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COMMERCE
Content Creation
The wise
possess all
II
Dear Students!
There is a wonderful treasure on your hands now in the form a text book, which is going to make you a really resourceful
and an able person in future. You have to believe it first so that you can develop a multi-dimensional personality in your
own self with a thorough knowledge in Commerce.
This is for you to know, how you could make use of the book for the best understanding of various useful and valuable
knowledge sources hidden within the text. These tips would certainly make a difference in you while learning the units,
lessons and relevant concepts thereof.
Actually the book is divided into 10 Units, 33 Chapters where in there are several sections are written in a student
friendly way. An attempt is made here to explain how to use them for a better learning experience.
The units are broad heading of the book which contains several
Chapters in each of them so that you can understand the section
specific knowledge in various parts of Commerce Education.
This is the usual way of learning. There are three Chapters, for
UNITS example, in Unit I, which gives you the basic and introductory
aspects of Commerce Education. Similarly the remaining
Units give you the specialized knowledge on the different Unit
headings so required at the level of Eleventh Standard. Omission
any unit may lead to loss of knowledge continuity.
All the 33 Chapters in the book are a real treasure for one who
wants to learn the theory and practice of Commerce today. So
you have to look into these chapters as useful, informative and
CHAPTERS capacity building capsules in any individual student who wants
to learn the elements and fundamentals of Commerce. Omission
HOW TO USE of any Chapter would lead to loss of knowledge in real terms and
other related benefits.
THE BOOK
These headings are given for you to remember the major
divisions of a chapter with conceptual clarity and information
sequence in an orderly manner so as to arrange your learning
SUB-HEADINGS method made easy. So you have to learn the subject content of a
chapter, mainly based on the ‘sub-headings’ of a chapter. This is
the simple way of learning.
III
As you are aware of, this section is essential to evaluate your ability
to answer specific questions, may be long answer or short answer
or fill in the blanks or choosing the correct one from among the
multiple-choice of answers. Scoring high marks is an indicator
of your knowledge level for higher studies and hence you need
QUESTIONS to prepare for these questions well in advance to the schedule of
examination time-table. You can try to find answers before your
teachers direct you to answer them. Prevention is better than cure.
GLOSSARY
IV
EDUCATIONAL OPPORTUNITIES
Any of the following Degree Any of the following Any of the following Any of the following Any of the Research
Programmes can be pursued professional courses/ programmes in India or professional courses/ Programme after a
by the students both on programmes. abroad after a Formal Degree programmes after Formal Post Graduation
Regular mode and Distance Programme. Anywhere a Formal Degree in Commerce/
Education mode. in colleges. Universities Programme
or Indian Institute of
Management (IIM)
• B.Com., Bachelor of • C.A., Chartered • M.Com., • Chartered • M.Phil., (Commerce)
Commerce (General) Accountant as Master of Commerce. Accountancy Master of Philosophy
• B.Com., (Hons.) an Integrated • M.Com., •C ost and • Ph.D., (Commerce)
Programme. (Accounting and Finance) Management Doctor of Philosophy
• B.Com., (Accounting &
Finance) • CMA(ICWA) • M.Com., (International Accounting (ICWA) • D.Litt., (Commerce)
• B.Com., (Corporate • ACS Business and Banking) •A ssociate Company Doctor of Letters
Secretaryship) • B.L., Bachelor of Law • M.Com., (Computer Secretary • UGC – National
• B.Com., (Computer – Five year Integrated Applications) •B achelor of Loss Eligibility Test (NET)
Application) Programme. • M.Com., (Co operative (LLB) • SET – State Eligibility
• B.Com., (International • B.Com., (LLB) Management) •U nion Public Sercice Test
Business) Bachelor of Law – • M.B.A., Master of Business Commission (UPSC) • B.Ed., (Bachelor of
Five year Integrated Administration • I ndian Administrative Education) and followed
• B.Com., (Bank Management) Programme in India
• M.B.A., (Finance) Service (IAS) by
• B.B.A., (Bachelor of Business or Abroad
Administration) • M.B.A., (Marketing) • I ndian Police Service •M .Ed., (Master of
• CIMA (Chartered (IPS) Education) Programmes
• B.B.M., (Bachelor of Bank Institute of • M.B.A., (Human Resource
Management) Management Management) • I ndian Foreign • Any PG Diploma
Accountants (UK)) Service (IFS) programme offered by a
• B.A., (Co-operation) • M.B.A., (Advertisement and standard Institute
• ACCA (Association Salesmanship) • I ndian Revenue
• M.Com., (Master of Service (IRS)
Commerce – Five year of Chartered Certified • M.B.A., (Hospital
Integrated programmed) Accountants (UK)) Management) • I ndian Audit and
• CPA (Certified Public Account Service
• Any Diploma Programme • MHRM (Master of Human (IA&AS) etc.
offered by a Standard Institute Accountant (USA)) Resource Management)
• MLM (Master Labour
Management)
EMPLOYMENT OPPORTUNITIES
a) For self employment there are a number of Enterpreneurial Development and Training Programmes sponsored by District Industries
Centres (DIC) throughout Tamil Nadu. Any Higher Secondary student can approach DIC in their own District Headquarters to train
up themselves to start their own Agri-business, small trade, Self Help Group, Departmental stores or any General Mercantile Shop.
b) After gaining a Formal Degree Programme, the commerce graduate can gain access to Bank Finance or Institutional lending for
business start-up
c) After Higher Secondary Course, the students can appear for Group IV and after formal degree programme, they can appear for
Group I and Group II for Govt Postings through TNPSC/UPSC, including services in police to postal departments, besides bank
employees in public sector.
d) Commerce graduates can become Income Tax practitioners and GST consultants with due qualifications.
SCOPE ABROAD
The commerce students have a wide range of scope abroad as listed below.
1. Th
e Bachelor Degree holders in commerce can join MBA in any university in developed countries like England. The USA, Australia
and so on.
2. Th
e commerce graduates with ‘Tally’ Accounting package can get employed in any part of world as Accountants in business
enterprises.
3. Th
e Master Degree holders in commerce can join Ph.D. Programmes in any foreign University with fellowships abroad.
4. B
.Ed/M.Ed/M.Phil/Ph.D holders in commerce can gain teaching jobs abroad both in schools and colleges (This is not only for younger
but also those who are retired from service in India)
5. C
ommerce graduates are permitted by foreign governments to start-up export business ventures in their respective Nations, If their
projects are valid.
6. C
ommerce graduates can become foreign exchange dealers through proper and authorised certification by the respective National
Governments in various countries.
7. C
ommerce graduates can become bank employees abroad after a formal selection by them. Based on required qualification.
8. C
ommerce graduates have great scope for Management consultancy/Export and Import consultancy/ Clearing and Forwarding
agencies/Economic Advisories/ Project consultancies/planning divisions/ share market speculators/security brokers/portfolio advisors/
Insurance advisors/ Advertisement agencies/ Secretariats of Business Tycoons/ Board personnel /Financial Advisors/Associates of Tax
consultancies/Treasury Management/Scrap Dealers/ Bullion Trader/ Advisors to various purchase committees.
SCOPE OF AREA OF
RESEARCH
• Marketing
• Management
• Finance
• Human Resource Management
• Entrepreneurship
• Retailing
• Supply Chain Mangement
• Logistic Mangement
• Financial Services
• Financial Markets
• Services Industries
• International Business
• Organisational Behaviour
• Digital Marketing
• Taxation
Institute of Chartered
Accountants Of India
VI
Chapter page
Unit No Contents
No No
PRINCIPLES OF MANAGEMENT
1.01 Concept of Management 1
1.02 Definitions of Management 2
1 1.03 Management Vs. Administration 4
1.04 Management Process 5
1.05 Principles of Scientific Management 7
1.06 Principles of Modern Management 9
FUNCTIONS OF MANAGEMENT
13
2 2.01 Main Functions
14
2.02 Subsidiary Functions
MANAGEMENT
MANAGEMENT BY OBJECTIVES (MBO) and
PROCESS MANAGEMENT BY EXCEPTION (MBE)
3.01 Meaning and Definition of MBO 17
3.02 Objectives of MBO 18
3.03 Features of MBO 18
3.04 Process of MBO 18
3 20
3.05 Advantages of MBO
3.06 Disadvantages of MBO 20
3.07 Meaning of MBE 20
3.08 Process of MBE 21
3.09 Advantages of MBE 21
3.10 Disadvantages of MBE 21
INTRODUCTION TO FINANCIAL MARKETS
4.01 Meaning and Definition of Financial Market 24
4.02 Scope of Indian Financial Market 25
4.03 Types of Financial Markets 25
4
4.04 Role of Financial Market 25
4.05 Functions of Financial Market 26
4.06
New Issue Market (NIM) Vs. Secondary 27
Market
CAPITAL MARKET
30
5.01 Meaning and Definition
31
5.02 Characteristics of Capital Market
31
5 5.03 Kinds of Capital Market
32
FINANCIAL 5.04 Functions and Importance of Capital Market
5.05
Indian Capital Market – Evolution and
MARKETS – I 33
Growth 5.06 New Financial Institutions
MONEY MARKET
37
6.01 Meaning and Definition
38
6.02 Characteristics
6.03
Difference between Capital Market and
39
Money Market
6.04 Participants in Money Market
6 41
6.05 Money Market Instruments
41
6.05.01 Treasury Bills
42
6.05.02 Certificate of Deposit
42
6.05.03 Commercial Bills
6.05.04 Government or Gilt-Edged Securities
43
Market.
VII
STOCK EXCHANGE
7.01
Stock Exchange – Origin, Meaning and
Definition 48
7.02 Functions of Stock Exchange 49
7.03 Features of Stock Exchange 50
7
7.04 Benefits and Limitations of Stock Exchange 51
7.05 Stock Exchanges in India 52
7.06 Types of Speculators 54
FINANCIAL 7.07 Stock Exchange Vs. Commodity Exchange 55
MARKETS – II 7.08 Recent Development in Stock Exchange 56
SECURITIES EXCHANGE BOARD OF INDIA
(SEBI)
8.01 Introduction of SEBI 65
8.02 Objectives of SEBI 67
8
8.03 Functions of SEBI 67
8.04 Powers of SEBI 68
8.05 Dematerialization 69
8.06 Benefits of Dematerialization 69
HUMAN RESOURCE MANAGEMENT
9.01 Meaning and Definition of Human Resource 76
9.02 Characteristics of Human Resource 76
9.03 Significance of Human Resource 76
9.04 Meaning and Definition of Human Resource
9
Management 77
9.05 Nature and Features of Human Resource
Management
9.06 Significance of Human Resource Management 77
9.07 Functions of Human Resource Management 79
RECRUITMENT METHODS
10.01 Meaning and Definition of Recruitment 82
10 10.02 Recruitment Process 82
10.03 Sources of Recruitment 83
10.04 Recent Trends in Recruitment 85
EMPLOYEE SELECTION PROCESS
HUMAN RESOURCE 11.01 Steps in Employee Selection Process 89
MANAGEMENT 11.02 Factors influencing Selection Process 94
11.03 Importance of Selection 95
11
11.04 Selection differs from Recruitment 95
11.05 Placement 96
11.06 Significance of Placement 96
11.07 Principles of Placement 97
EMPLOYEE TRAINING METHOD
12.01 Purpose of Training or Need for Training 101
12.02 Steps in Designing a Training Programme 102
12.03 Training Method 102
12.03 (i) On the Job Training 103
12.03 (ii) Off the Job Training 105
12
12.04 Differences Between on the Job Training and
off the Job Training 108
12.05 Benefits of Training 108
12.05 (i) Benefits to the Organization 108
12.05 (ii) Benefits to the Employees 109
12.05 (iii)Benefits to Customer 109
VIII
CONSUMER PROTECTION
17.01 Duties of Consumers 153
17
17.02 Consumer Responsibilities 156
17.03 Consumer Rights 157
ENVIRONMENTAL FACTORS
19.01
Meaning and Definition of Business
Environment 171
19.02 Types of Business Environment 171
19.02.01 Internal Environment 172
19 19.02.02 External environment: 173
19.02.03 Micro Environment; 173
19.02.04 Macro Environment: 174
19.03 Future Environment of Business-VUCA 176
19.04 Corporate Governance 176
19.05 Goods and Services Tax – GST 177
XII
COMPANY SECRETARY
25.01 Company Secretary 293
25.02 Qualifications of Company Secretary 293
25.02.01 Statutory Qualifications 293
25.02.02 Other Qualifications 294
25.03 Appointment of Company Secretary 294
25.04 Functions/ Duties of Company Secretary 295
25.04.01 Statutory Functions 295
25.04.02 Non-Statutory Functions 296
25.05 Powers and Rights of Company Secretary 296
28 25.06 Removal / Dismissal of Company Secretary 297
25.07 Company Meetings 297
25.08 Kinds of Company Meetings 297
25.08.01 Shareholders Meetings 297
25.08.02 Meeting of the Board of Directors 298
25.08.03 Special Meeting 298
Digi-Link 25.09 Resolution 299
25.09.01 Kinds of Resolution 299
25.10 Voting 300
25.11 Procedures of Voting 300
XII
1
CHAPTER
PRINCIPLES OF MANAGEMENT
process affects the organisation, i.e., with Drucker stresses three jobs of
and through personnel or human resources. management:
3. Quantitative school wants to improve the (i) Managing a business;
quality of decision making, i.e., fulfilling the (ii) Managing manager; and
stated objectives of the enterprise.
(iii) Managing workers and work.
4. Systems approach concentrates on the entire
Even if one is omitted, It would not have
organisation, i.e., inputs-process- outputs.
management anymore and it also would not
5. Contingency approach emphasises dynamic have a business enterprise or an industrial
nature of management process in an ever- society. According to P. Drucker, the manager
changing business environment. has to balance and integrate three major jobs of
a business enterprise as mentioned above.
(ii) Precise Definition of
Hence, a manager is a dynamic and life-
Management:
giving element in every business. Without
Let us discuss the definition of efficient management it cannot be secure
management. It should be the basis of our study the best allocation and utilisation of human,
of the principles of management. The substance material and financial resources.
of management should be identified as a process.
A process is something that a person does. Management is an Art or Science
A process also implies ongoing and There is always a discussion about the
unceasing cyclical operations. In management nature of management whether it is an Art of
we have planning-action-control cycle. Our doing things or it is a pure Science of getting
definition must incorporate this management things done. It would be useful to explain the
cycle. A process indicates the dynamic nature of nature of management in brief as under:
management. Management is an in-exact science,
It also implies that change is a constant because in pure science, the principles are put
reality of organisational life and management is into test in a laboratory and they are either proved
the management of change. Lastly, management or disproved exactly and precisely. For example,
is regarded as a social process because it is plant leaves have starch in them which can be
directly concerned with management of human proved or disproved in a Botany lab. Similarly
resources in order to secure cooperation and the management principles can be put to test in
teamwork from the people in their performance, an organization where men, machine, money
and materials (4 Ms) are practically integrated
1. “To manage is to forecast, to plan, to
towards achieving some chosen organizational
organise, to command, to co-ordinate and
goals. These principles cannot be exactly proved
to control.” —Henry Fayol. It attempts to
or disproved either as they tend to be flexible to
describe management in terms of what a
changing environment, policies and practical
manager does, and not what management is.
difficulties while synchronizing them together.
2. “Management is a multipurpose organ So, management can be described as an inexact
that manages a business and manages science.
manager, and manages worker and
Everyone believes that management is
work.”— Peter F. Drucker: The Practice of
an art. No, it is not an art in Toto. Because, the
Management
concept of art denotes the learning of skills
and practicing them in the day to day life like a and displaying popular managerial skills to
mason or carpenter or mechanic or a musician accomplish the organizational goals as efficiently
being able to perform their respective art they and as quickly as possible so as to be competitive
learnt by way of skill display before anybody in the globalised environment of business.
under any circumstances.
1.03 Management is differ from
Music composer and singer Mr. A.R. Administration
Rahman can display his skills at any point One should be able to distinguish between
of time anywhere in any country and any management and administration as the concepts
number of times which he composed and are interchangeably used in the world of business
sang before on silver screen, so also is Mr. today. While management is more ‘executive’ in
Ilayaraja or Mr. T. M. Soundararajan or nature the concept of administration denotes
Mrs. P. Suseela. the art of ‘decision making’ at the top and
‘evolving policies’ of the business undertakings
But the concept of management involves either by the governments of various countries
a set of required skills for any one designated or the respective promoters of such business
as a manager, but the level or span of their enterprises. Management is all about plans and
managerial skills would vary from person to actions, but the administration is concerned
person and individual to individual irrespective with framing policies and setting objectives.
of the countries they belonged to. The nature The manager looks after the management
of the administrative and managerial skills of the organization, whereas administrator
of our former Prime Minister Pt.Jawaharlal is responsible for the administration of
Nehru cannot be compared to his counterpart the organization. Management focuses on
and his own daughter Mrs.Indira Gandhi. So managing people and their work.
management is not an exact art of doing things.
The art of management is fully reflected
in the decision making capacity of a manager. Board of Directors
Judgment and imagination are essential even in
en n
em o
Managing Director
a computerised economy. A computer cannot
t
ag tra
an is
M min
called Administration, while the Managers by his or her immediate higher authority.
of various units like Production, Marketing, A process also implies ongoing and
Finance, Accounting, Distribution and Research unceasing cyclical operations. In management
& Development may be called Management of there is planning-action-control cycle. Defining
the concept must incorporate this management
the said organization.
cycle. A process indicates the dynamic nature of
Theoretically, it can be said that both are management.NITISH.....
different terms, but practically, it is found that
It also implies that change is a constant
the terms are more or less same. A manager
reality of organisational life and management is
performs both administrative and functional
the management of change. Lastly, management
activities. Although the managers who are
is regarded as a social process because it is
working on the top most level are said to
directly concerned with management of human
be the part of administration, the managers
resources in order to secure cooperation and
working on the middle or lower level represents
teamwork from the people in their performance.
management. So, it could be concluded that
administration is above management.
There are twin purposes of the
1.04 Management Process management process:
The substance of management should be (1) Maximum productivity or profitability and
identified as a process. A process is something (2) Maximum human welfare and satisfaction.
that what a person does in the context of his
There are five parts of management as a
individual duties and responsibilities assigned
process: first, the co-ordination of resources;
BASIS FOR
MANAGEMENT ADMINISTRATION
COMPARISON
Planning Direcng
Input End
Results
1. Men & Women
2.Machinery
3.Materials Process Goals
4.Money
5.Resources
Outputs
Organising Controlling
Inputs Outputs
Fundamental
Basic M. Funcons Stated
Resources (Process of Management) Objecves
Process of Management
feel that they are part of same family. It helps to should always welcome their suggestions and
produce synergy effect since both management should also reward them if their suggestions
and workers work in unison. prove to be beneficial for the organisation viz.
For example, in most of the Japanese reduction of costs or increase in production etc.
companies, paternalistic style of management At the same time, workers should also resist
is in practice and there is complete openness from going on strike or making unnecessary
between workers and the management. Usually, demands from management. Workers should
workers don‘t go on strike but, if at all they do be treated as integral part of organisation and
so, they just wear a black badge and work even all important decisions should be taken after
more than the normal hours just to impress due consultation with workers. Both of them
upon the management that their focus is on their should visualize themselves as two pillars whose
soundness alone can ensure achievement of
demands as well as organisational objectives.
common goals of the organisation. Taylor also
suggested that there should be proper division
3. Mental Revolution:
of work and responsibility between the two.
The technique of Mental Revolution
Management should always guide, encourage
involves a change in the attitude of workers and
and help the workers.
management towards each other. Both should
realize the importance of each other and should
5. Development of each and every
work with full cooperation. Management as
person to his or her greatest efficiency
well as the workers should aim to increase
the profits of the organisation. For this, the and prosperity:
workers should put in their best efforts so that Efficiency of any organisation also depends
the company makes profit and on the other on the skills and capabilities of its employees to
hand management should share part of profits a great extent. Thus, providing training to the
with the workers. Thus, mental revolution workers was considered essential in order to
requires a complete change in the outlook of learn the best method developed through the use
both management and workers. There should of scientific approach. To attain the efficiency,
be a spirit of togetherness between workers and steps should be taken right from the process of
management. selection of employees. Employees should be
scientifically selected. The work assigned to each
4. Cooperation, Not Individualism: employee should suit his/her physical, mental
This principle is an extension of principle and intellectual capabilities. Efficient employees
of ‘Harmony, not discord’ and lays stress on produce more to earn more. This ultimately
mutual cooperation between workers and the helps to attain efficiency and prosperity for both
management. Cooperation, mutual confidence, organisation and the employees.
sense of goodwill should prevail among both, The Principles of Taylor’s Scientific
managers as well as workers. The intention is to Management Theory became widely practiced,
replace internal competition with cooperation. and the resulting cooperation between workers
Both ‘Management’ and ‘Workers’ should realize and managers eventually developed into the
the importance of each other. Workers should be teamwork we enjoy today. While Taylorism in a
considered as part of management and should pure sense isn’t practiced much today, scientific
be allowed to take part in decision making management did provide many significant
process of the management. Management contributions to the advancement of management
practice. It introduced systematic selection and
8
For own thinking 4. Dividing the work into small tasks is known
1. Imagine yourself to be a manager and chart as
down the functions to be performed. a) Discipline b) Unity
2. Formulate a new policy relating to timing of c) Division of work d) Equity
employees. 5. With a wider span, there will be _______
hierarchical levels.
For Future learning a) More b) Less
1. The changes in management and c) Multiple d) Additional
administration of a school growing into a
Answers:
college.
1 a 2 c 3 b 4 c 5 b
2. Application of management process in
accomplishing work life balance. II. Very short answer questions:
1. What is Management?
TOP RANKED INDIAN 2. List out the management tools.
MANAGEMENT THINKERS:
3. Who is a manager?
Nirmalya kumar, Professor,
4. State the meaning of Authority.
London Business school
5. What do you mean by Span of management?
Vijay Govindarajan, Professor, Tuck School
of Business @ Dart mouth college, III. Short answer questions:
1. Define the term management.
New Hampshire.
2. Is management an Art or Science?
Pankaj ghemawat, Professor, IESE Business
school, Spain. 3. Differentiate management from
Administration.
4. What are the principles of Taylor?
5. What determines the span of management?
Exercise
IV. Long answer questions:
1. Write about the contribution of Drucker to
management.
2. Explain the management process in detail.
I. Choose the Correct answers
1. Management is what a _______ does? 3. Describe the principles of scientific
management.
a) Manager b) Subordinate
4. Explain the principles of modern
c) Supervisor d) Superior
management.
2. Management is an ________
5. Discuss the implications of span of
a) Art b) Science
management.
c) Art and Science d) Art or Science
3. Scientific management is developed by References
a) Fayol b) Taylor Management - Koontz O'Donnel
11
CHAPTER
2 FUNCTIONS OF MANAGEMENT
FUNCTIONS OF MANAGEMENT
Learning Objectives Managerial functions are time specific,
institution specific and country specific.
To enable the students to understand the
The management functions of industrial
■ Various functions of management
revoluvation may differ from the management
■ Significance of functions of management functions of 19th century and followed by 20th
century. This chapter is an attempt to explain
the management functions of 20th century and
after.
Chapter Synopsis Management functions are called as
Managerial process. This process is 24 hours
2.01 Main Functions
non stop process for attaining the objectives
2.02 Subsidiary Functions again and again for reaching the highest level.
Functions of management can be classified
into two catogories, they are A. Main functions
12
01 Planning
Organising
02
MAIN FUNCTIONS
Staffing
03
Direcng
04
Movaon
05
Controlling
06
Co-ordinaon
07
personnel. In other words, staffing refers to All the activities are divided groupwise
placement of right persons in the right jobs. or sectionwise under organising function.
Staffing includes selection of right persons, Now, such grouped activities are co-ordinated
training to those needy persons, promotion towards the accomplishment of objectives of
of best persons, retirement of old persons, an organisation. The difficulty of co-ordination
performance appraisal of all the personnel, depends upon the size of organisation. The
and adequate remuneration of personnel. The difficulty of co-ordination is increased with the
success of any enterprise depends upon the increasing size of the organisation.
successful performance of staffing function.
7. Motivating
4. Directing
The goals are achieved with the help of
Directing denotes motivating, leading, motivation. Motivation includes increasing the
guiding and communicating with subordinates speed of performance of a work and developing
on an ongoing basis in order to accomblish a willingness on the part of workers. This is
pre-set goals. Employees are kept informed of done by a resourceful leader. The workers
all necessary matters by circulars, instructions expect, favourable climate conditions to work,
manuals, newsletters, notice-boards, meeting, fair treatment, monetary or non-monetary
participative mechanism etc., in order to enable incentive, effective communication and
the employees to accomplish the organizational gentleman approach.
goals.
“ Passing the buck, the
5. Controlling buck stops here”
Controlling is performed to evaluate To shift or reassign the blame or
the performance of employees and deciding responsibility (for something) to another
increments and promotion decisions. The person, group, or thing.
control function helps in identifying under
performers and arranging remedial training for
them. It is the control function which facilitates 2.02 Subsidiary Functions
synchronization of actual performance with
Innovation, Representation, Decision-
predetermined standards.
making, and Communication are the subsidiary
functions of management.
6. Co-ordination
Co-ordination is the synchronization 1. Innovation
(or unification or integration) of the actions Innovation refers to the preparation of
of all individuals, working in the enterprise in personnel and organisation to face the changes
different capacities; so as to lead to the most made in the business world. Continuous
successful attainment of the common objectives. changes are being made in the business.
Co-ordination is included in every managerial Consumers are satisfied through innovation.
function; Eg (i) Planning and co-ordination, Innovation includes developing new material,
(ii).Organising and co-ordination, (iii) Staffing new products, new techniques in production,
and co-ordination, (iv) Directing and co- new package, new design of a product and cost
ordination, (v) Motivation and co-ordination reduction.
and (iv) Controlling and co-ordination.
14
02
03
REPRESENTATION DECISION
MAKING
01
04
INNOVATION
COMMUNICATION
SUBSIDIARY FUNCTIONS
15
• Have a plan for professional growth 4. How do you coordinate your classroom
with peace?
• Set clear expectations
5. What is meant by Innovation?
• Make them feel valued
• Be transparent. III. Short Answer Questions:
1. List out the main functions of management?
2. State the importance of staffing.
3
CHAPTER
MANAGEMENT BY OBJECTIVES (MBO)
MANAGEMENT BY EXCEPTION (MBE)
MANAGEMENT BY
Learning Objectives OBJECTIVES (MBO)
To enable the students to 3.01 Meaning and Definition
■ understand the meaning and definition Management By Objectives (MBO) is a
of MBO and MBE management system in which each member
■ understand the concept of Management of the organisation effectively participates and
by Objectives (MBO) involves himself. This system gives full scope
■ understand the concept of Management to the individual strength and responsibility.
by Exception (MBE) MBO harmonises the goal of an individual with
the organisation’s goal. It creates self-control
and motivates the manager into action before
Chapter Synopsis somebody tells his to do something.
MBO is popularised in the USA by George
3.01 Meaning and Definition of MBO
Odiorne. According to him, “MBO is a system
3.02 Objectives of MBO wherein the superior and the sub-ordinate
3.03 Features of MBO managers of an organisation jointly identify
3.04 Process of MBO its common goals, define each individual’s
major area of responsibility in terms of the
3.05 Advantages of MBO
result expected of him and use these measures
3.06 Disadvantages of MBO
guides for operating the unit and assessing the
3.07 Meaning of MBE contribution of each of its members”.
3.08 Process of MBE Prof. Reddin defines MBO as, “the
3.09 Advantages of MBE establishment of effective standards for
3.10 Disadvantages of MBE managerial positions and the periodic
17
conversion of those into measurable time bound 7. A high degree of motivation and satisfaction
objectives linked vertically and horizontally and is available to employees through MBO.
with future planning”. 8. Recognises the participation of employees
in goal setting process.
3.02 Objectives of MBO
9. Aims at replacing the exercise of authority
Management by objectives is intended primarily: with consultations.
i. to measure and judge performance
10. Encourages a climate of trust, goodwill and
ii.
to relate individual performance to a will to perform.
organisational goals
iii. to clarify both the job to be done and the 3.04 Process of MBO
expectations of accomplishment The MBO process is characterised by the
iv. to foster the increasing competence and balance of objectives of the organisation and
growth of the subordinates individual. The process of MBO is explained
below:
v.
to enhance communications between
superiors and subordinates 1. Defining Organisational Objectives
vi. to serve as a basis for judgements about Initially, organisational objectives
salary and promotion are framed by the top level employees of an
organisation. Then, it moves downwards.
vii. to stimulate the subordinates’ motivation
The definition of organisational objectives
viii.
to serve as a device for organisational states why the business is started and exists.
control and integration. First, long-term objectives are frames. Then,
Short-term objectives are framed taking into
3.03 Features of MBO account the feasibility of achieving the long-
1. An attempt is made by the management term objectives.
to integrate the goals of an organisation
2. Goals of Each Section
and individuals. This will lead to effective
management. Objectives for each section, department
or division are framed on the basis of overall
2. MBO tries to combine the long run goals of objectives of the organisation. Period within
organisation with short run goals. which these objectives should be achieved is
3. Management tries to relate the organisation also fixed. Goals or objectives are expressed in a
goals with society goals. meaningful manner.
4. MBO’s emphasis is not only on goals but
3. Fixing Key Result Areas
also on effective performance.
Key result areas are fixed on the basis of
5.
It pays constant attention to refining, organisational objectives premises. Key Result
modifying and improving the goals and Areas (KRA) are arranged on a priority basis.
changing the approaches to achieve the KRA indicates the strength of an organisation.
goals on the basis of experience. The examples of KRA are profitability, market
6. It increases the organisational capability of standing, innovation etc.
achieving goals at all levels.
18
08 01 Defining
Reappraisal of
Organisaonal
Objecves
Objecves
07 02
Appraisal of Goals of
Acvies Each Secon
06 03
Periodical Review PROCESS OF MBO Fixing Key
Result Areas
Meeng Acvies
05 04
Matching Resources Seng Subordinates
with Objecves Objecves or Targets
19
20
For example, the production manager ii. It focuses managerial attention on major
establishes quality control standards wherein five problems. As a result, there is better
defects per 100 units produced are permissible. utilisation of managerial talents and energy.
So long as the number of defects does not exceed iii. It facilitates delegation of authority. Top
5, the supervisors/foremen (subordinates) will management concentrates on strategic
handle the problem. Whenever there are more decisions and operational decisions are left
than 5 defects, the matter will be reported to the to the lower levels. There is increase in span
production manager. of control. This leads to motivation and
Management by exception (MBE) has development of subordinates.
both a general business application and a iv. It is a technique of separating important
business intelligence application. General information from unimportant one. It
business exceptions are cases that deviate the forces managers to review past history and
normal behavior in a business process and need study related business data for identifying
to be cared for in a unique manner, typically by deviations. There is better use of knowledge
human intervention. Their cause might include: of trends, history and available business data.
process deviation, infrastructure or connectivity
issues, external deviation, poor quality business v. MBE keeps management alert to
rules, malformed data, etc. opportunities and threats by identifying
critical problems. It can avoid uninformed
and impulsive action.
3.08 Process of MBE
vi. Management by exception provides better
Primarily, it is necessary to set objectives
yardsticks for judging results. It is helpful in
or norms with predictable or estimated results.
objective performance appraisal.
These performances are assessed and get
equated to the actual performance. Next, the
deviation gets analysed. With an insignificant 3.10 Disadvantages of MBE
or no deviation, no action is required and senior i. The main disadvantage of MBE is, only
managers can concentrate on other matters. If managers have the power over really
actual performances deviates significantly, the important decisions, which can be
issue needs to be passed to the senior managers, demotivating for employees at a lower level.
as an “exception has occurred”. Finally, the aim
ii. Furthermore, it takes time to pass the
is to solve this “exception” immediately.
issues to managers. Managing employees
who deviate from the normal procedures.
3.09 Advantages of MBE Because of compliance failures are
Management by exception provides the considered difficult to manage and typically
following benefits: find themselves with limited job duties and
ultimately dismissed/terminated.
i. It saves the time of managers because they
deal only with exceptional matters. Routine
problems are left to subordinates. Key words
Harmonise Appraisal Terminated
21
23
Financial Financial
instruments instruments
HOUSEHOLD SAVERS
Financial
Markets
24
25
26
(ii) Providing the lenders with earning assets so as to enable them to earn wealth by deploying the
assets in productive ventures
BASIS FOR
NEW ISSUE MARKET SECONDARY MARKET
COMPARISON
27
29
30
31
32
33
34
35
Money Market
Learning Objectives
Money Market is a market for purely
To enable the students to understand the short-term funds. It deals with the financial
assets and securities whose maturity period
■ Characteristics of Money Market
does not exceed one year.
■ The Difference between Capital Market
and Money Market 6.01 Meaning and Definition
■ The Money Market Instruments Money Market is the segment of financial
markets where in financial instruments having
Chapter Synopsis maturities of less than one year are traded.
Examples: Treasury Bills, Commercial Bills,
6.01 Meaning and Definition Certificate of Deposits, Government Securities,
6.02 Characteristics etc.,
6.03 Difference between Capital Market According to Crowther, ”the money
and Money Market market is the collective name given to the
6.04 Participants in Money Markets various firms and institutions that deal in the
6.05 Money Market Instruments various grades of near money”.
6.05.01 Treasury Bills The RBI defines the money market as,
6.05.02 Certificate of Deposit “a market for short-term financial assets that
6.05.03 Commercial Bills are close substitutes for money facilitates the
exchange of money for new financial claims in
6.05.04 Government or Gilt-Edged
the primary market as also for financial claims,
Securities Market.
already issued, in the secondary market”.
37
38
Money Market
Availability of Capital market instruments
instruments generally
6 generally have secondary
Instruments do not have secondary
markets.
market.
Transactions mostly
Transactions take place at
take place over the
8 Place of Transaction a formal place. Eg. stock
phone and there is no
exchange.
formal place.
39
40
41
Issuers
The Issuers of Certificate of Deposits are Specimen Copy of Commercial Bill
Commercial Banks, Financial Institutions, etc., Features
Subscribers The features of the Commercial Bills are
Certificate of Deposits are available for as follows:
subscription by individuals, corporations, 1. Drawer
trusts, associations and NRIs. It is a document 2. Acceptor
of title to a time deposit. It is a bearer certificate 3. Payee
and is negotiable in the market. 4. Discounter
5. Endorser
Features of Certificate of Deposit 6. Assessment
1. Document of title to time deposit 7. Maturity
2. It is unsecured negotiable instruments. 8. Credit Rating
3. It is freely transferable by endorsement Types
and delivery.
a. Demand and Usance Bills
4. It is issued at discount to face value.
A demand bill is one wherein no specific
5. It is repayable on a fixed date without time of payment is mentioned. So, demand
grace days. bills are payable immediately when they are
presented to the drawee.
42
43
8. Participants
The participants in Government securities London Money Market is the
market include the Government sector oldest, most developed and leading
comprising Central and State Governments Money Market in the world.
whose holdings represent governmental New York Money Market is ranked as
transfer of resources. the second well-developed Money Market in
9. Trading the world next only to the London Money
Market.
Although the secondary market for
Government securities is narrow, small and
less active, banks and corporate holders who
For Future Learning
purchase and sell Government securities on the
stock exchanges participate in trading. How to Invest Money in Money Market
10. Issue Mechanism Funds?
The Public Debt Office (PDO) of the RBI Gathering information about Money
undertakes to issue government securities. Market Funds
11. Issue opening Learn about money market
A notification for the issue of the Understand the goal of money market
securities is made a few days before the public funds.
subscription is open. Learn the disadvantages of money market
12. Grooming Gradual funds.
Acquisition of securities nearing maturity Investing in Money Market Funds
through the stock exchanges by the RBI in Understand the different types of Money
order to facilitate redemption is described as Market Funds
‘grooming’. Understand the purpose of Money Market
14. Switching Funds
The purchase of one security against the Compare past yields
sale of another security carried out by the RBI in Buying and Tracking of Money Market
the secondary market as part of its open market Funds
operations is described as ‘Switching’.
15. Auctioning
Buy at Money Market Fund
A method of trading whereby merchants
Track the Investment
bid against one another and where the securities
are sold to the highest bidder is known as Use records for tax filing
‘auctioning’.
44
Exercise 7.
The market for buying and selling of
Commercial Bills of Exchange is known as a
__________.
I. Choose the Correct Answers:
a) Commercial Paper Market
1.
The money invested in the call money b) Treasury Bill Market
market provides high liquidity with c) Commercial Bill Market
_________________.
d) Capital Market
a) Low Profitability
b) High Profitability 8. A marketable document of title to a time
c) Limited Profitability deposit for a specified period may be referred
d) Medium Profitability to as a __________.
2. A major player in the money market is the a) Treasury Bill
_________________. b) Certificate of Deposit
a) Commercial Bank c) Commercial Bill
b) Reserve Bank of India d) Government. Securities
c) State Bank of India
d) Central Bank. 9. Treasury Bills commands ___________.
a) High Liquidity
3. Money Market provides_______________.
b) Low Liquidity
a) Medium-term Funds
b) Short-term Funds c) Medium Liquidity
c) Long-term Funds d) Limited Liquidity
d) Shares
45
10.
Government Securities are issued by IV. Long Answer Questions:
agencies such as __________ 1. Define Money Market and Capital Market.
a) Central Government Explain the difference between the Money
b) State Governments Market and Capital Market.
c) Semi-government Authorities 2. Explain the characteristics of Money Market?
d) All of the above.
3. Explain the Instruments of Money Market?
Answers: 4. Explain the features and types of Commercial
Bills?
Q A Q A Q A Q A Q A
1 A 2 A 3 B 4 D 5 C 5.
What are the features of Government
Q A Q A Q A Q A Q A Securities?
6 B 7 C 8 B 9 A 10 D
References
II. Very Short Answer Questions:
1. Financial Markets and Services – E.Gordon
1. Define the term “Money Market”.
and Natarajan,
2. What is commercial bill market?
2. Investment Management Security Analysis
3. What is a CD market? and Portfolio Management – Dr. L Natarajan,
4. What is Government Securities Market? 3. Financial Services (Indian Financial System) –
5. What are the Instruments of Money Market? Prof. B. Santhanam, Financial Marketing –
Dr. Gurusamy
6. Explain the two oldest money markets.
7. What do you meant by Auctioning?
8. What do you meant by Switching?
46
UNIT FINANCIAL
MANAGEMENTMARKETS
PROCESS
- II
III
I
71
CHAPTER
PRINCIPLES
STOCKOF
EXCHANGE
MANAGEMENT
47
Stock exchanges and organized market first stock exchange in India was“The Native
provide a place for the investors to buy and sell Shares and Stock Brokers Association”. It was
securities freely. The market offers perfectly recognized by Government of India on Aug 31,
competitive conditions where a large number 1957 under Securities Contract (Regulation)
of sellers and buyers participate. Further, stock Act, 1956. It became The Bombay Stock
exchanges provide an auction market in which Exchange subsequently.
members of the exchange participate to ensure
continuity of price and liquidity to investors. Meaning
The efficient functioning of the Stock Exchange (also called Stock
stock exchange is responsible for creating a Market or Share Market) is one of the important
conductive climate for an active and growing constituents of Capital market. Stock Exchange
primary market for new issues. Moreover, is an organized market for the purchase and
an active and a healthy secondary market in sale of industrial and financial security. It is a
existing securities leads to a better psychology convenient place where trading in securities is
of expectations, considerably broadening the conducted in a systematic manner i.e. as per
investment enquiries and thereby, rendering the certain rules and regulations. It performs various
task of raising resources by entrepreneurs easier. functions and offers useful services to investors
Good performance and outlook for equities in and borrowing companies. It is an investment
the stock exchanges imparts buoyancy to the intermediary and facilitates economic and
new issue market. industrial development of a country.
Stock exchange is an organized market
7.01 Stock Exchange – Origin, for buying and selling corporate and other
Meaning, Definition securities. Here, securities are purchased and
sold out as per certain well-defined rules
Origin and regulations. It provides a convenient and
secured mechanism or platform for transactions
in different securities. Such securities include
shares and debentures issued by public
companies which are duly listed at the stock
exchange, and bonds and debentures issued by
government, public corporations and municipal
and port trust bodies.
Stock exchanges are indispensable for the
smooth and orderly functioning of corporate
sector in a free market economy. A stock
exchange need not be treated as a place for
Amsterdam Stock Exchange is considered speculation or a gambling den. It should act as
as the oldest stock exchange in the world. It a place for safe and profitable investment, for
was established in the year 1602 by Dutch this, effective control on the working of stock
East India company called VerenigdeOost- exchange is necessary. This will avoid misuse of
IndischeCompagnie called ‘VOC’. It was later this platform for excessive speculation, scams
rechristended as “Amsterdam Bourse”. The and other undesirable and anti-social activities.
48
London stock exchange (LSE) is the cash easily and quickly) and consequently raises
most popular stock exchange in the world. their value.
While Bombay stock exchange (BSE) is the
2. Correct Evaluation of Securities
oldest stock exchange in India. Similar Stock
exchanges exist and operate in other parts of the The prices at which securities are bought
world. (Tokyo Stock Exchange, Bankgaco Stock and sold are recorded and made public. These
Exchange, Singapore Stock Exchange, Dubai prices are called “market quotations”. One can
Stock Exchange, Newyork Stock Exchange) easily evaluate the worth of one’s securities on the
basis of these quotations. The lender can easily
Definition assess the worth of security offered for loan.
49
50
51
CHANDIGARH
v.
The Calcutta Stock Exchange
Punjab U
rakhand
Urakhand
Haryana
Delhi NEW DELHI
rad
esh
Association Ltd.
lP
cha
na
JAIPUR
Rajasthan
KANPUR
U
ar Pradesh
Sikkim
Assam
GUWAHATI
Aru
As
sa
m
Nagaland
vi. The Cochin Stock Exchange Ltd.
Rajasthan Uar Pradesh
Bihar
PATNA
Mehalaya
Gujarat
Gujarat
Bihar
Jharkhand West
Bengal Tripura
Manipur
vii. The Delhi Stock Exchange Association
AHMADABAD
West Mizoram
STOCK
EXCHANGE
VADODARA
Madhya pradesh
Bengal
KOLKATA Ltd.
Odisha
h
BHUBANESHWAR
ch
MUMBAI Maharashtra
PUNE
VASHI
Telungana
HYDERABAD
Telungana
ix. The Hydrabad Stock Exchange Ltd.
x. The Jaipur Stock Exchange Ltd.
a
Goa
tak
rna
Andra Pradesh
Ka
MANGALORE
BENGALURU
TamilNadu
CHENNAI
xi. The Kanara Stock Exchange Ltd.
TamilNadu
xii.
The Ludhiana Stock Exchange
Ker
KOCHI
COIMBATORE
alaKe
lakshadweep Island
Srilanka
LEGEND Association Ltd.
Internaonal Boundary
52
53
Bull
holders are not willing to part with them. In are traded whereas stock exchange is an
such situations, he feels concerned. Moreover, exchange where stock brokers and investors
the buyer is not willing to carry over the buy and / or sell stocks, bonds, and other
transactions. securities. Both types of exchanges are driven
by the demand and supply for commodities or
7.07 Stock Exchange Vs financial instruments. An exchange facilitates a
Commodity Exchange trading platform for buyers and sellers to meet
and conduct transactions. With the increase in
The key difference between commodity the opportunities provided by the commodity
exchange and stock exchange is that a commodity and exchange markets, they are able to attract a
exchange is an exchange where commodities growing customer base.
55
Forward Forward dealings are simplified as Standards are to be fixed for deliverable
8.
contract securities are fully standardized grades to facilitate futures contract
57
58
The trading time for commodity (MCX) They can be used as:
market is between 10:00 a.m. to 11:30 a.m. Leverage: Options help you profit from
Monday to Friday. changes in share prices without putting
The normal trading time for Agri- down the full price of the share. You get
community (NCDEX) market is between control over the shares without buying them
10:00 a.m. to 05:00 p.m. Monday to Friday. outright.
In addition, there is no lunch break or tea Hedging: They can also be used to protect
break in the Indian stock market timings. yourself from fluctuations in the price of a
The timings of the Indian stock market are share and letting you buy or sell the shares
divided into three sessions: at a pre-determined price for a specified
1. Normal session (also called continuous period of time
session)
2. Pre-opening session
3. Post-closing session
Dalal Street
Options Market
An 'Option' is a type of security
that can be bought or sold at a
specified price within a specified
period of time, in exchange for a non-
refundable upfront deposit. An options The literal translation of Dalal in Marathi is
contract offers the buyer the right to buy, not a broker or intermediary. Today, Dalal Street
the obligation to buy at the specified price is a metonym for the entire Indian financial
or date. Options are a type of derivative
sector much like Wall Street in the United
product. The right to sell a security is called
States.
a ‘Put Option', while the right to buy is called
the ‘Call Option‘.
59
Key words
Stock Exchange Commodity Exchange
From Bank junction, where nine streets Rechristended Brokers
converge by the Bank of England, Lombard Jobbers Clearing House
Street runs southeast for a short distance before Investors Speculators
bearing left into a more easterly direction, and Optimistic Pessimistic
terminates at a junction with Grace church
Street and Fenchurch Street. Its overall length
is 260 metresIt has often been compared For Own Thinking
with Wall Street in New York City
1. Identify any two persons in your vicinity
who are associated with the financial
market/stock exchanges, either as an
investor or as a stockbroker. Talk to them
Wall Street and find out (i) how sale and purchase
of securities takes place; (ii) what are
Wall Street is a street in lower
the popular instruments traded in the
Manhattan that is the original market; and (iii) about recent SEBI/
home of the New York Stock Exchange and government guidelines that may have
the historic headquarters of the largest U.S. affected their transactions.
brokerages and investment banks. The term
Wall Street is also used as a collective name
for the financial and investment community,
which includes stock exchanges and large
60
Case Study
1. Ramesh and Asaladeepesh are good friends. Ramesh is very god-fearing kind, while Asaladeepesh
was an enterprising person, having practical in approach. Read the following conversation.
Ramesh : Hi, Deepesh! What are you doing?
Asaladeepesh : Hi, I am reading the newspaper - financial market page that gives us information
about the shares price.
Ramesh : Shares, that is an area of big gambles.
Asaladeepesh : No, not really! You must understand how it works.
Ramesh : Frankly speaking, I think this Capital market is all a gambling game and I don’t
see any use of them.
Asaladeepesh : No, you are seriously mistaken; you do not know the importance of capital
market. I will tell how it is needed for an individual and an economy.
You are required to play the role of Asaladeepesh and continue the conversation.
61
62
63
64
UNIT FINANCIAL
MANAGEMENTMARKETS
PROCESS
- II
III
I
SECURITIES EXCHANGE
81
CHAPTER
PRINCIPLES OF MANAGEMENT
BOARD OF INDIA (SEBI)
8.01 Introduction
Learning Objectives
65
Initially SEBI was a non statutory body without any statutory power. However, in 1992, SEBI was given
additional statutory power by the Government of India through an amendment to the Securities and
Exchange Board of India Act, 1992
The SEBI is managed by its members, which consists of following:
Organization Structure of SEBI
Director
Secon Officers
(Administraon) Technical Assistants
66
68
6.
Power to Regulate Business of Stock iii. Trading has become more convenient as one
Exchanges can trade through computers at any location,
SEBI is also empowered to regulate the without the need of visiting a broker.
business of stock exchanges, intermediaries iv. The shares that are created through mergers
associated with the securities market as well and consolidation of companies are credited
as mutual funds, fraudulent and unfair trade automatically in the DEMAT account.
practices relating to securities and regulation v.
As all the transactions occur through the
of acquisition of shares and takeovers of depository participant, a trader does not have
companies. to communicate individually with each and
8.05 Dematerialization (DEMAT) every company.
Dematerialization is the process by which vi There is no need for stamp duty for transfer
physical share certificates of an investor are taken of securities; this brings down the cost of
back by the company/registrar and destroyed. transaction significantly.
Then an equivalent number of securities in the
vii. Certain banks also permit holding of both
electronic form are credited to the investors
equity and debt securities in a single account.
account with his Depository Participant.
viii. Banks also provide dedicated and trained
Dematerialization is done at the request of
customer care officers to assist through all
the investor. Investors will first have to open an
the procedures.
account with a DP (Depository Participant) and
then request for dematerialization of certificates ix.
A DEMAT account holder can
through the DP. buy or sell any amount of shares.
However, there is limit on the number of
Purchases made by an investor are
transactions done using physical securities.
credited to his account and sales are debited.
The securities held in dematerialized form are x. One can also choose to take a loan against
fungible. In other words they do not have any securities which are held in a DEMAT account
distinguishing features. Dematerialized shares by offering it as a collateral to the lender.
do not have any distinctive numbers. All the
holdings of a particular security will be identical
and interchangeable.
Trading in dematerialized shares
commenced on the NSE in December 1996 Common Low risk of
Bank BENEFITS OF Delivery
where Reliance Industries was the first company DEMATERIALIZATION
to trade its 100 shares in demat form. In case of
the BSE, dematerialization of shares commenced
in the year December 1997.
Automa c Reduces
8.06 Benefits of Dematerialization Update Costs
69
70
71
72
7.
Trading is dematerialized shares III. Short Answer Questions:
commenced on the NSE is ________ 1. What is meant by Dematerialization?
a) January 1996 b) June 1998
2. What are the documents required for a
c) December 1996 d) December 1998
Demat account?
8. ________ was the first company to trade its
3. What is the power of SEBI under Securities
shares in Demat form.
Contract Act?
a) Tata Industries
4. What is meant by Insiders trading?
b) Reliance Industries
c) Infosys 5. Draw the organization structure of SEBI.
d) Birla Industries
9. _________ enables small investors to IV. Long Answer Questions:
participate in the investment on share 1. What are the functions of SEBI?
capital of large companies. 2. Explain the powers of SEBI.
a) Mutual Funds b) Shares 3. What are the benefits of Dematerialisation?
c) Debentures d) Fixed deposits
10. PAN stands for _____
References
a) Permanent Amount Number
1. Sundar K. Business Organisation,
b) Primary Account Number
Vijay Nichole Imprints Private Ltd.,
c) Permanent Account Number
Chennai, 2017.
d) Permanent Account Nominee
2. Gurusamy S. Financial Markets and
Answers: Institutions, Vijay Nichole Imprints Private
1 a 2 b 3 a 4 d 5 b Ltd., Chennai, 2012.
6 a 7 c 8 b 9 a 10 c
74
UNIT HUMAN
MANAGEMENT
RESOURCE MANAGEMENT
PROCESS
IV
I
FUNDAMENTALS OF HUMAN
91
CHAPTER
PRINCIPLES OF MANAGEMENT
RESOURCE MANAGEMENT
76
77
9.06
Significance of Human
Resource Management
The strategic role of human resource i.
To identify manpower needs :
management is the process of acquiring, training, Determination of manpower needs in an
appraising, and compensating employees, and organisation is very important as it is a
attending to their labour relation, health, safety form of investment. The number of men
and fariness concerns. required are to be identified accurately to
There are various reasons why human optimise the cost.
resource management is important. They are as ii.
To incorporate change : Change is
follows: constant in any organisation and this
change has to be introduced in such a way
78
79
80
81
UNIT HUMAN
MANAGEMENT
RESOURCE MANAGEMENT
PROCESS
IV
I
10
1
CHAPTER
PRINCIPLES
RECRUITMENT
OF MANAGEMENT
METHODS
82
83
85
87
11
CHAPTER
EMPLOYEE SELECTION PROCESS
Chapter Synopsis
11.01 Steps in Employee Selection Process
A selection process includes a number
11.02 Factors influencing Selection Process
of steps – screening the application forms,
11.03 Importance of Selection
test, interview, checking of references, physical
11.04 Selection differs from Recruitment examination, and approval by appropriate
11.05 Placement authority, and handing over the selected
11.06 Significance of Placement candidates to orientation and placement section.
11.07 Principles of Placement These steps are not necessary for all types of
selection process. The main aim of selection
88
process is to find out the suitable candidate Commissions, Recruitment Boards and Private
for specific job. Since there are various factors Sector Companies either supply pre-printed
which affect the seeking of such information, application form or direct the candidates
the same type of selection process cannot be to download the forms uploaded in their
applied in all types of selection. respective websites. In the case of voluntary
Selection is the process of differentiating applications submitted by the candidates, they
between applicants in order to identify and hire are issued application form afresh at the venue
those with a greater likelihood of success in a of the interview to collect complete information
job. Selection is the process of choosing the about the candidate in the standardized
most suitable person for the vacant position in format. Selector can collate different types of
the organization. information from the application blank namely
family background, educational qualification,
According to Dale Yoder: “Selection co-curricular activities, work experience,
is the process in which the candidates for exposure to related activities, scale of pay
employment are divided into two classes – drawn, academic distinction, area of expertise
those who are to be offered employment and and so on.
those who are not.”
II) Scrutinizing the Applications
David & Robbins: Selection is a
managerial decision making process is to Where the applications received in
predict which job applicants will be successful response to advertisement inviting applications
if hired.” for opening are more, it is not possible for
recruitment agency to call all the applicants
11.01 Steps in Employee Selection for interview. Hence, selection committee
Process has to evolve some criteria like age, length of
experience, level of education, percentage of
STEPS IN SELECTION PROCESS marks, higher qualification, level of exposure,
Applicaon Blank communal quotos, proficiency etc., to shortlist
Scrunizing the
Applicaons Selecon 01 the number of applicants for the interview.
Test
III) Selection Test
02 Interview
06 Contract of Employment
89
Personality test refers to the test In other words interview represents a face
conducted to find out the non-intellectual traits to face interaction between the interviewer and
of a candidate namely temperament, emotional interviewee. According to Scott and others “an
response, capability and stability. There is no interview is a purpose full exchange of ideas,
right or wrong answer in the test. It comprises the answering of questions and communication
of following tests. between two or more persons.”
91
94
2. Better Efficiency
Selection of right person to the right job
“The key for us number one,
is sure to produce better quality of work and
has always been hiring very
may facilitate faster achievement of objectives.
smart people.”
This will help in greater measure to tone up the
- Bill Gates
overall efficiency of organisation.
“ you cannot push anyone up the ladder
3. Reduced Cost of Training and Development unless he is willing to climb it”.
Better selection of candidates definitely
reduces the cost of training because qualified
11.04 Selection differs from
personnel have better grasping power. If they
select suitable candidates for suitable job, Recruitment
they can easily understand the techniques Recruitment and selection play a vital
of the work better in quick time. Besides, the role in the Human Resource Management.
organization can develop different training These are the two sides of the same coin but
programmes for different persons on the basis there exists some difference between the two.
of their individual differences, thus reducing The difference have been highlighted and the
the time and cost of training considerably. exhibit is given below.
95
In other words, Placement is a process iv) It avoids misfit between the candidates and
of assigning a specific job to each and every the job.
candidate selected. v) It helps the candidate to work as per the
predetermined objectives of the organization
96
vi) It involves assigning a specific rank and employee shows a better performance, he/she
responsibilities to an individual is confirmed at the job as a regular employee
vii) It helps to avoid short term staff shortage. of the organization.
2. Job Offer
The job should be offered to the man Qualities required to success in
based on his qualification. campus placement: confidence,
Enthusiasm,communication
3. Terms and conditions skill, leader team player
The employee should be made conversant ,leadership, Honesty
with the conditions and culture prevailing in
the organization and all those things relating to
the job. Key words
Application Blank Structured
4. Aware about the Penalties Turnover Placement Job Offer
The employee should also be made aware Loyalty Recruitment Evaluation
of the penalties if he / she commits a wrong or Relocation Aptitude Attitude
lapse. Personality
5. Loyalty and Co-operation
When placing new recruit on the job,
For own Thinking
an effort should be made to develop a sense
of loyalty and co-operation in him, so that he/ 1. How will you prepare your Resume and
she may realise his/her responsibilities better Application?
towards the job and the organization. 2. Find out any 5 Selection interview
Placement is not an easy process. It questions.
is very difficult for an new employee, who 3. Student should arrange face to face
cannot be expected to be not familiar with interview
the job and environment. For this reason, the 4. To Identify the Placement process
employee is generally put on a probation/trial
5. Student should visit a nearby organization
period ranging from one year to two years.
and observe the selection interview.
After completion of the probation period, if the
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99
12
CHAPTER
EMPLOYEE TRAINING METHOD
100
for doing the jobs them self. Training enables iv) Enlightening New Recruits
the employees to guide their behavior. Training New employee can learn the methods
refers to the teaching and learning activities of working, techniques, reporting, related
carried on for the primary purpose of helping tools and equipment used in the job, the work
members of an organization to acquire and to culture of the company etc. with the help of
apply the required knowledge, skill and attitudes training.
to perform their jobs effectively and efficiently.
v) Improved Safety Measures:
According to Edwin B. Flippo” Training
Employees gain awareness about the
is the act of increasing the Knowledge and
risks involved in job and safety measure to be
skills of an employee for doing particular jobs”.
adopted through a proper training program.
According to Mathis and Jackson This helps to improve safety in the work place
“Training is a learning process whereby people and avoid accidents.
learn skills, concepts, attitudes and knowledge
to aid in the achievement of goals. vi) Motivating Employees:
An employee needs continuous
According to Dale S Bean defined
development to move along the career path
training as “the organized procedure by which
as per the career planning. Training motivates
people learn knowledge and skill for a definite
and instils organizational commitment.
purpose”
vii) Higher Productivity and Profits
12.01
Purpose of Training or Efficient training improves higher
Need for Training productivity and more profits as the trained
The purpose of Training can be explained employee can apply more skills and techniques
as follows at works. It helps them do work at faster rate
and complete it with high perfection.
i) Improved Quality of Work
Training helps to focus on specific viii) Cost Reduction
area and develop employee skills. It enables Trained employees can utilize the
employee to increase the quality of work resources in an efficient manner. There is no
carried out by them. possibility of wastages of resources and all
facilities are used at an optimum level. This
ii) Enhance Employee Growth
will lead to cost reduction.
Employees who undergo training
becomes good at their job. Imparting new ix) Reduced Supervision
skills helps in performance enhancement of Trained employees need minimum
the employees. supervision as they are educated about
various aspect of job in detail at the training
iii) Prevention of Obsolence:
programme.
Training helps to learn more knowledge
regarding the latest technologies and x) Better Adaptability
techniques. The employee gets updated with Employees are able to adapt themselves
the latest technology and trend. The major to new technologies and new methods of work
purpose of training is to avoid obsolence. which constantly undergoes changes.
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TRAINING METHODS
ON THE JOB TRAINING OFF THE JOB TRAINING
04 Apprenceship
Seminar / Conference Field Trip
04
Vesbule training Programmed
05 Commiee Assignment Instrucon E learning 05
Demonstraon
On the Job Training and Off the Job Training the role of coach or guide and an instructor.
Under this method the superior should point
My employees are my most important out mistakes/lapses committed by the new
assets. When they go home in the evening worker and also advise the remedial measures,
networth drops to Zero - A software to trainees. The trainees can clear their doubts
Billionaire in Silicon Vally (USA) then and there.
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EXPERIENCE
PRACTICE
LEARNING SUCCESS
12.03 (II) Off the Job Training Group of people participate and discuss
particular subject or one topic. Under this
Off the job training is the training method participants are divided into various
method where in the workers/employees learn groups. They were provided a particular issue
the job role away from the actual work floor. for deliberation. Each groups has to prepare
In other words training which is carried out solution after deep discussion with their group
away from your normal place of work. Off-the- members. The group leader has to present the
job training comprises of a place specifically solution to the audience,which will be discussed
allotted for the training purpose which may be or deliberated by other groups. Moderator will
near the actual work place, where the workers give final solution after listening to divergent
are required to learn the skills and get well view points.
equipped with the tools and techniques that
are to be used at the actual work floor. iii) Case Study Method
12. 04 Difference Between on the Job Training and off the Job Training
The major differences between these two training method is listed below.
Basis for
On the Job Training Off the Job Training
comparison
The employee learns the job in the Off the Job training involves the training
Meaning actual work environment. of employees out side the actual work
location
It is cheapest to carry out It requires expenses like separate
Cost training rooms, specialist, resources
like projectors.
Location At the work place Away from the work place
Generally imparted in case of Mostly imparted for managerial andnon
Suitable for Manufacturing for production production related jobs.
related Jobs
Approach Practical approach Theoretical approach
Principle Learning by performing Learning by acquiring knowledge
It is carried out by the experienced Training which is provided by the
Carried out
employee experts.
Training is very relevant and It can more easily deal with groups of
Deals with practical dealing with day –to –day workers at the same time.
requirement of job
The scope for distractions is There is no distraction because trainees
more, as there may be noise and are away from the actual working
Work disturbance
disturbances because of working environment.
machines, tools and gadgets.
Coaching, job rotation, Role –plays , seminar, lectures, case
apprenticeship, mentoring, under studies, vestibule field trip programmed
Methods study, job instruction, committee instruction demonstration e-learning
assignment are some of the avenues are some of the off – the job training
of on-the job training methods methods.
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3. Improves Skill Levels of employees to ensure II. Very Short Answer Questions:
better job performance
1. What is meant by training?
a) Training 2. What is Mentoring training method?
b) Selection
3. What is Role play?
c) Recruitment
d) Performance appraisal 4. State e-learning method?
110
UNIT ELEMENTS
MANAGEMENT
OF MARKETING
PROCESS
V
I
CONCEPT OF MARKETING
13
1
CHAPTER
PRINCIPLES OF MANAGEMENT
AND MARKETER
111
product operate and towards which the iv. To introduce new modes of life.
actual goods tend to travel.” v. To develop product by enhancing market
From the above definition it is observed that segment.
i. Market may mean a Place; where buying
and selling take place. 13.03. Classification of Markets
ii.
Buyers and sellers come together for On the basis of different approaches
transactions. markets have been classified on the basis of
Area, Nature of Goods, and Economic view,
iii. An organisation through which exchange
Transaction, Regulation, Time, Volume and
of goods takes place.
importance. The detailed classification is
iv. The act of buying and selling of goods (to presented in the following chart.
satisfy human wants).
I. On the Basis of Geographical Area
v.
An area of operation of commercial
a. Family Market: When exchange of goods or
demand for commodities.
services are confined within a family or close
members of the family, such a market can be
13.02. Need for Market called as family market.
i. To exchange (barter) goods and services. b. Local Market: Participation of both the
ii. To adjust demand and supply by price buyers and sellers belonging to a local
mechanism. area or areas, may be a town or village, is
called as local market. The demands are
iii. To improve the quality of life of the society.
CLASSIFICATION OF MARKETS
CLASSIFICATION
Perfect Spot
Family Commodity Capital
Imperfect Future
Produce Money
Local
Manufactured Foreign
National
Bullion Stock
World
Long Terminal
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Horse Market
c. National Market: a. Certain type of
commodities has demand throughout the
country. Hence it is called as a national
market. Today the goods from one corner
Flower Market
can reach another corner with ease as the
communication and transportation facilities
are developed well in India. This creates
national markets for almost all the products.
d.
International Market or World Market:
World or international market is one where
the buyers and sellers of goods are from
different countries i.e., involvement of buyers
and sellers beyond the boundaries of a nation.
II. On the Basis of Commodities/Goods
Goat Market a. Commodity Market:
A commodity market is a place where
produced goods or consumption goods are
bought and sold. Commodity markets are sub-
divided into:
i. Produce Exchange Market: It is an organised
market where commodities or agricultural
produce are bought and sold on wholesale basis.
Generally it deals with a single commodity. It is
regulated and controlled by certain rules. e.g.
Wheat Exchange Market of Hapur, the Cotton
Exchange Market of Bombay etc.
Cattle Market
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iii. Bullion Market: This type of market b. Imperfect Market: A market is said to be
deals with the purchase or sale of gold and silver. imperfect when
Bullion markets of Mumbai, Kolkata, Kanpur i. Products are similar but not identical.
etc., are examples of such markets.
ii. Prices are not uniform.
b. Capital Markets:
iii. There is lack of communication.
New or going concerns need finance at
iv. There are restrictions on the movement of
every stage. Their financial needs are met by
goods.
capital markets. They are of three types:
i. Money Market: It is a type of market IV. On the Basis of Transaction
where short term seurities are exchanged. It i. Spot Market: In such markets, goods are
provides short term and very short term finance exchanged and the physical delivery of goods
to industries, banks, governments agencies and takes place immediately.
financial intermediates. ii. Future Market: In such markets, contracts
ii. Foreign Exchange Market: It is an are made over the price for future delivery. The
international market. This type of markets dealing and settlement take place on different
helps exporters and importers, in converting dates.
their currencies into foreign currencies and vice
versa. V. On the Basis of Regulation
i. Regulated Market: These are types of
iii. The Stock Market: This is a market
markets which are organised, controlled and
where sales and purchases of shares, debentures,
regulated by statutory measures.
bonds etc., of companies are dealt with. It is also
known as Securities market. Stock Exchanges of Example: Stock Exchanges of Mumbai,
Mumbai, Kolkata, Chennai etc., are examples Chennai, Kolkata etc.
for this type of market. ii. Unregulated Market: A market which is
III. On the Basis of Economics not regulated by statutory measures is called
unregulated market. This is a free market,
a. Perfect Market: A market is said to be a
where there is no control with regard to price,
perfect market, if it satisfies the following
quality, commission etc. Demand and supply
conditions:
determine the price of goods.
i.
Large number of buyers and sellers are
there. VI. On the Basis of Time
i. Very Short Period Market: Markets
ii. Prices should be uniform throughout the
which deal in perishable goods like, fruits,
market.
milk, vegetables etc., are called as very short
iii. Buyers and sellers have a perfect knowledge period market. There is no change in the supply
of market. of goods. Price is determined on the basis of
iv. Goods can be moved from one place to demand.
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2. A marketer is someone whose job formula for creating a brand relationship with
involves marketing the consumers. The endorsement for the brand
3. Someone who promotes or exchanges of a company can be carried down by Cinema
goods or exchanges goods or services for money. Stars, Sports Stars, Musicians and eminent
personalities.
Definition of marketer
vi. Places: Under place marketing, tourist
“A person whose duties include the business prospects, new residents and land are
identification of the goods and services appealed to visit and particular geography by
desired by a set of consumers, as well as the promoting special characteristics of places like
marketing of those goods and services on infrastructural facilities, amusement, climatic
behalf of a company”. conditions, entertainment, culture etc.,
- Business Dictionary vii. Properties: Properties include both real
property and financial property which involve
13.05. What can be Marketed? transfer of ownership on sale or purchase of the
Marketing is a comprehensive concept same. For eg. Constructed house, Land, Plot,
which starts from the point of creation, Building, Shares, Debentures, Mutual funds
promotion and ultimately delivering the goods etc.,
and services to consumers and businesses. The viii. Organisations: An organisation can
dynamic items that can be marketed are listed market itself in order to build an image for it
below: by sponsoring events, adoption of villages,
i. Goods: Manufactured Goods are the donations for charitable causes, corporate social
main constituent of marketing endeavor in responsibility activities etc.,
all the countries across the world. Companies ix. Information: Information is the most
and individuals market goods like consumer valuable product that can be marketed today.
durables, electronic products, machineries, The data collected by an organisation can be
Computers and its software and hardware etc., used as a product for this purpose. For eg.,
ii. Services: Not only physical goods Information collected by libraries, research
can be marketed. Even the services of many agencies, educational institutions, book
organisations can be marketed to the consumers publishers, broadcasting companies, internet,
namely banking, insurance, finance, hospitality, etc.
tourism, professional consultations etc., x. Ideas: An idea may change the world.
iii. Experiences: The unique and varied Innovative and attractive ideas are the desirable
experiences pertaining to a place or a park or products for the marketers to sell. Social media
an event can be marketed under this concept. marketing thrives on new ideas in a consistent
For eg. Amusement Park, Theme Park, manner.
Mountaineering etc.,
iv. Events: The event marketing aims at
promoting and marketing of special events,
shows, exhibitions, fairs, performances, sports
events like World Cup, Olympics, T20 etc.,
v. Persons: The marketing of goods and
services through celebrities is a successful
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Inte
v ator grat
o or
Inn
Imp
tor
lem
tiga
ent
Ins
r o
Role of a Marketer
117
i.
There is a Goat market in
Aathur in Tamil Nadu.
STORAGE WAREHOUSE
ii. There is a daily flower market
in Hosur in Tamil Nadu.
118
2. The marketer initially wants to know in the 2. Mention any three Role of Marketer?
marketing is . 3. Marketer is an innovator? Do you agree?
a) Qualification of the customer 4. Why Customer support is needed to
b) Quality of the product Market?
c) Background of the customers 5. Explain the types of market on the basis of
d) Needs of the customers time.
3. The Spot market is classified on the basis of 6. List down the functions of Marketer?
. III. Long Answer Questions:
a) Commodity b) Transaction 1. How the market can be classified?
c) Regulation d) Time
2. How the market can be classified on the
4. Which one of the market deals in the basis of Economics?
purchase and sale of shares and debentures? 3. What is your contribution to promote the
a) Stock Exchange Market market in the modern society?
b) Manufactured Goods Market
c) Local Market
References
d) Family Market 1. Pillai, R.S.N., and Bagavathi, Modern
Marketing, S. Chand & Company Lt., New
5. Stock Exchange Market is also called Delhi, 2010.
...........................
2. Philip Kotler, Principles of Marketing,
a) Spot Market b) Local Market Prentice Hall of Indian (P) Ltd., New Delhi
c) Security Market d)National Market 2002.
Answers: 3. Sundar K. Elements of Marketing, Vijay
1 b 2 d 3 b 4 a 5 c Nicole Imprints Private Ltd., chennai, 2017.
4. www.yourarticlelibrary.com/marketing/
market-definition-and-classification-of-
markets/48772
119
Chapter Synopsis
Learning Objectives
14.01. Introduction
To enable the students to understand the 14.02 Evolution of Marketing
■ Introduction to marketing 14.03. Marketing Concepts
■ Evolution of marketing 14.04. Definition of Marketing
■ Marketing concept
14.05. Objectives of Marketing
■ Definition of marketing
14.06. Importance of Marketing to the
■ Objectives of marketing
Society
■ Importance of marketing to the society
14.07. Importance of Marketing to the
■ Importance of marketing to the
Individual Firms
individual firms
14.08. Functions of Marketing
■ Functions of marketing
■ Meaning and definition of marketing mix 14.09. Meaning and Definition of Marketing Mix
■ Elements of marketing mix 14.10. Elements of Marketing Mix
■ Marketing mix matrix 14.11. Marketing Mix Matrix
14.01 Introduction concerned with putting the goods into the hands of
the buyers for a price, but marketing is much wider
Marketing is one of the business functions
than selling.
that all activities that take place in relation to markets
for actualise potential exchanges for the purpose of The development of marketing is evolutionary
satisfying human needs and wants. In other words rather than revolutionary. There is no single answer
marketing is the performance of buying activities to the question of what is marketing? To understand,
that facilitate to more flow of goods and services it may be explained in brief, as “Marketing is what
from producer to ultimate user. Selling is basically a marketer does,” But this meaning lacks clarity
120
in understanding the subject. The evolution of concerned with the consumer preferences,
marketing is as old as the Himalayas. It is one of the concentrated on the mass production of goods
oldest professions in the world. for the purpose of profit. They cared very little
Marketing is indeed an ancient art; it has been about the customers.
practiced in one form or the other since the days iii. Sales Orientation: The stage
of Adam and Eve. The word, marketing has been witnessed major changes in all the spheres of
defined differently by authorities in different ways. economic life. The selling became the dominant
The traditional objective of marketing had been to factor, without any efforts for the satisfaction of
make the goods available at places where they are the consumer needs.
needed. This idea was later on changed by shifting iv. Marketing Orientation: Customers’
the emphasis from “exchange” to “satisfaction importance was realised but only as a means
of human wants”. Different authors tried to give of disposing of goods produced. Competition
suitable definition from their viewpoint. Some are became more stiff. Aggressive advertising,
very broad; others are rather too narrow. Some personal selling, large scale sales promotion etc.
emphasise on the traditional view of producing are used as tools to boost sales.
goods and finding out customers, others emphasise
on the modern view that marketing must first find v. Consumer Orientation: Under this
out what customers want and then plan a product stage only such products are brought forward
to satisfy the wants. As any other subject, it has its to the markets which are capable of satisfying
own origin, growth and development. the tastes, preferences and expectations of the
consumers-consumer satisfaction.
14.02 Evolution of Marketing vi. Management Orientation: The
i. Barter System: The goods are marketing function assumes a managerial role to
exchanged against goods, without any other co-ordinate all interactions of business activities
medium of exchange, like money. with the objective of planning, promoting
and distributing want-satisfying products and
ii. Production Orientation: This was
services to the present and potential customers.
a stage where producers, instead of being
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122
123
them as and when they are needed. Several ii. Risk Bearing:
types of warehouses are used for storage of RISK ARISING
FROM TIME RISK
goods, which are as follows. NATURAL
CALAMITIES
(i) Private warehouses
RISK PLACE RISK
(ii) Public warehouses POLITICAL BEARING
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125
TRADITIONAL
PROMOTION
126
a) Education b) Mobiles
For Future learning
c) Garments d) Vehicles
i. To organise a Model Marketing
Answers:
Practices in your class with some kind
1 c 2 a 3 c 4 c 5 a
of goods and services
ii. To arrange and invite a marketing II. Very Short Answer Questions:
practitioner and good speakers for 1. Define Marketing Mix.
guest lectures about success and
2. Give any two internal factors affecting the
failures of market
price of product / service.
3. Define Product.
1. The initial stage of Marketing system 3. What are the factors affecting Price of
is……………………. Product?
UNIT MARKETING
V
RECENT TRENDS IN
15
CHAPTER
MARKETING
15.03 E-Tailing
Learning Objectives 15.04 Green Marketing
To enable the students to understand the 15.05 Social Marketing
■ Meaning and definition of E-Business 15.06 Rural Marketing
and E-Commerce 15.07 Service Marketing
■ Objectives , advantage and disadvantages 15.08 Commodity Exchanges
of E-Marketing 15.09 Niche Marketing
■ Concept of Green, Niche, Ambush and 15.09 Viral Marketing
Referral Marketing
15.10 Ambush Marketing
15.11 Guerrilla Marketing
Chapter Synopsis
15.12 Multilevel Marketing
15.01 Recent Trends in Marketing 15.13 Referral Marketing
15.01 (i) Electronic Commerce 15.14 Content Marketing
(E-Commerce)
15.01 (ii) E-Business
15.01 Recent Trends in Marketing
15.01 ( iii )E-Commerce VS E-Business The market scenario in the world today is
15.02 E-Marketing changing very rapidly. The boundaries of nations
are disappearing for exploiting the opportunities
15.02.(i) E-Marketing – Definition
of business. Today’s customers are global and
15.02.(ii) Objectives of E-Marketing
exhibit international characteristics. Because of
15.02.(iii) Advantages of E-Marketing developments of information technology, rapid
15.02.(iv) Disadvantages of E-Marketing means of transportation, liberalization, and
15.02.(v) E-Market v/s Traditional Market mobility of people across the world, their buying
128
habits are fast varying and so are the fortunes of earning profit and acquiring wealth through
various organisations. In the Globalised business the satisfaction of human wants is known as
environment, the marketer must move goods business. Electronic business (e-business) via,
faster and quicker to satisfy the consumers’ needs web, internet, intranets, extranets or some
and wants by serving the best quality goods and combination thereof to conduct business. In
services. Therefore marketers are shifting from simple words, if all the business transaction
transaction thinking to relationship building and carried out through internet and other online
also focusing on life long customers. So, marketer tools is called E-business
has given more emphasis on the notion, “offer more
for less” and adopt different strategies to satisfy the
consumers. It is possible to carry out all the business
transactions over an electronic network, primarily
through the internet. The number of internet users
is increasing very rapidly. They use a variety of
tools like computers, laptops, tablet and smart or
android phone devices to access different websites.
Besides the social media networks have opened
new avenues of interacting with customers.
(ii) E-Business
The regular production or purchase and
sale of goods undertaken with an objective of
129
130
132
The service products are mostly intangible, needs of niche market. A niche market does not
inseparable from service provider and service mean a small market, but it involves specific
variable depending on the mood swing of target audience with a specialized offering. It
service providers perishable in quick time, aimed at being a big fish in a small pond instead
unstandardisable and deliverable directly from of being a small fish in a big pond. For example,
service provider without inter-median. The there are various cinema halls across India,
unique characteristics of services marketing but there are few which have recliner seats to
warrant different strategies compared with the offer. Not everybody wants to watch a movie by
marketing of physical goods paying 5x-6x times the cost of a normal ticket.
The sports channels like STAR Sports, ESPN,
15.08 Commodity Exchanges STAR Cricket and Fox Sports target the niche
A commodity exchange is an organized market of sports enthusiasts.
and regulated market that facilitates the
purchase and sale of contracts whose values 15.09 Viral Marketing
are tied to the price of commodities (e.g. crude
oil, natural gas, copper and gold). Typically,
the buyers of these contracts agree to accept
delivery of a commodity, and the sellers agree
to deliver the commodity
133
134
135
136
8. Pure play retailers are called 4. Elucidate how E-Commerce differs from
a. Market creators E-Business.
b. Transaction brokers 5. Explain in detail about Niche marketing.
c. Merchants
d. Agents IV. Long Answer Questions:
Answers: 1. Explain in detail how traditional marketing
differ from E-marketing
1 b 2 c 3 c 4 c 5 a 6 c
7 a 8 b 2. Explain advantages and disadvantages of
E-tailing.
II. Very Short Answer Questions: 3. Describe the various strategies pursued in
1. What is E business? recent day’s marketers.
2. What is green marketing? 4. Compare the concept of social marketing
3. What is service marketing? with service marketing.
137
UNIT MANAGEMENT
CONSUMER PROTECTION
PROCESS
VI
I
16
1
CHAPTER
PRINCIPLES
CONSUMERISM
OF MANAGEMENT
138
A person who obtains such goods for It refers to mixing or substituting undesirable
resale or for any commercial purposes will material in food. This causes heavy loss to the
not be a consumer. However, if such goods consumers. This will lead to monitory loss
are bought by a person exclusively for the and spoil the health. But adulterators make
purpose of earning his livelihood by means of illegitimate profit while prudent businessmen
self-employment then such a person will be aim at normal profit whenever unscrupulous
considered a consumer. traders seek to reap higher profit out of
greed, they seek to adulterate the products.
In theory, all business enterprises consider Adulteration is quite common in food articles.
consumer’s satisfaction as their main objective. It is a crime which cannot be pardoned as it
A consumer is said to be the king and the spoils the very health of consumers
businessmen are primarily supposed to serve
and satisfy customers. The consumer occupies
the central position in the entire scheme of free
economy; consumers have not always received FENNEL SEEDS CUMIN SEEDS PURE ADULTERATED
139
are available in plenty in the market for every Substandard Products Charging High Prices
original and genuine parts or components like Duplicate Arcles Adulteraon & Impurity
automobile spare parts, blades, pens, watches, Lack of Safety Devices Unsasfactory aer Sales Support
140
141
textbooks, notebooks, pen and other stationery stuffs its profits and guff the consumer
items for your studies. Sometimes one–quire satisfaction. To illustrate a few of this kind, these
notebooks you buy do not contain 192 pages can be – supply of unsafe products, adulteration,
and the pencil is not of a good quality. Have you fictitious pricing, defective and deceptive
not been dissatisfied and heated over these when packing and packaging, false and misleading
you have paid a fair price? Thus, a consumer is advertisements and sales literature, hoarding,
one who consumes goods manufactured and profiteering, black-marketing, price collusion,
sold by others misuse of brands, planned obsolescence, short
The term consumerism was first coined measures and weights, release of those goods
by businessmen in the mid 1960s as they which are not really wanted by the consumer
thought consumer movement as another “ism” nor can they afford, face lifting of products and
like socialism and communism threatening the like.
capitalism.
SIGNIFICANCE OF
“Consumerism is an attempt to enhance
the rights and powers by buyers in relation to
CONSUMERISM
sellers” 16.04 Importance of Consumerism
-L. Massie Importance of consumerism lies in
Consumerism means “the actions of
1. Awakening and uniting consumers.
individuals and organisations (consumer,
government, and business) in response to 2. Discouraging unfair trade practices.
consumer’s dissatisfaction arising in exchange 3. Protecting against exploitation.
relationship”.
4. Awakening the government.
– William Stanton 5.
Effective implementation of consumer
“Consumerisms not limited to organised protection laws.
efforts only but, is a social movement seeking
6. Providing complete and latest information.
to augment the rights and powers of buyers in
relation to sellers”. 7. Discouraging anti-social activities
142
took a closer look into the products they were market,” but in fact he is not. The majority of
buying and working class persons began to the Indian problems relating to consumers are
demand better working conditions, America hit adulteration, artificial scarcity, unreasonable
a cross roads between industry and consumer prices etc.
satisfaction. Industrial reform for consumers There are different religious customs,
would be an answerable to inconsistencies that traditions, and languages in India; and about
existed between product, price, and consumer three fourth of population live in rural areas,
satisfaction. The first consumer wave marked where cultivation is the source of livelihood,
a shift toward recognition “the centrality of and there is wide disparity in the income of
consumers to the nation’s economy and polity people. Majority of the people are mostly
(Cohen)” The companies began to make efforts illiterate and have low income. In order to save
towards targeting consumers on a more massive or protect them, against exploitative practices of
scale. trade, consumerism has emerged and has been
Progressives, as well as other American accepted as a defensive force to safeguard the
citizens began to realise the value in fighting interest of the customers.
for better quality goods. Consumers should be Evolution of Consumerism
guaranteed for some type of accountability from
industries in their quality for food and goods The major causes of consumerism in
quality. Middle class progressive women began India have been identified as rising prices,
organisation like ‘The National Consumers poor product performance and service quality,
League’ (NCL) in response to the substandard product shortages and deceptive advertising
quality of goods and the lack of involvement by and inflation. Government has been very
the government in protecting consumers against responsive to the consumer needs through
terrible food and other goods conditions. legislative actions. Economic discontent has
been generated out of spiralling inflation. Thus
The majority of the consumers in it has become necessary for the consumers
advanced countries are well educated, well – to stand up for their rights through effective
informed and are in a position to protect them. organisation in order to redress the grievances.
But our Indian situation is entirely different The word consumerism came into existence in
from the western, where adequate production the year 1960.
and proper distribution of products exist. In
India, industries have not achieved the level of Growth
affluence of technology and the existing markets Consumerism or consumer movement is
of products run in shortages, adulteration, and an outcome of sufferings, and exploitations of
black market prices. Indian people have less consumers. It intends to shield the consumers
money at their disposal. The profit making from commercial terrorism and exploitative
attitude of the business failed to discharge practices. Its aim is to safeguard their interests
social responsibilities of maintaining fair by establishing their rights and powers in
price, quality of goods and providing services relation to products and sellers.
etc. In short, consumerism is an outcome of
Mr. Ralph Nader pioneered the fight
sufferings and exploitation of consumers and
against monopoly and unethical trade practices
some businessmen aim to make abnormal
of large companies in the United States. He is
profit, which is at the cost of consumer’s safety
considered to be the father of the Consumer
and health. However, it has been accepted
Movement. He initially fought against automobile
and agreed that “A consumer is a king of the
industry for violating safety standards and
143
pollution control norms. But today, in almost Both voluntary measures and law serve
all countries the consumer movement is well as tools to protect consumer’s interest. Self-
developed. Countries like Britan, Sweden, regulation, Consumer Associations, Alert
Netherlands, Denmark and even in Kenya have consumer, and State Support are some of the
stringent laws against consumer exploitation in means of consumer protection. Individual
their respective countries. The United Nations consumer is considered more vulnerable, in the
General Assembly has adopted a set of general modern world, to exploitation and harassment
guidelines for consumer protection. by the manufacturers and distributors or sellers
because of environmental complexities of
business operations, technological changes,
application of mass production techniques,
vast resources, man-power and acrimonious
advertising, Hence it is necessary to protect and
promote the consumer interest. Satisfaction and
well being of the consumer should be the main
objective of all business units. In real practice,
consumer is not protected or safeguarded but,
consumer is cheated and looted. Thus, there is
a need for consumer movement to safeguard
16.06 Consumer Protection their interest.
Consumer protection is a form of social 16.07 Need for Consumer
action which is designed to attain the well-
Protection
being of the society namely consumers. A
consumer is said to be a king in a free market
economy. The earlier approach of caveat
emptor, which means “Let the buyer beware,’’
has now been changed to caveat venditor
(“Let the seller beware”). However, with
growing competition, manufacturers and
service providers may be tempted to engage
in unscrupulous, exploitative and unfair trade
practices like defective and unsafe products,
adulteration, false and misleading advertising,
hoarding, black-marketing etc in an attempt Though consumer is said to be the king
to expand their market share in a competitive of entire business sphere, his interests are
environment. As a consequence, consumers virtually neglected. Shortage of goods makes
may have to buy unsafe products, may have the consumers to be content with whatever is
to suffer from various health disorders, due to offered for sale. Quality is sacrificed: warranty of
adulteration; may have to pay higher price due performance has no meaning; health hazard is
to hoarding and have to get duped by misleading never considered; profit maximisation turns out
advertisement. In this situation there is a need to be sole consideration of business enterprises.
to provide adequate protection to consumers In such a context, consumer protection remains
against all such malpractices of sellers/vendors. a vital importance.
144
There are three parties involved in the sphere of business transactions viz. the Government,
business and the consumers. Let us discuss what each party has to do in this regard
ROLE OF ROLE OF
BUSINESS GOVERNMENT
ROLE OF
CONSUMER
145
146
vi. To
further international co-operation in
the field of consumer protection
vii. To
encourage the development of market
conditions which provide consumers with
greater choice at lower prices.
147
special marks to products fulfilling 15.04.1987. This Act was further amended in
minimum quality standards and thus 1993. The Act is referred in short as ‘COPRA’.
ensures supply of quality products to
The Consumer Protection Act 1986
consumers.
seeks to protect and promote the interests of
x.
The Drugs and Magic Remedies consumers. The act provides safeguards to
(advertisements) Act, 1954 prohibits consumers against defective goods, deficient
advertisement of drugs and remedies services, unfair trade practices, and other forms
claiming to have magical properties. of their exploitation. The object of the act is to
xi.
The Drugs and Cosmetics Act, 1940 provide for the better protection of the interests
ensures the safety of drugs and cosmetics of the consumer courts for the settlement of
sold in India. consumer’s disputes and all matters connected
there with. The Consumer Protection Act is of
xii.
The Food Safety Standard Act, 2006
great importance. It is the latest to be adopted.
regulates the manufacture, storage, and
It is applicable to public sector, financial, and
distribution of food in safe and wholesome
cooperative enterprises. Recently even medical
condition to consumers.
services have been brought under its scope. The
xiii.
The Air (Prevention and Control of Act shall apply to all goods and services across
Pollution) Act, 1981 controls and prevents board.
pollution in India.
The Consumer Protection Act 1986 does
xiv. The Public Liability Insurance act, 1991 not create rights or liabilities, but it has emerged
provides immediate relief to persons as new forum for the settlement of disputes
affected by accidents securing while relating to the sale of goods or services. The
handling hazardous substance. loss claimed by the consumers must be a loss
xv.
The Narcotic Drugs and Psychotropic resulting from on some “deficiency of service”
Substances Act, 1985 prevents the or “defect in the goods.” The Act provides for the
production of narcotic drugs except for setting up of a three tier-machinery, consisting
educational use. of District Forums, State Commissions, and the
National Commission. It also lays down rules
16.09 The Consumer Protection for formation of consumer protection councils
Act 1986 (COPRA) in every District and State and at the apex level.
Nowadays, the consumers’ grievances Salient features of The Indian Consumer
and dissatisfactions grow largely. Consumers Protection Act, 1986
themselves did not have any effective mechanism
The salient features of the Indian
or institutional arrangement for the speedy
Consumers Protection Act, 1986 are listed
redressal of their grievances. Lack of effective
below
popular movement isolated the consumer and
so his plight is increased. Sensing the pressure i.
Protecting consumers against products
mounting from various consumer protection and services which are harmful to the
groups and consumers themselves, the Central health of consumers.
Government enacted a comprehensive law ii. Protecting consumers from the breach of
called the Consumer Protection Act in 1986. contract by sellers /manufacturers.
This Act came into force with effect from
148
iii. Ensuring consumers with supply of goods iii. Protecting consumers from unfair trade
at fair quality. practices of traders.
iv.
Safeguarding consumers against iv. Empowering consumers to seek redressal
misleading and untrue messages against exploitation
communicated through advertisement. v. Educating the consumer of their rights
v. Ensuring that consumers are charged fair and duties
price. vi.
Ensuring better standard of living for
vi. Ensuring uninterrupted supply of goods. consumers by providing them with
vii.
Ensuring the availability of goods in quality products at fair price.
correct quantity and right size. vii.
Putting in place right mechanism like
viii. Protecting the consumers against unfair councils and other authorities to enable
trade practices of unscrupulous trader the consumers to enforce their rights.
xi.
Protecting the consumers against 16.10 'Caveat Emptor'
pollution of various kinds
‘Caveat emptor’ is a Latin term that means
x.
Protecting consumers against the evil "let the buyer beware." Similar to the phrase "sold
effect of competition. as is," this term means that the buyer assumes
Importance of Consumer Protection the risk that a product fails to meet expectations
or have defects. In other words, the principle of
Consumer protection has a wide agenda.
caveat emptor serves as a warning to the buyers
It not only purports to educate consumers
that they have no recourse with the seller if the
about their rights and responsibilities, but also
product does not meet their expectations.
helps in getting their grievances redressed. It
provides judicial machinery for protecting the The term actually means that ‘let a
interests of consumers to come together and purchaser beware’, for he ought not to be
organise themselves into consumer associations ignorant of the nature of the property which he
for protection and promotion of their interests. is buying from another party. The assumption
Consumer protection has a special significance is that buyers will inspect and otherwise ensure
for business too. that they are confident with the integrity of the
product before completing a transaction. This
Objectives of the Consumer Protection Act
does not, however, give sellers the green light to
1986
actively engage in fraudulent transactions.
Following are the objectives of Consumer
Protection act 1986 Caveat Emptor in Practice
i.
Protection of consumers against Under the principle of caveat emptor,
marketing of goods which are hazardous a consumer purchases a coffee mug and later
and dangerous to life and property of discovers that it has a leak he has no choice
consumers. other than to keep it with him. According to
their principle, the buyer should have been
ii.
Providing correct and complete
cautious and should have thoroughly examined
information about quality, quantity,
the product to check the defect if any.
purity, price and standard of goods
purchased by consumers.
149
A more common example is a used car iii. Field visits to local markets / Consumer
transaction between two private parties (as Courts and door to door campaign
opposed to a dealership, in which the sale is in the local community etc., may be
subject to an implied warranty). The buyer organized for at least 4 days in a year.
must assume the responsibility of thoroughly It can be done on Saturdays with prior
researching and inspecting the car by taking it to arrangement.
a mechanic for a closer look before finalizing the iv. Minutes of each activity have to be
sale. If something comes up after the sale, maybe recorded by the Student and Teacher Co-
a transmission failure or something, it is not the ordinator jointly as properly document.
seller's responsibility. But ‘caveat emptor’ principle
cannot be applied where the car is bought afresh
as a brand new car from showroom as the deal in Mahatma Gandhi's quote about Consumerism
governed by warranty of certain years. “What is a man if he is not a thief who openly
charges as much as he can for the goods he sells?”
16.11 Caveat Venditor
Caveat emptor was the rule for most
purchases and land sales prior to the Industrial For own learning
Revolution, although sellers assume much more
Students should go to the nearest
responsibility for the integrity of their goods in
consumer court and watch the activities
the present day.
of the consumer court
Today, most sales in the U.S. fall under the
principle of caveat venditor, which means "let
the seller beware," by which goods are covered
For Future learning
by an implied warranty of merchantability. Students may collect further details
Unless otherwise advertised (for example, "sold regarding Consumer Protection. For this
as is") or negotiated with the buyer, nearly all purpose, they may contact their District
consumer products are guaranteed to work, if Collector and the Chairman, District
used for their intended purpose Consumer Protection Council and also
What are the functions of the the Voluntary Consumer Organisation
Consumer Clubs in schools? of locality with valid reputation to learn
The following basic structure of more about actual implementation of
functioning is recommended: Consumer Protection Act in practice,
i. Monthly meetings and demonstrations
for one hour after school hours on the
First Thursday of each month. Each Case Study
month a topic / activity may be scheduled
as in the model calendar. Mr.Narasimachary bought a refrigerator of a
familiar brand with a warranty for seven years.
ii. Days of National and International
He uses the fridge as per the guidelines given
importance to consumers may be by the manufacturer. After the completion
celebrated in the School / College. of two years the fridge went out of order.
Poster / Speech / Essay competitions He was shocked, and approached the dealer.
can be organised at school level by the But the dealer refused to service the fridge at
Consumer Club to sensitise the students free of cost. What is your suggestion to Mr.
on the importance of the day. Narasimachary to this grievance?
150
Live example:
A Mumbai based consumer purchased a
pair of shoes from the dealer of a well-known Exercise
brand after going through its advertisement
assuming 50% off. Consumer paid Rs.1345/- for
the purchase. After the purchase, the consumer I. Choose the Correct Answers:
came to know that it had two price tags, one
printed at MRP Rs.1345/- and another sicker 1. The term ‘consumerism’ came into existence
for Rs.2690/-. On complaining by E-mail, in the year ---------.
the dealer gave reply that discount had been a) 1960
included in MRP, and the consumer was not b) 1957
satisfied. Then he came to show room and took c) 1954
refund from the dealer. d) 1958
151
7. Any person who buys any goods or avails IV. Long Answer Questions:
services for personal use, for a consideration 1. How consumers are exploited?
is called as
a) Customer 2. Explain
the role of business in consumer
b) Consumer protection.
c) Buyer 3. What are the needs for consumer protection?
d) User
4. Explain
the role of consumers in Consumer
8. The General Assembly of United Nations Protection..
passed resolution of consumer protection guide
5. What
are the objectives of Consumer
lines on
Protection Act, 1986?
a) 1985
b) 1958 6. Write
about five important consumer
c) 1986 legislations.
d) 1988. 7. What
are the salient features of the
Answers: Consumer Protection Act, 1986?
1 a 2 c 3 c 4 d 8. What
are the objectives of United Nations
guidelines for consumer protection?
5 c 6 c 7 b 8 a
II. Very Short Answer Questions: References
1. Who is a consumer? 1. Modern Marketing - S.A. Sherlekar
2. Define Consumerism. 2. Modern
Marketing - R.S. N. Pillai and
Bagavathi.
3. Give two examples of adulteration.
3. Marketing
Management - Dr. C.B.Gupta
4. What is Caveat Emptor?
and Dr. N.Rajan Nair
5. What is Caveat Venditor?
4. Marketing management - S.A. Sherlaker
6. W
rite a short notes on Consumer Protection
5. Marketing Management - R.S.N.Pillai and
Act, 1986.
Bagavathi
III. Short Answer Questions:
1. Which are the three constituent elements of
business?
2. What
are the important legislations related
to consumerism in India?
3. What is meant by artificial scarcity?
4. Write the importance of consumerism.
5. W
hat is the role of Government in consumer
protection?
152
UNIT MANAGEMENT
CONSUMER PROTECTION
PROCESS
6I
17
1
CHAPTER
PRINCIPLES
CONSUMER OFPROTECTION
MANAGEMENT
Learning Objectives
To enable the students to understand the
■ Rights of consumer
■ Duties of consumers
■ Responsibilities of the consumers
Chapter Synopsis
17.01 Rights of Consumer
17.01 Rights of Consumer
17.02 Duties of Consumer The modern marketing concept
17.03 Responsibilities of Consumer recognises the fact that the consumer is the
pivotal point around which the entire business
moves. Satisfaction of consumers wants and
needs is stated to be the prime and supreme
The modern marketing concept
objective of a business. But in reality consumer
recognises that the consumer is the pivotal point
feels he is supplied with adulterated stuff at a
around which the business moves. Satisfaction
price far above the cost price. In order to protect
of consumer needs/requirements is stated to be
their own interest, consumers must educate
supreme objective of a business. To protect their
themselves about their rights.
own interest, consumers must first be aware of
their rights as buyers. This chapter explains Consumer Right is interpreted as “the
about consumer duties, responsibilities as well right to have information about the quality,
as consumer rights. potency, quantity, purity, price, and standard of
goods or services”.
153
The consumer is to be protected against relevant facts about the product so that they
any unfair practices of trade. It is mandatory for can take intelligent decisions on purchasing
the consumers to know these rights. However, the product. Advertising and labelling on the
there are strong and clear laws in India to defend package should provide objective information to
consumer rights. The most important law is the buyers. This implies that manufacturer and the
Consumer Protection Act, 1986. According to dealer are expected to disclose all the material
this law, everybody including individuals, a firm, facts relevant and relating to the product. The
a Hindu undivided family and a company, has package should contain the full details about the
the right towards the purchase of goods made name of the product, composition, dosage, date
by them. It is the significant that, as a consumer, of manufacturing, date of expiry, batch number,
everyone should know the basic rights as well warnings, antidote etc. In addition, it should
as about the courts and procedures that follow clarify as to the name of the manufacturer, price
with the infringement of one’s rights with or without tax. Such information goes a
John F. Kennedy’s view on Consumer Rights long way towards saving the consumer against
the possible deceit.
The former president of U.S.A Mr. John F.
Kennedy defined the basic consumer rights as iii) Right to choose
“The Right of Safety, the Right to be informed, Consumer satisfaction is the ultimate aim
the Right to choose and the Right to be heard.” of modern marketing and is the philosophy of
The consumer is the king of the modern marketing concept. A wise trader or dealer or
marketing, but in fact he is not. The various manufacturer is one who maximises his profits
rights of consumers guaranteed under the by maximising the consumer satisfaction.
Consumer Protection Act have been discussed Consumer satisfaction can be increased by
here under. giving the consumer the widest choice. The
term ‘Choice’ means offering the widest range
i) Right to Protection of Health and Right of
of products in quality and brand varieties at
Safety reasonable prices. In short consumers should
There may be few products that are more have access to varieties of goods in terms of
likely to cause physical danger to consumers’ colour, quality, design, size etc.
health, lives and property. They may contain
potentially harmful substances which are
dangerous from the consumer welfare point of
view. The best examples of this kind are Food
additives, colours, emulsifiers, preservatives.
The health hazards which are likely to arise have
to be eradicated or reduced altogether. In case
of food items and drugs both life saving and
life sustaining safety is to be guaranteed. One iv) Right to be Heard
thing that is encouraging to-day is that recent Consumers have every right to
legislations have shifted the responsibility for ventilate and register his/her dissatisfaction,
the production of such unsafe items onto the disagreements and get the complaint heard and
shoulders of sellers rather than on buyers. aired. This right is vital. Business enterprises
ii) Right to be Informed should lend a compassionate ear to complaints
or grievances of consumers. All business
Consumers should be given all the
154
enterprises should have a separate department relation pollution, and legacies of on-going
or wing or segment for addressing consumer industrialisation take a heavy toll on the quality
grievances. of life of people and on the environment of their
inhabitation. The social cost of these pollutions
v) Right to Seek Redressal
far exeed their social benefits. In other words,
This step is one step ahead of the previous each kind of pollution is eating away the social
right. The complaints and protests are not just benefits resulting from the society. It is where
to be heard: but the aggrieved party is to be the social responsibilities of business enterprises
granted compensation within a reasonable time arise; there is nothing wrong in producing
period . There should be prompt settlement of the products/output for the mankind. But
complaints and claims lodged by the aggrieved the manufacturers have to safely dispose the
customers. This will boost consumer confidence inevitable sewage and effluent in such a way
and help render justice to buyers. There should that it does not cause any damage to human or
be fair and just settlement of deserving claims environment.
in a definite timeframe.
viii) Right to Consumer Protection
vi) Right to Consumer Education
The consumer has a right to be aware
The consumer has a right to acquire of his rights and remedies available to him,
knowledge and stay well-informed all through redress his grievances through publicity in
his life. He should be aware about his rights the mass media. Consumer has a right to be
and the reliefs granted to him where a product protected against goods and services which
or service falls short of his expectations. Many are hazardous to life and health. For instance,
consumer organisations and some enlightened electrical appliances which are manufactured
businesses are taking a pro active part in with substandard components or which do
educating consumers in this respect. not conform to the safety norms might cause
serious physical injury to the user. Therefore,
CONSUMERS RIGHTS IN INDIA consumers need to be educated that they should
On 24th December 1986,
Government of India enacted the
use electrical appliances with ISI mark which
CONSUMER PROTECTION ACT 1986 to stands testimony to the quality and standards
01. Ensure Rights of Consumers observed in the manufacturers.
02. Provide Remedies for
deceived Consumers ix) Right to Basic Needs
03. Check Unfair Business Pracces &
Restricve Trade Pracces.
Safety Heard
Rights of
vii) Right to Quality of Life Consumer
Healthy Environment Redressal
Quality of life refers to the perceived well-
Choose Consumer Educaon
being of people, in groups and individually, and
well-being of the environment in which these Every consumer has a right to get basic
people live. Consumerism has been defined necessities of life such as food, clothing and water,
as ‘an improved quality of life.” It means that and right to pure and healthy environment. It
the environmental problems affect the very life is the latest addition to consumer bill of rights.
of consumers and on the environment which Community life should be free from various
people live. In other words air pollution, water modes of pollution. This will enhance the
pollution, food pollution, noise pollution, and quality of human life.
155
156
157
6.
The consumer has the responsibility to 10. The consumer should never compromise
express unambiguously to the seller of his on the quality of goods. The consumers
requirements and expectations from the must watch for ISI, Agmark, FPO, the
product. standard quality certification marks and
7. The consumer must seek to collect complete the like in the label.
information about the quality, quantity, 11.
The consumer should not be carried
price etc of the product before purchasing it. away by exaggerating the quality of the
8. The consumer must get cash receipt as a goods through advertisements. If there
proof of goods purchased from the seller. is any discrepancy between the features
If it carries any warranty, the buyer must advertised and the actual features observed
obtain the warranty card mentioning the in the product, it must be brought to the
date of purchase and period of warranty. It notice of the seller or advertiser.
must also bear the signature and stamp of 12. The consumer has every right to safety,
the seller organisation. right to be informed, right to choose, right
9. The consumer must file a complaint with to represent, and right to seek redressal and
the seller concerned about defects or right to seek information. If any of these
shortcomings noticed in their products and rights is violated, the consumer should
services. file a complaint with the appropriate legal
machinery under the Consumer Protection
Act, 1986.
158
159
160
a country like India there is shortage of many Forum in a district if it deems fit to do so.
products. A few firms enjoy monopoly power in Complaints can be filed with the forum
the market place. A large majority of consumers by a consumer. Complaints can also be filed by
are ignorant and illiterate and do not know their the Central or State Government or by a group
rights. They are poor and there is lack of unity of consumers. Thus, it is not necessary that
among them. Due to these reasons, consumers complaint should be filed only by the affected
are often deprived of their rights. They are often person. Others can also take up the matter with
exploited through misleading advertisements, the District Forum.
poor quality goods, fractional weights and
measures, overcharging, etc. Members
1. A person who is or who has been or is
18.02 Consumer Councils
qualified to be, a District Judge as its
The Consumer Protection Act postulates President.
establishment of Consumer Protection
2. Two other members who shall be persons
Councils at the District, State and Central
of ability, integrity and standing and have
levels for the purpose of spreading consumer
adequate knowledge or experience of or
awareness. The objects of the Councils, as per
who have shown their capacity in dealing
the Act, shall be to promote and protect the
with problems relating to economics, law,
rights of the consumers.
commerce, accountancy, industry, public
18.03
Three Tier Courts or affairs or administration. It is insisted in
Quasi Judiciary the Act that out of such two other members’
one shall be a woman.
NATIONAL Jurisdiction
COMMISSION
(Above One Crore)
The District Forum can entertain
complaints within the territory of genuine
district and where the value of goods or services
STATE and the compensation if any claimed is less than
COMMISSION Rs 20 Lakhs.
(Above 20Lakhs to
One Crore) Powers
Every proceedings before the District
Forum shall be deemed to be judicial
DISTRICT
proceedings within the meaning of sections
FORUM
(Below 20Lakhs) 193 and 228 of the Indian Penal Code and the
Forum shall be deemed to be Civil Court.
If the value of the complaint exceeds this
18.04 District Forum limit of Rs 20 Lakhs the complaint should be
made direct to the State Commission. Further
As per the Consumer Protection Act of
the District Forum also may pass orders against
1986 and Section 9 thereof the establishment of
traders indulging in unfair trade practices,
a District Forum by the State Government in each
sales of defective goods or rendering deficient
district is necessary today to protect the interest
services, the turnover of goods or value of
of aggrieved consumers in that district. The State
services does not exceed Rs 20 Lakhs.
Government can establish more than one District
162
164
3.
To strengthen consumer protection consumers, the consumers get a feeling that
and welfare and to provide counselling, they are not alone in their struggle.
guidance and mediation services. iii) O
rganising Protests against Adulteration etc.
4. VCO’s supported through CWF provides The consumer’s organizations play
grants for diverse projects including a significant role in eliminating the evil of
comparative testing of products and adulteration, hoarding black-marketing and
services and dissemination of the findings under-weight selling.
5.
Steps have been taken to enhance iv) Helping Educational Institutions
transparency and to digitalise the These organizations advice the
government’s interface with its citizens. educational institutions the way to prepare
Accelerating Consumer Awareness/Educating courses of study keeping in view the interests
Consumers of the consumers.
The first priority of a consumer v)
Promoting Network of Consumer
organization is to accelerate consumer Association
awareness towards their rights. To accomplish Consumer organizations are trying to
this task the following efforts are made: grow their numbers. They want to cover all the
I.
To publish brochures journals and regions of the country so that consumers of all
monographs. the regions are benefited by their services.
ii.
To arrange conferences, seminars and vi) Extending Support to Government
workshops. Consumer organisations keep informing
iii. To educate consumers to help themselves. the government agencies about adulteration,
artificial scarcity, inferior quality produce etc.
iv.
To provide special education to women
to help the government.
about consumerism.
To maintain desirable standards, the Procedures for Filing Complaint
following steps are followed: A complaint can be filed by a complainant
i) Collecting Data on Different Products against the seller, manufacturer, or dealer
and testing them of goods which are defective or against the
provider of services, if they are deficient in any
These organizations collect samples
manner whatsoever. An unfair trade practice
of different products from time to time and
or restrictive trade practice can also invite
test them. After that the results of the tests
complaint
are declared to public. In this way, these
organisations provide prior information to Steps involved in filing Complaint in
consumers about the authenticity of product Consumer Court
and protect them. The first step in filing a consumer
ii) Filing Suit on Behalf of Consumers complaint is to send a legal notice to the seller
Whenever a consumer fails to raise his or company. A legal notice must be drafted
voice of protest regarding his complaints, with the help of a consumer court lawyer and
these consumers’ organisations come to the include the following:
rescue and file a case in the court, on behalf 1. Details of the consumer like name, address,
of a consumer. By giving this service to the product or services purchase details of the
company, etc.
165
2. Necessary details of the problem faced and How to register the complaints?
describe the deficiency in service. The complaint should be registered by
3. Action taken by the company in response the following ways:
to the customer complaint 1.
Complaint can be registered within 2
4. Action expected from the company years from the date on which the cause of
action has arisen, to the date on which the
5. Time period given to the company to take
completion from the deficiency in service.
action
2. Stamp paper is not required for declaration
6. The legal action that will be taken upon
3. Complaint can be registered, in person, by
failure by the company in sending a reply
the complainant or through his authorised
to the legal notice.
agent or by post addressed to the Redressal
Who can make complaint? Agency.
1. A consumer as defined under Consumer 4. Advocates are not necessary.
Protection Act, 1986
What are the particulars that should be
2.
A registered Voluntary Consumer furnished along with the complaint?
Association
The complaint should contain the
3. Central Government following particulars:
4. State Government / Union Territory
1.
The name and complete address of the
5.
One or more consumer representing complainant
numerous consumers having the same
2.
The name and complete address of the
interest.
opposite party/parties
When the complaints can be made?
3.
Date of purchase of goods or services
A complaint may be made in writing availed
under the following circumstances:
4. Amount paid for the above purpose
1. Loss or damage is caused to the consumer
5.
Particulars of goods purchased with
due to unfair trade practice of a trader.
number or details of services availed
2. If the article purchased by a consumer is
6.
The details of complaint, whether it is
defective.
against Unfair Trade Practices/supply
3. If the services availed of by a consumer of defective goods/deficiency in service
suffer from any deficiency. provided/collection of excess price, should
4. When the price paid by a consumer is in explicitly be mentioned in the complaint
excess of the price displayed on the goods petition.
or when the price is in excess of the price 7.
Bills/receipts and copies of related
fixed under any law in force. correspondence, if any.
5. Goods, which will be hazardous to life and Relief to the Consumers
safety, when used are being offered for The District Forum / State Commission
sale to the public in contravention of the can order the following reliefs to the consumers:
provisions of any law.
1. To remove the defects in the goods pointed
out
166
167
Case Study
Exercise
Case 1:
In The Supreme Court Of India Civil
Appellate Jurisdiction Civil Appeal No. 7335 I. Choose the Correct Answers:
of 2008 Chief Administrator, H.U.D.A. & Anr. 1.
The Chairman of the National Consumer
Appellant(S) Versus Shakuntla Devi Disputes Redressal Council is ______
Respondent(S) Judgement by L. Nageswara a) Serving or Retired Judge of the Supreme
Rao, J. Court of India.
This Appeal is filed challenging the order b) Prime Minister
dated 25.09.2007 of the National Consumer c) President of India
Disputes Redressal Commission, New d) None of the above
Delhi (hereinafter referred to as ‘National 2.
The Chairman of the State Consumer
Commission’) by which an order of the State Protection Council is _____
Consumer Disputes Redressal Commission, a) Judge of a High Court
Union Territory, Chandigarh b) Chief Minister
c) Finance Minister
There is No order as to costs in this appeal.
d) None of the above
The point that falls for our consideration 3.
The Chairman of the District Forum is
in this case is whether the State Commission ________
was justified in awarding Rs. 15 lakhs
a) District Judge
towards the escalation in the cost of
b) High Court Judge
construction for compensation. We are of
c) Supreme Court Judge
the view that the Respondent is not entitled
d) None of the above
to such compensation awarded by the State
4.
The State Commission can entertain
Commission and confirmed by the National
complaints where the value of the goods or
Commission. The Respondent suffered an
services and the compensation, if any claimed
injury due to the delay in handing over the
exceed
possession as there was definitely escalation
in the cost of construction. At the same time a)`2 lakhs but does not exceed `5 lakhs
the Respondent has surely benefited by the b) `20 lakhs but does not exceed `1 crore
increase in the cost of plot between 1989 to c) `3 lakhs but does not exceed `5 lakhs
2000. The National Commission orderdered d) `4 lakhs but does not exceed `20 lakhs
that the State Commission is vitiated for non 5. The National Consumer Disputes Redressal
application of mind to a vital and relevant Commission has jurisdiction to entertain
factor and hence, suffers from the vice of complaints where the value of goods/services
unreasonableness. For the aforementioned complained against and the compensation, if
reasons, the Order of the State Commission as any, claimed is
confirmed by the National Commission is set a) Exceeding `1 crore
aside and the Appeal is allowed. b) Exceeding ` 10 lakhs
c) Exceeding ` 5 lakhs
d) Exceeding ` 12 lakhs
168
6. The District Forum can entertain complaints II. Very Short Answer Questions:
where the value of goods or services and the 1. What do you meant by Redressal Mechanism?
2. What do you know about National Commission?
compensation if any claimed is less than
3. State the meaning of the term State Commission.
a) Below `10,00,000 4. What is an term District Forum?
b) Below `20,00,000 5. How to register the complaints?
c) Below `40,00,000 III. Short Answer Questions:
d) Below `50,00,000 1. Is Consumer Protection necessary?
2. Who are the members of the National
7. The International Organisation of Consumers
Commission?
Unions (IOCU)was first established in 3. What is the Pecuniary Jurisdiction of the
a) 1960 b) 1965 State Commission?
4. Does District Forum exceeds the claim limit
c) 1967 d) 1987
of Rs 20 lakhs. Explain the condition.
8. Consumer awareness covers the following: 5. Write a note on the Voluntary Consumer
Organisation.
a)
Consumer awareness about Maximum
IV. Long Answer Questions:
Retail Price (MRP)
1. What are the Functions of the National
b)
Consumer awareness about Fair Price Commission?
Shop 2. Explain the overall performance of State
c) Consumer awareness about price, quality, Commission.
3. Explain the term District Forum and explain
and expiry date of the product
the functions of District Forum.
d) All of the above 4. What is Voluntary Consumer Organisations?
9. Complaints can also be filed by the Explain its Functions.
5. How to create consumer awareness?
a) Central Government
References
b) State Government
1. Consumer Protection Law and Practice by
c) A group of consumers Dr V.K.Agarwal, Universal Book Traders,
d) All of the above Delhi.
2. Consumer Behaviour Dr L. Natarajan,
10. A consumer has to be protected against
Margham Publications, Chennai
a) Defects of product 3. Marketing Management Dr. R.L.Varshney
b) Deficiencies of product and Dr S.L.Gupta, Sultan Chand&Sons,
NewDelhi.
c) Unfair and restrictive trade practices
4. Marketing Management Text & Cases
d) All of the above Dr.C.B.Gupta & Dr N. Rajan Nair Sultan
Chand & Sons, New Delhi
Answers:
5. Marketing Management R.S.N. Pillai &
1 a 2 a 3 a 4 b 5 a Bagavathi S.Chand & Company Pvt Limited,
6 b 7 a 8 d 9 d 10 d New Delhi
169
UNIT BUSINESS
MANAGEMENT
ENVIRONMENT
PROCESS
7I
19
1
CHAPTER
PRINCIPLES
ENVIRONMENTAL
OF MANAGEMENT
FACTORS
Chapter Synopsis
Learning Objectives
19.01 Meaning and Definition of Business
To enable the students to understand the Environment
■ Meaning of Business environment 19.02 Types of Business Environment
■ differences between internal and 19.02.01 Internal Environment
external business environment 19.02.02 External environment:
■ various controllable and uncontrollable 19.02.03 Micro Environment;
factors affecting business 19.02.04 Macro Environment:
■ examples that impact economic, socio- 19.03 Future environment of business-VUCA
cultural, political and legal, geo-physical 19.04 Corporate Governance
and technological factors of business 19.05 GST- Goods and Services Tax
170
171
These factors can be changed or altered and culture of ethical standards and values.
hence are known as controllable factors. ii. Vision
and objectives: The vision and
External environment refers to those objectives of a business guides its operations
factors outside the business These factors by and and strategic decisions. Example ‘Amul the
large are beyond the control of a business and taste of India’ Gujarat Co-operative Milk
hence uncontrollable .e.g economic, political Marketing Federation GCMMF
and socio-cultural factors. Vision: Liberate our farmers from economic
19.02.01 Internal Environment oppression and lead them to prosperity.
Internal Factors iii. Management
structure and ature: The
structure of management/board and
their style of functioning, the level of
Vision and professionalism of management, the
Objecves composition of the board are the various
factors which affects the decision making.
Internal
Power Value System Since the board is the highest decision
Relaons making authority, it’s composition, degree
Internal of professionalism and style of operations
Environment plays a very critical role in the growth and
R&D development in an organisation.
Capital
Human
Structure iv. Internal
power relations: This refers to the
Resources
Markeng & internal power relations that exist in an
Assets
Company organisation. The relations among board
Image members , between board members and
the CEO and the level of support enjoyed
by the board from its’ stakeholders namely
employees and shareholders are significant
The major internal factors affecting
factors which affects decision making and
business decisions are
its implementation in an organisation.
i Values system: The values of the founder/
i. Human resources : The success of an
owner of the business , percolates down to
enterprise is solely dependent on its
the entire organisation and has a profound
manpower. Therefore the quality,
effect on the organisation. The success of
skill competency, right attitude and
an organisation depends upon the sharing
commitment of its human resources
of value system by all members. External
is essential for the success of an
business associates like suppliers and
organisation.
distributors consider the value system
practised by an organisation with strong v. Company image: The image of an
organisation plays an important role
Two Indian companies TATA Steel and in introducing new products, selecting
WIPRO have been named as the world’s most agents and dealers for distribution, forging
ethical companies by American Think tank alliances with suppliers, expanding and
Ethisphere Institute. Infosys, Murugappa entering new markets both domestic and
group, TVS group international, raising finance etc.
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173
agencies help in promoting the products in the macro environment system which
and services. Insurance firm is another has a bearing on a business include
marketing intermediary which provides 1) The nature of economy based on the stage
coverage for risk in business. of development. The countries across the
vi) Public This refers to any group like media globe can be categorised on the basis of
group, citizen action group and local public growth and per capita income as developed
which has an impact on the business. The nations, developing nations and under
public group has the ability to make or mar a developed nations. The USA, Japan,
business. Many companies had to face closure Germany, Canada and Australia developed
due to actions by local public. economies generally have high degree of
technological advancement, very strong and
For example. the closure of Sterlite Copper robust industrial base, and high standard of
factory in Thoothukudi due to protests by living. Many of these developed nations have
environment protection group in 2018. successfully integrated the computer based
technologies with their existing business.
Developing nations like India, China, Brazil
19.02.04 Macro Environment:
Mexico are middle income economies are
Macro Environment Factors characterised by low to moderate industrial
growth, the inequality in the distribution of
Economic income, high population, a low standard of
living and slow absorption of technology.
Global Socio- Under developed nations are low income
Cultural economies with a very low degree of
technology adoption and a very poor
Macro standard of living.
Environment
2)
The nature of economic system The
Polical economic systems can be classified as
Technology and Capitalistic, Socialistic and Mixed economy.
Legal
Capitalistic economy is a free enterprise
Geo- market where individual ownership of
Physical
wealth is predominant. Socialistic economy
is a state controlled with a lot of restrictions
on private sector. Mixed economy is a
This is the general or overall environment
combination of both state owned and
in which the business operates. The success of
private sector ownership.
a business is dependent on its ability to adapt
to the macro environment, since these are 3) T
he economic policies of a nation Monetary
uncontrollable factors. They offer enormous policy, fiscal policy, Export-import policy,
opportunities to business and also poses serious Industrial policy Trade policy, Foreign
threats to business. The general or remote exchange policy etc are part of the economic
environment factors are as follows; environment.
i) Economic environment: The business is 4) The
Economic indices like GDP, GNP
an integral part of the economic system national income, per-capita income,
prevalent in a nation. The multiple variables balance of payments, rate of savings and
174
investments etc. form an important part of changes. The legislative, executive and
economic environment. judiciary are the three political institutions
5) Development
of financial market The which directs and influences a business.The
organisation and development of money major elements of the legal and political
market, capital market securities market environment are
and, the banking system has a greater 1) Political stability is reflected by the following
impact. parameters like the election system, the law
6) The
Economic structure includes capital and order situation, the role and structure
formation, investment pattern, composition of Military and Police force, the declaration
of trade balance, occupational distribution of President’s rule, civil war etc
of workforce, and the structure of national 2) Political
organisation refers to the ideology
output. and philosophy of the political parties,
ii) Socio-Cultural environment - Business is the government, the role and degree of
a part of the society .Social environment authority of bureaucracy, the level of
refers to the sum total of factors of the political consciousness among citizens and
society in which the business is located. the funding of political parties by business
Social and cultural environment of society houses and the clout wielded by them.
affects the business. It is dynamic and 3) The image of the leader and the country in
includes the behaviour of individuals, the the inter-national arena.
role and importance of family, customs, 4)
Legal framework of business and their
traditions, beliefs and values, religion and degree of flexibility.
languages, the ethical values. The literacy
5) The constitution of the nation.
level, and the social attitudes of the people of
the society. The socio-cultural environment 6)
The Foreign policy of the country with
also includes the following; special reference to tariffs and free trade.
6)
Demographic factors which includes 2) the weather and climatic conditions and
the size, composition, literacy level, availability of water and other natural resources
distribution and mobility of the population is essential for the agricultural sector .
7)
The lifestyle of people and their tastes, 3)
topographical factors like the terrain
likes and preferences. impacts type of business since the
demand and consumption pattern may
iii) Political
and Legal environment – The vary in these regions. E.g in the the hilly
framework for running a business is given region mode of transport will have to be
by the political and legal environment. modified to tackle the terrain..
The success of a business lies in its ability
to adapt and sustain to political and legal 4)
ecological factors are now gaining
momentum, since the governments
175
across the globe are framing stringent 3) Differences in norms and practices
policies for ecological conservation and 4) Differences in tastes and preferences of
prevention of pollution. The ban on people
use of plastic bags imposed by the Ooty
corporation is an example. 5) The tax structure relating to import and
export.
5) location of certain industries is influenced
by the geographical conditions For e.g In 6) Differences in the degree of adoption of
Tamilnadu the concentration of cotton technology.
textile industry in Coimbatore is due to
conducive weather conditions. . 19.03 Future environment of
6) availability of natural harbours and port business-VUCA
facilities for transporting goods . The future environment of business in
v)
Technological environment – this age of rapid technological advancement
The development in the IT and has been captured aptly in the acronym
telecommunications has created a VUCA – volatility, uncertainty, complexity
global market. Technology is widely and ambiguity, developed in the late 80’s by
used in conducting market research for the U.S military. Every business has to take
understanding the special needs of the strategic decisions.The dynamic ever changing
customer. Digital and social media are environment, the unpredictability of various
used as a platform for advertising and factors, the multiplicity of forces affecting
promoting the products/services. Data- business and the lack of clarity are the variables
mining and data analytics are used to which affects business.
know the customer better. Technology is It is now important for every business to
used in managing inventory, storing goods meet the challenges posed by the environment
in warehouses, in distributing goods and in order to remain competitive. The uncertain
in receiving payment. This dynamic conditions and situations requires a firm to be
environment also includes the following ; prepared to face the volatility by planning. The
1) the level of technology available within presence of complex variables impacting business
the country should be understood and alternative measures
for solving the issues should be developed. In an
2) rate of change in technology VUCA environment a firm has to be forward
3) technology adopted by competitors looking anticipating the change, adaptability will
remain essential for the success of any business
4) technological obsolescence
in an ambiguous, uncertain environment.
vi) Global environment With the rapid
growth of technology the physical
19.04 Corporate Governance
boundaries are fast disappearing and
the new global market is emerging. The Corporate governance is a set of rules and
international environmental factors which policies which governs a company. It provides
affects a business are as follows; a frame work for managing a company and
achieving its objectives. It gives guidelines for
1) Differences in language and culture
internal control, performance measurement
2) Differences in currencies and corporate disclosure. Corporate governance
lays down the rules and responsibilities of
176
the stakeholders of a company primarily the norms laid down in Companies Act 2013 by
shareholders, the directors and the management. bringing in transparency in corporates have
The role of board of directors is very important raised the governing standards of Indian
in corporate governance. It is the board that companies as per International Standards.
provides the guidelines for the company and
its other stakeholders including employees, 19.05 GST Goods and Services
customers, suppliers and financiers. Corporate Tax
governance is based on the four fundamental
pillars of fairness, transparency, accountability GST is the indirect tax levied on
and responsibility. goods and services across the country. It is a
comprehensive, multi-stage, destination-based
In India the Kumara Mangalam tax that is levied on every value addition.
Birla Committee 2000, Narayana Murthy
There are 3 taxes applicable under this
Committee 2003 , Adi Godrej Committee
system.
2008, and presently Uday Kotak Committee
were constituted to give a comprehensive i) C
GST: Collected by the Central
framework for Corporate Governance. Government on an intra-state sale (Eg:
The present corporate governance norms, transaction happening in TamilNadu)
included in the Companies Act 2013, ii) S
GST: Collected by the State Government
SEBI listing regulations and Clause 49 of on an intra-state sale (Eg: transaction
the listing agreement are the outcome of happening within TamilNadu)
discussion by these committees.
iii) I GST: Collected by the Central
Government for inter-state sale (Eg:
The Indian Corporate Governance
Punjab to Tamil Nadu)
framework requires listed companies
Goods & Services Tax Council is
i) to
have independent directors on the board;
a constitutional body for making
At least one third of the directors have to be
recommendations to the Union and State
independent directors.
Government on issues related to Goods and
ii) to have at least one independent woman Service Tax. The GST Council is chaired by the
director , Union Finance Minister and other members are
iii) to disclose all deals and payments to related the Union State Minister of Revenue or Finance
parties. and Ministers in-charge of Finance or Taxation
of all the States.
iv)
to disclose details of managerial
compensation The Goods and Services Tax Council
shall make recommendations to the Union and
v)
CEO and CFO to sign stating that the
the States on
governance norms have been complied
with in the financial statements. a. the
taxes, cesses and surcharges levied by
the Union, the States and the local bodies
It can thus be concluded that the presence
which may be subsumed in the goods and
of active governance norms in a company
services tax
enhances the image of the company, increases
investor confidence and safeguards the interests b.
the goods and services that may be
of the shareholders and the society. The new subjected to, or exempted from the goods
and services tax
177
c.
model Goods and Services Tax Laws,
principles of levy, apportionment of Goods
Case Study
and Services Tax levied on supplies in the
course of inter-State trade or commerce
under article 269A and the principles that
govern the place of supply
d. the threshold limit of turnover below which
goods and services may be exempted from
goods and services tax
e. the rates including floor rates with bands Dr.VargheseKurien – Pioneer of White
of goods and services tax revolution in India
Amul meant different things to different people :
f. any special rate or rates for a specified
To a Milk Producer A life enriching experience
period, to raise additional resources
To a Consumer Assurance of having
during any natural calamity or disaster
wholesome milk
g. special provision with respect to the States To a Mother A reliable source of
of Arunachal Pradesh, Assam, Jammu and nourishment for her child
Kashmir, Manipur, Meghalaya, Mizoram, To the Country Rural Development and
Nagaland, Sikkim, Tripura, Himachal Self Reliance
Pradesh and Uttarakhand and
h. any other matter relating to the goods and Purpose
services tax, as the Council may decide.
At the Tata group we are committed to
Key Terms improving the quality of life of the communities
we serve. We do this by striving for leadership
Environment, Micro and Macro
and global competitiveness in the business
Environment, Value system, Capitalistic
sectors in which we operate.
Economy, Socialistic Economy, Mixed
Our practice of returning to society
economy, Fiscal Policy, Monetary policy,
what we earn evokes trust among consumers,
Demography, VUCA GST employees, shareholders and the community.
We are committed to protecting this heritage
of leadership with trust through the manner in
For Future learning which we conduct our business.
178
To improve the quality of life of the communities 6. ________ environment includes weather
we serve globally through long-term stakeholder and climatic conditions.
value creation based on Leadership with Trust. 7. The size and composition of the population
is part of _________ environment.
Case Study Answers:
Apollo Hospitals 1 2 3 4 5 6 7
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180
UNIT BUSINESS
MANAGEMENT
ENVIRONMENT
PROCESS
7I
LIBERALIZATION, PRIVATIZATION
20
1
CHAPTER
PRINCIPLES OF MANAGEMENT
AND GLOBALIZATION
Chapter Synopsis
Learning Objectives
20.01 Dimensions of New Economic Policy
To enable the students to understand the 20.02 Meaning and forms of Liberalisation
■ Meaning, measures, advantages, 20.03 Advantages and disadvantages of
disadvantages and impact of Liberalisation
Liberalisation 20.04 Impact of Liberalisation
■ Meaning, measures, advantages, 20.05 Meaning and Forms of Privatisation
disadvantages and impact of 20.06 Advantages and disadvantages of
Privatisation Privatisation
■ Meaning, measures, advantages, 20.07 Impact of Privatisation
disadvantages and impact of 20.08 Meaning and Forms of Globalisation
Globalisation 20.09 Advantages and disadvantages of
■ Highlights of LPG Globalisation
20.10 Impact of Globalisation
During 1991, India approached
20.11 Highlights of LPG policy
International Bank for Reconstruction and
India agreed to the conditions of World
Development (IBRD), popularly known as
Bank and IMF and announced New Economic
World Bank and International Monetary Fund
Policy (NEP) which consists of wide range of
(IMF) and received $ 7 million as loan to repay
economic reforms. This new set of economic reforms
the external borrowings. These international
is commonly known as the LPG or Liberalisation,
agencies expected India to liberalise and open
Privatisation and Globalisation model.
up economy by removing restrictions on private
sector and remove trade restrictions between
India and other countries.
181
182
183
184
185
Globalisation means the interaction and to send or bring money back to one’s own
integration of the domestic economy with country. Since globalisation has integrated many
the rest of the world with regard to foreign countries, repatriation has become very easy.
investment, trade, production and financial (d) Reduction in tariffs: Custom duties
matters. It is the process by which businesses and tariffs imposed on imports and exports
or other organizations develop international are reduced gradually to make Indian economy
influence or start operating on an international attractive to the global investors.
scale. Globalization stands for the consolidation
of the various economies of the world. (e) Encouraging open competition:
Globalisation brings an end to the difference
between domestic and international markets.
Domestic companies start their operations in
the international level and therefore there is an
open competition.
20.09 Advantages and
Disadvantages of
Globalization
Advantages
(a) Increase in foreign collaboration:
Globalisation increases foreign collaboration
GLOBALISATION through various modes such as joint venture,
merger, franchise, turn-key projects, etc.
Globalization results from the removal
of barriers between national economies to (b) Expansion of market: The size and
encourage the flow of goods, services, capital, operation of business moves from local to
and labour. While the lowering or removal of national and from national to international.
tariffs and quotas that restrict free and open (c) Technological development:
trade among nations has helped globalize the Technological advancement paves way for a
world economy. company to enter foreign market. Globalisation
of technology is done by Royalty or purchase of
Forms of Globalization
technology or by technology collaborations.
(a) Foreign trade policy: India has signed
(d) Reduction in brain drain: Brain drain is
a number of agreements in order to expand
a situation in which a country loses its most
Indian trade worldwide. Some of the agreement
educated and talented workers to other countries
includes TRIPS (Trade Related Intellectual
through migration. Globalisation paves way for
Property Rights), GATS (General Agreement
employment opportunities in the home country
on Trade in Service).
and utilise the man-power efficiently.
(b) Export promotion: Globalisation
promotes export by reducing quotes and Disadvantages
tariffs, by eliminating trade restrictions and by (a) Loss of domestic industries:
simplifying trade procedures. Globalisation causes decline in the demand of
(c) Freedom to repatriate: Repatriate means, domestic products which in turn vanishes the
186
187
Answers:
Financial Sector
1 c 2 b 3 a 4 c 5 b
Reforms taken
Fiscal Sector during
liberalisa
on
Industrial Sector
II. Very Short Answer Questions:
1. State the branches of New Economic Policy.
Trade Sector
2. What is Privatisation?
3. Mention any three disadvantages of
Gather knowledge about these four Dimensions
Liberalisation.
4. Name the industries which are reserved for
Exercise
public sector.
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21
1
CHAPTER
PRINCIPLES
THE SALE OFOF
GOODS
MANAGEMENT
ACT 1930
Learning Objectives
To enable the students to understand the
■ Understand the contract of sale
■ Differentiate the sale and agreement to sell
■ Knows the types of Goods
■ Understand the transfer of ownership
■ Understand the conditions and
warranties
■ Knows the rights of unpaid seller
190
191
1. Existing Goods
192
Existing Goods
(i) Specific Goods (ii) Ascertained Goods
Specific goods denote goods identified and The term ‘ascertained goods’ is also used as
agreed upon at the time of contract of sale. For similar in meaning to specific goods. But this
eg. if a buyer selects a particular variety of saree term may even refer to goods which become
after examining several other sarees, the selected ascertained subsequent to the formation of the
one denotes specific goods. contract.
193
Passing of Property
Transfer of title of a property is called as passing of property.
Passing of Property
At the me of
Contract
Beyond the
date of Contract
194
195
c. Delivery to the Carrier presumption is that the seller has not reserved
Where the seller delivers the goods to a the right of disposal of the goods. The property
carrier for the purpose of transmission to the in such goods passes to the buyer immediately
buyer, he is deemed to have unconditionally on delivering them to the carrier.
appropriated the goods to the contract. But
the only condition is that the seller should
3. Goods Sent ‘On Approval’ or ‘On
not have reserved the right of disposal of the Sale or Return’ Basis
goods.Where the railway receipt or the bill of Goods sent on approval or on sale or
lading is made out in the name of the buyer, the return basis mean those goods in respect of
which the buyer has option either to return or
retain.
Time of Transfer of
Sl. No Rule Examples
Ownership
197
198
199
Where an unpaid seller has made a part The unpaid seller can resell the goods
delivery of the goods, he has lien on the reminder. (i) Where they are of a perishable nature or
However, if delivery of a part is intended as a
(ii) After exercising his right of lien or stoppage
delivery of the whole, then this lien is lost.
in transit, even though he has given
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201
(a)
Find out whether the following (c) State whether the seller is an unpaid
transactions can be included under the seller or not in the following cases:
Contract of Sale: i. X sold some goods to Y for Rs.
i. X agreed to sell 100 shares to Y for 10,000. Y paid Rs. 9,900 but failed to
Rs. 10,000. pay the balance
ii. X agreed to sell his building for Rs. ii. X sold some goods to Y for Rs.
1,00,000 to Y 10,000 and received a cheque for the
iii. X agreed to exchange with Y 100 kg full price as conditional payment.
of rice valued at Rs. 20 per kg for 200 On presentment, the cheque was
Kg of wheat valued at Rs. 12 per kg. dishonoured by the bank.
and pay the difference in cash. iii. X sold some goods to Y for Rs.
iv. X agreed to transfer some jewellery 10,000 on a credit of one month.
to his prospective wife out of love One month has not yet expired.
and affection. iv. X sold some goods to Y for Rs.
v. X agree to buy a painting from an 10,000 on a credit of one month and
artist one month has expired and the price
vi. X supplied a piece of cloth to a tailor remains unpaid.
to stitch a suit for him. The tailor v. X sold some goods to Y for Rs. 10,000
agreed to supply lining materials and on a credit of one month. Y became
buttons. insolvent during the period of credit.
vii. X agreed to pledge his goods valued
at Rs. 1,00,000 with Y (i) Mere possession of the goods
Clues: Students are advised to understand does not make the possessor the
the meaning for goods and the owner of the goods possessed. A
essential elements of contract of sale. person may possess the goods by borrowing
(b)
Find out whether the following from others; or from finding it on the
contracts of sale amount to sale or highways or by mortgage or by pledge or
agreement to sell:
by bailment or by lease or by hire and
i. X entered into a contract for sale entire so on. These transactions do not confer
crop of rice cultivated in his farm.
ownership rights to the possessor. It is only
ii. A railway administration agreed to when the ownership is transferred that the
sell coal-ash that might accumulated
person becomes absolute owner. The owner
during the period of the contract.
possesses every right to hold the goods
iii. X entered into a contract for sale of
against the whole world. In this context,
some goods in a particular ship to be
you have to understand that purchase means
delivered on the arrival of the ship
buying the ownership of the goods bought
iv. X entered into a contract for sale of a
for consideration and sales means selling the
painting only if Z, its present owner
ownership over the goods for consideration.
sells it to him.
202
3. Discuss the implied conditions and (ii) P.C. Tulsian& Bharat Tulsian, Business Law,
warranties in sale of goods contract. S. Chand publishing, New Delhi 2014
Balachandran V & Thothadri S, Business Law,
4. Discuss in detail the rights of an unpaid
Vijay Nicole Imprints Pvt. Ltd., Chennai, 2009
seller against the buyer personally.
204
22
CHAPTER
THE NEGOTIABLE INSTRUMENTS ACT 1881
Learning Objectives
To enable the students to understand the
■ Negotiable Instruments
■ Meaning, characteristics and
Assumptions
■ Bills of Exchange, Cheque, Promissory
Note – comparison
■ Crossing of cheque – types –
endorsement types
Chapter Synopsis
22.01 Negotiable Instruments – Meaning, The word ‘Negotiable’ means transferable
Characteristics, Assumptions from one person to another in return for
22.02 Negotiability & Assignability consideration. The word ‘Instrument’ means
a written document by which a right is created
22.03 Bills of Exchange, Cheque, Promis- in favour of certain person. Thus, a negotiable
sory Note – A Comparison
instrument is a document which entitles a
22.04 Crossing of Cheque person to a certain sum of money and which
22.05 Endorsements is transferable from one person to another by
mere delivery or by endorsement and delivery.
The terms delivery and endorsement has been
explained subsequently in this chapter. The law
205
relating to negotiable instruments is dealt in she need not return the bill to true owner.
the Negotiable Instruments Act 1881. This Act eg. A sold certain goods to B. B gives a Bills
speaks about promissory note, bills of exchange of Exchange to S for the price. Later B refuses
and cheques. to pay the Bills of Exchange on the ground that
the goods supplied are defective. Meantime,
22.01 Negotiable Instruments– A endorsed the bill to C. In this case, B’s defence
Meaning, Characteristics, is of no value. C is a holder in due course. His
title is not affected by certain defence like fraud
Assumptions
or misrepresentation or any mistake.
In the words of Justice K.C. Wills, a
negotiable instrument is one, the property in 3. Right of the transferee to sue
which is acquired by anyone who takes it bonafide
Though a bill, a promissory note or a
and for value, and withstanding any defect to title
cheque represents a debt, the transferee is
in the person from whom he took it.
entitled to sue on the instrument in his own
According to section 13 of the Negotiable name in case of dishonour, without giving notice
instruments Act 1881, a negotiable instrument to the debtor that he has become its holder.
means a promissory note, bill of exchange or
Presumptions to Negotiable Instrument
cheque payable either to order or to bearer.
Certain presumptions as briefly mentioned
Characteristics of a Negotiable below:
Instrument I. Every negotiable instrument is presumed
to have been drawn, accepted etc. for
1. Transferability consideration.
A negotiable instrument is transferable II. A negotiable instrument is presumed to
from one person to another without any have been accepted.
formality, such as affixing stamp, registration
III. Every negotiable instrument bearing, a
etc., In other words, the property (the right of
date is presumed to have been made or
ownership) in the instrument can be transferred
drawn on such a date.
by mere delivery (in case it is payable to bearer)
or by indorsement and delivery (in case it is IV.
It is presumed to have been accepted
payable in order). within a reasonable time after the date
and before its maturity.
2. Title of the holder free from all V. The transfer of a negotiable instrument
defects is presumed to have been made before
A person taking the instrument in good maturity.
faith and for value is known as holder in due VI.
The endorsements appearing upon a
course. When the instrument is held by holder negotiable instrument are presumed to
in due course in the process of negotiation, it have been made in the order to which
is cured of all defects in the instrument with they appear thereon.
respect to ownership. In other words, even VII. When a negotiable instrument has been
though the right of the person who transferred lost, it is presumed to have been duly
the instrument to holder in due course is stamped.
defective i.e. disentitled to transfer, the title VIII. The holder of a negotiable instrument is
of the holder in due course is superior. He/ presumed to be a holder in due course.
206
207
208
209
Note No:_______
0002/16/12/2018 DATE:_______________
18/05/2018
NAME:______________________________________________________________________
Allimuthu and Co.
For value received, I or We, the signers, promise to pay to the order of Charter State Bank
of Chennai, Tamil Nadu, _____
90 days from date, the principal sum of _____________________
Rs.15,00,000/=
_________________________________________________________________with
Rupees Fifteen Lakh Only__________________________________ interest from date
at the rate of _______%
8 per year, due on __________________.
August 15, 2018
06. Interest Rate
Micheal Lawrence President
______________________________________
______________________________________
Allimuthu and Co.
07. Maturity Date
210
211
LY Types of Crossing
T ON E
UN BL
. O T IA General Crossing
CO C
GO
& AC
ES NE
E T According to section 123 of the Negotiable
PA
Y NO
Instruments Act, 1881,
Speciments of Special or Restricve Crossing “Where a cheque bears across its face
an addition of the words “and company” or
DI
A any abbreviation thereof, between to parallel
IA A
IN ND EE DI E IA
K
OF
O. F I
PAY F IN I A BL IND transverse lines or of two paralleltransverse
C O C O T OF
BAN & NK A/ NK GO NK lines simply, either with or without the words
E A E
AT EB BA N BA
ST TAT TE N OT TE “not negotiable” that addition shall be deemed
S A A
ST ST
a crossing and the cheque shall be deemed to be
crossed generally”.
The lines should be drawn across the face of
Crossing a cheque refers to the practice of a cheque and not on the reverse thereof. Further,
drawing two parallel transverse lines across the they must by parallel and transverse. Cross marks
faceof a cheque with or without the words ‘and such as ‘X’ does not constitute crossing. The
Co’. The effect of this crossing is that the drawee words ‘and company’ or any abbreviation thereof
bank will pay the amount of a cheque only to are not an integral part of a crossing and their
the banker. omission does not affect the validity of crossing.
212
213
that its detection is impossible and if payment 3. If the endorsee’s name is wrongly spelt, the
has been made in due course, though at the endorsee should sign the same as spelt in the
counter, the paying banker is discharged from instrument and write the correct spelling
liability. within brackets after his endorsement.
4. Endorsement for only a part of the amount
22.05 Endorsements of the instrument is invalid. It can be made
Section 15 of the Negotiable instruments only for the entire amount.
Act 1881 defines endorsement as follows:
5. Where, however, the instrument has been
“When the maker or holder of a negotiable partly paid, a note to that effect can be given
instrument signs the name, otherwise that as on the instrument and endorsement made
such maker for the purpose of negotiation, on for the balance amount.
the back or face thereof, or on a slip of paper
6.
Endorsement is complete only when
annexed thereto or so signs for the same purpose
delivery of the instrument is made. On the
a stamped paper intended to be completed as a
death of the endorse who has endorsed
negotiable instrument, he is said to endorse the
an instrument but has not delivered it to
same and is called the endorsee”.
the endorsee, the endorsement becomes
In other words, when the person signs on invalid.
the back of (or face of) the instrument with a
7.
It is presumed that the endorsements
view to transferring his interest therein, he is
appearing on a negotiable instrument were
said to be endorsing it. Though endorsement
made in the order in which they appear
can be made on the face of the instrument also,
thereon.
it is usually make on its back. If the space on
the back is insufficient, a piece of paper can be 8. Signing in block letters does not constitute
attached to the instrument for this purpose. regular endorsement.
This piece of paper is called Allonge. 9. The prefixes or suffixes added to the names
of the payees or endorsees must be omitted
Requisites of a Valid Endorsement
in the endorsement.
If an endorsement is to be valid, it must
possess the following requisites: 10. Endorsement must be in link
1. Endorsement is to be made on the face of the 11. If the payee is an illiterate person, he can
instrument or on its back. It is usually made endorse it by affixing his thumb impression
on the back of a negotiable instrument. on the instrument. But it must be duly
attested by somebody who should give his
2. When there is no space for making further
full address thereon.
endorsements a piece of paper can be
attached to the negotiable instrument for 12. A
person duly authorised to endorse a cheque
this purpose. This piece of paper is called or a bill must indicate that he is signing in
‘Allonge’. it on behalf of his principal by using such
words as “for”, “on behalf of ” or “per pro”.
214
Kinds of Endorsements
Types of
Meaning Specimen
Endorsement
1. When the endorser puts his mere signature on the “Pallavan “
Endorsement back of an instrument without mentioning the name
in blank of the person to whom the endorsement is made, it is
or general called Blank Endorsement or General Endorsement.
endorsement Eg. A cheque is drawn in favour of Pallavan and
Pallavan who is entitled to get the amount of the
cheque desires to transfer it to Paari. If Pallavan just
puts his signature without mentioning the name of
Paari to whom he wants to endorse it is called Blank
Endorsement.
2. Where the endorser, in addition to his signature,
Endorsement specifies the person to whom or to whose order the
in full or instrument is payable, the endorsement is called
special endorsement in full. In the above example, if Pallavan
endorsement writes as follows and puts his signature, it becomes a
full endorsement.
Any holder can convert a blank endorsement into Pay to Paari
special endorsement by writing above the signature of
“Pallavan”
the endorser a direction to pay to himself or to some
other person. When he makes it payable to some
other person and delivers it to that person, he does not
endorse it himself and therefore he assumes no liability
thereon as an endorser. When a cheque is drawn
payable to a bearer, even a subsequent endorsement in
full cannot make it payable to order.
3. Conditional Where the endorser of a negotiable instrument makes
or qualified his liability dependent upon the happening of an event
endorsement which may or may not happen, it is called conditional
endorsement.
Similarly where the right of the endorsee to receive
the amount is made dependent upon the happening Pay Paari, if he returns
of an event which may or may not happen, then also from Delhi within three
the endorsement is called conditional or qualified months.
endorsement. “Pallavan”
Here Paari, the endorsee is entitled to receive payment
only on the fulfilment of the specified condition,
namely his return from Delhi within three months.
Conditional endorsement does not affect negotiability.
Such endorsements are not usually made
215
Key Words
216
Negotiable
Meaning Example
Instrument
217
218
219
I. Find out the type of instrument and the (ii) Mr. Y, I owe you Rs. 500
reason? (iii) I promise to pay Y Rs. 500 + some
(a) A bill is drawn payable to X or other charge
bearer (iv) I promise to pay Y Rs. 500 on Z’s
(b) Bill drawn in London upon a death
merchant in Chennai and accepted (v) I promise to pay Y (myself) Rs. 500
and payable in Bangalore
(vi) I promise to pay Y Rs. 500 and to
(c) Bill drawn in Delhi upon a deliver to him my black horse on
merchant in London and accepted first January next.
and payable in London
Clues: Answer should be given after reading
(d) Bill drawn in London on a merchant the characteristics of Promissory note
in Agra and endorsed in Delhi
(e) A Bill drawn by Bajaj Auto Agent III. Classify the following endorsement
on Bajaj Auto Ltd. with reasons
(f) Bill drawn by A on Y (an imaginary (i) No other words except B’s signature
person not in existence) and (ii) Pay C
endorsed to B (iii) Pay C or order
(g) X gives a blank cheque to Y or gives (iv) Pay C only
undated cheque to Y (v) Pay C or order for the account of B
(h) X signs stamped and blank (vi) Pay C or order being the unpaid
promissory note and keep it locked residue of the bill
in his drawer
(vii) Pay C or order on safe receipt of
II. Find out which of the following is a goods
promissory note? (viii) Pay C Sans Recourse
(i) X promises to pay a sum of Rs. 500 (ix) Pay C, notice of dishonour
on telephone. dispensed with
220
ENTREPRENEURSHIP
UNIT MANAGEMENT PROCESS
DEVELOPMENT
IX
I
ELEMENTS OF
23
1
CHAPTER
PRINCIPLES OF MANAGEMENT
ENTREPRENEURSHIP
Chapter Synopsis
23.01 Entrepreneurship – Concept, Meaning
& Definition
23.02 Characteristics of Entrepreneur
23.03 Importance of Entrepreneurship
23.04 Entrepreneur, Intrapreneur and
Manager – a comparison
23.05 Women Entrepreneurs –
Opportunities and Challenges
23.06 Entrepreneurial Functions
222
223
224
7. Leadership 23.03 Importance of
Entrepreneur should be able to influence Entrepreneurship
team members by showing sympathy and
empathy so as to enable them to contribute
positively towards the goals of the venture.
Entrepreneur should lead others from the front
and by personal example and should walk the
talk and effectively take all the followers to
activate the goals of the venture.
226
Fund Entrepreneur has to mobilize funds Intrapreneur does not engage in fund
Mobilization to finance the venture. mobilization. But can access funds mobilized by
the entrepreneur.
Reward Entrepreneur is rewarded by profit Intrapreneur does not share in profits of venture.
for the risk bearing exercise. But gets perquisites, salary, incentives etc., for
the service.
Risk Bearing Entrepreneur bears the risk Intrapreneur does not bear any risk in the venture
involved in the venture undertaken. and does not even share the risk inherent in the
project or work assigned. However Intrapreneur
is accountable for the task or project assigned.
Basis of
Entrepreneur Manager
difference
Motive The very motive of an entrepreneur The very motive of manager is to render service
is to start a venture by setting of an in an entity setup for execution of venture.
entity.
Status Entrepreneur is owner of the entity Manager is a salaried employee in the entity set
up for carrying on the venture.
Risk Bearing Entrepreneur bears the eventual Manager doesn’t bear any risk in the venture
risk and uncertainty in operating where the venture is unsuccessful he/she simply
the enterprise quits the enterprise.
227
Skills An entrepreneur requires creative Manager requires conceptual skills and human
talent, intuition and urge for relations skills.
innovation.
23.05 Women Entrepreneurs Thus, a stage has been already set for social
– Opportunities and take-off of women from a low development path
to an accelerated pace in achieving higher level
Challenges
of self sustaining economic growth in the wake
Women entrepreneurship has been getting of new economic policy 1991.
growing recognition over the past two decades
across the world. Women entrepreneurs not Definition
only generate new jobs for themselves but also According to Schumpeter’s concept,
for others. They provide society with different “Women who innovate, imitate or adopt
solutions to management, organisation and a business activity are known as women
business problems. Women owned businesses entrepreneurs”.
are playing a pivotal role in the upsurge of Government of India based on women
entrepreneurial activity in the United States. It is participation in equity and employment
reported that the highest number of self employed of business enterprise has defined women
women are in Sweden followed by England, entrepreneurs as “An enterprise owned and
France and USA. In general, women are attracted controlled by a women having a minimum
to retail trade, restaurants, hotels, education, financial interest of 51% of the capital and giving
insurance and manufacturing. In our country, at least 51% of the employment generated in the
women constitute only 5.2 per cent of the total enterprise to women.”
self employed persons in India. Majority of them
opted for agriculture, agro based industries, Opportunities for Women
handicrafts, handlooms, cottage industries but in Entrepreneurs
2011 (2011 census) it has improved to 25 percent.
228
229
230
231
decisions in many contexts during the course of concessions, benefits and incentives awarded by
running the entrepreneurial venture. Besides, Government and other agencies.
the weak emotions do not allow them to tolerate
failures and disappointments arising during the 8. Dependent culture
normal course of their entrepreneurial journey. In India, women however educated and
This inherently tone downs the effectiveness of talented are groomed to be dependent on their
their functioning. parents, life partners and children during the
various phases of their life cycle. They could not
7. Lack of Information take decisions on their own in many contexts
Women entrepreneurs are reported not to due to this dependency factor. They have to
be generally aware of subsidies and incentives take permission from their support groups to
available for them due to their poor literacy levels engage in any purposeful and gainful activity.
or due to their pre occupation with household They are not treated as equals unlike women in
responsibilities. This lack of knowledge or western countries. This cultural barrier does not
limited knowledge about subsidies prevents allow them to start and manage their ventures
them from availing themselves of special according to their free will and pleasure.
232
233
234
235
After the completion of the academic career, which engagement would you like to opt for after
considering the following factors:
Job Security Fixed tenure jobs in respect of Stable job till the business is solvent
public sector appointments and
absolute unstable job in private
sector appointments.
Financial Risk There is no financial risk in There is high degree of risk of losing
salaried employment as the the investment due to continuous loss.
employee does not invest in
the capital of the employer
organisation
236
Case Study 1
GoliVadaPav 1
(Indian Street-food Vendor)
C h a l l e n g e : Ha n d m a d e
patties are not uniform in
quality and have a short
span of shell life. Decrease
in the profit margin due to
acute increase in the price
of ingredients. Bank which
rendered loans to Mr.
Venkatesh insisted to stop
the losses which arose due
to these problems or repay
the bank loans
Inception: Strategy:
VenkateshIyer co-founded Outsourcing the supply chain
GoliVAdaPav with Shiv Menonto and operations from Vista
2004 in Kalyan, near Mumbai Processing foods, a US company
for selling affordable, clean, to supply frozen vegetables and
ethnic fast good to lower income patties to GoliVAdaPav which
customers in India. ensures consistency in quality
and short shell life. Installation of
Product - Vadapav:
automated fryer machines in their
A typical Mumbai street-food outlets improved their business.
dish of a spicy vegetable patty Decision to penetrate the second-
in a bun. The goal was to sell tier cities in western and southern
hygienically prepared food with cities for their marketing.
an authentic touch.
Success Story:
i. GoliVadaPav has 300 stores in 100 cities across 20 states of India.
ii. Goli fast food chain products are prepared in fully automated ‘HACCP’ certified hands free plant
frozen at -18 degree Celsius.
iii. GoliVadaPav was set up in over 40 cities with 150 outlets with a success rate of sale of
75,000-100,000 vadapavs per day.
Key words
Entrepreneurship, Investigation, Innovator, Mobilisation, Leadership, GDP, Intrapreneur, Manager
237
1.
Which of the below is a factor of production? 3.
List down the commercial functions of
(a) Land (b) Labour Entrepreneur and explain them shortly.
II. Very Short Answer Questions: ii. Gupta, G.P. and Srinivasan, N.P.,
Entrepreneurial Development, Sultan
1.
Mention any two features of entrepreneurs. Chand & Co., New Delhi, 1993.
2.
List down the managerial functions of iii. Sundar K.S., Elements of Entrepreneurship,
entrepreneurs. Vijay Nichole Imprints Pvt. Ltd., Chennai
3.
List down the promotional functions of 2018
entrepreneurs.
4.
Define Intrapreneur
5.
List the problems faced by the women
entrepreneurs
238
UNIT ENTREPRENEURSHIP
MANAGEMENT PROCESS
DEVELOPMENT
IX
I
24
1
CHAPTER
PRINCIPLES
TYPES OF ENTREPRENEURS
OF MANAGEMENT
Chapter Synopsis
Learning Objectives
24.01 Types of Entrepreneurs
To enable the students to understand the
■ Based on Function - Innovating, 24.02 Classification According to Function
Imitative, Fabian, Drone 24.03 Classification According to Type Of
■ Based on Type of Business - Business, Business
Trading. Industrial, Corporate,
24.04 Classification Based on Technology
Agricultural, Retail, Service Adopted
■ Based on Technology - Technical, Non-
technical, Professional 24.05 Classification in terms of Motivation
■ Based on Motivation - Pure, Induced, 24.06 Classification Based on Development
Motivated, Spontaneous Stage
■ Based on Development - First
24.07 Classification According to Area
Generation, Modern, Classical
■ Based on Area - Urban, Rural 24.08 Classification According to Owner-
■ Based on Ownership - Private, State, Joint ship
Entrepreneurs in business are different adopt; the area they start the venture; the level
according to the type of activity undertaken by of development they achieve in the venture;
him/her. Though the word entrepreneur is a type of ownership held and motivation given
general term, they are called by different names to them. Besides each of the above type is sub
depending upon the function they perform; classified as shown in the chart.
business they engaged in; technology they
239
240
24.03 Classification According
to Type of Business
241
242
expertise to distribute the products produced rate of interest, tax breaks, tax holidays, training,
by technical entrepreneur effectively to channel import of technology from abroad, concessions
members and end consumers. for export oriented item, allotment of sheds, and
lands at subsidised price etc. impel the potential
3. Professional Entrepreneur entrepreneurs to start the venture.
Professional entrepreneur is one who
is having a rich expertise in starting a venture
but lack interest in continuing the venture as a
manager or as a owner. He/she simply sells out
the venture started by him to someone else after
its successful take-off. They keep on conceiving
new ideas to develop alternative projects. In
short, these entrepreneurs have got professional
expertise in starting the venture and exiting it
after the establishment.
24.05 Classification in Terms of
Motivation
1. Pure Entrepreneur
Pure entrepreneurs are individuals 3. Motivated Entrepreneur
who are propelled to enter into venture by Motivated entrepreneurs are those
psychological and economic motives. Their motivated to take up venture by the desire for self
egos do not permit them to work for somebody fulfilment. They are motivated to produce and
else. They nurture desire of starting a particular market product or service by sheer prospect of
venture and earning high profit there from and making huge profit. They are further motivated
thus attaining a social status. They apply their to develop the venture to a saleable stage so that
knowledge, skill and insight in making the he/she can sell the venture at a super profit to
venture a great success in order to earn maximum certain entrepreneurs(buyers) who do not like
profit out of the venture. Example Dhirubai to take risks in setting up a new venture but
Ambani, Jamshadji Tata, T.V. Sundaram Iyengar, desire to buy well developed venture promising
Seshadriji, Birla, Narayanamurthi, Aziz Premji great profit prospects.
and so on.
4. Spontaneous Entrepreneur
2. Induced Entrepreneur These entrepreneurs have natural
An induced entrepreneur is one who is inclination to start venture. They are supposed
inspired to take up entrepreneurial activity to be bold, optimistic and enterprising persons.
thanks to entrepreneurship friendly policies put They have passion for meeting the challenges.
in place by the Government. In other words, Their inner urge and inborn traits drive them to
concessions, incentives and soaps provided commence their ventures.
by the government drive them to enter into
venture. Government provides a great deal of
support in the form of loans, subsidies, nominal
243
244
groups.
• Your friend wants to start a business
with Rs. 10 lakhs from his ancestral
property. Make an analysis for your
friend to suggest him suitable business For Future Learning
in your locality. 1. Students are instructed to visit and
interview a successful entrepreneur in
• Identify products which are exclusively your locality. Present a report about the
utilised by kids under the age group of factors that leads to the success of the
1-5 years, 5-10 years,10-15 years. entrepreneur based on the interview.
2. Scan the products that are available in
• Critically examine an industry of your
your market. Imagine an innovative
choice based on its current demand and product with multiple uses. Make a
supply of products. survey about the innovative products
success among the locality.
3. Observe the small shops and outlets in
and around your locality. Think about
new ideas for the future outlets in your
area.
245
Case Study - 2
246
1. Choose the type of entrepreneur that isn’t 10. Which of the below is not a Characteristic
based on function: of a Fabian Entrepreneur?
a. Innovative b. Classical a. Conservative b. Risk averse
c. Fabian d. Drone c. Sceptical d. Adaptive
6. Poultry, Flowers, Fruits etc are called allied III. Short Answer Questions:
Products of _______ entrepreneur. 1. Who is a private entrepreneur?
a. Corporate b. Retail 2. What is political environment?
c. Trading d. Agricultural
3. List down few examples of pure
7. ________ Entrepreneur Supply Services entrepreneurship
Unlike. 4. How does a professional entrepreneur
a. Hoteliers b. Banking operate?
c. Airlines d. Livestock 5. Explain about the agricultural entrepreneur.
247
References
i. Khanka S.S., Entrepreneurial Development,
S.Chand & company Ltd. Ram Nagar. New
Delhi, 2006
ii. Gupta, G.P. and Srinivasan, N.P.,
Entrepreneurial Development, Sultan
Chand & Co., New Delhi, 1993.
iii. Sundar K.S., Elements of Entrepreneurship,
Vijay Nichole Imprints Pvt. Ltd., Chennai,
2018
248
ENTREPRUNERIAL
UNIT DEVELOPMENT
IX
GOVERNMENT SCHEMES FOR
25
CHAPTER
ENTREPRENEURIAL DEVELOPMENT
Government of India’s
Learning Objectives Support for Innovation and
Entrepreneurship in India
To enable the students to understand the
■ India’s efforts at promoting The Government of India has undertaken
entrepreneurship several initiatives and instituted policy
■ Specific entrepreneurship schemes measures to foster a culture of innovation and
■ Steps in promoting an entrepreneurial entrepreneurship in the country. Job creation
venture is a foremost challenge facing India. With a
■ Women entrepreneurial schemes significant and unique demographic advantage,
■ Government of Tamil Nadu India, however, has immense potential to
entrepreneurial schemes innovate, raise entrepreneurs and create jobs for
the benefit of the nation and the world.
In the recent years, a wide spectrum
Chapter Synopsis of new programmes and opportunities to
nurture innovation have been created by the
25.01 India’s efforts at promoting Government of India across a number of
Entrepreneurship and Innovations sectors namely,Agriculture, Chemicals, and
25.02 Specific Entrepreneurship Schemes Fertilizers, Finance, Commerce and Industry,
Communication and Information Technology,
25.03 Steps in promoting an entrepreneurial
venture Corporate Affairs, Culture, Food Processing,
Housing & Urban Poverty Alleviation, and
25.04 Government of Tamil Nadu Science & Technology etc.
entrepreneurial schemes
Financial assistance, insurance, subsidy,
training, helps early stage tech start-up and
249
1. Startup India:
Through the Startup India
initiative, Government of India promotes
entrepreneurship by mentoring, nurturing and
facilitating startups throughout their life cycle.
Since its launch in January 2016, the initiative 3. Atal Innovation Mission (AIM):
has successfully given a head start to numerous AIM is the Government of India’s
aspiring entrepreneurs. A ‘Fund of Funds’ has endeavour to promote a culture of innovation
been created to help startups gain access to and entrepreneurship, and it serves as a platform
funding. for promotion of world-class Innovation Hubs,
Grand Challenges, start-up businesses and
other self-employment activities, particularly in
technology driven areas.
STARTUP
4. Support to Training and
INDIA Employment Programme for
Women (STEP):
STEP was launched by the Government
of India’s Ministry of Women and Child
Development to train women who have access
to formal skill training facilities, especially in
rural India. The Ministry of Skill Development
& Entrepreneurship and NITI (National
2. Make in India:
Institution for Transforming India formally it is
This scheme is designed to transform called as planning commission) Aayog recently
India into a global design and manufacturing redrafted the Guidelines of the 30-year-old
hub, the Make in India initiative was launched initiative to adapt to present-day needs. The
in September 2014. It came as a powerful call programme imparts skills in several sectors such
to India’s citizens and business leaders, and an as agriculture, horticulture, food processing,
invitation to potential partners and investors handlooms, traditional crafts like embroidery,
around the world to centralize information travel and tourism, hospitality, computer and
about opportunities in India’s manufacturing IT services.
sector. This has in turn helped procure
investments, foster innovation, develop skills, 5. Jan Dhan-Aadhaar - Mobile (JAM):
protect intellectual property and build best-in-
JAM, for the first time, is a technological
class manufacturing infrastructure.
intervention that enables direct transfer
250
251
3. Dairy Entrepreneurship
Development Scheme
Dairy Entrepreneurship Development
Scheme aims at helping entrepreneurs in the
field of Agriculture, pets and animals, and social
impact to set up small dairy farms and incentives
are provided to cover the cost of the required
25.02 Other Specific equipment or establishment of the facility.
Entrepreneurship Schemes
In order to support and strengthen the 4. Single Point Registration Scheme
Start-up culture in India, the Government has (SPRS)
launched various schemes in the past few years. A great scheme for Micro and Small
They are as follows: Enterprises, which provides an exemption
1. Modified Special Incentive Package from payment of Earnest Money Deposit
(EMD). Under this scheme, the tenders are
Scheme (M-SIPS)
issued free of cost.
The M-SIPS scheme provides capital
subsidy of 20% in SEZ and 25% subsidy
5. Atal Incubation Centres (AIC)
in non-SEZ for business units engaged in
manufacturing of electronics in the fields of the The Government of India has setup
Internet of Things, aeronautics/aerospace and the Atal Innovation Mission (AIM) at NITI
defence, automotive, renewable energy, non- Aayog in 2016 with the over arching purpose
renewable energy, technology, green technology of promoting a culture of innovation and
and nanotechnology. entrepreneurship in the country. This has
been setup to provide high class incubation
2. New Gen Innovation and
facilities across various parts of India in terms
Entrepreneurship Development
of capital equipment, operating facilities along
Centre
with sectoral expert for monitoring start-ups,
(New Gen IEDC) especially in transport. manufacturing health,
New Gen IEDC provides a limited one-
energy, water, agriculture and construction
time, non-recurring financial assistance to
sectors.
252
Innova
ve Role Model to Self Iden
ty & Need for
Thinking Others Social Status Addi
onal Income
Support of Educa
on and Self Fulfilment New
Family Members Qualifica
on Challenges
253
254
255
Common
Applicaon
Form Public Health
Inspector of
Factories
Single Window
Clearance Commi ee Town &
Local Body
Country Planning
Polluon
Entrepreneur Control Board
Fire Service
DISTRICT INDUSTRIES CENTRE
ANGEL INVESTORS
256
257
26
1
CHAPTER
PRINCIPLES
COMPANIES
OF MANAGEMENT
ACT 2013
258
Some Important Basic changes made in the new Companies Act 2013 are as follows:
260
26.03 Body Corporate Out of the four stages, the first two stages
‘Promotion and Registration’ are necessary for
Body corporate means a corporate entity
both public and private companies. A private
which has a legal existence. According to
company can start operating its business
section 2(11) “body corporate” or “corporation”
immediately after registration, but a public
includes a private company, public company,
company has to pass through two more stages-
one personal company, small company, Limited
capital subscription and commencement of
Liability Partnerships, foreign company
business.
incorporated outside India, but does not include
A public company can raise funds
1. a co-operative society registered under any
from the public by issuing shares. After
law relating to co-operative societies; and
following all the legal provisions of public
2. any other body corporate (not being a issue, which are specified in The Company’s
company as defined in this Act), Act, a public company can start operating
of its business.
26.04 Formation/Incorporation
of a Company 26.05 Promoter
Section 3(1) of the Act states that a company Promotion stage begins when the idea
may be formed for any lawful purpose by- to form a company comes in the mind of a
(a) seven or more persons, where the company person. The person who envisage the idea
to be formed is to be a public company; is called a ‘promoter’. Section 2 (69) of
the Companies Act, 2013 defines the term
(b) two or more persons, where the company
‘promoter’ as under:-
to be formed is to be a private company; or
“Promoter” means a person—
(c) one person, where the company to be
formed is to be One Person Company that (a) who has been named as such in a
is to say, a private company by subscribing prospectus or is identified by the company
their names or his name to a memorandum in the annual return referred to in section
and complying with the requirements of 92; or
this Act in respect of registration: (b) who has control over the affairs of the
The process of formation of company company, directly or indirectly whether
consists of different stages, which starts when a as a shareholder, director or otherwise;
person envisage an idea to form a company and or
ends when a company gets a certificate from the (c) in accordance with whose advice, directions
Registrar of Companies after complying with or instructions the Board of Directors of
the various provisions relating to the formation the company is accustomed to act.
of a company. ‘Formation of a Company’ has By virtue of above definition, persons
been divided into four stages: in accordance with whose advice, directions
1. Promotion or instructions the Board of Directors of the
2. Registration company is accustomed to act are also treated
as promoters. However, if a person is merely
3. Capital Subscription and
acting in a professional capacity i.e. giving only
4. Commencement of Business. professional advice to the Board of directors, he
shall not be treated as a promoter.
261
(d)
Preparation of Affidavit from the AAICBO206M*
CHECBO206M*
subscribers to the Memorandum
(e) Furnishing verification of Registered Office
(f) Preparation of particulars of subscribers
(g) Preparation of particulars of first directors
along with their consent to act as directors
(h) Power of Attorney XYZ MARKETING (OFC0 PRIVATE LIMITED
PLOT NO.150, ABC NAGAR, MKR ROAD, CHENNAI,
TAMILNADU, INDIA, PIN:600 006.
262
Capital Subscription - Third stage Rs.1 lakh in the case of private limited
Both private company and public company.
company not having share capital can (iii) It has filed the Registrar the verification of
commence its business after the completion the registered office.
of the above stages. But a public limited
These restrictions in section 11 are
company having its share capital has to pass
applicable to companies having share capital.
through two more stages. One of them is
It can commence business only after fulfilling
capital subscription, steps to be taken at this
all the formalities mentioned above and
stage are listed below.
exercise borrowing powers immediately after
(i) The fulfilling formalities to raise necessary incorporation.
capital
(ii) Adhering to SEBI guidelines in this regard
(I) Provisions Specifically Relating
to Incorporation of One Person
(iii) Observing guidelines for Disclosure and
Company
investor protection issued by SEBI
According to section 3(1), the
(iv) Issuing prospectus memorandum of One Person Company shall
(v) Appointing official banker of the indicate the name of the other person, with his
company for receiving application from prior written consent in the prescribed form,
the investors who shall, in the event of the subscriber’s death
or his incapacity to contract become the member
(vi) Fulfilling the condition for valid allotment
of the company and the written consent of such
by director
person shall also be filed with the Registrar at
(vii) Passing resolution for making allotment the time of incorporation of the One Person
by director Company along with its memorandum and
(viii) Despatch allotment letters to allottees articles.
(ix) Filing allotment return with the Registrar
(x) Issuing share certificates in exchange for 26.07 Share and Share Capital
their allotment letter The term “Capital” is viewed by a layman
(xi) Ensuring collection of minimum as the money, which a business persons invest
subscription in the business and in case of company raise the
capital by issue of shares. They uses this money
to meet its requirements by way of acquiring
Commencement of Business – Fourth
business premises and stock-in-trade, which
stage
are called the fixed capital and the circulating
As per section 11 of the Act, a company capital respectively. The phrase “loan or
having share capital should file with the borrowed capital” is sometimes used to mean
Registrar, declaration stating that money borrowed by the company and secured
(i) Every subscriber to the Memorandum by issuing debentures. This, however, is not the
has paid the value of shares agreed to be proper use of the word “capital”.
taken by him. In case of company limited by shares, the
(ii) Paidup capital is not less than Rs.5 lakhs word “capital” means the share capital i.e., the
in the case of public limited company and capital in terms of rupees divided into specified
264
number of shares each having fixed rupee payable to any share holders in that year.
value. For e.g. share capital of a company is
Rs.10,00,000 which can be divided into 10,000 Meaning of Preference Share
shares of Rs.100 each or 1,00,000 shares of Rs.10 Section 42 of the Companies Act, 2013
each, whichever is reasonable to the company. the term ‘preference shares’ mean that part of
the share capital the holders of which have a
Share preferential right over payment of dividend (fixed
The term Share is viewed by a layman amount or rate) and repayment of share capital
as a fraction or portion of total capital of the in the event of winding up of the company.
company which have equal denomination. In
simple, the total capital of the company is shared Kinds of Preference shares
by many person and each share is having equal There are eight types of preference shares.
value. In case of dissolution of the company, any of the
According to Section 2(84) of the eight types would be paid out before other types
Companies Act, 2013, share means share in the of equity.
"Share Capital of a company and includes stock
Cumulative Preference shares: As the word
except where a distinction between stock and
indicates, all dividends are carried forward until
share is expressed or implied"
specified, and paid out only at the end of the
Kinds of Share Capital specified period.
According to Section 43 of the Act, a Non-cumulative Preference shares: The
company which is limited by shares can issue opposite of cumulative, obviously. Dividends
two classes of shares they are: are paid out of profits for every year. There are
(i) Equity Share Capital: no arrears carried over a time period to be paid
at the end of the term
a) With Voting rights or
b) With differential rights as to dividend, Redeemable Preference shares: Such
preference shares can be claimed after a fixed
voting or otherwise in accordance with
period or after giving due notice.
such rules as may be prescribed.
Non-Redeemable Preference shares: Such
(ii) Preference Share Capital
shares cannot be redeemed during the lifetime
of the company, but can only be obtained at the
Meaning of Equity Share
time of winding up (liquidation) of assets.
Those shares which are not called as
Convertible Preference shares: The shares
preference share are known as Equity share
can be converted into equity shares after a time
or the share of a company which do not have
period or as per the conditions laid down in the
any preferential rights with regard to dividend
terms.
and repayment of share capital at the time
of liquidation of a company, is also called Non-convertible Preference shares: Non-
as ordinary share. It may be noted that the convertible preference shares cannot be, at any
dividend is payable, only when the company time, converted into equity shares.
earns adequate profits and the rate of dividend Participating Preference shares: Such shares
is recommended by the Board of Directors and have the right to participate in any additional
declared at the General Body Meeting. The rate profits, after paying the equity shareholders.
of dividend is not a fixed one, in all the years. The surplus of profit is apart from the fixed
Where a company earned loss no dividend is dividend paid up for preference shares.
265
Non-Participating Preference shares: Non- (iii) To provide for the payment of premium
participating preference shares do not possess on the redemption of any redeemable
any right to participate in surplus profits or any preference shares or debentures of the
surplus gained at the time of liquidation of the company.
company.
Thus, the Securities Premium Account cannot
Tenure of Preference Shares be treated as a revenue reserve for distributing
dividends. It can only be used for the above
Tenure of Preference Shares continued
mentioned purposes and also for buying back
as 20 years except for “Infrastructural Projects”
of securities (section 77A). It must be noted
Companies having "infrastructural projects"
that Security premium is not available for
can issue Preference Shares for more than 20
distribution of dividend.
years but up to 30 years subject to minimum
10% redemption of such preference shares from
Issue of Securities at Discount
21st year onward or earlier.
When the shares are issued at a price below the
26.08 Issue of shares, Bonus face value they are said to be issued at a discount.
For example, a share having the face value of Rs
shares and Right shares
10 is issued at Rs 8. The companies act 2013,
There are various ways by which shares can be prohibits the issue of shares at discount (Section
issued.
53), except sweat Equity share.
Issue of shares at Par
Sweat Equity Shares
Normally shares are issued at their face
value or par value i.e at a price mentioned on Under section 54 of the Companies Act 2013,
the face of share certificate concerned. There is Sweat Equity Shares can be issued at Discount.
no legal restrictions on issuing shares at par / Sweat Equity Shares means issue of shares to
face value. employees or directors at a lower price for cash
or other than Cash, in lieu of providing know-
Issue of Shares at Premium how or making available rights in the nature
When shares are issued at a price above the of intellectual property rights or any value
face or nominal value, they are said to be issued additions.
at a premium. For example, a share having the
face value of Rs.10 is issued at Rs.12. Here, Rs.2
Bonus Shares
is the premium. The amount of share premium A company may, if its Articles provide, capitalize
has to be transferred to an account called the its profits by issuing fully-paid bonus shares.
‘Securities Premium Account’. This account is The issue of bonus shares by a company is a
capital in nature and can only be utilized for the common feature. In simple, Bonus share means
purposes specified by the Act under Section 78 to utilize the company’s reserves and surpluses,
viz; Issue of fully paid bonus shares to members issue of shares to existing shareholders without
of the company. taking any consideration is known as Bonus
Shares. It can be issued by:
(i) To write off preliminary expenses.
(i) Making partly paid up shares as fully paid
(ii) To write off the expenses of issue, or
commission paid, or discount allowed, (ii) Issuing new shares
on issue of shares or debentures of the
company.
266
269
270
S. No DEBENTURES SHARES
Key Words
271
272
273
27
1
CHAPTER
PRINCIPLES
COMPANYOFMANAGEMENT
MANAGEMENT
not affected due to changes in the members i.e person from a Board of Directors who leads or
any member may come and go but the company supervises the functioning of a company.
lives till its death according to the provisions of The Companies Act 2013 section 2 (34)
the Act. In this lesson, how this artificial person defines a director appointed to the board of
is managed is discussed. It is managed by a a Company is
group of human beings. "A Person who is appointed or elected
The group of human beings who undertake member of the Board of Directors of a company
the responsibility to run the business of the and has the responsibility of determining and
company are known as Board of Directors and implementing policies along with others in the
the members of the Board individually called board. It is not necessary to, hold any shares in
as Director. The Directors play a vital role in the company or be an employee. Directors act
the functioning of the company by controlling, on the basis of resolutions made in the Board of
guiding, directing and managing the affairs of Directors meeting according to their powers
the company. The overall performance of any stated in the Articles of Association of the
company is vested with the directors. So they company."
are responsible for it. The every person in the Minimum/Maximum Number of
Board individually or collectively is responsible Directors in a Company- Section 149(1)
for achieving the objectives prescribed in the Section 149(1) of the Companies Act, 2013
Memorandum of Association of the Company. requires that every company shall have a
The appointment of Directors and their minimum number of 3 directors in the case
qualifications are specified in the Companies of a public company, two directors in the case
Act 2013 Chapter XI. of a private company, and one director in the
case of a One Person Company. A company
In the Company Management, Board
can appoint maximum 15 fifteen directors.
of directors gets nucleus position and their
A company may appoint more than fifteen
selection is according to the procedure
directors after passing a special resolution
prescribed lay down in the Act and the Articles
in general meeting and approval of Central
of Association.
Government is not required.
Since the Success of any company depends A period of one year has been provided
on the efficient functioning of its Directors, to enable the companies existing on or before
they can be called as eyes, ears, brain, hands, the commencement of Companies Act, 2013 to
nerves and other essential parts of a company. comply with this requirement.
The directors formulate policies and establish
organizational set up for implementing those General duties are not mentioned in the
policies, in order to achieve the objectives Companies Act and therefore are not
contained in the Memorandum of association obligatory for the directors to perform. Some
of the company. of them are mentioned below:
To act in good faith: The directors are expected
27.01 Meaning and Definition to act in good faith i.e. they should always act in
of Directors the best interest of the company. The directors
should not make any secret profits.
The person one who takes active interest
in the well being of a company and one of To act with utmost care: The directors should
the Members of Board of Directors is called conduct their work with utmost care. They
as Director of a company. A Director is a should act with prudence.
275
Not to delegate work: The directors are (iii) the Company Secretary;
supposed to perform all their work by (iv) the Whole-time Director;
themselves. They are not expected to delegate (v) the Chief Financial Officer; and
their work to anyone else.
(vi) such other officer as may be prescribed;
However in the following cases the directors may Following Companies are required to appoint
choose to delegate the work to someone else: KMP
If it is permitted in the Companies Act or
in the Articles of Association.
If the directors cannot perform certain
work that demands specialized expertise, such
work can be delegated in such a case.
27.02 Key- Managerial
Personnel of a Company
Companies Act, 2013 (Act) has introduced
many new concepts and Key Managerial
Personnel (KMP) is one of them. KMP covers 27.03 Board of Directors
the traditional roles of managing director and The Governing body of a Company
whole time director and also includes some incorporated under Companies Act called
functional heads like Chief Financial Officer and Board. It is a group of individuals called
Chief Executive Officer and Company Secretary. directors, elected to represent the views of
shareholders of a public limited company and
to manage the company affairs by establishing
policies and implementing them to achieve the
goal. They are empowered to take decisions on
the major issues to lead the company in the right
way. In General the Board is empowered to
276
adequate resources available in the company Whole Time Director: A Director is one who
and its utilisation. devotes whole of his time of working hours to the
company and has a significant personal interest
COMPOSITION OF THE BOARD OF in the company as the source of his income.
DIRECTORS:
a) General Optimum Combination: Managing Director: A Director is one who is
employed by the company and has substantial
Board of Directors shall have an optimum powers of management over the affairs of the
combination of executive and non-executive company subject to superintendence, direction
directors with at least one woman director and and control of the board.
not less than fifty percent of the board of directors
shall comprise of non-executive directors. Executive Director
An executive director is a Chief
Executive Officer (CEO) or Managing
Director of an organization, company, or
corporation, who is responsible for making
decisions to complete the mission and for the
success of the organisation. In the globalised
business world the title of President or of
Chief Executive Officer is used instead of
Managing Director.
277
India for a total Period of not less than 182 days director on the Board. The following class of
in the previous calendar year. companies shall appoint at least one woman
2. Independent Director: According to director
Section 149(6) an independent director is (i) every listed company;
an alternate director other than a Managing (ii) every other public company having:
Director who is known as Whole Time Director (a) paid–up share capital of one hundred
Or Nominee Director. The following type crore rupees or more; or
of companies has to appoint minimum Two
(b) turnover of three hundred crore rupees
independent directors:-
or more.
a)
Public Companies which have Paid-up 6. Additional Directors: Any Individual can
Share Capital- ₹10 Crores or More; – be appointed as Additional Directors by a
b) Public Companies which have company.
Turnover- ₹100 Crores or More:-
7. Alternate Directors: Alternate director
c)
Public Companies which have total is appointed by the Board of Directors, as a
outstanding loans, debenture, and substitute to a director who may be absent from
deposits of ₹50 Crores or More. India, for a period which is not less than three
3. Small Shareholders Directors: Small months. The appointment must be authorised
shareholders can appoint a single director in a either by the Articles of Association of the
listed company. But this action needs a proper company or by a passing a resolution in the
procedure like handing over a notice to at General Meeting. The alternative director is not
least 1,000 Shareholders or 1/10th of the total a representative or agent of Original Director.
shareholders. 8. Shadow Director: A person who is not the
4. Nominee Director: "A director nominated member of Board but has some power to run it
by any financial Institution in pursuance of can be appointed as the director but according
the provisions of any law for the time being in to his/her wish.
force, or of any agreement, or appointed by any
Government , or any other person to represent 27.05 Number of Directors
its interests”. Required
From the above,
Under section 149 (1) of the Companies Act,
a)
should be nominated by any financial
2013 states that the requirement of Minimum/
Institution in pursuance of any law or in
Maximum Number of Directors in a Company
terms of an agreement entered into by the
company Minimum Number of Directors
b) could be appointed by the Government or a) Public Company: Every Public company
by any other person. shall have a minimum number of 3 directors
c)
The person so appointed shall represent and
the interests of the organization /Institution b) Private company
which he represents. In case of One Person Company: The
5. Women Director: As per Section 149 (1) requirement of directors is one.
(a), there are certain categories according to Other Private Companies: The minimum
which there should be at least one woman as a requirement of Directors is two.
278
279
It is also considered that directors are not if a director accepts employment in the same
a full fledged agents of the company because company under a separate contract of service,
they are elected person but agents are appointed then, in addition to the directorship, he is also
persons. treated as an employee or servant of the company.
In other words, when the director is appointed
Directors as Managing Partners as whole time employee of the company, then
The management of company is vested in that particular director shall be considered as
the hands of many executives. So, the directors employee director or whole time director.
are virtuals managing partners and the Directors
elected by shareholders are like partners to the
Example 4: Gunalan is a director of
shareholders. However, substantial powers
a company who has also taken an
may be entrusted with the directors or to an
extra charge to act as a manager of the
outsider, such a person has to act under the
company. But as per the contract of
superintendence, control and direction of
service as a manager he is entitled to
the board of Directors. Therefore, unlike in a
receive a remuneration. Hence he is
partnership firm, no power can be delegated to
a director who also happens to be an
a single director as a managing partner.
employee of the company.
Directors as trustees
Directors are trustees of the company’s Directors as officers
money and property and they have to safeguard
“Officer” includes any director, manager
them and use them for the sake of the company
or key managerial personnel or any person in
and on behalf of the company. According to Law
accordance with the directions or instructions
of trust, the equitable ownership of the trust
the Board of Directors or any one or more of
property is vested with the beneficiary only,
the directors who is or are accustomed to act.
Hence directors cannot act as a full-fledged
Therefore Director is treated as officers of an
trustee.
company. Sometimes, they may be also liable
for punishments in form of penalties, under
Example 3: Eswar Company has two Companies Act, when the provisions of the Act
directors Deepa and Mani. The directors are not strictly complied with.
issue 1,000 shares to the public and
receive Rs.100 each per share from the
27.07 Appointment of Directors
shareholders as share application, share
allotment and share first call money.
under Companies Act 2013
However they themselves do not pay - Section 152
Rs.100 for each of the shares taken by Generally, in a public company or
them. This amounts to breach of trust a private company subsidiary of a public
and hence they are required to pay company, two-thirds of the total numbers of
Rs.100 each for the shares held by them. Directors are appointed by the shareholders and
the remaining one-third’s appointment is made
Directors as employees as per Articles and failing which, shareholders
shall appoint the remaining one-third.
Directors are professionals who manage
the company for the benefit of themselves and In a private company, which is not a
for the benefit of the shareholders. However, subsidiary of a public company, the Articles
280
it must be ensured that the proposed 1) A person shall not be capable of being
appointee also satisfies the criteria laid appointed director of a company, if the
down for Independent Directors. director is
(v) An alternate director shall not hold office (a) Of unsound mind
for a period longer than that permissible
(b) An undercharged insolvent;
to the director in whose place he has been
appointed and should vacate the office if (c) Has been convicted by a court for any
and when the original director in whose offence involving moral turpitude
place he has been appointed returns to and sentenced in respect thereof to
India. imprisonment for not less than six
(vi)
If the term of office of the original months
director is determined before original (d) Has not paid any call in respect of shares
director returns to India, any provision
of the company held by him, whether
for the automatic re- appointment of
alone or jointly with others.
retiring directors in default of another
appointment shall apply to the original, (e)
An order disqualifying him for
and not to the alternate director. appointment as director has been passed
by a court in pursuance of section 203
27.08 Qualifications of Director
(f) He has been convicted of the offence
As regards to the qualification of dealing with related party transactions
directors, there is no direct provision in the under section 188.
Companies Act, 2013. In general, a director
shall possess appropriate skills, experience and (g) He has not got the Director Identification
knowledge in one or more fields of finance, law, Number.
management, sales, marketing, administration,
research, corporate governance, technical 27.10 Removal of Director
operations or other disciplines related to the A Director of Company can be removed
company’s business. According to the different from his Office before the expiry of his term by
provisions relating to the directors; the following
qualifications may be mentioned: a) the Shareholders
283
Limit of yearly
(ii) Managerial Powers of Directors
Where Effective
Capital is
Remuneration payable (iii) Powers only with a resolution
shall not exceed (Rupees)
(iv) Other Powers
(i) Negative or less
₹30 lakh
than ₹5 Crore Statutory Powers of Directors
(ii)
₹5 Crore and In the General Body Meeting of the
above but less ₹42 lakh Company the following powers must be
than ₹100 Crore exercised by the Board of Directors by passing
(iii)
₹5 Crore and ₹60 lakh a resolution.
above but less
than ₹100 Crore (i) Power to make calls on shareholders in
(iv)
₹250 Crore and ₹60 lakh plus 9.91% of respect of money unpaid on their shares
above the effective capital in (ii) Power to issue debentures
excess of ₹250 Crore.
(iii) Power to borrow moneys otherwise than
Minimum Remuneration in case of Losses on debentures
During the Tenure of Managerial Personnel (iv) Power to invest the funds of the company
The Approval of Central Government shall (v) Power to make loans
not be required in case of loss or inadequacy of (vi) Power to diversify the company business
profit during the tenure of Managerial Person. (vii) Power to approve amalgamation, Merger
or reconstruction
Remuneration Payable to a Managerial (viii) Power to approve Financial Statement
Person in Two Companies and Board reports.
A managerial person shall draw
remuneration from one or more companies, Managerial Powers of Directors
provided that the total remuneration drawn (i) Power to contract with the third party.
from the companies does not exceed the higher (ii) Power to allot, forfeit or transfer shares of
maximum limit admissible from any one of company
the companies of which he/she is a managerial
(iii) Power to decide the terms and conditions
person.
to issue debentures.
(iv) Power to frame new policies and to issue
instructions for the efficient running of
the business.
284
(v) power to appoint Managing Director, (ii) Right to receive notices of board meetings
Manager, Secretary of the company. (iii) Right to participate in proceedings and
(vi) power of Control and supervision of work cast vote in favour or against resolutions
of subordinates. (iv) Right to receive circular resolutions
proposed to be passed
Powers only with a resolution
(v) Right to inspect minutes of board
(i) To sell or lease any asset of the company meetings.
(ii) To allow time to the director for repayment
of the loan Collective rights are as follows
(iii) To borrow money in excess of paid up (i) Right to refuse to transfer shares:
Capital and free reserves Directors of private companies and
(iv) To appoint a sole agent for more than 5 deemed public companies are entitled to
years. refuse registration of transfer of shares to
(v) To issue bonus shares and for a person whom they do not approve.
reorganization of share capital (ii) Right to elect a Chairman: The directors
(vi) To contribute money for charitable are entitled to elect a chairman for the
purposes exceeding ₹50,000 or 5% of the board meetings.
average profits of 3 years whichever is (iii) Right to appoint a Managing director:
greater. The Board has the right to appoint the
managing director/ manager of the
Other Powers company.
(i) Power to fill casual vacancy (iv) Right to recommend dividend: The
(ii) Power to appoint the first auditor of the Board is entitled to decide whether
company dividend is to be paid or not. Shareholders
(iii) Power to appoint alternative directors, cannot compel the directors to pay
additional directors and Key managerial dividend. However they can reduce the
personnel. rate of recommended dividend. Payment
of dividend is the prerogative of the board
(iv) Power to remove Key managerial
personnel
(v) Power to recommend the Interim and
27.14 Duties of Director
final dividend to shareholders. Directors act as agents of the shareholders
(vi) Power to declare solvency position of the and act as a trustees of shareholders. Thus they
company. have a fiduciary duty to protect the property of
(vii) Power to make political contribution the company. Simply stated the following are
the duties of Directors.
27.13 Rights of Director Collective Duties of Directors: Directors as a
part of Board perform certain duties collectively.
Rights can be categorized into individual
The following are some of those duties exercised
rights and collective rights.
collectively:-
Individual rights are such as
(i) Approval of annual accounts and
(i) Right to inspect books of accounts authentication of annual accounts
285
(ii) Directors report to shareholders (vi) Duty to confirm the required disclosure
highlighting performance of the company, in the prospectus as required by the Act.
transfers to reserves, investment of (vii) Duty to sign in the prospectus before
surplus funds, borrowings submitting it to the Registrar of
(iii) Appointment of First Auditors Companies
(iv) Issuance of Notice and Holding of Board (viii) Duty to deposit application money in
meetings and shareholders meetings a scheduled Bank and its utilisation in
(v) Passing of resolutions at board meetings accordance with the specification given
or by circulation. in the Act.
(ix) Duty to file Return of Allotment of
General duties of Directors: Securities with the Registrar.
(i) Structuring or new policy to reach the (x) Duty to arrange for making payment of
objectives of a company. Dividend declared.
(ii) Delegating power to any committee if (xi) Duty to forfeit and transfer shares.
the Articles Permits for well being of the (xii) Duty to file all the reports and resolutions
company as required by the Act with the Registrar
(iii) Issuing instructions to employees for of Companies.
implementation of policy to review (xiii) Duty to carry out all other activities as
company's progress. specified in the Act in time.
(iv) Appointing their subordinates like (xiv) Duty to call on an Extraordinary General
Managing director, Manager, Secretary Body Meeting, if necessary.
and other employees. (xv) Duty to call statutory and annual general
(v) Acting in accordance with the Articles of meeting of the company
the company
(vi) Act in Good faith in order to promote the 27.15 Liabilities of director
objects of the company
The liabilities of directors may be
(vii) Perform duties with due and reasonable
discussed under three heads:
care and diligence.
(i) Duty to disclose his name, address and The directors are not personally liable to
occupation outsiders if they act within the scope of powers
vested in them. The general rule in this regard in
(ii) Duty to disclose his shareholding and
that wherever an agent is liable, those directors
interest in Contracts of the company.
would be liable, but where the liability would attach
(iii) Duty to hold minimum qualification to the principal only, the liability is the liability of
shares within two months after his the company. The directors are personally liable to
appointment. third parties of contracts in the following cases:
(iv) Duty to issue prospectus and fix the
a. They contract with outsiders in their
minimum subscription.
personal capacity
(v) Duty to take care that prospectus should
b. They contract as agents of an undisclosed
not contain any false or misleading
principal
statement.
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287
288
289
2. Which _________ Director is appointed by 8. What is the statue of Directors who regulate
a Financial institution. money of the company.
3. A Private Company shall have a minimum 9. According to Companies Act, the Directors
of ________. must be appointed by the.
290
5. List the disqualification of a directors. Rahul Bajaj Rs. 22.32 Bajaj Group
Yogesh Chander
6. Explain how director of a company can be Rs. 15.15 ITC Ltd.,
Deveshwar
removed from the office.
Mukesh Ambani Rs. 15.00 RIL,
7. What is the maximum limit for the
Managerial remuneration? Hindustan
Sanjiv Mehta Rs. 13.87 Unilever
8. What are the duties of a directors? Ltd.,
9. State the powers of the directors. Abidali
Rs. 11.96 Wipro
Neemuchwala
10. State the Criminal liabilities of Directors.
Gopal Vittal Rs. 10.40 Bharti Airtel
291
28
1
CHAPTER
PRINCIPLES
COMPANY OFSECRETARY
MANAGEMENT
292
293
294
the existing secretary appointed by promoters (v) To sign and send annual return
or can appoint a new company secretary. (vi) To make a statutory declaration for
receiving certificate of commencement of
business
25.04 Functions/ Duties of
(vii) To send notice of general meeting to every
Company Secretary
member of the company
Functions of the Company Secretary may be
(viii) To make statutory books
discussed under two headings:
(ix) To prepare minutes of every general
(i) Statutory Functions or Duties and (ii) meeting and board meeting within 30
Non-statutory Functions or Duties. days
(x) To file a resolution with the registrar
(xi) To assist in preparing the statement of
affairs in a winding up
295
Wages Act, Industrial Disputes Act and other 3. Functions in Relation to Office and Staff
labour laws. The Secretary is the kingpin of the whole
corporate machin ery. He is responsible for
25.04.02 Non-Statutory Functions
smooth functioning of the office work. He
Secretary has to discharge non-statutory exercises an overall supervision, control and
functions in relation to directors, shareholders co-ordination of all clerical activities in the office.
and office and staff. These functions are briefly
mentioned. 25.05 Powers and Rights of
(1) Functions as agent of directors; Company Secretary
(2) Functions towards shareholders;
Signing
(3) Functions towards office and staff.
298
299
300
b) Postal Ballot
B i g Case Study
companies or big
associations having 1. Mr R, as the secretary of the Muraliviki
members scattered Co., signed a letter to its bank,
all over the country forwarding a ‘resolution' of the board of
follow this method of voting. Under this method directors. The resolution named three
serially numbered ballot papers are sent by post directors and instructed the bank to
in sealed covers to the members,who, living at a pay cheques signed by any two of them
distant place, are unable to attend the meeting and countersigned by the secretary.
physically. The members or voters fill in the Specimen signatures were attached. The
ballot papers and return them in sealed covers instruction was entirely in accordance
which are opened when the ballot box is opened with the company's memorandum and
for counting the votes. articles. However, there had never been
any proper appointment of directors or a
Poll: Poll means tendering or offering secretary by the company. Those who had
vote by ballot to a specially appointed formed the company had assumed their
officer, called the polling officer. roles. Following the letter, the bank had
Under the Companies Act, poll means honoured cheques in accordance with
exercising voting right in proportion to the instructions contained in the letter.
shareholder’s contribution to the paid- The question was, whether, the company
up capital of a limited company having was bound by the cheques. Comment.
a share capital.
2. A contract between Muthumani Ltd and
Mr. V, one of its director is referred to a
general meeting for its approval. At the
Key words meeting, Mr. V voted for the resolution
and all others against it. But as V held
Secretary Meetings Committee
majority of shares and was entitled to
Motion Resolution majority of votes, the resolution was
passed. Is the contract binding on the
company?
301
302
IV. Long Answer Questions: 5. Explain different types of open and secret
types of voting.
1. Elaborate the functions of the Company
Secretary
2. Discuss the liabilities of Company Secretary. Stakeholders of the company
include shareholders, employees,
3. Briefly state different types of company
customers, suppliers, financiers,
meetings.
governments and the society.
4. Describe the different types of resolutions
which company may pass with suitable
matters required for each type of resolution.
Notice is hereby given that the statutory meeting of the company will be held at the registered office
of the company at ______ on ______ 2018 at ______ a.m./p.m. for considering the statutory report
and for conducting any other business which ought to be considered at that meeting.'
Please find enclosed a copy of the statutory report.
By order of the board
for Nithilan Manufacturing Limited
Date:
Place
Note:
A member entitled to attend and vote at the meeting is entitled to appoint one or more
proxies to attend and vote instead of him and a proxy need not be a member. The instrument
appointing a proxy should be deposited at the registered office of the company not less than
48 hours before the commencement of the meeting.
303
PROXY
Proxy means a person being the representative of a shareholder at the meeting of the
company who may be described as his agent to carry out which the shareholder has himself
decided upon. Proxy can be present at the meeting and he cannot vote.
I/We ______ of ______ in the district of ______ being a member/members of the above named
Company hereby appoint--------in the district of--------or failing him______of______in the district
of______as my/our proxy to vote for me/us on my/our behalf at the 25th Annual General Meeting
of the Company to be held at 3 p.m. on Monday, the 12th July 2018 and at any adjournment thereof.
1 Rupee
Revenue
Stamp
304
305
GLOSSARY
Administration நிர்வாகம் Consumerism நுகர்வோரியல்
Application விண்ணப்பம் Consumption நுகர்வு
Appraisal மதிப்பிடல் Content Marketing கருத்து சந்தை
Aptitude திறனாய்வு Contingent நிகழ்தகவு
Assignability உரிமை மாற்றம் Contribution பங்களிப்பு
Assurance அறுதியிடல் Control கட்டுப்படுத்துதல்
Attitude அணுகுமுறை Co-ordination ஒருங்கிணைப்பு
Auctioning ஏலமிடுகை Crossing கீறலிடுதல்
Bearer க�ொணர்பவர் Debentures கடனீட்டுப் பத்திரம்
Bills of Exchange மாற்றுச் சீட்டு Debt Market கடன் சந்தை
Blank வெற்று Decision-Making முடிவெடுத்தல்
Board of Directors இயக்குநர் குழுமம் புறத்தோற்றமற்ற பத்திரக்
Demat-account
Bonus shares மிகையுதிய பங்குகள் கணக்கு
Brokers தரகர்கள் Dematerialization மின்பொருளாக்கம்
Capital Market மூலதனச் சந்தை Demography மக்களியியல்
முதலாளித்துவ Depository வைப்பகம்
Capitalistic Economy
ப�ொருளாதாரம் Determined தீர்மானித்தல்
Cash memo ர�ொக்க குறிப்பு Development மேம்பாடு
Cash receipt ர�ொக்க ரசீது Director இயக்குநர்
வாங்குவ�ோரே விழித்திரு Directorial Register இயக்குநரக பதிவேடு
Caveat Emptor
தத்துவம் Dishonour அவமதிப்பு
விற்பனையாளரே Distribution பகிர்வு
Caveat venditor
விழித்திரு தத்துவம் District Forum மாவட்ட குறைதீர்வு மன்றம்
Certificate of
வைப்புச் சான்றிதழ் Dominant மேலாதிக்கம்
Deposits ச�ோம்பலான
Change மாற்று Drone
த�ொழில்முனைவ�ோர்
Cheque காச�ோலை Electronic marketing மிண்ணணு சந்தையிடல்
Clearing House தீர்வகம் Endorsement மேலெழுதுதல்
Commercial Bills வணிகச் சீட்டு Entrepreneur த�ொழில் முனைவ�ோர்
Commercial Papers வணிகத் தாள் Entrepreneurship த�ொழில் முனைவு
Committee குழு Environment சுற்றுச்சூழல்
Commodity
ப�ொருள் மாற்றியம் Equity Market பங்கு சந்தை
Exchange
Completion பூர்த்தி செய்தல் e-tailing மிண்ணணு வர்த்தகம்
Conflict முரண்பாடு Evaluation மதிப்பீடு
Consumer நுகர்வோர் காலம் கடத்தும்
Fabian
பழமைவாதம்
Consumer Awareness நுகர்வோர் விழிப்புணர்வு
Financial Market நிதிசார் சந்தை
Consumer duties நுகர்வோர் கடமைகள்
Consumer Fiscal policy வரிக் க�ொள்கை
நுகர்வோர் குறைபாடுகள் ம�ொத்த உள்நாட்டு
Grievances GDP
Consumer movement நுகர்வோர் இயக்கம் உற்பத்தி
Consumer protection நுகர்வோர் பாதுகாப்பு Government Bonds அரசுப் பத்திரம் (முறி)
Consumer Grading வகைப்படுத்துதல்
நுகர்வோர் ப�ொறுப்புகள்
responsibilities Green marketing பசுமைச் சந்தை
Consumer rights நுகர்வோர் உரிமைகள் Grievance Redressal
குறைதீர்ப்பு செயல்முறை
Consumer welfare Mechanism
நுகர்வோர் நலநிதி
fund Harmonise ஒத்திசைவு
306
307
In-House
QC - Arun Kamaraj Palanisamy
- Kamatchi Balan Arumugam
This book has been printed on 80 G.S.M.
Elegant Maplitho paper.
Co-ordination
Ramesh Munisamy Printed by offset at:
308