Business Studies Mock Test - 2

The correct answer is Disciplining employees

Key PointsManagement is required for an established life and essential to managing all types of management. Sound management is the fortitude of thriving companies. Managing life implies getting everything done to accomplish life’s aspirations and maintaining an establishment means getting everything done with and by other people to deliver its objectives.

Importance of Management

1. Management Helps Achieving Group Goals It integrates the objective of individual along with organisational goal.
2. Management Increases Efficiency It increases productivity through better planning, organising, directing the activities of the organisation.
3. Management Creates a Dynamic Organisation Organisation have to survive in dynamic environment thus manager keep changes in the organisation to match environmental changes.
4. Management Helps in Achieving Personal Objectives Through motivation and leadership, management helps in achieving the personal objectives.
5. Management Helps in the Development of Society It provides good quality products and services, creates employment, generate new technology in that sense it helps in the development of the society.

The correct answer is All of the above

Key Points

• Management as an Art::Art is the experienced and personal utilisation of subsisting information to accomplish solicited outcomes.
• It can be procured via education, research and practice.
• As art is involved with the personal utilisation of data some kind of inventiveness and creativity is needed to follow the fundamental systems acquired.

The essential characteristics of art are as follows:

• The presence of theoretical knowledge:
• Art assumes the presence of specific academic knowledge. Specialists in their particular fields have obtained specific elementary postulates which are appropriate to a specific sort of art. For instance, the literature on public speaking, acting or music, dancing is publicly acknowledged.
• Personalised application:
• The application of this primary information differs from person to person. Art, hence, is a highly personalised notion
• Based on custom and creativity:
• Art is practical. Art includes the creative practice of subsisting intellectual knowledge. We know that music is based on 7 notes. However, what makes the style of a musician different or distinctive is his performance of these notes in an artistic way that is uniquely his own solution

The correct answer is All of the Above

Key Points

• Management is the process by which a co-operative group directs actions of others toward common goals.” Management is defined as the process of planning, organizing, and controlling an organization's operations in order to achieve the target efficiently and effectively.

Objectives can be categorized into organizational objectives, social objectives, and personal or individual objectives.

Organizational Objectives: 

• Management is accountable for establishing and attaining objectives for the company.
• It has to deliver a variety of objectives in all operations contemplating the interest of all shareholders including, stakeholders, consumers, the government, and employees.
• The principal objective of any company must be to use material and human resources to the maximum potential benefit, i.e., to meet the financial objectives of a firm. And, they are survival, profit, and growth
• Survival: The essential objective of any industry is survival. Management must attempt to assure the continuation of the business. In order to survive, an industry must gain enough funds to meet the costs that would be incurred.
• Profit: Poor survival is not sufficient for the industry. Management has to make sure that the company earns a profit. Profit contributes to a necessary catalyst for the sustained successful performance of the firm. Profit is crucial for meeting the costs and uncertainties of the business concern.
• Growth: A firm requires to add to its chances, in the long run, for this it is necessary for the concern to develop. To prevail in the business, management must utilise adequately the growth potential of the firm.

Social objectives:

• It includes the establishment of benefits for the community.
• As a part of the community, every business whether it is a trade or non-trading concern has a social responsibility to meet.
• This applies to consistently generating financial value for many components of society.
• This includes using environmentally beneficial technologies of production, providing job opportunities to the disadvantaged sections of the community, and furnishing primary facilities like crèches and schools to employees.

Personal Objectives:

• Establishments are made up of resources who possess different backgrounds, experiences, objectives, and personalities.
• They all become part of the establishment to meet their several demands.
• These differ from economic necessities such as ambitious perks and salaries, social obligations such as equal attention, and higher-level demands such as individual growth and progress.

The correct answer is All of the above

Key Points

• Organising is that function of business management that deals with identifying and grouping different activities in the organisation. 
• it also deals with bringing together the physical, financial, and human resources required and established to achieve organisational goals. 
• As per Fayol, “To organise a business is to provide it with everything useful to its functioning; raw materials, machines and tools, capital and personnel.”

Importance of organising:

• Benefits of specialization:
• Since a portion of the total work is allocated to each worker and not the entire job or assignment, the division of work into smaller units and repetitive output contributes to specialization, which therefore encourages specialization. In turn, specialization leads to productive & rapid task efficiency.
• The clarity in working relationships:
• Organizing is essential because it helps to build well-defined roles and also to explain the boundaries of each job’s authority and obligation.
• Optimum utilisation of resources:
• Proper job allocation prevents job overlap/duplication, which helps prevent confusion and minimise waste of resources and efforts.
• Adaptation to change:
• Organising indeed enables a well-designed organizational structure that is flexible and facilitates adjustment to changes in workload caused by technology, products, resources and markets-related changes in the external environment.
• Effective administration:
• Organizing provides a clear description of jobs and related tasks that helps to avoid confusion and duplication, and this clarity in working relationships allows work to be properly executed, resulting in effective management.
• Development of personnel:
• On the part of the staff, the sound organization encourages initiative and relative thinking.
• It reduces their workload when managers delegate their authority to concentrate on more important growth & innovation issues. 
• Expansion and growth:
• good organising also contributes to an enterprise’s growth & diversification by adding more jobs, departments, line managers, product lines, new geographical territories, etc.

The correct answer is None of the Above

Key Points

• Organising includes appointing assignments, gathering tasks into offices, designating authority, and distributing assets across the association.
• During the organising process, administrators coordinate employees, assets, procedures, and policies to work with the objectives distinguished in the plan.

Process of Organizing:
Organizing involves assigning responsibilities, grouping them into offices, delegating power, and distributing assets throughout the organization.
During the organizational operations, administrators organize employees, assets, processes, and regulations to work with the plan's goals.
The organizing process involves the following steps:

1. Identification of Objectives and Activity Division
2. Identifying and categorizing job tasks
3. Activity grouping.
4. Gathering Human as well as Material Resources
5. Establishing Power and Responsibility
6. Creating a Relationship Structure
7. Establishing the Control Span and Decentralization
8. Teamwork.
9. Offering Physical Facilities as well as an Appropriate Environment
10. Formation of a Structural Connection for Overall Control Examining and Reorganisation

The correct answer is Investment decision

Key Points

• Investment Decision
• Resources are scarce and can be put to alternate use. A firm must choose where to invest so as to earn the highest possible profits.
• Investment decision relates to decisions about how the firm‘s funds are invested in different assets that is, different investment proposals

Investment decision has two components:

• Working Capital Decisions – Short Term investment decisions.
• Capital Budgeting decisions – Long Term investment decisions

Factors affecting Investment Decisions/Capital Budgeting decisions

• Cash flows of the project:
• The series of cash receipts and payments over the life of an investment proposal should be considered and analyzed for selecting the best proposal.
• Rate of Return:
• The expected returns from each proposal and risk involved in them should be taken into account to select the best proposal.
• Investment Criteria Involved:
• The various investment proposals are evaluated on the basis of capital budgeting techniques. These involve calculation regarding investment amount, interest rate, cash flows, rate of return etc.

The correct answer is If the demand for a product is inelastic

Key Points

• Pricing in marketing is a process by which businesses decide on a specific price for their products and services.
• The price for products and services takes into account many different factors in order to accurately reflect accurate market value. Pricing is an extremely integral part of marketing.
• The price you charge for your product or service is one of the most important business decisions you make.
• Setting a price that is too high or too low will at best - limit your business growth. At worst, it could cause serious problems for your sales and cash flow.
• consider your pricing strategy before you start. Established businesses can improve their profitability through regular pricing reviews.
• When setting your prices you must make sure that the price and sales levels you set will allow your business to be profitable. You must also take note of where your product or service stands when compared with your competition.
• Inelastic demand is when a buyer’s demand for a product does not change as much as its change in price. When price increases by 20% and demand decreases by only 1%, demand is said to be inelastic.

Pricing strategy takes into account some of the following business factors:

1. Target profit margin
2. Revenue goals
3. Target audience
4. Product or service competition
5. Product life-cycle
6. Economic trends

The correct answer is Promotion

Key PointsPromotion:

• Promotion is the process of making the customers aware of the product by presenting it to customers across various channels of promotion and entice them to buy the product.
• The major channels of promotion are: advertising, media, personal selling and promotion (publicity). An ideal promotion mix will be a combination of all or some methods

Elements of Marketing Mix

Product in Marketing Mix:

• A product is a commodity, produced or built to satisfy the need of an individual or a group.
• The product can be intangible or tangible as it can be in the form of services or goods.
• It is important to do extensive research before developing a product as it has a fluctuating life cycle, from the growth phase to the maturity phase to the sales decline phase.
• A product has a certain life cycle that includes the growth phase, the maturity phase, and the sales decline phase.
• It is important for marketers to reinvent their products to stimulate more demand once it reaches the sales decline phase.
• It should create an impact in the mind of the customers, which is exclusive and different from the competitor’s product.
• There is an old saying stating for marketers, “what can I do to offer a better product to this group of people than my competitors”. This strategy also helps the company to build brand value.

Price in Marketing Mix:

• Price is a very important component of the marketing mix definition.
• The price of the product is basically the amount that a customer pays for to enjoy it.
• Price is the most critical element of a marketing plan because it dictates a company’s survival and profit.
• Adjusting the price of the product, even a little bit has a big impact on the entire marketing strategy as well as greatly affecting the sales and demand of the product in the market.
• Things to keep on mind while determining the cost of the product are, the competitor’s price, list price, customer location, discount, terms of sale, etc.,

Place in Marketing Mix:

• Placement or distribution is a very important part of the marketing mix strategy. We should position and distribute our product in a place that is easily accessible to potential buyers/customers.

Promotion in Marketing Mix:

• It is a marketing communication process that helps the company to publicize the product and its features to the public.
• It is the most expensive and essential components of the marketing mix, that helps to grab the attention of the customers and influence them to buy the product.
• Most of the marketers use promotion tactics to promote their product and reach out to the public or the target audience.
• The promotion might include direct marketing, advertising, personal branding, sales promotion, etc.

The correct answer is Staffing

Key Points

• Staffing is one of the essential functions of management that is concerned with acquiring, hiring, developing, motivating and retaining the best talent for achieving the goals of the organisation.
• Staffing is a process of keeping the best resources in an organisation that will result in accomplishing the objectives of the business.
• Staffing is essential as without proper human resources, the organisation will not perform as effectively and business will witness downfall.

Following are some of the points of importance of staffing

• Finding proper resources:
• Staffing performs a very important role of finding the best resource necessary for conducting the day to day operations of the business. In other words, staffing is the process of finding out the qualified resources for performing the various functions of the business.
• Facilitates control:
• An organisation where the staff are well trained in their respective jobs will result in better control and also better performance for the organisation. This reduces deviations in workflow and ensures smooth functioning of the business.
• Improved performance:
• Since the staffing process is all about selection of the right person for the right position, it greatly impacts the business performance by reducing the turnaround time.
• Provides motivation:
• By recognising the talent of the employee various financial and non-financial incentives can be provided by management. It will keep the employee motivated to provide the best effort towards the improvement of organisational performance.
• Reduction in cost of production:
• Staffing selects the appropriate candidate for the job role which results in reducing cost of production and also improves revenue of the organisation.

The correct answer is Scientific management

Key Points

F.W. Taylor or Fredrick Winslow Taylor, also known as the ‘Father of scientific management’ proved with his practical theories that a scientific method can be implemented to management.

• Taylor gave much concentration on the supervisory level of management and performance of managers and workers at an operational level.

The five principles of management by F.W Taylor.

Science, not the Rule of Thumb-

• This rule focuses on increasing the efficiency of an organisation through scientific analysis of work and not with the ‘Rule of Thumb’ method.
• Taylor believed that even a small activity like loading paper sheets into boxcars can be planned scientifically.
• This will save time and also human energy.
• This decision should be based on scientific analysis and cause and effect relationships rather than ‘Rule of Thumb’ where the decision is taken according to the manager’s personal judgement.

Harmony, Not Discord-

• Taylor indicated and believed that the relationship between the workers and management should be cordial and completely harmonious.
• Difference between the two will never be beneficial to either side.
• Management and workers should acknowledge and understand each other’s importance.
• Taylor also suggested the mental revolution for both management and workers to achieve total harmony.

Mental Revolution-

• This technique involves a shift of attitude of management and workers towards each other. Both should understand the value of each other and work with full participation and cooperation.
• The aim of both should be to improve and boost the profits of the organisation. Mental Revolution demands a complete change in the outlook of both the workers and management; both should have a sense of togetherness.

Cooperation, not Individualism-

• It is similar to ‘Harmony, not discord’ and believes in mutual collaboration between workers and the management.
• Managers and workers should have mutual cooperation and confidence and a sense of goodwill. The main purpose is to substitute internal competition with cooperation.

Development of Every Person to his Greatest Efficiency-

• The effectiveness of a company also relies on the abilities and skills of its employees. Thus, implementing training, learning best practices and technology, is the scientific approach to brush up the employee skill.
• To assure that the training is given to the right employee, the right steps should be taken at the time of selection and recruiting candidates based on a scientific selection.

The correct answer is Interrelatedness

Key PointsBusiness Environment is the most important aspect of any business. The forces which constitute the business environment are its suppliers, competitors, media, government, customers, economic conditions, investors and multiple other institutions working externally. 

Features of Business Environment

• Totality of external forces: Business environment is the sum total of all the forces/factors external to a business firm.
• Specific and general forces: Business environment includes both specific and general forces. Specific forces include investors, competitors, customers etc. who influence business firm directly while general forces include social, political, economic, legal and technological conditions which affect a business firm indirectly.
• Inter-relatedness: All the forces/factors of a business environment are closely interrelated. For example, increased awareness of health care has raised the demand for organic food and roasted snacks.
• Dynamic: Business environment is dynamic in nature which keeps on changing with the change in technology, consumer’s fashion and tastes etc.
• Uncertainty: Business environment is uncertain as it is difficult to predict the future environmental changes and their impact with full accuracy.
• Complexity: Business environment is complex which is easy to understand in parts separately but it is difficult to understand in totality.
• Relativity: Business environment is a relative concept whose impact differs from country to country, region to region and firm to firm. For example, a shift of preference from soft drinks to juices will be welcomed as an opportunity by juice making companies while a threat to soft drink manufacturers.

The correct answer is Authority

Key Points

• Delegation of authority refers to the transfer of authority from the level of supervisor to the level of subordinates.
• Delegation is the downward transfer of authority from the manager to the subordinate.
• Delegation of authority is important as the superior in an organisation is not able to manage all the work by himself.
• Delegation of authority helps the managers to focus on more important functions of the organisation that need to be taken care of on priority.
• Delegation is the transfer of responsibility which is less important and can be performed by the subordinates.
• This also brings a sense of responsibility to the work done by the subordinates and paves the way for growth of the subordinates.
• Transfer of authority to subordinates does not mean that the subordinate is accountable for the actions, it is the superior who will be accountable for all the actions. Only tasks that can be completed effectively by the subordinates are delegated without the actual transfer of accountability.

Elements of Delegation

• Delegation consists of the following elements.
• 1. Authority
• 2. Responsibility
• 3. Accountability

Authority:

• One of the essential elements of delegation is authority which is the power to complete an assigned task.
• Without authority a subordinate is unable to execute the task perfectly. In order to complete the task as is expected by the manager, the manager has to provide authority of executing that task to the subordinate.

Responsibility:

• Responsibility is another element of delegation which is assigning the subordinate a task that needs to be executed.
• When the superior assigns any task to the subordinate it becomes the obligation of the subordinate to perform that task with responsibility.
• The feeling of responsibility arises from the superior subordinate relationship where a subordinate is obliged to perform the job as assigned by the superior.

Accountability:

• Accountability element of delegation refers to the answerability of a subordinate to his superior for the job or task that is assigned.
• Accountability flows in an upward direction, which means the subordinate is accountable to the superior.
• Although the subordinate is accountable to the superior, the actual accountability of that task and its outcome rests with the superior as accountability is not transferred to the subordinate, it is just imposed till the time the task is completed

The correct answer is Job Evaluation

Key Points

•  Recruitment refers to the process of searching and attracting the required personnel for a job.
• It is the process of finding the potential candidates and instigating them to apply for the job.
• Recruitment refers  the overall process of identifying, sourcing, screening, shortlisting, and interviewing candidates for jobs (either permanent or temporary) within an organization.
• Recruitment can also refer to the processes involved in choosing individuals for unpaid roles

Disadvantages of External Sources of Recruitment are:

Limited Understanding of the Organisation

• When a candidate is chosen through an external recruitment process, there is a potential that he or she will have a limited awareness of the company's environment.

Existing Employees are Dissatisfied

• Existing personnel may be dissatisfied and frustrated as a result of external recruitment. They may believe that their chances of advancement have dwindled. When a corporation selects a new application for a senior job above existing prospects, there is a greater likelihood that present employees would display some type of internal conflict among company authorities.

Lengthy Procedure

• It takes a long time to recruit from outside sources. To begin the selection process, the company must announce the openings and wait for applications. External recruitment has a number of drawbacks, including the fact that it takes time because most organisations promote their open positions on the internet.

Expensive

• Recruiting personnel from outside sources is quite expensive. A significant amount of money must be spent on advertising and application processing. Because the majority of the external recruitment procedure deals with brand new candidates, organisations must devise a compensation scale for that candidate that reflects his or her aptitude and skill.

Risk

• There's a chance that the candidate chosen for the job isn't deserving of the position, and that he or she will take advantage of the company's predicament.

Recruits Wrong Candidates

• External advertising strategies are used on a broad scale through print media, attracting a high number of applications who are unfit for the job opening

The correct answer is All of the above

Key Points

• Communication is defined as the process by which information is exchanged between individuals through a system of signs, symbols.
• The concept of communication involves a sender, a message and a recipient.
• The sender sends the message and the recipient is the receiver of the message.
• The process of communication is never smooth as it is affected by the barriers of communication.
• Barriers to effective communication can result in confusion which can lead to incorrect information being conveyed or miscommunication which can lead to loss of business.

Following are some of the barriers to effective communication:​

Semantic barriers:

• Semantic barriers are also known as language barriers. These barriers are caused due to improper communication between the sender and the receiver. The following instances of semantic barriers can be witnessed in communication.

Poor quality of message:

• Message when communicated should be precise and easy to understand, that makes it easy for the receiver to grasp the information conveyed.Sometimes, due to the lack of clarity or complexity of the way of providing information from the sender, there can be a case of semantic barriers.
• For e.g. A manager is conversing in English to a group of workers who understand and speak Bengali. It will create confusion among workers as they will not be able to understand what is being conveyed by the manager.

Technical language:

• Language barriers also arise when the sender of the message is speaking in technical terms while the receiver is unaware of the terms. It creates confusion and misunderstanding between the sender and receiver by acting as a barrier to effective communication.

Psychological Barriers:

• Psychological barriers play an important role in interpersonal communication as the state of the mind of the sender or the receiver can make it difficult to understand the information that is conveyed, which often leads to misunderstanding.
• some instances where psychological barriers to communication can be seen.

1. Premature evaluation of information by the receiver even before it is transmitted can lead to barriers in communication, as it will create premature conclusion to the message, which withholds the original message.
2. Inadequate attention from the receiver’s end at the time of communication can lead to barriers of communication as the information conveyed by the sender is not properly received by the receiver.
3. When information is passed within multiple sources, the final information is distorted as the receivers of the message are not able to retain everything that was conveyed. This can cause communication barriers.

Organisational barriers:

• Organisational barriers are those barriers that are caused due to the structure, rules and regulations present in the organisation.
• The various types of barriers that can be encountered due to superior subordinate relationships where the free flow of communication is not possible.
• Sometimes the complexity of organisational structure and multiple managers make it difficult to convey information properly, and the information gets distorted leading to miscommunication.

Cultural barriers:

• Cultural barriers are those that arise due to lack of similarities among the different cultures across the world. A term that can be harmless in one culture can be regarded as a slang in another culture. Moreover, various beliefs can differ from one culture to another.

Physical barriers:

• Physical barriers to communication are those that arise due to certain factors like faulty equipment, noise, closed doors and cabins that cause the information sent from sender to receiver to become distorted, which results in improper communication.

Physiological barriers:

• Physiological barriers arise when a sender or the receiver of the communication is not in a position to express or receive the message with clarity due to some physiological issues like dyslexia, or nerve disorders that interfere with speech or hearing.

The correct answer is communication

Key Points

• Directing is one of the principal elements of management along with planning, organising and controlling.
• Directing is a very essential function which helps ensure that the employees perform to the best of their abilities and achieve the organisational goals effectively.
• The lack of a direction in an organisation will result in the employees being clueless about what to do next and will increase inefficiency, thereby resulting in a devastating impact on the business and revenue generation.

Elements of Directing
Directing as a management function comprises the following elements.

Communication:

• Communication is one of the most basic functions of management, it is the process by which a piece of information is transferred from one person to another in an organisation.
• The person who conveys the information is known as the sender and the one to whom the information is conveyed is known as the receiver.
• The purpose of communication in an organisation is to send across any set of instructions, orders or information related to the improvement of the operational efficiency.
• Communication is essential for conveying the state of performance of the employees and ways to improve them.
• Proper communication occurs when subordinates understand what was conveyed to them by the supervisor and act accordingly, whereas miscommunication occurs when the information conveyed is not clear and understandable, leading to misunderstanding and loss of performance.
• Communication can always be two sided, where the flow of information is from supervisor to subordinates and vice versa.

Supervision:

• Supervision is the next step after information is conveyed by the supervisor to the employees regarding the work that needs to be done.
• It is that stage where the supervisor oversees if the subordinates are following what has been instructed to them.
• Managers act as supervisors and they ensure that the work is going as per their instructions.
• It is the duty of a supervisor to make sure that all instructions are properly followed and the subordinates are doing as they are instructed.
• Supervisors act as problem solvers of the subordinates regarding any issues with the instructions or the process.

Motivation:

• Motivation is one of the key elements of directing. Issuing of order to the subordinates by the supervisor does not guarantee that it will be followed exactly as was asked for.
• For getting the desired outcome, the employees need to be motivated by the managers which leads to the task being completed efficiently.
• Motivation is a force that makes an individual perform to the best of his abilities in order to complete a set of tasks or instructions.
• Motivation can be in the form of monetary gains such as incentives or bonus, it can be non-monetary such as appreciation or growth.

Leadership:

• Leadership is that element of directing that involves motivation and persuasion in order to achieve the desired goals.
• A leader is defined as a person who is able to influence other people and inspires them to follow the instructions provided.

The correct answer is Democratic leadership

Key Points

• Leadership is that element of directing that involves motivation and persuasion in order to achieve the desired goals. 
• A leader is defined as a person who is able to influence other people and inspires them to follow the instructions provided.
• In other words, leadership is the act of leading, guiding, and motivating subordinates to achieve organizational goals
• Democratic Leadership, also known as Participative Leadership, involves the input of all members of a group.
• The leader provides an opportunity for all employees to participate in setting the goals and objectives of an organisation.
• The employees also get to decide the methods and activities that the company will use to achieve those goals.
• The advantage of this form of leadership is that there are lesser conflicts between employees and the management.
• It is because the workers are allowed a say in most, if not all, important decisions concerning the organisation.
• The leader has to coordinate between different departments to ensure that the organisation functions effectively.
• Unlike Authoritarian or Autocratic Leadership, a democratic leader is not a key figure in the company.
• Although they still have the final say in decision making, the whole process is much more collaborative than other forms of leadership.

Benefits of Democratic Leadership
The major benefits of Democratic Leadership are as follows:

1. Work Environment – The work environment is significantly more positive and collaborative in Democratic Leadership than other styles.
2. Inclusivity – The employees are a more substantial part of the decision-making process in this leadership style and can provide their inputs on various issues.
3. Improvement in decision making – Everyone who belongs within a group is involved in the decision-making process under the Democratic Leadership style.

• It helps the leader get a broader perspective on any issue, which leads to more holistic decisions.

The correct answer is Maslow

Key Points

• Maslow's hierarchy of needs is a motivational theory in psychology comprising a five-tier model of human needs, often depicted as hierarchical levels within a pyramid.
• This five-stage model can be divided into deficiency needs and growth needs.
• The first four levels are often referred to as deficiency needs (D-needs), and the top level is known as growth or being needs (B-needs).
• Our most basic need is for physical survival, and this will be the first thing that motivates our behavior.

Once that level is fulfilled the next level up is what motivates us, and so on.

Physiological needs - these are biological requirements for human survival, e.g. air, food, drink, shelter, clothing, warmth, sex, sleep.

• If these needs are not satisfied the human body cannot function optimally. Maslow considered physiological needs the most important as all the other needs become secondary until these needs are met.

Safety needs -  Once an individual’s physiological needs are satisfied, the needs for security and safety become salient. People want to experience order, predictability and control in their lives. These needs can be fulfilled by the family and society (e.g. police, schools, business and medical care).

• For example, emotional security, financial security (e.g. employment, social welfare), law and order, freedom from fear, social stability, property, health and wellbeing (e.g. safety against accidents and injury).

Love and belongingness needs -

• After physiological and safety needs have been fulfilled, the third level of human needs is social and involves feelings of belongingness.
• Belongingness, refers to a human emotional need for interpersonal relationships, affiliating, connectedness, and being part of a group.
• Examples of belongingness needs include friendship, intimacy, trust, and acceptance, receiving and giving affection, and love.

Esteem needs

• Esteem needs are the fourth level in Maslow’s hierarchy and include self-worth, accomplishement and respect.
• Maslow classified esteem needs into two categories:

1. esteem for oneself (dignity, achievement, mastery, independence) and
2. the desire for reputation or respect from others (e.g., status, prestige).

• Maslow indicated that the need for respect or reputation is most important for children and adolescents and precedes real self-esteem or dignity.

Self-actualization needs

• This needs are the highest level in Maslow's hierarchy, and refer to the realization of a person's potential, self-fulfillment, seeking personal growth and peak experiences. Maslow (1943) describes this level as the desire to accomplish everything that one can, to become the most that one can be.

The correct answer is Financial management

Key Points

• Financial management is an important activity in any organization. It is the process of planning, organizing, controlling, and monitoring the financial resources with a view to attain organizational goals and objectives.
• It is the best approach for controlling the financial activities of an organization such as procurement of funds, utilization of funds, accounting, payment, risk assessment, and everything that is related to money management. Read the article below to know the objectives and scope of financial management.

Roles of Financial Management:

• Taking part in utilising the funds and controlling productivity.
• Recognizing the requisites of capital (funds) and picking up the sources for that capital.
• Investment accords incorporate investment in fixed assets known as capital budgeting. Investing in current assets are part and parcel of investment decisions known as working capital decisions.
• Financial decisions associated with the finance raised from different sources which would rely upon the accord on – the kind of resource, when is the financing done, cost incurred and the returns as well.

In the case of dividend decision, the finance manager is the who is responsible for the accord that is taken by him or her; regarding the net profit distribution (NPD). However, Net profits are classified into two(2) types:

• Dividend for shareholders: The rate of dividend and the amount of dividend has to be decided
• Retained profits: The amount of contained (retained) gains has to be ascertained which would rely upon the development and variety of strategies of the trading concern

The correct answer is Cash flow ability

Key Points

• Cash flow is a measure of how much cash a business brought in or spent in total over a period of time.
• Cash flow is typically broken down into cash flow from operating activities, investing activities, and financing activities on the statement of cash flows, a common financial statement.
• Financial planning is the process of taking a comprehensive look at your financial situation and building a specific financial plan to reach your goals.
• Financial planning often delves into multiple areas of finance, including investing, taxes, savings, retirement, your estate, insurance and more.
• Financial planning is the practice of putting together a plan for your future, specifically around how you will manage your finances and prepare for all of the potential costs and issues that may arise.
• The process involves evaluating your current financial situation, identifying your goals and then developing and implementing relevant recommendations.
• Financial planning is holistic and broad, and it can encompass a variety of services,
• Rather than focusing on a single aspect of your finances, it views clients as real people with a variety of goals and responsibilities.
• It then addresses a number of financial realities to figure out how to best enable people to make the most of their lives.
• Financial planning is not the same as asset management. Asset management generally refers to managing investments for a client.
• This includes choosing the stocks, bonds, mutual funds and other investments in which a client should invest their money

The correct answer is Debt-equity ratio

Key Points

Capital structure refers to the specific mix of debt and equity used to finance a company's assets and operations. From a corporate perspective, equity represents a more expensive, permanent source of capital with greater financial flexibility.

• The arrangement of capital by using different sources of long term funds which consists of two broad types, equity and debt.
• The different types of funds that are raised by a firm include preference shares, equity shares, retained earnings, long-term loans etc.
• The debt-to-equity (D/E) ratio compares a company’s total liabilities to its shareholder equity and can be used to evaluate how much leverage a company is using.
• Higher-leverage ratios tend to indicate a company or stock with higher risk to shareholders.
• However, the D/E ratio is difficult to compare across industry groups where ideal amounts of debt will vary.
• Investors will often modify the D/E ratio to focus on long-term debt only because the risks associated with long-term liabilities are different than short-term debt and payables.

The correct answer is Financial Planning

Key Points

Financial planning

• Financial planning is the process of taking a comprehensive look at your financial situation and building a specific financial plan to reach your goals.
• Financial planning often delves into multiple areas of finance, including investing, taxes, savings, retirement, your estate, insurance and more.
• Financial planning is the practice of putting together a plan for your future, specifically around how you will manage your finances and prepare for all of the potential costs and issues that may arise.
• The process involves evaluating your current financial situation, identifying your goals and then developing and implementing relevant recommendations.
• Financial planning is holistic and broad, and it can encompass a variety of services,
• Rather than focusing on a single aspect of your finances, it views clients as real people with a variety of goals and responsibilities.
• It then addresses a number of financial realities to figure out how to best enable people to make the most of their lives.
• Financial planning is not the same as asset management. Asset management generally refers to managing investments for a client.
• This includes choosing the stocks, bonds, mutual funds and other investments in which a client should invest their money
• Financial planning involves designing the blueprint of the overall financial operations of a company such that the right amount of funds are available for various operations at the right time.
   

1. Identifying the sources from where the funds can be raised and ensuring that the required funds are available to the firm as and when needed. For this, under financial planning, an estimation is made regarding the amount of funds which would be required for various business operations.
2. An estimation is made regarding the time at which the funds would be needed.
3. To ensure that there is proper utilisation of funds in the sense that there is neither surplus nor inadequate funding by the firm.
4. In other words, it ensures that situations of both excess or shortage of funds are avoided.
5. This is because while inadequate funds obstruct operations of the firm, excess funding leads to wasteful expenditure by the firm. Thus, proper financial planning ensures optimal utilisation of funds by the firm

The correct answer is Money market

Key Points

• Money Market is a monetary market where transient monetary resources having liquidity of one year or less are exchanged on stock trades.
• The protections or exchanging bills are profoundly fluid.
• These incorporate treasury bills, certificates of deposit, business paper, and repurchase arrangements.
• The money market is a sub-division of the financial market that facilitates the transfer of funds between investors/ lenders and borrowers/ users.
• The money market is short term funds which deal in financial assets whose maturity period is up to one year/ 365 days.
• Money market does not deal in cash or money but simply provides a market for credit instruments such as bills of exchange, promissory notes, commercial paper, treasury bills, etc.
• They are the close substitute for money.
• These instruments help to borrow funds to business units, other organizations and the Government for the short-term requirement.
• The money market is an essential component of the financial market for buying and selling of securities of short-term maturities, of one year or less, such as treasury bills and commercial papers. Here are the features of the money market:

The correct answer is None of the above

Key Points

• None of the above because every factor given in the option is attributed for ups and downs in the SENSEX.
• The stock market is a complex, interrelated system composed of large and small investors making uncoordinated decisions about a huge variety of investments.
• The market could be construed as an ecosystem organized by an invisible hand.
• Each market participant acts and plays freely based on their individual ideas and following their own personal interests.
• "The market" is shorthand for the collective values of individuals and companies.
• There are basic economic principles that can help explain up and down market movements, and with experience and data, there are more specific indicators that market experts have identified as being significant.
• "The market" is not a monolithic entity but a complex system of individual, professional, and institutional investors, each making decisions based on their own views and interests.
• The law of supply and demand holds true as in any market.
• Some factors, such as the rate of inflation, have the power to move the market as a whole higher or lower.
• Other factors, such as corporate earnings, may move a single company or an industry sector.

The correct answer is National Commission

Key Points

• National Commission is a consumer dispute redressal commission at national level established by the Central Government by notification.
• It is also called as National Consumer Disputes Redressal Commission. It is a part of the thee-tier consumer redressal system established under the Consumer Protection Act, 2019.
• The National Consumer Disputes Redressal Commission (NCDRC),
• India is a quasi-judicial commission in India which was set up in 1988 under the Consumer Protection Act of 1986.
• Its head office is in New Delhi.
• The commission is headed by a sitting or retired judge of the Supreme Court of India.
• The commission is presently headed by Justice R K Agrawal, former judge of the Supreme Court of India.
• Section 21 of Consumer Protection Act, 1986 posits that the National Consumer shall have jurisdiction:- to entertain a complaint valued more than one crore and also have Appellate and Revisional jurisdiction from the orders of State Commissions or the District fora as the case may be.
• Section 23 of Consumer Protection Act, 1986, provides that any person aggrieved by an order of NCDRC,  may prefer an Appeal against such order to Supreme Court of India within a period of 30 days.

The correct answer is It curbs the marketability of the securities.

Key Points

• A stock exchange is an important factor in the capital market.
• It is a secure place where trading is done in a systematic way.
• Here, the securities are bought and sold as per well-structured rules and regulations.
• Securities mentioned here includes debenture and share issued by a public company that is correctly listed at the stock exchange, debenture and bonds issued by the government bodies, municipal and public bodies.

Functions of Stock Exchange
Following are some of the most important functions that are performed by the stock exchange:

Role of an Economic Barometer: 

• Stock exchange serves as an economic barometer that is indicative of the state of the economy. It records all the major and minor changes in the share prices. It is rightly said to be the pulse of the economy, which reflects the state of the economy.

Valuation of Securities:

• Stock market helps in the valuation of securities based on the factors of supply and demand. The securities offered by companies that are profitable and growth-oriented tend to be valued higher. Valuation of securities helps creditors, investors and government in performing their respective functions.

Transactional Safety:

• Transactional safety is ensured as the securities that are traded in the stock exchange are listed, and the listing of securities is done after verifying the company’s position. All companies listed have to adhere to the rules and regulations as laid out by the governing body.

Contributor to Economic Growth:

• Stock exchange offers a platform for trading of securities of the various companies.
• This process of trading involves continuous disinvestment and reinvestment, which offers opportunities for capital formation and subsequently, growth of the economy.

Making the public aware of equity investment:

• Stock exchange helps in providing information about investing in equity markets and by rolling out new issues to encourage people to invest in securities. 

Offers scope for speculation:

• By permitting healthy speculation of the traded securities, the stock exchange ensures demand and supply of securities and liquidity.

Facilitates liquidity:

• The most important role of the stock exchange is in ensuring a ready platform for the sale and purchase of securities. This gives investors the confidence that the existing investments can be converted into cash, or in other words, stock exchange offers liquidity in terms of investment.

Better Capital Allocation:

• Profit-making companies will have their shares traded actively, and so such companies are able to raise fresh capital from the equity market. Stock market helps in better allocation of capital for the investors so that maximum profit can be earned.

Encourages investment and savings:

• Stock market serves as an important source of investment in various securities which offer greater returns. Investing in the stock market makes for a better investment option than gold and silver.

The correct answer is Treasury Bills

Key PointsVarious instruments available in the money market are:
Treasury Bills (T-Bills):

• It is a short-term borrowing instrument issued by the Government of India. RBI issues it on behalf of the Government of India.
• It is also known as zero coupon bonds.
• It has a maturity of less than one year.
• It is issued at discount and repaid at par.
• It is in the form of a promissory note.
• It is highly liquid and has negligible risk.
• It is available in denominations of Rs 25,000 and its multiples.

Commercial Paper:

• Commercial paper is issued by large creditworthy companies to raise short-term funds at lower rates of interest than the market rate.
• It is an unsecured promissory note, having a maturity of 15 days to one year.
• It is a negotiable instrument, transferable by endorsement and delivery.
• It is sold at discount and redeemed at par.
• It is an alternative to bank borrowing. The original purpose of commercial paper was to meet working capital needs of companies.
• It is used by companies for bridge financing, a method of financing used by companies before issuing shares or debentures, to cover the expenses associated with the issue of such securities, i.e. floatation costs (e.g.: brokerage, commission, printing of applications, advertising, etc.)

Call Money:

• Call money is a method used by commercial banks to borrow funds from each other, in order to maintain the Cash Reserve Ratio (CRR). Cash Reserve Ratio is the minimum balance of cash to be maintained by banks, according to RBI guidelines.
• It is short-term finance repayable on demand.
• Maturity of call money is 1 day to 15 days.
• The interest paid on call money is called the call rate.
• Call rate is highly fluctuating, which varies from day-to-day or even from hour-to-hour.
• There is an inverse relationship between call rates and return on other short-term money market instruments. Increase in call rates makes the demand for call money decrease, an increase in demand for other short-term instruments, as they become cheaper in relation to call money.

Certificate of Deposit:

• Certificate of deposits are issued by commercial banks or developmental financial institutions to individuals, institutions, corporations and companies.
• It is an unsecured, negotiable instrument in bearer form.
• It is issued in periods of tight liquidity, when the deposits by individuals and households is less, but the demand for credit is high.y
• They help to mobilise large amounts of mone in a short time period.

Commercial Bill:

• It is a bill of exchange used by business firms to meet their working capital needs.
• It is a short-term, self-liquidating, negotiable instrument, used for financing credit sales of a firm.
• When goods are sold on credit, the seller (drawer) draws a bill of exchange on the buyer (drawee), who accepts it. When he accepts the bill, it becomes a marketable instrument, which is called a trade bill. When the seller presents it to the bank for discounting it, to get the funds before the maturity of the bill and the bank accepts it, it is called a commercial bill.

The correct answer is Working capital

Key Points

• Working capital is a financial metric which represents operating liquidity available to a business, organisation, or other entity, including governmental entities. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital.
• If the raw materials and other required materials are available freely and continuously, lower stock levels may suffice.
• If, however, raw materials do not have a record of un-interrupted availability, higher stock levels maybe required.
• The Working Capital Requirement (WCR) is a financial metric showing the amount of financial resources needed to cover the costs of the production cycle, upcoming operational expenses and the repayments of debts.
• The working capital requirement will not be high when the procurement of raw material is difficult or not readily available.
• When the rate of inflation is low, the working capital requirement will likely not be high

Factors affecting the requirement of working capital 

1. Type of business
2. Scale of operations
3. Fluctuations in the business cycle
4. Production cycle: 
5. Growth prospects
6. Seasonal factors
7. Credit allowed
8. Credit availed
9. Operating efficiency
10. Availability of raw materials
11. Level of competition

The correct answer is SEBI

Key PointsThe three Protective Functions of SEBI are:

• Check on unfair practices
• SEBI prevents fraudulent and unfair trade practices in the interest of investors. Some of the usual unfair trade practices are making misleading advertisements, manipulations, price rigging etc. SEBI takes strong actions against the companies indulging in these unfair trade practices.  
• Control on insider trading
• When a person having access to price sensitive information in respect of securities of a company uses the information to make his personal profit, it is called insider trading. SEBI keeps a strict check on insider trading and takes strict action.  
• Protection of investors 
• SEBI protects the rights and interests of investors particularly individual investors and to guide and educate them. SEBI has compelled the companies to give accurate information to the investors on regular basis.  
• Code of conduct  
• SEBI promotes fair trade practices by developing a code of conduct so that companies and financial intermediaries render better service to the investors

The correct answer is Horizontal Capital Structure

Key PointsHorizontal capital Structure:

• The firm has no component of debt in the financial mix.
• Expansion of the firm is through equity and retained earnings only.
• In a Horizontal Capital Structure, the firm has zero debt components in the capital structure mix.
• The structure is quite stable.
• Expansion of the firm takes in a lateral manner, i.e. through equity or retained earnings only.
• The absence of debt results in the lack of financial leverage.
• Probability of disturbance of the structure is very less.
• In simple words, all the funds required for a particular project are brought out by the owners only.

The correct answer is Attitude formation

Key Points

• Staffing is a very important part of running a business or an organisation. It is referred to as the process of obtaining and hiring of manpower for the various business requirements.
• Staffing is regarded as an essential managerial function.
• An enterprise is unable to run its operations without the help of human resources. Therefore, human resources play an important role in the functioning of an organisation.

• Selection is the process of identifying and choosing the best person out of a number of prospective candidates for a job.

Selection process of personnel involves the following steps:

Preliminary screening:

• It helps the manager to eliminate unqualified or unfit job seekers, based on the information supplied in the application forms.

Selection tests:

• An employment test is a mechanism (either a paper and pencil test or exercise) that attempts to measure certain characteristics of individuals.
• These characteristics range from aptitudes, such as manual dexterity, to intelligence, to personality, etc.

Employment interview:

• Interview is a formal, in-depth conversation, conducted to evaluate the applicant's suitability for the job.
• Through an interview, an interviewer seeks to obtain maximum information about the interviewee and the interviewee seeks information about the job and the company.

Reference and background checks:

• Many employers request names, addresses and telephone numbers of references for the purpose of verifying information and gaining additional information of an applicant.

Selection decision:

• The final decision has to be made from among the candidates, who pass the tests, interviews and reference checks.

Medical examination:

• After the selection decision and before the job offer, the candidate is required to undergo a medical fitness test.
• The job offer is given to the candidate, who is physically and mentally fit for the job.

Job offer:

• The next step in the selection process is issuing job offer to those applicants, who have passed all the previous hurdles.
• It is made through a letter of appointment to confirm his acceptance, and communicating to him the reporting date and time.

Contract of employment:

• When a candidate accepts the job offer, the contract of employment is made, which is in a written form and includes job title, duties, responsibilities, date when continuous employment starts and the basis for calculating service, rates of pay, allowances, hours of work, leave rules, sickness, grievance procedure, etc.

The correct answer is Discipline

Key Points

• Henry Fayol, also known as the ‘father of modern management theory’ gave a new perception of the concept of management.
• He introduced a general theory that can be applied to all levels of management and every department.
• The Fayol theory is practised by the managers to organize and regulate the internal activities of an organization.
• He concentrated on accomplishing managerial efficiency.

The fourteen principles of management created by Henri Fayol are explained below.

Discipline

• Without discipline, nothing can be accomplished.
• It is the core value for any project or any management. Good performance and sensible interrelation make the management job easy and comprehensive.
• Employees good behaviour also helps them smoothly build and progress in their professional careers.

Division of Work

• Henri believed that segregating work in the workforce amongst the worker will enhance the quality of the product. Similarly,
• he also concluded that the division of work improves the productivity, efficiency, accuracy and speed of the workers.
• This principle is appropriate for both the managerial as well as a technical work level.

Authority and Responsibility

• These are the two key aspects of management. Authority facilitates the management to work efficiently, and responsibility makes them responsible for the work done under their guidance or leadership.

Unity of Command

• This means an employee should have only one boss and follow his command.
• If an employee has to follow more than one boss, there begins a conflict of interest and can create confusion.

Unity of Direction-

• Whoever is engaged in the same activity should have a unified goal.
• This means all the person working in a company should have one goal and motive which will make the work easier and achieve the set goal easily.

Subordination of Individual Interest

• This indicates a company should work unitedly towards the interest of a company rather than personal interest.
• Be subordinate to the purposes of an organization.
• This refers to the whole chain of command in a company.

Remuneration

• This plays an important role in motivating the workers of a company.
• Remuneration can be monetary or non-monetary.
• However, it should be according to an individual’s efforts they have made.

Centralization

• In any company, the management or any authority responsible for the decision-making process should be neutral.
• However, this depends on the size of an organization.
• Henri Fayol stressed on the point that there should be a balance between the hierarchy and division of power.

Scalar Chain

• Fayol on this principle highlights that the hierarchy steps should be from the top to the lowest.
• This is necessary so that every employee knows their immediate senior also they should be able to contact any, if needed.

Order

• A company should maintain a well-defined work order to have a favourable work culture.
• The positive atmosphere in the workplace will boost more positive productivity.

Equity

• All employees should be treated equally and respectfully.
• It’s the responsibility of a manager that no employees face discrimination.

Stability

• An employee delivers the best if they feel secure in their job.
• It is the duty of the management to offer job security to their employees.

Initiative

• The management should support and encourage the employees to take initiatives in an organization.
• It will help them to increase their interest and make then worth.

Esprit de Corps

• It is the responsibility of the management to motivate their employees and be supportive of each other regularly.
• Developing trust and mutual understanding will lead to a positive outcome and work environment.

The correct answer is Financial management

Key Points

Financial management

• Financial management refers to the efficient acquisition, allocation and usage of funds by a company for its smooth working.
• The main objectives of financial management are to reduce the expenses involved in procuring funds, to control risk and to achieve effective deployment of funds.
• Importance of Financial Management
• The role of financial management is as such that it has a direct impact on all the financial aspects/activities of a company. Certain aspects affected by financial management decisions are

Size and composition of fixed assets: 

• The amount of money invested in fixed assets is an outcome of investment decisions. So, if more amount of capital is decided to be invested in fixed assets, then it will increase the value of the total share of fixed assets by the amount invested.

Amount and composition of current assets: 

• The quantum of current assets and its constituents like cash, bills receivable, inventory etc. is also influenced by management decisions. It is also dependent on the amount invested in fixed assets, decisions about credit and inventory management etc.

Amount of long-term and short-term funds to be used: 

• Financial management determines the quantum of funds to be raised for the short term and long term. In case a firm requires more liquid assets, then it will prefer to have more long-term finance even when their profits will the decrease due to payment of more interest in comparison to short term debts.

Proportion of debt and equity in capital: 

• Financial management also takes decisions regarding the proportion of debt and/or equity.

All items in profit and loss account: 

• All items in the profit and loss account are affected by financial management decisions. For example, higher amount of debt will lead to increase in the expense in the form of interest payment in the future.

The correct answer is Universal Validity

Key Points

• The Beauty of management lies in the fact that it is a multiverse subject. In other words, it can be science, art, profession or all of these simultaneously depending on your perception.
• Management is very systematic and concrete and so we consider management as a science. 

Management as a Science:

• Science is an organized collection of knowledge that emphasizes definite universal truths or the action of comprehensive laws. 
• The central characteristics of science are as follows:
• The organised body of knowledge: 
• Science is a precise entity of knowledge. Its systems are based on a purpose and consequence association.
• Universal validity: 
• Scientific conventions have global genuineness and application.
• Systems based on experimentation: 
• Scientific conventions are originally formed via research and then tested via repeated trial and error under the regulated situations

The correct answer is Planning

Key Points

• Planning and control are the two sides of the same coin. They are in fact parts of one integral function and it can be quite difficult to separate the two.
• This means that we cannot tell when the planning function ends and the control functions begin.
• Planning sets the philosophy and the guidelines on which the company operates. And controlling ensures that the activities of the firm conform to these plans, goals, objectives etc.

Relationship between Planning and Control

Planning originates Control

• Planning is the most basic function of a firm. It decides what is to be done, who will do it when it will be done etc. The aim of planning is to bridge the gap between where the firm is and where it wishes to be.
• Control on the other hand only starts after planning. It is basically controlling that all activities are going according to the plan. So without planning there is no need for control.

Controlling sustains Planning

• The relationship between planning and control is that it is a two-way street. While planning originates control, control will help sustain the planning function. It directs the course of planning and points out the areas where further planning is necessary.

They are Interdependent and Interlinked

• Planning and control are actually part of one integral function. So they always co-exist as one larger function.
• Controlling actually involves comparing actual performance with the plans, and without any plans, it will be unable to do so. Without a yardstick for comparison, there is no point of the control function.
• Similarly, planning is also dependent on the control function. Planning is only done on paper, it has to be translated into actions.
• And it is controlling by managers that ensure that these plans are implemented correctly and produce the desired results.
• Hence the relationship between planning and control is that of interdependence. For example, the workers made 800 units in one day.
• Is this a good statistic? The only way we can compare is if a plan and standards are in place. Say if the standard is 900 units, then the managers step in to correct this deviation from the standard. This is the control function.

Both are Forward-Looking Functions

• Both planning and control are concerned with the future activities of the firm. Planning is always done for the future. And control too is a forward-looking activity.
• The past cannot be changed or controlled, we can only focus on controlling the future. It is the objective of both these functions to combine and achieve the business objectives and goals of the firm.

The correct answer is Motivation

Key Points

• Motivation is an element of directing. It means the simulation, inducement or incitement a person to act in a certain way.
• Motivation pushes people to work in a way so that the targets are achieved. In an organization, motivation is very important so that people work towards achieving organizational goals.
• Many times, people do not work to the fullest of their potential or they do not feel like doing so, this is because they lack the motivation to do so. When they are motivated then they get a push in right direction.
• This push element can be different things like increased salary, bonus, incentives, recognition, better working conditions, promotion etc. 

Features of motivation

From various definitions given by the experts there are certain features which are derived, they are:

Motivation is an internal feeling

• The motive of an individual for which he or she works hard to achieve are all internal desires and needs of the person.
• Motivation itself is an internal feeling. When the urge to do something increases internally then the person becomes excited to do that particular task.

Motivation leads to goal directed behaviour

• Motivation is for the urges, needs, desires, wants, drives and aspirations which are focused on a point which can be called a focal point towards which the person wants to move.
• This focal point is the motive and the person who is motivated enough which only work in a single direction and thus goal directed behaviour is achieved through motivation.

Motivation can be either positive or negative

• Positive motivators mean that the person is motivated to do something because there is certain reward attached such as promotion, increased pay, bonus, recognition etc.
• While negative motivators are the ones which create a fear, if certain work is not done then the result can be negative, such as demotion, punishment, loss of job etc.

Motivation is a complex process

• Humans are different. Their expectations and desires from things can be different. These different king's of aspirations will require different kind of motivation.
• One person may be motivated to do a task because he will get recognition while other may be doing that task because she will get increased salary.

The correct answer is Leadership

Key Points

• Leadership is that element of directing that involves motivation and persuasion in order to achieve the desired goals. 
• A leader is defined as a person who is able to influence other people and inspires them to follow the instructions provided.
• In other words, leadership is the act of leading, guiding, and motivating subordinates to achieve organizational goals.

Leadership: 

• Leadership is that element of directing that involves motivation and persuasion in order to achieve the desired goals. 
• A leader is defined as a person who is able to influence other people and inspires them to follow the instructions provided.
• In other words, leadership is the act of leading, guiding, and motivating subordinates to achieve organizational goals.

Democratic Leadership,

• Democratic Leadership also known as Participative Leadership, involves the input of all members of a group.
• The leader provides an opportunity for all employees to participate in setting the goals and objectives of an organisation.
• The employees also get to decide the methods and activities that the company will use to achieve those goals.
• The advantage of this form of leadership is that there are lesser conflicts between employees and the management.
• It is because the workers are allowed a say in most, if not all, important decisions concerning the organisation.
• The leader has to coordinate between different departments to ensure that the organisation functions effectively. Unlike Authoritarian or Autocratic Leadership, a democratic leader is not a key figure in the company. Although they still have the final say in decision making, the whole process is much more collaborative than other forms of leadership.

The correct answer is Ensuring order & discipline

Key Points

• Directing is regarded as the heart of the management process. Other functions like planning, organising and staffing cannot function properly without proper direction.
• Directing is a high level management function that is concerned with providing direction to the goals of the organisation, from there it moves on to the lower levels in form of actions.
• Direction exists as a management function as long as there is existence of the business. It is a continuous process.
• It binds all the efforts done by the management in the form of organising and planning and brings together all of the organisation towards achieving the goals of the organisation

Main characteristics of Directing are as follows:

Initiates Action

• A directing function is performed by the managers along with planning, staffing, organizing and controlling in order to discharge their duties in the organization. While other functions prepare a platform for action, directing initiates action.

Pervasive Function

• Directing takes place at every level of the organization. Wherever there is a superior-subordinate relationship, directing exists as every manager provides guidance and inspiration to his subordinates.

Continuous Activity

• It is a continuous function as it continues throughout the life of organization irrespective of the changes in the managers or employees.

Descending Order of Hierarchy

• Directing flows from a top level of management to the bottom level. Every manager exercises this function on his immediate subordinate.

Human Factor

• Since all employees are different and behave differently in different situations, it becomes important for the managers to tackle the situations appropriately. Thus, directing is a significant function that gets the work done by the employees and increases the growth of the organization.

The correct answer is Development.

Key PointsTraining: It is the systematic development of knowledge, skills and attitudes required by an individual to perform adequately a given task or job.

Development: It denotes the process by which the employees acquire skills and competence to do their present job and increase their capabilities for handling higher jobs in the future.

Advantages of Training and Development:

• Up-skilling Employee
• Less Supervision
• Growth Opportunities for Individuals
• Boost in Company’s Productivity
• Better use of Resources

Disadvantages of Training and Development:

• Training & Skill Development Cost Time and Money
• Sparing Extra time for Training can be Stressful for Workers
• Training Sessions can be Complicated
• Lack of Interest
• Switching to a New Job
   

Additional InformationThe benefits of training and development to an organization are as follows: 

• Training is a systematic learning. It is always better than hit and trial methods which lead to wastage of efforts and money. 
• Training enhances employee productivity both in terms of quantity and quality, leading to higher profits. 
• Training equips the future manager who can take over in case of an emergency. 
• Training increases employee morale and reduces absenteeism and employee turnover. 
• It helps in obtaining effective response to fast changing environment – technological and economic.

• Improved skills and knowledge due to training lead to better career of the individual. 
• Increased performance by the individual helps him to earn more. 
• Training makes the employee more efficient to handle machines. Thus,less prone to accidents. 
• Training increases the satisfaction and morale of the employees

The correct answer is First

Key Points

• Recruitment is a process of finding and attracting the potential resources for filling up vacant positions in an organization.
• It sources the candidates with the abilities and attitude, which are required for achieving the objectives of an organization.
• The recruitment process is a process of identifying the jobs vacancy, analyzing the job requirements, reviewing applications, screening, shortlisting and selecting the right candidate.
• The recruitment process is the first step in creating a powerful resource base.
• The process undergoes a systematic procedure starting from sourcing the resources to arranging and conducting interviews and finally selecting the right candidates.

Recruitment Planning

• Recruitment planning is the first step of the recruitment process, where the vacant positions are analyzed and described. It includes job specifications and its nature, experience, qualifications and skills required for the job, etc.
• A structured recruitment plan is mandatory to attract potential candidates from a pool of candidates.
• The potential candidates should be qualified, experienced with a capability to take the responsibilities required to achieve the objectives of the organization

Identifying Vacancy

• The first and foremost process of recruitment plan is identifying the vacancy.
• This process begins with receiving the requisition for recruitments from different department of the organization to the HR Department, 

Job Analysis

• Job analysis is a process of identifying, analyzing, and determining the duties, responsibilities, skills, abilities, and work environment of a specific job. These factors help in identifying what a job demands and what an employee must possess in performing a job productively.

Job Description

• Job description is an important document, which is descriptive in nature and contains the final statement of the job analysis. This description is very important for a successful recruitment process.

Job Specification

• Job specification focuses on the specifications of the candidate, whom the HR team is going to hire.
• The first step in job specification is preparing the list of all jobs in the organization and its locations.
• The second step is to generate the information of each job.

Job Evaluation

• Job evaluation is a comparative process of analyzing, assessing, and determining the relative value/worth of a job in relation to the other jobs in an organization.
• The main objective of job evaluation is to analyze and determine which job commands how much pay. There are several methods such as job grading, job classifications, job ranking, etc., which are involved in job evaluation. Job evaluation forms the basis for salary and wage negotiations.

Recruitment Strategy

• Recruitment strategy is the second step of the recruitment process, where a strategy is prepared for hiring the resources. After completing the preparation of job descriptions and job specifications, the next step is to decide which strategy to adopt for recruiting the potential candidates for the organization.

Searching the Right Candidates

• Searching is the process of recruitment where the resources are sourced depending upon the requirement of the job. After the recruitment strategy is done, the searching of candidates will be initialized.
• This process consists of two steps −

1. Source activation − Once the line manager verifies and permits the existence of the vacancy, the search for candidates starts.
2. Selling − Here, the organization selects the media through which the communication of vacancies reaches the prospective candidates

The correct answer is Employee morale is high

Key PointsEsprit de Corps

• It is the responsibility of the management to motivate their employees and be supportive of each other regularly.
• Developing trust and mutual understanding will lead to a positive outcome and work environment.
• Esprit De Corps means the union is strength. 
• It is one of the fourteen principles of management developed by Fayol. 
• He emphasized teamwork.
• According to Fayol management must develop a feeling of belongingness among the employees so that they can contribute maximum to achieve the team goal.

Positive of this principle:

• Team spirit is developed.
• Harmony and mutual understanding among each member of the organization.
• The organizational goal is achieved along with groups goals.
• Employee morale is high.
• Individual work burden is reduced since team spirit is maintained.
• The mutual relationship between management and group of employees.

Results of avoiding this principle:

• Team spirit, harmony, and mutual understanding are not realized.
• Conflicting situations in the organization.
• Role conflicts arise.
• Low employee morale.
• Employee participation is reduced.
• Individual efforts do not make as good results as team efforts

The correct answer is Physical distribution

Key Points

• Physical distribution is defined as the process of physical movement of goods from the producer to the consumer.
• It is an important marketing function which describes marketing activities that involves flow of raw materials from the suppliers to the factories for production and also the movement of finished goods from production to the final user.
• The activities that are included in the efficient movement of goods from producer to end user or consumer include transportation, inventory control, warehousing, material handling, forecasting, customer service, plant and warehouse location and order processing.

Objectives of Physical Distribution
The following are the objectives of physical distribution

1. Consumer satisfaction
2. Profit Maximisation
3. To ensure the availability of right goods at the right quantity at the right time and the right place with the least cost for the service.
4. To achieve speedier transportation of goods and maintaining minimum inventory level.
5. To establish the correct price of products by effective management of physical activities of distribution.
6. To achieve competitive advantage over the competitors by providing the best customer service.

Components of Physical Distribution
Following are the components of physical distribution

Order Processing:

• Order processing is the first point or in other words, the starting point of the distribution activity. The functions involved in order processing are receiving order, handling the received order, granting of credit for the item ordered, generating invoice, dispatching of order and collecting the bills.
• Businesses should be making an effort to reduce the order cycle time which is the time between placing an order by the customer and delivery of the goods at the customer’s place.

Storage and Warehousing:

• Storage deals with the storing of goods in proper condition till the time it is ordered by the customer. Goods that cannot be generally made available throughout the year need to be stored.
• Warehouses act as centres of storage and by providing the functionality it helps businesses meet the demands of customers. Apart from being a source of storage, a warehouse also acts as centres for assembling the goods.

Inventory Control:

• Inventory control refers to the process of efficient control of goods that are stored in the warehouses. Businesses need to maintain adequate levels of inventory in order to ensure uninterrupted fulfillment of orders.
• The level of inventory needs to be optimal, it should not be too less or too more, as less inventory results in out of stock goods, lost business and unhappy customers, while a high level of inventory requires huge investment.

Material Handling:

• Material handling refers to the activities that are associated with the movement of goods from the site of manufacturing till it is loaded to the transport.
• Proper material handling results in minimising the wastage of goods during transport, reduces unnecessary movement of goods, facilitates quick order processing and efficient goods movement.

Transportation:

• Transportation is a very essential component of physical distribution which plays a crucial role in movement of the stored goods from warehouse to the customers. The process of transporting involves loading and unloading of goods and their movement from one place to another.

The correct answer is Production process.

Key Points

• A marketing Mix is a set of marketing tool or tactics, used to promote a product or services in the market and sell it.
• It is about positioning a product and deciding it to sell in the right place, at the right price and right time.
• The product will then be sold, according to marketing and promotional strategy.

The components of the marketing mix consist of 4Ps

1. Product,
2. Price,
3. Place
4. Promotion

Product Marketing Mix:

• A product is a commodity, produced or built to satisfy the need of an individual or a group.
• The product can be intangible or tangible as it can be in the form of services or goods. It is important to do extensive research before developing a product as it has a fluctuating life cycle, from the growth phase to the maturity phase to the sales decline phase.
• A product has a certain life cycle that includes the growth phase, the maturity phase, and the sales decline phase.
• It is important for marketers to reinvent their products to stimulate more demand once it reaches the sales decline phase. It should create an impact in the mind of the customers, which is exclusive and different from the competitor’s product.
• There is an old saying stating for marketers, “what can I do to offer a better product to this group of people than my competitors”. This strategy also helps the company to build brand value.

Price in Marketing Mix:

• Price is a very important component of the marketing mix definition. The price of the product is basically the amount that a customer pays for to enjoy it. Price is the most critical element of a marketing plan because it dictates a company’s survival and profit. Adjusting the price of the product, even a little bit has a big impact on the entire marketing strategy as well as greatly affecting the sales and demand of the product in the market. Things to keep on mind while determining the cost of the product are, the competitor’s price, list price, customer location, discount, terms of sale, etc.,

Place in Marketing Mix:

• Placement or distribution, is a very important part of the marketing mix strategy. We should position and distribute our product in a place that is easily accessible to potential buyers/customers.

Promotion in Marketing Mix:

• It is a marketing communication process that helps the company to publicize the product and its features to the public.
• It is the most expensive and essential components of the marketing mix, that helps to grab the attention of the customers and influence them to buy the product.
• Most of the marketers use promotion tactics to promote their product and reach out to the public or the target audience.
• The promotion might include direct marketing, advertising, personal branding, sales promotion, etc

The correct answer is Decentralization

Key PointsDecentralization

• Decentralization is referred to as a form of an organizational structure where there is the delegation of authority by the top management to the middle and lower levels of management in an organization.
• In this type of organisation structure, the duty of daily operations and minor decision-making capabilities are transferred to the middle and lower levels which allows top-level management to focus more on major decisions like business expansion, diversification etc.
• Delegation refers to assigning a portion of work and the associated responsibility by a superior to a subordinate.
• When delegation is expanded on an organizational level, it is called decentralization.

Advantages of Decentralization

1. Reduces the burden on top executives
2. Facilitates diversification
3. Executive Development
4. It promotes motivation
5. Better control and supervision

Disadvantages of Decentralization

1. Uniform policies not Followed
2. Problem of Co-Ordination

The correct answer is Lack of favoritism

Key Points

Disadvantages of Formal Organisation:

• Delay in Action: While following scalar chain and chain of command, actions get delayed in formal structure.
• Ignores Social Needs of Employees: Formal organisational structure does not give importance to psychological and social need of employees which may lead to demotivation of employees. 
• Emphasis on Work Only: Formal organisational structure gives importance to work only; it ignores human relations, creativity, talents, etc.this will develop Mechanical relationship.
   

Additional InformationOrganisation 

• Organisation refers to a collection of people who are working towards a common goal and objective.
• In other words, it can be said that organisation is a place where people assemble together and perform different sets of duties and responsibilities towards fulfilling the organisational goals.
• Types of Organisation and their Structure

1. 1. Formal Organisation
2. 2. Informal Organisation

Formal Organisation:

• Formal organisation is that type of organisation structure where the authority and responsibility are clearly defined.
• The organisation structure has a defined delegation of authority and roles and responsibilities for the members.
• The formal organisation has predefined policies, rules, schedules, procedures and programs.
• The decision making activity in a formal organisation is mostly based on predefined policies.
• Formal organisation structure is created by the management with the objective of attaining the organisational goals.

Advantages of Formal Organisation:

• Systematic Working: Formal organisation structure results in systematic and smooth functioning of an organisation.
• Achievement of Organisational Objectives: Formal organisational structure is established to achieve organisational objectives.
• No Overlapping of Work: In formal organisation structure work is systematically divided among various departments and employees. So there is no chance of duplication or overlapping of work.
• Co-ordination: Formal organisational structure results in coordinating the activities of various departments.
• Creation of Chain of Command: Formal organisational structure clearly defines superior subordinate relationship, i.e., who reports to whom.
• More Emphasis on Work: Formal organisational structure lays more emphasis on work than interpersonal relations.

The correct answer is Setting an objective

Key PointsProcess of Planning

• As planning is an activity, there are certain reasonable measures for every manager to follow:

Setting Objectives

• This is the primary step in the process of planning which specifies the objective of an organisation, i.e, what an organisation wants to achieve.
• The planning process begins with the setting of objectives.
• Objectives are end results which the management wants to achieve by its operations.
• Objectives are specific and are measurable in terms of units.
• Objectives are set for the organisation as a whole for all departments, and then departments set their own objectives within the framework of organisational objectives.

Developing Planning Premises

• Planning is essentially focused on the future, and there are certain events which are expected to affect the policy formation.
• Such events are external in nature and affect the planning adversely if ignored.
• Their understanding and fair assessment are necessary for effective planning.
• Such events are the assumptions on the basis of which plans are drawn and are known as planning premises.

Identifying Alternative Courses of Action

• Once objectives are set, assumptions are made.
• Then the next step is to act upon them.
• There may be many ways to act and achieve objectives.
• All the alternative courses of action should be identified.

Evaluating Alternative Course of Action

• In this step, the positive and negative aspects of each alternative need to be evaluated in the light of objectives to be achieved.
• Every alternative is evaluated in terms of lower cost, lower risks, and higher returns, within the planning premises and within the availability of capital.

Selecting One Best Alternative

• The best plan, which is the most profitable plan and with minimum negative effects, is adopted and implemented.
• In such cases, the manager’s experience and judgement play an important role in selecting the best alternative.

Implementing the Plan

• This is the step where other managerial functions come into the picture.
• This step is concerned with “DOING WHAT IS REQUIRED”.
• In this step, managers communicate the plan to the employees clearly to help convert the plans into action.
• This step involves allocating the resources, organising for labour and purchase of machinery.

Follow-Up Action

• Monitoring the plan constantly and taking feedback at regular intervals is called follow-up.
• Monitoring of plans is very important to ensure that the plans are being implemented according to the schedule.
• Regular checks and comparisons of the results with set standards are done to ensure that objectives are achieved

The correct answer is to find the best method of doing the job

Key Points

• The objective of method study is to simplify the job and develop more economical methods of doing it.
• Method study is systematic both in investigation of problem being considered and in the development of its solutions.
• It can be stated as one of the most penetrating tools of investigation available to management.

Important objectives of method study are:

1. The improvement of processes and procedures.
2. Factory and workplace layout improvement.
3. Improvement in the design of plant and equipment.
4. Reduction in unnecessary fatigue and movements.
5. Use of improved materials, machines, and manpower.
6. Better Working conditions.

The following seven steps constitute the basic procedure of method study:

1. Select the work to be studied.
2. Obtaining all the relevant information or facts regarding the exiting method by direct observation.
3. Examining these facts critically but impartially.
4. Developing the most effective and practical method. 
5. Defining the new method so as to create its identity.
6. Installing the new method.
7. Maintaining this method by regular routine checks.

The correct answer is Orderly arrangements of various resources

Key Points

• According to Fayol, People and materials must be in suitable places at the appropriate time for maximum efficiency. 
• The principle of the order states that a place should be fixed for everything and everyone should be in its fixed place. 
• Essentially it means orderliness. If there is a fixed place for everything and it is present there, then there will be no hindrance in the activities of business/ factory. 
• This will lead to increased productivity and efficiency.

Positive impacts of this principle:

• No wastage of time and energy.
• Better handling of resources.
• Smooth and systematic working in the organization.
• Increased productivity.
• Efficiency in work.
• Proper use of financial resources.

Consequences of violation of this principle:

• Delayed operations.
• Scattered physical and human resources.
• Wastage of time and energy.
• Wastage of financial resources.
• No proper accountability.
• Reduction in the efficiency of the controlling process.
• Reduced operational efficiency

Key Points

• It is the connection between top and lower-level managers. 
• They are lower than the top managers and above to the first-line managers. 
• They are normally called division heads, for instance, Production Managers.
• Middle management is accountable for executing and regulating systems and maneuverings generated by the top management.
• At the same time, they are liable for all the actions of the first-line managers.

1. The procedures outlined by the top management
2. Guarantee that their staff has the required workers
3. Designate certain tasks and duties to them, and drive them to accomplish the aspired objectives.
4. Interact with other departments for the stable operation of the company. At the same time, they are subject to all the actions of the first-line managers.

The correct answer is Right to seek redressal

Key Points

• The Consumer Protection Act, implemented in 1986, gives easy and fast compensation to consumer grievances.
• It safeguards and encourages consumers to speak against insufficiency and flaws in goods and services.
• If traders and manufacturers practice any illegal trade, this act protects their rights as a consumer.
• The primary motivation of this forum is to bestow aid to both the parties and eliminate lengthy lawsuits.
• This Protection Act covers all goods and services of all public, private, or cooperative sectors, except those exempted by the central government.
• The act provides a platform for a consumer where they can file their complaint, and the forum takes action against the concerned supplier and compensation is granted to the consumer for the hassle he/she has encountered.

Consumer Rights and Responsibilities:
The Rights of the Consumer

• Right to Safety- Before buying, a consumer can insist on the quality and guarantee of the goods. They should ideally purchase a certified product like ISI or AGMARK.
• Right to Choose- Consumer should have the right to choose from a variety of goods and in a competitive price.
• Right to be informed- The buyers should be informed with all the necessary details of the product, make her/him act wise, and change the buying decision.
• Right to Consumer Education- Consumer should be aware of his/her rights and avoid exploitation. Ignorance can cost them more.
• Right to be heard- This means the consumer will get due attention to express their grievances at a suitable forum.
• Right to seek compensation- The defines that the consumer has the right to seek redress against unfair and inhumane practices or exploitation of the consumer.

The Responsibilities of the Consumer

• Responsibility to be aware – A consumer has to be mindful of the safety and quality of products and services before purchasing.
• Responsibility to think independently– Consumer should be well concerned about what they want and need and therefore make independent choices.
• Responsibility to speak out- Buyer should be fearless to speak out their grievances and tell traders what they exactly want
• Responsibility to complain- It is the consumer’s responsibility to express and file a complaint about their dissatisfaction with goods or services in a sincere and fair manner.
• Responsibility to be an Ethical Consumer- They should be fair and not engage themselves with any deceptive practice.

The correct answer is All of the Above

Key Points

•  Management is the process by which a co-operative group directs actions of others toward common goals.” Management is defined as the process of planning, organizing, and controlling an organization's operations in order to achieve the target efficiently and effectively.

Objectives can be categorized into organizational objectives, social objectives, and personal or individual objectives.

Organizational Objectives: 

• Management is accountable for establishing and attaining objectives for the company.
• It has to deliver a variety of objectives in all operations contemplating the interest of all shareholders including, stakeholders, consumers, the government, and employees.
• The principal objective of any company must be to use material and human resources to the maximum potential benefit, i.e., to meet the financial objectives of a firm. And, they are survival, profit, and growth
• Survival: The essential objective of any industry is survival. Management must attempt to assure the continuation of the business. In order to survive, an industry must gain enough funds to meet the costs that would be incurred.
• Profit: Poor survival is not sufficient for the industry. Management has to make sure that the company earns a profit. Profit contributes to a necessary catalyst for the sustained successful performance of the firm. Profit is crucial for meeting the costs and uncertainties of the business concern.
• Growth: A firm requires to add to its chances, in the long run, for this it is necessary for the concern to develop. To prevail in the business, management must utilise adequately the growth potential of the firm.

Social objectives:

• It includes the establishment of benefits for the community.
• As a part of the community, every business whether it is a trade or non-trading concern has a social responsibility to meet.
• This applies to consistently generating financial value for many components of society.
• This includes using environmentally beneficial technologies of production, providing job opportunities to the disadvantaged sections of the community, and furnishing primary facilities like crèches and schools to employees.

Personal Objectives:

• Establishments are made up of resources who possess different backgrounds, experiences, objectives, and personalities.
• They all become part of the establishment to meet their several demands.
• These differ from economic necessities such as ambitious perks and salaries, social obligations such as equal attention, and higher-level demands such as individual growth and progress