KENDRIYA VIDYALAYA SANGATHAN

CHANDIGARH REGION

SUBJECT ENRICHMENT MATERIAL

CLASS: XII

SUBJECT: BUSINESS STUDIES

2019-20

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 INDEX

Sr. No. Name of the Chapter Page No.

1. Nature and Significance of the management 3-20
2. Principles of Management 21-29
3. Business Environment 30-57
4. Planning 58-81
5. Organising 82-100
6. Staffing 101-121
7. Directing 122-131
8. Controlling 132-142
9. Financial Management 143-154
10. Financial Markets 155-169
11. Marketing Management 170-181
12. Consumer Protection 182-190

SUBJECT ENRICHMENT MATERIAL

(FOR HIGH ACHIEVERS)

CLASS : XII SUBJECT : BUSINESS STUDIES

UNIT 1 - NATURE AND SIGNIFICANCE OF MANAGEMENT

Q. NO. QUESTIONS MARKS

1 One of the organisational objectives of management is ‘Growth of 1
business’. Which one of the following is not associated with

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 measurement of business growth?
(a) Sales volume (b) Number of Employees
(c) Number of Creditors (d) Number of Products offered
2 -------------- refers to the orderly synchronising of efforts of subordinates 1
to provide proper amount, timing and quality of execution.
(a) Planning (b) Organising
(c) Coordination (d) Cooperation
3 ------------- in Management means to complete the task correctly with 1
minimum resources.
(a) Effectiveness (b) Efficiency
(c) Coordination (d) None of the above
4 Vijay works in a bank. The bank is about to lose its position as the 1
leading bank in the banking industry. Vijay was assigned to find out the
reason behind poor performance of the bank. He analysed the
situation and came out with the conclusion that there was lack of
integration of efforts made by various departments like human
resource, information technology and consumer relationship.
Identify the managerial concept discussed in the above case.
(a) Cooperation (b) Coordination
(c) Effectiveness (d) Efficiency
5 Saurabh is managing director in a shoe manufacturing company. He 1
has been doing well at this post. Under his guidance and leadership,
the company has been actively achieving all the set targets as all the
unrelated and diverse actions taken by different departments are given
a common direction.
Identify the characteristic of management discussed in the above case.
(a)Management is a goal oriented process
(b) Management is a continuous process
(c) Management is a group activity
(d) Management is a dynamic function.
6 Jay is working as a marketing manager in a company. Has been given 1
the task of selling 1,00,000 units of a product at the cost of Rs. 100 per
unit within 20 days. He is able to sell all the units within the stipulated

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 time, but had to sell last 1,000 units at 20% discount in order to
complete the target. In such a situation, he will be considered to be
(a) An efficient manager (b) An effective manager
(c) Both inefficient and ineffective (d) None of the above
7 Management is said to be poor if it is 1
(a) Efficient but ineffective (b) Effective but inefficient
(c) Both inefficient and ineffective (d) All of the above
8 Tarang Enterprises Limited is planning to increase its sales by 30% in 1
the next quarter. Identify the feature of management being
highlighted in the given statement.
(a) Management is all pervasive
(b) Management is a goal oriented process
(c) Management is a continuous process
(d) All of the above
9 Management is equally important to run a political organisation as it is 1
to run an economic organisation. Which feature of management is
being reflected in the given statement?
(a) Management is a goal oriented process
(b) Management is multidimensional
(c) Management is all pervasive
(d) Management is a group activity
10 Management translates the work to be carried out in terms of goals to 1
be achieved and assigns the means to achieve it.
This statement relates to :
(a) Management of work (b) Management of people
(c) Management of operations (d) All of the above
11 Principles of management are not exact as the principles of science and 1
they have to be modified according to a given situation. Which feature
of science is not applicable in this statement?
12 Why is coordination and cooperation required together? 1

13 At which level of management are the managers responsible for 1

maintaining the quality of output and the safety standards?
14 “Dominos pizza keeps introducing new variety of pizzas in its menu”. 1

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 Which feature of management represents this act?
15 “A manager applies his knowledge of management in his own way”. 1
Which aspect of the nature of management does this statement
indicate?
16 “Management increases efficiency”. How? 1
17 What is the basic difference in the nature of coordination and 1
cooperation?
18 Since management deals with human beings and human behaviour, it 1
can be termed as a --------------
19 It is the process whereby an executive develops an orderly pattern of 1
group efforts among his subordinates and secures unity of action in the
pursuit of common purpose. Which process is referred to here?
20 Bhawna feels that management is required in all kinds of organisation 1
whereas Puja argues that management is not required in non-business
organisations like Schools, hospitals and clubs, who is correct?
21 Mita has a successful ice cream business at Bikaner, namely ‘Smart 3
flavours’. Her ice creams are utterly delicious. She makes ice creams
from fresh milk and the same are available in a wide range of flavours
and packs. She sets viable business objectives and works with the same
in mind in order to ensure that the customers will come back for
purchasing.
Having the first mover advantage her business was doing well. To earn
higher profits, she started cutting costs. This would sometime lead to
delay in delivery and the ice cream was not reaching in the market in
time. Over a period of time, the demand for her ice cream declined
and because of it the competitors entered the market. She lost some
of her market share to competitors.
At the beginning of summer season she got back to back orders for
supply of 4,000 ice cream packs of different flavours for special
occasions. To ensure that the task was completed and orders delivered
in time she hired additional workers. She was, thus able to produce and
deliver the ice cream packs but at a high production cost. While
completing activities and finishing the given task for achieving goals,
Mita realised that she was ignoring one of the important aspects of

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 management.
Identify the aspect of management that has been ignored by Mita. Also
explain the same with the help of example.
22 Shiva Computers Ltd. is a leading company in Computer Technology 3
and IT services. The CEO of the company attributes the success of the
company to its managerial team spirit, which have helped to handle
rapid changes in technologies and to transform into opportunities. Like
any other business enterprise profits are important for survival and
growth of Shiva Computers Ltd. The management of the company
believes that a satisfied employee creates a satisfied customer, who in
turn creates profits that leads to satisfied shareholders.
The company has a strong sense of social responsibility. It has set up
many educational institutions in the field of management, engineering
and computer education in which half of the students are girls.
Identify and explain the various types of objectives of management
being fulfilled by Shiva Computers Ltd. by quoting lines from the
paragraph.
23 Ayushi works as a soft skill trainer in a corporate house. She begins a 3
new session every time by acquainting the trainees with a process
which is vital for achieving the goals of the organisation effectively and
efficiently. She also makes them understand the various primary
activities involved in carrying out this process. She emphasis upon the
fact that in the absence of this process it will be difficult for the
employees to attain their personal goals. Moreover the development
of the society will be hampered as the welfare of the people is also
likely to be overlooked by the organisation.
In context of the above case:
(a) Identify and explain the process being referred to in the above lines.
(b) List the primary activities contained in this process.
(c) How does this process help in achieving personal objectives of the
employees?
24 Ajay and Sanjay are childhood friends. Sanjay had lost his right hand in 3
an accident in childhood. They meet after a long time in a restaurant.

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 On being asked, Sanjay tells Ajay that he feels very discontented in
managing his family business after the death of his father as it doesn’t
match with his areas of interest. Ajay knows that Sanjay possess
extraordinary skills in management although he hasn’t acquired any
professional degree in management. Therefore, he asks Sanjay to wind
up his business in India and join him in his hotel business in Dubai as an
Assistant Manager in Sales and Marketing Division.
Can Sanjay be deployed at the post of Assistant Manager in Sales and
Marketing Division although he hasn’t acquired any professional degree
in management? Explain by giving suitable justification in support of
your answer.
25 Harshita has successfully emerged as the owner of the best modular 3
kitchen manufacturer firm in Delhi. Her friend Vartika is highly inspired
by Harshita’s success in business. In order to understand the essence
of successful business management Vartika decides to spend a week in
her office. Vartika observes that a deliberate effort is made to integrate
the diverse activities of the organisation. Like whenever the sales
manager makes a plan to raise the sales target, he also consults other
department managers i.e. the production manager, the purchase
manager, the finance manager, etc. in order to avoid any problem that
may arise in future. Moreover, work among the people working in the
production department is divided in such a manner that where the
work of one person ends, the work of the next person begins.
Therefore, everybody makes efforts to complete his/her work on time,
and the workers do not create obstruction in each other’s work.
In the context of above case:
(a) Identify the concept being described in the above paragraph.
(b) How does the concept as identified in part (a) of the question help
in carrying out management functions successfully?
26 Devesh works as head (Finance) in a electronics company. Although 3
over the years, with experience he has been able to build upon his
managerial skills in terms of creativity, imagination and initiative, but

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 still he feels that the knowledge of certain underlying theories and
principles of management is a must for any aspiring manager. This is
primarily due to the fact that these principles are evolved through
observations and tested through experimentation and help the
managers in taking scientific decisions. Thus, a manager requires both
the knowledge and certain skills to apply the related knowledge in the
light of given situations to be successful in his work.
In context of the above case:
(a) Identify and explain the two aspects of nature of management
which Devesh thinks makes a manager successful.
(b) Also, explain the specific feature of one of the aspects of nature of
management as identified in part (a) of the question which
distinguishes it from other physical sciences like biology, physics and
chemistry etc.
27 “Management helps in development of society”. How? 4
28 Rishi Sharma has recently joined ABC Ltd., a company manufacturing 4
Air-conditioners. He found that his department was under-staffed and
other departments were not cooperating with his department for
smooth functioning of the organisation. Therefore, he ensured that his
department has the required number of employees and its cooperation
with other departments is improved.
(a) Identify the level at which Rishi Sharma was working.
(b) Also, state three more functions required to be performed by him at
this level.
29 Noori owns a garment factory in Gurugram. She has observed that 4
frequent conflicts emerge between production and marketing
department which adversely affects the sales of the company. When
she shared this problem with her father, he told her that these conflicts
arise due to the fact that each department is performing activities in
isolation from others and barriers between departments are becoming
more rigid.
In the context of above case:
(a) Identify and explain the quality of management which is lacking

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 because of which each department is performing activities in isolation
from others.
(b) Also, explain any three features of the concept as identified in part
(a) of the question.
30 Esha works as the cost and risk management head of a company in 4
power sector. As a result of her excellent managerial competence, the
company is able to reduce cost and increase productivity. The
company belongs to infrastructure sector, wherein regular
amendments are made in the government regulations and policies. She
holds regular meetings to ensure that people in her department are not
only aware of the related changes but are also able to adapt to these
changes effectively. This helps the company to maintain its competitive
edge. She motivates and leads her team in such a manner that
individual members are able to achieve personal goals while
contributing to the overall organisational objective. In the process of
fulfilling her duties for the growth of the organisation, she helps in
providing competitive services, adopting new technology, creating
more employment opportunities etc. for the greater good of the people
at large.
In the context of the above case:
Identify the various reasons that have made management so important
by quoting lines from the paragraph.
31 Amit and Sumit are good friends. Considering the fact that the 5
activities involved in managing an enterprise are common to all
organisations, after completing their masters in business management,
both of them take up a job at managerial level in different organisations
as per their individual areas of interest. Amit takes up a marketing job
in retail company and strives to increase sales whereas Sumit joins an
NGO and works diligently to realise its objective related to providing
employment to especially abled persons. Both of them have to
perform a series of continuous, composite, but separate functions. On
some days, Amit may spend more time in planning a future display

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 layout and on another day, he may spend time in sorting out an
employee’s problem. Both Amit and Sumit make conscious efforts to
build a feeling of team spirit and coordination among diverse
individuals with different needs who work under them. The effect of
their management is noticeable in their respective departments as the
targets are met according to plans, employees are happy and satisfied,
and there is orderliness in its functioning rather than chaos.
Identify the various features of management highlighted in the above
paragraph by quoting lines from it.
32 Aman, Ahmad and Ally are partners in a firm engaged in the 5
distribution of dairy products in Maharashtra state. Aman is a holder of
Senior Secondary School Certificate from Central Board of Secondary
Education with Business Studies as one of his elective subjects. Ahmad
has done his post graduation in History and Ally in dairy farming. One
day there was a serious discussion between Ahmad and Ally regarding
the nature of management. Ahmad argued that management was a
profession, whereas Ally argued against it saying that the legal and
medical professions are the only profession because they fulfil all the
conditions of profession. Aman on the basis of his knowledge of
Business Studies explained the nature of management as a profession
to Ahmad and Ally.
Explain how Aman would have satisfied both Ahmad and Ally.
33 A consumer goods company, manufacturing electrical goods, has been 5
facing a lot of problems for the last one year. Its margins are under
pressure and its profits and market share are declining. For this state of
affairs, the production department blames the marketing department
for not meeting sales targets and the marketing department blames the
production department for producing goods which are not of good
quality meeting customers’ expectations. The finance department
blames both the production and the marketing departments for
declining return on investment and bad marketing.
What steps should be taken to bring the company on track?
34 Real Alliance Ltd. is a well-known company in India. It is able to earn 5

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 adequate revenues to cover costs. Its capital base, number of
employees and production turnover has increased manifolds over the
years. The rate of profitability of the business is also creditable. The
employees of the company are happy and satisfied with their
remuneration, working conditions, promotion policy etc. As a part of
its moral obligation, the company has taken many initiatives for
providing employment to especially abled persons and promoting
literacy in the villages adopted by it.
Identify and explain the various types of objectives of management
being fulfilled by Real Alliance Ltd. by quoting lines from the paragraph.

Answers

ANSWERS MARKS
1 C 1
2 C 1
3 B 1
4 B 1
5 C 1
6 B 1
7 C 1
8 B 1
9 C 1
10 A 1
11 Universal validity and application 1
12 Because these are required at all levels of management due to the 1
interdependent nature of activities of various departments.
13 Supervisory or Operational Level Management 1
14 Management is Dynamic in nature. 1
15 Management is called an Art because it is concerned with the 1
application of personal skills by the manager.
16 Through planning and organisation, management eliminates all types 1
of wastages and achieves efficiency in all business operations.
17 Coordination is a conscious and deliberate effort, whereas 1
cooperation is a voluntary effort.
18 Inexact Science 1
19 Coordination 1
20 Bhawna is correct because management is pervasive in nature. 1

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21 The aspects of management that has been ignored by Mita are 3
Effectiveness and Efficiency. For example, Alka works as a designer
in an export house. As per the terms of an order received by the
export house she has to get 1,000 units of leather jackets made in 14
days @ Rs. 1,500 per jacket. She is able to complete her target
production in 18 days. So, in order to complete the order in 14 days
she would have made the workers work over time. As a result the
cost o production per jacket may have increased by Rs. 100.
(a) In the above case, Alka is efficient in her work as she has been
able to get 1,000 units of leather jackets made @ Rs. 1,500 per
jacket.
(b) But we cannot consider Alka to be effective as she was not able
to get the work completed within the stipulated time of 14 days.
22 (a) Organisational objectives: It refers to the utilisation of human 3
and material resources considering the interest of stakeholders.
‘Like any other business enterprise profits are important for survival
and growth of Shiva Computers Ltd.’
(b) Social Objectives: it refers to consistently creating economic
value for various constituents of the society.
‘It has set up many educational institutions in the field of
management, engineering and computer education in which half of
the students are girls.’
23 (a) The process of Management is being referred to in the above 3
lines.
Management is the process of designing and maintaining the
environment in which individuals working together in groups
efficiently accomplish selected goals.
(b) The primary activities contained in management process refers to
the functions of management namely; planning, organising, staffing,
directing and controlling.
(c) Personal objectives relate to the needs of employees of the
organisations which must be given due considerations like fair wages

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 and salary, growth prospects, good working conditions etc. The
management ensures that individual members are able to achieve
personal goals while contributing towards the overall organisational
objectives.
24 Yes, Sanjay can be deployed at the post of Assistant Manager in 3
Sales and Marketing Division although he hasn’t acquired any
professional degree in management as management is not
considered to be a full-fledged profession because of the following
reasons:
(i) Restricted Entry. The entry to the above stated profession is
restricted through a prescribed qualification. But there is no
restriction on anyone being appointed as a manager in any business
enterprise. So, presently this feature of profession is not present in
management.
(iii) Professional association. Legal and Medical professions are
affiliated to a professional association like bar council and medical
council which regulates entry, grants certificate of practice and
formulates and enforces a code of conduct. There are several
associations of practising managers in India like the AIMA that has
laid down a code of conduct to regulate the activities of their
members. There is, however, no compulsion for managers to be
members of such an association. So, presently this feature of
profession is not present in management.
25 (a) Coordination is the concept being described in the above 3
paragraph.
(b) The importance of coordination is described below:
(i) Growth in size: With the growth in the size of an organisation
there is a proportionate increase in the number of its employees. So
there is a greater need to unify the efforts of diverse individuals
towards the realization of organizational goals.
(ii) Functional differentiation: As a result of functional differentiation
in an organisation its people and activities get divided into small

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 departments on the basis of functions like marketing, finance etc.
Therefore, there is need to reconcile the goals pursued by each of
such department with the goal of the organisation as a whole.
26 (a) The two aspects of nature of management which Devesh thinks 3
makes manager successful are Management as a Science and
Management as an Art.
Management as science forms the basis of knowledge of underlying
theories and principles of management. Management as an art
enables skilful and personal application of existing knowledge by the
managers to achieve desired results. It also leads to emergence of
different styles of management.
(b) The specific feature of management as science which
distinguishes it from other physical sciences like biology, physics and
chemistry etc. is Universal validity.
Unlike the scientific principles, the principles of management lack
universal validity as it deals with human behaviour which is complex
in nature. Different people react differently to the same situation
and there for their behaviour cannot be predicted with accuracy.
27 Efficient management of resources helps in the development of 4
nation in the following ways:
(a) Provision of good quality products and services;
(b) creation of employment opportunities;
(c) technological innovations for the betterment of the society; and
(d) Contribution to economic growth and development.
28 Rishi sharma is working at Middle level of management. The three 4
more functions that he has to perform at this level are :
(i) He has to assign duties and responsibilities to the people in his
department.
(ii) He has to motivate the people in his department to achieve the
desired objectives.
(iii) he has to interpret the policies framed by top management.
29 (a) Coordination is the quality of management which is lacking 4
because of which each department is performing activities in

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 isolation from others.
(b) Coordination is the process of integrating the individual and
group efforts in pursuit of common goals. The three features of
coordination are stated below:
(i) Coordination integrates group efforts: Coordination integrates
group efforts into a purposeful activity by ensuring that activities are
carried out as per predetermined standards.
(ii) Coordination ensures unity of action: Coordination ensures unity
of action as it acts as a binding force between and among
departments and facilitates smooth working of the organisation.
(iii) Coordination is a continuous process: Coordination is a
continuous on-going process as it is required till an organisation
exists in order to integrate diverse activities of different individual/
groups.
30 The various reasons mentioned in the above paragraph that have 4
made management so important are stated below:
(a) Management increases efficiency as it leads to reduction in costs
due to optimum utilisation of resources.
“As a result of her excellent managerial competence, the company is
able to reduce cost and increase productivity.”
(b) Management creates a dynamic organisation so that it is able to
incorporate the corresponding changes in its working with any
change in its business environment.
“The company belongs to infrastructure sector, wherein regular
amendments are made in the government regulations and policies.
She holds regular meetings to ensure that people in her department
are not only aware of the related changes but are also able to adapt
to these changes effectively. This helps the company to maintain its
competitive edge.”
(c) Management helps in achieving personal objectives of the
employees in the organisation.
“She motivates and leads her team in such a manner that individual

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 members are able to achieve personal goals while contributing to
the overall organisational objective.”
(d) Management helps in the development of society by contributing
effectively towards it in multiple ways.
“In the process of fulfilling her duties for the growth of the
organisation, she helps in providing competitive services, adopting
new technology, creating more employment opportunities etc. for
the greater good of the people at large.”
31 The various features of management highlighted in the above 5
paragraph are:
(a) Management is all pervasive. “Considering the fact that the
activities ------------------ as per their individual areas of interest.”
(b) Management is a goal-oriented process. “Amit takes up a
marketing job in retail ---------------employment to specially abled
persons.”
(c) Management is a continuous process. “Both of them have to
perform a series of --------------- in sorting out an employee’s
problem.
(d) Management is a group activity. “Both Amit and Sumit make
conscious efforts to ------------------needs who work under them.”
(e) Management is an intangible force. “The effect of their
management is ----------------------orderliness in its functioning rather
than chaos.”
32 Aman would have satisfied both Ahmad and Ally by explaining the 5
following features of management as a profession.
(i) Well-defined body of knowledge. All professions are based on a
well-defined body of knowledge that can be acquired through
instruction.
Management too is based on a systemic body of knowledge
comprising well-defined principles. This feature of profession is
present in management.
(ii) Restricted Entry. The entry to the above stated profession is

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 restricted through a prescribed qualification. But there is no
restriction on anyone being appointed as a manager in any business
enterprise. So, presently this feature of profession is not present in
management.
(iii) Professional association. Legal and Medical professions are
affiliated to a professional association like bar council and medical
council which regulates entry, grants certificate of practice and
formulates and enforces a code of conduct. There are several
associations of practising managers in india like the AIMA that has
laid down a code of conduct to regulate the activities of their
members. There is, however, no compulsion for managers to be
members of such an association. So, presently this feature of
profession is not present in management.
(iv) Ethical code of conduct. Legal and medical professions are
bound by a code of conduct which guides the behaviour of its
members. AIMA has devised the code of conduct for Indian
managers but there is no statutory backing for this code. So,
presently this feature of profession is not present in management.
(v) Service motive. The motive of legal and medical profession is to
serve their client’s interest by rendering dedicated and committed
service. The basic purpose of management to help the organisation
achieve its goal by providing good quality products at reasonable
prices, thereby serving the society, is being increasingly recognised.
So, presently this feature of profession is not fully present in
management.
This shows that management does not satisfy all the criteria of a
profession. So, Aman would have been able to satisfy both Ahmad
and Ally by making them understand that Management is a
profession but not a full fledged or a true profession.
33 In this case, there is lack of coordination among different 5
departments. Each department is blaming the others for declining
sales and profit margins.

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 The top management of the company should take the following
steps:
(i) Every department should be asked to work for the corporate
objectives.
(ii) There should be proper communication among the different
departments.
(iii) Periodic meetings of the head of different departments should
be held to remove any misunderstanding and to integrate their
efforts.
(iv) The plans of various departments should be coordinated by the
CEO.
(v) conflicts among different departments must be resolved at the
earliest.
34 Objectives; 5
(i) organisational objectives: An organisation strives to achieve
multiple organisational objectives, mainly:
(a) Survival: “it is able to earn adequate revenues to cover costs”.
(b) Growth: “ Its capital base, number of employees and production
turnover has increased manifolds over the years”.
(c) Profit: “the rate of profitability of the business is also creditable”.
(ii) Personal objectives: It relate to the needs of the employees of
the organisation which must be given due consideration.
“The employees of the company are happy and satisfied with their
remuneration, working conditions, promotion policy etc.”
(iii) Social objectives: They relate to taking initiatives for the welfare
of social groups and society at large.
“As a part of its moral obligation, the company has taken many
initiatives for providing employment to specially abled persons and
promoting literacy in the villages adopted by it.”

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 UNIT 2 -PRINCIPLES OF MANAGEMENT

1 Which principle of management aims at securing the loyalty and devotion of the 1
employees by giving them fair and just treatment?
A. Unity of direction
B. Equity
C. Order
D. Unity of command
2 What is the purpose of Time Study? 1
A. To eliminate unnecessary motion of workers
B. To estimate the amount of rest intervals

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 C. To determine the fair day work
D. To differentiate between efficient and inefficient worker
3 Which of the following statement is related to division of work 1
A. Resources should be divided equally among departments
B. Work should be divided into smaller parts
C. Subordinates should be divided among superiors
D. Departments should be divided into sub sections
4 Who is known as the father of scientific management 1
A. F W Taylor
B. Harold Koontz
C. Gilbreth
D. Henry Fayol
5 Which of the following statements describes `Unity of direction` the best? 1
A. One head One plan
B. One subordinate one superior
C. One work one person
D. One superior one department
6 ______is the formal line of authority and communication that runs from top to bottom 1
level of management
7 _________ involves a complete change in the mental outlook and attitude of workers 1
and management from competition to cooperation
8 ________ is the technique of scientific management that is the extension of principle of 1
division of work and specialization to the shop floor
9 Management principles aims at influencing behaviour of human being. State the feature 1
of management principle highlighted here.
10 This principle of Taylor is an extension of principle of harmony not discord. Name it. 1
11 Principles of Fayol and Taylor are mutually complementary. One believed that
management should not only scientifically select the person and the work assigned
should also suit his physical and intellectual capabilities, while other suggested that the
work can be performed more efficiently if divided into specialised tasks. Identify and
explain the principles of Taylor and Fayol referred in the above case.
12 Taylor`s techniques of management are universally applicable. Do you agree? Give 3
reason in support of your answer.
13 The Delhi Government imposes ban on use, storage, sale and manufacture of plastic 3
after considering its adverse impact on environment and ecology. Which principle of

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 Fayol is mentioned in above decision. Explain.
14 Faiyaz the production manager of ABC Ltd. wants to increase the speed of packaging. In 3
order to identify and eliminate needless and unproductive movements of workers in
packaging, he installed the movie camera in the factory.
Which technique of Taylor is adopted by Faiyaz ?
How can the technique helped ABC Ltd
15 The application of principles of management is dependent upon the prevailing situation 3
at particular point of time. State and explain the feature of management mentioned
here.
16 Name and explain the technique of Taylor which is the strongest motivator for a worker 3
to reach standard performance.
17 Give three objectives of Standardisation of work. 3
18 SG Ltd is a well known company manufacturing washing machines. The company has 3
the policy of paying proper attention to the training of the managers. The organisation
teaches the various management principles to the managers whenever required so that
they apply them and understand the practical aspects of business through them. Year
by year the organisation is able to increase its revenue this is because mangers are able
to economically use the funds of the company and increase the output of workers
through various principles of management. The company has decided to donate 10% of
its earning to nearby orphanage.
Identify the three importance of principles of management highlighted in above case by
quoting lines.

19 Identify the nature of principles of management highlighted in given statements 3

1. They do not provide readymade solutions as business environment is ever changing
and dynamic.
2. They are applied to all types of organisation, business as well as non business.
They are developed through research work on the basis of experience of manager.
20 Identify the significance of principles of management highlighted from the following 3
statement:
1. Management principles help in thoughtful decision making. They emphasis logic
rather than blind faith.
2. Professional courses such as BBA, MBA also teach these principles as part of their
curriculum

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 Principles of management can be modified according to changes take place in the
environment
21 Satyam Ltd manufactures curtain clothes. Noticing it’s popularity in the market , the 6
company decided to manufacture bed sheets also. The decision was executed with
immediate effect. But the company did not increase the workforce to the desired
extent. The company wanted the existing staff to manage the work for some time, by
working overtime. The result was that on the one hand the new product of the
company failed to keep its hold on the market and on the other hand due to overwork
the efficiency of the employees declined. On several occasions it was discovered that a
subordinate was getting instructions from two or more managers .Managers had
started giving simple and easy work to their known employees and complex and
difficult work to other employees. The company was now ignoring the rules completely.
Identify and state those three principles of management that have been ignored in the
case by quoting the lines.
22 Anuj Gupta and Mangala Sharma are both qualified dentist and good friends. After 6
obtaining a certificate of practice, they decided to pursue a career of their own choice.
Anuj Gupta starts a dental care centre in the city whereas Mangala Sharma joins a
government hospital. They meet after a long time in a party. Anuj Gupta invites
Mangala Sharma to visit his dental care centre and she accepts his invitation. She
observes at his clinic that there is fixed place for everything and everyone and tools and
equipments are lying in an organised manner. Also, Anuj Gupta always tend to replace I
with We while having a conversation with the staff members. Later on Anuj Gupta also
shares with her that he always deals with lazy staff sternly to send the message that
everyone is equal in his eyes. Identify and explain the three principles of management
which Anuj Gupta is applying for successful management of his dental care centre.
23 Karan Nath took over D North motor company from his ailing father three months ago. 6
In the past the company was not performing well. Karan was determined to improve
the company’s performance. He observed that the methods of production as well as
selection of employees in the company were not scientific. He believed that there was
only one best method to maximize efficiency. He also felt that once method is
developed the workers of the company should be trained to learn that best method.
He asked the production manager to learn the best method and carry out the necessary
training. The production manager developed this method and carry out necessary

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 training. The production manager developed this method using several parameters
right from deciding the sequence of operations, place for men, machines and raw
materials till the delivery of the product to the customers. This method was
6implemented throughout the organization. It helped in increasing the output,
improving the quality and reducing the wastage. Identify and explain the principles and
techniques scientific management followed by the production manager in above case.
24 Rishabh managing director of an electronic goods manufacturing company has been 6
experiencing year to year increase in revenues and net profit. The reason was that he
ensured competition is replaced by cooperation and Rishabh has always been receptive
towards constructive employees suggestions. He emphasized on worker training as he
felt that efficient employees shall produce more. Thus , he decided to reward workers
by paying them higher pay as compared to inefficient ones.
Identify and explain the principle of management and technique of scientific
management referred in above para.
25 New Delhi Ltd is a famous service providing company .Mr Lakshay Wadhwa is its 6
managing director. He continuously motivates the research and development
department that a new and latest method of doing work must be explored. The
provision has been made to give reward to those employees who will participate in a
particular exploration. He also believes that the two groups working in managerial and
non managerial posts are similar to two wheels of an organisational vehicle. If this
vehicle is to be driven in a right way then both the wheel should be properly aligned.
Mr. Lakshay is a successful leader. Among his employees he has instilled the feeling that
no decision will be taken without consulting the subordinates. To excel, the other
companies in this field is the main motive of Mr Lakshay. Paying attention to training is
the secret of the company.
Identify the four principles of scientific management highlighted in above para by
quoting the lines.
26 Application Ltd is engaged in manufacturing and distribution of home appliances since 6
1987. It has good name in market as the company is producing good quality appliances.
It has separate departments for manufacturing, finance, sales, maintenance services
and technical services to achieve specialization.
Since the areas of operations of the company have increased and customers have
become more demanding the company decided to modify the existing principle of

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 management to meet the changing requirements of environment.
State and explain the principle of management which the company wants to modify to
meet the changing requirements.
27 Consolidated constructions Ltd have never given any importance to employees 6
suggestions. All employees of the company consider themselves superior to other. They
neither help anybody nor get help from anybody. Last year Mr.Gurpreet was appointed
as Chief manager of the company. He was an MBA from IIM Ahemdabad and also seven
years experience of the same post. Immediately after taking charge he decided to deal
with both the problems of the company. He convened the meeting of all the employees
and said “ All the employees are free to give their suggestions. Besides the one who
gives the best suggestion will be rewarded. In addition he advised them to discard ego
and extend help in each others work. We will have to give it shape of the movement.
Those who participated in the movement will be promoted at the earliest. Gurpreet
proved to be a good leader.
Identify and explain principles discussed above by quoting the lines.

Suggested Answers:

1 B 1
2 C 1
3 B 1
4 A 1
5 A 1
6 Scalar Chain 1
7 Mental revolution 1
8 Functional foremanship 1
9 Mainly behavioral 1
10 Cooperation not individualism 1
11 Taylor principle development of each and every person to his greatest 3
efficiency and prosperity
Fayol principle: Division of work
12 No, techniques of scientific management are not universally applicable 3
1. Functional Foremanship:

This technique insist on orders and instructions from eight specialist. This
technique is not applicable in organizations following Unity of

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 command.Moreover this technique is not applicable in case of small sized
organizations.
2. Differential piece wage system

This technique is not applicable in the organizations following principle of

equity as this technique makes provision for payment of different for same
job.
13 Initative with explanation 3
14 Motion study 3
Motion study can help in detecting and eliminating unproductive
movements and can determine the better way of doing the job
15 Contingent(with explanation) 3
16 Differential piece wage system 3
17 1. Reduction in the given line or product to a fixed type size and 3
characteristics.

2. Determine the standard of performance of men and machine

3.Establish standard of excellence and quality in material

18 1. Providing manager useful insight into reality 3

The organisation teaches ……..practical aspects of business through them

2. Optimum utilization of resources

This is because the mangers……..through various principles of

management
3. Fulfiling social responsibilty

The company has decided to donate…….to a nearby orphanage

19 1. Management principles are general guidelines 3

2. They have Universal applicability

3.Formed by practice and experimentation

20 1. Providing manger useful insight to reality 3

2. Management training, Education and research

Meeting changing environment requirement

21 1. Unity of command 6

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 2. Equity

3. Discipline

With explanation
22 1. Order 6

2. Espirit de corps

3. Equity

With explanation
23 Principles of scientific management followed by production manager in 6
above case:
1. Science not the rule of thumb

2. Development of each and every person to his/her greatest efficiency

and prosperity

The technique of scientific management discussed in above case is

`Method study`
24 Principle of management is Initiative 6
Technique of scientific management differential piece wage system
With their explanation
25 1. Science not the rule of thumb 6

He continuously motivates his research and development dept. That new

and latest method of doing work must be explored
2. Harmony not discord

If this vehicle is to be driven in a right way then both the wheels should be
properly aligned.
3. Cooperation not individualism

Among his employees he has instilled the feeling that no decision will be
taken without consulting the subordinates
4. Development of each and every person to his/her greatest efficiency
and prosperity

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 Paying attention to the training is the secret of the company.
26 The company wants to modify existing principle of centralization to 6
decentralization. Explanation in detail
27 1. Initative 6

All employees are free to give their suggestion. Besides one who give the
best suggestion will be rewarded
2. Espirit de corps

In addition he advised……..each other work

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 UNIT 3 -BUSINESS ENVIRONMENT

Q.No. Questions Marks

1 Business environment is a group of ………………. Powers. 1
(a) Specific
(b) General
(c) Internal
(d) Specific and general
2 1
Which of following is not included in special powers of business environment?
(a) Technical situations
(b) Customers
(c) Suppliers
(d) Investors
3 Indicate whether the following statements are ‘True’ or ‘False’ : 1
(i) Composition of family is an example of social environment.
(ii) More supply in the economy is an example of Social environment.
4 Which of following is available on time with help of study of environment? 1
(a) Government help
(b) Foreign Aid
(c) Warning signal
(d) Material
5 The study of Environment makes available …………………. Resources. 1
(a) Costly
(b) Cheap
(c) Inferior
(d) Useful
6 Which of following is undergoing quick changes? 1
(a) Competition
(b) Fashion
(c) Technique
(d) All of above
7 ITC hotels made a study of business environment and planned to open 1
……………. in India and Abroad.

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 (a) Factories
(b) Hotels
(c) Shops
(d) Offices
8 With the help of study of business environment an organisation can improve 1
its…………..
(a) Present
(b) Future
(c) Present and future
(d) Past
9 Determination of Economic policies is for the purpose of regulating…………… 1
(a) Political environment
(b) Social environment
(c) Legal environment
(d) Economic environment
10 Under which environmental effects IBM and Coca- cola had to leave India? 1
(a) Political
(b) Social
(c)Economic
(d) Technical
11 Which of following is factor of the social environment of business? 1
(a) Customs
(b) Standard of education
(c) Standard of Living
(d) All the above
12 Which component of business environment resulted in the relaxation of ban 1
imposed on Foreign Direct Investment?
(a) Economic Environment
(b) Political Environment
(c) Social environment
(d) Legal regulatory environment.
13 With the introduction of photostat machines in the market, the carbon paper 1
industry was adversely affected. Which component of environment was

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 responsible for it?
(a) Economic
(b) Political
(c) Technical
(d) All the above
14 Which of following deals with the process of simplification of Import- Export? 1
(a) Liberalisation
(b) Privatisation
(c) Liberalisation and privatisation
(d) Globalisation
15 Under Industrial policy the role of ………….. has been decided. 1
(a) Public sector
(b) Private sector
(c) Public sector and private sector
(d) Government
16 The Income and Expenditure policy of the government is called? 1
(a) Fiscal policy
(b) Industrial policy
(c) Trade policy
(d) Monetary reforms
17 Price control means that the companies will sell goods on the …………price. 1
(a) Government
(b) Market
(c) Printed
(d) Voluntary
18 As a result of economic Reforms the seller market has been replaced by 1
(a) Buyer market
(b) Foreign market
(c) Wholesale market
(d) Retail market

CASE STUDIES

Q. No. Questions Marks

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19 Which component of business environment requires that advertisements of 1
baby food must necessarily inform the potential buyers that mother’s milk is
best for the baby?
20 The government of India is seriously thinking of allowing the oil marketing 1
public sector undertakings to fix their own prices for petrol and diesel. Which
economic reform is reason for this change in government’s policy?
21 Mr. Ajay after completing MBA from USA comes to India to start a new 3
business under the banner Ecom Creations Ltd. He launches a new product in
e-learning for Senior Secondary School students in Commerce stream, which
already has a established market in UK and USA but not in India. His business
starts flourishing in India. Now more Indian companies entered into the
market with other subjects also.
Identify and quote the lines from above para which highlight the
significance of understanding business environment.
22 Just after declaration of Lok Sabha Elections 2014 results, the Bombay stock 3
exchange’s price index (Sensex) rose by 1000 points in a day. Identify the
environmental factor which led to this rise giving reason. Also explain any two
other dimensions of business environment.
23 The court passed an order that all schools must have water purifier for the 3
school children as
(i) Society in general is more concerned about quality of life.
(ii) Innovative techniques are being developed to manufacture water purifier
at competitive rates.
(iii)Incomes are rising and children at home are also drinking purified water.
(iv) The government is also showing positive attitude towards the water
purifier business.
Identify the different dimensions of business environment by quoting from the
above details.
24 It is common now to see CD-ROM‟s, computerized information kiosks, and 3
Internet/Word Wide Web multimedia pages highlighting the virtues of
products.‟ Name the dimension of the business environment highlighted by
this statement.
25 It is the process by which government control over the industry is being 1

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 loosened. Give the term to which this statement is trying to indicate.
26 Due to entry of foreign firms, competition for Indian firms has increased, 1
especially in service industries. Name such service industries.
27 The Court passed an order to ban polythene bags as the bags are creating 4
many environmental problems which affect the life of people in general and
society in general is more concerned about quality of life.
The Government decided to give subsidy to jute industry to promote this
business.
Innovative techniques are being developed to manufacture jute bags at low
rates.
Incomes are rising and people can afford to buy these bags.
Identify the different dimensions of Business Environment by quoting the lines
from the above particulars.
28 Kapil Sharma is working as the Country Head of a company which owns a chain 4
of malls under the name of “Virtuoso” in the various parts of India. Through an
analysis report of the business environment, it has been brought to his notice
that in the coming years, shopping at a mall will not be a necessity for the
buyers as purchases can be made online from anywhere and at any time with
ease and at the consumer’s convenience. Hence, malls will have to provide
much more than shopping to be able to attract customers. So, he recommends
that “Virtuoso” malls should to be restructured into recreation centres,
offering more spaces to socialize, host events and concerts, and provide ample
Food and Beverages options.
Consequently the share of entertainment segment and Beverages segment in
the overall mall space is increased by 20%. As a result, the company gains
enormously by getting the first mover advantage.
In context of the above case:
1. Define the term “Business Environment”.
2. Explain the terms “Threats” and “Opportunities” by quoting lines from
the paragraph.
28 “Zero Defect Zero Effect” (ZED) is a slogan coined by the Prime Minister of 4
India, Narendra Modi with reference to the Make in India initiative launched
by the government. The slogan reflects the efficiency of production processes,

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 i.e. the products have no defects and the process through which the product is
made has zero adverse environmental and ecological effects. The Zed model
aims to make India the manufacturing hub of the world and prevent the
products developed in India from being rejected by the global market.
Moreover, before the initiative was launched, the limits of foreign direct
investment in various sectors had been relaxed. The application for licences
was made available online and the validity of licences was increased to three
years. Various other norms and procedures were also relaxed by the
government.
In the light of the above paragraph, identify and explain the major component
of New Economic Policy of 1991 that are being referred to by quoting lines
from the paragraph.
29 Over the years, e-business in our country has witnessed tremendous growth 5
due to several reasons. There is significant improvement in the Information
Technology infrastructure over the last decade as the Government has taken
important steps in high-speed Internet connectivity. As a result, the broadband
networks have not only become better but also more affordable. Additionally,
Government is trying to make rural India connected through broadband – a
great possibility for e-business to expand the retail market by reaching out to
the most remote rural customer. Another catalyst strengthening the e-
business segment is the country’s favourable demography. It has more than
50% of its population below the age of 25 and more than 65% below the age of
35. It is expected that, in the year 2020, the average age of an Indian will be 29
years, compared to 37 for China and 48 for Japan, this promises for
phenomenal increase in e-business. Moreover, the penetration of the smart
phone in a large section of the population has aptly addressed the problem of
compute illiteracy. Notwithstanding the fact that consumers also prefer e-
business due to multiple factors like convenience, time etc.
Identify and explain the various dimensions of business environment being
referred to in the above case.

30 Beni, after completing her MBA, took up a job in a multinational company 5

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 named “Fortio”. The company was paying good salary and perks to its
employees. The wages were within the paying capacity of the company that
provided the employees a reasonable standard of living. The company also had
a good work-culture and the behaviours of superiors were very good towards
their subordinates. Beni was very happy in this organization, but due to long
working hours she did not have time to cook her meals. She had to depend on
outside found, which was deteriorating her health.
She observed that this problem was faced by many of her colleagues, not only
in her company but also in many other companies. This was because of
increase in the number of working women and non-availability of hygienic
home-cooked food. She identified this as a great opportunity and decided to
give up her job to supply packaged home-cooked food to office goers at a
reasonable price. At the end of the day she also distributing the left-over food
in the nearby night-shelters.
(i) State the dimension of business environment being discussed
above.
(ii) State the principle of management being followed by “Fortio”.
(iii) Identify any two values being communicated by the company to
the society in the above case.
31 Nakul, a manager of Zyco Ltd. always takes into account the changes taking 5
place in business environment while determining plans. He accepts changes
readily and gives useful suggestions to his superior, which results in reduction
of costs. As a result, company’s profits increase. Nakul enjoys cordial relations
with his co-workers and makes plans in consultation with his team to achieve
organizational goals.
(i) Which characteristic of management is highlighted in the
above lines?
(ii) Identify and state any two principles of management
followed by Zyco Ltd.
(iii) Give any two benefits which Zyco Ltd. get by taking into
account the
changes taking place in business environment, quoting the lines

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 from the above para.
(iv) State any one value which Nakul wants to communicate to
the society.
32 It is interesting to know that the menu items of the multinational food chains 4
are customized to suit the general palates of the local people in the region.
When McDonald’s started its business in India in the year 1996, the company
went through a complete localization strategy. McDonald’s changed its
product menu to accommodate the vegetable burger given the large
vegetarian population. It also altered its store design and even reduced the
product price by close to fifteen per cent. Also, the “McAlooTikki burger” is not
available anywhere but in the Indian outlets of McDonalds.
Identify the relevant feature of business environment being discussed above.
33 Eco-friendly products are gaining power as the consumers‟ awareness about 4
environmental issues has increased over the years and they are conscious
about choosing products that do not have adverse effects on the environment.
They are now more conscious about the carbon emission and climate change
effects, and want themselves to be „seen‟ as a green advocate among their
peers. In such a scenario, it has become a challenge for the companies as they
have to not only meet the needs of the consumers but also ensure that their
products are safe and environment friendly. At a result, there is growing need
for better and advanced technologies to works as a catalyst in this regard.
(i) Identify the relevant feature of business environment being
discussed above.
(ii) Describe briefly any three points which highlight the importance of
business environment and its understanding by managers.
34 Ultra Paint Co. which is manufacturing paints has been enjoying a prominent 5
market position as it manufactured best quality paints, made timely payment
of taxes to government. It assembled various inputs like finance, machines,
raw materials, etc. from its environment. But since last year it has been
dumping its untreated poisonous waste on the river bank which has created
many health problems for the people. As a result, the court passed an order to
seal the manufacturing unit of the company.
(i) State the importance of business environment highlighted quoting

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 the line from the above case.
(ii) Identify any two dimensions of business environment mentioned in
the above case by quoting lines from it.
(iii) State any two values which have been overlooked by the company?
35 Philips, a company manufacturing light bulbs incurred heavy expenditure on 5
scientific Research and Development and discovered a technology that made it
possible to produce an energy efficient light bulb that lasts at least twenty
times as long as a standard bulb. It resulted in growth and profitability of the
company.
(i) Identify and state the dimension of business environment
mentioned
above.
(ii) State the importance of business environment mentioned above by
quoting the lines.
(iii) State any one value which the company wants to communicate to
the society.
36 Disco Ltd. manufactures fashionable and designer clothes. Recently it finds 6
that the demand for its products has been declining. After market research it
was discovered that fashion and tastes of the consumers is changing at a fast
pace. Customers‟ demand is increasing. New competitors have entered the
market with new designs. It is very difficult for the company to predict future
happenings. Also, it is difficult to know the extent of the relative impact of the
social, economic, political, technological or legal factors on decrease in
demand of its products in the market.
A meeting was held in which managers from different functional levels heading
Production, Marketing, Finance, etc., for example, Chief Operating Officer,
Chief Finance Officer, Vice President (Marketing) were present to discuss how
to deal with the situation. After a long discussion, it was decided that they
would study and analyze the market first to identify customer tastes and
fashion and then manufacture garments accordingly. It was also decided to
increase expenditure on advertising, after-sales services, etc.
(i) Identify any two features of business environment by quoting the

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 lines from the above case.
(ii) At which level of management the meeting of managers of Disco
Ltd. was held?
(iii) Identify any two impact of government policy changes on business,
quoting lines from the above case.
(iv) State the importance of understanding of environment by business
managers in the light of the above para.
37 The organic food market in India is grow at 25-30 per cent which reflects a 6
clear shift in consumer tastes and preferences. The current growth in the
organic food market is driven by multiplicity of factors like rising health
consciousness, changing lifestyles, increase in disposable income and growing
availability of organic food products in shopping malls, retail outlets and
online.
In context of the above case:
(i) Identify and explain the features of business environment being
referred to here.
(ii) By quoting phrases from the paragraph identify the various
components of general forces which have led to a growth in the
organic food market.
38 Anurag, aspires to work with a socially and environmentally committed 6
company as he does not want to work just for monetary benefits but also the
brand value of the company he works for in the society matters a lot to him.
Therefore, he has joined Cerebra Integrated Technologies a Bengaluru-based
Infotech company. The company has built India’s largest e-waste recycling
plant. The company strives to be one of the leading players in this business
which has huge potential not only in terms of generating huge revenues and
profits but also wants to contribute to the environment issues that have
become crucial worldwide. The company sees big business in the mountains of
e-waste in Bengaluru which produces 2,00,000 tonnes of e-waste a year. The
company plans to make its millions by extracting metals such as gold and
platinum from the e-waste piling up in the city. As a mobile phone, for
example, is made up of a combination of rare earth and precious metals: it

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 contains 250 mg of silver, 24 mg of gold and nine mg of palladium while a
laptop has 1,000 mg of silver, 220 mg of gold and 500 grams of copper.
To start the business, the company has obtained a licence from KSPCB
(Karnataka State Pollution Control Board).
In context of the above case:
(i) Identify the various dimensions of business environment being
referred to by quoting lines form the paragraph.
(ii) List any two values which the company wants to convey to the
society. .
39 After competing his education, Arun joins his father in their family business of 6
manufacturing cookware. As a businessman, his father is rigid in his approach
and has fixed ideas about various issues. He tends to maintain a distance from
the factory workers.
However, Arun is more receptive to the needs of the workers and
doesn‟tseem to believe in any class-differences. He believes that the
prosperity of their business greatly depends upon the prosperity of their
workers and vice versa. At the same time, he has a good understanding of the
business environment. Therefore, he introduces a new range of green pans
that provide a healthy cooking surface, as they are manufactured with all
ceramic or silicon coating and are considered safer than the traditional
petroleum based nonstick surfaces which may contain toxic substances.
Although, the new cookware range is highly prices, he expects a ready market
for it as both the purchasing power of people and their preference for better
quality products has increased over the years.
In context of the above case:
1. Identify the nature of management which is being reflected in
the
different styles of management in practice adopted by Arun and his
father.
2. Name and explain the related principle of scientific
management.
3. State the related dimensions of business environment.

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40 Continuous and comprehensive evaluation is a process of assessment, 6
mandated by the right to Education Act, of India. This approach to assessment
has been introduced by state governments in India, as well as by the Central
Board of Secondary Education in India. With the introduction of (CCE) system
in education there is greater focus on project based learning. As a result,
besides time and effort the students are willing to invest money to enhance
the visual appeal of their project files so as to score higher marks. In order to
cash on the opportunity Rishabh has started a small business unit to
manufacture different kinds of decorative materials for the project files. He
has employed a team of four creative designers for developing the innovative
material with the help of latest technology. However, he has a prejudice
against women and therefore pays less salary to them as compared to the
male staff for equal work.
In the context of the above case:
1. Name any two functions of management that Rishabh will have
to
perform in order to manage his business successfully.
2. Name and explain the principle of management which is being
violated
by Rishabh.
3. Identify the related dimensions of the business environment.
41 Government of India is seriously thinking to allow oil marketing public sector, 3
undertaking to fix their own price for petrol and diesel.
1. Name the economic reform related to this decision of
government.
2. Name other two reforms recommended in new economic policy.
42 Recently many companies have planned for significant investment in organizes 6
retailing in India. Various factors which have encouraged companies to take
these decisions are customer income is increasing, rise in standard of living of
people. People are ready to pay high price for quality goods, government
policy of liberalization regarding MNC entry and FDI, etc.
1. Explain briefly changes in business environment under different heads

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 that have facilitated the companies decision to plan significant
investment in retailing.
2. What has been the impact of these changes with regards to
globalization and privatization?
43 Two big banner movies were scheduled to be released on the same date. On 3
the last movement release of one of the movies has to be postponed due to
opposition of a group of people due to some unethical contents related to
their religion was shown in the that movie. The other movie released on time
and made huge profit as there was no competition and movie which was
postponed suffered loss.
1. Which feature of business environment is highlighted here.
2. Identify the dimension of business environment, which delayed
the release of movie.
44 After winning the election, Prime Minister Mr. Narender Modi launched a 5
Campaign of “Swachh Bharat” and invited various celebrities to be a part of
this Abhiyaan. This spread awareness among the people in society and in
general, people started becoming more careful and aware about the
cleanliness around their area. To continue its impact, a new service tax for
Swachh Bharat was also started. The government is planning to import new
and better technology to adopt new methods of treating the garbage and
waste.
State the various dimension of business environment mentioned in
the above para quoting the lines from the above para.
45 Even after opening up of Indian Economy, foreign companies found it 1
extremely difficult to cut through the bureaucratic and red tapism in
government offices. This discourages them from investing in India.
Identify the dimension of environment mention in above para.
46 Just after the declaration of Lok Sabha Elections in 2019, the Bombay Stock 1
Exchange Index rose by 1000 points.
Identify the dimension of business environment.
47 Mamta Rice Food Ltd‟ is a well know rice producing company. The sales have 5
been falling down from the beginning of the year. The managing director MR.
Bhuvan is worried about this situation. With a view to find out the solution of

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 this problem he made a team to find but the reasons for downfall of sales. The
team conducted the survey and gave following four reasons for the downfall of
company’s sale.
1. On account of increase in export duty made by the government, the foreign
demand has gone down.
2. Due to availability of other eatable substitute the taste of people is diverted
from rice.
3. The competitor’s imported new technology machine and are producing
better quality rice.
4. Due to strain with neighbouring country’s government and our Country’s
government export is effected.
Identify the dimension of Business Environment discussed in the above case.
48 With changes in the consumption habits of people, Neelesh, who was running 3
a sweet shop, shifted to the chocolate business. On the eve of Diwali, he
offered chocolates in attractive packages at reasonable prices. He anticipated
huge demand and created a website chocolove.com for taking orders online.
He got a lot of orders online and earned huge profits by selling the chocolate.
Identify and explain the dimensions of business environment discussed in the
above case.
49 A recent rate cut in the interest on loans announced by the banks encouraged 3
Amit, a science student of Progressive School, to take a loan from State Bank
of India to experiment and develop cars to be powered by fuel produced form
garbage. He developed such a car and exhibited it in the Science Fair organized
by the Directorate of Education. He was awarded the first prize for his
invention.
Identify and explain the dimensions of business environment discussed in the
above case.
50 Accent electronics Ltd.‟ was operating its business in Malaysia. The company 3
started exporting its products to India when the Prime Minister announced
relaxation in import duties on electronic items. The company appointed
retailers in India who had direct online links with the suppliers to replenish
stocks when needed.
Identify and explain the dimensions of business environment discussed in the

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 above case.
51 As per the directions issued by the Supreme Court, the government passed an 3
order to ban the sale of tobacco products within the area of 200 meters of all
educational institutions as:
1. Its consumptions injurious to health.
2. People are becoming more conscious about health and fitness.
This indicates the government‟s attitude towards this business.
Identify the business environment under three different dimensions by quoting
from above paragraph.
52 Make in India is an initiative launched by the Government of India to 5
encourage national and multinational companies to manufacture their
products in India. It focuses on job creation and skill enhancement and is in
twenty five sectors of the economy. Under the initiative, brochures on these
sectors and a web portal were released. The initiative aims at high quality
standards and minimizing the impact on the environment. It also seeks to
attract foreign capital investment in India.
In context of the above case:
1. Identify the various dimensions of business environment being referred to
by quoting lines from the paragraph.
2. List any two values which the Government of India wants to convey through
this initiative.
53 India’s retail sector has been undergoing structural changes for the last two 3
decades. On one hand, the „mall culture‟ has gradually become a way of life,
especially in the metros and mini-metros. On the other hand, there is
accelerated growth in e-business as customers also prefer to buy products and
services via the Interest, telephone and television. However, operating in
either of the segments is marked by the presence of strong competitors.
Identify the components of specific forces and general forces being discussed
in the above paragraph. .
54 To mark the celebrations of International Family Day on 16th may 2016, 5
Kurkure flagged off India’s first family food train – Kurkure Family Express at
New Delhi. The train took forty families ona fun culinary experience of a
lifetime through an eight-day journey across fourteen states in India. A whole

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 lot of fun activities were hosted on the train by the travel and food anchors
Rocky and mayor.
The families were selected through an online campaign, Chatpata family
photos‟. The contest attracted approximately 1,000 entries, of which 40
entries that gelled with the brand’s image were selected.
The core idea of the campaign was to bring families from across India together
over a journey like this. As in today’s time, everyone is busy with their life the
family members may feel disconnected with each other.
Identify and explain the various dimensions of business environment being
referred to the in the above case by quoting lines from the paragraph.
55 In the year 2016,the State Government of Kerala had made it mandatory for 6
anganwadis hostels and canteens in educational institutions to secure the
Food Safety and standards Authority of India (FSSAI) licence to ensure food
safety. As the educational institutions also get categorized as food business
operators in the event of the annual turnover of the hostels, they run
exceeding Rs. 12 lakh per annum.
In context of the above case:
1. Identify and explain the various dimensions of business environment being
referred to here.
2. List any two values which the State Government of Kerala wants to convey
through this initiative.
56 Postage stamps have been unveiled to commemorate 140 years of existence 6
of the country’s first stock exchange the Bombay Stock Exchange (BSE). The
setting up of BSE is considered to be the greatest revolution that took place in
the financial markets in India as it acts as a key driver for economic growth of a
country. This is due to the fact that there exists a strong correlation between
economic growth and capital accumulation.
In the context of the above case:
1. Identify the dimension of business environment of India being referred here.
2. State any three factors which broadly affected the dimension of business
environment of India as identified in part (a) of the question.
57 In May 2016, the government had launched a web-based application which 5
will provide as opportunity to all the industries dealing in hazardous waste to

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 apply online and get online permissions for import and export of certain
categories of waste, which is for reuse, recycling or recovery while it will also
help authorities in web-based processing, generation and grant of various
types of permissions to the entrepreneurs and industries. It is also aimed at
implementing the concept of paperless and green office and provide
information regarding number authorizations or consent order granted by the
State Pollution control Boards (SPCBs).
Identify the various dimensions of business environment being referred in the
above case.
58 Bharat is running an ice cream parlour in a local market. Keeping in mind the 6
changing perceptions about health among the people, one of his employee
Abhiraj suggests to him that they should introduce a range a flavoured yogurt.
Bharat accepts his suggestion as a result both the image and the profitability of
his business increases.
In the context of the above case:
1. Identify the feature of management which is being highlighted.
2. State the related dimension of the business environment.
3. Name and explain the related principle of general management.
59 The Government of India announced ‘Demonetisation ‘ of Rs. 500 and Rs. 5
1,000 currency notes with effect from the midnight of November 8, 2016. As a
result, the existing Rs 500 and Rs.1,000 currency notes ceased to be legal
tender from that date. New currency notes of denomination of Rs 500 and Rs
2,000 issued by RBI after announcement. Discuss “demonetisation” in light of
the legal and economic environment.
60 With change in the consumption habits of people, Neelesh who was running a 6
sweets shop shifted to chocolate business. On the eve of Diwali he offered
chocolates in attractive packages at reasonable prices. He anticipated huge
demand and created a website chocolove.com for taking orders online. He got
lot of orders online and earned huge profits by selling chocolates. Identify and
explain the dimensions of business environment discussed in the above case.

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 ANSWERS

Q.No. Answers Marks

1 (d) 1
2 (a) 1
3 (i) True (ii) False 1
4 (c) 1
5 (d) 1
6 (d) 1
7 (b) 1
8 (c) 1
9 (d) 1
10 (a) 1
11 (d) 1
12 (d) 1
13 (c) 1
14 (a) 1
15 (c) 1
16 (a) 1
17 (a) 1
18 (a) 1
19 Legal Regulatory Environment 1
20 Privatisation as a reform is the reason for this change in the government 1
policy.
21 • “Comes to India to start a new business ... launches a new product in e- 3
learning for Senior secondary school students in Commerce stream.”
1. It helps in assisting in planning and policy formulation. 2. It helps the firm to
identify opportunities and get the first mover advantage.
• “His business starts flourishing in India.”
1. It helps in improving performance.
• “Now more Indian companies entered into the market with different
subjects also.”
1. It helps the firm to identify threats and early warning signals.
22 Rise in stock market index (Sensex) is economic environment. But Political 3
environment (declaration of Lok Sabha Elections 2014 results)) led to this rise.
Two other dimensions of business environment:

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 1. Legal Environment: 2. Technological environment:
23 1. Legal environment: 2. Social environment: 3. Technological environment: 4. 3
Economic environment: 5. Political environment:
24 Technological. 3
25 Liberalization 1
26 Telecommunications, airlines, banking, insurance, etc. 1
27 1. Legal environment: 2. Social environment: 3. Political environment: 4. 4
Technological environment: 5. Economic environment:
28 The term „Business Environment‟ means the sum total of all individuals, 4
institutions and other forces that are outside the control of a business
enterprise but that may affect its performance. 2. The term „threats‟ refers to
the external environment, trends and changes
that will hinder a firm’s performance.
“Through an analysis report of the business environment, it has been brought
to his notice that in the coming years, shopping at a mall will not be a necessity
for the buyers as purchases can be made online from anywhere and at any
time with ease and at the consumer’s convenience.Hence, malls will have to
provide much more than shopping to be able to attract customers.”
The term „opportunities‟ refers to the positive external or changes that will
help a firm to improve its performance.
“As a result, the company gains enormously by getting the first mover
advantage.”
29 The major components of New Economic Policy of 1991 that are being 4
referred to are as follows:
• Liberalization: The economic reforms signaled the end of the licence-permit-
quota raj and were aimed at liberalizing the Indian business and industry from
all unnecessary controls and restrictions.
“Moreover, before the initiative was launched, the limits of foreign direct
investment in various sectors has been relaxed.The application for licences was
made available online and the validity of licences was increased to three years.
Various other norms and procedures were also relaxed by the government.”
• Globalization: Globalization means the integration of the various economies
of the world leading towards the emergence of a cohesive global economy.
“The ZED model aims to make India the manufacturing hub of the world and

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 prevent the products developed in India from being rejected by the global
market.”
30 The various dimensions of business environment being referred to in the 5
above case are as follows:
1. Political Environment: 2. Technological Environment: 3. Social Environment:
31 (i) Social environment which includes social forces like customs and traditions, 5
values trends etc.
‘this was because of increase in the number of working women and non-
availability of hygienic home-cooked food.’
(ii) Remuneration of employees, which states that the overall pay and
compensation should be fair to both employees and the organization.
‘The company was paying good salary and perks to its employees.The wages
were within the paying capacity...standard of living.’
(iii) Values being communicated by the company to the society are: (Any two)
1. Good work culture 2. Good behaviour inhuman interaction 3. Concern for
the employees 4. Respect for law
32 (i) Management is a dynamic function.
(ii) 1. Initiative
This principle indicates that the subordinates should be encouraged to give
suggestions and make and execute plans within the prescribed limits of
authority.
2. Spirit de corps
This principle suggests that management should promote a team spirit of unity
and harmony among the employees.
(iii) Benefits of business environment:
1. It helps in assisting in planning and policy formulation.
„... takes into account the changes taking place in business environment while
determining plans.‟
2. It helps in improving performance.
„He accepts changes readily and gives useful suggestions to his superior, which
results in reduction of costs.As a result, company’s profits increase.‟
(iv)Value:
• Team work

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 • Adaptability

33 Relativity is the relevant feature of business environment which is being 3

discussed above.
34 1. Inter-relatedness is the relevant feature of business environment which is 5
being discussed above. 2. The three points which highlighted the importance
of business environment
and its understanding by managers are described below:
1. It enables the firm to identify opportunities and getting the first mover
advantage: The dynamic business environment provides numerous
opportunities for a business to evolve as per the changing needs. Therefore,
early identification of the forthcoming opportunities helps an enterprise to be
the first to exploit them instead of losing them to the competitors. 2. It helps
the firm to identify threats and early warning signals: sometimes the
changes in the external environment may pose as a threat and hinder a firm‟s
performance. An awareness about the business environment helps the
managers to identify such threats on time and take necessary decisions and
action. 3. It helps in tapping useful resources as the enterprise designs policies
that
allow it to get the resources that it needs so that it can convert those
resources into outputs that the environment desires.
35 (a) Business environment helps in tapping useful resources. 5
„It assembled various inputs like finance, machines, raw materials, etc. from its
environment.‟
(b) (i) Social environment
„...it has been dumping its untreated poisonous waste on the river bank which
has created many health problems for the people.‟
(ii) Legal environment
„...the court passed an order to seal the manufacturing unit of the company.‟
1. Value overlooked.
• Environment protection
• Concern for human life
• Respect for law and order

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 • Social responsibility
36 1. Technological 6
environment
It includes forces relating to scientific improvements and innovations which
provide new ways of producing goods and services, and new methods and
techniques of operating a business. 2. Business environment helps a firm to
improve its
performance.
„It resulted in growth and profitability of the company.‟ 3. Value conservation
of energy
37 Features of business environment: 6
1. Dynamic nature: „fashion and taste of the consumers is changing at a fast
pace.‟ 2. Uncertainty: „It is very difficult for the company to predict future
happening.‟ 3. Complexity: „It is difficult to know the extent of the relative
impact of the social, economic, political, technological or legal factors on
decrease in demand of its products in the market.
1. Top level management 2. Impact of government policy changes on business:
1. Increasing competition: „New competitors have entered the market with
new
designs.‟ 2. More demanding customers: „Customers‟ demand is increasing.‟
3. Market orientation: „it was decided that they would study and analyze the
market first to identify customer tastes and fashion and then manufacture
garments accordingly. It was also decided to increase expenditure on
advertising, after-sales services, etc.‟
1. Business environment helps the manager in coping with rapid changes
38 1. The features of business environment being referred to in the above case 6
are as follows:
• Dynamic nature: It is dynamic in nature and keeps on changing due to
technological up gradations, shifts in consumer preferences or increase in
competition in the market.
• Inter-relatedness: All the elements of business environment are closely
interrelated. Therefore, any change is one element may necessitate
corresponding changes in the other elements as well.

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 2. The various components of general forces which have led to a growth in the
organic food market are as follows:
1. Social: “rising health consciousness, changing lifestyles” 2. Economic:
“increase in disposable income” 3. Technological: “growing availability of
organic food products in shopping malls, retail outlets and on line.”
39 1. The various dimensions of business environment being referred to the in the 6
above case are as follows:
• Technological environment: Technological environment includes forces
relating to scientific improvements and innovations which provide new ways of
producing goods and services and new methods and techniques of operating a
business.
• Legal environment: Legal environment includes various legislations passed by
the Government administrative orders issued by government authorities, court
judgments as well as the decisions rendered by various commissions and
agencies at every level of the government – centre, state or local.
• Social Environment: Social environment includes the social forces like
customs and traditions, values, social trends, society‟s expectations from
business, etc.
1. The two values which the Cerebra Integrated Technologies wants to convey
through this initiative are:
1. Sustainable development 2. Concern for environment.
40 1. The different styles of management in practice adopted by Arun and his 6
father reflect that management is an art. 2. „Harmony, Not Discord‟ is the
related principle of scientific management. 3. The related dimensions of the
business environment are:
• Economic Environment:
• Social Environment:
• Technological Environment:
41 1. The two functions of management that Rishabh will have to perform in 3
order
to manage his business successfully are Planning and Orgnising. 2. The
principle of management which is being violated by Rishabh is Equity. 3. The
related dimensions of the business environment are:

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 1. Legal Environment 2. Political Environment 3. Economic Environment 4.
Social Environment 5. Technological Environment
42 1. Liberalization 2. Other two reforms: Privatization and Globalization. 6
43 1. Explain recent changes in various environment heads, i.e., economic, 3
social, political, legal and technological. 2. Explain the topic, impact of change
in government policy/economic policy.
44 1. Feature highlighted in .........‟relativity‟. 2. The dimension is ........‟social 5
environment‟.
45 1. “After wining election ..... campaign of Swachh Bharat.” 5
Political Environment
1. “People in society ..... around their area.” 2. Social Environment 3. “A new
service tax ..... started.”
Economic Environment
1. “Import new technology .... Garbage.”
Technological Environment
46 Political Environment. 1
47 Political Environment. 1
48 1. Economic Environment 2. Social Environment 3
3. Technological Environment 4. Political Environment.
49 The various dimensions of business environment being referred to in the 3
above cases are as follows:
1. Social environment: 2. Technological environment.
50 The various dimensions of business environment being referred to in the 3
above case are as follows:
1. Political Environment: 2. Technological Environment.
51 The various dimensions of business environment being referred to the in the 5
above case are as follows:
1. Legal Environment:”As per the directions issued by the Supreme Court.‟ 2.
Political Environment: “The government passed an order to ban the sale of
tobacco products within the area of 200 meters of all educational institutions.”
3. Social Environment: “Its consumption is injurious to health and people are
becoming more conscious about health and fitness.”
52 1. The various dimensions of business environment being referred to in the 3
above case are as follows:
1. Political Environment: 2. Technological Environment: 3. Economic

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 Environment:
1. The two values which the Government of India wants to convey through this
initiative are:
1. High quality standards 2. Concern for environment
53 The components of specific forces discussed in the above paragraph are the 5
customers and competitors.
The components of general forces discussed in the above paragraph is the
social and technological conditions.
54 The various dimensions of business environment being referred to in the 6
above case are as follows:
1. Technological environment: 2. Social environment.
55 1. The various dimensions of business environment being referred to in the 6
above case are as follows:
1. Political Environment: 2. Legal environment:
1. The two values which the State Government of Kerala wants to convey
through this initiative are:
1. High quality standards 2. Good health
56 1. Economic environment is the dimension of business environment of India 5
being referred here. 2. The three factors which broadly affect the economic
environment of India
are stated below;
1. Stage of economic development of the country. 2. The economic structure
in the form of mixed economy which recognizes the
role of both public and private sectors. 3. Economic planning, including five
year plans, annual budgets, and so on
57 1. The various dimensions of business environment being referred to the in the 6
above case are as follows:
1. Political Environment: 2. Technological Environment: 3. Legal Environment:
4. Social Environment: 5. Economic Environment:
58 1. The feature of management which is being highlighted is Dynamic. 2. The 5
related dimension of the business environment is Social. 3. The related
principle of general management is Initiative.
Initiative means taking the first step with self-motivation. The workers should

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 be encouraged to develop and carry out their plans for improvement.
Suggestion system should be adopted in the organization.
59 Meaning of demonetisation in context of legal and economic environment. 6
60 Dimensions of business environment discussed here are: 6
(i) Social Environment : “with the change………………..at reasonable
prices.”
The social environment of business includes social forces like : (i)
Customs and traditions (ii) Social trends (iii)society’s expectations
(iv) Values (v) attitudes and beliefs.
For example : Social trends provides opportunities and threats to the business
organisations.
(ii) Technological Environment : “He anticipated huge
demand……..taking orders online.
Technological environment includes forces relating to : (i) Scientific
improvements and innovations which provides now ways of producing
goods and services. (ii) New methods and techniques of operating a
business.

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 UNIT 4 - PLANNING

Q.No. Questions Marks

1 Explain the term planning premises. 1
2 Which function of management is considered as the base of all other functions? 1
3 ‘ABC Ltd’ decides to advertise their product on T.V. and radio. What type of plan should it 1
prepare?
4 Name the type of plan is in which minutes details are worked out, i.e., procedures, rules 1
budgets, etc.
a. Objective b. Programme
c. Strategy d. Policy
5 “Swachch Bharat Abhiyaan” started by government of India is an example of …….of plan. 1
6 ABC Ltd. gives promotion on the basis of seniority. Which type of plan is it? 1
7 Planning leads to rigidity is: 1
i. Method of planning
ii. Characteristic of planning
iii. Importance of planning
iv. Limitation of planning
8 What to do and how to do is concerned with: 1
i. Controlling
ii. Staffing
iii. Planning
iv. Directing
9 No smoking in the factory comes under : 1
i. Objectives
ii. Policies
iii. Methods
iv. Rules
10 Estimated cash inflows and outflows are: 1
i. Programme

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 ii. Procedure
iii. Budgets
iv. Rules
11 Increasing sales by 15% is : 1
i. Planning
ii. Method
iii. Rule
iv. Objective
12 The first step of planning is: 1
i. Setting- up the objective
ii. Follow-up
iii. Selecting an alternative
iv. Developing premises
13 Planning is : 1
i. Useless function
ii. Physical exercise
iii. Mental exercise
iv. One time process

14 Actual performance can be compared with standard performance through: 1

i. Programme
ii. Staffing
iii. Budget
iv. None of these
15 Plans can be implemented after the: 1
i. Developing premises
ii. Setting objective
iii. Selecting an alternative
iv. Follow-up action
16 There are two types of plans : 1
i. Traditional plan and Modern plan
ii. Single use plan and Standing plan
iii. Short term plan and Long term plan

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 iv. Single use plan and Double use plan
17 Indicate whether the following statements are ‘True’ or ‘False’ : 1
(i) Objectives are targets of planning but they are part and parcel of planning.
(ii) A rule requires that a specific and definite action be taken or not with respect to
a situation.
(iii) Planning is the beginning and end of all managerial activities.
18 Identify the type of plan in the following statements: 3
a) They are ends which the organization wants to achieve by its operations.
b) Girls will be given a rebate of 5 per cent cut off for admission in the college.
c) It facilitates comparison of actual results with the planned results.
d) Library will issue at one time only 4 books for 15 days.
e) Any employee found logging to any social networking site in the office will be
punished.
f) Coca cola reduce prices of its products in response of price cut by the Pepsi.

19 Which type of plan has the least flexibility and why? 1

20 After completing B.Tech in electrical engineering, Rocky sets a unit to produce LED bulbs. 3
Due to government support for the project he is able to get finance at a reasonable rate of
interest. Rocky has the ability to foresee and plan his operations very well. His company
does well and needs to appoint a manager to help him. Kishor joins his business as the
production manager. Kishor is very poor at planning the activities and does his work in a
very haphazard manner. Due to this their orders got delayed and customers started to get
dissatisfied. The goodwill earned by the Rocky over the years began to decline.
On the basis of the given information about Rocky, answer the following questions:
(a) Identify and explain the function of management which Kishor failed to perform by
quoting lines from the paragraph.
(b) Describe briefly any two features of the function of management as identified in part
(a).
21 Mrs. Sonu Dhaliwal, the Senior Manager of ‘Bharat Limited’ held a meeting with the Sales 4
Manager in order to fix the target of sales for the following year. For this purpose she
studied the sales trend of the previous 3 years. She came to know the company’s sales
were increasing at the rate of 20% every year. For this she did the market survey also. From
this she learnt that the main competitor of the company was running in loss, was planning

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 to enter some other venture. Taking this information as base, Mrs. Dhaliwal doubled the
target from the previous year. All the Departmental Managers were directed to make their
respective preparations to achieve this target. The sales manager kept a close watch over
the sales rate of his company and the activities of the competing company as well. After
some time, she came to know that the competing company was not leaving its current
business, but was planning for improvement in it. The General Manager called a urgent
meeting of all the Departmental Managers so as to make changes in his plans.
Identify the different stages of planning process described in the paragraph given above.
Quote the relevant lines to do so.

22 Ishu is the C.E.O. of Star Ltd. He in accordance with the other board members decides to 4
formulate a general statement which will be guiding the thinking of employees. He further
goes on to formulate many such statements in the next six months. These statements could
be divided into two categories.
(a) Identify and state the type of plan highlighted above.
(b) Also give two types of this plans.

23 New-generation limited is a company manufacturing governments. While making its plane, 4

the company takes into consideration the business environment. It constantly adapts itself
to changes in environment by making changes in its plan. However, it becomes difficult for
the managers of the company to accurately foresee future trends in the environment.
Competition in the market upsets its financial plan; then sales targets have to be revised
and, accordingly cash budgets also need to be modified since they are based on sales
figures.
(a) Name and explain the limitation of planning highlighted in the above para.
(b) Identify and explain the two types of plans mentioned in the above para by quoting the
lines from it.

24 ABC Ltd. A mobile company is facing a problem of declining market share due to 4
competition from existing and new players in the market. The competitors are introducing
low-priced models for price-sensitive consumers. At the same time, for quality conscious
customers. The competitors are introducing new models with added features.
Identify and explain the steps ABC Ltd. should use to gain its market share.

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25 In ‘Chak De India’ movie, Shahrukh Khan becomes the coach of the girl’s hockey team. He 4
knows he has to prepare the girls for the international hockey matches and bring the world
cup after winning. For this he prepares a long-term plan thinks the way how to beat the
competitors. He coaches the girls to play in different ways like defensive, offensive, etc. at
the outset of a match he explains who will open the match, and how the ball will be passed
by one player to another step by step.
Identify the different types of plans quoting the lines from the above para.

26 Natural Ltd. is accompany working on the principle of ‘Best out of Waste’ is engaged in 4
utilizing the waste materials, like used CDs, thrown away card boards, plastic, thermocoal
and almost everything to make innovative and useful products like pen stands, lamp,
shades, decorates pieces, boxes, etc. The company has already engaged a few uneducated
workers for getting such useful waste materials. So, at negligible cost of procuring raw
material, and use of labour intensive technique of production, it is able to obtain good
prices for its products.
(a) Identify and explain the type of plan highlighted in the above para.
(b) Identify any two values reflected in the above para.

27 (a) “If any employee working in G.D. Goenka Public School comes late to the school four 4
times in a month, his/her one day salary is deducted.” Identify and explain the type of plan
highlighted by this statement.
(b) “Swachh Bharat Abhiyan” started by government of India is an example of which type of
plan? Explain it.
28 “Planning is Pervasive”. Explain briefly.  3

29 How is planning forward looking?  3

30 Explain “Objective” and “Policy” as types of plan using suitable examples.  4
31 What are the main points in the definition of planning?  4
32 “Planning is not a guarantee of success of a business.”Comment. 3
33 ABC Ltd. Announced a plan that no body would smoke in organization premises and they 4
further added that certain penalty will be imposed on employess,overlooking this.

(i)Name the type of plan n related to above para.

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 (ii)Name the features of that plan n .
(iii)Name the values emphasized by the company.

34 4
Alpha Ltd. Spent a lot of money to hire specialized people for faming their plans and
collecting important facts from environment. The company cut down their cost by
cancelling the employees trip for recreation.(3)

(i)Name the limitation planning mention in above para.

(ii)Name the value overlook by management .

35 4
PK Ltd. has been well-known for delay in decision making and overlapping of workdone.
Identify the management function lacking in the organisation and state the importance
of this function.

36 4
Is planning actually worth the huge cost involved? Give four reasons?

37 4
Why is it that organisations are not always able to accomplish all their objectives?

38 4
"Planning is not a guarantee of a success of a business". Comment.

39 Suhasini, a home science graduate from a reputed college, has recently done a cookery 4
course. She wished to start her own venture with a goal to provide ‘health food’ at
reasonable prices. She discussed her idea with her teacher (mentor) who encouraged her.
After analysing various options for starting her business venture, they short listed the
option to sell readymade and ‘ready to make’ vegetable shakes and sattu milk shakes.
Then, they weighed the pros and cons of both the short listed options.
1. Name the function of management being discussed above and give any one of its
characteristics.
2. Also briefly discuss any three limitations of the function discussed in the case.
40 Two years ago, Madhu completed her degree in food technology. She worked for sometime 4
in a company that manufactured chutneys, pickles and murabbas. She was not happy in the
company and decided to have her own organic food processing unit for the same. She set

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 the objectives and the targets and formulated an action plan to achieve the same.
One of her objectives was to earn 10% profit on the amount invested in the first year. It
was decided that raw materials like fruits, vegetables, spices, etc. will be purchased on
three months credit from farmers cultivating only organic crops. She also decided to follow
the steps required for marketing of the products through her own outlets. She appointed
Mohan as the Production Manager who decided the exact manner in which the production
activities were to be carried out. Mohan also prepared a statement showing the number of
workers that will be required in the factory throughout the year. Madhu informed Mohan
about her area wise sales target for different products for the forthcoming quarter. While
working on the production table, a penalty of ? 100 per day for not wearing caps, gloves
and apron was announced.
>>Quoting lines from the above paragraph, identify and explain the different types of plans
discussed.

41 Josh Ltd. is a one of the largest two-wheeler manufacturer in India. It has a market share of 4
about 42% in the two-wheeler category. The company had witnessed almost a 35% drop in
the booking as the currency crunch was prompting people to withhold new purchases due
to demonetisation. Therefore, the production manager of the company had decided to
align production to factor in slower sales in the market.
In context of the above case:
>>Identify and explain the function of management being discussed in the above lines.
>>Which limitations of the function of management as identified in part (a) of the question
was the production manager trying to overcome due to demonetisation?

42 Wazir Ahmed joins ‘Ashiyana Ltd.’ a company dealing in real estate, as a human resource 4
manager. Through a series of interactions with his team during lunch breaks, he comes to
know that quite a few managers at middle and senior levels have recently left the
organisation as their promotions were overdue. Therefore, in order to reinstate the
confidence of the staff, he lays out a clear cut plan consisting of a set of general guidelines
for both time bound and performance related appraisals of the mangers at all levels.
Moreover, he develops standardized processes containing a series of steps specified in a
chronological order for its implementation.

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 In context of the above case:

1. Identify the two different types of plans that Wazir Ahmed proposes to implement in
order to reinstate the confidence of the staff by quoting lines from the paragraph.

2. Distinguish between the two types of plans as identified in part (a).The difference
between Policy and Procedure is outlined below:

43 Arush joins as a sales manager of a company dealing in naturotherapy products. Being 4

proficient in his work, he knew that without good planning he will not be able to organise,
direct, control or perform any of the other managerial functions efficiently and effectively.
Only on the basis of sales forecasting, he would assist in the preparation of the annual
plans for its production and sales. Besides, he will have to prepare sales plans regularly on
weekly, monthly, quarterly and half yearly basis. While preparing the sales forecasts, he
undertakes intellectual thinking involving foresight, visualization and issued judgement
rather than wishful thinking or guess work. Most importantly, all these planning activities
will be meaningful only if they will coincide with the purpose fob which the business is
being carried out.
In context of the above case, identify the various features of planning highlighted in the
above paragraph by quoting lines from it.
44 A company is manufacturing garments. The manager wants to increase profits by 5
purchasing new high speed machines or increasing the sale price or using waste materials
in manufacturing stuffed toys. He decided that "using waste material" is the best solution
for him.

(a) Indentify the concept of managment involved.

(b) Mention the steps involved in the above process by quoting the lines from the question.

45 "KOHINOOR FOODS ltd. has banned smoking in the factory premises". 5

(a) Identify the plan stated in the above lines
(b) State the feature of this plan.
(c) Different between policy and this plan.

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46 Suhasini, a home science graduate from a reputed college, has recently done a cookery 5
course. She wished to start her own venture with a goal to provide ‘health food’ at
reasonable prices. She discussed her idea with her teacher (mentor) who encouraged her.
After analysing various options for starting her business venture, they short listed the
option to sell ready made and ‘ready to make’ vegetable shakes and sattu milk shakes.
Then, they weighed the pros and cons of both the short listed options.

1. Name the function of management being discussed above and give any one of its
characteristics.
2. Also briefly discuss any three limitations of the function discussed in the case.

47 Two years ago, Madhu completed her degree in food technology. She worked for 5
sometime in a company that manufactured chutneys, pickles and murabbas. She was not
happy in the company and decided to have her own organic food processing unit for the
same. She set the objectives and the targets and formulated an action plan to achieve
the same.
One of her objectives was to earn 10% profit on the amount invested in the first year. It
was decided that raw materials like fruits, vegetables, spices, etc. will be purchased on
three months credit from farmers cultivating only organic crops. She also decided to
follow the steps required for marketing of the products through her own outlets. She
appointed Mohan as the Production Manager who decided the exact manner in which
the production activities were to be carried out. Mohan also prepared a statement
showing the number of workers that will be required in the factory throughout the year.
Madhu informed Mohan about her area wise sales target for different products for the
forthcoming quarter. While working on the production table, a penalty of ? 100 per day
for not wearing caps, gloves and apron was announced.
Quoting lines from the above paragraph, identify and explain the different types of plans
discussed.
48 Two years ago, Mayank obtained a degree in food technology. For some time, he worked 5
in a company that manufactured bread and biscuits. He was not happy in the company
and decided to have his own bread and biscuits manufacturing unit. For this, he decided
the objectives and the targets, and formulated an action plan to achieve the same.

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 One of his objectives was to earn 50% profits on the amount invested in the first year. It
was decided that raw materials like flour, sugar, salt, etc. will be purchased on two
months credit. He also decided to follow the steps required for marketing the products
through his own outlets. He appointed Harsh as the Production Manager who decided
the exact manner in which the production activities were to be carried out. Harsh also
prepared a statement showing the requirement of workers in the factory throughout the
year. Mayank informed Harsh about his are a wise sales target for different products, for
the forthcoming quarter. While working on the production table, a penalty of ?150 per
day was announced for not wearing the helmet, gloves and apron by the workers.
Quoting lines from the above paragraph, identify and explain the different types of plans
discussed.
49 Rahul, a worker, is given a target of assembling two computers per day. Due to his habit 5
of doing things differently, an idea struck him which would not only reduce the
assembling time of computers but would also reduce the cost of production of the
computers. Instead of appreciating him, Rahul’s supervisor ordered him to complete the
work as per the methods and techniques decided earlier as nothing could be changed at
that stage. The above paragraph describes one of the limitations of the planning function
of management. Name and explain that limitation, And state 4 more limitation.
50 Josh Ltd. is a one of the largest two-wheeler manufacturer in India. It has a market share of 5
about 42% in the two-wheeler category. The company had witnessed almost a 35% drop in
the booking as the currency crunch was prompting people to withhold new purchases due
to demonetisation. Therefore, the production manager of the company had decided to
align production to factor in slower sales in the market.
In context of the above case:

1. Identify and explain the function of management being discussed in the above lines.
2. Which limitations of the function of management as identified in part (a) of the
question was the production manager trying to overcome due to demonetisation?

51 Flipkart is an e-commerce company founded in the year 2007 by Sachin Bansal and Binny 5
Bansal. The company is registered in Singapore, but has its headquarters in Bangaluru,
India. The company seeks to increase traffic (more clicks on their products) and boost sales
and revenue through integration of Mobile Apps, Display, Pay Per Click and Search Engine

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 Optimization. In order to dispel the fear of people related to shopping online, Flipkart was
the first company to implement the popular ‘Cash on Delivery’ facility. All the products sold
by the company under a particular category may have different return/replacement period.
Flipkart allows multiple payment options such as cash on delivery, credit or debit card
transactions, net banking, e-gift voucher and card swipe on delivery. The company operates
both ways when an order is received. The products for which it holds inventory are
dispatched by it directly. For the products they do not store in inventory, they just send the
order received by them to the supplier who ships it. The company plans to spend about ?75
crores on e-Commerce advertising in the year 2016. Flipkart reserves the right to terminate
your membership and/or refuse to provide you with access to the website if it is brought to
Flipkart’s notice or if it is discovered that you are under the age of 18 years. This is because
as per the Indian Contract Act, 1872, the minors, un-discharged insolvents, etc. are not
eligible to use the website.
In context of the above case, identify and explain the different types of plans being used by
Flipkart by quoting lines from the paragraph.

52 Rajender has been running a successful business of manufacturing traditional wedding 5

wear for women including sarees and lehengas. His friend Surinder who is engaged in the
business of providing web designing solutions to his clients, suggests him to explore the
option of selling his products online. Rajender agrees to his suggestion and decides to
venture into online business, keeping in view the various e-commerce regulations in order
to avoid imposition of any penalty. In order to facilitate the sale of his products, Rajender
decides to offer multiple payment options such as cash on delivery, credit or debit card
transactions, net banking to the buyers etc.
In context of the above case:

1. Identify the two different types of plans mentioned in the above paragraph that
relate to the online portal that Rajinder intends to startby quoting lines from the
paragraph.
2.  Distinguish between the two types of plans as identified in part (a).

53 State any five points of importance of planning function of management. 5

54 State any five features of planning. 5

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55 Holistic Education Public School in Bahadurgarh decides to implement the literacy 5
programme of the government in the school. It is decided that within the year, the forty
five support staff employees of the school will be made literate by the school counsellors
and social workers. In order to enhance the learning process, the school decides to use
audio-visual aids. To start the programme, the school has to first procure the literacy books
from State Resource Centre at Jamia. Besides the curriculum, each literacy book contains a
series of nine tests which the volunteers have to get completed by the learners during the
programme. Moreover, by implementing the plan of ‘each one teach one’, each student of
the school from classes fifth to tenth will be encouraged to make one person literate. The
student volunteers may select a learner by adopting any one of the two ways; either from
the slum areas adopted by the school or on their own within the vicinity of their residence.
As per the norms of the Delhi Government, it is mandatory for the volunteers to send back
the filled copy of only the ninth test paper in the series to the authorities as a conclusive
proof of the completion of the course, else the certificate of commendation will not be
awarded to them. Considering the implementation of the programme to be a part of its
corporate social responsibility initiative, the school has decided to spend around Rs. 50,000
on the distribution of free stationery items, refreshments of the learners, etc.
In context of the above case:

1. Identify the various types of plans being used by Holistic Education Public School in
order to implement the literacy programme in their school by quoting the lines from
the paragraph.
2. Categorise the various types of plans as identified in part (a) into single use plans
and standing plans.

ANSWERS

Q.No. Answers Marks

1 The planner or the manager is required to make assumptions about the future. 1
These assumptions are known as planning premises.

2 Planning 1

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3 Strategy 1
4 Programme 1
5 Programme 1
6 Policy 1
7 iv) Limitation of planning 1
8 (iii) Planning 1
9 (iv) Rules 1
10 iii) Budget 1
11 (iv) Objective 1
12 (i) Setting-up of the objective 1
13 (iii) Mental exercise 1

14 (iii) Budget 1
15 (iii) Selecting an alternative 1

16 (ii) Single use plan and Standing use plan 1

17 (i) True (ii) True (iii) True 1

18 (a) Objectives 1
(b) Policy
(c) Budget
(d) Policy
(e) Rule
(f) Strategy
19 Rules are enforced rigidly. No exception or deviation is allowed. With regard to rule, the 1
managers have no scope for discretion.
20 (a) PLANNING. Quoting lines: “Kishor is very poor………….haphazard manner” 3
Features:
(i) pervasive (ii) goal oriented
21 . (i) Developing premises and Setting objectives 4
“Taking, this information as base…….from the previous year”
(ii) Implementing Plans
“All the Departmental Managers …….to achieve this target.”
(iii) Follow up
“After some time……..improvement in it.”

22 (a) Policy 4

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 (b) (i) Major (ii) Minor

23 (a) Planning may not work in a dynamic environment 4

(b) (i) strategy (ii) Budget

24 type-Strategy 4
(a) Determining long term objectives
(b) Adopting a particular course of action
(c) Allocating necessary resources

25 . (a) objective 4
‘…..bring the world cup after winning’
(b) Strategy
‘ for this he……beat the competitors’
(c) method
‘he coaches the girls…….offensive,etc.
(d) Procedure
‘ at the outset…….step by step’
26 a) method 4
(b) Values: (i) optimum utilization of waste material (ii) environmental protection (iii)
recycling (iv) promotingeco friendly products
27 . (a) Rule 4
(b) Programme
28 3
Planning is the pervasive function of the management. It is required in all the types of
organisation, whether big or small, business or non-business, social, political or religious.
It is needed in all the departments of the organisation. Planning is performed even at all
levels of management at the top, middle and lower level. As top level managers plan to
make objectives and policies for the organisation. Middle-level managers plan to
implement policies and rules among their departments. Lower level managers plan to
control, inspect and supervise workers in the factory. In this way, planning is all
pervasive.

29 3
. Planning is forward-looking because it essentially involves looking ahead and preparing

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 for the future. The purpose of planning is to meet future events effectively to the best
possible advantage of the organisation. It is always for the future and never for the past.
It involves peeping into the future, analysing and then preparing plans .

30 4
Objectives: Objectives are those endpoints which every organization strives to achieve.
These are the basic reason for a firm’s existence. These are usually stated in measurable
terms. These are time-bound i.e these are to be achieved within a given period of time.
All the activities of the organisation are directed towards the attainment of the
objectives. These provide broad direction to employees about what they should do. For
e.g. it is a firm’s objective to increase its sales targets by 20%.Policy: A Policy is a general
statement that guides decision making. It acts as a guide to managerial actions and
decisions in implementing strategy. A policy defines the boundaries within which
decisions can be made by the subordinates. The main purpose of policies is to provide a
practical shape to objectives by elaborating the manner in which goals are to be
achieved. Policies play important role in setting the parameters within which a manager
may function. There are different policies at different levels ranging from major company
policies to minor policies. Major policies are concerned with the market, competitors,
customers and clients etc. whereas minor policies are concerned with the insiders.

accordingly. For e.g. on the basis of the sales forecasts, annual plans for production are
drawn.

31 In the words of Koontz O’Donnell, Planning is deciding in advance what to do, how to do 4
it, when to do it and who is going to do it. Planning bridges the gap from where we are
and where we want to go. It is a trap to capture the future.Main points involved are:

 Setting objectives

 Time period

 Formulating alternatives course of action

 Selecting a course of action

32 3
A business plan does not guarantee success. Having a business plan has become, in

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 many business owners' mind, a roadway to success. ... The reality is that the mere
possession of a plan does not mean that what has been planned will actually occur.
That plan that sits in your safe or on your shelf cannot predict the future.

33 4
i)Rule is the type of plan.

(ii) Rules are very rigid.

(iii)VALUES:(a)Respect towards environment.

(b)Follow the discipline and order

34 4
(i)Limitation :Planning envolve huge cost.

(ii)Value overlook: Psychological need of employees.

35 4
Planning

36 Yes, it is worth every amount spent on its. A company needs to plan because of the 4
following benefits (EXPLAIN four importance of planning)
-Provides directions
-Reduce risk of uncertainty
-Promotes innovative ideas
-Facilitate controlling
37 Explain any 6 limitations of planning 4
-Planning leads to rigidity
-Planning may not work in dynamic environment
-It reduces creativity
-Planning involves huge cost
-It is a time consuming process
-Planning does not give guarantee success

38 Yes, i agree with the statement, planning through an important tool of

managment is not a remedy for all types of problems because it suffers from
following limitations;

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 [Explain any four limitations of planning]

39 1.Planning is the function of management which is being discussed above. 4

Meaning-
Planning involves decision-making: Planning essentially involves application of rational
thinking to choose the best alternative among the various available alternatives in order
to achieve the desired goals efficiently and effectively.
2. Explain any 3 limitations of planning
40 The different types of plans discussed above are listed below: 4
Objectives: Objectives are the end results of the activities that-an organisation seeks to
achieve through its existence. All other activities within the organisation are directed
towards achieving these objectives.
“One of her objectives was to earn 10% profit on the amount invested in the first year.”
Policy: A policy is a set of general guidelines that helps in managerial decision making
and action.
“It was decided that the raw materials like fruits, vegetables, spices, etc. will be
purchased on three months credit from farmers cultivating only organic crops.”
Procedure: A procedure contains a series of specific steps to be performed in a
chronological order to carry out the routine activities.
“She also decided to follow the steps required for marketing of the products through
her own outlets.”
“The exact manner in which the production activities are to be carried out.”
Rule: A rule is a specific statement relating to the general norms in terms of Do’s and
Dont’s that guide the behaviour of people. It commands strict obedience and a penalty is
likely to be imposed on its violation.
“While working on the production table, a penalty of ? 100 per day for not wearing
caps, gloves and aprons was announced.”
Budget: A budget refes to a financial plan that is expressed in numerical terms.
“Mohan also prepared a statement showing the number of workers different products
for the forthcoming quater.”

41 Planning is the function of management which is being discussed in the above lines. 4
Planning is deciding in advance what to do, how to do, when to do and who has to do

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 it. Thus, it involves setting objectives and developing an appropriate course of action to
achieve these objectives.
2.The production manager is trying to overcome the following limitations of planning:
- Rigidity
-Planning may not work in dynamic environment

42 Policy and Procedure are the two different types of plans that Wazir Ahmed proposes to 4
implement in order to reinstate the confidence of the staff.
Policy: “… he lays out a clear cut plan consisting of a set of general guidelines for both
time bound and performance related appraisals of the mangers at all levels.”
Procedure: “Moreover, he develops standardized processes containing a series of steps
specified in a chronological order for its implementation.”
[ALSO differentiate between POLICY and PROCEDURE with basis]

43 The features of planning highlighted in the above paragraph are explained below: 4

Planning is a primary function: Planning precedes all the functions of management i.e.
organizing, staffing, directing and controlling. This refers to primacy of planning. Planning
provides the basis of all other functions.
“… without good planning he will not be able to organise, direct, control or perform
any of the other managerial functions efficiently and effectively. “
Planning is futuristic: Planning is called a forward looking function as it enables an
organization to meet future events effectively.
“Only on the basis of sales forecasting, he would assist in the preparation of the annual
plans for its production and sales.”
Planning is continuous: Plans need to be continuously made, implemented and
followed by another plan and so on till an organization exists
“Besides, he will have to prepare sales plans regularly on weekly, monthly, quarterly
and half yearly basis.”
Planning is a mental exercise: Planning is done on the basis of rational thinking
involving foresight, visualization and issued judgment rather than wishful thinking or
guess work.

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 “While preparing the sales forecasts, he undertakes intellectual thinking involving
foresight, visualisation and issued judgment rather than wishful thinking or guess work.”
Planning focuses on achieving objectives: Planning is a purposeful activity as it
contributes to the achievement of predetermined goals of the organisation both
efficiently and effectively.
“Most importantly, all these planning activities will be meaningful only if they will
coincide with the purpose for which the business is being carried out.”

44 a) planning 5
(b) steps of planning or planning process
45 -(a) rule 5
(b) features of rules:
-code of conduct
-specifies what to do and what not to do
-are rigid, stringent and compulsive in nature
-they are usually the simplest type of plan
(c) difference between POLICY and this PLAN

46 Planning involves decision-making 5

The limitations of planning are described below:

1. Planning may not work in a dynamic environment

2. Planning reduces creativity
3. Planning involves huge costs

47 The different types of plans discussed above are listed below: 5

1. Objectives: Objectives are the end results of the activities that-an organisation
seeks to achieve through its existence. All other activities within the organisation
are directed towards achieving these objectives.
“One of her objectives was to earn 10% profit on the amount invested in the first
year.”
2. Policy: A policy is a set of general guidelines that helps in managerial decision

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 making and action.
“It was decided that the raw materials like fruits, vegetables, spices, etc. will be
purchased on three months credit from farmers cultivating only organic crops.”
3. Procedure: A procedure contains a series of specific steps to be performed in a
chronological order to carry out the routine activities.
“She also decided to follow the steps required for marketing of the products
through her own outlets.”
“The exact manner in which the production activities are to be carried out.”
4. Rule: A rule is a specific statement relating to the general norms in terms of Do’s
and Dont’s that guide the behaviour of people. It commands strict obedience and a
penalty is likely to be imposed on its violation.
“While working on the production table, a penalty of ? 100 per day for not wearing
caps, gloves and aprons was announced.”
5. Budget: A budget refes to a financial plan that is expressed in numerical terms.
“Mohan also prepared a statement showing the number of workers different
products for the forthcoming quater

48 The different types of plans discussed above are listed below: 5

1. Objectives: Objectives are the end results of the activities that an organisation
seeks to achieve through its existence. All other activities within the organisation
are directed towards achieving these objectives. “One of her objectives was to earn
50% profit on the amount invested in the first year.”
2. Policy: A policy is a set of general guidelines that help in managerial decision
making and action. “It was decided that the raw materials like flour, wheat, sugar,
etc. will be purchased on two months credit.”
3. Method: A method refers to the prescribed ways or manner in which a task has to
be performed considering the objective. “..Decided the exact manner in which
production activities were to be carried out.”
4. Procedure: A procedure contains a series of specific steps to be performed in a
chronological order to carry out the routine activities.

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 “He also decided to follow the steps required for marketing of the products
through his own outlets.”
5. Rule: A rule is a specific statement relating to the general norms in terms of Do’s
and Dont’s that guide the behaviour of people. It commands strict obedience and a
penalty is likely to be imposed on its violation.
“While working on the production table, a penalty of Rs. 150 per day was
announced for not wearing helmets, gloves and aprons by the workers.”

49 The limitation of the planning function of management described in the above paragraph 5
is that ‘planning reduces creativity.’ The top management undertakes planning of
various policies and procedures whereas the other members are expected to merely
implement these plans. This restricts the creativity of the middle level managers as they
are neither allowed to deviate from plans, nor permitted to act on their own.
50 Planning is the function of management which is being discussed in the above lines. 5
Planning is deciding in advance what to do, how to do, when to do and who has to do
it. Thus, it involves setting objectives and developing an appropriate course of
action to achieve these objectives.

1. The production manager is trying to overcome the following limitations of

planning:

o Rigidity
o Planning may not work in dynamic environment

51 The different types of plans being used by Flipkart are listed below: 5

1. Objectives: Objectives are the end results of the activities that an organisation
seeks to achieve through its existence. All other activities within the organisation
are directed towards achieving these objectives.
“The company seeks to increase traffic (more clicks on their products) and boost
sales and revenue through integration of Mobile Apps, Display, Pay Per Click and
Search Engine Optimization.”
2. Strategy: A strategy is a comprehensive plan for achieving the objectives of the
organisation. This comprehensive plan involves:

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 o determining long term objectives
o adopting a particular course of action
o allocating resources necessary to achieve the objective.
“In order to dispel the fear of people related to shopping online, Flipkart was
the first company to implement the popular ‘Cash On Delivery’ facility.”
3. Policy: A policy is a siet of general guidelines that help in managerial decision
making and action.
“All the products sold by the company under a particular category may have
different return/replacement period.”
4. Method: A method refers to the prescribed ways or manner in which a task has to
be performed considering the objective.
“Flipkart allows multiple payment options such as cash on delivery, credit or debit
card transactions, net banking, e-gift voucher and card swipe on delivery.”
5. Procedure: A procedure contains a series of specific steps to be performed in a
chronological order to carry out the routine activities.
“The company operates both ways when an order is received. The products for
which it holds inventory are dispatched by it directly. For the products they do not
store in inventory, they just send the order received by them to the supplier who
ships it.”
6. Budget: A budget refers to a financial plan that is expressed in -numerical terms.
“The company plans to spend about ? 75 crores on e-commerce advertising in the
year 2016.”
7. Rule: A rule is a specific statement relating to the general norms in terms of Do’s and
Don’ts that guide the behaviour of people. It commands strict obedience and a penalty is
likely to be imposed on its violation.
“Flipkart reserves the right to terminate your membership and/or refuse to provide you
with access to the Website if it is brought to Flipkart’s notice or if it is discovered that you
are under the age of 18 years. This is because as per the Indian Contract Act, 1872, the
minors, un-discharged insolvents etc. are not eligible to use the Website.”

52 Rule and Method are the two different types of plans that relate to the online portal that
5
Rajender intends to start.

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 o Rule: “Rajender agrees to his suggestion and decides to venture into
online business keeping in view the various e-commerce regulations in order
to avoid imposition of any penalty.”
o Method: “However, he decides to offer multiple payment options such as
cash on delivery, credit or debit card transactions, net banking to the buyers
etc.”

53 Any five points of importance of planning function of management. 5

54 Any five features of planning. 5
55 a. Objectives. 5
b. Policy.
c. Budget.
d. Policy.

CHAPTER : ORGANISING

Q.NO. QUESTION MARKS

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1 Roles and duties of each member are clearly defined which helps in 1
avoiding confusion and duplication of work and efforts in informal
organisation. (T/F)
2 For effective administration, organising is the primary function. (T/F) 1
3 Organising clarifies ________ and _________ for results and logical 1
grouping of activities. authority and responsibility
4 Selective dispersal of authority leads to _______. 1
5 Rishabh has joined as creative head in an entertainment company. He 1
always ensures that the work has been divided into small and
manageable activities and also the activities of similar are grouped
together. Identify the related step in organising process mentioned here.
(a) Identification and division of work
(b) Departmentalisation
(c) Assignment of Duties
(d) Establishing Reporting Relationships
6 Which of the following is not a demerit of informal Organisation? 1
(a) It leads to spreading of rumors .
(b) It gives more importance to structure and work.
(c) It may restrict implementation of changes.
(d) It puts psychological pressure on members to conform to group
expectations, even if they are against the firm.
7 Being answerable to the final outcome is a phrase which can be 1
associated with:
(a) Authority
(b) Duty
(c) Responsibility
(d) Accountability
8 ‘It is a process by which managers brings order out of chaos, removes 1
conflicts among people over work and creates an environment suitable
for teamwork.’ Identify it.
9 Sunidhi is a simple girl, who has recently joined an IT company in Pune. 1
She often observes that most of her colleagues go for a party on
weekends with their boss. Identify the type of organisation being
described in above lines.

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10 Soumya runs a chain of low cost fashion wear outlets in various parts of 1
the country. As the taste and preference of people vary from one region
to another, she hires competent, capable and resourceful managers and
gives them an opportunity to work independently at local level. At the
same time they are expected to assume the responsibility for effective
implementation of their decisions with regard to various aspects like
colour, texture, design etc. Related to the garments. Identify the
concept.
11 Shine spices Ltd.’ are the manufactures of different food spices like 1+1+1=3
Rajmaah masala, chhole masala, paav bhazi masala etc. Mr. Raghav the
owner of the company has created different departments like purchase,
production, marketing etc. There are 30 employees working in the
organisation. Mr. Raghav believes that effective planning is of paramount
importance and can help to achieve organisational objectives. In order to
make employees focus on objectives, he issued orders that during
working hours only official matters will be discussed. He made certain
rules and code of conduct for the employees, according to which
employees are not allowed to visit and talk to the employees of other
departments except for official work. He emphasised on work
performance.
 Identify and name the type of organisation mentioned in above
para.
 State one feature of the concept identified in part (1) above.
 What was the purpose behind the formulation of the rules for the
employees that restricted the personalcommunication.
12 You are working in HR department.Day-by-day you are facing problems 3
due to existence of informal groups. What steps would you take to
manage such informal groups?

13 The manager of M Ltd. Is overburdened with the work and is unable to 3

concentrate on core issues of the company. To overcome this problem,
he entrusted some of his authority to his immediate subordinate to
share some of his routine work.

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 1. Which concept is used by the manager?
2. It is an extension of one of the principles of management, Name
the principle.
3. Give one benefit of the concept identified in part (1) above
14 “If we delegate the authority we multiply by two and if we decentralise 3
we multiply authority by many”. Comment
15 The directors of Gunjan Limited, an organisis an extation manufacturing 3
colour televisions have asked their production manager to achieve the
target production of 150 television per day, manager has asked his
foreman to achieve this target but he did not give him the authority for
requisition of tools and materials from the stores department .The
foreman could not achieve the desired target. Can the directors blame
the production manager and can production manager blame his foreman
for not achieving the target?

Explain in brief the relevant principles relating to this function in support

of your answer
16 Atul joins as a Regional Sales Head in the export division of a FMCG (fast 1+1+1+1
moving consumer goods) company. In a departmental meeting, he asks =4
one of his subordinates, Manik, to take charge of the company’s new
office in Dubai. He allocates the work to him and grants the necessary
authority. However, within a month by seeking regular feedback on the
extent of work accomplished from Manik, Atul realises that Manik is not
doing the work as per his expectations. So he takes away the authority
delegated to him and re delegates the work to Prakrit. Due to the time
wasted in this switch over, the work at the Dubai office suffers
tremendously and the company is not able to meet its desired goals.
In context of the above case:

 Why is Manik supposed to give regular feedback about work to

Atul?

 Can the authority granted to a subordinate be taken back and re-

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 delegated to another person?

 Can Manik be held responsible for not meeting the work related
expectations of Atul? Give a suitable reason in support of your
answer.

 Differentiate between authority, responsibility and accountability

on the basis of origin.
17 After completing a course in travel and tourism, Karan started his own 4
travel agency. In order to ensure smooth functioning of his business, he
decided to create fourteen job positions divided into four departments
on the basis of functions namely, front office department including
online queries, reservations department for airways, railways and
roadways, accommodation booking department, and securing payments
department. In order to avoid any interdepartmental conflicts he decides
to specify clearly the lines of authority and areas of responsibility for
each job position.

In the context of the above case:

A) Which function of management is being described in the above

lines?

B) Identify the framework created by Karan within which all

managerial and operating tasks are to be performed in his
organization.

C)Name the type of the framework as identified in part (a) of the

question. Also, give any two of its advantages.

18 It is a network of personal and social relations not established or 4

required by the formal organisation but arising spontaneously as people
associate with one another. Name the organisation and give its three
advantages.

19 ‘No Organisation can be completely centralised or decentralised’ 4

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 Comment.

20 One of the questions that needs to be answered in the organizing 4

function is ‘At what level are decisions

made’? Decision making authority in an organization can be pushed

down to the lower levels or it may lie with the top management.
However it is not an ‘either or’ concept.

When an organization grows in size or complexity, there is tendency

towards sharing decision making authority with the lower levels. This is
because in large organizations, employees who are closely involved with
certain operations tend to have more knowledge about them than the
top management. An important concept of organizing function is
discussed above. Identify the concept and state any three points of its
importance.
21 Rakesh joins as a Head Librarian of a newly constructed medical college 1+1+3=5
in Pune. A team of four librarians is placed under him for the smooth
functioning of the library. Besides, he has been assigned eight people as
support service staff. On the second day of his joining, he is told to get a
shipment of new books unloaded, stock the bookshelves, and then get all
waste (packaging, paper etc.) disposed off within a weeks time. In order
to ensure orderliness and speed in the process of setting up of the
library, he makes each of the four librarians in charge of five different
subjects. Keeping in mind their competence and experience he decides
to give them more authority so that they can make autonomous plans
and assume the responsibility for the effective implementation of their
decisions.
In context of the above case:
1) Identify and explain the concept used by Rakesh keeping in mind
the competence and experience of the other librarians.
2) Describe briefly any three advantages of using the concept as
identified in part (a) of the question.
22 Ishita works as a corporate event coordinator in an event management

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 company. She has been made an overall official in charge for organizing a
painting exhibition for one of the clients of the company. For ensuring
that the exhibition takes place successfully, she identifies the various
activities involved and divides the whole work into various task groups
like marketing committee, decoration committee and reception
committee. In order to facilitate coordination within and among
committees, she appoints a supervisor of each group. Each member in
the group is asked to report to their respective supervisor of each group.
Each member in the group is asked to report to their respective
supervisors and all the supervisors are expected to work as per Ishita’s
orders.

In context of the above case:

A) Identify the function of management being performed by Ishita.

B) Describe briefly the various steps involved in the performance of

the function of management as identified in part (A) of the question.

23 A company manufacturing consumer goods has grown in size. It was a 5

market leader but with changes in economic environment and with the
entry of MNCs its market share is declining. The company was following a
centralized business model as even the minor decisions were in the
hands of top level. Before 1991 this model was suitable for company but
now the company is under pressure to reform.

What changes should the company bring about in order to retain its
market share? Give its three points of importance.
24 A Steel Manufacturing Company has the following main jobs: 5

1. Manufacturing, (ii) Finance, (iii) Marketing, (iv) Personal and, (v)

Research and development.

A) Which type of organizational structure will you choose for this

type of a company and why?

B)State any six advantages that this structure offers to an organization.

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25 Voltage fluctuations have been common and quite high in India. They 5
harm our electrical appliances like television, refrigerators and air
conditioners, often leaving them in a permanently damaged condition.

N-Guard Company decided to manufacture stabilizers for North India

where the voltage fluctuation ranges from 220V-230V. Once the demand
for the North India was taken care of, they decided to launch stabilizers
of varying voltages from 90 V -260V for meeting the requirements of
voltage fluctuations in other regions of India also.

Three engineers were appointed for South, West and East regions of
India, as the voltage was different in all the three regions. Though all the
engineers were appointed to manufacture stabilizers but the product
differed from region to region.

(a) Identify the organisational structure of NGuard Company.

(b) State any two advantages and two limitations of the structure
identified in the above para.
26 Company manufacturing Sewing Machines set up in 1946 follows formal 2+2+2=6
organisation structure. It is facing a lot of problems such as delay in
decision making, result, it is not able to adapt to the changing business
environment. The workforce is also not motivated, the problem of red
tapeism and employees turnover is very high.
 Advise the company with regard to change it should bring about
in its organisation structure to overcome the problems faced by
it.
 Give reasons in terms of benefits it will derive from the changes
suggested by you.
 In which sector can the company diversify keeping in mind the
declining market for the product the company is manufacturing?
27 Tanushree runs a factory wherein she manufacturers shoes. The business 2+4=6
has been doing well and she intends to expand by diversifying into
leather bags as well as western formal wear, thereby making her

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 company a complete provider of corporate wear. This will enable her to
market her business unit as the one shop for working women. Which
type of structure would you recommend for the expanded organization
and why? State any four advantages of this organization structure.
28 Kiran Industries is a company manufacturing office furniture. The 3+3=6
company chose to diversify its operations to improve its growth potential
and market share. As the project was important, many alternatives were
generated for the purpose and were thoroughly discussed amongst the
members of the organisation. After evaluating the various alternatives,
Rohan , the Managing Director of the company decided that they should
ass ‘Home Interiors and Furnishings’ as a new line of business activity.
A) Name the framework, which the diversified organisation should
adopt, to enable it to cope with the emerging complexity? Give two
reasons in support of your answer.
B) State any three limitations of this framework.
29 Aradhna and Gandharv are heads of two different departments in 6
‘Yumco Ltd.’ They are efficient managers and are able to motivate the
employees of their respective departments to improve performance.
However, their drive to excel in their own sphere of activity instead of
giving emphasis on objectives of the enterprise has hindered the
interaction between the departments that Aradhana and Gandharv are
heading. Often there are inter-departmental conflicts and they have
become incompatible. This has proved to be harmful in the fulfillment of
the organizational objectives. The situation has deteriorated to such an
extent that the CEO of ‘Yumco Ltd.’ Has hired a consultant, Rashmi, to
resolve the problem. After studying the situation closely, Rashmi found
that the problem has arisen due to inflexibility and a narrow perspective
on the part of both Aradhana and Gandhrav. She is of the view that this
situation is a result of the type of organizational structure ‘Yumco Ltd.’
has adopted.

From the above information, identify the organizational structure

adopted by ‘Yumco Ltd.’ And state advantages of the structure so

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 identified.

30 Aman Chadha started ‘Bulls Eye’ a company for providing cyber security 6
solutions to businesses. Its objective is to prevent, detect and respond to
cyber attacks and protect critical data. He was a hardworking software
engineer and anexpert in cyber security. His reputation grew by leaps
and bounds as he was not only a person of integrity but also did his work
with utmost honesty and sincerity. The business started growing day by
day.He was delighted when he was offered a big project by the Ministry
of Defence. While working on the project, he found that the volume of
work made it impractical for him to handle all the work by himself. He
decided to expand the team. The company maintained a close liaison
with a local engineering college. During a campus placement, Ishan and
Vrinda were appointed to work for the new project.

He found the new employees capable, enthusiastic and trustworthy.

Aman Chadha was thus, able to focus on objectives and with the help of
Ishan and Vrinda, the project was completed on time. Not only this Aman
Chadha was also able to extend his area of operations. On the other
hand Ishanand Vrinda also got opportunities to develop and exercise
initiative.

(i) Identify and briefly explain the concept used by Aman Chadha in the
above case which helped him in focusing on objectives.

(ii) Also, state any four points of importance of the concept identified in
(i) above.

ANSWERS

Q.NO. ANSWER MARKS

1 False 1
2 False 1
3 authority and responsibility 1
4 Decentralisation 1
5 B) Departmentalisation 1
6 B) It gives more importance to structure and work. 1

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 7 D) Accountability 1
8 Organising 1
9 Informal Organisation. 1
10 Decentralisation. 1
11 1. Formal Organisation 1+1+1=3
2. Focus on objective and work performance
3. Avoidance of emergence of informal organisation which may obstruct
the fulfillment of organisational goals.
12 Following steps should be taken to manage such informal groups: 3

1. Management should use group based approaches for decision

making and conflict handling.

2. Management should ensure that informal groups follow the rules,

laid down in an organisation

3. Managers should assist informal groups for the betterment of

organisation
13 1. Delegation of authority 3
2. Division of work
3. Motivation to employees
14 It is true , because the scope of delegation is limited, when authority is 3
delegated , only two person are involved I.e. Delegator and delegatee
(immediate subordinate). Authority gets shared by two people.
Delegator has to keep a regular check on the delegatee as the
accountability of superior is not delegated.

While scope of decentralisation is wider, as here authority is

systematically delegated upto the lowest level. Decentralisation
increases the role of subordinates in decision making and provide relief
to top management.
15 Yes ,the Director can blame the production manager although he has 3
delegated the task to his foreman and because accountability cannot be
delegated by manager. The production manager shall still be
accountable for the performance of the assigned task (principle of
absoluteness of accountability)

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 However the production manager cannot blame his forman for not
achieving the target because it did not give him the authority for the
requisition of tools and materials from the stores department.
Responsibility with authority will make the subordinates ineffective ,that
is he will not able to perform his duties well (principle of authority and
responsibility)

16  Manik is supposed to give regular feedback about work to Atul as 1+1+1+1

he has been granted authority and entrusted responsibility, so =4
he remains answerable for the outcome.

 Yes, the authority granted to a subordinate can be taken back

and re-delegated to another person.

 Yes, Manik can be held responsible for not meeting the work
related expectations of Atul as it is the obligation of a
subordinate to perform the assigned duty to the best of his
ability and skill.

4. Authority arises from the job position of person in the

organisation, responsibility originates from authority and accountability
originates from responsibility
17 A)The Organizing function of management is being described in the 4
above lines.

B)Organizational structure is the framework created by Karan within

which all managerial and operating task are to be performed in his
organization.

C)Karan has created a functional structure as job positions are

divided into four departments on the basis of functions namely,
front office department including online queries, reservation
department for airways, railways and roadways, accommodation
booking department, and securing payments department.

The two advantages of functional structure

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18 Informal Organisation 4

Advantages

It brings feeling of belongingness

Informal organisation satisfies social and cultural needs

It provides useful channels of communication

19 Centralisation and Decentralisation are relative terms, i.e. absolute or 4
complete centralisation or decentralisation is not possible.

Complete centralisation means concentration of all decision making

powers at top level. It is not possible as it remove the need for
management heirarchy. A manager cannot retain all the authority and
yet have subordinates in the organisation. It is possible in one- man
business. Manager cannot concentrate on important matters, if he tries
to handle everything by himself.

Complete decentralisation means delegation of all decision making

functions to the lower levels. This is also not possible as it would obviate
the need for higher managerial positions. A manager cannot delegate all
his authority without surrendering his position as a manager.

So, an organisation can never be completely centralised or

decentralised. An organisation moves towards decentralisation as it
grows in size and complexity. In order to increase effectiveness and to
improve overall functioning, the organisation maintain a balance
between centralisation and decentralisation.
20 Decentralisation 4

Importance of decentralisation: (Any three)

(i) It gives relief to the top management as, when the subordinates are
given the freedom to act, the top

management gets more time to devote on important policy decisions

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 rather than handling operational decisions.

(ii) It develops initiative amongst subordinates by promoting self

reliance and confidence among them. This is because when lower
managerial levels are given freedom to take their own decisions they
learn to depend on their own judgement.

(iii) It develops managerial talent for the future by giving the

subordinates a chance to prove themselves, thus, creating reservoir of
qualified manpower to fill up challenging positions in future.

(iv) It facilitates growth by fostering competition amongst the

departments leading to increase in productivity, thereby generating to
higher profits which can be used for growth and expansion.

(v) It helps in quick decision making as there is no requirement for

approval from many levels. There are also less chances of information
getting distorted as it doesn’t have to go through many levels.

(vi) It leads to better control by evaluating performance at each level

of management. The departments can be held accountable for their
results.
21 1)Rakesh has used the concept of decentralization keeping in mind 2+3=5
the competence and experience of the other librarians.
2)The three advantages of using decentralization are as follows:
 Decentralization helps to promote initiative amongst the
subordinates
 Relief to top management
 Quick decision making (explanation to be given)
22 A) The Organizing function of management is being performed by 5
Ishita.

B) The steps involved in the process of organizing are as follows:

1.Identification and division of work: It means identifying various

activities to be done and dividing those activities in to sub tasks

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 keeping in mind the qualification, experience and skills required to
do those tasks.

2.Departmentalisation: It involves grouping of activities which are

similar in nature. This process is called departmentalization.
Departments can be created on the basis of products and functions.

3.Assignment of Duties: Jobs are allocated to individuals according

to their knowledge and skill. There should be proper match
between the nature of job and the ability of an individual.

4.Establishing Reporting Relationships: In order to perform the

duties assigned, it is necessary that some authority is granted for the
same. Each employee has some authority as well as responsibility. It
is necessary that every individual must know whom he has to take
orders from and to whom he is answerable. This creates superior-
subordinate relationship.

23 The top management of the company must share decision-making 5

authority with middle level land supervisory level also. It should
introduce the concept of ‘Decentralization’ instead of following
complete centralization. In the current scenario of business
environment, there is need for fast action and quick decision-making
which is possible only with decentralization.

Importance of decentralization:

1. Relief to top management:

2. Develops initiative amongst subordinates

3. Quick decision-making:

24 A) Functional structure; because the company has diversified 5

activities and operations require a high degree of specialization.

B) Advantages of functional structure:

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 I) Functional structure leads to occupational specialization.

II) It promotes control and coordination within the department.

III) It helps in increasing managerial and operational efficiency and

this results in an

IV) increase in profits.

V) It leads to minimum duplication of effort.

VI) It makes training of employees easier.

VII) It ensures that different functions get due attention.

25 Functional Structure 5

Advantages of Functional structure: (Any two)

(a) It leads to occupational specialisation since emphasis is placed on

specific functions.

(b) It promotes control and coordination within a department because

of similarity in the tasks being performed.

(c) It increases managerial and operational efficiency resulting in

increased profit.

(d) It lowers cost as it reduces duplication of effort.

(e) It makes training of employees easier as it focuses on a limited range

of skills.

(f) It ensures that different functions get due attention.

Two limitations of Functional structure are: (Any two)

(a) Creation of functional empires where less emphasis is placed on

overall objectives of the enterprise and more on the objectives pursued

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 by a functional head.

(b) Problems in coordination as information has to be exchanged across

functionally differentiated departments.

(c) Inter-departmental conflicts may arise when the interest of two or

more departments are not compatible.

(d) Inflexibility as people with the same skills and knowledge may
develop a narrow perspective.
26 1. The company should give due importance to informal organisation 2+2+2=6
structure along with the formal structure. It enhances the job
satisfaction. This will overcome the problem of lack of motivation, It
also provide useful communication channels which may help to
transmit Useful information quickly.
2. benefits of informal organisation structure:
a) fastest speed of information.
b) fulfillment of social needs.
c) fill inadequacies of formal structure.
3.The company can diversify its activities by introducing embroidery
machines. it can also design special machines keeping in mind the
requirement of readymade garment manufacturers etc. ,by
diversifying in the same field it can get maximum utilisation of
existing. Resources
27 ‘Divisional structure’ is suitable for the expanded business since it will 2+4=6
produce multiple products – shoes, leather bags and western formal
wear. That means, the organization will grow; and will need to add more
employees; create more divisions; and introduce new levels of
management.
By adopting divisional structure, the company will get the following
advantages:
1)It will facilitate growth and expansion. Now the business of Tanushree
will have multiple divisions shoes, bags and formal wear. Within division,
functions like production, marketing finance, purchase, etc. will be

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 performed to achieve the objectives of the business.
2)Greater accountability will be possible because the divisional
managers can be held separately accountable for their respective
division’s profits, costs, etc.
3)Product specialization: A divisional head gains experience in all
functions related to a particular product.
4)Flexibility and initiative: It promotes flexibility and initiative because
each division functions as an autonomous unit which leads to faster
decision-making.
28 A) Divisional Structure 3+3=6
Reason:
 Product specialisation : It helps in the development of varied
skills in divisional head and this prepares him for higher
positions.
 Greater Accountability: In divisional structure , each product is
treated as a ‘profit centre’ and is accountable for its own profit
or loss. This provides a base for measuring performance and
helps in fixing responsibility in case of poor performance.
B) Limitations:
1. Departmental conflicts:Conflicts may arise among different divisions
with refernce to allocation of funds.
2. Costly: It is costly as each division has to maintain its own facilities,
equipments and personnel.
3.Ignore organisational interests: In Divisional structure, managers focus
on their own product without thinking of the rest of the organisation.
Thus organisational objectives suffer and become difficult to achieve.
29 Functional Structure is the organizational structure adopted by ‘Yumco 6
Ltd.’

Advantages of Functional Structure: (any five)

(a) It leads to occupational specialization since emphasis is placed

on specific functions.

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 (b) It promotes control and coordination within a department
ecause of similarity in the tasks being performed.
(c) It increases managerial and operational efficiency.
(d) It lowers cost as it reduces duplication of efforts.
(e) It makes training of employees easier as it focuses on a limited
range of skills.
It ensures that different functions get due attention.
30 (i) Delegation. 6

Delegation is the transfer of authority from superior to subordinate,

entrustment of responsibility and creation of accountability for
performance which helps a manager to extend his area of operations.

(ii) Importance of delegation of authority: (Any four)

(i) Effective management : It helps in effective management as the

managers get more time to concentrate on important matters.

(ii) Employee development : It helps in development of employees as

the employees get more opportunities to utilize their talent.

(iii) Motivation of employees : It helps to motivate employees as the

employees feel encouraged and try to improve their performance
further.

(iv) Facilitation of growth : It facilitates growth by providing a ready

workforce to take up leading positions in new ventures.

(v) Basis of management hierarchy : It establishes a management

hierarchy through clear superior subordinate relationships.

(vi) Better co-ordination : It helps in better co-ordination by avoiding

overlapping of duties.

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 CHAPTER : STAFFING

Q. NO. QUESTION MARKS

1 In internship training, the trainee learns under the guidance of master 1
trainer. (True/False)
2 Under which source of recruitment do employees get motivated? 1
(a) Internal
(b) External
(c) Both
(d) None of the above

3 Expense on training is a waste. (True/False) 1

4 From which source of recruitment do we get Badli or casual 1

Employee?

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 (a) Direct Recruitment

(b) Casual Callers

(c) Media Advertisement
(d) Employment Exchange

5 Providing the candidate, the post, for which he is selected is 1

called………………..
6 1
Which of the following is not an external source of recruitment?

(a) Casual Callers

(b) Advertisement
(c) Promotions
(d) Recommendations of Employees

7 Why is ’employment interview’ conducted in the process of 1

selection? 
8 When does the Personnel Manager act as the Line Manager? 1

(a) When he completes the job of staffing as part of functional

area of management

(b) When he performs the function of staffing as a function of

management
(c) In both the above situations
(d) He never acts as the Line Manager

9 What stage does the requisition of employees occupy in the process of 1

recruitment?

(a) First

(b) Second
(c) Third
(d) Fourth

10 NKG Pvt. Ltd. is a company engaged in the marketing of water 1

purifiers. As their product is in great demand, the employees in the

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 marketing department are always racing against time. The employees
have to work over time. So the company decided to search for new
workers and took recommendations from present employees.
(a) Identify the function of management being performed by the
company in the above situation.
(b) Name the source used by the company to put people to jobs.

11 Rama Ltd. is engaged in the marketing of air conditioners. To meet the 1.5+1.5=3
increasing demand of their product, they decided to start a new plant.
They assessed the type and the number of employed required and
they took the help of advertising in the local news-paper to attract the
prospective employees.
Explain the next two steps that they have to undertake to fulfil the
requirement of quality workforce.
12 Joseph Bros is a firm manufacturing jute lampshades. It uses leftover 3
jute pieces from various jute factories to manufacture economical
lampshades which are supplied to various hotels in nearby towns. It
employs men and women from nearby villages as workers for creating
good lampshade designs. Joseph Bros, is not able to meet its targets.
Namish, the supervisor of the company, was told to analyse the
reasons for the poor performance. Namish found the following
problems and suggested certain solutions in the working of the
business. The number of workers employed was less than what was
required for the work. As a result, the existing workers were
overburdened. The firm decided to search for new workers and it
asked the present employees to introduce candidates or recommend
their friends and relatives to the firm. This enabled the firm to ‘put
people to jobs’ and assured the attainment of objectives according to
plans.

1. Identify the functions of management being performed by the

firm in the above situation.
2. Name the concept and its source used by the firm to attract

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 more workers for the firm.
3. State any two values being followed by Jacob Bros.

13 Ganesh was concerned about the sedentary lifestyle people are 3

leading nowadays. Their dependency on outside food is also
increasing because corporate work culture demands working till late
night at offices. So, he decided to start a restaurant, ‘Healthy Eating
Point’ to provide healthy food options to customers. After completing
planning and organising functions, he identified the various job
positions that are required to be filled i.e. a General Manager, an
Accountant, two Chefs, two boys for serving the food in the restaurant
and three boys for home delivery of food. He decided that his father,
Karan, would be the General Manager of the restaurant. He would be
paid Rs.50,000 per month for his services. His father requested him to
appoint his friend’s son, Prem as an accountant who is well qualified
for this post. Ganesh agreed to this proposal. Earlier, Prem had a
business of providing unskilled workers to different organisations from
remote areas of the country. Prem took permission from Ganesh to
continue with the old business. Ganesh happily agreed and asked him
to provide five boys for serving and delivering the food. For the
appointment of the two Chefs, Ganesh approached a renowned Hotel
Management Institute and was satisfied with the Chefs provided by
the institute.
Quoting the lines from the above paragraph, explain any two sources
of recruitment being used by Ganesh for filling up the various job
positions.
14 After passing his secondary school examination, David left the school 3
at the age of 15 years and started getting training under his father. His
father, a renowned electrician, had worked for many companies. He
everyday started accompanying his father on work and watched him
carefully while working. David was a good learner and learnt the
techniques of work quickly. Now his father started passing on the
tricks of the trade to David. With the passage of time David acquired a

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 high level skill and became a
well-known electrician at Indore. Big business-houses started calling
him for electrical -wiring .
(a)Name the method of training discussed in the above para.
(b) State any two benefits which David could get on being trained.
15 Mr. Murthy is the Human Resource Manager of Jai Hind Hospital in 3
Vellore. He has to appoint nurses for the hospital. Since patients in the
hospital are of different types, he wants to find out the candidates’
maturity and emotions in dealing with the patients. He also wants to
know about the candidates’ ability to make decisions.
Explain two types of tests thatMr. Murthy can use to meet his
requirements.
16 Bharat Ltd. purchased a new machinery from Germany for 1+3=4
manufacturing some auto components. It was a cost-effective and
quality production machine but during the production process,
manager observed that the quality of the production was not as per
standards. On investigation, it was found that there was lack of
knowledge of using these hi-tech machines. So, frequent visits by
engineers were required from Germany but this resulted in high
overhead charges.
Suggest what can be done to develop the skills and abilities of
employees for producing quality products by using these hi-tech
machines. Also state how the employees will be benefited by your
suggestion.
17 Human Resource Management includes many specialized activities 4
and duties which the human resource personnel must perform. In the
light of this statement, explain any four such duties performed by
Human Resource Manager.
18 To enhance production, XYZ ltd. purchased a new machinery .But in 4
actual, production got down and also production was not up to
standard. On investigation, it was found that employees are not able
to use that new machinery properly because of lack of knowledge
regarding new technology.

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 (A). Suggest what can be done to develop the skills of employees.
(B.) Also state three benefits of your suggestion.
19 Xeno Ltd. is a global information technology consulting company with 4
45,000 employees serving over 600 clients in 23 countries. Its Chief
Executive Officer, Mr Neil Suman guided the company through two
decades of diversification and growth to emerge as one of the leading
Indian companies in the software industry. The company has set
standards in ensuring the best training opportunities for its
employees.
The Project Guidance Program is a 52 day structured training program
offered to all recruits of varied backgrounds to be trained on essential
behavioural and technical skills that prepares them to work in live
customer projects. These recruits are hired from universities and
management institutes for technical, professional as well as
managerial jobs. It is to help the new employees in settling down
quickly into the job by becoming familiar with the people, the
surroundings, the job and the business.
(a) Identify the external sources of recruitment used by the company
to hire new employees.
(b) Explain the method of training used by the company to train
employees selected by the source of recruitment identified in part (a)
(c) State two ways in which the Project Readiness Program can benefit
Xeno Ltd.
20 Vandana Public School had a vacancy of a Maths teacher. They were 4
looking for a smart and creative teacher having a drive for excellence.
An advertisement was given in all leading dailies. Since the
Response was huge, the school examined all the application forms and
rejected the candidates who did not have the necessary qualifications.
Thereafter, a test was conducted to measure the existing skills of the
candidates. After that it was followed by a formal in-depth
conversation with the Principal of the school and a panel of Maths
experts.

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 (a) Explain the steps that have been performed by Vandana Public
School in the process of identifying and choosing the best candidate.
(b) Give the name and also the meaning of the test which was
conducted by the school.
21 Narsimha belongs to a small village in Varanasi. Being the only literate 1+4=5
person in his immediate family, he decides to settle in a city. So he
opens a sweets shop in Chandni Chowk, Delhi as he possesses
extraordinary culinary skills. Very soon he starts getting requests from
his cousins in the village to engage them in some kind of job in his
business. Considering it to be his moral obligation, he engages five of
his cousins in his business without paying any specific attention to
their individual capabilities. This leads to wastage of materials, time,
effort and energy, resulting in lower productivity and poor quality of
products. As a result, the profitability of his business starts falling.
Soon, he realised that for the success of the business it is essential
that right kind of people must be available in right number at the right
time.
In the context of the above case:
(a) Identify and explain the function of management that has been
overlooked by Narsimha .

(b) Describe briefly the importance of the function of

management as identified in part (a).

22 Joseph Bros is a firm manufacturing jute lampshades. It uses leftover 5

jute pieces from various jute factories to manufacture economical
lampshades which are supplied to various hotels in nearby towns. It
employs men and women from nearby villages as workers for creating
good lampshade designs.
Joseph Bros, is not able to meet its targets. Namish, the supervisor of
the company, was told to analyse the reasons for the poor
performance. Namish found the following problems and suggested
certain solutions in the working of the business. The number of

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 workers employed was less than what was required for the work. As a
result, the existing workers were overburdened. The firm decided to
search for new workers and it asked the present employees to
introduce candidates or recommend their friends and relatives to the
firm. This enabled the firm to ‘put people to jobs’ and assured the
attainment of objectives according to plans.

1. Identify the functions of management being performed by the

firm in the above situation.
2. Name the concept and its source used by the firm to attract
more workers for the firm.

State any two values being followed by Jacob Bros.

23 Aayesha, the Marketing Head, Raman, the Assistant Manager and 5
Jyoti, the Human Resource Manager of Senor Enterprises Ltd. decided
to leave the company.
The Chief Executive Officer of the company called Jyoti, the Human
Resource Manager and requested her to fill up the vacancies before
leaving the organisation. Informing that her subordinate Miss Alka
Pandit was very competent and trustworthy, Jyoti suggested that if
she could be moved up in the hierarchy, she would do the needful.
The Chief Executive Officer agreecs for the same. Miss Alka Pandit
contacted Keith Recruiters who advertised for the post of marketing
head for Senor Enterprises Ltd. They were able to recruit a suitable
candidate for the company.
Raman’s vacancy was filled up by screening the database of
unsolicited applications lying in the office.

1. Name the internal/external sources of recruitment used by

Senor Enterprises Ltd. to fill up the above stated vacancies.
2. Also state any one merit of each of the above identified source
of recruitment.

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24 Nisha Sethi was working as a Human Resource Manager in a famous 5
consultancy firm, KLI Global Services. Her job included preparing job
descriptions, recruitment, developing compensation and incentive
plans and facilitating employee learning. They had entered into
alliances with institutes to ensure continuous learning of their
employees. With the jobs becoming more and more complex, KLI
Global Services invested large amount of money in making the
employees learn the skills necessary to complete the jobs. State by
giving any five points, how this investment is likely to benefit the
organisation.
25 Mr. Raman is the human resource manager of Shanti Hospital in 5
Nellore. He has to appoint nurses for the hospital. For this he has
conducted preliminary interviews. Since patients in the hospital are of
different types, he has also conducted tests to find out the candidates’
maturity and emotions in dealing with the patients. He has also
conducted tests to know about the candidates’ ability to take
decisions.
Explain the remaining steps that Mr. Raman should take to complete
the selection process.
26 Sham Sunder runs a security service providers agency. Considering 1+5=6
that psychological testing is a critical step for judging the potential of
the prospective candidates for a career in law enforcement, he uses
various types of psychological tests as part of the selection processes.
This is done to ensure that potential new officers are emotionally and
psychologically suited to carry out the requirements of the job.
In context of the above case:
(a) Briefly outline any one more type of test that Sham Sunder
may use to assess the potential of the prospective candidates.

(b) Briefly outline the steps involved in the selection process after
conducting the assessment tests.

27 An Auto company is setting up a new plant in India for manufacturing 2+2+2=6

auto components. India is a highly competitive and cost effective

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 production base in this sector. Many reputed car manufacturers
source their auto components from here.
Co. is planning to capture about 40% of the market share in India
and also export to the tune of at least $6 million in about 2 years of its
planned operations. To achieve these targets it requires a highly
trained and motivated workforce. You have been retained by the
company to advise it in this matter. While giving answers keep in mind
the sector the company is operating.
Questions.
(i) Outline the process of staffing the company should follow.
(ii) Which sources of recruitment the company should rely upon. Give
reasons for your recommendation.
(iii) Which methods of training and development should the company
initiate? Explain giving reasons.
28 ‘Newrange’ is a chain of departmental stores in India with 56 outlets. 5+1=6
It sells the best products at the lowest price. The Human Resource
department takes care to select, train, motivate and retain the
employees. Currently, it has 170 full time employees and 30 part time
employees. For top-level management, employees are recruited
through private consultants. These professional recruiters can entice
the needed top executives from other companies by making the right
offers. Employees appointed at the entry level are recruited through
walk-in. For that, a notice is placed on the notice board specifying the
details of the jobs available. ‘Newrange’ also encourages present
employees or their friends and
relatives to refer candidates. They also visit some of the reputed
educational institutions to hire some of the most talented and
promising students as its employees. ‘Newrange’ shifts workforce
from surplus departments to those where there is shortage of staff
instead of laying them off.
Explain the various internal and external sources of recruitment used
by ‘Newrange’ to recruit its employees. Also name one more type of

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 each of internal and external source of recruitment.
29 Zemima Ltd. is a highly reputed company and many people wanted to 6
join this company. The employees of this organization are very happy
and they discussed how they came in contact with this organization.
Aman said that he was introduced by the present Sales
Manager, Mr. John.
Benu said that he had applied through the newspaper and he
was appointed as H.R Manager.
Vaibhav said that he was neither related to any of the
employee of the organization nor there was any advertisement
in the newspaper even then he was directly called from IIM
Ahmadabad from where he was about to complete his MBA.
(a) The above discussion is indicating an important function of
management. Name the function of management.
(b) The management function identified in part (a) follows a
particular process. Explain the step of this process which is
being discussed in the above para.
30 There were two vacancies for the post of Assistant Manager in ‘Gyan 6
Electrics Private Ltd.’ ‘Parth’ the Human Resources Manager identified
one suitable candidate ‘Vishwas’ from within the organization and
promoted him to the post of Assistant Manager. For another post, the
Manager ‘Parth’ took help of a placement agency and selected
‘Saleem’. After six months, Parth observed that ‘Vishwas’s’
performance was much better than ‘Saleem’s’ performance though
‘Vishwas’ was less qualified than ‘Saleem’. Hence, ‘Parth’ decided that
in future he will not make any appointment with the help of an
outside source.
Explain any four reasons on the basis of which ‘Parth’ would have
taken the above decision.

ANSWERS

Q. NO. ANSWER MARKS

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1 False 1
2 A 1
3 False 1
4 A 1
5 Placement. 1
6 Promotion 1
7 An employment interview is a formal, in-depth conversation 1
conducted to evaluate the applicant’s suitability for the job in the
process of selection. At the same time the interviewee may also seeks
information from interviewer (if needed).
8 B 1
9 A 1
10 (a) Staffing 1
(b) External source of recruitment (recommendation of the
employees)
11 1. Selection is a process of choosing from among the pool of 1.5+1.5=3
prospective job candidates developed at the stage of recruitment.
2. Placement and orientation refers to employees occupying the
position or post for which the person has been selected and
introducing the selected employees to other employees and
familiarizing him with the rules and policies of the organization .

12 1. The ‘Staffing’ function of management is being performed by 3

the firm.
2. Recruitment is the concept used by the firm to attract more
workers to the firm.
The firm is planning to use the external source of recruitment i.e
‘Recommendation of present employees’ to attract more
workers to the firm.
3. The two values that are being followed by Jacob Bros are:

 Generating employment
 Optimum utilisation of resources.

13 Sources of recruitment being used by Ganesh for filling up the various 3

job positions are: (Any two)

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 (i)Recommendation of employees
‘His father requested him to appoint his friend’s son, Prem as an
accountant who is well qualified for this post’
In this source of recruitment, applicants are introduced by present
employees or their friends and relatives. Such employees are likely to
be good employees as their background is sufficiently known.
(ii) Labour Contractors
‘Earlier, Prem had a business of providing unskilled workers to
different organisations from remote areas of the country’
It is a source of recruitment in which the labour contractor maintains a
close contact with the labourers and can provide the required number
of unskilled workers at short notice.
(iii) Campus Recruitment
‘For the appointment of the two Chefs, Ganesh approached a
renowned Hotel Management Institute and was satisfied with the
Chefs provided by the institute’
It is a source of recruitment in which organisations maintain a close
liaison with educational institutions like universities, vocational
schools and management institutes to recruit qualified personnel for
technical, professional and managerial jobs.
14 .(a) Apprenticeship Training 3
(b)Benefits which David could get on being trained: (Any two)
(i) It may lead to his promotion and career growth due to improved
skills and knowledge.
(ii) It will help him to earn more due to improved performance.
(iii) It will reduce accidents as he will be more efficient to handle
machines.

(iv) It will increase his satisfaction and morale.

15 Two types of tests that Mr Murthy can use to meet his requirements 3
are:
(i) Personality Test
It provides clues to a person’s emotions, reactions, maturity, value

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 systems etc. They probe the overall personality and are difficult to
design and implement.
(ii) Intelligence Test

It measures the level of intelligence quotient of an individual. It is an

indicator of a person’s learning ability or the ability to make decisions
and judgments.
16 Training should be provided to the employees to develop their skills 4
and abilities for producing quality products by using these hi-tech
machines.
The benefits of imparting training to the employee are as follows:

1. Better career: Training leads to better career opportunities for

the employees as it helps to improve their skills and knowledge
of doing the job.

2. Increased earnings: Training leads to increased performance

by the employees thereby helping them to earn more.

3. Increased efficiency: Training makes the employees more

efficient in handling machines and less prone to accidents.

4. Improved motivation: Training increases the satisfaction and

morale of employees thereby motivating them to work with
greater enthusiasm.

17 Human Resource Management includes many specialised activities 4

and duties which the human resource personnel must perform. These
duties are stated below:

 Recruitment i.e., search for qualified people and stimulating

them to apply for the job within the organisation.
 Prepare job descriptions by analysing jobs, collecting
information about jobs etc.
 Developing suitable compensation and incentive plans for the

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 employees.
 Designing appropriate training and development of employees
to foster efficient performance and career growth.

18 A. Training of employees 4
B. 1. Helps to adapt changes
2. Better performance
3. Helps in solving operational problems
19 (a) Campus Recruitment 4
(b) Induction Training
It is a type of training given to help the new employee in settling down
quickly into the job by becoming familiar with the people, the
surroundings, the job and the business.
(c) Ways in which Project Readiness Program can benefit Xeno Ltd.:
(Any two)
(i) Avoiding wastage of efforts and money as training is systematic
learning, better than hit and trial methods.
(ii) Enhancing employee productivity both in terms of quantity and
quality leading to higher profits.
(iii) Equipping the future manager to take over in an emergency.
(iv) Reducing employees’ turnover as it increases employee morale
and reduces absenteeism.

(v) Helping the organisation in obtaining effective response in a fast

changing environment

20 . (a) Steps performed by Vandana Public School in the process of 4

identifying and choosing the best candidate:
(i) Preliminary Screening
(ii) Selection Tests
(iii) Employment Interview

(b) Trade test was conducted by the school to measure the existing
skills possessed by the candidates.

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21 1. Staffing is the function of management that has been 1+4=5
overlooked by Nakul.
Staffing is the process of manning the roles designed into the
organisational structure. It is concerned with obtaining,
utilising and maintaining a satisfactory and satisfied work
force.
2. The importance of the staffing function of management is
described below:

 It helps in discovering and obtaining competent

personnel for various jobs within an organisation.

 By putting right person on the right job, it leads to a

higher performance of the employees.

 It ensures the continuous survival and growth of the

enterprise through the succession planning for managers.

 It helps to ensure optimum utilisation of the human

resources. By avoiding over manning, it prevents under-
utilisation of personnel and high labour costs. At the same
time it avoids disruption of work by indicating in advance
the shortages of personnel.

 It improves job satisfaction and morale of the

employees through objective assessment and fair
rewarding for their contribution.

22 1. The ‘Staffing’ function of management is being performed by the 5

firm.
2. Recruitment is the concept used by the firm to attract more
workers to the firm.
The firm is planning to use the external source of recruitment i.e
‘Recommendation of present employees’ to attract more workers
to the firm.

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 3. The two values that are being followed by Jacob Bros are:

 Generating employment
 Optimum utilisation of resources.

23 1. The internal and external sources of recruitment used by Senor 5

Enterprise Ltd. to fill up the above stated vacancies are stated
below:

 The vacancy for the post of Human Resource Manager

has been filled up through Promotion.
 The vacancy for the post of Marketing Head has been
filled up through the Placement Agencies and
Management Consultants.
 The vacancy for the post of Assistant Manager has been
filled up through Casual Callers.
. The relative merit of each of the internal and external sources
of recruitment used by Senor Enterprise Ltd. to fill up the above
stated vacancies are stated below:
 Promotion: It boosts the morale of not only the
employee who is promoted but also of other employees
as they get an assurance that their competence will also
be recognised in due course.
 Placement Agencies and Management
Consultants provide specialised services to the
organisations to recruit technical, professional and
managerial personnel at middle and top level.
 Casual Callers as a source of recruitment reduces the
cost of recruiting workforce in comparison to other
sources.

24 Benefits of training to the organisation: 5

(i) It avoids wastage of efforts and money as training is systematic

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 learning, better than hit and trial methods.
(ii) It enhances employee productivity both in terms of quantity and
quality leading to higher profits.
(iii) It equips the future manager to take over in an emergency.
(iv) It reduces employees’ turnover as it increases employee morale
and reduces absenteeism.

(v) It helps in obtaining effective response in a fast changing

environment.

25 Remaining steps that Mr. Raman should take to complete the 5

selection process are:
(i) Employment interview and Reference and background checks.
(ii) Selection decision.
(iii) Medical examination.

(iv) Job offer and Contract of employment.

26 (a) Interest Tests: Interest tests are used to know the pattern of 1+5=6
interests or involvement of a person.
(b) The further important steps in the process of selection, after
conducting assessment tests are as follows:

 Employment Interview: It is a face-to-face interaction

between the interviewers and prospective candidate. It
involves a formal, in-depth conversation that is conducted
to evaluate the applicant’s suitability for the job.

 Reference and Background Checks: At the time of filling

up of the job application form, the prospective candidates
are required to provide names, addresses, and telephone
numbers of references for the purpose of verifying
information and gaining additional information about
him/her.

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  Selection Decision: The final decision about the
selection is made from among the candidates who pass
the tests and interview.

 Medical Examination: After the selection decision and

before the job offer is made, the candidate is required to
undergo a medical fitness test.

 Job Offer: The next step in the selection process is job

offer, given to those applicants who have passed all the
previous tests.

 Contract of Employment: After candidate accepts the

job offer, a contract of employment is issued. Basic
information that should be included in a written contract
of employment will vary according to the level of the job,
but it will include information like job title, duties,
responsibilities, date of joining, pay and allowances, etc.

27 (i) Process of staffing the company should follow: 2+2+2=6

(a) Estimating the manpower requirements
(b) Recruitment
(c) Selection
(d) Placement and orientation
(e) Training and development
(ii) The company should focus on external sources of recruitment
because of the following reasons:
(a) Qualified personnel
(b) Wider choice
(c) Fresh talent
(d) Competitive spirit
(iii) Company should prefer the following methods of training and
development:
(a) Apprenticeship programme

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 (b) Vestibule training
28 Sources of recruitment used by ‘Newrange’: 5+1=6
(i) Internal
Transfers
(ii) External
Placement Agencies and Management Consultants
Direct Recruitment
Recommendations of Employees
Campus recruitment
(with explanation)
Name of one more type of both sources of recruitment
29 Training of employees 6
Benefits to the organization or employees:
(i) Avoid wastage of effort and money
(ii) Enhance employees productivity
(iii) Equips future managers.
(iv) Increase employee morale and reduces
absenteeism
(v) Obtaining effective response to fast changing
environment.
(vi) Improve skill and knowledge of the individual.
(vii) Increased performance by the individual.
(viii) Employee more efficiently handle machines
30 Reasons on the basis of which ‘Parth’ would have taken the decision 6
not to make appointment with the help of an outside source are: (any
four)
(a) Internal sources are more reliable way of recruitment since the
candidates are already known to the organisation whereas external
sources.
(b) If internal source are used, there is no need for induction training
as the employees are already familiar with the organisation.
(c) Internal sources help to improve the motivation, loyalty and
satisfaction level of existing employees.

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(d) Promotion at a higher level may lead to a chain of promotions at
lower levels in the organisation.
(e) They simplify the process of selection as the candidates are already
known to the organisation.
(f) They help in adjustment of surplus staff in those departments
where there is shortage of staff.
(g) Filling of jobs internally is cheaper as compared to getting
candidates from external sources.

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 CHAPTER : DIRECTING

Q.NO. QUESTION MARKS

1 In autocratic leadership style only ---------------communication is done with 1
subordinates.
2 There are many theories of leadership---------and-------------. 1
3 A …………..need can no longer motivate a person. 1
4 Obstruction or hindrance to communication like poor telephone 1
connection, inattentive receivers etc. are termed as--------------.
5 Other functions of management prepare a setting for action, while 1
________ function initiates action.
6 Stability of income is an example of Basic Physiological Needs. (True/False) 1
7 Productivity linked wage incentives include regular increments in the pay 1
every year and enhancement of allowances from time-to-time. (True/False)
8 If there is two way information flows between the superior and subordinate 1
then there will be positive reaction of employees. (true/False)
9 Leadership never determines the ability of an individual to influence others. 1
10 Some managers may be effective leaders without ever having taken a 1
course or training program in leadership.
11 Leadership: 1

(a) Influencing the behavior of others

(b) Maintain bad interpersonal relationship
(c) Influence employees to involuntarily
(d) Helps in planning
12 No interference of superior in taking decision by subordinates in 1

(a) Autocratic leadership

(b) Democratic leadership
(c) Free rein leadership
(d) Paternalistic leadership
13 Obedience of order and discipline is find in 1

(a) Autocratic leadership

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 (b) Democratic leadership
(c) Free rein leadership
(d) Paternalistic leadership
14 Full utilization of potential and capacity of employees can be seen in 1

(a) Autocratic leadership

(b) Democratic leadership
(c) Free rein leadership
(d) Paternalistic leadership
15 Directing takes place wherever superior- subordinate relations exist. 1
Identify the characteristic highlighted in the above statement-
(a) Directing is a continuous process
(b) Directing flows from top to bottom
(c) Directing takes place at every level
(d) Directing initiates action
16 Which of the following is the appropriate order of hierarchy of needs 1
according to Abraham Maslow?

(a) Safety Needs → Psychological needs → Affiliation needs → Esteem

Needs → Self Actualisation needs
(b) Psychological needs → Safety Needs → Affiliation needs → Esteem
Needs → Self Actualisation needs
(c) Affiliation needs → Safety Needs → Psychological needs → Esteem
Needs → Self Actualisation needs
(d) Psychological needs → Safety Needs → Esteem Needs → Affiliation
needs → Self Actualisation needs
17 Use of ‘Technical Jargon’ is which type of communication barrier? 1

(a) Organisational barrier

(b) Psychological barrier
(c) Semantic barrier
(d) Personal barrier
18 ‘Lack of proper incentive’ is a barrier to communication. 1
Identify the type of barrier to which it belongs-
(a) Personal barrier

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 (b) Organizational barrier
(c) Psychological barrier
(d) Semantic barrier
19 Which of the following is not a measure to overcome barrier to effective 1
communication?

(a) Convey things of help and value to listeners

(b) Communicate according to the needs of receiver
(c) Consult others before communicating
(d) Fear of challenge to authority
20 Which of the following is a financial incentive? 1
(a) Job security
(b) Stock option
(c) Job enrichment
(d) Employee participation
21 Which is not the advantage of formal communication? 1
(a) Very systematic
(b) Friendly relationship
(c) Orderly flow of information
(d) Easy to exercise control
22 Which two parties are involved in communication process? 1
(a) Encoder & Decoder
(b) Superior & Subordinate
(c) Sender & Receiver
(d) Buyer & Seller
23 Payal is the Chief Executive Officer of a reputed company. She introduced 1.5+1.5
appropriate skill development programmers’ and a sound promotion policy =3
for the employees of her company. To motivate and retain the best talent in
the company , she designed the jobs of the managers which include greater
variety of work content. Identify and explain the two incentives introduced
by payal to motivate the employees of the company.
24 Lakhan, an expert in the area of Financial Management, sent an e-mail to 3
his subordinate Thomas about a new project for a client in France. Though,
the mail was in English, a language known to Thomas, he was not able to

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 understand the actual meaning of many words used in the mail. He was also
not a specialist in the field of Financial Management. Not only this, some
portions of the mail were translated from French to English in such a
manner that many mistakes crept in, causing different meaning to the
message.
(a) Identify two specific barriers to communication in Lakhan’s e-mail.
(b) State any two measures which can be taken by Lakhan to overcome the
barriers identified in part (a)above to improve in future the effectiveness of
his communication.
25 A company has employees from different countries. They speak different 1+1+2=
languages. Once the management decided to draft the message of 4
congratulating the employees of the New York in their native languages. For
this they had to translate the same message in different languages. On the
5th of January there was a strike by people belonging to a particular country
showing resentment on the wrong language used in the greetings.
(a) Identify and state the communication barrier discussed above.
(b) State the category of this communication barrier.
(C )Explain any two other communication barrier of the same category.
26 Kunal joined as a shop level manager in the Production department of a 4
textile company in the year 2005. Because of his good work, he became the
Deputy Production Manager of the company in the
year 2010. He had status and prestige and was well respected by all in the
company . On 1st March, 2019, he was promoted as the General Manager
of the company. Kunal was very happy on his promotion as now he had
become what he was capable of becoming. As a good manager, Kunal
decided to motivate his subordinates, after understanding the Need
Hierarchy theory which is based on various assumptions. He realised that
people’s behaviour is based on their needs and the manager can influence
the behaviour of his employees by satisfying their needs.
(a) One of the assumptions of Need Hierarchy theory is stated in the above
paragraph. State the other three assumptions of this theory.
(b) State the needs of Kunal which are being satisfied through promotion.
27 Arun is working in a multinational company in Gurgaon. He was running 2+3=5

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 temperature for the last many days. When his blood was tested, he was
found positive for dengue with a very low platelet count. Therefore, he was
admitted in the hospital and a blood transfusion was advised by the
doctors. One of his colleagues sent a text message about it to his immediate
superior ‘Mr. Narain’. ‘Mr. Narain’ in turn sent a text message to the
employees of the organisation requesting them to donate blood for Arun.
When the General Manager came to know about it, he ordered for
fumigation in the company premises and cleanliness of the surroundings.
(a) From the above para quote lines that indicate formal and informal
communication.
(b) State any three features of informal communication.
28 ‘Alfa Ltd.’ was dealing in renewable energy. To get the business, the team 5
leader and his team used to travel to different states to give presentation to
their clients. As per the policy of the company, the leader used to travel by
air, whereas his team travelled by road/train. It was not only time
consuming but also at time forced female team members to travel alone.
As a result, the subordinates were not acting in desired manner to achieve
organisational goals. The CEO came to know about it. He called the team
leader, discussed the matter with him and decided to change the travel
policy of the company. It was decided that all the members including the
leaders would travel together in future and would usefully utilize the
travelling time in discussion with the subordinates about presentation to be
given to the clients. This made a positive impact and every member of the
team started acting in a manner as desired by the team leader.
State the features of the element of the function of management used by
the CEO.
29 Three friends, Rajat, Raman and Ansh, after completing their MBA from a 3+3=6
reputed business school at Mumbai, were discussing about the type of
organisation they would like to join. Rajat was very clear that he would like
to take up a government job as it gives stability about the future income
and work which will help him to work with greater zeal. It will also provide
him pension when he will retire from his service. Raman wanted to work in

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 a company, which has appropriate skill development plans for its
employees and helps the employees to grow to higher levels in the
organisation. In addition to this, the company should also provide facilities
like housing, medical aid, etc. Ansh said that he would prefer to work in an
organisation, which has the culture of individual autonomy, is considerate
to employees and provides the employees with opportunity for personal
growth and a meaningful work experience.
(a) Identify the various financial and non-financial incentives discussed by
the three friends in the above conversation.
(b) Explain three other non-financial incentives which were not discussed by
any one of them.
30 Pratap Singh is the Chief Executive Officer of Nissar Enterprises. It is an 6
automobile parts manufacturing company. The enterprise has a functional
structure, in which jobs of similar nature have been grouped together as
Production, Finance, Marketing and Human Resource. Nissar Enterprises
has its manufacturing unit at Manesar. The factory has been plagued with
many problems for a long time which was in the knowledge of the
Production Manager, Varun Sharma. The workers had internal differences.
Time and again, there were misunderstandings between the management
and the workers. Keeping the problems in mind, Varun Sharma appointed,
Siyaram Singh who had 14 years of experience of working with the actual
work force and passing on instructions of the middle management to the
workers. Siyaram Singh met Varun Sharma to understand what the
management wanted. Thereafter he met the workers and conveyed the
ideas of management to them. He also promised the workers to convey
their problems to the management. In this way, he cleared the
misunderstanding between the management and the workers.
He also sorted out internal differences and was able to unite the workers
within a month of his joining. His work was acknowledged and he was given
a certificate of good performance along with 10% increase in salary.
(i) Siyaram Singh performed some of the functions which are required to be
performed at the position he is working at. State any five other functions

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 Siyaram Singh is expected to perform.
(ii) Name the incentives provided to Siyaram Singh.

ANSWERS

Q.NO. ANSWER MARKS

1 One way 1
2 Behaviour and Styles 1
3 Satisfied 1
4 Noise 1
5 Directing 1
6 False 1
7 False 1
8 True 1
9 False 1
10 True 1
11 A 1
12 C 1
13 A 1
14 C 1
15 C 1
16 B 1
17 C 1
18 A 1
19 D 1
20 B 1
21 B 1
22 C 1
23 Job Enrichment and career advancement opportunity with explanation 1.5+1.5
=3
24 Two specific barriers to communication in Lakhan’s e-mail were: 3
(i) Faulty translations
(ii) Technical jargon
Measures to overcome communication barriers: (Any two)
(i) Lakhan should communicate according to the needs, education and
understanding levels of subordinates.
(ii) He should take a proper feedback to improve the communication
process and make it more responsive.
(iii) He should regularly follow up communication and review the

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 instructions given to subordinates.
(iv) He should be aware of languages, tone and content of the message to
make it understandable to the receiver.
25 (a) Faulty Translation and its meaning 1+1+2=
(b) Semantic Barriers 4
(c) words with different meaning, Unclarrified assumption/ Technical
jargon
26 (a) The following are the assumptions of Maslow’s Need Hierarchy theory 4
other than the one discussed above:
(i) People’s needs are in hierarchical order, starting from basic
needs to other higher level needs.
(ii) A satisfied need can no longer motivate a person; only next
higher level need can motivate him.
(iii) A person moves to the next higher level of the hierarchy only
when the lower need is satisfied.
(b) Needs of Kunal which are being satisfied through promotion are:
(i) Esteem Needs which refer to the need for self respect, autonomy status,
recognition and attention.
(ii) Self actualisation needs which refer to the drive to become what one is
capable of becoming. These needs include growth, self- fulfillment and
achievement of goals.
27 (a) Formal communication 2+3=5
‘When the General Manager came to know about it, he ordered for
fumigation in the company premises and cleanliness of the surroundings.
Informal communication
One of his colleagues sent a text message about it to his immediate superior
‘Mr. Narain’.
OR
‘Mr. Narain’ in turn sent a text message to the employees of the
organisation requesting them to donate blood for Arun’.
(b) Features of Informal communication: (Any two)
(i) It takes place without following the formal lines of communication.
(ii) It arises out of social needs of the employees

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 (iii) It spreads rapidly.
28 Features of motivation: 5
(a) It is an internal feeling as the urges, drives or needs of human beings
which influence human behaviour are internal.
(b) It produces goal directed behaviour as it stimulates people to
accomplish desired goals.
(c) It can be positive in the form of positive rewards or negative like
punishment, stopping increments etc.
(d) It is a complex process as any type of motivation may not have a uniform
effect on all the members.
29 (a) Financial and non-financial incentives discussed by the three friends in 3+3=6
the above conversation.
(i) Financial incentives
Retirement benefits, Perquisites
(ii)Non- Financial incentives
Job security, Career advancement opportunity, Organizational climate
Status
(b) Other non-financial incentives which were not discussed by any one of
them (Any three)
Job enrichment, Employee recognition, Employee participation
Employee empowerment
30 (i) Five other functions Siyaram Singh is expected to perform are: 6
(a) Maintaining day to day contact and friendly relations with the workers.
He should act as a friend, philosopher and a guide to the workers.
(b) Providing good on the job training to the workers to build an efficient
team.
(c) Building up high morale among workers through good leadership.
(d) Giving feedback to the workers after analyzing their work and suggesting
ways of developing their work skills
(e) Ensuring performance of work according to the targets set.
(f) To oversee the efforts of the workforce.
(g) To ensure that the quality of output is maintained and wastage of
material is minimized.

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 (h) To ensure safety standards are maintained
(ii) Incentives provided to Siyaram Singh are:
(a) Pay and allowances/ Financial Incentive
(b) Employee Recognition Programmes/ Non Financial Incentive.

CHAPTER : CONTROLLING

Q. NO. QUESTION MARKS

1 Planning is perspective whereas controlling is___________. 1

2 Controlling creates an atmosphere of _____ and _______ in the 1

organization.

3 Controlling can be used to _______ the performance of employees. 1

4 A good control enables the management to verify whether the standards 1

set are ________ and____________ .

5 ______ function of management helps in formulation of future plans in the 1

light of the problems that were identified in the past.

6 Critical point control focuses on ___________ 1

(a) Every task

(b) Financial areas

(c) Key result areas

(d) Planning areas

7 Measurement of employees’ performance can be done by 1

______________.

(a) Increasing the market share of the company

(b) Gross profit ratio

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 (c) Return on investment

(d) Performance report

8 Which one of the following is not the step in the process of controlling? 1

(a) Measurement of actual performance.

(b) Establishing reporting relationship.

(c) Setting performance standards.

(d) Taking corrective action.

9 Among the following, which one standard can be maintained in 1

Marketing?

(a) Cost

(b) Flow of Capital

(c) Advertising Expenditure

(d) Liquidity.

10 “Controlling is required at all the levels of management”. Which feature is 1

highlighted in the above statement?

(a) Dynamic

(b) Contingent

(c) Pervasive

(d) Continuous

11 Which of the following is the function prerequisite for controlling? 1

(a) Staffing

(b) Organising

(c) Planning

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 (d) Directing

12 Chief basis of standard is __________ 1

(a) Quantity

(b) Quality

(c) Time

(d) All of the above

13 Controlling is related to results. (Yes/No) 1

14 Controlling in the absence of planning is blind. (True/False) 1
15 Management by exception differentiates between actual and planned 1
performance. (True/False)
16 Standards are the bench marks to measure future performance. 1
(True/False)

17 Clarity in working relationship is not an importance of controlling? 1

(True/False)

18 Kansal Sweets is a renowned name for quality sweets since 1955. Somesh, 1
the owner of Kansal Sweets was worried as the sales had declined during
the last three months. When he enquired from the sales manager, the
sales manager reported that there were some complaints about the
quality of sweets. Therefore Somesh ordered for sample checking of
sweets.
Identify the step taken by Somesh that is related to one of the functions of
management.
19 Isha Machines was a renowned name for quality sewing machines since 1
1960. Mr Suresh, the owner of Isha Machines was worried as the
production had declined during the last three months. He directed the
production Manager to find out the reason. The production Manager
ordered the different supervisors to prepare a performance report of the
workers working under them.
Identify the step taken by the production Manager that is related to one of
the functions of management.
20 Give the meaning of ‘Management by Exception.’ 1

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21 Sonakshi Ltd. produces safety pins on a mass scale. The company’s policy is 1
that maximum 2.5% of the daily production could be defective. Over a
three months period, it has been observed that 8% - 10% of the production
is defective. The cause of deviation found is defective machinery. What
corrective action should be taken by the management?
22 You are the manager of NFL Petro Chemicals Ltd. it is reported to you that 1
postal expenses have increased by 10% over standard rates and cost of
raw materials has increased by 2%. Which of the two deviations will be
more critical to you?
23 Isha Machines is engaged in manufacturing machine components. The 2+1=3
target production is 200 units daily. The company had been successfully
attaining this target until two months ago. Over the last few months it has
been observed that daily production varies between 150-170 units.
Identify the possible causes for the decline in production and the step to
be taken to achieve the desired targets.
24 If anything goes wrong with the performance of key activities, the entire 3
organization suffers. Therefore, the organization should focus on them’.
Explain the statement with suitable example.
25 Rajeev and Sanjeev are managers in the same organisation heading 4
different units. While discussing about the functions of management,
Rajeev says that ‘Planning is looking ahead whereas controlling is looking
back.’ But Sanjeev says, ‘You are wrong because planning is looking back
whereas controlling is looking ahead.’ Both are giving reasons in favour of
their statements. Explain the possible reasons given by both and justify
who is correct. 
26 Vinber Ltd. set up a manufacturing unit at Bhiwadi at Himachal Pradesh to 4
manufacture electric geysers and supply them to dealers all over the
country. Their production target was 500 geysers per week. It was decided
by the management that variation in production upto 10 units would be
acceptable.
At the end of the first week, the production was 450 geysers. The next
week, production increased to 470 geysers. A week later, production was
460 geysers. On investigation, it was found out that fluctuation in

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 production was due to irregular supply of electricity.
(a) The above para discusses some of the steps of one of the functions of
management. Explain the steps.
(b) Also, state the step(s) not discussed in the above para.
27 A critical point control (CPC) approach is followed by McDonald in the 1+2+2=5
cooking and handling process so that any food safety threat can be
prevented, eliminated, or reduced to an acceptable level. Hence,
continuous monitoring of activities are undertaken to ensure that the
process is right at each critical point control. The main principle followed
for cooking at McDonald is “less amount many time” which can ensure the
high quality and high fresh level of the food. For instance, if your
hamburgers have to be made, a worker cannot cook all the four
hamburgers at one time. The time figured out for making one hamburger
is one hundred and forty-five seconds. Moreover, nearly all foods in the
McDonald have the specific holding time, the holding time for hamburgers
is ten minutes and for French fries is seven minutes. If it is not sold within
that time it is thrown away. Also, the temperature of the milk sent by the
supplier must be under 40 c, otherwise, it will be returned.
In context of the above case:
1. Name the steps involved in the controlling process which are being
discussed in the above lines.
2. What do you understand by ‘critical point control’? Explain.
3. How does the controlling function of management help in accomplishing
organizational goals and ensure efficient use of resources?
28 Vikas was the Chief Operating Officer of ‘Yalet Ltd.’, a company providing 5
advanced software solutions to Indian Defence Services. They had been
carrying on business successfully for the last twelve years and earning
enough profits. But from the last one year, they realised that though the
business is getting big orders which are being fulfilled in time, even then
the revenues kept on decreasing. Vikas was
not able to find out where the problem was. He started keeping a close
check on the progress of activities as he could sense that something was

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 wrong. He wanted to take some action before any major damage could be
done to the business. Vikas appointed a cyber security expert who
monitored the company’s processes and found out that the computer
operator was deleting the entries from the computers and pocketing the
revenues. He was caught and handed over to the police. This created an
atmosphere of order and discipline in the organisation and helped in
minimizing dishonest behavior on the part of the Employees.
(a) Identify the function of management highlighted in the above
paragraph.
(b) Explain any four other ways in which this function of management may
help the organisation.
29 ‘Jolly Ltd.’ is a company known for manufacturing good quality 2+4=6
confectionery products. The automated system of production ensures
uniformity in production and quality maintenance. The quality assurance
team conducts stringent checks at all stages, records and analyses the
deviations and takes the necessary corrective actions right from the
procurement of raw material to its processing, production and packaging.
The company has a well-equipped in-house quality inspection cell where
confectionery products are tested on various parameters of quality by the
team of experienced quality staff.
In context of the above case:
1 Identify and explain the function of management being performed
by the quality assurance team of ‘Jolly Ltd.’
2 Explain the statement, “records and analyses the deviations and
takes the necessary corrective actions”.
30 Airtech Ltd. is manufacturing mobile phones both for domestic Indian 6
market as well as for export. It has enjoyed a substantial market share and
also had a loyal customer following. But lately it has been experiencing
problems because its targets have not been met with regard to sales and
customer satisfaction. Also, mobile market in India has grown
tremendously and new players have come with better technology and
pricing. This is causing problems for the company. It is planning to revamp

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 its controlling system and take other steps necessary to rectify the
problems it is facing. It also decides to offer its basis models of mobile
phones at 50% discount to the poor people.
1. State any two benefits the company will derives from a good control
system.
2. How can the company relate its planning with control in this line of
business to ensure that their plans are actually implemented and targets
attained.
3. Give the steps that the company should follow to remove the problems
it is facing.

ANSWERS

Q.NO. ANSWER MARKS

1 Evaluative 1
2 Order and discipline 1
3 Appraise 1
4 Accurate , objective 1
5 Controlling 1
6 C 1
7 D 1
8 B 1
9 C 1
10 C 1
11 C 1
12 D 1
13 Yes 1
14 True 1
15 False 1
16 False 1
17 False 1
18 Measurement of actual performance 1
19 Measurement of actual performance 1
20 Management by Exception is a technique of managerial control which 1
involves identifying only significant deviations which go beyond the
permissible limit and bringing them to the notice of the management.
21 Repair existing machine or replace the machine if it cannot be 1
repaired
22 Increase in cost of raw materials by 2% is more critical. (Critical Point 1

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 Control)
23 The possible causes for decline in production are listed below: 2+1=3

 The workers are not well versed with the production process.

 The working environment is not conducive to efficient

working.

 The raw materials and other equipment are not available on

time.

 The machinery is defective or has become obsolete.

The deviations require immediate management attention so that-

they do not reoccur in future. Therefore, the manager should take
appropriate corrective action after analyzing the situation like
providing training to workers, improving the work environment,
ensuring timely availability of the raw materials and other equipment
or replacing the machinery.
24 The given statement refers to the importance of ‘Critical Point 3
Control’ in order to ensure effective performance of key activities in
an organisation.
Critical Point Control: it may be neither economical nor easy to
monitor each and every activity in the organisation. Therefore, every
organisation identifies and states its specific Key Result Areas (KRAs)
or critical points which require tight control and are likely to have a
significant effect on the working of the business. Any deviations on
these points are attended to urgently by the management. For
example, if in an organisation, the expenditure on stationery goes up
by 10%, it can be ignored but if the production cost goes up by 5%, it
may call for managerial action
25 Both Rajeev and Sanjeev are correct in their statements as explained 4
below:
 Planning is considered as a forward looking function by Rajeev
as plans are made for future.

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  Planning may be considered as a backward looking function by
Sanjeev because the quality of planning can be improved with the
help of valuable information provided by controlling in terms of
results achieved.
 Controlling is considered as a backward looking function by
Rajeev as it is like the post mortem of the past activities to
ascertain the deviations if any.
 Controlling is considered as a forward looking function by
Sanjeev as it helps to improve the future performance by
providing guidance for taking corrective action so that deviations
do not reoccur in future.
26 (a) Steps in the process of controlling discussed in the above case: 4
(i) Setting performance standards
(ii) Measuring actual performance
(iii) Comparing actual performance with standards and Analysing
deviations
(b) Step not discussed in the above para:
Taking corrective action if deviations go beyond the acceptable limits.
27 1. Analyzing deviation and taking corrective action are being discussed 1+2+2=5
in the above lines.
2. Since it may neither be economical nor easy to monitor each and
every activity in the organization, there for every organization
identifies and states its specific key result area (KRAs) or critical points
which require tight control are likely to have a significant
effect on the working of the business. Any deviations on these points
are attended to urgently by the management.
3. Explanation of following points of importance of controlling
function:
1. Accomplishing organizational goals
2. Making efficiently use of resources
28 (a) Controlling. 5
(b) Other ways in which this function may help the organization : (Any

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 four)
(i) Accomplishing organisational goals.
(ii) Making efficient use of resources.
(iii) Improving employee motivation.
(iv) Judging accuracy of standards.
(v) Facilitating co-ordination in action.
29 1. Controlling is the function of management being performed by 2+4=6
the quality assurance team of ‘Jolly Ltd.’
Controlling is the process of ensuring that events conform to
plans.
2. The statement “records and analyses the deviations and takes
the necessary corrective actions” refers to the following steps
involved in the process of controlling:
 Comparing the actual performance with the standards:
The actual performance is compared with the standards and
deviations, if any, are recorded.
 Analysing deviations: Once the deviations are
identified, it is important to analyze them through:
 Critical point control: All the deviations may not
be significant. Moreover, it may not be either economical or
easy to monitor each and every activity in the organisation.
Therefore, every organisation identifies and states its specific
key result areas (KRAs) or critical points which require tight
control as they are likely to have a significant effect on the
working of the business. Any deviations on these points are
attended to urgently by the management. Like in the above
case, if the expenditure on refreshment of workers goes up
by 10% it can be ignored but if the production cost goes up
by 5% it may call for managerial action.
 Management by exception: Management by
exception is the principle of management control which is
based on the belief that if you try to control everything, you

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 may end up controlling nothing. Therefore, only significant
deviations which go beyond the permissible limits should be
brought to the notice of the management. Like in the above
case, the output defects up to 2% may be considered
acceptable but if it goes up by 5%, it may call for managerial
action.
30 1. Two benefits which the company will derive from a good control 6
system are:
a) Accomplishing organizational goals of increasing market share
and customer satisfaction.
b) Making efficient use of resources by controlling wastage and
spoilage of resources; and ensuring that each activity is performed
according to the predetermined standards.
2. a) Controlling will improve future planning by providing information
to the company derived from past experience that its targets were
not met with regard to sales and customer satisfaction.
b) The company should undertake technological up gradation of
machinery, and modify the existing process so that cost is reduced
and the company can set lower price for its mobile phones to bet its
competitors.
Chapter 9 FINANCIAL MANAGEMENT

Marks (unit 9 & unit 10 carries 15 marks)

Important Points

Clue words in the case study

 Decision affecting liquidity and profitability of a business- Short term investment

decision/ Working capital decisions
 Decision affecting financial risk and profitability of a business- capital structure
decisions
 Decisions that relates to fund requirements both in terms of the quantum as well as
the timing- financial planning

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  Concerned with quantum of finance to be raised from various long term sources-
Financing Decisions
 Decisions affecting Growth, Financial risk and profitability of a business- capital
budgeting decisions

Points to be remember for solving the case studies

 Always read the question first what the question want

 Important line and points should be underlined at the time of reading the case
 In this chapter you just remember five major decisions- capital budgeting decisions,
financing decision, dividend decision, working capital and fixed capital decisions and
concepts-financial planning, trading on equity etc.
 Numerical questions also asked in this chapter

1 The cheapest source of finance is: 1

(a) Debenture
(b) Equity share capital
(c) Preference shares
(d) Retained earnings

2 Other things remaining the same, an increase in the tax rate on corporate profits will: 1
(a) Make the debt relatively cheaper
(b) Make the debt relatively the dearer
(c) Have no impact on the cost of debt
We can’t say
3 Financial leverage is called favourable if : 1
(a) Return on investment (ROI) is lower than the cost of debt

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 (b) ROI is higher than the cost of debt
(c) Debt is easily available
(d) If the degree of existing financial leverage is low

4 Higher debt-equity ratio results in: 1

(a) Lower financial risk
(b) Higher degree of operating risk
(c) Higher degree of financial risk
(d) Higher EPS

5 Current assets are those assets which get converted into cash: 1
(a) Within six months
(b) Within one year
(c) Between one and three years
Between three and five years
6 Financial planning arrives at : 1
(a) Minimising the external borrowing by resorting to equity issues
(b) Entering that the firm always have significantly more fund than required
so that there is no paucity of funds
(c) Ensuring that the firm faces neither a shortage nor a glut of unusable
funds.
(d) Doing only what is possible with the funds that the firms has at its
disposal
7 A fixed asset should be financed through : 1
(a) A long-term liability
(b) A short-term liability’
(c) A mix of long and short-term liabilities
8 Current assets of a business firm should be financed through: 1
(a) Current liability only
(b) Long-term liability only
(c) Both types (i.e. long and short-term liabilities)

9 Long-term investment decisions are also called as 1

(a) Working capital decisions
(b) Capital budgeting decisions
(c) Dividend decision
(d) Financing decisions

10 This decision affects the liquidity and short term profits of the company 1
(a) Long term investment decision
(b) Working capital investment decision
(c) Financing decision
All the above
11 Financial risk of a company increases because of 1
(a) High operating cost
(b) High fixed cost charges
(c) High rate of dividends

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 (d) High debt-equity ratio

12 Debts financing is better than equity if 1

(a) Company has strong cash flow
(b) Company has weak cash flow
(c) Cash flow position does not matter
(d) None of the above
13 The size of assets, the profitability and competitiveness are affected by ___________ 1
decision.

14 Dividend is that portion of _________ which is distributed among shareholders. 1

15 Short term investment decision is also known as ______________ decision. 1

16 __________ decision determines the overall cost of capital. 1

17 ______________ techniques of evaluating investment proposals. 1
18 __________ decision taken in financial management which affects the liquidity as well 1
as profitability of business.
19 The main objective of financial management is ___________. 1
20 Higher amount of debt indicates _________ interest expense in future. 1
21 Investment for long term is called _______________ decisions. 1
22 __________ decision taken in financial management related to acquire a new & modern 1
plant and to upgrade an old one.
23 Working capital decision is a decision to acquire a new and modern plant to upgrade an 1
old one.(true /false )
24 Trading on equity takes place when ROI is more than the rate of interest on debt. . 1
(true /false )
25 Debt component of capital structure determines the overall financial risk. .(true /false ) 1
26 Long term investment decisions facilitates smooth day to day operations of the 1
business.(true /false )
27 Working capital is the excess of current assets over current liabilities. .(true /false ) 1
28 The main objective of financial management is to maximize profit. .(true /false ) 1
29 Financial management is the concept which link the present with the future. .(true 1
/false )
30 Dividend is the portion of retained earnings which is distributed to shareholders.(true 1
/false )
31 Match the columns 1
1.
(A) (B)
1.Decision affecting liquidity and profitability of a business (a) Financial
planning
2. Decision affecting financial risk and profitability of a business (b) capital
budgeting
decisions

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 3.Decisions that relates to fund requirements both in terms of the (c) working
capital
quantum as well as the timing decisions
4. Decisions affecting Growth, Financial risk and profitability of a (d) Capital structure
business

32 Match the columns 1

(A) (B)

1.ROI is more than the Rate of interest on de (a) Unfavourable financial leverage
2. ROI is less than the rate of interest on debt (b) Trading on equity
3. Objective of financial management (c) Funds available at right time
4. Objective of Financial planning (d) Maximize shareholder’s wealth

Case Studies

S.NO. QUESTIONS MARKS

1 In the paint industry, various raw materials are mixed in 1
different proportions with petroleum for manufacturing
different kinds of paints. One specific raw material is not readily
and regular available to the paint manufacturing companies.
Bonler Paints Company is also facing this problem and because
of this there is a time lag between placing the order and the
actual receipt of the material. But, once it receives the raw
materials, it takes less time in converting it into finished goods.
Identify the factor affecting the working capital requirements of
this industry.

2 Aarohan Ltd. An automobile manufacturer was diversifying into 1

manufacturing two-wheelers. They knew that India is on a
growth path and a new breed of consumer is eager for a first
vehicle. The market responded very well to the new product.
The company did not have to allow credit, as it had advance
orders from four to six months with deposits paid. Also, due to
efficiency in managing their operations as soon as a vehicle was
off the assembly line, it was out to the dealers. Give any one
reason discussed above which helped the firm in managing its
working capital efficiently.
3 Ravi, after leaving his job, wanted to start a Private Limited 1
Company with his son. His son was keen that the company may
start manufacturing mobile-phones with some unique features.
Ravi felt that mobile phones are prone to quick obsolescence

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 and a heavy fixed capital investment would be required regularly
in this business. Therefore, he convinced his son to start a
furniture business.
Identify the factor affecting fixed capital requirements which
made Ravi choose the furniture business over mobile phones.
4 Amar is doing his transport business in Delhi. His buses are 1
generally used for tourists going to Jaipur and Agra. Identify the
working capital requirements of Amar. Give reasons to support
your answer.
5 A bank may use another’s ATM or some of them may jointly 1
establish a particular facility. Name the factor affecting the fixed
capital requirements of each bank.
6 Shyam wanted to start a business of selling handicrafts by 3
getting in touch with the craftsmen in the rural areas of Bengal.
He wants to make a low investment in fixed capital. Advice him
in taking suitable decisions regarding the Nature of Business,
Scale of operations and Financing Alternatives (in a developed
financial market) that he needs to take for the purpose.
7 Yogesh, a businessman is engaged in purchasing and selling of 3
Ice-creams. Identify the working capital requirement of Manish
giving reasons in support of your answer. Explain any two factors
that will affect his fixed capital requirements.

8 Pinnacle Ltd. deals in the sale of stationery and office furniture. 3

They source the finished products from reputed brands who
gave them four to six months credit.
Seeing the demand for electronic items, they are also planning
to market these items by opening outlets throughtout India. For
this, they have decided to join hands with a Japanese electronic
goods manufacturer.
Identify and state any two factors that would affect the fixed
capital requirement of pinnacle Ltd. as discussed above.

9 Saksham Ltd. a firm manufacturing textiles, wished to diversify 4

their business. They were considering two options, either to
diversify into manufacturing tooth-paste or switches. They
wanted to invest in the purchase of land, to set up a
manufacturing unit in the backward areas of Gujarat, which
would also lead to the generation of employment opportunities
in the area, but only after fulfilling all legal requirements and
taking appropriate steps to ensure that the environment was not
polluted. The finance manager of the company, Mr. Ramakant
was asked by the management to prepare a report on the
factors which should be considered while making the above
investment decision.
(A) State any two factors that Mr. Ramakant would give in
his report.

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 (B) Also state any one reason which makes it important for
the above decision to be made carefully.

10 Somnath Ltd. is engaged in the business of export of garments. 4

In the past, the performance of the company had been upto the
expectations. In line with the latest technology, the company
decided to upgrade its machinery. For this, the Finance Manager,
Dalmia estimated the amount of funds required and the timings.
This will help the company in linking the investment and the
financing decisions on a continuous basis. Dalmia therefore,
began with the preparation of a sales forecast for the next four
years. He also collected the relevant data about the profit
estimates in the coming years. By doing this, he wanted to be
sure about the availability of funds from the internal sources of
the business. For the remaining funds he is trying to find out
alternative sources from outside.
Identify the financial concept discussed in the above para. Also
state the objectives to be achieved by the use of financial
concept, so identified.

11 A business that doesn’t grow dies”, says Mr. Shah, the owner of 6
Shah Marble Ltd. with glorious 36 months of its grand success
having a capital base of Rs.80 crores. Within a short span of
time, the company could generate cash flow which not only
covered fixed cash payment obligations but also create sufficient
buffer. The company is on the growth path and a new breed of
consumers is eager to buy the Italian marble sold by Shah
Marble Ltd. To meet the increasing demand , Mr. Shah decided
to expand his business by acquiring a mine. This required an
investment of Rs.120 crores. To seek advice in this matter, he
called his financial advisor Mr. Seth who advised him about the
judicious mix of equity(40%) and Debt(60%). Mr. Seth also
suggested him to take loan from a financial institution as the
cost of raising funds from financial institutions is low. Though
this will increase the financial risk but will also raise the return to
equity shareholders. He also apprised him that issue of debt will
not dilute the control of equity shareholders. At the same time,
the interest on loan is a tax deductible expense for computation
of tax liability. After due deliberations with Mr. Seth, Mr. Shah
decided to raise funds from a financial institution.
(a) Identify and explain the concept of financial management
as advised by Mr. Seth in the above situation.
(b) State the four factors affecting the concept as identified
in part (a) above which have been discussed between Mr.
Shah & Mr. Seth.
12 Shalini, after acquiring a degree in Hotel management and 6
Business Administration, took over her family food processing

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 company of manufacturing pickles, jams and squashes. The
business had been established by her great grandmother and
was doing reasonably well. However, the fixed operating costs of
the business were high and the cash flow position was weak. She
wanted to undertake modernization of the existing business to
introduce the latest manufacturing processes and diversify into
the market of choclates and candies. She was very enthusiastic
and approached a finance consultant, who told her that
approximately Rs.50 lakh would be required for undertaking the
modernization and expansion programme. He also informed her
that the stock market was going through a bullish phase.
(a) Keeping the above considerations in mind, name the
source of finance Shalini should not choose for financing
the modernization and expansion of her food processing
business. Give one reason in support of your answer.
(b) Explain any two other factors, apart from those stated in
the above situation, which Shalini should keep in mind
while taking this decision.
13 ‘Sarah Ltd’ is a company manufacturing cotton yarn. It has been 6
consistently earning good profits for many years. This year too it
has been able to generate enough profit. There is availability of
enough cash in the company and good prospect for growth in
future. It is a well managed organisation believes in quality,
equal employment opportunities and good remuneration
practices. It has many shareholders who prefer to receive a
regular income from their investments. It has taken a loan of Rs
40 lakh from IDBI and is bound by certain restrictions on the
payment of dividend as per terms of loan agreement.
The above discussion about the company leads to various factors
which decide how much of the profit should be retained and
how much about to be distributed by the company.
Quoting the lines from the above discussion Identify and explain
any four such factors.
14 Well being Ltd. is a company engaged in production of organic 6
foods. Presently, it sells its products through indirect channels of
distribution. But, considering the sudden surge in the demand
for organic products, the company is now inclined to start its
online portal for direct marketing. The financial mangers of the
company are planning to use debt in order to take advantage of
trading on equity. In order to finance its expansion plans, it is
planning to raise a debt capital of Rs.40 lakhs through a loan @
19% from an industrial bank. The present capital base of the
company comprises of Rs.9 lakh equity shares of Rs.10 each. The
rate of tax is 30%.
In context of the above case:
(a) What are the two conditions necessary for taking
advantage of trading on equity?

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 (b) Assuming the expected rate of return on investment to
be same as it was for the current year i.e. 15%, do you
think the financial managers will be able to meet their
goal. Show your workings clearly.

Answers
Multiple choice questions

Ans.1 (a)

Ans.2 (a)

Ans.3 (b)

Ans.4 (c)

Ans.5 (b)

Ans.6 (c)

Ans.7 (a)

Ans.8 (c)

Ans.9 (b)

Ans.10 (b)

Ans.11 (d)

Ans.12 (a)

Fill in the blanks

(i) Capital budgeting

(ii) Profit
(iii) Working capital
(iv) Financing decisions
(v) Capital budgeting techniques
(vi) Working capital
(vii) Maximize shareholder’s wealth
(viii) High
(ix) Capital budgeting
(x) Long term investment decision

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True/False

1. False
2. True
3. True
4. False
5. True
6. False
7. False
8. False

Match

1. 1-(c). 2-(d), 3-(a), 4-(b)

2. 1-(b), 2-(a), 3-(d), 4-(c)

Case Studies

Ans. No. Answers

1 Availability of raw material
2 Credit allowed
3 Technological upgradation
4 Working capital requirements of Amar will be relatively less as he is engaged in
providing transport services wherein there is no need to maintain inventory.
5 Level of collaboration
6 Shyam should take into account the following points while taking decisions along
the following factors:
(a) Nature of Business: it is advisable that shyam starts a trading concern and
engages in buying handicrafts from the craftsmen and selling them
directly to the prospective buyers. He should not plan to set up a
manufacturing unit as he wants to make a low investment in fixed capital.
(b) Scale of operations: it is advisable that initially shyam carries out his
business on a small scale.
(c) Financing alternatives: It is advisable that shyam may opt for procuring
fixed assets on lease instead of purchasing them as h wishes to make a
low investment in fixed capital. Moreover in a developed financial market
leasing facilities are easily available.
7 Working capital will be less as he is engaged in trading business.
Factors affecting fixed capital
Level of collaboration and financial alternatives available
8 Diversification and level of collaboration

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9 (a) A long term investment decision is also called a capital budgeting
decision. The factors that should be kept in mind by the company while
making the investment decision are as follows:
(A) Cash inflows from the project
(B) Rate of return
(b) Due to the following one reason the above decision is to be made
carefully:
It affects the overall level of business risk of the organization and its growth and
profitability of business in future.

10 Financial Planning
Objectives:
(a) To ensure availability of funds whenever required
(b) To see that the firm does not raise resources unnecessarily.
11 (a) Capital structure
(b) Factors:
(i) Cash flow position
(ii) Risk consideration
(iii) Tax rate
(iv) Control
12 Debt because of high fixed operating cost and weak cash position
Other two factors:
Risk and flexibility
13 Any five factors:
Growth opportunities, Stability of dividend, Legal restictions, Restrictions in loans
agreement, liquidity, stability of earnings etc.
14 (a) The two conditions necessary for taking advantage of trading on equity
are:
(i) The rate of return on investment should be more than the rate of
interest.
(ii) The amount of interest paid should be tax deductible.
(b)
Sources Situation 1 Situation 2
Equity shres 90,00,000 90,00,000
10% Debentures NIL 40,00,000
Total capital 90,00,000 1,30,00,000
EBIT 13,50,000 19,50,000
Less: Interest --------- (4,00,000)
EBT 13,50,000 15,50,000
Less: Tax @ 30% (4,05,000) (4,65,000)
EAT 9,45,000 10,85,000
No. of shares of Rs.10 9,00,000 9,00,000
each
EPS 1.05 1.21

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 CHAPTER: FINANCIAL MARKET

S.NO. QUESTION MARKS

1 Which of the following helps to eliminate the use of stock certificates 1
by placing stock transactions on computer?
(a) Demat account
(b) Securities exchange commission
(c) Depository trust company
(d) Federal depository insurance corporation
2 The last step in the trading procedure on a stock exchange is: 1
(a) Placing an order
(b) Executing the order
(c) Settlement of account
(d) Selection of a broker
3 The functions of SEBI are: 1
(a) Regulatory functions
(b) Development functions
(c) Protective functions
(d) All of the above

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4 Elimination of problems on transfer of shares such as loss , theft and 1
delay is the benefit of...................account.

5 What is the minimum amount of treasury bill? 1

(a) Rs 25,000
(b) Rs 10,000
(c) Rs 15,000
(d) Rs 20,000
6 .......................refers to the process in which securities are allotted to 1
the institutional investors and some selected individuals.
7 Financial market provide liquidity to financial assets (True/False) 1

8 Prem has 500 shares of L&T. L&T comes out with a fresh issue of shares 1
and Prem received an offer to buy 1 share of L&T for every 5 shares
held by him. Which method of floating new issue is indicated in this
case?
9 Shiv wants to invest his savings in share market. What is the most 1
important requirement for this?

10 Name the prominent stock exchange enjoying nation wide coverage 1

11 New issue market is also known as: 1

(a) Stock market
(b) Money market
(c) Primary market
(d) Capital market
12 A treasury bill is basically : 1
(a) An instrument to borrow short term funds
(b) An instrument to borrow long term funds
(c) An instrument of capital market
(d) None of the above
13 The settlement cycle in NSE is: 1
(a) T+5
(b) T+3
(c) T+2
(d) T+1
14 Which of the following is money market instrument? 1
(a) Share
(b) Debenture
(c) Commercial paper
(d) Bond
15 ..........................provides continuous market for purchase and sale of 1
securities.

16 Depository participant is an agent between depository and investor. 1

( True/False)

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17 Increase in the call rate makes the other short term sources of funds 1
dearer. ( True/False)

18 Primary and secondary markets: 1

(a) Compete with each other
(b) Complement each other
(c) Function independently
(d) Control each other
19 Name the indices of BSE and NSE 1

20 “ SEBI conducts research and publishes information which are useful to 1

all those participants who deal at capital market’. Name the function
performed by SEBI.

21 List the initial four steps in the trading procedure: 1

(A) Connect to main exchange
(B) Placement of order
(C) Opening account
(D) Approach a registered broker
Options are:
(a) A,C,D,B
(b) C,D,B,A
(c) D,C,B,A
(d) B,C,D,A

22 What is financial intermediation? 1

23 ABC Ltd. issued prospectus for the subscription of its shares for Rs. 500 1
crores in 2008. The issue was oversubscribed by 20 times. The
company issued shares to all the applicants on pro-rata basis. Later
SEBI inspected the prospectus and found some misleading statement
about the management of the company in it. SEBI imposed a penalty
of Rs. 5 crores and banned its three executive directors for dealing in
securities market for three years. Identify the function and its type
performed by SEBI in the above case. 

24 Reshu’s father has gifted her the shares of a large cement company 1
with which he had been working. The securities were in physical form.
She already has a bank account and does not possess any other forms
of securities.
She wished to sell the shares and approached a registered broker for
the purpose. Mention one mandatory detail which she will have to
provide with the broker

25 SEBI 2 years ago called for information and issued a show cause notice 1
to NSE and its 14 officials seeking explanation on the preferential

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 access allegations at the exchange’s co-location facility.

State the function that SEBI performed by doing so.

26 Ketan won a cash prize of Rs. 20,000 in the National level Robotics 3
Competition. On the advise of his father, he visits a nearby bank to
open a Fixed deposit account in his name with the prize money. His
sister Suhasini accompanied him to the bank. On reaching the bank, he
notices big banners which are placed within the premises containing
information about the various arrangements through which horporate
may raise their capital through the bank. Being a finance graduate,
Suhasini explains to Ketan that banks play the role of the financial
intermediary by helping in the process of channelizing the savings of
the households into the most profitable business ventures.
In context of the above case: .

1. Name another financial intermediary that helps in the process

of channelizing the savings of the households into the most
productive use.
2. Also, outline any two functions of another financial
intermediary as identified in part (1).

27 Sumita is a professor in a reputed business institute. While explaining 3

the procedure of stock exchange trading, she shared with her students
that many years back she had bought 200 shares of a leading
automobiles company. As per the settlement procedure she paid for
the shares and received the share certificates in physical form.
However, when she had sent those certificates to the company to get
them endorsed in her name, she was informed by the company that
those certificates were duplicate. Therefore, in order to protect the
investors from many such malpractices, now only screen-based trading
is done and dematerialisation is compulsory. In context of the above
case:

1. What is screen based trading?

2. Give the meaning of ‘dematerialisation’. State any two of its
advantages.

28 The stock market regulator, Securities and Exchange Board of India 3

(SEBI), has initiated a certification programme for all market
intermediaries. Under this programme, people associated with stock
markets in any way, will have to obtain a qualifying certificate from the
regulator.The National Institute of Securities Market (NISM), a trust
formed by SEBI, is tasked with the certification programme.

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 In the context of the above case:

1. Identify the type of function performed by SEBI.

2. Outline any two reasons for setting up SEBI.

29 Make Good Technologies Ltd. is one of the top suppliers of security 4

software products and solutions in India with a market share of over
20% in the retail segment. Its customers includes people all sections of
the society i.e. both households and corporates. Its unique threat
detection system works to detect security threats including virus
attacks in real time to protect users’ IT assets across varied platforms
and devices. The company has an established track record of growth
and financial performance. At present the company operates only
through its website. The company now intends to launch a range of
computer accessories and plans to market it by opening its own retail
outlets. So, the board of directors of the company have decided to only
raise capital for the first time through an issue of shares, but at the
same time they do not wish to get into the hassles of launching a
public issue of shares.
In context of the above case:

1. Name and explain the way through which the company can
raise finance by allotting securities to selective individuals and
institutions only.
2. Can the company also raise capital through a right issue? Why
or why not? Give a reason to justify your answer.

30 Ragunath Ahuja is one of the Promoter-Director of Vishwas Ltd. The 4

company is engaged in the real estate sector, which has recently
witnessed a steady fall in its revenue and the value of its assets due to
a downward trend persisting in the market in specific and the economy
in general. The periodical financial results of the company were to be
declared in a fortnight time. Ragunath Ahuja, being an insider, had
access to unpublished price sensitive information related to it.
Consequently, he sells a major portion of his holdings in an anticipation
of a fall in the market price of the shares of the Company subsequent
to the announcement of periodical financial results of the company.
Moreover, he doesn’t inform The Securities and Exchange Commission
(SEC) about the dealings.
On conducting a probe, Securities and Exchange Board Of India (SEBI)
finds Ragunath Ahuja guilty of insider trading. As per law, company
directors, officials or any individual with a stake of 10% or more in the
company are considered to be insiders and they are required to report
their insider transactions within two business days of the date the
transaction occurred.

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 In context of the above case:

1. State the purpose of setting up SEBI.

2. Identify the type of function performed by SEBI by quoting lines
from the paragraph.

31 Ragu works as a waiter in a five star hotel in Mumbai. While serving the 4
customer he overhears him at the table saying that the he has made
profits higher than expected by investing in securities market. So, Ragu
also decides to make a nominal investment from his savings in the
stock market in pursuit of higher gains. In context of the above case: As
a financial consultant, apprise him of the steps involved in the working
of a Demat system.

32 During navratras ,Varun finalises a deal to buy a new house. So, he 4

visits a nearby branch of ‘Subh Bank’ to withdraw Rs. 10 lakhs from his
account in order to pay the token money to the seller. In the bank he
observes that a large number of customers are present to make cash
with drawls, probably because it is an auspicious time to make
purchases. After sometime, he overhearsone of the bank staff
members telling his colleague that, “Today ‘Subh Bank’ is likely to fall
short of cash and to make up for the deficit and maintain its cash
reserve ratio it will have to approach another bank.”
In context of the above case:

1. Identify the instrument that ‘Subh Bank’ will use to meet its
short term requirements of funds.
2. State any three feature of the instrument as identified in part
(1).

33 Ganesh Steel Ltd. is a large and creditworthy company that 4

manufactures steel for the Indian market. It now wants to cater to the
Asian market and decides to invest in new hi-tech machines. Since the
investment is large, it requires long-term finance. It decides to raise
funds by issuing equity shares. The issue of equity shares involves huge
floatation cost. To meet the expenses of floatation cost, the company
decides to tap the money market.

1. Name and explain the money-market instrument the company

can use for the above purpose.
2. What is the duration for which the company can get funds
through this instrument?
3. State any other purpose for which this instrument can be used.

34 Incorporated in 1990, Raju Dairy Ltd., is one of the leading 5

manufacturers and marketers of dairy-based branded foods in India. In

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 the initial years, its operations were restricted only to collection and
distribution of milk. But, over the years it has gained a reasonable
market share by offering a diverse range of dairy based products
including fresh milk, flavoured yogurt, ice creams, butter milk, cheese,
ghee, milk powders etc. In order to raise capital to finance its
expansion plans, Raju Dairy Ltd. has decided to approach capital
market through a mix of Offer for sale of Rs. 4 crore shares and a public
issue of Rs. 2 crore shares.
In context of the above case:

1. Name and explain the segment of capital market being

approached by the company.
2. Identify the two methods of floatation used by the company to
raise the required capital. Give one difference between them.

35 After doing a course in online trading, Arsh started an online portal for 5
stock trading under the name ‘Investment Guru’. He met his school
friend Ajay after a long time in a bank where Ajay had come to open a
D-Mat account. Arsh urged Ajay to invest in the forthcoming IPO of a
blue chip companies whereas Ajay was inclined to buy existing
securities of the other companies to build his investment portfolio.

In context of the above case:

1. Identify the two different types of capital market being referred

to by quoting lines from the para.

2. State any four differences between the two different types of

capital markets as identified in part (1).

36 Madhav’s is one of the India’s most trusted brands in Indian sweets 5

and snacks segment. The company has manufacturing plants in Kota,
Kanpur, New Delhi, and Mumbai. Madhav’s has its own retail chain
stores and a range of restaurants in these cities. Now, the company
plans to extend its business in 12 more cities in India. In order to raise
the funds, its directors have decided to float a public issue through
prospectus. Besides, it intends to raise money to meet the floatation
costs in terms of brokerage, underwriting commission, advertising etc.

In context of the above case:

1. What is the other name used for the funds required to meet
floatation costs?

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 2. Describe briefly the short term instrument popularly used by the
companies to raise for the funds required to meet floatation costs.
Who can issue them?

3. Distinguish between the two types of financial markets that the

company intends to approach to meet its financial needs.

37 The SEBI has imposed a penalty of Rs. 7,269.5 crore on Pearls Agrotech 5
Corporation Limited (PACL) and its four directors — Tarlochan Singh,
Sukhdev Singh, Gurmeet Singh and Subrata Bhattacharya who had
mobilised funds from the general public through illegal collective
investment schemes in the name of purchase and development of
agriculture land. While imposing the penalty, the biggest in its history,
Securities and Exchange Board of India (SEBI) said the company
deserved “maximum penalty” for duping the common man. Its
Prevention of Fraudulent and Unfair Trade Practices Regulations
provides for “severe to severe penalties” for dealing with such
violations. As per SEBI norms, it can impose a penalty of Rs. 25 crore or
three times of the profit made by indulging in fraudulent and unfair
trade practices and in the present case, the regulator has imposed a
fine equivalent to three times of the illicit gains.

In the context of the above case:

1. State the objectives of setting up SEBI.

2. Identify the type of function performed by SEBI by quoting lines

from the paragraph.

38 The Bombay Stock Exchange (BSE) is Asia’s first stock exchange and the 6
world’s 11th largest stock exchange. It became the first stock exchange
to be recognized by the Indian Government under the Securities
Contracts Regulation Act. Its automated, screen-based trading platform
called BSE On-Line Trading (BOLT) had a capacity of 8 million orders per
day. The BSE has also introduced a centralized exchange-based
internet trading system, BSEWEBx.co.in to enable investors anywhere
in the world to trade on the BSE platform.
In context of the above case:

1. Name the organisation that regulates the working of stock

exchanges in India.
2. State any three functions performed by stock exchanges.
3. Give any two advantages of screen-based trading.

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 39 Supriya’s grandmother who, was unwell, called her and gave her a gift 6
packet. Supriya opened the packet and saw many crumpled share
certificates inside. Her grandmother told her that they had been left
behind by her late grandfather.

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

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

1. Identify and state the process.

2. Also, give any four reasons to Supriya why dealing with shares in
physical form has been stopped.

40 Incorporated in 1990, Raju Dairy Ltd., is one of the leading 6

manufacturers and marketers of dairy-based branded foods in India. In
the initial years, its operations were restricted only to collection and
distribution of milk. But, over the years it has gained a reasonable
market share by offering a diverse range of dairy based products
including fresh milk, flavoured yogurt, ice creams, butter milk, cheese,
ghee, milk powders etc. In order to raise capital to finance its
expansion plans, Raju Dairy Ltd. has decided to approach capital
market through a mix of Offer for sale of Rs. 4 crore shares and a public
issue of Rs. 2 crore shares.

In context of the above case:

1. Name and explain the segment of capital market being approached

by the company.

2. Identify and explain the two methods of floatation used by the

company to raise the required capital.

3. Give one difference between them.

MARKING SCHEME

Q.NO. ANSWER MARKS

1 A 1
2 C 1
3 D 1
4 Demat account 1

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5 Rs 25,000 1
6 Private placement 1
7 True 1
8 Right issue 1
9 PAN card for opening Demat account 1
10 NSE 1
11 C 1
12 A 1
13 C 1
14 C 1
15 Stock exchange 1
16 True 1
17 False 1
18 B 1
19 Sensex and Nifty 1
20 Developmental function 1
21 C 1
22 It is the process by which banks and financial market allocate 1
funds available to them
23 Protective function has been performed by SEBI in the above 1
case. And the type of Protective function is Prohibition of
fraudulent and unfair trade practices.
24 Reshu will have to give her Permanent Account Number (PAN) to 1
the broker as it is mandatory as per law.
25 Regulatory function 1
26 1. Financial markets is the other financial intermediary that helps 1+2=3
in the process of channelizing the savings of the households into
the most productive use.
2. The two functions of financial market are as follows:

 It helps to determine the price for the financial asset in a

particular financial market through the market forces of
demand and supply.
 It provides liquidity to the financial assets by providing
ready markets wherein the securities can be converted
into cash or vice versa easily.

27 1. Screen-based trading refers to the process of buying or selling 1+2=3

securities online.
2. Dematerialisation refers to the process of holding securities in
electronic form. The two advantages of Dematerialisation as
follows:

 The securities in the demat account can be offered as

security to raise loans.

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  Since the shares certificates are not held in physical
form, there is no danger of loss, theft or forgery.

28 1. Developmental function is being carried out by SEBI by starting 1+2=3

a certification programme for all market intermediaries.
2. SEBI was set up as a regulatory body by the government for the
following reasons:

 To curb malpractices in the financial market.

 To enhance the confidence of the investors by ensuring
fair, efficient and transparent dealings.

29 1. The company can raise finance by allotting securities to 2+2=4

selective individuals and institutions only through Private
Placement. It is a relatively economical way of raising money as it
helps to save time, cost and money involved in the process of
issuing securities.
2. No, the company cannot raise capital through a right issue as it
is issuing securities for the first time. A rights issue is a pre-
emptive right given only to the existing shareholders to subscribe
to the securities of the company as per its terms and conditions.

30 1. SEBI has to be responsive to the needs of three groups, which 1X3+1=4

constitute the market namely:

 The issuers of securities so as to provide them a platform

for raising capital in an easy, effective and efficient
manner.
 The investors so as to protect their interests in securities
by keeping them abreast about the developments through
true and appropriate information.
 The market intermediaries in order to provide them a
framework so as to enable them perform their functions
effectively and efficiently.
. Regulatory function is being performed by SEBI: “On conducting
a probe Securities and Exchange Board of India (SEBI) finds
Ragunath Ahuja guilty of insider trading.”

31 Ragu will have to initiate the following steps for trading through a 1X4=4
Demat system:

 He will have to first open a Demat account with a depository

participant (DP) who may either be a bank, broker or financial

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 services company by furnishing certain details and information
about himself including PAN number, date of birth, bank account
details, income details etc.
 If he plans to buy shares through a public offer he will have to
give details of his Demat account, bank account etc. On
allotment the shares will be directly credited to his account.
 If he decides to buy shares otherwise, he will have to instruct
his broker with the details about the name of the company,
number of shares, price etc. The transaction will be executed
through the depository participant and he will have to make
payment for them within T + 2 days.
 On contrary, whenever he decides to sell shares, he will have to
instruct his broker with the details about the name of the
company, number of shares, price etc. The transaction will be
executed through the depository participant and his account will
be debited accordingly. He will receive the payment in T + 2 days.

32 1. Call money is the instrument used by ‘Subh Bank’ to meet its 1+1X3=4
short term requirements of funds.
2. Three features of call money are as follows:

 Call money is an instrument through which one bank

may borrow money from another bank to maintain the
cash reserve ratio as per the guidelines of RBI.
 Its maturity period may be from a single day to a
fortnight.
 The rate at which the interest is paid on call money is
called call rate.

33 1. Commercial Papers can be used for Bridge financing by Ganesh 2+1+1=4

Steel Ltd. as they are issued by large and credit worthy
companies. The instrument is in the form of an unsecured
promissory note and is freely transferable by endorsement. It is
sold at discount and redeemed at par.
2. Its maturity period may range from a fortnight to a year.
3. It is also used to meet the short term seasonal and working
capital requirements of a business enterprise.

34 Primary market is the segment of capital market being 2+3=5

approached by the company. It is also known as the new issue
market as the securities are issued for the first time by the
companies through this market.

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 1. The two methods of floatation used by the company to raise the
required capital are – Issue through prospectus and Offer for
sale.
In case of issue through prospectus, the company approaches the
members of the general public directly by issuing a prospectus
whereas in case of Offer for sale, the company approaches
members of the general public indirectly through intermediaries
like issuing houses, stock brokers etc.

35 1. The two different types of capital market being referred 1+4=5

to are-

• Primary Market: “Arsh urged Ajay to invest in the

forthcoming IPO of a blue chip companies.”

• Secondary Market: “Ajay was inclined to buy existing

securities of the other companies to build his investment
portfolio.”

Differences between Primary Market and Secondary Market:

BASIS PRIMARY MARKET SECONDARY

S. MARKET
No
1 Meaning It is the new issue It is the market for
market. old securities.
2 Aspects Only buying of securities Both buying and
takes place. selling of securities
takes place.

3 Price Prices of the securities Prices of the

are determined by the securities are
company. determined by the
forces of demand
and supply.
4 Parties It involves dealings It involves dealings
involved between the company between the two
and investors investors.

36 1. Bridge financing is the other name used for the funds 1+4=5
required to meet floatation costs.

2. Commercial Papers issued by large and credit worthy

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 companies. The instrument is in the form of an unsecured
promissory note and is freely transferable by endorsement. It is
sold at discount and redeemed at par. Its maturity period may
range from a fortnight to a year. It is also used to meet the short
term seasonal and working capital requirements of a business
enterprise. For example it is used for the purpose of bridge
financing.

Basis Capital Market Money Market

S.
No
1 Duration It is a market for It is a market for
long term funds short term funds
whose maturity
period is upto one
year.
2 Participants The main The main
participants in participants are
capital market are institutional
banks, financial investors.
institutions,
corporate bodies,
foreign investors
and retail
investors.
3 Investment Since, the cost of Since the cost of
outlay securities may be securities may be
low, investment high, investment in
can be made in the the money market
capital market can requires huge
be with less capital outlay.
capital.
4 Liquidity The securities in The securities in
capital market money market
enjoy good enjoy high liquidity
liquidity. as The Discount
Finance House of
India works as a
compulsory market
maker
.
37 1. The objective of setting up SEBI are outlined below: 1x5=5

• To prevent trading malpractice in the securities markets.

• To protect the rights and interest of investors, and to

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 guide and educate them.

• To regulate and develop a code of conduct and fair

practices by intermediaries like brokers, merchant bankers, etc.
with a view to making them competitive and professional.

• To regulate stock exchanges and the securities market to

promote their orderly functioning.

Protective function is performed by SEBI: “The SEBI has imposed

a penalty of Rs. 7,269.5 crore on Pearls Agrotech Corporation
Limited.”

38 1. Securities And Exchange Board of India (SEBI) regulates the 1+3+2=6

working of stock exchanges in India.
2. Three functions performed by stock exchanges are as follows:

 Ensures liquidity and marketability of existing securities

by a providing a ready and continuous market for the sale
and purchase of securities.
 Helps in determining the prices of the securities through
the forces of demand and supply.
 It provides a legal framework for fair and safe dealings.
. Two advantages of screen-based trading are as follows:
 As the investors get access to the stock market during
real time, there is complete transparency in the dealings.
 It provides a common platform for exchange of
securities thereby increasing the efficient transactions by
saving time, effort and money.

39 1. Dematerialisation refers to the process of holding 2+4=6

securities in electronic form.

2. The two problems of holding shares in physical form are

as follows:

(1) When the shares certificates are held in physical form, there
is danger of loss or theft.

(2) There is risk of forgery, as the buyer may be delivered fake

certificates .

(3) Transfer delay

(4) Paper work associated with the share certificates or

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 debentures held in physical forms.
40 1. Primary market is the segment of capital market being 2+2+2=6
approached by the company. It is also known as the new issue
market as the securities are issued for the first time by the
companies through this market.

2. The two methods of floatation used by the company to raise

the required capital are – Issue through prospectus and Offer for
sale.

3. In case of issue through prospectus, the company approaches

the members of the general public directly by issuing a
prospectus whereas in case of Offer for sale, the company
approaches members of the general public indirectly through
intermediaries like issuing houses, stock brokers etc.

Marketing Management

Marks (unit 11 & 12 carries 15 marks )

Points to be remember for solving the case studies

 Always read the question first what the question want

 Important line and points should be underlined at the time of reading the case

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  In this chapter you just remember – marketing mix ,elements of promotion mix
,product, price ,place and promotion

S.No Questions Marks

1 Dev wanted to purchase a fuel efficient car having the latest standards regarding 1
minimization of pollution. He saw an advertisement offering such a car and visited the
showroom of the company wherein the car was displayed. In his discussion, the Marketing
manager told him that the company is providing credit facilities, maintenance services and
many other effective services which are helping in bringing repeat sales and developing
brand loyalty.
Identify the marketing function which the Marketing manager was discussing with Kumar.
2 ‘TVS Ltd.’ entered into the market with colored television and have now introduced 1
products like audio systems, air-conditioners washing machines, etc. The company is not
only offering the products but also handling complaints and offering after-sales services.
The element of marketing-mix discussed here.
a) Product b) Price
c) Physical distribution d) Promotion
3 ‘Chamoli Medicare Equipment Ltd.’ manufactures equipment for surgeons having a unique 1
laser technique. The equipment can be used by the surgeons only after proper training.
Even their maintenance requires guidance of specialized engineers. Because of this, the
equipment is used in a limited number of hospitals. The company wants to increase the
sale of the equipment.
Suggest the promotion tool to be used by the company giving reason in support of your
answer.
4 Name the function of marketing which is concerned with cost and location of target 1
market.
a) Physical distribution b) pricing
c) Transportation d) storage and warehousing
5 Which of the following is a Shopping Product? 1
(a) T.V. Set (b) Raw Material
(c) Sugar (d) Milk

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6 One of the following is an element of Promotion Mix : 1
(a) Product (b) Price
(c) Personal selling (d) Plant location
7 Marketing is the process which aims at _____________
a) Production b) selling
c) customer satisfaction d) profit making
8 Anything that can be offered for market for attention, use and consumption that may 1
satisfy need and wants is a/an
a) Idea b) product
c) demand d) service
9 If the sales forecasts will be having higher degree of accuracy then the level of inventories 1
will be ___________
10 “How are you telling the target customers about your product” this relates to which 1
concept of marketing mix
a) product b) price
c) place d) promotion
11 Stare whether the following statement is True/False 1
The spoken part of brand is called brand name.
12 Marketing can be best understood as: 1
I. Pre production activity

II. Post production activity

III. Pre & Post production activity

IV. Selling activity

13 __________________ is also called as silent salesman. 1
14 Under direct channels, firm have __________________ intermediaries. 1
15 The communication tool which is used to improve the image or goodwill of the company is 1
called __________________.
16 Stare whether the following statement is True/False 1
“Packaging and Labeling are same or synonyms of each other”
17 Match the following on the basis of suitability 1
I. Zero Level a)Colgate toothpaste

II. Two Level b)Maruti Udyog

III Three level c) Mail order House
18 Match the followings examples with the items that can be marketed 1
a) Visit to Udaipur i) Event

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 b) Diwali mela ii) Organisation
c) Hindustan Unilever iii) Person
d) Lok Sabha elections iv) Place
19 Match the following characteristics of a good brand name with its objective 1
1. To differentiate from the a) Adaptable
other products
2. To not get out of date b) Versatile
3. To accommodate new c) Distinctive
product
4. To advertise the product d) Staying power
conveniently

20 Match the following examples with their relative terms

1. Basmati Rice a) Generic name
b) Brand name

2.
3. Book c) Logo
4. Maggi d) Grading

21 “Ideas for life” is the tagline of

a) Samsung b) Google
c) Panasonic d )Sony
22 Match the following functions of labeling with the suitable examples
1. Shampoo for normal hair a) Sales promotion
2. No smoking on cigarette b) Specifies contents
packet
3. Oil containing amla, neem c) Grading
etc.
4. Buy one get one free d) Required by law Specifies
contents
23 Japanese technique ‘Just In Time’ is related to which component of Physical Distribution
(a) Order Processing
(b) Transportation
(c) Warehousing
(d) Inventory Control
24 You are a soap manufacturer and want to introduce a new hand wash in the market. 3
Which factors will you consider to fix price of your product? Give any three points.
25 JTM Ltd. launched ‘Buddyline’, an exercise book and comprehensive stationery brand 3

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 name comprising of ball pens, gel pens and geometry boxes after identifying the target
market and understanding the needs and wants of the consumers of that market. All their
products were of good quality and eco-friendly but expensive. They wanted to distinguish
their products from that of their competitors. They spent lot of efforts, time and money in
creating the brand name, as they knew that without a brand name, they can only create
awareness for the generic products and can never be sure of the sale of their products.
The effort paid off and the demand for the products started growing. The customers liked
the brand and became habitual to it. They did not mind paying a higher price. Over a
period of time, it became a status symbol to buy ‘Buddyline’ brand because of its quality.
The consumers felt pride in using them.
(i) Identify the marketing management philosophy followed by JTM Ltd.
(ii) Explain the advantages of branding to the marketers highlighted in the above
26 A company launched a new car running on bio diesel. The launch event was covered by 4
the popular newspapers and news channels.
a) Which non-personal form of communication was used by the company?
b) How is it different for other non –personal mode of communication?
c) Explain any two demerits of the mode used by the company.
27 Jay is working as the Chief Executive Officer of a soft drinks company. The company is 4
doing its business in collaboration with a soft drinks company of France. Jay’s friend,
Swami, a teacher of Business Studies in a reputed college was discussing the ‘Marketing’
chapter with his students. He wanted clarity from Jay about the factors which affect the
marketing decisions. Jay explained that there were a large number of factors affecting
marketing decisions which may be divided into two categories: (i) controllable factors, and
(ii) non-controllable factors. Jay further explained that controllable factors became
marketing tools that can be constantly shaped and reshaped by marketing managers, to
achieve marketing success.
Identify and explain the set of marketing tools that can be constantly shaped and reshaped
by marketing managers.
28 Your company has setup a coconut hair-oil factory in Coastal Kerala, with a production 4
capacity of 10,000 bottles of 100 milliliter per day. The company plans to market the hair-
oil with the brand name ‘Kale Kesh’. Design a label for the hair oil bottles.
29 Oriflame have been working with skincare and that has been their area of expertise for
more than over 40 years. They combine their products with the best of what the nature 4

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 has got to give, with the science behind it. Pure ingredients and very strict manufacturing
standards, little energy waste and strong environmental policies are the manufacturing
mantras of the company. Oriflame is aware of the growing concerns about environment so
it is providing products which are not tested on animals, without any perfume, natural
ingredients which cannot harm the skin or cause allergies use environment friendly
techniques of production
Identify and explain the marketing philosophy followed by the company on the basis of :
a) main focus
b) means
c) ends
30 Flipkart was set up by two software engineers from the Indian Institute of Technology, 5
Delhi, Sachin Bansal and Binny Bansal, in 2007. It sold many items under various categories
like apparels, appliances, books, etc. October being the festive season in India, the big e-
commerce companies were looking to lure buyers through various attractive discounts and
offers. Flipkart too declared a sale on October 6, 2014. The company spent a huge amount
of money on its ad campaigns, installing servers to handle online traffic and deploying staff
for processing the orders and delivering the goods. Unfortunately for them, things did not
turn out quite as they expected. Flipkart's servers crashed, items went out of stock, and
the prices of items changed during the sale. Buyers were outraged and took to the social
media to express their ire. Manufacturers too accused the company of selling goods below
the selling price. To protect the image of their company, Flipkart’s founders sent out
apology letters to the buyers regretting the inconvenience they had caused and assuring
them that they would deliver better service in future. Despite all the hue and cry, Flipkart
witnessed a mega sale of $100 million (Rs 6 billion) in just 10 hours.
Name and explain the marketing concept was used by Flipkart to protect the image of the
company?
31 Reliance Jio Infocomm Limited is the subsidiary company of Reliance industry which 5
provides 4G network service. Jio is the only Vo-LTE (voice over LTE) provider in the
country. Reliance Jio was launched with free unlimited calling and data usage for 3 months
which was extended for another three months later as a special offer. This was one of the
biggest reasons for its popularity among the masses. After April 2017 customer has to pay
for their calls and data usage there are many very reasonable price plans from which you

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 can choose to use. Company used all types of medium for promoting its products in
market i.e. print, electronic media, sponsorship of sports and game shows, Display and
Hoardings, Social Networking Sites, departmental stores etc. at the end of the third month
it provided another attractive offer for its existing customers to pay a sum of Rs. 300 once
and enjoy the same service for next three months. As a result the company covered a
major market share within a short span of time. It has launched its own mobile phones,
wifi Routers also. In the context of the above case:
a) Identify which types of promotional tools were used by the company?
b) Identify and explain two features of promotional tools identified in part (a)
32 ‘Pushpanjali Ltd.’, is manufacturing chocolates, biscuits, cakes and other 5
similar products. The company is not generating enough profits. Saurabh, the Marketing
manager of the company got a survey conducted to find out the reasons. The findings of
the survey revealed that in spite of better quality, the customers were not able to
distinguish the products of the company from its competitors. Though the customers
wanted to buy the products of ‘Pushpanjali Ltd.’ again and again because of its good
quality, but they were not able to identify its products in the market. Because of this, the
sales of the company could not pick up resulting in inadequate profits. Saurabh, the
Marketing manager now realised that ‘Pushpanjali Ltd.’ had forgotten to take one of the
most important decisions related to the product.
What decision should ‘Pushpanjali Ltd.’ take so that its customers are
able to identify its products in the market ? Explain the benefits that may
result to ‘Pushpanjali Ltd.’ and its customers if the above decision is taken.
33 Pioma Industries, known for its Rasna SDC (soft drink concentrates) brand, decided to 5
make its entry into the ready-to-drink beverages market. It believed that adding new
products to existing product range would improve its sales. In India, the SDC product was
introduced by Pioma Industries in 1976 under the brand name 'Jaffe'. It was renamed
'Rasna' in 1979. In the late 70's and 80's, company found in market analysis that people
were habituated to drinking squashes and sherbets at home, and these were quite
expensive. The company launched less costly substitutes of squashes and sherbets and
that too in variety of flavours. Pioma Industries found a huge untapped potential in 1977
when Coca Cola's operations in the Indian market were closed down due to changed
Foreign Exchange Regulation Act (FERA) laws for MNCs in India. This served as an

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 advantage for Rasna in its bid to penetrate the market. In 2012 Rasna also ventured into
ethnic products like Pickles, Paste, Chutney, Curries, Gravies, Snacks, and Instant tea mix,
etc. Pioma Industries believed that adding ready- to-drink beverages under the flagship
brand Rasna would help it gain new revenues as well as achieve consistent growth in its
business.
By quoting lines from the above paragraph identify and explain the marketing functions
performed by the Pioma Industries.
34 Since childhood Niru and Janak had been watching their grandmother procuring wheat 5
from the market, washing it well, drying it and getting it converted into atta. They
conducted a survey to collect data to identify whether there is demand for readymade atta
and realised that with the growing number of working women, it is the need of the hour to
manufacture high quality atta. They named their product ‘Srijan’ and set up ‘Srijan Atta
Factory’ at Jaunpur Village. To penetrate in the market, they decided to keep the price
low. For maintaining smooth flow of their product into the market and avoiding delays in
delivery, it was decided to store wheat at SKM Services which had scientific processes and
logistics facilitating quick delivery. They also set up an online complaint portal to take care
of consumer grievances.
By quoting the lines from the above paragraph, state five marketing functions undertaken
by Niru and Janak for successful marketing of ‘Srijan’ atta.
35 As the number of people making online purchase has increased manifolds, there is a 6
growing concern about the disposal and management of packaging waste. Every item
bought is delivered with excess packaging and sometimes even non-biodegradable
materials are used.
In the context of the ab ove case :
a) Name and explain the different levels of packaging used by the marketer.
b) Describe any two functions performed by the additional packaging done in online
sold material.
c) State any two factors to be kept in mind by online marketer while designing the
packaging of its products.

ANSWERS

MARKETING MANAGEMENT

1 Customer Support Services 1

2 a) Product 1

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3 Personal Selling. 1
This is because it is a complex product requiring technical details and is best
sold through shorter channels.
4 Transportation 1
5 a) TV set 1
6 c) Personal selling 1
7 c) customer satisfaction 1
8 b) product 1
9 Low 1
10 d) promotion 1
11 True 1
12 III. Pre & Post production activity 1
13 packaging 1
14 Zero/no 1
15 Public Relation 1
16 false 1
17 i.(c), ii.(a) 1
18 a(iv) ,b(i) ,c(ii), d(iii) 1
19 1(c), 2(d), 3(b), 4 (a) 1
20 1 (d), 2(c), 3(a), 4(b) 1
21 c) Panasonic 1
22 1(c), 2(d), 3(b), 4(a) 1
23 (d) Inventory Control 1
24 Factors affecting prices (any three) 1x3=
1. Cost 3
2. Demand and utility
3. Pricing objectives
4. Extent of competition in the market
5. Government regulations
6. Marketing method used
25 (i) Societal marketing philosophy. 1+2
(ii) Advantages of branding highlighted in the above case are: (Any two)
(a) Helps in product differentiation.
(b) Helps in advertising and display programmes.
(c) Differential pricing.
26 a) Publicity 1+1
+2= 4
b) It is non- paid form of communication it is free of cost and comes in
the form of news
c) i. no control on message
ii. news may be negative also
27 Set of marketing tools that can be constantly shaped and reshaped by 4
marketing managers are:
(i) Product
Product is a mixture of tangible and intangible attributes which are capable of

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 being exchange for a value with ability to satisfy customer needs.
(ii) Price
Price may be defined as the amount of money paid by the buyer (or received
by the seller) in consideration for the purchase of a product or a service.
(iii) Place or Physical Distribution
Place or Physical Distribution is concerned with making the goods and services
available at the right place, in right quantity and at the right time so that the
consumers can purchase the same.
(iv) Promotion
Promotion refers to the use of communication with the objective of informing
potential customers about the product and persuading them to buy the
samec
28 The following information is to be provided on the label in any form (any 1x4=
4
four):
Name of the product/ Kale Kesh
Name of the manufacturer/ Future Oils Ltd.
Address of the manufacturer/ 54, Chandni Chowk
Net weight when packed/ 100 ml
Manufacturing date/ 20th July 2015
Expiry date/ 20th December 2016
Maximum retail price (MRP)/ 40
Batch number/ D 4567
Directions for use/ For best results, massage with Luke warm oil
29 Societal marketing concept/philosophy 1+3=
Main focus : customers’ need and society’s well being 4
Means: integrated Marketing
Ends: Profit through customer satisfaction and social welfare
30 Marketing concept used by Flipkart is Public Relation 1+3=4
31 a) Advertisement and Sales Promotion 1+2 +
b) Features of advertising 2=5
1. Paid form
2. Impersonal communication
3. Mass reach
4. Identified sponsor
Features of Sales promotion
1.encourage the buyers to make immediate purchase
2. include all promotional efforts other than advertising, personal
selling and publicity
3. provide short term incentives to boost the sales of a firm.
4. it is usually undertaken to supplement other promotional efforts
such as advertising and personal selling.

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32 The decision which ‘Pushpanajali Ltd.’ should take so that its customers are 1+2
+2= 5
able to identify its products in the market is Branding.
Benefits that may result to Pushpanjali Ltd.: (Any two)
(i) Enables marking product differentiation.
(ii) Helps in advertising and display programmes.
(iii) Differential pricing.
(iv) Ease in introduction of new product.
Benefits that may result to the customers: (Any two)
(i) Helps in product identification.
(ii) Ensures quality.
(iii) Status symbol
33 Functions of marketing performed by Pioma Industries 1x5=
Market Planning: Pioma Industries, known for its Rasna SDC (soft drink 5
concentrates) brand, decided to make its entry into the ready-to-drink
beverages market
Gathering and Analysing Market Information: In the late 70's and 80's,
company found in market analysis that people were habituated to drinking
squashes and sherbets at home, and these were quite expensive
Branding: . In India, the SDC product was introduced by Pioma Industries in
1976 under the brand name 'Jaffe'. It was renamed 'Rasna' in 1979
Pricing:The company launched less costly substitutes of squashes and
sherbets and that too in variety of flavours.
Product: In 2012 Rasna also ventured into ethnic products like Pickles, Paste,
Chutney, Curries, Gravies, Snacks, and Instant tea mix, etc.

34 Marketing functions undertaken by Niru and Janak: 5

(i) Gathering and analyzing market information is necessary to identify the
needs of the customers and take various decisions for successful marketing of
products and services.
“They conducted a survey to collect data to identify whether there is demand
for readymade atta and realised that with the growing number of working
women,it is the need of the hour to manufacture high quality atta.”
(ii) Branding: It is the process of giving a name/sign/symbol to the product in
order to distinguish the product from that of competitors.
“They named their product ‘Srijan”
(iii)Pricing of product involves fixation of price of a product and taking
various related decisions like pricing strategies.
“To penetrate in the market, they decided to keep the price low.”
(iv) Storage or warehousing refers toarranging for proper storage of goods to
maintain smooth flow of goods in the market and avoid delay in delivery.
“For maintaining smooth flow of their product into the market and avoiding
delays in delivery, it was decided to store wheat at SKM Services which had

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 scientific processes and logistics facilitating quick delivery.”
(v) Customer support Services aim at providing maximum satisfaction to the
customers for developing brand loyalty for a product.
“They also set up an online complaint portal to take care of consumer
grievances.”
35 a) 1. Primary Package: It refers to the product’s immediate container. In some 3+2
cases, the primary package is kept till the consumer is ready to use the +1=
product . 6
2. Secondary Packaging: It refers to additional layers of protection that are
kept till the product is ready for use, e.g., a tube of shaving cream usually
comes in a card board box.
3. Transportation Packaging: It refers to further packaging components
necessary for torage, identification or transportation.
b) Functions performed by the additional packaging done in online sold
material.
1. Product Protection: additional packaging protects the product from
damage which may be caused during transportation
2. Easy To Transport: additional layers help to handle the product easily
during its transportation and carrying it through different modes of transports
without damage.
c) factors to be kept in mind by online marketer while designing the
packaging of its products
1. use biodegradable packaging material
2. packaging should enhance utility of the product

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 CONSUMER PROTECTION ACT 1986

Q.no Questions Marks

1 Shubhangi purchased a car for Rs. 1.1 crore and found its engine defective. 1
Despite many complaints, the defect was not rectified. She filed a complaint
in National Commission but was not satisfied with its order. Suggest her the
appropriate authority where she can appeal.
(a) National commission (b) District forum
(C ) Supreme court of India (d) None of the above.

2 Sonu went to a shopkeeper to buy shampoo. The shopkeeper forced him to 1

buy a particular brand of shampoo out of various available brands, irrespective
of the willingness of Sonu.. Which right of Sonu, as a consumer, has been
exploited?
(a) Right to Information. (b) Right to choose
(c) Right to consumer education. (d) Right to be heard

3 Rita wants to buy a packet of juice. As an aware customer, how can she be 1
sure about the quality of juice she plans to buy?
(a) By ISI mark (b) By FPO mark label
(c) By Hall mark (d) Agmark

4 Consumer can make a complaint to the National Commission when the value 1
of goods or services and compensation claimed exceeds rupees
5 Vijay purchased a flat for Rs. 50 lacs and found it different from what was 1
agreed. He wants his money back. Suggest him the appropriate authority to
file his complaint in the three-tier machinery under the Consumer Protection
act, 1986.
(a) State commission (b) District forum
(c) National commission (d) Supreme court

6 When was the consumer protection act enacted 1

(a) 1984 (b)1985
(c) 1986. (d) 1987

7 Raja Babu purchased a diesel car for Rs. 7 lakhs from an automobile company 1

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 and found its engine being defective. Despite many complaints the defect was
not rectified. Name the highest authority to file his complaint in the three-tier
machinery under the Consumer Protection Act.
(a) National commission (b) State commission
(c) District forum (d) Supreme court

8 Harsh asked for a bottle of mineral water from a shopkeeper. The maximum 1
retail price printed on the bottle was Rs. 20 only whereas the shopkeeper was
charging Rs. 35. In spite of many arguments the shopkeeper was not ready to
sell the bottle for less than Rs. 35. Harsh was in need of it and had no option
except to buy. Identify the ‘Right’ which Harsh can exercise.
(a) Right to choose (b) Right to seek redressal
(c) Right to heard (d) Right to information

9 Whether following will be treated as a consumer say 'yes' or 'no' 1

(a) Sita purchase a washing machine for her home.
(b) Ramesh purchased a DVD Player for resale.
(c) Rahul purchase a computer for earning his livelihood by doing DTP work.
(d) Kunal use a new mobile connection.

10 Match the following quality mark is a consumer should look for while 1
purchasing the following products.
Products. Quality marks
(A) electrical goods. 1. FPO marks
(B) Agricultural Products. 2. ISI mark
(C) jewellery. 3. Hall mark
(D) Food products. 4. Agmark

11 Identify the consumer right discussed in the following cases: 1

(A) Many consumer organisations are taking an active part in creating
awareness in consumers.
(B) According to this right produces have to provide all relevant information
about the product.

12 . A consumer is not certain satisfied with district forum. In how many days we 1
can challenge the same and approach the state Commission?
(A) 20 days. (B) 30 days
( C) 40 days. (D) 50 days

13 Redressal Agencies come under which Consumer Protection Act? 1

( A) District forum
(B) State commission
(C) National commission
(D) None of these
(E) All of these

14 ________________________________________________________relief is 1

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 available if the goods are adulterated and the manufacturer is still in practice
of selling.
(A) cease manufacturing of hazardous goods
(B) to complete consumer education.
(C) to free choice of goods and service.

15 Full form of VOICE an NGO is: 1

(A) various Organisation in interest of consumer education
(B) voluntary organisation in interest of consumer education.
(C) Voluntry organisation in interest of commodity education.

16 State whether the following statement is True or False 1

(a) Consumer protection has a moral justification for business.
(b) In addition to rights, a consumer also has some responsibilities.
(c). A a complaint can be made to a district forum when the value of the goods
or service in the question, along with the compensation claimed exceeds
Rupees 20 lakh.
(d) ISI is the quality certificate mark used in case of food products

17 Identify the given statement whether it is Right of consumer or Responsibility 1

of consumer:
(A) consumer must refer label carefully.
(B) consumer to get relief in case the product or service Falls short of his
expectations.
(C) to acquire knowledge and to be a well informed consumer throughout life.
(D) to take cash memo.

18 _________________________is set up by the central government. 1

(A) state Commission
(B) district Forum
(C) National Commission
(D) none of these

19 Reena purchased some household goods from a ‘General store’. After 3

reaching home she found a face cream which she had not billed for. After
checking the date of expiry and other details, she started using it. Her face
burnt due to the use of the cream. Where should Tanya file a complaint?
Justify. Under Consumer Protection Act, 1986 who can file a complaint?

20 Seema purchased a book from Harish Book Store. While reading the book, 3
she found that sixteen pages were missing. She approached the seller of the
book and complained about the missing pages. The seller promised that if the
publisher was ready to change the book he would change the same. After a
week, the seller informed Seema that the publisher had refused to change the
book.Where can Seema file a complaint against the seller of the book? Give
reason in support of your answer. Also explain who is a consumer as per
“Consumer Protection Act 1986”.

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21 Raghav moved from Dehradun to Mumbai to work as an artist in television 3
serials. On getting his first salary, he opened an account in a nearby
commercial bank and also opted for ATM facility under ATM card. After a few
months, he lost his ATM Card and lodged a request with the bank for
furnishing duplicate card. Consequently, he was allotted duplicate ATM Card
Number but that card was not given to him. After a week, he received a SMS
message on his mobile stating that sum of Rs. 10,000/- has been withdrawn
from his account. Since the duplicate ATM card was not given to him, he
brought the debit entry in the notice of the bank. The bank assured to repay
that amount to him within 15 days after investigating the issue. But, more
than a month has passed since then and despite his persistent efforts the bank
has not taken any action so far. So, he files a case against the bank in the
district forum. The consumer court can issue a notice to the bank after being
satisfied with the genuineness of the complaint and directs the bank to repay
Rs. 10,000 to Raghav along with the compensation of Rs. 50,000. Name the
rights exercised by Raghav in the context of the above case.

22 In the year 2015, Under section 12(ID) of the Consumer Protection Act, the 4
Consumer Affairs Ministry had filed a suit in National Consumer Disputes
Redressal Commission (NCDRC) against Nestle India, the manufacturer of
Maggi noodles, seeking about Rs. 640 crore in damages for alleged unfair trade
practices, false labeling and misleading advertisements.
In context of the above case: 1. Name any two other two parties besides
government who can file a case under Consumer Protection Act 1986.
2. Why has the government filed a suit in National Consumer Disputes
Redressal Commission (NCDRC) and at no other level of three tier redressal
system?

23 Rajat purchased an ISI mark electric iron from Bharat Electricals. While using 4
it, he found that it was not working properly. He approached the seller and
complained about the same. The manufacturer refused to replace and Bharat
Electrical decided to file a complaint in the consumer court. Can Bharat
Electricals do this? Why? Also explain who is a consumer as per Consumer
Protection Act, 1986.
24 On her sister’s wedding, Radha decided to gift her gold earrings. When she 5
shared her plan with her husband, he showed her an article in the daily
national newspaper under the heading “Jago Grahak Jago.” The campaign
included details about the various aspects that people must consider before
buying any gold jewellery.
1. Why do you think campaigns like “Jago Grahak Jago” are inserted in the
newspaper?
2. Name the right of consumer being fulfilled through this initiative of the
government
3. State any three responsibilities that Radha must discharge as an aware
consumer while buying her sister’s wedding gift.

25 Home Shop 18 is ian online and on-air retail and distribution venture of the 5

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 Network 18 group, India. It is a part of the Network 18 Media and Investments
Limited which is owned and operated by Reliance Industries. Currently, Home
Shop 18 com comprises of more than 15 categories namely, Mobiles, Health &
Beauty, Apparel, Jewellery, Home & Kitchen, Household Appliances etc. to
name a few. The company offers a wide variety of goods under each of these
categories.
1. Identify and explain the relevant consumer right being promoted by the
company.
2. Also mention any two values being reflected through this approach
adopted by the company.

26 Raja Ram bought a bottle of disinfectant spray from the nearby market. It had 6
a knob which was to be opened in a particular way. However, there was no
instruction on its package in this regard. Therefore, when he tried to open the
knob in a casual way, some of the spray flew in his eyes. This affected his
vision.
In context of the above case:
1. Name the right of consumer being violated by the company.
2. State any two directions which the consumer court can issue to the
company after being satisfied with the genuineness of the complaint.

27 Aman a degree holder in Entrepreneurship came to know about Piplantri 6

Village located in Rajasthan, where in 2006 an initiative was started, in which
111 trees are planted every time a girl child is born. To keep termites away
from the trees the villagers have planted 2.5 million Aloe Vera plants around
the trees. This has turned the village into on oasis, as the planting of trees led
to higher water levels. Aman decided to visit the village to start a business
unit, for the processing and marketing of Aloe Vera into juices, gels and other
products. However, on visiting the village Aman found that the villagers were
suffering exploitation at the hands of local merchants who were engaged in
unscrupulous, exploitative trade practices like hording and black marketing of
food products and also selling unsafe, adulterated products to the villagers.
After looking at their plight instead of a business organization he decided to
set up an organization for the protection and promotion of the consumer
interest of the villagers.
State the functions that the organization established by Aman will be
performing. (any six points)

28 Good Health Ltd., a pharmaceuticals company, has introduced mosquito 6

repellent bands under the brand name ‘Jaddu’ in the wake of outbreak of
dengue in various parts of the country. The product attracted many people
from all age groups, especially kids. However, the company failed to provide
adequate guidance for the users on the label of the product in terms of time
period of the effectiveness of the repellent band once its seal is opened.
Because of this ambiguity, many buyers faced problems. In context of the
above case: 1. Identify and explain the consumer right which has been
overlooked by the company .

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 2. Name and explain any two functions of the important product related
aspect ignored by the company.

Marking scheme

Q.n Answer Marks

o
1 (c) The Supreme Court 1
2 (b) Right to choose. 1

3 (b) By FPO mark label 1

4 1 crore 1
5 (a) State Commission 1
6 (c) 1986 1

7 (a) National Commission 1

8 (c) Right to be Heard 1
9 a, c and d 'yes' 1
b. 'No'

10 A. __2 1
B. ____4
C _____3
D______1

11 (a) right to consumer education 1

(b) Right to be informed

12 B 1

13 E 1

14 A 1

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15 B 1

16 A. True 1
B. True
C False
D False

17 (a) Responsibility 1
(b). Right
(C). Right
(D) Right
18 c 1
19 Reena cannot file a complaint in any consumer court since she does not 3
have the proof of purchase, i.e., cash memo. She did not fulfil her
responsibility of an honest consumer. She should have gone back to the
general store to get its billing.
Under the Consumer Protection act, 1986, any of the following can file a
complaint:
1. Any consumer
2. Any registered consumers’ association
3. The central Government or any State Government
4. One or more consumers on behalf of many consumers having same
interest.
5. A legal representatively of a deceased consumer.

20 Since, the value of the goods or services in question, along with the 3
compensation claimed, does not exceed Rs. 20 lakhs she will file a case
in the District Forum.
1 A ‘consumer’ is generally understood as a person who uses or
consumes goods or avails of any services.
2. A person who buys goods for commercial purpose or resale will not be
considered to be a consumer.

21 The two rights exercised by Raghav in the context of the above case are 3
Right to be heard and Right to seek redressal.
22 The two other two parties besides government who can file a case under 3
Consumer Protection Act 1986 are any consumer and any registered
consumers’ association.
2. The government filed a suit in National Consumer Disputes Redressal
Commission (NCDRC) and at no other level of the three tier redressal
system because a complaint has to be made to the National Commission
only when the value of the goods or services in question, along with the
compensation claimed, exceeds Rs. 1 crore.

23 No, Bharat Electricals will not be able to file a complaint under 4

Consumer Protection Act 1986 because according to this act a person is

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 not deemed to be a customer if he buys goods for resale or commercial
purpose. Under the Consumer Protection Act 1986, a consumer is
defined as:
1. Any person who buys any goods for a consideration, which has been
paid or promised, or partly paid and partly promised or under any
scheme of deferred payment. It includes any uses of such goods, when
such use is made with the approval of the buyer, but does not include a
person who obtains goods for re-sale or any commercial purpose.
2. Any person who hires or avails of any service, for a consideration
which has been paid or promised or partly paid and partly promised or
under any system of deferred payment. It includes any beneficiary of
services when such services are avails of such services for any
commercial purposes.

24 The campaigns like “Jago grahak Jago” are given in the newspaper to 5
make the consumers aware of the various undesirable activities like
unscrupulous, unfair trade practices etc which are carried out by the
marketers to exploit the buyers.
2. Right to Consumer Education is being fulfilled through this initiative of
the government. 3. The three responsibilities that Radha must discharge
while buying her sister’s wedding gift are as follows:
1. Buy only standardized goods and check for standardization mark like
Hallmark for gold jewellery.
2. Assets herself to ensure that she gets a fair deal.
3. Ask for a cash memo on purchase of goods or services.
Ans. 25
25 The Right to Choose is being promoted by the company. According to 5
the Right to Choose, the consumer has a right to choose from a variety
of products at competitive prices. Also, the marketers should offer w
wide variety of products to buyers.
2. The two values being reflected this approach adopted by the company
are increasing standard of living and technological development

26 The two rights of consumer being violated in the above case are Right to 6
information and Right to safety.
2. The two directions which the consumer court can issue to the
company after being satisfied with the genuineness of the complaint are
as follows:
1. Not to offer hazardous goods for sale.
2. To pay a reasonable amount of compensation for any loss or injury
suffered by the consumer due to the negligence of the marketer
27 Functions of an NGO / Consumer organization 6
1. Educating the villagers / general public about consumer rights by
organizing training programmes, seminars and workshops.
2. Publishing periodicals and other publications to impart knowledge
about consumer problems, reliefs available and other matters of
interest.

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 3. Carrying out comparative testing of consumer products in accredited
laboratories to test relative qualities of competing brands and publishing
the test results for the benefit of consumers.
4. Encouraging consumers to strongly protest and take an action against
exploitative and unfair trade practices of sellers.
5. Providing legal assistance to consumers by way of providing aid, legal
advice etc, in seeking legal remedy.
6. Filing complaints in consumer courts on behalf of consumers.

28 The Right to information is being overlooked by the company in the 6

above mentioned case. 1. According to the Right to information, a
consumer has the right to get complete information about the product
he / she intends to buy including its contents, date of manufacture, date
of expiry. Price, quality, directions for use etc. Also, as per law, it is
mandatory for the marketers to provide complete information about the
product / service to the buyers.
2. The important aspect related to the marketing of products which has
been ignored by the company is Labelling.
The two important functions performed by labeling are: 1. Describes
the product and specifies its contents: 2. Helps in identification
of the product or brand:

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