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Short Answer Type Question:

Q.1 What is marketing? What functions does it play with the process of exchange of goods and services? Explain. 

ANSWER: Marketing is the process by which buyers and sellers interact with one another in order to purchase and sell goods and services. Previously, different approaches to marketing’s definition were taken. It is also sometimes called as a process which occurs  post-production involving the purchase of the final products, and other times as a pre-production process involving the merchandising (designing) of the product. In reality, marketing is said to be a much broader concept. It includes all of the activities involved in the exchange of goods and services between producers and consumers. These are the functions that fall under the purview of marketing. It entails product planning, design, packaging and labeling, standardization, branding, warehousing, transportation, advertising, pricing, and distribution. It also includes activities that are carried out even after the product has been sold, such as maintaining customer relations and gathering feedback. As a result, marketing plays an important role in the exchange of goods as well as services.

Q.2 Distinguish between the product concept and production concept of marketing. 

ANSWER: The difference between two concepts of marketing are mentioned below:

Basis of Difference	Product Concept	Production Concept
Belief	It was believed that consumers preferred superior quality products, and that by increasing the quality of the product, profits could be maximized.	It was believed that consumers preferred readily available and affordable products, and that by increasing production volume, profits could be maximized.
Focus of the business	The emphasis was on improving the product’s quality, adding new features, and so on.	The emphasis was on increasing the quantity of production and lowering the average cost of production.
Odology	The emphasis is on improving the product’s features and quality.	The emphasis is on increasing the business’s production efficiency.

Q.3 Product is a bundle of utilities? Do you agree? Comment. 

ANSWER: When a customer decides to purchase a product, his or her primary focus is on the utility that he or she will receive from using it. A customer seeks various levels of satisfaction from a product. A product’s benefits can be classified into three types: functional benefits, psychological benefits, and social benefits. For example, when a consumer buys a car, it provides him with functional utility as a mode of transportation. In addition, having purchased a car provides him with a psychological benefit in the form of pride and self-esteem. It also comes with a social benefit in the form of peer acceptance. As a result, a product is said to be a bundle of utilities, and a buyer values all such utilities when purchasing a product.

Q.4 What are industrial products? How are they different from consumer products? Explain. 

ANSWER: Industrial products are those that are used as inputs in the manufacture of other goods. These items are not intended for final consumption; rather, they are used as raw materials and inputs by manufacturers in the production of consumer goods. Machines, tools, and so on are examples of industrial products. In contrast, consumer products are those that are used by the ultimate customers for their personal consumption. Consumer goods include items such as toothpaste, edible oil, furniture, and so on. The distinctions between industrial and consumer products are highlighted in the following points.

Basis of Difference	Industrial Products	Consumer Products
Number of customers	There are a limited number of customers. For example, oil seeds (an industrial product) are primarily used by mustard oil producers.	The number of customers has increased. Many people, for example, consume mustard oil (a consumer product).
Channel of distribution	Such products necessitate shorter distribution channels, such as direct selling or a one-level channel.	Such products must travel through significantly longer channels before reaching the final consumer. However, the distribution channel for perishable consumer goods is limited.
Location	Industrial products are concentrated only in areas where the industries that produce them are located.	Consumer goods are easily and conveniently available.
Demand	The demand for industrial products is obtained from consumer goods demand.	Consumer product demand is not derived demand; rather, it serves as the foundation for demand for industrial products.
Role of technical features in decision making	When purchasing these products, technical features play an important role.	Manufacturing of such products does not involve any technical complexities. As a result, technical features play little of a role in purchasing decisions.

Q.5 Distinguish between convenience products and shopping products. 

ANSWER: The difference between convenience products and shopping products is given below:

Basis of differenceDemand	Convenience productsConvenience products are in high demand all the time.	Shopping productsShopping products are in relatively low demand.
Nature of products	Convenience goods fall under the category of essential commodities.	In general, such goods are long-lasting in nature.
Unit of purchase and price	These items are sold in small quantities and at a low unit cost. As a result, these items have a low profit margin.	These items are typically larger in size and have high unit prices. As a result, the pro gin is also high.
Nature of purchase	Such items are purchased on the spur of the moment, without much thought or planning.	Such products are not purchased on the spur of the moment; instead, the consumer takes the time to compare the price, quality, and other features of the product.
Example	Ice cream, medicines, newspapers, and stationery items.	Jewelry, furniture, clothing, and so on.

Q.6 ‘Products is a mixture of tangible and intangible attributes’. Discuss. 

ANSWER: In general, a product is a tangible asset with physical characteristics. For example, we consider a motorcycle or a laptop to be products. However, when it comes to marketing a product, it is important to consider not only the physical or tangible attributes of the product, but also certain intangible attributes. That is, a consumer’s decision to buy a product is influenced not only by its tangible characteristics, but also by certain intangible characteristics. In other words, a consumer buys a product for reasons other than its functional utility, such as brand recognition, reputation, social satisfaction, and so on. When a person buys a laptop, he looks for intangible attributes such as guarantee, brand, and so on, in addition to the physical attributes and functional utility of the model, size, features, and so on. As a result, a product is a combination of tangible as well as intangible attributes.

Q.7 Describe the functions of labelling in the marketing of products. 

ANSWER: Labeling plays an important role in product packaging during the marketing process. Labeling essentially provides information about the product in the form of a tag (in the case of unbranded local products such as rice, wheat, and so on) or graphics (such as a lady applying cream on face for a face cream). Labeling serves several functions, the most important of which are as follows.

i) Contents and Description of Use: The primary function of labeling is to provide information about the product’s use, application, warnings, content, and so on. For example, the contents of a shampoo bottle are written on the bottle, along with warnings such as “keep away from children under the age of 10.” Similarly, a picture of noodles describing its appearance can be found on food products such as Maggie Cuppa Mania. Along with this, the ingredients and method of preparation are specified.

ii) Identification and Distinction: A label makes it easier to identify a product. It assists consumers in differentiating their preferred products from others. In a potato chip product, for example, a man eating potato chips is imprinted for identification. A label also contains useful information such as the manufacturer’s name or address, net weight, maximum retail price, batch number, and so on.

iii) Standardization and Evaluation: A label also aids in the determination of a product’s grade. This allows marketers to categorize the product into different categories based on specific qualities or features. For example, a face-cream brand may be divided into three categories: oily skin, dry skin, and normal skin.

iv) Encourages Production: An appealing label also aids marketers in promoting the product. It aids in attracting new customers to the product. For example, the label for Maggi Noodles reads, “Taste bhi, Health bhi.” In this case, the label is crucial in highlighting the product and promoting its sale.

v) Information Necessary for Law: The label also provides and mentions the information that is required by law to be included. On a packet of tobacco, for example, it says, ‘chewing tobacco is harmful to your health.’

Q.8 Discuss the role of intermediaries in the distribution of consumer non-durable products. 

ANSWER: Intermediaries are crucial in the distribution of consumer nondurables. They facilitate the movement of goods from the point of manufacture to the point of consumption. In the case of nondurables, the intermediaries perform the following functions.

i) Arrangement: An intermediary receives goods from a variety of sources. He then categorizes these items into homogeneous groups based on characteristics such as size, quality, and so on. For example, an electronic goods seller may receive a supply of various electronic goods (TV, washing machine, etc.) and then sort them according to their functions.

ii) Collection: An intermediary keeps a large stock of goods on hand to ensure an easy flow of supply. For example, an electronic goods seller may keep a large stock of each type of electronic item.

iii) Allocation and Packing: This function entails dividing larger stock into smaller units. For example, each electronic item and its spare parts are packed separately.

iv) Creating Variety: An intermediary obtains various goods from various sources and assembles them in a single location. As a result, it keeps a wide range of goods. He obtains the products and then sells them in various combinations as desired by the customers. Most people, for example, prefer a television and a video player together. As a result, the retailer can sell a mix of the two.

v) Promotion of Product: They help the manufacturers with their promotional efforts. Manufacturers, for example, use advertising to promote their product. Intermediaries can help this process by displaying banners and other advertisements. For example, an electronic goods retailer may display banners highlighting the features of various products.

vi) Mediation: Middlemen are responsible for negotiating a deal that will satisfy both the producers and the consumers. They negotiate the price, quality, quantity, and so on for an efficient transfer of ownership that meets the needs of both parties.

vii) Bearing Risk: Intermediaries buy goods from manufacturers and keep them in their possession until the final sale. During the process, they are vulnerable to fluctuations in demand, price, spoilage, and so on. Assume a retailer purchases a large number of air conditioners. However, after a few months, winter arrives, and demand for air conditioners decreases. As a result, the stock remains unsold, and the retailer suffers a loss.

Q.9 Explain the factors determining choice of channels of distribution. 

ANSWER: One of the most important marketing decisions is deciding which channel of distribution to use. The following factors influence channel selection.

(i) Product Category: The channel of distribution chosen is determined by the type of product produced. It is critical to determine whether the product is perishable or non-perishable, whether it is an industrial or consumer product, whether its unit value is high or low, and the product’s degree of complexity. For example, if a product is perishable, short channels should be used rather than long ones. Likewise, if a product has a low unit value, a longer channel is preferred. Similarly, consumer goods are distributed via long channels, whereas industrial goods are distributed via short channels.

ii) The Company’s Characteristics: The two most important characteristics of a company that influence channel selection are its financial strength and the level of control it desires over intermediaries. Shorter channels necessitate more funds than longer channels, but they also provide greater control over the channel’s members (intermediaries). As a result, companies that are financially strong or want to have more control over the distribution channel choose shorter distribution channels.

iii) Factors of Competition: The degree of competition and the channels chosen by other competitors influence the distribution channel selection. Depending on its policies, a company may choose to use the same channel as its competitors or a different channel. For example, if a company’s competitors choose to sell through a retail store, the company may do the same, or it may choose a different channel, such as direct selling.

iv) Environmental Aspects: Environmental factors such as economic constraints and legal policies all play a role in channel of distribution selection. For example, the requirement of complex legal formalities at each stage of distribution encourages companies to choose shorter distribution channels.

v) Market Elements: Other factors influencing channel selection include market size, geographical concentration of buyers, quantity demanded, and so on. Shorter channels, for example, are used when potential buyers are concentrated in a small geographical area. In contrast, if the buyers are spread out over a larger area, longer distribution channels may be used.

Q.10 Explain briefly the components of physical distribution. 

ANSWER: Physical distribution is the movement of goods from the point of manufacture to the point of consumption. The components of physical distribution are as follows.

i) Processing of Order: Order processing consists of several steps, including order placement, transmission of the order by intermediaries to the manufacturer, inventory maintenance as needed, delivery of goods, and so on. Because all of these processes take time, a physical distribution system should be designed to ensure quick and accurate order processing. In summary, order processing speed and accuracy are directly related to customer satisfaction. Fast and accurate order processing leads to higher levels of customer satisfaction.

ii) Transportation of Products: The physical movement of goods from the point where they are manufactured to the point where they are consumed is referred to as product transportation. Transporting goods from the point of production to the point of consumption is required to make them physically available to consumers.

iii) Warehousing: The process of storing manufactured goods prior to the final act of sale is known as warehousing. If we suppose that a company has a lot of warehouses then it indicates that the company will be able to provide goods at various locations more quickly and also on time. However, maintaining warehouses comes with its own set of expenses. As a result, a company must weigh the relative benefits and costs of warehousing and strike a balance between the two as needed.

iv) Maintenance of Inventory: Inventory is kept on hand by the companies to ensure that products are delivered on time. Inventory maintenance, like warehousing, has a positive relationship with customer service. However, inventory maintenance comes at a cost because a large amount of capital remains locked up in the stock until it is sold. As a result, the companies must strike a balance between customer service and cost.

Q.11 Define advertising. What are its main features? Explain. 

ANSWER: Advertising is a marketing technique that is used to promote a product. Companies use advertising to attract customers to their products and persuade them to buy them. Newspapers, magazines, television, and other forms of advertising are common. The following are some of the most important aspects of advertising.

(i) Cost Involved: Advertising is not free. It is a form of paid promotion. The costs of advertising will be borne by the sponsors.

ii) Impersonal Mode: Advertising is a form of impersonal communication. In other words, there is no direct interaction between the customer and the advertiser. As a result, it lacks personality and creates a monologue.

iii) Specific Sponsor: There are always a few individuals or sponsors who take on the responsibility of designing it and bearing the associated costs.

Q.12 Discuss the role of ‘sales promotion’ as an element of promotion mix. 

ANSWER: Sales promotion refers to the incentives provided to buyers in order to persuade them to purchase the product. It included activities such as providing discounts, gifts, and free samples, among others. These activities supplement the company’s other promotional efforts, such as advertising and direct selling. They are increasingly attracting customers and persuading them to buy the product right away. Such activities are especially beneficial during the launch of a new product. They provide a temporary boost to sales. Discounts are given by selling the product at a lower price than the listed price, for example. Quantity gifts are given away as freebies (such as 20 percent extra or buy 2, get 1 free). When a new brand is launched, free samples are distributed in the form of small packets. Companies use such incentives to attract more customers and increase sales.

Long Answer Type Question:

Q.1 Define Marketing. How is it different from selling? Discuss.
ANSWER: Marketing is a total system of business activities designed to plan, price, promote and distribute want, satisfying goods and services to present and potential customers.

Q.2 What is the marketing concept? How does it help in the effective marketing of goods and services?
ANSWER:  Orientation of marketing implies that focus on the satisfaction of customers need, is the key to the success of any organisation in the market. All the decisions in the firm are taken from the point of view of the customers, e.g., What product will be produced, with what features and at what price shall it be sold or where shall it be made available for sale will depend on what do the customer wants.
Marketing concept helps in effective marketing of goods and services by using the following
(i) Identification of market or customer who are chosen as the target of
(ii) Understanding needs and wants of customers in the target market.
(iii) Development of products or services for satisfying needs of the target market.
(iv) Satisfying needs of target market better than the competitors.
(v) Doing all this at a profit.

Q.3 What is marketing mix? What are its main elements? Explain.
ANSWER: Marketing mix refers to the combination of four basic elements known as four P’s — Product, Price, Promotion and Place.
Product Mix
(i)Product mix basically concerns with the features related to a product e.g., range, quality, size, labelling, packaging, branding etc. All products must satisfy consumer needs and expectations. It aims at providing good quality products at fair prices.
(ii)Price Mix
It includes decisions relating to price determination, discounts and allowances credit terms. It covers pricing objectives and pricing policies. Price should cover not only cost of production and selling expenses but also a reasonable profit margin. The price policy adopted by the enterprise should not only be cost based but also demand based and competition based.
(iii) Place Mix
Place mix links the seller and buyer. The choice of channels of distribution and transport are the two major issues here. There are various factors which help in deciding the channel e.g., the time and the place, where the goods have to reach or transportation.
It is the nature of goods, place of destination, cost and availability etc.
(iv) Promotion Mix
It refers to all marketing activities to increase the volume of sales of the product of an enterprise. It consists of means of marketing communication with a view to informing and persuading the prospective buyers to buy a certain product. It includes advertising, personal selling, publicity and sales promotion.

Q.4 How does branding help in creating product differentiation? Does it help in marketing of goods and services? Explain.
ANSWER:  Branding helps a firm in distinguishing its products from that of its competitors. This helps the firm to secure and control the market for its products. If products were sold by generic names, it would be very difficult for the marketers to distinguish their products from its competitors. Thus, most marketers give a name to their product, which helps in identifying and distinguishing their products from their competitors product. This process of giving a name or a sign or a symbol etc to a product is called Branding.

Q.5 What are the factors affecting determination of the price of a product or service? Explain.
ANSWER:  There are number of factors which affect the fixation of the price of a product. Some of the important factors in this regard are discussed as below
(i) Product Cost The cost sets the minimum level or the floor price at which the product may be sold. There are broadly three types of cost—fixed costs, variable costs and semi variable cost. Total cost is the sum of all these three. Generally, all firms try to cover all their costs, atleast in the long Sun. In addition, they aim at earning a margin of profit over and above the costs.
(ii) The Utility and Demand The utility provided by the product and the intensity of demand of the buyer sets the upper limit of price, which a buyer would be prepared to pay. Infact the price must reflect the interest of both the parties to the transaction — the buyer and the seller. The buyer may be ready to pay up to the point, where the utility from the product is atleast equal to the sacrifice made in terms of the price paid. The seller would, however, try to cover the costs. According to the law of demand, consumers generally purchase more units at a low price than at a high price.
(iii) The Extent of Competition in the Market
The price is also affected by the nature and degree of competition. The price will tend to reach the upper limit in case there is less degree of competition while under free competition, the price will tend to be set at the lowest level.
(iv) Government and Legal Regulations
In order to profit the interest of public against unfair practices in the field of price fixing, Government can intervene and regulate the price of commodities. Government can declare a product as essential product and regulate its price.
(v) Pricing Objectives
Pricing objectives are another important factor affecting the fixation of the price of a product or a service. Apart from price maximisation, the pricing objectives of a firm may include.
(a)Obtaining Market Share Leadership If a firm objective is to obtain larger share of the market, it will keep the price of its products at lower level, so that greater number of people are attracted to purchase the products.
(b)Surviving in a Competitive Market If a firm is facing difficulties surviving in the market because of intense competition or introduction of a more efficient substitute by a competitor.
(c) Attaining Product Quality Leadership In this case, normally higher prices are charged to cover high quality and high cost of R & D (Research and Development).
(vi) Marketing Methods used Price Fixation
Price is also affected by other elements of marketing such as distribution system, quality of salesmen employed, quality and amount of advertising, sales promotion efforts, the type of packaging, product differentiation, credit facility and customer service provided.

Q.6 What do you mean by ‘Channels of distribution’? What functions do they play in the distribution of goods and services? Explain.
ANSWER:  People, institutions, merchants and functionaries, who take part in the distribution of goods and services are called ‘Channels of Distribution’. Channels of distribution are set of firms and individuals that take title or assist in transferring title, to particular goods or services as it moves from the producers to the consumers.
Channels of distribution smoothen the flow of goods by creating possession, place and time utilities. They facilitate movement of goods by overcoming various barriers The important function performed by middlemen are
(i) Sorting Middlemen procure supplies of goods from a variety of sources, which is often not of the same quality, nature and size. These goods are sorted into homogeneous groups on the basis of the size or quality.
(ii) Accumulation This function involves accumulation of goods into larger homogeneous stock, which help in maintaining continuous flow of supply.
(iii) Allocation Allocation involves breaking homogeneous stock into smaller, marketable lots to sell them to different types of buyers.
(iv) Assorting Middlemen build assortment of products for resale. There is usually a difference between the product lines made by manufacturers and the assortment or combinations desired by the users. Middlemen produce variety of goods from different sources and delivers them in combinations, desired by customers.
(v) Product Promotion Middlemen also participate in some sales promotion activities, such as demonstration, special display, contests etc. to increase the sale of products.
(vi) Negotiation Channels operate with manufacturers on the one hand and customer on the other. They negotiate the price, quality, guarantee and other related matters with customers, so that transfer of ownership is properly affected.
(vii) Risk Taking In the process of distribution of goods, the merchant middlemen take title of the goods and thereby assume risks on account of price and demand fluctuations, spoilage, destinations etc.

Q.7 Explain the major activities involved in the physical distribution of products.
ANSWER: Physical distribution covers all the activities required to physically move goods from manufacturer to the customers. Important activities involved in the physical distribution include transportation, warehousing, material handling and inventory control.
(i) Order Processing
In a typical buyer-seller relationship order placement is the first step. Products flow from the manufacturers to customers via channel members while orders flow from customers to manufacturers. Therefore, a good speedy and accurate system of order processing becomes a necessity.
(ii) Transportation
Transportation is the means of carrying goods and raw materials from the point of production to the point of sale. It is one of the major element in the physical distribution of goods. It is important because unless the good are physically made available, the sale can not be completed.
(iii) Warehousing
Warehousing refers to the act of storing and assorting products in order to create time utility in them. The basic purpose of warehousing activities is to arrange placement of goods and provide facilities to store them. The need for warehousing arises because there may be difference between the time, a product is produced and the time it is required for consumption. Generally, the efficiency of a firm in serving its customers will depend on, where these warehouses are located and where are these to be delivered.
(iv) Inventory Control
A very important decision in respect of inventory is deciding about the level of inventory. Higher the level of inventory, higher will be the level of service to customers but the cost of carrying the inventory will also be high because lot of capital would be tied up in the stock. The decision regarding level of inventory involves prediction about the demand for the product. A correct estimate of the demand helps to hold inventory and cost level down to a minimum. The major factors determining inventory levels include.
(a) Firm’s policy regarding the level of customer service. Higher the level of service, greater will be the need to keep more inventories.
(b) Degree of accuracy of the sales forecast. In case more accurate estimates are available, the need for keeping very high level of inventory can be minimised.
(c) Responsiveness of the distribution system i.e., ability of the system to transmit inventory needs back to the factory and get products to the market.
(d) Cost of inventory, which includes holding cost, such as cost of warehousing, tied up capital etc and the manufacturing cost

Q.8 ‘Expenditure on advertising is a social waste’ Do you agree? Discuss.
ANSWER:  The opponents of advertising say that the expenditure on advertising is a social waste as it adds to the cost, multiplies the needs of the people and undermines social values. The proponents, however argue that advertising is very useful as it increases the reach, brings the per unit cost of production down and adds to the growth of the economy.
Following are the points of criticism
(i) Adds to Cost
The opponents of advertising argue that advertising unnecessarily adds to the cost of product, which is ultimately passed on to the buyers in the form of high prices. It is line that advertisement of a product cost lots of money but it helps to increase the demand for the product as large number of potential buyers come to know about the availability of the products, its features etc and are persuaded to buy it. This increases the demand and therefore the
– production. As a result, the per unit cost of production comes down as the total cost is divided by larger number of units.
(ii) Undermines Social Values
Advertising undermines social values and promotes materialism. It breeds discontentment among people as they come to know about new products and feel dissatisfied with
their present state of affairs. This criticism is not entirely time. Advertisement in fact helps buyer by informing them about the new products which may be improvement over the existing products.
(iii) Confuses the Buyers
Another criticism against advertisements is that so many products are being advertised which makes similar claims that the buyer gets confused as to which one is true and which are should be relied upon, e.g., there are so many brands of soaps, shampoos, cars, TVs, cell phones etc which are advertised. The supporters of advertisement, however argued that we are all rational human beings who make our decisions for purchase of products on factors, such as price, style, size, etc. Thus the buyers can clear their confusion by analysing the information provided on the advertisements and other sources before taking a decision to purchase a product.
(iv) Encourages Sale of Inferior Product
Advertising does not distinguish between superior and inferior products and persuade people to purchase even the inferiors products. The desired level of quality will depend on the economic states and preferences of the target customers. Advertisements sell products of a given quality and the buyers will buy, if it suits their requirements.
(v) Some Advertisements are in Bad Taste
Another criticism against advertising is that some advertisements are in bad taste. They show something which is not approved by some people. Some advertisement spoil the relationship between employer and employee, husband and wife etc.
From the above discussion, we have learnt that through advertisements are crticised but still they have their own advantages. It is not a social waste, rather it adds value to the social cause by giving a boost to production and generating employment.

Q.9 Distinguish between advertising and personal selling.

Short answer Type Question:

Q.1What are the functions of a financial market? 

ANSWER: A financial market is a market for the creation and exchange of financial assets such as shares and debentures. A financial market performs the following functions.

i) Savings mobilization and channeling into the most productive uses. A financial market serves as a conduit between savers and investors. It serves as a channel for the transfer of savings from households to investors. It provides savers with a variety of investment options, assisting in the allocation of surplus funds to the most productive use.

ii) Make Price Discovery Easier. The price of a financial asset, like a commodity, and generally determined by the forces of demand and supply for funds. The financial market serves as a platform for the interaction of fund demand (represented by business firms) and fund supply (represented by the households). As a result, it aids in determining the price of the traded asset.

iii) Gives Financial Assets Liquidity. In a financial market, an asset or security can be easily bought and sold. This gives the assets liquidity. That is, assets can be easily converted into cash or cash equivalents through financial market trading.

iv) Reduce Transaction Costs. Financial markets provide useful information about the securities that are traded on the market. It saves time, effort, and money that both buyers and sellers of a financial asset would otherwise have to spend trying to find each other. As a result, the financial market serves as a common platform where buyers and sellers can meet to meet their individual needs.

Q.2 ”Money Market is essentially a Market for short term funds”. Discuss. 

ANSWER: The money market is a market for trading short-term securities and funds. Money market securities have a very short maturity period ranging from one day to one year. These assets can be used as a close substitute for cash or money. These are also called as ‘Near Money instruments’ due to their short maturity period. These instruments are considered as an vital source of financing for working capital needs. They have a high level of liquidity. DFHI offers a discount on money market securities and a ready market for them. Furthermore, securities traded in the money market are safe and secure because transactions are made in instruments issued by financially strong financial institutions and companies. Treasury bills, commercial paper, call money, certificates of deposit, and other common instruments traded in the money market include treasury bills, commercial paper, call money, certificates of deposit, and so on.

Q.3 What is a Treasury Bill? 

ANSWER: The Reserve Bank of India issues Treasury Bills on behalf of the Central Government of India. They are issued to meet the Government of India’s short-term funding needs. Treasury Bills have maturities ranging from 14 to 364 days. These bills are typically introduced by commercial banks, LICs, UTIs, non-banking financial institutions, and so on. They’re also known as Zero-Coupon Bonds. Treasury bills are highly liquid instruments because the RBI is always willing to purchase them. Furthermore, because they are issued by the RBI, they are regarded as the safest instrument. They are available for a minimum of Rs 25,000 and in multiples of that amount. Treasury Bills are issued at a discount, that is, at a lower price than the face value, and are redeemed at par. The interest received during redemption is denoted by the discount (the difference between the issue price and the redemption value). The purpose of issuing T-Bills is to meet the government’s short-term money borrowing needs. T-bills have several advantages over other bills, including: 

1. They have a zero risk weighting  because of issuance by the government, and on the other hand sovereign papers carry no risk.

2. High liquidity because the maturities are 91 and 364 days, respectively.

3. Accountability.

4. Because T-Bills have a very active secondary market, they have a higher degree of tradability.

Q.4 Distinguish between Capital Market and Money Market. 

ANSWER: The following points highlight the difference between Capital Market and Money Market:

Basis of difference	Capital Market	Money Market
Time Span of Securities	The capital market is primarily concerned with the trading of medium and long-term securities with maturities of more than one year.	This Market is usually concerned with the short-term trading of securities with maturities ranging from one day to a maximum of one year.
Liquidity	Capital market securities are liquid in the sense that they can be traded on stock exchanges, but they are less liquid than money market securities.	The traded securities are extremely liquid. DFHI offers a discount on money market securities and a ready market for them.
Return expected	Because of the possibility of long-term and regular dividends or bonuses, expected returns are higher.	Because of the shorter duration, expected returns are lower.
Instruments	Equity shares, preference shares, debentures, bonds, and other long-term securities are among the instruments traded in the capital market.	Treasury bills, commercial bills, certificates of deposit, and other short-term securities are among the instruments traded in the money market.
Risk	In terms of principal repayment, capital market securities carry a higher level of risk.	The securities here are less risky due to the short time period and the issuers’ strong financial position.

Q.5 What are the functions of a Stock Exchange? 

ANSWER: The term “stock exchange” refers to a market where existing securities are bought and sold. The primary functions of a stock exchange are as follows. 

(i) Provides Liquidity and Marketability: The stock exchange provides a ready-to-trade platform for existing securities. In another way we can say, it provides a continuous market for the sale and purchase of securities. Securities can be easily converted into cash via stock exchange whenever needed. Furthermore, long-term securities can be converted to medium-term and short-term securities via stock exchange.

(ii) Determination of Prices: A stock exchange aids in determining the value of the monetary assets traded in that market. It provides a platform for interaction between buyers and sellers of securities, assisting in the determination of securities prices through the forces of demand and supply.

(iii) Fair and Safe Market: As a legal and well-regulated market, the stock exchange. It operates within the boundaries of the defined and existing legal framework. As a result, it ensures transactional safety and fairness.

(iv) Facilitates Economic Growth: Securities are constantly bought and sold on a stock exchange. This ongoing process of disinvestment and reinvestment aids in directing savings and investments to the most productive uses. This boosts capital formation as well as economic growth. 

(v) Spreading Equity Cult: A stock exchange can help educate people about investing by regulating issues and improving trading practices. It encourages and promotes people to invest in ownership securities. 

(vi) Acts as an Economic Barometer: A stock exchange reflects changes in economic conditions through changes in share prices. For example, the rise (or fall) in share prices reflects a boom (or recession).

(vii) Scope for Speculation: It is widely assumed that some degree of speculation is required for improved liquidity and the maintenance of demand and supply for securities. Within the confines of the law, the stock exchange allows for a reasonable and controlled scope of speculation.

Q.6 What are the objectives of the SEBI? 

ANSWER: The Securities and Exchange Board of India (SEBI) was formed to promote the orderly and healthy growth of India’s securities market. The following points highlight SEBI’s overall goals:

1.To regulate the stock exchanges market as well as the securities industry in order to ensure their smooth operation.

2. To protect and guide individual investors’ rights and interests, as well as to educate and guide them.

3. To prevent trading malpractices and strike a balance between the securities industry’s self-regulation and statutory regulation.

4. Regulating as well as developing a code of conduct and fair practices for intermediaries such as brokers, merchant bankers, and so on. , in order to make them more competitive and professional.

Q.7 State the objectives of the NSE. 

ANSWER: The National Stock Exchange of India was established in 1992. It was established as a stock exchange in 1993 and began operations in 1994. It was founded by major banks, financial institutions, insurance firms, and financial intermediaries. NSE was founded with the following goals in mind.

(i) The NSE aimed to establish a single nationwide trading system to provide trading in all types of securities. This type of system boosts investor confidence.

(ii) It ensured that all investors throughout the country have easy and equal access to a suitable communication network. It improves the security’s liquidity. In the transaction, the people involved were limited under the regional stock exchange system. In contrast, the NSE incorporates transactions from all over the country, increasing the liquidity of the securities.

(iii) The NSE aims to provide a fair, efficient, and transparent securities market by utilizing an electronic trading system. Anyone can obtain information about the trading of various securities from the NSE’s local terminals. As a result, it aids in the reduction of trading fraud.

(iv) One of the NSE’s goals is to enable shorter settlement cycles and book entry settlements.

(v) The NSE aimed to meet international stock exchange standards and benchmarks.

Long Answer Type Questions:

Q.1 Explain the various money Market Instruments.
ANSWER: Money Market Instruments
(i) Treasury Bill
A treasury bill is an instrument of short term borrowing by the Government of India maturing in less than one year. They are also known as Zero Coupon Bonds issued by Reserve Bank of India on behalf of the Central Government to meet its short term requirements of funds. They are issued in the form of a promissory note. They are highly liquid and issued at a price which is lower than their face value and repaid at par. Treasury bills are available for a minimum amount of Rs.25,000.
(ii) Commercial Paper
Commercial paper is a short term unsecured promissory note, negotiable and transferable by endorsement and delivery with a fixed maturity period. It is issued by large and creditworthy companies to raise short term funds at lower rates of interest than market rates. It usually has a maturity period of 15 days
to one year. The issuance of commercial paper is an alternative to bank borrowing for large companies that are generally considered to be finally strong. It is sold at discount and redeemed at par.
(iii) Call Money
Call money is a short term finance repayable on demand, with a maturity period of one day to fifteen days, used for inter-bank transactions. Commercial Banks have to maintain a minimum cash balance known as cash reserve ratio. Call money is a method by which banks borrow from each other.
(iv) Certificate of Deposit
Certificates of deposit are unsecured, negotiable, short term instruments in bearer form, issued by Commercial Banks and development financial institutions. They can be issued to individuals, corporations and companies during periods of tight liquidity when the deposit growth of banks is slow but the demand for credit is high. They help to mobilise a large amount of money for short periods.
(v) A Commercial Bill
A commercial bill is a bill of exchange used to finance the working capital requirements of business firms. It is a short term negotiable, self-liquidating instrument which is used to finance the credit sales of firms, when goods are sold on credit, the buyer becomes liable to make payment on a specific date in future.

Q.2 What are the methods of floatation in Primary Market?
ANSWER:  The primary market is also known as the new issues market. It deals with new securities being issued for the first time. There are various methods of floating new issues in the primary market
(i) Offer Through Prospectus
This involves inviting subscription from the public through issue of prospectus. A prospectus makes a direct appeal to investors to raise capital, through an advertisement in newspapers and magazines. The issues may be under written and also required to be listed on at least one stock exchange. The contents of the prospectus have to be in accordance with the provisions of the Companies Act and SEBI disclosure and investor protection guidelines.
(ii) Offer for Sale
Under this method securities are not issued directly to the public but offered for sale through intermediaries like issuing houses or stock brokers. In this case, company sells securities enblock at an agreed price to brokers who, in turn, resell them to the investing public.
(iii) Private Placement
Private placement is the allotment of securities by a company to institutional investors and some selected individuals. It helps to raise capital more quickly than a public issue. Access to the primary market can be expensive on account of various mandatory and non-mandatory expenses.
(iv) Rights Issue
This is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. The shareholder are offered the ‘right’ to buy new shares in proportion to the number of shares they already possess.
(v) e-IPOs
A company proposing to issue capital to the public through the on-line system of the stock exchange has to enter into an agreement with the stock exchange. This is called an Initial Public Offer (IPO). SEBI registered broker’s have to be appointed for the purpose of accepting applications and placing orders with the company the issuer company should appoint a registrar to the issue having electronic connectivity with the exchange. The issuer company can apply for listing of its securities on any exchange other than the exchange through which it has offered its securities. The lead manager co-ordinates all the activities amongst intermediaries connected with the issue.

Q.3 Explain the Capital Market reforms in India.
ANSWER:  The National Stock Exchange is the latest, most modern and technology driven exchange. NSE has setup a nationwide fully automated screen based trading system. The NSE was setup by leading financial institutions, banks, insurance companies and others financial intermediaries. It is managed by professionals, who do not directly or indirectly trade on the exchange. The trading rights are with the trading members who offer their services to the investors. The Board of NSE comprises senior executives from promoter institutions and eminent professionals, without having any representation from trading members.
Objectives of NSE
(i) Establishing a nationwide trading facility for all types of securities.
(ii) Ensuring equal access to investors all over the country through an appropriate communication network.
(iii) Providing a fair, efficient and transparent securities market using electronic trading system.
(iv) Enabling shorter settlement cycles and book entry settlements.
(v) Meeting international bench marks and standards..
Within a span of 10 year, NST was able to achieve its objectives for which it was set up. It has been playing a leading role as a change agent in transforming the Indian capital market

Q.4 Explain the objectives and functions of SEBI.
ANSWER:   Objectives of SEBI
Functions of SEBI
Keeping in mind the emerging nature of the securities market in India, SEBI was entrusted with the twin task of both regulation and development of the securities market. It has certain functions
Regulatory Functions
(i) Registration of brokers and sub-brokers and other players in the market.
(ii) Registration of collective investment schemes and mutual funds.
(iii) Regulation of stock brokers, portfolio exchanges, underwriters and merchant bankers and the business in stock exchanges and any other securities market.
(iv) Regulation of takenover bids by companies.
(v) Calling for information by undertaking inspection conducting enquiries and audits of stock exchanges and intermediaries.
(vi) Levying for or other charges for carrying out the purposes of the act.
(vii) Performing and exercising such power under Securities Contracts Act, 1956, as may be delegated by the Government of India.
Development Functions
(i) Training of intermediaries of the securities market.
(ii) Conducting research and publishing information useful to all market segments.
(iii) Undertaking measures to develop the capital markets by adopting a flexible approach.
Protective Functions
(i) Prohibition of fraudulent and unfair trade practice like making misleading statements, manipulations, price rigging etc.
(ii) Controlling insider trading and imposing penalties for such practices.
(iii) Undertaking steps for investor protection.
(iv) Promotion of fair practices and code of conduct in securities market

Q.5 Explain the various segments of NSE.
ANSWER:   NSE provides trading in the following two segments
(i) Whole Sale Debt Market Segment This segment provides a trading platform for a wide range of fixed income securities that include central government securities, treasury bills, state development loans, bonds issued by public sector undertakings, floating rate bonds, zero coupon bonds, index bonds, commercial paper, certificate of deposit, corporate debentures and mutual funds.
(ii) Capital Market Segment The capital market segment of NSE provides efficient and transparent platform for trading in equity, preference, debentures, exchange traded funds as well as retail government securities.

Short Answer Type Question:

Q.1 What is meant by capital structure? 

ANSWER: The proportion of debt and equity used to fund a company’s operations is referred to as its capital structure. In other words, capital structure is the proportion of debt and equity capital in the capital structure. It is difficult to say what type of capital structure is best for a company. The capital structure should be designed to maximize the wealth of equity shareholders by increasing the value of their equity shares. Alphabetically, the Capital structure is  Debt  Equity  Debt  Equity  or  Debt  Equity +Debt Debt  Equity +Debt.

Q.2 Discuss the two objectives of Financial Planning. 

ANSWER: Financial planning entails creating a blueprint for a company’s financial operations. It ensures that the appropriate amount of funds are available for organizational operations at the appropriate time. As a result, it ensures that everything runs smoothly. Firms use financial planning to forecast how much money will be needed at what time, taking into account growth and performance. The two primary goals of financial planning are as follows.

To ensure availability of funds whenever these are required: The primary goal of financial planning is to ensure that sufficient funds are available in the company for various purposes such as the purchase of long-term assets, meeting day-to-day expenses, and so on. It ensures that funds are available on time. In addition to availability, financial planning attempts to specify the sources of finance.

To see that firm does not raise resources unnecessarily: Excessive funding is just as bad as insufficient or scarce funding. If there is a surplus of funds, financial planning must invest it as wisely as possible, as keeping financial resources idle is a significant loss for an organization.

Q.3 What is financial risk? Why does it arise? 

ANSWER: Financial risk occurs when a company is unable to meet its fixed financial charges, such as interest payments, preference dividends, and repayment obligations. In other words, it refers to the likelihood of the company failing to meet its fixed financial obligations. It manifests itself as the proportion of debt in the capital structure rises. This is due to the fact that the company is required to pay the interest charges on debt in addition to the principal amount. As a result, the greater the debt, the greater the payment obligations, and thus the greater the chances of payment default. As a result, increased use of debt entails increased financial risk for the company.

Q.4 Define a ‘current asset’. Give four examples of such assets.

ANSWER: Current assets are assets that are retained in the business with the intention of converting them anytime into cash within a short period of time i.e. one year. For example, goods are purchased with the intent of reselling them and earning a profit, debtors exist to convert them into cash, i.e., receive the amount from them, and bills receivable exist to receive cash against them. Current assets include short-term investments, debtors, stocks, and cash equivalents.

Q.5 Financial management is based on three broad financial decisions. What are these? 

ANSWER: Financial management is the efficient acquisition, allocation, and utilization of a company’s funds. It focuses on three major aspects of financial decisions: investment decisions, financial decisions, and dividend decisions.

1. Investment decisions include the purchase of fixed assets (called capital budgeting). Investment in current assets is also a type of investment decision that is referred to as a working capital decision.

2. Financial decisions – They concern the raising of funds from various sources, which will be determined by the decision on the type of source, the period of financing, the cost of financing, and the resulting returns. 

3. Dividend decision – The finance manager must make a decision on net profit distribution. Net profits are typically divided into two categories:

1. Dividend for shareholders- A dividend, as well as the rate at which it will be paid, must be determined.

2. Retained profits- The amount of retained profits must be finalized, which will be determined by the enterprise’s expansion and diversification plans.

Q.6 What are the main objectives of financial management? Briefly explain.

ANSWER: Financial management is generally concerned with the procurement, allocation, and control of a company’s financial resources. The goals could be

1. Ensure a consistent and adequate supply of funds to the concern.
2. To ensure adequate returns to shareholders, which will be determined by earning capacity, market price of the share, and shareholder expectations.
3. To ensure that funds are used as efficiently as possible. Once the funds are obtained, they should be used in the most efficient and cost-effective manner possible.
4. To ensure investment safety, funds should be invested in safe ventures to achieve an adequate rate of return.
5. To plan a sound capital structure-Capital should be composed in a sound and equitable manner so that a balance between debt and equity capital is maintained.
   

Q.7 How does working capital affect both the liquidity as well as profitability of a business? 

ANSWER: A company’s working capital is defined as the excess of current assets (such as cash on hand, debtors, stock, and so on) over current liabilities. Working capital has an impact on a company’s liquidity as well as its profitability. The liquidity of the business increases as the amount of working capital increases. However, because current assets provide a low return, increasing working capital reduces business profitability. For example, increasing the business’s inventory increases its liquidity, but because the stock is kept idle, the profitability falls. Low working capital, on the other hand, impedes the day-to-day operations of the business. As a result, working capital should be allocated in such a way that a balance between profitability and liquidity is maintained.

Long Answer Type Questions:

Q.1 What is meant by working capital? How is it calculated?
Discuss five important determinants of working capital requirements.
ANSWER: Working capital is that part of total capital which is required to H meet day-to-day expenses, to buy raw materials, to pay wages and other
expenses of routine nature in the production process or we can say it refers 2 to excess of current assets over current liabilities.
Working Capital = Current Assets – Current Liabilities
Factors affecting working capital requirement are
2 (i) Nature of Business The basic nature of a business influences the
amount of working capital required. A trading organisation usually needs a lower amount of working capital compared to a manufacturing organisation. This is because in trading, there is no processing required. In a manufacturing business, however, raw materials need to be converted into finished goods, which increases the expenditure on raw material, labour and other expenses,
(ii) Scale of Operation The firms which are operating on a higher scale of operations, the quantum of inventory, debtors required is generally high, Such organisations, therefore, require large amount of working capital as compared to the organisations which operate on a lower scale.
(iii) Production Cycle Production cycle is the time span between the receipts of raw materials and their conversion into finished goods.
Some businesses have a longer production cycle while some have a shorter one. Working capital requirement is higher in terms with longer processing cycle and lower in firms with shorter processing cycle.
(iv) Credit Allowed Different firms allow different credit terms to their customers. A liberal credit policy results in higher amount of debtors, increasing the requirements of working capital.
(v) Credit Availed Just as a firm allows credit to its customers it also may get credit from its suppliers. The more credit a firm avails on its purchases, the working capital requirement is reduced.

Q.2 Capital structure decision is essentially optimisation of risk-return relationship. Comment.
ANSWER:   Capital structure refers to the mix between owners and borrowed funds. It can be calculated as Debit/Equity.
Debt and equity differ significantly in their cost and riskiness for the firm. Cost of debt is lower than cost of equity for a firm because lender’s risk is lower than equity shareholder’s risk, since lenders earn on assured return and repayment of capital and therefore they should require a lower rate of return. Debt is cheaper but is more risky for a business because payment of interest and the return of principal is obligatory for the business. Any default in meeting these commitments may force the business to go into liquidation. There is no such compulsion in case of equity, which is therefore, considered riskless for the business. Higher use of debt increases the fixed financial charges of a business. As a result increased, use of debt increases the financial risk of a business.
Capital structure of a business thus, affects both the profitability and the financial risk. A capital structure will be said to be optimal when the proportion of debt and equity is such that it results in an increase in the value of the equity share.

Q.3 A capital budgeting decision is capable of changing the financial fortune of a business. Do you agree? Why or why not?
ANSWER:   Investment decision can be long term or short term. A long term investment decision is also called a capital budgeting decision. It involves commiting the finance on a long term basis, e.g., making investment in a new machine to replace an existing one or acquiring a new fixed assets or opening a new branch etc. These decisions are very crucial for any business. They affect its earning capacity over the long-run, assets of a firm, profitability and competitiveness, are all affected by the capital budgeting decisions. Moreover, these decisions normally involve huge amounts of investment and are irreversible except at a huge cost. Therefore, once made, it is almost impossible for a business to wriggle out of such decisions. Therefore, they need to be taken with utmost care. These decisions must be taken by those who understand them comprehensively A bad capital budgeting decision normally has the capacity to severely damage the financial fortune of a business.

Q.4 Explain factors affecting the dividend decision.
ANSWER:   Dividend decision relates to distribution of profit to the shareholders and its retention in the business for meeting the future investment requirements.
How much of the profits earned by a company will be distributed as profit and how much will be retained in the business is affected by many factors. Some of the important factors are discussed as follows
(i) Earnings Dividends are paid out of current and past year earnings. Therefore, earnings is a major determinant of the decision about dividend.
(ii) Stability of Earnings Other things remaining the same, a company having stable earning is in a position to declare higher dividends. As against this, a company having unstable earnings is likely to pay smaller dividend.
(iii) Growth Opportunities Companies having good growth opportunities retain more money out of their earnings so as to finance the required investment. The dividend in growth companies, is therefore, smaller than that in non-growth companies.
(iv) Cash Flow Position Dividends involve an outflow of cash. A company may be profitable but short on cash. Availability of enough cash in the company is necessary for declaration of dividend by it.
(v) Shareholder Preference If the shareholder in general, desire that at least a certain amount should be paid as dividend, the companies are likely to declare the same.
(vi) Taxation Policy If tax on dividend is higher it would be better to pay less by way of dividends. As compared to this, higher dividends may be declared if tax rates are relatively lower.
(vii)Stock Market Reaction For investors, an increase in dividend is a good news and stock prices react positively to it. Similarly, a decrease in dividend may have a negative impact on the share prices in the stock market.
(viii) Access to Capital Market Large and reputed companies generally have easy access to the capital market and therefore, depend less on retained earnings to finance their growth. These companies tend to pay higher dividends than the smaller companies which have relatively low access to the market.
(ix) Legal constraints Certain provisions of the Company’s Act place restriction on payouts as dividend. Such provisions have to be adhered, while declaring dividends.
(x) Contractual Constraints While granting loans to a company, sometimes the lender may impose certain restrictions on the payment of dividends in future. The companies are required to ensure that the dividends does not violate the terms and conditions of the loan agreement in this regard.

Q.5 Explain the term ‘trading on equity’. Why, when and how it can used by a business organisation?
ANSWER:  Trading on equity refers to the increase in profit earned by the equity shareholders due to presence of fixed financial charges. When the rate of earning or Return on Investment (ROI) of a company is higher than the rate of interest on borrowed funds only then a company should opt for trading on equity. Let us consider the following example

It should be clear from the above example, that shareholders of the company ‘X’ have a higher rate of return than company ‘Y’ due to loan component in the total capital of the company.

Short Answer Type Question:

Q.1Explain the meaning of controlling. 

ANSWER: Controlling is the function of evaluating and assessing the progress of work. It entails establishing specific criteria or standards for the work and then comparing the actual work to the established standards. It aids in identifying deviations from the set targets and, as a result, in taking the necessary corrective actions. It also ensures that everything goes as per the plan. It also ensures that resources are used fully and efficiently. Controlling is an essential managerial function because it keeps a close eye on the progress of work and thus serves as the foundation for future actions and planning.

Q.2 ‘Planning is looking ahead and controlling is looking back’. Comment. 

ANSWER: Planning is forward-thinking, while controlling is backward-thinking. This statement is only partially correct. Planning is a psychological process that involves “thinking and deciding ahead of time” about “what is to be done” and “how it is to be done.” It is a mental activity that entails deciding on goals as well as the actions that will be taken to achieve them. Thus, planning is said to be looking ahead because it involves predicting the future. Controlling, on the other hand, entails assessing past performance and comparing it to predetermined standards. Controlling is a backward-looking function in this sense. Both of these statements, however, are only partially correct. Though planning is a forward-thinking concept, it is founded on past actions and experiences. Without looking into the past, it is impossible to plan for the future. Similarly, while controlling involves evaluating past performance, it also aims to improve future performance by implementing necessary corrective actions. As a result, we can say that planning and controlling are both backward and forward looking functions.

Q.3 ‘An effort to control everything may end up in controlling nothing’. Explain. 

ANSWER: The statement, ‘an effort to control everything may end up controlling nothing,’ refers to the ‘Management by Exception’ principle. It emphasizes the fact that nothing can be effectively controlled. Rather than controlling every deviation in performance, this principle states that an acceptable range of deviations in various activities should be established, and only deviations that exceed the acceptable range should be brought to the attention of managers for control. In other words, only major deviations that exceed the allowable limit should be acknowledged. Assume, for example, that the acceptable range of increase in input cost is set at 3%. In this case, only an increase of more than 3% in input costs (say, 7%) should be brought to the managers’ attention. A decrease of less than 3% (say, 1% ) should, on the other hand, be ignored. As a result, instead of attempting to control everything, an effort should be made to control only the major things.

Q.4 Write a short note on budgetary control as a technique of managerial control. 

ANSWER: Budgetary control is a control technique that entails creating plans in the form of budgets. A budget is considered as a financial or quantitative statement that defines the goals to be achieved and the policies to be implemented over a specific time period. The actual results are then compared to the budgetary standards. This comparison aids in identifying deviations and, as a result, guides in the implementation of appropriate corrective measures. Budgets can be created for various divisions of an organization, such as sales, production, and purchasing. However, in order for budgeting to be effective, future estimates must be carefully made. Budgeting also serves as a source of motivation for employees by establishing the benchmarks against which their performance will be measured. As a result, it motivates them to meet their goals. Furthermore, it is used to facilitate coordination among the organization’s various divisions/departments. Furthermore, proper budgeting ensures that resources are allocated to different divisions based on their needs. As a result, it aids in the most efficient use of resources.

Q.5 Explain how management audit serves as an effective technique of controlling. 

ANSWER: Management auditing is the comprehensive and constructive evaluation of an organization’s management’s overall performance. It aims to improve management’s overall effectiveness and efficiency. It evaluates all of the functions performed by managers and aids in the identification of deficiencies in work performance. The following factors can be used to assess the effectiveness of management auditing for controlling.

i. Identification of Deficiencies: Management auditing assists in identifying current as well as potential deficiencies in performance. As a result, it aids in the implementation of necessary corrective measures.

ii. Increases Efficiency: Management auditing allows various management activities to be continuously monitored. As a result, it aids in improving management’s overall efficiency.

iii.Improves Coordination: As it continuously oversees the work, it improves coordination between employees as well as within the various functions of the organization.

iv.Adapting to Environmental Changes: It assists the organization in appropriately adapting to environmental changes. This is accomplished by ensuring that management policies and strategies are up to date.

Long Answer Type Questions:

Q.1 Explain the various steps involved in the process of control.
ANSWER: Controlling is a systematic process involving following steps
(i) Setting Performance Standards The first step in the controlling process is setting up of performance standards. Standards are the criteria against which actual performance would be measured.
Standards can be set in both quantitative as well as qualitative terms.
Some of the qualitative standards are—cost to be incurred, product units to be produced, time to be spent in performing a task etc. Improving goodwill and motivation level of employees are examples of qualitative standards.
(ii) Measurement of Actual Performance
Once performance standards are set, the next step is measurement of actual performance. Performance should be measured in an objective and reliable manner. Some of the techniques used for measuring the performance are personal observation, sample checking performance reports etc.
(iii) Comparing Actual Performance with Standards
This step involves comparison of actual performance with the standards. Such comparison will reveal the deviation between actual and desired results. Comparison becomes easier when standards are set in quantitative terms. For instance, performance of a worker in terms of units produced in a week can be easily measured against the standard output for the week.
(iv) Analysing Deviations
Some deviations in performance can be expected in all activities. It is therefore, important to determine the acceptable range of deviations. Also, deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. Critical point control and management by exception should be used by a manager in this regard.
(v) Taking Corrective Action
The final step in the controlling process is taking corrective action. No corrective action is required when the deviations are within acceptable limits. However, when the deviations go beyond the acceptable range, especially in the important areas, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished. Incase the deviations cannot be corrected through managerial action, the standards may have to be revised.

Q.2 Explain the techniques of managerial control.
ANSWER:  The various techniques of managerial control may be classified into broad categories
(i) Traditional Techniques
Those techniques which have been used by the companies for a long time now are traditional techniques. However, these have not become obsolete and are still being used by companies.
(a) Personal Observation
Personal observation enables the manager to collect first hand information. It also creates a psychological pressure on the employees to perform well as they are aware that they are being observed personally in their job.
(b) Statistical Reports
Statistical analysis in the form of averages, percentages, ratios, correlation etc. Present useful information to the managers regarding performance of the organisation in various areas. Such information when presented in the form of
charts, graphs, tables etc enables the managers to read them more easily and allow a comparison to be made with performance in previous periods and also with the benchmarks.
(c) Break-even Analysis
It is a technique used by managers to study the relationship between costs, volume and profits. It determines the probable profits and losses at different levels of activity. The sales volume at which there is no profit, no loss is known as break-even point. It is a useful technique for the managers as it helps in estimating profits at different levels of activities.
(d) Budgetary Control
It is a technique of managerial control in which all operations are planned in advance in the form of budgets and actual results are compared with budgetary standards. This comparison reveals the necessary actions to be taken so that organisational goals are accomplished. A budget is a quantative statement for a definite future period of time for the purpose of obtaining a given objective. It is also a statement which reflects the policy of that particular period. It will contain figures of forecasts both in terms of time and quantities

(ii) Modern Techniques
Modern techniques of controlling are those which are of recent origin and are comparatively new in management literature. They provide a new thinking on the ways in which various aspects of an organisation can be controlled.
(a) Return on Investment
Return on Investment (ROI) is a useful technique which provides the basic yardstick for measuring whether or not invested capital has been used effectively for generating reasonable amount of return. It can be calculated as under

ROI provides top management an effective means of control for measuring and comparing performance of different departments. It also permits departmental managers to find out the problem which affects ROI in an adverse manner.
(b) Ratio Analysis It refers to analysis of financial statements through computation of ratios. The most commonly used ratios are
Liquidity Ratios
Liquidity ratios are calculated to determinedly short term solvency of business.
Solvency Ratios
Ratios which are calculated to determine the long term solvency of business are known as Solvency ratios.
Profitability Ratios
These ratios are calculated to analyse the profitability position of a business.
Turnover Ratios
They are calculated to determine the efficiency of operations based on effective utilisation of resources.
(iii) Responsibility Accounting Responsibility accounting is a system of accounting in which different sections, divisions and departments of an organisation are set up as ‘responsibility centres’. The head of the centre is responsible for achieving the target set for his centre. Responsibility centres may be of the following types
(a) Cost Centre
A cost or expense centre is a segment of an organisation in which managers are held responsible for the cost incurred in the centre but not for the revenues e.g., production department.
(b) Revenue Centre
A revenue centre is held responsible for generating revenue, e.g., marketing department.
(c) Profit Centre
A profit centre is responsible for both cost and revenue e.g., repair and maintenance department.
(d) Investment Centre
An investment centre is responsible not only for profits but also for investments made in the centre in the form of assets.
(iv) Management Audit
Management audit refers to systematic appraisal of the overall performance of the management of an organisation. The purpose is to review the efficiency and effectiveness of management and to improve its performance in future periods. It is helpful in identifying the deficiencies in the performance of management functions. The main advantages are
(a) Helps to locate weaknesses.
(b) It helps to improve control system.
(c) Ensures updating of existing managerial policies and strategies in the light of environmental changes.
(v) PERT and CPM
Programme evaluation and review technique and critical path method are important network techniques useful in planning and controlling. These techniques are especially useful in planning, scheduling and implementing time bound projects involving performance of a variety of complex, diverse and inter-related activities. These techniques deal with time scheduling and resource allocation for these activities and aims at effective execution of projects within given time schedule and structure of costs.
(vi) Management Information System
MIS is a computer based information system that provides information and support for effective managerial decision-making. A decision maker requires up-to-date
accurate and timely information. MIS provides the required information to the managers by systematically processing a massive data generated in an organisation. Thus, MIS is an important communication tool for managers.

Q.3 Explain the importance of controlling in an organisation. What are the problems faced by the organisation in implementing an effective control system?
ANSWER:  Control is an indispensable function of management. Without control the best of plans can go away. A good control system helps an organisation in the following way
(i) Accomplishing Organisational Goals
The controlling function measures progress towards the organisational goals and brings to light the deviations. If any, and indicates corrective action. It thus, guides the organisation and keeps it on the right track so that organisational goals might be achieved.
(ii) Judging Accuracy of Standards
A good control system enables management to verify whether the standards set are accurate and objective an efficient control system keeps a careful check on the changes taking place in the organisation and in the environment and helps to review and revise the standards in light of such changes.
(iii) Making Efficient Use of Resources
By exercising control, a manager seeks to reduce wastage and spoilage of resources. Each activity is performed in accordance with pre-determined standards and norms. This ensures that resources are used in the most efficient and effective manner.
(iv) Improving Employee Motivation
A good control system ensures that employees know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised. It, thus motivates them and helps them to give better performancer.
(v) Ensuring Order and Discipline
Controlling creates an atmosphere of order and discipline in the organisation. It helps to minimise dishonest behaviour on the part of the employees by keeping a close check on their activities.
(vi) Facilitating Co-ordination in Action
Controlling provides direction Jo al! activities and efforts for achieving organisational goals. Each department and employee is governed by pre-determined standards which are well co-ordination with one another. This ensures that overall organisational objectives are accomplished.
Although controlling is an important function of management. It suffers from the following limitations also
(i) Difficulty in Setting Quantitative Standards Control system loses some of its effectiveness when standards cannot be defined in quantitative terms. This makes measurement of performance and their comparison with standards a difficult task. Employee morale, job satisfaction and human behaviour are such areas where this problem might arise.
(ii) Little Control on External Factors Generally an enterprise cannot control external factors such as government policies, technological changes competition etc.
(iii) Resistance from Employees Control is offer resisted by employees. They see it as a restriction on their freedom. For instance, employees might object when they are kept under a strict watch with the help of Closed Circuit Televisions (CCTVs).
(iv) Costly Affair Control is a costly affair as it involves a lot of expenditure, time and effort. A small enterprise cannot afford to install an expensive control system. It cannot justify the expenses involved. Managers must ensure that the costs of installing and operating a control system should not exceed the benefits derived from it.

Q.4 Discuss the relationship between planning and controlling.
ANSWER:  Planning and controlling are inseparable, they are twins of management. A system of control pre-supposes the existence of certain standards. These standards of performance which serve as the basis of controlling are provided by planning. Once a plan becomes operational controlling is necessary to monitor the progress, measure it, discover deviations and initiate corrective measures to ensure that events conform to
plans.
Planning is clearly a pre-requisite for controlling. Controlling cannot be accomplished with planning. With planning there is no pre-determined understanding of the desired performance, planning seeks consistent, integrated and articulated programmes while controlling seeks to compel events to conform to plans.

Short Answer Type Question:

Q.1 What is informal communication? 

ANSWER: Communication between employees who are not officially related to each other is called informal communication, this type of communication may flow in any direction thus it is also called ‘grapevine’. Informal communication involves the flow of information in all directions without regard for the level or authority of the sender. 

Informal communication arises from the need for employees to exchange ideas that cannot be done through formal channels. The informal communication spreads information rapidly and sometimes generates rumors.

Q.2 Which style of leadership does not believe in use of power unless it is absolutely essential? 

ANSWER: Laissez Faire, or free rein leadership does not believe in using power unless it is absolutely necessary. Subordinates are given complete decentralisation of authority under such leadership. Hence, the subordinates are given complete autonomy and are encouraged to make their own decisions.

Q.3 Which element in the communication process involves converting the message into words, symbols, gestures etc.?

ANSWER: Encoding is the step in the communication process that involves converting the message into words, symbols, gestures, and so on.

Q.4 The workers always try to show their inability when any new work is given to them. They are always unwilling to take up any kind of work. Due to sudden rise in demand a firm wants to meet excess orders. The supervisor is finding it difficult to cope up with the situation. State the element of directing that can help the supervisor in handling the problem

ANSWER: The element is motivation. 

Also, the firm can do the following to enhance workers motivation:

• Supervisor can provide monetary incentives like wages linked with productivity to motivate the employees.
• He can encourage the workers to work by making them understand that this work will lead to increased exposure to industry and will have better job prospects.
• Opportunity for effective leadership should be provided to employees so that they get motivated, and have a sense of responsibility.
  

Q.5 What are semantic barriers of communication? 

ANSWER: Semantics is a branch of linguistics that studies the meaning of words and sentences. Semantic barriers are problems and impediments in the process of encoding and decoding messages into words or impressions. Typically, such barriers arise as a result of the use of incorrect words, erroneous translations, or differing interpretations. Some of the causes of semantic barriers are as follows.

1. Badly expressed message: The information may not be clearly expressed at times due to a lack of vocabulary or incorrect word usage.
2. Symbols with different meanings: A word may have more than one meaning at times, or two or more words may have the same pronunciation (such as idle and idol). The correct interpretation of the word remains ambiguous in such cases.
3. Faulty translations: In some cases, the proficiency of a language varies between workers and managers. In such cases, a translation of the information into a language that the workers can understand is required. However, some words or sentences may be misinterpreted during the translation process. For example, the meaning of certain words may change in a translation of an instruction from English to Hindi.
4. Technical jargon: When giving instructions, the senior or specialist may use technical terminology that the subordinates may find difficult to understand( such as the meaning of drawings for a commerce student and some either person is different).
5. Body language and gesture decoding: Every movement of the body conveys some meaning. The communicator’s body movement and gestures are extremely important in conveying the message. Communications may be misinterpreted if there is a mismatch between what is said and what is expressed through body movements. As in your face expression reveals anger, while your hand movements reveal otherwise.
6. Unclarified assumptions: Certain assumptions in some communications may be open to different interpretations.
   

Q.6 Explain the process of motivation with the help of a diagram. 

ANSWER: Motivating someone entails inducing and stimulating them to act in a certain way. The following points describe the motivational process.

1. Unsatisfied need: The motivation process begins with an individual’s unsatisfied need.
2. Tension: As the desire goes unsatisfied, frustration builds up in the individual’s mind.
3. Motives/Drives: Frustration motivates the individual to seek out alternatives to meet his needs.
4. Search Behaviour: He selects one of several options and begins acting in accordance with it.
5. Satisfied Needs: After a period of time, he evaluates whether or not his need has been met.
6. Reduced Tension: Once the need is met, the individual’s frustration and tension are relieved.

Example: Assume a person wishes to advance in his or her career. This makes him uneasy, and he begins to look for other ways to advance in his career. He may consider working harder and bettering his performance. After consistently working hard, he may receive recognition and a promotion, which will finally satisfy his desire and alleviate his frustration.

The process of motivation explains by the following diagram:

(Image Will Be Updated Soon)

Q.7 Explain the different networks of grapevine communication? 

ANSWER: Grapevine communication, also known as informal communication, is a communication that develops as a result of social interaction among employees and spreads without following the formal communication path. The types of grapevine communication networks are as follows.

1. Single Strand Network: In this network, information spreads from one person to the next person in a certain sequence. That is, one person communicates with another, who then communicates with yet another. Hence , information is passed through a line of persons.
2. Gossip Network: In a gossip network, one person spreads information to a large number of people. Such as gossip about the new employee who recently joined the organization etc.
3. Probability Network: In a probability network, an individual shares information with other people at random. That is, the individual is unconcerned about who he shares the information with.
4. Cluster Network: Information in this network is first shared between two people who trust each other. One of them then passes the information on to another, who then passes it on to another, and so the information spreads.
   

Q.8 Explain the three principles of directing? 

ANSWER: Management’s function of directing is quite complex. Certain principles have been developed to aid in the directing process. The principles of directing are as follows.

1. Maximum Individual Contribution: A manager should use directing techniques that encourage employees to perform to the best of their abilities, according to this principle. It should motivate employees to work toward the organization’s goals. That is, each individual should make the greatest possible contribution to the organization’s goals. Managers, for example, can use appropriate incentive and motivation techniques to encourage employees to perform better.
2. Appropriateness of Direction Technique: This principle states that the direction technique to be used should be appropriate. It should be appropriate for the employees’ needs and attitudes. For example, one employee may be motivated by praise, whereas another requires monetary compensation. As a result, the manager should employ appropriate directing techniques based on the situation.
3. Managerial Communication: Effective communication is essential for effective directing. The superior’s instructions and commands must be clear and easily understood by the subordinates. Furthermore, subordinates must be able to communicate with superiors without hesitation. They must be able to freely express their opinions and suggestions. As a result, effective two-way communication between the superior and the subordinates is required.
   

Q.9 In an organisation, one of the departmental manager is inflexible and once he takes a decision, he does not like to be contradicted. As a result, employees always feel they are under stress and they take least initiative and fear to express their opinions and problems before the manager. What is the problem in the way authority is being used by the manager? 

ANSWER: The manager is an autocratic leader.

An autocratic leader gives orders and expects others to obey them. The decision-making power is centralized. Due to the inflexibility of the leader, employees feel demotivated and discouraged due to the leader’s unwillingness to take their suggestions, and the productivity is also impacted due to demotivated employees.

To solve this issue, the manager needs to be a little flexible, and foster positive communication with its employees, as well as welcome suggestions from them.

Q.10 A reputed hostel, GyanPradan provides medical aid and free education to children of its employees. Which incentive is being highlighted here? State its category and name any two more incentives of the same category.

ANSWER: Gyan Pradhan has provided its employees with perquisites and fringe benefits such as free education for children and medical aid. This comes under Financial incentives.

Other financial incentives include:

• Bonus: An additional reward given in addition to the salary, such as gifts, a festival bonus, and so on.
• Retirement Benefits: Providing employees with retirement benefits such as pensions, gratuities, provident funds, and so on.
• Stock option: Providing employees with shares of the company at a lower price than the market price.
• Profit-Sharing: It is the practice of sharing a portion of a company’s profits with its employees (any two)
  

Long Answer Type Questions:

Q.1 Explain the principles of Directing.
ANSWER: Principles of Directing
(i) Maximum Individual Contribution
This principle emphasises that directing techniques must help every employee to contribute to his maximum potential in order to achieve the organisational goals. It should help in bringing out unused or dormant potential of an employee to improve the efficiency of the organisation, e.g., suitable and appropriate incentives should be given to encourage employees to improve their performance.
(ii) Harmony of Objectives Most of the time it happens that the organisational objectives and individual objectives move in opposite directions. The person in charge of a team of workers should guide and instruct his team in such a manner that they realise the importance of both the objectives.
(iii) Unity of Command This principle insists that a person in the organisation should receive instructions from one superior only. If instructions are received from more than one, it creates confusion, conflict and disorder in the organisation. Adherence to this principle ensures effective direction.
(iv) Appropriateness of Direction Technique According to this principle, appropriate motivational and leadership technique should be used while directing the people based on subordinate needs, capabilities, attitudes
etc, e.g., combination of both monetary and non-monetary incentives should be used to elicit the right response from the employees.
(v) Managerial Communication Directing should convey clear instructions to create total understanding to subordinates. Through proper feed back the manager should ensure that subordinate understands his instructions clearly.
(vi) Use of Informal Organisation Informal groups or organisations exist within every formal organisation and every manager should spot and make use of such organisations for effective directing
(vii) Leadership While directing the subordinates managers should exercise good leadership as it can influence the subordinates positively without causing dissatisfaction among them.
(viii) Follow Through Mere giving of an order is not sufficient. Managers should follow it up by reviewing continuously whether orders are being implemented accordingly or any problems are being faced by the subordinates.

Q.2 Explain the qualities of a good leader. Do the qualities alone ensure leadership success?
ANSWER: Some of the qualities required by all leaders are
(i) Physical Features
It is believed that good physical features attract people. Height, weight, health, appearance determine the physical personality of an individual.
(ii) Knowledge A good leader should have required knowledge and competence. Only such person can instruct subordinates correctly and influence them.
(iii) Integrity He should be a role model to other regarding the ethics and values. A leader should possess high level of integrity and honesty.
(iv) Initiative A good leader never waits for opportunities to come to his way rather he grabs the opportunity and use it to the advantage of organisation.
(v) Communication and Motivation Skills A leader should be a good communicator. He should have the capacity to explain his ideas and make the people to understand his ideas. He should also understand the needs of people and motivate them through satisfying their needs.
(vi) Self Confidence A high level of self confidence is very important for any leader. He should not loose his confidence even in most difficult times. A person who is not himself confident will never be successful in providing confidence to his followers.
(vii)Decisiveness Leader should be able to take decisions while managing the work. Once he is convinced about a fact, he should be firm and should not change opinions frequently.
(viii) Social Skills A leader should be sociable and friendly with his colleagues and followers. He should understand people and maintain good human relations with them.
Many times, the success of an organisation is attributed to the leader, but due credit is not given to the followers. Many followers related factors like their skills, knowledge, commitment, willingness to co-operate team spirit etc make a person an effective leader. It is said that followers make a person, a good leader by acceptance of leadership. Therefore both followers and leaders are playing an vital role in leadership process.

Q.3 Discuss Maslow’s need Hierarchy theory of motivation.
ANSWER: Maslow’s need Hierarchy Theory of Motivation Motivation is a psychological term and the needs of an employee plays an important role in motivation. In order to study motivation various researchers developed theories on them. Among them Abraham Maslow’s need Hierarchy theory is considered of worth. As per him, their exists a Hierarchy of five needs these are
(i) Basic Physiological Needs These needs are most basic in the hierarchy and corresponds to primary needs. Food, clothing shelter are a few examples of this type of need. Basic salary helps to fulfill these needs.

(ii) Safety/Security Needs When the basic needs satisfied, people start thinking of future. These needs provide security and protection from physical and emotional harm in coming future e.g., job security, pension plans etc.
(iii) Affiliation/Belonging Need These needs refer to human feeling of belongingness. We all as human beings look forward to being accepted in the society e.g., friendship.
(iv) Esteem Needs These include factors such as self-respect, autonomous status, attention. An individual wants a respect and recognition from others in this need.
(v) Self-actualisation Needs It is the highest level of need in the hierarchy. It refers to the drive to become what one is capable of becoming. The needs include growth self-fulfillment and achievement of goals etc.

Q.4 What are the common barriers to effective communication suggest measures to overcome them?
ANSWER: Common Barriers to Effective Communication Managers in all organisations face problems due to communication barriers. These barriers may prevent a communication or filter part of it or carry incorrect meaning due to which misunderstanding may be created. Therefore all managers should take some steps to overcome these barriers.
There are broadly four groups of barriers
(i) Semantic Barriers Semantic barriers are concerned with problems and obstructions in the process of encoding and decoding of message into words or impressions. Normally, such barriers result on account of use of wrong words, faulty translations, different interpretations etc. These are discussed below
(a) Badly Expressed Message Sometimes the message is not communicated correctly by the manager because of inadequate vocabulary, usage of wrong words, omission of needed words etc.
(b) Symbols with Different Meaning A word may have several meanings. Receiver has to perceive one such meaning for the word used by communicator.
(c) Faulty Translations Sometimes while translating if incorrect translation is done due to poor command over both the languages then meaning of the message changes. This leads to cause different meanings to the communications.
(d) Unclarified Assumptions Sometimes communication may have certain assumptions which are subject to different interpretations The one should always clear the meaning of what he is instructing the worker to do, so that the worker has no doubts in his mind.
(e) Technical Jargon Sometimes specialists may use technical words in their communication by which the receiver is not aware.
Therefore, they may not understand the complete conversation.
(f) Body Language and Gesture Decoding The body movement and body gestures plays an important role in conveying the message.
If there is no match between what is said and what is expressed in body movements, communications may be wrongly perceived.

(ii) Psychological Barriers
Emotional or psychological factors acts as barrier to communications e.g., a person who is worried cannot understand what is being told. Some of the psychological barriers are
(a) Premature Evaluation  Sometimes people evaluate the meaning of message before the sender completes his message. Such premature evaluation may be due to pre-conceived notions.
(b) Lack of Attention If the mind is pre-occupied then the result is non-listening of message by receiver act as a major psychological barrier.
(c) Lon by Transmission and Poor Retention When message passes through various levels, successive transmission of message results in loss of information. It happenes mostly with oral communication. Also people cannot retain the information for a long time if they are inattentive or not interested.
(d) Distrust If the communicator and communicatee do not believe on each other, they can not understand each others message in its original sense as they are not giving importance to the information exchanged.

(iii) Organisational Barriers The factors related to organisation structure, authority relationships, rules and regulations may sometimes act as barriers to effective communication some of these barriers are
(a) Organisational Policy If the organisational policy is not supportive to free flow of communication, it may hamper effectiveness of communications.
(b) Rules and Regulations Rigid rules and cumbersome procedures may be a hurdle to communication similarly, communication through prescribed channel may result in delays.
(c) Status Status of superior may create psychological distance between him and his subordinates. The people working at higher level may not allow his subordinates to express their feelings freely.
(d) Complex Organisational Structure In an organisation where there are number of managerial levels, communications gets delayed and distorted as number of filtering points are more.
(e) Organisational Facilities For smooth clear and timely communication proper facilities are required like frequent meetings suggestion box, internet connection, inter-com facility. Lack or ineffectiveness of these facilities may create communication problems.

(iv) Personal Barriers
The personal factors of both sender and receiver may exert influence on effective communication. Some of the personal barriers are
(a) Fear of Challenge to Authority If a superior feels that a particular communication may affect his authority negatively then he/she may not speak it out clearly and openly.
(b) Lack of Confidence of Superior on his Subordinate If superiors do not have confidence on their subordinates, they may not seek their advice or opinions.
(c) Unwillingness to Communicate Sometime subordinator may not be prepared to communicate with their superiors, if they think that it may adversely affect their interests.
(d) Lack of Proper Incentives If there is no reward for communication then employees may not be motivated to communication, e.g., if there is no reward or appreciation for a good suggestion, the subordinate may not be willing to offer useful suggestions again.
Some measures which can be adopted by organisations to improve communications are
(i) Clarify the Ideas Before Communication The entire message to be communicated should be studied in depth, analysed and stated in such a manner that it is clearly conveyed to subordinates. The message should be encoded in simple language which is understandable.
(ii) Communication According to the Needs of Receives All managers should be aware of the understanding level of his/her subordinates. He should adjust his communication and select the words according to the education and understanding levels of subordinates
(iii) Consult Others Before Communicating Before communicating anything, others who are linked with it in some way or the other should be taken into confidence for developing a better plan.
(iv) Beaware of Languages, Tone and Content of Message
The language used for communication should be understandable to the listener. The tone of the appropriate and the matter should not be offending to anyone.
(v) Convey Things of Help and Value to Listener
It is always better to know the interests of the people with whom you are communicating. If the message relates directly or indirectly to such interests and needs it certainly evokes response from communicatee.
(vi) Ensure Proper Feedback
The receiver of communication may be encouraged to respond to communication. The communication process may be improved by the feedback received to make it more responsive.
(vii) Follow up Communication
There should be a regular follow up and review on the instructions given to subordinates. Such follow up measures help in removing hurdles if any in implementing the instructions.
(viii) Be a Good Listener
Manager should be a good listener. Patient and attentive listening solves half of the problems. Managers should also give indications of their interest in listening to their subordinates

Q.5 Explain different financial and non-financial incentives used to motivate employees of a company.
ANSWER: Financial Incentives Financial incentives refer to incentives which are in direct monetary form or measurable in monetary term and serve to motivate people for better performance. The financial incentives used in organisations are listed below
(i) Pay and Allowances For every employee, salary is the basic monetary incentive. It includes basic pay, DA and other allowances. Salary system consists of regular increments in the pay every year and enhancement of allowances from time to time.
(ii) Productivity Linked Wage Incentives Several wage incentives aim at linking payment of wages to increase in productivity at individual or group level.
(iii) Profit Sharing Profit sharing is meant to provide a share to employees in the profits of the organisation. This serves to motivate the employees to improves their performance and contribute to increase in profits.
(v) Co-Partnership/Stock Option Under these incentives schemes, employees are offered company shares at a set price which is lower than market price. The allotment of shares creates a peeling of ownership to the employees and makes them to contribute more for the growth of the organisation.
(vi) Retirement Benefits Several retirement benefits such as provident fund, pension and gratuity provide financial security to employees after their retirement. This act as an incentive when they are in service in the organisation.
(vii) Perquisites
In many companies perquisites and fringe benefits are offered such as car allowance, housing, medical aid, and education etc over and above the salary. These measures help to provide motivation to the employees/managers.
Non-financial Incentives
Incentives which help in fulfilling our psychological, emotional and social needs are known as non-financial incentives. Some of the non-financial incentives are
(i) Status Status means ranking or high positions in the organisation. Whatever power position prestige an employee enjoys in the organisation are indicated by his status. Psychological, social and esteem needs of an individual are satisfied by status given to their job.
(ii) Organisational Climate This indicates the characteristics which describe an organisation and distinguish one from the other. Individual autonomy, reward orientation, consideration to employees, etc are some of the positive features of an organisation. If managers try and include more of these in an organisation helps to develop better organisational climate.
(iii) Career Advancement Opportunity Managers should provide opportunity to employees to improve their skills and be promoted to the higher level jobs appropriate skill development programmes and sound promotion policy will help employees to achieve promotions. Promotions have always worked as tonic and encourages employees to exhibit improved performance.
(iv) Job Enrichment Job enrichment is concerned with designing jobs that include greater variety of work contentment, require higher level of knowledge and skill, give workers more autonomy and responsibility and provide opportunity for personal growth and a meaningful work experience.
(v) Employee Recognition Programmes Recognition means acknowledgement with a show of appreciation. When such appreciation is given to the work performed by employees, they feel motivated to perform/work at higher level, e.g.,
(a) Congratulate the employee
(b) Displaying names of star performers
(c) Installing awards
(d) Distributing mementos
(vi) Job Security
Employees want their job to be secure. They want certain stability about future income and work so that they do not feel worried on these aspects and work with greater zeal. There is only one problem with this incentive i.e., when people feel that they are not likely to lose their jobs, they may become relaxed.
(vii) Employee Participation
It means involving employees in decision making of the issues related to them. In many companies, these programmes are in practice in the form of joint management committees, work committees canteen committees etc.
(viii) Employee Empowerment
Empowerment means giving more autonomy and powers to subordinates. Empowerment makes people feel that their jobs are important. This feeling contributes positively to the use of skills and talents in the job performance.

In This Post we are  providing Chapter- 1 Ranga’s Marriage NCERT MCQ for Class 11 English Snapshot which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS  can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.

NCERT MCQ ON RANGA’S MARRIAGE

Question 1.
What sort of intentions does the narrator seem to have towards Ranga?
(a) He is mean
(b) He feels responsible for his marriage
(c) He is manipulative
(d) He feels pitiful

Answer: (b) He feels responsible for his marriage

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Question 2.
“It’s Shyama’s birthday.” Who has been referred to in this line?
(a) Ranga and Ratna’s child
(b) The narrator
(c) A child in village
(d) None of the aboveAnswer

Answer: (a) Ranga and Ratna’s child

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Question 3.
“Don’t forget, I developed on the hints you had given me.” What does the line suggest?
(a) Narrator tutored Shastri for what to tell
(b) Everything that Shastri told was based on his predictions
(c) Both (a) and (b)
(d) None of the above

Answer: (a) Narrator tutored Shastri for what to tell

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Question 4.
Later on, Ranga got to know that Ratna was __________.
(a) divorced
(b) widowed
(c) unmarried
(d) engaged

Answer: (c) unmarried

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Question 5.
According to the Shastri, what was Ranga’s concern?
(a) Concern for a girl
(b) Concern for his studies
(c) Concern for a job
(d) Concern for his village

Answer: (a) Concern for a girl

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Question 6.
“Come, let’s go and see Shastri.” Who was Shastri?
(a) The village doctor
(b) A village elder
(c) The astrologer
(d) Not mentioned in the tale

Answer: (c) The astrologer

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Question 7.
“She was married a year ago.” Hearing this, Ranga was ___________.
(a) thrilled
(b) disappointed
(c) unconcerned
(d) surprised

Answer: (b) disappointed

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Question 8.
When Ranga reached the narrator’s house, Ratna was __________.
(a) sitting
(b) painting
(c) singing
(d) waiting

Answer: (c) singing

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Question 9.
According to the narrator, who would make a suitable bride for Ranga?
(a) Narrator’s own daughter
(b) Rama Rao’s niece
(c) Narrator’s niece
(d) Rama Rao’s daughter

Answer: (b) Rama Rao’s niece

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Question 10.
What was Ranga’s initial take on marriage?
(a) He wanted to marry immediately
(b) He wanted to marry a girl chosen by his parents
(c) He wanted to remain a bachelor
(d) He wanted an arranged marriage

Answer: (c) He wanted to remain a bachelor

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Question 11.
How does the narrator speak of Ranga’s character?
(a) Poorly
(b) Highly
(c) Manipulatively
(d) Does not speaks of his character

Answer: (c) Manipulatively

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Question 12.
An old lady checked for Ranga’s ___________.
(a) birthmark
(b) sacred piercing
(c) sacred tattoo
(d) sacred thread

Answer: (b) sacred piercing

Question 13.
After reading “Ranga’s Marriage”, who (according to you) played a major role in Ranga and Ratna’s marriage?
(a) Rama Rao
(b) Shastri
(d) Ranga
(d) Shyama

Answer: (d) Shyama

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Question 14.
Why does the narrator call the couple childish?
(a) Because they were immature
(b) Because they named their child after him
(c) Because they were playful
(d) Because they invited him for dinner

Answer: (b) Because they named their child after him

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Question 15 .
“There’s greater truth in that shastra than we imagine.” Who said this?
(a) Shyama
(b) Shastri
(c) Ratna
(d) Ranga

Answer: (d) Ranga

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In This Post we are  providing Chapter- 2 The Address NCERT MCQ for Class 11 English Snapshot which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS  can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.

NCERT MCQ ON THE ADDRESS

Question 1.
After reading “The Address”, how would you describe Mrs. Dorling?
(a) Materialistic
(b) Selfish
(c) Opportunist
(d) All of the above

Answer: (d) All of the above

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Question 2.
In total, how many times did the author visit the given address?
(a) Twice
(b) Once
(c) Thrice
(d) Never

Answer: (a) Twice

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Question 3.
The author had come to visit Mrs. Dorling _______ the war.
(a) during
(b) before
(c) after
(d) Not mentioned in the story

Answer: (c) after

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Question 4.
At the end, what does the author decide?
(a) To forget the address
(b) To visit next year again
(c) To remember the address forever
(d) None of the above

Answer: (a) To forget the address

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Question 5.
Why did the author leave Mrs. Dorling in a hurry?
(a) Because she was getting late for the train
(b) Because she no longer wanted to stay there
(c) Both (a) and (b)
(d) None of the above

Answer: (c) Both (a) and (b)

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Question 6.
According to the author, when do we notice the things in the house?
(a) When they are out of our sight
(b) When they are used
(c) When they are shown
(d) All of the above

Answer: (a) When they are out of our sight

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Question 7.
In what condition did the author find the living room?
(a) Haphazard
(b) Well arranged
(c) Empty
(d) Old fashioned

Answer: (a) Haphazard

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Question 8.
“I was in a room I knew and did not know.” What does author mean by this?
(a) She saw familiar things but in unfamiliar surroundings
(b) She saw unfamiliar things but in familiar surroundings
(c) She did not recognize the things she saw
(d) She did not want to remember anything

Answer: (a) She saw familiar things but in unfamiliar surroundings

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Question 9.
Unlike Mrs. Dorling, her daughter was __________ towards the author.
(a) rude
(b) mature
(c) hospitable
(d) mean

Answer: (c) hospitable

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Question 10.
Why had the author come to visit Mrs. Dorling?
(a) Because Mrs. Dorling had belongings of author’s mother
(b) Because Mrs. Dorling called her
(c) Because she missed Mrs. Dorling
(d) None of the above

Answer: (a) Because Mrs. Dorling had belongings of author’s mother

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Question 11.
How does the author describe Mrs. Dorling when she saw her the first time during the war?
(a) A woman with a broad back
(b) A woman with a round back
(c) A woman with a straight back
(d) None of the above

Answer: (a) A woman with a broad back

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Question 12.
Mrs. Dorling took the possessions of the things on the pretence of __________.
(a) using them
(b) selling them
(c) keeping them safe
(d) Both (a) and (b)

Answer: (c) keeping them safe

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Question 13.
The author had come to visit Mrs. Dorling _______ the war.
(a) during
(b) before
(c) after
(d) Not mentioned in the story

Answer: (c) after

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Question 14.
At the end, what does the author decide?
(a) To forget the address
(b) To visit next year again
(c) To remember the address forever
(d) None of the above

Answer: (a) To forget the address

Question 15.
Why did the author leave Mrs. Dorling in a hurry?
(a) Because she was getting late for the train
(b) Because she no longer wanted to stay there
(c) Both (a) and (b)
(d) None of the above

Answer: (c) Both (a) and (b )

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In This Post we are  providing Chapter- 1 The Summer of Beautiful White Horse NCERT MCQ for Class 11 English Snapshot which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS  can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.

NCERT MCQ ON THE SUMMER OF BEAUTIFUL WHITE HORSE

Question 1.
What idea/theme does “The Summer of a Beautiful White Horse” entails?
(a) Honesty
(b) Honour
(c) Trust
(d) All of the above

Answer: (d) All of the above

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Question 2.
“Quiet, man, quiet. Your horse has been returned.” Who said this?
(a) Mourad
(b) Aram
(c) Uncle Khosrove
(d) Not mentioned in the story

Answer: (c) Uncle Khosrove

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Question 3.
Why did the boys return the white horse to its owner?
(a) Because they were conscience stricken
(b) Because they were afraid
(c) Because they found it difficult to hide the horse
(d) Because they were accused of theft

Answer: (a) Because they were conscience stricken

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Question 4.
Why did the horse’s owner refuse to believe that the boys had stolen his horse?
(a) Because he didn’t examine the horse carefully
(b) Because their family was known for honesty
(c) Because he had found his horse elsewhere
(d) Because his horse had a twinAnswer

Answer: (b) Because their family was known for honesty

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Question 5.
“I have a way with farmers.” Who says it to whom?
(a) Aram to Mourad
(b) Mourad to John Byro
(c) Aram to John Byro
(d) Mourad to Aram

Answer: (d) Mourad to Aram

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Question 6.
For how long did Mourad have the horse before Aram got to know about it?
(a) One day
(b) One year
(c) One month
(a) One week

Answer: (c) One month

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Question 7.
John Byro learned to speak Armenian out of ________.
(a) necessity
(b) fun
(c) eagerness
(d) loneliness

Answer: (d) loneliness

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Question 8.
What was the behaviour of the horse initially?
(a) It wanted to be trained
(b) It wanted to rest
(c) It wanted to run wild
(d) All of the above

Answer: (c) It wanted to run wild

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Question 9.
When Aram rode the horse alone, it ran down the road to the _________.
(a) vineyard
(b) irrigation ditch
(c) field
(d) countryside

Answer: (a) vineyard

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Question 10.
What did uncle Khosrove do to stop anyone from talking?
(a) By beating them
(b) By walking away
(c) By shouting at them
(d) By ignoring them

Answer: (c) By shouting at them

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Question 11.
Mourad was considered the natural descendant of his _________.
(a) father
(b) uncle
(c) grandfather
(d) great-grandfather

Answer: (b) uncle

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Question 12.
How does Aram describe the horse?
(a) Magnificent & lovely
(b) Beautiful white horse
(c) Both (a) and (b)
(d) None of the above

Answer: (c) Both (a) and (b)

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Question 13.
Who is the narrator of the story “The Summer of a Beautiful White Horse”?
(a) William Saroyan
(b) Aram
(c) John Byro
(d) Mourad

Answer: (b) Aram

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Question 14.
After the horse was stolen and returned, it became ______.
(a) rougher
(b) sick & ill
(c) stronger & better-tempered
(d) Both (a) and (c)

Answer: (c) stronger & better-tempered

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Question 15.
When did the boys return the horse?
(a) After Aram learned to ride it
(b) After an year
(c) After six months
(d) After they ran into John Byro

Answer (d) After they ran into John Byro

In This Post we are  providing Father to Son NCERT MCQ for Class 11 English Hornbill which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS  can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.

NCERT MCQ ON FATHER TO SON

Q1. Why was the father ready to forgive him?

(i) to let go of all the sorrows he had inside
(ii) to become a better person
(iii) to teach his son a lesson
(iv) to help his son

Answer (i) to let go of all the sorrows he had inside

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Q2. Does the father want his son to move around in his own world?

(i) Yes, absolutely
(ii) Not at all
(iii) Maybe
(iv) None of the above

Answer (ii) Not at all

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Q3. What happened when he tried to build a relationship with him in his childhood?

(i) he was successful
(ii) his efforts were in vain
(iii) he was half-way successful
(iv) None of the above

Answer (ii) his efforts were in vain

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Q4. What does the son share about him understanding himself?

(i) he is at a point where he doesn’t understand himself
(ii) he understands him so well
(iii) he don’t want to think about it
(iv) he is very busy to think about understanding himself

Answer (i) he is at a point where he doesn’t understand himself

Q5. When the son spoke for the first time, does he also feel sad about the distance between them?

(i) Yes, he did
(ii) No, he did not felt anything
(iii) Maybe in his heart
(iv) He never thought about it

Answer (i) Yes, he did

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Q6. How old is the son when his father rants about his agony to his son?

(i) teenager
(ii) grown-up
(iii) child
(iv) just became adult

Answer (ii) grown-up

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Q7. What happens when they both put out an empty hand for the others to seek?

(i) efforts are always in vain
(ii) they got successful in the end
(iii) father wasn’t interested
(iv) they never had a chance to talk

Answer (i) efforts are always in vain

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Q8. From where does the son’s anger arise ?

(i) out of his nature
(ii) out of his sadness
(iii) out of his father’s attitude
(iv) out of his childhood memories

Answer (ii) out of his sadness

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Q9. What is the poem ‘Father to Son’ about?

(i) Unsettling relationship between father and son
(ii) father’s old age
(iii) son comparing him to his father
(iv) father talking to son about his childhood

Answer (i) Unsettling relationship between father and son

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Q10. Which of the following is an Alliteration?

(i) Silence surrounds us
(ii) We speak like strangers
(iii) I do not understand this child
(iv) I would have

Answer (i) Silence surrounds us

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Q11. Find out the simile used in the poem ‘Father to Son’?

(i) Silence surrounds us
(ii) The seed I spent or sown it where
(iii) We speak like strangers
(iv) Yet what he loves I cannot share

Answer (iii) We speak like strangers

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Q12. Who is the poet of the poem ‘Father to Son’?

(i) Walt Whitman
(ii) Shirley Toulson
(iii) Elizabeth Jennings
(iv) Kushwant Singh

Answer (iii) Elizabeth Jennings

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Q13. Since his son was prodigal, why does he want him to come back home?

(i) to make amends with him
(ii) to teach him a lesson
(iii) to give him money
(iv) None of the above

Answer (i) to make amends with him

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Q14. Is there a silence between the father and the son?

(i) Yes
(ii) No
(iii) Can’t say
(iv) Maybe

Answer (i) Yes

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Q15. Despite all his efforts to fix the communication gap, was the son able to understand him?

(i) Yes
(ii) No
(iii) Can’t say
(iv) Maybe

Answer (ii) No

Short Answer Type Question:

Q.1What is meant by staffing?

ANSWER: Staffing is a management function that entails hiring candidates who are a good fit for the organization by evaluating their skills and knowledge and assigning them specific roles based on their skill set. It is involved in meeting an organization’s human resource requirements. 

Q.2 State the two important sources of recruitment? 

ANSWER: The process of searching for and attracting qualified candidates for a job is referred to as recruitment. In other words, it is the process of identifying potential candidates and encouraging them to apply for a position. The two most important sources of recruitment are as follows.

1. Internal sources: Internal sources of recruitment are those that come from within the organization. That is, jobs are filled from within the organization using internal resources. Transfers and promotions are two examples. The job of a specific profile is filled through transfers by transferring a suitable person from another department of the organization to the concerned department. Similarly, by promoting lower-level employees, higher-level job vacancies in the organization are filled.
2. External Sources: External sources of recruitment are those that come from outside the organization. Jobs in an organization are filled by bringing in new people from outside sources. External sources are used to find new talent and a broader range of options. One of the external sources of recruitment, for example, is ‘direct recruitment,’ which entails posting a notice board outside the office and then following the recruitment process on a specific date. Similarly, placement agencies serve as an external source by acting as a matchmaker between job seekers and employers.

Q.3 The workers of a factory are unable to work on new machines and always demand for help of supervisor. The Supervisor is overburdened with their frequent calls. Suggest the remedy.

ANSWER: This situation can be managed by providing workers with proper machine-use training. This can be done through an off-the-job training method, that is vestibule training should be provided to employees, in which they will be trained regarding the use and other intricacies of the operation of machinery. It will boost their self-esteem and skill set, and will also result in faster working with no delays in task completion.

Q.4 The quality of Production is not as per standards. On investigation it was observed that most of the workers were not fully aware of the proper operation of the machinery. What could be the way to improve the quality of production to meet the standards? (training).

ANSWER: Employee training can help to improve the quality of the production. This can be done through an off-the-job training method, and under this vestibule training should be provided to employees, in which they will be trained regarding the use and other intricacies of the operation of machinery. Employees can learn and practice under the supervision of a master worker for a period of time before working on their own. This type of training will assist an employee in working more efficiently.

Q.5 The workers of a factory remain idle because of lack of knowledge of hi-tech machines. Frequent visit of engineer is made which causes high overhead charges. How can this problem be removed?

ANSWER: This type of issue is addressed by providing workers with appropriate training. These workers can be given vestibule training, which will reduce the engineer’s frequency of visits. Vestibule training is a type of training in which workers practice on dummy machines, which are models of industrial equipment that the workers will be working on. Once they have gained sufficient experience, the workers can be transferred to the factory to perform the work.

Q.6 What is meant by recruitment? How is it different from selection? 

ANSWER: The procedure of locating and encouraging qualified candidates to apply for a specific job is referred to as recruitment. In contrast, selection is the process of screening and selecting the appropriate candidates from a pool of candidates. The distinctions between recruitment and selection are highlighted in the following points.

Basis of difference	Recruitment	Selection
Meaning	The process of locating and enlisting the necessary personnel for a job is referred to as recruitment.	The process of selecting the best candidate from a pool of candidates gathered during the recruitment process is referred to as selection.
Sequence	Recruitment is the second stage of the staffing process.	Selection is the third stage of the staffing process, following recruitment.
Employment contract	The organization does not offer any employment contracts to the candidates gathered through recruitment.	The organization offers an employment contract to candidates who successfully complete the selection process, which includes information such as the date of joining, terms and conditions, and so on.
Characteristic	The recruitment process entails attracting as many candidates as possible for the job.	The selection process entails selecting only the best candidates and rejecting the rest.

Q.7 An organisation provides security services. It requires such candidates who are reliable and don’t leak out the secrets of their clients. What steps should be incorporated in selection process?

ANSWER: Various steps could be incorporated  by the company such as:

• Personality tests are one type of test that can be used to conduct such a selection process. Such tests will assist recruiters in identifying candidates with the most stable personalities who are appropriate for the job type being offered.
• Reference and background checks can be done to ensure the nature and behaviour of the prospective candidate.
• A confidentiality clause could be added in the contract of employment, which states that the employee will not be allowed to lead any confidential information about the company to the outsider or the clients.

Q.8 A company is manufacturing paper plates and bowls. It produces 1,00,000 plates and bowls each day. Due to local festival, it got an urgent order of extra 50,000 plates and bowls. Explain the method of recruitment that the company should adopt in the given circumstances to meet the order.

ANSWER: In this situation, approaching labor contractors is the best option. Paper plates and bowls are manufactured by workers or laborers with limited skills. Labour contractors have access to laborers looking for work and will thus be able to provide the necessary manpower at short notice.

Q.9 Distinguish between training and development. 

ANSWER: Training and development are two separate but related concepts. Though both concepts are concerned with personal development, their perspectives differ. 

On the one hand, training refers to the provision of skills and abilities for a specific job. Development, on the other hand, refers to the concept of an individual’s overall growth.

The following points emphasize the distinction between training and development.

Basis of difference	Training	Development
Meaning	Training is the process of improving an employee’s skills and competence required to perform a specific job.	The process of an employee’s overall growth is referred to as development.
Scope	Training is limited in scope and focuses on how to become more efficient in one’s intended job.	Development is broader in scope and focuses on the employee’s overall personality development. Training is a component of development.
Focus	The focus of training is on the specific job requirement, so it is job-oriented.	The focus of development is on overall growth and, as a result, is career oriented.

Q.10 Why are internal sources of recruitment considered to be more economical? 

ANSWER: Internal sources of recruitment are those that are endogenous to the organization, that is, they come from within the organization. Internally, there are two options for filling positions: transfers and promotions. It has the advantage of being less expensive than other sources of recruitment. Filling jobs internally is less expensive in terms of both time and money, as shown below:

1. Simplicity: Internal recruitment simplifies the selection and placement process. Candidates who are already employed by the company can be evaluated more accurately and economically. Because the candidates are already known to the organization, this is a more reliable method of recruitment.
2. No induction required: Transfer is a training tool used to prepare employees for higher-level positions. In addition, people hired from within the organization do not require induction training.
3. Balance between departments: Transfer has the advantage of shifting workforce from overburdened departments to understaffed ones. Thus, in comparison to other sources, internal sources of recruitment are more cost-effective.

Long Answer Type Questions:

Q.1Define the staffing process and the various steps involved in it.
ANSWER: Staffing process of the management is concerned with acquiring, developing, employing, remunerating and retaining people or we can say it is the timely fulfilment of the manpower requirements with in an organisation.
(i) Estimating the Manpower Requirements The first step in the staffing process is determining the present manpower inventory and assessing the present and future manpower requirements of the organisation keeping in mind the production schedule, demand etc.
(ii) Recruitment Recruitment may be defined as the process of searching for prospective employees and stimulating them to apply for jobs in the organisation. For this various sources can be used like transfer, promotion, advertising, job consultants etc.
(iii) Selection Selection is the process of choosing from among the pool of the prospective job candidates developed at the stage of recruitment. It involves a host of tests and interviews.
(iv) Placement and Orientation Orientation is introducing the selected employee to other employees and familiarising him with the rules and policies of the organisation. He is taken around the work place and given the charge of the job for which he has been selected. Placement refers to the employee occupying the position or post for which the person has been selected.
(v) Training and Development All organisations have either in-house training centres or have forged alliances with training and educational institutes to ensure continued learning of their subordinates. By offering the opportunities for career advancement to their members, organisations are not only able to attract but also retain its talented staff.
(vi) Performance Appraisal After the employees have undergone a period of training and they have been on the job for some time, there is a need to evaluate their performance. The employee is expected to know what the standards are and the superior is to provide the employee feedback on his/her performance. The performance appraisal process, therefore, will include defining the job, appraising performance and providing feedback.
(vii) Promotion and Career Planning It is very important for all organisations to address career related issues and promotional avenues for their employees. They must provide opportunities to everyone to show their potential and in return promotions can be provided.
(viii) Compensation All organisations need to establish wage and salary plans for their employees. There are various ways to prepare different pay plans depending on the worth of the job. Compensation therefore, refers to all forms of pay or rewards going to employees.

Q.2 Explain the procedure for selection of employees.
ANSWER:  The important steps in the process of selection are as follows
(i) Preliminary Screening It helps the manager eliminate unqualified or unfit job seekers based on the information supplied in the application forms.
(ii) Selection Tests An employment test is a mechanism that attempts to measure certain characteristics of individuals. These range from aptitudes, such as manual dexterity, to intelligence to personality.
(iii) Employment Interview Interview is a formal, in depth conversation conducted to evaluate the applicant’s suitability for the job.
(iv) Reference and Background Checks Many employers request names, addresses and telephone numbers of references for the purpose of verifying information and gaining additional on an applicant.
(v) Selection Decision The final decision has to be made among the candidates who pass the tests, interviews and reference checks.
(vi) Medical Examination Before the candidate is given a job offer he/she is required to go through a medical test.
(vii) Job Offer Job offer is made through a letter of appointment/confirm his acceptance. Such a letter generally contains a date by which the appointee must report on duty.
(viii) Contract of Employment After the job offer has been made and candidate accepts the offer, certain documents need to be executed by the employer and the candidate. There is also a need for preparing a contract of employment. It includes job title, duties, responsibilities, date when continuous employment starts etc.

Q.3 What are the advantages of training to the individual and to the organisation?
ANSWER: Training helps both the organisation and the individual.
Benefits to the Organisation
(i) Training is a systematic learning which reduces the wastage of efforts and money.
(ii) Enhances employee productivity.
(iii) Training helps a manager to handle an emergency situation.
(iv) Training motivates workers and thus reduces absenteeism.
(v) Helps in adjusting to the changing environment (technological).
Benefits to the Employee
(i) Better career opportunities due to improved skills and knowledge.
(ii) Earnings can be increased due to improved performance.
(iii)Trained workers can handle machines more efficiently.
(iv) Employees always remain motivated and satisfied.

Q.4 The staffing function is performed by every manager and not necessarily by a separate department. Explain.
ANSWER:  Staffing is a function which all managers need to perform. It is the responsibility of all managers to directly deal with and select people to work for the organisation. When the manager performs the staffing function his role is slightly limited. In small organisations, managers may perform all duties related to employees salaries, welfare and working conditions but as organisation grow and number of persons employed increases, a separate department called the human resource department is formed which has specialists in managing people.