BUSINESS STUDIES BOOK_1368439_2024_05_09_19_33

Prince Kathuria Classes (CUET: Business Studies)
The only path to achieve target
Chapter 1
Principles, Functions, Nature and Significance of Management
Learning Objectives:
 Describe the meaning, features, objectives of management and its
importance in an organisation;
 Explain the nature of management as an art, science and profession;
 Outline the levels and functions of management; and
 State the meaning, features and importance of co-ordination.
Important Definitions
Management: Management refers to the process of planning, organizing,

directing, and controlling resources, including people, finances, materials,
and time, to achieve specific organizational goals and objectives. It involves
coordinating and overseeing the activities of individuals and groups within
an organization to ensure that resources are utilized efficiently and
effectively in pursuit of the organization's mission or purpose.
“Management is the art of getting things done through others and with
formally organised groups.”
-Harold Koontz
“Management is the process of designing and maintaining an environment

in which individuals, working efficiently together in groups, accomplish
selected aims.”
- Harold Koontz and Heinz Weihrich
Clue words with concepts
 Deliberate process; intangible force- Management

 Doing the right task; Completing activities; Achieving goals-
Effectiveness
 Minimum cost; Cost-benefit analysis; Relationship between inputs
and outputs- Efficiency
 Includes series of functions which are planning, organising, staffing,
directing and controlling- Management as a process
 Two sides of the same coin- Efficiency and effectiveness
 Quality of management; essence of management.- Co-ordination
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Clue Concept with Description

 Management-: Management is the process of ensuring effective and
efficient realisation of organisational goals. It includes three elements:
process, efficiency and effectiveness.
 Management as a process-: It refers to a series of interrelated and
interdependent functions. planning, organising, staffing, directing and
controlling.
 Effectiveness-: It means taking correct decisions and actions in every
situation to achieve the targets. Effectiveness relates to the extent to
which objectives or goals are achieved, emphasizing the quality and
impact of outcomes.
 Efficiency-: It means to ensure optimum utilization of resources to
reduce cost. Efficiency Refers to the ability to accomplish a task or
goal with the least amount of resources, time, or effort.
 Efficiency and effectiveness-: Efficiency: Doing things right,
Effectiveness: Doing the right thing. Efficiency and effectiveness
represent distinct dimensions of organizational performance, with
efficiency emphasizing optimal resource use and effectiveness
emphasizing the achievement of meaningful outcomes. Balancing both
aspects is crucial for organizational success.
Features of Management
 Management is a goal-oriented process- An organisation is created

to realise certain goals, which indicates the end results of its
activities.
 Management is all pervasive- In order to manage all types of
organisations i.e. economic, social or political, a similar sets of
functions are required.
 Management is multidimensional- Management is a multifaceted
activity involving three dimensions:
 Management of work- Management translates the organisational
work in terms of goals to be achieved and provides the means to
achieve it.
 Management of people- Management of employees as individuals
reflecting diverse needs and behaviour; management of employees as
a group.
 Management of operations- Management is essential to ensure
successful transformation of inputs into desired output.
 Management is a continuous process- Management requires
simultaneous performance of a series of interrelated but distinct
functions namely planning, organising, staffing, directing and
controlling, in order to achieve the desired goals. Management
encourages a culture of continuous improvement, seeking ways to
enhance processes, performance, and outcomes. Continuous
improvement fosters innovation, adaptability, and organizational
resilience.
 Decision-Making: Managers are involved in making decisions,
ranging from strategic choices to day-to-day operational decisions.
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Effective decision-making is crucial for achieving organizational

objectives and responding to challenges.
 Management is a group activity- The concept of management relates
to a group of individuals with diverse needs and behaviour, who need
to be influenced in a desired manner for realisation of common goals.
 Management is a dynamic function- In order to be successful,
management needs to constantly adapt itself to the changes in the
external environment.
 Management is an intangible force- Successful management of an
organisation manifests itself in the form of attainment of
organisational goals, job satisfaction among employees, offering value
products to the consumers and so on.
 Ethical Considerations: Management involves ethical considerations,
requiring decisions and actions that align with moral and legal
standards. Ethical management practices build trust, reputation, and
long-term sustainability.
 Efficiency and Effectiveness: Management seeks both efficiency
(using resources optimally) and effectiveness (achieving desired
outcomes). Balancing efficiency and effectiveness ensures that the
organization achieves its goals in a resource-efficient manner.
 Interpersonal Skills: Managers require interpersonal skills to
communicate effectively, build relationships, and collaborate with
individuals at various levels. Strong interpersonal skills contribute to
effective leadership and team dynamics.
Objectives of Management
 Organisational objectives-
 Survival: An organization should earn adequate revenues to
cover costs.
 Profit: It is important for covering the costs and risks of the
business.
 Growth: A business must enhance its prospects in the long run.
 Social objectives-
 Generating employment opportunities
 Manufacturing environment-friendly products
 Personal objectives-
 Fair wages/ salary
 Good working conditions
 Prospects for growth
 Perks and benefits
Importance of Management
 Management helps in achieving group goals- Management seeks to

integrate the individual goals of an employee with that of an
organization, to ensure the successful realization of both.
 Management increases efficiency- Management aims at optimum
utilization of resources and reducing the cost of operations.
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 Management creates a dynamic organization- Successful

management ensures the smooth transition of an organization in the
context of changes in its environment.
 Management helps in achieving personal objectives- Good
management synchronizes the realization of individual goals with
group goals, effective leadership, and motivation.
 Management helps in the development of society- Successfully
managed organizations offer manifold benefits to society in the form of
raising the standard of living of people, conservation of the
environment, growth of the economy, and so on.
Nature of Management
 Management as an Art- Art involves skilful and personalised

application of knowledge in a particular field. Management is
considered to be a full-fledged art because-:
 there exists theoretical knowledge on management;
 there is personalised application of knowledge as it is brought
into practice differently by different managers; and
 it is based on practice and creativity.
 Management as a Science- Science is a systematised body of
knowledge that explains a fundamental truth. Management as a
science comprises of a systematised body of knowledge and it is based
on experimentation. But the principles of management lack universal
validity like the principles of science as they deal with human
behaviour.
 Management is an impure / inexact social science: management
as an impure and inexact social science acknowledges its practical,
context-dependent nature. It highlights the challenges of dealing with
human behavior and the dynamic nature of organizational
environments, where precision and predictability are limited. This
perspective reflects the evolving and adaptive nature of the field.
 Management as a Profession- Profession refers to an occupation
which requires specialised knowledge and skill in a particular
field. Management, like any other profession, is a well-defined body of
knowledge. However, the entry to profession of management is not
restricted to qualifications/ tests etc. It is not necessary for practising
managers to be the members of any management association and
adopt its ethical code of conduct or be committed towards the society
at large. However, the current trends indicate that management is fast
moving in the direction of being recognised as a full-fledged
profession.
 Goal-Oriented: Management is inherently directed towards achieving
specific organizational goals and objectives. Setting and pursuing
goals provide a clear purpose and direction for the organization.
 Universal Application: Management principles are universally
applicable across various industries, sectors, and organizational sizes.
Universal application allows for the transferability of management
concepts and practices.
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 People-Centric: Management involves working with and through

people to achieve organizational objectives. Recognizing the
importance of human resources emphasizes leadership, motivation,
and team dynamics.
 Cyclical Nature: Management involves a continuous cycle of
planning, organizing, leading, and controlling. The cyclical nature
ensures that activities are revisited and refined, promoting continuous
improvement.
Levels of Management: In organizations, management is typically

structured into hierarchical levels, each with distinct responsibilities and
functions. The common levels of management are:
 Top-Level Management
(Strategic Management)
 Middle-Level Management
(Tactical Management)
 Lower Level Management
(Operational Management)
Levels of Management: The authority-responsibility relationships that

exist between the superior and subordinates within an organisation give
rise to levels of management.
Level of Designations Functions
management
 They formulate
Chairman, Managing
the overall
Director, Board of
organizational
1-Top level Directors, Chief
goals and
management Executive Officer, Chief
strategies.
Operating Officer,
 They co-
President, Vice-President,
ordinate the
General Manager
activities of
different
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departments.
 They maintain
contact with the
outside world.
 They are
responsible for
the success and
failure of the
organization.
 They are
responsible for
all the business
activities and
their impact on
society.
 They serve as a
link between
the top level
and the lower
level
management.
 They are
responsible for
implementing
and controlling
plans and
strategies
developed by
the top
management.
Divisional Head like  They ensure
2- Middle level
Factory Manager, Sales that their
management
Manager, etc. department has
the necessary
staff.
 They assign
duties and
responsibilities
to their
personnel.
 They motivate
the people in
their
department to
achieve desired
objectives.
 They co-operate
with other
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departments for
smooth
functioning of
the
organization.
 They directly
oversee the
efforts of the
workforce.
 They serve as a
link between
the workers and
the middle level
managers.
3- Lower/
 They ensure
supervisory/
Supervisors, Foremen, availability of
operational
Inspectors etc. resources and
management/first
good quality of
line managers
output.
 They provide
guidance and
training to
workers.
 They ensure to
provide good
working
conditions.
Functions of Management
 Planning- Planning means deciding

in advance what is to be done and
who is to do it.
 Organising- Organising is a process
of bringing together human, physical
and financial resources and
establishing productive relationships
among them for the purpose of
achieving organisational goals
efficiently and effectively.
 Staffing- Staffing is a process of
obtaining and maintaining a
satisfactory and satisfied workforce.
 Directing- Directing is a process of
instructing, guiding and inspiring
people in order to realise the desired
goals. It has four elements:
supervision, communication,
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motivation and leadership.

 Controlling- Controlling is a process of ensuring that the events
conform to plans.
Co-ordination- The Essence of Management-

 Co-ordination is the process which helps a manager to synchronise
the activities of various departments.
 It is the force that binds all the other functions of management.
 It is implicit and inherent in all functions of an organisation.
 It provides the requisite amount, quality, timing and sequence of
efforts which ensures that planned objectives are achieved with a
minimum of conflict.
Features of Co-ordination
 Co-ordination integrates group efforts- Co-ordination unifies
individual efforts to ensure that the work within an organisation is
carried out as per plans.
 Co-ordination ensures unity of action- Co-ordination binds the
diverse individual efforts by providing it a common direction.
 Co-ordination is a continuous process- Co-ordination is an ongoing
process which starts with the planning, function and continues till
controlling.
 Co-ordination is an all pervasive function- Co-ordination is
required at all levels of management as well as within and among all
departments.
 Co-ordination is the responsibility of all managers- The
responsibility to establish co-ordination in the working of an
organisation is shared among all the three levels of management: top
level, middle level and lower level. Each level of management is
expected to synchronise its activities.
 Co-ordination is a deliberate function- Co-ordination requires
conscious effort in order to synchronise the work of one
individual/department with that of others. It does not happen as a
result of mere wishful thinking.
Importance of Co-ordination
 Growth in size- The growth of an organisation is accompanied by
increase in the number of its employees, thereby necessitating greater
need for coordination in order to synchronise the work of large
number of people towards realisation of common objectives.
 Functional differentiation- High level of functional differentiation is
evident in the working of the present organisations, wherein the work
is divided into a number of divisions/departments/units in the
absence of co-ordination to integrate the activities within and among
departments in pursuit of common goals.
 Specialisation- Co-ordination is essential in the modern day
organisations which operates through a large number of specialists, in
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order to harmonise the interests, views and perspectives of such

specialists in a common direction.
Management in the Twenty-first Century- The management in 21st

century is marked by evolution of new management practices in order to
enable an organization to adapt itself to the rapid changes both in the
external and internal business environments so as to meet its goals not only
„locally‟ but also „globally‟.
Multiple Choice Questions
1. Successful organisations do not achieve goals by chance but by following

a deliberate process known as
(a) Planning
(b) Co-ordination
(c) Controlling
(d) Management
2. ................. is the process of designing and maintaining an

environment in which individuals, working together in groups, efficiently
and accomplish selected aims.
(a) Management
(b) Planning
(c) Organising
(d) Coordination
3. Management is essential for the organisations which are

(a) Non-profit organisations
(b) Service organisations
(c) Social organisations
(d) All of the above
4. Management contains a series of interrelated functions that include

(a) Planning
(b) Organising
(c) Directing
5. People in the organisations carry out diverse tasks with the aim to
achieve ................................................................................................
(a) Different objectives
(b) Common objectives
(c) Both (a) and (b)
(d) None of the above
6. Both Company A and company B are using the same amount of

resources, however the output of company A is higher than that of
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company B. Identify the concept in which company A as an edge over

company B.
(a) Effectiveness
(b) Efficiency
7. “Management has been defined as a process of getting things done with

the aim of achieving goals effectively and efficiently.” Identify the
important concept being referred in the given statement.
(a) Process
(b) Efficiency
(c) Effectiveness
8. Tina works in an export house, where maximum emphasis is placed on

cutting down of cost. The company employs less labour to keep the cost
of production low. As a result, the export house has to bear huge losses
sometimes due to delay in completion of an export order. Identify the
concept of management being ignored by the export house.
(a) Efficiency
(b) Effectiveness
9. Diya and Riya work as sales coordinators in separate divisions of a

company. In order to outshine Riya, Diya offers 10% discount to the
customers so as to boost sales and complete the sales target much before
the stipulated time. Identify the concept of management being ignored by
Diya.
(a) Efficiency
(b) Effectiveness
10. Successful management ensures that .....

(a) Goals are achieved with least cost
(b) Timely achievement of goals
11. Efficiency is concerned with .... ...

(a) Doing the right thing
(b) Doing things right
(c) Achieving end results
12. Effectiveness relates to ...........
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(a) Doing the right task

(b) Completing activities
(c) Achieving goals
13.Anirban is working as a finance manager of „Shourya Ltd.‟ a company

dealing in exquisite designer jewellery. He has been asked to raise ₹ 200
crore within next 6 months to fund the new project of the company. Since
the present interest coverage ratio of the company is low, the Head
(Finance) is of the opinion that the required capital should be raised
through equity. Moreover, the flotation cost should not exceed 8% of the
funds raised. Anirban is able to raise the required funds after 8 months
at 6% flotation cost. He cannot be acknowledged as an
(a) Effective manager
(b) Efficient manager
14.Rohan works as a production manager in Global Enterprises Limited. He

has been given the task of getting 1000 units of hand woven table mats
manufactured at the cost of ₹150 per unit within 10 days. In order to be
acknowledged as an effective manager, he must ensure that
(a) The cost of production does not exceed ?T50 per unit
(b) The work is completed within 10 days even at higher cost per unit
(c) The cost of production is less than ?150 per unit
15. Ashish Singh is working as a marketing manager in a company. He has

been given the task of selling 4,00,000 units of a product at the cost of
rupees 100 per unit within 20 days. He is able to sell all the units within
the stipulated time, but had to sell last 1000 units at 20% discount in
order to complete the target. In such a situation, he will be considered to
be .............................................................
(a) An efficient manager
(b) An effective manager
(c) Both an effective and efficient manager
16. Jay is working as a marketing manager in a company. He has been given

the task of selling 1, 00,000 units of a product at the cost of ₹ 100 per
unit within 20 days. He is able to sell all the units within the stipulated
time, @ ₹ 100 per unit. In such a situation, he will be considered to be
(a) An efficient manager ............................
(b) An effective manager
(c) Both effective and efficient manager
17. Management is said to be poor if it is .......
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(a) Efficient but ineffective

(b) Effective but inefficient
(c) Both inefficient and ineffective
18. Tarang Enterprises Limited is planning to increase its sales by 30% in

the next quarter. Identify the feature of management being highlighted in
the given statement,
(a) Management is all pervasive
(b) Management is a goal oriented process
(c) Management is a continuous process
19. “Human resources are an organisation‟s greatest asset. Despite all

developments in technology “getting work done through people” is still a
major task for the manager.” Identify the dimension of management
being described above.
(a) Management of work
(b) Management of people
(c) Management of operations
20. “Every organisation whether it is government-owned, a privately owned

business or a company in the private sector requires management.”
Name the feature of management highlighted in the above statement.
(a) Management is an intangible force
(b) Management is a group activity
(c) Management is all pervasive
(d) Management is multidimensional
21. Which of the following is not a feature of management?

(a) Continuous process
(b) Goal-oriented process
(c) A group activity
(d) Increases efficiency
22. Management is equally important to run a political organisation as it is

to run an economic organisation. Which feature of management is being
reflected in the given statement?
(a) Management is goal oriented
(b) Management is multidimensional
(d) Management is a group activity
23. The need for the management is equally felt both at an airport and in an
hospital. Identify the feature of management being highlighted in the
given case.
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24. It is difficult to demark the time spent by a manager in performing a

particular function on a particular day as he may have to perform all the
functions simultaneously while doing his work. Identify the feature of
management being highlighted in the given case.
25. The sales team of Aloud Ltd. consists of four people Ajay Kumar,
Sukanto Ghosh, R. Ramaswamy and Gurpreet Singh. Each of these four
individuals have a different purpose for joining the organisation, but as
members of the same sales team the work towards for achievement of the
common objectives. Identify the feature of management being highlighted
in the given case.
(c) Management is a group activity
26. Tamanna has two kids Yash and Yashika, studying in different schools.
On comparing the two schools, Tamanna realizes that the management of
Yash‟s school is better as the teachers seem to be more joyful and
contented. Identify the feature of management being highlighted in the
given case.
(a) An intangible force
(b) A group activity
(c) A dynamic function
(d) A multidimensional activity
27.„Morning Basket‟ is a popular E-Commerce portal which provides free

home delivery of the daily grocery items to the households in Faridabad.
Over the years, the business has grown many times, primarily because
the marketing team recommends constant changes in the product list of
the company keeping in view the changes in the taste and preferences of
the consumers. Identify the feature of management being highlighted in
the given case.
28. „Go shopping‟ is a popular chain of consumer goods. The company has
decided to increase the number of outlets from 10 to 30 by the end of
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year 2024. Identify the feature of management being highlighted in the

given case.
(c) Management is a group activity
29. Which of the following aspect is involved in the dimension related to

management of people?
(a) Management of employees as individuals reflecting diverse needs and
behaviour
(b) Management of employees as a group
30. Management translates the works to be carried out in terms of goals to

be achieved and assigns the means to achieve it. This statement relates
to ................................................................................................
31. Management is essential to ensure successful transformation of imputs

into desired output. Identify the related dimension of Management.
32. Which of the following is the organisational objectives of management?

(a) Survival
(b) Profit
(c) Growth
33. Identify the social objective of management.

(a) Providing free education to the children of the slums
(b) Manufacturing environment friendly products
(c) Generating employment opportunities
(d) Al! of the above
34. Naina and Sunaina are working as Physics and Chemistry teachers in
a reputed School in Delhi. Naina believe that it is important to instill a
fear of authority among the students in order to get the work done from
them in a desired manner. Whereas, Sunaina focuses on developing
interest of the students in the subject and a good rapport with the
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teachers so that the students carry out the work in the desired manner.
Identify the nature of management being highlighted in the given case.
(a) Management as an art
(b) Management as a science
(c) Management as a profession
35. The principle of equity was evolved on the basis of the observation that
discrimination of any kind among two employees at the same level may
lead to job dissatisfaction. Moreover, the principle was tested through
repeated experimentation in order to certify its authenticity. Identify the
nature of management being highlighted in the given case.
(a) Management as an art
(b) Management as a science
(c) Management as a profession
36. Which of the following statement highlights that management is a group
activity?
(a) Organisation is a collection of diverse individuals with different needs.
(b) Achievement of common goal requires teamwork and co-ordination of
efforts in a common direction.
(c) Each member of the organisation may have different individual goals
but they must travel together towards common goals.
37. Keeping in view the changes in the consumer demands and preferences
„Tastemaker Bakery‟ has reduced the sugar and fat content in its
products. This approach of business shows that management is
38. Which of the following is not an organisational objective of management.

(a) Survival
(b) Growth
(c) Profit
(d) Generating employment opportunities
39. Which of the following is not an organisational objective of management?

(a) Earning enough revenue to cover costs
(b) Earning sufficient profits to cover risks of business
(c) Increase in the prospects of business in the long run
(d) Providing free education to children in slums
40. Providing good working conditions is a kind of objective of Management

(a) Organisational
(b) Social
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(c) Personal
(d) Economic
41. Management is considered important because ......

(a) It helps an organisation to adapt to the changes
(b) Seeks to integrate individual efforts
(c) It helps in development of the society
42. Management is considered to be an art because ....

(a) The principles of management have universal validity
(b) The principles of management have universal application
(c) Different principles of management are brought into effect differently
by different managers
(d) It is not important for the practising managers to be a member of a
professional association.
43. Which of the following statements is not relevant to the concept of

„Management as an inexact science‟?
(a) The principles of management lack universal validity
(b) The principles of management lack universal applicability
(c) The principles of management have to be modified according to the
given situation
(d) Management involves dealing with human behaviour and outcomes
cannot be predicted with utmost accuracy
44. The authority-responsibility relationships that exist within the

organisation give rise to
(a) Different functions within the organisation
(b) Different levels in the organisation
(c) Management as a multidimensional activity
(d) Management as a group activity
45. Which of the following is not a designation related to top level

management?
(a) President
(b) Vice-President
(c) Chairman
(d) Production Manager
46. Which of the following is not a designation related to middle level

management?
(a) Operations Head
(b) Sales Manager
(c) Chief Operating Officer
(d) Divisional Manager
47. Which of the following is not a designation related to lower level
management?
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(a) Plant Superintendent

(b) Supervisors
(c) Section officers
(d) Marketing Manager
48. Which of the following is a function of top level management?

(a) Ensuring quality of output
(b) Assigning necessary duties and responsibilities to their departments
(c) Taking responsibility for all the activities of the business and its
impact on the society
(d) Ensuring that the safety standards are maintained within the
organisation.
49. Which of the following statements does not pertain to middle level
management?
(a) They are responsible for all the activities of the operational managers.
(b) They are responsible for the welfare and survival of the organisation.
(c) The interpreter the policies made by top level managers
(d) Co-operate with other departments for the smooth running of the
organisation.
50. Which of the following statements is not true for lower level
management?
(a) Analyse the business environment and its implications for the
survival of the business. ,
(b) Ensure the quality of the output
(c) They strive to reduce the wastage of resources
(d) They ensure that the safety standards are maintained within the
organisation.
51. Identify the level of management which does not interact with the work
force directly.
(a) Supervisory management
(b) Operational management
(c) First line managers
(d) Middle level management
52. The main task of this level of management is to determine the overall
organisational objectives and strategies for their realisation.
(a) Operational management
(b) Middle level management
(d) Top level management
53. This level of management serves as a link between top level managers
and first line managers.
(a) Supervisory level management
(c) Middle level management
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54. Organising as a function of management involves deciding ...

(a) What activities and resources are required?
(b) Who will do a particular task?
(c) Where will it be done?
(d) All of the above?
55. The function of management related to grouping of activities to be

carried out into departments and creating management hierarchy is
(a) Planning
(b) Organising
(c) Controlling
(d) Directing
56. This function of management relating to laying down the foundation for
carrying out the other functions of management successfully is
(a) Organising
(b) Staffing
(c) Planning
(d) Controlling
57. Supervision, communication, motivation and leadership are the key

elements of this function of management.
(a) Directing
(b) Controlling
(c) Planning
(d) Organising
58. This function of management related to placing the right person at the
right job.
(a) Organising
(b) Staffing
(c) Planning
(d) Controlling
59. It is a force that binds all the functions of management.

(a) Cooperation
(b) Coordination
(c) Planning
(d) Management hierarchy
60. It acts as the binding force between departments and ensures that all
action is aimed at achieving the goals of the organisation. Identify the
related feature of coordination.
(a) Coordination integrates group efforts
(b) Coordination ensures unity of action
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(c) Coordination is a continuous process

(d) Coordination is an all pervasive function
61. Co-ordination is considered to be the essence of management because

(a) .................................................................................................... It is
a common thread that runs through all the activities within the
organisation
(b) It is implicit and inherent in all functions of the organisation
(c) It is a force that binds all the functions of management
62. Identify the process that provides the requisite amount, quality, timing
and sequence of efforts, which ensures that planned objectives are
achieved with a minimum of conflict.
(a) Management
(b) Planning
(c) Coordination
(d) Controlling
63. Identify the feature of co-ordination being highlighted in the given

statement: “Coordination is not a onetime function, it begins at the
planning stage and continue till controlling.”
(a) Coordination ensures unity of action
(b) Coordination is an all pervasive function
(d) Coordination is a deliberate function
64. „Even where members of a department willingly cooperate and work, a

manager has to coordinate the efforts of different people in a conscious
manner.‟ Identify the characteristic of coordination discussed above.
(b) Coordination is a deliberate function
(d) Coordination is an all-pervasive function
Read the following text and answer question No. 65-68 on the basis of
the same:
„Sureksha Pvt. Ltd.‟ is a well-established
Knowledge Process Outsourcing company with experienced specialists in

different areas. The company provides services for a whole cross section of
clients from multinational corporations to hotels, corporate houses,
residences, embassies, educational institutions, industrial establishments,
multinational companies, ATMs, etc. The effect of sound management is
noticeable in an organisation as the employees are happy and satisfied.
Considering it to be the need of the hour the company wants to introduce
new system of accounting. Initially, there is some resistance from the
19 | P a g e
accounting staff but when he explains the purpose, provides training and
motivates with additional rewards the employees accept the change and
cooperate with him.
In context of the above case:

65. Identify any one feature of management discussed above.
(c) Management is intangible
66. Identify the type of objective of management not discussed above.

(a) Organisational
(b) Personal
(c) Social
67. Identify the level of management which does not interact with the work
force directly.
68. Identify the related function of management which has helped the
company to introduce changes in the organisation.
(a) Planning
(b) Directing
(c) Controlling
(d) Organising
the r ime:
During the orientation talk, Mr. Kunal Malhotra, the Human Resource
Manager of „Pragun Ltd.‟ told the fresh joiners that the aim of a manager
should be to reduce costs and increase productivity through better
planning, organising, directing, staffing and controlling the activities of the
organisation. He also appraised them about the rise in sales volume of the
company and increase in the number of employees over past five years.
69. Identify the related point of importance of Management being

highlighted in the given statement.
(a) Management helps in achieving group goals
(b) Management creates a dynamic organisation
(c) Management helps in achieving personal objectives
(d) Management help to increase efficiency
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70. Identify the level of management at which Mr. Kunal Malhotra is placed
within the organisation.
71. Name the concept of management on which Mr. Kunal Malhotra

emphasized upon during his talks.
(a) Efficiency
(b) Effectiveness
72. Which organizational objective of management is being mentioned in the

last line of the above paragraph?
(a) Survival
(b) Growth
(c) Profit
73. Management is considered to be.........

(a) A Science
(b) An Art
(c) Both science and art
(d) Neither
74. “A person can be called a manager regardless of the educational

qualification possessed.” Identify the characteristic of the profession that
Management does not fulfil in the statement being discussed above.
(a) Ethical code of Conduct
(b) Professional Association
(c) Restricted Entry
(d) Service Motive
75. This process involves working with and through others to effectively
achieve organisational objectives by efficiently using limited resources in
a changing environment. Identify it.
(a) Management
(b) Planning
(c) Organising
(d) Controlling.
76. The feeling of cooperation among the members of a department towards

work alone is not enough, manager needs to consciously coordinate their
efforts in common direction. Identify the characteristic of coordination
discussed above.
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(b) Coordination is a deliberate function

(d) Coordination is an all-pervasive function
77. Name the objective of management which consistently creates economic

value for various constituents of society.
(a) Organisational objective
(b) Social objective
(c) Personal objective
(d) Both Social and Personal objective
Fill in the blanks
1. Successful organisations do not achieve goals by chance but by following

a deliberate process known as ………….
2 …………..is concerned with doing things right.
3. Keeping in view the changes in the consumer demand and preferences

„Tastemaker Bakery‟ has introduced zero touch delivery process for its
products. This approach of business shows that management is in
nature.
4. The concept of ................ is related to the completion of the task within

the stipulated time irrespective of the cost involved.
5. Management is ............ in nature and involves three aspects,

management of work, management of people and management of
operations.
6. A manager may have to perform all the functions of management

simultaneously while doing his work. This highlights as
................................................... feature…………. of management.
7. Management contains a series of interrelated functions namely,

planning, organising, staffing, ………… and controlling.
8. Operations head is a designation related to ...... level management.
9 ……………… isimplicit and inherent in all functions of the organisation

and is therefore known as essence of management.
10. The concept of relates to cost benefit analysis and study the
relationship between inputs and outputs.
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State whether True or False (Give reason in support of your answer)
1. Management is essential only for the profit making organisations.
2. Effectiveness relates to doing the right task.
3. Deepansh works as a production manager in Sibal Enterprises

Limited. He has been given the task of getting 100 units of hand
woven rugs manufactured at the cost of rupees 1000 per unit within 5
days. He gets the work is completed within 5 days but at cost of
rupees 1100 per unit. Deepansh cannot be categorised as an effective
manager.
4. Sanay is working as a marketing manager in a company. He has been

given the task of selling 50,000 units of a product at the cost of
rupees 50 per unit within 10 days. He is able to sell all the units
within the stipulated time, but had to sell last 1000 units at 20%
discount in order to complete the target. In such a situation, he will be
considered to be an effective manager.
5. The principles of management have universal applicability. This

statement reflects that management is a pure science.
6. The authority responsibility relationships that exist within the

organisation gives rise to different functions within the organisation.
7. Production manager is not a designation related to top level

management.
8. Section officers are categorised into middle level management.
9. Ensuring quality of output is a function of top level management.
10. The middle level management interpret the policies made by top
level managers.
Match the following by choosing the correct option.

1.
Column A Column B
(i) To achieve end result on time (a) Management
(ii) To conduct cost-benefit (b) Coordination
(iii) Intangible force (c) Effectiveness
(iv) Synchronise the various activities of
(d) Efficiency
an organisation.
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)
23 | P a g e
(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)

(c) (i)-(c); (h)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
2.
Column A Column B
(i) Creating employment opportunities for (a) Organisational objectives
society
(ii) Giving competitive salary and perks to (b) Social objectives
employees.
(iii) Earns enough revenue to cover costs (c) Personal objectives
(a) (i)-(c); (ii)-(b); (iii)-(a)

(b) (i)-(b); (ii)-(c); (iii)-(a)
(c) (i)-(a); (ii)-(c); (iii)-(b);
(d) (i)-(a); (ii)-(b); (iii)-(c)
3.
Column A Column B
(i) Every manager has his own unique
style of managing things and people (a) Management as a profession
(ii) The prominence of human factor in (b) Management as an art
the management
(iii) Anybody can proclaim to be a (c) Management as social science
manager; Prescribed compulsory
educational degree or license is not
required.
(a) (i)-(c); (ii)-(b); (iii)-(a)

(b) (i)-(b); (ii)-(a); (iii)-(c)
(c) (i)-(b); (ii)-(c); (iii)-(a)
(d) (i)-(a); (ii)-(b); (iii)-(c)
4.
Column A Column B
(i) Chief task is to integrate and to coordinate the (a) Lower level
various activities of the business management
(ii) To ensure the availability of resources to (b) Top level
implement policies management
(c) Middle level
(iii) Maintain discipline among the workers management
(a) (i)-(c); (ii)-(b); (iii)-(a)

(b) (i)-(a); (ii)-(b); (iii)-(c)
24 | P a g e
(c) (i)-(c); (ii)-(a); (iii)-(b)

(d) (i)-(b); (ii)-(c); (iii)-(a)
5.
Column A Column B
(i) Setting the objectives (a) Staffing
(ii) Establishing authority relationships (b) Coordination
(iii) Finding the right people for the right job (c) Planning
(iv) Essence of Management (d) Organising
(a) (i)-(c); (ii)-(b); (iii)-(a); (iv)-(d)

(b) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)
(c) (i)-(a); (ii)-(b); (iii)-(d); (iv)-(c)
(d) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
6.
Column A Column B
(i) Completing activities and achieving goals (a) Management
(ii) Doing the task correctly and with minimum (b) Coordination
cost
(iii) Consists of a series of interrelated (c) Effectiveness
functions
(iv) Essence of management (d) Efficiency
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
7.
Column A Column B
(i) Using environmental friendly methods
production (a) Organisational objectives
(ii) Giving prospects for training and (b) Social objectives
development to employees.
(iv) Management must exploit fully the growth (c) Personal objectives
potential of the organization.
(a) (i)-(c); (ii)-(b); (iii)-(a)

(b) (i)-(b); (ii)-(c); (iii)-(a)
(c) (i)-(a); (ii)-(c); (iii)-(b)
(d) (i)-(a); (ii)-(b); (iii)-(c)
25 | P a g e
8.
Column A Column B
(i) A good manager works through a (a) Management as a
combination of practice, creativity, profession
imagination, initiative and innovation.
(ii) The prominence of human factor in the (b) Management as an art
management
(iii) Anyone can be called a manager (c) Management as social
irrespective of the educational science
qualifications possessed.
(a) (i)-(c); (ii)-(b); (iii)-(a)

(b) (i)-(b); (ii)-(a); (iii)-(c)
(c) (i)-(b); (ii)-(c); (iii)-(a)
(d) (i)-(a); (ii)-(b); (iii)-(c)
9.
Column A Column B
(i) Vice-president (a) Lower level management
(ii) Division heads (b) Top level management
(iii) Foremen (c) Middle level management
(a) (i)-(c); (ii)-(b); (iii)-(a)

(b) (i)-(a); (ii)-(b); (iii)-(c)
(c) (i)-(c); (ii)-(a); (iii)-(b)
(d) (i)-(b); (ii)-(c); (iii)-(a)
10.
Column A Column B
(i) It determines in advance what is to be done and (a) Staffing
who is to do it
(ii) It determines what activities and resources are (b) Coordination
required for implementing a plan.
(iii) It seeks to find the right people for the right
job (c) Planning
(iv) It involves leading, influencing and motivating (d) Organising
employees to perform the tasks assigned to
them.
(a) (i)-(c); (ii)-(b); (iii)-(a); (iv)-(d)

(b) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)
(c) (i)-(a); (ii)-(b); (iii)-(d); (iv)-(c)
(d) (i)-(c); (ii)-(d); (iiiXa); (iv)-(b)
26 | P a g e
Assertion-Reason Questions
1. Assertion (A): Management is a deliberate process.

Reason (R): The job of a manager consists of a series of interconnected
and interdependent functions aimed at achieving the goals of the
organisation.
(a) Both the statements (A) and (R) are correct and (R) is the right
explanation of (A)
(b) Both the statements (A) and (R) are correct but (R) is not the right
explanation of (A)
(c) Statement (A) is correct but statement (R) is incorrect
(d) Both statements (A) and (R) are incorrect
2. Assertion (A): The time spent by managers in performing different

functions is same. Reason (R): Managers at the lower level spends more
time in planning and organising than managers at top levels of the
organisation.
explanation of (A)
explanation of (A)
3. Assertion (A): Management aims at guiding individual efforts towards

achieving a common objective.
Reason (R): People in organisations are performing similar tasks to
achieve the same goal.
explanation of (A)
explanation of (A)
4. Assertion (A): Good management must seek to strive a balance between

effectiveness and efficiency.
Reason (R): Effectiveness in management ensures completing activities
and achieving goals.
explanation of (A)
explanation of (A)
5. Assertion (A): Management is all pervasive.

Reason (R): The economic organisations require management.
27 | P a g e
(a) Both the statement (A) and (R) are correct and (R) is the right
explanation of (A)
explanation of (A)
6. Assertion (A): Management is responsible for setting and achieving

multifaced objectives for the organisation.
Reason (R): As a part of society, every organisation must fulfill its social
obligation,
(a) Both the statement (A) and (R) are correct and (R) is the right
explanation of (A) (b) Both the statements (A) and (R) are correct but
(R) is not the right explanation of (A)
7. Assertion (A): Management can be said to be an art.

Reason (R): Scientific principles of management have universal validity
and application.
explanation of (A)
explanation of (A)
8. Assertion (A): Management does not meet the exact criteria of a

profession. Reason (R): Everywhere in the world is it compulsory for a
manager to possess any such specific degree.
explanation of (A)
explanation of (A)
Answer Key
Multiple Choice Questions (Question no 01-77)

Q.N Ans Q.N Ans Q.N Ans Q.N Ans Q.N Ans Q.N Ans Q.N Ans
1 D 12 D 23 C 34 A 45 D 56 C 67 D
2 A 13 A 24 D 35 B 46 C 57 A 68 B
3 D 14 B 25 C 36 D 47 D 58 A 69 D
4 D 15 B 26 A 37 C 48 C 59 A 70 D
5 B 16 C 27 C 38 D 49 B 60 B 71 A
6 B 17 C 28 A 39 D 50 A 61 D 72 B
28 | P a g e
7 D 18 B 29 C 40 C 51 D 62 C 73 C
8 D 19 B 30 A 41 D 52 D 63 C 74 C
9 A 20 C 31 C 42 C 53 C 64 B 75 A
10 C 21 D 32 D 43 B 54 D 65 C 76 B
11 B 22 C 33 D 44 B 55 B 66 C 77 A
Assertion-Reason
Fill in the blanks True or false Match the following
Questions
Q Ans Q Ans Q Ans Q Ans
1 Management 1 False 1 C 1 A
2 Efficiency 2 True 2 B 2 D
3 Dynamic 3 False 3 C 3 C
4 Effectiveness 4 True 4 D 4 B
5 Multidimensional 5 False 5 D 5 B
6 Continuous 6 False 6 C 6 B
7 Directing 7 True 7 B 7 C
8 Lower 8 False 8 C 8 C
9 Coordination 9 False 9 D
10 Efficiency 10 True 10 D
29 | P a g e
Chapter 2
Principles of Management
 Describe the meaning, nature and significance of principles
of management;
 Explain Taylor‟s principles and techniques of Scientific
Management; and
 Describe Fayol‟s principles of management.
Important Definitions:
Principles of Management: The principles of management are
defined as a set of broad and general guidelines that serve as the
basis for the managerial decision making and action.
Value: A “value" is a person‟s personal belief in favour of or
against something. Value has moral connotations.
Techniques of management: The techniques of management
refer to the procedures as well as the methods which require a
series of steps to be performed so as to achieve the desired goal.
Scientific management: “Scientific management means knowing
exactly what you want men to do and seeing that they do it in the
best and cheapest way.”
- Taylor
 One best method: Principle : Science, not Rule of Thumb
Technique : Method Study
 Encouraging suggestions from employees : Fayol : Principle
of Initiative Taylor : Co-operation, not Individualism
 Incentive bonus plan; Discriminating between efficient and
inefficient workers : Differential Piece Wage System
 Change in the outlook of management and workers towards
each other : Mental Revolution
 Extension of principle of co-operation, not individualism :
Harmony, not discord
 Scientific management technique contradictory to a
principle of unity of command : Functional foremanship
30 | P a g e
 Scientific management technique based on a principle of

division of work : Functional foremanship
 Eliminating unnecessary diversities of products :
Standardisation and simplification of work
 Elimination of unnecessary movements of workers : Motion
study
 Determination of standard time required to complete a
specific task : Time study
 A technique based on use of Robotics and computers
production : Lean manufacturing
 Creation of separate departments within an organisation:
Application of Principle of division of work
 Creating a balance between authority and responsibility:
Application of Principle of authority and responsibilities
 Obedience to organisational rules; workers and
management should honour their commitments towards
each other; justified application of penalties : Application
of Principle of discipline
 Each employee should receive orders from and be
responsible to only one superior : Application of Principle
of unity of command
 One head, one plan; Each division should have a separate
incharge : Application of Principle of unity of direction
 A manager should replace „I‟ with „we‟ : Application of
Principle of Esprit De Corps
 Priority of organisational interest over general interest :
Application of Principle of subordination of individual
interest to general interest
 Fair and justified compensation : Remuneration of
employees
 Concentration of decision making authority and dispersal of
authority to lower levels : Application of Principle of
centralisation and decentralisation
 Chain of command and communication linking all job
positions : Application of Principle of scalar chain
 A shorter route of communication to be used during
emergency : Gang plank
 Well defined place for people and materials in an
organisation : Application of Principle of order
31 | P a g e
 No discrimination among the employees; Dealing with

inappropriate behaviour of employees sternly : Application
of Principle of equity
 The recruitment and selection of employees should be done
carefully; The employee should not be moved on adhoc basis
from one place to another : Application of Principle of
stability of personnel
 Suggestions from employees should be encouraged :
Application of Principle of initiative
Key concepts at a glance
 Difference between principles of pure science and
principles of management: The principles of pure science
are rigid in nature. The principles of management are
flexible in nature as they deal with human behaviour.
 Types of principles of management:
 Fayol‟s Principles of General Management
 Taylor‟s Principles of Scientific Management
 Features of principles of management :
 Universal applicability- The principles of
management are deemed to apply to all types and
sizes of organizations.
 General guidelines- The principles are guidelines to
action but do not provide readymade, straightjacket
solutions to all managerial problems as the real
business situations are very complex and dynamic
and are a result of many factors.
 Formed by practice and experimentation- The
principles of management are formulated by the
management experts through observation and tested
through repeated experimentation.
 Flexible- The principles of management are not rigid
prescriptions, which have t<5 be followed absolutely.
They are flexible and can be modified by the manager
in the light of given situation so as to achieve the
desired goals.
 Mainly behavioural- The principles of management
aim at influencing behaviour of human beings in a
desired manner.
 Cause and effect relationships- The principles of
management seek to establish relationship between
32 | P a g e
cause and effect so that they can be used in similar

situations in a large number of cases.
 Contingent- The application of principles of
management is contingent or dependent upon the
prevailing situation at a particular point of time.
 Significance of principles of management :

 Provides managers with a useful insight into
reality- The knowledge of these principles enhances
the knowledge and understanding of different types of
managerial situations. It also enables the managers to
effectively deal with the issues which are reoccurring
from management in nature, by learning from their
previous experiences.
 Optimum utilization of resources and effective
administration- The understanding of principles of
management enables the managers to be equipped
with the necessary competences to make all their
decisions and actions cost effective and promote
effective administration.
 Scientific decisions- The knowledge of principles of
management enables an objective assessment of the
managerial situation or problem in hand and take
scientific decisions based on logic rather than wishful
thinking or guess work.
 Meeting changing environment requirements- They
help to meet changing requirement of the environment
to the best advantage of an organisation.
 Fulfilling social responsibility- The knowledge of
principles of management seeks to develop a sense of
responsiveness towards various kinds of social
responsibilities and interest groups, be it customers,
employees, etc.
 Management training, education and research- The
principles of management are fundamental to
management theory and practice.
 Principles of General Management - Henri Fayol :
 Division of work- The whole organizational work,
both managerial and technical should be divided into
smaller jobs and the task involved in doing each such
33 | P a g e
job should be determined. It leads to specialization,

speed, efficiency and accuracy to work.
 Discipline- It refers to the obedience to an
organization‟s rules and the employment agreement. It
is necessary for the systematic working of the
organization. It requires good superiors at all levels,
clear and fair agreements and judicious application of
penalties.
 Authority and Responsibility- There should always
be a balance between the authority given and
responsibility entrusted to an employee. This is
because if authority is more than responsibility, the
employees are likely to misuse it whereas if authority
is less than responsibility, he/she will be unable to do
the desired work.
 Unity of command- There should be only one boss for
every individual employee from whom she/he should
receive orders and be responsible to. Dual
subordination should be avoided.
 Unity of Direction- All the units of an organization
should be moving towards the same objectives
through co-ordinated and focused efforts. Each group
of activities having the same objective must have one
head and one plan.
 Subordination of Individual Interest to General
Interest- In all the situations the interests of an
organisation should take priority over the interests of
any one individual employee.
 Remuneration of employees- The overall pay and
compensation should be fair to both employees and
the organization. The employees should be paid fair
wages, which should give them at least a reasonable
standard of living. At the same time it should be
within the paying capacity of the company i.e.
remuneration should be just and equitable
 Centralisation and Decentralisation- The
concentration of decision-making authority is called
centralisation whereas its dispersal among more than
one persons is known as decentralization. Large
organizations have more decentralization than small
organizations.
34 | P a g e
 Scalar Chain- The formal lines of authority along

which the communication flows from highest to lowest
ranks are known as scalar chains. Gang Plank is a
shorter route that has been provided so that
communication is not delayed during emergencies.
However, the superior has to be informed later on.
 Order- The people and material must be in suitable
places at appropriate time for maximum efficiency, i.e.
„A places for everything (everyone) and everything in
its place.‟
 Equity- It emphasizes kindliness and justice in the
behaviour of managers towards workers. No
discrimination should be made by them on the basis
of caste, creed, gender or otherwise.
 Stability of Personnel- The employee turnover should
be minimized to maintain organizational efficiency.
Personnel should be selected and appointed after due
and rigorous procedure. After placement they should
be kept at their post for a minimum fixed tenure so
that they get time to show results. Any adhocism in
this regard will create instability/insecurity among
employees. They would tend to leave the organisation.
 Initiative- Initiative means taking the first step with
self-motivation. The workers should be encouraged to
develop and carry out their plans for improvement.
Suggestion system should be adopted in the
organization. ,
 Esprit De Corps- The management should promote a
team spirit of unity and harmony among employees. A
manager should replace T with „We‟ in all his
conversations with workers.
 Techniques of Scientific Management :
 Time Study- It is the technique to determine the
standard time taken by a worker of average skill and
knowledge to complete a standard task.
 Fatigue study- It seeks to determine the amount and
frequency of rest intervals required in completing a
task.
 Method study- It seeks to find out one best way of
doing the job.
35 | P a g e
 Motion study- It refers to the study of movements of

limbs which are undertaken while doing a typical job.
This helps to eliminate unnecessary movements so
that it takes less time to complete the job efficiently.
 Standardisation and simplification of work- It
refers to the process of setting standards for every
business activity. Simplification aims at eliminating
superfluous varieties, sizes and dimensions of
products.
 Functional foremanship- It is an extension of the
principle of division of work and specialisation to the
shop floor. Each worker is supposed to take orders
from eight foremen in the related process or function
of production, namely four for planning and four for
production.
Principles of Scientific Management - F.W. Taylor:
01. Science not Rule of Thumb:
 Taylor believed that there was only one best method to
maximise efficiency which can be developed through
study and analysis and should substitute „Rule of
Thumb‟ or hit-and- trial method throughout the
organisation.
 The scientific method involved investigation of
traditional methods through work-study, unifying the
best practices and developing a standard method,
which would be followed throughout the organisation.
 In the present context, the use of internet has brought
about tremendous improvements in internal
efficiencies and customer satisfaction.
02. Harmony, not Discord:

 Taylor emphasised that there should be complete
harmony between the management and workers
instead of a kind of class-conflict, the managers
versus workers.
 To achieve this state, Taylor called for complete
mental revolution on the part of both management
and workers.
36 | P a g e
 The prosperity of the employer cannot exist for a long

time unless it is accompanied by prosperity of the
employees and vice versa.
 He advocated paternalistic style of management in
practice.
03. Co-operation, not Individualism

 This principle is an extension of principle of „Harmony,
not discord‟
 There should be complete co-operation between the
labour and the management instead of individualism.
 Competition should be replaced by co-operation and
there should be an almost equal division of work and
responsibility between workers and management.
 Also, management should reward workers for their
suggestions, which results in substantial reduction in
costs.
 At the same time, workers should desist from going on
strike and making unreasonable demands on the
management.
04. Development of Each and Every Person to His or Her

Greatest Efficiency and Prosperity
 Taylor was of the view that the concern for efficiency
could be built in right from the process of employee
selection.
 Each person should be scientifically selected and the
work assigned should suit Jier/his physical, mental
and intellectual capabilities.
 To increase efficiency, they should be given the
required training.
 Efficient employees would produce more and earn
more. This will ensure their greatest efficiency and
prosperity for both company and workers.
Difference between Unity of command and Unity of direction
Basis Unity of command Unity of direction

Meaning One subordinate should receive Each group of activities
orders from and should be having same objective must
responsible to only one superior. have one head and one
plan.
37 | P a g e
Aim It prevents dual subordination. It prevents overlapping of

activities.
Implications It affects an individual employee. It affects the entire
organization.
Difference between Fayol’s and Taylor’s approach to

management
Basis Taylor Fayol

Perspective Top level management Shop floor level of a factory
Unity of Followed strictly Suggested the technique of
command functional foremanship which is
contradictory to the concept of
unitary command.
Applicability Applicability in only specialized
Universal applicability situations
Basis of Personal experience Observation and
formation experimentation
Focus Overall administration Increase in productivity
Personality Practitioner Scientist
Expression General theory of Scientific administration
administration
1. Which of the following statements is true with reference to principles of

management?
(a) The principles of management have evolved.
(b) The principles of management are yet to be evolved.
(c) The principles of management are in the continuous process of
evolution.
(d) None of the above.
2. By profession, FW Taylor was a ...........

(a) Mechanical engineer
(b) Mining engineer
(c) Psychologist
(d) Human resource officer
3. This concept defines broad and general guidelines for decision making
and behaviour. Name the concept.
(a) Principles of pure science
(b) Principles of management
(c) Techniques
(d) Values
4. The principles of pure science are considered to be.. in nature.
38 | P a g e
(a) Flexible
(b) Rigid
(c) Creative
5. „She/he keeps machines, materials, tools etc., ready for operations by
concerned workers‟. Identify the type of specialist being described under
functional foremanship.
(a) Instruction Card Clerk
(b) Route Clerk
(c) Repair Boss
(d) Gang Boss
6. How are the principles of management derived?

(a) On the basis of observation
(b) On the basis of experimentation
7. Which of the following statements best defines the techniques of

management?
(a) It is a set of guidelines to take decisions and actions.
(b) It is a procedure which involves a series of steps to be taken.
(c) They are general rules for behaviour of individuals.
8. The principles of management have been developed on the basis of .

(a) Observation
(b) Experimentation
(c) Personal experiences of the manager
9. Which of the following statements is true with reference to principles of

management?
(a) The principles are guidelines to action.
(b) The principles denote a cause and effect relationship.
(c) Principles help the manager to take decisions while performing
various management functions.
(d) All of the above.
10. The principles of management are intended to be applied to all types and
sizes of organisations. This statement reflects that the principles of
management are
(a) General guidelines
(b) Flexible
(c) Universally applicable
(d) Mainly behavioural
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11. Razia and Ria are the team members of Kanha who works as a team
lead in an IT company. Kanha observes that both Razia and Ria are in
constant conflict with which each other due to their personal prejudices.
Many a times,.this conflict among them influences their work
performance adversely. Kanha, always resolves such situations by
emphasizing on the primacy of organisational goals over individual
interests. Identify the related feature of principles of management being
described in the given case.
(a) Universal Applicability
(b) General guidelines
(c) Mainly behavioural
(d) Cause and effect
12. Rambabu works as a supervisor in a paint making factory. He often

observes the problem of fatigue of workers in the factory. In order to
resolve the situation, he conducts an experiment to see if an additional
rest interval during work hours would improve their work performance.
It is observed, that by providing an additional break of 10 minutes, 2
hours after the tea break helped to reduce their stress and increase
productivity. Identify the feature of principles of management been
described in the above lines.
(a) Formed by practice and experimentation
(c) Cause and effect
13. While conducting a survey on „motivational techniques used in factories‟,

Umang observed that although there was division of work in each of the
factory that he visited, but the extent of division of work varied from
factory to factory depending upon the demands of the situation. Which
feature of principles of management does the above case highlight?
(a) Flexible
(b) Contingent
(c) General guidelines
14. It is a well-known fact that if two employees at the same level are not
treated at par by their superior, it would lead to job dissatisfaction.
Identify the related feature of principles of management being
highlighted in the given case.
(b) Universal Applicability
(c) Mainly behavioural
15. Gaurav was working as a driver with a multinational company till last
year when he had to leave his job due to some critical illness. At that
time he was drawing a salary of rupees 18000 per month. When he
40 | P a g e
resumed his work, after a year he was offered a salary of rupees 16000
only. When he tried to negotiate on his remuneration, he was told that
at present there is a recession in the economy so whatever remuneration
is being offered to him by the company is fair and justified. Identify the
related feature of principle of management being mentioned in the given
case,
(a) Flexible
(c) Contingent
16. Anurag joined television entertainment company as Business

Development Manager five years back after completing his Masters in
Business Administeration. Over the years, he has built upon his
competence to deal with recurring problems quickly by learning from his
past mistakes. Earlier he used to carry out all the activities himself right
from contacting new client to fixing up a meeting, making presentations
and so on. But, now he delegates the routine work to his subordinates
so that he has sufficient time at his disposal to focus on key areas. Give
the related point highlighting the significance of principles of
management.
(a) Meeting changing environment requirements
(b) Providing managers with useful insight into reality
(c) Optimum utilisation of resources and effective administration
(d) Fulfilling social responsibility
17. Suraj works as a production manager in a company. The knowledge of

principles of management has guided him to impersonalise managerial
conduct so as to enable him use his managerial power with due
discretion for the benefit of the organisation. Name the related point
which highlights the significance of principles of management,
(a) Management training, education and research
(b) Providing managers with useful insight into reality
(c) Optimum utilisation of resources and effective administration
(d) Fulfilling social responsibility
18. The principles of management do not provide readymade straight jacket

solutions to all management problems because
(a) The real business situations are complex.
(b) The real business situations are dynamic,
(c) The principles act as general guidelines.
19. Principles of management can be modified by the manager when the

situation demands. This statement implies that the principles of
management are
(a) Rigid
(b) Contingent
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(c) Flexible
(d) Universally applicable
20. The principles of management enhance the understanding of

relationship between human and material resources for the achievement
of organisational goals. Identify the feature of the principles of
management being described in the given statement,
(a) Cause and effect relationships
(b) Optimum utilisation of resources and effective administration
(c) Formed by practice and experimentation
21. The Principles of Management are considered to be ........................... as

their application is dependent upon the prevailing situation at a
particular point of time,
(a) Flexible
(b) Contingent
(c) General Guidelines
(d) Mainly Behavioural
22. Yajur works as a team leader in an IT company. Yajur observes that

many a times, a conflict among the team members influences their work
performance adversely. Yajur, always resolves such situations by
emphasizing on the primacy of organizational goals over individual
interests. Identify the related feature of principles of management being
(a) Contingent
(b) Mainly behaviour
(c) Cause and effect relationship
(d) General guidelines
23. The application of the principles of management has to be changed as

per the requirements of the prevailing situation at a particular point of
time. Which feature of the principles of management is being described
in the given statement?
(a) Contingent
(b) Mainly behavioural
(c) Cause and effect relationship
24. Principles of management emphasize on logical and rational decision

making rather than on the basis of bias and prejudice. The given
statement highlights that the knowledge of principles of management
leads to ............................................................................
(a) Providing managers with useful insight into reality
(b) Scientific decisions
(c) Meeting changing environmental requirements
42 | P a g e
25. „Rule of thumb‟ refers to ...................

(a) Use of personal judgement in handling management issues
(b) Adopting a hit-and-trial approach to resolve management problems
26. According to Taylor, “even a small production activity like loading figures
of iron into boxes can be scientifically planned and managed. This can
result in tremendous savings of human energy as well as wastage of
time and materials.” Identify the related principle of scientific
management.
(a) Harmony, not discord
(b) Science, not rule of thumb
(c) Development of each and every person to get his/her greatest
efficiency and prosperity
27. According to this principle of scientific management, ‟‟Scientific

management has for its foundation the firm conviction that true interest
of the management and workers are one and the same; the prosperity
for the employer cannot exist for a long time unless it is accompanied by
prosperity for the employees and vice versa.”
(a) Science, not rule of thumb
(b) Co-operation, not individualism
(c) Harmony, not discord
28. Name the principle of scientific management which is an extension of

the principle of harmony not discord.
(a) Cooperation, not individualism
(c) None of the above
(d) Harmony not discord
29. One of the principles of general management is in direct contradiction to

technique of-scientific management. Name both the principle and the
technique.
(a) Order and Functional foremanship
(b) Unity of direction and Differential piece rate wage system
(c) Unity of command and functional foremanship
(d) Equity and Unity of command
30. F.W. Taylor has emphasised on the concept of„one best method‟ through
a technique and a principle of management. Identify both of them.
(a) Science, not rule of thumb and Functional foremanship
(b) Method study and Science, not rule of thumb
(c) Order and Method study
43 | P a g e
(d) Division of work and Unity of command
31. Identify the concept of scientific management which relates to extensive

use of robotics and computers protroduction and other business
activities in the present time.
(a) Mental revolution
(b) Lean manufacturing
(c) Just in time
32. One of the techniques of scientific management is based on the principle

of general management as suggested by Henri Fayol. Name the technique
and the related principle.
(a) Initiative and Method study
(b) Unity of command and Fatigue study
(c) Division of work and Functional foremanship
(d) Espirit de corps and Motion study
33. Both Taylor and Fayol have stressed upon the importance of
encouraging suggestions from the employees. Identify the related
principle of management suggested by both of them.
(a) Initiative and Harmony, not discord
(b) Unity of command and Cooperation, not individualism
(c) Unity of direction and functional foremanship
(d) Initiative and Cooperation, not individualism
34. Who is known as the father of scientific management?

(a) Henri Fayol
(b) Peter Drucker
(c) Fredrick Winslow Taylor
35. Name the principle of scientific management through which Taylor

advocates that, “there should be an almost equal division of work and
responsibility between workers and Management.”
(b) Cooperation, not individualism
(c) Harmony not discord
(d) Development of Each and Every Person to His or Her Greatest
Efficiency and Prosperity
36. Which of the following techniques is a part of the technique of work

study?
(a) Time study
(b) Motion study
(c) Method study
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37. Nanu works as a supervisor in a warehouse. In order to carry out the

work scientifically, he knows that it should take not more than two
minutes for any worker to download corrugated box from a truck and
place it within the warehouse. Identify the technique of scientific
management being adopted by him.
(a) Time study
(b) Motion study
(c) Method study
(d) Fatigue study
38. Ketan worked in leather making factory as a plant supervisor. Whenever

there was a need for workers, he would give job to anybody would
approach him for the same without paying any attention to the skill and
knowledge of the candidate.
Consequently, the productivity in the factory started declining. Name the
principle of scientific management that will help him in this regard.
(c) Harmony not discord
(d) Development of Each and Every Person to His or Her Greatest
Efficiency and Prosperity
39. McDonald‟s have developed a sequence of thorough and precise working

procedures that ensures the food they send out to their customers has
the same high level of quality in every chain or franchise. For example,
the layout of equipments and machineries are measured and calculated
to best maximize efficiency and are very similar in every outlet. However,
the most distinct demonstration of using a standard method is definitely
in the production line of food. The ingredients making up a burger is
strategically placed for the workers so as to reduce extra time for excess
motion. The practice does not only stop at the production of goods but is
also applied in the service line. McDonald‟s enforces workers to follow a
rigid script when they are speaking to a customer or offering their
service to them.
Identify any one principle and technique of scientific management being
described in the given paragraph.
(a) Time study and Science, not rule of thumb
(b) Method study and Cooperation, not individualism
(c) Initiative and Cooperation, not individualism
(d) Motion study and Science, not rule of thumb
40. Ford has incorporated Taylor‟s scientific management theory into his
production techniques. For, implementing Taylor‟s theory during the
assembly stage, Ford determined that the larger parts of the car should
remain stationary, while the smaller parts should be brought to the
vehicle as needed. This strategy sped up the production process
significantly, to further reduce his cars‟ building time, Ford had his
laborers remain stationary in an assembly line as the body of the car
45 | P a g e
was moved through individual workstations. Workers would pull the car,
by rope, through one workstation after another, allowing each worker to
perform his specified task before moving the car to the next station. This
process was repeated until the car‟s construction was complete. Identify
any one principle and technique of scientific management being adopted
by Ford.
(a) Motion study and Science, not rule of thumb
(b) Method study and Science, not rule of thumb
(c) Fatigue study and Cooperation, not individualism
(d) Time study and Harmony, not discord
41. Naushad on a small furniture making workshop in Moradabad. In order

to differentiate between efficient and inefficient workers‟ wages are paid
to the workers according to the output. The standard output per worker
per day is 7 units and those who made standard or more than standard
will get rupees 50 per unit and those below will get rupees 40 per unit.
Calculate the wages of worker A and worker B whose output for a given
day is 8 units and 6 units respectively.
(a) Worker A MOO and Worker B MOO
(b) Worker A MOO and Worker B ?240
(c) Worker A ?350 and Worker B ?420
42, Rahman‟s father owns a sugarcane factory in Chittoor, Andhra Pradesh.

Over the years, the rift between the management and the workers has
worsened. In order to improve the situation, they decide to hire a
management consultant, Rajinikanth. Rajnikant makes concentrated
efforts to change the mind-set of the workers and the management
towards each other. He advises them to co-operate with each other
rather than quarrelling over trivial issues. Identify the concept of
scientific management being used by Rajinikanth to improve the work
situation at the factory,
(a) Just in time
(b) Mental revolution
(c) Lean manufacturing
43. Harsh, a project manager has been given the responsibility for the
completion of a project in time and under budget. There are 8 members
in his team to help him in this task. Out of these 4 members wish to go
on a tracking tour during the time when the project is on. Since, the
leave in the company is sanctioned by the General manager, Harsh does
not have any authority to hold them back for the completion of the
project. Moreover, he is not in a position to hire additional staff, as the
expected cost budgeted will rise. Consequently, the completion of the
project gets delayed. Name the principle of management which will be
used by Harsh to clarify position in terms of accountability for non
completion of the project on time.
46 | P a g e
(a) Division of work

(b) Authority and responsibility
(c) Espirit de corps
(d) Initiative
44. Kareena joined an event management company as a creative director two

years back. At the time of joining, he was given an assurance for a range
of 5% in her salary on the completion of one year. However, despite one
more year has lapsed, the management has not honoured its
commitment. Identify the principle of general management which is
being violated in the given case.
(a) Remuneration of employees
(b) Discipline
(c) Equity
45. Piyush works as a Purchase Manager in a construction company. The

finance manager of the company wants him to place an order for the
cement with company A because it offers an additional 20% discount on
the purchase. Whereas , the production manager is of the opinion that
the cement should be purchased from company B as they sell better
quality cement. Piyush, is confused as to whose order should obey and
consequently he decides not to place any order for th*e cement for the
time being. Identify the principle of general management being violated
in the above case.
(a) Unity of direction
(b) Unity of command
(c) Discipline
(d) Authority and responsibility
46. Tarun has started a takeaway restaurant „Trzan burgers‟ in a popular

local market. When a customer places an order for a „Trzan burger‟ at
the counter and make the payment the order is passed on the kitchen
area. The person who bakes the burger also toasts it and passes it on to
the next person who does the fillings in the burger and wraps it up in a
butter paper. In the meantime, another person would prepare the french
fries and put it in the box. Finally, the person at the front counter puts
all these together for the customer. Thus, by following a definite way a
working and assigning the same work repeatedly to the same persons
the work efficiency is higher. Identify one principle of general
management and a technique of scientific management being described
in the above case.
(a) Division of work and Functional foremanship
(b) Unity of command and Differential piece rate wage system
(c) Division of work and Method study
(d) Unity of direction and Motion study
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47. According to this principle of scientific management, the employees

should be rewarded for their suggestions which results in substantial
reduction in the cost,
(b) Co-operation, not individualism
48. According to Taylor, “each specialist is to be assigned work according to

his/her qualities, the employees who possess technical mastery should
be involved in planning work whereas those with energy and good health
may be assigned execution work.” Name the related principle of scientific
management.
(a) Functional foremanship
(c) Development of each and every person to his or her greatest
49. Gaddi Ltd. is a well-known automobile company in India. The

production manager of the company believes that the best results come
to the company because of effective partnership between a trained and
qualified management and a cooperative workers and thus there is no
need of trade unions. Identify the principle of scientific management
(a) Harmony, not discord
(c) Development of each and every person to get our greatest efficiency
and prosperity
50. Name the principle of management, suggested by Henri Fayol which

advocates that, “there should be good superiors at all levels, clear and
fair agreement and judicious application of penalties.”
(a) Authority and responsibility
(b) Espirit de corps
(c) Order
51. Considering the fact that it is difficult to find one single person with all
the needed qualities, Taylor suggested appointment of a specialist
through this technique of scientific management. Identify the technique.
(a) Standardisation and simplification of work
(b) Method study
(c) Functional foremanship
(d) Motion study
48 | P a g e
52. To reduce a given line or product to fixed types, sizes and characteristics
is an objective of …………… technique of scientific management.
(a) Time study
(b) Standardisation and simplification
(c) Differential piece rate wage system
(d) Functional foremanship
53. This technique of scientific management helps in development of the

concept of assembly line which is widely used in automobile companies
these days as well. Identify the technique.
(a) Motion study
(b) Standardisation and simplification of work
(c) Method study
(d) Time study
54. Anjali started a cafe house in Mumbai. Initially the footfall to the outlet
was high, but it started to decline gradually. When Anjali took feedback
from the clients and found out that though they loved the special unique
aroma of coffee but were not happy with the long waiting time being
taken to process the order. She analysed and found out that there we're
many unnecessary obstructions in between which could be eliminated
and time for processing the order could be reduced and consumer
satisfaction could be maximised.
Identify the techniques of scientific management used by Anjali to solve
the problem.
(a) Standardisation and simplification of work
(b) Method study
(d) Motion study
55. Which of the following is an objective of time study?

(a) To determine the number of workers to be employed
(b) To formulate suitable incentive schemes
(c) To calculate the labour costs
56. This technique of scientific management aims to determine the amount

and frequency of rest intervals that should be provided to the employees
during working hours.
(a) Time study
(b) Method study
(c) Motion study
57. The technique of differential piece rate system was developed by Taylor
in order to (a) Discriminate between efficient and inefficient workers
(b) Reward the efficient worker
(c) Motivate the inefficient workers to perform better
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58. Identify the technique of scientific management which is contradictory to

the principle of unity of command.
(a) Time study
(b) Differential piece rate wage system
(d) Work study
59. The technique of Functional foremanship is an extension of the principle

of ……………. to the shop floor.
(a) Discipline
(b) Equity
(c) Division of work
(d) Order
60. The application of this principle of management leads to higher
production and better work for the same effort. Identify the related
principle of general management,
(a) Discipline
(b) Equity
(d) Order
61. The work within an organisation may be grouped into separate

departments , like production, marketing, finance, human resource, etc.
Identify the principle of management being applied in the given case.
(a) Stability of personnel
(d) Order
62. According to this principle of general management, “an organisation

should safeguard against abuse of managerial power, but at the same
time a manager should have the necessary authority to carry out his
responsibility.” Name the principle of management being described in
the given statement.
(a) Discipline
(c) Unity of command
(d) Unity of direction
63. Through this principle of management, Henri Fayol guides the managers
to exhibit exemplary behaviour and advises that they should not fall into
temptation of misusing their powers for personal benefit at the cost of
general interest of the organisation. Which principle of management is
being described in the above statement?
(a) Remuneration of employees
(b) Centralisation and decentralisation
50 | P a g e
(c) Subordination of individual interest to general interest

(d) Equity
64. Which principle of general management advocates that, “Employee

turnover should be minimised to maintain organisational efficiency.”?
(b) Remuneration of employees
(c) Equity
(d) Esprit De Corps
65. Rupali started an online Tiffin Box service through a website

“Mytiffin.com” in Noida two years back. Recently they have started
online booking system through their website „mydabbawala.com‟. The
Dabbawalas operate in a group of 25-30 people along with a group
leader. Each group teams up with other groups in order to deliver the
tiffin on time. They are not transferred on frequent basis as they have to
remember the addresses of their customers. They follow certain rules
while doing trade- No alcohol during working hours; No leave without
permission; Wearing of white cap & carrying ID cards during business
hours. Recently on the suggestion of a few self-motivated fellow men, the
dabbawalas thought out and executed a plan of providing food left in
tiffins by customers to slum children. They have instructed their
customers to place red sticker if food is left in the tiffin, to be fed to poor
children later.
Which of the following principles is not mentioned in the given

paragraph?
(b) Discipline
(c) Initiative
(d) Equity
the same:
Sunder Public School a reputed school in Gurugram, Haryana is hosting an

Inter-School Painting Competition. Karuna, the co-curricular in charge of
the school has determined the exact manner in which the related activities
will be carried out. On the basis of her enriched experience, Karuna
determined that standard time required by a teacher in completing
registration formalities for every participating team is five minutes.
Therefore, keeping in view the number of participating schools, she decided
to assign this work to three teachers. Last year, since the number of
participating teams was less she had divided this work among two teachers
only. On the day of the competition Mr. Anubhav, the art teacher took a
leave due to personal reasons. His absence had an adverse effect on the
conduct of the competition.
51 | P a g e
66. Identify the principle of management being adopted by the co-curricular

in charge of the school as described above.
(b) Division of work
(d) Equity
67. Identify the principle of management being violated by the Art teacher of
the school as described above.
(b) Subordination of individual interest to general interest
(c) Equity
(d) Espirit de corps
68. Identify the technique of scientific management being described in the

above paragraph.
(a) Time study
(b) Method study
(c) Motion study
69. Which feature of principle of management is being described in the given

case?
(a) Contingent
(b) Mainly behaviour
(c) Flexible
Fill in the blanks
1. The principles of management do not provide readymade straight

jacket solutions to all management problems because the real
business situations are complex and…………….
2. Principles of management can be modified by the manager when the

situation demands. This statement implies that the principles of
management are in …………… nature.
3. The application of the principles of management has to be changed as

per the requirements of the prevailing situation at a particular point of
time because the principles of management are …………… in nature.
4. According to the ………………principle of scientific management, “even

a small production activity that loading figures of iron into boxes can
be scientifically planned and managed.”
52 | P a g e
5. According to …………….. principle of scientific management the

employees should be rewarded for their suggestions which results in
substantial reduction in the cost.
6. Through the principle of ………………… Taylor advocated that each

specialist is to be assigned work according to his/her qualities.
7. Agile Automobiles Limited has implemented the concept of assembly

line in its production system. This shows that the ……………
technique of scientific management is being adopted by the company.
8. The principle of ……………… is an extension of the principle of

Harmony not discord.
9. Through the principle of ……………………. Fayol emphasized on the

judicious application of penalties within an organization.
10. Henri Fayol guides the managers to exhibit exemplary behaviour

and should not fall into temptation of misusing there powers for
personal benefit at the cost of general interest of the organization. The
……………. principle is being described in the above line.
State whether True or False (Give reason in support of your answer)
1. The principles of management are in the continuous process of

evolution.
2. The principles of pure science are considered to be flexible in nature.
3. The principles of management have been developed only on the basis
of personal experiences of the manager.
4. The principles of management have universal validity.
5. The concept of work study techniques includes the technique of
fatigue study.
6. The objective of method study technique of scientific management is
to reduce a given line or a product to fixed type sizes and
characteristics.
7. The technique of differential piece rate system was developed by
Taylor in order to discriminate between efficient and inefficient
workers.
8. The application of the principle of Division of work leads to higher
production and better work for the same effort.
9. According to Henri Fayol, if the principle of discipline is violated,”
authority is undermined, discipline is in jeopardy, order disturbed and
stability threatened.”
10. The principle of order suggests that if two employees at the same level
are not treated at par by their superior, it would lead to job
dissatisfaction.
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1.
Column A Column B
(i) Each work is done by a trained specialist (a) Unity of Command
(ii) Judicious application of penalties. (b) Unity of Direction
(iii) Dual subordination should be avoided (c) Division of work
(iv) One head and one plan (d) Discipline
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
2.
Column A Column B
(i) Affects an individual employee (a) Scalar Chain
(b) Centralisation and
(ii) Affects the entire organization.
Decentralisation
(iii) Formal lines of authority between (c) Unity of Direction
superiors and subordinates
(iv) Concentration of decisions making
authority (d) Unity of Command
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
3.
Column A Column B
(i) Manager should replace „I‟ with „we‟ (a) Equity
in all his conversations with
workers
(ii) Employees should not be
transferred frequently (b) Order
(iii) Right material should be placed at
the right place (c) Espirit De Corps
(iv) No worker should be unduly
favoured (d) Stability of Personnel
(a) (i)-(c); (ii)-(d); (iii)-(b); (iv)-(a)

(b)(i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(d) (i)-(a); (ii)-(c); (iii)-(d); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
54 | P a g e
4.
Column A Column B
(i) Emphasises on mental revolution (a) Development of workers to
their greatest efficiency and
prosperity
(ii) Scientific study and analysis of each (b) Cooperation not individualism
element of job
(iii) Adopt a suggestion system (c) Harmony, not discord
(iv) Assign job to workers as per their (d) Science, not rule of Thumb
physical, mental and intellectual
capabilities
(a) (i)-(b); (ii)-(c); (iii)-(d); (iv)-(a)

(b) (i)-(c); (ii)-(d); (iii)-(b); (iv)-(a)
(c) (i)-(a); (ii)-(c); (iii)-(d); (iv)-(b)
(d)(i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
5.
Column A Column B
(i) Responsible for keeping tools and machines (a) Route Clerk
ready for operation
(ii) Specifies the exact sequence and route of (b) Repair boss
production
(iii) Checks the quality of work (c) Gang boss

(iv) Ensure proper working conditions of tools
(d) Inspector
and machines
(a) (i)-(b); (ii)-(c); (iii)-(d); (iv)-(a)

(b) (i)-(c); (ii)-(a); (iii)-(d); (iv)-(b)
(c) (i)-(a); (ii)-(c); (iii)-(d); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
6.
Column A Column B
(i) Leads to specialisation (a) Principle of Unity of Command
(ii) Both the workers and management (b) Principle of Unity of Direction
should honour their commitments
towards each other
(iii) There should be one and only one (c) Principle of Division of work
boss for every individual employee
(iv) Each division should have its own (d) Principle of Discipline
incharge, plans and execution resources.
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)
55 | P a g e
(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)

(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
7.
Column A Column B
(i) It prevents dual subordination (a) Gang Plank
(ii) It prevents overlapping of
activities. (b) Centralisation and Decentralisation
(iii) A shorter route and has been
provided so that communication is (c) Unity of Direction
not delayed.
(iv) Concentration of decisions (d) Unity of Command
making authority at top level
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)
(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
8.
Column A Column B
(i) It will minimise the need for using (a) Principle of Equity
penalties.
(ii) Employees should be given reasonable (b) Principle of Order
time to show results.
(iii) „A place for everything (everyone) and (c) Principle of Espirit De Corps
everything (everyone) in its (her/his) place‟
(iv) It emphasises kindliness and justice in
the behaviour of managers towards (d) Principle of Stability of
workers. Personnel
(a) (i)-(c); (ii)-(d); (iii)-(b); (iv)-(a)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(a); (ii)-(c); (iii)-(d); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
9.
Column A Column B
(i) Emphasises on change in the attitude of (a) Development of workers to
workers and management towards one their greatest efficiency and
another prosperity
(b) Cooperation not individu
(ii) One best method to maximise efficiency
alism
(iii) Employees should be reward for their (c) Mental revolution
valuable suggestions
56 | P a g e
(iv) Each person should be scientifically (d) Science, not rule of Thumb
selected.
(a) (i)-(b); (ii)-(c); (iii)-(d); (iv)-(a)

(b)(i)-(c); (ii)-(d); (iii)-(b); (iv)-(a)
(c) (i)-(a); (ii)-(c); (iii)-(d); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
1. Assertion (A): Management principles are not as rigid as principles of

pure science. Reason (R): Human behaviour is never static.
explanation of (A)
explanation of (A)
2. Assertion (A): Derivation of principles of management may be said to be

a matter of science and their creative application may be regarded as ad
art.
Reason (R): The principles of management have been developed on the
basis of observation and experimentation as well as personal
experiences of the managers,
explanation of (A)
explanation of (A)
3. Assertion (A): The principles of management have universal

applicability.
Reason (R): The principles of management are applicable in all types
and sizes of organisations.
explanation of (A)
explanation of (A)
4. Assertion (A): There should be a balance between authority and

responsibility.
Reason (R): A manager should assign minimum authority to his
subordinate to carry out his responsibility.
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explanation of (A)
explanation of (A)
5. Assertion (A): The principles of management are specific guidelines to

action. Reason (R): The principles of management provide readymade,
straitjacket solutions to all managerial problems.
explanation of (A)
explanation of (A)
6. Assertion (A): The principles of management are flexible in nature.

Reason (R): The application of principles of management is contingent
or dependent upon the prevailing situation at a particular point of time.
explanation of (A)
explanation of (A)
7. Assertion (A): Management principles emphasise logic rather than blind

faith.
Reason (R): Management decisions taken on the basis of principles are
free from bias and prejudice.
explanation of (A)
explanation of (A)
8. Assertion (A): Dual subordination should be avoided.

Reason (R): Each group of activities having the same objective must
have one head and one plan.
explanation of (A)
explanation of (A)
(d) Both statements (A) and <R) are incorrect
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Answer Key

Q Ans Q Ans Q Ans Q Ans Q Ans Q Ans Q Ans
1 C 11 B 21 B 31 B 41 B 51 C 61 C
2 A 12 A 22 D 32 C 42 B 52 B 62 B
3 B 13 A 23 A 33 D 43 B 53 C 63 C
4 B 14 D 24 B 34 C 44 B 54 B 64 A
5 D 15 C 25 C 35 B 45 B 55 D 65 D
6 C 16 B 26 B 36 D 46 C 56 D 66 B
7 B 17 C 27 C 37 A 47 B 57 D 67 B
8 D 18 D 28 A 38 D 48 C 58 C 68 A
9 D 19 C 29 C 39 D 49 A 59 C 69 C
10 C 20 D 30 B 40 B 50 D 60 C
Assertion-
Match the
Fill in the blanks True or false Reason
following
Questions
1 Dynamic 1 True 1 C 1 B
2 Flexible 2 False 2 D 2 B
3 Contingent 3 False 3 A 3 A
4 Science, not rule of thumb 4 False 4 B 4 C
5 Cooperation, not individualism 5 True 5 B 5 D
6 Development of each and every 6 False 6 C 6 B
person to his or her greatest
7 Method study 7 True 7 D 7 A
8 Cooperation, not individualism 8 True 8 A 8 B
9 Discipline 9 False 9 B
10 Subordination of individual 10 False
interest to general interest
59 | P a g e
Chapter 3
Business environment
• Describe the meaning, features, importance and dimensions of business
environment;
• Describe the meaning and features of demonetisation;
• Examine the impact of government policy changes on business in India
with reference to New Economic Policy, 1991
Business environment: The term „business environment‟ means the sum

total of all individuals, institutions and other forces that are outside the
control of a business enterprise, but that may affect its performance.
“Business environment is the aggregate of all conditions, events and

influences that surround and affect a business.”
—Keith Davis
Dimensions of the business environment: Dimensions of the business

environment include economic, social, technological, political and legal
conditions which are considered relevant for decision-making and improving
the performance of an enterprise.
Demonetisation: Demonetisation refers to the act of scrapping a currency

unit of its status as legal tender.
 Sum total of all individuals, institutions and other forces that are
outside the control of a business enterprise but that may affect its
performance.: Business environment
 Exert a direct and immediate influence on the working of a business
firm/owners, suppliers, creditors, employees, trade union,
competitors.: Specific forces
 Exert an indirect influence on the functioning of a business
firm/economic, social, technological, political and legal components.:
General forces
 The economic system, level of economic development, availability of
economic resources, the level of income of people, economic policies,
rate of inflation, exchange rate balance of payment position, gross
national product, per capita income, rate of savings and investment,
changes in disposable income of people, stock market indices and the
value of rupee, etc.: Economic environment
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 Size, growth rate, composition of population, life expectancy of people,

level of literacy, values, beliefs, customs, traditions. Social
environment
 Scientific improvements and innovations which provide new ways of
producing goods and services and new methods and techniques of
operating a business. Technological environment
 General stability and peace in the country, organisation and
philosophy of political parties, ideology of the government, the image
of the country and its leaders, foreign policies pursued by the
government in power, attitude of the government towards various
types of business organisations.: Political environment
 Various legislations passed by the government, administrative orders
issued by government authorities, court judgements as well as the
decisions rendered by various commissions and agencies at every level
of the government— centre, state or local.: Legal environment
 Abolishing licensing and all unnecessary controls and restrictions.:
Liberalisation
 Giving greater role to the private sector.: Privatisation
 Integration of the various economies of the world.: Globalisation
 Act of scrapping a currency unit of its status as legal tender.:
Demonetisation
Features of business environment
 Totality of external forces- It is a sum total of all the forces external to

business firms.
 Specific and general forces- It consists of both specific forces such as
investors, customers, competitors and suppliers which affect individual
enterprises directly and immediately in their day-to-day working and general
forces such as social, political, legal and technological conditions which have
an impact on all business enterprises and thus may affect an individual firm
only indirectly.
 Inter relatedness- All the elements of business environment are closely
interrelated.
 Dynamic nature- It is dynamic in nature and keeps on changing due to
technological upgradations, shifts in consumer preferences or increase in
competition in the market.
 Uncertainty- It is highly uncertain as it is not always possible to predict
future happenings, especially when environment changes are taking place
too frequently as in the case of information technology or fashion industries.
 Complexity- It is complex in nature as it is relatively easier to understand in
parts but difficult to comprehend in its totality, because it consists of
numerous interrelated and dynamic conditions or forces which arise from
different sources.
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 Relativity- It is a relative concept since it differs from country to country

and even region to region.
Importance of business environment
 It enables the firm to identify opportunities and get the first

mover advantage- It helps in timely identification of business
opportunities instead of losing them to its competitors.
 It helps the firm to identify threats and early warning signals- The
threats that are likely to hinder a firm‟s performance are identified, so
that timely actions are initiated in the best interest of the
organisation.
 It helps in tapping useful resources- The enterprise designs policies
that allow it to get the resources that it needs so that it can convert
those resources into outputs that the environment desires.
 It helps in coping with rapid changes- It enables the managers to
understand and examine the environment and develop appropriate
courses of action.
 It helps in assisting in planning and policy- The understanding and
analysis of business environment can be the basis for deciding the
future course of action or decision making.
 It helps in improving performance of an enterprise- The
continuous monitoring of the environment and adopting suitable
business practices help to improve the present and future
performance of the organisation.
Various factors constituting the general environment of business
 Economic Environment- It comprises of factors that can affect

management practices in a business enterprise, which includes
interest rates, inflation rates, changes in disposable income of people,
stock market indices and the value of rupee, etc.
 Social Environment- It includes the social forces like customs and
traditions, values, social trends, society‟s expectations from business,
etc.
 Technological Environment- It includes forces relating to scientific
improvements and innovations which provide new ways of producing
goods and services and new methods and techniques of operating a
business.
 Political Environment- It includes political conditions such as
general stability and peace in the country and specific attitudes that
elected government representatives hold towards the business.
Features of demonetisation
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 Tax administration measure- Demonetisation is perceived as an

effective tax administration measure because the people with
accumulated black money are left with no other option but to declare
their cash holdings and pay taxes at a penalty rate at the time of
getting it exchanged for new notes.
 Stringent approach towards tax evasion- Through demonetisation,
the government seeks to communicate in a stringent manner that the
practice of tax evasion will neither be tolerated nor allowed any
further.
 Channelizing savings into the formal financial system- One of the
initial impacts of demonetisation is an increase in the savings in the
bank deposits. This is because the people need to deposit their cash
holdings in the bank, so as to get it exchanged with new currency.
 Development of less-cash economy- Demonetisation is considered
to be an important step towards moving India to a less-cash or cash-
lite economy. The digital transactions are based on the availability of
internet connection and an interface in the form of mobile phones for
customers and point-of-sale (pos) machines for sellers.

1. Which of the following is not a part of the business environment of
business?
(a) Customers
(b) Suppliers
(c) Competitors
2. Which of the following is not a component of specific forces of business

environment?
(a) Technological conditions
(b) Customers
(c) Employees
(d) Investors
3. The growing awareness about healthcare has led to an increase in the

demand for healthcare products and services in the country. Identify the
feature of business environment being described in the above case.
(a) Dynamic nature
(b) Uncertainty
(c) Relativity
(d) Interrelatedness
4. Since more number of people have become more beauty and health
conscious, our economy has witnessed an unprecedented surge in the
number of health and beauty spas and wellness clinics. Related feature
of business environment being described in the above lines is —
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(a) Totality of external forces

(b) Dynamic nature
(c) Interrelatedness
(d) Relativity
5. „Twinkle Stars‟ is a well-known resort for organising parties, especially

for children. However, in past 6 months its popularity has reduced
considerably as a new resort with better ambience and facilities has
opened within its vicinity. Name the related feature of business
environment which has influenced the business of „Twinkle Stars‟
adversely.
(b) Dynamic nature
(d) Uncertainty
6. Keeping in view the increased expectations of corporates and increased

awareness for self-development among people, Anu has started a
Personality Development institute in Kasauli. The institute offers
multiple courses on personal grooming, confidence building and public
speaking. Name the related feature of business environment.
(a) Dynamic nature
(b) Uncertainty
(c) Relativity
7. Any kind of external devices, like compact discs (CD‟s) for computer,
have become obsolete. Google, with its Google Drive service, Apple with
its iCloud offering, enables the users store documents, photos, music
and movies on web-based servers. Identify the feature of business
environment being described in the above lines.
(a) Relativity
(b) Dynamic nature
(c) Uncertainty
8. In 1995 Amazon was the first company to truly exploit the power of the
rapidly expanding Internet to provide an online book retailing service to
consumers. Amazon has also been the first company to enable
consumers to search for, and order, hard- to-find books as easily as best
sellers. Outline the concept that enables a firm to take advantage early
identification of business opportunities environment is business
environment.
(a) Business opportunities
(b) Early mover advantage
(c) Business threats
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9. In order to be ahead of its global competitor „Awasthi Telecom‟ has

decided upon its future course of action through re-farming spectrum
and aggressive fabrication of towers. Identify the related point with
reference to importance of understanding business environment.
(a) It helps in assisting in planning and policy formulation
(b) It helps in coping with rapid changes
(c) It helps in improving performance
(d) It enables the firm to identify opportunities and getting the first
mover advantage
10. The lifestyle of consumers also affects businesses. When consumers

want to lead a healthy lifestyle, then businesses need to change to
address this need if they want to grow. The people want to use less
energy and use products that are safer for the environment. Some
businesses have changed how they do business in terms of what
supplies they may use to encourage these potential customers to visit
them or use their services. Identify the related point with reference to
importance of understanding business environment.
(a) It helps in assisting in planning and policy formulation
(d) It enables the firm to identify opportunities and getting the first mover
advantage
11. Consumers‟ increased focus on fitness and wellbeing is challenging the

confectionery industry to make healthier products. The consumers are
looking for more nutritious products, so the companies taking a
leadership role in improving their offerings. Identify the related feature of
business environment which shows that business is ever changing.
(b) Dynamic nature
(c) Complexity
(d) Relativity
12. The government brought in the new policy in February, 2019 after
complaints from small Indian traders who said the e-commerce giants
used their control over inventory from affiliated vendors to create an
unfair marketplace in which they offered major discounts. Such
practices are now prohibited. Identify the related dimensions of business
environment.
(a) Political Environment and Social Environment
(b) Legal Environment and Political Environment
(c) Technological Environment and Social Environment
(d) Economic Environment and Political Environment
13. According to the United Nations Environmental Agency, the world

produces around 300 million tons of plastic each year, half of which
constitutes single-use items. Ford is recycling over one billion plastic
65 | P a g e
bottles every year to develop elements of the car‟s interior, reducing the
amount of plastic ending up in a landfill. The American car maker has
revealed that their Romanian-built EcoSport SUVs‟ carpets are made
using 470 recycled single-use plastic bottles. The process for making
Ford EcoSport carpets involves shredding bottles and their caps into
tiny flakes and then heating them to 260° C. Identify the related
dimension of business environment which is facilitating the change.
(a) Economic dimension
(b) Social dimension
(c) Technological dimension
(d) Political dimension
14. DigiLocker is the country‟s first secured cloud-based platform for the
storage, issuance and verification of documents with the Driving Licence
& Vehicle Registration System of the Road Transport Ministry. The
integration of a government department with DigiLocker since its launch
last year is one of the biggest of its kind. It will spare people the trouble
of carrying licences & vehicle papers, which can be accessed on phones
using the DigiLocker app. Identify the related dimension of business
environment.
(b) Technological dimension
(c) Social dimension
15. Which of the following is not a component of social environment of

business
(a) Growth rate
(b) Per capita income
(c) Composition of population
(d) Life expectancy of people
16. The Uttarakhand government has developed surveillance network using

latest satellite technology. Under this system, the state‟s mining
department would be in a position to check illegal mining activities
across the state. The state government is also considering the use of
drones in its proposed campaign against illegal mining. Identify the
related dimension of business environment not being described in the
given lines
(a) Legal dimension
(c) Technological dimension
17. In order to boost and double India‟s export of goods and services to over
USD 1,000 billion by 2025, it is important to lower effective corporate
tax rate, bring down cost of capital and simplify regulatory and tax
framework. Identify the related dimension of business environment.
66 | P a g e
(a) Social dimension and Legal dimension

(b) Technological dimension and Political dimension
(c) Political dimension and Social dimension
(d) Economic dimension and Legal dimension
18. The Economic Survey, 2019 suggests that the psychological biases can
be used in the realm of tax compliance. It is in favour of using religious
norms such “dying in debt is a sin” to improve tax compliance.
Identify the related dimensions of business environment.
(a) Legal dimension and Social dimension
(b) Social dimension and Economic dimension
(c) Technological dimension and Political dimension
(d) Political dimension and Economic dimension
19. Electric vehicles with zero tail pipe emission are emerging as a good
alternative to problems like climate change, surging pollution leading to
ill health, crude import bill and energy security.
(a) Economic dimension, Legal dimension and Social dimension
(b) Social dimension, Political dimension and Economic dimension
(c) Economic dimension, Technological dimension and Social dimension
(d) Social dimension, Political dimension and Legal dimension
20. *Yo Tummy‟ began its business by offering the classic combo of
hamburgers and fries. But over time, their customers wanted healthier
foods, so ‟Yo Tummy‟ responded and began offering healthy alternatives
such as salads, fruits, wraps and oatmeal. If „Yo Tummy‟ hadn‟t
responded, they may have lost customers that wanted to eat healthier
foods. The above case highlights one of the points related to the
importance of business environment and its understanding by
managers. Identify it.
(a) It helps in coping with rapid changes.
(b) It helps in improving performance.
(c) It helps the firm to identify threats and early warning signals.
mover advantage.
21. Anuradha has been selling home-made cakes, cookies and breads which
are made to order. Over the past one year she has witnessed a sudden
surge in her business during festival season due to the growing
preferences of people for hygiene and quality during pandemic. Identify
the related dimension of business environment,
(c) Political dimension
(d) Technological dimension
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22. Which of the following is not a component of specific forces of business

environment?
(a) Social conditions
(b) Customers
(c) Employees
(d) Investors
23. As a result of major government initiatives, more and more people are
going „green‟. In order to keep in line with the trend, „Clapaway„ a carpet
cleaning company has advertised that they only use natural cleaners
that come from renewable resources and that all their service vehicles
are hybrid vehicles that use both gas and electricity. Identify one of the
points related to the importance of business environment and its
understanding by managers in terms of adopting suitable business
practices which is being highlighted in the above case.
(a)It helps in assisting in planning and policy formulation.
(b) It helps in coping with rapid changes.
(c) It helps in improving performance.
(d)It enables the firm to identify opportunities and getting the first mover
advantage.
24. According to the World Health Organization, 39% of adults are

overweight. Over the last 40 years, the prevalence off obesity has tripled
around the world. With over half of consumers drinking at least one
sugary drink on a given day, regulations towards the beverage sector are
likely to become increasingly onerous. In the U.K., for example, a sugar
tax was introduced in 2018 on beverages containing more than 5%
sugar.
(a)Legal dimension and Social dimension
(b) Social dimension and Technological dimension
(c)Technological dimension and Legal dimension
(d)Political dimension and Technological dimension
25. India‟s population is expected to grow under 0.5 per cent during 2031-41
due to decline in fertility rate and increase in life expectancy. These
changes in India‟s demography will also have implications such as the
proportion of elementary school going children will witness significant
declines, lack of hospital beds and increase in retirement age. The
related feature of business environment being described in the above
lines is
(b) Dynamic nature
(d) Relativity
26. India continues to be a lower-middle-income country along with 46

others, while Sri Lanka has climbed to the upper-middle-income group
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for the fiscal year (FY) 2020, according to the World Bank‟s classification
of countries by income levels, released on July 1, 2019.
(a) Social dimension
(c) Economic dimension
(b) Technological dimension
27. Food safety is becoming a growing global concern with regulatory

regimes worldwide facing the challenge of minimising food safety risks.
With India being one of the biggest markets for the import of various
kinds of food products from across the globe, food safety has become a
major concern for our country. The government is focussing on the
delivery of safe and wholesome food to its citizens by setting up a single
unified established standard. Enactment of the Food Safety and
Standards Act, 2006 (FSS(a) is a major step taken by the government in
this direction. Identify the related dimension of business environment.
(a) Legal dimension
(c) Political dimension
28. It may be difficult to know the extent of the relative impact of the social,
economic, political, technological or legal factors on change in demand of
a product in the market, identify the related feature of business
environment.
(a) Interrelatedness
(b) Dynamic
(c) Complexity
(d) Relativity
29. Sneha owns a nursery in Fridabad. She is now planning to venture into
the business of setting up a portal for selling terrarium plants (art of
growing plants inside glass jars with a narrow opening). The market for
indoor plants in India is estimated at over ₹ 250 crore annually and is
growing at 15% to 20%. The terrarium plants require less water and are
much in demand now with houses becoming small and virtually no
gardens for people residing in apartments in metro cities. The above
case highlights one of the point related to the importance of business
environment and its understanding by managers. Identify it.
(a) It helps in coping with rapid changes
(b) It helps in improving performance
(c) It helps the firm to identify threats and early warning signals
mover advantage
30. The term Opportunities refer to ............

(a) Any positive external trends
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(b) Any changes in the environment that will help a firm to improve its
performance
31. According to a report by the India Staffing Federation (ISF), India has
emerged as the fifth largest market worldwide in flexi-staffing in 2018
and the country would have 6.1 million flexi-workforce by 2021. It
showed that Haryana, Gujarat, Karnataka, Madhya Pradesh and
Telangana are the states with high growth potential for flexistaffing but
Andhra Pradesh tops the list of states with favourable business
environment. Identify the feature of business environment being
discussed above,
(a) Relativity
(b) Dynamic nature
(c) Uncertainty
32. The Union Cabinet has given „in-principle‟ nod to divest stakes in Air
India — a wholly government owned airline. This means the government
is willing to shed a substantial portion of its stake and hand over the
management of the ailing airline to the private sector. Identify the
concept being described in the above lines.
(a) Liberalisation
(b) Privatisation
(c) Globalisation
(d) Demonetisation
33. The Government of India launched “Make in India” initiative in

September, 2014 to increase foreign direct investment (FDI) in 25
sectors. As of April, 2015, FDI inflow in India increased by 48% since the
launch of “Make in India” initiative.
Identify the concept being described in the above lines, with regard to
inflow of FDI.
(a) Demonetisation
(b) Privatisation
(c) Liberalisation
(d) Globalisation
34. In today‟s world, the flow of goods and services is not only cheap and
fast, but reliable and secure. You can order anything you wish from any
part of the world. Internet has been connecting people without any
limitations or boundaries in the way of doing business.
Identify the concept being described in the above lines.
(a) Liberalisation
(b) Globalisation
(c) Demonetisation
(d) Privatisation
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the same:
AK Limited has introduced location free work arrangements in order to
ensure wellbeing of its employees to during pandemic situation. Mr. Kunal
Goel, the General Manager of the company shared that such an option was
necessary and the company has adopted this courses of action in order to
effectively deal with the significant changes in the environment. He further
added that although the impact of Covid 19 has been worldwide, but the
strategies being adopted by businesses across the globe are varying keeping
in view their specific environment.
35. Identify the dimension of business environment not being mentioned in

the above case.
(a) Technological environment
(b) Social environment
(c) Legal environment
(d) Economic environment
36. The employees of AK Limited constitute a part of its ..........

(a) General business environment
(b) Specific business environment
37. The above case highlights one of the point related to the importance of
business environment and its understanding by managers. Identify it.
(a) It helps the firm to identify threats and early warning signals
mover advantage
38. Identify the feature of business environment being described in the last
line of the given paragraph.
(a) Relativity
(b) Dynamic nature
(c) Uncertainty
39. Which among the following is considered a major element of the political
environment
(a) The extent and nature of government intervention in business.
(b) Planned outlay in public and private sectors.
(c) Expectations from the work force.
(d) Administrative order issued by government authorities.
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40. The social conditions vary from place to place and exert the multifacet
affect on business. Which feature of the business environment is being
highlighted in the above statement?
(a) Specific and general force
(b) Dynamic nature
(c) Relativity
41. “The increase in the demand for many organic products in the past few
months, is related to the need for building immunity and an increased
awareness for health care due to the spread of Corona Virus.” Identify
the feature of business environment being described above.
(a) Specific and general force
(b) Interrelatedness
(c) Relativity
42. Which of the following is an element of political environment?

(a) Birth and Death Rate
(b) Constitution of the country
(c) Population shifts
(d) Life expectancy
43. Which of the following is not a component of economic environment?

(a) Concern with quality of life
(b) Extent of government intervention in business
(c) Birth and death rates
Fill in the blanks.

1 ………………. forces exert a direct and immediate influence on the
working of a business firm.
2. The demand for two-wheelers is likely to be more in urban areas than in
rural areas. The feature of business environment being described in
above line is ………………
3. The Prime Minister has announced an economic relief package of ₹ 21
lakh crore for program titled Atmanirbhar Bharat Abhiyan. This
statement is related to dimension …………………….of business
environment.
4. The restaurant industry alone is expected to contract by 25% to 40% as
customers remain skeptical about eating out due to safety concerns
owing to coronavirus pandemic. The above statement is concerned with
……………….. type of
5. The retail health business is growing because there is a large demand
considering the increase in awareness about boosting immunity. The
above statement is related to …………………….. feature of business
environment.
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6. The Supreme Court has developed a software called SCI-Interact to

make all its 17 benches paperless. With the help of this software, judges
will be able to access files, annexures to petitions and make soft notes
on computers itself, without it being accessible to others. The above
statement is concerned with …………………….. dimension of business
environment.
7. The food-delivery platform Swiggy and ride sharing company Uber have
started leveraging their two-wheeler fleets to offer services under Genie
and Connect, respectively, to transport small items such as office
documents, lunchboxes, etc. within the city limits. The above statement
is related to …………………… feature of business environment.
State whether True or False.
1. Technological conditions are not a component of specific forces of

business environment.
2. Increase in tax rates reduces the disposable income of people leading to
a fall in demand for products. This is an example of legal business
environment.
3. The Government has extended certain benefits to entities falling with the
Micro, Small and Medium Enterprises bracket to strengthen and
incentivise them. The above statement is concerned with social
dimension of business environment.
4. The concept of Dematerialisation of securities is related to technological
dimension of business environment.
5. There has been an overall increase in demand for consumer electronics
like headphones, laptop & mobile accessories, keyboards, data cables,
memory sticks etc. with people working and studying from home. This is
an example of social dimension of business environment.
6. The government is giving priority to strengthening of infrastructure
facilities in order to promote self-reliance. The above statement is relates
to technological dimension of business environment.
7. Many online companies have long-term plans laid out for venturing out
into new businesses to expand their revenue streams in the future like
Domino‟s Pizza partnering ITC to deliver essential goods. The above
statement can be related with „complexity‟ as a feature of business
environment.
8. The Securities and Exchanges Board of India has sent a warning letter
to a company for inadequate disclosures made by the company four
years ago relating to a jury verdict against it. The above statement is
concerned with legal dimension of business environment.
9. Paytm Payments Bank Limited (PPBL) has launched „Cash at Home‟
facility for senior and differently-abled citizens in the national capital to
make the banking experience more convenient and accessible for its
customers. The above initiative can be related with social dimension of
business environment.
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1.
Column A Column B
(i) Suppliers and Creditors (a) Opportunities
(ii) Social Environment and Political
Enviromnent (b) Specific forces
(iii) Gaining the profits for being a pioneer (c) General forces
(iv) Positive external trends (d) First mover advantage
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(c); (iii)-(d); (iv)-(a)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)
2.
Column A Column B
(i) Lifestyle and values (a) Economic Environment
(ii) Payments though e-wallets (b) Political Environment
(iii) Rise in inflation (c) Legal Environment
(iv) Attitude of government towards
business (d) Technological Environment
(v) Statutory warning on advertisement (e) Social Environment
(a) (i)-(a); (ii)-(b); (iii)-(e); (iv)-(d); (v)-(c)

(b) (i)-(b); (ii)-(e); (iii)-(d); (iv)-(c); (v)-(a)
(c) (i)-(e); (ii)-(d); (iii)-(a); (iv)-(b); (v)-(c)
(d) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c); (v)-(e)
3.
Column A Column B
(i) Investors and customers (a) Opportunities
(ii) Legal Environment and Economic
Environment (b) Specific forces
(iii) An advantage gained by a company that first (c) General forces
introduces a product
(iv) Positive changes in environment of a
business (d) First mover advantage
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(c); (iii)-(d); (iv)-(a)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)
4.
Column A Column B
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(i) Educational system and literacy rates (a) Economic Environment

(ii) Airline companies book their tickets online (b) Political Environment
(iii) Rates of saving and investment (c) Legal Environment
(iv) The nature of relationship of our country (d) Technological
with foreign countries Environment
(v) Prohibition of advertisement of alcoholic (e) Social Environment
beverages
(a) (i)-(a); (ii)-(b); (iii)-(e); (iv)-(d); (v)-(c)

(b) (i)-(b); (ii)-(e); (iii)-(d); (iv)-(c); (v)-(a)
(c) (i)-(e); (ii)-(d); (iii)-(a); (iv)-(b); (v)-(c)
(d) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c); (v)-(e)
1. Assertion (A): Different elements of business environment are closely
interrelated. Reason (R): A change in any dimension of business
environment necessitates a corresponding change in other dimensions
as well.
explanation of (A)
explanation of (A)
2. Assertion (A): Business environment is dynamic in nature.

Reason (R): Business environment keeps on changing in terms of
economic and social environment.
explanation of (A)
explanation of (A)
3. Assertion (A): Business environment is largely certain.

Reason (R): The future happenings in the business environment can be
predicted easily.
explanation of (A)
explanation of (A)
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4. Assertion (A): The general environment mostly influences many

enterprises at the same time.
Reason (R): The economic, social, technological, political and legal
conditions are considered relevant for decision-making and improving
the performance of an enterprise.
explanation of (A)
explanation of (A)
Answer Key

1 D 12 B 23 C 34 B
2 A 13 C 24 A 35 C
3 D 14 B 25 C 36 B
4 C 15 B 26 C 37 B
5 B 16 B 27 D 38 A
6 D 17 D 28 C 39 A
7 C 18 A 29 A 40 C
8 B 19 C 30 B 41 B
9 A 20 A 31 C 42 B
10 C 21 B 32 B 43 D
11 b 22 A 33 c
Q Ans
1 Specific
2 Relativity
Fill in the blanks 3 Political/Economic
4 Social/economic
5 Inter-relatedness
6 Technological/legal
7 Dynamic
1 True
2 False
3 False
4 True
True or false
5 True
6 False
7 False
8 True
9 True
Match the following 1 B
2 C
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3 B
4 C
1 A
Assertion-Reason Questions 2 B
3 D
4 A
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Chapter 4
Planning
• Explain the concept, features, importance and limitations of planning;
• Describe the steps involved in the process of planning; and
• Identify and explain the different types of plans.
 Planning: “Planning is deciding in advance what to do, how to do and

who is to do it. Planning bridges the gap between where we are and
where we want to go. It makes it possible for things to happen.”
 -Koontz & O’Donnell
 Single use plans: Single use plans are the ones that are formulated to
deal with unique, new or non-repetitive situations that may arise in
an organisation from time to time, like programmes, budgets and
projects. \
 Standing plans: Standing plans refer to the types of plans which once
formulated may be used for a long period of time in similar or
repetitive situations that may prevail in an organisation, like
objectives or methods.
 Objectives: Objectives are the end results of the activities that an
organisation seeks to achieve through its existence.
 Strategy: Strategy is a comprehensive plan as it covers three
dimensions: (i) determining long term objectives, (ii) adopting a
particular course of action, and (Hi) allocating resources necessary to
achieve the objective.
 Policy: Policy is defined as a set of general guidelines that help in
managerial decision making and action.
 Method: Method refers to the prescribed ways or manner in which a
task has to be carried out in order to realise the predetermined
objective. It relates to one step of a procedure and details the steps to
be executed for carrying out the concerned task.
 Procedure: Procedure refers to a series of specific steps to be
performed in a chronological order to carry out the routine activities.
 Budget: Budget refers to a statement of expected results that is
expressed in numerical terms.
 Rule: Rule is a specific statement relating to the general norms in
terms of Do‟s and Don‟t‟s that guide the behaviour of people.
 Programme: Programme is a comprehensive plan that contains
thorough details about a project in terms of related objectives,
policies, procedures, rules and method and the budget to implement
any course of action.
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 Primary function of management: Planning

 Forward looking function/looking ahead: Planning
 An intellectual activity: Planning
 Assumptions about the future: Planning premises
 Plans formulated to deal with unique, new or non- repetitive
situations: Single use plans
 Plans used for a long period of time in similar or repetitive situations:
Standing plans
 End results of the activities: Objectives
 Comprehensive plan/a plan to achieve an objective: Strategy
 Guidelines for implementing a strategy: Policy
 Prescribed way to carry out a particular task: Method
 Series of steps to be performed in a chronological order: Procedure
 Numerical plan: Budget
 Simplest form of plans which specifies the action that must or must
not be taken: Rule
 Very detailed plans: Programme
Features of planning
 Planning focuses on achieving objectives- Planning involves

deciding upon the activities to be undertaken in advance based on the
objectives of the organisation.
 Planning is a primary function- Planning precedes all functions of
management, i.e. organising, staffing, directing & controlling.
 Planning is pervasive- Planning is required at all the levels of
management but its scope may vary.
 Planning is continuous- The plans needs to be made on a continuous
basis till an organization exists.
 Planning is futuristic- Planning seeks to meet future events
effectively to the best advantage of an organization. Planning is,
therefore, called a forward looking function.
 Planning involves decision-making- Planning involves rational
thinking to choose the best alternative among the various available
alternatives in order to achieve the desired goals efficiently and
effectively.
 Planning is a mental exercise- Planning is based on intellectual
thinking involving foresight, visualization and judgement rather than
guess work.
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Importance of Planning
 Planning provides directions- Plans act as a guide for deciding what

course of action should be taken to attain the organisational goals.
 Planning reduces the risk of uncertainty- Planning enables a
manager to anticipate and meet changes in the business environment
effectively.
 Planning reduces overlapping & wasteful activities- Plans serve as
the basis for co-ordinating the activities and efforts of different
divisions and individuals.
 Planning promotes innovation- Plans encourage new ideas that can
take shape of concrete plans.
 Planning facilitates decision making- Planning enables a manager
choose the best alternative course of action among the various
available alternatives in light of present and future conditions.
 Planning establishes standards for controlling- The standards set
in the planning process serve as the basis for controlling.
Steps involved in the planning process
 Setting objectives- Planning process begins with the laying down of

clear, specific and measurable objectives for the entire organization
and each department or unit within the organization.
 Developing Premises- Premises reflect the assumptions about the
future that the manager is required to make certain as the future is
uncertain.
 Identifying alternative course of actions- The different ways in
which the desired goals can be achieved are identified.
 Evaluating alternative courses- The relative pros and cons of each
alternative, in light of their feasibility and consequences, are analysed.
 Selecting an alternative- The most suitable alternative or a
combination of alternatives which appear to be most feasible are
selected.
 Implementing the plan- The selected plan is implemented with the
help of a strategy.
 Follow-up action- the plans are monitored to ensure that the desired
objectives are achieved efficiently and effectively.
Limitations of planning
 Planning leads to rigidity- Since the plans are drawn in advance and
managers may not be in a position to change it in the light of changed
conditions.
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 Planning may not work in a dynamic environment- Through

planning, everything cannot be foreseen and predicted with accuracy.
 Planning reduces creativity- The top management undertakes
planning of various activities, whereas the middle managers are
neither allowed to deviate from plans nor are they permitted to act on
their own.
 Planning involves huge costs-The cost involved, in terms of time and
money required to undertake scientific calculations sometimes may
not justify the benefits derived from it.
 Planning is a time consuming process- If too much time is lost in
planning, sometimes there is not much time left for implementation of
those plans.
 Planning does not guarantee success- It is not always essential that
if a plan has worked before it will work again as things may change.
This kind of complacency and false sense of security may actually lead
to failure instead of success of a business.
Types of plans - on the basis of useability
 Single use plans are the ones that are formulated to deal with new or
non- repetitive situations that may arise in an organisation from time
to time, like programmes, budgets and projects.
 Standing plans refer to the types of plans which once formulated may
be used for a long period of time in similar or repetitive situations that
may prevail in an organisation, like policy, procedure, rule and
method.
Types of plans - on the basis of duration
 Objectives- They are the end results of the activities that an

organisation seeks to achieve through its existence.
 Strategy- A strategy is a comprehensive plan for achieving the
 Policy- It is a set of general guidelines that help in managerial
decision making and action.
 Method- It refers to the prescribed ways or manner in which a task
has to be performed considering the objective.
 Procedure- it refers to a series of specific steps to be performed in a
chronological order to carry out the routine activities.
 Budget- It refers to a financial plan that is expressed in numerical
terms.
 Rule- It is a specific statement relating to the general norms in terms
of Do‟s and Don‟t‟s that guide the behaviour of people. It commands
strict obedience and a penalty is likely to be imposed on its violation.
 Programme- It is a comprehensive plan that contains detailed
statements about a project which outlines the objectives, policies,
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procedures, rules, method and the budget to implement any course of

action.
Differences between Standing Plans and Single Use Plans
Basis Standing Plans Single Use Plans

Standing Plans refer to the Single Use Plans are the ones
types of plans which are that are formulated to deal with
formulated for use in similar unique, new or non-repetitive
Meaning
or repetitive situations that situations that may arise in an
may prevail in an organisation from time to time.
organisation.
Standing Plans are made for Single Use Plans are made for a
Period a long duration of time. very short duration of time.
Standing Plans are mainly Single Use Plans are mainly
Level determined by the Top level determined by the Middle level
involved management of an and Lower level management of
organization. an organization.
Standing Plans seek to Single Use Plans seek to attain
Objectives attain the main goals of the specific goals like dealing
organization. with specific situations.
Differences between Objectives and Strategy
Basis Objectives Strategy

Objectives are the end A strategy is a
results of the activities that comprehensive plan prepared
Meaning an organisation seeks to for winning over the given
achieve through its challenge or problem.
existence.
Objectives are based on the A strategy is based on the
Source mission or philosophy of the objectives of the
organisation. organisation.
Level of Objectives are determined A strategy may be
persons by Top level management. determined by Top level or
involved Middle level management.
Objectives focus on desired Strategies strive to create an
future position the identity of a business in its
Purpose management of an environment.
organisation would like to
reach.
An online education portal A food and beverages
aims to increase its company plans to counter
Example
subscription by 20% in the competition through sales
new academic session. promotion techniques.
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Differences between Objectives and Policies
Basis Objectives Policies

Meaning Objectives are the end Policies are general
results of the activities that statements that guide
an organisation seeks to managerial decision making.
achieve through its
existence.
Source Objectives are based on the Policy is based on the
mission or philosophy of the objectives of the
organisation. organisation.
Level of Objectives are determined Policies are to be determined
persons by Top level management. by Top level or Middle level
involved management.
Purpose Objectives focus on desired Policies lay down the broad
future position the parameters within which the
management of an managers are expected to
organisation would like to function.
reach.
Nature Objectives should be stated Policies are expressed in the
in clear, specific and form of general statements.
measurable terms.
Example An online education portal Pricing policy, recruitment
aims to increase its policy etc.
subscription by 20% in the
new academic session.
Differences between Rules and Methods
Basis Rules Methods

Rules are specific statements Methods define the ways of
Meaning that tell people what should or doing routine or respective
should not be done. jobs.
Violation of rules may lead to Method does not involve any
Violation imposition of penalties. penalties on violation.
Rules help to maintain Methods help in carrying out
Purpose discipline. the job efficiently.
Rules are both specific and Methods are specific (well
Nature rigid. defined) but flexible.
Rules are formulated within Methods can be modified in the
the policy framework and can light of changes that take place
Scope
be changed only when there is in the business environment.
a change in the policy.
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Salary will be deducted in case Method of payment of fee for

an employee fails to submit an registration - cash, cheque,
Example application for leave within the RTGS, NEFT, credit card etc.
same month.
Differences between Procedures and Methods

Sr. no Basis Procedures Methods
It is a series of Methods define the ways
chronological steps which of doing routine or
01 Meaning
are performed to do a respective jobs.
particular activity.
Procedures are laid down Methods help in carrying
to facilitate out the job efficiently by
02 Purpose
implementation of a ensuring uniformity and
policy. consistency in operations.
Procedures do not offer Methods are specific (well
any scope for discretion defined) but flexible as
during implementation. they can be modified in
03 Flexibility
the light of changes that
take place in the business
environment.
Procedures determine the Methods specify as to how
04 Nature exact manner in which a a particular job is to be
task is to be performed. performed.
Procedure for admission Method of payment, of
to college, procedure to calculating depreciation,
05 Example
apply for loan etc. computation of interest
etc.
Differences between Policies and Rules
Basis Policies Rules

Policies are general Rules are specific statements
Meaning statements that guide that tell people what should or
managerial decision making. should not be done.
Violation of policies may not Violation of rules may lead to
Violation lead to imposition of penalties. imposition of penalties.
Policies serve as a guideline Rules help to maintain
Purpose for implementing a strategy. discipline and ensure smooth
functioning of an enterprise.
Policies exist in the form of Rules are both specific and
Nature general statements. rigid statements.
Policies provide scope for There is no scope for flexibility
Discretion managerial discretion in their or discretion in the application
implementation. of the rules.
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Promotion policy, purchase No smoking, No Parking etc.

Example policy etc.
Differences between Policies and Strategy
Basis Policies Strategy

Policies are general statements A strategy is a comprehensive
Meaning that guide managerial decision plan prepared for winning over
making. the given challenge or problem.
Policies serve as a guideline for A strategy is based on the
Rationale implementing a strategy. objectives of the organisation.
It is determined by Top level A strategy may be determined
Level management. by Top level or Middle level
management.
Policies proride scope for Strategies strive to create an
Scope managerial discretion in their identity of a business in its
implementation. environment.
Promotion policy, purchase Offering higher shopping
policy etc. experience to customers,
Example launching a new product,
introducing a new channel of
distribution etc.
Differences between Policies and Procedure
Basis Policies Procedure

Meaning Policies are general It is a series of chronological
statements that guide steps which are performed to
managerial decision making. do a particular activity.
Level of It is determined by Top level It is determined by Lower
management management. and Middle level
management.
Expression It is a general statement. It is a specific statement.
Manager’s It provides scope for There is no scope foi'
Discretion managerial discretion. managerial discretion.
Purpose Policies are framed to achieve Procedure is framed to
the objectives of an implement a policy.
organisation. They all guide
in implementing the strategy.
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1. Name the function of management which involves setting objectives and

developing appropriate courses of action to achieve these objectives.
(a) Directing
(b) Organising
(c) Planning
(d) Staffing
2. Which of the following statement is not true with reference to planning?

(a) Planning is a prerequisite for controlling
(b) Planning does not leads to rigidity
(c) Planning enables a manager to look ahead and anticipate changes.
(d) Planning facilitates coordination among departments and individuals
in the organisation
3. Saundraya Ltd., a shampoo manufacturing company wanted to increase

its market share from 20% to 45% in the long run. Keeping in view the
growing trend of herbal and organic products the company has decided
to diversify into new product line which will promote eco-friendly living
in the contemporary lifestyle. The company has decided to introduce a
variety of shampoos with natural ingredients having benefits and
fragrances of different flowers namely, Rose, Lavendear and Mogra.
Identify the function of management mentioned above.
(a) Planning
(b) Organising
(c) Staffing
(d) Directing
4. Plans encourages new ideas that can take shape of concrete plans.
Identify the related importance of planning.
(a) Planning provides direction
(b) Planning reduces the risk of uncertainty
(c) Planning promotes innovation
(d) Planning facilitates decision making
5. Which of the following is not a benefit of planning?

(a) Planning reduces overlapping and wasteful activities.
(b) Planning is a mental exercise.
(c) Planning provides directions.
(d) Planning reduces the risks of uncertainty.
6. Which of the following is a benefit of planning?

(a) Helps in avoiding confusion and misunderstanding.
(b) Ensures clarity in thought and action.
(c) Useless and redundant activities are minimised or eliminated.
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7. What is known as the primary function of management?

(a) Controlling
(b) Organising
(c) Planning
(d) Staffing
8. Identify the function of management which is concerned with setting of

objective and identifying the ways of achieve them.
(a) Planning
(b) Staffing
(c)Directing
(d)Organising
9. Planning provides the goals or standards against which actual

performance is measured. Identify the related point to the importance of
planning.
(a) Planning is a mental exercise
(b) Planning provides directions
(c) Planning establishes standards for controlling
(d) Planning reduces the risks of uncertainty
10. India has 22 of the world‟s 30 most polluted cities therefore the central
government has approved an outlay of Rs. 10,000 crore for three years
till 2022 to subsidize electric vehicles and drive the adoption of electric
mobility in the country. Identify the step in the planning process being
(a) Setting objectives
(b) Developing Premises
11. The supply chain for McDonald‟s is highly complex in India. It uses
around 9000 hamburger buns, 3500 kg of tomatoes, 2000 kg of iceberg
lettuce and more than 5000 slices of cheese on a daily basis. The whole
practice begins at the grassroots with produce being delivered directly to
suppliers by farmers. This produce is then processed and distributed to
distribution centers and the quality of supplies is maintained by using
customized multi- chamber temperature controlled trucks. These items
are stored in rooms with zones at different temperatures and then
dispatched to the restaurants depending on their requirements. This
well-defined method ensure coordination within various individuals and
departments. Identify the related point to the importance of planning
being described in the above lines, (a) Planning reduces overlapping
and wasteful activities
(b) Planning is a mental exercise
(c) Planning provides directions
(d) Planning reduces the risks of uncertainty
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12. Which of the following is not a feature of planning?

(a) Planning is futuristic
(b) Planning is pervasive
(c) Planning establishes standards for controlling
(d) Planning focuses on achieving objectives
13. All other managerial functions are performed within the framework of
the plans drawn. Identify the related feature of planning.
(a) Planning focuses on achieving objectives.
(b) Planning is pervasive.
(c) Planning is futuristic.
(d) Planning is primary function of management.
14. Planning requires logical and systematic thinking rather than guess
work or wishful thinking. Identify the related feature of planning.
(a) Planning is futuristic.
(b) Planning is a mental exercise.
(c) Planning establishes standards for controlling.
(d) Planning focuses on achieving objectives.
15. Planning cannot foresee everything, and thus, there may be obstacles to
effective planning. Identify the related limitation of planning.
(a) Planning leads to rigidity.
(b) Planning may not work in a dynamic environment.
(c) Planning does not guarantee success.
(d) Planning reduces creativity.
16. Ketan works as a production manager in a company dealing in

stationery products. Every year at the time of drawing annual
production plans he along with his team have to undertake intellectual
thinking involving foresight, visualization and judgement. This is
because plans cannot be made on guess work. Identify the related
feature of planning being described above.
(a) Planning is a primary function
(b) Planning is pervasive
(c) Planning invoice decision making
(d) Planning is a mental exercise
17. The plans are monitored to ensure that the desired objectives are
achieved efficiently and effectively. Identify the related step in the
planning process as described in the above line.
(a) Determining planning premises
(b) Follow up
(c) Evaluating all the alternatives
(d) Implementing a plan
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18. The process of planning involves include a number of expenses on

boardroom meetings, discussions with professional experts and
preliminary investigations to find out the viability of the plan. The above
lines mention a limitation of planning function of management. Identify
the related limitation.
(a) Planning leads to rigidity
(b) Planning may not work in a dynamic environment
(c) Planning reduces creativity
(d) Planning involves huge costs
19. It is not always true that just because a plan has worked before it will
work again. Identify the related limitation of planning.
(a) Planning leads to rigidity.
(b) Planning reduces creativity.
(c) Planning may not work in a dynamic environment.
(d) Planning does not guarantee success.
20. In the process of planning the manager is required to make certain

assumptions about the future related to income of people, policy of
government, inflation etc. Identify the step following the step as
described in the above lines?
(a) Evaluating alternative courses
(b) Identifying alternative course of actions
(c) Setting objectives
(d) Developing Premises
21. Ray Limited follows centralisation policy and the entire planning is done
by the top management. Gagan works as a middle level manager in the
company. He is neither allowed to deviate from plans nor permitted to
act on his own. Identify the related limitation of planning.
(b) Planning reduces creativity
(c) Planning may not work in a dynamic environment
(d) Planning does not guarantee success
22. Identify the correct sequence of steps involved in the planning process.
(a) Evaluating alternative courses, Identifying alternative course of
actions, Setting objectives, Developing premises
(b) Setting objectives, Identifying alternative course of actions,
Evaluating alternative courses, Developing premises
(c) Setting objectives, Developing premises, Identifying alternative
course of actions, Evaluating alternative courses
(d) Developing premises, Evaluating alternative courses, Identifying
alternative course of actions, Setting objectives
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the same:
Truegen Limited is a company dealing in wellness products. One of the
prime reason for its success lies in the abilities of its managers to formulate
objectives and strategies effectively. Their objectives are clearly stated and
the employees are aware of what the organisation has to do and what they
must do to achieve those goals. This facilitates coordination between
departments and individuals in the organisation. The General Manager Mr.
Rishabh emphasises that this function of management seeks to bridge the
gap between where we art and where we want to go. However, at the same
time he shares that there have been such instances during the life time of
the business when despite the best efforts of management the desired
results could not be achieved.
23. Identify the function of management being described in above lines.

(a) Organising
(b) Directing
(c) Planning
(d) Controlling
24. Identify the related point of importance of the concerned function being
(a) It reduces overlapping and wasteful activities
(b) It is a mental exercise
(c) It provides directions
(d) It reduces the risks of uncertainty
25. Identify the related feature of the concerned function being described in
the above lines.
(a) It is futuristic
(b) It is pervasive
(c) It establishes standards for controlling
26. Identify the related limitation of the concerned function being described
in the above lines.
(a) It leads to rigidity
(b) It may not work in a dynamic environment
(c) It does not guarantee success
(d) It reduces creativity
the same:
Indian Railways has one of the world‟s largest rail networks and it is the
single largest consumer of electricity in the country. It has an ambitious
target through based on logical thinking based on forecasts to source 25% of
its energy requirements from renewable energy sources by the year 2025.
Electricity accounts for 20% of Railway‟s operational costs and it is
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estimated that ? 41,000 crore would be saved in ten years by increasing the
use of renewable energy sources.
27. Identify the function of management being described in the above

paragraph.
(a) Planning
(b) Organising
(c) Directing
(d) Controlling
28. Identify the step in related process that has already been carried by
Indian Railways.
(b) Implement the plan
(c) Follow up action
29. Identify the related feature of the function of management as identified

in question no. 27 being described in the given paragraph.
(a) Futuristic
(c) Focuses on achieving objectives
(b) Mental exercise
30. Identify the step in the related process that is yet to be carried by Indian
Railways.
(b) Identifying alternative course of actions
(c) Evaluating alternative courses v
(d) Implement the plan
31. As a financial manager of a pharmaceutical company, Anansh has

prepared a statement of expenses, revenue and income for the next
financial year. Identify the type of one of the functions of management
mentioned above.
(a) Policy
(b) Procedure
(c) Budget
(d) Programme
32. After completing a course in jewellery designing Kashish has recently

opened a jewellery showroom in Gurgaon under the name „Glamo‟. She
intends to increase her clientele by 25% during the forthcoming festival
season by pushing the sales of handmade jewellery both in traditional as
well as modern designs and thereby carving a niche for the business.
(a) Method and objective
(b) Strategy and Rule
(c) Objective and strategy
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(d) Strategy and Programme
33. Solar Ltd. is dealing in renewable energy. To get the business, the team
leader and his team have to travel to different states to give presentation
to their clients. The leader travel by air, whereas his team travel by
road/train. Identify the type of plan being followed by the company.
(a) Rule
(b) Policy
(c) Method
(d) Budget
34. Muskaan owns a reputed event company under the name „Eventura Pvt.
Ltd.‟ The company has a workforce of about 1000 people working in 10
different offices located in various cities across India. She follows certain
prescribed ways for imparting training to employees at various level from
top management to supervisory in her organization. Identify the type of
plan mentioned in the above paragraph.
(a) Rule
(b) Objectives
(c) Method
(d) Procedure
35. Devna works a event coordinator in a publishing house. She is known

for her work as she prepares plan for each event in a unique manner.
Standing plan is being described in the above case. Identify the types of
plan:
(a) Single use plan
(b) Standing plan
36. These types of plans which are formulated for use in similar or repetitive
situations that may prevail in an organisation.
(a) Method
(b) Budget
(c) Programme
37. It is the simplest form of plans which specifies the action that must or
must not be taken.
(a) Method
(b) Programme
(c) Rule
(d) Strategy
38. Ketan‟s Grandmother made very good boondi laddos. So he decided to

start the business of preparation and supplying sweets through home
delivery at a production cum show-room „Desi Sweets‟ at Meerut under
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her guidance. He made a plan forecasting the sales of different types of

sweets in various localities of Meerut for each month of every year to
earn a profit of 25% on capital employed. He set a sales target of ₹
15,00,000 in the current year with a 8% increase every year. Identify the
type of plan by quoting the lines from the above.
(a) Rule
(b) Method
(c) Budget
(d) Programme
39. Every business has to assess and design its need for cash with a degree
of caution. Name the type of plan which is a fundamental financial
planning instrument in many organisations.
(a) Budget
(b) Policy
(c) Procedure
(d) Strategy
40. A food and beverages company plans to counter competition through

sales promotion techniques. Identify the type being described in the
above lines
(a) Policy
(b) Objective
(c) Method
(d) Strategy
41. Policy is a type of single use plans.

(a) True
(b) False
(c) Partly True
(d) Partly false
42. Wipro has introduced Elite National Level Talent Hunt 2019 (NLTH) a
freshers‟ hiring initiative to attract the best of 2019 engineering talent
across the country. The aim of this initiative is to enable an equal
opportunity for employment to the most deserving talent across all
engineering streams in India. Upon selection in the Online Assessment,
candidates will be required to go through Technical Interview followed by
HR interview.
Identify the type of plan not being described above:
(a) Procedure
(b) Budget
(c) Rule
43. It represents the end point of planning.

(a) Rule
(b) Method
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(c) Objective
(d) Policy
44. Achiever‟s Public School is a reputed school in Panchkula, Haryana is

hosting an Inter-School Literacy Painting Competition. The co-curricular
incharge of the school will determine the exact manner in which the
related activities will be carried out. The participating schools may
confirm their participation in the event either through mail, courier or e-
mail. No registration for participation will be done on the day of the
competition under any condition.
Identify the type of plan not being discussed.
(a) Procudure
(b) Rule (c) Method
(d) Strategy
45. With the growth in religious and spiritual tourism in India, Hyatt Hotels
and Resorts has launched Hyatt Palace Rameswaram, its first vegetarian
hotel, close to Rameswaram temple and other holy spots to increase its
business. Name the type of plan of being followed by the company.
(a) Objective
(b) Strategy
(c) Policy
(d) Programme
46. „Fun Games Limited‟ is planning to launch five new Play Station games
in the next 3 months. Identify the type of plan made by the company.
(a) Policy
(b) Objective
(c) Strategy
(d) Method
47. „Indhan Limited‟ is one of the largest state-owned natural gas processing
and distribution company in India. It is headquartered in Pune. It has
plans to strengthen its exploration and production activities by
acquiring an exploration & production (E&P) company. Name the type of
plan being pursued by the company.
(a) Policy
(b) Strategy
(c) Programmes
(d) Procedure
48. Considering the fact that Indian economy operates hugely on cash the
government is focussing on digitisation in order to curb the component
of black money. Identify the type of one of the functions of management
described above.
(a) Policy
(b) Strategy
(c) Rule
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(d) Method
49. Mr. Rajbir works as a English teacher in a school for primary classes. He
ensures that the learners skills and knowledge are assessed at regular
intervals. He uses various evaluation techniques for this like reading
test, speaking test, listening test, self-diaries and self-recording of
specific incidents. Identify the type of plan being described in the above
lines.
(a) Policy
(b) Procedure
(c) Rule
(d) Method
50. Which of the following is not a single use plan?
(a) Policy
(b) Budget
(c) Program
(d) Project
51. Kaun Banega Crorepati is an Indian television game show originally

aired on Star Plus, commissioned by the programming team of Sameer
Nair. However, since the year 2010, it has been produced by Big
Synergy. It is based on the United Kingdom game show „Who Wants to
Be a Millionaire?‟ All contestants must be over the age of 18 years and
citizens of India in order to be eligible for participating in the show. The
person must not be a former Kaun Banega Crorepati contestant and, as
defined in the Income Tax Act, 1961, must also be a resident of India.
Furthermore, they may not be employees of the production company,
broadcaster, or prize providers. Identify the type of plan being described.
(a) Rule
(b) Method
(c) Strategy
(d) Objective
52. A strategy is a comprehensive plan which will not include this dimension
(a) Determining long term objectives
(b) Adopting a particular course of action
(c) The ends which the management seeks to achieve by its operations
(d) Allocating resources necessary to achieve the objective
53. They provide a basis for interpreting strategy, which is usually stated in
general terms.
(a) Policies
(b) Procedures
(c) Objectives
(d) Programmes
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54. They detail the exact manner in which any work is to be performed.
(a) Rules
(b) Methods
(c) Procedures
(d) Programmes
55. It helps to save time, money and effort, and increases efficiency.
(a) Procedure
(b) Programme
(c) Rule
(d) Method
56. It is a plan which quantifies future facts and figures.

(a) Procedure
(b) Programme
(c) Rule
(d) Budget
57. Which of the following is not a standing plan?

(a) Policy
(b) Procedure
(c) Programme
(d) Rule
58. Which of the following is not a single use plan?

(a) Budget
(b) Programme
(c) Method
59. Micromax was India‟s largest seller of mobile handsets. It launched low-
cost Chinese manufacturing with some smart packaging and features
like long-lasting batteries and dual-sim functionality to garner 20%
market share in India‟s value-conscious mobile handset market. Identify
the two types of plans being described in the above lines.
(a) Strategy and objective
(b) Rule and Programme
(c) Programme and objective
(d) Method and objective
60. According to a survey, these days the young children have more power
in purchasing decisions than ever before. The parents seek their kids‟
opinions about all kinds of once-adult decisions, including where to go
for dinner, what kind of car to buy, even what to wear,”. Therefore, the
retailers are adapting to this by enhancing their kids‟ sections. If the
children want to shop in the store for their clothes, then there‟s a greater
chance the parent will also see something they want to buy as well.
Identify the type of plan being described in the above lines.
96 | P a g e
(a) Programme
(b) Method
(c) Strategy
(d) Rule
61. According to a survey of 250 consumer packaged goods (CPG)

companies by a reputed firm, 75% of brand owners say they‟re going to
spend significantly more on packaging as it is critical to their brand‟s
success.
(a) Rule
(b) Programme
(c) Strategy
(d) Method
62. According to the World Health Organization, 39% of adults are

overweight. Consequently in the U.K., a sugar tax was introduced in
2018 on beverages containing more than 5% sugar to curb sugar intake.
(a) Programme
(b) Method
(c) Strategy
(d) Rule
63. According to the Economic Survey, insights from behavioural economics

can be strategically utilised to create an aspirational agenda for social
change - from BBBP (Beti Bachao Beti Padhao) to BADLAVL (Beti Aapki
Dhan Lakshmi Aur Vijay Lakshmi); from Swachh Bharat to Sundar
Bharat; from „Give It Up‟ for the LPG subsidy to „Think about the
Subsidy‟ and from tax evasion to tax compliance. Identify the type of
plan being described in the above lines.
(a) Programme
(b) Method
(c) Strategy
(d) Rule
64. Shubham wants to increase the sale of his business by 15% in the next
quarter. Identify the type of plan being described in the above lines.
(a) Method
(b) Objective
(c) Strategy
(d) Programme
65. Packaging is said to have the unique capacity to make products stand
out in a crowded marketplace. Therefore, convenience of the consumer
is at the top of mind of the marketers as they are focussing on
developing packaging that‟s easier to open, to protect against breakage,
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maintain freshness during delivery and keep a consistent look and feel
across multiple channels.
(a) Programme
(b) Method
(c) Strategy
(d) Rule
66. Based on National Common Mobility Card standards, India‟s first

indigenously developed inter-operable transport card was launched in
March 2019 to make travel across various modes convenient.
(a) Strategy
(b) Programme
(c) Method
(d) Rule
67. India is world‟s third largest domestic aviation market. The government
plans to make India a hub for financing aircraft purchases and leasing
of planes. In order to promote this, the government has announced tax
incentives, like tax deductions, for companies setting up business in
IFSC for fifteen years.
(a) Method
(b) Strategy
(c) Programme
(d) Rule
68. The government has been doubling down on its efforts to switch to 100%
electric vehicles by 2030. Many companies such as Tata Motors, Kinetic
Motors, Maruti Suzuki and Hyundai Motors are all readying their EV
models for a 2020 launch in order to support the plan. Identify the type
of plan being described in the above lines.
(a) Method
(b) Rule
(c) Programme
(d) Objective
69. In order to encourage technologies like artificial intelligence (AI), the

internet of things (IOT) and virtual reality (VR), the government is
planning to launch a scheme to invite foreign companies through a
transparent bidding process, to set up plants for manufacturing semi-
conductors, solar photo voltaic cells, lithium cell batteries, solar electric
charging vehicles, computer servers, and laptops in India.
(a) Method
(b) Strategy
(c) Programme
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(d) Objective
70. Ketan Enterprises adopts different ways to provide training to

employees, like Job Rotation, Coaching, Vestibule Training, Conference,
Lecture Method and Role Playing. Identify the type of plan being
(a) Method
(b) Strategy
(c) Programme
(d) Procedure
71. Swatch Ltd. plans to earn a 20% return onits investment in a new
project. Identify the type of plan being described in the above lines.
(a) Method
(b) Strategy
(c) Programme
(d) Objective
72. Deepak is striving to earn a profit of 30% in the current financial

year. Identify the type of plan being described in the above lines.
(a) Method
(b) Objective
(c) Strategy
(d) Programme
73. Name the type of budget which is prepared to determine the net cash
position.
(a) Purchase budget
(b) Sales budget
(c) Cash budget
(d) Production budget
74. In 2019 alone, Swiggy has launched operations in 300 towns and cities.
Swiggy follows a two-step sequence while expanding to a small town.
First, it provides more laborious training to restaurants and delivery
partners compared to their counterparts in the city. Second, it focuses
on building scale in operations and increase the restaurant‟s reach to a
larger base of consumers, including optimizing kitchens, resource
planning among others.
(a) Method
(b) Strategy
(c) Programme
(d) Procedure
75. India has 22 of the world‟s 30 most polluted cities, therefore the central
government has approved an outlay of ₹ 10,000 crore for three years till
2022 to subsidise electric vehicles and drive the adoption of electric
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mobility in the country. Identify the type of plan being described in the
above lines.
(a) Procedure
(b) Policy
(c) Strategy
(d) Rule
76. The supply chain of McDonald‟s is highly complex in India. It uses

around 9000 hamburger buns, 3500 kg of tomatoes, 2000 kg of iceberg
lettuce and more than 5000 slices of cheese on a daily basis. The whole
practice begins at the grassroots with produce being delivered directly to
suppliers by farmers. This produce is then processed and distributed to
distribution centers and the quality of supplies is maintained by using
customized multi-chamber temperature controlled trucks. These items
are stored in rooms with zones at different temperatures and then
dispatched to the restaurants depending on their requirements. Identify
any one type of plan being described in the above lines.
(a) Rule
(b) Procedure
(c) Programme
77. Varun has recently joined as a Purchase Officer in Kings Limited. He has
been advised to place order for the raw materials from one supplier only
as the company does not prefer to deal with multiple suppliers at the
same time. Identify the type of plan being described in the above lines.
(a) Objective
(b) Strategy
(c) Policy
(d) Method
78. Dhruv Verma works as Soft Skills Trainer. He ensures that the learners‟
skills and knowledge are assessed before the training program. He uses
various evaluation techniques for this phase, like observation,
questionnaire, interview, self-diaries and self-recording of specific
incidents. Identify the type of plan being described in the above lines.
(a) Programme
(b) Policy
(c) Method
(d) Strategy
79. As per CBSE, the regular students who gave Board Exams through their
CBSE- affiliated educational institutes in March, and their result was
declared as COMPARTMENT, need to apply for the exam. A candidate
who fails in his compartment exam and does not appear for the same
will be treated to be „FAIL‟ in this exam. Identify the type of plan being
(a) Method
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(b) Rule
(c) Objective
(d) Policy
80. „Jay Limited‟ has prepared detailed statements about a new project
related to work place safety measures that the company is planning to
pursue. The statements highlight the objectives, policies, procedures,
rules, responsibilities, human and physical resources required and the
budget to implement it. Identify the type of plan being described in the
above lines.
(a) Rule
(b) Programme
(c) Procedure
(d) Method
81. Lucky Shoe Company expects to sell 10,000 pairs of shoes to be in

beginning inventory, and produce 4,000 pairs in the month of May. If
the production cost is ₹ 500 per pair, the company spends ₹20,00,000,
or ₹500 x 4,000, on the cost of sales, which is the manufacturing cost.
The company also expects to pay ₹80,000 in costs not directly related to
production, such as insurance. Identify the type of plan being described
in the above lines.
(a) Policy
(b) Budget
(c) Rule
82. Tarun Gupta works as a Corporate Trainer. In order to establish rapport

with participants, he uses different ways like greeting, encouraging
informal conversation, remembering their first name, pairing up the
learners and have them familiarized with one another, varying his
instructional techniques. Identify the type of plan being described in the
above lines.
(a) Rule
(b) Strategy
(c) Program
(d) Method
83. Yajur Limited implemented a comprehensive plan to ensure total quality

management for a customer-focused organization that involves all
employees in continual improvement. The minutest details are worked
out i.e., procedures, rules and budgets within the broad policy
framework, to integrate the quality discipline into the culture and
activities of the organization. Identify the type of plan being described in
the above lines.
(a) Objective
(b) Budget
(c) Programme
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(d) Rule
84. Seema runs a catering business. Everytime she gets an order for
catering, she prepares a plan depicting the number of workers required
to deliver the order. Identify the type of plan being described in the
above lines.
(a) Objective
(b) Budget
(c) Programme
(d) Rule
85. Keeping in view health-conscious consumers, McDonald‟s has launched

„Rice Fiesta‟, which combines ingredients like Basmati rice, Indian spices
and vegetables with international flavours. Currently the product is
available only in 16 McDonald‟s outlets in Chennai. Identify the type of
plan being described in the above lines.
(a) Objective
(b) Strategy
(c) Policy
(d) Rule
Fill in the blanks.

1 Planning is a prerequisite for …………….
2 ………………… is known as the primary function of management.
3 Rahul, owns a financial consultancy firm. He always explores new
innovative ways of marketing his services as he strongly believes that
just because a plan has worked before it is not necessary that it will
work again. The limitation of planning that Rahul tries to overcome is
………................
4 Planning is a ………………… activity, as it contributes towards the
realisation of predetermined organisational goals.
5 Planning is considered to be a forward looking function, as it is based on
future ……………….. events.
6 As the head of a financial consultancy firm, Gaurav formulates the
objectives for the whole year for the firm. The departmental managers on
the other hand prepare the plans for their respective departments. The
feature of planning being described in the above lines is
……………………….
7 Ajay selected the brand name for his new product line after carefully
assessing the various available alternatives. The feature of planning
being highlighted in the above lines is …………………
8 While determining the marketing plans for his business, Anurag does
not rely on guess work but uses his foresight, visualisation and
judgement. The feature of planning being emphasised upon in the above
lines is ……………………
9 Sridhar has decided to increase the production turnover of his business
by 20% in the current year. The step of planning being described in
above lines is…………………
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10 Garima is planning to start an online coaching centre. She wants to

introduce innovative teaching techniques especially for slow learners.
Therefore, she is constantly interacting with parents and encouraging
them to share their ideas. This will make her aware of more alternatives.
The step of planning being described in above lines is …………………
11 …………………. are the ones that are formulated to deal with unique,
new or non- repetitive situations.
12 …………………… refers to the types of plans which once formulated may
be used for a long period of time in similar or repetitive situations.
13 …………………… are the end results of the activities that an organisation
seeks to achieve through its existence.
14 ……………………. is a comprehensive plan which is based on the
15 ……………………. is defined as a set of general guidelines that help in
managerial decision making and action,
16 ………………….refers to the prescribed ways or manner in which a task
has to be carried out in order to realise the predetermined objective.
17 …………………… relates to one step of a procedure and details the steps
to be executed for carrying out the concerned task.
18 ……………………. refers to a series of specific steps to be performed in a
chronological order to carry out the routine activities.
19 ……………………… refers to a plan which is expressed in numerical
terms.
20 …………………..involve penalties on violation.
21 ……………………serves as a guideline for implementing a strategy.

1. Planning does not help in establishing coordination within an
organisation as it is merely a thinking function.
2. Planning is essentially a logical activity of thinking rather than doing.
3. Planning is an exclusive function and is performed only by the top
management within an organisation.
4. The middle level management is responsible for the day-to-day
operational planning.
5. Planning does not help in reducing the risks of uncertainty, as the
future is unknown.
6. It is believed that planning reduces creativity.
7. Managers may solely depend upon the formerly tried and tested
successful plans for meeting new situations.
8. Planning is a useless exercise, as it does not guarantee success.

1.
Column A Column B
(i) Anticipate changes (a) Planning
(ii) Planning decides in advance how (b) Reduces the risk of uncertainty
work is to be done
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(iii) Establishes standards for (c) Promotes innovation

controlling
(iv) Planning encourages new ideas (d) Provides directions
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)
2.
Column A Column B
(i) Planning involves looking ahead (a) Planning is pervasive
(ii) Managers are inclined to follow the old (b) Planning does not
plans even in changed situations guarantee success
(iii) Inspite of the best efforts of the (c) Planning is futuristic
managers, sometimes planning does not
lead to realisation of desired goals
(iv) Planning is not an exclusive function of (d) Planning leads to rigidity
top management
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(c); (iii)-(d); (iv)-(a)
(c) (i)-(c); (ii)-(d); (iii)-(b); (iv)-(a)
(d) (i)-(c); (ii)-(a); (iii)-(b); (iv)-(d)
3.
Column A Column B
(i) Specify what an organisation aspires to (a) Developing premises
achieve
(ii) Planning precedes other functions (b) Mental exercise
(iii) Planning is an intellectual activity (c) Goals
(iv) Assumptions about the future (d) Primacy of planning
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(c); (iii)-(d); (iv)-(a)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(c); (ii)-(d); (iii)-(b); (iv)-(a)
4.
Column A Column B
(i) Useless and redundant activities are (a) Planning establishes
minimised or eliminated standards for controlling
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(ii) Goals act as a guide for deciding the (b) Reduces overlapping and
course of desired action wasteful activities
(iii) The predetermined goals serve as basis (c) Planning promotes
against which actual performance is innovation
measured.
(iv) New ideas are generated through creative (d) Planning provides
thinking directions
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)
5.
Column A Column B
(i) Planning involves deciding the future course (a) Planning is pervasive
of action
(ii) Managers are likely to persue the previous (b) Planning does not
plans even in changed situations guarantee success
(iii) Sometimes even the best efforts of the (c) Planning is futuristic
managers may not lead to realization of
desired goals
(iv) Planning function is not only limited to top (d) Planning leads to
level management rigidity
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(c); (iii)-(d); (iv)-(a)
(c) (i)-(c); (ii)-(d); (iii)-(b); (iv)-(a)
(d) (i)-(c); (ii)-(a); (iii)-(b); (iv)-(d)
6.
Column A Column B
(i) It indicates the purpose of existence of an (a) Developing premises
enterprise
(ii) Planning lays the foundation for all other (b) Mental exercise
functions
(iii) Planning is involves rational thinking (c) Goals
(iv) Assumptions made about the future (d) Primacy of planning
during olanning
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(c); (iii)-(d); (iv)-(a)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(c); (ii)-(d); (iii)-(b); (iv)-(a)
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7.
Column A Column B
(i) Plans formulated to deal with unique, new or (a) Objectives
non- repetitive situations
(ii) Plans used for a long period of time in similar (b) Strategy
or repetitive situations
(iii) End results of the activities (c) Standing plans
(iv) Comprehensive plan (d) Single use plans
(a) (i)-(a); (ii)-(c); (iii)-(b);. (iv)-(d)

(b) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
(c) (i)-(d); (ii)-(b); (iii)-(c); (iv)-(a)
(d) (i)-(c); (ii)-(a); (iii)-(d); (iv)-(b)
8.
Column A Column B
(i) Guideline for implementing a strategy (a) Procedure
(ii) Prescribed way to carry out a particular task (b) Policy
(iii) Series of steps to be performed in a (c) Budget
chronological order
(iv) Numerical plan (d) Method
(a) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)

(b) (i)-(b); (ii)-(c); (iii)-(a); (iv)-(d)
(c) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(d) (i)-(c); (ii)-(a); (iii)-(d); (iv)-(b)
9.
Column A Column B
(i) Violation may lead to imposition of penalties (a) Policy
(ii) It defines the way of doing a respective job. (b) Procedure
(iii) It is a general statement. (c) Rule
(iv) It is framed to implement a policy. (d) Method
(a) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)

(b) (i)-(e); (ii)-(b); (iii)-(a); (iv)-(d)
(c) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(d) (i)-(c); (ii)-(a); (iii)-(d); (iv)-(b)
106 | P a g e
1. Assertion (A): Planning is closely connected with creativity and
innovation.
Reason (R): Planning facilitates critical thinking and infusion of new
ideas.
explanation of (A)
explanation of (A)
2. Assertion (A): Planning provides a rational approach for achieving

predetermined objectives.
Reason (R): Planning helps the manager to look into the past and make
a choice from amongst various alternative courses of action.
explanation of (A)
explanation of (A)
(d) Both statements (A)., and (R) are incorrect
3. Assertion (A): Planning provides direction for action.

Reason (R): In the absence of planning, employees would be working in
different directions and the organisation would not be able to
achieve its desired goals.
explanation of (A)
explanation of (A)
4. Assertion (A): Controlling is a prerequisite for planning.

Reason (R): Controlling involves measuring the standards against the
actual performance.
explanation of (A)
explanation of (A)
5. Assertion (A): Planning precedes other functions.

Reason (R): All other managerial functions are performed within the
framework of the plans drawn.
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explanation of (A)
explanation of (A)
6. Assertion (A): Planning is an exclusive function of top management.

Reason (R): The scope of planning is same at all levels of management.
explanation of (A)
explanation of (A)
7. Assertion (A): Planning is regarded as a forward looking function.

Reason (R): Planning essentially involves looking ahead and preparing
for the future.
explanation of (A)
explanation of (A)
8. Assertion (A): Planning is based on wishful thinking.
Reason (R): Planning is basically an intellectual activity of doing rather
than thinking.
explanation of (A)
explanation of (A)
9. Assertion (A): Planning does not guarantee success.

Reason (R): It is always true that just because a plan has worked before
it will work again.
explanation of (A)
explanation of (A)
(d) Both statement (A) and (R) are incorrect
10. Assertion (A): Standing plans have a short term horizon.

Reason (R): Standing plans help to achieve operational goals.
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explanation of (A)
explanation of (A)
(c) Statements (A) is correct but statement (R) is incorrect
11. Assertion (A): A single-use plan is developed for a one-time event.

Reason (R): They are determined in context of the non-recurring
situations that may occur within an organisation.
explanation of (A)
explanation of (A)
(d) Both, statements (A) and (R) are incorrect
12. Assertion (A): Standing plan is formulated to ensure that the internal
operations of an organisation are carried out smoothly.
Reason (R): Standing plan is determined in context of the non-recurring
situation that may occur within an organisation.
explanation of (A)
explanation of (A)
13. Statement I: Objectives represent the end point of planning

Statement II: Objectives serve as a guide for overall business planning.
(a) Both the Statement I and Statement II are true
(b) Both the Statement I and Statement II are false
(c) Statement I is true but Statement II is false
(d) Statement I is false but Statement II is true
14. Statement I: Procedures are specified steps to be followed in particular

circumstances. Statement II: Budget deals with a task comprising one
step of a procedure and specifies how this step is to be performed.
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Answer Key

1 C 14 B 27 A 40 D 53 A 66 A 79 B
2 B 15 B 28 A 41 B 54 C 67 B 80 B
3 A 16 D 29 D 42 A 55 D 68 D 81 B
4 C 17 B 30 D 43 C 56 D 69 B 82 D
5 B 18 D 31 C 44 D 57 C 70 A 83 C
6 D 19 D 32 C 45 B 58 C 71 D 84 B
7 C 20 D 33 B 46 B 59 A 72 B 85 B
8 A 21 B 34 C 47 B 60 C 73 C
9 C 22 C 35 A 48 B 61 C 74 B
10 C 23 C 36 A 49 D 62 C 75 C
11 C 24 C 37 C 50 A 63 A 76 B
12 C 25 A 38 C 51 A 64 B 77 C
13 D 26 C 39 A 52 C 65 C 78 C
Fill in the blanks

Q Ans Q Ans
1 Controlling 11 Single use plans
2 Planning 12 Standing plans
3 Planning does not guarantee 13 Objectives
success
4 Purposeful/Goal Oriented 14 Strategy
5 Forecasting/anticipating 15 Policy
6 Planning is pervasive 16 Method

7 Planning involves decision-making 17 Method
8 Planning is a mental exercise 18 Procedure
9 Setting objectives 19 Budget
10 Identifying alternative courses of 20 Rules
action
True or false Match the following Assertion-Reason Questions
Q Ans Q Ans Q Ans
1 False 1 B 1 A
2 True 2 C 2 C
3 False 3 D 3 A
4 False 4 B 4 D
5 False 5 C 5 A
6 True 6 D 6 D
7 False 7 B 7 A
8 False 8 C 8 D
9 A 9 C
10 D
11 A
12 C
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13 A
14 C
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Chapter: 05
Organising
• Explain the concept and importance of organising;

• Describe the steps involved in the process of organising;
• Identify and explain the features, merits and limitations of functional and
divisional organisational structure;
• Distinguish between functional and divisional structure;
• State the meaning, features, merits and limitations of formal and
informal organisation;
• Differentiate between formal and informal organisation;
• Explain the concept, importance and elements of delegation;
• State the concept of centralisation and decentralisation;
• Explain the importance of centralisation, delegation and decentralisation;
and
• Distinguish between delegation and decentralisation.
 Organising: Organising is the process of defining and grouping the

activities of the enterprise and establishing authority relationships
among them for the realisation of the desired goals.
 Hierarchy: Hierarchy is the ranking of job positions on the basis of
relative roles and responsibilities.
 Organisational structure: The organisational structure can be
defined as the framework within which managerial and operating
tasks are performed.
 Span of management: Span of management refers to the number of
subordinates that can be effectively managed by a superior. This
determines the levels of management in the structure.
 Delegation of authority: Delegation of authority merely means the
granting of authority to subordinates to operate within prescribed
limits.
 Decentralisation: Decentralisation refers to systematic dispersal of
authority to the lowest level except that which can be exercised at
central points.
 Ranking of job positions: Hierarchy

 Framework within which managerial and operating tasks are
performed: Organisational structure
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 Number of subordinates that can be effectively managed by a

superior: Span of management
 Sharing of work and responsibility with subordinates: Delegation of
authority
 Concentration of decision making at top level: Centralisation
 Systematic dispersal of authority to the lowest level: Decentralisation
 Occupational specialisation: Functional organisational structure
 Organisation created to achieve goals of the enterprise: Formal
organisation
 Network of social relationships: Informal organisation
 One Product Company: Functional organisational structure
 Multiple product company: Divisional organisational structure
 Spreading of rumours: Informal organisation
Steps involved in the process of organising
 Identification and division of work- It is done in accordance with

predetermined plans to avoid duplication of activities and ensure that
the burden of work is being shared among the employees.
 Departmentalisation- It involves grouping of similar activities into
departments, units, sections etc. using several criteria as a basis to
facilitate specialisation.
 Assignment of duties- It is done to the members as per their job
positions. Once departments have been created, each of them is
placed under the charge of an individual.
 Establishing reporting relationships-While assigning jobs, each
member is told that from whom he/she has to take orders and to
whom he/she will be accountable. The establishment of such clear
reporting relationships helps to create a well-defined hierarchical
structure.
Importance of organising
 Offers benefits of specialisation- It leads to a systematic allocation

of jobs amongst the work force as the specific employees are assigned
specific jobs on a regular basis.
 Clarity in working relationships- By establishing a hierarchical
order, organising enables the fixation of responsibility and
specification of the extent of authority to be exercised by an
individual.
 Optimum utilisation of resources- Through proper allocation of jobs,
and minimising the wastage of resources and efforts, organising leads
to optimum utilisation of resources.
 Adaptation to change- It helps to create a stable organisation by
incorporating changes in the organisational structure as per the needs
of the changing environment.
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 Effective administration- By providing a clear description of jobs

and related duties, organising helps to avoid confusion and
duplication.
 Development of personnel- Delegation helps to build the ability of
the subordinate to deal effectively with challenges and helps them to
realise their full potential.
 Expansion and growth- Organising enables an organisation to
deviate from existing norms and take up new challenges.
Types of organisational structure
 Functional Structure
 Divisional Structure
Features of functional structure
 A functional structure is an organisational design that groups similar

or related jobs together on the basis of functions like production,
finance etc.
 Each department has a functional manager who is responsible for
performance and who has authority over the department.
 All departments are under the charge of a co-ordinating head.
 These departments may be further divided into sections.
Advantages of functional structure
 A functional structure lays emphasis on specific functions and ensures that

different functions get due attention.
 Due to the similarity in the tasks being performed, it promotes control and
co-ordination within a department.
 It results in increased profit with the improvement in managerial and
operational efficiency.
 By focusing only on a limited range of skills, it facilitates the training of
employees.
Disadvantages of functional structure

 It gives less emphasis on overall enterprise objectives than the
objectives pursued by a functional head.
 It may lead to problems in co-ordination.
 It may lead to conflict of interests if two or more departments are not
compatible.
 It may lead to inflexibility as the functional heads do not get training
and experience in diverse areas.
Features of divisional structure
 A divisional structure is an organisational design that groups similar

or related jobs together on the basis of functions of different products
manufactured in the organisation. Structure comprises of separate
business units or divisions.
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 Each department has a divisional manager responsible for the profit

or loss of his division.
 Each division is multifunctional because within each division,
functions like production, marketing, finance, purchase etc., are
performed together to achieve a common goal.
Advantages of divisional structure
 Product specialisation helps a divisional manager to gain experience

in all functions related to a particular product and this prepares him
for higher positions.
 It provides a proper basis for performance measurement and also
helps in fixation of responsibility in cases of poor performance of the
division, as revenues and costs related to different departments can be
easily identified.
 It leads to faster decision making, promotes flexibility and initiative
because each division functions as an autonomous unit.
 It facilitates expansion and growth as new divisions can be added just
by adding another divisional head and staff for the new product line
without interrupting the existing operations.
Disadvantages of divisional structure
 There may be conflicts among the different divisional heads, as in

pursuit of higher profits, each of them may seek maximum allocation
at the cost of other divisions.
 The cost is high as each division is provided with separate set of
similar functions.
 The managers are provided with the authority to supervise all
activities related to a particular division. In course of time, such a
manager may gain power and in a bid to assert his independence, may
ignore organisational interests.
Types of organisation
 Formal Organisation
 Informal Organisation
Features of formal organisation
 It specifies the reporting relationships among various job positions.

 It is a means to achieve the organisational objectives.
 It seeks to co-ordinate the efforts of various departments.
 It is deliberately created by the top management to facilitate the
smooth functioning of the organisation.
 It places more emphasis on work to be performed rather than
interpersonal relationships among the employees.
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Advantages of formal organisation
 It is easier to fix responsibility since reporting relationships are clearly

specified.
 The role and duties of each employee are clearly defined.
 A unity of command is maintained through an established chain of
command.
 It leads to effective accomplishment of goals by providing a framework
for the efficient operations
 It provides stability to the organisation as the behaviour of the
employees is guided by rules and regulations of the organisation.
Limitations of formal organisation
 It may lead to procedural delays as all communication has to take

place through scalar chain only.
 It restricts the creativity and recognition of employees as it does not
allow any deviations from rigidly laid down policies.
 It does not provide a complete picture of how an organisation works as
it is difficult to understand all human relationships in a formal
structure.
Advantages of informal organisation

 It leads to faster spread of information as well as facilitates quick
feedback.
 It helps to fulfill the social needs of the members by giving them a
sense of belongingness in the organisation and enhances their job
satisfaction.
 It contributes towards the fulfillment of organisational objectives by
compensating for inadequacies in the formal organisation.
Limitations of informal organization

 It may work against the interest of the formal organisation as it leads
to spreading of rumours.
 Sometimes it may restrict growth of the organisation by strongly
opposing to the proposed change.
 As it creates a peer pressure among the members to conform to group
expectations, it can be harmful to the organisation.
Elements of delegation
 Authority
 Responsibility
 Accountability
Importance of delegation
 It leads to effective management, as by relieving the employees from
doing routine work it provides them with time to excel in new areas.
 It promotes employee development, as they are entrusted with more
opportunities to utilise their talent, perform complex tasks and
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assume those responsibilities which are likely to improve their career

prospects.
 It helps to motivate employees, as when a subordinate is entrusted
with a task, it is not merely the sharing of work, but it involves trust
on the superior‟s part and commitment on the part of the subordinate.
 It facilitates the growth of an organisation, as it seeks to enrich the
quality of manpower and widens the scope of using internal
recruitment by providing them with training and experience through
exposure to varied jobs.
 It provides the basis of management hierarchy, as it establishes
superior-subordinate relationships, which are the basis of hierarchy of
management.
 It facilitates better co-ordination amongst the departments, levels
and functions of management by providing clarity in reporting
relationships.
Importance of decentralisation
 It seeks to develop initiative in the subordinates by promoting self-

reliance and confidence amongst them and also helps to identify those
executives who have the necessary potential to become dynamic
leaders.
 It provides relief to top management, as the subordinates are
allowed to operate independently within their area of jurisdiction.
Consequently, the need for direct supervision is reduced.
 It facilitates quick decision making, as the employees are allowed to
act independently within their area of jurisdiction without consulting
others.
 It develops managerial talent for the future by providing the
employees with the necessary training and experience through
exposure to varied challenging jobs and also facilitates identification of
those employees who may and those who may not be successful in
assuming greater responsibility.
 It facilitates growth of the organisation by increasing its productivity
and profitability through assigning greater autonomy to the lower
levels of management as well as divisional or departmental heads.
 It facilitates better control by ensuring continuous evaluation of
performance at each level and the contribution of each department so
that they can be individually held accountable for their results.
Difference between Functional and Divisional Structure
S.No Basis Functional Structure Divisional Structure

1. Formation It is based on functions. It is based on product
lines and is supported by
functions.
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2. Responsibility It is difficult to fix on a It is easy to fix

department. responsibility for
performance.
3. Specialisation Functional specialisation Product specialisation
4. Managerial It is difficult, as each It is easier, autonomy as
Development functional manager has well as the chance to
to report to the top perform multiple
management. functions helps in
managerial development.
5. Cost It is economical, as the It is costly, as there is
functions are not duplication of resources
duplicated. in various departments.
6 Co-ordination It is difficult for a It is easy, because all
multiproduct company. functions related to a
particular product are
integrated in one.
7. Suitability It is most suitable when It is suitable for those
the size of the business enterprises
organisation is large, has where a large variety of
diversified activities and products are
operations require a high manufactured using
degree of specialisation. different productive
resources.
Difference between Formal and Informal Organisation
S.No. Basis Formal Organisation Informal Organisation

1. Meaning The structure of authority It is a network of social
relationships is created, relationships arising out of
deliberated by the the interaction among
management to achieve its employees within an
objectives. organisation.
2. Origin It arises as a result of It arises as a result of social
company rules and policies. interaction.
3. Authority It arises by the virtue of It arises out of personal
position in the qualities of the members.
organisation.
4. Behaviour It is directed by rules of the There is no set behaviour
organisation. pattern for the members.
5. Flow of The communication takes The communication can
Communication place through the scalar take place in any direction,
chain. as its flow does not follow a
set pattern.
6. Nature It is rigid. It is flexible.
7. Leadership Managers are leaders. Leaders are chosen by the
group, so they may not be
the managers.
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Difference between Authority, Responsibility and Accountability
S.No. Basis Authority Responsibili Accountabilit

ty y
1. Meaning Authority refers Responsibility isAccountability
to the right of an the obligation ofimplies being
individual to a subordinate to answerable for
command his properly perform the final outcome.
subordinates and the assigned Once authority
to take action duty. has been
within the scope delegated and
of his position. responsibility
accepted, one
cannot deny
accountability.
2. Delegation Can be delegated. Cannot be Cannot be
entirely delegated at all.
delegated.
3. Origin Arises from Arises from Arises from
formal position in delegated responsibility.
the organisation. authority
4. Flow Flows downward Flows upward Flows upward
from superior to from from subordinate
subordinate. subordinate to to superior
superior.
Difference between Delegation of Authority and Decentralisation
S.No. Basis Delegation of Decentralisation

Authority
1. Nature It is a compulsory act, It is an optional policy
because no individual can decision and is only
perform all tasks on his implemented at the
own. discretion of the top
management.
2. Freedom of The subordinates have The control over executives
action less freedom to take own is less, hence they have a
decisions as there is more greater freedom of action.
control exercised by the
superiors.
3. Status It is a process followed to It is the result of the policy
share tasks. decision of the top
management.
4. Scope It has a narrow scope, as It has a wide scope, as it
it is limited to superior implies extension of
and his immediate delegation to the lowest
subordinate. level of management.
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5. Purpose To lessen the burden of To increase the role of the

the manager. subordinates in the
organisation by giving
them more autonomy.
6. Withdrawal Easy, as only two persons Difficult, as it involves the
of are involved in the extension of delegation to
authority process. the lowest level of
management.

1. Name the process which co-ordinates human efforts, assembles
resources and integrates both into a unified whole to be utilised for
achieving specified objectives,
(a) Management
(b) Planning
(c) Organising
(d) Directing
2. …………………… is the process by which the manager brings order out of
chaos, removes conflict among people over work or responsibility
sharing and creates an environment suitable for teamwork.
(a) Planning
(b) Organising
(c) Staffing
(d) Controlling
3 …………………….. ensures that the heads of separate business units in
the organisation are responsible for profit or loss of their unit and have
authority over it.
(a) Span of management
(b) Divisional Structure
(c) Functional structure
(d) Hierarchy of Authority
4. Organising is a process by which the manager

(a) Establishes order out of chaos
(b) Removes conflict among people over work or responsibility sharing
(c) Creates an environment suitable for teamwork
5. After completing a course in journalism, when Vidhu joined a

Publication company, she was assigned a challenging media coverage
project by her superior. This helped to boost her self-esteem and
improve her confidence from day one. Identify the point of importance
related to the concept being described in the above lines.
(a) It facilitates the growth of an organisation
(b) Motivation of employees
(c) It facilitates better coordination
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6. It determines the number of levels of management in the structure.

(b) Responsibility ..
(c) Accountability
7. When Arun started a factory two years back with 50 workers, he had
placed 10 workers under direct control of one supervisor. Whereas his
friend Ajay, has placed 20 workers under direct control of one supervisor
in his garment factory. Identify the concept related to organising being
described in the above case.
(a) Planning
(b) Decentralisation
(c) Span of management
8. After completing a course in film production, Rishabh shared his vision

to start an advertising agency with his father. His father advised him to
first determine the framework of his company in terms of various job
positions that he intends to create. Identify the concept of organising
being described in the above lines.
(a) Organisational structure
(b) Organisation
(c) Decentralisation
9. Vedant and Arahan working as departmental heads in Shooting Star

Limited. Vedant is heading the public relation department whereas
Arahan leads the Human Resource Department of the company. Identify
the type of organisational structure being followed by the company.
(a) Functional structure
(b) Divisional structure
(c) Matrix structure
10. Rihan and Rohan are working as departmental heads in Best Living
Limited. Rihan has been entrusted with the responsibility of cosmetics
division whereas Rohan is heading the food division. Identify the type of
organisational structure adopted by the company.
(a) Divisional structure
(b) Functional structure
11. Over past five years Vivaan has been working as a departmental head in
a multinational company. But now he is very keen on changing his
company. This is because he wants to gains experience in all functions
related to a particular product rather than restricting himself to
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expertise in one particular function. Identify the type of organisation

structure being followed by his present company.
12. This type of organisational structure facilitates expansion and growth as

new divisions can be added without interrupting the existing operations
by merely adding another divisional head and staff for the new product
line.
(b) Matrix structure
(c) All of the above
(d) Divisional structure
13. What type of organisaional structure is suitable for those business

enterprises where a large variety of products are manufactured using
different productive resources?
(a) Matrix structure
(b) Divisional organisation
(c) Functional structure
14. Healthy Living Limited is a company dealing in organic products.

Keeping in view the growing demand for such products the company has
decided to open three more outlets in the same city in order to expand
its business. Identify the type of organisational structure which is
suitable for the company after expansion.
(a) Divisional organisation
(bl Functional structure
15. Sambhavna runs a chain of low cost fashion wear in various parts of the
country. As the taste and preferences of the consumers vary from one
region to another, she hires competent, capable and resourceful
managers and gives them an opportunity to work independently at local
level. At the same time they are expected to assume the responsibility for
the effective implementation of their decisions with regard to various
aspects like colours, textures, design etc. related to the garments.
Identify the concept described in the above lines.
(a) Delegation of authority
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16. What is the ranking of job positions on the basis of relative roles and
responsibilities known as?
(b) Hierarchy
(c) Decentralisation
17. A consumer durable company presently employing 8,000 people, desires

to diversify its business in furniture segment. To achieve its objectives it
has started shifting from a centralised to a decentralised management
system. Identify the management function being performed by the
company to become a decentralised company.
(a) Planning
(b) Organising
(c) Staffing
(d) Directing
18. Organising helps in creating a hierarchical order thereby enabling the

fixation of responsibility and specification of the extent of authority to be
exercised by an employee. Identify the relevant point of importance of
organising.
(a) It brings clarity in working relationships
(b) Ensures optimum utilization of resources
(c) Provides benefits of specialisation
(d) Effective administration
19. It is defined as the framework within which managerial and operating

(b) Organisational structure
(c) Informal organisation
20. It refers to the number of subordinates that can be effectively managed

by a superior.
(a) Organisational structure
(b) Informal organisation
21. As the span of management increases in an organisation, the number of

levels of management in the organisation
(a) Increases
(b) Decreases
(c) Remains unaffected
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22. Uranus Limited is a company dealing in metal products. The work is

mainly divided into functions including production, purchase,
marketing, accounts and personnel. Identify the type of organisational
structure followed by the organisation.
(b) Relational structure
(c) Divisional structure
23. Besttech Limited is one of the India‟s largest information technology

services company. It has organised itself in a manner that allows
customer orientation to dominate over other goals and diversified on the
basis of product lines. What type of organisational structure allows for
the addition of the new product lines without interrupting the existing
operations in order to facilitates expansion and growth of a business
enterprise?
24. A diwali mela was organised in a residential colony in Delhi. After work
was assigned to each member of the welfare association, it was told that
from whom he/she has to take orders and to whom he/she will be
accountable. Identify the step in organising process being described
above.
(a) Identification and division of work
(b) Departmentation
(c) Assignment of duties
(d) Establishing authority relationship
25. When the jobs of similar nature in an organisation are grouped under
functions like production, finance, marketing and human resource and
further these major functions are marked as separate departments it
leads to creation of a …………………structure.
(a) Divisional
(b) Functional
(c) Either (a) or (b)
26. Identify the type of organisational structure which facilitates

occupational specialisation,
(b) Horizontal structure
(c) Network structure
(d) Divisional structure
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27. Identify the type of organisational structure which makes training of

employees easier, as the focus is only on a limited range of skills.
28. This type of organisational structure is most suitable when the size of
the organisation is large, has diversified activities and operations require
a high degree of specialisation.
29. Under this type of organisational structure, manpower is grouped on the

basis of different products manufactured.
30. Which of the following is not a feature of functional structure?

(a) It promotes functional specialisation.
(b) Managerial development is difficult.
(c) It is easy to fix responsiblity for performance.
(d) It is an economical structure to maintain.
31. Which of the following is not a merit of functional structure?

(a) It promotes control and co-ordination within a department.
(b) It makes training of employees easier, as the focus is only on a
limited range of skills.
(c) It ensures that different products get due attention,
(d) It leads to occupational specialisation.
32. Rishabh has joined as a Creative Head in an entertainment company. He

always ensures that the work has been divided into small and
manageable activities and also the activities of similar nature are
grouped together. Identify the related step in organising process being
mentioned in the above lines.
(b) Departmentalisation
(d) Establishing reporting relationships
33. Indigo Limited has a staff of 300 people which is grouped into different
departments. The organisational structure depicts that 100 people work
in Production department, 150 in Finance department, 20 in Technology
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department and 30 in Human Resource department. Identify the type of

organisational structure being followed by the company.
(c) Informal structure
34. Aryan limited is a company dealing in metal products. The work is

mainly divided into functions including production, purchase,
marketing, accounts and personnel. Identify the type of organisational
structure in followed by the organisation.
35. Which of the following is not a merit of divisional structure?

(a) It promotes product specialisation.
(b) It ensures that different functions get due attention.
(c) It promotes flexibility and faster decision making.
(d) It facilitates expansion and growth of new divisions.
36. Which of the following is not a demerit of divisional structure?

(a) It is an expensive structure to maintain, since there may be a
duplication of activities across products.
(b) All functions related to a particular product are integrated in one
department,
(c) Conflict may arise among different divisional heads due to different
interests.
(d) Authority provided to the managers to supervise all activities related
to a particular division may lead to undesirable consequences.
37. Identify the correct sequence of steps to be followed in an organising

process.
(a) Departmentalisation, Establishing reporting relationships,
Assignment of duties, Identification and division of work
(b) Identification and division of work, Departmentalisation, Assignment
of duties, Establishing reporting relationships
(c) Identification and division of work, Assignment of duties,
Departmentalisation, Establishing reporting relationships
(d) Identification and division of work, Establishing reporting
relationships, Departmentalisation, Assignment of duties
38. Which of the following is not a demerit of functional structure?

(a) It places more emphasis on the objectives pursued by a functional
head rather than on overall enterprise objectives.
(b) It may lead to conflict of interests among departments due to varied
interests.
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(c) It leads to occupational specialisation.

(d) It may lead to difficulty in co-ordination among functionally
differentiated departments.
39. Lakshay has been given the task of arranging for five-day conference for
foreign delegates. In order to ensure smooth functioning of the event, he
has made two people as co-ordinators to take care of activities related to
registration and refreshment. Identify the function of management being
carried out by Lakshay.
(a) Planning
(b) Staffing
(c) Organising
(d) Directing
40. Which of the following is not an element of delegation?

(a) Responsibilty
(b) Authority
(c) Accountability
(d) Decentralisation
41. It arises from the established scalar chain which links the various job
positions and levels of an organisation.
(a) Responsibility
(b) Authority
(c) Accountability
42. The authority flows from .......

(a) Bottom to top
(b) Top to bottom
(c) In all directions
43. The scope of authority ...... as we go higher up in the management

hierarchy.
(a) Increases
(b) Decreases
(c) Remains same
44. It is the obligation of a subordinate to properly perform the assigned

duty.
(a) Responsibility
(b) Authority
(c) Accountability
45. The responsibility flows .........
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(a) In all directions

(b) Downwards
(c) Upwards
46. Authority granted to an employee should be ....

(a) More than the responsibility entrusted to him
(b) Less than the responsibility entrusted to him
(c) Equal to the responsibility entrusted to him
47. The accountability flows ........

(a) In all directions
(b) Downwards
(c) Upwards
48. Which of the following can be delegated completely?

(a) Responsibility
(b) Authority
(c) Accountability
49. Name the element of delegation which indicates that the manager has to
ensure the proper discharge of duties by his subordinates.
(a) Authority
(b) Responsibility
(c) Accountability
50. Which of the following cannot be delegated?

(a) Responsibility and accountability
(c) Accountability and responsibility
51. Authority arises from ......

(a) Responsibility
(c) Accountability
(b) Formal position
52. Responsibility is derived from ...........

(a) Authority
(b) Formal position
(c) Accountability
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53. Accountability is derived from .........

(a) Authority
(b) Formal position
(c) Responsibility
54. When decision-making authority is retained by higher management

levels, an organisation is said to be
(a) Decentralised
(b) Centralised
(c) Fragmented
55. Aayush joins a e-commerce company as a delivery executive. The Area

Team Leader Shekar is very happy with his performance. However, after
a few months, due to some family problems Aayush becomes irregular to
work and is not able to meet the work related deadlines. As a result,
Shekar is not able to realise his team targets. Under such a situation
which of the following statement will hold true?
(a) Shekar can absolve himself of his accountability to the extend of
work assigned to Aayush.
(b) Shekar cannot absolve himself of his accountability to the extend of
work assigned to Aayush.
(c) Shekar can partly absolve himself of his accountability to the extend
of work assigned to Aayush.
56. Nirv Ltd. was a market leader in the Healthcare segment, but with the
entry of MNCs its market share is declining. In order to deal with the
situation the General Manager of the company dispersed some of his
authority to different levels throughout the organisation so as to enable
the managers take suitable decisions and actions which are within their
respective jurisdiction. Identify the concept of management which has
been described above.
(a) Delegation
the same:
Jolly Good Ltd. is a well-known entertainment company in Bangalore. The
main divisions of the company include television, print, and films. Each unit
has a divisional manager responsible for performance and who has
authority over the unit. All its divisions are multifunctional as within each
division functions like production, human resource, marketing, finance,
purchase etc, are performed simultaneously for the accomplishment of
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desired goals. Keeping in view, the nature of work the company has shaped
a narrow span of control across at all levels.
57. Identify the type of organisational structure being followed by the

company?
(a) Divisional Structure
(b) Functional Structure
(c) Network Structure
(d) Matrix Structure
58. Which of the following may not be a reason for the company to adopt
this type of structure as identified in question no. 57?
(a) Promotes product specialisation
(b) Helps in fixation of responsibility in cases of poor performance of a
unit
(c) Leads to economies of scale and this lower cost
(d) Promotes flexibility and initiative
59. Which of the following statement is true about span of management?

(a) It gives shape to the organisational structure
(b) It determines the levels of management in the structure
60. Keeping in view the policy of the Jolly Good Ltd. is it likely to have ..
number of levels in management.
(a) More
(b) Less
(c) Difficult to define
the same:
Sandeep is a Professor in Management in a reputed institute. He first made
his students understand the concept of delegation then he made them
aware of another process which is an extension of delegation and is
essentially carried out in every large scale organisation. It involves dispersal
of authority up to the lowest level within an organisation. After explaining
the various elements of delegation, he decided to hold a class quiz. The
excerpts from the same is shared below.
61. Identify the other process which Sandeep appraised his students about?
(a) Delegation
(d) Centralisation
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62 ……………………….. arises from the established scalar chain which links

the various job positions and levels of an organisation.
(a) Authority
(b) Responsibility
(c) Accountability
63. What is the direction of flow of the element of delegation as identified in

question no. 62?
(a) Bottom to top
(b) Top to bottom
(c) In all directions
64. Which of the following is true with regard to the element of delegation as
identified in question no. 62?
(a) Can be delegated
(b) Cannot be entirely delegated
(c) Cannot be delegated at all
the same:
Danish recently took over as a Chief Operating Officer (CEO) of„Dream Big‟ a
company diversified into two segments namely telecom and education. He
has convinced the Board of Directors of company to close down telecom
division as it is running into huge losses due to entry of a new competitor.
65. What type of organizational structure allows for easy closure of

undesirable product lines without interrupting the existing operations of
a business enterprise?
66. Which of the following is not a feature of functional structure?

(a) It promotes functional specialisation.
(b) Managerial development is difficult
(c) It is easy to fix responsiblity for performance on one department
(d) It is an economical structure to maintain
67. Which of the following is not a merit of divisional structure?

(a) It promotes product specialisation
(b) It leads to minimal duplication of effort which results in economies of
scale
(c) It promotes flexibility and faster decision making
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(d) It facilitates expansion and growth as new divisions can be added

easily
68. What type of organizational structure is advisable for „Dream Big‟ after it
closes down telecom division?
(c) Both (a) and (b)'
the same:
„Tanjo‟ is a popular club in Faridabad. The working of the club is divided
into four main functions, namely, front office, kitchen, safety and security
and entertainment. The club has also adopted a slum area in its vicinity and
whatever cooked food is left everyday it is distributed amongst the people
living in this slum area. Jaykant is working as a public relation manager in
this club. The club hosts various kinds of parties from time to time which is
a major source of revenue for the club besides the restaurants, gaming
zones, confectionery shop and swimming pool. Recently, Jaykant made a
booking for hosting a corporate event. However, he was not given the
authority to arrange for the projector and LCD screen on behalf of the client
by the management committee of the club. As a result, the booking was
cancelled by the client.
69. Can Jaykant be held responsible for the losses suffered by the club due
to last minute cancellation by the client?
(a) Yes
(b) No
(c) Not sure
(d) Not at all
70. Identify the type of organisational structure adopted by the club.

71. “The working of the club is divided into four main functions, namely,
front office, kitchen, safety and security and entertainment.” Identify the
related step of the organising function.
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72. The scope of authority ………………… as we go higher up in the

management hierarchy
(a) Increases
(b) Decreases
(c) Remains same
73. After completing his MBA in finance management, Harshit has joined
„Roshani Limited‟ a company manufacturing LED lights. He observes
that the work environment is very congenial and the flow of work is very
smooth in the company. Moreover, on the last Friday of every month a
birthday party is organised to mark the celebrations on behalf of all the
employees whose birthday falls in that particular month. Also, the
cultural programme committee of the company keeps organising various
programmes from time to time which provides a platform to the
employees to exhibit their talent in different fields. Identify the type of
organisation being promoted by „Roshani Limited‟ by organising parties
and cultural programmes for their employees.
(a) Formal
(b) Informal
74. „Ureko Ltd.‟ sometimes allows free flow of communication in all the
directions as per the requirement which lead to faster spread of
information as well as quick feedback. Identify the type of organisation
which permits „Ureko Ltd.‟ the flow of communication in all the
directions.
(a) Formal
(b) Informal
75. Arun is working as Divisional Head Operations in a power sector

company. Being reserved by nature Tarun would never encourage any
interactions with his subordinates beyond any topics related to work.
Arun regularly engages in chit chat with his subordinates during breaks,
organise outstation trips with them and keep himself well-informed
about the important happenings in their lives beyond work. Identify the
type of organisation being mentioned above.
(a) Formal
(b) Informal
76. Gurdeep Singh runs a diagonistic clinic in Delhi for the last 34 years.
The clinic is being run by a team of essentially experienced professionals
with utmost dedication and sincerity. Gurdeep Singh puts in special
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focus to foster interpersonal relationship when he interacts with his

staff. Through these lively interactions he is able to seek the
wholehearted cooperation from them and is also able to gauge employees
reactions towards plans and policies.
Identify the type of organisation through which Gurdeep Singh fosters
interpersonal relationship with his staff.
(a) Formal
(b) Informal
Fill in the blanks.

1 ………………………is the ranking of job positions on the basis of relative
roles and responsibilities.
2 The framework within which managerial and operating tasks are
performed is known as …………………..
3 ………………………refers to the number of subordinates that can be
effectively managed by a superior.
4 ………………………provides the basis of management hierarchy as it
establishes superior-subordinate relationships.
5. …………………………. is an optional policy decision and is only
implemented at the discretion of the top management.
6. The process of concentration of decision making authority at top level
within an organisation is known as ………………………..
7. Rohan joined an organisation as a production manager. In order to
ensure smooth flow of work he decided to group similar activities into
sections. The process carried out by him is known as ……………………
8 …………………………structure is most suitable when the size of the
organization is large, has a diversified activities and operations require a
high degree of specialisation.
9 ………………………. arises from delegated authority.
10 ……………………….organisation refers to the organisation structure
which is created by the management to achieve particular goals.
11. An ………………………. organization helps to fulfill the social needs of the
members by giving them a sense of belongingness in the organisation
and enhances their job satisfaction.
12. A ………………….. organization provides stability to the organisation as
the behaviour of the employees is guided by rules and regulations of the
organisation.
13. An ………………….. organization leads to faster spread of information as
well as facilitates quick feedback.
14. A…………………………..organization may lead to procedural delays as
all communication has to take place through scalar chain only.
15. A ……………………… organization may sometimes restrict growth of the
organization by strongly opposing to the proposed change.
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1. Hierarchy gives shape to the organisational structure and determines

levels of management.
2. A wider span of management results in flat structure.
3. Divisional structure is appropriate for large size of organisations
producing one line of product.
4. Functional structure brings product specialisation.
5. Delegation does not mean abdication.
6. Organising function of management establishes relationship and deploys
resources.
7. In a functional structure it is easier to fix responsibility since mutual
relationships are clearly defined.
8. Accountability is the obligation of a subordinate to properly perform the
assigned duty.
9. Accountability can be delegated but responsibility cannot be delegated
by a manager.
10. Formal organization defines authority responsibility relationships and
clarifies who has to report to whom.
11. Formal organisation originates from within the informal organisation
when people interact beyond the official lines of communication.
12. The code of conduct in a formal organization evolve from group norms as
a result of social interaction among the employees within an
organization.
13. The informal organization has no definite structure.
14. The co-existence of both formal and informal organization ensures
smooth running of an organization.

1.
Column A Column B
(i) Can be delegated (a) Accountability
(ii) Cannot be entirely delegated. (b) Authority
(iii) Cannot be delegated at all (c) Responsibility
(a) (i)-(b); (ii)-(c); (iii)-(a)

(b) (i)-(a); (ii)-(c); (iii)-(b)
(c) (i)-(c); (ii)-(b); (iii)-(a)
(d) (i)-(b); (ii)-(a); (iii)-(c)
2.
Column A Column B
(i) It involves only two parties (a) Decentralisation
(ii) Functions are not duplicated hence (b) Delegation of authority
economical
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(iii) It has wide scope (c) Divisional Structure

(iv) Duplication of resources in various (d) Functional Structure
departments, hence costly
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)
3.
Column A Column B
(i) Leads to Specialisation (a) Organisation structure
(ii) Functional and Divisional (b) Step of organising process
(iii) An outcome of the organising (c) Importance of organising
process
(iv) Establishing reporting relationships (d) Types of organisation structure
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)
1. Assertion (A): Departmentalisation facilitates specialisation.
Reason (R): Departments can be created using several criteria as a basis
for division of work.
explanation of (A)
explanation of (A)
(d) Both statement (A) and (R) are incorrect
2. Assertion (A): An effective structure will result in increased profitability

of the enterprise.
Reason (R): A proper organisation structure is essential to ensure a
smooth flow of communication and better control over the operations of
a business enterprise.
explanation of (A)
explanation of (A)
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3. Assertion (A): The span of management, to a large extent gives shape to

the organisational structure.
Reason (R): Span of management refers to the number of subordinates
that can be effectively managed by a superior.
explanation of (A)
explanation of (A)
4. Assertion (A): Functional heads get training for top management

positions .
Reason (R): Functional heads gains experience in all functions related to
a particular product.
explanation of (A)
explanation of (A)
5. Assertion (A): Delegation is a pre-requisite to the efficient functioning of

an organisation.
Reason (R): Delegation involves downward transfer of authority from a
superior to a subordinate.
explanation of (A)
explanation of (A)
6. Assertion (A): Delegation does means abdication.

Reason (R): The manager no longer remains accountable for the
performance of the assigned tasks.
explanation of (A)
explanation of (A)
7. Assertion (A): Responsibility is derived from authority .

Reason (R): The scope of authority is greater at higher levels in the
management hierarchy.
explanation of (A)
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explanation of (A)
8. Assertion (A): Delegation has a narrow scope.

Reason (R): Delegation implies extension of authority to the lowest level
of management.
explanation of (A)
explanation of (A)
9. Assertion (A): The informal organisation leads to faster spread of

information.
Reason (R): There is a well-defined path of communication to be
followed in an informal organisation.
explanation of (A)
explanation of (A)
10. Assertion(A): Informal organization enhances job satisfaction level of the

employees. Reason (R): Informal organisation helps to develop a sense
of belongingness in the organisation.
explanation of (A)
explanation of (A)
11. Statement I: Formal organization places more emphasis on

interpersonal relationships among the employees than work to be
performed.
Statement II: It is easier to fix responsibility in a formal organization.
12. Statement I: The formal organisation does not provide a complete

picture of how an organisation works.
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Statement II: Formal organization emerges spontaneously and is not

deliberately formed by the management.
Answer Key

1 C 20 C 39 C 58 C
2 B 21 B 40 D 59 C
3 B 22 A 41 B 60 A
4 D 23 B 42 B 61 B
5 B 24 D 43 A 62 A
6 A 25 B 44 A 63 B
7 C 26 A 45 C 64 A
8 A 27 A 46 C 65 B
9 A 28 B 47 C 66 C
10 A 29 A 48 B 67 B
11 A 30 C 49 C 68 A
12 D 31 C 50 A 69 B
13 B 32 B 51 B 70 A
14 B 33 A 52 A 71 B
15 B 34 A 53 C 72 A
16 B 35 B 54 B 73 B
17 B 36 B 55 B 74 B
18 A 37 B 56 B 75 C
19 B 38 C 57 A 76 B
Fill in the blanks True or Match the Assertion-

false following Reason
Questions
1 Hierarchy 1 False 1 A 1 A
2 Organisational structure 2 True 2 B 2 A
3 Span of management 3 False 3 C 3 B
4 Delegation of authority 4 False 4 D
5 Decentralisation 5 True 5 B
6 Centralisation 6 True 6 D
7 Departmentalisation 7 False 7 B
8 Functional 8 False 8 C
9 Responsibility 9 False 9 C
10 Formal 10 True 10 A
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11 Informal 11 False 11 D
12 Formal 12 False 12 C
13 Informal 13 True
14 Formal 14 True
15 Informal
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Chapter: 06
Staffing
• Outline the concept, need and importance of staffing;
• Analyse the staffing function as a part of human resource management;
• Describe the steps involved in the process of staffing;
• Explain the meaning, sources and methods of recruitment;
• Describe the steps involved in the selection process; and
• State the meaning, benefits and method of on-the-job and off-the job
training.
 Staffing: Staffing may be defined as the process of obtaining, utilising
and maintaining a satisfactory and satisfied work force.
 “The managerial function of staffing involves manning the
organisational structure through effective and proper selection,
appraisal and development of personnel to fill the roles designed into
the structure.”
 -Koontz and O’Donnell
 Human Resource Management: Human Resource Management is
defined as “planning, organizing, directing, controlling of
procurement, development, compensation, integration, maintenance
and separation of human resources to the end that individual,
organizational and social objectives are achieved,”
 -Edwin Flippo
 Workload analysis: Workload analysis would facilitate an estimation
of the number and types of human resources essential for the
performance of various jobs and achievement of organisational goals.
 Workforce analysis: Workforce analysis helps to know the number
and type of the manpower available within the organization.
 Recruitment: Recruitment may be defined as the process of searching
for prospective employees and stimulating them to apply for job
positions within an organisation.
 Selection: Selection is the process of choosing from the pool of the
prospective job candidates who have applied for the job.
 Placement: The term placement refers to the process by which an
employee takes charge of his job position.
 Orientation: The process of orientation is important in order to
familiarise the new employees with the various aspects related to the
organisation and the workers.
 Training: Training is an act of increasing the knowledge and. skill of
an employee for doing a particular job.
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 Development: Development is a much wider term as compared to

training because it seems to improve upon an individual in all
spheres, be it human or technical, and foster their growth.
 Education: Education is the process of increasing the knowledge and
understanding by awakening the faculties of mind and character of an
individual.
 Performance Appraisal: Performance appraisal seeks to measure the
worth of an employee for an organisation.
 Promotion: Promotion increases the status of an employee in the
organisation and also provides monetary gains in terms of higher pay
package and other perks and benefits.
 Transfer: Transfer refers to the shifting of an employee horizontally
along the organisational structure.
 Compensation: Compensation consists of all forms of pay or rewards
going to employees.
 Manning the organisational structure: Staffing

 Process of searching for prospective employees: Recruitment
 Process of choosing best candidate from the pool of the prospective job
candidates: Selection
 Estimation of the number and types of human resources required in
the organisation: Workload analysis
 Estimation of the number and types of human resources available in
the organisation: Workforce analysis
 Process by which an employee takes charge of his job position:
Placement
 Vertical movement of an employee: Promotion
 Horizontal movement of an employee: Transfer
 Process of familiarising the new employees with the various aspects
related to the organisation: Orientation
 Job-oriented process: Training
 Career-oriented process: Development
 Measure the worth of an employee to an organisation.: Performance
appraisal
 All forms of pay or rewards going to employees: Compensation
 A notice on the notice board specifying the details of the various jobs
available: Direct recruitment
 Database of unsolicited applications: Casual callers
 Filling up the vacancies in the middle level and top level management:
Placement agencies and management consultant
 Source for hiring unskilled workers at a very short notice: Labour
contractors
 Measuring the intelligence quotient of an individual: Intelligence
Tests
 Evaluate the potential of a candidate in acquiring new skills and
capacity to develop: Aptitude Test
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 Provide an insight into a person‟s emotions, her reactions, maturity

and value system, etc: Personality Tests
 Measure the knowledge, skills and proficiency that a candidate
possesses with regard to a particular job position: Trade Test
 Define the interests of the candidate: Interest Tests
 Collaboration between educational institutes and business firms:
Internship training
 Trainee is placed under guidance of a master worker: Apprenticeship
training
 Trainees are expected to work on sophisticated machinery and
equipment at the actual place of work: Vestibule training

Benefits offered by proper staffing
 It helps in identifying and hiring competent manpower to fill in the
various job positions within the organisation.
 It leads to higher productivity by placing the right person on the right
job i.e. assigning tasks to people in accordance to their individual
potential.
 It ensures perpetual existence of the organisation and also fosters its
growth through continuous manpower planning and execution.
 It leads to optimum utilisation of human resource by avoiding the
situations of overstaffing or understaffing.
 It boosts the morale of the employees and enhances their job
satisfaction, by adopting an objective method of performance
appraisal and fair system for rewards and recognition^.
Scope of Human Resource Department

 Carrying out recruitment.
 Preparing job description with regards to the various job positions
through systematic collection of information and analysis of each job.
 Formulating compensation and incentive plans.
 Providing for training and development of employees, so as to ensure
their efficient performance and career growth.
 Ensuring healthy labour relations and union management relations
 Dealing with the grievances and complaints.
 Creating provision for social security and welfare of employees.
 Defending the company in law suits and avoiding legal complications
Steps involved in the staffing process

 Estimating the manpower requirements- In order to ascertain
requirements properly, workload analysis and workforce analysis need
to be done. Workload analysis would facilitate an estimation of the
number and types of human resources required and workforce
analysis would help to know the number and type of the manpower
available within the organisation.
 Recruitment- Recruitment may be defined as the process of
searching for prospective employees and stimulating them to apply for
job positions within an organisation.
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 Selection- Selection is the process of choosing from the pool of the

 Placement and Orientation- The term placement refers to the
process by which an employee takes charge of his job position. At the
same time, the process of orientation is important in order to
familiarise the new employees with the various aspects related to the
organisation and the workers.
 Training and development- Training is an act of increasing the
knowledge and skill of an employee for doing a particular job.
Development is a much wider term as compared to training, because
it seems to improve upon an individual in all spheres, be it human or
technical, and foster their growth.
 Performance appraisal- Performance appraisal seeks to measure the
worth of an employee for an organisation.
 Promotion and career planning- Promotion increases the status of
an employee in the organisation, but also provides monetary gains in
terms of higher pay package and other perks and benefits.
 Compensation- Compensation consists of all forms of pay or rewards
going to employees.
Aspects of Staffing
 Recruitment
 Selection
 Training
Types of sources of recruitment

 Internal sources
 External sources
Internal sources of recruitment

 Transfers- Transfer refers to the shifting of an employee horizontally
along the organisational structure.
 Promotions- Promotion refers to the vertical movement of an
employee along the organisational structure.
Merits of internal sources

 Motivate employees- When an organisation uses internal sources of
recruitment, it provides a psychological benefit and helps to maintain
peace within the organisation.
 Simple process- The process of internal recruitment is relatively
simple because the employees are already known to the organisation.
 Promote training- A systematic transfer policy can be used as an
effective tool to foster the knowledge and skill of the employees about
different jobs.
 Deal with internal issues- Under the situations of overstaffing, an
employee can be effectively placed in an understaffed department.
 Economical sources- Internal recruitment helps to save time, effort
and money and the need for induction training is minimised.
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Limitations of internal sources

 Limited choice- The use of internal sources of recruitment restricts
the infusion of fresh blood within the organisation.
 Lethargic employees- When an organisation follows a time bound
promotion policy, its employees are likely to become complacent.
 Not suitable for new enterprises- It is not possible for a new
organisation to depend on internal source of recruitment.
 Dissatisfaction among employees- If the promotion policy followed
within an organisation is not fair and justified, it may lead to
dissatisfaction among the employees.
External sources of recruitment

 Direct Recruitment-A notice on the notice board specifying the
details of the various jobs available.
 Casual Callers- Many reputed enterprises maintain a database of
unsolicited applications for various job positions which serves as a
ready reckoner to fill the various job positions as and when they arise.
 Advertisement- Advertisement is being widely used since ages to
inform and persuade the prospective candidates to apply for the
various available job positions.
 Employment Exchange- The employment exchange works as an
intermediary and seeks to provide a link between the job seeker and
government organisation.
 Placement Agencies and Management Consultants- The placement
agencies work as middle men between the job seekers and the
organisations. The management consultancy firms primarily specialise
in filling up the vacancies and the middle level and top level
management.
 Campus Recruitment- Many reputed organisations work in close co-
ordination with the universities, vocational schools and management
institutes, so as to be able to tap the best of the human resources.
 Recommendations of Employees- The company encourages its
present employees to provide references of their friends and relatives
who may prove to be a worthwhile source of recruitment for the
organisation.
 Labour Contractors- The labour contractors act as a very useful
source for hiring unskilled worker at a very short notice.
 Advertising on Television- Television is considered to be one of the
most popular electronic medium of advertising.
 Web Publishing- Websites prove to be beneficial to both the
organisations which are searching for suitable people and candidates
themselves.
Merits of external sources

 Qualified Personnel- By exploring external sources of recruitment, an
organisation is able to attract qualified and competent persons for the
vacant positions in the organisation.
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 Wider Choice- External sources of recruitment offer a wider choice to

the organisation, unlike internal sources which provide only a limited
choice.
 Fresh Talent- External sources lead to infusion of fresh talent within
the organisation.
 Competitive Spirit- The use of external sources of recruitment helps
to instil a competitive spirit among the existing employees.
Limitations of external sources

 Dissatisfaction among existing staff- Many a times, use of external
sources of recruitment creates a feeling of unhappiness and
discontentment among the present employees.
 Costly process- The use of external sources of recruitment is
considered to be an expensive process.
 Lengthy process-The use of external sources of recruitment is a
lengthy and tedious process, as it involves a series of time consuming
steps.
Process of selection
 Preliminary Screening- Preliminary screening is undertaken with the
objective of eliminating all those applicants who do not fulfill the
minimum requirements of the job.
 Selection Tests- Selection tests form an integral part of selection
process. Unlike an interview, a selection test is free from all kinds of
bias and prejudice and purely objective in nature. The important tests
used for selection of employees outline as follows:
 Intelligence Tests: These include important psychological
tests which are useful in measuring the intelligence quotient of
an individual.
 Aptitude Test: These tests seek to evaluate the potential of a
candidate in acquiring new skills and capacity to develop.
 Personality Tests: These tests seek to provide an insight into a
person‟s emotions, her reactions, maturity and value system
etc.
 Trade Test: These tests seek to measure the knowledge, skills
and proficiency that a candidate possesses with regard to a
particular job position.
 Interest Tests : These tests are used to define the interests of
the candidate.
 Employment Interview- An interview involves a face to face
interaction between the prospective candidate and the interviewer(s).
 Reference and Background checking- The organisation may like to
establish the credibility of the person from whom the reference is
provided in the application form as well.
 Selection Decision- Once the genuineness of the candidate has been
ascertained, the organisation has to take the final decision about
hiring the candidates.
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 Medical Examination- The selected candidates are asked to undergo

medical examination before the job offer is made.
 Job offer- The job offer contains a proposal in terms of job position,
total emoluments to be given, date of joining and other related
important information about the job.
 Contract of Employment- If selected, a candidate accepts the job
offer he/she is issued with a letter of appointment.
Benefits of training to the organization

 Training programs are organised in a systematic manner and help to
avoid wastage of resources.
 Training leads to an increase in the productivity of an organisation,
both in qualitative and quantitative terms, leading to higher
profitability.
 Training seeks to prepare the employees to take charge of higher
positions in case of any emergency.
 Training enables the managers to deal with the problem of
absenteeism and employee turnover.
Types of training methods

 On-the-job training mehods
 Off-the-job training methods
On-the-job training methods

 Internship Training- An internship training program works through
collaboration between an educational institute and business firms.
 Induction Training- Induction training is provided to the new
employees of an organisation so as to familiarise them with the
organisational rules and policies, their superior and subordinate, and
so on.
 Apprenticeship Training- Under this method of training, the trainee
acquires the knowledge and skill related to a particular line of
specialisation under the guidance of a master worker.
Off-the-job training method
 Vestibule training- Under this method of training, a replica of the

actual work situation is created and the trainees are expected to
develop their knowledge and skill related to the particular job in an
environment which is similar to their actual work environment. This
method is suitable in the cases where the trainees are expected to
work on sophisticated machinery and equipment at the actual place of
work.
1. It is the process of management which is concerned with obtaining,

utilising and maintaining a satisfactory and satisfied work force.
(a) Planning
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(b) Organising
(c) Staffing
(d) Directing
2. This analysis would enable an assessment of the number and types of

human resources necessary for the performance of various jobs and
accomplishment of organisational objectives.
(a) Breakeven analysis
(b) Workload analysis
(c) Workforce analysis
3. This analysis would reveal the number and type of human resource
available within the organisation.
(a) Workload analysis
(b) Breakeven analysis
4. Workforce analysis would enable to know whether the organisation is

(a) Understaffed
(b) Overstaffed
(c) Optimally staffed
5. It refers to the process of searching for prospective employees and

stimulating them to apply for jobs in the organisation.
(a) Selection
(b) Training
(c) Recruitment
(d) Orientation
6. It is the process of choosing from the pool of the prospective job

candidates developed at the stage of recruitment.
(a) Selection
(b) Training
(c) Recruitment
(d) Orientation
7. It is the process of introducing the selected employee to other

employees and familiarising him with the rules and policies of the
organisation.
(a) Orientation
(b) Selection
(c) Training
(d) Recruitment
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8. It refers to the employee occupying theposition or post for

which the person has been selected.
(a) Orientation
(b) Selection
(c) Placement
(d) Recruitment
9. The important aspects of staffing include…………….

(a) Selection
(b) Training
(c) Recruitment
10. The various activities involved in the process of recruitment include

(a) Identification and assessment of the different sources of recruitment
(b) Selecting the most suitable source or sources
(c) Inviting applications from the prospective candidates
11. Which of the following is not an external source of recruitment

(a) Campus recruitment
(b) Promotion
(c) Casual callers
(d) Direct recruitment
12. It is a good source of filling the vacancies with employees from over
staffed departments.
(a) Transfer
(b) Promotion
(c) Placement agencies
(d) Government exchanges
13. It refers to the horizontal movement of employees along the

organisational structure.
(a) Transfer
(b) Promotion
(c) Training
(d) Employment interview
14. Promotion leads to ……………….

(a) Shifting an employee to a higher position
(b) Entrusting higher responsibilities
(c) Increase in status
15. When the employees are given promotion, their

(a) Motivation level improves
(b) Loyalty increases
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(c) Job satisfaction level is higher

16. Under this method of recruitment, a notice is placed on the notice board
of the organisation containing the details of the jobs available.
(a) Casual callers
(b) Labour contractors
(c) Recommendations of employees
17. It is suitable for filling casual vacancies when work load is high or when
certain number of permanent workers are absent.
(a) Direct recruitment
(b) Labour contractors
(c) Advertising on television
(d) Placement agencies and management consultants
18. Under this method of recruitment, an organisation maintains a database

of unsolicited applicants in their offices.
(b) Casual callers
(c) Labour contractors
(d) Advertising on television
19. Which of the following is an internal source of recruitment?

(a) Transfer
(b) Advertising on television
(c) Casual callers
(d) Labour contractors
20. This source of recruitment basically specialises in filling up the

vacancies at the middle level and top level management.
(b) Labour contractors.
(c) Advertising on television
(d) Placement agencies and management consultants
21. It is a very useful source of recruitment for hiring casual or „badli‟

workers to whom compensation is provided on a daily wage basis.
(a) Placement agencies and management consultants
(b) Direct recruitment
22. Many big organisations maintain a close liaison with the universities,
vocational schools and management institutes to recruit qualified
personnel for various jobs. This is known as
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(d) Campus recruitment
23. Which of the following is not an advantage of using external sources of

recruitment?
(a) Qualified personnel
(b) Wider choice
(c) Fresh talent
(d) Economical source
24. Which of the following is not a disadvantage of using external sources of

recruitment?
(a) Dissatisfaction among existing staff
(b) Lengthy process
(c) The scope for induction of fresh talent is reduced
(d) Costly process
25. This test is an indicator of a person‟s learning ability or the ability to

make decisions and judgements.
(a) Trade test
(b) Personality test
(c) Intelligence test
(d) Aptitude test
26. It is a measure of an individual‟s potential for learning new skills.

(a) Trade test
(d) Aptitude test
27. These tests measure the existing skills of the individual in terms of the
level of knowledge and proficiency in the area of professions or technical
training.
(a) Trade test
(d) Aptitude test
28. These tests are used to know the pattern of interests or involvement of a
person.
(a) Trade test
(d) Interest test
29. Which of the following is not a benefit of training and development to an
organisation?
(a) Help to avoid wastage of efforts and money
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(b) Enhance employee productivity

(c) Lead to better career of the individual
(d) Reduce absenteeism and increase employee turnover
30. It is a career oriented process.

(a) Training
(b) Development
(c) Selection
(d) Recruiment
31. Which of the following is not an on-the-job method of training?

(a) Apprenticeship training
(b) Induction training
(c) Internship training
(d) Vestibule training
32. Under this method of training, a trainee is put under the guidance of a
m.ster worker.
(a) Internship training
(b) Vestibule training
(c) Apprenticeship training
(d) Induction training
33. This type of training method is adopted when employees have to handle
sophisticated machinery and equipment at their workplace.
(b) Induction training
(d) Vestibule training
34. This type of training is provided to the new employees of an organisation

in order to familiarise them with the organisational rules and policies,
their superior and subordinate, and so on.
(a) Vestibule training
(b) Apprenticeship training
35. Which of the following activities lie within the scope of Human Resource
Department?
(a) Formulating compensation and incentive plans
(b) Ensuring healthy labour relations and union management relations
(c) Creating provision for social security and welfare of employees
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36. Identify the correct sequence of the steps involved in the staffing process
(a) Recruitment, Estimating the Manpower Requirements, Placement
and Orientation, Selection
(b) Estimating the Manpower Requirements, Selection, Placement and
Orientation, Recruitment
(c) Selection, Estimating the Manpower Requirements, Recruitment,
Placement and Orientation
(d) Estimating the Manpower Requirements, Recruitment, Selection,
Placement and Orientation
37. Identify the correct sequence of the steps involved in the selection
process
(a) Medical Examination, Contract of Employment, Reference and
Background checking, Selection Decision, Job Offer
(b) Reference and Background checking, Selection Decision, Contract of
Employment, Medical Examination, Job Offer
(c) Job Offer, Reference and Background checking, Selection Decision,
Medical Examination, Contract of Employment
(d) Reference and Background checking, Selection Decision, Medical
Examination, Job Offer, Contract of Employment
38. Lalit has always been fascinated by the hand woven textile designs.
Therefore, he decided to become a weaver. He was told that in order to
understand and learn this workmanship, he will have to work under the
guidance of a master worker for a certain number of years. Identify the
type of training being described in the given lines.
39. Kundan Lal joined a food processing unit as a factory worker. Since he
was expected to work on sophisticated machinery, he was asked to
undergo a special training. Identify the training method with reference to
above lines.
40. In the job application form for the post of Production Manager, Ketan
had given details of his present employer. The company contacted the
General Manager of his present company to establish Ketan‟s credibility.
Identify the step in selection process being described in the above lines.
(a) Job offer
(b) Contract of employment
(c) Reference and background checking
(d) Selection decision
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41. Aruna applied for the post of an art and craft teacher in a reputed school
in Delhi. After successfully clearing the tests and the interview, she was
offered an employment contract containing the terms and conditions,
and the date of joining. Identify the steps in the staffing process being
(a) Reference and background checking
(b) Selection decision
(c) Job offer
(d) Contract of employment
42. Roshni Limited is a company dealing in lights and illumination.

Whenever the company is in need of daily wage workers, a notice is
placed on the factory gate for the same. Identify the source of
recruitment being used by the company.
(d) Advertising
43. When the Principal of Golden Life Public School was on the verge of
retirement, the management of the school contacted a specialised
business firm in order to fill up the vacancy. Identify the source of
recruitment being used by the management.
(a) Labour contractors
(b) Advertising
(c) Placement agencies and management consultants
44. Rakesh works as a software engineer in an IT company. He provided the

reference of close friend Rohan to the Human Resource Department for
the post of Senior Business Development Manager. Rohan was duly
selected for the concerned post by the company. Identify the source of
(a) Advertising
(b) Placement agencies and management consultants
(c) Recommendation of employees
45. When Jaskaran Singh applied for the post of Computer teacher in a
school in Bhubaneswar, he was asked to prepare a powerpoint
presentation on a particular topic during selection procedure. Identify
the type of selection test being mentioned in the above lines.
(a) Trade test
(d) Interest test
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46. At Wipro, Project Readiness Program [PRP] a 68 day structured training

program is offered to all campus recruits coming from varied
background (Engineers + Nonengineers) to be trained on essential
behavioral and technical skills that prepare them to work in live
customer projects. E-learning has been introduced in this training for
engineering campus new hires. About 25% of the training duration has
been adopted in E-Learning mode.
Identify the method of training being described in the above paragraph.
(a) Apprenticeship
(b) Vestibule
(c) Induction
47. Wizard Ltd. is a highly reputed company. The employees of this

organization are very happy and they discussed how they came in
contact with this organization.
Veer Singh shared that he was directly called from IIM1 Lucknow from
where he was about to complete his MBA. Identify the source of
recruitment being described in the above lines.
(a) Campus recruitment
(b) Recommendation of present employees
(c) Casual callers
(d) Advertisements
48 „Medister Limited‟ is a management consultancy firm located in New

Delhi and founded by Mr. Anansh Gupta. The firm seeks to provide the
prospective candidates with an opportunity to get placed in the desired
companies in India and abroad in many sectors namely; Automobile
Manufacturing, IT, Telecommunications, Finance, Food, FMCG,
Pharmaceuticals, Healthcare and Power. Identify the type of source of
recruitment options being offered by Mediater Limited.
(b) Casual calling
(c) Placement agency and management consultancy
(d) Web publishing
49. The vacancy for the post of supervisor in a school was filled up by
screening the database of unsolicited applications lying in the office.
Name the external source of recruitment used to fill up the above stated
vacancy.
(a) Web publishing
(b) Casual callers
(c) Direct recruitment-
50. The Production Manager of a company know about the availability of

raw-materials at cheaper rates for a short period of time from a vendor.
For this he wrote a letter to the Manager Director of the company for
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getting sanction. But because of procedural delays in getting this

sanction and procuring funds from the Finance Manager, the order
could not be placed. Identify the type of organisation, that led to
procedural delays and because of which the company could not get the
advantage of procuring raw material at cheaper rates.
(a) Formal
(b) Informal
51 ……………….. involve shifting of an employee from one job to another,

one department to another or from one shift to another, without a
substantive change in the responsibilities and status of the employee.
(a) Transfer
(b) Promotion
(c) Demotion
52. Under this method of training the trainee is kept under guidance of a
master worker for a prescribed period of time.
(b) Internship training
(c) Vestibule training
53. Luv has decided to start a professional acting school after completing a
course from Royal Central School of speech and drama, University of
London. His friend Shubham advised him about one particular function
of management saying that attitude, aptitude, commitment, loyalty are
perceived as important qualities by all types of organizations because
the right people can help you take your business to the top; the wrong
people can break your business. Identify the function of management
being referred to by Subham.
(a) Organising
(b) Planning
(c) Staffing
(d) Controlling
54. Anurag Basu has been working as the Senior Marketing Manager in a IT
company in Delhi for the past 5years. As a person, he is very ambitious
and outgoing. When the Deputy Marketing Manager resigned Anurag
Basu was first considered for promotion by the Human Resource
Manager, but since in the recent past it had been observed that he tends
to take those decisions also which fall beyond the purview of his
jurisdiction. Therefore, the Human Resource Manager with the consent
of CEO of the company decided to shift the Senior Marketing Manager of
the Kolkata branch to Delhi instead of promoting Anurag Basu to that
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post. Name the source of recruitment used by Human Resource Manager

to fill in the post of Deputy Marketing Manager.
(a) Internal
(b) External
(c) Casual calling
55. Sumit discloses to his friend Shrey that he wants to work as a plumber.
Shrey tells him that the people seeking to enter skilled traits, to become,
plumbers, electricians or iron-workers, are often required to undergo
one form of training.
Name the form of training to which Shrey is referring to in the above
lines.
(a) Apprenticeship
(b) Vestibule
(c) Orientation
(d) Internship
56. Good Luck Ltd. has terminated the employment of its five senior
managers, if after evaluating their performance against pre-determined
standards if it is found lacking. With this disruption analysts say a large
portion of the employees may become irrelevant unless they learn new
skills and apply the knowledge to work on emerging technologies. Good
Luck Ltd. is ready to facilitate employee learning, through its in-house
centers. Name the function of management performed by Good Luck Ltd.
to maintain a satisfactory work force.
(a) Staffing
(b) Controlling
(c) Directing
(d) Planning
57. Mayuk runs a small hospital in Jhansi. He has to appoint nurses for the
hospital. Since patients in the hospital are of different types, he wants to
find out the candidates‟ maturity and emotions in dealing with the
patients. He also wants to know about the candidates‟ ability to take
decisions. Name any one type of tests that Mayuk can use to meet his
requirements.
(a) Aptitute test
(b) Intelligent
(c) Trade test
(d) Personality test
58. Electro Ltd. is a company manufacturing water geysers. The company

has a functional structure with four main functions—Production,
Marketing, Finance and Human Resource. As the demand for the
product grew, the company decided to hire more employees. Identify the
concept which will help the Human Resource Manager in deciding the
actual number of persons required in each department.
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(b) Workforce analysis
(c) Selection
(d) Recruitment
59. Kajal Limited is a company dealing in cosmetics. Whenever the company
is in need of daily wage workers, a notice is placed on the factory gate for
the same. Identify the source of recruitment being used by the company.
(d) Advertising
60. This managerial function involves manning the organisational structure

to fill the roles designed into the structure.
(a) Planning
(b) Organising
(c) Staffing
(d) Directing
61. Ultimatum Pest Control is the name of a highly esteemed service

provider engaged in undertaking Pest Control Services in Dehradun. The
company provides safe and environment friendly services to its clients.
Its owner Mr. Sammer Sikand feels that the prime reason for the
success of his business is the policy of promoting employees from
within. This supports employees to carry on their jobs well, they can
succeed from being just a team member to becoming the manager and
finally become the area incharge.
Identify the type of source of recruitment being described above:
(a) Internal
(b) External
62. Google Careers is an exclusive web portal for entry-level graduates who
finished their graduation in recent years and waiting for a job
opportunity in Google. Google job openings ifi India for the vacancies of
entry-level engineers and IT internship jobs. Interested and eligible
candidates can apply online for Google careers in India. Aspirants need
to clear Google online test and interview.
Identify the source of external recruitment being adopted by the
company.
(a) Web publishing
(c) Placement agency and management consultant
(d) Casual callers
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63. Shifting an employee to a higher position is known as …………………

(a) Promotion
(b) Transfer
(c) Direct recruitment
(d) Training
64. Identify the source of recruitment being described below:

Subham Ltd. obtained a large number of unskilled workers at a short
notice by placing an notice on the factory gate during Diwali.
(b) Casual callers
(c) Web publishing
(d) Camfus recruitment
65. Naveet has decided to install new machines in his food processing plant.
Identify the method of training under which the workers can be trained
to handle sophisticated machinery and equipment.
(c) Induction training
(d) Internship training
66. Which of the following is not a limitation of external source of

recruitment?
(a) The spirit of competition among the employees may be promoted.
(b) External recruitment may lead to dissatisfaction and frustration
among existing employees.
(c) A lot of money has to be spent on advertisement and processing of
applications,
(d) Recruitment from these sources takes a long time.
67. A detailed requirement of the desirable profile of a candidate with

reference to a job position in terms of the desired qualifications,
experience, personality characteristics and so on is prepared while
estimating manpower requirements of an organisation. Identify the
related concept.
(b) Workforce analysis
(c) Job description
(d) Job analysis
68. Tanu is working as a software engineer in an IT firm. Recently she

introduced her friend Manu to her Project Manager, who is looking for a
suitable candidate for the post of Team Leader in the company. After
clearing through the various levels of selection process in the company
Manu is finally selected for the post of Team Leader. Identify the method
of recruitment used by the company.
(a) Campus Recruitment
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(b) Casual callers

(c) Recommendation of present employees
69. Anuj owns a logistics company. Keeping in view, the sudden increase in
the business activities on account of bulk orders he needs to hire two
supervisors and about 50 unskilled workers at a short notice.
Suggest a suitable source of recruitment through which Anuj can recruit
50 unskilled workers at a short notice.
(a) Labour contractors
(b) Placement agency and Management cnsultants
(c) Casual callers
70. Identify the source of recruitment described below.

Gibi puts a notice at the factory gate to hire five unskilled workers for
her export factory.
(b) Casual callers
(c) Labour contractor
(d) Recommendation of present employers
71. Health Foods Limited is a chain of frozen foods. Due to lack of sufficient
number of delivery boys the company is facing a lot of problems these
days. Identify the function of management which will help the company
to obtain the required the number of persons.
(a) Planning
(b) Staffing
(c) Directing
(d) Controlling
72. Faruq is running a brick manufacturing unit in Meerut. Whenever there

is a need for additional workers a notice is placed on the notice board of
it‟s factory specifying the details of the jobs available. Identify the type of
recruitment being adopted by Faruq in order to meet the shortfall of
workers.
(a) Casual callers
(c) Advertisement
(d) Employment exchange
73. Name the step in the staffing process which involves determining the
sources of potential candidates.
(a) Estimating manpower requirement
(b) Recruitment
(c) Selection
(d) Training and development
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74. Yuvraj is working as a Human Resource Manager in an International

School in Noida. Coincidently, both the academic supervisor and co-
curricular supervisor in the Middle wing have submitted their
resignations at the same time although for different personal reasons.
The Principal finds, Hemlata, the dance teacher of in the school, very
competent and committed so she asks Yuvraj to move her up in the
hierarchy to the post of co-curricular supervisor in the Middle Wing. In
order to fill up the vacancy of academic supervisor an advertisement is
given in the newspaper and eventually Mrs. Charu Jindal is selected for
the post. Whereas, the post of dance teacher is filled up through
database of unsolicited applicants in the school office. Name the
internal/external sources of recruitment not used by the school to fill up
the above stated vacancies.
(a) Casual callers
(c) Promotion
(d) Advertisement
75. Dev joined a factory as a production manager. Soon, he realized that the
production targets were not being met. The prime reason for this was the
incompetency of the workers to operate the new hi-tech machinery and
equipments which had been recently installed in the factory. Suggest a
suitable method of training which may be adopted by Dev.
(a) Internship training
(c) Apprenticeship training
76. Supreme Ltd. is known for its unique product range across the world as
one of the leading wire and cable manufacturers in India. One of the
prime reason for the success of the company is its investment in human
assets. The company broadly carries out a kind of process in the
organisation to constantly improve the performance within the
organisation. Which aims to increase the potential of employees in
relation to the current job. Identify the process being described above.
(a) Training
(b) Development
(c) Controlling
(d) Organising
77. Sneha runs a KPO (Knowledge Process Outsourcing) in Agra. The

services provided by her firm include all kinds of research and
information gathering, in fields such as financial market, medicine,
animation and design, etc. Sneha believes that the success of a business
mainly depends upon the people it chooses to employ. Therefore, she
aims to attract the best people and provides them innumerable
opportunities to enhance their knowledge and skill relevant to their
position.
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Identify the related function of management.

(a) Planning
(b) Organising
(c) Staffing
(d) Directing
78. Ruhani has established a small scale furniture manufacturing unit after
completing a course in interior designing. She has tied up with the
hotels in the city for providing her expert services. She believes that
controlling without planning is blind. So, every time she gets an order,
she sets the standards in terms of the number of personnel required, the
estimated requirements in man-hours, the requirements of direct
materials for the projected production and the amount of normal
overhead expenses required at the projected work-load. She also keeps a
close watch on the activities so as to ensure that they conform to plans.
Whenever the order size is too large she hires extra workers by placing a
notice on the notice-board of the factory specifying the details of the jobs
available.
Identify the function of management not being performed by Shruti.
(a) Planning
(b) Staffing
(c) Controlling
Fill in the blanks.

1. ……………………….. is the function of management which is concerned
with obtaining, utilising and maintaining a satisfactory and satisfied
work force.
2. ……………….. would facilitate an estimation of the number and types of
human resources essential for the performance of various jobs and
achievement of organisational goals.
3. The process of searching for prospective employees and stimulating
them to apply for job positions within an organization is known as
4. ……….................... equips the managers with the required technical and
managerial skills.
5. …………………..seeks to measure the worth of an employee to an
organisation.
6. The process of introducing the selected employee to other employees and
familiarising him with the rules and policies of the organisation is
known as……………………….
7. …………………….. refers to the vertical movement of an employee along
the organisational structure.
8. The use of………………….. sources of recruitment restricts the infusion
of fresh blood within the organization.
9. ……………………….is a type of selection test that seek to evaluate the
potential of a candidate in acquiring new skills and develop.
10. An …………………… training program works through a collaboration
between an educational institute and business firms.
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1. Workload analysis would make known the number and type of the
manpower available within the organisation.
2. Orientation is the process of choosing from among the pool of the
3. Development is an act of increasing the knowledge and skill of an
employee for doing a particular job.
4. Recruitment from external sources helps to save time, effort and money
and the need for induction training is minimised.
5. Recommendations of employees is categorised as an internal source of
recruitment.
6. The use of external sources of recruitment is a lengthy and tedious
process, as it involves a series of time consuming steps.
7. Transfer refers to the horizontal movement of employees along the
organisational structure.
8. Under Vestibule training method, the trainee is placed under guidance
of a master worker.
9. Induction training is a joint programme of training between educational
institutions and business firms.
10. Apprenticeship training is an off-the-job training method.

1.
Column A Column B
(i) Finding the right people for the right job (a) Recruitment
(ii) Negative process (b) Staffing
(iii) Positive process (c) Training
(iv) Act of increasing the knowledge and skill of an (d) Selection
employee
(a) (i)-(b); (ii)-(c); (iii)-(a); (iv)-(d)

(b) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(c) (i)-(d); (ii)-(b); (iii)-(a); (iv)-(c)
(d) (i)-(b); (ii)-(d); (iii)-(c); (iv)-(a)
2.
Column A Column B
(i) Direct Recruitment (a) Hiring through database of unsolicited
applications
(ii) Labour Contractors (b) Filling up the vacancies at the middle
level and top level management
(iii) Casual callers (c) Placing a notice on the notice board
specifying the details of the various jobs
available within the organization
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(iv) Placement agencies and (d) Source for hiring unskilled worker at a
management consultants very short notice
(a) (i)-(b); (ii)-(c); (iii)-(a); (iv)-(d)

(b) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(c) (i)-(d); (ii)-(b); (iii)-(a); (iv)-(c)
(d) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
3.
Column A Column B
(i) Trade test (a) Defines the interests of the candidate
(ii) Personality test (b) Evaluate the potential of a candidate in acquiring
new skills and develop
(iii) Aptitude test (c) Provide an insight in to a person‟s emotions, her
reactions, maturity and value system etc.
(iv) Interest test (d) Measure the knowledge, skills and proficiency that a
candidate possess with regard to a particular job
position.
(a) (i)-(b); (ii)-(c); (iii)-(a); (iv)-(d)

(b) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(c) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
(d) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
4.
Column A Column B
(i) Career oriented process (a) On-the-job training method
(ii) Vestibule training (b) Development
(iii) Apprenticeship training (c) Training
(iv) Job oriented process (d) Off-the-job training method
(a) (i)-(b); (ii)-(c); (iii)-(a); (iv)-(d)

(b) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(c) (i)-(d); (ii)-(b); (iii)-(a); (iv)-(c)
(d) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
5.
Column A Column B
(i) Reference and Background (a) Proposal in terms of job position
checking
(ii) Selection decision (b) Face to face interaction
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(iii) Employment interview (c) Final decision about hiring the

candidate(s)
(iv) Job Offer (d) Establish the credibility of the
person
(a) (i)-(b); (ii)-(c); (iii)-(a); (iv)-(d)

(b) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
6.
Column A Column B
(i) Pre-conceived notions of receiver (a) Distrust
(ii) Pre-occupied mind of receiver (b) Organisational facilities
(iii) Receiver and sender do not believe each (c) Premature evaluation
other
(iv) Lack of transparency in operations of (d) Lack of attention
management
(a) (i)-(a); (ii)-(c); (iii)-(b); (iv)-(d)

(b) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
(c) (i)-(d); (ii)-(b); (iii)-(c); (iv)-(a)
(d) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
7.
Column A Column B
(i) Fear of challenge to authority (a) Organizational barrier
(ii) Distrust (b) Semantic barrier
(iii) Status (c) Personal barriers
(iv) Unclarified assumptions (d) Psychological barriers
(a) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)

(b) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
(c) (i)-(d); (ii)-(b); (iii)-(c); (iv)-(a)
(d) (i)-(c); (ii)-(b); (iii)-(a); (iv)-(d)
8.
Column A Column B
(i) Omission of needed words (a) Organizational Facilities
(ii) Prejudices against the communication (b) Organizational policy
(iii) Suggestion box (c) Badly expressed message
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(iv) Highly centralised organization (d) Premature evaluation
(a) (i)-(a); (ii)-(c); (iii)-(b); (iv)-(d)

(b) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
1. Assertion (A): Staffing is the most important and critical drive of
organisational productivity.
Reason (R): It is believed that an organisation can accomplish its
objectives only when it has placed the right persons in the right
positions.
(a)Both the statements (A) and (R) are correct and (R) is the right
explanation of (A)
(b)Both the statements (A) and (R) are correct but (R) is not the right
explanation of (A)
2. Assertion (A): Staffing is seen as a generic function of management.

Reason (R): Selection seeks to attract suitable applicants to apply for
available jobs,
explanation of (A)
explanation of (A)
3. Assertion (A): Staffing is an inherent part of human resource

management.
Reason (R): The training and development of the staff is an important
aspect of the staffing process.
explanation of (A) (b) Both the statements (A) and (R) are correct but
(R) is not the right explanation of (A)
4. Assertion (A): Staffing is referred to as both a line as well as a staff

activity. Reason (R): Staffing is considered to be an essential function of
the manager.
explanation of (A)
explanation of (A)
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5. Statement I: Estimation of manpower requirements is merely involves

determining how many persons are needed in an organisation.
Statement II: Workforce analysis would enable an assessment of the
number and types of human resources available within an organisation.
6. Assertion (A): Recruitment is regarded as a positive process.

Reason (R): The essential objective of selection is choosing from the pool
of the prospective job candidates.
explanation of (A)
explanation of (A)
7. Statement I: Internal sources of recruitment may be used to an

unlimited extent. Statement II: External sources of recruitment may be
used to a limited extent,
8. Statement I: Transfer involves a vertical movement of employees.

Statement II: Promotion is a vertical shifting of employees.
9. Statement I: Intelligence tests are used to measure the level of

intelligence quotient of an individual.
Statement II: Intelligence tests is a measure of individuals potential for
learning new skills.
10. Statement I: On-the-Job methods means learning while doing.

Statement II: Off-the-Job methods means learning before doing.
167 | P a g e

11. Assertion (A): At times the receiver may assess the message before the
communication is complete.
Reason (R): The personal factors of both sender and receiver are likely
exert influence on effective communication.
explanation of (A)
explanation of (A)
12. Assertion (A): The sender must adjust the message according to the
needs and interest of the receiver.
Reason (R): The message should be thought-provoking to arouse
response from the listeners.
explanation of (A)
explanation of (A)
(c) Statements (A) is correct but statement (R) is incorrect *->
13. Statement I : The personal factors of only the sender are likely exert
influence on effective communication.
Statement II: Sometimes a subordinate may deliberately suppresses
particular communication thinking that when shared it may adversely
affect his authority.
14. Assertion (A): An organization should give reward or appreciation for a

good suggestion to the employees.
Reason (R): If some kind of incentive is provided for communication the
subordinates are likely to take initiative to communicate.
explanation of (A)
explanation of (A)
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Answer Key

Q Ans Q Ans Q Ans Q Ans Q Ans Q Ans
1 C 14 D 27 A 40 C 53 C 66 A
2 B 15 D 28 D 41 C 54 A 67 D
3 C 16 D 29 B 42 B 55 A 68 C
4 D 17 A 30 C 43 C 56 A 69 A
5 C 18 B 31 D 44 C 57 B 70 A
6 A 19 A 32 C 45 A 58 A 71 B
7 A 20 D 33 D 46 C 59 B 72 B
8 C 21 B 34 D 47 A 60 C 73 B
9 D 22 D 35 D 48 C 61 A 74 B
10 D 23 D 36 D 49 B 62 A 75 B
11 B 24 C 37 D 50 A 63 A 76 A
12 A 25 C 38 B 51 A 64 A 77 C
13 A 26 D 39 A 52 A 65 B 78 D
Fill in the blanks Matching Assertion-Reason

True or false
Questions Questions
1 Staffing 1 False 1 B 1 A
2 Workload analysis 2 False 2 D 2 C
3 Recruitment 3 False 3 C 3 B
4 Training 4 False 4 B 4 B
5 Performance appraisal 5 False 5 D 5 D
6 Orientation 6 True 6 D 6 B
7 Promotion 7 True 7 A 7 B
8 Internal 8 False 8 C 8 D
9 Aptitude Test 9 False 9 C
10 Internship 10 False 10 A
11 B
12 A
13 D
14 A
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Chapter: 07
Directing
• State the concept, importance, principles and elements of directing;
• Outline the concept of supervision and its importance;
• Explain the meaning, process and importance of motivation;
• Describe Maslow‟s need hierarchy theory as a basis for motivation in an
organisation;
• Outline the various financial and non-financial incentives;
• Describe the concept, importance and different styles of leadership and
qualities of a good leader;
• Explain the meaning, process and importance of communication;
• Distinguish between formal and informal communication;
• Identify and explain the different barriers to effective communication; and
• State the various measures to improve the effectiveness of
communication.
 Directing: Directing refers to the process of instructing, guiding,
motivating and leading people in the organisation for the purpose of
achieving organisational goals.
 Supervision: Supervision is the process of overseeing the work of a
subordinate by his superior.
 Motivation: Motivation is the process of stimulating people to action
in order to accomplish desired goals.
 Incentive: Incentive means all measures which are used to motivate
people to improve performance.
 Financial incentives: The incentives which are in direct monetary
form or measurable in monetary terms are known as financial
incentives.
 Non-financial incentives: The non-financial incentives are the ones
which cannot be expressed in terms of money, but at the same time
they are important to fulfil the social and emotional needs of the
individual.
 Leadership: Leadership is the process of influencing the behaviour
ofpeople by making them strive voluntarily towards achievement of
organisational goals.
 Communication: Communication is defined as a process of exchange
of ideas, views, facts, feelings etc., between or among people, to create
common understanding.
 Execution function / initiates action: Directing
 Overseeing the work: Supervision
 Stimulating people: Motivation
 Internal feelings: Motivation
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 Primary needs: Basic physiological needs

 Protection against physical and emotional harm: Safety needs
 Need for a sense of belongingness: Affiliation needs
 Highest level of needs: Self-actualization needs
 Self-respect/status need: Esteem needs
 Converting the message into communication symbols: Encoding
 Process of influencing in a desired manner: Leadership
 One-way communication: Autocratic Leadership
 Using forces within the group/encouraging employee participation:
Democratic Leadership
 Giving autonomy to subordinates: Laissez-faire Leadership
 Process of converting encoded symbols of the sender: Decoding
 Hindrance to communication: Barriers
 Communication flow through official channels: Formal
communication
 Refer to flow of communication from subordinate to superior: Upward
communication
 Communication takes place between one division and another:
Horizontal/lateral communication
 Grapevine: Informal communication
 These barriers are concerned with problems and obstructions in the
process of encoding and decoding of message into words or
impressions: Semantic barriers
 Emotional or psychological factors act as barriers: Psychological
barriers
 Personal factors of both sender and receiver may exert influence on
effective communication: Personal barriers

Features of Directing
 Directing initiates action- The actual work starts only when the
directing function is in action.
 Directing takes place at every level of management- This implies
that the directing function is performed wherever the superior-
subordinate relation exists.
 Directing is a continuous process-The function of directing is to be
performed continuously throughout the lifetime of an organisation.
 Directing flows from top to bottom- The function of directing is first
initiated at the top level management and then it flows down along the
management hierarchy to the lowest level.
Importance of Directing
 Directing initiates action- Directing seeks to initiate action by telling
people in the organisation as to what they are supposed to do and
ensuring that they do it to the best of their ability and skill.
 Directing helps to integrate goals- Directing leads to integration of
individual goals of the employees with organisational goals in such a
manner that while working towards the realisation of the
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organisational goals, an individual is also able to realise his personal

goals.
 Directing guides employees- Directing seeks to provides effective
guidance, motivation and leadership to the employees so that they are
able to optimise their potential.
 Directing facilitates changes- Directing ensures cooperation of the
employees in order to implement changes effectively by overcoming
resistance of people.
 Ensures stability and balance- Effective directing helps to ensure
that a balance is maintained among the various groups, activities and
the departments.
Elements of Directing
 Supervision
 Motivation
 Leadership
 Communication
Principles of Directing
 Maximum individual contribution: According to this principle
through effective directing techniques the managers must support
every employee in the organisation to optimise their work potential for
achievement of organisational objectives.
 Harmony of objectives: This principle emphasises on the need for
integration of individual objectives of employees and the
organisational objectives.
 Unity of Command: According to this principle, a subordinate should
receive instructions and be answerable to one immediate superior
only.
 Appropriateness of direction technique: According to this principle,
the motivational and leadership technique should be used keeping in
view the individual needs, capabilities, attitudes and other situational
variables.
 Managerial communication: According to this principle, Effective
communication which ensures proper feedback is the key to
successful running of an organisation.
 Use of informal organisation: According to this principle, a manager
should effectually use informal groups within the organisations exist
within every formal organisation to get valuable feedback.
 Leadership: This principle guides the manager to create positive
influence on the managers in order to bring about the desired
changes.
 Follow through: In order to ensure effective implementation of orders
regular follow up is essential so that timely corrective actions can be
initiated.
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Importance of Supervision
 A good supervisor act as a friend, guide and philosopher to the
workers.
 A supervisor acts as a link between workers and management.
 A supervisor plays a crucial role in maintaining group unity among
workers placed under his control.
 A supervisor ensures performance of work according to the target set
and motivate the workers effectively.
 A supervisor provides good on the job training to the employees.
 A supervisor with good leadership qualities can build high moral
among the workers.
 A good supervisor analyses the work performed and gives feedback to
the workers.
Features of Motivation
 Motivation is an internal feeling: Motivation refers to the urge,
drives, desires, aspirations, which are innate to an individual but
likely to influence his/her behaviour.
 Motivation produces goal directed behaviour- Motivation facilitates
focus upon the goal and triggers actions in that direction.
 Motivation can be either positive or negative- The motivation
provided to a person may be either positive or negative in nature.
 Motivation is a complex process- The very fact that the individuals
may differ in terms of their expectations, perceptions and reactions
makes the process of motivation very complex in nature.
Importance of Motivation
 Motivation helps to increase the performance- Motivation leads to
higher productivity of the individual employees as well as the
organisation.
 Motivation helps mould the attitudes- Through the use of effective
motivators, a manager can successfully mould the negative or
indifferent attitudes of employees to positive attitudes in order to
realise the organisational goals.
 Motivation helps to reduce the labour turnover- In - order to avoid
such a situation, where employee leaves the organisation, it is
important that effective motivation is provided to them.
 Motivation helps to reduce absenteeism- In order to ensure least
absenteeism from the employees of an organisation, enough
motivation should be provided to them in the form of attendance
appreciation and several others.
 Motivation helps managers to introduce changes- Motivation helps
to overcome the resistance of employees in this regard and facilitate
the process of smooth transition in the organisation.
Process of Motivation
1. Identify unsatisfied needs
2. Tension
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3. Drives
4. Search behavior
5. Satisfied need
6. Reduction of tension
Maslow's Need Hierarchy Theory of Motivation

 Basic Physiological Needs- It refers to the needs that are most basic
in the hierarchy, like hunger, thirst, shelter etc.
 Safety/Security Needs- It refers to the needs to get security and
protection from physical and emotional harm.
 Affiliation/Belonging Needs- It refers to the needs that relate to
affection, sense of acceptance, companionship, belongingness etc.
which are innate in every individual.
 Esteem Needs- The esteem needs relate to self-respect for oneself and
the prestige or status of self in the eyes of others.
 Self-Actualisation Needs- It refers to needs to become everything one
is capable of becoming, e.g. growth, achievement of goals, etc.
Assumptions of Maslow’s Need Hierarchy Theory

 The behaviour of people is based on their needs. Satisfaction of such
needs influences their behaviour.
 People‟s needs are in hierarchical order, starting from basic needs to
other higher level needs.
 A satisfied need can no longer motivate a person; only next higher
level need can motivate him.
 A person moves to the next higher level of the hierachy only when the
lower need is satisfied.
Types of Incentives
 Financial incentives
 Non-financial incentives.
Types of Financial Incentives

 Pay and allowances- In order to motivate employees, it is important
that the salary system followed in the organisation offers increments
in the pay every year and appreciation of allowances from time-to-
time.
 Productivity linked wage incentives- An organisation adopts
incentive based wage plans in order to motivate workers towards
increasing productivity.
 Bonus: A bonus payment is an incentive offered to the employees over
and above the wages/salary paid to them.
 Profit Sharing- Under this incentive, the employees of the
organisation are provided a share in the profits of the organisation.
 Co-partnership/ Stock option- Under these incentive schemes, the
shares of the company are offered at a set price to its employees,
which is lower than market price.
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 Retirement Benefits- The retirement benefits commonly offered by

an enterprise include provident fund, pension and gratuity.
 Perquisites- Under this incentive, the employees are offered
perquisites and fringe benefits like housing facility, car allowance,
reimbursement of medical expenses, free education of children, etc.
Types of Non-Financial Incentives
 Status- status refers to ranking order of job positions within an

organisation. Higher the position held by a person in an organisation,
higher is the status enjoyed by him in the organisation.
 Organisational Climate- The climate of an organisation depends
upon a number of factors, like individual autonomy granted to the
employees at each level, parameters used for reward system, kind of
concern and consideration shown towards the employees, approach to
risk-taking etc.
 Career Advancement Opportunity- A sound promotion policy should
be followed because promotion works as a tonic and encourages
employees to exhibit improved performance.
 Job Enrichment- Job enrichment is concerned with designing jobs in
a manner that it offers greater variety of work content, requires higher
level of knowledge and skill, gives the employees more autonomy and
responsibility; and provides opportunity for personal growth and a
meaningful work experience.
 Employee Recognition Programmes- Every organisation should
adopt a suitable employee recognition program so as to activate its
employees‟, motivation in the desired manner. E.g., congratulating the
employee for good performance, displaying on the notice board or in
the company news letter about the achievement of an employee,
installing award or certificate for best performance, distributing
mementos, complimentaries like t-shirts in recognition of employee
services, rewarding an employee for giving valuable suggestions, etc.
 Job Security- Job security creates a sense of stability in the employee
about the future in terms of both work and income.
 Employee Participation- An organisation may encourage the
involvement of the employees in many ways, like by forming of joint
management committees, work committees, canteen committees, etc.
 Employee Empowerment- Empowerment instils a feeling of trust and
motivates the employees to contribute wholeheartedly towards the
success of the organisation.
Features of Leadership
 Leadership shows the ability of an individual to influence others.
 Leadership seeks to bring about a desired change in the behaviour of
others.
 Leadership reflects the interpersonal relations between leaders and
followers.
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 Leadership is an effective tool to achieve common goals of the

organisation.
 Leadership is a continuous process.
Importance of Leadership
 Leads to positive changes- Good leaders help to bring about a
positive change in the employees by influencing their behaviour.
 Achievement of goals- A good leader creates a healthy work
environment by providing the required support to the employees so as
to build up their self confidence and morale.
 Introduce changes smoothly- A good leader helps to introduce the
required changes in the organisation smoothly and with least amount
of discontentment.
 Resolves conflicts- A leader tries to resolve the conflicts among the
employees amicably without leading to any .adverse consequences.
 Provides training- A good leader provides training to his or her
followers so as to create future leaders. He ensures that the process of
his succession is carried out smoothly.
Leadership Styles
 Autocratic leadership- An autocratic leader is one who believes in
centralising control in his own hands and does not take any advice
from his subordinates.
 Democratic leadership- A democratic leader encourages active
participation of a subordinate in the process of decision making and
action, although the final authority rests with him.
 Laissez-faire leadership- A laissez-faire leader believes in giving
complete freedom to his or her subordinates, so as to enable them set
their own targets and also determine the ways of achieving them.
Qualities of a good leader

 Physical features: Attractive personality of a good leader attracts
people.
 Knowledge: A good leader should have essential knowledge and
competence.
 Integrity: A good leader should posses high level of integrity and
honesty so as to idealised as a role model by his followers.
 Initiative: A good leader should be resourcefulness to take the
opportunity and use it to the benefit of organisation.
 Communication skills: A good leader should be both a good speaker
and a good listener.
 Motivation skills: A good leader should be able to simulate people
towards desired actions.
 Self Confidence: A good leader should have high degree of self-
confidence.
 Decisiveness: A good leader should have the ability to take balanced
decisions and be firm on them.
 Social skills: A good leader should possess good inter personal skills.
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Elements Involved in Communication process

 Sender
 Message
 Encoding
 Medium
 Decoding
 Receiver
 Feedback
 Noise
Importance of Communication
 Acts as the basis of co-ordination- Effective communication lays
down the base for establishing co-ordination among the various
interrelated and interdependent activities of an organisation.
 Helps in smooth working of an enterprise- It is only through
effective communication that a manager is able to integrate the
various resources so as to achieve the organisational goals in the
desired manner.
 Acts as basis of decision making- In order to take correct decisions,
it is very important that the managers are provided timely, accurate
and complete information about the related aspects.
 Increases managerial efficiency- Effective communication serves to
work as a lubricant and facilitates smooth working of an organisation.
 Promotes co-operation and industrial peace- Effective
communication seeks to develop a sense of mutual cooperation
between the workers and management so that industrial peace
prevails within the organisation.
 Establishes effective leadership- Good communication skill is
considered to be one of the prime qualities of an effective leader.
 Boosts morale and provides motivation- Without effective
communication, it is unlikely that the manager will be able to boost
the morale of this subordinates.
Types of Communication
 Formal communication- Formal communication flows through scalar
chain which is the official chain of communication. Formal
communication may take place vertically or horizontally within the
organisation. Vertical communication is of two types i.e. upward and
downward communication. Horizontal communication takes place
between one division and another.
 Informal communication - Informal communication takes place
independent of the formal lines of communication and helps to fulfil
the social and emotional needs of the employees.
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Barriers to Communication
 Semantic barriers- Semantic barriers relate to the difficulties and
hindrances that may occur in the process of encoding and decoding of
the message in the desired mode.
 Psychological barriers- In the situations, where the emotions or
psychological factors obstruct the smooth flow of _ communication,
psychological barriers are said to exist.
 Organisational barriers- When the factors related to the organisation
obstruct the smooth flow of communication, organisational barriers
are said to exist.
 Personal barriers- When the personal factors related to both sender
and receiver create an influence on effective communication, personal
barriers are said to exist.
Types of Semantic barriers

 Badly expressed message
 Symbols with different meanings
 Faulty translations
 Unclarified assumptions
 Technical jargon
 Body language and gesture decoding
Types of Psychological barriers

 Premature evaluation
 Lack of attention
 Loss by transmission and poor retention
 Distrust
Types of Organisational barriers

 Organisational policy
 Rules and regulations
 Status
 Complexity in organisation structure
 Organisational facilities
Types of Personal barriers

 Fear of challenge to authority
 Lack of confidence of superior on his subordinates
 Unwillingness to communicate
 Lack of proper incentives
Improving Communication Effectiveness

 Clarify the ideas before communication- A manager should himself
be crystal clear about the various aspects of a problem before he
communicates the same to his subordinates.
 Communicate according to the needs of receiver- A manager
should always match his communication with the level of education
and comprehension of the subordinates.
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 Consult others before communicating- A manager should seek the

involvement of the subordinates right from the inception of the plan.
He is likely to get their ready acceptance and wholehearted co-
operation in this manner.
 Be aware of languages, tone and content of message- The message
being communicated should not offend the receiver in any manner
and at the same time it should be successful in evoking the desired
response from them.
 Convey things of help and value to listeners- In order to ensure
that the message has been conveyed in the original sense, it is
important that the sender gives due consideration to the interest and
needs of the receiver.
 Ensure proper feedback-The receiver should be stimulated to give a
timely and appropriate feedback with reference to the message
conveyed.
 Communicate for present as well as future- In order to ensure
continuous survival and growth of the organisation, it is important
that the communication is so designed that it fulfills not only the
existing needs of the organisation, but also incorporates a vision
about its future.
 Follow up communications- In order to ensure effective and efficient
implementation of plans, it is important for the managers to seek
regular follow up and review from their subordinates.
 Be a good listener- In order to ensure efficient management in action,
a manager needs to give due attention to the problems, grievances,
complaints or suggestions that are shared by his subordinates.
Difference between Different Styles of Leadership
S.No. Basis Autocratic/ Democratic Laissez-faire

Authoritative Leadership Leadership
Leadership
1. Meaning Autocratic Democratic Laissez-faire
leader is one leaders believe leaders believe
who believes in in delegating in giving
centralising authority and complete
control in his encouraging freedom to
own hands. participation their
from the employees.
employees.
2. Focus It is also It is also It is also
known as known as known as
leader/ boss group centred subordinate
centred leadership. centred
leadership. leadership.
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3. Flow of One way flow of Two way flow of Free flow of

communication communication communication communication
takes place takes place takes place in
from the leader from superior all the
to followers. to subordinate directions.
and vice versa.
4. Decision The leader The leader The leader
making takes all the involves allows his/her
decisions on his/her followers to
his/her own followers play a more
without actively in the active role in
consulting his process of the decision
followers. decision making.
making.
5. Influence The leader uses The leader uses The leader does
his complete forces from not use power
power by the within the unless
virtue of his group. absolutely
position in the essential but
organisation to maintains
exercise tight contact with
control over the followers.
them.
6. Approach The leader The leader The leader
himself encourages encourages
determines involvement of involvement of
both thehis followers, his followers,
objectives to be both in both in
achieved and determination determining
the ways of of the the objectives
achieving objectives to be to be achieved
them. achieved and and the ways of
the ways of achieving
achieving them.
them.
7 Scope Autocratic Democratic Subordinates
leadership style style of may move in
facilitates leadership is different
quick decision- time directions and
making. consuming and may work at
may lead to cross purpose
delays in which may
decision- create
making. problems for
the
organisation.
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Difference between Formal Communication and Informal

Communication
S.N Basis Formal Informal
o. Communication Communication
1. Meaning Formal communication Informal communication
flows through scalar takes place independent
chain which is the of the formal lines of
official chain of communication.
communication.
2. Purpose Formal communication Informal communication
is essential in order to helps to fulfil the social
carry out the and emotional needs of
organisational work the employees which is
smoothly and achieve not possible through
goals. formal channels.
3. Direction of Formal communication Informal communication
flow may take place is also known as
vertically, horizontally grapevine because it
or diagonally within the spreads with its branches
organisation. going out in all directions
within the organisation
without any regard to
formal chain of
communication.
4. Form The formal Informal communication
communications may is generally verbal.
be either verbal or
written.
5. Authentificatio It is easy to It is not easy to
n/ proof authenticate formal authenticate informal
communication as it is communication as no
kept as records within records are maintained
the organisation. and it leads to spreading
of rumours within the
organisation.
6. Source It is easy to detect the It is very difficult to detect
source of any formal the source of informal
communication. communication.
7 Speed The flow of formal The flow of informal
communication may be communication is very
delayed because it fast, thereby making it
follows a well-defined very useful during
path. emergencies.

1. It refers to the process of instructing, guiding, counselling, motivating
and leading people in the organisation to achieve their objectives.
(a) Planning
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(b) Organising
(c) Staffing
(d) Directing
2. Which of the following is not an element of directing?

(a) Supervision
(b) Communication
(c) Leadership
(d) Inspection
3, While other functions prepare a setting for action, name the function
that initiates action in the organisation.
(a) Planning
(b) Organising
(c) Staffing
(d) Directing
4. Identify the level at which the directing function takes place in an

organisation?
(a) Top level management
(c) Lower level management
5. It is defined as the process of guiding the efforts of employees and other

resources to accomplish the desired objectives.
(a) Supervision
(b) Communication
(c) Leadership
(d) Inspection
6. It means the process of making subordinates to act in a desired manner

to achieve certain organisational goals.
(a) Supervision
(b) Communication
(c) Leadership
(d) Motivation
7. Effective motivation in the organisation does not contribute towards ......

(a) Developing performance levels of employees
(b) Helping to reduce employee turnover
(c) Resistance to changes in the organisation
8. These needs are most basic in the hierarchy of motivation theory and
correspond to primary needs.
(a) Self Actualisation Needs
(b) Basic Physiological Needs
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(c) Security Needs

(d) Belonging Needs
9. Mohit recently got a raise in his salary due to annual increment. Which
of his human needs is being satisfied through this?
(a) Security Needs
(b) Belonging Needs
(c) Self Actualisation Needs
(d) Basic Physiological Needs
10. Which of the following is not an assumption of Maslow‟s theory?

(a) People‟s behaviour is not based on their needs.
(b) Satisfaction of such needs influences their behaviour.
(c) A satisfied need can no longer motivate a person; only next higher
level need can motivate him.
(d) A person moves to the next higher level of the hierarchy only when
the lower need is satisfied.
11. It refers to all measures which are used to motivate people to improve
performance.
(a) Leadership
(b) Motivation
(c) Incentives
(d) Communication
12. Which of the following is not an example of financial incentive?

(a) Perquisites
(b) Job Enrichment
(c) Profit Sharing
(d) Co-partnership
13. Which of the following is not an example of non-financial incentive?

(a) Career Advancement Opportunity
(b) Perquisites
(c) Status
(d) Organisational Climate
14. Ashutosh works as a manager in Kuber Ltd. Besides the salary, the
company offers him benefits such as free housing, medical aid and
education to the children, etc. Identify the type of incentive being offered
to him.
(a) Perquisites
(b) Job Enrichment
(c) Co-partnership -
(d) Pay and allowances
15. On joining Kartar Ltd. as Chief Financial Officer, Madhumita was

allotted 500 shares of the company. Identify the type of incentive being
described.
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(a) Perquisites
(b) Retirement Benefits
(c) Co-partnership
16. Boom Limited gives due weightage to the perquisites and prestige of job
so that the designation helps to satisfy the psychological, social and
esteem needs of an individual. Identify the type of incentive being
(a) Employee empowerment
(b) Job security
(c) Status
(d) Perquisites
17. On joining Foster Public School as a Physical Education teacher, Vikram

realised that he did not have any freedom to introduce any changes in
the sports activities being carried out in the school. Identify the incentive
which was being ignored by the school,
(a) Organisational climate
(b) Job security
(c) Career advancement opportunities
(d) Employee recognition program
18. On the occasion of the Founders Day of the firm, Veena was felicitated
with the certificate of best performer as a Business Development
Manager. Identify the type of incentive being described in the above
lines.
(a) Career advancement opportunities
(b) Employee recognition program
(c) Organisational climate
(d) Job security
19. Ishan works as an Accounts Officer in Fabrications Limited. He also

feels very proud of the fact that he is the incharge of recreation
committee in his office. Identify the type of incentive being offered to
Ishan.
(d) Employee participation
20. It is the process of influencing the behaviour of people by making them

strive voluntarily towards achievement of organisational goals.
(a) Supervision
(b) Communication
(c) Leadership
(d) Motivation
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21. As the General Manager of an e-commerce company, Gagan maintains

good interpersonal relations with followers and also motivates them to
contribute for achieving organisational goals.
(a) Supervision
(b) Communication
(c) Determination
(d) Leadership
22. Which of the following is not a feature of leadership?

(a) It shows ability of an individual to influence others.
(b) It leads to achievement of organisational goals.
(c) Leadership is one-time process.
(d) It leads to desired change in the organisation.
23. It refers to the process of exchange of ideas, views, facts, feelings etc.,
between or among people to create common understanding.
(a) Supervision
(b) Communication
(c) Motivation
(d) Leadership
24. Identify the correct sequence of steps involved in the communication

process.
(a) Sender, Message, Encoding, Media, Decoding, Receiver, Feedback
(b) Sender, Decoding, Receiver, Feedback, Message, Encoding, Media
(c) Sender, Message, Encoding, Media, Decoding, Receiver, Feedback
(d) Sender, Media, Decoding, Receiver, Message, Encoding, Feedback
25. Formal communication may take place between ………………………..

(a) Superior and subordinate
(b) Subordinate and superior
(c) Two managers at the same level
26. Upward communications refer to flow of communication from

………………..
(a) Subordinate to superior
(b) One departmental manager to another
(c) Superior to subordinate
27. Downward communications refer to flow of communication

from………………
(a) One departmental manager to another
(b) Superior to subordinate
(c) Subordinate to superior
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28. Lateral communication takes place from …………………

(a) First to second division of the same organisattion
(b) Superior to subordinate
(c) Subordinate to superior
29. It is very difficult to detect the source of such communication.

(a) Upward communication
(b) Vertical communication
(c) Lateral communication
(d) Informal communication
30. Which of the following is not a type of communication barriers?

(a) Semantic barriers
(b) Psychological barriers
(c) Rational barriers
(d) Organisational barriers
31. Which of the following is not a type of semantic barriers?

(a) Badly expressed message
(b) Unclarified assumptions
(c) Technical jargon
(d) Premature evaluation
32. Which of the following is not a type of psychological barriers?

(a) Premature evaluation
(b) Lack of attention
(c) Fear of challenge to authority
(d) Distrust
33. Which of the following is not a type of personal barrier?

(a) Fear of challenge to authority
(b) Unwillingness to communicate
(c) Loss by transmission and poor retention
(d) Lack of proper incentive
34. Which of the following ways help in improving the communication

effectiveness?
(a) Ensuring proper feedback
(b) Being a good listener
(c) Ensuring follow up patience
35. As the incharge of a small scale factory manufacturing glassware, Raghu

guides his subordinates and clarifies their doubts in performing a task,
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so that they are able to achieve the work targets given to them. Identify
the function of management being described in the above lines.
(a) Planning
(b) Staffing
(c) Directing
(d) Organising
36. Yajur, as a Project Manager, is able to assess the true potential of his
subordinates and constantly motivates them to realise their full
potential. Identify the element of directing being described in the above
lines.
(a) Leadership
(b) Communication
(c) Supervision
(d) Motivation
37. Suman works as a Project Co-ordinator in an export house. Whenever

the workload is high, she is able to convince her team by explaining to
them the purpose, providing training and motivating them with
additional rewards so as to be able to win their wholehearted co-
operation. Identify the element of directing being described in the above
lines.
(a) Supervision
(b) Motivation
(c) Leadership
(d) Communication
38. As an employee of an automobile company, Suraj has always been very

lazy and evasive. In order to change his behaviour, his boss decided to
give him an incentive. Identify the feature of motivation being described
in the above lines.
(a) Motivation is an internal feeling.
(b) Motivation produces goal-directed behaviour.
(c) Motivation is a complex process.
39. Radhika runs a confectionary in a local market. In order to make the

workers in the Confectionary work optimally, she on one hand provide0
them overtime wages and on the other hand imposes penalty, if
required, by deducting the wages. Identify the feature of motivation
being described in the above lines.
(d) Motivation can be either positive or negative.
40. In order to motivate the workers in the factory to work overtime, Manoj
decided to provide additional wages to the workers. On knowing this, a
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worker in his factory, Madhur, was very happy, whereas Raju was
disappointed as he preferred to go back home on time rather than
working for overtime wages. Identify the feature of motivation being
(d) Motivation can be either positive or negative.
41. Identify the correct sequence of steps involved in the motivation process.
(a) Tension, drives, search behaviour, unsatisfied need, satisfied
behaviour, reduction of tension
(b) Unsatisfied need, tension, drives, search behaviour, satisfied
(c) Drives, search behaviour, unsatisfied need, tension, satisfied
(d) Search behaviour, reduction of tension, unsatisfied need, tension,
drives, satisfied behaviour
42. Esha was facing the problem of high labour turnover in her firm. On the
advice of her friend, she introduced special benefits for the employees,
which helped her to retain talented people in the organisation. Identify
the related point of importance of motivation.
(a) Motivation helps to improve performance levels of employees.
(b) Motivation helps to reduce employee turnover.
(c) Motivation helps to reduce absenteeism in the organisation.
(d) Motivation helps to mould the attitudes of employees.
43. Yamini received a special gold coin from her school management for
exceptionally good board result of her students in her subject. Identify
the need of Yamini being fulfilled as per Maslow‟s Need Heirarchy
Theory.
(a) Esteem Needs
(b) Belonging Needs
44. Jay and Lal work in a garment factory. Jay always earns a higher wage
than Lal, as he produces more units of output. Identify the type of
financial incentive being adopted by the company.
(a) Perquisites
(b) Productivity linked wage incentives
(c) Co-partnership
45. During the year 2018, Halla Walla Limited made surplus profits due to
growing reputation of the business as a result of sincerity of its
employees. In order to give due recognition to its employees and
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motivate them to continue with the good work, the company decided to
give a certain percentage of profits to them. Identify the type of financial
incentive being adopted by the company.
(a) Perquisites
(b) Productivity linked wage incentives
(c) Co-partnership
(d) Profit sharing
46. Om Limited adopts a systematic performance appraisal system which

provides opportunity to employees to improve their skills and be
promoted to the higher level jobs. Identify the type of incentive being
adopted by the company.
(a) Employee recognition programme
(b) Organisational climate
(d) Job security
47. Dheeraj Madan works as a Human Resource Manager in Busybee

Limited. He gives due care in designing jobs, so that it offers a
meaningful work experience by assuming a diversity of work content
requiring higher level of knowledge. Identify the type of incentive being
adopted by the company.
(a) Employee recognition programme
(b) Organisational climate
(d) Job enrichment
48. On the successful completion of two years in a company, Harsh received

a letter confirming his job as permanent employee. Identify the need of
Harsh being fulfilled as per Maslow‟s Need Heirarchy Theory.
(a) Esteem Needs
(b) Security Needs
49. Identify the style of leadership in which the superior uses the forces
from within the groups in order to establish control.
(a) Autocratic leadership
(b) Democratic leadership
(c) Laissez-faire leadership
(d) Authoritarian leadership
50. Adishwar Communications Limited organizes cultural evening programs

for its employees, wherein the employees get an opportunity to exhibit
their special talents. Identify the type of need of the employees being
satisfied by the company through this initiative.
(a) Financial need
(b) Social need
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(c) Monetary need

51. Prateek works as a Supervisor in a factory where he is responsible for

production on time and has to ensure labour productivity. Therefore, he
follows one-way communication, wherein the workers are made to
realise the targets and are expected to act according to the command
given by Prateek. Identify the style of leadership being described in the
above fines.
(a) Autocratic
(b) Democratic
(c) Participative
(d) Laisez faire
52. As a Marketing Manager of Chirag Limited, Arun develops the target for
the month in consultation with his subordinates. Identify the type of
leadership style being followed by Arun.
(a) Authocratic
(b) Democratic
(c) Laisez faire
53. Chinna runs a chain of kitchenware stores dealing in Chinese products.

She offers a high degree of independence to the various store managers
to formulate their own objectives and ways to achieve them by keeping
in view the local scenario. Identify the type of leadership style being
detailed above.
(a) Democratic
(b) Authocratic
(c) Laisez faire
54. Identify the step in the communication process which relates to

converting encoded symbols of the sender.
(a) Encoding
(b) Decoding
(c) Media
(d) Feedback
55. In order to synchronise the activities of the various departments within

the organisation, Varun holds inter-departmental meetings on regular
basis, wherein each department is made aware of its individual targets,
keeping in view the interdependency of one department on another.
Identify the related point, highlighting the importance of communication.
(a) Increases managerial efficiency
(b) Ensures smooth running of enterprise
(c) Acts as basis for coordination
(d) Establishes effective leadership
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56. In order to improve upon the performance of her team, Sujatha holds
meetings on regular basis in order to facilitate the adjustment of the
employees within the organisation and improve upon the human
relations. Identify the related point highlighting the importance of
communication.
(a) Boost morale and provide motivation
(b) Acts as a basis for decision making
(c) Ensures smooth running of organisation
57. Suhana works as a CBSE Co-ordinator in a reputed school in Jamnagar.

Every time she downloads any circular from cbse website, she gives a
copy of it first to the Principal of the school. Identify the type of vertical
communication being described in the above lines.
(a) Diagonal
(b) Upward
(c) Downward
58. In order to promote the multidisciplinary approach in education, a

reputed online education company conducts regular meetings of various
subject heads in the organisation. Identify the type of formal
(a) Upward
(b) Downward
(d) Diagonal
59. On being found guilty of misbehaviour, Tejinder Singh was issued a

warning letter by his superior. Identify the type of vertical
(a) Downward
(b) Upward
(c) Diagonal
60. Although, Tappu and Gappu work at different levels in a company, they
leave no opportunity to gossip about their bosses during the lunch break
everyday. Identify the type of communication being described in the
above lines.
(a) Formal
(b) Informal
(c) Upward
(d) Downward
61. On joining an insurance company as a Business Development Manager,

Geeta noticed that the work environment is very casual and the
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employees waste a large amount of their time in chatting. Identify the

type of communication being described in the given case.
(a) Diagonal
(b) Informal
(c) Formal
62. In order to give a greater exposure to the children, Champion Public

School organised a talk on stock market for the Commerce students.
However, the students did not gain much from the event as the resource
person used a lot of technical words while explaining about stock
market, which were beyond the comprehension of the students. Identify
the type of communication barrier being described in the above lines.
(a) Semantic
(b) Organisational
(c) Personal
(d) Psychological
63. In order to promote common interests, a residential welfare meeting was

organised in Sukhman Housing Complex. The notice of the meeting was
sent to the residents without specifying the duration of the meeting.
Identify the type of communication barrier being described in the given
lines.
(a) Technical Jargon
(b) Unclarified assumption
(c) Faulty translation
(d) Badly empressed message
64. Drishti joins a government school as a History teacher. She notices that
one student in her class, Dipesh, has been coming late to the class for
past one week. So she tends to form an opinion about him that he is an
undisciplined child. As a result, even when Dipesh is willing to share
some meaningful information in the class, Drishti doesn‟t pay much
attention towards him. Identify the type of communication barrier being
described in the above case.
(a) Distrust
(c) Premature evaluation
(d) Status
65. After having a heated argument with his colleague, Jay Madan proceeds
to attend an auditors‟ meeting in the conference room. Throughout the
meeting, he kept thinking about his bitter relationship with his colleague
and did not grasp much of the content that was being discussed in the
meeting. Identify the type of communication barrier being described in
the above lines. Also state the category to which it belongs.
(a) Lack of attention
(c) Premature evaluation
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(d) Unclarified assumption
66. Govind works as a casual worker in a factory. One day he sees the
Supervisor stealing goods from the warehouse, but still he decides to
remain quite about the matter, thinking that by sharing it with the
Production Manager he may himself land into trouble as he may not
believe him. Identify the type of communication barrier being described
in the above lines. Also state the category it belongs to.
(a) Lack of incentive
(c) Distrust
(d) Fear of challenge to authority
67. Within few days of joining Gupta Enterprises as a Section Officer,

Praveen Kumar realised that his superior prefers to keep a distance from
his subordinates and does not encourage any kind of communication
with them. Identify the type of communication barrier being described in
the above lines.
(a) Organisational facilities
(c) Status
(b) Technical Jargon
(d) Lack of incentive
68. Winsome Limited organises open house meetings for its employees on
regular basis, where they are allowed to share their grievances, if any,
openly with their superiors. Identify the type of communication barrier
which the company is trying to curb through this approach.
(a) Status
(c) Organisational policy
(b) Organisational facilities
(d) Rules and Regulations
69. Virender has recently joined a company as a Marketing Head. He is

facing a lot of behavioural issues with one of his subordinates, Subhash
Kumar. However, when the General Manager asked him about his
experience in the company, he decided to not to disclose anything about
the problem related to Subhash Kumar, thinking that it might create an
adverse effect on his competency as a Marketing Manager. Identify the
type of communication barrier being described in the above lines.
(a) Unwillingness to communicate
(c) Status
(d) Fear of challenge to authority
70. Naina joined a fashion wear company as a design expert. Being very
creative and enthusiastic about her work, she would initially shared her
innovative ideas with her superior Jyotsna. However, over a period of
time, she realised that Jyotsna never appreciates her contribution. She
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made up her mind not to give any suggestion henceforth. Identify the
type of communication barrier being described in the above lines. Also
state the category to which it belongs.
(a) Lack of confidence of superior over subordinates
(b) Organisational policy
(c) Lack of incentive
(d) Unwillingness to communicate
Fill in the blanks.

1 ……………… seeks to initiate action by telling people in the organisation
as to what they are supposed to do and ensuring that they do it to the
best of their ability and skill.
2 …………………is a type of incentive scheme in which the shares of the
company are offered at a set price to its employees which is lower than
market price.
3 ………………. Is concerned with designing jobs in a manner that it offers
greater variety of work content.
4 ……………….. shows the ability of an individual to influence others.
5. The kind of communication that flows through scalar chain which is
official chain of communication is known as …………………
6. The type of incentives which are in measurable in monetary term are
known as …………………..incentives.
7. By providing stability of income to its employees the company is able to
fulfil the ……………….. needs of its employees.
8. Only one way flow of communication takes place i.e. from the leader to
followers under ……………………. style of leadership.
9. The process of converting the message into communication symbols
such as words/ pictures etc. is known as ……………………
10. In case the working of an organisation is characterised by rigid rules
and regulations it may lead to development of …………………….barriers
in communication.
11 ………………. isthe category of barriers which is concerned with
problems and obstructions in the process of encoding and decoding of
message into words or impressions.
12 …………………… is the type of semantic barriers to communication that
may arise due to usage of wrong words.
13 ……..……………. Is the type of semantic barriers to communication
occurs when people may not understand the actual meaning of
terminology used by specialist in a particular field while communicating.
14. The state of mind of both sender and receiver of communication may
create …………………… barrier to communication.
15. When people are not interested in the content of message, they cannot
retain the information for a long time it leads to development of
……………….. barrier to communication.
16. When a subordinate deliberately suppresses particular communication
thinking that when shared it may adversely affect his authority,
……………. Barrier to communication is said to exist.
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17. At times the communication in an organization gets delayed and

distorted due to presence of number of managerial levels. This is an
example of …………….. barrier to communication.

1. Leadership is the function of management that will help the
management of a handicraft unit in overcoming resistances of the
workers with regard to introduction of some major changes.
2. Motivation is always positive in nature.
3. One of the assumptions of Maslow‟s need hierarchy theory is that a
person moves to the next higher level of hierarchy even when the lower
need not is satisfied.
4. Esteem Needs refers to the needs that relate to affection, sense of
acceptance and companionship, belongingness etc. which are innate in
every individual.
5. Congratulating the employee for good performance is a way of promoting
employee participation incentive.
6. A democratic leader believes in giving complete freedom to their
subordinates, so as to enable them set their own targets and also
determine the ways of achieving them.
7. Premature evaluation is a type of personal barrier.
8. With the use of appropriate words and language as per the needs and
understanding level of receiver the various types of semantic barriers
can be avoided.
9. The source of informal communication can be detected easily.
10. If an employee deliberately hides a particular information due to fear of
challenge to authority it may lead to creation of psychological barriers.

1.
Column A Column A
(i) Supervision (a) Process of influencing others in desired manner
(ii) Communication (b) Stimulating people
(iii) Leadership (c) Overseeing work
(iv) Motivation (d) Exchange of ideas
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a-); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
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2.
Column A Column B
(i) Self Actualisation Needs (a) Primary needs
(ii) Basic Physiological (b) Protection against physical and emotional
Needs harm
(iii) Security Needs (c) Sense of belongingness need
(iv) Affliation Needs (d) Highest level of need
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)
3.
Column A Column B
(i) Perquisites (a) Provident fund
(ii) Career Advancement Opportunity (b) Prestige of job
(iii) Retirement Benefits (c) Skill development programmes
(iv) Status (d) Car allowance
(a) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
4.
Column A Column A
(i) Democratic (a) One way communication
Leadership
(ii) Lai zee faire (b) Using forces within the group/ encouraging
Leadership employee participation
(iii) Autocratic (c) Giving autonomy to subordinates
Leadership
(a) (i)-(a); (ii)-(b); (iii)-(c)

(b) (i)-(b); (ii)-(c); (iii)-(a)
(c) (i)-(c); (ii)-(b); (iii)-(a)
(d) (i)-(a); (ii)-(c); (iii)-(b)
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5.
Column A Column B
(i) Upward Communication (a) Grapevine
(ii) Downward (b) Scalar chain
communication
(iii) Formal communication (c) Communication from subordinate to
superior
(iv) Informal communication (d) Communication from superior to
subordinate
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(b); (iv)-(a)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
6.
Column A Column B
(i) Unclarified assumptions (a) Psychological barriers
(ii) Fear of challenge to authority (b) Semantic barriers
(iii) Distrust (c) Organizational barriers
(iv) Status (d) Personal barriers
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
1. Assertion (A): Directing enables introduction of needed changes in the
organisation smoothly.
Reason (R): Effective directing enables a manager to develop required
cooperation in introducing changes in the organisation.
explanation of (A)
explanation of (A)
2. Statement I: Motivation is a complex process.

Statement II: The people are homogeneous in their expectations,
perceptions and reactions.
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3. Assertion (A): The lack of incentives within an organisation leads to

high rate of employee turnover.
Reason (R): Motivation helps to reduce absenteeism in the organisation.
explanation of (A)
explanation of (A)
4. Statement I: An autocratic leader follows a two-way communication

model.
Statement II: An autocratic leader does not wish to be contradicted.
5. Assertion (A): At times the receiver may assess the message before the
communication is complete.
Reason (R): The personal factors of both sender and receiver are likely
exert influence on effective communication.
explanation of (A)
explanation of (A)
(a) Both the statements ( A) and (R) are correct and (R) is the right
explanation of (A)
explanation of (A)
7. Statement I: The personal factors of only the sender are likely exert
influence on effective communication.
Statement II: Sometimes a subordinate may deliberately suppresses
particular communication thinking that when shared it may adversely
affect his authority.
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8. Assertion (A): An organization should give reward or appreciation for a

good suggestion to the employees.
Reason (R): If some kind of incentive is provided for communication the
subordinates are likely to take initiative to communicate.
explanation of (A)
explanation of (A)
Answer Key

1 D 11 C 21 D 31 D 41 B 51 A 61 B
2 D 12 B 22 C 32 C 42 B 52 B 62 A
3 D 13 B 23 B 33 C 43 A 53 C 63 B
4 D 14 A 24 C 34 D 44 B 54 B 64 C
5 A 15 C 25 D 35 C 45 D 55 C 65 A
6 C 16 C 26 A 36 A 46 C 56 A 66 C
7 C 17 A 27 B 37 C 47 C 57 B 67 C
8 B 18 B 28 A 38 B 48 B 58 C 68 B
9 D 19 D 29 D 39 D 49 B 59 A 69 D
10 A 20 C 30 C 40 C 50 B 60 B 70 C
Fill in the blanks True or Matching Assertion-Reason

false Questions

1 Directing 1 False 1 C 1 A
2 Co-partnership 2 False 2 D 2 C
3 Job enrichment 3 False 3 A 3 B
4 Leadership 4 False 4 B 4 D
5 Formal communication 5 False 5 C 5 B
6 Financial 6 False 6 B 6 A
7 Safety/Security Needs 7 False 7 D
8 Autocratic 8 True 8 A
9 Encoding 9 False
10 Organisational 10 False
11 Semantic
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12 Badly expressed message

13 Technical jargon
14 Psychological
15 Psychological
16 Personal
17 Organisational
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Chapter: 08
Controlling
• State the meaning, features and importance of controlling;
• Describe the steps involved in the process of controlling;
• Explain the relationship between planning and controlling; and
• Techniques of controlling
Controlling: The managerial function of controlling refers to the process of

ensuring that the activities in an organisation are performed as per the
plans. “The management function of control is the measurement and
correction of the performance of subordinates in order to make sure that
enterprise objectives and plans devised to attain them are accomplished.‟‟
—Koontz & O’Donnell
 Ensuring that events confirm to plans: Controlling

 Difference between planned performance and actual performance:
Deviation
 If you try to control everything, you end up controlling nothing:
Management by exception
 Key result areas: Critical point control
 Forward looking function: Planning /controlling
 Backward looking function: Planning /controlling
 Random quality checking: Sample checking
 Critical points for success of an organisation: Key result areas

Features of Controlling
 It is a goal-oriented function.
 It is a pervasive function, as it is carried out in the organisations of
varying types and sizes.
 It is considered to be a forward looking function, as it helps to improve
future performance by providing valuable feedback for reviewing and
revising the standards.
 It is considered to be a backward looking function, as it is like the
post mortem of the past activities to ascertain the deviations, if any.
 It is not the last function of management, as it brings the
management cycle back to the planning function.
Importance of Controlling
 Accomplishing organisational goals- The controlling function
facilitates constant monitoring of the actual performance in
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comparison to the predetermined standards. It brings to light the

deviations, if any, and indicates corrective action.
 Judging accuracy of standards- A good control system enables
management to validate whether the standards set are correct and
objective.
 Making efficient use of resources- By implementing a good control
system, a manager is able to curb the wastage and spoilage of
resources because each action is performed in accordance with fixed
standards.
 Improving employee motivation- An effective control system
motivates the employees by informing them well in advance about (a)
the level of performance expected from them, and (b) what are the
standards of performance on the basis of which their performance will
be evaluated.
 Ensuring order and discipline- The regular monitoring of the
employees‟ performance seeks to establish a sense of order and
discipline in the organisation.
 Facilitating co-ordination in action- Effective controlling creates co-
ordination because the efforts of each department and employee are
governed by well-defined standards, which serve as a basis for
integrating one task with another.
Relationship between Planning and Controlling

 Planning and controlling are inseparable twins of management.
Planning without controlling is meaningless and controlling without
planning is blind.
 Planning is prescriptive whereas controlling is evaluative.
 Planning is looking ahead and controlling is looking back.
 Planning precedes controlling and controlling succeeds planning.
 Thus, planning and controlling are interrelated and reinforce each
other because:
 Planning is based on facts and makes controlling process easier
and adds to the effectiveness.
 Controlling also adds to the effectiveness of planning process by
providing valuable feedback based on past experiences.
Steps involved in the Controlling Process

 Setting performance standards- The first step in the controlling
process involves setting standards in clear, specific and measurable
terms.
 Measurement of actual performance- The next step relates to the
measurement of actual performance. Depending upon the nature of
work, various techniques for measurement of performance like
personal observation, sample checking, performance reports, etc. may
be used.
 Comparison of actual performance with standards-
 This step involves comparison of actual performance with the
standard, and the deviations are noted.
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 Analysing deviations- Once the deviations are identified, it is

important to analyse them through: I. Critical point control
 II. Management by exception
 Taking corrective action- This is the final step involved in the
controlling process. When the deviations go beyond the acceptable
range, corrective action is required.
Techniques of Managerial Control

 Traditional Techniques
 Modern techniques
Traditional Techniques of Managerial Control

 Personal observation: Though time consuming it is the most
traditional technique of controlling to collect first-hand information.
 Statistical reports: Different tools of statistical analysis like
calculation of averages, percentages, ratios, correlation, etc.,
empowers the managers to understand the working of the
organisation in an more accurate manner.
 Breakeven analysis: Breakeven analysis is a technique that helps in
calculating profitability of business at different levels of activities.
 Formula for calculating Breakeven point : Breakeven Point = Fixed
Costs /(Selling price per unit - Variable cost per unit)
 Budgetary control: This technique involves monitoring of all activities
within an organisation against the predetermined budgetary
standards.
Modern techniques of Managerial Control

 Return on Investment: This technique reflects whether or not
invested capital has been used effectively for generating reasonable
amount of return. It can be calculated as under. Rol = Net income
before interest and tax/Capital Employed
 Ratio Analysis: It involves analysis of financial statements through
calculation of ratios. These includes:
 Liquidity Ratios: It determine short-term solvency of business.
 Solvency Ratios: It determines the ability of a business to
service its indebtedness.
 Profitability Ratios: It reflects the profitability position of a
business.
 Turnover Ratios: It reflects the efficiency of operations in terms
of effective utilisation of resources.
 Responsibility accounting: It is a system of accounting in which
different sections, divisions and departments of an organisation are
set up as „Responsibility Centres‟
 Cost Centre: The managers of cost centre are held responsible for the
cost incurred in the centre but not for the revenues. For example, in a
manufacturing organisation, production department is classified as
cost centre.
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 Revenue Centre: The managers of this centre are mainly

responsible for generating revenue.
 Profit Centre: The managers of this centre are mainly
responsible for both revenues and costs.
 Investment Centre: The managers of this centre are mainly
responsible both for profits and investments made in the centre
in the form of assets.
 Management Audit: It refers to systematic appraisal of the
functioning, performance and effectiveness of management of an
organisation.
 PERT and CPM PERT (Programme Evaluation and Review
Technique) and CPM (Critical Path Method): These are important
network techniques suitable for planning, scheduling and
implementing time bound projects involving performance of a variety
of complex, diverse and interrelated activities.
 Management Information System: It is a computer- based
information system that provides information and support for effective
managerial decision-making and controlling.
Advantages of Budgetary control

 Budgeting helps in realisation of the organisational objectives.
 Budgeting standards serves as source of motivation to the employees
as it enables them to perform better by making them aware of targets
beforehand.
 Budgeting ensures optimum utilisation of resources through their
effective allocation.
 Budgeting serves as the basis for coordination both within and among
different departments of an organisation.
 Budgeting facilitates management by exception by providing bench
mark for performance.
Types of budgets
 Sales Budget: It is a numerical plan that reflects the projected sales
of an organisation in a specific time period.
 Production Budget: It is a numerical plan that reflects the projected
production of an organisation in a specific time period.
 Material Budget: It is a numerical plan that reflects the projected
quantity and cost of materials required for desired level of production.
 Cash Budget: It is a numerical plan that reflects the projected cash
inflows and outflows for an organisation in a specific time period.
 Capital Budget: It is a numerical plan that reflects the projected
investments of an organisation on long term assets in a specific time
period.
 Research and Development Budget: It is a numerical plan that
reflects the projected outlay of an organisation in a specific time
period on development or refinement of products and processes.
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1. It is the process of ensuring that events confirm to plans.

(a) Planning
(b) Controlling
(c) Organising
(d) Directing
2. The controlling function is performed by ………………….

(b) Lower level management
(c) Middle level management
3. Controlling function brings the management cycle back to

the………………..
(a) Organising function
(b) Directing function
(c) Planning function
4. Deviations are said to be positive in nature when……………..

(a) Planned performance is more than the actual performance
(b) Actual performance is more than the planned performance
(c) Both planned and actual performances are same
5. Which of the following is not an importance of controlling function?

(a) It ensures order and discipline
(b) It restricts co-ordination in action
(c) It helps in judging accuracy of standards
(d) It improves employee motivation
6. Which of the following statements does not highlight the relationship

between planning and controlling?
(a) Planning and controlling are separable twins of management.
(b) Planning without controlling is meaningless, controlling without
planning is blind.
(c) Planning is prescriptive, controlling is evaluative.
(d) Planning and controlling are interrelated and interdependent.
7. Which of the following statements is true with respect to controlling

function?
(a) It is a forward looking function.
(b) Is a backward looking function.
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8. Identify the correct sequence of the steps involved in the controlling

process.
(a) Measurement of actual performance, Taking corrective action, Setting
performance standards, Comparison of actual performance with
standards, Analysing deviations
(b) Comparison of actual performance with standards, Setting
performance standards, Measurement of actual performance,
Analysing deviations, Taking corrective action
(c) Setting performance standards, Measurement of actual performance,
Comparison of actual performance with standards, Analysing
deviations, Taking corrective action
(d) Taking corrective action, Measurement of actual performance,
deviations, Setting performance standards
9. Which of the following is a technique used for measuring actual

performance?
(a) Random sampling
(b) Personal observation
(c) Performance reports
10. The comparison of actual performance with the planned performance

becomes easier if the standards are set in ………………
(a) Qualitative terms
(b) Quantitative terms
(c) Either of the above
11. This concept of Control Management is based on the belief that if you try
to control everything, you may end up controlling nothing.
(a) Critical point control
(b) Key result areas
(c) Management by exception
(d) Deviations
12. When the deviations between the actual performance and the planned
performance are within the limits ……………….
(a) A limited corrective action is required
(b) No corrective action is required
(c) A major corrective action is required
13. In an artificial plants manufacturing unit, the standard output set for a
worker is 50 units per day. Dinesh produces 48 units in one day. In the
given case, the value of deviation is
(a) -2
(b) + 2
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(c) 98
14. The need for the controlling function is felt in ...

(a) Business organisations
(b) Political organisations
(c) Social organisations
15. Om Prakash has set up a small business unit for the manufacturing of
detergent. In order to market the detergent in the local residential areas,
he has appointed a team of ten salesmen. Each salesman is expected to
sell at least 200 units of the detergent within a week‟s time. Identify the
point of importance of controlling being highlighted in the above case.
(a) Controlling helps in judging accuracy of standards.
(b) It ensures efficient use of resources.
(c) It helps in improving employee motivation.
(d) It facilitates co-ordination in action.
16. Controlling is known as a backward-looking function because

(a) It relates to future course of action.
(b) It is like a post-mortem of the past activities
(c) To find out deviation, it aims at improving future performance.
17. Reducing the workers, absenteeism in a factory by 20% is an example of

…………….
(a) Quantitative standard
(b) Qualitative standard
(c) Deviation
18. Yash runs a logistic company. The tour incharges of each trip in the
company are expected to submit a report to the Event Manager on the
completion of every trip. Identify the step in the controlling process being
(a) Setting of standards
(b) Measurement of actual performance
(c) Taking corrective action
(d) Analysing the deviations
19. In a marketing firm, the Financial Manager pays more attention towards
an increase of 3% in the marketing cost as compared to a 15% increase
in the courier expenses. Identify the concept being used by the manager.
(a) Management by exception
(b) Critical point control
(c) Corrective action
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20. An important project at AMB consultants is running behind schedule by

a month. This has upset their clients and might affect the reputation of
the company in the long run. No managerial action like assigning more
workers, equipment or giving overtime has been able to solve the
problem. What managerial action may now be taken by the company to
avoid such a situation from arising in the future?
(a) Revise the schedule
(b) Assigning additional workers and equipment to the project
(c) Get permission for further overtime work
(d) Both (b) & (c)
21. Vasu runs a chain of Quick Service Restaurant in various parts of Delhi.
Through, feedback from the customers he has anaysed that there is a
need for improving customer satisfaction in his self-service outlets. So,
he sets standards in terms of time taken by a customer to wait for a
table, time taken by him to place the order and time taken to collect the
order. Moreover, he deploys a team of executives to study the actual
pattern of these activities in all of his QSR chain outlets and give him a
report on their assessment. Identify the function of management being
performed by Vasu.
(a) Planning
(b) Organising
(c) Controlling
(d) Directing
22. Essence Ltd. is a renowned name for quality dryfruits since 1985. Rajat
the owner of Essence Ltd. was worried as the sales had fallen during the
last two months. The Marketing Manager conducted a research and
found out that customers felt that the packaging of the dryfruit was not
effective in preserving its quality. Therefore Rajat visited the factory for
sample checking of packages of dry fruits. Identify the step taken by
Rajat that is related to one of the functions of management.
(a) Setting standards
(b) Measurement of actual performance
(c) Analysing deviation
(d) Taking corrective action
23. Sikander runs an Auto Repair Shop in Khan market in New Delhi. He
has devised a way to measure the productivity and performance of his
employees in terms of how many cars are being repaired by each
mechanic on a weekly basis. He follows a repair quota system under
which each mechanic must fix ten engines, patch five tires and replace
15 windshield wipers each week. Henceforth, he decides to the measure
the performance of each mechanic and compare it with the preset
standards. Once he evaluates the information on the basis of its effect
on the working of the business, he provides feedback to each employee
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as this will help them make improvements to their work. Name the
function of management being perfomed by Sikander.
(a) Organising
(b) Controlling
(c) Directing
(d) Staffing
24. Rakesh is the Production Manager of Indi Fabrics Pvt. Ltd., an

organisation that promotes the sales of Indian handloom and handicraft
products while providing equitable employment to traditional artisans.
Indi Fabrics Pvt. Ltd sources its products from over 9000 craft persons
and artisans across India. Recently, when Rakesh discovered that his
team of designers had produced cushion covers that were more
expensive than they had planned to sell, he decided to change the fabric
to keep costs in check. Identify the function of management being
highlighted in the above paragraph.
(a) Planning
(b) Staffing
(c) Controlling
(d) Directing
25. Products of meat and poultry have often been connected to the
occurrence of food borne illnesses. Therefore, all businesses that
produce meat and poultry should design and operate through scientific
process that can be approved to effectively eliminate, reduce, or prevent
food safety hazards. Name the function of management being described
above.
(a) Directing
(b) Controlling
(c) Staffing
(d) Planning
26. „Deliver Tech Ltd.‟ is a popular courier company in India. Effective

monitoring of its operations is one of the key to the company‟s increased
profits during the past decade. An important part of the monitoring
system is the ability to track customers‟ parcels at each stage of
collection, shipment and delivery. With the use of internet enabled
systems the company has been able to attract and hold new customers
by providing them with crucial information as needed. The customers
can log onto the company‟s website and follow the progress of their
packages.
Identify the function of management involved in the above paragraph.
(a) Planning
(b) Organising
(c) Staffing
(d) Controlling
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27. Planning is evaluative whereas, controlling is prescriptive.

(a) True
(b) False
(c) Partly True
(d) Partly false
28. It is considered to be a backward looking function, as it is like the post

mortem of the past activities to ascertain the deviations if any.
(a) Planning
(b) Organising
(c) Directing
(d) Controlling
29. „Live Healthy Ltd.‟ is a company known for manufacturing different types
of mosquito repellants. The hi-tech system of production ensures
standardisation in the output. The company has a well-equipped in-
house quality inspection cell where all the products are tested on
various parameters of quality by the team of experienced quality staff.
The quality assurance team conducts rigorous quality checks at all
stages of the product production, records and analysis the deviations
and takes the necessary corrective actions right from the procurement of
raw material to its processing, production and packaging. Identify the
function of management being discussed above.
(a) Planning
(b) Controlling
(c) Directing
(d) Organizing
30. Abhay works as a manager in an export house. He has identified that an

important order is running behind schedule. Identify the function of
management being described above.
(a) Planning
(b) Directing
(c) Controlling
(d) Staffing
31. Jasraj is working as a production manager in a textile mill. Over the

years he has learned to follow two principles of control. Firstly, it is
neither economical nor easy to keep a check on each and every activity
in the factory. Secondly, an attempt to control everything results in
controlling nothing. Identify the concept underlying these principles.
(b) Management by exception
32. Vivek rims a furniture shop in Delhi under the name „Angel Creations‟.
He has received an order from an upcoming school for supplying 3000
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desks within ten days. He employs thirty carpenters on the site

assuming that an average carpenter will be able to make 10 desks in a
day. At the end of the first day of their work Vivek finds that carpenter A
and carpenter B have made 6 and 7 desks, respectively. On comparision
he finds that all the other workers have met their daily output targets.
On introspecting of the deviations he realises that both carpenter A and
B are not well versed with the nature of work so they work very slowly.
Identify the function of management being discussed above.
(a) Planning
(b) Controlling
(c) Directing
(d) Staffing
33. Controlling function is like a postmortem of past activities to find out

deviations from the standards. This statement reflects that the
controlling function is a function.
(a) Forward looking
(b) Backward looking
(c) Both
34. Ishika is running a small unit which manufactures different kinds of

handicraft items in Jaipur. Recently she noticed a down fall in the
production levels of her factory. On introspection she found out that her
staff was engaged in too much of gossiping during work hours. This
trend set in only after she hired Suhana as a craft worker. So she
decided to talk to Suhana and make her aware of the rules at the work
place.
Identify the function of management being referred to in the above lines.
(a) Planning
(b) Directing
(c) Controlling
(d) Staffing
35. In a shoe manufacturing company it has been observed that the

deviations have increased drastically and the projects are running
behind schedule.
Name the related function of management which has helped to identify
these discrepencies.
(a) Planning
(b) Organising
(c) Controlling
(d) Directing
Fill in the blanks.

1 is ………………… the process of ensuring that events confirm to plans.
2. Controlling function brings back the management cycle back to the
……………… function.
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3. The concept of…………….. Is based on the belief that, if you try to

control everything, you may end up controlling nothing.
4. Control is not a one time activity. This statement highlights that
controlling is a ………………… process.
5 ………………. is pre-requisite for controlling.
6. In the controlling process, the deviation between actual and desired
results is revealed in the step …………………
7. When the deviations go beyond the acceptable range …………………
action is required.
8. Planning and ………………. are inseparable twins of management.
9. Planning is prescriptive whereas, controlling is ………………
10. Planning is looking ahead while controlling is ……………..
11. Planning ……………. controlling and controlling succeeds planning.

1. The controlling function is performed only by Top level management.
2. Deviations are said to be positive in nature when the planned
performance is less than the actual performance.
3. Planning without controlling is meaningless, controlling without
planning is blind.
4. Controlling function is not a forward looking function.
5. Performance reports is a technique used for measuring actual
performance.
6. The comparison of actual performance with the planned performance
becomes easier if the standards are set in qualitative terms.
7. When the deviations between the actual performance and the planned
performance are within the limits, a limited corrective action is required.
8. The need for the controlling function is felt only in the business
organisations.
9. In the controlling process, for comparing actual performance with
standards certain units are checked at random for quality as sample
checking.
10. According to the concept of „Management by Exception‟ controlling
activities within an organization should focus on key result areas (KRAs)
which are critical to its success.

1.
Column A Column B
(i) Postmortem of past activities (a) Quantitative standards
(ii) Looking ahead (b) Qualitative standards
(iii) Production cost per unit (c) Planning
(iv) Improving goodwill (d) Controlling
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
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(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)

(d) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
2.
Column A Column B
(i) Sample checking (a) Critical point control
(ii) Focus on key result areas (b) Taking corrective action
(iii) An attempt to control everything results (c) Measurement ofActual
in controlling nothing performance
(iv) Creating provision for overtime work (d) Management by
Exception
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(a); (iii)-(d); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
3.
Column A Column B
(i) Faulty machinery (a) Alteration the quality specification
(ii) Production target not achieved (b) Deputing additional workers
(iii) Substandard material (c) Repair or replace the machinery
(iv) Project is running behind (d) Training of workers
schedule
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(c) (i)-(c); (ii)-(d); (iii)-(b); (iv)-(a)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
4.
Column A Column B
(i) Prescriptive (a) Pervasive function
(ii) Evaluative (b) Judging accuracy of standards
(iii) Feature of controlling (c) Planning

(iv) Importance-of controlling (d) Controlling
(a) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(a); (iii)-(d); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
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1. Assertion (A): Controlling is a primary function of every manager.
Reason (R): The top level managers perform controlling functions to
keep an overall control over the organisation.
explanation of (A)
explanation of (A)
(c)Statements (A) is correct but statement (R) is incorrect
(d)Both statements (A) and (R) are incorrect
2. Statement I: Controlling should be considered as the last function of

management. Statement II: Controlling function brings back the
management cycle back to the planning function.
(b)Both the Statement I and Statement II are false
(c)Statement I is true but Statement II is false
(d)Statement I is false but Statement II is true
3. Assertion (A): Planning and controlling are inseparable twins of

management.
Reason (R): Controlling presupposes the existence of predetermined
standards against which the actual performance is compared.
explanation of (A)
explanation of (A)
4. Statement I: Planning function may be carried out independent of

controlling function.
Statement II: Controlling function is dependent on planning function.
5. Statement I : Controlling is blind without planning.

Statement II: Controlling function provides standards for measurement
of actual performance.
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6. Statement I: Controlling is fundamentally an intellectual process which

involves thinking.
Statement II: Controlling function indicates how far the decisions have
translated into desired actions.
7. Assertion (A): Planning and controlling are inseparable twins of

management.
Reason (R): Planning presupposes the existence of predetermined
standards against which the actual performance is compared.
explanation of (A)
explanation of (A)
8. Statement I: Planning is blind without controlling.

Statement II: Controlling function provides standards for measurement
of actual performance.
9. Statement I: Planning is fundamentally an intellectual process which

involves thinking.
Statement II: Controlling function indicates how far the decisions have
translated into desired actions.
Answer Key
1 B 11 C 21 C 31 B
2 D 12 B 22 B 32 B
3 C 13 A 23 B 33 B
4 B 14 D 24 C 34 C
5 B 15 C 25 B 35 C
6 A 16 B 26 B
7 C 17 A 27 B
8 C 18 B 28 D
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9 D 19 B 29 B
10 B 20 A 30 C
True or Assertion-Reason
Fill in the blanks
false Matching Questions

1 Controlling 1 False 1 D 1 B
2 Planning 2 True 2 C 2 D
3 Management by exception 3 True 3 B 3 A
4 Continuous/on going 4 False 4 A 4 A
5 Planning 5 True 5 C
6 Comparing Actual 6 False 6 D
Performance with Standards
7 Corrective 7 False 7 A
8 Controlling 8 False 8 B
9 Evaluative 9 False 9 A
10 Looking back 10 False
11 Precedes
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Chapter: 09
Finance Management
• Outline the concept of Business Finance;
• Describe the concept, role and objectives of financial management;
• Discuss the meaning and importance of financial planning;
• Describe the financial decisions and the factors affecting them;
• Describe the concept of capital structure;
• Analyse the various factors affecting the capital structure decision;
• Outline the meaning of fixed capital and working capital; and
• Analyse the factors affecting the requirement of fixed and working
capital.
 Financial Management: Financial Management is concerned with
optimal procurement as well as usage of finance.
 Financial planning: The process of estimating the fund requirement
of a business and specifying the sources of funds is called financial
planning.
 Investment decisions: Investment decisions reflect as to how the
firm‟s funds have been invested in the different assets (both current
and fixed).
 Capital budgeting decisions: Capital budgeting decisions refer to the
amount of capital required for investment in fixed assets or long term
projects which will yield return and influence the earning capacity of a
business over a period of time.
 Working capital decision: Working capital decision relates to affect
in the day to day working of a business and seeks to determine the
levels of cash, inventories and debtors.
 Financing decision: Financing decision relates to determining the
quantum (amount) of funds to be raised from different sources of
finance.
 Financial risk: Financial risk refers to the inability of a business to
meet its fixed financial obligations, like payment of interest.
 Dividend Decision: Dividend Decision relates to disposal of profit by
deciding the proportion of profit which is to be distributed among
shareholders and the proportion of profit which is to be retained in the
business for meeting the investment requirements.
 Capital structure: Capital structure refers to the mix between owners
and borrowed funds. In simple words, it refers to the debt to equity
ratio. It is computed as ( Debt / Equity) or (Debt! Debt + Equity)
 Financial leverage: The proportion of debt in the overall capital is
called financial leverage. It is computed as DI E or D / D+E, when D is
the Debt and E is the Equity.
 Trading on Equity: Trading on Equity refers to the increase in the
earnings per share by employing the sources of finance carrying fixed
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financial charges like debentures (interest is paid at a fixed rate on

preference shares, dividend is paid at fixed rate).
The two conditions necessary for trading on equity are as follows:
 The amount of interest paid on debt is treated as a tax deductable
expense for computation of tax liability.
 The rate of return on investment should be more than the rate of
interest. (ROI > Rate of interest)

 Optimal procurement as well as usage of finance: Financial
Management
 Estimating quantum of funds and the related sources: Financial
planning
 Preparation of a financial blueprint of an organisation‟s future
operations: Financial planning
 These decisions affect the amount of assets, competitiveness and
profitability of business.: Long term investment decisions/ Capital
budgeting decisions
 These decisions affect the liquidity as well as profitability of a
business.: Short term investment decisions/ working capital
decisions
 This decision determines the overall cost of capital and the financial
risk of the enterprise.: Financing decision
 The mix between owners and borrowed funds: Capital structure
 These decisions affect both the profitability and the financial risk.:
Capital structure decisions
Differences Between Financial Planning and Financial Management
S.No. Basis Financial Manageemnt Financial Planning

1. Meaning Financial Management is The process of estimating the
concerned with optimal fund requirement of a
procurement as well as business and specifying the
usage of finance. sources of funds is called
financial planning.
2. Scope Financial management is Financial planning has a
wider in scope as it narrow scope and is
includes financial considered to be a part of
planning. financial management.
3. Objective The prime objective of The twin objectives of
financial management is financial planning are to
to maximise ensure availability of funds as
shareholder‟s wealth by per the requirements of the
maximising the market business and to see that the
price of a company‟s enterprise does not raise
shares. resources needlessly.
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Objectives of Financial Mangement: The prime objective of financial

management is to maximise shareholder‟s wealth by maximising the market
price of a company‟s shares.
Importance/ Role of Financial Management

 To determine the capital requirements of business, both longterm and
short-term.
 To determine the capital structure of the company and determine the
sources from where required capital will be raised, keeping in view the
risk and return matrix.
 To decide about the allocation of funds into profitable avenues,
keeping in view their safety as well.
 To decide about the appropriation of profits.
 To facilitate efficient management of cash in order to ensure both
liquidity and profitability.
 To exercise overall financial control in order to promote safety,
profitability and conservation of funds.
Financial Decisions Involved in Financial Management

 Investment Decision
 Financing Decision
 Dividend Decision
Types of Investment Decisions

 Long-term investment decisions/capital budgeting decisions
 Short-term investment decisions/ working capital decisions
Factors Affecting Long-Term Investment Decisions/ Capital Budgeting

Decisions
 Cash flows of the project
 The rate of return
 The investment criteria involved
Factors Affecting Financing Decision

 Cost- The cost of each type of finance is estimated and the source
which involves the least cost should be chosen by the financial
manager.
 Risk- The associated risk is different for each source e.g. the risk
involved in raising debt capital is higher than equity.
 Floatation Costs- A source of finance involving less floatation cost is
considered to be more preferable.
 Cash Flow Position of the Business- If the cash flow position of a
business is good, it should opt for debt, else equity.
 Level of Fixed Operating Costs- If the fixed operating cost of a
business is low, it should opt for debt, else equity.
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 Control Considerations- The issue of equity capital dilutes the

control of existing shareholders over business, whereas financing
through debt does not lead to any such effect.
 State of Capital Markets- If there is a boom in the capital market, it
is easy for the company to raise equity capital, else it may opt for debt.
Factors Affecting Dividend Decision

 Earnings- If the earnings of the company are high, it is likely to higher
dividends or vice versa.
 Stability of Earnings- If the other actors are kept constant, a
company whose earnings are stable over the years it is likely to
declare higher dividends or vice versa.
 Stability of Dividends- The companies usually tend to adopt a policy
of stabilising dividend per share as wide variations in dividend
payouts may adversely affect its goodwill.
 Growth Opportunities- If the company has lucrative forthcoming
growth opportunities it is likely to retain greater portion of its their
earnings for investment in these ventures and declare low dividends
or vice versa.
 Cash Flow Position- Since, the dividends are paid in cash, a
company is in a position to declare high dividends only when it enjoys
high liquidity besides high profitability.
 Taxation Policy- If the tax rate is high, the company is likely to pay
less dividend or vice versa.
 Stock Market Reaction- When a company declares high dividends, it
tends to create a positive impact on the investors because it leads to a
surge in its market price as well. On the contrary, declaration of low
dividends is linked to poor performance of the company and may have
a negative impact on the share prices in the stock market.
 Access to Capital Market- Since the investors prefer to invest in the
large and credit worthy companies they seem to have an easy access
to the capital market. Thus, the small companies are likely to pay
lower dividends than the larger companies.
 Legal Constraints- The management of a company needs to abide by
the provisions of the Companies Act while declaring the dividend.
 Contractual Constraints- The contractual constraints may also affect
the dividend payment by a company.
 Preferences of Shareholders- The company should given due
consideration to the preferences of shareholders, like the small
investors prefer regular income in form of dividend unlike large
investors who are willing to forgo present dividend in pursuit of higher
returns in future.
Objectives of financial planning

 To ensure availability of funds whenever these are required
 To see that the firm does not raise resources unnecessarily
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Features of financial planning

 Financial planning is the process that involves estimating the amount
of funds required by a business enterprise and also determining the
sources from where it will be raised.
 Financial planning is done by taking into consideration various
aspects like growth, performance, investments and requirement of
funds for a given period.
 Financial planning is done both on long-term and short-term basis.
 The long-term financial planning relates to capital expenditure and
facilitates the growth of the organisation through sound investments.
 A short-term financial plan is called budget, which is a detailed plan
of action for a period up to one year.
 Ideally, financial planning is done for three to five years as it may be
difficult to anticipate situations beyond a certain time period.
Importance of Financial Planning

 Sound financial planning ensures smooth running of an enterprise.
 It helps to prepare backup plans to deal with all kinds of
contingencies.
 It helps in anticipating future requirements of funds and evading
business shocks and surprises.
 It facilitates co-ordination among various departments of an
enterprise.
 It helps to establish a link between the present and the future.
 It provides a continuous link between investment and financing
decisions.
 It facilitates easy performance as evaluation standards are set in clear,
specific and measurable terms.
Factors Affecting the Choice of Capital Structure

 Cash Flow Position- If the cash flow position of the business is good,
it may use debt. As against this, if the cash flow position of the
business is bad, it may use equity.
 Interest Coverage Ratio (ICR)- If the interest coverage ratio is high,
the business may use debt but if the interest coverage ratio low, the
business may use equity.
 Debt Service Coverage Ratio (DSCR)- If the debt service coverage
ratio is high, the business may use debt but if the debt service
coverage ratio is low, the business should opt for equity.
 Return on Investment (Roll- If the return on investment is high, the
business may use debt. On the other hand, if the interest coverage
ratio is low, the business may use equity.
 Cost of debt- If cost of debt is low, more debt can be employed. As
against it, if the cost of debt is high, more of equity may be used.
 Tax Rate- A higher tax rate further reduces the cost of debt and
makes it a preferable source of finance.
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 Cost of Equity- As the proportion of debt goes beyond a certain level

in the capital structure, the risk of the shareholders increases further.
In such a situation, the shareholders may expect a higher return for
assuming greater risk.
 Floatation Costs- It is usually presumed that the cost of raising debt
is less than that of equity.
 Risk Consideration- Financial risk refers to a situation under which
a business is unable to meet its fixed financial charges. Business risk
refers to the operating risk and is directly proportional to its fixed
operating costs. Thus, if a firm‟s business risk is high, its capacity to
use debt is low, and vice-versa.
 Flexibility- In order to maintain flexibility, a firm should never use its
debt potential to the full, and always keep provision to raise debt in
unexpected situations.
 Control- Since the equity shareholders have the right to control
business, issue of further equity dilutes the control of existing
shareholders even more. As against this, issue of debt does not dilute
the control of the existing shareholders.
 Regulatory Framework- It is essential for every company to operate
within a regulatory framework to avoid any form of legal
complications.
 Stock Market Conditions- If the stock market conditions are bullish,
a company may use equity. On the contrary, during bearish period, it
is preferable for the company to opt for debt as it offers surety of
returns.
 Capital Structure of other Companies- For the successful running
of a business enterprise, its management must take into consideration
the capital structure of other companies in the same industry as it
may provide useful guidance.
Factors Affecting the Fixed Capital Requirements of a Business

Enterprise
 Nature of Business- The fixed capital requirements of a
manufacturing business are higher than a trading business.
 Scale of Operations- A business operating on large scale will require
higher investment in fixed assets as against a business operating on
small scale.
 Choice of Technique- If capital intensive production technique is
used, the fixed capital requirement for such enterprises would be
higher. On the contrary, if labour intensive production techniques are
adopted, it would require less investment in fixed assets.
 Technology Upgradation- In case a business operates on certain
technology that makes the related assets obsolete quickly, its fixed
capital requirements will be high, as constant upgradations in terms
of assets/technology may be essential.
 Growth Prospects- The fixed capital requirements of a business
enterprise planning to pursue higher growth opportunities will be
more. On the contrary, if there are no forthcoming growth
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opportunities, the fixed capital requirements of the business will not

be altered.
 Diversification- If a business firm plans to diverse, its fixed capital
requirements will increase as new investments in fixed assets may be
needed. As against this, if a business has no diversification plans in
near future, its fixed capital requirements will not be affected.
 Financing Alternatives-The availability of investment options like
leasing facilities as an alternative to outright purchase may reduce the
fixed capital requirements of funds considerably.
 Level of Collaboration- If level of collaboration is high, the fixed
capital requirements of a business is low. On the contrary, if level of
collaboration of a business is low, its fixed capital requirement is less.
 Nature of Business-A trading business requires less working capital
as compared to a manufacturing concern.
 Scale of Operations- If a business operates on a large scale, its
working capital requirements will be more, and vice versa.
 Business Cycle- During boom period, both the sales and production
are more, and consequently the requirement of working capital is
high. However, during the time of depression, the requirement of
working capital is low, because there is fall in both sales and
production levels.
 Seasonal Factors- During the peak season, the demand for the
product/service is high, therefore more working capital is required by
the concerned business. As against this, the requirement of working
capital is less during lean season.
 Production Cycle- In case of business where the production cycle is
shorter, less working capital is needed, and vice versa.
 Credit Allowed- In case a business firm follows a liberal credit policy,
its requirement of working capital is higher, as compared to a
business which follows a strict credit policy.
 Credit Availed- In case a business is able to avail the benefit of credit
purchases, its requirements of working capital will be less as
compared to a business which has to make cash purchases.
 Operating Efficiency-An inefficiency in business operations is likely
to increase the working capital requirements of a business, and vice
versa.
 Availability of Raw Material- If the raw material needed by a firm is
easily available and on a regular basis, it can operate efficiently on
lower stock levels. But if the procurement of raw materials is difficult,
the working capital requirements of the firm will be more.
 Growth Prospects- If the growth potential of a firm is perceived to be
higher, it will require higher amount of working capital so that is able
to meet higher production and sales target whenever required.
 Level of Competition- Higher level of competitiveness increases the
working capital requirement, and vice versa.
 Inflation- The working capital requirement of a business will be
higher with higher rate of inflation, and vice versa.
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1. Business finance is needed to ………………

(a) Establish a business
(b) Run a business
(c) Expand a business
2. Which of the following is not a tangible asset?

(a) Machinery -
(b) Trademarks
(c) Factories
(d) Offices
3. Financial Management aims at ……………..

(a) Reducing the cost of funds procured
(b) Keeping the risk under control
(c) Achieving effective deployment of such funds
4. Primary aim of financial management is to ……………..

(a) Maximise shareholder‟s wealth
(b) Wealth maximisation concept
(c) Maximisation of the market value of equity shares
5. This decision relates to how the firm‟s funds are invested in different
assets.
(a) Investment decision
(b) Financing decision
(c) Dividend decision
6. Purchasing a new machine to replace an existing one is an example of

…………….
(a) Financing decision
(b) Dividend decision
(c) Working capital decision
(d) Capital budgeting decision
7. The size of assets, the profitability and competitiveness are all affected
by …………….
(a) Working capital decision
(b) Capital budgeting decision
(c) Financing decision
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(d) Dividend decision
8. These decisions affect the liquidity as well as profitability of a business.

(a) Capital budgeting decision
(c) Working capital decision
9. Dev has two projects A and B in hand. The same amount of risk is
involved in both the projects. If the rate of return of project A and B is
20% and 15% respectively, then under normal circumstance, which of
the two projects is likely to be selected?
(a) Project A
(b) Project B
(c) Both project A and project B
10. This decision is about the quantum of finance to be raised from various
long-term sources.
11. The inability of a business to meet its fixed financial obligations, like
payment of interest, is known as ……………………
(a) Business risk
(b) Financial risk
(c) Long-term risk
(d) Market risk
12. The overall financial risk depends upon the ……………..

(a) Proportion of debt in the total capital
(b) Proportion of equity in the total capital
(c) Both of the above
13. This decision determines the overall cost of capital and the financial risk
of the enterprise.
(a) Dividend decision
(c) Investment decision
(d) Financing decision
14. Which of the following sources of capital should not be selected by a

business if its fixed cost is high?
(a) Equity shares
(b) Preference shares
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(c) Debentures
15. When the stock market index is rising, a company may issue…………….
In order to meet its financial requirements.
(a) Debentures
(b) Bonds
(c) Equity shares
16. When the stock market is bearish, a company may depend upon
…………..in order to raise the required funds.
(a) Debentures
(b) Equity shares
(c) Preference shares
17. Name the financial decision which relates to disposal of profits.

18. Under which of the following circumstances a company is not likely to

declare a higher dividend?
(a) When the earnings of the company are high
(b) When a company has a lucrative forthcoming business opportunity
(c) WTien the cash flow position of the company is strong
19. A company is likely to declare higher dividends if ……………

(a) Tax rates are high
(b) Tax rates are relatively lower
(c) Tax rate has no effect on dividend declaration
20. It is essentially the preparation of a financial blueprint of an

organisation‟s future operations. Identify the related concept.
(a) Financial management
(b) Financial planning
(c) Capital budgeting decisions
21. Name the process that enables the management to foresee the fund
requirements, both the quantum as well as the timing.
(a) Financial management
(b) Capital budgeting decisions
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(d) Financial planning
22. Kapil Limited is a company dealing in ready-to-eat food products. Over

the years, the earning potential of the company has gone up and it
enjoys a good reputation. The Financial Manager is confident of the fact
that not just the earnings of the current year, but of our future years are
likely to be high. Identify the related factor of dividend decision being
described in the given lines.
(a) Earnings
(b) Stability of earnings
(c) Stability of dividend
(d) Growth prospects
23. Amber Limited has been experiencing a downfall in its popularity, due to
growing competition. Also the company doesn‟t see any forthcoming
viable business expansion opportunities in the near future. So the
management of the company has decided to declare high dividends for
the current financial year. Identify the factor related to dividend decision
(a) Cash flow position
(b) Growth opportunities
(c) Stability of earnings
(d) Stability of dividends
24. Gamble Limited is a company dealing in healthcare products. The

company is earning high profits but is short on cash, so it has decided
to declare less dividends in the current financial year. Identify the factor
related to dividend decision being described in the above lines.
(a) Preference of shareholders
(b) Earning
(c) Cash flow position
(d) Contractual constraints
25. Lalit, an experienced stock broker advised his client Prabhu to invest in
the shares of Blue Angel Limited, as the company has declared high
dividends since an increase in dividend is perceived as a good news and
stock prices react positively to it. Identify the related factor of dividend
decision being described in the above lines.
(a) Tax rate
(b) Growth prospects
(c) Stock market reactions
(d) Access to capital markets
26. A company must adhere to the provisions of the Companies Act while
taking the dividend decision. Identify the related factor of dividend
decision being mentioned in the above line.
(a) Contractual constraints
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(c) Access to capital market

(b) Legal constraints
(d) Preferences of shareholders
27. While taking a loan from a financial institution, Lokesh Enterprises

signed an agreement that they shall not pay dividend to its shareholder
more than 15% until the loan is repaid, or dividend shall not be declared
if the liquidity ratio is found to be less than 1:1. Identify the factor
related to dividend decision being described in the above case.
(a) Access to capital market
(b) Preferences of shareholders
(c) Contractual constraints
(d) Legal constraints
28. Which of the following is not an objective of financial planning?

(a) Ensuring enough funds are available at the right time
(b) Ensuring excess availability of funds at the right time
(c) Ensuring smooth business operations
29. The financial plans are drawn by taking into consideration …………….
(a) Growth prospects
(b) Performance of the organisation
(c) Investments
30. The short-term financial plans are known as ......

(a) Objectives
(b) Budgets
(c) Programs
(d) Policies
31. Arrange the following steps involved in the process of financial planning
in the correct sequence.
(a) Estimation of expected profit, Preparation of a sales forecast,
Preparation of financial statements
(b) Preparation of a sales forecast, Preparation of financial statements,
Estimation of expected profit
(c) Preparation of a sales forecast, Estimation of expected profit,
Preparation of financial statements
(d) Preparation of financial statements, Estimation of expected profit,
Preparation of a sales forecast
32. Which of the following is not an importance of financial planning?

(a) It helps in avoiding business shocks and surprises.
(b) If helps in co-ordinating various business functions.
(c) If helps to reduce waste, duplication of efforts and gaps in planning.
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(d) It tries to delink the present with the future.
33. Which of the following is not a part of owners‟ funds?

(a) Equity shares
(b) Reserves and surplus
(c) Debentures
(d) Preference shares
34. Which of the following is not a source of borrowed funds?

(a) Loan from financial institutions
(b) Debentures
(c) Retained earnings
(d) Public deposits
35. Which of the following statements is not true?

(a) The cost of debt is higher than cost of equity.
(b) The lender‟s risk is lower than equity shareholder‟s risk.
(c) The interest paid on debt is treated as a tax deductible expense.
36. In order to raise an additional capital of Rs.50 lacs, Yudhister Limited

has used debt because ……………..
(a) Increased use of debt lowers the overall cost of capital
(b) Decrease in use of debt lowers overall cost of capital
(c) Increase in use of debt increases the overall cost of capital
37. Which of the following statements is not true?

(a) Increased use of debt increases the financial risk of a business.
(b) Increased use of debt decreases the financial risk of a business.
(c) Decrease in use of debt increases the financial risk of a business.
38. Name the decision which affects both the profitability and the financial
risk.
(a) Financial planning decision
(c) Capital structure decision
39. A higher financial leverage ratio indicates that ……………

(a) The dependency of the firm on the debt is more.
(b) The dependency of the firm on the debt is less.
(c) The proportion of equity in the total capital is high.
40. As the financial leverage of a company increases, it leads to……………..

(a) A decline in the cost of funds but an increase in the financial risk
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(b) An increase in the cost of funds but a decline in the financial risk
(c) Both an increase in the cost of funds and financial risk
(d) Both a decline in the cost of funds and financial risk
41. When does the earnings per share (EPS) rise with higher debt?
(a) When the rate of return on investment is higher than the rate of
interest.
(b) When the rate of return on investment is lower than the rate of
interest.
(c) When the rate of interest is more than the rate of return.
42. The total capital of Uranium Private Limited is ₹50 lacs. The amount of
debt is ₹20 lacs. The company has earned a profit of ₹10 lacs during the
current financial year. Its return on investment (ROI) for the present
year is
(a) 20%
(b) 40%
(c) 10%
(d) 80%
43. If in a particular situation, the earnings per share (EPS) falls with the
increased use of debt, it indicates that
(a) The rate of return on investment (RoI) is less than the cost of debt.
(b) The rate of return on investment is more than the cost of debt.
(c) The cost of debt is less than the rate of return on investment.
44. If the rate of return on investment for a company is 16%, a situation of

unfavourable financial leverage will be said to arise when the rate of
interest payable on debt capital is ……………….
(a) More than 16%
(b) Less than 16 %
(c) Equal to 16%
45. Under which of the following situations a company should not issue debt
capital?
(a) When the cash flow condition of the company is strong.
(b) When the rate of tax is low.
(c) When the return on investment is high.
(d) When the interest coverage ratio is high.
46. Under which of the following situations a company is not likely to issue
equity capital?
(a) When the debt service coverage ratio is high.
(b) When the interest coverage ratio is high.
(c) When the cost of debt capital is low.
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47. If a company is borrowing funds @ 10% and the tax rate is 30%, the
after tax cost of debt is only
(a) 10%
(b) 3%
(c) 20%
(d) 7%
48. Which of the following statements is not true with regard to use of fixed
capital?
(a) It effects the long term growth of the business.
(b) Large amount of funds are involved.
(c) The business risk involved is low.
(d) The investment decisions are irreversible.
49. Under which of the following conditions the fixed capital requirements of
a business is not likely to be low?
(a) When the raw material is easily available
(b) When the labour intensive production technique is used
(c) When the level of collaboration is low
(d) When the growth prospects of the firm are low
50. Under which of the following circumstances the fixed capital

requirement of a business is not likely to be high?
(a) When the raw material is not easily available
(b) Capital intensive techniques of production are used
(c) The growth prospects of a company a high
(d) When the financial alternatives are easily available
51. The working capital requirement of a business is not likely to be low

when ……………
(a) The scale of the business operation is small
(b) When the growth prospects of the business are high
(c) When the raw material is easily available
(d) When the rate of inflation is low
52. The working capital requirement of a business is not likely to be high

when?
(a) The nature of business is trading
(b) Scale of operation of business is small
(c) It is difficult to procure raw material
(d) The rate of inflation is low
53. A decision to acquire a new & modern plant to upgrade an old one is
known as ………………..decision.
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(b) Working capital decision

54. ABC Ltd. has Debt Equity ratio of 3:1 whereas XYZ Ltd. has Debt Equity
ratio of 1:1. Name the advantage ABC Ltd. will have over XYZ Ltd., when
the rate of interest is lower than the rate of return on investment of the
company.
(a) Trading on equity
(b) Low risk
(c) Low cost of equity
(d) Greater flexibility
55. Vikrant joins his father‟s business of Organic masalas, near Kotgarh in
Himachal after completing his MBA. In order to capture a major share of
the market, he decided to sell the product in small attractive packages
by using the latest packaging technology. His father suggested that they
hire financial consultants to estimate the amount of funds that would be
required for the purpose & timings when it would be required. The
concept being discussed by Vikrant‟s father, links which financial
decision with the investment decision?
(a) Dividend decision
(b) Financial Planning
(c) Capital structure decision
56. Rajani, after acquiring a degree in Hotel Management joined her family
business of manufacturing dairy products. The business had been
established by her great grandfather and enjoyed a good reputation.
Since she wanted to undertake modernisation of the existing business to
introduce the latest manufacturing processes and diversify into the
organic food segment it would require an additional capital of ? 50
Crores. The fixed operating costs of the business were high and the cash
flow position was weak. She also noticed that the stock market index
was going through a bullish phase. Keeping the above considerations in
mind, name the source of finance Rajani should not choose for financing
the modernization and expansion of her business.
(a) Debt
(b) Equity
(c) Both
57. Why do all financial decisions, major or minor, aim to ensure that
benefits from the investment exceed the cost so that some value addition
takes place and the market price of equity shares is maximised?
(a) For achieving the objective of wealth maximisation
(b) For achieving the objective of profit maximisation
(c) Both option (a) and (b)
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58. Mr. Suri, the owner of Junnon Ltd. with glorious 5 years of its grand
success having a capital base of ₹ 80 crores. Within a short span of time,
the company could generate cash flow which not only covered fixed cash
payment obligations but also create sufficient buffer. The company is on
the growth path and to meet the increasing demand, Mr. Suri decided to
expand his business by setting up a new factory. This required an
investment of ₹ 200 crores. On the recommendations of his financial
advisor Mr. Dev he decided about the judicious mix of equity (45%) and
Debt (55%). Identify the concept of Financial Management as advised by
Mr. Dev in the above situation.
(b) Investment decision
(c) Capital Structure
59. Iqbal has started a small take away restaurant near a multi-speciality
hospital. He is on good terms with Salman, a grocery shopkeeper who
sells him goods on one month credit, the working capital needs of Iqbal
will be …………………
(a) More
(b) Less
(c) Constant
60. Ranbir is working as a financial manager in an dairy products company.

One of his key function starts with an estimate of the sales which are
likely to happen in the next five years. Based on these, the financial
statements are prepared keeping in mind the requirement of funds for
investment in the fixed capital and working capital. Then the expected
profits during the period are estimated so that an idea can be made of
how much of the fund requirements can be met internally i.e., through
retained earnings (after dividend payouts). This results in an estimation
of the requirement for external funds. Further, the sources from which
the external funds requirement can be met are identified and cash
budgets are made, incorporating these factors. Identify the concept
related to business finance being discussed in the above paragraph.
(a) Capital structrue
(d) Investment decision
61. Name the concept which is concerned with optimal procurement as well
as usage of finance.
(a) Capital structure
(b) Finnancial planning
(c) Financial management
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62. „Vishesh Ltd.‟ is popular company engaged in the business of selling

rehabilitation equipments. It now is planning to open two new outlets in
the vicinity of two different hospitals respectively in next three months
by taking the place on lease.
Identify the factor affecting fixed capital requirements of the company.
(a) Level of collaboration
(b) Financial alternatives
(c) Nature of business
(d) Technology up gradation
63. It relates to disposal of profit by deciding the proportion of profit which

is to be distributed among shareholders and the proportion of profit
which is to be retained in the business for meeting the investment
requirements.
(b) Dividend decision
(c) Capital budgeting decision
64. „High Steel Ltd.‟ an Indian company producing 70 million tonnes of steel
annually and generating revenue of 40 billion US dollars has recently
acquired the world‟s third largest steel producing company, „Heal Steels
Ltd.‟ For this acquisition High Steels Ltd. had to arrange about ₹ 70,000
crores of rupees through debt and equity. State the decision made by the
company for arranging the funds through debt and equity.
(a) Financial decision
65. The companies can declare ………….. dividends if the tax on dividend is
lower.
(a) Lower
(b) Higher
66. Gagan is planning to set a small unit for recycling of paper and
manufacturing useful stationary items from it. He has analysed that his
business will require less investment in machinery as it relies more on
manual labour. Identify the related factor affecting the fixed capital
requirements of his business.
(a) Nature of Business
(b) Scale of Operations
(c) Choice of Technique
(d) Technology Upgradation
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67. If a business has to face high level of competition it will require

…………….working capital in order to maintain wider variety of goods
and larger inventory.
(a) More
(b) Less
(c) Same
68. Apex Ltd. deals in the sale of stationery and office furniture. They source
the finished products from reputed brands who give them six to eight
months credit. Seeing the demand for electronic items, they are also
planning to market these items by opening outlets throughout India.
Identify factors that would affect the fixed capital requirement of Apex
Ltd. as discussed above.
(a) Diversification
(b) Growth prospects
(d) Level of collaboration
69. Dreeva is an enterprising business woman who has been running a

printing shop for the past eight years. She has saved ₹ 5 Lakhs from her
business. She shared with her family her desire to utilize this money to
expand her business. Her family members gave her different suggestions
like buying new machinery to replace the existing one, acquiring
altogether new equipments with latest technology, opening a new branch
in other part of the city and so on.
Since these decisions are crucial for her business, involve a huge
amount of money and are irreversible except at a huge cost, Dreeva
wants to analyze all aspects of the decisions, before taking any final
decision. Identify the financial decision to be taken by Dreeva.
(a) Working capital decision
(c) Financing decision
70. Fortunate Ltd. is engaged in the business of export of garments. The

company plans to upgrade its machinery with latest technology. For
this, the Finance Manager, Goga Bedi has estimated the amount of
funds required and the timings. This will help the company in linking
the investment and the financing decisions on a continuous basis. Goga
Bedi therefore, began with the preparation of a sales forecast for the
next three years. He also collected the relevant data about the profit
estimates in the coming years. By doing this, he wanted to be sure about
the availability of funds from the internal sources of the business. For
the remaining funds he is trying to find out alternative sources from
outside.
Identify the financial concept discussed in the above paragraph.
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(a) Capital Structure

(b) Capital Budgeting Decision
(c) Financial Planning
(d) Financial Risk
71. Madhav Ltd. is a company selling dairy products to various parts of

North India. Two months before „Jaikrishna Ltd.‟, a Haryana based
company entered Delhi market with a similar range of products. State
the impact of entry of Haryana based „Jaikrishna Ltd.‟ on the working
capital requirements of Madhav Ltd. Also, name the factor affecting the
working capital requirements of Madhav Ltd.
(a) Inflation
(b) Business cycle
(c) Level of competition
(d) Scale of business
72. If the EBIT of a company is ₹ 5 crore and total capital employed is 600
crores. Is it advisable for the firm to raise capital at 10%? Identify the
underlying concept.
(a) Financial risk
(b) Business risk
(c) Trading on equity
(d) Financial leverage
73. The earnings of Gumer Ltd. have been highly fluctuating in past three
years. Consequently the company has declared a low dividend in the
present year. Identify the factor related to dividend decision being
described above.
(a) Cash flow position
(b) Growth opportunities
(c) Stability of earnings
(d) Stability of dividends
74. During a meeting the source of finance that should be used for
modernisation of existing plant of the company were being discussed.
Mr. Anuj Munjal, the Finance Manger quoted that „Sensex has soared by
6012 points‟ in the last three years and also highlighted that the fact
that the operating costs of the company at present is high.
According to you which as a source of finance should be used to raise
the funds required for modernisation of existing plant.
(a) Equity
(b) Debt
75. In case a business operates on certain technology that makes the related
assets obsolete quickly, its fixed capital requirements will be ……………..
(a) High
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(b) Low
(c) Not affected
(d) Difficult to determine
76. Assuming other aspects remaining the same, a decrease in the tax rate
on corporate profits will..... ………………..
(a) Make debt relatively less cheaper
(b) Make debt relatively cheaper
(c) Have no impact on the cost of debt
77. If the debt equity ratio ( Debt/ Equity ) of a company is low it will means
that …………….
(a) Degree of financial risk is low
(b) Higher degree of operating risk
(c) Degree of financial risk is high
(d) Higher EPS
78. Rashi has been selling homemade chocolates for the past three years.
Due to recent increase in the price of coca powder and sugar, her
requirements of working capital has increased in order to maintain
volume of production and sales. Identify the related factor affecting the
working capital of her business.
(a) Availability of raw material
(b) Business cycle
(c) Inflation
(d) Scale of business
79. The Return on Investment (ROI) of Bhumi Ltd., a real estate company
ranges between 15%-17% for the past two years. In order to finance its
expansion plans the company has the following option for borrowing
debts.
Option A : Rate of Interest 12%
Option B : Rate of Interest 18%
Which of the two source of debts, Option A or Option B would you
recommend?
(a) Option A
(b) Option B
80. Longer is length of operating cycle …………….. is the amount of working

capital required of a business?
(a) More
(b) Less
(c) Same
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81. „Gulivier Travels Ltd.‟ is a well-known chain of travel and tourism

company with its headquarters situated in Karnataka. The company is
now planning to start its own guest houses in various parts of the
country. The financial manager of the company has decided to raise an
additional capital of ₹ 500 crores through an issue of equity share for
the purpose of implementing the new plan. Identify the type of financial
decision taken by the company.
(b) Financial decision
82. Mahamaya Ltd. is a well-known real estate company in Delhi. However,

due to some wrong financial decisions in the past the company has not
been able to complete its residential projects on time. This has adversely
affected its goodwill in the present. The company at present is in dire
need of funds for the successful completion of its projects without
further delay. The total share capital of the company is ₹ 12 lakhs
divided into 1,20,000 shares of ₹ 10 each. The return on investment is
20%. Calculate ROI.
(a) ₹ 1,20,000
(b) ₹ 2,40,000
(c) ₹ 60,000
(d) ₹ 1,00,000
83. ………………the prime objective of financial management.

(a) Profit maximisation
(b) Wealth Maximisation
(c) Either (a) and (b)
(d) Conservation of funds
84. High Spirits Ltd. is a travel and tourism company in Mumbai. It is

planning to set up an amusement park in Pune. State the factor
affecting the fixed capital requirements of the company in the above
context.
(a) Nature of Business
(b) Scale of Operations
(c) Technology Upgradation
(d) Growth Prospects
85. When a company uses more of …………….it may lead to dilution of

management‟s control over the business.
(a) Debentures
(b) Bonds
(c) Equity
(d) Retained earnings
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86. Dreams Ltd. is a name in the aviation industry to reckon with. It is one
of the largest airline in India by passengers carried and fleet size. The
company plans to keep 25% of its profits as reserves and distribute the
remaining profit amongst the shareholders.
Identify and state the type of financial decision taken by the company.
(a) Investement decision
87. How is financial leverage computed?

(a) Debt/Equity
(b) Debt/Debt Equity
88. The total capital of a company is ₹ 10 crores and it has earned a profit of
₹ 3 crores on it. The company has to pay ₹ 1 crore as interest. In this
case the return on investment will be ………………..
(a) 10%
(b) 90%
(c) 30%
(d) 70%
89. What is the cost of raising funds known as?

(a) Floatation cost
(b) Transaction cost
90. Geet is working as a financial advisor in a consultancy firm. He has

advised one of the company‟s client to raise capital through a
combination of both debt and equity for getting the maximum
advantage. Identify the underlying concept.
(a) Capital structure
(c) Trading on equity
91. Determine if in situation II the company is able to take advantage of

trading on equity. Tax Rate 30%, ROI is 20% Total funds used : ₹ 90
lakhs
Situation 1 : 10% Debt - nil; Equity : ₹ 90 lakhs
Situation II : 10% Debt - ₹ 10 lakhs; Equity : ₹ 80 lakhs
(a) Yes
(b) No
(c) Partially yes
(d) Not sure
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92. Tapan runs a small business unit for manufacturing artificial flowers
and plants. He ensures that there is optimal procurement as well as
usage of finance in his business as it determines the overall financial
health of a business.
Identify the concept being mentioned in the above case.
(a) Financial Management
(c) Capital structure
(d) Financial leverage
Fill in the blanks.

1. The process of estimating the funds requirement of a business and
specifying the sources of funds is called …………………
2. ………………… decisions refers to the amount of capital required for
investment in fixed assets or long term projects which will yield return
and influence the earning capacity of business over a period of time.
3. ……………….. decision relates to determining the quantum (amount) of
funds to be raised from different sources of finance.
4. …………………… risk refers to the inability of a business to meet its fixed
financial obligations like payment of interest.
5. ……………. refers to the mix between owners and borrowed funds.
6. The proportion of debt in the overall capital is called ………………
7. …………..refers to the increase in the earnings per share by employing
the sources of finance carrying a fixed financial charges.
8 ………………. decisions affect the liquidity as well as profitability of a
business.
9. The size of assets, the profitability and competitiveness are all affected
by ………………decision.
10. The prime objective of financial management is …………………
11. If the fixed operating cost of a business is low it should opt for
…………….. as a source of finance.
12. If there is boom in capital market it is easy for the company to raise
…………..capital.
13. If the interest coverage ratio is ………………..the business may use
equity.
14. In case of business where the production cycle is …………. less working
capital is needed or vice versa.
15. If ………………intensiveproduction technique is used the fixed capital
requirement for such enterprises would be higher.

1. Trademark is an intangible asset.
2. The decision to replace an old machinery with a new one is a financing
decision.
3. Financial planning is concerned with optimal procurement as well as
usage of finance.
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4. Financing decisions reflect as to how the firm‟s funds have been invested
in the different assets
5. If the cash flow position of a business is good it should opt for debt else
equity.
6. Fixed capital decision relate to affect the day to day working of a
business and seek to determine the levels of cash, inventories and
debtors.
7. Investment decision relates to disposal of profit
8. The working capital requirement of a business will be higher with higher
rate of inflation or vice versa.
9. Financial leverage is computed as Equity/Debt.
10. Trading on Equity refers to the increase in the earnings per share by
employing the sources of finance carrying a variable financial charges
11. Profit maximization is the prime objective of financial management.
12. If the company has lucrative forthcoming growth opportunities it is likely
to retain greater portion of its their earnings for investment in these
ventures and declare low dividends or vice versa.
13. A business operating on small scale it will require higher investment in
fixed assets.
14. If a business firm plans to diverse, its fixed capital requirements will
increase as new investments in fixed assets may be needed.
15. A company is not likely to declare a higher dividend, when the earnings
of the company are high.

1.
Column A Column B
(i) Optimal procurement as well as usage of finance (a) Financing
decision
(ii) Decisions that determines the overall cost of (b) Capital structure
capital and the financial risk of the enterprise decisions
(iii) A financial blueprint of an organisation‟s future (c) Financial
operations management
(iv) Decisions affects both the profitability and the (d) Financial
financial risk planning
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(a); (iii)-(d); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
2.
Column A Column B
(i) Inability of a business to meet its obligations of (a) Capital
payment of interest structure
(ii) Mix between owners and borrowed funds (b) Financial
leverage
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(iii) Proportion of debt in the overall capital (c) Capital

budgeting decision
(iv) Decisions that affects the amount of assets, (d) Financial risk
competitiveness and profitability of business.
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)
3.
Column A Column B
(i) Maximise shareholder‟s wealth (a) Dividend decision
(ii) Appropriation of profits (b) Less dividend payout
(iii) High tax rate (c) Budget
(iv) Short-term financial plan (d) Prime objective
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
4.
Column A Column B
(i) High debt service coverage ratio (a) Stability of Earnings
(ii) Low rate of return on investment (b) Stability of Dividends
(iii) Earnings are stable over the years (c) Use debt
(iv; Less variations in dividend payouts (d) Use equity
(a) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(d); (h)-(c); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
5.
Column A Column B
(i) Decisions affect the liquidity as well as profitability (a) Reserves and
of a business surplus
(ii) Decision is about the quantum of finance to be (b) Capital
raised from various long-term sources budgeting decision
(iii) Decision determines the overall cost of capital and (c) Working capital
the financial risk of the enterprise decision
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(iv) Owners funds (d) Financing

decision
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(b); (iv)-(a)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
6.
Column A Column B
(i) Borrowed funds (a) Less working capital
requirement
(ii) Higher financial leverage ratio (b) Less fixed capital requirement
(iii) Raw material is easily available (c) Public deposits
(iv) Financial alternatives are easily (d) Deploying more debt
available
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(c) (i)-(c); (ii)-(d); (iii)-(b); (iv)-(a)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
1. Assertion (A): Financial Management is concerned with optimal
procurement as well as the usage of finance.
Reason (R): In order to ensure optimal procurement of funds different
available sources of finance should be identified and compared in terms
of their costs and associated risks.
explanation of (A)
explanation of (A)
2. Statement I: Capital Budgeting decision involves investment of funds in

long term projects.
Statement II: The size of assets, profitability and competitiveness are all
affected by capital structure decisions.
3. Assertion (A): The overall financial health of a business is dependent on

the quality of its financial management.
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Reason (R): Finance is required at the time of starting a business or

expanding, or diversifying it.
explanation of (A)
explanation of (A)
4. Statement I: Financing Decision seeks to determines the quantum of

finance to be raised from various long-term sources.
Statement II: Financing Decision fundamentally involves the
preparation of a financial blueprint of future operations of an
organisation‟s.
5. Assertion (A): : Debt is relatively cheaper when the tax rate is low.
Reason (R): The use of debt decreases the financial risk of a business.
explanation of (A)
explanation of (A)
6. Statement I: The cost of equity is lower than the cost of debt.

Statement II: The amount of interest paid on debt is treated as a tax
deductible expense for calculation of tax liability.
7. Statement I: The use of labour intensive techniques reduces the

requirement of fixed capital.
Statement II: If a firm uses capital-intensive techniques its requirement
of fixed capital would be lower.
8. Statement I: A smaller amount of working capital is required during

boom period when the sales are high.
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Statement II: The requirement of working capital is less during

depression period when the sales are low.
9. Statement I: A higher level of competitiveness increases the working

capital requirement of a firm
Statement II: The requirement of working capital is relatively less when
the level of competition that a firm faces in market is less.
10. Assertion (A): The dividend in growth companies is smaller than that in
the nongrowth companies.
Reason (R): Retained earnings is a preferable source of investment in
growth opportunities of a business.
explanation of (A)
explanation of (A)
11. Assertion (A): The dividends are free of tax in the hands of
shareholders.
Reason (R): Lower dividends may be declared by a company, if tax rates
are relatively lower.
explanation of (A)
explanation of (A)
Answer Key

Q A Q Ans Q Ans Q A Q A Q A Q A Q A Q A Q A
1 D 11 B 21 D 31 B 41 A 51 B 61 C 71 C 81 B 91 A
2 B 12 A 22 C 32 D 42 A 52 C 62 B 72 C 82 B 92 A
3 D 13 D 23 B 33 C 43 A 53 C 63 B 73 C 83 B
4 D 14 C 24 C 34 C 44 A 54 A 64 A 74 A 84 D
5 A 15 C 25 C 35 A 45 B 55 D 65 B 75 A 85 C
6 D 16 A 26 B 36 A 46 D 56 A 66 C 76 A 86 C
7 B 17 C 27 C 37 B 47 D 57 A 67 A 77 A 87 C
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8 C 18 B 28 B 38 C 48 C 58 C 68 A 78 C 88 C
9 A 19 B 29 D 39 A 49 C 59 B 69 B 79 A 89 A
10 B 20 B 30 B 40 A 50 D 60 B 70 C 80 A 90 C
Assertion-Reason
Fill in the blanks True or false Matching
Questions
1 Financial planning 1 False 1 C 1 B
2 Capital budgeting 2 False 2 D 2 C
3 Financing 3 False 3 B 3 B
4 Financial 4 False 4 A 4 C
5 Capital structure 5 True 5 C 5 C
6 Financial leverage 6 False 6 B 6 D
7 Trading on equity 7 False 7 C
8 Working Capital 8 True 8 D
9 Capital budgeting decision 9 False 9 A
10 Wealth maximization 10 False 10 A
11 Debt 11 False 11 C
12 Equity 12 True
13 Low 13 False
14 Shorter 14 True
15 Capital 15 False
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Chapter: 10
Financial Markets
• Describe the meaning and segments of financial market;
• Explain the meaning and instruments of money market;
• State the meaning and types of capital market;
• Differentiate between money market and capital market;
• Distinguish between primary market and secondary market;
• Explain the meaning and functions of stock exchange, NSE and OTCEI;
• Explain the concept of dematerialisation;
• Describe the meaning and types of depositories;
• Outline the steps involved in trading procedure of stock exchange; and
• Describe the objectives and functions of SEBI.
 Financial market: A financial market is a market for the creation and
exchange of financial assets.
 Financial intermediation: Financial intermediation refers to the
process through which allocation of funds is done by the savers in the
household sectors through two main mechanisms: banks and
financial markets.
 Money market: The money market constitutes the market for short
term funds which deals in monetary assets whose period of maturity
is up to one year.
 Capital market: The term capital market refers to facilities and
institutional arrangements through which long-term funds, both debt
and equity, are raised and invested.
 Primary market
 The primary market deals with new securities being issued for the
first time. Therefore, it is also referred to as the new issues market.
 Secondary market: The secondary market is commonly referred to as
the stock market or stock exchange. It is a market for the trading of
the old / existing securities of the companies.
 Stock exchange: According to Securities Contracts (Regulation) Act
1956, stock exchange means anybody of individuals, whether
incorporated or not, constituted for the purpose of assisting,
regulating or controlling the business of buying and selling or dealing
in securities.
 Dematerialisation: The process of holding securities in electronic
form is known as dematerialisation.
 Depository: A depository acts as a custodian of the securities in
electronic form on behalf of the investors. In India there are two
depositories:
 National Securities Depository Limited (NSDL)
 Central Depository Services Limited (CDSL)
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 Depository participant: The depository participant (DP) serves as an

intermediary between the investor and the Depository (NSDL or CDSL)
who is authorised to maintain the accounts of dematerialised shares.
Financial institutions, banks, clearing corporations, stock brokers and
nonbanking finance corporations are permitted to become depository
participants.
 Order confirmation slip: This slip is issued by the stock exchange to
the broker who then forwards it to the buyer / investor to certify the
execution of trade order.
 Contract note: A contract note contains details about the deal i.e. the
number of securities bought / sold, price, date and time of transaction
etc. It also includes a unique order code generated by the stock
exchange for that particular transaction. It is a legal document, which
may be used to settle the claims between the investor and the broker.
 Trade confirmation slip: It is a document issued by the stock broker
showing the details of securities bought or sold after the order has
been executed electronically.

 The market for the creation and exchange of financial assets:
Financial market
 Process through which allocation of funds takes place: Financial
intermediation
 Market for short-term funds: Money market
 Market for long-term funds: Capital market
 The market that deals with new securities: Primary market
 Market for the trading of the old/existing securities: Secondary
market
 Process of holding securities in electronic form: Dematerialisation
 Custodian of the securities in electronic form on behalf of the
investors.: Depository
 Acts as an intermediary between the investor and the depository.:
Depository participant
 Zero coupon bonds: Treasury bills
 Used for Bridge financing: Commercial paper
 Short-term instrument issued by large and credit worth companies:
Commercial paper
 Short-term instrument used for interbank dealings: Call money
 Short-term instrument issued by Reserve Bank of India: Treasury
bills
 Short-term instrument issued by banks or financial institutions:
Certificates of deposit
 Short-term instrument issued to finance the working capital
requirements of business firms: Commercial bill
 Securities are offered for sale through intermediaries: Offer for sale
 A company issues securities to institutional investors and some
selected individuals.: Private placement
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 A company invites subscriptions from the general public tor its

securities.: Offer through prospectus
 A privilege exclusively given to the existing shareholders, to subscribe
to a new issue of shares.: Rights Issue
 Mandatory detail for opening a demat account: PAN Number
 The investor has to deliver the shares sold or pay cash for the shares
bought.: Pay-in day
 The exchange will deliver the shares or make payment to the other
broker in case of purchase.: Pay-out day
Functions of Financial Market

 Mobilisation of savings and cnannelizing them into the most
productive uses- Financial markets act as an intermediary and
facilitate the transfer of funds from the surplus sector (savings of the
household) to the deficit sector (business firms).
 Facilitating Price Discovery- The prices of the financial assets are
determined by the forces of demand and supply, i.e., through the
interaction between the surplus sector and deficit sector.
 Providing Liquidity to Financial Assets- The existence of financial
markets provides liquidity to the financial assets by providing ready
markets, wherein the securities can be easily traded.
 Reducing the Cost of Transactions- It helps in reducing the cost of
transactions by saving time, effort and money that would have been
spent by the buyers and sellers in locating each other.
Classification of Financial Market

 Capital market
 Money market
Money Market Instruments

 Treasury Bills- Treasury bills are short term money market
instruments which are issued by Reserve Bank of India on behalf of
the Central Government. They represent the borrowing by the
Government of India.
 Commercial Paper- Commercial Paper is the short term money
market instrument issued by large and credit worthy companies as an
alternative to bank borrowing.
 Call Money- Call money is short term loan raised by one bank from
another and is repayable on demand.
 Certificate of Deposite- Certificate of deposit is a short term money
market instrument issued by commercial banks and development
financial institutions during periods of tight liquidity when the deposit
growth of banks is slow but the demand for credit is high.
 Commercial Bill- A commercial bill is a bill of exchange used as a
short-term money market instrument used to finance the working
capital requirements of business firms.
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Classification of Capital Markets

 Primary Market
 Secondary Market
Methods of Floatation in Primary Market

 Offer through Prospectus- Under this method, a company invites
subscriptions from the general public for its securities, like equity
shares, debentures, bonds etc. through an issue of prospectus.
 Offer for Sale- Under this method, the securities are not issued
directly to the public but are offered for sale through intermediaries,
such as issuing houses or stock brokers.
 Private Placement- Under this method, a company issues securities
to institutional investors and some selected individuals.
 Rights Issue- Under this method, a company provides a privilege
exclusively to the existing shareholders, to subscribe to a new issue of
shares according to the terms and conditions of the company.
 E-IPOs- Under this method, a company desirous of issuing securities
to general public through the online system is allowed to do so with a
prior agreement with the stock exchange. It is called an Initial Public
Offer (IPO).
Functions of a Stock Exchange

 Providing Liquidity and Marketability to Existing Securities- By
providing a ready market for financial assets, it lends both liquidity
and easy marketability to the existing securities in the secondary
market.
 Pricing of Securities- The prices of securities in the secondary
market are determined by the market forces of demand and supply.
 Safety of Transaction- The working of a stock exchange is well
regulated and it offers a transparent, fair and safe platform for trading
in securities to the investors.
 Contributes to Economic Growth- The efficient functioning of the
stock exchange ensures that the funds are channelized into the most
profitable business avenues.
 Spreading of Equity Cult- The existence of a well regulated and
efficient system for trading in securities motivates people to take an
active part in the process of exchange.
 Providing Scope for Speculation- The stock exchange provides the
framework for well regulated speculative activities which are carried
out within the provisions of law.
Timeline of National Stock Exchange of India (NSE)

 It was incorporated in 1992.
 It was recognised as a stock exchange in April 1993.
 It started operations in 1994, with trading on the wholesale debt
market segment.
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 It launched the capital market segment in November 1994 as a

trading platform for equities
 The futures and options segment became operational in June 2000 for
various derivative instruments.
Objectives of NSE
 Establishing a nationwide trading facility for all types of securities.
 Ensuring equal access to investors all over the country through an
appropriate communication network.
 Providing a fair, efficient and transparent securities market using
electronic trading system.
 Enabling shorter settlement cycles and book entry settlements.
 Meeting international benchmarks and standards.
Two Market Segments of NSE

 Whole Sale Debt Market Segment: This segment deals in fixed
income securities like central government securities, commercial
paper, certificate of deposit, corporate debentures and mutual funds.
 Capital Market Segment: This segment deals in equity, preference,
debentures, exchange traded funds and also retail Government
securities.
Timeline of BSE (Bombay Stock Exchange)

 It was formerly known as Bombay Stock Exchange Ltd.
 It was established in 1875 and was Asia‟s first Stock Exchange.
 It was granted permanent recognition under the Securities Contract
(Regulation) Act, 1956.
Objectives of BSE
 To offer an well-organized and transparent market for trading in
equity, debt instruments, derivatives and mutual funds.
 To provide a trading platform for equities of small and medium scale
companies.
 To ensure efficiency and transparency in transactions through screen
based trading.
Timeline of OTCEI
 It was also known as the Over-the-Counter Exchange of India.
 It was founded in 1990 under the Companies Act 1956 and was
recognized by the Securities Contracts Regulation Act, 1956 as a stock
exchange.
 It was based in Mumbai, Maharashtra under the ownership of
Ministry of Finance, Government of Incia.
 It is the first screen-based nationwide stock exchange in India for
small companies
 OTCEI was promoted by the Unit Trust of India, the Industrial Credit
and Investment Corporation of India, he Industrial Development Bank
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of India, the Industrial Finance Corporation of India, and other

institutions, and is a recognised stock exchange under the SCR Act.
 The OTCEI is no longer a functional exchange as the same has been
de-recognised by SEBI vide its order dated 31 Mar 2015.
 OTCEI Securities Limited subsequently filed for liquidation on 25
September 2017.
Trading and Settlement Procedure

 Opening a trading account and Demat account- In order to start
the trading in securities, the investor has to first open a trading
account in his name. The investor has to then approach Depository
Participant for opening a „demat‟ account or „beneficial owner‟ (BO)
account. He also needs to open a bank account through which cash
transactions in the securities market will be carried out.
 Placing an order- Now, the investor may place an order with a broker
for purchasing or selling the securities. He has to give clear
instructions to the broker about the number of the shares and the
price at which he is willing to buy or sell them. The broker then will
access the portal of the main stock exchange on-line and initiate steps
to strike a deal by matching the share and best price available.
 Execution of order- When the details of the transactions match
online and the shares can be bought or sold at the price mentioned, it
will be communicated to the broker‟s terminal. On receiving the
consent of the broker for the same, the order will be executed
electronically. Within 24 hours of the execution of the order, the
broker issues a contract note to the investor.
 Settlement of order- On receiving the contract note, the investor has
to deliver the shares sold or pay cash for the shares bought. This
should be done immediately after receiving the contract note or before
the day when the broker shall make payment or delivery of shares to
the exchange. This is known as the pay-in day. On the T+2 day, in
case of sale, the exchange will deliver the shares or make payment to
the other broker in case of purchase. This is called the pay-out day.
On receiving the payment from the exchange, the broker then has to
make payment to the investor within 24 hours of the payout day.
Thereafter, the broker can deliver the share electronically directly to
the investor‟s demat account. In order to facilitate this, investor has to
provide details of his demat account and instruct his depository
participant to accept the delivery of securities directly in his beneficial
owner account.
The Securities and Exchange Board of India (SEBI): The Securities and
Exchange Board of India (SEBI) is the regulator for the securities market in
India. It was established in the year 1988 by the Government of India. It was
to function under the overall administrative control of Ministry of Finance of
the Government of India. It was given statutory powers on 30th January,
1992 through an ordinance. The ordinance was later on replaced by an Act
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of Parliament known as the Securities and Exchange Board of India Act,

1992.
Purpose and Role of SEBI: The Securities and Exchange Board of India was
primarily set up to create an environment conducive to effective and efficient
trading in securities. It seeks to facilitate mobilisation and allocation of
resources into most productive avenues through the process of
disinvestment and reinvestment, besides promoting competition and
encouraging innovation in the stock exchange. This environment comprises
of rules and regulations, institutions and their interrelationships,
instruments, practices, infrastructure and policy framework. In a nutshell, it
strives to create an environment that fulfills the needs of the three groups
which are the pillars of the market, i.e.
 the issuers of securities (Companies);
 the investors and the market; and
 intermediaries.
Role and Responsibility of SEBI

 To the issuers: To provide a market place which promotes the
confidence and trust of the corporates to raise the required finance in
an easy, fair and efficient manner.
 To the investors: It should promote and safeguard their rights and
interests by providing for adequate, accurate and authentic
information and disclosure of information on a continuous basis.
 To the intermediaries: It should promote the development of a
competitive, professionalised and expanding market, equipped with
adequate and efficient infrastructure, in the pursuit of offereing better
service to the investors and issuers.
Objectives of SEBI
 To protect the rights and interest of investors, and to guide and
educate them.
 To regulate and develop a code of conduct and fair practices by
intermediaries like brokers, merchant bankers, etc. with a view to
make them competitive and professional.
 To prevent trading malpractices and create a balance between self
regulation by the securities industry and its statutory regulation.
 To regulate and define a code of conduct and fair practices by
intermediaries like brokers, merchant bankers etc., with an objective
to make them competitive and professional.
Functions of SEBI
Protective Functions of SEBI
 SEBI prohibits fraudulent and unfair trade practices in the securities
market.
 Promotion of fair practices and code of conduct in securities market.
 Undertaking steps for investor protection.
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 Controlling insider trading and imposing penalties for such

malpractices.
Regulatory Functions of SEBI

 Registration and regulation of brokers, sub-brokers and other players
in the financial market.
 Registration of collective investment schemes and Mutual Funds.
 Conducting enquiries and audits of stock exchange and
intermediaries.
 Regulation of portfolio exchanges, underwriters, merchant bankers
and the dealings in the stock exchanges.
 Regulation of take-over bids by the companies.
Developmental Functions of SEBI

 Ensuring training of intermediaries of securities market
 Conducting research and publishing information useful to all market
participants.
 Facilitating flexibility in the working of capital markets.
Difference between Capital Market and Money Market
S.No. Basis Capital Market Money Market

1. Meaning The term capital The money market
market refers to constitutes the market for
facilities and short term funds which deals
institutional in monetary assets whose
arrangements through period of maturity is up to
which long-term one year.
funds, both debt and
equity are raised and
invested.
2. Duration It is a market for It is a market for short term
medium and long term market instruments whose
securities whose tenure may range from one
period of maturity is single day up to one year.
more than a year.
3. Participants The main participants The main participants in
in capital market are money market are
banks, financial institutional investors like the
institutions, corporate RBI, banks, financial
bodies, foreign institutions and finance
investors and retail companies. Although, the
investors. individual investors are
allowed trade in the
secondary money market,
however they do not generally
do so.
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4. Investment Since, the cost of Since, the cost of instruments

outlay certain securities may is high, investment in the
be low, investment can money market requires huge
be made in the capital capital outlay. Like, the price
market even with less of one treasury bill is ₹
capital. Like, the price 25000.
of a share even be as
low as ₹ 10 or ₹ 100
etc.
5. Liquidity The securities in The securities in capital
capital market enjoy market enjoy high liquidity as
good liquidity. The Discount Finance House
of India works as a
compulsory market maker.
6. Risk The instruments in The instruments in money
capital market carry market carry low risk as they
high risk as stock carry negligible or low risk of
market is highly default due to the
volatile. creditworthiness of the
issuers, which includes the
government, banks and
financially strong companies.
7. Expected The possibility of The expected return is low on
return earnings on the money market
investment in capital instruments because they are
markets generally is held for a short period of
higher if the securities time.
are held for a longer
duration.
8. Instruments The main instruments The main instruments traded
traded in the capital in the money market are
market are equity short term debt instruments
shares, debentures, such as treasury bills, trade
bonds, preference bills reports, commercial
shares etc. paper and certificates of
deposit.
Difference between Primary Market and Secondary Market
S.No. Basis Primary Market Secondary Market

1. Meaning It is the new issue market.
It is the market for old
securities.
2. Aspects Only buying of securities Both buying and selling
takes place. of securities takes place.
3. Price Prices of the securities are Prices of the securities
determined by the company. are determined by the
forces of demand and
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supply.
4. Parties It involves dealings between It involves dealings

involved the company and investors. between the two
investors.
5. Location There is no fixed location for The secondary market
the primary market. exists at fixed locations
in the form of the stock
exchanges.
6. Capital It leads to capital formation It leads to capital
formation directly as the funds are formation indirectly by
mobilised and channelised providing liquidity and
directly from the investors to marketability to the
the company. securities.
1. Which of the following statements is true with regard to financial

markets?
(a) They link the households which save funds and business firms
which invest these funds.
(b) They work as an intermediary between the savers and the investors
by mobilising funds between them.
(c) They allocate funds available for investment into their most
productive investment opportunity.
2. The allocated function is performed by …............

(a) Financial market
(b) Capital market
(c) Money market
3. It is a market for short-term funds which deals in monetary assets

whose period of maturity is up to one year.
(a) Primary market
(b) Secondary market
(c) Capital market
(d) Money market
4. Which of the following statements is not true with regard to money

market?
(a) It involves low market risk.
(b) It is situated at specific locations.
(c) Deals in unsecured and short-term debt instruments.
(d) The instruments traded are highly liquid.
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5. It is an instrument of short-term borrowing by the Government of India

maturing in less than one year.
(a) Commercial bill
(b) Treasury bill
(c) Call money
6. Who issues a treasury bill?

(a) Any nationalised bank
(b) Any private sector bank
(c) Reserve Bank of India
7. Which of the following statements is not true with regard to Treasury

bills?
(a) Are issued in the form of a promissory note.
(b) They are highly liquid and have assured yield
(c) They carry high risk of default.
(d) They are available for a minimum amount of ₹25,000 and in
multiples thereof.
8. Suppose an investor purchases a 91 days Treasury bill with a face value

of ₹2,00,000 for ₹1,92,000. By holding the bill until the maturity date,
the investor receives ₹2,00,000. What is the amount of interest received
by him?
(a) ₹8,000
(b) ₹80,000
(c) ₹3,92,000
(d) ₹2,00,000
9. It is used as an alternative to bank borrowing for large and creditworthy

companies.
(a) Commercial bill
(b) Commercial papers
(c) Call money
10. Which of the following statements is not true with regard to Commercial
paper?
(a) Is a long-term unsecured promissory note with a fixed maturity
period.
(b) It usually has a maturity period of 15 days to one year.
(c) It is sold at a discount and redeemed at par.
(d) Companies use this instrument for bridge financing.
11. It is a method by which banks borrow from each other to be able to

maintain the cash reserve ratio.
(a) Commercial bill
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(c) Call money
12. Which of the following statements is not true with regard to Call money?
(a) It is short-term finance repayable on demand.
(b) Its maturity period ranges from one day to fifteen days.
(c) There is a direct relationship between call rates and other short-term
money market instruments.
(d) It is used for inter-bank transactions.
13. A rise in call money rates makes other sources of finance such as
commercial paper and certificates of deposit
(a) Expensive in comparison with banks who raise funds from these
sources.
(b) Cheaper in comparison with banks who raise funds from these
sources.
(c) Creates no effect on other sources.
14. It is a short-term, negotiable, self-liquidating instrument which is used

to finance the credit sales of firms.
(a) Commercial bill
(c) Call money
15. The capital market consists of ………………

(a) Development banks
(b) Commercial banks
(c) Stock exchanges
16. Which of the following statements is not true with regard to primary
market?
(a) Is also known as the old issues market.
(b) It facilitates the transfer of investible funds from savers to
entrepreneurs.
(c) It deals with new securities being issued for the first time.
(d) It facilitates the transfer of investible funds from savers to
entrepreneurs.
17. A company can raise capital through the primary market in the form of
(a) Equity shares
(b) Preference shares
(c) Debentures
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18. They can be issued to individuals, corporations and companies during

periods of tight liquidity when the deposit growth of banks is slow but
the demand for credit is high.
(a) Commercial papers
(b) Call money
(c) Commercial bill
(d) Certificate of deposit
19. Which of the following statements is not true with regard to capital
market?
(a) The funds are raised for a short period of time.
(b) Both debt and equity funds can be raised.
(c) It is classified into two types.
20. Which of the following participants represent capital market?

(a) Development banks
(b) Commercial banks
(c) Stock exchanges
21. Under this method of floatation in primary market, a subscription is

invited from general public to invest in the securities of a company
through the issue of advertisement.
(a) Private placement
(b) Offer through prospectus
(c) Offer for sale
22. PK Enterprises Limited has sold an entire lot of 5,00,000 equity shares
@ ₹9 each to Prosperous Bank Private Limited. The bank inturn will offer
the shares to general public for subscription @ ₹11 per share. Identify
the method of floatation being described in the given lines.
(b) Offer through prospectus
(c) Offer for sale
(d) Rights issue
23. Jaykant is holding hundred shares of a company. He has been given a

privilege offer to subscribe to a new issue of shares of the same company
in proportion of 2:1 to the number of shares already possessed by him.
Identify the method of floatation being described in the above case.
(a) Offer through prospectus
(b) Offer for sale
(c) Rights issue
(d) Private placement
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24. Which of the following statements is not true with regard to stock
exchange?
(a) It provides a platform for buying and selling of new securities.
(b) It curbs the marketability of the securities.
(c) By providing a ready market, it extends liquidity to the securities.
(d) It provides a platform for buying and selling of old securities.
25. Stock Exchange works as a mechanism for valuation of securities

through the forces of demand and supply. Identify the related function of
performed by the stock exchanges.
(a) Providing liquidity and marketability to existing securities.
(b) Safety of transaction.
(c) Pricing of security.
(d) Spreading of equity cult.
26. Stock exchanges provide an opportunity to the investors to disinvest and

invest. Identify the related function of the stock exchange.
(a) Providing scope for speculation.
(b) Providing liquidity and marketability to existing securities.
(c) Pricing of security.
(d) Spreading of equity cult.
27. The process of holding shares in electronic form is known as ……………

(a) Demutualisation
(b) Dematerialisation
(c) Speculation
28. Which of the following is not a protective function of stock exchange?

(a) Prohibition of fraudulent and unfair trade practices.
(b) Controlling insider trading.
(c) Regulation of takeover bids by companies.
(d) Promotion of fair practices and code of conduct in securities market.
29. One of the common irregularities noted by the Securities and Exchange
Board of India during the inspection of a stock exchange was that it was
dealing with unregistered sub-brokers.
Identify the related function of Securities and Exchange Board of India
(a) Regulatory function
(b) Protective function
(c) Developmental function
30. It acts like a bank and keeps securities in electronic form on behalf of
the investor.
(a) Depository Participant
(b) Depository
(c) Stock exchange
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31. It serves as an intermediary between the investor and the depository

who is authorised to maintain the accounts of dematerialised shares.
(a) Depository Participant
(b) Depository
(c) Stock exchange
32. It is a number assigned to each transaction by the stock exchange and

is printed on the contract note.
(a) PAN number
(b) Unique Order Code
(c) Contract Note
33. Identify the correct sequence of steps to be followed in the trading

procedure at Stock Exchange
(a) Opening a trading account and Demat account, Placing an order,
Settlement of order, Execution of order
(b) Settlement of order, Opening a trading account and Demat account,
Placing an order, Execution of order
(c) Opening a trading account and Demat account, Placing an order,
Execution of order, Settlement of order
(d) Placing an order, Opening a trading account and Demat account,
Execution of order, Settlement of order
34. The mandatory detail that an investor has to provide to the broker at the
time of opening a demat account is
(a) Date of birth and address
(b) PAN number
(c) Residential status (Indian/NRI)
(d) Bank account details.
35. It is a legally enforceable document which is issued by a stock broker

within 24 hours of the execution of a trade order.
(a) PAN number
(c) Contract Note
36. On this day, the exchange will deliver the share or make payment to the
other broker.
(a) Pay-in day
(b) Pay-out day
(c) Transaction day
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37. When is a trade confirmation slip issued to the investor?

(a) On placing an order
(b) On execution of the order
(c) On settlement of the order
38. After the trade has been executed, the broker issues a Contract Note to
the investor within
(a) 52 hours
(b) 24 hours
(c) 48 hours
(d) 12 hours
39. Raj Enterprises wishes to invest ₹1,10,000 in treasury bills. What is the
maximum number of treasury bills it can buy with this fund?
(a) 6
(b) 7
(c) 4
(d) 2
40. Raghav‟s friend Raman works as a Chartered Accountant in Solutions

Ltd. Raman in a meeting with the Board of Directors of the Company
came to know that the firm would soon be declaring a Bonus issue
which would result in increase in the price of shares. Considering this,
Raman advised Raghav to purchase the shares of Solutions Ltd., who
acted on his advice and bought the shares before time. Which function
of SEBI can control such malpractices?
(a) Protective functions
(b) Regulatory functions
(c) Development functions
(d) All the above
41. Priyanshu has decided to work as a stock broker, so he visits his friend
Harsh for guidance. Harsh is a leading stock broker. Harsh tells him to
first apply for registration to the Securities and Exchange Board of India
(SEBI) as it is compulsory for all stock brokers under the SEBI Act.
What type of the function is being performed by SEBI through this
condition?
(c) Developmental
42. Geet‟s grandmother gave her a gift packet on her birthday. Geet opened
the packet and saw many wrinkly share certificates inside. Her
grandmother told her that her grandfather had left them for Geet in his
will. As no trading is now done in physical form, Identify the process
through which she will be in a position to deal with these certificates.
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(a) Demutualisation
(c) Computation
(d) Financial intermediation
43. „Exploration Ltd.‟ is planning to raise an issue of 3,000 non-convertible

debentures (NCDs) of face value of 10 lakh aggregating ? 300 crore
through private placement. Name the type of financial market being
approached by the company.
(a) Primary market
(b) Secondary market
(c) Money market
44. SEBI can call for information by undertaking inspection, conducting

enquiries and audits of stock exchanges and intermediaries. Identify the
related function of Securities and Exchange Board of India.
(b) Developmental function
(c) Protective function
45. The depository participant (DP) serves as an intermediary between the

investor and the Depository.
(a) True
(b) False
(c) Partially true
(d) Partially false
46. It is a document issued by the stock broker showing the details of

bought or sold after the order has been executed electronically.
(a) Order confirmation slip
(b) Contract note
(c) Trade confirmation slip
(d) Unique identification code
47. SEBI recently called for information and issued a show cause notice to
BSE and its 10 officials seeking explanation on the insider trading. State
the function that SEBI performed by doing so.
(c) Developmental function
48. They are the short-term money market instruments issued by large and
credit worthy companies.
(a) Commercial bill
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(c) Call money

49. Paras Ltd. a reputed paint manufacturer needs Rupees twenty crores as
additional capital to expand its business. Considering the fact that the
public issue may be expensive on account of various mandatory and
non-mandatory expenses, it was decided to allot the securities to
institutional investors.
Name the method through which the company decided to raise
additional capital.
(a) Offer for sale
(b) e-IPO
(c) Private placement
(d) Issue through prospectus
50. Ashish Ltd. is a large company, engaged in real estate business. It has
built good reputation over the year and has been consistently earning
profits and paying regular dividend to its shareholders. It needs
additional working capital immediately to finance a project. It expects to
return this amount after five to seven months. Mr. Devgan, the Cheif
Operating Officer of the company does not want to get into procedural
requirements of securing finance from a Financial institution or bank.
Suggest how the company can raise the required finance for meeting its
additional working capital requirements.
(a) Certificate of deposit
(b) Commercial paper
(c) Treasury bills
(d) Call money
51. Incorporated in 1999, state-owned Indian Railway Catering and Tourism

Corporation Limited (IRCTC) is a wholly-owned subsidiary of Indian
Railways. IRCTC handles tourism, catering, online ticket booking
services and provides packaged drinking water in trains and at railway
stations in the country. The Promoters of this company is the President
of India acting through the Ministry of Railways, Government of India.
Recently the company came out with an initial public offer (IPO). One of
the objects of the Offer is to carry out the disinvestment of Equity
Shares by the Selling Shareholder constituting Company‟s paid up
Equity Share capital. Identify the type of financial market being
discussed in the above lines.
(a) Capital market
(b) Money market
(c) Secondary market
52. Abel purchases a 91 days financial instrument with a face value of

₹4,00,000 for ₹3,80,000. On the maturity date, he receives ₹4,00,000.
The minimum value of purchase these type of financial instrument is
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₹25,000 and in multiples thereof. Identify the type of financial

instrument being described above.
(a) Treasury Bill
(b) Commercial paper
(c) Call money
(d) Commercial Bill
53. Under this method of floatation in primary market a company invites

subscriptions from the general public for its securities like, equity
shares, debentures, bonds etc. through an issue of prospectus. Identify
the method being mentioned in the above lines..
(b) Offer for sale
(c) Right issue
(d) Offer through prospectus
54. During the shifting of her residence Bhanu found the share certificates of
a reputed tyre company, which she had purchased many years back.
The securities were in physical form. Keeping in view the surge in the
stock price of those shares she plans to sell them off. Her friend Radha
advised her to first get them converted into electronic form. What
process was Radha referring to?
(a) Denomination
(c) Demutualisation
55. Topnotch Ltd. an automobile company has recently been converted into
a public company. It now plans to raise ₹ 400 crores through an issue of
shares. The company plans to sell these securities enbloc at an agreed
price to brokers who, in turn, resell them to the investing public. Name
the type of financial market being approached by the company.
(a) Primary Market
(b) Secondary Market
(c) Money Market
56. Name the money market instrument which is issued by commercial

banks and development financial institutions during periods of tight
liquidity when the deposit growth of banks is slow but the demand for
credit is high.
(b) Call money
(c) Treasury bills
(d) Commercial papers
57. Who issues a contract note?

(a) Stock broker
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(c) Investor
(b) Stock exchange
58. SEBI seeks to control insider trading and impose penalties for such
practices. Identify the type of function of SEBI being stated above.
(b) Developmental function
(c) Protective function
59. When the rate of return offered to households would be higher, it

indicates that the allocative function is performed well.
(a) True
(b) False
(c) Partly true
(d) Partly false
60. One of the steps in the trading procedure necessitates that, the investor
has to deliver the shares sold or pay cash for the shares bought. This
should be done immediately after receiving the contract note or before
the day when the broker shall make payment or delivery of shares to the
exchange. This is known as ……………….
(a) Pay-in day
(b) Pay-out day
(c) Order confirmation slip
(d) Unique code number
61. When a trade bill is accepted by a commercial bank it is known as a
…………
(a) Commercial paper
(b) Treasury bill
(c) Commercial bill
(d) Certificate of deposit
62. Under this method securities are issued directly to the public and are
not offered for sale through intermediaries like issuing houses or stock
brokers. Identify the method of floatation being described in the above
case.
(b) Offer for sale
(c) Rights issue
63. Arsh and Utsav are good friends. Considering the boom in the stock
market they have decided to invest in shares. Arsh is planning to
subscribe to an upcoming public issue of a private sector bank whereas,
Identify the type of capital market being approached by Arsh.
(a) Primary Market
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(c) Money market
64. KL Enterprises Limited has floated a public issue of equity shares

through „offer for sale‟ method. Which type of capital market should it
approach?
(a) Primary Market
(c) Money market
65. „Taste Buds Pvt. Ltd.‟ is a company dealing in various kinds of flavoured
mineral water. Keeping in view the growing demand for its products the
company has now decided to „go public‟ with an issue of equity shares.
Since the cost of raising funds through equity is high, the company has
decided to source this requirement of funds through money market.
Name and explain the money market instrument that the company may
use for meeting its purpose.
(b) Treasury bills
(c) Commercial bills
(d) Commercial paper
66. On the execution of the order the stock exchange broker will issue a
trade confirmation slip to the investor.
(a) True
(b) False
(c) Partially True
(d) Partially False
67. In order to trade in securities Tarun has decided to open a special

account with ICICI Bank. Who is the depository participant in this case?
(a) ICICI Bank
(b) Tarun
68. In India National Securities Depository Limited (NSDL) and Central

Depository Services Limited (CDSL) act as a
(a) Depository
(b) Depository participant
(c) Stock broker
(d) Investor
69. The process of holding and transferring securities in electronic form is

referred to as……………..
(a) Demutualisation
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(b) Dematerialisaton
(c) Standardisation
(d) Financial intermediation
70. Esha is holding 100 shares of „Trekha Limited‟. The company is offereing
her a privilege to subscribe to a new issue of shares according to the
terms and conditions of the company. Identify the method of floatation
used in primary market being used by the company.
(a) Offer for sale
(b) Rights issue
(c) Offer through prospectus
Fill in the blanks.

1 A …………… marketis a market for the creation and exchange of
financial assets.
2 ………………. refers to the process through which allocation of funds is
done by the savers in the households sectors through two main
mechanisms; banks and financial markets.
3. The …………………market constitutes the market for short term funds
which deals in monetary assets whose period of maturity is up to one
year.
4. The …………………. market deals with new securities being issued for
the first time.
5. The mandatory detail that an investor has to provide to the broker at the
time of opening a demat account is …………………..
6. The secondary market is commonly referred to as the …………………
market.
7. A ……………… means anybody of individuals, whether incorporated or
not, constituted for the purpose of assisting, regulating or controlling the
business of buying and selling or dealing in securities.
8. Sudha Enterprises wishes to invest ₹2,10,000 in treasury bills. The
maximum number of treasury bills he can buy with this fund is
………………..
9. The process of holding securities in electronic form is known as
………………..
10. A …………………… acts as a custodian of the securities in electronic
form on the behalf of the investors.
11 ………………… is a legal document, which may be used to settle the
claims between the investor and the broker.
12 …………………. represent the short-term borrowing by the Government
of India.
13. Under ……………… method, the securities are not issued directly to the
public but are offered for sale through intermediaries.
14. The ………………….is the regulator for the securities market in India.
15. On this day, the exchange will deliver the share or make payment to the
other broker ……………….. in the trading procedure at stock exchange.
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1. The term money market refers to facilities and institutional
arrangements through which long-term funds, both debt and equity are
raised and invested.
2. Primary market is also referred to as the new issues market.
3. In India National Securities Depository Limited (NSDL) acts as a
depository participant.
4. The depository participant serves as an intermediary between the
investor and the Depository.
5. Secondary market is a market for the trading of the old/existing
securities of the companies.
6. Order confirmation slip is a document issued by the stock broker
showing the details of bought or sold after the order has been executed
electronically.
7. A rise in call money rates makes other sources of finance such as
commercial paper and certificates of deposit expensive in comparison for
banks raise funds from these sources.
8. Certificate of deposit are the short-term money market instrument
issued by large and credit worthy companies as an alternative to bank
borrowing.
9. Treasury bills carry high risk of default.
10. A commercial paper is a bill of exchange used as a short-term money
market instrument used to finance the working capital requirements of
business firms.
11. A rights issue is a method used by a company to issues securities to
institutional investors and some selected individuals.
12. Conducting enquiries and audits of stock exchanges and intermediaries
is one of the protective functions of Securities and Exchange Board of
India (SEBI).
13. Conducting research and publishing information useful to all market
participants is one of the developmental functions of Securities and
Exchange Board of India (SEBI).
14. There is an indirect relationship between call rates and other short-term
money market instruments.
15. Unique Order Code is the number assigned to each transaction by the
stock exchange and is printed on the contract note.

1.
Column A Column B
(i) Money market (a) Creation and exchange of financial assets
(ii) Capital market (b) Process of allocation of funds
(iii) Financial market (c) Market for long-term funds
(iv) Financial intermediation (d) Market for short-term funds
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
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(c) (i)-(c); (ii)-(a); (iii)-(d); (iv)-(b)

(d) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
2.
Column A Column B
(i) New issues market (a) Depository
(ii) Trading of the existing securities (b) Dematerialisation
(iii) Holding securities in electronic form (c) Primary market
(iv) A custodian of the securities in electronic form (d) Secondary market
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(b); (iv)-(a)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
3.
Column A Column B
(i) Zero coupon bonds (a) Call money
(ii) Used for Bridge financing (6) Treasury bills
(iii) Short-term instrument used for inter-bank
dealings (c) Certificate of deposit
(iv) Instrument issued by commercial banks and (d) Commercial papers
development financial institutions
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(c) (i)-(c); (ii)-(a); (iii)-(d); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
4.
Column A Column B
(i) Securities are offered for sale
through (a) Offer through
intermediaries prospectus
(ii) Securities are issued to institutional investors (b) Rights Issue
(iii) Subscriptions from the general public for
(c) Offer for sale
securities
(iv) Issuing securities exclusively to the existing (d) Private placement
shareholders
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
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5.
Column A Column B
(i) The investor has to deliver the shares sold or (a) Function of stock
pay cash for the shares bought exchange
(ii) The exchange will deliver the shares or make (b) Objective of stock
payment to the other broker in case of purchase exchange
(iii) Providing liquidity and marketability to (c) Pay in day
existing securities
(iv) To protect the rights and interest of investors (d) Pay out day
(a) (i)-(a); (ii)-(b); (iii)-(c); (iv)-(d)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
1. Assertion (A): Treasury bills have assured yield and negligible risk of
default. Reason (R): Treasury bills are available for a minimum amount
of '25,000 and in multiples thereof.
explanation of (A)
explanation of (A)
2. Statement I: A commercial bill is sold at a discount and redeemed at

par. Statement II: The interest rate paid on commercial bill is known as
the call rate,
3. Statement I: Certificate of deposit are issued during periods of tight

liquidity when the deposit growth of banks is high but the demand for
credit is less .
Statement II: Certificate of deposit help to mobilise a small amount of
money for short periods.
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4. Assertion (A): Secondary market provides liquidity and marketability to

existing securities.
Reason (R): Secondary market provides investors the chance to
disinvest and reinvest,
explanation of (A)
explanation of (A)
5. Statement I: An order confirmation slip is issued to the investor by the

broker. Statement II: An order confirmation slip is legally enforceable
and helps to settle disputes between the investor and the broker.
6. Statement I: The depository participant serves as an intermediary

between the investor and the depository.
Statement II: A depository is like a custodian bank and keeps securities
in electronic form on behalf of the investor.
7. Statement I: Capital Market may be divided into primary market and

money market.
Statement II: Money Market is a market for short-term funds.
Answer Key
1 D 11 C 21 B 31 A 41 A 51 A 61 A
2 D 12 C 22 C 32 B 42 B 52 A 62 C
3 D 13 B 23 C 33 C 43 A 53 D 63 A
4 B 14 A 24 B 34 B 44 A 54 B 64 A
5 B 15 D 25 C 35 C 45 A 55 A 65 A
6 C 16 A 26 B 36 B 46 C 56 A 66 B
7 C 17 D 27 B 37 B 47 A 57 A 67 A
8 A 18 D 28 C 38 B 48 B 58 C 68 A
9 B 19 A 29 A 39 C 49 C 59 A 69 A
10 A 20 D 30 B 40 A 50 B 60 A 70 B
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Assertion-Reason
Fill in the blanks True or false
Matching Questions

1 Financial 1 False 1 D 1 B
2 Financial intermediation 2 True 2 C 2 B
3 Money 3 False 3 B 3 B
4 Primary 4 True 4 C 4 A
Permanent account number
5 5 True 5 C 5 C
(PAN)
6 Stock 6 False 6 A
7 Stock exchange 7 False 7 D
Eight (value of one treasury False
8 8
bill is ₹25,000)
9 Dematerialisation 9 False
10 Depository 10 False
11 Contract note 11 False
12 Treasury bills 12 False
13 Offer for sale 13 False
Securities and Exchange True
14 14
Board of India (SEBI)
15 Pay out day 15 True
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Chapter: 11
Marketing Management
• Explain the concept of market and marketing;
• State the important functions of marketing;
• Describe the concept and elements of marketing mix;
• Describe the concepts of branding, labelling and packaging;
• State the nature and classification of product.
• Analyse the factors affecting the pricing decision;
• Describe the different types of channels of distribution;
• State the various components of physical distribution; and
• Explain the concept and elements of promotion mix, namely: advertising,
personal selling, sales promotion and public relation.
 Market: A market consists of all the potential customers who have
both the ability and willingness to buy a product or service to satisfy
their needs or wants.
 Marketing: Philip Kolter has defined marketing as, “a social process
by which individual groups obtain what they need and want through
creating offerings and freely exchanging products and services of value
with others”.
 Marketer: A marketer or seller refers to an individual or organisation
that plays more active role in the process of exchange. It usually refers
to a seller, but in certain cases a persuasive buyer may also be called
a marketer.
 Marketing Management Philosophies/ Concepts: Production
concept : According to Philip Kotler, the production concept holds that
consumers will prefer products that are widely available and
inexpensive.
 Product concept: According to Philip Kotler, the product concept
holds that consumers will prefer products that offer the best quality,
performance or most innovative features.
 Selling concept : In the words of Philip Kotler, the selling concept
holds that the consumers and businesses, if left alone, will ordinarily
not buy enough of the organisation‟s products.
 Marketing concept : According to Kotler, the marketing concept holds
that the key to achieving its organisational goals consists of the
company being more effective than competitors in creating, delivering
and communicating customer value to its chosen target markets.
 Societal marketing concept : In the words of Kotler, the societal
marketing concept holds that the organisation‟s task is to determine
the needs, wants and interests of the target markets and to deliver the
desired satisfactions more effectively and efficiently than competitors
in a way that preserves or enhances the consumer‟ and the society‟s
well-being.
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 Marketing mix: Marketing mix refers to the combination of four

marketing variables, namely: product, price, place and promotion,
which are interrelated and interdependent.
 Branding: The process of assigning a brand name to a product or
service is known as branding.
 Brand: A brand is a name, term, design, symbol or other feature that
differentiates an organisation or product from its competitors in the
eyes of the prospective buyers.
 Brand Name: A brand name refers to that part of a brand which can
be uttered or spoken.
 Brand Mark: A brand mark refers to that part of a brand which
cannot be uttered or spoken but can be recognised as it may appear
in the form of a symbol, design, distinct colour scheme or lettering.
 Trade Mark: When a brand or a part of a brand is given legal
protection, it is referred to as trademark.
 Packaging: Refers to the act of designing and producing the container
or wrapper of a product.
 Labelling: The process of designing a label for a product is known as
labelling. A label for a product may range from a simple tag to a
complex graphic.
 Pricing: Pricing refers to the process of deciding the price of a
product.
 Physical distribution: The physical distribution is concerned with
making the goods and services available at the right place, at the right
time and in the right condition so as to enable the people to make a
purchase.
 Channels of distribution: Channels of distribution refer to the set of
firms and individuals that take title or help in the process of
transferring the title to particular products or services as they move
from the producers to the consumers.
 Promotion: Promotion refers to the set of activities undertaken by a
marketer to inform the prospective buyers about the product and
persuading them to make a purchase.
 Promotion mix: Promotion mix refers to a combination of
promotional tools, namely: Advertising, Personal Selling, Sales
Promotion and Public relation.
 Advertising: Advertising refers to the paid form of non-personal
communication to promote the sale of goods or services undertaken
by an identified sponsor
 Personal selling: Personal selling refers to the process of making
verbal presentation of a message in the form of interaction with one or
more prospective customers for the purpose of making sales.
 Sales promotion: Sales promotion refers to the various short-term
incentives which are designed to persuade the prospective buyers to
make the purchase of a product or service immediately.
 Public relations: Public relations refer to the practice of managing
communication between an organisation and its public in order to
create and maintain a positive image about itself and its products.
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 Potential customers who have both the ability and willingness to buy a
product or service: Market
 Controllable variables: Components of marketing mix.
 Non-controllable variables: Components of general business
environment: economic, social, political, legal and technological
 Name of the whole class of the product: Generic name
 A part of brand which can be spoken: Brand name
 A part of brand which cannot be spoken: Brand mark
 A registered brand name: Trademark
 Easy availability and affordability of products: Production concept
 Supremacy of the product quality: Product concept
 Aggressive sales promotion: Selling concept
 Finding wants and filling them: Marketing concept
 Eco-friendly products: Societal marketing concept
 Making the goods and services available at the right place, at the right
time and in the right condition: Physical distribution
 Set of firms and individuals that take title or help in the process of
transferring the title: Channels of distribution
 Activities undertaken to inform and persuade prospective buyers:
Promotion
 Paid form of non-personal communication: Advertising
 Face-to-face interaction between seller and prospective buyer:
Personal selling
 Short-term incentives to promote sales: Sales promotion
 Create and maintain a positive image about the company and its
products: Public relations

Features of marketing
 Needs and Wants- The process of marketing seeks to facilitate
satisfaction of needs and wants of the individuals and groups.
 Creating a Market Offering- The creation of a good market offering is
fundamental to the success of any business firm.
 Customer Value- A prospective buyer is likely to evaluate a product
both in terms of its functional utility and the social/psychological
benefits it is going to provide to him/her.
 Exchange Mechanism- The process of marketing is transacted
through an exchange between the buyer and the seller. The seller
offers a product/service in return for its monetary value.
Marketing Management Philosophies

 The Production Concept- This philosophy holds that consumers will
prefer products that are widely available and inexpensive.
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 The Product Concept- This philosophy focused on maximising profits

through product improvement.
 The Selling Concept- This philosophy holds that the consumers and
businesses, if left alone, will ordinarily not buy enough of the
organisation‟s products. The organisation must, therefore, undertake
an aggressive selling and promotion event.
 The Marketing Concept- This philosophy holds that the key to
achieving its organisational goals consists of the company being more
effective than the competitors in creating, delivering and
communicating customer value to its chosen target markets.
 The Societal Marketing Concept- This philosophy holds that the
organisation‟s task is to determine the needs, wants and interests of
target markets and to deliver the desired satisfaction more effectively
and efficiently than competitors in a way that preserves or enhances
the consumers‟ and the society‟s well-being.
Functions of Marketing
 Gathering and Analysing Market Information
 Marketing Planning
 Product Designing and Development
 Standardisation and Grading
 Packaging and Labelling
 Branding
 Customer Support Services
 Pricing of Product
 Promotion
 Physical Distribution
 Transportation
 Storage or Warehousing
Difference between marketing and selling
Basis Selling Marketing

Meaning Selling denotes exchange of Marketing is a social process
goods and service through wherein people exchange things
transfer of tittle of goods of value with others to satisfy a
from a buyer to a seller. need or want.
Orientation It follows a product-orientedIt follows a customer-oriented
approach. approach.
Starting This concept starts with This concept starts with the
point existing products. requirements actual and
potential customers.
Scope The concept of selling has a The scope of the concept of
narrow scope. marketing is wider and it
includes selling.
Focus It focuses on maximizing It focuses on maximizing long-
short-term revenue through term revenue through customer
sales maximization. satisfaction.
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Approach Selling seeks to strategies Marketing aims at adopted a

promotional activities in well integrated approach which
order to promote sales. starts before the production of a
product and continues even
after its sales.
Nature of product
 A product refers to an item that satisfies the consumer‟s needs or
wants.
 Product is a mixture of tangible and intangible attributes.
 According to a consumer‟s perspective, a product is perceived as a
bundle of utilities i.e. functional benefits, psychological benefits and
social benefits.
 The concept of product also include the extended product or what is
offered to the customers by way of after sales services, handling
complaints, availability of spare parts etc.
Classification of products
 Consumers products
 On the basis of durability - Durable products, nondurable products,
services
 On the shopping efforts involved - Convenience Products, Shopping
Products, Specialty Products
 Industrial products
 Materials and parts
 Capital items
 Supplies and business services
Components of marketing mix

 Product- A product is anything of value i.e. a product or service
offered to a market to satisfy needs or wants.
 Price- Price refers to the value of a product in monetary terms. It is a
crucial decision in marketing of the products and services.
 Place- Place or physical distribution are all those activities that
ensure availability of the product at the right place, at the right time
and in the right position to the target customers.
 Promotion- Promotion includes a set of activities that are undertaken
by the prospective buyers. The key components of promotion mix
advertising, personal selling, sales, promotion and public relations.
Advantages of Branding
Advantages of Branding to the Marketers
 Enables marking product differentiation
 Helps in advertising and display programmes
 Differential pricing
 Ease in introduction of new product
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Advantages of Branding to the Customers

 Helps in product identification
 Ensures quality
 Status symbol
Characteristics of Good Brand Names

 The brand name should be short, easy to pronounce, spell, recognise
and remember.
 A brand should suggest the benefits and qualities of the product and
it should be appropriate in accordance to the product‟s function.
 A brand name should be distinctive.
 The brand name should be adaptable to packing or labelling
requirements, to different advertising media and in different
languages.
 The brand name should be sufficiently versatile to accommodate new
products, which are added to the product line.
 It should be capable of being registered and protected legally.
 The selected name should have staying power.
Levels of Packaging
 Primary Package- The immediate container of a product is referred to

as the primary package.
 Secondary Packaging- The additional layers of protection that are
kept till the product is ready for use.
 Transportation Packaging- The goods need to be transported from
the place of production to the place of consumption. Transportation
packaging thus facilitates storage, identification or transportation.
Importance of Packaging
 Rising Standards of Health and Sanitation
 Self Service Outlets
 Innovational Opportunity
 Product Differentiation
Functions of Packaging
 Product Identification
 Product Protection
 Facilitating Use of the Product
 Product Promotion
Functions performed by a label

 Describe the Product and Specify its Content
 Identification of the Product or Brand
 Grading of Products
 Helps in Promotion of the Products
 Providing Information Required by Law
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Factors Affecing Price Determination

 Product Cost- The first consideration in fixing of the price of a
product is its cost of production, distribution and selling the product.
There are broadly three types of costs: viz., Fixed Costs, Variable
Costs and Semi-Variable Costs.
 The Utility and Demand- Utility of a product refers to the benefit that
the consumer is likely to derive through the use of a product. The
buyer will generally be inclined to pay the price of a product which is
at least equivalent to the utility derived from the product. According to
the law of demand, a consumer is likely to buy more units of a
product at a low price or vice versa. Therefore, the price of a product
is also affected by the elasticity of the demand for the product.
 Extent of Competition in the Market- If the level of competition is
high, the firm is likely to fix the prices of its products on the lower
limit. Whereas, if the level of competition is low, the price of the
product is likely to reach the upper limit.
 Government and Legal Regulations- In order to safeguard the
interest of the consumers against unfair trade practices in the area of
pricing, the government may intervene and regulate the price of the
product.
 Pricing Objectives- In case a firm decides to maximize profits in the
short run, it is likely to set the price at the upper limit. On the
contrary, if a firm decides to maximize profits in the long run, it is
likely to fix the prices on the lower limit as it would enable the firm to
maximize sales and capture a larger market share.
 Marketing Methods Used- If a firm enjoys uniqueness of any of the
elements such as the type of distribution system adopted, the quality
of salesmen employed, promotional efforts, credit facilities, extent of
advertising, etc., it will have a competitive edge in fixing high prices
for its products.
Two key decisions related to physical distribution

 It relates to the physical movement of the goods from the producers to
the consumers.
 It also refers to the choice regarding the channels of distribution to be
adopted.
Types of Channels
Direct channel: (Zero-Level channel) (Manufacturer- Consumer)
Indirect channels:
 One level channel (Manufacturer- Retailer Consumer)
 Two level channel: (Manufacturer - Wholesaler Retailer- Consumer)
 Three level channel: (Manufacturer - Agent - Wholesaler - Retailer-
Consumer)
Components of Physical Distribution

 Order Processing- In order to develop efficient and effective physical
distribution systems, it is essential that the processing of the order is
280 | P a g e
done in an accurate and speedy manner. This will help to build a

goodwill of the business and also enhance customer satisfaction.
 Transportation- Transportation is one of the major elements in the
process of physical distribution of goods. This is because the goods for
which an order has been received by a seller cannot be physically
delivered or transported to the buyer in the absence of transportation.
 Warehousing- Considering the fact that there is likely to be a time gap
between production of the goods and their consumption, warehousing
is considered to be an important component of physical distribution
process. Warehousing refers to the act of storing and assorting
products in order to create time utility in them.
Inventory Control: Inventory refers to the level of stocks maintained by a

marketer for different products. It is a very crucial decision for carrying out
marketing activities successfully. If a firm decides to maintain high level of
inventory, its need in terms of storage facility will also be higher.
Key components of promotion mix

 Advertising
 Personal Selling
 Sales Promotion
 Public relation
Features of advertising
 Paid Form
 Impersonality
 Identified Sponsor
Advantages of advertising
 Mass Reach
 Enhancing Customer Satisfaction and Confidence
 Expressiveness
 Economy
Objections to advertising
 Adds to cost: A common argument against advertising is that, it adds
to the cost of the product as this cost is passed on to the buyer in the
form of higher prices.
 Undermines social values: The kind of lifestyles depicted in some of
the advertisement are against the norms of the society.
 Confuses the buyers: According to the opponents, a consumer is
likely to get confused on seeing too many advertisements of the
products.
 Encourages sale of inferior products: The opponents argue that
through effective advertising, the marketers can also be successful in
promoting the sale of inferior quality products.
 Some advertisements are in bad taste: Advertisements sometimes
are criticized on the ground that they are vulgar or obscene.
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Features of Personal Selling

 Personal Form
 Development of Relationship
1. The term „market‟ may be understood in which of the following contexts?

(a) Geographical area covered
(b) Type of buyers
(c) Quantity of goods transacted
2. According to the modern marketing concept, which of the following

statements is true?
(a) It refers to the group of people who do not have the ability but
willingness to buy a particular product.
(b) It refers to only the set of people who have the purchasing power to
buy a particular product.
(c) It refers to the set of actual and potential buyers for a product.
(d) It refers only to the people who show interest in a particular product.
3. Which of the following is a feature of marketing process?

(a) Satisfying needs and wants of the consumers
(b) Creating a market offering
(c) Developing an exchange mechanism
4. Which of the following statements does not reflect a condition to be

satisfied for an exchange to take place?
(a) Involvement of at least two parties- the buyer and the seller- is
mandatory.
(b) Each party should be capable of offering something of value to the
other.
(c) Exchange can take place if the buyers and sellers are not able to
communicate with each other.
(d) Each party should have freedom to accept or reject other party‟s
offer.
5. Raman has the purchasing power to buy a new model of small car but
not the willingness to purchase it. Whereas his friend Tarun has the
willingness to purchase it but does not have purchasing power to buy it.
Who will consitute the part of market for the product?
(a) Raman
(b) Tarun
(c) Both Raman and Tarun
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6. Naina a 5 year old girl is feeling hungry and is insisting to eat only pizza
and nothing else. Identify the related feature of marketing being
described in the given line.
(a) Needs and wants
(b) Customer value
(c) Exchange mechanism
(d) Creating an offering
7. The following pair of scissors is available for sale for rupees 75 at a

stationery shop. Identify the related feature of marketing being
mentioned in the given case.
(a) Needs and wants

(b) Customer value
(c) Exchange mechanism
(d) Creating an offering
8. In order to promote the sale of sports shoes, Mansa Limited is offering

an opportunity to have dinner with Anushka Sharma and Virat Kohli to
two of its customers whose names will be decided randomly through a
draw. Besides the product itself, what is being marketed by the company
through this offer.
(a) Place
(b) Experiences
(c) Event
9. In order to promote green initiative, Basak Limited has started using

Eco-friendly packaging containing Plantable Seeds. What is being
marketed in the given case?
(a) Information
(b) Place
(c) Idea
10. Which of the following statements is not true with regard to the concept
of product?
(a) It is a bundle of utility.
(b) It is a source of satisfaction.
(c) It is confined to physical product.
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11. Which of the following can be marketed?

(a) Red Cross society persuading to donate blood.
(b) Kerala Tourism persuading people to visit Kerala for health tourism.
(c) Political parties persuading to vote for a particular candidate.
12. „Feather Ltd.‟ is a large multinational company and operates in many
countries of the world. The company is in the business of Business
process outsourcing, knowledge process outsourcing etc. What is being
marketed by the company?
(a) Ideas
(b) Place
(c) Events
(d) Services
13. Karam Limited is offering a travel package for 15 destinations worldwide

with a free insurance on the bookings for the month of December, 2019.
Identify the feature of marketing being described in the above lines.
(a) Needs and wants
(b) Creating a market offering
(c) Customer value
(d) Exchange mechanism
14. Agile Limited has launched a new range of air conditioners in order to
add value to the usability of the product. The new range of air
conditioners have an inbuilt air purifier and are available in attractive
colours. Identify the type of marketing philosophy being described in the
above lines.
(a) Product concept
(b) Production concept
(c) Marketing concept
(d) Societal marketing concept
15. Identify the concept of marketing which emphasizes on affordability and

easy availability of the products?
(a) Product concept
(b) Selling concept
16. In order to create an edge over its competitors, Gagan Private Limited
constantly strives to bring about innovative changes in the features of
it‟s products. Name the Marketing concept being described in the given
case.
(a) Product concept
(b) Selling concept
(d) Production concept
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17. In order to enhance the popularity of its mutual funds, Paisa Limited
undertakes aggressive sales promotion efforts. Identify the marketing
philosophy being described in the given case.
(a) Marketing concept
(b) Product concept
(c) Selling concept
(d) Production concept
18. Raju has decided to open a school uniform shop in a local market. But
before doing so he decided to conduct a survey to assess the needs and
wants of the parents and students with regard to the same. Identify the
type of marketing philosophy been mentioned in the given case.
(a) Production concept
(b) Marketing concept
(c) Product concept
(d) Selling concept
19. In order to contribute effectively towards the go green initiative Munjal

Limited has decided to switch over to eco friendly packaging made from
sugarcane and rice husk. Identify the type of Marketing concept being
propagated by the company.
(a) Production concept
(b) Marketing concept
(c) Product concept
20. Which of the following are controllable factors that affect marketing
decisions?
(a) Technological conditions
(b) Social conditions
21. The decision areas relate to managing inventory, storage and

warehousing and transportation represent which component of
marketing mix?
(a) Product
(b) Price
(c) Place
(d) Promotion
22. As the winters were approaching, Dev bought a leather jacket for
himself. Identify the type of product utility being described in the given
case.
(a) Functional utility
(b) Psychological utility
(c) Social utility
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23. Varun expressed his desire to buy an expensive mobile phone on his
birthday as he wanted to show off to his friends. Identify the type of
product utility being described in the given case.
(a) Functional utility
(b) Psychological utility
(c) Social utility
24. VK Limited company dealing in glassware products. Over the years, the
company has established high reputation for itself because of its high
quality products. Consequently the customers have become have
become habitual of the brand and do not mind mind paying a little
higher for it. Identify the concept being described in the given case.
(a) Differential pricing
(b) Product differentiation
(c) Functional utility
(d) Environmental variable
25. Identify the level of packaging being exhibited below.
(a) Primary package

(b) Secondary packaging
(c) Transportation packaging
26. State any one function of the level of packaging being affected below.
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(a) It provides an additional layer of protection to the product.

(b) Kept till the product is ready for use
27. The packaging of the room fresheners is done in accordance with it‟s
specific fragnance like purple colour is used for lavender, yellow for lime,
pink for rose and so on. Identify the related point of importance of
packaging.
(a) Product identification
(b) Product protection
(c) Facilitating use of the product
28. Neha runs a Fashion Boutique in posh locality in Delhi. At the time of
fixing of the price for each costume she takes into consideration the
money spent on the fabric, stitching and other accessories used in the
costume. Identify the factor affecting- pricing decision being described in
the above case.
(a) The Utility and Demand
(b) Product cost
(c) Extent of Competition in the Market
(d) Pricing Objectives
29. Till six months back Roar Limited was the only company selling solar
heating bags, but now with the entry of three other companies offering
the same product, the market scenario has changed. Consequently,
Roar Limited has decided to reduce the prices of a product by 5% .
Identify the related factor affecting the pricing decision of the company.
(a) The Utility and Demand
(b) Product cost
(c) Extent of Competition in the Market
30. Identify the type of channel of distribution being depicted below.
Manufacturer
Consumer
(a) Direct channel

(b) Indirect channel
(c) Two level channel
31. Upasana has setup a small bakery unit to manufacture delicious and
healthy cookies which are high in fibre and low in sugar. In order to sell
the cookies she has deployed a team of five salesman to visit the
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households in the nearby colonies. Identify the type of distribution

channel being adopted by Upasana.
(a) Direct channel
(b) Indirect channel
(d) Three level channel
32. In order to inform and persuade the prospective consumers about its
range of products, a start up business decided to use non-personal form
of communication. Identify the element of promotion mix been described
in the given case.
(a) Personal selling
(b) Public relation
(c) Advertising
(d) Sales promotion
33. In order to re instate it‟s lost public image in wake of recent cases of
negligence filed of by its patients. Holy Hospital limited has set up a
separate department who would work towards creating a positive
perception about the hospital in the minds of public at large. Identify the
relation element of promotion mix being described in the given case.
(b) Public relation
(c) Advertising
(d) Sales promotion
34. In order to promote the habit of health and hygiene among weaker
sections of the society, Abhyas Limited has launched low cost packs of
hand wash. Identify the type of marketing philosophy being adopted by
the company.
(a) Product concept
35. In order to contribute effectively towards the go green initiative Munjal

Limited has decided to switch over to eco-friendly packaging made from
sugarcane and rice husk. Identify the type of Marketing concept being
propagated by the company. Identify the type of marketing philosophy
being adopted by the company.
(a) Product concept
36. Sujhav Limited is a company dealing in various types of fire

extinguishers. Considering the fact that people generally don‟t buy fire
extinguishers, the company undertakes aggressive sales promotion
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efforts in order to create and maintain demand for the product. Identify
the type of marketing philosophy being described in the given case.
(a) Product concept
(b) Selling concept
37. Madhubala is planning to launch an online education portal. In order to

understand the varied needs of the students, she conducted an online
survey. Based on the feedback of the survey, she has decided to offer
educational packages to the prospective buyers. Identify the type of
marketing concept being described in the given lines.
(a) Product concept
38. Gagan, the marketing manager of Skylane Ltd. stresses that a company
cannot achieve its objectives without understanding the needs of the
customers. It is the duty of the businessmen to keep consumer
satisfaction in mind because business is run by the resources made
available to them by the society. He acknowledged that he himself was
taking into consideration the needs of the customers and that was the
prime reason for success of his business. Identify the type of thinking
that guided Gagan in the marketing efforts of his business as described
in above lines.
(a) Product concept
39. Pragati Limited has chalked out an action plan in order to increase its
market share in the international market by 20% in the next one year.
The action plan contains the details about how the production levels will
be increased, promotional activities will be carried out and so on.
Identify the type of marketing function being described in the given
lines.
(a) Gathering and analysing market information
(b) Marketing planning
(c) Product designing and development
(d) Packaging and labelling
40. In order to improve upon its competitive edge, Khushboo Limited has
change the packaging of its hair care products. They are now available
in a consumer friendly design, which has a nozzle attached to the lid so
that at the time of usage, the consumer doesn‟t need to open the cap of
the bottle. Name the marketing function being explained in the given
lines.
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(a) Product designing and development

(b) Customer support services
(c) Promotion
(d) Physical distribution
41. In order to get feedback about its new product launch, Taggi Limited
conducted an online survey through a short questionnaire. Identify the
marketing function being mentioned in the given line.
(a) Gathering and analysing market information
(b) Marketing planning
(c) Product designing and development
(d) Packaging and labelling
42. Gabbar is a wholesaler of food grains. He categorises his stock into

different groups on the basis of their quality and also fixes up the prices
accordingly. Identify the type of marketing function being mentioned in
the given line.
(a) Physical distribution
(b) Transportation
(c) Warehousing
(d) Standardisation and grading
43. In order to enhance the easy marketability of the products, Dev, a

producer gets the home furnishing products manufactured in
confirmation to the predetermined specifications. Identify the type of
marketing function being described in the given case.
(b) Standardisation and grading
(c) Transportation
(d) Warehousing
44. Name the marketing function that seeks to protect against both
unavoidable delays in delivery and to meet out contingencies in the
demand.
(a) Transportation
(b) Warehousing
(c) Promotion
(d) Gathering and analysing market information
45. Good Health Limited has decided to launch a new range of water bottles
with in-built water purifier. Instead of marketing the product by is
generic name, the company has decided to call it „Purifiere‟. Identify the
type of marketing function being described in the given lines.
(a) Packaging and labelling
(b) Branding
(c) Pricing
(d) Promotion
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46. Drishti Limited is a chain of trusted optical centers for prescription &
fashion eyewear. It caters to affluent people with a range of premium
sunglasses for men, women and kids. In order to raise the level of
buyers‟ satisfaction, the company has decided to create a special section
in each of its outlets for handling customer complaints and adjustment
requirements. Identify the type of marketing function described in the
given lines.
(c) Promotion
47. Ecofriend Limited has decided to launch solar jackets, which will have
an inbuilt solar charger as well. In order to make its product
competitive, the company has decided to offer it for sale within the range
of ^1500 to ^4000. Identify the related function of marketing being
mentioned in the given case.
(b) Branding
(c) Pricing
(d) Promotion
48. Keeping in view the recent trends of sales regression, Sona Limited has
decided to offer a flat 15% discount on all its products. Identify the
related function of marketing being described in the given lines.
(b) Branding
(c) Pricing
(d) Promotion
49. Be Cool Limited has decided to market its products through the
conventional network of manufacturer-wholesaler-retailer-consumer.
Identify the function of marketing being described in the above line.
(b) Transportation
(c) Warehousing
(d) Standardisation and grading
50. While reading the label of a pack of aluminium foil, Reshma discovered
that the product was manufactured at Hyderabad but was available for
sale in many states across the country. Identify the function of
marketing which has made this possible,
(c) Transportation
(d) Warehousing
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51. Ranjan‟s business is being adversely affected due to the delay in delivery
on account of poor weather conditions. Identify the marketing function
which will be helpful to him in this regard.
(c) Transportation
(d) Warehousing
52. Champ Limited is a company providing online education to school

children of all the classes. Over the years, it has established a good
reputation and a market share of 75%. However, in past 2 months, due
to the entry of a new competitor in the same segment, the market share
of the company has reduced by 20%. Identify the type of marketing
factor which has adversely affected the sales of the company.
(a) Controllable factors
(b) Environmental factors
(c) Marketing mix
53. In order to promote the sales of the company, Mukund Limited has
decided to offer consumer durable products at 0% finance. Identify the
type of marketing factor being described in the above line.
(a) Controllable factor
(b) Non-controllable factor
(c) Environmental factor
54. Harshit is planning a start up a venture for offering mobile pet care
services at door step. He has decided to charge ₹1000 for heated
hydrobath & blow dry of a pet and ₹500 for shampoo and conditioning.
Identify the element of marketing mix which is not being described in
the above case.
(a) Product
(b) Place
(c) Price
55. Paytm Gold, a gold offering by digitial payments firm Paytm has
generated high demand since its launch in April 2017 primarily in tier II
and tier III cities because customers in these locations didn‟t have
access to high quality gold at attractive prices in the shops.
Identify the element of marketing mix because of which the buyers in
tier II and tier III cities were unable to make a purchase.
(a) Product
(b) Price
(c) Place
(d) Promotion
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56. Identify the component of branding being depicted below.
(a) Brand name

(b) Brand mark
(c) Trademark
(d) Generic name
57. It refers to that part of a brand which cannot be uttered or spoken but
can be recognised as it may appear in the form of a appears in the form
of a symbol, design, distinct colour scheme or lettering. Identify the
related concept being described in the above line.
(a) Brand name
(b) Brand mark
(c) Trade mark
58. Name the marketing function which is one of the very important means
of implementing differential pricing strategy.
(a) Branding
(b) Labelling
(c) Packaging
59. Arpita is the marketing manager of a „Muskaan Ltd‟ a company

providing dental care services in various parts of the country. Now, the
company is planning to sell its dental care products online. Identify the
type of distribution channel that the company plans to adopt.
(a) Zero level channel
(b) One level channel
(d) Indirect channel
60. Guneet went to a shop and expressed her desire to buy a copper water
bottle only of Prestige company. Identify the component related to
branding being described in the above case.
(a) Trademark
(b) Generic name
(c) Brand name
(d) Brand mark
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61. What does the symbol given below denote?
(a) Brand name

(b) Brand mark
(c) Trademark
(d) Generic name
62. Pranav has decided to start a business of manufacturing crockery and

cutlery items. In order to give a unique identification to his products, he
has decided to assign the brand name „Elegan„ as it will enable the firm
to secure and control the market for its products. Identify the relative
advantage of branding to the marketers being described in the above
case.
(a) Facilitates differential pricing
(b) Ease in the launching of new products
(c) Facilitates product differentiation
(d) Assists in advertising and display programmes
63. Srijan is fond of a particular brand of stationery. Every time he buys his
favourite brand stationery products, he does not need make a close
inspection of that product. Identify the relative advantage of branding to
the customers being described in the given case.
(a) Supports in product identification
(b) Certifies quality
(c) Considered to be a status symbol
64. Karan had started the business of producing exclusive home decor items
under the brand name „Eleganza‟ 15 years back. Over the years, he has
diversified into new segments like home furnishing, furniture and
kitchenware. However, all the products are being sold under the same
brand name „Eleganza‟, as it appears to be apt for all of them. Identify
the relative feature of a good brand name being described in the given
case.
(a) Short and easy to pronounce, spell and remember
(b) Reflects the functions of the product
(c) Distinctive/easily identifiable
(d) Versatile, can be used for brand extension
65. Sugandha purchased a pack of crayons for her daughter from a nearby
stationery shop. She noticed that the crayons were packed in a portable
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transparent plastic bag. Identify the level of packaging being described

in the above lines.
(a) Primary package
66. Lavanya runs a Play School from her residence. Recently, she placed an
order online for 200 chalk boxes. The boxes were delivered to her in a
corrugated box. Identify this level of packaging which facilitated
movement of the product.
(a) Primary package
67. Tejas bought a pack of tooth paste from a nearby grocery store. The
toothpaste was packed in a plastic tube and placed in a cardboard box.
Identify the level of packaging not being described in the above lines.
(a) Primary package
68. Good Living Ltd. manufactures Air Fresheners in „Block‟ formats which
can be used in bathrooms, cupboards, etc. These „Blocks‟ come in a
range of four exciting fragrances namely rose, lavender, citrus and
jasmine. Each of these „Blocks‟ are first individually packed in a foil and
then in a cardboard box. 100 such boxes are then placed in a big
corrugated box and delivered to various retailers for sale. Identify the
level of packaging which relates to putting the „Blocks‟ in a corrugated
box.
(a) Primary package
69. Zoom Ltd., a water purifier manufacturing company, has started its
business with Zoom mini and slowly launched Zoom-supreme, Zoom-
premier, etc. and also offers various services like after sale service,
availability of spare parts, etc. Identify the element of marketing mix
referred here.
(a) Product
(b) Price
(c) Place
(d) Promotion
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70. Tapan runs a grocery store. He receives the goods from the
manufacturers and wholesalers in corrugated boxes containing 10, 20,
or 100 units. Identify the level of packaging being described in the above
lines.
(a) Primary package
71. In an inter school quiz competition, the participants were shown empty
bottles of soft drinks and were asked to identify the brands. All the
participants were able to do so. Identify the related point highlighting
the importance of packaging which is being described in the given case.
(a) Rising standards of health and sanitation
(b) Facilitates product differentiation
(c) Innovative packaging adds value to a product.
(d) Useful in self service outlets
72. When Reema had sent her servant to the market to buy a pack of chips,
she asked him specifically to bring the yellow coloured packet of chips of
a particular brand. Identify the function of packaging being described in
the above line.
(a) Helps in product identification
(b) Provides protection to the product
(c) Facilitates the use of product
(d) Assists in promotion of the product
73. On visiting a supermarket to buy a pack of moisturizer, Harsha noticed

that the packaging of most of the beauty products exhibited a
photograph of a celebrity. Identify the related function of packaging
being described in the given case.
(a) Facilitates the use of product
(b) Assists in promotion of the product
(c) Helps in product identification
(d) Provides protection to the product
74. The labelling of a pack of oats cookies explains how the product is
beneficial in adding fibre to the diet and the other related health
benefits. Identify the related function of labelling being described in the
given case.
(a) Describes the product and specifies its content
(b) Identification of the product or brand
(c) Grading of products
(d) Helps in promotion of the products
75. Which of the following is not a function of labelling?

(a) Describe the product and specifies its content
(b) Identification of the Product or Brand
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(c) Grading of products

(d) Facilitating Use of the Product
76. Identify the component of promotion mix being described in the given
exhibit?
(a) Advertising
(b) Sales Promotion
(c) Public relation
(d) Personal selling
77. Identify the related function of labelling being depicted below as given on
the pack of the chips.
(a) Describes the product and specifies its content

(b) Grading of products
(c) Helps in promotion of the products
(d) Identification of the product or brand
78. Ria refused to buy an insulated lunch box for ₹200 as she felt that the
real worth of the product was much less than its monetary value.
Identify the factor related to pricing decision being described in the given
case.
(a) Cost of the product
(b) The utility and demand
(c) Government and legal regulations
(d) Pricing objectives
79. A salesman of a company dealing in pet foods is paid a fixed salary of

₹20000 per month and furthermore, ₹20 extra per unit of the product
sold beyond the target sales. Identify the type of cost being described in
the given example.
(a) Fixed cost
(b) Variable cost
(c) Semi-variable cost
80. Under which of the following conditions is a marketer not likely to fix the
price of his products at lower end?
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(a) When he faces high degree of competition

(b) When he wants to attain market share leadership
(c) When the product is unique in terms of packaging, product
difference and product differentiation
(d) When the demand for the product is low
81. Under which of the following situations is a company not likely to fix a
lower price for its product?
(a) When the competition has introduced a substitute product
(b) If the demand for a product is inelastic
(c) When the company wants to attain market share leadership
(d) When the demand for the product is low
82. Nooper Limited is marketing its products online. Identify the channel of
distribution being adopted by the company.
83. Kannu has decided to sell her range of organic food products through
her own retail outlets. Identify the channel of distribution being adopted
by the company.
84.. Srijan Limited sells its products through the company approved
retailers. Identify the channel of distribution being adopted by the
company.
85. Hena is planning to set up a small manufacturing unit for

manufacturing eco- friendly packaging material. She has decided to
market her products through the conventional channel of distribution,
which involves wholesalers and retailers. Identify the channel of
distribution being adopted by the company.
86. Under which of the following conditions will the company not be able to
provide high level of customer services?
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(a) When it maintains high level of inventory

(b) When it maintains low level of inventory
(c) When it owns large number of warehouses
87. Under which of the following conditions does a business need not
maintain high- level of inventory?
(a) When higher level of customer services need to be provided
(b) When high degree of accurate sales forecast can be made
(c) When the responsiveness of the distribution system is low
88. Mehak Limited has hired 300 salesmen who will be assigned the task of
contacting prospective buyers and creating awareness about the new
range of organic incenses introduced by the company. Identify the
element of promotion been described in the given lines.
(a) Advertising
(b) Sales promotion
(c) Personal selling
(d) Public relation
89. Within 2 years of it‟s inception, Bhavishya Limited has created a very
positive reputation about itself and its products in the eyes of general
public by participating extensively in various social welfare programs.
Identify the component of promotion mixing described in the given lines.
(a) Advertising
(b) Personal selling
(c) Public relation
(d) Sales promotion
90. „Manoranjan‟ is a leading telecommunications company in India. On

taking the annual subscription of a DTH connection the company is
charging only for llmonths and offering one month free subscription.
Identify the component of promotion mix adopted by the company to
boost its sales.
(a) Advertising
(b) Personal selling
(c) Sales promotion
(d) Public relation
91. Durantee Ltd.‟ is a company dealing in skin care products. Considering

that direct marketing is a powerful tool to create demand for a firm‟s
products, it has been decided to deploy a team of 50 salesman over next
one month. Identify the element of promotion mix being adopted by the
company.
(a) Advertising
(b) Sales promotion
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the same:
“This approach is applicable in the cases of unsought goods like life
insurance, vacuum cleaner, fire fighting equipments including fire
extinguishers. These companies are seen having a strong network of sales
force. This concept is applicable for the firms having over capacity in which
their goal is to sell what they produce than what the customer really wants.”
92. Identify the marketing concept being referred to in the above paragraph.
(a) Product concept
(c) Selling concept
(d) Marketing concept
93. The main focus of the type of marketing concept as identified in part (a)
of the question is …………………..
(a) Quantity of product
(b) Quality of performance
(c) Existing product
(d) Customer needs
94. The means of the type of marketing concept as identified in part (a) of
the question is ………………….
(a) Selling and promoting
(b) Availability and affordability of product
(c) Product improvements
(d) Integrated marketing
95. Identify the type of promotional techniques which may be used the
company.
(a) Advertising
(b) Sales promotion
the same:
Mehak decided to start a tiffin service under the brand name Annapurna‟ to
increase her family income. To begin with she started supplying tiffin only in
the neighbourhood. For informing the people about her service she designed
a beautiful informative pamphlet, got it printed and started distributing it
through the daily newspapers. She has decided to select the size and shape
of the package which will be convenient to open, handle and use for the
consumers
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96. Identify the promotional tool used by Mehak to communicate to the

customers about her tiffin service.
(b) Advertising
(c) Public relation
(d) Sales promotion
97. Identify the important product related decision which has not been
mentioned in the above paragraph.
(a) Branding
(b) Labelling
(c) Packaging
98. Name the function of packaging being mentioned in the given paragraph.
(a) Facilitating use of the Product
(b) Product Identification
(c) Product Protection
99. Identify the element of marketing mix not being mentioned in the above
paragraph
(a) Product
(b) Price
(c) Place
(d) Promotion
Fill in the blanks.

1. A ………………… consists of all the potential customers who have both
the ability and willingness to buy a product.
2. A …………………..refers to an individual or organisation that plays more
active role in the process of exchange.
3. The ………………. concept of marketing holds that consumers will prefer
products that are widely available and inexpensive.
4 ………………….. refersto the combination of four marketing variables
which are controllable by a firm.
5. A ………………… is a name, term, design, symbol, or other feature that
differentiates an organisation or product from its competitors in the eyes
of the prospective buyers.
6 ………………… refers to the act of designing and producing the container
or wrapper of a product.
7. Besides a seller, in certain cases a persuasive …………………… may also
be called a marketer.
8. The ……………….. is concerned with making the goods and services
available at the right place at the right time and in the right condition so
as to enable the people to make a purchase.
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9 …………………… refers to the set of firms and individuals that take title
or help in the process of transferring the title to particular products or
services as it moves from the producers to the consumers.
10 …………………..refers to the set of activities undertaken by a marketer to
inform the prospective buyers about the product and persuading them
to make a purchase
11. The components of physical distribution includes transportation,
warehousing, order processing and …………………….
12 …………………..refers to movement of raw material and goods from place
of production to point of sales.
13. The ………………..component of physical distribution is important as
there may be a time gap between production and consumption of
products.
14. Maintaining a higher level of inventory necessitates a ………………level of
capital investment.
15. If a firm operates through a larger number of warehouses its level of
customer service would be ………………….
16. There is a ………………….. relationship between the level of inventory
maintained by a firm and the quality of its customer service.

1. According to the modern Marketing concept, market refers to the group
of people who do not have the ability but willingness to buy a particular
product
2. The concept of product is confined to physical product.
3. The marketing concept holds that the consumers and businesses, if left
alone, will ordinarily not buy enough of the organization‟s products.
4. A brand name refers to that part of a brand which cannot be uttered.
5. The additional layers of protection that are kept till the product is ready
for use is known as transportation packaging.
6. When a brand or a part of a brand is given legal protection, it is referred
to as generic mark.
7. According to the law of demand, consumer is likely to buy more units of
a product at a low price or vice versa.
8. If the level of competition is high, the firm is likely to fix the prices of its
products on the higher limit.
9. If a firm decides to maximise profits in the long run, it is likely to fix the
prices on the lower limit.
10. Marketing mix refers to combination of promotional tools namely;
Advertising, Personal Selling, Sales Promotion, and Public Relation.
11. A speedy and accurate order processing system is likely to have an
adverse effect on the goodwill of the firm.
12. There exists an inverse relationship between the number of warehouses
maintained by a firm and level of its customer service.
13. There is no relation between the capital investment made by a firm and
level of its inventory management.
14. If a firm operates through a large number of warehouses it will require
higher capital investment.
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1.
Column A Column B
(i) A Social process (a) Market
(ii) Set of actual and potential customers (b) Marketing
(iii) Controllable variables (c) Functions of marketing
(iv) Performance of business activities (d) Marketing mix
(a) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(b); (ii)-(c); (iii)-(a); (iv)-(d)
2.
Column A Column B
(i) Focus on customer needs (a) Production concept
(ii) Focus on quality, features and
(b) Selling concept
performance of product
(iii) Focus on existing product (c) Product concept
(iv) Focus on quantity of product (d) Marketing concept
(a) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
3.
Column A Column B
(i) Name given to all products having identical (a) Brand mark
characteristics
(ii) The verbal component of a brand. (b) Trademark
(iii) A part of brand which appears in the form of a (c) Generic name
symbol, design, distinct colour scheme or lettering.
(iv) Confers upon a firm the exclusive right for use of a (d) Brand name
name, sign etc.
(a) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
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4.
Column A Column B
(i) Culturally defined objects that are potential (a) Standardization
satisfiers of needs.
(ii) Comprehensive blueprint needed to accomplish (b) Warehousing
marketing objectives of the organisation
(iii) Ensures producing goods of predetermined (c) Wants
specifications
(iv) Helps to to meet out contingencies in the (d) Market planning
demand
(a) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
5.
Column A Column B
(i) It refers to additional layers of protection (a) Price is likely to be set at
provided to a product upper limit
(ii) Approach of a firm seeking to achieve (b) Price
product quality leadership
(iii) Approach of a firm striving to obtain market
(c) Secondary Packaging
share leadership
(iv) It determines the value of a product in (d) Price is likely to be set at
monetary terms lower limit
(a) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(a); (iii)-(d); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
6.
Column A Column B
(i) Impersonal form of communication (a) Public relation
(ii) Personal form of communication (b) Sales promotion
(iii) Offering short term incentives to promote (c) Personal selling
sales
(iv) Stiving to create and maintain a positive (d) Advertising
image about the company and its products
(a) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
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7.
Column A Column B
(i) Finding wants and filling them (a) Production concept
(ii) Supremacy of the product quality (b) Selling concept
(iii) Aggressive sales promotion (c) Product concept
(iv) Easy availability and affordability of
(d) Marketing concept
products
(a) (i)-(a); (ii)-(d); (iii)-(c); (iv)-(b)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
8.
Column A Column B
(i) High level of inventory (a) Inadequate customer service

(ii) Large number of warehouses (b) Loss of business
(c) Lesser time required in serving
(iii) Inefficient order processing
customers at different locations
(iv) Minimum number of warehouses (d) More capital investment
(a) (i)-(a); (ii)-(c); (iii)-(b); (iv)-(d)

(b) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
(c) (i)-(d); (ii)-(b); (iii)-(c); (iv)-(a)
(d) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)
9.
Column A Column B
(i) Zero level channel (a) Manufacturer-Wholesaler-Retailer-Consumer
(ii) One level channel (b) Manufacturers-Consumer
(c) Manufacturer-Agent-Wholesaler-Retailer-
(iii) Two level channel
Consumer
(iv) Three level channel (d) Manufacturer-Retailer-Consumer
(a) (i)-(a); (ii)-(c); (iii)-(b); (iv)-(d)

(b) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(c) (i)-(d); (ii)-(b); (iii)-(c); (iv)-(a)
(d) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)
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1. Assertion (A): Marketing is merely a post-production activity.
Reason (R): It only includes the activities that are performed after the
goods have been sold.
explanation of (A)
explanation of (A)
2. Assertion (A): Marketing is not merely a business phenomena.

Reason (R): Marketing activities are relevant to profit making
organisations only.
explanation of (A)
explanation of (A)
3. Assertion (A): Our decision to buy a product is only affected by its

physical qualities. Reason (R): When a person buys a car, he is just
buying a a means of transport.
explanation of (A)
explanation of (A)
4. Assertion (A): Advertising is an inflexible tool.

Reason (R): The message in an advertisement can be adjusted to the
needs of the prospective buyer.
explanation of (A)
explanation of (A)
5. Assertion (A): Marketing is not merely a post-production activity.

Reason (R): It includes many activities that are performed even before
goods are actually produced, and continue even after the goods have
been sold.
explanation of (A)
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explanation of (A)
6. Assertion (A): The societal marketing concept is the extension of the

marketing concept.
Reason (R): The societal marketing concept pays attention to the social,
ethical and ecological aspects of marketing.
explanation of (A)
explanation of (A)
7. Assertion (A): Marketing as a social process.

Reason (R): It is a process whereby people exchange goods and services
for money or for something of value to them.
explanation of (A)
explanation of (A)
8. Assertion (A): The job of a marketer is to add to the value of the product
so that the customers prefer it in relation to the competing products and
decide to purchase it. Reason (R): A product will be purchased only if it
is perceived to be giving minimum benefit or value for the money.
explanation of (A)
explanation of (A)
9. Assertion (A): The societal marketing concept is the extension of the
marketing concept.
Reason (R): It not only seeks to find wants of consumers and fill them
but also pays attention to the social, ethical and ecological aspects of
marketing.
explanation of (A)
explanation of (A)
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10. Assertion (A): A brand name should be distinctive.

Reason (R): It helps the customers to identify and differentiate one
product from another.
explanation of (A)
explanation of (A)
11. Assertion (A): Packaging facilitates product differentiation.

Reason (R): Packaging protects the contents of a product from spoilage,
breakage, leakage etc.
explanation of (A)
explanation of (A)
12. Assertion (A): Labelling describes the product and specify its contents.
Reason (R): A popular brand of shampoo comes in different categories
for different hair, like for „ dry hair‟ and for other categories.
explanation of (A)
explanation of (A)
13. Assertion (A): Semi variable costs are those costs which vary with the
level of activity. Reason (R): Semi variable costs are in direct proportion
with the level of activity,
explanation of (A)
explanation of (A)
14. Assertion (A): Advertising involves transmission of standardised

messages. Reason (R): In advertising the cost per person reached is very
low.
explanation of (A)
explanation of (A)
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15. Assertion (A): An efficient order processing system is must for success
of any business. Reason (R): Efficient order processing is concerned
only with timely delivery of goods.
explanation of (A)
explanation - of (A)
16. Assertion (A): The level of customer service of a firm will depend upon
the location of its warehouses.
Reason (R): A large number of warehouses at different locations will
increase the capital investment requirement of the firm.
explanation of (A)
explanation of (A)
17. Statement I: If a firm maintains a higher level of inventory its level of

service to customers will be higher.
Statement II: The decision to provide higher level of customer service
will reduce the investment in stocks.
Answer key
Q A Q A Q A Q A Q A Q A Q A Q A Q A Q A
1 D 11 D 21 C 31 A 41 A 51 D 61 C 71 B 81 B 91 C
2 C 12 D 22 A 32 C 42 D 52 B 62 C 72 A 82 A 92 C
3 D 13 C 23 C 33 B 43 B 53 A 63 A 73 B 83 A 93 C
4 C 14 A 24 A 34 B 44 B 54 D 64 D 74 A 84 B 94 A
5 D 15 D 25 A 35 D 45 B 55 C 65 A 75 D 85 C 95 D
6 A 16 A 26 C 36 B 43 B 56 B 66 C 76 B 86 B 96 B
7 D 17 C 27 A 37 C 47 C 57 B 67 C 77 C 87 B 97 B
8 B 18 B 28 B 38 C 48 D 58 A 68 C 78 B 88 C 98 A
9 C 19 D 29 C 39 B 49 A 59 A 69 A 79 C 89 C 99 B
10 C 20 D 30 A 40 A 50 C 60 C 70 C 80 c 90 C
Fill in the blanks True or false Matching Assertion-Reason

Questions
1 Market 1 False 1 B 1 D
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2 Marketer 2 False 2 D 2 C
3 Production 3 False 3 C 3 D
4 Marketing mix 4 False 4 C 4 D
5 Brand 5 False 5 C 5 A
6 Packaging 6 False 6 D 6 B
7 Buyer 7 True 7 D 7 A
8 Physical 8 False 8 D 8 C
distribution
9 Channels of 9 True 9 B 9 A
distribution
10 Promotion 10 False 10 A
11 Inventory 11 False 11 B
control
12 Transportation 12 False 12 B
13 Warehousing 13 False 13 C
14 Higher 14 True 14 B
15 High 15 C
16 Direct 16 B
17 C
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Chapter: 12
Consumer Protection
• State the meaning and importance of consumer protection;
• Describe briefly the three-tier redressal system under the Consumer
Protection Act;
• Outline the various rights, responsibilities and reliefs available to a
consumer;
• State the various ways and means of consumer protection; and
• Describe the role of consumer organisations and NGOs in protecting
consumer interests.
 Consumer protection: Consumer protection refers to not only
providing education to consumers about their rights and
responsibilities, but also helping them in getting their grievances
redressed.
 Consumer: A „consumer‟ is generally understood as a person who
uses or consumes goods or avails any service but does not include a
person who obtains goods or avails a service for re-sale or any
commercial purpose.

 Offering hazardous goods/checking standardization mark: Right to
safety
 Offering a wide variety of goods: Right to be assured
 Providing details about the product: Right to information
 Consumer helpline/grievance cell: Right to be heard
 Consumer gets a relief: Right to seek redressal
 Creating consumer awareness: Right to consumer awareness
 When the value of the goods or services in question, along with the
compensation claimed, does not exceed crore.: District Commission
compensation claimed, is between ₹1 crore and ₹10 crore.: State
Commission
compensation claimed, is more than ₹10 crore.: National
Commission

Importance of consumer protection from the consumers’ point of view
 Consumer Ignorance- It is very important to provide protection to the
consumers, considering the fact that majority of the consumers are
ignorant.
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 Widespread Exploitation of Consumers- In pursuit of higher profits,

the businessmen are likely to resort to unfair trade practices, so there
is a need to curb the widespread exploitation of consumers.
 Unorganised Consumers- In order to protect and promote the
interests of consumers, it is imperative that they group themselves
into powerful consumer organisations.
Importance of consumer protection from the businessmen’s point of

view
 Long-term Interest of Business- In order to promote long- term
interest of business, it is important for the business to aim at realising
the objective of profit maximization only through consumer
satisfaction.
 Business uses Society’s Resources- Since every business acquires
all these resources from the society, it has a responsibility towards the
society to supply such products and render such services which are in
the interest of the public at large.
 Social Responsibility- As consumers are an important part of its
interest group, a business should ensure that the interests of the
consumers are well satisfied.
 Moral Justification- Every business has the moral responsibility
towards the consumers and should abstain from exploiting them in
any way.
 Government intervention- In order to avoid any kind of government
intervention or action, a business should voluntarily discharge its
responsibilities towards the customers.
Consumer rights
 Right to safety- The consumer has a right to be protected against
goods and services which are hazardous to life and health.
 Right to information- According to this right, the consumer has the
right to get complete information about the product he/she is willing
to buy, like its contents, name of the manufacturer, date of
manufacture, expiry date, price, quantity, directions for use, etc.
 Right to be assured- According to this right, the consumer has the
freedom to choose from a variety of products according to his/her
needs and desires. The products should be offered at fair and justified
prices to the consumers.
 Right to be heard-According to this right, the consumer has a right to
file a complaint and to be heard in case of dissatisfaction with some
goods or services.
 Right to seek redressal- According to this right, the consumer has a
right to get relief in case the product or service falls short of his/her
expectations.
 Right to consumer education- According to this right, the consumer
has a right to gain knowledge and to be a well— informed consumer
throughout life.
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Consumer responsibilities
 Be aware about various goods and services available in the market.
 Buy only standardised goods, as they provide quality assurance.
 Learn about the risks associated with products and services, follow
manufacturer‟s instructions and use the products safely.
 Read labels carefully so as to have information about prices, net
weight, manufacturing and expiry dates, etc.
 Assert yourself to ensure that you get a fair deal.
 Be honest in your dealings.
 Ask for a cash memo on purchase of goods or services.
 File a complaint in an appropriate consumer forum in case of a
shortcoming in the quality of goods purchased or services availed.
 Form consumer societies which would play an active part in educating
consumers and safeguarding their interests.
 Respect the environment.
Who can file a complaint?

 Any consumer
 Any registered consumers‟ association
 The Central Government or any State Government
 One or more consumers, on behalf of numerous consumers having the
same interest
 A legal heir or representative of a deceased consumer
Three-tier redressal agencies under the Consumer Protection Act, 2019

(a) District Commission
 The District Consumer Disputes Redressal Commission, to be known
as the District Commission, is established by State Government in
each district of the State.
 The District Commission shall have jurisdiction to entertain
complaints where the value of the goods or services paid as
consideration does not exceed one crore rupees.
 On receipt of a complaint, the District Commission may, by order,
admit the complaint for being proceeded with or reject the same.
 At the first hearing of the complaint after its admission, or at any later
stage, if it appears to the District Commission that there exists
elements of a settlement which may be acceptable to the parties, it
may direct the parties to give in writing, within five days, consent to
have their dispute settled by mediation in accordance with the
provisions of the Act.
 In case of failure of settlement by mediation, the District Commission
shall,—ask the opposite party mentioned in the complaint directing
him to give his version of the case within a period of thirty days or
such extended period as the case may be.
 If the opposite party on receipt of a complaint referred to him denies
or disputes the allegations contained in the complaint, or omits or
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fails to take any action to represent his case within the time given by
the District Commission will proceed to settle the consumer dispute.
 In case the complaint alleges a defect in the goods which cannot be
determined without proper analysis or test of the goods, obtain a
sample of the goods from the complainant, seal it and authenticate it
in the manner as may be prescribed and refer the sample so sealed to
the appropriate laboratory.
 On receipt of the report from the appropriate laboratory, the District
Commission shall give a reasonable opportunity to the complainant as
well as the opposite party of being heard.
 In case the aggrieved party is not satisfied with the order of the
District Commission, he can appeal before the State Commission
within 45 days of the passing of the order.
(b) State Commission

 State Consumer Disputes Redressal Commission, to be known as the
State Commission, is established by State Government in each State.
 A complaint can to be made to the appropriate State Commission
when the value of the goods or services in question, along with the
compensation claimed, exceeds ₹ 1 crore but does not exceed ₹10
crore.
 On receiving the complaint, the State Commission shall refer the
complaint to the party against whom the complaint is filed. If
required, the goods or a sample thereof, shall be sent for testing in a
laboratory. The State Commission shall pass an order after
considering the test report from the laboratory and hearing to the
party against whom the complaint is filed.
 The appeals against the orders of a District Commission can also be
filed before the State Commission.
 In case the aggrieved party is not satisfied with the order of the State
Commission, he can appeal before the National Commission within 30
days of the passing of the order.
(c) National Commission
 National Consumer Disputes Redressal Commission, to be known as
the National Commission is established by Central Government and
has territorial jurisdiction over the whole country.
 A complaint can to be made to the National Commission when the
value of the goods or services in question, along with the
compensation claimed, exceeds ₹ 10 crore.
 The appeals against the orders of a State Commission can also be filed
before the National Commission and no further.
 An order passed by the National Commission in a matter of its original
jurisdiction is appealable before the Supreme Court if the aggrieved
party was not satisfied with the order of the National Commission
within 30 days of passing of order.
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Reliefs available to consumers

 To remove the defect in goods or deficiency in service.
 To replace the defective product with a new one, free from any defect.
 To refund the price paid for the product, or the charges paid for the
service.
 To pay a reasonable amount of compensation for any loss or injury
suffered by the consumer due to the negligence of the opposite party.
 To pay punitive damages in appropriate circumstances.
 To discontinue the unfair/restrictive trade practice and not to repeat
it in the future.
 Not to offer hazardous goods for sale.
 To withdraw the hazardous goods from sale.
 To cease manufacture of hazardous goods and to desist from offering
hazardous services.
 To pay any amount (not less than 5% of the value of the defective
goods or deficient services provided, to be credited to the Consumer
Welfare Fund or any other organisation/ person, to be utilised in the
prescribed manner.
 To issue corrective advertisement to neutralise the effect of a
misleading advertisement.
 To pay adequate costs to the appropriate party.
Ways and means of consumer protection

 Self-regulation by Business: In order to ensure its long-term interest
a business should be ethical and morally bound to serve the
customers in a due manner and redress their problems and
grievances efficiently.
 Business Associations: The Federation of Indian Chambers of
Commerce of India (FICCI) and Confederation of Indian Industries (CII)
have laid down their code of conduct to regulate the dealings of a
businesses with its customers.
 Consumer Awareness: Since a well-informed consumer is able to
safeguard his interests and be in a position to raise his voice against
any unfair trade practices or unscrupulous exploitation the Jago
Grahak Jago campaign of, the Department of Consumer Affairs,
Government of India plays a vital role in promoting consumer
awareness.
 Consumer Organisations: The Consumer organisations play an
indispensable role in educating, protecting and supporting
consumers.
 Government: The Government of India has initiated many steps like
enactment of Consumer Protection Act, 2019, setting up of a toll-free
national consumer Helpline Number 1800114000 etc. to protect and
promote interest of consumers.
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Role of consumer organisations and non-governmental organisations

(NGOs) in promoting consumer protection
 The consumer organisations and non-governmental organisations
work consistently towards providing education to the general public
on the subject of consumer rights.
 They undertake the publication of periodicals and other publications
to communicate about varied issues of consumer interest.
 These organization carry out comparative tests to ascertain the quality
standards of different types of consumer products in accredited
laboratories, and provide feedback.
 They provide necessary confidence and support to the grieved
consumers so as to enable them to protest strongly and take an action
against unscrupulous, exploitative and unfair trade practices of the
marketers.
 They extend legal assistance to consumers required for seeking legal
justification through guidance, legal advice etc.
 They also take initiative and file complaints in appropriate consumer
courts on behalf of the consumers.
 They may also initiate a legal procedure by filing cases in consumer
courts in the interest of the general public, not for any individual.

1. Which of the following activities lie within the scope of consumer
protection?
(a) Educating consumers about their rights and responsibilities
(b) Helping consumers in getting their grievances redressed
(c) Protecting the interests of consumers
2. Jagga started a small stationery shop in the nearby market. In pursuit

of earning higher profits in a short term, he overpriced all his products
by 20%. Gradually, the consumers understood his pricing strategy and
stopped coming to his shop for making any purchase. Identify the
related point highlighting the importance of consumer protection from
businessmen‟s point of view.
(a) Long-term interest of business is assured
(b) Business uses society‟s resources so they need to safeguard
consumer‟s interests.
(c) Social responsibility towards consumers as an important interest
group.
(d) It is the moral obligation of the businessmen to give due
consideration to the consumer‟s interests.
3. Dipika Pallikal, the Padma Shri recipient, in a petition filed in 2012 said
that she had faced humiliation and loss of reputation, as a transaction
using a bank‟s debit card at a hotel in the Netherlands‟ Rotterdam failed,
though she had a balance of more than 10 times the billed amount in
her account. The bank claimed that the incident was a case of “force
316 | P a g e
majeure”, which means a natural and unavoidable catastrophe or an act

of God, and was beyond is control. A consumer court in Chennai has
directed the bank to pay a compensation of ₹5 lakh to Dipika Pallikal for
“deficiency m service”. The bank was also directed to pay her ₹5,000 as
expenses. Identify the right of consumers being exercised in the given
case.
(a) Right to safety
(b) Right to be heard
(c) Right to seek redressal
(d) Right to consumer education
4. When Aaradhya, inspite of paying the full price of the plot as per the
terms and conditions of the allotment letter, was not given the
possession of the plot by the builder, she filed a case in the State
Commission. Identify the right of consumers being exercised in the given
case.
(a) Right to safety
5. Ranjan bought a bottle of soft drink of a famous beverage company and

found a gutka pouch floating inside the bottle. He forwarded a legal
notice to the company, accusing it of the deficiency in service that could
cause health hazard to the consumer. Identify the right of consumer
being violated in the given case.
(a) Right to safety
6. Siddhartha booked several rooms in a reputed five-star hotel in Goa for

his destination wedding. On the day of his wedding, when his friend
Ramandeep, after attending the lunch party, returned to his room to
take a shower, he had a fall in the bathroom. The bathroom was three
stairs down to the bathing area and there was a handle bar to the right.
On the second step, Ramandeep slipped badly and fell on his face with a
great force, resulting in multiple fractures. He filled a case against the
hotel for compensation for the injuries suffered due to faulty designing of
its room. Identify the right of consumers being violated in the given case.
(a) Right to be heard
(c) Right to consumer education
(b) Right to seek redressal
(d) Right to safety
7. A consumer court in Pune slapped a ₹55,000 fine on a reputed online

food-delivery company along with a hotel for delivering non-vegetarian
food to a lawyer who had ordered a vegetarian dish. He had ordered
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paneer butter masala but was delivered butter chicken instead. When he
reportedly registered the complaint, the hotel promised to replace it and
send another parcel of food with the correct dish. However, Deshmukh
allegedly received butter chicken instead of paneer butter masala the
second time as well. Deshmukh sent notices to both the restaurant and
the online food-delivery company for „hurting religious sentiments‟.
Identify the right of consumers being violated in the given case.
(c) Right to be assured
(d) Right to safety
8. A popular nationalised bank has been fined ₹8 lakh by the country‟s

highest consumer court, National Consumer Disputes Redressal
Commission (NCDRC), for not sharing complete insurance policy details
with a customer. The bank has been ordered to pay the full amount as
compensation to the customer. Identify the right of consumers being
violated in the given case.
(c) Right to information
(d) Right to safety
9. Naina, her husband and her two minor daughters were travelling from
Mumbai to Delhi, availing a company‟s flight services in 2018. The
airlines had issued boarding passes to all of them. Naina claimed in her
plea that the airlines left all her family at the Mumbai Airport without
informing them, despite their being in the airport premises. The family
had to stay in a hotel and purchase new tickets the next day. The State
Consumer Disputes Redressal Commission (SCDRC). on hearing the
plea, asked an airline company to pay ₹50,000 to Naina and her family.
Identify the right of consumers being exercised in the given case.
(a) Right to safety
10. Identify the right of consumers being promoted in the picture given on
the right
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(a) Right to safety

11. Identify the right of consumers being exhibited in the picture on your
right.
(a) Right to be assured

12. Identify the right of consumers being promoted in the picture.
(a) Right to safety

13. Identify the right of consumers being promoted in the given picture.
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(a) Right to seek redressal

(b) Right to consumer education
(d) Right to be heard
14. Identify the responsibility of consumers being promoted in the picture.
(a) Buy only standardised goods

(b) Read labels carefully
(c) Assert yourself to ensure that you get a fair deal
(d) Be honest in your dealings
15. Identify the responsibility of consumers being highlighted in the picture

given below.
(a) Be honest in your dealings

(b) Learn about the risks associated with products and services
(c) Assert yourself to ensure that you get a fair deal
(d) Respect the environment.
16. Recently, Yamini purchased a pack of dog food for her pet. It was
nowhere mentioned on the pack that it had to be mixed in lukewarm
water in order to ensure easy digestion. Therefore, Yamini kept serving
the food to her pet by mixing it in cold water. As a result, her pet fell ill
and had to be hospitalised. Identify the right of consumers being ignored
by the company marketing the pet food.
(a) Right to consumer education
(b) Right to information
(c) Right to be assured
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17. Which of the following types of cases are filed in the State Commission?
(a) When the value of the goods or services in question, along with the
compensation claimed, exceeds ₹1 crore but does not exceed ₹10
crore.
(b) When the value of the goods or services in question, along with the
compensation claimed, exceeds ₹20 lakhs but does not exceed ₹2
crore.
(c) When the value of the goods or services in question, along with the
compensation claimed, exceeds ₹40 lakhs but does not exceed ₹1
crore.
18. Where can the aggrieved party appeal further in case he is not satisfied
with the order of the District Forum?
(a) National Commission
(c) Supreme Court of India
19. In case an aggrieved consumer is not satisfied with the decision of the
State Commission, he can make a further appeal in …………………
(b) District Commission
20. In case an aggrieved consumer is not satisfied with the decision of the
National Commission, he can make a further appeal in …………..
(a) State Commission
21. Yash had severe pain in his throat, so he called up the doctor and asked
for a telephonic advice. The doctor prescribed him a sachet of Throat
Reliever Hot Sip. He asked his servant to get a sachet from a local
chemist with a cash memo. After consuming the sachet, he started
feeling more ill, so he picked up the empty sachet and started reading
the label. To his utter dismay, the sachet had already expired last
month. Which of the following remedies is not available to him any
longer as a consumer?
(a) To withdraw the hazardous goods from sale.
(b) To replace the defective product with a new one.
(c) To refund the price paid for the product.
(d) To pay a reasonable amount of compensation for any loss suffered
by the consumer due to the negligence of the opposite party.
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22. Which of the following functions are carried out by the consumer
organisations?
(a) Publishing periodicals to impart knowledge about consumer issues.
(b) Providing legal assistance to consumers.
(c) Filing complaints in appropriate consumer courts on behalf of the
consumers.
23. Due to the negligence of the doctors, Johar passed away within a week‟s
time after his surgery of the spine. Which of the following parties can not
file a case in this regard?
(a) The consumer
(b) Any registered consumers‟ association
(c) A legal heir or representative of a deceased consumer
24. In case a consumer is not satisfied with the order passed in the State
Commission, he can further make an appeal in the National Commission
within a time period of
(a) 10 days
(b) 20 days
(c) 30 days
(d) 45 days
25. Sheela went to a free eye camp & got her eyes operated for cataract. The
surgery was not done properly, due to which she lost her vision. Where
can she file a complaint under consumer protection act?
(a) At District Commission
(d) None of above
26. After completing his graduation when Jay went to his ancestral village
with his parents he noticed that although the villagers were literate but
did not find anything wrong with many malpractices practices. Most of
the fruit and vegetable vendors were not using weights but stones
instead to weigh and sell their merchandise. The food products which
were made locally did not have „FPO mark‟. So to create awareness
among villagers about their rights Jay decided to distribute handouts.
State the „Right‟ which Jay has exercised by doing so.
(c) Right to consumer education
(d) Right to safety
27. „Navchetna‟ a popular consumer organisation in Chandigarh, has filed a

case against a yogurt manufacturing company in the National
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Consumers Disputes Redressal Commission. The yogurts were marketed

as being “clinically” and “scientifically” proven to boost immune system
and helps to regulate digestion. However, on conducting laboratory tests
the claims found to be wrong. Name any party who could have also filled
a complaint in the above case.
(a) Any consumer
(b) The Central Government
(c) Any State Government
28. On being engaged, Arjun was eagerly looking for a „magic wand‟ which
would help him to reduce weight in a short span of time. He came across
an advertisement in the magazine of „Splendor Ltd.‟ a health centre
offering a free subscription for 2 months of its gym on enrolling for a
weight loss program for ₹ 30,000 to lose 10 kgs in two months. Arjun
joined the programme. Unfortunately, a month later he suffered from
spine injury due to the negligence of the weight loss trainer and was
advised bed rest for 3 months by the doctor. As a result, his marriage
had to be postponed. Arjun is feeling very angry about the whole issue
and has decided to file a case against „Splendor Ltd.‟ Name the
consumer right that Ajun plans to exercise.
(b) Right to be assured
(d) Right to information
29. Bhumika purchased a bottle of cheese spread from the local grocery
shop. The information provided on the bottle was not clear. She fell sick
on consuming it. She filed a case in the District Forum under Consumer
Protection Act and got the relief. Name the consumer right that has been
violated in the above case.
(a) Right to information
(b) Right to safety
30. The Maharashtra State Consumer Commission has asked one of the
international fizzy drinks manufacturer, its bottler and distributor to pay
rupees one lakh in damages to a consumer who found impurities in a
bottle of soft drink that he had bought. Identify the right of the
consumer which was violated by the international fizzy drinks
manufacturer.
(a) Right to safety
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31. Recently, on the complaint of Damodar Kolkara resident of Thane city

the District Consumer Disputes Redressal Forum Thane has placed a
ban on „Mishthan Bhandar‟ a sweet shop in the city. The shopkeeper has
been asked it to withdraw the artificially coloured sweets from the
market for sale. This is because through a laboratory test it has been
certified that these sweets contained inedible and unsafe colours which
could cause serious harm to human health. Identify the right of
consumers not relating to the above case.
(a) Right to safety

(c) Right to be heard
(d) Right to seed redresal
32. A complaint can to be made to the appropriate ………………..when the

value of the goods or services in question, along with the compensation
claimed, exceeds ₹1 crore but does not exceed ₹10 crore.
(d) Supreme Court of India
33. Identify the right of a consumer under Consumer Protection Act, 2019
through which Consumer organisations help a consumer to claim by
performing the function of “encouraging consumers to strongly protest
and take an action against unscrupulous, exploitative and unfair trade
practices of sellers”.
(a) Right to safety
34. Appeals against orders of District Forums can be brought to the State
Commission and appeal against the orders of State Commission can be
brought as revision petition to National Commission. Where can a
grieved consumer make a appeal against the orders passed by National
Commission in case the value of goods and services in question, along
with the compensation claimed, exceeded ₹10 crore.
(a) State Commission
(d) National Commission
35. „Roshan Pvt. Ltd.‟ is a small business unit which is engaged in

manufacturing economical lamp shades in Udaipur which are supplied
to various hotels in nearby towns. It employs men and women from
nearby villages as workers for creating good lamp shade designs in a
wide variety. The label on the product also contains details about the
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source from which a particular design has been inspired by and also
how colours are made from vegetable dye have been used.
Explain briefly any two rights of consumers being promoted by the
business unit.
(a) Right to information and right to safety
(b) Right to be assured and right to information
(c) Right to be heard and right to safety
36. Ravi bought a geyser from an electronics shop in the nearby market
which turned out to be defective. When the shopkeeper refused to take
any necessary action, Ravi had filled a case in the District Forum.
However, Ravi is not happy with the judgment passed by the District
Commission. Where can he make a further appeal against the order of a
District Commission?
(d) Supreme Court of India
37. Atul bought two packs of fruit juice one for his son and the other for
himself. He didn‟t take a cash memo for it. On consuming the juice his
son fell ill and had to be hospitalised. Later on through a laboratory test
conducted on the other pack of juice which was not consumed by Atul
yet it was certified that it was adulterated. Identify the right of consumer
which has been violated.
(b) Right to safety
38. Vasu, bought a pack of frozen vegetables from the market. He noticed
that on its label the company had mentioned its consumer grievances
helpline number and e-mail address. Name the consumer right being
promoted by the company.
(d) Right to safety
39. The State government has placed a ban on the sale of Sweets
manufactured by Chajulalji Private Limited. This action has come into
force, subsequent to a investigation undertaken by an NGO „Uphaar‟
which revealed the presence of some harmful chemicals in the product.
Name any party who can file a case against the company in this regard.
(a) Consumer
(b) Consumer organisation
(c) Legal heir of decreased consumer
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40. As a part of his research work Subhra happens to visit a remote village
in Ghaziabad to study their level of awareness as consumers. On
interacting with them she realizes that the villagers are not even aware
of their basic rights as consumers and are at the mercy of the local
shopkeepers. So she first decides to appraise them of these rights by
conducting talks and showing them documentary films on it. Identify the
consumer right being promoted by Subhra.
(a) Right to information
(c) Right to safety
41. Jatin had filled a case against a builder for deficiency in services. He is
not satisfied with the order passed by the State Commission two months
back regarding his case, where can he appeal furthur to resolve his
issues.
42. Ayushi purchased a pack of face wash from a nearby market. On using
the face wash, she instantly got rashes on face. When she approached a
dermatologist for treatment she was told that the particular face wash
that she had applied was not suitable for her skin type as she has very
oily skin. She complained about it to the company. The company sent
her a written apology, reimbursed the cost of treatment and also
promised to add a warning on the label of the face wash related to its
suitability.
State the consumer right which was excised by Ayushi.
(a) Right to assured
43. Sukriti bought a pack of room freshner without reading the label. When
she came home and read its label she found that many of the necessary
details were not mentioned on it. Name the consumer right which is
being violated by the manufacturer.
(a) Right to safety
(b) Right to be assured
44 is the quality certification mark used in case of food products.

(a) ISI
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(b) FPO
(c) Hallmark
(d) Eco mark
45. Harish booked a flat in „Sunder Ghar‟ project in Noida NCR, by

depositing a booking amount of ₹1.5 crore. He was not told by the
builder that the upper floors are not approved by Ghaziabad
Development Authority. When he confirmed the same builder said the
approval will come by June 2015 and till then he will not be asked for
any more amount. On 30/3/2015, Harish received a call from the
builder asking him to deposit 75% of the amount within a month, failing
which he will be charged interest for late payment. Harish then filed a
case against the builder in the consumer redress al agency and was
satisfied with the order passed by the court.
Name the consumer right which has been exercised by Harish.
(a) Right to safety
46. In May 2013, the National Consumer Disputes Redressal Commission

(NCDRC) gave a landmark judgement when it levied a fine of ₹50 lakh on
a vendor who charged a customer ₹75 more than the MRP on an energy
drink. Identify the consumer right which is being fulfilled through the
judgement.
(a) Right to safety
(d) Right to seek redressal
47. Kunal bought a pack of of cheese slices. On opening the packet he found
that the colour of the slices was turning green indicating presence of
fungus. On checking the date of manufacturing, he realised that the
shopkeeper has given him an expired product. Identify the responsibility
of consumer which has been ignored by Kunal in the above case.
(a) Learn about the risks associated with products and services, follow
manufacturer‟s instructions and use the products safely.
(b) Read labels carefully so as to have information about prices, net
weight, etc.
(c) Be honest in your dealings.
(d) Ask for a cash memo on purchase of goods or services.
48. V. Kodinhi, popularly known as The Twin Town is a small village in the
district of Malappuram in Kerala, India. It has one of the highest birth
rates of twins in the world. When Rishabh, who is working as a traveller
with „Rediscover India‟, heard about it he planned a visit to the village.
However, on visiting the village Rishabh found local sellers were not only
engaged in dishonest and unfair trade practices, like charging high
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prices, but also selling unhygienic and adulterated food products to the
villagers. He felt deeply concerned about them and established an
organisation for the protection and promotion of the consumer interest
of the villagers. Identify the type of organisation set up by Rishabh.
(a) Consumer organisation
(b) District commission
(c) State commission
(d) National commission
49. Shiana is planning to buy jewellery for her wedding. Name the
standardisation mark which will assure her of the purity of the gold.
(a) FPO
(b) Hallmark
(c) ISI
(d) Agmark
50. Mr. Lal went to an amusment park in Mumbai. While he was on one of
the rides, he suffered a heart attack. Later on the doctor told him that
being a heart patient he was not suppose to take that particular ride.
This mishap happened with him because there was no caution
mentioned anywhere that the particular ride was not suitable for heart
patients. Identify the consumer right being violated in the above case.
51. Which of the following aspect does not relate to the concept of consumer
as per Consumer Protection Act 2019?
(a) Any person who buys any goods for a consideration
(b) Any person who hires or avails of any service, for a consideration
(c) Any person who obtains goods for re-sale or any commercial purpose
(d) Any user of goods with the approval of the buyer
52. Rahul went to a shop with his friend to buy a pen. The shopkeeper
showed them various kinds of pens in different price ranges. Rahul
bought a sliver colour pen which he liked the most. Identify and explain
the consumer right being promoted by the shopkeeper.
53. Atul got injured in a road accident and fractured his foot six months
back. His wife took him to her friend‟s husband Shekar who is an
orthopedic doctor for treatment. Shekar applied a plaster on his foot and
did not charge any fees from him. Due to his negligence in putting the
plaster Atul is still not able to walk properly. Atul can file a case against
Shekar if he decides to do so. True/false
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(a) True
(b) False
(c) Partially true
(d) Partially false
54. What kind of cases can be filed in the State Commission?

(a) A complaint can to be made to the appropriate State Commission
when the value of the goods or services in question, along with the
compensation claimed, exceeds ₹1crore but does not exceed ₹10
crore.
(b) The appeals against the orders of a District Forum can also be filed
before the State Commission.
Fill in the blanks.

1 ……………refers to providing education to consumers about their rights
and responsibilities and also helping them in getting their grievances
redressed.
2. A ……………refersto any person who uses or consumes goods or avails of
any service
3. A ………………. of a deceased consumer can file a case on behalf of a
consumer.
4. A complaint can to be made to the appropriate District Forum when the
value of the goods or services in question, along with the compensation
claimed, does not exceed ……………….
5. A case can be filled in ………………. only when the value of the goods or
services in question, along with the compensation claimed, is more than
₹10 crore.
6. According to right to …………….., the consumer has the freedom to
select from a variety of products according to his/her needs and desires.
7. According to the right to ………………., the consumer has a right to gain
knowledge and to be a well informed consumer throughout life.
8. A consumer should buy only ……………..goods as they provide
quality assurance.
9. An order passed by the National Commission in a matter of its original
jurisdiction is appeal-able before the ……………… if the aggrieved party
was not satisfied with the order of the National Commission.
10. In case the aggrieved party is not satisfied with the order of the State
Commission, he can appeal before the National Commission within
……………… days of the passing of the order.

1. There is no need for a business to voluntarily discharge its
responsibilities towards the customers unless imposed by law.
2. A consumer‟ does not include a person who obtains goods or avails a
services for resale or any commercial purpose.
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3. According to the right to be heard, the consumer has a right to get relief
in case the product or service falls short of his/her expectations.
4. District forum comprises of four members who are appointed by the
State Government concerned.
5. Only those cases can be filled in State Commission, when the value of
the goods or services in question, along with the compensation claimed,
is between ₹1 crore - ₹10 crore.
6. All the members of National Commission are appointed by the Central
Government.
7. In case the aggrieved party is not satisfied with the order of the State
Commission, he can appeal before the Supreme Court within 30 days of
the passing of the order.
8. In case a consumer is not satisfied with the order passed in the state
commission, he can further make an appeal in the National Commission
within a time period of 45 days.
9. An order passed by the State Commission can be challenged before the
National Commission and no further.
10. An order passed by the National Commission in a matter of its original
jurisdiction is appealable before the Supreme Court if the aggrieved
party was not satisfied with the order of the National Commission.

1.
Column A Column B
(i) Consumer gets a relief (a) Right to information
(ii) Offering a wide variety of goods (b) Right to be heard
(iii) Providing details about the product (c) Right to be assured
(iv) Providing grievance cells (d) Right to seek redressal
(a) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)

(b) (i)-(b); (ii)-(a); (iii)-(d); (iv)-(c)
(c) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
2.
Column A Column B
(i) File a case when the value of the goods or (a) State Commission
services in question, along with the compensation
claimed, does not exceed ₹1 crore.
(ii) Checking standardisation mark (b) District Commission
(iii) File a case when the value of the goods or (c) Right to safety
services in question, along with the compensation
claimed, is more than ₹10 crore.
(iv) File a case when the value of the goods or (d) National
services in question, along with the compensation Commission
claimed, is between ₹1 crore - ₹10 crore.
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(a) (i)-(a); (ii)-(d); (iii)-(c); (iv)-(b)

(b) (i)-(b); (ii)-(c); (iii)-(d); (iv)-(a)
(c) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
3.
Column A Column B
(i) All the members are appointed by the (a) Responsibility of a consumer
State Government
(ii) All the members are appointed by the (b) District Commission
Central Government
(iii) Respect the environment (c) National Commission
(a) (i)-(b); (ii)-(c); (iii)-(a)

(b) (i)-(b); (ii)-(a); (iii)-(d)
(c) (i)-('c); (ii)-(b); (iii)-(a)
(d) (i)-(a); (ii)-(c); (iii)-(b)
1. Assertion (A): The consumer has a right to be protected against goods
which are hazardous to life and health.
Reason (R): The consumers should always buy goods with
standardisation mark as they provide assurance about their quality .
explanation of (A)
explanation of (A)
2. Assertion (A): Consumer protection has a wide scope.

Reason (R): Consumer protection relates to educating consumers about
their rights and responsibilities,
explanation of (A)
explanation of (A)
3. Assertion (A): The business enterprise should strive to achieve the

objective of long term profit maximisation through customer satisfaction
Reason (R): The market forces have changed to a consumer market i.e.,
caveat emptor which implies let the seller beware.
explanation of (A)
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explanation of (A)
4. Statement I: A „consumer‟ is generally understood as a person who

uses or consumes goods or avails of any service.
Statement II: The term „consumer‟ includes any person who obtains
goods or avails services for resale or commercial purpose.
5. Statement I: Only those complaints where value of goods and services

paid as consideration exceeds- ten crores of rupees can be filed in State
Commission.
Statement II: If any of the parties are not satisfied by the order of State
Commission can appeal against such order to the Supreme Court of
India.
.
6. Statement I: Unfair trade practice involves the activities undertaken to
falsely represents the quality, standard, quantity, composition, style or
model of a product or service.
Statement II: Restrictive trade practice refers to the act of imposing an
unjustified cost on the consumer.
7. Assertion(A): According to the Right to seek redressal a consumer has

the right to get relief in case the product or a service falls short of his
expectations.
Reason (R): In order to promote the Right to seek redressal many
business firms have setup grievance cells.
explanation of (A)
explanation of (A) „ '
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Answer key
1 D 14 C 27 D 40 B
2 A 15 B 28 A 41 B
3 C 16 B 29 C 42 C
4 B 17 A 30 A 43 C
5 A 18 B 31 B 44 B
6 D 19 A 32 B 45 C
7 C 20 C 33 B 46 D
8 C 21 B 34 C 47 B
9 C 22 D 35 B 48 A
10 D 23 A 36 B 49 B
11 A 24 C 37 B 50 B
12 A 25 D 38 A 51 C
13 C 26 C 39 D 52 A
53 B
54 C
Fill in the blanks True or false Match Assertion-Reason Questions

1 Consumer protection 1 False 1 C 1 A
2 Consumer 2 True 2 B 2 C
3 Legal heir or representative 3 False 3 A 3 C
4 ₹20 lakhs 4 False 4 C
5 National Commission 5 False 5 B
6 Choose 6 True 6 A
7 Consumer education 7 False 7 c
8 Standardised 8 False 8
9 Supreme Court 9 True 9
10 30 10 True 10
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Chapter: 13
Entrepreneurship Development
 Explain the concept, characteristics functions, and need of
Entrepreneurship;
 Describe the entrepreneurship competencies;
 State the steps involved in the process of entrepreneurship development;
 Outline the entrepreneurial values and attitudes; and
 State the meaning and concept of motivation
Concept Definition
Entrepreneurship Entrepreneurship is the act of being an entrepreneur,
which is a French word meaning “one who undertakes
an endeavour”. Entrepreneurship may be defined as the
process by which either an individual or a team
identifies a business opportunity and acquires and
deploys the necessary resources required for its
exploitation.
Entrepreneur According to Peter Drucker, “Entrepreneur-one who is
involved in gathering and using resources to
opportunities to produce result.”
Enterprise The output of the entrepreneurship process, that is, the
business unit is called an enterprise.

S.No. Concept Description
1. Characteristics of (a) Systematic activity: Entrepreneurship
Entrepreneurship is a well-defined activity which involves a
series of steps. A person can be made a
successful entrepreneur through formal
education and vocational training to
acquire the necessary knowledge, skill
and competence.
(b) Lawful and purposeful activity:
Entrepreneur ship is a legitimate and
meaningful activity as it involves
identification and implementation of new
business ideas with the purpose of
creating value for personal gain and
social welfare.
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(c) Innovation: Entrepreneurs are the

pioneers in evolving new ideas be it in
context of product, method of production
or distribution.
(d) Organisation of production: An
entrepreneur mobilises the other factors
of production i.e. land, labour, capital
and technology in the best interest of
society at large. It includes both the
aspects ; creation of a product as well as
creation of market for the product.
(e) Risk-taking: Entrepreneurship
therefore, involves assuming calculated
risks of varied kinds in order to realise
desired goals.
2. Relationship between The concept of entrepreneurship primarily
Entrepreneurship and relates to the activities involved in business
Management start up whereas the process of
management relates to the series of
activities which are required to ensure
smooth running of a business enterprise.
3. Need for (a) Employment generation:
Entrepreneurship Enterpreneurship is regarded as a vital
instrument for employment generation in
the country through the establishment of
new and small enterprises.
(b) Balanced economic development: It
has been seen that the local talent and
resources are tapped effectively by an
entrepreneur who sets up a business in
rural areas and be easily carried out in
rural and semi-urban areas.
(c) Innovations: Entrepreneurship
encourages innovations in enterprises
and by promoting new ideas in business.
(d) Compete in the international
market: It has enabled the Indian
industry to compete in the international
market due to the enhanced competence
of small business in the country.
(e) Social benefits: It offers innumerable
social benefits like ensuring optimum
utilisation of resources, raising the
standard of living of people by providing
better quality products at reasonable
prices.
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4. Functions of (a) Contribution to gross domestic

Entrepreneurs in product (GDP): Entrepreneurship
Relation to Economic creates economic value for all factors of
Development production like rent on land, wages for
labour and interest on capital.
(b) Capital formation: Entrepreneurs
contribute towards capital formation by
mobilising and channelising funds into
most productive avenues which leads to
an increase in GDP.
(c) Generation of employment:
Entrepreneurship involves setting up of
new enterprises thereby leading to
creation of many job opportunities.
(d) Generation of business opportunities
for others: Considering the fact that
every business is interrelated and
interdependent on many other
businesses for supplies of inputs and
markets for output. The success of an
entrepreneur in turn ignites growth of
other related businesses.
(e) Improvement in economic efficiency:
Entrepreneurs foster economic efficiency
by ensuring optimal utilisation of
resources and technological
upgradations.
(f) Increasing the spectrum and scope of
economic activities: Entrepreneurs
seek to venture into new markets be it
domestic or international in pursuit of
higher gains. This helps in
transformation of the economy.
(g) Impact on local communities:
Entrepreneurs who sets up a business in
rural areas like agrobased and craft
based cottage industries tap the local
talent and resources effectively. This
leads to socio-economic development of
local communities.
(h) Fostering the spirit of exploration,
experimentation and daring:
Entrepreneurs assume calculated risks
in terms of new discoveries which may be
at times revolutionary in nature and
shackle the old values and beliefs.
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5. Role of entrepreneur (a) Opportunity scouting: Entrepreneurs

in relation to their consciously search for new ideas which
enterprise may evolve through personal
observation, discovery or invention.
(b) Identification of specific product
offering: After identifying opportunities
through environmental scanning
entrepreneur must zero in on to one
specific product or service.
(c) Feasibility analysis: Before giving a
practical shape to an idea entrepreneurs
assess its technical, financial, legal,
commercial and economic viability.
6. The process of Entrepreneurship development seeks to
entrepreneurship equip a person with the necessary
development knowledge and skills needed for successfully
starting and running the enterprise.
7. Process of setting up a (a) Resource mobilisation
business (b) Scanning the environment for
entrepreneurial opportunities
(c) Development of product/service idea
(d) Assessment of the feasibility of idea and
preparation of business plan
(e) Appraisal by funding agencies
(f) Project commissioning and launch
(g) Adaptation and management of growth
8. Entrepreneurship (a) Initiative
competencies (b) Sees and acts on opportunities
(c) Persistence
(d) Information seeking
(e) Concern for high quality work
(f) Commitment to work contract
(g) Efficiency orientation
(h) Systematic planning
(i) Problem solving
(j) Self confidence
(k) Assertiveness
(l) Persuasion
(m) Use of influence strategies
(n) Monitoring
(o) Concern for employee welfare
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9. Entrepreneurial Entrepreneurs are self driven persons who

motivation seek to fulfil their needs-
(a) need for achievement (desire to do
accomplish challenging work)
(b) need for power (urge to fulfil self-interest
and ensure social well being)
(c) need for affiliation (motive to work for a
cause they identify with like
environment)
(d) need for autonomy (drive to act in
freedom with responsibility)
10. Entrepreneurial values In order to be successful entrepreneurs
and attitudes need to nurture certain values and attitudes
which create a positive impact on their
behavioural choices.
1. Which of the following activity is a part of entrepreneurship?

(a) Identification of a business opportunity
(b) Conducting feasibility study
(c) Employing necessary resources for its implementation
2. Which of the following is not a feature of entrepreneurship?

(a) An economic activity
(b) Does not involve any risk
(c) Dynamic in nature
(d) A purposeful activity
3. Which of the following is not an advantage of entrepreneurship

development?
(a) Employment generation
(b) Balance economic development
(c) Restricts innovations
(d) Social benefits
4 …………….is the process of setting up one‟s own business as distinct

from pursuing any other economic activity, be it employment or
practicing some profession.
(a) Enterprise
(b) Entrepreneur
(c) Entrepreneurship
5. The person who set-up his business is called an ....

(a) Enterprise
(b) Entrepreneur
338 | P a g e
6. The output of the process, that is, the business unit is called an
………………
(a) Enterprise
(b) Entrepreneur
7. Entrepreneurship may be defined as a ……………..

(a) Systematic activity
(b) Purposeful activity
(c) Creative activity
8. Entrepreneurship is step-by-step and purposeful activity as the

knowledge and skill required for it can be acquired, learnt and
developed. Identify the feature of Entrepreneurship being highlighted in
the above statement.
(a) An economic activity
(b) Innovation
(c) Dynamic in nature
(d) A purposeful activity
9. Entrepreneurship is creative because ……………….

(a) It involves creation of value
(b) Introduction of new product
(c) Discovery of new markets
10. The term „entrepreneurship‟ was coined by ………………….

(a) Richard Cantillon
(b) Henri Fayol
(c) FW Taylor
(d) Koontz and O‟Donnell
11. An Entrepreneur is perceived to assume ……………….

(a) High risk
(b) Low risk
(c) Calculated risk
12. Identify the correct order of first four steps involved in the process of
entrepreneurship development.
(a) Resource mobilisation, Scanning the environment for
entrepreneurial opportunities, Development of product/service idea,
Assessment of the feasibility of idea and preparation of business
plan
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(b) Scanning the environment for entrepreneurial opportunities,

Resource mobilisation, Development of product/service idea,
plan
(c) Resource mobilisation, Scanning the environment for entrepreneurial
opportunities, Assessment of the feasibility of idea and preparation
of business plan, Development of product/service idea,
(d) Resource mobilisation, Development of product/service idea,
Scanning the environment for entrepreneurial opportunities,
plan
13. The complete awareness and understanding of business environment is

known as ………………….
(a) Environment scanning
(b) Entrepreneurship
(c) Economic activity
14. Entrepreneurs foster economic development by improving improve

economic efficiency through ………………..
(a) Improving the process
(b) Reducing waste
(c) Bring technical progress
15. Economic development provides following opportunities for the growth

and expansion of enterprise as it provides ………………..
(a) Availability of factors of production.
(b) Well developed financial in the economy
(c) Opportunities to raise and avail funds from various financial
institutions
16. Which among the following is not a competency required to be a

successful entrepreneur……………….
(a) Taking initiative to set up an enterprise
(b) Recognise and encash the opportunities
(c) Dispassionate towards the progress of venture
(d) Providing effective leadership
17. If the incremental capital output ratio of a country is 2.8 and it desires
to grow at the rate of 10% p.a then it must ensure capital formation at
the rate of ……………….per annum,
(a) 28%
(b) 280%
(c) 10%
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1. The person who set-up his business is called an enterprise.
2. Entrepreneurship is creative because it involves creation of value.
3. The need for achievement refers to the desire to do accomplish
challenging work.
4. The values and attitude of entrepreneurs have no role to play in their
success.
5. Technical feasibility seeks to assess the practical possibility of the
business idea.
6. Entrepreneurs are born rather than made.
7. The terms management and entrepreneurship can be used
interchangeably.

1.
Column A Column B
(i) Feasibility analysis (a) Helps to assess the profitability of the
business idea
(ii) Technical feasibility (b) Helps to assess the availability of funds
required to implement a business idea
(iii) Economic feasibility (c) Helps to assess the practical possibility of
the business idea
(iv) Financial feasibility (d) Helps to assess the availability of technology
required to implement a business idea
(a) (i)-(a); (ii)-(c); (iii)-(b); (iv)-(d)

(b) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(c) (i)-(d); (ii)-(b); (iii)-(c); (iv)-(a)
(d) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)
2.
Column A Column B
(i) Entrepreneur (a) Awareness and understanding of business
environment
(ii) Enterprise (b) A purposeful activity
(iii) Environmental scanning (c) Output of the entrepreneurship process
(iv) Entrepreneurship (d) The person who set-up his business
(a) (i)-(a); (ii)-(c); (iii)-(b); (iv)-(d)

(b) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(c) (i)-(d); (ii)-(b); (iii)-(c); (iv)-(a)
(d) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
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3.
Column A Column B
(i) Need for achievement (a) Drive to act in freedom with responsibility
(ii) Need for power (b) Motive to work for a cause they identify with
like environment
(iii) Need for affiliation (c) Urge to fulfil self-interest and ensure social
well being
(iv) Need for autonomy (d) Desire to do accomplish challenging work
(a) (i)-(d); (ii)-(c); (iii)-(b); (iv)-(a)

(b) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(c) (i)-(d); (ii)-(b); (iii)-(c); (iv)-(a)
(d) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
1. Statement I: Entrepreneurs are born rather than made.
Statement II: Entrepreneurs are made and not born.
2. Statement I: Entrepreneurship emerge spontaneously.

Statement II: Entrepreneurship is the outcome of a dynamic process of
interaction between a person and his/ her environment.
3. Assertion (A): The object of entrepreneurship is lawful business.

Reason (R): The purpose of entrepreneurship is creation of value for
personal profit and social gain.
explanation of (A)
explanation of (A)
4. Statement I: Entrepreneurship is a wider term and includes the

concept of management.
Statement II: The process of entrepreneurship relates to the series of
activities which are required to ensure smooth running of a business
enterprise.
342 | P a g e

Answer key

1. (d) All of the above
2. (b) Does not involve any risk
3. (c) Restricts innovations
4. (c) Entrepreneurship
5. (b) Entrepreneur
6. (a) Enterprise
8. (d) A purposeful activity
10. (a) Richard Cantillon
11. (c) Calculated risk
12. (a) Resource mobilisation, Scanning the environment for entrepreneurial
opportunities, Development of product/service idea, Assessment of the
feasibility of idea and preparation of business plan
13. (a) Environment scanning
16. (c) Dispassionate towards the progress of venture
17. (a) 28%
True or false
1. False (he/she is called an entrepreneur)
2. True
3. True
4. False (the behavioral choices of an entrepreneur are vital for success in
business)
5. False (economic feasibility)
6. False (entrepreneurs are made)
7. False (both the terms are different)
Match the following

1. (b)
2. (d)
3. (a)
1. (d) Statement I is false but Statement II is true
2. (c) Statement I is true but Statement II is false
3. (a) Both the statements (A) and (R) are correct and (R) is the right
explanation of (A)
4. (b) Both the Statement I and Statement II are false
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SAMPLE PAPER 1 (CUET-UG) 2022

(BUSINESS STUDIES)
General instructions:
(a) This paper contains 50 multiple choice questions.
(b) Only 40 questions are to be attempted out of 50 questions in 45
Minutes.
(c) Each question carries 5 marks.
(d) One mark will be deducted for a wrong answer.
(e) No marks will be deducted for not attempting any questions.
1. Naveen is hired as a consultant for an export house. He identifies that

the export house has to bear huge losses sometimes due to delay in
completion of an export order. This is primarily due to employment of
less number of workers than actually needed with an intention to keep
the cost of production low. Identify the concept of management being
ignored by the export house.
(a) Efficiency
(b) Effectiveness
(c) Both of the above
2. According to this principle of scientific management,” Scientific

management has for its foundation the firm conviction that true interest
of the management and workers are one and the same; the prosperity
for the employer cannot exist for a long time unless it is accompanied by
prosperity for the employees and vice versa.” Identify it.
(a) Science not rule of thumb
3. With the announcement of Government of India on November 8, 2016,

all the 500 and 1,000 rupees banknotes of the Mahatma Gandhi Series
have ceased to be a legal tender. It also announced the issuance of new
500 and 2,000 rupees banknotes in exchange for the demonetised
banknotes.
(a) Globalization
(b) Liberalisataion
(c) Demonitisation
(d) Privatization
4. Stock exchanges provide an opportunity to the investors to disinvest and

invest. Identify the related function of the stock exchange.
(a) Providing scope for speculation
344 | P a g e
(b) Providing liquidity and marketability to existing securities

(c) Pricing of security
(d) Spreading of equity cult
5. Assertion (A): The time spent by managers in performing different

functions is different.
Reason (R): Managers at the lower level spends more time in planning
and organising than managers at top levels of the organisation.
explanation of (A)
explanation of (A)
6. By profession FW Taylor was a ……………………

(a) Mechanical engineer
(b) Mining engineer
(c) Psychologist
(d) Human resource officer
7. Sugandha purchased a pack of crayons for her daughter from a nearby

stationery shop. She noticed that the crayons were packed in a portable
transparent plastic bag. Identify the level of packaging being described
in the above lines.
(a) Primary package
8. Ravi bought a geyser from an electronic shop in a nearby which turned

out to be defective. When the shopkeeper refused to take any necessary
action, Ravi had filled a case in the District Commission. However, Ravi
is not happy with the judgment passed by the District Commission.
Within how many days can he make a further appeal against the order
of a District Commission?
(a) 30 days
(b) 45 days
(c) 60 days
(d) 15 days
9. Coordination provides direction to the group efforts and integrates them

into a purposeful activity. Identify the related feature of coordination.
(b) Coordination integrates group efforts
(c) Coordination is all pervasive
(d) Coordination is a continuous on-going process
345 | P a g e
10. Druv joined a placement agency after completing his degree in

management. He realised very soon that the even through application of
principles of management is fundamental to the smooth running of an
organisation yet they do not provide readymade state jacket solutions to
all management problems. This is because ………………….
(a) The principles act as general guidelines
(b) The real business situations are complex
(c) The real business situations are dynamic
11. RR limited is a company dealing in leather products. The work is mainly

divided into functions including production, purchase, marketing,
accounts and personnel. Identify the type of organisational structure
followed by the organisation.
12. This technique of scientific management was initially adopted in Ford

Motor Company in development of the concept of assembly line. Even
now this technique is being used in automobile companies. Identify the
technique.
(a) Motion study
(b) Standardisation and simplification of work
(c) Method study
(d) Time study
13. Under the new Regulations, The Food Safety and Standards Authority of
India (FSSAI) has made it mandatory that when a food product is sold
over an e-commerce platform or any other direct selling means, all
mandatory declarations in the label are to be provided to consumers
through appropriate means before sale except certain variable
declarations like batch number/lot number, best before, use by date,
expiry date and date of manufacturing/packing. Identify the related
dimensions of business environment.
(a) Social dimension and legal dimension
(b) Technological dimension and legal dimension
(c) Political dimension and social dimension
(d) Economic dimension and legal dimension
14. Statement I : Entrepreneurs are born rather than made.

Statement II: Entrepreneurs are made and not born.
346 | P a g e
15. According to Henri Fayol, if this principle of general management is

violated, “authority is undermined, discipline is in jeopardy, order
disturbed and stability threatened.” Identify the principle.
(b) Discipline
(d) Equity
16. Planning cannot foresee everything and thus, there may be obstacles to
effective planning. Identify the related limitation of planning.
(c) Planning does not guarantee success
(d) Planning reduces creativity
17. When Gaurika applied for the post of computer programmer in an IT

company, she was asked to design a program for employee database
management. The purpose of this test was to measure her existing skills
in terms of the level of technical knowledge and proficiency. Identify the
type of selection test being described in the above lines.
(a) Trade test
(d) Aptitude test
18. In order to give a greater exposure to the children, Novel Public School
organised a talk on Consumer Protection for the Commerce students.
However, the students did not gain much from the event as the resource
person used lot of technical words while explaining about related legal
aspects which were beyond the comprehension of the students. Identify
the type of communication barrier being described in the above lines.
(a) Badly expressed message
(b) Unclarified assumptions
(c) Technical jargon
(d) Premature evaluation
19. Match the following:

Column A Column B
(a) Helps to assess the profitability
(i) Feasibility analysis of the business idea
(b) Helps to assess the availability
of funds required to implement a
(ii) Technical feasibility business idea
(c) Helps to assess the practical
(iii) Economic feasibility possibility of the business idea
(d) Helps to assess the availability
of technology required to
(iv) Financial feasibility implement a business idea
347 | P a g e
(a) (i)-(a); (ii)-(c); (iii)-(b); (iv)-(d)

(b) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
(c) (i)-(d); (ii)-(b); (iii)-(c); (iv)-(a)
(d) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)
20. Which of the following is not a feature of informal organization ?

(a) It originates from within the formal organisation
(b) The standards of behaviour evolve from group norms
(c) Scalar chain of command is not followed
(d) It is deliberately created by the management
21. This concept of Control Management is based on the belief that if you try
to to control everything you may end up controlling nothing.
(b) Key result areas
(c) Management by exception
(d) Deviations
22. Identify the level at which the directing function takes place in an
organisation?
(c) Lower level management
23. As the span of management decreases in an organisation, the number of

levels of management in the organisation ……………….
(a) Increase
(b) Decrease
(c) Remain unaffected
24. It is the obligation of a subordinate to properly perform the assigned

duty.
(a) Responsibility
(b) Authority
(c) Accountability
25. Sneha is planning to set up a new division in her departmental store to

focus primarily on activities related to assumption of corporate social
responsibilities. Keeping in view the working of the new division she has
undertaken an analysis for assessment of the number and types of
human resources necessary for the performance of various jobs and
accomplishment of organisational objectives.
Identify the concept being described above.
(a) Breakeven analysis
348 | P a g e
(b) Workload analysis

26. Statement I: A good motivation plan is the precondition to motivate an

employee to contribute his maximum efforts.
Statement II: Money can act as powerful motivator for some employees
while for others non financial incentives are more important.
27. Gaurav has always been fascinated by the hand woven textile designs.
Therefore, he decided to become a weaver. He was told that in order to
understand and learn this workmanship he will have to work under the
guidance of a master worker for a certain number of years. Identify the
type of training being described in the given lines.

Column A Column B
(i) Fear of challenge to authority (a) Organizational barrier
(ii) Distrust (b) Semantic barrier
(iii) Status (c) Personal barriers
(iv) Unclarified assumptions (d) Psychological barriers
(a) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)

(b) (i)-(d); (ii)-(c); (iii)-(a); (iv)-(b)
(c) (i)-(d); (ii)-(b); (iii)-(c); (iv)-(a)
(d) (i)-(c); (ii)-(b); (iii)-(a); (iv)-(d)
29. Aryan has set up a small business unit for the manufacturing of masks.
In order to market the masks in the local residential areas he has
appointed a team of ten salesmen. Each salesman is expected to sell at
least 400 units of the masks within a week‟s time. Identify the point of
importance of controlling being highlighted in the above case.
(a) Controlling helps in judging accuracy of standards
(b) It ensures efficient use of resources
(c) It helps in improving employee motivation
(d) It facilitates coordination in action
30. Litup Living Limited is a company manufacturing lights and

illumination. Whenever the company is in need of daily wage workers, a
349 | P a g e
notice is placed on the factory gate for the same. Identify the source of
(d) Advertising
31. Statement I: Internal sources of recruitment may be used to an

unlimited extent. Statement II: External sources of recruitment may be
used to a limited extent,
32. Knowmania Limited is a well-known media company in India with a

market share of over 30% in this segment. The company has an
established track record of growth and financial performance. Though
its functioning the company ensures active compliance with the law,
ethical standards, and business norms. The company is now planning to
open 15 offices at strategic locations in the country over the next two
years. The Board of directors of the company have decided to only raise
capital for the first time through an issue of shares, but at the same
time they do not wish to get into the hassles of launching a public issue
of shares. Under which of the following method of floatation the
company can raise finance by allotting securities to selective individuals
and institutions only?
(a) Offer for sale
(b) Private placement
(c) e-IPO
(d) Rights issue
33. Primary aim of financial management is to ……………….

(a) Maximise shareholder‟s wealth
(b) Wealth maximisation concept
(c) Maximisation of the market value of equity shares
34. Statement I: A „consumer‟ is generally understood as a person who

uses goods or avails of any service.
Statement II: The term „consumer includes any person who obtains
goods or avails services for resale or commercial purpose.
350 | P a g e
35. The inability of a business to meet its fixed financial obligations like
payment of interest is known as ………………….
(a) Business risk
(b) Financial risk
(c) Long term risk
(d) Market risk
36. Informal organisation has no definite structure. The given statement is
…………….
(a) True
(b) Partly true
(c) False
(d) Not sure
Read the case study given below and answer question no. 37 - 41
Ridhima decided to start a organic cosmetic products manufacturing
business. She aims at earning 30% profit on sales in the first year. She
conducted direct personal interviews and online surveys to gathered
information from the potential market and analysed that the preferences of
the people for organic cosmetic products is growing day by day. She wanted
to use this information as the foundation for future planning. Therefore, she
shared the data about consumers behaviour with her subordinates so that
they could suggest new ways to achieve the objective. At the same time
Ridhima acknowledges that entry of a new competitor can affect profitability
of her business.
37. Which step in the function of management is not being described in the
above case.
(b) Evaluating alternative courses
(c) Developing premises
(d) Identifying alternative course of actions
38. She aims at earning 30% profit on sales in the first year. Identify the
related type of one of the function of management being described in the
given statement.
(a) Strategy
(b) Policy
(c) Objective
(d) Rule
39. Name the step in the function of management which is to be followed

next after the step as identified in Question No. 37.
(a) Identifying alternative course of actions
(b) Selecting an alternative
(c) Evaluating alternative courses of action
(d) Follow up
351 | P a g e
40. She conducted direct personal interviews and online surveys to gathered
information from the potential market. Identify the related type of one of
the function of management being described in the given statement.
(a) Procedure
(b) Method
(c) Programme
(d) Strategy
41. “At the same time Ridhima acknowledges that entry of a new competitor
can affect profitability of her business.” Which limitation of one of the
functions of management is being referred to in the given statement.
(c) Planning does not guarantee success
(d) Planning reduces creativity
42. Statement I: A commercial bill is sold at a discount and redeemed at

par. Statement II: The interest rate paid on commercial bill is known as
the call rate, (a) Both the Statement I and Statement II are true (b) Both
the Statement I and Statement II are false (c) Statement I is true but
Statement II is false (d) Statement I is false but Statement II is true
43. Which of the following is not a point of importance of Financial

planning?
(a) It helps in avoiding business shocks and surprises
(b) If helps in co-ordinating various business functions
(c) If helps to reduce waste, duplication of efforts, and gaps in planning.
(d) It tries to delink the present with the future
44. Sujhav Limited is a company dealing in various types of Fire

extinguishers. Considering the fact that people generally don‟t buy fire
extinguishers, the company undertake aggressive sales promotion efforts
in order to create and maintain demand for the product. Identify the
type of marketing concept being described in the given case.
(a) Product concept
(b) Selling concept
45. If the rate of return on investment for a company is 16%. A situation of

unfavourable financial leverage will be said to arise when, the rate of
interest is payable on debt capital is ………………
(a) More than 16 %
(c) Equal to 16%
(b) Less than 16 %
46. Which of the following is not a protective function of SEBI?
352 | P a g e
(a) Prohibition of fraudulent and unfair trade practices functions

(b) Controlling insider trading
(c) Regulation of takeover bids by companies
(d) Promotion of fair practices and code of conduct in securities market
47. Under which of the following conditions the fixed capital requirements of
a business is not likely to be low?
(a) When the raw material is easily available
(b) When the labour intensive production technique is used
(c) When the level of collaboration is low
(d) When the growth prospects of the firm are low
48. Assertion (A): Financial management is concerned with optimal

procurement as well as the usage of finance.
Reason (R): In order to ensure optimal procurement of funds different
available sources of finance should be identified and compared in terms
of their costs and associated risks.
explanation of (A)
explanation of (A)
49. Jaykant is holding hundred shares of a company. He has been given a

privilege offer to subscribe to new issue of share of the same company in
proportion of 2 :1 to the number of shares already possessed by him.
Identify the method of floatation being described in the above case.
(c) Rights issue
(b) Offer for sale
50. Drishti Limited is a chain of trusted optical centers for prescription and
fashion eyewear. It caters to affluent people with a range of premium
sunglasses for men, women and kids. In order to raise the level of
buyer‟s satisfaction, the company has decided to create a special section
in each of its outlets for handling customer complaints and adjustments
requirements . Identify the type of marketing function described in the
given lines.
(c) Promotion
353 | P a g e
Answers Key
1. (b) Effectiveness
2. (c) Harmony, not discord
3. (c) Demonitisation
4. (b) Providing liquidity and marketability to existing securities
5. (c) Statements (A) is correct but statement (R) is incorrect
6. (a) Mechanical engineer
7. (a) Primary package
8. (b) 45 days
9. (a) Coordination ensures unity of action
11. (a) Functional structure
12. (c) Method study
13. (b) Technological dimension and legal dimension
14. (d) Statement I is false but Statement II is true
15. (c) Unity of command
16. (b) Planning may not work in a dynamic environment
17. (a) Trade test
18. (c) Technical jargon
19. (b) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
20. (d) It is deliberately created by the management
21. (c) Management by exception
22. (d) All of 'he above
23. (a) Increase
24. (a) Responsibility
25. (b) Workload analysis
26. (a) Both the Statement I and Statement . II are true
27. (b) Apprenticeship training
28. (a) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)
29. (c) It helps in improving employee motivation
30. (b) Direct recruitment
32. (b) Private placement
35. (b) Financial risk
36. (c) False
37. (b) Evaluating alternative course of actions
38. (c) Objective
39. (b) Selecting an alternative
40. (b) Method
41. (b) Planning may not work in a dynamic environment
43. (d) It tries to delink the present with the future
44. (b) Selling concept
45. (a) More than 16%
46. (c) Regulation of takeover bids by companies.
47. (c) When the level of collaboration is low
354 | P a g e
48. (b) Both the statements (A) and (R) are correct but (R) is not the right
explanation of (A)
49. (c) Rights issue
50. (b) Customer support services
355 | P a g e
SAMPLE PAPER 2 (CUET-UG) 2022

(BUSINESS STUDIES)
General instructions:
(a) This paper contains 50 multiple choice questions.
(b) Only 40 questions are to be attempted out of 50 questions in 45
Minutes.
(c) Each question carries 5 marks.
(d) One mark will be deducted for a wrong answer.
(e) No marks will be deducted for not attempting any questions.
1. The sales team of Aloud Ltd. consists of four people Dev Kumar, Iqbal
Rehman, R. Ramaswamy and Jeet Singh. Each of these four individuals
belong to different backgrounds and have diverse interests. They all have
a different purpose for joining the organisation, but as members of the
same sales team they work towards the achievement of the common
objectives. Which feature of management is being reflected in the given
statement?
2. Varnika and Vedika are the team members of Vansh who works as a
team lead in an IT company. Vansh observes that both Varnika and
Vedika are in constant conflict with which each other due to their
personal prejudices. Many a times, this conflict among them influences
their work performance adversely. Vansh, always resolves such
situations by emphasizing on the primacy of organisational goals over
individual interests. Identify the related feature of principles of
management being described in the given case.
(b) Flexible
(c) Universally applicable
3. The oil industry has been impacted from the war between Russia and
Ukraine. According to the report, rising gasoline and diesel prices
derived from crude oil will prompt cost-conscious consumers to switch
to electric vehicles more quickly. Identify dimensions of business
environment not being highlighted in the above paragraph,
(a) Political Environment
(b) Legal Environment
(c) Technological Environment
(d) Economic Environment
356 | P a g e
4. Enakshi is a daughter of a business tycoon. She often hears her father

saying that the management of the business should be done in a logical
and rational manner. Therefore, she has started believing that
management is a pure science like that of Physics or chemistry. Do you
agree with her view point?
(a) Completely agree
(b) Disagree
(c) Partially agree
(d) Not sure

Column A Column B
(i) Guidelines for implementing a strategy (a) Procedure
(ii) Prescribed way to carry out a particular task (b) Policy
(iii) Series of steps to be performed in a (c) Budget
chronological order
(iv) Numerical plan (d) Method
(a) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)

(b) (i)-(b); (ii)-(c); (iii)-(a); (iv)-(d)
(c) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
(d) (i)-(c); (ii)-(a); (iii)-(d); (iv)-(b)
6. Which of the following statement does not pertain to middle level

management?
(a) They are responsible for all the activities of the operational
managers.
(b) They are responsible for the welfare and survival of the organisation.
(c) The interpreter the policies made by top level managers
(d) Co-operate with other departments for the smooth running of the
organisation.
7. Taylor focused on improving the performance in the factory set-up.

Considering the fact that it is difficult to find one single person with all
the needed qualities, Taylor suggested appointment of specialist through
a technique of scientific management. Under this technique one of the
specialist is responsible for keeping machines and tools etc., ready for
operation by workers. Identify the type of specialist being described in
the given case.
(a) Functional foremanship
(b) Gang boss
(c) Method study
(d) Repair boss
357 | P a g e
explanation of (A)
explanation of (A)
9. Assertion (A): Taylor proposed rule of thumb as opposed to scientific

management. Reason (R): Taylor restricted the introduction of the
method of scientific inquiry into the domain of management practice.
explanation of (A)
explanation of (A)
10. Ajay applied for the post of Production Manager in Imminent Enterprise
Limited. In the application form, Ajay had given contact details of Mr.
Arun Mehta his present employer. Before finalizing the decision to hire
Ajay the company contacted Mr. Arun Mehta to establish Ajay‟s
credibility. Identify the step in selection process being described in the
above lines.
(a) Job Offer
(b) Contract of Employment
(c) Reference and Background checking
(d) Selection Decision
11. Benny Joseph joined television entertainment company as Business

Development Manager three years back. Over the years, he has built
upon his competence to deal with recurring problems quickly by
learning from his past mistakes. Earlier he used to carry out all the
activities himself right from contacting new client to fixing up a meeting,
making presentations and so on. But, now he delegates the routine work
to his subordinates so that he has sufficient time at his disposal to focus
on key areas. The given statement highlights that the knowledge of
principles of management leads to ………………
(a) Providing managers with useful insight into reality
(b) Scientific decisions
(c) Meeting changing environment requirements
12. Assertion (A): The general environment mostly influences many

enterprises at the same time.
Reason (R): The economic environment is considered relevant for
decision-making and improving the performance of an enterprise.
explanation of (A)
358 | P a g e
explanation of (A)
13. Kajol joined an event management company as a creative director two

years back. At the time of joining, she was given an assurance for a raise
of 8% in her salary on the completion of one year. However, despite one
more year has lapsed, the management has not honoured its
commitment and there has been no hike in her salary so far. Identify the
principle of general management which is being violated in the given
case.
(a) Discipline
(b) Equity
(c) Order
(d) Stability of personnel
14. Assertion (A): Planning provides a rational approach for achieving

predetermined objectives.
Reason (R): Planning helps the manager to look into the past and make
a choice from amongst various alternative courses of action.
explanation of (A)
explanation of (A)
15. Assertion(A): The informal organisation leads to faster spread of

information.
Reason (R): There is a well-defined path of communication to be
followed in an informal organisation.
explanation of (A)
explanation of (A)
16. It helps to save time, money and effort and increases efficiency. Identify
the related type of plan.
(a) Procedure
(b) Programme
(c) Rule
(d) Method
359 | P a g e
17. Match the following

Column A Column B
(i) Can be delegated (a) Accountability
(ii) Cannot be entirely delegated. (b) Authority
(iii) Cannot be delegated at all (c) Responsibility
(a) (i)-(c); (ii)-(a); (iii)-(b)

(b) (i)-(a); (ii)-(b); (iii)-(c)
(c) (i)-(b); (ii)-(c); (iii)-(a)
(d) (i)-(c); (ii)-(a); (iii)-(b)
18. Assertion(A): Functional heads get training for top management

positions.
Reason (R): Functional heads gain experience in all functions related to
a particular product.
(a) Both the statements (A) and (R) are correct and 1R) is the right
explanation of (A)
explanation of (A)
19. Under this method of recruitment an organisations maintains a

database of unsolicited applicants in their offices.
(b) Casual callers
20. It is defined as the framework within which managerial and operating

(c) Informal organisation
(b) Organisational structure
21. Bull‟s Eye Limited is a well reputed education technology company,

headquartered in New Delhi. Whenever a vacancy falls vacant in the
organisation Arnav, the Human Resource Manager looks for those
sources of recruitment which infuse fresh blood within the organisation.
Which of the following is not a disadvantages of using the type of source
of recruitment preferred by Arnav?
(a) Dissatisfaction among existing staff
(b) Lengthy process
(c) Costly process
360 | P a g e
22. Rahul has joined as a content developer in media company. He always

ensures that the activities of similar nature are grouped together.
Identify the related step in organising process being mentioned in the
above lines.
23. Rojghar Ltd. is a popular placement agency in Bengaluru. Every new

employee of the company has to undergo a training program to ensure
that they have the skills needed to perform their job effectively. The
purpose of the program is to introduce new employees to the company‟s
culture, brand, and their specific functions. Identify the type of training
being described in the given lines.
(a) Induction training
(b) Internship training
(c) Vestibule training
(d) Apprenticeship training
24. After having a heated argument with his colleague in the office, Yash
Malhotra proceeds to attend an auditors meeting in the conference
room. Throughout the meeting , he kept thinking about his bitter
relationships with his colleagues and did not grasp much of the content
that was being discussed in the meeting. Identify the type of
communication barrier being described in the above lines.
(a) Semantic barrier
(b) Psychological barrier
(c) Personal barrier
(d) Organisational barrier
25. Assertion (A): Staffing, is referred to as both a line as well as a staff

activity.
Reason (R): Staffing is considered to be an essential function of the
manager,
explanation of (A)
explanation of (A)
26. Assertion (A): A supervisor works as a link between the workers and
management. Reason (R): A supervisor maintains day-to-day contact
with the workers.
explanation of (A)
361 | P a g e
explanation of (A)
27. While other functions prepare a setting for action, name the function
that initiates action in the organisation?
(a) Planning
(b) Organising
(c) Staffing
(d) Directing
28. Which of the following activities do not lie within the scope of consumer
protection?
(a) Educating consumers about their rights and responsibilities
(b) Helping consumers in getting their grievances redressed
(c) Protecting the interests of consumers
29. Geet filed a case in the State Commission and subsequently in National
Commission against the order passed by the State Commission. Name
the highest authority where Geet can appeal further in case she is not
satisfied with the order of the National Commission?
30. A company is likely to declare higher dividends if ………………

(a) Tax rates are high
(b) Tax rates are relatively lower
(c) Tax rate has no effect on dividend declaration
31. Identify the correct sequence of the steps involved in the controlling
process.
(a) Measurement of actual performance, Taking corrective action,
Setting performance standards, Comparison of actual performance
with standards, Analysing deviations
(b) Comparison of actual performance with standards, Setting
performance standards, Measurement of actual performance,
Analysing deviations, Taking corrective action
(c) Setting performance standards, Measurement of actual performance,
deviations, Taking corrective action
(d) Taking corrective action, Measurement of actual performance,
deviations. Setting performance standards
362 | P a g e
32. The total earnings of a company before interest and tax is rupees 54 lacs
and it pays rupees 9 lakh as interest. Calculate interest coverage ratio.
(a) 5 times
(b) 6 times
(c) 8 times
(d) 9 times
33. Which of the following function is not carried out by the consumer
organisations?
(a) Publishing periodicals to impart knowledge about consumer issues
(b) Providing legal assistance to consumers
(c) Appoint the members of District Commission
(d) Filing complaints in appropriate consumer courts on behalf of the
consumers
34. Statement I : Capital Budgeting decision involves investment of funds

in long term projects.
Statement II: The size of assets, profitability and competitiveness are all
affected by capital structure decisions.
35. Jay works as a financial manager in an e-commerce firm. He pays more

attention towards an increase of 3% in the promotion cost as compared
to a 10% increase in the courier expenses. Identify the concept being
used by the manager.
(a) Management by exception
(b) Critical point control
(c) Corrective action
(d) Analysing deviation
36. Which of the following statement is not true?

(a) The cost of debt is higher than cost of equity
(b) The lenders risk is lower than equity shareholder‟s risk
(c) The interest paid on debt is treated as a tax deductible expense
(d) A decrease in interest rate on debt has a favourable effect on
financial leverage of a company
Read the case study given below and answer question no. 37 - 41
Mukesh works as a Senior Accounts Officer in Creative Creations Limited.
When the company decided to open a new branch he was promoted to the
post of Head Accounts Department and there was a substantial increase in
his salary . He could afford a new car for himself as he became entitled for
the car allowance. There was a mention about his achievements in the
363 | P a g e
annual newsletter of the company. He is also the in-charge of recreation

committee in his office.
37. Identify the element of one of the functions of management being
(a) Supervision
(b) Communication
(c) Leadership
(d) Motivation
38. There was a mention about his achievements in the annual news letter
of the company. Which of his human need is being satisfied through this
initiative of the company?
(a) Security Needs
(b) Esteem Needs
39. He is the in-charge of recreation committee in his office. Identify the type
of incentive being offered to Mukesh.
(d) Employee participation
40. Name the type of incentive being extended to Mukesh.

(a) Financial incentive
(b) Non-financial incentive
41. Which of the following incentive is not being described in the given case?
(a) Perquisites
(b) Pay and allowances
(c) Employee recognition programme
(d) Co-partnership
42. Which of the following activity is a part of entrepreneurship?

(a) Identification of a business opportunity
(b) Conducting feasibility study
(c) Employing necessary resources for its implementation
43. Assertion (A): Secondary market provides liquidity and marketability to

existing securities.
Reason (R): Secondary market provides investors the chance to
disinvest and reinvest.
explanation of (A)
364 | P a g e
explanation of (A)
44. Ved was facing display issues with his laptop so he approached the
company‟s service center. But there after every time he went to take his
laptop back the executive at the service centre would tell Ved that it will
take one more week, sometimes ten days and his only reason for delay
used to be unavailability of parts or absence of the staff. On the advice
of his friend Ved approached the consumer court and registered his
complaint through helpline number. Consequently, the issue went till
the headquarters of the manufacturing company and after a few days
Ved got a call from the manager of the service Center. He called Ved for
discussion. The manager then came on terms with Ved and promised
him to repair the laptop in one week time else he agreed to give him a
new laptop. Finally Ved got his laptop back in a week after servicing.
Identify the right of consumer being exercised in the given case.
45. Which of the following statements is not true with regard to capital
market?
(a) The funds are raised for a short period of time
(b) Both debt and equity funds can be raised
(c) It is classified into two types
46. Which of the following is not a modern technique of controlling?

(a) Return on investment
(b) Breakeven Analysis
(c) PERT and CPM
(d) Management information system
47. It is a number assigned to each transaction by the stock exchange and

is printed on the contract note.
(a) PAN number
(c) Order confirmation number
(d) Pay out day
48. Neelab owns a cloth shop in a wholesale market in Delhi. His working
capital requirements are high, as he extends liberal credit to the various
retailers who make a purchase from a shop. Identify the related factor
affecting the working capital requirements of the business.
(a) Credit allowed
365 | P a g e
(b) Credit availed

(d) Inflation
49. Who issues a treasury bill?

(a) Any nationalised bank
(b) Any private sector bank
(c) Reserve Bank of India
50. When does the earnings per share (EPS) does not rise with employment
of higher debt?
(a) When the rate of return on investment is higher than the rate of
interest on debt
(b) When the rate of return on investment is lower than the rate of
interest on debt
(c) When the rate of interest on debt is less than the rate of return on
investment
Answers Key
1. (d) Management is a group activity
2. (a) General guidelines
3. (b) Legal Environment
4. (b) Disagree
5. (c) (i)-(b); (ii)-(d); (iii)-(a); (iv)-(c)
6. (b) They are responsible for the welfare and survival of the organisation.
7. (b) Gang boss
8. (a) Both the statements (A) and (R) are correct and (R) is the right
explanation of (A)
9. (d) Both statements (A) and (R) are incorrect
10. (c) Reference and Background checking
11. (a) Providing managers with useful insight into reality
explanation of (A)
13. (a) Discipline
16. (d) Method
17. (c) (i)-(b); (ii)-(c); (iii)-(a)
18. (d) Both statements (A) and (R) are incorrect
19. (b) Casual callers
20. (b) Organisational structure
21. (d) None of the above
22. (b) Departmentalisation
23. (a) Induction training
24. (b) Psychological barrier
366 | P a g e
explanation of (A)
explanation of (A)
27. (d) Directing
30. (b) Tax rates are relatively lower
31. (c) Setting performance standards, Measurement of actual performance,
Comparison of actual performance with standards, Analysing deviations,
Taking corrective action
32. (b) 6 times
33. (c) Appoint the members of District Commission
35. (b) Critical point control
36. (a) The cost of debt is higher than cost of equity
37. (d) Motivation
38. (b) Esteem Needs
39. (d) Employee participation
40. (c) Both (a) and (b)
41. (d) Co-partnership
43. (a) Both the statements (A) and (R) are correct and l'R) is the right
explanation of (A)
44. (c) Both (a) and (b)
45. (a) The funds are raised for a short period of time
46. (b) Breakeven Analysis
47. (b) Unique Order Code
48. (a) Credit allowed
49. (c) Reserve Bank of India
50. (b) When the rate of return on investment is lower than the rate of
interest on debt
367 | P a g e

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Prince Kathuria Classes (CUET: Business Studies)

The only path to achieve target

Management: Management refers to the process of planning, organizing,

“Management is the process of designing and maintaining an environment

- Harold Koontz and Heinz Weihrich

Clue words with concepts

 Deliberate process; intangible force- Management

Clue Concept with Description

 Management is a goal-oriented process- An organisation is created

Effective decision-making is crucial for achieving organizational

 Management helps in achieving group goals- Management seeks to

 Management creates a dynamic organization- Successful

 Management as an Art- Art involves skilful and personalised

 People-Centric: Management involves working with and through

Levels of Management: In organizations, management is typically

Levels of Management: The authority-responsibility relationships that

 Planning- Planning means deciding

motivation and leadership.

Co-ordination- The Essence of Management-

order to harmonise the interests, views and perspectives of such

Management in the Twenty-first Century- The management in 21st

Multiple Choice Questions

1. Successful organisations do not achieve goals by chance but by following

2. ................. is the process of designing and maintaining an

3. Management is essential for the organisations which are

4. Management contains a series of interrelated functions that include

6. Both Company A and company B are using the same amount of

company B. Identify the concept in which company A as an edge over

7. “Management has been defined as a process of getting things done with

8. Tina works in an export house, where maximum emphasis is placed on

9. Diya and Riya work as sales coordinators in separate divisions of a

10. Successful management ensures that .....

11. Efficiency is concerned with .... ...

12. Effectiveness relates to ...........

(a) Doing the right task

13.Anirban is working as a finance manager of „Shourya Ltd.‟ a company

14.Rohan works as a production manager in Global Enterprises Limited. He

15. Ashish Singh is working as a marketing manager in a company. He has

16. Jay is working as a marketing manager in a company. He has been given

17. Management is said to be poor if it is .......

(a) Efficient but ineffective

18. Tarang Enterprises Limited is planning to increase its sales by 30% in

19. “Human resources are an organisation‟s greatest asset. Despite all

20. “Every organisation whether it is government-owned, a privately owned

21. Which of the following is not a feature of management?

22. Management is equally important to run a political organisation as it is

(b) Management is multidimensional

24. It is difficult to demark the time spent by a manager in performing a

27.„Morning Basket‟ is a popular E-Commerce portal which provides free

year 2024. Identify the feature of management being highlighted in the

29. Which of the following aspect is involved in the dimension related to

30. Management translates the works to be carried out in terms of goals to

31. Management is essential to ensure successful transformation of imputs

32. Which of the following is the organisational objectives of management?

33. Identify the social objective of management.

38. Which of the following is not an organisational objective of management.

39. Which of the following is not an organisational objective of management?

40. Providing good working conditions is a kind of objective of Management

41. Management is considered important because ......

42. Management is considered to be an art because ....