Business Studies (054)

Unit 1: Nature and Significance of Management
Concept After going through this unit, the
student/ learner would be able to:
Management - concept, objectives, and
importance
• Understand the concept of
management.
• Explain the meaning of
‘Effectiveness and Efficiency.
• Discuss the objectives of
management.
• Describe the importance of
management.
Management as Science, Art and
Profession
• Examine the nature of
management as a science, art and
profession.
Levels of Management • Understand the role of top, middle
and lower levels of management
Management functions-planning,
organizing, staffing, directing and
controlling
• Explain the functions of
management
Coordination- concept and importance • Discuss the concept and
characteristics of coordination.
• Explain the importance of
coordination.
Unit 2: Principles of Management
Principles of Management - concept and
significance
• Understand the concept of
principles of management.
• Explain the significance of
management principles.
Fayol’s principles of management • Discuss the principles of
management developed by Fayol.
Taylor’s Scientific management - principles
and techniques
• Explain the principles and
techniques of ‘Scientific
Management’.
• Compare the contributions of Fayol
and Taylor.
Unit 3: Business Environment
Business Environment- concept and
importance
• Understand the concept of
‘Business Environment’.
• Describe the importance of
business environment
Dimensions of Business Environment -
Economic, Social, Technological, Political
and Legal
Demonetization - concept and features
• Describe the various dimensions of
‘Business Environment’.
• Understand the concept of
demonetization
Unit 4: Planning
Planning: Concept, importance and
limitation
• Understand the concept of
planning.
• Describe the importance of
planning.
• Understand the limitations of
planning.
Planning process • Describe the steps in the process
of planning.
Single use and Standing Plans. Objectives,
Strategy, Policy, Procedure, Method, Rule,
Budget and Programme
• Develop an understanding of single
use and standing plans
• Describe objectives, policies,
strategy, procedure, method, rule,
budget and programme as types of
plans.
Unit 5: Organising
Organising: Concept and importance • Understand the concept of
organizing as a structure and as a
process.
• Explain the importance of
organising.
Organising Process • Describe the steps in the process
of organizing
Structure of organisation- functional and
divisional concept.
Formal and informal organization - concept
• Describe functional and divisional
structures of organisation.
• Explain the advantages,
disadvantages and suitability of
functional and divisional structure.
• Understand the concept of formal
and informal organisation.
• Discuss the advantages,
disadvantages of formal and
informal organisation.
Delegation: concept, elements and
importance
• Understand the concept of
delegation.
• Describe the elements of
delegation.
• Appreciate the importance of
Delegation.
Decentralization: concept and importance • Understand the concept of
decentralisation.
• Explain the importance of
decentralisation.
• Differentiate between delegation
and decentralisation.
Unit 6: Staffing
Staffing: Concept and importance of
staffing
• Understand the concept of staffing.
• Explain the importance of staffing
Staffing as a part of Human Resource
Management concept
• Understand the specialized duties
and activities performed by Human
Resource Management
Staffing process • Describe the steps in the process
of staffing
Recruitment process • Understand the meaning of
recruitment.
• Discuss the sources of recruitment.
• Explain the merits and demerits of
internal and external sources of
recruitment.
Selection – process • Understand the meaning of
selection.
• Describe the steps involved in the
process of selection.
Training and Development - Concept and
importance, Methods of training - on the
• Understand the concept of training
and development.
job and off the job - vestibule training,
apprenticeship training and internship
training
• Appreciate the importance of
training to the organisation and to
the employees.
• Discuss the meaning of induction
training, vestibule training,
apprenticeship training and
internship training.
• Differentiate between training and
development.
• Discuss on the job and off the job
methods of training.
Unit 7: Directing
Directing: Concept and importance • Describe the concept of directing.
• Discuss the importance of directing
Elements of Directing • Describe the various elements of
directing
Motivation - concept, Maslow’s hierarchy of
needs, Financial and non-financial
incentives
• Understand the concept of
motivation.
• Develop an understanding of
Maslow’s Hierarchy of needs.
• Discuss the various financial and
non-financial incentives.
Leadership - concept, styles - authoritative,
democratic and laissez faire
• Understand the concept of
leadership.
• Understand the various styles of
leadership.
Communication - concept, formal and
informal communication; barriers to
effective communication, how to overcome
the barriers?
• Understand the concept of
communication
• Understand the elements of the
communication process.
• Discuss the concept of formal and
informal communication.
• Discuss the various barriers to
effective communication.
• Suggest measures to overcome
barriers to communication.
Unit 8: Controlling
Controlling - Concept and importance • Understand the concept of
controlling.
• Explain the importance of
controlling.
Relationship between planning and
controlling
• Describe the relationship between
planning and controlling
Steps in process of control • Discuss the steps in the process of
controlling.
Part B: Business Finance and Marketing
Unit 9: Financial Management
Financial Management: Concept, role and
objectives
• Understand the concept of financial
management.
• Explain the role of financial
management in an organisation.
• Discuss the objectives of financial
management
Financial decisions: investment, financing
and dividend - Meaning and factors
affecting
• Discuss the three financial
decisions and the factors affecting
them.
Financial Planning - concept and
importance
• Describe the concept of financial
planning and its objectives.
• Explain the importance of financial
planning.
Capital Structure – concept and factors
affecting capital structure
• Understand the concept of capital
structure.
• Describe the factors determining
the choice of an appropriate capital
structure of a company.
Fixed and Working Capital - Concept and
factors affecting their requirements
• Understand the concept of fixed
and working capital.
• Describe the factors determining
the requirements of fixed and
working capital.
Unit 10: Financial Markets
Financial Markets: Concept • Understand the concept of financial
market.
Money Market: Concept • Understand the concept of money
market.
Capital market and its types (primary and
secondary)
• Discuss the concept of capital
market.
• Explain primary and secondary
markets as types of capital market.
• Differentiate between capital
market and money market.
• Distinguish between primary and
secondary markets.
Stock Exchange - Functions and trading
procedure
• Give the meaning of a stock
exchange.
• Explain the functions of a stock
exchange.
• Discuss the trading procedure in a
stock exchange.
• Give the meaning of depository
services and demat account as
used in the trading procedure of
securities.
Securities and Exchange Board of India
(SEBI) - objectives and functions
• State the objectives of SEBI.
• Explain the functions of SEBI.
Unit 11: Marketing
Marketing – Concept, functions and
philosophies
• Understand the concept of
marketing.
• Explain the features of marketing.
• Discuss the functions of marketing.
• Explain the marketing philosophies.
Marketing Mix – Concept and elements • Understand the concept of
marketing mix.
• Describe the elements of marketing
mix.
Product – branding, labelling and
packaging – Concept
• Understand the concept of product
as an element of marketing mix.
• Understand the concept of
branding, labelling and packaging.
Price - Concept, Factors determining price • Understand the concept of price as
an element of marketing mix.
• Describe the factors determining
price of a product.
Physical Distribution – concept,
components and channels of distribution
• Understand the concept of physical
distribution.
• Explain the components of physical
distribution.
• Describe the various channels of
distribution.
Promotion – Concept and elements;
Advertising, Personal Selling, Sales
Promotion and Public Relations
• Understand the concept of
promotion as an element of
marketing mix.
• Describe the elements of promotion
mix.
• Understand the concept of
advertising.
• Understand the concept of sales
promotion.
• Discuss the concept of public
relations.
Unit 12: Consumer Protection
Consumer Protection: Concept and
importance
• Understand the concept of
consumer protection.
• Describe the importance of
consumer protection.
• Discuss the scope of Consumer
Protection Act, 2019
The Consumer Protection Act, 2019:
Source:
http://egazette.nic.in/WriteReadData/2019/210422.pdf
Meaning of consumer
Rights and responsibilities of consumers
Who can file a complaint?
Redressal machinery
Remedies available
• Understand the concept of a
consumer according to the
Consumer Protection Act, 2019.
• Explain the consumer rights
• Understand the responsibilities of
consumers
• Understand who can file a
complaint and against whom?
• Discuss the legal redressal
machinery under Consumer
Protection Act, 2019.
• Examine the remedies available to
the consumer under Consumer
Protection Act, 2019.
Consumer awareness - Role of consumer
organizations and Non-Governmental
Organizations (NGOs)
• Describe the role of consumer
organizations and NGOs in
protecting consumers’ interests.

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Unit 1: Nature and Significance of Management

1. Management - Concept, Objectives, and Importance

Concept of Management

Management is the process of planning, organizing, staffing, directing, and controlling to achieve organizational goals efficiently and effectively.

Effectiveness vs. Efficiency

Effectiveness: Completing tasks on time and achieving goals. (Focus on results)
Efficiency: Using resources wisely to minimize costs. (Focus on process)
Both are necessary for good management!

Objectives of Management

Organizational Objectives – Profit, growth, and survival.
Social Objectives – Social welfare, ethical business practices.
Personal Objectives – Employee satisfaction, career growth.

Importance of Management

Achieves organizational goals.
Improves efficiency and reduces costs.
Creates a dynamic organization (adapts to changes).
Helps in achieving personal growth of employees.
Contributes to the development of society.

2. Management as Science, Art, and Profession

Management as a Science

Based on systematic knowledge and principles.
Principles are developed through observation and experimentation.
However, human behavior makes it an inexact science.

Management as an Art

Requires personal skills and creativity.
Involves practice and experience.
Managers use intuition and judgment.

Management as a Profession

Requires specialized knowledge.
Has ethical codes of conduct.
However, it is not a full profession like medicine or law.

3. Levels of Management

Top Level: (CEO, MD, Board of Directors)
- Makes major decisions.
- Sets long-term goals.
Middle Level: (Department heads, Branch managers)
- Implements policies set by the top level.
- Coordinates between top and lower levels.
Lower Level: (Supervisors, Foremen)
- Directly manages workers.
- Ensures daily tasks are completed.

4. Functions of Management

Planning – Deciding what to do in advance.
Organizing – Arranging resources to achieve goals.
Staffing – Hiring and managing employees.
Directing – Leading and motivating employees.
Controlling – Monitoring performance and taking corrective action.

5. Coordination - Concept and Importance

Concept of Coordination

Coordination ensures different departments and employees work together towards a common goal.

Characteristics of Coordination

Ensures unity of efforts.
Integrates different activities.
Continuous process.

Importance of Coordination

Brings harmony in work.
Reduces conflicts and duplication of efforts.
Ensures efficient use of resources.
Increases team spirit and productivity.

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Unit 2: Principles of Management

1. Principles of Management - Concept and Significance

Concept of Principles of Management

Principles of management are guidelines that help managers make decisions and run an organization efficiently.
These principles are universal (applicable to all organizations) and flexible (can be modified as needed).

Significance of Management Principles

Provide guidance to managers in decision-making.
Increase efficiency by improving planning and execution.
Encourage teamwork and coordination.
Help in adapting to changes in the business environment.
Ensure social responsibility by promoting ethical behavior.

2. Fayol’s Principles of Management

Henri Fayol, a French industrialist, developed 14 principles of management that are widely used today:

Division of Work – Specialization increases efficiency.
Authority and Responsibility – Authority (power) should match responsibility (duties).
Discipline – Employees must obey rules and agreements.
Unity of Command – A person should receive orders from only one boss.
Unity of Direction – The organization should have one plan for a group of similar activities.
Subordination of Individual Interest – Organizational interest is more important than personal interest.
Remuneration – Fair payment for employees' work.
Centralization and Decentralization – Balance between decision-making at the top (centralization) and delegation (decentralization).
Scalar Chain – A clear chain of authority should be followed.
Order – Right person at the right job, and proper arrangement of materials.
Equity – Fair treatment of employees.
Stability of Tenure – Reducing employee turnover to maintain stability.
Initiative – Encouraging employees to take initiative.
Esprit de Corps – Promoting team spirit for unity and harmony.

3. Taylor’s Scientific Management - Principles and Techniques

Scientific Management - Concept

Frederick Winslow Taylor developed Scientific Management to improve productivity by using scientific methods instead of traditional practices.

Principles of Scientific Management

Science, Not Rule of Thumb – Use scientific methods instead of trial and error.
Harmony, Not Discord – Encourage cooperation between management and workers.
Cooperation, Not Individualism – Work as a team instead of conflicting interests.
Development of Workers – Train workers for higher efficiency.

Techniques of Scientific Management

Functional Foremanship – Division of work among supervisors for efficiency.
Standardization and Simplification – Setting uniform standards for work, tools, and processes.
Work Study –
- Method Study – Best way to perform a task.
- Motion Study – Reducing unnecessary movements.
- Time Study – Determining the standard time to complete a task.
- Fatigue Study – Providing rest periods to reduce worker fatigue.
Differential Piece Wage System – Paying higher wages to efficient workers.

4. Comparison of Fayol and Taylor

Basis	Henri Fayol (Administrative Theory)	F.W. Taylor (Scientific Management)
Focus	Overall administration	Efficiency and productivity
Approach	Top-down (General principles)	Bottom-up (Shop floor management)
Principles	14 principles	4 principles + scientific techniques
Application	Entire organization	Production and factory workers
View on Workers	Part of the organization’s system	Most important factor for efficiency

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Unit 3: Business Environment

1. Business Environment - Concept and Importance

Concept of Business Environment

The business environment refers to external factors that influence a business, such as economic conditions, government policies, social trends, and technology.
It includes everything outside the business that affects decision-making and performance.

Importance of Business Environment

Helps in Identifying Opportunities – Businesses can take advantage of favorable conditions.
Helps in Identifying Threats – Businesses can prepare for challenges and risks.
Helps in Planning and Policy Making – Companies can make better decisions based on external factors.
Improves Performance – Adapting to changes leads to growth and success.
Ensures Legal Compliance – Businesses follow government rules and regulations.

2. Dimensions of Business Environment

1. Economic Environment

Factors like GDP, inflation, interest rates, tax policies, and economic growth.
Example: A high inflation rate increases costs for businesses.

2. Social Environment

Social and cultural factors like lifestyle, education, population trends, and consumer behavior.
Example: Increasing demand for healthy food due to health awareness.

3. Technological Environment

Changes in technology, automation, R&D, and innovation.
Example: Growth of online shopping platforms like Amazon and Flipkart.

4. Political Environment

Government policies, political stability, and leadership impact business operations.
Example: A stable government attracts foreign investment.

5. Legal Environment

Laws and regulations such as labor laws, consumer protection laws, and environmental laws.
Example: Businesses must follow GST regulations in India.

3. Demonetization - Concept and Features

Concept of Demonetization

Demonetization means removing the legal status of a currency note so that it can no longer be used as money.
In India, demonetization happened on 8th November 2016, when ₹500 and ₹1000 notes were declared invalid.

Features of Demonetization

Aimed at Reducing Black Money – To prevent illegal cash hoarding.
Encouraged Digital Transactions – Increased use of online payments and UPI.
Controlled Fake Currency – Reduced circulation of counterfeit notes.
Affected Short-Term Economy – Temporary cash shortages in businesses.
Promoted Banking Services – More people opened bank accounts.

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Unit 4: Planning

1. Planning: Concept, Importance, and Limitations

Concept of Planning

Planning is deciding in advance what to do, how to do it, when to do it, and who will do it.
It is the first function of management and provides direction for achieving goals.

Importance of Planning

Provides Direction – Helps employees know what to do.
Reduces Uncertainty – Prepares for future risks.
Minimizes Wastage – Ensures efficient use of resources.
Improves Decision-Making – Provides a clear framework for choices.
Encourages Innovation – Helps in developing new ideas and strategies.
Facilitates Coordination – Ensures different departments work together.

Limitations of Planning

Time-Consuming – Planning takes time, delaying action.
Costly Process – Requires research, analysis, and expert opinions.
May Not Work in a Dynamic Environment – External factors like government policies or competition can change.
Reduces Creativity – Employees may follow plans strictly without innovation.
No Guarantee of Success – A well-made plan may still fail due to unforeseen circumstances.

2. Planning Process (Steps in Planning)

Setting Objectives – Defining what needs to be achieved.
Developing Premises – Identifying assumptions about the future.
Identifying Alternative Courses of Action – Listing different ways to achieve goals.
Evaluating Alternatives – Comparing options based on pros and cons.
Selecting the Best Alternative – Choosing the most suitable option.
Implementing the Plan – Putting the plan into action.
Follow-up and Monitoring – Checking if the plan is working and making adjustments if needed.

3. Single-Use and Standing Plans

Single-Use Plans

Used only once for a specific project or event.
Example: Plan for organizing an annual company event.

Standing Plans

Used repeatedly for similar situations.
Example: A company’s policy on employee leave.

4. Types of Plans

Objectives – End goals that an organization wants to achieve.
- Example: A company aims to increase sales by 20% in one year.
Strategy – A long-term plan to achieve objectives.
- Example: A business enters new markets to expand.
Policy – General guidelines for decision-making.
- Example: "No refund without a receipt" policy in a store.
Procedure – Step-by-step process for performing a task.
- Example: Hiring procedure for new employees.
Method – The specific way a task is performed.
- Example: A standard way of assembling a product.
Rule – Strict guidelines that must be followed.
- Example: "No smoking in the office" rule.
Budget – A financial plan for income and expenses.
- Example: A marketing budget of ₹5 lakhs for advertising.
Programme – A detailed plan with objectives, policies, procedures, and budgets.
- Example: A company’s training programme for new employees.

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Unit 5: Organising

1. Organising - Concept and Importance

Concept of Organising

Organising as a Structure: The framework that defines how activities, roles, and responsibilities are arranged within a company.
Organising as a Process: The process of identifying and grouping activities, assigning responsibilities, and coordinating them to achieve business goals.

Importance of Organising

Ensures Efficient Administration – Clearly defines roles and responsibilities.
Facilitates Growth and Expansion – Helps businesses expand by systematically managing operations.
Improves Coordination – Ensures smooth teamwork across departments.
Encourages Specialisation – Groups similar tasks together, leading to expertise.
Increases Productivity – Avoids duplication of work and saves time.
Enhances Adaptability – Helps businesses adjust to changing environments.

2. Organising Process (Steps in Organising)

Identification of Work – Listing all tasks needed to achieve goals.
Grouping of Activities – Similar activities are grouped together (e.g., marketing, finance, production).
Assignment of Duties – Work is assigned to employees based on skills.
Establishing Authority and Responsibility – Creating a clear chain of command.
Coordinating Activities – Ensuring different departments work together smoothly.

3. Structure of Organisation

(A) Functional Structure

Groups activities based on functions (e.g., HR, Finance, Production, Marketing).
Example: A company has separate departments for sales, accounting, and manufacturing.

Advantages:
✔ Specialisation improves efficiency.
✔ Reduces duplication of work.
✔ Clear authority and responsibility.

Disadvantages:
✖ Departments may work in silos (lack coordination).
✖ Delays in decision-making due to hierarchy.

Suitability:
✔ Best for large organizations with one product line.

(B) Divisional Structure

Groups activities based on products, regions, or markets.
Example: A company has separate divisions for electronics, clothing, and food.

Advantages:
✔ Focuses on specific product lines.
✔ Quick decision-making within divisions.
✔ Easy expansion and growth.

Disadvantages:
✖ Costly due to duplication of resources.
✖ Risk of divisions competing with each other.

Suitability:
✔ Best for large organizations with multiple product lines.

4. Formal and Informal Organisation

Formal Organisation

A structured system with clear roles and hierarchy.
Example: Company departments and reporting relationships.

Advantages:
✔ Clearly defined roles and authority.
✔ Ensures discipline and accountability.

Disadvantages:
✖ Rigid structure, less flexibility.
✖ Slow decision-making due to hierarchy.

Informal Organisation

A spontaneous network of personal and social relationships among employees.
Example: Office friendships and informal discussions.

Advantages:
✔ Faster communication and decision-making.
✔ Encourages teamwork and creativity.

Disadvantages:
✖ Lack of control and discipline.
✖ May spread rumors and misinformation.

5. Delegation: Concept, Elements, and Importance

Concept of Delegation

Delegation is the process of transferring authority from a superior to a subordinate to perform specific tasks.

Elements of Delegation

Authority – The power to make decisions.
Responsibility – The duty to complete assigned work.
Accountability – Being answerable for the outcome.

Importance of Delegation

Reduces Workload of Managers – Allows them to focus on strategic tasks.
Develops Future Leaders – Prepares employees for higher responsibilities.
Improves Decision-Making – Decisions are made faster at lower levels.
Motivates Employees – Increases job satisfaction by giving responsibility.
Ensures Efficiency – Work is completed more effectively.

6. Decentralisation: Concept and Importance

Concept of Decentralisation

Decentralisation means systematically distributing decision-making authority to lower levels in the organization.

Importance of Decentralisation

Reduces Burden on Top Management – Top managers can focus on strategic planning.
Encourages Decision-Making at Lower Levels – Speeds up operations.
Enhances Flexibility and Adaptability – Departments can quickly respond to local needs.
Motivates Employees – Increases confidence and responsibility.
Promotes Growth – Helps in business expansion by managing different branches independently.

7. Difference Between Delegation and Decentralisation

Basis	Delegation	Decentralisation
Definition	Assigning authority from one person to another.	Systematic delegation of authority throughout the organization.
Scope	Limited (between a manager and subordinate).	Broader (involves multiple levels of management).
Purpose	To reduce workload of a manager.	To empower different levels of management.
Control	Ultimate authority remains with the superior.	Authority is shared with lower levels.

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Unit 6: Staffing

1. Staffing: Concept and Importance

Concept of Staffing

Staffing means finding the right people for the right job at the right time.
It includes hiring, training, and maintaining a workforce to achieve organizational goals.

Importance of Staffing

Ensures Competent Workforce – Helps in hiring skilled employees.
Increases Productivity – Right employees improve efficiency.
Reduces Employee Turnover – Proper hiring and training keep employees satisfied.
Improves Job Satisfaction – Right placement leads to motivation.
Supports Growth and Expansion – A well-trained workforce helps businesses grow.

2. Staffing as a Part of Human Resource Management (HRM)

Concept of HRM

Human Resource Management (HRM) is a specialized function that manages employees from hiring to retirement.

Functions of HRM in Staffing

Recruitment and Selection – Finding and hiring the best candidates.
Training and Development – Enhancing employees' skills.
Performance Appraisal – Evaluating employee performance.
Compensation and Benefits – Managing salaries, incentives, and rewards.
Employee Relations – Ensuring a positive work environment.

3. Staffing Process (Steps in Staffing)

Estimating Manpower Requirements – Finding out how many employees are needed.
Recruitment – Searching for candidates.
Selection – Choosing the right candidate.
Placement and Orientation – Assigning work and introducing employees to the organization.
Training and Development – Improving employees' skills.
Performance Appraisal – Assessing employees' work.
Promotion and Career Planning – Helping employees grow within the company.
Compensation and Benefits – Providing salaries, incentives, and other rewards.

4. Recruitment Process

Meaning of Recruitment

Recruitment is the process of finding and attracting potential employees.

Sources of Recruitment

(A) Internal Sources (Within the Organization)

Promotion – Giving higher positions to existing employees.
Transfers – Moving employees from one department to another.

Merits of Internal Recruitment
✔ Motivates employees.
✔ Saves cost and time.

Demerits of Internal Recruitment
✖ Limited choices.
✖ No new ideas or talent.

(B) External Sources (Outside the Organization)

Direct Recruitment – Hiring directly from job seekers.
Employment Agencies – Using agencies to find employees.
Campus Recruitment – Hiring fresh graduates.
Advertising – Posting job vacancies in newspapers or online.

Merits of External Recruitment
✔ Brings in fresh talent and ideas.
✔ Large number of applicants.

Demerits of External Recruitment
✖ Expensive and time-consuming.
✖ Higher risk of hiring the wrong person.

5. Selection Process

Meaning of Selection

Selection is the process of choosing the best candidate from the pool of applicants.

Steps in the Selection Process

Preliminary Screening – Checking basic qualifications.
Application Form – Collecting candidate details.
Written Test – Assessing knowledge and skills.
Interview – Face-to-face interaction to evaluate personality.
Reference Check – Contacting previous employers for verification.
Medical Examination – Checking the candidate’s health.
Final Selection & Appointment Letter – Offering the job to the selected candidate.

6. Training and Development

Concept of Training and Development

Training: Short-term learning for improving job-related skills.
Development: Long-term learning for overall growth and leadership skills.

Importance of Training

For Employees

✔ Improves skills and confidence.
✔ Increases job satisfaction.

For Organization

✔ Increases efficiency and productivity.
✔ Reduces mistakes and accidents.

7. Methods of Training

(A) On-the-Job Training (Training at the Workplace)

Induction Training – Introducing new employees to the company.
Apprenticeship Training – Learning under an expert (e.g., electricians, plumbers).

(B) Off-the-Job Training (Training Outside the Workplace)

Vestibule Training – Training in a simulated work environment (e.g., pilots using flight simulators).
Internship Training – Practical experience for students in a company.

8. Difference Between Training and Development

Basis	Training	Development
Meaning	Short-term learning for job skills.	Long-term learning for overall growth.
Focus	Improving job performance.	Preparing for future roles.
For Whom?	Workers and employees.	Managers and future leaders.
Example	Learning how to use a machine.	Leadership training for managers.

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Unit 7: Directing

1. Directing: Concept and Importance

Concept of Directing

Directing means guiding, leading, and supervising employees to achieve business goals.
It is a continuous process that ensures employees work efficiently.

Importance of Directing

Initiates Action – Employees start working towards goals.
Ensures Coordination – Aligns individual efforts with organizational objectives.
Motivates Employees – Encourages better performance.
Improves Efficiency – Reduces wastage of time and resources.
Facilitates Adaptability – Helps employees adjust to changes.

2. Elements of Directing

Supervision – Monitoring employees' work.
Motivation – Encouraging employees to perform better.
Leadership – Influencing employees to follow a direction.
Communication – Exchanging information within the organization.

3. Motivation

Concept of Motivation

Motivation is the process of encouraging employees to perform their best by satisfying their needs.

Maslow’s Hierarchy of Needs Theory

Maslow classified human needs into five levels:

Physiological Needs – Basic survival needs (food, water, shelter, salary).
Safety Needs – Job security, health, and safe working conditions.
Social Needs – Friendship, teamwork, and good relationships.
Esteem Needs – Recognition, rewards, and appreciation.
Self-Actualization Needs – Achieving personal growth and potential.

Types of Incentives (Ways to Motivate Employees)

(A) Financial Incentives (Monetary Benefits)

Salary & Wages – Regular payment for work.
Bonus – Extra payment for good performance.
Commission – Extra earnings based on sales.
Profit Sharing – Employees receive a share of company profits.
Stock Options – Employees get company shares at a lower price.

(B) Non-Financial Incentives (Non-Monetary Benefits)

Job Security – Assurance of continued employment.
Recognition – Appreciation of good work.
Career Growth – Promotions and skill development.
Work Environment – Comfortable and positive workplace.
Autonomy – Freedom to make decisions in work.

4. Leadership

Concept of Leadership

Leadership is the ability to influence and guide employees to achieve goals.

Styles of Leadership

(A) Autocratic Leadership (Authoritative)

Leader makes all decisions and expects obedience.
Example: Military, strict companies.

✔ Quick decision-making
✔ Good for emergencies
✖ Employees feel controlled and unmotivated

(B) Democratic Leadership (Participative)

Leader involves employees in decision-making.
Example: Google, modern organizations.

✔ Encourages teamwork and motivation
✔ Better ideas and creativity
✖ Time-consuming process

(C) Laissez-Faire Leadership (Free-Rein)

Leader gives full freedom to employees.
Example: Creative industries, research labs.

✔ Encourages innovation and responsibility
✔ Good for highly skilled workers
✖ Lack of control may lead to inefficiency

5. Communication

Concept of Communication

Communication is the process of sharing ideas and information between people.

Elements of Communication Process

Sender – Person who sends the message.
Message – Information being communicated.
Medium – The way the message is sent (email, call, face-to-face).
Receiver – Person who receives the message.
Feedback – Response from the receiver.

Types of Communication

(A) Formal Communication (Official, structured)

Follows official channels in an organization.
Examples: Emails, reports, official meetings.

✔ Clear and professional.
✔ Record-keeping is easy.
✖ Slow and rigid.

(B) Informal Communication (Unofficial, casual)

Happens naturally among employees.
Example: Friendly conversations, office gossip.

✔ Fast and free-flowing.
✔ Creates good relationships.
✖ Can spread rumors and misunderstandings.

6. Barriers to Effective Communication

Language Barrier – Use of difficult words or different languages.
Psychological Barrier – Stress, fear, or emotions affecting communication.
Organizational Barrier – Too many levels in the hierarchy delay messages.
Technical Barrier – Poor internet, faulty phones, or unclear handwriting.
Cultural Barrier – Different backgrounds and beliefs leading to misunderstandings.

Ways to Overcome Communication Barriers

✔ Use simple and clear language.
✔ Listen actively and give feedback.
✔ Use proper communication channels (email, calls, meetings).
✔ Encourage open and transparent communication.
✔ Train employees in effective communication skills.

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Unit 8: Controlling

1. Controlling: Concept and Importance

Concept of Controlling

Controlling is the process of monitoring performance and taking corrective actions to ensure that organizational goals are achieved.
It ensures that actual performance matches the planned performance.

Importance of Controlling

Achieves Organizational Goals – Ensures that targets are met.
Improves Efficiency – Helps reduce waste and optimize resources.
Detects Errors – Identifies mistakes early and corrects them.
Ensures Discipline – Maintains order and accountability.
Facilitates Coordination – Aligns individual and team efforts with organizational goals.

2. Relationship Between Planning and Controlling

Planning and Controlling are interdependent.
Planning sets goals, and Controlling ensures goals are achieved.
Without Planning, Controlling is meaningless, as there are no set objectives.
Without Controlling, Planning is ineffective, as there is no way to track progress.

✔ Planning is the first function of management (deciding what to do).
✔ Controlling is the last function of management (ensuring it is done correctly).

Example: If a company plans to produce 1,000 units of a product but produces only 800, controlling helps find reasons for the shortfall and take corrective action.

3. Steps in the Process of Controlling

Setting Performance Standards – Defining what is expected.
- Example: Target of producing 1,000 units per month.
Measuring Actual Performance – Checking what has been achieved.
- Example: Measuring actual production of 800 units.
Comparing Performance with Standards – Identifying deviations.
- Example: Difference of 200 units between target and actual production.
Finding the Causes of Deviation – Identifying reasons for not meeting the target.
- Example: Machine breakdown or shortage of raw materials.
Taking Corrective Action – Fixing the issue to meet future targets.
- Example: Repairing machines or arranging more raw materials.

Conclusion

✔ Controlling helps organizations stay on track and achieve their objectives.
✔ It ensures efficient use of resources and better performance.

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Unit 9: Financial Management

1. Financial Management: Concept, Role, and Objectives

Concept of Financial Management

Financial Management is the process of planning, organizing, directing, and controlling financial resources to achieve business goals.
It focuses on making financial decisions to ensure efficient use of funds.

Role of Financial Management in an Organization

Ensures Availability of Funds – Arranges funds when needed.
Controls Financial Activities – Monitors spending and investments.
Maximizes Profitability – Ensures funds are used efficiently.
Improves Financial Stability – Helps maintain a healthy cash flow.
Ensures Growth and Expansion – Supports long-term business success.

Objectives of Financial Management

✔ Profit Maximization – Increasing company earnings.
✔ Wealth Maximization – Increasing shareholder value.
✔ Efficient Fund Utilization – Avoiding wastage of resources.
✔ Financial Security – Ensuring enough funds for smooth operations.

2. Financial Decisions

Types of Financial Decisions

(A) Investment Decision

Deciding where to invest money to earn profits.
Example: Investing in a new factory or machinery.
Factors Affecting Investment Decisions:
✔ Return on Investment (ROI)
✔ Risks involved
✔ Cash flow

(B) Financing Decision

Deciding how to raise money for the business.
Example: Taking a bank loan or issuing shares.
Factors Affecting Financing Decisions:
✔ Cost of raising funds
✔ Risks associated with debt
✔ Financial stability of the company

(C) Dividend Decision

Deciding how much profit to distribute to shareholders as dividends and how much to reinvest in the business.
Factors Affecting Dividend Decisions:
✔ Profits earned
✔ Growth opportunities
✔ Shareholder expectations

3. Financial Planning

Concept of Financial Planning

Financial Planning is the process of estimating financial needs and ensuring funds are available when required.

Importance of Financial Planning

Ensures Financial Stability – Prevents cash shortages.
Helps in Fund Allocation – Ensures money is used efficiently.
Minimizes Business Risks – Prepares for uncertainties.
Supports Business Growth – Helps in expansion and investment.

4. Capital Structure

Concept of Capital Structure

Capital Structure refers to the mix of debt (loans) and equity (own funds) used to finance business operations.

Factors Affecting Capital Structure

✔ Business Risk – More risk, less debt.
✔ Profitability – High profits allow more equity.
✔ Market Conditions – Economic stability affects financing choices.
✔ Cost of Debt and Equity – Cheaper sources are preferred.

5. Fixed and Working Capital

Concept of Fixed Capital

Fixed Capital is used for long-term assets like buildings and machinery.
Example: Buying land for a new factory.

Factors Affecting Fixed Capital Requirements

✔ Nature of Business
✔ Scale of Operations
✔ Technology Used

Concept of Working Capital

Working Capital is used for day-to-day expenses like salaries and raw materials.
Formula: Working Capital = Current Assets - Current Liabilities

Factors Affecting Working Capital Requirements

✔ Business Type – Manufacturing needs more working capital.
✔ Credit Terms – More credit given to customers, more working capital needed.
✔ Inventory Management – More stock requires more working capital.

Conclusion

✔ Financial Management ensures proper fund utilization.
✔ Financial decisions help in investment, funding, and profit distribution.
✔ Financial planning ensures smooth operations and growth.

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Unit 10: Financial Markets

1. Financial Markets: Concept

A Financial Market is a place where buyers and sellers trade financial assets like shares, bonds, and debentures.
It helps in raising capital, investing money, and managing risks.

2. Money Market: Concept

The Money Market deals with short-term financial instruments (maturity period less than one year).
Examples: Treasury Bills, Commercial Papers, Certificates of Deposit.
It helps businesses and the government manage short-term liquidity needs.

3. Capital Market and its Types

Concept of Capital Market

The Capital Market deals with long-term investments (maturity period more than one year).
It helps in raising money for businesses and governments.

Types of Capital Market

(A) Primary Market

Where companies issue new shares to raise funds.
Example: IPO (Initial Public Offering) – when a company sells shares to the public for the first time.

(B) Secondary Market

Where already issued shares are traded among investors.
Example: Buying and selling shares on the stock exchange.

Differences Between Capital Market and Money Market

Capital Market	Money Market
Deals with long-term funds	Deals with short-term funds
Investment in shares, bonds	Investment in T-bills, CPs, CDs
Higher risk, higher returns	Lower risk, lower returns

Differences Between Primary and Secondary Market

Primary Market	Secondary Market
New securities are issued	Existing securities are traded
Company gets money	Investors trade among themselves
No fixed location (done through banks & investment firms)	Conducted at stock exchanges like NSE & BSE

4. Stock Exchange: Functions and Trading Procedure

Meaning of Stock Exchange

A Stock Exchange is a platform where securities (shares, bonds, debentures) are bought and sold.
Examples: NSE (National Stock Exchange), BSE (Bombay Stock Exchange).

Functions of Stock Exchange

✔ Provides Liquidity – Investors can buy/sell shares anytime.
✔ Determines Share Prices – Prices change based on demand and supply.
✔ Encourages Investment – Attracts people to invest in businesses.
✔ Ensures Safety – SEBI regulates stock exchanges for fair trading.
✔ Helps in Economic Growth – Companies raise money for expansion.

Trading Procedure in Stock Exchange

Placing the Order – Investor contacts a broker to buy/sell shares.
Executing the Order – Broker places the order on the stock exchange.
Matching the Order – System finds a buyer/seller.
Settlement of Transaction – Shares are transferred, and payment is made.

Meaning of Depository Services & Demat Account

Depository Services: Secure storage of shares electronically.
Demat Account: An account that holds shares in digital form (just like a bank account holds money).

5. SEBI (Securities and Exchange Board of India)

Objectives of SEBI

✔ Protect investor interests
✔ Ensure fair trading in stock markets
✔ Prevent fraudulent activities
✔ Promote transparency in trading

Functions of SEBI

✔ Regulation – Monitors stock exchanges, brokers, and mutual funds.
✔ Protection – Prevents unfair practices to protect investors.
✔ Supervision – Ensures companies provide accurate financial details.
✔ Development – Promotes training and education for investors.

Conclusion

✔ Financial Markets help in mobilizing funds.
✔ Money Market is for short-term investments; Capital Market is for long-term investments.
✔ Stock Exchange ensures liquidity and price determination of shares.
✔ SEBI protects investors and ensures fair trading.

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Unit 11: Marketing

1. Marketing: Concept, Functions, and Philosophies

Concept of Marketing

Marketing refers to all activities involved in identifying customer needs and satisfying them with goods and services.
It focuses on creating value for customers and building strong relationships.

Features of Marketing

✔ Customer-Oriented – Focuses on customer needs.
✔ Exchange Process – Involves buying and selling.
✔ Continuous Process – Marketing never stops.
✔ Dynamic – Adapts to changes in market trends.

Functions of Marketing

Marketing Research – Understanding customer needs.
Product Planning & Development – Designing the right product.
Branding & Packaging – Giving identity to a product.
Pricing – Deciding the right price.
Promotion – Advertising and selling the product.
Physical Distribution – Delivering products to customers.

Marketing Philosophies

Production Concept – Focus on mass production.
Product Concept – Focus on product quality.
Selling Concept – Focus on aggressive selling.
Marketing Concept – Focus on customer needs.
Societal Concept – Focus on social welfare along with profit.

2. Marketing Mix: Concept and Elements

Concept of Marketing Mix

Marketing Mix refers to the combination of four elements (4Ps) used by businesses to promote and sell products.

Elements of Marketing Mix (4Ps)

✔ Product – What to sell (features, quality, branding).
✔ Price – At what price to sell.
✔ Place – Where to sell (distribution channels).
✔ Promotion – How to advertise and sell the product.

3. Product: Branding, Labelling, and Packaging

Concept of Product

A product is anything that satisfies customer needs (goods or services).

Branding

✔ Giving a unique name, symbol, or logo to a product.
✔ Example: Nike’s “Swoosh” logo, Apple’s half-bitten apple.
✔ Importance: Builds recognition and trust.

Labelling

✔ Provides information about the product (ingredients, usage, expiry date).
✔ Example: A shampoo bottle label with product details.
✔ Importance: Helps in identifying products and ensuring safety.

Packaging

✔ The covering of a product to protect and promote it.
✔ Example: Chips in an airtight packet.
✔ Importance: Attracts customers and protects the product.

4. Price: Concept and Factors Determining Price

Concept of Price

Price is the amount of money a customer pays to buy a product.

Factors Determining Price

✔ Cost of Production – Higher cost, higher price.
✔ Demand for Product – High demand, higher price.
✔ Competitor’s Price – Price set according to rivals.
✔ Government Regulations – Some products have price controls.

5. Physical Distribution: Concept, Components, and Channels

Concept of Physical Distribution

The process of moving goods from the manufacturer to the consumer.

Components of Physical Distribution

✔ Transportation – Moving goods from factories to markets.
✔ Warehousing – Storing goods safely.
✔ Inventory Management – Keeping stock of products.
✔ Order Processing – Handling customer orders.

Channels of Distribution

✔ Direct Channel – Manufacturer → Consumer (Example: Online stores).
✔ Indirect Channel – Manufacturer → Wholesaler → Retailer → Consumer (Example: Supermarkets).

6. Promotion: Concept and Elements

Concept of Promotion

Promotion refers to activities used to inform, persuade, and attract customers.

Elements of Promotion Mix

Advertising – Paid promotion (TV, newspapers, social media).
Personal Selling – Direct selling by a salesperson (door-to-door sales).
Sales Promotion – Discounts, coupons, free samples.
Public Relations – Building a good public image through media and social work.

Importance of Promotion

✔ Increases awareness about products.
✔ Helps businesses attract customers.
✔ Boosts sales and revenue.

Conclusion

✔ Marketing focuses on customer needs and satisfaction.
✔ The Marketing Mix (4Ps) helps businesses plan marketing strategies.
✔ Promotion plays a crucial role in increasing sales.

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Unit 12: Consumer Protection (Class 12 Business Studies)

1. Consumer Protection: Concept and Importance

Concept of Consumer Protection

Consumer protection refers to the measures taken to safeguard consumers from unfair trade practices, defective goods, and poor services.
It ensures that consumers get fair treatment and compensation in case of fraud or exploitation.

Importance of Consumer Protection

✔ Prevents Exploitation – Protects consumers from fraud, overpricing, and low-quality products.
✔ Ensures Safety – Bans harmful products and misleading advertisements.
✔ Creates Consumer Awareness – Educates consumers about their rights.
✔ Promotes Business Ethics – Encourages businesses to follow fair practices.
✔ Boosts Consumer Confidence – Consumers feel secure while purchasing goods and services.

2. Scope of the Consumer Protection Act, 2019

Consumer Protection Act, 2019 is a law that protects the rights of consumers.
It applies to all goods and services, whether online or offline.
It provides a mechanism for consumers to file complaints and get compensation if their rights are violated.

3. Meaning of Consumer (Consumer Protection Act, 2019)

A consumer is a person who buys goods or services for personal use and not for resale or commercial purposes.
The law protects consumers from unfair trade practices and provides them with rights and remedies.

4. Rights and Responsibilities of Consumers

Consumer Rights (6 Rights)

Right to Safety – Protection against dangerous goods and services.
Right to be Informed – Correct information about products and services.
Right to Choose – Freedom to select from different products.
Right to be Heard – Consumers’ complaints should be considered.
Right to Seek Redressal – Compensation for defective goods or unfair services.
Right to Consumer Education – Awareness of consumer rights and responsibilities.

Consumer Responsibilities

✔ Be aware of products and services before purchasing.
✔ Read labels and expiry dates before buying.
✔ Demand a bill or receipt for purchases.
✔ Report fraudulent activities to authorities.
✔ Do not fall for misleading advertisements.

5. Who Can File a Complaint and Against Whom?

Who Can File a Complaint?

✔ Any consumer.
✔ A registered consumer organization.
✔ The Central or State Government.
✔ Legal heirs or representatives of a deceased consumer.

Against Whom Can a Complaint Be Filed?

✔ Manufacturers and sellers of defective goods.
✔ Service providers offering poor quality services.
✔ Traders engaging in unfair trade practices.

6. Redressal Machinery Under the Consumer Protection Act, 2019

There are three levels of consumer courts for handling complaints:

District Commission (For claims up to ₹1 crore)
- Handles complaints at the district level.
State Commission (For claims between ₹1 crore and ₹10 crore)
- Appeals against District Commission decisions.
National Commission (For claims above ₹10 crore)
- The highest consumer court in India.

7. Remedies Available to Consumers

✔ Refund or Replacement – Consumer can get money back or a new product.
✔ Compensation – For any loss or injury suffered.
✔ Product Repair – Free repair of defective goods.
✔ Discontinue Unfair Practices – Order to stop misleading ads or unfair trade.
✔ Penalty on Seller – Fine or punishment for fraudulent businesses.

8. Consumer Awareness: Role of Consumer Organizations & NGOs

Consumer Organizations & NGOs Help By:

✔ Educating consumers about their rights.
✔ Filing complaints on behalf of consumers.
✔ Conducting awareness campaigns.
✔ Testing and verifying product quality.
✔ Pressuring the government for better consumer laws.

Examples:
🔹 Consumer Guidance Society of India (CGSI)
🔹 Common Cause
🔹 Consumer Voice

Conclusion

✔ Consumer Protection Act, 2019 helps prevent unfair trade practices.
✔ Consumers should be aware of their rights and responsibilities.
✔ There are legal ways to file complaints and get justice.
✔ Consumer organizations and NGOs play a major role in consumer protection.

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