders and creditors. Hence we can conclude that under capitalization is a lesser evil. (if student conveys suitable meaning in any format, full credit should be given)

Explain briefly any 5 factors to be considered while determining the requirements of WORKING CAPITAL of a business enterprise? CBSE-2004(2) (C) 5 marks Anagram COINS required for working capital Credit policy:

Less working capital is required if a liberal credit policy is followed i.e. when suppliers grant the firm credit for supply of raw materials, etc. Operating cycle: Operating cycle refers to the manufacturing cycle, which converts raw material to finished goods. If the operating cycle is long then more working capital is required and vice versa. Inventory policy: If the business requires keeping a large stock of inventory, working capital requirement will be more and vice versa. Nature of business: The amount of working capital required depends on the nature of business of the enterprise. Trading companies require less working capital than manufacturing companies because in trading companies or retail shops: the transactions are mostly done in cash length of the operating cycle is small, time gap between goods acquired and sold is less; and

turnover is high

Seasonal operations: If the products have a steady demand in the market throughout the year, then the working capital requirements remain constant in a business. However when demands for products are seasonal sales increases. To cater to this increase in sales, there is a demand to produce more. Hence more working capital is required during this time Explain in brief any 5 factors that should be taken into consideration while determining the long-term DIVIDEND POLICY 2004 (set 3) 2004 Compartment (Sets 1 and 3), (Anagram to remember this answer is: There are LEGAL RESTRICTIONS for ISSUE OF BONUS SHARES as the company has to CONSIDER THE CAPITAL MARKET and follow a STABLE DIVIDEND POLICY for FINANCIAL REQUIREMENTS OF THE COMPANY) - FLICS Legal restrictions: According to the Companies Act, a company Cannot pay dividends from its paid up capital Can use its profits for other purposes only after it has made depreciation for payment of dividends.

Issue of Bonus shares:

Sometimes companies issue bonus shares (also known as stock dividend) instead of cash dividends. This helps to increase the number of shares of the shareholder as well as the capital base of the company. It keeps investors happy. The issue of bonus shares is an integral part of the dividend policy. Capital market considerations: When a company needs funds for investment it has two options open: If the company has easy access to capital market then it can afford to pay more dividends and raise additional equity by tapping the capital market; or If the company has limited access to capital market, then it can pay low dividends to its shareholders and rely on retained earnings for funding its investments.

Stable dividend policy: Most companies, shareholders and even financial institutions like UTI, IDBI prefer to invest in companies that follow a stable dividend policy because: It has a favourable impact on the market value of the shares It removes the uncertainty in the minds of the investors It satisfies their desire for current income

Financial requirements of the company: If the company has many investment opportunities then it should pay low dividends to its shareholders and reinvest its profits in the business. It is cheaper to use retained earnings to finance the projects, as they do no involve floatation costs and any legal formalities. Mature companies normally have few investment opportunities and so declare high dividends while growth companies, which are always in need of funds to finance their assets, normally declare low dividends.

eBooksin this chapter ( 5 marks each two questions will be asked = 10 marks)

Objectives/Importance of financial planning CBSE 2005 Set 1 (Imp) 5 causes of over capitalization? 5 causes of under capitalization? 5 effects of over capitalization on company -2005(Sets 1 and 2)- Imp 5 effects of overcap. on shareholders OR Over capitalization is a curse to shareholders v imp (2004 Sets1,2,3) 5 factors that determine capital structure-2005 (Set2)2004 Compartment(2) 5 factors that determine working capital 2004(set 2) 2004 Compartment Sets 1 and 3

5 factors that determine dividend policy 2004 (set 3) 2004 Compartment (Sets 1 and 3),

Chapter 10 Capital Market (4+ 4 = 8 Marks) 60-80 words) What is meant by capital market? Describe its nature. 4 marks

It is a market where all organizations, financial institutions and instruments provide long and medium term funds to the business sector. The two major components of capital market are o Primary (new issue market) o Secondary market (stock exchange). The nature of capital market can be understood from the following points: It acts a link between savers and borrowers who need funds to invest profitably and efficiently.

It helps firms to procure finances for long-term investments such as buying plant & machinery, building, etc. It obtains its funds through issue of various securities such as equity shares, bonds, debentures and innovative securities like zero interest bonds and deep discount bonds. It functions thru various intermediaries such as underwriters, bankers, stock brokers, etc. It includes both individual investors and institutional investors such as UTI, LIC, IDBI, etc

State any four PROTECTIVE functions of SEBI? (What is insider trading)? It prohibits insider trading. It prevents insiders such as directors, promoters who have access to price sensitive information regarding securities of the company (which is not available to the public) to make individual profits through trading of securities. It prohibits fraudulent and unfair trade practices in the security market like making misleading statements and price rigging. (Manipulating with the sole intention of inflating or deflating the market price of securities is termed as price rigging)

It promotes fair practices and code of conduct in the securities market. Example: Looks after the interest of the debenture holders in terms of any mid term revision of interest rate, etc. It takes steps to educate investors.

SEBI is a REGULATORY authority of the securities market. Do you agree? Explain in brief any four reasons in support of your answer. 4 marks - CBSE2005 Set 1, 2. OR V. Imp

It carries out audit of the share markets It regulates takeover of companies It regulates the business being conducted in the share market. It registers and regulates the working of brokers, sub brokers, transfer agents, merchant banks, underwriters, etc. It registers and regulate the credit rating agency, venture capital funds and mutual funds

State any two developmental functions of SEBI 4 marks CBSE-2004 Set 1 V. Imp

It promotes trading of intermediaries of the securities market. It adopts a flexible approach to develop the capital market.

You are a finance expert. One of your friends comes to you and tells you that the capital market and money market are one and the same, whereas you differ with

him. How would you convince him? Give any 4 reasons. 4 marks CBSE-2004 Set 1,2.3 Or Dist between: Capital Market and Money Market on the basis of: participants, instruments traded, investment outlay and safety 4 will be asked (4 marks CBSE 2005 Set 2) V. Imp CAPITAL Basis MONEY MARKET MARKET Participants Participants are Participants are financial institutions such s institutions, banks, RBI, Banks, corporate entities, Financial foreign investors Institutions and and ordinary retail finance companies investors from the public Instruments Equity shares, Treasury bills, debentures, trade bills, Traded bonds, preference commercial shares, etc papers, certificates of deposit Investment Does not require Requires huge outlay huge investment investment outlay outlay as value of as instruments are units of securities quite expensive is low Safety Risky both in Safer with terms of returns minimum risk of and principal default repayment

Duration Liquidity

Deals in medium and long term securities Low liquidity

Expected Generally yields returns high returns Dist between: 4 marks NSEI and OTCEI on the basis of: size of company, securities traded, settlement, objective. Basis NSE(I) OTCE(I) Size of Paid up capital 3 Paid up capital 30 company crores & above lakhs and above Securities Trades in Equity, Equity, traded debentures, debentures, etc treasury bills, PSU, bonds, etc Settlement Payment within 15 Payment within 7 days of transaction days of the transaction Objective Nationwide, Serves as an ringless exchange for transparent trading securities of small facility for both companies capital and money market

Deals in short term securities from 1 day up to 1 year High degree of liquidity Generally yields low returns

Dist between: Primary and Secondary Market on any 4 basis Basis Primary Secondary Market(New Issue Market(Stock

Market) Exchange) Securities It is a market for It is a market for trading new securities existing securities Sale of Securities are sold Securities are securities to investors exchanged directly by the between investors company or without through their involvement of the intermediary company Flow of funds It directly It indirectly promotes capital promotes capital formation as flow formation as it of funds is from enhances liquidity savers to investors of shares Location It has no fixed It has a fixed geographical location and fixed location. Shares working hours can be traded from anywhere Prices Prices are Prices are determined by determined by management of demand and the company supply of the securities The directors of a company want to modernize its plants and machinery by making a public issue of shares. They wish to approach stock exchange, while the finance manager prefers to approach a consultant for the new public issue of shares. Advise the directors whether to approach stock exchange or a consultant for new public issue of shares and why?

Also advise about the different methods that the company may adopt for the new public issue of shares. The directors should approach the consultant for the new public issue of shares. The reason being that as stock exchange is a secondary market, which deals in existing securities while the company wants to make a public issue of shares. The following are the methods for the new public issue of shares. Public issue through prospectus: Under this method, the company issues a prospectus to invite the public to invest in its securities. The prospectus provides the following details o purpose for which funds are being raised o past financial performance of the company o background and experience of promoters This information helps the investing public to evaluate the earning potential and risk of the proposed investment.

Offer for sale:

The sale of securities takes place in two steps: o In the first step the company sells all the shares to intermediaries at an agreed price. o In the second step the intermediaries resell these securities to investors at a higher price. The advantage of this method is that the company is saved from the tedious process involved in making a public issue.

(1 mark for correct advice + 1 mark for reason + 1 mark for each correct method = 1=1=2=4 marks)

Chapter 12A Consumer Protection (2+4 = 6 Marks) 2-3 marks Q should not exceed 30-40 words 4-5 marks Q should not exceed 60-80 words 6 marks Q should not exceed 100 words Consumer Protection (2+4 = 6 marks) (a) The rationale of consumer protection concept, aspect and need

(b) Importance of Consumer Protection (c) Consumer rights and responsibilities (d) Ways and Means of Consumer Protection (e) Role of Consumer Organizations Explain briefly the meaning of consumer with reference to Consumer Protection Act 1986 - 2 marks The Act defines consumer as: 1. One who buys goods or hires services for consideration. 2. One who uses the goods or hired services with the approval of the buyer or hirer of the service. 3. One who uses the goods/services to earn livelihood by self-employment. What are the salient features of Consumer Protection Act? 4 marks The Act applies to all goods and services unless specially exempted by Union Government It covers all sectors public, private or cooperative Provisions of the Act are compensatory in nature It enshrines all consumers rights to choose, to be heard, to be informed,

to safety, education and redressal (CHISER) It empowers consumers seeking discontinuance of traders malpractices, defective goods, service deficiencies or withdrawal of hazardous goods from the market. What does Consumer Protection refer to? It refers to protection of consumers against anti consumer trade practices by producers/traders. These anti trade include adulteration, sub standard quality, overcharging, making misleading claims in advertisements, etc The essence of consumer protection is curbing such practices through legislative and other measures

Giving any six points, explain the need/importance for consumer protection? OR Why is consumer protection needed in India 6 marks Business is a means of human welfare: Business serves the customer and therefore it is a means and not an end in itself. Hence it is in the interest of both the consumer and the businessman to ensure that the business is run well because ignoring the interest of the consumer may be a sure death of the business.

Growth with social justice: We are a secular country and growth with social justice is the cornerstone of our economic philosophy. Exploitation of consumers is against the directive principles of State Policy laid down in our Indian Constitution. Single versus multiple objectives: Business works for all stakeholders consumers, shareholders, employees, government, and the public. It is both a social and economic institution. Therefore it cannot just make profit by ignoring the interest of the society. For the survival and growth of business it must work for the interest of the stakeholders in general and consumers in particular. Power Centre: Business has considerable influence over society and government. Therefore it has to set standards regarding food, dress habits, living styles, etc which will not damage the cause of society and serve the interest of a few persons only. Self interest: Due to liberalization and globalization, firms have to compete

with multinationals. Unless they become customer oriented and provide right quality, quantity and price they cannot satisfy a customer and without customer satisfaction no business can survive for long and will be out beaten by competition from multinationals. Moreover, Government has enacted laws to protect the interest of the consumers. Hence if a firm violates the laws they are likely to lose their goodwill and clients permanently. Ethical obligations: Firms that adapt ethical values, attain glories in the business world. Business without ethical values is nothing but a criminal activity and no civil society will tolerate a business without ethical values for long. ( mark for naming each point and mark for each explanation) Explain in brief any six rights of consumers as provided under the Consumer Protection Act, 1986 6 marks Or Explain the following rights: (6 marks) The right to safety It refers to the right to be protected against products, production processes and services which are hazardous to health or life. It

includes concern for consumers immediate and long term needs. The right to be informed Consumers have a right to be informed about the quality, quantity, potency, purity, standard and price of goods or services so that they can make the right decision and protect themselves against malpractices. The right of choice The consumer has the right to be assured of a choice of various goods and services of satisfactory quality and competitive price. Right to representation (or right to be heard) It is a right and the responsibility of civil society to ensure consumer interest prevails while formulating and executing policies which affect the consumers, as well as right to be heard while developing or producing a product or service. Right to seek redressal of aggrievances. The consumer has the right go to court if he has been unscrupulously exploited against unfair or restrictive trade practices and receive compensation for supply of unsatisfactory or shoddy goods. The right to consumer education

It is the right to acquire knowledge and skills to be an informed consumer because it is easier for the literate to know their rights and to take actions to influence factors that affect consumers decisions. The Union and State Governments have accepted the introduction of consumer education in school curriculum. Right to basic needs It is the right to receive the eight basic necessities that are required to survive and lead a dignified life. These eight basic necessities include food, clothing, shelter, health care, sanitation, education, energy and transportation. Right to healthy environment It is the right to be protected against environmental pollution and environmental degradation so as to enhance the quality of life of both the present and future generation. Explain any six responsibilities of a consumer ( 6 marks) It is the responsibility of the consumer to: Be aware of his rights and exercise them with regard to products purchased or services rendered.

Be quality conscious and thoroughly examine the product before purchasing it. o Check the quality mark i.e. AGMARK, ISI, PDS, BIS, etc. o Ask for a guarantee card if there is one. Insist on a cash memo which is required as proof of purchase in case of a complaint. File a complaint for redressal of grievance however small, to discourage malpractices. Do not get carried away by advertisements but check the actual use of the product with that given in the advertisement. If there is a discrepancy, it should be brought to the notice of the sponsor. Form Consumer Awareness organizations, which can be represented at various committees formed by the government for the welfare of the consumers.

Mr. Soni a consumer purchased medicines without noticing the date of expiry. He also did not obtain the cash memo. Do you think he will be able to protect himself by the loss caused due to expired medicine? Give reasons to support your answer. 4 marks No, Mr. Soni cannot protect himself from the above loss due to the following reasons:

1. He should have been a cautious consumer and should have thoroughly examined the product including the expiry date of the medicine before purchasing it and not depended on the seller. 2. He should have insisted on a cash memo, which is required as proof that he has purchased the medicine from that particular trader, failing which he cannot sue for compensation. Explain any six ways and means of consumer protection followed in India 6 marks The following are some of the ways and means of consumer protection followed in India: Lok Adalats: How do Lok Adalat & publicity measures help in protecting the consumer? 6 marks The Consumer can approach the Adalat with his grievance. The issue is discussed and decision is taken on the spot. This saves time and money Lok Adalat has become a speedy, effective and economical redressal system. Indian Railways, Delhi Transport Corp, Delhi Development Authority, Delhi Vidhyut Board, etc hold Lok Adalat from time to time to sort out problems faced by users.

Publicity Measures: How do Lok Adalat & publicity measures help in protecting the consumer? 6 marks 15th March is celebrated as World Consumer Right Day all over the world ever year. In 1995 this day was organized at Vigyan Bhawan, New Delhi. In addition, the Ministry with the help of DAVP undertook a massive outdoor publicity program such as displaying hoardings, banners, bus panels, etc. Telecasting on consumer protection is also done by Doordarshan on a fortnightly basis.

Public Interest Litigations: (Under what circumstances can a public interest litigation be filed? The Indian legal system does not provide legal services to large segments of the population such as the poor, environmentalists, consumers, minorities, etc. Thus the Public Interest Litigations legally represents such groups with the result that any individual or organization can approach the court for remedial action for effective implementation of the law, environmental protection or any other social evils like bonded labour, etc. Environmentally Friendly Products:

The Ministry of Environment and Forests has introduced an Eco-Mark scheme. It is a label that has a symbol of an earthen pitcher. If this label appears on a product, it means that the manufacturer has satisfied the conditions laid down regarding the production processes and used environmental friendly materials. This scheme has been started with consumer items like soap, detergents, paints, food items, edible oil, etc. This scheme is consumer oriented so that people manufacture, use and dispose off products which are least harmful to the environment.

Redressal Forums & Consumer Protection Councils: Under the Consumer Protection Act 1986 a judicial machinery such as the District Forums, State and National Commissions have been set up to provide speedy, effective and economical redressal of consumer grievances and disputes. National Youth Award on consumer protection: To encourage consumers and youths to participate in the field of consumer protection, every year the Union Ministry gives two national awards National Award on Consumer Protection and National Youth

Award on Consumer Protection. The Ministry also gives a National Woman Award to involve women in outstanding work in the field of consumer protection. Consumer Welfare Fund : The Revenue Department of the Union Ministry of Finance has passed the Central excise and Customs laws (Amendment) Act 1991. According to this Act, a consumer welfare fund is created and the excess amount of excise/custom duties which is not refundable to manufacturers or importers is credited into this fund and used for: Promoting the welfare of the consumers. Community based rural awareness projects Setting up a consumer guidance bureau to handle complaints, counseling and guidance Setting up consumer product testing laboratories. ( mark for naming each means + mark for its explanation)

Which type of complaints can be lodged by consumers? The Act provides that consumers can lodge complaints and claim compensations with respect to :

Traders malpractices,

Defective goods; and Service deficiencies. These include services in connection with banking, entertainment, financing, insurance, transport, supply of gas and electricity, medical services, boarding and lodging. (clue: BEFITS medical, boarding & lodging)

What type of judicial machinery is there to deal with consumer grievances and disputes?

The Act further provides that the consumer can approach the following 3-tier judicial machinery depending upon the amount of loss involved District if loss is up to Rs. 20 lakhs Forum State if loss is between Rs.20 lakhs to Rs 1 Commissio crore n National if loss is more than Rs. 1 crore Commissio n The complaint must be disposed off as speedily as possible within 3 months or within 5 months if testing or analysis of goods is required to be done. The consumer has the right to file an appeal within 30 days with the next higher forum if he feels justice has not be done to him. The prescribed fee to file an appeal is as follows:

State Commission - 50% of the amount payable or Rs. 25,000 whichever is less National Commission 50% of the amount payable or 35 % whichever is less

What are the remedies/reliefs available to consumers under the Consumer Protection Act 1986? Discuss 6 marks The relief/remedies available to the consumer are: Replacement of Discontinuation of unfair or goods restricted trade practices Withdrawal/discontinue the Price refund sale of hazardous goods Compensation Paying adequate cost to against loss or parties injury Removal of service deficiency Explain the role of Consumer Organisations/Non govt. Organisations Or Explain in brief any six functions of consumer organizations in the area of consumer protection. 6 marks

Bringing out journals, brochures, monographs Arranging conferences, seminars, workshops on consumer problems and solutions Supporting government agencies against malpractices, adulterated & hazardous goods. Investigating into problems of consumers

Collecting data on different products and testing them Filing suits and petitions in the court on behalf of the consumers Organizing protests against price rigging, adulteration, underweight selling, etc Encouraging consumers to boycott defective bad quality goods In what type of activities is Consumer Coordinating Council involved?

It is the main body of the Consumer Organizations of India. It conducts several programmes on consumer education for activists, etc It has published training manuals on Consumer Protection Act Water, Food and Public Distribution System o Health drugs and cosmetics o Road Transport and Railways

Explain the role of press in consumer protection? 6 marks

The press has been responding to consumer needs in several ways even much before the Consumer Protection Act was enacted. Besides publishing articles, columns etc. it has rescued harassed consumers. For example the Indian Express was the first newspaper to start a column on consumer complaints. It not only published the problems and grievances of

consumers but also forwarded them to the concerned authorities for redress. In many cases the results were published and consumers were able to get their grievances settled. The success and popularity of the Indian Express column, motivated other newspapers to follow suit and today almost all newspapers, including regional language newspapers, publish consumer complaints on a weekly basis.

Explain the role of universities and schools in consumer protection?

Indira Gandhi National Open University (IGNOU) has developed a comprehensive syllabus, which provides the basic framework for other universities to develop a curriculum for consumer education. The Kakitaya University in Andhra Pradesh is offering a one-year post graduate course in consumer law. The Maharashtra Open University in Pune is offering courses in consumer education. CBSE has published a Teachers Manual on consumer education for students. Many other voluntary consumer organizations have mushroomed but due to lack of resources their contribution in this field has been insignificant. There is therefore an urgent need of an apex (main) Consumer Organisation that will help to coordinate the activities of these voluntary organizations in India.

Chapter 12B Consumer Protection (6 Marks) 100 words Giving any 6 points, explain the IMPORTANCE for consumer protection? Business is a means of human welfare: Business serves the customer and therefore it is a means and not an end in itself. It is in the interest of both the consumer and the businessman to ensure that the business is run well because ignoring the interest of the consumer may be a sure death of the business.

Growth with social justice: We are a secular country and growth with social justice is the cornerstone of our economic philosophy. Exploitation of consumers is against the directive principles of State Policy laid down in our Indian Constitution.

Stakeholder approach:

The success and survival of business depends on the efforts made by all stakeholders such as consumers, shareholders, employees, government, and the public. Therefore for its survival and growth business must work for the interest of the stakeholders in general and consumers in particular.

Power Centre: Business has considerable influence over society and government. Therefore it has to set standards regarding food, dress habits, living styles, etc which will not damage the cause of society and serve the interest of a few persons only. Self interest: Due to liberalization and globalization, firms have to compete with multinationals. Unless they become customer oriented and provide right quality, quantity and price they cannot satisfy a customer and without customer satisfaction no business can survive for long and will be out beaten by competition from multinationals. Moreover, Government has enacted laws to protect the interest of the consumers. Hence if a firm violates the laws they are likely to lose their goodwill and clients permanently.

Ethical obligations: Business without ethical values is nothing but a criminal activity and no civil society will tolerate a business without ethical values for long. ( mark for naming each point and mark for each explanation) Explain in brief any six rights of consumers as provided under the Consumer Protection Act, 1986 6 marks Important Or Explain the following rights: (6 marks) Any 3 will be asked Clue: CHISER choice, heard, informed, safety, education, redressal. Right to choose The consumer has the right to be assured of a choice of various goods and services of satisfactory quality and competitive price. Right to representation (or right to be heard) It is a right and the responsibility of civil society to ensure consumer interest prevails while formulating and executing policies which affect the consumers, as well as right to be heard while developing or producing a product or service Right to be informed

Consumers have a right to be informed about the quality, quantity, potency, purity, standard and price of goods or services so that they can make the right decision and protect themselves against malpractices. Right to safety It refers to the right to be protected against products, production processes and services which are hazardous to health or life. It includes concern for consumers immediate and long term needs. The right to consumer education It is the right to acquire knowledge and skills to be an informed consumer because it is easier for the literate to know their rights and to take actions to influence factors that affect consumers decisions. Right to seek redressal of aggrievances. The consumer has the right go to court if he has been unscrupulously exploited against unfair or restrictive trade practices and receive compensation for supply of unsatisfactory or shoddy goods. Right to basic needs It is the right to receive the eight basic necessities that are required to survive and lead a dignified life. These eight basic

necessities include food, clothing, shelter, health care, sanitation, education, energy and transportation. Right to healthy environment It is the right to be protected against environmental pollution and environmental degradation so as to enhance the quality of life of both the present and future generation. Explain any six responsibilities of a consumer ( 6 marks) It is the responsibility of the consumer to: (Important) Be aware of his rights and exercise them with regard to products purchased or services rendered. Be quality conscious and thoroughly examine the product before purchasing it. o Check the quality mark i.e. AGMARK, ISI, PDS, BIS, etc. o Ask for a guarantee card if there is one. Insist on a cash memo which is required as proof of purchase in case of a complaint. File a complaint for redressal of grievance however small, to discourage malpractices.

Do not get carried away by advertisements but check the actual use of the product with that given in the advertisement. If there is a discrepancy, it should be brought to the notice of the sponsor. Form Consumer Awareness organizations, which can be represented at various committees formed by the government for the welfare of the consumers.

Explain any 4- 6 ways & means of consumer protection followed in India 6 marks The following are some of the ways and means of consumer protection followed in India: Lok Adalats: How do Lok Adalat & publicity measures help in protecting the consumer? 6 marks The Consumer can approach the Adalat with his grievance. The issue is discussed and decision is taken on the spot. This saves time and money

Publicity Measures: How do Lok Adalat & publicity measures help in protecting the consumer? 6 marks

15th March is celebrated as World Consumer Right Day all over the world ever year. In 1995 this day was organized at Vigyan Bhawan, New Delhi. In addition, the Ministry with the help of DAVP undertook a massive outdoor publicity program such as displaying hoardings, banners, bus panels, etc. Telecasting on consumer protection is also done by Doordarshan on a fortnightly basis.

Public Interest Litigations: (Under what circumstances can a public interest litigation be filed? The Indian legal system does not provide legal services to large segments of the population such as the poor, environmentalists, consumers, minorities, etc. Therefore the Public Interest Litigations legally represents such groups for effective implementation of the law, environmental protection or any other social evils like bonded labour, etc.

Environmentally Friendly Products:

The Ministry of Environment and Forests has introduced an Eco-Mark scheme. It is a label that has a symbol of an earthen pitcher. If this label appears on a product, it means that the manufacturer has satisfied the conditions laid down regarding the production processes and used environmental friendly materials. This scheme is consumer oriented so that people manufacture, use and dispose off products which are least harmful to the environment.

Redressal Forums & Consumer Protection Councils: Under the Consumer Protection Act 1986 a judicial machinery such as the District Forums, State and National Commissions have been set up to provide speedy, effective and economical redressal of consumer grievances and disputes. National Youth Award on consumer protection: To encourage consumers and youths to participate in consumer protection, the Union Ministry every year gives two national awards National Award on Consumer Protection and National Youth Award on Consumer Protection.

The Ministry also gives a National Woman Award to involve women in outstanding work in the field of consumer protection.

Consumer Welfare Fund : A consumer welfare fund has been created according to the Central excise and Customs laws (Amendment) Act 1991. The excess amount of excise/custom duties which is not refundable to manufacturers or importers is credited into this fund and used for: Promoting the welfare of the consumers. Community based rural awareness projects Setting up a consumer guidance bureau to handle complaints, counseling and guidance Setting up consumer product testing laboratories.

What are the remedies/reliefs available to consumers under the Consumer Protection Act 1986? Discuss 6 marks Important The relief/remedies available to the consumer are: They can have the goods replaced They can get a price refund They can be compensated against loss or injury

Discontinuation of unfair or restricted trade practices Withdrawal/discontinue the sale of hazardous goods Paying adequate cost to parties Removal of service deficiency

Explain the role of Consumer Organizations/Non govt. Organizations (any 6 points) Or Explain in brief any six functions of Consumer Organizations in the area of consumer protection. CBSE 2005 Set 1,2,3 6 marks (Clue: BASIC FOE)

Bringing out journals, brochures, monographs Arranging conferences, seminars, workshops on consumer problems and solutions Supporting government agencies against malpractices, adulterated & hazardous goods. Investigating into consumers problems Collecting data on different products and testing them Filing suits and petitions in the court on behalf of the consumers Organizing protests against price rigging, adulteration, underweight selling, etc Encouraging consumers to boycott defective bad quality goods