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S.Y.J.C.ORGANISATION OF COMMERCE

PRELIMINARY TEST PAPER - 1

Q.1 (A) Select the proper option from the options given below and rewrite the sentences : [5]1. EDP was first introduced in _________

(a) Maharashtra (b) Gujarat (c) Rajasthan 2. Quality control, ABC analysis, Benchmarking, etc. are ______ of

management.(a) Means (b) Types (c) Tools

3. ________ are the statements of fundamental truth.(a) Management (b) Principles (c) Vision

4. ________ is observed as “Consumer Rights Day” throughout the world. (a) 15th June (b) 15th March (c) 1st January

5. For economic growth and national security, ______ stability is required.(a) Political (b) Social (c) Natural

(B) Match the correct pairs : [5]

Column ‘A’ Column ‘B’1. HTTP2. Postal Department3. Cold Storage4. Partnership Act5. Common Seal

a. 1932b. Government owned protocolc. Symbol of companyd. Perishable goodse. Hyper Text Transfer

Protocolf. Outsourcing

1- e, 2- b, 3- d, 4- a, 5- c(C) Write a word or phrase or term which can substitute the following

statements: [5]1. The committee which recommends the appointment of members

and the president of the District Forum to the State Government. - Selection Committee.

2. The business organisation which has minimum ten members. - Co-operative society.

3. Values associated with self confidence and believing in themselves. - Internal Values.

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SOLUTIONSTime : 3 Hrs.

Marks : 80

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S.Y.J.C.4. Name the modern process of controlling a business function to

someone else. - Outsourcing.5. A management function concerned with ascertaining whether the

activities are carried out as per plan and take corrective action. - Controlling.

Q.2 Distinguish between the following (Any Three) : [15]1. Bonded Warehouse and Duty Paid Warehouse.Ans.

Bonded Warehouse Duty Paid Warehouse1. Meaning

Bonded warehouse is the warehouse where imported goods on which duty is not paid are stored.

Duty paid warehouse is the warehouse is the warehouse where imported goods on which duty is already paid are stored.

2. LocationThey are located near the port area. They are located in a town outside

the port area.3. End Use

The imported goods stored here are mostly re-exported.

The imported goods stored here are mostly for the domestic markets.

4. SupervisionThey are either operated by the government or work under the control of custom authorities.

These warehouses are not supervised by customs authority. They may require a government license to operate.

5. DeliveryDelivery of goods is done after payment of import duty. In case of re-export, the import duty need not service charges are to be paid.

Delivery of goods can be obtained after payment of the rent charges of the warehouse.

6. PurposeMain purpose would be either the importer needs to re-export the goods or the importer may not be in a position to pay the entire import duty. He may pay duty in instalments.

Main purpose would be that the importer does not have suitable warehousing facility. Also, he may not require immediate delivery of goods.

7. OwnershipSuch warehouses may be owned and managed by the government or custom authorities.

Such warehouses are owned and managed by an individual or co-operative society.

2. Co-ordination and Controlling.

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S.Y.J.C.Ans.

Co-ordination Controlling1. Meaning

Co-ordination is the process in which different activities of an organization are integrated for achieving desired and common goals of an organization.

Controlling is a process which measures the deviation of actual performance from the standard performance discovers the causes of such deviations and helps in corrective actions.

2. PurposeThe main purpose of co-ordination is to integrate or bring together the work done by all the employees and ensure smooth functioning of the organization.

The main purpose of controlling is to ensure that targets set are achieved and corrective action is taken if they are not being achieved.

3. ComponentsCo-ordination includes integration of work of the top level management, middle level management and lower level employees.

It includes measurement of actual performance, comparison of actual performance with standard, analysing reason for deviation, taking correcting action.

4. Factors to be consideredMainly internal factors are to be considered while co-ordinating.

It considers internal (i.e. set targets) well as external factors (in order to revise performance standards if there is a change in the business conditions).

5. Order of functionCo-ordination is required in an organization since the beginning. co-ordination follows planning.

Controlling is the end function of management process. It follows all other functions.

6. Relation with resourcesCo-ordinating refers to integrating the work done by all human resources.

It is related with all resources as it helps to achieve targets and

7. NatureCo-ordination goes on continuously as the work done by all the departments needs to be continuously integrated.

Controlling starts once the actual performance is completed as it mainly deals with comparing the actual performance with standard and taking corrective actions.

8. Levels of ManagementCo-ordination is required at all Controlling is mainly done by top

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S.Y.J.C.levels i.e. top level, middle level and lower level employees.

level management. However, middle level managers are also involved in controlling activities of lower level employees.

9. StepsCo-ordinating includes integrating activities of organization to achieve desired goals.

Controlling includes fixation of standard, measurement of actual performance, comparison of actual with standard, analyzing reason for deviation and taking corrective action.

3. Co-operative Society and Joint Hindu Family Business.Ans.

Co-operative Society Joint Hindu Family Business1. Meaning

A co-operative society is an association of person who unite voluntarily to meet their economic and social needs through a jointly owned and controlled enterprise.

Joint Hindu Family consists of all person lineally descended from a common ancestor and includes their wives and unmarried daughters. When this family runs any business then such a business is called as a Joint Hindu Family Business.

2. MotiveThe main motive of a co-operative society is to provide services to its members.

The main motive of a Joint Hindu Family Business is to earn profit.

3. FormationA co-operative society has to be compulsorily registered under the Co-operative Societies Act, 1912 or respective state co-operative societies Act.

The Joint Hindu Family firm is formed as per the operation of the Hindu Law. No separate registration or agreement is required.

4. Ownership & ManagementThe members are the joint owners of the society. The members of co-operative society elect few members and form a managing committee for day-to-day administration.

The property of the family is jointly owned by the three successive generations due to their birth in the Hindu family. the Karta is manager, controller and co-ordinator of the business.

5. LiabilityThe liability of members is limited to the extent of unpaid amount of shares held by them.

The liability of the Karta is limited but the liability of the other members of the family is limited.

6. Membership

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S.Y.J.C.The minimum no. of members required is ten for the formation of a co-operative society. There is no upper limit.

The membership of a Joint Hindu Family Business is unlimited. Every child (even a girl child in Maharashtra) can become a co-parcener in the business. The membership keeps changing depending on the births and deaths in the family.

7. Transferability of MembershipThe membership in a co-operative society is easily and freely transferable. In certain cases, the consent of other members may have to be taken.

The membership in a Joint Hindu Family Business is not transferable since membership is acquired only on birth.

8. Levels of ManagementThe co-operative society distributes a part of its profits as dividend and bonus. A certain portion is transferred to a statutory reserve and the balance is used for welfare of the locality.

There is no specific ratio prescribed by the Hindu Law and neither is there any agreement between the coparceners for sharing the profits & losses. The ratio keeps changing as per births & death in the family.

4. Traditional Social Responsibility and Corporate Social Responsibility.Ans.

Traditional Social Responsibility Corporate Social Responsibility1. Meaning

Traditional Social Responsibility basically refers to helping weaker and poor section of society.

Corporate Social Responsibility refers to involvement of company in contributing to social and economic development.

2. LevelIt caters to individual and individual’s demands are met.

It caters to society at a general level.

3. OriginIt was originated in ancient India and Pre-Christian Era.

It was originated and evolved post World War II

4. NatureIt is philanthropic in nature & evolved out of love for humanity.

It is social, legal, economical and ethical in nature.

5. GoalsIt considers only tangible goals. It considers tangible as well as non-

tangible goals.5. Co-operative Society and Joint Stock Company.Ans.

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S.Y.J.C.

Co-operative Society Joint Stock Company1. Meaning

A co-operative society is an association of person who units voluntarily to meet their economic and social needs through a jointly owned and controlled enterprise.

A joint stock company is a voluntary association of individuals for profit having capital divided into transferable shares, the ownership of which is the condition of membership.

2. MotiveThe main motive of a co-operative society is to provide services to its members.

The main motive of a joint stock company is to earn profit.

3. Formation processThe formation of a co-operative society is simpler and inexpensive as compared to joint stock company since the legal formalities involved are limited.

The formation process of a company is complicated, time consuming and expensive since many legal formalities are involved.

4. Ownership and ManagementMembers are joint owners of the society. The members of co-operative society elect few members and form a managing committee for day-to-day administration.

The shareholders are the owners of the company. They elect representatives among themselves called as ‘Board of Directors’ to manage the affairs to company.

5. MembershipThe minimum no. of members required is ten for the formation of a co-operative society. There is no upper limit.

Private Limited

Public Limited

Minimum 2 7Maximum 50 No limit

6. Sharing of Profits & LossesThe co-operative society distributes a part of its profits as dividend and bonus. A certain portion is transferred to a statutory reserve and the balance is used for welfare of the locality.

The profits of the company are distributed as ‘dividends’ to the shareholders according to the number of shares held by them. The amount to be distributed as dividend is decided by board of directors and approved by shareholders.

7. CapitalThe capital of the co-operative society is limited. It is contributed by the members.

The capital of a joint stock company is huge. There are large number of shareholders who invest in the

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S.Y.J.C.shares of the company.

8. Voting RightsThe principle of voting is “one member one vote”. Thus, opinion of each member is valued.

The principle of voting is “one share one vote”. Therefore, decisions are always in the favour of big or major shareholders.

Q.3 Write short notes on the following (Any Three) [15]1. Payment mechanism.Ans. Generally in e-business transactions, payments are made online. There

is no physical payment of cash over the internet. The procedures and steps involved while making online payment are

known as “payment mechanism”. Online payments are made with the help of and e-commerce

application known as “payment gateway”. The payment may be made through a debit card, credit card and by

direct transfers from bank accounts. Most gateways offer all these options for payment.

A payment gateway authorizes payments made online by the buyer. It is the equivalent of a physical point of sale terminal located in retail outlets. a payment gateway controls the entire online payment process.

Any buyer who uses the payment gateway goes through the following steps:

1. After the customer select the required goods he confirms his order by clicking on “submit” or “confirm” or “place order” button on merchant’s website.

I Phone 5sMRP : 50,000Flipkart price : 45,000

Buy2. Merchant’s website then asks for mode of payment i.e. either by

debit / credit card or net banking. In either case, the buyer has to enter the required details.

Card Details :

Card No. :Name on Card :Date of Expiry :

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S.Y.J.C.CVV No. :

3. These details are then coded by the web browser (Google Chrome, Mozilla Firefox, Internet Explorer) and forwarded by merchant’s website to ‘payment gateway’. Here the information is coded again.

4. The “payment gateway”, for wards this information to “payment processor” which is used by the credit card issuing bank. On the payment processor, the customer is required to enter a PIN or password.NOTE : The “payment processor” is an agent of bank. Eg. Paynet and Paypal.

5. The payment processor forwards this information to Card Association. (Example of Card Association : VISA, Master Card).

6. “Card Association” forwards the information to ‘Card Issuing Bank’. (Example of Card issuing bank : HDFC, ICICI, SBI, Citi Bank, Kotak Bank etc.)

7. The ‘card issuing bank’ authorizes the payment and sends the information back through the same process to the merchant’s website.

8. Merchant’s website then approves the sale and the transaction is completed. The entire process takes 2 – 3 minutes depending on the internet speed.

9. In case internet connection is lost in between the transactions, the transaction fails. In such cases, if any amount is debit from the buyers account then the same is reversed and credited back to his account using appropriate procedures.

Merchant’s Payment Payment Card CardWebsite Gateway Processor Association Issuing Bank

2. Rights of consumers.Ans. Any person who consumes or uses any commodity or service available

from natural resources or through the market is known as consumer.15th March is observed as ‘Consumer Rights Day’ through out the world as the President of USA (Mr. John F. Kennedy) had declared certain consumer rights on this day in 1962. Since then, some more rights have been added by the “International Organization of Consumers Union”. The Consumer Protection Act, 1986 also incorporates all these rights of the consumers.The various rights of consumers are : [SMART CODE : RIGHTS CHE]1. Right to Redressal :

- A consumer will not get justice just by filing a complaint. Therefore, the Right to Redressal was recognized.

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S.Y.J.C.- The right enables a consumer to seek redressal against unfair

trade practices or exploitation.- This right assures proper legal recourse to attend to a

consumer’s complaint and get it redressed (solved).- For this purpose, the District Forum, State Commission and

National Commission have been established under the Consumer Protection Act, 1986.

- The consumer is entitled to compensation in case he suffers any loss.

2. Right to Information :- The Right to Information gives every consumer the right to get

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

- The consumer should also be instructed about the use of the product and the risks / consequences involved in improper use of the product.

- Every product should contain all this information on the wrapper or the outer packing.

- In case of technical goods, there should be an instruction manual. It should also contain the consequences that would occur if the product is not used correctly.

- Right to Information helps consumer in selecting the right product and take more informed decision. It assures safety of the consumer and the product both.

3. Right to Protect Against Spurious Goods :- This right protects the consumers against marketing of spurious

and hazardous goods which pose a danger to public health and life.

- This right was incorporated by the Amendments Act, 2002.Eg.: Companies cannot advertise liquor or cigarettes directly. For Liquor, they advertise the water or soda (Bagpiper) which they manufacture or like Seagram – “Have I made it large” campaign or Imperial Blue – “Men will be men” campaign.

4. Right to be Heard :Every consumer has the right to be heard and file a complaint.- This right allows a consumer to express his views (i.e. be heard)

about any product or service bought by him.

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S.Y.J.C.- This right assures that the grievances (complaints) of the

consumer are heard and he receives proper hearing at the right forums.

Eg.: Certain companies claim that using their air conditioners or lights will help to reduce electricity consumption of the consumer. However, even after using the same, if the electricity consumption of the consumer does not reduce, he can file a complaint against such company.

5. Right to Protect Against Unfair Trade Practices :- This right offers protection to consumers against any kind of

unfair trade practices like wrong measurements, overcharging, artificial shortages, selling defective goods etc.

- This right was incorporated by the Amendments Act, 1993.6. Right to Safety :

- This right protects the consumers against marketing of goods and services which are hazardous to their life and property. In other words, the trader has to ensure that the goods sold will not cause any damage to life or property of the consumer.

- If the product is hazardous in nature then detailed information should be given about how to use the product. It should also contain the consequences that would occur if the product is not used correctly.

Eg.: The instruction manual of an electric cooker, microwave, gas stove etc. contains details about the use of the product since these products are hazardous in nature.- Sometimes, the product becomes hazardous after its sale. In

such instances, the Right to Safety expects the manufacturer or the trader to take back the product or modify it or compensate the consumer for the damage.

Eg.: Honda Motors (USA) recalled around 15000 cars in 2014 after its sale when they found out that the airbags (protection balloon) in the car were faulty.- Care has to be taken in case of ordinary goods as well.Eg.: A general store should not stock bread after its expiry date.

7. Right to Choose :- There is a variety of products available in the market today and

the consumer should be able to select a product of his choice.Eg.: There are many brands of toothpaste or soap available in market.

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S.Y.J.C.- The Right to Choose enables a consumer to select a suitable

product from among the available variety in the market, at a competitive price, based on his budget and need.

- At times, a seller may force for a product because if may give him higher margin or there is more unsold stock. However, no seller can force the customer to buy a particular product.

- This right restricts only seller from creating a monopoly situation in the market.

8. Right to Healthy Environment :- The consumer has a right to live in a healthy and pollution free

environment in the present as well as in the future.- If any industrial activity is creating air or water pollution the

society can object to it and can also file public interest litigation (PIL).

9. Right to Education :- This right entitles the consumer to know about

a) Consumer rightsb) Market malpracticesc) Remedies against the same.

- Consumer education makes consumers more aware about unfair trade practices and ways in which they can protect themselves.

- The government, media and NGD’s can play a major role in educating consumers.

Eg.: Jaago Grahak Jaago Campaign.3. Types of partner.Ans. In a partnership firm, two or more persons, who are called partners, pool

in their resources, enter into a contract and carry out lawful business for mutual benefit. The following are the various types of partners.(SMART CODE : Active Minor Sleeps Limited, Nominal Partners Hold Secrets)1. Active Partner : The partners who are actively involved in the day-

to-day working of the business are called active partners. Active partners invest capital, put in effort, share the profits and losses and have unlimited liability. They act as agents of the firm. They must give a public notice of their retirement. Active partners are also known as ‘ordinary’ or ‘general’ partners.

2. Minor Partner : A person below 18 years of age is called a minor. According to the Partnership Act, 1932, a minor can be admitted as

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S.Y.J.C.a partner in profits in the firm only if other partners agree. A minor is not liable for losses of the firm.

3. Sleeping Partner : A partner who has invested his money in the business but is not actively involved in day-to-day operations is called as sleeping partner. A sleeping partner shares his profits & losses. They have unlimited liability. They do not have to give public notice of their retirement.

4. Limited Partner : The liability of limited partner is limited to the extent of his / her investment in the firm. A limited partner cannot take active part in day-to-day working of the business. A partnership with all partners being limited partners cannot be formed. The partnership firm should have at least one partner having unlimited liability.

5. Nominal Partner : Nominal partner only lend their name to the firm but they do not invest any capital nor do they share the profits or losses. They are not actual partners and do not have real interest in the firm. These persons have goodwill in the market and hence the firm benefits if their name is associated with the firm.For Eg.: A leading jewellery store may ask a bollywood celebrity to be its nominal partner.

6. Partner in Profits Only : This partner only shares the profits of the firm. However, his liability is unlimited and he has no right to actively participate in day-to-day working of business. They must give public notice of their retirement.

7. Holding out Partner : If a person who is not a partner in the firm but claims to be a partner to the outsiders (either orally or in writing or by his behaviour), then he is called as “partner by holding out”. If an outsider gives loan to the firm believing that such person is actually a partner, then the holding out partner shall also be liable to repay the loan.

8. Secret Partner : A secret partner is a partner in the firm but outsiders are not aware about his relations with the firm. Like an active partner, the secret partner invests money, puts in efforts, shares the profits and losses and has unlimited liability.

Type Contributes Capital

Management of Firm

Shares Profits

/ Losses

Liability Special Feature

Active Yes Yes Yes Unlimited Gives notice of

retirementMinor Yes No Profits

onlyLimited to

the Below 18 years of

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S.Y.J.C.extent of

his capital

age

Sleeping Yes No Yes Unlimited Does not give notice

of retirement

Limited Yes No Yes Limited to the

extent of his

capital

All partners cannot be

limited partners

Nominal No No No No They only lend their

namePartner in profits only

Yes No Profits only

Unlimited Has to give notice or

retirement

Holding out

No N No Liable to the

extent of his act

Not a partner but claims to

be a partner

Secret Yes Yes Yes Unlimited Outsiders are not

aware that he is a partner

4. Policy to protect environment.Ans. Business has always been dependent on and has impact on the natural

world. Therefore, business should be committed to protect and to promote environment. In order to do so, a business needs to have a structured plan. Following are the steps to be undertaken to protect environment.

Planning

Environmental DesigningManagement System

Use of 4R’s Manufacturing

Interactive tools Assessing

1. Planning (Planning ke time pe hi environment protection ko consider karo) : The business should take into consideration

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S.Y.J.C.environmental aspects when it is planning business activities itself. The policy to protect environment should be well co-ordinated and balanced while preparing the plan.

2. Development Design Stage (Process aise desing karo jisme energy save ho) : The business should concentrate on activities where there is minimal usage of water & other resources and where the chemical emissions are the least. Energy saving and zero emission activities should be undertaken.

3. Manufacturing Stage (Current Process ko energy efficient process se replace karo) : The business should think about replacing the current manufacturing process with more energy efficient and less pollution technique. This will also help in reducing the consumption of energy and natural resources.

4. Assessing Current Environment Impact (Yeh find out karo ki current process se environment ko kitna harm kar rahe ho) : The business should assess the hamr that they are causing the environment due to current production techniques, transportation, wastage disposal etc. They should make change in the process of production which will help in reducing negative impact.

5. Use of Interactive Tools (Carbon footprints measure karo) : The business can use interactive tools in order to comply with environmental policy. They can measure the carbon emission of the products and try to introduce processes which minimize carbon emissions. Companies should also think of making products that are reusable or multifunctional.

6. Use of 4 “R” : The business can reduce the use of pollution creating material by using 4 “R” i.e. refuse, reduce, reuse and recycle.Firstly, the business should refuse the use of pollution creating material. However, if it is not possible to refuse, then reduce the use of such materials. After this use, they should be reused & recycled. Further, the waste material that is generated during manufacturing process should be recycled. Companies should follow “Waste and Resources Action Programme” (WRAP).

7. Environmental Management System (EMS) : EMS is a document developed by business organizations in order to assess their environmental impact and improve efficiency. It is mandatory in USA.ISO 1400 – 2004 is an environmental management standard. It specifies a set of environmental management requirements. The purpose of this standard is to hold all types of organizations to protect the environment, prevent pollution and to improve their environmental performance.

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S.Y.J.C.Recently, two new ISO standards have been introduced :14005 – 2010 – It includes environmental performance evaluation.14006 – 2011 – Provides guidelines for incorporating eco-design.

The following are the advantages of protecting the environment for business organizations : [SMART CODE : IS GOA]1. Increase in profits : The business organizations which minimize

waste also save money because they do not have to spend separately on treating / recycling the waste.

2. Support from Customers : Customers now like to support those organizations that support society and environment.

3. Green Economy : Following good practices helps in keeping environment green and preserves natural resources.

4. Obtaining Various Approvals : Companies who strive to keep environment clean and follow rules get various government approvals and licenses easily.

5. Awareness among Employees : The message of protecting the environment has to be spread among everyone. If the organization follows good practices, it will spread awareness amongst employees.

5. Postal services in India.Ans. The postal services originated with the necessity of communicating

written messages. In olden times, written messages were sent from one place to another through persons who were known as “runners”. In India, till 1837, postal service were used only for sending official mail. After 1837, the postal services were opened for the public as well.INDIAN POSTAL SERVICES :- The Department of Post comes under the Ministry of Communications

and Information Technology.(NOTE : Mr. Ravi Shankar Prasad is the Minister of the Communication and Information Technology.)

- These services are administered by Government of India throughout the country and therefore charges for all the services are minimal which are affordable to a common man.

- The postal network in India is the largest in the world. As on 31st March, 2011, there were 1,54,866 post offices of which 90% were located in rural areas and the balance in urban areas.

- Indian Post employs over 5 lakh people and serves over 30 crore customers every year.

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S.Y.J.C.- Postal services include carrying letters and parcels, transfer of money,

accepting deposit from public, maintaining savings account & fixed deposits account, NSC etc.

- The various types of postal services are as follows :A) Mail B) Specialised C) Money D) Retail

Service Mail Services Remittance ServicesService

i. Post card i. UPC i. Money order i. Bill mailii. Inland letter ii. Registered ii. IMO ii. Retail Post

card Postiii. Parcel Post iii. Insured Post iii. International iii. E-paymentsiv. Envelope iv. Speed Post Money Transferv. Telegram v. VPP iv. Money Gramvi. Book Post vi. Post Restante v. Money order videshvii. Telephone vi. Forex Services(PIPE and Tubes vii. ElectronicsBy Tata) International

Money Order Service[A] MAIL SERVICES :

It is the basic and one of the most important services provided by post office i.e., delivering letters and parcels from sender to receiver. Indian postal service caters to both domestic and foreign mails, various form of mail services are :(i) Post Card : It is a card on which messages can be written on

both the sides. It is also the cheapest mode of written communication. The space for writing address of receiver is given separately and the balance space can be used for writing the matter. There are two types of post cards :a) Ordinary post card – Used for writing letters.b) Competition post card – Used to send reply to questions

asked in various competitions, quiz, contests etc. announced through radio, television, newspapers etc.

The usage of post cards is very rare these days. There is no secrecy in post card. Any person can read it. Therefore, it is suitable for only small impersonal messages.

(ii) Inland Letter Card : The inland letter card also is used to send written messages within the country. It is sold by post offices. The messages can be written on one side and the written portion is then folded and sealed. This type of card

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S.Y.J.C.ensures secrecy of the message. Only the name and address of the receiver and sender can be seen. However, no enclosure can be sent in an inland letter card. The message can only be written and sent.Similarly, a card called as ‘aerogram’ is available for sending the letter to foreign countries.

(iii) Parcel Post : The postal facility through which articles can be sent in the form of parcels is known as “Parcel Post”. Under parcel post, articles / items of a specified size and weight can be sent as parcel, both within the country as well as to foreign countries. The charges depend on the weight of the parcel. Also separate postage has to be paid for inland and foreign post. Parcel post service is reliable as well as economical.

(iv) Envelope : An envelope is a paper packet with one side open. A letter or documents can be enclosed in the same and sent to the receiver. The envelope is sealed after enclosing the documents. This ensures secrecy of the letter and documents. Postage stamps are to be affixed on such envelope before posting them. This mail service is used the maximum by general public and business firms.[NOTE : An envelope is to be pronounced as “onvelope”.]

(v) Telegrams : It is one of the oldest means of communication which was used to send message to distant places quickly. First the sender writes the message in the telegram and then sends it to the post office. Such post office would send to message to another post office which is situated near the address of the receiver and ultimately the message is delivered to the house of the receiver. The charges were based on the number of words in the telegram and hence telegram was used only for conveying urgent messages like death n the family.[Fact : The use of telegram ended in India in July 2013 after a period of 163 years of operation.]

(vi) Book Post : It is facility where printed material or books or greeting cards can be sent as post.The envelope of such books / cards can be closed but not sealed. Also, the words “Book Post” must be mentioned on the face of the envelope. The postal charges for book post are less compared to normal sealed envelopes.As on 2014 :Postal Stamp for sealed envelope - Rs.5

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S.Y.J.C.Postal Stamp for book post - Rs.4

(vii) Telephones : It is the best and quickest mode of communication. It was started in 1881 by Post and Telegraph Department. A telephone call to a person in the same city is called as a “local call” and a telephone call to a person in another city is called as “trunk call”. These services are now also provided by Videsh Sanchar Nigam Ltd. (VSNL), Bharat Sanchar Nigam Ltd. (BSNL) and various other private companies. Even in business organizations, maximum communication is done by telephone.

[B] SPECIALIZED MAIL SERVICE :The Indian Post also offers certain specialized mail services as follows:(i) UPC (Under Postal Certificate) : When normal letter are

posted through the post office, we do not receive any acknowledgement or receipt. However, if the sender wants to have a proof that the letters are posted, then a certificate called ‘Certificate of Posting’ can be obtained from the post office on payment of prescribed fee. This certificate acts as a proof that the letter has been sent by the sender. The certificate contains all details like name of sender, name of receiver, date of posting etc., and bears the seal of the post office. The envelope / parcel has ‘Under Certificate of Posting’ or UPC written on its face.[NOTE : UPC is used when legal or important documents are sent by one person to another.]

(ii) Registered Post : The post office offers registered post service to send letter / parcel. The difference between a regular post and registered post is :a) The post office immediately issues a receipt to the

sender which serves as a proof.b) The postal charges for registered post are higher as

compared to regular post.Also, an ‘Acknowledgement Due Card’ can be sent along with the registered mail. This is signed by the receiver when the parcel / letter is received and then sent back to the sender by post. The envelope has ‘Registered Post AD’ written on its face.

(iii) Insured Post : It is a type of mail service through which valuable articles may be sent after insuring these upto a specific amount. Insurance premium is paid to the post office depending on the value of the item sent. In case of any

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S.Y.J.C.damage / loss, the post office shall compensate for the loss. Generally, valuable articles are sent through insured post.

(iv) Speed Post : The post office provides time-bound as well as guaranteed mail delivery through its “Speed Post Service”. Under this service, letter, documents and parcels are delivered faster i.e. within a fixed time frame. The charges for speed post are comparatively higher than that of ordinary mail service. The postal charges may vary depending on the distance. This facility is available only at specific post offices.

(v) VPP (Value Payable By Post) : VPP is used when- The receiver wants to pay for the article / item only on

receipt or delivery.- The sender wants to recover the value or price of the

article through the post office.Under this type of service, price of the article or item sent by the post is paid by the receiver when the article is received by him. However, the amount of such parcel sent shall not exceed Rs.1000. Registered parcels, registered letters, registered book packets, newspapers etc. may be sent through VPP. However, the amount of postage has to be paid by the sender only.

(vi) Post Restante : When one person has to send a letter to another person whose exact address is not known, the letter can be sent to the postmaster of the area in which the receiver resides These letters are called “Post Restante Letters”.The sender has to mention “Post Restante Letter” or “Care of Postmaster” on the face of the letter. The letter is retained by the receiving post office and it is delivered to the addressee when he calls the post office informing his temporary address. This letter is retained only for a period of 14 days after which it is sent bank to the sender.This facility offered by the postal department is generally suitable to people who are :- frequently travelling and not sure about their address in a

place.- looking for a fixed address at a particular place.

[C] MONEY REMITTANCE SERVICE :These are the modes by which money can be transferred from one person / place to another person / place via post office.

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S.Y.J.C.(i) Money Order : It is an order which is issued by post office for

payment of sum of money to the person to whom it is sent through post office. If Mrs. A (payer) has to send a money order to Mr. B (payee), then Mrs. A has to go to the post office, deposit the money and fill a money order form which contains details of the payee. This money order is then directly delivered to the house of the recipient.

(ii) Instant Money Order (IMO) : IMO is an instant web-based money transfer service through which one can transfer money from Rs.10,000 to Rs.50,000 from designated IMO post offices. This service is convenient, reliable and affordable. It is simple to send and receive money through this service.

(iii) International Money Transfer : It is a quick and easy mode by which people in foreign countries can transfer money to their relatives / beneficiaries in India. However, remittance from India to foreign countries is not permissible.The receiver can collect the money within minutes after the sender has made the remittance (transfer). Money can be transferred from around 200 countries to India. This service is very useful for NRIs who want to transfer money to their parents / relatives in India.

(iv) Money Gram : Indian Post Department in association with Money Gram Payment Systems Inc, USA has started offering Money Gram International Money Transfer service to general public through selected post offices. The service commenced from 29th September, 2011.

(v) Money Order Videsh : This service enables money remittance to and from foreign countries through the medium of post office. These services are offered only through head post offices. The service commenced from 24th October, 2009.

(vi) Electronic International Money Order Service : The Indian Post and Emirates Post of UAE signed an agreement to Launch Electronic International Money Orders through postal network. This has made money remittance between people of India and UAE easier. The service commenced from February 2008.

(vii) Foreign Exchange Services : The people who travel abroad need the currency of that foreign country. Similarly, foreigners visiting India need Indian Currency. Therefore, there was a need for reliable & quality service provider for purchase and sale of foreign exchange. Indian Post offers such forex

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S.Y.J.C.services in an efficient & economical manner through select post offices in association with HDFC Bank.

[D] RETAIL SERVICE :(i) Bill Mail : This service is subscribed to by service providers

who have to post monthly or quarterly bills or account statements to its customers. However, the frequency of sending the documents should be atleast once in 90 days. Therefore, if a service provider wants to sends account statement / documents to its customers once in six months, then they cannot subscribe to this service.Eg.: Telephone bills are sent by MTNL to the post office, who in turn delivers the same to its customers.

(ii) Retail Post : Retail post includes services like collection of electricity bills, telephone bills, payment of taxes, insurance premium etc. Also, under retail post, the post office sells application forms for UPSc, AFMC and other government exams.

(iii) E-Payment : Post office provides service of making online payment of all bills and other dues under one roof on behalf of customers. The bill amount has to be paid in the post office and the post office pays the bill to the service provider online. E-Payment is a ‘Many to One’ service through which bills i.e. telephone, electricity, insurance etc. are paid by customers in post offices.

Q.4 State with reasons whether the following statements are True or False (Any Three) [15]1. Functions of Management have no role to play in success or failure of an

organization.Ans. The above given statement is ‘FALSE’. The correct statement is “The

success of an organization is mainly dependent on efficiently performing functions of management”. The reason for the same is as under :(1) Management is a process of co-ordination of resources so as to

attain some desired objectives.(2) Management process consists of various functions. The functions

are planning, organizing, staffing, directing, co-ordinating and controlling.

(3) The above functions are guidelines for successful management.(4) Management functions are universal in nature i.e. they are

applicable to all types of organization and all types, of managers working at the different levels.

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S.Y.J.C.(5) Each and various function has its own importance. It is impossible

for an organization to ignore any function.(6) If the management functions are carried out properly, desired

objectives can be attained.(7) Hence, the above given statement is false.

2. Business should not disclose their records to investors.Ans. The above given statement is ‘FALSE’. The correct statement is

“Business should disclose their records completely and in correct manner to investors”. The reason for the same is as under :(i) Investors are the persons who provide finance to an organization.(ii) Finance is bloodstream of an organization. Without sufficient funds,

an organization cannot function smoothly.(iii) Thus, investors are one of the most important aspect of an

organization.(iv) An organization runs because of the funds provided by investors.

Investors have a right to know details about utilization of funds, profitability, solvency etc.

(v) Business should provide complete and accurate information to investors about their funds. This is because they are taking a risk of losing their money by investing in the business.

(vi) Besides, providing correct and complete information helps in gaining trust of investors too.

(vii) Hence, business should disclose their records completely and in correct manner to investors.

3. The principle of equity says that the employees should be differentiated while distributing the work and making the payment.

Ans. The above given statement is ‘FALSE’. The correct statement is “The principle of equity says that the employees should be equal treatment while distributing the work and making payment”. The reason for the same is as under :(i) Principle of Equity says that all the employees should be treated

fairly and equally.(ii) Managers should treat all the subordinates equally.(iii) There should not be any discrimination between the employees.(iv) The salary / wages of employees working at the same level should

be the same even though they belong to different departments.(v) Besides, work should also be divided equally among people to avoid

conflict in the organization.

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S.Y.J.C.(vi) Hence, the above given statement is false.

4. Consumer Protection Act is a blessing for consumers.Ans. The above given statement is ‘TRUE’. The reason for the same is as under:

(i) The Consumer Protection Act came into existence in the year 1986.(ii) This act prescribes the rights of the consumers. Thus, consumers

are protected and have the power to enforce these rights.(iii) Besides, this Act provides quasi judiciary machinery and can solve

all the grievances of the consumer.(iv) The consumer courts formed under this Act follow simple

procedures and as a result delays are avoided.(v) These courts hear complaints regarding damages cause by unfair

trade practices, unsatisfactory services, defective products, unsafe products etc.

(vi) The Consumer Protection Act has proved to be a boon for consumers because under this Act they can file a suit against any manufacturer or seller in case of loss due to fault in their product or service.

(vii) Thus, Consumer Protection Act is a blessing for consumer.5. Attitudes build an entrepreneur.Ans. The above given statement is ‘TRUE’. The reason for the same is as

under :(i) Attitude generally refers to a person’s response or behaviour about

a certain thing or in a certain situation.(ii) Entrepreneurial attitude refers to an individual’s attitude towards

opportunities recognition.(iii) It refers to identifying opportunities. Entrepreneurs will obviously be

inclined towards recognising and developing opportunities and hence have high entrepreneurial attitude.

(iv) Entrepreneurs maintain a strong work ethic in their business. They will not do anything that is unethical.

(v) Entrepreneurs are open to criticism and opinion of others. Infact, they would prefer criticisms over praise as it would help in improving their product and business.

(vi) Entrepreneurs are extremely passionate about their business. Due to this passion, they are able to convince their clients and also persuade people to work with them.

(vii) Business cannot be done by someone afraid to take risk. Entrepreneur should not let his fear hold him back.

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S.Y.J.C.(viii) All of the above traits are extremely important to be a successful

entrepreneur. It is truly said that the attitude builds entrepreneur.Q.5 Attempt the following questions (Any Two) [10]

1. What are the characteristics of an entrepreneur?Ans. An entrepreneur basically is a person who innovates, visualizes a

business, takes all the necessary risks in organizing capital, infrastructure and personnel and establishes an enterprise. In simple words, an entrepreneur is an individual who has own business. Hence, in order to be an entrepreneur an individual should possess certain characteristics. Following are few general characteristics. [SMART CODE : CHARACTER](1) Creativity : Entrepreneurs have a creative thinking due to which

they are able to come up with the innovative ideas. They build and grow the entire enterprise on the basis of this creative idea. The idea is the most basic requirement for starting any business.

(2) High Goals : Entrepreneurs set very high goals for the organization. They set high quality standards and are always motivated to achieve. It is their vision that enables the business to be successful.Happiness, wealth, success are by-products of goal-setting. They cannot be the goal themselves.

(3) Able to Estimate Future (Future Foresight) : Entrepreneurs have an inherent sixth sense or foresight to future development in the market. They usually estimate as to what will happen in future. Accordingly, they are better prepared and can take timely decisions.

(4) Risk Taker : Every enterprise / business involves certain risks. An entrepreneur takes calculated risks while running his enterprise. Entrepreneurs have a high risk bearing ability and they need to have courage to take such risks.

(5) Always Highly Optimistic : Entrepreneurs have great amount of self confidence which enables them to establish and lead their organization. They are also highly optimistic and positive about all the things. This helps them to be motivated even in the difficult times. Entrepreneur is required to be motivated and also keep its employees motivated.People react in one of the following four ways in difficult situations.1. Retreat into the past.2. Day dream about the future.3. Wait for someone to rescue them.4. Face the crisis and transform it into own favour.The entrepreneur generally reacts in the fourth way.

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S.Y.J.C.(6) Communication Skills : Basic requirement of communication is to

communicate the message in right sense. An entrepreneur needs to have excellent communication skills in dealing with customers, employees, creditor etc. His communication has to be clear, polite and he should be able to develop good relations.

(7) Technical Knowledge : Entrepreneur should have the technical knowledge required to run his business successfully.Eg.: A commerce graduate might not be able to run a hospital as he will not have the technical knowledge required to manage the hospital.

(8) Experienced and Qualified : Entrepreneurs are qualified individuals who are capable enough of managing various areas of the business. Besides, entrepreneur also needs to be intelligent, should be able to think quickly and be creative. It helps in taking proper decisions. A strong education is necessary for an entrepreneur.TRIVIA FOR STUDENT FRIENDS : There are few entrepreneurs who were non-qualified but extremely successful. Dhirubhai Ambani is a wonderful example of non-qualified entrepreneur. He is architect of “Reliance Group of Industries”. Steve jobs, the founder of “Apple”, is also a college drop out. However, such cases are extremely rare.

(9) Requires Hard Work : There is general belief that people in business have a relaxed life. However, it is totally untrue. An entrepreneur has to put n long hours of hard work. It is the hard work which helps them to grow the organization.

2. State / Explain the nature of principles of management.Ans. Principles of Management are the statements of fundamental truth. They

are the unwritten rules which the managers use while managing work or taking decisions. These principles provide guidelines to managers to take decisions.The nature of principles of management is explained as follows : [SMART CODE : NATURE](1) Not Rigid [Flexible in Nature] : Principles of management are

flexible in nature. They can be adjusted according to the needs and situation of the organization. They act as a guideline and are not in the form of law which is to be followed as it is.Eg.: With change in technology, application of management principles changes.

(2) AIMS at Influencing Human Behaviour : Management is not an individual effort. It requires co-ordination and support of everyone. It

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S.Y.J.C.aims to achieve goals through human involvement. Hence, management principles are designed to influence behaviour of entire group. These principles control the entire group of persons and direct them to achieve desired objectives.Eg.: Management principles help to motivate employees and increase their efficiency which in turn helps to increase profitability of the company.

(3) The Cause and Effect Relationship : The decision of management directly or indirectly affects many areas in the organization. Management principles help in determining this cause-effect relationship of such decisions.Eg.: If the company increases expense on maintenance of machine (cause), their efficiency and life increases (effect).

(4) Universal in Nature : Principles of management are universally applicable. They are applicable to :- All types of circumstances or situations in the business.- All types of business organizations (irrespective of its size,

nature, employee strength etc.)- All level of management (lower level, middle level and top level).Eg.: Management is required in MNCs like Microsoft and also in a small pan shop.

(5) Relative in Nature : Principles of management are relative in nature i.e. they are applied in different ways in different situation. They have tobe modified or changed according to the situation to get the optimum results. Infact, a management principle applied in one situation today may have to be applied in a different way in the same situation on a later date.

(6) Equal Importance : Using few management principles will not help a company to achieve its objectives. Equal importance has to be given to all the principles of management. They are to be applied simultaneously to achieve desired objectives.

3. What is the need (cases) for social responsibility?Ans. Business is responsible for all the activities it does. It exists in society. The

society helps businesses to survive. In return, business should also perform its due towards betterment of society. Following points highlight the need for social responsibility : [SMART CODE : FORGET LEDGER](1) Favourable Public Image : A business organization which

considers and satisfies the needs of various stakeholders creates strong reputation and goodwill. When the organization cares for its employees, the owners and the society at large, it automatically earns support and respect from them.

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S.Y.J.C.(2) Overall Complexities of Social Problems : Today, the problems

of the society are more complex and increasing. Government is trying to overcome such problems. However, the efforts of government only may not be enough as they have limited resources. Business organizations should help government in overcoming such problems.

(3) Resources Utilization : (Better and Optimum Utilization of Resources) Generally, large business organizations have a huge surplus of resources in terms of finance, talent and functional expertise. Such resources should be used for expansion and benefit of the various stakeholders in the society. Business organization should ensure optimum utilization of resources. Wastage has to be avoided.

(4) Globalization : India opened up its economy for world in 1991. A lot of companies entered the Indian market and similarly lots of Indian companies were allowed to sell its products in foreign markets. The world became a smaller place and competition increased. Multi-national companies have adopted good social practices to create its goodwill in market. This has encouraged Indian companies to undertake good social practices so that it can also create a good image in foreign markets.

(5) Environment Protection : Business organization use natural resources and human resources for their activities. The business organizations should make proper use of such resources. They should avoid environmental pollution and ecological imbalance. The business practices must be eco-friendly.‘Syngeta’ has started a project called as “Krishi Shakti Kendra” to protect environment. Syngeta is a world-leading company whose objective is to promote agricultural through innovative research and technology. In India, its office is based in Pune.

(6) Theory of Trusteeship : Business Organizations operate within the society and they are a part of the society. It is now realized that an activity which is not good for public is also not good for business. This is the theory of trusteeship. According to this principle, “A business must be held in trust, legally and morally for the benefit of people.” Thus, businessmen are considered to be trustees of the society and business, as such, is considered to be a social venture.

(7) Long Term Self Interest : Business organizations cannot ignore social responsibility if they have to survive & earn profits in long term. If they try to overprice the products or provide low quality, consumers may not stay with the company in the long run. Similarly, in case employees are not properly remuneration they

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S.Y.J.C.may leave organization. Hence, organizations need to understand the importance of social responsibility.

(8) Expectations of Society : The awareness about rights and knowledge level of the people has increased. Their expectations from business also have changed. The business organizations must operate as per the expectations of the society and it should give the society what it wants. In addition, it should not do anything which is harmful to the society.

(9) Development of Consumer Movement : Consumer movement is a movement against business malpractices. Consumers today have become more aware of their rights. They cannot tolerate injustice or any malpractice of business organization. There are various consumer forums and associations which put pressure on business organizations to produce quality products at reasonable prices and avoid any kind of malpractices. As a result, business organizations have also understood their social responsibility towards consumers.

(10) Government Control : The government wants to create a favourable atmosphere for business to grow. However, at the same time it has to ensure that business does not harm the society. The government has framed various laws and legislations for this purpose. If a company fails to follow such laws and legislations, it may lead to legal consequences for the organization. Therefore, social responsibility is not just a moral responsibility but also statutory responsibility.

(11) Employee and Trade Union’s Pressure : Business organization earns profits because of the efforts of the employees and the employees are becoming aware of this fact. Therefore, they demand a lot from the business organization like proper remuneration, good working conditions, incentives, asking for their opinion in decision – making process etc. To avoid any conflicts, business organization should understand its responsibility towards its employees and act accordingly.

(12) Role of Media : Media is the most dominating force today. The reach of media has increased due to newspaper, TV, internet etc. Media can raise voice against business malpractices and exploitation of consumers. It can influence the people in the society. Hence, business organizations should not neglect its social responsibility.

Responsibility of business towards various sections of society : Business is conducted with and dependent on various interest groups in the society. Business need to protect the interests of these groups while carrying out their activities. Business has responsibilities towards following :1. Owner

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S.Y.J.C.2. Consumer3. Government4. Community5. Public6. Investor7. EmployeesNOTE : The words business and business organization mean the same and can be used alternatively.

4. Explain the importance of co-ordinating.Ans. Co-ordination is a process in which different activities of an organization

are integrated for achieving desired & common goals of an organization. It is a function, which binds together all the other functions of management. The following is the importance of co-ordination :(1) Integrated Group Efforts : Co-ordination helps to integrate group

efforts. The efforts of all are taken into consideration and everyone is appreciated. This reduces conflicts as well as jealousy between the employees. It helps in increasing team spirit among employees.

(2) Creative Force : Two brains are always better than one. It helps in discussing task to be done, sharing thoughts and enhancing creative ideas. This is possible only because of co-ordination.

(3) Unity of Direction : The work is done in different department of an organization. However, everyone works for achieving the common goals set. There is a need of proper co-ordination between various departments. Co-ordinating gives proper direction to all the departments.

(4) Facilitates Motivation : Co-ordination enables employees to take initiative, interact with other people & bring creativity in work. This motivates the employees to perform better. They also get monetary & non-monetary incentives which helps to boost their morale. They feel satisfied that their efforts are being appreciated.

(5) Optimum Utilization of Resources : Co-ordination helps to integrate various activities in an organization. Various departments can share the resources. This is possible only because of co-ordination as only through co-ordination they can share information. This results in better utilization of resources.

(6) Achievement of Objectives : Co-ordination is a process that integrates the work done by each employee. It leads to smooth functioning of an organization. It helps to reduce wastage and save time. This helps to achieve common objectives of an organization.

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S.Y.J.C.(7) Improves Relations : All departments in an organization are

dependent on each other to complete the task. Co-ordination helps to improve relations among all them.Eg.: If production department needs raw material, it asks purchase department to buy. Purchase department buys and asks finance department to make payment. Once raw material is converted into finished goods, it is duty of sales department to sell it. Thus, all departments are dependent on each other.

(8) Higher Efficiency : Co-ordination leads to optimum utilization of resources. It increases overall efficiency in working of the organization. Optimum utilization leads to reduction of wastage. It will help in reducing cost and thereby help in increasing profits.

(9) Improves Goodwill : Co-ordination helps in improving efficiency and thereby results in higher profits. Higher profits help in improving the image as well as market value of shares of company. Overall, it helps to increase the goodwill of the company.

(10) Specialization : Every department is headed by specialized person. Eg. Marketing department is headed by MBA in marketing, finance by MBA in finance etc. It is very important for proper co-ordination amongst these people. Only if the people at managerial level co-ordinate, they can train employees to co-ordinate amongst themselves.

Q.6 What is entrepreneurial attitude and what are the traits that enable to achieve entrepreneurial success? [10]

Ans. Attitude generally refers to a person’s response or behaviour about a certain thing or in a certain situation. Entrepreneurial attitude refers to an individuals attitude towards opportunities recognition. It refers to identifying opportunities. Entrepreneurs will obviously be inclined towards recognizing and developing opportunities and hence have high entrepreneurial attitude. Necessity – based new entrepreneur will demonstrate higher levels of entrepreneurial attitude (opportunity recognition) than non-entrepreneurs.(1) Have Passion for your Business : Entrepreneurs are extremely

passionate about their business. Due to this passion, they are able to convince their clients and also persuade people to work with them. Work is fun for them.

(2) Set an Example of Trust Worthiness : Entrepreneurs work towards gaining the trust of customers and employees by creating a culture of integrity.

(3) Be Flexible, Except with Core Values : An entrepreneur is not rigid. He changes himself and also his product as per the market. However, the circumstances should not overpower him and he should never change his core values.

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S.Y.J.C.(4) Don’t Let Fear of Failure Hold you Back : Business cannot be done by

someone who is afraid to take risk. Entrepreneur does not let his fear hold him back. He takes bold decisions and calculated risks.

(5) Make Decisions in Time : The major work of an entrepreneur is to take decisions and he does so in a timely manner. Postponing the decision making process may lead to loss.

(6) The Major Company Asset is you : The biggest asset in any company is “entrepreneur”. He takes decisions, motivates others, guides them and helps them in solving their problem. He should take care of himself, his health and always be energetic.

(7) Keep your Ego Under Control : Ego can never benefit anyone and hence an entrepreneur keeps his ego in control. He should always try to motivate others.

(8) Believe : There are days when nothing goes as per plan but the entrepreneur has immense belief in himself, his product and his enterprise. This helps him to conquer difficulty.

(9) Encourage and Accept Criticism Graciously, Admit your Mistakes : Entrepreneurs are open to criticism and opinions of others. Infact, they would prefer criticisms over praise as it would help in improving their product and business.

(10) Maintain A Strong Work Ethic : Entrepreneurs maintain a strong work ethic in their business. They will not do anything that is unethical (eg. cheating) or that will tarnish the image of the enterprise. The employees follow the footsteps of entrepreneurs.

(11) Rebound Quickly from Setbacks : There are certain business deals which might not work as planned and may cause serious losses to an entrepreneur. Business is full of ups and downs. The entrepreneurs learn from such setbacks and move on.

(12) Periodically get out of your comfort zone to Pursue Something Important : An entrepreneur has to change with changing times. He may have to make certain decisions which he may not be comfortable with but he has to do so far for the benefit of the business. Therefore, he may step out of his comfort zone at times.

ORQ.6 Explain Henry Fayol’s Principles of Management. [10]Ans. Henry Fayol (1841 – 1925), a French mining Engineer, conducted many

experiments in management and developed 14 principles of management. These principles have been explained in his book “General and Industrial Administration”. Due to his contribution to management, he is called the “Father of Modern Management”.The following are the principles of management laid down by Fayol :

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S.Y.J.C.(1) Principle of Division of Work : As per this principle, the work in an

organization should be divided into small sub parts. This work should be assigned to the employees depending on their interest, skill and capabilities. Usually, one type of work is assigned to one employee. This helps in increasing efficiency and leads to specialisation.Eg.: In a college, there are different professors for different subject. All subjects are generally not taught by one professor. The subject is assigned to a professor depending on the qualification and interest.Interesting : Mr. Henry Ford (Founder of Ford Motors) introduced the concept of assembly line to the world. Earlier, only one worker used to assemble a vehicle from start to end. However, Mr. Ford introduced assembly line where he built various workstations. Each workstation assembled one particular spare part. This helped to complete the job much faster and in an efficient manner.

(2) Principle of Authority and Responsibility : Authority means the right to give orders and get work done. A manager can work properly only if he is given authority to take decisions. However, with authority comes responsibility. When authority has been given to the manager, he is responsible for that work.The manager is to be held responsible if the work is not completed in time or not done properly. To summarize, when the work is assigned to a person, he should be given proper authority to carry out that work.Eg.: Dhoni is given the authority to select his own cricket team. Now, in case, India loses the match, he has to face the consequences.

(3) Principle of Discipline : According to Fayol, the discipline is the most essential thing in the organization. Employees must respect and obey the rules of the organization. Discipline helps to achieve the goals set in the organization. Good leaders can properly maintain discipline in an organization. There should be proper understanding between management and employees regarding the rules so that the discipline is maintained.Eg.: Management should clearly convey the office timings to employees. Employees should adhere to such timings.

(4) Principle of Unity of Command : As per this principle, one employee should receive orders from one superior only. This principle is applicable for all levels of management. This principle tries to avoid confusion. A person receiving order from more than one superior will be confused. He may not be able to work with concentration. When he receives order from only one superior, he shall be able to complete his work with greater efficiency.Eg.: If employee is on two projects with two different bosses, both of them may ask the employee to finish work on the same day. In that case,

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S.Y.J.C.employee will either have to work long hours which will affect his efficiency or he may have to finish the task in an improper manner.

(5) Principle of Unity of Direction : According to this principle, a group of people working in an organization to achieve a common goal must work under the direction of one single person. According to this principle, every group in the organization should have the same objective. The group should be directed by one manager only.Eg.: In an army, every soldier obeys the command of the commanding officer. A strict unity of direction is followed.The difference between unity of direction and unity of command is :- Principle of unity of command : One individual one superior.- Principle of unity of direction : One group one objective one superior.

(6) Principle of Subordination of Individual Interest to General Interest : According to this principle, the interest of the individual is to be given lesser importance as compared to the interest of the organization. The manager must consider the interest of the whole organization while taking decision. The employees too should give higher importance to the interest of the organization than their own self. When the organization grows, the employees will prosper automatically.Eg.: In IPL 2012 season, Danniel Vettori despite being a captain of the team “Royal Challengers Bangalore” dropped himself so that the team could have a better player i.e. Murlitharan as only four foreign players were allowed.

(7) Principle of Remuneration : As per this principle, employees must be paid fair amount of salary / wages for the services they provide to the organization. The remuneration of an employee should depend on their experience, work skill etc. This will boost their moral and increase productivity.

(8) Principle of Centralization : When an entire organization is managed by one person or few persons it refers to centralization or centralized management. This happens in case of smaller organizations (Eg. : In a proprietary concern all decisions are taken by proprietor). When an organization is managed by different people it refers to decentralization or decentralized management. In bigger organizations, the authority or management needs to be decentralized. The authority is given to different people.Eg.: Chief Financial Officer heads finance, Chief Marketing Officer heads marketing etc.According to this principle, there needs to be a proper balance between centralization and decentralization. Size of the organization, nature of the

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S.Y.J.C.activity, experience of people etc. are the factors determining the centralization and decentralization.

(9) Principle of Scalar Chain : There is a particular type of communication channel or system of communication in every organization.Eg.: If there is any financial decision taken by the top management which requires a effect in the accounting system, then the CFO will first inform the Manager – Accounts, then Manager – Accounts will inform the Head – Accounts. The Head – Accounts will then inform the Account Executive and finally the work will get done.At times, communication may be from worker to manager also. This is known as scalar chain.This is however a very time consuming process and there is a possibility that the accurate message may not reach the final person in the chain. Therefore, sometimes a cross – communication known as “Gang Plank” should be allowed to avoid delays. However, proper permission of the authorities needs to be takenEg.: In the above example, the Manager – Accounts should directly communicate with the Accounts Executive to avoid delays.

(10) Principle of Order : As per this principle, material and people must be at the right place and at the right time. It means that there should be a proper place for materials and proper personnel should be appointed for the right job. This will lead to proper utilization of physical and human resources.Eg.: An accounts expert should be in accounts department and not in marketing department. This will help in increasing efficiency.

(11) Principle of Equity : This principle says that all the employees should be treated fairly and equally. Managers should treat all the subordinates equally and there should not be any discrimination between the employees. The salary / wages of employees working at the same level should be the same even though they belong to different departments. Work should be divided equally among people to avoid conflict in the organization.Eg.: Sr. Executive – Accounts, Sr. Executive – Sales, Sr – Executive – Production should all have equal pay.

(12) Principle of Stability of Tenure : The manager should ensure that the employees get a sense of security in their job. Only then will the employees take ownership and put in their maximum efforts. There should not be any uncertainty regarding the stability of the job as this would affect their performance.Eg.: During the phase of recession, employees in many IT companies were being terminated in order to cut costs. As a result, the balance

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Managed by NIRAJ SIR

S.Y.J.C.employees were constantly in the fear of losing their jobs. The manager should ensure that such a situation does not arise.

(13) Principle of Initiative : Initiative means taking the first step. Managers should encourage employees to take initiative and come up with new ideas. According to this principle, managers should welcome such ideas even if they may be wrong or impractical. This approach helps the organization grow. More importantly, it creates a sense of belonging in the minds of the employees.Eg.: In case a group of friends want to go for a movie, there is always one person who comes forward, suggests the idea of the move place etc. He is the one who takes the initiative for going to a move.

(14) Principle of Espirit De Corpse : Espirit de Corpse means union is strength. Power of many is always more than power of one. The manager should create a spirit of team work among the employees. They should be made to realize that the organization goals are achieved only due to the combined efforts of all the employees. Manager should build a sense of togetherness among the employees. The goals can be achieved smoothly and easily, if the workers work with unity.

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