Provide links for tricky case study and application problems.

Important Topics
Business Studies-XII
Chapter Topic
Nature and Significance of Management
  • Management as a Science, Art & Profession
  • Levels of management
  • Importance of coordination
Principles of Management
  • Fayol's principles of management
  • Techniques of scientific management
Business Environment
  • Importance of business environment
  • Dimensions of business environment
  • Features of planning
  • Types of plans
  • Functional & divisional structure of organisation
  • Elements of delegation
  • Importance of decentralisation
  • Importance of staffing
  • Staffing process
  • Methods of Training
  • Financial & non-financial incentives of motivation
  • Styles of leadership
  • Formal and informal communication
  • Importance of controlling
    Relationship between planning & controlling
Financial Management                              
  • Financial decisions & factors affecting them
  • Factors determining the choice of an appropriate capital structure
Financial Markets
  • Money market instruments
  • Functions of stock exchange
  • Elements of marketing mix- Product, Price, Place & Promotion
  • Branding, Labelling & Packaging
Consumer Protection
  • Consumer rights
  • Responsibilities of consumers

1Q- As per direction issued by supreme court the govt. passed an order to ban the sale of tobacco products within the area of 200 meters of all educational institution  as:
 1. Its consumption is injurious to health
2. People are becoming more conscious about health and fitness
It indicating the govt. attitude towards this business. Identify business environment' under different dimension quoting the lines from para.
Ans- Legal Environment- “As per direction issued by supreme court the govt. passed an order to ban the sale of tobacco products within the area of 200 metres of all educational institution as
its consumption is injurious to health”
Social environment- “People are becoming more conscious about health and fitness”
Political environment- “Government attitude towards the business”
2Q- Name and explain the concepts which relate to the following:
1. Assessing the present and future requirements of the workers.
2. Streamlining the attributes of a person required for doing a job.
3. Searching for prospective candidates.
Ans- 1. Estimating man power requirements through workload analysis . (staffing process step one.)
2. Training . It is a process by which employees learn new skills.
3. Recruitment . It is the process of searching and stimulating the prospective candidates to apply for jobs in the organisation.  
3Q- Amita filed a case against 'Mahindra Ltd.' in the National Commission but she was not satisfied with the orders of the 'National Commission'. Name the authority where she can appeal against the decision of the 'National Commission'?
Ans- Supreme Court  
4Q- Excel ltd. raised funds from the market by issuing debentures in order to increase return on equity. Name the concept used here. 
Ans- The concept referred in the above case is 'Trading on Equity' and not financing decision. ‚ÄčTrading on equity refers to a practice of raising the proportion of debt in the capital structure such that the earnings per share increases. A company resorts to Trading on Equity when the rate of return on investment is greater than the rate of interest on the borrowed fund. That is, the company resorts to Trading on Equity in situation of favourable financial leverage. As the difference between the return on investment and the rate of interest on debt increases, the earnings per share increase.  
5Q- Kotak launched a multilingual mobile app,'kotak bharat'that allws customers to manage their a/c through SMS widout the need of an internet connection. This initiative was taken keeping in mind the rural amd hilly areas where there is no / poor internet connectivity.This brought them at par with their urban counterparts. 
a) Which dimension of business environment is referred to? 
b) What values have been imparted?
Ans- a) In the given case, technological environment is being referred. This is because Kotak has launched a multilingual mobile application 'Kotak Bharat', that allows customers to manage their accounts through SMS without the need of an internet connection. It means efforts have been taken by Kotak to improve its technology. With the launch of mobile application, company has provided innovative service to its customers.

b) Values which have been imparted here are as follows:
i) Taking care of the interest of rural and hilly area people.
ii) Awareness to all of their accounts without internet connection.
6Q- A big business house had plans of expansion by entering into a newer makerts for which it not only needs to increase its production capacity but also needs to procure more raw materials. This will require funds both for long term and short term. 
Which concepts of financial management are being refered to? 

Ans- Since business had plans of expansion by entering into newer markets, here long term investment decisions(capital budgeting decisions) are involved. Moreover, to increase the production, a firm needs to install new machinery for which a huge amount of capital is required to invest in long term or fixed assets. So, here the company is in need of fixed capital. To procure more raw material, a company needs to maintain a large amount of working capital to make payments to the suppliers of raw materials. 
7Q- Rama Enterprises a small business concern wants to expand its capital base. However the firm faces a major threat of takeover by a bigger concern in the same line of operations.
a) Advice the firm on what type of capital it should raise ?
b) Give reasons also ?
Ans- i) Firm should raise more debt capital.
ii) Since the firm is facing a major threat of takers, raising capital from equity shares will not be a suitable option as the equity shareholders do not show any interest in making investment in these firms.   
8Q- The directors of a manufacturing company are thinking of issuing Rs. 20 lacs additional debentures for expansion of their production capacity. This will lead to an increase in debt-equity ratio from 2:1 to 3:1. What are the risks involved in it? What factors other than risk do you think the directors should keep in view before taking the decision, name them & explain any 4  
Ans- The directors of a manufacturing company are thinking of issuing Rs20 lacs additional debentures for expansion of their production capacity. This will lead to an increase in debt-equity ratio from 2:1 to 3:1. The risks involved with increase in debt-equity ratio are as follows:

i) The legal boundation of a company to pay interest on debentures increases its payment obligations (particularly in the event of losses)
ii) If the company is unable to pay the principal amount to debenture holders, then debenture holders have control over the assets of the company and company may get liquidated.
The director should keep the other factors in mind other than risk  before taking this decision.  These are:
1. Position of cash flow : The cash flow position should be such that it must be able to fulfill its cash obligations and in addition is also left with some buffer. The capital structure of the company should be decided taking this factor into consideration.
2. Debt-service coverage ratio (DSCR) : A higher DSCR indicates that the company is better able to meet its cash and interest obligations and thereby, can increase the component of debt in the capital structure.
3. Cost of debt : Cost of debt is the interest rate to be paid on debt. Higher the cost of debt, lower the proportion of debt in the capital structure and vice-versa.
4. T ax rate : As interest payable on debt is a tax deductible item, therefore tax rate directly affects the cost of debt and thereby, the proportion of debt in capital structure. Higher the tax rate, cheaper is the debt, thereby, higher can be the proportion of debt in capital structure.
9Q-  How can the company ensure that higher order needs ie. Esteem & self actualisation are met.
Ans- For satisfying the higher order needs measures such as work enrichment and career opportunities must be given to the employees. The employees can be endowed with challenging work and greater responsibilities that require higher knowledge and skills. Moreover, they must be offered with growth opportunities in the organisation.
10Q- Hina & Harish are typist in a company having same educational qualification. Hina is getting Rs.3000 per month and harish Rs. 4000 per month as salary far the same working hour. Which principle of management is violated in this case? Name and explain the principle?         
 Ans- In the given sentence, principle of 'Equity' has been violated. ‚ÄčThe principle of 'Equity' is violated because as per this principle, managers should treat their employees in a just and kind manner but in the given case Hina and Harish who joined as typist having same educational qualification are given different salary for the same working hours.   
11Q- Ms Shubra is working as CEO  in began tea company her company manufacture tea with 10 brands every brand  has 5 flavors tea of every taste  is packed in packing of 10g 20 g 30g 40g
50g 60g 70g 80g 90g 100g 150g 200g ....900g 1kg 2kg 3kg 4kg 5kg in this way company sells tea of one brand in 135 packets and all the brands put together and are sold in 1350 packets 
What is your opinion mistake committed by Mrs. Shubra ?
With what technique of scientific technique she can improve upon her mistake ?
Ans- The mistake committed by Mrs. Shubra is that she is creating unnecessary varieties of the product which leads to increase in labour cost. By adopting the technique of Simplification, she can improve her mistake.
12Q- Miss Neeta recently completed her post graduate diploma in human resource management. A few months from now she is appointed as HRM. As of now company employs 800 person and has an expansion plan in hand which may require another 200 person for various types of additional requirements. MissNneeta has given charge of the company human resource department.
Ans- As a human resource manger the main function that she would be performing is the staffing function. She must ensure that according to the expansion plan of the organisation, positions are filled with qualified and suitable candidates and that the positions remain filled. Subsequently she must ensure that the candidates are trained properly and remain motivated. It is her role to ensure that the individual goals of the employees are in harmony with the organisational goals.

The functions of Ms. Neeta can be summarised as follows.

i. Recruiting the qualified candidates
ii. Preparing job descriptions
iii. Preparing a compensation plans and incentive plans
iv. Training the employees as per the job requirements
v. Maintaining harmonious relations with the employees
vi. Working towards social security and welfare of the employees
vii. Defending the company in case of any law suits and legal complications

2. The following can be some of the problems that Ms. Neeta might face.

i. Her job requires her to perform many specialised functions simultaneously.
ii. Selecting the right candidates suitable for the jobs is a rigorous process.
iii. Identifying the right source from where the candidates can be recruited is a challenge.
iv. Arranging for training the personnel in the skills required as per the job.

The following steps must be taken to perform the job efficiently.

i. A proper staffing plan must be formulated so as to estimate the present as well as future human resource requirements.
ii. The qualifications required for various jobs must be pre-decided.
iii. An assessment test must be developed to screen the potential candidates.
iv. The job should be advertised well so as to attract potential candidates.
v. A proper selection test and interview must be conducted.  

13Q- K&K is engaged in manufacturing machine components.The target of production is 200units daily.The company had been successfully attaining this target until two months ago,Over the last few months it has been observed that daily production varies between 150-170uniys.Identify the possible causes for the decline in production and the steps to be taken to achieve the desired targets.
Ans- The possible causes for decline in production are:
i) There may be some defect in machinery by which the components are produced.
ii) Employees are not performing efficiently.
iii) Sometimes employees may become lethargic.

The company can take the following steps to achieve the desired results:
i) If they are unable to achieve target due to defect in machinery, company can replace the machinery or get it repaired.
ii) If employees are not performing efficiently, the company can give training to their employees.
iii) If employees are becoming lethargic, the company needs to keep a close supervision on their employees.
14Q-  “Controlling requires a systematic process” Explain 
Ans- Controlling requires a systematic process. Controlling is a systematic approach of managing and controlling the organisational actions. The following are the steps involved in the controlling process.
(i) Setting Standards 

Setting up of standards involves developing the benchmarks against which the actual performance is to be measured. The standards can be set in qualitative as well as quantitative terms. Qualitative benchmarks can be in the form of improving coordination in work, higher goodwill or increased motivation level of employees, etc. For example, to improve the motivation level among employees, standard can be set in terms of number of initiatives taken. Quantitative benchmarks can be in the form of sales targets, units to be produced or time to be spent on a particular action, etc. For example, in a shirt factory completing 10 pieces a day is a quantitative target. The standards that are set should be such that they facilitate easy comparison. 

(ii) Measuring Actual Performance 

Once the standards are set, the next step is to measure the actual performance of the activities. This may be done through various techniques such as personal observation, checking the sample, performance reports, etc. The checking should be done in an exact and reliable manner so that correct measurement is taken for comparison. Measurement can be done after the completion of an activity as well as while it is in progress. For example, while assembling small parts of a bigger machine, the parts can be checked before assembling. This would ensure the continuous monitoring of the small parts as well as the final machine.

(iii) Comparing the Performances 

Performances once measured are then compared with the set standards. Such a comparison helps in assessing the deviations in the work. Thereby, it guides the managers in taking the necessary steps so as to improve the performances. These comparisons are easier when they are in quantitative terms. For example, efficiency in work in terms of cost incurred can be measured against the standard cost. 

(iv) Analysing Deviation 

Every organisation faces deviations when comparing the actual performance with the pre-developed standards. Thus, it is important to find the deviations that are in the permissible range. It is said that deviations in key areas should be attended first. For analysing the deviations the managers generally use 'Critical Point Control' and 'Management by Exception'. .

• Critical Point Control: An organisation cannot keep a check on all the activities of the management. Thus, this technique of controlling aims at focussing on only the key result areas (KRAs) that affect the entire organisation. For example, rise in input cost would be more important than rise in stationary cost.

• Management by Exception: This technique of management is based on the belief that 'an attempt to control everything results in controlling nothing'. According to this, only the essential and significant deviations that are beyond the acceptable limit should be controlled. For example, if there is a 6 per cent rise in labour cost whereas the permissible limit is just 3 per cent, then, this should be immediately brought into the notice of the management. On the other hand a 2 percent rise in the cost can be ignored. 

Once the deviations are recognised, it is necessary to acknowledge the cause for it. There can be a number of elements causing deviations in work such as infeasible standards, deficiencies in process, under utilisation of resources, changes in business environment, etc. Thus, it becomes important for the management to take into regard the causes for the concerned deviations.

(v) Corrective Measures 

When deviations go beyond the admissible limits, there arises a need for the management to take corrective actions. This is the last step of controlling which aims at correcting the deficiencies of the organisation so that the errors do not occur again. For example, if the production target was not met duly, appropriate corrective actions such as training the workers or updating the machinery for working, etc. can be taken. 
15Q- Directors of Ltd manufacturing mobile have asked the production manager to achieve the target production of 150 mobile per day .the production manager have asked his foreman to achieve his target but he did not give him the authority of using the material from stored departments .the foreman could not achieve the target. Can the director blame the production manager and can the production manager blame his foreman for not achieving the target. Explain with reason.
Ans- Yes, the director can blame the production manager. This is because by passing the work to foreman, the production manager cannot escape from his responsibility and accountability.

The production manager cannot blame the foreman for not achieving the target. This is because foreman was not given authority of using the material from stored departments. It must be noted that authority and responsibility moves hand to hand. If a person do not have sufficient authority, he cannot be held responsible for not achieving the target.

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