MBA Assignment 1st sem
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Principles & Practice of management Q1. Explain scalar chain A1. Scalar Chain refers to the chain of superiors ranging from top management to the lowest rank. The principle suggests that there should be a clear line of authority from top to bottom linking all managers at all levels. It is considered a chain of command. It involves a concept called a "gang plank" using which a subordinate may contact a superior or his superior in case of an emergency, defying the hierarchy of control. However the immediate superiors must be informed about the matter Q2. What is portfolio Matrix? A2. The portfolio matrix or BCG Matrix is a portfolio management tools that can be used to determine what priorities should be given in the product portfolio Q3. Define Ethics in Business & Its importance? A3. Business ethics (also corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. Business ethics is important because it is concerned with right and wrong and how conduct should be judged to be good or bad. Q4.What are non-Programming decisions? A4. Non-programming decisions are to be dealt non-routine and non-repetitive nature. There is no standard procedure for handling such problems. Such decision are warranted by extra-ordinary, exceptional or emergency situations. This decision is taken by managers in consultation with higher level of management. Q5. write down the point of distinction between power & Authority A5. Authority - According to Simon authority means ―the power to make decisions which guide the actions of another. It is a relationship between two individuals – one superior, the other subordinate. The superior frames and transmits decisions, with the expectation that they will be accepted by the subordinate. The subordinate expects such decisions, and his conduct is determined by them‖. Power - Power refers to the capacity to affect the behavior of the subordinate with the control of resources. Types of authority – 1. Line authority, 2. Staff authority, 3. Team authority. Types of power – 1. Legitimate power 2. Coercive power 3. Reward power 4. Expert power
5. Referent power 6. Information. Q6. What is Span of Management? A6. It refers to the number of subordinates who can be managed effectively by a superior and subordinates reports to their respective manager only. It is describes the numbers of subordinates that report to each manager. Span of management also known as span of control and span of supervision. It is dimension of organizational design measured by the number of subordinates that report directly to a given manager. Q7. Explain feed forward control A7. 1. Feed-forward is a term describing a kind of system which reacts to changes in its environment, usually to maintain some desired state of the system. A system which exhibits feed-forward behavior responds to a measured disturbance in a pre-defined way in contrast with a feedback system. 2. This is a control technique that can be measured but not controlled. The disturbance is measured and fed forward to an earlier part of the control loop so that corrective action can be initiated in advance of the disturbance having an adverse effect on the system response Q8. Write a note on Japanese management? A8. A combination of management styles that emphasizes human relations and team working and advanced manufacturing techniques such as just-in-time production and total quality management which is credited with bringing about the Japanese economic miracle that began in the 1960s Japanese management practices were studied in the rest of the world in the hope that other countries could imitate Japan's economic success, but the downturn in the Japanese economy that began in the 1990s has forced the Japanese themselves to reassess them. Q9. Explain the importance of controlling. A9. Controlling is one of the managerial functions like planning, organizing, staffing and directing. It is an important function because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of the organization are achieved in desired manner. According to modern concepts, control is a foreseeing action whereas earlier concept of control was used only when errors were detected. Control in management means setting standards, measuring actual performance and taking corrective action. Thus, control comprises these three main activities. Q10. Explain Management Audit as control technique. A10. A management audit is carried out within the company and is a means for the management to keep a very close eye on the organisation, its transactions, record keeping
etc. It is therefore a very effective instrument of control and, unlike an external audit, the management has discretion over how it is conducted and what is done with the data. Part B Q1. Discuss the 14 principles of Henry Fayol. A1. The 14 Management Principles from Henri Fayol (1841-1925) are: Division of Work. Specialization allows the individual to build up experience, and to continuously improve his skills. Thereby he can be more productive. Authority. The right to issue commands, along with which must go the balanced responsibility for its function. Discipline. Employees must obey, but this is two-sided: employees will only obey orders if management play their part by providing good leadership. Unity of Command. Each worker should have only one boss with no other conflicting lines of command. Unity of Direction. People engaged in the same kind of activities must have the same objectives in a single plan. This is essential to ensure unity and coordination in the enterprise. Unity of command does not exist without unity of direction but does not necessarily flows from it. Subordination of individual interest (to the general interest). Management must see that the goals of the firms are always paramount. Remuneration. Payment is an important motivator although by analyzing a number of possibilities, Fayol points out that there is no such thing as a perfect system. Centralization (or Decentralization). This is a matter of degree depending on the condition of the business and the quality of its personnel. Scalar chain (Line of Authority). A hierarchy is necessary for unity of direction. But lateral communication is also fundamental, as long as superiors know that such communication is taking place. Scalar chain refers to the number of levels in the hierarchy from the ultimate authority to the lowest level in the organization. It should not be over-stretched and consist of too-many levels. Order. Both material order and social order are necessary. The former minimizes lost time and useless handling of materials. The latter is achieved through organization and selection. Equity. In running a business a ‘combination of kindliness and justice’ is needed. Treating employees well is important to achieve equity. Stability of Tenure of Personnel. Employees work better if job security and career progress are assured to them. An insecure tenure and a high rate of employee turnover will affect the organization adversely. Initiative. Allowing all personnel to show their initiative in some way is a source of strength for the organization. Even though it may well involve a sacrifice of ‘personal vanity’ on the part of many managers. Esprit de Corps. Management must foster the morale of its employees. He further suggests that: “real talent is needed to coordinate effort, encourage keenness, use each person’s abilities, and reward each one’s merit without arousing possible jealousies and disturbing harmonious relations.”
Q2. Write Note on a) contribution of Rensis Likert Likert developed a refined classification, breaking down organizations into four management systems. 1st System – Primitive authoritarian 2nd System – Benevolent authoritarian 3rd System – Consultative 4th System – Participative As per the opinion of Likert, the 4th system is the best, not only for profit organizations, but also for non-profit firms. b) Maslow’s need hierarchy theory One of the most widely mentioned theories of motivation is the hierarchy of needs theory put forth by psychologist Abraham Maslow. Maslow saw human needs in the form of a hierarchy, ascending from the lowest to the highest, and he concluded that when one set of needs is satisfied, this kind of need ceases to be a motivator. As per his theory this needs are : (i) Physiological needs : These are important needs for sustaining the human life. Food, water, warmth, shelter, sleep, medicine and education are the basic physiological needs which fall in the primary list of need satisfaction. Maslow was of an opinion that until these needs were satisfied to a degree to maintain life, no other motivating factors can work. (ii) Security or Safety needs : These are the needs to be free of physical danger and of the fear of losing a job, property, food or shelter. It also includes protection against any emotional harm. (iii) Social needs : Since people are social beings, they need to belong and be accepted by others. People try to satisfy their need for affection, acceptance and friendship. (iv) Esteem needs : According to Maslow, once people begin to satisfy their need to belong, they tend to want to be held in esteem both by themselves and by others. This kind of need produces such satisfaction as power, prestige status and self-confidence. It includes both internal esteem factors like self-respect, autonomy and achievements and external esteem factors such as states, recognition and attention.
(v) Need for self-actualization : Maslow regards this as the highest need in his hierarchy. It is the drive to become what one is capable of becoming, it includes growth, achieving one’s potential and selffulfillment. It is to maximize one’s potential and to accomplish something.
As each of these needs are substantially satisfied, the next need becomes dominant. From the standpoint of motivation, the theory would say that although no need is ever fully gratified, a substantially satisfied need no longer motivates. So if you want to motivate someone, you need to understand what level of the hierarchy that person is on and focus on satisfying those needs or needs above that level. Maslow’s need theory has received wide recognition, particularly among practicing managers. This can be attributed to the theory’s intuitive logic and ease of understanding. However, research does not validate these theory. Maslow provided no empirical evidence and other several studies that sought to validate the theory found no support for it. Q3.How do you distinguish between line and staff functions? Give reasons for distinguishing their roles in the organization of business units Q4. Define delegation of authority. What are problems in delegation? Explain the principles of effective delegation Ans: Delegation means “Authorizing subordinates to make certain decisions”. Delegation is must because – a. Structure of authority/accountability exists. b. Superiors need to concentrate on important and vital issues. Reasons for Delegation
• To enable the manager to get more work done by utilizing the skills and talents of subordinates. • To foster the development of subordinates by having them participate in decision making and problem solving that allows them to learn about overall operations and improve their managerial skills. Delegation has basically 5 degrees – Zero, low, moderate, high and fifth degree. • Low degree of Delegation : Low degree of delegation is that in which a superior states a particular task to his subordinates and tell him to investigate on that task and report back. • Moderate degree of delegation : It is in which a superior states the task to his subordinate. He tells him to investigate on that task and report back with action plan. • High degree of delegation : It is that degree of delegation in which a task is specified to a subordinate and he is told to investigate on that task, make an action plan, formulate the plan and then report back with the results and reasons. Problems in delegation is of two types : • Problems in delegation - Manager • Problems in delegation - Subordinate Problems in delegation – Manager : • Reluctant to delegate - Some managers believe in fallacy i.e. if we want it done right, do it yourself. • Superiors delegation method - Poor examples set by superiors who do not delegate may discourage the managers to delegate further • Subordinate’s success threatens superior’s advancement. – Low self-confidence more over confidence amongst the managers may create a bottleneck in a process of delegation • Lack of trust in the subordinate to do well – Managers lacking required confidence and trust in subordinates might not be interested in delegating the authority. • Fear of loosing position - Fear amongst managers that they will loose status and position. Problems in delegation – Subordinates: • Reluctant to accept power - Reluctant to accept delegation for fear of failure. • Expects reward - Perceives no rewards for accepting additional responsibility. • Fear of risk - Prefers to avoid any risk and responsibility. Following are the ten principles of effective delegation: • Explain the degree of delegation - The degree of delegation should be clear to both the superior and the subordinate. • Select appropriate subordinates – Delegation should be to a right person. • Keep lines of communication open – After the delegation there should be always a open communication channel between superior and subordinate. • Train your subordinate and motivate them – Subordinates should be trained for the relevant work before delegating and superior should motivate the subordinate to do that delegated work. • Reward delegation – Financial and non-financial – Subordinates should be rewarded for the delegated work. This is like a motivation for subordinates • Keep appropriate reporting system and controlling – Supervisor should monitor the progress of delegated work, this is controlling and subordinates should report to the
supervisor periodically and they should keep the superior informed about the proceedings. • Don’t delegate and disappear – After delegating the work superior cannot escape from the responsibilities, he/she should control the delegated work. • Don’t follow practices of ‘Delegation on Paper’ – Delegation should be done personally if it is only on paper it will not be effective. • Believe in feedback, interaction and result orientation of delegation – Superiors should give constant feed back to the subordinates. A good interaction between superior and subordinates results in a good delegation of work. • Principle of exception – Subordinates should not consult superior for routine matter. Subordinates should act independently. Q5. What is controlling? What are the principles of effective control? What steps should an organization take before things go out of control? Ans: Controlling in simple terms means monitoring or measuring the progress of accomplishment of the goal. For an organization to function effectively certain goals and objectives must be clearly set. Plans can be realized only through effective managerial control. Control involves setting the important standards in the organization. In other words control can be defined as : “Planning is the basis of control, Action is the essence of control, Delegation is the key to control, And information is the guide to control.” Definition of control as stated by few great management contributors. “Managerial control implies measurement of accomplishment against standard and the correction of deviations to assure attainment of objectives according to plans.” – Koontz O’ Donnell “Control Consists in verifying whether everything occurs in conformity with the plans adopted, the instructions issued and the principles established.” – Henry Fayol “Control maintains the equilibrium between ends and means, output and efforts” – Peter Drucker Principles of effective Control: • Suitability : The technique of control to be used should suit the organizational working system. Different departments should have different system of control. • Deviations: Any changes in conditions should be reported well in advance so that immediate action can be taken to avoid loss or damage. • Objective : Control should be done with accurate and suitable standards. Management should take into consideration the proper objectives of the organization for control to be effective. • Predictions : Control should also aim for the future. If necessary steps are taken well in advance, the management will be able to take both corrective and precautionary measures.
• Flexible : Necessary flexibility is required in control design so that control can be effective when there are some unforeseen changes in stated plans. • Economic : It should be made sure that the benefits derived from the system should be more than the cost incurred from the control system. • Understandable : The whole process should be clearly understood by everybody involved, especially managers. Its only then that control will be effective in the organization. • Corrective : A proper control system should not only detect deviations from plans, but must also show the way to corrective action so that further loss or damage are not caused in the organization. Following are the steps to be followed by any organization before things go out of control: • Establishment of Standards : Control logically begins with setting up of standards. These provide the established criteria of desired performances for evaluating both individual and organizational performance. The criteria of desired performance vary according to the nature of business activities. Whatever standards may be set and used, they should be appropriate to the purpose attainable, flexible, precise and concerned with results rather than with procedures. Standards should also not be vague and should be understandable by all the persons concerned. • Measurement of Actual performance : This is done for the purpose of evaluation. Measurement of actual performance should be done as accurately as possible. Technical kind of work can be measured easily but difficulties will arise where less technical kind of work are concerned. Managers and supervisors should adopt suitable methods of performance appraisal. • Comparison Step: After the standards are set and performance is accurately measured, the next step is comparing them to see any variation between the two. When actual performance is equal to expected performance there is not much need for controlling action. This is an ideal situation, which rarely exists. In case of difference between actual performance and the desired performance, the manager should use his judgment to determine the significance of this difference. • Corrective Action : Control process would be incomplete if corrective action is not taken. As Connor observes, “An effective control system should produce more than a red flag; it must also contain procedures to determine means of correcting the deviations:. Corrective action calls for the removal or adjustment of causative factors, with a view to put in the performance on a proper track. Also, corrections should be undertaken promptly as soon as deviations need correction. Such action may be either remedial (which is taken after the wrong has been done) or preventive (which is taken before). It is obvious that the latter is preferred to the former. Those having the authority over the actual performance put the corrective action into effect. As such, the control process ends with such proper corrective action. Q6 Describe the main features of Z-culture of Japanese management. Compare it with American management.
2 assinment Theory X of Motivation Theory X is based on a faulty conception of human nature. Theory X of motivation is based on the following assumptions:(1)The average individual is by nature indolent and will avoid work if he can.(2)The average person lacks ambition, dislikes responsibility, and prefers to be led.(3)An average human being is inherently self-centred, and indifferent to organisationalgoals.(4)Most people are by nature resistant to change and want security above all.(5)The average individual is gullible, not very bright, the ready victim of the schemer.On the basis of these assumptions, the conventional view of management puts forwardthe following propositions: (1)Management is responsible for organising the elements of productive enterprise— money, materials, equipment, people—in the interest of economic gain.(2)With respect to people, management involves directing their efforts, motivating them,controlling their actions and modifying their behaviour to fit the needs of theorganisation.(3) Without active intervention by management, people would be passive—even resistant to organizational needs. They must, therefore, be persuaded, rewarded,punished and controlled.The above assumptions are negative in nature. Therefore, Theory X is a conventional ortraditional approach to motivation. External control is considered appropriate for dealing withunreliable, irresponsible and immature people. According to McGregor, an organisation builtupon Theory ‘X’ notions will be one in which there is close supervision and control of subordinates and high centralisation of authority. Leadership in such an organisation willtend to be autocratic, and workers will have very little (if any) say in decisions affecting them.The climate in a Theory X organisation would be impersonal—this theory implies use of ‘carrotand stick approach’. ANS: Laissez-Faire or Free-Rein Leadership In this situation, the leader delegates his authority in totality. He avoids his authority and does not exercise the power to govern. Leader is like any other member of the team and generally works as the contact person in the group. OR Indirect supervision of subordinates, form of management supervision that allows others to function on their own without extensive direct supervision. People are allowed to prove themselves based upon accomplishments rather than meeting specific supervisory criteria. ANS: Hygiene factors- Hygiene factors are those job factors which are essential for existence of motivation at workplace. These do not lead to positive satisfaction for long-term. But if these factors are absent / if these factors are non-existant at workplace, then they lead to dissatisfaction. In other words, hygiene factors are those factors which when adequate / reasonable in a job, pacify the employees and do not make them dissatisfied. These
factors are extrinsic to work. Hygiene factors are also called as dissatisfiers or maintenance factors as they are required to avoid dissatisfaction. These factors describe the job environment / scenario. The hygiene factors symbolized the physiological needs which the individuals wanted and expected to be fulfilled. Hygiene factors include: •PayThe pay or salary structure should be appropriate and reasonable. It must be equal and competitive to those in the same industry in the same domain. •Company Policies and administrative policies- The company policies should not be too rigid. They should be fair and clear. It should include flexible working hours, dress code, breaks, vacation, etc. •Fringe benefits- The employees should be offered health care plans (mediclaim), benefits for the family members, employee help programmes, etc. •Physical Working conditions- The working conditions should be safe, clean and hygienic. The work equipments should be updated and well-maintained. •Status- The employees’ status within the organization should be familiar and retained. •Interpersonal relations-The relationship of the employees with his peers, superiors and subordinates should be appropriate and acceptable. There should be no conflict or humiliation element present. •Job Security- The organization must provide job security to the employees ANS: THE BASIC ELEMENTS OF CULTURE Language. Norms. Values. Beliefs and ideologies. Social Collectives. Statuses and Roles. Cultural Integration. Ans: Intragroup conflict is distinctive in that it occurs between members of a group or team who are theoretically united over a common characteristic or objective; in contrast, intergroup conflict occurs between two competing or distinct groups. Intragroup conflicts are most common in workplaces that divide employees into specific teams or departments. An example of intragroup conflict would be members of a marketing group debating about the best way to launch a new product. If the group was experiencing intergroup conflict, the marketing team may argue with the technology development team about the launch. Intragroup conflict is marked by verbal disagreements between group members that could result ultimately in the fracturing of the group into distinct and opposing parts. Groups experiencing intragroup conflict may frequently solicit the input of superiors or show delayed progress in achieving a goal. Part B: 2) According to me, we all could see or observe an object, but we are bound to have a different understanding of it and a different point of view. We make an understanding of a situation due to our own way of perceiving life and the way we see our world. Also factors like past experiences, personality, culture, religion,
upbringing, gender and the society we live in affect our understanding. We can comprehend what we see but it is subject to our own unique way of thinking. We all act according to our past experiences, if they were good or bad. If someone was bitten by a dog when he was little, then he might get scared when a dog comes near him, on the other hand, some people have dogs as pets and they think they are the most loyal animals on earth and yet may never do anything to harm them. Each person has a different personality that could affect their perception. 3) Traits Model of Leadership: Initial investigations of leadership considered leaders as individuals endowed with certain personality traits which constituted their abilities to lead. The studies investigated individual traits such as intelligence, birth order, socioeconomic status, and child-rearing practices (Bass, 1960; Bird, 1940; Stogdill, 1948, 1974). Stogdill (1974) identified six categories of personal factors associated with leadership: capacity, achievement, responsibility, participation, status, and situation but concluded that such a narrow characterization of leadership traits was insufficient: "A person does not become a leader by virtue of the possession of some combination of traits" (Stogdill, 1948, p. 64). The attempts to isolate specific individual traits led to the conclusion that no single characteristic can distinguish leaders from non-leaders. The Situational Leadership Theory suggests that effective leadership requires both acts of “leadership” and “management.” Depending on the level of each of these acts necessary, four different styles of leadership can be utilized. These are delegating, coaching, directing, and supporting. For a leader to be purposeful in their direction, they must use the correct style by being able to evaluate a follower’s readiness level. In other words, they must “meet a follower where they are.” A follower’s readiness level is determined by two factors. The first is the level of ability to do what is needed. The second is the level of willingness to do what is needed. The diagram above will aid you in identifying your officer’s readiness level. Once the officer’s readiness level is defined, you will be able to determine what style of leadership will lend the best results when you are advising. An advisor that is capable of adjusting his/her style to meet the needs of the officer will be much more effective. ANS Not done Show the treatment of bad debts in financial accounts Answer: Treatments of bad debts in financial accounts:-
A. Revenues should be reported net of discounts and allowances with the discount amount parenthetically disclosed on the face of the statement or in the notes to the financial statements. Alternatively, revenues may be reported gross with the related discounts and allowances reported directly beneath the revenueamount. B. Provision must be made for bad debt estimates each year. Tuition and fees should be reported net of allowances and discounts. As such, increases in allowances for bad debts are recorded as a reduction in revenues rather than anexpense. C. With regard to the presentation of the provision for bad debt estimates taken as a reduction of tuition and fee revenue, this should be deducted from the gross tuition and fee line item and should not be separately displayed on the face of the statement. This treatment is different than scholarship allowances which are required to be disclosed either on the face or in the notes to the financial statements. ANS Closing stock = 120000 Therefore opening stock =80000(as 40000 is excess in clsg. stock) Hence average inventory= (120000+80000)/2 = 100000 COGS= (Net sales - gross profit) therefore COGS= 300000. Hence stock t/o ratio= 300000/100000=3. It means that it takes 12/3 = 4 months for the stock to turnover ANS The standard deviation of the sampling distribution of a statistic. Standard error is a statistical term that measures the accuracy with which a sample represents a population. In statistics, a sample mean deviates from the actual mean of a population; this deviation is the standard error. The term "standard error" is used to refer to the standard deviation of various sample statistics such as the mean or median. For example, the "standard error of the mean" refers to the standard deviation of the distribution of sample means taken from a population. The smaller the standard error, the more representative the sample will be of the overall population. The standard error is also inversely proportional to the sample size; the larger the sample size, the smaller the standard error because the statistic will approach the actual value.
Seasonal Variations ANS: In business seasonal variation refers primarily to systematic variations in demand for products and services in a cyclical fashion at different within a recurring time period. For example, the demand for umbrellas is likely to have a yearly cycle, in which the demand will be high during rainy season and low in other seasons. The periodicity of demand can be any repeating time period such as year, month, week or day. Generally in business cyclical or seasonal variations of time period more than a year are not considered. The reasons for seasonal variations are changes in the environment or other cultural factors cause people to have different types of requirements at different times of the seasonality time period. For example, a fast food outlet or a restaurant will have a daily cycle based on the usual meal times for people in general. Similarly a super market will also have a daily cycle based on shopping time convenient to its customers. In addition both these types of businesses will experience a weekly cycle as well as a yearly cycles. Banks are likely to face a monthly cycle as many people get paid their salaries at the end of each month, and are more likely to make withdraw money from their accounts at the beginning of each months soon after their salaries are credited. Just as there are seasonal variations in demand there can be seasonal variations in other activities of other activities of business. It is obvious that seasonal variations in demand will result in seasonal variations in all all activities connected with fulfilling those activities, But there are many other activities with seasonal variations. For example, all utilities may bill their customers on a monthly cycle, causing a monthly seasonality in billing as well as bill collection activities. Similarly all credit card billing also follow monthly billing and settlement cycle. Because of the variation in level of demand and activities, organization may also make changes in the processes that they follow. A typical example of seasonality in processes is by restaurants. They may put up extra tables and use part time staff to handle extra rush of peak hours. Some other prominent example of product and services with high seasonality are listed below. Christmas trees are mostly purchased during Christmas festival. Ice creams and cold drinks have much higher demand during summers than in winters.
There is heavy seasonality in demand of clothing. Particularly warm clothes have much higher demand during winters. Local transportation in metro rails and buses has a heavy daily as well as a weekly variation in number of commuters. Demand for hotels and all other facilities in tourist location is much higher during their respective tourist seasons. Demand Stationary used by students is much higher wen schools and collages are open than during vacations. Demand for toys and presentation items are very high during Christmas and other festivals when people exchange gifts. There is heavy seasonality daily in demand for utilities such as electricity, piped gas and water. However there are some items with very low or no seasonal variability this will include items of common daily use or consumption such as bread or salt 105 Ans Price is the value or worth of a product or service and when you say price then it means the normal price of a product or a service which a company charges. On the other hand, market price is the price of a product or service which is in a marketplace and is resulted through market efficiency, equilibrium and rational expectations. Normal price can be lesser, equal or greater than the market price. If most of the companies in an industry charge market prices for the products or services then competition is high in that specific industry. ANS Stagflation is when the domestic economy of a country fails to grow but prices rise anyway. ("stagnation" with "inflation") Stagflation is an economic situation where there is a coupling of sluggish economic growth, high inflation rate and often unemployment. In Economic terms: Stagflation = Stagnation + Inflation Stagflation describes the combination of slow economic growth and high rate of unemployment along with continues rise in prices. Stagflation occurs when the economy isn't growing but prices are. Stagflation has most swear effects on consumers as goods and services become expensive and unemployment robs them of income. To add to their misery procuring loans maybe difficult as the Central Bank may restrict credit to combat stagflation.
ANS: Trade cycle 1. Fiscal Measures: During the period of boom, decrease in public expenditures, increase in taxes and increase in public debt. On the other hand, during the period of depression, the policy of increase in public expenditures, decrease in taxes and decrease in public debt is adopted by the government. 2. Monetary Measures: Monetary measures mean that control of money and credit supply in the country. When we are facing boom or inflation, the central bank reduces the total quantity of money in circulation. The bank can adopt different measures like bank rate policy, open market operations and rationing of credit etc. On the other hand, incase of depression, the central bank can increase the quantity of money by lowering the bank rate or purchasing the securities and discounted the bills of exchange. 3. International measures: Today every country has trade relation with other countries. If there is inflation or deflation in one country, it can be easily be carried top other countries, the example of great depression can be given. Business cycle is an international phenomena and it should be tackled on international level. Different measures have been suggested by the economists to control the business fluctuations effectively. Such as: (a). Control of international production. (b). International bill stock control and international investment control. 4. State control of private investment: If the govt. controls the private investment, cyclical fluctuations can be controlled within limits while the other economists who this agree with the above view, they say that private investment will be discouraged. But J.M. Keynes says that if we adopt the middle way we can control the fluctuations ANS: Price discrimination Practice of selling goods or services at different prices to different buyers, even though sales costs are the same for all the transactions. Buyers may be discriminated against on the basis of income, ethnicity, age, or geographic location. For price discrimination to succeed, other entrepreneurs must be unable to purchase goods at the lower price and resell them at a higher one. Product differentiation A marketing process that showcases the differences between products. Differentiation looks to make a product more attractive by contrasting its unique qualities with other competing products. Successful product differentiation creates a
competitive advantage for the seller, as customers view these products as unique or superior. Investopedia Says: Product differentiation can be achieved in many ways. It may be as simple as packaging the goods in a creative way, or as elaborate as incorporating new functional features. Sometimes differentiation does not involve changing the product at all, but creating a new advertising campaign or other sales promotions instead.
5. Referent power 6. Information. Q6. What is Span of Management? A6. It refers to the number of subordinates who can be managed effectively by a superior and subordinates reports to their respective manager only. It is describes the numbers of subordinates that report to each manager. Span of management also known as span of control and span of supervision. It is dimension of organizational design measured by the number of subordinates that report directly to a given manager. Q7. Explain feed forward control A7. 1. Feed-forward is a term describing a kind of system which reacts to changes in its environment, usually to maintain some desired state of the system. A system which exhibits feed-forward behavior responds to a measured disturbance in a pre-defined way in contrast with a feedback system. 2. This is a control technique that can be measured but not controlled. The disturbance is measured and fed forward to an earlier part of the control loop so that corrective action can be initiated in advance of the disturbance having an adverse effect on the system response Q8. Write a note on Japanese management? A8. A combination of management styles that emphasizes human relations and team working and advanced manufacturing techniques such as just-in-time production and total quality management which is credited with bringing about the Japanese economic miracle that began in the 1960s Japanese management practices were studied in the rest of the world in the hope that other countries could imitate Japan's economic success, but the downturn in the Japanese economy that began in the 1990s has forced the Japanese themselves to reassess them. Q9. Explain the importance of controlling. A9. Controlling is one of the managerial functions like planning, organizing, staffing and directing. It is an important function because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of the organization are achieved in desired manner. According to modern concepts, control is a foreseeing action whereas earlier concept of control was used only when errors were detected. Control in management means setting standards, measuring actual performance and taking corrective action. Thus, control comprises these three main activities. Q10. Explain Management Audit as control technique. A10. A management audit is carried out within the company and is a means for the management to keep a very close eye on the organisation, its transactions, record keeping
etc. It is therefore a very effective instrument of control and, unlike an external audit, the management has discretion over how it is conducted and what is done with the data. Part B Q1. Discuss the 14 principles of Henry Fayol. A1. The 14 Management Principles from Henri Fayol (1841-1925) are: Division of Work. Specialization allows the individual to build up experience, and to continuously improve his skills. Thereby he can be more productive. Authority. The right to issue commands, along with which must go the balanced responsibility for its function. Discipline. Employees must obey, but this is two-sided: employees will only obey orders if management play their part by providing good leadership. Unity of Command. Each worker should have only one boss with no other conflicting lines of command. Unity of Direction. People engaged in the same kind of activities must have the same objectives in a single plan. This is essential to ensure unity and coordination in the enterprise. Unity of command does not exist without unity of direction but does not necessarily flows from it. Subordination of individual interest (to the general interest). Management must see that the goals of the firms are always paramount. Remuneration. Payment is an important motivator although by analyzing a number of possibilities, Fayol points out that there is no such thing as a perfect system. Centralization (or Decentralization). This is a matter of degree depending on the condition of the business and the quality of its personnel. Scalar chain (Line of Authority). A hierarchy is necessary for unity of direction. But lateral communication is also fundamental, as long as superiors know that such communication is taking place. Scalar chain refers to the number of levels in the hierarchy from the ultimate authority to the lowest level in the organization. It should not be over-stretched and consist of too-many levels. Order. Both material order and social order are necessary. The former minimizes lost time and useless handling of materials. The latter is achieved through organization and selection. Equity. In running a business a ‘combination of kindliness and justice’ is needed. Treating employees well is important to achieve equity. Stability of Tenure of Personnel. Employees work better if job security and career progress are assured to them. An insecure tenure and a high rate of employee turnover will affect the organization adversely. Initiative. Allowing all personnel to show their initiative in some way is a source of strength for the organization. Even though it may well involve a sacrifice of ‘personal vanity’ on the part of many managers. Esprit de Corps. Management must foster the morale of its employees. He further suggests that: “real talent is needed to coordinate effort, encourage keenness, use each person’s abilities, and reward each one’s merit without arousing possible jealousies and disturbing harmonious relations.”
Q2. Write Note on a) contribution of Rensis Likert Likert developed a refined classification, breaking down organizations into four management systems. 1st System – Primitive authoritarian 2nd System – Benevolent authoritarian 3rd System – Consultative 4th System – Participative As per the opinion of Likert, the 4th system is the best, not only for profit organizations, but also for non-profit firms. b) Maslow’s need hierarchy theory One of the most widely mentioned theories of motivation is the hierarchy of needs theory put forth by psychologist Abraham Maslow. Maslow saw human needs in the form of a hierarchy, ascending from the lowest to the highest, and he concluded that when one set of needs is satisfied, this kind of need ceases to be a motivator. As per his theory this needs are : (i) Physiological needs : These are important needs for sustaining the human life. Food, water, warmth, shelter, sleep, medicine and education are the basic physiological needs which fall in the primary list of need satisfaction. Maslow was of an opinion that until these needs were satisfied to a degree to maintain life, no other motivating factors can work. (ii) Security or Safety needs : These are the needs to be free of physical danger and of the fear of losing a job, property, food or shelter. It also includes protection against any emotional harm. (iii) Social needs : Since people are social beings, they need to belong and be accepted by others. People try to satisfy their need for affection, acceptance and friendship. (iv) Esteem needs : According to Maslow, once people begin to satisfy their need to belong, they tend to want to be held in esteem both by themselves and by others. This kind of need produces such satisfaction as power, prestige status and self-confidence. It includes both internal esteem factors like self-respect, autonomy and achievements and external esteem factors such as states, recognition and attention.
(v) Need for self-actualization : Maslow regards this as the highest need in his hierarchy. It is the drive to become what one is capable of becoming, it includes growth, achieving one’s potential and selffulfillment. It is to maximize one’s potential and to accomplish something.
As each of these needs are substantially satisfied, the next need becomes dominant. From the standpoint of motivation, the theory would say that although no need is ever fully gratified, a substantially satisfied need no longer motivates. So if you want to motivate someone, you need to understand what level of the hierarchy that person is on and focus on satisfying those needs or needs above that level. Maslow’s need theory has received wide recognition, particularly among practicing managers. This can be attributed to the theory’s intuitive logic and ease of understanding. However, research does not validate these theory. Maslow provided no empirical evidence and other several studies that sought to validate the theory found no support for it. Q3.How do you distinguish between line and staff functions? Give reasons for distinguishing their roles in the organization of business units Q4. Define delegation of authority. What are problems in delegation? Explain the principles of effective delegation Ans: Delegation means “Authorizing subordinates to make certain decisions”. Delegation is must because – a. Structure of authority/accountability exists. b. Superiors need to concentrate on important and vital issues. Reasons for Delegation
• To enable the manager to get more work done by utilizing the skills and talents of subordinates. • To foster the development of subordinates by having them participate in decision making and problem solving that allows them to learn about overall operations and improve their managerial skills. Delegation has basically 5 degrees – Zero, low, moderate, high and fifth degree. • Low degree of Delegation : Low degree of delegation is that in which a superior states a particular task to his subordinates and tell him to investigate on that task and report back. • Moderate degree of delegation : It is in which a superior states the task to his subordinate. He tells him to investigate on that task and report back with action plan. • High degree of delegation : It is that degree of delegation in which a task is specified to a subordinate and he is told to investigate on that task, make an action plan, formulate the plan and then report back with the results and reasons. Problems in delegation is of two types : • Problems in delegation - Manager • Problems in delegation - Subordinate Problems in delegation – Manager : • Reluctant to delegate - Some managers believe in fallacy i.e. if we want it done right, do it yourself. • Superiors delegation method - Poor examples set by superiors who do not delegate may discourage the managers to delegate further • Subordinate’s success threatens superior’s advancement. – Low self-confidence more over confidence amongst the managers may create a bottleneck in a process of delegation • Lack of trust in the subordinate to do well – Managers lacking required confidence and trust in subordinates might not be interested in delegating the authority. • Fear of loosing position - Fear amongst managers that they will loose status and position. Problems in delegation – Subordinates: • Reluctant to accept power - Reluctant to accept delegation for fear of failure. • Expects reward - Perceives no rewards for accepting additional responsibility. • Fear of risk - Prefers to avoid any risk and responsibility. Following are the ten principles of effective delegation: • Explain the degree of delegation - The degree of delegation should be clear to both the superior and the subordinate. • Select appropriate subordinates – Delegation should be to a right person. • Keep lines of communication open – After the delegation there should be always a open communication channel between superior and subordinate. • Train your subordinate and motivate them – Subordinates should be trained for the relevant work before delegating and superior should motivate the subordinate to do that delegated work. • Reward delegation – Financial and non-financial – Subordinates should be rewarded for the delegated work. This is like a motivation for subordinates • Keep appropriate reporting system and controlling – Supervisor should monitor the progress of delegated work, this is controlling and subordinates should report to the
supervisor periodically and they should keep the superior informed about the proceedings. • Don’t delegate and disappear – After delegating the work superior cannot escape from the responsibilities, he/she should control the delegated work. • Don’t follow practices of ‘Delegation on Paper’ – Delegation should be done personally if it is only on paper it will not be effective. • Believe in feedback, interaction and result orientation of delegation – Superiors should give constant feed back to the subordinates. A good interaction between superior and subordinates results in a good delegation of work. • Principle of exception – Subordinates should not consult superior for routine matter. Subordinates should act independently. Q5. What is controlling? What are the principles of effective control? What steps should an organization take before things go out of control? Ans: Controlling in simple terms means monitoring or measuring the progress of accomplishment of the goal. For an organization to function effectively certain goals and objectives must be clearly set. Plans can be realized only through effective managerial control. Control involves setting the important standards in the organization. In other words control can be defined as : “Planning is the basis of control, Action is the essence of control, Delegation is the key to control, And information is the guide to control.” Definition of control as stated by few great management contributors. “Managerial control implies measurement of accomplishment against standard and the correction of deviations to assure attainment of objectives according to plans.” – Koontz O’ Donnell “Control Consists in verifying whether everything occurs in conformity with the plans adopted, the instructions issued and the principles established.” – Henry Fayol “Control maintains the equilibrium between ends and means, output and efforts” – Peter Drucker Principles of effective Control: • Suitability : The technique of control to be used should suit the organizational working system. Different departments should have different system of control. • Deviations: Any changes in conditions should be reported well in advance so that immediate action can be taken to avoid loss or damage. • Objective : Control should be done with accurate and suitable standards. Management should take into consideration the proper objectives of the organization for control to be effective. • Predictions : Control should also aim for the future. If necessary steps are taken well in advance, the management will be able to take both corrective and precautionary measures.
• Flexible : Necessary flexibility is required in control design so that control can be effective when there are some unforeseen changes in stated plans. • Economic : It should be made sure that the benefits derived from the system should be more than the cost incurred from the control system. • Understandable : The whole process should be clearly understood by everybody involved, especially managers. Its only then that control will be effective in the organization. • Corrective : A proper control system should not only detect deviations from plans, but must also show the way to corrective action so that further loss or damage are not caused in the organization. Following are the steps to be followed by any organization before things go out of control: • Establishment of Standards : Control logically begins with setting up of standards. These provide the established criteria of desired performances for evaluating both individual and organizational performance. The criteria of desired performance vary according to the nature of business activities. Whatever standards may be set and used, they should be appropriate to the purpose attainable, flexible, precise and concerned with results rather than with procedures. Standards should also not be vague and should be understandable by all the persons concerned. • Measurement of Actual performance : This is done for the purpose of evaluation. Measurement of actual performance should be done as accurately as possible. Technical kind of work can be measured easily but difficulties will arise where less technical kind of work are concerned. Managers and supervisors should adopt suitable methods of performance appraisal. • Comparison Step: After the standards are set and performance is accurately measured, the next step is comparing them to see any variation between the two. When actual performance is equal to expected performance there is not much need for controlling action. This is an ideal situation, which rarely exists. In case of difference between actual performance and the desired performance, the manager should use his judgment to determine the significance of this difference. • Corrective Action : Control process would be incomplete if corrective action is not taken. As Connor observes, “An effective control system should produce more than a red flag; it must also contain procedures to determine means of correcting the deviations:. Corrective action calls for the removal or adjustment of causative factors, with a view to put in the performance on a proper track. Also, corrections should be undertaken promptly as soon as deviations need correction. Such action may be either remedial (which is taken after the wrong has been done) or preventive (which is taken before). It is obvious that the latter is preferred to the former. Those having the authority over the actual performance put the corrective action into effect. As such, the control process ends with such proper corrective action. Q6 Describe the main features of Z-culture of Japanese management. Compare it with American management.
2 assinment Theory X of Motivation Theory X is based on a faulty conception of human nature. Theory X of motivation is based on the following assumptions:(1)The average individual is by nature indolent and will avoid work if he can.(2)The average person lacks ambition, dislikes responsibility, and prefers to be led.(3)An average human being is inherently self-centred, and indifferent to organisationalgoals.(4)Most people are by nature resistant to change and want security above all.(5)The average individual is gullible, not very bright, the ready victim of the schemer.On the basis of these assumptions, the conventional view of management puts forwardthe following propositions: (1)Management is responsible for organising the elements of productive enterprise— money, materials, equipment, people—in the interest of economic gain.(2)With respect to people, management involves directing their efforts, motivating them,controlling their actions and modifying their behaviour to fit the needs of theorganisation.(3) Without active intervention by management, people would be passive—even resistant to organizational needs. They must, therefore, be persuaded, rewarded,punished and controlled.The above assumptions are negative in nature. Therefore, Theory X is a conventional ortraditional approach to motivation. External control is considered appropriate for dealing withunreliable, irresponsible and immature people. According to McGregor, an organisation builtupon Theory ‘X’ notions will be one in which there is close supervision and control of subordinates and high centralisation of authority. Leadership in such an organisation willtend to be autocratic, and workers will have very little (if any) say in decisions affecting them.The climate in a Theory X organisation would be impersonal—this theory implies use of ‘carrotand stick approach’. ANS: Laissez-Faire or Free-Rein Leadership In this situation, the leader delegates his authority in totality. He avoids his authority and does not exercise the power to govern. Leader is like any other member of the team and generally works as the contact person in the group. OR Indirect supervision of subordinates, form of management supervision that allows others to function on their own without extensive direct supervision. People are allowed to prove themselves based upon accomplishments rather than meeting specific supervisory criteria. ANS: Hygiene factors- Hygiene factors are those job factors which are essential for existence of motivation at workplace. These do not lead to positive satisfaction for long-term. But if these factors are absent / if these factors are non-existant at workplace, then they lead to dissatisfaction. In other words, hygiene factors are those factors which when adequate / reasonable in a job, pacify the employees and do not make them dissatisfied. These
factors are extrinsic to work. Hygiene factors are also called as dissatisfiers or maintenance factors as they are required to avoid dissatisfaction. These factors describe the job environment / scenario. The hygiene factors symbolized the physiological needs which the individuals wanted and expected to be fulfilled. Hygiene factors include: •PayThe pay or salary structure should be appropriate and reasonable. It must be equal and competitive to those in the same industry in the same domain. •Company Policies and administrative policies- The company policies should not be too rigid. They should be fair and clear. It should include flexible working hours, dress code, breaks, vacation, etc. •Fringe benefits- The employees should be offered health care plans (mediclaim), benefits for the family members, employee help programmes, etc. •Physical Working conditions- The working conditions should be safe, clean and hygienic. The work equipments should be updated and well-maintained. •Status- The employees’ status within the organization should be familiar and retained. •Interpersonal relations-The relationship of the employees with his peers, superiors and subordinates should be appropriate and acceptable. There should be no conflict or humiliation element present. •Job Security- The organization must provide job security to the employees ANS: THE BASIC ELEMENTS OF CULTURE Language. Norms. Values. Beliefs and ideologies. Social Collectives. Statuses and Roles. Cultural Integration. Ans: Intragroup conflict is distinctive in that it occurs between members of a group or team who are theoretically united over a common characteristic or objective; in contrast, intergroup conflict occurs between two competing or distinct groups. Intragroup conflicts are most common in workplaces that divide employees into specific teams or departments. An example of intragroup conflict would be members of a marketing group debating about the best way to launch a new product. If the group was experiencing intergroup conflict, the marketing team may argue with the technology development team about the launch. Intragroup conflict is marked by verbal disagreements between group members that could result ultimately in the fracturing of the group into distinct and opposing parts. Groups experiencing intragroup conflict may frequently solicit the input of superiors or show delayed progress in achieving a goal. Part B: 2) According to me, we all could see or observe an object, but we are bound to have a different understanding of it and a different point of view. We make an understanding of a situation due to our own way of perceiving life and the way we see our world. Also factors like past experiences, personality, culture, religion,
upbringing, gender and the society we live in affect our understanding. We can comprehend what we see but it is subject to our own unique way of thinking. We all act according to our past experiences, if they were good or bad. If someone was bitten by a dog when he was little, then he might get scared when a dog comes near him, on the other hand, some people have dogs as pets and they think they are the most loyal animals on earth and yet may never do anything to harm them. Each person has a different personality that could affect their perception. 3) Traits Model of Leadership: Initial investigations of leadership considered leaders as individuals endowed with certain personality traits which constituted their abilities to lead. The studies investigated individual traits such as intelligence, birth order, socioeconomic status, and child-rearing practices (Bass, 1960; Bird, 1940; Stogdill, 1948, 1974). Stogdill (1974) identified six categories of personal factors associated with leadership: capacity, achievement, responsibility, participation, status, and situation but concluded that such a narrow characterization of leadership traits was insufficient: "A person does not become a leader by virtue of the possession of some combination of traits" (Stogdill, 1948, p. 64). The attempts to isolate specific individual traits led to the conclusion that no single characteristic can distinguish leaders from non-leaders. The Situational Leadership Theory suggests that effective leadership requires both acts of “leadership” and “management.” Depending on the level of each of these acts necessary, four different styles of leadership can be utilized. These are delegating, coaching, directing, and supporting. For a leader to be purposeful in their direction, they must use the correct style by being able to evaluate a follower’s readiness level. In other words, they must “meet a follower where they are.” A follower’s readiness level is determined by two factors. The first is the level of ability to do what is needed. The second is the level of willingness to do what is needed. The diagram above will aid you in identifying your officer’s readiness level. Once the officer’s readiness level is defined, you will be able to determine what style of leadership will lend the best results when you are advising. An advisor that is capable of adjusting his/her style to meet the needs of the officer will be much more effective. ANS Not done Show the treatment of bad debts in financial accounts Answer: Treatments of bad debts in financial accounts:-
A. Revenues should be reported net of discounts and allowances with the discount amount parenthetically disclosed on the face of the statement or in the notes to the financial statements. Alternatively, revenues may be reported gross with the related discounts and allowances reported directly beneath the revenueamount. B. Provision must be made for bad debt estimates each year. Tuition and fees should be reported net of allowances and discounts. As such, increases in allowances for bad debts are recorded as a reduction in revenues rather than anexpense. C. With regard to the presentation of the provision for bad debt estimates taken as a reduction of tuition and fee revenue, this should be deducted from the gross tuition and fee line item and should not be separately displayed on the face of the statement. This treatment is different than scholarship allowances which are required to be disclosed either on the face or in the notes to the financial statements. ANS Closing stock = 120000 Therefore opening stock =80000(as 40000 is excess in clsg. stock) Hence average inventory= (120000+80000)/2 = 100000 COGS= (Net sales - gross profit) therefore COGS= 300000. Hence stock t/o ratio= 300000/100000=3. It means that it takes 12/3 = 4 months for the stock to turnover ANS The standard deviation of the sampling distribution of a statistic. Standard error is a statistical term that measures the accuracy with which a sample represents a population. In statistics, a sample mean deviates from the actual mean of a population; this deviation is the standard error. The term "standard error" is used to refer to the standard deviation of various sample statistics such as the mean or median. For example, the "standard error of the mean" refers to the standard deviation of the distribution of sample means taken from a population. The smaller the standard error, the more representative the sample will be of the overall population. The standard error is also inversely proportional to the sample size; the larger the sample size, the smaller the standard error because the statistic will approach the actual value.
Seasonal Variations ANS: In business seasonal variation refers primarily to systematic variations in demand for products and services in a cyclical fashion at different within a recurring time period. For example, the demand for umbrellas is likely to have a yearly cycle, in which the demand will be high during rainy season and low in other seasons. The periodicity of demand can be any repeating time period such as year, month, week or day. Generally in business cyclical or seasonal variations of time period more than a year are not considered. The reasons for seasonal variations are changes in the environment or other cultural factors cause people to have different types of requirements at different times of the seasonality time period. For example, a fast food outlet or a restaurant will have a daily cycle based on the usual meal times for people in general. Similarly a super market will also have a daily cycle based on shopping time convenient to its customers. In addition both these types of businesses will experience a weekly cycle as well as a yearly cycles. Banks are likely to face a monthly cycle as many people get paid their salaries at the end of each month, and are more likely to make withdraw money from their accounts at the beginning of each months soon after their salaries are credited. Just as there are seasonal variations in demand there can be seasonal variations in other activities of other activities of business. It is obvious that seasonal variations in demand will result in seasonal variations in all all activities connected with fulfilling those activities, But there are many other activities with seasonal variations. For example, all utilities may bill their customers on a monthly cycle, causing a monthly seasonality in billing as well as bill collection activities. Similarly all credit card billing also follow monthly billing and settlement cycle. Because of the variation in level of demand and activities, organization may also make changes in the processes that they follow. A typical example of seasonality in processes is by restaurants. They may put up extra tables and use part time staff to handle extra rush of peak hours. Some other prominent example of product and services with high seasonality are listed below. Christmas trees are mostly purchased during Christmas festival. Ice creams and cold drinks have much higher demand during summers than in winters.
There is heavy seasonality in demand of clothing. Particularly warm clothes have much higher demand during winters. Local transportation in metro rails and buses has a heavy daily as well as a weekly variation in number of commuters. Demand for hotels and all other facilities in tourist location is much higher during their respective tourist seasons. Demand Stationary used by students is much higher wen schools and collages are open than during vacations. Demand for toys and presentation items are very high during Christmas and other festivals when people exchange gifts. There is heavy seasonality daily in demand for utilities such as electricity, piped gas and water. However there are some items with very low or no seasonal variability this will include items of common daily use or consumption such as bread or salt 105 Ans Price is the value or worth of a product or service and when you say price then it means the normal price of a product or a service which a company charges. On the other hand, market price is the price of a product or service which is in a marketplace and is resulted through market efficiency, equilibrium and rational expectations. Normal price can be lesser, equal or greater than the market price. If most of the companies in an industry charge market prices for the products or services then competition is high in that specific industry. ANS Stagflation is when the domestic economy of a country fails to grow but prices rise anyway. ("stagnation" with "inflation") Stagflation is an economic situation where there is a coupling of sluggish economic growth, high inflation rate and often unemployment. In Economic terms: Stagflation = Stagnation + Inflation Stagflation describes the combination of slow economic growth and high rate of unemployment along with continues rise in prices. Stagflation occurs when the economy isn't growing but prices are. Stagflation has most swear effects on consumers as goods and services become expensive and unemployment robs them of income. To add to their misery procuring loans maybe difficult as the Central Bank may restrict credit to combat stagflation.
ANS: Trade cycle 1. Fiscal Measures: During the period of boom, decrease in public expenditures, increase in taxes and increase in public debt. On the other hand, during the period of depression, the policy of increase in public expenditures, decrease in taxes and decrease in public debt is adopted by the government. 2. Monetary Measures: Monetary measures mean that control of money and credit supply in the country. When we are facing boom or inflation, the central bank reduces the total quantity of money in circulation. The bank can adopt different measures like bank rate policy, open market operations and rationing of credit etc. On the other hand, incase of depression, the central bank can increase the quantity of money by lowering the bank rate or purchasing the securities and discounted the bills of exchange. 3. International measures: Today every country has trade relation with other countries. If there is inflation or deflation in one country, it can be easily be carried top other countries, the example of great depression can be given. Business cycle is an international phenomena and it should be tackled on international level. Different measures have been suggested by the economists to control the business fluctuations effectively. Such as: (a). Control of international production. (b). International bill stock control and international investment control. 4. State control of private investment: If the govt. controls the private investment, cyclical fluctuations can be controlled within limits while the other economists who this agree with the above view, they say that private investment will be discouraged. But J.M. Keynes says that if we adopt the middle way we can control the fluctuations ANS: Price discrimination Practice of selling goods or services at different prices to different buyers, even though sales costs are the same for all the transactions. Buyers may be discriminated against on the basis of income, ethnicity, age, or geographic location. For price discrimination to succeed, other entrepreneurs must be unable to purchase goods at the lower price and resell them at a higher one. Product differentiation A marketing process that showcases the differences between products. Differentiation looks to make a product more attractive by contrasting its unique qualities with other competing products. Successful product differentiation creates a
competitive advantage for the seller, as customers view these products as unique or superior. Investopedia Says: Product differentiation can be achieved in many ways. It may be as simple as packaging the goods in a creative way, or as elaborate as incorporating new functional features. Sometimes differentiation does not involve changing the product at all, but creating a new advertising campaign or other sales promotions instead.
