UNIT-1 MANAGEMENT PROCESS

CHAPTER 1-PRINCIPLES OF MANAGEMENT

2 marks
1. What is Management?
Management is goal oriented and it is an art of getting things done with and through others.
2. List out the management tools.
• Accounting
• business law
• psychology
• statistics
• econometrics
• Data processing, etc.
3. Who is a manager?
Manager has to balance and integrate three major jobs of a business enterprise as below
(i) Managing a business;
(ii) Managing manager; and
(iii) Managing workers and work.
4. State the meaning of Authority.
Authority means the right of a superior to give the order to his subordinates
5. What do you mean by Span of management?
The Span of Management refers to the number of subordinates who can be managed efficiently
by a superior.
3 marks
1. Define the term management.
“Management is a multipurpose organ that manages a business and manages manager, and
manages worker and work.” — Peter F. Drucker
“To manage is to forecast, to plan, to organize, to command, to co-ordinate and to control.” —
Henry Fayol.
2. Is management an Art or Science?
• Management is neither a science nor an art.
• But a combination of both requiring people holding managerial positions to apply the
scientific management principles and displaying popular managerial skills.
3. Differentiate management from Administration. Pg. No: 5
Content Management Administration
Authority Middle and Lower Level Top level
Role Executive Decisive
Concerned Policy Implementation Policy Formulation
with
Key person Manager Administrator

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Represents Employees, who work for Owners, who get a return on the capital
remuneration invested by them. Function Executive
and Governing Legislative and
Determinative
4. What are the principles of Taylor?
• Science, Not Rule of Thumb
• Harmony, Not Discord
• Mental Revolution
• Cooperation, Not Individualism
• Development of each and every person to his or her greatest efficiency and prosperity
5. What determines the span of management?
• Influences the complexities of the individual manager ‘s job
• Determine the shape or configuration of the Organization
5 marks
1. Explain the concept of Management.
The management concept can be understood from its profound characteristic features as follows:
Body of Knowledge: Management has now developed into a specialised body of management
theory and philosophy. Management literature is growing in all countries. In fact, management
knowledge is the best passport to enter the world of employment either in business world or
government or private.
Management Tools: Tools of management have been developed such as, accounting, business
law, psychology, statistics, econometrics, data processing, etc. These branches of management
profession have enhanced the practical utility of the science of management.
Separate Discipline: Management studies in many universities and institutions of higher learning
are recognised as a separate discipline. Since 1951, many specialised schools of management
offering master‘s degree in business management and administration.
Specialisation: There is a growing tendency to select and appoint highly qualified, trained and
experienced persons to manage the business in each functional areas of management. Thus we
have today an increasing tendency in favour of management by experts or professionals.
Code of Conduct: Enlightened businessmen have recognised that business management is a
social institution and it has social responsibilities to be fulfilled — towards customers,
employees, and the public or community. Corporations have now social conscience and
awareness.
Professional Association: The Business Management Associations in many countries to promote
the spread of knowledge in all management areas and to build up the bright public image of
managerial profession.
2. Explain the Management process in detail.
A process is something that a person does in the context of his individual duties and
responsibilities assigned by his or her immediate higher authority.
Management is Coordination:
The manager of an enterprise must effectively coordinate all activities and resources of the
organization, namely, men, machines, materials and money the four M‘s of management.

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Management is a Process:
The manager achieves proper co-ordination of resources by means of the managerial functions of
planning, organizing, staffing, directing (or leading and motivating) and controlling.
Management is a Purposive Process:
It is directed toward the achievement of predetermined goals or objectives. Without an objective,
we have no destination to reach or a path to follow to arrive at our destination, i.e., a goal, both
management and organization must be purposive or goal-oriented.
Management is a Social Process:
It is the art of getting things done through other people.
Management is a Cyclical Process:
It represents planning-action-control-re-planning cycle, i.e., an ongoing process to attain the
planned goals.
3. Describe the principles of scientific management.
Principles of scientific management propounded by Taylor are
1. Science, Not Rule of Thumb
2. Harmony, Not Discord
3. Mental Revolution
4. Cooperation, Not Individualism
5. Development of each and every person to his or her greatest efficiency and prosperity.
They are explained in brief as follows:
Science, Not Rule of Thumb: Rule of Thumb means decisions taken by managers as per their
personal judgments. This principle is concerned with selecting the best way of performing a job
through the application of scientific analysis and not by intuition or hit and trial methods.
Harmony, Not Discord: Taylor emphasized that there should be complete harmony between the
workers and the management since if there is any conflict between the two, it will not be
beneficial either for the workers or the management. Both the management and the workers
should realize the importance of each other. It becomes possible by (a) sharing a part of surplus
with workers (b) training of employees, (c) division of work (d) team spirit (e) positive attitude
(f) sense of discipline (g) sincerity etc.
Mental Revolution: The technique of Mental Revolution involves a change in the attitude of
workers and management towards each other. Both should realize the importance of each other
and should work with full cooperation. There should be a spirit of togetherness between workers
and management.
Cooperation, Not Individualism:
This principle is an extension of principle of ‘Harmony, not discord’ and lays stress on mutual
cooperation between workers and the management. Cooperation, mutual confidence, sense of
goodwill should prevail among both, managers as well as workers. The intention is to replace
internal competition with cooperation. Management should always guide, encourage and help the
workers.

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Development of each and every person to his or her greatest efficiency and prosperity: To attain
efficiency, steps should be taken right from the process of selection of employees. Employees
should be scientifically selected. The work assigned to each employee should suit his/her
physical, mental and intellectual capabilities. Efficient employees produce more to earn more.
This ultimately helps to attain efficiency and prosperity for both organization and the employees.
4. Explain the principles of Management.
The Father of Modern Management is Mr. Henry Fayol, and according to him there are 14 major
principles of management which every manager has to practice for the success of the
organization.
1. Division of Work
2. Authority and Responsibility
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of Individual Interest to Mutual Interest
7. Remuneration
8. The Degree of Centralization
9. Line of Authority/Scalar Chain
10. Order
11. Equity
12. Stability of Tenure of Personnel
13. Initiative
14. Esprit de Corps/Team Spirit
Division of Work: According to this principle the whole work is divided into small tasks. The
specialization of the
workforce according to the skills of a person leads to specialization which increases the
efficiency of labour.
Authority and Responsibility: Authority means the right of a superior to give the order to his
subordinates whereas responsibility means obligation for performance.
Unity of Command: This principle states that each subordinate should receive orders and be
accountable to one and only one superior.
Unity of Direction: All related activities should be put under one group, there should be one plan
of action for them, and they should be under the control of one manager.
Line of Authority/Scalar Chain: The principle suggests that there should be a clear line of
authority from top to bottom linking all managers at all levels.
Equity: Employees must be treated kindly, and justice must be enacted to ensure a just
workplace. Managers should be fair and impartial when dealing with employees, giving equal
attention towards all employees.

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Esprit de Corps/Team Spirit: This refers to the need of managers to ensure and develop morale in
the workplace; individually and communally. Team spirit helps develop an atmosphere of mutual
trust and understanding. Team spirit helps to finish the task on time.
UNIT-1 MANAGEMENT PROCESS
CHAPTER 2-FUNCTIONS OF MANAGEMENT
2 marks
1. Write a short note about Planning.
Nothing can be performed without planning; Planning refers to deciding in advance.
2. What is meant by Motivation?
It is the process of stimulating people to actions to accomplish the goal.
3. What is meant by Controlling?
It is the control function which facilitates management of actual performance with predetermined
standards.
4. List the subsidiary functions of management.
• Innovation
• Representation
• Decision making
• Communication
5.What is the traditional proverb used in planning?
Think Before you Act ‘or 'Look Before you Leap' are some of the usual traditional proverbs;
which provide a basis or logic for planning.
3 marks
1. List out the main functions of management?
• Planning
• Organizing
• Staffing
• Directing
• Motivating
• Controlling
• Coordination
2. State the importance of staffing.
• Staffing refers to placement of right persons in the right jobs. Staffing helps to ensure
better utilization of human resources.
• It ensures the continuity and growth of the organization, through development managers.
3. What is meant by Innovation?
Innovation refers to the preparation of personnel and organisation to face the changes made in
the business world. Continuous changes are being made in the business. Consumers are satisfied
through innovation. Innovation includes developing new material, new products, new techniques
in production, new package, new design of a product and cost reduction.
4. what is meant by co-ordination?

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Co-ordination is the synchronization (or unification or integration) of the actions of all
individuals, working in the enterprise in different capacities; so as to lead to the most successful
attainment of the common objectives. Co-ordination is included in every managerial function; Eg
(i) Planning and co-ordination, (ii)Organising and co-ordination, (iii) Staffing and co-ordination,
(iv) Directing and co-ordination, (v) Motivation and co-ordination and (iv) Controlling and co-
ordination.
5. How employees are informed about the important matters in a company?
Communication is the transmission of human thoughts, views or opinions from one person to
another person. Workers are informed about what should be done, where it is to be done, how it
is do be done and when it is to be done. Communication helps the regulation of job and co-
ordinates the activities.
5 Marks
1. Explain the various functions of Management.
Functions of management can be classified into two categories; they are A. Main functions and
B. Subsidiary functions. All functions of management are briefly discussed below:
Main functions.
1. Planning: Planning is the primary function of management. Nothing can be performed without
planning. (For eg., Writing a book starts with planning). In short, planning refers to deciding in
advance.
2. Organising: Organizing is the process of establishing harmonious relationship among the
members of an organization function work is assigned to employees who are given authority to
carry out the work assigned and made accountable for it.
3. Staffing: Staffing function comprises the activities of selection and placement of competent
personnel. In other words, staffing refers to placement of right persons in the right jobs.
4. Directing: Directing denotes motivating, leading, guiding and communicating with
subordinates on an ongoing basis in order to accomplish pre-set goals.
Subsidiary functions:
Innovation, Representation, Decision-making, and Communication are the subsidiary functions
of management.
1. Innovation: Innovation refers to the preparation of personnel and organization to face the
changes made in the business world. Continuous changes are being made in the business.
2. Representation: A manager has to act as representative of a company. Manager has dealings
with customers, suppliers, government officials, banks, financial institutions, trade unions and
the like. It is the duty of every manager to have good relation with others.
3. Decision-making: Every employee of an organization has to take a number of decisions every
day. Decision-making helps in the smooth functioning of an organization.
4. Communication: Communication is the transmission of human thoughts, views or opinions
from one person to another person. Workers are informed about what should be done, where it is
to be done, how it is to be done and when it is to be done. Communication helps the regulation of
job and co-ordinates.

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 UNIT-I MANAGEMENT PROCESS
CHAPTER 3-MANAGEMENT BY OBJECTIVES, MANAGEMENT BY
EXCEPTION
2 marks
1. Define MBO.
According to Prof.Reddin defines MBO as, “the establishment of effective standards for
managerial position and the periodic conversion of those into measurable time bound objectives
linked vertically and horizontally and with future planning”
2. What are the objectives of MBO?
• To measure and judge performance
• To relate individual performance to organizational goals
3. Bring out the meaning of MBE.
Management by exception is a style of business management that focuses on identifying and
handling cases that deviate from the norm.
4. Mention any two advantages of MBO?
• MBO process helps the managers to understand their role in the total organisation.
• Manager recognizes the need for planning and appreciates the planning.
5. What is known as KRA?
• Key result areas are fixed on the basis of organizational objectives premises.
• Key Result Areas (KRA) are arranged on a priority basis.
• KRA indicates the strength of an organisation.
3 marks
1. Write the features of MBO.
• MBO tries to combine the long run goals of organisation with short run goals.
• Management tries to relate the organisation goals with society goals.
• MBO’s emphasis is not only on goals but also on effective performance.
2. What are the processes involved in MBO?
• Defining Organizational Objectives Goals of Each Section
• Fixing Key Result Areas Setting Subordinate Objectives or Targets Matching Resources
with Objective
• Periodical Review Meetings
• Appraisal of Activities Reappraisal of Objectives.
3. List out any three process of MBO.
• Defining Organizational Objectives
• Goals of Each Section
• Fixing Key Result Areas
• Setting Subordinate Objectives or Targets
5 marks
1. What are the major advantages of MBO.

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Management by Objectives (MBO) is a management system in which each member of the
organization effectively participates and involves himself. MBO harmonizes the goal of an
individual with the organization’s goal.
1. Managers are involved in objectives setting at various levels of management under MBO and
this commitment ensures hard work to achieve them.
2. MBO process helps the managers to understand their role in the total organisation.
3. Manager recognizes the need for planning and appreciates the planning.
4. Systematic evaluation of performance is made with the help of MBO.
5. MBO gives the criteria of performance. It helps to take corrective action.
6. Delegation of authority is easily done with the help of MBO.
7. MBO motivates the workers by job enrichment and makes the jobs meaningful.
8. The responsibility of a worker is fixed through MBO.
2. What are the advantages of MBE?
Management by exception is a style of business management that focuses on identifying and
handling cases that deviate from the norm.
• It saves the time of managers because they deal only with exceptional matters. Routine
problems are left to subordinates.
• It focuses managerial attention on major problems. As a result, there is better utilization
of managerial talents and energy.
• Management by exception provides better yardsticks for judging results. It is helpful in
objective performance appraisal.
• It is a technique of separating important information from unimportant one. It forces
managers to review past history and study related business data for identifying
deviations. There is better use of knowledge of trends, history and available business
data.
• MBE keeps management alert to opportunities and threats by identifying critical
problems. It can avoid uninformed and impulsive action.
3. Explain the various disadvantages of MBO.
Management by Objectives (MBO) is a management system in which each member of the
organization effectively participates and involves himself. MBO harmonizes the goal of an
individual with the organization’s goal.
Advantages:
1. MBO fails to explain the philosophy; most of the executives do not know how MBO works.
2. MBO is a time-consuming process. Much time is needed by senior people for framing the
MBO. Next, it leads to heavy expenditure and also requires heavy paper work.
3. MBO emphasizes only on short-term objectives and does not consider the long-term
objectives.
4. The status of subordinates is necessary for proper objectives setting. But this is not possible in
the process of MBO.

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5. MBO is rigid one. Objectives should be changed according to the changed circumstances,
external or internal. If it is not done, the planned results cannot be obtained.
4. Discuss the disadvantages of MBE.
Management by exception is a style of business management that focuses on identifying and
handling cases that deviate from the norm.
Disadvantages:
• The main disadvantage of MBE is, only managers have the power over really important
decisions, which can be demotivating for employees at a lower level.
• Furthermore, it takes time to pass the issues to managers. Managing employees who
deviate from the normal procedures.
• Because of compliance failures are considered difficult to manage and typically find
themselves with limited job duties and ultimately dismissed/terminated.
UNIT-II FINANCIAL MARKET- I
CHAPTER 4- INTRODUCTION TO FINANCIAL MARKETS
2 marks
1. What are the components of organized sectors?
• Regulators
• Financial Institutions
• Financial Markets and Financial Services.
2. Write a note on financial market.
A market wherein financial instruments such as financial claims, assets and securities are traded.
3. What is spot market?
Cash/Spot Market is a market where the delivery of the financial instrument and payment of cash
occurs immediately. i.e. settlement is completed immediately.
4. What is debt market?
Debt market is the financial market for trading in Debt Instrument (i.e. Government Bonds or
Securities etc.
5. How is price decided in a secondary market?
Prices in the secondary market are determined by the basic forces of supply and demand.
3 marks
1. Give the meaning and definition of financial market.
Meaning: A market wherein financial instruments such as financial claims, assets and securities
are traded.
According to Brigham, Eugene F, “The place where people and organizations wanting to borrow
money are brought together with those having surplus funds is called a financial market.”
2. Differentiate spot market from future market.
(i) Cash/Spot Market is a market where the delivery of the financial instrument and payment of
cash occurs immediately.
(ii) Forward or Futures Market is a market where the delivery of asset and payment of cash takes
place at a pre-determined time frame in future.

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3. Write a note on Secondary Market.
The place where formerly issued securities are traded is known as Secondary Market. (Resale
Market). Stock Exchange is an important institution in the secondary market. It does not provide
funding to companies.
4. Bring out the scope of financial market in India.
The financial market provides financial assistance to individuals, agricultural sectors, industrial
sectors, service sectors, financial institutions like banks, insurance sectors, provident funds and
the government as a whole.
5 marks
1. Distinguish between new issue market and secondary market.

2. Enumuterate the different kinds of financial market.

a. On the Basis of Type of Financial Claim
(i) Debt Market is the financial market for trading in Debt Instrument (i.e. Government Bonds or
Securities, Corporate Debentures or Bonds)
(ii) Equity Market is the financial market for trading in Equity Shares of Companies.
b. On the Basis of Maturity of Financial Claim
(i) Money Market is the market for short term financial claim (usually one year or less) E.g.
Treasury Bills, Commercial Paper, Certificates of Deposit
(ii) Capital Market is the market for long term financial claim more than a year E.g. Shares,

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Debentures
c. On the Basis of Time of Issue of Financial Claim
(i)Primary Market is a term used to include all the institutions that are involved in the sale of
securities for the first time by the issuers (companies). Here the money from investors goes
directly to the issuers.
(ii) Secondary Market is the market for securities that are already issued. Stock Exchange is an
important institution in the secondary market.
d. On the Basis of Timing of Delivery of Financial Claim
(i) Cash/Spot Market is a market where the delivery of the financial instrument and payment of
cash occurs immediately. i.e. settlement is completed immediately.
(ii) Forward or Futures Market is a market where the delivery of asset and payment of cash
takes place at a pre-determined time frame in future.
e. On the Basis of the Organizational Structure of the Financial Market
(i) Exchange Traded Market is a centralized organization (stock exchange) with standardized
procedures.
(ii) Over–the–Counter Market is a decentralized market (outside the stock exchange) with
customized procedures.
3. Discuss the role of financial market.
(i) Savings Mobilization: Obtaining funds from the savers or ‘surplus’ units such as household
individuals, business firms, public sector units, Government is an important role played by
financial markets.
(ii) Investment: Financial market plays a key role in arranging the investment of funds thus
collected, in those units which are in need of the same.
(iii) National Growth: Financial markets contribute to a nation’s growth by ensuring an
unfettered flow of surplus funds to deficit units. Flow of funds for productive purposes is also
made possible. It leads to overall economic growth.
(iv)Entrepreneurship Growth: Financial markets contribute to the development of the
entrepreneurial class by making available the necessary financial resources.
(v)Industrial Development: The different components of financial markets help an accelerated
growth of industrial and economic development of a country and thus contributing to raising the
standard of living and the society’s well-being.
4. What are the functions of the financial market?
I. Intermediary Functions:
The intermediary functions of a financial market include the following:
(i) Transfer of Resources: Financial markets facilitate the transfer of real economic resource
from lenders to ultimate borrowers.
(ii)Enhancing Income: Financial markets allow lenders earn interest/dividend on their surplus
investible funds and thus contributing to the enhancement of the individual and the national
income.
(iii) Productive Usage: Financial markets allow for the productive use of the funds borrowed and

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thus enhancing the income and the gross national production.
(iv)Capital Formation: Financial markets provide a channel through which new savings flow to
aid capital formation of a country.
(v)Price Determination: Financial markets allow for the determination of the price of the traded
financial asset through the interaction of buyers and sellers.
(vi) Sale Mechanism: Financial market provides a mechanism for selling of a financial asset by
an investor so as to offer the benefits of marketability and liquidity of such assets.
II. Financial Functions:
The financial functions of a financial market include the following:
(i) Providing the borrowers with funds so as to enable them to carry out their investment plans.
(ii) Providing the lenders with earning assets so as to enable them to earn wealth by deploying
the assets in productive ventures
(iii) providing liquidity in the market so as to facilitate trading of funds.
UNIT-II FINANCIAL MARKET- I
CHAPTER 5- CAPITAL MARKETS
2marks
1. What is Capital Market?
It is a market where buyers and sellers engage in trade of financial securities like bonds, and
stocks.
2. Write a note on OTCEI.
The OTCEI was set up by a premier financial institution to allow the trading of securities across
the electronic counters throughout the country.
3. What is Mutual Fund?
Financial institutions that provide facilities for channeling savings of small investors into
avenues of productive investments are called ‘Mutual Funds’.
4. Who are the participants in a Capital Market?
The participants of the capital market include individuals, corporate sectors, Govt., banks and
other financial institutions.
5. How is price determined in a Capital Market?
Its price is determined by supply and demand for its shares in the market.
3 marks
1. What are the various kinds of Capital Market? Explain.
I. Primary Market: Primary market is a market for new issues or new financial claims. Hence, it
is also called New Issue Market.
II.Secondary Market: Secondary Market may be defined as the market for securities which are
previously issued in the primary markets are traded here.
2. Explain any two functions of Capital Market.
(i) Savings and Capital Formation: In capital market, various types of securities help to mobilize
savings from various sectors of the population.
(ii) Reliable Guide to Performance: The capital market serves as a reliable guide to the

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performance and financial position of corporate, and thereby promotes efficiency.
3. Write a note on National Clearance and Depository System (NCDS).
It arranges to provide for the transfer of ownership of securities in exchange on payment by book
entry on electronic ledgers without any physical movement of transfer deed.
4. Discuss about the evolution and growth of Indian Capital Market.
➢ The period between 1947 and 1973 marked the development in the capital market.
During this period, a network
of development financial institutions such as IFCI, ICICI, IDBI and UTI, SFCs and
SIDCs were established which strengthened the capital market.
➢ During the period between 1980 and 1992, debenture emerged as a powerful instrument
of resource mobilization in the primary market. The public sector bonds were introduced.
A number of stock exchanges came into existence. There was a momentous growth in the
secondary market.
➢ SEBI emerged as an effective regulatory body for the primary and secondary markets and
afford a measure of protection to small investors. A new financial service such as credit
rating was introduced.
5. Explain about Factoring and Venture Capital Institutions.
(i) Factoring Institutions: The factoring institutions collect the book debts for and on behalf of its
clients.
(ii)Venture Fund Institutions: Venture capital funds bring into force the hi-technology projects
which are converted into commercial production.
5 marks
1. Discuss the characters of a capital market.
(i)Securities Market: The dealings in a capital market are done through the securities like shares,
debentures, etc. The capital market is thus called securities market.
(ii)Price: The price of the securities is determined based on the demand and supply prevailing in
the capital market for securities.
(iii)Participants: There are many players in the capital market. The participants of the capital
market include individuals, corporate sectors, Govt., banks and other financial institutions.
(iv)Location: Capital market is not confined to certain specific locations, although it is true that
parts of the market are concentrated in certain well-known centers known as Stock Exchanges. It
has its impact in the overall economy, wherever suppliers and users of capital get together and do
business.
(v)Market for Financial Assets: Capital market provides a transaction platform for long term
financial assets.
2. Briefly explain the functions of capital market.
(i)Savings and Capital Formation: In capital market, various types of securities help to mobilize
savings from various sectors of population (Individuals, Corporate, Govt., etc.).
(ii)Permanent Capital: The existence of a capital market/stock exchange enables companies to
raise permanent capital. The investors cannot commit their funds for a permanent period but

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companies require funds permanently.
(iii)Ready and Continuous Market: The stock exchange provides a central convenient place
where buyers and sellers can easily purchase and sell securities. Easy marketability makes
investment in securities more liquid as compared to other assets.
(iv)Reliable Guide to Performance: The capital market serves as a reliable guide to the
performance and financial position of corporate, and thereby promotes efficiency.
(v)Proper Channelization of Funds: The prevailing market price of a security and relative yield
are the guiding factors for the people to channelize their funds in a particular company. This
ensures effective utilization of funds in the public interest.
(vi)Provision of Variety of Services: The financial institutions functioning in the capital market
provide a variety of services such as grant of long term and medium-term loans to entrepreneurs,
provision of underwriting facilities, assistance in promotion of companies, participation in equity
capital, giving expert advice etc.
3. Explain the various types of new financial institutions.
(i)Venture Fund Institutions: Venture capital financing is a form of equity financing designed
especially for funding new and innovative project ideas. Venture capital funds bring into force
the hi-technology projects which are converted into commercial production.
(ii)Mutual Funds: Financial institutions that provide facilities for channeling savings of small
investors into avenues of productive investments are called ‘Mutual Funds’. A mutual fund
company invests the funds pooled from shareholders and gives them the benefit of diversified
investment portfolio and a reasonable return.
(iii)Factoring Institutions: “Factoring” is an arrangement whereby a financial institution provides
financial accommodation on the basis of assignment/sale of account receivables. The factoring
institutions collect the book debts for and on behalf of its clients. Some of the factoring
institutions operating in India are SBI Factors and Commercial Services Private Limited, a
subsidiary of State Bank of India.
(iv)Over the Counter Exchange of India (OTCEI): The OTCEI was set up by a premier financial
institution to allow the trading of securities across the electronic counters throughout the country.
It addresses some specific problems of both investors and medium-size companies. Some of the
greatest strengths of OTCEI are transparency of transactions, quick deals, faster settlements and
better liquidity.
(v) National Stock Exchange of India Limited (NSEI): NSEI was established in 1992 to function
as a model stock exchange. The Exchange aims at providing the advantage of nation-wide
electronic screen based “scrip less” and “floorless” trading system in securities. The institution is
expected to allow for an efficient and transparent system of securities trading.
UNIT-II FINANCIAL MARKET- I
CHAPTER 6- MONEY MARKET
2 marks
1. Define the term “Money Market”.
According to Crowther,” the money market is the collective name given to the various firms and

14
institutions that deal in the various grades of near money”.
2.What is a CD market?
Certificate of Deposits are short-term deposit instruments issued by banks and financial
institutions to raise large sums of money.
3. What is Government Securities Market?
A market whereby the Government or gilt-edged securities can be bought and sold is called
‘Government Securities Market’.
4. What do you mean by Auctioning?
A method of trading whereby merchants bid against one another and where the securities are
sold to the highest bidder is known as ‘auctioning’.
5. What do you meant by Switching?
The purchase of one security against the sale of another security carried out by the RBI in the
secondary market as part of its open market operations is described as ‘Switching’.
3 marks
1. What are the features of Treasury Bills?
• Issuer
• Finance Bills
• Liquidity
• Vital Source
• Monetary Management
2. Who are the participants of Money Market?
• Government of different countries
• Central Banks of different countries
• Private and Public Banks
• Mutual Funds Institutions
• Insurance Companies
• Non-Banking Financial Institutions
3. Explain the types of Treasury Bills?
I. 91 days Treasury Bills: It issued at a fixed discount rate of 4 per cent as well as through
auctions.
II. 182 days Treasury Bills: The RBI holds 91 days and 182 Treasury Bills and they are issued on
tap basis throughout the week.
III. 364 days Treasury Bills: 364 days Treasury Bills do not carry any fixed rate.
4. What are the features of Certificate of Deposit?
Document of title to time deposit. It is unsecured negotiable instruments. It is repayable on a
fixed date without grace days.
5. What are the types of Commercial Bill?
• Demand and Usance Bills
• Clean bills and documentary Bills
• Inland bills and Foreign Bills

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 • Indigenous Bills
• Accommodation and supply Bills.
5 marks
1. Differentiate between the Money Market and capital market.
Content Money market Capital market
Deals with Instruments It deals with instruments like It deals with instruments like
commercial bills (bill of shares, debentures,
exchange, treasury bill, Government bonds, etc.,
commercial papers etc.)

Liquidity High liquidity in Money liquidity in Capital Market

Market Low
Subdivision In money market there is no In capital market there is a
such subdivision. division of primary market
and secondary market
Place of Transaction Transactions mostly take place Transactions take place at a
over the phone and there is no formal place. Eg. stock
formal place. exchange
Risk Low credit and market risk. High credit and market risk

2. Explain the characteristics of Money Market.

1. Short-term Funds: It is a market purely for short-term funds or financial assets called near
money.
2. Maturity Period: It deals with financial assets having a maturity period upto one year only.
3. Conversion of Cash: It deals with only those assets which can be converted into cash readily
without loss and with minimum transaction cost.
4. No Formal Place: Generally, transactions take place through phone, i.e., oral communication.
Relevant documents and written communications can be exchanged subsequently. There is no
formal place like stock exchange as in the case of a capital market.
5. Sub-markets: It is not a single homogeneous market. It comprises of several sub-markets each
specializing in a particular type of financing. E.g., Call Money Market, Acceptance Market, Bill
Market.
6. Role of Market: The components of a money market are the Central Bank, Commercial Banks,
Non-Banking Financial Companies, Discount Houses and Acceptance House. Commercial banks
generally play a dominant role in this market.
7. Existence of Secondary Market: There should be an active secondary market for these
instruments.
8. Demand and Supply of Funds: There should be a large demand and supply of short-term
funds. It presupposes the existence of a large domestic and foreign trade.
9. Wholesale Market: It is a wholesale market and the volume of funds or financial assets traded
in the market is very large.

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10. Flexibility: Due to greater flexibility in the regulatory framework, there are constant
endeavours for introducing new instruments.
3. Explain the Instruments of Money Market.
There are many kinds of Instruments available in Money Market. In India, till 1986, only a few
instruments were available. They were as follows:
• Treasury Bills in the Treasury Market
• Money at Call and Short Notice in the Call Loan Market
• Commercial Bills and Promissory Notes in the Bill Market
Now in addition to the above, the following new instruments come into existence:
• Commercial Papers
• Certificate of Deposits
• Inter-Bank participation Certificates.
• Repo Instruments.
Treasury Bills: Treasury bills are very popular and enjoy a higher degree of liquidity since they
are issued by the Government. A Treasury bill is nothing but a promissory note issued for a
specified period stated therein. The Government promises to pay the specified amount mentioned
therein to the bearer of the instrument on the due date. The period does not exceed a period of
one year.
Certificate of Deposits: Certificate of Deposits are short-term deposit instruments issued by
banks and financial institutions to raise large sums of money. Certificate of Deposits are issued
in the form of usance promissory notes. They are easily convertible in nature and are in
marketable form having particular face value and maturity.
Commercial Bills: A bill of exchange issued by a commercial organization to raise money for
short- term needs. These bills are of 30 days, 60 days and 90 days maturity. Government or Gilt-
Edged Securities: Government securities are issued for the purposes of refunding the maturing
securities, for advance refunding securities, which have not yet matured and for cash financing,
i.e., raising fresh cash resources.
4. Explain the features and types of Commercial Bills.
The features of the Commercial Bills are as follows:
1. Drawer
2. Acceptor
3. Payee
4. Discounter
5. Endorser
6. Assessment
7. Maturity
8. Credit Rating
Types
a. Demand and Usance Bills: A demand bill is one wherein no specific time of payment is
mentioned. So, demand bills are payable immediately when they are presented to the drawee.

17
b. Clean bills and documentary Bills: Bills that are accompanied by documents of title to goods
are called documentary bills. Clean bills are drawn without accompanying any document.eg.
Railway Receipt and Lorry Receipt.
c. Inland bills and Foreign Bills: Bills that are drawn and payable in India on a person who is
resident in India are called inland bills. Bills that are drawn outside India and are payable either
in India or outside India are called foreign bills.
d. Indigenous Bills: The drawing and acceptance of indigenous bills are governed by native
custom or usage of trade.
e. Accommodation and supply Bills: Accommodation bills are those which do not arise out of
genuine trade of transactions.
5. What are the characters of Government securities?
1. Agencies: Government securities are issued by agencies such as Central Government, State
Governments, semi-government authorities like local Government authorities, e.g.
municipalities, autonomous institution such as metropolitan authorities, port trusts etc.,
2.Nature of Securities: Securities offer a safe avenue of investment through guaranteed payment
of interest and repayment of principal by the Government.
3. Tax Rebate: A striking feature of these securities is that they offer wide-range of tax
incentives to investors. This has made these securities very popular for this benefit.
4. Participants: The participants in Government securities market include the Government sector
comprising Central and State Governments whose holdings represent governmental transfer of
resources.
5. Issue Mechanism: The Public Debt Office (PDO) of the RBI undertakes to issue government
securities.
6. Switching: The purchase of one security against the sale of another security carried out by the
RBI in the secondary market as part of its open market operations is described as ‘Switching’.
7. Auctioning: A method of trading whereby merchants bid against one another and where the
securities are sold to the highest bidder is known as ‘auctioning’.
UNIT-III FINANCIAL MARKET- II
CHAPTER 7- STOCK EXCHANGE
2 marks
1. What is meant Stock Exchange?
Stock Exchange is an organized market for the purchase and sale of industrial and financial
security.
2. Define Stock Exchange.
According to Husband and Dockerary, "Stock exchanges are privately organized markets which
are used to facilitate trading in securities."
3. Write any 5 Stock Exchanges in India.
• The Bombay Stock Exchange
• The National Stock Exchange of India (NSE) Ltd
• The Coimbatore Stock Exchange Ltd,
• The Madras Stock Exchange Ltd,
• Bangalore Stock Exchange Ltd.

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4. What is meant by Remisier?
He acts as an agent of a member of a stock exchange. He obtains business for his principal ie.,
the member and gets a commission for that service.
5. Who is called a Broker?
Brokers are commission agents, who act as intermediaries between buyers and sellers of
securities.
6. What are the types of Speculator?
• Bull
• Bear
• Stag
• Lame Duck
7. Mention the recent Development in Stock Exchange?
• National Stock Exchange of India Limited (NSE)
• Stock Holding Corporation of India Limited (SHCIL)
• National Clearing and Depository System (NCDS)
• Securities Trading Corporation of India (STCI)
• National Securities Depositary Limited (NSDL)
3 marks
1. What are the limitations of Stock exchange?
• Lack of uniformity and control of stock exchanges.
• Failure to control unhealthy speculation.
• Allowing more than one charge in the place.
2. Explain Bull and Bear.
Bull: A Bull or Tejiwala.
• He is an optimistic speculator.
• In anticipation of price rise he makes purchases of shares at present and other securities
with the intention to sell at higher prices in future.
Bear: A bear or Mandiwala speculator
• He expects prices to fall in future and sells securities at present with a view to purchase
them at lower prices in future.
• A bear is a pessimistic speculator.
3. Explain Stag and Lame Duck.
Stag: A stag is a cautious speculator
• He applies for shares in new companies and expects to sell them at a premium, if he gets
an allotment.
• He is also called a premium hunter.
Lame Duck:
• A bear speculator contracts to sell securities at a later date.
• On the appointed time he is not able to get the securities as the holders are not willing to
part with them.
4. Explain National Stock Market System (NSMS)
National stock market system was advocated by the - High Powered Group on the Establishment
of New Stock Exchanges headed by Shri.M.J.Pherwani (popularly known as Pherwani
Committee). At present the National Stock Market in India comprises the following:
1. National Stock Exchange of India Limited (NSE)

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2. Stock Holding Corporation of India Limited (SHCIL)
3. National Clearing and Depository System (NCDS)
4. Securities Trading Corporation of India (STCI)
5. National Securities Depositary Limited (NSDL)
5. Explain National Stock Exchange. (NSE)
NSE was incorporated in November, 1992. It is a country wide, screen based, online and order
driven trading system. It uses satellite link to spread trading throughout the country thereby
connecting members scattered all
over the India.
5 marks
1. Explain the functions of Stock Exchange. (Any 5)
1. Ready and Continuous Market: Stock Exchange is, in fact, a market for existing securities. If
an investor wants to sell his securities, he can easily and quickly dispose them off on a stock
exchange. In other words, he can convert his shares into cash and with the same ease he can
convert his cash into securities. This easy marketability of securities increases their liquidity
(conversion of securities into cash easily and quickly) and consequently raises their value.
2. Correct Evaluation of Securities: The prices at which securities are bought and sold are
recorded and made public. These prices are called “market quotations”. One can easily evaluate
the worth of one’s securities on the basis of these quotations. The lender can easily assess the
worth of security offered for loan.
3. Protection to Investors: All dealings in a stock exchange are in accordance with well-defined
rules and regulations. For example, brokers cannot charge higher rate of commission for their
services. Any malpractice will be severely punished. Thus, stock exchange provides reasonable
measure of safety and fair dealing in buying and selling of securities.
4. Proper Channelization of Capital: People like to invest in the shares of such companies which
yield good profits. The savings of individuals are directed towards promising companies which
declare good dividends over a period of time. But for the stock exchanges, these savings are
likely to be wasted on the shares of unprofitable units.
5. Aid to Capital Formation: The publicity which the stock exchange gives to various industrial
securities and their prices and the facilities provided by it for their purchase and sale induce
people to save and invest. Stock exchanges thus ensure a steady flow of capital into industry and
assists industrial development.
6. Facilities for Speculation: Speculation is an integral part of stock exchange operations. As a
result of speculation, demand for and supply of securities are equalized. Similarly, price
movements are rendered smoothly.
2. Explain the features of Stock Exchange. (Any 5)
1. Market for Securities: Stock exchange is a market, where securities of corporate bodies,
government and semi-government bodies are bought and sold.
2. Deals in Second Hand Securities: It deals with shares, debentures bonds and such securities
already issued by the companies. In short, it deals with existing or second hand securities and
hence it is called secondary market.

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3. Association of Persons: A stock exchange is an association of persons or body of individuals
which may be registered or unregistered.
4. Recognition from Central Government: Stock exchange is an organised market. It requires
recognition from the Central Government.
5. Working as per Rules: Buying and selling transactions in securities at the stock exchange are
governed by the rules and regulations of stock exchange as well as SEBI Guidelines. No
deviation from the rules and guidelines is allowed in any case.
3. Explain the Benefits of Stock Exchange.
A. Benefits to the Community
i. Economic Development: It accelerates the economic development by ensuring steady flow of
savings into productive purposes.
ii. Fund Raising: Platform It enables the well-managed, profit making companies to raise
limitless funds by fresh issue of shares from time to time.
iii. Tools to Divert Resources: Scarce resources are thus diverted to efficiently run enterprises for
better utilization. iv. Capital Formation: It encourages capital formation.
v. Fund Raiser for Government: It enables Government to raise funds for undertaking projects
through sale of securities on the stock exchange. Thus, stock exchange serves as a platform for
raising public debt.
B. Benefits to the Company
i. Enhances Goodwill or Reputation: Companies whose shares are quoted on a stock exchange
enjoy greater goodwill and credit standing.
ii. Wide Market: There is a wide and ready market for such securities.
iii. Raises huge funds: Stock Exchange can raise huge funds easily by issue of shares and
debentures. iv. Increases bargaining strength Companies whose shares rise in the stock exchange
command higher bargaining power in the event of further expansion, merger or amalgamation.
C. Benefits to Investors
i. Liquidity: Stock exchange helps an investor to convert his shares into cash quickly and thus
increases the liquidity of his investments.
ii. Adding collateral value of security: The fact that a security is dealt on a stock exchange makes
it a good collateral security for obtaining loan from banks.
iii. Investor protection: The stock exchange safeguards, investor’s interest and ensures fair
dealing by strictly enforcing its rules and regulations.
iv. Assessing real worth of security: An investor can easily assess the real worth of securities in
his hands, as market quotations are published daily in the newspapers and in websites.
v. Mechanism to trade security: Stock Exchange provides a mechanism by which purchase and
sale of listed securities take place in a matter of few minutes.
4. Distinguish between Stock Exchange and Commodity Exchange. Pg no:55
Content Stock exchange Commodity exchange
Meaning Stock Exchange (also called A commodity exchange is an
Stock Market or Share exchange where commodities
Market) is one important are traded. Tradable

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 constituent of capital market. commodities fall into the
following categories
Function Providing easy marketability Offering hedging or price
insurance services and
liquidity to securities.
Participants Investors and Speculators Producers, dealers, traders and
a body of speculators.
Price Quotation As regards forward dealings, For future dealings, multiple
only one quotation is possible quotations are possible

Forward contract Forward dealings are Standards are to be fixed for

simplified as securities are deliverable grades to facilitate
fully standardized futures contract

UNIT-III FINANCIAL MARKET- II

CHAPTER 8- SECURITIES EXCHANGE BOARD OF INDIA
2 marks
1. Write a short note on SEBI
Securities and exchange board of India (SEBI) is an apex body that maintains and regulates our
capital market.
2. Write any two objectives of SEBI.
• Regulation of Stock Exchanges
• Protection to the Investors
3. What is Demat account?
A demat account holds all the shares that are purchased in electronic or dematerialized form.
Basically, a demat account is to shares what a bank account is to money. Like the bank account,
a demat account holds the certificates of financial instruments like shares, bonds, government
securities, mutual funds and exchange traded funds (ETFs).
4. Mention the headquarters of SEBI.
SEBI has its headquarters at the business district of Bandra Kurla Complex in Mumbai and has
Northern, eastern, southern and western Regional offices in New Delhi, Kolkata, Chennai and
Ahmedabad respectively.
5. What are the various ID proofs?
• PAN card
• voter's ID
• passport
• driver's license
• bank attestation
• IT returns etc.
3 marks

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1. What is meant by Dematerialization?
Dematerialization is the process by which physical share certificates of an investor are taken
back by the company. Then an equivalent number of securities in the electronic form are credited
to the investors account with his depository participant.
2. What are the documents required for a Demat account?
Proof of identity: PAN card, voter’s ID, Driving license, IT returns, electricity bill.
Proof of address: ration card, voter’s ID, Driving license, bank passbook or bank statement.
3. What is the power of SEBI under Securities Contract Act?
SEBI is also empowered by the Finance Ministry to nominate three members on the Governing
Body of every stock exchange.
4. What is meant by Insiders trading?
Insider trading means the buying and selling of securities by directors Promoters, etc. Who have
access to some confidential information about the company and who wish to take advantage of
this confidential information.
5. Draw the organization structure of SEBI.

5 marks
1. what are the functions of SEBI
• Safeguarding the interests of investors by means of adequate education and guidance.
• Regulating and controlling the business on stock markets.
• Conduct inspection and inquiries of stock exchanges, intermediaries and self-regulating
organizations and to take appropriate measures wherever required.
• Barring insider trading in securities.
• Prohibiting deceptive and unfair methods used by financial intermediaries operating in
securities markets.
• Registering and controlling the functioning of stock brokers, sub-brokers, share transfer
agents, bankers, trustees, registrars, merchant bankers, underwriters, portfolio managers,

23
 investment advisers and various other intermediaries who might be linked to securities
markets in any manner.
• SEBI issues Guidelines and Instructions to businesses concerning capital issues.
2. Explain the powers of SEBI
1. Powers Relating to Stock Exchanges &Intermediaries: SEBI has wide powers regarding the
stock exchanges and intermediaries dealing in securities. It can ask information from the stock
exchanges and intermediaries regarding their business transactions for inspection or scrutiny and
other purpose.
2. Power to Impose Monetary Penalties: SEBI has been empowered to impose monetary
penalties on capital market
intermediaries and other participants for a range of violations. It can even impose suspension of
their registration for a short period.
3. Power to Initiate Actions in Functions Assigned: SEBI has a power to initiate actions in regard
to functions assigned. For example, it can issue guidelines to different intermediaries or can
introduce specific rules for the protection of interests of investors.
4. Power to Regulate Insider Trading: SEBI has power to regulate insider trading or can regulate
the functions of merchant bankers.
5. Powers Under Securities Contracts Act: For effective regulation of stock exchange, the
Ministry of Finance issued a Notification on 13 September, 1994 delegating several of its powers
under the Securities Contracts (Regulations) Act to SEBI.
3. What are the Benefits of Dematerialization?
• The risks pertaining to physical certificates like loss, theft, forgery and damage are
eliminated completely with a DEMAT account.
• The lack of paperwork enables quicker transactions and higher efficiency in trading.
• Trading has become more convenient as one can trade through computers at any location,
without the need of visiting a broker.
• The shares that are created through mergers and consolidation of companies are credited
automatically in the DEMAT account.
• As all the transactions occur through the depository participant, a trader does not have to
communicate individually with each and every company.
• There is no need for stamp duty for transfer of securities; this brings down the cost of
transaction significantly.
• Certain banks also permit holding of both equity and debt securities in a single account.
• Banks also provide dedicated and trained customer care officers to assist through all the
procedures.
UNIT-4 HUMAN RESOURCE MANAGEMENT
CHAPTER 9- HUMAN RESOURCE MANAGEMENT
2 marks
1. Give the meaning of Human Resource.
Human resource is a “whole consisting of interrelated, interdependent and interacting

24
physiological and ethical components” – Michael J jucius
2. What is Human Resource Management?
Human Resource Management is a function of management concerned with hiring, motivating
and maintaining people in an organisation. It focuses on people in an organisation.
3. State two features of HRM.
• Universally relevant
• Goal oriented
4. Mention two characteristics of Human Resource.
• Human resources are moveable
• HR can work as a team
• HR is the only factor of production that lives.
5. What are the managerial functions of HRM
• Planning
• Organising
• Directing
• Controlling.
3 marks
1. Define the term Human Resource Management.
“HRM as that part of management process which is primarily concerned with the human
constituents of an organisation” -E.F.L Brech
2. What are the Charateristic of Human resources?
• Human resource is the only factor of production that lives.
• Human resource created all other resources
• Human resource exhibits innovation and creativity
3. What is the significance of Human resource?
• It is only through human resource all other resources are effectively used.
• Industrial relations depend on human resource.
• Human relations are possible only through human resource.
• Human resource manages all other factors of production.
5. State the functions of Human Resource Management.
I. Managerial function - Planning, Organising, Directing, Controlling.
II. Operative function – Procurement, Development, Compensation, Retention, Integration,
Maintenance.
5 marks
1. Explain the characteristics of Human Resource (any 5)
• Human resource is the only factor of production that lives
• Human resource created all other resources
• It is only the labour of employees that is hired and not the employee himself
• Human resource exhibits innovation and creativity

25
 • Human resource alone can think, act, analyse and interpret
• Human resources are emotional beings
• Human resources can be motivated either financially or non-financially
• The behaviour of human resources are unpredictable
• Over years human resources gains value and appreciates
• Human resources are movable xi. Human resource can work as a team
2. Describe the significance of Human Resource Management.
To identify manpower needs: Determination of manpower needs in an organisation is very
important as it is a form of investment. The number of men required is to be identified accurately
to optimise the cost.
To incorporate change: Change is constant in any organisation and this change has to be
introduced in such a way that the human resource management acts as an agent to make the
change effective.
To ensure the correct requirement of manpower: At any time, the organisation should not suffer
from shortage or surplus manpower which is made possible through human resource
management.
To select right man for right job: Human resource management ensures the right talent available
for the right job, so that no employee is either under qualified or over qualified.
To promote favourable employee attitude: Organisations are expected to provide a good work
environment to secure favorable employee attitude towards the management. This can be
accomplished through conflict resolution, counselling, grievance reprisals etc.
To provide scope for collective bargaining: Human resource management encourages workforce
to form a union to represent their grievances and find early solution for their problems by
collective representation.
3. Elaborate on the Managerial functions of Human Resource Management.
Managerial Functions
I. Planning – Planning is deciding in advance what to do, how to do and who is to do it. It
bridges the gap between where we are and where we want to go. It helps in the systematic
operation of business. It involves determination objectives, policies, procedures, rules, strategies,
programmes and budgets. It ensures maintenance of correct number of employees to carry out
activities and also to formulate timely employee policies.
ii.Organizing – It includes division of work among employees by assigning each employee their
duties, delegation of authority as required and creation of accountability to make employees
responsible.
iii. Directing – It involves issue of orders and instructions along with supervision, guidance and
motivation to get the best out of employees. This reduces waste of time energy and money and
early attainment of organisational objectives.
iv. Controlling – It is comparing the actual with the standards and to check whether activities are
going on as per plan and rectify deviations. The control process includes fixing of standards,
measuring actual performance, comparing actual with standard laid down, measuring deviations

26
and taking corrective actions. This is made possible through observation, supervision, reports,
records and audit.
4. Discuss the Operating functions HRM.
Operating Functions
• Procurement – Acquisition deals with job analysis, human resource planning,
recruitment, selection, placement, transfer and promotion
• Development – Development includes performance appraisal, training, executive
development, career planning and development, organisational development
• Compensation – It deals with job evaluation, wage and salary administration, incentives,
bonus, fringe benefits and social security schemes
• Retention – This is made possible through health and safety, welfare, social security, job
satisfaction and quality of work life
• Integration – It is concerned with those activities that aim to bring about reconciliation
between personal interest and organizational interest
• Maintenance – This encourages employees to work with job satisfaction, reducing labour
turnover, accounting for human resource and carrying out audit and research.
UNIT-IV HUMAN RESOURCE MANAGEMENT
CHAPTER 10- RECRUITMENT METHODS
2 marks
1. Give the meaning of Recruitment.
Recruitment is the process of finding suitable candidates for various posts in an organisation. It is
a process of attracting potential people to apply for a job in an organisation.
2. What is promotion?
It’s based on seniority and merits of the employees they are given opportunity to move up in the
organisational order.
3. State two of internal source of recruitment.
• Upgrading – Performance appraisal helps in the process of moving employees from a
lower position to a higher position.
• Promotion – Based on seniority and merits of the employees they are given opportunity
to move up in the organisational hierarchy.
4. What is meant by campus recruitment.
The organisations visit the educational institutions to identify and recruit suitable candidates.
5. What is meant by poaching?
Organisations instead of training and developing their own employees hire employees of other
competitive companies by paying them more both fi nancial and non fi nancial benefi ts. It is
also called raiding.
1 marks
1. Define the term Recruitment.
“It is a process of searching for prospective employees and stimulating and encouraging them to
apply for jobs in an organisation.” -Edwin B. Flippo
2.What is meant by unsolicited application?

27
These are the applications of job seekers who voluntarily apply for the vacancies not yet notified
by the organisations.
3. What is meant job portals?
Using internet job portals organisations can screen for the prospective candidates and fi ll up
their vacancies.
4. State the steps in Recruitment process outsourcing.
• Planning recruitment
• Determining vacancies
• Identifying the sources
• Drafting information for advertisement
• Selecting the suitable mode of advertisement
• Facilitating selection process
• Evaluation and control
5 marks
1. Explain the internal source of recruitment (any 5)
• Upgrading – Performance appraisal helps in the process of moving employees from a
lower position to a higher position
• Promotion – Based on seniority and merits of the employees they are given opportunity
to move up in the organisational hierarchy
• Demotion – Movement of employee from a higher position to a lower position because of
poor performance continuously to make him realise the significance of performance
• Recommendation by existing Employees – A family member, relative or friend of an
existing employee can be recruited and placed
• Job rotation – One single employee managing to learn how to perform in more than one
job on rotation. This familiarises the employees with all kind of jobs performed and
becomes a source.
• Retention – The retiring employees can be used to meet the requirement after
superannuation as per management discretion
2. Explain the external source of recruitment (any 5)
• Advertisements – The employer can advertise in dailies, journals, magazines etc. about
the vacancies in the organization specifying the nature of work, nature of vacancy,
qualification and experience required, salary offered, mode of applying and the time limit
within which the candidate has to apply.
• Unsolicited applicants – These are the applications of job seekers who voluntarily apply
for the vacancies not yet notified by the organisations.
• Walkins– Walk-in applicants with suitable qualification and requirement can be another
source of requirement.
• Campus Recruitment – The organisations visit the educational institutions to identify and
recruit suitable candidates.
• Recruitment at Factory gate – Usually casual or temporary unskilled employees are
recruited by this way. They are recruited at factory gate and paid on hourly or daily basis.

28
3. What is the recent trends in recruitment?
The recent methods of recruiting by organisations include the following methods:
Outsourcing – There are outsourcing firms that help in the process of recruiting through
screening of applications and finding the right person for the job for which job they are paid
service charges.
Poaching – Organisations instead of training and developing their own employees hire
employees of other competitive companies by paying them more both financial and non-financial
benefits. It is also called raiding.
UNIT-IV HUMAN RESOURCE MANAGEMENT
CHAPTER 11- EMPLOYEE SELECTION PROCESS
2 marks
1. What is selection?
“Selection is the process in which the candidates for employment are divided into two classes-
those who are to be offered employment and those who are not”- Dale Yoder
2. What is an interview?
An interview is a purpose full exchange of ideas, the answering of questions and communication
between two or more persons-scott and others.
3. What is intelligence test?
Intelligence tests are one of the psychological tests, that is designed to measure a variety of
mental ability, individual capacity of a candidate. The main aim of these tests is to obtain an idea
of the person’s intellectual potential.
4. What do you understand about bio data?
Bio data is a commonly used term in industrial and organisation psychology for biographical
data.
5. What do you mean by placement?
The term ‘placement’ includes initial assignment of new employees and promotion, transfer or
demotion of present employees. The process of placing the right man on the right job is called
‘Placement’.
3 marks
1. What is stress interview?
This type of interview is conducted to test the temperament and emotional balance of the
candidate Interviewer purposefully creates stressful situation by directing the candidate to do
irrational and irritating activities.
2. What is structured interview?
Under this method, a series of question to be asked by the interviewer are pre-prepared by the
interviewer and only these questions are asked in the interview. Interviewees are ranked on the
basis of score earned by the candidate in the interview.
3. Name the types of selection test?
Ability Tests
• Aptitude Test,
• Achievement Test,

29
 • Intelligence Test,
• Judgment Test.
Personality Tests
• Interest Test
• Personality Test
• Projective Test
• Attitude Test.
4. What do you mean by achievement test?
This test measures a candidate’s capacity to achieve in a particular field. This test measures a
candidate’s level of skill in certain areas, accomplishment and knowledge in a particular subject.
It is also called proficiency test. Example : A driver may be asked to drive a vehicle to test his
driving efficiency
5.What is aptitude test?
Aptitude test is a test to measure suitability of the candidates for the post/role. It actually
measures whether the candidate possess a set of skills required to perform a given job. It helps in
predicting the ability and future performance of the candidate.
6. How is panel interview conducted?
Where a group of people interview the candidate, it is called panel interview. All panel members
ask different types of questions on general areas of specialization of the candidate. At the end,
the marks awarded by all the members are aggregated and the candidates are ranked accordingly.
5 marks
1. Briefly explain the various types of tests.
Ability Test: A test designed to measure an individual’s cognitive function in a specific area,
such as variety of skills, mental aptitude, problem solving, knowledge of particular field,
reasoning ability, intelligence etc. This test is used to find the suitability of a candidate for a
given job role.
1. Aptitude test: Aptitude test is a test to measure suitability of the candidates for the post/role. It
actually measures whether the candidate possess a set of skills required to perform a given job. It
helps in predicting the ability and future performance of the candidate. Aptitude test can be
measured by the following ways:
• Numerical Reasoning Test
• Verbal Reasoning Test
• Inductive Reasoning Test
• Mechanical Reasoning Test
• Diagrammatic Reasoning Test
• Spatial Reasoning Test
• Situational Judgment Test
• Mental Arithmetic Test
• Vocabulary Test
• Number Sequence Test

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2. Achievement Test: This test measures a candidate’s capacity to achieve in a particular field. In
other words, this test measures a candidate’s level of skill in certain areas, accomplishment and
knowledge in a particular subject. The regular examination conducted in educational institution
represents achievement test. It is also called proficiency test.
Example, a) A driver may be asked to drive a vehicle to test his driving efficiency ,b) Music
student may be asked to play a given instrument ,c) Teacher candidate may be asked to give a
demonstration
3. Intelligence Tests: Intelligence tests are one of the psychological tests, that is designed to
measure a variety of mental ability, individual capacity of a candidate. The main aim of these
tests is to obtain an idea of the person’s intellectual potential.
4. Judgment Test: This test is conducted to test the presence of mind and reasoning capacity of
the candidates
Personality test: Personality test refers to the test conducted to find out the non-intellectual traits
of a candidate namely temperament, emotional response, capability and stability. There is no
right or wrong answer in the test. It comprises of following tests.
1. Interest Test
2. Personality Inventory Test
3. Projective Test / Thematic Appreciation Test
4. Attitude Test
2.Explain the important methods of interview. (any 5)
The term ‘interview’ has been derived from French word enter voir that means to glimpse or to
see each other. In other words, interview represents a face to face interaction between the
interviewer and interviewee.
• Preliminary Interview: This interview is conducted to know the general suitability of the
candidates who have applied for the job. Team of experts conducts their interview
primarily to eliminate those who are unqualified and unfit candidates. This helps the
employer organization to cut cost and time in selection process.
• Structure/Guided/Planned Interview Under this method, a series of question to be asked
by the interviewer are pre-prepared by the interviewer and only these questions are asked
in the interview. Ultimately interviewees are ranked on the basis of score earned by the
candidate in the interview.
• Unstructured Interview This is quite contrary to structured interview. An atmosphere for
free and frank interaction is created in the interview environment. There is no pre-
prepared questions.
• In depth Interview This interview is conducted to test the level of knowledge of the
interviewee in a particular field intensively and extensively. Thus, interview helps the
interviewers to learn about the candidate’s expertise and practical exposure with respect
to his/her area of specialization.
• Panel Interview Where a group of people interview the candidate, it is called panel
interview. Usually panel comprises chair person, subject expert, psychological experts,

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 representatives of minorities/underprivileged groups, nominees of higher bodies and so
on. All panel members ask different types of questions on general areas of specialization
of the candidate. Each and every member awards mark for the candidate separately. At
the end, the marks awarded by all the members are aggregated and the candidates are
ranked accordingly. This method eliminates bias in selection process. It ensures more
reliability in the selection of the candidate.
• Stress Interview: This type of interview is conducted to test the temperament and
emotional balance of the candidate interviewed. Interviewer deliberately creates stressful
situation by directing the candidate to do irrational and irritating activities.
3. Explain the principles of placement.
1. Job First, Man Next: Man should be placed on the job according to the requirements of the
job. There is no compromise on the requirements or qualifications of the man with respect to job.
“Job first Man next” should be principles of Placement.
2. Job Offer: The job should be offered to the man based on his qualification.
3. Terms and conditions: The employee should be made conversant with the conditions and
culture prevailing in the organization and all those things relating to the job.
4. Aware about the Penalties: The employee should also be made aware of the penalties if he /
she commits a wrong or lapse.
5. Loyalty and Co-operation: When placing new recruit on the job, an effort should be made to
develop a sense of loyalty and co-operation in him, so that he/ she may realise his/her
responsibilities better towards the job and the organization. Placement is not an easy process. It
is very difficult for a new employee, who cannot be expected to be not familiar with the job and
environment. For this reason, the employee is generally put on a probation/trial period ranging
from one year to two years. After completion of the probation period, if the employee shows a
better performance, he/she is confirmed at the job as a regular employee of the organization.
4.Differentiate Recruitment and Selection.

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 UNIT-IV HUMAN RESOURCE MANAGEMENT
CHAPTER 12- EMPLOYEE TRAINING METHOD
2 marks
1. What is meant by training?
“Training is the act of increasing the skill of problem-solving activity and technical knowledge
of an employee for doing particular jobs.”-Edwin.B.Flippo
2. What is Mentoring training method?
Mentoring is the process of sharing knowledge and experience of an employee. The focus in this
training is on the development of attitude of trainees. It is mostly used for managerial employees.
Mentoring is always done by senior person; it is also one-to-one interaction, like coaching.
Besides the mentor is responsible for the providing necessary support to trainees, and feedback
on the performance of trainee.
3. What is Role play?
Under this method trainees are explained the situation and assigned roles. Thus, they have to
assume role and play the role without any preparation.
4. State e-learning method?

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E learning is also often referred to us online learning or web-based training. E learning training
courses can save money to an organization.
3 marks
1. What is vestibule training?
Vestibule training is training of employees in an environment similar to actual work environment
artificially created for training purpose. This type of training is given to avoid any damage or
loss to machinery in the actual place by trainees.
2. What do you mean by on the job Training?
On the job training refers to the training which is given to the employee at the work place by his
immediate supervisor. It is based on the principle of “Learning by Doing and Learning While
Earning”.
3. Write down various steps in a training programme.
• Whom to Train?
• Who is the Trainee?
• Who are Trainers?
• What Method will be used for Training?
• What should be Level the Training?
• Where to Conduct the Training Programme?
4. Write short note on trainer and trainee.
Trainer: Trainer is a person who teaches skills to employee and prepares them for a job activity.
Trainers may be supervisor, co-workers, HR staffs, etc.,
Trainee: A person who is learning and practising the skills of particular job is called trainee.
5 marks
1. Discuss various types of training.
(I) On the Job Training: On the job training refers to the training which is given to the employee
at the work place by his immediate supervisor. In another words the employee learns the job in
the actual work environment. It is based on the principle of “Learning by Doing and Learning
While Earning”. On the job training is suitable for imparting skills that can be learnt in a
relatively short period of time. The following are the on the job training methods.
(II) Off the Job Training: Off the job training is the training method where in the
workers/employees learn the job role away from the actual work floor. In other words, training
which is carried out away from your normal place of work. Off-the job training comprises of a
place specifically allotted for the training purpose which may be near the actual work place,
where the workers are required to learn the skills and get well equipped with the tools and
techniques that are to be used at the actual work floor.
2. What is the difference between on the job training and off the job training?
CONTENT ON JOB TRAINING OFF JOB TRAINING
Meaning The employee learns the job in Off the Job training involves
the actual work environment. the training of employees
outside the actual work
location acquiring knowledge

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Cost It is cheapest to carry out It requires expenses like
separate training rooms,
specialist, resources like
projectors.
Location At the work place Away from the work place
Principle Learning by performing Learning by acquiring
knowledge
Approach Practical approach Theoretical approach
3. Explain the benefits of training.
(i) Benefits to the Organization
• It improves the skill of employees and enhances productivity and profitability of the
entity.
• It reduces wastages of materials and idle time
• It exposes employees to latest trends.
• It minimizes the time for supervision.
• It reduces the frequency of accidents at workplace and consequent compensation
payment.
• It reduces labour turnover of employee
• It improves union and management relation.
(ii) Benefits to the Employees
• It adds to the knowledge skill and competency of employee
• It enables him to gain promotion or achieve career advancement in quick time.
• It improves the employee’s productivity
• It enhances the morale of the employee.
• Employees get higher earnings through incentives and rewards.
• It builds up the confidence of employee by changing his attitude positively towards to
work
• It enables him to observe safety practices voluntarily during his engagement in dangerous
operation
(iii)Benefits of Customer
• Customers get better quality of product/ service.
• Customers get innovative products or value added or feature rich products.
UNIT-V ELEMENTS OF MARKETING
CHAPTER 13- CONCEPT OF MARKETING AND MARKETER
2 marks
1. What is Market?
“Market includes both the place and region in which buyers and sellers are in free competition
with one another”-Pyle
2.Define Marketer.

35
“A person whose duties include the identification of the goods and services desired by a set of
consumers, as well as the marketing of those goods and services on behalf of a company”. -
Business Dictionary
3. What is mean by Regulated Market?
These are types of markets which are organised, controlled and regulated by statutory measures.
Example: stock exchanges of Mumbai and Chennai.
4. What is meant by spot market?
In such markets, goods are exchanged and the physical delivery of goods takes place
immediately.
5. What is commodity market?
A commodity market is a place where produced goods or consumption goods are bought and
sold.
3 marks
1. What can be marketed in the Market?
• Goods
• Services
• Experiences
• Events
• Persons
• Places
• Properties
• Organization
• Information
• Ideas
2. Mention any three Role of Marketer?
Instigator: marketer keenly watches the developments taking place in the market and identifies
marketing opportunities.
Innovator: He differentiates his products/services by adding additional features to the existing
product.
Implementer: Marketer plays a role of implementer when he/she actually converts marketing
opportunities into marketable product.
3. Marketer is an innovator? Do you agree?
Yes I Agree, Marketer seeks to distinguish his products/services by adding additional features,
modifying the pricing structure, introducing new delivery pattern, etc.,
4. Explain the types of market on the basis of time.
i. Very Short Period Market: Markets which deal in perishable goods like, fruits, milk,
vegetables etc.,
ii. Short Period Market: In certain goods, supply is adjusted to meet the demand. The demand is
greater than supply.

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iii. Long Period Market: This deal in durable goods, where the goods and services are dealt for
longer period usages.
5. List down the functions of Marketer?
• Market planning
• Product Designing and development
• Packaging and Labelling
• Branding
• Customer Support Services
5 marks
1. How the market can be classified?
I. On the Basis of Geographical Area
• family market
• local market
• National Market
• International Market or World Market
a. Family Market: When exchange of goods or services are confined within a family or close
member of the family, such a market can be called as family market.
b. Local Market: Participation of both the buyers and sellers belonging to a local area or areas,
may be a town or village, is called as local market. The demands are limited in this type of
market. For example, perishable goods like fruits, fish, vegetables etc.
II. On the Basis of Commodities/Goods
• Commodity Market
• Capital Markets
a. Commodity Market: A commodity market is a place where produced goods or consumption
goods are bought and sold. Commodity markets are subdivided into:
i. Produce Exchange Market
ii. Manufactured Goods Market
iii. Bullion Market
b. Capital Markets: New or going concerns need finance at every stage. Their financial needs are
met by capital markets. They are of three types:
i. Money Market
ii. Foreign Exchange Market
iii. The Stock Market
III. On the Basis of Economics
• Perfect Market
• Imperfect Market
a. Perfect Market: A market is said to be a perfect market, if it satisfies the following conditions:
i. Large number of buyers and sellers are there.
ii. Prices should be uniform throughout the market.
iii. Buyers and sellers have a perfect knowledge of market.

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iv. Goods can be moved from one place to another without restrictions.
v. The goods are identical or homogenous.
It should be remembered that such types of markets are rarely found.
b. Imperfect Market: A market is said to be imperfect when
i. Products are similar but not identical.
ii. Prices are not uniform.
iii. There is lack of communication.
iv.There are restrictions on the movement of goods.
IV. On the Basis of Transaction
• Spot Market
• Future Market
i. Spot Market: In such markets, goods are exchanged and the physical delivery of goods takes
place immediately.
ii. Future Market: In such markets, contracts are made over the price for future delivery. The
dealing and settlement take place on different dates.
V. On the Basis of Regulation
• Regulated Market
• Unregulated Market
i. Regulated Market: These are types of markets which are organised, controlled and regulated by
statutory measures. Example: Stock Exchanges of Mumbai, Chennai, Kolkata etc.
ii. Unregulated Market: A market which is not regulated by statutory measures is called
unregulated market. This is a free market, where there is no control with regard to price, quality,
commission etc. Demand and supply determine the price of goods.
2. How the market can be classified on the basis of Economics?
On the Basis of Economics
• Perfect Market
• Imperfect Market
a. Perfect Market: A market is said to be a perfect market, if it satisfies the following conditions:
i. Large number of buyers and sellers are there.
ii. Prices should be uniform throughout the market.
iii. Buyers and sellers have a perfect knowledge of market.
iv. Goods can be moved from one place to another without restrictions.
v. The goods are identical or homogenous.
It should be remembered that such types of markets are rarely found.
b. Imperfect Market: A market is said to be imperfect when
i. Products are similar but not identical.
ii. Prices are not uniform.
iii. There is lack of communication.
Iv.There is restrictions on the movement of goods.
UNIT-V ELEMENTS OF MARKETING

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 CHAPTER 14- MARKETING AND MARKETING MIX
2 marks
1. What is Marketing?
marketing is the performance of buying activities that facilitate to more flow of goods and
services from producer to ultimate user. Selling is basically concerned with putting the goods
into the hands of the buyers for a price, but marketing is much wider than selling.
2.Define Marketing Mix.
“Marketing mix is a pack of four sets of variables namely product variable, price variable,
promotion variable, and place variable”. In simple words marketing mix means a marketing
programme that is offered by a firm to its target consumers to earn profits through satisfaction of
their wants. Such a marketing programme is a mixture of four ingredients, namely Product mix,
Price mix, Place (Distribution)mix and Promotion mix.- Mr. Jerome McCarthy
3. What is meant by Grading?
Grading means classification of standardized products in to certain well defined classes.
4.Define Product.
“A product is anything that can be offered to a market for attention, acquisition, use or
consumption that might satisfy a want or a need’’, - Philip Kotler.
3 marks
1. What are the objectives of marketing?
• To develop the marketing field.
• To develop guiding policies and their implementation for a good result.
• To suggest solutions by studying the problems relating to marketing.
• To take appropriate actions in the course of action.
2. What is need for market and explain the concept of marketing?
Need for Market:
• To exchange (barter) goods and services.
• To adjust demand and supply by price mechanism.
• To improve the quality of life of the society.
• To introduce new modes of life.
Concept of marketing:
• First Create A Customer, Then Create Products
• Love your customers and not the products
• Customer is supreme or king
3. What are the factors affecting Price of Product?
a. Internal Factors:
• Marketing Objectives
• Marketing Mix Strategy
• Organizational considerations
• Costs
• Organization Objectives
b. External Factors:
• The market and the demand
• Competition
• Customers
• Suppliers

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 • Legal factors
• Regulatory factors
4. What do you mean by marketing mix? Describe any two elements.
Marketing programme is a mixture of four ingredients, namely Product mix, Price mix, Place
(Distribution) mix and Promotion mix.
Two elements:
• Product: It is the main element of marketing. Without a product, there can be no
marketing.
• Price: It is the value of a product expressed in monetary terms. It is the amount charged
for the product.
5 marks
1. Discuss about the Evolution of marketing.
Barter System: The goods are exchanged against goods, without any other medium of exchange,
like money.
Production Orientation: This was a stage where producers, instead of being concerned with the
consumer preferences, concentrated on the mass production of goods for the purpose of profit.
They cared very little about the customers.
Sales Orientation: The stage witnessed major changes in all the spheres of economic life. The
selling became the dominant factor, without any efforts for the satisfaction of the consumer
needs.
Marketing Orientation: Customers’ importance was realized but only as a means of disposing of
goods produced. Competition became stiffer. Aggressive advertising, personal selling, large
scale sales promotion etc. are used as tools to boost sales.
Consumer Orientation: Under this stage only such products are brought forward to the markets
which are capable of satisfying the tastes, preferences and expectations of the consumers-
consumer satisfaction.
Management Orientation: The marketing function assumes a managerial role to co-ordinate all
interactions of business activities with the objective of planning, promoting and distributing
want-satisfying products and services to the present and potential customers.
2. Why the marketing is important to the society and individual firm? Explain.
a) To the Society
i. Marketing is a connecting link between the consumer and the producer.
ii. Marketing helps in increasing the living standard of people.
iii. Marketing helps to increase the nation’s income.
iv. Marketing process increases employment opportunities.
v. Marketing creates modern cultivators.
vi. Marketing removes the imbalances of supply by transferring the surplus to deficit areas,
through better transport facilities.
vii. Marketing helps to maintain economic stability and rapid development in underdeveloped or
developing countries.
viii. Marketing includes all activities in the creation of utilities-form, place, time and possession.
ix. A reduction in the cost of marketing is a direct benefit to society.

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x. Marketing adds value of goods by changing their ownership and by changing their time and
place of consumption.
b) To the Individual Firms
i. Marketing generates revenue to firms.
ii. Marketing section of a firm is the source of information to the top management for taking
overall decisions on production.
iii. Marketing and innovation are the two basic functions of all businesses. The world is dynamic.
iv. Marketing facilities the development of business and creates employment opportunities for
people.
3. Narrate the Elements of marketing mix.
Marketing mix refers to two things.
i. A list of important elements or ingredients that make up the marketing programme
ii. The list of forces having bearing on marketing operations.
Definition of marketing mix: “Marketing mix is a pack of four sets of variables namely product
variable, price variable, promotion variable, and place variable”.
i. Product: Product is the main element of marketing. Without a product, there can be no
marketing. “A product is anything that can be offered to a market for attention, acquisition, use
or consumption that might satisfy a want or a need’’, says Philip Kotler.
ii. Price: Price is the value of a product expressed in monetary terms. It is the amount charged for
the product. According to Philip Kotler, “Price is the amount of money charged for a product or
service, or the sum of the values that consumers exchange for the benefits of having or using the
product or service”.
iii. Place (Physical Distribution: An excellent quality product, with a competitive price structure,
backed up by efficient promotional activities, will be a waste if it is not moved from the place of
production to the place of consumption at an appropriate time. The fourth element of product
mix, namely place or physical distribution facilitates the movement of products from the place of
manufacture to the place of consumption at the right time.
iv. Promotion: An excellent product with competitive price cannot achieve a desired success and
acceptance in market, unless and until its special features and benefits are conveyed effectively
to the potential consumers.
UNIT-V ELEMENTS OF MARKETING
CHAPTER 15- RECENT TRENDS IN MARKETING
2 marks
1. What is E-business?
If all the business transaction carried out through internet and other online tools is called E-
business.
2. What is green marketing?
Green marketing implies marketing environmentally friendly products. Green marketing
involves developing and promoting products and services which satisfy customers’ wants and
needs without affecting the environment.
3. What is service marketing?

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Service marketing denotes the processing of selling service goods like telecommunication,
banking, insurance, car rentals, healthcare, tourism, professional services, repairs etc.
4. Define E-Marketing.
E-marketing or Electronic marketing is achieving marketing objectives through use of digital
technologies like Internet, world wide web, email, wireless media, and management of digital
customer data and electronic customer management systems.
5. What is E-Tailing?
E-tailing refers to selling of goods and services through a shopping website (internet) or through
virtual stores to the ultimate consumer.
6. What is Social marketing?
It is a marketing philosophy and techniques to achieve specific behavioural goals which ensure
social good. Example, asking people not to smoke in public areas.
3 marks
1. What are the advantages of E-Marketing?
• Any Time market: E - Marketing provides 24 hours and 7 days “24/7” service to its users.
So consumer can shop or order the product anytime from anywhere.
• Direct contact of end consumer by the manufacturers cuts down the substantially
intermediation cost. Thus products bought through e-marketing become cheaper.
• Customer can buy whatever they want/ need just by browsing the various sites.
2. Discuss the objectives E-Marketing.
• Expansion of market share
• Reduction of distribution and promotional expenses.
• Achieving higher brand awareness.
• Strengthening database.
3. Explain in detail about Niche marketing.
Niche marketing denotes a strategy of directing all marketing efforts towards one well defined
segment of the population. The sports channels like STAR Sports, ESPN, STAR Cricket and Fox
Sports target the niche market of sports enthusiasts.
5 marks
1. Explain in detail how traditional marketing differ from E-marketing
E-Marketing Traditional Marketing
It is very economical and faster way to It is very expensive and takes more time to
promote the products. promote product.
It is quite easier for promoting product globally It is very expensive and time consuming to
in the short time. promote product/ service under traditional
marketing.
E-Business enterprises can expand their It needs more man power.
operation with minimum manpower.
In this marketing product can be sold or bought with minimum manpower That is not possible
24 x 7, round the year in traditional marketing.
2. Explain advantages and disadvantages of E-Marketing.
Advantages of E-Marketing
1. Any Time market: E - Marketing provides 24 hours and 7 days “24/7” service to its users. So
consumer can shop or order the product anytime from anywhere.

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2. Direct contact of end consumer by the manufacturers cuts down the substantially
intermediation cost. Thus products bought through e-marketing become cheaper.
3. Customer can buy whatever they want/ need just by browsing the various sites.
Disadvantages of E-Marketing
1. High Cost for E- marketing which requires a strong online advertising campaign a for which
company has to spend large amount. The cost of web site design, software, hardware,
maintenance of business site, online distribution costs and invested time, all must be factored
into the cost of providing service or product online.
2. It is not suitable for small size business and also deters customers from buying who lives on
long distances.
3. While the number of customers are continuously growing, companies hardly update the
information on website.
4. Many buyers are suspicious about the security of the internet. As a result, many visitors of
business web sites, do not like to use their credit card to make a purchase. So there is a fear of
their cards being misused by fraudulent practitioners.
3. Discuss any two methods of Marketing.
Social marketing is a new marketing tool. It is the systematic application of marketing
philosophy and techniques to achieve specific behavioural goals which ensure social good. For
example, this may include asking people not to smoke in public areas, asking them to wear seat
belts or persuading them to follow speed limits. The primary aim of social marketing is ‘social
good’ such as anti-tobacco, anti-drug, antipollution, anti-dowry, road safety, protection of girl
child, against the use of plastic bags. Social marketing promotes the consumption of socially
desirable products and develops health consciousness. It helps to eradicate social evils that
affect the society and quality of life.
Service marketing: A service is any activity or benefit that one party can offer to another which
is essentially intangible and which does not result in the ownership of anything like business and
professional services insurance, legal service, medical service etc. Service marketing is a
specialized branch of marketing. Service marketing denotes the processing of selling service
goods like telecommunication, banking, insurance, car rentals, healthcare, tourism, professional
services, repairs etc.,
UNIT-VI CONSUMER PROTECTION
CHAPTER 16- CONSUMERISM
2 marks
1. Who is a consumer?
A consumer is one who buys any goods or services for a consideration which has been paid or
promised or partly paid and partly promised or under any system of deferred payment is a
consumer.
2. Define Consumerism.
“Consumerism is not limited to organised efforts only but, is a social movement seeking to
argument the rights and powers of buyers in relation to sellers”-Philip kotler
3. Give two examples of adulteration.
• Mixing of stones with grains

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 • Papayas seed is added to black pepper
• Mixing of coconut oil with Palmolein.
• Chilli powder is adulterated with brick powder.
4. What is Caveat Emptor?
‘Caveat emptor’ means "let the buyer beware.” Buyer has to purchase the quality product, if the
product does not meet their
expectations they can’t blame the seller.
5. What is Caveat Venditor?
Caveat venditor means "let the seller beware, Sellers has to sell the quality products to the
consumer, if anything wrong buyer will file a case against seller or producer.
6. Write a short note on Consumer Protection Act, 1986.
The Act is referred in short as ‘COPRA’. It protects and promote consumers from unfair trade
practices, defective goods, false advertisement etc.
3 marks
1.What are the important legislations related to consumerism in India?
• The Indian Contract Act, 1982 was passed to bind the people on the promise made in the
contract.
• The Trademark Act, 1999 prevents the use of fraudulent marks on the product.
• The Competition Act, 2002 protects the consumers against unhealthy competition.
2. What is meant by artificial scarcity?
There are certain situations where the shop-keepers put up the board ‘No Stock” in front of their
shops, even though there is plenty of stock in the store. In such situations consumers who are
desperate to buy such goods have to pay high price to buy those goods and thus earning more
profit unconscientiously.
3. Write the importance of consumerism.
• Awakening and uniting consumers.
• Discouraging unfair trade practices.
• Protecting against exploitation.
• Awakening the government.
• Providing complete and latest information.
5 marks
1. How consumers are exploited?
Selling at Higher Price: The price charged by the seller for a product service may not be
commensurate with the quality but at times it is more than the fair price. Even though sellers
have surplus or adequate goods they create artificial scarcity in the market with an intent to push
up the prices.
Adulteration: It refers to mixing or substituting undesirable material in food. This causes heavy
loss to the consumers. This will lead to monitory loss and spoil the health. Adulteration is quite
common in food articles. It is a crime which cannot be pardoned as it spoils the very health of
consumers
Example:
1. Chemicals, detergent chalk, urea caustic soda, etc. are added to make the milk dense and
white.
2. Mixing of stones with grains

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3. Mixing of coconut oil with palmolein
4. Honey is adulterated with water and table sugar to enhance the quantity.
Duplicate or Spurious goods: Duplicate products of popular products are illegally produced and
sold. Duplicates are available in plenty in the market for every original and genuine parts or
components like automobile spare parts, blades, pens, watches, radios, medicines, jewellery,
clothes and even for currency notes.
Artificial Scarcity: There are certain situations where the shop-keepers put up the board ‘No
Stock” in front of their shops, even though there is plenty of stock in the store. In such situations
consumers who are desperate to buy such goods have to pay hefty price to buy those goods and
thus earning more profit unconscientiously. Even in Cinema houses, board may hang in the main
entrance ‘House Full’ while cinema tickets will be freely available at a higher price in the black
market.
Sub-standard: On opening a packet or sealed container one may find the content to be of poor
quality. If defective or damaged items are found in a pack, a consumer finds it difficult to
exchange the defective one for good one and consumers have to blame for lack of attention one
cannot return it and the consumers have tendency to blame their carelessness or fate for having
bought such sub-standard product.
2. Explain the role of business in consumer protection.
Role of Business in Consumer Protection
Business enterprises should do the following towards protecting consumers.
1.Avoidance of Price Hike: Business enterprises should desist from hiking the price in the
context of acute shortage of goods /articles.
2.Avoidance of Hoarding: Business enterprises should allow the business to flow normally. It
should not indulge in hoarding and black marketing to earn maximum possible profit in the short
term at the cost of consumers.
3. Guarantees for Good Quality: Business enterprises should not give false warranty for the
products. It should ensure supply of good quality.
4. Product Information: Business enterprises should disclose correct, complete and accurate
information about the product viz. size, quality, quantity, substances, use, side effects,
precautions, weight, exchange, mode of application etc.
5. Truth in advertising: Business enterprises should not convey false, untrue, bogus information
relating to the product through the advertisements in media and thus mislead the consumers.
6. Consumer Grievances: Where the business enterprises have customer care department, it
should handle the grievances of consumer immediately or within a definite time frame.
3. What are the needs for consumer protection?
Consumer protection is a form of social action which is designed to attain the wellbeing of the
society namely consumers. A consumer is said to be a king in a free market economy. The earlier
approach of caveat emptor, which means “Let the buyer beware,’’ has now been changed to
caveat venditor (“Let the seller beware”). However, with growing competition, manufacturers
and service providers may be tempted to engage in unscrupulous, exploitative and unfair trade

45
practices like defective and unsafe products, adulteration, false and misleading advertising,
hoarding, black-marketing etc in an attempt to expand their market share in a competitive
environment. As a consequence, consumers may have to buy unsafe products, may have to suffer
from various health disorders, due to adulteration; may have to pay higher price due to hoarding
and have to get duped by misleading advertisement. In this situation there is a need to provide
adequate protection to consumers against all such malpractices of sellers/vendors.
Needs for consumer protection
Though consumer is said to be the king of entire business sphere, his interests are virtually
neglected. Shortage of goods makes the consumers to be content with whatever is offered for
sale. Quality is sacrificed: warranty of performance has no meaning; health hazard is never
considered; profit maximisation turns out to be sole consideration of business enterprises. In such
a context, consumer protection remains a vital importance
4. Explain the role of consumers in Consumer Protection.
Role of Consumers: Ultimately it is the consumer who alone can put an end to all their unethical
trade practices. Business enterprises may break the codes and Government may rest content with
mere enaction of laws and do little to protect consumers. In this context consumers have to be
vigilant and organise themselves into a movement for concerted action.
Activation of Consumer Action Councils
1. Consumer action councils established at village levels should educate consumers of the right.
2. Consumer protection agencies should take necessary steps to investigate consumer complaints
and grievances and arrange to forward them to correct forum.
3. It should regulate business enterprises according to the rules of the industry.
4. Voluntary consumer groups should provide information so as to educate consumers on matters
affecting them through media.
5. It should organise movement against the malpractice of manufacturers and traders.
6. Consumer cooperatives need to be strengthened.
7. Consumer groups should contact the legislators to raise the consumer issues in Assembly and
Parliament.
8. There should be testing laboratories at each district to test the purity of goods.
9. Voluntary consumer organisations should publicise the malpractices of manufacturers and
traders by media.
10. It should take initiation to report such officials and authorities who let the offender to go scot
free to follow enforcement agencies.
5. What are the objectives of Consumer Protection Act, 1986?
Objectives of the Consumer Protection Act 1986
Following are the objectives of Consumer Protection act 1986;
• Protection of consumers against marketing of goods which are hazardous and dangerous
to life and property of consumers.
• Providing correct and complete information about quality, quantity, purity, price and
standard of goods purchased by consumers.

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 • Protecting consumers from unfair trade practices of traders.
• Empowering consumers to seek redressal against exploitation
• Educating the consumer of their rights and duties
• Ensuring better standard of living for consumers by providing them with quality products
at fair price.
• Putting in place right mechanism like councils and other authorities to enable the
consumers to enforce their rights.
6. Write about five important consumer legislations.
Consumer Legislation
• The Indian Contract Act, 1982 was passed to bind the people on the promise made in the
contract.
• The Sale of Goods Act, 1982: This Act protects consumers against sellers not complying
with expressed and implied warranties in the sale contract.
• The Essential Commodities Act, 1955 protects the consumers against artificial shortages
created by the sellers by hoarding the goods and thus selling the goods at high prices in
black market in respect of essential commodities.
• The Agricultural Products Grading and Marketing Act, 1937 ensures the supply of
agricultural commodities at high quality.
• The Prevention of Food Adulteration Act, 1954 checks the adulteration of food articles
and ensures purity of goods supplied and thus protects the health of consumers.
• Weights and Measures Act, 1958 protects the consumer against malpractices of
underweight or under measurement. This Act has been replaced as the Legal Metrology
Act, 2009.
• The Trademark Act, 1999 prevents the use of fraudulent marks on the product.
• The Competition Act, 2002 protects the consumers against unhealthy competition.
• Indian Standard Institution (Certification marks) Act, 1952 (Now ISI is known as Bureau
of Indian Standards) provides special marks to products fulfilling minimum quality
standards and thus ensures supply of quality products to consumers.
UNIT-VI CONSUMER PROTECTION
CHAPTER 17- CONSUMER PROTECTION
2 marks
1. Write short notes on: “Right to be informed.”
Consumers should be given all the relevant facts about the product eg.price, expiry date, weight
etc
2.What do you understand about “Right to Safety”?
The consumers are entitled to protection of their health and safety from the goods and services
they buy.
3. What are the rights of consumer according to John F. Kennedy?
“The Right of Safety, the Right to be informed, the Right to choose and the Right to be heard.”
4. Which is the supreme objective of business?
The Satisfaction of consumer wants and need/requirements is stated to be supreme objective of a

47
business.
5. What are the important aspects to be kept in mind by consumer while purchasing goods
related to the quality of goods?
The consumer should enquire about the price from certain shops and if possible from
government stores to get an idea of its price, quality, and other terms and conditions. The
consumer should enquire about the price from certain shops and if possible, from government
stores to get an idea of its price. The consumer has to have knowledge about the quality from his
own experiences or from the experiences of other persons who used the product or by browsing
the website.
3 marks
1. What do you understand by “Right to redressal”.
The complaints and protests are not just to be heard: but the aggrieved party is to be granted
compensation within a reasonable time period. There should be prompt settlement of complaints
and claims lodged by the aggrieved customers. This will boost consumer confidence and help
render justice to buyers. There should be fair and just settlement of deserving claims in a
definite timeframe.
2. What do you understand about” Right to protection of health and safety”.
Right to Protection of Health and Right of Safety: There may be few products that are more
likely to cause physical danger to consumers’ health, lives and property. They may contain
potentially harmful substances which are dangerous from the consumer welfare point of view.
The best examples of this kind are Food additives, colours, emulsifiers, preservatives. The health
hazards which are likely to arise have to be eradicated or reduced altogether
5 marks
1. What are the rights of consumers?
Consumer Right is interpreted as “the right to have information about the quality, potency,
quantity, purity, price, and standard of goods or services”.
• Right to Protection of Health and Right of Safety: There may be few products that are
more likely to cause physical danger to consumers’ health, lives and property. They may
contain potentially harmful substances which are dangerous from the consumer welfare
point of view. The best examples of this kind are Food additives, colours, emulsifiers,
preservatives. The health hazards which are likely to arise have to be eradicated or
reduced altogether.
• Right to be Informed: Consumers should be given all the relevant facts about the product
so that they can take intelligent decisions on purchasing the product. Advertising and
labelling on the package should provide objective information to buyers. This implies
that manufacturer and the dealer are expected to disclose all the material facts relevant
and relating to the product.
• Right to choose Consumer: A wise trader or dealer or manufacturer is one who
maximises his profits by maximising the consumer satisfaction. Consumer satisfaction
can be increased by giving the consumer the widest choice. The term ‘Choice’ means
offering the widest range of products in quality and brand varieties at reasonable prices.
In short consumers should have access to varieties of goods in terms of colour, quality,
design, size etc.
• Right to be Heard Consumers: have every right to ventilate and register his/her
dissatisfaction, disagreements and get the complaint heard and aired. This right is vital.

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 Business enterprises should lend a compassionate ear to complaints or grievances of
consumers.
• Right to Seek Redressal: This step is one step ahead of the previous right. The complaints
and protests are not just to be heard: but the aggrieved party is to be granted
compensation within a reasonable time period. There should be prompt settlement of
complaints and claims lodged by the aggrieved customers. This will boost consumer
confidence and help render justice to buyers. There should be fair and just settlement of
deserving claims in a definite timeframe.
2. Explain the duties of consumers.
• Buying Quality Products at Reasonable Price: It is the responsibility of a consumer to
purchase a product after gaining a thorough knowledge of its price, quality and other
terms and conditions. The consumer should enquire about the price from certain shops
and if possible, from government stores to get an idea of its price.
• Ensure the Weights and Measurement: before Making Purchases The sellers often cheat
consumer by using unfair weights and measures. The consumer should ensure that he/she
is getting the product of exact weight and measure. Consumer should check the weights
and balance of the product. Consumer should not buy a product which has been weighed
along with its packing.
• Reading the Label Carefully: It is the duty of the consumer to thoroughly read the label of
the product. It should have corrected, complete and true information about the product.
• Beware of False and Attractive Advertisements: Often the products are not as attractive
as shown in the advertisement by the sellers. Hence, it is the prime duty of consumer not
to get misled by such fraudulent advertisements.
• Misleading Schemes: Mostly advertisements are used to be very attractive and appealing
to the senses. They may be occasionally false and misleading. The consumer is supposed
to be careful with the attractive advertisements and avoid such misleading and false
advertisements. These days almost every product in the market is offered for sale with a
gift, discount, or a free product to bait the consumer to buy. For example, a free comb
with soap, a discount off on the price of the soap or one free soap on buying one, and the
like. Often a consumer is allured by such offers and buys such a product even when it is
not desperately in order, to avail them of free offer.
3. What are the responsibilities of consumers?
Consumers should keep in mind their responsibilities while purchasing, using and consuming
goods and services. Rights and responsibilities are two sides of the same coin. Just as consumers
enjoy certain rights, they owe certain responsibilities. The responsibilities of consumer are listed
below;
1. The consumer must pay the price of the goods according to the terms and conditions of the
sales contract.
2. The consumer has got a responsibility to apply to the seller for the delivery of the goods.
He/she has to take delivery of the goods in time.
3. The consumer has to bear any loss, which may arise to the seller when the consumer delays
taking delivery of the goods as per the terms of contract.
4. The consumer is bound to pay any interest and special damages caused to the seller in case if
there is delay in the payment.
5. The consumer has to assiduously follow and keenly observe the instructions and precautions
while using the products.

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 UNIT-VI CONSUMER PROTECTION
CHAPTER 18- GRIEVANCE REDRESSAL MECHANISM
2 marks
1. What do you meant by Redressal Mechanism?
Under the provision of the act ,1986, there shall be consumer councils and three tier quasi-
judicial machinery called redressal Forums-at the district, state and central levels for the purpose
of spreading consumer awareness.
2. What do you know about National Commission?
National Commission is in India, Delhi which was set up in 1988.The main aim of this
commission is a consumer has to be protected against defects, deficiencies and unfair and
restrictive trade practices.
3. State the meaning of the term State Commission.
A consumer has to be protected against defects, deficiencies and unfair and restrictive trade
practices. The State Consumer Protection Council is also called State Commission.
4. What is a term District Forum?
As per the Consumer Protection Act of 1986 the establishment of a District Forum by the State
Government in each district is necessary today to protect the interest of aggrieved consumers in
that district.
5. How to register the complaints?
1. Complaint can be registered within 2 years.
2. Stamp paper is not required
3. Complaint can be registered, in person.
4. Advocates are not necessary.
3 marks
1. Is Consumer Protection necessary?
Yes, it’s necessary for the following reasons. We need physical protection of the consumer, for
example protection against products that are unsafe or dangerous to his health and welfare.
Consumers want protection against deceptive and unfair trade and market practices.
2. Who are the members of the National Commission?
• The National Commission should have five members.
• One should be from judiciary.
• Four other members of ability, knowledge and experience from any other fields.
• It should include a woman.
3. What is the Pecuniary Jurisdiction of the State Commission?
1. The State Commission can entertain complaints of entire state and where the value of the
goods or services exceeds Rs.20 lakhs and below Rupees One Crore.
2. The State Commission entertain appeals against the orders of any District Forum within the
State.
4. Who are the members of the State commission?
Each State Commission shall consist of the following members.

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 1. A person who is or has been a Judge of a High Court appointed by the State
Government as its President.
2. Two other members who shall be persons of ability, integrity and standing and have
adequate knowledge or experience of or have shown capacity in dealing with problems relating
to economics, law, commerce, industry, public affairs or administration of them, one shall be a
woman.
5. Write a note on the Voluntary Consumer Organisation.
Voluntary consumer organisations refer to the organisation formed voluntarily by the consumers
to protect their rights and interests. The objectives of voluntary organization are:
A. The department of consumer affairs (DCA) operates the consumer Welfare Fund (CWF).
B. A wide network of voluntary consumer organization (VCO) is doing commendable work to
raise awareness amongst members.
C. The International organization of Consumers Union (IOCU)was established in more than 120
countries.
5 marks
1. Explain the overall performance of the National Commission?
National Consumer Disputes Redressal Commission (NCDRC) or National Commission: The
National Consumer Disputes Redressal Commission (NCDRC), India is a quasi-judicial
commission in India which was set up in 1988 under the Consumer Protection Act of 1986. Its
head office is in New Delhi. The Commission is headed by a serving or retired judge of the
Supreme Court of India. The National Consumer Disputes Redressal Commission (NCDRC) is
also called as National Commission.
Members: The National Consumer Disputes Redressal Commission has been constituted by a
Notification.
1. The National Commission should have five members.
2. One should be from judiciary.
3. Four other members of ability, knowledge and experience from any other fields.
4. It should include a woman.
Jurisdiction: Section 21 of The Consumer Protection Act, 1986 describes, the National
Commission shall have jurisdiction
1. To entertain a complaint valued more than 1 Crore.
2. Revised the orders of State Commissions.
3. To call for the records and pass appropriate orders from the State Commission and District
Forum.
2. Explain the overall performance of State Commission.
State Consumer Disputes Redressal Commission or State Commission
The State Commission is to be appointed by the State Government in consultation with the
Centre. It has the same function as state level. The state consumer protection council is also
known as “Consumer Disputes Redressal Commission”. Both goods and services are included in
the purview of the council. A consumer has to be protected against defects, deficiencies and

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unfair and restrictive trade practices. The State Consumer Protection Council is also called State
Commission.
Members: Each State Commission shall consist of the following members.
1. A person who is or has been a Judge of a High Court appointed by the State Government as its
President.
2. Two other members who shall be persons of ability, integrity and standing and have
adequate knowledge or experience of or have shown capacity in dealing with problems relating
to economics, law, commerce, industry, public affairs or administration of them, one shall be a
woman.
Jurisdiction: The Jurisdiction of the State Commission is as follows.
1. The State Commission can entertain complaints within the territory of entire state and where
the value of the goods or services and the compensation, if any claimed exceed Rs. 20 lakhs and
below Rupees One Crore.
2. The State Commission also has the jurisdiction to entertain appeals against the orders of any
District Forum within the State.
Powers: The following are the powers of the State Commission.
1. The State Commission also has the power to call for the records and pass appropriate orders in
any consumer dispute which is pending before or has been decided by any District Forum within
the State.
2. To produce before and allow to be examined by an officer of any of these agencies, such
books of accounts, documents or commodities as may be required and to keep such books,
documents, etc., under his custody for the purposes of the Act.
3. To furnish such information that may be required for the purposes of the Act to any officer so
specified.
Appellate Forum
1. The State Commission’s jurisdiction may be original, appellate or revision. The State
Commission may reverse or confirm the orders passed by the District Forum.
2. Any person aggrieved by an order of the State Commission may prefer an appeal to the
National Commission within 30 days from the date of such order.
3. What is Voluntary Consumer Organisations? Explain its Functions.
Voluntary Organizations for Consumer Awareness
Consumer is a broad label for any individuals or households that use goods and services
produced within the economy. Voluntary consumer organisations refer to the organisation
formed voluntarily by the consumers to protect their rights and interests.
Objectives
1. The Department of Consumer Affairs (DCA) operates the Consumer Welfare Fund (CWF).
The primary objective of the CWF is to strengthen the Consumer Advocacy Movement in India.
2. A wide network of Voluntary Consumer Organisation (VCO) is doing commendable work to
raise awareness amongst consumers.

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3. To strengthen consumer protection and welfare and to provide counselling, guidance and
mediation services.
4. VCO’s supported through CWF provides grants for diverse projects including comparative
testing of products and services and dissemination of the findings
5. Steps have been taken to enhance transparency and to digitalise the government’s interface
with its citizens.
UNIT-VII BUSINESS ENVIRONMENT
CHAPTER 19- ENVIRONMENTAL FACTORS
2 marks
1. Define Business environment
According to Bayard O ‘Wheeler “the total of all things external to firms and industries which
affect their organisation and operations”.
2. What is internal environment?
Internal environment refers to those factors within an organisation e.g. Policies and programmes,
organisational structure, employees, financial and physical resources. These factors can be
changed or altered and hence are known as controllable factors.
3. Give the meaning of corporate governance.
Corporate governance is a set of rules and policies which governs a company. It provides a
framework for managing a company and achieving its objectives.
4. What is GST?
GST is the indirect tax levied on goods and services across the country. Types of taxes: CGST,
SGST, IGST
5.Expand VUCA.
VUCA – Volatility, Uncertainty, Complexity and Ambiguity,
3 marks
1. What are the political environment factors.
• Political stability is reflected by the following parameters like the election system, the
law and order situation, the role and structure of Military and Police force, the declaration
of President’s rule, civil war etc
• The image of the leader and the country in the inter-national arena.
• Legal framework of business and their degree of flexibility.
• The constitution of the nation.
• The Foreign policy of the country with special reference to tariffs and free trade.
2. Write about any three internal environmental factors of business.
Vision and objectives: The vision and objectives of a business guides its operations and strategic
decisions.
Management structure: The structure of management/board and their style of functioning which
affects the decision making.
Company image: The image of an organisation plays an important role.
3. State the framework of Corporate Governance in India.
• To have independent directors on the board; at least one third of the directors have to be
independent directors.
• To have at least one independent woman director,
• To disclose all deals and payments to related parties.

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4. What are the functions of the GST council?
Goods & Services Tax Council is a constitutional body for making recommendations to the
Union and State
Government on issues related to Goods and Service Tax. The Goods and Services Tax Council
shall make recommendations to the Union and the States.
5. What do you know about Technological environment?
The development in the IT and telecommunications has created a global market. Technology is
widely used in conducting market research for understanding the special needs of the customer.
Digital and social media are used as a platform for advertising and promoting the
products/services.
5 marks
1. Discuss the role of macro environment of business.
Economic environment: The business is an integral part of the economic system prevalent in a
nation. The multiple variables in the macro environment system which has a bearing on a
business include
1) The nature of economy based on the stage of development. The countries across the globe can
be categorised on the basis of growth and per capita income as developed nations, developing
nations and under developed nations.
2) Mixed economy is a combination of both state owned and private sector ownership.
3) The economic policies of a nation monetary policy, fiscal policy, Export-import policy,
Industrial policy Trade policy, Foreign exchange policy etc are part of the economic
environment.
Socio-Cultural environment: It is dynamic and includes the behaviour of individuals, the role and
importance of family, customs, traditions, beliefs and values, religion and languages, the ethical
values. The literacy level and the social attitudes of the people of the society. The socio-cultural
environment also includes the following;
1) The social institutions and groups
2) Family structure prevalent in the society
3) Role of marriage as an institution
4) Caste system in the society
5) Customs, beliefs and values
Political and Legal environment: The framework for running a business is given by the political
and legal environment. The success of a business lies in its ability to adapt and sustain to
political and legal changes. The legislative, executive and judiciary are the three political
institutions which direct and influence a business.
1) Political stability is reflected by the following parameters like the election system, the law and
order situation, the role and structure of Military and Police force, the declaration of President’s
rule, civil war etc
2) The image of the leader and the country in the inter-national arena.
3) Legal framework of business and their degree of flexibility.
4) The constitution of the nation.

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Geo-physical environment: The natural, geographical and ecological factors have a bearing on
the business. These are as follows;
1) The availability of natural resources like minerals oil. etc, since setting up of industries
requires availability of raw materials
2) The weather and climatic conditions and availability of water and other natural resources is
essential for the agricultural sector.
3) Topographical factors like the terrain impacts type of business since the demand and
consumption pattern may vary in these regions. Eg in the the hilly region mode of transport will
have to be modified to tackle the terrain.
Technological environment: The development in the IT and telecommunications has created a
global market. Technology is widely used in conducting market research for understanding the
special needs of the customer.
Global environment with the rapid growth of technology the physical boundaries are fast
disappearing and the new global market is emerging. The international environmental factors
which affect a business are as follows;
1) Differences in language and culture
2) Differences in currencies
2. Describe the economic environment of business.
Economic environment: The business is an integral part of the economic system prevalent in a
nation. The multiple variable sin the macro environment system which has a bearing on a
business include
1) The nature of economy based on the stage of development. The countries across the globe can
be categorised on the basis of growth and per capita income as developed nations, developing
nations and under developed nations. The USA, Japan, Germany, Canada and Australia
developed economies generally have high degree of technological advancement, very strong and
robust industrial base, and high standard of living. Many of these developed nations have
successfully integrated the computer-based technologies with their existing business. Developing
nations like India, China, Brazil Mexico are middle income economies are characterised by low
to moderate industrial growth, the inequality in the distribution of income, high population, a low
standard of living and slow absorption of technology. Under developed nations are low income
economies with a very low degree of technology adoption and a very poor standard of living.
2) The nature of the economic systems can be classified as Capitalistic, Socialistic and Mixed
economy. Capitalistic economy is a free enterprise market where individual ownership of wealth
is predominant. Socialistic economy is a state controlled with a lot of restrictions on private
sector. Mixed economy is a combination of both state owned and private sector ownership.
3) The economic policies of a nation monetary policy, fiscal policy, Export-import policy,
Industrial policy Trade policy, Foreign exchange policy etc are part of the economic
environment.
4) The Economic indices like GDP, GNP national income, per-capita income, balance of
payments, rate of savings and investments etc. form an important part of economic environment.

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5) Development of financial market the organisation and development of money market, capital
market securities market and, the banking system has a greater impact.
6) The Economic structure includes capital formation, investment pattern, composition of trade
balance, occupational distribution of workforce, and the structure of national output.
3. Explain the micro environmental factors of business.
i) Suppliers: In any organisation the suppliers of raw materials and other inputs play a very vital
role. Timely procurement of materials from suppliers enables continuity in production and
reduces the cost of maintaining stock/inventory. Organisations generally obtain supplies from a
panel of suppliers instead of relying on a single source. Organisations have realised the
importance of nurturing and maintaining good relationship with the suppliers.
ii) Customers: The aim of any business is to satisfy the needs of its customers. The customer is
the king and the fulcrum around which the business revolves. Hence it is essential for any
business to understand the needs of its varied customers like individuals, retailers, wholesalers,
industries and government sector. Customer relationship management aims at creating and
sustaining cordial relations with customers.
iii) Competitors: All organisations face competition at all levels local, national and global.
Competitors may be for the same product or for similar products. It is important for a business to
understand its competitors and modify their business strategies in the face of competition.
iv) Financiers: The financiers of a business which includes the debenture holders and financial
institutions play a significant part in the running of a business. Their financial capability, policies
strategies, attitude towards risk and ability to give non–financial assistance are all important to a
business.
v) Marketing Channel members: The marketing inter-mediaries serve as a connecting link
between the business and its customers. The middlemen like dealers, wholesalers and retailers
ensure transfer of product to customers. Physical distribution is facilitated by transporters, and
warehouses help in storing goods.
UNIT-VII BUSINESS ENVIRONMENT
CHAPTER 20- LIBERALIZATION, PRIVATIZATION, GLOBALIZATION
2 marks
1.State the branches of New Economic Policy.
• Liberalization
• Privatisation
• Globalization
2.What is Privatisation?
Privatization is the process of transferring ownership of a business enterprise, agency or public
service from the government to the private sector.
3. Mention any two disadvantages of Liberalisation.
(a) Increase in unemployment
(b) Loss to domestic units
4.Name the industries which are reserved for public sector.

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 • Atomic Energy
• Defence
• Railways.
5.Give any three advantages of Globalisation.
• Increase in foreign collaboration
• Expansion of market
• Technological development
3 marks
1.What do you mean by Liberalisation?
Liberalization refers to laws or rules being liberalized, or relaxed, by a government. It’s done in
order to make economies free to enter in the market and establish their venture in the country.
2.What is meant by Public Sector Units(PSU’s)
Privatization is the incidence or process of transferring ownership of a business enterprise,
agency or public service from the government to the private sector. Simply speaking,
privatisation means permitting the private sector to set up industries which were previously
reserved for the public sector. Under this policy many Public Sector Units (PSUs) were sold to
private sector.
3.State any three impacts on Globalisation.
• lower operating costs, and access to new raw materials and additional markets.
• Multinational corporations (MNCs) can manufacture, buy and sell goods worldwide.
• Globalisation has led to a boom in consumer products market.
4.Write a short note on New Economic Policy.
Liberalization refers to laws or rules being liberalized, or relaxed, by a government. Privatisation
means permitting the private sector to set up industries which were previously reserved for the
public sector. Globalisation means the interaction and integration of the domestic economy with
the rest of the world.
5 marks
1. Explain the advantages and disadvantages of liberalisation.
Advantages
(a) Increase in foreign investment: If a country liberalises its trade, it will make the country more
attractive for inward investment. Inward investment leads to capital inflows but also helps the
economy through diffusion of more technology, management techniques and knowledge.
(b) Increase the foreign exchange reserve: Relaxation in the regulations covering foreign
investment and foreign exchange has paved way for easy access to foreign capital.
(c)Increase in consumption: Liberalization increases the number of goods available for
consumption within a country due to increase in production.
(d)Control over price: The removal of tariff barriers can lead to lower prices for consumers. This
would be particularly a benefit for countries who are importers.
(e) Reduction in external borrowings: Liberalization reduces the dependence on external
commercial borrowings by attracting more foreign investments.

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Disadvantages
(a) Increase in unemployment: Trade liberalisation often leads to a shift in the balance of an
economy. Some industries grow, some decline. Therefore, there may often be structural
unemployment from certain industries closing.
(b) Loss to domestic units: With fewer entry restrictions, it has been possible for many entrants
to make inroads into the country, which poses a threat and competition to the existing domestic
units.
(c) Increased dependence on foreign nations: Trade liberalisation means firms will face greater
competition from abroad. When competition is not automatically enhanced, it can lead to
domination by big institution that has market controlling powers.
(d) Unbalanced development: Trade liberalisation may be damaging for developing economies
which cannot compete against free trade. The trade liberalisation often benefits developed
countries rather than developing economies.
2. Explain the impact of LPG on Indian Economy.
Impact of Liberalization
(a) The impact of Liberalisation on Indian Economy was well enforceable with the phenomenal
growth by contributing $1.3 Trillion to the world GDP. So also, the Indian Economy because the
Seventh Largest among the world leading economies.
(b) Liberalization has opened up new business opportunities abroad and increased foreign direct
investment.
(c)New market for various goods came into existence and resulted not only in urban but also in
rural development. (d)It became very easy to obtain loans from banks for business expansion.
(e)"Foreign Collaboration" is the latest outcome of liberalization.
(f) A number of multinational companies started operating world-wide including India.
Impact of Privatization
(a) Privatization has a positive impact on the financial growth by decreasing the deficits and
debts.
(b) Increase in the efficiency of government undertakings.
(c) Provide better goods and services to the consumers.
(d) Making way for Foreign Direct Investment (FDI)
Impact of Globalization
(a) Corporations got a competitive advantage from lower operating costs, and access to new raw
materials and additional markets.
(b)Multinational corporations (MNCs) can manufacture, buy and sell goods worldwide.
(c) Globalisation has led to a boom in consumer products market.
(d) The advent of foreign companies and growth in economy has led to job creation.
(e) Globalisation has touched every aspect of agriculture like technological advancement,
improved production techniques and quality-based enhancement.
UNIT-VIII THE SALE OF GOODS ACT- 1930 AND NEGOTIABLE
INSTRUMENTS ACT 1881

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 CHAPTER 21- THE SALE OF GOODS ACT 1930
2 marks
1. What is a contract of sale of goods?
Contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the
property (ownership) of the goods to the buyer for a price.
2. List down the essential elements of a contract of sale.
(1) Two Parties
(2) Transfer of Property
(3) Goods
(4) Price
(5) Includes both ‘Sale’ and ‘Agreement to Sell’
3. What is meant by goods?
The term ‘goods’ includes every kind of movable property, stocks and shares, growing crops
etc. Goodwill, trademarks, copy rights, patent rights etc., are all also regarded as goods.
4. What is a Contingent Goods?
Contingent goods are the goods, the acquisition of which by the seller depends upon a
contingency (an event which may or may not happen).
5. What do you understand by warranty?
Warranty represents a requirement which is collateral to the main purpose of the contract. It is of
secondary importance to the contract.
3 marks
1. Explain the meaning of Agreement to sell.
-If the transfer of property takes place at a future date or on fulfilment of certain conditions, it is
called ‘an agreement to sell’.
-The ownership of the goods will be transferred in future in certain circumstances.
Ownership lies with the seller, risk remains on the seller not to the buyer.
2. Discuss in detail about existing goods.
Existing goods are those owned or possessed by the seller at the time of contract of sale. Goods
possessed even refer to sale by agents or by pledgers.
Existing goods may be either
(i) Specific Goods
(ii) Ascertained Goods
(iii) Generic or Unascertained Goods
3. Discuss the implied conditions and warranties in sale of goods contract.
The term implied conditions and warranties means which can be indirect from or guessed from
the context of the contract. Following are the implied conditions:
1.Conditions as to Title
2.Conditions as to Description
3.Sale by Sample
4.Conditions as to Quality or Fitness

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Implied Warranties:
(i)Quiet Possession
(ii)Free from Any Encumbrances
(iii) Warranty in the case of Dangerous Goods.
5 marks
1. Explain in detail the elements of Contract of sale.
(1) Two Parties: A contract of sale involves two parties – the seller and the buyer. The buyer and
the seller should be two different persons. If a person buys his own goods, there is no sale. On
the dissolution of partnership when the surplus assets including goods were distributed among
the partners, the court held that it was not a sale attracting sales tax. The partners were
themselves joint owners of the goods and they could not be both sellers and buyers. However,
there is one exception. When the goods of a person are sold in execution of a decree, he himself
may buy the goods to retain their ownership.
(2) Transfer of Property: To constitute sale, the seller must transfer or agree to transfer the
ownership in the good to the buyer. A mere transfer of possession does not amount to sale.
(3) Goods: The subject matter of contract of sale must be goods. It excludes money, actionable
claims and immovable property. The term ‘goods’ includes every kind of movable property,
stocks and shares, growing crops etc. Goodwill, trademarks, copy rights, patent rights etc., are all
also regarded as goods.
(4) Price: The monetary consideration for the goods sold is called price. If goods are exchanged
for goods, it is only barter and not a sale. But if goods are sold partly for goods and partly for
money, the contract is one of sale.
(5) Includes both ‘Sale’ and ‘Agreement to Sell’: The term contract of sale includes both sale and
agreement to sell. If the property in goods is transferred immediately to the buyer it is called a
sale. On the other hand, if the transfer of property takes place at a future date or on fulfilment of
certain conditions, it is called ‘an agreement to sell’.
2. Distinguish between sale and agreement to sell
SL.NO BASIS SALE AGREEMENT TO SALE
1. Nature of the This is the current selling This is the agreement to sell the
contract contract((executed) goods in future(executory)
2. Transfer of Ownership of the goods are Ownership of the goods will be
ownership transferred at the time of transferred in future in certain
contract circumstances.
3. Transfer of When the goods are sold, the Ownership lies with the seller; risk
risk risk of the goods shifts with remains on the seller not to the
ownership to buyer. buyer.
4. Right against The seller may file a suit The buyer may file a suit against
each other against the buyer for price. the seller for indemnity.
5. Right to seller After payment the goods in The seller can sell the same goods
to re-sale possession of the seller cannot again to another buyer.
be sold.
3. Classify goods under the Sale of Goods Act.

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1.Existing Goods: Existing goods are those owned or possessed by the seller at the time of
contract of sale. Goods possessed even refer to sale by agents or by pledgers. Existing goods may
be either (i) Specific Goods (ii) Ascertained Goods (iii) Generic or Unascertained Goods
• Specific Goods: Specific goods denote goods identified and agreed upon at the time of
contract of sale. For eg. if a buyer selects a particular variety of saree after examining
several other sarees, the selected one denotes specific goods.
• Ascertained Goods: The term ‘ascertained goods’ is also used as similar in meaning to
specific goods. But this term may even refer to goods which become ascertained
subsequent to the formation of the contract.
• Unascertained or Generic Goods:These are goods which are not identified and agreed
upon at the time of contract of sale. For eg. A wants to buy a car from a showroom
where different models at different prices have been displayed. All these displayed
models represents unascertained goods.
2.Future Goods: These are goods which a seller does not possess at the time of contract of sale
but which will be manufactured or produced or acquired by him after entering into the contract
of sale agreement. Eg. ‘A’ contractor agrees to supply 100 bags of rice to ‘B’ for giving marriage
feast. It is a case of future goods. Similarly where the bus company agrees to buy spare parts
from a particular supplier, it is an example of future contract. Future goods represents
unascertained goods.
3.Contingent Goods: Contingent goods are the goods, the acquisition of which by the seller
depends upon a contingency (an event which may or may not happen). Contingent goods are a
part of future goods. Eg.‘A’ agrees to sell a particular painting work, provided he gets from ‘C’.
In this case, the painting work represents contingent goods. Similarly a rice merchant agrees to
supply 10 bags of basmathi rice from Pakistan if he get supplies. In this case, basmathi rice
representing contingent goods may or may not be available to the rice merchant.
4. Distinguish between Conditions and Warranty.
Basic of Difference Condition Warranty
Meaning It is a stipulation which is It is a stipulation which is
essential to the main purpose collateral to the main purpose
of the contract of sale. of contract.

Significance Condition is so essential to the It is of subsidiary or inferior

contract that the breaking of character. The violation of
which cancels out the contract. warranty will not revoke the
contract.

Transfer of Ownership Ownership on goods cannot be Ownership on goods can be

transferred without fulfilling transferred on the buyer
the conditions. without fulfilling the warranty.

Remedy In case of breach of contract, In the case of breach of

the affected party can cancel warranty, the affected party

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 the contract and claim cannot cancel the contract but
damages. can claim damages only.
Treatment Breach of condition may be Breach of warranty cannot be
treated as breach of warranty treated as breach of condition

UNIT-VIII THE SALE OF GOODS ACT- 1930 AND NEGOTIABLE

INSTRUMENTS ACT 1881
CHAPTER 22- THE NEGOTIABLE INSTRUMENT ACT 1881
2 marks
1. What is meant by Negotiable Instrument?
According to Negotiable instruments Act 1881, a negotiable instrument means a promissory
note, bill of exchange or cheque payable either to order or to bearer.
2. Define Bill of Exchange.
According to section 5 of the Negotiable Instruments Act, “a bill of exchange is an instrument in
writing containing an unconditional order, signed by the maker, directing a certain person to pay
a certain sum of money only to, or to the order of a certain person or to the bearer of the
instrument”.
3.List three characteristics of a Promissory Note.
• A promissory note must be in writing.
• It must be signed by the maker.
• A promissory note must be sufficiently stamped.
4. Define cheque?
According to section 6 of the Negotiable Instruments Act, 1881 defines a cheque as “a bill of
exchange drawn on a specified banker and not expressed to be payable otherwise than on
demand”.
5.Define Endorsement.
Section 15 of the Negotiable instruments Act 1881 defines endorsement as follows: “When the
maker or holder of a negotiable instrument signs the name, otherwise that as such maker for the
purpose of negotiation, on the back or face thereof, or on a slip of paper annexed thereto or so
signs for the same purpose a stamped paper intended to be completed as a negotiable instrument,
he is said to endorse the same and is called the endorsee”.
3 marks
1.Explain the nature of a Negotiable Instrument.
• Transferability: It is transferable from one person to another without any formality, such
as affixing stamp, registration etc.,
• Title of the holder free from all defects: Even though the right of the person who
transferred the instrument to holder in due course is defective i.e. the title of the holder in
due course is superior.

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 • Right of the transferee to sue: The transferee is entitled to sue on the instrument in his
own name in case of dishonour, without giving notice to the debtor that he has become its
holder.
2.Distinguish between Negotiability and Assignability.
BASIS NEGOTIABILITY ASSIGNABILITY
Transfer notice Not Required Must be served by assignee on
his debtor.
Title Transferee gets the right of Assignee's title is subject to
holder in due course. the title of Assignor.
Consideration It is presumed It is proved
3.What are the characteristics of a Bill of Exchange.
i. A bill of exchange is a document in writing.
ii. The document must contain an order to pay.
iii. The order must be unconditional.
iv. The instrument must be signed by the
person who draws it.
v. The name of the person on whom the bill is drawn must be specified in the bill itself.
vi. The amount that is required to be paid
must also be specified in the bill.
vii. The bill may be payable on demand or after a specified period.
4.Distinguish between Bill of Exchange and Promissory note.
BASIS Bill of Exchange Promissory Note
Nature of Undertaking A bill of exchange contains an A promissory note contains an
unconditional order to pay unconditional undertaking to
money. pay money.
No. of Parties drawer, drawee and payee maker and the payee.
Bearer Instrument A bill of exchange can be A promissory note cannot be
drawn payable to bearer drawn payable to bearer.
Conditionality A bill may be accepted A note cannot be made
conditionally. conditional
5.Discuss the two different types of crossing.
There are two types of crossing. They are
(i)General crossing: “Where a cheque bears across its face an addition of the words “and
company” or any abbreviation thereof, between to parallel transverse lines or of two parallel
transverse lines simply, either with or without the words “not negotiable” that addition shall be
deemed a crossing and the cheque shall be deemed to be crossed generally”. The lines should be
drawn across the face of a cheque and not on the reverse thereof.

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(ii)Special crossing: “Where a cheque bears across its face an addition of the name of a banker
with or without the words “not negotiable”, that addition shall be deemed a crossing and the
cheque shall be deemed to be crossed specially and to be crossed to that banker”.
Here that parallel transverse lines are not essential. But the name of banker to whom the payment
should be made is to be necessarily written on the face of the cheque.

5 marks
1. Mention the presumptions of Negotiable Instruments.
Presumptions to Negotiable Instrument Certain presumptions as briefly mentioned below:
• Every negotiable instrument is presumed to have been drawn, accepted etc. for
consideration.
• A negotiable instrument is presumed to have been accepted.
• Every negotiable instrument bearing, a date is presumed to have been made or
drawn on such a date.
• It is presumed to have been accepted within a reasonable time after the date and
before its maturity.
• The transfer of a negotiable instrument is presumed to have been made before
maturity.
• The endorsements appearing upon a negotiable instrument are presumed to have
been made in the order to which they appear thereon.
• When a negotiable instrument has been lost, it is presumed to have been duly
stamped.
• The holder of a negotiable instrument is presumed to be a holder in due course.
2. Distinguish a cheque and a bill of exchange.
Sl. Basic of Bill of Exchange Cheque
No. Difference

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1. Drawn A bill of exchange can be A cheque can be drawn only on a
drawn on any person including particular banker.
a banker
2. Payability It is payable on demand or on It is payable on demand only.
the expiry of a certain period.
3. Validity A bill made payable to bearer A cheque drawn payable to bearer
on demand is void by virtue of on demand is perfectly valid.
section 31 of the RBI Act.
4. Acceptance In case of time bill, acceptance A cheque does not require any
by the drawee is necessary acceptance.
before he can be made liable
on it.
5. Grace period Three days of grace are No days of grace are allowed in the
allowed while calculating the case of a cheque for the simple
maturity date in the case of reason that is always payable on
time bill. demand.
6. Notice When a bill is dishonoured, Notice is not necessary for a
notice of dishonour is cheque.
necessary.
7. Sets Foreign bills of exchange are It is not so in case of cheque.
drawn in sets of three.
3. Discuss in detail the features of a cheque.
Features of a Cheque
• Instrument in Writings A cheque or a bill or a promissory note must be an instrument in
writing. Though the law does not prohibit a cheque being written in pencil, bankers never
accept it because of risks involved. Alternation is quite easy but detection impossible in
such cases.
• Unconditional Orders The instrument must contain an order to pay money. It is not
necessary that the word ‘order’ or its equivalent must be used to make the document a
cheque. It does not cease to be a cheque just because the world ‘please’ is used before the
word pay.
• Drawn on a Specified Banker Only The cheque is always drawn on a specified banker. A
cheque vitally differs from a bill in this respect as latter can be drawn on any person
including a banker. The customer of a banker can draw the cheque only on the particular
branch of the bank where he has an account.
• A Certain Sum of Money Only The order must be for payment of only money. If the
banker is asked to deliver securities, the document cannot be called a cheque. Further, the
sum of money must be certain.
• Payee to be Certain The cheque must be made payable to a certain person or to the order
of a certain person or to the bearer of the instrument. The word, person includes bodies
corporate, local authorities, associations, holders of office of an institution etc.,
• Signed by the Drawer The cheque is to be signed by the drawer. Further, it should tally
with specimen signature furnished to the bank at the time of opening the account.
• Payable Always on Demand A cheque is always payable on demand. The words on
demand are not used when the drawee bank is asked to pay and the time for its payment
is not specified, it is considered to be payable on demand.

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4. What are the requisites for a valid endorsement?
Requisites of a Valid Endorsement: If an endorsement is to be valid, it must possess the
following requisites:
• Endorsement is to be made on the face of the instrument or on its back. It is usually
made on the back of a negotiable instrument.
• When there is no space for making further endorsements a piece of paper can be attached
to the negotiable instrument for this purpose. This piece of paper is called ‘Allonge’.
• If the endorsee’s name is wrongly spelt, the endorsee should sign the same as spelt in the
instrument and write the correct spelling within brackets after his endorsement.
• Endorsement for only a part of the amount of the instrument is invalid. It can be made
only for the entire amount.
• Where, however, the instrument has been partly paid, a note to that effect can be given on
the instrument and endorsement made for the balance amount.
• Endorsement is complete only when delivery of the instrument is made. On the death of
the endorse who has endorsed an instrument but has not delivered it to the endorsee, the
endorsement becomes invalid.
• It is presumed that the endorsements appearing on a negotiable instrument were made in
the order in which they appear thereon.
• Signing in block letters does not constitute regular endorsement.
• The prefixes or suffixes added to the names of the payees or endorsees must be omitted in
the endorsement.
• Endorsement must be in link
5. Explain the different kinds of endorsements
1. Endorsement in blank or general endorsement: When the endorser puts his mere signature on
the back of an instrument without mentioning the name of the person to whom the endorsement
is made, it is called Blank Endorsement or General Endorsement.
2. Endorsement in full or special endorsement: Where the endorser, in addition to his signature,
specifies the person to whom or to whose order the instrument is payable, the endorsement is
called endorsement in full.
3. Conditional or qualified endorsement: Where the endorser of a negotiable instrument makes
his liability dependent upon the happening of an event which may or may not happen, it is called
conditional endorsement.
4.Restrictive endorsement: When an endorsement restricts or prohibits further negotiability of
the instrument, it is called Restrictive Endorsement.
5.Sans recourse endorsement: Ordinarily the endorser becomes liable to subsequent parties in the
event of dishonour of the instrument. But if he makes it clear that the subsequent holders should
not look to him for payment in case it is dishonoured, the endorsement is called Sans Recourse
Endorsement.
UNIT-IX ENTREPRENEURSHIP DEVELOPMENT
CHAPTER 23- ELEMENTS OF ENTREPRENEURSHIP
2 marks
1.Mention any two characteristics of entrepreneurs.
• Self-confidence
• Hard work

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 • Innovator
• Spirit of service
• Flexibility
• Innovation
2. List down the managerial functions of entrepreneurs.
• Planning
• Organising
• Directing
• Controlling
• Co ordination
3. List down the promotional functions of entrepreneurs.
• Discovery of Idea
• Determining the business objectives
• Detailed Investigation
• Choice of form of enterprise
• Fulfilment of the formalities
• Preparation of Business Plan
• Mobilisation of funds
• Procurement of Machines and Materials
4.What is meant by Intrapreneur
Intrapreneur is one who thinks and acts like an entrepreneur for the firm's development during
the course of employment in an organization.
5. List the challenges faced by the women entrepreneurs
• Problem of Finance
• Limited Mobility
• Lack of Education
• Lack of Network Support
• Stiff competition
• Sensitivity
• Lack of information
• Dependent culture
3 marks
1. Define Entrepreneur
“An entrepreneur is someone who conceives an idea, creates a path to success, does whatever it
takes to succeed and tries to dominate their market!” - Matthew Toren
“A person who has so much passion for an idea that they're willing to risk almost everything to
make their dream a reality.” - Jared Tanner
2.Distinguish between Entrepreneur and Manager .

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Basis of Entrepreneur Manager
difference
Motive The very motive of an entrepreneur The very motive of manager is to render
is to start a venture by setting of an service in an entity setup for execution of
entity. venture.
Status Entrepreneur is owner of the entity Manager is a salaried employee in the entity
set up for carrying on the venture.
Risk Entrepreneur bears the eventual risk Manager doesn’t bear any risk in the venture
Bearing and uncertainty in operating the where the venture is unsuccessful he/she
enterprise simply quits the enterprise.
Rewards Entrepreneur is rewarded by profit Manager’s reward salary, bonus, allowance
for the risk bearing exercise. The is certain and regular.
reward for entrepreneur is totally
uncertain.
Skills An entrepreneur requires creative Manager requires conceptual skills and
talent, intuition and urge for human relations skills.
innovation.
3.List down the commercial functions of entrepreneur and explain them shortly
(i) Production or Manufacturing
(ii) Marketing
(iii) Accounting
(iv) Finance
(v) Human Resource Management
Production or Manufacturing: under the production function, entrepreneur has to take decision
relating to selection of factory site, design and layout, type of products to be manufactured,
research and development, product design etc.
Marketing: Entrepreneur has to carry out following functions pertaining to marketing aspect
namely consumer research, product planning and development, standardisation, packaging,
pricing, warehousing, distribution, promotion etc.
4.Explain the promotional functions of entrepreneur.
(1) Discovery of Idea
(2) Determining the business objectives
(3) Detailed Investigation
(4) Choice of form of enterprise
(5) Fulfilment of the formalities
(6) Preparation of Business Plan
(7) Mobilisation of funds
(8) Procurement of Machines and Materials
(1) Discovery of Idea: The first and foremost function of entrepreneur is idea generation. A
person may conceive his own ideas or develop the ideas contributed by others. Ideas can be
generated through several ways like own experience and exposure to entrepreneurs, keen
observation of the environment, education, training, market survey, environmental scanning and

68
so on. After the ideas were collected, the entrepreneur has to weigh objectively each and every
idea and finally select an idea which is worth pursuing commercially.
(2) Determining the business objectives: Entrepreneur has to develop business
objectives in the backdrop of nature of business and type of business activity i.e. nature of
business, manufacturing or trading, type of business organisation chosen so that he/she can
organise the venture in accordance with the objectives determined by him/her.
(3) Detailed Investigation: Entrepreneur has to analyse in detail the product proposes to produce.
In other words, entrepreneurs should investigate the commercial feasibility of the product
proposed to be produced and conduct market study to ascertain the potential demand for the
product.
5 marks
1.How do you Classify entrepreneurs.
• Entrepreneur as a Risk Bearer Richard Cantillon, an Irish man described the entrepreneur
to be a person who assumes risk inherent in the venture started by him. Entrepreneur acts
as an agent combining all factors of production to produce a product or service in order to
sell at uncertain price in future. Knight also describes an entrepreneur to be an economic
functionary who undertakes the risk of uncertainty which cannot be insured or capitalised
or salaried. In nutshell, entrepreneur is described to be a risk taker.
• Entrepreneur as an Organiser According to Jean Baptize, entrepreneur is one who brings
together various factors of production and creates an entity to produce product or service
and supervises and coordinates several functions in the process. He further elaborates
that an entrepreneur faces a great deal of obstacles and misfortunes and undergoes mental
agony and anxieties in the process of organising any venture. In sum, entrepreneur is
described to be an organiser.
• Entrepreneur as an Innovator Joseph A Schumpeter in the year 1934 used innovation as a
criterion to define an individual as entrepreneur. According to him, entrepreneur is one
who
i. Introduces a brand-new product in the market
ii. Institutes new technology to produce a product
iii. Discovers new course of supply of raw materials
iv. Discovers new product hitherto untapped
v. Puts in place a new form of organisation by establishing a monopoly or
by dismantling existing monopoly.
2. What are the characteristics of an entrepreneur?
1. Spirit of Enterprise: Entrepreneur should be bold enough to encounter risk arising from the
venture undertaken. Entrepreneur should not get discouraged by setbacks or frustrations
emerging during the course of entrepreneurial journey.
2. Self Confidence: Entrepreneur should have a self confidence in order to achieve high goals in
the business. The negativities like inconvenience, discomfort, disappointments, rejections,
frustrations and so on should not weaken his steely resolve to make the venture a grand success.
3. Flexibility: Entrepreneur should not doggedly stick to decisions in a rigid fashion.
Entrepreneur should change the decisions made already in the light of ever-changing business
environment.
4.Innovation: Entrepreneur should contribute something new or something unique to meet the
changing requirements of customers namely new product, new method of production or

69
distribution, adding new features to the existing product, uncovering a new territory for business,
innovating new raw material etc.,
5.Resource Mobilisation: Entrepreneur should have the capability to mobilise both tangible
inputs like manpower, money materials, technology, market, method etc., which are scattered
over a wide area and certain intangible inputs like motivation, morale and innovativeness cannot
be purchased in the market outright. Entrepreneur has to marshal all these tangible and
intangible inputs to produce a product successfully. Thus, entrepreneurship is a function of gap
filling and input completion.
6.Hard work: Entrepreneur should put in strenuous efforts and constant endeavours to
accomplish the goals of the venture successfully. They have to courageously face uncertainties,
risks and constraints. They should not blame the uncontrollable factors for the misfortunes
experienced during the course of their entrepreneurial venture. They should spend their energy in
addressing the issues to stay successful.
3. Distinguish between an Entrepreneur and an Intrapreneur.
Basis Entrepreneur Intrapreneur
Thinking Entrepreneur is a free thinker Intrapreneur is forced to think
independently but within scope of
business activities undertaken in the
enterprise.
Dependency Entrepreneur is an independent He is an employee.
person Intrapreneur is dependent on
the entrepreneur.
Fund Entrepreneur has to mobilize funds Intrapreneur does not engage in fund
Mobilization to finance the venture. mobilization. But can access funds
mobilized by the entrepreneur.
Reward Entrepreneur is rewarded by profit Intrapreneur does not share in profits of
for the risk bearing exercise. venture. But gets perquisites, salary,
incentives etc., for the service.
Risk Bearing Entrepreneur bears the risk Intrapreneur does not bear any risk in the
involved in the venture undertaken. venture and does not even share the risk
inherent in the project or work assigned.
However, Intrapreneur is accountable for
the task or project assigned.
4. Discuss the challenges faced by Women Entrepreneurs.
• Problem of Finance: The access of women to external sources of funds is limited as they
do not generally own properties in their own name. Financial institutions too do not
consider women in general creditworthy as they are sceptical of their entrepreneurial
capabilities of women. They impose stringent condition which discourages women to
avail themselves of loan assistance from banks. In this context, they are pushed to rely
on their own savings and small loans from friends and relatives. Because of the limited
funds, women entrepreneurs are not able to effectively and efficiently run and expand
their business.
• Limited Mobility: Indian women cannot afford to shed their household responsibilities
towards their family even after they plunge into the venture started by them. This
restricts the mobility of women entrepreneur significantly. The domestic responsibilities

70
 do not allow women entrepreneurs to freely move out of business enterprises in
connection with business activities.
• Lack of Education: Illiterate and semi-literate women entrepreneurs encounter a lot of
challenges in their entrepreneurial journey with respect to maintaining accounts,
understanding money matters, day-to-day operations of the company, marketing the
products, applying technology etc., This reduces the efficiency of operating the business
successfully.
• Lack of Network Support: The successful operation of any venture irrespective of the
size depends upon the network of support extended by various constituencies like family
members, friends, relatives, acquaintances, neighbours, institutions and so on.Women
entrepreneurs need much needed psychological support and wiser counselling especially
during the time they actually encounter challenges. But it is reported that women
entrepreneurs get very limited support in times of crisis from most of these
constituencies.
• Stiff Competition: Women entrepreneurs have to face acute competition for their goods
from organised sector and from their male counterparts. Since they are not able to spend
liberally due to financial constraints, they are not able to compete effectively and
efficiently in the market.
5. Explain in detail the various functions of an entrepreneur.
I. Promotional Functions
(1) Discovery of Idea: The first and foremost function of entrepreneur is idea generation. A
person may conceive his own ideas or develop the ideas contributed by others. Ideas can be
generated through several ways like own experience and exposure of entrepreneur, keen
observation of environment, education, training, market survey, environmental scanning and so
on.
(2) Determining the business objectives: Entrepreneur has to develop business objectives in the
backdrop of nature of business and type of business activity i.e. nature of business,
manufacturing or trading, type of business organisation chosen so that he/she can organise the
venture in accordance with the objectives determined by him/her.
(3) Detailed Investigation: Entrepreneur has to analyse in detail the product proposes to produce.
In other words, Entrepreneur should investigate commercial feasibility of the product proposed
to be produced and conduct market study to ascertain the potential demand for the product.
Besides, Entrepreneur has to probe the sources of supply of various inputs required for
manufacturing the proposed product, their respective prices and other terms and conditions.
II. Managerial Functions
(i)Planning: Under planning, entrepreneur has to lay down the objectives, goals, vision, mission,
policies, procedures, programmes, budget, schedules etc., for enabling the venture to proceed
towards established destinations.
(ii) Organising: Entrepreneur puts in place suitable organisational structure to perform various
managerial functions namely choosing the type of organisation, creating department, fitting the
human resources to appropriate organisation slots, defining and delegating authority, distributing
responsibility and creating accountability for efficient performance of activities.
(iii) Directing: In the realm of directing, entrepreneur has to motivate, lead, guide and
communicate with subordinates on an ongoing basis in order to accomplish pre-set goals. The
process of directing involves issuing orders and instructions, guiding, counselling and mentoring

71
of employees, supervising employees, maintaining discipline, motivating employees and
providing leadership.
III. Commercial Functions
(i) Production or Manufacturing: Under production function, entrepreneur has to take decision
relating to selection of factory site, design and layout, type of products to be manufactured,
research and development, product design etc., The efficient and effective performance of
production function depends on the proper production planning and control to a major extent.
(ii) Marketing: Entrepreneur has to carry out following functions pertaining to marketing aspect
namely consumer research, product planning and development, standardisation, packaging,
pricing, warehousing, distribution, promotion etc., The very success of marketing function is
very much linked with selection of appropriate marketing mix. The term marketing mix denotes
the combination of four components namely product, price, promotion and physical distribution
in the case of physical products and three more components are included in the case of service
products namely people, process and physical evidence.
(iii) Accounting: Entrepreneur has to arrange to prepare trading and profit and loss account in
order to know the profit or loss incurred out of operation of the business and prepare balance
sheet to know the financial status of business at a particular day.
UNIT-IX ENTREPRENEURSHIP DEVELOPMENT
CHAPTER 24- TYPES OF ENTREPRENEURS
2 marks
1. What is the other name of a business entrepreneur?
Business entrepreneur is called a solo entrepreneur. He/she is the one who conceives an idea for
a new product/service and establishes a business enterprise to translate his idea into reality.
2. Mention the other name for a corporate entrepreneur.
Corporate entrepreneurs are called promoters. He/she takes initiative necessary to start an entity
under company law.
3. Who are agricultural entrepreneurs?
Agricultural entrepreneurs are those entrepreneurs who raise farm products and market them.
These entrepreneurs pursue their venture in agriculture and allied sector.
4. State the name of the following ventures:
a. Started by individuals for profit motive-private Entrepreneur
b. Started by Government-State Entrepreneur
c. Started by individuals and Government Together-Joint Entrepreneur
d. Started as a family business-Classical Entrepreneur.
5.Give some examples of pure entrepreneurs
Pure entrepreneurs are individuals who are pushed to enter into venture by psychological and
economic motives. Example Dhirubai Ambani, Tata, T.V.S,Birla etc..
3 marks
1. Who is a private entrepreneur?
Ventures started by individual either singly or collectively at their own risk after mobilising
various resources in order to earn profit are called private entrepreneurship.
2. How does a professional entrepreneur operate?
Professional entrepreneur is one who is having a rich expertise in starting a venture but lack

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interest in continuing the venture as a manager or as a owner. He/she simply sells out the venture
started by him to someone else after its successful take-off.
3.Explain about the imitative entrepreneur.
Imitative entrepreneur is one who simply imitates existing skill, knowledge or technology
already in place in advanced countries. A simply reengineer or redesign the products developed
in advanced countries and produce a version suited to their local conditions. For example, many
electronic products invented in advanced countries are simply reengineered in developing
countries. Similarly expensive medicines developed in advanced countries are simply
reengineered by changing the composition of elements or changing the process of production.
4.Write about Fabian Entrepreneur.
These entrepreneurs are said to be conservatives and sceptical about plasticising any change in
their organisation. They are of risk-averse type. They do not simply change to the changes
happening in the environment. But they adapt themselves to the changes only as a last resort
when they fear that non adaptability to changes will inevitably lead to loss or collapse of the
enterprise. Their dealings are governed by customs, religion, tradition and past practices handed
down to them by their ancestors. They would like to follow in the footsteps of predecessors.
Example; Nursus coffee
5 marks
1. Explain in detail on classification according to the type of business
1. Business Entrepreneur: Business entrepreneur is called solo entrepreneur. He/she is the one
who conceives an idea for a new product/service and establishes a business enterprise to translate
his idea into reality. He/she may establish small or large enterprise to commercially exploit
his/he idea. He/she takes up production, operations and pursues marketing activities.
2. Trading Entrepreneur: Trading entrepreneurs are those who restrict themselves to buying and
selling finished goods. They may be engaged in domestic and international trade. Their core
strength lies in distribution and marketing. They get their income by way of commission and
marketing.
3.Industrial Entrepreneur: These are entrepreneurs who manufacture products to cater to the
needs of consuming public after identifying the need left unfulfilled by the manufacturer
hitherto. They may be small, medium and large entrepreneurs.
4. Corporate Entrepreneur: Corporate entrepreneur is called promoter. He/she takes initiative
necessary to start an entity under corporate format. He/she arranges to fulfil the formalities to
start a corporate entity under Company law. Corporate entrepreneur assembles all the resources
and put in place organisation to run the business on a day-to-day basis.
5. Agricultural Entrepreneur: Agricultural entrepreneurs are those entrepreneurs who raise farm
products and market them. They use the various inputs like labour, fertilizer, insecticide, water
technology etc. to raise the products and market their products either directly or through co-
operative entities or through brokers or through tie up with large retailers. Those who raise allied
products like poultry, meat, fish, honey, skin, agricultural implements, flower, silk, fruits, prawn
etc., are called agricultural entrepreneur.
2. Discuss the nature of functional entrepreneurs.
1. Innovating Entrepreneur: Innovative entrepreneur is one who is always focussed on
introducing a new project or introducing something new in the venture already started. They

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constantly observe the environment around them; collect information and analyse them in order
to contribute something a new in the venture.
2. Imitative Entrepreneur: Imitative entrepreneur is one who simply imitates existing skill,
knowledge or technology already in place in advanced countries. A simply reengineer or
redesign the products developed in advanced countries and produce a version suited to their local
conditions.
3. Fabian Entrepreneur: These entrepreneurs are said to be conservatives and sceptical about
plasticising any change in their organisation. They are of risk-averse type. They do not simply
change to the changes happening in the environment. But they adapt themselves to the changes
only as a last resort when they fear that non adaptability to changes will inevitably lead to loss or
collapse of the enterprise. Their dealings are governed by customs, religion, tradition and past
practices handed down to them by their ancestors. They would like to follow in the footsteps of
predecessors. Example; Nursus coffee
4. Drone Entrepreneur: Drone entrepreneurs are those who are totally opposed to changes
unfolding in the environment. They used to operate in the niche market. They are similar to
fabian entrepreneur in doggedly pursuing their conventional practices. The main difference
between fabian entrepreneur and drone entrepreneur lies in the fact that while fabian
entrepreneur adapts to changes eventually as a last resort, drone entrepreneur never adapts
himself or herself to change, Example; Gopal Tooth powder
UNIT-IX ENTREPRENEURSHIP DEVELOPMENT
CHAPTER 25- GOVERNMENT SCHEMES FOR ENTREPRENEURIAL
DEVELOPMENT
2 marks
1.Name any four Governmental Entrepreneurial schemes.
• Startup India
• Make in India
• Stand-Up India
• Dairy Entrepreneurship Development Scheme
2. Give a note on ‘Digital India’.
The Digital India initiative has been launched to modernize the Indian economy to make all
government services available electronically.
3.List down the two types of finance.
Entrepreneur requires two types of finance namely long term and short term.
3 marks
1. What is ‘Start up India’?
Through the Start-up India initiative, Government of India promotes entrepreneurship by
mentoring, nurturing and facilitating start-ups throughout their life cycle.
2.Expand the following: STEP, JAM, TREAD, M-SIPS, SEED and New Gen IEDC
STEP : Support to Training and Employment Programme for Women
JAM : Jan Dhan-Aadhaar – Mobile
TREAD : Trade related Entrepreneurship Assistance and Development
M-SIPS : Modified Special Incentive Package Scheme

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SEED : Science for Equity Empowerment and Development
New Gen IEDC : New Gen Innovation and Entrepreneurship Development Centre
3. Write a short note on the following
a) Dairy Entrepreneurship development scheme: Dairy Entrepreneurship Development Scheme
aims at helping entrepreneurs in the field of Agriculture, pets and animals, to set up small dairy
farms
b) Project report: Project reports needs to be prepared according to the format prescribed in the
loan application form of term lending institutions.
5 marks
1. Explain any five Government Entrepreneurial schemes.
Digital India:
• The Digital India initiative has been launched to modernize the Indian economy to make
all government services available electronically.
Startup India:
• Through the Startup India initiative, Government of India promotes entrepreneurship by
mentoring, nurturing and facilitating startups throughout their life cycle.
• A ‘Fund of Funds’ has been created to help startups gain access to funding.
Dairy Entrepreneurship development scheme.
• Dairy Entrepreneurship Development Scheme aims at helping entrepreneurs in the field
of Agriculture, pets and animals, to set up small dairy farms
• Incentives are provided to cover the cost of the required equipment or establishment of
the facility.
Jan Dhan-Aadhaar - Mobile (JAM):
• JAM, for the first time, is a technological intervention that enables direct transfer of
subsidies to intended beneficiaries.
• Therefore, eliminates all intermediaries and leakages in the system, which has a potential
impact on the lives of millions of Indian citizens.
Single Point Registration Scheme (SPRS)
• A great scheme for Micro and Small Enterprises, which provides an exemption from
payment of Earnest Money Deposit (EMD).
• Under this scheme, the tenders are issued free of cost.
2. Describe the steps promoting Entrepreneurial venture.
1. Selection of the product: An entrepreneur may select a product according to his aspiration,
capacity and motivation after a thorough scrutiny of micro and macro environment of business.
He/she may select a brand, new product or may like to select imitation one or he/she may
improve upon an existing product in terms of additional features like comforts, convenience,
ease of operation, lower price etc.
2. Selection of form of ownership: Entrepreneur has to choose the form of organisation suitable
and appropriate for his venture namely family ownership, partnership and private limited
company.
3. Selection of Site: Entrepreneur has to choose suitable plot for accommodating his venture. He
has four options open to him for housing his venture. These have been mentioned below.
• State Development Corporation like SIDCO, SIPCOT, MMDA, TNHB and Directorate of
Industries may allot plot to entrepreneur

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• Entrepreneur can have a factory sheds constructed by State Industrial Development Agency
• Entrepreneur can start ventures in the land developed by private developers
• Entrepreneur may buy private land and develop it for industrial use.
Following things may be considered in choosing the site namely:
• Nearness to Native Place
• Incentives provided by the Govt.
• Nearness to Market
• Availability of Labour and Raw Materials in a particular area.
• Infrastructure Facilities
4. Designing Capital Structure: Entrepreneur has to determine the source of finance for funding
the venture. He/she may mobilise funds from his own savings, loans from friends and relatives,
term loans from banks and financial institutions.
5.Acquisition of Manufacturing know-how: Entrepreneur can acquire manufacturing know-how
from Government research laboratories, research and development divisions of industries, and
individual consultants.
6. Preparation of project report: Project reports needs to be prepared according to the format
prescribed in the loan application form of term lending institutions. An entrepreneur can get the
report prepared either by technical consultancy organisation or by auditors or by consultants or
by development agencies. This report should cover aspects like sources of finance, technical
know-how, sources of labour and raw materials, market potential and profitability.
The project report should include the following
• Technical Feasibility
• Economic Viability
• Financial Viability
• Managerial Competency
• Provisional Registration Certificate
• Permanent Registration Certificate
• Statutory Licence
• Power Connection
• Arrangement of Finance
UNIT-X COMPANY LAW AND SECRETARIAL PRACTICE
CHAPTER 26- COMPANIES ACT 2013
2 marks
1.what are the four stages of formation of a company?
‘Formation of a Company’ has been divided into four stages:
1. Promotion
2. Registration
3. Capital Subscription and
4. Commencement of Business.
2.what is a share?
“Share means a share in the share capital of the company and includes a stock except where a
distinction between stock and share is expressed or implied”
3. What is Bonus Shares?
Bonus share means to utilize the company’s reserves and surpluses, issue of share to existing
shareholders without taking any consideration is known as Bonus shares.
4. What is Right Shares?

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Right share are the shares which are issued by the company, with the aim of increasing the
subscribed share capital of the company by further issue. The right shares are issued to the
existing equity shareholders through a letter of an issue, on pro rata basis.
5.What is Debentures?
“Debenture includes debenture stock, bonds or any other instrument of a company evidencing a
debt, whether constituting a charge on the assets of the company or not “:-section 2(30) of
companies act 2013.
3 marks
1.What do you understand by Issue of Securities at Premium?
When shares are issued at a price above the face or nominal value, they are said to be issued at a
premium. For example, a share having the face value of Rs.10 is issued at Rs.12. Here, Rs.2 is
the premium.
2.Explain different Kinds of Preference shares.
Cumulative Preference shares: As the word indicates, all dividends are carried forward until
specified, and paid out only at the end of the specified period.
Non-cumulative Preference shares: The opposite of cumulative, obviously. Dividends are paid
out of profits for every year. There are no arrears carried over a time period to be paid at the end
of the term
Redeemable Preference shares: Such preference shares can be claimed after a fixed period or
after giving due notice.
Non-Redeemable Preference shares: Such shares cannot be redeemed during the lifetime of the
company, but can only be obtained at the time of winding up (liquidation) of assets.
Convertible Preference shares: The shares can be converted into equity shares after a time period
or as per the conditions laid down in the terms.
5 marks
1. Write the difference between Debentures and Shares
S. No DEBENTURES SHARES
1. Debentures constitute a loan. Shares are part of the capital of a company.
2. Middle and Lower Level Top level
3. Debenture holder gets fixed rate of Shareholders gets dividends with a varying
Interest which carries a priorities over rate.
dividend.
4. Debentures generally have a charge on Shares do not carry any such charge.
the assets of the company.
5. Debentures can be issued at a discount Shares cannot be issued at a discount.
without restrictions.
6. The rate of interest is fixed in the case Whereas on equity shares, the dividend varies
of debentures from year to year depending upon the profit
of the company and the Board of directors
decision to declare dividends or not.
7. Debenture holders do not have any Shareholders enjoy voting right.
voting right
2. Brief different stages in Formation of a Company.
Formation/Incorporation of a Company:
Section 3(1) of the Act states that a company may be formed for any lawful purpose by-

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 (a) seven or more persons, where the company to be formed is to be a public company;
(b) two or more persons, where the company to be formed is to be a private company; or
(c) one person, where the company to be formed is to be One Person Company that is to say,
a private company by subscribing their names or his name to a memorandum and complying
with the requirements of
this Act in respect of registration:
The process of formation of company consists of different stages, which starts when a
person envisage an idea to form a company and ends when a company gets a certificate from the
Registrar of Companies after complying with the various provisions relating to the formation of a
company. ‘Formation of a Company’ has been divided into four stages:
1. Promotion
2. Registration
3. Capital Subscription and
4. Commencement of Business.
Out of the four stages, the first two stages ‘Promotion and Registration’ are necessary for
both public and private companies. A private company can start operating its business
immediately after registration, but a public company has to pass through two more stages- capital
subscription and commencement of business.
A public company can raise funds from the public by issuing shares. After following all the legal
provisions of public issue, which are specified in The Company’s Act, a public company can
start operating of its business.
3. What are the various kinds of Debentures?
Kinds of Debentures
Debentures are generally classified into different categories on the basis of:
(1) Convertibility of the Instrument
(2) Security of the Instrument
(3) Redemption ability
(4) Registration of Instrument
1. On the basis of convertibility: Debentures may be classified into following categories:
• Non-Convertible Debentures (NCD): These instruments retain the debt character and
cannot be converted into equity shares.
• Partly Convertible Debentures (PCD): A part of these instruments are converted into
Equity shares in the future at notice of the issuer. The issuer decides the ratio for
conversion. This is normally decided at the time of subscription.
• Fully convertible Debentures (FCD): These are fully convertible into Equity shares at the
issuer's notice. The ratio of conversion is decided by the issuer. Upon conversion the
investors enjoy the same status as ordinary shareholders of the company.
• Optionally Convertible Debentures (OCD): The investor has the option to either convert
these debentures into shares at a price decided by the issuer/agreed upon at the time of
issue.
2.On the basis of Security: debentures are classified into:
• Secured Debentures: These instruments are secured by a charge on the fixed assets of the
issuer company. So, if the issuer fails on payment of either the principal or interest
amount, such fixed assets can be sold to repay the liability to the investors.

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 • Unsecured Debentures: These instruments are unsecured in the sense that if the issuer
defaults on payment of the interest or principal amount, the investor has to be included as
unsecured creditors of the company.
3.On the basis of Redeemability: debentures are classified into:
• Redeemable Debentures: It refers to the debentures which are issued with a condition that
the debentures will be redeemed at a fixed date or upon demand, or after notice, or under
a system of periodical drawings. Debentures are generally redeemable and on redemption
these can be reissued or cancelled.
• Perpetual or Irredeemable Debentures: A Debenture, in which no specific time is
specified by the companies to pay back the money, is called an irredeemable debenture.
The debenture holder cannot demand repayment as long as the company is a going
concern. Issuing company has to pay interest periodically.
4. On the basis of Registration: debentures may be classified as
• A Registered Debentures: Registered debentures are issued in the name of a particular
person; whose name appears on the debenture certificate and who is registered by the
company as holder on the Register of debenture holders.
• Bearer debentures: Bearer debentures on the other hand, are issued to bearer, and are
negotiable instruments, and so transferable by mere delivery like share warrants.
UNIT-X COMPANY LAW AND SECRETARIAL PRACTICE
CHAPTER 27- COMPANY MANAGEMENT
2 marks
1.Define Director.
“A person who is appointed or elected member of the Board of Directors of a company and has
the responsibility of determining and implementing policies along with others in the board.-The
cpmpanies Act 2013 section 2(34)
2.Name the companies required to appoint KMP.
• Every Listed Company
• Every Public Company
Having paid up share capital of Rs 10 Crores or More
3. Who is whole time Director?
A Director is one who devotes whole of his time of working hours to the company and has a
significant personal interest in the company as the source of his income.
4.Who is called as Managing Director?
A Director is one who is employed by the company and has substantial powers of management
over the affairs of the company subject to direction and control of the board.
5.Who can be Executive Director?
Chief Executive Officer (CEO) or Managing Director of an organization, who is responsible for
making decisions to complete the mission and for the success of the organisation.
3 marks
1.When are alternative directors appointed?
Alternate director is appointed by the Board of Directors, as a substitute to a director who may be
absent from India, for a period which is not less than three months.

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2.Who is a shadow director?
A person who is not the member of Board but has some power to run it can be appointed as the
director but according to his/her wish.
3. State the minimum number of directors for a private company.
• In case of one-person company, the requirement of directors is one.
• In the case of other private companies, the minimum requirement of directors is two.
5 marks
1. Who are the KMP?
Key- Managerial Personnel of a Company: Companies Act, 2013 (Act) has introduced many new
concepts and Key Managerial Personnel (KMP) is one of them. KMP covers the traditional roles
of managing director and whole-time director and also includes some functional heads like Chief
Financial Officer and Chief Executive Officer and Company Secretary
WHO ARE THE KEY MANAGERIAL PERSONNEL?
The definition of the term Key Managerial Personnel is contained in Section 2(51) of the
Companies Act, 2013. This Section states:
(i) the Chief Executive Officer
(ii) the Managing Director or the Manager;
(iii) the Company Secretary;
(iv) the Whole-time Director;
(v) the Chief Financial Officer; and
(vi) such other officer as may be prescribed;
Following Companies are required to appoint KMP

2.Brief different types of Directors.

1. Residential Director: – According to Section 149(3) of Companies Act 2013, Every company
should appoint a director who has stayed in India for a total Period of not less than 182 days in
the previous calendar year.
2. Independent Director: According to Section 149(6) an independent director is an alternate
director other than a Managing Director who is known as Whole Time Director Or Nominee
Director.
3.Additional Directors: Any Individual can be appointed as Additional Directors by a company.
4. Alternate Directors: Alternate director is appointed by the Board of Directors, as a substitute
to a director who may be absent from India, for a period which is not less than three months.

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5.Shadow Director: A person who is not the member of Board but has some power to run it can
be appointed as the director but according to his/her wish.
3. State the qualification of Directors.
Qualifications of Director As regards to the qualification of directors, there is no direct provision
in the Companies Act, 2013. In general, a director shall possess appropriate skills, experience
and knowledge in one or more fields of finance, law, management, sales, marketing,
administration, research, corporate governance, technical operations or other disciplines related
to the company’s business. According to the different provisions relating to the directors; the
following qualifications may be mentioned:
1. A director must be a person of sound mind.
2. A director must hold share qualification, if the article of association provides such.
3. A director must be an individual.
4. A director should be a solvent person.
5. A director should not be convicted by the Court for any offence, etc.
4. State the Criminal liabilities of Directors.
Directors will be liable with a fine and imprisonment or both for fraud of non-compliance of any
statutory provisions in the following situations where
1. There is mis-statement in Prospectus
2. There is failure to file return on allotment with the registrar
3. There is failure to give notice to the registrar for conversion of share into stock
4. There is failue to issue share Certificate and Debenture certificate
5. There is failure to maintain register of the members and register of debenture holders
6. There is default in holding Annual General Meeting
7. There is failure to provide Financial Statements
UNIT-X COMPANY LAW AND SECRETARIAL PRACTICE
CHAPTER 28- COMPANY SECRETARY
2 marks
1.who is a secretary?
“A Company secretary or secretary means any individual possessing the prescribed
qualifications, appointed to perform the duties which may performed by a secretary under this
Act and any other ministerial or administrative duties”- Section 2(24)of the companies Act,2013.
2.What is meant by meeting?
A company meeting must be convened and held in perfect compliance with the various
provisions of the Act and the rules framed thereunder. It is essential that the business dealt with
at the meetings, should be validly transacted and not liable to be questioned later due to any
irregularity.
3.what is resolution?
The decision taken at a meeting are called resolution.In other words a motion,with or without the
amendments (rules)which is put to vote at a meeting and passed with the required quorum
becomes resolution.
4.write a short note on Proxy.
Proxy refers to a person who is authorized by member for the purpose of attending the meeting.
5.what is voting?

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The word ‘vote’ originated in Latin word 'votum’ indicating one's wishes or desire. By casting
his vote one formally declaring his opinion or wish in favour of or against a proposal or a
candidate to be elected for an office.
3 marks
1.What is Special Resolution?
A special resolution is the one which is passed by a not less than 75% of majority. The intention
of proposing a resolution as a special resolution must be specifically mentioned in the notice of
the general meeting.
2. What do you mean by Statutory Meeting?
• Every public company, should hold a meeting of the shareholders within 6 months but
not earlier than one month from the date of commencement of business of the company.
• This is the first general meeting of the public company is called the Statutory Meeting.
• This meeting is conducted only once in the lifetime of the company.
• The company gives the circular to shareholders before 21 days of the meeting.
3. Give any three cases in which an ordinary resolution need to be passed.
• To change or rectify the name of the company
• To alter the share capital of the company
• To declare the dividends
• To appoint the directors
4.What resolution is requires special notice?
The following matters require special notice before they are discussed in the meeting:-
a. To appoint an auditor, a person other than a retiring auditor
b. To provide expressly that a retiring Auditor shall not be reappointed
c. To remove a director before the expiry of his period of office
d. To appoint a director in the place of a director so removed.
5 marks
1. Elaborate the functions of the Company Secretary
Functions of the Company Secretary may be discussed under two headings:
▪ Statutory Functions or Duties
▪ Non-statutory Functions or Duties.
Statutory Functions or Duties
(i) To sign document and proceedings requiring authentication by the company
(ii) To maintaining share registers and register of Directors and of contracts
(iii) To give notice to register for increase in the share capital
(iv) To deliver share certificate of allotment within 2 months after transfer
(v) To sign and send annual return
(vi) To make a statutory declaration for receiving certificate of commencement of business
(vii) To send notice of general meeting to every member of the company
(viii) To make statutory books

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(ix) To prepare minutes of every general meeting and board meeting within 30 days
(x) To file a resolution with the registrar
(xi) To assist in preparing the statement of affairs in a winding up
Non-Statutory Functions
Non-Statutory Functions Secretary has to discharge non-statutory functions in relation to
directors, shareholders and office and staff. These functions are briefly mentioned.
(1) Functions as agent of directors;
(2) Functions towards shareholders;
(3) Functions towards office and staff.
2. Briefly state different types of company meetings.
Under the Companies Act, 2013, Company meetings can be classified as under:
1. Meetings of Shareholders:
(a) Statutory Meeting
(b) Annual General Meetings (AGM)
(c) Extraordinary General Meetings (EGM)
2. Meetings of the Directors
(a) Board meetings
(b) Committees meetings
3. Special Meetings
(a) Class Meetings.
(b) Creditors and of Debenture/bond holders meetings
Shareholders Meetings
The meeting held with the shareholders of the company is called shareholders meeting. The
shareholders meeting can be classified as statutory meeting, annual general meeting and extra
ordinary general meeting.
a) Statutory Meeting
• According to Companies Act, every public company, should hold a meeting of the
shareholders within 6 months but not earlier than one month from the date of
commencement of business of the company.
• This is the first general meeting of the public company is called the Statutory
Meeting.
• This meeting is conducted only once in the lifetime of the company.
• A private company or a public company having no share capital need not conduct a
statutory meeting.
• The company gives the circular to shareholders before 21 days of the meeting.
b) Annual General Meeting [AGM]
• Every year a meeting is held to transact the ordinary business of the company. Such
meeting is called Annual General Meeting of the company (AGM).
• Company is bound to invite the first general meeting within eighteen months from
the date of its registration.

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 • Then the general meeting will be held once in every year. The differences between
two general meetings should not be more than fifteen months.
• Every Annual General meeting shall be held during business hours, on a day which
is not a public holiday.
• AGM should be conducted by both private and public Ltd companies.
c) Extra-Ordinary General Meeting
• Both Statutory meeting and annual general meetings are called as ordinary
meetings of a company.
• All other general meetings other than statutory and annual general meetings are
called extraordinary general meetings.
• If any meeting conducted in between two annual general meeting to deal with some
urgent or special or extraordinary nature of business is called as extra-ordinary
general meetings.

Meeting of the Board of Directors

a) Board Meetings
Meetings of directors are called Board Meetings. Meetings of the directors provide a platform to
discuss the business and take formal decisions. First meeting of directors should be convened
within 30 (Thirty) days from the date of incorporation of the company.
b) Committee Meetings
Every listed company and every other public company having paid up share capital of ₹10
crore is required to have audit committee. This committee should meet at least four times in a
year. In case of other companies, the board of directors shall nominate a director to play the
role of audit committee which is functioning as a vigil mechanism.
Special Meeting
a) Class Meeting (Meetings of Particular Share or Debenture Holders)
Meetings, which are held by a particular class of share or debenture holders e.g.
preference shareholders or debenture holders is known as class meeting. The debenture holders
of a particular class conduct these meetings. These meetings are held according to the rules and
regulations laid by the Trust Deed or Debenture Bond, from time to time, where the interests of
the debenture holders play vital role at the time of re-organisation, reconstruction, amalgamation
or winding-up of the company.
b) Meetings of the Creditors
Strictly speaking, these are not meetings of a company. Unlike the meetings of a
company, there arise situation in which a company may wish to arrive at a consensus with the
creditors to avoid any crisis or to evolve compromise or to introduce any new proposals.
3.Explain different types of open and secret types of voting.
There are two distinct procedures of voting viz., Open and Secret procedures.
I. Open Procedure This type of voting has no secrecy as the all the members assembled can see
voting. There are two popular methods of open voting namely voice voting and voting by show
of hands.

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 (a) By Voice: Voice voting is a popular type of voting in which the chairman allows the
members to raise their voice in favour or against an issue ‘Yes’ for approval and ‘No’ for
rejection. Chairman announces the result of voice voting on the basis of strength of words
shouted. It is an unscientific method. It cannot be employed for deciding complex issue.
(b) By Show of Hands: Under this method the chairman, requests the members to raise
their hands of those who are in favour of the proposal or candidate and then requests those are
against. Then the chairman counts the number of hands raised for Yes and No respectively can
announce the result on the basis of hands counted.
II. Secret Procedure Secret procedure is adopted to decide certain vital issues. It is a popular
voting method that could maintain the secrecy of the voter.
a) By Ballot Under this system, ballot paper bearing serial number is given to the
members to record their opinion by marking with the symbol or Shareholders have to cast their
vote in a secret chamber and put the ballot paper into the ballot box. The chairman opens the
ballot box in the presence of tellers or scrutinizers and counts the votes. He rejects the defective
or wrongly marked ballot papers. The votes are counted and the results are announced.
b) Postal Ballot Big companies or big associations having members scattered all over the
country follow this method of voting. Under this method serially numbered ballot papers are sent
by post in sealed covers to the members, who, living at a distant place, are unable to attend the
meeting physically. The members or voters fill in the ballot papers and return them in sealed
covers which are opened when the ballot box is opened for counting the votes.
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