Business Studies Mock Test - 4

The correct answer is Earning Projects

Key PointsThe objectives of management are:

Getting Maximum Results with Minimum Efforts – 

• The main objective of management is to secure maximum outputs with minimum efforts & resources.
• Management is basically concerned with thinking & utilizing human, material & financial resources in such a manner that would result in best combination.
• This combination results in a reduction of various costs.

Increasing the Efficiency of factors of Production – 

• Through proper utilization of various factors of production, their efficiency can be increased to a great extent which can be obtained by reducing spoilage, wastage and breakage of all kinds, this, in turn, leads to saving of time, effort, and money which is essential for the growth & prosperity of the enterprise.

Maximum Prosperity for Employer & Employees – 

• Management ensures the smooth and coordinated functioning of the enterprise.
• This in turn helps in providing maximum benefits to the employee in the shape of good working conditions, a suitable wage system, incentive plans on the one hand and higher profits to the employer on the other hand.

Human betterment & Social Justice – 

• Management serves as a tool for the upliftment as well as the betterment of society.
• Through increased productivity & employment, management ensures better standards of living for society.
• It provides justice through its uniform policies

The correct answer is Management as an art

Key PointsManagement 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 To Formulate overall goals and strategies for the organization

Key Points

• Management is the process of coordination and administration of tasks that is required to achieve the goals of the organisation. It is also referred to as the art of making things happen with the help of resources.
• Management is required for an established life and is essential for managing all types of organisations. A sound management system is the fortitude of thriving companies.
• Managing life implies getting everything done to accomplish the aspirations of life and maintaining an establishment. This means getting things done with and by other people to fulfill its objectives.

There are 3 levels in the ranking order of an establishment and they are:

1. Top-level management
2. Middle-level management
3. Lower-level management

Top Level Management

• They comprise of the senior-most executives of the company. 
• They are normally regarded as the Chairman, the Chief Executive Officer (CEO), the Chief Operating Officer (COO), President and Vice-president (VP). 
• Top management is a team consisting of managers from various operational levels, managing marketing, finance, etc., 
• For instance, Chief Finance Officer (CFO), Vice President (marketing) whose primary task is to combine various components and regulate the actions of different units according to the overall objectives of the company
• There are several functions performed by the top-level management, but three of them are the most important, and they are:

1. To lay down the policies and objective of the organization
2. Strategizing the plans of the enterprise and aligning competent managers to the departments or middle level to carry them out.
3. Keeping the communication between the enterprise and the outside world

The correct answer is Absolute

Key Points

• Principles of management are not absolute. They are just the guidelines for decision-making in the course of management. That is, principles of management are not applied as it is in real business situations rather they need to be modified by the manager as per the situation and the requirement.
• Management principles are relative, not absolute, and they should be applied according to the need of the organization.
• A particular management principle has different strengths in different conditions.
• In all aspects of management, there is no rigidity or absoluteness, it is all a matter of proportion, hence, principles are flexible and adaptable to every situation.
• Using them effectively is a difficult art that requires intelligence and experience. It is rare to apply the same principles twice in the same situations, one must take into account changing conditions.
• We should not apply management principles blindly to all problems Therefore, principles should be applied according to the prevailing conditions.

The correct answer is Remuneration

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.

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.

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.

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.
• A positive atmosphere in the workplace will boost 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 Both management and workers require each other

Key Points

• Mental Revolution is a change in thinking both on the part of management and workers. 
• Success of implementation of scientific management depends on the mental revolution of management and workers both as to their duty to cooperate in producing the largest possible surplus and to the necessity for substituting exact scientific knowledge for opinions or the old rule of thumb of individual knowledge. If not, all the measures suggested in the scientific management system would be useless. 
• Mental revolution is a change in thinking on both the sides.
• Mental Revolution is one of the techniques of Scientific Management that demands a change in employers’ and employees’ mindsets.
• As per this Management technique, a positive mindset is quite crucial for promoting the feeling of cooperation and boosting proficiency.
• In its absence, conflicts about the division of labor and delegation of responsibility are bound to arise in an organization.
• Consequently, both employers and their workers should make an effort to increase the overall productivity of their firm through cooperation and by harboring a positive outlook towards business operations.

The correct answer is Planning does not lead to rigidity

Key Points

• Planning is ascertaining prior to what to do and how to do.
• It is one of the primary managerial duties.
• Before doing something, the manager must form an opinion on how to work on a specific job.
• Hence, planning is firmly correlated with discovery and creativity. But the manager would first have to set goals.
• Planning is an essential step what managers at all levels take.
• It requires making decisions since it includes selecting a choice from alternative ways of performance.

The planning function of management has some special features. These features cast enlightenment on its scope and nature.

• Planning focuses on achieving objectives:
• Companies are set up with a common goal in view. Explicit purposes are placed out in the projects along with the ventures to be initiated to accomplish the goals. Therefore, planning is helpful.
• Planning is a primary function of management:
• Planning puts down the foundation for other operations of management. All other managerial duties are conducted within the structure of the ideas outlined. Consequently, planning leads to other operations. This is also mentioned as the supremacy of planning.
• Planning is continuous:
• Plans are outlined for a particular period of time, perhaps for a period, a quarter or a year. At the completion of that period, there is a requirement for a new policy to be formed on the support of new conditions and future circumstances.
• Planning is futuristic:
• Planning typically includes looking forward and outlining for the future. The idea of planning is to coincide future results efficiently to the valid advantage of an association. It means glancing into the future, investigating it and foretelling it. Planning is, therefore, perceived as a forward-looking capacity based on predicting.

The correct answer is Informal organization

Key Points

• An informal organization is a group of people who share a common identity and are committed to achieving a common purpose.
• Informal organizations are created by the will and shared identity of their members.
• The operation of an organization, in reality, is known as an informal organization as opposed to a formal organization, which is based on roles and responsibilities.
• Informal organizations emerge from the interaction or communication between employees irrespective of their designations and hierarchies. It runs parallel to a formal organization.

Features of Informal Organization

• Informal organizations exist in every organization. They are built spontaneously, over time, and not deliberately
• Policies, procedures, or norms are not required to create such groups; they are formed merely based on personal interactions and common interests.
• There is no specific direction in the flow of information.
• It does not possess any definite structure or hierarchy.
• Another feature of informal organizations is that they are found in every business. It is because social interactions are essential.
• Employees who do not get along well with one another may not be able to work cooperatively. This affects the organization's financial profitability.
• Finally, managers can only regulate rather than prohibit informal organizations. This regulation is significant because it has the potential to influence the productivity and morale of everyone involved. 

Informal organizations have several important functions. They are: 

• It provides a source of friendship and social connections for members of the organization. 
• Interpersonal relationships and informal groups can help employees better understand what is going on in the company and establish contact with it so that they have a certain sense of control over the work environment. 
• Informal organizations can provide status and recognition that formal organizations cannot or will not provide employees. 
• The interpersonal network can help the socialization of new employees by informally communicating rules, responsibilities, basic goals, and job expectations. 
• Organizational grapevine helps employees better understand what is happening in their workplace by quickly transmitting information and conveying it to places that cannot be reached by the formal system.

The correct answer is Decentralisation means that control and decision-making lies only with the top management

Key Points

• 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 organizational structure, the 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. In simple words, when delegation is expanded on an organizational level, it is called decentralization

• Rapid decision-making –
• Most of the decisions are taken on the spot, and approval from the higher authority is not required.
• The ability to make a prompt decision allows an organization to function its operation quickly and effectively. 
• Administrative development –
• The decentralization process questions the manager’s judgment and techniques, when responsibility and challenges to develop solutions are given to them.
• This questioning method grows confidence, encourages self-reliance, and make them  good decision-maker resulting in the development of the organization.
• Development of executive skills –
• It allows the employee to perform task individually, giving them invaluable exposure.
• This individual performance creates an environment where an individual can enhance their expertise, take ownership & more significant responsibilities, and be suitable for promotion.
• Promotes growth –
• Decentralisation also allows the heads of the department to work independently.
• This independence helps the department to grow, have a healthy competition between other departments.
• Ultimately, the competition will lead to an improvement and enhancement in productivity.
• Higher control –
• It also evaluates and reviews the performances of each department and gives them a comprehensive perspective of their work.
• However, controlling is the biggest challenge of decentralisation and stabilised management and scorecard are being developed.

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.

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.

• 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 Job offer

Key Points

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

A well organised 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 Marketing

Key Points

• The Marketing concept is a set of strategies that the firms adopt where they analyze the needs of their customers and implement strategies to f those needs which will result in an increase in sales, and profit maximization and also beat the existing competition.
• The marketing concept has been widely used by companies all over the world in the present age, but the situation was not the same earlier.
• As per this concept, it is said that for an organization to satisfy the objectives of the organization, the needs and wants of the customer should be satisfied.
• This theory was first mentioned in Adam Smith’s book “The Wealth of Nations” in 1776 but came into widespread use only 200 years later.
• Therefore, marketing can be said as a process of acquiring customers and maintaining relations with them and at the same time matching needs and wants with the services or products offered by the organization, which ensures that the organization will become profitable.

The marketing concept focuses on the needs, wants, and demands of customers. 

• Needs:
• Needs are basic requirements that enable a healthy and active life. If needs are not fulfilled, it will result in the dysfunction of the system, which can result in disability or death. It can be objective as well as physical as in need of food, water, and shelter.
• Wants:
• Wants are something that is desired by the person. These are not required for day-to-day functioning. Wants are not necessary for basic survival and are mostly molded by cultural influence.
• Demands:
• When the needs and wants are supported by an ability to pay, it becomes a demand

The correct answer is Recruitment Planning

Key Points

• Recruitment is a process of finding and attracting the potential resources for filling up the vacant positions in an organization.
• It sources the candidates with the abilities and attitude, which are required for achieving the objectives of an organization.
• Recruitment process is a process of identifying the jobs vacancy, analyzing the job requirements, reviewing applications, screening, shortlisting and selecting the right candidate.
• 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 Human resource management is bigger than staffing

Key Points

• Human resource development in the organisation context is a process by which the employees of an organisation are helped, in a continuous and planned way to:
• Acquire or sharpen capabilities required to perform various functions associated with their present or expected future roles;
• Develop their general capabilities as individuals and discover and exploit their own inner potentials for their own and/or organisational development purposes; and
• Develop an organisational culture in which supervisor-subordinate relationships, teamwork and collaboration among sub-units are strong and contribute to the professional well being, motivation and pride of employees.
• HRD is needed by any organisation that wants to be dynamic and growth-oriented or to succeed in a fast-changing environment.
• Organisations can become dynamic and grow only through the efforts and competencies of their human resources.
• Personnel policies can keep the morale and motivation of employees high, but these efforts are not enough to make the organisation dynamic and take it in new directions.
• Employee capabilities must continuously be acquired, sharpened, and used. For this purpose, an “enabling” organisational culture is essential.
• When employees use their initiative, take risks, experiment, innovate, and make things happen, the organisation may be said to have an “enabling” culture.
• Staffing is the function of management which takes care of the manpower requirement of an organisation.
• In the complex business environment where rapid continuous changes take place in technology,
• Market preferences and size of organization, it becomes essentially critical to find appropriate and suitable personnel for the job.
• Thus, proper staffing is important for an organization

The correct answer is Inspection

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 Basic Physical Needs

Key Points

• The levels of hierarchy in Maslow’s need hierarchy theory appear in the shape of a pyramid, where the most basic need is placed at the bottom while the most advanced level of the hierarchy is at the top of the pyramid.
• Maslow was of the view that a person can only move to the subsequent level only after fulfilling the needs of the current level. The needs at the bottom of the pyramid are those which are very basic and the most complex needs are placed on the top of the pyramid.

The various steps in Maslow’s hierarchy of needs theory.

• Physiological needs:
• The physiological needs are regarded as the most basic of the needs that humans have. These are needs that are very crucial for our survival. Examples of physiological needs are food, shelter, warmth, health, homeostasis and water, etc.
• In addition to all the above needs, Abraham Maslow also included sexual reproduction as one of the most common needs as it is essential for the survival of the species.
• Safety Needs:
• Once the basic needs of food, shelter, water, etc are fulfilled, there is an innate desire to move to the next level. The next level is known as the safety needs. Here the primary concern of the individual is related to safety and security.
• Safety and security can be regarding many things like a stable source of income that provides financial security, personal security from any kind of unnatural events, attacks by animals and emotional security and physical safety which is safety to health.
• The various actions taken by an individual in ensuring safety and security are finding a job, getting an insurance policy, choosing a secure neighborhood for staying with family, etc.
• Social Needs (Also known as Love and Belonging Needs):
• This is the third level in the need hierarchy theory. It is that stage where an individual having fulfilled his physiological needs as well as safety needs seeks acceptance from others in the form of love, and belongingness.
• In this stage, human behavior is driven by emotions and the need for making emotional relationships is dominant here.
• The following examples can satisfy this need:

1. Friendship
2. Family
3. Intimacy
4. Social Groups

• Esteem needs:
• This is considered as the fourth level of the hierarchy of needs theory. It is related to the need of a person being recognized in society. It deals with getting recognition, self-respect in society.
• The need for recognition and acceptance arises when a person has fulfilled their need for love and belongingness.
• In addition to recognition from others, there is a need for the person to develop self-esteem and personal worth.
• Self-actualization needs:
• This is the final level of the theory of hierarchy of needs as proposed by Maslow. It is the highest level of needs and is known as the self-actualization needs. It relates to the need of an individual to attain or realise the full potential of their ability or potential.
• At this stage, all individuals try to become the best version of themselves. In other words, self actualisation is the journey of personal growth and development.

The correct answer is Leadership

Key PointsLeadership: 

• 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

​Importance of leadership

Leadership benefits an organization in many ways:

• Good interpersonal relationship:
  • a good leader will maintain congenial and good interpersonal relationships with the followers and thus help them in achieving their targets by motivating, guiding, encouraging and supporting them.
• Influences the behaviour:
  • people in an organization may not always be willing to perform their best. There are days when they feel low on energy and lack motivation. Leader will help them in turning this negative behaviour into positive one and thus ultimately help the organization.
• Reduce resistance for change:
  • people everywhere are reluctant to change the habits they already have. Employees do not like to change their way of working or they do not want to switch to new and upgraded technology because they are used to and fluent with the existing one.
  • It is thus task of a leader to help in reduction of resistance and clarify and inspire people to accept the changes wholeheartedly.
• Training:
  • the leader will be knowledgeable and skilful enough that he can train the followers and they will always walk on the footsteps of the leader and this way there will be smooth and easy succession process.
• Clarifying doubts:
  • there are several doubts in the minds of followers while starting up the work, it is thus upon the leader to clarify those doubts and help them understand the work role easily.
• Handle conflicts effectively:
  • leaders also help in bringing harmony and peace in an organization by solving the conflicts that the followers have among themselves

The correct answer is Controlling

Key Points

• Controlling refers to the process of evaluation and assessment of the work done. Under the process of controlling, standards are set for various tasks and activities. 
• Accordingly, the various tasks and activities are evaluated against the set standards. 
• Deviations from the set targets are identified, and corrective actions to be taken are decided. 
• controlling refers to the process of ensuring that the various activities and tasks in the organization are carried out according to the pre-defined goals and objectives. 
• It ensures that deviations if any are identified and appropriate corrective action is taken

Features of Controlling in management

• Controlling is a dynamic process: 
• Controlling is a dynamic process. A manager is required to take a different course of action when an employee fails to match the standards of performance. A manager should have the skills to decide how to react to a certain situation.
• Controlling is an end function: 
• Controlling is an end function because it comes into action once the task is completed. The performance standards are decided before the work is assigned to the employees and once the work is complete the performance of employees is compared with the standard performance, and if the performance of the employees is the same as that of the standard performance then no actions are required to be taken but in case the performance doesn’t match then the manager is required to take the corrective actions.
• Planning and controlling go hand in hand :
• It is not wrong to say that planning and controlling work together. A manager is required to plan so that he can control the actions of employees in order to achieve the desired outcome.
• Controlling is a pervasive function: 
• Controlling is a pervasive function because it can’t be escaped at any level of management. All management is required to control at all levels.
• Controlling is looking forward: 
• A manager can control the performance of an employee by controlling past actions. A manager keeps track of the performance of the employee so that follow-up can be made when the time comes to compare the performance.

The correct answer is Debentures

Key Points

• A debenture is used to issue loan by the government and companies.
• The loan is issued at a fixed interest depending upon the reputation of the companies. When companies need to borrow some money to expand themselves they take the help of debentures.
• Debentures are issued to the public as a contract of repayment of money borrowed from them.
• These debentures are for a fixed period and a fixed interest rate that can be paid yearly or half-yearly.
• Debentures are also offered to the public at large, like equity shares.
• Debentures are actually the most common way for large companies to borrow money.
• Debentures are instruments of debt, which means that debenture holders become creditors of the company
• They are a certificate of debt, with the date of redemption and amount of repayment mentioned on it.
• This certificate is issued under the company seal and is known as a Debenture Deed
• Debentures have a fixed rate of interest, and such interest amount is payable yearly or half-yearly
• Debenture holders do not get any voting rights. This is because they are not instruments of equity, so debenture holders are not owners of the company, only creditors
• The interest payable to these debenture holders is a charge against the profits of the company. So these payments have to be made even in case of a loss.

The correct answer is ​When the growth prospects of the business are high

Key PointsWorking Capital

• Working capital refers to the capital of a business used in day-to-day activities.
• Two main concepts of working capital: 
• Gross working capital: It simply implies investment in current assets. 
• Net working capital: It implies the excess of current assets (cash in hand/at bank, bills receivable, debtors etc.) over current liabilities (obligatory payments which are due; for example, bills payable, outstanding expenses etc.). Algebraically, Net Working Capital = Current Assets − Current Liabilities Factors affecting the requirement of working capital 

Type of business: 

• The nature of business is one of the important determinants of working capital requirements. a. For instance, trading organizations have shorter operating cycles, i.e. no processing is done in such organizations. Accordingly, they require low working capital. b. As against this, an organization dealing in manufacturing would require large working capital. This is because it involves a large operating cycle, i.e. the raw materials first need to be transformed to finished goods before they are offered for sale.

The scale of operations: 

• Firms that operate on a larger scale require greater working capital than those which operate on a lower scale. This is because firms with greater scale of operations are required to maintain high stock of inventory and debtors. As against this, a business with smaller scale of operation requires less working capital.

Fluctuations in the business cycle: 

• In various phases of the business cycle, the requirement of working capital is different. For instance, in the phase of boom, both production and sales are higher. Accordingly, the requirement of working capital is also high. As against this, in the phase of depression, the demand is low, and so production and sale are low. Accordingly, there is less requirement of working capital. 

Production cycle: 

• The production cycle refers to the time gap between receiving goods and their processing into final goods. Longer the production cycle for a firm, the larger are the requirements of Factors Affecting the Requirement of Fixed Capital BUSINESS STUDIES FINANCIAL MANAGEMENT www.topperlearning.com 13 working capital and vice versa. This is because a longer production cycle would imply greater inventories and other related expenses, so a greater requirement of working capital. 

Growth prospects: 

• Higher growth prospects imply higher production, sales and inputs. Accordingly, higher growth prospects for a company imply a greater requirement of working capital. 

Seasonal factors: 

• Companies require a huge amount of working capital because of the high level of activity in the peak season, whereas during the lean season they require less as the activities reduce. 7) Credit allowed: Credit policy refers to the average period for collection of sale proceeds. This depends on the credit worthiness of clients. So, a company that allows a liberal credit policy will require more working capital. 

Credit availed:

•  A company/firm may get credit from its suppliers depending on their credit worthiness. The more they get such credit, the more the requirement of working capital reduces. 

Operating efficiency: 

• Companies with a high degree of operating efficiency will require less working capital, whereas companies having a low level of efficiency will require more working capital because efficiency may help the company/firm in reducing the level of raw materials required, average time for which finished goods inventory is held, etc. 

Availability of raw materials:

•  If raw materials are easily and continuously available, then lower levels of stocks would suffice. This will help the firm/company to avoid storing a large number of raw materials, thereby reducing the need of working capital. However, if the lead time between placing the order and supply of goods increases, then the company will require to store a large amount of stock of raw materials which will lead to more requirements of working capital. 

Level of competition: 

• If the market is more competitive, the company will require larger stocks of finished goods in order to supply goods on time. So, they maintain higher inventories which require a large amount of capital.

The correct answer is Both (A) and (B)

Key Points

• Capital structure simply implies a combination of different financial sources which a firm uses to raise funds. 
• There are two broad categories of sources of funds, namely borrowed funds and owner’s funds.
• Borrowed funds refer to borrowings in the form of loans, borrowings from banks, public deposits etc. In general, ‘borrowed funds’ are simply called debt.
• On the other hand, owner’s funds can be in the form of reserves, preference share capital, retained earnings etc. In general, owner’s funds can be called equity. 
• Accordingly, capital structure can be simply stated as the combination of debt and equity used by a firm. 
• The capital structure of a company affects the profitability as well as the financial risk of the company. 
• Hence, it needs to be taken after considering various aspects.

The way capital structure is framed by the company depends on three main factors—cost, risks and returns. 

• Cost considerations 
• Debt is a cheaper source of finance than equity. The low cost of debt is because the lenders are assured of the return amount, i.e.
• It involves a low risk. Low risk, in turn, implies a lower rate of return. This implies a lower cost to the company.
• The interest to be paid on debt is tax deductible. 
• Equities are more expensive than tax as they involve flotation cost as well. Moreover, dividends paid to shareholders are not tax deductible (i.e. dividends are paid from profits after tax).
• Financial risk
• Debt involves financial risk in the sense that there is compulsion to repay the debt amount in a fixed period of time. Any default in repayment may even lead to liquidation of the firm.
• In case of equity, there is no such risk as it is not mandatory to pay dividends to shareholders.
• Return 
• Debt offers higher return in the sense that in case of debt, the difference between cost and return is greater. Accordingly, the earning per share is greater. Thus, we can say that while debt is cheaper and offers higher return, it also increases the financial risk of the company. Hence, the decision regarding the capital structure must be taken after careful consideration of the factors of cost, return and risk involved.

The correct answer is high creditors

Key Points

Working Capital

• Working capital refers to the capital of business used in day-to-day activities.
• Two main concepts of working capital: 
• Gross working capital: It simply implies investment in current assets. 
• Net working capital: It implies the excess of current assets (cash in hand/at bank, bills receivable, debtors etc.) over current liabilities (obligatory payments which are due; for example, bills payable, outstanding expenses etc.). Algebraically, Net Working Capital = Current Assets − Current Liabilities Factors affecting the requirement of working capital 
• Type of business: 
• The nature of business is one of the important determinants of working capital requirement. a. For instance, trading organisations have shorter operating cycles, i.e. no processing is done in such organisations. Accordingly, they require low working capital. b. As against this, an organisation dealing in manufacturing would require large working capital. This is because it involves a large operating cycle, i.e. the raw materials first need to be transformed to finished goods before they are offered for sale.
• Scale of operations: 
• Firms which operate on a larger scale require greater working capital than those which operate on a lower scale. This is because firms with greater scale of operations are required to maintain high stock of inventory and debtors. As against this, a business with smaller scale of operation requires less working capital.
• Fluctuations in business cycle: 
• In various phases of the business cycle, the requirement of working capital is different. For instance, in the phase of boom, both production and sales are higher. Accordingly, the requirement of working capital is also high. As against this, in the phase of depression, the demand is low, and so production and sale are low. Accordingly, there is less requirement of working capital. 
• Production cycle: 
• Production cycle refers to the time gap between receiving goods and their processing into final goods. Longer the production cycle for a firm, larger are the requirements of Factors Affecting the Requirement of Fixed Capital BUSINESS STUDIES FINANCIAL MANAGEMENT www.topperlearning.com 13 working capital and vice versa. This is because a longer production cycle would imply greater inventories and other related expenses, so greater requirement of working capital. 
• Growth prospects: 
• Higher growth prospects imply higher production, sales and inputs. Accordingly, higher growth prospects for a company imply greater requirement of working capital. 
• Seasonal factors: 
• Companies require huge amount of working capital because of the high level of activity in the peak season, whereas during the lean season they require less as the activities reduce. 7) Credit allowed: Credit policy refers to the average period for collection of sale proceeds. This depends on credit worthiness of clients. So, a company which allows liberal credit policy will require more working capital. 
• Credit availed:
•  A company/firm may get credit from its suppliers depending on their credit worthiness. The more they get such credit, the more the requirement of working capital reduces. 
• Operating efficiency: 
• Companies with a high degree of operating efficiency will require less working capital, whereas companies having a low level of efficiency will require more working capital because efficiency may help the company/firm in reducing the level of raw materials required, average time for which finished goods inventory is held etc. 
• Availability of raw materials:
•  If raw materials are easily and continuously available, then lower levels of stocks would suffice. This will help the firm/company to avoid storing a large amount of raw materials, thereby reducing the need of working capital. However, if the lead time between placing the order and supply of goods increases, then the company will require to store a large amount of stock of raw materials which will lead to more requirement of working capital. 
• Level of competition: 
• If the market is more competitive, the company will require larger stocks of finished goods in order to supply goods on time. So, they maintain higher inventories which require a large amount of capital.

The correct answer is Money market

Key Points

• The money market refers to trading in very short-term debt investments. At the wholesale level, it involves large-volume trades between institutions and traders.
• At the retail level, it includes money market mutual funds bought by individual investors and money market accounts opened by bank customers.
• In all of these cases, the money market is characterized by a high degree of safety and relatively low rates of return.
• The money market involves the purchase and sale of large volumes of very short-term debt products, such as overnight reserves or commercial paper.
• An individual may invest in the money market by purchasing a money market mutual fund, buying a Treasury bill, or opening a money market account at a bank.
• 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 that deal in financial assets whose maturity period is up to one year/ 365 days.
• The 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 a close substitute for money. These instruments help to borrow funds to business units, other organizations, and the Government for the short-term requirement.
• 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 correct answer is Regulation of takeover bids by companies

Key PointsThe three Protective Functions of SEBI are:

1. Controlling insider trading and imposing penalties for such practices.
2. Undertaking steps for investor protection.
3. Promotion of fair practices and code of conduct in the securities market.

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 guides and educates 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 It consists of a President and at least five other members, one of whom should be a woman

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.

Management is intangible as it cannot be seen or touched. One can feel its presence through orderliness, enthusiastic employees, and efficient work.

Intangible assets do not exist in physical form and include things like accounts receivable, pre-paid expenses, and patents, and goodwill which can only be felt.

1. Tangible assets are physical; they include cash, inventory, vehicles, equipment, buildings, and investments. 
2. Fictitious assets literally mean fake, imaginary, or not true. Hence, fictitious assets mean the assets which are not actually assets of the company.

The correct answer is Objective.

• 3 Views of Conflict: Traditional View, Human Relations View, Interactionist View of Conflict. where each view treats and manages conflict uniquely and differently.
• Organizational conflict is the discord that arises when the goals, interests, or values of different individuals or groups are incompatible and those individuals or groups block or thwart one another’s attempts to achieve their objective.
• Conflicts can occur because of the task, relationship, or process-related issues between personnel.
• Conflicts at the organization were perceived or viewed as only a negative object.
• But through the development of “organizational behavior” studies; conflict is now viewed differently and organizations now learned how to manage them.
• But, there is conflict over the role of conflict in groups and organizations.
• Changing Views of Organizational Conflict
• Attitude towards conflict in organizations has changed considerably in the last few decades.
• Once upon a time conflict was considered fully harmful and must be avoided for the betterment of the organization.
• With the passes of time, those views changed largely. Conflict is now an inevitable part of organizations. Its presence is positive in some aspects.
• Here explain the 3 different views on organizational conflicts. With continuous studies and researches in the field of organizational behavior and management, that thinking gradually changed.
• These views advocate the same concept that there are different types of conflicts and not all of them have to be bad and dysfunctional.

Additional Information

3 Views of Conflict are;

The traditional view of organizational conflict:

• The traditional view on organizational conflict is the earliest of the trio.
• It was first developed in the late 1930s and early 1940s, with the most linear and simple approach towards conflict. According to the traditional view, any conflict in an organization is Outright bad, negative, and harmful.
• Although conflicts are of different types, the traditional view only sees conflict as dysfunctional and destructive.
• The conflict was treated negatively and discussed with such terms as violence, destruction, and irrationality to reinforce its negative implication.
• The conflict was a dysfunctional outcome; resulting from poor communication, lack of transparency and trust between people, and the failure of managers to be responsive to the necessities and aspirations of their employees.
• The view that all conflict is negative certainly offers a simple approach to looking at the behavior of people who create conflict.
• We simply need to direct our attention to the causes of conflict, analyzing them, and take measures to correct those malfunctions for the benefit of the group and organizational performance.

Human relations view of organizational conflict:

• The traditional view of conflict fell out of favor for a long time as scholars and academics came to realize that in some circumstances a conflict was inescapable.
• Human Relations View of Organizational Conflict
• From the late 1940s to the mid-70s, the human relations view dominated the topic of organizational conflict.
• In that period, the fields of management and organizational behavior were expanding.
• Moreover, this perspective even suggests that organizational conflicts within groups may even lead to better group performance and outcomes.
• The human relations view of conflict treats conflict as a natural and inevitable phenomenon and, so can’t be eliminated from any organization.
• Here, the conflict was seen in a positive light as it was suggested that conflict may lead to an improvement in a group’s performance.
• But it is similar to the interactionist view of the conflict.
• Interactionist View of Organizational Conflict
• With passing time and further studies in the field of organizational behavior, people started to accept conflict as an integral and somewhat positive aspect.

The interactionist view on organizational conflict extends that concept.

• While the human relations view accepted organizational conflict as an important part, the interactionist view on- organizational conflict takes the same concept one step further.
• It suggests that an ongoing, minimum level of conflict is necessary and beneficial for a group.
• In the interactionist view, an organization or group with no conflict is more likely to become static, non-responsive, inflexible, and inadaptable.
• It states that a minimum level of conflict is beneficial for the group because it maintains a certain level of creativity, self-evaluation, and competition among the individuals.
• All these things result in increased group performance, more creative solutions to problems, and better outcomes.
• So the major contribution of the interactionist view is encouraging group leaders to sustain an ongoing minimum level of conflict enough to keep the group viable, self-critical, and inspired.

The correct answer is Overlapping.

Key Points

• Management has been described as a social process involving responsibility for economical and effective planning & regulation of operation of an enterprise in the fulfillment of given purposes.
• It is a dynamic process consisting of various elements and activities.
• These activities are different from operative functions like marketing, finance, purchase, etc.
• Rather these activities are common to every manager irrespective of his level or status.
• According to Henry Fayol, To manage is to forecast and plan, to organize, to command, & to control.
• Most widely accepted are functions of management given by KOONTZ and O'DONNELL i.e. Planning, Organizing, Staffing, Directing, and Controlling.
• For theoretical purposes, it may be convenient to separate the function of management but practically these functions are overlapping in nature i.e. they are highly inseparable. Hence, Option 1 is correct.
• Each function blends into the other & each affects the performance of others.

Additional Information

Managerial functions typically perform managerial functions in order of planning, organizing, directing, and controlling. Planning being the preparative step for the future course of action, followed by organizing which helps how to utilize resources that are directed/lead by managers and controlled by the top management for measuring and assessing the deviations from the plans.

1. Planning means setting an organization’s goal and deciding how best to achieve them. Planning is decision making, regarding the goals and setting the future course of action from a set of alternatives to reach them. The plan helps to maintain managerial effectiveness as it works as a guide for the personnel for future activities. Selecting goals as well as the paths to achieve them is what planning involves.
2. Organizing involves determining how activities and resources are to be assembled and coordinated. The organization can also be defined as an intentionally formalized structure of positions or roles for people to fill in an organization.
3. Directing/leading is said to be a process in which the managers instruct, guide, and oversee the performance of the workers to achieve predetermined goals. Directing is said to be the heart of the management process
4. Controlling is measuring, comparing, finding deviation, and correcting the organizational activities which are performed for achieving the goals or objectives. 

For theoretical purposes, it may be convenient to separate the function of management but practically these functions are overlapping in nature i.e. they are highly inseparable. Each function blends into the other & each affects the performance of others.

The Managerial grid model is a leadership style developed by Robert R. Blake and Jane Mouton. This model has developed five leadership styles based on the concern for production and concern for people.

High concern both for production and people - 9.9 Management:

• This managerial gird leadership style was previously known as the Team style and is currently known as the Sound style.
• The managers following this style have a high concern for both production and people and this model is based on the Theory Y of Douglas McGregor.
• This style of leadership is considered the optimal or best style as the managers encourage teamwork and commitment to employees and make them see themselves as a constructive part of the company.

Therefore, the Managerial Grid suggests High concern both for production and people as the best leader behaviour.

Low concern both for production and people - 1.1 Management:

• This managerial leadership style was previously known as the Impoverished style and is currently known as the Indifferent style.
• The main concern of the manager is not to be held responsible for any mistakes and managers use this style mostly to keep their job secure and they avoid getting into trouble as much as possible.
• The managers following this leadership style have low consideration for both production and for the people of the organization. 

High structure and high consideration and Low structure and low consideration are part of the Ohio State Leadership Studies also known as Behavioural Leadership Theory.

High structure and high consideration:

• When the managers initiate a formal structure to communicate and to develop a leader-subordinate role so that everyone knows what is expected from them and how tasks will be performed than he is known as a high structure leader.
• When the managers are concerned about their subordinates and try to develop a warm and friendly work environment than that manager is said to have high consideration for his subordinates.
• When both the above behaviours of initiating structure and consideration are found within leaders than it is known as High structure and high consideration model.  

Low structure and low consideration:

• When the managers do not initiate a formal structure to communicate and to develop a leader-subordinate role and everyone do not know what is expected from them and how tasks will be performed than he is known as a low structure leader.
• When the managers are least concerned about their subordinates and do not try to develop a warm and friendly work environment than that manager is said to have low consideration for his subordinates.
• When both the above behaviours of low initiating structure and least consideration are found within leaders than it is known as Low structure and low consideration model.  

The correct answer is Speciality products.

The Scientific Management Theory is well known for its application of science at the production floor or the operating levels. Important Points

• Science, not Rule of Thumb: Rule-of-thumb methods are traditional approaches that suited organisations in the past. Under mass production, the volume of work had expanded that required scientific methods to manage and control work easily.
• Harmony, not Discord Under this principle, workers and management should work in harmony with mutual cooperation and coordination. Workers should not be overburdened with work, while should not feel dissatisfied with their investment of time and money in an organisation.
• According to Taylor a firm can achieve maximum prosperity if workers and management work with each other leading to development of a cordial relationship with each other and team spirit, and organisational goals can be achieved easily.
• Cooperation, not Individualism: In continuation with the earlier point, it is coordination and not individualism that will assist in achieving organisational goals.
• This principle also suggests that management should take workers into confidence in making important decisions which affect workers and there should be almost equal division of work and responsibility between workers and management and both should work side by side.
•  Personal Efficiency Level  :  This principle involves development of each and every person to his/her greatest efficiency and prosperity. There should be scientific selection of workers and work assigned to them should suit their physical, mental, and intellectual capabilities

Hence, we can conclude that the above are the principles of scientific theory.

The correct answer is Fredrick Winslow Taylor.

Key Points

• According to Taylor, there should be an almost equal division of work and responsibility between workers and management.
• All the day long the management should work almost side by side with the workers helping, encouraging and smoothing the way for them.
• Cooperation, Not Individualism: There should be complete cooperation between the labour and the management instead of individualism. This principle is an extension of principle of ‘Harmony not discord’.
• Competition should be replaced by cooperation. Both should realise that they need each other.

The correct answer is All of the Above

Key PointsThe following are the functions of marketing:

• Identify needs of the consumer: 
  • The first step in the marketing function is to identify the needs and wants of the consumer that is present in the market. 
  • Companies or businesses must therefore gather information on the customer and perform an analysis of the collected information.
  • By doing this they can present the product or service that matches closely with the customer’s needs and wants.
• Planning: 
  • The next step in the marketing function is planning. 
  • It is considered very important for a business to have a plan. 
  • The management should be very clear about the company objectives and what it wishes to achieve from the created plan.
  • The company should then chalk out a timeline that is essential for achieving the objectives.
• Product Development: 
  • After the details are received from the consumer research, the product is developed for use by the consumers. 
  • There are many factors that are essential for a product to be accepted by the customer, a few factors among the many are product design, durability, and cost.
• Standardization and Grading: 
  • Standardisation refers to the process of ensuring uniformity in the product which means that a product developed by a business shall be standard for every consumer with the same quality and design and this is one of the key aspects that need to be maintained by the business.
  • Grading is referred to as the process of classifying products that are similar in quality and characteristics. 
  • Grading helps in making the customer know about the quality of the product offered. 
  • It helps in making customers understand that the products conform to the highest quality standards.
• Packing and Labelling: 
  • The first impressions of a product are its packaging and the label attached to it. Therefore, packaging and labeling should be looked after very well. 
  • It is a well-known fact that great packaging and labeling go a long way in ensuring product success.
• Branding: 
  • Branding is referred to as the process of identifying the name of the producer with the product. 
  • Certain brands are there in the market have a lot of goodwill and any product coming from the same brand will be accepted more warmly by the consumers. 
  • Although, having a separate identity for the product can be helpful.
• Customer Service: 
  • A company has to set up various kinds of customer service based on their product. 
  • It can be pre-sales, technical support, customer support, maintenance services, etc.
• Pricing: 
  • It can be regarded as one of the most important parts of marketing function. 
  • It is the price of a product that determines whether it will be successful or a failure. 
  • Some other factors are market demand, competition, price of competitors.
  • The company or business should understand clearly that bringing about frequent changes in the price of a product can lead to confusion in the minds of consumers.
• Promotion: 
  • 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.
• Distribution: 
  • Distribution refers to the movement of consumer goods to the point of consumption. A company must ensure that the correct channel of distribution is selected for the product.
  • The mode of distribution is dependent on the factors such as shelf life, market concentration, and capital requirements. Proper management of inventory is also essential.
• Transportation: 
  • Transportation is defined as the physical movement of goods from one place to another. 
  • In other words, it is the movement of goods from the place of production to the place of consumption. Also, the correct mode of transportation can be selected based on the geographical boundaries of the market.
• Warehousing: 
  • Warehousing of products creates time utility. It is often seen that there is a gap between the time a product is produced and the time when it is consumed. 
  • Companies like to maintain the smooth flow of goods even when the products are of seasonal nature. 
  • Warehousing and storing provide the opportunity to provide goods during off-season also.

The correct answer is Informal organization

Key Points

• An informal organization is a group of people who share a common identity and are committed to achieving a common purpose. 
• Informal organizations are created by the will and shared identity of their members. The operation of an organization, in reality, is known as an informal organization as opposed to a formal organization, which is based on roles and responsibilities.
• Informal organizations emerge from the interaction or communication between employees irrespective of their designations and hierarchies. It runs parallel to a formal organization.

The correct answer is Both inefficient and ineffective

Key Points

• Management is the process of running a company, a non-profit organization, or a government agency.
• It's the science and art of managing a company's resources.
• Management will be viewed as ineffective if it does not use persuasion in its communication and decision-making.
• When administrators fail to plan and organize their work correctly, they are referred to as "helpless administration."
• There are no preconceived goals or assumptions, and there isn't much of a plan or structure to work with.

The correct answer is None of the above.

Key Points

 Significance of principles of management

• The principles of management derive their significance from their utility.
• They provide useful insights to managerial behaviour and influence managerial practices.
• The significance of principles of management can be discussed in terms of the following points:
  • Providing managers with useful insights into reality: The principles of management provide the managers with useful insights into real world situations.
  • Optimum utilisation of resources and effective administration: Resources both human and material available with the company are limited. They have to be put to optimum use.
    • By optimum use we mean that the resources should be put to use in such a manner that they should give maximum benefit with minimum cost. 
  • Scientific decisions: Decisions must be based on facts, thoughtful and justifiable in terms of the intended purposes. They must be timely
  • Meeting changing environment requirements: Although the principles are in the nature of general guidelines but they are modified and as such help managers to meet changing requirements of the environment. 
  • Fulfilling social responsibility: The increased awareness of the public, forces businesses especially limited companies to fulfill their social responsibilities. 
  • Management training, education and research: Principles of management are at the core of management theory. As such these are used as a basis for management training, education and research.

The correct answer is Span of management

Key Points

• The Span of Management refers to the number of subordinates who can be managed efficiently by a superior.
• The manager ha the group of subordinates who report him directly is called as the span of management.
• The span of management, to a large extent gives shape to the organization structure.
• The span of management refers to the number of subordinates that can be effectively managed by a superior.
• This determines the levels of management in the structure.
• A proper organization structure is essential to ensure a smooth flow of communication and better control over the operations of a business enterprise.
• An organization structure provides the framework which enables the enterprise to function as an integrated unit by regulating and coordinating the responsibilities of individuals and departments.

Additional Information

For example:

• Sunita opened her own travel agency. The success of her travel agency depends on a harmonious relationship between the customer and the employees of the travel agency.
• In order to achieve this objective she has divided the entire work of the agency into three subheads based on the functions namely operations,

The correct answer is All of the Above

Key Points

• Financial management might be characterised as the function or area in an association which has to be about profit, cash, expenses, and credit.
• Its goal would be that the association might possess the ability to provide for all functions of organisational financial activities and reap satisfactorily.
• All the above options are the primary aims of financial management.

Directing is said to be a process in which the managers instruct, guide, and oversee the performance of the workers to achieve predetermined goals. The direction is said to be all those activities that are designed to encourage the subordinates to work effectively and efficiently. The elements of direction consist of Supervision, Communication, Leadership, and Motivation.

Hence, delegation is not the element of direction.

4 Elements of Direction are:

1) Supervision:

It refers to monitor the progress of routine work of one’s subordinates and guiding them properly. Supervision is an important element of the directing function of management. Supervision has an important feature that face-to-face contact between the supervisor and his subordinate is a must.

2) Communication:

It refers to the art of transferring facts, ideas, feeling, etc. from one person to another and making him understand them. A manager has to continuously tell his subordinates about what to do, how to do, and when to do various things.

3) Leadership:

It refers to influence others in a manner to do what the leader wants them to do. Leadership plays an important role in directing. Only through this quality, a manager can inculcate trust and zeal among his subordinates.

4) Motivation:

It refers to that process that excites people to work for the attainment of the desired objective. Among the various factors of production, it is only the human factor that is dynamic and provides mobility to other physical resources.

Delegation:

1. Delegation is the assignment of authority to another person to carry out specific activities.
2. It is the process of distributing and entrusting work to another person.
3. Delegation is one of the core concepts of management leadership. 

Motivation is the reason for people’s actions, desires, and needs. Motivation is one of the essential aspects of HRM which is concerned with the process of inducing, inspiring, organizing, and stimulating employees to do a better job in the organization.

1. Motivation is an Internal feeling
2. Motivation is a complex Process
3. Motivation is a continuous Process
4. Motivation is Goal Oriented
5. Motivation is a complex Subject
6. Intrinsic and Extrinsic Motivation
7. Positive and Negative Motivation
8. Motivation is Behavior-oriented,

Therefore, Internal feeling is a characteristic of motivation. 

The correct answer is individualistic.

Key Points

• There is always a strong case for the value and growing popularity of teams.
• But all people are not inherently team players.
• There are also many organizations that have historically nurtured individual accomplishments.
• They have created competitive work environments in which only the strong survive.
• The challenge of creating team players will be greatest where the national culture is highly individualistic and the teams are being introduced into an established organization that has historically valued individual achievement. Hence, Option 3 is correct.

Additional Information 

The correct answer is Delegation.

Key Points

• Delegation
  • Delegation refers to the downward transfer of authority and responsibility from a superior to a subordinate for completing certain tasks.
  • It is a prerequisite to the efficient functioning of an organization because it enables a manager to use his time on high-priority activities.
  • It also satisfies the subordinate's need for recognition and provides them with opportunities to develop and exercise initiative.
  • It helps a manager to extend his area of operations.

Key Points

•  Decentralization
  • The process of transferring and assigning decision-making authority to lower levels of an organizational hierarchy.
  • Ideas and information are flowing from the bottom to the top of the organization.
  • the span of control of top managers is relatively small.
• Departmentalization
  • It is a process wherein teams are combined together into functional units called departments on the basis of their area of specialization, to achieve the goals of the organization.
  • The objectives of Departmentalization are to specialize activities, to simplify the process and operations of the organization, to maintain control.
• Differentiation
  • Differentiation involves achieving competitive advantage through pinpointing product or service attributes that customers perceive as valuable and positioning the firm to meet those demands better than the competition.

Human society has made a long journey in this; so is the concept of development. Human society has progressed and developed through several stages. The social system prevalent in any society or country at any point in time is a sum total of several sub-systems such as political system, economic system, educational system, etc. 

Key Points

• In every society, no matter how simple or complex, there exist standards, norms, customs, values, beliefs and conventional ways of behaving which shape the behaviour and preferences of its members.
• These behaviours may differ from society to society and from era to era, but they represent a process through which the social heritage or the culture, is passed on from generation to generation.  
• Man is the only living creature capable of'co~nmunicating symbolically and storing his social heritage for transmission to the new generation.
• Therefore, 'culture' refers to the attitudes, values, beliefs and ways of acting and interacting that characterize a social group.
• Neither a single individual nor a group, nor an entire society can be understood without reference to culture. 

Thus from the above-mentioned points, it is clear that society gains potency as it is handed down from generation to generation.

The correct answer is Technical Skills.

Key Points

•  Technical Skills
  • Technical Skills refer to the specialized knowledge and expertise needed to accomplish complex actions, tasks, and processes relating to computational and physical technology as well as a diverse group of other enterprises.
  • Those who possess technical skills are often referred to as technicians with the expression referring to audio technicians, electronics technicians, market technicians, computer technicians, engineering technicians, and a variety of other designations.
  • Technical skills may also refer to the expertise of a certain type of market participant who uses technical analysis signals to buy and sell stocks, bonds, futures, and other financial instruments.
  • In most cases, the acquisition of advanced technical skills requires specialized training or education, which takes both time and resources.
  • The acquisition of advanced technical skills requires specific education or training, often with a hands-on learning component and many advanced topical elements.​

Additional Information

• ​Interpersonal Skills
  • ​Interpersonal skills are the behaviors and tactics a person uses to interact with others effectively.
  • In the business world, the term refers to an employee's ability to work well with others.
  • Interpersonal skills range from communication and listening to attitude and deportment.
• Conceptual Skills
  • Conceptual skills are the abilities that allow an individual to better understand complex scenarios and develop creative solutions.
  • From a management perspective, these skills are valuable because those who have them can approach complicated workplace situations in a variety of different ways.

By extension of control means a senior officer can control only a limited number of executives.

Here the extension of control simply refers to the span of control.

Span of Control:

• A span of control, also known as span of management refers to the number of subordinates that a manager can control or manage.
• The theories about the optimum span of control go back to V. A. Graicuna; in 1933, he used assumptions about mental capacity and attention span to develop a set of practical heuristics.
• The number of subordinates that can be managed depends on the complexity of the work.
• For example, a manager can manage 4-6 subordinates when the nature of work is complex, whereas, the number can even go up to 15-20 subordinates for fixed or repetitive work.
• Nowadays, technology helps ease several middle managers' tasks such as collecting and manipulating operational information.
• Due to this, a manager has been able to control more subordinates at one time.
• Several factors affect the span of control of a manager such as the nature of work, capabilities of the manager, capabilities of the employees to be managed, and the responsibilities of a manager.

A community comprises a number of people living together and sharing a common life. They interact with each other frequently and purposefully. The community has been a central focus of social work practice since its inception.

• Communities are one of the many social systems that touch peoples’ lives and shape their individual and group identities. People are born in social contexts, they grow, mature and learn about and form perceptions of social structures. They also develop individual and group identities through associations that connect them to life-long community experiences.

Key Points

• Social control is also required to bring compatibility in thoughts, ideas, behaviour patterns, attitudes and perceptions of the individuals, because devoid of it, society cannot function effectively.
• Social control provides social security to the people. Human beings are so helpless and weak that their existence is not possible without the help of others. When the ties get weaker, people feel disconnected and alone.
• Social control keeps a check on the forces endangering the safety and security of the people and prepares them to face the realities of the world. Social control is badly needed to bring the selfish nature of man under control because normally, nobody feels happy being controlled, subordinated and directed by others.

Thus from the above-mentioned points, it is clear that when community ties are weak, people feel disconnected and alone.

The lower level of management is also referred to as the supervisory or the operative level of managers. They spend most of the time addressing the functions of the firm, as instructed by managers above them. 

The lower-level managers are the first-line managers as they feature at the base of operations, so they are considered as essential personnel that communicates the fundamental problems of the firm to the higher levels. This management level consists of the foreman, the line-boss, the section chief, the head nurse, superintendents, sergeants.

Functions of lower-level management:

• To assign jobs to workers and to make arrangements for their training and development. 
• To communicate the objectives and goals laid down by the higher-level officials.
• To supervise and control workers and maintain personal contact with them.
• To ensure quality and be responsible for the production quantity.
• To maintain discipline and good human relations among workers. 
• To give suggestions, recommendations, appeals, and information concerning employee problems to the higher-level managers.
• To give periodic reports of the workers to the higher-level managers.  

Therefore, motivation and development of Staff is not the function of lower-level management.

Middle-level managers are responsible for the motivation and development of staff. They are also the communicators between the top level and the lower level as they transfer information, reports, and other data of the enterprise to the top-level. 

In democratic leadership, the subordinates are also involved in decision making. 

1. Democratic Leadership

This style of leadership is also known as a participative style of leadership. In this style, the subordinates are also involved in decision making. The democratic style of leadership can be further categorized into three types:

• Consensus: A consensus leader makes a decision only after consulting the group members. A decision is not made final until all the members agree with the decisions
• Consultative: A consultative leader takes the opinion of the employees before making a decision
• Democratic: In the democratic style, the final authority of making decisions rests with the subordinates.

​

2. Autocratic Leadership

The autocratic style of leadership is also known as the authoritative style or directive style of leadership, in which the autocratic leader retains most of the authority for himself/herself. An autocratic leader gives orders to his/her subordinates and expects that subordinates should give complete obedience to the orders issued. In this type, the decisions are taken by the leader without consulting others.

3. Laissez-Faire Leadership

Laissez-Faire leadership is also known as free-reign leadership. In this style of leadership, the decision making power is completely left with the subordinates. The leader’s involvement in making decisions is minimized and the people are allowed to make their own decisions. The group members are given complete freedom in setting their own goals and achieving them, which gives them complete autonomy. Employees under this leader, tend to become self-sufficient and guidance is not offered by leaders unless requested

4. Paternalistic leadership 

It is a managerial approach that involves a dominant authority figure who acts as a patriarch or matriarch and treats employees and partners as though they are members of a large, extended family. In exchange, the leader expects loyalty and trust from employees, as well as obedience.

In democratic Leadership, the decision is taken with subordinates while in Laissez-Faire Leadership the decision is taken by subordinates.

The invisible hand, metaphor, introduced by the 18th-century Scottish philosopher and economist Adam Smith in 1759, characterizes the mechanisms through which beneficial social and economic outcomes may arise from the accumulated self-interested actions of individuals, none of whom intends to bring about such outcomes.

• Smith argued against mercantilism and was a major proponent of laissez-faire economic policies.
• In his first book, "The Theory of Moral Sentiments," Smith proposed the idea of an invisible hand—the tendency of free markets to regulate themselves by means of competition, supply and demand, and self-interest.
• The Theory Of Moral Sentiments was a real scientific breakthrough.
• It shows that our moral ideas and actions are a product of our very nature as social creatures.
• It argues that this social psychology is a better guide to moral action than is the reason.