BUSINESS ORGANISATION
(XII) -2014
GROUP-A (1 Marks)
Objective:
1. Example
of joint sector business is Bengal Peerless / Tata Steel/ I.T.C.(2007
2. Food
Corporation of India s an example of------------------. (a) Public sector
enterprise, (b) Private Sector.
3. The
main objective of public sector is to ---------------. (a) Earn profit; (b) do
social welfare
4. India
is an example of --------------. (a) Socialistic economy system, (b) mixed
economy system
5. Freedom
of enterprise is found in (a) Capitalistic economy, (b) Socialistic
system, (c) Mixed system
6. Business
is a constituent of ---------------. (Economy).
7. Economy
is a part of -----------------. (Society).
8. Haldia
petrochemicals Limited are an example of ---------------sector business in West
Bengal. (Joint)
9. -----------
leads to monopoly. (Capitalism)
10. -----------
is a group of individuals united together with a definite end in view. (Society).
11. In
---------- both government and private capital are invested. (Joint sector).
12. Lack
of competition is seen in capitalism. (F)
13. Life
Insurance Corporation of India is an example of public sector enterprise. (T)
14. Lack
of skill external/internal obstacle of environment.
15. The
external factors of business environment are controllable/ uncontrollable.
16. The
social/ physical environment of country depends on area, topography,
climate, rivers, minerals resources etc.
17. Climate
is an important factor of ------------ environment. (Physical).
18. Natural
environment is not created by people. (T)
19. Globalization
has made business environment complex. (F)
20. Environment
pollution is a constraint for industry. (T)
21. Fast
and quick technological changes take place due to globalization. (T)
22. The
business environment of the country does not depend on its economic condition.(T)
23. Low
purchasing power of people is one of the important features of Indian business
environment. (T)
24. Foreign
trade of the country is regulated by -------------- (Government)
25. National
Arbitration Board was formed in 1947/1951/1962
26. Essential
commodities Act was passed in 1953/1955/1956
27. Government
and business are the two wings of an economy. (T)
28. The
main objective of industrial policy, 1991 was to introduce liberalization with
a view to integrate the Indian economy with the World economy. (T)
29. The
Government Acts as a promoter to settle Industrial disputes through its
machinery of conciliation officer and industrial and Tribunals. (F)
30. Hindustan
Machine tools limited are an example of departmental organization/
Government Company.
31. Government
Company is registered under company Act 1956/ special legislation.
32. In
government company, the private ownership is less than/ more than 50%
33. Post
and Telegraph is the example of -----------management. (Departmental)
34. The
departmental organization is under the full authority of the -------------
(government)
35. -----------
refers to freedom as regards management of an organization. (Autonomy)
36. Joint
venture was undertaken first in 1956-57/ 1960-61/01970-71.
37. Gujarat
Fertilizer Company is an example of joint sector. (T)
38. A
multinational co. is a joint venture. (T)
39. Trust
is partial / complete consolidation.
40. Associated
cement co. of India Ltd is an example of vertical / horizontal / partial
combination.
41. Business
combination is formed for increasing……………… (Business strength).
42. Bata India Limited
is an example of ………………….. Combination. (Vertical).
43. Under
…………………. Various firm engaged in different processes of production are
combined. (Vertical)
44. …………………..
is an association of workers formed with the object of protecting their
interests and rights. (Trade union)
45. Holding
company is the example of partial consolidation. (T)
46. The objective
of horizontal combination is to enjoy benefits of large scale production.
(T)
47. Elimination
of competition is one of the causes of combination. (T)
48. Chamber
of commerce is a voluntary association which aims at promoting and protecting
the common interest of all the members. (T)
49. Cable
connection / computer are must resource of e-commerce.
50. Payment
is made through cash card / cheques in e-commerce.
51. Outsourcing
/
staffing is helpful in earning maximum profit for the country.
52. E-Commerce
introduces paperless exchange of business information using electronic data
interchange and ……………………. (Electronic mail).
53. E-Commerce
involves less clerical work. (T)
54. E-Commerce
is offering lower costs per business transaction. (T)
55. Scheduled
banks /
Non- scheduled bank are called listed banks with Reserve Bank of India.
56. Accepting
of deposit is the primary function / secondary function of commercial
Bank.
57. Issuing
of credit letter is the primary function / secondary function of
commercial Banks.
58. Commercial
Banks accepts two / four / six types of deposit.
59. Credit
cards are issued by banks / insurance companies.
60. No.
of scheduled bank under public sector is 224 / 250
61. No.
of Nationalized bank is 18/ 28
62. The
scheduled banks are required to deposit …………. Of current & term deposits to
Reserve Bank. (6%)
63. State
Bank of India is an example of ………………….. (commercial bank)
64. Banks
having at least Rs. 5, 00,000 towards paid up capital and reserve are known
as……………….. (Scheduled banks)
65. When
a ………is dishonoured, a notice of dishonor is to be given by the holder to the
drawer. (bill)
66. …………………acts
as banker’s bank. (Reserve bank of India)
67. Utmost
good faith is one of the principles of Insurance / office/ godown.
68. Life
Insurance /
Marine Insurance is applicable in the name of person only.
69. General
Insurance / Life Insurance is a contract of payment of an assured sum of
money at the end of certain period or maturity.
70. Nomination
is compulsory in case of General Insurance / Life Insurance to avoid any
dispute.
71. The
agreement of general Insurance is a contract of……………….. (Indemnity).
72. Cash-in-transit
insurance is an example of ……………… (General insurance).
73. Endowment
policy is the most popular form of life insurance. (T)
74. Marine
insurance is an example of general insurance. (T)
75. All
risks are not insurable. (T)
76. Cheap
mode of transport is airways / waterways.
77. Among
all the transport air / road / rail is the fastest in speed.
78. The
speed of ocean transport is very low / high.
79. Railway
board was constituted in ……….. (1905).
80. Air
transport is the costliest mode of transport. (T)
81. Railway
transport has no flexibility. (T)
82. Demand
of the commodities is decreased / increased by advertisement.
83. The
medium of advertisement / sales promotion is distribution of sample,
issue of coupon etc.
84. An
effective advertisement removes the gap of ……………….. (Knowledge).
85. Advertisement
and Publicity are synonymous. (F)
86. One
of the powerful media of advertising is television. (T)
87. Henri
Fayol propounded 10/ 12/ 14 principles of management.
88. Scientific
management is science / art / philosophy /
89. Management
is a process of group / single activity.
90. Administration
/ Management is concerned with policy implementing.
91. Management
/ Administration formulate board policies of the business.
92. Management
is a profession because it has specialized knowledge / training facilities /
code of conduct / all the above.
93. The
keyword PODSCORB given by Gulick / Fayol.
94. The
first function of management is……………… (planning)
95. Father
of scientific management is ………………… (W.Taylor)
96. Father
of modern management is …………………… (Henri Fayol)
97. Authority
and…………………co-exist. (Responsibility)
98. A
plan is a ……………….course of action. (Future)
99. …………………translates
plan into action. (Directing)
100.
PODSCORB stands for planning,
organizing, directing, staffing…………………reporting and budgeting.
(Co-Ordinating)
101.
Group efforts cannot succeed without a
sound……………. (Planning)
102.
Control is the last function of
management. (T)
103.
Management is organized body of
knowledge. (T)
104.
The central office performs various official
functions relating to outgoing / incoming & outgoing correspondences.
105.
Franking machine is used for…………………..
(Affixing stamps on envelops)
106.
Office is the ……………….. For storing of
different documents. (place)
107.
The function of drafting of letters is
required for……………….mails. (Outgoing)
108.
………………is the combination of telephone
and typewriter. (Teleprinter)
109.
Pins are……………..stationery used in
office. (Office)
110.
Fax machine and telephone are two
important instruments of a modern office. (T)
111.
Record keeping is an important
function of modern office. (T)
112.
The first function of an office is to
receive information. (T)
113.
Agenda are the requisite of a meeting
– meeting / notice / business.
114.
Managing director / general manager /
chairman is a must in a meeting.
115.
Notice must be definite, absolute and unconditional
/ conditional.
116.
Minutes / agenda are the
concise records of decision arrived at a meeting.
117.
A meeting is lawful / unlawful if
it is held in a prohibited place, ignoring the law and orders.
118.
…………………means the minimum number of
members that must be present at a meeting. (Quorum).
119.
In case of a company, the appointment
of chairman is regulated by the ………………… (Article of Association)
120.
A lawful meeting is one which does not
break peace. (T)
121.
A chairman may be elected from the
members of the meeting. (T)
GROUP-B (2 Marks)
Short answer type:
1. What
are the features of joint sector in an economy?
Ans: Characteristics/Features OF JOINT STOCK COMPANY.
Artificial
Person: A joint stock company is an artificial person Which means that it is
created by law and does not possess physical features of a natural person.
Separate
Legal Entity: Being an artificial person, a company exists independent of its
members. It can make contracts, purchase and sell things, employ people and
conduct any lawful business in its own name.
2. What
is Joint Stock Company?
Ans: A Joint Stock Company or simply a company is a voluntary
association of persons generally formed for undertaking some big business
activity. It is established by law and can be dissolved by law. The company has
a separate legal existence so that even if its members die, the company remains
in existence.
3. What
is joint venture?
Ans: A joint venture is a business agreement in which parties agrees
to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses
and assets
4. What
is public sector?
Ans: A pubic sector enterprise may be defined as any commercial or
industrial undertaking owned and managed by the government with a view to
maximize social welfare and uphold the public interest.
5. Write
two features of public sector.
Ans: Two features of public sector are:
Government
Ownership and Management: The public enterprises are owned and managed by the
central or state government, or by the local authority. The government may
either wholly own the public enterprises or the ownership may partly be with
the government and partly with the private industrialists and the public
Public
Welfare: Public enterprises are not guided by profit motive. Their major focus
is on providing the service or commodity at reasonable prices.
6. What
is private company?
Ans: According to Indian Companies Act 1956,a private company means a
company Private Company means a company which has a minimum paid-up capital of
one lakh rupees or such higher paid up capital, as may be prescribed, and limits
the number of its member to fifty (excluding members who are or were in the
employment of the company)
7. Mention
the features of statutory corporation.
Ans: Two features of statutory corporation are:
It is
incorporated under a special Act of Parliament or State Legislative Assembly.
It is
an autonomous body and is free from government control in respect of its
internal management. However, it is accountable to parliament and state
legislature.
8. Write
two features of business environment.
Ans: Features of business environment:
i) It
is dynamic in nature. It keeps on changing.
ii)
Business environment are complex and it consist of various factors.
9. Mentions
two points of distinction between private sector and public sector.
Ans : Two differences between private sector and public sector are:
|
Basis of differences
|
Private sector
|
Public sector
|
|
Objective
|
Maximization of profit.
|
Maximize social welfare and ensure balanced economic
development.
|
|
Ownership
|
Owned by individuals.
|
Owned by Government.
|
10. Mentions
two features of Government Company.
Ans: Two features of Government Company are:
It is
registered under the Companies Act, 1956.
Not
less than 50% of paid up capital is held by the central or by any state government.
11. What
relationship do you find between government and business?
Ans: The relation between government and business are:
The
government provides environment that promote business activity
The
government provides credit facilities, infrastructures like transport for the
growth of business.
The
government decides which types of industries have to be set up. Which industry
has to be given priority through five years plan.
The
government imposes Direct and indirect tax on business activities which fetches
fund necessary for the development of the economy.
12. Define
business combination with example.
Ans: Business combination: When two or more business units combine for
common purpose and equal interest to carry on their activities, it is called
business combination.
Example:
In 1936 ten cement companies belonging to Tatas, Khataus, Killick Nixon and F E Dinshaw groups merged to
form a single entity Called the
Associated cement company (ACC)
13. What
is circular business combination?
Ans: When different types of business units combine themselves under
the one management it is called circular combination.
Example: - If a cloth industry combining with shoes industry and sugar industry is an example of mixed combination.
Example: - If a cloth industry combining with shoes industry and sugar industry is an example of mixed combination.
14. What
is diagonal combination?
Ans: Diagonal Business Combination:- When two or more than two
business units performs subsidiary services, if they combine themselves under
the main industry it is called diagonal combination.
Example :- If designing and tailoring business units are combined with the garments industry it is called diagonal combination.
Example :- If designing and tailoring business units are combined with the garments industry it is called diagonal combination.
15. Point
out different misuses if advertising.
Ans: Misuses of advertisement: Deceiving customer: In the competitive
market, the trader uses the advertisement cleverly. The customer becomes
bewildered in this policy.
Disappearance
of customer free thinking: Now a day, the trader uses the modern mean of
advertisement in such a claver way that the customer may lose their independent
thought.
16. Name
out different print media for advertising.
Ans: The different print media of advertising are: News paper and
periodical (magazine).
17. Mention
two principle of management.
Ans: These are:
Division
of Work: This principle suggests that work should be assigned to a person for
which he is best suited. This facilitates specialisation and improves
efficiency.
Authority
and Responsibility: Responsibility means the work assigned to any person, and
authority means rights that are given to him to manage people and things to
ensure performance.
18. What
is controlling?
Ans: Controlling: Control means
to guide something in the direction it is intended to go. Controlling as a
function of management consists in verifying whether everything occurs in
conformity with the plan adopted, the instructions issued and principles
established.”
19. What
is communication?
Ans: Communication: “A process of sharing facts, ideas, opinions,
thoughts and information through speech, writing, gestures or symbols between
two or more persons”.
20. Mentions
any two features of planning.
Ans: Features of planning are:
Planning
is the primary function of management as every activity needs to be planned
before it is actually performed.
Planning
is always goal directed. A manager cannot plan anything unless he knows what he
wants to achieve.
21. What
is Doctrine of subrogation?
Ans: According to this principle, once the claim of the insured has
been settled, the ownership right of the subject matter of insurance passes on
to the insurer. In other words, if the damaged property has any value, such properties
can not the allowed to remain with the insured because otherwise the insured
will realize more than the actual loss which goes against the principle of
indemnity.
22. What
is Mitigation of losses?
Ans: According to this principle of insurance in case of a mishap the
insured must take all possible steps to reduce or mitigate the loss or damage
to the subject matter of insurance. This principle ensures that the insured
does not become negligent about the safety of the subject matter after taking
an insurance policy. The insured is expected to act in a manner as if the
subject matter has not been insured.
23. Why
fire insurance is called a contract of indemnity.
Ans: The word indemnity means compensating somebody for the actual
loss suffered by him; or restore someone to the same position that he/she was
in before the insured event took place.In the fire insurance the insurer compensate the actual loss suffered by
insured so it is called contract of indemnity.
24. Mention
two function of office.
Ans: Two functions of office
are:
Collecting
information: The office receives or
collects information about various activities of the organisation. The
information may be collected from internal or external sources. Internal
sources may be employees and various departments of the organisation. The
external sources are customers, suppliers and government departments etc
Arranging,
analysing and processing information: The information collected in an office is
generally not in the form in which it may be used by the management. Therefore,
facts and figures collected have to be arranged, processed, organised,
presented and analysed to make them useful to the management
25. What
is indexing?
Ans: Indexing is an important aid to filing. It is a process of
determining the name, subject or other captions under which the documents are
filed. Index is a guide to records.
26. Write
the names of two methods of indexing of business office.
Ans: The two method of indexing are:
Fixed
Index – Instead of maintaining a separate index, an index may be bound with the
book concerned. Such an index generally appears at the end of standard books in
which subject matter is alphabetically arranged and then relevant page numbers
are given against each heading or sub-heading.
Bound
Book Index – Index is prepared in a bound book or register divided into
alphabetical sections in which the names or documents are entered.
27. Write are the essential part of a business letter.
Ans: Essential part of a business letter are :
(1) Form
: Its include heading, inside address, salutation, body of a letter signature,
Enclosure, post script and Margin.
(2)
Layout a letter
(3)
Style and effectiveness.
28. What
is e- mail?
Ans:
Email: Electronic mail, commonly known as email or e-mail, is a method of
exchanging digital messages from an author (Sender) to one or more recipients
through internet.
29. What
is cash credit?
Ans: Cash credit: Cash credit is an arrangement whereby the bank
allows the borrower to draw amount upto a specified limit. The amount loan
under cash credit is credited to the account of the customer. The customer can
withdraw this amount as and when he requires. Interest is charged on the amount
actually withdrawn.
30. Differentiate
between cheque and draft.
Ans: The differences between cheque and draft are:
|
Cheque
|
Draft
|
|
cheque is a negotiable instrument which is ordering to pay
certain amount money to certain person
|
Draft is also negotiable instrument which demand to, pay the
amount
|
|
It is issued by account
holder.
|
It is issued by bank.
|
|
It may be dishonoured.
|
It can’t be dishonoured
|
31. Give
an idea of post dated cheque.
Ans: A post dated cheque is a
chequee that has a date on it which is
yet to come(future date). We cannot cash it until that date.
32. What
is ante dated date?
Ans: If a cheque bears a date
earlier than the date on which it is presented to the bank, it is called as
"anti-dated cheque". Such a cheque is valid up to six months from the
date of the cheque.
33. What
is overdraft?
Ans: Overdraft: Overdraft is also a credit facility granted by bank. A
customer who has a current account with the bank is allowed to withdraw more
than the amount of credit balance in his account. It is a temporary
arrangement.
34. Give
two differences between Open cheque and crossed cheque.
|
Open cheque
|
Crossed Cheque
|
|
This cheque is always negotiable.
|
All type of crossed cheque is not negotiable.
|
|
This cheque is not safe and secure.
|
Thos cheque is more safe and secure
|
|
Any one can encash the cheque
|
It can only be encash by real payee through his bank.
|
35. Give
an idea about quorum of a valid meeting.
Ans: Quorum denotes the minimum number of members of a body of persons
whose presence is necessary in order to enable that body to transact its
business validly, so that its proceeding may be valid. It is generally left to
the committee themselves to fix the quorum of their meetings. No meeting of any
organization or body can be held unless there is a proper quorum, i.e. a
minimum number of members who must be present before any business can be transacted
and its act may be legal.
36. Mention
the limitation of air transport.
Ans: It has the following limitations:
It is
relatively more expensive mode of transport.
It is
not suitable for transporting heavy and bulky goods.
It is
affected by adverse weather conditions.
It is not suitable for short distance travel.
37. Mention
the advantages of road transport.
Ans: Road transport has the following advantages
It is
a relatively cheaper mode of transport as compared to other modes.
It is
a flexible mode of transport as loading and unloading is possible at any
destination. It provides door-to-door service.
Perishable
goods can be transported at a faster speed by road carriers over a short
distance.
It
helps people to travel and carry goods from one place to another, in places which
are not connected by other means of transport like hilly areas.
GROUP-C (5 Marks)
1. Identify
the different environmental constraints and briefly describe them.
Ans: Constraints of Business Environment: The favourable
business environment is helpful to the promotion and development of business,
but the unfavourable environment is constraint to it. The factor creating hindrances
to business environment are discussed with a diagram:
(i)Want
of capital: A major part of the population of
less-developed countries is of low- earning
group. Their per- capita income is insignificant. Less income but much
consumption lead to less amount of saving and consequently, the amount of
investment is less .As a result, the rate of capital formation is low.
(ii)
Low standard of living: In less developed country, like India ,most of the people
live a low standard of living. This is due to severe unemployment problem and
property.
(iii)
Lack of managerial skill: At present, the importance of scientific management
in the management of industrial establishment cannot be over emphasized .But an
account of different types of hindrances, the concept of scientific management
cannot be successfully implemented in our country.
(iv)
Lack of technical knowhow: The goods of high quality may be produced by
applying new method coming out of new inventions. By virtue of technology, it
has been possible improve at each stage
of economic activities. But in a less developed country like, India ,efficient
technical man and technologists are few in number. As such ,the benefits of
technology cannot be gained.
(v)Lack
of entrepreneur: The promotion of a business enterprise requires at the initial
stage an enthused entrepreneur .But its number is very few in less developed
countries.
(vi)Socio
economic unrest: For development of proper business environment socio-economic
stability is utmost essential .For want of stability under no circumstances the
business environment can be developed.
(vii)
Lack of socio recognition: Most of the educated youths of our country run after
getting a service . They have no inclination to develop a business. Beside ,
the business profession has not been socially recognized with honour. This
sense has made to averse to take up business as profession.
2. What
is board management? Enumerate a few features of board management?
Ans: Board Mangement: When in departmental management, the
public enterprises are managed by Board of Directors. It is called Board
Management.This Board is constityuted by the government directly and it has
direct control over the organization. Exmple railways board and State
electricity board are the example of such enterprise.
Features
of the Board management enterprises:
Control: Under this system, the responsibility of management of the enterprises
is rested with a board. The government exercises control over all the matters.
Accountability: The board acts directly under departmental
minister and secretary. The concern minister is accountable to the parliament.
Submission of budget: The budgets of the board are presented
separately to the Parliament or Assembly.
Status of the employee: the employees of theses enterprises are not
recognized as direct employee of government.
Sharing of profit: The income and expenditure account is
prepared separately. The budget and the income and expenditure accounts are
discussed in the parliament or Assembly. If surplus be available, a part of it
goes to the government exchequer and rest is used in the development of the
business.
3. Explain
the disadvantages of public corporations?
Ans: The disadvantages of public corporation
are:
Ø A
public company has to file several documents with the Registrar of Companies.
Its annual accounts are published and its records are open for inspection to
public. Therefore, business secrets cannot be guarded effectively.
Ø There
are lots of legal formalities required for forming a public limited company. It
is costly and time consuming.
Ø In
order to protect the interest of the ordinary investor there are strict
controls and regulations impose by the
government. These companies have to publish their accounts.
Ø There
are several directors and managers in a public company. Decisions are taken in
meetings of the Board of directors with the consultation of concerned
officials. The decisions may often get delayed.
Ø Public
Limited companies are huge in size and may face management problems such as
slow decision making and industrial relations problems.
4. Mentions
with examples the features of departmental form of public sector business.
Ans: The main features of departmental undertakings are as
follows:
Ø It is
established by the government and its overall control rests with the minister.
Ø It is
a part of the government and is managed like any other government department.
Ø It is
financed through government funds.
Ø It is
subject to budgetary, accounting and audit control.
Ø Its
policy is laid down by the government and it is accountable to the legislature.
5. “Competitions
lead to business combinations “.Explain. or Excessive and wasteful competition
is one of the major causes for forming combination – Explain?
Ans: Now a day there is stiff competition among the business units due
to expansion in the market. The stiff competition among the business units has
increased the capital risk and lowered the profits of the firms. Some
businesses units do not survive the competition and finally close the business.
Hence the excessive competition became a very powerful cause of business
combination. Hence business units
combine together in order to enjoy the benefits of monopoly, like high profits
and and eliminate competition.
6. Distinguish
between amalgamation and absorption.
Ans:
Amalgamation: - Amalgamation means joining 2 or more company to firm a bigger
company. In this case the two or more company will close down their business
and the bigger company which is newly formed will continue the business.
For Example: - Company A joins Company B and Company C to form a brand new Company D.
For Example: - Company A joins Company B and Company C to form a brand new Company D.
Absorption: - Absorption means an existing company taking over 1 or more
company. In this case one or more company will close down their business and
this business will be continued by the name of the existing company.
For Example: - Company A takes over Company B and Company C. The both target companies i.e. B & C will now work under name of Company A.
For Example: - Company A takes over Company B and Company C. The both target companies i.e. B & C will now work under name of Company A.
7. State
at least three causes of combination?
Ans: The three causes of combination are:
Competition: Now a day there is stiff competition among the business units
due to expansion in the market. The stiff competition among the business units
has increased the capital risk and lowered the profits of the firms. Some
businesses units do not survive the competition and finally close the
business. Hence the excessive
competition became a very powerful cause of business combination
Economies of Large Scale: A large number of economies are achieved
if a business is carried on a large scale. These economies relate to
production, management, financing and marketing. Small business units may
combine together to reap the benefits of large scale operations and
organisation. This will reduce the cost of production and increase the profits
of the business.
Control of Market: Combinations are created to secure steady
market. Sometimes, combinations are created to control the entire market and
create a monopoly which is detrimental to the interest of the consumers. By
controlling the market, they can sell their products at higher prices and earn
huge profits.
8. Classify
different types of banks.
Ans: TYPES OF BANKS: There are various types of banks operate
in our country to meet the diverse financial needs of customers. The different
types of bank according to their function are:
Commercial Bank: Commercial Banks are banking institutions
that accept deposits from the public and grant short-term loans and advances to
their customers.
Cooperative Banks: Cooperative Banks are the banks that are
governed by the provisions of State Cooperative Societies Act and meant
essentially for providing cheap credit to their members. It is an important
source of rural credit i.e., agricultural financing in India.
Development Bank: Development banks are the financial
institutions which provide medium and long-term loans to industry. Rapid
development of industries in India after independence requiring huge financial
investment and promotional efforts led to the establishment of these
institutions. Development banks assist the promotion, expansion and
modernisation of industries. Besides providing medium and long-term finance,
these banks also subscribe to the capital issues of industrial undertakings.
They also provide technical advice and assistance, if needed. Industrial
Finance Corporation of India (IFCI) and State Financial Corporations (SFCs) are
examples of development banks in India.
Specialised Bank: There are some bank which engage themselves
in some specific area or activity and are thus, called specialised banks.
Export Import Bank of India (EXIM Bank), Small Industries Development Bank of
India (SIDBI), National Bank for Agricultural and Rural Development (NABARD)
are examples of such banks.
Central Bank: In every country a bank which is entrusted with the
responsibility of guiding and regulating the banking system is known as the
Central Bank. Such bank is an apex bank and acts as the highest financial
authority. In India, the central banking authority is the Reserve Bank of
India. It does not deal directly with the members of public. It acts as
bankers’ bank, maintains deposit accounts of all other banks and advances money
to banks as and when needed. It regulates the volume of currency and credit,
and has the powers of control and supervision over all banking institutions.
9. What
are the differences between Bill of exchange and cheque?
Ans:
|
Points
|
Bill of Exchange
|
Cheque
|
|
i) Necessity of stamp
|
Barring a few specific case stamp of proper value should be a
affixed.
|
Here there is no necessity of affixing stamp.
|
|
ii)Drawer of instrument
|
Creditor is the drawer of this instrument.
|
The depositor is the drawer of cheque.
|
|
iii) Days of grace
|
Three days of grace is allowed after the expiry of maturity.
|
No days of grace is applicable.
|
|
iv) Crossing
|
Bill of exchange cannot be crossed.
|
The cheque may be crossed.
|
|
v) Requirement of deposit
|
There is no requirement of deposit in the bank.
|
Adequate balance is required in the name of depositor.
|
|
vi) Withdrawing the order
|
The drawer of bill cannot withdraw his order before the payment
of money.
|
The drawer of a cheque can withdraw his order if he so desires.
|
|
vii) Possibility of becoming free from liability
|
The drawer becomes free from liability if the bill is not
presented on due date for realization to the drawee.
|
The drawer of a cheque does not become free liability if the
cheque is not presented to the bank.
|
10. What
is bank draft? Mentions any two causes of dishonoring cheque.
Ans: Bank Draft: A bank draft is a cheque issued by one bank,
and drawn on another bank to pay a beneficiary an amount of money. This
money is specified in amount to be paid to a beneficiary. It may be used to
send money abroad for gifts, payment for goods purchased, advance
travel-related payments and maintenance.
There are various reasons why bank cheque are not being accepted
from drawers:
1. Insufficient Fund: When the amount written on the cheque is more than what the drawer has in his account in the bank.
2.The Death of The Drawer: If the bank receives information of the death of its customer, the bank will not honour any cheque presented on the account of the dead customer, until further notice.
3. Irregular Signature: If the signature the drawer signs on the cheque differs from the specimen signature in the bank. The bank will dishonor such cheque.
4. Non-Existing Account: Sometimes, swindlers who have no bank account but possess false cheque books may issue cheque to those whom they have swindled.
5. Bankruptcy: If one is judged by a law court to be unable to pay his debts in full, the bank will dishonour any cheque presented on behalf of that customer.
6.Frozen Account: If court orders or a military government decrees that some people's account be frozen, the bank must definitely dishonour all cheque bearing the account's numbers.
7.When There is Attention: If anything is cancelled on a cheque, the bank will dishonour such a cheque, except the drawer signs his signature above or under the altered word.
8. A Post-Dated Check: If a post dated cheque is presented for payment before the date mentioned on the cheque, the bank will dishonour such a cheque.
9. A Stale Checkd: A check that has been delayed for more than six months of the date written on it, if presented for repayment must be dishonoured by the bank.
10. If There Is A Difference Between The Amount Written In Words And That in Figure. If for instance, the drawer writes thirty thousand only in words and Rs 20000 in figure. The bank will dishonor such cheque.
11. When Payment is Stopped: If the drawer asks his bank not to pay a cheque already issued. The bank will not make the paymernt.
1. Insufficient Fund: When the amount written on the cheque is more than what the drawer has in his account in the bank.
2.The Death of The Drawer: If the bank receives information of the death of its customer, the bank will not honour any cheque presented on the account of the dead customer, until further notice.
3. Irregular Signature: If the signature the drawer signs on the cheque differs from the specimen signature in the bank. The bank will dishonor such cheque.
4. Non-Existing Account: Sometimes, swindlers who have no bank account but possess false cheque books may issue cheque to those whom they have swindled.
5. Bankruptcy: If one is judged by a law court to be unable to pay his debts in full, the bank will dishonour any cheque presented on behalf of that customer.
6.Frozen Account: If court orders or a military government decrees that some people's account be frozen, the bank must definitely dishonour all cheque bearing the account's numbers.
7.When There is Attention: If anything is cancelled on a cheque, the bank will dishonour such a cheque, except the drawer signs his signature above or under the altered word.
8. A Post-Dated Check: If a post dated cheque is presented for payment before the date mentioned on the cheque, the bank will dishonour such a cheque.
9. A Stale Checkd: A check that has been delayed for more than six months of the date written on it, if presented for repayment must be dishonoured by the bank.
10. If There Is A Difference Between The Amount Written In Words And That in Figure. If for instance, the drawer writes thirty thousand only in words and Rs 20000 in figure. The bank will dishonor such cheque.
11. When Payment is Stopped: If the drawer asks his bank not to pay a cheque already issued. The bank will not make the paymernt.
11. Distinguish
between Life Insurance and General Insurance?
Ans:
|
Point of difference
|
Life Insurance
|
General insurance
|
|
Subject Matter
|
Man’s life is subject matter of insurance
|
Man’ property of the subject matter
|
|
Possibility of happening.
|
There is certainty of happening of the risk but the time is
uncertain.
|
There is no certainty of about happening of risk. i.e there may
the risk not happen.
|
|
Objects.
|
Protection from risk and investment.
|
Protection from risk.
|
|
Type of contract
|
Here contract is made
about promise. So it is a contract of guarantee.
|
Here the contract is made
in order to indemnify the affected party.
|
|
Scope of insurance.
|
These insurance extents to long term period, ie 20 to 25 years.
Or it may cover the whole life.
|
It is concerned with shoirt term period, i.e mostly for one year
through it can renewed.
|
|
Possibility of payment.
|
For life insurance, payment will be made to the insured himself
or to his nominee or representative.
|
For general insurance, if no loss occurs, no payment will be
made as compensation.
|
|
Insurable interest.
|
At the time of making contract, there must be insurable
interest.
|
Incase of general insurance there must be insurable interest at
the time of causing loss.
|
|
Computation of loss.
|
Human life is invaluable. So it is not possible to compute the
loss of life in term of money.
|
In case of loss or damage to property, the amount actual loss can be computed in terms of money.
|
12. What
are different steps of taking out fire insurance?
Ans:The following procedures are generally
adopted to take out a fire insurance policy:
Intimation to the insurer: the person intending to take a fire insurance
policy is required to intimate his desire to do so to the insurer.
Sending the proposal form by the in insurance company: The insurer on
the basis of intimation, will send the proposal from to the insured for filling
up and sending it back to the insurer after its completion. That proposal
contains detail description about the subject matter of insurance, its nature,
price and location, etc.
Investigation on the basis
of information obtained: After receiving the proposal, the insurer will consider the
probability of combustibility of the subject matter of insurance and
accordingly for fixing the rate of premium, this will be send to the assessor
who after enquiry fixes up the premium. Then the insurance company will send
and advice for paying the requisite premium.
Receipt of the insurance premium: When the first
premium is paid, the insurer gives insured a receipt which is called Cover
note. This receipt will be treated as a substitute of the policy till it is
received.
Handing over the insurance policy: Afterwards the
insurer will hand over the deed with proper stamp and seal of the company to
the insured. This deed is called the insurance policy.
The duration of risk: The duration of risk must be stated in the
insurance policy. If the same is not renewed with the expiry of the duration or
extra three days of grace, it will be assumed that the maturity is over.
13. What
are the different steps of settling claims in case of fire insurance?
Ans: Procedure of presenting claim: In order to make a prepare claim
in case of any loss by fire the following steps should be taken:
Informing the insurer of the accident: If the subject matter of insurance is lost or
damaged due to fire, it should be intimated to the insurer within a reasonable
time which is mentioned in the policy. It is customary that it should be
intimated within a fortnight of the happening of accident.
The submission of detail
information in case of partial
loss: Incase
of partial loss to the subject matters of the insurance,the amount of partial
loss, possibility of getting salvage, its price or incidental expanses, etc.
should be informed to the insurer.
Consideration for re-instatement clause: If the
re-instatement clause is provided in the policy, the insurer will provide for
re-instatement in place of compensation. Incase of damage to building,
warehouse, etc. The probable cost of repair should be intimated.
Affidavit from court : For substantiating the claim, it requires
some time an affidavit from court.
Sending the inspector: After getting the relevant information about
the subject the matter lost or damage, the insurer will send an inspector for
spot verification and send the assessor also to determine the amount of loss.
Appointment of arbitrator, if any: If any dispute arise between the claims of the
insured and the amount settled by the insurer, an arbitrator is appointed for
both the parties for its settlement and if opinion differs among them, the
matters will be settled by Judge.
Thus,
after compromise, the amount of settlement will be paid as compensation to the
insured
14. “Insurance
diffuses the risk of business.” – Explain the statement.
Ans: The basic principle of insurance is that an individual or a
business concern chooses to spend a definitely known sum in place of a possible
huge amount involved in an indefinite future loss. Thus insurance is the
substitution of a small periodic payment (premium) for a risk of large possible
loss. The loss of risk still remains but the loss is spread over a large number
of policyholders exposed to the same risk. The premium paid by them are pooled
out of which the loss sustained by any policy holder is compensated. Thus,
risks are shared with others. In other words Insurance is a social device in
which a group of individuals (insured) transfers risk to another party
(insurer) in order to combine loss experience, which provides for payment of
losses from funds contributed (premium) by all members. Insurance is meant to
protect the insured, against uncertain events, which may cause disadvantage to
him.
15. What
is meant by “utmost good faith” in insurance?
Ans: Insurance contracts are the contracts of mutual trust and
confidence. Both parties to the contract i.e., the insurer and the insured,
must disclose all relevant information relating to the subject matter of
insurance. In case of life insurance, for example, the proposer must honestly
disclose all information relating to his/her health, habits, personal history,
family history etc. In case of any concealment about the material facts, the
contract will not be valid. It is so because the risk can be evaluated only on
the basis of these facts relating to subject matter of insurance.
16. What
are the advantages of E-Commerce ?
Ans: Advantages
of E-commerce:
Ø Using
E-Commerce, organization can expand their market to national and international
markets with minimum capital investment. An organization can easily locate more
customers, best suppliers and suitable business partners across the globe.
Ø E-Commerce
helps organization to reduce the cost to create process, distribute, retrieve
and manage the paper based information by digitizing the information.
Ø E-commerce
improves the brand image of the company.
Ø E-commerce
helps organization to provide better customer services.
Ø E-Commerce
helps to simplify the business processes and make them faster and efficient.
Ø E-Commerce
reduces paper work a lot.
Ø E-Commerce
increased the productivity of the organization. It supports "pull"
type supply management. In "pull" type supply management, a business
process starts when a request comes from a customer and it uses just-in-time
manufacturing way.
17. Mentions
the Important qualities of a good
salesman.
Ans: Some of the common qualities which a salesperson must possess are
as follows.
Good Personality : Personality of a salesperson should be such
that the moment he/she comes in contact with the customer, he/she should look friendly with whom the customer is
at least ready to start a conversation.
Mental Qualities: A salesperson must have the quality of
alertness, imagination, foresightedness, and should have ability to understand
and share the feeling of others. He should have the ability to read the
customer’s mind and behave accordingly
Good Behavior: A salesperson should be a well behaved person having ability to
interact with people comfortably. He/she should be cooperative so that he/she
can help people in making up their minds by patiently answering all their
questions
Group- D (10
Marks)
1. What
do you mean by a bank? Discuss the importance to business.
Ans: Bank is a lawful organisation, which accepts deposits that can be
withdrawn on demand. It also lends money to individuals and business houses
that need it.
IMPORTANCE OF BANKING
Capital Formation: Deposits accepted by banks are channelised as
loans and advances for industrial and trading activities to business
organisations.
Services to Business: Banking helps business through a variety of
services such as providing long-term and short-term finance, arranging
remittance of money, collection of cheques and bills etc., assisting in raising
of capital by acting as underwriters and merchant bankers and so on.
Balanced Development of Economy: Banks identify areas that need
special assistance for industrial development and provide them the necessary
help.
Purchase and sale of foreign currency: Banks provide assistance in transaction of
international trade through purchase and sale of foreign exchange.
Development of Credit Policy: Credit policy is a pre-requisite for
economic development. The central bank of a country develops a proper monetary
policy by determining the bank rate and regulate the money supply in the larger
interest of the economy and the pace of its development
Benefits to Rural Economy: Rural branches of banks play a useful role in
mobilizing savings in rural areas and provide loans to farmers and artisans at
concessional rates and on priority basis. This helps the rural economy in a big
way.
2. Define commercial bank.What are the functions
of a commercial Bank?
Ans: Commercial bank: A commercial bank is a type of bank that provides services such as
accepting deposits, making business loans, and offering basic investment
products to general public.
The functions of a commercial bank are divided
into two categories viz. (a) primary functions; and (b) secondary functions
Primary functions:
Accepting Deposits: The most important activity of a commercial
bank is to accept deposits from the public. People who have surplus income and
savings find it convenient to deposit it with banks.
Lending Money: The second important function of a commercial bank is lending of
money to the public as well as to the business houses. It takes the form of
loans and advances to the customers at the prescribed rates of interest. Loans
are granted for a specific period.
Secondary Functions:
Agency Services: Agency services refer to those services which
are provided by commercial banks as agents of their customers. These include:
•
Collection and payment of cheques and bills;
•
Collection of dividends, interest and rent, etc.;
•
Purchase and sale of securities (shares, debentures, bonds etc.);
•
Payment of rent, interest, insurance premium, subscriptions etc.;
•
Acting as a trustee or executor; and
•
Acting as agents or correspondents on behalf of customers for other banks and
financial institutions at home and abroad.
General
Utility Services: General utility services are those services which are
rendered
by commercial banks not only to the customers but also to the general public.
These
are available to the public on payment of a fee or charge. These include:
•
Issue of bank drafts, pay order (banker’s cheque), travellers’ cheques;
•
Issue of letters of credit;
•
Safe-keeping of valuables in safe deposit locker;
• ATM
card, debit card and credit card facility;
•
Internet banking and phone banking;
•
Sale of prospectus and application forms of various competitive examinations;
•
Accepting telephone bills, electricity bills;
• Underwriting
loans floated by government and public bodies;
•
Supplying trade information and statistical data useful to customers; and
•
Acting as a referee regarding the financial status of customers.
3. What
are the objectives of government control on business? Or. Explain the
objectives and rationale of government control on business. How government
controls business activity?
Ans: Businesses are usually profit motivated
and many times in order to gain more profit many businesses may neglect issues
like environmental protection and production of harmful and dangerous products.
Moreover, large businesses take the advantage of their size to exploit
consumers, employees and even use unfair tactics to overcome competition from
small businesses. As there are numerous problems to society, environment,
consumers and employees caused by businesses, the government will need to have
some control over the business activities.
Government
controls the business activities in many ways both direct and indirect. The
government can control business activities in a more direct way. These are as
follows:
Controlling what to produce.
In
order to safeguard the interest of the community government may ban or limit
the production of certain goods and services. For example, selling of guns,
explosive and dangerous drugs are illegal in many countries. Moreover, Goods
which harm the environment are also totally banned or strictly controlled in
many countries, e.g. aerosol cans that use CFCs which has been banned because
of their damaging effect on the ozone layer.
Employees Protection legislations:
Government
may pass laws to protect the interest of employees such as
Laws against unfair discrimination at work and when applying for
jobs:
There is no unfair discrimination on the basis of Race, religion, sex, age, or
colour.
Legislations for health and Safety at work:To protect
workers from dangerous machinery.Workers should be provided with proper safety
equipments and clothing.
A
reasonable workforce temperature is maintained for workers.
Proper
hygienic conditions and washing facilities are provided.
Workers
get adequate breaks between shifts.
Protect
employees against unfair dismissal
Business
can not dismiss the workers because they have joined a trade union or for being
pregnant. There should be proper warning before dismissing a worker otherwise
it will be treated as unfair dismissal.
Ensure
fair wages for the employees
In
many countries, government makes it mandatory to have a written contract of
employment. It contains the details of the wage rate; working hours, deductions
(if any) and other necessary details regarding working conditions. Minimum
wages paid to different types of workers are also determined by the government.
Consumer Protection legislations:Most of the countries have consumer
protection laws aimed at making sure that businesses act fairly towards their
consumers: A few examples are
Weight and Measures Act: goods sold should not be underweight.
Standard weighting equipments should be used to measure goods.
Trade Description Act: deliberately giving misleading impression
about the product is illegal.
Consumer Credit Act: According to this act consumers should be
given a copy of the credit agreement and should be aware of the interest rates,
length of loan while taking a loan.
Sale of Goods Act: It is illegal to sell products with serious
flaws or problems and goods sold should conform to the description provided.
Environment
protection
In
the recent years government across the globe have passes legislations to
control business activities from harming the environment. This includes setting
limits to the pollution, making it mandatory for businesses to treat their
wastes etc.
Location
decisions
Government often influences location of business through:
Planning
controls involve restricting the business activities that can be undertaken in
certain areas.
Provide
regional assistance to businesses which involves encouraging them to locate in
underdeveloped regions of the country.
4. What
is Departmental organization? Mention two examples. State the Features of
departmental organization.
Ans: Departmental undertakings are the oldest among the public
enterprises. A departmental undertaking is organised, managed and financed by
the Government. It is controlled by a specific department of the government.
Each such department is headed by a minister. All policy matters and other
important decisions are taken by the controlling ministry.
Examples:
Railways, Postal services, Broadcasting etc.
The main features of departmental undertakings are as follows:
Management
and control: ) It is established by the government so it is directly managed
and controlled as a department of the government.
Accountability: The full authority of the departmental
organization rest with the department Minister and the secretary. The concerned
minister and the secretary are accountable to the Parliament or Assembly.
Separate
entity: this organization has no separate existence. It is a part of the
government and its profit is deposited
in the government exchequer.
Status of employee: All the employees of this organization are
regarded as the employee of the government.
Compliance of rules: Starting from the Budget preparation, uniform
rules have been maintained like a government department in maintain account and
in auditing accounts.
Submission of the budget: The budget of income and expenditure of the
organization is presented to the parliament with the general budget.
Sovereign immunity: Being a part of the government machinery, the
departmental organization cannot be sued at law without the consent of the
government.
5. Define
Government Company. State the different characteristic of a government company.
Ans: Government Company: Government Company refers to the
company in which 51 percent or more of the paid up capital is held by the
government. It is registered under the Companies Act and is fully governed by
the provisions of the Act.
Characteristics of company:
The
main features of Government companies are as follows:
(a)
It is registered under the Companies Act, 1956.
(b)
It has a separate legal entity. It can sue and be sued, and can acquire
property in its own name.
(c)
The annual reports of the government companies are required to be presented in
parliament.
(d)
The capital is wholly or partially provided by the government. In case of
partially owned company the capital is provided both by the government and
private investors.
But
in such a case the central or state government must own at least 51% shares of
the company.
(e)
It is managed by the Board of Directors. All the Directors or the majority of
Directors are appointed by the government, depending upon the extent of private
participation.
(f)
Its accounting and audit practices are more like those of private enterprises
and its auditors are Chartered Accountants appointed by the government.
(g)
Its employees are not civil servants. It regulates its personnel policies
according to its articles of associations.
6. Explain
with examples the roles of government as, promoter, regulator, and arbitrator.
Ans: Government as promoter: the term promoter means s some one
who support and encourage business activities. Governments promotes business
activities
Ø To help small businesses to survive
and encourage competition in the economy.
Ø To encourage firms to export and earn
foreign exchange for the country.
Ø To encourage businesses to set up in
underdeveloped regions of the country and create wealth and employment
opportunities in these areas.
The role of government as promoter is to:
Ø Providing cheap loans and giving
grants.
Ø Providing advice and information
centres for businesses.
Ø Providing college courses and training
programmes for entrepreneurs.
Ø Offering subsidies or tax reduction to
businesses.
Ø Maintain a stable exchange rate of the
currency.
Government as a regulator: Businesses are
usually profit motivated and many times in order to gain more profit many
businesses may neglect issues like environmental protection and production of
harmful and dangerous products. As there are numerous problems to society,
environment, consumers and employees caused by businesses. One of the roles
of the government is to make sure that the public's interests are maintained
and preserved. The government plays regulatory
activities over the business by various way. Some are given below
The
government regulates business activity through industrial policy and it also
regulates price of commodities through essential Commodities Act.
The
government regulates monopolies and unfair and restrictive trade practice through the
MRTP Act.
The
development and Regulation Act direct s to secure approval from SEBI (Securities
and Exchange Board Of India) for setting up industries where assets value is
more than 3 crores.
Government as an Arbitrator: Arbitrator refers to settlement of
dispute arising out of any issue between two parties. If any dispute arises
between the employer and employee, The government has to play the role of an
arbitrator for its settlement. For certain purpose the government hasto play this
role such as for maintaining industrial peace, for continuing the flow of
production, for safeguarding the workers interest and for achieving the target
of national product.
For maintaing
industrial peace and settlement of industrial dispute, The industrial dispute
Act was passed in 1947. It has two main objectives i.e prevention and
settlement of industrial dispute. In order to settle the dispute through this
act, the government has formed some authority, namely works committee, Conciliation
officers, Board of Conciliation, Court of enquiry, labour court. Industrial
Tribunal and National tribunal etc.
7. Discus
the government policy towards joint venture business in India.
Ans: A joint venture (JV) is a business agreement in which the parties
agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise
control over the enterprise and consequently
share revenues, expenses and assets.
8. What
is negotiable instrument? State the features of negotiable instrument.
Ans: Negotiable instrument: negotiable instruments are
documents meant for making payments, the ownership of which can be transferred
from one person to another many times before the final payment is made.
Negotiable instruments are documents meant for making payments, the ownership
of which can be transferred from one person to another many times before the
final payment is made.
Features of negotiable instrument:
Ø A
negotiable instrument is freely transferable. Usually, when we transfer any
property to somebody, we are required to make a transfer deed, get it
registered, pay stamp duty, etc.
But,
such formalities are not required while transferring a negotiable instrument.
Ø Negotiability
confers absolute and good title on the transferee. It means that a person who
receives a negotiable instrument has a clear and undisputable title to the
instrument. However, the title of the receiver will be absolute, only if he has
got the instrument in good faith and for a consideration.
Ø A
negotiable instrument must be in writing. This includes handwriting, typing,
computer print out and engraving, etc.
Ø In
every negotiable instrument there must be an unconditional order or promise for
payment.
Ø The
instrument must involve payment of a certain sum of money only and nothing
else. For example, one cannot make a promissory note on assets, securities, or
goods.
Ø A
negotiable instrument must bear the signature of its maker. Without the
signature of the drawer or the maker, the instrument shall not be a valid one.
Ø Delivery
of the instrument is essential. Any negotiable instrument like a cheque or a
promissory note is not complete till it is delivered to its payee.
9. Make
a comparative analysis of Departmental organization, Public corporation and
Government Company.
Ans: Comparative analysis of Departmental,
Public Corporation and Government Company:
|
|
Departmental organization
|
Public Corporation
|
Government Company:
|
|
Establishment
|
By a Ministry
|
By the Parliament under a special Act
|
By a Ministry with or without private
participation
|
|
Legal Status
|
No separate entity distinct from the Government
|
Separate entity to sue and be sued
|
Separate corporate existence
|
|
Capital
|
Provided out of budgetary appropriation
|
Provided wholly by the Government
|
Part of it may be provided by private entrepreneurs
|
|
Management
|
Government official from the Ministry concerned.
|
Board of Directors
|
Board of Directors may include private
individuals
|
|
Control and Accountability
|
Control vests with the Minister and the Ministry concerned
|
Parliament
|
Government (Ministry concerned)
|
|
Autonomy
|
No autonomy. Works as a part and parcel of government
|
No governmental interference in day-to-day affairs
|
Some freedom from governmental interference
|
|
Suitability
|
Defence, public utilities
|
Heavy industries and service providing enterprises with
long gestation
period
|
All types of industrial and commercial enterprises
|
10. Define
insurance. What are the types of insurance?
Ans: INSURANCE: Insurance is a contract between the insurer
and insured whereby the insurer undertakes to pay the insured a fixed amount,
in exchange for a fixed sum known as premium, on the happening of a certain
event (like at a certain age or on death), or compensate the actual loss when
it takes place, due to the causes mentioned in the contract
Insurance, which is based on a contract, may be broadly classified
into the following types.
Life Insurance
A
contract of life insurance (also known as ‘life assurance’) is a contract
whereby the insurer undertakes to pay a certain sum either on the death of the
insured or on the expiry of a certain number of years. In return, the insured
agrees to pay an amount as premium either in a lump sum or in periodical
installments, annually, half-yearly, quarterly or monthly. The risk insured
against in this case is certain to happen. Hence, life insurance is also
referred to as life assurance.
Fire Insurance
A
contract of fire insurance is a contract whereby the insurer, on payment of premium
by the insured, undertakes to compensate the insured for the loss or damage
suffered by reason of certain defined subject matter being damaged or destroyed
by fire. It is a contract of indemnity, that is, the insured cannot claim
anything more than the value of property lost or damaged by fire or the amount
of policy, whichever is lower.
Marine Insurance
Marine
insurance is an agreement (contract) by which the insurance company (also known
as underwriter) agrees to indemnify the owner of a ship or cargo against risks,
which are incidental to marine adventures. It also includes insurance of the
risk of loss of freight due on the cargo. Marine insurance that covers the risk
of loss of cargo by storm is known as cargo insurance. The owner of the ship may
insure it against loss on account of perils of the sea. When the ship is the
subject matter of insurance, it is known as hull insurance.
Other types of Insurance
Apart
from life, fire and marine insurance, general insurance companies can insure a
variety of other risks through different policies. Some of these risks and the
different policies are outlined below.
(a)
Motor vehicles Insurance: Insurance of all types of motor vehicles passenger cars,
vans, commercial vehicles, motor cycles, scooters, etc., covers the risks of
damage of the vehicle by accident or loss by theft, as also risks of liability
arising out of injury or death of third party involved in an accident. Third
party risk insurance is compulsory under the Motor Vehicles Act.
(b)
Burglary Insurance: Under this insurance the insurance company undertakes to
indemnify the insured against losses from burglary i.e., loss of moveable goods
by robbery and theft by breaking the house.
(c)
Fidelity Insurance: As a protection against the risks of loss on account of
embezzlement or defalcation of cash or misappropriation of goods by employees,
businessmen may get policies issued covering the risks of loss on account of
fraud and dishonesty on the part of employees handling cash or in charge of
stores. This is called fidelity insurance policy. The employees may also be
required to sign a fidelity guarantee
Bond.
(d)
Personal accident and sickness Insurance: These are policies which can be taken
out against death or disability in special circumstances, for example by
traveling through flights, etc.
(e)
Liability Insurance: This type of policy covers the risk of liability for the
injury or death of someone else. These are two main forms as (i) Employers
liability- covers the employers legal liability for the safety of each
employee.(ii) Public liability- covers the liability of individuals and
business for members of public visiting their premises.
(f)
Property Insurance: Covers a wide variety of items from goods in transit or in
store to building or contents. Applies to both the business persons and the
private householders.
11. Elucidate
the basic principle of insurance.
Ans: The seven principles of insurance are :-
The Principle of Utmost Good Faith :Principle of Uberrimae
fidei (a Latin phrase), or in simple english words, the Principle of Utmost
Good Faith, is a very basic and first primary principle of insurance. According
to this principle, the insurance contract must be signed by both parties (i.e
insurer and insured) in an absolute good faith or belief or trust.
The
person getting insured must willingly disclose and surrender to the insurer his
complete true information regarding the subject matter of insurance. The
insurer's liability gets void (i.e legally revoked or cancelled) if any facts,
about the subject matter of insurance are either omitted, hidden, falsified or
presented in a wrong manner by the insured.
The
principle of Uberrimae fidei applies to all types of insurance contracts.
The principle of insurable interest: The principle
of insurable interest states that the person getting insured must have
insurable interest in the object of insurance. A person has an insurable
interest when the physical existence of the insured object gives him some gain
but its non-existence will give him a loss. In simple words, the insured person
must suffer some financial loss by the damage of the insured object.
For
example :- The owner of a taxicab has insurable interest in the taxicab because
he is getting income from it. But, if he sells it, he will not have an
insurable interest left in that taxicab.
From
above example, we can conclude that, ownership plays a very crucial role in
evaluating insurable interest. Every person has an insurable interest in his
own life. A merchant has insurable interest in his business of trading.
Similarly, a creditor has insurable interest in his debtor.
Indemnity
means security, protection and compensation given against damage, loss or
injury.
The principle of indemnity: According to the principle of indemnity, an
insurance contract is signed only for getting protection against unpredicted
financial losses arising due to future uncertainties. Insurance contract is not
made for making profit else its sole purpose is to give compensation in case of
any damage or loss. In an insurance contract, the amount of compensations paid
is in proportion to the incurred losses. The amount of compensations is limited
to the amount assured or the actual losses, whichever is less. The compensation
must not be less or more than the actual damage. Compensation is not paid if
the specified loss does not happen due to a particular reason during a specific
time period. Thus, insurance is only for giving protection against losses and
not for making profit.
However,
in case of life
insurance, the principle of indemnity does not apply because
the value of human life cannot be measured in terms of money.
Principle of Contribution: Principle of Contribution is a corollary of
the principle of indemnity. It applies to all contracts of indemnity, if the
insured has taken out more than one policy on the same subject matter.
According to this principle, the insured can claim the compensation only to the
extent of actual loss either from all insurers or from any one insurer. If one
insurer pays full compensation then that insurer can claim proportionate claim
from the other insurers.
For
example :- Mr. Ram insures his property worth Rs 100,000 with two insurers
"AIG Ltd." for Rs 90,000 and "MetLife Ltd." for Rs 60,000. Ram’s
actual property destroyed is worth Rs 60,000, then Mr. Ram can claim the full
loss of Rs 60,000 either from AIG Ltd. or MetLife Ltd., or he can claim Rs
36,000 from AIG Ltd. and Rs 24,000 from Metlife Ltd.
So,
if the insured claims full amount of compensation from one insurer then he
cannot claim the same compensation from other insurer and make a profit.
Secondly, if one insurance company pays the full compensation then it can
recover the proportionate contribution from the other insurance company
Principle of Subrogation: According to the principle of subrogation,
when the insured is compensated for the losses due to damage to his insured
property, then the ownership right of such property shifts to the insurer.
This
principle is applicable only when the damaged property has any value after the
event causing the damage. The insurer can benefit out of subrogation rights
only to the extent of the amount he has paid to the insured as compensation.
For
example :- Mr. Ram insures his house for Rs 1 million. The house is totally
destroyed by the negligence of his neighbour Mr.Tom. The insurance company
shall settle the claim of Mr. Ram for Rs 1 million. At the same time, it can
file a law suit against Mr.Tom for Rs 1.2 million, the market value of the
house. If insurance company wins the case and collects Rs 1.2 million from Mr.
Tom, then the insurance company will retain Rs 1 million (which it has already
paid to Mr. Ram) plus other expenses such as court fees. The balance amount, if
any will be given to Mr. Ram, the insured.
Principle of Loss Minimization: According to the Principle of Loss
Minimization, insured must always try his level best to minimize the loss of
his insured property, in case of uncertain events like a fire outbreak or
blast, etc. The insured must take all possible measures and necessary steps to
control and reduce the losses in such a scenario. The insured must not neglect
and behave irresponsibly during such events just because the property is
insured. Hence it is a responsibility of the insured to protect his insured
property and avoid further losses.
For
example :- Assume, Mr. Ram's house is set on fire due to an electric
short-circuit. In this tragic scenario, Mr. Ram must try his level best to stop
fire by all possible means, like first calling nearest fire department office,
asking neighbours for emergency fire extinguishers, etc. He must not remain
inactive and watch his house burning hoping, "Why should I worry? I've
insured my house."
Principle of Causa Proxima (Nearest Cause): Proximate Cause:
According to this principle, an insurance policy is designed to provide
compensation only for such losses as are caused by the perils which are stated
in the policy.When the loss is the result of two or more causes, the proximate
cause means the direct, the most dominant and most effective cause of which the
loss is the natural consequence. In case of loss arising out of any mishap, the
most proximate cause of the mishap should be taken into consideration
12. Write
the importance of Insurance.
Ans: IMPORTANCE OF INSURANCE
(a)
Protection Against Risk: Insurance provides protection against various risks
involved in business. The protection is in the form of a provision to
compensate for the loss suffered by the insured.
(b)
Pooling of Risk: Insurance helps in sharing of risk. In practice, a large number
of people seek insurance by paying the premium which results in the formation
of insurance fund. This fund is used for compensating a few among them who may
suffer a loss. Thus, in effect the loss is spread over a large number of
people.
(c)
Helps in Securing Loans: Banks and financial institutions usually insist on the
insurance of goods and properties before loans can be sanctioned on their
security.
So
insurance makes it convenient to secure loans and advances from the financial
institutions.
(d) Protection
Against Liabilities under various Labour Laws: Insurance gives protection to
businessmen in the event of compensation payable to employees for accidents
leading to fatal injury, partial injury, disablement, as well as sickness and
maternity.
(e)
Contribute to Economic Development: Funds with the insurance companies are
invested in various types of securities and projects, which contribute to
economic development of the country.
(f)
Generation of Employment: Insurance companies provide employment to a large
number of people on regular basis. A number of people earn their livelihood
working as insurance agents.
(g)
Social Security: Life insurance provides security against risks of old age and
premature death of people. Besides, social security is provided to workers
through the Employees State Insurance scheme whereby accidental risks are
covered.
13. Mentions
the advantages and limitations of advertisings.
Ans: Advantages of advertising:
In today’s competitive world there are innumerable products competing
with each other. Hence, it is necessary that information regarding features,
prices and availability of the product is frequently communicated to the
consumers so as to ensure a reasonable market share for the manufacturer. Not
only that, it also helps the consumers to make a right choice. So, advertising
today benefits not only the business houses who manufacture the products but
also the consumers and society.
Benefits
to Manufacturers: Advertising helps the manufacturers in introducing new
products, maintaining cu`stomers of existing products and in increasing their
sales by attracting new customers. It also helps the business houses in
creating and enhancing their goodwill. It makes the job of salespersons easier
by keeping the customer informed about the product. Advertising is an important
tool for fighting competition in the market.
Benefits to Consumers: Advertising helps the consumers to gain
useful information about the products, prices quality, terms of sale, after
sales services, etc. Besides providing such information advertising also guides
the customers about the right use of the product. This helps them to make a
comparative analysis and make their choice. Not only that, advertising is the
main source of information for those who live in remote areas and cannot be
easily approached by salespersons.
Benefit to Society:The enhanced competition resulting from
advertising motivate the producers to make improvements in their existing
products and find out better alternatives through Research and Development
(R&D) activity. So it helps in providing more convenience, comfort, better
life style to the people. Advertising also works as a guide and teacher for
people who do not know about many products and their multiple uses, if any. It
generates employment for thousands of people who are connected with advertising
world in different capacities. Not only that, advertising generates huge
revenue for both print and electronic media. This helps the availability of
newspapers, magazines and television programmes at affordable prices.
Disadvantages of advertising:
(i)
Advertising multiplies wants : People tend to desire and buy products as they
see in advertisement even if they do not actually need or afford them. This
multiplication of wants may put them under financial and psychological
pressure.
(ii)
Advertising adds to the cost and price of product : Money spent on advertising eventually
results in increased cost of the product, which is passed on to the consumers through
increased prices. You must have noticed that the brands which are advertised heavily
in different media are found to be priced higher as compared to those which are
not so heavily advertised.
(iii)
Creation of monopoly : Business firms which can spend heavily on advertising
are usually the ones who grab a bigger share of the market. Such firms
generally have a monopoly which results in unequal opportunity for small
producers to make a place for themselves in the market. They do not get a fair
opportunity to compete.
(iv)
Advertising may affect the value-system of society : Advertising may introduce ideas
or concepts alien to our culture. These new values generated or propagated by advertising
may affect our social, moral and ethical values adversely. Objectionable appeals
like sex, horror etc. are sometimes used in advertisement to attract attention.
(v)
Motivation for wrong or dangerous deeds : The way advertisements project people
consuming liquor, cigarettes or pan-masala, may feel tempted by the people to
try and then get addicted to such products which are not good for health.
Similarly, models are shown doing dangerous acts like jumping from the top of a
hill which some children may try to copy and may face the accidents.
(vi)
Advertising may not increase overall demand : Advertising does not always increase
demand. In many cases, a number of firms manufacturing similar products may
advertise vigorously. This may not result in an increase in the total demand
for the product but simply shift demand from one brand to another.
What
is salesman ship? Mentions different method of sales promotions, what are the
different misuses of advertising.
14. Define
management. Discuss the management as science.
Ans: Management: Management refers to the process of using
men, money, machines, and material and processes through proper direction,
coordination and integration of several activities so as to produce desired
results and attain predetermined goals. In other words, management consists of
a series of activities classified into various functions like planning,
organizing, staffing directing and controlling.
Management as a Science:
Science is an organized or systematized
body of knowledge pertaining to a particular field of enquiry. Science is
systematized in the sense that it establishes cause and effect relationship
between different variables.
Such systematized body of knowledge
contains concepts, principles and theories which help to explain past events
and to predict the outcome of specific actions. These principles are capable of
universal application, i.e., they can be applied under different situations.
They represent fundamental truths derived
through empirical results. These principles or basic truths are developed
through scientific methods of continuous observation, experiment and testing.
When generalizations or hypotheses are
empirically verified for accuracy through continuous observation and
experimentation they become principles. Science explains 'why' of human
behaviour.
Management is a science because it
contains all the characteristics of science. Firstly, there is a systematized
body of knowledge in management. Principles are now available in every
function of management and these principles help to improve managerial
effectiveness.
For instance, there are a number of
principles which serve as guidelines for delegating authority and thereby
designing an effective organization structure. Similarly, there are several
techniques (ways of doing things) in the field of management.
Budgeting, cost accounting, ratio
analysis, rate of return on investment, critical path method (CPM), programme
evaluation and review technique (PERT) are some of these techniques which
facilitate better management.
Secondly, principles of management have
been developed through continuous observations and empirical verification.
Thirdly, management principles are capable of universal application
15. Explain
“Management is science as well as Art”
Ans: Management as an
Art, Science or Both
A lot
of controversy arises whether management is an art or science or both. It is
said that the management is the oldest of arts and youngest of science. This
explains the changing nature of management. But to have an exact answer to this
question, it is necessary to understand both these aspects separately and
combinedly, as given below:
Management as a Science:
Science
may be described as a systematized body of knowledge based on proper findings
and exact principles and is capable of verification. It is a reservoir of
fundamental truths and its findings apply safely in all the situations. In this
sense, management is a science as it has also developed some systematized
knowledge. Like other sciences, management has also developed certain
principles, laws, generalization, which are universal in nature and are
applicable wherever the efforts of the people are to be coordinated. But
management is not as exact science as other physical sciences like physic,
chemistry, biology, astronomy etc. The main reason for the inexactness of
science of management is that it deals with the people and it is very difficult
to predict their behavior accurately. In this way, management falls in the area
of 'social sciences'. Thus, it is a social science.
Management as an Art:
Art
refers to the way of doing specific things; it indicates how an object can be
achieved. In the words of George R. Terry, "Art is bringing about of a
desired result through the application of skill." Art is, thus, skilful
application of knowledge which entirely depends on the inherent capacity of a
person which comes from within a person and is learned from practice and
experience. In this sense, management is certainly an art as a manager uses his
skill, knowledge and experience in solving various problems, both complicated
and non-complicated that arise in the working of his enterprise successful. In
the words of Ernest Dale, "Management is considered as an art rather than
science mainly because managerial skill is a personnel possession and is
intuitive."
Conclusion- Management is an Art and Science Both
From
the above study, we conclude that management is an art and science both.
According to American Society of Mechanical Engineers. "Management is the
art and science of preparing, organizing and directing human efforts to control
the forces and utilize the material of nature for the benefit of men.
"Thus, it has now been accepted that management is an art as well as
science. It has the elements of both arts and science. In the words of Dean
Stanley, "Management is a mixture of an art an science."
16. Write
the main function of management?
Ans: Management is at the core of all business activities and without
management the success of business unit can-not be expected.
Functions
Management
has certain definite tasks before it. A Management as a process includes all
the steps of planning, organizing, directing and controlling. All these
processes of management are denoted as management functions. The various
processes of management are expressed in a simple phrase called
"POSDCORB" where :
P
denotes Planning
O
denotes Organizing
S
denotes Staffing
D
denotes Directing. .
CO
denotes Co-ordination
R
denotes Reporting
B
denotes Budgeting.
1. Planning
This
is the first step in the management process. Planning denotes deciding in
advance what is to be done, when and how it is to be done and by whom it is to
be done. It is a conscious determination of future course of action. A concrete
planning is required at all levels of management to achieve the desired
objective. It includes forecasting, policies, programmes, procedures and preparation
of schedules.
2.
Organizing
Organization
denotes collection and integration of money, men and material to achieve the
planned objective of the enterprise. In organizing, the work to be performed is
classified into various classes and sub-classes. These classes are allotted to
some group of persons with authority and responsibility. Organization denotes a
pattern of ways in which large number of people has face-to-face contact and
engaged in complexity of tasks to achieve the end of the enterprise.
3.
Staffing
It is
one of the most important processes of management. It means allotment of
required amount of manpower to discharge specific job. The principles of right
man in right job is important because of organization is overstaffed it may
amounts to wastage and if under staffed it will lead the work to be untouched.
4.
Directing
Management
must guide the personnel through whom it gets the work done. If proper
direction of guidance is not given, management will face a lot of difficulties
in getting things done. Direction includes:
Supervising
the employees.
Decision-making.
Guiding
the employees.
Communication
and motivation.
5. Controlling
Control
is essential for attainment of objectives of an enterprise. Controlling is
determining what is being done, evaluating performances and applying corrective
measures if necessary. If proper control is not exercised on the activities of
the people working, it will create a lot of disturbances as people will work on
their own ways.
17. Elucidate
different views on the usage of the terms “management “and “administrations”.
Ans: Difference between Administration and
Management.
Management and administration are
generally taken to mean as one and the same and ai u often used
interchangeably. But there has been a controversy because of these two terms. There are following
three views on the subject of distinction between administration and management.
(1) Management and Administration are different—Oliver Sheldon was the first person to make a
distinction between management and administration. According to him "Administration is the function
in industry concerned with the determination of the corporate policy, the coordination of finance,
production and distribution. Management is the function concerned with the execution of policy within
the limits set up by administration." Thus administration is formulation of policies and is determinative
function while management is execution of policies and is an executive function. Florance and Tead
also support this view. In their view administration involves the overall setting of major objectives,
determination of policies, identifying of general purposes laying down broad programmes, major
objectives etc. while management is the active direction of human efforts with a view to getting this
done.
(2) Management includes administration— According to Brech, "Management is a social process entailing responsibility for the effective and economical
planning and regulation of the operation of an enterprise in fulfillment of a given purpose of task."
Administration is that part of management which is conceerned with the installation and carrying out of
the procedures by which the programme is laid down and communicated and the progress of activities
is regulated and checked against plans. Thus, first and second viewpoints are exactly opposite to one
another.
(3) There is no distinction between management and administration. Other authors like Fayol, Newman
Williams, do not make any distinction between these two terms. This viewpoint is gaining popularity
these days. It is very difficult to demarcate between managerial and administrative functions because
the same set of persons perform both of these functions. We do not have two sets of people to
discharge administrative and operative management functions. Therefore, there is no difference
between the two. Conclusion:
interchangeably. But there has been a controversy because of these two terms. There are following
three views on the subject of distinction between administration and management.
(1) Management and Administration are different—Oliver Sheldon was the first person to make a
distinction between management and administration. According to him "Administration is the function
in industry concerned with the determination of the corporate policy, the coordination of finance,
production and distribution. Management is the function concerned with the execution of policy within
the limits set up by administration." Thus administration is formulation of policies and is determinative
function while management is execution of policies and is an executive function. Florance and Tead
also support this view. In their view administration involves the overall setting of major objectives,
determination of policies, identifying of general purposes laying down broad programmes, major
objectives etc. while management is the active direction of human efforts with a view to getting this
done.
(2) Management includes administration— According to Brech, "Management is a social process entailing responsibility for the effective and economical
planning and regulation of the operation of an enterprise in fulfillment of a given purpose of task."
Administration is that part of management which is conceerned with the installation and carrying out of
the procedures by which the programme is laid down and communicated and the progress of activities
is regulated and checked against plans. Thus, first and second viewpoints are exactly opposite to one
another.
(3) There is no distinction between management and administration. Other authors like Fayol, Newman
Williams, do not make any distinction between these two terms. This viewpoint is gaining popularity
these days. It is very difficult to demarcate between managerial and administrative functions because
the same set of persons perform both of these functions. We do not have two sets of people to
discharge administrative and operative management functions. Therefore, there is no difference
between the two. Conclusion:
18. What
do you mean by planning? What are its basic features?
Ans: Planning is deciding in advance what to do and how to do. It is
one of the basic managerial functions. Before doing something, the manager must
formulate an idea of how to work on a particular task.
FEATURES OF PLANNING: The planning function of the management has
certain special features. These features throw light on its nature and scope:
Planning focuses on achieving objectives: Organisations
are set up with a general purpose in view. Specific goals are set out in the
plans along with the activities to be undertaken to achieve the goals. Thus,
planning is purposeful. Planning has no meaning unless it contributes to the
achievement of predetermined organisational goals.
Planning is a primary function of management: Planning lays
down the base for other functions of management. All other managerial functions
are performed within the framework of the plans drawn. Thus, planning precedes
other functions. This is also referred to as the primacy of planning. The
various functions of management are interrelated and equally important.
However, planning provides the basis of all other functions.
Planning is pervasive: Planning is required at all levels of
management as well as in all departments of the organisation. It is not an
exclusive function of top management nor of any particular department. But the
scope of planning differs at different levels and among different departments.
For example, the top management undertakes planning for the organization as a
whole. Middle management does the departmental planning. At the lowest level,
day-to-day operational planning is done by supervisors.
Planning is continuous: Plans are prepared for a specific period of
time, may be for a month, a quarter, or a year. At the end of that period there
is need for a new plan to be drawn on the basis of new requirements and future
conditions. Hence, planning is a continuous process. Continuity of planning is
related with the planning cycle. It means that a plan is framed, it is
implemented, and is followed by another plan, and so on.
Planning is futuristic: Planning essentially involves looking ahead
and preparing for the future.
The
purpose of planning is to meet future events effectively to the best advantage
of an organisation. It implies peeping into the future, analysing it and predicting
it. Planning is, therefore, regarded as a forward looking function based on
forecasting.
Planning involves decision making: Planning
essentially involves choice from among various alternatives and activities. If
there is only one possible goal or a possible course of action, there is no
need for planning because there is no choice. The need for planning arises only
when alternatives are available. In actual practice, planning pre supposes the
existence of alternatives. Planning, thus, involves thorough examination and
evaluation of each alternative and choosing the most appropriate one.
Planning is a mental exercise: Planning requires application of the
mind involving foresight, intelligent imagination and sound activity of
thinking rather than doing, because planning determines the action to be taken.
However, planning requires logical and systematic thinking rather than guess
work or wishful thinking. In other words, thinking for planning must be orderly
and based on the analysis of facts and forecasts.
19. What
is organizing? What are its basic features?
Ans: Meaning of
OrganisingIn an enterprise, many managers and employees work
together for achieving common objectives. It is the organisational structure
which binds them together and brings proper adjustment and coordination in
their work. The division of work and authority and the establishment of
relationship among individuals or groups are possible due to the organisation
structure. In simple words, organizing means arranging the ways and means for
the execution of business plan. It is the creation of administrative set-up for
the execution of the plan. It suggests the framework within which the
management functions. The term organisation suggests a functional group working
together for achieving common purposes/objectives.
The main characteristics or Features of organisation are as
follows:
Outlining the Objectives: Born with the enterprise are its long-life
objectives of profitable manufacturing and selling its products. Other
objectives must be established by the administration from time to time to aid
and support this main objective.
Identifying and Enumerating the Activities: After the
objective is selected, the management has to identify total task involved and
its break-up closely related component activities that are to be performed by
and individual or division or a department.
Assigning the Duties: When
activities have been grouped according to similarities and common purposes,
they should be organized by a particular department. Within the department, the
functional duties should be allotted to particular individuals.
Defining and Granting the Authority: The authority
and responsibility should be well defined and should correspond to each other.
A close relationship between authority and responsibility should be
established.
Creating
Authority Relationship: After assigning the duties and delegations of authority,
the establishment of relationship is done. It involves deciding who will act
under whom, who will be his subordinates, what will be his span of control and
what will be his status in the organisation. Besides these formal
relationships, some informal organizations should also be developed.
20. What
is directing? What are its basic features?
Ans:
In the ordinary sense, directing means giving instructions and guiding people
in doing work.
Discuss
the powers and right of chairman of a valid meeting. In the context of
management of an organisation, directing refers to the process of instructing,
guiding, counselling, motivating and leading people in the organisation to
achieve its objectives.
The main characteristics of directing are discussed below:
Directing initiates action: Directing is a
key managerial function. A manager has to perform this function along with
planning, organising, staffing and controlling while discharging his duties in
the organisation. While other functions prepare a setting for action, directing
initiates action in the organisation.
Directing takes place at every level of management: Every manager,
from top executive to supervisor performs the function of
directing.The directing takes place wherever superior – subordinate
relations exist.
Directing is a continuous process: It takes place
throughout the life of the organisation irrespective of people occupying
managerial positions. We can observe that in organisations like Infosys, Tata,
BHEL, HLL and the managers may change but the directing process continues
because without direction
the
organisational activities can not continue further.
Directing flows from top to bottom: Directing is
first initiated at top level and flows to the bottom through
organisational hierarchy. It means that every manager can direct his immediate
subordinate and take instructions from his immediate boss.
21. What
are the power and duties of chairman.
Ans: Chairman of a general meeting is responsible
for conducting the business at the meeting successfully. He has prima facie
authority to decide all incidental questions which arise at the meeting and
require immediate decision. The chairman is not merely a dummy head but has a
discretion with regard to general conduct of the meeting (Wall vs Exchange
Investment Corporation). In order that he may properly perform his duties, the
chairman is invested by law or the articles with certain powers.
Powers
of chairman :
His main powers are as follows:
1. To
regulate the course of the proceedings at the meeting.
2. To
decide who shall first address the meeting when simultaneously two or more
persons, rise to speak.
3. To
decide points of order submitted to him.
4. To
stop the speaker when his allotted time is over.
5. To
get disorderly persons removed from the meeting.
6. To
check irrelevant and personal reference during the course of debate.
7. To
declare result of voting by show of hands which shall be conclusive evidence of
the fact, unless a poll is demanded.
8. To
have a recount if he is uncertain who had voted for or against the motion.
9. To
order and take a 'poll'.
10.
To regulate the manner in which poll shall be taken.
11 .
To appoint scrutinizer for checking the votes on a poll,
12.
To remove a scrutinizer any time before the result of the poll is declared and
to fill the vacancy so caused.
13.
To decide the fact of the motion by the exercise of casting vote, if the
articles permit, in cases where the members are equally divided.
14.
To exclude certain matters from the minutes of the proceeding of the meeting if
he is of the opinion that the matter (i) is defamatory of any person, or (ii)
is irrelevant, or (iii) is detrimental to the interests of the company
Duties of Chairman :
The
Chairman is responsible for conducting the proceedings of the meeting in a
regular manner, expeditiously and properly. His main duties are:
1. To
see that the meeting is properly convened and constituted. In other words he
must find out that a proper notice has been issued, that his own appointment is
valid and that the required quorum is present.
2. To
take care that the requirements of the Act and Articles of Association are duly
complied with.
3. To
preserve order at the meeting.
4. To
see that the items of business are taken in the order set out in the Agenda
paper, unless the order is altered with the consent of the meeting.
5. To
see that every motion is property proposed and duly seconded.
6. To
decide questions of procedure requiring decision.
7. To
act impartially in the general interests of those present at the meeting. All
members entitled to speak must be given proper opportunity to express their
views.
8. To
ensure that the sense of the meeting is properly ascertained with regard to any
question before the meeting.
9. To
accede to a proper and valid demand for 'poll' and also to direct the manner in
which the poll is to be taken.
10.
To declare result of voting, by show of hands and by poll.
11.
To declare the meeting closed when all the business has been transacted.
12.
To see that proper and correct minutes are entered in the Minutes Book and of
sign them.
22. Give
an idea about agenda and quorum of a valid meeting?
23. Discuss
the different office departments and its function
Ans: The office is the central point of coordination of the
organization function. According to the nature of the business, the office
should be divided into departments for smooth management. The different
departments found modern office are:
Planning department: This department is
organized under the direction, supervision and control of top level management
or owner of the business. The function of this department is to formulate comprehensive
planning regarding production.
Production department: The production of goods is the basic function
of this department. The production manager prepares production planning and
devotes his time in accomplishment of task according to planning.
Stores department: This
department has important contribution towards uninterrupted flow of production.
This department procures various raw materials, machineries, equipment, spare
parts to be used in production and store them carefully.
Purchase department: This
department is entrusted with the purchase of necessary raw material,
equipments, tool, spare parts, etc on the basis of requisition received from
different departments.
Cash department: Daily cash transaction, i.e. receipts and
payments of cash is effected through this department. The cashier is the in
charge of this department and he submits the accounts of daily transaction
after close of business hours to the departmental head.
Sales department: Sale managers are the head of sales
department. He makes his sincere effort to sale the goods produced and good
procures at the maximum possible price. The stability and amount of profit are
wholly depends on the efficiency of this department. The department provides
arrangement for packing and delivery goods. This department adopts sale
promotion measures like advertising and publicity.
Account department: A separate account department is needed for
large undertaking to keep detailed accounts of income and expenditure. This
department is concern with recording all monetary transaction taking place in
the organisation
24. What
are the common appliances found in present day offices? Point out their usages.
Ans: Common office appliances and there use:
Type write: The type writer is most commonly used office
appliances for correspondence work. It produces uniform and neat and legible
letters which are essential in business correspondence. It saves time and
labour as a numbers of copies can be obtained by using carbon copy.
Xerox: The use of Xerox machine has rapidly increased in modern office.
It is used for reproducing report, letters, documents and circular etc.
Telephone: The telephone is now indispensable labour saving device and is
mostly used for oral communication in all types of office. As cheap and
efficient means of communication, the telephone has reduced the cost of
communication.
Isophone: It is automatic machine attached to telephone for recording name,
address and message of the communicator without the help of any person. When
the officers are away from office or telephone call made beyond office hours,
this appliance can keep a detailed record of the message.
Computer: This is electronic device that is capable of doing almost all
type of electrical operation at high speed. The computer practically does all
operation that is expected from human brain but at higher speed. They eliminate
errors, expedite operation and reduce cost.
Franking machine: Franking machine is used in most large offices
to do the work of affixing postage stamp on the envelopes.
Billing machine: The billing machine is the combination of
type writer and calculator..This is used in mostly in big office where a large
numbers of bills, invoice, credit note and similar documents is to be prepared
daily.
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