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SYJC (XII)ORGANISATION OF COMMERCE

Marks : 80 PRELIMINARY TEST PAPER - 1 Date : 08.12.2019

Q.1 (A) Select the proper option from the option given below and rewrite the sentence.(1) Marketing (2) Valued(3) Card association (4) Flexible(5) French

(B) Match the correct pairs.

Group A Answers(1) Public company Min 7 members(2) Cold storage Perishable goods(3) Saving Account Salaried people(4) District judge President of district forum(5) Controlling Right people at right job

(C) Write one word or phrase or a term which can substitute each one of the following Statements.(1) Joint Stock Company (2) Claim(3) Business Ethics (4) Principles of Management(5) Entrepreneurship

Q.2 Distinguish between the following.(1) Partnership Firm and Joint Hindu Family Business

Sr. No.

Partnership Firm Joint Hindu Family Firm

Meaning(i) In this form of business

organization, two or more persons agree to undertake the business and share the profits / losses.

In this form of business organization, business is conducted by the members of Joint Hindu Family which is inherited by them as per the Hindu Law.

Formation(ii) Formation of a partnership firm can

be done when an agreement is formed between two or more persons who are competent to enter into an agreement.

Joint Hindu Family Firm is created by the operation of Hindu Law.

Regulating Law / Act(iii) It is governed by the Indian It is governed by the Hindu Law.

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SOLUTIONS


SYJC (XII)Partnership Act, 1932.

Management(iv) The management is divided

amongst all the partners. Every partner has a right to participate in the managerial activities.

Karta is the key person responsible for the management of the business. He may be assisted by the co-parceners to a limited extent.

Membership(v) Minimum two partners are required

to form a partnership firm. The maximum limit of partners in a firm conducting banking business is 10 and for a non-banking business, it is 20.

There is no limit on the number of members since the membership depends on the births and deaths in the family.

Liability(vi) The liability of all the partners of

the firm is unlimited.The liability of the Karta is unlimited whereas the liability of all the co-parceners is limited.

Minor Members(vii) A minor can be a partner only in

the profits of the firm, if the consent is given by all the other partners.

A minor becomes a member merely by birth in the family.

(2) Cheque and Bank Draft

Sr. No.

Cheque Bank Draft

Meaning(i) According to the Indian Negotiable

Instrument Act, a cheque is an unconditional order directing the banker to pay a certain sum of money only to the order of a certain person.

A bank draft is an order to pay money drawn by one office of a bank upon another office of the same bank for a sum of money payable to order on demand.

Aim(ii) The aim of a cheque is to facilitate

businessmen to make local payments.

The aim of a bank draft is to facilitate immediate outstation payments.

Drawer(iii) The account holder is the drawer of

the cheque.The bank is the drawer of a bank draft.

Dishonour(iv) In case of a cheque, there are In case of a draft, there are no

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SYJC (XII)chances of it being dishonoured. chances of it being dishonoured as

it is already paid for.Bank Charges

(v) The bank may or may not charge for issuing cheque books.

The bank charges a nominal amount to issue a draft.

Payments(vi) In case of crossed cheques,

payment is not obtained immediately.

In case of bank drafts, payment is obtained immediately.

Facility Extended to(vii) Cheque facility is available to the

account holders of the banks only.Draft facility is available to the account holders of the bank as well as outsiders.

Reliability(viii) There are chances of a cheque not

being cleared due to various reasons like sign not matching, post dated, less balance etc.

A bank draft is more reliable as it is issued by the bank only after the receipt of the payment.

(3) Private Company and Public Company

Sr. No.

Private Company Public Company

Meaning(i) According to Sec 3(I)(iii) of the

Companies Act, 1956, A private company is a company which by its articles restricts the right to transfer its shares, if any, limits the number of its members to 50 and prohibits any invitation from public to subscribe for any shares or debentures of the company.

According to Sec 3(I)(iv) of the Companies Act, 1956, A public company means a company which is not a private company. It has no restriction to transfer its shares and has no maximum limit for the number of members.

Number of Directors(ii) The minimum number of directors

in a private limited company is 2.The minimum number of directors in a public limited company is 3.

Invitation to subscribe to shares / debentures(iii) It cannot invite the public to

subscribe to shares or debentures of the company.

It can invite the public to subscribe to shares or debentures of the company.

Number of Members(iv) The minimum number of members

is 2 and maximum is 50.The minimum number of members is 7 & there is no maximum limit.

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SYJC (XII)

(v) It is compulsory to add the name ‘Private Limited’ after the name of the private company.

It is compulsory to add the word ‘limited’ after the name of the public company.

Issue of Prospectus(vi) It is not compulsory for a private

limited company to issue Prospectus / Statement in Lieu of Prospectus.

It is compulsory for a public company to issue Prospectus / Statement in Lieu of Prospectus.

Minimum Capital(vii) Minimum paid-up capital is one

lakh rupees.Minimum paid up capital is five lakh rupees.

(4) District Forum and State Commission

Sr. No.

District Forum State Commission

Meaning(1) It is a consumer dispute redressal

forum working at district level.It is a consumer dispute redressal forum working at state level.

Establishment(2) It is established by the State

Government.It is established by the State Government.

Composition(3) It consists of a President (who is or

has been or is qualified to be a District Judge) and minimum two other Members (one of whom shall be a woman).

It consists of a President (who is or has been a judge of a High Court is appointed by the state government, after consultation with the Chief Justice of the High Court) and minimum two members (one of whom shall be a woman).

Monetary Jurisdiction(4) Cases where the value of goods /

services and the compensation claimed, if any, is less than Rs.20 lakh.

Cases where value of goods / services and the compensation claimed, if any, is more than Rs.20 lakh and less than Re.1 crore.

Duration(5) Member shall hold office for term

of 5 years or up to the age of 65 years, whichever is earlier.

Member shall hold office for term of 5 years or up to the age of 67 years, whichever is earlier.

Nature of Complaints(6) Original cases within the local Original cases and appeals against

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SYJC (XII)limits of a district are entertained. the order of District Forum within

the geographical limits of state are entertained.

Area Covered(7) It covers a particular district. It covers a particular state.

(5) Organizing and Staffing

Sr. No.

Organizing Staffing

Meaning(i) Organizing is the process of

bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals.

Staffing is the process of recruitment, selection, development, training, promotion etc.

Objective / Purpose(ii) The main objective is to identify

and bring together all the resources.

The main objective is to select right person for right kind of job and at right time.

Order of Function(iii) It is the second function of

management. It comes after planning.

This function of management comes next to organizing as human resources are required for organization. It is the third function of management.

Area of Function(iv) It includes identification and

grouping of interrelated activities.It includes activities like recruitment, training, appraisals, promotions, transfers etc.

Factors(v) Internal as well as external factors

are considered for making arrangement of resources.

Mainly internal factors are taken into consideration while staffing.

Resources(vi) In this process, all the resources

needed such as men, money, machines, material, methods etc. are arranged.

It is concerned with human resources.

Nature(vii) It occurs till the time all the It is a continuous activity as it

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SYJC (XII)resources are collected together. deals not only with the process of

recruitment but also involves training, appraisal, motivation, etc.

Levels of Management(viii) Both top and middle level

managers are responsible for organizing the resources of the organization.

Middle level managers are responsible for selection, recruitment, training, promotion etc.

Q.3 Write short notes on any THREE of the following.(1) Features of Co–operative SocietiesAns. The features of Co-operative Society are as follows :

(i) Formation :– A Co-operative Society is a voluntary association of persons who come

together in order to achieve a certain common economic objective.– Registration of a co-operative society is compulsory. It has to be

registered under the relevant Act in each state.– For e.g. In Maharashtra, a co-operative society has to be registered

under the Maharashtra State Co-operative Societies Act, 1960.(ii) Management :

Democratic Management :– Co-operative organization follows democratic principles in the

management of the organization.– Every member of the organization is allowed to participate in the

management of the organization equally.– They day–to–day administration is done by the managing

committee, which is an elected body of representatives of its members. The managing committee lays the required rules & regulations for the co-operative society. These framed rules & regulations are known as ‘Bye-laws’.

Equal Voting Rights :– In co-operative societies, ‘One member one vote’ is the principle

followed in voting, giving all members equal voting rights, unlike in companies which follow the principle of ‘One share one vote’.

– Thus in this way, members with higher share capital cannot dominate their terms, making the co-operative societies fair and democratic in decision making and other business activities.

(iii) Membership :– A co-operative society is an association of person formed voluntarily.– A person from any caste, creed of religion can become a member of a

co-operative society by simply buying its shares.– The membership is open to all.

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SYJC (XII)– All the members work together towards a common goal which benefits

all the members.– It is managed and controlled on democratic principles.– In other words, it is not compulsory for anybody to join or leave a co-

operative society.(iv) Service Motive :

– Co-operative society is not formed with the intention of earning profits and accumulating wealth.

– Its main motto is to work in the interest of its members and to provide goods and services to them by treating every member at par with others.

– All members are equally treated irrespective of the number of shares held by them.

(v) Profits and Loss Sharing :– The co-operative society distributes a part of its profits as dividend and

bonus.– Out of any surplus profit remaining after the payment of dividend and

bonus, a part is transferred to the statutory reserve and the remaining balance is utilized for the welfare of the locality where the co-operative society is situated.

(vi) Liability :– The liability of members in a co-operative organization is limited to the

extent of the unpaid amount of shares which are held by them.– The personal properties of members cannot be used to pay off any

liabilities of the organization.(vii) Legal Status :

– A co-operative organization has an independent legal status different from its members.

– It is granted under the Co-operative Societies Act, 1912.– Thus, co-operative society enjoys stability and continuity.

(viii) Government Control :– Every co-operative society must be registered as per the relevant act

of the state according to the Co-operative Societies Act 1912.– They are subject to government control and supervision.– The government also provides them with various benefits and

concessions from time to time.(2) Nature of Principles of ManagementAns. Principles of management are the statements of fundamental truth which

provide guidance to the managers for taking managerial decisions and performing the managerial functions more effectively.These provide the managers a basis for decision making.

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SYJC (XII)The nature of principles of management is as follows : [Mnemonic : CAR-FIN](i) Cause and Effect Relationship :

– Principles of management help the managers in identifying the cause or the reason for a particular effect.

– For e.g. Roping a celebrity / an athlete to do an advertisement for the company’s product or service (cause), increases the company’s sales and also increases its share value in the market (effect).

(ii) Aims at Influencing Human Behaviour :– Management involves achieving the goals of the company through a

group of people.– In other words, management cannot be done in isolation.– Management principles are formed in a way that they can be used to

influence people.– The principles control and direct them to achieve the goals of the

organization.– For e.g. The manager treats all the team members fairly and takes

into account every individual’s style of working. He provides them the resources they need to carry out their work.

– Moreover, he even tries to bring out the creativity. This behaviour of the manager influences the employees by giving them the space they need and motivate them to achieve goals.

(iii) Relative in Nature :– Principles of management are relative in nature i.e. applied in different

ways in different situations.– They are not absolute like the principles of science.– They can be changed or modified as per the changing demand of the

situation.(iv) Flexible in Nature :

– Principles of management are not rigid in nature i.e. they can be changed according to the situation.

– Flexibility is required as different organizations come across different situations and circumstances.

– In other words, management principles can be changed or modified to meet the requirement of the various businesses in different situations.

(v) Hold Equal Importance :– All the principles of management are equally important in order to

obtain fruitful results.– Even if one principle is not followed by the manager, it may affect the

working of the organization.– All the principles should be simultaneously followed to achieve goals.

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SYJC (XII)(vi) Universal in Nature :

– Principles of management are universally applicable i.e. applied everywhere.

– They are applicable :in all types of business situationsin all types of organizations (large or small),to all levels of management (top level, middle level and lower level)

– For e.g. Sound management is not only required in large institutions / organizations like HDFC Bank, Reliance Ltd. etc. but its need arises even when managing a small eatery like the panipuri stall at Chowpatty.

(3) Advantages of e-businessAns. e-business means using the internet to connect people and processes for doing

business. It also includes providing service to customers and collaborating with business partners across the globe. The internet and the emergence of e-business has provided entrepreneurs with many new advantages. However, it has few limitations too.The advantages of e-business are as follows : [Mnemonic : B-AVENGERS2](i) Flexible Business Hours :

– The internet is accessible 24 x 7. This means that buyers and sellers can conduct transactions at any time as opposed to the regular trading hours of traditional business models.

(ii) Availability of Wide Range of Products :– Consumers have access to a broader range of products and services

from which they can select the products as per their choice.– For e.g. : flipkart.com, amazon.in etc. offer a wide range of services

and products to select from.(iii) Very Low Start Up Cost :

– The initial investment for starting an e-business is generally lower than the cost associated with starting the same business using a traditional model.

(iv) Quick and Easy Communication :– Through e-business, it is easier and faster for the business

organizations to communicate with their suppliers and their customers as there is no face-to-face interaction.

(v) No Physical Space :– e-business does not require physical space for operation.– It requires highly qualified technical professionals.

(vi) Government Support :e-business gets a lot of support from the government.

(vii) Establishes Strong Relationship :9


SYJC (XII)– e-business enables strong relationship building between suppliers and

consumers as there is direct contact between both the parties.(viii) Renders a Global Platform :

– e-business provides the business organizations with the opportunity to transact with buyers across the globe. It connects the consumers and the business organizations anywhere from the world through internet.

(ix) Easy Set Up :– It is very easy to set up e-business as compared to traditional business.

(x) Sound Communication :– e-business provides a platform for sound and direct communication

between suppliers and consumers.(4) Importance of OrganizingAns. Organizing refers to the process of bringing together physical, financial & human

resources and developing productive relationship amongst them for achievement of organizational goals.The importance of organizing is as follows : [Mnemonic : GD – SURFACES](i) Facilitates Growth :

– Organizing helps to bring in efficiency in the proper working of the organization.

– An organization’s growth is dependent on how efficiently and smoothly the employees of the organization work.

– Efficiency can be brought about by proper harmonization between authority and responsibility, by clarifying the work of the managers, by focusing on specialization, etc.

All this leads to growth and expansion of organization.(ii) Well Defined Jobs :

– Through organizing, jobs can be well defined.This is because; the organizing process helps in placing the right men in the right jobThey do so by selecting qualified, skilled and experienced people for various departments.

– This helps in clarifying the role and task of every person.(iii) Specialization :

– Organizing helps to bring in division of labour. Here, the tasks are divided among individuals and groups.

– As the employees keep on performing the task repeatedly, they attain efficiency, which ultimately results in specialization.

– Specialization ensures that maximum work is completed in minimum possible time.

– For e.g. : In an IT company like Hurix or NIIT, there are specialized people and groups, who are assigned different tasks viz. the content

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SYJC (XII)writers take care of content development, the programmers and integrators write the program codes, etc. As this job is done repeatedly by the employees, they get better in their work, which helps them complete their work faster and that too with efficiency.

(iv) Optimum Utilization of Resources :– While organizing, the principle of division of labour and specialization is

thoroughly applied.– This function further stresses to make optimum use of available

resources.Through this, the organization can ensure reduced wastages & mistakes; avoid overlapping of work, etc.

– For e.g. : The class had a few projects to complete on ‘Using Renewable Sources of Energy to lessen the impact of Global Warming’. Accordingly, the class was divided into groups. The work was divided, as per the skill and liking of the group member.It was divided as follows :Good at art – drawing and sketching; Good with computer-aided tasks – taking print outs, typing, etc; Good with language – creating content for the project; Good with craft – they come up with innovative ideas that can be implemented like using paper and other stationery materials to create a globe and miniature models of various sources of reusable energy, etc. Here, we can see that, if every student’s ability is used optimally, then there will be less wastage of time and material. Also, the end product will turn out to be a good one.

(v) Responsibility :– Organizing helps in fixing the responsibility of the employees of the

organization.– Here, the employee is assigned some responsibility of a specific task;

for which he is also given the authority of taking decisions with regard to that particular task.

– Now if the task is not completed properly, the employee will be held responsible.

(vi) Dynamic Function :– The process of organizing clearly defines the role and responsibilities of

a manager.– The managers have the authority as well as responsibility to carry out

the task assigned.– The manager can use his skill, talent, knowledge etc. and implement

new processes like introducing new techniques of production etc. to achieve the organizational goals.

Thus, organizing is a dynamic function.(vii) Proper Authority :

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SYJC (XII)– Organizing clearly defines the roles, responsibilities and authority

giving power of each and every position in the organization.– One is allowed to take decisions only to the extent of his authority

defined in the job description.– The managers should be clearly made aware of how they are expected

to exercise their authority.– This will ensure that there is no misuse of the power and position.– For e.g. A school teacher is not allowed to physically harm the

students in a class. Now, the teacher in case of mischievous behaviour of a student can’t harm him / her; but only guide and council the student.

(viii) Innovation and Creativity :– When the roles and responsibilities are clearly defined, an employee

knows exactly what is he supposed to do and how the task is to be performed.

– In order to accomplish the task efficiently, he will not only put in his best efforts but also come up with innovative ideas.

– To discharge his responsibilities, he will be given authority to take decision relating to his task. Due to which, he will be able to implement his innovative ideas.

(ix) Effective Administration :– While organizing, the principle of division of labour and specialization is

thoroughly applied.– The organization employs right men for the right job and at the right

time.– Due to which, the organization can bring in specialization. Also, the

goals can be easily achieved.– This leads to efficient and effective administration.

(x) Job Satisfaction :– Organizing aims at clearly defining jobs. Thus, employees are well in

advance made aware about what and how much is expected from them.

– Proper description of the job helps the employees get clarity about the task to be performed.

– This increases the job and mental satisfaction of the employees.(5) Principles of InsuranceAns. – In Insurance, two parties enter into a contract. Hence, it becomes important

that all the elements of a valid contract are contained in it.– Apart from this, the insurance contact should follow certain other principles

also.They are as follows : [Mnemonic : MUSI2C2]

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SYJC (XII)(i) Principle of Mitigation of Loss :

– This principle states that the insured should take all possible steps to minimize the loss of his insured property on the occurrence of any uncertain events like fire outbreak, blast etc.

– In other words, it becomes the insured’s responsibility to take all the necessary steps to prevent complete damage / loss of the insured property in case of any unforeseen events.

– For e.g. Mr. A has insured his house against fire. If Mr. A’s house is on fire due to an electric short circuit then Mr. A should take all possible measures to stop the fire and reduce its damage on the property. It is his responsibility to call the fire brigade and use fire extinguishers to reduce the damage. He must not remain inactive and watch his house burn, because it is insured.

(ii) Principle of Utmost Good Faith (Uberrimae Fidei) :– This principle stats that both the parties in the insurance involved in

the contract i.e. the insured and the insurer, should have good faith towards each other.

– They should disclose all the material facts regarding the subject matter of the insurance in a clear, correct and complete manner. Failing to which (i.e. by not disclosing / by hiding / by presenting in a wrong manner), the contract becomes void.

– This principle becomes more important in life insurance policies as the insurance company will decide based on the information disclosed whether to enter into the contract or not.

– For e.g. Mr. A takes a life insurance policy for himself for Rs.10 lakhs. While entering into the insurance contract, he did not disclose about his medical illness (heart problem). 2 years after taking the policy, Mr. A dies due to heart attack. The insurance company comes to know about the illness of Mr. A only after his death. In such a situation, the contract becomes void and the insurance company is not liable to pay any compensation to Mr. A’s dependents as Mr. A did not follow the principle of utmost good faith and did not disclose all the material facts.

(iii) Principle of Subrogation :– This principle states that once the insured has received compensation from

the insurer for the loss due to damage to the insured property; then the right of ownership of such property passes on to the insurer.

– This principle is corollary of the principle of indemnity and is applicable to all contracts of indemnity.

– This principle is applicable only when the property has any remaining value after it has been damaged.

– The insurer can recover the loss in full or in part from a third party, due to whose negligence the loss may have occurred.

– However, the insurer can benefit out of the subrogation rights only to the extent of the amount he pays as compensation to the insured.

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SYJC (XII)For e.g. :– A person has insured his furniture for Rs.50,000 against fire and a part of the

furniture was destroyed by fire. The actual loss incurred by the insured was Rs.35,000. The insurance company will pay Rs.50,000 as compensation and the charge of the remaining furniture will be taken over by the insurer.

– Mr. A insures his house for Re.1 crore. The house is destroyed completely due to the negligence of his neighbour Mr. B. In such a situation, the insurer shall settle the claim of Re.1 crore of Mr. A. The insurer can then file a lawsuit against Mr. B for causing the damage to the amount of Rs.1.2 crores, the market value of the house. Once the insurer collects the Rs.1.2 crore from Mr. B, the insurer can retain Re.1 crore (paid to Mr. A as compensation) and also other expenses such as court fees etc. The balance amount if any will be given to Mr. A, the isured.

(iv) Principle of Indemnity :– Indemnity refers to compensate.– It is an assurance provided by the insurer to the insured, to make good the

loss that the insured has suffered.– However, an insurance contract does not cover the risk of losses due to future

uncertainties arising due to changing business environment / market conditions.

The applicability of this principle is as follows :– In case of marine, fire and general insurance, the compensation amount is

limited to the amount assured or the actual incurred loss, whichever is less.– This principle does not apply to life insurance policies as the value of human

life cannot be measured inters of money.– For e.g. If a person has insured his house for Rs.3 lacs and it is destroyed by

fire, due to which, the insurer has suffered a loss of Rs.2 lacs. In such a situation, the insurer will be paid the amount of actual loss i.e. Rs.2 lacs.

(v) Principle of Insurable Interest :– As per this principle, the person taking the insurance must have insurable

interest (financially) in the subject matter that is to be insured.– The subject matter of insurance must be a physical object which is subject to

risk.– Insurable interest in life insurance refers to the life insured. In Fire and

General Insurance, the insurable interest must be present at the time of making the policy and also at the time of occurrence of the loss. In Marine Insurance, the insurable interest exists only at the time of the occurrence of the loss.

– Following are the examples to understand the principle insurable interest :A person has insurable interest in his own life and property;

A wife has insurable interest in the life of her husband;

A businessman has insurable interest in the goods and property of his business;

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SYJC (XII)A creditor has insurable interest in the life of the debtors to the extent of loan given;

In a partnership firm, a partner has insurable interest in the life of the other partners of the firm; etc.

– If there is no insurable interest, then the contract of insurance becomes invalid.

– Here, ownership of the property at the time of taking a claim as well as at the time of making the claim is essential.

– For e.g. Owner of a car has insurable interest in his car and hence insures his car. If he sells off the car he ceases to be the owner of the car and thus, does not have any insurable interest. Hence, the contract of insurance becomes invalid.

(vi) Principle of Contribution :– This principle is a corollary (result / outcome) of the Principle of Indemnity.– All contracts of indemnity have to follow this principle.– This principle is applicable to the insured who has taken more than one

insurance policy for the same subject matter.– Here, the insured can claim compensation only to the extent of actual loss

suffered by him either from any one or all insurers.– If one insurer pays full compensation then that insurer can claim

proportionate claim amount from the other insurers.For e.g. :– Mr. A insures his house worth Rs.60 lakhs with three insurance companies. X

Co. Ltd. – Rs.10 lacs, Y Co. Ltd. – Rs.20 lacs and Z Co Ltd. – Rs.30 lacs. So if Mr. A incurs loss due to any damage to his house, then the compensation will be paid by the three insurance companies in the ratio 1 : 2 : 3.

– Mr. S insures his property worth Rs.1 lakh with two insurers. A Co. Ltd. for Rs.90,000 and with B Co. Ltd. for Rs.60,000. If the value of the actual property destroyed is Rs.60,000, then Mr. S can claim the full loss of Rs.60,000 from either A. Co. Ltd. or B. Co. Ltd. or he can claim Rs.36,000 from A. Co. Ltd. and Rs.24,000 from B. Com Ltd. in the ratio of 3:2.

(vii) Principle of Causa-Proxima (Nearest Cause) :– As per this principle, if the loss is caused by more than one reasons then, the

cause that is proximate (closest) or immediate must be considered.The property may be insured against some causes and not all the causes.– If the proximate cause for the loss is a cause insured against, then the

insured can recover the compensation from the insurance company.– For e.g. A ship was insured against losses resulting from collision. There was

a collision and the ship was delayed by few days. Due to this delay, its cargo containing of mangoes became rotten and unfit for consumption. The loss was caused due to two causes, delay and collision. In this case, the proximate cause for loss was delay which led to damage to the cargo. Since the ship was

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SYJC (XII)insured against losses due to collision and not due to delay; the insured cannot claim for any compensation from the insurer.

Q.4 State with reasons whether the following statement are true or false.(1) Frederick Taylor has proposed 'Different Piece Rate Plan' for remunerating

workers.Ans. The above given statement is 'TRUE'. The reason for the same is as under:

According to this technique, payment made to a worker should be linked to his performance.

Efficient workers should be paid more as compared to the inefficient ones. In this method, a standard production unit is fixed for production. Workers who produce more than the standard are paid more in the form of

incentive and those who produce less than the standard are paid less as penalty.

This system encourages good performers and motivates under-performers. Hence, he has proposed 'Different Piece Rate Plan' for motivating workers.

(2) Internal values are not important for an entrepreneur.Ans. The above given statement is 'FALSE'. The reason for the same is as under:

Internal values are associated with self-confidence and believing in themselves.

It is very important for the person who starts his business to have self-confidence.

If he has faith in his abilities, only then others will trust him. Hence, internal values are extremely important for an entrepreneur. Entrepreneurs, especially budding and new entrepreneurs, usually

demonstrate high level of internal values as Compared to non-entrepreneurs.(3) Ethics is a branch of politics.Ans. The above given statement is "FALSE". The correct statement is "Ethics is a

branch of social science". The reason for the same is as under: Dr. C. B. Manoria defines ethics as "Businessmen integrity so far as his

conduct or behavior is concerned in all fields of business as well as towards the society and other business".

Business ethics refers to system of moral principles or rules of conduct applied to business activities or operations.

Business ethics is also known as "corporate ethics". It is a form of "applied" or "professional"_ ethics that examines ethical principles and morals.

It examines the given circumstances and suggests the right path in case of dilemma (difficulty).

Ethics basically means to differentiate between what is good and what is bad, what to do and what not to d0

Ethics define what is morally correct, irrespective of its impact on profits of the company.

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SYJC (XII) Thus, ethics deals with human behavior. Hence, it is a branch of social science and not politics.

(4) Post offices provide money remittance services. (Mar' 16)Ans. The above statement is "TRUE". The reasons for the same are as under:

Apart from the basic service of delivering letters and parcels from sender to receiver, the post offices provide a variety of other service.

One of the services provided by post offices is money remittance service wherein money can be transferred from one person/place to another person/place.

The following are the modes of money transfer: money order international money order Foreign exchange services Instant money order money gram etcthus in above modes post offices provides us money remittance services

(5) The Consumer Protection Act was passed in the interest of the sellers.Ans. The above given statement is 'FALSE'. The correct statement is "The Consumer

Protection Act was passed in the interest of the consumers". The reason for the same is as under The Consumer Protection Act came into existence in the year 1986. This Act prescribes the rights of the consumers. They are protected & have

the power to enforce these rights. Besides, this Act provides quasi judiciary machinery and can solve all the

grievances of the consumer. The consumer courts formed under this Act follow simple procedures and as a

result delays are avoided. These courts hear complaints regarding damages cause by unfair trade

practices, unsatisfactory services, defective products, unsafe products etc. It has also provided for the establishment of three-tier quasi- judicial

consumer redressal machinery at the district, state and national level The Consumer Protection Act has proved to be a boon for consumers because

under this Act they can file a suit against any manufacturer or seller in case of loss due to fault in their product or service.

All the above points are in favour of consumers and not the sellers. Hence, the Consumer Protection Act was passed in the interest of consumers.

Q.5 Attempt the following.(1) What are the functions and need of an entrepreneur?Ans. An entrepreneur is the one who has the skills to identify an opportunity or come

up with a new idea and knows how to make profit by utilizing that idea or

17


SYJC (XII)opportunity. He has the initiative to take an idea forward; execute it; bear the risk and earn profit.Functions and Need of an Entrepreneur :The functions and need of an entrepreneur are stated below : [Mnemonic : D2IG – ROAD](i) Determination of Objectives :

– An entrepreneur has to clearly set the aims and objectives of the enterprise.

– Along with this, he also needs to ensure that they are flexible in nature so that he can change them as the situation demands.

Good to Know : Dhirubhai Ambani had dreamed of making phone calls affordable to

every Indian. In the year 2003, his son, Anil Ambani achieved this dream through the

project Reliance India Mobile by offering cheapest call rates at 40 paise per minute from reliance to reliance in addition to many other offers.

(ii) Taking Decisions :– An entrepreneur has to take wise business decisions as it can impact

the future of the company.– To ensure success, he needs to back up his decision by a proper plan.

(iii) Innovation :– In layman’s language, innovation refers to renew or to create.– Innovation may include :

Introducing a new effective process; or

Introducing a new product; or

A new way of doing the same thing.

– The entrepreneur has to be an innovator and he must try & create new ways to make the enterprise more profitable.

Good to Know : 3Doodler is the world’s first 3D printing pen which helps to draw in 3D

by releasing heated plastic filament that cools almost instantly into a solid.

By using this pen, one can draw up into the air and create anything which he / she can think of.

Few stuff that can be made by using this pen are an architectural model, decorations, jewellery, etc.

(iv) Good Relations :– In today’s modern business culture, the entrepreneur has to maintain

sound relation with the customers, employees, subordinates, etc.

18


SYJC (XII)– This is important as the success of an enterprise largely depends on

the way it maintains the relation with others.(v) Risk Bearer :

– Risk and uncertainty are a part of any business activity.– There are two kinds of risks involved in business viz. Insurable and

Non-Insurable.– The insurable risks can be handled by insurance policies.– However, the entrepreneur must manage the non-insurable risks

effectively by using adequate skills and good judgment.

Good to Know : The film Ajooba (1991), produced and directed by Shashi Kappor, was

made on a very large budget assuming that it will fetch a good business.

It was huge risk taken by Mr. Shashi Kapoor. But unfortunately, it failed to make profits on the box office.

The losses were so high that Shashi Kapoor had to shut down his film production company.

(vi) Organizing Funds :– Finance is the life line of any enterprise, without which its survival is

endangered. Thus, the entrepreneur must ensure that sufficient funds are available so that the enterprise functions smoothly.

– For this, he has to maintain good relations with the existing and potential investors.

Good to Know : Before February 2004, Mark Zuckerberg and Eduardo Saverin bore all

the cost to ensure proper functioning of the website “facebook.com”. Thereafter, they got their first funding of $500,000 from an investor

called Peter Thiel who later acquired a 10.2% stake in the company in 2004.

(vii) Acquiring New Technology :– Only one thing stays constant i.e. ‘CHANGE’.– Technology changes rapidly.– An entrepreneur has to be aware of the new and latest technology in

the market so that he can upgrade the machinery and equipments of the enterprise. This is also important from the viewpoint of competition.

– For e.g. Now-a-days, many builders have started providing a very unique feature of “Home Automation” to it’s clients. Usually, home automation includes centralized control of lighting, HVAC (heating, ventilation and air conditioning), appliances, security locks of gates and doors and other systems. It’s main aim is to provide improved convenience, comfort, energy efficiency and security.

19


SYJC (XII)(viii) Development of Market :

– The entrepreneur after understanding the need of the consumers, should try to launch the desired products so as to suffice their demand.

– Along with this, he must also try to develop a market of his own by launching new and different products at regular intervals.

Good to Know : Initially, Amazon used to deal only in the selling of books. Later, it

decided to expand it’s market by offering a huge range of products. Amazon now justifies it’s logo i.e. by offering everything from A to Z. (The arrow connecting the two letters “A and Z” in its LOGO).

Functions of entrepreneurs as per Economist Kilby Peter :Kilby Peter was an economist who has enumerated 13 functions of an entrepreneur which are important for the success of any enterprise. They are stated as below:– Perception of market opportunities.– Gaining command over scarce resources.– Purchasing Inputs.– Marketing of products and responding to the competition.– Dealing with the public bureaucracy.– Managing human resources of the firm.– Management of consumer and supplier relations.– Financial management.– Managing production.– Acquiring and overseeing – assembly of factory.– Industrial engineering.– Upgrading process and product quality.– Introduction of new production techniques and products.

(2) Explain in detail the right of consumers.Ans. Meaning of Consumer : Any person who consumes or uses any commodity or

service available to him either from natural resources or through the market is known as a Consumer.Rights of Consumers : [Mnemonic : PS – SHE is RICH]– On 15th March, 1962, the then President of U.S.A. declared some of the rights

of the consumer (Right to safety, Right to information, Right to choose, Right to be heard). Since then, this day is observed as “Consumer Rights Day”.

– Later on, other rights were added to these four by the International Organization of Consumers’ Union.

– The Consumer Protection Act passed by the Indian Government in the year 1986 incorporates these rights of the consumers.

20


SYJC (XII)– It later added two more rights viz. ‘Right to protect against unfair trade

practices’ in 1993 and ‘Right to protect against spurious goods’ in 2002 by passing the Amendment Act.

(i) Right to protect against Unfair Trade Practices :– This right protects the consumers against any unfair trade practices

like wrong measurements, artificial shortages, overpricing, selling sub-standard goods, etc.

– This right was incorporated by the Amendment Act, 1993.(ii) Right to Safety :

– This right safeguards the consumers against marketing of those goods / services which are hazardous to their life and property.

– In other words, the trader has to ensure that the goods sold will not cause any damage to consumers’ life and property.

– The manufacturer has to give clear instructions to consumers on how to use the goods and also the risk involved in case the goods sold are hazardous in nature.

– Post selling, if the manufacturer realizes that the product is unsafe, he must recall the defective product from the market or implement necessary modifications to make the product safe; and compensate the consumer in case of any damages caused by the product.

– For e.g. Chemists should not sell medicines after the expiry date or a hotel owner should not serve food that is stale.

Good to Know : In the month of November 2015, about 8,00,000 Volkswagen cars were

called back as they were found to have “inconsistencies” related to carbon dioxide emissions.

The manufacturer post recalling the cars, assured to fix the problems free of cost.

(iii) Right to protect against Spurious Goods :– This right protects the consumers against marketing of spurious (fake /

bogus) and hazardous goods; which are harmful to the health or pose a danger to life.

– This right has been added to the Consumer Protection Act by the Amendment Act, 2002.

Good to Know : Maharashtra Government extended the ban on chewable tobacco for

one more year (from July 20, 2015). FDA’s notification mentions that it’s consumption may cause oral

cancer, stomach cancer, cause respiratory ailments, etc.

(iv) Right to Heard :– Through this right, the consumers are enabled to express their views

about the product / service bought.21


SYJC (XII)– Here, if the consumers feel that they have been cheated, they can file

a complaint about the product / service at the appropriate forums so that they receive due consideration.

– For e.g. If an advertisement on TV promises free home delivery of an article but at the time of delivery, the company refuses to deliver the product without payment of delivery charges then the consumer has a right to file a suit against the seller for providing misleading information through the advertisement.

(v) Right to Education :– Through this right, the consumers are well informed about their rights,

market practices and the remedies available to them.– Consumer education makes consumers aware about the unfair trade

practices and ways in which they can protect themselves.– The Government, Media as well as NGO’s can play a major role in

educating consumers.– For e.g. Jago Grahak Jago Campaign.

(vi) Right to Redressal :– This right enables a consumer to seek redressal for his complaints

against unfair trade practices / exploitation. Only the right to be heard is not sufficient, thus the “Right to Redressal” has been recognized to give due justice.

– This right provides a legal platform for attending and redressing the complaints of the consumers so that they get a fair settlement for their grievances.

– The redressal is done through the Consumer Protection Act, 1986 under which the District Forum, State Commission and National Commission are established.

(vii) Right to Information :– This right gives every consumer the right to get appropriate

information about the quality, quantity, purity, price, ingredients, manufacturing date, expiry date, etc. of the product purchased.

– The right also stresses to provide proper instructions on how to use the product and the risk involved in using it.

– Also, it ensures that the electronic products are sold with a proper user manual.

– Moreover, this right assures the safety of both, the consumers as well as the product, and it also helps the consumers in selecting the right product.

Good to Know : As per Sec 7 of Cigarettes and Other tobacco products (Prohibition of

Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 or COTPA deals with “Display of pictorial health warning on all tobacco products packets”.

22


SYJC (XII) The act prohibits the production, sale and import of cigarettes / other

tobacco product unless the product bears pictorial warnings on its label covering at least 40% of the package.

(viii) Right to Choose :– This right assures the consumer the right to select a product or service

as per his need and budget out of a variety of products at a competitive price.

– The right also restricts monopolistic tendencies in the market so that no sellers can compel the consumers to buy a particular product / service.

– Many-a-times, sellers make use of pressure tactics for selling poor quality products. However, the final decision lies with the buyer as the seller can just suggest to buy but can’t force the buyer.

(ix) Right to Healthy Environment :– A consumer has a right to live in a clean and healthy environment.– If any company, during its manufacturing process, is creating any type

of pollution in the environment, then the society has the right to object.– A ‘Public Interest Litigation’ can be filed against such companies to

stop the degradation of the environment.(3) State any 5 principles of management given by Henry Fayol.Ans. Henry Fayol was a French mining engineer who later worked as a director of the

mines and after conducting many experiments, he developed the 14 principles of management. Henry Fayol has made significant contributions to management and is therefore known as “The Father of Modern Management”. The management principles are explained in his famous book “General and Industrial Administration”.Stated below are the principles laid down by Fayol :(i) Principle of Division of Work :

– As per this principle, the total work should be divided into small sub-parts and the divided work should be assigned to different employees depending on their skills, interest and capacities.

– According to Fayol, when a sub-part of work is assigned to an employee, his productivity increases leading to specialization.

– For e.g. At any Dominos Pizza outlet, you can see that there are two counters. At one counter, orders are taken and at the other billing work is done. The order is then passed to the kitchen staff. The cook prepares the pizza and sends it back to the counter. Here, if we see, each one is assigned a task as per the skill and capacity. Due to this division of work, the task of delivering the pizza is completed faster and more efficiently.

(ii) Principle of Authority and Responsibility :– When a task is assigned to a person, he should be given the authority

to make the decisions related to that task.23


SYJC (XII)– This is required so that the task can be completed properly.– At the same time, the person who has been assigned the task also

needs to take responsibility for the completion of the task.– In other words, authority and responsibility always go hand-in-hand

and if a manager has been given the authority to complete a task within a given time, it is the responsibility of the manager, to complete that task within that particular time.

Good to Know : Sachin Tendulkar was the captain of the Indian team from 1996-2000.

He was given the authority to select players for his team and device his own strategies for the game. As a captain, he also had the responsibility to keep a check on his team’s performance. Unfortunately, the team won only four matches and lost nine. He was held responsible for India’s defeat.

(iii) Principle of Discipline :– As per Fayol, Discipline is the most essential attribute in an

organization.– Employees must obey and respect the rules of the organization.– Discipline helps in achieving organizational goals.– Sound discipline is a result of effective leadership.– The rules and regulations of the organization should be clearly

understood by the managers and employees in order to ensure proper discipline.

– Few examples with regards to discipline are :In schools, teachers are not supposed to dress casually and have to report on time.Companies have a register and / or a biometric login, which employees have to update at the beginning and at the end of the day.

(iv) Principle of Unity of Command :

One man one boss One man many bosses(Right method) (Wrong method)

– The principle of unity of command emphasizes that in an organization, every employee should receive orders from only one superior (manager).

– This is applicable at all levels of management.

24


SYJC (XII)– If an employee is given orders by more than one superior, he will be

confused and this will in turn affect his performance.– Instead, if the employee gets orders from only one superior, he will be

able to perform the tasks effectively and efficiently.– For e.g. In the police department, a constable will take orders from

the sub-inspector and the sub-inspector from the inspector and so on.(v) Principle of Unity of Direction :

– This principle states that a group working with the same objective should be directed by a single person and everyone in the group should follow one plan.

– In unity of command, the principle states that one person should get instructions from one superior, but the Unity of direction speaks about a group or team.

– For e.g. The sales target of a company is 500 units. This will be the target of the entire sales team. In this case, the sales manager should make one plan for achieving the target and each sales executive should follow the directions of the sales manager. All sales executives should work as per the plan made by the sales manager.

(vi) Principle of Subordination of Individual Interest to General Interest :– As per this principle, the interest of the organization should be given

more importance than the interest of an individual.– A manager should always consider the interest of a whole group than

that of a single person.– Similarly, the employee should also give importance to the

organization’s interest first and then to his own interest.– If the organization makes progress, it will eventually lead to the

progress of the employee.

Good to Know : During the filming of the song, “Kaante nahin kat te” in the movie ‘Mr.

India’, Sridevi was burning with a fever of over 1000 F. She overlooked her health and gave a mesmerizing performance. She did that as the shoot for the song had to be completed on that day.

(vii) Principle of Remuneration :– As per this principle, the employees should be paid fair wages based on

their skill, expertise, knowledge, tenure, experience etc.– This is needed as employees show better productivity and perform

more efficiently when they are paid fair remuneration.– Moreover, this keeps them motivated and satisfied with the job.

(viii) Principle of Centralization :– Centralization refers to the concentration of power or authority.

25


SYJC (XII)– Generally, in small organizations the power / authority usually lies with

an individual/a group of individuals.– However, centralization becomes difficult in large organizations as

there the power / authority needs to be decentralized i.e., authority is given to different people like departmental heads, managers, etc. who are responsible for the tasks assigned.

– As per this principle, there should be a proper balance between the centralization and decentralization of authority and it should be done on the basis of the size of the organization, nature of the business etc.

(ix) Principle of Scalar Chain :– As per the principle of scalar chain, the communication system in an

organization flows in an orderly manner i.e. from top level to middle level and then to lower level and vice versa.

– For e.g. Communication from the departmental head to the supervisor and further from the supervisor to the foreman and from the foreman to the workers. Similar flow of communication is also followed when the information is to be passed in the reverse order i.e., from the workers to the departmental head.

– However, this process is time consuming and there exists a chance that the exact message may not reach the end person in the chain.

– Hence, sometimes cross communication (communication which is not as per the chain) should be allowed.

– This deviation from the standard process is known as ‘Gang Plan’, which helps in avoiding delays. But, it should be executed with prior and proper permission from respective authorities.

Time Consuming Communication Time saving with the permission (Scalar Chain) of the boss (Gang Plank)

(x) Principle of Order :– As per this principle, manpower and material should be placed

properly, in their right place at the right time.– In other words, all the material of the organization should have a

proper place and the manpower should be appointed for the right job at the right time.

– This in turn, ensures proper utilization of physical and human resources.

26


SYJC (XII)(xi) Principle of Equity :

– As per this principle, all the employees should be treated equally and in a fair manner.

– The principle further explains that managers should not discriminate between employees and should be kind and fair to all their subordinates.

– The work should be divided equally between the subordinates to the extent possible and there should be no difference in the wages paid to the employees at the same level even though, they are in different departments.

(xii) Principle of Stability of Tenure :– As per this principle, when managers are selecting employees for a job,

they should give them assurance for stability of their tenure with the organization.

– This would give them a feeling of job security.– Through this, the employee will take responsibility of the task assigned

and put in his maximum efforts.– Also, employees will get a sense of belonging towards the organization.

Good to Know : During the recession period, which started in 2007, in the UK and USA,

companies were cutting cost by firing employees. The employed ones were in constant fear of losing their jobs, because of which, they were not able to deliver their best.

(xiii) Principle of Initiative :– Initiative means thinking of new ideas or taking the first step.– As per this principle, workers should be encouraged to come up with

new ideas and suggestions as it motivates them to perform better.– Also involvement of employees in the process of decision making,

makes them feel responsible for the successful implementation of the decision.

– Thus, participation of workers in the process of decision making is favorable for both, the employees as well as the organization.

(xiv) Principle of Esprit de corpse :– Esprit de corpse means ‘union is strength’.– As per this principle, manager should encourage the spirit of team work

and unity among his team members.– Through team work and unity, the goals of the organization can be

achieved easily.(4) What is the need for Social Responsibility.Ans. A business operates within the society i.e. it uses various factors and resources

from the society that are required for conducting business. It is thus, required to

27


SYJC (XII)maintain a balance between profit-making and its duty towards the society. In other words, the business unit should perform its due towards the welfare of society.The below points explains the need for social responsibility : [Mnemonic : 3G – PURPLE – CUT](i) Growth of Consumer Movement :

– Consumer movement is a movement organized by the consumers against business malpractices.

– This movement protects consumers from unfair trade practices.– It is the responsibility of the organization to provide best quality

products at a reasonable price.– This movement has made different organizations perform their social

responsibilities well.(ii) Government Control :

– The government allows the business firms to operate in the society and conduct the operations.

– However, the firm should ensure that they don’t resort to any harmful practice; which would affect the society.

– Thus, the government has enacted several laws such as The Consumer Protection Act, Air Pollution Act, Food Adulteration Act etc. to ensure that businesses fulfill their moral and social responsibilities.

– Government, through these laws, attempts to create a favourable atmosphere which promotes economic and industrial growth.

Good to Know : The recent Maggi controversy is an example of strict governmental

laws against food adulteration and false labeling. Traces of monosodium glutamate (MSG) were found in magi noodles according to the laboratory tests done by the FDA in Gorakhpur against Nestle’s claim that magi had non. On June 5, 2015, the Food Safety & Standards Authority of India (FSSAI) ordered Nestle to withdraw all the nine variants of magi noodles from the stores nation-wide. In another test conducted in the Kolkata laboratory, it was found that magi contained 17.2 parts per million (ppm) of lead, which is way beyond the permissible level of 2.5 ppm. Only after tests of the new production, the court lifted orders on the ban and magi was allowed to start its sale.

(iii) Globalization :– Through New Economic Policy, 1991, lot of companies entered the

Indian market and similarly, many Indian companies were granted permission of going abroad and sell their products / service.

– International trade barriers among different countries have also reduced; which has resulted in the creation of global markets for goods and services.

28


SYJC (XII)– Various countries like Japan, England and Germany have adopted good

social practices and are influencing and motivating other countries to do the same.

(iv) Environment Protection :– Businesses depend on the society for a variety of natural resources and

infrastructural facilities like roads, power, water supply, etc. So, it becomes their responsibility to use them appropriately.

– They should not cause pollution or create an ecological imbalance.– They should adopt eco-friendly practices.

Good to Know : One of the CSR initiatives by L & T is the 2 x 700 megawatt (MW)

power plant in Rajpura district of Punjab. It is one of the most eco-friendly thermal plants in India, which supplies megawatt to the state of Punjab and provides power to the industries. L & T has also constructed a multi-tiered water conservation system in Rajpura. This includes two storage tanks, filtration chamber and a recharge-well for harvesting rain water and facilitating artificial recharge.

(v) Optimum Utilization of Resources :– Large business organizations have huge resources, in terms of finance,

manpower, expertise, talent etc.– They are, however, expected to utilize these resources appropriately

and avoid wastage.– The surplus resources can be used for the welfare of the society.

(vi) Role of Media :– Media of a country has a strong influence on its people.– In modern times, the reach of media has increased through internet

and other technologies.– It has become powerful in creating awareness regarding malpractices.Hence, it has become mandatory for the organizations to fulfill its social responsibilities.

(vii) Projecting Favourable Public Image :– Any business which fulfills its social responsibilities well, will produce

for itself a good reputation in the market.– This helps in earning a sound public image.– In other words, an organization who cares for its employees, customers

and society will earn respect and gain support from public.(viii) Long Term Self Interest :

– If any business organization does not fulfill their social responsibilities, it may be difficult for them to survive in the long run.

– If not taken care of, then:employees may lack motivation;

29


SYJC (XII)investors and shareholders will not be interested in investing further in the business and customers may not be keen to buy the products of such companies.

(ix) Changing Expectations of Society :– The world is changing rapidly.– People are aware of their rights and their overall knowledge has also

increased.– As a result, a change is seen in their expectations and social demands.– Corporate sector should positively respond to these demands and

expectations; as they exist and grow with the support of the society. They should not undertake activities that are harmful for the society.

(x) Complexities of Social Problems :– The world is facing complex problems which are increasing every day.– The government is burdened with social problems like child labour,

inadequate facilities to the poor, flood and earthquake affected people, etc and has limited resources to deal with them all.

– So, the government seeks help from organizations to solve the problems.

Good to Know : During the recent floods in Chennai, in December 2015; Zomato

launched a “Meal for flood relief” wherein anytime someone bought a meal for a flood victim, Zomato added another meal to it. Zomato delivered 30,000 meals for 15,000 paid meals to the flood victims.

Similarly, Vodafone launched a service to help find missing people. With the help of “Trace Your Loved One” program, customers were able to call through a special helpline number and provide the phone number of the missing person. Vodafone would then sent them a text within two hours with the details of the missing person’s last tracked location.

(xi) Trade Unions Pressure :– There have been changes in the mindset of the employees over the

past few years.– They are now becoming aware of their rights and privileges.– Poor management of rights and privileges may result in conflicts

between he employees and the management.– Hence, to avoid such conflicts, the management should understand

and fulfill their responsibilities towards the employees.(xii) Concept of Trusteeship :

– A business organization operates within the society and thus, forms a part of the society.

– Activity which are not good for public are not good for the business too.

30


SYJC (XII)– Business is a social Venture and businessmen are like the trustees of

the society. This is the concept of Trusteeship.– The principle of Trusteeship says, “A business must be held in trust,

legally and morally for the benefit of the people”.Q.6 What factors are to be considered before starting a business? What factors are to be

considered for selection of suitable form of business organization.Ans. Before starting a new business, there are various important factors that needs to be

considered as these factors contribute towards the success or failure of a business. The factors that need to be considered for starting a business are as follows : [Mnemonic : BIRTHFUL](i) Form of Business Organization :

– An entrepreneur has to consider the type of business before starting his venture.

– Various factors like the personal capacity of the entrepreneur to manage and control the business, investment required, risk factors, continuity and stability, government control, tax liability, business secrecy, flexibility, etc. should be considered.

(ii) Identification of Business Opportunity :– It is very important to first understand the business environment.– A systematic approach to understand the environment is the ;SWOT’ analysis

i.e. strength, weakness, opportunity and threat.– An understanding of the external environment in terms of opportunities and

threats and the internal environment in terms of strength and weakness is important for the existence, growth and profitability of the organization.

(iii) Raw Material :– When starting a new business, a vital factor that needs to be considered is

the availability of raw materials.– Also the type, quality, quantity, delivery time and cost of raw materials is also

required to be considered.(iv) Technology and Equipment :

– Use of latest technology and equipment enables an organization to produce improved quality of goods and services.

– It also results in cost savings for the organization.– Therefore, selection of the right technology and equipment is very important

for an organization.(v) Human Resources :

– Manpower is the most important factor for any business as it is manpower that is required to manage the other factors for production.

– Hence, without manpower all other factors are useless.– Therefore,, while starting a new business, factors concerning manpower need

to be considered, like the requirement of skilled and semi-skilled manpower, its availability and cost, etc.

31


SYJC (XII)(vi) Financial Planning :

– For the running of any business, capital is needed.– Capital is required for purchase of fixed assets and other operational

expenses.– Hence, while starting a new business, it is necessary to have proper financial

resources.(vii) Utilities :

– A variety of utilities like power, water, fuel, steam and other consumables is required for starting a business.

– Therefore, necessary clearances from various government authorities like Pollution Control Board etc. are required before starting an enterprise.

(viii) Selection of Location :– Location of business plays an important role in the success of a business.– In case of a manufacturing business, the availability of raw materials, skilled

personnel, electricity, climatic conditions, transport, etc. has to be considered.

– In case of a service oriented business (for e.g.: a grocery store, restaurant), the skills and knowledge base of people near the store should be considered.

– Transportation, banking facilities etc. also influence the selection of the location for the business.

ORWhat are the various modes or personal communication? Explain in detail the mail services and specialized mail services provided by Indian Post.

Ans. The postal services were originated due to the requirement of communicating written messages. Initially, written messages were sent from one place to another through persons who were known as “runners”. In India, till 1837, postal service was used only for sending official mail. Post 1837, the postal services were opened for the public as well.Indian Postal Services :– The Department of Post comes under the Ministry of Communication and

Information Technology.– Postal services are administered by Government of India throughout the country

and hence charges for all the services are minimal which are affordable to a common man.

– The postal network in India is the largest in the world. With over 1,55,333 post offices, the Indian post employs over half a million people and serves over 300 million customers each year.

– Postal services include carrying letters and parcels, arranging remittance of money, accepting deposit from public, etc.

The various types of postal services are as follows :Mail Services : One of the main services provided by the postal department is mail services. Post offices deal with collection of letters and parcels from the sender which is

32


SYJC (XII)then distributed amongst the receivers. Indian postal service deals with both domestic / inland as well as international mails.The various types of mail services are : [Mnemonic : TP2 – BITE](i) Telegrams :

– Telegram is a very quick mode of sending messages over long distances.– Here, the sender writes the message to be communicated in the telegram

and send it to the post office.Thereafter, the post office would send the message to another post office which is situated near the address of the receiver.The message is then successfully delivered to the receiver.

– The expense of the telegram sent depends on the number of words written in the message.

Good to Know : After 163 years of service, Telegrams were discontinued by the Indian Postal

Services on 14th July, 2013.

(ii) Post Card :– Post card is the cheapest means of sending a written communication through

the post.– It is a rectangular piece of card used for sending messages by post without an

envelope.– It has a specific space for both, writing messages as well as mentioning the

address of the receiver.– There are two types of post cards available in the post office :

Ordinary Post Card – used to write letters; and

Competition Post Card – used to send letters and replies to questions asked in competitions which are held in radios, televisions, newspapers and magazines.

(iii) Parcel Post :– It is a service provided by postal department through which articles can be

sent in the form of parcels.– Here, parcels of specific size and weight can be sent across the country as

well as outside the country.– The post office specifies the charges for the parcels which vary depending on

the weight of the parcels.– Also, the postage charges are different for inland and foreign parcel post.

(iv) Book Post :– Book post is used to mail printed materials, printed books, periodicals,

greeting cards etc.

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SYJC (XII)– If the books or periodicals are sent through book post then it should only be

closed but not sealed. This is because, the postage paid on book post is less than the postage paid on sealed envelopes.

– It is essential to write the words ‘Book Post’ on the face of the envelope.(v) Inland Letter Card :

– Inland letter card is similar to a post card and is used to send written messages within the country.

– Here, the messages can be written on one side and the written portion is thereafter folded and sealed. Thus, it is possible to maintain secrecy of the message sent.

– The name, address of the receiver and sender is written on the outside portion.

– It is not possible to send enclosures with such type of letter.– Similarly, a special type of inland letter card is used for sending messages to

foreign countries which is known as ‘aerogram’.(vi) Telephone :

– Telephone is the best medium to send messages in a quick and easy manner.– In India, telephone services were started by the post and telegraph

department in the year 1881.– Local calls refer to telephone calls made to persons in the same city and

trunk call refers to calls made to a person in some other city. Calls made to persons in other countries are known as ISD (International Subscriber Dialing).

– Now telephone services are provided by The Videsh Sanchar Nigam Ltd. (VSNL) and Bharat Sanchar Nigam Limited (BSNL)

(vii) Envelope :– An envelope is a paper container, used to enclose a letter or a document and

can be sealed.– Post cards cannot be used to send confidential information and inland letter

card though maintains secrecy, cannot include any enclosures.Envelopes, on the other hand, can be used to post letter along with enclosures like documents, certificates, etc.

– Postage stamps are to be affixed on the envelope before posting them.

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