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PREPARED BY
K
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P
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commerce@gmail
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NATURE AND SIGNIFICANCE OF MANAGEMENT
Weightage as per CBSE curriculum 2022-23

Max
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EFFECTIVENESS vs
...
To say in simple it is concerned with the end
Result
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CHARACTERISTICS/FEATURES OF MANAGEMENT
01
02
03

04
05
06
07

Mgt
...
It is used in all types of organizations whether economic,
social or political irrespective of its size, nature and location and at every level
It is multidimensional as it involves management of work, people and operations
...
The management has to
ensure the participation, of its people in the realization of the organization goal
...
needs to conduct the various operations such as production, sale, purchase etc
...
Functions of management like planning, organizing, staffing,
directing and controlling continuously need to be done
It is a group activity since it involves managing and coordinating activities of
different people as a team to attain the desired objectives
...
In order to be successful, an orgn
...
When the goals of an organization are being realized in accordance with its
force:
plans, we can say that the management of the organization is good
...
,
An organization strives to fulfill personal objectives of its employees and also to
Personal
reconcile their objectives with the organizational objectiveness
...
g
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IMPORTANCE/SIGNIFICANCE OF MANAGEMENT
01
02
03
04
05

Mgt
...
increases
efficiency
Mgt
...
helps in achieving
personal objectives
Mgt
...
Managers give
common direction to individual efforts in achieving the overall goals of the orgn
...

Management helps in the development of society by producing good quality
products, creating employment opportunities and adopting new technology
...
Existence of theoretical knowledge (√) 2
...
Based on practice and creativity (√)
CONCLUSION: Hence, management can be said to be an art since it satisfies the all criteria

2

1
...
Systematized body of knowledge (√)
2
...
Universal validity (Χ)
Mgt as a
CONCLUSION: Since management deals with human beings and their behaviour, the
02 Science
outcomes of these experiments are not capable of being accurately predicted or replicated
...

1
...
Professional association (√)
4
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Service
motive
(Χ)
3
Profession
CONCLUSIION: Since management does not meet the exact criteria of a profession,
hence it is not treated as a Profession
...
Responsible all the
activities of the business and for its impact on society
...
, Chairman, Chief Executive
Officer, Chief Operating Officer, President and Vice-President)
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(b) Responsible for the welfare and
survival of the organization
...

1
...
g
...
They are interprets and explains the policies framed by the
top level mgt and collects and reports feedbacks to top level mgt
...

Functions: (a) Interpret the policies
...

They are mainly concerned with technical and routine work on day-to-day basis
...
g
...
(b) Pass
on instructions to the workers
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FUNCTIONS OF MANAGEMENT
It refers to deciding in advance what to do, how to do and developing a may of achieving
goal efficiently and effectively
It refers to the assigning of duties, grouping tasks, establishing authority and allocating of
02 Organizing resources required to carry out a specific plan
...

03 Staffing
It involves leading, influencing
...

04 Directing
ControIt refers to the performance measurement and follow up actions that keep the actual
05 lling
performance on the path of plan
...
Coordination is the force that binds all the
other functions of management
...

It directs the activities of different departments and employees towards
achievement of common goals and brings unity in individual efforts
...
It synchronizes the activities of all levels and
departments as they are interdependent to maintain organizational balance
It is equally important at all the Three-Top, Middle and Lower levels of
management
...

Coordination is never established by itself rather it is a conscious effort on the
part of every manager
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3

IMPORTANCE/SIGNIFICANCE OF COORDINATION
When there is a growth in size, the number of people employed by the organization also
01 Growth in size increases
...
Co-ordination is needed
...
The process of
Functional
02 differentiation linking those activities is achieved by co-ordination
Modern orgn
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Co-ordination is
03 Specialization required among different specialists because of their different approaches, judgment etc

02
...
Marks
01
03
04
06
No of questions
01
There is ONE internal choice question for 06 marks, from this chapter only

Weightage as per CBSE curriculum 2022-23

Total
06

Principle: It refers to a statement which reflects the fundamental truth about some phenomenon based on
cause and effect relationship
...
A managerial
principle is a broad and general guideline for decision-making and behaviour
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Techniques are procedures or methods, which
involve a series of steps to be taken to accomplish desired goals
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is applicable in all types of orgs
...

Management principle give guidelines to solve the problems, these principles do
not provide readymade solution for all the problems
The Mgt
...

These are not set of rigid statements
...

Management principles are formed to guide and influence the behaviour of
employees
...

Management principles are contingent or dependent upon the situation prevailing
in organization
...
Management principles equip the
managers to see the cause and effect of their decisions and actions and thus
02 of resources and
effective Admn
reduce wastage
...
Management principles must be timely, realistic and subject to
03 decisions
measurement and evaluation
...
requirements
to meet the changing requirements of the environment
...
Principles of mgt
...

Mgt
...
, education Management principles are the core of management and are helpful in increasing
06 and research
knowledge, which forms the basis for management training and research
...


4

and seeing that they do it in the

TAYLOR`S PRINCIPLES OF SCIENTIFIC MANAGEMENT
01 Science not Rule of Thumb
02 Harmony, Not Discord
03 Cooperation, Not Individualism
Development of Each and Every
04 Person to his or her Greatest
Efficiency and Prosperity

One best method to maximize efficiency that can be
Developed through study and analysis
...
and workers, mental
revolution on the part of both management and workers required
Competition should be replaced by cooperation
...


TECHNIQUES OF SCIENTIFIC MANAGEMENT
Functional
01 Foremanship
Standardization
and
simplify02
cation of Work
03 Method study
04 Motion Study
05 Time Study
06 Fatigue Study
Differential Piece
07 Wage System

Extension of the principle of division of work and in contradiction to unity of
command
...
Simplification aims at
eliminating superfluous varieties, sizes and dimensions
...
So that it
will minimize the cost of product ion and maximize the quality of the product
...

Unnecessary movements are sought to be eliminated
...

Seeks to determine the amount and frequency of rest intervals in completing a task
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08 Mental revolution Complete change in outlook of the relationship between mgt
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FAYOL`S PRINCIPLES OF MANAGEMENT
01 Division of Work

It leads to specialization so that the work can be performed more efficiently

Authority and
02 Responsibility

Balance between authority and responsibility
...


04 Unity of Command

One and only one boss for every individual employee
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One head and one plan
...

Fair to both employees and the organization
...

The formal lines of authority from highest to lowest ranks are known as
scalar chain
...

No discrimination against anyone on account of sex, religion, language,
caste, belief or nationality etc
...
Employee turnover should be minimized
...

Promote a team spirit of unity and harmony among employees
...


BUSINESS ENVIRONMENT

Max
...

Business environment is becoming exceedingly complex day by day
...
Specific forces influence business firm directly while general forces affect a
business firm indirectly
...
For example,
increased awareness of health care has raised the demand for organic food an roasted
snacks in turn change the life style of people
...
It may be
change in technology, fashion and taste etc
Business environment is uncertain as it is difficult to predict the future environment
changes and their impact with full accuracy
...


IMPORTANCE/SIGNIFICANCE OF BUSINESS ENVIRONMENT
advantage Understanding of business environment helps an organization in
It enables the firm to
01 identify opportunities and identifying advantageous opportunities an getting their benefits prior to
competitors, thus reaping the benefits of being a pioneer
getting the first mover
Correct knowledge of business environment helps a organization to identify
It helps the firm to
identify threats and early those threats which may adversely affect its operations
...

It helps in tapping useful Business environment makes available various resources such as capital,
resources
labour, machines, raw material etc
...
In order to know the
03
availability of resources and making them available on time at economical
price, knowledge of business environment is necessary
...

Understanding and analysis of business environment helps an organization in
It helps in assisting in
planning policy formulation
...

formulation
Correct analysis and continuous monitoring of business environment not only
It helps in improving
helps an organization in improving its performance but also continue to
06 performance
succeed in the market for longer time
...

Customs and traditions, values, social trends, society‟s expectations, product innovations,,
lifestyles, consumer preferences, quality of life, Life expectancy, Expectations from the
02 Social
workforce, presence of women in the workforce, Birth and death rates, Population shifts,
Educational system and literacy rates, Consumption habits, Composition of family

6

03 Technological
04 Political
05 Legal

Scientific improvements, innovations, up gradation, new methods and techniques etc
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This is (2016) third time
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1,000 and Rs
...
1000, Rs
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10000 Notes
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Third time on 8th November, 2016 the Government of India by banning, Rs
...
1000 notes
...
Usually, a new currency replaces the old
currency
...
The people of India had to deposit the invalid
currency in the banks which came along with the restrictions placed on cash withdrawals
...


FEATURES OF DEMONETIZATION
Demonetization is viewed as a Cash holdings arising from declared income was readily deposited in
tax
administration
banks and exchanged for new notes
...

Demonetization is a method to
Tax collection increased because of increased disclosure of income due
02 check tax evasion
to that tax evasion decreased
Though, much of the cash that has been deposited in the banking
system is bound to be withdrawn but some of the new deposits
03 To channelize the savings
schemes is offered by the banks will continue to provide a base loans at
lower interest rates
Demonization is aimed to
Cash transactions declined
...

06 To control illegal activities

IMPACT OF DEMONETIZATION
01 Money/
Interest rates
02
Private wealth
03
04
05
06

(1) Decline in cash transactions (2) Bank deposits increased (3) Increase in
financial savings
Declined since some high demonetized notes were not returned
and real estate prices fell
Public sector wealth No effect
Digitization
Digital transactions amongst new users (RuPay/AEPS) (Aadhar Enabled Payment
System)increased
Real estate
Prices declined
Tax collection
Rise in income tax collection because of increased disclosure

7

04
...
Marks
No of questions

01
-

03
-

04
-

06
01

Total
06

There is ONE internal choice question for 06 marks, from this chapter only
PLANNING: - Planning is the process of deciding well in advance the future courses of action i
...
What is to
be done? When is to be done? How is to be done? By whom it is to be done? etc
...
It requires taking decisions since it involves making a choice from alternative course of
action

FEATURES OF PLANNING
Focuses on achieving
objectives
Primary function of
02 management
01

03
04
05

Pervasive
Continuous Process
Futuristic

Involves decision
06 making
Mental exercise
07

Specific goals are set out in the plans along with the activities to be undertaken
to achieve the goals
...
Thus, planning proceeds other functions
Planning is required at all levels of management as well as in all departments of
the organization
Continuity of planning is related with t he planning cycle
...

Therefore, it is regarded as a forward looking function based on forecasting
...
After evaluation each alternative, it will choose appropriate one
Planning requires application of the mind involving foresight, intelligent imagination and sound judgment
...


IMPORTANCE OF PLANNING
01

02
03
04
05
06

Planning provides directions

By stating in advance how work is to be done planning provides
direction for action
...

In Planning the work of each person and department is clearly decided
...


Planning promotes innovative
ideas
Planning facilitates decision
making

During discussions for planning, new ideas may be presented by
managers/individuals
...
This
helps them in taking decision for selection of best alternative
...


LIMITATIONS OF PLANNING

04

Does Not Work in Dynamic
Environment

Managers have to work according to pre-decided plan they may not be
in a position to change it
...

Middle management and other decision makers are neither allowed to
deviate from plans nor are they permitted to act on their own
...

Business environment changes very frequently
...
Such type of
planning may not give success
...


01

02

Leads to Rigidity
Involves Huge Cost
Reduces Creativity

03

06

8

PROCESS OF PLANNING
01

02
03
04
05
06
07

Setting Objectives

Objectives may be set for the entire organization and each department
or unit within the organization
...

Identifying alternative courses nce objectives are set, assumptions are made
...

Evaluating alternative courses The next step is to weigh the pros and cons of each alternative
...
The best plan has to be
adopted for implementation
...

Follow-up action
Monitoring the plans are equally important to ensure that objectives
are achieved
...
Usually these are designed by top
01 Objective
management as the desired future position that the management would like to reach
...

Strategy provides the broad outline boundary of an organizations` business
...
e
...
Examples, which channel of distribution to use? What is the pricing policy? and how to
advertise the product?
These are general guidelines which facilitate achievement of pre determined objectives
...
Example, selling goods on cash basis only,
03 Policy
reserving some post for women in the organization
...
It deals the exact manner in which any work is to be performed
...
The best method is to be selected out of various methods which carry minimum cost
...

Rule is a specific statement that informs what is to be done and what not
...
A rule does not allow for any flexibility or discretion
...

Programme is a detailed statement about a project which outlines the objectives, policies,
Proprocedures, rules, tasks, physical and human resources required to implement any course of
07
gramme
action
...
,
A budget is a statement of expected result expressed in numerical terms for a definite period of
08 Budget
time in the future
...
ORGANISING
Weightage as per CBSE curriculum 2022-23

Max
...
It can also defined as a process that initiates implementation of plans by
clarifying jobs and working relationships and effectively deploying resources for attainment of identified and
desired results
...

Departmentalization
Departmentalization means grouping together the activities those which
are similar in nature
...
The grouping process is
02
called departmentalization
To assign the task to different job positions
03 Assignment of duties
Establishing authority and After allocating the work by the authorities, each individual should know
04
reporting relationships
who he has to take order s from and to whom he is accountable
01

9

IMPORTANCE OF ORGANISING
01
...

03
...

05
...


Benefits of
specialization
Clarity in working
relationships
Optimum utilization
of resources
Adaptation to
change
Effective
administration
Development of
personnel

Because of the specific workers performing a specific job on a regular basis
...

The establishment of working relationships clarifies who is to report to whom
...
This helps to
avoid confusion and duplication
...

Organizing provides a clear description of jobs and related duties
...

Effective delegation allows the managers to reduce their workload by assigning
routine jobs to their subordinates
...


SPAN OF MANAGEMENT:- Span of Management refers to the number of subordinates that can be
effectively managed by a superior
...
(Two Types – Functional and Divisional Structure)

FUNCTIONAL STRUCTURE
The organization structure which is created on the
basis of grouping of similar functions such as HR,
Marketing, R&D and Purchasing etc
...
Leads to occupational specialization

1
...
Promotes control and coordination within a
department
3
...
Fixation of responsibility-Divisional heads are
accountable for profits
3
...
Leads to minimal duplication
5
...
Attention on every function
Limitations (Less Conflict Leads to Problems)

4
...
Faster decision making

1
...
Conflict among different divisions

2
...
Duplication of activities

3
...
Ignore organizational interests

Limitations (Ignore Duplicate Conflict)

4
...


SUITABILITY
It is suitable for those business enterprises where a
Large variety of products are manufactured using
different productive resources
...


DISTINCTION BETWEEN FUNCTIONAL AND DIVISIONAL STRUCTURE
01 Formation

Basis of distinction

FUNCTIONAL STRUCTURE
Based on functions

DIVISIONAL STRUCTURE
Based on product line

02 Specialization

Functional specialization

Product specialization

03 Responsibility

Difficult to fix responsibility

Easy to fix responsibility

04 Managerial development
05 Cost
06 Co-ordination

Difficult, as each functional manager Easier, autonomy as well as the chance
has to report to the t op mgt
to perform multiple functions
Economical
Costly
Difficult for a multiproduct company

10

Easy because all functions related to a
particular product

FORMAL ORGANISATION
It refers to the organization structure which is designed by the management to accomplish task
...


FEATURES OF FORMAL ORGANISATION
01
02
03
04
05

In formal organization, job positions and reporting relationships are clearly stated
...

It is the framework of a formal structure in which activities of all departments are coordinated
...

The main focus is on work and not interpersonal relationships
...

Unity of command is maintained through an established chain of command
It leads to effective accomplishment of goals by providing operational framework to the employees
It provides stability in the organization because behavior of employees can be fairly predicted since
05
there are specific rules to guide them
...

The employees have to do what they are told to do and they have no opportunity of thinking creatively
02
since it does not allow any deviations from rigid policies
...


INFORMAL ORGANISATION
In the formal structure, individuals are assigned certain job positions
...

This new work of social and friendly groups forms another structure in the organization which is called the
informal structure
...

Independent channels of communication without any specified directions
It emerges spontaneously and is not deliberately created by the management
It is no definite structure or form as it is a social relationships among members
...

It contributes towards fulfillment of organizational objectives by compensating for inadequacies in the
03
formal organization
...

2
...
This may be harmful to the interest of the
03
organization
...


Leaders may or may not be managers
...


DELEGATION/DELEGATION OF AUTHORITY: Delegation refers to the downward transfer of authority
from a superior to subordinate to reduce the workload of the superior
...


Responsibility Responsibility is the obligation of a subordinate to properly perform the assigned duty
...


OMPARAIVE STUDY OF AUTHORITY, RESPONSIBILITY AND ACCOUNTABILITY
Basis

Meaning

Delegation
Origin
Flow

AUTHORITY
Authority refers to the right
of an individual to command
his subordinates and to take
action within the scope of his
job position
...


RESPONSIBILITY

ACCOUNTABILITY

Responsibility is the obligation Delegation of authority,
of a subordinate to properly Undoubtedly
empowers
an
perform the assigned duty
...

Cannot be entirely delegated
...


Arises
from
delegated Arises from responsibility
authority
...

subordinate to superior
...


IMPORTANCE OF DELEGATION
01

Effective management

02 Employee development
Motivation of employees
03
04
05
06

Basis of management
hierarchy
Facilitates growth
Better coordination

The managers are able to function more efficiently as they gets more time to
concentrate on important matters
Employee gets more opportunities to utilize their talent
Responsibility for work builds the self-esteem of an employee and improves
his confidence
It is the degree and flow authority which determines who has to report to
whom
By providing a ready workforce to take up leading positions in new
Ventures
It helps to avoid overlapping of duties and duplication of effort as it gives a
clear picture of the work

DECENTRALISATION/DECENTRALISATION OFAUTHORITY:- Decentralization of authority is delegation
of authority to all the levels of management
...


12

IMPORTANCE OF DECENTRALISATION

...

future
Quick decision making
03
01

04 Relief to top management
05 Facilitates growth
06

It identify those executives who have the necessary potential
to become dynamic leaders
It gives a chance to prove their abilities and creates a reserve
for future
Since the decisions are taken at levels, decision will be made
quickly
Top mgt will get free time to concentrate on important issues
It facilitate growth to the employees as there is autonomy
As the performance will evaluate at each levels of mgt, it
easier to control the activities and subordinates
...

02 Freedom
More control by superiors hence less
of action
freedom to take own decisions
...

04 Scope
05 Purpose

Narrow scope as it is limited to superior
and his immediate subordinate
...


DECENTRALISATION
Optional policy decision
...

Less control over executives‟ hence greater
freedom of action
...

Wide scope as it implies extension of
delegation to the lowest level of management
...


06
...
Marks
No of questions

01
-

03
01

04
01

06
-

Total
07

There is ONE internal choice question for 04 marks, from this chapter only
Meaning: “Staffing consist of Estimating Manpower requirement, Recruitment, Selection, Training,
Compensation, Promotion of managerial personal
...

Makes higher performance, by putting right person on the right job
Ensures continuous survival and growth of the enterprise
Helps to utilize optimum utilization of the human resources
Improves job satisfaction and morale of employees

STAFFING AS A PART OF HRM
In small organizations, the function of staffing is performed by all the managers but in large organizations,
the function of staffing is the responsibility of a separate department called the ''Human Resource
Department''
...

03 Developing compensation and incentive plans
...

05 Maintaining labour relations and union management relations
...

07 Providing for social security and welfare of employees
...


STAFFING PROCESS
Estimating Man01 power Requirement

Finding out number and types of employee
...


13

2
...

It is the process of choosing and appointing the right candidates for various jobs
in an organization through various exams, tests & interviews
...
Orientation refers to
introducing a new employee to the organization
...
Development involves growth of an
employee in all respects
...

Hierarchically upward movement of the employee
...


TYPES OF SOURCES OF RECRUITMENT (Internal and External)
01
02
...

A notice is placed on the notice board of the enterprise specifying the
details of the jobs available
...
This list can be used for Recruitment of
candidate in future
...


Direct Recruitment
Casual callers

02
03
04

05

06
07
08
09
10

Advertisement
Employment
Exchange
Placement
Agencies and
mgt
...
It is
managed by Government
...
These agencies run by private people
...

Companies go to the Campuses of reputed technical and non-technical
colleges and institutions for recruitment
Applicants introduced by present employees, or their friends may prove to
be a good source of recruitment
...

Labour contractors can provide the required number of unskilled workers
at short notice
...

Certain websites specifically designed for providing information regarding
job seekers and companies which have vacancies
...

It simplifies the process of selection and
placement
...


LIMITATIONS
01 The scope for induction of fresh talent is reduced
...

Frequent transfers of employees may often
05
reduce the productivity of the Organisation
...
Selection is described as a negative in nature because it aims at rejecting applicants
who are found unsuitable and offering jobs to those who are found perfectly suitable
...


Preliminary Screening

After applications have been received, they are properly checked for
qualification, age, gender etc
...

Includes intelligence tests, aptitude test, personality test, trade and
interest tests
...

Test
02 Aptitude Test To check person‟s ability to learn new jobs
...

To check the existing knowledge
...

Face to face interaction between employer and candidate to check
candidate‟s personality confidence, knowledge
...

A list of candidates who clear the employment tests, interviews and
reference checks is prepared and then the selected candidates are listed in
order of merit
...

Formally appointed by issuing him an Appointment Letter
...

05 Interest test

3
04

Employment Interviews
Reference Checks
Selection Decisions

05
06 Medical Examination
07 Job Offer
Contract of Employment
08

TRAINING
It is the systematic development of knowledge, skills and attitudes required by an individual to perform
adequately a given task or job
...


DIFFERENCES BETWEEN TRAINING AND DEVELOPMENT
Base
Concept
Nature
Duration
Centered

Training
Teaching of technical skills

Development
Teaching technical human and conceptual skills

Focus on developing skills which are
already possessed by employee
Short term and fixed period
It is work centered

Development of hidden skills
It is a long-term process
It is people centered
...


EDUCATION
It is the process of increasing the knowledge and understanding of employees‟ interpretation
...
Education imparts qualities of mind, character, and understanding of the basic
principles and develops the capacities of analysis, synthesis and objectivity
...
It Is used for training of plumbers, electrician
...
He sets goals,
gives suggestions to achieve, periodical reviews to know their output
...

It involves shifting of trainees from one department to another or from one job
to another
...

It is well adapted to conveying specific information rules, procedures or
method
...

Taken from actual experiences of organizations, cases represent attempts to
describe as accurately as possible real problems that managers have faced
...

Workers work on same types of equipment but away from actual work place
...
DIRECTING
Weightage as per CBSE curriculum 2022-23

Max
...


FEATURES / CHARACTERISTICS OF DIRECTING
Imitates
01
...
While
other functions prepare a platform for action, directing initiates action
...

04

Flows from
top to bottom

It is a continuous function as it continues throughout the life of organization
irrespective of the changes in the managers or employees
...
It initiate action
It integrate
employees efforts
Means of
03
motivation
02

04

Balance in the
organization

It initiate action by people in the organization towards attainment of desired
objectives
It integrates employees efforts in the organization in such a way that every
individual effort contributes to the organizational performance
It guides employees to fully realize their potential and capabilities by
motivating and providing effective leadership
It helps to bring stability and balance in the organization since it foresters
cooperation and commitment among people and helps to achieve balance among
various groups

16

05

To facilitate
change

It facilitates needed changes in the organization through motivation,
communication and leadership
...
Individual
Contribution
02
03
04

The directing techniques must help every employee contribute to his maximum
potential for the achievement of organizational objectives
...

Every individual is assigned a particular task which he is responsible to
Harmony of
accomplish
...

Unity of
One superior is for giving instructions to subordinates
...

Command
Appropriateness Appropriate motivational and leadership techniques should be used based on people
needs, capabilities, attitudes and situational variables
...

The managers must use informal relations for getting correct feedback from the
employees
...

A good leader is the biggest asset for any team
...
As a leader, the boss should guide and
counsel the workers not only on the work problems but also the personal problems
...
Manager should also follow up by
reviewing continuously and check whether instructions are properly
executed or implemented as per instructions given
...
Supervision
02 Motivation

To see, instruct, guide, monitoring and observing the employees
...

It is a process of influencing the behavior of employees at work towards the
03 Leadership
achievement of the goals of the organization
...


SUPERVISION
It is the process of guiding and checking the efforts of employees and other resources to accomplish the
desired objectives
...
Relations
02 Acts as a link
03
04
05
06
07

Plays a
leadership role
Ensures
performance of
work
Provides on the
job training
Builds high
morale
Provides
feedback to the
workers

He maintains day-to-day contact and maintains friendly relations with workers
Supervisor conveys the management‟s ideas to the workers on one hand and
workers problems to the management on the other, thus acting as a link pin
...

The supervisor makes sure that all the instructions are communicated to each and
every employee
Supervisor provides good on the job training to the workers andemployees so that
supervisor can build efficient team of workers
...

During supervision, a supervisor is always in direct contact with his subordinates
...
He also gives feedback to
workers on how to improve their work
...


Motivation is an internal feeling

02 Motivation produces goal directed
Motivators can be positive as well as
03
Negative
Motivation is a complex process
...


PROCESS OF MOTIVATION

IMPORTANCE OF MOTIVATION
01
...


Basic Physiology needs

02
03

Safety needs
Social/Belonging needs

Explanation
Includes needs for survival and maintenance of life
...

It deals with future needs and safety of human life
...


04

Esteem needs

It deals with demand of respect for themselves in a group
...
It includes growth self
fulfillment and achievement of goal
...

02
1
...
Human behavior can be changed motivated by fulfilling
their needs
...
e
...

A satisfied need can no longer motivated a person, only the next higher need can motivate him
...


18

FINANCIAL AND NON-FINANCIAL INCENTIVES
S
...

01 Pay and Allowance
Productivity linked
02
wage incentives
Bonus
03
04
05
06
07
01
02
03
04
05
06
07
08

Type

Financial

Profit Sharing
Co-Partnership/
Stock Option
Retirement
Benefits
Perks/Fringe
Benefits
Status
Organizational
Climate

Explanation
Regular salary payment and various allowances
The incentive plans aims at linking payment of wages to increase
in productivity
It is one-time extra reward offered to the employee for higher
performance
...

Offering of shares to employees and lower rate in form of ESOPs
...
at the time of retirement of employee
Special benefits like medical facilities, free education for children,
housing facilities
...

It refers to relationship between superior and subordinate
...

Promotional opportunities given to employees
...

Making the job of employees more interesting to avoid boredom in
job by offering more varieties and challenges in job
...

It means giving more autonomy and powers to subordinates
...


05

Continuous process
...

Maintains personal relations and helps followers in fulfilling their needs
Play a key role in introducing required changes in the organization
Handles conflicts effectively and does not allow adverse effects resulting from the conflicts
...
Health
and endurance help a leader to work hard and inspire others also to do so
...

A leader should possess high level of integrity and honesty, so that he can be a role
model to others
...


19

05

Communication
skills

06

Motivation
skills

07 Self-confidence
08 Decisiveness
09 Social skills

A leader should be a good communicator
...
He should not only be a good speaker, ut a good listener, teacher
and counselor
...

A leader should have a high level of confidence
...

A leader must be decisive in the sense that once he has taken a decision, he should
be firm on it
...


STYLES OF LEADERSHIP
S
...

01
02

Basis
Decision Making
Communication

Motivation
03
...
authority
05 Focus
Role of leader
06

Autocratic/
Authoritative
Only leaders make
the decisions
...
e
...

Fear and punishment
(negative motivation)
No delegation
Leader control
Provides directions

Democratic/ Participative

Laissez Faire/ Free Rein

Leaders make decision in
consultation with subordinate
Two-way of communication

Subordinates make the
decisions
Free flow of communication

Reward and involvement
(positive motivation)
Delegation of authority to
some extent
Group control
Maintains team work

Self-direction and selfcontrol
...
He may be
a speaker, a writer or an actor
...
It may consist of facts, information, ideas,
opinions, etc
...

The sender translates the message into words, gestures or other symbols, which he feels
will make the receiver understand the message
...
g
...

It means process of conversion of symbols into the message by the receiver
...
The receiver may be a
listener, reader or viewer
...
Such response is known as
feedback
...


IMPORTANCE OF COMMUNICATION
01
02
03

04

The manager explains to the employees the organizational goals, modes of their
The Basis of
achievement and also the interpersonal relationships amongst them
...

A manager coordinates the human and physical elements of an organization to run
Fluent Working
it smoothly and efficiently
Proper communication provides information to the manager that is useful for
The Basis of
decision making
...
Thus,
Decision Making
communication is the basis for taking the right decisions
...
All of these aspects involve communication
...


20

Increases
The two-way communication process promotes co-operation and mutual
understanding amongst the workers and also between them and the management
05 Cooperation and
Organizational Peace
Boosts Morale of the Good communication helps the workers to adjust to the physical and social aspect
06
Employees
of work
...


FORMAL COMMUNICATION
It flows through official channels designed in the organizational chart
...
Different types of formal
communication net works are explained with the help of images
...
It includes
subordinate to superior
...

suggestions, reactions etc
...
Ex
...


TYPES OF FORMAL COMMUNICATION NET WORKS
In this type of network communications flows from every superior to his subordinate
01 Single chain
through a single chain
...
They
02 Wheel
are not allowed to talk among themselves
...
Each person is able to
03 circular
communicate with his adjoining two persons only
...
There is no
04 Free flow
restriction
...
However, in the latter case, only ordained
communication takes place
...
An informal communication system is also known as grapevine
...

03 Probability network In this network, the individual communicates randomly with other individuals
...
Out of these four networks, the Cluster network is the most popular network
02 Gossip network

21

Difference between FORMAL and INFORMAL COMMUNICATION
SN

Basis

01 Meaning
02 Flow
03 Verbal or written
04 Scope for rumors
05 Scalar chain
06 Purpose

Formal Communication
Official communication at official place
between people who are officially related
with each other
...

Generally, it is written
...

It is mostly verbal
...

It is for social purposes only
...

Badly
There may be a difficulty in expressing information because of poor vocabulary or the
expressed
01 wrong use of words
...
In such cases, it may be difficult for
different
02 the receiver to interpret the intended meaning of the word
...
For ex: The original draft is
translations
written in English and the same is translated in Hindi with some mistakes
Sometimes, there are certain assumptions about a particular communication and so it
might be misinterpreted
...

Sometimes, a senior or specialist uses technical vocabulary which subordinates might
Technical
05 find difficult to understand or interpret
...

Gestures of the communicator are also seen as part of the communication
...
For example, if a boss cracks
decoding
a joke but his/her body language shows signs of irritation and frustration, then
employees might get confused

BARRIERS TO COMMUNICATION (PSYCHOLOGICAL/EMOTIONAL BARRIERS)
Various psychological or emotional factors such as anger and frustration might also act as a barrier in
effective communication
...
This is possible due to pre-conceived notions or prejudices about
evaluation
communication
Lack of
While communication takes place, it may happen that the receiver is preoccupied with
02
attention
something else and that is why he is unable to grasp the message communicated to him
Loss by transThere can be loss of information or transmission of wrong information due to
mission and
03 information passing through multiple stages
...

Effectiveness of communication may be hampered if organizational policy is
Organizational policy
01
not supportive to free flow of communications
...

Complexity in organization
Communication gets delayed and distorted if there are number of
04
structure
managerial levels in an organization
...


BARRIERS TO COMMUNICATION (PERSONAL BARRIERS)
Personal barriers arise out of personal factors affecting the sender and the receiver
...
On the other hand, the manager may also not communicate certain
authority
information with subordinates if he feels that it would affect his authoritative power
Lack of confidence
If the manager does not have confidence in the skill and competence of the
of superior on his
02 subordinates, he would not seek their advice or opinion
subordinates
Unwillingness to
The subordinates, at times, are not willing to share information or communicate
03
communicate
with managers if they feel that it would affect their personal interests
Many a times, there is no incentive (in the form of reward or appreciation) for
Lack of proper
04 participation in communication
...


IMPROVING COMMUNICATION EFFECTIVENESS
01 Clarifies the ideas before communication
Communicate according to the needs of
02
receiver
03 Consult other before communicating
04
05
06
07
08
09

Sender should be clear about the message he is about to send
...

It is better to discuss before the message is conveyed to the receiver

Be aware of language, tone and content of message
...

Needs of the receiver should be clearly understood so that the message
Convey things of help and value to
could be of help and add value to the receiver
...

Communicate for present as well as
Communication is needed to meet the present as well as future
future
commitments to maintain consistency
...

A message sender can only be good in communication if he listens to
Be a good listener
the other party properly and then gives his response
...
CONTROLLING
Weightage as per CBSE curriculum 2020-21

Max
...
Controlling is a
process of comparison of actual performance with the planned performance
...

A good control system enables management to verify whether the standards
set are accurate or not by careful check on the changes taking
place in the organizational environment
...

An effective control system communicates the goals/standards in advance
to the employees
...

Controlling creates an atmosphere of order and discipline in the
organization by keeping a close check on the activities of its employees
...
It
06 in Action
...


23

LIMITATIONS OF CONTROLLING
Difficulty in
setting
01
quantitative
standards
Little control on
02
external factors
Resistance from
03
employees
04 Costly affair

Control system loses its effectiveness when standards of performance cannot be
defined in quantitative terms
...

e
...

An enterprise cannot control external factors like government policies, technological
changes, and competition
...

Control is resisted by the employees as they feel that their freedom is restricted
...
g
employees may resist and go against the use of cameras to observe them minutely
...
A small enterprise cannot afford
to install an expensive control system
...


RELATION BETWEEN PLANNING AND CONTROLLING
01

02

03

04

Planning
without
controlling is
meaningless
Controlling is
blind without
planning
Planning is
basically an
intellectual
process
planning is
looking ahead
while
controlling is
looking back

planning and
05 controlling are
interrelated

Planning and controlling are inseparable twins of management
...
Once a plan becomes
operational, controlling is necessary to monitor the progress, measure it, discover
deviations and initiate corrective measures to ensure that events conform to the plans
...
When there
is no plan, there is no basis of controlling
...
Controlling checks whether
decisions have been translated into desired action
...
Plans are prepared for future and are
based on forecasts about future conditions
...

Controlling is like a postmortem of past activities to find out deviations from the
standards
...
Thus, planning and controlling
are both Backward-Looking as well as a Forward-Looking Function
...

Controlling improves future planning by providing information derived from the
past experience
...

Standards should be clearly defined and expressed in numeric terms so that all
can understand them
...

While measuring the performance quantitative & qualitative aspect kept in mind
...
The
differences between two is known as deviation
...

All deviations need not to be brought to the notice of the management
...
To analyze the deviations Critical point control and
Management by Exception are used
...
if there is deviation
in these areas then it must be attended urgently
...
2 and cost of postage by Rs 10
...
Thus, for an organization
KRA will be cost of production
...
The deviations beyond the specific range in
KRA should be handled by manger and managers should not waste time in
controlling everything
...
5 then management will not take the action in above case
...

After knowing the reasons for deviations, the management takes all necessary
steps to resolve the deviations so that planned performance and actual
performance are matched
...
FINANCIAL MANAGEMENT
Weightage as per CBSE curriculum 2022-23

Max
...

Financial Management- It is concerned with optimal procurement as well as the usage of finance
...
g
...


A capital budgeting/financial management decision to invest in
Fixed assets would raise the size of fixed assets
...
The decision credit and inventory
management affect the amount of debtors and inventory
...

Similarly, use of equity may entail dividends
...
It is achieved through(a) Ensuring effective utilization of funds
...


INVESTMENT/CAPITAL BUDJETING/LONG TERM INVESTMENT DECISION
(as a part of Financial Decision)
The investment decision, therefore, relates to how the firm‟s funds are invested in different fixed assets
...
Long-term investment decision is called capital
budgeting decision and short-term investment decision is called working capital decision
...

The expected returns from each proposal and risk involved in them should be
taken into account to select the best proposal
...
These involve calculation regarding investment
amount, interest rate, cash flows, rate of return etc
...
In other words, it refers to the determination as how the total funds required by the business will be
obtained from various long-term sources
...
It needs a judicious mix of debt and
equity
...
The cheapest source should
be selected (usually cheapest is debt )
The risk associated with different sources is different
...
(usually low risk is equity)

25

FACTORS AFFECTING FINANCING DECISION
03
04
05
06
07

The costs involved in issuing securities such as brokers commission, underwriters‟ fees,
Floatation cost expenses on prospectus etc
...
Higher the flotation cost, less
attractive is the source of finance
...

position
Fixed operating If a business has high fixed operating cost then it must reduce fixed financing costs
...

In case the existing shareholders want to retain the complete control of business then
Control
finance can be raised through borrowed funds but when they are ready for dilution of
considerations
control over business, equity can be used for raising finance
...


DIVIDEND DECISION

(as a part of Financial Decision)

The decision involved here is how much of the profit earned by company (after paying tax) is to be
distributed to the shareholders and how much of it should be retained in the business
...


FACTORS AFFECTING DIVIDEND DECISION
Amount
01
Earnings
Stability
02
Earnings
Stability
03 Dividends
04
05
06
07
08
09
10
11

of Companies having high and stable earning could declare high rate of dividends as
dividends are paid out of current and paste earnings
...
The dividend per share is not
altered and changed in case earnings change by small proportion or increase in
earnings is temporary in nature
Growth
In case there are growth prospects for the company in the near future them it will
Opportunities
retain its earning and thus, no or less dividend will be declared
...

Shareholders
While deciding about dividend the preference of shareholders is also taken into
Preference
account
...

Taxation
A company is required to pay tax on dividend declared by it
...

Stock Market If the companies are declaring more amounts of dividend and stock prices react
Reaction
positively t o it
...

Access
to Large companies having easy access to the capital market may depend less on retained
Capital Market warnings, these companies tend to pay higher dividends than the smaller companies
which have relatively low access to the market
...
This limits the capacity of company to declare
Constraints
dividend
...
The companies are required to ensure that the dividend
Constraints
does not violate the terms of the loan agreement

FINANCIAL PLANNING
A Financial planning is a blueprint of an organization‟s future operations
...


OBJECTIVES OF FINANCIAL PLANNING
To ensure availability of funds whenever required:
To see that the firm does not raise resources unnecessarily
...

05 It tries to link the present with the future
06 It provides a link between investment and financing decisions on a continuous basis
...


CAPITAL STRUCTURE
Capital Structure refers to the mix between owners and borrowed funds
...
It can be calculated as debt-equity ratio or as the proportion of debt out of
the total capital
...


TRADING ON EQUITY
Trading on Equity refers to the increase in profit earned by the equity shareholders due to the presence of
fixed financial charges like interest
...
Rate Tax Rate

DEBT OPTIONS
Situation 1
Situation 2
Situation 3
30,00,000
10%
30%
NIL
10,00,000
20,00,000
This is a situation of Favorable Financial
This is a situation of Unfavorable
leverage
Financial leverage
Situation
Situation Situation
Situation Situation Situation
3
1
2
1
2
3

EBIT
Interest@10%
EBT
Tax (@30%)
EAT

4,00,000
NIL
4,00,000
(1,20,000)
2,80,000

No of shares

3,00,000

EPS

0
...
05

1,00,000
1
...
33% (4/30*100) and Kd is 10%

No of shares
EPS

60,000

30,000

NIL

1,40,000

70,000

NIL

3,00,000

2,00,000

1,00,000

0
...
35

NIL

ROI is 6
...
Cash flows must not
only cover fixed cash payment obligations but there must be sufficient buffers also
...

Debt Service Coverage Ratio takes care of the deficiencies referred to in the Interest
Coverage Ratio (ICR)
...

Return on
If the ROI of the company is higher, it can choose to use trading on equity to increase
04
investment
its EPS
Cost of debt
A firm‟s ability to borrow at a lower rate increases its capacity to employ higher debt
...

06 Tax rate
A higher tax rate makes debt relatively cheaper vis-a-vis equity
Cost of equity Stock owners expect a rate of return from the equity which is commensurate with the
07
risk they are assuming
...

risk
Business risk depends upon fixed operating cost
...
Total risk depends upon business risk and financial risk
...

Debt normally does not cause a dilution of control where as equity dilute the control
11 Control
Regulatory
The companies have to operate within a regulatory frame work provided by the law at
12 frame work
the time of opting debt and or equity
Stock Market
Stock market conditions often affect the choice between equity and debt
...


FIXED CAPITAL
The amount of capital investment in fixed assets is called fixed capital, e
...
plant and machinery, land and
building, etc
...


FACTORS AFFECTING FIXED CAPITAL REQUIREMENTS
Nature of
01
business
Scale of
02
Operations
03

Choice of
Technique

04

Technology
Upgradation

05

Growth
Prospects

06 Diversification
07

Financing
Alternatives

08

Level of
collaboration

A trading concern needs lower fixed capital since it does not require purchasing fixed
assets
...

A large organization operating at a higher scale needs higher investment in fixed assets
when compared with the small organization
...

Capital intensive organization needs higher investment and labour intensive less
investment in fixed assets
...
Thus, such organizations which use assets which
are prone to obsolescence require higher fixed capital to purchase such assets
...

More fixed capital will be required in case of companies which have diversity of
production lines as compared to companies which do not have much of diversification
...

If some business organizations share each other‟s facilities, these organizations will
require lesser fixed capital
...


WORKING CAPITAL
Working capital is the amount that the company uses in its day to day trading operations
...
It is that part of total capital which is
required for holding current assets
...
It refers to a firm‟s investment in short term assets such as cash, short term securities, account
receivable and inventories
...
as compared to small scale firms
...

Higher amount of working capital is required by the organization during its peak season
Seasonal
04 Factor
as the level of activities is higher as compared to lean season
...
e
...
Longer period means more working capital
05 Cycle
is required and vice-versa
...

If it is difficult to avail credit by the firm (on its purchases) from suppliers then, higher
07 Credit Availed amount of working capital is required
...

Higher lead time (i
...
time lag between the placement of order and actual receipt of the
Availability of
materials) and interrupted availability of raw materials will raise the requirement of
09 Raw Material
working capital
...


28

FACTORS AFFECTING WORKING CAPITAL REQUIREMENTS
Level of
11 competition
12 Inflation

Working capital requirements will be more if level of competitions is high
...


10
...
Marks
Weightage as per CBSE curriculum 2022-23 No of questions

01
04

03
01

04 06 Total
07

There is ONE internal choice question for 03 marks, from this chapter only

FINANCIAL MARKET
A market for the creation and exchange of financial assets such as -equity shares, debentures and bonds
...
This market transfers money or capital from those who have
surplus money to those who are in need of money
...
If the investors want, they can invest their
savings into long term investments and whenever they want, they can sell the investments/ instruments and
convert them into cash

MONEY MARKET
The money market is a market for short term funds which deals in monetary assets whose period of
maturity is up to one year


...


DISTINCTION BETWEEN CAPITAL MARKET AND MONEY MARKET
Sl
...

Riskier
Higher return

MONEY MARKET
RBI, banks, financial institutions and
finance companies
T-bills, trade bills reports, commercial
paper and certificates of deposit
...

Safer
Comparatively less returns

PRIMARY MARKET/NEW ISSUE MARKET
It deals with new securities being issued for the first time
...
The investors in this market are banks, financial institutions,
insurance companies, mutual funds and individuals
...

01
02
03
04
05
06

Basis
Trading securities
Participants
Capital formation
Buy/Sale
Price determination
Geographical location

PRIMARY MARKET
New securities
Sold by the company
directly
Only buying
By the management of the company
...

indirectly
Both the buying and the selling
By demand and supply of securities
Local area
...
It helps existing
investors to disinvest and fresh investors to enter the market
...
Securities are traded, cleared and settled within the regulatory framework prescribed by
SEBI
...
In other
words, it provides a continuous market for the sale and purchase of securities
...
It enables correct pricing of securities through the interplay of demand
securities
and supply
...
This ensures that the investing public gets a safe and fair deal
transaction
in the market
...
This continuous process of
Economic
disinvestment and reinvestment helps in channelizing the savings and the investments
Growth:
to the most productive use
...

Through regulation of the issues and better trading practices, a stock exchange helps in
Spreading
educating the people about investment
...

It is generally believed that certain degree of speculation is necessary for better liquidity
Providing Scope
and to maintain demand and supply of securities
...


ADVANTAGES OF ELECTRONIC/SCREEN BASED TRADING SYSTEM
It ensures transparency as it allows the participants to see the prices of all
securities in the market while business is being transacted
...
The computer screens display information on prices and also capital
market developments that influence share prices
...

People from all over the country and even abroad who wish to participate in the
stock market can buy or sell securities through brokers or members without
Improves the liquidity knowing each other
...
This system has enabled a
large number of participants to trade with each other, thereby improving the
liquidity of the market
...
Thus, all the trading centers spread all over the
platform
country have been brought onto one trading platform, i
...
, the stock exchange, on
the computer
...

Brokers are the members of the stock exchange
...
It is possible only with the help of an
intermediary known as share broker
...
The investor has to open a „DEMAT‟ account BENEFICIAL OWNER
account with the
(BO) account with DEPOSITORY PARTICIPANT (DP) for holding and transferring
depository
...

03
The investor then places an order with the broker to buy or sell shares
...
Once the order is received, an order confirmation
slip is issued to the investor
...
When price mentioned arrived in the market, the order will be
order
executed and it will be communicated to the broker‟s terminal
...

Selection of
Stock broker

30

STEPS IN THE TRADING AND SETTLEMENT PROCEDURE OF STOCKS

In this stage the investor has to deliver the shares sold or he has to pay cash for the
shares purchased
...
It is done immediately after receiving contract note
...
Cash is
paid (if securities purchased) or securities are delivered (if securities are sold) on
pay-in-day, which is before the T+2 day as the deal has to be settled and finalised on
the T+2 day
...
It is an organisation for holding securities of an
investor in electronic form
...

1
...
It was
promoted as a JV of the IDBI, UTI & NSE
2
...
CDSL (Central Depository Service Ltd):- It is the second depository to commence operations and was
3
...


DEPOSITORY PARTICIPANT (DP)
He is a registered agents/intermediaries of the Depository (NSDL/CDSL) concerned which interacts with
investors: Ex: ICICI Bank link between investors and depositors
...
A depository participant (DP), either a bank, broker, or financial services company, may be identified
...
An account opening form and documentation (PAN card details, photograph, power of attorney) may be
completed
...
The physical certificate is to be given to the DP along with a dematerialization request form
...
If shares are applied in a public offer, simple details of DP and demat account are to be given and the
shares on allotment would automatically be credited to the demat account
...
If shares are to be sold through a broker, the DP is to be instructed to debit the account with the number
of shares
...
The broker then gives instruction to his DP for delivery of the shares to the stock exchange
...
The broker then receives payment and pays the person for the shares sold
...
All these transactions are to be completed within 2 days, i
...
, delivery of shares and payment received
from the buyer is on a T+2 basis, settlement period
...
It was recognized as Stock Exchange in
1993 and started operations in 1994
...


OBJECTIVES OF NATIONAL STOCK EXCHANGE OF INDIA (NSEI)
01 NSE establishing a nationwide trading system for providing the trading facility in all types of securities
02 Ensuring equal access to investors all over the country through an communication net work
03 By using an electronic trading system, NSE providing a fair, efficient and transparent securities market
...

05 NSE aimed at meeting the international standards and benchmarks of stock exchange
...
Whole Sale Debt Market Segment: This segment provides a trading platform for a wide range of fixed
income securities that include central government securities, treasury bills, state development loans, bonds
issued by public sector undertakings, floating rate bonds, zero coupon bonds, index bonds, commercial
paper, certificate of deposit, corporate debentures and mutual funds
...
Capital Market Segment: The capital market segment of NSE provides an efficient and transparent
platform for trading in equity, preference, debentures, exchange traded funds as well as retail Government
securities
...
It commenced
operations in the year 1992
...
OTCEI is a fully computerized and single window exchange system
...
It acts as a place where buyers meet the sellers
and negotiate for an acceptable terms of trade
...
It provides liquidity to the securities along with practicing a fair trade system
...


ADVANTAGES OF OVER THE COUNTER EXCHANGE OF INDIA (OTCEI)
01 It provides a trading platform to smaller and less liquid companies
...

04 Dealer can operate both in new issues & secondary market at their options
...

07 Information flows are free and more direct from market makers to customers
...
It was granted permanent recognition under the Securities Contract (Regulation) Act, 1956
...
A stock
exchange can be set up as a corporate entity with different individuals (who are not brokers) as members or
shareholders
...
OBJECTIVES OF BOMBAY STOCK EXCHANGE OF INDIA (BSE)
To provide an efficient and transparent market for trading in equity, debt instruments, and mutual
01
funds
...

03 To ensure active trading and safeguard market integrity through an electronically-driven exchange
...

05 To conform to international standards

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)
SEBI - Established on 12 April 1988 by the GOI given statutory status through an Act in 1992
...

To protect the rights and interests of investors, particularly individual investors and to guide and
02
educate them
...

To regulate and develop a code of conduct and fair practices by intermediaries like brokers, merchant
04
bankers etc
...


32

FUNCTIONS OF SEBI
01 Registration of brokers and sub brokers and other players in the market
...

Regulation of stock brokers, portfolio exchanges, underwriters and merchant
REGULATORY
03
bankers and the business in stock exchanges
FUNCTIONS
04 Regulation of takeover bids by companies
...

06 Levying fee or other charges for carrying out the purposes of the Act
...

01 Training of intermediaries of the securities market
...

02
FUNCTIONS
Undertaking measures to develop the capital markets by adapting a flexible
03
approach
...
Prohibition of fraudulent and unfair trade practices like making misleading
01
statements, manipulations, price rigging etc
...

PROTECTIVE
03 Undertaking steps for investor protection
...
MARKETING MANAGEMENT
Max
...


MARKETING
It refers to “social process by which individual groups obtain what they need and want through creating
offerings and freely exchanging products and services of value with others”

01
02
03
04

FEATURES OF MARKETING

Satisfaction of the needs and wants of individuals and organizations
...

Greatest benefit or value for the money
...

Exchange mechanism

WHAT CAN BE MARKETED
Physical Products,
Organizations

Services,

Ideas,

Persons,

Place,

Experience,

Properties,

Events,

Information,

MARKETER/SELLER
The marketer can be a person or organization who make available the products or services and offer them to
the customer with an intention of satisfying the customer needs and wants
...


PROCESS OF MARKETING MANAGEMENT
Choosing a target
01 market
02

Choosing a target market, say a manufacturer may choose to make readymade
garments for children up to the age of 5 years;

After choosing target market, the focus is shifted on getting, keeping as well as
Create demand for the
growing the customers
...

communicating superior values for the customers
...

Basis
01 Part of the process Vs
wider term
02 Transfer of title Vs
...
So, anyone who was able to
01
Concept
produce goods could easily find buyers for the same
...

Increase in scale of production→ competition among the sellers → Product quality and
availability alone did not ensure survival as a large number of firms were now selling
products of similar quality
...
Customer satisfaction is the precondition for realizing the
firm’s goal and objectives
...
Some products
bring harmful effect on environment so these should not be supplied
...


FUNCTIONS OF MARKETING
Gathering and
01 Analyzing Mrkt
...
This is necessary to identify the needs of the customers and take various
decisions for the successful marketing of the product and services
...

Standardization refers to producing goods of Predetermined specifications, which helps
in achieving uniformity and consistency in the output
...
,
Packaging refers to designing and developing the package for the products
...

Brand name helps in creating product differentiation
...
Branding also helps
in building customer‟s loyalty and promotes sales of a product
...
Physical movement of the product from the place of its production to the
ultimate consumer‟s place
...
In other words, it is the movement of goods from the place of production to
the place of consumption
...
It is often seen that there is a gap
between the time a product is produced and the time when it is consumed
...


MARKETING MIX
The marketing mix consists of various elements, which have broadly been classified into four categories,
popularly known as four P`s of marketing
...


1
...


1
...
It includes (A) branding (B) packaging and (C) labeling

1A
...
, to a product is called branding
...
g
...

BRAND NAME:-It is a part of brand, which can be spoken is called a Brand Name
...
It consists of words, numbers or letters which can be pronounced such as Maggi, Uncle chips, etc
BRAND MARK:- It is a part of brand which can be recognized
...
g
...

TRADE MARK:- It means a brand or a part of brand that enjoys legal protection, e
...
Hyundai sign on
Hyundai cars
...
ADVANTAGES OF BRANDING
ADVANTAGES TO THE MARKETERS

ADVANTAGES TO THE CUSTOMERS

01 Enables marketing Product differentiation

01 Helps in product identification

02 Helps in advertising and display activities

02 Ensures quality

03 Differential pricing

03 Status symbol and psychological benefits

04 Easiness in introducing new products:

04 Reduction in efforts

1A
...
For example: apple, idea, Rin etc
...
It should not be common and should be catchy
...

A brand name should be capable enough to explain the benefits and qualities and also the utility of the
product without creating confusion in the minds of the buyers
...

A brand name should be unique and distinctive and have a separate identity than the competitors
...

A brand name should be easy to advertise and should be adjustable enough to suit the packaging and
labeling requirements of the products
...

A brand name should be versatile
...
For example: Dabur
...


35

1A
...
For
08
example: Reynolds and signature pens
...
PACKAGING
Packaging refers to the act of designing and producing the container or wrapper of a product
...
LEVELS OF PACKAGING
It is the immediate packet of the product i
...
which is directly above the product
...
For example: packet of soap will be removed before use
...

Secondary
It is removed before the use of the product
...
The cardboard box will be disposed off
...

03 portation It helps in safeguarding the product from damage and also useful for easy identification of
packaging the product in the market

1B
...
it is
also useful for the shopkeepers to identify the product through its packet
...

Some products are in such a packaging that their use becomes easy and the packets
facilitate it‟s‟ use in accordance to the shape and size of the product
...
Many products have packaging so that
they become attractive and can become a source of promotion
...


1B
...
g
...

The package of a product protects it from spoilage, breakage, pilferage, leakage,
damage, etc
...
g
...

The package of a product helps the consumer to open, handle and use the product more
conveniently, e
...
toothpaste tubes, hand wash soap dispenser, etc
...
g
...


1C
...
indicating some
information about the quality or price, to complex graphics that are part of the package, like the ones on
branded products

1C
...
It enables the
manufacturer to give clear instructions to the consumer about the proper use of
his product
...
g
...

It enables the manufacturer to grade the product into different categories, e
...

Hindustan Lever sells different grades of tea under green, yellow and red labels
...
Packing material in the house
reminds the consumers constantly about the product
...
For
example, the statutory warning on the package of Cigarette or Pan Masala, „Smoking
is injurious to Health` or Chewing Tobacco is injurious to Health
...
PRICE/PRICING
Price is the amount of money customers have to pay to obtain the product
...
FACTORS AFFECTING PRICE DETERMINATION
While fixing the prices of a product, the firm should consider the fixed and variable cost
involved in producing the product
...

The utility
It is necessary to anticipate the utility and demand of a product, while fixing the price, as
and
if a product is offering higher utility, one can easily charge high price from the customer
...
On the other
hand, if the demand is elastic, price should be set at a lower level and if
the demand is less elastic or inelastic price can be set at a higher level
...
If the competition is low generally the price of a product will be high on the
the market
other hand if the competition is high, the price will be less
...
Life-saving drugs etc
...

objectives
Marketing
The various marketing methods such as distribution system, quality of salesmen, type of
methods used packaging, customer services, etc
...


CHANNELS OF DISTRIBUTION
The people (wholesalers, dealers, agents‟ retailers and other intermediaries), institutions, merchants, and
functionaries, who take part in the distribution function, are called „Channels of Distribution‟
...
They sort these goods into homogeneous groups
...

It involves breaking homogeneous stock into smaller marketable lots e
...
once cashew
nuts are graded and large quantities are built, these are divided into convenient packs of
03 Allocation
say 1kg, 500gms, to sell them to different types of buyers
...
There is usually a difference between
the product lines made by manufacturer and the assortment or combinations desired by
04 Assorting
the users, e
...
a cricket player may need a bat, a ball, wickets, gloves, helmet, a t-shirt
and a pair of shoes
...

Product
Middlemen also participate in certain activities such as demonstrations, special displays,
05 promotion
contests, etc
...

Middlemen negotiate the price, quality, guarantee and other related matters about a
06 Negotiation
product with the producer as well as customer
...
when the goods are transported from one place to another or when they are stored
07 Risk taking
in the god-owns
...
No intermediary is involved in the
CHANNEL
transaction, e
...
, selling through non retail outlets, mail order selling, selling through own
(zero Level)
work force, etc
...
The distribution network is called indirect
...
e
...
It is usually adopted for specialty goods
...
Manufacturer > Retailer > Consumer

37

TYPES OF CHANNELS OF DISTRIBUTION
B

C

Under this channel, wholesaler and retailer act as a link between the manufacturer and
TWO LEVEL
customer
...
Manufacturer > Wholesaler >Retailer > Consumer
...
e
...
The
manufacturers supply the goods to their agents who in turn supply them to wholesalers
THREE LEVEL
and retailers
...

Manufacturer > Agent > Wholesaler > Retailer > Consumer

FACTORS DETERMINING CHOICE OF CHANNELS OF DISTRIBUTION
Before deciding channel of distribution for a product, various products related factors are to
be considered
...
Whereas, standardized products are sold
the product
through a number of efforts
...

Product
01 related
Product
Technologically complex products are sold directly whereas, to sell simple
factors
complexities
products, indirect channels may be employed
...

High priced products are mostly sold directly whereas; cheap or
Price of the
inexpensive products are sold with the help of a large number of
product
intermediaries
...

These are
Financial
if the firm has plenty of funds it may go for direct selling on the other hand
Company
strength of
if spare funds are not available, it may go for indirect channels
02 charathe company
cteristics
Degree of
if the management want to have greater control on the channel members,
control
short channels are used but if the management do not want more control
over the middlemen, it can go in for longer channel
The choice of channel is also affected by the channel selected by the competitors in the
same industry
...
These are:
Size of The number of channel constituents depends largely on the customer base for
Market
market the products
...

04
factors
Direct channels of distribution are used where the quantity of purchase is big
...

Environment The environmental includes economic condition and legal constraints
...


COMPONENTS OF PHYSICAL DISTRIBUTION
A good physical distribution system ensures an accurate and speedy processing of
Order
order
...

It is the means of carrying goods from manufacturers to consumers
...
It is important because unless the goods are
physically made available, at various places the sale cannot be completed
...
Need for warehousing arise due to time gap between the production and
03 Warehousing
consumption of goods
...
High level of inventory ensures product availability when demand arises but
increases the cost of carrying the inventory
...
The level of inventory depends upon
estimated demand, sales forecasts, cost of inventory
...
PLACE
Place or Physical Distribution include activities that make firm‟s products available to the target customers

4
...
, of
the products to the target customers and persuade them to buy it
...
PROMOTION MIX
It refers to combination of promotional tools used by an organization to achieve its communication
objectives
...
These
tools are also called elements of promotion mix
...
A
...
The most common modes of advertising are „newspapers‟, „magazines‟, „television‟, and
“radio‟
...
FEATURES OF ADVERTISING
01 Paid form
02 Impersonality
03 Identified sponsor

It is a paid form, as the advertiser has to pay for the advertising media used, for
the space or time used to communicate the message to the user
...

Sponsor may be an individual or a firm, who pays for the advertisement
...
MERITS OF ADVERTISING
01 Mass reach
Enhancing customer
satisfaction and
02
confidence
03

Expressiveness

04 economy

Advertisement is a method through which the advertiser can reach out to the
potential consumer who are spread over a vast geographical area
...

Expression is very important for persuasion
...

When large numbers of people are to be reached who are spread over wide
geographical area then it is an economical plan to go for
...
LIMITATIONS OF ADVERTISING
Less
01 forceful

We cannot judge the effectiveness of advertisement‟s because it is not forceful and we can
never know how much impact it is creating on the potential customers and it is not a
compulsion for the viewer to focus on the advertisement
...

Advertising is less flexible as the message is standardized and cannot be altered according
03 Inflexibility to the requirements of the different customer groups
Due to bulk of advertisements in the market it is becoming difficult for the viewers to grasp
Less
the message as they start ignoring these advertisements and an advertisement loses its
04 effectiveness
effectiveness because it is not forceful enough
...
OBJECTIONS OF ADVERTISING
01 Add to cost

Advertising unnecessarily adds to the cost of product, which is ultimately passed on to
the buyers in the form of high prices
...


39

4A
...
It
encourages dissatisfaction among people as they come to known about new products
and feel dissatisfied with their present state of affairs
...
All advertisements make
Confuses the
similar claims that the buyer gets confused as to which one is true and which product
03
buyer
should be purchased
...
Hence, it
persuades people to buy even the inferior products
...

Some
Another Criticism against advertising is that some advertisements are in bad taste
...

02

Undermines
social values

4
...
PERSONAL SELLING
Personal selling involves oral presentation of message in the form of conversation with one or more
prospective customers for the purpose of making sales
...
FEATURES OF PERSONAL SELLING
01 Personal form
Development
02 of relationship

It involves a direct face-to-face communication between the seller and the buyer
...


4B
...

The feedback can be obtained then and there
...

The wastage is reduced due to one to one contact
...


4B
...
Salesman
explains the merits of products to customers
...

As compared to other methods of promotion in personal selling, the wastage of
efforts is minimum
...

Personal selling helps to create lasting relationship between customers and sellers,
which helps in increasing sale
...

It is an effective tool to launch products in the introductory stage of a product life
cycle
...


4B
...

Under personal selling, customers are provided with information regarding availability
or shortage of product, introduction of new product etc
...

Personal selling induces customers to buy new product in order to satisfy their needs
04 Induce customers in a better way
...
IMPORTANCE OF PERSONAL SELLING (to Society)
Converts latest
01 demand

Personal selling helps in converting latest demand into effective demand
...


40

4B
...

Personal selling ensures attractive career, job satisfaction, respect, variety, security
etc
...

Personal selling ensures uniformity in consumption by selling standardized
products
...
C
...


4C
...


Useful in new
02 product launch
Synergy in total
03 promotional
efforts

Useful in new product launch Sales promotion techniques such as sampling and
product combination help in easy introduction of new product in the market
...
Many organizations use a
mix of various promotional techniques and sales promotion will help in boosting the
effectiveness of other techniques
...
LIMITATIONS OF SALES PROMOTION
Frequent use of sales promotion techniques may create an impression that the
company is unable to generate any sale
...

Spoils
product
image
02
01 Reflects crisis

4C
...
It means offering products at special prices, to clear off excess
01
inventory
...

It means offering products at less than list price
...
Example: Buy 2 shirts and get a discount of 30% on the next
Discount
02
purchase of shirt;
It means refunding a part of the price paid by a customer of purchase of its product
...
10
...
Example: 100g gm pouch of Kissan jam with 500 gm
04 combinations
of Kissan tomato ketchup
...
For example
05 Quantity gift
– 20% Extra or Buy 2, Get 1 Free
...

It refers to taking out a draw on the purchase of the product and giving a gift to
07 Lucky draw
the winner
...

Purchase goods worth Rs
...
Discount
08 Usable benefit
vouchers on a purchase of Rs
...

It is the technique of sales promotion in which easy financing schemes are offered
...

Free samples are distributed in order to launch or popularize their products
...

contests are based the quiz, luck etc
...

Rebate

4
...
PUBLICITY
Publicity generally takes place when favorable news is presented in the mass media about a product/service
...

1
...
There is no identified sponsor
...
D
...


4D
...

New products require special effort to publicize them and the company has to
sponsor such programmes
...

The public relations department advises the management on general issues that affect
the general public and the goodwill of the company
...


DISTINCTION BETWEEN ADVERTISING AND PERSONAL SELLING
Sl
...

The cost per person is quite high in the
case of personal selling
Personal selling provides direct and
immediate feedback
...
CONSUMER PROTECTION
Weightage as per CBSE curriculum 2022-23

Max
...
The scope of the Act is very wide
...
It applies to both offline and online transactions through electronic means, teleshopping, multi-level
marketing or direct selling, but does not include a person who obtains goods for re- sale or any commercial
purpose
...


IMPORTANCE OF CONSUMER PROTECTION
(from the point of view of Consumer)
01

Consumer ignorance

Unorganized
consumers
Widespread exploit03 tation of consumers
02

Majority of consumers are not aware of their rights and reliefs available to them
as a result of which they are exploited
...

In India consumers are still unorganized and there is lack of consumer
organizations also, thus consumer protection is required
...
Global
01 Long-term interest of
competition could be won only after satisfying customers
...

Every business uses the resources of the society and thus it is their responsibility
02 Business uses
to
work in the interest of the society
...
Thus, customers should be provided
qualitative goods at reasonable prices
...

05 Government
If a business engages in any form of unfair trade practices then government takes
action against it, which adversely affects its goodwill
...

Under the Consumer Protection Act, 2019 a consumer is defined as:
A consumer is a person who buys any goods or avails services for a consideration, which has been paid
or promised, or partly paid and partly promised, or under any scheme of deferred payment
...
It
applies to both offline and online transactions, but does not include a person who obtains goods for resale or any commercial purpose
...


WHO CAN FILE A COMPLAINT
01
02
03
04

Any consumer
Any registered consumers‟ association
The Central Government or any State Government;
One or more consumers, on behalf of numerous consumers having the same interest; and

05 A legal heir or representative of a deceased consumer, in case of death of a consumer
06 In case a consumer being minor, his parent or legal guardian
...

The consumer has a right to have complete information about the product he intends
Right to be
to buy including its ingredients, date of manufacture, price, quantity, directions to
02 Informed
use, etc
Right to Choose/ The consumer has the freedom to choose from a variety of products at competitive
03
Right to be assured prices
...

Right to seek
The consumer has a right to get relief in case the product or service falls short of his
05
Redressal
expectations
...

01 Right to Safety:

RESPONSIBILITIES OF A CONSUMER
01
02
03
04
05

Be aware about
Be aware about various goods and services available in the market so that an
goods and services intelligent and wise choice can be made
...
Thus, look for ISI
dized goods
mark on electrical goods, FPO mark on food products, Hallmark on jewelry, etc
...

Cautious
Read labels carefully so as to have information about prices, net weight,
consumer
manufacturing and expiry dates, etc
The consumer should assert himself/herself to get a fair deal
Assert yourself

43

RESPONSIBILITIES OF A CONSUMER
Be honest in your
06
dealings
Ask for a cash
07
memo
08 File a complaint
Form consumer
societies
Respect the
10
environment
09

The consumer should be honest in his/her dealings
...
Discourage unscrupulous practices like black-marketing etc
...
This would serve as a proof
of the purchase made
File a complaint in an appropriate consumer forum for every genuine grievance
...

The consumer should form consumer societies
...

The consumer should respect the environment
...

The associations of Trade and Commerce etc
...

Consumer organizations should play an vital role in educating their rights and providing
protection to them
The Government can protect the interests of the consumers by enacting various
Legislations
...

The District Forum consists of a President (District Judge) and not less than
Compotwo other members, one of whom should be a woman
...
concerned
District commission will entertain complaints where the value of goods or
Jurisdiction
services paid as consideration does not exceed ONE CRORE
...
The
Judgment
District Commission shall pass an order after considering the test report and
hearing the other party`s argument
...

Establishing The State Government shall establish a State Consumer Disputes Redressal
Authority
Commission to be known as State Commission in each state
...
They all are
sition
appointed by the State Govt
...
(b) Appeals against the order of the District Commission
...
The
Judgment
State Commission shall pass an order after considering the test report and
hearing the other party`s argument
...

Establishing The Central Government shall establish a National Consumer Disputes
Authority
Redressal Commission to be known as National Commission
...
They
sition
all are appointed by the Central Govt
...
10 crore
...

On receiving the complaint the National Commission shall refer it to the
Judgment
concerned party and shall send the goods for testing in a laboratory
...

In case the aggrieved party is not satisfied with the order of the National
Commission, he/she can appeal before the SUPREME COURT within 30 days
from the date of the order
...

01 To remove the defect in goods or deficiency in service
...

03 To refund the price paid for the product, or the charges paid for the service
...

05 To pay punitive damages in appropriate circumstances
...

07 Not to offer hazardous goods for sale
...

09 To cease manufacture of hazardous goods and to desist from offering hazardous services
...


ROLE OF CONSUMER ORGANISATIONS AND NGOs
Consumer organizations and NGO‟s perform several functions for the protection and promotion of interest of
consumers
...

Publishing periodicals and other publications to impart knowledge about consumer problems, legal
02
reporting, reliefs available and other matters of interest
...

Encouraging consumers to strongly protest and take an action against unscrupulous, exploitative and
04
unfair trade practices of sellers
...


CONSUMER ORGANISATIONS AND NGOs IN INDIA
01
02
03
04
05
06
07
08
09
10

Consumer Coordination Council, Delhi
...

Voluntary Organization in Interest of Consumer Education (VOICE), Delhi
...

Consumer Protection Council (CPC), Ahmadabad
...

Mumbai Grahak Panchayat, Mumbai

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