Fully Prepared O C

OMTEX CLASSES ORGANISATION OF COMMERCE AND MANAGEMENT
OMTEX CLASSES
ORGANISATION OF
COMMERCE
AND MANAGEMENT
NAME :- ______________________________
STANDARD: - S.Y.J.C (Second year junior college)
CLASSES : - OMTEX
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1 “Achieve success through OMTEX CLASSES The home of text”

SUCCESSFULLY
STEPPING INTO THE TH YEAR 5
IN ORDER TO
ACHIEVE ONCE AGAIN SUCCESS

1. FEATURES OF SOLE TRADING CONCERN?
INTRODUCTION: Sole trading concern is the oldest form of commercial organisation. Sole means
one person. So a sole trading concern is an organization where all business activities are controlled
and managed by one man. He is also solely responsible for the debt and risk of the firm.
Definition: “A sole trader is a person who trades on his own account rather than in partnership
or as a member of a company.” (Michael Greener). The following are some of the features of a
sole trading concern.
1. Single ownership
2. Unlimited liability
3. Limited government control
4. Business secrecy
5. Flexibility
6. No sharing of profit and losses
7. No Legal status
THE ABOVE IMPORTANT FEATURES ARE EXPLAINED BRIEFLY DETAIL IN UNDER
1. Single ownership: The sole trader is a single owner of the organization. The sole trader owns all
the assets and property of the business. The sole trading concern is often referred (said) as “one
man show”
2. Unlimited liability: The liability of the sole trader is unlimited. This means he is alone
responsible for all the risks and debts of the firm.
3. Minimum government control: Sole trading concern is less affected by government control. This
is because, there are almost no legal formalities are required to start or close down a business.
4. Business secrecy: The sole trader can maintain complete business secrecy. He needs not to
publish any accounts and reports to any body. Competitors cannot easily get business secrets
and information of the sole trader’s activities.
5. Flexibility: Sole trader enjoys maximum flexibility. He can take right decision at the right time
depending upon the situation. At any time, he need not have to consult with anyone because he is a
single owner of his business.
6. No sharing of profit and losses: There is a direct relationship between efforts and rewards. This
results in best possible efforts on the part of sole trader. Therefore, he can enjoy all the profits of
his business.
7. Legal status: - Legally, the sole trader and his business concern are one and the same in the eyes
of law. The sole trader and his business cannot be separated from each other. So the sole trader
lacks legal status.
2. FEATURES OF JOINT HINDU FAMILY BUSINESS?
Meaning: -The joint Hindu family business firm is a distinct form of business organization existing
only in India. It comes into existence by the operation of Hindu law, via Hindu Succession Act, 1956.
The business of joint Hindu family is controlled and managed by the eldest male member of the
family who is known as ‘Karta’ and other members of the family are called as “co-parcener”.
Following is the features of Joint Hindu Family business
1. Joint ownership
2. Limited liability of co-parceners
3. Unlimited liability of karta
4. Minimum government control
5. Business secrecy
6. Flexibility
7. Quick Decision Making
The above Import features are briefly explained as under.
1. Joint Ownership: - The business is jointly owned by all the members of a joint Hindu family.
Three successive generations inherit the business by reason of their birth in the family.
2. Limited Liability of Co-parceners: - The joint owners i.e. the co-parceners liability is limited to
the extent of their share in the family business.
3. Unlimited Liability of Karta: -The liability of the karta is Unlimited. This is because,
⇒ He is total authority to take decisions.
⇒ He is the leader or head of the joint Hindu family.
⇒ He is liable to pay the dues out of his personal assets, so, the Liability of the karta is
unlimited.
4. Minimum Government Control: - This type of business is subject to less government control.
This is because there is less legal formalities are required .Hence; the karta can start a new
business or close down the existing one without much legal formalities.
5. Business Secrecy: - There is a great deal of business secrecy. This is because the joint Hindu
family business need not have to publish accounts and other data to any outside persons.
6. Flexibility: - This type of business offers a good deal of flexibility in business operations. The
karta can expand the business, change the line of the business, or even close down the business if
the situation so demand.
7. Quick Decision Making: - -In this type of business, there can be quick decision making. This is
because the karta can take quick decisions with or without consultation with the co-parceners.
8. Absence of Legal Status: -The joint Hindu family business does not have any legal status. The
members of the joint Hindu family are also not treated as separate entities. The business activities
of this organisation are monitored by the Hindu Law, 1956.

3. FEATURES OF PARTNERSHIP FIRM?
Meaning: - Partnership firm is a voluntary association of two or more who contribute their capital and
services, and share the profits and losses in an agreed proportion.
Definition: - “Partnership is the relation between persons who have agreed to share the profits of a
business carried on by all or any of them acting for all.” (Section 4 of the Indian Partnership Act,
1932.)
Following is the features of Partnership firm
1. Joint ownership
2. Agreement
3. Lawful business
5. Business secrecy
6. Sharing of profit and losses
7. Number of partners
The above Import features are briefly explained as under
1. Joint Ownership: The partnership firm is jointly owned by the partners. The partners have to use
the partnership property only for business purpose and not for personal purpose.
2. Agreement: - Partnership is an outcome of an agreement between two or more persons to

conduct a business with a view to earn profit. The agreement may be oral or written. It is always
advisable to have written agreement.
3. Lawful business: - The partnership firm must undertake only that business is which permitted by
law. They must conduct lawful business only and they cannot undertake unlawful business .for ex,
sale of illegal arms. Or indulge in smuggling business.
4. Unlimited Liability: -The liability of each partner is joint several and unlimited as per the Indian
partnership Act 1932. all the partners is jointly liable along with other partner for the debt of the
firm
5. Business Secrecy: -unlike sole trading concern, a partnership firm lacks complete business
secrecy. This is because there are several partners and some partners may leak out the business
information to outsiders.
6. Sharing of Profit and Losses: - The partners agree to share the profits among themselves in a
certain proportion. The agreed proportion depends upon the amounts of capital contributed.
7. Number of Partners: - A partnership must have a Minimum of two Persons. The maximum
persons in the case of banking business is Ten and in the case of ordinary partnership (other than
banking business), the Maximum number of partner is Twenty.

4. FEATURES OF JOINT STOCK COMPANY?
Meaning: -A Joint stock is an incorporated association, which is an artificial person, having

independent legal status with a perpetual succession, a common seal, a common capital of
transferable shares carrying limited capital. In other words, Joint Stock Company is a business
organization organized and owned by shareholders but managed by directors. But the directors must
have to purchase the Qualification shares with in two months form the date of his admission.
Definition: - PROF. (H.L.Haney) “A joint stock company is a voluntary association of individual

for profit, having its capital divided into transferable shares, the ownership of which is the condition
of membership.”
Following is the features of Joint Stock Company
1. Artificial person
2. Incorporated association
3. Perpetual succession
4. Common seal
5. Limited liability
6. Large membership
7. Voluntary Association
The above important features are explained briefly as under:
1. Artificial Person: - A company is an artificial person created by a law, it has non-physical

existence, but it has legal existence. Like human being, it can acquire property, enter into a
contract, and sign documents, take legal action, etc,
2. Incorporated Association: - Every company in India has to be registered under the Indian
companies Act, 1956. Registration or incorporation gives birth to a company. On registration, it
gets a separate identity.
3. Perpetual Succession: A company has a perpetual succession. It means that the company has a
long and stable life. Its existence is not affected by death, insolvency or insanity of its members.
4. Common Seal: - A company is an artificial person, and as such, it has to sign documents and
other papers. However, it cannot sign as a human being and, therefore, the common seal serves as
its signature. The common seal remain in the custody of the Board of Directors
5. Limited Liability: -The liability of the members of the joint stock company is limited to the
extent of the Shares Purchased by them. If the shares are fully paid, the member is not liable for
any debts of the company.
6. Large Membership: - A joint stock company enjoys large membership. This is because, in a
private company, the minimum members are two maximum members can be fifty. In a Public
company, the minimum members are Seven and there is no Maximum limit.
7. Voluntary Association: - A company is a voluntary association of persons. Any person competent

to enter into a contract can become its member. To be a member, a person should buy or own the
shares of the company. A person can terminate is membership form the company by transferring his
shares.
5. FEATURES OF CO-OPERATIVE SOCIETY?
Meaning: -A Co-operative society is a voluntary association of people who come together on the
basis of unity and equality to protect and promote their common economic interest.
Definition: -“It is an association of the weak who gather together for a common economic need and
try to lift themselves from weaknesses into strength through business organization” [Talmaki]
Following is the features of co-operatives:
1. Service motive
2. Limited Liability
3. Stability:
4. Voluntary associations
5. Equal voting rights
6. Open Membership
7. Lack of Secrecy
1. Service motive: The main aim of a co-operative society organization is to render service to the
people. It is a service-oriented organization. It is mainly formed for promotion of welfare of the
society.
2. Limited Liability: In a co-operative society, the liability of each member is limited. The liability
of the member is limited to the face value of shares purchased by them.
3. Stability: The co-operative society enjoys a stable life. There is continued existence. The society
survives even if some members resign or leave the society. as it is a corporate body.
4. Voluntary associations: co-operative society is a voluntary association of people who come

together on the basis of unity and equality to protect and promote their common economic
interest. The individual joins the cooperative society on his free will.
5. Equal voting rights: - All members are treated equal. Equal voting rights are given to all. Every
members has one voting rights only, as the society follows the principal of “one man one vote”.
Voting by proxy is not allowed.
6. Open Membership: - Normally, membership is open to all those who are willing to join the co-
operative. There is no restriction of caste, creed, race, religion, etc. At Least 10 Members are
required to form a Co-operative Society.
7. Lack of Secrecy: - The co-operative Lacks secrecy. This is because, the account are made
available to the members and others. It is difficult to maintain business secrecy in a cooperative
organization.

6. NATURE/CHARACTERISTICS/FEATURES OF MANAGEMENT.
Meaning: -The survival and success of an organisation largely depends upon the quality of management.
Some organisation prospers and progress not only in good times but also during tough times, but others
fails even during good times. Therefore, it is vital for every organisation to have dynamic and dedicated
managers.
Definition: -
“To manage is to forecast and to plan, to organise, to command, to coordinate and to control”. (Henri Fayol)
“Management is the art of getting things done through and with people in formally organised groups”. (Harold
Koontz)
Following are the some of the important features/characteristics of MANAGEMENT
1. Management is a process: - Management is a process undertaken by managers to attain objectives.

The management process involves:
Planning activities
Organizing resources
Directing subordinates, and
Controlling activities
The process of management is continues is nature. As long as the organisation exists, there is a
need to achieve goals, and therefore, there is a need for managerial process on a continuous basis.
2. Group Activity: - proper management requires team work. The combined efforts of all the
managers bring success to the organisation. A single manager, however, capable, may not be able
to attain organisational goals without the support of other managers.
3. Involves Getting Things done through people: -Management involves getting things done
through the people in the organisation. To get the work done, managers need to:
a. Lead the subordinates b. Communicate effectively, and c. Motivate the subordinates
4. Result Oriented: - Management places emphasis on results. The activities of the managers are
focused on the attainment of goals or results. It is not just activities that matters but better results.
The results can be in the form of:
A. Reduction in wastages B. Optimum use of resources C. Motivated workforce D. Higher efficiency, etc.
5. An art as well as a Science: -There is a considerable debate as to whether management is an art or

science. In practice, managing is an art. However, a manager can work better by using the
organised knowledge (Science). Therefore, management has characterised of both art as well as
science.
6. Follows established Principles: - Management follow well established principles in managing

their organisation. The principles includes
A. Division of work B. Authority-responsibility balance C. Discipline D. Unity of Command, etc.
7. Need not be ownership: - In Large organisations, management and ownership need not be one
and the same. The owners, i.e. shareholders can hire the service of professional managers.
8. Dynamic in nature: -Management need to be creative and innovative. The success and survival of
the organisation largely depends upon innovation. Managers must come up with:
A. New and Creative Ideas B. New and better products C. Cost-effective processes, etc.

7 FEATURES OF DEPARTMENTAL ORGANISATION
Introduction: - It is considered as a suitable form of organisation of public Enterprises. The

departmental form of public sector operates under the control and guidance of the concerned
ministry. The Departmental form of public sector includes the railways, broadcasting, post and
telegraphs, telephone services, etc.
Following are the some of the important features/characteristics of Departmental Organisation.
1. Administration by the Government/ controlled by the ministry: - The Enterprises is run as a

Government Department. For instance, All India Radio, and Doordarshan come under the
ministry of information and broadcasting. The minister concerned is accountable for the
working of the department. He is answerable to the people, i.e. to the any queries relating to the
working of the enterprise
2. Decision-Making: - The major policy decisions are taken by the concerned ministry, whereas,
day-today administration is looked after by the officials appointed with executive power.
3. Finance: - Government of India finances the department form of public sector, and the surplus,
if any goes to the government exchequer.
4. Major policy changes: - The officials’ in-charge of the department has to take government
sanction for expansion programmes and for major policy changes.
5. Monopoly position: - prior to 1991, most of the department were working as monopolies.
However, of late, there has been privatization of such department including broadcasting,
defence and even railways to a certain extent.
6. Establishment: - A departmental undertaking is established by a particular ministry. For

instance, the department of railways is established by ministry of railways.
7. Suitability: - The departmental form of business organisation is suitable for defence and public
utilities. For instance, it is suitable for public utilities such as railways, post and telegraphs, and
so on.

8. NATURE/CHARACTERISTICS/FEATURES OF STATUTORY CORPORATIONS
Meaning: - A Statutory corporation is also called as public corporation. A Statutory corporation is

established under a special Act of the Parliament or state legislature. The central government or
state government owns the corporation. Examples of such corporations are Life Insurance
Corporation, Industrial development bank of India, Unit Trust of India, Export Credit Guarantee
Corporation of India Let., and so on.
The main features of Statutory Corporation are explained briefly as under.
1. Establishment: -A public corporation is established under a special act of parliament or state

Legislature. The act lists out details in respect of powers, privileges and area of activities of the
corporation.
2. Autonomy: -It enjoys autonomous powers in respect of expansion and major administrative
decisions. However, approval of the government may be required in case of major policy
changes.
3. Objective: -It works on profit objective, and as such its activities are commercial in nature.
4. Decision-Making: -There is quick decision making as compared to departmental form, as it

does not have to consult government officials in respect of decision-making.
5. Administration: -The Administration is undertaken by Board of Directors nominated by the

Government.
6. Answerability: -It is answerable to the Parliament as regards to its activities.
7. Capital Contribution: -Its capital is wholly owned and subscribed by the Government. The
public are not the shareholders of this type of organisation as compared to that of Government
Company.
8. Borrowing Power: -Although its capital is contributed only by the Government, yet it can
borrow funds from the public. This means public can be the lenders or creditors of this type of
organisation.

9. FEATURES OF MULTINATIONAL COMPANIES/CORPORATIONS (MNC)
Meaning: - The term ‘Multinational’ is widely used all over the world to denote large companies
having vast financial, managerial and marketing resources. MNCs are like holding companies
having its head office in one country and business activities spread within the country of origin
and other countries.
IBM computer and Pepsi-Cola from U.S.A., Siemens from Germany, Sony and Honda from
Japan Philips from Holland etc., are some of the MNCs operating at international levels.
Definition:-According to ILO report (i.e. International Labour Organisation) “The essential nature
of the multinational enterprises lies in the fact that its managerial headquarters are located in one
country, while the enterprise carries out operations in number of other countries’.
Following are the some of the important features/characteristics of MNCs:
1. Area of operation: - The MNCs operate in many countries with multiple products on large
scale. A MNC may operate both manufacturing and marketing activities in a number of
countries. Some MNCs operate in several countries, whereas, others may operate in a few
countries. Mostly MNCs from developed countries dominate in the world markets.
2. Origin:-The development of MNCs dates back to several centuries, but their real growth
started after the Second World War Majority of the MNCs are from developed countries like
U.S.A, Japan, UK, Germany and European countries. In recent years MNCs from countries
like Korea, Taiwan, India, China, etc. are operating in the world markets.
3. Comprehensive Term: - In general, the term ‘MNC’ is a Comprehensive term and includes
international and transnational corporations. The term global corporation is also included in the
list of ‘MNC’.
4. Profit Motive: - MNCs are profit oriented rather than social oriented. Such corporations do
not take much interest in the social welfare activities of the host country.
5. Management: - The Parent company works like a holding company. The subsidiary
companies are to operate under control and guidance of parent company. The subsidiaries
functions as per the policies and directions of parent organisation.
6. Manufacture and Marketing Activities: - MNCs undertake both Manufacturing and

Marketing Activities and they are predominantly engaged in hi-tech and consumer good
industries. Majority of the MNCs are engaged in pharmaceutical, petrochemicals, engineering,
consumer goods, etc.
7. Quality Consciousness: - MNCs are quality and cost conscious and managed by professionals
and experts. They have their own organisation culture and systems. MNCs believe in the
concept of total quality management.

10. NATURE/CHARACTERISTICS/FEATURES OF GOVERNMENT COMPANY
Meaning: -A Government Company is registered under Indian Companies Act, 1956. 51% or
more of its paid-up share capital is to be held by central and/or state government. Examples of
such organisation includes Indian Oil, BHEL, SAIL, GAIL, Hindustan Petroleum Ltd., and
Bharat Petroleum Limited
The Main features are as follows:
1. Registration: -It is registered under the Indian Companies Act 1956. The provisions of Indian
companies Act, 1956 are applicable in respect of conduct of meetings, rising of capital,
appointment of directors, auditors, etc.
2. Annual Accounts: -The annual accounts of a Government Company are placed before the
parliament or state government for review.
3. Management: - It is managed by a Board of Directors, most of whom are appointed by the

government.
4. Exemption from Companies Act: - The Government reserves the right exempt such a
company from certain provisions of the Indian Companies Act.
5. Objective: -It operates on commercial principles, and as such it aim is to make profit apart
from other objectives.
6. Need for Privatisation: - There is growing move to privatize a good number of government
Companies so as to improve their efficiency.
7. Capital contribution: - Its Capital is contributed by Central/State Governments and public.

51% or more of its paid up capital is contributed by the government. The public hold minority
shareholding in Government Companies.
8. Staff: - This type of organisation can recruit its own employees and they are not government
servants. Their terms of service are not governed by the civil service rules. However, the
employees of departmental undertakings are Government servants, and are governed by Civil
Service Rules.

11. NATURE/CHARACTERISTICS/FEATURE OF EVENT MANAGEMENT
Meaning: - Events play an important role in our society. Any happening or an activity can be
referred as an event. Examples of event can include:
Celebration of a festival or any other celebration.
A football match between two clubs or countries.
A launching of a new product.
Farewell party to students, etc.
Definition: -Dr. J. Goldblatt defines special Event as “A unique moment in time celebrated with
ceremony and ritual to satisfy specific needs”.
The Following are the characteristic of Event Management:
1. Creative Process: -Event Management is a creative process. The event management team must
be creative or dynamic. It must come up with new ideas to manage and deal with the event.
Creative ideas will enable the success of the event.
2. Objective Oriented: - Event Management focuses on objectives. Every event has certain goals
or objectives to be achieved. Therefore, all the activities will be directed to achieve the
objectives. Unwanted activities or unnecessary formalities may be done away with.
3. Requires effective Leadership: - Event Management requires effective leadership on the part
of event managers. The Event Managers have to influence and motivate the employees in order
to undertake the event successfully. Therefore, there is a need to have effective leadership skills
on the part of Event Managers to manage the event successfully.
4. Requires effective Promotion: - Event Management requires effective promotion. The event
promotion involves:
Publicity of the event.
Advertising of the event.
Maintaining good public relations
5. Planning and Control: -The event management team has to plan and control the activities
relating to the event, the planning and controlling activities involve:
Developing a mission statement for the event.
Establishing the objectives of the event.
Preparation of event proposal.
Evaluating the performance of the event.
Taking Corrective measures for the future event
6. Deals with different event: - To manage event successfully, there is a need for professionalism
on the part of event management. Professionalism involves:
Mega-event such as Olympics or World-Cup Football.
Local events such as Carnival in Goa or Boat-race in Kerala.
Organisational events such as launch of a new product. Etc.
7. Requires Professionalism: -To manage an event successfully, ther is a need for professionalism
on the part of event management. Professionalism involves:
Systematic planning and control of activities
Proper training of manpower
Proper compensation to the employees.

12. NATURE/CHARACTERISTICS/FEATURE OF PROFESSIONAL MANAGEMENT
Meaning: - Professional management refers to the professional approach in managing the

organisations. Professional management is vital in today’s competitive business world. The
importance of professional management is explained as follows
Following are the important characteristics of professional management:
1. Formal Education: - professional managers are formally educated and trained to run the
business organisation. They place great emphasis on training and development of managers.
Most of the professional managers have either degree or diploma in management.
2. Merit the basis of promotion: - professionally managed companies follow merit as the basis
of promotion at higher levels. Family neither ties, nor biased as the basis of promotions is
normally not followed in such organisations.
3. Delegation of authority: - The senior managers delegate authority to the subordinate

managers. Routine and repetitive activities are given in the charge of subordinates. Only
important and crucial matters are decided by the superiors.
4. Social responsibility: - professional managers give the due consideration to the concept of
social responsibility. In fact, they try to bring reconciliation or a balance between profit motive
and social responsibility. They go for consumer oriented products. They try to improve the
quality through research and development, and so on.
5. Employees Participation: - The top management not only secures the active participation of
subordinate managers in planning and controlling activities, but they also encourage initiative
and innovative ideas from the employees. Valuable suggestions are implemented and those
who provide ideas are often rewarded.
6. Automation and Modernisation: - professional managers advocate the need for automation
and modernisation. They recognise the change brought in by changing situations, and are ready
to accept that change. They also encourage their subordinates to willingly accept the
automation and modernisation plans of the organisation.
7. Decentralisation: - professional management believes in balance between centralisation and

decentralisation. Important matters are centralised, and other matters are decentralised. The top
management believes that involvement of lower level managers is vital to the success of the
organisation.
8. Style of leadership: - professional managers follow the situational style in managing their
business activities. They are more of democrats rather than autocrats.

13. NATURE/CHARACTERISTICS/FEATURE OF DISASTER MANAGEMENT
Meaning: -According to Oxford Dictionary a crisis is a decisive moment-a time of great difficulty, a
disaster, or a catastrophe. It is a turning point that changes the destiny of an individual or a group or a
company or a government. Therefore, the term ‘Crisis’ and Disaster’ are used as synonymous. However,
usually crisis is considered as made and a disaster as a natural calamity.
World book, 2001, Chicago has defined “disaster as a sudden extremely unfortunate event that affects many
people”. It includes natural occurrences such as earthquake, volcanic eruptions, floods, famine and so on. It
also includes man made calamities such as bomb blasts, accidents, looting and rioting during communal riots,
etc.
The following are some of the important features of disaster management:
1. Disaster Management Teams: - World wide, governments, business and non-business

organisation are setting up disaster or crisis management teams in order to manage the disaster.
The disaster management teams are broadly divided into three parts namely (1) The Policy Team
(2) The management Team (3) The Liaison Team.
2. Systematic Planning: - Disaster management involves systematic planning to avert a disaster, and
if it occurs, then systematic planning is required in order to overcome the crisis arising out of
disaster, Disaster planning indicates, what to do, when to do, how to do and who is to do certain
activities to manage and overcome the problems of disaster.
3. Organising of Resources: - Disaster Management requires proper organising of resources such as

manpower, materials, funds, etc., in order to deal with the calamity. Proper organizing of resources
will help the disaster management personnel to overcome the problems caused by the calamity or
disaster.
4. Training to Manpower: -To manage a disaster effectively, there is a need to provide proper
training to the disaster management personnel. The training will help to develop and improve
Disaster Management skills in the personnel. Training may help to avert a disaster effectively.
5. Suitability: - Disaster Management is required before and after a disaster. It is suitable before a
disaster in order to avert a disaster, or to caution the people and to take proper appropriate
measures before the disaster strikes. Disaster Management is also very much required after a
disaster takes place in order to undertake rescue, relief and rehabilitation measures at the time of
floods, earthquakes.
6. Stability: -Normally, disaster management teams lack stability. They are formed just prior to a
disaster in order to avert it, whenever possible. However, in advanced countries such as in USA,
UK, Japan, etc., some organisations form more or less permanent Disaster Management teams.
7. Organisation Structure: -Robert F. Littlejohn in his paper on ‘Crisis Management’ suggested

a matrix organisation structure to deal with disaster or crisis in the organisation or in the city or
country. The disaster management team is to be headed by a crisis manager.

14. NATURE/CHARACTERISTICS/FEATURES OF NEW INDUSTRIAL POLICY 1991
Meaning: -The Government of India announced the new industrial policy (NIP) on 24th July,
1991. The NIP aims at liberalisation of Indian industry. The main objectives of the NIP are:
1. Attainment of international competitiveness.

2. Development of backward areas.
3. Encouraging competition within Indian industry.
4. Efficient use of productive resources.
5. Full utilisation of plant capacities to generate employment.
6. Revival of weak units, etc.
Following are some of the main features of the industrial policy 1991
1. Dereservation of Public Sector: -The role of public sector has been reduced to a great extent.
The number of industries reserved for public sector was reduced to 8 industries. There was
further Dereservation. At present, there are only three industries reserved for public sector
which include. (a) Atomic energy (b) Railways, and (c) specified Minerals.
2. Delicensing: -The most important features of NIP, 1991 was the abolition of industrial licensing
of all industries except six industries. The six industries are of social and strategic concern. The
six industries are
1. Hazardous Chemicals. 2. Alcohol 3. Cigarettes 4. Industrial Explosives 5. Defence Products,
and 6. Drug and pharmaceuticals.
3. Disinvestment of public sector: -The NIP 1991 permitted disinvestment of public sector units.
Disinvestment is a process of selling government equity in PSUs in favour of private parties.
Disinvestments aim at certain objectives. (1) To provide better customer Service. (2) To make
effective use of disinvestment funds. (3) To overcome the problem of political interference. (4)
To enables the government to concentrate on social development. Etc,
4. Liberalisation of Foreign Investment: -Prior to this policy, it was necessary to obtain approval
from the government in respect of foreign investment. At present, 100% foreign equity
participation is allowed in select industries.
5. Liberalisation Foreign Technology: -The NIP 1991 liberalised foreign technology to bring
about technological improvement in Indian industry. (1) No Permission is required for hiring
foreign technicians and foreign testing of indigenously developed technologies.
6. Liberalisation of Industrial Location: -The IP 1991 stated that there is no need to obtain
approval from Central Government to locate industries in areas (other than cities of more than
one million populations). However, industries subject to compulsory licensing, approval need to
be obtained. In cities with a population of more than one million, polluting industries were
required to be located outside 25 Kms of the city area.
7. Removal of Mandatory Conversion Clause (MCC): - In India, banks and FIs provide a large
part of industrial finance. The banks and FIs have the option to convert the loans into equity.
This may create a threat of takeover by FIs. Therefore, the IP 1991 abolished MCC.
8. Abolition of phased Manufacturing Programme: - The IP 1991 has suggested for the
abolition of PMP, which was in force in engineering and electronic industries.
15. OBJECTIVES/FEATURES OF WORLD TRADE ORGANISATION
Meaning: -The World Trade Organisation came into existence with effect from 1-1-1995. The
WTO replaced General Agreement on Tariffs and Trade (GATT). The main objective of WTO is to
increase world trade and thereby employment. In 1947, 23 countries including India signed the
General Agreement on Tariffs and Trade (GATT). GATT was created to reduce the tariff barriers.
GATT has been replaced by WTO in 1995. WTO is wider in scope. It is concerned with not only
reducing or eliminating tariff barriers but also non-tariff barriers such as quotas. In April 2004, the
membership of WTO was 147 countries including India.
The Main Objectives of the WTO are as follows:
1. Trade without Discrimination: -Trade without Discrimination through the application of most
favoured nation (MFN) principle. As per MFN clause, a member nation of WTO must accord
the same preferential treatment (in case of tariff reduction or concession) to other member
nations which it gives to any other member nation.
2. Settlement of Disputes: - Settlement of Disputes among members through consultation,

conciliation, and as a last resort through dispute settlement procedure.
3. Raising Standard of living: - Raising standard of living and incomes and ensuring full
employment of the citizens of its member nations.
4. Optimum use of world resources: - Ensuring optimum use of world’s resources and, thereby,
expanding world production and trade of goods as well as services.
5. Protection of environment: -Preserving and protecting the environment of the world so as to

benefit all the nations of the world.
6. Growth of less developed countries: - Recognises the need for positive efforts, designed to
ensure that developing countries. Especially the less developed countries, secure a better share
of growth in international trade.
7. Employment: - WTO aims at generating full employment and broad increase in effective
demand.
8. Enlargement of Protection and Trade: -WTO aims to enlarge production and trade of goods
as well as services.

16. FEATURES/CHARACTERISTICS/NATURE OF TOTAL QUALITY MANAGEMENT
Meaning: -The concept of TQM was developed by Dr.W.E. Deming (regarded as the father of
TQM) in 1960s in Japan. TQM is strategic approach that focuses on production of best possible
product or services through constant innovation and timely action. It places emphasis on prevention
of errors rather than on rectification.
Definition: - TQM is a management approach that places emphasis on continuous improvement in

quality, in the interest of the organisation and that of its customers”.
The following are some of the features of TQM:
1. Customer Focus: - - TQM Palaces emphasis in meeting the requirement of both the internal as
well as the external customer. In order to meet the requirements for the external customer, it is
necessary to meet the needs of the internal customer. The initial focus should be on meeting needs
of internal customer before an attempt is made to meet the requirements of the external customers.
2. Continuous Process: - TQM is a continuous process. Constant and continuous efforts are made to
improve the quality, and to reduce internal costs. Quality improvement helps the organisation to
face the challenges of the competitors and to meet the requirements of the customers. TQM is a
process which goes on forever, because at no time the quality can be 100% right. There is always
a possibility for new and better way of doing things.
3. Defect-free Approach: - TQM place emphasis on the defect-free work most of the time. The
defect free approach is phrased in various ways as right first time, working smarter or zero defects.
4. Employees Involvement: - in TQM everyone is involved in the process from the management
director to the junior clerk or worker in the organisation. It is not just manufacturing people, but
also the accounting, finance, marketing, and even the canteen people are involved in the TQM
process.
5. Recognition and Rewards: - Recognition and rewards is an integral part of company’s TQM
Programme. Positive reinforcement through recognition and reward is essential to maintain
achievement and continuous improvement in quality.
6. Synergy in Team Work: -The Japanese are great believers in synergy (to work together).
Engineers, technicians, and workers look upon themselves as equals and communicate easily as
they work side by side. They create what professor Okuda has called a ‘synergetic Partnership’.
7. Techniques: - TQM can take place by following various techniques such as quality circle, value
engineering, statistical process control, etc. Through such techniques it is possible to improve
systems and procedures.
8. System Approach: - TQM is a system approach to managing the business and improving the
performance. Without the total commitment on the part of chief executive officer and his senior
executives, TQM cannot take off to a good start.

17. NATURE/FEATURE/CHARACTERISTICS OF CONSUMER MOVEMENT
Meaning: - Consumer movement is a social movement of consumers that has come into existence
to educate and unite consumers to fight for protection of their rights.
Definition: - Philip Kotler and G. Armstrong “Consumerism is an organised movement of

citizens and government to impose the rights and powers of buyers in relation to seller”.
Following are the some important features of Consumer Movement:
1. Voluntary movement
2. Production of rights
3. Strength of unity
4. Comprehensive term
5. Prevention of unethical practices
6. Enforcing consumer rights
1. Voluntary Movement: - It is a voluntary and collective movement of consumers; it is a

movement of the consumers, by the consumers and for the consumers. A group of active
consumers come forward, forms a union and fight for the well-being of the community.
2. Protection of Rights: - The objective of the consumer movement is to make the business
community and government to guarantee and enforce the legitimate rights of consumers.
3. Strength of Unity: -Consumerism is a social force whose aim is to protect rights of consumers
by exercising legal and social pressure on business community.
4. Comprehensive Term: - Every one of us is a consumer of goods and services provided by

private and government undertakings. Today, the concept of consumerism is not restricted to
commercial activities alone. Also extended to public utilities, and services like banking,
transport, telephones, medical.etc.
5. Prevention of unethical Practice: - consumerism is a voluntary association of consumers,

whose one of the objective is to prevent the business from following unethical practices like
black-marketing, exploitation of consumers etc.
6. Enforcing Consumer Rights: - The consumer movement aims at enforcing four basic rights of
consumers-Right to safety, Right to be informed, Right to choose and right to redress.

18. NATURE/FEATURE/CHARACTERISTICS OF PRINCIPLES OF MANAGEMENT
Meaning: -Principles of management are the guidelines to be followed by managers in managing

the organisation. No manager can be effective if he/she does not follow the principles of
management. Therefore, managers in all organisations, whether large or small, business or non-
business, and at al levels (top, middle and lower) must follow the principles of management.
The nature of principles of management can be briefly explained as under:
1. Basic Guidelines: -The principles provide basic guidelines to the managers to manage the
subordinates effectively. If managers follow the well established principles of management, then
he/she would be in a better position to get the work done effectively and efficiently from the
subordinates.
2. Applicable to business and non-business organisation: - principles of management are applicable

to business organisations as well as to non-business organizations. For instance, the principle of
management must be followed by managers in a non-business organisation such as hospitals,
educational institutions, charitable trust, etc.
3. Applicable at all levels: -The principles of management must be followed by managers at all
levels. Principles of management are the guidelines to be followed by managers in managing the
organisation. No manager can be effective if he/she does not follow the principles of management.
Therefore, managers in all organisations, whether large or small, business or non-business, and at
al levels (top, middle and lower) must follow the principles of management.
4. Applicable to any size of business: - The principles of management are applicable not only to
large organisation such as joint stock companies but also to small organisations, like sole trader
too. It necessary for the sole trader to follow the principles of management in order to satisfy the
customer and to run the organisation successfully.
5. Time Tested: - The principles of management are time tested. The basic principles of
management have remained the same for a number of centuries (although Henri Fayol first
published the list of 14 Principles of management in 1916). Principles of management are
practiced by the people over period of time.
6. Ensures smooth working of an organisation: - The principles of management ensure smooth

working of an organisation. For instance, the principles of division of work, team spirit, order, etc.,
enable the organisation to conduct its activity in a systematic and successful manner.
7. Situational in Nature: -Certain principles of management may be applied depending upon the
situation. For instance, a manager may not delegate authority to subordinates, if subordinates have
no knowledge of a certain type of work. In such a condition the managers must first training the
subordinates, and then to delegate the authority.
8. Intangible: - The principles of management are not directly visible. The effect of principles can be
felt by the results. If the managers follow the principles, then there can be higher results in the
organisation in the form of : -
Reduction of wastages
Optimum use of resources
Motivated and dedicated workforce
Higher efficiency.
19. DEFINE DISTRICT FORUM? EXPLAIN ITS FEATURES?
Meaning: -A Consumer Disputes Redressal Forum, to be known as the District Forum, established by
the State Government in each district of the State as per the Consumer Protection Act 1986.
Features of District Forum:
1. Composition of District Forum: -A District Forum has to consist of:

a. A person who is or has been or is qualified to be a District Judge, to be nominated by the State
Government, to be its President.
b. Two other persons of eminence, in the field of education, trade, or commerce one of whom
shall be woman.
2. Term of Office: -Members of the District Forum hold office for a term of 5 years or upto the age
of 65 years whichever is earlier and are not eligible for re-appointment. In other words, the
maximum period of membership of the forum is 5 years.
3. Salary: -The State Government drafts rules regarding salary or honorarium and other allowances
payable to members and also the terms and conditions of their service.
4. Jurisdiction of District Forum: -As per the latest amendments, the District Forum has the
jurisdiction to entertain complaints, where the value of goods or services and the compensation, if
any, claimed does not exceed Rupees five Lakh.
5. Number: -There are a number of District Forums in Maharashtra eg, In Mumbai, Pune,
Ahmednagar, Aurangabad, Nagpur, Nasik, Ratnagiri, Satara, Sholapur, Sangli etc.
In Mumbai, the District Forum has 3 offices, at Dadar, Worli and C.S.T.

1. DEFINE PRIVATISATION? EXPLIAN NEED/IMPORTANCE OF PRIVATISATION?
Meaning: -Privatisation means inducing private ownership, management and control into public
sector undertakings. It is opposite of nationalising private firms. It implies disinvestment in public
sector units and passing of management rights to private entrepreneurs. In some cases the management
and control of public undertakings may be transferred to private sector without transferring the
ownership.
Privatisation is importance due to the following reasons: -
1. Improvement in efficiency: -The motive of private enterprises is to maximise profits. Therefore,

they have to improve efficiency and performance without the competitive forces.
2. Raising Funds: -By selling government equity to private sector it is possible to raise funds for
public investment.
3. No political influence: - Once a public sector is privatised it becomes free from political,
ministerial and government intervention.
4. Quick Decisions: - In private sector organisation quick decisions can be taken to respond to
changing circumstances.
5. Better Service to the customers: -The survival and growth of private sector enterprises depends
on consumer satisfaction. Therefore they try to provide better quality goods and services to their
customers.
6. Quick remedial measures: -In private sector enterprises quick remedial measures must be taken
to avoid wastages, losses and to secure benefits from business opportunities. There is no scope for
red tapism.
7. Easy to fix responsibility: -In private sector organisation authorities, responsibilities and
accountability are generally fixed by the Board of Directors and corporate laws. Therefore, it is
easy to fix the responsibility in the case of failure in performance by any employee

2. DEFINE LIBERALISATION? EXPLAIN THE NEED FOR LIBERALISATION?
Meaning: - Liberalisation is the process of liberating the economy from various regulatory and control
mechanisms of the state and of giving greater freedom to private enterprise.
Definition: - Liberalisation can be defined as, “Unilateral or multilateral reductions in tariffs and other
measures that restrict trade”
NEED FOR LIBERALISATION
• Bring flexibility in the operations of business organisations.
• Paves the way for globalisation
• Helps companies to compete with other companies at international level.
• Saves time, efforts and money of business enterprises.
• reduces cost of production and distribution
• Increase efficiency, productivity and profitability of business organisations.

3. DEFINE GLOBALISATION? EXPLAIN THE NEED FOR GLOBALISATION?
Meaning: - It is a process of global integration of products, technology, labour, investment, information

and even cultures. In other words, globalisation is the process of integrating a country’s economy with
the world economy with a view to exploit global opportunities for country’s growth.
Factors responsible for globalisation of business
1. Free Trade: -In recent years, there have been efforts by various countries to reduce the number
and level of trade restrictions i.e. to achieve free trade country should remove tariff duty and quota
limits should be avoid.
2. Setting up of W.T.O: - The world Trade Organisation has been set up which is made up of
countries committed to the principle of freeing world trade from restrictions.
3. Free Trade blocks: - These are groups of countries (often geographically grouped) that have
arranged to trade with each other without restrictions. E.g. (NAFTA) and (ASEAN) the members
of the European Union (EU) also trade freely amongst themselves.
4. International banking and revolution in information technology have a big push to globalisation.
5. International education and tourism facilitates globalisation of cultures and languages.
6. Increasing demand of consumers for world class products and services.
7. Growth of multinational countries i.e. the business organisations having their headquarters in one
country but operating branches, factories and assembly plants in other countries.

4. IMPORTANCE/ADVANTAGES/ FUNCTIONS/ROLE OF BUSINESS ENVIRONMENT?
Meaning: - Business Environment consists of all those forces or factors both internal and external that affects
the working of a business. Analysis of the internal environment helps a firm to identify its strengths and
weakness, and the analysis of the external environment helps to identify opportunities and threats. Thus,
environment analysis helps to undertake the SWOT analysis, i.e., strength, weaknesses, opportunities and threats.
Definitions: - According to Keith Davis, “Environment of the business means the aggregate of all
conditions, events and influences that surround and affect it.”
The role and importance of business Environment analysis is briefly explained as follows:
1. Identification of Strengths: -The analysis of the internal environment helps to identify the strengths of the
firm. For instance, if the company has good personnel policies in respect of promotion, transfer, training,
etc., then it indicates strength of the firm in respect of personnel policies. After identifying strengths, the
firm must try to consolidate its strengths by further improvement in its existing plans, policies, and
resources.
2. Identification of Weaknesses: -The analysis of the internal environment indicates not only strengths but
also weakness of the firm. A firm may be strong in certain areas, whereas, it may be weak in some other
areas. The firm should identify such weaknesses so as to correct them as early as possible. For instance, the
machines used by the firm may be outdated; therefore, the firm may replace the obsolete machines with
new ones so as to improve the quality and quantity and also to reduce the cost of production.
3. Identification of Opportunities: -An analysis of the external environment helps the business firm to
identify the opportunities in the market. The business firm should make every possible effort to
grab the opportunities, as and when they come. Failure to do so would mean that someone also would
grab the opportunities.
4. Identification of Threats: -Business may be subject to threats from competitors and others.
Therefore, environmental analysis helps to identify threats from the environment. Identification of
threats at an earlier date is always beneficial to the firm as it helps to defuse the same.
Identification of competitors’ strengths is very much helpful for the firm to take immediate actions
to counter the strategy of the competitors by introducing a new product or entering into new
markets or in new product lines.
5. Effective Planning: -A proper study of environment helps a business firm to plan its activities
properly. Before planning, it is very much necessary to analyse the internal as well as external
environment. After SWOT analysis, the firm can identify specific objectives, which in turn helps
to frame proper plans.
6. Facilitates organising of resources: -A Proper analysis of environment enables a firm to know

the demand potential in the market. Accordingly, the firm can plan and organize the right amount
of resources to handle the activities of the organisation.
7. Optimum use of Resources: -A study of technological development, government policies,

demographic pattern, etc. will help the business firm to plan its activities and allocate the limited
resources in a better way.
8. Helps to be active and alert: - Environmental analysis help a business firm to remain active and
alert in the competitive market. In the absence of environmental analysis, a business firm may
adopt a casual approach towards business, which in turn leads to failure or closure of the business.

5. IMPORTANCE/ADVANTAGES/ FUNCTIONS/ROLE OF BUSINESS ETHICS
Meaning: - The term ethics is derived from the Greek word ‘ethos’, which means character. Ethics is
a branch of social sciences, which deals with concepts such as right and wrong, good and bad, fair and
unfair, just and unjust, legal and illegal, moral and immoral, proper and improper in respect of human
actions.
Definition: -Thomas M. Garett defines “Business Ethics is primarily concerned with the relationship
of business goals and techniques to specific human needs”.
The following points explain the need for and importance of Business Ethics:
1. Protection of Consumer Rights: -Consumer is the centre of all the business activities. In fact,
business is essentially meant for satisfaction of consumer wants. Unfortunately, consumers are the
most neglected and exploited group. The application of business ethics will help to confer and
implement consumer rights.
2. Social Responsibility: -Business Ethics is a means of making business socially responsible for its
actions. Exploitation of consumers, employees, discriminate use of natural resources, etc., is quite
common in all type of business. Compliance to ethical standards will ensure (a) Protection of
consumer rights (b) Public accountability (c) Protection of worker’s interests, and (d) Proper
utilisation of natural resources.
3. Concept of Socialism: -The Concept of Socialism in business states that gains of a business must
be shared by all and not just by the owner of business. Profit is a sign of business skill and talent.
Profit is also a result of group efforts. Employees, shareholders, consumers, suppliers, and others
contribute to the success of the business. Therefore, success should be shared by all concerned.
4. Interest of industry: - Business Ethics are necessary to safeguard the interests of the small scale
business firms. The tendency of big business firms is always to dominate the market and drive
away the small industries out of the market. Small scale units can establish their position and fight
for their right if the industry follows a code of ethics.
5. Consumer movement: -The growth in consumer movement is also another important factor that
has necessitated the need for business ethics. The spread of education and awareness among
consumers about their rights has made the business community to conduct business on ethical
principles.
6. Better Relations With the Society: -Business Ethics is needed to develop good relations between
business and society. The relationship of business with society has various dimensions such as its
relations with shareholders, employees, consumers, distributors, competitors and government.
7. Buyer’s market: - There has been a structural change in the concept of business. The concept of
profit has been gradually taken over by consumer satisfaction. The large scale production and
increased competitions in the market changed the business scene from a seller’s market to a
buyer’s market.
8. Beneficial to Business and Society: - Ethics suggests what is good and bad, right and wrong,
ethical and unethical, etc., to businessman. It also brings an element of honesty, sincerity, fairness,
and human touch to business activities.

6. NEED/IMPORTANCE/OBJECTIVE/ROLE/FUNCTION/OF CONSUMER MOVEMENT.
Consumer movement aims at promoting an interest of the consumers the following are the objectives
of consumer movement.
1. Protection against Malpractices: - the main objective of consumer movement is to protect the
interest of the consumer from the malpractices adopted by the business community such as
charging high prices, supplying inferior goods, creating artificial shortage.
2. Educating the consumers: - consumer movement aims at educating and informing the consumer
about their rights, such education makes the consumer aware of their rights.
3. Representing Consumers: - the consumer protection organisation such as consumer guidance

society of India represents on behalf of the consumers to the government authorities so as to frame
proper consumer protection laws and other measures for consumer protection.
4. Publishing unfair practices: - Consumer protection organisation publishes in various media

regarding the unethical practices of the businessman.
5. Forming of Association: - consumer movement encourages consumer to form consumer

protection associations at the local level.
6. Support to business community: - consumer movement aims at co-operation and support to the
business community in dealing with their problems and difficulties
7. Assistance in legal matters: - the Consumer protection organisation assist individual consumers
in legal matters i.e. the procedure to be followed in filling a complaint in the court.
8. Exerting or creating pressure on businessman: - consumer movement aims at exerting a

pressure on businessman and makes them more socially responsible.

7. ROLE AND FUNCTION OF WORLD TRADE ORGANISATION (WTO)
Meaning: -The World Trade Organisation came into existence with effect from 1-1-1995. The
WTO replaced General Agreement on Tariffs and Trade (GATT). The main objective of WTO is to
increase world trade and thereby employment. In 1947, 23 countries including India signed the
General Agreement on Tariffs and Trade (GATT). GATT was created to reduce the tariff barriers.
GATT has been replaced by WTO in 1995. WTO is wider in scope. It is concerned with not only
reducing or eliminating tariff barriers but also non-tariff barriers such as quotas. In April 2004, the
membership of WTO was 147 countries including India.
1. Administration of Agreements: -It looks after the administration of the 29 agreements

(signed at the conclusion of Uruguay Round in 1994), plus a number of other agreements,
entered into after the Uruguay Round.
2. Implementation of Reduction of Trade Barriers: -It checks the implementation of tariff cuts
and reduction of non-tariff measures agreed upon by the member nation at the conclusion of
the Uruguay Round.
3. Examination of Member’s Trade Policies: -It regularly examines the foreign trade policies of
the member nations, to see that such policies are in line with WTO’s guidelines.
4. Collection of Foreign Trade Information: -It collects information in respect of Export-

Import trade, various trade measures and other trade statistics of member nations.
5. Settlement of Disputes: -It provides conciliation mechanism for arriving at an amicable

solution to trade conflicts among member nations.
6. Consultancy Services: -It keeps a watch on the development in the World economy and it
provides consultancy services to its member nations.
7. Forum for Negotiation: -WTO is a forum where member nations continuously negotiate the
exchange of trade concessions. The member nations also discus trade restrictions in areas of
goods, services, intellectual property, etc.
8. Assistance of IMF and IBRD: -It assists IMF and IBRD for establishing coherence in
universal economic policy administration.

8. WRITE SHORT NOTES ON CONSUMER RIGHTS?
Introduction: -In 1962 the American president John F. Kennedy, in his Consumer message to U.S.
congress had specifically mentioned four consumer Rights and opened the door for consumerism
in .U.S. and all over the world.
Kennedy declared that consumers have the right to safety, to be informed, to choose and to be heard.
Consumer Movement is a Social Movement of Consumers that has come into existence to educate
and unite consumers to fight for protection of their rights.
Def: - Philip Kotler & G. Armstrong define “Consumerism is an organised movement of then
citizen and government to impose the rights and powers of buyers in relation to seller”.
1. Right to Choose: - A Consumer should be given open access and freedom to choose from a
variety of products and services. Right of choice aims at promoting competition and discarding
monopoly. Sometimes leading competitors for the sake of business purpose joint hands and
allocate market among them. In order to restrict their monopoly it is necessary to get freedom of
choice.
2. Right to Safety; -A Consumer has a right to be protected against the marketing of goods, which
are dangerous to human health and life. Consumer has a right to receive an assurance from the
producer about the quality, reliability and performance of good for products like electrical
appliances, automobiles etc. considerable safety and security is required similarly food articles like
sweets, fast food, colddrings etc. should be free from substances that are harmful for human
consumption.
3. Right to be informed: -A Consumer has a right to be protected against fraudulent, miss leading
information, advertising, labelling or other practices and to be given facts needed to make proper
choice.
4. Right to be heard: - This right permits the consumer to register his dissatisfaction or complaint
with the company and government. The right to heard also includes legal hearing to get redress of
their complaints. This right can be exercised effectively only when the consumers are properly
organised.
5. Right to redress: - Many times, it so happens that the actual performance or quality of product
does not match with what is advertised or stated on package. This right enables the consumers to
get his claims settled, if he becomes a victim of exaggerated claims.
6. Right to Consumer education: -This is another important right aims at supplying information and
educating consumers regularly. It is a continues process and works to update consumers
knowledge about the developments in business and industry, and changes made in laws affecting
consumer’s rights.

9. NEED/IMPORTANCE/OBJECTIVE/ROLE/FUNCTION/OF TOTAL QUALITY MANAGEMNET
Meaning: -The concept of TQM was developed by Dr.W.E. Deming (regarded as the father of
TQM) in 1960s in Japan. TQM is strategic approach that focuses on production of best possible
product or services through constant innovation and timely action. It places emphasis on prevention
of errors rather than on rectification.
Definition: - TQM is a management approach that places emphasis on continuous improvement in

quality, in the interest of the organisation and that of its customers”.
The need and importance of TQM can be stated with the help of its advantages:
1. Customer Satisfaction: - TQM stresses the need to satisfy both the internal as well as the
external customer. Internal customer refers to the persons within the company who receives the
work of another and then adds his or her contribution to the product or service before passing it
on to someone else. TQM must focus on the customers, the eventual buyer of the product or
services. To do so, the initial focus should be on meeting needs of internal customer before an
attempt is made to meet the requirements of the external customers.
2. Helps to Face Competition: - A Proper emphasis on TQM enables a company to face the
competition in the market. The company may even come out as a winner or a leader. This is
because of high quality product, at the lowest possible cost, produced by a dedicated team of
work-force.
3. Good will: - TQM generates name and reputation to the company in the market. This is because
of its constant efforts in bringing the improvement in the products-design, variety, shape, size,
colour, shade and other features.
4. Highly motivated personal: - TQM develops a sense of dedication and discipline in the
employees. There is willingness on the part of the employees to identify quality improvements
and waste elimination opportunities. The employees become aware of their importance in the
company’s performance and progress. This leads to greater involvement and participation of the
employees.
5. Lower rejection rate: - Internal rejection rate gets reduced considerably over a period of time.
Various initiatives such as quality circles, process control, right first time approach, just in time
approach, etc., enable the company to reduce rejection rate.
6. Reduction in customer complaints: - TQM results in less or no customer complaints. This is

because the products are built to specification with zero defects. Again, efforts are made to
improve upon the customer specification so as to provide complete satisfaction.
7. Better facilities to employees: - TQM results in higher benefits to the organisation in terms of
increased profits. The higher profits are utilized in a way to provide better facilities to the
employees in terms of training, salary, canteen facilities etc.
8. Expansion and Diversification: - TQM generates a good name in the market. It also brings in
higher returns. This enables a company to expand and diversify.

10. NEED/IMPORTANCE/OBJECTIVE/ROLE/FUNCTION/OF EVENT MANAGEMENT
Meaning: - Events play an important role in our society. Any happening or an activity can be
referred as an event. Examples of event can include:
Celebration of a festival or any other celebration.
A football match between two clubs or countries.
A launching of a new product.
Farewell party to students, etc.
Definition: -Dr. J. Goldblatt defines special Event as “A unique moment in time celebrated with
ceremony and ritual to satisfy specific needs”.
Event management is vital for the following purposes:
1. Develops the theme of the Event: - The event management team develops the theme of the event.
The theme of the event should be linked to the purpose of the event. It should develop team sprit or
friendship between two clubs or states or nations. Therefore, the theme of the event may be
described as ‘The friendship Series’ or ‘The Good will Series’.
2. Provides Career Opportunities: - Event management Provides career opportunities. Apart from
event manager, there are several other job opportunities in the Event management such as:
1. Operation and Logistics managers. 2. Entertainment manager’s 3.Sponsorship managers.
4. Event coordinator 5.Event Designer 6.Security Coordinator, etc.
3. Develops leadership qualities: - Event management develops leadership qualities. To manage an

event, the managers require good leadership qualities to influence and motivate the subordinates to
work effectively in making the event more successful.
4. Develop Team sprit: - Event management helps to develops team spirit in the employees. The
success of the Event management largely depends upon the team effort. Therefore, there is need
for team work between managers and their subordinates, and between the various departments in
the organisation, so as to make the event more successful.
5. Enhances Corporate Image: -Proper Event management helps to develop corporate image of an
organisation. If the event is well managed, then there is a possibility of greater success.
6. Encourages Creativity: - Event management encourages and develops creativity in the managers.
Managers need to be dynamic or innovative in managing the event. The mangers have to find out
new and innovative ways in managing the event.
7. Ensures safety and security: - Event management team ensures safety and security of the people
during the event. The Event management team makes proper security and safety arrangements. For
instance, the event management team makes proper arrangement to deal with the certain crisis
such as occurrence of fire, failure of lighting or air conditioning, gas leaks, and so on.
8. Financial Management: -The Event management team may be responsible for the financial
management of the event. The event management team may be responsible for:
• Preparation of budget for the event.
• Determining break-even point
• Preparation of cash-flow analysis, and
• preparation of profit and loss statement, etc.

11. NEED/IMPORTANCE/OBJECTIVE/ROLE/FUNCTION/OF DISASTER MANAGEMENT
Meaning: -According to Oxford Dictionary a crisis is a decisive moment-a time of great difficulty, a
disaster, or a catastrophe. It is a turning point that changes the destiny of an individual or a group or a
company or a government. Therefore, the term ‘Crisis’ and Disaster’ are used as synonymous.
However, usually crisis is considered as made and a disaster as a natural calamity.
World book, 2001, Chicago has defined “disaster as a sudden extremely unfortunate event that
affects many people”. It includes natural occurrences such as earthquake, volcanic eruptions, floods,
famine and so on. It also includes man made calamities such as bomb blasts, accidents, looting and
rioting during communal riots, etc.
Disaster management is vital for the following purposes.
1. To avert a disaster: - Disaster management teams can help to avert a disaster before it occurs. The
Disaster management team may examine the possible causes of disaster, and may take appropriate
measures to avert a disaster. For instance, forest fires, or even terrorists bombings can be averted
through effective planning and pre-emptive action.
2. To undertake rescue operations: - Disaster management personnel can undertake rescue

operations effectively. Trained disaster management personnel can rescue people effectively at the
time of floods, major fires, building collapses, and so on.
3. To provide relief measures: - Disaster management team is responsible to provide relief

measures to the victims. For instance, the team can make arrangement for food, clothing, and relief
camps, medicines and so on. Such measures would reduce the misery of the disaster victims.
4. To undertake rehabilitation programmes: - Disaster management team can work effectively to

undertake rehabilitation programmes in the affected areas. For instance, in the earthquake affected
areas, rehabilitation programmes include:
a. Construction of dwellings
b. Schools and other infrastructure.
5. To undertake liaison work: -The disaster management team undertakes liaison work relating to
the disaster. The liaison work is required with various agencies-private and government (including
hospitals) in order to obtain funds and donations, and other resources or services so as to manage
and overcome the disaster.
6. To reduce trauma and tension: - The Disaster management team can help to reduce the trauma
and tension before and after the disaster. For instance, before a disaster, the team can properly
guide the people to face or handle the disaster such as floods. Also, after the disaster, the team can
provide not only material or financial support, but also psychological support to overcome the
traumatic effect of disaster.
7. To protect the Environment: - Disaster management team can help to protect and preserve the
environment. For example, a disaster management team can plan pre-emptive action to avert forest
fires. Etc.
8. To minimize losses: - Disaster management teams can help to minimize loss of life and property.
This is because; the Disaster management team can take pre-emptive actions to avert a disaster.

12. NEED/IMPORTANCE/OBJECTIVE/ROLE/FUNCTION/OF PROFESSIONAL MANAGEMENT
Meaning: -Professional management refers to the professional approach in managing the

organisations. Professional management is vital in today’s competitive business world. The
importance of professional management is explained as follows:
1. Innovation: -Professional management facilitates innovation in the organisation. Now-a-days, it

is essential to generate new ideas; new product, and new technology, etc. innovation helps to
gain competitive advantage in today’s competitive business world.
2. Corporate Image: - Professional management enables the organisation to enhance corporate

image. Effective management is required to bring improvement in quality of goods and services
offered by the company. A good corporate image creates confidence about the company in the
minds of customer, employees, shareholders, etc.
3. Team work: - Professional management develops team sprit in the organisation. It is the team
work that brings success to the organisation. There is a need for team work among the
employees and the departments in the organisation.
4. Optimum use of resources: - Professional management facilitates optimum use of resources

in the organisation. Effective management helps to reduce wastage of resources to a greater
extent. Optimum use of resources brings good results to the organisation.
5. Motivation: - Professional management facilitates motivation of the employees in the

organisation by providing incentives. Motivated employees work with application and
dedication. The dedication on the part of motivated work force brings higher efficiency in the
organisation.
6. Reduction in Wastages: - Professional management ensures reduction of wastages in the

organisation. Now-a-days, reduction in wastages is vital to any organisation. Reduction in
wastages generates higher productivity in the organisation.
7. Higher Efficiency: - Professional management is required to generate higher efficiency in the

organisation. Efficiency is the relation between returns and costs. The more the returns at the
same costs or at a lower cost, then the organisation is said to be more efficient.
8. Quality of worker’s life: - Modern management shares the fruits of productivity and
efficiency with the workers. Workers are provided not only with good working conditions but
they are also rewarded monetarily and non-monetarily, and as such their quality of life enhances

13. IMPORTANCE OF MANAGEMENT?
Meaning: -The survival and success of an organisation largely depends upon the quality of management.
Some organisation prospers and progress not only in good times but also during tough times, but others
fails even during good times. Therefore, it is vital for every organisation to have dynamic and dedicated
managers.
Definition: - “To manage is to forecast and to plan, to organise, to command, to coordinate and to control”.
(Henri Fayol)
“Management is the art of getting things done through and with people in formally organised groups”.
(Harold Koontz)
Following are the importance of MANAGEMENT

14. NEED/IMPORTANCE/OBJECTIVE/ROLE/FUNCTION/OF NEWMANAGEMENT TRENDS
Meaning: - The scope of management is ever enlarging. Now a day, management is used for not
only managing business organisations. Management is also vital for new trend such as for managing
crisis or disasters, events, and so on. The above questions focus on new trends in management with
reference to professional management, event management, disaster manager, and total quality
management.
The need and importance of new management trends can be briefly stated as follows:
1. Importance of professional management: -
The importance of professional management is briefly stated as follows:
• It helps to develop innovative ideas.

• It facilitates team work in the organisation.
• It ensures optimum use of resources.
• It helps to generate higher efficiency in the organisation
2. Importance of Disaster Management: -
The importance of disaster management is briefly stated as follows:
• It helps to avert a major disaster

• It helps to manage a disaster, if it takes place.
• It undertakes various relief measures.
• It provides liaison facilities at the time of disasters.
3. Importance of Event Management: -
The event management is desirable for the following reasons:
• It facilitates proper planning of the event.

• It enables proper organizing of resources.
• It helps in managing the promotion of the event.
• It enables follow-up activities relating to the event.
4. Importance of Total Quality Management: -
The TQM is important due to the following reasons:
• It generates customer satisfaction.

• It helps to produce defect free products.
• it facilitates optimum use of resources
• it develops team work in the organisation

15. IMPORTANCE/ADVANTAGES/ FUNCTIONS/ROLE OF PUBLIC SECTOR
Meaning: -In India, the sectoral organisation of business can be broadly divided into two groups—
Private sector organisation and public sector organisation. Public sector plays an important role in
the economic development of India. The role and importance of public sector can be briefly
explained as follows:
1. Employment: - public sector provides employment to large number of people in the country. For
instance, the Indian Railways provide employment to about 15.5 lakh people, perhaps the largest
employer in the world.
2. Rural Development: - public sector units facilitate rural development. This is possible due to:
i. Infrastructure development, both economic and social infrastructure

ii. Locating Projects in rural areas like the Bokara Steel Plant, the Raurkela Steel Plant, etc.
3. National Income: - public sector units contribute to the national income of the country. The public
sector has grown in size over the years both in terms of number of units as well as in production. It
is estimated that the public sector’s contribution to GDP is about 25%, and that of the private
sector’s 75%.
4. Capital formation: -The public sector contributes to capital formation by mobilisation of savings
through public sector banks. The all India financial institutions like IDBI, ICICI, etc., play an
important role in industrial investment and capital formation by providing medium terms and long-
term funds to industry and service sector.
5. Foreign Exchange Earnings: -The public sector enterprises have contributed to the export
earnings of the country. The public sector units export a number of products like engineering
goods, chemicals, minerals, metals, etc. they also export services.
6. Social Order: -The public sector units contribute to the social order b y providing employment to
a large number of people in the country. The employment generation reduces the possibility of
anti-social activities.
7. Government Revenue: -PSUs bring revenue to the Government. The revenue is in the form of:
a. Direct Taxes
b. Indirect Taxes
c. Profits of PSUs
8. Infrastructure Development: -Public sector units play an important role in the development of
the infrastructure of the nations. The public sector has developed roadways, railways, airways,
power, and so on.

16. FEATURES/OBJECTIVE/ROLE/FUNCTION/OF CONSUMER PROTECTION ACT, 1986
Meaning: -The Consumer Protection Act, 1986 was passed to provide better protection of the interest
of consumers and for the purpose of establishing of consumer councils and other forms for the
settlement of consumer disputes:
Salient Features of Consumer Protection Act are as follows:
1. The Act acknowledges six rights of the consumers:
Right of Choice
Right to safety
Right to be Informed
Right to be Heard
Right to Redress, and
Right to Consumer Education
2. The Act Provides for the establishment of:
Central Consumer Protection Council at Central Levels
The State Consumer Protection Council at State Levels, and
Consumer Disputes Redressal Agencies.
3. The Act is applicable to all private, public or co-operative business sectors.
A trader or a person against whom a complaint is lodged fails to comply with any order made by any
council, is punishable with imprisonment for a term which shall not be less than one month but which
may extend to 3 years or with fine shall not be less than Rs. 2000 or may extend to Rs. 10,000 or both

Other importance of
Organisation of commerce and
management

1. MANAGEMENT IS AN ART EXPLAIN
Meaning: - There is a considerable debate as to whether management is an art or science. In

practice, however, a manager’s job involves both science and art.
Definition: - Mary parker follet, Harold Koontz and several other management authors called
management “as the art of getting things done through people’.
Management is an art due to the following reasons
1. Innovative: -Management like any other art needs to be innovative; managers have to come up
with new ideas or solutions to handle situations. There is a constant need to be innovative in
order to gain competitive advantage. Copying has no place in management.
2. Individual Approach: - Every manager needs to adopt his individual approach or style of
managing to handle situations. Individual approach can create a big difference in managing the
subordinates. For instance, given the same situation, same resources, and the same
environment, some managers can easily get the work done from their subordinates. Whereas,
others fail in spite of their best efforts.
3. Application and dedication: -Good managers require not only skills and knowledge but there
is also a need for discipline, dedication, and commitment. It is often said that success is the
outcome of ‘knowledge + intelligence + dedication’. Managers need to work with their minds
(application) as well as with their heart (dedication).
4. Result oriented: - Every good manager, like an artist, is always practical and action based.
What matters is not just activities but accomplished of results. Emphasis needs to be placed on
the results rather than activities. The result of manager may be seen in the form of reduction in
wastes, optimum use of resources, motivated workforce, higher efficiency, etc.
5. Initiative: - Managers like artists take the initiative in doing the right things right at the right
time. Good managers also encourage initiative on the part of their subordinates. The initiative
helps to take the right decisions, which in turn improves the overall performance of the
organisation.
6. Intelligence: - Successful managers are intelligent. They need to have mental intelligence,
social intelligence, inter-personal intelligence and emotional intelligence.
They need to have more intelligence than their subordinates so as to command respect and get
the work done from them efficiently and effectively.
I4AR

2. MANAGEMENT IS AN SCIENCE EXPLAIN
Meaning: - Science is a systematic body of knowledge which is universally accepted. F.W. Taylor
father of scientific management was perhaps the first person to consider management as a science.
He was of the opinion that management should conduct their business affairs by following certain
well established standards.
Science can be broadly divided into two groups:
(a) Physical Sciences (b) Social Sciences
Physical sciences like Physics, chemistry and mathematics are exact and accurate, whereas, social
sciences are not so exact and accurate as they deal with human beings.
Management is a social science because it deals with human beings. Since human nature cannot be
predicted with accuracy, the decisions taken in management may just be one way of doing things in a
given situation and not the only way of doing things.
Management is a social science due to the following reasons:
1. Systematic Decision-Making: -Management need to make systematic decisions. For this

purpose the managers need to collect the right information from the right source at the right time.
The collected data need to be processed and analysed systematically. The systematic collection
and processing of data helps management to take better decisions.
2. Output may Vary, the Inputs Being the same: -In physical sciences, output may vary with a
change in input. However, in social sciences, like management, output may vary without a
change in input. For instance, when workers are properly motivated, their performance can
improve even without any increase in resources like material, time, etc.
3. Process of management is universally followed: - Managers in all organisations, whether large

or small, and at all levels, follow the process of management. All managers need to plan, to
organise, to direct and to control the activities.
4. Principles of Management are universally accepted: -All successful organisations do follow

the well established principles of management, such as division of work, unity of command,
discipline, and so on.
However, the degree of application varies from one manager to another manager and from one
situation to another situation and from one organisation to another organisation.
Thus, it can be concluded that management is an art as well as a science. Managers need to be
scientific artists in order to accomplish the goals. For this purpose, they need to be innovative,
and systematic. It is the science that discovers and the art that develops.
SOPP

3. MANAGEMENT AS AN PROFESSION EXPLAIN
Meaning:-Profession is an occupation carried on by professional people like doctors, lawyers,

architects, etc. it involves application of expert knowledge to solve specific problems or to handle
specific tasks. There is a debate whether management is a profession or not. To find out whether
management is a profession, one needs to know features of professions.
Following are some of the important features of professions
1. Formal Education: - a true professional needs to have minimum formal education from a
recognised institution. For instance, a lawyer needs to have a degree in law from a recognised
university.
2. Fees: - The professional normally charges fees for their services rendered to the clients. The fees
may be varying from professional to professional. Normally, they do not work exclusively for
only one client. They have number of clients.
3. Expert Knowledge: - professional require expert knowledge in a particular discipline. For

instance, a doctor needs to have expert knowledge in the field of medicine.
4. Requirement of Licence: - Professionals require a license or a permission to practice. For

instance, a doctor requires a licence to practice as a medical practitioner.
5. Independent office: - Normally, the professionals practice from their own independent office.
6. Social Responsibility: - The professionals are socially responsible to their clients and to the
society, while handling their tasks and responsibilities. Their actions should be guided not only
by monetary consideration, but also by social responsibility.
7. Specialisation: - The professionals may specialise in a particular field. For instance, there may be
doctors only for a particular disease or for a particular class of patients. For instance, ther are
heart specialist, child specialist, etc.
8. Code of Conduct: -The actions of the professional are guided by a code of conduct. It is the
association, either at national level or at state level that lays down certain standards to be
followed by the professionals.

4. EXPLAIN THE FUNCTIONS OF THE TOP LEVEL MANAGEMENT?
Meaning: -Every level of management performs certain function. The function does vary from level
to level.
The functions of Top level Management are briefly explained as follows:
1. Mission Statement: - The top management frames mission statement of the organisation. The
mission statement gives a clear direction to the activities of the organisation.
2. Plans and Policies: -The Top management frames plans and policies from long term point of view.
The long term goals and objectives of the company are set by the top management.
3. Organising Resources: -The top management make arrangement of important physical, financial
and other resources of the company.
4. Selection: -The top management has the responsibility of selecting departmental heads and other
key executives.
5. Direction: -The top management provides necessary direction to the middle level executives to
implement the plans.
6. Control of Activities: -The top management designs and develops a system of monitoring,
measurement and evaluation of performance.
7. Motivation: -The Top management has the responsibility to train and motivate key personnel of
the organisation.

5. EXPLAIN THE FUNCTION OF THE MIDDLE LEVEL MANAGEMENT
Meaning: -Every level of management performs certain function. The function does vary from level
to level.
The functions of Top level Management are briefly explained as follows:
1. Planning: -The middle level management frames plans and policies for the departmental
activities. They get the plans approved by top management.
2. Organising: -The middle management make arrangement of physical, financial and other
resources to undertake departmental activities.
3. Selection: -The middle level management undertakes the selection of lower level executives.
They also train the lower level executives.
4. Direction: -The middle level management provides direction to lower level executives to
undertake the activities effectively.
5. Motivation: -The middle level management motivates the lower level executives so that they
perform efficiently and effectively.
6. Controlling: - The middle level management monitors and controls the departmental
performance.
7. Reporting: -The middle level management report to the top management in respect of
departmental performance. They provide recommendation to the top management.

6. EXPLAIN THE FUNCTIONS OF THE LOWER LEVEL MANAGEMENT
Introduction: -This level is also called Operational or supervisory Level of Management. This level
consists of Supervisors, Superintendents, foremen, Inspectors, etc.
Their main Functions are as follows: -
1. Preparing plans: - They prepare plans regarding their work and allot the work to the workers.
2. Representing the problems of workers: -The supervisory level managers come to know the
problems and grievances of the subordinates and pass them on to the middle level management.
3. Maintaining good working conditions: -The supervisory managers provide good working
conditions such as adequate lighting, ventilation, etc. and provide other amenities to the staff.
4. Looking to safety of workers: - The Supervisory level managers provide safe and secure work
environment for the workers by proper fencing and putting safety guards at all critical points for
avoiding accidents.
5. Helping the middle level management: -The supervisory level managers guide and help the
middle level managers in the selection, training, placement and the promotion of the workers.
6. Welcoming suggestions: -The Supervisory level managers encourage the workers to take
initiative in their work. They invite suggestions from the workers for better production and
reducing wastage.
7. Maintaing quality standards: -The Supervisory level managers have to make sure that there is
steady flow of output and that the quality standards are maintained by the workers.
8. Boosting the morale; - The supervisory level managers need to boost the morale of the employees
in order to get the work done from them effectively and efficiently

7. WHAT ARE THE DIFFERENT LEVELS OF MANAGEMENT
Meaning: - All Managers in the organization do not belong to the same class or level, just as all
students of a college do not belong to the same class. Managers belong to the higher levels,
whereas, others belong to the lower level, and some others belong to the middle level. Normally,
management positions are graded into three broad levels, i.e.
1. Top Level
1
2. Middle Level, and
2
3. Lower Level.
3
1. At the Top Level, the managerial personnel are few in number. The top level executives report
to the Board of Directors. The Top level managerial personnel includes:
Chief Executive Office (CEO) or General Manager.

President of the organisation. The CEO may hold position of the president as well.
Vice-Presidents of the functional areas such as marketing, production, finance, and
personnel.
Managing Director. In some firms, the managing directors and the CEO are one and
the same.
2. At the Second Level, the organisation has more managerial personnel as compared to the top
level. The managerial personnel at the second level report to the top level management. The
managerial personnel includes in the Second Level are:
Divisional Heads of a multi-divisional organisation.

Special Business Unit (SBU) Heads in organisations.
Regional and Area Managers in a large national or international organisation.
Departmental Heads such as Marketing Manager, Finance Manager, Production
Manager, Human Resource Manager, etc.
3. At the third level, the organisation has more personnel as compared to the second level. The
managerial personnel at the third level include:
Assistant Managers.
Supervisors (Foremen)
Junior Executives.

8. WRITE SHORT NOTES ON DEEMED PUBLIC COMPANY?
The concept of private company becoming a public company is stated under sec.43 A of
Indian Companies Amendment Act 1960.
The following were the provisions of section 43 A.
• Where not less than 25% of the paid-up share capital of a private company is held by one or
more bodies corporate, such a private company shall become a public company from the
date on which such 25% is held by body corporate. (section 43 A (1)
• Where the average annual turnover of a private company is not less than Rs. 10 crores
during the relevant period, such a private company shall become a public company after the
expiry of the period of three months from the last day of the relevant period when accounts
show the said average annual turnover. (section 43 A (1A)
• When a Private company holds not less than 25% of the paid up share capital of a public
company, the private company shall become a public company from the date on which the
private company holds such 25% (section 43A (1B)
• When a private company accepts, after an invitation is made by an advertisement or renews

deposits from the public other than its members, directors or their relatives, such private
company shall become a public company (section 43a 1C)
The above provisions of section 43A shall not apply on or after the 31-12-2000 (section
43A (11). Deemed concept of a public limited company on account of the above four
factors is abolished (as per Companies Amendment Act 2000).

9. EXPLAIN THE IMPORTANCE OF SOCIAL VALUES?
Meaning: -Social Values are values (standards) concerned with social aspects of human life. For
example, truth, honesty, justice, kindness, generosity, tolerance, patriotism, perfection, excellence,
etc. the business organisations are expected to participate in the development of social values
through educative advertising, cultural programmes, national integration programmes , assistance
to educational institutions, etc.
1. Economic Progress: -Social Values foster economic progress of a society. For instance, if
truth and honesty are practised by every body, it will promote fair dealings in all walks of life
such as business, education, political, social services, etc.
2. Social Development: -Social Values foster social development also, for instance, several
industrialists and charitable institutions have shown generosity and started schools, colleges,
hospitals, cultural centres for the benefit of common people.
3. Social relations: -Social values like co-operation, tolerance, respect for seniors, etc. tend to
improve social ties or relations. When a person extends his hand of co-operation to others,
even the enemies will have to check their inimical relations.
4. Regional Co-operation: -Social Values like co-operation, patriotism, and tolerance can help to
mitigate the differences between the regions, states and countries. These three values, if
practised it will promote social and economic development of the nations.
5. Love, peace and happiness: -Values like respect for others, co-operations, tolerance develop a
bond of togetherness. As a result, conflicts and clashes get solved through mutual
understanding.
6. Standard of living: - Values of perfection and excellence enables people to develop new
methods, process and techniques. As a result, new and better products and services become
available in the market. This ultimately led to raising the standard of living.

10. WRITE SHORT NOTES ON CONSUMER PROBLEM
Introduction: -Peter Drucker ones stated. “There is only one definition of business purpose; to
create customer.” The customer is the start and the success point of any business. The Survival and
success of business depends on the customer’s support.
In India, Consumers face a number of problems. The main problems are as follows:
1. False Weights and measures: -Consumers in India are cheated by traders and others with false
weights and measures in unorganised as well as organised markets..
2. Poor after-sale-service: -In India, after-sale-service is very poor. Even in the big companies also
do not provide effective after sale service to its customers.
3. Problem of duplicate Goods: -In India, the customer face a major problem of duplicate goods.
Unethical producers duplicate popular brand names and thereby customers get cheated.
4. Problem of artificial shortage: - Unethical dealers, some traders or shopkeeper indulge in

artificial shortages. The purpose is to inflate the prices. Therefore, customers have to pay high due
to artificial shortage of goods.
5. Problem of Health and Safety hazards: -Another problem faced by customers in India is the
problem of health hazards. There are several such examples are:
Certain manufacturers duplicate health related products such as medicines.

Shopkeepers or Traders may also sell products even after the expiry date.
6. Unethical Advertising: -Customers are cheated with false advertising. There are several examples
of unethical advertisements:
Tall Claims or Exaggerations.
Testimonials by professionals or personalities who do not even use the product. etc.
7. Problem of Delivery of Goods: - Customers also face the problems of Delivery of goods on a
specific delivery date

11. WRITE SHORT NOTES ON MEMORANDUM OF ASSOCIATION?
MEANING: - It is the fundamental document of the company. It has been described as the
constitution of charter of the company. It clearly states the objectives of the company, defines its scope
of operations and its relationship with the outsiders.
Definition: - According to Section 2(28) of the Companies Act, “ Memorandum means the
Memorandum of association of a company as originally framed or as altered from time to time in
pursuance of any previous Companies law or of the Companies Act, 1956”.
The memorandum of association contains the following six clauses:-
1. Name clause: - This contains the name of the company in full.
2. Domicile clause: - This clause is also known as registered office clause. It indicates the state in
which the registered office of the company is situated or located.
3. Objective clause:-This clause states the main object and other auxiliary objects of the company. It
defines the boundaries for the operation of the company.
4. The liability clause:-This clause states the nature of liability of its members. The memorandum of
a company limited by shares or guarantee must state that the liability of its members is limited.
5. Capital clause: - It refers to the authorized capital of the company. A company cannot issue more
share capital than the authorized capital of the company, unless this clause is altered in accordance
with the articles of the company.
6. Association clause: - This clause contains a declaration from the signatories to the memorandum,
that they are desirous of being formed into an association or company.
Note: - If this question is asked for 10 marks then write the distinguished points first like a
paragraph and then explain the above clauses.

IMPORTANT BRIEF
ANSWER OF ORGANISATION
OF COMMERCE
AND
MANAGEMENT

1. DEFINE SOLE TRADING CONCERN? EXPLAIN ITS MERITS AND DEMERITS?
Meaning: - Sole trading concern is the oldest form of commercial organisation. Sole means one
person. So a trading concern is an organization where all business activities are
controlled and managed by one man. He is also solely responsible for the debt and
risk of the firm. The following are some of the features of a sole trading concern.
Definition: “A sole trader is a person who trades on his own account rather than in partnership
or as a member of a company.” (Michael Greener)
A sole trading concern has the following merits over other forms of commercial organisation:
1. Ease in formation: - a sole trading concern is considerably easy to start and to conduct its
activities. There are least formalities in the formation of a sole trading concern. A sole trader may
also close down the business as per his own will.
2. Complete control: - The sole trader can have complete control over business operations. He can
take his own decision regarding the business activities. No need to consult with any one
3. Business Secrecy: - The sole trader can maintain complete business secrecy. He needs not to
publish any accounts and reports to any body. Competitors cannot easily get business secrets
and information of the sole trader’s activities.
4. Flexibility in operation: - Sole trader enjoys maximum flexibility. He can take right decision at
the right time depending upon the situation. At any time, he need not have to consult with anyone
because he is a single owner of his business.
5. Minimum Government Control: - Sole trading concern is less affected by government control.
This is because, there are almost no legal formalities are required to start or close down a
business.
6. Close conduct with the customers: -The Sole trader can develop close contacts with his
customers. This is because; he deals regularly with the customers. By developing personal
contacts with his customers, the sole trader can come know the likes, dislikes, preferences and
tastes of the customers. This helps to increase the sales turn over.
7. Proper utilisation of resources: -The sole trader will make proper utilisation of resources (men,
money, materials, etc.) this is because, the sole trader enjoys all the profits.

In spite of several advantages/merits, the sole trading concern suffers from a number of
disadvantages. The main disadvantages are:
1. Limited Capital
2. Limited Managerial skills
3. Lack of continuity:
5. Limited Bargaining power
6. No Legal status
7. Limited Expansion:
The above important demerits are briefly explained as under.
1. Limited Capital: - The main drawback of sole trading concern is the limitation of capital. The
sole trader can manage limited amount of capital from his own savings. He may also get some
funds from his friends and relatives. The limitation of capital often restricts the size of the sole
trading concern.
2. Limited Managerial skills: - Normally, a sole trader manages the business on his own. The
sole trader may not have all the abilities or skills to manage all by himself. Now a day, ther, ther
is a need for specialized managerial staff. The sole trader may not able to appoint a skilled
managers or staffs this is because of his limited capital.
3. Lack of continuity: -The sole trading business lacks continuity. If the sole trader cannot run his
business due to ill health or if he dies, the business comes to an end. This is because the
successors may not be interested to run the business or they may lack the necessary business
skills.
4. Unlimited liability: - The liability of the sole trader is unlimited. This means he is alone
responsible for all the risks and debts of the firm. In the eyes of law, there is no distinction
between the private property and business property of the sole trader.
5. Limited Bargaining power: -the sole trader often lacks bargaining power. This is because he
purchases on a small scale from the wholesalers; secondly, he may not have the skill of
bargaining. Thus he may not be able to obtain competitive terms from his suppliers.
6. No Legal status: - Legally, the sole trader and his business concern are one and the same in the
eyes of law. The sole trader and his business cannot be separated from each other. So the sole
trader lacks legal status. But a joint stock company enjoys a separate legal status.
7. Limited Expansion: -The Sole trading concern is restricted in its growth. This is because of
limitation of capital and lack of managerial skills that are necessary for the expanding
organisations.

2. DEFINE JOINT HINDU FAMILY FIRM? EXPLAIN ITS MERITS AND DEMERITS?
Meaning: -: -A business, which continues from one generation tom another generation is known as
joint Hindu family business or firm. This is special form of business organization, which now exists
only in India. And the business is with in the family. The head of the family is the head of the
business also. He is known as “karta” and the members are known as “co- parceners”. Joint Hindu
Family is governed by the Mitaksara Law.
Advantages of Joint Hindu Family Business are:
1. Easy formation
2. Quick decisions and prompt action
3. Flexibility in operation
4. Business Secrecy
5. Continuity of business
6. Minimum Government regulations
7. Limited liability of co-parceners
1. Easy formation: -Formation of Joint Hindu family is very easy. Because it does not require any
legal formalities to form. It comes into existence under the Hindu succession Act 1956.
2. Quick decisions and prompt action: -The Karta is the sole manager of the business and head of
the family. He need not consult any one before taking any decisions. Therefore he can take quick
decisions and prompt actions
3. Flexibility in operation: -The management is in the hands of the Karta. He takes the decisions
according to the changing circumstances. He can expand or contracts his business at his
convenience. He enjoys maximum flexibility in operation.
4. Business Secrecy: -A joint Hindu family business can maintain business secrecy. Because they
need not have to publish there’s any account to any outsider of the family.
5. Continuity of business: -Joint Hindu family business does not dissolve due to death of Karta.
Because a minor members that is a co-parceners can become a karta after the death of the Head of
the family
6. Minimum Government regulations: - Though the Hindu undivided Family is the result of Hindu
Law, there is least Government control over Hindu undivided Family because the business are
conducted by the family members itself so they no need to publish any accounts and reports to any
outsiders.
7. Limited liability of co-parceners: - The Co-parceners enjoy limited liability. The liability of the
co-parceners is limited to the extent of the shares in the family business. However, the liability of
the Karta is unlimited.
Disadvantages of Joint Hindu Family Business are as follows:
1. Limited Capital
2. Unlimited liability of Karta
3. Lack of stability
4. Less motivation
5. Limited Growth and Expansion
6. No entry for non family members
7. No Legal Status
1. Limited Capital: -This type of business does suffer from the limitation of capital. This is
because the business has to depend upon the savings of the family. Again, limited amount of
borrowings is possible from friends, banks and others.
2. Unlimited liability of Karta: -The liability of the karta is unlimited but the liability of co-
parceners is limited. The karta is liable to pay the dues even from his personnel property.
Unlimited liability makes him more cautions and he may not take any risk.
3. Lack of stability: -The continuity and stability of the firm depends upon good relations among
the family member’s but in practice it is not possible. Therefore there may be results in the
discontinuation of the firm. However in many case there is continuity of business.
4. Less motivation: -All the members of the family are entitled to equal share whether they put in
work or not. There is no relation between efforts and rewards. Hence, there is less motivation to
put in more effort.
5. Limited Growth and Expansion: -The investment of the joint Hindu family business is limited.
Growth and expands is possible only when there is large investment. But the liability of the
Karta is unlimited. Hence, there is less scope for Growth and expansion.
6. No entry for non family members: -Only family members can get entry into the business.
Outsiders are not allowed to interfere in the family business. So there is less scope for increasing
the capital of family members.
7. No Legal Status: -Like Sole trading concern, the Joint Hindu family business lacks legal status.
The registration of this type of business is not compulsory. The members and the firm do not
have separate entity.

3. DEFINE PARTNERSHIP FIRM? EXPLAIN ITS MERITS AND DEMERITS?
Meaning: - Partnership is a voluntary association of two or more people who contributes skill and
time for carrying on a lawful business for their benefits. It is the second stage in the evaluation of
commercial organization. It comes into existence under the partnership act 1932. The liability of the
partner is joint several and unlimited.
The merits of partnership firm’s points are explained briefly as under
1. Easy formation
2. Business Secrecy
3. Limited Government control
4. large capital
5. Flexibility in operation
6. Easy dissolution
7. Effort-Reward Relationship
1. Easy formation: -The formation of a Partnership is quite easy, less expensive and does not
involve any legal formalities. An oral or written agreement is sufficient to start partnership.
2. Business Secrecy: -Business Secrecy can be maintained because the annual accounts are not
required to be published. Business secrets are known to partners only. Hence, there is a chance of
maintaining maximum business secrecy.
3. Limited Government control: -Partnership is based on mutual trust, confidence and co-
operation, registration is not compulsory. There fore interference from government in partnership
business is limited.
4. Large capital: -Partnership is an association of several persons. Large amount of capital can be
raised through large number of partners; as compared to sole trader the partners can collect or
generate huge funds from their savings and borrowings from their friends, relatives and also by
the way of loans from banks.
5. Flexibility in operation: -The working of a partnership firm is flexible there are no statutory
restrictions on the management of business. Partners are allowed to bring about change this
brings about operational flexibility.
6. Easy dissolution: -Like formation dissolution of partnership is also easy. Events like death,
insolvency and insanity of a partner are some of the reason for dissolution.
7. Effort-Reward Relationship: -There is often a direct relationship between efforts and rewards.
Each and every partner puts in best efforts and the rewards are shared among themselves. The
active partners may get a higher share in profits as compared to dormant partners.

The Demerits of partnership firm’s points are explained briefly as under:
1. Limited Membership: -There is a limit to the number of partners in a partnership firm. A

maximum of 10members can run a banking business and a maximum of 20 members are
permitted in case of an ordinary partnership.
2. Unlimited Liability: -The liability of the partners is joint, several and unlimited. It means
partners will be held responsible to pay off debts and obligations of the firm even out of their
private estate.
3. Lack of Stability: -A partnership firm lacks stability. The life of partnership is affected by events
like retirement, death and insolvency of the partners.
4. Problem of Continued Existence: -There is a problem of continued existence. Initially partners

are united and the relations are friendly but with the passage of time, conflicts, misunderstanding,
are commonly affected which lead to dissolution of partnership firm.
5. Lack of Public Confidence: -A partnership firm is not required to publish final accounts, sales
returns etc.due to this; public confidence is limited towards this type of partnership firm. Ans as
such, public may not lend money to partnership firm
6. Difficulty in admitting new partner: -There is often a difficulty in admitting new partners. This
is because, some of the partners may object to such admission. Secondly, because of the
restriction on the maximum number of partners, imposed by the Indian partnership Act, 1932.
7. Difficulty in Transfer of shares: -The Partners cannot easily transfer share or interest to an
outside party. Prior consent is required to be obtained from all other partners. Often the other
partners do not allow for such transfer of interest to an outside party.

4. DEFINE JOINT STOCK COMPANY? EXPLAIN ITS MERITS AND DEMERITS?
Meaning: -A Joint stock is an incorporated association, which is an artificial person, having

independent legal status with a perpetual succession, a common seal, a common capital of
transferable shares carrying limited capital. In other words, Joint Stock Company is a business
organization organized and owned by shareholders but managed by directors. But the directors must
have to purchase the Qualification of shares.
Definition: -- PROF. (H.L.Haney) “A joint stock company is a voluntary association of individual

for profit, having its capital divided into transferable shares, the ownership of which is the condition
of membership.”
The advantages of joint stock company’s points explained briefly as under:
1. Large Capital: - A joint stock company can raise large amount of funds by way of shares,
debentures, public deposits, loans and advance from bank and financial institution. This is due
to no limit in the membership of public limited company.
2. Limited Liability: -As compared to other forms of organization a joint stock company is the
best type of business organization. The liability of members of a joint stock company is limited
to the face value of the shares purchased by them.
3. Transferability of Shares: -Shares of the Joint Stock Companies can be easily transferred. The
transferability of shares is always welcome in this of organization. A member can sell his shares
in the open market at any time or transfer it at any one. This encourages the public and others to
invest in shares.
4. Specialised Management: -A Joint Stock company can afford to appoint specialised experts in
the field of production and distribution. Specialised Management brings in higher returns to the
company and as such the company can further expand diversify its activity.
5. Scope for Expansions: -Due to availability of huge funds, Expert management, stables and
continues existence, public confidence is created. It enables the company to make progress and
expand its activities.
6. Statutory Regulations: - the formation of companies is regulated by the provisions of the

Indian companies Act 1956. The working of a company ism fully regulated by the company act.
Sending report regularly to the registrar of companies, maintenance of statutory books, this will
help to create Public confidence in this form of organization.
7. Democratic Management and Control: -The management and control of a joint stock
company is in the hands of highly skilled Board of Directors. The Board of Directors are
professional managers who efficiently look after the management and control of the
organisation. The shareholders have the right to remove then directors if the shareholders find
that the directors are insufficient or corrupt.

The disadvantages of Joint stock company’s points are explained briefly as under:-
1. Complicated Formation: -The promotion and formation of a joint stock company is complicated.
A number of legal formalities have to be completed before its registration. Thus formation is time
consuming.
2. Lack of Secrecy: -Business secrecy cannot be maintained in the joint stock company. All the
public limited companies have to publish their final accounts as per the provisions of the
companies. And this may result in lack of secrecy of business matters.
3. Selfish Management: -The directors of the company are Infact the representatives of the
shareholders. They are the agents, managers and trustees of the company. But they misuse the
power, because of the inactiveness and passive nature of the share holders.
4. Excessive Government Control: -The Joint Stock Companies are subject to excessive
government control. A company suffers from too much of unrealistic controls over its working
through government interference. Excessive controls create a lot of obstacles in the smooth
working of a company.
5. Delay in Decision Making: -The process of decisions making is slow. Because the decisions are
to be taken only in the meeting. As the procedure of the meeting is lengthy and time consuming.
Hence, there is delay in decisions and actions.
6. Conflict of Interest: -There is often conflict of interests among the various parties in a joint stock
company. There may be disputes between the management and employees. Again, there may be
disputes between the directors and shareholders.
7. Problem of Flexibility: -A Joint Stock Company is less flexible as compared to sole trading and
partnership firm. This is because; it cannot change or take immediate decisions. Again, if they
want their line of business may require the approval of the shareholders.

5. DEFINE CO-OPERATIVE SOCIETY? EXPLAIN ITS MERITS AND DE-MERITS?
Meaning: -A Co-operative society is an organization, which is service oriented rather than profit
oriented. It is an association of persons who joint to form an organization for mutual benefit. In other
words, co-operative organisation is defined as a form of organisation where in person voluntarily
associate together as human being on the basis of equality for economic interests for themselves.
Following points are the merits of co-operative society:
1. Easy Formation: -As per the co-operative society act 1956 it can be easily formed. The minimum
number of members required is 10. The Procedure of registration with the registrar of co-operative
societies is also simple and less expensive.
2. Limited Liability: -In a co-operative society, the liability of each member is limited. The liability
of the members is limited to the face value of shares purchased by them.
3. Low overhead cost: -The overhead costs are comparatively low. The members of the managing
committee may provide honorary services. It has government support also.
4. Stability: -The Co-operative Society enjoys stability and continued existence. A co-operative
society has a long life. It is not affected due to death, insolvency or insanity of a member. Hence,
there is a stability of business.
5. Open Membership: -The membership of a co-operative society is open to all members of the
public. Irrespective of castes, creed, religion and so on.
6. Socially Desirable: -Co-operative societies are formed to help the poor and middle-income people.
They protect the society from the evils of monopoly and concentration of economic power. Hence,
it develops social desirability among the people.
7. Reasonable Prices: -The members can make their purchases at reasonable prices. This is because
the main objective of the cooperative is to provide service to its members. Profits become the
secondary motive.

Following points are the de-merits of co-operative society
1. Limited Capital: -A co-operative society can collect limited capital only from the members. As it
is, a local organisation and member are poor and middle income group.
2. Lacks of Business Secrecy: -In a co-operative society, it is not possible to maintain secrecy.
Democratic management also effects business secrecy. Because the business done in this
organisation is openly.
3. Lack of Motivation: -Most of the members in a co-operative organisation are less educated and
ignorant about the rights and principles of co-operative. Hence, there is lace of motivation in a co-
operative society.
4. Lack of Economies of Scale: -A Co-operative society lacks economics of scale. This is because
the co-operative conducts its business activities in a local area on a limited basis.
5. Non-Transferability of Shares: -The shares of co-operative society are not freely transferable to
any one. Every member can purchase a limited number of shares, as there are restrictions for
purchasing more numbers of shares.
6. Political Interference: - The Co-operative organisation acts as a platform for political interests. At
the time of elections to managing committee, some of the political parties get involved.
7. Limited Scope for Expansion: -A co-operative society is owned managed and controlled by
middle class people. The capital of this people is limited. Its area of operation is also restricted to
certain extent only. Hence, there is limited scope for expansion.
8. Lack of Loyalty among Members: -The members are often not loyal to their cooperatives. Some
of the members may buy their requirements from private traders rather than buying from co-
operative.

6. Explain the characteristics of an ideal form of a business organisation? Pg 93
Meaning: -Before selecting a suitable form of commercial organization, entrepreneur[s]will have to

consider a number of factors. The choice of the form of commercial organization largely depends
upon the following factors.
Following are some of the important features of ideal forms of business organisation:
1. Ease in Formation: - An ideal form commercial organization is one, which can be formed with
ease. It should involve the least expense and minimum legal formalities. On this account, the sole
trading concern scores over the other forms of commercial organization.
2. Ease in Raising Capital: - Every commercial organization requires capital. Some organization
may require less capital. Whereas others may require more capital. When a small amount of capital
is required, then the entrepreneur himself can invest. However the amount of capital is large, then
Joint Stock Company is the most suitable form.
3. Extent of Liability: - The owner (s) of a business would normally prefer limited liability. In such
a case, the joint stock company form of commercial organization is ideal. All other form of
organization requires more liability except co-operative society.
4. Business Secrecy: -The sole trader can maintain complete business secrecy. This is because; he
undertakes business activities all by himself. However, business secrecy may not be possible in
joint stock companies and to a certain extent in partnership firms.
5. Continuity and Stability: - an ideal form of organization should exist for a long period of time. It
must not be closed down or wound up within a short period of time. Here a joint stock company
and a co-operative society have an advantage over sole trading concern and partnership firm.
6. Flexibility of operations: - Flexibility refers to the ability of the organisation to adjust its
activities, depending upon the changed situation. On this account, the sole trading concerns and
partnership firms outweigh the joint stock companies.
7. Ownership Management and Control: -As far as possible, there should be a direct relationship
between ownership, management and control. Those who manage must have complete control
over business matters. On this account, the sole trading concerns and partnership firms outweigh
the joint stock companies.
8. Tax Considerations: -An ideal form of commercial organisation should attract minimum tax
liability. Here the sole trader scores over the partnership firm and joint stock companies.
9. Minimum Government Regulations: -As far as an ideal form of commercial organisation must
be subject to least government regulations. A Joint stock Company is subject to more government
regulations, and the sole trader is least subject to such regulations.
10. Bargaining Power: -An ideal form of commercial organisation also needs to have a good
bargaining power with the suppliers and customers. The joint stock company may scores over the
partnership firm and the sole trading concern in this respect.

7. WHAT ARE THE DIFFERENT TYPES OF COMPANIES?
There are different types of companies. A brief explanation on the various types of companies is given
below:
ON THE BASIS OF INCORPORATION
1. Chartered Company: - A chartered company is a company, which is, establish under a special
charter issued by the head of the state i.e. the king or queen. British East Indian Company is an
example of such company. In India, such types of companies do not exist.
2. Statutory Company: - A statutory company is formed under a special Act or statute passed by
legislature [parliament] of the country. Such companies are subject to the provisions of special
act. The R.B.I & U.T.I are some of examples.
ON THE BASIS OF LIABILITY
3. Company limited by Shares: - In this type of company, the liability of the members is limited
to the extent of the unpaid value on shares.
4. Unlimited Company: - In this type of company, the liability of the members is unlimited.
They are not found in India due to risk involved at the time of winding up.
ON THE BASIS OF OWNERSHIP
5. Government Company: -It is that type of company in which not less than 51% of the paid up
capital is contributed by the government i.e. central and/or state government[s].
6. Non-Government Company: -Such companies are owned by private parties and government is
not involved. Most of the joint stock companies in India belong to this category.
ON THE BASIS OF NUMBER OF MEMBERS
7. Public Limited Company: -A companies which are owned, managed and controlled by
government on behalf of people are known as public limited company. A public limited
company must have minimum 7 members and maximum number of member is unlimited. After
getting certificate of incorporation and trading certificate. It must hold statutory meeting.
8. Private Limited Company: - A companies, which are owned, managed and controlled by
private organizations, are called private limited company. A private limited company must have
minimum 2 members and maximum number of member is 50. It can start its business after
getting certificate of incorporation. It need not have to hold statutory meeting.
ON THE BASIS OF CONTROL
9. Holding Company: - A holding company controls some other company by holding a majority
of shares or by controlling the composition of the board of that company.
10. Subsidiary Company: - It is that company which is controlled by another company i.e. by the
holding company.

8. Explain the Merits and Demerits of Multinational Corporations?
Meaning: - The term ‘Multinational’ is widely used all over the world to denote large companies
having vast financial, managerial and marketing resources. MNCs are like holding
companies having its head office in one country and business activities spread within the
country of origin and other countries.
IBM computer and Pepsi-Cola from U.S.A., Siemens from Germany, Sony and Honda from Japan
Philips from Holland etc., are some of the MNCs operating at international levels.
Definition:-According to ILO report (i.e. International Labour Organisation) “The essential nature
of the multinational enterprises lies in the fact that its managerial headquarters are located
in one country, while the enterprise carries out operations in number of other countries’.
The following are the benefits/merits of MNCs:
1. Economic Development: -The Developing countries need both foreign capital and technology to
make use of available resources for economic and industrial growth. MNCs can provide the
required financial, technical and other resources to needy countries in exchange for economic
gains.
2. Technology Gap: - MNCs are the instruments of transfer of technology to the host country.
Technology is necessary to bring down cost of production and produce quality goods on a large
scale. The services of MNCs can be of great help to bridge the technological gab between
developed and developing countries.
3. Industrial Growth: - MNCs are dynamic and offer growth opportunities for domestic industries.
MNCs assist local producers to enter the global markets through their well established
international network of production and marketing. And there by ensure industrial growth.
4. Marketing Opportunities: - MNCs have access to many markets in different countries. They
have the necessary skills and expertise to market products at international level. For example, an
Indian Company can enter into Joint Venture with a foreign company to sell its product in the
international market.
5. Work Culture: - MNCs introduces a work culture of excellence, professionalism and fairness in
deals. The sole objective of Multinational is profit Maximation. To achieve this, the Multinationals
use various strategies like product innovation, technology up gradation, professional management
etc.
6. Export Promotion: - MNCs assist developing countries in earnings foreign exchange. This can be
done by promoting and developing export oriented and import substitute industries.
7. Research and Development: -The resources and experience of MNCs in the field of research
enables the host country to establish efficient research and development system. It is a fact that
many MNCs are now shifting their research units to countries like India to avail of monetary
incentives and cheap labour.

The following are the De-merits MNCs
1. Problem of Technology: - Technology developed by MNCs from developed countries does not
fully fit in the needs of developing countries. This is because, such technology is mostly capital
intensive.
2. Political Interference: -The MNCs from developed countries are criticised for their
interference in the political affairs of developing nations. Through their financial and other
resources, they influence the decision-making process of the governments of developing nations.
3. Self-Interest: -MNCs work towards their own self-interest rather than working for the
development of host country. They are more interested in making profits at any cost.
4. Outflow of foreign Exchange: -The working of MNC is a burden on the limited resources of
developing countries. They charge high price in the form of commission and royalty paid by
local subsidiary to its parent company. This leads to outflow of foreign exchange.
5. Exploitation: - MNCs are criticised for exploiting the consumers and companies in the host
country. MNCs are financially very strong and adopt aggressive marketing strategies to sell their
products, adopt all means to eliminate competition and create monopoly in the market.
6. Investment: -MNCs prefer to invest in areas of low risk and high profitability. Issues like
social welfare, national priority do not find any place on the agenda of MNCs.
7. Artificial Demand: -MNCs are criticised on the ground that they create artificial and
unwarranted demand by making extensive use of the advertising and sales promotion techniques.

9. EXPLAIN THE SOCIAL RESPONSIBILITY OF COMMERCIAL ORGANISATION TOWARDS EMPLOYEE AND

SHAREHOLDERS?
Definition: -H.R.BOWEN defines “Social responsibility of business refers to the obligation of

business to pursue those policies, to make those decisions, or to follow those lines of actions, which
are desirable in terms of objectives and values of our society.”
Meaning: -The survival & success of a business depends upon the service of its efficient work force.
Human resource or employees is one of the greatest resources of all the resources.
1. Job security: -The Company should provide job security to its employees. The workers should
not be kept temporarily for a long time. They must be given permanent jobs. Otherwise they may
be frustrated.
2. Monetary factors: - Workers should be paid adequate wages and other incentives like bonus,
medical allowance, travelling allowance; etc Prompt payment often results in higher motivation
to the workforce.
3. Working conditions: - The workers should be provided with good working conditions. There
should be adequate lighting and ventilation. Noise, dirt and dust pollution should be avoided.
4. Health and Safety measures: - The Company should take adequate measures to protect health of
the employees. They should be provided with canteen facilities, and medical facilities. Proper
maintenance of machines and buildings must be done to prevent accidents.
5. Proper personal policies: - There must be proper personal policies in respect of transfers,
promotions, recruitment, training, etc. There should be no partiality in Promotions and transfers
of employees.
6. Workers Participation in Management: -The Workers must been couraged to take part in
management. There are different ways of workers participation in management, such as quality
circles, work committee, suggestions scheme, and co-partnership, etc.,
7. Grievance Procedure: -There should be a proper Grievance Procedure to handle employees’

complaints. Any complaint of the employee must be immediately sorted by following suitable
Grievance Procedure.

RESPONSIBILITIES TOWARDS SHAREHOLDERS
The shareholders are the owners of the company. They have invested their funds for higher returns.
They expect certain responsibilities on the Part of the management.
1. Fair return on investment: -The shareholders expect a fair return on their investment. After all
they have invested their valuable resources.
2. Expansion and Diversification: -The shareholders expect that the management should undertake
expansion and diversifications programmes. This will result in more returns to the shareholders.
3. Proper use of Shareholders Funds: -The shareholders expect optimum utilization of their funds.
They will not tolerate the management, if it spends their funds in unproductive manner.
4. Proper conduct of share holders meetings: -The shareholders want fair conduct of meeting.
There should be fair conduct of meetings. There should be fair elections at company meetings.
5. Proper Disclosure: -The management should make a proper disclosure regarding the affairs of the
business. The accounts must be properly maintained and audited from time to time. The share
holders should allowed getting the copies of the audited report sheets of the company.
6. Good public image: -The shareholders expect that the management should develop and maintain a
good public image. A company that enjoys name and goodwill commands a lot of respect and trust
in the share market, labour market, consumer market, and so on.
7. Periodic Information: -The Shareholders expect the company to inform them about important
happenings in the company, either at company meetings or through correspondence. The
shareholders have a right to be informed of the development in the company.

10. EXPLAIN THE SOCIAL RESPONSIBILITY OF COMMERCIAL ORGANISATION TOWARDS EMPLOYEES

AND GOVERNMENT?

Meaning: -The survival & success of a business depends upon the service of its efficient work force.
Human resource or employees is one of the greatest resources of all the resources
1. Job security: -The Company should provide job security to its employees. The workers should
not be kept temporarily for a long time. They must be given permanent jobs. Otherwise they
may be frustrated.
2. Monetary factors: - Workers should be paid adequate wages and other incentives like bonus,
medical allowance, travelling allowance; etc Prompt payment often results in higher motivation
to the workforce.
3. Working conditions: - The workers should be provided with good working conditions. There
should be adequate lighting and ventilation. Noise, dirt and dust pollution should be avoided.
4. Health and Safety measures: - The Company should take adequate measures to protect health
of the employees. They should be provided with canteen facilities, and medical facilities. Proper
maintenance of machines and buildings must be done to prevent accidents.
5. Proper personal policies: - There must be proper personal policies in respect of transfers,
promotions, recruitment, training, etc. There should be no partiality in Promotions and transfers
of employees.
6. Workers Participation in Management: -The Workers must been couraged to take part in
management. There are different ways of workers participation in management, such as quality
circles, work committee, suggestions scheme, and co-partnership, etc.,
7. Grievance Procedure: -There should be a proper Grievance Procedure to handle employees’

complaints. Any complaint of the employee must be immediately sorted by following suitable
Grievance Procedure.

RESPONSIBILITIES TOWARDS GOVERNMENT
The Government also expects social assistance from the corporate sector in the following areas:-
1. Assistance in implementing Socio-economic policies: -The government expects cooperation

and assistance from the business sector to assist it in implementing socio-economic programmes
2. Payment of Taxes: -The government expects the corporate sector to pay taxes and duties
regularly. If the corporate sector does not pay taxes and duties on time, then it would be difficult
for the government to undertake its plans.
3. Observance of Government Rules and Regulations: -The government expects strict

observances of its rules and regulations on the part of the corporate sector. If the corporate sector
has any valid suggestions to modify the rules and regulations, then it should do so in the interest
of the society as a whole.
4. Political Stability: -The corporate sector should work towards the political stability of the
country. A stable government often brings more returns and peace in a democratic society.
Therefore, corporate sector should not support those elements who are indulging in political
instability.
5. No seeking of Unfair Favours: -The companies should not seek unfair favours from government
officials by bribing or influencing them.
6. Earnings of Foreign Exchange: -Companies, especially the large ones should enter in export
trade to earn valuable foreign exchange for the country. This foreign exchange is necessary to pay
for vital imports.
7. Advising the Government: -Corporate sector should provide timely advise to the government in
respect of framing various policies, such as export-import policy, licensing policy, industrial
policy. Etc,

11. EXPLAIN THE SOCIAL RESPONSIBILITY OF COMMERCIAL ORGANISATION TOWARDS CUSTOMER

AND SOCIETY?

The survival and growth of a business depends upon customers’ satisfactions, service, and
support. The company should win over the confidence of the customers.
1. Quality: -The Company should produce quality goods. The company should always strive to
improve its quality. At no time quality can be 100%, and as such there is always a room for
improvement.
2. Fair Price: -The consumers will not take if they are being cheated. After all, the company will not
be able to fool the consumers all the time.
3. Honest Advertising: -The consumers expect true facts of the product, its uses, merits, and side –
effects and so on. They will not like exaggerated and tall claims. The company should also refrain
from vulgar and unethical advertisement.
4. Availability of Goods: -The consumers should be made available the goods regularly as and when
they need it. The company should not create artificial shortage and hoard the goods in cooperation
with unethical dealers.
5. After Sales Service: -The consumers expect efficient and effective after-sale-service, especially in
the case of consumer’s durables.
6. Redressal of Complaints: -The complaints of the consumers must be immediately dealt with.
Valid suggestions of the consumers must be taken into consideration.
7. Research and Development: -The Consumers expect the company to conduct research and
development for the purpose of improving the quality and reducing the cost of the product.

RESPONSIBILITY OF COMMERCIAL ORGANISATION TOWARDS SOCIETY
1. Protection of Environment: -The Company should take all possible measures to prevent air, and
water pollution.
2. Optimum use of Resources: -The business firms make use of scarce natural resources such as
raw materials of iron, steel, fuel, and so on.
3. Upliftment of Backward Regions: -The society expects that the companies should start
industries in backward areas. This will generate employment facilities and increase in purchasing
power of the rural masses.
4. Help to weaker sections of the Society: -The business organisation should also uplift the weaker
sections of the society. Certain jobs may be reserved for economically weaker section of the
society.
5. Financial Assistance: -The society also expects donations and financial assistance to various
social causes, such as eradications of poverty, illiteracy, etc. they expect the company to take part
in anti-drug campaigns, anti-noise campaigns, and so on.
6. Prevent Congestion in Cities: -The companies should also work to avoid congestion in cities by
spreading their industries in different places and locations.
7. Expansion: -The society expects expansion and diversification of industries so as to generate

employment opportunities and at the same time to enhance standard of living of the society.

11. EXPLAIN THE SOCIAL RESPONSIBILITY OF COMMERCIAL ORGANISATION TOWARDS SUPPLIERS

FINANCIAL INSTITUTION AND COMPETITORS? (B)
H.R.BOWEN defines “Social responsibility of business refers to the obligation of business to pursue
those policies, to make those decisions, or to follow those lines of actions, which are desirable in
terms of objectives and values of our society.”
Suppliers:
1. The company should maintain good relations with the suppliers.
2. Payment of credit amount must be done on time.
3. The company should not force the suppliers to provide unreasonable terms.
4. The companies should work for their growth and survival.
5. The companies should not disclose any secret information about its suppliers to others.
Financial institution:
1. The Payment of loan and interest instalments must be made on time.
2. They should not bribe bank officials in sanctioning loans.
3. Provide regular reports to the financial institutions.
4. There should be proper use of funds provided by financial institutions.
5. They should not convert bank loans into bad debts.
Competitors:
1. The company should avoid unfair practices, such as duplicating the products of the Competitors.
2 Respect the competitors and treat them as challengers and not enemies.
3. They should ensure free entry, and not block entry of competitors.

12. EXPLAIN THE PROCESS/FUNCTIONS OF MANAGEMENT
Meaning: - In 1916, Henri Fayol provided a ‘Functional approach to management’ in his book,
“Industrial and General Management”. Fayol’s list of managerial functions includes Planning,
Organising, Commanding, Coordinating and Controlling. In 1930s, Luther Gullick coined the
functions of management in one word- POSDCORB- Planning, Organising, Staffing,
Directing, Co-ordinating, Reporting and Budgeting.
The Important functions of management are briefly explained as follows:
1. Planning:
Koontz and O’Donnell “Planning is deciding in advance what to do, how to do it, when to do it,
and who is to do it”.
The main steps in planning are stated as follows:
Analysing the internal environment to identify strengths and weaknesses.

Analysing the external environment to identify the opportunities and threats.
Setting of clear and realistic goals.
Framing alternative plans.
Studying (evaluating) the alternative plans.
Selection of the best suitable plan(s)
Implementation of the Plan(s)
Review of the plan(s)
Planning
Controlling Objectives Organizing
Directing
2. Organising:
Definition: - Louis Allen defines organisation as “The process of identifying and grouping of the
work to be performed, defining and delegating responsibility and authority, and establishing a pattern
of relationship for the purpose of enabling people to work most effectively together in accomplishing
objectives”.

The Main steps in Organising are as follows:
Determining goals of the organisation.
Identifying the activities to be performed.
Grouping of the related activities into departments.
Making arrangements of resources.
Defining authority and responsibility.
Delegating authority to managers.
Establishing superior-subordinate relationships.
Coordination of activities in the organisations.
3. Staffing: it is an important element of organizing. Since staffing is very vital, it needs to be

given proper focus. A major aspect of staffing is to find out the right person for the right job. It
also involves.
o Placing the right persons in the right job
o Performance appraisal
o Promotion and Transfer
o Training and development
o Motivating and rewarding the employees.
4. Directing: - The Plans may be the best feasible ones, the activities may be systematically
organised, the staff may be highly efficient, but the organisation will not succeed if there is no
proper directions.
Directing Involves three sub-functions:
o Communicating: -It involves transfer of messages from one person to another. Effective
communication takes place only when the message is clearly understood and proper feedback
is received or proper action is taken.
o Leading: -Leading is an art of influencing subordinates to work willingly towards the
attainment of desired objectives.
o Motivating: -The manger should motivate his subordinates by providing incentives so that
they work with dedication and commitment to achieve goals of the organisation.
5. Coordination: -It refers to integration of activities or actions of the subordinates by the

superiors. There is a need for co-ordination at all levels,
The top level coordinates the activities of the middle levels.

The middle level coordinates the activities of the lower level.
The Lower level managers coordinate the activities of the subordinates.
6. Controlling: -Definition: - George Terry, defines “Controlling is determining what is being

accomplished, that is, evaluating the performance, and if necessary, applying correcting measures
so that the performance takes place according to the plans”.
Controlling involves the following steps:

Setting of standards or targets.
Implementation of tasks
Measuring actual performance.
Comparing actual performance with plans or targets.
Finding out Causes of deviations if any.
Listing out various corrective measures.
Selecting the appropriate corrective measures.
Implementation and review of corrective measures.
13. DEFINE MANAGEMENT? ALSO EXPLAIN THE OBJECTIVES OF MANAGEMENT

14. DEFINE PLANNING? EXPLAIN ITS FEATURES AND IMPORTANCE?
Meaning: - Planning provides a sense of direction to business activities. If you don’t know where
you are going, no road will take you there. Planning bridges the gap from where we are and where
we want to go.
Definition: - Koontz and O’Donnell “Planning is deciding in advance what to do, how to do it,
when to do it, and who is to do it”.
The nature and characteristics of planning can be explained as follows:
1. Planning is goal oriented: - Planning is goal-oriented in the sense that plans are developed and
executed to achieve goals. At first the goals are set, and then plans are framed to accomplish them.
2. Future Oriented: - Planning is future related activity. Necessary forecasts are made about the
future and accordingly plans are made. In other words, plans are made for the future activities-
whether short term, medium term, or long term.
3. Continues activity: - Planning is a continues activity. It is an ongoing process. Effective planning

requires constant and continues checking of events. Accordingly plans are redrawn depending
upon the situation or circumstances at the time of implementation.
4. Link between the past, present and future: - planning acts as a link between the past, present
and future. Although planning is a future related activity, yet, one cannot totally ignore the past
and present events and achievements while planning for the future events or achievements. It is the
past experience that helps in preparing realistic future plans.
5. Primacy of planning: - planning is the primary or basic function of management. Without

planning, it would be difficult to organise, to direct, and to control. When the plans are well
defined and clear, it would be easy to organise the resources, to provide necessary directions, and
to take proper control measures.
6. Pervasiveness of planning: - planning is the function of every manager. The need for planning
exists at all levels of management. Such as government organisation, educational institution,
charitable trust, etc.
7. Intellectual process: - the success of plans depends upon to a great extent on the intelligence of
the manager. A great deal of imagination and intelligence is needed to prepare sound plans.

FOLLOWING ARE THH NEED/IMPORTANCE/OBJECTIVE/ROLE/FUNCTION/OF PLANNING
Meaning: - Planning provides a sense of direction to business activities. If you don’t know where
you are going, no road will take you there. Planning bridges the gap from where we are and where
we want to go.
Definition: - Koontz and O’Donnell “Planning is deciding in advance what to do, how to do it,
when to do it, and who is to do it”.
The need and importance of planning can be explained as follows:
1. Minimizes Risks: - Planning helps to minimize or reduce risks. Potential risks are forecasted
and necessary protective devices are decided well in advance. If the risks occur, then the
protective devices are put into practice.
2. Facilitates Coordination: - The plans of one department are coordinated with the plans of all
other concerned departments. This brings in unity among of all various departments of the
organisation.
3. Facilitates Organising: - Planning enables a manager to organise he resources properly.

Depending upon the targets, the manager will make proper arrangement of all resources.
4. Facilitates Proper Direction: - Planning provides proper schedules or time table or to when the
activities need to be conducted. Planning enables superiors to give clear directions to the
subordinates so that they undertake the right tasks at the right time.
5. Facilitates Control: - A plan provides a yardstick (target) against which actual performance can
be compared. If deviations are notices, the manager may take the right corrective steps at the
right time.
6. Optimum Utilisation of Resources: - Planning enables optimum utilisation of resources. All

the resources – i.e., physical, financial and human resources are put to their best use.
7. Encourages Innovation: - The planning process encourages creative thinking on the part of
managers.
8. Focus on Goals: - Planning is goal oriented in the sense that plans are developed and executed
to achieve certain goals. Every activity is directed towards the attainment of goals.

15. DEFINE ORGANIZAING? ALSO EXPLAIN ITS FEATURES AND IMPORTANCE?
Meaning: -To conduct any activity-business or non-business, there is a need for an organisation. If
there is no organisation, it is not possible to conduct activities. Organisations big or small have at
least two common characteristics.
They are composed of people, and

They exist to achieve goals.
work to be performed, defining and delegating responsibility and authority, and establishing a
pattern of relationship for the purpose of enabling people to work most effectively together in
accomplishing objectives”.
The main characteristics of an organisation are as follows:
1. Structure of Relationships: - organisation is a chain of relationships among different parts of

an organisation. There is a need for relationships between superior and subordinates, various
departments, and various levels. It is through effective relationships, the organisation progresses
and prospers.
2. Common objectives: - every organisation exists to achieve certain goals. The overall goals of
the organisation are decided by the top management. Individuals and departments set their own
goals. The goals of the individuals and departments must be in line with overall goals.
3. Group of individuals: - organisation consists of a group of individuals who come together to

achieve the goals of the organisation. Without people associating themselves, organisation is
meaningless.
4. Division of work: - In every organisation, there must be division of work; the work of the
organisation must be divided among the individuals and department. Division of work leads to
specialisation, and brings certain benefits such as quality and quantity improvement and
reduction in costs.
5. Co-ordination: -In every organisation there is a need for a system of c0-ordination. This is
required to inter-link the various activities in the organisation. There is a need for co-ordination
throughout the organisation.
6. Authority: - Authority is the power to take and to get the work done from the subordinates.
Every manager in the organisation must be given adequate authority so that he can take the right
decisions to get the work done.
7. Responsibility: - The managers who are provided with authority must be made responsible.
There must be a balance between authority and responsibility.

FOLLOWING ARE THE PORTANCE/OBJECTIVE/ROLE/FUNCTION/OF ORGANISING
Meaning: -To conduct any activity-business or non-business, there is a need for an organisation. If
there is no organisation, it is not possible to conduct activities. Organisations big or small have at
least two common characteristics.
They are composed of people, and

They exist to achieve goals.
work to be performed, defining and delegating responsibility and authority, and establishing a
pattern of relationship for the purpose of enabling people to work most effectively together in
accomplishing objectives”.
The need and importance of organising can be explained as follows:
1. Ensures Co – ordination: - Due to good organisation structure, coordination is possible in the

organisation. Coordination refers to interlinking of actions of the subordinates by the superior.
2. Optimum Utilisation of Resources: - Organisation ensures optimum utilisation of resource –

i.e., human, financial and physical resources are put to best possible use.
3. Facilitates Effective Management: - A properly designed organisation facilitates effective

management. It avoids confusion, delays and duplication of work.
4. Motivates Personnel: - A sound organisation avoids confusion, misunderstandings and

overlapping of functions, and as such employees are motivated to produce their better results.
5. Facilitates Delegation of Authority: - A good organisation structure enables the superiors to

delegate authority to the subordinates. The superiors are in a position to delegate the proper
degree of authority to the right subordinates.
6. Encourages Initiative and Innovation: - Due to effective delegation of authority, there is

freedom of self – expression. The subordinates are encouraged to show their initiative, which
helps the organisation to excess and grow.
7. Technological Improvements: - Sound organisations have contributed to the technological

developments. Through research and development, the organisation comes with new methods,
new machines, and techniques.
8. Facilitates Growth: - sound organisations achieve good success. This enables the organisations
to grow and diversify. Large progressive firms are the direct outcome of the success of effective
organising.

16. DEFINE STAFFING? ALSO EXPLAIN ITS FEATURES AND IMPORTANCE?
Meaning: - There are no two opinions that people alone will determine the fate and future of the
organisation. Therefore, management should place proper focus on the function of staffing. The staffing
function includes the following elements:
1. Recruitment and selection of employees 2. Placing the right person at the right job 3. Performance
appraisal of the employee 4. Promotion and transfer of employees. 5. Training and development.
Definition: - H Koontz defines staffing as “filling and keeping filled, positions in the organisation
structure”.
The nature of the staffing can be briefly explained as follows:
1. Continues Process: - staffing is a continues process. As long as the organisation exists, there is a
need for staffing. It is not enough to select people, and make them to work. There is a constant
need to monitor the performance of the employees through performance appraisal reports. If
required, training may be provided to the employees on regular basis.
2. Multi-dimensional in nature: - staffing is multi-dimensional in nature. It involves various sub-

elements. Each of the sub-elements is vital to the success of the organisation. The various sub
elements are as follows:
Recruitment and selection of employees

Placing the right person at the right job
Performance appraisal of the employee
Promotion and transfer of employees.
Training and development
3. Factors: - staffing depends on various factors. The factors affecting staffing can be broadly
divided into two groups.
Internal Factors such as image of the firm, expansion or growth plans, etc.
External factors such as educational standards, labour policy of the government. Etc.
4. Result-oriented function: - The staffing functions places emphasis on results. All the sub-
functions of staffing aim at achieving higher efficiency and productivity.
5. Systematic approach: - staffing requires systematic approach. For instance, there should be a
systematic approach in selection of employees. The firm should select the right people by
conducting systematic interviews.
6. Long-term benefits: - staffing aims to obtain long-term benefits. The long-tem benefits include
• Corporate image.
• Market Share.
• Loyalty of employees.
• Loyalty of customers, etc.

FOLLOWING ARE THE IMPORTANCE/OBJECTIVE/ROLE/FUNCTION/OF STAFFING
Meaning: - There are no two opinions that people alone will determine the fate and future of the
organisation. Therefore, management should place proper focus on the function of staffing. The
staffing function includes the following elements:
1. Recruitment and selection of employees 2. Placing the right person at the right job 3. Performance
appraisal of the employee 4. Promotion and transfer of employees. 5. Training and development.
Definition: - H Koontz defines staffing as “filling and keeping filled, positions in the organisation
structure”.
Staffing is important due to the following reasons:
1. Helps to Achieve Objectives: - staffing helps to achieve organisational objectives. Through

proper staffing policies, such as motivational policies, motivates the employees to put in their
best efforts, which in turn helps to achieve organisational goals.
2. Job satisfaction: - Staffing generates job satisfaction in the employees. For instance, proper
placement and promotion policies enhance job satisfaction. Higher job satisfaction leads to
higher efficiency.
3. Labour Relations: - Staffing policies helps to develop good labour relations. Due to proper
staffing policies, the employees develop positive attitude towards the management and
organisation, and therefore, the labour relations improve considerably.
4. Improve Efficiency: - Staffing helps to improve efficiency and productivity of the organisation.
Due to proper staffing policies, the employees are motivated to put in their best efforts, which in
turn improve efficiency.
5. Reduces Absenteeism: - Proper staffing helps to reduce absenteeism. Employees work with
application and dedication and they become loyal to the organisation.
6. Optimum Use of Resources: - Staffing helps to make optimum use of resources. Due to proper
staffing, not only human resources are put to maximum possible use, but also the physical and
financial resources as well.
7. Reduces Employee Turnover: - Proper staffing helps to reduce employee turnover. Employees
work with application and dedication and they become loyal to the organisation.
8. Team work: - Proper staffing facilitates team work in the organisation. Disputes in the
organisation are reduced to the minimum due to proper staffing policies.
9. Enhance Corporate Image: - Staffing leads to better performance. This helps to improve
corporate image. Corporate image gives competitive advantage in the market.

17. DEFINE DIRECTING? ALSO EXPLAIN ITS CHARACTERISTICS AND IMPORTANCE?
Meaning: -Directing is one of the most important functions of management. Directing involves
instructing, guiding and inspiring people in the organisation tom achieve desired objectives.
Definition: - According to J.L. Massie “Directing concerns the total manner in which a manager
influences the actions of subordinates. It is the final action of a manager in getting others to act
after all preparations have been completed”.
Nature and characteristics of Directing as a function of management are as follows:
1. Continuous Process: - Directing is a continuous process. As long as the organisation exists,

there is a need for directing. Managers need to direct their subordinates to get the work done
effectively and efficiently.
2. Focus on goals: - Directing place emphasis on goals. The manager gives directions to the
subordinates to achieve the goals. Depending upon the goals, a manager makes use of the
elements of directing communication, leading, and motivation.
3. Creativity activity: - Directing is a creative activity. Managers need to be innovative in giving

instructions to the subordinates. They should also provide new and innovative ideas to the
subordinates to complete the work effectively and efficiently.
4. Individual approach: - Directing is affected by individual approach of the manager. Every

manager should follow his own leadership style in leading and motivating the subordinates.
One should not copy the leadership styles of the other manage in directing the subordinates.
5. Psychological Factor: - There is lot of psychological factor in directing. The manager should
analyse the feelings and emotions of the subordinates and accordingly deal with them. The
manager must also respect the subordinates to get the work done from them effectively and
efficiently.
6. Linking Function: - Directing links planning and controlling activities. The plans are put into
action through effective directing. The comparison of actual performance (due to directing) can
then be compared with actual plans.
7. Chain of command: - Directing follows the principle of chain of command. The directions
normally flow from top to down through the chain of hierarchy in the organisation. For
instance, the top direct the middle level, the middle level directs the lower level, and
accordingly the lower level directs the subordinates.

FOLLOWING ARE THE IMPORTANCE/OBJECTIVE/ROLE/FUNCTION/OF DIRECTING
Meaning: -Directing is one of the most important functions of management. Directing involves
instructing, guiding and inspiring people in the organisation tom achieve desired objectives.
Definition: - According to J.L. Massie “Directing concerns the total manner in which a manager
influences the actions of subordinates. It is the final action of a manager in getting others to act after
all preparations have been completed”.
Proper directions help in the following ways:
1. Facilitates Innovation: -Proper directions facilitate innovation in the organisation. Due to

effective directions, employees may be motivated to come up with innovative ideas, plans, and
policies.
2. Corporate Image: -Proper directions help to improve corporate image. Due to effective
directions, there can be better performance of the employees. The better performance of the
employees can help to develop goodwill in the market.
3. Team Work: - Directing develops team spirit in the organisation. It is the team work that brings
success to the organisation. Due to effective directions of the superiors, the subordinates work as
a team.
4. Optimum use of Resources: -Directing facilitates optimum use of resources. Through effective
directions, the manager can make optimum use of resources such as 1. Physical resources, 2.
Financial resources. 3. Human resources.
5. Motivation: -Directing facilitates motivation of employees in the organisation. The managers

can motivate the subordinates to perform effectively through effective communication, and
leading.
6. Reduction in wastages: - Effective directions help to reduce wastages of resources. The

subordinates would make every possible effort to minimize or avoid wastages of resources,
wherever possible.
7. Reduces Absenteeism: -Proper directing helps to reduce absenteeism. For instance, if a lecturer
gives proper directions to the students, then the absenteeism on the part of the students may be
reduced considerably.
8. Higher Efficiency: -Proper directing can facilitate higher efficiency in the organisation.
Efficiency is the ratio or returns to cost. Due to effective directions, there can be higher returns
at reduced costs.

18. DEFINE CO-ORDINATION? ALSO EXPLAIN ITS NATURE AND IMPORTANCE
Meaning: -Co-ordination refers to inter-linking of actions. There is a need or co-ordination at all

levels.
Definition: - Theo Haimann defines co-ordination as “Coordination is the orderly synchronizing of

efforts of the subordinates to provide the proper amount, timing and quality of execution so that
their unified efforts lead to the stated objective, namely the common purpose of the enterprise”.
Nature and characteristics of Coordination are as follows:
1. Essence of management: - Coordination is the essence of management. There is a need for

Coordination in every function of management. For instance, there is a need for Coordination
in planning. The top management has to coordinate the plans of the middle level managers or
the departmental managers.
2. Managerial Responsibility: - Coordination is the basic responsibility of the managers at all

the levels. The top-level managers are responsible to coordinate the activities of the middle
level managers. The middle level managers are responsible to coordinate the activities of the
lower level managers. The lower level managers are responsible to coordinate the activities to
their subordinates.
3. Deliberate Effort: - Coordination involves deliberate effort on the part of managers. It does
not arise spontaneously or by chance. Managers have to make definite efforts to coordinate the
activities of their subordinates.
4. Creativity: - Managers require creativity or innovativeness to coordinate the activities of the

subordinates. One cannot copy earlier decisions or efforts in coordinating the activities of the
subordinates. Coordinating the activities involves lot of challenges, especially in the case of
complex activities and in the case of sensitive matter.
5. Continuous process: - Coordination is a continuous process. As long as the organisation exists,

there would be activities. Therefore, there is a need to coordinate the activities of the
organisation on the part of the management.
6. Required in group activity: - Coordination is required, when there is group activity.

Coordination is not required in the case of individual activity. If an individual person carries on
the work, then there is no question of coordinating the activities. Coordination arises only
when there is group activity.
7. Coordination is different from co-operation: - Coordination and cooperation are not one and
the same. Cooperation involves willingness on the part of people to help one another. However,
Coordination is the function of managers, whereby they try to interlink the activities of their
subordinates. Coordination is broader in scope than cooperation.

FOLLOWING ARE THE IMPORTANCE/FUNCTION/OF CO-ORDINATION
Meaning: -Co-ordination refers to inter-linking of activities in the organisation. It is very much

necessary for the organisation to accomplish common goals or objectives. There is a need or co-
ordination at all levels.
Definition: - Theo Haimann defines co-ordination as “Coordination is the orderly synchronizing

of efforts of the subordinates to provide the proper amount, timing and quality of execution so that
their unified efforts lead to the stated objective, namely the common purpose of the enterprise”.
The significance or importance of co-ordination can be stated as follows:
1. Integration of Group efforts: - Coordination involves integration of group effort. In the

absence of Coordination, there would be confusion and disorder in the organisation, as various
members may tend to work independent of each other, and as such the organisation would not
be able to accomplish its objectives. It is very much necessary for the organisation to
accomplish common goals or objectives.
2. Facilitates mutual Dependence: - Coordination facilitates mutual dependence in the

organisation. Coordination helps to manage interdependence and interactions among the
different departments or unit in the organisations.
3. Helps to resolve the conflicts: -there may be conflict of interests in the organisation among
individuals and departments. For instance, there can be a conflict between finance department
and marketing department on issues relating to credit period, rate of discount, and so on. It can
be resolved effectively by the proper coordination of higher authorities.
4. Development of Team Spirit: - Coordination develops team spirit in the organisation. The
superiors coordinate the activities of their subordinates for the purpose of achieving group
objectives. For this purpose, managers need to develop team spirit among their subordinates.
5. Motivate subordinates: - Coordination facilitates motivation of subordinates in the

organisation. The subordinates are motivated by the superiors by providing them monetary and
non-monetary incentives. The superiors encourage the subordinates to perform better and
achieve the objectives.
6. Better Relations: - Coordination develops better relations throughout the organisation.

Managers at all levels coordinate the activities of the subordinates. Effective Coordination
results in good relations with the subordinates.
7. Optimum use of Resources: - Coordination facilitates optimum use of resources. There is

optimum use of both physical and human resources. The resources of the organisation are put to
the best possible use by the members of the organisation.

19. DEFINE CONTROLLING? ALSO EXPLAIN ITS NATURE AND IMPORTANCE
Meaning: -Controlling is a process of monitoring actual performance, and taking corrective

measures, if required.
Definition: - George Terry, defines “Controlling is determining what is being accomplished, that
is, evaluating the performance, and if necessary, applying correcting measures so that the
performance takes place according to the plans”.
The nature of Controlling is explained as follows:
1. Focus on objectives: - Controlling focuses on achievement of objectives. The actual

performance is compared against the targeted performance. If there are deviations, corrective
measures are taken so as to attain the pre-determined objectives.
2. Continuous Process: - Controlling is continuous process. As long as the organisation exists,

there are activities. And as long as there are activities, there is a need to control such activities.
Therefore, controlling is a never-ending process.
3. Suggestive in nature: -The control system must be suggestive in nature. It should indicate
where the problem is, who is at a fault and what should be done to correct the faults, if any.
4. Critical point Control: - It may be neither desirable nor economical to control each and every
activity. Therefore, an organisation should be selective in control matters. A good control
system should focus on critical factors or areas, where control is vital to ensure successful
achievement of goals or targets.
5. Control by exception: - The control system should enable the managers to focus their
attention on exceptional or significant deviations. The senior managers should control major or
exceptional deviations. The junior managers should be allowed to control routine matters.
6. Forward Looking: -A good control system should be forward looking in nature. It should help
the managers to plan their activities for the future.
7. Variety of techniques: -To control activities, management may adopt various control
techniques or tools.
• Budgetary control.
• Management audit.
• PERT (Programme Evaluation Review Technique)
• CPM (Critical Path Method)
• MBO (Management by objectives)
• Break Even Analysis
• Management information System (MIS), etc.

FOLLOWING ARE THE IMPORTANCE/OBJECTIVE/ROLE/FUNCTION/OF CONTROLLING
Meaning: -Controlling is a process of monitoring actual performance, and taking corrective

measures, if required.
Definition: - George Terry, defines “Controlling is determining what is being accomplished, that is,
evaluating the performance, and if necessary, applying correcting measures so that the performance
takes place according to the plans”.
The importance of controlling is as follows:
1. Guide to operations: -Control System guides the actions of the organisation. Activities are
undertaken in the right direction. It acts as a traffic signal post, and keeps the activities moving
on the right track.
2. Facilitates performance Appraisal: -Control system facilitates employee appraisal. The

actual performance is measured in the light of the plans. The superior can easily measure the
performance of his subordinates and provide them necessary performance feedback.
3. Improves Morale: -employees are aware that their performance is reviewed periodically. They
will put in their best efforts to show better performance. Thus, employee morale is improved
because those employees who show better performance are normally rewarded.
4. Facilitates Coordination: -Controlling facilitates coordination among the various departments

of the organisation. Whenever, there are any, deviations, the concerned departments come
together to review and to take collective and corrective measures.
5. Facilitates optimum utilisation of resources: -the resources of the organisation –physical,

financial and human are put to best possible use. This generates higher productivity and
efficiency.
6. Minimisation of wastages: - Control helps to reduce wastages of raw materials, machines,

men and money. Wasteful expenditure is avoided. There is proper material management.
Again, the right personnel are placed at the right place of work.
7. Fixes Responsibility: -Control system fixes responsibility on the superiors. It is the duty of the
managers to correct the activities, if they are not taking place as expected or as planned.
Managers cannot simply ignore their responsibility, because it is their duty to control the
activities.
8. Higher Efficiency: -Controlling brings in higher efficiency to the organisation. This is because
of optimum utilisation of resources and minimization of wastages. Again, the right corrective
measures are taken at the right time.

20. EXPLAIN THE 14 PRINCIPLES OF HENRY FAYOLS
In 1916, Henry Fayol provided a list of 14 principles in his book titled ‘Industrial and General
Administration’. Fayol was of the opinion that all managers in all organisations, whether large or
small, needs to follow the principle or guidelines in managing business affairs.
The 14 principles are as follows:
1. Division of Work: - The work in an organisation must be divided among individuals and
departments. Division of work leads to specialisation. It results in improvement in quality, increase
in quantity, and reduction in costs. Specialisation also leads to innovation.
2. Authority and Responsibility: -Fayol stressed that there should be a balanced between authority
and responsibility. Authority is the power or right to take decisions. The responsibility is the
obligation for accepting authority. Authority must be equal to responsibility. If authority is more
than responsibility, then a manager may misuse it. And, if responsibility is more than authority,
then he may feel frustrated.
3. Discipline: -Fayol stressed the need for discipline in an organisation. Discipline needs to flow
from top level to lower level in the organisation. Discipline involves not only obedience to rules
and regulations of the organisation, but more importantly, it involves application and dedication on
the part of the employees.
Fayol wrote that the best means of maintaining discipline is to have:
Disciplined superiors at all levels.
Clear and fair agreements, and
Judicious use of penalties.
4. Unity of Command: - A subordinate should receive orders from only one superior. In turn, the
subordinate should report only to one superior. Fayol observed that if one subordinate receives
orders from more than one superior, then everything will be in disorder. Lack of unity of command
is like “Too many cooks spoil the soup”.
5. Unity of Direction: -There should be the same directions to all employees doing similar activities.
A particular activity must be directed with the help of a single plan. In the absence of unity of
direction, there would be confusion among the employees.
6. Subordination of interest: -The interest of organisation should be primary and that of an

employee or a group of employees be secondary or subordinate. Every employee or a group should
work in the interest of the organisation and not for their own self interest.
7. Remuneration: - Wages and salaries should be fair. More importantly wages must be paid on time.
It should depend on factors, such as cost of living, ability of the company to pay, prevailing wage
rates in the industry, etc. also the value of the employee must be taken into consideration.
8. Centralisation: -Fayol stated that certain matters are to be centralised and others to be
decentralised. There is a need to have a proper balance between centralisation and decentralisation.
He advised that extreme centralisation or decentralisation is to be avoided. Especially in large
companies.

9. Scalar Chain: -It refers to the line of command which runs from top level to the lowest level in
the organisation. Fayol stated that scalar chain needs to be followed, but not at all times. He
stressed that the scalar chain can be broken if the situation so demands in the interest of the
organisation.
E O
F P
Gangplank
To avoid distortion in communication and delay in action, Fayol suggested that with the help of
‘Gangplank/bridge’, ‘F can directly communicate with ‘P’, provided both of them inform their
immediate superior of any action taken.
10. Order: - Fayol stated that there should be order in the organisation. He stressed that there should
be place for everything, and everything must be in place. Again, there must be a place for every
one, and everyone must be in their place. Thus, this principle requires the orderly organisation and
placement of men, machines and other resources. Misplacement would lead to misuse and disorder.
11. Equity: -Equity means social justice. All members of the organisation should be given fair and
just treatment, depending upon the performance and circumstances. Ther must not be any partiality
in transfers, promotions, etc.
12. Stability of Tenure: -Employees should not be kept temporary for a long period of time.
Employees should be made permanent so that they do not leave the organisation. However,
incompetent persons need to be removed or replaced and those who perform well must be
rewarded.
13. Initiative: -The superior must sacrifice his own vanity to encourage and inspire those under him to
show initiative. Subordinates should be given freedom to come up with suggestions and ideas.
This will not only add to the success of the success of the organisation but will also boost the
morale of the subordinates.
14. Esprit de Corps: -The superior must encourage esprit de corps (team sprit) among his
subordinates. It is the team spirit that results in loyalty, dedication and commitment of the
employees.
According to Fayol, even small matters help in developing team sprit. The superior should not
criticise or discourage subordinates for making mistakes, but must encourage them not to make
mistakes. Also, verbal communication needs to be used instead of formal, written communication,
wherever possible, Fayol warned of the consequences of
(a) Divide and rule, and

(b) Abuse of written communications.

21. Explain the Merits and Demerits of Government Companies?
Meaning: -A Government Company is registered under Indian Companies Act, 1956. 51% or more
of its paid-up share capital is to be held by central and/or state government. Examples of such
organisation include Indian Oil, BHEL, SAIL, GAIL, Hindustan Petroleum Ltd., and Bharat
Petroleum Limited.
The following are Merits of Government Companies.
1. Quick Decision Making: -The Management of Government Company can take quick decisions.
This is because; the management enjoys considerable autonomy or powers to take the decisions.
2. Efficiency: -The Efficiency of employees of Government Company is high as compared to that

of departmental undertakings. This is because the staff can be recruited independently by the
organisations. There is a less interference of government in the appointment of top officials in
such organisation.
3. Flexibility: -This type of organisation enjoys flexibility in decision making. The management
can change their decisions, if required depending upon the situation.
4. Statutory Discipline: -There is statutory discipline on the part of management. This is because;
the management has to follow the provisions of Indian Companies Act.
5. Easy Formation: -It is relatively easy to form a Government Company. It can be created by
executive decision of the Government. The objects and powers of the company can be changed
easily. This is because as it is formed under the Indian Companies Act 1956.
6. Suitability: -This type of organisation is suitable to industrial and commercial undertakings.

Therefore, this type of organisation makes effort to operate on commercial lines rather than
purely on social lines.
7. Employment: -This type of organisation generates employment to several people. For instance,
the Indian Oil Corporation employs lakhs of people in the country.
8. Capital Formation: -This type of organisation facilitates capital formation, for instance,
Government Companies encourage savings as they borrow money from the public by way of
bonds.

The following are De-merits of Government Companies
1. Political Interference: - Although this type of organisation enjoys autonomy in decision-

making, yet there is good amount of political interference. The minister, government officials,
and politician’s interference in the day to-day management of the corporation.
2. Inefficiency and Corruption: -There is inefficiency and corruption in public undertakings. The
inefficiency is due to faulty selection, lack of training, poor performance appraisal, faulty
promotions, etc. apart from inefficiency, there is also corruption on the part of officials which in
turn affects the overall performance.
3. Consumers Exploitation: -Before 1991, most of the Government companies were exploit the
consumers because of their monopolistic position, However, after 1991 due to liberalisation,
most of them have lost their monopolistic positions.
4. Wastage of Resources: -There is good amount of wastages of resources. There is poor material
management. Raw materials and even costly machinery are purchased and often remain
unutilized. At times, such machinery is sold for scrap.
5. Lack of Motivation: -There is lack of competitive spirit in Government Companies. Quite often,
the inefficient ones are promoted at higher levels due to political connections. Therefore,
efficient employees lack motivation to perform effectively.
6. Low-Labour Productivity: -The Government Companies suffer from the problem of lower
productivity. the efficiency is low due to various problems such as:
Faulty selection and promotion

Lack of training and development
Poor Performance appraisal
Faulty placement and forced transfers, etc.
7. Poor Labour-Management Relations: -The Government Companies suffer from the problem
of poor labour-Management relations. This is due to corrupt and inefficient management and
also due to selfish and militant trade union.

22. Explain the Merits and Demerits of Statutory Corporation?
Meaning: - A Statutory corporation is also called as public corporation. A Statutory corporation is

established under a special Act of the Parliament or state legislature. The central government or
state government owns the corporation. Examples of such corporations are Life Insurance
Corporation, Industrial development bank of India, Unit Trust of India, Export Credit Guarantee
Corporation of India Let., and so on.
The Following are the merits of Statutory Corporations:
1. Quick Decision Making: -The Management of Statutory Corporation takes quick decisions.
This is because; the management enjoys considerable autonomy or powers to take the decisions.
2. Efficiency: -The Efficiency of employees of Statutory Corporation is high as compared to that

of departmental undertakings. This is because the staff can be recruited independently by the
organisations. There is a less interference of government in the appointment of top officials in
such organisation.
3. Flexibility: -This type of organisation enjoys flexibility in decision making. The management
can change their decisions, if required depending upon the situation.
4. Suitability: -This type of organisation is suitable to indusial and commercial undertakings.

Therefore, this type of organisation makes effort to operate on commercial lines rather than
purely on social lines.
5. Employment: -This type of organisation generates employment to several people. For instance,
the Indian Oil Corporation employs lakhs of people in the country.
6. Capital Formation: -This type of organisation facilitates capital formation, for instance,
Statutory Corporation encourage savings as they borrow money from the public by way of
bonds.
7. Service Motive: -This type of organisation works more on service motive rather than profit
motive. However, this does not mean that this type of organisation does not focus on profit
making. Through service motive it tries to protect the interest of the consumers.

The following are De-merits of Statutory Corporations:
1. Political Interference: - Although this type of organisation enjoys autonomy in decision-

making, yet there is good amount of political interference. The minister, government officials,
and politician’s interference in the day to-day management of the corporation.
2. Inefficiency and Corruption: -There is inefficiency and corruption in public undertakings. The
inefficiency is due to faulty selection, lack of training, poor performance appraisal, faulty
promotions, etc. apart from inefficiency, there is also corruption on the part of officials which in
turn affects the overall performance.
3. Consumers Exploitation: -Before 1991, most of the Statutory Corporation are exploit the
consumers because of their monopolistic position, However, after 1991 due to liberalisation,
most of them have lost their monopolistic positions.
4. Lacks of Motivation: -There is lack of competitive spirit in Government Companies. Quite

often, the inefficient ones are promoted at higher levels due to political connections. Therefore,
efficient employees lack motivation to perform effectively.
5. Wastages of Resource: -There are several cases, where the public corporations do not utilize
the resources properly. There is often wastage of:
Physical Resources (Such as Machines, Materials, etc.)

Capital Resources (Funds or Money)
Manpower Resources (due to surplus staff)
6. Rigidity in Statute: -The Statute or Charter of a public corporation is rigid. It is very difficult to
change its objectives and functions. The statute has to be amended, which is a time-consuming
process.

23. Explain the Merits and Demerits of Departmental Undertaking?
Introduction: - It is considered as a suitable form of organisation of public Enterprises. The

departmental form of public sector operates under the control and guidance of the concerned ministry.
The Departmental form of public sector includes the railways, broadcasting, post and telegraphs,
telephone services, etc.
The following are the merits of departmental undertakings:
1. Development of Public utilities: - The Departmental form of Public sector facilitates

development and expansion of public utilities. For instance, Indian railways facilitate
development and expansion of railways in India.
2. Regional Development: - The Public undertakings facilitate regional development. For instance,
Indian railways facilitate regional development. This is because; it facilitates easy movement of
people and goods from developed regions to backward regions, and vice versa.
3. Generates Employment: -The Public undertakings generate employment in the country. The
undertakings generate employment in the undertakings itself.
4. Economics of Scale: -The Departmental undertakings such as Indian railways enjoy monopoly
power. Therefore, there is limited or no competition. As such they operate on a large scale, which
in turn generates economies of large scale.
5. Less Misuse of Funds: -There is less risk of misuse of money due to strict budget accounting and
audit control. However, the proper application of funds remains only on paper and not in practice.
6. Reduction of Poverty: -Departmental Marketing’s facilitates reduction of poverty. This is

because’; departmental undertakings generate employment to the masses. Also, they facilitate
regional development, which in turn reduces poverty.

The following are the De-merits of departmental undertakings:
1. Lack of Autonomy: - departmental undertakings lack autonomy in decision-making. This is

because; the management of such undertaking is in the hands of Government officials who are
under the direct control of the concerned ministry. Major decisions have to be approved by the
ministry concerned.
2. Lack of Flexibility: -There is lack of flexibility in decision-making. The Management has to

follow strict guidelines from the concerned ministry relating to implementation of the various
activities or projects. The Management has to respect strictly to the rules and regulations laid
down by the concerned ministry.
3. Inefficiency and Corruption: -There is a lot of inefficiency and corruption in departmental

undertakings. The inefficiency is due to the following reasons:
Faulty Selections.
Poor Training.
Poor Performance Appraisal.
Faulty Promotions, etc.
Apart from inefficiency, there is also corruption on the part of officials which in turn affects the
overall performance.
4. Lack of Professionalism: -The management of departmental undertakings lacks

Professionalism. Many-a-times, the decisions are taken in an unsystematic manner. Often
outdated data is collected. Also, there is no proper analysis of such data. Therefore, the
decisions are taken in a haphazard manner.
5. Poor Manpower planning: - There is poor manpower planning in several departmental

undertakings. Due to poor manpower planning there is surplus staff. As a result of this, the
Government expenditure increases on account of salaries, and other overheads.
6. Political Interference: - There is too much of Political Interference in departmental

undertakings. The Political interference is in respect of:
Selection of top officials

Awarding Contracts
Location of Projects, etc.
Due to undue political interference, the overall performance of such undertakings does get affected.

24. Explain in detail the elements/ process of External business environment?
Meaning: - Business Environment consists of all those forces or factors both internal and external
that affects the working of a business. Analysis of the internal environment helps a firm to identify
its strengths and weakness, and the analysis of the external environment helps to identify
opportunities and threats. A Proper analysis of external environment will enable the firm to grab the
opportunities and defuse the threats.
Definitions: - According to Keith Davis, “Environment of the business means the aggregate of all
conditions, events and influences that surround and affect it.”
The External environment can be broadly divided into two groups as shown below:
EXTERNAL
ENVIRONMENT
MICRO ENVIRONMENT MACRO ENVIRONMENT

1. Customers 1. Demographic
2. Competitors 2. Economic
3. Channel Intermediaries 3. Socio-Cultural
4. Suppliers 4. Natural
5. Society 5. Technological, etc.
MICRO ENVIRONMENT
1. Customers: -The customer is one of the most important factors in the firm’s external environment.
The consumers affect most of the business decisions. Therefore, the customer’s needs, wants,
preferences and buying behaviours must be studied in order to frame proper production and
marketing strategies.
2. The Competitors: -The Company has to identify and monitor its competitor’s activities.
Information must be collected about competitors in respect of their prices, products, and promotion
and distribution strategies. Such information will enable the firm to analyse the strengths and
weaknesses of the competitors. And accordingly make some adjustments to win over the
competitors.
3. The Suppliers: -Suppliers supply raw materials, machines, equipments and other supplies. The
Company has to maintain good relations with the suppliers to supply quality items at the right
price and at the right time.

4. Channel Intermediaries: -The dealers and other intermediaries in the chain of distribution are
important factors in the firm’s immediate environment. The firm has to select and satisfy its
dealers in order to push and promote its products in the market.
5. Society: -The Society may also affect company’s decisions. The Society can either facilitate or
make it difficult for a company to achieve its objectives. Therefore, professional business firms
maintain public relations departments to handle complaints, grievances and suggestions from the
public.
MACRO ENVIRONMENT
The various macro environmental factors are briefly discussed as follows:
1. Demographic Environment: - Demographic Environment relates to human population with

reference to its size, density, literacy rate, life expectance, sex ratio, rural-urban divide, age
composition, occupational pattern, etc. business firm have study in detail the various Demographic
Factors, which would help them to frame proper production and marketing strategies.
2. Economic Environment: -A business firm closely interacts with its economic environment.
Economic environment consists of:
Economic conditions in the market. (Such as Demand and Supply Factors)
Economic Policies of the government. (Such as Taxation, Foreign trade, Money market,
etc.)
Economics System of the Country.
3. Natural (Ecological) Environment: -Natural Environment or ecological environment relates to

natural resources like land, water, minerals, port facilities, etc. Business firms use natural resources
like water, land, iron ore, crude oil, etc. In doing so, two things happen:
Erosion of natural resources, etc
Pollution of resources like air, water, etc.
Business firms should understand the above two effects and take necessary measures to control
erosion and pollution of natural resources.
4. Technological Environment: - There are constant technological developments. The business

firms must constantly monitor changes in the technological environment. in order to succeed in the
competitive business world.
5. Political Environment: -Business decisions are greatly influenced by the developments in

political environment. This environment consists of government agencies, political parties, and
pressure groups that influence and control various individuals and organisations in the society.
6. International Environment: -The international environment is an outcome of political and

economic conditions in the international markets. Business firms engaged in foreign trade are more
affected by changes in the international environment.

25. Explain the impact of government policy changes on business and industry?
Introduction: -The Impact of Government Policy changes on business and industry can be explained
with reference to liberalisation, privatization and Globalization as follows:
IMPACT OF LIBERALISATION
Liberalisation means reduction of Government controls on the private sector. With the announcement
of new industrial Policy, 1991, the private sector is given more freedom from Government control.
The impact of liberalisation is explained as follws:
Positive Impact
1. Impact of Abolition of Phased Manufacturing Programme: - The Government has

withdrawn PMP. Now there is no need to use domestic content materials. 100% imported raw
materials can be used as per this programme.
2. Benefits of Liberalisation of Industrial Location: -The Indian Companies are given freedom
to locate industries anywhere in the country. Except 6 industries which require licensing.
Because that industries are pollution creating industries.
3. Impact of Broad Banding of Industries: -
4. Problem of Delicensing: -The NIP1991 delicensed industries except six. Delicensing enabled
Indian Companies to concentrate on productive activities rather than wasting their time, money
and effort on unproductive licensing formalities.
Negative Impact
1. Impact of Abolition of Phased Manufacturing Programme: -The Abolition of PMP would

affect Indian companies producing raw materials and parts. This is because of importing the
materials from abroad by many industries in India.
2. Benefits of Liberalisation of Industrial Location: -
3. Impact of Broad Banding of Industries: -Due to this the workers may lose their jobs, or they
may be lay –off, especially that of temporary workers.
4. Problem of Delicensing: -The NIP 1991 recommended automatic expansion without

Government permission. This has resulted in heavy expansion of capacities in the 1990s in all
sectors of the industry. This results in recession, especially between 1996-2003.

IMPACT OF Privatisation
Positive Impact
1. Benefits of Dereservation: - The Government has dereserved public sector. At present there are
only three industries reserved for public sector. Dereservation has enabled the entry of private
sector in those industries, which were earlier reserved for public sector. this has generated
competition between the private and public sector, which in turn has improved the customer
service and efficiency of business firm.
2. Benefits of Disinvestment: -The New Industrial policy 1991 had announced disinvestment of
public sector units, especially non-strategic ones. Disinvestment means selling of Government
shareholding in public sector units to private parties. It will bring some benefits to the government
such as Improvement in customer service, Improvement in the performance of units, overcoming
the political interference, etc.
Negative Impact
1. Problem of Dereservation: - because of this Dereservation the private sector has the right to
expand the capacity, which in turn has recession, especially, from 1996 to 2003.
2. Problem of Disinvestment: - Because of this Disinvestment the country has to face a lot of problems
such as
Exploitation of workers through reduction of work-force.
Exploitation of customers by charging high prices.
Now the government has decided to put on hold this programme due to strong opposition from
the left parties. (Which is supporting the Central Government from outside)
IMPACT OF Globalisation
Globalisation involves interlinking of domestic economy with the world economy. It involves
reduction or withdrawal of custom duties, reduction of quotas. Etc.,
The Impact of globalisation is stated as below:

Positive Impact
1. Benefits of reduction of customs duty: -The Custom duties on imports have been reduced
considerably,
Especially, since 1995 (with the setting of World Trade Organisation). For Example The peak
Custom
Duty was reduced from 40% to 12.5% in 2006-07.
2. Benefits of Foreign Exchange Management Act, 1999: -The Government of India has
replaced the Foreign Exchange Regulation Act, 1973 (FERA) by Foreign Exchange
Management Act 1999. (FEMA). The FEMA has made Foreign Exchange Transaction easier
such as: Raising of Funds by Indian Companies abroad, Current account transactions, Holding
of Property by Indian Nationals Abroad., etc.
3. Benefits of Liberalisation of Foreign Investment: -Government has liberalised foreign

investment in Indian Companies. At, Present foreign investment is allowed even upto 100% in
selected industries. This results in up gradation of technology in Indian Companies.

1. Distinguish between Sole Trading Concern and Partnership Firm
1. SOLE TRADING CONCERN PARTNERSHIP FIRM

Meaning Meaning
A Sole trading Concern is a form of business A Partnership is a form business which is
organisation which is carried on by a single carried on by two or more persons
person.
Membership Membership
The sole trading concern is carried on by one A Partnership firm must have at least two
Person partners. The maximum number of partners is
10 in the case of banking business and 20 in
the case of ordinary business.
Capital Capital
The Capital contributed by a sole trader is The partners can raise large capital as
comparatively less as compared to compared to a sole trader. This is because the
partnership firm. partners are more in number.
Formation Formation
Formation of sole trading concern is very Formation of partnership firm is
easy, simple and less costly comparatively less easy, simple, quick, and
more costly.
Agreement Agreement
As there is single owner the question of Agreement is necessary between two or more
agreement does not arise person to do business. I.e. oral or written.
Business Secrecy Business Secrecy

A Sole Trader can maintain 100% business In a Partnership firm, there can not be 100%
Secrecy, because of his single ownership Secrecy, because of more number of partners.
Sharing of Profits Sharing of Profits

A Sole Trader enjoys all the profits of the In a Partnership firm, there is sharing of
firm. He need not share with any one. profits among all the partners either equally or
in an agreed proportion.

2. Distinguish between Joint Hindu Family and Partnership Firm
2. JOINT HINDU FAMILY PARTNERSHIP FIRM

Meaning Meaning
This type of business is undertaken only in A Partnership firm is a business which is
India under the Hindu law applicable to joint jointly carried on by two or more persons.
Hindu family
Number of member Number of member

There are no restrictions regarding the In a Partnership firm, the minimum number is
members of a Joint Hindu Family business. two and maximum is 10 in case of banking
and is 20 in case of non-banking.
Capital Capital
The Capital of this type of business is In a partnership firm, the capital contribution
comparatively less can be more.
Continuity and stability Continuity and stability

There is greater continuity and stability of It may not enjoy continuity and stability of
business as the business is carried on for a business, due to disputes among partners or
number of generations other reasons.
Formation Formation
There are less complications in its formation The formation of a partnership firm is little
complicated due to legal formalities.
Liability Liability
The liability of the Karta is unlimited but The liability of all the partners is unlimited.
that of co-parceners is limited to the extent They are jointly and severally responsible for
of their share in the business. the acts of the firm.
Business Secrecy Business Secrecy

There is a great deal of business secrecy can In a Partnership firm, there cannot be 100%
be maintained business secrecy.

3. Distinguish between Joint Stock Companies and Partnership Firm
3. JOINT STOCK COMPANY PARTNERSHIP FIRM

Meaning Meaning
A Joint Stock Company is a voluntary It is a form of commercial organisation in which
association of members formed for the purpose two or more persons come together to run a
of undertaking a business. business for common purpose.
Number of Members Number of Members

For a Private limited company, the minimum The minimum number to form a Partnership firm
number is 2 and maximum 50. For a public is 2. The maximum number is 10 in case of
limited company, the minimum number is 7 and Banking business and 20 in case of non-banking
there is no limit for maximum number. business.
Transfer of interest Transfer of interest

The shareholders in a public limited company The Partners cannot transfer the interest or share
can freely transfer their shares. However, in a without the consent of all partners
private limited company, the right to transfer
shares is restricted by articles.
Formation Formation
The formation is a complicated process as many The formation is the simple process as less legal
legal formalities are required. formalities are required.
Liability Liability
The liability of the members in a Joint Stock The Liability of the partners is unlimited. They
Company is limited to the extent of unpaid value are jointly and severally responsible for the debts
on shares. of the firm.
Continuity and Stability Continuity and Stability

A Joint Stock Company enjoys continued The continuity of a partnership firm depends upon
existence. The death of shareholder or director the mutual trust among partners. Again due to
does not affect the existence of a company. death or retirement of a partner, the partnership
may have to be closed down.
Capital Capital
It can raise large capital because of huge It can raise limited Capital.
membership

4. Distinguish between Co-operative Society and Partnership Firm
4. CO-OPERATIVE SOCIETY PARTNERSHIP FIRM

Meaning Meaning
It is a voluntary association formed for the It is a business organisation in which 2 or more
purpose of promoting and protecting the interest persons come together to run a business for
of its members. common purpose.
Minimum 10 persons are required to form co- The minimum number to form a Partnership firm
operative society. There is no maximum limit is 2. The maximum number is 10 in case of
for membership. Banking business and 20 in case of non-banking
business.
Primary Motive Primary Motive

The main aim is to provide service to its The main aim is to conduct business at a profit.
members.
Act Act
It is subject to state co-operative societies Act. It is governed by Indian Partnership Act, 1932.
For Example Maharashtra State Co-operative
Societies Act, 1960.
Liability Liability
The liability of members is limited in co- The liability of partners is unlimited.
operative society.
Stability and continuity Stability and Continuity

Normally, a co-operative society is more stable The continuity of a partnership firm depends upon
in it existence. the mutual trust among partners. Again due to
death or retirement of a partner, the partnership
may have to be closed down.
Distribution of Profits Distribution of Profits

Profits are distributed to members in the form of Each partner gets a share of profit as agreed upon.
dividend

5. Distinguish between Joint Stock Companies and Co-operative Society
5. JOINT STOCK COMPANY CO-OPERATIVE SOCIETY

Meaning Meaning
A Joint Stock Company is a voluntary It is a voluntary association formed for the
association of members formed for the purpose purpose of promoting and protecting the interest
of undertaking a business. of its members.
Primary Objective/Motive Primary Objective/Motive

The Primary objective is to make profit. The main aim is to provide service to its
Providing services to society is secondary members. Profit making is secondary objectives.
objectives.
Number of Members Number of Members

For a Private limited company, the minimum Minimum 10 persons are required to form co-
number is 2 and maximum 50. For a public operative society. There is no maximum limit for
limited company, the minimum number is 7 and membership.
there is no limit for maximum number.
Voting Rights Voting Rights

Each member enjoys Voting Rights in Each Member enjoys voting rights. The Principle
proportion of his shareholding. The principle of of “One man one vote” is followed. Proxy is not
“One shares, one Vote” is followed. Proxies are allowed.
allowed.
Formation Formation
The Formation of Joint stock company is The Formation of cooperative society is
complicated. There are a number of legal comparatively easy. There are less legal
formalities are to be followed. formalities are to be followed.
Rate of Dividend Rate of Dividend

There is normally no restriction on the rate of There is a restriction on the rate of dividend,
dividend. Companies may declare any rate of which works out to be about 9%
dividend depending upon the profits.
Area of Operations Area of Operations.

The area of operations may be even at The Co-operative society conducts its operations
international level. in the local area.

6. Distinguish between Public limited Company and Private Limited Company
6. PUBLIC LIMITED COMPANY PRIVATE LIMITED COMPANY

Minimum number of persons is 7 and maximum Minimum number of persons is 2 and maximum
number of person is unlimited. number of person required is 50.
Statutory meeting Statutory meeting

It Must hold a statutory meeting It need not to hold a statutory meeting
Transfer of shares Transfer of shares

The shares are freely transferable The right to transfer shares is restricted by its
articles.
Prospectus Prospectus
It must file with the registrar prospectus or A Private company need not file a prospectus or
statement in lieu of prospectus before allotment statement in lieu of prospectus
of shares.
Number of Directors Number of Directors

It must have Atleast 3 Directors It must have Atleast 2 Directors
Share Warrant Share Warrant

A public company issue bearer share warrant A Private company cannot issue bearer share
warrant
Preparation of Articles Preparation of Articles

It is not necessary to prepare articles it can adopt It Must Prepare its articles.
Table A.
Commencement Certificate Commencement Certificate

It is necessary to receive commencement It is not necessary to receive commencement
Certificate Certificate

7. Distinguish between Shares and Preference Shares.
7. EQUITY SHARES PREFERENCE SHARES

Meaning
Equity Shares are those shares which enjoy Preference Shares are those shares which enjoy
rewards as well as bear risks of the company. certain Preferences, as to payment of dividend,
They provide permanent capital to the and repayment of capital, over the equity
company. shareholders.
Nature of preference
They do not enjoy preference over preference They enjoy Preference over equity
shareholders in terms of receiving dividend and shareholders in terms of payment of dividend
repayment of capital. and repayment of Capital.
Dividend
They normally get higher dividend. They get The Preference Shareholders get a regular
dividends only after making payment of dividend. They enjoy a Preference for payment
dividend to preference shareholders. of dividend over the equity shareholders.
Voting Rights
The equity shareholders enjoy normal voting They do not enjoy normal voting rights, except
rights. on those matters which affect their interest.
Face value
Normally, equity shares are issued for a face Normally, Preference Shares are issued for a
value of Rs. 10/- face value of Rs. 100/-
Dividend Rate
The dividend rate is not fixed. The rate The rate of dividend is fixed. The rate of
depends upon the profits of the company in dividend differs from one company to that of
each year. another.
Bonus shares
Equity shareholders are eligible for bonus Preference Shareholders are not eligible for
shares, if issued by the company. bonus shares, if issued by the company.

8. Distinguish between Shares and Debentures
8. SHARE HOLDERS DEBENTURE HOLDERS

Meaning
A Companies owned capital which is spilt into A debenture represents a part of the debt
large number of equal parts each such part is capital of the company. The holders of
called as shares. debentures are called as debenture holders.
Status of Holder
The shareholder is the owner of the Company. The Debenture holder is the creditor of the
Company.
Income
The Shareholders get an income on their The debenture holder gets a fixed rate of
investment called dividend. The dividend interest as income. They get the interest even
fluctuates from year to year depending on the when the Company makes losses.
profits and policy of the company.
Voting Rights
The shareholders enjoy normal voting rights at The Debenture holders do not enjoy normal
the company meetings. voting rights, except on those matters which
affect their interest.
Conversion
Shares Cannot be converted into debentures. The Convertible debentures can be converted
into shares.
Repurchase
A Company cannot repurchase its own shares. The company can purchase back its own
debentures
Repayment of Capital
The shareholders are eligible for repayment They get priority over the shareholders in
only after making payment to debenture repayment of principal amount at the time of
holders at the time of winding up of the winding up of the company.
company.

9. Distinguish between Memorandums of association and Articles of Associations
9. MEMORANDUM OF ASSOCIATION ARTICLES OF ASSOCIATION

Meaning Meaning
It is a fundamental document which lays down It is subordinate document which provides rules
the objectives of the company. It regarded as the to achieve the objectives. It is regarded as the
constitution or charter of the company. rules and regulations for internal working of the
company.
Establishment of relationship Establishment of relationship

It defines the relationship between company and It defines the relationship between company & its
outsiders. shareholders/Directors.
Purpose Purpose
The main purpose is to define limits or the scope The main purpose is to provide directions for the
of the company’s activities. internal management of the company
Ease in Alteration Ease in Alteration

It is not so easy to alter memorandum. It is convenient to alter articles.
Obligation Obligation
Every company has to prepare its memorandum A Public company limited by shares need not to
& register it with the register of companies. register its Articles and as such can adopt Table A
in place of its Articles.
Contents Contents
It contains six clauses such as name clause, It contains rules and regarding internal
Domicile clause, objective clause, liability management of the company. Such as rules
clause and association clause. regarding meeting, appointment of directors, issue
of shares etc…
Status Status
The Memorandum is the fundamental document The Articles is subordinate to memorandum
required for the formation of the company. which is required for the formation of the
company.

10. Distinguish between Incorporation certificate and Commencement certificate
10. INCORPORATION CERTIFICATE COMMENCEMENT CERTIFICATE

Meaning Meaning
It is a certificate issued to a Joint Stock Company It is a Certificate issued to a public company by
by the Registrar of Companies, signifying the the registrar, giving a signal to commence the
birth of a company. business.
Effect Effect
On obtaining this certificate, the company gets On Obtaining this certificate, the company starts
legal Status. its business.
Which Companies require it? Which Companies require it?

All Joint Stock companies i.e. Only public limited company with a share capital
Private as well as Public need such a certificate. needs such certificate.
Purpose Purpose
It is a proof or evidence of the fact that the It enables the public company to start its business
company is incorporated and a private company operations, immediately on the receipt of such a
can start its business operations immediately on certificate.
receiving such certificate.
Documents Required Documents Required

To obtain this certificate the following To obtain this certificate the following documents
documents are required : are required :
⇒ Memorandum of Association and Articles ⇒ Declaration of Filing Prospectus.
⇒ List of Directors ⇒ Declaration of receiving minimum
⇒ Declaration of Directors subscription
⇒ Written consent of directors ⇒ Declaration of payment towards qualification
⇒ Statutory declaration regarding incorporation of shares.
⇒ Statutory declaration regarding
commencement
Order Order
This certificate must be obtained first. This Certificate is obtained only after
Incorporation Certificate.
Implication for not obtaining Implication for not obtaining

All companies need to obtain it. In case any The Public Company with a share capital must
company operates without it, then it will be obtain it; otherwise, it will not be allowed to
termed as illegal association and company can be commence business.
wound up under the act.

11 Distinguish between Private Sector Organisation and Public sector organisation.
11. PRIVATE SECTOR ORGANISATION PUBLIC SECTOR ORGANISATION

Meaning Meaning
A private sector organisation is owned and A Public sector organisation is normally owned
managed by private individuals or firms. by government and managed by officials
appointed by Government.
Constituents Constituents
It includes sole trading concerns, partnership A Public sector organisation includes
firms, co-operative organisations, and joint stock departmental undertakings, statutory
companies. corporations, and Government Companies.
Examples Examples
Companies Like Godrej Limited, Hindustan Organisations like LIC, Indian Oil Corporation,
Lever Limited, Tata motors, are examples of Department of Railways are examples of public
Private Sector. sector organisations.
Main Motive Main Motive

The main motive of private sector organisations The Main Motive of public sector organisation is
is to earn profit to serve public interest.
Management Management
The management of private sector organisations The Management of a public sector organisation
remains with the owners or their appointed or is in the hands of Government officials or Board
elected representatives. of Directors.
Business Areas Business Areas

The private sector organisations operate in The Public sector operates in defence, public
industrial and commercial areas. utilities like railways, and also industrial and
commercial undertakings.
Decision-Making Decision-Making
In Private sector, the decision-making is quick, In Public sector, the decision-making is delayed
especially in the case of sole trader, and due to bureaucratic hurdles. Also departmental
partnership firms. lack autonomy in Decision-Making.

12. Distinguish between State Commission and National Commission.
12. STATE COMMISSION NATIONAL COMMISSION

Area Jurisdiction Area Jurisdiction
It has jurisdiction over a particular State. It has jurisdiction over the entire nation
Amount of Compensation Amount of Compensation

The distinct forum can decide complaints where The National Commission has the powers to deal
the value of goods and services and the with complaints where the value of goods and
compensation, if any, claimed exceeds Rs 20 services and compensation, if any, claimed
lakhs but does not exceed Rs 1Crore. exceeds Rs 1Crore.
The State Commission shall consists of: The National Commission Consists of:
Headed by a person who is or was a judge of Headed by a person who is or was a judge of
High Court. Supreme Court.
The two other members, one of whom shall The Four other members, one of whom shall
be a woman. be a woman.
Appeals Appeals
Any Person not satisfied with State Commission Any Person not satisfied with National
Order may appeal to National Commission Commission Order may appeal to Supreme Court
within 30 days of the order. within 30 days of the order.
Administrative Control Administrative Control

The State Commission has administrative The National Commission has administrative
control over all the District Forums in the State. control over all the State Commission in the
Country.
Enforcement Enforcement
Every order made by the state Commission is Every order made by the National Commission is
enforced by the State Commission Itself. enforced by the National Commission Itself.

13. Distinguish between Departmental undertaking and statutory corporations
13. DEPARTMENTAL UNDERTAKINGS STATUTORY CORPORATIONS

Establishment Establishment
A departmental undertaking is established by a A Statutory corporation is established by a
Government Ministry. Special Act of the Parliament or State
Legislature.
Legal Status Legal Status

A departmental undertaking has no separate A Statutory corporation has separate entity
distinct from the Government. distinct from the Government.
Capital Capital
The funds required by a departmental The Capital is contributed by the Government at
undertaking come from annual budget the time of establishment. Additional capital, if
appropriations of the Government. required may be further contributed by the
government
Borrowing Power Borrowing Power

A departmental undertaking cannot borrow A Statutory corporation can borrow funds from
money from the public the public by way of bonds.
A departmental undertaking is managed by A Statutory corporation is managed by board of
Government officials of the concerned ministry. directors nominated by the government.
Control Control
A departmental undertaking is controlled by the A Statutory corporation is controlled by the
concerned Ministry. parliament or State Legislature
Autonomy Autonomy
A departmental undertaking does not have A Statutory corporation enjoys autonomy in
autonomy in decision making decision-making to a certain extent
Staff Staff
The Staff of departmental undertaking is The staffs of Statutory corporation are recruited
Government servants and the term of their independently by the corporation and their service
service is governed by Civil Service Rules. is governed by the Contract of Service Rules.

14. DEPARTMENTAL UNDERTAKINGS V/S GOVERNMENT COMPANIES
14. DEPARTMENTAL UNDERTAKINGS GOVERNMENT COMPANIES

A Departmental Undertakings is established by a A Government Companies comes into existence
Government Ministry. on account of incorporation under Indian
Companies Act.

A Departmental Undertaking has no separate A Government Company has separate entity
entity distinct from the Government. distinct from the Government.
Capital Capital
The funds required by a Departmental The Capital of a Government Company is
Undertaking come from annual budget Contributed by the Central/State Governments,
appropriations of the Government. and partly by general public and financial
institutions.

A Departmental Undertaking cannot borrow A Government Company can borrow Funds by
money from the public. way of debt from the public.
A Departmental Undertaking is managed by A Government Company is managed by Board of
Government officials of the concerned ministry. Directors appointed by Government and
Shareholders.
Control Control
A Departmental Undertaking is controlled by the A Government Company is controlled by the
concerned ministry. Government and Shareholders.
Staff Staff
The Staff of A Departmental Undertaking is The Staff of A Government Company is recruited
government servants and the term of their service independently by the company and their service
is governed by Civil Service Rules. is governed by the contract of Service Rules.
Autonomy Autonomy
A Departmental Undertaking does not have A Government Company enjoys autonomy in
autonomy in decision making. decision-making to a considerable extent.

15. STATUTORY CORPORATIONS V/S GOVERNMENT COMPANIES
15. STATUTORY CORPORATIONS GOVERNMENT COMPANIES

A Statutory corporation is established by a A Government Companies comes into existence
Special Act of the Parliament or State Legislature. on account of incorporation under Indian
Companies Act.

A Statutory corporation has separate entity A Government Company has separate entity
distinct from the Government. distinct from the Government.
Capital Capital
The Capital is contributed by the Government at The Capital of a Government Company is
the time of establishment. Additional capital, if Contributed by the Central/State Governments,
required may be further contributed by the and partly by general public and financial
government institutions.

A Statutory corporation can borrow funds from A Government Company can borrow Funds by
the public by way of bonds. way of debt from the public.
A Statutory corporation is managed by board of A Government Company is managed by Board of
directors nominated by the government. Directors appointed by Government and
Shareholders.
Control Control
A Statutory corporation is controlled by the A Government Company is controlled by the
parliament or State Legislature Government and Shareholders.
Staff Staff
The staffs of Statutory corporation are recruited The Staff of A Government Company is recruited
independently by the corporation and their service independently by the company and their service is
is governed by the Contract of Service Rules. governed by the contract of Service Rules.
Autonomy Autonomy
A Statutory corporation enjoys autonomy in A Government Company enjoys autonomy in
decision-making to a certain extent decision-making to a considerable extent.

16. TOP LEVEL MANAGEMENT V/S MIDDLE LEVEL MANAGEMENT
TOP LEVEL MANAGEMENT MIDDLE LEVEL MANAGEMENT

1. Composition
This level comprises of board of directors, This level comprises of functional managers,
chief executive officer, chairman, managing Departmental Heads and other executive officers.
director and general manager.
2. Number of persons
It involves very few persons It embodied moderate number of persons
3. Nature
The nature of work of this level is The nature of work of this level is more executory
determinative. It is more administrative than and managerial than administrative.
managerial.
4. Policy formulation
This level is concerned with the formulation This level is moderately concerned with policy
of policies to a great extent. formulation.
5. Skills
It requires creative skills. It requires persuasive skills.
6. Evaluation
It is difficult to evaluate its achievement. It is less difficult to evaluate its achievement.
7. Time range’
It covers long span of period It covers intermediate range

17. TOP LEVEL MANAGEMENT V/S LOWER LEVEL MANAGEMENT

OR SUPERVISORY
TOP LEVEL MANAGEMENT LOWER LEVEL MANAGEMENT

18. TAYLOR’S CONTRIBUTION TO MANAGEMENT V/S FAYOL’S CONTRIBUTION TO

MANAGEMENT
TAYLOR’S CONTRIBUTION TO FFAYOL’S CONTRIBUTION TO

MANAGEMENT MANAGEMENT
CONCERN
Taylor’s technique and principles are concerned Fayol’s principles are concerned with
with worker’ management efficiency.
LEVEL
Taylor started his studies and approach from Fayol started his studies and approach from the
lowest level in the organisation. highest level in the organisation.
EMPHASIS
Taylor laid great emphasis on standardisation of Fayol laid great emphasis functions of managers.
work
FOCUS
Taylor laid focus on eliminating wasteful Fayol laid focus on development of principles for
movements and saving energy of workers better management
MAIN CONTRIBUTION
Taylor’s main contribution was development of Fayol’s main contribution was development of
scientific techniques and scientific principles. fourteen principles of general management.
PERSONALITY
Taylor developed a personality of scientist and Fayol developed the personality of a researcher
became famous as father of scientific and practitioner. He became famous as father of
management. general management.

19. ADMINISTRATION V/S MANAGEMENT
ADMINISTRATION MANAGEMENT
Meaning Meaning
Administration means the formulation of plans, Management is concerned with getting the work
policies and objectives of an organisation. done from others in the most effective and
efficient manner.
Nature of Function Nature of Function

It is a thinking and decision making function. It is an executive function implementing the
decisions.
Decision-making Decision-making
It decides what is to be done and when it is to be It decides who should do it and how it should be
done done.
Levels in the organisation Levels in the organisation

Administration is more relevant at top level of an Management is more relevant at middle and lower
organisation levels of an organisation.
Types of authority Types of authority

Administration has strategic authority to take Management has operational authority to
strategic and policy decisions. executive administrative decisions.
Usage Usage
The term administration is more widely used in The term management is more widely used in
non-business organisations such as government, business organisations in the private sector.
military, public sector organisations
Stage of performance Stage of performance

Administration comes first as plans, policies are Management follows administration as execution
framed first. Of the planes and policies comes later.

20. HUMAN RELATION APPROACH TO MANAGEMENT V/S BEHAVIOURAL

APPROACH TO MANAGEMENT
HUMAN RELATION APPROACH TO BEHAVIOURAL APPROACH TO

MANAGEMENT MANAGEMENT

OUR ACHIEVERS.
S.Y.J.C
NAME OF THE STUDENTS PERCNETAGE
ANANDA KRISHNAN (SIWS) = 75.17%
DIVYA (SIWS) = 75.17%
MURUGESH (GURU NANAK) = 75.00%
KAVITHA (SIES) = 74.50%
SUNDARI (SIWS) = 73.00%
SHANTHI (SIWS) = 73.00%
PUSHPA (SNDT) = 72.17%
AGILA (AMBEDKAR) = 72.00%
SARASHWATI (SIWS) = 70.00%
PADMA (SIWS) = 70.00%
SUNIL (SIWS) = 69.17%
DAISON (SIWS) = 69.00%
SELVI (SIWS) = 68.67%
INDIRA (SIWS) = 68.33%
KANI (SIWS) = 66.67%
SUBRAMANI (SIWS) = 66.67%
DHANA LAKSHMI (SNDT) = 65.00%
PRISKILLA (W.R.COLLEGE) = 64.83%
RADHA KRISHNAN (SIWS) = 63.00%
ANISHA (SIWS) = 62.33%
NIRMALA (AMBEDKAR) = 60.83%
YESODHARAN (ARYAN) = 60.00%
FIRST THREE TOPPERS IN S.S.C PERCENTAGE
K.SUBITHA =77.23%
R.ELAVARASI =75.23%
A. NARMATHA =72.00%


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OMTEX CLASSES ORGANISATION OF COMMERCE AND MANAGEMENT

STANDARD: - S.Y.J.C (Second year junior college)

1 “Achieve success through OMTEX CLASSES The home of text”

2 “Achieve success through OMTEX CLASSES The home of text”

1. FEATURES OF SOLE TRADING CONCERN?

THE ABOVE IMPORTANT FEATURES ARE EXPLAINED BRIEFLY DETAIL IN UNDER

2. FEATURES OF JOINT HINDU FAMILY BUSINESS?

Following is the features of Joint Hindu Family business

The above Import features are briefly explained as under.

4 “Achieve success through OMTEX CLASSES The home of text”

3. FEATURES OF PARTNERSHIP FIRM?

Following is the features of Partnership firm

The above Import features are briefly explained as under

2. Agreement: - Partnership is an outcome of an agreement between two or more persons to

5 “Achieve success through OMTEX CLASSES The home of text”

4. FEATURES OF JOINT STOCK COMPANY?

Meaning: -A Joint stock is an incorporated association, which is an artificial person, having

Definition: - PROF. (H.L.Haney) “A joint stock company is a voluntary association of individual

The above important features are explained briefly as under:

1. Artificial Person: - A company is an artificial person created by a law, it has non-physical

7. Voluntary Association: - A company is a voluntary association of persons. Any person competent

5. FEATURES OF CO-OPERATIVE SOCIETY?

Following is the features of co-operatives:

4. Voluntary associations: co-operative society is a voluntary association of people who come

7 “Achieve success through OMTEX CLASSES The home of text”

1. Management is a process: - Management is a process undertaken by managers to attain objectives.

5. An art as well as a Science: -There is a considerable debate as to whether management is an art or

6. Follows established Principles: - Management follow well established principles in managing

8 “Achieve success through OMTEX CLASSES The home of text”

7 FEATURES OF DEPARTMENTAL ORGANISATION

Introduction: - It is considered as a suitable form of organisation of public Enterprises. The

Following are the some of the important features/characteristics of Departmental Organisation.

1. Administration by the Government/ controlled by the ministry: - The Enterprises is run as a

6. Establishment: - A departmental undertaking is established by a particular ministry. For

9 “Achieve success through OMTEX CLASSES The home of text”

8. NATURE/CHARACTERISTICS/FEATURES OF STATUTORY CORPORATIONS

Meaning: - A Statutory corporation is also called as public corporation. A Statutory corporation is

The main features of Statutory Corporation are explained briefly as under.

1. Establishment: -A public corporation is established under a special act of parliament or state

4. Decision-Making: -There is quick decision making as compared to departmental form, as it

5. Administration: -The Administration is undertaken by Board of Directors nominated by the

6. Answerability: -It is answerable to the Parliament as regards to its activities.

10 “Achieve success through OMTEX CLASSES The home of text”

9. FEATURES OF MULTINATIONAL COMPANIES/CORPORATIONS (MNC)

Following are the some of the important features/characteristics of MNCs:

6. Manufacture and Marketing Activities: - MNCs undertake both Manufacturing and

11 “Achieve success through OMTEX CLASSES The home of text”

10. NATURE/CHARACTERISTICS/FEATURES OF GOVERNMENT COMPANY

The Main features are as follows:

3. Management: - It is managed by a Board of Directors, most of whom are appointed by the

7. Capital contribution: - Its Capital is contributed by Central/State Governments and public.

12 “Achieve success through OMTEX CLASSES The home of text”

11. NATURE/CHARACTERISTICS/FEATURE OF EVENT MANAGEMENT

The Following are the characteristic of Event Management:

13 “Achieve success through OMTEX CLASSES The home of text”

12. NATURE/CHARACTERISTICS/FEATURE OF PROFESSIONAL MANAGEMENT

Meaning: - Professional management refers to the professional approach in managing the

Following are the important characteristics of professional management:

3. Delegation of authority: - The senior managers delegate authority to the subordinate

7. Decentralisation: - professional management believes in balance between centralisation and

14 “Achieve success through OMTEX CLASSES The home of text”

13. NATURE/CHARACTERISTICS/FEATURE OF DISASTER MANAGEMENT

The following are some of the important features of disaster management:

1. Disaster Management Teams: - World wide, governments, business and non-business