Practicing the CBSE Sample Papers for Class 12 Business Studies with Solutions Set 7 allows you to get rid of exam fear and be confident to appear for the exam.
CBSE Sample Papers for Class 12 Business Studies Set 7 with Solutions
Time: 3 Hours.
Max. Marks: 80
General Instructions:
- This question paper contains 34 questions.
- Marks are indicated against each question.
- Answers should be brief and to the point.
- Answers to the questions carrying 3 marks may be from 50 to 75 words.
- Answers to the questions carrying 4 marks may be about 150 words.
- Answers to the questions carrying 6 marks may be about 200 words.
Question 1.
If the manufacturer achieves a breakthrough by developing a car engine, which can run on both petrol and diesel, and this news is covered by television or radio or newspapers in the form of the news item. It would be termed as:
(a) Publicity
(b) Advertisement
(c) Sales promotion
(d) Personal selling
Answer:
(a) Publicity
Explanation: It would be termed as publicity as the information is moving from its source to the general public via the media which helps to increase awareness
Question 2.
Which decision is related to determining the amount of finance to be raised from different sources of finance?
(a) Financial
(b) Capital
(c) Business
(d) None of these
Answer:
(a) Financial
Explanation: Financing decision relates to determining the amount of finance to be raised from different sources of finance. This decision determines the overall cost of capital and the financial risk of the enterprise.
Question 3.
“Taking corrective actions” is the final step in the process of controlling, in which the managers take corrective measures to bring back everything on track. Sometimes even after best efforts, if deviations cannot be corrected then what should be done?
(a) Revise the standards
(b) Delegate the authorities
(c) Shut the company
(d) None of these
Answer:
(a) Revise the standards
Explanation: After detecting the deviations, managers ensure that deviations do not occur again. The problem may lie in initiative to work or standards may have to be revised because they are sub-optimal or over-optimal.
Question 4.
Which of the following components of the business environment is being described in the picture given below?
(a) Economic environment
(b) Political environment
(c) Natural environment
(d) Socio-cultural environment
Answer:
(b) Political environment
Explanation: The political environment contains political conditions, peace, stability in the country, and certain attitudes that elected government representatives hold towards an organization.
Question 5.
Choosing the most suitable person from the shortlisted candidates is called as:
(a) Development
(b) Selection
(c) Training
(d) Recruitment
Answer:
(b) Selection
Explanation: prospective jobSelectioncandidatesis the developed process of at choosing the stage of the recruitment.most suitable candidate from the pool of the
Question 6.
Choose the correct option showing the correct difference between the Consumer Protection Act (COPA), 1986 with Consumer Protection Act (COPA), 2019:
(a) There was no provision for product liability in COPA, 1986 but there is a provision for product liability in COPA, 2019.
(b) There was a legal provision for mediation cells in Consumer Protection Act of 1986 and 2019 both.
(c) The Consumer Protection Act, 1986 and 2019 both have rules for e-commerce selling.
(d) Central Council Protection Authority was working as a regulator according to both the Acts.
Answer:
(a) There was no provision for product liability in COPA, 1986 but there is a provision for product liability in COPA 2019.
Explanation: There was no provision for product liability in COPA, 1986 but there is a provision for product liability in COPA, 2019.
Question 7.
“Kamal Limited gives due weightage to the perquisites and prestige of job so that the designation helps to satisfy the psychological, social and esteem needs of an individual.” Identify the type of incentive being described in the above lines.
(a) Employee empowerment
(b) Job security
(c) Status
(d) Perquisites
Answer:
(c) Status
Explanation: The type of incentive being described in the above case is status. It feels good when people recognise an employee and get rewards, recognition, authority responsibility, etc.
Question 8.
Devi has two projects P and Q, in hand. The same amount of risk is involved in both the projects. If the rate of return of projects P and Q are 20% and 15%, respectively, then under normal circumstances, which among the two projects is likely to be selected?
(a) Project P
(b) Project Q
(c) Both project P and project Q
(d) None of these
Answer:
(a) Project P
Explanation: Devi will select P project because it gives a higher return than project Q, with the same risk factor.
Question 9.
The government is putting efforts to switch all the vehicles into electric vehicles by 2030. Many companies such as Maruti Suzuki, Kinetic Motors, Hyundai Motors and Tata Motors are preparing their EV models to support the plan. Identify the type of plan involved here.
(a) Method
(b) Strategy
(c) Programme
(d) Objective
Answer:
(b) Strategy
Explanation: Strategy is a comprehensive action plan designed to achieve specific objectives in the event of difficulty. It is prepared to cope with the changing business environment and ensuring the survival and development of the organisation.
Question 10.
One of the common irregularities noted by the Securities and Exchange Board of India during the inspection of a stock exchange was that it was dealing with unregistered sub-brokers. Identify the related function of the Securities and Exchange Board of India.
(c) Developmental function
(d) None of these
(a) Regulatory function
(b) Protective function
Answer:
(a) Regulatory function
Explanation: Registration of brokers and sub-brokers and other players in the market comes under the regulatory function of SEBI
Question 11.
Stock Exchange works as a mechanism for the valuation of securities through the forces of demand and supply. Identify the related function performed by the stock exchanges.
(a) Providing liquidity and marketability to existing securities.
(b) Safety of transaction.
(c) Pricing of security.
(d) Spreading of equity cult
Answer:
(c) Pricing of security.
Explanation: Pricing of security is a function performed by the stock exchanges.
Question 12.
Statement I: Organising involves identifying and dividing the work that has to be done in accordance with previously determined plans.
Statement II: Identification and division of work is the first step in the process of organising.
Choose the correct option from the options given below:
(a) Statement I is true and II is false.
(b) Statement II is true and I is false.
(c) Both the statements are true.
(d) Both the statements are false.
Answer:
(c) Both the statements are true
Explanation: The first step in the process of organising involves identifying and dividing the work that has to be done in accordance with previously determined plans. Work is divided into manageable
Question 13.
Match the items in column-I with those in column II.
| Column-I | Column-II |
| (a) Selling concept | (i) Stakeholder relationship |
| (b) Marketing concept | (ii) New or existing improved product |
| (c) Societal concept | (iii) Sales oriented |
| (d) Product concept | (iv) Customer oriented |
(a) (i), (ii), (iii), (iv)
(b) (iii), (iv), (i), (ii)
(c) (ii), (iii), (i), (iv)
(d) (iv), (ii), (iii), (i)
Answer:
(b) (iii), (iv), (i), (ii)
Question 14.
__________is manipulating the market price of shares by increasing or decreasing their prices.
(a) Price rigging
(b) Insider trading
(c) Private placement
(d) Fluctuation
Answer:
(a) Price rigging
Explanation: profits at the expense price rigging of the occurs consumer.when parties conspire to fix or inflate prices to achieve higher.
Question 15.
__________ is concerned with optimum procurement as well as usage of finance.
(a) Financial analysis
(b) Financial planning
(c) Financial management
(d) Budgeting
Answer:
(c) Financial management
Explanation: Financial management is concerned with optimal procurement as well as the usage of finance. For optimal procurement, different available sources of finance are identified and compared in terms of their costs and associated risks.
Question 16.
Which of the following statements is incorrect about controlling?
(a) Effective use of resources
(b) Judging accuracy of standards
(c) Ensures order and discipline
(d) Exploitation of resources
Answer:
(d) Exploitation of resources
Explanation: Exploitation of resources is not an importance of controlling. As by exercising control, a manager seeks to reduce the wastage and spoilage of resources, which helps in effective and effluent utilisation of resources.
Question 17.
XYZ company offers its director certain benefits such as car, housing, medical facilities etc. apart from basic salary. Name the incentive provided here by the company to its director:
(a) Perquisites
(b) Stock option
(c) Bonus
(d) Job enrichment
Answer:
(a) Perquisites
Explanation: Perquisites are fringe benefits that are received over and above the salary as a result of their official position. Here, XYZ company offers its director certain benefits such as car, housing, medical facilities etc. apart from basic salary which are perquisites.
Question 18.
“People are the most valuable asset of any organisation” other assets such as land, building, machinery etc. become productive only when people use them properly.
Read the given statement carefully and answer the question from the given options:
It shows the importance of which of the following functions of management?
(a) Organising
(b) Staffing
(c) Controlling
(d) None of these
Answer:
(b) Staffing
Explanation: The above statement highlights the importance of staffing function which is a process of finding the right person with appropriate qualifications or experience and recruiting them to fill the vacant job positions or roles in the organisation.
Question 19.
Under which of the following conditions the fixed capital requirements of a business is not likely be low?
(a) When the raw material is easily available.
(b) When the labour-intensive production technique is used.
(c) When the level of collaboration is low7.
(d) When the growth prospects of the firm are low.
Answer:
(c) When the level of collaboration is low.
Explanation: a business are When not the likely level to of collaboration is low. is low, the conditions of the fixed capital requirements
Question 20.
Arrange the steps involved in Selection process in correct sequence:
(i) Preliminary Screening
(ii) Selection Test
(iii)Employment Interview
(iv)Reference and Background Checks
(a) (i), (iv), (iii), (ii)
(b) (i), (ii), (iii), (iv)
(c) (iv), (iii), (ii), (i)
(d) (iv), (ii), (iii), (i)
Answer:
(b) (i), (ii), (iii), (iv)
Explanation: The-selection process has the following steps:
1. Preliminary screening.
2. Selection test. Intelligence test. Aptitude test.
3. Employment interview.
4. Reference and background checks.
5. Selection decision.
6. Medical examination.
7. Job offer.
8. Contract of employment.
Question 21.
Rajneesh has been running a successful business of manufacturing traditional wedding wear for women including sarees and lehengas. His friend suresh who is engaged in the business of providing web designing solution to his clients, suggested him to explore the option of selling his products online. Rajneesh agrees to his suggestion and decides to venture into online business, keeping in view the various e-commerce regulation in order to avoid imposition of any penalty.
In order to facilitate the sale of his products Rajneesh decided to offer, multiple payment options such as cash on delivery, credit or debit card transaction, net banking to the buyers etc. In the context of above case Identify the two different types of plans mentioned in the above paragraph that relate to the online portal that Rajneesh intends to start quoting lines from the paragraph.
Answer:
Rule and Method are the two different types of plans that relate to the online portal that Rajneesh intends to start.
Rule: Rajneesh agrees to his suggestion and decides to venture into online business keeping in view the various e-Commerce regulational in order to avoid imposition of any penalty.
Method: To facilitate the sales of his products online, Rajneesh adapted different methods for payment like cash on delivery,net banking, credit or debit card transaction.
Question 22.
Pankaj Gupta started a company Hitech Ltd.’ with ten employees to assemble economical computers for the Indian rural market. The company did very well in its initial years. As the product was good and marketed well, the demand went up. To increase production, the company decided to recruit additional employees. Pankaj Gupta, who was earlier taking all the decisions for the company, had to selectively disperse the authority.
He believed that people are competent, capable and resourceful and can assume responsibility for the effective implementation of their decisions. This paid off and the company was not only able to increase its production but also expanded its product range with different features. Identify the concept used by Pankaj Gupta through which he was able to steer his company to greater heights and also explain any three points of importance of this concept.
Answer:
1. The concept used by Pankaj Gupta through which he is able to steer his company to greater heights is Decentralisation.
2. The three advantages of using decentralisation are as follows:
(a) Decentralisation helps to promote self-reliance and confidence amongst the subordinates: When the subordinates are given freedom to take their own decisions they learn to depend on their own judgment and develop solutions for the various problems they encounter. Moreover, a decentralisation policy helps to identify those executives who have the necessary potential to become dynamic leaders.
(b) Relief to top management: Decentralisation reduces the need of direct supervision and helps to save the time of top management for persuing other important work.
(c) Quick decision-making: In a decentralized organization, managers at all levels are allowed to take such decisions independently which lie within their area of jurisdiction. This makes the process of decision-making much faster.
Question 23.
“There is no need of human resource planning as so many people are available in the market these days.” Do you agree with this statement? Give reasons.
OR
Explain briefly ‘Casual Callers’ and ‘Labour Contractors’ as external sources of recruitment.
Answer:
No, I don’t agree with this statement. There is a great need of manpower planning due to the following reasons:
1. Human resource manager has to find out the number of employees required by the organisation and make provision for their recruitment.
2. Developing compensation and incentive plans from time to time with the aim of improving the policies concerning personnel.
3. Manpower planning helps companies in handling grievances and complaints. It establishes cordial relations between the employees and the employer.
OR
Casual Callers: It is a type of external source of recruitment. Generally, the large business organisations maintain database (a file of job applications of casuals callers) file in which they keep all the pending application which the job seekers leave with the reception, sometimes the application of suitable candidate who were not selected in previous years selection process are also kept in application file.
These casual callers or job applicants, which are maintained in the records of the organisation, can be called upon in case of new job vacancies or job openings when arises. Labour contractor: It is also a type of external source of recruitment. In this, organisation informs its requirement of labour to contractors. Contractors maintain close contact with the labourers and they provide the required number of unskilled workers as per demand. The contractor charges commission for this work.
Question 24.
With reference to the various dimensions of business environment, state what is meant by political environment? Mention any three components of political environment.
OR
Briefly explain any two external factors of micro environment of business.
Answer:
Political environment consists of those factors that are concerned with the management of public affairs and their impact on the business organisations. The political factors affect the business in a big way. Political factors also affect the government. Some components of the political environment are:
1. Political system: Nature and ideologies of political parties.
2. Political structure: Nature of relations between the center and the state governments.
3. Stability of the government: How strong a government is and how long can it be expected to remain in power.
OR
Some external factors of micro-environment of business are as follows (any two):
1. Customers: Customers lead to generation of revenues for business organisation. The customers are dominant in an industrial sector, they put considerable pressure on business organisation about product quality, price and delivery.
2. Financer: Financer are those persons and organisations which provide financial resources to business organisations in the form of capital, loans, public deposits, etc. Financer puts pressure on an organisation about the quantity and the terms under which financial resources will be made available.
3. Suppliers: Suppliers are those persons and organisations which provide goods and services to business organisations. Suppliers can exert bargaining power on business organisations by raising prices of goods and services affecting organisations profitability adversely.
4. Competitors: Competitors are those persons and organisations which compete directly with business organisation to capture the market share for a given product. If the total market size of the product does not grow in proportion to the number of competitors, the fight for capturing market share becomes more intense, resulting in lower profitability of the organisation.
Question 25.
“Though advertising is one of the most frequently used mediums of promotion of goods and services,
it attracts a lot of objections.’ Explain any four such objections.
OR
Define marketing management. State any three objectives of marketing management.
Answer:
When it comes to advertising spending, there are a variety of viewpoints. On the one hand, it is considered a social waste because it increases manufacturing costs, lowers social values, and expands consumer requirements and desires. On the other hand, it is considered as advantageous because it aids in raising sales and earnings.
Points of arguing that advertising is a waste of money for a business are:
1. Higher cost: Advertising costs contribute to the cost of the product and the firm, which is subsequently passed on to customers as an additional cost in the form of higher pricing.
2. Causes confusion: It is said that when a huge number of comparable products are advertised, the consumer is frequently confused. Those who support commercials, claim that they assist consumers to have a better understanding of the many products available in the market. As a
result, their options broaden, and they are better able to make informed decisions about the products they wish to purchase.
3. Promotes substandard products: Advertisements persuade consumers to buy the product. Even inferior products can be advertised and persuaded to sell. Quality, on the other hand, is thought to be a subjective concept. Advertisements tell consumers about a wide range of products. Consumers must decide whether or not to purchase the product.
4. Offending advertisements: Advertisements can occasionally be offensive in the sense that they undermine social values. In certain commercials, for example, women are portrayed in an unpleasant light. The language, graphics, and content of advertisements may not always be appealing to societ
OR
Marketing management is the process of planning and executing the conception, pricing, promotion and distribution of products, services and ideas to enable exchange between buyers and sellers.
Objectives of marketing management are:
1. Choosing a target market: Marketing management involves selecting target markets which are group of customers representing a particular characteristic of a population in terms of incomes, age, etc., and concentrated in a particular geographical region.
2. Growing customers in target market: Following the selection of a target market, the marketing process entails increasing demand and in turn, increasing the number of customers in the market to understand the wants and needs of customers in the target market and cater to their satisfaction.
3. Creating superior value: Marketing management involves creating a superior value to the product for the customer by mobilising and offering services enabling customer loyalty by offering various schemes and incentives to customers that can enable more demand for the product from various customers
Question 26.
What are the objectives of advisory committees formed by SEBI?
OR
What are the features of a capital market?
Answer :
The objectives of advisory committees formed by SEBI are:
1. To advise SEBI on matters relating to the regulation of intermediaries for ensuring investor protection in the primary market.
2. To advise SEBI on issues related to the development of the primary market in India.
3. To advise SEBI on matters required to be taken by for changes in the legal framework to introduce simplification and transparency in the primary market.
4. To advise SEBI on disclosure requirements for companies.
5. To advise the board in matters relating to the development and regulation of the secondary markets in the country.
OR
Capital market is a market for long-term funds.
The features of a capital market are:
1. The main participants in the capital market are banks, financial institutions, corporate bodies, foreign investors and retail investors.
2. Since the cost of securities may be low, investment can be made in the capital market with less capital.
3. The securities in the capital market enjoy good liquidity.
4. The instruments in the capital market carry high risk as the expected return on them is high
Question 27.
“Sound financial planning is essential for the success of any enterprise” Explain this statement by giving any six reasons.
Answer:
“Sound financial planning is essential for the success of any enterprise”. The following points explain the importance of financial planning:
1. It makes the evaluation of actual performance simply by giving out specific objectives for various business units.
2. Helps in avoiding surprises and shocks: Through financial planning, an organisation can detect situation of shortage or surplus of funds that may arise in future. Therefore, it prepares the managers in advance for such situation.
3. Improves coordination: Through financial planning, various business activities such as sales and production are coordinated in a better manner. Such coordination ensures smooth functioning of the business.
4. Reduces wastages and duplication: Financial planning clearly defines the policies and procedures for working, which in turn helps to reduce duplication of work as well as avoid wastage of time and efforts by filling gaps in planning.
5. It provides link between investment and financing decisions on a daily basis
Question 28.
‘Astra Ltd.’ is engaged in the manufacturing of apparel. Over the years, it has became a popular brand due to its good product quality and exclusive designing. The company plans to open its own retail showrooms in metropolitan cities in India. In order to meet its financial needs it has offered for subscription an IPO of Rs. 4 lakh equity shares in the price band of Rs. 430- Rs. 445 each.
As per the guidelines of SEBI, the company has provided a complete disclosure of the relevant details in its prospectus Identify and explain the right of the consumer being fulfilled by the directives of SEBI in the above mentioned case. Briefly explain any two points highlighting the importance of consumer protection from the point of view of the businessmen.
Answer:
1. The Right to information is being fulfilled by the directives of SEBI in the above mentioned case. According to the Right to information, the consumer has the right to get complete information about the product that he/she may propose to buy including its contents, date of manufacture and expiry, maximum retail price, quantity, directions for use etc. Moreover, as per law, it is mandatory for the marketers to provide complete information about the product/service to buyers.
2. The importance of consumer protection from businessmen’s point of view is outlined below:
(a) Long-term interest of business: In order to ensure long term interest of business it is important that businessmen strive to earn profits only through consumer satisfaction. This will not only ensure the survival of business but also lead to its growth in the future.
(b) Business uses society’s resources: Since a business employs society’s resources to create offerings so they need to safeguard the consumer’s interests.
Question 29.
A company was marketing water purifiers which were very popular due to their quality and after sales services provided to the customers. The company was a leading company in the market and earning huge profits. Because of huge profits, the company ignored the after sales services. As a result, its relations with customers got spoiled and the image of the company was damaged in the public.
The top management became concerned when the profits for the current quarter fell steeply. On analysis, it was revealed that ignoring the after sales services was its reason. Therefore, the company took all possible measures to protect and promote its favourable image in the eyes of the public. As a result, the goodwill of the company improved in the society. Name and state the communication tool used by the marketer in the above case to improve its image and also explain role of the tool as identified in part(1).
Answer:
1. Public Relations is being used as a promotional tool by the marketer. It refers to the practice of managing communication between an organisation and its publics in order to create and maintain a positive image about itself and its products.2. The role of public relations as a promotional tool is described below:
(a) Public relations helps to create a positive image about the company in the eyes of various interest holders like consumers, government, suppliers etc.
(b) It helps in launching new products as they may be accepted easily because of good reputation of business. It helps the business to reinstate itself in the wake of controversies or prejudices etc.
Question 30.
How is the training of employees beneficial for the organisation? State any four reasons.
Ans.
Training is important in every organisation, as it aims at building the skills and abilities of the employees to perform their tasks.
The following points highlight the importance of training in an organisation:
1. Less wastage: Training is a concept that involves a systematic learning of a particular job. It is a more efficient way of learning than any trial-and-error method. It helps in reducing wastage of time and money in an organisation, thus ensuring optimum utilisation of resources.
2. Higher profits: Training enhances the productivity of employees by making them more efficient. Such increase in both qualitative and quantitative productivity, boosts the profits of the company.
3. Managerial efficiency: Training prepares employees to face new challenges, thus helping them to make effective responses to various business problems. It also equips future managers to take precautionary steps in case of emergency.
4. Boost employees morale: Training not only improves the performance, but it also improves the overall attitude of the employees towards job, working conditions and organisation. It helps in reducing absenteeism, labour turnover and grievances among the employees
Question 31.
“A particular type of organisation is a system of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability.” Name the type of organisation and explain any two advantages of it.
OR
How is functional structure different from a divisional structure?
Answer:
It is a formal organisation. Its advantages are as follows (any two):
1. Clarity about contributions of employees: Formal organisation prescribes what each employee is expected to do. Therefore, everyone is very clear about his contributions to achieve group/ organisational objectives.
2. Clear authority, responsibility and accountability: Everyone knows precisely his authority, responsibility and accountability and works accordingly. Thus, conflict is unlikely to emerge.
3. Clear working relationships: Working relationships are prescribed clearly which sets interaction pattern of people, that is, who will communicate with whom. This makes communication orderly.
4. Rational behaviour: It leads to rational behaviour of employees as they are expected to behave according to prescriptions. This brings stability in organisational functioning.
5. Orderly coordination and control: It leads to orderly coordination and control because ‘who will be coordinated and controlled by whom’ is prescribed precisely.
OR
The following points highlight the differences between a functional structure and a divisional structure
| Basis of Difference | Functional structure | Divisional structure |
| Meaning | It is about grouping or combining of jobs of similar nature under various functions as well as organising these functions as department creates functional structure. | Organisations with diversified activities organise their structure with separate business units or divisions, which is known as divisional structure. |
| Formation | It is formed by keeping in mind all the functions that are performed in the organisation. | It is on the other hand; formed on the basis of product lines, supported by functions. |
| Specialisation | It leads to functional specialisation. | It leads to product specialisation. |
| Responsibility | It is considered as difficult to fix responsibility on a department. | It is considered as easy to fix responsibility for performance. |
| Managerial development | Less scope of managerial development as specialised functions are performed. | High degree of managerial development with ease, due to autonomy and performance of multiple functions. |
| Cost involved | It is considered as economical because there is no duplication. | It is costly as there is duplication of work and resources. |
| Coordination | Difficult for a multi-product company. | It is considered as easy, because all functions related to a particular product are integrated in one. |
Question 32.
Explain any five ways in which managers have responded to changes in business environment.
OR
Management of every enterprise can be benefited from being aware of different dimensions of business environment. Explain any four such dimensions
Answer:
The following are the ways in which managers have responded to changes in businessmen environment:
1. Strategic alliance, mergers and consolidation of businesses: To achieve the objectives of market dominance, market entry, product ranges etc., the Indian business enterprises are also indulging in mergers, acquisitions, amalgamations and takeovers. Initiative for same has naturally come from managers of such enterprises.
2. Diversification strategy: Managers are focusing on diversification of their companies into various fields. For example, Reliance has now diversified its business into communications, retail chains etc. Likewise, they are bold enough to diversify into other nations too if they want to.
3. Consolidation of multinationals: Many multinational companies have entered India through new joint ventures. For example, General Motors’ entry through a joint venture with Hindustan Motors.
4. Brand building: Companies are becoming more aggressive towards brand building. Their managers are spending huge amounts on same. Focus is on securing prime positions for their brands, through creative media-mix, in the minds of consumers.
5. Labour: Managers are changing their behavior towards labour. Labour is also benefited through higher wages and other facilities like training to upgrade their skills and job enrichment.
OR
Dimensions of business environment are as follows:
1. Economic environment: It consists of economic factors that influence the business in a country. These factors include Gross National Product, corporate profits, inflation rate, employment, balance of payments, interest rates, consumer income, etc. Economic environment in a country has strong influence on the business in that country.
2. Social environment: It describes the characteristics of the society in which the organisation exists. Literacy rate, customs, value beliefs, life style, demographic features and mobility of population are the part of the social environment. The trend of change can be predicted well in advance. It is important for managers to notice the direction in which the society is moving and formulate progressive policies according to the changing social scenario.
3. Political environment: It is the outcome of a combination of various ideologies advocated by different political parties. Every political party has a different attitude towards business community. A live example of this, can be seen during elections when there is a fluctuation in the share market.
4. Legal environment: It consists of legislation that is passed by the parliament and state legislatures. This component sets the framework of law within which the business is free to operate. Example of such legislation specifically aims at business operations which include the Trade Marks Act, 1969, Essential Commodities Act, 1955, Standards of Weights and Measures Act, 1969 and Consumer Protection Act, 1986.
Question 33.
Explain the elements of directing function of management.
Answer:
There are four elements of directing function of management are:
1. Supervision: It refers to monitoring the progress of routine work of subordinates and guiding them properly. Face-to-face contact between the supervisor and his subordinate is mandatory in supervision function.
2. Communication: It refers to the art of transferring facts, ideas and feelings from one person to another and making sure that the receiver understands the message. Communication by developing mutual understanding inculcates a sense of cooperation which builds an environment of coordination in the organisation.
3. Leadership: It refers to influence others in a manner to do what the leader wants them to do. Leadership plays an important role in directing. Only through this quality, a manager can inculcate trust and zeal among his/her subordinates.
4. Motivation: It is a process which inspires people to work for achieving the desired goal. The human factor is dynamic and provides mobility to other physical resources. Thus, it becomes essential to motivate the human resource, to keep them dynamic, aware and eager to perform their duty. Both monetary and non-monetary incentives are given to the employees for motivation.
Question 34.
Panika opens a jewellery showroom in Udaipur after completing a course in jewellry designing. She has employed eleven persons in her showroom. For greater productivity, she divides the work into small tasks and each employee is trained to perform his/her specialised job.
The sales persons are allowed to close a deal with a buyer by giving a maximum of 10% discount, whereas the decision to give any further discount rests with Panika as the final authority. In the earlier days of starting of the business, five of her employees were asked to put in extra hours of work. In return she had promised to give them a special incentive within a year.
Therefore, after six months when the business was doing well, she awarded a cash bonus to each of these employees to honour her commitment. FTowever, when it comes to settling the conflicts among her employees, she tends to be more biased towards her female employees.
In context of the above case: Identify and explain the various principles of management that are being applied by Panika by quoting lines from the paragraph. Identify and explain the principle of management which is being violated by Panika by quoting lines from the paragraph. State any one effect of the violation of the principle of management by Panika as identified in part(b) of the question.
Answer:
1. The various principles of management that are being applied by Panika are listed below:
(a) Principle of Division of Work: According to Fayol, “The intent of division of work is to produce more and better work for the same effort. Specialization is the most efficient way to use human effort.” He advocates that the principle of division of work is applicable to all kinds
of work both technical as well as managerial. “For greater productivity, she divides the work into small tasks and each employee is trained
to perform his/her specialised job.”
(b) Principle of Centralisation and Decentralisation: The concentration of decision-making authority is called centralisation whereas its dispersal among more than one person is known as decentralisation. According to Fayol, “There is a need to balance subordinate involvement through decentralisation with managers’ retention of final authority through centralisation.” “The sales persons are allowed to close a deal with a buyer by giving a maximum of 10% discount, whereas the decision to give any further discount rests with Radhika as the final authority.”
(c) Principle of Discipline: Discipline refers to the obedience to organisational rules and employment agreements that are necessary for the working of the organisation. According to Fayol, discipline requires good superiors at all levels, clear and fair agreements and judicious
application of penalties. “Therefore, after six months when the business was doing well, she awarded a cash bonus to each of these employees to honour her commitment.”
2. The principle of management which is being violated by Danika is Equity. According to Fayol, “Good sense and experience are needed to ensure fairness to all employees, who should be treated as fairly as possible.” This principle emphasizes on kindliness and justice in the behavior of managers towards workers. The managers should not discriminate against anyone on account of gender, religion, language, caste, belief or nationality, etc. “However, when it comes to settling the conflicts among her employees, she tends to be more biased towards her female employees.”
3. One effect of the violation of the Principle of Equity is that it may lead to job dissatisfaction among the male workers