KVS (RAIPUR REGION)

brings for its students STUDY MODULE For Case studies in

CLASS-XII – Business Studies (2015-16) Under the leadership of Ms.P.B.S.Usha Deputy Commissioner (Chief Patron) Mr. Tajuddin Saikh Assistant commissioner (Patron)

Mr. Girish Chand Principal, KV-Nabarangpur (Patron)

Content Formation Dr. Lokesh Bajpai, PGT-Commerce, KV , Chirimiri, SCEL

Sh. S.S. Thakur, PGT-Commerce, KV, Balaghat Sh. B.K.Patal, PGT-Commerce, KV, Jhgarakhand

Nature and Significance of Management

Case 1- ABC Ltd. is having a lot of problems these days. It manufactures white goods like washing machines, refrigerators and air conditioners. The company’s margins are under pressure and the profits and market share are declining. The production department blames marketing for not meeting sales targets and marketing blames production department for producing goods, which are of sub standard quality not meeting customers’ expectations. The finance department blames both production and marketing for declining return on investment and bad marketing.(a) What quality of management do you think the company is lacking? Explain briefly.(b) What steps should the company management take to bring the companyback on track?

ANS. (a) ABC Ltd. is lacking “Coordination”. Since production, marketing and finance departments are not working unitedly, but acting as independent units. Due to which they are unable to achieve organizational goals and are blaming each other for decrease in sales and profit margin. But for achieving the goals of the organization, they have to work unitedly. So management needs to take following steps to bring the company back on track:(i) Each department must understand that managerial functions are performed in a better way with the help of coordination and coordination is the essence of management and it is needed to perform each and every function and level of management.(ii) Each department must be given realistic goal after considering strengths and weaknesses of each department.(iii) all department heads be made part of goal setting process.

Case 2: Ram Ltd., a leading manufacturer of iron and steel decided to open up a new branch in the remote area of Rajasthan so that unemployed youth from the rural areas could get same opportunities as those available in the urban areas. This innovative step has raised the standard of living of people in rural areas. All children in these families are getting good education

and these families are also actively contributing in the nation building through their dedicated work.(i) Identify the objective of management highlighted in the above-mentioned case. (ii) Identify and explain the principle of management highlighted in the given case.

Ans. (i) Social objectives of management: Objectives which are desired to be achieved for the benefit of the society is known as social objectives.(ii) Equity: Equity refers to fair treatment to all workers in an organization. Fairtreatment involves kindness and justice on the part of superiors while dealing with their subordinates.

Principles of ManagementCase 1- M & F Ltd. is doing the business of food processing and, selling its products under a popular brand “PURE” enjoying good quality with reasonable prices. So, Company is expanding its business and at the same time new players are also coming to cash in this new trend. In order to keep its market share intact the company directed its existing workforce to work overtime. But this resulted in many problems. Due to increased pressure of work the efficiency of the workers declined. Sometimes the subordinates had to work for more than one superior resulting in declining efficiency. The divisions that were previously working on one product were also made to work on two or more products. This resulted in a lot of overlapping and wastage of resources. Sometimes the workers are feeling frustrated and disobeying, even the managers are not taking interest to solve the problems due to distrust on each other. The quality of the products is beginning to decline and market share is also start to decrease. Actually the company had implemented changes without creating the required infrastructure. So, now you need to identify the Principles of Management that are being violated by the company. Explain these principles in brief and what steps should the management take in relation to the above Principles to restore the company to its path of profit?

Ans. (i) The principles violated by the company are:(a) Unity of command (as subordinates had to work for more than one superior).(b) Unity of direction (as divisions were made to work on two or more products,which leads to wastage and overlapping).(c) Discipline (as workers are disobeying).(d) Espirit de Corps (as the spirit of working in team decreases due to distrust).(e) Initiative (as managers are not taking any interest to solve the problem). (a) Unity of command: According to Fayol, there should be one and only one boss for every individualEmployee. If an employee gets orders from two superiors at the same time the principle of unity of command is violated.(b) Unity of direction: According to this principle, there should be one head and one plan for agroup of activities having the same objectives. l It is necessary to direct the efforts of all the members of the group towards common goals under the direction of one head. (c) Discipline: Discipline is the obedience to organisational rules and employment agreementwhich are necessary for the working of the organisation. According to Fayol, discipline requires good superiors at all levels, clear and fair agreements and judicious application of penalties.(d) Espirit de Corps: It refers to team spirit. Managers must take steps to develop a sense ofbelonging among the members of a work group. This principle emphasises the need for teamwork. It facilitates the development of an atmosphere of mutual trust and understanding among employees and minimises the need to use penalties for default.(e) Initiative: Workers should be encouraged to develop and carry out their plans forimprovements. Initiative means taking the first step with self-motivation.

An organisation should encourage desire and initiative among its managersand employees by extending opportunities and freedom to contribute their best.

The company management may take the following steps:(a) The managers must ensure that a superior gives orders to only one subordinate to avoid dual subordination.(b) The rising pressure on workers must be cut down.(c) Division of work must be done to ensure specialisation.(d) All similar activities are put under one plan and each plan is headed by onehead.(e) Workers should be made to work with team spirit.(f) Workers should be given the initiative to participate in the working of theorganisation and those giving good suggestions must be rewarded.(g) The Company should introduce scientific management with regard to production.(h) Differential Piece wage system should be implemented, in order to motivate the workers.

Case 2: The production manager assigned a target of producing 1,000 TV sets in the month of September among the group of 10 workers. They mutually decided to produce 100 TV sets each. Among them 3 of the workers of the group fell sick. The other worker refused to divide his work among and concentrated only on the production of their own individual target of production the group target of 1,000 TV sets could not be achieved.(i) Which characteristic of management is violated in the above para?(ii) Name and explain the principle of Fayol which is violated in the abovepara.Ans. (i) Management is a group activity:(a) An organization is a collection of diverse individuals with different needs.(b) Every member of the group has a different purpose for joining the organization but as members of the organization they work towards fulfilling the common organizational goal.

(c) This requires team work and coordination of individual effort in a commondirection.

(ii) Espirit de corps: It refers to team spirit. Managers must take steps to develop a sense of belonging among the members of a work group.

Case for practice

Case: XYZ’s company established a factory to manufacture mobile phones. The factory was neither having proper lightning & sanitation facilities nor was the company site in hygine place. All the machines were kept in single room & also not placed properly which gives too much problem while working. Mr. A, the owner of the company also did not appoint skilled labour so that he could save some labour cost. He laid down all the plans and procedure to be followed by all. Production in charge was asked to follow the plan to produce target of 50,000 mobile phones. Mr A also told the production manager that if he failed to achieve the target within a month he will lose his job.

Production manage was confused as there was no proper setup of machines and even the workers were not trained to manufactured mobile phones.

Questions :

A. Name the scientific principle that should have been followed before starting production?

B. State the principle of management violated?

Case : A company 'D' limited was engaged in manufacturing of Auto Components. Lately the business was expanding due to good quality and reasonable prices. But suddenly the profit of the company started declining due to some conflict between the employees. In order to maximise the profit the company would want to get maximum output from its employees at a competitive salary. But on the other hand some employees converted themselves into a union and they started demanding for the maximum salary with the least working, which is not admissible to other employees and the company.

Q.1. Identify the principles of management that were being violated by the employees and company?

Q.2. what steps should company management take in relation to the above principles?

Business Environment

Case 1-Lately many companies have planned for significant investment in

organized retailing in India. Several factors have prompted their decision in

this regard. Customers income is rising .people have developed the taste for

better quality products. The government is liberalized to economic policies in

this regards and has permitted even 100% FDI in some sectors of retailing.

On the basis of above condition, identify changes in business environment

under different heads –economic, social, technological , political and legal

that have facilitated the companies decisions to plan significant investment

in organized retailing.

Ans: 1. The changes in business environment under different heads are:(i) Economic change: “Customer income is rising”.(ii) Social change: The aspiration levels have increased.(iii) Technological change: People have developed a taste for better quality products even though they may have to pay more.(iv) Political change: The government has also liberalised its economic policies.(v) Legal change: Cent percent foreign direct investment in some sectors of retailing has been now permitted.

2. The impacts of these changes with regard to globalisation and privatisation are:(i) Increasing competition: As a result of changes in the rules of industrial licensing and entry of foreign firms, competition for Indian firms has increased especially in service industries like telecommunications, airlines, banking, insurance, etc. which were earlier in the public sector.(ii) More demanding customers: Customers today have become more demanding because they are well-informed.(iii) Rapidly changing technological environment: Increased competition forces the firms to develop new ways to survive and grow in the market. New technologies make it possible to

improve machines, process, products and services. The rapidly changing technological environment creates tough challenges before smaller firms.(iv) Necessity for change: In a regulated environment of pre-1991 era, the firms could have relatively stable policies and practices. After 1991, the market forces have become turbulent as a result of which the enterprises have to continuously modify their operations.(v) Need for developing human resource: Indian enterprises have suffered for long with inadequately trained personnel. The new market conditions require people with higher competence and greater commitment. Hence the need for developing human resources.(vi) Market orientation: Earlier firms used to produce first and go to the market for sale later. In a fast changing world, there is a shift to market orientation in as much as the firms have to study and analyse the market first and produce goods accordingly.(vii) Loss of budgetary support to the public sector: The central government’sbudgetary support for financing the public sector outlays has declined over theyears. The public sector undertakings have realised that, in order to surviveand grow, they will have to be more efficient and generate their own resources.

Case 2- M/S Sheep & sons plans to produce meat articles. The local

population is against meat. The company irrespective to their feeling takes

you the production of such meat. Finally it finds that there is heavy stock of

meat is left and there is no further chance of its sales.

(a) Which type of business Environment has not been considered in above

case?

(b) Explain the relevant business Environment with a suitable example.

Ans: (a) Social Environment .

It represents the customs and traditions, values, culture, social trends, beliefs, norms and ethics of a society in which business enterprises operate.

(b) A business is a part of the society in which it operates. The buying and

consumption habits of the people, their languages, customs, preferences,

tastes etc. are the factors that influence the business. Businessmen should

be alert enough to visualize the factors that directly or indirectly affect

their organization. Cooperation between business and society will see

business boom and will help growth of professional managers. The failure

of any business organization in adapting to changes in the social

environment will lead to dissatisfaction amongst its customers and

rejection of its products. This shift of demand can even endanger the very

survival of a business. For example, equal pay for male and female workers,

demand for reservation in jobs for minorities and women etc.

Case3: Mention four examples of acquisitions and mergers and also write

relevant dimension of business environment.

Ans: (i) SRF buy Ceat's Rayon Tyre Cord. (ii) Parle's take-over by Coke. (iii) Godrej has bought over Goodnight.

(iv) Hutch by Vodafone

Relevant dimensions of business environment are Liberalisation and Globalisation.

Case 4 : LMN Industries is facing a lot of opposition as it pays less salary to female workers as compared to male workers for equal work.(i) One of the objectives of management is not followed here. Name it.(ii) Which dimension of business environment is being violated in the givenSituation?(iii) Identify and explain the principle of management which is not followed by Sethi Industries.

Ans. (i) Social objective of the management is not followed here.

(ii) Social dimension:

(a) Social environment of a business refers to the broad characteristics of the society in which a business enterprise operates.(b) The social environment of business includes the social forces like customs and traditions, values, social trends, society’s expectations from business, etc. Social values and attitudes are changing very fast.

(iii) Equity: Equity refers to fair treatment to all workers in an organization. Fair treatment involves kindness and justice on the part of superiors while dealing with their subordinates.

Case 5: Indians mostly being vegetarians as per the studies of KFC has planned to introduce veg rice meals in its menu.(i) Which characteristic of management is highlighted in the given statement?(ii) Name and explain the dimension of business environment which isResponsible for this step of KFC.

Ans. (i) Dynamic:(a) Management is a dynamic function and has to adapt itself to the changingenvironment.(b) An organization interacts with its external environment which consists of various social, economic and political factors.(c) In order to be successful, an organization must change itself and its goalsaccording to the needs of the environment. For example, McDonalds, the fastfood giant made major changes in its menu to survive in Indian market.(ii) Social environment:(a) Social environment of a business refers to the broad characteristics of the society in which a business enterprise operates.(b) The social environment of business include the social forces like customs and traditions, values, social trends, society’s expectations from business, etc. Social values and attitudes are changing very fast.

Case 6 : -You Are General Manager Of a Company. Find Out Environmental Changes That Have adverse effect on The Company. List the Steps taken By You to Cope With these changes In current scenario.

Ans.Challenges or adverse effects may include –

Increasing competition, more demanding customers, problems of Human Resources, Market Orientations, and Loss of Budgetary support to the public sector.In today’s business environment a business can cope with this changes only by – 1. Appointing qualified Professional experts.2. By adopting the latest technology keeping in mind the global competition.3. By building or creating a brand image in the minds of customers.4. By understanding the requirements and needs of the customers and always try to satisfy the customers.5. By keeping their employees satisfied by paying them fair compensation.

Case 7 - Roshinee is the owner and manager of textile industry, which is her family business. Last year she attended the seminar on the topic globalization. She found the topic relevant and helps her expanding the business by conducting operations worldwide.Why she considers the topic relevant?What will be the positive impact of opting globalization?

Ans:(a) She considers the topic relevant because she want to expand her

business which is possible only by study and knowledge about globalization. It will increase economic integration and provide strong opportunity to explore in the market.

(b) Globalization will help to enter in to trade and commerce by adapting and linking the economy of a country with the economies of other countries by free trade and free mobility of capital and labour etc.

Case for self practice

Case :- A Foreign Based MNC was allowed to set Up Its Cold Drink Plants at several Place in India. Different flavours of its drink are liked by Many Indians. The Company’s name has now become a lip word and It has launched Intensive advertisement though T.V. and various Papers.In What Respect is This MNC Beneficial to India?What are its harmful effects?Under Which Policy Was This MNC allowed To Enter in India?

Hints 1 Write some merits of Globalization. 2 Write some limitations of Globalization. 3 Under Foreign trade policy / Globalization

PLANNING

Case.1- the CEO of ABC Ltd. an automobile enterprise dreams of his company becoming the best player in future, for which he sets the objectives, forecasts the future and develops various courses of action.Q1. Identify the management function which is highlighted here.Q2. What are the various values the CEO is striving to achieve?

Answers:1. Planning is the Management function2. The values the above mentioned paragraph highlight are:

a) Hard work helps individuals to turn their dreams into realityb) Initiative, confidence, commitment

Case.2- An Tej auto company Ltd. is facing a problem of declining market share due to increased competition from other new and existing players in the market. Its competitors are introducing lower priced models for mass consumers who are price sensitive. For quality conscious consumers, the company is introducing new models with added features and new technological advancements.

Questions1. Prepare a model business plan for the company to meet the existing challenge. You need not be very specific about quantitative parameters. You may specify which type of plan you are preparing.2. Identify the limitations of such plans.3. How will you seek to remove these limitations?

Ans. (i) Company can make use of ‘strategy’ as a type of plan. The various steps involved in preparing this plan are:(a) The company should set up its objectives after considering quality expectations of consumers and technological changes.(b) Like its rival, it can cut down its prices without compromising the quality.(c) It may use sales promotional tools like full finance and rebate to capture the market share again.(ii) The limitations of such plan are:(a) It is a costly process.(b) It is a time consuming process.(c) It may not work in a dynamic environment.(d) It may lead to rigidity in operations.(iii) The given limitations can be overcome through following measures:(a) An organisation can keep a strict watch on time limit to achieve the target.(b) Amount to be spent should be pre-planned by preparing budgets.(c) Environment should be properly scanned to minimise the risk of competition.(d) Plan should be flexible, so that there is a scope for initiative and creativity.

Case.3- Ram ,Mohan and Shyam are good friends. After completed B.Com they are thinking to manufacture papers. They mutually decided that this manufacturing unit will be set up in a rural area of Chhattisgarh where people have a few job opportunities and labour is available at very low rates. They also decided not to sell goods on credit.Questions:(i) One of the functions of management is highlighted in the above para. Name it by quoting the line from it.(ii) Name the type of plan highlighted in the above para by quoting the line from it.(iii) Explain any three limitation of such functions of management. (iv) Which type of organizational structure would you recommend for thisManufacturing unit? State any two reasons.

Ans. (i) Planning: They are thinking to manufacture papers.

(ii) Policy: They also decided not to sell goods on credit.(a) Policies are general statements that guide thinking or channelize energies towards a particular direction. Policies in general are formulated at top management level.

(iii) Limitations of planning are as follows:a) It is a costly process.b) It is a time consuming process.c) It may not work in a dynamic environment.

It may lead to rigidity in operations.

(iv) Organizational structure: (a) Occupational specialisation is ensured.

(b) Promotes control and coordination

Case.4- Mrs. Gupta is the principal of a reputed school in Delhi. She decides to conduct a meeting of all the staff members in the conference hall. In a meeting she instructs the admission department that in the upcoming session the school will give admission to those students who secured more than 85% marks. She also assigns duties, authority and creates accountability of the person whom work has been handed over. In addition to this, she tells to new teachers what is to be done and what is not to be done in specific situations.Questions: (i) Name the types of plan highlighted in the above para by quoting lines from it.(ii) name the functions of management which are highlighted in above para by quoting lines from it and explain any three importance of any one function.(iii) Name the process through which Smt. Gupta assigns duties, authority and creates accountability of the person whom work has been handed over. Also, explain any two points which highlight the importance of this process.

Answer. (I) types of plan:a) Rule: She tells to new teachers what is to be done and what is not to be

done in specific situations.b) Policy: she instructs to the staff members that, they will give admission

to those students who secured more than 85% marks.(II) (A) functions of management:

a) Planning: prepare admission guideline for upcoming session.

b) Organising: assigning duties, authorities and creating the authority and responsibility relationship among them.

(B) importance of planning:a) Planning provides directions.b) Planning facilitates decision making.c) Planning promotes innovative ideas. OR

Importance of organisinga) Clarity in working relationshipsb) Effective administrationc) Expansion of growth.

(iii) Delegation. Two points which highlight the importance of this process are:(a) Effective management/Reduces workload of managers: Delegation of authority permits a manager to share his workload with hissubordinates. By passing on some of his work to the subordinates, the managers are able to function more efficiently as they get more time to concentrate on important matters. Freedom from routine work provides them with opportunities to excel in new areas.(b) Employee development: As a result of delegation, employees get more opportunities to utilise theirtalent and it may explore their hidden abilities. It allows them to develop those skills which will enable them to perform complex tasks and assume those responsibilities which will improve their career prospects. It makes them better leaders and decision makers.

Thus, delegation helps in preparing better future managers. Delegationempowers the employees by providing them with the chance to use theirskills, experience and develop themselves for higher positions.

CASE-5. Management cannot be seen but felt. Do you think planning which is the primary function of management can be seen? How can we measure or evaluate the effectiveness of sound planning? Mention any five parameters that declare whether the plan turns out to be a success or a failure.

Answer. (i) No, planning cannot be seen (ii) The Parameters are:

(a) Whether planning reduces the risk of uncertainty or not?(b) Whether planning promotes innovative ideas or not?(c) Whether planning provides directions or not?(d) Whether planning reduces overlapping of wasteful activities or not? (e) Whether planning minimises cost and time or not?

CASE-6. A Toy company Ltd. Manufacturing garments. The manager wants to increase the profits by

Purchasing new high speed machine; or Increasing the sale price; or Using waste material in the manufacturing stuffed toys.

He decided that `using waste material` to increase the profit is the best solution for him.Question:

1. Identify the concept of management involved.2. Mention the steps involved in the above process.

Answer:1. Planning.2. The steps involved are:

Identifying alternative course of action, Evaluating alternative courses and Selecting an alternative.

CASE-7. Mr. Nagar a worker is given a target of assembling two computers per day. Due to his habit of doing things differently, an idea struck him which would not only reduce the assembling time of computer but would also reduce the cost of production of the computers. Rohit`s supervisor instead of appreciating him, ordered him to complete work as per the methods and techniques decided earlier as nothing could be changed at that stage.Questions:

One of the limitation of planning functions of management is describes in the above Para. Name and explain it by quoting the line from it.

Answer: Explained the limitation is `Planning reduce creativity`. Rohit`s habit of doing things differently. But his supervisor instruct to him that, work done as per the methods and techniques.

Case 8: Mr. Ajaya after completing MBA from USA comes to India to start

a new business under the banner Ecom Creation Ltd. He launches a new

product in e-learning for Senior Secondary School Students in Commerce

stream, which already has as established market in UK and USA but not in

India. His business starts flourishing in India. Now more Indian companies

entered into the market with other subject also.

Identify and quote the lines from above para which highlighted the

significance of understanding business environment.

Ans:- (a) “Comes to India to start a new business and launches a new product in e-learning for Senior Secondary School Students in Commerce stream it help in” :

i. Assisting in planning and policy formulization.ii. It enables the firm to identify opportunities and getting the

first mover advantage.

(b) ‘His business starts flourishing performance.

i. It helps in improving performance.

(c) Now more Indian companies entered into the market with different subject also.

i. It helps the firm to identify threats and early warning signals.

Organising

Case 1 : A company, which manufactures a popular brand of toys, has been enjoying good market reputation. It has a functional organisational structure with separate departments for Production, Marketing, Finance, Human Resources and Research and Development.Lately to use its brand name and also to cash on to new business opportunities

it is thinking to diversify into manufacture of new range of electronic toysfor which a new market is emerging.Questions.Prepare a report regarding organisation structure giving concrete reasonswith regard to benefits the company will derive from the

steps it should take.

Ans: The organisation structure suitable is Divisional structure. The report is as under:By : XYZThe organisation enjoys good market reputation. The company is encashing it’s brand name and reputation. It’s venturing into manufacture of a new range of electronic toys. This organisation has got multiple divisions, it should appoint divisional heads for each division. This will ensure product specialisation. Adapting such structure will ensure flexibility and easy fixation of responsibility. The change of structure will also help the business enterprise to make these divisional heads accountable.So, in a nutshell this new structure will ensure growth and expansion for the organisation.

Case 2 : company manufacturing sewing machines set up in 1940 by the British promoters follows formal organisation culture in totality. It is facing lot of problems in delays in decision making.As the result it is not able to adapt to changing business environment. The work force is also not motivated since they cannot vent their grievances except through formal channels, which involve red tape. Employee turnover is high. Its market share is also declining due to changed circumstances and business environment. Questions.(i) You are to advise the company with regard to change it should bring aboutin its organisation structure to overcome the problems faced by it.(ii) Give reasons in terms of benefits it will derive from the changes suggestedby you.

(iii) In which sectors can the company diversify keeping in mind the decliningmarket for the product the company is manufacturing?

Ans. (i) To overcome the problems faced, the company should encourage informal organisation.

(ii) The benefits it will derive are:(a) Faster communication and quick feedback: It follows an independentchannel of communication as there is no Prescribed lines of communication to be followed. Thus, the informal organisation leads to faster spread of information as well as quick feedback.(b) Fulfill social needs: It helps to fulfill the social needs of the members andallows them to find like-minded people. This enhances their job satisfaction since it gives them a sense of belongingness in the organisation.(c) Fulfillment of organisational objectives: It contributes towards fulfillmentof organisational objectives by compensating for inadequacies in the formalorganisation. For example, employees reactions towards plans and policies canbe tested through the informal network.

(iii) The company can diversify into interlocking machines, automatic buttoning units, embroidery machines.

Case 3: A Jee Ltd. manufacturing cosmetics, which has enjoyed a preeminent position in business, has grown in size. Its business was very good till 1991. But after that, new liberalised environment has seen entry of many MNC’s in the sector. With the result the market share of jee Limited has declined. The company had followed a very centralised business model with Directors and divisional heads making even minor decisions. Before 1991, this business model had served the company very well as consumers had no choice. But now the company is under pressure to reform.Questions.(i) What organisation structure changes should the company bring about inorder to retain its market share?

(ii) How will the changes suggested by you help the firm? Keep in mind thatthe sector in which the company is FMCG.

Ans. (i) The company should shift from centralised to decentralised structure. It would ensure quick decision-making, motivate the subordinates and ensure effective communication.(ii) Even in Fast moving consumer goods (FMCG) industry, there is need fordecentralisation. By using decentralisation, a company gets following benefits.(a) Develops initiative among subordinates:Decentralisation helps to promote self-reliance and confidence amongstthe subordinates. This is because when lower managerial levels are givenfreedom to take their own decisions they learn to depend on their ownjudgment. It also keeps them in a state wherein they are constantly challenged and have to develop solutions for the various problems they encounter. A decentralisation policy helps to identify those executives who have the necessary potential to become dynamic leaders.

(b) Develops managerial talent for the future: Formal training plays an important part in equipping subordinates withskills that help them rise in the organisation but equally important is theexperience gained by handling assignments independently. Decentralisation gives them a chance to prove their abilities and createsa reservoir of qualified manpower who can be considered to fill up moreChallenging positions through promotions. It also helps to identify those who may not be successful in assuming greater responsibility. Thus, it is a means of management education as well as an opportunity for trained manpower to use its talent in real-life situations.(c) Quick decision-making: The management hierarchy can be looked upon as a chain of communication.In centralised organisation, every decision is taken by the top management,

the flow of information is slow as it has to traverse many levels. Responsealso takes time. This reduces the speed of decision-making and makes itdifficult for an enterprise to adapt to dynamic operating conditions. In a decentralised organisation, however, since decisions are taken at levelswhich are nearest to the points of action and there is no requirement forapproval from many levels, the process is much faster. There are also lesschances of information getting distorted because it doesn’t have to go throughlong channels.(d) Relief to top management: Decentralisation is required to reduce the burden of top executives when itincreases due to increase in the size and complexity of the organisation. In a decentralised organization, top executives have enough time to planahead, develop new strategies and concentrate on coordination and control.Since they are not burdened by the routine problems and complexities ofadministrative details.

Case 4: National Ltd has grown in size. It was a market leader but with

changes in business environment and with entry of MNCs its market share is

declining. To cope-op with the situation CEO starts and delegating some of

his authority to the General Manager, who also felt himself overburdened

and with the approval of CEO disperses some his authority to various levels

throughout the organization. Identify the concept of management discussed

above.

Ans: - Decentralization.

Case 5 : A company manufacturing washing machine. There is a well

defined system of jobs with a clear and definite authority, responsibility

and accountability in the company. But people are not allow to interact

byond their officially defined roles. As a result the company not able to

adopt to the changing business environment. The workshop is also not

motivated due to lack of social interaction. The company facing problems

of procedural delays and inadequate recognition to creative talents.

(a) Suggest how the organization can overcome the problem faced by

it.

(b) Give any two benefits it will derive from your suggestion.

Ans:- (i) Introduction of informal organization.

(ii) Two benefits the firm will derive are:

(a) Faster spread of communication and quick feedback.

(b) It helps to fulfil the social needs of the members and enhances their job

satisfaction.

(c) Fulfilment of organizational objectives.

Case 6: R is the managing director of ‘ Ujala’ a company which manufactures soft toys. The organizational structure has separate department for production, finance, marketing and human resources.Name the organization structure of the organization.State any two advantages and two disadvantages of such structure.

Ans: a) Functional organization structure. Write any 2 merits and 2 demerits of such organization structure.

Case7: -Nikita is the CEO of a firm which manufactures women’s

garments. Her company has now diversified operations into women’s health

care products and cosmetics for women. She seeks your advice about

selecting suitable organizational structure.

Ans:- Divisional organization structure.

Cases for practice

Case 1:-K runs a beauty clinic which has its head office in Kanaught place and

branches at 7 centers all over Delhi. For her branches she has appointed

managers, assistants managers and supervisors who take impendent

decisions regarding working of their branches but work under overall control

under K.

a) Name the organizational set up chosen by her.

b) Give 4 advantages of such set up.

(Hint: Decentralization)

Case 2:- S Ltd is engaged in the production of marble products. The members of the organization have friendly relations among them. Which type of organization exists in S Ltd? Explain any 3 benefits of developing such organization. (Hint: Formal Organization)

Staffing

Case 1: An Auto company is setting up a new plant in India for manufacturing auto components. India is a highly competitive and cost effective production base in this sector. Many reputed car manufacturers source their auto components from here.Co. is planning to capture about 40% of the market share in Indiaand also export to the tune of at least $6 million in about 2 years of itsplanned operations. To achieve these targets it requires a highly trained and motivated workforce. You have been retained by the company to advise it in this matter. While giving answers keep in mind the sector the company is operating.Questions.(i) Outline the process of staffing the company should follow.(ii) Which sources of recruitment the company should rely upon. Give reasons for your recommendation.(iii) Outline the process of selection the company should follow with reasons.(iv) Which methods of training and development should the company initiate? Explain giving reasons.

Ans. (i) The process of staffing the company should follow:(a) Estimating the manpower requirements, keeping in view the production schedules, demand forecasts, market schedules etc. It aims to determine the number and type of employees required. Type refers to specific qualification, skills or experience to be possessed by the employees.(b) Recruitment: the process of searching for prospective employees and stimulating them to apply for jobs in an organisation. After assessing the number and type of employee required, the manager triesthat more and more people should apply for the job so that the organisation can get more choice and select better candidates.(c) Selection: It is the process of identifying and choosing the best person out of a number of prospective candidates for a job.(d) Placement and orientation(e) Training and development

(ii) The company should focus on external sources of recruitment because of the following reasons:

(a) Qualified personnel(b) Wider choice(c) Fresh talent(d) Competitive spirit

(iii) The process of selection the company should follow is given along with reasons:

(a) Preliminary screening (b) Selection tests (c) Employment interview (d) Reference and background checks (e) Selection decision (f) Medical examination (g) Job offer (h) Contract of employment

(iv) Company should prefer the following methods of training and development:(a) Apprenticeship programme(b) Vestibule training

Case 2 : A major insurance company handled all recruiting, screening and training processes for data entry/customer service representatives. Their competitor was attracting most of the qualified, potential employees in their market. Recruiting was made even more difficult by the strong economy. This resulted in the client having to choose from candidates who had the ‘soft’ skills needed for the job, but lacked the proper ‘hard’ skills and training.Questions.(i) As an HR manager, what problems do you see in the company?(ii) How do you think it can be resolved?

Ans. (i) (a) Labour turnover seems a major problem. Therefore, the organisation will be reduced into an empty shell of jobs.(b) Recruitment of candidates has become more difficult.(c) Less trained employees are hired and consequently it resulted in reducedproductivity.(d) The employees became more prone to accidents.

(ii) The following steps can be taken to solve the problems:

(a) employees can be retained in the organisation by using incentives like attractive remuneration and other financial incentives like perquisities so that the competitors are not successful in their attempt to attract the company’s personnel.(b) Recruitment can be done using methods like advertisements, promotions and employee recommendation so as to ease the recruitment process.(c) Employees should be given On the job training so as to help them acquire hard skills. Job rotations can be used to make employees enhance their productivity.

Case 3 : Zenith Ltd. is a highly reputed company and many people wanted to

join this company. The employees of this organization are very happy and

they discussed how they came in contact with this organization.

Aman said that he was introduced by the present Sales Manager, Mr.

John.

Benu said that he had applied through the newspaper and he was

appointed as H.R Manager.

Vaibhav said that he was neither related to any of the employee of the

organization nor there was any advertisement in the newspaper even

then he was directly called from IIM Ahmadabad from where he was

about to complete his MBA.

(a) The above discussion is indicating an important function of

management. Name the function of management.

(b) The management function identified in part (a) follows a particular

process. Explain the step of this process which is being discussed in

the above para.

Ans:- a) Staffing.

a) Recruitment: it is defined as the process of researching for prospective employees and stimulating them to apply for jobs in the organization.

Case 4 : Blue Heaven Ltd. purchased a new hi-tech machine from Germany

for manufacturing high quality auto components in a cost effective

manner. But during the production process, the manager observed that

the quality of the production was not as per standard. On investigation it

was found that there was a lack of knowledge amongst the employees of

using this high –tech machines. So frequent visit of engineers was

required from Germany. This resulted in high over head charges.

Suggest what can be done to develop the skills and abilities of

employees for producing high quality products by using these hi-

tech machines. Also state how the employees or the organization

will benefit from your suggestion.

Ans- Training of employees

Benefits to the organization or employees:

(i) Avoid wastage of effort and money

(ii) Enhance employees productivity

(iii) Equips future managers.

(iv) Increase employee morale and reduces absenteeism

(v) Obtaining effective response to fast changing environment.

(vi) Improve skill and knowledge of the individual.

(vii) Increased performance by the individual.

(viii) Employee more efficiently handle machines

Case for practice

CASE : - Ms. Maya recently completed her post graduate diploma in human resource management. A few months from now a large still manufacturing company appointed her as its human resource manager. As of new, the company employs 800 persons & has an expansion plan in hand

which may require another 200 persons for varies types of additional requirements. Ms. Maya has been given complete charge of the company’s human resource department.Based on this case answer the following question.

Questions:-

1. Point out what functions is the supposed to perform?2. What problems do you foresee in her job?

What steps is the going to take to perform her job efficiently

DIRECTING

Case 1: Smart bank functioning in India. It is planning to diversify into insurance business. Lately, the government of India has allowed the private sector to gain entry in the insurance business. Previously, it was the prerogative of LIC and GIC to do insurance business. But now with liberalisation of the economy and to make the field competitive other companies have been given licenses to start insurance business under the regulation of ‘Insurance Regulatory and Development Authority’.Bank plans to recruit high quality employees and agents and exercise effective direction to capture a substantial part of life and non-life insurance business.Questions.(i) Identify how the company can supervise its employees and agents effectively. What benefits will the company derive from effective supervision?(ii) What financial and non-financial incentives can the company use for employees and agents separately to motivate them. What benefits will the company get from them?(iii) How can the company ensure that higher order needs i.e., esteem and self actualisation as specified by Abraham Maslow are met? (iv) Give a model of formal communication system that the company can follow. Identify the barriers in this model. How can they be removed?(v) How can informal communication help to supplement formal communication model given by you in answer to question (v)?

Ans. (i) Company can supervise its employees and agents by appointing a supervisor. Supervisor will not only supervise the employees but will also guide and direct their efforts towards the objectives. Benefits from effective supervision are:(a) Maintains day-to-day contact(b) Link between workers and management(c) Maintains group unity(d) Ensures performance(e) Provides training

(ii) (a) Financial incentives: Financial incentives refer to incentives which are in direct monetary form or measurable in monetary terms and serve to motivate people for better performance. The financial incentives generally used in organisations are listed below: Pay and allowances, Productivity-linked wage incentives, Bonus Profit sharing, Co-partnership/stock option, Retirement benefits, and Perquisites(b) Non-financial incentives: Psychological, social and emotional factors also play an important role in providing motivation. Non-financial incentives mainly focus on these needs. Some of the important non-financial incentives are discussed below: Status, Organisational climate, Career advancement opportunity, Job enrichment, Employee-Recognition programmes, Job security, Employee participation and Employee empowerment .Incentives will benefit the company as incentives help to motivate theEmployees and motivated employees work positively for achieving the organisational objectives.

(iii) Higher order needs are not satisfied with money alone. To satisfy esteem and self actualisation needs, motivators like autonomy status, appreciation from others, challenging jobs, opportunities for innovation, etc. play an important role. (iv) The company can follow free flow model of formal communication system as flow of communication is very fast in this network.The barriers are: (a) Semantic Barriers. (b) Psychological Barriers.(c) Organisational Barriers. (d) Personal Barriers.Measures to remove the barriers:

(a) Clarifying the ideas before communication.(b) Communicate according to the needs of receiver.(c) Consult others before communicating.(d) Be aware of languages, tone and content of message.(e) Convey things of help and value to listeners.

(vi) Company should use positive aspects of informal communication and minimise its negative aspects. Thus, the importance of informal communication lies in the advantages it adheres to the organisation.Advantages of Informal Communication:(a) It helps the employees to develop friendly and social relationship in theorganisation.(b) It helps them to communicate on the matters which cannot be discussed through formal communication.(c) Informal communication is often repeated and understood easily.(d) It helps the managers to fill the communication gap, if any, in the flow ofinformation through formal communication.(e) It is fast and the urgent matters can be transmitted easily without any delay.

CASE 2. X is the owner of an electronic showroom. He wants an experienced sales manager and accounts manager. For this, he gives an advertisement. Thirty people apply for the job. He selects the two best persons out of a number of prospective candidates for a job. X gives sales target to sales manager and assigns work to accounts manager. The sales manager achieved his sales target one month in advance. His achievement was displayed on the notice board and a certificate for the best performance was awarded to him by the owner of the showroom.Questions:(i) Name the source of recruitment which is used by X to fill the above posts by quoting the line from the above para. Also state any one advantage of using this source of recruitment.(ii) Which test help X to find out the skills and abilities possessed by the candidate relating to the job during selection process?(iii) Name the type of incentive awarded by X to a sales manager.(iv) Which need of a sales manager, according to the Maslow’s Need Hierarchy Theory of Motivation is satisfied by giving such type of incentives?

Answer.

(i) External Recruitment: He wants an experienced sales manager and accounts manager. For this, he gives an advertisement. External sources of recruitment include personnel outside the organization.(ii) (a) Trade test: This test measures the existing skills of the individual. They measure the level of knowledge and proficiency in the area of professions or technical training.(b) Interest test: Every individual has fascination for some job rather than the other. Interest tests are used to know the pattern of interests or involvement of a person.(iii) Employee recognition: Employees’ work should be recognized and appreciated. Recognition means acknowledgement with appreciation. Employees feel motivated if appreciation is given to them.(iv) Esteem needs/Ego needs: These include factors such as self-respect, autonomy status, recognition and attention.

CASE 3. Ms. Mamta is promoted to the post of principal in G.S. Alag Public School, Delhi. Ruchika and Amit are business studies’ teachers as well as good friends. One day at lunch they were discussing the behavior of the newly appointed principal. The Principal sets the target for the subject teachers without discussing it with them. She firmly tells them that if the task is not completed within given time period then strict action will be taken against them. On the next day, one of the teachers explains some problems to the principal but she does not grasp the message due to some reasons. At the end of the given time period, the principal has been told that a few teachers could not complete their task.Questions:(i) Name the source of recruitment which is used by school’s management to fill the post of principal by quoting the line from the question.(ii) Identify the type of communication used by Ruchika and Amit in the above para.(iii) Which style of leadership is followed by Ms. Mamta?

Answer. (i) Internal recruitment:(a) Ms. Mamta is promoted to the post of principal in G.S. Alag Public School, Delhi. Internal sources of recruitment include personnel already on the payroll of the organization.(b) Recruitment out of internal sources refers to the recruitment for jobs for within the organization.(ii) Informal communication: Communication taking place without following the formal lines of communication is said to be an informal communication.(iii) Autocratic leadership:

(a) Under this, autocratic leader gives order and expects his subordinates to obey those orders.(b) He keeps all the authorities concerned in his control and takes all decisions without consulting the subordinates.

CASE 4. Explain the various needs of Maslow’s Need Hierarchy theory. Which of the needs are satisfied in the following cases? (i) When employees are given training?(ii) When financial incentives like bonus and co-partnership are given to them?(iii) When authority is delegated to them?

Answer. (i) Safety needs and self-actualisation needs, (ii) Physiological needs, safety needs: (iii) Ego needs self-actualisation needs:

CASE 5. Mr. Ashok, a Production Manager of an Auto-mobile company is a not able to communicate and provide guidance to the workers of a factory due to overload of the work. So he decides to appoint a person who will be able to spend more time with the workers.

Questions:

1. Identify the element of directing which helps the production manager to reduce his workload.

2. Write any two importance of such element which identify in above.

Answers:

1. Supervision2. A) Provides a link between the workers and management

B) Motivating of workers.

CASE 6. Sunita had been working as trainer with Global enterprises. She was popular amongst the employees. She was quite an ambitious person. When the executive engineer (her boss) retired, she applied for that post. Management of Global Enterprises decided to fill the vacant position by an outside. She felt demotivated and her performance declined. When the new

executive engineer joined, she saw that Sunita had been working with company for a long time and she needed motivation to improve her performance.

Questions:1. Why did Sunita`s performance decline? Explain, by quoting the line in

above para.2. Why did management of Global Enterprises hire the executive engineer

from outside?3. What was required to improve Sunita`s Performance?

Answers:1. Management of Global Enterprises decided to fill the vacant position by

an outside. So her performance declined although she felt that she was competent to do the same.

2. The management may not have found Sunita competent enough to cope up with the new designation responsibilities and work profile.

3. Sunita needed appropriate direction and motivation to improve her performance.

CASE 7: Mr. Vimal , a sales manager, achieved his sales targets one month in advance. His achievement was displayed on the notice board and a certificate for the best performance was awarded to him by the CEO of the Co. Questions:

1) Name the type of incentive offered to the employees. 2) Explain any two other such types of incentives.3) What values can be generated among the workers by adopting this

incentive?Answers:

1) Recognition (under non- financial incentive)2) The two other non-financial incentive are: Job security Employee participation3) The values are:

• Motivation• Sense of appreciation• Encouragement• Inspiration to other workers

CASE 8 . Nippon Ltd. an organization manufacturing generators. The marketing manager delegates the task to five sales representatives working under him. Among them the three sales representatives was able to achieve their respective targets. As a result the marketing manager talks to the CEO of the company to recognize the performance of the three sales

representatives. The company decides to upgrade their cadre and their salary package also.Questions:

1. Name and explain the element of directing function which the company assures the three representatives to achieve their targets.

2. What values does the company inculcate to the other two sales representatives?

Answers:1. Explain the element of directing `Motivation`.2. Values are:• Commitment • Hard work• Responsibility • Cooperation

Controlling

Case 1 : Mr. Nath, a recently appointed production manager of Suntech

Ltd. has decided to produce Jute bags instead of Plastic bags as these are

banned by the government. He set a target of producing 1000 jute bags a

day. It was reported that the employees were not able to achieve the

target. After analysis he found that the employees were de-motivated

and not putting their best for achieving the target. Mr. Nath’s behavior is

good toward the employees. His attitude is always positive. So he

announced various incentive schemes for the employees like:-

Installing award or certificate for best performance.

Rewarding an employee for giving valuable suggestions.

Congratulating the employees for good performance.

(a) Identify the functions of managements highlighted in the

above paragraph.

(b) State the incentive under which the employees are motivated.

(c) State any two values which the Production manager wants

to communicate to the society by his work and behavior.

Ans:- (a) Controlling and directing.

(b) Employee recognition programme (non-monetary incentive).

(c) Value (any two).

Sensitivity to environment;

Good behavior towards employee;

Team work with employee;

Case 2-Rajat limited produces hosiery items for export purposes. “john

player” a foreign import company, has sent a complaint that the cloth used in

the shirts in the January 2015 dispatched is substandard.

a) What management function is responsible in above case?

b) Explain the process of above function.

Ans: (a) Controlling

(B)Steps in contolling process:-

1- Setting Performance Standards2- Measurement of Actual Performance 3-Comparing Actual Performance with Standards4-Analysing Deviations:(a) Some deviation in performance can be expected in all activities. It is, therefore, important to determine the acceptable range of deviations.(b) Also, deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. Critical point control and management by exception should be used by a manager in this regard.l Critical Point Control: It is neither economical nor easy to keep a check on each and every activity in an organisation. Control should, therefore, focus on key result areas (KRAs) which are critical to the success of an organisation. These KRAs are set as

the critical points. If anything goes wrong at the critical points, the entire organisation suffers. Management by Exception: Management by exception, which is often referred to as control by exception, is an important principle of management control based on the belief that an attempt to control everything results in controllingnothing. Attempt to control everything results in controlling nothing. Thus, only significant deviations which go beyond the permissible limitshould be brought to the notice of management.Step 5: Taking Corrective Action:(a) The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within acceptable limits.(b) However, when the deviations go beyond the acceptable range, especially in the important areas, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished.(c) Corrective action might involve training of employees if the production target could not be met.(d) Similarly, if an important project is running behind schedule, corrective action might involve assigning of additional workers and equipment to the project and permission for overtime work

Case 3 : -Rajeev and Sanjeev are managers in the same organization heading different units. While discussing about the function of management. Rajeev says that “planning” is looking ahead. Whereas controlling is looking back’ but sanjeev says you are wrong because planning is looking back whereas controlling is looking ahead.a)Both are giving reasons in favour of their statements explain.b) Explain the possible reasons given by both and justify who is correct?

Ans: a - Rajeev is saying that planning is looking ahead because plans are always made for future On the other hand , Sanjeev is saying that planning is looking back because while making plans for future, past experience and knowledge are required. So, both are right in their statement.

b- Both are correct, because planning and controlling are considered looking backward and forward. Though planning is looking ahead but when we plan for future we are guided by past experience also. Similarly while controlling we measure the past performance and if we find any deviation we take the corrective actions. Therefore planning and controlling both are looking backward and forward.

Case for practice:

Case : pranav is appearing as a factory manager in a washing machine manufacturing company. He was given a target of producing 500 washing machines per month. He knew that the essence of management is to achieve desired result. But he does not know how to ensure that work goes on according the plans guide him by explaining the process. So that he is able to achieve the desired result. identify the functions of management to which this process is related? Explain three importance of above functions. (hint: Controlling)

Financial Management

Case 1: IJK Ltd. is planning to modernise its plant and machinery.(i) Name this kind of investment decision.(ii) Explain any three factors affecting the investment decision.(iii) Which kind of market is feasible for this organization?(iv) How can securities be floated in such a market?

Ans. (i) Capital budgeting decision: A long-term investment decision is called a capital budgeting decision.(ii) The three factors affecting the investment decision are:(a) Cash flows of the project: (b) The rate of return: (c) The investment criteria involved: The decision to invest in a particular project involves a number of calculationsregarding the amount of investment, interest rate, cash flows and rate of return. There are different techniques to evaluate investment proposals which areknown as capital budgeting techniques. These techniques are applied to eachproposal before selecting a particular project.

(iii) Primary Market: Primary market is also known as the new issue market. It deals with the new securities being issued for the first time.

(iv) Securities can be floated in primary market through the following:(a) Offer through prospectus: (b) Offer for sale:(c) Private placement: Private placement is the allotment of securities by a company to institutionalinvestors( like LIC, UTI etc.) and some selected individuals. It helps to raise capital more quickly than a public issue. The cost of raising finance through private placement of securities is lower than that through public issue of securities. Small companies which cannot afford to raise resources from the public issue, may opt for the private placement.(d) Right issue: This is a privilege given to existing shareholders to subscribe to a new issueof shares according to the terms and conditions of the company. The shareholders are offered the ‘right’ to buy new shares in proportion tothe number of shares they already possess.

Case 2 : -K is the financial director of a newly established company "fast wire and cables". The management seeks him advice on type of capital structure it should maintain and how it should raise capital. (a) State what type of decision K should take to advice the management.(b) Explain any 3 factors which affect such decision.

Ans: a) Financing Decision.

b) explain any 3 factors like- Cost of raising funds, Risk factor, Cost of floatation, Cash flow position, Control consideration, Fixed operating cost etc.

case 3 : - In a meeting, General manager is of the view that profit maximization is the main objective of financial management , while you as a finance manager believe that -wealth maximization is the most important objective. Justify your position to convince the board member by giving suitable reasons.

Ans:

Profit maximization implies procuring the optimum amount of finance by creating minimum liabilities on the companies and by utilizing the finance in the best possible way. While wealth maximization means increase in the market value of shares.

Wealth of a company can be maximized only if funds are economically used. Hence wealth maximization become the most important objective since it includes profit maximization and represents the long term interest of shareholders.

Case 4 :- You are finance manager of a company. The board of director has

asked you to determine the working capital requirement for the company.

state the factor that you would consider while determining the requirements

of working capital for the company.

Ans: factor for determining the working capital requirement:-

Size of business, Nature of business, Operating cycle, Rapidity of turnover,

Seasonal factors, Availability of raw material etc.

Financial Markets

Case 1 : Supriya’s grandmother who was unwell, called her and gave a gift

packet. Supriya opened the packet and saw many crumpled share

certificates inside. Her grandmother told her that they had been left

behind by her late grandfather.

As no trading is now done in physical form, Supriya wants to know the

process by adopting which she is in a position to deal with certificates.

a) Identify and state the process.

b) Also give two reasons to Supriya, why dealing with shares in

physical form had been stopped.

Ans:- (a) De-materialization : It is process where securities held by the investor in physical form are cancelled and the investor gives an electronic entry or number so that she/he can hold it as an electronic balance in an account. So, she needs to open D-mat A/c with DP.

(b) Problem with dealing in physical form (Any two) :i- Theft.ii. Fake/forged transfers.iii. Transfer delays.iv. Paper work associated with share certificates or debentures held in physical form.

Case 2 : R’ Limited is a real estate company which was formed in 1950. In about 56 years of its existence the company has managed to carve out a niche for itself in this sector. Lately, this sector is witnessing a boom due to the fact that the Indian economy is on the rise. The incomes of middle class are rising.More people can afford to buy homes for themselves due to easy availabilityof loans and accompanying tax concessions.To expand its business in India and abroad the company is weighing variousoptions to raise money through equity offerings in India. Whether to tapequity or debt market, whether to raise money from domestic market orinternational market or Combination of both?, whether to raise the necessaryfinance from money market or capital market. It is also planning to list itselfin New York Stock Exchange to raise money through ADR’s. To make itsofferings attractive it is planning to offer host of financial plans productsto its stakeholders and investors and also expand it’s listing at NSE aftercomplying with the regulations of SEBI. (i) What are the regulations of SEBI that the company must comply with?(ii) How does the SEBI exercise control over ‘R’ Limited in the interest ofinvestors?

Ans. (i) Company must comply with the following regulations of SEBI:

Regulatory functions of SEBI(a) Registration of brokers and sub-brokers and other players in the market.(b) Registration of collective investment schemes and Mutual funds.(c) Regulation of stock brokers, portfolio exchanges, underwriters and merchant brokers and any business in other securities market.(d) Calling for information by undertaking inspection, conducting enquires andaudits of stock exchanges and intermediaries.(e) Regulation of takeover bids by companies.(f) Levying fee or other charges for carrying out the purposes of the Act.

(ii) SEBI controls ‘R’ Limited in the interest of investors by exercising following protective functions:

(a) Prohibition of fraudulent and unfair trade practices like making misleadingstatements, manipulations, price rigging, etc.(b) Controlling insider trading and imposing penalties for such practices.(c) Undertaking steps for investor protection.(d) Promotion of fair practices and code of conduct in securities market.

Case 3 : Energy Supplier Ltd. is a newly established company. The company needs fixed capital to buy fixed assets like land, building, plant machinery, etc.(i) Name the market from where the company can raise the funds. Also explain any two methods of issuing securities in this market.(ii) Explain any two factors which affect the requirements of fixed capital.

Ans. (i) Primary market is also known as the new issue market. It deals with the new securities being issued for the first time. Two methods of issuing securities are as follows:(a) Offer through prospectus:

This involves inviting subscription from the public through issue of prospectus. A prospectus makes a direct appeal to investors to raise capital, through anadvertisement in newspapers and magazines . Public issue involves a large number of intermediaries, such as bankers, brokers and underwriters.(b) Offer for sale: Under this method, securities are not issued directly to the public but areoffered for sale through intermediaries like issuing houses or stock brokers. In this case, a company sells securities at an agreed price to brokers who,in turn, resell them to the investing public.

(ii) Factors affecting fixed capital:(a) Nature of the business: The type of business has a bearing upon the fixed capital requirements. ForExample, a trading concern needs lower investment in fixed assets comparedwith a manufacturing organization; since it does not require to purchasePlant and machinery etc.(b) Scale of Operations: A larger organization operating at a higher scale needsbigger plant, more space etc. and therefore, requires higher investment in fixedassets when compared with the small organization.

MARKETING

CASE 1. It is one of the elements of market mix which contains one of the most important decisions that a marketer has to take to promote sales. This decision was taken by Mr. Mukund, Marketing manager of Intel Ltd. which facilitated the customers in product identification and hence ensured quality. It also built up their confidence and help in increasing their level of satisfaction. Apart from this, they provide educational scholarships for poor children in the society.Questions:

a) Identify the element of marketing mix.b) Name any two values being emphasised by ensuring quality products

for customers and by running an orphanage home.ANSWER:

a) The element of marketing mix. `Promotion`.b) The two values are: • Respect• Humanity• Social responsibility etc.

CASE 2. Jasbir read in the newspaper that there is a special offer on the purchase of LCD T.V. He went to Vikram Electronics. He purchased goods according to his need and satisfaction. He is not forced by any sales person to purchase any product.Questions:(i) Name the promotional tool which has bought him to the shop.(ii) State any two qualities of a good salesman.(ii) Name and explain the consumer rights highlighted in the above para.

Ans. (i) Advertisements.(ii) Honesty, convincing ability.(iii) Right to choose:(a) Every consumer has the right to choose the product at competitive prices which are fair and reasonable.(b) He must have access to the variety of goods available and must be able to compare the relative qualities and prices of similar products

CASE -3. Mr. Rakesh working in a limited company as a sales manager. He decided, that goods and services must be made available to the customer at the right place, in right quantity and the right time.Questions:

a) One of the elements of marketing mix is highlighted in the above para. Name it by quoting the line from it.

b) Explain the components of such element of marketing mix.Answers:

a) Place mixb) The components of place mix are:

• Order processing• Transportation• Warehousing

• Inventory control.

CASE 4. Elder Pharmaceuticals is a leading company engaged in manufacturing cough syrups. The company packs the syrups first in glass bottle and then in a cardboard box. As the syrups are demanded all over the world, 20 boxes of syrups are packed in corrugated boxes and distributed to various chemists and hospitals.Questions:

a) Identified the three levels of packaging is highlighted in the above para. Name it by quoting the line from it.

a) What is the basic purpose of packing the cardboard boxes in corrugated boxes?

Answers: a) The three levels of packaging are:

• Primary package `Pack the syrups first in glass bottle`. And • Secondary packaging `then in a cardboard boxes.• Transportation packaging `20 boxes of syrups packed in corrugated boxes for

transportation and storage purpose`.b) The basic purpose is to protect the product in the process of transportation and

storage.

CASE -5. Radha found a worm crawling out of newly opened tetra pack of a juice manufactured by a reputed company, Zest Ltd. She went back to the shopkeeper from whom the pack was purchased who directed her to call up the customer care centre. When all her efforts failed, she went to customer activist group to seek help. The group decided to help Radha and take measure to impose restrictions on the sale of the firm`s products of the particular batch and urge customers to refrain from buying the products of the company. Zest Ltd. lost its image in the market. The CEO gives the responsibility of bringing back the lost image of the company to a manager.Questions:

1. Identify the concept of marketing management which will help the manager getting the firm out of the above crisis.

2. Also explain the role of above identified concept by stating any two points.

Answers:1. Public Relations2. Role of public relations are:

• Press relation• Counselling• Product publicity• Corporate communication etc.

CASE 6. Mr. David, working as Sales executive in Mahalaxmi Ltd. possesses good marketing techniques. His techniques involve oral presentation of

message in the form of conversation with prospective customers for the purpose of making sales.Questions:

1. Name the promotional tool used by Mr. David.2. Identify the values which can be inculcated by using the technique in

the above case.ANSWER:

1. Personal selling2. Values are:• Confidence.• Customer Relations• Creating goodwill

CASE -7. ABC believed that it could maximise its profits by producing hair dye at large scale. Similarly XYZ Ltd. Who also sold hair dye laid more emphasis on society and customer need rather than quantity of product? XYZ company grew within few years and reached the heights of business environment while ABC Ltd. Suffered losses and closed down. Questions:

1. What could be the possible reason for closing down?2. How ABC ltd. Overcome its depressed position?3. Which market management philosophy do you think both the

companies followed?Answers:

1. ABC Ltd. Laid more emphasis on quantity rather than customer satisfaction and quality of product.

2. It should lay more emphasis on customer satisfaction.3. Marketing philosophy followed by:

• The ABC Ltd. – production concept and• The XYZ Ltd. – societal concept.

CASE-8. In the sales promotion meeting, Mr. Ashutosh, sales executive of flornce Ltd., raised several queries regarding branding and labelling of their products. His queries, however,were overlooked by Mr. Jitin, sales manager and Mr. Pankaj, production manager as they thought they were not so important.Questions:

1. Who do you think is right?2. Why do you think branding and labelling are important?3. What do you think are the important points to be considered in mind

while branding?Answers:

1. Ashutosh.2. Branding and labelling help in advertising and promotion of the products.

3. Brand name should be easy to pronounce, suggestive, distinctive, adaptable, versatile etc.

CASE-9. Mi Si sold their car at a discount of Rs. 25000 for a limited period to clear off stock, while H Ltd. started with a scheme of giving a laptop with every purchase of their car.Questions:

1. What promotional technique did H Ltd. apply?2. Which promotional tool was used by both the companies?3. What is basic purpose of both the companies?4. What promotional technique of promotion did MSi apply?5. Explain any two other tools of promotion.

Answers:1. Product combination.2. Sales promotional tools3. To increase their sales4. Rebate.5. The other promotional tools are:

Usable benefits. Lucky draw

Case 10: Zoom Udyog, a car manufacturing Co., has started its business

with Zoom 800 and slowly launched Zoom 1000, Wagon –Z, Swy-fy, etc.

and offered various services like after service, availability of spare parts,

etc. Identify the element of marketing mix referred here.

Ans:- Product mix

Case 11: Radha found a worm crawling out of newly opened tetra pack of

juice manufactured by a reputed company, Zest Ltd. she went back to the

shopkeeper from whom the pack was purchased who directed her to call

up the Customer Care Centre. When all her effort failed, she went to a

consumer activist group to seek help. The group decided to help Radha

and take measures to impose restriction on the sale of the firm product of

the particular batch and urge customers to refrain to buying the products

of the company. Zest Ltd. lost its image in the market. The CEO gives the

responsibility bringing back the lost image of the company to a manager.

(a) Identify the concept of the marketing management, which will help

the managers getting the firm out of the above crisis.

(b) Also explain the role of above identify concept by stating any two

points.

Ans: - (a) Public Relations.

(b) Role of public Relation can be discussed with respect to the

following points:

(i) Press Relations.

(Ii) Product Publicity.

(iii) Corporate Communication.

(iv) Lobbying.

(v) Counselling.

Consumer Protection

Case:1- Himesh after completing his graduation started working with a

multinational company in Delhi. But due to ill health of his parents he had

to go back his village. There he noticed the villagers were literate but

ignorant about their rights. Many vegetable vendors were using stones as

weights to sell their vegetables. Some shopkeepers were selling food

items without having ‘FPO mark’. So, to create awareness among villagers

Himesh decided to publish weekly journal “jan jagriti”. State the “right’

which Himesh has exercised by doing so.

Ans: - Right to consumer education.

Case2 : Now, filing complaint is just a click away. Filing a complaint in a consumer court’s going to get a lot easier by the end of this year, virtually. No matter which part of the country you’re in, it’s going to happen at the click of a mouse.The project, called Confonet (Computerisation and Computer Networkingof Consumer Fora), is being executed on a turnkey basis by the NationalInformatics Centre (NIC).“Online registration of complaints, the government hopes, will promotee-governance, transparency, efficiency and streamlining of consumer fora,”said an official in the Consumer Affairs Ministry. Of Rs.48.64 crore set asidefor the project, the government has released Rs.30.56 crore so far, the officialadded.” Besides software development and testing, networking and projectimplementation, integration and site preparation, it will include purchase ofhardware for all the 583 district for a, 35 state commissions and the NationalCommission,” the official said. At present, computer systems and systemsoftware have been delivered to 25 state commissions and 300 district for a—never mind the fact that it’s sometimes a long wait before the hardware isfinally unpacked and set up in some of the districts. Meanwhile, training ofstaff, sometimes in the classroom and sometimes through e-learning sessions,are in full swing.“But just setting up an online complaint filing system won’t ensure a strongconsumer protection movement in the country — for that we’re working onGenNext and the best way to do that is to go to schools,” the official said.The government is, therefore, involving school children to form consumerclubs so as to involve them in various consumer welfare activities. Part of

the funding for running the club is to come from various state governments,with an equally matching grant from the Centre.

Questions.(i) What new measure is the Ministry of Consumer Affairs taking to make filing of complaint easy?(ii) What role can you as a student play to contribute to the cause of consumerprotection?(iii) What scenario of consumer protection do you foresee when the measuresproposed in the above news report are implemented?Ans. (i) (a) The project, called Confonet (Computerisation and Computer Networking of Consumer Fora), is being executed on a turnkey basis by the National Informatics Centre (NIC).(b) Online registration of complaints.(c) Besides software development and testing, networking and project implementation, integration and site preparation.(d) Computer systems and system software have been delivered to 25 statecommissions and 300 district fora.(e) Training of staff, sometimes in the classroom and sometimes through e-learning sessions, are in full swing.(ii) As a student, the following steps can be taken:(a) We can educate the general public about consumer rights by organisingworkshops and seminars.(b) A student may spread awareness about the duties of a rational consumer.(c) Students can also protest against unfair trade practises.(d) Educate consumers about various consumer logos.(iii) (a) It will ease the process of consumer grievance handling.(b) Online registration of complaints, will promote transparency and efficiency.(c) Through training of staff, cases of systematic learning can be improved andconsumer can be satisfied.(d) Malpractices can be curbed.

Case 3: Subhash Ltd. is manufacturing cosmetics. They decide to launch a new range of herbal products. As they are in a hurry so they have tested the products on

rats only. The necessary information is missing on the package.(i) Name and explain the consumer rights violated in the given para.(ii) According to you, a label should contain what kind of information?

Ans. (i) Right to be informed:(a) Consumers have the right to be informed about the quality, quantity, purity,durability, standard and price of the products.

(b) They must be informed about the following: How to use the products? What safety measures or precautions are to be taken to avoid loss or injury? What is the date of expiry of products like medicines?

(c) A consumer must be given adequate information so that he may assess whether the item he buys is worth the money he spends.(ii) Details of the product like:(a) Batch no. (b) Date of Manufacturing(c) Price (d) Date of expiry(e) Net weight (f) Ingredients

Case4 : Jasbir read in the newspaper that there is a special offer on the purchase of LCD T.V. He went to Vikram Electronics. He purchased goods according to his need and satisfaction. He is not forced by any sales person to purchase any product.

(i) Name the promotional tool which has bought him to the shop.(ii) State any two qualities of a good salesman.(ii) Name and explain the consumer rights highlighted in the above para.

Ans. (i) Advertisements.(ii) Honesty, convincing ability.(iii) Right to choose:(a) Every consumer has the right to choose the product at competitive prices which are fair and reasonable.

(b) He must have access to the variety of goods available and must be able to compare the relative qualities and prices of similar products.

Cases for practice

Case: A consumer Raj bought a refrigerator of Rs. 25000 with a guarantee of 2 years. But he did not paid in lump sum. At the time of purchase he paid Rs. 5000 only and remaining Rs. 20000 in the installment of Rs. 2000 per month. He was not given a bill for that but only a receipt for the payment. After the functioning of 3 months the compressor of refrigerator stopped functioning and also there were some more defects in it. So Raj goes to agency and wants to replace it but the salesman disagreed and said to repair it but Raj wants the other one. Then he appeals in the consumer court by showing his receipts of payment for refrigerator and guarantee card bearing no. 421. Consumer court ordered the Agency to replace the refrigerator and also to pay compensation for the inconvenience to Raj.

Questions :-

1. What type of case can be filed in which type of consumer court?

2- Why bills and receipts are important?

Case: Ram baught a car with insurance & warranty card of 2 years .

He enjoyed so much with properly working car, but after 1.5 year the car was not responding properly. It’s A.C and sound system were not working properly. So he went to the service centre. Even though the transaction falls in the warranty period but service centre tried to make him fool. Then he walked to consumer court for relief. Ram filed a case against the service provider .

According to Consumer Protections Act , each consumer should be entertained properly. But in this case Ram was not at all entertained properly.

Questions :-

1- Explain the reasons as to why consumers protection is needed .

2- Which act is enumerated in the above case?

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