MODEL ANSWER
CLASS XII
BUSINESS STUDIES
Ans 1- The two important characterstics of management are:-
(i) Management is goal oriented process.
(ii) Management is pervasive.
Ans 2- F.w.Taylor is considered as the father of scientific management.
Ans 3- Consumer protection act is the example of social enviroment.
Ans 4- Policy formation is the function of top level management.
Ans 5- A profession may be defined as an occupation that requires specialized knowledge and intensive academic preparations to which entry is regulated by a representative body. The essentials of a profession are:
- Specialized Knowledge - A profession must have a systematic body of knowledge that can be used for development of professionals. Every professional must make deliberate efforts to acquire expertise in the principles and techniques.
- Formal Education & Training - There are no. of institutes and universities to impart education & training for a profession. No one can practice a profession without going through a prescribed course. Many institutes of management have been set up for imparting education and training. For example, a CA cannot audit the A/C’s unless he has acquired a degree or diploma for the same but no minimum qualifications and a course of study has been prescribed for managers by law. For example, MBA may be preferred but not necessary.
- Social Obligations - Profession is a source of livelihood but professionals are primarily motivated by the desire to serve the society. Their actions are influenced by social norms and values.
- Code of Conduct - Members of a profession have to abide by a code of conduct which contains certain rules and regulations, norms of honesty, integrity and special ethics. A code of conduct is enforced by a representative association to ensure self discipline among its members.
- Representative Association - For the regulation of profession, existance of a representative body is a must. For example, an institute of Charted Accountants of India establishes and administers standards of competence for the auditors but the AIMA however does not have any statuary powers to regulate the activities of managers.
Ans 6- Mangement is important due to following reasons:-
(i) Management helps in achieving group goals: Management is required not for itself but for achieving the goals of the organisation.
(ii) Management increases efficiency: The aim of a manager is to reduce costs and increase productivity through better planning, organising, directing, staffing and controlling the activities of the organisation.
(iii) Management creates a dynamic organisation: All organisations have to function in an environment which is constantly changing. It is generally seen that individuals in an organisation resist change as it often means moving from a familiar, secure environment into a newer and more challenging one.
(iv) Management helps in achieving personal objectives: A manager motivates and leads his team in such a manner that individual members are able to achieve personal goals while contributing to the overall organisational objective
(v) Management helps in the development of society: An orga-nisation has multiple objectives to serve the purpose of the different groups that constitute it. In the process of fulfilling all these, management helps in the development of the organisation and through that it helps in the development of society.
Ans 7-The scientific technique of differential piece rate system emphasizes on paying different rate of wage for efficient and inefficient employees.th echnique of differential piece rate system insist on:
(a) Paying different rate of wage to efficient and inefficient employees.
(b) Extra wages paid to efficient employees will motivate them to remain efficient.
(c) Extra wages paid to efficient employees will motivate inefficient employees to come in the category of efficient employees.
(d) When payment is given according to no. of units produced automatically the production will be maximised.
Q.8 explain any three points regarding significance of management.
Ans-
Ans 9- The term ‘business environment’ means the sum total of all individuals, institutions and other forces that are outside the control of a business enterprise but that may affect its performance.
Thus, the economic, social, political, technological and other forces which operate outside a business enterprise are part of its environment.
Business environment, has the following features:
(i) Totality of external forces: Business environment is the sum total of all things external to business firms and, as such, is aggregative in nature.
(ii) Specific and general forces: Business environment includes both specific and general forces.
(iii) Inter-relatedness: Different elements or parts of business environment are closely inter-related
(iv) Dynamic nature: Business environment is dynamic in that it keeps on changing whether in terms of technological improvement, shifts in consumer preferences or entry of new competition in the market
(v) Uncertainty: Business environment is largely uncertain as it is very difficult to predict future happenings, especially when environment changes are taking place too frequently as in the case of information technology or fashion industries
(vi) Complexity: Environment is a complex pheno-menon that is relatively easier to understand in parts but difficult to grasp in its totality
(vii) Relativity: Business environment is a relative concept since it differs from country to country and even region to region.
Ans 10- Various dimensions of business enviroment are:-
(i) Economic Environment: Interest rates, inflation rates, changes in disposable income of people, stock market indices and the value of rupee are some of the economic factors that can affect management practices in a business enterprise
(ii) Social Environment: The social environment of business include the social forces like customs and traditions, values, social trends, society’s expectations from business, etc
(iii) Technological Environment: Technological environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business
(iv) Political Environment: Political environment includes politi-cal conditions such as general stability and peace in the coun-try and specific attitudes that elected government representatives hold towards business
(v) Legal Environment: Legal environment includes various legislations passed by the Government administrative orders issued by government authorities.
Ans 11- The Government of India announced a new industrial policy in July 1991.
The broad features of this policy were as follows:
(a) The Government reduced the number of industries under compulsory licensing to six.
(b) Many of the industries reserved for the public sector under the earlier policy, were dereserved. The role of the public sector was limited only to four industries of strategic importance.
(c) Disinvestment was carried out in case of many public sector industrial enterprises.
(d) Policy towards foreign capital was liberalised. The share of foreign equity participation was increased and in many activities 100 per cent Foreign Direct Investment (FDI) was permitted.
(e) Automatic permission was now granted for technology agreements with foreign companies.
(f) Foreign Investment Promotion Board (FIPB) was set up to promote and channelise foreign investment in India.
The Indian corporate sector has come face-to-face with several challenges due to government policy changes. These challenges can be explained as follows:
(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) Repidly changing technological environment: Increased competition forces the firms to develop new ways to survive and grow in the market.
(iv) Necessity for change: 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: The new market conditions require people with higher competence and greater commitment. Hence the need for developing human resources.
(vi) Market orientation: 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’s budgetary support for financing the public sector outlays has declined over the years.
Ans 12- Unity of Direction: All the units of an organisation should be moving towards the same objectives through coordinated and focussed efforts. Each group of activities having the same objective must have one head and one plan. This ensures unity of action and coordination. For example, if a company is manufacturing motorcycles as well as cars then it should have two separate divisions for both of them. Each division should have its own incharge, plans and execution resources. On no account should the working of two divisions overlap. Now let us differentiate between the two principles of unity of command and unity of direction.
Centralisation and Decentralisation: The concentration of decision-making authority is called centralisation whereas its dispersal among more than one person is known as decentralisation. According to Fayol, “There is a need to balance subordinate involvement through decentralisation with managers’ retention of final authority through centralisation.” The degree of centralisation will depend upon the circumstances in which the company is working. In general large organisations have more decentralisation than small organisations. For example, panchayats in our country have been given more powers to decide and spend funds granted to them by the government for the welfare of villages. This is decentralisation at the national level
Order: According to Fayol, “People and materials must be in suitable places at appropriate time for maximum efficiency.” The principle of order states that ‘A place for everything (everyone) and everything (everyone) in its (her/his) place’. Essentially it means orderliness. If there is a fixed place for everything and it is present there, then there will be no hindrance in the activities of business/ factory. This will lead to increased productivity and efficiency.
Ans 13 - Management can be said to be an art since it satisfies the following criteria:
(i) A successful manager practices the art of management in the Nature and day-to-day job of managing an enterprise based on study, observation and experience. There is a lot of literature available in various areas of management like marketing, finance and human resources which the manager has to specialise in. There is existence of theoretical knowledge.
(ii) A manager applies scientific methods and body of knowledge to a given situation, an issue or a problem, in his own unique manner. A good manager works through a combination of practice, creativity, imagination, initiative and innovation. A manager achieves perfection after long practice. Students of management also apply these principles differently depending on how creative they are.
(iii) A manager applies this acquired knowledge in a personalised and skillful manner in the light of the realities of a given situation. He is involved in the activities of the organisation, studies critical situations and formulates his own theories for use in a given situation. This gives rise to different styles of management
The best managers are committed and dedicated individuals; highly trained and educated, with personal qualities such as ambition, self-motivation, creativity and imagination, a desire for development of the self and the organisation they belong to. All management practices are based on the same set of principles; what distinguishes a successful manager from a less successful one is the ability to put these principles into practice.
Management can be said to be an inexact science as it satisfies the following criteria:
(i) Management has a systematised body of knowledge. It has its own theory and principles that have developed over a period of time, but it also draws on other disciplines such as Economics, Sociology, Psychology and Mathematics. Like all other organised activity, management has its own vocabulary of terms and concepts. For example, all of us discuss sports like cricket and soccer using a common vocabulary. The players also use these terms to communicate with each other. Similarly managers need to communicate with one another with the help of a common vocabulary for a better understanding of their work situation
(ii) The principles of management have evolved over a period of time based on repeated experimentation and observation in different types of organisations. However, since management deals with human beings and human behaviour, the outcomes of these experiments are not capable of being accurately predicted or replicated. Therefore, management can be called an inexact science.
(iii) Since the principles of management are not as exact as the principles of science, their application and use is not universal. They have to be modified according to a given situation. However, they provide managers with certain standardised techniques that can be used in different situations. These principles are also used for training and development of managers.
The practice of management is an art. However, managers can work better if their practice is based on the principles of management. These principles constitute the science of management. Management as an art and a science are therefore not mutually exclusive, but complement each other.
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