Brings for Its Students

KVS

(RAIPUR REGION)

Brings for its students

STUDY MODULE

For

CLASS-XII –BUSINESS STUDIES (2016-17)

Under the leadership of

Ms.P.B.S.Usha

Deputy Commissioner

(Chief Patron)

Mr. Girish Chand

Principal, KV-Nabarangpur

(Patron)

Content Updated by:

Sh.R.K. Thakur, PGT- Commerce, KV-No.2, Raipur.

Ms. Monaly D.P. Mukherjee, PGT-Commerce KV, Bilaspur

Sh.V. Jaiswal, PGT-Commerce, PGT-commerce, KV, Durg

PREFACE

TIPS FOR SCORING GOOD MARKS

Cracking an examination is a skill that can be acquired. As with studying, scoring

good marks too is a combination of managing one’s time well and applying the right method.

Here are some guidelines that one can follow while attempting an exam paper.

* Write the question number clearly and highlight it by underlining.

* Utilize the early 15 minutes to read the question paper carefully.

* Plan and organize your answers in mind. Also try to analyze and break a long question in small parts for easy understanding. As internal choice is provided only in questions carrying 6 marks, select the questions to be attempted.

* Write your answers in points as far as possible. Avoid writing in paragraphs. If a question carries a longanswer but has been allotted comparatively less marks, focus on points and sub-points

* To make presentation effective;underline the headings/main points and keywords.

* Don’t get confused with the question starting with words like “ list out ,outline, state, enumerate, explain”. In such questions,answer with complete sentence should be given for each point. Question started with the word like-“state” give brief description(one sentence each). However, you may check the marks assigned to the question and accordingly write your answer within the given word limit.

* You can make your answers more effective by supporting it with illustrations, diagrams, views of management experts, latest example or data, wherever necessary.

* Questions based on distinction must be answered in tabular form with thebasis of distinction clearly specified.

* Do not spend more than requisite time on a particular question.

* Use your watch to keep track of time so as to finish thepaperwell in time and do a quick revision before the exam ends.

Points deserve your attention to learn Business Studies better:-

* Learn the correct meaning of the concept duly supported by the steps of theprocess with diagrams and flowcharts.

* Rememberthe views of management experts and latest example or data.

* Do good practice of case studies to learn the concepts effectively.

* Learn distinction between two related concepts on certain concrete basis and show them in tabular form.

*Solve LatestCBSE sample papersavailable at CBSE’s website CBSE question papers asked in 2015 & 2016. These papers must be done in examination like conditions i.e. Within a time limit of three hours.

* Learn and solve this Study Module.

Division of Marks

Units / Marks
1 Nature and Significance of Management
2 Principles of Management
3 Business Environment / 16
4 Planning
5 Organising / 14
6 Staffing
7 Directing
8 Controlling / 20
9 Financial Management
10 Financial Markets / 15
11 Marketing Management
12 Consumer Protections / 15
Project Work / 20

NATURESIGNIFICANCEOFMANAGEMENT

Content Mapping:-

Management-concept, objectives, and importance

Concept includes meaning and features.

Management as Science, Art and Profession.

Levels of Management.

Management functions-planning, organizing,Staffing, directing and controlling.

Coordination- concept and importance.

KEYCONCEPTSINNUTSHELL

1.MEANING/CONCEPTOFMANAGEMENT:

Managementistheprocessofgettingthingsdonewiththeaimofachievinggoalseffectivelyandefficiently.

• Process:referstotheprimaryfunctionlikeplanning,organising,staffing,directingandcontrollingperformedbythemanagementtogetthingsdone.

• Effectiveness:meanscompletingtheright tasktoachievethedeputedgoalwithinthetimeframe.

• Efficiency:meanscompletionoftaskusingminimumresources

2.DEFINITIONOFMANAGEMENT:

“Managementistheprocessofworkingwithandthroughotherstoeffectivelyachievethe organisationalobjectivesbyefficientlyusinglimitedresourcesinthechangingenvironment.” -Kreitner

3.Functionsofmanagement:

1. Planning- Settingobjectivesandtargetsandformulatinganactionplanofwhatistobedone,howtobedoneandwhentodoit

2.Organising-Assignment of duties, task, establishment of authority and responsibility relationships,allocatingtheresourcesrequiredtoperformtheplannedtask.

3.Staffing-Findingandplacingtherightpersonattherightjobattherighttime.

4.Directing-Leading,influencing,motivatingthestaffchosentoperformtheassignedtaskefficientlyandeffectively.

5.Controlling-Ensuring/Monitoringtheactivitiesinanorganisationareperformedaspertheplan.

4. Nature of Management: As an art, As a science and As a profession.

5. MANAGEMENTOBJECTIVES-

Organisational Objectives:

Survival:-Ensurethattheorganisationsurvivesandexistsinthefuture.

Profitability:-Earningadequateprofitinordertosurviveandgrow

Growth:-Growthindicateshowwellitexploitsthepotentialopportunities.

Social Objectives:

•Producingqualityproductsatreasonablerates,

•generatingemploymentopportunities,

•CommunityprogressanddevelopmentbyprovidingschoolsandcrèchestoemployeesInfactmostofthefirmshavetakenuponthemselvestheconceptofsocialresponsibilityasoneofthebasicelementofbusinessobjectives.

•Environmentalfriendlymethodofproduction.

Personal Objectives:

•MeetingtheFinancialneedslikecompetitivesalariesandperks

•Socialandsafetyneedsoftheemployeelikepeer recognition,selfrespectandrespectforcolleagues

•Higherlevelneedslikeimplementationandmonitoringofpoliciesforpersonalgrowthandsurvival

•Reconcilepersonalgoalswithorganisationalobjectivesforharmonyintheorganisation.

6.IMPORTANCEOFMANAGEMENT

•Aidsinachievementofindividualandorganisationalgoals

•Increasesefficiency

•Enhancesoptimumutilisationofresources

•Createsadynamicorganisation

•Promotesdevelopmentofsociety

7.LEVELSOFMANAGEMENT

Toplevel:- Designations and Functions

•ComprisesofCEO,BoardofDirectors,MD,GM,VP

•Conceptualisingoforganisationalgoal,policyandstrategyformulation

•Organising,ControllingandMonitoringactivitiesandresources

•Controllingtheworkperformance

•ApprovingBudgets

MiddleLevel:- - Designations and Functions

•ComprisesofDepartmental,Sub-DepartmentalandDivisionalheads.

•Executionofplans,policiesframedbythetoplevelmanagement

•Preparingorganisationalsetupappointingemployees

•Issuinginstructionsandmotivatingemployees

•Ensuringinterdepartmentalcooperation

LowerLevel:- - Designations and Functions

•Forwardingsuggestionsandfeedbacktothetoplevel

•CompriseofSupervisors,Foremenandinspectors

•MaintainMorale,safetyanddisciplineamongsttheworkforce

•Overseetheworkoftheworkers

•Assistthemanagementinselection,training,placementpromotionofworkers

8.NATUREOFMANAGEMENTAsanart:

•Existenceoftheoreticalknowledge.

•DevelopedthroughPracticalandcreativeprocess.

•Personalisedapplicationandskill

AsaProfession:

•Welldefinedbodyofknowledge.

•Existenceofcodeofconduct

•Professionalassociation(AIMA)

•Restrictedentry

•Feesasremunerationfortheirservices

AsaScience:

•Arranged,organisedsystematicbodyofknowledge

•Universalvalidity

•Principlesarrivedatafterexperimentation

9.COORDINATION Meaning.

Itisthesynchronisationofvariousactivitiesandeffortsinanorganisationprovidingtherequiredamountofquality,timingandsequence;thusensuringtheachievementoftheplannedgoalwithminimumcontent.

10.FEATURESOFCOORDINATION:

•IntegratesGroupEffort:Itisanorderlyarrangementofgroupeffortandnotindividualeffort

•Ensuresunityofaction:Itisabindingforcebetweendepartmentsandensuresthatalleffortsarefocussedtowardsachievingtheorganisationalgoal

•ItisaContinuousProcessneverendingprocessasitsneedsarefeltatalllevelsandstepsintheorganisations.Itbeginsattheplanningstageandcontinuestillcontrolling

•Itremainsthefunctionandresponsibilityofeverymanager:thetoplevelcoordinatestheoverallplan,middlelevelcoordinatestheeffortsofthedifferentsectionsandsubsectionsandlowerlevelmanagementcoordinatestheactivitiesoftheworkers

•ADeliberatefunction:Itdoesnotoccurspontaneouslynorisitachievedbyforceitisadeliberateactiontaken.

•Allpervasivefunctionitisneededinalldepartmentsandatalllevels.Lackof coordinationcanleadtooverlappingofactivities.

11.NEEDFORCOORDINATION:

Thereasonsthatbringouttheimportanceorthenecessityforcoordinationare

•GrowthintheSizeoftheorganisationresultsintheincreaseinvariedqualityof manpower toowithvariedindividualaspirations.Coordinationseekstomatchthe individualgoalwiththeorganisationalgoal.

•FunctionalDifferentiationarisingoutofdepartmentalisationanddivisionbringsfortha motiveforachievementofindividualobjectives,inisolationfromotherobjectivesleadingtodepartmentalclashes.Coordinationseekstoironoutthesevariations.

•Specialisationcangiverisetofeelingofsuperiorityandprioritisingoftheirzoneofactivities.Coordinationseekstosequenceandintegrateallthespecialistsofactivitiesintoawholesomeeffort.

12.IMPORTANCEOFCOORDINATION

•Ensuresunityofaction

•Erasesinterdepartmentalconflicts

•Promotesharmoniousimplementationofplans

•Helpsinmaintainingahighdegreeofmoraleamongstemployees

13.COORDINATIONISTHEESSENCEOFMANAGEMENT.

Coordinationisthemanagementfunctionofcorrelatingandintegratingthediversegoalsandactivitiesintheorganisationalprocess.Itistheessenceofmanagementbecause:

ItisneededatallManagementfunctions

Planning-Coordinationbetweenthemasterplananddepartmentalplan.

Organising-Requiredbetweenauthority,responsibilityandaccountability.

Staffing-Achievebalancebetweenjobrequirementandqualitiesofpersonnel

Directing-Requiredbetweensupervision,motivationandleadership.Controlling-Ensuresactualresultconformtoexpectedresults.

NeededatalllevelsofManagement-

Toplevel-needscoordinationtointegrateactivitiesoftheorganisationfor accomplishingtheorganisationalgoal

Middlelevel-Coordinationoftheeffortsofdifferentsectionsandsub-sections

Lowerlevel-Coordinationintheactivitiesofworkerstoensureworkprogressesasperplans.

Important Questions:

(One mark questionits answer)

(01)Define management. (1 mark)

It is a process of getting things done with prime aim of accomplishing organizational objectives effectively and efficiently.

(02)How management is a process? (1 mark)

Management is a process as it follows series of continuous inter-related functions like planning, organizing, staffing, directing and controlling.

(03)‘Management is a pervasive function.’ Explain.

Management is required in every type of organization whether government or non-government organization, business or non-business organization as well as to abroad.

(04)What is ‘being effective’ means?

Being effective means completing assigned task on assigned time.

(05)Define efficiency.

Efficiency is the ability to complete assigned task on assigned cost or at the lesser cost.

(06)Management is intangible force. Explain.

Management could not be seen but it can be realized with achievement of goal or satisfied work force from the working environment and organization etc.

(07)Management is multi-dimensional functions. How?

Management is multi-dimensional because: (a) it manages work (b) it manages people (c) it manages business operations.

(08)Management constantly reviews its organizational goals to meet the changing needs of the environment. Identify the characteristic of management.

Ans: Management is ‘dynamic’.

(09)Roopa Garments always reserve three positions in their office for physically challenged individuals. State the business objective which is Roopa Garments going to achieve through this. Ans- Social objectives.

(10)State two examples of personal objectives of management.

(a) provide safe & comfortable working environment (b) competitive wages & salaries (c) growth & development opportunities to the workforce.

(11)Why is it extremely important for management to achieve economic objectives? Ans- Achievement of economic objectives helps business to achieve personal and social objectives.

(12)State two features of art present in management.

(a) continuous practice and creativity (b) personal application

(13)State two features of science present in management.

(a) Theoretical knowledge (b) applications based on experimentation

(14)Who is responsible to establish organizational goals and set targets for all individuals and groups working in the organization? Ans- Top Level Management

(15)Which is the most important function performed by the top level of management? Ans- Planning

(16)Which is the most important function performed by the middle level of management? Organizing

(17)Name the function of management which involved in preparing organizational strategies. Planning

(18)Which level of management is responsible for implementation of plans and policies? Operative level of management

(19)Supervisor belong to which level of management?

Operative level of management

(20)Define coordination.

It is a process of unifying individual efforts among interdependent activities and departments of an organization.

(21)Name the process which synchronizes the activities of different departments.

Coordination

(22)At which level of management are the managers responsible for maintaining the quality of output and safety standards? Ans- Operative level ofmanagement.

(Three/four marks question and its suggestive answer)

(23)Hero Ltd. target is to produce 10,000 shirts per month at a cost of Rs. 150 per shirt.The Production Manager could achieve this target at a cost of Rs.160 per shirt.Do you think the Production Manager is ‘effective’? Give reason in support of your answer.

Yes, the production manage is effective because he has completed the work in given time. (needs to state the meaning of effectiveness).

(24)Your grandfather has retired from an organization in which he is responsible for implementing the plans developed by the top management. At which level of management was he working? State one more function performed at this level.

He is working at middle level of management. He has to interpret the policy of top management to lower level. He has to look after of his respective department. He has to assign duties and responsibilities to his subordinates.

(25)Identify the levels of management performing following responsibilities:

(a)Representing problems of workers regarding safety issues.

(b)Entering into joint venture with foreign company.

(c)Devising new schemes to boost sales.

Ans. (a) Operative level (b) Top level (c) Middle level

(26)Management of Diamond Ltd fulfills all its objectives and the organization is able to work effectively and efficiently. It is using friendly method of production and disposes off the waste material by either recycling it or using the same for landfill in such a manner that the aquatic life is not disturbed. It also provides employment opportunities to the disadvantaged sections of the society.

(a)Identify the objective of management which Diamond Ltd wants to fulfill by doing the above activities.

(b)State any two other objectives that the management of Diamond Ltd should fulfill.

(c)Identify any two values which management of Diamond Ltd can communicate through fulfilling the objectives as stated in (b).

(d)Identify any two values which Diamond Ltd desires to emphasize through its above stated activities.

Ans. (a) Social objective

(b) (i) Organizational objectives (ii) Personal Objectives

(d) (i) Waste management: recycling of waste material or using to landfill. (ii) Providing employment opportunities to disadvantage sections of society

(27)Do you think management has the characteristics of a full-fledged profession?

Any profession like Lawyers, Medicine (Doctor), Engineer, Chartered Accountant should have the following characteristics.

(a)Well defined and organized body of knowledge which can be acquired through course of study, training.

(b) Restricted entry i.e. only after passing concerned exam in the field.

(d)Common code of conduct to its members.

(e)Serving clients - main motive.

Though management does not satisfy fully the norms/features of profession, it partly has some of its features, as given below.

WHY IS MANAGEMENT NOT CONSIDERED AS PROFESSION?

Practically most of the managers are not properly qualified and formally trained for the job. Even some of them are illiterate, but perform well.
The practice of hereditary managers is prevalent, sons, daughters, and nearest relatives of business magnates are born managers. Management is thrust upon them.
Code of conduct, an important feature of profession is not strictly followed in the management. Though All India management Association has made code of conduct but most of the managers’ even members of this association are not follow the code of conduct.

At present management cannot be regarded as a profession in all respects because it has some of the features of profession but not all. Therefore management is not a full-fledged profession but it is growing position to become a profession.

Management is not true science like physics or chemistry. Comment.

Management as a science: The essential features of science are:

There is a systematic body of knowledge in the form of principles and practices.
The principles are developed through the scientific methods of observations and experiments.
The principles establish cause and effect relationships between different phenomena.
The principles have universal validity or application.

Management fulfills most of these features. It has a systematic body of knowledge in the form of principles and techniques. Management principles have been developed through observation and experiments in different types of organizations. These principles establish cause and effect relationships. For example, the principle of unity of command suggests that if a person has more than one boss at same time, discipline and loyalty are likely to get undermined. Principles of management are valid in most of situations.

However, these are flexible and can be modified to suit a given situation. This is because management is concerned with human beings whose behavior cannot be predicted with absolute accuracy. That is way management is known as a social science or soft science and not likes as physics or chemistry.

PRINCIPLES OF MANAGEMENT

Content mapping:-

Principles of Management- concept and significance,Fayol‟s principles of management, Taylor’sScientific management- principles and techniques

Concept: A managerial principle is a broad and general guideline for decision making and behavior. Management principles are not as rigid as principles of pure science. They deal with human behavior.

Nature of Principles of Management:

(a) General guidelines:

They are not readymade solutions to all managerial problems; rather they are general guidelines to help the management.

(b) Formed by practice and experimentation:

They are not developed overnight. They are derived on the basis of observations and analysis of events which managers face in actual practice. Secondly they are derived after conducting experimental studies.

(d) Universal Applicability: They are applicable to all types of organizations and situations.

(e)Mainly behavioural:Management principles aim at influencing behaviour of human beings.

(f)Cause and effect relationships:

This principle intended to establish relationship between cause and effect so that they can be used in similar situations in a large number of cases.

(g) Contingent:

The application of principles of management is contingent or dependent upon the prevailing situation at a particular point of time. The application of principles has to be changed as per requirements.

Importance or Significance of Principles of Management:

1. Provide useful insights to manager : –

Principle of managers provides useful insights to managerial behaviour and influence managerial practices. These principles will add to their knowledge ability and understanding of managerial situations and circumstances.

2. Optimum Utilization of Resources :—

Management principles aim at optimum utilization of human and physical resources for the attainment of organizational goals.Resources should be used in such a manner that they should give maximum benefit with minimum cost.

3. Scientific Decisions:

Management principles enable the managers tosolve the problems systematically &scientifically in changing conditions.

4. Meeting changing environment requirements:

Principles are modified and as such help managers to meet changing requirements of the environment.

5. Fulfilling social responsibility:

Due to awareness of the public, companies have to fulfill their social responsibilities. Management theory and management principles have also response to these demands.

6. Management training, education and research:

Principles of Management are at the core of management theory. As such these are used as a basis for management training, education and research.

Taylor’s Scientific Management:

Meaning: Application of science for each and every element of management. Knowing exactly what you want man to do and seeing they do it in the best and cheapest way.

Principle of scientific Management:

1. Sciencenotruleofthumb-

Thereshouldbescientificstudyandanalysisofeachelementofjobratherthanadoptingold rule of the thumb approach on a hit and miss method. Encourage “thinking before doing”.

2. Harmonynotdiscord-

There should be complete harmony and proper understanding between managementandworkersinachievingtheorganizationgoals.

3. Cooperationnotindividualism-

Tayloremphasizedontheimportanceofcooperativegroupeffortbetweenthe managementandworkersinachievingtheorganization’sgoalsandnotindividualism.

4. Developmentofworkerstotheirgreatestefficiencyandprosperity:

Themanagementshouldscientificallyselecttheworkers;assignjobaspertheirphysical,mentalandintellectualcapabilityandpotential;andtrainthemasperthejob requirement.

Techniquesofscientific management;

1. FUNCTIONAL FOREMANSHIP;

PlanningIn-charge:Themainfunctionof"planningin-charge"istoplanallaspectsofa jobtobeperformed.Itconsistsoffourpositions:

(i)Routeclerk:Hedeterminesthesequencetoperformvariousmechanicalandmanualoperations.

(ii)Instruction card clerk: He issues instructions to the workers to be followed by them.

(iii)Timeandcostclerk:Heisconcernedwiththeframingoftimescheduleonthebasisofdeterminedroute.Also,hekeepstherecordofthecostofoperations.

(iv)Disciplinarian:He isconcernedwiththecoordinationineachjobfromplanningtosuccessfulexecution.Heenforcesrulesandregulationsandmaintainsdiscipline.

ProductionIn-charge:Itconsistsoffollowingfourspecialistswhoareconcernedwiththeexecutionofplans.

(i)SpeedBoss:Hecheckswhetherworkisprogressingasperschedule.Heensurestimelyandaccuratecompletionofjobs.

(ii)GangBoss:Hearrangesmachines,materials,tools,andequipment’sproperlysothatworkerscanproceedwiththeirwork.

(iii)RepairBoss:Heensuresthatallmachines,tools,equipment’sareinperfectworking order.

(iv)Inspector:Heensuresthattheworkisdoneasperthestandardsofqualitysetbyplanningdepartment.

(2) Standardizationandsimplificationofwork

(i) To reduce a given line or product to fixed types, sizes and characteristics.

(ii) To establish interchange ability of manufactured parts and products.

(iii) To establish standards of excellence and quality in materials.

(iv) To establish standards of performance of men and machines..

3) Methodstudy

(1) Findingonebestwayofdoingajob.

(2)Criticalanalysisismadeforplantlayout,productdesign,materialhandlingandworkprocessesusingtechniqueslikeprocesscharts,operationsresearchetc.

4) Motionstudy

(1) Takingthoroughanalysisofvariousmotionsbeingperformedbyaworkerwhiledoingaparticulartask.

(2) Identifyinganddeterminingtheidealproductivemovement.

(3) Eliminatetheunproductivemovementsandequipment.

5)Timestudy

1.Itisthetechniqueusedtodeterminethestandardtimetakenbytheworkmanwithreasonableskillandabilitytoperformaparticulartask.

2. Herethejobisdivided intoseriesofelementsandthetimerequiredtocompleteeachelementidealisticallyisrecordedusingastopwatch.

6) FatigueStudy

Determines theamountandfrequencyofrestintervalsrequiredincompletingatask.

7) DifferentialPiecewagesystem

1. In this system theefficientandinefficientworkersarepaidatdifferentrates,asfinancialincentivesactasmotivators.

2. Firstastandardtaskisestablishedwiththe help of timeandmotionstudy,thentworatesareestablished.

3. Higherwhenstandardoutputs is produced and lower whenthestandardisnotmet.

8) Mental Revolution

1.Itinvolves a change in the attitude of workers and management towards one another from competition to cooperation. Both should realize that they require one another.

Henri Fayol ‘Father of General Management’

Fayol’s Principles of Management:

1. Division of labour -work shouldbe divided into small specializedjoband performedbyatrainedspecialist

2.Authorityandresponsibility-theremustbeabalancebetweenauthority(righttogiveorders)andresponsibility(obligationtoperformtheassignedtask).

3.Discipline-obediencetoorganizationrulesand regulation.

4.Unityofcommand-receiveordersfromoneboss.

5.Unity ofDirection-alltheunitsoftheorganizationshouldaimandmovetowardsachievingtheorganizationalgoal.

6.Subordinationofindividualinterest to common interest-theorganizationinteresttobeprioritizedoverindividualinterest.

7.Remuneration-payshouldbefairandsatisfyingtobothemployeeandthe organization.

8.Centralizationanddecentralization-Properbalancebetween centralization and decentralization.

9.Scalarchain-ordersorcommunicationshouldpassfromtoptobottomandfollowtheofficiallineofcommand.

10.Orders-Aplaceforeverything/everyoneandeveryoneinitsplace.

11. Equality-kindness,empathyandjusticeinthebehaviorofmanagertowardsworkers.

12.Stability of Tenure –frequentdisplacementofemployeefromtheirpositionshouldbeavoided.Theyshouldbegivensufficienttimetoshowtheirresults.

13. Initiative-Employeestobeencouragedtodevelopandcarryouttheirimprovementplans.

14.Espirit-de-corps-needforteamwork,spiritandharmony.

Comparison of the contributions of HENRY FAYOLandF. W. TAYLOR

Basis / HenryFayol / F.W. Taylor
1.Perspective / Toplevelmanagement / Lowerlevel-shopfloorlevel
2.UnityofCommand / Ordersshouldbereceivedfromoneboss. / Insisted infunctionalforemanship
3.Applicability / Universallyapplicable / Onlytospecializedsituations
4.Focus / Improvetheoverall administration / Concentratesonimprovingthe productivity
5.Personality / Scientist.
gescientificmanagement / Practitioner.
6.Emphasis / On standardizationofworki.e. GeneralTheoryofAdministration / On ScientificManagement
7.Basisofformation / PersonalExperience / Observationsand experimentation

VERY SHORTANSWERTYPEQUESTIONS(1MARK)

1.Prince the manager of a business undertaking is very lax with his fellow employees and subordinates. He does not given them parameters or rules for reporting to work and completion of assignments. Which principle of management is overlooked?