Maharashtra HSC Board : Organization Of Commerce And Management (51): (Sample Q.P. with Solution)

Maharashtra HSC Board : 

Organization Of Commerce And Management (51): 

(Sample Q.P. with Solution)

Q.1. (A) Correct the underlined word and rewrite the sentence:

(1) The loan taken under stand-up India scheme is repayable in ten years. (Ch. 3)

Ans: The loan taken under stand-up India scheme is repayable in Seven years.

(2) Services are tangible in nature. (Ch. 4)

Ans: Services are Intangible in nature.

(3) E-business is hard to start. (Ch. 5)

Ans: E-business is Easy to start.

(4) MRP should not be printed on every packet (Ch. 6)

Ans: MRP should be printed on every packet

(5) Pricing bridges the time gap between production and sale-of-goods. (Ch.8)

Ans: Warehousing bridges the time gap between production and sale-of-goods.

Q.1 (B) Find the odd one:

(1) People, Promotion, Physical evidence, Process (Ch.8)

Ans: Promotion

(2) Job security, Safety measures, Good working conditions, Reasonable profit. (Ch. 6)

Ans: Reasonable profit

(3) Debit card. Credit card, Aadhar card. ATM card. (Ch.5)

Ans: Aadhar card

(4) Endowment policy, Whole life policy, Money back policy, Blanket policy. (Ch.4)

Ans: Blanket policy

(5) Selecting, Training. Co-ordinating, Placing. (Ch.2)

Ans: Co-ordinating

Q.1 (C) Give one word /phrase/term:

(1) The principle which deals with to do work with innovative way. (Ch. 1)

Ans: Principle of Initiative

(2) Last function of management. (Ch. 2)

Ans: Controlling

(3) Sub segment of BPO. (Ch. 5)

Ans: KPO

(4) Getting good quality products is the basic right of this group of society. (Ch.6) 

Ans: Consumers

(5) Organizations which aim at promoting the welfare of the people. (Ch.7)

Ans: Non-Government Organization 

Q.1 ( D) Select the correct options:

(Agro Tounsm, Niche Tourism, apex financial institution, Principal institution for MSMES, NABARD)

(Max. Marks: 10 (5)(2

Group A

Group B

(1)

SIDBI (Ch. 4)

(2) Agro Tourism is a form of (Ch. 3)

(3)

The idea of bringing Urban resident to agriculture farm. (Ch. 3)

(4) Central Bank (Ch. 4)

(5) Institution related to Agriculture (Ch.4)

Q.2 Explain the following terms/concepts (Any FOUR)

(1) Staffing (Ch.2)

Ans: Staffing is the process of attracting, recruiting, selecting, placing, appraising, remunerating, developing and retaining the best workforce. Overall growth and success of every venture is based on appropriateness of staffing function. It is very challenging for organization to focus on best utilization of workforce by using their talents and skills, retaining them and arranging training and development programmes. 

The function emphasizes managing human and not material or financial resources. The need of staffing arises since the initial period of organization. Due to promotion, transfer, business expansion, retirement, resignation, accidents, death of employee etc. vacancies are created in organization. In this context, staffing function plays very important role in organization. Right person at right job with right pay is the basic principle of staffing.

(3) B2C (Ch.5)

Ans: Customer identifies a need, and searches for the product or services to satisfy the need. Cus tomers select a vendor and negotiates a price. Customers receives the product or services, makes payment, gets service and warranty claims. As the name implies, B2 C transactions have business firms at one end and its customers on the other end. The transactions under B2C are between business firms and consumer. 

Firms use their sites for a range of marketing activities. These include promotion, product information, reviews about the product/ service and delivery of the product at the doorstep. The cost of products and services is kept low through this method and the speed of transaction is also faster. Examples of web sites: www.flipkart.com etc.

(2) State commission (Ch. 7)

Ans: 

A consumer dispute redressal commission at the state level established by the State Government is known as State Commission. It is also called as State Consumer Disputes Redressal Commission.

A person who is sitting or retired or Judge of High Court, shall, be appointed by the State Government as the President of State Commission.

Not less than four or not more than such number of members as may be prescribed in consultation with the Central Government.

 The members can have the membership for a term of five years or up to the age sixty seven, whichever is earlier.

(4) Product (Ch.8)

Ans: 

 Product refers to the goods or services that are offered to the customers for sale and are capable of satisfying the need of the customer. The product can be intangible or tangible, as it can be in the form of services or goods. The business need to decide the right type of product through extensive market research. Success of the business depends on the impact of the product in the minds of the customer.

(5) Entrepreneur (Ch.3)

Ans: 

The word "entrepreneur" comes from the French verb 'entreprendre', it means "to undertake" 

An entrepreneur is a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so."

An entrepreneur is "a person who starts a business and is willing to risk loss in order to make money".

 The common keywords 'businesses' and 'risk' are interrelated. If there is no real business or risk, a person cannot be called as an entrepreneur

(6) Consumer (Ch.7)

Ans: 

 The word 'Consumer' is derived from the Latin word 'Consumere' which means, to eat or to drink. The consumer is the one who consumes or uses any commodity or service available from natural resources or through a market. 

 A Consumer means any person who buys any goods, hires any service or services for a consideration which has been paid or promised or partly paid or partly promised or under any system of deferred payments. 

We are all consumers when we use any commodity like foodgrains, milk etc. or service like bank, railway, post office, hospital etc.

Q.3 Study the following case/situation and express your opinion (Any TWO)

(1) Ms. Saba has started new business two years ago. Her customers are located in different parts of the country and hence they are directly depositing bill amount in her business account. At the same time she used to pay various payments from this account only.

(a) Identify type of account maintained by Ms. Saba.

(b) Suggest any modern way of money transfer to Ms. Saba

(c) What kind of facilities does she get on her bank account? (Ch. 4)

Ans: 

(2) Mr. Alex made his payment by cheque at the same time Mr. Deep made his payment by fund transfer.

(a) Whose payment is faster?

(b) Whose payment is related to traditional business?

(c) Whose payment is related to E-business? (Ch. 5)

Ans: 

(3) Mr. Jagan is a salaried person. He wants to take a policy for his two children which assures them protection as well as completes their financial needs once they become major by age.

In the above case

(a) Suggest him a policy which can satisfy requirements of his children.

(b) Who are the beneficiaries of policy?

(c) In above case which principle is involved? (Ch. 4)

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

(1) Savings Account and Current Account. (Ch. 4)

Ans: 

(2) District commission and National commission. (Ch. 7) 

Ans:

Organizing and Directing. (Ch. 2)

Ans: 

(3) (4) E-Commerce and E-Business. (Ch.5)

Ans: 

Q.5 Answer in brief (Any TWO)        [08]

(1) State any four rights of consumer. (Ch.7)

Ans: 

1) Right to Safety: This right protects consumers against products, production processes and services which are hazardous to health or life. It includes concern for consumer's long-term interests as well as their immediate requirements. According to this right, consumer must get full safety and protection to his life and health. This safety should be in relation to medicines, electrical appliances, food etc. The GOI has given safety standards in the form of AGMARK, lSI, BIS, Hallmark etc. 

2) Right to Information: According to this right, consumer should be provided with adequate information about all aspects of goods and services like price, name of manufacturer, contents used, batch number if any, date of manufacture and expiry date, user manual and safety in struction etc. This right also enables consumer to select right product or service. It is applicable to food products, medicines, spare parts or any other consumer products or services. 

3) Right to Choose: The choices available to Indian consumers across the basket of goods and services have multiplied like telecommunications, travel and tourism, banking, electronics, fast moving consumer goods(FMCG) etc. According to this right, consumer should be given full freedom to select an article as per his requirement, liking and purchasing capacity. The right to choose is related to the concept of free market economy. As per this right, the seller cannot compel consumer to buy particular product and hence monopoly is prevented. 

4) Right to be heard: Every business organization should listen and solve the complaints of consumers. According to this right, consumers have opportunity to voice their complaint to the consumer forum. Consumers also give suggestions to manufacturer or trader on certain matters such as quality, quantity, price, packaging etc. Now a days, consumers can file online complaints through portal or mobile applications. 

5) Right to Consumer Education: Every consumer has the right to know about consumer rights and solutions to their problems. This right creates consumer awareness. An aware consumer can make rational choice of goods and services and protect his rights and interests from the exploitation of unscrupulous businessmen. Thus, consumer education becomes a priority concern. It is necessary to give education and training regarding prevailing acts and legal process es. The government, media and NGOs play vital roles in this regard. E.g. 'Jago Grahak Jago' campaign. 

6) Right to Represent: The act provides an opportunity to individuals and consumer groups to represent consumer’s interest before consumer forum. The act allows the consumer to be rep resented by a person who is not a professional advocate. This provision is in recognition of consumer's right to represent. 

7) Right to Redress: Along with the right to represent, right of redressal is also given. Only filing of complaint is not enough to give justice to consumers, so this right implies fair settlement of claims. This right enables the consumer to demand repair or replacement or compensation for defective products and for poor services. According to consumer protection Act, three tier quasi judicial consumer dispute redressal machinery is established for settlement of claims such as District Commission at District level, State Commission at state level and National Commission at national level. Consumers are protected from business malpractices. 

8) Right to Healthy Environment: All consumers have a right to healthy and clean environment. According to this right, consumer can demand actions against the pollution causing business organisations. All consumers have the right to healthy and clean environment in present and future.

9) Right to Protect from unfair business practices: As per this right all consumers are protect ed against unfair business practices such as black marketing, profiteering, faulty weights and measures, exorbitant prices, adulteration etc. 10) Right against spurious goods: This right is against the marketing of goods which are hazard ous to health, spurious and pose a danger to life itself.

(2) State four social responsibility of business towards government. (Ch.8)

Ans: 

The government regulates and controls the business with the objectives of systematic economic development of the country and safeguarding the interests of the common man. Government provides incentives and subsidies to business. Following are the responsibilities of organization towards government. 

1) Timely Payment of Taxes: The government imposes various types of taxes like sales tax, income tax, wealth tax etc. Business units should pay these taxes from time to time. It would be difficult for the government to undertake development projects without availability of funds. 

2) Observing rules and regulations: The rules framed by the government for business should be fully complied with. The business should follow the laws regarding obtaining license for a specified business, the operation of the business, price determination and production etc. They should conduct business in lawful manner. 

3) Earning Foreign Exchange: The government also expects from business organization that it will earn foreign exchange by exporting goods. The government requires this foreign exchange for importing various goods. valuable and important products. 

4) Economic Development: The government sets the targets for balanced and rapid economic development of the country. The business organization should provide necessary cooperation to the government. 

5) Implementing Socio Economic Policies: The government expects cooperation and help from the business sector in implementing so cio-economic programmes and policies. 

6) Suggestions to the Government: The business organisation can provide suggestions to the government before framing important policies such as Industrial Policy, Import Export Policy, Licensing Policy etc. Such sug gestions are helpful for framing organisation-friendly policies. 

7) No favours: The commercial organization should not take any favour from the government officials by bribing or influencing them. 

8) Contributing to Government Treasury: The Commercial organization must contribute the funds to government during the emergencies and natural calamities like floods, earthquakes etc.

(3) What is BPO? Explain in detail. (Ch. 5)

Ans: 

BPO is basically the outsourcing of work to some third party service provider in order to save money while KPO is a subset of BPO only. KPO includes more knowledge based and specialised  work. In addition to this there are many reasons that a company may choose KPO services over BPO.

Business process outsourcing or BPO, is a business practice in which one organization hires another company to perform a task ( process) that the hiring organization requires to operate its own business successfully.

Meaning - 

BPO is a subset of outsourcing that involves the contracting of the operations and responsibilities of specific business process to a third party service provider. BPO refers to the outsourcing of peripheral activities of the orgnisation to an external organization to minimize cost and increase efficiency.

BPO refers to the outsourcing of peripheral activities of the organisation to an external organisation to minimize cost and to increase efficiency. For example, customer care centres for various banks, service providers etc.

Advantages and Disadantages of BPO:

Advantages of BPO :

1) Productivity improvement :

Educated or skilled people perform the task efficiently and thus improve productivity.

2) Optimum utilization :

BPO enables optimum utilization of scarce resources.

3) Reducation in cost :

Cost saving can be significant to any business. BPO not only helps to reducing cost but also increase productivity and increase revenues.

4) Improved human resources :

Improved human resources is another great advantage of BPO. Outsourcing gives a company the ability to get access to skilled and trained man power at low rates.

Disadvantages of BPO :

1) Communication problem :

There can be communication gap between the client and vendor companies due to misunderstanding and miscommunication.

2) Different time zones :

The client and the vendor operate in two different time zones. The difference in time can create many problems during online meeting, communication etc.

3) Loss of control :

Due to communication errors, time differences, client company can at times lose control of the project

Q.6 Justify the following statements (Any TWO)        [08]

(1) Successful businessman takes calculated risk. (Ch.3)

Ans: 

A successful businessman should be calculative in taking a risk. He should be prepared to face challenges and look for opportunities in every adverse situation of the business. He should be self-confident to achieve his organizational goals. He should always keep himself confident and motivated to face various obstacles and come out victorious every time in every challenge he faces. A businessman has to undertake many risks including fall in prices, changes in fashion, earthquake, etc. All these risks cannot be insured with insurance companies. A risk that cannot be insured against and measured is called uncertainty. A businessman buys factors of production at certain prices to combine their contributions into the products and then sell those products at uncertain prices in the future. Thus, a Successful businessman takes a calculated risk.

(2) Warehousing is important. (Ch. 4)

Ans: 

Warehousing can be defined as a group of activities connected with the storing and preserving of stored goods from the time of production till the time of consumption

Warehousing refers to storage of goods and consists of all those activities which are connected with storage and preserving of goods. 

(3) Online transaction is done with the help of the Internet. (Ch.5)

Ans: 

Online transaction is done with the help of the internet. It can't take place without a proper internet connection. Online transactions occur when a process of buying and selling takes place through the internet. When a consumer purchases a product or a service online, he/she pays for it through online transaction.

Registration is the first step in online transaction. For online transaction registration is required. The consumer needs to login a particular website to buy a particular article or service. The customers email ID, name, address, other details are saved and are safe with the website. For security reasons, the buyer's 'Account' and his 'Shopping Cart' is an online record of what you have picked up while browsing the online store.

 When a customer likes a product or service he/she puts the product in the shopping cart. The shopping cart gives a record of all the items selected by the buyer to be purchased ,the number of units or quantity desired to be bought per item selected and the price for each item. The buyer then proceeds to the payment option after selecting all the products

(4) Business organizations should avoid environmental pollution and ecological balance. (Ch. 6)

Ans: 

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

(1) Explain advantage of outsourcing. (Ch. 5)

Ans: 

Outsourcing is the process of contracting a business function or any specific business activity to specialized agencies mostly the non-core areas such as sanitation, security, household pantry etc. are outsourced by the company. The company makes a formal agreement with the agency. 

The agency can send the required manpower to the company. The agency charges the company for their services. With the help of outsourcing, company can focus on their core areas.

Meaning / Concept :

Outsourcing is the process of contracting some business functions to specialised agencies. The company benefits in two ways.

1. It reduces its own cost

2. It uses the expertise of the firm which specialises in a particular kind of service Advantages of Outsourcing :

1)  Overall cost advantages- It reduces the cost and also saves time and efforts on training cost.

2) Stimulates entrepreneurship, employment and exports- Outsourcing stimulates entrepreneurship, employment and exports in the country.

3)  Low manpower Cost- The manpower cost is much lower than that of the host company.

4) Access to professional, expert and high Quality services- Mostly the tasks are given to people who are skilled in that particular field. This provides us with a better level of service and fewer chances of errors.

5) Emphasis on core process rather than the supporting ones- With its help companies can focus on their core areas which lead to better profits and increase the quality of their products.

6) Investment requirements are reduced - The organization can save on investing in the latest technology, software and infrastructure and let the outsourcing partner handle the entire infrastructure

7) Increased efficiency and productivity - There is an increased efficiency end productivity in the non core areas of an organization.

8) Knowledge sharing - Outsourcing enables the organization to share knowledge and best practices with each other, it helps develop both the companies and also boosts goodwill in the industry

(2) What is staffing? Explain the importance of staffing. (Ch. 2)

Ans: 

Meaning:

Staffing is the process of attracting, recruiting, selecting, placing, appraising, remunerating, developing and retaining the best workforce. Overall growth and success of every venture is based on appropriateness of staffing function. It is very challenging for organization to focus on best utilization of workforce by using their talents and skills, retaining them and arranging training and development programmes. The function emphasizes managing human and not material or financial resources.

Importance of Staffing:

1) Effective Managerial Function:

Staffing is the key to effective performance of other functions of management such as planning, organizing, directing and controlling. Competent workforce can work effectively in different functional areas like production, sales, finance etc. The outcome of other functions is based on the effectiveness of staffing.

2) Leads to Effective Utilization of Human Resources:

Staffing function leads to effective utilization of human resources i.e. workforce. Proper care is taken at every stage such as recruitment, selection, placement, remuneration, training, development etc. Excessive burden of work is avoided. Optimum utilization of human resources results in improvement in performances and progress of organization.

3) Builds Cordial Relationship:

This function is helpful in building healthy relationships among all levels of employees in the organization. A smooth human relation is the key to better communication and coordination of managerial efforts in an organization.

4) Helps Human Resource Development:

Skilled and experienced employee is an asset of a business organization. Staffing helps to inculcate the organizational culture into employees. It trains and develops the existing workforce. It also ensures smooth functioning of all the managerial aspects of the business organization.

5) Helps in Effective use of Technology and Other Resources:

Trained employees can use the latest technology, capital, material and methods of work effectively. It helps in building competitive strength of the organization. It is also helpful in improving standard of work and productivity in terms of quality and quantity 

6) Improves Efficiency:

Training and development programmes are offered to the employees for self-development and organizational development. Through proper selection, the organization gets quality employees and through proper training the performance level of the employees can be improved.

7) Long Term Effect:

Qualified, efficient and skillful workforce is always an asset of the organization. Proper selection of employees leads the organization towards the path of success. Naturally, long term positive effects can be observed on the efficiency of an organization.

8) Essential Contribution:

Staffing ensures the continuity and growth of the organization through development of employees. Selection is based on the ability of the prospective employees. So that organization can meet the future challenges wisely. Therefore, the contribution of the staff in their future roles is taken into account in staffing function.

9) Provides Job Satisfaction:

Employees can be motivated through financial and non-financial incentives. Adequate remuneration increases job satisfaction and morale of the employees. Training and development programmes, fair remuneration and job security are the factors which are important in providing job satisfaction.

10) Maintains Harmony:

In staffing process, individuals are recruited, selected and placed as well as their performance is regularly appraised and promotions are given on the basis of merit. For this, criteria is made and duly communicated to concerned employees. It brings peace and harmony in organization 

(3) Explain various functions of marketing. (Ch.8)

Ans: 

Success of business is difficult without effective marketing. Marketing deals with exchange of goods and services to satisfy needs of consumers. Marketing functions help to study the needs of the consumers and facilitate to satisfy it. Following are some of the important functions of marketing :

1) Marketing Research

Effective marketing is possible when business takes initiative to identify the needs and wants of the consumers in the market. To identify the needs of the consumers, there is a need to collect information from the consumers and analyse the same is known as Market Research.

Analysis of the information helps in the assessment of the need in the market. It helps to find out what do consumers want to buy, when do consumers buy, in what quantity they want to buy and at what price. Marketing Research helps to take various decisions regarding successful marketing of products.

2) Buying and Assembling:

It involves collecting raw material from different sources at one place for production. This function is important as quality and price of raw material determine cost and quality of the final product.

3) Market Planning:

After assessing the need of the marketing, business needs to chalk out the marketing plan and strategies to achieve the desired objective. Market planning is the process of organizing and defining the marketing objectives of the business and creating strategies to achieve them. It is the comprehensive blueprint that will help to draw outline of business's overall marketing efforts.

4) Product Development

Product development and design play an important role in the selling of the product. There is a need to develop the product that suits the needs of the consumer. Product design includes decision related to quality, standards, shape, design, packing, colour etc. of the product. Consumer always prefer better and attractively designed product. Good design of the product gives competitive advantage to the business. Product development is continuous process as the requirements of the customer change from time to time.

5) Standardisation and Grading:

Standardisation means to determine standards related to process, size, quality, design, weight, colour etc. of the product. It helps in ensuring uniformity in the quality of the product. It helps in achieving customers' loyalty towards the product.

Grading is the process of classification of products according to similar characteristics and/or quality. Grading is done on the basis of their features like size, shape quality etc. Generally grading is done in case of agricultural products like wheat, rice, potatoes etc.

6) Packaging and Labelling:

Package and Label creates the first impression on the consumer about the product. Attractive package and label can help to make product successful. Packaging means designing the package for the product. It helps to avoiding breakage, damage and destruction of the product.

Packing material includes bottles, container, plastic bags, tin, wooden boxes, jute bags, bubble bags, packing foam etc. 

Label is a slip which is found on the product and provides all the information regarding the product and its producer. The slip on which all this information is provided is called as label and its process is called as labeling. Packaging and labelling not only provide protection to the product but also act as an effective tool of marketing. 

7) Branding :

Every businessman wants to have special identity in the market for his product. Branding is a process of giving special identity to a product through unique brand name to differentiate it from competitor's products. In simple words giving of distinct name to one's product is called as branding.

Registered brands are known as Trademarks.

Trademarks can not be copied. Branding helps to get recognition among the consumers. It can help to get new business and increase brand awareness in the market.

8) Customer Support Service:

Customer is the king of the market hence business needs to take necessary steps for the satisfaction of the customer. Business needs to take every possible effort to provide support services to the customer. Timely support services help to gain customer's loyalty.

The business can provide the support services like Pre-sales service, consumer helpline, after sales service, technical assistance, product demo etc. to the customers. These services help in getting, retaining and growing the customers.

9) Pricing of Product:

Pricing is one of the most important as well as challenging function of the marketing. Many times price of the product decides the success or failure of the product. Pricing plays an important role in the market where there is cut throat competition. While determining the price of the product businessman needs to consider factors like cost, desired profit, price of the competitor's product, demand for the product, market condition etc. Business needs to change prices as per the need of the market. If prices are too high, it might lose customers but if prices are too low, it might suffer losses. So deciding the right price needs extensive market research

10) Promotional Channels

Promotion is the process of informing the consumers about the products, their features, uses, prices etc and encouraging them to buy these products. Advertising, Personal selling, Publicity and Sales Promotion are some of the important tools of promotion. Business uses combination of all or some of these four methods for promotion as per the need of the business. Promotional activities help to increase brand awareness in the market.

11) Distribution:

Distribution is the set of activities which is concerned with efficient movement of finished goods from the place of production to the consumer. It includes transportation, warehousing, material handling, inventory control, order processing, market forecasting, packaging, plant and warehouse location and customer service. Distribution accounts for a major part of marketing budget of the business. Importance of physical distribution for a firm depends on the type of product and level of customer satisfaction desired.

12) Transportation:

Transportation means physical movement of goods from the place of production to the place of consumption. Transportation includes transportation of finished goods as well as of raw material. Production, sale and consumption-all the three activities need not be at one place hence there is a need of transportation. Place utility is created by transportation activity. Analysis of geographical boundaries, nature of product, cost, target market, speed, reliability, frequency, safety etc. help in deciding modes of transportation. Road, air, water, railways, pipelines are some of the important modes of transportation used by business.

13) Warehousing:

There is a time-lag between the purchase or production of goods and their sale. It is important to store the goods at a safe place during this time-lag. Any negligence during this period may damage the stock. Warehouse helps to maintain a smooth flow of goods. It also helps in stabilizing prices in the market. Function of warehousing is performed by retailers, wholesalers and manufacturers. Warehousing creates time utility

Q.8 Attempt the following (Any ONE)                [08]

(1) Explain 14 principles of Henry Fayol in detail. (Ch. 1)

Ans: 

1) Principle of Division of Work:

According to this principle, the work is divided into different kinds such as technical, financial, commercial, security operations, accounting and managerial. It is assigned to employees as per their qualities and capabilities. It helps in improving efficiency and expertise of employees which ultimately turns into expected productivity level.

2) Principle of Authority and Responsibility:

Authority is the right to take decisions. It is necessary to get the things done appropriately from subordinates. Authority always comes with the responsibility. If the manager is given the authority to complete a task within a given time, he should be held responsible if he does not  complete the work in given time. Manager should have proper authorities to take managerial decision on his own in respect to the goal.

3) Principle of Discipline:

According to Fayol, discipline is the most essential thing in the organisation. Employees must obey and respect the rules that govern the organisation. Discipline helps to achieve the goals in the organisation. Good discipline is the result of effective leadership. There must be a clear understanding between the management and workers regarding the organisation's rules. Basic discipline should be observed at all levels of management.

4) Principle of Unity of Command:

Each member of organization should receive orders from only one superior. This principle helps in managing conflicts and solving disputes among people in organization. It also helps in avoiding confusion. If an employee receives commands from more than one authority, he will get confused and will not be able to take decision about whose orders should be followed.

This is wrong approach. For this organizational hierarchy should be well defined. Each employee should know his immediate superior and should receive orders from him only

5) Principle of Unity of Direction:

This principle states that 'there should be one head and one plan' in every organization. Each group in the organization should have the same objective and the group should be directed by one manager using single plan.

6) Principle of Subordination of Individual Interest to Organisational Interest:

According to this principle the interest of an individual must be given less importance than the interest of the organisation. While taking decision in the organisation the manager should always consider the interest of the whole group rather than the interest of a single employee. 

Similarly the employee should protect the interest of the organisation first and his personal interest should be subordinated. For example, in every game, the players are always thinking about winning the match as a team rather than their individual records.

7) Principle of Centralization:

Centralization refers to the concentration of powers and authorities. In some organisations this power is vested in one hand or few hands. This situation occurs in the small organisations. But, if the size of organisation is large then there is a decentralization of the power or authority. 

According to this principle there must be a proper balance between centralization and decentralization in the organisation. This is to be done according to the size of the organisation, nature of the activity etc.

8) Principle of Remuneration:

Appropriate remuneration to staff or employees is the principle to keep them satisfied financially as well as retain them for long span of time within the organization. The fair remuneration affects on the productivity and efficiency level in total. The remuneration should be fixed by taking into consideration the skill, expertise, knowledge, tenure, cost of living, market trend, profitability of organization etc.

9) Principle of Scalar Chain:

Scalar chain means the hierarchy of authority from the top level to the lower level for the purpose of communication. This helps to ensure the orderly flow of information and communication.

Traditionally, organizations used to frame large scalar chain which is time consuming. For example, a General Manager informs the decision to respective Functional Manager, then Functional Manager will pass it to supervisor, the supervisor will inform it to Foreman and so on according to level of authority. For avoiding this longer chain and to take speedy decisions cross communication or direct communication is followed by various organizations which is known as Gang Plank. 

For direct communication, proper permission of the authorities is necessary.

In the above diagram, the communication between 'D' and 'G' should flow through proper hierarchy.

But to avoid delay or in emergency situation there will be direct communication. It is termed as Gang Plank.

10) Principle of Order:

This principle is based on 'A place for everything and everything in its place'. Human resources and materials should be in the right place at the right time for maximum efficiency. Human resources should be placed at right place and on right job. The principle focuses on the proper utilization of physical and human resources.

11) Principle of Equity:

Management should be fair as well as friendly to the subordinates. While dividing the work, delegating the authorities, deciding the monetary terms etc.. there should not be any discrimination between the employees. It is also suggested that the remuneration should not depend on the department but at the level on which subordinates are working. The employee working on the same level but in different departments should be paid same wages. This equity will help in avoiding conflicts in the organisation.

12) Principle of Stability of Tenure:

At the time of recruitment of employees, the management should assure them about stability of tenure or job security. It plays very important role in creating sense of belongingness among the employees. Insecurity in job always affect the efficiency of employees adversely whereas job security minimizes employee turnover ratio.

13) Principle of Initiative:

Initiative refers to volunteering to do the work in an innovative way. The freedom to think and work on new ideas encourages employees to take initiative while working on given task. This initiative should be welcomed by the manager through discussion on the new ideas. It also helps in creating healthy organizational culture.

14) Principle of Esprit de corps: (Team work)

Henry Fayol has given emphasis on team work. Esprit de corps means union is strength. Running any organization is a group activity and human resources are the valuable asset of the organization. If all employees are working as a union and with mutual trust, the difficulties can be solved quickly. Therefore, as a leader, manager should create a spirit of team work and understanding among employees to achieve organizational goal easily

(2) Explain Functions of commercial banks. (Ch.4)

Ans: 

Primary Functions:

The primary functions of commercial banks are known as core banking functions. The primary functions are as follows:

A) Accepting Deposits:

Commercial banks collect deposits from individuals and organizations. The deposits can be classified into two types i.e. Time Deposits and Demand deposits.

a) Time Deposits:

Time deposits are called as time deposits because they are repaid to the customers after the expiry of decided time.

1) Fixed Deposit:

Fixed deposit account is an account where fixed amount is kept for fixed period of time bearing fixed interest rate. Rate of interest is more as compared to saving bank account and varies with the deposit period.

Normally, withdrawal of amount is not permitted before maturity date. However, depositor can withdraw amount before maturity date for which bank will reduce the interest rate. For amount deposited in this account, a fixed deposit receipt (FDR) is issued by the bank. Against this receipt loan can be taken from the bank

2) Recurring Deposit:

It is operated by salaried persons and businessmen having regular income. A certain fixed sum of money is deposited into the account every month. Withdrawal of accumulated amount along with interest is paid after the maturity date. Rate of interest is higher which is similar to fixed deposit account. Separate passbook is provided to know the position of RD account.

b) Demand Deposits:

Demand deposits are those which are repaid to customers whenever they demand. That means, money can be withdrawn as per the wish of the customer through withdrawal slips, Cheques, ATM cards, online transfer etc.

1) Saving Account:

It is generally operated by those who earn regular or fixed income such as salary or wages. The main aim of this deposit account is to encourage habit of savings among people. These deposit accounts are meant for the purpose of maximum savings. 

There are restrictions on withdrawal limits from these accounts. These accounts carry low interest rates. Interest is credited monthly, quarterly, half-yearly and yearly basis on this account. Passbook facility, balance on SMS, account statement etc. facilities are provided to account holders to ascertain financial position.

2) Current Account:

This account is operated by business firms and other commercial organizations such as hospitals, educational institutions etc. who have regular banking transactions. In this account there is no restriction on deposits and withdrawals of amounts. No interest is paid by the bank on this account. Overdraft facility is available for this account. For current account, banks provide statement of account every month.

B) Granting loans and advances:

Banks grant loans and advances to business firms and others who are in need of bank funds. The loans are provided for longer period of time from 1 year and more. Advances are provided for shorter period from 4 months to 1 year. The advances are in the form of cash credit, overdraft and discounting of bills etc.

1) Loans:

Commercial banks provide loan to businessman and others. The borrowers can use entire amount sanctioned or can withdraw in installments. Interest is charged on the amount sanctioned. 

The loans are as follows:

a) Short Term Loans are for a period upto 1 year to meet working capital requirements of the borrower.

b) Medium Term Loans are for a period of 1 year to 5 years to meet working capital as well as fixed capital requirements of the borrower.

c) Long Term loans are for a period of 5 years or more to meet long term capital requirements of the borrower.

2) Advances:

Advances are small term fund provided to businessman to satisfy different financial requirements of the business. Advances are as follows:

a) Cash Credit:

The cash credit advances are provided to current account and savings account holders. It provides working capital for longer period of time. Interest rate is higher on CC. Separate CC account has to be maintained by the borrower.

b) Overdraft:

This facility is offered to current account holders to meet their working capital requirements. The period can vary from 15 to 60 days. Interest is charged on actual amount withdrawn. No separate account is maintained, and entries are shown in current account. It is a temporary arrangement for a short period.

c) Discounting of bills of exchange:

The drawer of bills of exchange or beneficiary can discount the bill with bank and obtain an advance. On the due date of the bill, the bank will recover the amount from the drawee.

IL Secondary Functions:

Secondary functions of commercial banks are classified into two groups:

(A) Agency Functions (B) Utility Functions

A) Agency Functions:

A commercial bank acts as an agent or representative of its client and performs certain functions as follows:

1) Periodic Collections and Payments:

Commercial bank collects salary, dividends, interests and any other income periodically as well as makes periodical payments such as taxes, bills, premiums, rent etc. on the standing instructions provided by customer. Commercial bank charges certain fixed amount quarterly or annually in the form of service charges from customer for providing such services.

2) Portfolio Management:

Large commercial banks undertake to purchase and to sell securities such as shares, bonds, debentures etc. on behalf of the clients. This handling of securities is known as portfolio management. Due to this facility more clients are opting for such services of commercial banks.

3) Fund Transfer:

Commercial banks provide facility of fund transfer from one branch to another branch or branch of another bank. Commercial banks come with various initiatives to make these transfer hassle free.

4) Dematerialisation:

Banks provides dematerialisation facilities to their clients to hold their securities in an electronic format. On behalf of clients, it undertakes the electronic transfer of shares in case of purchase or sale.

5) Forex Transactions:

Forex is an abbreviation for foreign exchange. A bank may purchase or sell foreign exchange on behalf of its clients. A bank purchases forex from its clients which the clients receive from foreign transactions and sell the forex when the clients need it for overseas transactions.

B) Utility Functions:

A commercial bank performs utility functions for the benefits of its clients. It provides certain facilities or products to its clients as follow:

1) Issue of Drafts and Cheques:

A draft /cheque is an order to pay money from one branch of bank to another branch of the same bank or other bank. A bank issues drafts to its account holders as well as non account holders whereas cheques are issued only to the account holders. Bank charges commission for issuing a bank draft.

2) Locker Facility:

This is common utility function of any commercial bank. The bank provides locker facility for the safe custody of valuables, documents, gold ornaments etc.

3) Project Reports:

A bank may prepare project reports and feasibility studies on behalf of the clients. Project reports enable the business firm to obtain funds from the market and to obtain clearance from government authorities.

4) Gift Cheques:

Banks issue gift cheques and gold coins to account holders as well as to non account holders. The gift cheques/ coins can be used by the clients for the purpose of gifting on occasions like weddings, birthdays etc.

5) Underwriting Services:

A commercial bank may underwrite the issue of securities issued by companies. If the shares are not fully subscribed, the underwriting bank agrees to take up the unsubscribed portion of the securities.

6) Gold related Services:

Now a days many banks are providing gold services to its customers. Some banks also provide advisory services to its customers in terms of gold funds, gold ETF etc.