Finance

Q-1. Define finance, financial management, public finance, financial

statement?
Ans. Finance is concerned with the art and science of managing money. Financial
management is strategically planning how a business should earn and spend money. This
includes decisions about raising capital, borrowing money and budgeting. Public finance is the
management of a country’s revenue, expenditures, and debt load through various government
and quasi-government institutions. Financial statements are a set of documents that show your
company's financial status at a specific point in time. They include key data on what your
company owns and owes and how much money it has made and spent.

Q-2. What are the basic principles of finance? Can you explain the concept of
profitability and liquidity?
Ans. There are six principles of finance:
i. The Principle of Risk and Return
ii. Time Value of Money Principle
iii. Cash Flow Principle
iv. The Principle of Profitability and liquidity
v. Principles of diversity and
vi. The Hedging Principle of Finance

Principle of Profitability and Liquidity:

The principle of profitability and liquidity is very important from the investor’s perspective
because the investor has to ensure both profitability and liquidity. Liquidity indicates the
marketability of the investment i.e., how easy it is to get cash by selling the investment. On the
other hand, investors have to invest in a way that can ensure the maximization of profit with a
moderate or lower level of risk.

Q-3. What are the functions played by finance managers?

Ans. Generally financial managers perform Managerial functions and Routine functions.

Routine Functions
 Financial Planning
 Identification of sources
 Raising fund
 Investment of fund
  Profit Distribution
 Forecasting cash inflow
 Co-ordination and control
 Dealing with financial market
 Risk management

Managerial Functions
 Investment Decision
 Financial Decision
 Dividend Decision
 Asset Management

Q-4. What should be the goal of a firm? Wealth Maximization or Profit

Maximization?
Ans. The goal of a firm should be wealth maximization because the main aim of the business
concern under this concept is to improve the value or wealth of the shareholders. Wealth
maximization considers the comparison of the value to cost associated with the business concern.

Q-5. What is agency conflict and agency cost? How to minimize agency
conflict?
Ans. In corporate finance, an agency problem usually refers to a conflict of interest between a
company's management (Agent) and the company's stockholders (Principal). The costs borne by
the shareholders due to the presence or avoidance of agency problems are called agency cost.
Agency cost can be reduced by a Structure management compensation plan which includes:
a) Incentive plan
b) Performance plan

Q-6. What are the “Perfect capital market “? What are the assumption of
perfect capital market?
Ans. Perfect capital markets are characterized by certain conditions:
a) Trading is cost less, and access to the financial markets is free;
b) Information about borrowing and lending opportunities is freely available;
c) There are many traders, and no single trader can have a significant impact on market
prices.
d) All investors are risk averse.
e) There are a large number of buyers and sellers in the market.
Q-7. What is DFC analysis?
Ans. Discounted cash flow (DCF) is a method of valuation used to determine the value of an
investment based on its return in the future–called future cash flows.
Q-8. What are the effective market hypothesis? What are the forms of market
effective?
Ans. The efficient market hypothesis states that when new information comes into the market, it
is immediately reflected in stock prices and thus neither technical nor fundamental analysis can
generate excess returns.

Q-9. What are the forms of market efficiency CFA?

Ans. Eugene Fama developed a framework of market efficiency that laid out three forms of
efficiency: weak, semi-strong, and strong. Each form is defined with respect to the available
information that is reflected in prices.

Q-10. What is risk and return tradeoff?

Ans. The risk-return trade-off is a theory of investing that states that an asset's potential return
will be proportional to the level of risk the investor takes. Investors examine the investment's
alpha, beta, standard deviation, and Sharpe ratio to ascertain the risk-return tradeoff of a
particular stock or mutual fund.

Q-11. What is CAPM and APT? What are the main difference between them?
Ans. The Capital Asset Pricing Model (CAPM) describes the relationship between systematic
risk and expected return for assets, particularly stocks. Arbitrage pricing theory (APT) is a multi-
factor asset pricing model based on the idea that an asset's returns can be predicted using the
linear relationship between the asset's expected return and a number of macroeconomic variables
that capture systematic risk.
Difference:
While the CAPM formula requires the input of the expected market return, the APT formula uses
an asset's expected rate of return and the risk premium of multiple macroeconomic factors.

Q-12. What is financial asset? What are the difference between financial asset
and real asset?
Ans. A financial asset is a liquid asset that gets its value from a contractual right or ownership
claim. Cash, stocks, bonds, mutual funds, and bank deposits are all examples of financial assets.
Financial assets include stocks, bonds, and cash, while real assets are real estate, infrastructure,
and commodities. These are highly liquid assets that are either in cash or can be fast converted to
cash. They include investments such as stocks and bonds. The major feature of financial assets is
that they have some economic value that is easily realized.
Real assets are value-driven physical assets that a company owns. They include land, buildings,
motor cars, or commodities. Its unique feature is that they have intrinsic value by themselves and
don’t rely on exchanges to have value.
Q-13. Do you know DSE, CSE and BSEC. What is their main job?
Ans.
DSE
 Attracting more foreign investors in order to attain a steady level of at least 30% total
market cap.
 Doubling its number of listed individual company securities.
 Increasing its scope to offer index futures, exchange traded funds (ETFs), and
derivatives.
 Advancing its technology to enable global trading and settlement.

CSE
 Provide infrastructures that enable fair, organized, transparent and efficient securities
trading that is accessible to a wide range of stakeholders.
 Offer a diversified range of investment and trading opportunities for investors and
members.
BSEC
 Monitoring and regulating all authorized self-regulatory organizations in the securities
market.
 Prohibiting fraudulent and unfair trade practices relating to securities trading in any
securities market.
 Promoting investors' education and providing training for intermediaries of the securities
market.

Q-14. Why time value of money concept is very important to financial decision
making?
Ans. The time value of money (TVM) is an important concept to financial decision making
because a dollar on hand today is worth more than a dollar promised in the future. The dollar on
hand today can be used to invest and earn interest or capital gains. The time value of money
helps us understand how inflation affects the purchasing power of money. Inflation is when a
unit of currency today can buy more goods and services than the same unit of currency in the
future.

Q-15. Who are the participants of in the financial market of Bangladesh?

Ans. They're all the people and organizations that do business in a financial market, from banks
and other lenders to individual investors. There are two basic financial market participant
categories –
 Investor v speculator
 Institutional v retail

Q-16. What is cash flow? What are the components of cash inflows and cash
outflows?
Ans. Cash flow refers to the net balance of cash moving into and out of a business at a specific
point in time.
Components of cash inflow:
 cash flow from operations
 cash flow from investing
 cash flow from financing
Components of cash outflow:
 Any debts
 Liabilities
 Operating costs
 Any amount of funds leaving your business.

Q-17. What is Capital Budgeting? What are the Capital Budgeting

techniques?
Ans. Capital budgeting is the process by which investors determine the value of a potential
investment project. The three most common approaches to project selection are payback period
(PB), internal rate of return (IRR), and net present value (NPV).

Q-18. What is a conventional cash flow? Difference between conventional and

non-conventional cash flow?
Ans. Conventional cash flow pattern is one with an initial outflow followed by a series of
inflows. On the other hand, unconventional cash flow is a series of inward and outward cash
flows over time in which there is more than one change in the cash flow direction.

Q-19. What is portfolio? What is an optimum portfolio? Do you know Prof Harry
Markowitz? Why he is famous for? Say the basics of diversification concept?
Ans. A portfolio is a collection of financial investments like stocks, bonds, commodities, cash,
and cash equivalents etc. An optimal portfolio is one designed with a perfect balance of risk and
return. The optimal portfolio looks to balance securities that offer the greatest possible returns
with acceptable.

Harry Markowitz (born 1927) is a Nobel Prize-winning American economist best known for
developing Modern Portfolio Theory (MPT). His work popularized concepts like diversification,
overall portfolio risk and return.
Diversification is an investing strategy used to manage risk. It mixes a wide variety of
investments within a portfolio in an attempt to reduce portfolio risk.
Q-20. Which technique of Capital Budgeting is better? NPV or IRR?
Ans. IRR and NPV have two different uses within capital budgeting. IRR is useful when
comparing multiple projects against each other or in situations where it is difficult to determine a
discount rate. NPV is better in situations where there are varying directions of cash flow over
time or multiple discount rates.

Q-21. How much a firm should pay as a dividend? What is Walter and
Gordon model of dividend policy?
Ans. A range of 35% to 55% is considered healthy and appropriate from a dividend investor's
point of view. A company that is likely to distribute roughly half of its earnings as dividends
means that the company is well established and a leader in its industry.

Walter’s model: Professor James E. Walter argues that the choice of dividend policies almost
always affects the value of the enterprise. His model shows clearly the importance of the
relationship between the firm’s internal rate of return (r) and its cost of capital (k) in determining
the dividend policy that will maximize the wealth of shareholders.
Gordon model: The Gordon growth model (GGM) is a formula used to determine the intrinsic
value of a stock based on a future series of dividends that grow at a constant rate. It is a popular
and straightforward variant of the dividend discount model (DDM).

Q-22. What is the difference between risk and uncertainty?

Ans. Risk is defined as the variability of returns associated with a given asset. Uncertainty
refers to a situation where the outcome is not certain or unknown.

Q-23. What is the difference between Systematic and Unsystematic risk?

Ans. Systematic risk is that portion of the security risk which cannot be diversifiable, arises
from the movement of economic forces or market (Interest rate, inflation). Unsystematic risk is
the portion of risk which can diversifiable, arises from the movement of company specific
factors (wrong strategies, shortage of capital).
Q-24. Do you know the difference between pricing efficiency and operational
efficiency of financial market?
Ans. Price efficiency theory posits that markets are efficient because all relevant information
that impacts valuations is in the public domain. That means it should be nearly impossible for
investors to earn excess returns or “alpha” on a consistent basis. Operational efficiency means a
market condition that exists when participants can execute transactions and receive services at a
price that equates fairly to the actual costs required to provide them.
Q-25. Define working capital. What are the components of working capital?
Why working capital termed as the blood of the organization?
Ans. In short, working capital is the money available to meet your current, short-term
obligations.
Working Capital = Current Assets - Current Liabilities
The four main components of working capital are:
 Cash and cash equivalents
 Accounts receivable (AR)
 Inventory
 Accounts payable (AP)
Working capital represents the funds / resources available to a business for use in day-to-day
operations.  It is the lifeblood of every business because it is what enables the business to cover
day-to-day costs and, ultimately, keep its doors open.

Q-26. What are the motives of holding cash? Why is cash termed as a non-
earning asset?
Ans. People hold money (M) in cash for three motives: the transactions, precautionary and
speculative motives. The transaction motive for holding cash is directly related to the level of
income and relates to 'the need for cash for the current transactions for personal and business
exchange.
Cash is termed as a non-earning asset because it can’t generate income by itself without proper
utilization or any kind of investment.

Q-27. What is liquidity? What are the dangers of liquidity shortage and excess
liquidity?
Ans. Liquidity in finance refers to the ease with which a security or an asset can be converted
into cash at market price. Lack of liquidity results in shortage of working capital which
ultimately create negative impact on production and balance between Supply and demand in
market. It also create problems to meet up the short-term obligations. Excess liquidity results in
a lower chance of missing potential investment opportunities.
Q-28. Do you know the concept of cost of capital? What are the components of
cost of capital? What is WACC?
Ans. Cost of capital is the minimum rate of return or profit a company must earn before
generating value. Components of Cost of Capital: cost of debt, cost of equity, and weighted
average cost of capital (WACC). The weighted average cost of capital (WACC) is the average
rate that a business pays to finance its assets. It is calculated by averaging the rate of all of the
company's sources of capital (both debt and equity), weighted by the proportion of each
component.
Q-29. What is marketable security? Give us some examples of marketable
securities?
Ans. Marketable securities are securities that can easily be sold. On a corporation's balance
sheet, they are assets that can be readily converted into cash. Some common example of market
securities are:
 Stocks
 Bonds
 Preferred shares
 ETFs 
 Accounting
Q-1. Define Accounting.
Ans. Accounting is the process of recording financial transactions pertaining to a business. It
consists of three basic activities: it identifies, records and communicates the economic events of
an organization to interested users.

Q-2. What is the difference between Accounting and Book keeping?

Ans. Book keeping usually involves only the recording of economic events. It is just one part of
accounting process. Accounting involves the entire process of identifying, recording and
communicating economic events.

Q-3. What is the dual entry system of accounting?

Ans. It is a method of recording transactions where for every business transaction, an entry is
recorded in at least two accounts as a debit or credit.

Q-4. Do you know the accounting equation?

Ans. Yes, I know the accounting equation
Asset = Liabilities + Owner’s equity

Expanded equation:
Asset = Liabilities + Capital + Revenue - Drawings - Expenses.

Q-5. What is depreciation? What are the general techniques or

methods of depreciation? Why depreciation is termed as non-cash expense?
Ans. Depreciation is the process of allocating the cost of an asset to expense over its useful life.
Depreciation is a non-cash expense because no cash payment has to be made against
the depreciation. It does not involve any cash outflow. Methods on techniques of depreciation:
 Straight-line
 Declining balance
 Sum-of-the years
 Units of production

Q-6. Why the two sides of a balance sheet equate?

Ans. The total amounts of two sides of accounting equation are always equal because of
dual effect of a transection. It represents two different views of the same thing.
Q-7. What are the basic types of financial statements prepared by public
limited companies?
Ans. 4 financial statements prepared by public limited company:
 Income statements
 Owner's equity statement
 Balance sheet
 Cash flows statement

Q-8. What are the classifications of Assets? Give examples of Long-term

Assets and Short-term Assets.
Ans. Classifications of Asset:

On the basis of Convertibility

 Current Asset
 Fixed Asset

On the basis of Usage

 Operating
 Non-operating

On the basis of Physical Existence

 Tangible
 Intangible

Examples of Short-term Asset: cash, Accounts Receivable, Inventory, Bank Accounts.

Examples of Long-term Asset: Land, Equipment, Property, Buildings, Motor Vehicles.

Q-9. What is ICAB & ICMAB? What functions they are playing?
Ans. ICAB stands for the Institute of Chartered Accountants of Bangladesh. It is the
national professional accountancy body and research institute in Bangladesh. ICAB is the sole
organization in Bangladesh with the right to award the Associate Chartered Accountant
designation. ICAB has 2,005 members. It helps to promote and regulate high quality financial
reporting and auditing in Bangladesh. The Institute of Cost and Management Accountants of
Bangladesh (ICMAB) is an institution dedicated to Cost and Management Accounting
education and research in Bangladesh. It is managed as an autonomous professional body under
the Ministry of Commerce. As well as education, it is also engaged in regulating and promoting
the profession of cost and management accountant in Bangladesh.
Q-10. What is Tax? Is there any difference between Income Tax and
VAT? Does the tax structure vary in case of a firm and individual?
Ans. A tax is a compulsory contribution to state revenue, levied by the government on
employees' income and business profits (income tax), or added to the cost of some goods,
services, and transactions (value added tax). Both are tax which is considered as a Govt.
revenue where VAT is levied on goods and service which is indirect tax and income tax levied
on Income or revenue which is considered as direct tax. The corporate tax rate and personal
income tax rates vary from depending on the taxable income.

Q-11. Give us a brief idea about tax administration of Bangladesh

government.
Ans. The National Board of Revenue is the apex authority for tax administration in
Bangladesh which was established in 1972 and it’s under the Ministry of Finance (MOF).

Q-12. Explain the concept of set-off and carry forward of losses in tax calculation?
Ans. The concept of set-off and carry forward of losses in tax calculation allows a taxpayer
to reduce their taxable income by offsetting losses from one source of income against gains
from another source. If the losses exceed the gains in a particular year, the unused losses can be
carried forward to future years to offset against future gains. This reduces the taxpayer's tax
liability and allows them to use their losses more effectively.

Q-13. Do you know IFRS & IAS?

Ans. IFRS stands for International Financial Reporting Standards, while IAS stands for
International Accounting Standards. Both IFRS and IAS are global accounting standards
developed and maintained by the International Accounting Standards Board (IASB).
These provide guidelines for the preparation and presentation of financial statements of
companies.

Q-14. What is GAAP?

Ans. GAAP stands for Generally Accepted Accounting Principles. It refers to a set of
accounting rules, practices, and standards that are widely recognized and followed in the
preparation and presentation of financial statements by companies in the United States. GAAP
is developed and maintained by various standard-setting bodies, including the Financial
Accounting Standards Board (FASB) in the U.S.

Q-15. What is tax holiday scheme?

Ans. In cost accounting, a tax holiday scheme is a government policy that grants temporary
tax exemptions or reductions to businesses or individuals in order to promote economic
development or investment in a particular region or industry.
Q-16. What is accrual and cash basis of accounting?
Ans. Accrual basis accounting records transactions when they are incurred and not when cash
is received or paid. Cash basis accounting records transactions only when cash is received or
paid.

Q-17. Name the authorities related with the formulation of accounting

practices and reporting standards.
Ans. The profession of accountancy is represented by two professional bodies, the Institute of
Cost & Management Accountants of Bangladesh (ICMAB) and the Institute of Chartered
Accountants of Bangladesh (ICAB). The Institute of Chartered Accountants of Bangladesh
(ICAB) prescribes Financial Reporting Standards which are known as Bangladesh Financial
Reporting Standards (BFRS). Bangladesh Accounting Standards (BAS) are also included in
BFRS. International Accounting Standards and International Financial Reporting Standards
which are issued by the International Accounting Standards Board are what the BFRS models
on.

Q-18. What is the going concern principle?

Ans. The going concern principle is an accounting concept that assumes that a business
will continue to operate for the foreseeable future, without the intention or necessity of
liquidating or ceasing operations. This means that the business is viewed as a "going concern"
that will be able to generate enough cash flow to meet its obligations and continue operating in
the long term.

Q-19. Can you please explain the accounting cycle?

Ans. The accounting cycle is a series of steps that businesses follow to record, classify, and
report their financial transactions accurately. The 8 Steps in the Accounting Cycle:
 Step 1- Analysis and identification of business transactions.
 Step 2- Preparing journal entries.
  Step 3- Posting to the general ledger.
 Step 4- Generating unadjusted trial balance report.
 Step 5- Preparing adjusting entries.
 Step 6- Preparing worksheets.
 Step 7- Generating financial statements.
 Step 8- Closing the books.

Q. Is there any difference between international accounting practices

and Bangladesh accounting practices? If so, what are the areas?
Ans. Yes, there are differences between international accounting practices and Bangladesh
accounting practices. According to a report by the World Bank, the accounting and
auditing practices in Bangladesh suffer from institutional weaknesses in regulation and
compliance, capacity building, and the adoption of updated IASB standards.
Marketing

Q-1. Define marketing?

Ans. Marketing means building and maintaining profitable customer relationship. Marketing is
the process of exploring, creating, and delivering value to meet the needs of a target market in
terms of goods and services.

Q-2. What are the different concepts of marketing / marketing philosophies?

Ans. There are 5 concepts of marketing known as philosophies. They are-
 Production concept: That holds consumer will favor products that offer the most
quality, performance and innovative features.
 Product concept: This concept holds that consumers will favor products that are
available and highly affordable
 Selling concept: It holds that customers will not buy enough of the firm’s products
unless it undertakes a large scale selling and promotion effort.
 Marketing concept: Holds that achieving organization goal depends on knowing the
needs and wants to target markets and delivering the desired satisfaction better than
competitors do.
 Societal marketing concept: Holds that marketing strategy should deliver the value to
customers in a way that maintains or improve both the consumers and society's
wellbeing.
Q-3. What is a product? What are the different classification of product?
Ans. Anything that can be offered to a market for attention, acquisition, use or consumption that
might satisfy a want or need.
Product classification:
a) Consumer product
 Convenience product
 Shopping product
 Specialty product
 Unsought product
b) Industrial product
 Materials and parts
 Capital items
 Supplies and services.

Q-4. Can you mention the product development stages?

i. Idea generation
 Internal source
 External source
ii. Idea screening
 Spot good ones, drop poor ones
 Reduce of number of ideas
iii. Concept development and testing
iv. Marketing strategy development
v. Business analysis
vi. Product development
vii. Testing marketing
viii. Commercialization.

Q-5. What are the stages in a product life cycle?

Ans. There are five stages in product life cycle.
i. Product development
ii. Introduction
iii. Growth
iv. Maturity
v. Decline

Q-6. Define Fashion, style, fad.

Ans.
i. Style: A basic and distinctive mode of expression.
ii. Fashion: A currently accepted or popular style in a given field.
iii. Fad: A temporary period of unusually high sales driven by consumer enthusiasm and
immediate product or brand popularity.

Q-7. What are the Cs' related with Ps' of marketing mix?
Ans. The 4Cs' with 4Ps' are--
a) Product - Customer solution
b) Price - Customer cost
c) Place - Convenience
d) Promotion - Communication

Q-8. What is marketing mix? Do you know the 4ps' of marketing mix? What
are the additional 3ps' added in the modern marketing mix?
Ans. Marketing mix is the set of tactical marketing tools that the firm blends to produce the
response it wants in the target market. The 4ps' are --
i. Product
ii. Price
iii. Place
iv. Promotion

The additional 3Ps' are --

v. People
vi. Process
vii. Physical evidence

Q-9. What is STP?

Ans.
a) Segmentation: Divide the total market into smaller segments
b) Targeting: Select the segments to enter
c) Positioning: Position the market offering in the minds of target customers.

Q-10. What are the bases of market segmentation?

Ans.
a) Geographic: Region or division, city size, density, climate.
b) Demographic: Age, Gender, Family, and Region.
c) Psychographic: Life style, personality.
 d) Behavioral: Occasion, benefit.

Q-11. What are the strategies of market positioning?

Ans. The way the product or service is defined by consumers on important attributes the place
that the product or service occupies in consumers mind relative to competing product or services
is called market positioning. Market positioning strategies are:
 Identifying possible value differences and competitive advantages
 Choosing the right competitive advantage
 Selecting and overall positioning strategy
 Developing a positioning statement.

Q-12. What are the sales promotion took available?

Ans. The available Sales promotion took are advertising, Personal selling, Public relations, sales
promotions and direct marketing.

Q-13. What in advertising? What are the forms of advertising? What types of
Medias are used in advertising?
Ans. Advertising is any paid form of non- Presentation and promotion of ideas, goods, services
by an identified sponsor.
Media used in advertising: News Papers, ad magazine, Radio. Television, online ads and Direct
email.

Q-14. How can we use social media as a tool of advertising?

Ans. We can used the Social Medias as a tool of less costly advertising because they offered
low-cost advertising opportunities to billions of People.

Q-15. Is there any difference between advertisement and publicity?

Ans. Yes, there are so many differences.

Advertising:
1) Paid form- by sponsor
2) Presentation is programed.
3) Marketers exercise control
4) Advertising is positive

Publicity:
 1) Non paid form
2) Presentation is non programmed
3) Marketers have less control
4) Publicity may be positive or negative.

Q-16. What is SWOT analysis? What are the internal and external factors of
SWOT Analysis?
Ans. SWOT analysis is a compilation of organization’s strengths weaknesses, Opportunities and
threats.
Internal factor: strengths, and weaknesses.
External factor: opportunities and threats.

Q-17. Define corporate social responsibilities (CSR) in Marketing. Give some

examples of CSR activities.
Ans. CSR is a commitment to improve the society’s well-being through voluntary corporate
activities and corporate resources.

Example:
 Reducing Carbon foot Print,
 Engaging in Charity Work.
 Purchasing fair trade Product
 Improving labor Policies.
 Engage in Environmental Preservation Efforts.

Q-18. What in marketing research? Why do firms' go for marketing

research?
Ans. Marketing research is the process of collecting, analyzing and interpreting data about your
target market, consumers, competitors and the industry as a whole. Firms go for marketing
research because it provides critical information about the market and the business landscape. It
can tell how the company is perceived by the target customer and clients that company wants to
reach.

Q-19. Do you know the concepts "prosumer" and "glocal"?

Ans. Prosumer in a concept created by merging the terms producer and customer. People who
produce some of the good and services entering their own consumption. They can be found in
making their own clothes, cooking their own food, raring their own cars etc. Glocal marketing
refers to a strategy that global brand use to localize their promotional contents. The term
combines the words global and local. The concept in a blend of creating goods or services aimed
to achieve global reach and tailoring the promotion to appeal to specific sections of the global
market. Mc Donald’s globalized in products around the world.

Q-20. Who is considered to be the marketing GURU?

Ans. Philip Kotler (May 27, 1981), in America.

Q-21. What activities should be included in a detail marketing plan?

Ans. It includes smart marketing goals, deadlines, action steps, long- term objectives, target
audiences, core marketing messages and metrics. By the end of it, one can walk away with a
strong understanding of the organization's strategic direction for their upcoming marketing
efforts.

Management
Q-1. Can you please define management?
Ans. Management is a process of planning, decision making, organizing, leading, motivation
and controlling the human resources, financial, physical, and information resources of an
organization to reach its goals efficiently and effectively.

Q-2. What are the basic functions of management?

Ans. There are four basic functions of management. They are planning, organizing, leading, and
controlling.

Planning: In the planning stage, managers establish organizational goals and create a course of
action to achieve them.
Organizing: It is the process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational goals.
Leading: Leading consists of motivating employees and influencing their behavior to achieve
organizational objectives. Leading focuses on managing people, such as individual employees,
teams and groups rather than tasks.
Controlling: Controlling is the process of evaluating the execution of the plan and making
adjustments to ensure that the organizational goal is achieved. It is the process of monitoring all
the activities, to ensure whether these are running according to plan or not.
Q-3. What are the steps of planning?
Ans.
a) Being aware of opportunities
b) Establishing objectives
c) Developing premises
d) Determining alternative courses
e) Evaluating alternative courses
f) Selecting a course
g) Formulating derivative plans
h) Numberizing plans by budgeting

Q-4. What are the different levels of management?

Ans. There are three levels of management. They are- Top level, mid-level and lower-level
management.

Q-5. Would you please clarify the term “Motivation”?

Ans. Motivation means a process of stimulating people to action to achieve desired goals. It is the
driving force behind human actions.

Q-6. What are the renowned theories of motivation?

Ans.
a) Maslow's Hierarchy of Needs Theory (Physiological, Safety/security, love and belonging/
social, Esteem, Self-actualization
b) Herzberg's Two-Factor Theory (Hygiene factor- Company policy and administration,
Supervision, Salary, Working conditions etc. and Motivating factor- Achievement,
Recognition, Work itself, Advancement etc.)
c) McClelland's Needs Theory ( Need for affiliation, Need for achievement, Need for
power)
d) McGregor's Theory X, Theory Y.
e) Alderfer’s ERG theory (Existence, Relatedness, and Growth)

Q-7. How can we create a satisfied and satisfactory workforce?

Ans. For creating a satisfied workforce everyone should be careful about employees’ well-being,
offer a competitive salary, offer opportunities for learning, give frequent feedback, solve
employees’ problems, etc.

Q-8. What is decision making?

Ans. Decision-making is a selection process based on certain criteria from two or more
alternatives.

Q-9. What are the stages of decision making? Can we apply the basic
decision- making stages to other functional areas of business?
Ans. 7 steps of the decision-making process
a) Identify the decision
b) Gather relevant information
c) Identify the alternatives
d) Evaluation of alternatives
e) Choose among the alternatives
f) Take action
g) Review the decision

Yes, we can apply these stages to other functional areas of business.

Q-10. Mention the steps of controlling.

Ans. Controlling consists of five steps: 
a) Set standards,
b) Measure performance,
c) Compare performance to standards,
d) Determine the reasons for deviations and then
e) Take corrective action as needed 

Q-11. How do you define HRM?

Ans. Human resource management is a systematic process of managing people working in the
organization.

Q-12. Can you tell me the functional area of HRM?

Ans. There are four basic functional areas of human resource management.
a) Acquisition
b) Development
c) Motivation
d) Maintenance

Q-13. What is staffing?

Ans. Staffing refers to the continuous process of finding, selecting, evaluating and developing a
working relationship with current or future employees. The main goal of staffing is to fill the
various roles within the company with suitable candidates.

Q-14. Can you differentiate between Recruitment & Selection?

Ans. Recruitment is a process of attracting and searching for potential candidates and
selection is a process of picking the candidates from the shortlisted ones.

Q-15. What is the basic difference between training and development?

Training refers to the process of increasing the knowledge, skills and abilities of employees for
doing a work. It is arranged for newly selected employees of the organization. Development
refers to the overall growth of the employees. Sometimes organization arranges separate
development programs for the existing employees for increasing their existing performance.

Q-16. What are the methods of training?

Ans. There are two methods of training.
a) On-the-job training (Arranges during the working time/environment)
b) Off-the-job training (Arranges in a separate place out of the work place)
Q-17. Define planning. Can you please clarify different types of planning?
Ans. Planning is the fundamental management function, which involves deciding beforehand,
what is to be done, when is it to be done, how it is to be done and who is going to do it.

Types of plan
a) On the basis of hierarchy
i. Corporate / strategic plan (long-term plan prepared by the top-level management)
ii. Tactical plan (Sub-division of the corporate plan to be implemented and prepared
by the middle-level management)
iii. Operational plan (Consistent with the tactical plan and prepared by the low-level
management)
b) On the basis of use
i. Single-use plan (Prepared for a specific purpose or non-repetitive activities or for
single use only. After completion of a defined objective, such a plan becomes
worthless)
ii. Standing use plan (Prepared for programmed decision-making situations and for
repetitive use)
c) On the basis of flexibility
i. Specific plan (Developed for a particular department or unit about the activities to
be performed, changes are not possible here)
ii. Flexible plan (Changeable on the basis of time and situation. It is not specific in
 terms of procedures and allocation of resources)

Q-18. Is controlling always done before or after the planning?

Ans. Both of these two are right. Generally, controlling is done after the planning to monitor
whether the functions are running according to plan or not. On the basis of this observation,
organization can make a change in the existing planning and make a new one. In that case, it can
be said that controlling is done before planning.

Q-19. How do you explain the concept ‘effectiveness and efficiency’ in decision
making?
Ans. Effectiveness is defined as the degree to which something is successful in producing a
desired result. It means doing the right things. Efficiency is defined as the ability to accomplish
something in a right way with the least amount of wasted time, money, and effort or competency
in performance.

Q-20. Do you know the name of “Scientific management Guru”?

Ans. Frederick Winslow Taylor. He is the father of scientific management.
Q-21. Do you know the name of “Modern management Guru”?
Ans. Though Peter Ferdinand Drucker is known as the father of modern management, actually
we know Henri Fayol as the guru or father of management for his tremendous contributions in
management.

Q-22. What are Frederick Taylor’s four principles of Scientific Management?

Ans. Frederick Taylor’s four principles of Scientific Management are:
a) Science, not the Rule of Thumb (Increase efficiency through scientific analysis)
b) Harmony, Not Discord (Harmonious relationship)
c) Mental Revolution (Management body and workers both should understand the value of
each other)
d) Cooperation, not Individualism (Mutual cooperation)
e) Development of Every Person to his Greatest Efficiency (Training)

Q-23. Do you know Henri Fayol and his book and 14 principles of
management?
Ans. Henri Fayol is known as the father of management. In his 1916 book, "Administration
Industrielle et Générale," he shared his experiences of managing a workforce. It was
written in French language. It was first translated into English in 1929 under the title of General
and Industrial Management. He gave us the famous 14 principles of management. Those are –
 i. Division of Work
ii. Authority and Responsibility
iii. Discipline
iv. Unity of Command
v. Unity of Direction
vi. Subordination of Individual Interest
vii. Remuneration
viii. Centralization
ix. Scalar Chain
x. Order
xi. Equity
xii. Stability
xiii. Initiative
xiv. Esprit de Corps

Q-24. Do you have any idea about Hawthorn Studies?

Ans. Elton Mayo developed Hawthorne Effect which suggested that workers’ productivity is not
only based on physical conditions, but some other things are related and employees are more
productive when they know their work is being observed, measured and studied.
Q-25. Who is the mother of modern management?
Ans. Lillian Gilbreth is the mother of modern management.

Q-26. Tell me who is a leader? Give us a brief idea about Leadership

Theories?
Ans. A leader is someone who inspires passion and motivation in followers.
a) Transformational Leadership Theory (Leaders motivate and inspire through their
enthusiasm and passion. They are a model for their teams, emphasizing a collaborative
work environment, communication skills, and efficient delegation.
b) Transactional Leadership Theory (Places great emphasis on structure, organization,
supervision, hierarchy, performance, and outcomes. The leader's main priorities are facilitating
tasks, assessing performance, and administering rewards or punishments)
c) Charismatic Leadership Theory (Charismatic leader is who uses his or her
communication skills, persuasiveness, and charm to influence others)
d) Fiedler's Contingency Theory (Effective leadership is contingent upon the specific
situation at hand. According to this theory, a leader can be effective in one circumstance and
ineffective in another. It simply depends on whether their leadership style fits the given
situation)
e) Great Man Theory (Have extra qualities like drive to achieve, desire to lead, integrity,
 confidence, political skills, etc.
f) Participative Theory (Teaches leaders to listen to their employees and involve them in the
decision-making process)

Q-27. Define career.

Ans. Career refers to a profession, occupation, position, trade etc. It is the variety of experiences
like- education, training, work experience etc. that a person has undertaken throughout his/her
life. 

Q-28. What do you know about performance appraisal?

Ans. Performance appraisal is the formal, systematic assessment of how well employees are
performing their jobs in relation to established standards.

Q-29. Can you please mention the stages of performance appraisal?

Ans. Yes, there are six stages of performance appraisal-
a) Establishing performance standards
b) Communicating the standards
c) Measure actual performance
d) Comparison of performance with standards
e) Discussion with employees about performance
f) Follow up action