Bihar Board 12th Business Studies Important Questions Long Answer Type Part 1

Bihar Board 12th Business Studies Important Questions Long Answer Type Part 1 are the best resource for students which helps in revision.

Bihar Board 12th Business Studies Important Questions Long Answer Type Part 1

Question 1.
Explain the advantages of training of employees and enterprise.
Answer:
Advantages of training of employees:

• Job satisfaction: An employee can find foil satisfaction when he is skillful in his work. So skillness is very necessary for training.
• Minimum accidents: A skillful worker knows that how does operate machinery. This quality can be get by training.
• Increase in capacity and efficiency: Training docs improved capacity and efficiency of workers. A trained workers can be given more output than untrained workers.
• Better chances of promotion: Trained workers get promotion very soon. So training is very necessary for workers (employees).

Advantages of Training of Enterprise:

• Improvement in quality and quantity of output: The quality and quantity of goods can be improved by training. Because it does reduce cost of production,
• No requirement of supervision: Trained employees become skillful in their work. So their is no specific need of supervision.
• Full utilisation of resources: Natural resources are very limited. Trained employees can be full and good use of these for business enterprise. So training of employees is necessary for business concern.

Other advantages:

• Increase in national income
• Increase in per capita income
• Increase in standard of living of society
• Development of society
• Increase in moral.

Question 2.
Every manager has to take three major decisions while performing the finance function. Explain.
Answer:
(i) Investment decision: It relates to as how the funds of a firm are to be invested into different assets, so that the firm is able to cam highest possible return for the investors. Investment decision can be long term, also known as capital budgeting where the funds arc committed into long term basis.

Short term investment decision also known as working capital decision and it is concerned with the levels of cash, inventories and debtors.

(ii) Dividend decision: It relates to decision regarding distribution of dividend. The decision taken is as to how much dividend is to be retained in business and how much should be distributed to shareholders, after taking into account various factors affecting it.

(iii) Financing decision: It refers to the determination as to how the total funds required by the business will be obtained from various long term sources. Tong term financial sources chiefly include equity share capital, preference share capital, retained earning, debenture, long term loan, etc.

Question 3.
How functional structure differs from a divisional structure?
Answer:
Difference between functional structure and divisional structure:

Basis	Functional structure	Divisional structure
1. Nature	Focus on functions such as production, marketing and finance.	Focus on products or product lines.
2. Type of specialisation	Specialized treatment to each function.	Specialized treatment to each product and to each function within the division.
3. Structure	Simple structure	Complicated structure
4. Authority	Concentration of authority at the top level of the enterprise.	Decentralisation of authority at the divisional level.

Question 4.
State objectives of contolling.
Answer:
The following are the important objects of controlling:

• To direct the activities according to planning.
• To find out deviations and try to remove these deviations.
• Proper and symmetrical use of factors of production.
• To motivate employees.
• To establish co-ordination between objects, means and efforts of the organisation.
• To make decentralisation and delegation of authority successful.
• To get the knowledge regarding quality, cost and time of work performed.
• The main object of controlling activity is not to create hurdle but to maintain flow in activities of the business.
• To stop wastage and to minimise the cost.
• To know the progress of the activities on the basis of standards fixed.

Question 5.
Co-ordination is the essence of management. Do you agree with this? Give reasons.
Answer:
Co-ordination is the Essence of Management: Co-ordination is regarded as the very essence of management. A manager seeks to achieve co-ordination through the basic functions of management i.e. planning, organising, staffing, directing and controlling. As a matter of fact, performance of any of these functions is an exercise in co-ordination.

In the words of GR. Terry, “Co-ordination deals with the task of blending efforts in order to ensure successful attainment of an objective. It is accomplished by means of planning, organising, actuation and controlling.”

(i) The planning function facilitates co-ordination by properly integrating various plans through discussion and exchange of ideas. The plans of different departments are co-ordinated for preparing the piaster plan. There should also be co-ordination between the objectives and available resources.

(ii)While organising, there should be a co-ordination between the authority and responsibility of every individual. Same work should not be assigned twice.

(iii) While staffing, co-ordination is achieved by balancing the skills and abilities of the employees with the jobs assigned to them.

(iv) While directing the function of co-ordination is achieved. The very essence of giving orders, instructions, guidance to sub-ordinates means co-ordination of their activities in such a manner that enterprise objectives are achieved efficiently.

(v) While undertaking controlling, a manager assesses the performance of sub-ordinates against the prescribed standards. Remedial measures are taken if performance is less than the standards.

Question 6.
Describe the nature of principles of management.
Or, State the features of principles of management.
Answer:
Following are features which indicate the nature of principles of management.
(i) Universal: The principles of management are universally applicable to alt types of organizations, business, social, political, religious, etc. They are applicable to any kind of organisation whenever there is a need of co-ordinated effort of human being.

(ii) Flexible: The principles of management are flexible guides and provide ample scope for taking into consideration the requirement of a given situation, the principles of management are applied in the light of changing conditions and special situations.

(iii) Evolutionary: The principles of management are developed on the basis of organized quantitative fact or from the accumulated experiences.

(iv) General guidelines: Principles of management arc general guidelines to action and do not provide readymade solutions to managerial problems. Management principles are subject to many limitations since human behaviour is unpredictable and complex.

(v) Mainly behavioural Management principles aim at infiuencing human behaviour in an organization so that people give their best to the organization.

(vi) Contingent: The application of principles of management is dependent upon the prevailing situation at a particular point of time. The application of principles has to be changed according to circumstances.

Question 7.
Management is considered to be both an Art and Science, Explain.
Answer:
Management as an art and Science: It is a matter of discussion whether management should be regarded as a science or an art or both. For this purpose, we have two different views, as given below:

Management as a Social Science: Science is a systematically organised body of knowledge based on proper findings and exact principles and is capable of verification. The generalisations are made on the basis of empirical studies and so they may be applicable studies and so they may be applicable in future also.

In order to be recognised as science, a subject should have the following characteristics:

• A systematised body of knowledge including concepts, principles and theories.
• It should establish cause and effect relationship.
• Methods of enquiry should be scientific.
• Principles should be variable and universally applicable.

Like other social science, management is also related with human beings and it is not an exact science like physics or chemistry. Though inexact, management, like body of knowledge; its practice depends on cause and effect relations; and not on the personal likes and dislikes of managers, Principles of management, as in the case of science, are also derived from observations and experiments.

Management as an art: Art is concerned with the application of knowledge and skills. Desired results are achieved through the application of skill, thus an art has the following characteristics:

• It signifies practical knowledge.
• It signifies personal skills in a particular field of human activity.
• It helps in achieving desired/predetermined results.
• It is creative in nature.

Management is also an art since it involves application of knowledge and personal skills to achieve desired results. Every manager has to apply certain knowledge and skills while dealing with the people to achieve the desired results. As an art, management cells for a group of abilities, skills and judgement and a continuous practive of management concepts and principles.

From the above discussion, it is clear that management is both a science and an art.

Question 8.
What is planning? Explain in features.
Or, “Plainning is looking acead” Explain this statement and state any five features of planning.
Or, What are the features of planning?
Answer:
Meaning of planning: Planning is the process of thinking before doing. It involves determination of goals as well as the activities required to be undertaken to achieve the goals. Planning may be defined as deciding in advance what is to be done in future, In the planning process, managers anticipate the future and accordingly decide what activities must be undertaken. More specifically, planning consists of deciding in advance what to do, when and by whom.

Features of planning: The planning function of management has certain special features which throw light on its nature and scope. The features of planning are enumerated as follows:
1. Planning is goals oriented/Provides direction: Organisations are set up with a general purpose in view. Specific goals are set our in the plans along with the activities to be undertaken to achieve the goals, thus, planning is purposeful. Planning has no meaning unless it contributes to the achievement of predetermined organisational goals.

2. Primacy of planning: Planning lays down the base for other functions of management, all other managerial functions are performed within the framework, of plans drawn. Thus, planning proceeds other functions. This is also referred to as the primacy of planning. The various functions of management are interrelated and equally important. However, planning provides the basis for all other functions.

3. Planning is pervasive: Planning is required at all levels of management as well as in all departments of the organisation. It is not an exclusive function of top management nor of any particular department. But the scope of planning differs at different levels and among different departments, for example, the top management undertakes planning for the organisation as a whole. Middle management does the departmental planning.

4. Planning is flexible/works on a changing enviroment: Plans are drawn on the basis of forecasts. Since the future is uncertain, planning must cope with changes in future conditions. Activities planned with certain assumptions about the future may not come true. Under the circumstances the original plan of action must be revised in the light of changing conditions. for example, suppose a firm has planned to sell 2,000 TV sets during 2007 in a particular area and that area is affected by flood.

The company will have to change its plan and prepare itself to achieve the sales target elsewhere. In practice, new situations emerge quite often and quite unexpectedly. to meet these, managers must make changes in the existing plans.

5. Planning is a continuous process: Plans arc prepared for a specific period of time, may be for a month, a quarter, or a year. At the end of that period, there is a need for a new plan to be drawn on the basis of new requirements and future conditions. Hence, planning is a never ending activity. It is a continuous process, continuity of planning is related with planning cycle. It means that a plan is framed, it is implemented and is followed by another plan and so on.

6. Planning is futuristic: Planning essentially involves looking ahead and preparing for the future. The purpose of planning is to meet future events effectively to the best advantage of an organisation. It implies peeping into the future, analysing it and predicting into the future, analysing it and predicting it. Planning is, therefore, regarded as a forward looking function based on forecasting. Through forecasting future events, conditions are anticipated and plans are drawn accordingly. Thus, For example, sales forecasting is the basis on which a business firm prepares its annual plan for production and sales.

7. Planning involves choice/decision-making: Planning essentially involves choice from among various alternatives and activities. If there is one possible goa of only one possible course of action, there is not need for planning because there is no choice. The need for planning arises only when alternatives are available. In actual practice, planning presupposes the existence of alternatives. Planning thus involves thorough examination and evaluation for each alternative an choosing the most appropriate one.

8. Planning is a mental exercise: Planning requires application, of the mind involving foresight, intelligent imagination and sound judgement. It is basically an intellectual activity of thinking rather than doing because planning determines the action to be taken: However, thinking for planning requires logical and systematic thinking rather than guessing or wishful thinking. In other words, thinking for planning must be orderly and based on the analysis of facts and forecasts.

Question 9.
Briefly explain the techniques of Taylor’s scientific management.
Or, Explain any five techniques of ‘Scientific Management’.
Answer:
Following are the techniques of scientific management:
(i) Time Study: It is work measurement technique which is designed to establish the time for a qualified worker to cany out a specified task under specified conditions at a defined rate working. The object of time study is to determine the number of workers to be employed and to frame suitable incentive schemes.

(ii) Motion Study: It aims to Study the workers and machines so as identify and eliminate unnecessary and wasteful motions.

(iii) Standardiszaion: Standardization is a means of achieving economy of production by ensuring that the line of product is restricted to predetermined weight quality, etc, Standards are established as regards quality of manufactured goods and standards of performance are established for the workers ate all levels.

(iv) Functional Forcmanship: Functional foremanship is based on specialization of functions, under functional foremanship, two functions planning and doing are separated. The function of planning should be left to the production planing department comprising expert in different fields. At the factory, workers should only concentrate on carrying out the plans handed out to them.

(v) Differential Piece rate plan : Under this system, efficient workers are paid at a higher rate than the inefficient workers and workers are paid on the basis of number of pieces produced.

Question 10.
Explain any five limitations of planning.
Or, ‘In spite of best effort of managers sometimes planning fails due to its limitations.’ Explain any five such limitations of planning.
Answer:
Following are the limitations of planing:
(i) Planning is an expensive process: Planning depends on an effective system of feedback, transmitting necessary data collection and analysis of data and evaluation of various courses of action. It results in heavy expenditure.

(ii) Planning is a time-consuming process: Planningrequired collection of information, its analysis and interpretation. These activities take considerable time and planning is not practicable when quick decisions are to be made.

(iii) Planning results in rigidity: Planning implies prior determination of policies and procedures while business environments dynamic. This prevents managers from taking initatives and from doing innovative thinking. Blind conformity with pre-determined rules and procedures promotes red-tapism and delay in the performance of work.

(iv) Effectiveness of planning is limited due to external factors: External contingencies are beyond the control of planners and are very difficult to be forecasted. Wat, Government control, natural havocs like flood, political climate, bahaviour of trade unions, technological changes, etc, make the implementation.

(v) Planning creates a false sense of security: Planning may create a false sense in the organization that everything is well taken care of by the plans. A manager may feel that once the plans are formulated, action will automatically be efficient. As a result, he fails to take timely decisions.

Question 11.
Explain why planning is necessary for effective management? Give reasons.
Or, Explain any five points of importance of planning for a large business enterprise.
Or, Why planning is needed?
Answer:
Planning is important for better management of business planning. It determines the objective, decides the course of action, removes uncertainty, the results in economics in operation and makes control possible. Its importance is analysed as below:

(i) Takes care of future uncertainties: The future is full of uncertainties. Planing takes care of all future uncertainties and minimizes business risks since it makes an effective use of forecasting techniques.

(ii) Focuses attention on objective: All planning is directed towards achieving the objectives of an enterprise. Planning makes these objectives more concrete and tangible by determining the programmes, policies and procedures which provide guidelines to the employees to achieve these objectives.

(iii) Facilitates decision-making: Decision-making is the core of planning. It is the process of developing and selecting a course of action from among the various alternatives available. Planning provides a framework for decision making by specifying the organizational objectives and planning premises.

(iv) Facilitates control: Controlling is the process that measures current performance against desired standards to ensure that the objectives are attained according to plans. Control is always exercised in the light of planning which provides performance standards in quantitative terms.

(v) Promotes efficiency: Proper planning ensures better utilization of organizational resources, Planning involves the selection of the best or most profitable course of action. This reduces idle time for worker, machines and so on.

(vi) Helps in co-ordination: Planning is necessary for the organization as a whole. Derivative plans are prepared for each department within the limits of the master plan.Thus, planing leads to co-ordination of activities of all the departments in order to achieve the basic objective of the organization.

Question 12.
What do you mean by marketing mix? Discuss its elements.
Answer:
Marketing mix: Marketing mix refers to the tools which the marketeer mixes in order to interact with a particular market.

Marketing mix is the combination of different marketing decision variable being used by a firm to market its goods and services. The environmental influences are uncontrollable elements whereas the ingredients of marketing mix are controllable elements. The blend or combination of these ingredients constitutes the marketing mix and this marketing mix is expected to be in tune with the environmental influences.

Following are the main definitions of marketing mix given by some eminent experts:

1. “Marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market.” -Philip Kotler
2. “The policies adopted by manufactures to attain success in the market constitute the Marketing mix.” -R.S. Davar
3. “The marketing mix is composed of a larger battery of advices which might be employed to include customers to buy a particular product. -Keeley and Lazar
4. “The firm’s task is to find the best setting for its marketing decision variables. The setting constitute its Marketing-mix.” -Philip Kotler

The marketing-mix can be regarded as the core of the company’s marketing system. Kotler has defined it as “the set of controllable variable that the firm can use the influence the buyer’s responses.”

The concept of marketing mix, according to Burden, consists of (i) a list of the important elements or ingredients that make up the marketing programmes; and (ii) a list of the forces that bear on the marketing operations of a firm and to which the marketing manager must adjust in his search for a mix or programme that can be successful.

Every business enterprise has to determine its marketing mix for the satisfaction of needs of the customers. Marketing mix represents a blending of decision in four areas-product, pricing, promotion and physical distribution. These elements are inter-related because decisions in one area usually affect actions in the others.

The basic purpose of determining the marketing mix is to satisfy the needs and wants of the customers in the most effective and economical manner. As the needs of the customers and environmental factors change, the marketing mix also changes. Thus, marketing mix is a dynamic concept. It concentrates on how to satisfy the needs of the customers. If the needs of the customers change, the marketing mix will also be changed. The customer is the point around which all organisational activities revolve.

Elements of Marketing mix: E. J. McCarthy given four elements of marketing mix. These include: 1. Product, 2. Price, 3. Promotion, and 4. Place or Physical Distribution. These elements are popularly called the “Four Ps” of marketing-mix. In each of the elements, decisions are taken as regards certain sub-elements. For instance, in product area, decisions are taken as regards product range and quality, branding, packaging and labelling, after sales services, etc. These elements constitute the product mix of the firm. In the same manner, each firm has to determine its price mix, promotion mix and place mix. As a matter of fact, marketing mix is a mix of product mix. price mix, promotion and place mix.

The element of marketing mix arc briefly discussed below:
1. Product: It involves planning, developing and producing the right type of products and services to be offered by the firm to the customers. It deals with the product range, durability, branding, packaging, colour and other features.

2. Price: The marketing manager should determine the price in such a way that the firm is able to sell its products successfully. The price of the product must cover its cost of production and distribution and also a reasonable margin of profit. Pricing also involves establishing policies regarding credit and discount. The variables that vitally influence princing are demand for the product in question, its cost, actual and potential competition and Government regulation, etc.

3. Promotion: It deals with informing the customers about the firm’s product and persuading them to purchase the same. It involves personal selling, advertising, publicity and sales promotion. Taken together, these elements constitute the promotion-mix of the firm. A brief description of the elements of promotion is given below:

(i) Personal selling of salesmanship: n includes activities both inside and outside the firm conducted on a person-to-person basis with the buyers. It involves oral presentation of the product to the prospective customers.

(ii) Advertising: It appeals to customers through impersonal media like radio, television, newspapers and magazines. Compared, with personal selling which involves personal contact with a customer, advertising is used to communicate simultaneously to a large number of people.

(iii) Publicity: Publicity may be defined as any form of non-paid significant news or editorial comment about ideas, products or institutions in the mass media like newspapers, radio and T. V. It appears primarily in the form of news stories and differs from advertising in that the latter is a paid medium of promotion.

(iv) Sales promotion: It Includes all promotional activities other than personal selling, advertising and publicity that are intended to increase sale of a product. The examples are distribution of samples, discount coupons, freebies, contests, window display, etc.

4. Place or physical distribution: Place in the context of marketing mix refers to a set of decisions that need to be taken in order to make the product available to the customers for purchase and consumption. It involves physical handling and movement of goods from place of production to the place of consumption.

Question 13.
What actions can be taken to make planning more effective?
Or, State any six qualities of a good plan.
Or, Explain the characteristics of a sound plan.
Answer:
Following are the six qualities of a good plan:

• Clear-cut goals and objectives: There should be clear-cut goals and objectives. They must be capable of being converted into specific targets and assignments.
• Resonable: A plan should have reasonable but challenging and achievable targets.
• Sound communication: For implementation of plans, it is necessary to have sound communication system so that plans are communicated clearly and in time.
• Flexible: A plan should be flexible. A plan should not be so inflexible that it cannot be changed when need arises. A plan should be flexible enough to keep the organization in tune with the times.
• Periodic review: A plan should be reviewed periodically. A Plan should be scrutinized at regular intervals to find out their relevance.
• Written: As far as possible, plan should be precise, clear and written. A written plan becomes more specific and clear and. leaves no room for misinterpretation.

Question 14.
What is the meaning of formal organization? State the features of formal organization.
Answer:
Formal organization signifies pre-determined relationships, designed by the top management of the company where superiors and subordinates are linked through duties and authorities and are bound by rules and regulations.

Features of formal Organization:
(a) Creation of management: These are conceived and created after deliberation at top management. These represent official blueprint of an organization.

(b) Division of labour and specialization: Dividing activities among different levels of managers create formal organigation. It tries to rationally distribute work amongst managers. By assigning job to different managers, benefits of specialization are ensured.

(c) Involve rules and procedures: Formal organization follows certain rules that every manager has to abide by. They also prescribe Procedures to perform duties assigned. Rules and procedures are predetermined. These do not change frequently.

(d) Clarifies roles: While delegating authority role of each manager and limits with which he has to work are clearly laid down. These specify the domain or area of authority of every manager.

Question 15.
Define the staffing process and the various steps involved in it.
Answer:
Staffing is the process involved in identifying, assessing, planning, evaluating and developing individuals at work. In other words, staffing may be defined as the managerial function of hiring and developing the required personnel to fill in various positions in the organization.

Steps involved in Staffing Procedure:

(i) Manpower planning: It tries, to assess the manpower requirements in advance keeping the production schedule, market fluctuations, demand forecasts, etc, in the background, It is a part of the overall corporate plan.
(ii) Job Analysis: Itis the careful study of each job to determine the following:

• Tasks and responsibilities involved in a job.
• Relation of one job to other.
• Conditions under which job performance is carried on;and
• Personal capabilities of jobholder must possess for its satisfactory performance.

(iii) Recruitment: It includes right candidates to fill the positions in the organization, structure: This makes it easier to recruit suitable candidates from outside:
(iv) Selection
(v) Placement and orientation
(vi) Training
(vii) Performance appraisal
(viii) Promotion and carrier planning
(ix) Compensation
(x) Separation

Question 16.
Explain the procedure for selection of employees.
Or, State the steps involved in the process of “Staffing”.
Answer:
Following are the steps involved in the selection of employees:
(i) Preliminary screening: The first step is to eliminate the unsuitable candidates based on the information supplied in the applications. The preliminary interview may also be held for this purpose.

(ii) Selection tests: Following tests are undertaken to measure the characteristics of the candidates required for the job:

• Intelligence tests
• Aptitude tests
• Trade tests
• Intrest tests
• Personality tests,

(iii) Interview: Selection interview consists of conversation between candidate and the employer. Its aim is to have an overview of the candidates ability for the job.

(iv) Physical examination: Successful candidates are required to undergo physical examination by medical practitioner. Its aim is to assess the health of candidates in accordance with the requirements of the jobs.

(v) Reference checks: References give detailed information about candidate’s capabilities. From reference, a lot of information is recieved about a candidate.

(vi) Selection decision: Now final decision has to be made from among the candidates who pass the tests, interviews and reference checks.

Question 17.
Briefly explain the different methods of training.
Or, Discuss, in brief, any three methods of training.
Answer:
Methods of Training: In different methods of imparting training to workers are as follows:
(i) Vestibule Training: In this method, workers are trained in a separate workshop away from the job place but the working conditions are some chat similar to that of the actual job place. This is generally used for training employees on sophisticated modem equipment and machinery involving high investment.

(ii) Job Rotation: Under this method, an individual is transfered from one job to another and from one department to other so that they get the knowledge of all types of job in the organization. This type, of training is suitable for newcomers to make them aware of various aspects of job.

(iii) Internship: This programmes is a combinatiuon of theory and practice. It involves practical knowledge of theoretical knowledge. Normally, students of professional courses are imparted such kind of training like in Chartered Accountancy.

(iv) Promotional Training: This type of training is imparted to on existing employees to prepare them for higher post in the organization.

(v) Refresher course: In order to acquaint old employees with latest development in the industry market and production and management techniques courses arc organized to refresh them to meet the challenge of the work.