OCM: Organization of Commerce and Management

HSC Board Exam 2021

Sample Paper of OCM

 Important Question

Q.1. A) Select the correct option AND rewrite the sentences.    

  1. ……………..WAS REGARDED AS FATHER of Scientific MANAGEMENT.  a)Henry FAYOL b) F W TAYLOR c) Philip Kotler
  2. The functions of MANAGEMENT START with function.
    a.ORGANISING b) PLANNING c) COORDINATING
  3. The word ‘entrepreneur’ is derived from the word ‘entreprendre’.
    a. JAPANESE b) English c) French
  4. WAREHOUSES provide FACILITIES for perishable commodities.
    a) Bonded b) Cold STORAGE c) Government
  5. The TRANSACTIONS under ARE between consumers AND consumers.
    a. B2B b. C2C c. B2C

Q.1. B) MATCH the PAIRS.

Group ‘A’Group ‘B’
1.      Henry Fayol

2.        Staffing

3.      Entrepreneur

4.      Business Service

5.      Outsourcing

a)      To focus on the role of MANAGER.

b)      It is the process of recruiting, selecting, PLACING AND REMUNERATING.

c)      German engineer

d)      Modern Management

e)        Self-motivated

f)       Employments

g)               Intangible in nature

h)      BPO

i)        Efficient business

Q.1. C) Give one WORD/PHRASE/TERM for the following STATEMENTS.

  1. The principle which DEALS with ‘to do work with INNOVATIVE WAY’.
  2. The right person at the job with the right
  3. A function of creating something new for an economic
  4. The commission which entertains case where the value of the goods or services paid as consideration does not exceed Rs. one
  5. These warehouses are owned, managed, and controlled by central and state governments or public

Q.1. D) Answer in one sentence.

  1. WHAT is the principle of unity of COMMAND?
  2. What is management?
  3. What is Agrotourism?
  4. What is E-business?
  5. What is marketing?

Q.2.     EXPLAIN the following terms/concepts. (Any 4) [8]

  1. Staffing
  2. Intrapreneur
  3. Warehouse
  4. Social Responsibility
  5. Lok
  6. Consumer movement

 Q.3.     Study the following CASE/SITUATION AND express your opinion. (Any 2) [6]

  1. Harshad is an entrepreneur and engaged in the production of eco-friendly utensils. Both male and female workers are working in his factory. All male employees are directly working on machines whereas female employees are working in the Packaging Department. Mr. Sharath is working as Finance Manager while Mrs. Naina is working as an HR Manager who is responsible for recruiting employees in the factory. On this basis:
    1. Identify any one principle of management in above
    2. What is the designation of Naina in this organization?
    3. Who is responsible for the overall planning of the organization?
  2. In XYZ Company, Lele gives instructions to the employees working under him, provides guidance, and motivates them for their best performance. On the other hand, Mr.Sayyad takes an effort to harmonize the work done by the employees of different departments while achieving organizational goals. Mr.Desai is looking after the arrangement of the required resources for the business organization.
    1. Mention the name of the employee engaged in the following functions:
    2. i) Organization ii) Direction iii) Coordination
  3. Mr. Soham is a young MBA degree holder, Mr. Navin is a Commerce graduate. Mr. Soham is willing to start a dairy farm in his village. Mr. Navin is willing to work as a cashier in a Private Company.
    1. Find out the dream of Soham and Navin.
    2. State anyone feature of Entrepreneur.
    3. To become a successful entrepreneur, which qualities Mr. Soham should have?

Q.4.     Distinguish between    (Any 3) [12]

  1. Planning and Organizing
  2. Life Insurance and Marine Insurance
  3. BPO and KPO
  4. District Commission and State

Q.5.     Answer in brief. (Any 2) [8]

  • Explain any five principles of management of Henry
  • Explain the functions of an entrepreneur
  • Types of warehouse

 Q.6.     Justify the following STATEMENTS. (Any 2) [8]

  • Principles of management are flexible in
  • An entrepreneur must be an
  • The principle of subrogation is applicable to all contracts of
  • Marketing helps in increasing consumer awareness

Q.7.     Attempt the following. (Any 2)           [10]

  • States the importance of
  • the primary function of a commercial bank
  • Explain social responsibility towards employee

 Q.8.     Answer the following.  (Any2)  [16]

  • Explain in detail the 7P’s of the marketing mix
  • What is Insurance? Explain the principles of insurance.

For notes Click Here  

Support us: GooglePay/PhonePay/Paytm: 7208379315

Q.1. A) Select the correct option AND rewrite the sentences.    

  1. Member of ORGANIZATION should receive orders from…………..
    a) MANY superior b) one superior c) ALL superiors
  2. ORGANIZATION function is IMPORTANT for the execution of the PLANS which HAVE been PREPARED by…………… MANAGEMENT.
    a) top-level b) middle-level c) lower level
  3. Principle of is not APPLICABLE to life iNSURANCE.
    a. INSURABLE interest b) utmost good FAITH c) indemnity
  4. For online TRANSACTIOns is required.
    a. REGISTRATION  b. TRADING c. business
  5. Businessmen ARE of the society.
    a. REPRESENTATIVES b) LEADERS c) Trustees

Q.1. B)  STATE whether the following STATEMENTS ARE true or FALSE.

  1. F W TAYLOR HAS proposed 14 principles of MANAGEMENT.
  2. Specialization in activities leads to an increase in organizational
  3. An entrepreneur should not be ready to work
  4. Current Account is opened by salaried
  5. It is easy to set up an e-business as compared to traditional

Q.1. C)  Find the odd one.

  1. Principle of Authority AND Responsibility, Motion Study, Principle of Division of Work, Principle of Discipline.
  2. Planning, Organizing, Staffing,
  3. Communicator, Innovator, Self-starter,
  4. NABARD, RBI, SIDBI,
  5. BPO,RTO,LPO, KPO

Q.1. D)  Complete the sentences.

  1. The tasks of getting the things done by others are known as …………..
  2. An entrepreneur is a person who starts a …………………….
  3. The term bank comes from the French word ………………
  4. The term e-business came into existence in the year ……………
  5. The business organization can maximize profitability by……………….

Q.2. EXPLAIN the following terms/concepts. (Any  4) [8]

  1. Planning
  2. Start-ups
  3. Insurance
  4. Outsourcing
  5. Principle of management

Q.3.  Study the following CASE/SITUATION AND express your opinion. (Any 2) [6]

  1. In ‘Fine Diamonds ‘ 200 employees are working in three shifts. In the first shift 60 employees, in the second shift 60 employees and in the third shift 80 employees are working without sufficient breaks except for lunch break and shift change break. No employee is able to complete the work in designated time due to inappropriate time management which results in delay for next shift employees.
    1. Identify which scientific principle needs to be followed by the
    2. Suggest two scientific techniques which can be used for smooth flow of work in ‘Fine Diamonds ‘
    3. Why the work is not being completed in time?
  2. Satvik purchases watch from Titan shop and his friend Shambhavi purchases watch from online shopping
    1. Which shopping is from a traditional business?
    2. Which shopping is from e-business?
  3. Harshali has started a new business two years ago. Her customers are located in different parts of the country and hence they are directly depositing bill amounts in her business account. At the same time, she used to pay various payments from this account only.
    1. Identify the Type of account maintained by Ms.
    2. Suggest any one modern way of money transfer to Harshali.
    3. What kind of facility does she get on her bank account?

Q.4. Distinguish between   (Any 3) [12]

  1. Staffing and Coordination
  2. Life Insurance and Fire Insurance
  3. E-business and E-commerce
  4. State Commission and National

 Q.5. Answer in brief. (Any 2) [8]

  1. Explain any five importance of planning
  2. What is e-business? Explain its advantages
  3. State the function of the warehouse

 Q.6. Justify the following STATEMENTS. (Any 2) [8]

  • The principle of equity is important
  • The entrepreneur must be a good communicator
  • Communication is essential for the growth of a business
  • The Consumer Protection Act was passed in the interest of consumers

Q.7.  Attempt the following. (Any 2)                 [10]

  • Explain the nature of principles of management
  • Explain the secondary function of a commercial bank
  • Explain social responsibility towards government

 Q.8. Answer the following.  (Any2)  [16]

Support us: GooglePay/PhonePay/Paytm: 7208379315

Q.1. A) Select the correct option AND rewrite the sentences.

  1. 1. The functions of MANAGEMENT end with………….
    a.Directing b) Staffing c) Controlling
  2. Start-Up India is an Initiative of the ——————
    a) RBI b) Government of India c) World Bank
  3. Business is a…………activity.
    a. Socio-economic b) Service c) Charitable
  4. In the modern competitive market, a consumer is regarded as the …………
    a. king, b) Agency c) Owner
  5. The term market is derived from the……….word ‘MERCATUS’
    a. French b) LATIN c) ITALIAN

Q.1. B) Correct the underlined word AND rewrite the following sentences.

  1. Esprit de corps MEANS ‘division is strength’.
  2. STAFFING is concerned with MACHINES.
  3. The word ‘Entrepreneur’ comes from the GERMAN verb entreprendre, it means’ to UNDERTAKE’ .
  4. Overdraft facility is available for savings bank account holder.
  5. E-business is hard to start.

Q.1. C)  Select the correct option from the BRACKET.

  1. Directing is a responsibility of (manager/workers/people) at all
  2. (Business to Business, First step, e-commerce, payment mechanism, e-business)
Group AGroupB
A)Registration…………..
B)Superset of e-commerce…………..
C)………..Last step
D)Subset of E-business…………..
E)…………..B2B

3. (Responsibilities towards shareholders, responsibilities towards consumers, Responsibilites towards government, Responsibilities towards society)

Group AGroup B
1)After-sales service……………….
2)Timely payment of proper taxes……………….
3)……………….Protest Anti Social activities
4).……………….Fair practices on stock Exchange

Q.1. D) Arrange in proper order

  1. Controlling, ORGANIZING, PLANNING.
  2. CLAIM, Accident, TAKing the policy, COMPENSAtion
  3. PLACING AN orders, CASH on delivery, REGISTRATIOn
  4. NATIONAL Commission, District Commission, StATE Commission.
  5. District Judge, Supreme Court Judge, High Court Judge.

Q.2. EXPLAIN the following terms/concepts. (Any 4) [8]

  1. Controlling
  2. Agro- tourism
  3. KPO
  4. District Commission.
  5. Market
  6. EDP

Q.3.        Study the following CASE/SITUATION AND express your opinion. (Any 2) [6]

  1. Ram, an emerging entrepreneur has designed a structure of his business organization by taking into consideration the required resources such as land, money, machinery, workforce, etc, for his new business. He appointed Mr.Shyam as a manager. Mr.Ram has assigned responsibilities such as recruitment, selection, training, and development and to determine the remuneration of the employees’ to Mr.Shyam. Mr. Ram has also appointed Mr.Shubham to supervise the work done by the employees according to the standards given to the employees. Mr.Shubham has to also suggest the remedies to the employees wherever necessary.
    1. In this context, find out the management functions performed by
    2. i.Ram ii. Mr.Shyam iii. Mr.Shubham
  2. Jagan is a salaried person. He wants to take a policy for his two children which assures them protection as well as completes their financial needs once they become major by age.
    1. Suggest him a policy which can satisfy the requirements of his
    2. Who are beneficiaries of policy?
    3. In the above case which principle is involved? 
  1. Yashwant Ltd. is providing facilities for their female staff like day care center for kids and work from home facility. Even management takes their suggestions while taking the decisions though they are members of trade union
    1. By doing this they are following social responsibilities towards which interest groups?
    2. What values are they presenting?
    3. What kind of responsibilities employer follows in the above case?

Q.4. Distinguish between (Any 3) [12]

  1. Directing and Controlling
  2. Current Account and Fixed Deposit Account
  3. District Commission and National Commission

Q.5. Answer in brief. (Any 2) [8]

  1.  States any five importance of controlling
  2. Explain types of banks
  3. What outsourcing? Explain its advantages

Q.6. Justify the following STATEMENTS. (Any 2) [8]

  1. Taylor emphasized on standardization of tools and equipment.
  2. It is EASY to set up an e-business as compared to a traditional business.
  3. Aim of consumer organization is to protect the rights of the consumer.

Q.7. Attempt the following. (Any 2) [10]

  1. Elaborate principles of scientific management.
  2. State rights of the consumer.
  3. Explain 4P’s of product marketing mix.

Q.8. Answer the following. (Any2) [16]

  1. Explain 14 principles of Henry Fayol in detail.

 

Support us: GooglePay/PhonePay/Paytm: 7208379315

OCM

You can write one answer for all question below and also watch the video for detailed information

  • Importance of planning
  • Importance of Organizing
  • Importance of Staffing
  • Importance of Directing
  • Importance of Coordinating
  • Importance of Controlling
  • Importance of the Principle of Management

  1. Innovation: __________________facilitates innovation within the organization. Nowadays, it is very important to generate new ideas, new products, new technology, etc. innovation helps the organization to face competition in today’s competitive business world.
  2. Better Relations/Co-ordination: There should be a good relationship between various people and departments working in the same organization. Good relations generate teamwork and bring success to the organization._________________ helps to develop good relations in the organization.
  3. Motivation: _______________ helps to motivate the employees in the organization by giving monetary and non monetary benefits. Motivated employees work with dedication. which brings higher efficiency to the organization.
  4. Higher Efficiency: __________________ is required to generate higher efficiency in the organization. Efficiency is the relation between returns and costs. The more the returns at the same costs or at a lower cost, then the organization is said to be more efficient.
  5. Corporate Image: ________________ helps the business organization to develop a good corporate image (goodwill/reputation) in the market by providing good quality of goods and services to the customers.
  6. Team Work: _________________ develops team spirit in the organization. Teamwork brings success to the organization. There is a need for teamwork between the various people and departments working in the same organization. Teamwork is important to bring success to the organization.
  7. Optimum Use of Resources: _______________ helps the organization to optimum use of available resources within the organization. There is an efficient use of various resources such as men, money, material, etc. optimum use of resources brings good results to the organization.
  8. Reduction in Wastages: _________________ ensures reduction of wastages in the organization. Nowadays, it is very important for any organization. Reduction in wastages helps to increase productivity in the organization.
  9. Integrated Process: – It means working in a team, Integrated is a very important part of management. In every organization, there should be integration between people, departments, various plans, etc. in order to achieve good results and maximum returns.
  10. Reduction in Absenteeism: Absenteeism takes place when employees remain absent without prior permission. Absenteeism creates problems in the organization. Proper ________________ facilitates reduction of absenteeism in the organization.
  11. Reduction in Labour Turnover: Employee turnover takes place when some employees leave the organization and others join in their place. Frequent labour turnover increases selection and training costs. ________________ helps to reduce labour turnover in the organization.

Define an entrepreneur. Explain the functions of the entrepreneur/Explain the Characteristics of entrepreneur/Explain the Characteristics of Entrepreneurship Development.

  • An entrepreneur is “a one who starts a business and is willing to take a risk so as to make a profit”.
  • The entrepreneurs are ardent to innovate, lead, or initiate with a disruptive product or technology.
  • Entrepreneurs are the people that have the courage to offer and to share an idea or a product or a service with the world. They try to create the market a much better place where the wants of consumers can be satisfied.
  • Webster dictionary gives a definition, “An entrepreneur is a person who starts a business and is willing to risk loss in order to make “

Characteristic and function of entrepreneurs:

  1. Innovation/Creativity: An entrepreneur is basically an innovator. The entrepreneur should be imaginative and innovative. Therefore, a successful entrepreneur is always on the lookout for new ideas, new products, new processes or methods, solutions to problems, etc.
  2. Communication Skills: An entrepreneur has to communicate with different people like customers, suppliers, creditors, employees, etc. entrepreneurs have the ability to express his IDEAS and STRATEGIES effectively so It’s necessary that there’s a proper understanding between the sender and the receiver of the message.
  3. Technical Knowledge: An entrepreneur has good technical knowledge about the product, process, and technology used in manufacturing. In addition, an entrepreneur should have knowledge about legal, finance, and administration matter relating to business.
  4. Risk bearing capacity: Successful entrepreneur takes calculated risks.  An entrepreneur is ready to face challenges and always seeks new and more opportunities.
  5. Self Confidence: An entrepreneur has self-confidence. He has positive desires to achieve his GOALS. It keeps him strong and confident to face various challenges.
  6. Decisions-making: An entrepreneur is required to take various decisions. The decisions with respect to the location of the business unit, selection of employees, obtaining funds, production decisions, marketing, and distribution decisions, etc.
  7. Determination of Objective/Goal organizer: An entrepreneur has to determine the aims and objectives of the business. Successful entrepreneurs are good organizers of resources of man, machines, materials, and money needed to start and run the business smoothly.
  8. Good Relations/Co-ordination: It’s necessary to maintain a healthy working atmosphere in an organization. It depends upon the efficient and good relations between employees and superiors. Proper co-ordination with staff is the key to the success of an organization.
  9. Personality/Intellectual Capabilities: An entrepreneur needs to have a good personality to be successful. It includes physical qualities, mental qualities, and social qualities. An entrepreneur is a creative thinker. He has the ability to analyze business situations and take proper decisions.
  10. Maintaining Relations: An entrepreneur has to maintain good relations with various parties like employees, government authorities, customers, supplied, etc.
  11. Development of Market: The entrepreneur has to find out different ways of marketing the products and services of his enterprise. He may conduct surveys or research to understand the customer’s demand. When the markets are developed constantly, the demands of the consumers will increase.
  12. Managerial skill and leadership: A person who wants to be a successful entrepreneur should have more passion for doing something new than just earning Leadership and managerial skills are the most important facets of entrepreneurship. Other skills can be considered secondary. An entrepreneur must have the ability to lead and manage an organization.
  13. Disciplined: Successful entrepreneur is disciplined enough to take steps every day towards the achievement of business objectives. entrepreneurs are focused on making their businesses work, and eliminate the threat to business.

 

Principles of Management

  • Management is a process of achieving organizational goals through the coordinated performance of five specific functions of planning, organizing, directing, staffing, and controlling.
  • Principles of management are the guideline for managers for effective management of people and activities in the organization.
  • In simple words, techniques or systems which give one Directional result are called principles. These principles are universally applicable everywhere.
  • While achieving the goals of an individual or an organization, it is always important to use different systems or techniques. Some of these techniques are accepted universally, hence, they are called principles.
  • It provides guidelines to the manger to conduct all organizational activities on specific bases. It helps the manager to take effective decisions and to achieve organizational goals.

NATURE OF PRINCIPLES OF MANAGEMENT

  1. Universally Application: The principles of management are universally applicable. They can be applied everywhere and in all situation, it is not only applicable to the larger organization but also a small organization.
  2. All principles are equally important: All the principles of management are equally important. All are to be practiced continuously to get perfect results. No principle is more important than others.
  3. General Guidelines: Principles of management provide general guidelines in solving the problems. Principles of management are applied depends upon the situation and nature of the organization.
  4. Principles are formed by Practice & Experiments: The Principles of management are developed gradually through research work. Systematic observation and experiments are conducted before developing principles. The results of such experiments have been developed as a principle after its practice in the organization.
  5. Flexibility: Principles of management are flexible in nature. It means they can be changed or modified according to the situation.
  6. Behavioral in Nature: Management is group activities. Management principles are designed to influence human beings. These principles control A group of persons and direct them to achieve the objectives.
  7. Cause and effect relationship: Principles of Management are the base for taking decisions. They determine the cause or reason for a particular effect. For e.g,  payment of good wages and incentives helps in increasing the output of workers.

SIGNIFICANCE OF MANAGEMENT PRINCIPLES

  1. Provides useful insight to Managers: The principles of management help the manager to understand the organization. The study of the principles helps to improve the understanding of the situations and problems. It further helps the manager to find out the solutions to the problems and handle situations.
  2. Helpful in efficient Utilization of Resources: In every organization, two types of resources are used i.e. physical resources (MATERIAL, MACHINES, money, etc.) and human resources (MANPOWER). The basic function of management is to make a proper balance between these resources by putting them to optimum use and control on the wastage of resources.
  3. Scientific Decisions: In a business organization, a scientific decision means a systematic or balanced decision. Principles train the manager to handle critical situations efficiently.
  4. Understanding Social responsibility: Principles of management are based on every aspect of the organization. They are not developed only from viewpoint of handling the resources effectively but they guide management in understanding the social responsibility of the organization. So that they can focus on providing quality products at reasonable prices.
  5. Encourage Research and Development (R & D): Principles of management are dynamic. Their nature goes on changing along with the changes in the business world. Guidelines help management to make a comparison of used principles with its expected outcome.
  6. Helps to Coordinate and Control: Management principles are the guidelines for better coordination and control. It creates coordination and cooperation among different employees working in a different Department.
  7. Develops objective Approach: With the help of various principles of management, one can develop an objective approach. Managers can identify the business opportunities, the root cause of the problems in the correct manner and can provide appropriate solutions to them. It builds confidence in the minds of the managers.

14 Principles of Management

  • Henry FAYOL (1841-1925) WAS A French mining engineer who turned a leading Industrialist and successful manager. He started his career as a mining engineer in a French mining company and rose to the position of the Chief Managing Director.
  • ‘Father of Modern Management’. Fayol suggested 14 principles of management. These statements serve as a guideline for decision making and management actions.
  1. Division of Work: All the work in an organization can not be done effectively by one person alone. It must be divided into departments. It helps to improve the quality, increase quantity, and reduction in costs. It also helps to get better and better work done by subordinates with the same efforts.
  2. Authority and Responsibility: Henry Fayol stress that authority given to the manager should be equal responsibility. Authority is the power or right to make decisions. The responsibility is the obligation for accepting authority. If authority is more than responsibility, then a manager may misuse it. And if responsibility is more than authority then he may feel frustrated.
  3. Discipline: According to Henry Fayol, there is always a need for discipline in an organization. It means following and maintaining the rules and regulations of an organization by all employees. It helps to achieve the goals set in the organization. Discipline is the result of effective leadership.
  4. Unity of Command: According to Henry Fayol, subordinates should get orders from one superior (boss) only that helps to avoid confusion. There should not be more than one superior. Also, the subordinates should not be reported to several superior. If the order and commands are given by one superior to the employees it helps to work smoothly and effectively.
  5. Unity of Direction: There should the same direction for all employees doing similar work. Business activities having a common goal and objectives planned and directed by one superior. It suggests that “one man, one head” in the absence of unity of direction. There would be confusion among employees
  6. Subordination of Individual interest to organizational interest: The interest of an organization should be primary and secondary to employees and groups. While taking decisions in the organization the manager should always consider the interest of the whole group rather than the interest of single employees.
  7. Remuneration: These principles state that the employees must be paid a fair wage for their services. It helps the employees with their monthly planning. While paying remuneration the skill, knowledge, etc. of the employees should be taken into account. It helps to get good results in work.
  8. Centralization: Centralization means is a situation in which top management retains most of the decision-making authority. Decentralization means sharing authority downwards is decentralization. There is a need to have a proper balance between centralization and decentralization.
  9. Scalar chain: It refers to the line of command which runs from the top-level to the lowest level in the organization. Every order, instructions, message, request, explanation has to pass through the Scalar chain. (a). But, for the sake of conveniences and urgency, this path can be short cut, and this short cut is known as Gang Plan. (b). A Gang Plan is a temporary arrangement between two different points to facilitate quick and easy communication as explained below.
  10. Order: There should be proper order in every organization. According to this principle, people and materials should be in the right place at right time. It must be the proper placement of personnel. This principle emphasizes the proper utilization of physical and human resources.
  11. Equity: Fayol Stressed that there should be equal treatment for every subordinate. There should be equal and fair deal with subordinates. Managers or superior should deal with subordinates with kindness and equal justice. There should not be any discrimination between the employees.
  12. Stability of Tenure: Employees should not be kept temporary basis he should be kept permanent basis so that it does not leave the organization. According to Fayol. “Time is required for an employee to get used to a new work and succeed in doing it well but if he is removed before that he will not be able to render worthless services”. As a result the time, effort and money spent on training the worker will go waste.
  13. Initiative: The Managers should always try to motivate, encourage the subordinates to take initiative in the work. Subordinates should come up with suggestions and ideas. This helps to achieve the organization goals and objectives. This will create a sense of participation in the mind of employees.
  14. Esprit de Corpse: (TEAM work) Henry Fayol has given emphasis on team work. Esprit de corps means union is strength. Running any organization is A group activity and human resources are the valuable asset of the organization. If all employees are working as a union and with mutual trust, the difficulties can be solved quickly. Therefore, as a leader, manger should create a spirit of team work and understanding among employees to achieve organizational goal easily.

Principles of Scientific Management:

F.W. Taylor (1856-1915) was an American who started his career as a Machinist. He introduced his Observations and experiments based on scientific data. Taylor’s approach towards management is termed as Scientific Management.

For this contribution in development of Management thoughts, he is known as the “Father of Scientific Management”.

Principles are as follows:

  1. Science, Not Rule of Thumb: In order to increase organizational efficiency, the ‘Rule of Thumb’ method should be substituted with the methods developed through scientific analysis of work. Rule of thumb decisions are based on personal judgments of the manager. This principle is concerned with selecting the best way of performing a job after scientific analysis of that job and not by trial and error methods.
  2. Harmony, Not Discord: According to this principle, there should be Harmony between the employees and management. This coordination  will help in minimizing conflicts between them. Perfect understanding between employees  and management will be helpful in creating healthy work environment for achieving the desired GOAL i.e. success.
  3. Mental Revolution: This principle focuses on change in the attitude of employees and management towards each other. Both should realize their equal importance in organization. They should give full cooperation for achieving goal of organization. This will increase productivity and profits.
  4. Cooperation, Not Individualism: This principle emphasizes on mutual cooperation between workforce i.e. employees and management. Due to cooperation, trust, team spirit etc. internal competition will turn into healthy working environment. Management should always consider the suggestions given by employees in decision making process.
  5. Division of Responsibility: Proper division of work should always be accompanied with division of responsibilities between the mangers and employees. Managers should always help, Encourage and guide the employees. It helps for best performances of managers as well as employees.
  6. Development of employer AND employees for GREATER efficiency AND MAXIMUM prosperity: Best performance of any organization always depends on the skills and capabilities of its, employees to a great extent. Thus, providing training and development Programmes to the employees whenever required, is very essential. It ultimately affects the profitability of the organization.

Techniques of Scientific MANAGEMENT

  1. Work Study: Before assigning the work to the available workforce, proper work study should be done by Management. Work study is BASED on the techniques such as time study, motion study, method study and fatigue study.
  1. Time Study: It is the technique of observing and recording the time TAKEN by an employee to complete a given TASK. With the help of time study, the precise time required for EACH element of work is determined. It is the technique used for fixing the STANDARD time required to do a particular task under given condition. It is useful to MEASURE the efficiency of an  employee and to control the cost of work.
    Method Study: For best QUALITY and cost effectiveness, identifying the best method of doing a particular job is very important but challenging task  for a Manager. It helps in reducing the WASTAGE of time and raw material.
  2. Motion Study: The study of required motion means movement of an  employee as well as of MACHINE while completing a particular TASK is very IMPORTANT. It is helpful in ELIMINATING UNNECESSARY motions AND finding the best method of doing A PARTICULAR job. It ALSO helps in improving the efficiency of the employees.
  3. Fatigue Study: Generally long working hours without sufficient Breaks, Target pressure, Heavy working tools, and poor working conditions result into Physical and mental stress i.e. FATIGUE.
  1. Standardization of Tools and Equipment’s: With the result of experiments conducted at work place, TAYLOR advocated standardization of tools  and  equipment’s. STANDARDIZED working environment AND methods of production help to reduce WASTAGE of material, cost of production and it improves QUALITY of work.
  2. Scientific TASK Setting: Scientific work setting is IMPORTANT to prevent the employees from doing work much below their CAPACITY. By using this technique, employees will complete the TASK according to standards given and management can keep proper control on optimum UTILIZATION of workforce.
  3. Scientific Selection and Training: Management can select right persons for the right jobs by using scientific selection procedures. It needs to fix job SPECIFICATIONS as per requirement. Employees are selected according to predetermined STANDARDS. After selection, Management  should provide the proper Training programmes to increase their efficiency.
  4. Functional organization: It means PLANNING is done by different people and actual work is supervised by different people. Thus, every worker will be supervised by two different sets of supervisors. He recommended TOTAL eight foremen to control the VARIOUS ASPECTS of production. They ARE CATEGORIZED AS follows:
    A) At PLANNING Level:
    1. Route Clerk- tells how work moves from one MACHINE to other.
    2. Instruction Clerk- records instructions to complete the work.
    3. Time and Cost Clerk- determines time in which work should be completed and workout the cost
    4. Discipline- ensures that the workers are working as per FACTORY rules.
    B) At IMPLEMENTATION Level:
    1. GANG BOSS-ACTUALLY gets the work done.
    2. Speed Boss- ensures that the work is completed in specified time.
    3. REPAIR Boss- HANDLES security and Maintenance of MECHANISM
    4. Inspector- ensures THAT the work is done AS per the specified STANDARDS.
    According to TAYLOR, with the help of proper division of all ACTIVITIES into Planning and Implementation; Management can definitely ACHIEVE the required PERFORMANCE from the employees.
  5. Differential Piece rate Wage Plan: Remuneration should be fixed in such a way that AVERAGE worker is MOTIVATED to attain a STANDARD output. TAYLOR suggested the Differential Piece rate Wage system. Higher Rates are offered to employees who complete the work more than the STANDARD QUANTITY under this system. On the other hand, if and  employee is performing below the STANDARD; he shall be given lower Rate of wages. This technique MOTIVATE the employees to ATTAIN higher STANDARD PERFORMANCE AND EARN WAGES i.e. REMUNERATION AT higher RATE.

Q. Define the planning and explain its importance

  1. Planning is the primary function of management. It involves the process of determining the goals and objectives of the organization.
  2. Planning bridges the gap between where we are and where we want to go. It is key to success of business
  3. Planning involves defining the organization’s goals, establishing an overall strategy for achieving organization goals, and developing plans for organizational work activities.

IMPORTANCE OF PLANNING

  1. Helps to set Clear objectives: Planning  is related to setting objectives, targets, and formulating plans for achievement of organizational goals and objectives. Every organization exists to achieve the goals and it is made to achieve the goals and objective of the business. It is always result oriented.
  2. Provides Path of Action: Planning provide direction for doing the right things at the right time with right way. It helps employees to know what organization has to do and what they must do for achieving the goals.
  3. Planning improves performance: Due to proper Planning, the employees can work according to timely guidelines. This helps to improve performances results into higher profitability of the organization. It helps managers to improve future performances of employees by establishing objectives and selecting a course of action. It is beneficial for the organization.
  4. Minimizes the risk: Planning is the process of looking into the future and anticipating the future changes. By deciding in advance the tasks to be performed, planning helps to deal with changes and uncertainties events. It minimizes the risk of future or uncertainties of future.
  5. Planning Leads to optimum Utilization of Resources: Planning helps to proper allocation and optimum use of resources in the organization. There is efficient use of various resources such as men, money, material, etc. optimum use of resources brings good result to the organization.
  6. Helps in decision Making: There are various alternatives in front of the management. Planning helps the management to select the best alternative by considering all positive and negative outcomes of all the alternatives. Decisions are taken after selecting alternative courses of action to achieve a predefined goal. It helps the manager to take rational decision
  7. Useful in setting the Standards for controlling: Planning set out standards for controlling, So planing provides basis for control. It is also important for maintaining discipline at working place of organization.
  8. Facilitates Coordination of all Activities: In every organization there is a need for a system of co-ordination. This is required to interconnect the various activities. Plans, direction, department and various people in the organization. There is a need for co-ordination though the organization.
  9. Facilitates other management functions: Every organization functions towards achieving goal and  set target at planning stage. Unless the Plan is Ready, other Management functions such as organization, staffing etc. cannot be undertaken thus, planning facilitates all other functions of management.
  10. Promotes Innovation ideas: Planning facilitates innovation in the organization. Now-a-days, it is essential to generate new ideas, new product, new technology, etc. innovation helps to face competition in today’s competitive business world.

Q. Define the organizing and explain its importance

  1. Organization is next to planning. It is a process of identifying and bringing all the resources that is men, material, machine, money and methods to use them properly for achieving the goals and objectives. In simple words, organizing means arranging the way and means for execution of business plans.
  2. Organizing involves determination and grouping of the activities, Designing organization structures, Defining the roles and responsibilities of the departments and of the job positions within the departments. Defining relationships between different departments
  3. Koontz AND O’Donnell: “Organization involves the grouping of activities necessary to accomplish goals and plans, the assignment of these activities to appropriate departments and the provision of authority, delegation and co-ordination.”

Importance of Organizing:

  1. Facilitates administration as well as operation: Organizing process leads to identify and to group the activities. Organization facilities administration as well as operation of the organization. Due to proper grouping of the tasks and the employees, there is increase in production and reduction in wastage.
  2. Brings Specialization: Organizational structure is a network of relationship in which the work is divided into units and departments. This division of work helps in bringing specialization in various activities that leads to increase in organizational efficiency.
  3. Defines the Jobs Properly: Organizational structure helps in putting right men on right job which can be done by selecting people for various departments according to their qualification, skill and  experience. This is helping in defining the jobs properly which clarifies the role of every person.
  4. Clarifies Authority and Responsibility: Organizational structure defines the role to every manager. This can be done by delegating the authority to every manager and clarifying the way he has to exercise those powers. So that misuse of powers does not take place. Well defined jobs and responsibilities helps in bringing efficiency into managers working. This helps in increasing productivity.
  5. Establishes Coordination: In every organization there is a need for a system of co-ordination. This is required to interconnect the various activities. Plans, direction, department and various people in the organization. Coordination helps in smooth functioning of organizational activities.
  6. Helps for Effective Administration: This function determines different positions, departments, activities and the roles are clearly  structured. The utmost care is taken while placing right person in right job with right authorities and responsibilities. It is achieved through division of work and delegation of authorities. This all leads to efficient and effective administration.
  7. Helpful for Growth and Diversification: The growth of every organization depends on its smooth and efficient functioning. Clearly  defined roles and responsibilities, coordination among all levels of management personnel and use of appropriate control techniques bring efficiency at work place and organization grows well. This is possible only when the organization structure is well- defined.
  8. Creates Sense of Security: Organizational structure clarifies the job positions. It clearly states the duties and responsibilities of everyone. Everyone can work accordingly. Clarity in jobs and powers helps in increasing mental satisfaction and it creates sense of security among the employees.
  9. Scope for Innovation:  Organizing facilitates innovation in the organization. Now-a-days, it is essential to generate new ideas, new product, new technology, etc. innovation helps to face competition in today’s competitive business world. The scope for INNOVATION into adopting new changes in methods of work is possible only through a set of organizational structure.
  10. Helps in Optimum Utilization of Resources: This function provides different jobs to different employee according to the job specification. It facilitates optimum use of resources in the organization. There is efficient use of various resources such as men, money, material, etc. optimum use of resources brings good result to the organization.

Q. What is staffing and explain its importance

  1. Staffing function starts with finding out the number and types of person required for an organization. It includes manpower or human resource planning. Staffing involves recruitment, selection, induction and positioning the people in the organization.
  2. Recruiting (Selecting) Right man for the right job at right time is the principle of staffing. Training, retraining, development, mentoring and counseling are important aspects of staffing. It also includes performance appraisals and designing and administering the motivational packages.

Importance of Staffing:

  1. Effective Managerial Function: Staffing is the key to effective Performance of other functions of management such as Planning, Organizing, Directing and Controlling. The outcome of other functions is based on the effectiveness of staffing.
  2. Leads to Effective Utilization of Human Resources: Staffing  function leads to effective utilization of human resources i.e. workforce. Proper care is taken at every stage such AS recruitment, selection, placement, remuneration, training, development etc. Optimum utilization of Human resources results in improvement in performances and progress of organization.
  3. Builds healthy Relationship: This function is helpful in building healthy relationships among all levels of employees in the organization. There is a need for co-ordination though the organization.
  4. Helps Human Resource Development: Skilled and experienced employee is an asset of a business organization. Staffing helps to inculcate the organizational culture into employees. It trains and  develops the existing workforce. It also ensures smooth functioning of all the managerial aspects of the business organization.
  5. Helps in Effective use of Technology & Other Resources:
    Trained employees can use the latest technology, capital, material and methods of work effectively.  It is helpful in improving standard of work and productivity in terms of quality and quantity.
  6. Improves Efficiency: Training and development programmes are offered to the employees for self-development and organizational  development. Through proper selection, the organization gets quality employees and through proper training the performance level of the employees can be improved.7) Long Term Effect:
    QUALIFIED, efficient AND skillful workforce is ALWAYS AN ASSET of the ORGANIZATION. Proper selection of employees LEADS the ORGANIZATION TOWARDS the PATH of success. NATURALLY, long term positive effects CAN be observed on the efficiency of AN ORGANIZATION.
    8) ESSENTIAL Contribution:
    STAFFING ensures the continuity AND growth of the ORGANIZATION through development of employees. Selection is BASED on the ABILITY of the prospective employees. So THAT ORGANIZATION CAN meet the future CHALLEnges wisely. Therefore, the contribution of the STAFF in their future roles is TAKEN into ACCOUNT in STAFFING function.
    9) Provides Job SATISFACTION:
    Employees CAN be MOTIVATED through FINANCIAL AND NON-FINANCIAL incentives. ADEQUATE REMUNERATION INCREASES job SATISFACTION AND MORALE of the employees. TRAINING AND development PROGRAMMES, FAIR REMUNERATION AND job security ARE the FACTORS which ARE IMPORTANT in providing job SATISFACTION.
    10) MAINTAINS HARMONY:
    In STAFFING process, INDIVIDUALS ARE recruited, selected AND PLACED AS well AS their PERFORMANCE is REGULARLY APPRAISED AND promotions ARE given on the BASIS of merit. For this, CRITERIA is MADE AND duly COMMUNICATED to concerned employees. It brings PEACE AND HARMONY in ORGANIZATION.
  1. Distinguish between the following (Any 3)      [15]
  1. Sole trading concern and Partnership Firm.
  2. Road transport and Rail Transport
  3. State commission and National Commission.
  4. Planning and Staffing.
  5. Joint Hindu family business and Co – operative Society.
  6. Joint Hindu Family firm and Joint Stock Company.
  7. Fire Insurance and Marine insurance.
  8. Partnership firm and Co-operative Society.
  9. Organising and Staffing.
  10. Sole trading concern and Partnership Firm.
  11. Savings account and Fixed Deposit Account.
  12. District Forum and National Commission.
  13. Private Company and Public Company
  14. Planning and Organizing.
  15. SoleTrading Concern  Partnership Firm.
  16. District Forum  National Commission
  17. Organising  & Directing
  18. Co – Operative Society Joint Hindu Family Firm.
  19. Co – operative Society and Joint Stock Company
  20. District Forum and State Commission
  21. Co – ordinating and Controlling.
  22. Private Company and Public company
  23. Partnership and Joint Stock Company.
  24. Current Account and Fixed Deposit Account.
  25. Road Transport and Water Transport.
  26. Planning and Controlling.
  1.  Write short notes on the following (Any 3)    [15]
  1. Merits of Joint Hindu Family Business.
  2. Advantages of outsourcing.
  3. Social responsibilities of business organisations towards consumers.
  4. Nature of principles of management.
  5. Features of Co – operative Society.
  6. Advantages of E – business.
  7. Responsibilities of Business organization towards government.
  8. Importance of consumer protection.
  9. Importance of coordination.
  10. Merits of Co – operative Society.
  11. Features of a Joint Stock Company.
  12. Merits and limitations of air transport.
  13. Elements of business ethics.
  14. Disadvantages of e – business.
  15. Any ‘five’ principles of managment.
  16. Types of partners.
  17. Importance of staffing.
  18. Role of Transport
  19. Advantages of outsourcing.
  20. Significance of Principles of management.
  21. Features of Sole trading Concern.
  22. Importance of Directing.
  23. Functions of a Warehouse.
  24. Features of Joint Hindu Family Business.
  25. ‘e’ Business.
  26. Significance of Principles of Management.
  27. Rights of Consumers.
  1. 4. State the reasons whether the following statements are true or false. (Any3)[15]
  1. The main purpose of a co-operative organisation is to earn profit.
  2. Principles of utmost good faith is only applicable to life insurance contract.
  3. The consumer protection act was passed in the interest of the consumers.
  4. According to F. W. Taylor, there should be scientific selection and training of employees.
  5. Division of work is not required in organising a function.
  6. In a partnership firm the liability of partners is unlimited.
  7. Business organisation do not have various types of social responsibilities.
  8. Lok Adalat can rightly be described as “people’s court”.
  9. According to Taylor, there should be scientific selection and training of employes.
  10. Planning has no vital importance in the process of management.
  11. Maximum number of members in a Joint Hindu Family Firm is 20.
  12. E- business allows you to work across the globe in any field.
  13. Business should not disclose their records to investors.
  14. Consumer being the king of the market does not have any responsibilities.
  15. Principles of Management improves the efficiency of employees.
  16. Maximisation of profit is the object of a co-operative society.
  17. e- business means using the internet to connect people and processes.
  18. Business organisations have various types of social responsibilities.
  19. Consumer Protection Act is not a blessing for the consumers.
  20. Principles of management improve the efficiency of employees.
  21. Co – operative society differs from other forms of commercial organisations.
  22. E – business allow you to work across the globe in any field.
  23. Business organisation does not have various types of social responsibilities.
  24. ‘Lok Adalat’ is one of the effective ways to resolve consumer problems.
  25. Principles of management are rigid.
  26. The ownership and management is not separated in a Joint Stock Company.
  27. Reserve Bank of India cannot accept deposits from public.
  28. Post offices provide money remittance services.
  29. Management should avoid workers’ participation while making decisions.
  30. The Consumer Protection Act was passed in the interests of the sellers.
  1. 5. Write answers of the following. (Any 2)   [10]
  1. State the nature of directing a function.
  2. State the steps involved in online transactions.
  3. State ‘any five’ cases of social responsibility of business organisation.
  4. State the characteristics of an entrepreneur.
  5. State the various types of warehouses?
  6. State the advantages of outsourcing?
  7. State the importance / significance of the principles of management.
  8. Explain characteristics of Entrepreneurship.
  9. State the importance of consumer protection.
  10. State any five principles of management.
  11. State the factors motivating the entrepreneur.
  12. State the social responsibilities of a business towards consumers.
  13. State the characteristics of Entrepreneurship.
  14. State the importance of controlling.
  15. State the right of consumers.
  16. State the responsibilities of business towards employees.
  17. State the functions of an Entrepreneur.
  18. State the importance of planning.
  19. State the rights of consumers.
  20. State the features of sole trading concern.
  21. State the social responsibilities of business organization towards government.
  22. State the functions of an Entrepreneur.
  1. 6.                                                                               [10]
  1. Define a ‘Joint Stock company’. Explain its features.
  2. Define Joint Hindu Family Firm. Explain the features of a Joint Hindu Family Firm.
  3. Define commercial bank? Explain its functions.
  4. Define Fire Insurance. Explain the various types of fire Insurance Policy.
  5. Define a partnershp firm. Explain its merits and demerits.
  6. Define Life Insurance. Explain the types of Life Insurance Policies.
  7. Define Co – operative Society. Explain merits and demerits of Co – operative Society.

Form of Business Organization

SOLE TRADING CONCERN

What is sole trading? Explain its features / define the sole trading concern, explain the features of sole trading

Ans.:

Meaning:-

  • Sole trading concern is the oldest form of commercial organization.
  • Sole means one person. So a sole trading concern is an organization where all business activities are controlled and managed by one man. He is also solely responsible for the debt and risk of the firm.
  • Sole proprietorship is a simple and oldest form of business organization.
  • Its formation does not require any complicated legal provision like registration etc. It is a small-scale work, as it is owned and controlled by one person, and operated for his profit. It is also known as “sole ownership” and “single proprietorship”.

 DEFINITION:-

Following are some important definition of sole proprietorship:

According to D.W.T. Staffod

“It is the simplest form of business organization, which is owned and controlled by one man.”

According to G. Baker

“Sole proprietorship is a business operated by one person to earn profit.”

According to Michael Greener:

“A sole trader is a person who trades on his own account rather than in partnership or as a member of a company.”

CHARACTERISTICS/ features of sole trading concern or sole proprietorship

Following are the main characteristics features of sole proprietorship or sole trading concern:

  1. Single ownership: – The sole trader is a single owner of the organization. The sole trader owns and invests all the assets, capital and property on his own in the business. The sole trading concern is often referred as one ‘one-man show’.
  2. Business Secrecy: – A sole trader can easily maintain the secret of his business. The sole trader does not need to publish his account and records to anybody. Competitors cannot easily get business secrets and information of the sole trader’s activities.
  3. Minimum Government Control: – Sole trading concern is less affected by government control. This is because, there are almost no legal formalities are required to start or close down a business.
  4. Flexibility in operation: – Sole trader enjoys maximum flexibility. He can take right decision at the right time depending up on the situation. At any time. He need not have to consult with anyone because he is a single owner of his business.
  5. Unlimited liability: – The liability of sole trader is unlimited. This means he alone responsible for all the risks and debts of the organization.
  6. No sharing of profit and loss: -In sole trading concern the sole trader is single owner of the organization thus, the sole trader enjoys all the profits of the business and similarly he bears all the losses, risks and debts involved in the business.
  7. Better relation with customers: – In sole trading concern is only one person who directly deals with the customer. He is a manager also. The direct dealing with the customer helps to create better relationship with the customer.

Q.2. Define the sole trading concern and explain the merits and demerits/ what is sole trading concern? Explain its advantages and disadvantages.

Meaning:-

  • Sole trading concern is the oldest form of commercial organization.
  • Sole means one person. So a sole trading concern is an organization where all business activities are controlled and managed by one man. He is also solely responsible for the debt and risk of the firm.
  • Sole proprietorship is a simple and oldest form of business organization.
  • Its formation does not require any complicated legal provision like registration etc. It is a small-scale work, as it is owned and controlled by one person, and operated for his profit. It is also known as “sole ownership” and “single proprietorship”.

DEFINITION:-

According to Michael Greener:

“A sole trader is a person who trades on his own account rather than in partnership or as a member of a company.”

Merits of sole trading concern are:

  1. Easy formation: – A sole trading concern is very easy to start and to conduct its activities. There are least formalities in the formation of a sole trading concern. A sole trader may also close down the business as per his own will.
  2. Business secrecy: – A sole trader can easily maintain the secrecy of his business. The sole trader does not need to publish his account and records to anybody. Competitors cannot easily get business secrets and information of the sole trader’s activities.
  3. Flexibility in operation: – Sole trader enjoys maximum flexibility. He can take right decision at the right time depending upon the situation. At any time, he need not have to consult with anyone because he is a single owner of his business.
  4. Minimum Government Control: – Sole trading concern is less affected by government control. This is because, there are almost no legal formalities are required to start or close down a business.
  5. Complete control: – The sole trader can have complete control over business operations. He can take his own decision regarding the business activities. If there are any problems, he can immediately take corrective measure. And he does not need to consult with anyone.
  6. Better relation with customers: – In sole trading concern is only one person who directly deals with the customer. He is a manager of the organization. The direct dealing with the customer helps to create better relationship with the customer.
  7. Quick decision: -the sole trader can take quick decision of business activities because, of single ownership. He does not need consult with anybody before taking decision. And such quick decisions often bring good results.
  8. Efficiency: – In sole trading concern whole capital is invest by the owner. He will responsible for management and control. So, for good management and control, earn more profit and better performance of his business. He performs his duty efficiently and effectively.
  9. Limited tax burden: – The sole trader enjoys the limited tax burden. Tax rates under income tax Act are lower for sole trading concerns as compared to other form of organization. And secondly the sole trader may not disclose the entire business income to the Tax Department.

Demerits / disadvantages of sole trading concern

  1. Limited managerial ability: – Normally, a sole trader manages the business on his own. The sole trader may not have all the abilities or skills to manage all by himself. Now a day, there is a need for specialized managerial staff. The sole trader may not able to appoint a skilled managers or staffs this is because of his limited capital.
  2. Lake of continuity: – The sole trading business lacks continuity. If the sole trader cannot run his business due to ill health or if he dies, the business comes to an end. This is because the successors may not be interested to run the business or they may lack the necessary business skills.
  3. Limited capital: – The main drawback of sole trading concern is the limitation of capital. The sole trader can manage limited amount of capital from his own savings. He may also get some funds from his friends and relatives, but still he cannot expand his business.
  4. Unlimited liability: – The liability of sole trader is unlimited. This means he alone responsible for all the risks and debts of the organization. In the eyes of law, there is no different between the private property and business property of the sole trader.
  5. Limited bargaining power: -the sole trader often lacks bargaining power because, he purchases in small quantity from the wholesalers; secondly, he may not have the skill of bargaining. Thus, he may not get competitive terms (discounts, credit period, etc.)From his suppliers.
  6. Lack of specialization: – In sole trading concern the sole trader is the owner, manager, supervisor and controller of his business. He does not specialize in all areas. And he does not get the services of specialists because of limited scale of operation.
  7. Poor quality of decision making: – The sole trader may make poor decisions of business activities because he may lack of managerial skills. And also he may not able to consult experts on consultants due to limited capital.
  8. Limited expansion: – The Sole trader may find difficult to expand the business. This is because of limitation of capital and lack of managerial skills that are necessary for the expanding organizations. Therefore, a sole trader may start the business in local areas on a small scale.
  9. Lack of Economic scale: – A sole trader may not achieve the economic scale. Because sole trader may purchase and sell in small quantities. And thus, he does not get the benefits of large economic scale.

Q.3.State with Reasons whether the following statements are True or False:

PARTNERSHIP FIRM

Define the Partnership firm, and explain its features/ what is Partnership Firm? Explain its characteristic.

Ans.:

Meaning:

  • A partnership firm is a form of business organization in which two or more persons contributes their capital and services, and shares the profits and losses of the business equally called partnership firm.
  • The owners are called partners and the organization is called a firm. This form of organization is governed by the Indian Partnership Act 1932.

DEFINITION

According to Section 4 of Partnership Act, 1932

“Partnership is the relation between persons who have agreed to share the profits of a Business carried on by all or any of them acting for all.”

Features /Characteristic of partnership firm are:

  1. Agreement: – Agreement is the base of partnership business. The business of partnership firm is conducted as per the rule and regulations of agreement. This agreement may be oral or written. The written agreement always advisable. If there is no written agreement, there may be dispute among the partner. The written agreement of partnership is called partnership deed.
  2. Lawful business: – A partnership can be formed only for the purpose of carrying on business activities. The partnership firm cannot form for the purpose of carrying on illegal business activities like theft or kidnapping, smuggling, buy or sale of drugs etc.
  3. Sharing of profits and losses: – Earning profit is a primary objective of the partnership firm. The profits and losses are shared by all the partners in an agreed proportion. If there is no fixed proportion then profits or losses are shared in equal proportion.
  4. Number of partners: – To form a partnership at least two persons are required. The maximum number of partners required for banking business is ten and for non-banking or general business is twenty.
  5. Joint ownership: – Every partner of a firm is joint owners of the property of partnership firm. The partners should use the property, assets of the firm for business purpose not for their personal use.
  6. Unlimited liability: – The liability of partners in a partnership fir is unlimited. This means, In case the assets of the firm are insufficient to pay the debts in full, the personal property of each partner can be attached to pay the creditors of the firm.
  7. Dissolution: – The partnership can be dissolved at any time, if the partners agree to do so. It automatically gets dissolved in case of death, insolvency of partners. Otherwise it can be dissolved by any partner at his will by giving notice to other partners.
  8. Joint management: – All partners of partnership firm can take active part in the management. It means partnership has joint management. Partners are expected to work as team and bring growth to business. The partners can apply the principle of division of work and specialization.
  9. Mutual Trust: It means the trust and confidence of partners in each other. Each partner has to work in the best interest of his firm. He must get full confidence & good faith of his partners. He should not make any secret profit & must disclose all the information which is directly or indirectly related to the business.

Q.2 what is Partnership firm? Explain its Merits and Demerits/ define the Partnership firm, explain its Advantages and Disadvantages.

Ans.:

Meaning:

  • A partnership firm is a form of business organization in which two or more persons contributes their capital and services, and shares the profits and losses of the business equally called partnership firm.
  • The owners are called partners and the organization is called a firm. This form of organization is governed by the Indian Partnership Act 1932.

DEFINITION

According to Section 4 of Partnership Act, 1932

“Partnership is the relation between persons who have agreed to share the profits of a Business carried on by all or any of them acting for all.”

Merits of partnership firm

  1. Easy formation: -The formation of a Partnership is quite easy, less expensive and does not involve any legal formalities. An oral or written agreement is sufficient to start partnership.
  2. Business Secrecy: -Business Secrecy can be maintained because the annual accounts are not required to be published. Business secrets are known to partners only. Hence, there is a chance of maintaining maximum business secrecy.
  3. Limited Government control: -Partnership is based on mutual trust, confidence and co-operation, registration is not compulsory. Therefore, interference from government in partnership business is limited.
  4. Flexibility in operation: -The partnership firm enjoys flexibility in its operations. The partnership firm is free from government control and new changes can be easily introduced in the business.
  5. Easy dissolution: – the dissolution of partnership is easy and simple. Any partners can dissolve the partnership by giving fourteen days notice in writing to all other partners. There are no legal formalities and heavy expenditure involved in dissolution process.
  6. Economic scale: – The partnership business is carried on a large scale as compare to sole trading firms. Thus, the partnership firms can get the benefits of economic of scale such as higher discounts and good price due to bulk (large) purchase.
  7. Quick and Quality decision: – The partners can take quick decisions because they are few in number. The decisions are taken after proper discussion among the partners. The quality of decision may better as compare to sole trading concern.
  8. Personal contact: – The partnership firm, business can maintain personal contacts with customers and supply them goods and services as per their needs and requirements. This helps customer satisfaction and the firm earns goodwill in the market similarly good relation can be maintained with employees.
  9. Spreading of risks: – In partnership firm, business risk is spread among all the partners of the firm. In case of loss every partners will have to bear only part of loss not full. Division of risk attracts more members towards partnership.

Demerits of partnership firm

  1. Unlimited liability: – The liability of partners in a partnership fir is unlimited. This means, In case the assets of the firm are insufficient to pay the debts in full, the personal property of each partner can be attached to pay the creditors of the firm.
  2. Limited Capital:-Since the total number of partners cannot exceed 20, the capital to be raised is always limited. It may not be possible to start a very large business in Partnership firm.
  3. Difficult in transfer of share: – if you are a partner in any firm you cannot transfer you share of interest to outsiders without the permission of other partners. Often the other partners do not allow for such transfer of interest to an outside party.
  4. Dispute: – There are often dispute between the partners. Because some partners may be selfish. Some may make secret profits. Some may not show interest in the working of a firm.
  5. Limited membership: – There is a limit to the number of partners in a partnership firm. Minimum two persons are require for partnership firm. The maximum number of partners required for banking business is ten and for non-banking or general business is twenty.
  6. Lack of Stability: -A partnership firm lacks stability. The life of partnership is affected by events like retirement, death and insolvency of the partners.
  7. Difficulty in admitting new partner: -There is often a difficulty in admitting new partners. This is because, some of the partners may object to such admission. Secondly, because of the restriction on the maximum number of partners, imposed by the Indian partnership Act, 1932.
  8. Limited business operation: – A partnership may find difficulty in expanding and diversifying its business, Because of limitation of capital and managerial skills. But Joint Stock Company not Have such problem.
  9. Lack of public confidence: – Public does not have confidence in the partnership. This is because partners do not publish their books of accounts and business records. Partnership firm is not strictly controlled by government.

Q.3 Explain the Types of Partners/ what are the types of partnership firm

In a partnership firm you can find different types of partners. Some may actively participate in the business or some may not actively participate. Also there are different kinds of partners who may not contribute capital in business. Let us learn more about them.

Types of partners are as follows

  1. Active partner: -The partners who actively participate in the day-to-day operations of the business are known as active partner or working partners. They contribute capital and are also entitled to share profits of the business.
  2. Dormant partners: – Those partners who do not participate in the day-to-day activities of the partnership firm are known as sleeping partners. They only contribute capital and share the profits or bear the losses of the firm.
  3. Nominal partners: – these partners only allow the firm to use their name as a partner. They do not have any real interest in the business of the firm. The do not invest any capital. They do not take part in business activities of the firm.
  4. Minor as a partner: – A minor is a person who has not yet attained the age of 18. A minor can only share the profit of the business. In case of loss his liability is limited.
  5. Partner by estoppels: – He is not a partner of the firm. But he falsely represents or acting himself as a partner of the firm. If he is partners of the firm, because of his behavior or action, outside parties consider him as a partner of the firm. He is he does not take part in working of the firm.
  6. Partner by holding out: – A partner by holding out is not a partner of the firm. He does not contribute the capital nor share profits in the business. He does not take part in the working of the firm. The third parties consider him as a partner of the firm.
  7. Partner in profit only: -These types of partner shares only profit of the firm not bear the losses of the firm. He may not take active part in the business. His liability is unlimited like other partners.
  8. Secret partner: – A secret partner does not want to be known as a partner to the third parties. He contributes capital in the business, but may not take part in the working of the firm. He shares profit of the firm.

What is joint Hindu family business?

  • Joint Hindu Family Business is a special form of business organization which is found only in India.
  • It is the result of Hindu Undivided family (HUF) system followed in India It comes into existence by the operation of Hindu law. This because is governed by Hindu Succession Act, 1956.
  • It is a form of business organization in which all the members of Joint Hindu family run business under the control and guidance of head of the family called ‘Karta’ he is the senior most person in the family. Other members of the family are known as ‘Coparceners.’

Features of the Joint Hindu Family firm

  1. Creation: – Joint Hindu family business is not created by any agreement or contract. It is created by operation of Hindu Law. This business is governed by Hindu Succession Act, 1956.
  2. Membership: – Membership in joint Hindu family business is not fixed. It depends upon number of births and deaths in the family. The membership is obtained by birth or adoption. Outsiders are not allowed to enter in joint Hindu family business.
  3. Joint ownership: – In joint hindu family business there are is joint ownership. All the business properties are owned by all the members of the family jointly.
  4. Sharing of profit and loss: – There is sharing of profit and loss in joint hindu family business. All the profits and losses of the business are jointly shared by all the family members. The ratio of profit and loss in not mentioned in Hindu Succession Act, 1956. The ratio changes according to births and deaths in the family.
  5. Limited Government control: – The government control on joint hindu family firm is limited. It is not strictly controlled by government. The registration of joint hindu family firm is not compulsory. Formation or dissolution of joint hindu family firm does not involve complicated legal formalities.
  6. Unlimited liability of Karta: – The liability of Karta is unlimited. The liability of Karta is unlimited because he has total authority to manage the business and the Law does not make difference between business property and personal property of Karta.
  7. Liability of Co-parceners:– The other members of joint hindu family are known as ‘Co-parceners’. The liability of co-parceners is limited. It is limited to business only. It means when the business liabilities are more than business assets then co-parceners need not sell their personal property to pay the business liabilities.
  8. Quick decision making: – Success of business depends upon quick decision making. Karta can take quick decision whenever is required. While taking business decisions Karta need not consult with co-parceners.
  9. Continuity and stability: – Joint Hindu family business enjoys relatively long, stable and continuous life. This business is carried on by generation to generation. The continuity of the business is not affected by death, insolvency or insanity of Karta or any co-parceners. If karta dies then other senior person of the family becomes the Karta.

Merits of Joint Hindu Family Business

  1. Easy formation: – formation of joint Hindu Family Business is very easy. There are no complicated legal formalities involved to start this business. It is formed and operated by operation of Hindu Law.
  2. Flexibility: – Flexibility means capacity of business to adjust as per changing situations. Joint Hindu Family Business enjoys maximum flexibility. If Karta wants to make any changes in the business then he can do so easily. He can start, change or close his business any time, without much legal formalities.
  3. Complete business secrecy: – The success of business depends upon secrecy. Joint Hindu Family Business can maintain complete business secrecy. It is not necessary for Karta to publish his books of accounts and business records. The competitors cannot get business secrets of joint Hindu Family Business easily.
  4. Quick decision making: – Success of business depends upon quick decision making. Karta can take quick decision whenever is required. While taking business decisions Karta need not consult with co-parceners.
  5. Continuity and stability: – Joint Hindu family business enjoys relatively long, stable and continuous life. This business is carried on by generation to generation. The continuity of the business is not affected by death, insolvency or insanity of Karta or any co-parceners. If karta dies then other senior person of the family becomes the Karta.
  6. Limited Government control: – The government control on joint hindu family firm is limited. It is not strictly controlled by government. The registration of joint hindu family firm is not compulsory. Formation or dissolution of joint hindu family firm does not involve complicated legal formalities.
  7. Membership: – Membership in joint Hindu family business is not fixed. It depends upon number of births and deaths in the family. The membership is obtained by birth or adoption. Outsiders are not allowed to enter in joint Hindu family business.
  8. Good relation with Employees: – Joint Hindu Family Business has few employees. The Karta can maintain personal relations with the employees. The direct effort- reward relationship motivates the employees to provide best possible services.

Demerits of Joint Hindu Family business

  1. Limited capital: – This business suffers from limited capital. The capital for business is contributed by using family savings, borrowing from relatives and banks etc. Due to this the capital raising capacity of the business is limited.
  2. Limited managerial skills: – This business is managed mainly by family members. The Karta and co-parceners may not have professional skills of business management. Due to limited capital they cannot appoint specialized staff. This result into inefficient management.
  3. Limited expansion: – Expansion means progress of business. Expansion of any business depends on capital and managerial skill. Due to limited capital and limited managerial skill Karta cannot expand his business beyond particular limit.
  4. Unlimited liability of Karta: – The liability of Karta is unlimited. The liability of Karta is unlimited because he has total authority to manage the business and the Law does not make difference between business property and personal property of Karta.
  5. Lacks economic scale: – These types of business may not be able to obtain economics of scale. This is mainly because of limited scale of operations. Bulk buying and selling is normally not possible.
  6. Poor quality decision: – There is often risk of poor decisions. This is because, joint Hindu Family Business firm may not appoint specialized experts.
  7. Family dispute: – There may be dispute in family which may affect or ruin the joint family business. The co-parceners may demand partition of business. Thus, continuity of business may affect.
  8. Lacks Legal Status:Any organization gets separate legal status only after its registration with appropriate authorities. In case of Joint Hindu Family firm registration is not at all compulsory; hence it does not enjoy any legal status
  9. Problem in distribution in profit: There may be a problem in distribution of profits to the co-parceners. Some co-parceners may demand higher share due to their higher effort. However, such problems may be sorted out by kata.

Joint Stock Company

Meaning:-

A joint stock company is an incorporated association of large number of members which has legal status, continuous and stable life, common seal, common capital, limited liability and transferable shares.

Definition:

Prof. L. H. Haney – “A Joint Stock Company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership.”

Section 3(1) of Companies Act, 1956 defines a Joint Stock Company as under-

“A company means a company formed and registered under this Act or an existing company. An existing company means a company formed and registered under any of the provisions companies’ laws.”

Features of Joint Stock Company

  1. Incorporated Association: – Incorporated means registration. As per Companies Act 1956, registration of a joint stock company is compulsory. Registration gives birth to the company.
  2. Artificial legal person: – Joint Stock company is an artificial person created by law. A company is formed after completing necessary legal formalities and not by natural birth. A company has no physical existence like individuals (human body). But it has legal existence. It is considered as a person (individual) because if performs all the business activities (appointment of employees entering into contracts etc.) just like normal individual.
  3. Limited liability: – The liability of the members or shareholders is limited to the extent of the value of shares held or the amount guaranteed by them. The shareholders are not personally liable for the debts of a company beyond that limit.
  4. Transferability of shares: – The shares of a public limited company are freely transferable and can be purchased and sold through the stock exchanges. A shareholder of a public limited company can transfer his shares without the consent of other shareholders. But there are certain restrictions on transferability of shares in case of private limited company.
  5. Common seal: – Due to lack of physical existence company can not sign like human being. Hence, on every important document a rubber stamp having the name of company is put. This rubber stamp is called as Common seal. It is acts as signature of the company. After putting the common seal two director must sign as witness. This common seal is kept in the safe custody of Board of Directors.
  6. Large membership: – The joint stock company enjoys large membership. In case of private company minimum members should be two and maximum fifty. While in a public company minimum member should be seven but there is no restriction on the maximum members.
  7. Separation of Ownership and Management: – The shareholders are the owners of the company. They are different group of people who are widely scattered throughout the country and abroad. The shareholders elect their representatives called directors to manage the company. Thus, the company is managed by directors rather than the shareholders. This results in separation of ownership from management.
  8. Maximum government control: – Government control on Joint Stock Company is maximum. It is strictly controlled by government. Formation and dissolution of Joint Stock Company involved many complicated and time consuming legal formalities. Government control on company is maximum because a joint stock company uses others money to start and run the business.
  9. Perpetual succession: – The Company enjoys a continuous existence. Its existence is not affected by death, lunacy or insolvency of its shareholders or directors as the case in partnership or sole proprietorship. The company can only be dissolved by the operation of law.
  10. Voluntary association: – Joint Stock Company is a voluntary organization. Voluntary means without any compulsion. People come together, raise capital and start joint stock Company there is no compulsion on them. There is no different among members on the basis of cast, religion etc.
  11. Complicated formation: – Formation of Joint Stock Company is difficult, complicated and time consuming. It involves many legal formalities which are expensive and time consuming. It requires preparation and submission of various documents like Memorandum of Association, Articles of Association etc.

Merits of Joint Stock Company

  1. Large capital: – As there is no limits on maximum membership. Company can raise/ collect huge capital. Large number of investors invests in Joint Stock Company as there is limited liability, and free transferability of shares.
  2. Large membership: – The joint stock company enjoys large membership. In case of private company minimum members should be two and maximum fifty. While in a public company minimum member should be seven but there is no restriction on the maximum members.
  3. Limited liability: – The liability of the members or shareholders is limited to the extent of the value of shares held or the amount guaranteed by them. The shareholders are not personally liable for the debts of a company beyond that limit.
  4. Transferability of shares: – The shares of a public limited company are freely transferable and can be purchased and sold through the stock exchanges. A shareholder of a public limited company can transfer his shares without the consent of other shareholders. But there are certain restrictions on transferability of shares in case of private limited company.
  5. Perpetual succession: – The Company enjoys a continuous existence. Its existence is not affected by death, lunacy or insolvency of its shareholders or directors as the case in partnership or sole proprietorship. The company can only be dissolved by the operation of law.
  6. Large economic scale: – It means the benefits enjoyed by organization due to large-scale activities/operations. A company with large capital can conduct large scale buying, selling, production, distribution etc. such large-scale operations reduce cost of production and increase profitability of the company.
  7. Research development: – The joint stock company invests a lot of money on research and development for improved production process, improving quality of product, designing and innovating new products etc.
  8. Efficiency: – Joint Stock Company operates with highest efficiency. They get higher returns at lower costs. Due to, latest technology, research and development and training to employees.
  9. Expansion of business: – There is a good scope for expansion and diversification of business activities in Joint Stock Company. The company with large capital and professional management may expand its existing activities or enter into new field of business. This brings growth and prosperity for company.
  10. Benefits to Government: – Government is also benefited by Joint Stock Company. It gets high amount of revenue from the company in the form of taxes and duties. Such amount of taxes and duties is utilized by the government for the welfare of the poor people and national development.

Demerits of Joint Stock Company

  1. Complicated formation: – Formation of Joint Stock Company is difficult, complicated and time consuming. It involves many legal formalities which are expensive and time consuming. It requires preparation and submission of various documents like Memorandum of Association, Articles of Association etc.
  2. Lack of flexibility: – Flexibility means capacity of business to adjust as per changing situations. Joint Stock Company lacks flexibility. Changes as per business requirements are difficult, expensive and time consuming.
  3. Lack of business secrecy: – The success of business depends upon secrecy. Joint Stock Company can not maintain business secrecy. The company uses others money to run the business. Hence the company has to disclose all the books of accounts and business records. The competitors can get the business secrets of company easily.
  4. Lack of personal contact with customer: – Joint Stock Company can not maintain personal contact with customers due to its large scale of operations. Their customers are spread over wide area. It operations and its business activities on national and international level.
  5. Slow decisions making: – The profitability of business depends upon quick decisions and prompt actions. In Joint Stock Company it is not possible. In joint stock company decision taking procedure is very slow. Important decisions are required to be taken in company meetings only.
  6. Not suitable for all business: – A joint stock company as an organization is not suitable for all types of business. It is not suitable where personal services, quick and prompt actions are required.
  7. Maximum government control: – Government control on Joint Stock Company is maximum. It is strictly controlled by government. Formation and dissolution of Joint Stock Company involved many complicated and time consuming legal formalities. Government control on company is maximum because a joint stock company uses others money to start and run the business.
  8. Difficulty dissolution: – Like formation, dissolution of joint stock company is alos difficult, complicated and time consuming. It involves many legal formalities which are expensive and time consuming.
  9. Conflict of interest: – In the Joint Stock Company there is a conflict of interest between various groups like shareholders, workers, customers and management. Customer’s demands less price, workers, want more wages and shareholders want more dividend. The management cannot satisfy all of them at a time.

PRIVATE COMPANY

  • The company which is owned by private group of people is called as private company.
  • The name of private company ends with the word “Private Limited” or “Pvt. Ltd”.
  • The shares of private company are not issued to public and the shares are not transferable.
  • The shares of private company cannot be openly purchased and sold in the share market.
  • In private company minimum membership is two and maximum membership is fifty. A private company needs minimum two directors.
  • The minimum capital required for private company is Rs. One lakh.

PUBLIC COMPANY

  • The company which is owned by general public is called as public company.
  • The name of public company ends with the word “ends with the word “Limited” or “Ltd”.
  • The shares of public company are issued to public and the shares are freely transferable.
  • The shares of public company can be openly purchased and sold in the share market.
  • In public company minimum membership is seven and maximum membership is Unlimited.
  • The public company needs minimum three directors. And the minimum capital required for public company is Rs. 5 lakhs.

Co-operative society

Meaning:

  • A co-operative society is a voluntary association of economically and socially weaker sections of the society formed for the purpose of protecting and promoting their economic and social interest.
  • A co-operative society is a different form of business organization. It is service oriented and not profit oriented.

Definition:- (copy from text book)

Features of co-operative society

  1. Voluntary association: – A co-operative society is a voluntary association of members. There is no force on an individual to become a member of the co-operative society. Any person at any time can join the co-operative society and any person at any time can leave the co-operative society as per his own wish.
  2. Open membership: – In co-operative society membership is open to all. There are no restrictions on membership such as caste, colour, creed, religion etc. any person can become its member by paying membership fees or by purchasing the shares of the co-operative society.
  3. Large member ship: – A co-operative society is owned by large number of members. In Co-operative society minimum membership is ten and maximum membership is
  4. Democratic management: – A co-operative society is managed by the principle of democracy. The members of the co-operative society known as general body elect their representative known as Managing Committee to manage the working of the co-operative society.
  5. Equal voting rights:– The members of the co-operative society enjoys equal voting rights. The voting principle is “One member one vote” and not “One share one vote”.
  6. Separates legal status:– A co-operative society enjoys separate legal status. As per law a co-operative society and its members are separate from each other. They are not one and the same. The organization and owners are separate from each other.
  7. Limited liability:– The liability of share holders of a co-operative is limited. It is limited to the face value of the share held by shareholder. At the time of winding up of the co-operative society, shareholders have to pay only up to face value of shares and not more than that.
  8. Cash trading:– A co-operative society conducts its business activity on cash basis. It does not provide credits facilities. Due to this co-operative society remains free the burden of bad debts.
  9. Compulsory Incorporated:– Incorporated means registration. Registration of co-operative is compulsory. All co-operative societies are redistricted under the state Co-operative Societies Act, 1912.

Merits of co-operative society

  1. Easy formation: – Formation of a co-operative society is easily. It is less expensive and less time consuming. It does not involve many difficult and complicated legal formalities. Government charges nominal stamp duty and registration fees because it is formed by economically and socially weaker sections of the society.
  2. Open membership: – In co-operative society membership is open to all. There are no restrictions on membership such as caste, colour, creed, religion etc. any person can become its member by paying membership fees or by purchasing the shares of the co-operative society.
  3. Democratic management: – A co-operative society is managed by the principle of democracy. The members of the co-operative society known as general body elect their representative known as Managing Committee to manage the working of the co-operative society.
  4. Equal voting rights: – The members of the co-operative society enjoy equal voting rights. The voting principle is “One member one vote” and not “One share one vote”.
  5. Separates legal status:- A co-operative society enjoys separate legal status. As per law a co-operative society and its members are separate from each other. They are not one and the same. The organization and owners are separate from each other.
  6. Limited liability:– The liability of share holders of a co-operative is limited. It is limited to the face value of the share held by shareholder. At the time of winding up of the co-operative society, shareholders have to pay only up to face value of shares and not more than that.
  7. Continuity and stability:– A co-operative society enjoys long, stable and continuous life. This is because co-operative society enjoys separated legal status. Life of the co-operative society does not depend on the life of its members. Death, insolvency or insanity of a member of co-operative society does not affect the continuity of co-operative society.
  8. Cash trading: – A co-operative society conducts its business activity on cash basis. It does not provide credits facilities. Due to this co-operative society remains free the burden of bad debts.
  9. Reasonable price: – In co-operative society goods are sold at lower prices. It is not profits oriented organization. It is a service oriented. Sometimes it operates its business on no profit no loss basis. This helps poor people a lot.
  10. Economic of large scale:– The Co-operative society conducts business on large scale. If the scale of business is large it gives benefits like trade discount, cash discount etc. This helps Co-operative society to reduce or control its cost of operation.

Demerits of Co-operative society

  1. Limited capital: – Capital is the lifeblood and backbone of business. Capital raised by a co-operative society is limited business it is formed by economically and socially weaker sections of the society. Secondly, there is limit on maximum rate of dividend and the shares of the co-operative society are not freely transferable.
  2. Inefficient management: – Modern business is complex, complicated and competitive. It requires expert and specialized management. Due to limited capital the co-operative society cannot appoint qualified and expert persons to manage the business because they demand high.
  3. Limited expansion: – Expansion means progress of business. Expansion of business depends upon capital and managerial skill. Due to limited capital and inefficient management a co-operative society cannot expand its business beyond a particular limit.
  4. Lack of business secrecy:– Success of business depends upon secrecy. A co-operative society can not maintain complete business secrecy. It has to publish books of accounts and business records. So competitors can get business secrets of co-operative society.
  5. Delay in decision making:– success of business depends upon quick decisions and prompt actions. Quick decisions and prompt actions are not possible in co-operative society. In co-operative society decision taking procedure is very slow. All decisions are taken in co-operative societies meetings only. This is very time consuming procedure.
  6. Lack of motivation:-In co-operative society there is lack of motivation. Employees of the co-operative society do not get higher salary. They do not get incentives like traveling allowances, bones, commission etc. so the employees do not take active interest in the workings of the co-operative society. This affects the profitability of co-operative society.
  7. Cash trading:– a co-operative society conducts its business on cash basis. It does not provide credit facilities. However, in practices credit transactions are more popular and common. Due to this the co-operative society gets affected.
  8. Government control:– Co-operative society is controlled by government. It is controlled by Registrar of Co-operative societies. If co-operative wants to make any change then prior permission of government control affects the working of the co-operative society.
  9. Political interference:– All co-operative societies are controlled by government. Due to this the ruling party uses the co-operative society as a plateform for its party’s activities. Political parties interfere in the activities of the co-operative society and bring corruption. Due to this the real needy persons do not enjoys the benefits of co-operative societies.
  10. No transfer of shares:– The shares of co-operative societies are not freely transferable. The members of co-operative society can not sell or purchase their shares in the share market. Due to this people avoid to invest their money in co-operative societies.

Business services

  • The business services like banking service, insurance, transport, tourism, telecom etc. it play very important role in Indian economy.
  • The services are intangible that is we cannot see them, we cannot touch them and we can only feel them. The goods and services are not the same, generally goods are tangible i.e. we can see them and we can touch them but services are intangible

 Definition:

Philip Kotler defines as “services as any act or performance that any party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may not be tied to a physical product”.

Nature of business services

  1. Intangibility: The services are intangible in nature; it cannot be seen or touched. A customer can only experiences the benefits of the services. For example, the services of a teacher can only be experienced.
  1. Inseparability: Services cannot be separated from the services provider. For example a doctor must be present physically at the time of treatment of patient.
  1. Heterogeneity: – Services are heterogeneity in nature. Services are lack in homogeneity (same). For example different teachers may teach differently.
  1. Non-stocking:– Services are non-stocking in nature that is services are cannot be stored /stocked because services are perishable in nature. For example railway ticket.
  1. Non-transferable:– Business services are non-transferable in nature that is the Ownership cannot be transfer from services provider to the customers. For example, Hotel services.
  1. Participation of customer: – The Participation of customer is required to get the benefits of the services. For example, tourism and hotels

Types of Business Services

The following are the main types of business services:

Banking Services:

  1. Banks play very important role in financial markets. The primary functions of the bank are accepting deposits and lending money.
  2. The bank performs agency functions on behalf of its customers like collection of funds and transfer of funds to third party.
  3. Bank also perform utility functions such as debit cards, credits cards, locker facility , etc.

Insurance Services:

  • It helps to minimize the business risk such as loss by fire, loss by thief etc.
  • There are various types of insurance such as life Insurance, fire Insurance, marine Insurance, accident insurance etc.
  • Businessmen and others can insure (protect) against risks.

Transport Services:-

  • Transportation means transfer of goods from one place another.
  • It solves the problem of place difficulty.
  • Transport play very important role in the development of business, because only through the medium of transportation essential product/ goods and human resources are transfer from one place to another.
  • There are several modes of transport such as Road, Railway, Water, and air.

Warehousing:-

  • It means to storing materials, goods in a regular manner that creates Time Utility.
  • Warehousing play very importance role in modern business era/world.
  • Due to warehousing goods can be produce in large scale, and seasonal goods are made available throughout the years.

Communications:-

  • It facilitates transfer or exchange of information.
  • Communication is main aid (help) to trade.
  • Communication use for enquires for goods and services, placement and orders, obtaining feedback from customers etc.
  • There are various means of communication – Written and Oral.

 

BANKING

  • The term bank comes from the French word ‘Banco’ which means a bench.
  • A bank is a financial institution which deals with deposits and advances and other related services.
  • The Indian Banking Regulation Act, 1949 defines “accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdraw able by cheque, draft order or otherwise.

Types of Banks

  1. Central Bank: – The central bank is the apex (top) financial institution in the country. In India, the central bank is Reserve Bank of India (RBI). It was established in 1935 in India under the Reserve Bank of India, Act 1934. The main function of RBI is to bring Economic Development. This bank issues currency, controls other banks and work as bank of the government. And RBI also provides guidance to other banks.

Commercial Banks:– The commercial bank play very important role in economic and social development of a country. The commercial banks perform important functions such as :

  1. Primary functions, accepting deposits from public and lending money.
  2. Secondary function that is agency functions and utility functions.

In India, commercial banks can be divided into three groups.

  • Public sector bank: a total 26 banks such as, state bank of India, Bank of Baroda, Dena bank, Bank of India.
  • Private sector bank such as AXIS bank, ICICI Bank, HDFC Bank etc.
  • Foreign Banks operating in India such as HSBC, Citi Bank, Standard Chartered Bank etc.
  1. Co-operative Banks:– Co-operative Banks are financial institutions registered under the co-operative societies Act. The main objective of co-operative banks is to provide credit to economically backward people, farmers and small scale units. The co-operative banks encourage saving habits in villages and also provide loans at low interest.
  2. Saving Bank: – This bank accepts small saving from the public in rural areas. It encourage saving habits in villages. Examples are postal saving bank. Commercial and Co-operative bank also encourage savings of the people.
  3. Specialized Bank: – There are some banks which specialize in certain areas to provide finance either directly or indirectly. Some of these bank includes:
  • EXIM Bank: It is Exporter and Importer Bank of India was set up in 1982 to provide medium and long term finance to exporter and importer.
  • SIDBI: It is Small Development Bank of India was set up in 1990 to provide medium and long term finance to small industries.
  • NABARD: The National Bank for Agriculture and Rural Development was set up in 1982. It is the apex bank financing agriculture and rural Development.
  1. Exchange Bank: – The main aim of Exchange bank is financing foreign trade. The main function of exchange banks are:
  • Financing foreign trade transactions.
  • Discounting of foreign bills of exchange.
  • Issue of letter of credit.
  • Remitting money from one country to another.
  1. Development Banks: – These are the financial institutions that provide medium and long term finance to the business organization. Examples are, Industrial Corporation of India (IFCI), State Financial Corporation (SFC) etc.

Primary function of commercial bank

A) Accepting Deposit:This is one of the main function of every bank. The bank collects deposits from the public. The deposit can be of different types such as:

  1. Savings deposit
  2. Current Deposits
  3. Fixed Deposits
  4. Recurring Deposits

 

  1. Savings Deposits: – It encourages saving habit among the people. The rate of interest is low. At present it is about 3.5% p.a. this account is suitable to salary and wages earners.
  2. Fixed Deposits:-Under this account, money is deposited for a certain fixed period of time. Higher rate of interest is paid. Depositors can keep for period ranging from 15days to 5 years or more.
  3. Current Deposits:This type of account is operated by businessmen. Withdrawals are freely allowed. The account holders can get the benefit of overdraft facility.
  4. Recurring Deposits:-It is operated by salaried persons and small traders. A certain sum of money is periodically deposited into the bank. Withdrawals are permitted only after the expiry period. A higher rate of interest is paid.

B) Granting of Loans and Advances:The bank advances loans to the business community and other members of the public. The bank loans advances include:

    1. Overdraft
    2. cash Credits
    3. Loans
    4. Discounting of bills of exchange.

 

  1. Overdraft: it is given to current account holders. Interest is charged only on used amount. It is provided to business and non-business organization.
  2. Cash Credits: Under this account the customer can borrow certain limit against security. A separate A/c is opened in the name of borrower and the amount sanctioned is credited to this A/c. Interest is charged on the amount withdrawn.
  3. Loans:- Bank are provide loans for short term say a period one years and medium term say a period of five years. Nowadays, banks do lend money for long period. Repayment of money can be in the form of installments spread over a period of time. The rate of interest depends upon, the amount of loan and period of loan.
  4. Discounting of Bill of Exchange: – The bank provide funds to their customers by purchasing or discounting bills of exchange. The bank charges commission or interest up to the maturity period of the bills.

Secondary functions:

Agency functions: The bank acts as an agent of its customers. The bank perform a number of agency function. Which includes:

  1. Transfer of funds: The bank transfer funds from one bank to another bank or one place to another.
  2. Collection of cheques: The bank collects money of the bill of exchange. The bank also collects the money of the Cheques of its customers through clearing section.
  3. Periodic Payment: The commercial bank makes the periodic payment in respect of electricity, bills, rent etc. on the behalf of its customers.
  4. Portfolio Management: The commercial bank purchase and sell the shares and debentures on the behalf of its customers. This facility called as portfolio management.
  5. Periodic collection: the bank collects the salary, pension, dividend and other periodic collections on the behalf of its customer.
  6. Other agency function: it Acts as trustee on the behalf of its customer. And it also Act as a foreign Exchange transaction.

General Utility Functions: The bank also performs general utility functions, such as :

  1. Locker facility: the commercial bank provides a locker facility for the safe custody and valuable documents.
  2. Underwriting of Shares: the bank underwrites shares and debentures through its merchant banking division.
  3. Issue of draft, Letter of Credits etc.: Bank issues draft for transferring of money from one place to another. It also issue letter of credit, in case of import.
  4. Dealing foreign exchange: The commercial banks are allowed by RBI to deal in foreign exchange.
  5. Project report: The bank may also undertake to prepare project reports and feasibility studies on behalf of it clients.
  6. Other Utility functions: It provides market information to its customers etc.

Insurance

Introduction:-

  • Insurance is a protection against financial loss arising on the happening of an unexpected event.
  • Life and property is subject to risks and uncertainties. The risks can be divided into two group:
  • Insurable risks such as risk of loss due to fire, theft, accident, death or permanent death etc.
  • Non-insurable risks include loss due change in fashion, technology, loss due to bad debts, etc.

Principles of insurance 

  1. Principle of Utmost Good Faith:
  • All types of insurance contracts require utmost good faith towards each other.
  • The insurer and the insured must also disclose all material facts, clearly, correctly and completely.
  • If the insurer finds that certain material facts relating to the contract was not disclosed the insurer may avoid the contract,
  • This principle is more important for Life Insurance as the information disclosed will affect the decision of the Insurance Company to decide whether to accept or reject the proposal.
  1. Principle of Insurable Interest:
  • The insured must have insurable interest (financially) in the subject matter of insurance.
  • In Life Insurance it refers to the life insured. In Fire and General Insurance, it must be present at the time of occurrence of loss and in Marine Insurance; the insurable interest exists only at the time of the occurrence of the loss.
  • The owner of the contract is said to have insurable interest as long as he is the owner. It is applicable to all contracts of insurance.
  1. Principle of Indemnity:
  • Indemnity means a guarantee or assurance to put the insured in the same position in which he was immediately prior to the happening of the uncertain event.
  • The insurer undertakes to make payment of actual loss incurred by the insured.
  • Insurance contract is signed only for getting protection against unpredicted financial losses arising to the future uncertainties.
  • Compensation is paid in proportion to the losses incurred.
  1. Principle of Contribution:
  • This principle is a corollary (effect) to the principle of indemnity. It is applicable to all contracts of indemnity.
  • Under this principle the insured can claim the compensation only to the extent of actual loss either from any one insurer or all the insurers.
  • If one insurer pays full compensation then that insurer can claim proportionate (balanced) claim from the other insurers.
  1. Principle of Subrogation:
  • According to principle of Subrogation, after the insured is compensated for the loss due to damage to property insured then the right of ownership of such property passes on to the insurer.
  • This principle is corollary (effect) of the principle of indemnity and is applicable to all contracts of indemnity. This principle is applicable only when the damaged property has any value after the event causing the damage.
  1. Principle of Mitigation of loss:
  • Under this principle, insured must always try his level best to minimize the loss of his insured property, in case of uncertain events like fire outbreak, blast etc.
  • The insured must take all possible measures and necessary steps to control and reduce the losses.
  • The insured must not neglect and behave irresponsible during such events just because the property is insured.
  • Hence, it is responsibility of the insured to protect his insured property and avoid further losses.
  1. Principle of Cause-Proxima:
  • Principle of Causa-Proxima means when a loss is caused by more than one causes, the proximate (nearest) cause should be taken into consideration to decide the liability of the insurer.
  • The property may be insured against some causes and not against all causes, in such as instance, the proximate cause of loss to be found.
  • If the proximate cause is the one which is insured against, the insurance company is bound to pay the compensation and vice versa.

Types of Insurance

  1. Life Insurance
  2. Fire Insurance
  3. Marine insurance

Types of Life Insurance

    Meaning:

  • Under Life Insurance contract, the human life is insured against death, old age, sickness, accident etc.
  • Life Insurance contract is not a contract of indemnity. Therefore, the insurer has to pay a definite sum on the maturity of the policy. The sum has to be paid after the death of insured or at the expiry of the term.
  • Life Insuranceis not for the person who passes away, but it is for those who survive. It is the responsibility of every member to guard against the events that could affect the family in the unfortunate circumstances of his demise. Thus, having a Life Insurance policy is very vital.

Definition: – Life Insurance can be defined as “A contract where an insurance company undertakes the consideration of regular payment of premium to pay certain sum of money to the assured on maturity of policy or death, whichever is earlier”.

Types of Life Insurance Policy:

  1. Whole Life Policy: –The whole life of a person is insured under this policy. The insured cannot receive the money from the insurance company till he is alive. The rate of premium is normally very low. The money becomes payable on the death of the insured person to the nominee or the legal heir of the deceased policy holder.
  2. Endowment Insurance Policy: -Under this policy, insurance is taken for a specific period. The sum assured along with bonus is given on his death to the dependents of family or on the expiry of the specific period; the insured himself receives the sum assured along with bonus. It is a popular plan as it protects the family of the deceased or provided old age pension to the insured.
  3. Term Insurance Policy: -Term insurance policy is taken for a specific period. It has lowest premium among all Insurance plans. Premium is fixed and does not change during the term of the policy. In case of an untimely death, the dependents will receive the benefit amount specified in the term life insurance agreement.
  4. Money-Back Policy: -Money-back policy provides a regular percentage of the sum assured during the life time of the policy and also guarantee the benefit of full sum assured in the event of the death of the insured to the dependents of the family. This policy is for those people who like to have savings and Insurance Cover.
  5. Joint Life Policy: -Under Joint Life Policy, two or more persons are jointly assured. The person who takes joint life policy must have insurable interest in each other. It is useful for individuals having common interest, requiring joint safety and security to their lives. It can be taken by the partners of the firm or husband and wife.
  6. Annual Policy: -The insured has to pay the premim in lump sum or installments over a certain period of time. The insured will receive back a specific sum periodically from a specified date onwards, either for life or for a fixed number of years. Generally, life annuity (pension) is opted (choose) by a person having surplus wealth and wants to use this money after his retirement.
  7. Pension Plan Policy: -Pension policy is different from all other forms of life insurance, as it does not provide any life insurance cover but merely offers a guaranteed income either for a life or for a certain period. (therefore, this type of insurance is taken so as to get income after retirement)
  8. Money back policy: it provide regular percentage of sum assured during the time of policy and also guarantee the benefit of full sum assured in the event of the death to the success or of policy holder.

Types of Fire Insurance Policy

  •   Meaning:
  • The Fire Insurance protects the insured against the risk of fire. Any property which is subject to damageby fire can be insured against fire. The loss due to fire, lightning and explosion is also covered by Fire Insurance.
  • Fire Insurance is for protection and not for profit. The amount of premium of fire insurance depends upon the value of subject matter, place of storage and extent of risk involved. Fire insurance protects against the risk of damage by fire property and assets.

Definition: – According to Indian Fire Insurance Act, 1938; “In addition to other insurances, fire insurance is that insurance contract which takes place against fire and such other risks which are mentioned in the fire insurance contract.”

Types of Fire Insurance Policy:

  1. Valued Policy: – Under this policy, the valuation of the property is made at the time of issue of policy and the compensation (give payment to reduce the loss) will be paid if the loss occurs. Such policies are mostly taken in the case of works of art, painting etc.
  2. Average Policy: -It is a policy which contains an average clause. If the subject matter is not insured as per the exact market value or undervalued, then the insurer is liable to pay that percentage of the loss for which it is insured. E.g. if a policy is taken for Rs 50,000against the market value of Rs 1, 00,000. The loss incurred due to fire is Rs 40,000, then the Insurance company will pay Rs20,000 (50% of Rs 40,000)
  3. Specific Policy: – It covers the risks of certain specific amount mentioned in the policy. The compensation payable by insurer will not be more than specific amount. E.g. a property of value Rs 1,00,000 is insured  for Rs 60,000 and the loss due to fire is Rs 30,000 then the insurance company will pay Rs 30,000 in full as compensation.
  4. Floating Policy: -This policy can be taken for those goods which are lying (put down carefully) in different localities or warehouse. There is only one policy at different places. These types of policies are very useful for traders whose goods are laying at different godowns or places.
  5. Comprehensive Policy: -Comprehensive policy covers all types of risks like fire, burglary, riots, explosions, strikes, etc. this policy is also called as all in one policy. This type of policy is not popularin India but very popular in the countries like UK, USA, etc.
  6. Excess Policy: -Excess policy is taken when the value of the stock in the market constantly fluctuates (up and down). In such an instance it is not advisable to take one policy of certain sum, but instead two policies can be taken.
  7. Reinstatement Policy: -This is a type of fire Insurance Policy where the insurer undertakes to replace the property or goods lost by fire. In this policy instead of paying compensation for the property lost by fire, the property is replaced. The rate of premium is higher in Reinstatement Policy.
  8. Blanket Policy: -Blanket Policy covers all fixed and current assets of the assured in one policy. Under this policy all the assets lying at different places are covered under one premium and one policy.

Types of Marine Insurance Policy                    

Meaning:

  • Marine Insurance gives protection against losses caused due to the dangers of the sea.
  • Marine Insurance is very useful for foreign trade i.e. for exporters and importers.
  • It has become mandatory for exporters and importers to insure their goods. It also covers the loss or damage to the passengers in cruise during journey on the sea.
  • Marine Insurance covers the dangers of the sea such as sinking of the ship, storm, fire, explosion in the ship, crashing with icebergs, pirates, etc.

Definition: – according to Marine Insurance Act, 1963 “An agreement whereby the insurer undertakes to indemnity (compensation for damage or loss) the assured, in the manner and to the extent thereby agreed, against losses incidental to marine adventure. It may cover loss or damage to vessels, cargo or freight.”

Types of Marine Insurance Policies:

  1. Voyage Policy: – It is a policy in which the subject matter is insured for a particular voyage (a long journey by sea) irrespective of the time involved in it. In this case, the risk begins only when the ship starts on voyage. E.g. voyage from Mumbai to New York.
  2. Time Policy: – Under this policy, the subject matter of insurance, i.e., ship or cargo is insured for a particular period, say 12 months. It is taken in case of hull(the main body of a ship) insurance.
  3. Mixed Policy: – It is taken for a specific period and for a definite voyage (a long journey by sea). For example, a policy can be taken for two months for voyage starting on May 5, 2012 from Bombay to New York.
  4. Valued Policy: -Under this policy, goods are insured for an agreed value between the insurer and insured. This facilities easy settlement of claims. This agreed value is more than the actual value of goods.
  5. Floating Policy: –Floating Policy is taken for a large sum covering several shipments. This policy is mostly taken by exporters in order to avoid trouble of taking out a separate policy for every shipment. This policy covers several shipments till the amount insured is exhausted.
  6. Blanket Policy: – This policy is taken to for a certain amount and full amount of premium is paid in the beginning of the policy. Later on adjustments in premium are made, if necessary.
  7. Composite Policy: – In this case, the insurance contract is underwritten by two or more insurer. The liability of each insurer is separate and different. It is taken only when the insurance amount is high.

Functions of Warehousing                                  

Introduction: –

  • Warehouse refers to storage of goods and services.
  • Warehouses preserve goods on a large scale in a systematic and orderly manner.
  • They provide protection to goods against heat, wind, storm, moisture, etc. and also cut down losses due to spoilage, wastage, etc. this is the basic function of every warehouse.

There are many other functions in addition to these basic functions which are as follows:

Definition: -A warehouse is defined as “an establishment for the storage or accumulation of goods”.

  1. Storage of goods: –The basic function of warehouses is to store large stock of goods. These goods are stored from the time of their production or purchase till their consumption or use.
  2. Protection of goods: -a warehouseprovides protection to goods from loss or damage due to heat, wind, dust, etc. it makes special arrangements for different products according to their nature. It also helps to reduce the losses due to spoilage or wastage during storage.
  3. Financing: – Warehousing of goods also enables to obtain finance from banks. Banks grant loans against the security of goods.
  4. Risk-bearing: -The entire responsibility of the goods stored in the warehouse is passed to the warehouse keeper, once the goods are handed over to him for storage. Thus, the risk of loss or damage to goods in storage is bear by the warehouse-keeper.
  5. Grading and Branding: – Warehouses also perform the functions of grading and branding of goods on behalf of the manufacturer, wholesaler and the importer of goods. It also provides facilities for packaging of goods for the convenience of handling.
  6. Safety to perishable Goods: – It provides safety to perishable goods. Perishable goods like fish, meat, etc., can be preserved in cold storage.
  7. Transportation: -Warehouses can provide transport facility to the bulk depositors. It collects goods from the place of production and also sends goods to the place of delivery on the request of the depositors.
  1. Time and place utility: – Warehouses create time utility by preserving the goods till it is demanded. It also creates place utility by providing the goods at the place, where they are required.

Types of Ware houses

 Introduction: –

  • Warehouseis a storage structure constructed for the protection of the quality and quantity of the stored goods.
  • A businessman has to keep different kinds of goods, so there is always a need for different types of warehouses, which are as follows.
  1. Private warehousing: -Private warehousing are owned and managed by the manufacturers or traders to store their own goods. They are found mostly in industrial and commercial centers. In this warehouse the goods can be stored and removed without formalities and personal care of the goods is taken.
  2. Public/commercial warehouses: –They are also known as licenced warehouses. This types of warehouse requires a licence from the government. They are owned and managed by individuals, firms, companies and others. They are generally located near railway stations, highways, airport, seaport, etc.
  3. Government warehouses: -These warehouses are owned, managed and controlled by Central and State government or public corporations or local authorities. It is difficult for the small traders, farmers, businessmen, etc. to own a warehouse, so these government warehouses assist them in storing their goods at a nominal charge.
  4. Bonded Warehouses: -Bonded warehouses are licensed by the government for storing imported goods till the custom duty is not paid. They are located near the ports. They are either operated by the government or custom authorities. The goods are held in bond and cannot be withdrawn without paying the custom duty. Such warehouses are very useful to importer and exporters
  5. Duty paid warehouses: -If an importer faces any problem in transportation of goods, after making payment of duty, then goods can be stored at Duty Paid Warehouses. All duty paid warehouses are public warehouses which are available to all the importers whether big or small. These warehouses are more helpful for some businessman, who re-exports the goods.
  6. Co-operative warehouses: -These warehouses are owned, managed, and controlled by the co-operative societies. They provide warehousing facilities at the rural areas. These types of warehouses are very useful for farmers and traders. They provide warehousing facilities at the most economical rates to the members of the society and also to the public.
  7. Cold storages warehouse:- They are suitable for perishable goods. In cold storage goods like fish, meat and fruit can be preserved. They make available seasonal goods throughout the year. The maintenance cost cold storage is high. In India cold storages are popular in cities and towns.

Role of Transport

Introduction: –

  • In India, transport plays an important role in nation’s economy.
  • Transport can be defined as a means of carrying goods and people from one place to another.
  • Transportation is the movement of people, animal and goods from one location to another.
  • It makes possible to distribute the goods from the place of production to the place of consumption.
  • India’s rail network is the 4th largest and most heavily used system in the world, transporting over 6 billionpassengers and over 350 million tons of goods annually.
  1. Helps in production: -Transport system helps the manufacturer to take the raw materials and other requirements quickly from the places and make it available to the production centers. It helps the movement of the labour from their houses to the place of their work.
  2. Expanding Markets: -It reduces the gap between the producers and consumers. It helps to cover the wider area of market places by making the goods available as per the market requirement. Transport plays an important role in distribution and marketing of goods. Air transport plays an important role in the success of an international trade.
  3. Create Place Utility: –Transport creates place utility. The goods produced in one place and it can be transfer to another place as per requirement. E.g. apples from Kashmir are transported throughout the country’s Mangoes from India are exported to different countries, etc.
  4. Stability of Prices: –Transport helps to maintain the prices of the goods by providing the goods at the proper time and satisfying the consumer demand. It helps to maintain balance between the demand and supply of goods, which ensures stability of prices.
  5. Creates Employment: –Transport provides direct employment to transport owners, drivers, mechanics, and helpers etc. It also provides indirect employment by facilitating the movement of goods and people from one place to another. So, it provides direct and indirect employment to the number of people.
  6. Improves standard of Living: –Transport helps people to enjoy a better standard of living by providing them with goods of their choices from faraway places or places of its availability. As transport creates employment, it gives an opportunity to people to earn good amount of income. E.g. imported cars can be transported from foreign countries.
  7. Cost Reduction: –The cost of production and distribution can be reduced with the help of efficient, cheap and quick means of transport. The goods can be sold at low prices which in turn will increase demand and expand market.
  8. Provides help during emergency:Transport facilities are very important at the time of emergency like floods, earthquakes, landslides, etc. and also during riots, bomb blasts, accidents, fire, etc. transport helps the people by providing them with the necessities like food, water, medicines, etc. and also helps them to travel to their destinations.
  9. National Defense: –Transport plays an important and special role in the defense of the country. An efficient transport network system ensures quick movement of troops, arms and ammunitions from one place to another.
  1. Economic development: –Economic development of a country depends on a good network of transport system and industrial development. Good transport system also provides employment opportunity; new industries are established where there is a good network of transport. This all gives rise to economic development of a nation.

 Advantages of Road Transport

  1. Door to door services: Road transport provides door to door services. The goods can collects from seller warehouse and deliver it right at the door step of the buyer.
  2. Suitable for short distance: – The road transport suitable for short distance. The loading and unloading charges are reduced due to direct transportation.
  3. Less expensive: It is less expensive from other mode of transportation because the maintenance cost is very low and the wages for drivers are low as compare to railways.
  4. Flexibility: – the road transport offers more flexibility than railways. The road transport can operate at any time as per the client requirement.
  5. Low investment: – Road transport requires low investment. The vehicles, trucks and tempos cost very less as compared to train and ships and airplanes.

Disadvantages of Road Transport

  1. Not suitable for bulky goods: The Road transport is not suitable for carry bulky and heavy goods, such as heavy machinery.
  2. Not suitable for long distance: Road transport is not suitable for long distances for carry the goods.
  3. Limited protection of goods: Road transport provide limited protection to goods from rain, sun etc.
  4. Less reliable during monsoons: The road transport is less reliable during the monsoons because of poor condition of roads.
  5. More accident: there are number of accidents on the highway and on other roads due to poor condition of road or careless of drivers.

Rail Transport

  • Indian Railway network is the fourth largest in the world covering about 65, 000 kilometeres.
  • Railways were introduced to India in 1853 from Mumbai to Thane.
  • In 1951 the rail system were nationalized as one unit – Indian Railways

Advantages of Rail Transport

  1. Suitable for long distance: – The rail transport suitable for long distance because the trains operates at a higher speed than road vehicles.
  2. Suitable for bulky good: Railways are more suitable for bulky and heavy goods. The train can carry huge load.
  3. Full protection of goods:– The trains operate full protection of goods from rain and sun etc. therefore it is also suitable in monsoons.
  4. Uniform rates: The railways charge a uniform rate that is according to distance. There are fixed rate for fixed stations.
  5. Less pollution: The railways create less pollution. Now-a-days, most of the trains operate on electricity or power. There is less pollution as compared to road transport.

Disadvantages of Railways

  1. Huge investment: The railways require huge investment because the cost of train is high as compared to road vehicle. The construction of railway tracks involves lot of money.
  2. Lack of door to door services: The railways cannot provide door to door service to the clients because the rail service is available along the railways routes only.
  3. Less flexible: The railway operates on fixed schedule. They cannot operate as per the individual likes of the customers.
  4. Not suitable for short distance: It is not suitable for short distance because he Railways are expensive for short distances.
  5. High overhead costs: The overhead cost of railway is very high because the maintenance of trains and trucks.

Water transport

  • Water transport refers to movement of goods and passengers on waterways by using boats, ships etc.
  • With the help of water transport goods and passengers are carried to different place or to other country.

Advantages of Water Transport

  1. Suitable for long distance: The water transport is suitable for long distance especially in case of overseas (foreign) shipping.
  2. Suitable for Bulky goods: The water transport is suitable to carry bulky and heavy cargo. It can be used to carry heavy machinery.
  3. Protection of goods: The goods are protected from sun, rain, etc. The goods are mostly carried in containers, tankers etc.
  4. Easy in loading: – It is very convenient to load the cargo inside the ship. With the help of cranes, even heavy cargo can be easily loaded on the ship.
  5. Promote foreign trade: The water transport help to increase the international trade by carrying goods in overseas.

Disadvantages of Water Transport

  1. Huge investment: The water transport requires huge investment. A bulk carrier ship cost crores of rupees.
  2. Risk during the war time: There is high risk during war times. The ship becomes easy victims of the war. They are destroyed by enemy country.
  3. Lack Door-to-Door Services: Water transport cannot provide door-to-door services. the door-to-door services can be proved by road transport only.
  4. High maintenance Cost: Ships and tankers require high maintenance cost. There is a need for constant painting of ships.
  5. Less speed: Water transport works on a slow speed as compared to air transport. It may operate less then road transport speed.

Air Transport

  • The air transport came into existence during the 20th It is fastest mode of transport.
  • The air transport is suitable to carry passengers and light and valuable goods from one place to another.
  • The various forms of air transport are passenger plane, cargo plane, jumbo-jet etc.
  • Rapid economic growth in India has made air travel more affordable.

 Advantages of Air Transport

  1. Fastest mode of transport: Air transport operates at a very high speed. The high speed makes the air transport the fastest of all other form of transport.
  2. Suitability: Air transport is suitable to carry passengers who want lot of comfort. The passengers can save lot of time. Light and valuable goods like diamond, gems etc. can be transported.
  3. Vital during the emergency: – Air transport is very vital during emergencies. When there are floods, food, medicine etc. requirement can be supplied by air transport.
  4. Efficient service: Air transport, especially, the international airlines provide highly efficient services to its customers. They are highly regular and reliable.
  5. Safety: Air transport is safer as compared to all other transport system. Accident chances are very less.

Disadvantages of Air Transport

  1. Huge investment: Air transport requires huge investment. An aeroplane cost crore of rupees.
  2. Limited carrying capacity: The air transport has limited carrying capacity as compared to water and road transport.
  3. High maintenance cost: Air transport requires heavy maintenance cost. There is a constant need of monitor the maintenance of the vehicle. And to reduce the risk of accident it requires high maintenance cost.
  4. Risk during War time: Air transport is risky during war times. Planes can be destroyed by the enemy countries.
  5. International restrictions: Air transport has certain international restrictions. Aeroplane of other nations is not allowed to fly over certain areas.

Emerging Mode of Business

Meaning

  • Business can be broadly divided into two groups. Industry and commerce, E-business may be defined as the conduct of industry, trade, commerce using computer networks.
  • The term “e-business” was coined by IBM’s marketing in 1996. It is electronic business is derived from the e-mail, and e-commerce.
  • E-business uses the application of Information and Communication Technology (ICT) in support of all the internal and external activities of business, i.e. manufacturing, trading(exchanging of products and services between groups and individual) , and other business activities.

Resources required for successful E-business Implementation/ Types of business

  1. Consumer to Consumer (C to C):- In this transaction one customer sell the product to another customer. Customer sells the products to other customer bye classified advertisement on the internet. For Example eBay.com, Quikr.com etc. today there are number of websites where consumers can buy and sell goods like books, electronic goods, fashion jewellery etc.
  2. Business to Consumer (B to C):- In this types of transaction a Business firm sell the goods and services to the customer through net or websites. Firms use their site for a range of marketing activities. These include promotion, product information and review and delivery of product at door step. The cost of products is low in this method and the speed of transaction is also faster. For example popular websites is www.flipkart.com, yebhi.com etc.
  3. Business to Business (B to B):– The Business to Business transaction refers to online business transitions between firms. In B to B commerce business transactions take place between Manufacturer and supplier, Wholesaler and retailer. This is mostly used by companies for their production of goods.

Advantages of E-Business:

  • Easy formation: It is easy to set up e-business as compared to traditional businesses.
  • Global Platform: we can run business at global level due internet (World Wide Web).
  • Ease to Access: It is very easy to shopping online from anywhere as per our time schedule and choices.
  • Government support: Government Support: Government provides support to E-business by provide subsidies and concession to promote digitalization.
  • No Physical Space: E-business does not require Physical space you can run the business from home or anywhere.
  • Easy Communication: There is direct relationship between Suppliers and Consumers so strong relation is built in E-business.

Disadvantages of E-Business:

  1. No Face to Face Interaction: In E-business there is any face to face interaction between buyer and seller so buyer may not buy the product online.
  2. No Personal Touch: E-business has no personal touch and we cannot touch or feel the product as the human touch is missing (No salesperson). That makes buyer insecure.
  3. No Touch and feel: In India most of the buyers wants to teach and feel the product before buying but in online business consumer unable to touch and feel.
  4. Government Interference: Sometimes government monitoring may lead to interference in e-business.
  5. Security Issues: In e-business there is transnational risk involved because financial details can be used by third party.

Outsourcing

Outsourcing is the process of contracting a business function to specialized agencies. In doing so, the company benefits in two ways:

  • It reduces its own cost.
  • It uses expertise of the firm which specializes in a particular kind of service.

Many organizations outsource their requirements to a third party. Outsourcing is a contract between an organization and a specialized agency to perform some tasks on behalf of the organization. The examples are:

  • Outsourcing of canteen facilities in hospitals, industrial canteen etc.
  • Outsourcing of after-sale services in case of consumer durables, office equipment etc.
  • Outsourcing of business processes.

Advantages of Outsourcing

  1. It leads to better efficiency and effectiveness.
  2. The companies are able to focus their attention on improving the quality of their product.
  3. Outsourcing leads to cost reduction for the company. The cost of outsourcing services is much less than keeping such a large work force on the rolls of the company.
  4. Manpower through outsourcing is available at a lower cost.
  5. Investment requirements of the company are reduced.
  6. Outsourcing helps in knowledge sharing between organizations.
  7. It stimulates entrepreneurship, employment and exports in the country from where outsourcing is done.

Disadvantages of Outsourcing

  1. There is always a danger of the misuse of company information by the contractor or by the third party.
  2. Many companies compromise on the quality of outsourcing in order to cut costs. This is especially seen in the IT sector where companies try to get cheap manpower from the other countries.
  3. In some cases, companies ignore ethical issues related to outsourcing.
  4. The quality of the outsourced service is sometimes not up to the mark / not good.

Social Responsibility of Business

Meaning:

  • Social responsibility is an duty of business organization to promote and protects the society
  • It is a philosophy which indicates duties and responsibilities of commercial organization towards its employees, shareholders, consumers, government and society.

Definition:

According to Wikipedia “Social responsibility is a duty every individual or organization has to perform so as to maintain a balance between the economy and the ecosystem.

Q.1. what are the social responsibility of business organization towards employees.

Ans.: The success, survival and growth off any business organization depend upon efficient and co-operative workforce. The employees can give quantity and quality only when they are properly motivated. In order to motivate the employees the business organization should fulfill the following social responsibilities towards employees:

  1. Job security: – The employees expect that the business organization should provide them job security. The workers should not be kept on temporary basis for a long period of time. They should get permanent job. If worker are kept on temporary basis for a long period of time then they will not work with commitment and dedication.
  2. Fair wages: – It is the responsibility of business organization to pay fair wages to its employees. It should also pay incentives like bonus, traveling allowance, medical allowance etc.to its employees. Payment   of employees should be done regularly on time. There should be increment in wage from time to time.
  3. Proper working conditions: – It is the responsibility of business organization to provide proper working conditions to its employees. This is because the efficiency of workers depends upon the proper working conditions. There should be sufficient lighting and ventilation system at the place of work. There should not be noise, dirt and dust at the place of work because that affects the efficiency and productivity of employees.
  4. Health and safety measures: – It is the responsibility of business organization to provide proper health and safety measures to its employee. Healthy and efficient employees are the assets of the organization. The business organizations should take maximum care of its employees. The employees should be provided with good canteen facilities, medical facilities etc. proper maintenance of machine in the factory must be done to prevent accidents.
  5. Proper personnel policies: – The workers expect that the business organization should adopt proper personnel policies in respect of requirement, transfer, promotion and training. There should not be any type of partiality in case of recruitment, transfer, promotion and training.
  6. Division of labour: – It is the responsibility of business organization to do the proper division of labour in the organization. The jobs must be allotted to the employees on the basis of their qualification, knowledge, experience etc. the business organization try to see that there is a right person in the right job.
  7. Worker union: – To maintain industrial peace is the responsibility of business organization. Therefore, the management must allow the workers to form their union. Management should not follow divide and rule policy. It should not encourage multiple unions as it will not only weaken the strength of workers but also make the organization weak.
  8. Participation in management: – The business organization should encourage to its employees to take part in the management. This can be done by issuing some shares of the company to its employees, by inviting suggestions from employees regarding management etc.

Q.2. what is social responsibilities of business organization towards consumers?

Ans.: The person who purchases the goods for self consumption is called consumer. The success, survival and growth of any business organization depend upon satisfaction and support of consumers. In order to win over the confidence of consumers the business organization should fulfill the following social responsibilities towards consumer.

  1. Quality goods: – It is the responsibility of business organization to supply quality goods and services. Consumers expect that the business organizations should try hard to improve the quality of goods and services. For this the business organizations should undertake research and development and various quality control measures.
  2. Fair price: – It is the responsibility of business organization to supply the quality goods and services at fair price. The business organization should try to reduce the price of goods. It should try to earn the profit by increasing the sales and not by increasing the price.
  3. After sales service: – The service which is provided after effecting the sale is called “After Sales Service’. Consumer expects that the business organization should provide quick and efficient after sales services. Such after sales services is necessary in case of consumer durable goods like T.V., Washing Machine, refrigerator etc.
  4. Consumer safety: – The consumers expect that the business organization should produce and market only those goods which are consumers’ health oriented. It means it should not produce and market those goods which are harmful to the consumers. It should protect and promote consumer safety.
  5. Honest Advertising: – Sometimes consumers finds that the actual performance of the product. But not as per advertisement by the manufacturer. The main purpose of advertisement is to inform the consumers about the availability of goods, their merits and so on and not to cheat the consumers. It is the responsibility of business organization to make honest advertisement.
  6. Regular supply: – The consumer expect that there should be regular supply of goods and services. It is the responsibility of business organization to satisfy the wants of consumers by supplying various goods and service to them. The business organizations should not create any artificial shortage of goods and services to exploit the consumer.
  7. Information: – The manufacturer or sellers should provide necessary information to the consumer either through advertisement or in any other form. The information must be provided in respect of uses of the product, side-effects, etc.
  8. Avoid monopoly: – It is the responsibility of business organization to avoid monopoly and not to exploit the consumers. The consumers expect that there should be free and fair competition in the market.

Q.3. what are the social responsibilities of business organization towards shareholders/investors?

Ans.: The people who purchase the shares of company are known as shareholders. They are the owners of the company. Shareholders invest their money in the company. So they expect certain social responsibilities from business organization which are as follows:’

  1. Proper use of shareholders funds: – It is the responsibility of business organization to make proper use of shareholders funds. It should use their funds in productive manner. It should make maximum utilization of shareholders funds. It should not waste their funds.
  2. Fair return on investment: – It is the responsibility of business organization to pay fair return on investment of share holders. This because shareholders are basically investors. The board of directors should pay higher rate of dividend every year to their shareholders.
  3. Expansion and diversification: – Expansion means starting more and more factories and diversification means producing variety of products. The shareholders expect that the business organization should undertake the expansion and diversification programmes. This will give more profit to business organization and shareholders will get high rate of dividend.
  4. Proper discloser: – Company uses others money i.e. shareholders money to start and run the business. Hence the company should make proper disclosure of all business activities. It is the responsibility of management to maintain all the book of accounts must be sent to all shareholders.
  5. Periodic information: – It is the responsibility of Boards of Directors to inform the shareholders about important happenings in the company either through correspondence or through company meetings. This is because the shareholders are the owners of the company.
  6. Proper conduct of shareholder meetings: – It is the responsibility of Board of Directors to conduct the shareholders meeting properly and on time. It is not physical possible for shareholders to manage their company. They can manage their company only through company meetings by voting in the meeting. At meeting every shareholder must be given a chance to express his views regarding the activities of the company.
  7. Good public image: – The shareholder expect that the management should develop and maintain goods public image. A company that enjoys name, fame and reputation has lot of respect and trust in share market, labour market, capital etc. goods images of the company increases market value of the shares.
  8. Proper method of accounting: – It is the responsibility of business organization to adopt fair and proper method of maintains books of accounts. The books of account should show the true and fair pictures of the working of the organization.

Q.4. what are the social responsibilities of business organization towards governments?

Ans.: Government is the representative of public. The government expects certain social responsibilities from business organizations. Following are the social responsibility of business organization towards government.

  1. Payment of taxes: – It is the responsibility of business organization to pay the taxes and duties to the government regularly and on time. The amount of taxes and duties is utilized by the government for the welfare of poor people and national development.
  2. Advising the government: – The government expect that the business organizations should provided advice to the government regarding various business policies like export policy, import policy, industrial policy and so on.
  3. Political stability: – It is the responsibility of business organization to maintain political stability in the country. They should keep in mind that only stable government can bring stability and prosperity in the country.
  4. Earning foreign exchange: – the government expects that the business organization should enter into foreign trade. They should enter into export trade and earn foreign exchange for the country. The amount of foreign exchange will be utilized to import capital goods for national development.
  5. Rule and regulation: – It is the responsibility of business organization to follow the rule and regulation framed by the government from time to time. If they want to modify any rule then they can do so for the benefit of the society.
  6. Unfair favours: – The government expects that the business organization should not try to get any unfair favours from government officials by bribing or influencing them. On the other hand they should oppose such type of corruption.
  7. Contribution to government treasury: – It is the responsibility of business organization to contribute funds and donations to government treasury at the time of emergency like accidents, war or natural calamities like floods, earthquake etc.
  8. Economic development: – The Government expects that the business organizations should provide monetary and non-monetary help to economic development programmes undertaken by the Government.

Q.5. what are the social responsibilities of business organization towards society?

Ans.: the general public expects certain social responsibilities on the part of business organization. Following are the social responsibilities of business organization towards society:-

  1. Protection of environment:-It is the responsibility of business organization to protect the environment. They should take all possible steps to prevent water, air and noise pollution. This is because pollution affects the health of the people very badly.
  2. Optimum utilization of resources: – The society expects that the business organizations should make proper utilization of natural resources like iron, steel, fuel etc. they should not make wastage of such natural resources.
  3. Development of backward area: – It is the responsibility of business organizations to develop the backward regions of the country by starting new factories in those areas. This will provide more employment opportunities to rural people. It will increase their purchasing power and will improve their standard of living.
  4. Help to weaker sections of the society: – Society expects that the business organizations should help the economically and socially weaker sections of the society. They should reserve certain jobs for economically and socially weaker sections of the society.
  5. Financial Assistance:– It is the responsibility of business organization to provide financial assistance to various social causes such as eradication of poverty, literacy rate.
  6. No Participation in Anti-social activities: – Society expects that the business organization should not participate in anti-social activities. It is the responsibility of business organizations not to support and provide financial assistance to antisocial elements because they disturb the peace of the society.
  7. Expansion and diversification: – Expansion means starting more and more factories and diversification means producing variety of products. The shareholders expect that the business organization should undertake the expansion and diversification programmes. This will give more profit to business organization and shareholders will get high rate of dividend.
  8. Stander of living: – the society expects that the business organization should try to improve the standard of living of the people. For this the business organizations should supply quality goods and services. They should undertake certain research and development programmes.

Business ethics

  • The term “Ethics” is derived from the Greek words “ethos” which means Character.
  • Ethics is a branch of social science which deals with concepts like good and bad, right and wrong, fair and unfair, legal and illegal, moral and immoral etc. (i.e. anything concerned with human action.)
  • It is a science of morality which guides the action of individual or group
  • Business ethics refers to the system of moral principles of rule of conduct applied to business activities or operations.

Definition:-

“Business ethics is an art or science of maintaining harmonious relationship with society, its various groups and institutions as well as recognizing the moral responsibility for right and wrong conduct of business.”

Features/Nature/ characteristic of Business Ethics?

  1. Moral values: Business ethics is related with morality in business. The business organization affects the society in terms of what kind products is supplied. Therefore if it is necessary that business community conducts is self check , self-control and keeping always in mind the interests of community
  2. Relative terms: Business Ethics is a relative term. It may differ from country to country. For example taking or giving bribe is considered as unethical in our country but may be this is ethical in other country.
  3. Interest in society: Business ethics says that the business should do first good for the society and then to itself. It is an important institution and has responsibility to protects interest of all groups like employees, society, customers etc.
  4. Business-society Relationship: Business Ethics helps the organization to maintain the good relations with society. And business organization provides the goods as per the customer’s needs. And it thinks about the society
  5. Provides Framework: Business Ethics defines the social, legal, cultural and economic limits within which business organization are expected to plan their activities.
  6. Systematic study: Business ethics is a systematic study of business policies and actions that have a positive and negative impact on human beings and society. It helps to protect the environment.
  7. Universal application: Business ethics has universal application. It is applicable to all business organizations whether small or large sole trading, co-operative or public limited companies.
  8. Guiding Principles: Business ethics are the guiding principles which help to differentiate good or bad, right or wrong, proper or improper business decision and action.
  9. Code of conduct: The code of conduct ethics provides guidelines to operate business activities on legal, moral. It tells what should be done and what should not be done for the society.
  10. Facilities Growth and expansion: It helps in growth and expansion of the business. It helps to gain the trust and confidence of the customers, employees, shareholders, and society.

Elements of business ethics

  1. Equality: According to business ethics everyone in business should be treated equally. There is no discrimination regarding cast, religion, rich and poor in business.
  2. Honesty: Businessmen should be honest in all their dealing with people. It is better to be honest about what you can do. Company should leave every client feeling well served upon completion of each project. “Idea” mobile company’s formula is remarkable. “Under commitment and over delivered”.
  3. Confidentiality: -Business organization should follow strict written internal confidential policy. Consumer’s information and confidential records should not be disclosed to others. At the same time, they should not use wrong means to obtain information from competitors about certain formula or method of production.
  4. Openness: -Business organization should follow the principle of openness. Opinion and feedbacks from clients and team members should be asked regularly. Even in time of business disagreement, treat other’s opinions and ideas with professional respect and courtesy (good manner).

Consumer protection

Introduction:

In day to day language the terms consumer and customer are used as same, however, from legal point of view they are not same.

  • A consumer means any person who buys any goods or service. He may also be user of the product.
  • At the level of ‘consumer’ the goods and services are actually consumed. In other word at the level of ‘consumer’ the actual satisfaction of want takes place.
  • If he buys goods and services for his own consumption then he is the consumer.
  • A customer is one who buys the goods and services. He may not be the user of the goods and services.
  • He may buy the goods and services for his own consumption or resell them.
  • If he buys goods and services for commercial resell the n he is customer.

 What are consumer rights?

  1. In theory consumer is king but in practice he is cheated and exploited by seller by various business malpractices.
  2. Hence the government passed consumer protection act in 1986. The act provides certain rights to consumer.

They are explained below:

  1. Right to choose:– As per this right consumer is free to purchase/buy any product as per his choice. The seller cannot force the consumer to purchase a particular product. The consumer can enjoy this right only when wide choice of products is available in the market.
  2. Right to safety:– This right suggests that consumer must be protected against products, production processes and services which are dangerous to his health of life. Goods like electrical appliances, automobiles, toys medicines etc.
  3. Right to be informed:– As per this right consumer must be given all the information about the product he want to buy. Consumer needs information about price of the products, name of the manufacturer, date of manufacturing, date of expiry, if any instructions regarding how to use the product and so on.
  4. Right to be heard:- As per this right the consumers should be given an opportunity to express their views and suggestions regarding certain business policies like price fixation, quality standard etc. similarly, consumers should be given an opportunity to express their difficulties, complaints and grievances about the products that use.
  5. Right to redress:– As per this right if the product supplied to consumer is not as per the assurance given by the seller or manufacturer, the consumer has right to get compensation. As per this right if product supplied to consumer is defective, the consumer has right to get the product replaced, repaired or get his money back.
  6. Right to consumer education:–  As per this right consumer must be educated about his rights, i) Agencies where complaint can be made ii) current changes in business iii) marketing polices iv) availability of goods v) availability of credit facility if any vi) changes made in laws affecting consumer’s interest. Such information can be given to consumers through mass media of communication like TV., Radio, Press, Outdoor advertising etc.
  7. Right to have healthy environment:-  As per this right the business organization should take all possible steps to control the environment pollution. The businessmen cannot carry out business activities at the cost of consumer. This right states the need to protect and improve the environment for the present and future generation.
  8. Right to protect against unfair trade practices: – This right gives protection to consumers against any kind of unfair trade practices. Consumer can raise their voice against faulty measurements. Artificial shortages, etc. The government of India has launched a campaign ‘jago grahak jago’ to make consumer to fight against unfair trade practices.

Importance of consumer movement

  1. Increasing Awareness:- The consumers are becoming more mature and conscious of their rights against the malpractices by the business. There are many consumer organisations and associations who are making efforts to build consumer awareness, taking up their cases at various levels and helping them to enforce their rights.
  2. Survival and Growth of Business:- The business has to serve consumer interests for their own survival and growth. On account of globalization and increased competition, any business organization which indulges in malpractices or fails to provide improved services to their ultimate consumer shall find it difficult to continue. Hence, they must in their own long run interest, become Consumer oriented.
  3. Provide Market Information: Majority of the consumers has no information about quality, type, price and other marketing facilities. Many customers buy without product knowledge and this make them suffer losses.
  4. Importance of Physical Safety: Indian markets are over flooded with products. The products may be adulterated and may be health hazardous. This may endanger their life and due to this a consumer needs to be protected.
  5. Avoiding Monopoly: Consumer Protection is very important in terms of avoiding monopoly. Monopoly is the crown of modern market. Most of the organizations, irrespective of various restrictions follow monopoly practice. Due to this consumers get affected and needs to be protected.
  6. Prevention from Malpractices: Business malpractices are rapidly growing in modern market. Businessmen follow unfair trade practices, restrictive trade practices and monopolistic trade practice and consumer protection plays a important role.
  7. Misleading Advertisements: Many organizations deliberately cheat consumers through wrong or misleading advertisements. This will protect consumers from getting exploited.
  8. Informing Consumers about their Basic Rights: Majority of the consumers are ignorant. They do not know about consumer rights. Consumer movements inform consumers about their rights and protect their interest and rights.

Principle of management

What is management?

  • A process of achieving organization goals by engaging in the function of Planning, organization, leading and controlling
  • A process of achieving results through the efficient utilization of human resources and material.
  • A set of activities directed at the efficient and effective utilization of resources to achieve goals and objective of target or an organization
  • The art of getting things done through and with people in formally organized groups.

Definition

  1. The art of getting things done through other people (Mary Parker Follet)
  2. The process of getting things done through the efforts of other people (Moody etal)

In short it is a process of achieving organization goals through coordinated performance of five specific function of planning, organizing, directing, staffing and controlling.

What is principle of management?

  • A principles is a basic statement that provide understanding and guideline
  • It is a basic element of management theory that helps in forecasting what would happen if the principle were applied
  • It provides guideline to manager to take managerial decisions.
  • Principles of management are the guideline for managers for effective management of people and activities in the organization.

Nature of Principle of management

  1. Pervasive in nature: – __________________ is pervasive in nature. It is applicable not only business organization, but also to other organization such as educational institutions. It is also applicable to individual activities such as study.
  2. Basic Guideline: The principles of management provide basic guidelines to the manger to manage the subordinates effectively. If a manger follows the principles of management, then he/she would be in a better position to get the work done effectively and efficiently from subordinates
  3. Applicable at all level: The principles of management must be followed by managers at all levels. Therefore, managers at the top level and also at the middle and lower level must follow the principles of management in order to get the work done efficiently and effectively from subordinates.
  4. Applicable to any size of business: The principles of management are applicable not only to larger organization like joint stock companies but also to small organization like sole trading concern.
  5. Intangible: the principles of management are not visible directly. The effect of principles can be felt by the results such as reduction of wastage, optimum utilization of resources and higher efficiency etc.
  6. Universally application: The principles of management are universally applicable. They can be applied everywhere and all situation, it is not only applicable for larger organization but also small organization.
  7. All principles are equally important: All the principles of management are equally important. All are to be practiced continuously to get perfect result. No principle is more important than other.
  8. Ensure smooth working of an organization: the principles of management ensure smooth working of an organization. For example the principle of division of work, team spirit, order , helps the organization to conduct its activities in a systematic and successful manner

Importance of Principle of Management  

  1. Innovation: __________________facilitates innovation in the organization. Now-a-days, it is essential to generate new ideas, new product, new technology, etc. innovation helps to face competition in today’s competitive business world.
  2. Corporate Image: ________________enable the organization to enhance corporate image. This is because _______________ helps to provide good quality goods and services to the customers. Therefore, proper___________ is required to develop goods corporate image or goodwill of the organization.
  3. Team Work: _________________ develops team spirit in the organization. It is the team work that brings success to the organization. There is a need for team work between the various people and departments working in the same organization. Team work is important to bring success in the organization.
  4. Optimum Use of Resources: ________________facilitates optimum use of resources in the organization. There is efficient use of various resources such as men, money, material, etc. optimum use of resources brings good result to the organization.
  5. Motivation: _______________ enable to motivate of the employees in the organization. Motivated employees work with application and dedication. The dedication on the part of motivated work force brings higher efficiency in the organization. Therefore, proper ____________is required to generate motivation in the employees.
  6. Reduction in Wastages: _________________ ensures reduction of wastages in the organization. Now-a-days, reduction in wastages is vital to any organization. Reduction in wastages generates higher productivity in the organization.
  7. Reduction in Absenteeism: Proper ________________ facilitates reduction of absenteeism in the organization. Absenteeism takes place when employees remain absent without prior permission. Absenteeism creates problems in the organization.
  8. Reduction in Labour Turnover: ________________ helps to reduce labour turnover in the organization. Employee’s turnover takes place when some employees leave the organization and others join in their place. Frequent labour turnover increases selection and training cost.
  9. Higher Efficiency: __________________ is required to generate higher efficiency in the organization. Efficiency is the relation between returns and costs. The more the returns at the same costs or at lower cost, then the organization is said to be more efficient.
  • Better Relations/ facilitates Co-ordination: ___________________ to develop good relations in the organization. There should be good relation between various people and departments working in the same organization. Good relations generate team work, and bring success to the organization.
  • Integrated Process: – Integrated is a very important part of management. In every organization there should be integration between people, departments, various plans etc. in order to achieve good result and maximum returns.

14 Principles of management

  1. Division of work: All the work in an organization can not be done effectively by one person alone. It must be divided among departments. It helps to improve the quality, increase in quantity, and reduction in costs. It also helps to get more and more better work done by subordinates with the same efforts
  2. Authority and responsibility: Henry Fayol stress that authority given to the manager should be equal responsibility. Authority is the power or right to take decisions. The responsibility is the obligation for accepting authority. If authority is more than responsibility, then a manager may misuse it. And if responsibility is more than authority then he may feel frustrated.
  3. Discipline: According to Henry Fayol, there is always a need for discipline in an organization. It means following and maintaining the rules and regulations of an organization by all employees. Its helps to achieve the goals set in the organization. Discipline is the result of effective leadership.
  4. Unity of command: According to Henry Fayol, subordinates should get orders from one superior (boss) only. There should not be more than one superior. Also the subordinates should not be report to several superior. If more than one superior order to the same employees there will be disorder and confusion in work. If the order and commands given by one superior to the employees it helps to work smooth and effectively.
  5. Unity of direction: There should same direction to all employees doing similar work. Business activities having the common goal and objectives planned and directed by one superior. It suggests that “one man, one head” in the absence of unity of direction. There would be confusion among employees
  6. Subordination of interest: The interest of an organization should be primarily and secondary to employees and groups. While taking decision in the organization the manager should always consider the interest of the whole group rather than the interest of single employees.
  7. Remuneration: These principles state that the employees must be paid a fair wage for their services. It helps the employees for their monthly planning. While paying remuneration the skill, knowledge etc. of the employees should be taken into account. It helps to get good result in work.
  8. Centralization: Centralization means concentration of authority at the top level. In other words, centralization is a situation in which top management retains most of decision making authority. Decentralization means disposal of decision making authority to all the level of the organization. In other words, sharing authority downwards is decentralization. There is need to have proper balance between centralization and decentralization.
  9. Scalar chain: It refers to the line of command which runs from top level to lowest level in the organization. Every orders, instructions, messages, requests, explanation has to pass through Scalar chain. But, for the sake of conveniences and urgency this path can be short cut and this short cut is known as Gang Plan.
  10. Order: There should be proper order in every organization. According to this principle people and materials should be in the right place at right time. It must be proper placement of personnel. This principle emphasizes on the proper utilization of physical and human resources.
  11. Equality: Fayol Stressed that there should be equal treatment to every subordinate. There should be equal and fair deal with subordinates. Managers or superior should deal with subordinates with kindness and equal justice. There should not be any discrimination between the employees.
  12. Stability of tenure: Employees should not be kept temporary basis he should be kept permanent basis so that he do not leave the organization. According to Fayol. “Time is required for an employee to get used to a new work and succeed to doing it well but if he is removed before that he will not be able to render worthless services”. As a result the time, effort and money spent on training the worker will go waste.
  13. Initiative: The Managers should always try to motivate, encourage the subordinates to take initiative in the work. Subordinates should come up with suggestions and ideas. This helps to achieve the organization goals and objectives. This will create a sense of participation in the mind of employees.

FUNCTION OF MANAGEMENT

Define the planning and explain its features

  • Planning is the primary function of management. It involves the process of determining the goals and objectives of the organization.
  • Planning bridges the gap between where we are and where we want to go. It is key to success of business
  • Planning involves defining the organization’s goals, establishing an overall strategy for achieving organization goals, and developing plans for organizational work activities.

FEATURES OF PLANNING

  1. Primary function: -Planning is the primary function of management. All the functions of management depend on planning. It is the foundation of the process of management.
  2. Pervasive in nature: – __________________ is pervasive in nature. It is applicable not only business organization, but also to other organization such as educational institutions. It is also applicable to individual activities such as study.
  3. Intellectual Process: – The success of ________________ depends upon to a great extent on the intelligence of the manager. Hence it requires a great deal of imagination and mental qualities on the part of manager to achieve result.
  4. Goal Oriented: – ________________ is important for achievement of organizational goals and objectives. Every organization exists to achieve the goals and it is made to achieve the goals and objective of the business. It is always result oriented.
  5. Continuous Process: – _________________is a regular and continues function of management. It is an ongoing process. This function is vital for organization as the managers are required to perform this function throughout its whole life.
  6. Universally followed:– Manager in all organization, weather large or small and at all level follows this function. The manager needs to __________ in order to accomplish the objective and to achieve the goals.
  7. Co-ordination:– In every organization there is a need for a system of co-ordination. This is required to interconnect the various activities. Plans, direction, department and various people in the organization. There is a need for co-ordination though the organization.
  8. Integrated Process: – Integrated is a very important part of management. In every organization there should be integration between people, departments, various plans etc. in order to achieve good result and maximum returns.
  9. Higher Efficiency: – The main aim of ________________ is to achieve goals. Hence, to achieve goal the managers motivate the employees. National employee work with a dedication. Dedication on the part of motivated employees increases efficiency in the organization.
  10. Future oriented: – Planning is always done by keeping in mind the futures needs. The goals and objective can be achieved if the planning is done with proper thinking. Therefore A good Planner needs to think about future to make effective plans.

 

Explain the importance of management/ planning/ Organizing/ Staffing/ Directing/ coordinating/ controlling / principle of Management/

  1. Innovation: __________________facilitates innovation in the organization. Now-a-days, it is essential to generate new ideas, new product, new technology, etc. innovation helps to face competition in today’s competitive business world.
  2. Corporate Image: ________________enable the organization to enhance corporate image. This is because _______________ helps to provide good quality goods and services to the customers. Therefore, proper___________ is required to develop goods corporate image or goodwill of the organization.
  3. Team Work: _________________ develops team spirit in the organization. It is the team work that brings success to the organization. There is a need for team work between the various people and departments working in the same organization. Team work is important to bring success in the organization.
  4. Optimum Use of Resources: ________________facilitates optimum use of resources in the organization. There is efficient use of various resources such as men, money, material, etc. optimum use of resources brings good result to the organization.
  5. Motivation: _______________ enable to motivate of the employees in the organization. Motivated employees work with application and dedication. The dedication on the part of motivated work force brings higher efficiency in the organization. Therefore, proper ____________is required to generate motivation in the employees.
  6. Reduction in Wastages: _________________ ensures reduction of wastages in the organization. Now-a-days, reduction in wastages is vital to any organization. Reduction in wastages generates higher productivity in the organization.
  7. Reduction in Absenteeism: Proper ________________ facilitates reduction of absenteeism in the organization. Absenteeism takes place when employees remain absent without prior permission. Absenteeism creates problems in the organization.
  8. Reduction in Labour Turnover: ________________ helps to reduce labour turnover in the organization. Employee’s turnover takes place when some employees leave the organization and others join in their place. Frequent labour turnover increases selection and training cost.
  9. Higher Efficiency: __________________ is required to generate higher efficiency in the organization. Efficiency is the relation between returns and costs. The more the returns at the same costs or at lower cost, then the organization is said to be more efficient.
  10. Better Relations/ facilitates Co-ordination: ___________________ to develop good relations in the organization. There should be good relation between various people and departments working in the same organization. Good relations generate team work, and bring success to the organization.
  11. Integrated Process: – Integrated is a very important part of management. In every organization there should be integration between people, departments, various plans etc. in order to achieve good result and maximum returns.

Define the organizing and explain its features

  • Organization is next to planning. It is a process of identifying and bringing all the resources that is men, material, machine, money and methods to use them properly for achieving the goals and objectives.
  • In simple words, organizing means arranging the way and means for execution of business plans.
  • Organizing involves determination and grouping of the activities.
  • Designing organization structures
  • Defining the roles and responsibilities of the departments and of the job positions within the departments.
  • Defining relationships between different departments

FEATURES OF ORGANIZATION

  1. Division of work: In an organization total work is divided among the individuals and department. Division of work leads to specialization, and also increases the efficiency and effectiveness of employees in an organization.
  2. Co-ordination:– In every organization there is a need for a system of co-ordination. This is required to interconnect the various activities. Plans, direction, department and various people in the organization. There is a need for co-ordination though the organization.
  3. Goal Oriented: – ________________ is important for achievement of organizational goals and objectives. Every organization exists to achieve the goals and it is made to achieve the goals and objective of the business. It is always result oriented.
  4. Continuous Process: – _________________is a regular and continues function of management. It is an ongoing process. This function is vital for organization as the managers are required to perform this function throughout its whole life.
  5. Integrated Process: – Integrated is a very important part of management. In every organization there should be integration between people, departments, various plans etc. in order to achieve good result and maximum returns.
  6. Pervasive in nature: – __________________ is pervasive in nature. It is applicable not only business organization, but also to other organization such as educational institutions. It is also applicable to individual activities such as study.
  7. Intellectual Process: – The success of ________________ depends upon to a great extent on the intelligence of the manager. Hence it requires a great deal of imagination and mental qualities on the part of manager to achieve result.
  8. Universally followed: – Manager in all organization, weather large or small and at all level follows this function. The manager needs to __________ in order to accomplish the objective and to achieve the goals.
  9. Decision making: Top management has a right and power to take decisions. It is a task of a manager to get the things done from the employees in the most efficient and effective manner.

What is staffing and explain its features

  • After designing an organizational structure, the management has to do the function of staffing. Staffing function starts with finding out the number and types of person required for an organization.
  • Recruiting (Selecting) Right man for the right job at right time is the principle of staffing.
  • It includes manpower or human resource planning.
  • Staffing involves recruitment, selection, induction and positioning the people in the organization.
  • Training, retraining, development, mentoring and counseling are important aspects of staffing.
  • It also includes performance appraisals and designing and administering the motivational packages.

FEATURES OF STAFFING

  1. Pervasive in nature: – __________________ is pervasive in nature. It is applicable not only business organization, but also to other organization such as educational institutions. It is also applicable to individual activities such as study.
  2. Continuous Process: – _________________is a regular and continues function of management. It is an ongoing process. This function is vital for organization as the managers are required to perform this function throughout its whole life.
  3. Universally followed: – Manager in all organization, weather large or small and at all level follows this function. The manager needs to __________ in order to accomplish the objective and to achieve the goals.
  4. Integrated Process:– Integrated is a very important part of management. In every organization there should be integration between people, departments, various plans etc. in order to achieve good result and maximum returns.
  5. Goal Oriented: – ________________ is important for achievement of organizational goals and objectives. Every organization exists to achieve the goals and it is made to achieve the goals and objective of the business. It is always result oriented.
  6. Co-ordination:– In every organization there is a need for a system of co-ordination. This is required to interconnect the various activities. Plans, direction, department and various people in the organization. There is a need for co-ordination though the organization.
  7. Motivation: _______________ enable to motivate of the employees in an organization. Motivated employees work with application and dedication. The dedication on the part of motivated work force brings higher efficiency in the organization.
  8. Systematic approach: It requires systematic approach. For example there should be a systematic approach in selection of employee by conducting systematic interviews and train the employee by providing right types of training.

Define the directing and explain its features

  • Directing is the function of management. It is related with instructing, guiding and inspiring people in the organization to achieve the objectives.
  • It ensures that people in the organization work effectively for accomplishment of objectives. It is said to be the heart of management process.
  • It is process of communicating and motivating the subordinates to work effectively to achieve the goals and objective of an organization.
  • It consists of issuing orders and instructions by the superior to their subordinates regarding performance of the work.

FEATURES OF DIRECTING

  1. Pervasive in nature: – __________________ is pervasive in nature. It is applicable not only business organization, but also to other organization such as educational institutions. It is also applicable to individual activities such as study.
  2. Continuous Process: – _________________is a regular and continues function of management. It is an ongoing process. This function is vital for organization as the managers are required to perform this function throughout its whole life.
  3. Human factor: Directing is related to human factor in the organization. It is very difficult function as human factor is complex and behaviour is unpredictable, direction function become important.
  4. Flow from Top level to Bottom Level: Directing function includes providing instructions which flows from top to bottom. It starts with top level management and ends with subordinates at lower level.
  5. Universally followed: – Manager in all organization, weather large or small and at all level follows this function. The manager needs to __________ in order to accomplish the objective and to achieve the goals.
  6. Integrated Process: – Integrated is a very important part of management. In every organization there should be integration between people, departments, various plans etc. in order to achieve good result and maximum returns.
  7. Goal Oriented: – ________________ is important for achievement of organizational goals and objectives. Every organization exists to achieve the goals and it is made to achieve the goals and objective of the business. It is always result oriented.
  8. Co-ordination:– In every organization there is a need for a system of co-ordination. This is required to interconnect the various activities. Plans, direction, department and various people in the organization. There is a need for co-ordination though the organization.
  9. Motivation: _______________ enable to motivate of the employees in an organization. Motivated employees work with application and dedication. The dedication on the part of motivated work force brings higher efficiency in the organization.

Define the coordinating and explain its features

  • Co-ordination is and integration of different activities which are important for an organization.
  • It is a process to establish harmony among the different activities of an organization to achieve the goals and objectives.
  • It is a process of inter-linking of action. There is a need for coordination at all level.
    • The Top level coordinates the activities of the middle level
    • The Middle level coordinates the activities of the lower level.
    • The lower level coordinates the activities of the subordinates.

FEATURES OF CO-ORDINATING

  1. Team Work: _________________ develops team spirit in the organization. It is the team work that brings success to the organization. There is a need for team work between the various people and departments working in the same organization. Team work is important to bring success in the organization.
  2. Continuous Process: – _________________is a regular and continues function of management. It is an ongoing process. This function is vital for organization as the managers are required to perform this function throughout its whole life.
  3. Pervasive in nature: – __________________ is pervasive in nature. It is applicable not only business organization, but also to other organization such as educational institutions. It is also applicable to individual activities such as study.
  4. Co-ordination:– In every organization there is a need for a system of co-ordination. This is required to interconnect the various activities. Plans, direction, department and various people in the organization. There is a need for co-ordination though the organization.
  5. Integrated Process: – Integrated is a very important part of management. In every organization there should be integration between people, departments, various plans etc. in order to achieve good result and maximum returns.
  6. Goal Oriented: – ________________ is important for achievement of organizational goals and objectives. Every organization exists to achieve the goals and it is made to achieve the goals and objective of the business. It is always result oriented.
  7. Universally followed: – Manager in all organization, weather large or small and at all level follows this function. The manager needs to __________ in order to accomplish the objective and to achieve the goals.
  8. Dynamic process: Co-ordination begins with planning and ends with controlling. In every organization co-ordination plays an important role in success of any business. It is necessary at every level of activity to achieve the desired goals and objectives of an organization.
  9. Managerial Responsibility: Coordination is the basic responsibility of the managers at all levels. The Top level coordinates the activities of the middle level, The Middle level coordinates the activities of the lower level and the lower level coordinates the activities of the subordinates.

Define the contracting and explain its features

  • Controlling is end function of management and it is the core of management process. It helps the organization to achieve the desired goals and objectives.
  • It is an important function that ensures the effective and efficient utilization of resources to achieve the desired goals.
  • It measures actual performance against the plans.
  • It measures the effective and efficiency of execution against these standards and the plans. It periodically reviews, evaluates and monitors the performance.

FEATURES OF CONTROLLING

  1. Planning is a basis of controlling: Controlling is said to be checking the performance as per the planning. So planning precedes controlling and sets the standards and target of performance. Without planning, control is not possible.
  2. Continuous Process: – _________________is a regular and continues function of management. It is an ongoing process. This function is vital for organization as the managers are required to perform this function throughout its whole life.
  3. Pervasive in nature: – __________________ is pervasive in nature. It is applicable not only business organization, but also to other organization such as educational institutions. It is also applicable to individual activities such as study.
  4. Co-ordination:– In every organization there is a need for a system of co-ordination. This is required to interconnect the various activities. Plans, direction, department and various people in the organization. There is a need for co-ordination though the organization.
  5. Integrated Process: – Integrated is a very important part of management. In every organization there should be integration between people, departments, various plans etc. in order to achieve good result and maximum returns.
  6. Goal Oriented: – ________________ is important for achievement of organizational goals and objectives. Every organization exists to achieve the goals and it is made to achieve the goals and objective of the business. It is always result oriented.
  7. Forward looking: A good control system should be forward looking in nature. It should help the managers to plan their activities for the future.
  8. Creativity: Managers should adopt new and modern controlling techniques for the achievement of objectives. They have to be creative and innovation in their thinking.
  9. Universally followed: – Manager in all organization, weather large or small and at all level follows this function. The manager needs to __________ in order to accomplish the objective and to achieve the goals.
  10. End Function: – Controlling is an end function which comes once the performance is made in accordance to the plan. If all the desired objectives are achieved as per the planned activities. Then the control function brings an end to the task assigned.

Features/Nature/ characteristic of ENTREPRENEUR?

Meaning: -Entrepreneur plays an important role in the development of any country. They are the backbone of nation’s economic progress. Entrepreneurs are innovators but in their role they act as the owners, producers, coordinators, market creators, decision takers and risk takers. They organize land, labour and capital to provide much needed goods and services to the society and therefore are referred to as fourth “factor of production’. He is also called as caption of the industry.

Definition: – An entrepreneur is a person who buys factor services at certain prices with a view to selling its product at uncertain (doubtful) prices.” …………Defined by (Cantilon)

The nature of Entrepreneur is explained as follows:

  1. High goals: -The Entrepreneurs have very positive desires to achieve high goals. Such high self motivation keeps them strong and confident to face various obstacles and misfortune (bad luck). Hence they are successful in setting a prosperous organization.
  2. Future foresight: – The Entrepreneurs have good foresight to know about the future market development and the external business environment. He can take proper decision according to the market situations and market changes. This also helps them to take timely action.
  3. Mental abilities: – Mental ability consists of intelligence and creative thinking. Ti be an Entrepreneur, a person must be intelligent and have the ability of creative thinking. .
  4. Technical Knowledge: -An Entrepreneur should have sufficient technical knowledge about the products and his plan to produce. Timely change of technology should always be updated to be in pace (speed) with the market.
  5. Hard Work: – A successful Entrepreneur will always be ready to work hard. Hard work will always distinguish a successful entrepreneur from an unsuccessful one.
  6. Highly optimistic (positive): – An entrepreneur always thinks positive in all the activities. He is always optimistic with the market situations even in failure times. Such positive attitude helps the entrepreneur to run successfully.
  7. Communication skills: -This refers to communicate effectively. It is very important that the sender and receiver of the message are being understood perfectly. An entrepreneur has to communicate to various parties i.e. customers, suppliers, creditors, employees, etc.
  8. Creativity: -An entrepreneur should be creative; Creativity is the ability to bring something new into existence. Innovation is the process of doing new things, and creativity is a prerequisite (requirement) to innovation.

Feature/nature/characteristics of Entrepreneurship?

Introduction: – Entrepreneurship is a process of setting up a new business organization. It is the process where one decides to build a business career by finding the market options and mobilizing the available resources.

Following are the Characteristics of Entrepreneurship.

  1. Economic Activity: -An entrepreneur produces a new product for the consumers as per their needs. He feels the need of this to satisfy human wants and as well in exchange earn a better livelihood. It is a systematic plan activity as per the skills and knowledge of an entrepreneur. Hence entrepreneurship is an economic activity.
  2. Innovation: – entrepreneurship is an innovation. The introduction of new combination of various factors of production is innovation. A new product arrives in the market, uses new production technology, discovers new source of supply of raw materials and opens a new market for the specific product.
  3. Creative activity: -Innovation should have a strong support of creativity. Introducing creativity in producing some new is a big challenge for the entrepreneur. Thus creativity is an essential part of entrepreneurship.
  4. Organizational building: – It is an activity where various factors of production have to be organized. Different factors like place utility, time utility, form utility, etc. has to be considered to collect them under one roof for new production.
  5. Managerial skill and leadership: -A person who wants to be a successful entrepreneur should have more passion of doing something new than just earn profit. Leadership and managerial skills are the most important facets (part) of entrepreneurship.
  6. Risk bearing: -Uncertainty is defined as a risk which cannot be insured against and is incalculable. Entrepreneur is an agent who buys factors of production at certain prices, in order to combine them into a product, to sell them at uncertain prices in future. Thus they too are risk-bearing agents of production.
  7. Gab filling function: -The most significant feature of entrepreneurship is gap filling. It is the entrepreneur’s job to fill the gap or make up the deficiencies which always exist in the knowledge about the production function.
  8. Skillful management: -The success of any entrepreneur ship depends on the management of the organization. With professional management and skilled managers, entrepreneur ship becomes a successful activity

Note:    

  1. All questions are compulsory.
  2. Figures to the right indicate full marks for the questions.
  3. Figures to the left indicate question numbers.
  4. Answer to every question must be started on a new page.

 

Q.1. (A)  Select the proper option from the options given below and rewrite the sentences: [5]

  1. The Karta in a Joint Hindu family business has _______ liability.

(a)   Unlimited     (b)   limited      (c)   joint

  1. Perishable goods are stored in _______.

(a)    Bonded warehouses (b)   duty paid warehouses  (c)   cold storage warehouses

  1. The process of contracting a business function to someone else is called as _______.

(a)   e‐business  (b)  outsourcing   (c)  trading

  1. In modern competitive market, consumer is regarded as _______.

(a)  King   (b) Agency  (c) Superintendent

  1. Businessmen are _______ of the society.

(a)   representatives   (b)  members   (c)  trustees

 

 (B)   Match the correct pairs:                                                                                            [5]      

Group ‘A’Group ‘B’
1.      Co‐operative society

2.      F.W. Taylor

3.      Directing function

4.      A.T.M.

5.      Rail transport

 

a)      Manager

b)      12 hours service

c)      One member one vote

d)      Government owned

e)      Father of scientific management

f)       Owned by private companies

g)      Father of modern management

h)      24 hour service

i)        Maximum business secrecy

j)        Worker

 

(C) Write a word or a phrase or term which can substitute the following statements:         [5]    

  1. A partner who gives his name to a partnership firm.
  2. Getting products of better quality is the basic right of this group of society.
  3. A consumer dispute redressal agency that handles claims upto rupees twenty lakhs.
  4. The principle of management which advocates that work should be divided into small  sub‐parts.
  5. One of the functions of the management is considered as a base for all functions.  

Q.2.Distinguish between the following: (Any three)              [15]   

  1. Sole trading concern and Partnership firm.
  2. Private Company and Public company
  3. District Forum and National Commission.
  4. Organising and Directing.
  5. Road transport and Rail Transport

Q.3.Write short notes on the following: (Any three)              [15]   

  1. Disadvantages of e-business.
  2. Any ‘five’ principles of management.
  3. Types of partners.
  4. Importance of staffing.
  5. Role of transport.

Q.4.State with reasons, whether the following statements are True or False: (Any 3)              15]

  1. Maximisation of profit is the object of a co‐operative society.
  2. E‐business means using the internet to connect people and processes.
  3. Business organizations have various types of social responsibilities.
  4. Consumer Protection Act is not a blessing for the consumers.
  5. Principles of management improve the efficiency of employees.

Q.5.Attempt the following questions: (Any two)                     [10]  

  1. State the social responsibilities of a business towards consumers.
  2. State the characteristics of Entrepreneurship.
  3. State the importance of controlling.
  4. State the rights of consumers.

Q.6.Define Joint Stock Company and explain its features.                   [10]

                               OR

Define Fire Insurance. Explain the various types of fire insurance policy.

  1. The liability of sole trader concern is limited.

Ans.: FASLE,

Because the liability of sole trader is unlimited.

  1. Sole trading concern does not enjoy separates legal status. Organization and owner are one and the same. They are not separates from each other. Legally sole trading concern and sole trader are one and the same.
  2. The liability of sole trader is unlimited. It is not limited to business.
  3. When the business liabilities are more than business assets then sole trader has to sell his personal property to pay the business liabilities.
  4. The law does not make difference between business property and personal property of sole trader.
  5. The creditor can recover their money by selling business property as well as personal property of sole trader.

After considering all above reasons I can say that given statement is false.

  1. Sole trader has weak bargaining power.

Ans.: TRUE, Because, sole trader has weak bargaining power.

  1. Bargaining means buying or selling at the best possible price. Bargaining power depends upon scale of buying and selling.
  2. When buying and selling are on small scale the bargaining power is weak. When buying and selling are on large scale then bargaining power is strong.
  3. Due to limited capital, limited storage space and limited risk bearing capacity sole trader runs his business on small scale. Hence, he has weak bargaining power.
  4. Due to weak bargaining power sole trader can not control market price he has to always accept market price. Secondly, sole trader may not have the skill of bargaining. He suffers losses due to slight changes in the market.

After considering all above reasons I can say that given statement is false.

  1. Sole trading concern in international markets.

Ans.: FALSE,The activities of sole trading concern are confined to local market.

Reasons:-

  • The activities of sole trading concern are not confined to international market. It means the activities of sole trading concern are concern are confined to local market only.
  • To expand the business on national and international level large capital and expertManagement in needed.
  • Due to limited capital, limited managerial skill and limited risk bearing capacity sole trader cannot expand his business beyond local market.
  • Sole trader starts and runs his business at particular locality. He deals with local people. He can not expand his business to national and international level.

After considering all above reasons I can say that given statement is false.

  1. A sole trading concern is flexible form of business organization.

Ans.: TRUE, A sole trading concern is flexible form of business organization

Reasons:-

  1. Flexibility means capacity of business to adjust as per changing situation. A sole trading concern is a flexible form of business organization.
  2. In sole trading concern changes as per business requirements are easy, less expensive and less time consuming.
  3. Sole trader is the only owner of his business. He is the owner, manager and controller of his business. He is whole and sole of his business.
  4. Sole trader can start, close or change the line of business at any time without undergoing any legal formalities.

After considering all above reasons I can say that given statement is true.

  1. A partnership agreement can be verbal or written.

Ans.: TRUE, Partnership agreement can be verbal or written.

Reason:-

  1. To form a partnership agreement is compulsory. Without agreement partnership cannot be formed. This is because partnership is owned, managed and controlled by two not be any partnership
  2. Partnership is a contract between two or more person to carry out a particular business. As per Indian Contract Act, 1872 an agreement i.e. contract can be verbal or written. Besides this there is no specific legal provision in Indian Partnership Act, 1932 that partnership agreement must be in writing. Oral agreement is also valid.
  3. Though, written agreement is not compulsory by law. But it is always better to have written agreement to valid future disputes among the partners. When agreement is written on stamp paper as per Indian Stamp Act, 1899 then it is called as “Partnership Deed”. It includes terms and conditions of partnership. It acts as proof in court of law.
  4. In short partnership agreement can be verbal or written. There is no compulsion that agreement should be in writing.

After considering all above reasons I can say that given statement is true

  1. The liability of partners is limited

Ans.: FALSE, The liability of partners is unlimited.

Reason:-

  1. Partnership firm does not enjoy separate legal status. Organization and owner are one and the same. They are not separate from each other. Legally partnership firm and partners are one and the same.
  2. The liability of partners is unlimited. It is not limited to business.
  3. When the business liabilities are more than business assets then partners have to sell their personal property to pay the business liabilities.
  4. The law does not make difference between business property and personal property of partners.
  5. The creditors can recover their money by selling business property as well as personal property of partners.

After considering all above reasons I can say that given statement is false.

  1. The liability of Karta is unlimited.

Ans.: TRUE,   Reason:-

  1. Joint Hindu Family firm does not enjoy separate legal status. Organization and owner are one and the same. They are not separate from each other. Legally joint Hindu family firm and Karta are one and the same.
  2. The liability of Karta is unlimited. It is not limited to business.
  3. When the business liabilities are more than business assets then Karta has to sell his personal property to pay the business liabilities.
  4. The law does not make anuy difference between business property and personal property of Karta.
  5. The creditors can recover their money by selling business property as well as personal property of Karta.

After considering all above reasons I can say that given statement is false.

  1. Maximum number of members in joint hindu family business is 20.

Ans.: FALSE, Reasons:-

  1. Membership in joint hindu family is not fixed. It is unlimited.
  2. The membership of joint hindu family depends upon numbers of birth and deaths in the family.
  3. When a child takes birth in the family the membership increases and when a person dies in the family the membership decrease.
  4. The membership of joint hindu family can be obtained only by birth or by adoption. Outsiders are not allowed to enter in this business.

After considering all above reasons I can say that given statement is false.

  1. Company form of organization has developed after industrial revolution.

Ans.: TRUE,  Reasons:-

  1. After industrial revolution production started on large scale with the help of machines and anticipation of demand. Domestic method of production was replaced by factory system of production.
  2. Industrial revolution was followed by transport revolution. Use of electricity and efficient means of transport become necessary. Skilled labours were employed in factories who demanded high salary. All these needed large amount of capital and specialized management.
  3. The earlier form of business organization such as sole trading concern, partnership firm were unable to provide large amount of capital, limited managerial skills, limited risk bearing capacity, unlimited liability and so on.
  4. Hence a new form of business organization with large capital and expert management come into existence. It is known as Joint Stock Company. It has many advantages like large capital, expert management, continuity and stability, limited liability etc.

After considering all above reasons I can say that given statement is false.

  1. The main motive of co-operative society is to earn maximum profit.

Ans.:- FALSE,  Reasons:-

  1. A co-operative society is a different from of business organization. The other forms of commercial organizations like sole trading concern, partnership firm, joint hindu family firm, joint stock company are profit oriented.
  2. A co-operative society is services oriented organization. It is formed by the economically and socially weaker sections of the society, who have joint together to protect and promote their economic and social interest.
  3. The main objective of co-operative society is not to make large profit but to provide maximum service to its members.
  4. Profit earning is the secondary objective of co-operative society. It is a service oriented organization. Hence, profit maximization is not the main motive of co-operative society.

After considering all above reasons I can say that given statement is false.

  1. A co-operative society differs from other forms of business organization.

Ans.: TRUE, Reasons:-

  • The main motive of co-operative society is to provide services to its members. It is a service oriented organization. It is not a profit oriented organization. Earning profit is secondary motive.
  • Other form of commercial organization like some trading concern, partnership firm, joint Hindu family business and joint stock companies are profit oriented.
  • In co-operative society there are equal voting rights. The voting principle is ‘one member one vote ‘.
  • There are no restrictions to become thee member. The shares of co-operative society are not freely transferable.
  • In Joint Stock Company there are no equal voting rights. The voting principle is ‘one share one vote’ secondly in case of Private Company membership is not open to all. The shares od public company are freely transferable.

After considering all above reasons I can say that given statement is true.

Business organization have no social responsibilities

Ans.:

This statement is False because of the following reasons

  • The main essential economic objectives of commercial organization are to making profit and it should also have other objectives which will be useful to the society.
  • A commercial organization is a part of society. So it has social objectives or responsibilities towards various sections of the society i.e. consumers, employees, investors, government etc.
  • It is the responsibility of the commercial organizations to balance the economics interest with social commitments.
  • This can be done by performing social duties along with the economic activities.

 

 

Private companyPublic company
1.meaning:-

The company which is owned by private group of people is called as private company.

 

The company which is owned by general public is called as public company.

 

2. membership:-

In private company minimum membership is two and maximum membership is fifty.

In public company minimum membership is seven and maximum membership is Unlimited.

 

3. shares:

The shares of private company are not issued to public and the shares are not transferable.

 

The shares of public company are issued to public and the shares are freely transferable.

 

4. number of directors:

A private company must have at least two directors.

 

A public company must have at least three directors.

 

5. capital:

A private company has relatively limited capital.

A public company has relatively large capital.
6. statutory meeting:

Holding statutory meeting is not compulsory for private company.

Holding statutory meeting is compulsory for public company.
6.Certifivates:

It must obtain only one certificate i.e. certificates of incorporation.

It must obtain two certificates i.e. certificate of incorporation and certificate of Commencement of business.

 

7.Allotment of share:

It can allot its shares just after the incorporation certificate.

It cannot allot shares only when the minimum subscription has been received.

 

8.Articles:-

A private company must prepare its own article of Association as per requirement.

A public company need not to prepare articles of Association. It can adopt Table “A” as it articles of association.
9.Name:-

Name of private company ends with the words ‘Pvt. Ltd”.

Name of public company ends with the word ‘Ltd’.

 

Water Transport Air Transport

 

Sr.

No.

Basis of DifferenceWater TransportAir Transport
 

1.

SpeedIt is slowest mode of transport.It is the fastest mode of transport.
 

2.

carrying capacityIt has a very huge carrying capacity.It has limited carrying capacity.
 

3.

Cost   of maintenance It requires high maintenance cost for ships.It also requires huge maintenance cost for aircraft etc.
 

4.

 

Distance

Suitable for long distances especially across countries and continents.Suitable for long distances.
 

5.

Transport chargesTransport charges are lowest.Transport charges are the very high.
 

6.

 

Suitability

It is suitable for transporting very heavy goods, machineries in large quantities to any part of the world.It is suitable for transporting light weight perishable and valuable goods to any part of the world.
 

7.

Means of transportIt uses boats, big ships, liners, tankers. Etc.It uses aircrafts, helicopters, jets, etc.
 

8.

 

Ownership

It is owned by both private sector as well as public sector.It is owned by both private sector as well as public sector.
 

9.

 

Safety

Goods are safe as they are specially packed.Goods are safe as they are more specially packed.

Life Insurance Marine Insurance

 

Sr.

No.

Basis of Difference 

Life Insurance

 

Marine Insurance

 

1.

 

Meaning

A contract whereby the insurance company undertakes to pay a certain sum of money either on death or maturity (whichever earlier for a consideration (premium)A contract whereby the insurance company undertakes to pay compensation to the insured in case of loss to him due to danger (perils) of the sea.
 

2.

 

Who takes it

It can be taken by an individual for his own life or for his family members.It can be taken by individuals for their properties or by businessmen for their goods, properties business liabilities, etc.
 

3.

Subject matterIn life Insurance, the life of the Insured is a subject matter.In Marine Insurance, the subject matter of insurance is the cargo.
 

4.

Insurable interestIt must exist (live) at the time of contract.It must exist at the time of loss.
 

5.

 

Period

The policy can be issued for any number of years, even until death of the assured.The period of the policy normally does not exceed 12 months. It can be for one month.
 

6.

compensationIt is paid either on death or maturity whichever is earlier.It is paid only if there is a loss causing during the term of the policy.
 

7.

Principle of IndemnityIt is not applicable as a human life cannot be valued in terms of money for calculating the actual loss.It is applicable as insurance company compensates for the financial loss.
 

8.

Number of policiesInsured can take any number of policies on the same life.Generally, only one policy can be taken. However, double insurance is possible.
 

9.

Surrendering of policyThe policy can be surrendered before the expiry of the term subject to certain conditions. 

It cannot be surrendered.

 

Life Insurance Fire Insurance

 

Sr.

No.

Basis of Difference 

Life Insurance

 

Fire Insurance

 

1.

 

Meaning

A contract whereby the insurance company undertakes to pay a certain sum of money either on death or maturity (whichever earlier for a consideration (premium)A contract which insurer promises to pay compensation to insured if something happens to the subject matter due to fire or related events.
 

2.

 

Who takes it

It can be taken by an individual for his own life or for his family members.It can be taken by exporters, importers and shipping companies.
 

3.

Subject matterIn life Insurance, the life of the Insured is a subject matter.In fire Insurance, the subject matter of insurance is the property or goods.
 

4.

Insurable interestIt must exist (live) at the time of contract.It must exist both at the time of contract and also at the time of loss.
 

5.

 

Period

The policy can be issued for any number of years, even until death of the assured. 

It is generally for a short period like one year.

 

6.

compensationIt is paid either on death or maturity whichever is earlier.It is paid only if there is loss due to fire during the term policy.
 

7.

Principle of IndemnityIt is not applicable as a human life cannot be valued in terms of money for calculating the actual loss.It is applicable as insurance company compensates for the financial loss.
 

8.

Number of policiesInsured can take any number of policies on the same life.Generally, only one policy can be taken. However, double insurance is possible.
 

9.

Surrendering of policyThe policy can be surrendered before the expiry of the term subject to certain conditions. 

It cannot be surrendered.

 

Commercial Bank Central Bank

 

Sr.

No.

Basis of DifferenceCommercial BankCentral Bank
 

1.

FunctionThe main function is to accept deposits from public for lending to industry and others.The main function of the central bank (RBI) is to regulate money supply in the country.
 

2.

Printing of currencyThe commercial bank cannot print currency notes.The central bank can print currency notes.
 

3.

Acceptance of depositsThe commercial bank accepts deposits from the public.The central bank does not accept deposits from public.
 

4.

LoansThe commercial banks provides loan to industry and commerce.The Central bank provides loan to banks and financial institutions.
 

5.

OwnershipIt can be owned by private and/or by government agencies.It is owned and controlled by the government if India.
 

6.

NumberThere are many commercial banks in India.There is only one Central bank (RBI) in India.
 

7.

Monetary PolicyThe commercial banks do not frame any monetary policy.The Central bank frames the monetary policy and credit policy.
 

8.

MonitoringThe commercial bank does not keep check on the Central bank.The Central bank keeps a check on the working of the commercial banks`.

 

 

Points District formState commission National commission
MeaningConsumer disputes redressal agency which settles consumer complaints at district level called as district fourm.Consumer disputes redressal agency which settles consumer complaints at state level is called as state commission.Consumer disputes redressal agency which settles consumer complaints at national level is called as national commission.
Establish byIt is establish by state governmentIt is establish by state government.t is establish by central government.
MembershipIt has three membersIt has three members.It has five members.
Headed byIt is headed by a working or retired judge of district court.It is headed by a working or retired judge of district court.It is headed by a working or retired judge of supreme court.
Area of operationIts operates at district level.Its operates as state level.Its operates at national level.
Age limit of membersMembers of district forum can hold office up to the age of 65 years.Members of state commission can hold office up to the age of 67 years.Members of national commission can hold office up to the age of 70 years.
CompositionIt consists of a president and two other members.It consists of a president and two other members.It consists of a president and four other members.
Appointment of presidentThe president of district forum is appointed by the state government on the recommendation of the selection committee.The president of state commission is appointed by the state government after consultation with the chief justice of high court.The president of national commission is appointeed by the central government after consultation with the chief justice of India.
Amount of compensationIt can be entertain complaint where the value of goods and services and the compensation claimed is up to Rs. 20 lakhsIt can be entertain complaint where the value of goods and services and the compensation claimed is above Rs. 20 lakhs but up to Rs. 1 crore.It can be entertain complaint where the value of goods and services and the compensation claimed is above Rs. 1crore
Appeal against orderAny person who is not satisfied with the order of district forum can appeal against the order to state commission within 30 days of the order.Any person who is not satisfied with the order of state commission can appeal against the order to national commission within 30 days of the order.any person who is not satisfied with the order of the national commission can appeal against the order to supreme court within 30 days of the order.

 

Sr.

No.

Basis of DifferenceEntrepreneurManager
 

1.

 

Motive

The main motive of an entrepreneur is to start a venture by setting a enterprise to achieve his ideas.The main motive of a manager is to give his services to an enterprise owned by someone else.
 

2.

 

Status

An entrepreneur is the owner of the enterpriseA manager is a servant or paid employee of an enterprise.
 

3.

 

Risk-bearing

Being the owner, the entrepreneur undertakes all the risk and uncertainties of the enterprise.A manager being an employee does not undertake any risk involved in the enterprise.
 

4.

 

Qualification

an entrepreneur requires qualities and qualifications like hard working , patience, foresight, high thinking, independence, etc.A manager needs to posses educational and technical skills. Special management knowledge and qualification is an additional benefit
 

5.

 

Innovation

Entrepreneurs are born innovators. They set their own goals and work for it.Managers only execute the plans prepared by the entrepreneurs. They only do the practical part of the plan.
 

6.

 

Benefits

An entrepreneur gets profits as the benefits of the enterprise which is uncertain.A manager usually gets fixed salary for the services rendered by him. It is fixed.
 

7.

Decision makingAn entrepreneur takes decisions on his own as the enterprise has to develop as per his ideas.A manger does not have authority to take decision on behalf of the enterprise, but he may take decision related to the plan which he is executing.
 

8.

 

Specialization

An entrepreneur may not be a specialized in his trade but may have sufficient knowledge.A manager is trained professional, hence is specialized in his field.

 

 

 

 

 

 

35 comments on “OCM: Organization of Commerce and Management

  1. Sir Can you please upload notes from chapter 3 to 8(If you have time).Please Sir it will be Highly grateful to you.Thank you sir.Stay Safe In COVID-19 times😀🥰.

Post your Comment

Your email address will not be published. Required fields are marked *

one × 5 =