CBSE Class 12

Detailed, Step-by-Step NCERT Solutions for 11 Business Studies Chapter 9 Small Business and Entrepreneurship Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Small Business and Entrepreneurship NCERT Solutions for Class 11 Business Studies Chapter 9

Small Business and Entrepreneurship Questions and Answers Class 11 Business Studies Chapter 9

Question 1.
What are the different parameters used to measure the size of the business?
Answer:
Several parameters can be used to measure the size of business units. These include the number of persons employed in business, capital invested in the business, the volume of output or value of the output of the business, and power consumed for business activities, appropriate parameters may be used depending on the need and advantages or limitations of various measures.

Question 2.
What is the definition used by the Government of India for Small Scale Industries?
Answer:
The definition used by the Government of India to describe small industries is based on the investment in plant and machinery. This measure seeks to keep in view the socio-economic environment in India where capital is scarce and labour is abundant.

One more point to note is that a definition exists only for small and tiny units but not for large and medium units. Medium and large-sized enterprises are not defined. Anything that does not fall under the definition of small can be large or medium. Taking capital invested as the basis, the small business unit in India can be one of the following categories :

(1) A small-scale industrial undertaking is defined as one in which the investment in fixed assets of plant and machinery does not exceed rupees one crore. However, in case of small industries in the field of export promotion and modemalization, investment limits in plant and machinery is fixed as rupees five crores.

Question 3.
How would you differentiate between an ancillary unit and a tiny unit?
Answer:
Ancillary Unit:

1. An ancillary unit is a unit which supplies not less than 50% of its production to the parent unit.
2. Investment limit in such a unit is one crore.
3. Parent unit assists the ancillary unit by providing technical and financial help.

Tiny Unit:

1. A tiny unit is a business enterprise whose investment in plant and machinery is not more than Rs.25 lakh.
2. The investment limit is Rs.25 lakh in this type of unit.
3. No such assistance is there.

Question 4.
State the features of cottage industries.
Answer:
Cottage industries are also known as rural industries or traditional industries. They are not defined by capital investment criteria as in the case of other small scale industries. However, cottage industries are characterised by certain features as follows :

• These are organised by individuals, with private resources.
• It normally use family labour and locally available talent.
• The equipment used is simple.
• Capital investment is small.
• It produce simple products, normally in their own premises.
• It produce the goods using indigenous technology.

Long Answer Questions

Question 1.
How do small scale industries contribute to the socio economic development of India?
Answer:
Small scale industries in India enjoy a distinct position in view of their contribution to the soc io-economic development ‘of the country. The following points highlight their contribution.
(i) Small industries in India account for 35 percent of the industrial value added and 45 percent of the total exports (direct and indirect exports) from India.

(ii) Small industries are the second largest employers of human resources, after agriculture. They generate more number of employment opportunities per unit of capital invested compared to large industries. They are, therefore, considered to be more labour intensive and less capital intensive. This is a boon for a labour surplus country like India.

(iii) Small industries in our country supply an enormous variety of products which include mass consumption goods, readymade garments. hosiery\goods, stationery items, soaps and detergents, domestic, utensils, leather, plastic and rubber goods processed foods and vegetables, wood and steel furniture, paints, varnishes, safety matches, etc.

Among the sophisticated items manufactured are electric and electronic goods like televisions, calculators, electro-medical equipment, electronic teaching aids like overhead projectors, air conditioning equipment, drugs and pharmaceuticals, agricultural tools and equipment and several other engineering products. A special mention should be made of hand looms, handicrafts and other products from traditional village industries in view of their export value.

(iv) The contribution of small industries to the balanced regional development of our country is noteworthy. Small industries with produce simple products using simple technologies and depend on locally available resources both material and labour can be set up anywhere in the country.

Since they can be widely spread without any locational constraints, the benefits of industrialisation can be reaped by every region. They thus, contribute significantly to the balanced development of the country.

(v) Small industries provide ample opportunity for enterpreneurship, The latent skills and talents of people can be channelled into business ideas which can be converted into reality with little capital investment and almost nil formalities to start a small business.

(vi) Small industries also enjoy the advantage of low cost of production. Locally available resources are less expensive. Establishment and running costs of industries are on the lower side because of law overhead expenses. Infect; the low cost of production which small industries enjoy is their competitive strength.

(vi) Due to the small size of the organisations, quick and timely decisions can be taken without consulting many people as it happens in large sized organizations. New business opportunities can be captured at the right time.

(viii) Small industries arebest suited for customised production, i.e. designing the product as per the tastes/preferences/needs of individual customers, say for example tailor-made shirt or trouser. The recent trend in the market is to go in for customised production of even non-traditional products such as computers and other products. They can produce according to the needs of the customers as they use simple and flexible production techniques.

(ix) Last but not the least, small industries have inherent strength of adaptability and a personal touch and therefore maintain good personal relations with both customise and employees. The govt. doesYiot have to interfere in the functioning of a small scale unit.

Due to the small size of the organization quick and timely decision can be taken without consulting many people as in large sized organisations. New business opportunities can be captured at the right time, thus providing healthy competition to big business which is good for the economy.

Question 2.
Describe the role of small businesses in rural India.
Answer:
Small-scale enterprises provide numerous benefits in rural area. The role of small business in rural India is explained in the following points:
(i) Non – farm Employment:
Traditionally, rural households in India were exclusively engaged in agriculture. But now rural households have varied and multiple sources of income and participate in a wide range of non – agricultural activities such as wage employment and self employment in commerce, manufacturing and services, along with the traditional rural activities of forming and agricultural labour. This can be largely attributed to the setting up of agro-based rural small industries.

(ii) Employment for Artisans:
Cottage and rural industries play an important role in providing employment opportunities in the rural areas, especially for the traditional artisans and the weaker sections of society.

(iii) Prevention of Migration:
Development ofrural and village industries can also prevent migration of rural population to urban areas in search of employment.

(iv) Poverty Alleviation:
Village and small industries are significant as producers of consumer goods and absorbers of surplus labour, thereby addressing the problems of poverty and unemployment. Promotion of small scale industries and rural industrialization has been considered by the Government of India as a powerful instrument for realizing the twin objective; of accelerated industrial growth and creating additional productive employment potential in rural and backward areas ’.

(v) Socio-economic Aspects:
These industries contribute to other socio-economic aspects, such as reduction inequalities, dispersed development of other sectors of the economy.

Question 3.
Discuss the problems faced by small-scale industries.
Answer:
Problems of Small Scale Business – Small scale industries are at a distinct disadvantage as compared to large scale industries. The scale of operations, availability of finance, ability to use modern technology, procurement of raw materials are some of these areas.

This gives rise to several problems. Most of these problems can be attributed to the small size of their business, which prevents them from taking advantage, which acquire to large business organisations. However, the problems faced are not similar to all the categories of small businesses.

For instance, in the case of small ancillary units, the major problems include delayed payments, the uncertainty of getting orders from the parent units and frequent changes in production processes. The problems of traditional small-scale units include remote location with less developed infrastructural facilities, lack of managerial talent, poor quality, traditional technology and inadequate availability of finance.

The problems of exporting small-scale units include lack of adequate data on foreign markets, lack of market intelligence, exchange rate fluctuations, quality standards, and pre-shipment finance.

In general, the small businesses are faced with the following problems:

(i) Finance – One of the severe problems faced by SSIs is the non-availability of adequate finance to carry out its operations. Generally, a small business begins with a small capital base. Many of the units in the small sector lack the creditworthiness required to raise as capital from the capital markets.

As a result, they heavily depend on local financial resources and are frequently the victims of exploitation by money lenders. These units frequently suffer from a lack of adequate working capital, either due to delayed payment of dues to them or locking up of their capital in unsold stocks. Banks also do not lend money without adequate collateral security or guarantees and margin money, which many of them are not in a position to provide.

(ii) Raw Materials – Another major problem of small businesses is the procurement of raw materials, If the required materials are not available, they have to compromise on the quality or have to pay a high price to get good quality materials. Their bargaining power is relatively low due to the small number of purchases made by them.

Also, they cannot afford to take the risk of buying in bulk as they have no facilities to store the materials. Because of general scarcity of metals, chemicals and extractive raw materials in the economy, the small scale sector suffers the most. This also means a waste of production capacity for the economy and loss of further units.

(iii) Managerial Skills – Small business is generally promoted and operated by a single person, who may not possess all the managerial skills required to run the business. Many of the small business entrepreneurs possess sound technical knowledge but are less successful in marketing the output.

Moreover, they may not find enough time to take care of all functional activities. At the same time they are not in a position to afford professional managers.

(iv) Labours – Small business firms cannot afford to pay higher salaries to the employees, which affects employee willingness to work hard and produce more. Thus, productivity per employee is relatively low. Because of lower remuneration offered, attracting talented people is a major problem in small business organisations.

Unskilled workers join for low’ remuneration but training them is a time consuming process. Also, unlike large organisations, division of labour cannot be practised, which results in lack of specialisation and concentration.

(v) Marketing – Marketing is one of the most important activ ities as it generates revenue. Effective marketing of good’ requires a thorough understanding of the customer’s needs and requirements. In most cases, marketing is a weaker area of small organisations.

These organisations have, therefore, to depend excessively on middle men, who at times exploit them by paying low price and delayed payments. Further, direct marketing may not be feasible for small business firms as they lack the necessary infrastructure.

(vi) Quality – Many small business organizations do not adhere to desired standards of quality. Instead they concentrate on cutting the cost and keeping the prices low. They do not have adequate resources to invest in quality research and maintain the standards of the industry, non do they have the expertise to upgrade technology. In Tact maintaining quality is their weakest point, when competing in global markets.

(vii) Capacity utilisation – Due to lack of marketing skills or lack of demand, many sn sail business Finns have to operate below full capacity due to which their operating costs tend to increase. Gradually this leads to sickness and closure of the business.

(viii) Technology – Use of outdated technology is often stated as serious lacunae in the case of small industries, resulting in low productivity and uneconomical production.

(ix) Sickness – Prevalence of sickness in small industries has become a point of worry to both the policy makers and the entrepreneurs. The causes of sickness are both internal and external. Internal problems include lack of skilled and trained labour and managerial and marketing skills. Some of the external problems include delayed, payment, shortage of working capital, inadequate loans and lack of demand for their products.

(x) Global Competition – Apart from the problems stated above small businesses are not without fears, especially in the present context of liberalisation, privatization and globalisation (LPG) policies being followed by several countries across the world. Remember, India too has taken the LPG path since 1991. The areas where small businesses feel threatened with the on slaight of global competition.

(a) Competition is not only from medium and large industries but also from multinational companies which are giants in terms of their size and business volumes. Opening up of trade results in cutthroat competition for small-scale units.

(b) It is difficult to withstand the quality standards, technological skills, financial creditworthiness, managerial and marketing capabilities of large industries and multinationals.

(c) There is limited access to markets of developed countries due to the stringent requirements of quality certification like 1509000.

Question 4.
What measures has the government taken to solve the problem of finance and marketing in the small scale sector?
Answer:
The contribution of small-scale industries is remarkable. Thus, Government has provided the following institutional support to solve the problem of finance and marketing in the small scale sector:
1. National Bank for Agriculture and Rural Development (NABARD):
NABARD was setup in 1982 to promote integrated rural development. Since then, it has been adopting a multi-pronged, multi-purpose strategy for the promotion of rural business enterprises in the country.

Apart from agriculture, it supports small industries, cottage and village industries, and rural artisans using credit and non-credit approaches. It offers counseling and consultancy services and organises training and development programmes for rural entrepreneurs.

2. The Rural Small Business Development Centre (RSBDC):
It is the first of its kind set up by the world association for small and medium enterprises and is sponsored by NABARD. It works for the benefit of socially and economically disadvantaged individuals and groups. It aims at providing management and technical support to current and prospective micro and small entrepreneurs in rural areas.

Since its inception, RSBDC has organised several programmes on rural entrepreneurship, skill upgradation workshops, mobile clinics and trainers training programmes, awareness and counselling camps in various villages of Noida, Greater Noida and Ghaziabad.

Through these programmes it covers a large number of rural unemployed youth and women in several trades, which includes food processing, soft toys making, ready-made garments, candle making, incense stick making, two-wheeler repairing and servicing, vermicomposting, and non-conventional building materials.

3. National Small Industries Corporation (NSIC):
This was set up ini955 with a view to promote, aid, and foster the growth of small business Units in the country. This focuses on the commercial aspects of these functions.

• Supply indigenous and imported machines on easy hire-purchase terms.
• Procure, supply and distribute indigenous and imported raw materials.
• Export the products of small business units and develop export worthiness.
• Mentoring and advisory services.
• Serve as technology business incubators.
• Creating awareness on technological up-gradation.
• Developing software technology parks and technology transfer centres.

4. Small Industries Development Bank of India (SIDBI):

• Set up as an apex bank to provide direct/indirect financial assistance under different schemes, to meet credit needs of small business organisations.
• To coordinate the functions of other institutions in similar activities. Thus so far, we have learnt about the various institutions operating at the central level and state level in support of the small industries.

5. The National Commission for Enterprises in the Unorganised Sector (NCEUS):
The NCEUS was constituted in September 2004, with the following objectives:

• To recommend measures considered necessary for improving the productivity of small enterprises in the informal sector.
• To generate more employment opportunities on a sustainable basis, particularly in the rural areas.
• To enhance the competitiveness of the sector in the emerging global environment.
• To develop linkages of the sector with other institutions in the areas of credit, raw materials, infrastructure, technology up-gradation, marketing and formulation of suitable arrangements for skill development.

The commission has identified the following issues for detailed consideration:

• Growth poles for the informal sector in the form of clusters/hubs, in order to get external economic aid.
• Potential for public-private partnerships in imparting the skills required by the informal sector.
• Provision of micro-finance and related services to the informal sector.
• Providing social security for the workers in the informal sector.

6. Rural and Women Entrepreneurship Development (RWED):
The Rural and Women Entrepreneurship Development programme aims at promoting a conducive business environment and at building institutional and human capacities that will encourage and support the entrepreneurial initiatives of rural people and women.

RWE provides the following services:

• Creating a business environment that encourages initiatives of rural and women entrepreneurs.
• Enhancing the human and institutional capacities required to foster entrepreneurial dynamism and enhance productivity.
• Providing training manuals for women entrepreneurs and training them.
• Rendering any other advisory services.

7. World Association for Small and Medium Enterprises (WASME):
It is the only International Non- Governmental Organisation of micro, small and medium enterprises based in India, which set up an International Committee for Rural Industrialisation. Its aim is to develop an action plan model for the sustained growth of rural enterprises. Apart from these, there are several schemes to promote the non-farm sector, mostly initiated by the Government of India.

For instance, there are schemes for entrepreneurship through subsidised loans like Integrated Rural Development Programme (IRDP), Prime Minister Rojgar Yojana (PMRY), schemes to provide skills like Training of Rural Youth for Self Employment (TRYSEM), and schemes to strengthen the gender component like Development of Women and Children in Rural Areas (DWCRA).

There are schemes to provide wage employment like Jawahar Rojgar Yojana (JRY), food for work etc., on rural works programmes to achieve the twin objectives of creation of rural infrastructure and generation of additional income for the rural poor, particular during the lean agricultural season. Last, but not least, there are schemes for specific groups of industries such as khadi, handlooms and handicrafts.

8. Scheme of Fund for Re-generation of Traditional Industries (SFURTI):
To make the traditional industries more productive and competitive and to facilitate their sustainable development, the Central Government set up this fund with Rs. 100 crores allocation to begin within the year 2005. This has to be implemented by the Ministry of Agro and Rural Industries in collaboration with State Governments.

The main objectives of the scheme are as follows:

• To develop clusters of traditional industries in various parts of the country.
• To build innovative and traditional skills, improve technologies and encourage public-private partnerships., develop market intelligence etc., to make them competitive. pro-Stable and sustainable.
• To create sustained employment opportunities in traditional industries.

9. The District Industries Centers (DICs):
The District Industries Centers Programme was launched on 1, May 1978, with a view to providing an integrated administrative framework at the district level, which would look at the problems of industrialization in the district, in a composite manner.

In other words District Industries Centers is the institution at the district level which provides all the services and support facilities to the entrepreneurs for setting up small and village industries. Identification of suitable schemes; preparation of feasibility reports, arranging for credit, machinery and equipment, provision of raw materials and other extension services are the main activities undertaken by these centers.

Broadly DICs are trying to bring change in the attitude of the rural entrepreneurs and all other connected with economic development in the rural areas.

Even within the narrow spectrum, an attempt is being made to look at some of the neglected factors such as the rural artisan, the skilled craftsman and the handloom operator and to tune up these activities with the general process of rural development being taken up through other national programmes. The DIC is thus emerging as the focal point for economic and industrial growth at the district level.

Question 5.
What are the incentives provided by the Government for industries in backward and hilly areas?
Answer:
Since independence, industrial development in India has been geographically uneven and non-equal. Some parts of the country have become highly developed while others have remained backward. Therefore, the government provide various incentives to the industries set up in rural, backward and hilly areas which are as follows :

Incentives – Special emphasis on the industrial development of backward, tribal and hilly areas has been the concern of the Government of India expressed in all the Five Year Plans and Industrial Policy statements. Some parts of the country have become highly developed while others have remainder backward.

Realising that backward areas development is a long-term process, several committees were appointed to identify the criteria for identifying backward areas and also to suggest schemes to take up the Herculean task of balanced regional development.

The implementation of the integrated rural development programme is one such attempt made by the government to develop backward areas. The rural industries project programme initiated by the Government of India was meant to develop small business units in selected rural areas. Though the backward area development programmes varied from state to state, they cumulatively represented a significant package of incentives to attract industries in backward areas.

Some of the common incentives offered are discussed as below :

Land – Every state offers developed plots for setting up of industries, file terms and conditions may vary. Some states don’t charge rent in the initial years, while some allow payment in installments. Providing financial assistance on concessional rates for the purchase of and for units located in specified backward areas.

Power – Power is supplied at a concessional rate of 50 percent, while some states exempt such units from payment in the initial years. Creating electricity facilities in backward areas.

Water-Water is supplied on a no-profit, no-loss basis or with 50 percent concession or exemption from water charges for a period of 5 years.

Sales Tax – In all union territories, industries are exempted from sales tax, while some states extend the exemption for 5 years period.

Octroi – Most states have abolished octroi to promote rural and hilly area industries.

Raw materials – Units located in backward areas get preferential treatment in the matter of allotment of scarce raw materials like cement, iron and steel etc.

Finance – Subsidy of 10-15 percent is given for building capital assets. Loans are also offered at concessional rates.
Industrial estates – Some states encourage setting up of industrial estates in backward areas.

Tax holiday – Exemption from paying taxes for 5 or 10 years is given to industries established in backward, hilly and tribal areas. Special tax concessions provided to industries in backward areas.

To sum up, it may be stated that the small business sector in India is getting the support of government through various institutions in different forms for different purposes.

Despite special attention being given to backward areas, it is observed that imbalances in development are still there. There is a need to develop infrastructural facilities in these areas,as no amount of subsidies or concessions can overcome the natural handicaps caused by a lack of such facilities.

The Future – The present era is the regime of the World Trade Organisation (WTO), in which the rules of trade are subject to frequent changes as per global expectations. As a founder member of WTO, India too has committed itself to the policy framework of WTO.

As a result, small business is also moving away from the pre-liberalization era of protection. With the Indian economy getting integrated with the global economy, it is inevitable for small businesses to gear up their capabilities to explore, penetrate and develop new markets.

They have to steadily reorient themselves to face the challenges posed by increased competition, domestically and internationally too. With their dynamism, flexibility and innovative entrepreneurial spirit, small businesses have to adapt themselves to thei fast-changing needs of the market-driven economy. The government should reorient its assistance to the small business sector by acting as a facilitator and promoter and not as a regulator.

New strategies have to be evolved to foster a partnership between large and small industries, adopt cluster approach, develop creative marketing, improve technological skills by upgradation, building export competitiveness by identifying the core competencies of the small businesses.

In fact small business sector should view globalisation as an opportunity for its active participation as suppliers of specialized components and parts. If small businesses are to maintain their market share and healthy growth, they have to create a level-playing field for themselves.

The long-term competitive position for the small businesses will depend on how well they learn to manage, adopt and improve their competitive strength. In short the mantra of success for small businesses in this modern era has to be ‘think global, act local.’

Detailed, Step-by-Step NCERT Solutions for 11 Business Studies Chapter 5 Emerging Modes of Business Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Emerging Modes of Business NCERT Solutions for Class 11 Business Studies Chapter 5

Emerging Modes of Business Questions and Answers Class 11 Business Studies Chapter 5

Tick mark (✓) the most appropriate answer to the following questions :

Question 1.
E-commerce does not include
(a) A business’s interactions with its suppliers.
(b) A business’s interactions with the customers.
(c) Interactions among the various departments within the business.
(d) Interactions among the geographically dispersed units of the business.
Answer:
(c) Interactions among the various departments within the business.

Question 2.
Outsourcing ………….
(a) Restricts only to the contracting out of Information Technology Enabled Services (ITES).
(b) Restricts only to contracting out of non-core business processes.
(c) Includes contracting out of manufacturing and R&D as well as service processes – both core and non-core – but rescticts only to domestic territory.
(d) Includes off-shoring.
Answer:
(b) Restricts only to contracting out of non-core business processes.

Question 3.
The payment mechanism typical to e-business
(a) Cash on Delivery (COD)
(b) Cheques
(c) Credit and Debit cards
(d) e-cash
Answer:
(d) e-cash

Question 4.
A call centre handies
(a) Only in-bound voice based business
(b) Only out-bound voice based business
(c) Both voice based and non-voice based business
(d) Both customer facing and back-end business
Answer:
(a) Only in-bound voice based business

Question 5.
It is not an application of e-business
(a) Online bidding
(b) Online procurement
(c) Online trading
(d) Contract R&D
Answer:
(d) Contract R&D

Short Answer Questions

Question 1.
State any three differences between e-business and traditional business.
Answer:
e-Business and Traditional Business – e-business may be defined as the conduct of industry, trade and commerce using the computer networks. It includes all types of business functions such as production, finance, marketing and personite administration as well as managerial activities like planning, organizing and controlling can be carried out over computer networks.

A firm’s e-transactions and network can be visualised as extending into three directions i.e. B2B interactions with other businesses, B2C, business interactions with customers, and intra B commerce.

Difference between Traditional and e-Business

Question 2.
How does outsourcing represent a new mode of business?
Answer:
Outsourcing represents a new mode of business as it is a departure from the traditional thinking of self-sufficiency in business. It refers to a long-term contracting out of business activities to captive or third party specialists with a view to benefitting from their experience, expertise, efficiency, and even investment.

Generally, the non – core business activities are outsourced but of late even some of the core activities have started being outsourced. Outsourcing comprises four key segments: contract manufacturing, contract research, contract sales and informatics.

Global competitive pressures for higher quality products at lower costs, demanding customers and emerging technologies have induced a re-look at business processes and hence resulted in outsourcing as a new mode of business which is now being reported to not out of compulsion but out of choice.

Question 3.
Describe briefly any two applications of e-business.
Answer:
e-business includes not only e-commerce but also other electronically conducted business functions such as production, inventory management product development, accounting over finance and human resource management, e-business is, therefore, clearly much more than buying and selling over the internet.

The applications of e-business can be presented in these class of business situations such as:
(i) Business to Business (B2B) Application : In such situation, business transactions take place between different business firms. B2B transactions are in practice in several firms including Maruti Udyog, Telco, Bajaj Auto, Kinetic etc. ‘

(ii) Business to Consumer (B2C) Application : Under this situation, transactions take place between business firm and consumers. In B2C transactions firm sell physical goods to consumers, online in personalised environment. In this technique, each transaction represents an individual buying online. In India, Amul Com. sells the Amul brand products online under B2C mode of transaction.

(iii) Consumer to Consumer (C2C) Application : In C2C commerce, the seller may sell his services/goods by providing information on the net. This information may be evaluated by a requester/buyer to carry out the transaction. Similarly, the buyer may also give his requirements to select the desired services.

Question 4.
What are the ethical concerns involved in outsourcing?
Answer:
Outsourcing has raised certain ethical concerns which need to be considered. In search of cheap labour, manufacturing processes are being outsourced to developing countries where they use child labour/women in the factories, and working conditions are unhygienic and even unsafe.

The companies cannot do so in their developed home countries due to stringent laws forbidding the use of child labor. This raises the ethical concern of whether this sort of cost-cutting by using child labour justified. Similarly, there is a concern over the ethical aspect of outsourcing the work to countries where gender-based wage – discrimination is done and hence women are paid lower wages.

Question 5.
Describe briefly the data storage and transmission risks in e-business.
Answer:
Online transactions (e-business) are prone to a number of risks. Risks refer to the probability of any mishappening that can result into financial, reputational and psychological losses to the party involved in the transaction. The major risks in e-transactions are data storage and transmission risks.

Data storage and transmission risks – Data stored in the systems and ex-route is exposed to a number of risks. Many times vital information may be missing or changed to pursue selfish motives or for some pleasure. The word VIRUS stands for Vital Information Under Siege is a program which replicates itself due to series of wrong command on the other systems of computer. Installing and timely updating anti¬virus programmes and scanning the files and disks with them provides protection to data files, folders and systems from virus attacks.

Data may be interpreted in the course of transmission. For this, one can use cryptography. It is the art of protecting information by transforming it into an unreadable format called cyphertext.

Long Answer Questions

Question 1.
Why are e-business and outsourcing referred to as the emerging modes of business? Discuss the factors responsible for the growing importance of these trends. ‘
Answer:
Discuss the factors responsible for the growing importance of these trends. During the last decade or so the way of doing business has undergone fundamental changes. The manner of conducting business is referred to as the mode of business’, e-business and outsourcing are referred to as ‘emerging modes of business’ as these have brought about new changes in the way or manner in which business is conducted and it is believed that these trends are likely to continue, an e-business may be defined as the conduct of industry, trade and commerce using the computer networks, e-business covers a firm’s interactions with its customers and suppliers over the internet and also other electronically conducted business functions such a production, inventory management, product development, accounting and finance and human resource management.

Outsourcing represents a new model of business as it is a departure from the traditional thinking of self-sufficiency in business. It refers to a long-term contracting out of business activities to captive or third party specialists with a view to benefitting from their experience, expertise, efficiency and, even investment.

Generally, the non – core business activities are outsourced but of late even some of the core activities are being outsourced. Outsourcing comprises four key segments; contract manufacturing, contract research, contract sales and informatics.

The various factors responsible for the growing importance of these trends are:

1. Business managers and thinkers keep evolving newer and better ways of doing things in an effort to improve the business processes.
2. Business firms have to strengthen their capabilities of creating utilities and delivering Value successfully to meet the competitive pressures.
3. Consumers have become far more demanding than ever in terms of higher quality, lower prices, speedier deliveries and better customer care,
4. Business as an activity has to keep evolving by adopting new trends in order to benefit from emerging technologies.

Question 2.
Elaborate the steps involved in On-line Trading.
Answer:
The three stages involved in online transactions. Firstly, the pre-purchase or sale stage including advertising and information seeking. Secondly, the purchase or sale stage comprised of price negotiation, closing of purchase or sales deal and payment and thirdly, the delivery stage of the transaction. Following are the steps involved in online transactions:

(i) Registration – Registration is required for online transaction with the vendor by filling up a registration form. Among various details in account, a ‘password’ for selecting your account and ‘shoppingcart’ are password protected. Otherwise, anyone can logging using your name and shop in your name. .

(ii) Placing an order – After registration one can pick and drop the items in the shopping cart. Shopping cart is an online record of what one have picked up while browsing the online store. After being sure of what one want to why, he can ‘checkout’ and choose his payment options.

(iii) Payment mechanism – Payment under online transactions may be made in a number of methods such as :
Cash on Delivery (COD) : As the name suggest, payment is made in cash for online transactions when physical delivery of goods reached.

Cheque: Another way of payment is picking up of cheque from the customer’s end. On realisation of payment of cheque, that goods may be delivered.

Net banking transfer: In today’s world, banks provide to their customers the facility of electronic transfer of funds over the net. In such case, the buyer may transfer the amount for the agreed price of the transaction to the account of the online vendor, so that the vendor may proceed to arrange for delivery of goods.

Credit or Debit cards: Debit or credit cards also known as ‘plastic money’ are mostly used as a medium of exchange in online transactions. Almost 99% of online consumer transactions are executed with the help of these cards.

The cardholder is authorised to purchase on credit, the amount due from the cardholder is assumed to be paid by the issuing bank of these cards, who later transfers the amount involved in the transactions to the credit of the vendor. The buyer’s account is debited and the amount of bank will be received generally in instillments at the convenience of the buyers.

Digital cash: This form of money exists only in cyberspace. It has no real physical properties but offers the ability to use real currency in an electronic format.

Question 3.
Evaluate the need for outsourcing and discuss its limitations.
Answer:
(i) Focusing of attention:
Business firms are realizing the usefulness of focusing on just a few areas where out the rest of the activities to their outsourcing partners. In order to create utilities or value, a business engages in a number of processes, viz., purchase and production, marketing and sales, R&D, accounting and finance, HR and administration, etc., firms need to define or redefine themselves.

They, for example, need to consider whether they would like to be called manufacturing or marketing the scope of business enables them to focus their attention and resources on select activities for better efficiency and effectiveness.

(ii) Quest for excellence:
Outsourcing enables firms to pursue excellence in two ways. One they excel in the activities that they can do the best by virtue of limited focus. And they excel by extending their capabilities through contracting out the remaining activities to those who excel in performing them In the quest for excellence, it is necessary not only to know what you would like to focus on but also what you would like others to do for you.

(iii) Cost reduction:
Global competitiveness necessitates not only global quality but also global competitive pricing. As the prices turn southwards due to competitive pressures, the only way to survival and profitability is cost reduction. Division of labour and specialization, besides improving quality, reduces cost too. This happens due to the economies of large scale accruing to the outsourcing partners as they deliver the same service to a number of organizations.

(iv) Growth through alliance:
To the extend, you can avail of the services of others’, your investment requirements are reduced, others have invested in those activities for you. Even if you may like to have a stake in the business of your outsourcing partners, you profit from not only the low-cost and better quality services provided by them you but also by virtue of a share in the profit from the overall business they do.

Therefore, you can expand rapidly as the same amount of invisible funds result in the creation of a large number of businesses. Apart from financial returns, outsourcing facilities inter-organizational knowledge sharing and collaborative learning. This may also explain the reasons why the firms today are outsourcing not only their routine. Non-core processes. But also seeking to benefit from outsourcing such strategic and core processes as Research and development.

(v) Fillip to economic development:
Outsourcing, more so offshore outsourcing, stimulates entrepreneurship, employment, and exports in the host countries. In India in the IT sector alone, for example, there has been such a tremendous growth of entrepreneurship, employment, and exports that today we are the undisputed leaders as far as global outsourcing in software development and IT-enabled services are concerned. Presently, we have 60 percent of the $ 150 billion global outsourcing share in the informatics sectors.

But there are certain limitations of outsourcing as given below:
(A) Confidentiality:
Outsourcing depends on sharing a lot of vital information and knowledge. If the outsourcing partner does not preserve the confidentiality, and, say, for example, passes it on to competitors, it can harm the interest of the party that outsources its processes. If outsourcing involves complete processes/products, there is a further risk of the outsourcing partner starting up a competitive business.

(B) Sweat-shopping:
As the firms that outsource seek to lower their costs, they try to get the maximum benefit from the low-cost manpower of the host countries. Moreover, it is observed that whether in the manufacturing sector or the IT-sector, what is outsourced is the kind of components or work that does not much build the competency and capability of the outsourcing partner beyond the skills needed to comply with a rigidly prescribed procedure/ method. So, what the firm that go in for outsourcing look for is the ‘doing’ skills rather than the development of the ‘thinking’ skills.

(C) Ethical concerns:
Think of a shoe company that, in order to cut costs, outsources manufacturing to a developing country where they use child labour/women in the factories. Back home, the company cannot do so due to stringent laws forbidding the use of child labour. Is cost-cutting by using child labour in countries where it is not outlawed or where the laws are ‘weak’, ethical? Similarly, is it ethical to outsource the work to countries where there exists wage-discrimination on the basis of the sex of the worker?

(D) Resentment in the home countries:
In the course of contracting out manufacturing, marketing, Research, and Development or IT-based services, what is ultimately contracted out is ‘employment’ or jobs. This may cause resentment back in the home country (i.e., the country from which the job is being sourced out) particularly if the home country is suffering from the problem of unemployment.

Question 4.
Discuss the salient aspects of B2C commerce.
Answer:
B2C Commerce: As the name implies, B2C (business-to-customers) transactions have business firms at one end mid its customers on the other end. Although what comes to one’s mind instantaneously is online shopping, it must be appreciated that ‘selling’ is the outcome of the marketing process.

And, marketing begins well before a product has been sold. B2C commerce, therefore, entails a wide gamut of marketing activities such as identifying activities, promotion, and sometimes even delivery of products (e.g.., music or films) that are carried out online. E-commerce permits the conduct of these activities at a much lower cost but high speed.

For example, ATM speeds up the withdrawal of money. Customers these days are becoming very choosy and desire individual attention to be given to them. Not only do they require the product features to be tailor-made to suit their requirements, but also the convenience of delivery and payment at their pleasure. With the onset of e-commerce, all this has become a reality.

Further, the B2C variant of e-commerce enables a business to be in touch with its customers on a round-the-clock basis. Companies can conduct the online surveys to ascertain as to who is buying what and what the customer satisfaction level is. By now, you might have formed the opinion that B2C is one-way traffic, i.e., from business-to-customers.

But do remember that its corollary, C2B commerce is very much reality which provides the Consumers with the freedom of shopping-at-will. Customers can also use call-centers set up by companies to make toll-free calls to make queries and lodge complaints round the clock at no extra cost to them. The beauty of the process is that one need not set up these call centers or helplines; they may be outsourced.

Question 5.
Discuss the limitations of the electronic mode of doing business. Are these limitations serve enough to restrict its scope. Give reasons for your answer.
Answer:

e-business has its own limitations as discussed below:
(i) Low Personal Touch:
e-business lacks the warmth of interpersonal interactions and personal touch for the satisfaction of customers. Thus, it is a relatively less suitable mode of business for product categories requiring personal touch for convincing the customers such as garments, etc.

(ii) Incongruence between Order Taking / Giving and Order Fulfillment Speed:
In e-business, orders can be placed at the click of a mouse, but the physical delivery of the product takes time. Customers are sometimes not patient enough to bear with this incongruence. At times the users even get frustrated due to technical reasons when websites take an unusually long time to open.

(iii) Need for Technology:
Capability and Competence of Parties to e-business requires the parties to be fairly familiar with computers and the internet. The digital divide has thus limited the use of e-business.

(iv) Increased Transaction:
Risk Internet transactions occur between cyber personalities and it is difficult to establish the identity of the parties or know the location from where the parties may be operating, e-business is also risky due to additional hazards of impersonation and leakage of confidential information such as credit card details. Problems of virus attacks and ‘hacking’ also pose security concerns in e-business.

(v) Resistance to Change:
The process of adjustment to new technology and a new way of doing things causes stress and a sense of insecurity due to change. As a result, people may resist a change from traditional business to e-business.

(vi) Ethical Fallouts:
Companies use an ‘electronic eye’ to keep track of the computer files, email account, and the websites visited by their employees or others who use their network systems which are not considered right on ethical grounds.

Detailed, Step-by-Step NCERT Solutions for 11 Business Studies Chapter 4 Business Services Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Business Services NCERT Solutions for Class 11 Business Studies Chapter 4

Business Services Questions and Answers Class 11 Business Studies Chapter 4

Multiple Choice Questions

Question 1.
DTH services are provided by
(a) Transport company
(b) Bank
(c) Cellular company
(d) None of the above
Answer:
(c) Cellular company

Question 2.
The benefits of public warehousing includes –
(a) Control
(b) Flexibility
(c) Dealer relationship
(d) None of the above
Answer:
(b) Flexibility

Question 3.
Which of the following is not a function of insurance?
(a) Risk sharing
(b) Assist in capital formation
(c) Lending of funds
(d) None of the above
Answer:
(c) Lending of funds

Question 4.
Which of the following is not applicable in life insurance contract?
(a) Conditional contract
(b) Unilateral contract
(c) Indemnity contract
(d) None of the above
Answer:
(c) Indemnity contract

Question 5.
CWC stands for –
(a) Central water commission
(b) Central warehousing commission
(c) Central warehousing corporation
(d) Central water corporation
Answer:
(c) Central warehousing corporation

Short Answer Questions

Question 1.
Define services and goods.
Answer:
Services are those separately identifiable, essentially intangible activities that provide the satisfaction of wants, and are not necessarily linked to the sale of a product or another service.

A good is a physical product capable of being delivered to a purchaser and involves the transfer of ownership from the seller to the customer. Goods are also generally used to refer to commodities or items of all types except services, involved in trade or commerce. While goods are produced, services are performed. A service is an act which cannot be taken home.

What we can take home is the effect of the services. There are five basic features of services. These features also distinguish them from goods and are known as’’ intangibility, inconsistency, inseparability, inventory and involvement (five I’s). Service facilities help ensure the supply of the right place at the right time. These facilities ensure a smooth flow of exchange of goods and services. Efficient service facilities provide the following benefits:

• Improved customer service.
• Lower distribution costs.
• Additional sales volume.
• Time and place utilities.
• Stabilization of prices.

Services required in business are transportation banking, insurance, communication, and warehousing.

Question 2.
What is e-banking. What are the advantages of e-banking?
Answer:
Electronic Banking (E-Banking)
These days banks have been providing the following new services due to the introduction of computerised equipments :
(1) Electronic Funds Transfer System (EFTs) – It allows transfer of funds electronically. It is a cost-saving scheme for the convenience of customers. Under the scheme the banks transfer the wages and salaries from company’s account to employees’ accounts as per the instruction of the employer.

This system removes the risk and inconvenience of handling cash. Similarly, a company can distribute dividend to its shareholders electronically. This is very safe method of transfer money.

(2) Automated Teller Machine (ATMs) – It is a free-standing self-service terminal which renders the facility of withdraw and deposit a money. While using ATM a plastic card is inserted into the terminal. After that identification code is also inserted. The machine responds by delivering required cash, cashing cheques, taking deposits and simple banking transactions.

(3) Debit Card – The card issued to the Bank Account holders against their bank balance to facilitate and simplify the payment, withdrawal and transfer of money any time, any where through the computer is known as Debit Card. There is no overdraft facility to Debit Cardholders. There is no fee interest and charge for issuing these cards. These cards are being issued in India by ICICI, HDFC, HSBC, Citi Banks, SBI, PNB etc.

Under the scheme point-of-sale (POS) terminals are located at merchants check out counters audited electronically to a bank computer. When the customer presents a debit card, the point-of-sale terminal automatically)
transfers the money for the purchase from customer’s account to store’s account. Under this system an individual can pay bills automatically by using a personal computer, which is linked by telephone to the bank computer.

Net Banking – In order to provide convenience to the customers for banking anytime, anywhere in the world, net banking is used. Customers are provided secured log in id and password through which they can access their account and make transactions like account balance enquiry, cheque book request, fund transfer etc.

(4) Credit Card – It is also called plastic money as it allow the cardholder to withdraw money without depositing. The card issued to selected customers to enable them to make payment of credit bills upto specified limit any time anywhere through computer is known as credit card. It is also used for withdrawing cash from ATMs.

The amount overdrawn is repaid upto specified date. Interest is charged if payment is not made upto specified date. The credit card system has facilitate simplified encourage credit transactions.

Credit card is a substitute for cash that can be used by selected customers. It is the key to the opening of bank account for daily payments. It provides overdraft facilities also. These are plastic cards having the photo identity and the signature embossed on the cards. It also contains issuing bank’s name and validity period of the card. The credit card holder has to deposit the amount withdrawn along with interest due to credit and company or bank.

Question 3.
Write a note on various telecom services available for enhancing business.
Answer:
The various types of telecom services are:
(i) Cellular mobile services:
These are all types of mobile telecom services including voice and non-voice messages, data services, and PCO services utilizing any type of network equipment within their service area. They can also provide direct interconnectivity with any other type of telecom service provider.

(ii) Radio paging services:
Radio paging service is an affordable means of transmitted information to persons even when they are mobile. It is a one-way information broadcasting solution and has spread its reach far and wide. Radio paging services are available including tone only, numeric only, and alpha / numeric paging.

(iii) Fixed line services:
These are all types of fixed services including voice and non-voice messages and data services to established linkages for long-distance traffic. These utilize any type of network equipment primarily connected through fiber optic cables laid across the length and breadth of the country. They also provide interconnectivity with other types of telecom services.

(iv) Cable services:
These are linkages and switched services within a licensed area of operation to operate services. The two-way communication including voice, data and information services through cable networks would emerge significantly in the future. Offering services through the cable network would be similar to providing fixed services.

(v) VSAT services:
VSAT (Very Small Aperture Terminal) is a satellite-based communications service. It offers businesses and government agencies a highly flexible and reliable communication solution in both urban and rural areas. Compared to land-based services, VSAT offers the assurance of reliable and uninterrupted service that is equal to or better than based services.

It can be used to provide innovative applications such as telemedicine, newspapers, online, market, rates, and tele-education even in the most remote areas of our country.

(vi) DTH services:
DTH (Direct to Home) is again a satellite-based media service provided by cellular companies. One can received media services directly through a satellite with the help of a small dish antenna and a set-top box. The service provider of DTH services provides a bouquet of multiple channels. It can be viewed on our television without being dependent on the services provided by the cable network services provider.

Question 4.
Explain briefly the principles of insurance with suitable examples.
Answer:
Fundamental Principles Of Insurance
(1) Principle of utmost good faith (uberrimate fide). This principle implies that the insurer and insured must disclose all the material facts apd information to each other. Material facts, here means all the important information, which would have affected the insurance policy as regards accepting the risk at that rate of premium.

Concealment of the material fact wi 11 make the contract voidable at the discretion of the aggrieved party. For example, the insured is a cancer patient but does not disclose this material fact in his proposal form. If the insured dies of cancer, the insurance company is not liable to pay the insurance money.

In case of fire insurance if certain flammable material like patrol is stored in the godown, it must be intimated to the insurance company. If this fact is concealed and the godown catches fire, the insurance company will not be liable to compensate for damages. Misrepresentation or failure to reveal material information gives the affected party the right to cancel the control.

(2) Principle of insurable interest – It is the basic and essential requirement of an insurance contract that the person taking the insurance policy must have personal and direct insurable interest in the insured person or property. The insured must have insurable interest.

The person is said to have an insurable interest, when he stands to gain with the safe existence of the insured person or property and would suffer personal loss due to the destruction of the insured. The objective behind this principle is that the insured should be compensated for the loss.

The loss will be suffered by the insured, if his own personal property is destroyed. He cannot be said to have suffered loss due to the destruction of the property of someone else. In case of life insurance, it must be present at the time of falling the policy. In fire insurance, both at the time of calling policy and at the time of actual loss.

(3) Principle of Indemnity – All insurance contract, except life insurance, are contract so find enmity. The objective behind this principle is to place the insured person as far as possible in the same financial position which he had enjoyed before the loss. In case of loss the insured will be paid the amount of actual loss or the amount of the policy, whichever is lesser.

The policy behind this arrangement is that nobody should treat insurance contract as the source of profit. The purpose of this principle is to put the insured in the same position after the event happened in which he was immediately before the event.

Example – The owner of the house gets his house insured for Rs. 10,00,000. Unfortunately the house catches fire and half of the house is destroyed. In this case the insurance company will pay only Rs.5,00,000 as compensation. It is the amount of actual loss. Suppose the house was worth Rs.20,00,000 but insured for Rs. 10,00,000. In this case if the entire house is fully destroyed, the insurance company will pay only Rs. 10,00,000. If half of the house is damaged the insurance company will pay Rs.5,00,000 only.

(4) Principle of Mitigation of losses – In the event of misshaping it is the duty of the insured that he must take all reasonable steps to minimise the loss in the same manner, which he would have done if the property was not insured. If the insured suffers any loss or incurs expenses in minimising the loss, he can recover the loss from the insurers.

If it is proved that the insured did not take steps to minimise the loss, which many prudent persons would have done, simply because the loss will be borne by the insurance company not by him, the insurance claim may be lost. The insured must act in the same manner as he would have gone, if the property were not insured.

(5) Principle of causa Proxima – According to this principle compensation is paid to the insured if the causes responsible for loss were insured. In case, the cause of the loss was not insured, compensation is not paid. The insured risk must be the proximate or nearest not remote. If the risk insured is the remote cause of the loss, then the insurer is not bound to pay compensation.

In case of marine insurance, shipping company is held responsible for certain risks, some risks are borne by the owner of goods and the insurance company is held liable if the loss is caused by the insured risk. If the loss is due to many complex causes, the nearest cause of the loss is ascertained.

For example, sugar sent by ship was insured against sea hazards. Rats made hole by cutting the pipe of the toilet. Sea-water entered through-hole and the sugar was destroyed. In this case, the nearest cause of the loss of sugar is the seawater, a risk, which was insured and the insurance company will be liable for risk. If the rats would have damaged the sugar directly insurance company would not have been liable for the risk.

(6) Principle of subrogation – Do6trine of subrogation states that after making compensation for the loss, the, insurer steps into the shoes of the insured. It means that the insurance company becomes entitled to exercise all the rights and remedies, which the insured had in respect of the property.

Let us take an example. Anil ensured his factory for Rs. 4,50,000. There was partial damage of the factory by fire due to the negligence of employee Anil’s claim for Rs.2,00,000 was admitted by the insurance company and paid later on. An filed a case against employee and received Rs.40,000 as compensation. The insurance company is entitled to receive Rs.40,000 from Anil which he received from employee.

(7) Principle of contribution – It implies that when property is insured for the some risk with two or more insurers, the different insurers will contribute to the total payment in proportion to the amount assured to each. In case one insurer has paid full compensation of loss, he is entitled to receive proportionate contribution from other insurers.

For example, A gets his house insured against fire for Rs. 1 lakh with insurer B and for Rs.50000 with insurer C.A loss of Rs.75000 occurs to the house due to a fire. Then, B is liable to contribute Rs.50000 and C Rs.25000. In case B pays the whole amount of loss, he can recover Rs.25000 from C. This principle is not applicable to life insurance.

Question 5.
Explain warehousing and its functions.
Answer:
Meaning Of Warehousing
A warehouse in simple language is the place used for the storage or accumulation of goods. Warehousing means holding and preservation of goods from the time of their production or purchase and until their sale or use. It involves making suitable and effective arrangements for keeping the goods in proper condition.

A warehouse is a place used for the storage of surplus goods. It helps the businessmen to keep suits during dull session. It may also be defined as an establishment that assumes responsibility for the safe custody of goods. Warehousing enables businessmen to produce goods throughout the year and sell them whenever there is adequate demand. It creates time utility by bridging the time gap between production and distribution of goods. Thus, warehousing creates time utility.

Functions of Warehouses
A modern warehouse performs the following important functions:
(1) Storage-The basic function of a warehouse is to store the surplus goods which are not needed immediately. Surplus goods are preserved and made available when required. A warehouse acts as a reservoir or storehouse of surplus goods and made available whenever they are demanded by the customers.

(2) Safety of Goods-A warehouse protects goods against pilferage, theft and damage. Goods are preserved safely from rain, sun, moisture, pests, fire, etc. Perishable goods such as fruits, vegetables, eggs, etc. can be preserved in cold storages. Thus, warehouses provide for the safe custody of goods.

(3) Price Stabilisation – Warehouses facilitate the smooth supply of goods and remove the fluctuations in the prices of goods. A warehouse enables businessmen to store excess goods and thereby avoid emergency sale. In the absence of storage facilities they have to dispose of the entire stock as soon as it is produced.

In warehouses available goods can be stored when they are in abundant supply and released when the demand is high. Thus, fall in prices is checked when the supply is at its peak and rise in prices is avoided during the slack season. In this way, producers can realise better prices and consumers can buy goods at reasonable prices.

(4) Risk Bearing- Warehouses safeguard the stock of goods against damage due to fire or theft. Once goods are handed to a warehouse the responsibility for ensuring the safety of goods passes to the warehouse¬keeper. The risk of loss or damage is borne by the warehouse-keeper. Moreover, goods kept in a recognised warehouse can be insured at a low premium. In case of loss or damage the value of goods can be recovered from the insurance company. Building of warehouses are specially constructed to safeguard the goods against several risks.

(5) Financing – In India, warehouse authorities advance money to owners of goods on security of goods deposited. Warehouses issue receipts to the persons who keep their goods on rent in warehouses. The receipt issued by a warehouse is a good collateral security against which money can be borrowed from banks and other financial institutions. In this way, warehouses help in financing trade.

(6) Mass Production – A warehouse removes the hindrance of time of production and consumption. Warehouses facilitate production in anticipation of demand. They create time utility by bridging the time gap between production and demand. In the absence of warehouses, the scale of production will be restricted to the level of current demand. Warehousing enables businessmen to avail of the economics of large- scale production and bulk-buying.

(7) Facilities-Warehouses provide facilities of processing, packing, blending etc. for the purpose of sale. A modern warehouse provides several facilities to businessmen. Goods can be prepared for sale by arranging them in small and suitable lots. They can be repacked, graded, blended and labelled. Prospective buyers can be taken to the warehouse for inspecting the goods. A warehouse can also deliver goods strictly according to the instructions of their owner.

(8) Employment – Warehouses provide jobs to a large number of persons. They offer direct employment and also generate employment opportunities by increasing the scale of operations.

(9) Facilitate Foreign Trade – An importer can keep the imported goods in bonded warehouses if he is unable or willing to pay customs duty immediately. He can pay duties in installments and draw goods gradually.

Long Answer Questions

Question 1.
What are services? Explain their distinct characteristics?
Answer:
Services are essentially intangible activities which are separately identifiable and provide satisfaction wants. Their purchase does not result in the ownership of anything physical Services involve an interaction to be realized between the service provider and the consumer.

(i) Intangibility:
Services are intangible, i.e., they cannot be touched. They are experiential in nature. One cannot taste a doctor’s treatment, or touch entertainment. One can only experience it. An important implication of this is that the quality of the offer can often not be determined before consumption and, therefore, purchase.

It is, therefore, important for the service providers that they consciously work on creating the desired service so that the customer undergoes a favourable experience. For example, treatment by a doctor should be a favourable experience.

(ii) Inconsistency:
The second important characteristic of services is inconsistency. Since there is no standard tangible product, services have to be performed exclusively each time. Different customers have different demands and expectations. Service providers need to have an opportunity to alter their offer to closely meet the requirements of the customers. This is happening, for example, in the case of mobile services.

(iii) Inseparability:
Another important characteristic of services is the simultaneous activity of production and consumption being performed. This makes the production and consumption of services seem to be inseparable. While we can manufacture a car today and sell it after, say, a month this is often not possible with services that have to be consumed as and when they are produced.

Service providers may design a substitute for the person by using appropriate technology but the interaction with the customer remains a key feature of services. Automated Teller Machines (ATMs) may replace the banking clerk for the front office activities like cash withdrawal and cheque deposit. But, at the same time, the presence of the customer, is required and his/her interaction with the process has to be managed.

(iv) Inventory (Less):
Services have little or no tangible components and, therefore, cannot be stored for a future use. That is, services are perishable and providers can, at best, store some associated goods but not the service itself. This means that the demand and supply needs to be managed as the service has to be performed as and when the customer asks for it.

They cannot be performed earlier to be consumed at a later date. For example, a railway ticket can be stored but the railway journey will be experienced only when the railways provide it.

(v) Involvement:
One of the most important characteristics of services is the participation of the customer in the service delivery process. A customer has the opportunity to get the services modified according to specific requirements.

Question 2.
Explain the functions of commercial banks with an example of each :
Answer:
Commercial Banks
Commercial banks are very popular in every country due to services rendered by them. A commercial bank is a financial institution; which deals in money and credit. It accepts deposits from those who have a surplus and lends to those who need them. The difference between the rate of interest on deposits and loans is the profit of the bank.

Definition of the Bank – According to Indian Banking Companies Act 1949, “A bank is an institution accepting for the purpose of lending or investment in deposit money from public repayable on demand or otherwise, withdrawal by cheque, drafts, order or otherwise’.

In the words of R.S.Mayers, “Banks are institutions whose debts are referred to as ‘bank deposits ’ and they are commonly accepted in final settlement of ‘other people s debts ’

According to Justice Holmes, “The real business of banker is to obtain deposits of money which he may use for his own profits by lending it out again ‘

Bank is German word, which means ‘to collect’. The main function of the bank is the collection of funds as deposits. Later on bank started performing other functions such as lending etc.

Bank has occupied very important place in the economic structure of the country. After independence in order to achieve social objectives of the country banks were nationalised. According to 20 point programme of the government banks have been entrusted the responsibility for developing the undeveloped regions of the country.

In the light of these recent thinking, banks may be defined as the financial institution dealing in money and credit to achieve the economic and social objectives of the business. In India, some of major commercial banks are – State Bank of India, Punjab National Bank, Bank of Baroda, Canera Bank and Syndicate Bank etc.

Functions Of Commercial Bank

(1) Accepting deposits – This is one of the primary function of the bank. The main purpose of banks is to promote savings and accept deposits from customers. Banks offer facilities in different ways to suit the needs, tastes and preferences of the customers. Deposits are accepted mainly in current, savings, fixed deposit, home safe and recurring deposits accounts.

(2) Advancing loans – This is also the important function of the bank. The bank advances loans to merchants and manufacturers at higher rates of interest than what it allows on deposits. The difference between the two rate of interest is the profit of the bank. The bank advances loans through cash credit, bank overdraft, discounting of bills etc.

(a) Cash credit- In this method, the bank instead of making payment to the borrower in cash, deposits the money in the Current Account, opened in the name of the borrower. The borrower can withdraw the money by using cheques upto specified limit. The bank asks the borrower to submit a promissory note for the loan. Cash credit is like overdraft arrangement, but for this purpose it is not necessary to operate a current account. Interest is to be paid on the amounts with drums.

(b) Bank overdraft – This facility is granted by the bank to its current account holders. Under this arrangement the customer is authorised to withdraw more than the amount deposited. The amount of overdraft is settled between the bank and customer. This facility is granted without holding security’. Interest is charged by the bank on the amount actually withdrawn on monthly basis. In practice the customer pledges security of stock of goods.

(c) Discounting of the bills – Financial help can also be sought from the bank by discounting Bills of exchange before the due date. The bank charges interest in the shape of discount for the period between date of discounting and the due date of the bill. The bank pays the amount or credits the amount into the account of the drawer after deducting discount.

3. Agency functions – Commercial banks perform the following agency functions:

(a) Collection of cheques, bills and drafts- Bank collects cheques, drafts and bills on behalf of its customers. The customer deposits his cheques received from outside parties, bills accepted by other parties and bank drafts received from outside. Bank collects the amounts of these documents and credits the money into the customers’ accounts.

(b) Collection of interest and dividends etc. – The customer may – have invested in shares and debentures and received interest and dividend.
The bank may be instructed to collect interest and dividend on behalf of the customer and deposit in his account.

(c) Payment of interest, instalment of loan and insurance premium etc.-The customer may instruct the bank to make the payment of his instalment of loan borrowed by him and interest thereon. He may also instruct the bank to make payment of his insurance premium, rent of the shop, factory, residence etc. The bank, after making payment of these expenses debits the amount to customers’ account.

(d) Purchase/Sale of securities – The bank can also work as an agent of the customer and assist in purchasing/selling shares, debentures, bonds, certificates and government securities.

(e) Transfer of funds through drafts/mail transfers – Bank provide facilities to transfer funds from one place to another place at nominal charges. Bank also provides the facility of purchase and sale in foreign currencies.

4. Other services – In addition to agency services banks provide other miscellaneous services also:

(a) Issuing travellers cheques – There is always risk to undertake long journey from one place to another place with large sum of money in cash. Banks issue travellers cheques for the desired amount. The cheque can be encashed for the desired amount at different places. The amount paid against cheque are entered at its back. The total amount withdrawn cannot exceed the amount of the cheque. Travellers cheque ensure safe journey without risks.

(b) Issuing letter of credit – The bank issues letter of credit on-demand to its customers. Sometimes suppliers of goods and lenders of money insist upon letter of credit issued by the bank.

(c) Locker or custodial services – There is always great risk in keeping large amount of cash, jewellery and other valuables. The bank offers an opportunity in the form of lockers in the premises of the bank itself, where valuables can be kept on payment of nominal charges. There are two or three keys of the locker, so for opening and closing it both the keys (one kept by the bank and the other kept by the customers) are used. The locker is operated by the customer as and when required.

(d) Underwriting securities – Underwriting means undertaking the risk to subscribe for shares and debentures of Companies in case applications from public fall short. Banks also underwrite shares and debentures of companies. In this way, banks help in building and strengthening capital market.

(e) Dealing in foreign exchange – Foreign currency is required for import, export, foreign travel and all sorts of foreign dealings. We can get foreign exchange through banks.

(f) Providing references – Sometimes creditors and money lenders require from the customers trade references, preferably from banks. Reference services are also provided by the government.

(g) Issuing bank drafts – Bank drafts are the economical and safest means of sending money. It is an instruction of the bank to its branch to pay the certain specified amount to the particular party. These bank drafts can be obtained against bank account and can also be obtained by cash payment.

(h) Advisory functions – Bank also functions as a friend, philosopher and guide of his customers. Bank renders advisory services on economic matters to its customers.

Question 3.
Write a detailed note on various facilities offered by the Indian Postal Department.
Answer:
Indian post and telegraph department provides various postal services a cross India. For providing these services the whole country had been divided into 22 postal circles. These circles manage the day-to-day functioning of the various head post offices, sub-post offices and branch post offices. Through their regional and divisional level arrangements, the various facilities provided by postal department are broadly categorized into:

(i) Financial facilities:
These facilities are provided through the post office’ savings scheme like Public Provident Fund (PPF), Kisan Vikas Patra and National Saving Certificates in association to normal retail banking functions of monthly income schemes, recurring deposits, savings account, time deposits and money order facility.

(ii) Mail facilities:
Mail services consist of parcel facilities that is the transmission of articles from one place to another; registration facility to provide security of the transmitted articles and insurance facility to provide insurance cover for all risks in the course of transmission by post.

(iii) Financial services: (SCSS, PPF, KVP, NSC, TDJ)
Senior Citizen Savings Scheme (SCSS): Any individual who has attained the age 60 years on the date of opening or who has attained the age of 55 years and who has voluntarily retired from the service can open this account. Here, the account holder gets an attractive interest. Automatic transfer of interest into savings account facility is available.

Joint account is opened with the spouse only and not with any other person. The amount of deposit is Rs. 500/- and maximum is Rs. 1.0 lakh. Subject to certain conditions loan facilities are available after 3 years. The investment by an individual will qualify for tax deduction under section 88 of IT Act. .

(iv) Kisan Vikas Patras (KVP):
The certificates will be available in the denominations of Rs. 100, Rs.500, Rs. 1000, Rs.5000, Rs. 10000 and Rs.50000. certificates will be issued to individuals only. There is no limit for purchase. Certificates can be cashed at any time after expiry of 2 years and 6 months from the date of purchase. Nomination and identity slip facilities are available. .

(v) National Saving Certificate (NSC):
NSC VIII Issue available in denominations of. 100,500,1000,5000 and 10,000 can be issued to individuals only. The maturity period shall be 6 years from the date of issue. There is no limit for purchase. Only local cheques are accepted. They can be pledged as security.

A nomination facility is available. No premature encashment is permitted in the normal course. Investments by individuals will qualify for tax deduction under Income Tax Act.

(vi) Time Deposit Accounts (TD):
There are four types of accounts, namely 1-year, 2-year, 3-year and 5-year accounts. A single can open an account, two adults jointly, Guardian on behalf of a minor or a minor himself who has attained the age of 10 years. Any number of accounts can be opened. There shall be only one deposit in an account.

The deposit should be in multiples of Rs. 200 and there is no maximum limit. Annual interest can be automatically credited to the savings account of the depositors, Post maturity interest shall be allowed for a maximum period of 24 months SB rate premature closure of the account is permitted on some conditions.

Question 4.
Describe various types of insurance and examine the nature of risks protected by each type of insurance.
Answer:
1. Life Insurance
Life insurance is a contract between a person and an Insurance company. According to the contract of insurance a specified sum of money is payable by insurance company on the death of the insured or after the expiry of the policy period, whichever is earlier in consideration to the payment of the premiums, whenever due. The amount of the premium is determined on the basis of the amount of the policy, the period of the policy and terms of the premium, whether monthly, quarterly, half-yearly or annually.

There is an element of investment in the life insurance, because the amount of the policy is received in both the cases i.e. on the death of the insured or at the expiry of the policy. Life insurance is not a contract of indemnity because it is impossible to compensate the deceased policyholder. The person whose life is insured is called the assured. The consideration paid to the insurance company is premium. It is based on good faith and based on insurable interest in the like assured.

2. Fire Insurance
Fire insurance is an agreement between the insurance company and the owner of the property, wherein insurance company, after receiving specified premium assures actual loss or the amount of the fire policy (whichever is less) will be paid if the insured property catches fire.

Fire insurance is a contract of indemnity. It is based upon the principle of good faith. The insured must have an Insurable interest in the subject-matter of Insurance. It must exist both at the time of insurance and at the time of loss. It is a contract from year to year on a renewable basis.

3. Marine Insurance
Marine insurance is an agreement in which the insurance company assures to compensate for the loss, if any, caused by insured marine perils after the receipt of the premium. Marine policies can be taken for the ship, loaded goods (cargo) for freight” and salaries of employees etc.

This contract is based on utmost good faith. Both the insured and the insurer must disclose everything which is in their knowledge and can affect the contract. Insurable interest must exist at the time of actual loss incurred and based on the approximate cause for which insurance policy is taken.

4. Miscellaneous Insurance
Some important types of insurance have been discussed below:

(1) Motor Vehicle Insurance – Under this insurance vehicles on roads such as motors, trucks, cars, vans, motorcycles, scooters etc. are insured. If the insured vehicle is lost or damaged or becomes the victim of accident, the insurance company compensates for the actual loss or the amount of the policy, whichever is lower. If the insured vehicle causes damage to any other vehicle the insurance company will compensate to the owner of other vehicle. Motor vehicle insurance is classified as follows:

(a) Comprehensive Insurance — This insurance covers all types of risk causing damage to the insured vehicle.

(b) Third Party Insurance – If any vehicle causes damage to any person or vehicle the owner of the vehicle will compensate. The insurance company under Third Party Insurance will compensate to the owner of vehicle only.

(2) Burglary Insurance – Under this insurance, loss due to theft or burglary is compensated by the insurance company. While taking policy detailed information of the article to be insured is furnished. The insurance company compensates for the loss of the insured due to theft or burglary. Insured items may include gold and ornaments, other household items such as refrigerator, T.V., Air Conditioners etc.

(3) Personal Accident Insurance – This insurance policy is taken to compensate for the loss caused by accident. If the insured person dies or meets any fatal accident, the insurance company makes the payment of the insured amount to the person himself if he survives or to the nominee of the insured person, if he dies. In case of partial disability the amount is paid according to the terms and conditions of the insurance policy. The insurer, in an accident policy, is liable only if the unfair or death is caused by an accident and not due to natural causes.

(4) Fidelity Insurance-This insurance policy protects against the loss caused by embezzlement, dishonesty and fraud of employees. In order to protect itself from losses caused by these misshaping the insurance company guarantees to compensate for the loss caused by dishonesty of employees. If the business suffers any lose due to the fraud of the employee, the insurance company compensates for it. In case of this insurance policy the business cannot make any change in the service conditions of the employee without consulting insurance company.

(5) Employees Accident Insurance – Workers working in the factory may be subjected to any accident.at any time while working in the factory. In case of partial loss of limbs or disability, the owner of the factories have to compensate for the loss to the employees as per the provisions of factory act. If the factory owner desires, he can get the risk insured with the insurance company. In the case of insurance, the insurance company will have to compensate the employee.

(6) Health Insurance – Under this insurance policy medical expenses of illness and disability are covered by the Insurance. This type of Insurance can transfer the burden, of the costs of illness or accident, so that people do not have to face financial ruin, because of poor health. This insurance covers basic medical expenses, major medical expenses, disability income and long term hospitalization reimbursement of charges.

Question 5.
Explain in detail the warehousing services.
Answer:
Functions Of Warehousing
(1) Stability in prices-Warehousing maintains the stability of price by storing goods in the godown and releasing as per requirements of the market. Prices of seasonal commodities can be stabilised. Warehousing help in removing violent fluctuation in the prices of goods through smooth supply throughout the year.

(2) Surety for loan – The warehouse receipt can be deposited with the bank and the lending institution as security against loans borrowed.

(3) Storage facility—Surplus goods required to be used in future can be stored in godown and taken back, whenever required.

(4) Safety of goods – Godowns are specially made to keep goods safe. Certain godown storing specific commodities are built to suit the nature of the commodity. Goods are always safe in their proper godowns. Godown safeguards the show of merchandise from deterioration pilferage and vastage etc.

(5) Other functions-Warehouses provide facilities for grading and packaging of goods. In case of bonded warehouse, the importer gets reasonable time to arrange funds to make the payment of customs and other dock charges.

Importance Of Warehousing

Goods are stored by manufacturers, producers, farmers, wholesalers and even retailers. Storage and warehousing have the following advantages and importance:

(1) Protection of goods-A warehouse protect goods against pilferage, theft and damage. After keeping goods in the godown the businessman are carefree. Goods are preserved free from rain moisture, pests, fire etc.

(2) Useful for seasonal goods – There are certain things which are produced once in a year and used throughout the year, such as wheat, rice, sugar, potatoes etc. By keeping goods in the warehouses, goods are available throughout the year.

(3) Seasonal consumption of goods – There are certain commodities which are produced throughout the year but consumed during the season. These commodities are woolen garments, heaters, coolers etc. As such in order to maintain balance between demand and supply these commodities are required to be stored safely. A warehouse acts as a reservoir of store house of surplus goods.

(4) Production to meet future demand – These days goods are produced on a large scale in anticipation of future demand. There is time gap between the production and consumption of goods. It is, therefore, necessary that goods should be kept safe and secured during this period.

(5) Storage of raw material – Production is a continuing activity, so raw material is required throughout the year. Supply of raw material can be maintained throughout the year by proper storing of raw material.

(6) Stability of prices – In order to maintain the stability of price, it is necessary that surplus goods during the season should be stored and brought out during the offseason. This will also check the fluctuation of price.

(7) Facilitating foreign trade – An importer can keep the imported goods in bonded warehouses if they is unable or unwilling to pay custom duty immediately. He can pay duties in installments and draw goods gradually.

Detailed, Step-by-Step NCERT Solutions for 11 Business Studies Chapter 3 Private, Public and Global Enterprises Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Private, Public and Global Enterprises NCERT Solutions for Class 11 Business Studies Chapter 3

Private, Public and Global Enterprises Questions and Answers Class 11 Business Studies Chapter 3

Tick the appropriate answer:
Question 1.
A government company is any company in which the paid-up capital held by the government is not less than
(a) 49%
(b) 51%
(c) 50%
(d) 25%
Answer:
(a) 49%

Question 2.
Centralised control in MNC’s implies control exercised by
(a) Branches
(b) Subsidiaries
(c) Headquarters
(d) Parliament
Answer:
(c) Headquarters

Question 3.
PSE’s (Public Sector Enterprises) are organizations owned by
(a) Joint Hindu Family
(b) Government
(c) Foreign Company
(d) Private Entrepreneurs
Answer:
(a) Joint Hindu Family

Question 4.
Reconstruction of sick public sector units is taken up by
(a) MOFA
(b) MOU
(c) BIFR
(d) NRF
Answer:
(c) BIFR

Question 5.
Disinvestment of PSE’s implies
(a) Sale of equity shares to
(b) Closing down operations private sector/public sector
(c) Investing in new areas
(d) Buying shares PSE’s
Answer:
(a) Sale of equity shares to

Short Answer Questions

Question 1.
Explain the concept of the public sector and private sector.
Answer:
Indian Economy consists of a mixed economy. A mixed economy refers to an Economic system where both private and government enterprises co-exist. The economy therefore classified into two sectors viz., private sector and public sector, file private sector consists of business enterprises owned by individuals or a group of individuals.

The various forms of organization are sole proprietorship, partnership, joint Hindu Family. Co-operative and company. The public sector consists of business enterprises owned and managed by the government. These organizations may either be partly or wholly owned by the Central or State Government with an equity stake of at least 51 % with the government.

They may also be a part of the ministry or might have come into existence by a special Act of the Parliament. The government participates in the economic activities of the country through the public sector. Industrial policy resolutions announced by the government from time – to – time define the area of activities in which the private sector and public sector are allowed to operate.

Question 2.
State the various types/forms of organizations in the private sector.
Answer:
Forms of Private Sector Enterprises – Following forms covered by Private Sector Enterprises:
(1) Sole Proprietorship – He is a person who carries on business exclusively by and for himself. He is the provider of capital and management to the business. He does not share the business profits with anybody. He himself is responsible for all the business activities.

(2) Joint Hindu Family – The business of a Hindu is inherited by his heirs under the Hindu Law. Such a business is known as Joint Hindu Family Business. The head of the family, known as Karta, manages the affairs of the business. The other male members of the Hindu family are known as coparceners. This business is governed by the provisions of Hindu Law.

(3) Partnership Firms-Partnership is a relationship between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. An A-partnership firm comes into existence when two or more persons enter into an agreement to carry lawful business and share its profits and losses. The maximum number of members of a partnership shall not exceed twenty.

(4) Joint Stock Company – It is an artificial person created by law (Companies Act, 1956). It is invisible, and intangible person and exists only in the eyes of law. Being created by law, it possesses only those characteristics which the charter of its creation known as Memorandum of Association confers upon it. It acts according to the Companies Act 1956.

(5) Cooperative Society – It is also a body corporate. It is formed and registered under the Cooperative Societies Act, 1912. It is a voluntary organisation of its members. Its success depends upon the cooperation among its members formed the cooperative society.

Question 3.
What are the different kinds of organizations that come under the public sector?
Answer:
The forms of organization which a public enterprise may take are as follows:
(i) Departmental Undertaking:
These enterprises are established as departments of the ministry and are considered as part of an extension of the ministry itself. These undertakings may be under the Central or the State Government. Examples: Railways and Post and Telegraph Department.

(ii) Statutory Corporation:
Statutory corporations are public enterprises brought into existence by a Special Act of the Parliament, which defines its powers and functions. It is a financially independent corporate body created by the legislature and has clear control over a specified area or a particular type of commercial activity.

(iii) Government Company:
According to the Companies Act, 1956, a government company means any company in which not less than 51 percent of the paid-up capital is held by the Central Government, or by any State Government or partly by Central Government and partly by one or more State Governments. These are established purely for business purposes.

Question 4.
List the names of some enterprises under the public sector and classify them.
Answer:
Followings are the undertaking covered by public enterprises :
Departmental Undertaking – A departmental enterprise is organised, financed, and controlled in as much the same way as any Government department. It may be run either by the Central Government or by a State Government. Examples of such departments are :

• Posts and Telegraphs Works
• Indian Railways
• The Integral Coach Factory, Perambur
• The Diesel Locomotive Works Varanasi
• National Instruments Factory, Calcutta
• Precision Instruments Factory, Kolkata
• U.P. Cement Factory.

Statutory Corporation – A statutory or public corporation is an autonomous business enterprise created by law to conduct the activities assigned to it. It is a body corporate set up under a special act passed by the Central or State Legislature. Thus, it is known as a statutory corporation as it is created by statute. The statute defines its objects, powers, and functions.

Some important examples of statutory corporations are:

• Life Insurance Corporation of India
• Air India International Corporation
• Indian Airlines Corporation
• Food Corporation of India
• Employees’ State Insurance Corporation
• Central Warehousing Corporation
• State Financial Corporations
• State Bank of India.

Government Company – A government company is a company in which not less than 51 percent of the paid up share capital is held by the Central Government or by one or more State Governments or both. The remaining amount of paid-up capital of a government company can be subscribed to by private individuals or institutions.

It is formed and registered under the Companies Act, 1956 which contains special provisions relating to the government companies. But the Central Government has been empowered to direct through a notification in the Official Gazette that any of the provisions of the Companies Act as may be specified therein shall not apply to any government company or shall apply with certain exceptions, modifications, and approvals.

Some of the examples of government companies are :

• Bharat Heavy Electricals Ltd.
• Hindustan Steels Ltd.
• Hindustan Insecticides Ltd.
• Hindustan Cables Ltd.
• Hindustan Shipyard Ltd.
• Sindri Fertilizers Ltd.
• Indian Oil corporation.

Question 5.
Why is the Government Company form of organization preferred to-other type in the Public Sector?
Answer:
The government company form of organization is preferred to other types in the public sector because of the following advantages it offers:
(i) Simple Procedure of Establishment:
A government company can be easily formed as compared to other public enterprises. There is no need to get a bill passed by the Parliament or State Legislature. It can be formed simply by following the procedure laid down by the Companies Act.

(ii) Working on Business Principles:
The government company works on business principles. It is independent in financial and administrative matters. Its Board of Directors usually consists of professionals and persons of repute.

(iii) Efficient Management:
The management of a government company ensures efficiency in managing the business as it is more accountable than other forms of public enterprises because the annual report of the government company is placed before both the House of Parliament.

(iv) Competition:
These companies pose a healthy competition to the private sector which ensures the availability of goods and services at reasonable prices and good quality.

Question 6.
How does the government maintain; a regional balance in the country?
Answer:
The government is responsible for developing all regions and states in a balanced way and removing regional disparities. Most of the industrial progress was limited to a few areas like the port towns in the pre-independence period. After 1951, the government laid down in its five-year plans, that particular attention would be paid to those sectors and regions which were lagging behind and public sector industries were deliberately set up.

Four major steel plants were set up in the backward areas to accelerate economic development, provide employment to the workforce and develop ancillary industries. This was achieved to some extent but there is scope for a lot more.

Development of backward regions so as to ensure a regional balance in the country is one of the major objectives of planned development. Therefore, the government had to locate new enterprises in backward areas and at the same time prevent the mushrooming growth of private sector units in already advanced areas.

Private sectors are not keen to set up industries in remote and backward regions because they lack infrastructural facilities such as electricity, transport, banks, communications, etc. As a result, these areas remain underdeveloped and industries get concentrated in urban areas. Public sectors should set up in backward areas to remove ’ regional disparities in development and to ensure balanced development in different parts of the country.

Long Answer Questions

Question 1.
Describe the Industrial Policy 1991, towards the public sector.
Answer:
Public sector in India was created to achieve the objectives of speeding up economic growth and more equitable distribution of income and wealth. The New Industrial Policy 1991 fay certain conditions to streamline public sector.

Public Sector and New Industrial Policy of 1991 – The government of India announced ‘New Industrial Policy’ in July, 1991. The important decisions have been taken in this policy with regards to public sector enterprises, which are as under:
(i) Sick public sector enterprises will be subject to the adoption of same policy as adopted by private sector enterprises.

(ii) Public sector enterprises will be made more efficient and : accountable through the medium of memorandum of understanding executed between these enterprises.

(iii) Share of public sector enterprises wi 11 be is in vested, that is sold to the ownership of public sector enterprises.

(iv) Only four industries have been reserved exclusively for public sector in place of 17 industries at present.
Recent Changes in the Role of Public Sector – U.S.S.R. was the firstcountry governed by socialism. Its disintegration shattered the concept of socialism. No country is prepared to accept socialism in its old form. It is a hard fact that economic growth at faster rate cannot be achieved without the active participation of private sector.

Simultaneously with the Public Sector – Previously in the fifty’s and sixty’s every developing country felt that, public sector should play dominant and major role in the economic growth of a country’s economy. It was felt during these years that the private sector has more interested in profit motive. It will result unbalanced growth of economy, ft will create wide gap between haves and the have-not.

After more than fifty years of independence it was seriously felt that the public sector has got its own drawbacks and limitations, ft can never be taken as the remedy of all economic evils. It was also seen that more capitalistic economies have flourishing economic growth.

Therefore, it was decided that public sector units running on losses should be closed. Importance should be given to private sector. Public sector should have narrow growth in areas of strategic defence works and infrastructure sector. Therefore, the slogan for privatisation has become the order of the day.

We cannot and should not dispense with the valuable contribution of public sector, but its unplanned expansion should be checked. There should be proper balancing between the public sectorand private sector.

It should be taken as granted that both public and private sectors are the two blade of a scissor, and both of them will be required to operate optimally. It will not be out of place to mention that no economy in the world is completely

socialisti corcapitalistic. In the light of above experiences, the government adopted a new approach to public enterprises. The important steps in the field of public enterprises are as follows :

(1) Industries Reserved for Public Sector – Since 1956-91, 17 industries had been reserved for the public sector. Private sector was not granted licences for the establishment of these, industries, so the public sector controlled these 17 industries. These industries were reduced in 1991 and further 5 industries reduced in 1993. At present only four industries have been reserved for public sector.

Since 1970 the licensing policy has been liberalised and simplified. Industrialists can also expand and develop their industries according to their wishes and this has had a very favourable effect on industrialisation in the country. As a result, industrialists now have complete freedom to establish any industry by obtaining licence easily and in case of some industries, even obtaining licence is not required.

List of Industries Reserved for the Public Sector

Private Sector will not be granted licences for under-mentioned industries

• Atomic energy
• Railway transport
•  The subsistences specified in the schedule to the Notification Number S.0.212(E) dated March 15,1995 of the Government of India in the Department of Atomic Energy.
• Arms and ammunition and allied items of defence equipment, defence aircraft and warships etc.

(2) Financial Restructuring – Financial requirements of public sector can be met through mutual funds, financial institutions, general public and workers.

(3) Provision of National Renewal Fund – Provision of funds through National Renewal Fund (NRF) was also made to protect the interest of public sector workers. National Renewal Fund was set up on 1 February 1992 to assist the employees in retraining, re-employment and counselling in case a public sector units is liquidated or dissolved.

(4) Redwelling through BIFR- Board for Industrial and Financial Reconstruction (BIFR) is established for the formation of rehabilitation schemes by which residential facilities can be provided to the workers of public sector enterprises.

(5) Privatization – The government of India has also experienced capitalised economy, where producing units are operated under private ownership. Though the speed of privatization is slow and clumsy but it will pick up soon by making a simple procedural mechanism, transparent, and stating the disinvestment Objectives clearly in each case.

The following table shows the disinvestment in public sector enterprises:

(1) Growth of subsidiary industries – Growth of subsidiary industries owes to the growth of public enterprises. Public enterprises provide more opportunities to the subsidiary industries. Moreover, 500 cottage industries are selling their products to public enterprises. During 1998-99, goods worth more than Rs. 1,230 crores were purchased from the subsidiary industries.

(2) Employment opportunities – The employment opportunities are also generated by the public sector enterprises. The average welfare expenditure incurred on the public sector employees is estimated to be Rs. 2,030 per annum and average income of public enterprises employees increased from 5,920 in 1970-71 to Rs. 78,841 in 1999-00. During the period of 1999-00 the public enterprises offered employment to 20.6 lakh of people. The government has set up public enterprises in various regions to provide employment.

(3) Capital formation – In India, the spread of public enterprises has stimulated capital formation. During first five year plan the share of public sector enterprises in gross capital formation stood at 84%; during second plan, it was 56%; during third plan, it was 59% and so on.

(4) Basic industries- Public sector laid sound foundation for basic, huge investment and defense and strategic importance industries in India. The public sector also established large-scale industries such as atomic energy, fertilizers, iron and steel, arms and ammunition, heavy machines etc. The contribution of public sector in attaining self-sustained growth cannot be over-emphasized and this sector is now striving for the growth of consumer industries along with basic and heavy industries.

(5) Resources of economic development-India is a less developed country, so it needs a lot of resources for economic development, but the small percentage of profit in the private sector is reinvested, the rest is distributed as dividend among the shareholders. The surplus of the public sector enterprises is largely reinvested on development of enterprises or on the economic progress of the country. Thus, the Government of India generates resources for the development of public enterprises. In order to speed up the process of economic development, the direct participation of Government is necessary.

(6) Progress of Infrastructure – The expenditure on the development of infrastructure is known as “social overhead costs” which are generally very high and beyond the means of private sector. The progress of infrastructure comprising of power, capital goods, basic industries, transport, communication etc. is a precondition of growth.

The private sector is reluctant to undertake the projects which do not involve high profits, their development is possible only in the public sector. Many of the public sector enterprises are extremely helpful in creating infrastructure for development.

(7) Establishment of socialistic pattern of society – Indian industrial policy of 1956 aims at establishing the socialistic pattern of society. In such system inequality of distribution is kept within the stipulated limits and public enterprises are expected to generate the much needed surplus for growth.

Investment in public sector would serve as a hand stock of check on the private sector. The government can sell essential goods to the poor at cheaper rates by adopting the policy of price discrimination. Public sector enterprises may set a trend for the socialistic pattern of the society and thus, wages of the low-paid employees can be raised to a reasonable standard.

(8) Development of backward regions- Public sector enterprises is set up to provide industries in the least or undeveloped regions in order to maintain regional balances in the area of industrial development This is done to create infrastructure and employment opportunities in economically backward regions.

(9) Taking over of sick industrial units – Public sector enterprises also formed to take over or merged the sick industrial undertakings so that wastage of social resources and loss of employment may be checked. National Textile Corporation establishment is an example of setting up of such enterprise.

Question 3.
Can the public sector companies compete with the private sector in terms of profits and efficiency? Give reasons for your answer.
Answer:
The profitability and efficiency of any enterprise can be measured with the help of certain indicators of revenue or surplus obtained and developmental activities operated by that enterprise. The profitability of Public Enterprises – Profitability is not the sole motivating force of development programme in case of public enterprises.

(Source : Economic Survey 2000) Reasons for Low Profitability in Public Sector- The main reasons of low profitability of public sector enterprises are given below:
Profit plays an important role. Profitability also measures the efficiency of management shown with the help of the following Table:

(1) Industrial Disputes – Public sector workers oftenly indulge in industrial disputes. The role of profit remains low due to the disputes between workers and management. It adversely affects production and efficiency resulting in low output and high cost which ultimately lower down the profits.

(2) Idle Capacity – Public sector enterprises operate at less than their full production capacity. Hence, the cost of production per unit remains high and the rate of profit low. The idle capacity is one of the most important cause of less profitability of public sector enterprises.

(3) Heavy expenditure on construction-Public sector enterprises have a lot of expenditure incurred on the construction of residential houses for the workers and managers. About Rs. 108 crores have been spent through public enterprises on the construction of houses and related welfare projects. It is not possible to cover the interest rate involved in the investment of construction, such investments miserably reduce the profits.

(4) Location effect – Private sector enterprises are located at places that suits the objectives of profit maximization. On the other hand, public enterprises are located in backward areas with a view to avoid regional imbalances. These places fail to offer developed and economically viable environment. As a result,cost factor is pushed up and profitability reduced.

(5) Lack of efficiency – Public enterprises generally have low efficiency, because of lack of professionalism of management and organisers. The managers of public enterprises are generally evasive of their responsibilities.Late Prime Minister Rajiv Gandhi held the view that in efficient management the fundamental weakness of public enterprises. Their delay-delaying tactics takes long time. This adversely affects the efficiency. These enterprises suffer from red-tapism syndrome.

(6) Inefficient management – Public enterprises fail to achieve their objectives due to the lack of good and professional management. Generally retired bureaucrats or defeated politicians in elections are appointed on managerial posts of the public enterprises. These politicians use public enterprises as a means to train the management staff of public enterprises to improve the quality of management by which the government can achieve its objectives.

Attempts are being made to improve the efficiency and profitability of public enterprises which are considered necessary. Staff strength and labour costs are being reduced through a freeze on new recruitment and voluntary retirement schemes. Professionalisation of management, functional autonomy and improvement in work culture are being made to improve the efficiency and profitability of the public sector.

Question 4.
Why are global enterprises considered superior to other business organizations?
Answer:
Global enterprises are industrial organizations which extend their industrial and marketing operations through a network of their branches or subsidiaries in several countries, these enterprises are considered superior to other private sector companies and public sector enterprises because of certain features which are as follows:
(i) Availability of Funds:
These enterprises can survive in crises and register higher growth as they possess huge financial resources as they have the ability to raise funds from different sources such as equity shares, debentures or bonds. They are also in a position to borrow from financial institutions and international banks as they have high credibility.

(ii) Diversification of Risk:
Global enterprises usually operate in different countries and enter into joint ventures with domestic firms of the host country. Thus, losses in one country may be compensated by profits in another country. Risk is also shared by-the domestic partner in case of the joint venture.

(iii) Advanced Technology:
Global enterprises conform to international standards and quality specifications as they possess superior technologies and methods of production.

(iv) Research and Development (R&D):
High-quality research involves huge expenditure which only global enterprises can afford. Therefore, these enterprises have highly sophisticated research and development departments which regularly come up with a product as well as process innovations making these firms globally competitive.

(v) Marketing Strategies:
Global companies use aggressive marketing strategies in order to increase their sales. Their market information systems are reliable and up-to-date leading to effective advertising and sales promotion. They manage their brands effectively as they have global brand equity.

(vi) Wider Market Access:
The operations and marketing of global companies extend to many countries in which they operate through a network of subsidiaries, branches, and affiliates. Due to this, they enjoy far wider market access than domestic firms.

Question 5.
What are the benefits of entering into joint ventures?
Answer:
Businesses can achieve unexpected gains through joint ventures with a partner. Joint ventures can prove to be extremely beneficial for both parties involved. One party may have strong potential for growth and innovative ideas but is still likely to benefit from entering into a joint venture because it enhances its capacity, resources, and technical expertise.

The major benefits of joint ventures are as follows:
(i) Increased resources and capacity:
Joining hands with another or. teaming up adds to existing resources and capacity enabling the joint venture company to grow and expand more quickly and efficiently. The new business pools in financial and human resources and is able to face market challenges and take advantage of new opportunities.

(ii) Access to new markets and distribution networks:
When a business enters into a joint venture with a partner from another country, it opens up a vast growing market. For example, when foreign companies form joint venture companies in India they gain access to the vast Indian market. Their products which have reached saturation point in their home markets can be easily sold in new markets.

They can also take advantage of the established distribution channels i.e., the retail outlets in different local markets. Otherwise establishing their own retail outlets may prove to be very expensive. .

(iii) Access to technology:
Technology is a major factor for most businesses to enter into joint ventures. Advanced techniques of production leading to superior quality products save a lot of time, energy, and investment as they do not have to develop their own technology. Technology also adds to efficiency and effectiveness, thus leading to a reduction in costs.

(iv) Innovation:
The markets are increasingly becoming more demanding in terms of new and innovative products. Joint ventures allow businesses to come up with something new and creative for the same market. Especially foreign partners can come up with innovative products because of new ideas and technology.

(v) Low cost of production:
When international corporations invest in India, they benefit immensely due to the lower cost of production. They are able to get quality products for their global requirements. India is becoming an important global source and extremely competitive in many products.

There are many reasons for this, lowcost of raw materials and labour, technically qualified workforce management professionals, excellent manpower in different cadres like lawyers, chartered accountants, engineers, scientists. The international partner thus gets the products of required quality Mid specifications at a much lower cost than what is prevailing in the home country.

(vi) Established brand name:
When two businesses enter into a joint venture one of the parties benefits from the other’s goodwill which has already been established in the market. If the joint venture is in India and with an Indian company, the Indian company does not have to spend time or money in developing a brand name for the product or even a distribution system. There is a ready market waiting for the product to be launched. A lot of investment is saved in the process.

Detailed, Step-by-Step NCERT Solutions for 12 Business Studies Chapter 1 Nature and Significance of Management Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Nature and Significance of Management NCERT Solutions for Class 12 Business Studies Chapter 1

Nature and Significance of Management Questions and Answers Class 12 Business Studies Chapter 1

Short Answer Type Questions 

Question 1.
Define management.
Answer:
Management is a process of planning, organising, staffing, directing and controlling the efforts of to organisational members by using all the other available resources to achieve its goal.

1. According to Harold Koontz and Heinz Weihrich
“Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.”

2. According to Kreither
“Management is the process of working with and through others to effectively achieve organisational objectives by efficiently using limited resources in the changing environment.”

Question 2.
Name any two important characteristics of management.
Answer:
After knowing about management we find some elements that may be called the basic charactristics.
They are as follows : (Write any two)

• Management is a goal oriented process.
• Management is all pervasive
• Management is multidimentional
• Management is a continuous process
• Manageme’nt is a group activity
• Management is a dynamic function
• Management is an intengible force.

Management is a goal oriented process :  An organisation has a set of basic goals which are the basic reasons for its existence. These should be simple and clear stated. Management unites the efforts of different individuals in the organisation towards achieving these goals.

Management is all pervasive : The activities involve in managing an enterprise are common to all organisations whether economic, social or political. Management is applicable at all levels of organisation. Every one has to make decisions within the ambit of the authority assigned to them.

Question 3.
Ritu is the manager of the northern division of a large corporate house. At what level does she work in the organisation? What are her basic functions?
Answer:
Ritu is the manager of the northern division of a large corporate house so she is working as middle management and she is responsible for implementing and controlling plans and strategies developed by top management.

At the some time she is responsible for all the activities of first line managers, for this she needs to interpret the policies framed by top management and ensure that her departme’t has the necessary personnel, she will assign duties and motivate the n and cooperate with other departments for smooth functioning of the organisation.

Question 4.
Why is management considered a multi-faceted concept?
Answer:
Management has been defined as a process of getting things done with the aim of achieving goals effectively, Management is a dynamic function and has to adopt itself to the changing environment. An organisation interacts with its external environment which consists of various social, economic and political factors and in order to be successful, an organisation must change itself and its goals according to the needs of the environment.

Moreover it is the process of planning, organising, staffing, directing and controlling the enterprise resources efficiently for achieving the goals that is why it is rightly called the multi-faceted concept.

Question 5.
Discuss the basic features of management as a profession.
Answer:
Management as a Profession
Management is a profession because it possesses the following basic features
1. It is a specialised body of knowledge that can be acquired through instruction.
2. It applies scientific approach to various managerial operations.
3. It has a regulatory body to enhance knowledge.
4. The basic motive of a profession is to serve their clients interests by rendering dedicated and committed service.
5. The right of admission is restricted i.e. decision to admit or reject a candidate is governed by criterion such as written examinations etc.
6. It has a uniform code of conduct or ethics to be followed by the members. Thus Management has emerged as a systematised body of knowledge having its own principles and theories. Now-a-days there are large number of professional institutes engaged in imparting professional training. However this degree is not essential but there is increasing demand for candidates having professional degree.

Long Answer Type Questions 

Question 1.
Management is considered to be both an art and science. Explain.
Answer:
Art is the skillful and personal application of existing knowledge to achieve desired results since art is the systematic application of a skill or know-how to accomplish a desired result. Management is an art because it involves the application of managerial skills to maximise the profits at the minimum possible cost in the most efficient manners. Like all other arts it is personal. The basic features of an art are :

• Existence of theoretical knowledge.
• It is Personalised application.
• It is based on practice and creativity.
• Thus every manager has a district style of working.

Management is also creative in respect that it converts raw material or inputs into output. However in case of art it is believed that “artists are born rather than made” and to be successful, what one needs is refining, and science is a systemetic body of knowledge that explains certain general truths. The basic features of science are as follows

• It is systematised body of knowledge.
• It is principles based on experimentation
• It has universal validity.

But the principles of management are not as exact as the principles of science their application and use is not universal. They have to be modified according to a given situation. However they provide managers with certain standardised techniques that can be used in different situations.

Thus we can say that management has features of both art and science. The practice of management is an art. However, managers can work better if their practise is based on the principles of management. These principles’ constitute the science management. Management as an art and a science are therefore not mutually exclusive, but complement to each other.

Question 2.
Do you think management has the characteristics of a full-fledged profession?
Answer:
A profession is an occupation, which possesses the following features.
1. There is a well defined and formal body of knowledge.

2. The right of admission is restricted i.e. decision to admit or reject a condidate is governed by criterion such c.s written examinations, interview etc.

3. All professions are affiliated to a professional association which regulates entry. Only those who possess the specialised degree and licence can practice it.

4. It has a uniform and ethical code of conduct which guides the behaviour of its members. Thus unlike professions such as medical or law which require a practicing doctor or lawyer to possess valid degree, nowhere in the world is it mandatory for a manager to possess any such specific degree. But professional knowledge and training is considered to be a desirable qualification, since there is greater demand for those who possess degree or diplomas from reputed institutions.

The basic purpose of management is to help the organisation achieve its stated goals. This, may be profit maximisation for a business enterprise. However this attitude is changing due to increasing awareness to the consumer and legal obligations. Thus it can be said that although management is not a full fledged profession, it is moving at a fast pace towards professionalisation.

Question 3.
Co-ordination is the essence of management. Do you agree? Give reasons.
Answer:
Co-ordination – The essence of Management :-
Co-ordination is the force that binds all the other functions of management. It is the integration, synchronisation, or orderly arrangement of group efforts to provide for unity of direction directed towards accomplishment of common objective.

It is a common thread that runs through all activities such as purchase, production, sales and finance to ensure continuity in the working of organisation. Co – ordination is sometimes considered a separate function of management. It is however, the essence of management, for achieving harmony among individual efforts towards the accomplishment of group goals. Each managerial function is an exercise contributing individually to co-ordination.

The process of co-ordinating the activities of an organisation begins at the planning stage itself. Top management plans for the entire organisation. According to these plans the organisational structure is developed. It is through the process of co-ordination that a manager ensures the orderly arrangement of individual and group efforts to ensure unity of action in the realisation of common objectives.

Thus co-ordination is an integral part of all managerial functions. It acts as link or guiding force between planning and organising. Finally it can be concluded the coordination is needed at all levels of management.

Question 4.
“A successful! enterprise has to achieve its goals effectively and efficiently.” Explain.
Answer:
Effectiveness and efficiency, these two terms are different but interrelated. For management it is important to be both effective and efficient. Effectiveness and efficiency are two sides of the same coin. But these two aspects need to be balanced and management at times, has to compromise with efficiency.

Suppose, a company’s target production is 5000 units in a year. To achieve this target the manager has to operate on double shifts due to power failure most of the time. The manager is able to produce 5000 units but at a higher production cost.

In this case the manager was effective but not so efficient, since for the same output more inputs were used. At times, a business may concentrate more on producing goods with fewer resources i.e. cutting down cost but not achieving the target production. Consequently, the goods do not reach the market and hence the demand for them declines and competitors enter the market.

This is a case of being efficient but not effective since the goods did not reach the market. Therefore, it is important for achieve goals with minimum resources i.e. as efficien while maintaining a balance between effectiveness and efficiency.

Question 5.
Management is a series of continuous interrelated functions. Comment.
Answer:
Management is described as the process of planning, organising, directing and controlling the efforts of organisation and of using resources to achieve specific goals

1. Planning
It is the function of determining in advance what is to be done and who is to do it. It implies setting goals in advance and developing a way of achieving them efficiently and effectively. It is the primary function which runs through all other functions.

2. Organising
It is the management function of assigning duties, grouping tasks, establishing authority and allocating resources required to carry out a specific plan. It is a process of defining the formal relationship among people and resources to accomplish desired goals. It involves identification of activities required to achieve goals.

3. Staffing
It simply stated that it is finding the right people for right job. A very important aspect of management as manpower is the most valuable resource to the organisation and due to complexities of human nature, staffing is treated as a separate function but in a series of other functions.

4. -Directing
It is an inter-personal aspect of managing by which subordinates are directed to understand and contribute. This requires establishing an atmosphere that encourages employees to do their best. Motivation and leadership are two key components of direction. There are four important elements of direction, leadership, communication, motivation and supervision.

5. Controlling
It is the management function of monitoring organisational performance towards the attainment of organisational goals. It is concerned with comparing the result with the plans and taking corrective actions. It involves establishing standards of performance, measuring current performance, comparing this with established standards and taking corrective actions where any deviation, is found.

6. Co-ordination
Co-ordination is the force that binds all the other functions of management. It is the common thread that runs through all activities. It is considered sometimes a separate function of management. It is the integration, synchronisation or orderly arrangement of group efforts to provide for unity of action directed towards the accomplishment of common objective.

Multiple Choice Questions

Question 1.
Which is not a function of management of the following.
a. Planning
b. Staffing
c. Cooperating
d. Controlling
Answer:
(c) Cooperating.

Question 2.
Management is ……………..
a. an art
b. a science
c. both art and science
c. neither
Answer:
(c) both art and science.

Question 3.
The following is not an objective of management.
a. earning profits
b. growth of the organisation
c. providing employment
d. policy making
Answer:
(c) Providing employment.

Question 4.
Policy formulation is the function of …………
a. top level managers
b. middle level managers
c. operational management
d. all of the above
Answer:
(a) Top level managers.

Question 5.
Co-ordination is ………..
a. function of management
b. the essence of management
c. an objective of management
d. none of the above
Answer:
(b) the essence of management.

Case Problems

1. Company X is facing a lot of problems these days. It manufacturers white goods like washing machines, microwave ovens, refrigerators and air conditioners. The company’s margins are under pressure and the profits and market share are declining.

The production department blames marketing for not meeting sales targets and marketing blames production department for producing goods, which are not of good quality meeting customers expectations. The finance department blames both production and marketing for declining return on investment and bad marketing.

Question 1.
What quality of management do you think the company is lacking? Explain briefly. What steps should the company management takeas to bring the company back on track?
Answer:
After reading the problem it is clear that there is lack of co-ordination among the three all are blaming, to each other, as co-ordination is the integration, orderly arrangement of group efforts to provide for unity of action directed towards the accomplishment of common objective. Thus it is the duty of top level management to make co-ordination amongst them and help them with proper command.

Question 2.
A Company wants to modify its existing product in the market due to decreasing sales. You can imagine any product about which you are familiar. What decisions/steps should each level of management take to give effect to this decision?
Answer:
Suppose a company X was selling mobile phones successfully in the market. Suddenly due to high competition in the market their sale started to decline. Now it is the duty of top and second level management to give more liberties to the third level mangement and the third level management should make more survey of the market to know the exact causes of the lacunas and declining sales.

Question 3.
A firm plans in advance and has a sound organisation structure with efficient supervisory staff and control system. On several occasion it finds that plans are not being adhered to. It leads to confusion and duplication of work. Advise remedy.
Answer:
In this case the company is facing two problems planning as will as co-cordination. So the top level management should make plans with the help of middle level management and lower level management, so that all the problems faced by working people should discuss properly in advance. In this way, it will not lead to confusion and duplication of work.

Detailed, Step-by-Step NCERT Solutions for 11 History Chapter 5 Nomadic Empires Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Nomadic Empires NCERT Solutions for Class 11 History Chapter 5

Nomadic Empires Questions and Answers Class 11 History Chapter 5

Question 1.
Why was trade so significant to the Mongols?
Answer:
The steppes of Central Asia had extreme climate and nomadic as, also hunter-gatherer tribes could only live there. Food grains was not grown there hence, only trade could help their survival. The scant resources of the steppe lands drove Mongols and other Central Asian nomads to trade and bartar with settled people in China.

Question 2.
Why did Genghis Khan feel the need to fragment the Mongol tribes into new social and military groupings?
Answer:
Reasons for fragmentation of Mongol tribes—
(i) There were a number of tribes divided into patrilineal lineages. There were some richer families but a majority
of them was poor. This caused conflicts between them, particularly, when game and stored provisions ran out or drought be fall in steppe.

(ii) The society was splited and exploited by the rulers of China because of no confederacy formed till then.

(iii) An organised military pressure could only make the raids successful and enhance their profit in the trade i.e. exchange of game, horses etc. for agricultural produce and iron utensils.

(iv) During to lack of unity, Genghis Khan (Temujin) himself had to suffer a lot during his youth. His blood-brother Jamuqa also had turned hostile to him.

The above bitter experiences during youth were formed motive that pressed Genghis Khan to fragment the Mongol tribes into new social and military groupings.

Question 3.
How do later Mongol reflections on the yasa bring out the uneasy relationship they had with the memory of Genghis Khan?
Answer:
This fact is revealed from the research of David Ayacon who has stated the “Yasa” was written as Yasaq when Genghis Khan promulgated it as the quilt of 1206.

It was then meant law, decree or order i.e. administrative regulations, the organisation of the hunt, the army and the postal system. However, his descendants in thirteenth century, started using the term “Yasa” purported to legal code of Genghis Khan.

Perhaps, they would have felt shame to confine his term only to tribal communities especially because, till then, they began to rule over very sophisticated urban societies with respective histories, cultures and laws. They wanted to claim their ancestor as big as Moses and Soloman who were great rulers and not merely a chieftain of a nomadic tribe.

The second proof on their uneasy relationship is apparent from record of Hafiz-a-Tanish, a chronicler to Abdullah Khan, one of distant descendants of Genghis Khan who states his visit at the festival ground in Bukhara where Genghis Khan had extorted hidden money from rich Muslim residents under a myth that they were sinners and would attain purgation only when said wealth is handed over to him. Hafiz-i-Tanish says that Abdulla had gone there to perform his holiday prayer.

Question 4.
If history relies upon written records produced by city- based literati, nomadic societies will always receive a hostile representation.” Would you agree with this statement? Does it explain the reason why Persian Chronicles produced such inflated figures of casualities resulting from Mongol campaigns?
Answer:
Yes, we are agree to this statement on the basis of following grounds
Reasons for contradiction in written history of nomadic societies .
(i) The work of scholars like Igor-de-Rachewiltz on “The secret History of the Mongols and Gorhard Doerfer. On Mongol and Turkic terminologies had infiltrated into the Persian language and made history of the central Asian nomads more difficult to understand.

(ii) Being the trans-continental span of the Mongol empire, the sources are written in several different languages.

(iii) There is difference between Mongqol-unniueatobeaan (The secret history of the Mongols) and Marco Polo’s travelogues in term of events and their description.

(iv) As we see in the chapter, in contrast to an eye witness report that 400 soldiers defended the citadel of Bukhara, II-Khanid chronicle reported that 30,000 soldiers were killed in the attack on the citadel. The reports also carried a statement of relief that times had changed and the great killings of the past were over.

Legacy of Genghis Khan was important, but for his descendants to appear as convincing heroes to a sedentary audience, they could no longer appear in quite the same way as their ancestor. On the basis of above grounds, we affirm the statement given for our opinion. Hence-opinion expressed on the basis of records described in the theme.

Question 5.
Keeping the nomadic element of the Mongol and Bedouin societies in mind, how, in your opinion, did their respective historical experiences differ? What explainations would you suggest account for these differences?
Answer:

Explanation
(i) The neglected and suppressed tribes i.e. Tatars, Khitan, Manchus and the Mongols by rulers of China and conditions being tough to survive after the great wall of China built, they adopted fair and unfair means to rule over trans-continental empire.

(ii) The topography being prosperous with the opportunity of trade, agriculture etc., the caliphates were formed instrument of ruling which remained for as long as 600 years. In Sultanate also, Caliphate was accepted as a facade. Eg. Mahmud also wished to receive a title of Sultan from the then Caliph (Abbasids) because originally, he was belonged to a slave’s son.

Question 6.
How does the following account enlarge upon the character of the Pax Mongolica created by the Mongols by the middle of the thirteenth century?
The Francis monk, William ofRubruck, was sent by Louis IX of France on an embassy to the great Khan Mongke’s court. He reached KaraKorum, the capital ofMongke, in 1254 and came upon a woman from Lorraine (in France) called Paquette, who had been brought from Hungary and was in the service of one of the prince’s wives who was a Nestorian Christian: At the court, he came across a Parisian goldsmith named Guillanme Boucher, whose brother dwelt on the Grand Point in Paris’.

This man was first employed by the queen Sorghagtani and then by Mongke’s younger brother. Rubruck found that at the great court festivals, the Nestorian priests were admitted first, with their regalia, to bless the grand Khan’s cup, and were followed by the Muslim clergy and Buddhist and Taoist monks
Answer:
The above account makes it ex-facie that owing to climax develoment of trade connections through silk route, a number of facilities and incentives were provided with the traders under Mongol i.e. nomadic empire. This was the period when said empire was extended from Europe to China.

Trade was continued norm into Mongolia and to Karakorum. Travellers were given a pass (paiza) in Persia or gerege in Mongolian for safe conduct of the business. Baj tax was imposed on traders in order to raise capital for investment on such facilities.

Earlier attitude of massacre of all peasantry and the conversion of their fields into pasture lands had been restricted to a large extent. In the 1290’s, the Mongol ruler of Iran, Ghazan Khan, a descendant of Genghis Khan’s youngest son Toluy, warned family members and other generals to avoid pillaging the peasantry.

Multi-culture administration we see, during Pax Mongolica as civil administrators were recruited from the conquered subordinated subjugated societies. Chinese secretaries deployed in Iran and Persian secretaries were in China. Gradually, the aristocratic pattern of ruling was turned into individual dynasties each ruling their separate Ulus (i.e. territorial administration).