Business Studies Class 12 Notes Marketing Management

1 What is Marketing

Marketing refers to things to do a business enterprise undertakes to promote the shopping for or promoting of a product or service.

Marketing consists of advertising, selling, and turning in merchandise to buyers or different businesses.

Some advertising and marketing are accomplished via associates on behalf of a company.

Professionals who work in a corporation’s advertising and marketing and advertising departments are looking for to get the interest of key viable audiences thru advertising.

Promotions are centered to positive audiences and may additionally contain celeb endorsements, catchy phrases or slogans, memorable packaging or image designs and usual media publicity

2 Importance Of Marketing

A. Marketing Is an Effective Way of Engaging Customers

 It’s vital for your enterprise to interact its customers. Marketing is a device to maintain the dialog going.

Engaging clients is exclusive from pushing your offers. Engaging entails furnishing your clients with applicable statistics about your merchandise and your enterprise as well.

It’s all about growing sparkling content. Tell your clients what they don’t know.

Let it be fascinating and well worth their time. Social media is one of the exceptional structures the place you can have interaction your customers.

Some groups use quick movies and different humor-laden hints to interact their client base.

By attractive your customers, advertising offers them an experience of belonging.

B. Marketing Helps to Build and Maintain the Company’s Reputation

The boom and lifestyles span of your commercial enterprise is positively correlated to your business’s reputation.

Hence, it’s truthful to say your popularity determines your company equity.

A majority of advertising things to do are geared in the direction of constructing the company fairness of the company.

Your business’s popularity is constructed when it successfully meets the expectations of its customers.

Such an enterprise is viewed an accountable member of the community.

The clients emerge as proud to be related with your products.

 Marketers use nice communication, branding, PR and CSR techniques to make certain that a business’s recognition is maintained.

C. Marketing Helps to Build a Relationship Between a Business and Its Customers

Businesses want to construct a relationship of believe and grasp with their customers.

How does advertising and marketing set up this relationship?

Marketing lookup segments must be based totally on demographics, psychographics, and patron behavior.

Segmentation helps the commercial enterprise meet the desires of its clients as a result gaining their trust.

The product group ensures the commercial enterprise grants what’s promised at the proper time.

This makes the clients company loyal. Loyal clients will have the self-belief to purchase extra merchandise from you.

The have faith and grasp between the enterprise and its clients make your industrial things to do extra fruitful.

D. Marketing Is a Communication Channel Used to Inform Customers

Marketing informs your clients about the merchandise or offerings you’re imparting them.

Through marketing, the clients get to comprehend about the cost of the products, their utilization and extra data that would possibly be useful to the customers.

It creates company consciousness and makes the enterprise stand out.

There’s stiff opposition in the market and you want to be a steady voice to persuade the customers.

Inform your clients of reductions and different aggressive hints you intend to use.

Through communication, advertising and marketing helps your enterprise come to be a market leader.

This publish explains extra about how to achieve an aggressive advantage.

E. Marketing Helps to Boosts Sales:

 Marketing makes use of unique approaches to promote your merchandise or services.

Once a product has been advertised, it’s already on the radar and this will increase your possibilities of promoting it.

Might also desire to strive yourmerchandise or offerings and this will set off a buy decision.

When clients are completely happy about your merchandise or services, they end up your manufacturer ambassadors barring your knowledge.

They will unfold the phrase and your income will begin to increase.

Ensure you provide super merchandise and offerings to complement your advertising and marketing efforts.

F. Marketing Aids in Providing Insights About Your Business

Every marketer is aware they want for focused on the proper audience.

 However, you should have the proper content material to share with such an audience.

Your advertising and marketing techniques can assist you set up what commercial enterprise messaging will persuade the goal audience.

At this point, you have to take a look at extraordinary messages and see what works.

Once you have examined one-of-a-kind units of messaging on the goal audience, you will discover a potential baseline for your advertising and marketing efforts.

It acts as a metric and gives the perception wished to make you keep away from guesswork.

G. Marketing Helps Your Business to Maintain Relevance

Every marketer is familiar with the want for disrupting an attainable consumer’s opinion about different products.

But don’t make a mistake of taking this danger for granted.

Most corporations count on that they will continually stay the client’s favorite company due to the fact up to now the consumer has by no means complained.

This is the incorrect mindset. You want to locate approaches to continue to be at the pinnacle of the client’s mind.

Every relationship wishes to be maintained. Marketing helps your commercial enterprise to hold a precise relationship with clients by way of making you continue to be relevant.

Don’t focal point on gaining new clients earlier than addressing the want to hold the current ones.

H. Marketing Creates Revenue Options

During the startup phase, your selections are sparse in view that you’re mainly cash-strapped.

This limits your options. As your advertising techniques generate greater clients and income opportunities, you’ll commence having options.

Having picks is related to having a quality battle chest. Having alternatives will supply you the braveness you want to penetrate new markets.

You will have the freedom to begin letting go of clients who are too traumatic to your sanity and well-being.

Without marketing, you will be pressured to precede working with purchasers who you have outgrown and are paying you peanuts.

I. Marketing Helps the Management Team to Make Informed Decisions

Every enterprise is confronted with issues such as to what, when, for whom and how a lot to produce.

A complicated and tedious method decide your business’s survival. As a result, companies closely remember on advertising mechanisms to make these decisions.

Why need to you remember on advertising and marketing mechanisms?

These mechanisms serve as a dependable hyperlink between your enterprise and society.

They domesticate people’s mind, teach the public and persuade them to buy.

3 Process Of Marketing

A. Choosing a goal market

B. Getting, maintaining as nicely as developing the customer

• that is, make certain that the goal clients buy the firm ‘s product, make sure that they hold their clients comfy with the merchandise and appeal to new clients so that the company can grow.

C. Create, improve and talk most reliable values to the clients

4 Functions Of Marketing


A Promotion

 When humans map out their advertising goals, advertising is commonly at or close to the pinnacle of that list.

Getting your title in the front of potential customers, constructing company cognizance and elevating your company’s profile are principal priorities for each and every advertising department.

Promotional techniques regularly overlap with different commercial enterprise gadgets and awareness-building activities, such as advertising and marketing and public relations.

From an advertising and marketing perspective, promoting can encompass the entirety from content material advertising and marketing and electronic mail advertising and marketing to social media and influencer marketing.

We don’t want to inform you how essential these efforts are to inbound advertising and producing certified leads.

It’s no marvel advertising has lengthy been regarded a quintessential factor of the advertising mix.

B Selling

 We’ve frequently recommended readers about the risks of coming on too sturdy and salesy with your advertising content.

Your danger alienating your goal target audience by using persistently handing over overt income pitches in your content material and making it appear like your solely intention is to get humans to purchase something from you.

The reality is phase of each and every marketer’s job is to promote their merchandise to clients — ideally, though, it’s carried out with greater nuance.

Every advertising decision, from your manufacturer messaging to your marketing campaign themes, ought to help the last intention of growing sales.

Once you’ve grabbed the interest of a conceivable customer, whether or not that’s a customer or B2B prospect, entrepreneurs want to go to work nurturing that lead and guiding them via the income funnel so they’re primed to make a buy when they subsequently make contact with your income team.

That capability consistently making the case for your company and regularly incorporating greater product-centric speak me factors in your advertising communications.

By the time they’re prepared to talk with an income associate, potentialities need to understand how your items or offerings stack up towards competing products.

C Product management

 Designing a new product that higher meets patron wants and fills a hole in the market doesn’t show up by way of twist of fate or sheer luck.

It takes a lot of thorough market lookup to determine out what human beings favor and how to supply the exceptional product possible.

Marketing groups may additionally become aware of new increase possibilities when:

  • Speaking with prospects.
  • Running competitor analysis.
  • Incorporating comments gleaned from patron guide offerings into advertising strategies.
  • In these cases, advertising and marketing lookup is the furnace that fuels product development. Who higher is familiar with your goal market than your advertising team?

D. Marketing records management

Strategic advertising is pushed by way of data. Every correct marketer is aware of that the greater statistics you can acquire about your goal customer, enterprise rivals and market trends, the greater profitable your advertising efforts will be.

All of that juicy data is as exact as gold, so there’s no motive to preserve it locked away in some silo.

One of the cores (yet once in a while overlooked) features of advertising is to gather this precious data, distill it down to motion gadgets and beneficial takeaways and share it with different departments that may discover it useful.

Sales teams, for instance, can continually use greater in-depth advertising insights to assist them refine their pitches to:

Address the cutting-edge enterprise trends.

Respond to competitor messaging.

Speak without delay to the urgent client concerns.

E Pricing

 Marketing lookup can additionally inform how manufacturers set the fee of a product.

Effective pricing is as a lot artwork as it is science, and manufacturers want to discover that candy spot that balances how clients cost your items or offerings with the fee of manufacturing and transport as nicely as accounting for the present-day rate of competing products.

The perceived cost of your manufacturer without delay affects your pricing approach — simply appear at the fee distinction between a luxurious trend manufacturer like Hermès and extra budget-conscious outlets like Old Navy.

The countless thousand greenback charge tag disparity for a single purse can’t be chalked up to manufacturing fees and satisfactory manage alone.

Hermes clients are paying as a great deal for the manufacturer as they are the product itself.

Marketing lookup sheds mild on your brand’s popularity and helps you higher apprehend how a whole lot your goal target market values your brand.

That’s on pinnacle of all the competitor evaluation and enterprise lookup essential to placing an honest asking charge for your wares.

F Financing

 Now we’re digging into some of the less-discussed features of marketing, though they’re nevertheless very essential to overarching commercial enterprise objectives.

Financing might also no longer at first appear like a pinnacle difficulty for your advertising group to fear about,

however suppose about it this way: If your branch can’t impervious area in the price range to completely aid your subsequent advertising campaign, how are you going to meet your goals?

When humans suppose about financing, they regularly center of attention on the up-front fees of getting a new enterprise off the ground.

But, in reality, financing is an ongoing subject for commercial enterprise proprietors and business enterprise leaders, who want to make tough budgeting choices yrs. after 12 months and quarter after quarter.

By supporting generate extra revenue, extend into new markets and attain extra practicable customers, advertising groups can show their cost to the corporation at large. And that makes it less difficult to impervious the financing they want on a departmental level.

Effective advertising administration is key in that regard. An advertising software that receives the most cost out of handy sources and applies the proper techniques to have interaction and nurture certified leads can exhibit simple ROI.

Successful advertising endeavor additionally helps corporations impenetrable funding from 0.33 events — say getting a mortgage from a financial institution or a funding from a challenge capital firm.

Any organization, whether or not it’s an unbiased company or an economic institution, desires to see that agencies have a complete advertising and marketing sketch that will assist construct the brand, faucet into markets and produce healthful income over the lengthy run.

G Distribution

 “Distribution?” you might also be asking yourself, “isn’t that furnish chain management’s problem?”

Yes, however the place you promote your merchandise or offerings and how you get them into your customer’s fingers is additionally an advertising problem, whether or not you’re speaking about digital or bodily distribution.

Choosing the proper distribution channels comes down to appreciation who your goal client is, how they view your manufacturer and the place they anticipate to discover you — all marketing-centric issues.

You would by no means assume to locate a Rolex watch for sale at the Dollar Store, after all. Those manufacturers signify two very one-of-a-kind market demographics.

Marketing managers and their grant chain counterparts want to be aligned on every occasion a new product, advertising or marketing campaign is launched so corporations can have all of their distribution geese in a row.

If entrepreneurs do their job well, they will generate a ton of buzz main up to that product launch or promotional event, pushing consumer demand to the limit.

That advertising win can rapidly flip into a PR nightmare if the furnish chain isn’t organized to meet demand.

5 Meaning and Concept of Marketing and Selling

Marketing is an extensive term. It refers to a massive set of things to do of which promoting is simply one part.

A marketer earlier than making the sale does a lot of different things to do such as planning the type, sketch of the product, the fee and deciding on the distribution stores at which the identical would be available.

  • Selling: refers to the sale of items or provider via publicity, promoting and salesmanship. The title of the product is transferred from vendor to buyer. The whole center of attention in promoting is to covert the product into cash.

6 Difference between Selling & Marketing


7 Marketing Mix

The advertising combine refers to the set of actions, or tactics, that an employer makes use of to promote its company or product in the market.

The 4Ps make up a traditional advertising and marketing combine – Price, Product, Promotion and Place. However, nowadays, the advertising combine more and more consists of countless different Ps like Packaging, Positioning, People and even Politics as crucial combine factors

8 Elements of Marketing Mix

A Price

refers to the cost that is put for a product. It relies upon on charges of production, section targeted, capacity of the market to pay, grant – demand and a host of different direct and oblique factors.

There can be various kinds of pricing strategies, every tied in with a normal commercial enterprise plan.

Pricing can additionally be used a demarcation, to differentiate and beautify the photograph of a product.

B  Product

refers to the object clearly being sold. The product ought to supply a minimal degree of performance;

in any other case even the fine work on the different factors of the advertising combine might not do any good.

C Place

refers to the factor of sale. In each industry, catching the eye of the purchaser and making it handy for her to purchase it is the fundamental purpose of a suitable distribution or ‘place’ strategy.

 Retailers pay a top class for the proper location. In fact, the mantra of a profitable retail commercial enterprise is ‘location, location, location’.

D Promotion

This refers to all the things to do undertaken to make the product or provider acknowledged to the consumer and trade.

This can encompass advertising, phrase of mouth, press reports, incentives, commissions and awards to the trade.

It can additionally encompass patron schemes, direct marketing, contests and prizes.

9 Branding

Branding, via definition, is an advertising exercise in which a business enterprise creates a name, image or plan that is without problems identifiable as belonging to the company.

This helps to pick out a product and distinguish it from different merchandise and services.

Branding is essential because no longer solely is it what makes a memorable influence on shoppers however it permits your clients and consumers to comprehend what to anticipate from your company.

It is a way of distinguishing yourself from the opponents and clarifying what it is you provide that makes you the higher choice. Your manufacturer is constructed to be an actual illustration of who you are as a business, and how you want to be perceived.

There are many areas that are used to enhance a company which includes advertising, client service, promotional merchandise, reputation, and logo.

All of these factors work collectively to create one special and (hopefully) attention-grabbing expert profile


  1. Why is advertising referred to as a social process?

Ans: Marketing is considered as a social process, whereby human beings’ alternate items and offerings for cash or something of price to them.

2 Distinguish between promoting thinking and advertising thinking of marketing

Ans: (i) Selling notion Firms trust that aggressive promoting and promotional efforts will persuade a patron to purchase a product.

(ii) Marketing thought Customers’ wants and customers’ pride is the key to success of an enterprises.

3. What is intended by using promoting idea of marketing?

Ans: Firms consider that aggressive promoting and promotional efforts will persuade a client to purchase a product.

4.Identify and give an explanation for the advertising and marketing administration philosophy which implies that merchandise and offerings are offered no longer purely due to the fact of their fantastic or manufacturer name, however due to the fact they fulfill a unique want of a customer.

Ans: The advertising administration philosophy referred right here is ‘Marketing concept’. This thought emphasis that in the long-run, income can be maximized by using figuring out and enjoyable the wishes of existing and manageable customers. Therefore, patron delight will become the focal factor of all commercial enterprise decisions.

5. Nisha, a college bag manufacturer, determined to enhance the product for earnings maximization and thus, brought a water bottle holder to the present design.

(i)Identify the advertising and marketing administration philosophy adopted by using Nisha.

(ii)Explain this philosophy on the groundwork of (a) Main focal point and (b) Means and ends

Ans: (i) Product idea or philosophy Firms which observe the product concept, advocate that the way to recognize commercial enterprise dreams is by using making excessive excellent products. These companies manufacture the merchandise of highest quality. Nisha is attempting to convey enhancement in quality, with the aid of corporation a new feature, i.e., including a water bottle holder in the bag.


 (a) Main center of attention the essential center of attention of this thinking is to enhance the fantastic of products. The entrepreneurs now believed that practicable alternate would be realized when the merchandise is of excessive quality. Thus, the company now centered on making top of the line merchandise and enhancing them overtime.

(b) Means Product improvement.

Ends Profit thru enhancement in product quality.

6. Mansi, a shoe producer for faculty students, determined to maximize her income by way of producing and distributing at giant scale and thereby decreasing the Average Cost of production.

(i)Identify the advertising administration philosophy adopted by means of Mansi.

(ii) Explain this philosophy or notion on the groundwork of

(a) Main center of attention          

 (b) Means and ends

Ans: (i) Production thinking or philosophy.

(ii) (a) Main focal point Main center of attention of this idea is to maximize the extent of product.

(b) Means Availability and affordability of product.

Ends Earning income via giant scale manufacturing and distribution.

7. Explain market planning, product designing and improvement as features of marketing.


Explain any three features of marketing


Explain any two features of marketing.  


Explain the following features of marketing.

(i)Marketing planning (ii)Product designing and improvement


Explain the following features of marketing

(i)Gathering and analyzing market information

(ii) Customer help services. 

Ans:  The major features of advertising are as follows:

(i) Gathering and analyzing market facts A marketer has to acquire data about the market. Gathering and analyzing market facts helps in figuring out the desires of the customers. It types the foundation for product development. It additionally helps in figuring out the opportunities, threats, strengths and weaknesses of the organisation.

(ii) Market planning the marketer develops fabulous advertising plans to seize or decorate the current market share. It offers the pointers to obtain the advertising and marketing objectives, e.g., a marketer of color TVs, having 2% of modern-day market share in the country, ambitions at improving his market share *0 20% in the subsequent three years.

(iii) Product designing and improvement Product designing and improvement is worried with watching for customers’ needs, creating new merchandise and enhancing the present merchandise so as to meet the expectations of customers, e.g., when we sketch to purchase any product say a motorbike, we now not solely see its points like cost, mileage, and so on however additionally the design, shape, style, etc.

(iv) Customer guide offerings Customer is the king of modern-day market. So, purchaser pride is the fundamental motto of each and every commercial enterprise firm. Hence, a very essential feature of advertising administration relates to growing client help offerings such as after sale services, dealing with client complaints, buying credit score services, upkeep services, technical services, and client information, etc. All these offerings purpose at imparting most pleasure to the clients which is the key to success in cutting-edge days.

8. Explain the position of advertising in a firm.

Ans: By advertising orientation, the company tries to focal point on desires and desires of the customers. Every association desire to stay longer and develop. If this happens, the motive of setting up the association is fulfilled. Marketing helps in survival and increase of the firm.

9. What is intended by means of manufacturing notion of marketing?

Ans: Production notion is based totally on the faith that earnings may want to be maximized through producing at massive scale, thereby decreasing the Average Cost of production. A massive wide variety of companies accept as true with that it is effortless to change the merchandise if they have been extensively on hand at a cheap price. Thus, availability and affordability have been regarded the key to success.

10. What is intended through promoting notion of marketing?

Ans: Firms accept as true with that aggressive promoting and promotional efforts will persuade a client to purchase a product. It used to be assumed that the clients will no longer purchase enough, except they are safely satisfied and prompted to do so.

Therefore, aggressive promoting and promotional efforts are made to persuade the customers. The use of promotional strategies such as advertising, private promoting and income advertising have been viewed necessary for promoting of products.

11. What is intended by way of product idea of marketing?

Ans: Consumers pick merchandise with ideal quality, overall performance and features.

The groups who accept as true with in the philosophy of product thinking are of the opinion that if the high-quality of items or offerings is of correct standard, the clients can effortlessly be attracted toward it.

The foundation of this wondering is that the clients get attracted toward the merchandise of precise quality.

On the foundation of this philosophy, agencies direct their advertising and marketing efforts to make bigger the fantastic and points of their product.


1.Define advertising and marketing and nation any three features of marketing.


What is intended by using marketing? State any three functions of marketing.

Ans:  Marketing is the sum complete of all these things to do which go items and offerings from the producers to the consumers.

According to Philip Kotler, ‘Marketing is that social system via which man or woman and companies achieve what they want and choose thru developing choices and freely changing merchandise and offerings of fee with others.

The three essential features of advertising and marketing are:

(i) Marketing planning the marketer develops gorgeous advertising plans to seize or beautify the current market share.

It gives the recommendations to obtain the advertising objectives, e.g., a marketer of coloration TVs, having 2% of modern market share in the country, objectives at bettering his market share *0 20% in the subsequent three years.

(ii) Production designing and improvement Product designing and improvement is involved with looking forward to customers’ needs, creating new merchandise and enhancing the current merchandise so as to meet the expectations of customers,

e.g., when we design to purchase any product say a motorbike, we no longer only see its elements like cost, mileage, and many others however additionally the design, shape, style, etc.

(iii) Pricing of merchandise It refers to the quantity of cash which the clients have to pay to gain a product.

Price is a necessary aspect affecting the success or failure of a product in the market.

The demand for a product or carrier is associated to its price. Generally, decrease the price, greater would be the demand for the product and vice-versa.

2. Define advertising and marketing management. State any three targets of marketingmanagement.

Ans: According to Philip Kotler, ‘Marketing administration is an artwork and science of selecting goal markets and getting, maintaining and developing clients via creating, turning in and speaking most excellent client values of management’.

It refers to planning, organizing, directing and manipulate of the things to do which facilitate alternate of items and offerings between producers and buyers of merchandise and services.

The three foremost targets of advertising and marketing administration are as follows:

(i) Creation of demand the advertising supervisor continually tries to create the demand no longer by means of unfair potential however via analyzing the wants and desires of the clients and then producing the products, which satisfies the customer’s need.

(ii) Market share Every commercial enterprise company wishes to seize a large share of the market.

Therefore, advertising methods adopted by using advertising supervisor assist to get a large share in the market.

(iii) Goodwill and popularity Marketing administration helps a company in constructing the picture for its merchandise via advertising and marketing excessive quality, caring for purchaser satisfaction, after sale service, easy supply, etc.

3. Explain the following features of marketing

(i)Gathering and analyzing market information

(ii)Product designing and development

(iii)Market planning

(iv) Customer help services

Ans: The principal features of advertising and marketing are as follows:

(i) Gathering and analyzing market statistics A marketer has to acquire statistics about the market.

Gathering and analyzing market statistics helps in figuring out the wishes of the customers.

It types the groundwork for product development. It additionally helps in figuring out the opportunities, threats, strengths and weaknesses of the organization.

(ii) Market planning the marketer develops excellent advertising and marketing plans to seize or decorate the present market share.

It presents the pointers to attain the advertising and marketing objectives,

e.g., a marketer of color TVs, having 2% of contemporary market share in the country, pursuits at bettering his market share *0 20% in the subsequent three years.

(iii) Product designing and improvement Product designing and improvement is involved with looking forward to customers’ needs, creating new merchandise and enhancing the present merchandise so as to meet the expectations of customers,

e.g., when we format to purchase any product say a motorbike, we now not solely see its points like cost, mileage, and so on but additionally the design, shape, style, etc.

(iv) Customer assist offerings Customer is the king of cutting-edge market. So, consumer delight is the foremost motto of each and every commercial enterprise firm.

Hence, a very essential feature of advertising administration relates to creating consumer guide offerings such as after sale services, managing consumer complaints, deciding to buy savings services, preservation services, technical services, and client information, etc.

All these offerings goal at supplying most delight to the clients which is the key to success in present day days.

Business Studies Class 12 Notes Consumer Protection

• As an end result of this, buyers may also be uncovered to dangers due to risky products- that is, he may also be cheated, might also have to pay a greater rate etc.

• Thus; there is a want to supply sufficient safety to buyers towards such practices

1 Importance of Consumer Protection

(from Consumer’s factor of view)

Consumers Ignorance: Majority of buyers are now not conscious of their rights and reliefs reachable to them as an end result of which they are exploited.

In order to store buyers from exploitation, patron safety is needed.

 Unorganized Consumers: In India buyers are nonetheless unorganized and there is lack of purchaser corporations also, accordingly purchaser safety is required.

 Widespread Exploitation of Consumers: Consumers are exploited on massive scale by way of capability of a range of unfair exchange practices and purchaser safety is required to defend them from exploitation.

(From the factor of Business)

Long time period Business Interest: It is constantly in the pastime of the commercial enterprise to maintain its patron satisfied.

Global opposition may want to be received solely after enjoyable customers.

Satisfied clients lead to repeat income and assist in growing purchaser base of business.

 Moral Justification: It is the ethical obligation of any commercial enterprise to take care of customer hobby & keep away from any structure of their exploitation & unfair change practices like faulty & hazardous products, adulteration, false and deceptive advertising, hoardings, black advertising etc.

 Business makes use of Resources of Society: Every commercial enterprise makes use of the sources of the society and as a result it is their accountability to work in the hobby of the society.

 Social Responsibility: A commercial enterprise has social obligations in the direction of a range of organizations like owners, workers, government, clients etc.

Thus, clients ought to be furnished qualitative items at lifelike prices.

 Government Intervention: If a commercial enterprise engages in any shape of unfair exchange practices then authorities takes motion towards it, which adversely impacts its goodwill.


A. Set up to shield and promote patron hobbies through a rapid and less expensive redressal of grievances.

B. Recognizes patron rightsRedressal agencies– set up a three-tier business enterprise to tackle purchaser grievances.

3 Meaning of Consumer

A. Any character who buys any items for a consideration. It consists of any consumer of such items with the approval of the buyer.

But it does now not encompass an individual who obtains items for resale or any industrial purpose.

B. Any individual who avails any offerings for a consideration. It consists of any beneficiary of such offerings however it does now not encompass a man or woman who avails such provider for any business purpose.

4 Rights of a Consumer

Consumer Protection Act, 1986 has furnished six rights to the consumers, which are as follows:

  • Right to Safety: Consumer has the proper to be included towards products, offerings which are hazardous to fitness  existence (should use ISI marked digital device).
  •  Right to be Informed: Consumer has proper to have entire records about the product earlier than shopping for it.
  •  Right to choose: Consumer has a proper to pick any product out of the accessible merchandise as per his personal selection
  •  Right to be heard: Consumer has the proper to file a criticism to be heard in case of dissatisfaction with items or offerings (use of complaint cell)
  •  Right to Seek Redressal: Consumer has the proper to get comfort in case the product or provider falls quick of his expectations or is dangerous. He can also be furnished with replacement/removal of defect or compensation for any loss. Various redressal boards are set up through the Govt. at National and State level.
  •  Right to patron education: Consumer has the proper to accumulate expertise and to be properly knowledgeable during life. He has to be made conscious of his rights and reliefs on hand to him in case of the product or carrier falls quick of his exceptions. The Govt. of India has covered customer training in the faculty curriculum & is making use of media to make buyers conscious of their rights.

5 Responsibilities/Duties of a Consumer

A. Consumer Responsibilities:

a. Ask for a money memo: On buy of items or services. This would serve as a proof of the buy made.

b. Be aware: About quite a number items and offerings accessible in the market so that a shrewd and sensible desire can be made

c. Buy solely standardized goods: As they furnish fine assurance. Thus, seem for ISI mark on electrical goods, FPO mark on meals products, Hallmark on earrings etc.

d. Follow manufacturer ‘s instructions: Learn about the dangers related with merchandise and services, and use the merchandise safely.

e. Read labels carefully: So as to have statistics about prices, internet weight, manufacturing and expiry dates, etc.

f. Assert yourself: To make sure that you get an honest deal.

g. Be trustworthy in your dealings: Choose solely from prison items and offerings and discourage unscrupulous practices like black-marketing, hoarding etc.

h. File a grievance in a gorgeous patron forum: In case of a shortcoming in the fine of items bought or offerings availed. Do now not fail to take a motion even when the quantity worried is small.

i. Form purchaser societies: Which would play a lively section in instructing buyers and safeguarding their interests.

j. Respect the environment: Avoid waste, littering and contributing to pollution.

6  The salient features and provisions of consumer protection act,1986

Who Can File A Complaint Under CPA, 1986?

A criticism earlier than the excellent client discussion board can be made by:

a. Any consumer.

b. Any registered customer association.

c. The central or nation government.

d. One or extra buyers on behalf of severa shoppers having equal interest.

e. A prison inheritor or consultant of a deceased consumer.

  • Complaints can be filed and compensation claimed w.r.t:

• Fraudulent practices by way of merchants and manufacturers

• Defective goods

• Deficiency in offerings in connection with 9 offerings such as banking, transportation, insurance, grant of electrical energy and gas, residence construction, clinical service

7 Redressal agencies under consumer protect act, 1986

For the redressal of patron grievances, the act gives a three–tier equipment as:

A. District forum

District discussion board are set up in each district with the aid of the nation concerned. The essential points are:

(a) It consists of a President and two members, one of whom have to be a woman, duly appointed by way of State Govt.

(b) It can get hold of purchaser complaints of now not greater than Rs. 20 lakhs value.

(c) On receiving the complaint, the district discussion board shall refer the grievance to the contrary birthday celebration worried and ship the pattern of items for checking out in a laboratory.

(d) The district discussion board after being at ease that items are faulty or there is some unfair change exercise can problem an order to contrary celebration directing him to both exchange or return the rate or pay compensation. In case the aggrieved birthday party is now not comfy with the order of district forum. He can enchantment earlier than kingdom discussion board inside 30 days of passing an order.

B. State commission

It is set up in every country by using the govt. concerned. The salient elements are:

(a) Each fee consists of a president and it least two contributors appointed by way of kingdom Govt.

(b) Complaints of at least Rs. 20 lakhs however no longer extra than 1 crore can be filed with kingdom commission.

(c) On receiving the complaint, the country fee can additionally refer the criticism to contrary birthday celebration and ship the items for trying out in laboratory.

(d) The nation fee after being blissful can order to contrary birthday celebration to both substitute or repay or pay compensation. In case the aggrieved celebration is now not satisfied, they can attraction earlier than country wide fee inside 30 days of passing an order.

C. National commission

It is setup with the aid of Central Govt. The provisions of act are:

a) It consists of a President and at least four individuals appointed by using Central Govt.

(b) All complaints are pertaining to items and offerings of fee greater than Rs. 1 crore can be filed with country wide commission.

(c) On receiving the complaint, the country wide fee can additionally refer it to contrary birthday celebration and ship items for testing.

(d) The National Commission has the energy to problem orders for change mentor elimination and to pay the compensation for loss.

9 Remedies available to consumers

• Remove defect in items and deficiency in services.

• Replace faulty items with one with no defects

• Refund rate paid

• Pay a real looking quantity of compensation for any loss or damage suffered.

• Pay punitive damages in fantastic circumstances.

• Discontinue unfair/restrictive exchange practice

• Not to provide hazardous items and offerings for sale

• Withdraw hazardous items from sale

• Cease manufacturing hazardous goods

• Pay a quantity to patron welfare fund/ individual (not much less than 5%) to be utilized in the prescribed manner

• Issue corrective commercial to neutralize the impact of deceptive ads.

• Pay sufficient prices to parties.

10 Consumer awareness

Some essential patron corporation and NGO’s engaged in defending client pursuits are:

A. Consumer coordination council, Delhi.

B. Voluntary company in Interest of Consumer Education, Delhi.

C. Mumbai Grahak Panchayat, Mumbai.

D. Consumer Association, Kolkata.

E. Consumer Unity and Trust Society Jaipur.

11 Role of Consumer companies and NGO’s

A. Educating the customary public about purchaser rights by way of organizing coaching programmed, seminars and workshops.

B. Publishing periodical & different publications to instruct consumers.

C. Providing prison help to buyers with the aid of imparting prison recommendation etc.

D. Producing motion pictures or cassettes on meals adulteration, misuse of tablets etc.

E. Filing complaints in fabulous client courts on behalf of consumers.

F. Encouraging customers to take on motion towards unfair change practices.

G. Taking an initiative in submitting instances in customer courts on behalf of consumers.

12 Ways and Means of Consumer Protection

A. Self-Regulation through Business:

• It is in the long-term activity of companies to serve the clients well.

• Socially accountable companies comply with moral requirements and practices in dealing with their customers.

• Many companies have set up their purchaser provider and criticism cells to redress the troubles and grievances of their consumers.

B. Business Associations:

• Examples of associations of trade, commerce and commercial enterprise – Federation of Indian Chambers of Commerce of India (FICCI) and Confederation of Indian Industries (CII)

• They have laid down their code of habits which lay down for their participants the recommendations in their dealings with the customers.

C. Consumer Awareness:

• A consumer, who is nicely knowledgeable about his rights and the reliefs on hand to him, would be in a function to increase his voice in opposition to any unfair exchange practices or unscrupulous exploitation.

 • This permits them to apprehend their duties and to protect their interests.

D. Consumer Organizations’:

• Force enterprise companies to keep away from malpractices and exploitation of consumers.

E. Government:

• The most necessary of these policies is the Consumer Protection Act, 1986. The Act presents for three-tier equipment at the district, country and country wide ranges for redressal of client grievances.


1. Besides a ‘consumer’, identify any two events who can file a. complaint earlier than the

appropriate patron forum.


Who can file a criticism underneath the Consumer Protection Act, 1986?

Ans: A grievance underneath Consumer Protection Act, 1986 can be made by: (Any two)

(i) Any consumer.

(ii) Any registered consumers’ association.

(iii) The Central Government or any State Government.

(iv) One or greater consumers, on behalf of severa customers having the identical interest.

(v)A prison inheritor or consultant of a deceased consumer.

2. How many contributors are required to represent ‘District patron dispute redressal forum’?

Ans: The District Forum consists of a President and two different members, one of whom ought to be a woman:

3. How can Business Associations act as a capability of customer protection?

Ans: Business Associations act as an ability of patron safety as they lay down suggestions for their individuals in dealings with the customers.

4. Give any one comfort handy to a customer who suffers due to consumption of an expired date medicine. 

Ans: Relief reachable to consumer:

(i) To refund the rate paid for the medicine.

(ii) To pay a lifelike quantity of compensation for any loss or damage suffered with the aid of the consumer.

(iii) To withdraw the faulty precise from sale.

5.State how self-rules by means of commercial enterprise acts as an ability of purchaser protection.

Ans: Self-law by using enterprise acts as a ability of customer safety by

  • Establishing moral requirements and practices in dealing with their consumers.

(ii) Setting up their patron carrier and complaint cells to redress the troubles and grievances of their consumers.

6. When can a patron get greater than one comfort for a complaint?

Ans: If the Consumer Court is comfortable about the genuineness of the complaint, a customer can get greater than one alleviation for a complaint.

7. Which type of instances can be filed in the State Commission below the Consumer Protection Act, 1986?    

Ans: Those instances can be filed in the State Commission beneath the Consumer Protection Act, 1986 in which compensation claimed exceeds Rs 20 lakh however does no longer exceed Rs1crore.

8.Which instances can be filed in the National Commission below Consumer Protection Act, 1986.    

Ans: Those instances can be filed in the National Commission below Consumer Protection Act, 1986 in which the fee of the items or offerings in question, alongside with the compensation claimed, exceed? 1 crore.

9. Which claims can be appealable become the Supreme Court below Consumer Act?  

Ans: An order exceeded via the National Commission in a remember of its authentic jurisdiction is appealable earlier than the Supreme Court. Its capability solely these appeals the place the price of items and offerings in question, alongside with the compensation claimed exceed? 1 crore and the place the aggrieved birthday celebration used to be no longer at ease with the order of the National Commission can be taken to the Supreme Court.

10. Who can file a grievance on behalf of a deceased consumer?

Ans: A criminal inheritor or consultant of a deceased consumer.

11. Is self-legislation by means of commercial enterprise critical for customer protection? How?

Ans: Yes, self-law through commercial enterprise is indispensable for customer safety due to the fact it is in their long-term pastime to serve the clients well.

12. Mohit filed a case towards Domestic Collings Ltd in the District Forum, however he was not cozy with the orders of the district forum. Where can he enchantment similarly in opposition to the selections of district forum? 

Ans:  Mohit can similarly enchantment at the State Commission towards the choice of the District Forum.

13.Amrit filed a case in opposition to Volvo Ltd in the State Commission however he used to be no longer comfy with the orders of the State Commission. Name the authority to which he can enchantment towards the choices of State Commission.  

Ans:  Amrit can strategy National Commission to attraction in opposition to the selection of the State Commission.

14.How does a commercial enterprise use self-guideline for patron protection?

Ans: Enlightened commercial enterprise companies recognize that it is in their long-term hobby to serve the clients well.

 Socially accountable companies observe moral requirements and practices in dealing with their customers.

Many companies have set up their consumer provider centers and complaint cells to redress the issues and grievances of their customers.


1. How are customer grievances redressed by way of the three-tier equipment below CPA,1986? Explain.

Ans: The three-tier-machinery underneath CPA, 1986 consist of District Forum, State Commission and the National Commission.

 A customer can file a case in District Forum if the value of items and offerings along with the compensation claimed, does now not exceed Rs 20 lakh, in the State Commission if the price of items and offerings along with the compensation claimed is over Rs 20 lakh however much less than Rs 1 crore, and in the National commission, if the fee of items and offerings along with the compensation claimed is above Rs 1 crore

On receiving the complaint, the District Forum/State Commission/National Commission shall refer the criticism to the celebration towards whom the criticism is filed.

If required, the items or a sample, thereof, shall be despatched for trying out in a laboratory.

The court docket shall ignore an order after thinking about the take a look at file and listening to the birthday party in opposition to whom the grievance is filed.

2. Give the definition of ‘Consumer’ as per CPA, 1986.

Ans: Under the Consumer Protection Act, 1986, the time period ‘consumer’ has been described as any individual who buys items or hires or avail any carrier for a consideration which has been paid or promised or partly paid and partly promised or beneath any machine of deferred payment.

It additionally consists of any person of such items with the approval of the customer or any beneficiary of offerings when such items or offerings are availed of with the approval of the character worried however does now not consist of a man or woman who avails such offerings for any industrial purpose.

3.State any eight reliefs accessible to a purchaser below the provision of CPA, 1986.

Ans: The reliefs handy to a customer underneath the CPA, 1986 are:

(i) To eliminate the defects in items or deficiency in services.

(ii) To exchange the faulty product with a new one, free from any defect.

(iii)To refund the charge paid for the product.

(iv) To pay a realistic quantity of compensation for any loss suffered.

(v)To pay punitive damages in fabulous circumstances.

(vi)Not to provide hazardous items for sale.

(vii)To withdraw the hazardous items from sale.

(viii) To quit the manufacture of hazardous goods.

4.Anita purchased a e book from Satish e book stores. While studying the book, she located that ten pages have been missing. She approached the e book vendor and complained about the lacking pages. The vendor promised that if the writer was once equipped to alternate the book, he would trade the same. After one week, the vendor knowledgeable Anita that the writer had refused to trade the book.

Where can Anita file a criticism in opposition to the vendor of the book? Give purpose in help of your answer. Also, provide an explanation for who is a customer as per Consumer Protection Act, 1986. 

Ans. Anita can file a grievance in opposition to the vendor of the e book in the District Forum.

District Forum is set up by way of the State Government in every district.

In District Forum, solely such complaints can be filed in which the price of items or offerings and the compensation claimed is now not extra than Rs 20 lakhs.

Consumer as per CPA, 1986   Under the Consumer Protection Act, 1986, the time period ‘consumer’ has been described as any individual who buys items or hires or avail any carrier for a consideration which has been paid or promised or partly paid and partly promised or below any device of deferred payment.

 It additionally consists of any consumer of such items with the approval of the purchaser or any beneficiary of offerings when such items or offerings are availed of with the approval of the individual worried however does now not encompass an individual who avails such offerings for any industrial purpose.

5.Harish bought a medicinal drug from Bhatia Medical Stores for his son, who had excessive fever. Even after giving the medicinal drug his son’s situation did no longer enhance and he had to be hospitalized. Doctor knowledgeable Harish that medicinal drug given to his son was once spurious. Harish complained about this to Bhatia Medical Stores. As-a result, Bhatia Medical Stores determined to file a criticism in opposition to the producer in the client court. Can Bhatia Medical Stores do this? Give motive in help of your answer. Also, provide an explanation for who is a client as per Consumer Protection Act, 1986.

Ans: ‘Bhatia Medical Stores’ can’t file a criticism in opposition to the producer in the customer courtroom due to the fact Bhatia Medical Stores is now not a client in this case. He is now not a consumer however has bought medicinal drug for resale purpose/commercial purpose.

Meaning of Consumer as per Consumer Protection Act, 1986   Anita can file a criticism towards the vendor of the e book in the District Forum. District Forum is mounted by means of the State Government in every district. In District Forum, solely such complaints can be filed in which the price of items or offerings and the compensation claimed is no longer greater than Rs 20 lakhs.

Consumer as per CPA, 1986   Under the Consumer Protection Act, 1986, the time period ‘consumer’ has been described as any individual who buys items or hires or avail any carrier for a consideration which has been paid or promised or partly paid and partly promised or beneath any gadget of deferred payment. It additionally consists of any consumer of such items with the approval of the consumer or any beneficiary of offerings when such items or offerings are availed of with the approval of the character worried however does no longer consist of a character who avails such offerings for any industrial purpose.

6. Explain the following as approaches and ability of customer protection

(i)Consumer awareness


Ans: (i) Consumer focus A nicely knowledgeable client will shield himself from unfair alternate practices. A customer needs to be properly knowledgeable about his rights, obligations and reliefs handy to him. Only then, he would be in a function to elevate his voice in opposition to unfair alternate practices and shield his interests. In addition to this, a perception of his duties would additionally allow a customer to protect his interest.

(ii) Government The authorities can defend the hobby of the buyers by way of enacting a number legislation. CPA is one of them which presents 3-tier device of redressal to the aggrieved consumers. The felony framework in India encompasses a variety of legislations which furnish safety to consumers.

Business Studies Class 12 Notes Financial Markets

1 Introduction to Financial Markets

Financial Intermediation = procedure of allocating cash from saving surplus devices (E.g. households) to saving deficit gadgets (e.g. industries, authorities etc.).

• Alternatives = Banks or Financial markets

Financial Markets are the institutional preparations through which financial savings generated in the financial system are channelized into avenues of funding by using industry, commercial enterprise and the government.

It is a market for the advent and change of economic assets.

2 Functions of Financial Market


A. Mobilization of financial savings and channelizing them into the most productive uses

• Facilitates switch of financial savings from the savers to the investors.

• Financial markets assist humans to make investments their financial savings in more than a few monetary contraptions and earn profits and capital appreciation.

• Facilitate mobilization of financial savings of human beings and their channelization into the most productive uses.

B. Facilitate Price Discovery

• Price of something relies upon the demand and grant factors.

• Demand and provide of monetary belongings and securities in economic markets assist in identifying the fees of a number of economic securities; the place commercial enterprise companies characterize the demand and the households symbolize the supply.

C. Provide liquidity to economic assets

• Financial markets supply liquidity to monetary gadgets by way of presenting a prepared market for the sale and buy of monetary assets.

• Whenever the buyers want, they can make investments their financial savings into lengthy time period investments and each time they want, they can promote the investments/ contraptions and convert them into cash.

D. Reduce the value of transactions

• By supplying treasured facts to customers and dealers of economic assets, it helps to saves time, effort and cash that would have been spent by means of them to locate every other.

• Also, buyers can buy/sell securities thru brokers who cost a nominal fee for their services. This way monetary markets facilitate transactions at a very low cost.

3 Types of Financial Markets

Financial markets is divided into two major categories:

A) Money Markets

B) Capital Markets


A Money Market

Market for monetary securities with maturity duration of much less than one year.

• Mkt for low risk, unsecured and quick time period debt contraptions that are exceedingly liquid are traded every day.

• No physical area bye performed over the smartphone and the internet.

• Helps to increases quick time period funds

#The principal contraptions of cash market are as follows:

i. Treasury Bills: They are issued by way of the RBI on behalf of the Central Government to meet its temporary requirement of funds.

They are issued at a charge which is lower than their face fee and arc repaid at par.

They are accessible for a minimal quantity of Rs.25000 and in multiples thereof.

They are additionally acknowledged as Zero-Coupon Bonds. They are negotiable devices i.e. they are freely transferable.

ii. Commercial Paper: It is a brief time period unsecured promissory notice issued via massive savings helpful businesses to increase quick time period dollars at decrease costs of hobby than market rates.

They are negotiable contraptions transferable through endorsement and shipping with constant maturity duration of 15 days to one year.

iii. Call Money: It is brief time period finance repayable on demand, with maturity duration of one day to 15 days, used for interbank transactions.

Call Money is a technique via which banks borrow from every different to be capable to hold the money reserve ratio as per RBI.

The pastime charge paid on name cash loans is regarded as the name rate.

iv. Certificate of Deposit: It is an unsecured instrument issued in bearer structure by using Commercial Banks Financial Institutions.

They can be issued to individuals. Corporations and agencies for elevating cash for a brief duration ranging from ninety-one days to one year.

v. Commercial Bill: It is a consignment of alternate used to finance the working capital necessities of enterprise firms.

A vendor of the items attracts the consignment on the customer when items are bought on credit.

When the invoice is popular by means of the consumer it will become marketable instrument and is referred to as a change bill.

These payments can be discounted with a financial institution if the vendor wants cash earlier than the invoice maturity.

B Capital Market

Facilities and institutional preparations via which lengthy time period securities are raised and invested- each debt and equity.

4 Nature of Capital Markets

a. Important aspect of Financial market because organisation raise funds for long term purpose

b. Two segments (primary and secondary)

 c. two forms (organized and unorganized)

 d. lengthy time period securities

e. Satisfies lengthy time period necessities of money

f. Performs trade-off features

g. Creates dispersion in enterprise possession

h. Helps in capital formation

i. Creates liquidity

5 Features of Capital Market Instruments

a. Provide lengthy time period funds

b. Lesser outlay required as unit price of units is low

c. Duration greater than 1 year

d. Liquidity

e. Lower safety

f. Higher anticipated returns as in contrast to brief time period securities

6 The capital market can be divided into two parts

A. Primary Market

B. Secondary Market

A PrimaryMarket

Primary Market is that market where first-time funds have been raised by the organization i.e. initial public offerings to raise funds by the organization

• Transfers investible cash from savers to entrepreneurs.

•Funds used for placing up new projects, expansion, diversification, modernization of present projects, mergers and take overs etc.

#) Methods of Floatation of New Issues in Primary Market

  1. Offer via Prospectus: It includes inviting subscription from the public thru problem of prospectus.

A prospectus makes a direct attraction to traders to increase capital thru a commercial in newspapers and magazines.

  • Offer for Sale: Under this method, securities are provided for sale via intermediaries like issuing homes or inventory brokers.

The business enterprise sells securities to intermediary/broker at an agreed charge and the broking resells them to buyers at a greater price.

c. Private Placements: It refers to the procedure in which securities are disbursed to institutional investor and some chosen individuals.

d. Rights Issue: It refers to the trouble in which new shares are presented to the current shareholders in percentage to the range of shares they already possess.

e. e-IPOs: It is a technique of issuing securities via an online machine of inventory exchange.

A corporation proposing to trouble capital to the public thru the on-line device of the inventory change has to enter into a settlement with the inventory exchange.

This is known as an e-initial public offer. SEBI’s registered brokers have to be appointed for the cause of accepting purposes and setting orders with the company.

B Secondary Market

Secondary market is that market where already issued securities are bought and sold

*The agency is no longer worried in the transaction at all. It is between two investors.

7 Features of Secondary market

1) Creates liquidity

2) Fixed vicinity

3) Comes after principal market

4) Encourages new funding

8)Difference between Primary Market and Secondary Market


9 Stock Exchange / Share Market

A Stock Exchange is a group which affords a platform for shopping for and promoting of current securities. It enables the change of a safety i.e. share, debenture etc. into cash and vice versa.

# Some of the essential features of a Stock Exchange:

a. Gives liquidity and marketability to current securities

b. Pricing of securities

c. Safety of transactions (membership = regulated + dealings properly defined)

d. Contributes to monetary boom (ensures that financial savings are channelized to most productive funding avenues)

e. Spreading of fairness cult (ensures wider share ownership)

f. Provides scope for hypothesis (in a limited and managed environment)

10 Trading Procedure on a Stock Exchange


a. Selection of Broker: In order to exchange on a Stock Exchange first a dealer is chosen who need to be a member of inventory change as they can solely exchange on the inventory exchange.

b. Placing the order: After deciding on a broker, the traders specify the kind and range of securities they choose to purchase or sell.

c. Executing the order: The broking will purchase or promote the securities as per the directions of the investor.

d. Settlement: Transactions on an inventory alternate may additionally be carried out on both money foundation and lift over foundation (i.e. badla).

The time length for which the transactions are carried ahead is referred to as bills which range from a fortnight to a month.

All transactions made at some stage in one account are to be settled by way of price for purchases and with the aid of shipping of share certificates, which is a proof of possession of securities with the aid of an individual.

Earlier buying and selling on an inventory alternate took region thru a public outcry or public sale device which is now changed by using an on-line display primarily based digital buying and selling system.

Moreover, to eliminate, the troubles of theft, forgery, transfer, delays etc. a digital e book entry from a preserving and transferring securities has been introduced, which is known as procedure of de materialization of securities.

11 Difference between Capital and Money Market


12 Depository Services and DEMAT Accounts

Keeping in the idea the difficulties to switch of shares in bodily form, SEBI has developed a new machine in which buying and selling in shares is made obligatory in digital shape Depository offerings machine and D-Mat Account are very foundation of this system.

13 Depository Services

Just like a financial institution maintains cash in secure custody for customers, a depository additionally is like a financial institution and maintains securities (e.g. shares, debentures, bonds, mutual cash etc.) in digital shape on behalf of the investor. In the depository a securities account can be opened, all shares can be deposited, they can be withdrawn/ bought at any time and preparation to supply or get hold of shares on behalf of the investor can be given.

At existing there are two depositories in India: NSDL. (National Securities Depository Ltd.) and CDSL (Central Depository Services Ltd.). which are acknowledged as “Depository Participants”. (DPs)

14 Services supplied by means of Depository

Dematerialization (usually recognized as demat) is changing bodily certificates to digital form.

Rematerialisation, acknowledged as remat, is reverse of demat, i.e. getting bodily certificates from the digital securities.

Transfer of securities, exchange of really helpful ownership.

Settlement of trades accomplished on change linked to the Depository. Now a day’s online paper-less buying and selling in shares of the agency is obligatory in India.

Depository offerings is the title of that mechanism. In this gadget switch of possession in shares take location with the aid of skill of e book entry barring the bodily transport of shares.

When an investor needs to deal in shares of any business enterprise, he has to open a Demat account. Thereare 4 gamers who take part in this system.

A. The Depository: A depository is a group which holds the shares of an investor in digital form. There are two depository establishments in India these are NSDL and CDSL.

B. The Depository Participant: He opens the account of Investor and continues securities records.

C. The Investor: He is an individual who needs to deal in shares whose identify is recorded

D. The Issuing Company: That employer which problems the securities. This issuing employer sends a listing of the shareholders to the depositories.

15 Benefits of Depository Services

• Sale and Purchase of shares and shares of any enterprise on any inventory Exchange.

• Saves time.

• Lower transaction costs

• Ease in trading.

• Transparency in transactions.

• No counterfeiting of safety certificate

• Physical presence of investor is now not required in inventory exchange.

• Risk of mutilation and loss of safety certificates is eliminated.

16 Demat Account

Demat (Dematerialized) account refers to an account which an Indian citizen have to open with the depository participant (banks, stockbrokers) to exchange in listed securities in digital form.

The securities are held in the electronic structure via a depository.

17 Benefits of Demat Account

a) Increase liquidity thru rapid settlement.

b) Reduces paper work.

c) Elimination of troubles on switch of shares such as loss, theft and delay.

d) Exemption of stamp responsibility when switch of shares.

e) The thinking of extraordinary lot stands abolished.

f) Attract overseas buyers and promotion overseas investment.

g) A single demat account can keep investments in each fairness and debt instruments.

h) Traders can work from anywhere.

i) Automatic savings into demat account for shares bobbing up out of bonus/split/consolidation p.c merger.

j. Immediate transfers of securities.

k. Change in tackle recorded with a DP receives registered with all organizations in which investor holds securities removing the want to correspond with every of them.

18 Opening of Demat Account

A Demat account is opened on the identical traces as that of a financial institution account.

Prescribed account opening types accessible with the DP, want to be stuffed in. Standard settlement is to be signed with the aid of the consumer and the DP, which important points the rights and duty of each party.

Along with the form, the consumer is required to connect photograph, attested copies of dwelling proof and proof of identification want to be submitted.

19 Securities and Exchange Board of India (SEBI)

SEBI was once mounted by means of Government of India on 12 April 1988 as a period in-between administrative physique to promote orderly and wholesome increase of securities market and for investor protection.

It was once given a statutory fame on 30 January1992 thru an ordinance which was once later changed with the aid of an Act of Parliament regarded as the SEBI Act, 1992. It seeks to shield the activity of buyers in new and 2d hand securities.

20 Objectives of SEBI

a. To alter inventory alternate and the securities market to promote their orderly functioning.

b. To guard the rights and pursuits of buyers and to information & teach them.

c. To stop alternate mal practices such as interior trading.

d. To adjust and advance a code of habits and truthful practices via intermediaries like brokers, service provider bankers etc.

21 Functions of SEBI

1. Protective Functions

 a) Prohibit fraudulent & unfair alternate practices in secondary market (e.g. Price rigging & deceptive statement)

b) Prohibit insider trading.

c) Educate buyers Promote honest exercise & code of behavior in securities market

2. Development Functions

a) Promotes education of intermediaries of the securities market.

b) Investor training

c) Promotion of honest practices code of habits of all SRO ‘s.

d) Conducting lookup & post facts beneficial to all market participants

3. Regulation Functions

a) Registration of brokers and sub brokers & different gamers in the mkt.

b) Registration of collective funding schemes & mutual funds.

c) Regulation of inventory bankers & portfolio exchanges & service provider bankers.

Short questions

Q1- Mention the elements of the Financial Market?

Ans: The capacity of the Financial Market is given in focuses underneath:

a) Building up the Price

b) Moving Savings and Alternatives for Investment

c)Decreased Cost of Transaction

d)Encourages Liquidity

Q2- In which issue stock is offered to a current investor.

Ans: The issue in which the stock is offered to a current investor is the Right Issue.

Q3- Mention the goals of SEBI?

Ans: The goals of the Security Exchange Board of India (SEBI) are:

a) Set of principles

b) Avoidance

c) Guideline

d) Security

Q4- What are the different 4 elements of secondary market?

Ans: The four elements of ‘Auxiliary Market’ are:

a) Auxiliary Market ensures decency and security in an exchange.

b) It gives a stage for exchanging to introduce clients.

c)It gives a steady gauge of the protections which additionally helps in building interest and flexibly

d)Secondary Market gives a stage for channelizing the sparing to the most beneficial way.

Q5- Give any four elements of the Stock Exchange.

Ans: The elements of the Stock Exchange are:

a) Value Determination

b) Giving Liquidity and Marketability

c)Encouraging Economic Growth

d)Protected and Fair Market

Q6- Briefly notice in focuses the goals of NSE (National Stock Exchange)

Ans: The goals of the National Stock Exchange are:

With the assistance of an electronic exchanging framework, NSE gives a reasonable, proficient and straightforward protections market

NSE targets setting up a solitary cross-country exchanging framework which gives exchanging office a wide range of protections

NSE empowers more limited settlement cycles and books passage settlements

Public Stock Exchange likewise targets expanding the liquidity of the protections

It targets satisfying the worldwide guidelines and benchmarks of a stock trade

Q7- Discuss the ongoing Capital Market changes in India

Ans: A capital market is isolated into two sections i.e., Primary Market and Secondary Market.

The essential market manages the issue of new protections. While Secondary market bargains in the buy and offer of the current protections.

After the 1991 change, a three-level framework came into the Indian Stock Market.

This three-level framework comprised of the National Stock Exchange, Regional Stock Exchanges, and Over the Counter Exchange of India (OTCEI).

Q8- What are the defensive elements of the Securities and Exchange Board of India?

Ans: The defensive elements of SEBI are:

a) It looks at infringement of insider exchanging and rules, and resist to the organization’s demonstration.

b) Gives data about the organizations according to the customer’s necessity.

c)It gives rules with respect to interests in protections.

d)Characterizes set of principles for strategic policies

Q9- What are different Money Market Instruments?

Ans: The different Money Market Instruments are:

a) Call Money

b) Depository Bill

c)Authentication of Deposit

d)Business Paper

e) Business Bill

Q10- Discuss “Why Market currency is the opportunity for business for momentary assets?

Ans: Money market instruments are a significant wellspring of account for working capital prerequisites. They have a serious level of liquidity. A portion of the basic instruments that are exchanged the currency market are business paper, depository charges, call cash, authentication of store, and so forth

Long Answer Type

Q1: To promote orderly and healthy growth of securities market and protection of investors, SEBI was set up”. Explain in detail what are the objectives of sebi?

Ans: SEBI was once set up with the goal of safety of buyers and healthful increase of the securities market. Some targets of SEBI are given below:

A) Protection to the investors: The major goal of SEBI is to shield the pastime of human beings in the inventory market and grant wholesome surroundings for them.

B) Prevention of malpractices

This was once the motive why SEBI used to be formed. Among the principal objectives, stopping malpractices is one of them.

C)Fair and appropriate functioning

SEBI is accountable for the orderly functioning of the capital markets and continues a shut take a look at over the things to do of the monetary intermediaries such as brokers, sub-brokers, etc.

Business Studies Class 12 Notes Financial Management

1 Introduction

Business Finance = Money or cash accessible for an enterprise for its operations (that is, for some unique purpose) is known as finance.

It is integral for survival and increase of business, for manufacturing and distribution of items and assembly day to day prices etc.

It entails obtaining money to purchase Fixed property (tangible and intangible) and Raw substances and keep working capital.

Financial Management consists of these enterprise things to do that are involved with acquisition and conservation of capital cash in assembly the monetary wants and standard goals of a commercial enterprise.

2 Aims of Financial Management

The pursuits of monetary administration need to be beneficial to the firm’s proprietors, managers, personnel and consumers.

For this reason, the solely way is maximization of firm’s value.

The following elements have region in maximizing firm’s value:

A. Rise in profits: If the company needs to maximize its value, it should’ enlarge its income and revenues.

For this motive amplify of income extent or different things to do can be taken up. It is the prevalent characteristic of any association to extend income via acceptable utilization of all possibilities and plans.

Theoretically, company receives most earnings if it is below equilibrium. At that stage the common fee is minimal and the marginal fee and the marginal revenues are equal.

Here, we can’t say the income due to the fact there ought to be appropriate market for the elevated sales.

Further, the above charges need to additionally be controlled.

B. Reduction in cost: Capital and fairness dollars are utilized for production.

So, all kinds of steps need to be taken to decrease firm’s price of capital.

C. Sources of funds: It must be determined by way of maintaining in view the cost of the association to gather money thru problem of shares or debentures.

D. Reduce risks: There won’t be earnings besides risk.

But for this motive if greater danger is taken, it may also grow to be hazard to the existence of the firm.

Hence hazard ought to be decreased to minimal level.

E. Long run value: It has to be the function of economic administration to extend the long-run cost of the firm.

To earn greater income in quick time, some corporations may additionally do the things to do like releasing of low best goods, neglecting the hobbies of customers and employees.

These trials might also provide true consequences in the quick run.

But for growing the cost of the company in the lengthy run, avoiding; such things to do are extra essential.

3 Objectives of Financial Management

The goals of monetary administration are given below:


A. Profit maximization: Main intention of any form of monetary exercise is incomes profit.

A commercial enterprise challenge is additionally functioning in the main for the reason of incomes profit.

Profit is the measuring strategies to recognize the commercial enterprise effectivity of the concern.

The finance supervisor tries to earn most income for the corporation in the momentary and the long-term.

He can’t assurance earnings in the lengthy time period due to the fact of enterprise uncertainties.

However, a employer can earn most income even in the long-term, if:

The Finance supervisor takes suitable monetary decisions

He makes use of the finance of the organisation properly

B. Wealth maximization: Wealth maximization (shareholders’ cost maximization) is additionally a principal goal of monetary management.

Wealth maximization capacity to earn most wealth for the shareholders.

So, the finance supervisor tries to supply a most dividend to the shareholders.

He additionally tries to enlarge the market fee of the shares. The market price of the shares is immediately associated to the overall performance of the company.

Better the performance, greater is the market fee of shares and vice-versa.

So, the finance supervisor should attempt to maximize shareholder’s value

C. Proper estimation of whole economic requirements: Proper estimation of complete economic necessities is a very necessary goal of economic management.

The finance supervisor should estimate the complete monetary necessities of the company.

He needs to discover out how lots finance is required to begin and run the company.

He should discover out the constant capital and working capital necessities of the company.

His estimation ought to be correct. If not, there will be scarcity or surplus of finance. Estimating the economic necessities is a very challenging job.

The finance supervisor needs to reflect on consideration on many factors, such as the kind of technological know-how used with the aid of company, quantity of personnel employed, scale of operations, criminal requirements, etc.

D. Proper mobilization: Mobilization (collection) of finance is a vital goal of economic management.

After estimating the monetary requirements, the finance supervisor ought to figure out about the sources of finance. He can gather finance from many sources such as shares, debentures, financial institution loans, etc.

There ought to be a acceptable stability between owned finance and borrowed finance.

The corporation should borrow cash at a low fee of interest.

E. Proper utilization of finance: Proper utilization of finance is a vital goal of monetary management.

The finance supervisor should make most effective utilization of finance.

He should use the finance profitable. He has to now not waste the finance of the company.

He should no longer make investments the company’s finance in unprofitable projects.

He ought to now not block the company’s finance in inventories. He needs to have a brief deposit period.

F. Maintaining appropriate money flow: Maintaining acceptable money drift is a momentary goal of economic management.

The corporation need to have a suited money drift to pay the everyday prices such as buy of uncooked materials, fee of wages and salaries, rent, electrical energy bills, etc.

If the agency has an accurate money flow, it can take benefit of many possibilities such as getting money reductions on purchases, large-scale purchasing, giving savings to customers, etc.

A healthful money waft improves the probabilities of survival and success of the company.

G. Survival of company: Survival is the most necessary goal of economic management.

The business enterprise ought to live to tell the tale in this aggressive enterprise world.

The finance supervisor needs to be very cautious whilst making economic decisions.

One incorrect choice can make the employer sick, and it will shut down.

H. Creating reserves: One of the goals of monetary administration is to create reserves.

The agency needs to now not distribute the full income as a dividend to the shareholders.

It has to maintain a section of its income as reserves. Reserves can be used for future boom and expansion.

It can additionally be used to face contingencies in the future.

I. Proper coordination: Financial administration should attempt to have ideal coordination between the finance branch and different departments of the company.

J. Create goodwill: Financial administration ought to attempt to create goodwill for the company.

It has to enhance the photo and recognition of the company.

Goodwill helps the business enterprise to live to tell the tale in the momentary and be triumphant in the long-term.

It additionally helps the corporation for the duration of terrible times.

K. Increase efficiency: Financial administration additionally tries to expand the effectivity of all the departments of the company.

Proper distribution of finance to all the departments will extend the effectivity of the complete company.

L. Financial discipline: Financial administration additionally tries to create an economic discipline.

Financial self-discipline means to make investments finance solely in productive areas.

This will deliver excessive returns (profits) to the company.

To keep away from wastage and misuse of finance.

M. Reduce price of capital: Financial administration tries to limit the value of capital.

That is, it tries to borrow cash at a low fee of interest. The finance supervisor needs to graph the capital shape in such a way that the fee of capital it minimized.

N. Reduce running risks: Financial administration additionally tries to limit the running risks.

There are many dangers and uncertainties in a business.

The finance supervisor should take steps to limit these risks.

He should keep away from high-risk projects. He ought to additionally take ideal insurance.

O. Prepare capital structure: Financial administration additionally prepares the capital structure.

It decides the ratio between borrowed finance and owned finance. It brings a suitable stability between the exclusive sources of capital.

This stability is quintessential for liquidity, economy, flexibility and stability.

4 Every organization is required to take three important monetary selections

A. Investment Decision: Resources are scarce and can be put to alternate use.

An association have to pick out the place to make investments so as to earn the absolute best feasible profits.

Investment choice relates to selections about how the firm ‘s cash are invested in exceptional belongings that is, one of a kind funding proposal

# It has two components:

• Working Capital Decisions – Short Term funding decisions.

• Capital Budgeting choices – Long Term investment decisions

Factors affecting Investment Decisions/Capital Budgeting decisions

a) Cash flows of the project: The collection of money receipts and repayments over the existence of a funding thought need to be regarded and analyzed for choosing the excellent proposal.

b) Rate of Return: The anticipated returns from every thought and threat worried in them must be taken into account to choose the satisfactory proposal.

c) Investment Criteria Involved: A variety of funding proposals are evaluated on the foundation of capital budgeting techniques.

These contain calculation involving funding amount, hobby rate, money flows, charge of return etc.

B. Financing Decision

• These are selections w.r.t quantum of finance or composition of dollars from more than a few long-term sources.

(short time period = working capital Financial Management)

• Financing selections involve: a) Decision whether or not or now not to use an aggregate of possession and borrowed funds. b) Determining their specific ratio.

• Firm desires a sensible combine of debt and fairness as:

• Debt entails ‘Financial Risk ‘= hazard of default on charge of hobby on borrowed cash and the compensation of the precept quantity whereas

• Shareholders ‘money contain no constant dedication w.r.t charge of returns or reimbursement of capital.

• Ownership fund vs. Debt fund: They can be in contrast on the groundwork of elements such as examples, interest/dividend payout and compensation of principle, tax deductibility, and hazard and floatation costs.

Factors Affecting Financing Decision

A. Cost: The value of elevating dollars from specific sources are different.

The most inexpensive supply has to be selected.

B. Risk: The chance related with distinct sources is different.

More threat is related with borrowed dollars as in contrast to owner’s fund as activity is paid on it and it is repaid also, after a constant duration of time or on expiry of its; tenure.

C. Flotation Cost: The expenses concerned in issuing securities such as brokers commission, underwriters’ fees, charges on prospectus etc. are referred to as flotation costs.

Higher the flotation cost, much less captivating is the supply of finance.

D. Cash go with the flow function of the business: In case the money float function of an enterprise is suitable adequate then it can without problems use borrowed cash and pay pastime on time.

E. Control Considerations: In case the present shareholders choose to keep the whole manage of commercial enterprise then finance can be raised via borrowed money however when they are equipped for dilution of manipulate over business, fairness can be used for elevating finance.

F. State of Capital Markets: During boom, finance can without problems be raised through issuing shares however all through melancholy period, elevating finance by way of skill of debt is easy.

G. Period of Finance: For everlasting capital requirement, Equity shares ought to be issued as they are now not to be paid lower back and for lengthy and medium time period requirement, choice shares or debentures can be issued.

C. Dividend Decision

• Dividend is that element of divisible income that is dispensed to the proprietors i.e. the shareholders. Its outcomes in modern-day earnings for the shareholders.

• Retained earnings= share of income stored in, that is, reinvested in the enterprise for the business.

• Dividend decision= whether to distribute salary to shareholder as dividends or hold salary to finance long-term income of the firm. Must be executed maintaining in idea the corporation’s standard goal of maximizing the shareholders wealth.

Factors affecting Dividend Decision

A. Earnings: Companies having excessive and secure incomes should declare excessive price of dividends as dividends are paid out of contemporary and paste earnings.

B. Stability of Dividends: Companies usually comply with the coverage of steady dividend.

The dividend per share is no longer altered and modified in case salary trade by way of small percentage or extend in profits is transient in nature.

C. Growth Prospects: In case there are boom potentialities for the organization in the close to future them it will keep its incomes and thus, no or much less dividend will be declared.

D. Cash Flow Positions: Dividends contain an outflow of money and thus, availability of sufficient money is for most requirement for assertion of dividends.

E. Preference of Shareholders: While finding out about dividend the desire of shareholders is additionally taken into account.

In case shareholders wish for dividend then organization may additionally go for declaring the same.

F. Taxation Policy: A enterprise is required to pay tax on dividend declared via it.

If tax on dividend is higher, organization will decide upon to pay much less by way of way of dividends whereas if tax prices are decrease then extra dividends can be declared via the company.

G. Issue of bonus shares: Companies with massive reserves can also additionally distribute bonus shares to extend their capital base as it signifies increase of the organization and enhances its recognition also.

H. Legal constraints: Under provisions of Companies Act, all profits can’t be dispensed and the organization has to furnish for a number reserve. This limits the ability of agency to declare dividend.

5 Financial Planning

It includes practice of a monetary blueprint of an organization.

It is the technique of estimating the fund requirement of a commercial enterprise and deciding the feasible sources from which it can be raised.

6 Objectives of Financial Planning

Financial planning is accomplished to gain the following two objectives:

A. To make certain availability of money every time these are required: The principal goal of monetary planning is that adequate fund ought to be accessible in the business enterprise for exclusive functions such as for buy of lengthy time period assets, to meet day-to- day expenses, etc.

It ensures well timed availability of finance. Along with availability economic planning additionally tries to specify the sources of finance.

B. To see that association does no longer elevate assets unnecessarily: Excess funding is as awful as insufficient or scarcity of funds.

If there is surplus money, monetary planning should make investments it in the first-rate feasible manner as preserving monetary assets idle is an incredible loss for an organization.

Financial Planning consists of each quick time period as nicely as the lengthy time period planning.

Long time period planning focuses on capital expenditure layout whereas quick time period economic plans are known as budgets.

Budgets consist of designated graph of motion for a duration of one years or less.

7 Importance of Financial Planning

Sound monetary planning is quintessential for success of any enterprise.

It’s wanted is felt due to the fact of the following reasons:

A. It Facilitates Collection of Optimum Funds:

The economic planning estimates the specific requirement of money which skill to keep away from wastage and over-capitalization situation.

B. Financial planning helps in creating Appropriate Capital Structure:

Funds can be organized from a range of sources and are used for lengthy term, medium time period and brief term.

Financial planning is crucial for tapping terrific sources at fantastic time as lengthy time period money are typically contributed through shareholders and debenture holders, medium time period via economic establishments and quick time period with the aid of industrial banks.

C. Helps in Investing Finance in Right Projects: Financial graph suggests how the cash are to be allotted for a number functions through evaluating a variety of funding proposals.

D. Helps in Operational Activities: The success or failure of manufacturing and distribution feature of enterprise relies upon the monetary selections as proper choice ensures easy float of finance and easy operation of manufacturing and distribution.

E. Base for Financial Control: Financial planning acts as groundwork for checking the monetary things to do through evaluating the authentic income with estimated income and true price with estimated cost.

F. Helps in Proper Utilization of Finance: Finance is the existence blood of business.

So monetary planning is a necessary phase of the company planning of business.

All enterprise plans rely upon the soundness of monetary planning.

G. Helps in Avoiding Business Shocks and Surprises: By looking forward to the monetary necessities monetary planning helps to keep away from shock or surprises which in any other case companies have to face in unsure situations.

H. Link between Investment and Financing Decisions: Financial planning helps in figuring out debt/equity ratio and by way of identifying the place to make investments this fund.

It creates a hyperlink between each the decisions.

I. Helps in Coordination: It helps in coordinating a number enterprise features such as production, income feature etc.

J. It Links Present with Future: Financial planning relates existing monetary requirement with future requirement via awaiting the income and boom plans of the company.

8 Capital Structure

The term ‘structure’ signifies the game plan of the different parts.

So capital structure implies the plan of capital from various sources with the goal that the drawn-out assets required for the business are raised.

In this way, capital structure alludes to the extents or mixes of value share capital, inclination share capital, debentures, long haul credits, held profit and other long-haul wellsprings of assets in the aggregate sum of capital which a firm should raise to maintain its business

9 Factors Affecting Capital Structure


(A) Cash Flow Position: While making a desire of the capital shape the future money drift role need to be saved in mind.

Debt capital need to be used solely if the money glide function is truly excellent due to the fact a lot of money is wanted in order to make price of activity and refund of capital.

(B) Interest Coverage Ratio-ICR: With the assist of this ratio an effort is made to locate out how many instances the EBIT is accessible to the price of interest.

The capability of the organization to use debt capital will be in direct percentage to this ratio.

It is viable that in spite of higher ICR the money waft function of the enterprise may additionally be weak.

Therefore, this ratio is no longer an appropriate or suitable measure of the ability of the enterprise to pay interest.

It is equally necessary to take into consideration the money glide position.

(C) Debt Service Coverage Ratio-DSCR: This ratio gets rid of the weak spot of ICR.

This suggests the money drift role of the company.

This ratio tells us about the money repayments to be made (e.g., choice dividend, hobby and debt capital repayment) and the quantity of money available.

Better ratio capacity the higher potential of the agency for debt payment. Consequently, extra debt can be utilized in the capital structure.

(D) Return on Investment-ROI: The higher return on funding of an agency will increase its ability to utilize extra debt capital.

(E) Cost of Debt: The capability of an agency to take debt relies upon on the fee of debt.

In case the price of hobby on the debt capital is less, greater debt capital can be utilized and vice versa.

(F) Tax Rate: The fee of tax impacts the value of debt. If the charge of tax is high, the value of debt decreases.

The cause is the deduction of activity on the debt capital from the income thinking about it a section of costs and a saving in taxes.

For example, feel an enterprise takes a mortgage of 0ppp a hundred and the charge of hobby on this debt is 10% and the fee of tax is 30%.

By deducting 10/- from the EBIT a saving of in tax will take region (If 10 on account of hobby are no longer deducted, a tax of @ 30% shall have to be paid).

(G) Cost of Equity Capital: Cost of fairness capital (its capacity the expectations of the fairness shareholders from the company) is affected by way of the use of debt capital.

If the debt capital is utilized more, it will make bigger the fee of the fairness capital.

The easy motive for this is that the increased use of debt capital will increase the hazard of the fairness shareholders.

Therefore, the use of the debt capital can be made solely to a restrained level.

If even after this degree the debt capital is used further, the price of fairness capital begins growing rapidly.

It adversely impacts the market price of the shares. This is now not an excellent situation.

Efforts need to be made to keep away from it.

(H) Floatation Costs: Floatation expenses are these prices which are incurred whilst issuing securities (e.g., fairness shares, desire shares, debentures, etc.).

These encompass fee of underwriters, brokerage, stationery expenses, etc.

Generally, the value of issuing debt capital is much less than the share capital. This attracts the enterprise toward debt capital.

(I) Risk Consideration: There are two kinds of dangers in business:

(i) Operating Risk or Business Risk:

This refers to the chance of lack of ability to discharge everlasting running prices (e.g., lease of the building, price of salary, insurance plan installment, etc.),

(ii) Financial Risk:This refers to the danger of incapacity to pay constant economic repayments (e.g., charge of interest, desire dividend, return of the debt capital, etc.) as promised through the company.

The whole threat of enterprise relies upon on each these sorts of risks.

If the working danger in enterprise is less, the monetary danger can be confronted which ability that extra debt capital can be utilized.

On the contrary, if the working hazard is high, the monetary danger possibly happening after the increased use of debt capital must be avoided.

(J) Flexibility: According to this principle, capital shape needs to be pretty flexible.

Flexibility capability that, if want be, quantity of capital in the commercial enterprise ought to be elevated or diminished easily.

Reducing the quantity of capital in commercial enterprise is feasible solely in case of debt capital or choice share capital.

If at any given time corporation has extra capital than as fundamental then each the above-mentioned capitals can be repaid.

On the different hand, reimbursement of fairness share capital is now not feasible via the business enterprise at some stage in its lifetime.

Thus, from the perspective of flexibility to problem debt capital and desire share capital is the best.

(K) Control: According to this factor, at the time of making ready capital structure, it needs to be ensured that the manipulate of the present shareholders (owners) over the affairs of the organization is no longer adversely affected.

If cash are raised by using issuing fairness shares, then the wide variety of company’s shareholders will enlarge and it immediately influences the manipulate of current shareholders.

In different words, now the quantity of proprietors (shareholders) controlling the agency increases.

This state of affairs will no longer be desirable to the current shareholders.

On the contrary, when dollars are raised via debt capital, there is no impact on the manipulate of the employer due to the fact the debenture holders have no manipulate over the affairs of the company.

Thus, for these who guide this precept debt capital is the best.

(L) Regulatory Framework: Capital shape is additionally influenced by way of authority’s regulations.

For instance, banking corporations can elevate dollars with the aid of issuing share capital alone, now not any different sort of security.

Similarly, it is obligatory for different corporations to preserve a given debt-equity ratio whilst elevating funds.

Different perfect debt-equity ratios such as 2:1; 4:1; 6:1 have been decided for extraordinary industries.

The public trouble of shares and debentures has to be made underneath SEBI guidelines.

(M) Stock Market Conditions: Stock market prerequisites refer to upward or downward developments in capital market.

Both these stipulations have their have an impact on the resolution of sources of finance.

When the market is dull, buyers are commonly afraid of investing in the share capital due to excessive risk.

On the contrary, when prerequisites in the capital market are cheerful, they deal with funding in the share capital as the fantastic preference to reap profits.

Companies should, therefore, make resolution of capital sources retaining in view the prerequisites prevailing in the capital market.

(N) Capital Structure of Other Companies: Capital shape is influenced by using the enterprise to which an organization is related.

All organizations associated to a given enterprise produce nearly comparable products, their charges of manufacturing are similar, they rely on same technology, they have comparable profitability, and for this reason the sample of their capital shape is nearly similar.

Because of this fact, there are exceptional debt- fairness ratios widely wide-spread in one-of-a-kind industries.

Hence, at the time of elevating dollars an agency should take into consideration debt-equity ratio typical in the associated industry.

10 Fixed Capital

Fixed capital refers to funding in long-term assets.

Investment in constant property is for longer period and they ought to be financed via long-term sources of capital.

Decisions bearing on to constant capital contain massive capital money and are now not reversible except incurring heavy losses.

11 Factors Affecting Requirement of Fixed Capital

A. Nature of Business: Manufacturing worries require big funding in constant property & accordingly,

massive constant capital is required for them however buying and selling issues want much less constant capital as they are no longer required to buy plant and equipment etc.

B. Scale of Operations: A corporation working on giant scale requires greater constant capital as in contrast to an enterprise working on small scale.

For Example – A massive scale metal corporation like TISCO requires massive funding as in contrast to a mini metal plant.

C. Choice of Technique: An agency the use of capital-intensive methods requires extra funding in plant & equipment as in contrast to a corporation the use of labor-intensive techniques.

D. Technology upgradation: Organizations the use of belongings which come to be out of date quicker require greater constant capital as in contrast to different organizations.

E. Growth Prospects: Companies having extra boom plans require extra constant capital. In order to increase manufacturing ability greater plant & equipment is required.

F. Diversification: In case an employer goes for diversification then it will require greater constant capital to make investments in constant property like plant and machinery.

G. Distribution Channels: The company which sells its product thru wholesalers and outlets requires much less constant capital.

H. Collaboration: If corporations are underneath collaboration, Joint venture, then they want much less constant capital as they share plant; equipment with their collaborators.

I)Working Capital: Working Capital refers to the capital required for day to day working of an organization.

Apart from the funding in constant property each and every enterprise company desires to make investments in modern assets, which can be transformed into money or money equivalents inside a length of one year.

They furnish liquidity to the business. Working capital is of two sorts – Gross working capital and Net working capital.

Investment in all the modern property is known as Gross Working Capital whereas the extra of contemporary belongings over present day liabilities is known as Net Working Capital.

Following are the elements which have an effect on working capital necessities of an organization:

i. Nature of Business: A buying and selling business enterprise desires a decrease quantity of working capital as in contrast to a manufacturing organization, as buying and selling corporation undertakes no processing work.

ii. Scale of Operations: A business enterprise running on giant scale will require greater stock and thus, its working capital requirement will be extra as in contrast to small organization.

iii. Business Cycle: In the time of increase extra manufacturing will be undertaken and so extra working capital will be required at some stage in that time as in contrast to depression.

iv. Seasonal Factors: During top season demand of a product will be excessive and for this reason excessive working capital will be required as in contrast to lean season.

v. Credit Allowed: If credit score is allowed via a situation to its clients than it will require extra working capital however if items are offered on money foundation than much less working capital is required.

Vi. Credit Availed: If an association is capable to buy uncooked substances on savings from its suppliers than much less working capital will be required.

vii. Inflation: Working capital requirement is additionally decided by way of charge degree changes. For example, all through inflation fees of uncooked material, wages additionally upward jab ensuing in amplify in working capital requirements.

viii. Operating Cycle/Turnover of Working Capital: Turnover skill pace with which the working capital is transformed into money via sale of goods. If it is speedier, the quantity of working capital required will be less.

Short Answer Type

Q1. What is intended by using capital structure?

Ans- Capital shape refers to the mixture of borrowed money and owners’ fund that an association makes use of for financing its fund requirements.

Herein, borrowed money incorporate of loans, public deposits, debentures, etc. and owners’ fund incorporate of choice share capital, fairness share capital, retained incomes etc. Generally, capital shape is sincerely referred as the mixture of debt and fairness that an association makes use of for financing its funds.

It is calculated as the ratio of debt and fairness or the share of debt in the complete capital used through the firm.


The share of the debt and fairness used via the association impacts its economic hazard and profitability.

While on one hand, debt is a more cost-effective source of finance than fairness and lowers the average value of capital however on the different hand, greater use of debt, will increase the monetary hazard for the firm.

Thus, the selection involving the capital shape need to be taken with utmost care.

Capital shape is stated to be most efficient when the share of debt and fairness used is such that the income per share increases.

Q2. Discuss the two goal of Financial Planning.

Ans- Financial Planning entails designing the blueprint of the monetary operations of a firm.

It ensures that simply the proper quantity of dollars is accessible for the organizational operations at the proper time. Thereby, it ensures easy functioning.

Taking into consideration the increase and performance, via economic planning, corporations have a tendency to forecast what quantity of fund would be required at what time.

The following are the two highlighted goals of economic planning.

(i) Ensure Availability of Funds: Ensuring that the proper quantity of cash is accessible at the proper time is one of the fundamental goals of monetary planning.

It includes estimating the proper quantity of money that are required for quite a number enterprise operations in the lengthy time period as properly for day to day operations.

In addition, it additionally entails estimating the time at which the cash would be required.

Thus, monetary planning ensures that proper quantity of cash is on hand at the proper time.

Financial planning additionally factors out the possibly sources of funds.

(ii) Proper Utilization of Funds: Financial Planning goals at full utilization of funds.

It ensures that each insufficient money as nicely as extra cash is avoided. Inadequate money hinders the clean operations and the firm is unable to raise its commitments.

On the different hand, extra dollars add to the price of enterprise and motivate pointless wasteful expenditure.

Thus, economic planning ensures that the dollars are appropriate and optimally utilized.

Q3. What is economic risk? Why does it arise?

Ans- Financial danger refers to a scenario when an employer is now not in a position to meet its constant economic fees such as activity payment, desire dividend and compensation obligations.

In different words, it refers to the chance that the business enterprise would no longer be capable to meet its constant monetary obligations.

It arises when the percentage of debt in the capital shape increases.

This is due to the fact it is compulsory for the employer to pay the hobby fees on debt alongside with the precept amount.

Thus, greater the debt, greater will be its price responsibilities and thereby greater would be the probabilities of default on payment. Hence, greater use of debt leads to greater economic hazard for the company.

Q4. Define a ‘current asset’. Give 4 examples of such assets.

Ans- Current asset of a company refers to these properties which can be transformed into money or money equivalents in a quick length of time, i.e. less than one year.

Such property is used to facilitate the day to day commercial enterprise operations.

As they can be without difficulty transformed into money or money equivalents, these properties furnish liquidity to the company.

Firms gather such property to meet its a number of fee obligations.

However, such property furnishes very little return and are thereby, much less profitable.

Current property can be financed thru non-permanent as nicely as lengthy time period sources.

Some of the examples of contemporary belongings are brief time period investment, debtors, shares and money equivalents.

Q5. Financial administration is primarily based on three vast monetary decisions. What are these?

Ans- Financial administration refers to the environment friendly acquisition, allocation and utilization of dollars of the company.

It offers in three major dimensions of economic selections namely, Investment decisions, Financial selections and Dividend decisions.

a) Investment Decisions: Investment selections refer to the selections related to the place to make investments so as to earn the very best viable returns on investment.

Investment selections can be taken for each lengthy time period as nicely as quick term.

Long time period funding choices additionally recognized as Capital Budgeting selections have an effect on a business’ lengthy time period incomes ability and profitability.

For example, funding in a new machine, buy of a new building, etc. are lengthy time period funding decisions.

Short time period funding choices additionally acknowledged as working capital selections affect a business’ day to day working operations.

For example, choices related to money or consignment receivables are quick time period funding decisions.

b) Financial Decisions: Such selections contain figuring out a range of sources of money and figuring out the first-class aggregate for elevating the funds.

The predominant sources for elevating money are shareholders’ cash (referred as equity) and borrowed money (referred as debt). Based on the fee involved, threat and profitability an employer have to judiciously figure out the aggregate of debt and fairness to be used.

For example, whilst debt is viewed to be the most inexpensive supply of finance, greater debt will increase the economic risk.

Financial choices taken by using a business enterprise impacts its universal value of capital and the monetary risk.

c)Dividend Decisions: The choice includes the choice involving the distribution of earnings or surplus of the company.

An organization can distribute its income to the fairness shareholders in the structure of dividends or maintain it with itself.

Under dividend decision, an organization decides what percentage of the surplus to distribute as dividends and what share to maintain as retained earnings.

It is aimed at maximizing the shareholders’ wealth whilst maintaining in view the requirement of retained profits that are wanted for re-investment.

Q6. What are the principal targets of monetary management? Briefly explain?

Ans- The paramount goal of the economic administration is maximizing the shareholders’ wealth.

That is, the fundamental goal of economic administration for an organization is to choose for these monetary selections that show gainful from the factor of view of the shareholders.

The shareholders are stated to acquire when the market price of their shares rise.

The market fee of shares extends when the advantages from an economic choice exceed the value worried in taking them.

In different words, a monetary selection raises the market cost of share if its outcomes in some cost addition.

Thus, economic choices have to be taken such that some cost addition takes region and subsequently the rate of the fairness share increases.

When an economic choice is capable to fulfil the foremost goal of wealth maximization, different targets such as desirable utilization of funds, upkeep of liquidity etc. are robotically fulfilled.

Q7. How does working capital have an effect on each the liquidity as properly as profitability of a business?

Ans- Working capital of an enterprise refers to the extra of modern property (such as cash in hand, debtors, stock, etc.) over contemporary liabilities.

Working capital influences each the liquidity as properly as profitability of a business.

As the quantity of working capital increases, the liquidity of the commercial enterprise increases.

However, given that contemporary property provides low return, with the make bigger in working capital the profitability of the commercial enterprise falls.

For example, an expand in the stock of the commercial enterprise will increase its liquidity however due to the fact that the inventory is stored idle, the profitability falls.

On the different hand, low working capital, hinders the day to day operations of the business.

Thus, the working capital ought to be such that a stability is maintained between the profitability and liquidity.

Long Answer Type

Q1. What is working capital? How is it calculated? Discuss 5 necessary determinants of working capital requirement.

Ans- Every enterprise wants to take the choice involving the funding in contemporary belongings i.e. the working capital.

Current property refers to the property that are transformed into money or money equivalents in a brief length of time (less than or equal to one year).

There are two wide standards of working capital namely, Gross working capital and Net working capital.

Gross working capital (or, surely working capital) refers to the funding achieved in the present-day assets.

Net working capital, on the different hand, refers to the quantity of modern-day property that is in extra of modern liabilities.

Herein, modern-day liabilities are these compulsory repayments which are due for fee such as payments payable, extremely good expenses, creditors, etc. Net Working Capital is calculated as the distinction of modern belongings over present day liabilities. i.e.

NWC = Current Assets – Current Liabilities

The following are 5 determinants of working capital requirement:

(i) Type of Business: Working capital requirement of a company relies upon on its nature of business.

A business enterprise that offers in offerings or buying and selling will no longer require a whole lot of working capital.

This is due to the fact such enterprises contain small running cycle and there is no processing done.

Herein, the uncooked substances are the equal as the outputs and the income transaction takes vicinity immediately.

In distinction to this, a manufacturing association includes giant working cycle and the uncooked substances want to be transformed into completed items earlier than the ultimate sale transaction takes place.

Thereby, such corporations require massive working capital.

(ii) Scale of Operations: Another aspect figuring out the working capital requirement is the scale of operations in which the association deals.

If a company operates on a massive scale, the requirement of the working capital increases.

This is due to the fact such corporations would want to keep excessive inventory of stock and debtors.

In distinction to this, if the scale of operation is small, the requirement of the working capital will be less.

(iii) Fluctuations in Business Cycle: Different phases of enterprise cycle alter the working capital necessities by means of a firm.

During growth period, the market prospers and thereby, there is greater sale, greater production, greater inventory and debtors.

Thus, at some point of this length the want for working capital increases.

As towards this, in a duration of despair there is low demand, lesser manufacturing and sale, etc.

Thus, the working capital requirement reduces.

(iv) Production Cycle: The time length between the conversion of uncooked substances into completed items is referred as manufacturing cycle.

The span of manufacturing cycle is exceptional for extraordinary companies relying on which the requirement of working capital is determined.

If a company has a longer span of manufacturing cycle, i.e. if there is a lengthy time hole between the receipt of uncooked substances and their conversion into closing completed goods, then there will be an excessive requirement of working capital due to inventories and associated expenses.

On the different hand, if the manufacturing cycle is quick then requirement of working capital will be low.

(v) Growth Prospects: Higher boom and enlargement is associated to greater production, extra sales, extra inputs, etc. Thus, organizations with greater increase possibilities require greater quantity of working capital and vice versa.

Q2.” Do you agree? Why or why not? Capital budgeting selection is good for changing the monetary fortunes of a business”.

Ans- Yes, capital budgeting selection is a very quintessential selection which wishes to be taken carefully. It has the functionality of altering the economic fortunes of a business.

Capital budgeting selection refers to the selections involving the allocation of constant capital to specific projects.

Such selections contain funding selections involving attainment of new assets, expansion, modernization and replacement.

Such lengthy time period investments consist of buying plant and machinery, furniture, land, building, etc.

and additionally expenditure as on launch of a new product, modernization and advertising, etc.

They have lengthy time period implications on the enterprise and are irrevocable besides at a massive cost.

They have an effect on a business’ lengthy time period growth, profitability and risk.

The following are the elements that spotlight the significance of capital budgeting decisions:

(i) Long Term Implications: Investment on capital property (long time period assets) yield return in the future.

Thereby, they have an effect on the future potentialities of a company.

A company’s lengthy time period increase potentialities rely on the capital budgeting selections taken by way of it.

(ii) Huge Amount of Funds: Investing in constant capital includes a giant quantity of funds.

This makes the capital budgeting choices all the extra essential as massive quantity of dollars continues to be blocked for a longer length of time.

These selections as soon as made are challenging to change.

Thus, capital budgeting choices want to be taken cautiously after a distinct find out about of the complete requirement of money and the sources from which they are to be raised.

(iii) High Risk: Fixed belongings contain massive quantity of cash and thereby, contain massive hazard as well.

Such choices are volatile as they have an effect on the lengthy time period existence of the company.

For example, choice about the buy of new equipment includes a chance in phrases of whether or not the return from the equipment would be higher than the value incurred on it.

(iv) Irreversible Decisions: These selections as soon as made are irrevocable.

Reversing a capital budgeting choice entails large cost. This is due to the fact as soon as large funding is made on a project, withdrawing it would imply massive losses.

Q3. Explain the elements affecting the dividend decision.

Ans- Dividend selection of a corporation deals with what element of the income is to be disbursed as dividends between the shareholders and what component is to be saved as retained earnings.

The following are the elements that have an effect on the dividend decision.

(i) Amount of Earning: A company will pay dividend out of its cutting-edge and the previous earnings.

This implies that income play a key function in the dividend decision.

An enterprise having greater salary will be in a role to pay a greater quantity of dividend to its shareholders.

In distinction to this, an agency having low or restrained profits would distribute low dividends.

(ii) Stable Earnings: When an employer has a steady and an easy earning, they are in a role to distribute greater dividend as in contrast to the agencies who have an unstable earning.

In different words, an organization having steady and steady income can distribute greater quantity of dividends.

(iii) Stable Dividends: Companies typically comply with the exercise of stabilizing their dividends.

They strive to avoid normal fluctuations in dividend per share and decide for growing (or decreasing) the cost solely when there is a steady upward thrust (or fall) in the profits of the company.

(iv) Growth Prospects: Companies aiming for a greater boom stage or enlargement of operations keep a greater element of the income with itself for re-investment.

Thus, dividend of such a business enterprise is smaller as in contrast to the businesses with decrease boom opportunities.

(v) Cash Flow Position: Dividend repayments require money outflow.

If a business enterprise is low on money then the dividend will be decrease as in contrast to the business enterprise which has extra liquidity.

Even if an organization has greater profits, it will no longer be in a position to distribute excessive dividends if it does now not have sufficient cash.

(vi) Preference of the Shareholders: A corporation need to maintain in idea the preferences of the shareholders whilst distributing the dividends.

For instance, if the shareholders decide upon at least a sure quantity of dividend, then the employer is probably to declare the same.

(vii) Taxation Policy: Taxation coverage performs a necessary function in determining the dividends.

If the taxation coverage is such that an excessive price of tax is levied on dividend distribution, then the corporations are probable to distribute decrease dividends.

On the other, it may pick to distribute greater dividends if the tax fee is low.

(viii) Stock Market Reactions: The quantity of dividend that an organization distributes influences its inventory market prices.

An expand in dividend with the aid of an organization is seen as an exact signal by way of the traders and the inventory charge of the organization goes up.

On the different hand, a fall in the dividends adversely influences the inventory prices.

Thus, whilst taking the dividend decision, an employer should think about the likely inventory market reactions.

(ix) Contractual Constraints: Sometimes, whilst giving out loans to a company, the lender may additionally impose some restrictions in the structure of agreement.

These restrictions might also be associated to the dividend paid in the future.

In such cases, the enterprise has to hold such agreements in thinking when distributing the dividends.

x) Access to Capital Market:

The organizations that have a larger get right of entry to the capital market have a tendency to pay greater dividends.

This is due to the fact they can remember much less on retained salary and extra on different sources due to the market access.

The smaller organizations who have decrease get admission to capital markets have a tendency to pay decrease dividends.

(xi) Legal Constraints: Companies have to adhere to the policies and insurance policies laid out via the Companies Act.

Thus, any agency wants to take care of such restrictions and insurance policies earlier than declaring the dividends.

Business Studies Class 12 Notes Controlling

1 Meaning of Controlling

Controlling includes evaluation of real overall performance with the deliberate performance.

If there is any distinction or deviation, then discovering the motives for such distinction and taking corrective measures to cease these motives so that they don ‘t re-occurs in future and that organizational targets are fulfilled efficiently.

2. Importance of Controlling


A. Controlling helps in reaching organizational goals: The controlling characteristic measures growth closer to the organizational desires and brings to light/indicates corrective action.

B. For Evaluating/Judging accuracy of standards: A correct manage machine allows administration to confirm whether or not the requirements set are correct or no longer by way of cautious test on the modifications taking location in the organizational environment.

C. Making environment friendly use of resources: By the system of control, a supervisor seeks to limit wastage of resources.

D. Improves personnel motivation: A right manage machine ensures that personnel recognize properly in boost what they are predicted to do & additionally, the preferred of performance. 

For this reason, motivates & helps them to provide higher performance.

E. Facilitating Coordination in action: In controlling every branch and worker is ruled by using predetermined requirements which are nicely coordinated with one another.

Control presents solidarity of direction.

F. Ensuring order and discipline: Controlling creates surroundings of order and self-discipline in the company through maintaining a shut test on the things to do of its employees.

3 Nature of Controlling/Features of Controlling

A. Goal oriented: Controlling is directed in the direction of accomplishment of organizational dreams in the quality viable manner.

B. Pervasive: Controlling is a quintessential characteristic of each supervisor and exercised at all ranges of management.

C. Continuous: It is no longer an undertaking to be pursued in the give up only; it has to be executed on a continuous basis.

D. Controlling is searching back: Controlling entails size of real overall performance and its assessment with the preferred performance. It is the manner of checking and verification.

E. Controlling is ahead looking: It is associated to future due to the fact it seeks to enhance future outcomes on the groundwork of ride won in the past.

F. Depends on planning: It pre supposes existence of planning due to the fact except planning no manage is possible.

G. Action oriented: Control has no that means if no corrective motion is taken; So well timed motion ought to be taken to forestall deviations.

H. Primary Function of Management – controlling is carried out at all stages and in all kinds of organizations.

I. Brings returned administration cycle again to planning: Control must now not be seen as the remaining function. In truth its hyperlinks returned to planning. Controlling involves

4 Relationship between Planning and Controlling

Planning and controlling are interrelated and in truth toughen every different in the feel that-

A. Planning is pre-requisite for controlling. Plans supply the trendy for controlling.

Thus, besides planning, controlling is blind. If the requirements are no longer set in increase managers have nothing to control.

B. Planning is meaningless barring controlling. It is fruitful when manage is exercised.

It discovers deviations and initiates corrective measures.

C. Effectiveness of planning can be measured with the assist of controlling.

D. Planning is searching in advance and controlling is searching back: Planning is a future oriented feature as it entails searching in strengthen and making insurance policies for the most utilization of sources in future that is why it is viewed as ahead searching function.

In controlling we seem again to the overall performance which is already performed by using the personnel and examine it with plans.

If there are deviations in true and well-known overall performance or output then controlling features makes certain that in future true overall performance fits with the deliberate performances.

Therefore, controlling is additionally a ahead searching function. Thus, planning & controlling cannot be separated.

The two are supplementary characteristic which aid every different for profitable execution of each the function.

Planning makes controlling advantageous whereas controlling improves future planning.

5 Controlling Process


A. Setting Performance Standards: Standards are the standards in opposition to which genuine overall performance would be measured.

Thus, requirements emerge as groundwork for assessment and the supervisor insists on following of standards.

B. Measurement of Actual Performance: Performance need to be measured in a goal and dependable manner which consists of private observation, pattern checking.

Performance need to be measured in identical phrases in which requirements have been established, this will facilitate comparison.

C. Comparing Actual Performance with Standard: This step includes contrast of real overall performance with the standard.

Such contrast will disclose the deviation between proper and preferred performance.

If the overall performance fits the requirements it may additionally be assumed that the whole thing is underneath control.

D. Analyzing Deviations: The deviations from the requirements are assessed and analysed to become aware of the motives of deviations.

E. Taking Corrective Action: The last step in the controlling system is taking corrective action.

No corrective motion is required when the deviation is inside the applicable limits. But the place great deviations appear corrective motion is taken.

6 Limitations of Controlling

A. Difficulty in putting quantitative standards: Control device loses its effectiveness when requirements of overall performance can’t be described in quantitative terms.

This makes contrast with requirements a tough take. areas like human behavior, worker morale, job pride can’t be measured quantitatively.

B. Little manage on exterior factors: A business enterprise can’t manage exterior elements like authorities’ policies, technological changes, competition. etc.

C. Resistance from employees: Control is resisted by using the personnel as they experience that their freedom is restricted.

E.g. personnel might also withstand and go in opposition to the use of cameras to examine them minutely.

D. Costly: Control entails a lot of expenditure, time and effort.

A small business enterprise can’t manage to pay for to deploy a high priced manipulate system.

Managers ought to make sure that the value of putting in and working a manipulate machine have to no longer exceed the advantages derived from it.

Short Answer Type Questions

1. Explain the which means of controlling?

Ans– Controlling skill making sure that things to do in an enterprise are carried out as per the plans.

Controlling additionally ensures that an enterprises asset is being used efficiently and effectively for the success of favored goals.

Controlling is, as a result an intention-oriented function.

Controlling is a very vital managerial function. Because of controlling supervisor is capable to evaluate genuine overall performance with the deliberate performance.

In order to manage the things to do at all range’s supervisor wishes to operate controlling function.

2. Planning is searching in advance and controlling is searching lower back comment?

Ans– Planning and controlling are inseparable. Planning is the fundamental feature of each company it is the wondering process, which skill searching beforehand or making plans that how favored purpose is done in future accordingly it is referred to as a shaped searching feature on the different hand controlling is a systematic feature which measures the proper overall performance with the deliberate performance.

It in contrast and analyzed the complete system of a corporation and take correcting actions.

Thus, it is a backward searching characteristic however the announcement “Planning is searching beforehand and controlling is searching back” is partly right due to the fact it must be understood that planning is glided by means of past experiences and the corrective motion initiated via manipulate characteristic which goals to enhance future performance.

Thus, planning and controlling are each backward searching as properly as an ahead searching functions.

Q3. ‘An effort to manage the entirety may additionally cease up in controlling nothing’. Explain.

Ans– It’s a properly recognized reality that “Jack of all grasp of none” when we begin controlling the whole thing it consequences in controlling nothing due to the fact it is now not viable at one time to manage a variety of things to do as this method may also neither be low cost nor easy.

Control hence focal point on KRAs (Key Result Areas). Its skill rather of controlling all activities, manipulate the place the fundamental factors goes incorrect and via which employer suffers.

Thus, KRAs are set as fundamental factors and one have to be conscious that he has to manipulate what.

Q4. Write a brief observe on budgetary manipulate as an approach of managerial control.

Ans– Budgetary manage is an approach of managerial manipulate in which all operations are deliberate and this will assist us in understanding how a good deal we have to spend in order to obtain the future result.

It in contrast the real end result with budgetary standards. This evaluation displays the vital movements to be taken so that the organizational targets are accomplished. Budgeting affords the following advantages

(i) Budgeting focuses on unique and time certain targets.

(ii) Budgeting is a supply of motivation to the personnel they set the requirements towards which their overall performance will be appraised and thus, permits them to function better.

(iii) Budgeting helps in most efficient utilization of assets by means of allocating them in accordance to the necessities of distinct departments.

(iv) It helps the administration in placing standards.

Q5. Explain how administration audit serves as an advantageous method of controlling.

Ans– Management audit is a method which helps in measuring the effectivity and effectiveness of management.

It is a complete and optimistic review. Thus, we can say it is described as the assessment of the functioning overall performance and to enhance its effectivity in future length subsequently it serves as a nice method of controlling following factors are proving the same.

(i) It helps to come across existing and viable deficiencies in the overall performance of administration functions.

(ii) It helps to enhance the manipulate device of an enterprise via continually monitoring the overall performance of management.

(iii) It ensures updating of present managerial insurance policies and techniques in the mild of environmental changes.

This consequences in environment friendly controlling of management.

Long Answer Type Questions

Q1. Explain a number steps concerned in the method of control.

Ans– Controlling is a systematic technique involving following steps

(i) Setting Performance Standards: the first step in the controlling method is putting up of overall performance standards.

Standards are the standards towards which proper overall performance would be measured.

Standards can be set in each quantitative as nicely as qualitative term.

Some of the qualitative requirements are—cost to be incurred, product gadgets to be produced, time to be spent in performing a mission etc.

Improving goodwill and motivation stage of personnel are examples of qualitative standards.

(ii) Measurement of Actual Performance: Once overall performance requirements are set; the subsequent step is dimension of proper performance.

Performance need to be measured in a goal and dependable manner.

Some of the strategies used for measuring the overall performance are non-public observation, pattern checking overall performance reviews etc.

(iii) Comparing Actual Performance with Standards: This step entails contrast of proper overall performance with the standards.

Such assessment will disclose the deviation between genuine and favored results.

Comparison turns into less complicated when requirements are set in quantitative terms.

For instance, overall performance of an employee in phrases of gadgets produced in a week can be effortlessly measured in opposition to the trendy output for the week.

(iv) Analyzing Deviations: Some deviations in overall performance can be predicted in all activities.

It is therefore, essential to decide the suitable vary of deviations. Also, deviations in key areas of enterprise want to be attended extra urgently as in contrast to deviations in sure insignificant areas.

Critical point manages and administration with the aid of exception ought to be used through a supervisor in this regard.

(v) Taking Corrective Action: The ultimate step in the controlling technique is taking corrective action.

No corrective motion is required when the deviations are inside perfect limits.

However, when the deviations go past the suitable range, particularly in the essential areas, it needs instant managerial interest so that deviations do now not appear once more and requirements are accomplished.

In case the deviations can’t be corrected via managerial action, the requirements may also have to be revised.

Q2. Explain the strategies of managerial control.

Ans– A variety of methods of managerial manipulate might also be categorized into categories

(i) Traditional Techniques: Those methods which have been used with the aid of the agencies for a lengthy time now are normal techniques.

However, these have no longer grow to be out of date and are nonetheless being used via companies.

(a) Personal Observation: Personal statement allows the supervisor to accumulate firsthand information.

It additionally creates a psychological stress on the personnel to function properly as they are conscious that they are being discovered individually in their job.

(b) Statistical Reports: Statistical evaluation in the structure of averages, percentages, ratios, correlation etc.

Present beneficial facts to the managers related to overall performance of the employer in a variety of areas.

Such data when introduced in the shape of charts, graphs, tables and so on allows the managers to study them extra effortlessly and permit an assessment to be made with overall performance in preceding intervals and additionally with the benchmarks.

(c) Break-even Analysis: It is an approach used with the aid of managers to learn about the relationship between costs, quantity and profits.

It determines the in all likelihood earnings and losses at one-of-a-kind ranges of activity.

The income quantity at which there is no profit, no loss is regarded as break-even point.

It is a beneficial approach for the managers as it helps in estimating income at extraordinary degrees of activities.

(d) Budgetary Control

It is an approach of managerial manipulate in which all operations are deliberate in boost in the shape of budgets and real outcomes are in contrast with budgetary standards.

This assessment displays the critical movements to be taken so that organizational desires are accomplished.

A price range is a quantitate declaration for a particular future duration of time for the motive of acquiring a given objective.

It is additionally a declaration which displays the coverage of that precise period.

It will include figures of forecasts each in phrases of time and quantities.

(ii) Modern Techniques: Modern methods of controlling are these which are of current foundation and are comparatively new in administration literature.

They grant a new questioning on the methods in which a number factors of an enterprise can be controlled.

(a) Return on Investment: Return on Investment (ROI) is a beneficial approach which presents the fundamental yardstick for measuring whether or not or now not invested capital has been used correctly for producing real looking quantity of return.

It can be calculated as under ROI affords pinnacle administration a high-quality capacity of manage for measuring and evaluating overall performance of unique departments.

It additionally allows departmental managers to locate out the trouble which influences ROI in an unfavorable manner.

(b) Ratio Analysis: It refers to evaluation of monetary statements via computation of ratios. The most frequently used ratios are

*Liquidity Ratios: Liquidity ratios are calculated to determinedly quick time period solvency of business.

*Solvency Ratios: Ratios which are calculated to decide the lengthy time period solvency of enterprise are regarded as Solvency ratios.

*Profitability Ratios: These ratios are calculated to analyses the profitability role of a business.

*Turnover Ratios: They are calculated to decide the effectivity of operations based totally on high-quality utilization of resources.

(iii) Responsibility Accounting: Responsibility accounting is a device of accounting in which one-of-a-kind sections, divisions and departments of an organization are set up as ‘responsibility center’s’.

The head of the Centre is accountable for accomplishing the goal set for his Centre. Responsibility centers can also be of the following types

(a) Cost Centre

A value or fee Centre is a section of an enterprise in which managers are held accountable for the fee incurred in the Centre however now not for the revenues e.g., manufacturing department.

(b) Revenue Centre

An income Centre is held accountable for producing revenue, e.g., advertising department.

(c) Profit Centre

An earnings Centre is accountable for each price and income e.g., restore and renovation department.

(d) Investment Centre

A funding Centre is accountable now not solely for earnings however additionally for investments made in the Centre in the shape of assets.

(iv) Management Audit

Management audit refers to systematic appraisal of the universal overall performance of the administration of an organization.

The cause is to evaluation the effectivity and effectiveness of administration and to enhance its overall performance in future periods.

It is beneficial in figuring out the deficiencies in the overall performance of administration functions. The important blessings are

(a) Helps to hit upon weaknesses.

(b) It helps to enhance manipulate system.

(c) Ensures updating of current managerial insurance policies and techniques in the mild of environmental changes.

(v) PERT and CPM: Programmed comparison and evaluation method and vital direction technique are vital community methods beneficial in planning and controlling.

These methods are especially beneficial in planning, scheduling and imposing time sure tasks involving overall performance of a range of complex, numerous and inter-related activities.

These strategies deal with time scheduling and aid allocation for these things to do and pursuits at tremendous execution of initiatives inside given time table and shape of costs.

(vi) Management Information System: MIS is a laptop based totally data machine that presents statistics and aid for fantastic managerial decision-making.

A choice maker requires up-to-date accurate and well-timed information. MIS affords the required facts to the managers by using systematically processing a large statistic generated in an organization.

Thus, MIS is a necessary conversation device for managers.

Q3. Explain the significance of controlling in an organization. What are the issues confronted by means of the agency in imposing an nice manage system?

Ans– Control is an imperative feature of management. Without manipulate the excellent of plans can go away. A excellent manage machine helps an company in the following way

(i) Accomplishing Organizational Goals: The controlling feature measures growth toward the organizational dreams and brings to mind the deviations.

If any, and shows corrective action. It thus, publications the enterprise and continues it on the proper song so that organizational desires would possibly be achieved.

(ii) Judging Accuracy of Standards: A true manipulate device permits administration to confirm whether or not the requirements set are correct and goal an environment friendly manipulate machine continues a cautious take a look at on the adjustments taking area in the business enterprise and in the surroundings and helps to assessment and revise the requirements in mild of such changes.

(iii) Efficiently use of organizational resources: Controlling  is very much helpful in efficiently use of manpower and productive resources effective controlling helps in reducing the unnecessary wastage of resources

(iv) Improving Employee Motivation: A suitable manage machine ensures that personnel comprehend properly in strengthen what they are anticipated to do and what are the requirements of overall performance on the foundation of which they will be appraised.

It, therefore motivates them and helps them to supply higher performance.

(v) Ensuring Order and Discipline: Controlling creates an ecosystem of order and self-discipline in the organization.

It helps to minimize dishonest behaviors on the phase of the personnel through retaining a shut take a look at on their activities.

(vi) Facilitating Co-ordination in Action: Controlling gives route Jo al! things to do and efforts for accomplishing organizational goals.

Each branch and worker are ruled by way of pre-determined requirements which are nicely co-ordination with one another. This ensures that common organizational goals are accomplished.

# Although controlling is an essential feature of management. It suffers from the following barriers also

(i) Difficulty in Setting Quantitative Standards: Control device loses some of its effectiveness when requirements can’t be described in quantitative terms.

This makes size of performance and their contrast with requirements a tough task.

Employee morale, job pride and human behaviors are such areas the place this trouble may arise.

(ii) Little Control on External Factors:Generally,a company can’t manipulate exterior elements such as authorities’ policies, technological modifications opposition etc.

(iii) Resistance from Employees:Control is provide resisted via employees.

They see it as a limit on their freedom. For instance, personnel would possibly object when they are saved beneath a strict watch with the assist of Closed-Circuit Televisions (CCTVs).

(iv) Costly Affair: Control is a high-priced affair as it includes a lot of expenditure, time and effort.

A small organization can’t have enough money to installation a highly-priced manipulate system.

It can’t justify the fees involved. Managers should make certain that the fees of putting in and working a manipulate device must now not exceed the advantages derived from it.

Q4. Discuss the relationship between controlling and planning.

Ans– controlling and Planning are inseparable; they are management twins.

A machine of manipulate pre-supposes the existence of sure standards.

These requirements of overall performance which serve as the groundwork of controlling are furnished through planning.

Once a design will become operational controlling is fundamental to screen the progress, measure it, find out deviations and provoke corrective measures to make certain that occasions conform to plans.

Planning is honestly a pre-requisite for controlling. Controlling can’t be completed with planning.

With planning there is no pre-determined appreciation of the favored performance, planning seeks consistent, built-in and articulated programmed whilst controlling seeks to compel occasions to conform to plans.

Business Studies Class 12 Notes Directing

1 Meaning of Directing

Directing capability giving instructions, guiding, counseling, motivating and main the team of workers in a corporation in doing work to gain Organizational goals.

Directing is a key managerial feature to be carried out by using the supervisor alongside with planning, organizing, staffing and controlling.

From pinnacle govt to supervisor performs the feature of directing and it takes vicinity as a result anywhere best – subordinate family members exist.

Directing is a non-stop technique initiated at pinnacle stage and flows to the backside via organizational hierarchy.

2 Direction has obtained following characteristics


A. Pervasive Function– Directing is required at all stages of organization. Every supervisor presents education and suggestion to his subordinates.

B. Continuous Activity– Direction is a non-stop endeavor as it non-stop all through the existence of organization.

C. Human Factor– Directing feature is associated to subordinates and consequently it is associated to human factor.

Since human component is complicated and behaviors is unpredictable, course feature will become important.

D. Creative Activity– Direction characteristic helps in changing plans into performance.

Without this function, humans end up inactive and bodily sources are meaningless.

E. Function of execution – characteristic of Direction is carried out through all executivesand managers at all tiers all through the working of an enterprise, a subordinate receives directions from his most useful only.

F. Delegate Function– Direction is supposed to be a feature dealing with human beings. Human behaviors are unpredictable by way of nature and conditioning the people’s behaviors closer to the dreams of the organization is what the government does in this function.

Therefore, it is termed as having delicacy in it to address human behaviors.

3. Importance

A. Initiates Action: It helps to provoke motion via the humans in the company closer to attainment of preferred objectives.

The personnel begin working solely when they get guidelines and instructions from their superiors.

It is the directing characteristic which begins authentic work to convert plans into results.

B. Integrates Employee’s Efforts: All the things to do of the company are interrelated so it is quintessential to coordinate all the activities.

It integrates the things to do of subordinates by means of supervision, education and counselling.

C. Means of motivation: It motivates the subordinates to work efficaciously and to make contributions their most efforts in the direction of the fulfillment of organizational goals.

D. Facilitates change: Employees regularly withstand modifications due to worry of unfavorable outcomes on their employment and promotion.

Directing helps adjustment in the business enterprise to cope with modifications in the environment.

E. Stability and stability in the organization: Managers whilst performing directing characteristic instruct, guide, supervise and encourage their subordinates in a manner that they are capable to strike a stability between character and organizational interests.

4 Principles of Effective Direction

Effective route leads to larger contribution of subordinates to company goals.

The directing characteristic of administration can be high quality solely when sure properly regular standards are followed.

The following are the fundamental standards of high-quality direction:

A. Harmony of Objectives: It is a critical feature of administration to make the human beings recognize the targets of the crew and direct their efforts toward the fulfillment of their objectives.

The hobby of the crew needs to continually be triumphant over character interest.

The precept implies concord of private pastime and frequent interest.

B. Unity of Command: This precept states that one character have to obtain orders from solely one superior, in different words, one man or woman ought to be to blame to solely one boss.

If one individual is underneath extra than one boss then there can be contradictory orders and the subordinate fails to recognize whose order to be followed.

In the absence of harmony of command, the authority is undermined, self-discipline weakened, loyalty divided and confusion and delays are caused.

C. Unity of Direction: To have tremendous direction, there must be one head and one layout for a crew of things to do having the equal objectives.

In different words, every crew of things to do having the equal targets have to have one design of motion and ought to be beneath the manipulate of one supervisor.

D. Direct Supervision: The directing characteristic of administration turns into extra fantastic if the most beneficial keeps direct non-public contact with his subordinates.

Direct supervision infuses a feel of participation among subordinates that encourages them to put in their fantastic to obtain the organizational desires and enhance a wonderful device of feed-back of information.

E. Participative or Democratic Management: The characteristic of directing will become extra advantageous if participative or democratic fashion of administration is followed.

According to this principle, the foremost have to act in accordance to the mutual consent and the choices reached after consulting the subordinates.

It affords essential motivation to the people via making sure their participation and acceptance of work methods.

F. Effective Communication: To have high-quality direction, it is very imperative to have an advantageous verbal exchange machine which gives for free float of ideas, information, suggestions, complaints and grievances.

G. Follow-up: In order to make route effective, a supervisor has to constantly direct, guide, encourage and lead his subordinates.

A supervisor has now not solely to difficulty orders and directions however additionally to follow-up the overall performance so as to make certain that work is being carried out as desired.

He needs to intelligently oversee his subordinates at work and right them each time they go wrong.

Short questions

1. Explain in one sentence how directing initiates motion in management.

Ans– Directing initiates motion by using ordering personnel to gain the preferred purpose of an organisation.

2. What is supposed via directing?

Ans. Directing is the procedure of instructing, guiding and inspiring human beings in the employer to acquire its objectives.

3. Give any two factors of directing.

(i) Supervision

(ii) leadership.

4. State the component of directing which helps in enforcing the precept of scalar chain.

Ans– Communication helps in imposing the precept of scalar chain.

5. State any one attribute of directing.

Ans– Directing helps to provoke motion by way of the humans in the business enterprise in the direction of attainment of favored objectives.

Long Answer Questions

Q1. How directing helps in environment friendly and wonderful functioning of the organization? Explain by means of giving any three points.

Ans. Directing helps in environment friendly and high-quality functioning of administration because:

(i) It integrates personnel Directing integrates employees’ efforts in the employer in such a way that each individual’s efforts contribute to the welfare of the organization.

Thus, it ensures that personnel work effectively for the attainment of goals.   

(ii) It improves effectivity Directing courses personnel to absolutely recognize their potentials and capabilities.

Through this function, managers utilize the possible of employees and persuade them to work with the fantastic of their potential and make a contribution their most efforts closer to the success of organizational objectives.

(iii) It allows alternate Business surroundings is altering very frequently, however the human beings commonly have a tendency to face up to change.

In this context, directing helps supervisor to persuade his subordinates to raise out adjustments from time to time to cope with modifications in the surroundings as the adjustments are vital to adapt and it is the want of present-day business

Q2. Explain the which means and any three traits of directing.

Ans– Directing refers to the system of instructing, guiding, counselling, motivating and main humans in the corporation thru high quality communication, so that their efforts end result in fulfillment of organizational objectives.

Characteristics of directing are as follows:

(i) Initiating procedure, it entails giving orders and guidelines to the personnel and thereby choices are transformed into actions.

(ii) Pervasive feature the directing feature is carried out through all managers at all stages to obtain the organizational goals.

(iii) A non-stop system It is an exercise that takes region at some point of the lifestyles of an organization, irrespective of human beings occupying managerial position.

Q3. Directing is the coronary heart of the administration process. Do you agree? Give any 4 motives in help of your answer.

Ans– Yes, I do agree with this statement. Directing may also be considered as the coronary heart of the administration process; Its significance may additionally be defined beneath the following points

(i) Initiates motion Directing helps to provoke motion by using human beings in the business enterprise in the direction of attainment of favored objectives, e.g. if a supervisor courses his subordinates and clarifies their doubts in performing a task, it will assist employees to gain work aims given to them.

(ii) Directing helps in enhancing employees’ efforts and it integrates employees’ efforts in the employer in such a way that each and every person effort contributes to the attainment of organizational objectives. Thus, it ensures that the folks work for organizational goals.

(iii) Directing Improves effectivity courses personnel to absolutely realize their plausible and skills with the aid of motivating and presenting advantageous leadership. An excellent chief can usually become aware of the possible of his personnel and encourage them to extract work up to their potential.

(iv) Brings stability and steadiness in the agency Effective directing helps to deliver balance and stability in the business enterprise since, it fosters cooperation and dedication amongst the humans and helps to acquire stability amongst quite a number team things to do and the departments.

Q4. Directing is now not required at all in administration of organization. Do you agree? Give two motives in guide of your answer.

Ans– No, I do no longer agree with the above statement. Directing is required in organization as it initiates the motion of human beings in the direction of attainment of favored goals.


(i) Initiates motion Directing helps to provoke motion with the aid of humans in the agency in the direction of attainment of preferred objectives, e.g. if a supervisor courses his subordinates and clarifies their doubts in performing a task, it will assist employees to acquire work pursuits given to them.

(ii) Directing helps employees’ working and it integrates employees’ efforts in the company in manner that each womanor man effort contributes to the attainment of objectives of organizational.

Thus, it ensures that the folks work for organizational goals.

(iii)Improves efficiency Directing publications personnel to totally realize their achievable and abilities by using motivating and supplying high quality leadership.

A top chief can continually discover the doable of his personnel and encourage them to extract work up to their potential.

(iv)Brings stability and balance in the company Effective directing helps to deliver balance and stability in the employer since, it fosters cooperation and dedication amongst the humans and helps to reap stability amongst a number of team things to do and the departments.

Q5. Explain how directing helps in tremendous and environment friendly functioning of the organization.


What is supposed via directing as a characteristic of management? Describe any 4 factors of its importance.     


‘Every motion in the employer is initiated via directing’. Explain any 4 factors of significance of directing in the mild of this statement. (All India 2012)

Ans– Directing refers to the system of instructing, guiding, counselling, motivating and main human beings in the agency via tremendous verbal exchange so that their efforts end result in fulfillment of organizational objectives.

The scope of directing is very wide. It consists of all these things to do by means of which a supervisor influences the behaviors of his subordinates to impervious preferred overall performance from them.

According to William Newman, ‘Directing offers with the steps, a supervisor takes to get subordinates and others to elevate out plans.

Importance of directing

Its significance may additionally be defined underneath the following points

(i) Initiates motion Directing helps to provoke motion through human beings in the business enterprise closer to attainment of preferred objectives, e.g. if a supervisor publication his subordinates and clarifies their doubts in performing a task, it will assist employees to attain work pursuits given to them.

(ii) Directing helps in enhancing employees’ efforts, employees’ efforts in the business enterprise in such a way that each and every person effort contributes to the attainment of organizational objectives.

Thus, it ensures that the humans work for organizational goals.

(iii) Improves effectivity Directing courses personnel to entirely realize their plausible and skills by means of motivating and presenting positive leadership.

A right chief can usually perceive the practicable of his personnel and encourage them to extract work up to their potential.

(iv) Brings stability and balance in the company Effective directing helps to convey steadiness and stability in the company since, it fosters cooperation and dedication amongst the humans and helps to attain stability amongst a range of team things to do and the departments.

Business Studies Class 12 Notes Staffing

1 Meaning of Staffing

Staffing potential inserting human beings to jobs.

It starts off evolved with human useful resource planning and consists of exceptional different features like recruitment, selection, training, development, merchandising and overall performance appraisal of work force.

2 Need and Importance of Staffing

A. Obtaining Competent Personnel: Proper staffing helps in discovering and acquiring ready personnel for a range of jobs.

B. High Performance: Proper staffing ensures higher overall performance via placing proper individual on the proper job.

C. Continuous growth: Proper staffing ensures non-stop survival and boom of the enterprise.

D. Optimum utilization of human resources: It prevents under-utilization of personnel and excessive labour cost.

E. Improves job satisfaction: It improves job pride and morale of employee.

3 Staffing as a Part of Human Resource Management (HRM)

A. Staffing

• Function which all managers have to function as all managers immediately deal with people

• Staffing refers to this sort of function performed by using all managers in small organizations.

• As groups develop and range of human beings employed increases, a separate branch known as the human useful resource branch is shaped which consists of professionals who are specialists in dealing with people.

• In truth early definitions of staffing targeted narrowly on solely hiring human beings for vacant positions. But these days staffing is a phase of HRM which encompasses now not only staffing however additionally a wide variety of different specialized offerings such as job evaluation, administration of labour relations.

B. Human Resource Management

• Involves procuring, developing, preserving and appraising a in a position and cozy team of workers to acquire the dreams of the organisation successfully and effectively.

• Its reason is to allow each human being working in the enterprise to make his pleasant possible contribution.

4 Process of staffing


A. Estimating Manpower Requirement: It includes the following:

(a) Making stock of modern human sources in phrases of qualification, education & skills.

(b) Assessing future human useful resource wants of all departments.

(c) Developing a programmed to supply the human resources. Job Analysis is an intensive way of discovering important points associated to all jobs.

B. Recruitment: It refers to identification of the sources of manpower availability and making efforts to impenetrable candidates for the quite a number job positions in an organization.

C. Selection: It is the method of selecting and appointing the proper candidates for a number of jobs in abusiness enterprise thru a number of exams, exams & interviews.

D. Placement and Orientation: When a new worker reviews for duty, he is to be positioned on the job for which he is quality suited.

Placement is very vital technique as it can make sure “Right individual for proper job”.

Orientation/Induction is worried with the procedure of introducing a new worker to the organization.

The new personnel are familiarized with their units, supervisors and fellow employees.

They are additionally to be knowledgeable about working hours, method for availing leave, scientific facilities, records and geography of company and rules/regulations pertaining to their wages etc.

E. Training and Development: Systematic education helps in growing the capabilities and information of personnel in doing their jobs thru a number method.

Development entails boom of a worker in all respects. It is the procedure by means of which the personnel gather competencies and competence to do their existing jobs and enlarge their abilities for greater jobs in future.

F. Performance Appraisal: It is involved with ranking or evaluating the overall performance of employees. Transfers and promotions of the group of workers are primarily based on overall performance appraisal.

5 Recruitment

A) Recruitment: Recruitment may additionally be described as the procedure of looking out for potential personnel and stimulating them to observe for jobs in the organization.

Sources of Recruitment


(A) Internal Sources

(B) External Sources

(A) Internal Sources of Recruitment

Internal sources refer to inviting candidates from inside the organization. Following are essential sources of inside recruitment:

a. Transfers: It includes the transferring of a worker from one job to another, from one branch to some other or from one shift to any other shift.

b. Promotions: It refers to moving a worker to a greater role carrying greater responsibilities, prestige, services and pay.

c. Lay-Off: To recall the brief employee for work is known as Lay-Off, who had been briefly separated from organisation due to lack of work.

Advantages of Internal Sources Recruitment:

(1) Employees are encouraged to enhance their performance.

(2) Internal recruitment additionally simplifies the procedure of resolution & placement.

(3) No wastage of time on the worker education and development.

(4) Filling of jobs internally is cheaper.

Limitation of Internal Sources

(1) The scope for induction of clean intelligence is reduced.

(2) The worker may additionally come to be lethargic.

(3) The spirit of opposition amongst the personnel may also be hampered.

(4) Frequent transfers of personnel might also regularly minimize the productiveness of the organization.

(B) External Sources of Recruitment

When the candidates from outdoor the business enterprise are invited to fill the vacant job function then it is regarded as exterior recruitment. The frequent strategies of exterior sources of recruitments are:

a. Direct Recruitment: Under the direct recruitment, a observe is positioned on the observe board of the business enterprise specifying the important points of the jobs available.

b. Casual callers: Many reputed enterprise corporations preserve an information base of unsolicited candidates in their office. This listing can be used for Recruitment.

c. Advertisement: Advertisement in media is typically used when a wider preference is required. Example– Newspapers, Internet, Radio, Television etc.

d. Employment Exchange: Employment change is considered as a true supply of recruitment for unskilled and professional operative jobs.

e. Campus recruitment and labour contractors can be used for the purpose.

Merits of External Sources

1. Qualified Personnel: By the use of exterior supply of recruitment the administration can appeal to certified and skilled humans to observe for the vacant jobs in the organization.

2. Wider Choice: The administration has a wider preference in choosing the human beings for employment.

3. Fresh Talent: It offers wider desire and brings new blood in the organization.

4. Competitive Spirit: If an organization faucets exterior sources, the team of workers will have to compete with the outsiders.

Limitations of External Sources of Recruitment

1.Dissatisfaction amongst current employees: Recruitment from outdoor may also motive dissatisfaction amongst the employees. They may additionally sense that their probabilities of advertising are reduced.

2. Costly process: A lot of cash has to be spent on commercial consequently this is pricey process.

3. Lengthy Process: It takes greater time than inside sources of recruitment.

6 Selection

Selection is the system of deciding on from amongst the candidates from inside the employer or from outside, the most appropriate man or woman for the contemporary function or for the future position.

7 Process of Selection

The successive levels in resolution method are:


A. Preliminary Screening: After functions have been received, they are right checked as related to qualification etc. by way of screening committee. A listing of candidates to be known as for employment assessments made and unsuitable candidates are rejected altogether.

B. Selection Tests: These assessments include:

(a) Psychological assessments which are based totally on assumption that human behaviour at work can be expected through giving a number exams like aptitude, persona take a look at etc.

(b) Employment check for judging the applicant’s suitability for the job.

C. Employment Interviews: The essential motive of interview is:

(a) to locate out suitability of the candidates.

(b) to are seeking greater facts about the candidate.

(c) to supply the candidate a correct image of job with small print of phrases and conditions.

D. Reference Checks: Prior to remaining selection, the potential business enterprise makes an investigation of the references provided via the applicant.

He undertakes a thorough search into candidate’s household background, previous employment, education, police documents etc.

E. Selection Decisions: A listing of candidate who clear the employment tests, interviews and reference assessments is organized and then the chosen candidates are listed in order of merit.

F. Medical/Physical Examination: A certified clinical specialist appointed by using agency must certify whether or not the candidate is bodily healthy to the necessities of a precise job.

A ideal bodily examination will make sure greater general of fitness & bodily health of personnel thereby decreasing absenteeism.

G. Job Offer: After a candidate has cleared all hurdles in the resolution procedure, he is formally appointed through issuing him an Appointment Letter.

The vast phrases and conditions, pay scale are essential phase of Appointment Letter.

H. Contract of Employment: After getting the job offer, the candidate has to supply his acceptance.

After acceptance, each enterprise and worker will signal a contract of employment which incorporates phrases & conditions, pay scale, go away rules, hours of work, mode of termination of employment etc.

Nishant desires to set a unit in rural vicinity the place human beings have very few job possibilities and labour is on hand at a low cost.

For this he needs 4 specific heads for Sales, Accounts, Purchase and Production. He offers a commercial and shortlists some candidates after conducting determination tests.

1. Identify and nation the subsequent three steps for deciding on first-rate candidates.

2. Also discover two values which Nishant desires to communicate.

8) Training: Training is the act of growing the expertise and technical abilities of a worker for doing a unique job efficiently. Both current personnel and new personnel get acquainted with their jobs and this will increase job associated skills.

Training Methods:Training Method Off-the-job and On-the-Job Methods!


Management improvement is a systematic technique of boom and improvement via which the managers increase their skills to man­age.

It is worried with no longer solely enhancing the overall performance of managers however additionally giving them possibilities for increase and develop­ment.

There are two strategies thru which managers can enhance their information and skills.

One is thru formal coaching and different is thru on the job experiences.

On the job coaching is very essential due to the fact real mastering takes region solely when one practices what they have studied.

But it is additionally equally necessary in gaining understanding thru school room learning.

Learning will become fruitful solely when idea is blended with practice.

Therefore, on the job techniques can be balanced with school room education strategies (off-the-job methods).

1. On-the-job Training (OJT) Methods:

This is the most frequent technique of coaching in which a trainee is positioned on a precise job and taught the capabilities and understanding quintessential to function it.

The benefits of OJT are as follows:

A. On the job approach is a bendy method.

B. It is a much less high-priced method.

C. The trainee is relatively prompted and stimulated to learn.

D. Much association for the coaching is now not required.

On-the-job education techniques are as follows:

A. Job rotation: This coaching technique entails motion of trainee from one job to every other reap information and ride from extraordinary job assignments. This technique helps the trainee under­stand the troubles of different employees.

B. Coaching: Under this method, the trainee is positioned underneath a unique supervisor who features as a instruct in coaching and offers remarks to the trainee. Sometimes the trainee can also now not get a probability to categorical his ideas.

C. Job instructions: Also regarded as step-by-step education in which the coach explains the way of doing the jobs to the trainee and in case of mistakes, corrects the trainee.

D. Committee assignments: A team of trainees are requested to clear up a given organizational hassle with the aid of discussing the problem. This helps to enhance crew work.

E. Internship training: Under this method, directions via theoretical and realistic factors are supplied to the trainees. Usually, college students from the engineering and commerce schools obtain this kind of coaching for a small stipend.

2. Off-the-job Methods:

On the job education strategies have their personal limitations, and in order to have the basic improvement of employee’s off-the-job coaching can additionally be imparted.

The strategies of education which are adopted for the improvement of personnel away from the area of the job are acknowledged as off-the-job methods.

The following are some of the off-the-job techniques:

A. Case find out about method:

Usually case find out about offers with any trouble confronted via a commercial enterprise which can be solved through an employee.

The trainee is given a probability to analyze the case and come out with all feasible solutions.

This approach can decorate analytic and essential wondering of an employee.

B. Incident method: Incidents are organized on the foundation of proper conditions which occurred in special corporations and every worker in the education crew is requested to make choices as if it is a real-life situation.

Later on, the whole team discusses the incident and takes choices associated to the incident on the foundation of character and crew decisions.

C. Role play: In this case additionally a trouble state of affairs is simulated asking the worker to anticipate the function of a unique man or woman in the situation.

The participant interacts with different members assuming special roles. The total play will be recorded and trainee receives a possibility to look at their personal performance.

D. In-basket method: The personnel are given records about an imaginary company, its activi­ties and products, HR employed and all facts associated to the firm.

The trainee (employee underneath training) has to make notes, delegate duties and put together schedules inside a certain time. This can boost situational judgments and speedy selection making capabilities of employees.

E. Business games: According to this technique the trainees are divided into corporations and every crew has to talk about more than a few things to do and features of an imaginary organization.

They will talk about and figure out about a variety of topics like production, promotion, pricing etc. This offers end result in co-operative selection making process.

F. Grid training: It is a non-stop and phased programmed lasting for six years.

It consists of phases of planning development, implementation and evaluation.

The grid takes into consideration parameters like situation for humans and challenge for people.

G. Lectures: This will be an appropriate technique when the numbers of trainees are pretty large.

Lectures can be very a great deal useful in explaining the standards and concepts very clearly, and face to face interplay is very lots possible.

H. Simulation: Under this technique an imaginary state of affairs is created and trainees are requested to act on it.

For e.g., assuming the function of an advertising supervisor fixing the advertising and marketing troubles or growing a new approach etc.

I. Management education:

At current universities and administration institutes offers top notch emphasis on administration education.

For e.g., Mumbai University has begun bachelors and postgraduate diploma in Management.

Many administration Institutes grant no longer solely stages however additionally fingers on ride having collaboration with enterprise concerns.

J. Conferences: An assembly of quite a few human beings to talk about any problem is referred to as conference.

Each par­ticipant contributes through inspecting and discussing a variety of troubles associated to the topic. Everyone can specific their personal view point.

Short Questions

Q1- Mention quickly the essential sources of recruitment.

Ans– The two very essential sources of recruitment in any agency are.

Internal sources: Internal sources of recruitment are the sources that are inside the organisation

External Sources: External sources of recruitment are these sources of recruitment that exist backyard the business enterprise

Q2- Why Aptitude check is carried out in the course of the procedure of selection?

Ans– An aptitude check is carried out to measure and scale the applicant’s conceivable for studying a skill.

Q3- What is Training. In what way is it one-of-a-kind from education?

Ans– Training is to beautify the skills, abilities, and competence that is required for a precise job profile. While schooling skill the method which improves the ordinary understanding and appreciation of the employees.

Q4- Why ‘employment interview’ is performed through an enterprise in the technique of selection?

Ans– Organizations behavior worker interviews in order to determine the applicant’s feasibility for the function and to test if the individual is appropriate for the prescribed job post.

Q5- Give the cause why interior sources of recruitment are regarded to be extra economical?

Ans- Internal sources provide the benefit of being extra competitively priced than any different supply of recruitment. It is additionally more cost effective in phrases of saving time as nicely as money.

Q6- Mention the subsequent step of selection?

Ans- The subsequent step of decision is Placement and Orientation.

Q7- Mention the benefits of education to the person and to the organisation?

Ans- Training is a necessary phase of the job that goals at enhancing and developing the aptitude and information of a man or woman as prescribed in the job description.

It advantages the enterprise thru the expanded capabilities and output of the employee.

Q8- Explain how the contemporary day human aid administration is a broader concept.

Ans- In the current time human aid administration involves:

Assisting in accomplishing the dreams that are set by using the company alongside with conducting the private goals

Utilizing employees’ talent in an environment friendly manner

Enhancing job pride of the employees

Q9- Mention the process for the resolution of employees.

Ans- The resolution of the personnel entails the following procedures:

a. Screening

b. Test

c. Personal Interview

d. Background checks

e. Selection decision

f. Medical examination

g. Job offer

h. contract

Long Answer Type Questions

Q1. Define the staffing method and the more than a few steps concerned in it.

Ans- Staffing method of the administration is involved with acquiring, developing, employing, remunerating and holding humans or we can say it is the well-timed fulfilment of the manpower necessities within an organisation.

The following steps are worried in staffing process

(i) Estimating the Manpower Requirements, the first step in the staffing system is figuring out the existing manpower stock and assessing the existing and future manpower necessities of the enterprise preserving in idea the manufacturing schedule, demand etc.

(ii) Recruitment may additionally be described as the manner of looking for potential personnel and stimulating them to observe for jobs in the organisation. For this more than a few sources can be used like transfer, promotion, advertising, job consultants etc.

(iii) Selection is the manner of deciding on from amongst the pool of the potential job candidates developed at the stage of recruitment. It entails a host of checks and interviews.

(iv) Placement and Orientation is introducing the chosen worker to different personnel and familiarizing him with the policies and insurance policies of the organisation. He is taken round the work region and given the cost of the job for which he has been selected. Placement refers to the worker occupying the role or publish for which the individual has been selected.

(v) Training and Development All establishments have both in-house education center’s or have cast alliances with coaching and instructional institutes to make certain persisted getting to know of their subordinates. By providing the possibilities for profession development to their members, corporations are now not solely in a position to appeal to however additionally keep its gifted staff.

(vi) Performance Appraisal After the personnel have passed through a length of education and they have been on the job for some time, there is a want to consider their performance. The worker is anticipated to be aware of what the requirements are and the gold standard is to grant the worker remarks on his/her performance. The overall performance appraisal process, therefore, will encompass defining the job, appraising overall performance and presenting feedback.

(vii) Promotion and Career Planning, it is very vital for all organizations to tackle profession associated troubles and promotional avenues for their employees. They have to grant possibilities to everybody to exhibit their achievable and in return promotions can be provided.

(viii) Compensation All organizations want to set up wage and revenue plans for their employees. There are a number methods to put together unique pay plans relying on the well worth of the job. Compensation therefore, refers to all varieties of pay or rewards going to employees.

Q2. Explain the process for choice of employees.

Ans- The essential steps in the procedure of resolution are as follows

(i) Preliminary Screening It helps the manager put off unqualified or unfit job seekers primarily based on the facts provided in the utility forms.

(ii) Selection Tests An employment check is a mechanism that tries to measure positive traits of individuals. These vary from aptitudes, such as guide dexterity, to Genius to personality.

(iii) Employment Interview is a formal, in depth dialog carried out to consider the applicant’s suitability for the job.

(iv) Reference and Background Checks Many employers request names, addresses and phone numbers of references for the reason of verifying statistics and gaining extra on an applicant.

(v) Selection Decision The remaining selection has to be made amongst the candidates who omit the tests, interviews and reference checks.

(vi) Medical Examination Before the candidate is given a job provide he/she is required to go via a clinical test.

(vii) Job Offer Job provide is made via a letter of appointment/confirm his acceptance. Such a letter commonly carries a date by way of which the appointee ought to document on duty.

(viii) Contract of Employment After the job provide has been made and candidate accepts the offer, sure files want to be accomplished by using the business enterprise and the candidate. There is additionally a want for making ready a contract of employment. It consists of job title, duties, responsibilities, date when non-stop employment begins etc.

Q3. What are the blessings of coaching to the character and to the organization?

Ans- Training helps each the enterprise and the individual.

Benefits to the Organisation

(i) Training is a systematic studying which reduces the wastage of efforts and money.

(ii) Enhances worker productivity.

(iii) Training helps a supervisor to cope with an emergency situation.

(iv) Training motivates people and for this reason reduces absenteeism.

(v) Helps in adjusting to the altering surroundings (technological).

Benefits to the Employee

(i) Better profession possibilities due to multiplied abilities and knowledge.

(ii) Earnings can be improved due to elevated performance.

(iii)Trained employees can take care of machines extra efficiently.

(iv) Employees constantly stay influenced and satisfied.

Q4. The staffing characteristic is carried out with the aid of each supervisor and now not always by using a separate department. Explain.

Ans- Staffing is a characteristic which all managers want to perform.

It is the accountability of all managers to at once deal with and pick out humans to work for the organization.

When the supervisor performs the staffing characteristic his position is barely limited.

In small organizations, managers can also operate all obligations associated to personnel salaries, welfare and working prerequisites however as organization develop and range of humans employed increases, a separate branch called the human useful resource branch is shaped which has professionals in managing people.

How to Reverse a String in Java (5 Ways)

String reversal is changing the characters position from last to first in string.

There are different ways to to achieve reversal.

We will see them one by one.

  • Using Loops (or Iterations)
  • Usnig StringBuffer or StringBuilder ‘s reverse()
  • Using toCharArray() of Array
  • Using Recursion
  • Using Collections

Lets see different ways one by one

1 Reverse a string Using Loops

Following programs will show how to use loops to reverse a string.

Using loop we extracted one one character from string using charAt() of string to extract a character and assigned to another String or StringBuffer or in StringBuilder.

This program is also helpful in String reverse in java without using inbuilt function and in reverse a string without using string function in java

Below are the simple java programs for beginners

A. Reverse a string in java using for loop

  1. Create a String object String string = "Programmer";
  2. Create a for loop to iterate it from string object length to 0 for (int i = string.length() - 1; i>= 0; i--)
  3. Extract each character by using charAt() and assign it to another String object.

We run here java reverse for loop to get each characters and assigned to another string.

Printed the reversedString to get reverse string in java program.

B. Reverse a string in java using while loop

String object is inmutable so changing object value is not possible to avoid this we used StringBuffer here

C. Reverse a string in java using do while loop

Here StringBuilder is used to reverse the string

2. Using StringBuffer or StringBuilder classes

StringBuffer and StringBuilder provides a method reverse() to reverse the string.

This is very simple approach any one can easily reverse string using this approach.

Using this method we can reverse string.

3. Using toCharArray() of Array

toCharArray() is used to convert String Object to character array.

We follow below steps to revers string using toCharArray().

  1. Take a String
  2. Conver it to Character array string.toCharArray();
  3. Reverse loop in character array
  4. Assing it to a string object

4. Using Recursion to reverse a String

Recursion is one of the common way to reverse a string.

In many java interviews, it also asked to reverse a string without using iteration and reverse a string in java without using inbuilt function . In that case we use recursion.

  1. Create a method to call itself reverseString(String s)
  2. If String is empty then return
  3. If not empty make recursion call to reverse a string reverseString(s.substring(1)) + s.charAt(0);

5. Using Collections to Reverse a String in Java

  1. Get String
  2. Conver to List

List charList = string.chars()
.mapToObj(e -> (char) e)

  1. Reverse List Collections.reverse(charList);
  2. Convert to String String reverseString =;

Above program is a good example of  Java 8 using Streams

Business Studies Class 12 Notes Organizing

1. Meaning of Organizing

once the goals and plans are laid down, administration has to pick out and set up productive relationships between a variety of things to do and assets for enforcing plans.

In accepted phrases organizing refers to arranging the entirety in orderly shape and making the most environment friendly use of resources.

The goal of organizing is to allow humans to work collectively for a frequent purpose.

‘Organizing is the procedure of figuring out and grouping the work to be performed,

defining and delegating duty and authority and setting up relationships for the motive of enabling human beings to work most efficaciously together in conducting objectives.

2. Steps Involved in the Process of Organizing

Process of Organizing
Fig: Process of Organizing

I. Identification & Division of Work

The whole work to be carried out must be divided into precise jobs as in accordance to predetermined plans. –

Job = a set of associated duties that can be carried out through an individual.

It has to have precise and precise duties to be performed. As some distance as possible,

it needs to outline anticipated effects alongside with the job.

– Division of work → specialization of efforts and competencies + avoids duplication of work.

– Management have to make sure that all the things to do required to reap organizational targets are identified.

II Departmentalization

Grouping comparable and associated jobs into large gadgets known as departments,

divisions or sections and putting them beneath a department head.

It helps specialization.

– The departments are linked collectively and are interdependent.

– Aims at attaining co-ordination and facilitate solidarity of action. Departmentation can be accomplished on the groundwork of:

– Functions: marketing, personnel, finance etc.

– Products: Textiles, chemical, energy division etc.

– Territories: Western, northern, central, Japanese etc.

III Assignment of Duties

– Define the work of one-of-a-kind job positions and allocate work accordingly.

– Once departments are formed, the dept is positioned below the cost of an individual.

– Jobs are assigned to acharacter first-class acceptable to operate it.

– Qualifications, experience, capacity and aptitudes of humans must be matched with duties.

– E.g. things to do of finance ought to be assigned to people having skills and ride in finance e.g. C.A‘s.

IV Establishing Reporting Relationships

– Granting requisite authority to allow personnel to function the job satisfactorily.

– Superior subordinate family members between one of a kind human beings and job positions created,

so that each person is aware of from whom he is to take orders and to whom he can trouble orders.

– Creates administration hierarchy = a chain of command from the pinnacle supervisor to the character at the lowest level.

– This helps in coordination.

3 Importance of Organizing

I Benefits of specialization

In organizing each man or woman is assigned aside of whole work and no longer the total task.

This division of work into smaller devices and repetitive overall performance leads to specialization.

Thus, organizing promotes specialization which in flip leads to environment friendly & rapid overall performance of tasks.

II Clarity in relationship of working

It helps in nicely developingdescribed jobs and additionally clarifying the limits of authority and accountability of every job.

The superior-subordinate relationship is certainly described in organizing.

III Effective Administration

It gives a clear description of jobs and associated responsibilities which helps to keep away from confusion and duplication.

Clarity in working relationships permits ideal execution of work which outcomes ineffective administration.

IV Optimum utilization of resources

The ideal venture of jobs avoids overlapping/duplication of work.

This helps in stopping confusion and minimizing the wastage of assets and efforts.

V Adoption to Change

A correct designed organizational shape is bendy which allows adjustment to modifications in workload precipitated by

way of exchange in exterior surroundings associated to technology, products, assets and markets.

VI Development of Personnel

Sound company encourages initiative and relative wondering on section of the employees.

When managers delegate their authority, it reduces their workload so they can center of attention on greater vital problems associated to increase & innovation.

This additionally develops the subordinates’ capacity and helps him to understand his full potential.

VII Expansion and growth

It help in increase & diversification of an employer through including extra job positions,

departments, merchandise lines, new geographical territories etc.

4 Meaning of Organizational Structure

It seeks to set up family members amongst all the men and women working in the organization.

Under the organizational structure, more than a few posts are created to function one-of-a-kind things to do for the attainment of the targets of the enterprise.

Relations amongst humans working on distinct posts are determined.

The shape presents a foundation or framework for managers and different employers for performing their functions.

The business enterprise structure can be described as the body work inside which managerial and running duties are performed.

business structure
Fig: Business Structure

Relation between Organization structure and Span of Management

Span of administration refers to the quantity of subordinates that can be efficaciously managed through a superior.

The Span of administration to a massive extent offers structure to the agency structure.

This determines the stages of administration in the structure.

Arrow span of administration consequences in tall shape whereas wider span of administration outcomes in flat structure.

I Functional Structure

In practical shape things to do are grouped and departments are created on the groundwork of unique features to be performed.

For example, all the jobs associated to manufacturing are grouped below manufacturing department, income departments etc.


  • Large agencies producing one line of product.
  • Organizations which require excessive diploma of purposeful specialization with assorted activities.


A) Specialization: Better choice of labour takes area which consequences in specialization of features and its consequent benefits.

B) Coordination is established: All the people working inside a departmental are experts of their respective jobs.

It makes the co-ordination simpler at departmental level.

C) Helps in growing managerial efficiency: Managers of one branch are performing equal kind of characteristic

once more and once more which makes them specialized and improves their efficiency.

D) Minimizes cost: It leads to minimal duplication of effort which outcomes in economies of scale and therefore lowers cost.


A. Ignorance of organizational objectives: Each departmental head works in accordance to his personal wishes.

They continually supply more weight to their departmental objectives. Hence average organizational goals suffer.

B. Difficulty in Inter-departmental Coordination: All departmental heads work as per their personal needs which leads to coordination inside the branch less complicated

however it makes inter-departmental coordination difficult.

C. Hurdle in entire improvement – due to the fact every worker specializes solely in a small section of the complete job.


Dividing the total organization in accordance to the foremost merchandise to be manufactured (like metal, plastic, cosmetics etc.) is regarded as divisional agency structure.

Suitability: This shape is appropriate in agencies producing multi product or distinctive strains of merchandise requiring product specialization.

Also developing organizations which intend to add greater traces of merchandise in future undertake this structure.


A) Quick decision-making: Divisional supervisor can take any selection involving his division independently which makes selections rapid and effective.

B) Divisional outcomes can be assessed: Division consequences (profit/loss) can be assessed easily. On this groundwork any unprofitable division can be closed.

C) Growth and Expansion: It enables boom and growth as new divisions can be delivered besides stressful current departments.


1. Conflicts amongst specific divisions on allocation of resources.

2. Duplicity of Functions: Entire set of features is required for all divisions. It offers upward jostle to duplicity of efforts amongst divisions & Itwill increase cost.

3. Selfish Attitude: Every division tries to show higher performance and from time to time even at the price of different divisions. This indicates their egocentric attitude.


– Refers to the org. shape that is designed through the administration to accomplish organizational objectives.

– It specifies actually the boundaries of authority & duty and there is a systematic coordination amongst a variety of things to do to gain organizational goals.

– Louis Allen – System of properly described jobs, every bearing a particular measure of authority, duty & accountability.


A) It is intentionally created by way of the pinnacle management.

B) It is primarily based on regulations and techniques which are in written form.

C) It is impersonal i.e. does no longer takes into consideration emotional aspect.

D) It genuinely defines the authority and duty of each individual.

E) It is created to reap organizational objectives.


A) Easier to repair duty on the grounds that mutual relationships are truly defined.

B) No overlapping of work – due to the fact matters go in accordance to a specific plan.

C) Unity of command via a mounted chain of command.

D) Easy to reap goals – due to the fact coordination and most appropriate use of human and fabric resources.

E) Stability in the company – due to the fact conduct of personnel can be pretty anticipated for the reason that there are particular regulations to information them.


1. The Work is primarily based on regulations which motives needless delays.

2. Lack of initiative: The personnel have to do what they are informed to do and they have no chance of thinking.

3. Limited in scope: It is challenging to recognize all human relationships in a company as its location’s greater emphasis on shape and work.


A casual enterprise is that company which is no longer set up intentionally

however comes into existence due to the fact of frequent interests, tastes and spiritual and communal relations.

The essential reason of this organization, shape is getting psychological satisfaction.

For example, personnel with comparable activity in sports, films, faith etc.

May additionally structure their very own casual groups.


A) It originates from inside the formal organisation as a end result of non-public interaction amongst employees.

B) It has no written guidelines and procedures.

C) It does now not have constant traces of communication.

D) It is no longer intentionally created through the management.

E) It is non-public capability the emotions of folks are stored in mind.


A) Speed: Prescribed strains of verbal exchange are now not observed which leads to quicker unfold of information.

B) Fulfillment of social wants – enhances job pride which offers them an experience of belongingness in the organization.

C) Quick answer of the issues – due to the fact the subordinates can communicate barring hesitation earlier than the officers,

it helps the officers to apprehend the issues of their subordinates.


A) It creates rumors: All the people in a casual company speak careless and on occasion an incorrect element is conveyed to the different persons.

B) It resists trade and lays stress on adopting the ancient techniques.

C) Priority to crew interests: Pressurizes individuals to conform to crew expectations.

7 Difference between Formal and Informal Organization

Formal organization

Informal organization

1.Formal organization is established with the explicit aim of achieving well-defined goals.

1. Informal organization spring on its own. Its goals are ill defined and intangible.

2. Formal organization is bound together by authority relationships among members. A hierarchical structure is created, constituting top management, middle management and supervisory management.

2. Informal organization is characterized by a generalized sort of power relationships. Power in informal organization has bases other than rational legal right.

3. Formal organization recognizes certain tasks which are to be carried out to achieve its goals.

3. Informal organization does not have any well-defined tasks.

4.The roles and relationships of people in formal organization are impersonally defined.

4. In informal organization the relationships among people are interpersonal.

5.In formal organization, much emphasis is placed on efficiency, discipline, conformity, consistency and control.

5. Informal organization is characterized by relative freedom, spontaneity, by relative freedom, spontaneity, homeliness and warmth.

6. In formal organization, the social and psychological needs and interests of members of the organization get little attention.

6. In informal organization the sociopsychological needs, interests and aspirations of members get priority.

7. The communication system in formal organization follows certain pre-determined patterns and paths.

7. In informal organization, the communication pattern is Haphazard, intricate and natural.

8. Formal organization is relatively slow to respond and adapt to changing situations and realities.

8. Informal organization is dynamic and very vigilant. It is sensitive to its surroundings.

8 Delegation of Authority

Meaning: Its capability the granting of authority to subordinates to function inside the prescribed limits.

The supervisor who delegates authority holds his subordinates accountable for suitable overall performance of the assigned tasks.

To make certain that his subordinates function all the works efficiently and correctly in anticipated manner the supervisor creates accountability.

9 Process/Elements of Delegation

A) Authority: The electricity of taking choices in order to information the things to do of others.

Authority is that electricity which influences the habits of others.

B) Responsibility: It is the duty of a subordinate to top function the assigned duty.

When a highest quality problems orders, it turns into the accountability of the subordinate to raise it out.

C) Accountability: When a most reliable assigns some work to a subordinate, he is answerable to his most reliable for its success or failure.

10 Principle of Absoluteness of Accountability

Authority can be delegated however responsibility/accountability can’t be delegated by means of a manager.

The authority granted to a subordinate can be taken lower back and re-delegated to some other person.

The supervisor can’t get away from the accountability for any default or mistake on the phase of his subordinates.

For example, If the chief govt asks advertising and marketing supervisor to acquire an income goal of sale of a hundred units/day.

The advertising supervisor delegates this project to deputy income manager, who fails to attain the target.

Then advertising supervisor will be answerable for the work overall performance of his subordinates.

Thus, accountability is continually of the man or woman who delegates authority.

11 Difference between Authority, Responsibility and Accountability






It means right to command

It is the obligation to perform an assigned task.

It means the answerability for outcome of the assigned task.


It can be delegated.

It cannot be entirely delegated.

It cannot be delegated at all.


It arises from formal position.

It arises from delegated authority.

It arises from responsibility.


It flows downward from superior to subordinate.

It flows upward from subordinate to superior.

It flows upward from subordinate to superior.

12 Importance of the Delegation of Authority

a) Reduction of Executives’ work load: It reduces the work load of officers.

They can as a result make use of their time in extra necessary and innovative works rather of works of day by day routine.

b) Employee development: Employees get greater possibilities to make use of their Genius which lets in them to boost these capabilities which will allow them to operate complicated tasks.

c) Quick and better choice are possible: The subordinate is granted adequate authority so they want no longer to go to their superiors for taking selections regarding the pursuits matters.

d) High Morale of subordinates: Because of delegation of authority to the subordinates they get a possibility to show their effectivity and capacity.

e) Better coordination: The factors of delegation – authority, duty and accountability assist to outline the powers,

obligations and reply potential associated to quite a number job positions which outcomes in creating and preserving nice coordination.

13 Decentralization

Decentralization of authority capacity dispersal of authority to take selections all through the organization, up to the decrease levels.

• It implies reservation of some authority with the pinnacle stage administration and transferring relaxation of the authority to the decrease tiers of the organization.

This empowers decrease tiers to take selections related to issues confronted through them besides having to go to the higher levels.

According to Allen, ‘Decentralization refers to systematic efforts to delegate to the lowest level,

all authority barring the one which can be exercised at central points. ‟

Centralization = authority retained at pinnacle degree and Decentralization = Systematic delegation of authority at all stages and in all departments of a firm. Firm desires to stability the two.

• In case of a decentralized firm, Top stage retains authority for:

o Policies and selections w.r.t the complete firm

o Overall manage and coordination

• Middle and decrease tiers have authority to take choices w.r.t duties allotted to them

Centralization and Decentralization

represents the sample of authority amongst managers at one-of-a-kind levels.

Centralization of authority skill attention of energy of choice making in a few hands.

In such an enterprise very little authority is delegated to managers at center and decrease levels.

No company can be absolutely centralized or decentralized. They exist collectively and there is a want for a stability between the two.

As the enterprise grows in size, there is tendency to pass in the direction of decentralization. Thus, each employer is characterized by using both.

14 Importance of Decentralization

a) Develops initiative amongst subordinates: It helps to promote self assurance due to the fact the subordinates are given freedom to take their personal decisions.

b) Quick and higher decisions: The burden of managerial choices does no longer lie in the fingers of few humans however receives divided amongst a range of humans which helps them to take higher and speedy decisions.

c) Relieves the pinnacle executives from extra workload: Each day managerial works is assigned to the subordinates which leaves ample time with the superiors which they can make use of in growing new strategies.

d) Managerial Development: Its capacity giving authority to the subordinates up to the decrease stage to take choices involving their work. In this way the probability to take choices helps in the improvement of the organization.

e) Better Control: It makes it viable to consider overall performance at every degree which consequences in entire manage over all the activities.

Short Answer Type Questions

A) Define ‘Organizing?

Ans: Organizing is described as a method that initiates implementation of plans by means of clarifying jobs,

working relationships and correctly deploying resources for attainment of recognized and favored results.

B) What are the steps in the procedure of organizing?

Ans: Organizing includes following steps that want to be taken in series

(i) Identification and Division of Work Organizing procedure starts with figuring out and division of whole work into small units.

(ii) Departmentalization After dividing the work, associated and comparable jobs are grouped collectively and put below one department.

(iii) Assignment of Duties After departmentalization, the work is assigned in accordance to the capability of individuals.

(iv) Establishing Reporting Relationship Assigning responsibilities is now not enough.

Each person has to additionally know, who he has to take orders and to whom he is accountable.

Thus, reporting relationship helps in co-ordination amongst more than a few departments.

C) Discuss the factors of delegation.

Ans: The factors of delegation are as follows

(i) Authority It refers to the proper of a character to command his subordinates and to take motion inside the scope of his position.

The thought of authority arises from the mounted scalar chain, which hyperlinks a number of job positions and stages of an organization.

It has to be cited that authority is confined through legal guidelines and the guidelines and rules of the organization. Authority flows downward.

(ii) Responsibility is the duty of a subordinate to correct operate the assigned duty.

It arises from a superior-subordinate relationship due to the fact the subordinate is certain to function the obligation assigned to him by means of his superior.

Responsibility flows upward.

(iii) Accountability implies being answerable for the remaining outcome.

Once authority has been delegated and accountability accepted, one can’t deny accountability.

It can’t be delegated and flows upwards i.e.;

a subordinate will be responsible to a top-quality for pleasant overall performance of work.

4. What does the time period ‘Span of management’ refer to?

Ans: Is the variety of subordinates underneath a gold standard or we can say,

its ability how many personnel can be successfully managed by using a superior.

The span of management, to a massive extent offers form to the organizational structure, e.g.,

if the variety of subordinates below a most advantageous maintain growing when we go downward then the form of the organizational shape will be as follows.

Span of management

5. Under what occasions would purposeful shape show to be a fabulous choice?

Ans: Functional shape would show to be most appropriate when the measurement of the enterprise is large,

has different things to do and operations require a excessive diploma of specialization.

It promotes manipulate and co-ordination inside a department,

improved managerial and operational efficiency, outcomes in multiplied profits.

6) Can a massive sized enterprise be completely centralized or decentralized? Give your opinion.

Ans: No massive organization can no longer be completely centralized or decentralized.

Complete centralization would mean conceptualization of all choice making features at the apex of the administration hierarchy.

Such a situation would obviate the want for a administration hierarchy.

On the different hand, whole decentralization would suggest the delegation of all selection making features to the decrease degree of the hierarchy and this would end of the want for higher,

managerial positions. Both the conditions are unrealistic.

As a business enterprise grows in measurement and complexity, there is a tendency to go in the direction of decentralized selection making.

This is because, in giant organizations these employees, who are immediately and carefully concerned with positive operations

have a tendency to have extra information about them than the pinnacle management,

which may additionally solely be circuitously related with man or woman operations.

Hence, there is a want for stability between these co-existing forces.

7)Decentralization is expanding delegation to its lower level. Comment.

Ans: Decentralization is expanding delegation to its lower level.

decentralization explains the manner in which selection making duties are divided amongst hierarchical levels.

Decentralization refers to delegation of authority in the course of all the tiers of the organization.

Decision making authority is shared with decrease stages and is hence positioned nearest to the factor of action.

In different words, selection making authority is pushed down the chain of command.

Delegation is the technique and decentralization is the stop result,

e.g., If the director provides the accountability to manufacturing head to whole the goal of 20,000 devices and authorize him to appoint the workers,

manufacturing head similarly shares his duty with supervisor to choose the worker.

Manager shares his duty with supervisors, who are dealing with workers, authorize him to pick out workers.

Here, the accountability dispensed at each and every level.

Long Answer Type Questions

1. Why is delegation regarded indispensable for tremendous organizing?

Ans: Effective delegation leads to the following benefits

(i) Effective Management By empowering the employees,

the managers are in a position to feature extra effectively as they get extra time to pay attention on essential matters.

This makes the working of all the tiers high quality and efficient.

(ii) Employee Development As an end result of delegation,

personnel get extra possibilities to utilize their brain and this can also supply upward jab to intelligence competencies in them.

It makes them higher leaders and choice makers.

Delegation empowers the employees via imparting them with the danger to use their skills, achieve trip and increase themselves for greater positions.

(iii) Motivation of Employees Delegation helps in growing the abilities of the employees.

It additionally has psychological benefits. Responsibility for work builds the shallowness of a worker and improves his confidence.

He feels influenced and tries to enhance his overall performance further.

(iv) Facilitation of Growth Delegation helps in the growth of an employer by using offering a equipped group of workers to take up main positions in new ventures.

Trained and skilled personnel are in a position to play great roles in the launch of new projects.

(v) Basis of Management Hierarchy Delegation of authority establishes superior-subordinate,

which are the groundwork of hierarchy of management.

The extent of delegated authority additionally decides the strength that every job function enjoys in the organization.

(vi) Better Co-ordination Due to delegation work, duties, energy all turns into very clear.

This helps to keep away from overlapping of obligations and duplication of effort as it offers a clear image of the work being executed at a number level.

Such readability in reporting relationships assist in growing and retaining high quality coordination amongst the departments, stages and features of management.

2. What is a divisional structure? Discuss its blessings and limitations.

Ans: A divisional shape contains of separate commercial enterprise gadgets or divisions.

Each unit has a divisional supervisor accountable for overall performance and who has authority over the unit.

Generally, manpower is grouped on the groundwork of distinct merchandise manufactured.


(i) Skill Development Product specializations helps in the improvement of various capabilities in a divisional head and this prepares him for greater positions as he good points journey in all functions.

(ii) Accountability Divisional heads are to blame for profits, as revenues and expenses associated to exceptional departments, can be without difficulty recognized and assigned to them.

This affords applicable groundwork for overall performance measurement.

(iii) Quick Decision Making It promotes flexibility and initiative due to the fact every division feature as a self-sustaining unit which leads to quicker selection making.

(iv) Facilitates Expansion It helps boom as new divisions can be delivered besides interrupting the current operations,

with the aid of purely including any other divisional head and group of workers for the new product line.


The divisional shape has positive disadvantages

(i) Conflicts might also occur amongst one-of-a-kind divisions with reference to allocation of funds.

(ii) Higher Cost Providing every division with separate set of comparable features will increase expenditure.

(iii) Ignoring Organizational Goals, it affords managers with the authority to supervise all things to do associated to a precise division.

In route of time, such a supervisor may additionally reap energy and in a bid to assert his independence may additionally pass by organizational interests.

3. Decentralization is a non-obligatory policy. Explain why an organization would pick out to be decentralized.

Ans: Decentralization is a great deal greater than mere switch of authority to the decrease stages of administration hierarchy.

Its importance can be understood with the help of following points

(i) Develops Initiative Among Subordinates When decrease managerial degrees are given freedom to take their personal selections they examine to rely on their judgement.

A decentralized coverage helps to become aware of these executives, who have the essential practicable to end up dynamic leaders.

(ii) Develops Managerial Talent for the Future Formal education performs an essential phase in equipping subordinates

with capabilities that assist them upward thrust in the organization,

however equally essential is the ride won by using coping with assignments independently.

It offers them a threat to show their competencies and creates a reservoir of certified manpower.

(iii) Quick Decision Making In a decentralized organization, however,

on the grounds that selections are taken at levels, which are nearest to the factors of motion and there is no requirement for approval from many degrees the method is plenty faster.

(iv) Relief to Top Management Decentralization leaves the pinnacle administration with extra time,

which they can dedicate to essential coverage choices alternatively than occupying their time with each coverage as nicely as operational decisions.

(v) Facilitates Growth Decentralization awards increased autonomy to the decrease ranges of administration as properly as divisional or departmental heads.

This permits them to function in a manner pleasant appropriate to their branch and develops a feel of opposition amongst the departments,

consequently, the productiveness tiers extend and the agency is in a position to generate greater returns,

which can be used for enlargement purposes.

(vi) Better Control Decentralization makes it viable to consider overall performance at every degree and the departments can be in my view held guilty for their results.

The extent of success of organizational goals as nicely as the contribution of every branch in meeting, the overall targets can be ascertained

4. How does casual organization help the formal organization?

Ans: The casual corporation presents many benefits. Important amongst them are given as follows

(i) Quick Feedback Prescribed strains of verbal exchange are no longer followed.

Thus, the casual company leads to quicker unfold of facts as properly as rapid feedback.

(ii) Social Needs It helps to fulfill social desires of the participants and lets in them to locate like-minded people.

This enhances their job satisfaction, considering the fact that it offers them a experience of belongingness in the organization.

(iii) Organizational Objectives It contributes toward fulfilment of organizational targets via compensating for inadequacies in the formal corporation e.g.,

feedbacks on new insurance policies and many others can be examined via casual network.

Business Studies Class 12 Notes Planning

1 What is Planning?

Planning is ascertaining before what to try to and the way to try to.

It is one among the foremost important managerial duties.

Before doing something, the managers and supervisors must give their opinion regarding how to do a particular job.

Hence, planning is firmly correlated with discovery and creativity. But the supervisor would first have to set goals.

Planning is vital step what managers at all stages take.

It desires conserving on to the choices when you consider that it consists of choosing a preference from choice approaches of performance.

What is Business Planning
Fig: What is Business Planning

2 Features of Planning

Fig: Features of Business Planning
Fig: Features of Business Planning

I. Planning Focuses on Achieving Objective Planning is purposeful. It has no that means until it contributes to the fulfillment of predetermined organizational goals

II. Planning is a Primary Function of Management Planning is the important or first feature to be carried out via each manager.

No different characteristic can be completed via the supervisor except performing planning function.

III. Planning is Pervasive Planning is critical for each and every kind of commercial enterprise activity.

Every branch whether, purchase, income accounts, auditing, advertising and many others wishes systematic planning.

IV. Planning is Continuous Planning is a by no means ending or non-stop technique due to the fact after making plans additionally one has to be in contact with the adjustments in altering surroundings and in the resolution of one great way

V. Planning is Futuristic Planning usually skill searching ahead, it is by no means for the past.

All the managers strive to make predictions and assumptions for future.

VI. Planning Involves Decision Making Planning preference making of the fine feasible choice out of a range of choices

3 Importance of Planning

Importance of Business Planning
Fig: Importance of Business Planning

Planning is actually substantial as it directs us the place to go, it furnishes course and decreases the hazard of danger by using making predictions.

The full-size benefits of planning are furnished below:

A. Planninggives directions: Planning assures that the goals are virtually asserted so that they serve as a model for deciding what motion ought to be taken and in which direction.

If objects are properly established, personnel are knowledgeable of what the organization has to do and what they want do to accomplish these purposes.

B. Planning decreases the possibilities of risk: Planning is a pastime which approves a supervisor to seem ahead and predict changes.

By deciding in prior the duties to be completed, planning notes the way to deal with adjustments and unpredictable effects.

C. Planning decreases and wasteful activities overlapping: Planning works as the basis of organizing the things to do and functions of wonderful branches, departments, and people.

It assists in heading off chaos and confusion. Since planning ensures precision in appreciation and action, work is carried out on effortlessly barring delays.

D. Planning encourages revolutionary ideas: Since it is the most important characteristic of management, new procedures can take the shape of true plans.

It is the most difficult venture for the administration as it leads all deliberate moves pointing to boom and of the business.

E. Planning aids choice making: It encourages the supervisor to seem into the future and make a selection from amongst countless choice plans of action.

The supervisor has to investigate every choice and pick out the most manageable layout

4. Limitations of Planning

Internal Limitations

I. Planning leads to rigidity: Planning discourages individual’s initiative & creativity.

The managers do no longer make modifications in accordance to altering enterprise environment.

They give up taking or giving pointers and new ideas. Thus, special planning may additionally create an inflexible framework in the organization.

II. Planning may also now not work in dynamic environment: Planning is primarily based on anticipation of future happenings and when you consider that future is unsure and dynamic therefore, the future anticipations are no longer constantly true.

III. Planning entails massive costs: When plans are drawn up, big value is concerned in their formulation.

IV. Planning is time consuming: Sometimes plans to be drawn up take so a lot of time that there is no longer an awful lot time left for their implementation.

V. Planning does no longer assurance success: The success of a corporation is feasible solely when plans are top drawn and implement.

Sometimes managers rely on formerly tried profitable plans, however it is now not constantly actual that a format which has labored earlier than will work correctly again.

VI. Planning reduces creativity: In planning, work is to be accomplished as per pre-determined plans.

It is determined in strengthen what is to be done, how it is to be accomplished and who is going to do it.

Moreover, planning is executed by using pinnacle administration which leads to discount of creativity of different degrees of management.

External Limitations

They are these boundaries of planning which arises due to exterior elements over which an enterprise has no control.

I. Changes in Government insurance policies way leads to failure of planning.

II. Natural calamities such as flood, earthquake etc. additionally adversely have an effect on the success of planning.

III. Changes in the techniques of opponents additionally leads to failure of planning many times.

IV. Regular technological modifications may additionally have an effect on planning.

V. Changes in the Economic and Social Conditions additionally reduces the effectiveness of planning.

5. Planning Process

Business Planning Process
Fig: Business Planning Process

As planning is an activity, there are sure lifelike measures for each and every supervisor to follow:

A. Setting Objectives

This is the most important step in the system of planning which specifies the goal of an organization, i.e. what a company wishes to achieve.

The planning technique starts with the putting of objectives.

Objectives are quit outcomes which the administration desires to obtain via its operations.

Objectives are particular and are measurable in phrases of units.

Objectives are set for the agency as a total for all departments, and then departments set their very own targets inside the framework of organizational objectives.

Example: A cell telephone enterprise units the goal to promote 2,00,000 gadgets subsequent year, which is double the modern sales.

B. Developing Planning Premises

Planning is in truth centered on the future, and there are sure occasions which are anticipated to have an effect on the coverage formation.

Such occasions are exterior in nature and have an effect on the planning adversely if ignored.

Their grasp and truthful evaluation are indispensable for high-quality planning.

Such activities are the assumptions on the groundwork of which plans are drawn and are recognized as planning premises.

Example: The cell smartphone organization has set the goal of 2,00,000 gadgets sale on the groundwork of forecast completed on the premises of beneficial Government coverage toward digitization of transactions.

C. Identifying Alternative Courses of Action

Once targets are set, assumptions are made. Then the subsequent step is to act upon them.

There can also be many approaches to act and obtain objectives. All the choice publications of motion need to be identified.

Example: The Mobile business enterprise has many choices like decreasing price, growing advertising and promotion, after sale carrier etc.

D. Evaluating Alternative Course of Action

In this step, the nice and terrible factors of every choice want to be evaluated in the mild of targets to be achieved.

Every choice is evaluated in phrases of decrease cost, decrease risks, and greater returns, inside the planning premises and inside the availability of capital.

Example:The cell cellphone enterprise will consider all the picks and test its professionals and cons.

E. Selecting One Best Alternative

The great plan, which is the most worthwhile format and with minimal bad effects, is adopted and implemented.

In such cases, the manager’s trip and judgement play a necessary function in choosing the quality alternative.

Example: Mobile smartphone corporation selects greater T.V. commercials and on-line advertising and marketing with first-rate after income service.

F. Implementing the Plan

This is the step the place different managerial features come into the picture.

At this stage plans are implemented to achieve the desired results

In this step, managers speak the to the personnel truely to convert the plans into action.

This step entails allocating the resources, organizing for labor and buy of machinery.

Example: Mobile smartphone organization hires salesman on a massive scale, creates T.V. advertisement, and begins on-line advertising things to do and set up provider workshops.

G. Follow Up Action

Monitoring the layout continuously and taking remarks at ordinary intervals is known as follow-up.

Monitoring of plans is very essential to make sure that the plans are being applied in accordance to the schedule.

Regular tests and comparisons of the outcomes with set requirements are finished to make certain that goals are achieved.

Example: A desirable remarks mechanism was once developed with the aid of the cell cellphone agency during its branches so that the real purchaser response, income collection, worker response, etc. may want to be known.


Plan: -A Plan is a particular motion proposed to assist the business enterprise gain its objectives.

It is a report that outlines how dreams are going to be met.

The significance of creating plans is evident from the truth that there may additionally be extra than one capacity of attaining a unique goal.

So, with the assist of logical plans, goals of a business enterprise should be accomplished easily.


A Single use layout in a commercial enterprise refers to graph developed for a one-time assignment or tournament that has one precise objective.

It applies to things to do that do now not reoccur or repeat. It is specially designed to reap a unique goal.

Such sketch is developed to meet the desires of a special situation.

The size of a single use graph differs noticeably relying on the challenge in question, as a single match design can also solely remaining one day whilst a single mission may additionally ultimate one week or months.

For example, an define for an advertising and marketing campaign.

After the marketing campaign runs its course, the quick time period design will lose its relevance besides as an information for growing future plans.

Types of Single Use Plan

I. Programme: A programme is a single use layout containing specific statements about undertaking outlining the objectives, policies, procedures, rules, tasks, bodily and human assets required to put in force any direction of action.

II. Budget: A price range is a declaration of predicted end result expressed in numerical phrases for a precise length of time in the future.


Standing plans are used over and over once more due to the fact they center of attention on organizational conditions that take place repeatedly.

They are commonly made as soon as and keep their cost over a length of years whilst present process revisions and updates.

That is why they are also referred to as repeated use plans.

For example, Businessman plans to set up a new enterprise Entrepreneur drafts commercial enterprise design earlier than opening the doorways to their business, and they can use their sketch to information their efforts for years into the future.

Types of Standing Plans

I. Objectives: Objectives are described as ends for the fulfillment of which an organization goes on working.

They can also be designed as the favored future role 0that the administration would like to reach.

The first and fundamental step of the planning method is placing organizational objectives.

Examples growing income by way of 10%, Getting 20% return on Investment etc. Objectives must be clear and achievable.

II. Strategy: Strategies refer to these plans which an enterprise prepares to face a range of situations, threats and opportunities.

When the managers of a corporation put together a new method for the enterprise it is known as inside approach and when some techniques are organized to reply to the techniques of the competitors, then such techniques are known as exterior strategies.

Examples, choice of the medium of advertisement, decision of the channel of distribution etc.

III. Policy: Policies refers to the well-known tips which brings uniformity in decision-making for success of organizational objectives.

They furnish instructions to the managers of an organization. They are bendy as they may additionally be modified as per requirement.

Example, promoting items on money groundwork only, reserving some put up for ladies in the organization.

IV. Procedure: Procedures are these plans which decide the sequential steps to raise out some work/activity.

They point out which work is to be achieved in which sequence/way.

They assist in the overall performance of work. Procedures are publications to action. Example: Process adopted in the Selection of Employees.

V. Rule: Rules are precise declaration that inform what is to be completed and whatnot to be performed in a particular situation.

They assist in indicating which factors are to be stored in thinking whilst performing task/work.

Rules are inflexible which make certain self-discipline in the organization.

Example : ‘No smoking in the workplace premises’. Violation of regulations may also invite penalty.

VI. Method: Methods are standardized approaches or manners in which a unique challenge has to be performed.

There might also be many ways/methods of finishing a challenge but that method/way should be chosen by way of which work can be accomplished early at the minimal viable cost.

Methods are flexible. Example, a variety of techniques of education are adopted by using an organization to teach its personnel like apprenticeship training, vestibule coaching etc.

Short Answer Type Questions

1. What are the essential factors in the definition of planning?

Ans: The important factors in the definition of planning are as follows

(i) Planning is identifying in strengthen what to do and how to do.

(ii) It is one of the fundamental managerial function.

(iii) Planning includes putting goals and growing a terrific direction of motion to reap these objectives.

(iv) It bridges the hole between the place we are and the place we favor to reach.

2. How does planning supply direction?

Ans: Planning presents course for motion with the aid of identifying in improve what has to be done, how to do, when to do and who will do.

When we strive to are seeking for solutions to the above questions, which are properly deliberate then instructions are mechanically highlighted.

3. Do you suppose planning can work in a altering environment?

Ans: Planning might also now not work in a altering environment. The surroundings consist of a range of dimensions, economic, political, social, felony and technological dimensions. The enterprise has to continuously adapt itself to changes. It turns into hard to precisely examine future tendencies in the environment. Planning can’t foresee the whole lot and thus, there may additionally be boundaries to superb planning.

4. If planning entails working out small print for the future, why does it now not make certain success?

Ans: Planning does no longer warranty success. The success of an corporation is feasible solely when plans are right drawn up and implemented.

Any sketch wishes to be translated into motion or it turns into meaningless.

Managers have a tendency to count on beforehand tried and examined profitable plans.

It is no longer continually real that simply due to the fact a graph has labored earlier than it will work again.

This type of false experience of safety may additionally genuinely lead to failure as an alternative of success.

5. Why are regulations viewed to be plans?

Ans: Rules are unique statements that inform what is to be done. They do no longer enable for any flexibility or discretion.

It displays a managerial choice that a sure motion has to or ought to no longer be taken.

They are typically the easiest kind of plans due to the fact there is no compromise or trade except a policy choice is taken.

6. What variety of strategic selections are taken by way of enterprise organizations?

Ans: Major strategic selections encompass whether or not the agency will proceed to be in the equal line of enterprise or mix new traces of exercise with the present commercial enterprise or searching for to gather a dominant function in the identical market.

Long Answer Type Questions

1. Why is it that firms are no longer continually capable to accomplish all their objectives?

Ans: Organizations are no longer constantly in a position to accomplish all their targets due to the following reasons

(i) Planning Leads to Rigidity In an employer a nicely described diagram is drawn up with unique dreams to be achieved, with in a particular time frame.

These plans then determine how the work will growth in the future and managers may also now not be in a role to alternate it.

This creates a trouble as flexibility is very important. Always adhering to the sketch may additionally no longer provide us the favored effects always.

(ii)Planning May now not Work in a Dynamic Environment The commercial enterprise surroundings is dynamic, nothing is constant.

The commercial enterprise surroundings are a totality of exterior forces, the place in some adjustments or the different maintain on taking place.

Plans determine in strengthen what has to be performed in future. Planning can’t foresee the whole thing and for this reason there may additionally be limitations to positive planning.

(iii) Planning Reduces Creativity Planning is normally accomplished via the pinnacle management.

Usually the relaxation of the participants simply implements these plans. As a consequence, center administration and different selections makers are neither allowed to deviate from plans nor are they accredited to act on their own, as a result planning in a way reduces creativity given that humans have a tendency to suppose alongside the equal traces as others, there is nothing new or innovative.

(iv) Planning Involves Huge Cost Planning entails big fee in their formulation.

These can also be in phrases of time and money. The fees incurred on occasion may also now not justify the advantages derived from the plans.

(v) Planning is a Time-Consuming Process Sometimes plans to be drawn take up so a good deal of time that there is no longer a good deal time left for their implementation and the targets to be achieved.

(vi) Planning does no longer Guarantee Success Any plans wishes to be translated into motion or it turns into meaningless.

Managers have a tendency to be counted on in the past tried and examined profitable plans.

It is now not constantly authentic that simply due to the fact a design has labored earlier than it will work again.

2. What are the principal points to be viewed through the administration while doing planning?

Ans: The important aspects to be regarded with the aid of the administration while making planning is

(I) It helps in achieving objectives which is purposeful. Planning has no which means until it contributes to the fulfillment of predetermined organizational goals.

(ii) It is the Primary Function Planning lays down the base for different features of management.

All different managerial features are carried out inside the framework of the plans drawn. Thus, planning precedes different function.

(iii) Planning is Pervasive Planning is required at all tiers of administration as properly as in all departments of the organizations.

The pinnacle administration undertakes planning for the employer as a whole. Middle administration does the departmental planning.

At the lowest level, every day operational planning is finished with the aid of supervisors.

(iv) Planning is Continuous Plans are organized for a unique length of time, may additionally be for a month, a quarter or a year.

At the give up of that period, there is want for a new layout to be drawn on the groundwork of new necessities and future conditions. Hence, planning is a non-stop process.

(v) Planning is Futuristic The cause of planning is to meet future occasions correctly to the high-quality benefit of an organisation. It impliesanalyzing, predictingand peeping into the future

(vi) Planning Involves Decision Making Planning in actuality entails preference from amongst a number picks and activities.

If there is solely one feasible aim then there is no want for planning.

The want solely arises when choices are available. Planning thus, includes thorough examination and comparison of every choice and selecting the most suitable one.

(vii) Planning is a Mental Exercise Planning is essentially a mental exercise of questioning as a substitute than doing, due to the fact planning determines the motion to be taken.

Planning requires logical and systematic questioning alternatively than guesswork or wishful thinking.

3. What are the steps taken with the aid of administration in the planning process?

Ans: The planning technique includes the following steps

(i) Establishing Objectives The first step in planning is to decide targets which have to be realistic, unique and clear so as to specify what is to be performed by means of the community of policies, procedures, techniques etc.

(ii) Developing Premises They encompass assumptions or forecasts of the future and unknown stipulations that will have an effect on the operations of the plans.

They furnish a notion about the future which allows the work of planning.

(iii) Identifying the Alternative Courses of Action,the subsequent step in planning is to perceive the more than a few preferences reachable to reap the objectives.

(iv) Evaluating Alternative Courses,the deserves and demerits of one-of-a-kind publications of movements are evaluated in the mild of goals to be finished and their feasibility is judged i.e., how some distance they will be profitable in assisting to acquire the objective.

(v) Selecting an Alternative,the subsequent step is to locate out the most suitable path to be followed.

The efforts are directed closer to choosing that course. Which will increase effectivity in the employer through maximizing output and earnings at the minimal costs.

(vi) Implement the Plan At this step the first-rate choice chosen is put to use.

(vii) Follow Up Only placing the excellent choice to motion is no longer enough.

The future is unsure and dynamic. Therefore, it turns into essential to test again whether or not the sketch is giving effects or not

4. Is planning certainly really worth the big fees involved? Explain.

Ans: Planning entails massive cost, when plans are drawn up big charges are worried in their formulation.

These are in phrases of time, money, effort etc. Detailed plans require scientific calculations to confirm records and figures.

The charges incurred occasionally can also now not justify the advantages derived from the plans.

There is a quantity of incidental expenses as properly (which are indirect) like costs on organising a meeting, session charges given to expert experts, market survey etc.

But in spite of the excessive value no company can work barring desirable planning if used properly.

#Case Problem

Art auto enterprise D Ltd is dealing with a hassle of declining market share due to extended opposition from different new and present gamers in the market.

Its competitors are introducing decrease priced fashions for mass shoppers who are fee sensitive. For first-class aware consumers, the organization is introducing new fashions with delivered facets and new technological advancements.

1. Prepare a mannequin commercial enterprise diagram for D Ltd to meet the present challenge.

You want to be very particular about quantitative parameters. You may additionally specify which kind of layout you are preparing.

Ans: In such a situation, formulating an approach would be advisable.

A method is a single use plan. It is commonly made to battle opposition in the market.

The mannequin enterprise plan, i.e., approach will be

(i) It is goal and its reason is that how a lot income it wishes to make bigger over a particular time.

(ii) The enterprise must then list down its strengths and weakness. This brings in mild as to what will be handy and what will be difficult.

(iii) Aggressive, advertising and marketing and sales merchandising strategies to be adopted.

2. Identify the boundaries of such plans.

Ans: Limitations of the above approach can be

(i) Shortage of funds.

(ii) Shortage of technical professionals.

(iii) Top stage may additionally no longer be ready ample to increase a appropriate strategy.

(iv) The corporation might also now not be profitable in assessing the future plans of the rivals as in contrast to its very own strategy.

3. How will you are seeking for to do away with these limitations?

Ans: The above obstacles can be overcome by

(i) Arranging money in advance.

(ii) Effective techniques of recruitment ought to be adopted to make certain availability of superb personnel in all departments.

(iii) Middle degree must be prompted to advocate plans in the structure of suggestions. After thinking about all these, an approach has to be planned.

(iv) The organization have to be capable to verify the strikes of the opponents