Maharashtra HSC Board : Organization Of Commerce And Management (51): (Most Imp Questions with Solution)

 

Maharashtra HSC Board : 

Organization of Commerce &

 Management (51): 

(Most Imp Questions with Solution)

Chapter : 1 Principles of Management

MEANING AND DEFINITION

"Principle is defined as a fundamental truth or proposition that serves as the foundation for a system of belief or behaviour or for a chain of reasoning."

For Example, in cricket or in any other game, total play is designed and divided between the players according to their qualities and capabilities. In terms of management, it is called as division of work which is one of the principles of management.

Q.1 Explain nature of principles of management.

Management principles are formed to guide and influence the behavior of employees. These principles insist on improving efficiency of organizational resources in terms of profit. These principles also focus on best coordination between superior, subordinates and all the members of organization. The nature of management principles is given below: 

1) Universal application: 

The principles of management are universal in nature. That means they can be applied to all types of organizations, irrespective of their size and nature. Their results may vary and application may be modified but these are suitable for all kinds of organizations. Similarly, they are applicable to all levels of management. 

2) General guidelines: 

Management principles provide general guidelines in tackling the organizational situations wisely as well as in solving the problems. They are not rigid. Which management principles are to be applied depends upon the situation, size and nature of organisation. For example, when we say fair remuneration, then the term 'fair' can vary as per the nature, size and financial condition of the organisation. 

3) Principles are formed by practice and experiments: 

The management principles are developed gradually with thorough research work. Systematic observations and experiments are conducted before developing them. The results of such experiments have been developed as a principle after its practice in organizations. 

4) Flexibility: 

Management principles are flexible in nature. It means they can be changed or modified according to the situation. Managers can be flexible while implementing principles to suit the requirement. The business situations keep on changing. Management principles can be adjusted or modified and can be used in the organisation according to its need. 

5) Behavioral in nature: 

Management is group activity. Management aims at achieving certain goal through a group of human being. Management principles are designed to influence human beings. These principles control a group of persons and direct them to achieve the objectives. 

6) Cause and effect relationship: 

Principles of management are the base for taking decisions. They determine the cause or reason for particular effect. For example, payment of good wages and incentives helps in increasing the output of workers or making effective advertisement increases the sale of a product.

7) All principles are of equal importance: 

All principles of management are of equal importance. Those are to be practiced simultaneously to get best results in the form of achievement of predefined goals. If any specific principle is focused more and others are not followed with same focus, then it affects the working of organization. Management principles are the principles of social science. The nature of principles of management is not absolute like pure sciences i.e. Chemistry, Mathematics etc. With some modifications according to requirement, organization needs to apply the principles of management.

Q.2 Explain significance of Management Principles. 

1) Provides useful insight to managers: 

The principles of management help the manager to understand the organisation. The study of the principles helps to improve the understanding of the situations and problems. It further helps the manager to find out the solutions to the problems and handle situations. Management principles are an outcome of the experience of various professional people. The use of these principles is helping managers about the manner in which he should act in different situations. This type of timely guidance reduces the wastage of resources and the goals can be achieved in appropriate manner. 

2) Helpful in efficient utilization of resources: 

In every organization two types of resources are used i.e. physical resources (material, machines, money etc.) and human resources (manpower). The basic function of management is to make proper balance between these resources by putting them to optimum use and control on wastage of resources. While maintaining discipline and healthy working environment, management always uses techniques and principles. It helps in establishing cordial relationship between management and employees which increases the efficiency level of employees and also facilitates the effective administration. For example, Use of standard tools and machinery helps in increasing quality or productivity as well as in increasing level of efficiency of human resources. 

3) Scientific decisions: 

In business organization, a scientific decision means systematic or balanced decision. Principles train the managers to handle critical situations tactfully otherwise the managers have to work always with trial and error method. With the use of various management principles, one can get an idea about how to analyze the situations, to search alternative options and their results. 

4) Understanding social responsibility: 

Management principles are based on every aspect of organization. They are not developed only from view point of handling the resources effectively but they guide management in understanding social responsibility of organization. So that they can focus on providing quality products at reasonable prices, avoiding artificial monopolistic situations in market, fair competition, fair remuneration, change in environment, healthy working place, standard tools and machinery etc. 

5) Encourages Research and Development (R and D): 

Principles of management are dynamic. Their nature goes on changing along with the changes in the business world. Over the years they have developed to suit the current need. It enables the managers to bring consistent improvement in them. Management adopts new trends at working place automatically. These guidelines help management to make comparison of used principles with its expected outcome. If needed, management can modify the principles according to situation as the management is having liberty to take the decisions on their own. This training helps in developing scientific approach towards research and development and growth and development of organisation. For example, R and D department always works on finding new techniques in the field of production, finance, marketing, human resources etc. 

6) Helps to coordinate and control: 

Management principles are the guidelines for better coordination and control. It is very challenging to create coordination and cooperation among different employees working in different departments. It is also difficult task for manager to keep control on the performances of employees. Management principles offer suitable systems while establishing coordination and control. 

7) Develops objective approach: 

With the help of various principles of management, one can develop an objective approach. Managers can identify the business opportunities, root causes of the problems in correct manner and can provide appropriate solutions on it. It builds confidence in the minds of the managers.

Q.3 Explain Any Five principles of Henry Fayol in detail.

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 em ployee 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 employees 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.

Q. 4 Elaborate principles of scientific management. 

These principles are as follows: 

1) Science, Not Rule of Thumb: 

In order to increase organizational efficiency, the 'Rule of Thumb' method should be substituted with the methods developed through scientific analysis of work. Rule of thumb decisions are based on personal judgments of the manager. Taylor insisted upon scientific method for every small work. This principle is concerned with selecting the best way of performing a job after scientific analysis of that job and not by trial and error methods. Standard required time and standard output should be defined by the manager. This will help in saving time and human energy and will result into expected standard output. According to Taylor, even a small production activity like loading iron sheets into box cars can be scientifically planned. 

2) Harmony, Not Discord: 

According to this principle, there should be harmony between the employees and management. This coordination will help in minimizing conflicts between them. Perfect understanding between employees and management will be helpful in creating healthy work environment for achieving the desired goal i.e. success. Organization should think about maximum prosperity of employees also. 

3) Mental Revolution: 

Taylor introduced the concept of "Mental Revolution". This principle focuses on change in the attitude of employees and management towards each other. Both should realize their equal importance in organization. They should give full cooperation for achieving goal of organization. This will increase productivity and profits. 

4) Cooperation, Not Individualism: 

This principle emphasizes on mutual cooperation between workforce i.e. employees and management. Due to cooperation, trust, team spirit etc. internal competition will turn into healthy working environment. Management should always consider the suggestions given by employees in decision making process. Employees should be treated as an integral part of organisation in all respects. At the same time employees should resist themselves from going on strikes and making unnecessary demands from management. They should treat each other as two pillars of organization. 

5) Division of Responsibility: 

Proper division of work should always be accompanied with division of responsibilities between the managers and employees. Major planning is done by the top and middle level management authorities whereas employees are concentrating on its execution. The reporting is done as per the instructions given by their superiors. Managers should always help, encourage and guide the employees. It helps for best performances of managers as well as employees.

6) Development of employer and employees for greater efficiency and maximum prosperity: 

Best performance of any organization always depends on the skills and capabilities of its, employees to a great extent. Thus, providing training and development programmes to the employees whenever required, is very essential. It ultimately affects the profitability of the, organization. Each employee should be given proper opportunity to attain greater efficiency and maximum prosperity.

Q.5 What are the techniques of scientific management? Explain in detail.

1) Work Study: 

Before assigning the work to the available workforce, proper work study should be done by management. Work study consists of an organized, systematic and critical assessment of the various activities or functions. Work study is based on the techniques such as time study, motion study, method study and fatigue study. 

A) Time Study: 

It is the technique of observing and recording the time taken by an employee to complete a given task. With the help of time study, the precise time required for each element of work is determined. It is the technique used for fixing the standard time required to do a particular task under given condition. It is useful to measure the efficiency of an employee and to control the cost of work. 

B) Method Study: 

There are always various methods of completing the task. For best quality and cost effective ness, identifying the best method of doing a particular job is very important but challenging task for a manager. It helps in reducing the wastage of time, raw material and in improving the utility of all resources as per predefined objetives. It is helpful in determining the methods for handling the raw materials, transportation, inspection, storage etc. 

C) Motion Study: 

The study of required motion means movement of an employee as well as of machine while completing a particular task is very important. It is helpful in eliminating unnecessary motions and finding the best method of doing a particular job. It also helps in improving the efficiency of the employees. Motion technique is used to know whether some elements of a job can be eliminated or their sequence can be changed for smooth flow of task. 

D) Fatigue Study: 

Generally long working hours without sufficient breaks, target pressure, heavy working tools, and poor working conditions result into physical and mental stress i.e. fatigue. It has an adverse effect on the health and efficiency of the employees. The study of fatigue and steps to reduce the level of fatigue is very important to maintain the operational efficiency of the employees. 

2) Standardization of Tools and Equipments: 

With the result of experiments conducted at work place, Taylor advocated standardization of tools and equipments. Standardized working environment and methods of production help to reduce spoilage and wastage of material, cost of production, fatigue among the workers and it improves quality of work.

3) Scientific Task Setting: 

Taylor emphasized the need for fixing a fair day's work. Scientific work setting is important to prevent the employees from doing work much below their capacity. By using this technique, employees will complete the task according to standards given and management can keep proper control on optimum utilization of workforce. 

4) Scientific Selection and Training: 

Management can select right persons for the right jobs by using scientific selection procedures. It needs to fix job specifications as per requirement. Employees are selected according to pre- determined standards in an impartial way. After selection, management should provide the proper training programmes to increase their efficiency. 

5) Functional Organization: 

In this concept of Taylor, planning is separated from implementation. That means, planning is done by different people and actual work is supervised by different people. Thus, every worker will be supervised by two different sets of supervisors. He recommended total eight foremen to control the various aspects of production. They are categorized as follows: 

A) At Planning Level: 

1.Route Clerk- tells how work moves from one machine to other.

2.Instruction Clerk- records instructions to complete the work. 

3. Time and Cost Clerk- determines time in which work should be completed and workout the cost 

4. Discipline- ensures that the workers are working as per factory rules. 

B) At Implementation Level: 

1. Gang Boss-actually gets the work done. 

2. Speed Boss- ensures that the work is completed in specified time. 

3. Repair Boss- handles security and maintenance of mechanism 

4. Inspector- ensures that the work is done as per the specified standards. 

According to Taylor, with the help of proper division of all activities into planning and implementation; management can definitely achieve the required performance from the employees. 

6) Differential Piece-Rate Wage Plan: 

Remuneration should be fixed in such a way that average worker is motivated to attain a standard output. Taylor suggested the differential piece-wage system. Higher rates are offered to employees who complete the work more than the standard quantity under this system. On the other hand, if an employee is performing below the standard; he shall be given lower rate of wages. This technique motivate the employees to attain higher standard performance and earn wages i.e. remuneration at higher rate.

Chapter : 2 Function of Management

Explain the importance of management / planning / organization / staffing / directing / co- ordination / controlling.

1. Innovation: _____________ facilitates innovation in the organization. Now –a-days, it is essential to generate new ideas, new products, new technology, etc. innovation helps to face competition in today’s competitive business world.

2. Corporate image: __________ enables the organization to enhance corporate image. this is because _________ helps to provide good quality goods & service to the customers. Therefore, proper __________ is required to developed good corporate image or goodwill of the organization.

3. Team work: _____________ develops team spirit in the organization. It is the team work that bring success to the organization. There is a need for team work between the various people & departments working in the organization. Team work is important to bring success in the organization.

4. Optimum use of resources: ____________ facilitates optimum use of resource in the organization. There is efficient use of various resource such as men, money, material, etc. optimum use of resources brings good result to the organization.

5. Motivation: ____________ enables to motivate of the employees in the organization.  Motivated employees work with application & dedication. The dedication on the proper_____________ is required to generate motivation in the employee. 

6. Reduction of wastage: _________________ ensure reduction of wastages in the organization. now a days, reduction on in wastages brings higher return to the organization. Reduction in wastage is important to any organization.

7. Reduction in absenteeism: proper______________ facilities reduction of absenteeism inn the organization. Absenteeism take place when employees remain absent without prior permission. Absenteeism creates problems In the organization.

8. Reduction in labour turnover: _______________ help to reduce labour turnover in the organization. Employees turnover takes place when some employees leave the organization and other join in their place. Frequent labour turnover increases selection & training cost.

9. Higher efficiency: _____________ is required to generate higher efficiency in the organization. Efficiency is the relation between returns & costs. The more returns the same costs or a lower cost, then the organization is said to be more efficient.

10. Better relationship: _______________ enables to developed good relation in the organization. There should be good relation between various people & departments working in the organization. Good relation generates team work, & bring success to the organization.

Chapter : 3 Entrepreneurship Development

Q.1 Define entrepreneur. Explain characteristics of entrepreneur

The Oxford English Dictionary defines"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." 

Q.1 Explain the Characteristics of an ENTREPRENEUR.

Entrepreneurs have some special characteristics like creative thinking, imagination, enthusiasm, sincerity etc. The characteristics of an entrepreneur may be briefly stated as follows: 

1)Intellectual Capabilities: 

An entrepreneur is a creative thinker. He has reasonably good intelligence. He has ability to analyze business situations. This ability will help him to take proper decisions. 

2) Future Vision: 

The entrepreneur has a good foresight about future market situation. He should also have knowledge about external business environment. This will help him to take proper decisions according to the situations and changes in the market. So, he can take timely actions for the same. 

 3) Hard Work: 

An entrepreneur is ready to work hard. It is more necessary when a new venture is started. He has to work for long hours. Many a times he has to handle the main areas of business independently. This will make him successful. 

4) Technical Knowledge: 

An entrepreneur has good technical knowledge about his business. The entrepreneur has the ability to update himself with the latest knowledge about the product, process and technology. 

5) Communication Skills: 

An entrepreneur needs to communicate with different people like customers, suppliers, creditors, employees, etc. He must be able to express his ideas and strategies effectively. It is necessary that there is a proper understanding between the sender and the receiver of the message. 

6) Highly Optimistic: 

An entrepreneur has to always think positively. He is always hopeful and confident about the market situations even in failure times. Such positive attitude helps him to run his business successfully. 

7) Risk bearing capacity: 

Successful entrepreneur takes calculated risks. He is ready to face challenges and always seeks new and more opportunities. 

8) Self Confidence: 

An entrepreneur has self-confidence. He has positive desires to achieve his goals. Such self motivation keeps him strong and confident to face various obstacles.

Q.2 Define entrepreneur. Explain its functions.

The Oxford English Dictionary defines" 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." 

1) Innovation: 

An entrepreneur is basically an innovator. He introduces new combinations of means of production. He must introduce new products or bring changes in the existing products. Customers are satisfied with new products or new features in the existing products. Innovation is also necessary to solve problems that arise in the business. 

2) Determination of Objectives: 

An entrepreneur has to determine the aims and objectives of the business. There may be difference between primary and secondary objectives of the enterprise. He can change these objectives as per the market situations. 

3) Development of Market: 

The entrepreneur has to find out different ways for marketing the products and services of his enterprise. He can conduct surveys or research to understand the customer's demand. When the markets are developed constantly, the demands of the consumers will increase. 

4) New Technology: 

In global world, everyday there is an invention of new technology. Introduction of new technology will always result in growth of business e.g. new machinery, advanced technology, new and scientific methods of production, etc. 

5) Good Relations: 

It is necessary to maintain healthy working atmosphere in an organization. It depends upon the efficient relations between subordinates and superiors. Co-ordination among the employees is the key of success. 

6) Organizing Funds: 

Entrepreneur needs to find out different financial resources because adequate and continuous finance is always necessary for business. Good and honest relations with the investors is necessary for every business. 

7) Taking Decisions: 

An entrepreneur has to take wise decisions for his enterprise. Timely and correct decisions are also important and necessary for a proper business plan. He should always consider the pros and cons before taking any business decision.

Q.3 Define entrepreneur. Explain qualities of successful entrepreneur.

The Oxford English Dictionary defines"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." 

Successful business people have many Qualities in common with one another. 

1. Disciplined : 

These individuals are focused on making their businesses work, and eliminate any or distractions to their goals. An entrepreneur has comprehensive strategies and outline the tactics to accomplish them. Successful entrepreneur is disciplined enough to take steps every day towards the achievement of his objectives. 

2) Confidence : 

The entrepreneur does not ask questions about whether he can succeed or whether he is worthy of success. He is confident with the knowledge that he will make his businesses succeed. He shows that confidence in everything he does. 

3) Open Minded : 

Entrepreneur realizes that every event and situation is a 'business opportunity. Ideas are constantly being generated about workflows and efficiency, people skills and potential new businesses. He has the ability to look at everything around him and focuses it towards his goals. 

4) Self Starter : 

Entrepreneur knows that if something needs to be done he should start it himself. He sets the parameters and makes sure that projects follow that path. He is proactive, not waiting for someone to give him permission. 

5) Competitive : 

Many companies are formed because an entrepreneur knows that he can do a job better than others. He needs to win the game of business. An entrepreneur will highlight his own company's track record of success. 

6) Creativity : 

One aspect of creativity is being able to make connections between seemingly unrelated events or situations. Entrepreneur often comes up with solutions which are the synthesis of other items. He will repurpose products to market them to new industries. 

7) Determination : 

Entrepreneur is not thwarted by his defeats. He looks at defeat as an opportunity for success. He is determined to make all of their endeavors succeed, so will try and try again until it does. Successful entrepreneur does not believe that something cannot be done. 

8) Strong communication skills : 

The entrepreneur has strong communication skills to sell the product and to motivate employees. Most successful entrepreneur knows how to motivate his employees so the business grows overall. He is very good at highlighting the benefits of any situation and coaching others to their success. 

9) Strong work ethic : 

The successful entrepreneur will often be the first person to arrive at the office and the last one to leave. He will come on his days off to make sure that an outcome meets his expectations. His mind is constantly on his work, whether he is in or out of the workplace. 

10)  Passion : 

 Passion is the most important trait of the successful entrepreneur. He genuinely loves his work. He is willing to put in those extra hours to make the business succeed because there is a joy his business gives which goes beyond the money. The successful entrepreneur will always be reading and researching ways to make the business better. 

Q.4 What is Enterpreneurship Development Program ?

An entrepreneurship development programme has been defined as 'a programme designed to help a person in strengthening his entrepreneurial motive and in acquiring skills and capabilities necessary for playing his entrepreneurial role efficiently'. 

EDP is a device through which people with latent entrepreneurial traits are identified, motivated to take up new industrial venture, trained in managing the unit and guided in all aspects of starting a venture/an enterprise. 

EDP was first introduced in Gujarat in 1970 and was sponsored by the Gujarat Industrial Investment Corporation. The EDP's are based on McClellands experiments in Kakinanda District of Andhra Pradesh where businessmen were provided with motivation and training. 

The EDP includes following steps: 

1) Arrangement of Infrastructure. 

2) Selection of potential entrepreneur. 

3) Identification of enterprise.  

4) Actual training program.  

5) Selection of method of training. 

6) Actual training. 

7) Monitoring and follow-up. 

8) Selection of training personnel.

Objectives of EDP: 

The following objectives of EDP are identified. 

1) To foster entrepreneurial growth in the country. 

2) Optimum use of available resources. 

3) Development of backward regions and improving economic status of socially disadvantaged groups. 4) Generation of employment opportunities. 

5) Widening base for small and medium scale industries

Q.5 Explain the characteristics of Entrepreneurship Development.

Entrepreneurship is a process of setting up a new business organization. It is the process where one decides to build a business career by finding the market options and mobilizing the available resources. The following are the characteristics of entrepreneurship.

1) Innovation- Entrepreneurship is an innovation. The introduction of new combination of various factors of productions is innovation. A new product arrives in the market, uses new production technology, discovers new source of supply of raw materials and opens a new market for the specific product. In view of changing taste of consumers from time to time, entrepreneurship focuses on the research and development to produce goods to satisfy the customers. 

2) Economic activity- An entrepreneur produces a new product for the customers as per their needs. He feels the need of this to satisfy human wants and as well in exchange earn a better livelihood. It is a systematically planned activity as per the skills and knowledge of entrepreneur. Hence entrepreneurship is an economic activity. 

3) Organization Building- It is an activity where various factors of production have to be organized. Place utility, time utility, form utility etc. has to be considered to collect them under one roof for new production. 

4) Creative activity- Innovation should have a strong support of creativity. Introducing creativity in producing something new is a big challenge for the entrepreneur. Thus creativity is an essential part of entrepreneurship. 

5) Managerial skill and leadership- A person who wants to be a successful entrepreneur should have more passion of doing something new than just earning profit. Leadership and managerial skills are the most important facets of entrepreneurship. Other skills can be considered secondary. An entrepreneur must have the ability to lead and manage. 

6) Skillful management- The success of any entrepreneurship depends on the management of the organization. With professional management and skilled managers, entrepreneurship becomes successful activity. 

7) Risk Bearing- Uncertainty is defined as a risk which can not be insured against and is incalculable. Entrepreneur is an agent who buys factors of production at certain prices, in order to combine them into a product, to sell them at uncertain prices in future. Thus they too are risk-bearing agents in production. 

8) Gap filling function- The most significant feature of entrepreneurship is gap filling. It is the entrepreneur's job to fill the gap or make up the deficiencies which always exist in the knowledge about the production function.

Chapter : 4 Business Services

Q.1 State any four features of business services.

"Activities, benefits, or satisfactions which are offered for sale, or provided in connection with the sale of goods".- American Marketing Association Features of services: 

1) Intangibility: 

A service is not a physical product that can be touched or seen. A service can be experienced by the buyer or the receiver. Services lack material form, and therefore they are intangible. Due to intangibility, services cannot be demonstrated like goods, and therefore service providers must create good impact on the customers by delivering quality services on time.

2) Inseparability: 

Unique characteristic of services is that the service and the service provider cannot be separated. The presence of service provider is there at the time of delivering services to customers. In case of services production and consumption take place at the same time. 

3) Inconsistency: 

Services are heterogeneous. There can be no perfect standardization of services. Even if the service provider remains the same, the quality of the service may differ from time to time. For example, same restaurant can give different experience to two different customers. 

4) Perishability: 

The production and consumption of services are inseparable because storage of services is not possible. Being an intangible transaction there can never be an inventory of services. Unlike goods, they cannot be stored for future sale. For example, the vacant seats of morning flight of an airline cannot be utilized in afternoon flight of the same airline.

5) Non-transferability: 

Unlike goods, all services are non-transferable in nature. The ownership of services cannot be transferred from service provider to customer. For example, a customer can book hotel room but the ownership of room remains with the hotelier. 

6) Consumer participation: 

For services, participation of consumer is equally important. Without the participation of consumer, services cannot be offered. The seller cannot offer service without the presence of customer vice-versa customer cannot accept service, unless the seller is present to offer a service.

Q.2 What are the functions of warehouses?

Warehousing refers to storage of goods and consists of all those activities which are connected with storage and preserving of goods. It is a means of storing the goods. 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. 

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

 Functions of Warehouses: 

1) Storage: 

This is the basic function of warehousing. Surplus commodities which are not needed immediately can be stored in warehouses. They can be supplied as and when needed by the customers. 

2) Price Stabilization: 

Warehouses play an important role in the process of price stabilization. It is achieved by the creation of time utility by warehousing. In warehouses, usually large stock of goods is kept. Whenever, there is shortage in the market, goods can be immediately supplied through ware houses, which helps in price stabilization to avoid rise in price due to demand and supply difference. 

3) Risk bearing: 

When the goods are stored in warehouses they are exposed to many risks in the form of theft, deterioration, fire etc. Warehouses are constructed in such a way that they minimise these risks. A warehouse keeper has to take the reasonable care of the goods and safeguard them against various risks. For any loss or damage sustained by goods, warehouse keeper shall be liable to the owner of the goods. 

4) Financing: 

Loans can be raised from the warehouse keeper or from financial institutions against the goods stored by the owner. Goods act as security for the warehouse keeper or for financial institutions. In this manner, warehousing acts as a source of finance for the businessmen for meeting business operations. 

5) Grading and Packing: 

Warehouses now-a-days provide the facilities of packing, processing and grading of goods. Goods can be packed in convenient sizes as per the instructions of the owner. 

6) Transportation: 

Warehouses can provide transportation facility to bulk depositors. It collects goods from the place of production and also sends goods to the place of delivery on the request of the owner. 

7) Time and Place Utility: 

Warehouses create time utility by preserving the goods till they are demanded. It also creates place utility by providing the goods at the place, where they are required. 

8) Processing: 

Certain commodities are not consumed in the form they are produced. Processing is required to make them consumable. e.g. Paddy is polished, fruits are ripened etc. Sometimes warehouses undertake such activities on behalf of the owners.

Q.3 Explain types of warehouses.

1) Private Warehouses: 

The private warehouses are owned and operated by big manufacturers and merchants to fulfill their own storage needs. Big business firms which need large storage capacity on a regular basis and who can afford money, construct and maintain their private warehouses. A big manufacturer or wholesaler may have a network of his own warehouses in different parts of the country. 

2) Public Warehouses: 

A public warehouse is a specialized business establishment that provides storage facilities to the general public for a certain charge. It may be owned and operated by an individual or a cooperative society. It works under a license from the government in accordance with the prescribed rules and regulations. Public warehouses provide storage facilities to small manufacturers and traders at low cost. These warehouses are well constructed and guarded round the clock to ensure safe custody of goods. Public warehouses are generally located near the junctions of railways, highways and waterways.

3) Bonded Warehouses: 

Bonded warehouses are licensed by the government to accept imported goods for storage until the payment of custom duty. These warehouses work under the control of custom authorities. The warehouse keeper is required to give an undertaking or 'Bond' that it will not allow the goods to be removed without the consent of the custom authorities. The goods are held in bond and cannot be withdrawn without paying the custom duty. If an importer is unable or unwilling to pay customs duty immediately after the arrival of goods he can store the goods in a bonded warehouse. He can withdraw the goods in installments by paying the customs duty proportionately. 

4) Duty paid Warehouses: 

If an importer faces any problem in transportation of goods, after making payment of duty, then goods can be stored at a duty paid warehouse. All duty paid warehouses are public warehouses which are available to all importers. Duty paid warehouses help the importer as proper care of goods is taken, processing of goods can be done like sorting, re-packing etc. Such warehouses are more useful for re-export of the goods. These are located near port & dock area. 

5) Government Warehouses: 

These warehouses are owned, managed and controlled by central and state governments or public authorities. It is difficult for small farmers, businessmen, traders to own a warehouse, so these government warehouses assist them in storing their goods at nominal charge. Central Warehousing Corporation of India (CWC), State Warehousing Corporation (SWC) and Food Corporation of India (FCI) are having warehouses across different states and country. 

6) Co-operative Warehouses: 

These warehouses are owned, managed and controlled by co-operative societies. They mainly provide warehousing facilities at most economical rates. These type of warehouses are very useful for farmers and traders and general public. 

7) Cold storage Warehouses: 

Cold storage warehouses provide facilities for perishable commodities like fruits, flowers, vegetables, dairy products etc. In cold storage warehouses, goods are stored and refrigerated at very low temperatures so as to preserve them and use them in future. International trade has become possible due to these warehouses.

Q.4 What is Bank? Explain in detail primary functions of commercial banks.

Meaning:

A bank is a financial institution which deals with deposits and advances and other related services. Bank provides various services related to money or financial requirements of consumers.

As per The Indian Banking Regulation Act, 1949 banking company means "any company which transacts the business of banking in India" and the word banking has been defined as "accepting for the purpose of lending or investment of deposits of money from public, repayable on demand or otherwise, and withdrawable by cheque, draft and order or otherwise. 

1) 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.

 

Q. 5 Define Bank. Explain secondary functions of Bank.

Meaning:

A bank is a financial institution which deals with deposits and advances and other related services. Bank provides various services related to money or financial requirements of consumers.

As per The Indian Banking Regulation Act, 1949 banking company means "any company. which transacts the business of banking in India" and the word banking has been defined as "accepting for the purpose of lending or investment of deposits of money from public, repayable on demand or otherwise, and withdrawable by cheque, draft and order or otherwise, "

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 func- tions as follows:

1) Periodic Collections and Payments:

Commercial bank collects sourly, 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 trans- fer hassle free.

4) Dematerialization:

Banks provides dematerialization 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.

Gift Cheques:

Banks issue gift cheques and gold coins to account holders as well as to non account holders

E-banking Service:

E-banking stands for electronic banking it is also called 'Virtual Banking'. E-banking is the result of the development in the field of electronics and computers. Under E-banking, the banking operations are computerized. Some of the elements of E-banking are as follows:

1) Automated Teller Machine:

The ATMs are electronic machines which are operated by the customer on his own to with- draw or deposit money. It can be used for other banking transactions also such as balance enquiry, transferring money, request for cheque book or bank statements etc. Nowadays, ATM also provides facility of cash deposits through CDM (cash deposit machines.)

2) Credit Cards:

A credit card is a payment card. It allows the cardholder to pay for different transactions he performs. The issuing bank creates a revolving account and grants a line of credit to the cus- tomer or user. Credit card offers convenience to customers as customer need not carry cash.

3) Debit cards 

Most of the banks nowadays offer debit card as soon as account is opened by account holder. Through debit card payments, the amount gets deducted from account holder's account. Some banks offer personalized debit and credit cards as per the requirement of customer.

4) RTGS:

RTGS stands for Real Time Gross Settlement. RTGS is a fund transfer system where transfer of funds or money takes place from one bank to another bank on "real time" and on "gross basis". It is the fastest money transfer system through the banking channel.

Real Time Settlement means payment transaction is not subject to any waiting period. The transactions are settled as soon as they are processed. The receiving bank has to credit the account of the client within 2 hours of receiving the funds transfer message.

Gross Settlement means the transactions are settled on one to one basis without bunching with any other transactions. The minimum amount to be remitted through RTGS is Rs. Two lacs while there is no upper limit for transactions. However, amount changes from bank to bank.

5) NEFT:

NEFT stands for National Electronic Fund Transfer. Under this system, funds are transferred electronically from one branch to another branch or one bank to another bank in the country. The client has to give details of NEFT code of branch and account number of beneficiary to whom the money is to be transferred.

The NEFT settlements take place at particular time during working hours. For instance, settlements of fund transfer requests in NEFT system is done on half-hourly basis. There are 24 half- hourly settlement batches run from 8 am to 7 pm on all working days of week. The main difference between NEFT and RTGS is that in the case of RTGS, transfer is done on gross settlement basis while NEFT is on deferred net basis, where transactions are bundled together

6) Net Banking and Mobile Banking:

With the introduction of net banking, the client is able to transact banking operations with the help of computers, laptop and other gadgets. The internet banking services enable a client to check various transactions, facilitates payments of various things, transferring funds etc.. Mobile banking refers to the use of banking services with the help of mobile phones. The client registers with the bank for this facility and gets a unique code for transactions. The client can perform various transactions such as request for balances, transfer of funds, stop payment, issue of cheque book etc.

IMPS Facility:

IMPS stands for immediate payment services. This facility allows customers to instantly transfer funds to any other bank account.

Q.6 What is insurance? Explain principle of insurance. 

Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. Insurance is a contract between

the insurer and the insured, whereby the insurer agrees to compensate the insured against loss. The

insured has to pay a certain fixed sum of money on timely basis to the insurer.

Principles of Insurance:

1) Principle of Utmost good faith:

In all types of insurance contracts both the parties must have utmost good faith towards each

other. The insurer and insured must disclose all material facts clearly, completely and correctly.

The insured must provide complete, clear and correct information of the subject matter of

insurance to the insurer. Similarly, the insurer must provide relevant information regarding

terms and conditions of the contract. Failure to provide complete, correct and clear information

may lead to non-settlement of claim.

For example, Mr. Shantanu has not provided information regarding his heart surgery at the

time of taking policy. After his death, insurance company comes to know about this fact. As

Mr. Shatanu has not provided correct and complete information at the time of taking policy,

insurance company can refuse to give compensation to his family members.

Insurable interest means some financial interest in the subject matter. The insured must have

insurable interest in the subject matter of insurance. Insurable interest is applicable to all insurance contracts. It is said to have insurable interest in subject matter, when the existence of that

subject matter puts the insured in financial benefit. Whereas nonexistence of subject matter put

him into financial loss.

For example,

i) a person has insurable interest in his own life and property.

ii) a businessman has insurable interest in the goods he deals and in the property of business.

In life insurance, the insurable interest refers to the life insured. Insurable interest must exist at

the time of taking a life insurance policy

3) Principle of Indemnity:

Indemnity means a guarantee or assurance to put the insured in same financial position in

which he was immediately prior to the happening of the uncertain event.

This principle is applicable to fire, marine and general insurance. It is not applicable to life

insurance as loss of life can never be measured in monetary terms. In case of death of the insured, the actual sum assured is paid to the nominee of the insured.

Under this principle, the insurer agrees to compensate the insured for the actual loss suffered.

The amount of actual compensation is limited to the amount assured or the loss, whichever is

less.

For example, If property is insured for Rs. two lacs and if the loss by fire is Rs.one lac, then the

insured can claim compensation of Rs.one lac only

4) Principle of Subrogation:

This principle is applicable to all contracts of indemnity. As per this principle, after the insured

is compensated for the loss due to damage of the property insured, then the right of ownership

of such property passes on to the insurer. This principle is applicable only when the damaged

property has any value after the event causing the damage.

For example, Mr. A owns a two-wheeler . The vehicle was stolen and subsequently Mr.A filed

a complaint in local police station. Upon receiving report from police,. the insurance company

compensated fully Mr.A for the loss of the vehicle. Later on the stolen vehicle was recovered by

police. In this situation, the owner of the vehicle does not have any claim over the vehicle as he has

already subrogated i.e. transferred the ownership rights of the vehicle to the insurer. The insurer gets

every right to sell or to scrap the said vehicle.

5) Principle of Contribution:

This principle is applicable to all contracts of indemnity where the insured has taken out more

than one policy for the same risk or subject matter. Under this principle, the insured can claim

the compensation only to the extent of actual loss either from one insurer or all the insurers. If

the one insurer pays full compensation then that insurer can claim proportionate amount from

other insurers from whom insured has taken policy.

For example, Ms. Sayali insures her property of Rs.Two Lac Fifty Thousand with two insurers,

with T Insurance Co. for Rs.One Lac(2/5th of the property value) and R Insurance Co. for Rs.One

Lac Fifty Thousand (3/5th of the property value). If Ms. Sayali 's property is destroyed and the loss is

worth Rs. One Lac Twenty Thousand, then both insurance companies will contribute towards actual

loss i.e.Rs.One Lac Twenty Thousand. Thus company T will pay RS.48000/- (2/5th of the loss) and

company R will pay Rs. 72000/-(3/5th of the loss).

6) Principle of Mitigation of loss:

Insured must always try to minimise the loss of the property, in case of uncertain events. The

insured must take all possible measures and necessary steps to control and reduce losses.

Hence, it is the responsibility of the insured to protect the property and avoid loss.

For example, A house of Mr. Jayant is on fire due to electric short circuit. In this case, Mr. Jayant cannot remain passive and must try his best to save his house from fire. Mr. Jayant must be active and

cannot watch his house burn, just because house is insured.

7) Principle of Causa-Proxima:

Principle of casusa proxima means, when a loss is caused by more than one causes, then proximate cause of loss should be taken into consideration to decide the liability of the insurer. The

property is insured against some causes and not against all causes, in such a case, the proximate cause of loss is to be found. If the proximate cause is the one which is insured against,

the insurance company is bound to pay compensation and vice versa.

For example, a house was insured against the risk of theft. There was a theft in the house and

before leaving, the house was set on fire by thieves. Now, there are two causes of loss, theft and fire,

and the nearest cause of loss was fire. As the house was insured against theft and not by fire, the

insured will not get any compensation from insurance company for loss by fire. But, he will get the

compensation for the property lost by theft

Chapter : 5 

Emerging Modes of Business

Q.1 What is outsourcing? Explain advantages and disadvantages of outsourcing.

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.

 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. Access to 

professional, expert and high 

4) 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. 

Disadvantages of Outsourcing / Limitations of Outsourcing: 

1) Lack of customer focus- An outsourced vendor may be catering to the needs of multiple organizations at a time. In such a situation, he may lack complete focus on an individual organization. As a result, the organisation may suffer. 

2) A threat to security and confidentiality - The confidential information of the organization may be leaked to the third party, so there are security issues. 

3) Dissatisfactory services - Some of the common problem areas with outsourcing include stretched delivery time and sub standard quality. 

4) Ethical issues - The major ethical issue is taking away employment opportunities from one's own country, when the function is outsourced to a company from another country. 

5) Other disadvantages 

i) misunderstanding of the contracts. 

ii) lack of communication.

iii) poor quality and delayed services

Q.2 Explain the steps involved in online transaction.

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. 

Procedure of online Transaction: The online transaction moves through pre-purchase/sale, actual purchase/sale and delivery stage. It involves following steps. 

1) Registration - Before online shopping one has to register with the online vendor by filling up a registration form. 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.

2) Placing an Order- It is second step in online transaction. 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. 

3) Payment - It is the last step in online transaction. The buyer has to select the payment option. These payment systems are secured with very high level encryption. The personal financial information is completely secure. The following are some ways in which we can make this payment. 

a) Cash on Delivery- In this type of payment the buyer pays when he/she receives the product. The payment is made at the doorstep. The customer can pay in cash or by debit or credit card. 

b) Cheque- In this type of payment, the buyer sends a cheque to the seller and the seller sends the product after the realization of the cheque. 

c) Net Banking transfer- In this type of payment, the payment is transferred from the buyer's account to the seller's account electronically. After the payment is received by the seller, the seller dispatches the goods to the buyer. It is an electronic facility of transferring funds through the internet. 

d) Credit or Debit card - The buyer makes payment through debit or credit card and amount get deducted from customers account. Debit card or credit card popularly known as "Plastic Money". They are mostly used for online payments. 

e) Digital Cash - Digital Cash is a form of electronic currency that exists only in cyberspace and has no real physical properties, but offers the ability to use real currency in an electronic format.

Q.3 What are the advantages and disadvantages of e-business?

 Benefits of E- Business The main advantage of e-business is people get product information online and order the product online through cash on delivery or pre payment. In this way seller and buyer both get advantage of internet platform. Traditionally trading by the buyers and sellers is done through three channels like face to face, mail and phone. The internet has become the fourth channel for trade. Internet trade is booming and allowing business to sell more and at a lower cost. Thus, internet offers a great opportunity over traditional channels as it has some advantages or strengths. 

1) Ease of formation: The formation of traditional business is difficult, whereas to form e-business is relatively easy to start. 

2)  Lower Investment requirements: Investment requirement is low as compared to traditional business as the store does not have physical existence and can be managed with less manpower so if trader does not have much of the investment but has contacts (network), he can do fabulous business.

3) Convenience: Internet offers the convenience of 24 X 7 X 365 days a year. Business is going on any time and flexibility is available. Yes, e-business is truly a business that has enabled and enhanced by electronics and offers the advantage of accessing anything, any where, any time. 

4) Speed: This benefit becomes all the more attractive when it comes to information. Much of the buying or selling involves exchange of information that internet allows at the click of mouse. Global access: Internet is truly without boundaries. On one hand, it allows the seller an access to the global market. On the other hand, it offers a freedom to the buyer to choose products from almost any part of the world. No need of face to face interaction between buyer and seller. 

6) Movement towards a paperless society: Use of internet has considerably reduced the dependence on paperwork. Thus, recording and referencing of information has become easy.

7) Government support: The government provides favorable environment for setting up of e-business. This support ensures maximum transparency. 

8) Easy payment: The payment in e-business is done by credit card, fund transfer etc. and it is available round the clock.. 

Limitations of E- business : 

E-business does have certain disadvantages when compared to the traditional way of doing business. Some of the limitations of e-business are as follows. 

(1) Lack of personal Touch : E-business lacks the personal touch. One cannot touch or feel the products. So it is difficult for the consumers to check the quality of products. 

(2) Delivery Time : The delivery of the products takes time. In traditional business you get the product as soon as you buy it. But that doesn't happen in online business. This time lag often discourages customers e.g. Amazon now assures one day delivery. This is an improvement but does not resolve the issue completely. 

(3) Security issues : There are a lot of people who scam through online business. Also, it is easier for hackers to get your financial details. It has a few security and integrity issues. This also causes disturbance among potential customers. 

 (4) Government interference : Sometimes the Government monitoring can lead to interference in the business. 

( 5) High Risk : High Risk is involved as there is no-direct contact between the parties. In case of frauds, it becomes difficult to take legal action.

Q.4 What are the types of e-business? Explain.

 A firm, electronic transitions and networks can be visualized as extending into six directions as follows: 1) Business to Business (B2B) 

2) Business to Consumer (B2C) 

3) Consumer to Business (C2B) 

4) Consumer to Consumer (C2C) 

5) Business to Administration (B2A) 

6) Consumer to Administration (C2A) 

1) Business to Business (B2B): 

In this form the buyer and seller are both business entities and do not involve individual consumers. Here, both the parties involved in e-commerce transactions are business firms and hence the name B2B i.e. business to business.

Transactions between business firms come under this category. Business firms interact with each other for a variety of services. These include supplying ancillary parts/components to manufacturers providing value added services like catering and also providing man power.

2) Business to Consumer (B2C) 

Customer identifies a need, and searches for the product or services to satisfy the need. Customers 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.

3) Consumer to Business (C2B) 

In this electronic transaction the consumer requests a specific service from the business. Consumer to Business is a growing arena where the consumer requests a specific service from the business. It enables buyers to quote their own price for specific goods or services. A consumer posts his request with a set budget online and, companies review the customers requirements and bids out the project. For example, pest control services, taxi services, door step food delivery etc.

4) Consumer to consumer (C2C) 

It facilitates the online transaction of goods or services between two people. Consumer to consumer (C2C) involves the electronically facilitated transactions between consumers through some third party. A common consumer posts an item for sale and other consumers bid to purchase it. The sites are only intermediaries, just to match the consumers. The internet allows a lot of space for consumer groups to be formed. These forums are very interactive. Redressal of complaints is also possible through such groups. For example, eBay.

5) Business to Administration (B2A) 

This part of e-commerce encompasses all transactions conducted online between business and public administration. For example, registration of companies, payment of taxes, getting permits etc.

6) Consumer to Administration (C2A) 

The consumer to Administration model encompasses all electronic transactions conducted between individuals and public administration. For example, getting passport, aadhaar card, licenses etc.

Chapter : 6 

Social Responsibilities of Business organizations

Q.1 Explain any four responsibilities of consumer.

The consumer is the king of the market but in reality experience is different. Business cannot work without consumer. The survival and growth of business depends on consumer satisfaction, service and support. The commercial organization should win the confidence of the customers.

This is possible by following positive attitude towards customers and fulfilling following social responsibilities towards them -

1) Good Quality Products:

The organization should produce quality goods. Every organization should have its quality control department so inferior and substandard products can be rejected. International Standard Organization (ISO), is the latest trend towards quality control. This ensures customers about quality product.

2) Fair Prices:

The consumers should not be cheated by charging high prices. It is not possible to fool the customer at all the time. Fair prices convert a one time consumer into permanent consumer. 

Maximum Retail Price (M.R.P.) inclusive of all taxes should be printed on every packet. Retailer should not charge any extra amount.

3) Customer's Safety:

The business must ensure that the product supplied will not adversely affect the life and health of the customers. Unsafe products should not be marketed. Consumer should be warned of any unsafe goods.

4) Honest Advertising:

The consumers want to know the facts, features, advantages, side-effects etc. of the products. 

The advertisement conveys this information. So the organization must be sure that the advertisement is not being misleading. False, misleading and vulgar advertisement should be avoided. Consumers will appreciate only honest advertisements in the long run.

5) After Sales Service:

The organization is expected to provide after sales service for maintenance of goods during the period of warranty. Efficient and effective after sale service helps to establish good relation between the consumers and the organisation.

6) Research and Development:

Organization should conduct research and development to improve the quality of goods and to reduce the cost of production. This will minimize final prices charged to consumers. It must provide quality standards such as BIS or AGMARK on respective products.

7) Regular Supply:

Consumers should be supplied with the goods regularly as and when required by them. The commercial organization should not create artificial shortage of goods by hoarding and black marketing.

8) Attend Complaints:

The consumer complaints must be attended immediately. Quick and effective grievances redressal system should be implemented. Suggestions of customers should be welcomed.

9) Training:

The business organisation should arrange training for their consumers either free or by charging reasonable fees.

10) Avoid Customer Exploitation:

Business should avoid unfair trade practices which lead to exploitation of consumers. Also they should avoid monopolistic competition in the interest of consumers.

Q.2 State social responsibilities of business towards employees. 

Employees are human resource to the organisation. They must be treated with dignity and respect. The management and employees should develop mutual understanding and trust. Government has passed various labour laws to safeguard the interest of employees. Business has following responsibility towards employees

1. Job security: Security of job provides mental peace and employees can work with full dedication and concentration. Commitment with the work will raise their morale and loyalty towards the organisation.

2. Fair Remuneration: The business should pay attractive salaries to all their employees. Other incentives like bonus, overtime allowance etc. should be given to them. Remuneration should be fixed according to the nature of work. Suitable wage plans providing increments and revision of wages is also essential.

3. Health and safety Measures: Business should protect health and hygiene of employees. Canteen facilities, medical facilities and proper sanitation must be provided to the workers. Proper maintenance of machines and premises must be done to prevent accidents and to control pollution. Safety equipment like hand gloves, safety shoes, helmets, goggle, masks etc. should be provided to concerned employees.

4. Good Working Condition: The employees should be provided with good working conditions such as adequate lighting, ventilation, drinking water etc. Necessary steps should be taken to avoid air, water and sound pollution. There should be proper working hours with lunch breaks and rest pauses etc.

5. Recognition of Trade Unions: It is the responsibility of business organisation to maintain industrial peace. Employer must recognize the workers' right to join trade union. Employer should not restrict employees from forming trade union. 'Divide and Rule' policy should not be followed. Management should sort out various problems of workers by holding talks or negotiations with such unions. Management and union should agree to ban strikes and lockouts to protect interest of both the parties.

6. Education and Training: Organisation should make every possible attempt to educate employees. Guidance and methods of training depend on the nature of job. 'Introduction Training', 'Refresher Training' is conducted to keep employees updated on the latest development. Training makes employees confident and also it increases their efficiency

7. Workers Participation in Management: The workers must be encouraged to take part in management by forming workers committee. Suggestion schemes, profit sharing can be encouraged by management. It will raise their morale and give them a sense of belonging

8. Promotion and Career Opportunities. Business should offer adequate opportunities of promotion to their talented employees. They should give proper information about qualifications, skills and experience required to obtain promotion. It will increase awareness among employees and they will also be motivated to take efforts.

9. Proper Grievance Procedure: There should be proper grievance procedure to handle employees' complaints. All queries should be sorted quickly. The employees must feel satisfied. Investigations and necessary actions should be taken to settle their grievances.

Q.3 Define concept of social responsibility and what is the need for social responsibility.

Howard D. Bowen - 'Social Responsibility is to pursue those policies to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society.'

Need for Social responsibility 

Business organisation is run by profit motive but profit maximisation should not be the sole aim. Commitment to society is also important. The following points bring out the need for social responsibility of business.

 

1) Concept of Trusteeship: Trusteeship is a socioeconomic philosophy that was propounded by Mahatma Gandhi. It provides a means by which the wealthy people would be the trustees of trusts that looked after the welfare of the people in general. Businessmen are considered to be trustees of society. 

2) Changing expectations of society: Society's expectations from business firms have undergone a drastic change over the years. In the early days, business were viewed only as a provider of goods and services. But today society expects business to be a responsible citizen and contribute towards social welfare. 

3) Reputation: Businesses spend huge amount of resources in brand building and strengthening their image. A socially responsible company enjoys a good reputation in the society. It results in increased sales, profitability, attraction of talent and sustained growth.

4) Protection of Environment: Business organisation should make proper use of country's natural resources. They should avoid environmental degradation such as contamination of water resources, depletion of the ozone layer etc. which have been caused by businesses. These have resulted in poor health of the community and placed a question mark on the survival of human species. 

5) Optimum Utilisation of Resources: Modern businesses have huge amount of resources at their disposal. With such large resources businesses are in a better position to protect society's interests. Wastage of resources should be avoided. 

6) Pressure of trade Union: 

Nowadays, workers have become conscious of their rights. Trade unions are growing fast and play important role in business environment. Workers expect management to provide fair wages, bonus etc. to avoid conflicts between trade unions and management. To avoid con flicts, business should understand responsibility and act accordingly. 

7) Growth of Consumer Movement: Development of education and mass media and increasing competition in the market have made the consumers conscious of their rights and powers in determining market forces. So, business enterprises have to follow consumer oriented policies. 

8) Government Control: From the point of view of a business, government regulations are undesirable because they limit freedom. Government have enacted various laws. This has put moral as well as legal pressure on business.

9) Long term self interest: A firm and its image stands to gain maximum profits in the long run when it has its highest goal as 'service to society' when increasing number of members, of society- including workers, consumers, shareholders and government officials, feel that business enterprise is not serving their interest, they will tend to withdraw their cooperation to the enterprise concerned so in their own self interest, a firm fulfils its social responsibility. 

10) Complexities of Social Problems: Some of the social problems have been created by business firms themselves such as pollution, unsafe work places, discrimination etc. It is the moral obligation of business to solve such social problems. 

11) Globalisation : The entire globe is the market place nowadays. lt provides more opportunities and challenges to business. International trade barriers have reduced and resulted in global distribution of goods and services. Countries who have adopted good practices are influencing the world. 

12) Role of Media: Media plays important role in public life. Due to internet, it is easier to reach a common man. Media is very vibrant and active. It can influence masses in society. Media can raise voice against business malpractices and exploitation of consumers. Business should not ignore social values.

Q.4 Describe the features of business ethics.

Andrew Crane: Business ethics is the study of business situations activity and decisions where issues of right and wrong are addressed.

Features of Business Ethics 

1) Code of conduct: Business ethics is a code of conduct. It tells what to do and what not to for the welfare of the society. All businessmen must follow this code of conduct. 

2) Based on moral and social values: It contains moral and social principles (rules) for doing business. This includes self control, consumer protection and welfare, service to society, fair treatment to social group, not to exploit others etc. 

3) Gives protection to social groups: Business ethics give protection to different social groups such as consumers, employee, small businessmen, government, shareholders, creditors etc. 

4) Provides basic framework: It gives the social, cultural, economic, legal and other limits of business. Business must be conducted within these limits. 

5) Voluntary: The businessmen must accept business ethics on their own. Business ethics must be like self-discipline. It must not be enforced by law. 

6) Requires education and guidance: Businessmen must be given proper education and guidance before introducing business ethics. The businessman must be motivated to implement business ethics. 

7) Relative term: Business ethics change from business to business. It also changes from one country to another. What is considered as good in one country may be banned in another country. 

8) New concept: Business ethics is a newer concept. It is strictly followed only in developed countries and not in poor and developing countries. 

Q.5 What is corporate social responsibility ?

Meaning: 

Corporate Social Responsibility (CSR) is self-regulating business model, aims to contribute to societal goals or support volunteering or ethically-oriented practices. It makes a company socially responsible and accountable. This accountability is towards itself, its stakeholders, public in general etc. By practicing social responsibility, companies can be conscious about economic, social and environmental aspects of the society. 

Definitions: 

According to UNIDO (United Nations Industrial Development Organization), "Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders". 

Scope of CSR: 

 A) Applicability of CSR: 

1)  The companies having Net worth of 500 Cr. or more or Turnover of 1000 Cr. or more; or Net Profit of 5 Cr. or more during any financial year shall be required to constitute a Corporate Social Responsibility Committee of the Board with effect from 1st April, 2014. 

2) The Board's report shall disclose the compositions of the CSR Committee. 

3) All companies shall spend, in every financial year, at least 2% of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. 

4) The companies shall be required to incorporate in its Board's report, an annual report on CSR containing the following particulars: 

I. A brief outline of the company's CSR Policy, including overview of projects or

 programs proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programs; 

II. The composition of the CSR Committee; 

III. Average net profit of the company for last three financial years; 

IV. Prescribed CSR Expenditure; 

V. Details of money spent on CSR during the financial year; 

VI. In case the company has failed to spend the 2% of the average net profit of the last three financial year, reasons thereof;

B) CSR Committee: 

The CSR Committee will consist of four Directors, who shall meet at least twice in a year to discuss and review the CSR activities and policy. 

The CSR committee will recommend a for mal CSR Policy and will recommend particular CSR activities, prepares a budget, describe how the company will implement the project, and establish a transparent means to monitor progress.

C) CSR Activities: 

The Policy recognizes that corporate social responsibility is a commitment to support initiatives that measurably improve the lives of underprivileged by one or more of the following focus areas as notified under Section 135 of the Companies Act 2013 and Companies (Corporate Social Responsibility Policy) Rules 2014: 

i) Eradicating hunger, poverty & malnutrition, promoting preventive health care & sanitation & making available safe drinking water. 

ii) Promoting education, including special education & employment enhancing vocation skills especially among children, women, elderly & the differently abled & livelihood enhancement projects. 

iii) Reducing child mortality and improving maternal health by providing good hospital facilities and low cost medicines. 

iv) Ensuring environmental sustainability, ecological balance, protection of flora & fauna, animal welfare, agro forestry, conservation of natural resources & maintaining quality of soil, air & water. 

v) Employment enhancing vocational skills. 

vi) Measures for the benefit of armed forces veterans, war widows & their dependents. 

vii) Training to promote rural sports, nationally recognized sports. 

viii) Contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government for socia-economic development & relief & welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities & women. 

ix) Rural development projects, etc 

x) Slum area development. 

D) Allocation of Funds: 

1) The Company would spend not less than 2% of the average Net Profits of the Company made during the three immediately preceding financial years. The surplus arising out of the CSR activity will not be a part of business profits of the Company.

2) The Company may build CSR capacities of its personnel and/or those of its implementing agencies through Institutions with established track records of at least three financial years.

E) Non-compliance of CSR activities: 

There is no specific penal provision for non-compliance under section 135 of the Act. How ever, non-disclosure or absence of the details about the CSR policy and its implementation in the Boards' report would attract penalties. Penalties for non-complying the duty of CSR would attract a fine of not less than R50,000 which may extend to R 25,00,000 and every officer of the company in default shall be punishable with imprisonment for a term which may extend to 3 years; or with fine which shall not be less than R 50,000 which may extend to R 5,00,000 or with both.

Chapter : 7 Consumer Protection 

Q.1 Explain any four right of consumers.

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 hazardous to health, spurious and pose a danger to life itself.

Q.2 State any four needs of consumer protection.

Generally, safeguarding the rights and interests of consumers is known as consumer protection. It includes all the measures aimed at protecting the rights and interests of consumers. In modem competitive market, consumer is regarded as the 'King of Market' hence consumer protection is re quired due to the following reasons: 

1) Need of participation of consumers: '

It is noted that business organizations take decisions which affect the consumers' interest without consulting the consumer or their organizations. Only a strong consumer organization can pressurize business organizations to allow consumer participation in the decision making process. 

2) Lack of information: 

It is very difficult to establish direct contact between consumer and manufacturer because consumers live in a dynamic and complex world and they are widely scattered. Today's markets are full of domestic as well as imported products therefore it is very difficult to get correct and reliable information about product before they purchase. 

3) Ignorance: 

Ignorance of consumers is the main cause of exploitation by business. Consumers in India are mostly ignorant about their rights, market conditions, price levels and product details. A system is required to protect them from business malpractices.

4) Unorganized Consumers: 

Consumers are widely scattered and are not organized, On the other hand sellers are in better position than consumers and they are powerful. Consumers are under the influence of businessman. An individual consumer cannot fight against these powerful sellers. 

5)  Spurious Goods: 

There is increasing supply of duplicate products. It is not possible for an ordinary consumer to distinguish between a genuine product and its imitation. It is necessary to protect consumers from such exploitation by ensuring compliance with prescribed norms of quality and safety standards. 

6) Misleading Advertising: 

Some businessmen give misleading information about quality, safe ty and utility of products. Consumers are misled by misleading advertisement and do not know the real quality of advertised goods. A mechanism is needed to prevent misleading advertisements. 

7) Malpractices of Businessmen: 

Fraudulent, unethical and monopolistic trade practices by businessmen lead to exploitation of consumers. Many times consumers get defective, inferior and substandard goods and services. Certain measures are required to protect the consumers against such malpractices. 

 8) Trusteeship: 

According to Gandhian philosophy businessmen are trustees of the society's wealth. Therefore, they should use this wealth for the benefit of people.

Chapter : 8 Marketing

Q.1 Explain any four functions of marketing.

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:

Standardization 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.2 Explain importance of marketing to the consumers.

1) Promotes Product Awareness:

Through different marketing activities companies promote their products and services. This helps consumers to know about different products and services available in the market. It helps the consumer in making buying decision. It also creates awareness among the consumers about different brands and features of the product available in the market. Consumer can compare product features, price, availability and other essentials because of marketing. Marketing helps to improve the quality of life of the consumer.

2) Provides Quality Products

There is increasing competition in the market. Consumers are getting easy access to the information about the products and services available in the market. It creates moral pressure on the businesses to provide quality goods to the consumers. Supplying defective products may create negative image of the business which affects the consumer's loyalty.

3) Provides Variety of Products

Marketing creates awareness among the consumers about the product. At the same time, it attracts the consumers to buy the same. With the customer population and preferences becoming wider, and the competitive options becoming more available, market segmentation has become critical in any business or marketing plan. In fact, business launch products keeping the market segmentation in mind. Businessman needs to provide variety of goods to cater to the needs of the different market segments of the consumers. Variety may change according to the price, size and quality of the product.

4) Helps in Selection

Variety of products with different brands are available in the competitive markets. Marketing helps the consumer to choose the best products and services from the different options available.

5) Consumer Satisfaction

The first and foremost objective of any sound marketing policy is to satisfy the consumers by assurance of good quality product. When an offering meets the customer's expectations, the customer is satisfied. Marketing leads to consumer satisfaction through honest advertising, assurance of quality products and availability of innovative products. Thus, marketing takes every effort to satisfy the consumer.

6) Regular supply of goods:

Through efficient distribution channel of marketing regular supply of goods is possible. It helps to maintain the balance between demand and supply. It results into stable prices.

Q.3 Explain the importance of marketing towards the society.

1) Increase in Standard of Living: The prime objective of marketing is to provide goods and services to the customers to satisfy their needs. Paul Mazur defined marketing as, "The delivery of standard of living to the society". Marketing helps to identify the needs of the customers and take an initiative to provide the quality goods at the cheaper prices. 

This will help to increase and maintain the standard of living of the customers. In the modern times, large scale production of goods and services reduced its prices due to which even the poorer sections of society can attain a reasonable level of living.

2) Provides Employment: Modern marketing is a total system which covers almost all functions of organization such as buying, selling, financing, transport, warehousing, risk bearing, research and development etc. To run this system there is a need of people. Thus, marketing gives job opportunities to the people. In the modern era of automation, lesser employments are available in production function and the role of marketing has widened. 

It gives more opportunities of employment in marketing. Converse, Huegy and Mitchell have rightly pointed out that "In order to have continuous production, there must be continuous marketing, only then employment can be sustained and high level of business activity can be continued".

 3) Decreases Distribution Costs: Marketing activities help to provide cheap goods and services to the society. Effective utilization of channel of distribution can help in reducing the cost prices of the products and services. Reduction of cost will help to increase the potential consumers for the products or services. It also assures timely availability of the product. 

4) Consumer Awareness: Marketing helps the society by informing and educating consumers. The function of marketing is to fulfil the needs of the consumers. Marketing helps consumers to know about new product and service available in the market and its usefulness to the customer. 

 Marketing provides satisfaction to the society by supplying relevant information, goods, and services to the people of society according to their demand and taste. Marketing can also include more practical information to assist in making a purchase, such as addresses, phone numbers, product release dates, store hours and Web addresses. 

5) Increase in National Income: Every economy revolves around marketing, production and finance to the industry. The scientifically organized marketing activities help in the economic development of the country. Effective marketing of products and services result into industrialization, more job and makes the economy stronger and stable. Marketing can bring about rapid development of the country by integration of agriculture and industry. 

6) Managing Consumer Expectations: Marketing research helps the organizations to understand the needs of the consumers. It helps in developing the products which fulfills customer's expectations. Customers' review collected through different sources can help the organizations to make necessary changes in the products.

 Businesses use marketing to make consumers aware of major changes, such as mergers and transfers in ownership that affect product offerings or seek to improve quality. Government regulations prevent marketers from making false or misleading claims.

Q.4 Explain the importance of marketing towards the Firm.

1) Increases Awareness:

Marketing helps in creating awareness about the existing products, new arrivals as well as the company which sells a particular product in the market. This raises awareness among the potential consumers. It creates brand image among the consumers.

2) Increases Sales:

Once marketing creates awareness about the products or services among the consumers, it attracts them to purchase the same. Successful marketing campaign helps to increase the sales of the organization. Increase in sale generates profit for the organization. This income and profit are reinvested in the business to earn more profits in future. In modern business, survival of the organization depends on the effectiveness of the marketing function.

3) Creates Trust:

People want to buy from a business that has a trustworthy reputation. Creating trust among the customers is a time consuming process. Creating trust among the consumers helps the busi- ness to earn loyal customers. Once your business can establish this trust with your clients, it creates customer loyalty. Happy customers enhance the brand image in the market. Effective marketing plays an important role in building a relationship between the customers and the organization. Effective pricing policy and timely after sales services improve image of the organization. A majority of the activities of the marketers are directed towards building the brand equity of the business.

4) Basis for Making Decisions:

From inception of idea to delivering the final product to the customer, businessman has to take several decisions. Businessman has to look after many problems such as what, how, when. how much and for whom to produce? As the scale of operation increases, these decisions be- come more complex. Marketing helps to take right decision at right time.

5) Source of New Ideas:

Marketing helps business to understand the needs of the consumers. Feedbacks from the consumers help in the improvement of the existing products. There is rapid change in tastes and preference of people. Marketing helps in understanding these changes. It helps to understand new demand pattern emerged in the market. Research and Development department develop products accordingly. The 4p's of marketing mix i.e. product, price, place and promotion play a huge role in the product development. Inventions and innovations are taken place as per the need by the Research and Development team of the business.

6) Tackling the Competition

There is increasing competition in almost all sectors of the economy. It is difficult for any business to create monopoly for their products and services. The role of marketing is important to create brand image in the minds of potential customers. Marketing not only helps to communicate the products and services to the consumers but also motivates them to buy the same, Sound marketing strategies can portray better image of the business than the competitors.

Q.5 What is Marketing Mix? Explain 7 Ps of Marketing Mix.

1) Product:

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

2) Price:

The price of the product is basically the amount that a customer pays for the product. Price plays an important role in creating demand for the product. The business needs to take utmost care to decide the price of the product. Cost of the product and willingness of the customer to pay for the product play an important role in pricing the product. Too high price may affect the demand for the product and pricing too low may affect the profitability of the business. While deciding the prices, the value and utility of the product to its customers are to be considered. 

3) Place:

Place is also known as distribution channel. Placement or distribution is a very important part of the marketing. Making a right product at the right price is not enough. Businessman needs to make the product available to potential customer at the right place too. Business needs to distribute the product in a place that is accessible to potential buyers. It covers location, distribution and ways of delivering the product to the customer. Better the chain of distribution higher the coverage of the product in the market.

4) Promotion:

Promotion is an important element of marketing as it creates brand recognition and sales. Promotion is a tool of marketing communication which helps to publicise the product to the customer. It helps to convey product features to the potential buyer and inducing them to buy it.

Promotion mix includes tools such as advertising, direct marketing, sales promotion, personal selling, etc. Combination of promotional strategies depend on budget, the message business wants to communicate and the target market.

5) People:

People inside and outside the business directly or indirectly influence the business. People comprise of all the human beings that play an active role in offering the product or service to the customer. The people include employees who help to deliver services to the customer. Right people at right place add value to the business. For the success of the business, it is necessary to recruit right people, train them, develop their skill and retain them.

6) Process:

Process refers to the steps involved in delivering products and services to the customer. Processes are important to deliver a quality service. Good process helps to ensure same standard of service to the customer as well as save time and money by increasing efficiency. The advancement of technology helps businesses in effective monitoring of the process of the business and take corrective action wherever necessary.

7) Physical Environment:

Physical Environment refers to the marketing environment wherein the interaction between customer and firm takes place. Since services are intangible in nature service providers try to incorporate certain tangible elements into their offering to enhance customer experience. In the service market, the physical evidence is important to ensure that the service is successfully delivered. Through physical evidence customers know the brand leaders in the market. Physical evidence affects the customer's satisfaction. It includes location, layout, interior design, packaging, branding, dress of the staff and how they act, waiting area etc.