You can Download Chapter 11 Hatti Chitta Matt Questions and Answers Pdf, Notes, Summary, 2nd PUC Kannada Textbook Answers, Karnataka State Board Solutions help you to revise complete Syllabus and score more marks in your examinations.
You can Download Chapter 13 Entrepreneurship Development Questions and Answers, Notes, 2nd PUC Business Studies Question Bank with Answers Karnataka State Board Solutions help you to revise complete Syllabus and score more marks in your examinations.
2nd PUC Business Studies Entrepreneurship Development Multiple Choice Questions With Answers
Question 1.
Entrepreneurs undertake
(a) Calculated risks
(b) high risks
(c) Low risks
(d) moderate and calculated risks
Answer:
(b) It is generally believed that entrepreneurs take high risks as there is no assured career 10 that and secondly for a higher return the person takes higher risk.
Question 2.
In Economics, which of the following is not a function of the entrepreneur?
(a) Risk-taking
(b) Provision of capital and organisation of production
(c) Innovation
(d) Day-to-day conduct of business
Answer:
(d) Day-to-day conduct of business is not the function of the entrepreneur.
Question 3.
Which of the following statements does not clearly distinguish between entrepreneurship and management?
(a) Entrepreneurs found the business; managers operate it
(b) Entrepreneurs are the owners of their businesses; managers are employees
(c) Entrepreneurs earn profits; managers earn salaries
(d) Entrepreneurship is once for all activity; management is a continuous activity
Answer:
(d) Entrepreneurship is once for all activity, The concept behind this is not clear. Through this point, it is difficult to understand the difference between entrepreneurship and management.
Question 4.
In the roles and functions of the entrepreneur identified by Kilby, which of the following is not an aspect of ’political administration’?
(a) Dealing with public bureaucracy
(b) Managing human relations within the firm
(c) Introducing new production techniques and products
(d) Managing customer and supplier relations
Answer:
(c) Introducing new production techniques and products is not an aspect of political administration. It is come under the ‘Technology’ identified by Kilby.
Question 5.
Which of the following attitudes is not generally associated with successful entrepreneurship?
(a) Investing in R&D
(b) Live your business day-by-day
(c) Innovate and improvise continually
(d) Produce as per customers’requirements
Answer:
(b) Live your business day-by-day is not the attitude associated with successful entrepreneurship.
2nd PUC Business Studies Entrepreneurship Development Short Answer Questions With Answers
Question 1.
Clarify the meaning of the terms ‘entrepreneur’, ‘entrepreneurship’ and ‘enterprise’.
Answer:
Entrepreneur: The owner of a business is known as Entrepreneur or we can say that the person who set-up a business. That person is the co-ordinator, organiser of resources and gives shape to the business.
Entrepreneurship: It is the dynamic process of interaction between the person and the environment. It means starting up one’s own business, concerned with strategic decisions of resource allocation and involves huge risk to create value and earn profit.
Enterprise: The output of the entrepreneurship process is known as the Enterprise. It is something attempted to be performed. It provides employment opportunities, professional opportunities and business opportunities which helps in building up the economy of a nation.
Question 2.
Why is entrepreneurship regarded as a creative activity?
Answer:
Entrepreneurship is a creative activity. As an entrepreneur converts raw materials into useful goods and services, it involves creation of value, introduction of new products, discovery of new markets and technologies. Successful entrepreneurs keep focusing on innovative ideas and skills to produce efficient and effective results. Thus, an entrepreneur is innovator and this process is creative.
Question 3.
Entrepreneurs undertake ‘moderate risk’. Elaborate this statement.
Answer:
Entrepreneurs undertake ‘moderate risks’. It implies that an entrepreneur assures various supply of the projects, agrees to pay salaries, wages, rent whether the venture success or not. Secondly, the person who opted a career in entrepreneurship takes a bigger risk as there is no assured payoff. It is said that it is a 50 : 50 situation means loss and profit both are unpredictable.
Success depends upon the observations, calculations of risk, skills and confidence. Risk is not centred to one problem. It involves many issues like fluctuation in price, taste and preference fashion, risk of strikes, lock outs etc. It becomes the essential feature of the entrepreneurship which is to be focused more and more.
Question 4.
How does entrepreneurship result in increasing the spectrum and scope of economic activities?
Answer:
Development does not mean only the betterment of existing but it means the overall betterment across the geographical, sectoral and technological scope. Entrepreneurship results in diversification of economic activities by creating employment, business opportunities, stabilising the demand and supply factors as underdeveloped countries caught in the vicious cycle of the demand as well as supply side.
Thus, it helps to overcome from this situation. GOP originates from Industry and services increases. Entrepreneurs through their decisions to divert from the stale sectors and invest in green field sectors, bring a virtual transformation of the economy from underdeveloped to developed status. Thus, we can say entrepreneurship results in increasing the spectrum and scope of economic activities.
Question 5.
Describe briefly the role of achievement motivation in entrepreneurship.
Answer:
Entrepreneurial motivation is important to learn, as different individuals are motivated differ-ently and for the success of an enterprise. The following needs are to be focused to motivate an entrepreneur
1. Need for Achievement: It implies a desire to accomplish something. In order to ac-complish the task, one can use the creativity, talent, organise physical resources, explore and use opportunities, overcome from the obstacles and attain a high standard.
2. Need for Power: It is the concern with influencing people or the behaviour of others moving in the same direction to attain the objectives. Need for power means authority required to control the activities of an enterprise.
3. Need for Affiliation, people to conform: It implies among other things, a tendency of the to the wishes and norms of those whom they value. Entrepreneurs are believed to be Iowan affiliation buy they should focus and trace the elements of affiliation for the successful career and for the development of standardised goods and services for others.
4. Need for Autonomy: It means a desire for independence and being responsible and accountable to oneself rather than some external authority for performance-: Everybody needs freedom to some extent as it is very difficult to take orders and work all the time as per the boss.
2nd PUC Business Studies Entrepreneurship Development Long Answer Questions With Answers
Question 1.
Describe briefly the steps involved in starting a new business.
Answer:
Setting up and running of business unit is a very crucial decision which is taken by an entrepreneur. They perform several functions like assembling inputs, market analysis, sales strategy, risk factors financial analysis and many more. But in order to start a new business following steps are to be taken
1. Scanning the Environment: The complete awareness and understanding of business environment Is known as Environment scanning An entrepreneur scan business opportunities and risks involved. After the analysis, they use these opportunities and market them in a much better way.
2. Development of Product: It is the second step after scanning the environment, an entrepreneur starts assessing scarce resources, assembling inputs and starts the production of goods and services.
3. Feasibility Analysis: It refers to the analysis which helps in knowing the practical possibility. An entrepreneur starts looking at the feasibility like technical feasibility. This helps in knowing that the idea should be converted into reality using available technology, Similarly, economic feasibility helps in knowing the cost involved in production and after selling whether it will earn profit or not. The business plan starts after the feasibility report.
4. Funding Agencies: Finance is the backbone for the business activity. An entrepreneur needs finance to carry on the business that is why they prepare business plan which is to be submitted before the financial institutions and if satisfied they fund the project.
5. Establishing an Enterprise: After getting the fund, an entrepreneur have to take legal permission and clearance from various agencies in order to establish an enterprise.
Question 2.
Examine the nature of relationship between entrepreneurship and economic development.
Answer:
There is a mutual relationship between economic development and entrepreneurship. Entrepreneurship development leads to economic development of the country fey contributing in GOP and process of economic development which gives an opportunity for expansion and growth. Following points explain the relationship between economic development and entrepreneurship
1. Contfdarting to Gross Domestic Product (GOP): Income is generated in the process of production. Entrepreneurs generate income via organisation of production, it results in incwMttteg the value of GOPdirecdy
2. Capital Formation: Entrepreneurs use their own funds and encourage various investment opportunities to invest in companies. This leads to capital formation.
3. Generation of Employment: Every new business gives the opportunity of employment to the people with different abilities, skills and qualifications. It becomes a source of livelihood to those who neither have the capital to earn interest nor have the land to earn rent.
4. Improves Economic Efficiency Entrepreneurs improve economic efficiency by improving the process, reducing waste, increasing yield and bringing in technical progress. In this way, entrepreneurship results in economic development. On the other hand, economic development provides following opportunities for the growth and expansion of enterprise.
(a) Well developed financial in the economy
(b) Opportunities to raise and avail funds from various financial institutions.
(c) Lower rate of interest and moderate inflation.
(d) Availability of factors of production. ‘
Question 3.
Clarify how motivation and abilities impact on individuals decision to choose entre-preneurship as a career.
Answer:
Motivation and ability can positively reinforce each other. Persons having abilities search for the exposure and focus to start a new business. They take decisions logically with the personal courage and strive hard to acquire the necessary competencies to realise their dreams. Following competencies contribute towards effective performance and success
On the other hand, motivation is required to understand because entrepreneur’s objective is profit maximisation and it can only be achieved when employees are motivated in such a manner that fulfillment of enterprise’s objective may also lead to satisfy employees basic needs. In this way, entrepreneurship career proves to be a success for an individual motivation and ability both goes hand to hand.
2nd PUC Business Studies Entrepreneurship Development Application Question
Anshuman was a very industrious sales executive with a small herbal cosmetic manufacturer. He earned a good salary and commission on the business he brought for the firm and had very good command over the Delhi market for which he had virtually become indispensable. He was aware of the enviable position he held in the firm and thought aloud “The key to success in any business is the sale of its products. The beginning and end of the business cycle is nothing but sale and ‘other* people working in the factory to manufacture products are mere cogs in the business machine set in motion by sales people. So, why carry this burden and get only a tiny share of the prosperity of the firm? Instead others enjoying the fruits of my labour,
Question 1
why should I not start my own business?” Should Anshuman take a leap? Give reasons for your answer.
Answer:
Anshuman was a good industrious sales executive with a small herbal cosmetics. As per my opinion, Yes, he should start his own business as he is experienced, has a very good command over the market. He can market the products very well, maintain good relations with customers. He is good in marketing management. Thus, he can produce goods as per the customers’ needs, use effective promotional techniques and take care of customers.
2nd PUC Business Studies Entrepreneurship Development Case Problems Studies
Inspiring Feat: Daily wage Labourer turns Entrepreneur
A landless woman from Bihar has been nominated among the top 25 farmers in Asia by a Mexican website.
Forty five years old Lalmuni Devi was a daily wage labourer when she decided to take destiny into her own hands and transformed herself into a successful mushroom farmer. Today she manages to make Rs. 12,000 every year for an investment of only Rs 600.
Her feat finds mention on a Mexican website that has grouped her as the top 25 inspirational farmers in its photo gallery.
“1 am a poor woman. I thought that mushroom farming would profit henceforth I started it. Now, I can earn a living for my family”, said Lalmuni Devi.
Successful Enterprise
The success story has caught on with many women in the Azadpur village on the outskirts of Patna.
“It is effortless farming, which we can even do in our village. Working in the scorching heat is very tiring. Mushroom farming generates more profit”, said Urmila Devi.
Lalmuni and other landless women have been encouraged by the Indian Council for Agriculture Research to take up mushroom farming.
It is to help the poorest of the poor through alternative livelihood support system. For that we have chosen a village where people have no land and they have to share croppers”, said Dr AR Khan, Principal Scientist, ICAR,Patna.
Lalmuni’s efforts have paved the way for many other landless women to take up mushroom farming and earn a livelihood for their family with little effort.
Question 1.
What inspiring feat did Lalmuni Devi perform? Elaborate.
Answer:
A forty five years old woman Lalmuni Devi from Bihar was a daily wage labourer, then she decided to transform herself by starting mushroom farming. This step proved an inspirational feat and she was among the top 25 farmers in Asia by a Mexican website.
Question 2.
Do you feel that you can also become an entrepreneur?
Answer:
Lalmuni efforts have paved the way for others. Similarly, we can also become an entrepreneur and for that we should have following qualities
Question 3.
What qualities of entrepreneur did Lalmuni Devi exhibit?
Answer:
In the given case, Lalmuni have following qualities v
Question 4.
What are the benefits and risks of becoming an Entrepreneur? How can you guard against the risks? What (Teachers should highlight the qualities of an entrepreneur and motivate students to do so. Help that.
Answer:
Benefits of an entrepreneur
Risks of an Entrepreneur
In order to safeguard from the risk, an entrepreneur should analyse the market well, study about the innovative technologies, prepare the business plan so that financial institutions grant the fund, adopt the best ideas for product planning.
2nd PUC Business Studies Entrepreneurship Development One Mark Questions and Answers
Question 1.
What is Entrepreneurship?
Answer:
Entrepreneurship is the process of setting up one’s own business as distinct from pursuing any other economic activity.
Question 2.
What is need for achievement (N-Ach.).
Answer:
Need for Achievement (N-Ach.): Need for achievement implies a desire to accomplish something difficult. To master, manipulate, or organise physical objects, human beings or ideas.
Question 3.
Write a need for power (N-Pow).
Answer:
Need for Power (N-Pow): Need for Power is the concern for influencing people or the behaviour of others for moving in the chosen direction and attaining the envisioned objectives.
2nd PUC Business Studies Entrepreneurship Development Two Marks Questions and Answers
Question 1.
Write a note as entrepreneural values and attitudes.
Answer:
While explaining human behaviour, one often comes across the terms values and attitudes. Rather than attempting to distinguish between these two terms, it would be sufficient to say here that taken together, entrepreneurial values and attitudes refer to the behavioural choices individuals make for success in entrepreneurship.
The word choice is important, as there are alternative ways of behaving too. In entrepreneurship, a host of behavioural tendencies or orientations have been reported as having a bearing on success.
2nd PUC Business Studies Entrepreneurship Development Four Marks Questions and Answers
Question 1.
Explain the concept of Entrepreneurship.
Answer:
The concept of entrepreneurship: entrepreneurship is regarded as one of the four major factors of production, the other three being land, labour and capital. It is derived from French origin, the term ‘entrepreneurship’ (derived from the word ‘entreprende’ meaning ‘to undertake’) pertained not to economics, but to undertaking of military expeditions. So is true of many terms in management (a course of action to beat the competition, the ‘enemy’) and logistics The term ‘entrepreneur’ was first introduced in economics by the early 18th century French economist Richard Cantillon.
He defined the entrepreneur as the “agent who buys means of production at certain prices in order to sell the produce at uncertain prices in the future”In abroader sense it can define entrepreneurship as a systematic, purposeful and creative activity of identifying a need, mobilising resources and organising production with a view to delivering value to the customers, returns for the investors and profits for the self in accordance with the risks and uncertainties associated with business.
Question 2.
Explain the characteristics of entrepreneurship.
Answer:
Characteristics of entrepreneurship :
1. Systematic Activity: Entrepreneurship is a systematic, step-by-step and purposeful activity. It has certain temperamental, skill and other knowledge and competency requirements that can be acquired, learnt and developed, both by formal educational and vocational training as well as by observation and work experience.
2. Lawful and Purposeful Activity: The object of entrepreneurship is lawful business.
3. Innovation: From the point of view of the firm, innovation may be cost saving or revenue enhancing, Entrepreneurship is creative in the sense that it involves creation of value.
4. Organisation of Production: Production, implying creation of form, place, time personal utility, requires the combined utilisation of diverse factors of production, land, labour, capital and technology. Entrepreneur, in response to a perceived business opportunity mobilises these resources into a productive enterprise or firm.
5. Risk-taking: As the entrepreneur contracts for an assured supply of the various inputs for his project, the risk of paying them off whether or not the venture succeeds.
It is generally believed that entrepreneurs take high risks.
Question 3.
Explain the Functions of enterepreneurs.
Answer:
Functions of enterepreneurs in relation to economic development.
1. Contribution to GDP: Increase in the Gross Domestic Product or GDP is the most common definition of economic development.
2. Capital Formation: The entrepreneurial decision, in effect, is an investment decision that augments the productive capacity of the economy and hence results in capital formation.
3. Generation of Employment: Every new business is a source of employment to people with different abilities, skills and qualifications. As such entrepreneurship becomes a source of employees.
4. Generation of Business Opportunities for Others: Every new business creates . opportunities for the suppliers of inputs (this is referred to as backward linkages) and the marketers of the output.
5. Improvement in Economic Efficiency: You are aware that efficiency means to have greater output’ from the same input. Entrepreneurs improve economic efficiency by,
a. Improving processes, reducing wastes, increasing yield ,and,
b. Bringing about technical progress, that is, by altering labour-capital ratios.
6. Increasing the Spectrum and Scope of Economic Activities: Development does not merely mean ‘more’ and ‘better’ of the existing, it also and more crucially means diversification of economic activities- across the geographic, sectoral and technological scope.
7. Impact on Local Communities: Entrepreneurship, in its natural habitat, that is, small business is a great leveler. As there are no entry barriers in terms of educational qualifications, entrepreneurship is an even more attractive career option for such marginalised groups.
8. Fostering the Spirit of Exploration, Experimentation and Daring: Economic development, among other things, requires breaking away from the shackles of traditions and beliefs that restrict growth.
Question 4.
Explain Role of entrepreneurs in relation to their enterprise.
Answer:
Role of entrepreneurs in relation to their enterprise. Opportunity Scouting: Entrepreneurial opportunities have to be actively searched for. One may rely on personal observation, discovery or invention. Personal/professional contacts/ networks and experience or may also help in identifying business opportunities.
Identification of Specific Product Offering: While the environment scan leads to the discovery of more generalised business opportunities, there is a need to zero in on to a specific product or service idea.
Feasibility Analysis: The product offering idea must be technically feasible, that is it should be possible with the available technology to convert the idea into a reality.
Question 5.
Explain the process of entrepreneurship development.
Answer:
The process of entrepreneurship development:
Question 6.
Explain the process of business plan.
Answer:
2nd PUC Business Studies Entrepreneurship Development Eight Marks Questions and Answers
Question 1.
Write a note as Entrepreneural Competecies.
Answer:
Every opportunity and successful performance of every role and function has a competence requirement. Its true of entrepreneurship as well, entitled ‘Cash OR KASH?’
The term ‘competence’ refers to a composite of knowledge, skills and a host of psychosocial attributes in a person that mark his/her effectiveness for a task. The phrase ‘composite’ is crucial.
EDI has identified a set of 15 competencies that contribute toward entrepreneurial performance and success. These are briefly stated hereunder.
Question 5.
Differences enterpreruship and manageent.
Answer:
You can Download Chapter 12 Customer Protection Questions and Answers, Notes, 2nd PUC Business Studies Question Bank with Answers Karnataka State Board Solutions help you to revise complete Syllabus and score more marks in your examinations.
2nd PUC Business Studies Customer Protection True Or False Questions With Answers
I. State whether the following statements are true or false.
Question 1.
Consumer protection has a moral justification for business.
Answer:
True
Question 2.
In addition to rights, a consumer also has some responsibilities.
Answer:
True
Question 3.
A complaint can to be made to a District Forum when the value of the goods or services in question, along with the compensation claimed, exceeds? 20 lakhs.
Answer:
False.In district forum complaint can be made when goods or services, along with the compensation claimed, does not exceed ? 20 lakhs.
Question 4.
The Consumer Protection Act provides for six consumer rights.
Answer:
True
Question 5.
ISI is the quality certificate mark used in case of food products.
Answer:
False.ISI is the certification mark on electrical goods and FPO mark is for food products
Question 6.
Under the Consumer Protection Act, a compliant can be filed by a consumer for a defective good also for deficiency in service.
Answer:
True
2nd PUC Business Studies Customer Protection Short Answer Questions With Answers
Question 1.
Explain the importance of Consumer protection from the point of view of business.
Answer:
A business can not survive without paying attention on protecting the consumers interest and adequately satisfying them. This is important because of the following reasons
1. Long term interest of Business: Business firms should aim at long term profit maximisation through customer satisfaction. Satisfied customers not only lead to repeat sales but also provide good feedback to prospective customers and thus help in increasing the customer base of business.
2. Business uses Society’s Resources: Business organisations use the resources which belong to the society, thus they have a responsibility to supply such products and render such services which are in public interest.
3. Social Responsibility: A business has social resposibility towards various interest groups. Business organisations make money by selling goods and providing services to consumers. Thus, consumers form an important group among the many stakeholders of business and like other stakeholders, their interest has to be well taken care of.
4. Moral Justification: The moral duty of any business is to take care of consumer’s interest and securing them from exploitation. Thus, a business must avoid insecure loss, exploitation and unfair trade practices like defective and unsafe products, adulteration, false and misleading advertising, hoarding, black marketing etc.
5. Government Intervention: A business engaging in any form of exploitation time trade practices would invite government intervention or action. Thus, it is advisable that business organisations voluntarily resort to such practices, where the customers’ needs and interests will be taken care of.
Question 2.
Enumerate the various Acts passed by the Government of India which help in protecting the consumers’ interest.
Answer:
The Indian legal framework consists of a number of regulations which provide protection to consumers. Some of these regulations are as under
1. The Consumer Protection Act, 1986: This Act provides safeguards to consumers against defective goods, deficient services, unfair trade practices etc.
2. The Contract Act, 1982: This Act lays down the conditions in which the promises made by parties to a contract will be binding on each other.
3. The Sale of Goods Act, 1930: This Act provides some safeguards and reliefs to the buyers of the goods in case, the goods purchased does not comply with express or implied conditions or warranties.
4. Essential Commodities Act, 1955: This Act aims at controlling, production, supply, distribution and price of essential commodities.
5. The Agricultural Produce Act, 1937: This Act prescribes grade standards for agricultural commodities and livestock products.
6. The Prevention of Food Adulteration Act, 1954: This Act aims to check adulteration of foods articles and ensure their purity, so as to maintain public health.
7. The Standards of Weights and Measures Act, 1976: It provides protection to consumers against the malpractice of under-weight or under-measure.
8. The Trade Marks Act, 1999: This Act prevents the use of fraudulent marks on products and thus provides protection to the consumers against such products.
9. The Competition Act, 2002: This Act provides protection to the consumers In case of practices adopted by business firms which hamper competition in the market.
10. The Bureau of Indian Standard Act, 1986: The bureau has two major activities: Formulation of quality standards for goods and their certification through the BIS certification scheme. The bureau has also set up a grievance cell, where consumers can make a complaint about quality of products carrying the ISI mark.
Question 3.
What are the responsibilities of a consumer?
Answer:
1. Quality conscious: A consumer must be conscious in respect of the quality of the product like AGMARK, BIS MARK, HALLMARK, etc while purchasing the product.
2. Selection of goods: Consumer must choose only legal goods and services and discourage malpractice like smuggling, black marketing etc.
3. Consumer organization: Consumer must form their own organization to educate and protect their interest against malpractices of the manufactures and sellers.
4. Protection of environment: consumer must have respect for the environment and avoid wastage of resources and work towards protecting the environment and ecology.
5. Demand for Cash memo: The consumer must get a cash memo or bill in respect of the goods purchased or service availed.
Question 4.
Who can file a complaint in a consumer court?
Answer:
A complaint can be made by
Question 5.
What kind of cases can be filed in a State Commission?
Answer:
A complaint can be made to the appropriate State Commission when the value of the goods and services, along with compensation claim exceeds ₹ 20 lakhs but does not exceed ₹ 1 crore. The appeals against the orders of a District Forum can also be filed before the State Commission.
Question 6.
Explain the role of consumer organisations and NGOs in protecting and promoting consumers’ interest.
Answer:
Consumer organisation and NGOs perform several functions for the protection and promotion of interest of consumers. In India, these associations are performing lots of functions some of them are as given below.
2nd PUC Business Studies Customer Protection Long Answer Questions With Answers
Question 1.
Explain the rights and responsibilities of a consumer.
Answer:
The Consumer Protection Act provides six rights to consumers. They are as follows
a. Right to Safety : The consumer has a right to be protected against goods and services which are hazardous to life, e.g., sometimes we purchased the food items of low quality which causes severe problems. Thus, in this case, we should purchased good quality and FPO labelled products,
b. Right to be Informed : The consumer has a right to have complete information about the product, which he intends to buy including its ingredients, date of manufacture, price, quantity, directions for use etc. Under the legal framework of India manufactures have to provide such information on the package and label of the product.
c. Right to Choose : The consumer has the freedom to choose from a variety of products. The marketers should offer a wide variety of products and allow the consumer to make a choice and choose the product which is most suitable.
d. Right to be Heard : The consumer has a right to file a complaint and to be heard in case of dissatisfaction with a good or a service. It is because of this reason that many enlightened business firms have set up their own consumer service and grievance cells.
e. Right to Seek Redressal : The Consumer Protection Act provides a number product, of reliefs to the removal of defect consumer including replacement of the in the product, compensation paid for any loss or injury suffered by the consumer etc.
f. Right to Consumer Education : The consumer has a right to acquire knowledge about products. He should be aware about his rights and the reliefs available to him in case of a product service falling short of his expectations Many consumer organisations and some enlightened businesses are taking an active part in educating consumers in this respect.
Consumer Responsibilities
A consumer must be aware about these responsibilities while purchasing, using and consuming goods and services .
a. Consumer must be aware of all their rights.
b. Consumer must be careful while purchasing a product.
c. He should file complaint for the redressal of genuine grievances.
d. Consumer must buy a standardised good.
e. He should ask for a cash-memo on purchase of goods and services.
Question 2.
What are various ways in which the objective of consumer protection can be achieved? Explain the role of consumer organisations and NGOs in this regard?
Answer:
There are various ways in which the objective of consumer protection can be achieved
1. Self Regulation by Business: Socially responsible firms follow ethical standards and practices in dealing with their customers. Many firms have set up their customer service and grievance cells to redress the problems and grievances of their consumers.
2. Business Associations: The associations of trade, commerce and business like Federation of Indian Chambers of Commerce of India (FICCI) and Conference of Indian Industries (CII) have laid down their code of conduct which lays down for their members the guidelines in their dealings with the customers.
3. Consumer Awareness: A consumer, who is well informed about his rights and the reliefs, would be in a position to raise his voice against any unfair trade practices or exploitation.
4. Consumer Organisations : Consumer organisations play an important protecting role in educating consumers about their rights and providing protection to them. These organisations can force business firms to avoid malpractices and exploitation of consumers.
5. Government: The Government can protect the interests of the consumers by enacting various legislations. The legal framework in India encompasses various legislations which provide protection to consumers. The most important of these regulations is the Consumer Protection Act, 1986. The Act provides for a three-tier machinery at the District, State and National levels for redressal of consumer grievance.
Question 3.
Explain the redressal mechanism available to consumers under the Consumer Protection Act, 1986?
Answer:
For the redressal of consumer grievances, the Consumer Protection Act provides for setting up of a three-tier enforcement machinery at the District, State and the National levels.
1. District Forum: A complaint can be made to the appropriate District Forum when the value of goods or services, along with the compensation claimed, does not exceed ₹ 20 lakhs. In case the aggrieved party is not satisfied with the order of the District Forum. They can appeal before the State Commission within 30 days.
2. State Commission : A complaint can be made to the appropriate State Commission when the value of the goods or services, along with the compensation claimed, exceeds ₹ 20 lakhs but does not exceed ₹ 1 crore. The appeals against the orders of District Forum can also be filed before the State Commission. In case the party is not satisfied with the order of the State Commission. They can appeal before the National Commission within 30 days of the passing of the order by State Commission.
3. National Commission : A complaint can be made to the National Commission when the value of the goods or services, along with the compensation claimed exceeds ₹ 1 crore. The appeals against the orders of a State Commission can also be filed before the National Commission. An order passed by the National Commission in a matter of its original justification is appealable before the Supreme Court. This means that only those appeals, where the value of goods + services in question, along with the compensation claimed, exceeded ₹ 1 crore and where the aggrieved party was not satisfied with the order of the National Commission, can be taken to the Supreme Court of India.
2nd PUC Business Studies Customer Protection Case Problems
Now, filing a complaint is just, a click away. Filing a complaint in A consumer court is going to get a lot easier by the end of this year, virtually. No matter which part of the country you’re in, it’s going to happen at the click of a mouse.
The project, called Confonet (Computerisation and Computer Networking of Consumer Fora), is being executed on A turnkey basis by the National Informatics Centre (NIC).
“Online registration of complaints, the government hopes, will promote e-governance, transparency, efficiency and streamlining of consumer fora”, said an official in the consumer affairs ministry. of ₹ 48.64 Crore set aside for the project, the government has released ₹ 30.56 crore so far, the official added.
“Besides software development and testing, networking and project implementation, integration and site preparation, it will include purchase of hardware for all the 600 District Fora, 35 State Commissions and the National Commission”, the official said.
At present, computer systems and system software have been delivered to 25 state commissions and 300 District For a never mind the fact that it’s sometimes a long wait before the hardware is finally unpacked and set up in some of the districts. Meanwhile, training of staff, sometimes in the classroom and sometimes through elearning sessions, are in full swing.
“But just setting up an online complaint filing system won’t ensure a strong consumer protection movement in the country for that we’re working on GenNext and the best way to do that is to go to schools”, the official said.
The government is, therefore, involving school children to form consumer clubs, so as to involve them in various consumer welfare activities.
Part of the funding for running the clubs is to come from various state governments, with an equally matching grant from the Centre. However, a number of state governments are yet to sanction the fund – some of these include Uttar Pradesh, Madhya Pradesh and Kerala.
Question 1.
What new measure is the ministry of consumer affairs taking to make filing a complaint easy?
Answer:
Online registration of complaints has been initiated by the ministry of consumer affairs to make filing of complaint easy.
Question 2.
What roll can you as a student play to contribute to the cause of consumer protection?
Answer:
A student can play an active role in bringing out an awareness campaign on ‘Consumer Protection’.
Question 3.
What scenario of consumer protection do you foresee when the measures proposed in the above news report are implemented?
Answer:
With the. Implementation of online registration, educated and technology friendly consumer will gain but in my opinion the unaware, ignorant and Simple consumers who still are far away from e-governance would stand in need of the 3 forums working-efficiently and effectively Thus both the systems should work parallel, hand in hand to protect the interests of different types of consumers.
2nd PUC Business Studies Customer Protection One Mark Questions and Answers
Question 1.
Who is a consumer?
Answer:
Consumer is a person who buys goods or services to be consumed by himself or someone else on behalf of the buyer
Question 2.
When is consumers rights day observed?
Answer:
15th march of every year is observed as consumers rights day all over world
Question 3.
State any one consumer right.
Answer:
Right to safety
Question 4.
Name any one consumer grievances redressal agency.
Answer:
District consumer disputes redressal agency.
Question 5.
State any one remedy available to a consumer under the act.
Answer:
To replace the goods.
Question 6.
State any one consumer responsibility.
Answer:
Awareness of rights.
Question 7.
State any one reason for consumer protection.
Answer:
To protect the consumer from malpractices.
Question 8.
State the monetary limit for claim under the district forum.
Answer:
District Forum-Not exceeding 20 Lakhs
Question 9.
State the monetary limit for claim under the State Commission.
Answer:
State Forum – Exceeding 20 Lakhs less than 1 crore
Question 10.
State the monetary limit for claim under the National Commission.
Answer:
National Forum-Exceeding 1 crore.
Question 11.
When was Consumer Protection Act enacted?
Answer:
Consumer protection act was enacted in the year 1986.
Question 12.
What do you mean by consumer protection?
Answer:
Consumer Protection refers to protection of physical, economic, other interest of consumer from exploitation by the business community.
Question 13.
State any two features of consumer Protection.
Answer:
Consumer protection is viewed from the view point of Consumer, business
Question 14.
Mention any two rights of consumer.
Answer:
Right to safety & Right to be information
Question 15
State any two responsibilities of consumer.
Answer:
Selection of goods & Awareness of right
Question 16.
What is consumer Court?
Answer:
It is special purpose court mainly in India that deals with cases regarding consumer dispute and grievances.
Question 17.
What new measure is the ministry of consumer affairs taking to make filing a complaint easy?
Answer:
Online registration of complaints has been initiated by the ministry of consumer affairs to make filing of complaint easy.
2nd PUC Business Studies Customer Protection Two Marks Questions and Answers
Question 1.
Define consumer.
Answer:
A consumer may also be defined as “anybody who chooses goods and services, spend money to obtain them and used them to satisfy his or her own needs.
Question 2.
Name any two consumer grievances redressal agencies.
Answer:
Question 3.
List any two importance of consumer protection.
Answer:
Question 4.
Mention any two needs of consumer protection.
Answer:
Question 5.
State the composition of members of National Commission.
Answer:
Five members: a president & four members including one women member.
Question 6.
Write any two remedies available to the aggrieved consumer as per the Act.
Answer:
Question 7.
Name any two persons who can file a complaint with the redressal agencies.
Answer:
Question 8.
What scenario of consumer protection do you foresee when the measures proposed in the above news report are implemented?
Answer:
With the Implementation of online registration, educated and technology friendly consumer will gain but in my opinion the unaware, ignorant and Simple consumers who still are far away from e-governance would stand in need of the 3 forums working efficiently and effectively Thus both the systems should work parallel, hand in hand to protect the interests of different types of consumers.
2nd PUC Business Studies Customer Protection Four Marks Questions and Answers
Question 1.
Explain any five consumer rights.
Answer:
1. Right to Safety: According to this right, every consumer has right to be protected against. the marketing of goods and services which are hazardous to life and property.
2. Right to be informed: Every consumer has the right to be informed about the quality, quantity, purity, standards and price of goods so as to protect them against unfair trade practices.
3. Right to choose: The consumer has the right to choose the product independently, their choice out of the available alternative products.
4. Right to seek redressal: Every consumer has the right to seek redressal against any defect in the product or deficiency in the service.
5. Right to consumer education: Consumer must be educated against frauds, and about their rights and reliefs available to them in case of a product or service falls short of the required level.
Question 2.
Explain the importance of consumer protection.
Answer
1. Ignorance of consumers: Most of the consumer are ignorant and are not aware of their rights, hence a proper system is required to protect them against unfair trade practices.
2. Unorganized consumer: Consumer are not well organized, but producers and traders are well organized. As a result consumers are being exploited by the big business houses.
3. Deceptive advertising: Many business organizations deliberately cheat consumers through misleading advertisements about Quality, safety and utility of the products.
4. Malpractices of Businessmen: Businessmen indulge in malpractice such as adulteration and black marketing etc to maximize profit therefore consumers are exploited.
5. Freedom of Enterprise: For the survival and growth of business in the long run the business must ensure customer satisfaction so as to earn goodwill and support of consumer.
Question 3.
State the feature of district forum.
Answer:
1. Composition: Each district forum consists of a committee of three persons. A president and two members out of whom, one must be women who are being nominated by the state government for a term of 5 years.
2. Qualification: The president should have the qualification to be of a district judge and out of the two members one should be an eminent person from the field of education, trade or commerce with a bachelors degree.
3. Powers: Each district redressal agency is being given the powers of that of a civil court for enquiring into any complaints.
4. Jurisdiction: The district redressal agency is empowered to receive such complaints where the value of goods or service and compensation claimed in is not exceeding rupees twenty lakhs.
5. Redressal Proceeding: upon the receipt of the complaint, the agency serves a notice to the opposite party referred in the complaint, such opposite party may be a seller, a distributer or a manufacturer. If needed the agency sends the sample of goods for analysis and testing in a laboratory in respect of the defect raised in the complaint.
Question 4.
State the features of state commission.
Answer:
1. Composition: A state commission consists of a committee of 3 persons – a president two member out of whom, one must be a woman who are being nominated by the state government for a term of 5years.
2. Qualification: President should have the qualification to be of High court judge should possess bachelors degree & should have adequate knowledge & good experience in dealing with problems relating to Economics, commerce, Law, Accountancy, public affairs, Administration etc.
3. Jurisdiction: It is empowered to receive such complaints where the value goods & services & the compensation claimed is exceeding Rs.20 lakhs but less than Rs. 1 crore & the appeals against’ order of any District redressal Agencies.
4. Redressal Proceeding: upon the receipt of the complaint, the State commission serves a notice to a opposite party referred in the complaint, such opposite party may be a seller, a distributer or a manufacturer, if needed the commission further sends the sample of goods for analysis and testing in a laboratory in respect of the defect raised in the complaint.
5. Remedy: if it is found that the product has some defect or there is some unfair trade practice, the commission can direct the accused to:
Question 5.
State the features of National Commission.
Answer:
1. Composition: A National commission consists of a committee of 5 persons – a president & 4 member including one woman member, who are being nominated by the central government. For a term of 5years
2. Qualification: President should have the qualification to be of supreme court judge should possess bachelors degree & should have adequate knowledge & good experience in dealing with problems relating to Economics, commerce, Law, Accountancy, public affairs, Administration etc..
3. Jurisdiction: It is empowered to receive such complaintsWhere the value of the goods & services & the compensation paid exceeding Rs.1, crore. The appeals against the order of any State Commission.
4. Redressal Proceeding: upon the receipt of the complaint, the National commission serves a notice to a opposite party referred in the complaint, such opposite party may be a seller, a distributer or a manufacturer, if needed the commission further sends the sample of goods for analysis and testing in a laboratory in respect of the defect raised in the complaint.
5. Remedy: if it is found that the product has some defect or there is some unfair trade practice, the commission can direct the accused to:
Question 6.
What are the remedies available to a consumer as per consumer protection Act?
Answer:
The remedies are available as per the act are :
2nd PUC Business Studies Customer Protection Eight Marks Questions and Answers
Question 1.
Explain the features of District Forum and State Commission?
Answer:
Features of district forum are ;
1. Composition: Each district forum consists of a committee of three persons. A president and two members out of whom, one must be women who are being nominated by the state government for a term of 5 years.
2. Qualification: The president should have the qualification to be of a district judge and out of the two members one should be an eminent person from the field of education, trade or commerce with a bachelors degree.
3. Powers: Each district redressal agency is being given the powers of that of a civil court for enquiring into any complaints.
4. Jurisdiction: The district redressal agency is empowered to receive such complaints where the value of goods or service and compensation claimed in is not exceeding rupees twenty lakhs.
5. Redressal Proceeding: upon the receipt of the complaint, the agency serves a notice to the opposite party referred in the complaint, such opposite party may be a seller, a distributer or a manufacturer. If needed the agency sends the sample of goods for analysis and testing in a laboratory in respect of the defect raised in the. complaint.
Features of state commission forum are;.
1. Composition: A state commission consists of a committee of 3 persons – a president two member out of whom, one must be a woman who are being nominated by the state government for a term of 5years.
2. Qualification: President should have the qualification to be of High court judge should possess bachelors degree & should have adequate knowledge & good experience in dealing with problems relating to Economics, commerce, Law; Accountancy, public affairs, Administration etc..
3. Jurisdiction: It is empowered to receive such complaints where the value goods & services & the compensation claimed is exceeding Rs.20 lakhs but less than Rs. 1 crore & the appeals against order of any District redressal Agencies.
4. Redressal Proceeding: upon the receipt of the complaint, the State commission serves a notice to a opposite party referred in the complaint, such opposite party’ may be a seller, a distributer or a manufacturer, if needed the commission further sends the sample of goods for analysis and testing in a laboratory in respect of the defect raised in the complaint.
5. Remedy: if it is found that the product has some defect or there is some unfair trade practice, the commission can direct the accused to:
Question 2.
Explain the features of national commission?
Answer:
1. Composition: A National commission consists of a committee of 5 persons -a president & 4 member including one woman member, who are being nominated by the central government. For a term of Syears
2. Qualification: President should have the qualification to be of supreme court judge should possess bachelors degree & should possess bachelors degree & should have adequate knowledge & good experience in dealing with problems relating to Economics, commerce, Law, Accountancy, public affairs, Administration etc..
3. Jurisdiction: It is empowered to receive such complaints Where the value of the goods & services & the compensation paid exceeding Rs.1 crore. The appeals against the order of any State Commission.
4. Redressal Proceeding: upon the receipt of the complaint, the National commission serves a notice to a opposite party referred in the complaint, such opposite party may be a seller, a distributer or a manufacturer, if needed the commission further sends the sample of goods for analysis and testing in a laboratory in respect of the defect raised in the complaint.
5. Remedy: if it is found that the product has some defect or there is some unfair trade practice, the commission can direct the accused to:
2nd PUC Business Studies Customer Protection Five Marks Questions and Answers
question 1,
As an aggrieved consumer, write a complaint to District Forum seeking redressal.
Answer:
31st July 2017
Bangalore
From,
Mr. Rajeev Yadav,
#63, 5th Cross, 9th Main,
BM Temple Road
Bangalore – 560887
To,
The Registrar (KSCDRC)
Karnataka State Consumer Dispute Redressal Commission
Cunningham Road,
Bangalore.
Dear Sir,
Sub: Compliant against the CDFL Electronics – BMC Road, RR Pet, Bangalore.
With reference to the above subject, I would like to bring to your kind notice that, I had purchased a T.V set (32 Inches, LCD TV) on 26th July 2013 for Rs. 45000/- for which a warrantee of 1 year was provided( copy Bill attached for quick reference) On 13th July 2014 I had filed a complaint about the performance of the T.V to the customer care centre. A service personal had visited our place and resolved the issue.
Weeks later on 21st July 2014 the same problem with T.V set raised and the complaint was registered on the same day. The company provided the service personal on 25th July 2014 and refused to provide the service under warrantee and demanded for the service fees.
Though complaint was registered before the closure of the warrantee period the company fails to provide the service as promised. Till today the problem is unsolved in spite of repeated complaints. I hereby request you to kindly look in to the issue and provide redressal.
Thanking you
Yours truly
Rajeev Yadav
You can Download Chapter 11 Marketing Questions and Answers, Notes, 2nd PUC Business Studies Question Bank with Answers Karnataka State Board Solutions help you to revise complete Syllabus and score more marks in your examinations.
2nd PUC Business Studies Marketing Management Very Short Answer Questions With Answers
Question 1.
Explain the advantages of branding to marketers of goods and services.
Answer:
Branding is an important function performed by a marketer. It has following advantages to the marketers
Question 2.
List the characteristics of a good brand name.
Answer:
Following are the characteristics of a good brand name
Question 3.
What is the societal concept of marketing?
Answer:
The societal concept of marketing means an extension of marketing concept. Apart from the consumer satisfaction, it pays attention to the social, ethical and ecological aspects of marketing.
Question 4.
List the characteristics of convenience products.
Answer:
Following are the characteristics of convenience products
Question 5.
Enlist the advantages of packaging of a consumer products.
Answer:
Importance of packaging are as given below.
Question 6.
What are the limitations of advertising as a promotional tool? Enlist.
Answer:
Following are the limitations of advertising
Question 7.
List five shopping products purchased by you or your family during the last few months.
Answer:
2nd PUC Business Studies Marketing Management Short Answer Questions With Answers
Question 1.
What is marketing? What functions does it play with process of exchange of goods and services? Explain.
Answer:
Marketing is a total system of business activities designed to plan, price, promote and distribute want satisfying goods and services to present and potential customers. Marketing is concerned with exchange of goods and services from producer to consumers which involves many activities.
1. Gathering and Analysing Market Information: This is done to identify the needs of the customers and take various decisions for the successful marketing of the products and services.
2. Marketing Planning Another important activity or area of work of a marketer is to develop appropriate marketing plans, so that the marketing objective of the organisation can be achieved.
3. Product Designing and Development The design of the product contributes to make the product attractive to the target customers.
A good design can improve performance of a product and also give it a competitive edge in the market.
4. Standardisation and Grading: Standardisation refers to producing goods to predetermined specification which helps in achieving uniformity and consistency in the output which reduces the need for Inspection, testing and evaluation of the products.
Grading is the process of classification of products into different groups, on the basis of its features such as quality, size etc. It ensures that goods belong to a particular quality help in releasing higher prices for high quality output.
5. Packaging and Labelling: Packaging refers to designing the package for the products. Labelling refers to designing the label to be put on the package. Packaging provides protection to the product and also helps in its promotion. Labelling helps in self service.
6. Branding: Brand names help in creating product differentiations i.e., how the product can be distinguished from its competitors.
7. Customer Support Service: Marketing management relates to developing customer support service such as after sales services and handling customer complaints. All these aim at providing customer satisfaction which is a key to marketing success.
8. Pricing of Product: Price is an important factor affecting the success or failure of a product in the market. The marketers have to analyse properly the factors determining the price of a product.
9. Promotion: Promotion of products and services involves informing the customers about the firm’s product, its features etc and persuading them to purchase these products. It includes four methods: advertising, sales promotion, personal selling and publicity.
10. Physical Distribution: The important decision areas under physical distribution include managing inventory, storage, warehousing and transportation of goods from one place to another.
11. Transportation: Transportation involves physical movement of goods from one place to another. A marketer has to perform this function very efficiently keeping in mind the nature of product, cost, location of target market etc.
12. Storage or Warehousing: In order to maintain a smooth flow of products in the market, there is a need for proper storage of the products. Further, there is a need for storage of adequate stock of goods to protect against unavoidable delays in delivery or to meet out contingencies in the demand. Wholesalers and retailers play an important role in this.
Question 2.
Distinguish between the product concept and production concept of marketing.
Answer:
Difference between Product and Production Concepts are as given below.
| Basis | Product concept | Production concept |
| Main focus | The focus of the product concept is on quality of the product | The focus here is an quantity of the product |
| Means | It is achieved through continuous improvement in the quality | It is achieved through increased production leading to lower costs |
| Objective | Profit maximization through quality improvement | Profit maximization through increased production |
Question 3.
Product is a bundle of utilities. Do you agree? Comment.
Answer:
Yes, product is a bundle of utilities, which is purchased because of its capability to provide satisfaction of certain needs. A buyer buys a product or service for what it does for them or the benefits it provides. There can be three types of benefits, it provides to a customer.
e.g., the purchase of a motorcycle provides functional utility of transportation, but at the same time satisfies the need for prestige and esteem and provides social benefit by the way of acceptance from a group by riding it.
Question 4.
What are industrial products? How are they different from consumer products? Explain.
Answer:
Industrial products are those products, which are used as inputs in providing other products e.g., raw material, engines, tools, lubricants etc.
| Basis | Consumer product | Industrial product |
| Buyer | Consumer is the buyer | Industrial units and the processors are the buyers |
| Motive | It is purchased for personal consumption | It is bought and used for making other products |
| Number of buyers | Number of buyers of consumer products is large | Number of buyers is limited in case of industrial products |
The difference between consumer products and industrial products is based on their ultimate use and nature of purchases.
Question 5.
Distinguish between convenience product and shopping product.
Answer:
Difference between Convenience and Shopping Product
| Basis | Convenience product | Shopping product |
| Shopping efforts |
No or very little efforts are made in purchasing such products | Considerable time is devoted in purchasing such products |
| Cost | these products have low per unit cost | Unit price of such products is high |
| Retail outlets |
Number of retailers is large | Number of retailers is less |
| Customerbase | There is regular and continuous demand from the same set of customers | They cater to a large customer base |
Question 6.
Products is a mixture of tangible and intangible attributes. Discuss.
Answer:
In marketing, product is a mixture of tangible and intangible attributes which are capable of being exchanged for a value, with ability to satisfy customer needs. Beside physical objects, include services, ideas, persons and places in the concept of product. Thus, product may be defined as anything that can be offered in a market to satisfy a want or need. It is offered for attention, acquisition, use or consumption.
Question 7.
Describe the functions of labelling in the marketing of products.
Answer:
Label on a product provides detailed information about the product, its contents, methods of use etc. The various functions performed by a label are as follows
1. Describe the Product and Specify its Contents: One of the most important functions of labels is that it describes the product, its usage, cautions in use etc and specify its contents.
2. Identification of the Product or Brand: A label helps in identifying the product or brand e.g., we can easily pick our favourite soap from a number of packages, only because of its label.
3. Grading of Products Labels help grading the products into different categories. Sometimes, marketers assign different grades to indicate features or quality of the product e.g., different type of tea is sold by some brands under Yellow, Red and Green label categories.
4. Help in Promotion of Products An important function of label is to aid in promotion of the products. A carefully designed label can attract the customer to purchase. So, many labels provide promotional messages, some show discount or other schemes etc.
5. Providing Information Required by Law Another important function of labelling is to provide information required by law. e.g., the statutory warning on the package of cigarette or pan masala – ‘Smoking is injurious to health’ or ‘Chewing tobacco causes cancer.’
Question 8.
Discuss the role of intermediaries in the distribution of consumer non- durable products.
Answer:
The term channels of distribution refers the facilitate to the movement of goods and services and their title between the point of production and point of consumption, by performing a variety of marketing activities. Following are the functions performed by the channels of distribution
1. Accumulation: It aims at holding the stock to match between consumer demand and supply condition. Warehousing helps in maintaining continuous flow of goods and services.
2. Promotion: The marketing channels also help in promoting the demand for the product by displaying, demonstrating and participating in various promotional activities organised by the producers.
3. Negotiating: The marketing channels are the intermediaries between the producers and the consumers. They attempt to reach final agreement on price and other terms of the offer, so that transfer of ownership is properly effected.
4. Risk-taking: Risk taking is the basic responsibility of the intermediaries. It may arise out of physical deteriorations, changes in price levels, natural calamities, change in fashion etc. These are unavoidable as they hold sufficiently large and variety of inventories till the sale of stock.
5. Grading/Sorting: Grading is the process whereby they sort the products on the basis of different sizes, qualities, moisture contents and so on. It helps in realising the time value on shelf life for the product and at the same time the ultimate consumer feels satisfied with the uniform quality of the product.
6. Packaging: The products are packed in the small tradable lots for the convenience of the consumer.
7. Assembling/Assortment: Marketing channels aim at satisfying the needs of the customers. The products desired by the consumer may not be available in the market. They procure such goods from different sources, assemble or assort them as per the requirements of the consumers.
Question 9.
Explain the factors determining choice of channels of distribution.
Answer:
The choice of channels depend on various factors, which are discussed as follows
1. Product Related Factors The important product related considerations is deciding the channels. It includes whether the’ product is an industrial product or a consumer product. Industrial product require shorter channel and consumer products require longer channel.
2. Company Characteristics The important company characteristics affecting the choice of channels of distribution include the financial strength of the company and the degree of control it wants to hold on other channel member. Direct selling involves lot of foods to be invested in fixed assets say starting own retail outlets or engaging large number at sales force. Similarly if the management want to have greater control on the channel number, short channels are used but if the management do not want more control over the middlemen, it can go in for longer channel or large number of intermediaries.
3. Competitive Factors The choice of channel is also affected by what the competitor has selected as its channel. Sometimes, firm may decide to go for the same channel and sometimes absolutely opposite.
4. Market Factors Important market factors affecting the choice of channel of distribution include size of market, geographical concentration of potential buyers and quantity purchased.
5. Environmental Factors Sometimes environmental factors also helps in deciding the channel of distribution, e.g., in a depressed economy, marketers use shorter channels to distribute their goods In an economical way.
Question 10.
Explain briefly the components of physical distribution.
Answer:
The main components of physical distribution are as follows
1. Order Processing If a firm takes more time to process the order, then the consumer remains dissatisfied. Therefore, order processing has to made faster by using information technology.
2. Inventory Control Inventories ensure the availability of the product as and when consumer demand arises. There are various factors which influence a firm decision regarding the level of inventory e.g., degree of accuracy of sales forecast, cost of blocking of the working capital etc.
3. Warehousing It refers to the storage of goods from the time of production to the time of consumption, Warehousing is important as it creates time utility.
4. Transportation It creates place utility, It refers to the carrying of raw materials or finished goods from one place to another, The most important thing to be kept in mind is that the value addition by transportation should be greater than the cost of transportation.
Question 11.
Define advertising. What are its main features? Explain.
Answer:
Advertising is defined as the impersonal form of communication which is paid form by the marketer to promote some goods or services, It is commonly use as the promotional tool of the company, The important features of advertising are as follows
1. Paid Form Advertising is a paid form of communication which means the sponsor has to” bear the cost of communication with the prospects.
2. Impersonality There is no direct face to face contact between the prospect and advertiser, It is therefore, referred as the impersonal method of promotion.
3. Identified Sponsor Advertising is undertaken by some Identified individual or company, who makes the advertising efforts and also bears the cost of it.
Question 12.
Discuss the role of ‘Sales Promotion’ as an element of promotion mix.
Answer:
Sales promotion includes those marketing activities other than personal selling, advertising and publicity that stimulate consumer purchasing and dealer effectiveness, such as display, shows and exhibitions, demonstrations and various non-current selling efforts not in the ordinary routine, The main objectives of sales promotion activities are
2nd PUC Business Studies Marketing Management Long Answer Questions With Answers
Question 1.
Define Marketing. How is it different from selling? Discuss.
Answer:
Marketing is a total system of business activities designed to plan, price, promote and distribute want, satisfying goods and services to present and potential customers, difference between selling and marketing
| Basis | Selling | Marketing |
| Starting point | The selling starts after production has taken place | It stars even before goods are produced. |
| Main focus | To sell the product | To satisfy the consumer |
| Means | it is achieved through advertisement personal selling and sales promotion | It is achieved through integrated marketing |
| Ends /profit maximization | Profit maximization is achieved through volume of sales | Profit maximization is achieved through customer satisfaction |
Question 2.
What is the marketing concept? How does it help in the effective marketing of goods and services?
Answer:
Orientation of marketing implies that focus on the satisfaction of customers need, is the key to the success of any organisation in the market. All the decisions in the firm are taken from the point of view of the customers, e.g., What product will be produced, with what features and at what price shall it be sold or where shall it be made available for sale will depend on what do the customers want.
Marketing concept helps in effective marketing of goods and services by using the following.
Question 3.
What is marketing mix? What are its main elements? Explain.
Answer:
Marketing mix refers to the combination of four basic elements known as four P’s – Product, Price, Promotion and Place.
1. Product Mix: Product mix basically concerns with the features related to a product e.g., range, quality, size, labelling, packaging, branding etc. All products must satisfy consumer needs and expectations. It aims at providing good quality products at fair prices.
2. Price Mix: It includes decisions relating to price determination, discounts and allowances credit terms. It covers pricing objectives and pricing policies. Price should cover not only cost of production and selling expenses but also a reasonable profit margin. The price policy adopted by the enterprise should not only be cost based but also demand based and competition based.
3. Place Mix: Place mix links the seller and the buyer. The choice of channels of distribution and transport are the two major issues here. There are various factors which help in deciding the channel e.g., the time and the place, where the goods have to reach or transportation. It is the nature of goods, place of destination, cost and availability etc.
4. Promotion Mix: It refers to all marketing activities to increase the volume of sales of the product of an enterprise. It consists of means of marketing communication with a view to informing and persuading the prospective buyers to buy a certain product. It includes advertising, personal selling, publicity and sales promotion.
Question 4.
How does branding help in creating product differentiation? Does it help in marketing of goods and services? Explain.
Answer:
Branding helps a firm in distinguishing its products from that of its competitors. This helps the firm to secure and control the market for its products. If products were sold by generic names, it would be very difficult for the marketers to distinguish their products from their competitors. Thus, most marketers give a name to their product, which helps in identifying and distinguishing their products from their competitors’ products. This process of giving a name or a sign or a symbol etc to a product is called Branding.
Question 5.
What are the factors affecting determination of the price of a product or service? Explain.
Answer:
The factors affecting pricing decisions can be classified into two categories as under:
Internal Factors: These are controllable factors which exist within the company’s environment. They are:
1. Business Objectives: The pricing decision should always be in accordance with the business objectives like growth an expansion and customer satisfaction.
2. Cost of the product: This is the most important factor that determines the pricing decision. The price = Cost + profit. Thus the price for the product or service should cover the entire cost to the manufacturer as well as reasonable profits.
3. Quality of the product: High quality products give rise to higher cost and demands for higher price. But low quality products give rise to low cost and reduces the price.
4. Marketing Mix: The other elements of the marketing mix also influence the pricing decisions. If the other elements ail well co-ordinate, even a high-priced product can be sold easily.
5. Product differentiation: If a business concern differentiate its products from that of the competitors in terms of style, design, colour, package etc., it can change its prices easily than a firm which is too rigid in its product.
External Factors: These are the uncontrollable factors which exist outside the company’s environment. They are:
1. Elasticity of demand: A product that has inelastic demand, higher price may be fixed for that product. But if the demand for the product is elastic the price of the product must be kept flexible.
2. Pricing policy of competitors: The number of competitors and pricing strategies also will have a bearing on the pricing decisions of a concern.
3. Distribution channels: A lengthy distribution channel demands for higher price. On the other hand a shorter distribution channel reduces the price of the product.
4. Government policy: The government policies regarding certain products influence the pricing decision of the concern. Accordingly price needs to be adjusted.
Question 6.
What do you mean by ‘Channels of distribution’? What functions do they play in the distribution of goods and services? Explain.
Answer:
People, institutions, merchants and functionaries, who take part in the distribution of goods and services are called ‘Channels of Distribution’. Channels of distribution are set of firms and individuals that take title or assist in transferring title; to particular goods or services as it moves from the producers to the consumers.
Channels of distribution smoothen the flow of goods by creating possession, place and time utilities. They facilitate movement of goods by overcoming various barriers The important function performed by middlemen are the following.
1. Sorting: Middlemen procure supplies of goods from a variety of sources, which is often not of the same quality, nature and size. These goods are sorted into homogeneous groups on the basis of the size or quality.
2. Accumulation: This function involves accumulation of goods into larger homogeneous stock, which helps in maintaining continuous flow of supply.
3. Allocation: Allocation involves breaking homogeneous stock into smaller, marketable lots to sell them to different types of buyers.
4. Assorting: Middlemen build assortment of products for resale. There is usually a difference between the product lines made by manufacturers and the assortment or combinations desired by the users. Middlemen produce variety of goods from different sources and deliver them in combinations as desired by the customers.
5. Product Promotion : Middlemen also participate in some sales promotion activities, such as demonstration, special display, contests etc., to increase the sales of products.
6. Negotiation: Channels operate with manufacturers on the one hand and customer on the other. They negotiate the price, quality, guarantee and other related matters with customers, so that transfer of ownership is properly effected.
7. Risk-taking : In the process of distribution of goods, the merchant middlemen take title of the goods and thereby assume risks on account of price and demand fluctuations, spoilage, destruction etc.
Question 7.
Explain the major activities involved in the physical distribution of products.
Answer:
Physical distribution covers all the activities required to physically move goods from manufacturer to the customers. Important activities involved in the physical distribution include transportation, warehousing, material handling and inventory control.
1. Order processing: In a typical buyer-seller relationship, order placement is the first step. Products flow from the manufacturers to customers via channel members while orders flow from customers to manufacturers. Therefore, a good speedy and accurate system of order processing becomes a necessity.
2. Transportation: Transportation is the means of carrying goods and raw materials from the point of production to the point of sale. It is one of the major element in the physical distribution of goods. It is important because unless the goods are physically made available, the sale can not be completed.
3. Warehousing: Warehousing refers to the act of storing and assorting products in order to create time utility in them. The basic purpose of warehousing activities is to arrange placement of goods and provide facilities to store them. The need for warehousing arises because there may be difference between the time a product is produced and the time it is required for consumption. Generally, the efficiency of a firm in serving its customers will depend on, where these warehouses are located and where these are to be delivered.
4. Inventory Control: A very important decision to be made in respect of inventory is deciding about the level of inventory. Higher the level of inventory, higher will be the level of service to customers but the cost of carrying the inventory will also be high because a lot of capital would be tied up in the stock. The decision regarding level of inventory involves prediction about the demand for the product. A correct estimate of the demand helps to hold inventory and cost level down to a minimum. The major factors determining inventory levels include the following.
(a) Firm’s policy regarding the level of customer service. Higher the level of service, greater will be the need to keep more inventories.
(b) Degree of accuracy of the sales forecast: In case more accurate estimates are available, the need for keeping very high level of Inventory can beminimised.
(c) Responsiveness of the distribution system i.e., ability of the system to transmit inventory needs back to the factory and get products to the market.
(d) Cost of inventory, which includes holding cost, such as cost of warehousing, tied up capital etc and the manufacturing cost
Question 8.
‘Expenditure on advertising is a social waste’. Do you agree? Discuss.
Answer:
The opponents of advertising say that the expenditure on advertising is a social waste as it adds to the cost, multiplies the needs of the people and undermines social values. The proponents, however argue that advertising is very useful as it increases the reach, brings the per unit cost of production down and adds to the growth of the economy.
Following are the points of criticism and arguments against them.
1. Adds to cost: The opponents of advertising argue that advertising unnecessarily adds to the cost of product, which is ultimately passed on to the buyers in the form of high prices. It is line that advertisement of a product cost lots of money but it helps to increase the demand for the product as large number of potential buyers come to know about the availability of the products, its features etc and are persuaded to buy it. This increases the demand and therefore the production. As a result, the per unit cost of production comes down as the total cost is divided by larger number of units.
2. Undermines Social values: Advertising undermines social values and promotes materialism. It breeds discontentment among people as they come to know about new products and feel dissatisfied with their present state of affairs. This criticism is not entirely true. Advertisement in fact helps buyer by informing them about the new products which may be an improvement over the existing products.
3. Confuses the buyers: Another criticism against advertisements is that so many products are being advertised with similar claims, that the buyer gets confused as to which one is true and which can be relied upon, e.g., There are so many brands of soaps, shampoos, cars. TVs. cell phones etc which are hieing advertised. The supporters of advertisement, however argue that we are all rational human beings who make our decisions for purchase of products on factors, such as price, style, size, etc. Thus the buyers can clear their confusion by analysing the information provided on the advertisements and other sources before taking a decision to purchase a product.
4. Encourages sales of inferior products: Advertising does not distinguish between superior and inferior products and persuade people to purchase even inferior products. The desired level of quality will depend on the economic status and preferences of the target customers. Advertisements sell products of a given quality and the buyers will buy, if it suits their requirements.
5. Some Advertisements are in bad taste: Another criticism against advertising is that some advertisements are in bad taste. They show something which is not approved by some people. Some advertisement spoil the relationship between employer and employee, husband and wife etc.
Conclusion: From the above discussion, we learn that though advertisements are criticised, they still have their own advantages. It is not a complete social waste, rather it adds value to the social cause by giving a boost to production and generating employment.
Question 9.
Distinguish on advertising is a social waste: Do you agree? Discuss.
Answer:
Following are the differences between Advertising and Salesmanship:
| Basis | Advertising | Salesmanship |
| Nature of communication | It involves impersonal and mass one way communication. | It involves direct face to face two way communication. |
| Coverage | It has a wider coverage at a time. | It covers only individual or a small group of people at a time. |
| Flexibility | It is less flexible. | It is more flexible. |
| Feedback | It does not provide feedback immediately. | It provides feedback immediately. |
| Object | It aims at creation of customers. | It aims at selling the product or service. |
| Clarification of doubts. | Doubts cannot be clarified easily. | Here doubts can be clarified easily. . |
| Cost and Time | It is less costly and less time consuming. | It is more costly and more time consuming. |
| Media/Tools | It uses TV, Radio, Newspapers, Journals etc | Sales representatives are the only tool used here. |
2nd PUC Business Studies Marketing Management Application Based Problems
Question 1.
As marketing manager of a big hotel located at an important tourist destination, what societal concerns would be faced by you and what steps would you plan to take care of these concerns? Discuss.
Answer:
The societal marketing concept holds that the task of any organisation is to identify the needs and wants of the target market and deliver the desired satisfaction in an effective and efficient manner, so that the long term well-being of the consumers and the society is taken care of. In case any business activity encourages pollution, deforestation, storage of resources, population explosion, then its benefits cannot be justified. As marketing manager of a big hotel located at an important tourist destination certain care need to be taken regarding environment.
Question 2.
Suppose you are the Marketing Vice President of an Insurance Company, planning to design a new mediclaim policy for senior citizens. What information would you like to collect to perform this task and how will you collect such information? Discuss.
Answer:
The following information about the senior citizens should be collected
There are various sources of collecting the above information – personal visits, questionnaires, medical reports from nursing homes, doctors, clinics etc.
Question 3.
What shopping products have been purchased by you/your family in the last six months? Make a list and specify what factors influenced the purchase of each of these products.
Answer:
The following shopping goods were purchased by my family
Question 4.
What information is generally placed on the package of a food product? Design a label for one of the food product of your choice.
Answer:
The following information is normally placed, on the package of good product
Question 5.
For buyers of consumer durable products, what ‘customer care services’ would you plan as a manager of a firm marketing new brand of motorcycle. Discuss.
Answer:
For marketing motorcycles, the following customer care services can be planned
2nd PUC Business Studies Marketing Management Case Problems Studies
Nokia takes four-lane road to consumers.
NEW DELHI After having grabbed a king size 79% share of the 15,000 crore mo-bile handset market in India, Nokia India has found a new way of connecting people.
The mobile handset manufacturer has embarked upon a brand new retail strategy that is based on a classification of its consumers into four major groups that separates people in terms of usage, income level and lifestyle.
The classification is based on an extensive survey- the Nokia Segmentation Study – that was carried over two years involving 42,000 consumers from 16 countries. It studied the impact lifestyle choices and attitudes have on the mobile devices consumers buy and how they use them.
The strategy, which was announced globally in June last year, is being unfolded in India now. While the nitty-gritty of the new strategy is still being worked out, it is likely that the company would follow separate marketing strategies for the four different segments. The advertising campaigns could be different for the segments.
Nokia’s entire product portfolio has now been re-aligned towards these four groups to address the specific needs of each. The first of these segments Live, aimed at first time users whose basic need is to stay in touch with voice as the main driver, would have basic handsets low on features and price.
“These may be functional phones but the target group for these phones range from SEC C (low socio-economic class) to SEC A1 4- (very high socio-economic class) markets”, says Nokia India marketing head Devinder Kishore. The second segment Connect looks at more evolved users who look- for more functionality and features and connectivity. Accordingly, phones in this segment would have GPRS, camera and music capabilities.
The next two categories, Achieve and Explore, are aimed at high-end users and have Nokia’s top-end handsets, e.g., Achieve segment looks at enterprise users who need to have business functionalities in their phones. Nokia’s new E-series has been put under this segment with handsets having QWERTY keyboards and full Internet capabilities.
Aimed at high-end lifestyle users, Explore would be the most prominent segment for the company in the coming years. Says Nokia India multimedia business director Vineet Taneja, “This segment would see the most vibrant growth in the coming year. It will look at five different areas-applications, imaging, mobile, TV, music and gaming. We are fast developing (the ecosystem to support these areas.”
Nokia acquired music solution and content provider LoudEye and GPS solution provider Gate5. It is all slated to launch its most high-profile handset, which boasts of having a 5 mega pixel camera and GPS capabilities apart from iPod quality music, in February.
Says Taneja, “There is increasing demand for convergence and multiple functionalities, in high-end handsets. The N-series will try to address that”. Nokia feels that the new platform strategy wherein different handsets are launched under a platform, like the N- Series, will become a status and style statement and drive numbers.
Question 1.
Identify the four market segments that Nokia plans to address as per the news report above.
Answer:
Live, Connect, Achieve and Explore.
Question 2.
What is the basis of classification of the market used by the company?
Answer:
SEC Socio-Economic Class, usage and lifestyle
Question 3.
What do you mean by realignment of product portfolio? Illustrate this from the case above.
Answer:
It means that whatever product Nokia is planning to develop now, it will be according to the needs of the consumers. The four different handsets are Live, Connect, Achieve and Explore, being planned keeping the needs of four different types of users.
Question 4.
Identify the points that can be highlighted in marketing campaigns for each segment.
Answer:
The points that can be highlighted in marketing campaigns for each segment can be
Question 5.
What are the different considerations in the mind of consumers of each segment while purchasing mobile phones as given in the above case?
Answer:
The different considerations in the mind of each segment while purchasing mobile phones are these.
1. The first of these segments Live, aimed at first time users whose basic need is to stay in touch with voice as the main driver, So, here price of the phone is the main consideration.
2. The second segment Connect looks at more evolved users who look for more functionality and features and connectivity. So, here the features of the phone as well as an economic price tag are considered.
3. The next two categories, Achieve and Explore, are aimed at high end users. So, here the uniqueness of the handset and its business functionalities are the main points considered by the consumer.
2nd PUC Business Studies Marketing Management One Mark Questions and Answers
Question 1.
What is market?
Answer:
Market is place where buyers and sellers meet to effect purchase and sales
Question 2.
Name any one element of marketing mix.
Answer:
Product mix
Question 3.
Mention one function of marketing.
Answer:
Gathering and analyzing market information
Question 4.
State a factor affecting pricing decision.
Answer:
Cost of the product
Question 5.
Name a middleman in the channel of distribution.
Answer:
Wholesaler & retailer
Question 6.
Name any one features of advertisement.
Answer:
To inform the people about the introduction of the new product/service in the market.
Question 7.
Mention any one essential of an advertisement copy.
Answer:
Attention value
Question 8.
State a feature of personnel selling.
Answer:
Informative
Question 9.
What is a brand?
Answer:
Brand is a name, letter, term, symbol, mark, or design or a combination of these, intended to identify the goods or services
Question 10.
What is a Price?
Answer:
Price is a value of product expressed in terms of money
Question 11.
State any one method of sales promotion.
Answer:
Rebate of discount or offers.
Question 12.
State any one channel of distribution?
Answer:
Retailer or wholesaler
Question 13.
Mention any one objective of advertising?
Answer:
To create demand
Question 14.
Give an example for quantity gift?
Answer:
Pepsodent Tooth Paste – Buy 250 grams and get 100 grams FREE!!!
Question 15.
What is product?
Answer:
A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or a need.
Question 16.
State any one of the element of product.
Answer:
Brand
Question 17.
State any one of the element of promotion.
Answer:
Publicity
Question 18.
State any one of the objectives of the advertising.
Answer:
Creation of monopoly.
Question 19.
State any one of the advantage of advertising.
Answer:
Advertising helps to maintain steady and regular demand for the product or service of a concern.
Question 20.
State any one of the qualities of a successful salesman,
Answer:
Physical Qualities.
Question 21.
State any one of the objectives of sales promotion.
Answer:
To attract the. potential customers.
2nd PUC Business Studies Marketing Management Two Marks Questions and Answers
Question 1.
What is marketing?
Answer:
It is human activity directed at satisfying the needs and wants through exchange process.
Question 2.
Name any two elements of marketing mix.
Answer:
Product mix, price mix
Question 3.
What is branding?
Answer:
Banding is a distinctive processing of assigning as brand by whicha product can be identifies and remembered easily by the customer.
Question 4.
State the meaning of grading.
Answer:
Grading is the process of sorting out individual unit of a product in to well defined classes that possess similar characteristics of size & quality.
Question 5.
What is packing?
Answer:
It refers to placing product in suitable packages for safe & easy, handling
Question 6.
What do you mean by packaging?
Answer:
It involves designing & producing such appropriate packages for each unit of the product as well as for the bulk unit of the product.
Question 7.
What is warranty?
Answer:
It is a promise made by the producer that any repair, exchange or to replace the product if any manufacturing defect is found in the product with in mentioned time period from the date of purchase.
Question 8.
What is guaranty?
Answer:
It is a guaranty given by the marketer that the quality, durability of a product is good and free from any manufacturing defects and that the product will be replaced/ repaired at free of cost.
Question 9.
What do you mean by labeling?
Answer:
It refers to designing and affixing appropriate label to a product or its container.
Question 10.
Give the meaning of product.
Answer:
A product is bundle of utilities consisting of various product features and accompanying sendees.
Question 11.
What is pricing?
Answer:
It is process of fixing or determining reasonable price to the product or service.
Question 12.
Give the meaning of publicity.
Answer:
Publicity is used to promote different brands, product, persons, places, ideas and activities.
Question 13.
What is advertising?
Answer:
Any paid from of non personal presentation & promotion of ideas, goods or services by an identified sponsor.
Question 14.
What do you mean by sales promotion?
Answer:
It refers to all those activities designed to boost the sales of a product or services.
Question 15.
What do you mean by personnel selling?
Answer:
Personal selling is also known as salesmanship. It is an art of making prospective buyers to buy the product or service.
Question 16.
What do you mean by advertisement copy?
Answer:
The advertising message is known as advertisement copy.
Advertisement copy is taken as the life or the physical form to the idea of advertisement.
Question 17.
Write any two differences between advertising & personnel selling.
Answer:
| SL.No | Advertising | Personal Selling |
| 1. | It is impersonal in Nature | It is personal in Nature |
| 2. | It is Expensive | It is comparatively Economical |
Question 18.
Mention any two channels of distribution.
Answer:
Direct selling or channel – Selling Without Middlemen Indirect selling or channel – Selling through Middlemen
Question 19.
What is sweeps takes?
Answer:
It is a promotional tactic in which the prizes ranging from small items to bigger items or services are offered to the winner chosen through lucky draw.
Question 20.
Define marketing.
Answer:
Marketing is that phases of business activity through which human wants are satisfied by the exchange of goods and services.
Question 21.
Define market.
Answer:
Market is an area or atmosphere for a potential exchange.
Question 22.
State any two difference between marketing & selling.
Answer:
| SL. No | Marketing | Selling |
| 1. | It is Focused Towards Customer Needs | It is Product Focused |
| 2. | It is concerned with the Needs of the Customers | It is concerned with the necessities of the seller |
Question 23.
State any two functions of marketing.
Answer:
Question 24.
What is marketing mix?
Answer:
Marketing mix refers to aggregate of strategies formulated to achieve various marketing objectives.
Question 25.
State any two factors which affects pricing decision.
Answer:
1. Business Objectives: The pricing decision should always be in accordance with the business objectives like growth an expansion and customer satisfaction.
2. Cost of the product: This is the most important factor that determines the pricing decision. The price = Cost + profit. Thus the price for the product or service should cover the entire cost to the manufacturer as well as reasonable profits.
Question 26.
What do you mean by channels of distribution?
Answer:
It refers to the route or path, over which the products flow from the producer to the consumer.
Question 27.
Define promotion.
Answer:
It is a process of communication with the potential buyers involving information, persuasion & influence.
Question 28.
State any two objectives of advertising.
Answer:
To support personal selling programme.
2nd PUC Business Studies Marketing Management Four Marks Questions and Answers
Question 1.
Write any five factors affecting pricing decisions.
Answer:
The factors affecting pricing decisions can be classified into two categories as under:
Internal Factors: These are controllable factors which exist within the company’s environment. They are Business Objectives, Cost of the product, & Quality of the product.
1. Business Objectives: The pricing decision should always be in accordance with the ‘ business objectives like growth an expansion and customer satisfaction.
2. Cost of the product:- This is the most important factor that determines the pricing decision. The price = Cost + profit. Thus the price for the product or service should cover the entire cost to the manufacturer as well as reasonable profits.
3. Quality of the product: High quality products give rise to higher cost and demands for higher price. But low quality products give rise to low cost and reduces the price.
External Factors: These are the uncontrollable factors which exist outside the company’s environment. They are Elasticity of demand, Pricing policy of competitors etc
1. Elasticity of demand: A product that has inelastic demand, higher price may be fixed for that product. But if the demand for the product is elastic the price of the product must be kept flexible.
2. Pricing policy of competitors: The number of competitors and pricing strategies also will have a bearing on the pricing decisions of a concern.
3. Distribution Channels: A lengthy distribution channel demands for higher price. On the other hand a shorter distribution channel reduces the price of the product.
Question 2.
Explain briefly the channels of distribution.
Answer:
The Channels of distribution refer to the route or path, over which the products flow from the producer to the consumer. It can be classified into two main categories as under:
1. Direct Channel/Selling without middlemen: It is one of the channels of distribution under which the manufacturer sells his products directly to the ultimate consumers without the help of any middlemen. E.g Industrial goods and agricultural goods follow this channel.
2.Indirect Channels: Here the producer sells his products to the ultimate consumer through one or more middlemen. This indirect channel consists of the following distribution channels:
Question 3.
State the objectives of advertising.
Answer:
The objectives of advertising are:
Question 4.
What are the merits of advertising?
Answer:
Some of the general merits of advertising are given below:
Question 5.
Give the limitations of advertising.
Answer:
Some of the limitations of advertising are:
Question 6.
What are the arguments raised against advertising?
Answer:
The following arguments are raised against advertising:
Question 7.
What are the essentials of a good advertisement copy?
Answer:
Some the essentials of a good advertisement copy are:
Attention Value: Every advertisement copy should be designed with a high degree of attraction of the viewers. Use of catchy slogans, colorful picture, design borders etc in the ad copy will attract the attention of the viewers, towards product or service.
Memorizing value: The advertisement copy should be such that it should last for long in the minds of people. For example the advertisement for. “Washing powder Nirma” is remembered even today.
Suggestive value: The ad copy should highlight the need and necessity of the product/ service. For example, “Boost is the secret of my energy.” Suggests that boost is a healthy drink and gives good energy throughout the day.
Educational value: The ad copy should educate the customers by giving useful information about the usage of the product. For eg.advertisement for “Iodex” in TV gives the various purpose for which it can be used and how to use it.
Sentimental Value: Human behavior is affected by sentiments. Hence the ad copy should be prepared in such a way that it does not cause any damage to their sentiments.
Simplicity: The ad copy should be simple to understand and convincing to the people. Vague and confusing texts in advertisements should be avoided.
Question 8.
What are the features of Personal Selling?
Answer:
Informative: Personal selling is informative in nature. The seller or his representatives provide information about the product and its use.
Persuasive: It involves the act of persuasion by the salesmen to but products or services by a prospective buyer.
Demonstrative: The salesmanship allows for demonstration of the working of the product in the presence of the customer.
Creative: Personal selling is creative in nature. The salesman should be creative in increasing the demand for the product or service.
Face to face contact: Personal selling involves direct face to face contact between the buyers and sellers and influence better sales.
Flexibility: Personal selling is highly flexible in nature. The salesman can adjust their way of approach and attitudes according to the customers.
Question 9.
What are the objects of Sales Promotion?
Answer:
Some of the objects of sale promotion are:
Question 10.
Briefly explain any 5 sales promotion methods.
Answer:
Some of the commonly used sales promotion methods are as follows:
(a) Rebate/Discount: Rebate refers to discount. Many producers offer products at special prices in order to clear their excess stock.
(b) Refunds: Producers may offer to refund a part of price paid by customer. For this the customers are required to send to the producer some proof of purchase like duly filled in refund offer card or wrapper etc.
(c) Product Complement: Producers offer another product at free of cost upon purchase of the main product kept for sale.
(d) Quantity Gift: Under this sales promotion method, the producers offer extra quantity of the same product/service to the buyers upon purchase.
(e) Instant Draws and Assured Gifts: Under this method producers try to win customers by offering assured prizes on purchase of their particular product or on minimum purchase of their range of products.
2nd PUC Business Studies Marketing Management Eight Marks Questions and Answers
Question 1.
What do you mean by Marketing Mix? Explain briefly the elements of marketing mix. ,
Answer:
Marketing Mix is the combination of four inputs that revolve around the consumer satisfaction as the focal point. These.four elements are product, price, promotion and the place, known as 4 p’s of marketing mix.
Product Mix: Product is one of the main elements of the marketing mix. It occupies a dominant position. A product refers to anything that satisfies the needs of the consumers.
It may be a good, a service or an idea. The product mix has the following elements-
Price Mix: Price represents the value of a product expressed in terms of money. The actual profits accrue to the producer/seller only through the price. The price mix is concerned with fixing a reasonable price to the product / service that covers the cost and distribution expenses as well gets reasonable profits to the manufacturer. The elements of Price Mix are-
Promotion Mix: The promotion mix mainly deals with informing about company’s products or services to the potential consumers and stimulating them to purchase the same. The promotion mix includes the following elements:
Place Mix: Place or physical distribution mix is concerned with making available of the goods and services at right time, at right place and in right quantity. It enables for the smooth flow of goods & services from the producers to consumers. It creates place, time and possession utilities. The place mix includes the following elements:
Question 2.
What are the qualities of a successful salesman?
Answer:
The basic qualities which every salesman should possess in order to be a successful salesman
are:
(a) Good health and appearance: The salesman should have good health. There can be sound mind only in a sound body and health gives energy to work hard. Good appearance includes pleasant facial expressions, smart dress, personal cleanliness, good habits etc. which attracts the attention of customers towards the salesman.
(b) Good Posture: Good posture means upright bearing and carriage. A salesman should have a good posture which ensures confidence and commands respect from the customers.
(c) Voice and Conversational habits: A salesman should modulate his voice to be natural so as to attract the attention of customers.
(d) Cheerfulness: A salesman should possess a smiling face to attract all types of customers to him.
(e) Initiative: A salesman’s job needs considerable amount if initiative unlike, other jobs. It means an ability to work without continuous direction.
(f) Intelligence and imagination: Intelligence means quickness in understanding, better selling methods. Salesman should have imagination to look at things from the consumer’s point of view.
(g) Presence of mind:Presence of mind is the quickness in grasping the situation and handling it according to the needs of the time.
(h) Sharp memory: A good salesman should possess sharp memory which helps to recognize his customers and remember their requirements.
(i) Sociability: A salesman should have a liking for people to mix with them.
(j) Courtesy with good manners: He should be courteous in his behavior with all customers and especially with women customers.
(k) Honesty and Loyalty: A salesman should be honest in making representation about the products to the customers. He must be loyal to his employer.
Question 3.
Bring out the merits and demerits of advertising.
Answer:
Some of the general merits of advertising are given below:
Some of the limitations of advertising are:
Question 4.
Briefly explain the methods of sales promotion.
Answer:
Some of the commonly used sales promotion methods are as follows:
Rebate/Discount: Rebate refers to discount. Many producers offer products at special prices in order to clear their excess stock.
Refunds: Producers may offer to refund a part of price paid by customer. For this the customers are required to send to the producer some proof of purchase like duly filled in refund offer card or wrapper etc.
Product Complement: Producers offer another product at free of cost upon purchase of the main product kept for sale. ,
Quantity Gift: Under this sales promotion method, the producers offer extra quantity of the same product/service to the buyers upon purchase.
Instant Draws and Assured Gifts: Under this method producers try to woo customers by offering assured prizes on purchase of their particular product or on minimum purchase of their range of products.
Lucky Draw: Under this method, the producers/retailers offer many gifts that may have very high for too low value purchase.
Usable Benefit: Under this method the customers are offered some benefit on every purchase to be used in the subsequent purchase with the same seller.
Full finance at lower rates: Many marketers of consumer durables such as Electronic goods, Automobiles etc., offer easy financing schemes at lower rates.
Free samples: When a new product of lesser economic value is launched, the producers offer free sample of such products to the visiting customers to the visiting customers at noted outlets.
Sweepstakes and Contests: Sweepstakes is a promotional tactic in which the prizes ranging from small items to bigger items or services are offered to the winners chosen through lucky draw. Contests are the tests of skills or talent conducted among the visitors to the shops by the sponsor. The tests may vary as per the age group.
2nd PUC Business Studies Marketing Management Five Marks Questions and Answers
Question 1.
As an advertiser, what essentials do you expect in a good advertisement copy?
Answer:
Some the essentials of a good advertisement copy are:
Attention Value: Every advertisement copy should be designed eith a high degree of attraction of the viewers. Use of catchy slogans, colorful picture, design borders etc in the ad copy will attract the attention of the viewers, towards product or service.
Memorizing value: The advertisement copy should be such that it should last for long in the minds of people. For example the advertisement for. “Washing powder Nirma” is remembered even today.
Suggestive value: The ad copy should highlight the need and necessity of the product/ service. For example, “Boost is the secret of my energy.” Suggests that boost is a healthy drink and gives good energy throughout the day.
Educational value: The ad copy should educate the customers by giving useful information about the usage of the product. For eg. advertisement for “Iodex” in TV gives the various purpose for which it can be used and how to use it.
Sentimental Value: Human behavior is affected by sentiments. Hence the ad copy should be prepared in such a way that it does not cause any damage to their sentiments.
Simplicity: The ad copy should be simple to understand and convincing to the people. Vague and confusing texts in advertisements should be avoided.
You can Download Chapter 13 Representation of Geographical Data Questions and Answers, Notes, 2nd PUC Geography Question Bank with Answers Karnataka State Board Solutions help you to revise complete Syllabus and score more marks in your examinations.
I. Answer the following in a word or a sentence each:
Question 1.
Construct a Line-graph by using the following data Karnataka : Selected district wise Area under rice [in hectares].
| District | Area |
| Bellary | 1,22,721 |
| Davanagere | 1,30,208 |
| Mysore | 1,23,803 |
| Raichur | 1,64,925 |
| Shimoga | 1,31,070 |
| Mandya | 88,657 |
Answer:
Question 2.
Construct a Line-graph by using the following data Karnataka : Selected district – wise Population [in lakh].
| District | Population |
| Belgaum | 47.8 |
| Bagalkot | 18.9 |
| Bijapur | 21.8 |
| Bidar | 17.0 |
| Raichur | 19.3 |
| Dharwad | 18.5 |
Answer:
Question 3.
Construct a Line-graph by using the following data India: Net area sown of selected crops [in lakh hectare] 2011.
| Crops | Net sown area |
| Paddy | 358.64 |
| Jowar | 30.55 |
| Bajra | 86.38 |
| Maize | 75.84 |
| Groundnut | 49.84 |
| Soybean | 93.35 |
Answer:
Question 4.
Construct a Double Line graph by using following data Karnataka: Selected district wise decade growth rate of Population [in Percentage].
| District | 2001 | 2011 |
| Bellary | 22.41 | 24.92 |
| Gulbarga | 21.76 | 17.94 |
| Shimoga | 13.10 | 6.88 |
| Bijapur | 17.51 | 20.38 |
| Mysore | 15.75 | 13.39 |
| Kolar | 14.46 | 11.04 |
Answer:
Question 5.
Construct a Double Line graph by using following data Karnataka : Selected district wise sex ratio [Per – 1000 Males].
| District | 2001 | 2011 |
| Belagum | 960 | 969 |
| Bagalkot | 980 | 984 |
| Bijapur | 950 | 954 |
| Bidar | 949 | 952 |
| Raichur | 983 | 992 |
| Koppal | 983 | 983 |
Answer:
Question 6.
Construct a Double Line graph by using following data Karnataka : Selected district wise sex ratio [in Lakh] -2011.
| District | Male | Female |
| Haveri | 8.2 | 7.8 |
| Shimoga | 8.8 | 8.7 |
| Mysore | 15.1 | 14.9 |
| Bangalore | 50.2 | 46.0 |
| Bellary | 12.4 | 12.2 |
| Gulbarga | 13.0 | 12.6 |
Answer:
Question 7.
Construct a Single bar graph by using following data India: Selected state wise Rice Production [in Percentage].
| District | Production |
| West bengal | 15.80 |
| Andhra Pradesh | 12.71 |
| Uttar Pradesh | 11.91 |
| Punjab | 10.86 |
| Orissa | 7.31 |
| Tamilnadu | 7.08 |
| Karnataka | 3.70 |
Answer:
Question 8.
Construct a Single bar graph by using following data Karnataka : Decade wise sex ratio [Per 1000 males].
| Year | Female |
| 1951 | 966 |
| 1961 | 959 |
| 1971 | 957 |
| 1981 | 963 |
| 1991 | 960 |
| 2001 | 965 |
| 2011 | 968 |
Answer:
Question 9.
Construct a Single bar graph by using following data India: Decade wise sugarcane production [in million tons].
| Year | Production |
| 1951 | 57.05 |
| 1961 | 110.0 |
| 1971 | 126.36 |
| 1981 | 156.24 |
| 1991 | 241.04 |
| 2001 | 286.00 |
| 2011 | 310.0 |
Answer:
Question 10.
Construct a double bar graph by using the following data Karnataka: Selected district wise density of population [Per sq.km.
| District | 2001 | 2011 |
| Ramnagar | 288 | 303 |
| Bangalore [Rural] | 380 | 441 |
| Chikkaballapur | 273 | 298 |
| Kolar | 346 | 384 |
| Yadagir | 183 | 224 |
| Gulbarga | 198 | 233 |
Answer:
Question 11.
Construct a double bar graph by using the following data Karnataka: Literacy rate [in percentage] – 2011.
| Year | Male | Female |
| 1961 | 36.2 | 14.2 |
| 1971 | 41.6 | 21.0 |
| 1981 | 48.8 | 27.7 |
| 1991 | 67.3 | 44.3 |
| 2001 | 76.1 | 56.9 |
| 2011 | 82.9 | 68.1 |
Answer:
Question 12.
Construct a double bar graph by using the following data Karnataka: Selected district wise literacy rate [in percentage] – 2011.
| District | Male | Female |
| Dakshina Kannada | 93.31 | 84.80 |
| Haveri | 83.89 | 70.65 |
| Tumkur | 82.05 | 66.45 |
| Mandya | 78.14 | 62.10 |
| Koppal | 78.21 | 56.22 |
| Bagalkot | 80.16 | 58.55 |
Answer:
Question 13.
Construct a Pie Diagram using the following data India: Types of Railway gauges – 2012.
| Types | Percentage |
| Broad gauge | 86 |
| Meter gauge | 10 |
| Narrow gauge | 4 |
Answer:
Question 14.
Construct a Pie – Diagram using the following data India: Area under selected Kharif crops [in lakh hectare].
| Crops | Area |
| Cereals | 35.5 |
| Pulses | 16.4 |
| Oilseeds | 12.0 |
| Commercial crops | 11.0 |
| Others | 5.1 |
Answer:
Question 15.
Construct a Pie-diagram using the following data India: The percentages of N.H in terms of width -2011.
| Types | Percentage |
| Single Lane | 21 |
| Double Lane | 54 |
| Four/six/eight | 25 |
Answer:
Question 16.
Explain the Primary sources of data?
Answer:
Meaning – The data which are collected for the first time by a researcher or groups of researchers, institution or organizations are called Primary sources of data.
Types of Primary data collection:-
1. Through Personal interview : Personal interviews are the most commonly used method of collecting data, because the interviewer has the opportunity of explaining the study and answering any question, here the researcher gets direct information from the respondents.
2. By Personal observations: It refers to the collection of data or information by individuals or group of individuals, through direct observations in the field.
3. By Questionnaire : The most common method used in surverys is the Questionnaire. In this method, simple questions and their possible answers are written on a plain paper, and the respondents have to tick mark the possible answers from given choices.
4. Others methods :
Question 17.
Explain the Secondary sources of data?
Answer:
Meaning – The data those have been collected and analyzed already by some departments, organizations, NGO’s etc are called Secondary data.
Types of Secondary sources of data
1. Published sources – There are 5 types
2. Unpublished sources – There are 3 types.
Question 18.
Distinguish between Primary and Secondary data?
Answer:
| Primary | Secondary |
| (a) The data which are collected for the first time by a researcher or group of researchers, institutions or organizations are called Primary data. | (a) The data those have been collected and analyzed already by some departments, NGO’s etc …. are called Secondary data. |
| (b) These are original in character and first hand information. | (b) Here instead collecting the data by primary method the researcher may take, the help of Secondary data. |
Question 19.
Explain the components of GIS. Ans: The components of GIS are
Answer:
1. Data : Geographical data can be divided into 3
2. Software : There are the programmes designed to run the computer. However, GIS is designed to collect, store, process geographical data and construct maps.
3. Hardware : Hardware comprises storing and processing devices like central process unit, monito, key board, mouse, printer, scanner etc…
4. People : This component consists of the skilled people who involve in data capturing, processing and analyzing.
5. Analysis : It involves the processing of GIS data with various analyses so as to get meaningful information.
Question 20.
Explain the functions of GIS.
Answer:
Question 21.
Explain the segments of GPS.
Answer:
There are three segments of GPS:-
1. The space segments : The satellites of GPS are launched and positioned at an altitude of approximately 20200 km which is almost more than three times of the earth’s radius. The space segment consists of a constellation of 24 functioning GPs satellites located in 6 orbital plane with 4 satellites in each orbital plane. The time for the satellite to complete one revolution around the earth is 11 hrs and 58 minutes.
2. The control segment: The control segment consists of facilities necessary for satellites especially healthy monitoring, telemetry, tracking command and control clock error ‘ computation .of satellites. There are 5 GPS stations spread over the earths surface they are
3. The user segment: It is a total user and supplier community, both civilian and military. The user segment consists of all earth – based GPS receivers. Receivers very greatly in size and complexity, through the basic design in rather simple. The space and control segments are largely transparent to the operations of navigation functions.
Question 22.
Explain the applications of GPS.
Answer:
Question 23.
Explain the elements of remote sensing?
Answer:
Question 24.
Write the importance of remote sensing?
Answer:
Remote sensing is the science and art of obtaining information about an object, area or phenomenon through the analysis of data aquired by a device that is not in contact with it. This is done by sensing and recording reflected or emitted energy and processing, analyzing and applying that information.
In much remote sensing, the process involves an interaction between incident radiation and the targets of interest. This device can be a camera or a bank of sensors operated from an airplane or a satellite. Though satellite we can collect date related agriculture, forest, urban land use, water, natural calamities etc the satellite data is based for mapping, monitoring, studying the various phenomena related to earth’s surface.
You can Download Chapter 10 Financial Markets Questions and Answers, Notes, 2nd PUC Business Studies Question Bank with Answers Karnataka State Board Solutions help you to revise complete Syllabus and score more marks in your examinations.
2nd PUC Business Studies Financial Markets Multiple Choice Questions With Answers
Question 1.
Primary and secondary markets :
(a) compete with each other
(b) complement each other
(c) function independently
(d) control each other
Answer:
(b) Primary Market and Secondary Market complement each other as primary market deals with the issue of new securities and secondary market also helps the fresh Investor to enter the market.
Question 2.
The total number of Stock Exchanges in India is :
(a) 20
(b) 21
(c) 22
(d) 23
Answer:
(d) There are 23 stock exchanges in India list of stock exchanges in India are Bombay, National, Regional, Ahmedabad, Bengaluru, Bhubaneshwar, Calcutta, Cochin, Coimbatore, Delhi, Guwahati, Hyderabad, Jaipur, Ludhiana, Madhya Pradesh, Madras (Chennai), Magadh, Mangalore, Meerut, OTC Exchange of India, Pune, Saurashtra Kutch, Vadodara.
Question 3.
The settlement cycle in NSE is
(a) T+5
(b) T+3
(c) T+2
(d) T+1
Answer:
(c) The settlement cycle in NSE is T + 2.
Question 4.
The National Stock Exchange of India was recognised as stock exchange in the year
(a) 1992
(b) 1993
(c) 1994
(d) 1995
Answer:
(b) NSE was incorporated in 1992 and was recognised as a stock exchange in April 1993.
Question 5.
NSE commenced futures trading in the year
(a) 1999
(b) 2000
(c) 2001
(d) 2002
Answer:
(b) In 2000 NSE commenced future tradings.
Question 6.
Clearing and settlement operations of NSE is carried out by
(a) NSDL
(b) NSCCL
(c) SBI
(d) CDSL
Answer:
(b) NSCCL carries out the clearing and settlement operations of NSE.
Question 7.
OTCEI started on the lines of
(a) NASDAQ
(b) NYSE
(c) NASAQ
(d) NSE
Answer:
(a) OTCEI (Over The Counter Exchange of India) was established on the lines of NASDAQ. (National Association of Securities Dealers Automated Quotations).
Question 8.
To be listed on OTCEI, the minimum capital requirement for a company is :
(a) ₹ 5 crores
(b) ₹ 3 crores
(c) ₹ 6 crores
(d) ₹ 1 crore
Answer:
(b) In order to have its securities listed, the companies should have a minimum capital of ₹ 3 crores.
Question 9.
A Treasury bill is basically:
(a) an instrument to borrow short term funds
(b) an instrument to borrow long term funds
(c) an instrument of capital market
(d) None of the above
Answer:
(a) Treasury Bills are instruments to borrow short term funds. These are issued by RBI on behalf of the Government of India.
Question 10.
REPO is
(a) Repurchase agreement
(b) Read of the process
(c) Reliance petroleum
(d) None of the above
Answer:
(a) Repurchase agreement
2nd PUC Business Studies Financial Markets Short Answer Questions With Answers
Question 1.
What are the functions of a Financial Market?
Answer:
Financial market plays an important role in the allocation of scarce resources in an economy by performing the follow ing four important functions
a. Mobilisation of savings and channelising them into the most productive uses: A financial market facilitates the transfer of savings from savers to investors. It gives choice to the saver of different investments and thus, it helps to channelise surplus funds into the most productive use.
b. Facilitate price discovery: In a financial market, the households are suppliers of funds and business firms represent the demand. The interaction between them helps to establish a price for the financial asset which is being traded in that particular market.
c. Provides Liquidity to financial assets: Financial markets facilitate easy purchase and sale of financial assets. Holders of assets can readily sell their financial assets through the mechanism of financial market.
d. Reduces the cost of transactions: Financial markets provide valuable information about securities being traded in the market. It helps to save time, effort and money that both buyers and sellers of a financial asset would have to spend to try or otherwise find each other.
Question 2.
“Money Market is essentially a Market for short term funds:’ Discuss.
Answer:
The money market is a market for short term funds which deals in monetary assets whose period of maturity is upto one year These assets are close substitutes for’money. It is a market where low risk, unsecured and short term debt instruments that are highly liquid are issued and actively traded everyday. It enables the raising of short term funds for earning returns.
The major participants in the market are the Reserve Bank of India, Commercial Bank. Non¬Banking Finance Companies, State Governments, Large Corporate Houses and Mutual Funds.
Question 3.
What is a Treasury Bill?
Answer:
A Treasury Bill is an instrument of short term borrowing by the Government of India, Maturing in less than one year. They are also known as Zero Coupon Bonds issued by the RBI on behalf of the Central Government to meet its short term requirement of funds. Treasury Bills are issued in the form of a promissory note.
They are highly liquid and have assured yield and negligible risk of default. They are issued at a price which is lower than their face value and repaid at par. Treasury bills are available for a minimum amount of ₹ 25,000.
Question 4.
Distinction between Money Market & Capital Market?
Answer:
| SL. No. | Money market | Capital market |
| a. | It deals in short term funds. | It deals in a long term funds. |
| b. | The maturity period is from one day to one year. | The maturity period is for more than one year and can also include life time of a company. |
| c. | It provides funds for working capital requirement. | It provides funds for fixed capital requirement. |
| d. | Rate of returns is low | Rate of returns is high. |
| e. | Financial risk is relatively less. | Financial risk is relatively more. |
Question 5.
What are the functions of a Stock Exchange?
Answer:
The efficient functioning of a stock exchange creates a conducive climate for an active and growing primary market. Following are the important functions of a stock exchange.
a. Providing liquidity and marketability to existing securities: The basic function of a Stock Exchange is the creation of a continuous market where securities are bought and sold. It gives investors the chance to disinvest and reinvest. Thus it provides both liquidity and easy marketability to the existing securities in the market.
b. Pricing of securities: Share prices on a stock exchange are determined by the forces of demand and supply. A stock exchange is a mechanism of constant valuation through which the prices of securities are determined. Such a valuation provides important instant information to both buyers and sellers in the market.
c. Safety of transactions: The membership of a stock exchange is well-regulated and its dealings are well defined according to the existing legal framework, which ensures that the investing public gets a safe and fair deal on the market.
d. Contributes to economic growth: A stock exchange is a market in which existing securities are resold or traded. This process of disinvestment and reinvestment of savings gets channelised into productive investment avenues. This leads to capital formation and economic growth.
e. Spreading of Equity Cult: The stock exchange plays vital role in ensuring wider share ownership by regulating new issues, better trading practices and taking effective steps in educating the public about investments.
6. Providing scope for speculation: The stock exchange provides sufficient scope within the provisions of law for speculative activity in a restricted and controlled manner.
Question 6.
What are the objectives of the SEBI?
Answer:
The overall objective of SEBI is to protect the interest of investors, promote the development and regulate the securities in market. This may be elaborated as follows.
a. To regulate stock exchanges and the securities industry, to promote their orderly functioning.
b. To protect the rights and interests of investors, particularly individual investors and to guide and educate them.
c. To prevent trading malpractices and achieve a balance between self-regulation by the securities and its statutory regulation.
d. To regulate and develop a code of conduct and fair practices by intermediaries like brokers, merchant bankers etc with a view to making them competitive and professional.
Question 7.
State the objectives of the NSE.
Answer:
NSE was set up with the following objectives.
a. Establishing a nationwide trading facility for all types of securities.
b. Through an appropriate communication network, ensuring equal access to investors.
c. Through electronic trading system to provide a fair, efficient and transparent security market.
d. To enable shorter settlement cycles and book entry settlements.
e. Meeting international benchmarks and standards.
Question 8.
What is the OTCEI?
Answer:
The OTCEI is a company incorporated under the Companies Act, 1956. It was set up to provide smaii and medium companies an access to the capital market for raising finance in a cost effective manner. It is fully computerised, transparent, single window Exchange which commenced trading in 1992. This exchange is established on the lines of NASOAO the OTC exchange in USA. It has been promoted by UTI, ICICI, IOBI, IFCI, LIC, GIC, SBI, capital markets and Canbank financial services.
It is a negotiated market place that exists anywhere as opposed to the auction market place, represented by the activity on securities exchange. Thus, in the OTC, exchange, trading takes place when a buyer or seller walks up to an OTCEI counter, taps on the computer screen, finds quotes and effects a purchase or sale depending on whether the prices meet their target.
2nd PUC Business Studies Financial Markets Long Answer Questions With Answers
Question 1.
Explain the various money Market Instruments.
Answer:
Money Market Instruments :
1. Treasury7 Bill: A treasury7 bill is an instrument of short term borrowing by the Government of India maturing in less than one year. They are also known as Zero Coupon Bonds issued by Reserve Bank of India on behalf of the Central Government to meet its short term requirements of funds. They are issued in the form of a promissory note. They are highly liquid and issued at a price which is lower than their face value and repaid at par. Treasury bills are available for a minimum amount of ₹ 25,000.
2. Commercial Paper: Commercial paper is a short term unsecured promissory note, negotiable and transferable by endorsement and delivery with a fixed maturity period. It is issued by large and creditworthy companies to raise short term funds at lower rates of interest than market rates. It usually has a maturity period of 15 days to one year. The issuance of commercial paper is an alternative to bank borrowing for large companies that are generally considered to be financially strong. It is sold at a discount and redeemed at par.
3. Call Money: Call money is a short term finance repayable on demand, with a maturity period of one day to fifteen days, used for inter-bank transactions. Commercial Banks have to maintain a minimum cash balance known as cash reserve ratio. Call money is a method by which banks borrow from each other.
4. Certificate of Deposit: Certificates of deposit are unsecured, negotiable, short term instruments in bearer form, issued by Commercial Banks and Development Financial Institutions. They can be issued to individuals, Corporations and Companies during periods of tight liquidity, when the deposit growth of banks is slow but the demand for credit is high. They help to mobilise a large amount of money for short periods.
5. A Commercial Bill: A commercial bill is a Bill of Exchange used to finance the working capital requirements of business firms. It is a short term negotiable, self- liquidating instrument which is used to finance the credit sales of firms. When goods are sold on credit, the buyer becomes liable to make payment on a specific date in the future.
Question 2.
What are the methods of floatation in Primary Market?
Answer:
The primary market is also known as the new’ issues market. It deals with new securities being issued for the first time. There are various methods of floating new issues in the primary’ market
1. Offer through Prospectus: This involves inviting subscriptions from the public through issue of prospectus. A prospectus makes a direct appeal to investors to raise capital, throuqh an advertisement in newspapers and magazines. The issues may be under written and also required to be listed on at least one stock exchange. The contents at the prospectus have to be in accordance with the provisions of the Companies Act and SEBI disclosure and investor protection guidelines.
2. Offer for Sale: Under this method securities are not issued directly to the public but offered for sale through intermediaries like issuing houses or stock brokers. In this case, company sells securities enblock at an agreed price to brokers who, in turn, resell them to the investing public.
3. Private placement: Private placement is the allotment of securities by a company to institutional investors and some selected individuals. It helps to raise capital more quickly than a public issue. Access to the primary market can be expensive on account of various mandatory’ and non-mandatory expenses.
4. Rights Issue: This is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. The shareholders are offered the ’right’ to buy new shares in proportion to the number of shares they already possess.
5. e-IPOs: A company proposing to issue capital to the public through the on-line system of the Stock Exchange has to enter into an agreement with the stock exchange. This is called an Initial Public Offer (IPO). SEBI registered brokers have to be appointed for the purpose of accepting applications and placing orders with the company. The issuer company should appoint a registrar to the issue having electronic connectivity with the exchange. The issuer company can apply for listing of its securities on any Exchange other than the Exchange through which it has offered its securities. The lead manager co-ordinates all the activities amongst intermediaries connected with the issue.
Question 3.
Explain the Capital Market reforms in India.
Answer:
The National Stock Exchange is the latest, most modern and technology driven exchange. NSE has setup a nationwide fully automated screen based trading system. The NSE was setup by leading financial institutions, banks, insurance companies and others financial intermediaries. It is managed by professionals, who do not directly or indirectly trade on the exchange. The trading rights are with the trading members who offer their services to the investors. The Board of NSE comprises senior executives from promoter institutions and eminent professionals, without having any representation from trading members.
Objectives of NSE:
a. Establishing a nationwide trading facility for all types of securities.
b. Ensuring equal access to investors all over the country through an appropriate communication network.
c. Providing a fair, efficient and transparent securities market using electronic trading sys-tern.
d. Enabling shorter settlement cycles and book entry settlements, (v) Meeting international bench marks and standards.
Within a span of 10 year, NST Was able to achieve its objectives for which it was set up. It has been playing a leading role as a change agent in transforming the Indian capital market.
Question 4.
Explain the objectives and functions of SEBI. .
Answer:
Objectives of SEBI are as follows:
a. Development of securities market: The main objective of SEBI is to develop the securities market. It strictly prohibits the malpractices of brokers, merchants and companies involved in securities market and encourage transparent transaction dealing in the stock exchanges.
b. Protection of interest of investment: SEBI aims at protecting the rights and interests of investors through accurate and authentic information to the investors. SEBI can prosecute the companies if they fail to follow the rules and regulations laid down by SEBI.
c. Regulation of capital market: SEBI regulates both the primary and secondary capital markets. Every company issuing the shares to the public has to take the clearance from SEBI and follow the rules regarding the issue, settlement and speculation etc.
Functions of SEBI are:
Question 5.
Explain the various segments of NSE.
Answer:
NSE provides trading in the following two segments
a. Wholesale debt market segment: This segment provides a trading platform for a wide range of fixed income securities that include Central Government Securities, Treasury Bills, State Development Loans, Bonds issued by Public Sector Undertakings, floating rate Bonds, zero coupon Bonds, index Bonds, Commercial Paper, Certificate of Deposit, Corporate Debentures and Mutual Funds.
b. Capital Market Segment: The capital market segment of NSE provides efficient and transparent platform for trading in equity, preference, debentures, exchange traded funds as well as retail government securities.
2nd PUC Business Studies Financial Markets Case Problems
‘R’ Limited is a real estate company which was formed in 1950. In about 56 years of its existence the company has managed to carve out a niche for itself in this sector. Lately, this sector is witnessing a boom due to the fact, that the Indian economy is on the rise. The incomes of middle class are rising. More people can afford to buy homes for themselves due to easy availability of loans and accompanying tax concessions.
To expand its business in India and abroad the company is weighing various’options to raise money through equity offerings in India. Whether to tap equity or debt, market whether to raise money from domestic market or international market or combination of both? Whether to raise the necessary finance from money market or capital market. It is also planning to list itself in New York Stock Exchange to raise money through ADR’s. To make its offerings attractive it is planning to offer host of financial plans products to its stakeholders and investors and also expand it’s listing at NSE after complying with the regulations of SEBI.
Questionn 1.
What benefits will the company derive from listing at NSE?
Answer:
Following are the benefits the company can derive from listing at NSE
a. NSE provides nationwide trading facility for all types of securities.
b. The liquidity and best available prices for the securities are ensured by the processing speed of the Exchange.
c. The NSE network is used to disseminate information and company announcements across the country.
d. Enabling shorter settlement cycles and book entry settlement.
Question 2.
What are the regulations of SEBI that the company must comply with?
Answer:
Following are the regulations of the SEBI for new issues that the company must comply with.
a. Prospectus has to be attached with every application.
b. Objective of the issue and cost of project should be mentioned in the prospectus.
c. Company’s management, past history and present business of the firm should be highlighted in the prospectus.
d. Subscription list for public issue should be kept open for a minimum of 3 days and maximum of 10 days.
e. Collection agents are not allowed to collect application money in cash.
f. Issue should make adequate disclosure regarding the terms and conditions of redemption security conversion and other relevant features of the new Instrument so that an investor can make reasonable determination of risks returns, safety and liquidity of the instrument. The disclore shall be vetted by SEBI in this regard
Question 3.
How does the SEBI exercise control over ‘R’ Limited in the interest of investors?
Answer:
SEBI will exercise control over ‘R’ Limited by the following methods.
a. Prohibiting fraudulent and unfair trade practices In the securities market, unfair trade practices include price rigging, making misleading statements etc.
b. Prohibiting insider trading i.e., restricts the persons having access to price sensitive information about the company to take undue advantage of it.
c. Examing that adequate disclosure about the terms and conditions of redemption, security conversion and other relevant features of the new Instrument at the time of issue is made so that an investor can make reasonable determination of risks returns, safety and liquidity of the instrument.
Case Problem II
The above figures are taken from the website of National Stock Exchange of India. They illustrate the movement of NSE stock indices as well as world stock indices on the date indicated.
Question 4.
What do you mean by a stock index? How is it calculated?
Answer:
Stock index refers to the index used to capture the movement of the stock market. It is a barometer which measures overall market trend through a set of stocks which are representatives of the market An ideal index must represent changes in the prices of securities and also show the price movement of different classes of shares. Most of the stock market uses the following 3 methods of calculating index.
a. Price weighted Index: An index reflecting the sum of the prices of the sample share in a certain year/month/week/day with reference to a base year.
b. Equal Weighted Index : An index reflecting the simple arithmetic average of thfe price relatives of a sample of shares in a certain period with reference to a base year,
c. Value Weighted Index: It is an index reflecting the aggregate market capitalisation of the sample shares in certain period in relation to the base year.
Question 5.
What conclusions can you draw from the various movements of NSE stock indices?
Answer:
There is a downward swing in the stock market. While comparing the previous and current index of NSE, we can say that there is a depression in the market as index is down for all the sectors.
Question 6.
What factors affect the movement of stock indices? Elaborate on the nature of these factors.
Answer:
The fall in the domestic market as given in the above table, can significantly be attributed to the market sentiments of world market. We can see the world indices and NSE indices are moving in the same direction.
Question 7.
What relationship do you see between the movement of indices in world markets and NSE indices?
Answer:
There is direct relation between NSE indices and world market indices. As there is negative trend in world index, it brings negative trend in NSE index also.
Question 8.
Give details of all the indices mentioned above, you can find information on the web or business magazines.
Answer:
Answer to this question is based on reader’s evaluation.
2nd PUC Business Studies Financial Markets One Mark Questions and Answers
Question 1.
Name any one type of financial market.
Answer:
Money Market or Capital Market.
Question 2.
Give the meaning of financial market.
Answer:
It is a market which deals with various financial instruments & financial services
Question 3.
State the minimum & maximum period of maturity in the case of money market instruments.
Answer:
Minimum maturity period is one year and Maximum maturity period is more than one year.
Question 4.
Name any one money market instrument.
Answer:
Treasury bills or Call money
Question 5.
Name the most important constituent of Indian money market.
Answer:
Reserve Bank of India.
Question 6.
Name the money market instrument issued by government of India.
Answer:
Treasury bills.
Question 7.
Name any one capital market instrument.
Answer:
Debt market or Equity market
Question 8.
State any one component of capital market.
Answer:
Primary Capital Market or Secondary Capital Market
Question 9.
What is DEMAT account?
Answer:
It is an account in which all securities are held electronically by cancelling paper certificates through a process called dematerialization.
Question 10.
What is dematerialization of securities?
Answer:
Dematerialization is the process of converting the certificates held by the investor in physical form to an electronic form through DEMAT Account.
Question 11.
What is the biggest advantage of online trading on a stock exchange?
Answer:
They charge considerably lower brokerage for stock trading
Question 12.
Expand SEBI
Answer:
SECURITIES AND EXCHANGE BOARD OF INDIA
Question 13.
State any one objective of SEBI
Answer:
Development of securities market
Question 14.
Expand NSEI .
Answer:
National Stock Exchange India
Question 15.
Expand NASDAQ
Answer:
National Association of Securities Dealers Automate Quotation
Question 16.
Expand BSE
Answer:
Bombay Stock Exchange.
Question 17.
Expand SENSEX
Answer:
It is an abbreviation of Bombay Exchange SENSitive IndEX (SENSEX)
Question 18.
Name any one type of speculator in a stock exchange.
Answer:
Bull or Stag
Question 19.
Which market provides short term finance?
Answer:
Money Market
Question 20.
What is capital market?
Answer:
Capital market is a market for medium & long terms funds.
Question 21.
State any one function of stock exchange.
Answer:
Mobilization of savings
Question 22.
State any one depository services.
Answer:
It keeps custody of investments holding.
Question 23.
State any one function of SEBI.
Answer:
Registering & regulating the working of mutual funds.
2nd PUC Business Studies Financial Markets Two Marks Questions and Answers
Question 1.
What is money market?
Answer:
It is a market for borrowing & lending of short-term funds with high liquidity.
Question 2.
What is capital market?
Answer:
Capital market is a market for medium & long terms funds. Whereby long & intermediate term funds are & made available to individuals, business & government.
Question 3.
Write any two money market instruments.
Answer:
Treasury bills. & Certificate of deposits.
Question 4.
What are treasury bills?
Answer:
A treasury bills an instrument of short term borrowing by the Government of India maturing in less than one year.
Question 5.
What are commercial papers?
Answer:
Commercial paper is a short term unsecured promissory note, negotiable & transferable by endorsement & delivery with a fixed maturity period issued by the companies.
Question 6.
What are the certificates of deposits?
Answer:
These are short term, unsecured negotiable instrument in bearer from issued by the commercial banks.
Question 7.
What is call money?
Answer:
Call money is a method by which banks faced with temporary shortage of cash, will borrow short term finance from other banks.
Question 8.
What is bankers acceptance?
Answer:
A commercial bill can be discounted with the banker before its date of maturity which is called as banker’s acceptance.
Question 9.
What is primary capital market?
Answer:
It also known as New Issue Market or Stock Market. It mobilizes the funds from the investors by the directly issuing securities.
Question 10.
What is secondary capital market?
Answer:
It is a market for the purchase & sale of second hand or existing securities. This market creates liquidity & easy marketability to the securities.
Question 11.
Name the two depositories operating in India.
Answer:
NSDL (National Securities depository Account) CDSL (Central Depository Service Limited)
Question 12.
State any two depository services.
Answer:
Question 13.
State any two objectives of SEBI
Answer:
Development of securities market & Protection of Interest of Investment.
Question 14.
Who is a bulls speculator?
Answer:
Bulls are speculator on the stock exchange who always expect a rise in the prices of securities.
Question 15.
Who is a bear speculator?
Answer:
Bear are the speculator on the stock exchange who always expects a fall in the prices of securities.
Question 16.
Give the meaning of spot delivery?
Answer:
It means securities are delivered to the purchaser and payment is received immediately or at the spot.
Question 17.
What do you mean forward delivery?
Answer:
Here the securities are transferred to the purchaser immediately and payment is received at later date.
Question 18.
What are blue chips?
Answer:
In stock market it represents shares with high market capitalization & also a major share included in the main index of stock exchange.
Question 19.
What are commercial bills?
Answer:
It is a negotiable & self liquidating money market instruments with low risk. It is a bill of exchange used to finance the working capital requirements of business organization.
Question 20.
State two difference between capital & money market.
Answer:
| SI no. | Money Market | Capital market |
| 1. | Instruments of highly liquid. | Instruments are relatively less liquid. |
| 2. | Rate of returns is low | Rate of returns is high |
Question 21.
Define stock exchange.
Answer:
Stock exchange are organized auction markets where buyers & sellers come together through their brokers to effective transactions in securities admitted to listing on the exchange.
Question 22.
State any two features of stock exchange
Answer:
Ensures safety of funds. & Evaluation of securities.
Question 23.
What is DEMAT accounting?
Answer:
It is an account in which all securities are held electronically by cancelling paper certificates through a process called dematerialization.
Question 24.
State any two functions of SEBI.
Answer:
Question 25.
Who is lame duck?
Answer:
Lame duck is a bear speculator who is not able to settle his transaction on his settlement day.
Question 26.
Who is stag?
Answer:
A stag is a cautious speculator. He applies for a large number of shares in the new issue market on expectation that the price of the share will rise & sold for a premium.
Question 27.
What is arbitrage?
Answer:
The operators bring stability in the prices of the securities among various stock exchanges. The operators buy the securities from the stock exchanges where the prices are low and sell it in other stock exchanges where the prices are higher.
Question 28.
What is capital market? Explain the features of capital market.
Answer:
Capital market is a market for medium & long terms funds. Where by long & intermediate term funds are & made available to individuals, business & government.
Question 29.
What is REPO and Reverse REPO?
Answer:
REPO: REPO means an instruments for borrowing funds by selling securities with an agreement to repurchase the securities on a mutually agreed future date at an agreed price which includes interest for the funds borrowed.
Reverse REPO: Reverse REPO means an instrument for lending funds by purchasing securities with an agreement to repurchase the securities on a mutually agreed future date at an agreed price which includes interest for funds borrowed.
2nd PUC Business Studies Financial Markets Four Marks Questions and Answers
Question 1.
Explain any five money market instruments.
Answer:
Treasury bills: A treasury bills an instrument of short term borrowing by the Government of India maturing in less than one year.
Call Money: Call money is a method by which banks faced with temporary shortage of cash will borrow short term finance from other banks.
Certificate of Deposit: These are short term, unsecured negotiable instrument in bearer from issued by the commercial banks. They can be issued to individuals, corporations & companies.
Commercial Paper: Commercial paper is a short term unsecured promissory note, negotiable & transferable by endorsement & delivery with a fixed maturity period issued by the companies.
Commercial Bills: commercial bills are short terms, negotiable & self liquidating money market instrument with low risk. It is used to finance the working capital requirement of business organization.
Question 2.
Explain briefly the trading procedure on a stock exchange or market.
Answer:
Selection of broker: The first step is to select a broker who will buy or sell securities on behalf of the investors as trading of securities can only be done through SEBI registered brokers
Opening DEMAT Account: The next step is to open a DEMAT account in order to trade. It is an account in which all securities are held electronically by cancelling paper certificates through a process called dematerialization.
Placing the order: The investors should specify the securities to be bought or sold & the price range to make a order to broker either personally or through telephone, mobiles, emails etc.
Executing the Order: The brokers issues a contract note & copy of the contract note is sent to the investors: The contract note contains the name & the period of the securities, names of the parties, brokerage charged.
Settlement: The mode of settlement depends upon the nature of the contract. The settlement period is T+2. That means any tread taking place on Monday gets settlement by Wednesday
Question 3.
State any ten depository service offered by a depository.
Answer:
Question 4.
What is stock exchange? Explain the features of stock exchange.
Answer:
Stock exchange is an organized market for the purchase and sale of government & listed industries financial securities. It is a secondary market for securities, that means, the securities which are already issued in the primary market, are traded in this market.
The Main features of stock exchanges are:
Question 5.
Explain the objectives of SEBI.
Answer:
SEBI – Securities Exchange Board of India was established by Government of India in 1988 as a regulator of capital market. The main idea of SEBI was to promote healthy growth of securities market and to provide protection for investors.
Objectives of SEBI are as follows:
1. Development of securities market: The main objective of SEBI is to develop the securities market. It strictly prohibits the malpractices of brokers, merchants and companies involved in securities market and encourage transparent transaction dealing in the stock exchanges.
2. Protection of Interest of Investment: SEBI aims at protecting the right & interest of investors through accurate and authentic information to the investors. SEBI can prosecute the companies if they fail to follow the rules and regulation laid down by SEBI.
3. Regulation of capital market: SEBI regulate both the primary and secondary capital markets. Every company issuing the shares to the public has to take the clearance from SEBI and follow the rules regarding the issue, settlement and speculation etc.
Question 6.
Explain the functions of SEBI.
Answer:
Functions:
2nd PUC Business Studies Financial Markets Eight Marks Questions and Answers
Question 1.
State any ten functions of SEBI
Answer:
Functions:
2nd PUC Business Studies Financial Markets Five Marks Questions and Answers
Question 1.
List any ten stock exchanges operating in India.
Answer:
Madhay Pradesh stock Exchange, Indore (Madhya Pradesh) Magadha Stock Exchange, Patna (Bihar)
Cochin Stock Exchange, Cochin (Kerala)
Madras Stock Exchange, Chennai (Tamil Nadu)
Delhi Stock Exchange, (Delhi)
Bangalore Stock Exchange, Bangalore (Karnataka)
Canara Stock Exchange, Mangalore (Karnataka)
UP Stock Exchange, Kanpur (Uttar Pradesh)
Pune Stock Exchange, Pune (Maharashtra)
Meerut Stock Exchange, Meerut (Uttar Pradesh)
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I. Answer the following in a word or a sentence each:
Question 1.
What do you mean by Environment Pollution?
Answer:
Environment Pollution means the release of Harmful substances and contamination of environment.
Question 2.
What is Water Pollution? ,
Answer:
Degradation of the quality of water due to indiscriminate use of water is called water pollution.
Question 3.
At which strech/course the yamuna river is most polluted?
Answer:
In Delhi to confluence with Chambal and Mathura and Agra is the stretch of the yamuna River is most polluted.
Question 4.
What is Air Pollution?
Answer:
Increased concentration of contamiants like dust, fumes, gas, fog, odour, smoke or vapour in the air is called Air Pollution.
Question 5.
What is Noise Pollution?
Answer:
The state of high level of noise which unbearable and uncomfortable to Human beings is called Noise Pollution.
Question 6.
What are Solid Waster?
Answer:
Solid waster refers to any unwanted or discarded old materials from residental, commercial, mining, industriaTarid agricultural activities. Such as old news paper, glass bottles, plastic bags, scrap metals, junked vehicles, dead animals etc.
Question 7.
What are Slums?
Answer:
A slum is an Area of illegal construction with in the city characterized by substandard housing and dirt.
Question 8.
What do you mean by Planning?
Answer:
Planning is the process of thinking formulation of a scheme or programme and implementation of a set of action to achieve some goal. ,
Question 9.
What is Sustainable Development?
Answer:
The term sustainable Development is defined as development to achieve the needs of present generation without compromising future generation’s need.
Question 10.
What is Environment?
Answer:
The study of surroundings of man lives and works is called Environment.
Question 11.
What are the types of environement.
Answer:
Question 12.
What is Land Pollution.
Answer:
Disposal of untreated industrial waste, use of pesticides and fertilizers into the soil is called soil or land pollution.
Question 13.
What are effects of air pollution?
Answer:
It effects on health by various diseases related to respiratory nervous and circulatory systems, urban smog, acid rain & global warming etc.
Question 14.
What is land degradation?
Answer:
Decreasing of quality of agricultural land due to soil erosion, waterlogging, salinization and alkalization which is called ‘Land degradation’.
Question 15.
What is deforestation?
Answer:
Irresponsible cutting of trees by man for commercial and other purposes is called ‘deforestation’.
Question 16.
When the first five year plan was started? and who was the Chairman of the commission.
Answer:
In the year-1951-52. The Prime Minister is the ex-office Chairman.
Question 17.
What is ‘Kyoto Protocol’?
Answer:
It is an agreement on emissions norms for greenhouse gases in developed countries.
Question 1.
What are Pollutants?
Answer:
The agents which causes of Pollution can be called Pollutants for ex: coal, petrol, diesel, toxic effluents use of pesticides and fertilizers, aircrafts, automobiles etc.
Question 2.
What are the types of Pollutions?
Answer:
The types of Pollutions are :-
Question 3.
What are the Causes of Water Pollution?
Answer:
Question 4.
What are the effects of Water pollution on Human health?
Answer:
Water Pollution is a source of various water diseases which causes diarrhoea, intestinal worms hepatities etc.
Question 5.
Name the states of India where Ganga river is most polluted?
Answer:
Uttar Pradesh, Bihar and West Bengal are the states of India where Ganga river is most polluted.
Question 6.
What are the main causes of Pollution of Ganga river?
Answer:
Question 7.
Name three states of India where Yamuna river is most Polluted?
Answer:
Question 8.
Wha are the causes/sources of Air Pollution?
Answer:
Question 9.
What are the effects of Air Pollution?
Answer:
Question 10.
What are the causes for Noise Pollution?
Answer:
Question 11.
What are the effect of Noise Pollution?
Answer:
Question 12.
Mention two sources of solid wastes?
Answer:
Question 13.
Explain harmful effects of Solid wastes?
Answer:
Question 14.
Define the concept of land degradation?
Answer:
Pressure on agricultural land increase not only due to the limited availability but also by deterioration of quality of Agricultural land due to soil erosion, water, logging, salinization and alkalization which is called‘Degradation’. ‘
Question 15.
Name different types of degraded lands in India.
Answer:
Question 16.
What are the strategies for sustainable development?
Answer:
Question 17.
Write the important elements of natural environment.
Answer:
The elements of natural environment such as land, soil, water bodies, drainage system, air masses, climate, rock, soil, minerals, plains, plateau, hills, mountains, vegetation and animal life etc.
Question 18.
Write the four most polluted rivers in the world.
Answer:
Question 19.
Name any four most polluted cities in the world.
Answer:
Question 20.
Name any four most polluted countries in the world.
Answer:
Question 21.
What are remidies to control the Air and Noise Pollution.
Answer:
Question 22.
What are the causes of deforestation.
Answer:
Question 23.
Mention the drought prone areas in India.
Answer:
Question 1.
Explain about urban waste disposal in India?
Answer:
Question 2.
How solid wastes can be used for benefits? State any six problems of related to slums in metropolitan cities of India?
Answer:
Benefits : These wastes should be treated as resources and utilized for generating energy and compost.
Question 3.
Discuss any six problems of people living in slums?
Answer
Question 4.
Mention the Processes that induce land degradation in India?
Answer:
Question 5.
How the problem of land degradation can be tackled.
Answer:
Question 6.
What do you mean by the term planning? Which are the two approaches to planning? Explain each of them?
Answer:
Planning is the process by which an individual or organization decides in advance on some future course of action.
It involves the proces of thinking, formulation of a scheme or programme and implementation of a set of actions to achieve some goal.
There are two approaches to planning, sectorial planning and regional planning.
This type of Planning is termed as regional planning.
Question 7.
What is target area planning? Why it is necessary in India? Give any four examples of target area planning?
Answer:
Target area planning means making schmes for the development of particular group or area such as backward regions.
Question 8.
Explain the concept of sustainable development?
Answer:
Question 9.
Discuss the challenges of sustainable development in India?
Answer:
Population is a major challenges for the sustainable development. In the beginning of the 21st century the population of the Earth reached 6 billion and is expected to level out between 10 and 11 billion over the next to years.
Question 10.
Explain the Effects of deforestration and Remidies to control it.
Answer:
Effects of deforestration:
Remidies to control the deforestration:
Question 11.
Describe about Drought prone areas programme.
Answer:
The basic objective of the programme is to minimize the adverse effects of drought on production of crops and livestock, water and human resources.
Question 12.
Explain the strategies for sustainable Development.
Answer:
The conceptual meaning of sustainable development is not to create an obstacle in development process but this concept belongs to how we utilize our resources. The following strategies can be useful.
Input efficient technology :- It will reduce the utilization and exploitation of resources. So this technology will be good for sustainable development.
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2nd PUC Business Studies Financial Management Objective-Type Questions With Answers
Question 1.
The cheapest source of finance is
(a) debenture
(b) equity share capital
(c) preference share
(d) retained earning
Answer:
(d) Retained earning is the cheapest source of finance.
Question 2.
A decision to acquire a new and modem plant to upgrade an old one is a
(a) financing decision
(b) working capital decision
(c) investment decision
(d) None of the above.
Answer:
(c) Investment decision is related to careful selection of assets in which funds will be Invested by firms. Thus, the above case comes under the investment decision.
Question 3.
Other things remaining the same, an increase in the tax rate on corporate profits will
(a) make debt relatively cheaper
(b) make the debt relatively the dearer
(c) have no impact on the cost of debt
(d) we can’t say
Answer:
(a) If the tax rate on corporate profits are increased, it makes debt relatively cheaper
Question 4.
Companies with higher growth pattern are likely to
(a) pay lower dividends
(b) pay higher dividends
(c) dividends are not affected by growth considerations
(d) None of the above
Answer:
(a) Companies who are having a higher growth pattern are likely to pay lower dividends.
Question 5.
Financial leverage is called favourable if
(a) return on investment is lower than the cost of debt
(b) return on investment is higher than the cost of debt
(c ) debt is easily available
(d) if the degree of existing financial leverage is low
Answer:
(b) If ROI is higher than cost of debt, financial leverage in that case is called favourable.
Question 6.
Higher debt equity ratio ( Debt/Equity ) results in
(a) lower financial risk
(b) higher degree of operating risk
(c) higher degree of financial risk
(d) higher EPS
Answer:
(c) Higher debt equity ratio results in higher degree of financial risk.
Question 7.
Higher working capital usually results in
(a) higher current ratio. higher risk and higher profits
(b) lower current ratio, higher risk and profits.
(c) higher equity, lower risk and lower profits
(d) lower equitably, lower risk and higher profits
Answer:
(a) If the working capital is higher, it results in higher current ratio, higher risk and higher profits.
Question 8.
Current assets are those assets which get converted into cash
(a) within six months
(b) within one year
(c) between one and three years
(d) between three and five years
Answer:
(b) Current assets are those assets which are converted into cash within one year.
Question 9.
Financial planning arrives at
(a) minimising the external borrowing by resorting to equity issues
(b) ensuring that the firm always have significantly more fund than required so that there is no paucity of funds
(c) ensuring that the firm faces neither a shortage nor a glut of unusable funds
(d) doing only what is possible with the funds that the firm has at its disposal
Answer:
(c) Financial planning means deciding how much to spend and on what to spend it ensuring that the firm faces neither a shortage nor a glut of unusable funds.
Question 10.
Higher dividend per share is associated with
(a) high earnings, high cash flows, unstable earnings and higher growth opportunities
(b) high earnings, high cash flows, stable earnings and high growth opportunities
(c) high earnings, high cash flows, stable earnings and lower growth opportunities
(d) high earnings, low cash flows, stable earnings and lower growth opportunities
Answer:
(c) Higher dividend per share includes high earnings, high cash flows, stable earning and lower growth opportunities.
Question 11.
A fixed asset should be financed through
(a) a long term liability
(b) a short term liability
(c) a mix of long and short term liabilities
(d) Not given
Answer:
(a) Fixed assets financed through longterm liability.
Question 12.
Current assets of a business firm should be financed through
(a) current liability only
(b) longterm liability only
(c) both types (i.e., long and short term liabilities)
(d) None of the above
Answer:
(c) Current assets are financed through both long and short term liabilities.
2nd PUC Business Studies Financial Management Short Answer Questions With Answers
Question 1.
What is meant by capital structure?
Answer:
Capital structure refers to the mix between owners personal and borrowed funds. It represents the proportion of equity’ and debt.
Capital Structure = (Debt/Equity)
Question 2.
Discuss the two objectives of Financial Planning.
Answer:
Financial Planning strives to achieve the following two objectives
1. To ensure availability of funds whenever these are required: This includes a proper estimation of the funds required for different purposes such as for the purchase of long term assets or to meet day-to-day expenses of business etc.
2. To see that the firm does not raise resources unnecessarily: Excess funding is almost as bad as Inadequate funding. Efficient financial planning ensures that funds are not raised unnecessarily in order to avoid unnecessary addition of cost.
Question 3.
What is ’financial risk’? Why does it arise?
Answer:
It refers to the risk of company not being able to cover its fixed financial costs. The higher level of risks are attached to higher degrees of financial leverage. With the increase in fixed financial costs, the company is also required to raise its operating profit (EBIT) to meet financial charges. If the company cannot cover these financial charges, it can be forced into liquidation.
Question 4.
Define ‘current assets’ and give four examples.
Answer:
Current assets are those assets of the business which can be converted into cash within a period of one year. Cash in hand or at bank, bills receivables, debtors, finished goods inventory are some of the examples of current assets.
Question 5.
Financial management is based on three broad financial decisions. What are these?
Answer:
Financial management is concerned with the’solution of three major issues relating to the financial operations of a firm corresponding to the three questions of Investment, Financing and Dividend decision. In a financial context, it means the selection of best financing alternative or best investment alternative. The finance function therefore, is concerned with three broad decisions which are as follows
1. Investment Decision: The investment decision relates to how the firm’s funds are invested in different assets.
2. Financing Decisions: This decision is about the quantum of finance to be raised from various long term sources and short term sources. It involves identification of various available sources of finance.
3. Dividend Decision: This decision relates to distribution of dividend.
Dividend is that portion of profit which is distributed to shareholders. The decision involved here is how much of the profit earned by company is to be distributed to the shareholders and how much of it should be retained in the business for meeting investment requirements.
Question 6.
What is the main objective of financial management? Explain briefly.
Answer:
Primary aim of financial management is to maximise shareholders’ wealth, which is referred to as the wealth maximisation concept. The wealth of owners is reflected in the market value of shares. Wealth maximisation means the maximisation of market price of shares.
According to the wealth maximisation objective, financial management must select those decisions which result in value addition, that is to say the benefits from a decision exceed the cost involved. Such value additions increase the market value of the company’s shares and hence result in maximisation of the shareholders’ wealth.
Question 7.
Discuss about working capital affecting both the liquidity as well as profitability of a business.
Answer:
The working capital should neither be more nor less than required. Both these situations are harmful. If the amount of working capital is more than required, it will no doubt increase liquidity but decrease profitability. For instance, if a large amount of cash is kept as working capital, then this excessive cash will remain idle and cause the profitability to fall.
On the contrary, if the amount of cash and other current assets are very little, then lot of difficulties will have to be faced in meeting daily expenses and making payment to the creditors. Thus, optimum amount of both current assets and current liabilities should be determined so that profitability of the business remains intact and there is no fall in liquidity.
2nd PUC Business Studies Financial Management Long Answer Questions With Answers
Question 1.
What is working capital? How is it calculated? Discus five important determinants of working capital requirement.
Answer:
Working capital is that part of total capital which is required to meet day-to-day expenses, to buy raw materials, to pay wages and other expenses of routine nature in the production process or we can say it refers to excess of current assets over current liabilities.
Working Capital = Current Assets – Current Liabilities
Factors affecting working capital requirement are. the following :
1. Nature of business: The basic nature of a business influences the amount of working capital required. A trading organisation usually needs a lower amount of working capital compared to a manufacturing organisation. This is because in trading, there is no processing required. In a manufacturing business, however, raw materials need to be converted into finished goods, which increases the expenditure on raw material, labour and other expenses.
2. Scale of operation: For firms which are operating on a higher scale of operations, the quantum of inventory, debtors required is generally high. Such organisations, therefore, require large amount of working capital as compared to the organisations which operate on a lower scale.
3. Production Cycle: Production cycle is the time span between the receipts of raw materials and their conversion into finished goods. Some businesses have a longer production cycle while some have a shorter one. Working capital requirement is higher in firms with longer processing cycle and lower in firms with shorter processing cycle.
4. Credit Allowed: Different firms allow different credit terms to their customers. A liberal credit policy results in higher amount of debtors, increasing the requirements of working capital.
5. Credit Availed: Just as a firm allows credit to its customers it also may get credit from its suppliers. The more credit a firm avails on its purchases, the working capital requirement is reduced.
Question 2.
Capital structure decision is essentially optimisation of risk-return relationship. Comment.
Answer:
Capital structure refers to the mix between owners and borrowed funds. It can be calculated as (Debt/Equity).
Debt and equity differ significantly in their cost and riskiness for the firm. Cost of debt is lower than cost of equity for a firm because lender’s risk is lower than equity shareholder’s risk, since lenders earn on assured return and repayment of capital and therefore they should require a lower rate of return.
Debt is cheaper but is more risky for a business because payment of interest and the return of principal is obligatory for the business. Any default in meeting these commitments may force the business to go into liquidation. There is no such compulsion in case of equity’, which is therefore, considered riskless for the business. Higher use of debt increases the fixed financial charges of a business. As a result increased, use of debt increases the financial risk of a business.
Capital structure of a business thus, affects both the profitability and the financial risk. A capital structure will be said to be optimal when the proportion of debt and equity is such that it results in an increase in the value of the equity share.
Question 3.
A capital budgeting decision is capable of changing the financial fortune of a business. Do you agree? Give reasons for your answer.
Answer:
Investment decision can be long term or short term. A long term investment decision is also called a capita! budgeting decision. It involves committing the finance on a long term basis, e.g., making investment in a new machine to replace an existing one or acquiring new fixed assets or opening a new branch etc. These decisions are very crucial for any business. They affect its earning capacity over the long-run.
Assets of a firm, profitability and competitiveness, are all affected by the capital budgeting decisions. Moreover, these decisions normally involve huge amounts of investment and are irreversible except at a huge cost. Therefore, once made, it is almost impossible for a business to wriggle out of such decisions. Therefore, they need to be taken with utmost care. These decisions must be taken by those who understand them comprehensively.
A bad capital budgeting decision normally has the capacity to severely damage the financial fortune of a business.
Question 4.
Explain the factors affecting the dividend decision.
Answer:
Dividend decision relates to distribution of profit to the shareholders and its retention in the business for meeting the future investment requirements.
How much of the profits earned by a company will be distributed as profit and how much will be retained in the business is affected by many factors. Some of the important factors are discussed below.
1. Earnings: Dividends are paid out of current and past year earnings. Therefore, earnings is a major determinant of the decision about dividend.
2. Stability of earnings: Other things remaining the same, a company having stable earning is in a position to declare higher dividends. As against this, a company having unstable earnings is likely to pay a smaller dividend.
3. Growth opportunities: Companies having good growth opportunities retain more money out of their earnings so as to finance the required investment. The dividend in growth companies, is therefore, smaller than that in non-growth companies.
4. Cash flow position: Dividends involve an outflow of cash. A company may be profitable but short on cash. Availability of enough cash in the company is necessary for declaration of dividend by it.
5. Shareholder Preference: If the shareholders in general desire that at least a certain amount should be paid as dividend, the companies are likely to declare the same.
6. Taxation Policy: If tax on dividend is higher it would be better to pay less by way of dividends. As compared to this, higher dividends may be declared if tax rates are relatively lower.
7. Stock Market reaction: For investors, an increase in dividend is a good news and stock prices react positively to it. Similarly a decrease in dividend may have a negative impact on the share prices in the stock market.
8. Access to Capital Market: Large and reputed companies generally have easy access to the capital market and therefore, depend less on retained earnings to finance their growth. These companies tend to pay higher dividends than the smaller companies which have relatively low access to the market.
9. Legal constraints: Certain provisions of the Company’s Act place restrictions on payouts as dividend. Such provisions have to be adhered to, while declaring dividends.
10 Contractual Constraints: While granting loans to a company, sometimes the lender may impose certain restrictions on the payment of dividends in future The companies are required to ensure that the dividends do not violate the terms and conditions of the loan agreement in this regard.
Question 5.
Explain the term ‘Trading on Equity’. Why, when and how it can used by a company?
Answer:
Trading on equity refers to the Increase in profit earned by the equity shareholders due to presence of fixed financial charges. When the rate of earning or Return on Investment (ROI) of a company is higher than the rate of interest on borrowed funds, only then a company should opt for trading on equity. Let us consider the following example.
It should be clear from the above example that shareholders of the company ‘X have a higher rate of return than company ‘Y’, due to loan component in the total capital of the company.
2nd PUC Business Studies Financial Management Case Problems
’S’ Limited is manufacturing steel at its plant in India. It is enjoying a buoyant demand for its products as economic growth is about 7% – 8% and the deniand for steel is growing. It is planning to set up a new steel plant to cash on the increased demand it is facing. It is estimated that it will require about ? 5,000 crores to set up and about. ? 500 crores of working capital to start the new plant.
Question 1.
Describe the role and objectives of financial management for this company.
Answer:
Role of Financial Management Financial management is concerned with the proper management of funds. It involves the followin.
Objective of Financial Management:
The objective of financial management is maximisation of shareholders’ wealth The investment decision, financial decision and dividend decision help an organisation to achieve its objective In the given situation, S limited envisages growth prospects of steel Industry due to the growing demand. To expand the production capacity, the company needs to invest.
How ever, investment decision will depend on the availability of funds, the financing decision and the dividend decision. However, the company will take those financial decisions which result in value addition. The benefits are more than the cost. This leads to an increase in the market value of the shares of the company.
Question 2.
Explain the importance of having a financial plan for this company. Give an imaginary plan to support your answer.
Answer:
Importance of financial plan for the company is as under.
Financial Plan of S Ltd
Total finance required; Fixed capital = ₹ 1,000 crores
Working capital = ₹ 100 crores : Source of finance is 2:1 Ratio i.e..
50% finance collected by issue of shares and 50% by borrowed funds,
Question 3.
What are the factors which will affect the capital structure of this company?
Answer:
Capital structure refers to the proportion in which debt and equity funds are used for financing the operations of a business. A capital structure is said to be optimum when the proportion of debt and equity is such that it results in an increase in the value of shares. The factors that will affect the capital structure of this company are the following:
1. Equity Funds: The composition of equity funds in the capital structure will be governed by the following factors
(a) The requirement of funds of S Limited is for longterm. Hence, equity funds will be more appropriate
(b) There are no financial risks attached to this form of funding
(c) If the stock market is bullish, the company can easily raise funds through issue of equity shares.
(d) If the company already has raised reasonable amount of debt funds, each subsequent borrowing will come at a higher interest rate and will Increase the fixed charges.
2. Debt Funds: The usage and the ratio of debt funds in the capital structure will be governed by factors like these.
(a) The availability of cash flow with the company to meet its fixed financial charges. The purpose is to reduce the financial risk associated with such payments which can further be checked by using debt’ service coverage ratio.
(b) It will provide the benefit of trading on equity and hence will Increase the earning per share of equity shareholders. However, return on Investment ratio will be the guiding principle behind it. The company should opt for trading on equity only when return on investment is more than the fixed charges.
(c) Interest on debt funds is a deductible expense and therefore, will reduce the tax liability
(d) It does not result in dilution of management control.
Question 4.
Keeping in mind that it is a highly capital intensive sector what factors will affect the fixed and working capital ? Give reasons in support of your answer.
Answer:
The working and fixed capital requirement of’S’ Limited will be high due to the following reasons.
2nd PUC Business Studies Financial Management One Mark Questions and Answers
Question 1.
Name any one basic objective of financial marketing.
Answer:
Profit maximization.
Question 2.
What do you mean by financial decisions?
Answer:
It is concerned with mobilization of finance for the purpose of Investment
Question 3.
Name any one type of capital requirement of an organization.
Answer:
Fixed Capital or Working Capital
Question 4.
What is fixed capital?
Answer:
Fixed capital is refers to investments in long-term assets or fixed assets.
Question 5.
What is working capital?
Answer:
It refers to investments in current assets such as stock of materials, work-in-progress, finished goods, account receivables etc.
Question 6.
State any one factor affecting working capital requirement of a business concern.
Answer:
Nature of business.
Question 7.
State any one factor affecting fixed capital requirement of a business concern.
Answer:
Growth & Expansion prospects.
Question 8.
What is financial Management?
Answer:
It means effective and efficient management of money. It is concerned with planning & controlling of firms’ financial resources.
Question 9.
State any one importance of financial management.
Answer:
Estimating capital requirement. Or Capital Budgeting
Question 10.
State any one objective of financial management.
Answer:
Profit Maximization or Wealth Maximization
Question 11.
State any two importance of financial planning.
Answer:
Tool to face uncertainties, ensures liquidity’
Question 12.
Stat any two features of fixed capital.
Answer:
It is concerned with long term funds, it involves large amount of funds.
Question 13.
Mention any two features of working capital.
Answer:
It is concerned with short term funds, it involves lesser risk.
2nd PUC Business Studies Financial Management Two Marks Questions and Answers
Question 1.
What is financial management?
Answer:
It means effective and efficient management of money It is concerned with planning & controlling of firms financial resources. It mainly deals with the process of procurement and utilization of funds for the business purpose.
Question 2.
Give the meaning of investment decisions.
Answer:
Investment decisions are concerned with how firm’s funds are invested in different assets either long term or short term. The long term investment decisions are also called as Capital Budgeting Decision and the short term inv estment decisions are called as Working Capital Decisions.
Question 3.
Give the meaning of dividend decisions
Answer:
Dividend decisions are concerned with the apportionment of the’firm’s profit. Dividends are the portions of the profit which will be distributed to the share holders. The portion of profit which is undistributed to the share holders are called as retained earnings which will be utilized for expansion and development of the business.
Question 4.
Give the meaning of financing decisions.
Answer:
Financing decisions are concerned with how to raise the funds for business activities from various sources. There are two source of raising fiance to. the business they are Debt and Equity. The owner fund or share holders fund are called equity. The harrowed funds are called debts.
Question 5.
State any two factors affecting working capital requirement of a business concern,
Answer:
1. Nature of business: Trie amount of working capital required basically depends on the nature of the business. Due to the cash nature of the transactions in the business. Some business requires huge working capital and some need little working capital for their operations.
2. Scale of Operations: The requirement of working capital also depends up on the scale of operation. Small Scale needs less working capital when compared to large scale.
Question 6.
State any two factors affecting fixed capital requirement of a business concern.
Answer:
Nature of business: The amount of fixed capital requirement basically depends on the nature of the business. Some business requires huge fixed capital and some need little fixed capital depending on their operations. The need for fixed capital will be more as the concern need to invest on fixed assets like plant, machinery & Buildings etc.
Scale of operation: The scale of operation is the other important determinant of fixed capital requirement of a business. Larger the size and the scale of operations, the greater will be the amount of fixed capital requirement.
Question 7.
What is financial planning?
Answer:
Financial planning is concern with the preparation of a financial blue print of an organization for future operations. Financial planning is the process of determining the objectives, polices, procedure and program to deal with the financial activities of an organization.
Question 8.
Write the difference between working capital & Fixed capital?
Answer:
2nd PUC Business Studies Financial Management Four Marks Questions and Answers
Question 1.
Describe the importance of financial management.
Answer:
Estimating capital requirement: Financial Management makes the estimation of both short term & long term financial needs to make the smooth running of a business.
Capital budgeting: It refers to the long term funds. Capital can be raised in two ways either debts or Equity. Capital budgeting decides the composition of debt & equity in the long term finance of an organization.
Working capital marketing: Excess of current assets over current liabilities represents the working capital of an organization. To ensure the smooth working of an organization it should have sufficient working capital to meet the day to day needs.
Appraisal of financial performance & financial control: Financial Management provides various financials tools such as Ration analysis, Budgeting, Variance analysis. It helps the management to control the financial activities of the organization.
Making financial decision: Financial Management is concerned with financial decisions relates to the composition of assets. Capital & Investment. Sound financial decisions are made depending on risk & return.
Solution to financial problem: A good financial management helps the top management by providing financial information and also solutions to various financial problems.
Communication of financial performance: It is used to measure profitability & liquidity of the business. The various stakeholders who are keen about the financial performance of the organization are Share holders, Creditors, Investors, Economists, Employees and Government.
Question 2.
What do you mean by financial decisions? Explain in brief the types of financial decisions?
Answer:
Financial decisions are concerned with how to raise the funds for business activities from various sources. There are two source of raising fiance to the business they are Debt and Equity. The owner fund or share holders fund are called equity. The harrowed funds are called debts.
The Financial Management decisions can be broadly classified into:
1. Investment decisions: Investment decisions are concerned with how firm’s funds are invested in different assets either long term or short term. The long term investment decisions are also called as Capital Budgeting Decision and the short term investment decisions are called as Working Capital Decisions.
2. Financing decision: Financing decisions are concerned with how to raise the funds for business activities from various sources. There are two source of raising finance to the business they are Debt and Equity. The owner fund or share holders fund are called equity. The harrowed funds are called debts
3. The dividend decision: Dividend decisions are concerned with the apportionment of the firm’s profit. Dividends are the portions of the profit which will be distributed to the share holders. The portion of profit which is undistributed to the share holders are called as retained earnings which will be utilized for expansion and development of the business.
Question 3.
Explain briefly the importance of financial planning.
Answer:
Financial planning is concern with the preparation of a financial blue print of an organization’s for future operations. Financial planning ensures that enough funds are available at the right time. Financial planning is the process of determining the objectives, polices, procedures to deal with the financial activities of an organization.
Importance of financial planning are:
1. Tool to face uncertainties: Financial planning is a tool to face uncertainties. It helps in forecasting different business situations and develop alternative financial plans to meet the different situations.
2. Ensures liquidity: Financial planning would ensure liquidity of funds throughout the year for meeting various financial commitments and there by create a confidence in the minds of the suppliers who provide funds to the organizations.
3. Ensures adequate funds: Financial planning avoids the situations of both surplus and shortage of funds. Financial planning estimates quantity of the funds required and time when it is required to ensure the optimum fund to achieve the company objective.
4. Elimination of waste: Good financial planning through proper policy and procedures contribute to the elimination of waste of funds and facilitates maximum utilization of the available resources. It also avoids complexity and lack of co ordination among various functions of an organization.
5. Better financial control: An effective financial planning predetermines the desired results and also helps to check the deviation and adopts corrective measure to achieve the desired goals of the organization.
Question 4.
Explain any five factors which may influence the amount of working capital requirements in a business.
Answer:
1. Nature of business: The amount of working capital requirement basically depends on the nature of the business. Due to the cash nature of the transactions in the business. Some business requires huge working capital and some need little working capital for their operations.
2. Scale of Operations: The requirement of working capital also depends up on the scale of operation. Small Scale operations needs less working capital when compared to large scale operations.
3. Growth & Expansion: As the organizations grows it requires a large amount of working capital in order to meet higher production and sales target. With the growth & expansion the business need more & more working capital to meet the day to day requirement of the organization
4. Business cycle: The amount of working capital required by a concern varies with the changes in the phases of business cycle. During Boom period the demand for the product increases and results in higher working capital requirement. On the other hand during recession and depression demand for the products decreases results in lower working capital requirements.
5. Seasonal factors: The working capital requirement also influenced by the seasonal fluctuation in demand for the products. During peak seasons, the working capital requirement in more due to higher level of activity. On the contrary during lean seasons the requirement of the working capital will be less.
Question 5.
Explain any five factors which may influence the amount of fixed capital requirements in a business?
Answer:
1. Nature of business: The amount of fixed capital requirement basically depends on the nature of the business. Some business requires huge fixed capital and some need little fixed capital depending on their operations. The need for fixed capital will be more as the concern need to invest on fixed assets like plant, machinery & Buildings etc.
2. Scale of operation: The scale of operation is the other important determinant of fixed capital requirement of a business. Larger the size and the scale of operations, the greater will be the amount of fixed capital requirement.
3. Growth & Expansion prospects: Higher growth of organization generally requires higher investment in fixed assets. As the organization as to create higher capacity’ in order to meet the higher demand Suffer
4. Choice of technique of production: An organization may be capital intensive or labor intensive. A capital intensive organization requires higher investment in plant and machinery when compared to labor intensive organization. Thus the requirement of fixed capital for capital intensive organization would be higher.
5. Method of fixed asset acquisition: Organizations purchasing fixed asset on cash basis requires a large amount of fixed capital. Those organizations which acquire fixed assets on hire purchase and installment system requires lesser amount of fixed capital.
Question 6.
Explain any five objectives of financial management.
Answer:
1. Profit maximization: profit can be maximized with proper utilization of organizations resource. The company should earn sufficient profit to reach its expenses, expansion & modification.
2. Wealth maximization: It means the maximization of the market value of shares. The market value of shares is related to three financial decision, viz., investment decision, financial decision, & Dividend decision.
3. Proper estimation of total requirement: It is very important to know the financial requirement to start & run the business. Estimating of financial requirement is done after considering factors such as scale of operation, technology, man power requirements etc.
4. Obtaining funds at minimum cost: The required fund can be mobilized through many sources such as shares, debentures, Bank loan etc. The finance manager must decide about difference & the balance between owned finance & borrowed finance. He must obtain the funds at minimum cost.
5. Proper utilization of finance: Finance must invest in profitable project and care should be taken to ensure that finance is not wasted due to investment in unprofitable project, blocking of finance in inventories & long period of credit.
2nd PUC Business Studies Financial Management Eight Marks Questions and Answers
Question 1.
Describe different objectives of financial management.
Answer:
1. Profit maximization: profit can be maximized with proper utilization of organizations resource. The company should earn sufficient profit to melt its expenses, expansion & modification.
2. Wealth maximization: It means the maximization of the market value of shares. The market value of shares is related to three financial decision, viz., investment decision, financial decision, & Dividend decision.
3. Proper estimation of total requirement: It is very important o know the financial requirement to start & run the business. Estimating of financial requirement is done after considering factors such as scale of operation, technology, man power requirements etc.
4. Obtaining funds at minimum cost: The required fund can be mobilized through many sources such as shares, debentures, Bank loan etc. The finance manager must decide about difference & the balance between owned finance & borrowed finance. He must obtain the funds at minimum cost.
5. Proper utilization of finance: Finance must invest in profitable project and care should be taken to ensure that finance is not wasted due to investment in unprofitable project, blocking of finance in inventories & long period of credit.
6. Maintaining proper cash flow: An organization must have proper cash flow to pay its day-to-day expenses such as purchase of raw material, payment of wages & salaries, rent, electricity bills etc. Healthy Cash flow improves organizational success.
7. Risk minimization: Financial management tries to minimize the risk through creation of reserves to meet unforeseen contingencies. A portion of profits are always kept aside as reserve in order to utilize it for future growth and development.
8. Proper co-ordination: Financial Management works in combination with other areas like production, marketing, personnel etc. thus proper co-ordination with other departments is an important objective of financial management to achieve the organizational goals.
9. Financial control: Finance management should always plan the source of procuring funds & also the applications of funds. Deviation between the planned & actual inflow & outflow of funds should be studied; analyzed & corrective actions should be taken immediately.
10. Creation of goodwill: Financial management should try to create good will for the organization. Financial Management ensures good corporate governance. It will help to create confidence in the minds of the stake holders regarding the financial activities of the organization.
Question 2.
Explain the factors which may influence the amount of fixed capital requirement in a business.
Answer:
1. Nature of business: The amount of fixed capital requirement basically depends on the nature of the business. Some business requires huge fixed capital and some need little fixed capital depending on their operations. The need for fixed capital will be more as the concern need to invest on fixed assets like plant, machinery & Buildings etc.
2. Scale of operation: The scale of operation is the other important determinant of fixed capital requirement of a business. Larger the size and the scale of operations, the greater will be the amount of fixed capital requirement.
3. Growth & Expansion prospects: Higher growth of organization generally requires higher investment in fixed assets. As the organization as to create higher capacity’ in order to meet the higher demand.
4. Choice of technique of production: An organization may be capital intensive or labor intensive. A capital intensive organization requires higher investment in plant and machinery w’hen compared to labor intensive organization. Thus the requirement of fixed capital for capital intensive organization would be higher.
5. Method of fixed asset acquisition: Organizations purchasing fixed asset on cash basis requires a large amount of fixed capital. Those organizations which acquire fixed assets on hire purchase and installment system requires lesser amount of fixed capital.
6. Diversification: Diversification of production or operations is another important factor affecting fixed capital requirement. A concern which chooses to diversify its production requires more fixed capital.
7. Amount of promotion expenses: If a concern has to spend more amounts by way of promotion expenses, cost of raising finance etc then it requires more amount of fixed capital.
8. Level of collaboration: Collaboration refers to the business organizations which share the facilities to each other. It reduces the level of investment in fixed assets for the participating organizations. So the requirement of the fixed capital is less in a collaboration of business.
Question 3.
Explain the importance of financial management.
Answer:
1. Estimating capital requirement: Financial Management makes the estimation of both short term & long term financial needs to make the smooth running of a business.
2. Capital budgeting: It refers to the long term funds. Capital can be raised in two ways either debts or Equity’. Capital budgeting decides the composition of debt & equity in the long term finance of an organization.
3. Working capital marketing: Excess of current assets over current liabilities represents the working capital of an organization. To ensure the smooth working of an organization it should have sufficient working capital to meet the day to day needs.
4. Appraisal of financial performance & financial control: Financial Management provides various financials tools such as Ration analysis, Budgeting, Variance analysis. It helps the management to control the financial activities of the organization.
5. Making financial decision: Financial Management is concerned with financial decisions relates to the composition of assets. Capital & Investment. Sound financial decisions are made depending on risk & return.
6. Solution to financial problem: A good financial management helps the top management by providing financial information and also solutions to various financial problems.
7. Communication of financial performance: It is used to measure profitability & liquidity of the business. The various stakeholders who are keen about the financial performance of the organization are Share holders, Creditors, Investors, Economists, Employees and Government.
Question 4.
Explain the importance of financial planning.
Answer:
Tool to face uncertainties: Financial planning is a tool to face uncertainties. It helps in forecasting different business situations and develop alternative financial plans to meet the different situations.
Ensures liquidity: Financial planning would ensure liquidity of funds throughout the year for meeting various financial commitments and there by create a confidence in the minds of the suppliers who provide funds to the organizations.
Ensures adequate funds: Financial planning avoids the situations of both surplus and shortage of funds. Financial planning estimates quantity of the funds required and time when it is required to ensure the optimum fund to achieve the company objective.
Elimination of waste: Good financial planning through proper policy and procedures contribute to the elimination of waste of funds and facilitates maximum utilization of the available resources. It also avoids complexity and lack of co ordination among various functions of an organization.
Better financial control: An effective financial planning predetermines the desired results and also helps to check the deviation and adopts corrective measure to achieve the desired goals of the organization.
Optimum capital structure: Financial planning will contribute to optimum capital structure at minimum cost or it will fix the relative proportion of owned capital & borrowed funds.
Helps in co-ordination: Financial planning helps in coordinating various functions.
You can Download Chapter 11 Transport, Communication and Trade Questions and Answers, Notes, 2nd PUC Geography Question Bank with Answers Karnataka State Board Solutions help you to revise complete Syllabus and score more marks in your examinations.
I. Answer the following in a word or a sentence each:
Question 1.
What is Transportation?
Answer:
Transportation refers to the system of carrying persons and goods from one place to another
place.
Question 2.
What do you mean by Communication?
Answer:
Communication refers to exchange of ideas, messages, information from one person to another person.
Question 3.
Which road is at highest altitude in the World?
Answer:
The world’s highest road is Manali -Leh road in the Western Himalayas. It is at an altitude of 4,270 meters.
Question 4.
What is Trade?
Answer:
The process of buying and selling of goods and commadities is called trade.
Question 5.
What is Radio?
Answer:
It is one of the means of communication which sends the information of National and International news, sports, cricket and other kinds of information, etc.
Question 6.
What is Television?
Answer:
An electronic device that receives television signals and displays them on a screen.
Question 7.
Define Port.
Answer:
A Port is defined as a place of navigable water where ships can shelter for load and unload.
Question 8.
On which river bank Kolkata Port is located?.
Answer:
On the Hoogly river 148 km from the sea.
Question 9.
Name the Satellite launched in November 2013.
Answer:
‘Mangalyann” was launched on 5 November 2013.
Question 10.
Which is the Head quater of Central Railways?
Answer:
Mumbai [CST]
Question 11.
What is Road transportation.
Answer:
The means of carrying goods and passengers through the motor vehicles from one place to another place.
Question 12.
Expand PMGSY.
Answer:
Pradhan Mantri Gram Sadak Yojana (PMGSY).
Question 13.
Which is the longest National highway in India.
Answer:
The longest National highway is NH-7 from Varanasi to Kanyakumari (2344) km.
Question 14.
Which is first railway line laid in India.
Answer:
The first railway line in India was from Bombay (VT) to Thane a distance of 34 km.
Question 15.
What is the total railway length of India.
Answer:
64,460 km.
Question 16.
Expand CORE.
Answer:
The central organisation for railway electrification (CORE).
Question 17.
Which is first pipe line in India.
Answer:
India’s first pipeline-Naharkatia to Baruni.
Question 18.
Which is the longest pipeline in India.
Answer:
The Hazira-Bijaipur-Jagdishpur (HBJ) Gas pipeline is one of the longest pipeline of the country (1750 km). ‘
Question 19.
Which is the Milk pipeline in India.
Answer:
A milk pipeline: It is from the Anand dairy to Ahmedabad in Gujarath.
Question 20.
Which is longest inland water way in India.
Answer:
National water way no -1 from Kolkata to Patna through Gahga and its tributaries with a distance of 2510 km.
Question 21.
Which port is known as Gateway of India.
Answer:
“Mumbai port” is known as Gateway of India.
Question 22.
Name the airports which are called Green Airports of India?
Answer:
Kempegowda International Airport of Bangalore and Hyderabad Airport are called Green Airports of India.
Question 23.
Name the place of first air travelling facility was started in India and when?
Answer:
From Bangalore to Hyderabad by “Deccan Airways” in the year 1946.
Question 24.
Name the first newspaper in India and who introduced it.
Answer:
The newspaper named “Samachar Darpan” introduced by ‘Hicky’s Gazette’ in the year – 1779.
Question 25.
When the first Radio programme was broad casted and where?
Answer:
In the year – 1923 at a place called “Club of Mumbai”.
Question 26.
Which is world’s first artificial Satellite and from where it was launched.
Answer:
“Sputnik-I’, It was launched by the Soviet Union in 1957.
Question 27.
Expand NRSA.
Answer:
National Remote Sensing Agency (NRSA).
Question 1.
Mention the 3 important Railways gauges?
Answer:
Question 2.
Mention any 4 railway zones with their headquarters?
Answer:
Question 3.
Mention the advantages of Radio?
Answer:
Question 4.
Mention the main advantages of Television.
Answer:
Question 5.
State two types of Waterways.
Answer:
Question 6.
Differentiate between Internal and International airport of India.
Answer:
Internal Airport: The Airways which carries passengers, cargo and mail to different regions of the country and neighbouring countries.
International Airport: The Airways which carries the foreign traffic of passengers and cargo between the countries.
Question 7.
Differentiate between Export and Import trade of India.
Answer:
Export trade of India: Refers to the sale of goods and services by India to other countries of
the world.
Import trade of India: Refers to the buying goods from foreign countries and bringing them to home country.
Question 8.
Mention the four types of roads in India.
Answer:
Question 9.
State the significance of Air transport in India?
Answer:
Question 10.
Write a short note on Mission Mangalyaan.
Answer:
Question 11.
Write any four advantages of Road ways.
Answer:
Question 12.
Mention the types of Nagpur Plan road development in India.
Answer:
Nagpur plan has classified the road into 4 categories :
Question 13.
Mention the four disadvantages of the railways in India.
Answer:
Question 14.
Mention the important international airports of India.
Answer:
Question 15.
Write the advantages of newspaper.
Answer:
Question 16.
Which is the wonder box of 20th century, who invented colour TV and when.
Answer:
‘Television’ is described as the ‘Wonder box’ of 20th century. The first colour television was invented by Hungarian born ‘American Peter Gold Mark in 1940.
Question 1.
Explain the National Highways of India.
Answer:
National Highways : They connect the capitals of the states, Industrial centres and major parts. They are well planned wide roads with two-lane, four-lane and six-lane roads.
Under the National Highways Authority of India, about 14,297 km length of National high way is proposed to be upgraded to four or six lanes in two phases.
* It consists of the following components :
1. The Golden Quadrilateral super Highways Kolkata, Chennai-Mumbai and by six-lane super highway. It has a total length of 5846 kms.
2. East-West corridor :- This project has extended from the North-South corridor linking
between Srinagar (J.K) and Kanyakumari (T.N) and East-West corriders connecting between Silcher (Assam) and Porbandar (Gujarat). The project has a total length of about 7300 km.
3. Port connectivity project:-This project, connect golden quadrilateral roads with 3 major ports (380 km) and other projects (962 km) is in progress.
The longest National Highway is NH-7 from Varanasi to Kanyakumari (2344 km).
Question 2.
Explain the development of Railways in India.
Answer:
Question 3.
Explain pipelines transport with advantages and disadvantages.
Answer:
Advantages of Pipelines :
Disadvantages:
Question 4.
Explain any two major parts of West coast of India.
Answer:
The major ports located in the west coast of India are (a) Kandla (b) Mumbai.
1. Kandla : It is a tidal port located at Eastern end of Gulf of Kachchh (Gujarat).
2. Mumbai: Mumbai is the biggest, most spacious, natural, well shelter, and capital of the Maharashtra state.
Question 5.
Explain the air transportation of India.
Answer:
Civil Aviation :- Air transport used for commercial purpose is called civil Aviation.
There are two types of air transport in India namely:
1. The Indian Airlines Corporation :
2. The Air India :
Question 6.
Briefly explain the importance of satellite communication.
Answer:
Importance^of satellites: Satellites are important to us in many ways.
Question 7.
What do you mean by Satellite?
Answer:
A satellite can be defined as a body that orbits the earth or other planet which has been sent from the Earth into space theses are of vital importance to life on earth.
Question 8.
Explain Imports and Exports of India.
Answer:
Imports of India : Imports trade of India refers to buying goods from foreign countries and bringing them to home country.
The main items of Imports of India are :
1. Petroleum crude and products :
2. Pearls precious and semi precious stones :
India imported rupees 33,881 crores worth of precious stone.
3. Capital goods :
In 2006-2007 India imported rupees 2,51,136 crores worth of capital goods.
4. Fertilizers :
India is a major importer of chemical Fertilizers. It is because the country is agrarian and the Internal production of fertilizers is insufficient. Potash fertilizers are largely imported.
Exports of India : Export trade of India refers to the sale of goods and services by India to other countries of the world.
The main items of our exports are as follows :
Question 9.
Explain the composition and direction of India foreign trade.
Answer:
Composition of Export: Composition of exports refers to the goods that are exported from India to foreign countries.
The export of India may be classified into three types :
Direction of India’s exports:
Composition of India’s Imports:
Direction of India’s Imports:
Question 10.
Explain the important inland waterways in India.
Answer:
Question 11.
Describe the Radio as a communication Media in India.
Answer:
Radio has played an important means of communication in the field of advertising, information, broadcasting local, regional, public opinions, national and international news, sports, cricket etc.
Advantages:
Disadvantages:
Question 12.
Briefly explain about the television in India.
Answer:
An electronic device that receives television signals and displays them on a screen.
Advantages:
Disadvantages:
You can Download Chapter 3 Business Environment Questions and Answers, Notes, 2nd PUC Business Studies Question Bank with Answers Karnataka State Board Solutions help you to revise complete Syllabus and score more marks in your examinations.
2nd PUC Business Studies Business Environment Multiple Choice Questions With Answers
Question 1.
Which of the following does not characterise the business environment?
(a) Uncertainty
(b) Employees
(c) Relativity
(d) Complexity
Answer:
(b) Employees does not characterise the business environment
Question 2.
Which of the following best indicates the importance of business environment?
(a) Identification
(b) Improvement in performance
(c) Coping with rapid changes
(d) All of these
Answer:
(d) Identification, Improvement In performance, coping with rapid changes all are the indicators of importance of business environment.
Question 3.
Which of the following is an example of social environment?
(a) Money supply in the economy
(b) Consumer Protection Act
(c) The Constitution of the country
(d) Composition of family
Answer:
(d) Social environment includes social forces thus, composition of families is the example of social environment
Question 4.
Liberalisation means
(a) integrating among economies
(b) reduced Government controls and restrictions.
(c) policy of planned disinvestments
(d) None of the above
Answer:
(b) Liberalisation means end of license, quota and reduction of government controls and restrictions
Question 5.
Which of the following does not explain the impact of Government policy changes on business and industry?
(a) More demanding customers.
(b) Increasing competition
(c) Change in agricultural prices
(d) Market orientation
Answer:
(c) Change in agricultural prices does not explain the impact of Government policy changes on business and industry.
2nd PUC Business Studies Business Environment Short Answer Type Questions With Answers
Question 1.
What do you understand by business environment?
Answer:
The term ‘Business environment’ means the sum total of all Individuals, institutions and other forces that are outside the control of a business enterprise but that may affect its performance. The economic, social political, technological and other forces which operate outside the business enterprise are part of its environment.
Question 2.
Why it is important for business enterprises to understand their environment? Explain briefly.
Answer:
It is important for business organisations to understand their environment because of the following reasons
1. It enables the Firm to identify opportunities and getting the first Mover advantage: Environment provides numerous opportunities for business. Early identification of opportunities helps an enterprise to use it before instead of losing them to competitors.
2. It helps the Firm to identify threats and early Warning Signals. Environmental awareness can help managers to identify various threats on time and serve as an early warning signals.
3. It helps in tapping useful Resources Environment is a source for the various resources for running a business. To engage in any type of activity, a business enterprise assembles various resources called inputs. This can be done better by understanding what the environment has to offer.
4. It helps in coping with rapid changes. All types of enterprises are facing increasingly dynamic environment. In order to effectively cope with these significant changes, managers must understand and examine the environment and develop suitable courses of action.
5. It helps in assisting in Planning and Policy formulation. Since environment is the source of opportunities and threats, it’s understanding and analysis becomes the base for various policies to be framed and strategies to be made.
6. It helps in improving performance The enterprises that continuously monitor their environment and adopt suitable business practices are the ones which not only improve their present performance but also continue to succeed in the market for a longer period.
Question 3.
Mention the various dimensions of business environment.
Answer:
Question 4.
Briefly explain the following
(a) Liberalisation
(b) Privatisation
(c) Globalisation
Answer:
The three important features of New Economic Policy, 1991.
(a) Liberalisation: Under the new economic policy of 1991, the economic reforms that were introduced aimed at liberalising the Indian business and industry’ from all unnecessary controls and restrictions. They signalled the end of the licence-permit quota Raj.
(b) Privatisation: The new set of economic reforms that aim at giving greater role to the private sector in the nation building process and a reduced role to the public sector.
(c) Globalisation: Globalisation means the integration of the various economies of the world leading towards the emergence of a cohesive global economy. Till 1991, Indiahad a policy which strictly regulated imports in value and volume terms. After 1991, the reforms aimed at Import liberalisation.
Question 5.
Briefly discuss the impact of Government policy changes on business and industry.
Answer:
Impact of Government policy changes on business and Industry
1. Increasing Competition : As a result of liberalisation, privatisation and globalisation the number of players increased in all sectors and increased the competition for eveiyone.
2. More demanding Customers: Increased competition in the market gives the customer wider choices in purchasing better quality of goods and services, which makes them more demanding.
3. Rapidly changing Technological Environment: New technologies help to improve machines, process products and services. The rapidly changing technological environment creates tough challenges for the smaller firms.
4. Necessity for Change: After 1991, the market forces have become turbulent as a result of which the enterprises have to continuously modify their operations.
5. Need for developing Human Resource: The new market conditions require people with higher competence and greater commitment: Hence, the need for developing human resources has emerged.
6. Market Orientation: Earlier, production was taken up first and then selling was done. Now, due to increasing competition and more demanding customers, firms have to study and analyse the market first and produce goods accordingly.
7. Loss of Budgetary Support to the Public Sector: Public sector have less of budgetary support from the Central Government. Now, they have to generate their own resources and be more efficient in order to survive and grow.
2nd PUC Business Studies Business Environment Long Answer Type Questions With Answers
Question 1.
How would you characterise business environment? Explain with examples, the difference between general and specific environment.
Answer:
Features of business environment:
1. Totality of External Forces: Business environment is aggregative in nature as it is the sum total of all things external to business firms.
2. Inter-relatedness: Different elements of business environment are closely related to each other, e.g., increased awareness of health care have increased the demand for many health products.
3. Dynamic Nature: The business environment is highly dynamic. It keeps on changing. Sometimes there is a change in technology, tastes and preference of consumer etc
4. Uncertainty: The environment cannot be predicted. It is highly uncertain and unpredictable.
5. Complexity: Since there are many elements of Business Environment and they are inter-related and dynamic in nature, it becomes very difficult to understand them as a whole.
Difference between Specific and General Environment There are two types of forces operating in Business Environment, Specific and General Specific forces affect the individual enterprises directly and immediately, e.g., customers, suppliers. General forces affect the firms and only indirectly e g, social conditions or political conditions.
Question 2.
How would you argue that the success of a business enterprise is significantly influenced by its environment?
Answer:
Importance of business environment
1. It enables the firm to identify opportunities and getting the first mover advantage Environment provides numerous opportunities for business success. Early identification of opportunities helps an enterprise to be the first to exploit them instead of losing them to competitors, e g., Eureka Forbes introduced Aquaguard and took away the cream of demand.
2. It helps the Firm to identify threats and early Wamirng Signals . Environment happens to be the source of many threats. Environmental awareness can help managers to identity various threats’ in time and serve as an early warning signals e.g.-Lakme took serious steps to improve the quality and types of products as foreign multinational cosmetics companies started coming to India after 1991.
3. It helps in tapping useful resources : Environment offers various resources for running a business. In return, the business enterprise supplies the environment with its outputs such as goods and services for customers and taxes for Government. In order to arrange for the best possible resources, better understanding of the environment becomes important.
4. It helps in coping with rapid changes. It is not the fact of change itself that is so important as the pace of change. There are many changes taking place in the environment and at a fast speed. In order to effectively cope with these changes, managers must understand and examine the environment and develop suitable courses of action
5. It helps in assisting in Planning and Policy Formulation : Since environment is a source of both opportunities and threats, it’s understanding and analysis only helps in formulating the best possible policies to handle the future properly.
6. It helps in improving performance. Continuous monitoring and adopting changes in an enterprise will help in improving not only their present performance, but also continue to succeed in the market in long run.
Question 3.
Explain with examples, the various dimensions of business environment.
Answer:
Dimensions of business environment
1. Economic Environment: It includes the changes in the system due to economic policies made by the Government. Reserve Bank of India is the key regulator of county’s economic environment since it
(a) influences the Interest rates
(b) controls the flow of money in the economy
(c) regulates the working of banks
Example: When the banks reduce the interest rates on long term loans, automobiles and construction industries get a boost to the business as more spending is made on the purchase of homes and cars through loans.
2. Social Environment: The social environment of business includes the social forces like customs and traditions, values social trends, society’s expectations from business etc. In business terms, these values translate into freedom of choice in the market. Major elements of social environment are
(a) life expectancy
(b) shifts in the presence of women in the workforce
(c) consumer habits
Example: Due to the shift in the presence of women in the workforce the demand for readymade ladies formal wear, cosmetics, packed/processed food and electronic gadgets have gone up.
3. Technological Environment: Technological environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.
Example: Because of technological advancement, it has become possible to book railway tickets through internet from home, office etc.
4. Political Environment: Political environment includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business. It is only of use when a business enterprise can predict its business activities under stable political conditions. Major elements of political environment are
(a) The constitution of the country
(b) The nature and profile of political leadership and thinking of political personalities (cj Political ideology and practices of the ruling party.
Example: After the NEP of 1991, due to globalisation the foreign companies started coming to India, but due to the bureaucratic red tape, it became difficult for them to cut through it to do business here. As a result, these companies were discouraged in our country regarding investments. The situation has improved over time.
5. Legal Environment: Legal environment includes various legislations passed by the Government, administrative orders issued by government authorities, court judgements as well as the decisions rendered by various commissions and agencies. It is imperative for the management of every enterprise to obey the law of the land. Therefore, an adequate knowledge of rules and regulations framed by the government is a pre- requisite for better business performance.
Example: There is a government regulation to protect consumer’s interest e.g.. the advertisements of alcoholic beverages is prohibited.
Question 4.
What economic changes were initiated by the Government under the Industrial Policy, 1991? What impact have these changes made on business and industry?
Answer:
Economic changes initiated by the government under the Industrial Policy. 1991
The Indian corporate sector has come face-to-face with several challenges due to government policy changes. Some of them are as given below.
1. Increasing competition: The competition has increased due to entry of new players (privatisation and globalisation).
2. More demanding Customers: Customers today have become more demanding because they are well-informed. Increased competition in the market gives the customers wider choice in purchasing better quality goods and services.
3. Rapid Changes in Technological Environment: The rapidly changing technological environment creates tough challenges before smaller firms.
4. Necessity for Change: After 1991, the market forces have become turbulent as a result of which the enterprises have to continuously modify their operations.
5. Need for Developing Human Resources: Earlier. Indian enterprises worked with inadequately trained personnel. The new market conditions require people with higher competence and greater commitment. Hence, the need for developing human resources.
6. Market Orientation: Before 1991, all firms worked with production oriented marketing operations. In a fast changing world, there was a shift to market orientation. The firms had to study and analyse the market first and then produce goods accordingly.
7. Loss of Budgetary support to the Public Sector: The public sector undertakings have realised that in order to survive and grow, they will have to be more efficient and generate their own resources for the purpose.
Question 5.
What are the essential features of
(a) Liberalisation
(b) Privatisation and
(c) Globalisation
Answer:
Essential features of
(a) Liberalisation
(b) Privatisation
(c) Globalisation
2nd PUC Business Studies Business Environment Case Problems
Lately many companies have planned for significant investment in organised retailing in India. Several factors have prompted their decision in this regard.
Customers income is rising. People have developed a taste for better quality products even though they may have to pay more. The aspiration levels have increased. The government has also liberalised its economic policies in this regard and permitted even cent percent foreign direct investment in some sectors of retailing.
Question 1.
Identify changes in business environment under different heads – economic, social, technological, political and legal that have facilitated the companies decisions to plan significant investments in organised retailing.
Answer:
Changes which have taken place in the following areas are as follows
1. Economic: Availability of more money because of employment opportunities increasing.
2. Social: Tastes of customers are changing. As they are getting more exposure to the outside world, their tastes are changing.
3. Technological: Technological advancements have led to advanced ways of counting, checking, coding, billing and discounts which are convenient for the customer and also retailer.
4. Political: Government policies are encouraging developers to go for mass construction in real estate. As MNCs are coming to India, they have to be provided an Internationally based infrastructure to operate from.
5. Legal: As the Government is providing more rights to the consumers, organised retailing outlets would be more particular in taking care as compared to a small retailer.
Question 2.
What has been the impact of these changes with regard to globalistion and privatistion?
Answer:
Due to globalisation and privation, more retailers from India and abroad are encouraged to make investment in organised retailing. The competition has increased, the consumers are more demanding and experts working force is required in order to cope up with the changes, which have taken place and are further changing.
2nd PUC Business Studies Business Environment Two Marks Questions and Answers
Question 1.
Define Business Environment.
Answer:
The term ‘business environment’ means the sum total of all individuals, institutions and other forces that are outside the control of a business enterprise but that may affect its performance.
Question 2.
Mention the external forces of Business Environment.
Answer:
The economic, social, political, technological and other forces which operate outside a business enterprise are part of its environment.
Question 3.
What do you understand by business environment?
Answer:
The term ‘Business environment’ means the sum total of all Individuals, institutions and other forces that are outside the control of a business enterprise but that may affect its performance. The economic, social political, technological and other forces which operate outside the business enterprise are part of its environment.
Question 4.
What has been the impact of these changes with regard to globalisation and privatisation?
Answer:
Due to globalisation and privatisation, more retailers from India and abroad are encouraged to make investments in organised retailing The competition has increased, the consumers are more demanding and expert working force is required in order to cope up with the changes, which have taken place and are further changing.
Question 5.
Mention any two features of Business Environment.
Answer:
Question 6.
Mention any two important of Business Environment.
Answer:
Question 7.
What do you mean by liberalization?
Answer:
Question 8.
What do you mean by privatisation?
Answer:
Privatisation is the process of transferring an enterprise or industry from the public sector to the private sector.
Question 9.
What do you mean by globalisation?
Answer:
Globalisation implies the opening of local and nationalistic perspectives to a broader outlook of an interconnected and interdepended world with free transfer of capital, goods and services across national frontiers.
Question 10.
List out any two Indian industrial policy features.
Answer:
(a) The Government reduced the number of industries under compulsory licensing to six.
(b) Disinvestment was carried out in case of many public sector industrial enterprises.
2nd PUC Business Studies Business Environment Four Marks Questions and Answers
Question 1.
Explain the features of Business Environment.
Answer:
Business environment, has the following features:
1. Totality of external forces: Business environment is the sum total of all things external to business firms and, as such, is aggregative in nature.
2. Specific and general forces: Business environment includes both specific and general forces. Specific forces (such as investors, customers, competitors and suppliers) affect individual enterprises directly and immediately in their day-to-day working. General forces (such as social, political, legal and technological conditions) have impact on all business enterprises and thus may affect an individual firm only indirvectly.
3. Inter-relatedness: Different elements or parts of business environment are closely inter-related.
4. Dynamic nature: Business environment is dynamic in that it keeps on changing whether in terms of technological improvement, shifts in consumer preferences or entry of new competition in the market.
5. Uncertainty: Business environment is largely uncertain as it is very difficult to predict future happenings.
6. Complexity: Since business environment consists of numerous interrelated and dynamic conditions or forces which arise from different sources, it becomes difficult to comprehend at once what exactly constitutes a given environment.
7. Relativity: Business environment is a relative concept since it differs from country to country and even region to region. Political conditions.
Question 2.
Explain the importance of Business Environment.
Answer:
Importance of Business Environment
A good understanding of environment by business managers enables them not only to identify and evaluate, but also to react to the forces external to their firms. The importance of business environment and its understanding.
1. It enables the firm to identify opportunities and getting the first mover advantage: Opportunities refer to the positive external trends or changes that will help a firm to improve its performance. Environment provides numerous opportunities for business success. Early identification of opportunities helps an enterprise to be the first to exploit them instead of losing them to competitors.
2. It helps the firm to identify threats and early warning signals: Threats refer to the external environment trends and changes that will hinder a firm’s performance. awareness can help managers to identify various threats on time and serve as an early warning signal.
3. It helps in tapping useful resources: Environment is a source of various resources for running a business. To engage in any type of activity, a business enterprise assembles various resources called inputs like finance, machines, raw materials, power and water, labour, etc., from its environment including financiers, government and suppliers.
4. It helps in coping with rapid changes: Today’s business environment is getting \ increasingly dynamic where changes are taking place at a fast pace.
5. It helps in assisting in planning and policy formulation: Since environment is a source of both opportunities and threats for a business enterprise, its understanding and analysis can be the basis for deciding the future course of action (planning) or training guidelines for decision making (policy).
6. It helps in improving performance: The final reason for understanding business environment relates to whether or not it really makes a difference in the performance of an enterprise.
Question 3.
Write a note on Economic Environment in India.
Answer:
Economic Environment in India.
The economic environment in India consists of various macro-level factors related to the means of production and distribution of wealth which have an impact on business and industry.
These include:
(a) Stage of economic development of the country.
(b) The economic structure in the form of mixed economy which recognises the role of both public and private sectors.
(c) Economic policies of the Government, including industrial, monetary and fiscal policies.
(d) Economic planning, including five year plans, annual budgets, and so on.
(e) Economic indices, like national income, distribution of income, rate and growth of GNP, per capita income, disposal personal income, rate of savings and investments, value of exports and imports, balance of payments, and so on.
(f) Infrastructural factors, such as, financial institutions, banks, modes of transportation communication facilities, and so on.
Question 4.
Mention of the objectives of Economic Environment towards India’s development.
Answer:
The main objectives of India’s development plans were:
(a) Initiate rapid economic growth to raise the standard of living, reduce unemployment and poverty;
(b) Become self-reliant and set up a strong industrial base with emphasis on heavy and basic industries;
(c) Reduce inequalities of income and wealth;
(d) Adopt a socialist pattern of development based on equality and prevent exploitation of man by man.
Question 5.
List out the features of new Indsutrial Policy of 1991.
Answer:
As a part of economic reforms, the Government of India announced a new industrial policy in July 1991.
The broad features of this policy were as follows:
(a) The Government reduced the number of industries under compulsory licensing to six.
(b) Many of the industries reserved for the public sector under the earlier policy, were dereserved. The role of the public sector was limited only to four industries of strategic importance.
(c) Disinvestment was carried out in case of many public sector industrial enterprises.
(d) Policy towards foreign capital was liberalised. The share of foreign equity participation was increased and in many activities 100 per cent Foreign Direct Investment (FDI) was permitted.
(e) Automatic permission was now granted for technology agreements with foreign companies.
(f) Foreign Investment Promotion Board (FIPB) was set up to promote and channelise foreign investment in India.
Question 6.
Hightlights the impact of liberalisation for the economic reforms in India.
Answer:
Liberalisation: The economic reforms that were introduced were aimed at liberalising the Indian business and industry from all unnecessary’ controls and restrictions. They signalled the end of the licence-pemit-quota raj. Liberalisation of the Indian industry lias taken place with respect to:
Question 7.
Hightlights the impact of Privatisation for the economic reforms in India.
Answer:
Privatisation: The new set of economic reforms aimed at giving greater role to the private sector in the nation building process and a reduced role to the public sector. This was a reversal of the development strategy pursued so far by Indian planners. To achieve this, the government redefined the role of the public sector in the New Industrial Policy of 1991, adopted the policy of planned disinvestments of the public sector and decided to refer the loss making and sick enterprises to the Board of Industrial and Financial Reconstruction.
The term disinvestments used here means transfer in the public sector enterprises to the private sector. It results in dilution of stake of the Government in the public enterprise. If there is dilution of Government ownership beyond 51 percent, it would result in transfer of ownership and management of the enterprise to the private sector.
Question 8.
Hightlights the regulations of industeral policy of 1991 towards Globalisation.
Answer:
Globalisation: Globalisation means the integration of the various economies of the world leading towards the emergence of a cohesive global economy. Till 1991, the Government of India had followed a policy of strictly regulating imports in value and volume terms. These regulations were with respect to (a) licensing of imports, (b) tariff restrictions and (c) quantitative restrictions. The new economic reforms aimed at trade liberalisation were directed towards import liberalisation, export promotion through rationalisation of the tariff structure and reforms with respect to foreign exchange so that the country does not remain isolated from the rest of the world.
Globalisation involves an increased level of interaction and interdependence among the various nations of the global economy. Physical geographical gap or political boundaries no longer remain barriers for a business enterprise to serve a customer in a distant geographical market.
Question 9.
Explain the various dimensions of business environment.
Answer:
1. Economic Environment: Interest rates, Inflation rates value of rupee and many more are the economic factors that can affect management practices in a business enterprise.
2. Social Environment: The social environment of business includes the social forces like customs and traditions, values, social trends etc.
3. Technological Environment: This includes forces relating to scientific improvements and Innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.
4. Political Environment: This includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business.
5. Legal Environment: This includes various legislations passed by Government authorities and Court Judgements It is important for the management of every enterprise to obey the law of land and for this, enough of knowledge of rules and regulations framed by the Government is a pre-requisite for better performance.
2nd PUC Business Studies Business Environment Eight Marks Questions and Answers
Question 1.
Explain the impact of Government Policy Changes on Business and Industry.
Answer:
Impact of Government Policy Changes on Business and Industry
The policy of liberalisation, privatisation and globalisation of the Government has made a significant impact on the working of enterprises in business and industry. The Indian corporate sector has come face-to-face with several challenges due to government policy changes.
These challenges can be explained as follows:
1. Increasing competition: As a result of changes in the rules of industrial licensing and entry of foreign firms, competition for Indian firms has increased especially in service industries like telecommunications, airlines, banking, insurance, etc. which were earlier in the public sector.
2. More demanding customers: Customers today have become more demanding because they are well-informed.
3. Rapidly changing technological environment: Increased competition forces the firms to develop new ways to survive and grow in the market. New technologies make it possible to improve machines, process, products and services.
4. Necessity for change: In a regulated environment of pre-1991 era, the firms could have relatively stable policies and practices.
5. Need for developing human resource: Indian enterprises have suffered for long with inadequately trained personnel. The new market conditions require people with higher competence and greater commitment.
6. Market orientation: Earlier firms used to produce first and go to the market for sale later. In other words, they had production oriented marketing operations. the firms have to study and analyse the market first and produce goods accordingly.
7.) Loss of budgetary support to the public sector: The central government’s budgetary support for financing the public sector outlays has declined over the years. The public sector undertakings have realised that, in order to survive and grow, they will have to be more efficient and generate their own resources for the purpose.
On the whole, the impact of Government policy changes particularly in respect of liberalisation, privatisation and globalisation has been positive as the Indian business and industry has shown great resilience in dealing with the new economic order.
Question 2.
Explain the different Dimensions of Business Environment.
Answer:
Dimensions of Business Environment
Dimensions of, or the factors constituting the business environment include economic, social, technological, political and legal conditions which are considered relevant for decision-making and improving the performance of an enterprise.
However, management of every enterprise can benefit from being aware of these dimensions instead of being disinterested in them.
The various factors constituting the general environment of business is given below:
1. Economic Environment: The economic environment includes interest rates, inflation rates, changes in disposable income of people,
2. Social Environment: The social environment of business include the social forces like customs and traditions, values, social trends, society’s expectations from business, etc. Values refer to concepts that a society holds in high esteem. Social trends present various opportunities and threats to business enterprises.
3. Technological Environment: It includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.
4. Political Environment: Political environment includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business. The significance of political conditions in business success lies in the predictability of business activities under stable political conditions. Political stability, thus, builds up confidence among business people to invest in the long term projects for the growth of the economy.
5. Legal Environment: Legal environment includes various legislations passed by the Government administrative orders issued by government authorities, court judgments as well as the decisions rendered by various commissions and agencies at every level of the government centre, state or local.
an adequate knowledge of rules and regulations framed by the Government is a pre-requisite for better business performance. Non-compliance of laws can land the business enterprise into legal problems.