Business Studies Solved Question Papers' 2022 | AHSEC Class 12 Business Studies Solved Question Papers

[Class 12 Business Studies Solved question Paper, AHSEC, 2022, Assam Board]

Full Marks: 100
Time: 3 hours
The figures in the margin indicate full marks for the questions.

The figures in the margin indicate full marks for the questions.

1. (a) Who introduced the concept of ‘differential price-rate-wage system’?         1

Ans: F.W. Taylors

(b) Under which environmental factor does fiscal policy fall?  1

Ans: Economic Environment

(c) Write a difference between policy and procedure.  1




Policies are guidelines which facilitate the achievement of predetermined objectives.

Procedures are sequences of steps to be followed for performing some important jobs.

(d) What is an informal organization?      1

Ans: Informal organisation refers to the relationship between people in an organisation based not on formal hierarchy but on personal attitudes, whims, likes and so on. It is an unofficial framework.

(e) What is Orientation?                                1

Ans: Orientation refers to introducing the new employees with the existing employees.

(f) Who proposed the “Need Theory” of motivation?       1

Ans: Abraham Maslow

(g) Can working capital become negative?  1

Ans: Ans: Working Capital is calculated as: Net working capital= current assets – current liabilities. If current liabilities are more than current assets, then working capital becomes negative.

(h) What is SEBI?  1

Ans: SEBI is a regulatory body which was set up with the purpose of keeping a check on malpractices in stock exchanges and protect the interest of investors. [COURTESY: DTS NOTES]

2. What is Trade Mark?                 2

Ans: Trademark simply means mark of a trade carried on by an identified entity. It is usually a sign mark or a symbol, word or words.

3. Write the meaning of Management Audit.      2

Ans: Management Audit is an evaluation of the management as a whole. It critically examines the full management process, i.e. planning, organising, directing, and controlling. It finds out the efficiency of the management. Management auditing is conducted by a team of experts. They collect data from past records, members of management, clients and employees. The data is analysed and conclusions are drawn about managerial performance and efficiency.

4. Write two rights of a consumer.          2

Ans: Rights of Consumers:

a)       The right to safety: It refers to the right to be protected against products which are hazardous to health or life.

b)      The right to be informed: Consumers have a right to be informed about the quality, quantity and price of goods or services so that they can make the right decision.

5. What are two important functions of top level management?                               2

Ans: The functions of top management are:

a)       Determining the objectives of the enterprise: They determine both long term as well as short term objective of the enterprise.

b)      Framing of plans and policies: They formulate plans and policies to achieve the desired objectives.

6. What is meant by ‘Unity of Command’?           2

Ans: Unity of command: According to this principle of Fayol, every employee should receive orders and instructions from one boss and he should be responsible and accountable to him only. This principle will be violated if an employee is asked to receive orders from more than on superior.

7. How does social environment influence the working of a business?                    3









Ans: Social Environment: The social environment of business includes social factors like customs, traditions, values, beliefs, poverty, literacy, life expectancy rate etc. The businessman cannot overlook the components of social environment of social environment as these components may not have immediate impact on the business but in the long run the social environment has great impact on the business.

8. Write three limitations of planning.   3

Ans: Planning can’t prevent problem. It can only product them to prepare contingency plans to deal with them if and when they occur. Planning fails in spite of efforts of management because of its limitations which are stated below:

1. Planning does not work in dynamic environment: The business environment is dynamic, nothing is constant. The environment consists of a number of dimensions— economic, political, technological, legal and social dimensions. The organisation has to constantly adapt itself to the changes in business environment. However, it is not always possible to accurately assess future trends in the environment.

2. Planning is a time consuming process: Planning is a time consuming process. It requires collection of information, its analysis and interpretation. These activities may take considerable time.

3. Planning involves huge costs: Planning is an expensive process in terms of money. When plans are drawn up, huge costs are involved in the formulation of plans. If the costs are not justified by the benefits derived from the plan, it may have adverse effect on the enterprise.

9. Outline three merits of divisional organizational structure.  3

Ans: Advantages/Merits of divisional organizational structure

a)    Product specialisations as one type of product are grouped under one department.

b)    Fast decision making since there is no dependence of one department on other department.

c)    Expansion of new department without disturbing existing departments.


Write three merits of internal recruitment.         3

Ans: Advantages of Internal Source of Recruitment:

a)    Job Security: It creates a sense of security among employees when they are assured that they would be preferred in filling up vacancies.

b)    Motivation: It motivates the existing employees, for they are assured of the fact that they would be preferred over outsiders when vacancies occur. It gives the scope of development for existing employees of the organisation.

c)    Improved Commitment: It promotes loyalty and commitment among employees due to sense of job security and opportunities for advancement.

10. Write three differences between directives and supervision.               3

Ans: Direction: Directing is telling the people what to do and seeing that they do it in best of their ability. This function of management is concerned with guiding the employees in the organisation to achieve organisational goal.

Supervision: The word supervision is the combination of two words i.e., super+vision where super means over and above and vision means seeing. Thus, supervision means overseeing the subordinates at work. supervision refers to the direct and immediate guidance and control of subordinates in performance of their task.

Difference between directives and supervision: [COURTESY: DTS. NOTES]




1. Scope

It is a wider management concept. It includes Supervision, motivation, Leadership and communication.

It is narrow concept. It is an element of direction.

2. Level of management

It is done by top level management.

It is done by middle and lower level management.

3. Nature

It is goal oriented.

It is task oriented.


Write a note on Budgetary control.                         3

Ans: A budget is a planning and controlling device. Budgetary control is a technique of managerial control through budgets. It is the essence of financial control. Budgetary control is done for all aspects of a business such as income, expenditure, production, capital and revenue. Budgetary control is done by the budget committee.

Advantages of Budgetary Control

(i) Helpful in Attaining Organizational Objectives: Budgets are based on plans and all the departmental managers are informed about the expectations each one of them. The departmental managers put in their best efforts to achieve their target and consequently it helps in attaining the organizational objectives.

(ii) Source of Motivation for Employees: this technique prescribes the objectives for the employees. Their performance is matched with the standards. If the results are positive, they are appreciated. This motivates them.

11. Write any three factors affecting dividend decision.                3

Ans: Factors affecting dividend decision: A firm's dividend policy is influenced by the large numbers of factors. Some factors affect the amount of dividend and some factors affect types of dividend. The following are some major factors which influence the dividend policy of the firm.

1. Legal requirements: There is no legal compulsion on the part of a company to distribute dividend. However, there certain condition imposed by law regarding the way dividend is distributed.

2. Firm's liquidity position: Dividend payout is also affected by firm's liquidity position. In spite of sufficient retained earnings, the firm may not be able to pay cash dividend if the earnings are not held in cash.

3. Repayment need: A firm uses several forms of debt financing to meet its investment needs. These debts must be repaid at the maturity. If the firm has to retain its profits for the purpose of repaying debt, the dividend payment capacity reduces.


Write three features of OCTEL.                  3

Ans:  Over the counter exchange of India (OTCEI) was incorporated in 1990 but trading was started in 1992. It is established on the lines of NASDAQ and promoted by UTI, IDDI and LICI. It was established with the object to provide electronic trading facility to small investors.

The features of OTCEI are:

a) Nationwide coverage and Screen based trading

b) Transparency in transactions

c) Incorporated entities backed by financial institutions.

d) Only capital market securities are traded.

12. Write five advantages of branding.                  5

Ans: A brand is defined as a name, term, sign, symbol or special design or some combinations of these elements that is intended to identify the goods or services of one seller or a group of sellers. A brand differentiates these products from those of competitors. A brand in short is an identifier of the seller or the maker. It is simply giving a name or a sign or a symbol etc. to a product. For example: Pepsi, Nike etc.

Advantages of Branding:

a)       Brand name helps in advertising in an easier way.

b)      Brand name establishes permanent identity of the product.

c)       Branded products can be easily identified by consumers.

d)      Brand name promotes repurchasing.

e)      A good brand name helps to survive in the competitive market.

13. What are the fundamental features of management?            5

Ans: Features of Management:

a)       Management is goal oriented: Every management activity is directed towards achieving predetermined objectives of the organisation.

b)      Management deals with several functions: Management includes several functions such as planning, organizing, staffing, directing, coordinating, controlling, motivating or actuating, controlling, decision making, leadership and communication.

c)       Management is intangible: It cannot be seen but it can be felt through the performance of the workers. Mismanagement if any is quickly noticed and is a sign of poor management.

d)      Management is a continuous process: It is a never ending process. It is concerned with constantly identifying the problem and solving them by taking adequate steps. It is an on-going process.

e)      Management is dynamic: Under dynamic environment management faces several challenges hence efforts are made to develop and use new techniques for managing the organizations effectively and efficiently.  As social change takes place, management also changes to overcome the problems whenever they arise.

14. Write the principles of scientific management.          5

Ans:  Taylor’s philosophy consists of the following principles of scientific management:

a)       Replacing rule of thumb with science: According to this principle, scientific investigation should be applied in the scientific management, which will replace the rule of thumb. Taylor had made study of every job and fixed the method and timing for performing the job so that the worker should know that what, when, and how is required to perform the job. This principle is the starting point of scientific. This principle is concerned with selecting the best way of performing a job through the application of scientific analysis and not by intuition or hit and trial methods.

b)      Harmony in group action: This principle states that there should be cooperation between the management and the workers. In order to achieve the best possible results from the business operations, it is essential that there should be harmonious relations between the management and the workers.

c)       Division of responsibility between workers and management: According to this principle there should proportionate division of the responsibility between the managers and the workers, clearly defined, and predetermined.

d)      Maximum Output: Scientific Management aims for the continuous production and productivity. According to this principle management and the workers should try to increase the production at the minimum cost.

e)      Selection, training, and development of the workers in the scientific manner: According to this principle the right men are placed on the right job. The jobs are determined first for which the workers are required and then the qualifications required for the job are determined. On the basis of these standards the employees are selected.


Explain the process of liberalization in India.      5

Ans.: Liberalisation of economy means to free it from direct or physical control imposed by the government.  In other words, it is the process by which government control over the industry is being loosened. It implies liberating the trade and industry from unwanted government control and restriction. Liberalization of the Indian industry has been taken in the following way:

a)       Abolishing licensing requirements in most of the industries except a short list.

b)      Freedom in deciding the scale of business activities.

c)       Freedom in fixing the prices of goods services.

d)      Removal of restriction on the movement of goods and services.

e)      Liberalisation in import and export.

15. Explain the term ‘Authority’, ‘Responsibility’ and ‘Accountability’.                   5

Ans: Responsibility: Responsibility means assigning the work amongst subordinates. The process of delegation begins when manager divides his work among different individuals.

Authority: Authority means power to take decision. To carry on the responsibilities every employee needs to have some authority, so, when managers are passing their responsibilities to the subordinates, they also pass some of the authority to the subordinates.

Accountability: To make sure that his subordinates perform all works effectively and efficiently the manager creates accountability. Accountability means subordinates will be answerable for the non-completion of the task. It is the third and final step of delegation process. [DTS. NOTES]


Write any five functions of consumer organization.         5

Ans: Functions of Consumer organisation and Non-Government Organisations (NGO):

a)       Creating consumer awareness: They publish periodicals brochures journals etc. for creating consumer awareness.

b)      Encourage the consumer: They encourage and educate the consumer to protect against exploitative, unfair trade practice of the seller.

c)       Filing complaints: They file suits, complaints, on behalf of consumer.

d)      Focus on consumer problem: They arrange seminars, workshops and conference for the purpose of focusing on problem of consumer.

e)      Problem legal assistance: They provide legal assistant for getting legal remedy against the damage caused to consumer.

16. Write five objectives of entrepreneurship development programme.                              5

Ans: The primary objective of entrepreneurship development programme (EDP) is to enable entrepreneurs initiating and sustaining the process of economic development in the following ways:

1. Creation of Employment Opportunities: Unemployment is one of the most important problems confronting developing and underdevelopment countries, EDP’s aims at enabling prospective entrepreneurs in the setting up of their own units and get self-employment. With the setting up of more and more units by entrepreneurs, both on small and large scale, numerous job opportunities can be created for the others.

2. Capital Formation: It is not possible to set up an enterprise without adequate funds. Entrepreneur as an organizer of factors of production employs his own as well as borrowed resources for the setting up of his enterprise. Entrepreneur mobilizes idle savings of the public and put them to productive use. In this way he helps in capital formation, which is so essential for the industrial and economic development of a country. Various development banks like ICICI, IFCI, IDBI; SFCs, SIDCs take initiative in promoting entrepreneurship through assistance to various agencies involved in EDP and by providing financial assistance to new entrepreneurs.

3. Balanced Regional Development: Small scale units can be set up in industrially backward and remote areas with limited financial resources. EDP’s aims at accelerating the pace of industrialization in the backward areas and reduces the concentration of economic power in the hands of a few. Setting up of more units leads to more development of backward areas and balanced regional development.

4. Use of Local Resources: In the absence of any initiative local resources are likely to remain unutilized. Proper use of these resources can result in the progress or development of the area and that too at lower cost. Effective EDPs can help in the proper use of local resources by providing guidance, assistance, education and training to the prospective entrepreneurs.

5. Improvement in per Capital Income: Entrepreneurs are always on the lookout for opportunities. They explore and exploit the opportunities. Entrepreneurs take lead in organizing various factors of production by putting them into productive use through the setting up of enterprises. More enterprises will lead to more production, employment and generation of wealth in the form of goods and services. It will result in the increase in the overall productivity and per capita income in the country. EDPs play a positive role in the setting of more units and thus help in generation of more employment and income.


Write five external sources of recruitment.         5

Ans: Methods of External sources of recruitment are:

a)       Direct Recruitment: Sometimes the organisations paste notice at the gate of their factory or workshop stating the vacant job positions. The people who are interested in those jobs walk in for interview. This method of external recruitment is called direct recruitment.

b)      Advertising on Television: A new trend of external recruitment is telecast on various channels regarding vacant job position. They telecast the requirement of the job along with the required qualification.

c)       Employment Exchange: Employment exchange act as middlemen between the job-seekers and the organisations who have vacant job positions. The candidates leave their bio-data and details of their qualifications with the employment exchanges and when the organisations approach employment exchanges for suitable candidates.

d)      Placement agencies and Management consultant: Placement agencies provide nation-wide service of matching demand and supply of work force. These agencies invite the bio data and record from various job seekers and send them to suitable clients.

e)      Web Publishing: In internet there are certain websites such as and provides information regarding job seekers and companies which have vacant job position.

17. Write five importance of communication.                    5

Ans: Communication is a process of understanding between the persons through exchange of ideas, messages, suggestions etc. It is important due to the following reasons:

a) It facilitates Planning: Participation of all the executives in planning is a pre requisite for getting the task done. This participation is possible only when the managers and employees interact with each other.

b) It helps in decision making. Most of the decisions are taken up by the top level management. But for decision making, right type of information is required from different persons. It is through communication that managers can identify the problems which help in taking the decisions effectively.

c) It helps in the process of motivation: Sharing of the information with the subordinate gains their confidence and willing cooperation. It increases their morale of doing work.

d) It is a basis of effective leadership: A good communicator is a good leader. Through good communication skill, the manager comes closer to his subordinates and removes the misunderstanding. Thus it is the basis of leadership.

e) Helps in smooth working of an enterprise: Smooth working of an enterprise is possible only when there is no communication gap. Through communication managers give directions for smooth functioning of organisation.


Write features of New Issue market.                      5

Ans: Primary Market (New issue market) Features

1. It is a market for the new long term capital. It helps new company in capital formation.

2. It is the market where the securities are issued for the first time. It is also referred as new issue market.

3. In primary market, only buying of securities take place. Securities of company are sold directly by the company to the investors.

4. In primary market, capital can be raised in the form of IPO, Offer for Sale, Private placement, Right issue etc.

5. In primary market, price of securities is determined by the company considering the guidelines of SEBI.

18. Write five factors affecting requirements of working capital.                               5





Ans: Following factors are to be considered before determining the requirement of working capital.

1.       Scale of operations: There is a direct link between the scale of business and working capital. Larger business needs more working capital as compared to the small organizations.

2.       Nature of Business: The manufacturing organizations are required to purchase raw materials, convert them into finished goods, maintain the stock of raw materials; semi-finished goods and finished goods before they are offered for sale. They have to block their capital for labour cost, material cost etc., so they need more working capital. In the trading firm processing is not performed. Sales are affected immediately after receiving goods for sale. Thus they do no block their capital and so needs less working capital.

3.       Credit allowed: If the inventory is sold only for cash, it requires less working capital as money is not blocked in debtors and bills receivable. But due to increased competition, credit is usually allowed. A liberal credit policy results in higher amount of debtors, so needs more working capital. [DTS. NOTES]

4.       Credit availed: If goods are purchased only for cash, it requires more working capital. Similarly, if credit is received from the creditors, the requirement of working capital decreases.

5.      Availability of Raw materials: If the raw materials are easily available in the market and there is no shortage, huge amount need not be blocked in inventories, so it needs less working capital. But if there is shortage of materials, huge inventory is to be maintained leading to larger amount of working capital.


What is meant by Good Control System? Write its four requirements.   5

Ans: A Good control system is one which covers all the functional areas of the organisation. It must be responsibility based and comprehensive in design and functioning.

The following are the essentials or basic requirements of an effectively control system:

1)      Suitable: The control system must be suitable for the kind of activity intended to serve. Apart from differences in the systems of control in different business, they also vary from department to department and from one level in the organization to the other.

2)      Understandable: The system must be understandable, i.e., the control information supplied should be capable of being understood by those who use it. A control system that a manager cannot understand is bound to remain ineffective.

3)      Economical: The system must be economical in operation, i.e., the cost of a control system should not exceed the possible savings from its use. The extent of control necessary should be decided by the standard of accuracy or quality required. A very high degree or standard of accuracy or quality may not really be-necessary.

4)      Flexible: The system of control must be flexible, i.e. workable even if the plans have to be changed. A good control system would be sufficiently flexible to permit the changes so necessitated.

19. Write notes on the following:

a) Wealth maximisation is the objective of financial management.          4

Ans: Shareholders’ wealth maximization means maximizing the net present value of a course of action to shareholders. Net Present Value (NPV) of a course of action is the difference between the present value of its benefits and the present value of its costs. A financial action that has a positive NPV creates wealth for shareholders and therefore, is desirable. A financial action resulting in negative NPV destroys shareholders’ wealth and is, therefore undesirable. Between mutually exclusive projects, the one with the highest NPV should be adopted. NPVs of a firm’s projects are additive in nature. That is

NPV(A) + NPV(B) = NPV(A+B)

The objective of Shareholders Wealth Maximization (SWM) considers timing and risk of expected benefits. Benefits are measured in terms of cash flows. One should understand that in investment and financing decisions, it is the flow of cash that is important, not the accounting profits. SWM as an objective of financial management is appropriate and operationally feasible criterion to choose among the alternative financial actions. 

Maximizing the shareholders’ economic welfare is equivalent to maximizing the utility of their consumption over time. The wealth created by a company through its actions is reflected in the market value of the company’s shares. Therefore, this principle implies that the fundamental objective of a firm is to maximize the market value of its shares. The market price, which represents the value of a company’s shares, reflects shareholders’ perception about the quality of the company’s financial decisions. Thus, the market price serves as the company’s performance indicator.

In such a case, the financial manager must know or at least assume the factors that influence the market price of shares. Innumerable factors influence the price of a share and these factors change frequently. Moreover, the factors vary across companies. Thus, it is challenging for the manager to determine these factors. 

b) “Money market and its instruments”.              4

Ans: Money market is the short term security market. Following are the instruments dealt in money market.

a) Treasury bills: T-bills short term government security ranging from 14 days to 364 days issued by RBI on behalf of the government to meet its short-term financial needs. No fixed interest in payable on Treasury bills. Normally TBs are issued at the lowest interest rate agreed on competitive bidding. These bills are negotiable instruments and freely transferable. [COURTESY: DYNAMIC TUTORIALS AND SERVICES]

b) Commercial Paper: Commercial papers are unsecured promissory notes issued by highly creditworthy companies to raise funds for short term. It usually has a maturity period of 15 days to one year. CPs are normally issued at a discount and redeemed at par.  The commercial banks and mutual funds are the main investors of commercial papers.

c) Call money and short notice money: Call money refers to money given for a very short period ranging from 1 day to 7 days. Surplus funds of the commercial banks and other institutions are usually given as call money. Banks are the borrowers as well as lenders for the call funds. If the loan is given for one day and can be called back on demand, it is called money at call but if the loan cannot be called back on demand and will require 3 days’ notice, it is called money at short notice. Money at short notice can be of maximum 14 days.

d) Certificate of deposit (CD): Certificate of deposit is a time deposit having a maturity period from 91 days to 12 months. CDs are issued only by a bank. It is a bearer certificate which is freely transferable and can be sold in secondary market. Banks are not allowed to discount these documents.

e) Commercial bills: These are the trade bills which are drawn at the time of credit sales by the Drawer (Supplier) and accepted by the Drawee (Debtor). It is an acknowledgment of debt normally having a maturity period of 90 days. It is a negotiable instrument and can also be endorsed from one person to another.  It can also be discounted with the bank before maturity.


Discuss eight leading functional areas of marketing. 8

Ans: Functions of Marketing / Marketing activities

1. Product Planning: It involves development and commercialisation of new products, the modification of existing lines and discontinuation of unprofitable products.

2. Packaging: The main purpose of packaging is to preserve the quality and quantity of the contents during storage and transit. Besides, it has tremendous advertisement value, and facilitates the sale of a product. Example: Sachet packing has created a revolution in the shampoo industry.

3. Product Pricing: Product Pricing is an important component of marketing. Pricing decisions affect all the parties involved in production, distribution, selling, and consumption of goods. Price affects the volume of sales and profit.

4. Advertising and Sales Promotion: Advertising is a paid method of business communication to the prospective customers and the main objective is to promote the products. Sales promotion includes activities such as demonstrations, displays, dealer schemes that stimulate purchases by dealers/consumers. The marketing manager has to take decisions regarding the advertisement/sales promotion activities.

5. Distribution: Distribution includes distribution channel, area coverage, channel remuneration, warehousing, inventories, banking and transportation.

6. Marketing Research: Marketing Research involves systematic gathering, recording and analysing of data about problems connected with product, pricing, promotion and distribution. It deals with research on customer demand, behaviour of customers, analysis of sales data, market share, etc.

7. Sales Management: Sales Management is responsible for effective management of sales force and generating income to the organization. Salespersons are the backbone of the organisation and success of the organisation depends upon how effectively they are able to sell goods and services to meet the changing needs of the customers. The salesperson has to educate the customers on products and services, sell the same with benefit to the customer and profit to the seller.

8. Branding: Creating a distinct identity of the product from that of competitors e.g. Videocon washing machine is an important function. A good brand helps any product to survive in the competitive market.

20. Discuss the various steps involved in the process of organising.                         8

Ans: Steps in Organising:                                                             

a)       Identification and Division of Work: The first step in the process of organizing involves identifying and dividing the total work to be done into specific activities (called jobs) in accordance with previously determined plans. Such division of work into jobs is necessary because one individual cannot perform the entire work. While identifying the activities it should be borne in mind that no activity has escaped, there is no duplication of activities and various activities are performed in a coordinated way.

b)      Grouping jobs and Departmentalisation: The second step in organizing is to combine or group similar/related jobs into larger units called departments, divisions or sections. This grouping process is called “Departmentalisation”. Departmentation can be done in two ways – functional departmentation and divisional departmentation. Under functional departmentation jobs related to common functions are grouped for example production department, sales department etc. Under divisional departmentation jobs relating to one product are grouped together for example sale and marketing of cosmetics.

c)       Assignment of Duties: It is necessary to allocate work to various employees. Once departments have been formed, each of them is placed under the charge of an individual, called departmental head. Jobs are then allocated to the members of each department according to their skills and competencies.

d)      Delegation of Authority: Since so many individuals work in the same organization, it is the responsibility of management to lay down structure of relationship in the organization. Everybody should clearly know to whom he is accountable and authority is delegated to the subordinates to enable them to show work performance. This will help in the smooth working of the enterprise by facilitating delegation of responsibility and authority.


Discuss the relationship between Planning and Control.                                                8

Ans: The relationship between planning and controlling can be divided into the following two parts.

(i) Interdependence between Planning and Controlling.

(ii) Difference between Planning and Controlling.

(i) Interdependence between Planning and Controlling. Planning is meaningless without controlling and controlling is blind without Planning. Both the aspects of the interdependence of planning and control have been discussed below:

(a) Planning is meaningless without Controlling: if the process of controlling is taken away from management no person working in the enterprise will take it seriously to work according to the plans and consequently, the plans will fail.

(b) Controlling is blind without Planning: Under the system of controlling actual work performance is compared with the standards. Hence, if the standards are not determined there is no justification left for control and the standards are determined under planning.

(ii) Difference between Planning and Controlling: Yes, planning and controlling are incomplete and ineffective without each other but it doesn’t mean that both are not independent. Reasons are:

(a) Planning is looking Ahead whereas Controlling is Looking Back: Plans are always formulated for future and determined the future course of action for the achievement of objectives laid down. On the contrary, controlling is looking back because under it a manager tries to find out, after the work is completed, whether it has been done according to the standards or not.

(b) Planning is the first function and Controlling is the last function of Managerial Process: the managerial process moves in a definite sequence- like planning, organizing, staffing, directing and controlling happens to be the last step.

21. Write notes on the following:

a) Management is the art of getting things done.                             4

Ans: As per this point of view, management is the art through which a manager can easily achieve the objectives by utilising the full capacity of the subordinates. In this reference, following are the main points of importance of management: [DYNAMIC TUTORIALS AND SERVICES]

a)       Optimum Use of Resources: Management always concentrates on optimum utilisation of resources of the enterprise. The available resources for production put to use in effective way so as to reduce wastages.

b)      Effective leadership and Motivation: In the absence of management, the working of an enterprise will become unorganised and unsystematic. Management creates teamwork and motivates employees to work harder and better by providing guidance, counseling and effective leadership.

c)       Achievement of Goals: Objectives can be achieved only when the human and non-human resources are combined in a proper way. Managers plan carefully, organize the resources properly, hire efficient people and provide necessary guidance to achieve organisation objectives. Thus management is goal oriented.

d)      Reduces Costs: In modern time, it is necessary for every business enterprise to minimise the cost of production and distribution. Only those concerns can survive in the market which can produce better quality product at a minimum cost. Management uses physical, human and financial resources in such a manner which results in efficiency and effectiveness in the work.  This helps in reducing cost of production.


b) Fayol’s principles of management.     4 [Students are advised to mention points only in case of 4 marks]

Ans:   Different management experts have explained different principles on the basis of their research. Henry Fayol, a famous industrialist of France, has described fourteen principles of management in his book General and Industrial Management.

While presenting the principles of management Fayol has kept two things in mind. Firstly, the list of the principles of management should not be long but should be suggestive and only those principles should be explained which become applicable in most of the situations. Secondly, the principles of management should be flexible and not rigid so that changes can be made in them in case of need.

Fayol suggested the following 14 principles:

1.       Division of work: According to this principle the whole work must be divided into small tasks instead of assigning the whole task to one person.

2.       Authority and Responsibility: Authority is the right to issue command and make decisions. Responsibility is obligation towards organization and decisions made.

3.       Discipline: Discipline is important for the success of an organization. According to this principle, there must be rules and regulations for systematic working in the organisation and both subordinate and superior must follow these rules.

4.       Unity of command: According to this principle of Fayol, every employee should receive orders and instructions from one boss and he should be responsible and accountable to him only. This principle will be violated if an employee is asked to receive orders from more than on superior.                        (2009), 2017, 2022

5.       Unity of Direction: According to this principle “One unit means objective and one plan. There must be one plan for an organization at a time and should be directed by one manager using the same plan. This principle leads to good coordination in the organisation.   (2011), 2017

6.       Subordination of individual interests to the general interest: According to this principle, the interest of the organisation must be kept superior to the interest of individuals or employees.

7.       Remuneration: According to this principle, Fair wage for the service must be given to the employees to give them maximum satisfaction. Every worker should be paid fair remuneration and if workers are not satisfied than they can never contribute his maximum.

8.       Centralization and Decentralisation: Centralisation refers to concentration of power or authority in few hands i.e., top level. Decentralisation is defined as systematic distribution of authority at every level of management. According to this principle, an organisation must not be completely centralised or decentralised but there must be combination of both depending on the nature and size of the organisation.

9.       Scalar Chain: The line of authority from top management to the lower level management represents the scalar chain. There should be a chain for the flow of communication. Authority must flow from top management to lower level management and responsibility must flow vice-versa.                              (2010)

10.   Order: There must be an order for everything. According to this principle, order does not mean command but it refers to orderly arrangement of people and material in the organisation. Right person at right place and right material at right time and in right place is the key for success of any organisation.

11.   Equity: According to this principle, manager should treat all his subordinates equally. There should be no difference or should not show special attention or kind to any particular subordinate.

12.   Stability of tenure of personnel: According to this principle, the management must provide the feeling of job security among the employees. There must be stability and job security. High employee turnover affects organization adversely.

13.   Initiative: The successful management provides an opportunity to its employees to suggest their new ideas, experiences and more convenient methods of work. It is the duty of the manager to encourage the feeling of initiative among the employees for doing some work

14.   Esprit de Corps: According to this principle, there must be team spirit within an organisation. Management must develop a feeling of belongingness among the employees with develop team spirit and unity within the organization. (2012, 2015)

c) Planning is an intellectual process.     4

Ans: Planning can be defined as “thinking in advance what is to be done, when it is to be done, how it is to be done and by whom it should be done.” In simple words we can say, planning bridges the gap between where we are standing today and where we want to reach. [COURTESY: DYNAMIC TUTORIALS AND SERVICES]

In the words of Alfred and Beatty,” Planning is the thinking process, the organised foresight, the vision based on facts and experience that is required for intelligent action.”

Planning is said to be an intellectual process because:

a) Planning is a mental activity which is done mainly by top level management. It is an intellectual exercise which involves intuition, imagination, foresight, ability to analyse information and sound judgement.

b) Planning is a process of making decision about future. It provides direction to enterprise activities. Its work is to decide in advance what is to be done, when and where it is to be done, how it is to be done and by whom.

c) The main functions of planning are Set up goals, Forecasting, Search for alternatives source of action and Budgeting. These functions require deep thinking.


Steps in staffing process.              4

Ans: Steps involved in Staffing Process:

1)      Enumerating man power requirement: Staffing process begins with the estimation of man power requirement which means finding out number and type of employees need by the org. in future.              

2)      Recruitment: After man power planning, the manager tries that more and more people should apply for the job so that the org. can get more choice and select better candidates.

3)      Placement and Orientation: Placement refers to placing the right person on the right job for which he is selected. Orientation refers to introducing the new employees with the existing employees.

4)      Selection refers to choosing the most suitable candidate to fill the vacant job position. It is a negative process because a number of candidates are rejected under it.

5)      Training and Development: The process of training helps to improve the job knowledge and skill of the employees. Training and Development not only motivate the employees but these improve efficiency of work also.

6)      Performance Appraisal: At this step the capability of the employees is judged and for that his actual work performance is compared with the work assigned to him. Performance and career planning: It is a process through which employees get better salary, status, position and also get promotion to higher post.

7)      Compensation: For deciding the compensation the works are evaluated. Compensation must be reasonable and related with the work.

22. Write notes on the following:

a) Significance of Fiscal Policy.                   4

Ans: Significance of Fiscal Policy:

1. Increase in Savings: This policy is also used to increase the rate of savings in the country. In the developing countries rich class spends a lot of money on luxuries. The government can impose taxes on them and can provide the basic necessities of life to the poor class on low rate. In this way by providing incentives, savings can be increased.

2. To Encourage Investment: The government can encourage the investment by providing various incentives like the tax holiday in the various sectors of the economy. The capital can be shifted from less productive sectors to more productive sectors. So the resources of the country can be utilized maximum.

3. To Achieve Equal Distribution of Wealth: Fiscal policy is very useful for the achievement of equal distribution of wealth. When the wealth is equally distributed among the various classes then their purchasing power increases which ensures the high level of employment and production.

4. To Control Inflation: Fiscal policy is very useful weapon for controlling the rate of inflation. When the expenditure on non-productive projects is reduced or the rate of taxes are increased then the purchasing power of the people reduces.


b) Non-Financial incentives.

Non-Financial or non-monetary Incentives: Incentives which are not measurable in terms of money are called non-financial incentives. Examples of Non-Financial Incentives – job enrichment, Status, organizational climate, career advancement opportunity, job security etc.

(a) Job Enrichment: It is a method of motivating employee by making the task to be performed by him more interesting and challenging. The job in itself serves as a source of motivation to the employee and brings out the best in him.

(b) Suggestion System: It is a system where suggestions regarding the work procedure, environments are solicited from employees. This increase their participation & importance in the working of the enterprise and hence motivates them.

(c) Job security: Job Security refers to making the employee feel safe in his job positions. He is not threatened by transfers or removal from service and hence performs to the best of his abilities.

(d) Career advancement: Managers must provide promotional opportunities to employees. Whenever there are promotional opportunities employees improve their skill and efficiency with the hope that they will be promoted to higher level.

(e) Status: By offering higher status or rank in the organisation managers can motivate employees having self-actualization need in them.

c) Rights of a consumer under Consumer Protection Act.              4

Ans: Rights of Consumer:

a)    The right to safety: It refers to the right to be protected against products which are hazardous to health or life.

b)    The right to be informed: Consumers have a right to be informed about the quality, quantity and price of goods or services so that they can make the right decision.

c)    The right of choice: The consumer has the right to be assured of a choice of various goods and services of satisfactory quality and competitive price.

d)   Right to representation (or right to be heard): It is a right and the responsibility of civil society to ensure consumer interest prevails while formulating and executing policies which affect the consumers, as well as right to be heard while developing or producing a product or service.


d) Functions of entrepreneurs in relation to economic development.     4

Ans: Functions of an Entrepreneur: [COURTESY: DYNAMIC TUTORIALS AND SERVICES]

An entrepreneur frequently has to wear many hats. He has to perceive opportunity, plan, organize resources, and oversee production, marketing, and liaison with officials. Most importantly he has to innovate and bear risk. The main functions of an entrepreneur are as follows:

1. Innovation: Innovation is one of the most important functions of an entrepreneur according to Schumpeter. An entrepreneur uses information, knowledge and intuition to come up with new products, new methods of reducing costs of a product, improvement in design or function of a product, discovering new markets or new ways of organization of industry. Through innovation, an entrepreneur converts a material into a resource or combines existing resources into new and more productive configurations.

2. Risk and uncertainty bearing: According to Hozelist an entrepreneur performs the function of risk and uncertainty bearing. Every decision pertaining to development of new products, adapting new technologies, opening up new markets involves risk. Decision-making in an environment of uncertainty requires anticipation of risk. Profit is said to be the reward for anticipating and taking such risks. However, it is pertinent to mention that the entrepreneur is not a gambler, he only takes calculated risks. An entrepreneur develops the art of decision making under conditions of uncertainty as a matter of survival.

3. Organization building: An entrepreneur has to organize men, material and other resources. He has to perform the functions of planning, co-ordination and control. He has to use his leadership qualities to build a team, generate resources and solve problems. With his organizational skills an entrepreneur builds an enterprise from scratch, nurtures it and makes it grow. His vision sows the seeds for a sound and vibrant organization and synergies are built in the enterprise.

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