Class 11 – Page 10 – Maharashtra Board Solutions

11th Information Technology Chapter 1 Exercise Basics of Information Technology Practical Problems Solutions Maharashtra Board

April 1, 2025March 31, 2025 by Bhagya

Basics of Information Technology 11th Information Technology Chapter 1 Solutions Maharashtra Board

Balbharati Maharashtra State Board Class 11 Information Technology Solutions Chapter 1 Basics of Information Technology Textbook Exercise Questions and Answers.

Class 11 Information Technology Chapter 1 Exercise Solutions

1. Complete the following activity.

Question 1.
Maharashtra Board Class 11 Information Technology Solutions Chapter 1 Basics of Information Technology 1 Q1
Answer:

Question 2.
Tick the appropriate box.
Internet is a ____________ network connecting millions of computer.
Maharashtra Board Class 11 Information Technology Solutions Chapter 1 Basics of Information Technology 1 Q2
Answer:
Global

Question 3.
Maharashtra Board Class 11 Information Technology Solutions Chapter 1 Basics of Information Technology 1 Q3
Answer:

Question 4.
Tick the appropriate box.
Maharashtra Board Class 11 Information Technology Solutions Chapter 1 Basics of Information Technology 1 Q4
Answer:

Question 5.
Maharashtra Board Class 11 Information Technology Solutions Chapter 1 Basics of Information Technology 1 Q5
Answer:

2. Divide the following list of devices into appropriate categories.

Question 1.
Monitor, Barcode reader, Printer, Keyboard. Optical character reader, Speaker
Maharashtra Board Class 11 Information Technology Solutions Chapter 1 Basics of Information Technology 2 Q1
Answer:

Categories	Names
Input Devices	Barcode reader, Keyboard, Optical Character reader
Output Devices	Monitor, Printer, Speaker

3. Multiple choice two correct answers.

Question 1.
The primary memory consists of ____________ and ____________
(a) Pendrive
(b) Hard Disk
(c) RAM
(d) Scanner
(e) ROM
Answer:
(c) RAM, (e) ROM

Question 2.
The network architectures which are widely used are ____________
(a) Server
(b) Client
(c) Peer to peer
(d) Client-server
(e) Internet
Answer:
(c) Peer to peer, (d) Client-server

4. Match the following.

Question 1.

1. IS	(a) change directory
2. FTP	(b) Translates Network Address
3. CD	(c) List of Directory
4. DNS	(d) To transfer file on interent

Answer:

1. IS	(c) List of Directory
2. FTP	(d) To transfer file on interent
3. CD	(a) change directory
4. DNS	(b) Translates Network Address

5. Name the following and complete the diagram.

Question 1.
Maharashtra Board Class 11 Information Technology Solutions Chapter 1 Basics of Information Technology 5 Q1
Answer:

6. Complete the following with Linux commands with their use.

Question 1.
Maharashtra Board Class 11 Information Technology Solutions Chapter 1 Basics of Information Technology 6 Q1
Answer:

7. Complete the list of the following protocols.

Question 1.
Maharashtra Board Class 11 Information Technology Solutions Chapter 1 Basics of Information Technology 7 Q1
Answer:

8. Complete the following Long form.

Question 1.
Maharashtra Board Class 11 Information Technology Solutions Chapter 1 Basics of Information Technology 8 Q1
Answer:

9. Identify the following activity.

Question 1.
You are typing a letter using a computer and suddenly there is a power failure.
Which type of Memory does this activity deal with?
Answer:
Random Access Memory

10. Answer the following.

Question 1.
What are Data and Information? Give examples of data and information.
Answer:
Data can be any character, text, word, number, or raw facts.
Example of Data:
Mumbai, 1234, Aditya, MG Road, Maharashtra, 9444444441, 411004

Information is data formatted in a manner that allows it to be utilized by human beings in some significant way.
Example of Information:
Aditya, 1234, MG Road, Mumbai 400004, Maharashtra, 944444444114.

Question 2.
Explain functional units of a computer system.
Answer:
The computer system has the following three basic components:
Input Unit:
An input device is any hardware device that sends data to a computer, allowing you to interacts with and controls it. Data can be in the form of words, symbols, numbers, etc. The function of the input device is to direct commands and data into the computer.
For example keyboard, mouse, scanners, digital cameras, joysticks, and microphones.

Central Processing Unit:
After receiving data and commands from the user, a computer system has to process the instructions provided using Central Processing Unit (CPU). It has three elements:

(a) Arithmetic and Logic Unit: An arithmetic logic unit (ALU) is a major component of the central processing unit of a computer system. It does all processes related to arithmetic and logic operations like add, subtract, multiply, etc.

(b) Control Unit: The control unit (CU) is a component of a computer’s central processing unit (CPU) that directs the operation of the processor. It tells the computer’s memory, arithmetic, and logic unit, and input and output devices how to respond to the instructions that have been sent to the processor.

(c) Memory Unit: A memory unit is the amount of data that can be stored in the storage unit. Once the data has been entered using input devices, the system stores the data in the memory unit.

Types of Memory: Primary Memory & Secondary Memory.

Primary Memory: It has 18 internal memory of the computer also known as main memory. It is of two types RAM and ROM.
RAM (Random Access Memory): RAM stands for Random Access Memory also known as reading/write memory. Information stored in this memory is lost as the power supply to the computer is switched off; it is also called “Volatile Memory”.
ROM(Read Only Memory): ROM stands for Read-Only Memory. ROM is a permanent type of memory. The contents are not lost as the power supply to the computer is switched off. ROM cannot be overwritten by the computer. It is also called “Non Volatile Memory”.
Secondary Memory: It is the external memory of the computer which is used to store a large amount of data. The secondary storage devices are a Hard disk, Pen drive, CD, DVD, etc.

Output Unit:
An output device is any device used to send data from a computer to another device or user. Most computer data output that is ‘meant for humans is in the form of audio or video. Thus, most output devices used by humans are in these categories. Examples include monitors, projectors, speakers.

Question 3.
What is a storage unit? Explain types of primary memory storage.
Answer:
When a user enters data using input devices, the computer system stores this data in a memory unit i.e. storage unit. The storage unit uses a set of pre-programmed instructions to further transmit this data to other parts of the CPU. There are two types of memory

Primary Memory
Secondary Memory

RAM: It stands for Random Access Memory. RAM is known as reading/write memory. It is the main memory of the computer system. The information stored in this memory is lost as the power supply to the computer is switched off, so it is also called as “Volatile Memory”.

ROM: It stands for Read-Only Memory. ROM is permanent memory. The content is not lost when the power supply is switched off. ROM cannot be overwritten by the computer, so it is also called “Non-Volatile Memory”.

Question 4.
Explain how Linux is different from Windows.
Answer:

Linux is open sources system whereas the window operating system is commercial.
Linux has access to source code and alters the code as per user need whereas a window does not have access to source code.
Linux distribution doesn’t collect user data” whereas Windows collects all the user details which leads to privacy concerns.
As the software is open to the public, it constantly updates, improves, and expands as more people can work on its improvement.

Question 5.
Write down the difference between LAN, MAN, and WAN.
Answer:

LAN (Local Area Network)	MAN (Metropolitan Area Network)	WAN (Wide Area Network)
LAN Stands for Local Area Network.	MAN stands for Metropolitan Area Network.	WAN stands for Wide Area Network.
A LAN is a network of connected devices that exist within a specific location.	A public or private network is used to connect various locations including suburbs in metropolitan cities.	A WAN is any network that crosses metropolitan, regional, or national boundaries.
LANs may be found in homes, offices, educational institutions, or other areas.	A MAN is a network, which covers an entire city, but uses LAN topology.	Most networking professionals define a WAN as any network that uses routers and public network links (e.g. Telephone lines).
LAN is easy to set up.	MANs are formed by connecting multiple LANs.	Due to long-distance transmission, the noise and errors are more in WAN.
Data transmits at a very fast rate.	Examples of a MAN are the cable TV network in a city.	The best example of WAN is the Internet.

Information Technology 11th Std Commerce

11th Secretarial Practice Chapter 11 Exercise Correspondence with Banks Practical Problems Solutions Maharashtra Board

April 1, 2025March 31, 2025 by Bhagya

Correspondence with Banks 11th Secretarial Practice Chapter 11 Solutions Maharashtra Board

Balbharti Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 11 Correspondence with Banks Textbook Exercise Questions and Answers.

Class 11 Secretarial Practice Chapter 11 Exercise Solutions

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
A company usually opens _____________ account in a bank.
(a) Current
(b) Saving
(c) Recurring
Answer:
(a) Current

Question 2.
Bank is a _____________ institution.
(a) financial
(b) social
(c) cultural
Answer:
(a) financial

Question 3.
The appointment of banker is usually made by the _____________
(a) Board of Directors
(b) Secretary
(c) Chairman
Answer:
(a) Board of Directors

Question 4.
Resolution for opening Bank Account is passed in the _____________ meeting.
(a) Board
(b) Statutory
(c) Annual General
Answer:
(a) Board

Question 5.
Bank provides overdraft facility to _____________ account holder.
(a) Current
(b) Saving
(c) Fixed Deposit
Answer:
(a) Current

Question 6.
_____________ is used for depositing cash into a bank account.
(a) Pay-in-slip
(b) Withdrawal slip
(c) Cheque
Answer:
(a) Pay-in-slip

Question 7.
Borrowing/Accepting and lending money are considered as _____________ functions of bank.
(a) Primary
(b) Secondary
(c) Agency
Answer:
(a) Primary

Question 8.
Withdrawals are not permitted from the _____________ deposit account.
(a) Fixed
(b) Current
(c) Savings
Answer:
(a) Fixed

Question 9.
_____________ account is suitable to salaried people.
(a) Savings
(b) Current
(c) Fixed
Answer:
(a) Savings

Question 10.
Generally Interest is not paid on _____________ deposit account.
(a) Current
(b) Saving
(c) Fixed
Answer:
(a) Current

Question 11.
A deposit which is kept for fixed period in bank is called _____________ deposit.
(a) Fixed
(b) Current
(c) Recurring
Answer:
(a) Fixed

1B. Match the pairs.

Question 1.

Group ‘A’	Group ‘B’
(a) Lost cheque	(1) Board of Directors
(b) Appointment of Banker	(2) Higher rate of interest
(c) Cash credit	(3) Used for depositing cash and cheque
(d) Fixed Deposit Account	(4) Stop Payment
(e) Savings Account	(5) Restrictions on withdrawals
(f) Pay-in-slip	(6) Separate Account
(g) Overdraft facility	(7) Current Account
	(8) Recurring Account
	(9) Shareholders
	(10) No interest is paid
	(11) Used for withdrawing amount from the account
	(12) Long term credit facility
	(13) Certain restrictions on withdrawals
	(14) Dealing in foreign exchange

Answer:

Group ‘A’	Group ‘B’
(a) Lost cheque	(4) Stop Payment
(b) Appointment of Banker	(1) Board of Directors
(c) Cash credit	(6) Separate Account
(d) Fixed Deposit Account	(2) Higher rate of interest
(e) Savings Account	(5) Restrictions on withdrawals
(f) Pay-in-slip	(3) Used for depositing cash and cheque
(g) Overdraft facility	(7) Current Account

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
A slip is used for depositing cash and cheque in the Bank account.
Answer:
Pay-in-slip

Question 2.
Permission to withdraw excess amount from Current Account.
Answer:
Overdraft

Question 3.
Separate loan account under which the short-term loan facility is given by the bank to the business.
Answer:
Cash credit

Question 4.
The short-term credit facility is given by the bank to the current account holder.
Answer:
Overdraft

Question 5.
The account is generally opened by the business organization.
Answer:
Current Account

Question 6.
The request of Secretary to the bank not to make the payment of the cheque.
Answer:
Stop payment request

Question 7.
The type of account for which a higher rate of interest is paid to bank depositors.
Answer:
Fixed Deposit Account

Question 8.
The slip is used for withdrawing money from Savings Account.
Answer:
Withdrawal Slip

Question 9.
Negotiable Instrument which can be discounted with the bank.
Answer:
Bill of exchange

1D. State whether the following statements are True or False.

Question 1.
Joint Stock Company opens Current Account.
Answer:
True

Question 2.
Generally, no interest is paid by the bank on the Current Account.
Answer:
True

Question 3.
In cash credit, the customer’s account is credited by the bank with the sanctioned amount.
Answer:
True

Question 4.
Board resolution is not required to open the Current Account with the bank.
Answer:
False

Question 5.
The bank account of the company is operated by shareholders.
Answer:
False

Question 6.
Overdraft facility is granted to Savings account holders.
Answer:
False

Question 7.
Bank correspondence should be brief and to the point.
Answer:
True

Question 8.
It is necessary to instruct the bank to stop the payment of a cheque that is lost.
Answer:
True

Question 9.
A bank overdraft facility is a long-term facility.
Answer:
False

Question 10.
Banks grant long-term loans only.
Answer:
False

1E. Find the odd one.

Question 1.
Saving Deposit, Recurring Deposit, Cash Credit. Fixed Deposit
Answer:
Cash Credit

Question 2.
Overdraft, Fixed Deposit, Discounting of Bills, Cash Credit
Answer:
Fixed Deposit

1F. Complete the sentences.

Question 1.
A financial institution which receives deposits and lends money is called as _____________
Answer:
Bank

Question 2.
Accepting deposits and lending money are the primary functions of _____________
Answer:
Commercial Bank/Bank

Question 3.
A facility under which a customer can overdraw money from his account is called as _____________
Answer:
Overdraft facility

Question 4.
Overdraft facility is given to _____________
Answer:
Current Account Holder

1G. Select the correct option from the bracket.

Question 1.

Group ‘A’	Group ‘B’
(1) Overdraft	…………………………
(2) Primary Function	………………………..
(3) International Trade Transactions	………………………..
(4) ………………………	Current Account

(Accepting Deposits, Current Account, Letter of Credit, Businessman)
Answer:

Group ‘A’	Group ‘B’
(1) Overdraft	Current Account
(2) Primary Function	Accepting Deposits
(3) International Trade Transactions	Letter of Credit
(4) Businessman	Current Account

1H. Answer in one sentence.

Question 1.
What is a Letter of Credit?
Answer:
A letter of credit is a payment method generally used for international trade transactions. Letter of credit is issued by a bank on behalf of its client, promising to pay a certain amount of money to the seller, in case the buyer fails to pay it.

Question 2.
Which facility is given to the Current Account holder?
Answer:
Overdraft facility is given to Current Account Holder by the Bank.

Question 3.
What do you mean by stop payment of cheque?
Answer:
When a cheque is issued by the company, there is a possibility of misplacement of the cheque or loss in transit. Then it is necessary to inform the bank to stop payment of such cheque.

1I. Correct the underlined word and rewrite the following sentences.

Question 1.
Accepting deposits is the secondary function of Banks.
Answer:
Accepting deposits is the primary function of Banks.

Question 2.
Businessman opens Fixed Deposit Account.
Answer:
Businessman opens Current Account.

Question 3.
Under cash credit facility businessman/account holder can overdraw from his account.
Answer:
Under an overdraft facility, a businessman/account holder can overdraw from his account.

2. Explain the following terms/concepts.

Question 1.
Bank
Answer:
A bank is a financial institution, in which people deposit their idle or surplus cash, and those who need funds borrow from banks.

Question 2.
Demand Deposits
Answer:
The deposits which are repayable on demand are called Demand Deposits.

Question 3.
Time Deposits
Answer:
The deposits which are not repayable on demand are called Time Deposits.

Question 4.
Savings Deposits
Answer:
To encourage saving habit among the people, the bank allows depositors to open a savings account. There are restrictions on the frequency and amount of withdrawals.

Question 5.
Current Deposits
Answer:
This account is normally opened by businessmen, firms, or companies. There is no limit on the amount or number of withdrawals.

Question 6.
Recurring Deposits
Answer:
The account which encourages the customers to make regular savings and to deposit a fixed sum of money for a specific period of time is called Recurring Deposits.

Question 7.
Fixed Deposits
Answer:
Fixed Deposits are the deposits received for a fixed period. The rate of interest is high for fixed deposits. The longer the period of deposit, the higher is the rate of interest.

Question 8.
Loans
Answer:
A loan granted for a specific time period against personal security, gold or silver, and other moveable or immovable assets is called a term loan.

Question 9.
Advances
Answer:
Advances is a credit facility provided by the bank to its customers. It differs from loans in the sense that loans may be granted for a longer period, while advances are for a shorter period.

Question 10.
Cash Credit
Answer:
Under a cash credit facility, a bank allows the borrower to withdraw amounts up to the specified limit. Such credits are allowed against the security of stock of raw material, finished goods, etc.

Question 11.
Overdraft
Answer:
It is a facility where the bank allows its customers to overdraw an amount up to a particular limit. Such facility is allowed against collateral securities like shares, FDR, LIC Policy, etc.

Question 12.
Discounting of Bill
Answer:
It is a short-term finance facility provided by the bank to its customers by allowing discounting of bills and making payment of bills before their due date.

Question 13.
Letter of Credit
Answer:
A letter of credit is a payment method generally used for international trade transactions. A letter of credit is issued by a bank on behalf of its client, promising to pay a certain amount of money to the seller in case the buyer fails to pay it.

Question 14.
Stop payments of cheque
Answer:
When a cheque is sent by the Company, there is a possibility of misplacement of cheque or loss in transit. In that case, it is necessary to inform the bank to stop the payment of such cheques.

3. Distinguish between the following.

Question 1.
Current Account and Savings Account.
Answer:

Basis	Current Account	Savings Account
1. Meaning	It is a type of bank account that is generally opened by the businessman to carry out their business activities.	It is a type of bank account which is opened by salaried and household people with an aim of saving their part of the income and earn interest.
2. Withdrawals	There are no restrictions on the number of withdrawals. They can withdraw money by cheque.	There are restrictions over the number of withdrawals. They can withdraw money either by cheque or by withdrawal slip.
3. Facilities	Such account holder gets the facilities of Passbook, Cheque Book, Statement of Account and Pay-in-Slip Book.	Such account holders get the facilities of Passbook, Cheque Book, and Pay-in-Slip Book.
4. Rate of Interest	Generally, no interest is allowed on the Current Account. If it is allowed it is a very nominal rate.	The rate of interest on the Saving Account is higher than the Current Account but less than fixed deposits.
5. Overdraft facility	Overdraft facility is allowed to Current Account holders.	Overdraft facility is not allowed to Saving Account holder.
6. Suitability	It is suitable for traders, business firms, and institutions.	It is suitable for salary earners, households, and fixed income groups.

Question 2.
Loan and Overdraft
Answer:

Basis	Loan	Overdraft
1. Meaning	Amount granted for a specific period of time, against personal security, gold or silver, and other movable or immovable assets is called a loan.	Overdraft is a credit facility granted by the bank to Current account holders. Under an overdraft facility, the bank allows its customers to overdraw an amount up to a particular limit.
2. Eligibility	Savings account, Fixed, Recurring, and Current account holders are eligible for the loan facilities.	Only Current account holders are eligible for an overdraft facility.
3. Duration	The loan is a long period facility.	Overdraft is a short period facility.
4. Purpose	The purpose is to meet long-term requirements.	The purpose is to meet short-term working capital requirements.
5. Repayment	The amount of the loan may be repaid in installments or in a lump sum on its due date.	The amount of overdraft is adjusted against the balance of Deposits in the Current account.
6. Security	It is provided against personal security, gold or silver, and other movable or immovable assets.	It is provided against collateral securities like shares, FDR, LIC Policy, etc.

Question 3.
Fixed Deposit Account and Recurring Deposit Account.
Answer:

Basis	Fixed Deposit Account	Recurring Deposit Account
1. Meaning	Fixed Deposits are the deposits received for a fixed period of time.	A Recurring Deposit account is that account where depositors regularly deposit a fixed amount for a specific period of time.
2. Facilities	The bank gives a Fixed Deposit Receipt to the Fixed Deposit holders.	The bank gives a Pass Book and Pay-in-Slip book to Recurring Deposit holders.
3. Rate of Interest	The rate of interest allowed is higher. The longer the period of deposit, the higher will be the rate of interest.	The rate of interest is less than Fixed Deposit Account.
4. Suitability	It is suitable for those people having surplus income in hand.	It is suitable for fixed-income groups and lower-income groups.

4. Answer in brief.

Question 1.
What are the points to be kept in mind by a Secretary while corresponding with Banks?
Answer:
The following precautions must be taken by the secretary while corresponding with banks:

Prompt reply: For any correspondence with the bank, the reply must be sent without delay is the responsibility of a secretary.
Brevity/Conciseness: Secretary should provide maximum information in minimum words. A letter should not be lengthy. Unnecessary details, irrelevant information or explanation, lengthy paragraphs should be avoided.
Courtesy: The letter to the bank should show empathy, respect, and mutual understanding. It is helpful for getting favourable responses and built up goodwill for the organization.
Accuracy: While corresponding with Bank ‘Accuracy’ and ‘Perfectness’ are very important. Whatever information or data provided must be accurate. No haphazard remarks or statements are to be made.
Clarity: The secretary must provide true, factual updates and clear information about his organization to the banker. Clarity is required to avoid misunderstandings with bankers.

Question 2.
Under what circumstances will a secretary correspond with the Banks?
Answer:
The following are the circumstances under which a secretary has to correspond with the banks:
(i) Letter for opening a Current Account with the Bank:
The decision of opening a Current account is taken in the Board meeting by passing a resolution. The Board instructs the secretary for opening a Current account. The Secretary has to write a letter to the Bank accordingly and enclose the necessary documents.

(ii) Letter requesting a bank to stop payment of cheque:
When cheques are sent by Companies, there are possibilities of misplacement of cheques or loss in transit. Thus, it is necessary to inform the bank to stop the payment of such cheques.

(iii) Letter requesting a Bank for granting an overdraft facility:
Certain credit facilities are provided by the Bank to their customers. The Bank allows a Current Account holder to withdraw excess amount than the available balance. Secretary has to correspond with the bank to prevail this facility.

(iv) Letter requesting bank to issue a letter of credit:
A letter of credit is a payment method generally used for international trade transactions. Letter of credit is issued by Bank on behalf of its client promising to pay a certain amount of money to the seller in case the buyer fails to pay it. Secretary has to correspond with the bank to obtain this letter of credit.

Question 3.
State the agency functions of Banks.
Answer:
Agency functions of banks are part of secondary functions.
Following are the agency functions of the Bank:

Bank collects the cheques and Bill of Exchange on behalf of the customers or account holders.
Bank collects dividends, interest, and salary and credits the account holder’s account.
Bank makes payment of rent, insurance premium, electricity bill, etc.
Bank act as a Depository Participant for purchase and sale of securities.
Transfer of money.
Fulfill standing instructions of depositors.
The bank acts as a trustee, an executor of the will, and an attorney for the account holder.
The bank acts as a Banker to the issue, Lead Manager, etc. for the companies.

Question 4.
State the utility functions of Banks.
Answer:
Commercial Bank provides general utility services to their customers or account holders to attract customers.
Utility functions of Banks are as follows:

Provide locker facility to customer utility function of banks are as follows.
Provide a letter of credit facility to account holders for international business transactions.
Helps to deal in Foreign Exchange.
Provide Credit cards, Debit cards, and A.T.M. facilities.
To assist in the purchase and sale of securities.
Provide traveler’s cheque to customers.

Question 5.
Explain the different types of Deposits.
Answer:
The Bank accepts two types of deposits from the people.
(i) Demand Deposits:
Demand Deposits are deposits, where money is repaid by the bank on the demand made by the depositors or customers of the bank.

Such deposit accounts are:
(a) Savings Deposits:
As the name indicate this account is opened and operated by that person who have regular and fixed income e.g. salary. In order to ‘save’ something out of current income, this account is opened.
Features of this account are:

It is mainly for saving purposes.
Money can be withdrawn on demand.
Minimum balance must be maintained.

(b) Current Deposits:
This account is opened by the businessman, firm, company, etc. for business purposes. There is no limit on the number of withdrawals. Generally, interest is not payable on this account. Overdraft facilities are also allowed to these depositors.

(ii) Time Deposits:
The deposits which are not repayable on demand are called ‘Time Deposits’. These deposits are payable after a specific period of time.

Fixed Deposits: In this deposit account, a certain sum is kept deposited for a fixed period. A higher rate of interest is paid on Fixed Deposit.
Recurring Deposits: In this deposit account, the customer deposit’s fixed amount on regular basis for a specific period. The money is deposited periodically. The rate of interest is more than Saving Deposits.

5. Justify the following statements.

Question 1.
The secretary has to correspond with the Banks under certain circumstances.
Answer:
Following are the circumstance under which a secretary has to enter into correspondence with banks:

Letter for opening a Current account with Bank.
Letter requesting a bank to stop payment of the cheque.
Letter requesting a bank for granting overdraft facility.
Letter requesting a bank to issue a letter of credit.
Letter to a bank enquiring about new banking facilities.
Letter to the bank for a long-term loan.
Thus, the secretary has to correspond with the Banks under certain circumstances.

Question 2.
The secretary should observe certain precautions while corresponding with the Banks.
Answer:
The following precautions must be taken by the secretary while corresponding with the banks:

Secretary should give a prompt reply.
Secretary should take care that the letter should not be lengthy.
Unnecessary details should be avoided.
Not to use any harsh or rude words while corresponding with the banker.
Provide true factual updates and clear information about his organization to the bankers.
Thus, the secretary should observe certain precautions while corresponding with the Banks.

Question 3.
The primary functions of Commercial Banks include-Accepting deposits and Lending funds.
Answer:
The main object of a commercial bank is to accept deposits and lending money to customers or account holders:

To encourage the people who have surplus funds.
To encourage the saving habit among the people.
To give support to businessmen for opening a current account.
To encourage people to make regular savings.
To lend loans and advances through various modes i.e. short-term loan, medium-term loan, long term loan, overdraft facility, cash credit facility, and discounting of the bill of exchange, etc.
Thus, the primary functions of Commercial Banks include-Accepting deposits and Lending funds.

Question 4.
The Bank accepts two types of deposits from the public i.e. Demand and Time Deposits.
Answer:

The basic aim of the bank is to pool the excess money to the bank and develop the habit of saving amount people.
Bank accepts deposits in two forms i.e. Demand Deposits and Time deposits.
Demand Deposits include – Current Deposits and Savings Deposits.
Time Deposits includes – Fixed Deposits and Recurring Deposits
Thus, the Bank accepts two types of deposits from the public i.e. Demand and Time Deposits.

Question 5.
There is a difference between Loans and Advances given by the Bank.
Answer:

Bank lends money in two ways – i.e. Loans and Advance.
The loan is granted for a specific period of time against personnel security, gold or silver, and other movable or immovable properties.
Advances is a credit facility provided by the bank to its customers against collateral securities like – shares, Government shares, F.D.R., L.I.C. Policy, Stock of raw materials, or finished goods.
Loans are granted for a longer period while Advances are granted for a shorter period.
Loans may be short-term, medium-term, or long-term while advances are in form of overdraft, cash credit, and discounting of bills.
Thus, there is a difference between Loans and Advances given by the Bank.

Question 6.
Overdraft facility is given only to current depositors.
Answer:
Overdraft is a credit facility allowed to current account holders:

Under an overdraft facility, the bank allows, customers, to withdraw an amount, up to a particular limit.
The collateral securities are usually accepted for an overdraft facility.
The rate of interest charged by commercial banks for overdraft is low.
Overdraft facility is given only to existing current depositors because they have good relations with the Bank.
Thus, an overdraft facility is given only to current depositors.

6. Attempt the following.

Question 1.
Write a letter to the bank for opening a Current Account.
Answer:

PRAGAT KRUSHI SEVA COMPANY LTD.
Registered office: Milind Sally Manjul,
Nashik Pune Highway, Sangamner
CIN: H353558 MH 2019 PLO 227244

Phone: 02425 – 223019
Fax: 02425 – 227230

Website: www.pragatksltd.com
Email: milinadkulkarni@gmail.com

Date: 10th March 2019.

Ref No. BlbRbl212019
The Bank Manager, IDBI Bank,
New Nagar Road,
Jantar Raja Maidan,
Sangamner.

Sub: Opening of Current Account.

Dear Sir,

The Board of Directors of a company have passed a resolution on 3rd March 2019 to open a Current Account in your bank in the name of the company i.e. “PRAGAT KRUSHI SEVA COMPANY LTD.” and to appoint you as the company’s banker.

Please find enclosed herewith the following documents for the purpose of opening the Current Account of our company.

Account opening form duly filled, signed and dated.
Certified copy of Memorandum of Association.
Certified copy of Articles of Associations.
Certified copy of Incorporation Certificate.
Certified copy of Board resolution regarding opening a Current Account.
Specimen signature of two directors Mr. Maithily Kulkarni and Mr. Ajit Godse and the company secretary
Certified copy of the list of present Directors of the company.
Duly filled up Pay-in-slip along with ₹ 5,000 (Rupees Five thousand only) in cash as initial deposit.
Certified copies of PAN and TAN.

Thanking you,

Yours Faithfully,
for PRAGAT KRUSHI SEVA CO. LTD.
(Sign)
Company Secretary.

Encl: As above

Question 2.
Write a letter to the bank to stop the payment of the cheque.
Answer:

AVANI GLASS LIMITED COMPANY
Registered Office: Janata Raja Maidan,
Vidya Nagar, Sangamner.
CIN: B45453 MH 1992 PCL 123272

Phone: 02425 – 227244
Website: www.avaniglass.com

Fax: 02425 – 222340
Email: renukrushna@gmail.com

Date: 15th March 2019

Ref. No. B/PC/1/19-20
The Bank Manager,
New Nagar Road,
Sangamner.

Sub: Stop Payment of Cheque No 303592
Ref: Our Account No 30357090414

Dear Sir,

It is to bring to your notice, to stop payment of the Cheque no. 303592 dated 10th March 2019 of ₹ 75,000 (Rupee Seventy Five Thousand) issued by the company from Current Account no. 30357090414 in favour of Mr. Krushna Chaudhari, Nashik.

The said cheque is reported to be lost by the party. So we kindly request you to stop the payment of the said cheque.

We highly regret the inconvenience caused to you and wishing your kind co-operation in the above matter.

Thanking you,

Yours Faithfully,
for AVANI GLASS LIMITED COMPANY
(Sign)
Company Secretary.

Question 3.
Letter requesting a bank to issue a Letter of Credit.
Answer:

B.K. INDUSTRIES LTD.
Registered Office: 240, Apeksh.
F.C. Road, Pune 4
CIN: B40418 MH 2010PIL 373078

Phone: 020 – 3070901
Fax: 020 – 3145402

Website: www.BKundu.com
Email: unvitkrusha@gmail.com

Date: 25th May 2019

Ref. No. BP/23/19-20
The Bank Manager,
Bank of Maharastra,
F.C. Road,
Pune – 4.

Sub: Issue of Letter of Credit.
Ref: Our Current Account No 020304147911

Dear Sir,

We are pleased to inform you that, we want to import printing machine from America.

As per the quotation received from Mark Industries, America we have to place an order along with a letter of credit.

We, therefore, request you to issue a letter of credit in favor of the said company USD 4,50,0000. This letter may be issued on the basis of the credit balance in our current account and as per the prevailing exchange rate.

Kindly issue the letter of credit and oblige. This will enable us to place an order at an early date.

Thanking you,

Yours Faithfully
for B.K. INDUSTRIES LTD.
(Sign)
Company Secretary.

Question 4.
Write a letter requesting the bank to grant an overdraft facility.
Answer:

JAI MATA GLASS AGENCIES LTD.
Registered Office: 285, M.G. Road,
Dwarka. Nashik.

Phone: 0253 – 27304580
Fax: 0253 – 283048800

Website: jaymata.com
Email: jaymata@gmail.com

Date: 10th January, 2019

Ref. No. BK/7/20-19
The Manager,
RDBI Bank
Dwarka, Nashik.

Sub: Request for overdraft facility
Ref: Account No. 00303540451

Dear Sir,

The Board of Directors in their meeting held on 2nd January 2019 has decided to request you to grant our company an overdraft facility up to ₹ 10 lakhs for a period of 5 months from March 2019 to July 2019.

We are the manufacturer of Tuffen glass and we have a large export order for which we need to have working capital to fulfill our daily needs.

We request you to accept our security of Fixed Deposit worth ₹ 10 lakhs with your bank.
We would also like to bring to your notice that we are being your customer for the last 10 years.
Expecting your early reply in favor of our overdraft facility.

Thanking you,

Yours Faithfully,
for JAI MATA GLASS AGENCIES LTD.
(Sign)
Company Secretary

Activity (Textbook Page No. 168)

Visit a Bank and collect the form of opening a bank account and find out. The detail to be filled in and Documents needed to open an account.
Answer:
Yesterday, I visited the IDBI Bank of India, Sangamer Branch.
I collected the account opening form from Mr. Abhay Kulkarni Bank Officer.
The following are the details to be filled in in the Account opening form.

Branch Name
Date of opening account
Branch Address
Scheme Codes
Account Number
Type of Account
Full name in Capital Letter
Date of Birth
Occupation
PAN
Name of Guardian
Relationship with minor
Operating instruction
Facilities required
Statement of Account through
Other information
Declaration, if any
Specimen signature
Signature

Document required for opening a Bank Account.

Certified copy of Articles of Association and Memorandum of Association.
Certified copy of Board Resolution regarding the opening of a Current Account.
Specimen signature of Directors and Secretary.
List of Directors
Certificate of Incorporation.

Maharashtra State Board 11th Std Secretarial Practice Textbook Solutions Digest

11th Secretarial Practice Chapter 7 Exercise Company Meetings – I Practical Problems Solutions Maharashtra Board

April 1, 2025March 31, 2025 by Bhagya

Company Meetings – I 11th Secretarial Practice Chapter 7 Solutions Maharashtra Board

Balbharti Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 7 Company Meetings – I Textbook Exercise Questions and Answers.

Class 11 Secretarial Practice Chapter 7 Exercise Solutions

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
The intimation to members stating the day, date, time, and place of meeting is known as ______________
(a) quorum
(b) agenda
(c) notice
Answer:
(c) notice

Question 2.
The notice of the general meeting must be sent to all members ______________ clear days before the meeting.
(a) 24
(b) 21
(c) 14
Answer:
(b) 21

Question 3.
The person who presides over the meeting is known as ______________
(a) Secretary
(b) Chairman
(c) Director
Answer:
(b) Chairman

Question 4.
A proxy can vote only in the case of voting by ______________
(a) division
(b) show of hand
(c) poll
Answer:
(c) poll

Question 5.
The appointment of an auditor requires ______________
(a) resolution requiring special notice
(b) an ordinary resolution
(c) a special resolution.
Answer:
(b) an ordinary resolution

Question 6.
A ______________ is the proposal put before the meeting for discussion and decision.
(a) Motion
(b) Resolution
(c) Minutes
Answer:
(a) Motion

Question 7.
The right of casting vote is given to the ______________
(a) Director
(b) Chairman
(c) Secretary
Answer:
(b) Chairman

Question 8.
Minutes must be recorded within ______________ days of the conclusion of the meeting.
(a) 60
(b) 21
(c) 15
Answer:
(c) 15

Question 9.
______________ resolutions are not passed in general meeting.
(a) Ordinary
(b) Special resolution
(c) Resolution by circulation
Answer:
(c) Resolution by circulation

Question 10.
For passing special resolution ______________ majority is required.
(a) 51%
(b) 66%
(c) 75%
Answer:
(c) 75%

Question 11.
For alterations in the Articles of Associations ______________ is required.
(a) a special resolution
(b) an ordinary resolution
(c) a resolution requiring a special notice
Answer:
(a) a special resolution

Question 12.
Provisions about resolutions are contained in ______________ of a company.
(a) Articles of Association
(b) Memorandum of Association
(c) Prospectus
Answer:
(a) Articles of Association

Question 13.
When a poll is demanded it must be taken within ______________ hours.
(a) 48
(b) 36
(c) 12
Answer:
(a) 48

1B. Match the pairs.

Question 1.

Group ‘A’	Group ‘B’
(a) Chairman	(1) Proposal put before the meeting
(b) Quorum	(2) Casting vote
(c) Motion	(3) Amendment
(d) Minutes	(4) Minimum number of members required for a valid meeting
(e) Notice	(5) Voting
(f) Proxy	(6) Maximum number of members required for a valid meeting
	(7) Record of a meeting
	(8) Accepted motion
	(9) Intimation stating agenda, day, date, time and place of meeting
	(10) Representative of a member
	(11) Representative of a director
	(12) Formal motion

Answer:

Group ‘A’	Group ‘B’
(a) Chairman	(2) Casting vote
(b) Quorum	(4) Minimum number of members required for a valid meeting
(c) Motion	(1) Proposal put before the meeting
(d) Minutes	(7) Record of a meeting
(e) Notice	(9) Intimation stating agenda, day, date, time and place of meeting
(f) Proxy	(10) Representative of a member

1C. Write a word or a term or a phrase which can substitute each of the following statements.

Question 1.
The person who signs the minutes of the meeting.
Answer:
Chairman

Question 2.
A method of voting where members can vote in proportion to the number of shares held.
Answer:
Voting by-poll

Question 3.
A resolution passed by simple majority.
Answer:
Ordinary Resolution

Question 4.
A resolution passed by a 3/4 majority.
Answer:
Special Resolution

Question 5.
A company officer who is required to draft the minutes of the meeting.
Answer:
Secretary

Question 6.
A person who conducts the proceedings of the meeting.
Answer:
Chairman

1D. State whether the following statements are True or False.

Question 1.
Minutes are prepared before the meeting.
Answer:
False

Question 2.
A maximum number of members required to attend the meeting is called a Quorum.
Answer:
False

Question 3.
Meetings are held only to review the progress of the company.
Answer:
False

Question 4.
Chairman has the right to conduct the meeting.
Answer:
True

1E. Find the odd one.

Question 1.
Next Business Motion, Previous Question Motion, Special Resolution.
Answer:
Special Resolution

Question 2.
Ordinary Resolution, Resolution requiring special notice, Substantive motion.
Answer:
Substantive Motion

1F. Complete the sentences.

Question 1.
The authority who can convene the general meeting of shareholders is ______________
Answer:
Board of Director

Question 2.
The advance intimation about the day, date, time, etc. of a meeting sent to the members is called as ______________
Answer:
Notice

Question 3.
The minimum number of members required to be present at a meeting is called as ______________
Answer:
Quorum

Question 4.
A person who attends a general meeting and votes on behalf of a member is called as ______________
Answer:
Proxy

Question 5.
A proposal put before a meeting for consideration and adoption is called as ______________
Answer:
Motion

Question 6.
A formal and final decision taken in a meeting is called as ______________
Answer:
Resolution

Question 7.
The written records of proceedings of a meeting is called as ______________
Answer:
Minutes

1G. Select the correct option from the bracket.

Question 1.

Group ‘A’	Group ‘B’
(1) Voting by-poll	…………………
(2) ………………………	Special resolution
(3) Substantive Motion	…………………..
(4) ………………………	Chairman

(Presides over the meeting, Proxy, an amended Motion, 3/4 or 75% majority)
Answer:

Group ‘A’	Group ‘B’
(1) Voting by-poll	Proxy
(2) 3/4 or 75% majority	Special Resolution
(3) Substantive Motion	an amended Motion
(4) Presides over a Meeting	Chairman

1H. Answer in one sentence.

Question 1.
What are Minutes?
Answer:
Minutes are the written records of the proceedings of the meeting.

Question 2.
What is Notice?
Answer:
Notice is an advance intimation given by the company informing the day, date, time, and place of the meeting.

Question 3.
What is Ordinary Resolution?
Answer:
A resolution that is passed by a simple majority i.e., 50% or more is called Ordinary Resolution.

Question 4.
What is the agenda?
Answer:
Agenda is a list of items to be discussed or things to be done at the meeting.

Question 5.
Who is Chairman?
Answer:
A chairman is a person who presides over a meeting.

Question 6.
What is the point of order?
Answer:
A point of order is an objection or question raised by any member regarding irregularity in the proceedings of the meeting.

1I. Correct the underlined word and rewrite the following sentences.

Question 1.
Minutes are prepared before the meeting.
Answer:
Minutes are prepared after the meeting.

Question 2.
Resolution is a proposal put before a meeting for discussion.
Answer:
Motion is a proposal put before a meeting for discussion.

Question 3.
Polling papers are used for voting by show of hands.
Answer:
Polling papers are used for voting by-poll.

Question 4.
A Motion is a final decision taken in the meeting.
Answer:
A Resolution is a final decision taken in the meeting.

Question 5.
The agenda is prepared after the meeting.
Answer:
The agenda is prepared before the meeting.

1J. Arrange in proper order.

Question 1.
(a) Drafting Minutes
(b) Sending notice
(c) Confirming quorum
Answer:
(a) Sending Notice
(b) Confirming Quorum
(c) Drafting Minutes

Question 2.
(a) Motion
(b) Resolution
(c) Voting
Answer:
(a) Motion
(b) Voting
(c) Resolution

2. Explain the following terms/concepts:

Question 1.
Ordinary Resolution
Answer:
Ordinary Resolution (Section 114) A resolution that is passed by a simple majority i.e. 50% or more is called ordinary resolution. More than 50% of the votes should be in favour of the motion. An ordinary resolution need not be submitted to the Registrar of Companies. The notice of the meeting need not require to explain the particulars of an ordinary resolution.
Example:

Approval of Director’s report and Auditor report
Alteration of share capital
Declaration of dividend
Approval of final accounts
Election of director
Appointment of Secretary, Auditor, etc.

Question 2.
Agenda
Answer:
Agenda is a list of items to be discussed or things to be done or the business to be transacted at the meeting. It is sent along with the notice. A secretary prepares the agenda in consultation with the Chairman. The business at the meeting is transacted according to the order in which it appears in the agenda, routine matter first followed by special matters. The agenda is prepared as per the nature and the scope of the meeting.

Question 3.
Quorum
Answer:
Quorum (Section 103) is the minimum number of members required to be present for transacting a valid business. Without quorum proceeding of the meeting becomes invalid. The quorum should be present throughout the meeting i.e. from beginning till the end of the meeting. Secretary must check the quorum before the commencement of the meeting.

Question 4.
Proxy
Answer:
A proxy is a person, who can attend and vote at the meeting on behalf of an absent member. Every member of a company has a statutory right to appoint a proxy. When a member is not in a position to attend the meeting, he can appoint his representative. The representative of an absent member is called a Proxy. He has no right to speak at the meeting.

Question 5.
Amendment
Answer:
An amendment is any alteration proposed by a member to the original motion when a motion is under discussion. Amendments are generally moved to alter original motion by

Adding some new words or
Deleting some words or
Replacing some words or
Changing the position or place of words.

The amendment should be relevant to the main motion and it must not alter the original motion.

Question 6.
Motion
Answer:
A motion is a proposal put before the meeting for discussion and decision. A person who proposes a motion is called a proposer or a mover of a motion. A motion is subject to alteration before it is adopted by the meeting.

Question 7.
Special Resolution
Answer:
The resolution which is passed by a special majority is called a Special resolution. It is passed by 3/4th or 75% majority. The purpose of passing this resolution should be mentioned in the notice of the meeting. A special resolution is passed in general meetings only. Notice of special resolution has to be given to the members 21 clear days before the meeting. A copy of the special resolution must be filed with the Registrar of companies through e-filing on the MCA portal within 30 days of passing the resolution.
Examples:

Change in the name of the company (Section 13).
Change in the registered office of the company from one state to another (Section 12).
Alteration in the object clause of the company.
Reduction in the authorized share capital of the company.
Alteration in the Articles of Association of the company (Section 14)

Question 8.
Notice
Answer:
Proper notice must be given to a proper person for a valid meeting. Notice is an advance intimation given by the company informing the day, date, time, and place of meeting and business to be transacted at the meeting. It is given in writing to all those who are entitled to receive it. In case of general meeting, 21 days clear notice before meeting and 7 days in case of the Board meeting.

Question 9.
Minutes
Answer:
Minutes are the written records of proceedings of a meeting. It is a summary of all discussions and decisions taken at the meeting. It is a concise and accurate record of business transacted at the meeting. Minutes are prepared by the secretary within 15 days after the meeting. Minutes are recorded in minutes book and written in the past tense. After preparing minutes, it should be passed in consecutive meetings. Minutes book for General meetings and Board meetings are maintained separately.

Question 10.
Point of order
Answer:
A point of order is a question or objection raised by any member when he wants to point out an irregularity in the proceedings of the meeting. It is raised to draw the attention of the chairman.
The point of order can be raised on the following points:

Absence of quorum
Breach of any rule related to meeting
Misbehavior of any member
Unparliamentary or Improper language used by any member.

3. Study the following case/situation and express your opinion.

1. XYZ Ltd Co. sent notice of its Annual General meeting to its members. In the meeting, a resolution is to be passed on altering the Articles of Association.

Question (a).
Should agenda also be sent with Notice?
Answer:
Yes, the agenda should be sent along with the notice.

Question (b).
What type of resolution is needed to alter the Articles?
Answer:
A special resolution is needed to alter the Articles of Association.

Question (c).
Should the resolution for altering articles be filed with the Registrar of Companies?
Answer:
A copy of the special resolution passed for altering Articles of Association must be filed with the Registrar of Companies within 30 days of its passing.

2. A General meeting of a public limited company is to be held. State the provision of quorum for-

Question (a).
meeting of the company which has less than 1000 members?
Answer:
The quorum for less than 1000 members is 5 members.

Question (b).
meeting of the company which has more than 5000 members?
Answer:
The quorum for more than 5000 members is 30 members.

Question (c).
meeting of the company which has 2500 members?
Answer:
The quorum for 2500 members is 15 members.

3. Mr. P is elected as chairman of the General Meeting. Please advise him on the following matters:

Question (a).
What should be done if the votes cast in favour and against the motion are equal?
Answer:
A chairman of the general meeting (Mr. P) can exercise casting votes in case of a tie in votes.

Question (b).
How many votes can a member cast under the poll method?
Answer:
Under the poll method, a member can cast his votes as per the number of shares held by him. ‘One shares One vote’ is a rule.
Eg. If Mr. A has 100 shares, he can cast 100 votes.

Question (c).
What should Mr. P do if any point of order is raised by a member?
Answer:
If the point of order is raised, Mr. P has to stop discussion on an original motion under discussion and give his ruling/decision immediately on point of order.

4. Distinguish between the following.

Question 1.
Agenda and Minutes
Answer:

Basis	Agenda	Minutes
1. Meaning	Agenda is a list of ‘the things to be done or ‘business to be transacted at the meeting.	Minutes are the record of the business transacted, resolutions passed and decisions arrived at by the meeting.
2. Contents	Agenda, generally contains ‘what is to be done, motions, etc.	Minutes generally contain ‘what has been done, resolution, etc.
3. When Prepared	The agenda is prepared before the meeting.	Minutes are prepared after the conclusion of the meeting.
4. Tense	It is written in the future tense.	It is always in the past tense.
5. Importance	Agenda enables the members to know, what business the meeting is going to transact. The Chairman also can conduct the meeting as per the agenda.	Minutes are evidence of the decisions taken at a meeting. Even an absent member can know about the proceedings of the meeting.
6. Legal Status	Agenda has no legal importance. The Companies Act has not provided any rules regarding the drafting of an agenda.	Minutes are the legal evidence of resolutions passed at the meeting. It provides abstract proof of the proceedings at the meeting. It can even be produced in the court of law as a legal document.
7. Approval	The agenda is prepared by the secretary and approved by the Chairman, but no approval of the members is required.	Minutes are prepared by the secretary and approved by the members, finally, it is confirmed by the Chairman.
8. Alterations	Alterations in the order of items in an agenda can be made if the members attending the meeting agree to it.	Minutes once recorded in the minute book, signed by the Chairman, and confirmed by the members cannot be altered.

Question 2.
Motion and Resolution
Answer:

Basis	Motion	Resolution
1. Meaning	Motion is a written proposal placed before the meeting for discussion and decision.	Resolution is a duly approved and accepted motion in the meeting.
2. Amendment	Motion can be amended before it is put to vote.	Resolution once passed, cannot be amended.
3. Recording	A motion is not recorded in the minute’s book of a meeting.	All resolutions must be recorded in the minute book of a meeting.
4. Filing	The motion need not be filed with the Registrar of Companies.	Special resolutions are required to be filed with the Registrar of the Companies within 30 days of the date of its passing.
5. Withdrawal	It may be withdrawn by mover before it is put to vote.	Once it is approved, it cannot be withdrawn.
6. Evidence	It can not be used as evidence.	It can be used as legal evidence.
7. Types	Motion can be (a) Formal motion (b) Substantive motion	Resolution can be (a) Ordinary resolution (b) Special resolution

Question 3.
Voting by show of hands and Voting by-poll.
Answer:

Basis	Voting by show of hands	Voting by-poll
1. Meaning	Voting by show of hands is a method of voting in which members cast their votes by raising their hands.	Voting by-poll is a method in which every member is given a paper to record their votes according to the number of shares held by them.
2. Secrecy	Votes are given openly, hence secrecy is not maintained.	Votes are recorded on voting papers, hence secrecy is maintained.
3. Voting by Proxy	Proxies are not allowed to vote under this method.	Proxies can vote only in this method.
4. No. of Votes	‘One man One vote’ is the principle of voting.	‘One share One vote’ is the principle of voting.
5. Effect	The decision by show of hands is canceled, if the poll is demanded.	The decision taken by-poll is final and it cannot be canceled.
6. Nature	It is a democratic method of voting.	It is a capitalistic method of voting.

5. Answer in brief.

Question 1.
State the importance of company meetings.
Answer:
The term meeting is derived from the Latin word ‘Maeta’ means ‘face to face.
A meeting may be defined as ‘Any gathering or assembly or coming together of two or more persons for transacting some lawful business of a common concern.’ – P.K.Ghosh.

Importance of Company Meetings:

Members get the opportunity to come together and discuss the work and progress of the company.
Minutes of the last meeting is read, which enables the absent and present member to get a clear idea about the matters discussed in the previous meeting.
It enables the management to discuss and decide about their policies, plan, programs, etc, and its implementation.
Problems faced by the company can be discussed at the meeting and a decision can be arrived.
Legal formalities related to convening and conducting meetings of the company are fulfilled by conducting meetings.
Appointment of directors and auditors, declaration of dividend, approvals of the annual report, financial statements, auditors report, etc. can be done in the meetings.
Strict action can be taken against defaulters in the meeting.

Question 2.
State the legal provisions regarding Proxy.
Answer:
Legal Provisions regarding Proxy are as follows:

Appointment: Any member of a company entitled to attend and vote at the meeting shall be entitled to appoint a proxy to attend and vote at the meeting on his behalf. A minor cannot be appointed as a proxy. The proxy cannot be appointed for the Board Meeting. The appointment of a proxy is valid for an adjourned meeting.
Right: A proxy is not allowed to speak at the meeting. The proxy can vote only on resolutions passed by voting by-poll.
Membership: A person appointed as a proxy need not be a member of the company.
Proxy form: A member appointing a proxy must submit a duly completed proxy form in the registered office of the company at least 48 hours before the meeting.
Inspection: A member can inspect any proxy form by giving not less than three days’ notice to the company.

Question 3.
When can the point of order be raised?
Answer:
A point of order is a question or objection raised by any member when he wants to point out an irregularity in the proceedings of the meeting. It is raised to draw the attention of the chairman.
The point of order can be raised on the following points:

Absence of quorum
Breach of any rule related to meeting
Misbehaviour of any member
Unparliamentary or improper language used by any member.

When the point of order is raised, discussion on the original motion is stopped for some time. The chairman gives his decision on point of order. The decision given by the chairman is final and binding on the meeting.

Question 4.
Explain any four methods of Voting?
Answer:
Methods of Voting:
(i) Voting by Voice:
In this method, the members are requested to say ‘Yes’ if they favour the motion or say ‘No’ if they are against the motion. The decision is taken on the basis of the volume of voice. This method is rarely used. The volume of voice may not give a clear and correct idea about the majority of votes.

(ii) Voting by Division:
In this method, present members are divided into two groups. Members in favour and those against the motion are asked to go to different rooms. Then the sense of the meeting is ascertained by counting and the chairman declares the result.

(iii) Voting by show of Hands:
This method is used in the general meetings of a company. After the discussion on the motion, the Chairman requests the members to raise their hands in favour or against the motion. The chairman declares the result by counting a number of hands in favour or against the proposal. ‘One man One vote’ is the principle.

(iv) Voting by Poll:
The poll can be demanded after the declaration of result by show of hands. Under this method, each member can vote in proportion to the number of shares held by him. ‘One share One vote’ is the principle. Polling papers are given to members and proxies for recording their votes. The result of the poll is final and not to be challenged.

Question 4.
State the importance of Minutes.
Answer:
The importance of Minutes are as follows:

Official record: Minutes provide a ready reference to all the activities related to the meeting. It is the most important, official, and authentic record on which people can trust.
Evidence: Minutes can be used as prima facie evidence in a court of law.
Future reference: Minutes is a permanent record. It can be used for taking future managerial decisions.
Legal provisions: Minutes are prepared in order to comply with the provisions of the Companies Act and Secretarial Standard.
Information to absent members: Minutes help the absent members to know the proceedings of the meeting, as it is not always possible for everyone to attend the meeting.
Reminder: The matters discussed at the meeting are noted down in minutes. It acts as a reminder to the concerned people.
Information about resolution: The motion and discussion on the motion are reflected in the resolution. Interested parties can always refer to the text of a resolution when there is contradiction or confusion.
Inspection of Minutes: As per the Companies Act, Minutes Book should be kept at the registered office of the company and every member has right to inspect the Minutes book at the general meetings.

6. Justify the following statements.

Question 1.
The meeting must be duly convened and properly constituted.
Answer:

A meeting is defined as Any gathering assembly or coming together of two or more persons for the transaction of some lawful business of the common concern.
A meeting becomes valid when it is duly convened and properly constituted.
A meeting should be convened by proper authority.
It must be convened as per the provisions of the Companies Act, 2013.
Notice and Agenda of the meeting must be given 21 clear days before the meeting to all those who are entitled to receive it.
Thus, meetings must be duly convened and properly constituted.

Question 2.
Chairman is responsible for the proper conduct of meetings.
Answer:

A Chairman is a person who presides over a meeting.
There should be a proper person in the chair i.e. chairman to conduct the proceedings of the meeting smoothly, fairly, and properly.
A chairman should maintain overall discipline in the meeting.
A chairman has to maintain order at the debate and decide the priority of speakers so that members can get a chance to express their views.
A chairman should give his ruling on point of order at the earliest.
A chairman can initiate an order for voting and declare the result of voting.
A chairman must prevent improper behaviour, if any, by the member and prevent the use of unparliamentary language.
Thus, Chairman is responsible for the proper conduct of meetings.

Question 3.
Motion can be amended.
Answer:

A motion is a proposal put before the meeting for discussion and decision.
The amendment is an alteration proposed by a member to the original motion under discussion.
Amendment can be done by adding some new words or deleting some words in the original motion.
Amendment can be done by replacing some words or by changing the position of words to the original motion.
The amendment should be relevant to the original motion.
The amendment is done to make the original motion more effective and meaningful.
Amendment can be accepted or rejected. If accepted, it is considered for discussion. If approved by the meeting, it is incorporated in the original motion.
Thus, the motion can be amended.

Question 4.
The proxy can not speak in the meeting.
Answer:

A proxy is a representative of a member.
A proxy can attend and vote on behalf of an absent member.
If a member is not in a position to attend the meeting, he can appoint a proxy on his behalf.
A proxy need not be a member of the company.
A minor cannot be appointed as a proxy.
A proxy has no right to speak at the meeting.
A proxy can vote only under the poll method.
A member appointing a proxy must submit the proxy form in the registered office of the company at least 48 hours before the meeting.
Thus, Proxy can not speak in the meeting.

Question 5.
Notice is issued to members for a meeting along with the agenda.
Answer:

Notice is an advance intimation given by the company informing the day, date, time, and place of the meeting.
Agenda is given along with notice so that members can come well prepared for the meeting.
Members come to know about the matters to be discussed at the meeting.
If a member is not in a position to attend the meeting, he can appoint a proxy.
Member can advise his proxy to vote on certain matters.
Thus, a Notice is issued to members for a meeting along with the agenda.

7. Answer the following questions.

Question 1.
Explain the powers and duties of the chairman.
Answer:
A chairman is a person who presides over a meeting. There should be a proper person in the chair i.e. chairman to conduct the proceedings of the meeting smoothly, fairly, and properly.

Powers of Chairman:

To maintain order and conduct the meeting properly.
To maintain order at the debate.
To decide the priority of speakers.
To prevent improper behaviour and unparliamentary language.
To adjourn the meeting.
To exercise a casting vote.
To declare the result of the voting.
To give a ruling on point of order.

Duties of Chairman:

To see that the meeting is duly convened and properly constituted.
To see that the meeting is held according to the rules.
To see that the items are discussed as per the order of the agenda.
To maintain overall discipline in the meeting.
To give a fair chance to members to express their views.
To declare the result of voting.
To check and sign minutes book.
To act in the best interest of the company.

Question 2.
Explain the different methods of voting.
Answer:
Different methods of voting are as follows:
(i) Voting by voice:
In this method, the members are requested to say “Yes’ if they favour the motion or say ‘No’ if they are against the motion. The decision is taken on the basis of the volume of voice. This method is rarely used. The volume of voice may not give a clear and correct idea about the majority of votes.

(ii) Voting by division:
In this method, present members are divided into two groups. Members in favour and those against the motion are asked to go to different rooms. Then the sense of the meeting is ascertained by counting and the chairman declares the result.

(iii) Voting by ballot:
Under this method, every member entitled to vote is asked to record the vote on a ballot paper and deposit it in the ballot box. The votes are counted and the result is declared. This method ensures secrecy in voting.

(iv) Voting by show of hands:
This method is used in the general meetings of a company. After the discussion on the motion, the Chairman requests the members to raise their hands in favour or against the motion. The chairman declares the result by counting a number of hands in favour or against the proposal. ‘One man One vote’ is the principle.

(v) Voting electronically:
The Central Government may prescribe certain companies for having compulsory electronic voting in general meeting. Members may exercise his right to vote by electronic means.

(vi) Voting by postal ballot:
The Central Government may prescribe certain companies for having voting by postal ballot. Ballot papers are sent by post to members.

(vii) Voting by Poll:
Poll can be demanded after the declaration of result by show of hands. Under this method each member can vote in proportion to the number of shares held by him. ‘One share One vote’ is the principle. Polling papers are given to members and proxies for recording their votes. The result of poll is final and not to be challenged.

Question 3.
Explain the types of resolution.
Answer:
Types of Resolution:
(i) Ordinary Resolution:
A resolution which is passed by simple majority is called ordinary resolution. More than 50% of the votes should be in favour of motion. An ordinary resolution need not be submitted to the Registrar of Companies. The notice of the meeting need not require to explain the particulars of an ordinary resolution.

Examples:

Approval of Directors report and Auditor report.
Alteration of share capital
Declaration of dividend, etc.

(ii) Special Resolution:
The resolution which is passed by special majority is called as Special resolution. It is passed by 3/4th or 75% majority. The purpose of passing this resolution should be mentioned in the notice of the meeting. A special resolution is passed in general meeting only. Notice of special resolution has to be given to the members 21 clear days before the meeting. A copy of special resolution must be filed with the Registrar of Companies through e-filing on MCA portal within 30 days of passing resolution.

Examples:

Change in the name of the company.
Change in the registered office of the company from one state to another.
Alteration in the object clause of company, etc.

(iii) Resolution requiring special notice:
Some resolutions require special notice as per the companies Act or Articles of Association of the company, hence such resolutions are called resolution requiring special notice. Special Notice resolution may be ordinary or special resolution. A proposer of a motion has to give a special notice of 14 days to the company. The company should then give a notice of that resolution to all members atleast 7 days before the meeting.

Examples:

Resolution to appoint a person as an auditor other than a retiring auditors.
A resolution providing that a retiring auditor shall not be reappointed.
Resolution to appoint director other than retiring director, etc.

(iv) Resolution requiring registration:
Resolution which are required to be registered with the Registrar of Companies are called as resolution requiring registration. Resolution should be filed with Registrar within 30 days of its passing.

Examples:

All special resolutions.
Resolution made by Board of Directors regarding appointment or re-appointment of Managing director.
Resolution by members regarding dissolution of the company, etc.

(v) Resolution by Circulation:
When directors have to take important and urgent decisions and do not have a sufficient time to call a meeting, then a draft resolution is prepared and forwarded to all directors to pass resolution. It is called as resolution by circulation.

Activity: (Textbook Page No. 113)

Prepare an agenda for a meeting to discuss holding of Annual Day.
Answer:

AGENDA
Agenda for “Utsav – 2019”.
Annual day of Reliable Junior College, Mahim.

To discuss the date, venue and time for Utsav – 2019.
To decide and invite Chief guest for innaguration.
To set up the various committees – Cultural Committee, Welcoming Committee, Refreshment Committee, Security Committee, Stage Committee.
To assign the responsibilities to the various committees.
To issue special passes for the VIP’s and guest.
To fix the budget for the annual day.
To decide the vendor for Momentos and Medals.

Maharashtra State Board 11th Std Secretarial Practice Textbook Solutions Digest

11th Secretarial Practice Chapter 9 Exercise Business Communication Skills of a Secretary Practical Problems Solutions Maharashtra Board

April 1, 2025March 31, 2025 by Bhagya

Business Communication Skills of a Secretary 11th Secretarial Practice Chapter 9 Solutions Maharashtra Board

Balbharti Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 9 Business Communication Skills of a Secretary Textbook Exercise Questions and Answers.

Class 11 Secretarial Practice Chapter 9 Exercise Solutions

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
Business communication is concerned with ____________ activities.
(a) economic
(b) business
(c) social
Answer:
(b) business

Question 2.
Written communication is a ____________ record.
(a) permanent
(b) temporary
(c) unauthorised
Answer:
(a) permanent

Question 3.
E-mail is ____________ mode of communication.
(a) fastest
(b) slowest
(c) costliest
Answer:
(a) fastest

Question 4.
A unique internet address of website is known as ____________
(a) World Wide Web
(b) Uniform Resource Locater
(c) .com
Answer:
(b) Uniform Resource Locater

Question 5.
____________ is an organised statement of facts.
(a) Report
(b) Notice
(c) Heading
Answer:
(a) Report

Question 6.
There should be proper ____________ between words, lines and between paragraphs.
(a) margin
(b) typing
(c) spacing
Answer:
(c) spacing

Question 7.
____________ refers to use of minimum words.
(a) Courtesy
(b) Conciseness
(c) Correctness
Answer:
(b) Conciseness

Question 8.
A letter without ____________ is invalid.
(a) ‘You’ attitude
(b) signature
(c) clarity
Answer:
(b) signature

1B. Match the pairs.

Question 1.

Group ‘A’	Group ‘B’
(a) Twitter	(1) Hearing and understanding
(b) Consideration	(2) Personable
(c) Active listening	(3) Harsh, rude words
(d) Body language	(4) Social Media
(e) Courtesy	(5) Non-verbal communication
	(6) Blog
	(7) ‘You’ attitude
	(8) Empathy
	(9) SMS
	(10) Politeness

Answer:

Group ‘A’	Group ‘B’
(a) Twitter	(4) Social Media
(b) Consideration	(7) ‘You’ attitude
(c) Active listening	(1) Hearing and understanding
(d) Body language	(5) Non-verbal communication
(e) Courtesy	(10) Politeness

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
Process of communication, conveying a message in spoken form.
Answer:
Verbal communication

Question 2.
A set of interconnected web pages located on a single web domain.
Answer:
Website

Question 3.
Part of a business letter that introduces the sender to the receiver.
Answer:
Heading

Question 4.
A written summary of the business transacted at the meeting.
Answer:
Minutes

Question 5.
Part of a letter that contains the name and address of the sender.
Answer:
Heading or Letterhead

Question 6.
Audio-Visual means of electronic communication.
Answer:
Video conference

1D. State whether the following statements are True or False.

Question 1.
Notice is a written summary of business transacted at a meeting.
Answer:
False

Question 2.
Written communication provides permanent records.
Answer:
True

Question 3.
Active listening is essential for effective communication.
Answer:
True

Question 4.
The inside address gives the name and address of the sender.
Answer:
False

Question 5.
A letter without a date is incomplete and invalid.
Answer:
True

Question 6.
The reference number shows the purpose of the letter.
Answer:
False

Question 7.
Coherence refers to the logical arrangement of the contents of a letter.
Answer:
True

Question 8.
A letter should have minimum folds.
Answer:
True

1E. Find the odd one.

Question 1.
Paper, Margin, Typing, Courtesy
Answer:
Courtesy

Question 2.
Clarity, Courtesy, Spacing, Correctness
Answer:
Spacing

Question 3.
Date, Inside Address, Conciseness, Subject
Answer:
Conciseness

1F. Complete the sentences.

Question 1.
When communication is done through Reports, Letters, Circulars, etc it is called as ____________
Answer:
written communication

Question 2.
Proper arrangement of different parts of business letter is called as ____________
Answer:
layout

Question 3.
The part of the letter which contains the name and address of the receiver of the letter is called as ____________
Answer:
inside address

1G. Select the correct option from the bracket.

Question 1.

Group ‘A’	Group ‘B’
(1) You Attitude	…………………………
(2) Conciseness	………………………..
(3) ………………….	Complete information
(4) …………………	Polite language

(Minimum words, Completeness, Courtesy, Consideration)
Answer:

Group ‘A’	Group ‘B’
(1) You Attitude	Consideration
(2) Conciseness	Minimum words
(3) Completeness	Complete Information
(4) Courtesy	Polite language

1H. Answer in one sentence.

Question 1.
Name the type of communication in which words are not used.
Answer:
Non-verbal communication is the type of communication in which words are not used.

Question 2.
Name the type of communication in which communication is done in spoken form.
Answer:
Verbal communication is the type of communication in which communication is done in spoken form.

Question 3.
Name the type of communication which can be re-read.
Answer:
Written communication is the type of communication that can be re-read.

1I. Correct the underlined word and rewrite the following sentences.

Question 1.
Consideration means the letter should be in a logical sequence.
Answer:
Coherence means the letter should be in a logical sequence.

Question 2.
Completeness means the use of minimum words.
Answer:
Conciseness means the use of minimum words.

Question 3.
Complimentary close contains greetings to the reader of the letter.
Answer:
Salutation contains greetings to the reader of the letter.

1J. Arrange in proper order.

Question 1.
(a) Heading
(b) Complimentary close
(c) Subject
Answer:
(a) Heading
(b) Subject
(c) Complimentary close

Question 2.
(a) Enclosure
(b) Body of letter
(c) Date
Answer:
(a) Date
(b) Body of letter
(c) Enclosure

2. Explain the following terms/concepts.

Question 1.
Communication
Answer:

Communication is derived from the Latin term ‘communis’ that means ‘common’- ‘Shared by all’.
Communication is an exchange of facts, ideas, opinions, or emotions by two or more persons.
Communication is a two-way process where the thoughts feelings and opinion is transmitted.
Effective communication is when a message is conveyed by the sender and received by the receiver exactly the same it was intended.
It is giving or exchanging information, signals, or messages by talk, gestures, or writing.

Question 2.
Business Communication
Answer:

Business communication is the branch of general communication especially concerned with business activities.
It is a process through which information, facts, ideas, orders, decisions, etc. are exchanged between the person associated with the business.
The success of the business enterprise depends largely upon good communication.
Ineffective communication may cause loss of money and even goodwill of a business.
Thus, business communication relating to trade, law, management, finance, etc. of a business enterprise is termed as business communication.

Question 3.
Written Communication
Answer:

The exchange of information or ideas in a written form is known as written communication.
Written communication includes reports, letters, circulars, etc.
Written communication is the most important and the most effective mode of business communication.
The words written should convey specific meaning and should not confuse the reader.
Letters, memos, notices, circulars, reports, minutes are some common types of written communication.

Question 4.
Business Correspondence
Answer:

Communication through the exchange of letters is known as correspondence.
A businessman who writes letters in his day-to-day transactions is called business correspondence.
Business correspondence is a written communication between two parties.
Business correspondence takes place because the place of production and place of consumption is not the same.

Question 5.
Report
Answer:

A report is an organized statement of facts or opinions leading to some conclusion with or without some recommendations.
It is a systematic presentation of facts on a specific topic.
Some reports are made as per the Companies Act and some are prepared as per the requirement of the company.
A report may be prepared by an individual or by a committee.

Question 6.
Minutes
Answer:

It is a written summary of the business transacted at the meeting.
It is a concise and accurate official record of the discussion and decision at company meetings.
It can be used for future reference.
Minutes is the official record of the meeting so it is necessary to draft minutes in a proper format.
Minutes should be prepared by the secretary within 15 days of a meeting.
It is always written in the past tense.
Minutes are prepared by the secretary, confirmed by a member, signed by a chairman, and countersigned by the secretary.

3. Study the following case/situation and express your opinion.

1. Mr. Rahul is the secretary who has been asked by the Managing Director to inform a director about a decision taken in a board meeting in which he was absent. Which aspect of essentials of a good business letter he follows:
(Clarity, conciseness, coherence, courtesy, completeness, correctness)

Question (a).
When he is giving the required information in a very short and brief manner?
Answer:
Clarity and conciseness

Question (b).
When he is using courteous words so as to be polite?
Answer:
Courtesy

Question (c).
When he is giving the entire information about the meeting in a proper manner?
Answer:
Coherence, completeness, and correctness.

4. Answer in brief.

Question 1.
Explain any four essentials of effective communication.
Answer:

Communication is an exchange of facts, ideas, opinions, or emotions by two or more persons.
Effective communication is when a message is conveyed by the sender and received by the receiver exactly the same it was intended.
Being able to communicate effectively is an essential skill.

The following are the essentials skills for effective communication:
(a) Listening:

One of the most important aspects of business communication is being a good listener.
Effective communication requires active listening.
Active listening involves hearing and understanding a person.

(b) Body language:

Body language is an important communication tool.
Body language should convey words.
Tone, hand gestures, and ensuring eye contact are involved in body language.

The message should be conveyed by using as few words as possible, whether in person or through telephone, or e-mail.
The message should be clear concise and direct.
Excessive words should be avoided.
Thought should be given to the message before being conveyed in order to avoid confusion.

(d) Confident:

For effective communication, confidence is needed.
Making eye contact but having a friendly tone always shows confidence.

Question 2.
State any four essentials of a good business letter.
Answer:

A business letter is a type of written communication written by the secretary.
Good letter writing is important for maintaining the image of the business.
It helps in understanding the objective of the content and helps to make the correct decision.

A business letter should possess the following qualities:
(a) Clarity:

The message of the letter must be clear.
Simple and common words are to be used.
Technical and short forms should be avoided.
Names and figures should be correct and clear.

(b) Conciseness:

The letter should be brief.
Minimum words are to be used.
Unnecessary and irrelevant information should be avoided.
A brief letter saves time for the reader.

A letter must give complete information to the reader.
The letter should cover all possible facts related to the subject matter.
An incomplete letter does not achieve the desired results.

(d) Courtesy:

Courtesy means the language of the letter must be polite and kind.
A courteous letter gets a favorable response from the reader.
Harsh, rude words, insulting remarks must be avoided.

5. Justify the following statements.

Question 1.
Written communication is very useful to the organization.
Answer:

The exchange of information or ideas in a written form is known as written communication.
Written communication is the most important and effective mode of business communication.
It provides us with records, references, etc. on which important decisions are taken.
It provides legal defense to the organization through records, letters, instructions, etc.
It provides uniformity of policy and procedures and builds proper guidelines for the working of the organization.
It builds an image of the company.
It leads to accuracy and dependability.
Responsibility can be easily assigned through written communication.
It is permanent in nature.
Thus, written communication is very useful for the organization.

Question 2.
Social media network is very useful to the business.
Answer:

Social media are online interactive groups created using advanced mobile and web-based technologies.
From the business point of view, it provides a great opportunity to interact with the public and communicate about their product and services.
It helps in developing loyalties.
It builds a strong relationships with the audience and consumers.
Social networking makes relationships more personal.
Business can be promoted more effectively through advertising.
Thus, social media network is very useful to the business.

Question 3.
Listening is the most important aspect of effective communication.
Answer:

The most important aspect of effective communication is being a good listener.
Effective communication requires active listening.
Active listening involves hearing and understanding what a person is saying to you.
Without the ability to listen effectively, messages are generally misunderstood.
Good listening skills can lead to better customer satisfaction.
It can increase productivity with fewer mistakes.
Increased sharing of information will lead to more creative and innovative work.
Thus listening is the most important aspect of communication.

6. Answer the following questions.

Question 1.
State the merits of written communication.
Answer:

When the exchange of information or ideas is in a written form is known as written communication.
Written communication includes reports, letters, circulars, etc.
Written communication is the most important and the most effective of any mode of business communication.
The words written should contain specific meaning and should not confuse the reader.
Letter, memos, notices, circulars, minutes are some common types of written communication.

The following are the merits of written communication:
(a) Accurate and precise:

Written communication is drafted with great care.
The communicator has to be accurate and factual as it is open to verification.
Therefore written communication focuses greater on accuracy and precision.

(b) Re-read many times:

The receiver of written communication can read the message any time again in the future.
He can re-read it till it is properly understood by him.

(c) Permanent record:
Written communication becomes a permanent record of the organization and can prove very useful for future reference.

(d) Documentary evidence:
Written communication is acceptable as legal documents and as legal evidence also.

(e) Wide access:
Written communication is the best channel of communication for conveying information to people living in different places.

(f) No need for personal contact:

It is not necessary for both parties to be available at the time of communication.
Messages can be sent to the concerned person who can read when receives and gets spare time.

(g) Completeness:

Written messages are prepared with perfect knowledge related to the matter.
So there is completeness in the message.

(h) Economical:

This method is economical when the receiver is far away from the business place.
E-mails are the most popular method of written communication.

Question 2.
Explain different parts of a business letter.
Answer:

A business letter is a type of written communication written by a secretary.
Good letter writing is important for maintaining the image of the business.
The business letters are written with the objective of understanding and take the correct decisions.

The following are the different parts of the business letter:
(a) Heading:

The heading contains the name, address, telephone number, email id, website CIN of the company.
It is that part of the business letter which introduces the sender to the receiver.

Eg. TATA MOTORS LTD.
176, S.B. Road. MIDC,
Pune – 411015
CIN – L28920MH1945PLC004520
Telephone – (022)4756823
Email – tatamotors@gmail.com
Website – www.tatamotor.com

(b) Date:

The date is written on the right-hand side of the letter just below the heading.
The date includes the date, month, and year.
A letter without a date is incomplete.
The date is very important as the letter acts as legal evidence.
Eg. British style – 1st April 2019
American style – April 1st, 2019

It is written on the left-hand side below the heading.
The reference number is given to have a quick reference to the matter concerned.
The outgoing letter is given a reference number.

(d) Inside address:

It contains the name, address of the receiver of the letter.
It is written on the left-hand side of the letter.
For names, Mr, Shri, Mrs, or Smt are used and for firms, Messrs is used.

(e) Subject:

The reader gets the idea of the matter of the letter without reading the letter completely.
It helps to send it to the concerned section.
It is written in brief as the subject.

(f) Salutation:

Salutation is a greeting from the writer.
It creates a favorable impression on the reader’s mind.
It appears on the left margin below the inside address.

(g) Body of the letter:

It is the most important part of the business letter.
It contains the actual message for the receiver of the letter.
The message should be divided into paragraphs. The first paragraph, Main paragraph, Closing paragraph.

(h) Complimentary close:

This is the concluding part of the letter.
It is written below the body of the letter on the right-hand side.
It shows the polite end of the letter.
It should match salutation.

(i) Signature:

It is the final part of the letter.
A letter without a signature is incomplete and invalid.
Below the signature, the name and his or her designation are written.
The person who signs is responsible for the matter written in the letter.

(j) Enclosure:

It includes documents, cheques, etc. which are attached with the letter.
It is shown by word enclosure which is written on the left-hand side.

Activity (Textbook Page No. 144)

How can a company use Twitter and Blogs to reach out to outsiders?
Answer:

Twitter is considered to be an effective tool to grow your business and its brand name.
Twitter uses attractive hashtags that attract the attention of the targeted audience or customers.
It is an excellent platform to approach and get connected to new audiences gaining their positive opinions.
The cost of Twitter is very nominal, so small business organizations can use its benefits easily.
Twitter helps to connect a huge number of new customers as well as keep connected to old customers.
It also helps to build the brand name and recognition with the help of advertisements.
It helps to create a customer support channel and recognition who tweets positively as well as negatively about your product. Thus company or firm can improve its brand name.
Similarly, blogging also helps businesses to compete with competitors in the market.
Blogging helps to post in detail the qualities of your product which reaches a number of customers.
Needed customers can easily approach your business or profession by viewing your blog.

Maharashtra State Board 11th Std Secretarial Practice Textbook Solutions Digest

11th Secretarial Practice Chapter 10 Exercise Correspondence with Directors Practical Problems Solutions Maharashtra Board

April 1, 2025March 31, 2025 by Bhagya

Correspondence with Directors 11th Secretarial Practice Chapter 10 Solutions Maharashtra Board

Balbharti Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 10 Correspondence with Directors Textbook Exercise Questions and Answers.

Class 11 Secretarial Practice Chapter 10 Exercise Solutions

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
Representatives of shareholders are ____________
(a) directors
(b) employees
(c) servants
Answer:
(a) directors

Question 2.
The notice of the meeting of the Board of Directors must be accompanied by ____________
(a) agenda
(b) minutes
(c) resolution
Answer:
(a) agenda

Question 3.
____________ looks after the management of a company.
(a) Board of Directors
(b) Auditor
(c) Company Secretary
Answer:
(a) Board of Directors

Question 4.
The Directors take decisions at ____________ meeting.
(a) Annual General
(b) Board
(c) Statutory
Answer:
(b) Board

Question 5.
According to Section 167(1)(b) of the Companies Act 2013, if a director absents himself from all the meetings of the Board, for a period of ____________ months or more, with or without the leave of the Board, he shall be deemed to have vacated his office.
(a) 12
(b) 10
(c) 9
Answer:
(a) 12

Question 6.
Every company except OPC and the small company shall hold minimum ____________ Board Meetings in each year.
(a) 4
(b) 3
(c) 5
Answer:
(a) 4

Question 7.
The gap between two consecutive Board Meetings should not be more than ____________ days.
(a) 120
(b) 110
(c) 130
Answer:
(a) 120

1B. Match the pairs.

Question 1.

Group ‘A’	Group ‘B’
(a) Directors	(1) At least 2 Directors
(b) Absenteeism of Director in Board Meetings	(2) At least 3 Directors
(c) Public Company	(3) Disqualification of director
(d) Private Company	(4) Representatives of shareholders
(e) Notice of a Routine Board Meeting	(5) 21 clear days
	(6) 7 days
	(7) 70 days
	(8) Representative of the public
	(9) At least 20 directors
	(10) At least 30 directors

Answer:

Group ‘A’	Group ‘B’
(a) Directors	(4) Representatives of shareholders
(b) Absenteeism of Director in Board Meetings	(3) Disqualification of director
(c) Public Company	(2) At least 3 Directors
(d) Private Company	(1) At least 2 Directors
(e) Notice of a Routine Board Meeting	(6) 7 days

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
Elected body of representatives of shareholders.
Answer:
Board of Directors

Question 2.
An employee of a company who provides guidance and advice to the Board of Directors about business matters.
Answer:
Company Secretary

Question 3.
A meeting of all the directors of a company.
Answer:
Board Meeting

Question 4.
A written invitation was given to the Director to attend the meeting.
Answer:
Notice of Board Meeting

1D. State whether the following statements are True or False.

Question 1.
A director can be removed before the expiry of his term.
Answer:
True

Question 2.
Directors act as trustees of the company.
Answer:
True

Question 3.
A director can remain absent for any number of Board Meetings.
Answer:
False

Question 4.
Directors act as agents and trustees of the company.
Answer:
True

Question 5.
Company Secretary need not attend the board meetings.
Answer:
False

Question 6.
Director can take decisions individually.
Answer:
False

1E. Complete the sentences.

Question 1.
The elected representatives of the shareholders are called as ____________
Answer:
Board of Directors

Question 2.
The meeting of all Directors is called as ____________
Answer:
Board Meeting

Question 3.
The notice period for Board Meeting shall not be less than ____________
Answer:
7 days

1F. Select the correct option from the bracket.

Question 1.

Group ‘A’	Group ‘B’
(1) Notice of Board Meeting	………………………..
(2) …………………..	Meeting of all directors
(3) Duty of Directors	………………………….

(Board Meeting, Not less than 7 days, Disclosure of personal interest)
Answer:

Group ‘A’	Group ‘B’
(1) Notice of Board Meeting	Not less than 7 days
(2) Board Meeting	Meeting of all directors
(3) Duty of Directors	Disclosure of personal interest

1G. Answer in one sentence.

Question 1.
When does a Director vacate his office due to absenteeism at Board Meeting?
Answer:
When the director is absent for all meetings of the Board held during a period of twelve months, with or without the leave of absence from the board, he shall be deemed to have vacated his office.

Question 2.
Can a Director who was absent at the Board Meeting get a copy of the minutes of that Board Meeting?
Answer:
If the director is absent for a board meeting he has the right to get a copy of the minutes of that Board Meeting.

1H. Correct the underlined word and rewrite the following sentences.

Question 1.
Secretary is an elected representative of the shareholders.
Answer:
Director is an elected representative of the shareholders.

Question 2.
Secretary is responsible for the decision-making and framing policies of a company.
Answer:
Director is responsible for the decision-making and framing policies of a company.

2. Explain the following terms/concepts.

Question 1.
Director
Answer:
Director is any person occupying a position by whatever name called, Directors are authorized by shareholders to conduct the activities of the company. Director prepares policies to achieve the aims of the company.

Question 2.
Board of Directors
Answer:
Directors are elected representatives of shareholders. Directors are responsible for decision making, policy framing, and determination of plans for achieving the target set. They have to exercise proper control, direction, and supervision. Directors exercise their powers and authorities collectively as a “Board”.

Question 3.
Conciseness
Answer:
Business letters to directors must be brief and to the point. Unnecessary details, irrelevant matters must not be written, conciseness refers to ‘briefness’. It is said that ‘brevity is the soul of correspondence’.

Question 4.
Politeness
Answer:
While corresponding with Directors, simple words and language must be used. A letter must show empathy, respect, and mutual understanding. It helps to create goodwill. Unnecessary big terms, long sentences should be avoided. Secretary should not use any harsh words while corresponding with directors.

Question 5.
Initiative
Answer:
The secretary must take utmost care while corresponding with directors. He should take the lead to make arrangements for the board meetings. Secretary also helps the directors in conducting meetings.

Question 6.
Notice and Agenda of board meeting
Answer:
The notice of the Board meeting is a document that is sent to all directors of the company. All types of companies are required to give notice of at least 7 days along with agenda before the actual day of the meeting. Notice of Board meetings is generally sent by hand delivery or by post or by electronic means.

3. Answer in brief.

Question 1.
What are the points to be considered by a secretary while corresponding with the directors?
Answer:
Following are the points or precautions to be taken by the secretary while corresponding with Directors.

Initiative: The secretary must take utmost care while corresponding with directors. He should take the lead to make arrangements for the board meetings. Secretary also helps the directors in conducting meetings.
Accuracy: In correspondence with directors “accuracy” or perfectness is very much important. Whatever information, action, data, or reply is to be given, must be given accurately. Secretary should provide correct, accurate, and perfect information.
Promptness: Every letter must be dealt with promptly, whatever might be the subject matter. Prompt replies always create a good impression about your organization, delays in correspondence may prove to be costly in a later stage.
Brevity: The letter acts as a representative of the organization. Hence, the secretary should always provide all information in a compact manner. A letter should not be lengthy. Secretary should provide maximum information in minimum words.
Politeness: In correspondence with directors simple and words and language must be used. Unnecessary use of big terms, long sentences should be avoided. Secretary should not use any harsh words.

Question 2.
Under what circumstances will a secretary correspond with a director?
Answer:
Following are the circumstances when a company secretary corresponds with a Director:

Sending Notice and Agenda of routine Board Meeting.
Requesting a director to disclose his interest in a particular contract.
Forwarding the minutes of the meeting to the directors who were absent from the meeting.
Intimation to the director about the provisions regarding absenteeism at board meetings.

4. Justify the following statements.

Question 1.
Directors exercise their powers and authorities collectively as a Board.
Answer:

The Directors occupy a very important position in the company’s management.
They are elected representatives of the shareholders.
Directors are responsible for decision making, policy framing, and determination of plans for achieving the target set.
They have to exercise proper control, direction, and supervision.
Directors exercise their powers and authorities collectively as a “Board”.

Question 2.
The Secretary should take certain precautions while corresponding with Directors.
Answer:

The company secretary is an executive officer of a Joint Stock Company.
The decisions taken by the board of directors are implemented by the secretary.
The secretary acts as a link between the directors and other management personnel.
The secretary provides assistance to the directors and guidance to the directors.
Directors occupy key positions and are superiors, so the communication with them should be cautious and tactful.

Question 3.
The Board of Directors is the elected representative of the shareholders.
Answer:

A Joint Stock Company is a business organization with a wide scope of business activity.
Though shareholders of the company are the part of owners as well as the members of the Joint Stock Company, they cannot participate in the management and day-to-day functioning of the company since they are scattered over a large geographical area.
So, as such the shareholders during the Annual General Meeting elect the directors to act as their representatives and carry on the business activities of the company.

Question 4.
The Secretary has to correspond with Directors on important occasions.
Answer:

The company secretary is an executive officer of a joint-stock company.
The decisions taken by the board of directors are implemented by the secretary.
The secretary acts as a link between the directors.
The secretary is said to be the ears, eyes, hands, and mouthpiece of the Board.
So under the following circumstances, the secretary writes letters to Directors:
- Sending Notice and Agenda of the routine Board meeting.
- Requesting directors to disclose their interest in a particular contract.
- Forwarding the minutes of the meeting to the directors, who were absent for the meeting.
- Intimating the director, the provisions regarding absenteeism at consecutive board meetings.

5. Answer the following questions.

Question 1.
Draft the notice and agenda of routine board meetings.
Answer:

INFORT TECHNOLOGY LIMITED
Registered Office: 12, Swaraj Excellency,
British Library Lane, F.C. Road, Pune-411004
CIN: BOO160MH20375JLB400180

Phone:020-21173428
Fax: 020-32194237

Website: www.inforttechnology.com.
E-mail: infort@technology.com.

Date: 25th March 2019

Ref. No.: D/MR/13/19-20
The Director,
Mr. Anvit Gaurav Gaikwad,
Vastushodh, Building 42, Flat No. 107,
Urbangram, Kirkutwadi, Pune.

Sub: Notice of the Board Meeting dated 28th April 2019.

Dear Sir,

I wish to inform you that the monthly Board meeting will be held on 28th April 2019 at 10.00 a.m. at the registered office of the company to transact the following business.

AGENDA

To confirm the minutes of the last meeting.
To confirm the applications of shares.
To consider the financial position of the company.
To decide the date of the next board meeting.
To discuss any other matter with the permission of the Chairman.

You are requested to be present at the meeting.
Thanking you,

Yours faithfully,
for Infort Technology Ltd.
Sign
Company Secretary

Question 2.
Write a letter to the director requesting him to disclose his personal interest in a contract.
Answer:

CHAUDHARI KANCHWALA LIMITED
Registered Office: S.N.1960, Kolhar Ghoti Highway,
Sangamner Akole Road,
Mangalapur.
CIN: B40408MH2019ABC1205

Phone: 02425-227244
Fax: 02425-221974

Website: www.chaudharikanchwala.com.
E-mail: chaudhari60@gmail.com

Date: 1st January 2019

Ref. No.: D/CK/23/19-20
The Director,
Mrs. Rajshri Atul Chaudhari,
Janata Raja Madian,
Vidyanagar, Sangamner.

Sub: Disclosure of personal interest.

Dear Madam,

I wish to inform you that the meeting of the Board of Directors of the company will be held on 21st January 2019. The Board decided to appoint Public Relations Officer for developing relations with customers and wholesalers.

As per information received from a reliable source, Mr. Vinayak Nehulkar your relative has applied for the post of PRO.

I wish to know whether the said information is true or false. In this case, if you have a personal interest in his appointment, kindly disclose your nature of interest as per Section 184 of the Companies Act, 2013.

Kindly revert as early as possible.

Thanking you,

Yours faithfully,
for Shri Chaudhari Kanchwala Ltd.
Sign
Company Secretary

Question 3.
Write a letter to the director who was absent for a Board Meeting to inform him about the proceeding of the meeting.
Answer:

PRABHAT OPTICAL COMPANY LTD.
Registered Office: Yuga Tower, Nashik-Pune Road,
Ganesh Nagar, Sangamner.

Phone: 02425-222697
Fax: 02425-232697

Website: www.prabhatoptical.com.
E-mail: ritivinayak@gmail.com.

Date: 20th May 2019.

Ref. No.: D/LB/16/19-20
The Director,
Mr. Vijay Kodur,
Tajane Mala, Navine Nagar Road,
Sangamner – 422605.

Sub: Information about the proceedings of the meeting.

Dear Sir,

Please find enclosed herewith a copy of the minutes of the Board Meeting held on 1st May 2019 for your information and record.

I invite your attention to paragraph No.25 of the minutes. A proposal to establish a branch office in Mumbai was moved by Mr. Laxman Gadekar. It was seconded by Mr. Atul Chaudhari. After a detailed discussion, the chairman finally concluded the meeting by accepting the proposal. The motion was passed with an 80% majority.

The other items on the agenda being of routine nature require no explanation.

Thanking you,

Yours faithfully,
for Prabhat Opticals Company Ltd.
Sign
Company Secretary

Encl.:- Copy of Minutes

Question 4.
Write a letter to the director reminding him about the provision relating to absenteeism at the Board Meeting.
Answer:

SURESH CABLES NETWORK COMPANY LIMITED
Registered Office: Shubham Heights,
Old Mumbai Agra Road, Ghoti.
CIN: H25301MH1999ABC14708

Phone: 042530
Fax: 312240

Website: www.sureshcnc.com
E-mail: sureshcable@gmail.com.

Date: 13th December 2019.

Ref. No.: D/CB/17/19-20
The Director,
Mrs. Archana Sumit Pawar,
Juna Adgaon Naka, Chavan Nagar,
Tapovan Road, Nashik.

Sub: Information about absenteeism in the board meeting.

Dear Madam,

This is to bring to your attention the fact that you have remained absent for two consecutive board meetings held on 15th October 2018 and 17th November 2018. The chairman has not received any intimation from you regarding your absence from these board meetings.

You are requested to note that Section 167(1)(b) of the Companies Act, 2013 provides that a director has to vacate his office if such absence is with or without the chairman’s permission.

The next board meeting of the company is to be conducted on 13th January 2019. Please make it convenient to attend this meeting or intimate the cause of absence to avoid disqualification under Section 167(l)(b). The notice and agenda of the Board Meeting have been already forwarded to you.

Thanking you,

Yours faithfully,
for Suresh Cable Network Company Ltd.
Sign
Company Secretary

Balbharti Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 10 Correspondence with Directors Textbook Exercise Questions and Answers.

Maharashtra State Board 11th Std Secretarial Practice Textbook Solutions Digest

11th OCM Chapter 7 Exercise Business Environment Practical Problems Solutions Maharashtra Board

March 28, 2025March 27, 2025 by Prasanna

Business Environment 11th OCM Chapter 7 Solutions Maharashtra Board

Balbharti Maharashtra State Board Organisation of Commerce and Management 11th Textbook Solutions Chapter 7 Business Environment Textbook Exercise Questions and Answers.

Class 11 OCM Chapter 7 Exercise Solutions

1. (A) Select the correct option and rewrite the sentence

Question 1.
The business environment has a tremendous impact on ………………..
(a) business
(b) government
(c) society
Answer:
(a) business

Question 2.
The new Industrial policy was formulated in ………………..
(a) 1947
(b) 1951
(c) 1991
Answer:
(c) 1991

Question 3.
Changes in ruling government is an aspect of ……………….. environment.
(a) political
(b) technological
(c) economic
Answer:
(a) political

Question 4.
Literacy level is an aspect of ……………….. environment.
(a) social
(b) legal
(c) political
Answer:
(a) social

Question 5.
Privatization implies reduction in the role of ……………….. sector.
(a) public
(b) private
(c) foreign
Answer:
(a) public

Question 6.
Globalization is concerned with ……………….. market.
(a) global
(b) local
(c) rural
Answer:
(a) global

Question 7.
……………….. means linking national economy to the world economy.
(a) Globalization
(b) Privatization
(c) Liberalization
Answer:
(a) Globalization

Question 8.
Environment awareness provides ……………….. signal.
(a) warning
(b) alarming
(c) soft
Answer:
(a) warning

1. (B) Match the pairs

Question 1.

Part A	Part B
(a) Globalization	(1) Profit motive
(b) Privatization	(2) 2006
(c) Liberalization	(3) Borderless economy
(d) New economic policy	(4) Service Motive
(e) Social Environment	(5) Internal factor
	(6) Disinvestment
	(7) Social Values
	(8) 1991
	(9) Abolishing license policy
	(10) GATT

Answer:

Part A	Part B
(a) Globalization	(3) Borderless economy
(b) Privatization	(6) Disinvestment
(c) Liberalization	(9) Abolishing license policy
(d) New economic policy	(8) 1991
(e) Social Environment	(7) Social Values

Question 2.

Part A	Part B
(a) Internal environment	(1) Knowledge of law
(b) Political environment	(2) Taxation policy
(c) Legal environment	(3) Technology
(d) Economic environment	(4) Traditions
	(5) WTO
	(6) Controlled by business
	(7) High cost
	(8) Ideology of political party

Answer:

Part A	Part B
(a) Internal environment	(7) High cost
(b) Political environment	(8) Ideology of political party
(c) Legal environment	(2) Taxation policy
(d) Economic environment	(3) Technology

1. (C) Write a word or a term or a phrase which can substitute each of the following statements

Question 1.
Uncontrollable factors of the business environment.
Answer:
External business environment

Question 2.
The environmental of business that includes customs and traditions, values, social trends.
Answer:
Social environment

Question 3.
The process of transferring ownership of business enterprise, agency or public service from the public service to private sector.
Answer:
Privatization

Question 4.
A boundary less worlds where there would be flow of goods, services, information, capital and people across nation.
Answer:
Globalization.

1. (D) State whether the following statements are True or False

Question 1.
External factors of business environment are controllable factors.
Answer:
False

Question 2.
Business is the product of different environmental factors.
Answer:
True

Question 3.
Business and environment are inseparable parts.
Answer:
True

Question 4.
There is no benefit of globalization on Indian economy.
Answer:
False

Question 5.
New economic policy promoted the liberal economic policy.
Answer:
True

Question 6.
There is no benefit of privatization to Indian economy.
Answer:
False

Question 7.
There is no need of consideration of the business environment factors in business.
Answer:
False

1. (E) Complete the sentence

Question 1.
The term of business environment generally refers to …………………
Answer:
External Environment

Question 2.
……………….. helps the business enterprise for overcoming challenge successfully.
Answer:
Business Environment

Question 3.
Geographical and Ecological factors are included in ………………… Environment.
Answer:
Natural

Question 4.
Literacy is the important part of ………………… Environment.
Answer:
Social

Question 5.
Stability and peace in the country includes in ………………… Environment.
Answer:
Political

Question 6.
Indian political system comprises ………………… vital institutions.
Answer:
three

Question 7.
Limited involvement of government in public sector refer to …………………
Answer:
Privatization

Question 8.
Integration of economy and society through cross country is called as …………………
Answer:
Globalization

1. (F) Select the correct option

Question 1.
In how many type environmental factors can be classified?
(Two / Three / Four)
Answer:
Two

Question 2.
Which factors of Business Environment regard as controllable?
(Internal / External)
Answer:
Internal

Question 3.
Who frames the economic policy of the business?
(Government / Business / Citizen)
Answer:
Government

Question 4.
Which economic system in known as free market economy?
(Socialist / Mixed / Capitalist)
Answer:
Capitalist

1. (G) Correct the underline word and rewrite the following sentence

Question 1.
External factors of business environment are controllable.
Answer:
Internal factors of business environment are controllable.

Question 2.
Internal factors of business are beyond control.
Answer:
External factors of business are beyond control.

Question 3.
Natural resources are related to political environment.
Answer:
Natural resources are related to natural environment.

Question 4.
Privatization helps for global village.
Answer:
Globalization helps for global village.

1. (H) Answer in one sentences

Question 1.
Which factors are included in internal environment?
Answer:
Value system, vision, mission and objective management structure, Internal power relationship, Human resources, Physical facilities, Marketing resources, etc. are the factors included in internal environment.

Question 2.
What are the powers of legislature?
Answer:
Policy making, law making, budget approving, executing control, etc. are the powers of legislature.

Question 3.
Which factor influence the economic condition of the Nation?
Answer:
Economic condition of the nation is based on the gross domestic product, per capital income, availability of capital, growth of foreign trade and strength of capital market.

Question 4.
Who possess the factors of production in socialist economy?
Answer:
In socialist economy Government possess the factors of production.

Question 5.
In which environment are the methods and techniques of production included?
Answer:
Technological environment consist of the method and technical of production.

Question 6.
When did Indian government launch New Economic Policy?
Answer:
Indian government launched New Economic Policy on 24th July, 1991.

Question 7.
What is useful to reduced political interference in industry?
Answer:
Privatisation is useful to reduce political interference in Industry.

Question 8.
How is the boundary less world possible?
Answer:
Boundary less world is possible through Globalisation.

2. Explain the following terms /concept.

Question 1.
Business environment.
Answer:
Business environment refers to the external environment which includes factor outside the business leading to opportunities or threats of the business.

According to Bayard O. Wheeler
“The total of all things external to firm and industries which affect their organization and operations is called as “Business Environment”.

Question 2.
Liberalization.
Answer:

Liberalization refers to the process of eliminating unnecessary controls and restrictions for smooth functioning of business.
Liberalization helps in achieving a high growth rate, easy availability of goods at competitive rates, high foreign exchange reserve, strong rupee and good industrial relation, etc.

Question 3.
Privatization.
Answer:

Privatization refers to reduce the involvement of state or public sectors by involving of private sector in economic activities.
It implies government Sectors to be sold or given to private individuals to run them.

Question 4.
Globalisation.
Answer:

Globalisation means integration of national economy and societies through cross country flows of information, ideas, technologies, good services, capital, finance and people.
It also means “boundary less world”.

Question 5.
Social environment.
Answer:

Modern business is a social system in itself and forms a part of the larger social system represented by society in general.
The class structure of the society affects the business. Such as occupation of the people, their education, income level, social status, attitude towards living, work and social relationship.

Question 6.
Economic environment.
Answer:
Economic environment comprises of economic condition, economic policies and economic system, basic economic philosophy, infrastructure, national income, money supply, saving stages in economic development and trade cycles.

Question 7.
Political environment.
Answer:

Government and its policies affects business firms.
It includes stability and peace in the country, specific attitudes of elected representative. Ideology of the political parties influences the business organization and attitudes of government officials towards business has an impact on business.
It comprises three vital institutions like Legislature, Government and Judiciary.

Question 8.
Internal environment.
Answer:
Internal environment compromises of policies decided by by shareholders, managers, labour unions and employees which can be controlled which helps to make specific, proper understanding in strengthening the business.

3. Study the following case/situation and express your opinion.

(1) The court passes an order to ban polythene bags as the bags are creating many environmental problems which affects the life of people in general.
(2) Society in general is more concerned about quality of life. The government decided to give subsidy to jute industry to promote this business.

Question 1.
Identify the different dimensions of business environment.
Answer:
The different dimensions of business environment are:

Legal environment
Natural environment
Social environment
Political environment
Economic environment

Question 2.
Comment on it.
Answer:
The different dimensions of business environment are

Legal Environment : Court passes order to ban polythene bags.
Natural Environment : The Court order will solve environmental problems which affects the life of people in general.
Social Environment : Society is concerned about quality of life and better standard of living
Political Environment : Government framed a policy to give subsidy to jute industry.
Economic Environment : Subsidy to Jute industry will promote business of Jute industry and this will help in economic development.

2. Anchor company manufacturing light tubes increased expenditure on Scientific Research and Development and discovered a technology that made it possible to produce an energy efficient light tubes that lasts at least twenty times as long as standard tubes. It resulted in growth and profitability of the company.

Question 1.
Identify the dimension of business environment.
Answer:
Technological Environment:
Scientific research for innovation in product increased its production and it resulted in growth and profitability of the company. Internal environment of company led to growth and profitability.

Question 2.
State importance of business environment.
Answer:
Business environment helps in determining opportunities and threats, identify firms strengths and weaknesses, continuous learning, image building meeting competition and give direction for growth.

3. Make in India is an initiative launched by the government of India. It focuses on job creation and skill development and it is in twenty five sectors of the economy. Under the initiative, brochures on these sectors and web portal were released. The initiative aims at high quality standards and minimizing the impact on environment .It also seeks to attract foreign capital investment in India.

Question 1.
Identify the dimension of business environment.
Answer:
The various dimensions of business environment referred in the above case are:

Political environment
Technological environment
Economic-environment

Question 2.
Comment on it.
Answer:
Make in India is the policy of government as per its ideology. As it focusing on job creation and skill development in 25 sectors of economy, it convey two values through this initiative. High quality standards and concern for environment. It also aims to attract foreign capital investment in India.

4. Distinguish between the following

Question 1.
Social Environment and Economic Environment.
Answer:

	Social Environment	Economic Environment
(1) Meaning	Social environment includes customs, traditions, values, buying habits, tastes, etc.	Economic environment comprises of economic condition, economic policies and and economic system.
(2) Factors	It includes factors such as social aspects, social trends, social values and traditions.	It includes factors like economic condition, economic policies and economic system.
(3) Supplement to	It is supplemented by cultural environment like cultural factors, values, beliefs, etc.	It is supplemented by political environment as it is influenced by political decisions or events taken by Government.
(4) Impact on business	It helps to analyze the changing social trends, taste of different social groups which helps businessmen to know the opportunities and threats.	Changes in economic policies like agricultural policy, monetary policy, etc. lead to changes in economic system and planning which helps businessmen to make changes on timely basis.
(5) Purpose	It helps to know the-needs of customer and satisfy the demand. E.g. Today health and fitness trend has created demand for products like gym, organic foods etc.	It helps in forecasting market situations and thereby making suitable business plans E.g. Stock market fluctuations affects management practices in a business Enterprise.
(6) Nature	It is dynamic in nature. Changes in trends, values, growing awareness among different social groups affects the social environment.	It is multi dimensional in character. Agriculture, infrastructure, national, per capita income, price level etc. affects the economic environment of in a country.

Question 2.
Political Environment and Legal Environment.
Answer:

	Political Environment	Legal Environment
(1) Meaning	In a country, the political system, constitutional provision, party system, events taking place time to time determines the political environment.	In a country, business can be started, regulated, controlled, expanded within legal framework of a country determines legal environment.
(2) Factors	Political stability, peace in the country, specific attitudes of elected representative, etc are the factors which affects political environment.	Various laws are implemented from time to time with amendments in order to control and direct the business.
(3) Inter relation between environment	Political environment and economic environment are closely connected with each other.	Legal environment and regulatory environment goes together hand-in-hand in modern business environment.
(4) Impact on business	Ideology of the political parties influences the business organization.	Provides control, direction, expansion to the business organization.
(5) Purpose	Political stability creates strength, confidence to various interest groups and investors in long term projects.	Separate laws implemented time to time to safeguard and protect the interest of various groups such as busines’s organization, workers, consumers, etc.
(6) Effect of changes in environment	Political instability effects the business organisation adversely. Business policies are amended due to political issues, events etc. prevailing in country.	Excessive controls, implementation of laws, rules and regulations may create problem in overall development of business organizations.

Question 3.
Liberalization and Privatisation.
Answer:

	Liberalisation	Privatisation
(1) Meaning	It refers to the process of eliminating unnecessary controls and restrictions for smooth functioning of business.	It refers to reduce the involvement of state or public sectors by involving of private sector in economic activities.
(2) Aim	It aims to bring flexibility in business operations by creating environment for growth and expansion.	It aims at promoting efficiency, increase productivity, profitability.
(3) Need	To reduce taxation, controls on foreign exchange, attracting foreign investment, etc. thereby to compete with other companies at international level.	To achieve quick and logical business decisions aimed at commercial success of organisation.
(4) Measures adopted	Reduction in tariffs, reformation of financial system, abolishing industrial licensing system, etc.	Reduction in number of industries reserved for public sector, disinvestment of shares, improvement in performance through MOU.
(5) Benefits to Host Company	It results in, high growth rate, easy availability of goods at competitive rates, good industrial relation, etc.	It results in profitability, production of superior quality products and services, self motivation, etc.
(6) Benefits to Consumers / Traders	Optimum use of resources available at global level, easy availability of goods at competitive rates.	Entry of private sector results to competition thereby providing high quality goods and services at lower prices.
(7) Positive Effect	Removing restriction on taxations, abolishing industrial licensing system leads to expansion and growth of new business opportunities.	Improved performance, high quality goods and services in market. Timely prompt decision with more efficiency.
(8) Adverse Effect	It leads to social problems like urbanization and industrialisation, closure of domestic firms due to liberalised imported products, etc.	Growth of monopoly, inequality of income, lack of social responsibility, etc will hamper the social order of the economy.
(9) Inter Relationship	Liberalisation leads to privatisation and globalization.	Privatisation is a part of the process of globalization.

Question 4.
Globalization and Liberalization.
Answer:

	Globalization	Liberalization
(1) Meaning	It refers to integration of national economy and societies through cross country flows of information, ideas technologies, goods, services capital, finance and people.	It refers to the process of eliminating unnecessary controls and restrictions for smooth functioning of business.
(2) Aim	It aims at promoting world trade and economic growth by integrating technologies, goods, services, people, etc.	It aims to bring flexibility in business operations by creating environment for growth and expansion.
(3) Need	To overcome the problem of declining domestic demand and to ensure free trade.	To reduce taxation, controls on foreign exchange, attracting foreign investment, etc. thereby to compete with other companies at international level.
(4) Measures adopted	Allowing Foreign Direct investment, approving foreign technology, amendment of patent laws, etc.	Reduction in tariffs, reformation of financial system, abolishing industrial licensing system, etc.
(5) Benefits to Host Company	It results is expansion of investment. It promotes foreign trade and brings foreign exchange	It results in high growth rate, easy availability of goods at competitive rates, good industrial relation, etc.
(6) Benefits to Consumers / Traders	Consumers gets variety of goods as option to be purchased foreign technology is adopted by traders thereby increasing growth of production.	Optimum utilisation of resources at global level easy availability of goods at competitive rates.
(7) Positive Effect	It results in increase in foreign trade, inflow of foreign trade, inflow of foreign technology and capital, which increases employment opportunities, business growth, etc.	It results in removing restriction on taxations, abolishing industrial licensing system leading to expansion and growth of new business opportunities.
(8) Adverse Effect	It leads to exploitation of home market by foreign companies. Capital intensive techniques leads to reduction in job opportunities.	It leads to social problems like urbanization and industrialisation. Closure of domestic firms due to liberalised imported products.
(9) Inter Relationship	Globalisation includes liberalisation and privatisation.	Liberalisation leads to privatisation and globalisation.

Question 5.
Privatization and Globalization.
Answer:

	Privatization	Globalization
(1) Meaning	It refers to reduce the involvement of state or public sectors by involving of private sector in economic activities.	It refers to integration of national economy and societies through cross country flows of information, ideas technologies, goods, services capital, finance and people.
(2) Aim	It aims at promoting efficiency, increase productivity, profitability.	It aims at promoting world trade and economic growth by integrating technologies, goods, services, people, etc.
(3) Need	To achieve quick and logical business decisions aimed at commercial success of organisation.	To overcome the problem of declining domestic demand and to ensure free trade.
(4) Measures adopted	Reduction in number of industries reserved for public sector, disinvestment of shares, improvement in performance through MoU.	Allowing Foreign Direct investment, approving foreign technology, amendment of patent laws, etc.
(5) Benefits to Host Company	It results in profitability, production of superior quality products and services, self motivation etc.	It results is expansion of investment. It promotes foreign trade and brings foreign exchange
(6) Benefits to Consumers / Traders	Entry of private sector results to competition thereby providing high quality goods and services at lower prices.	Consumers gets variety of goods as option to be purchased foreign technology is adopted by traders thereby increasing growth of production.
(7) Positive Effect	Improved performance, high quality goods and services in market. Timely prompt decision with more efficiency.	It results in increase in foreign trade, inflow of foreign trade, inflow of foreign technology and capital, which increases employment opportunities, business growth, etc.
(8) Adverse Effect	Growth of monopoly, inequality of income, lack of social responsibility, etc will hamper the social order of the economy.	It leads to exploitation of home market by foreign companies. Capital intensive techniques leads to reduction in job opportunities.
(9) Inter Relationship	Privatisation is a part of the process of globalization.	Globalisation includes liberalisation and privatisation.

5. Answer in brief.

Question 1.
State any four features of Social environment.
Answer:
The four features of social environment are as follows:

Customs and Traditions : This decides the celebration of various festivals like Diwali, Id, Christmas and its effect on business.
Social Institutions and Groups or Social Aspects: Literacy level, educational system, cultural heritage standard of living of the various groups of people affect the social environment of business.
Social Values : Cultural and social justice, national integration affect the business. Beliefs also help the business to meet the customer needs.
Social Trends : Now a days people have become health conscious and therefore there is a sale of various types of goods like organic food, sugar free products etc.

Question 2.
Describe any two factors of economic environment.
Answer:
Economic environment has direct influence on business.

The Economic System : Economic activities depend upon the nature of economic system which are:
(a) Capitalist economy : e.g. U.S.A. (b) Socialist economy : e.g. China (c) Mixed economy : e.g. India
Economic Policies : The various economic policies of the government has a direct influence on economic environment. For e.g. import and export policy, educational policy, agricultural policy, industrial policy, foreign investment policy, etc.
Economic Condition : The stage at which the growth stands, employment rate, rate of interest, etc. All those determine development of the country.

Question 3.
State any four features of globalization.
Answer:
Features of globalization are as follows:

Purchase and sale of goods and services from one country to another.
Opportunity to start and do business in any part of the world.
Reduction in gap between domestic and international market.
Possibility of quick and rapid economic development.
Enhances the opportunity to exchange new ideas and technology across the nations.

Question 4.
State any four reasons of the need for privatisation.
Answer:
There is need for privatisation because of the following reasons:

To bring more efficiency in the working of business firms.
To reduce political interference in the working of the firms and companies.
To improve the quality of products
To bring efficiency in management of the organization.
To create discipline in capital market.

6. Justify the following statements.

Question 1.
External factors of business environment are beyond control.
Answer:

Factors which influences the business policy of an organization can be divided into internal and external factors.
Business has no control over external forces.
These are those factors which provide opportunities or pose threats to the organization.
Factor such as social customs, values, economic policies, technological development, political ups and down, legislation together constitute political, social, economic, legal and technological diversions of business, hence, they are not in the hands of business organizations.
Internal factors are controllable and business unit can modify their plans, policies, etc.
(Students can give example of social, political, legal environment to justify further)

Question 2.
Business firm should be aware of the changes in society.
Answer:

The success of every business depends on adopting itself to the environment in which it functions. Modern business is rightly termed as socio-economic activity.
There is reciprocal relationship between business and society.
Business is affected by class structure of the society which depends upon factors such as occupation its own culture, income, etc.
Every society depends its own culture, customs, tradition, values, ethics, etc. social trends are also changing fast. For e.g. large number of people are eating fast food and go to gyms. So many fast food outlets and gyms are coming up in towns and cities.
Social values and traditions such as celebration of Diwali, Eid, Christmas also affect business.

Question 3.
Political stability builds up confidence among business people.
Answer:

Business firms are affected by the government and its policies.
Political force decide the nature of business, device performance and projects for development.
Political environment includes stability and peace in the country. Political stability builds confidence among different interest groups and investors because long term policies and projects will be started by the government and if the government keep on changing every six months or in a year.
This will impact long term decisions of development for the country, because political parties identify forms their decision making, hence if a government gets its full tenure of 5 years, it can complete its projects and plans and win the confidence of the people.

Question 4.
Economic environment has direct influence on business.
Answer:

Economic environment consists of economic condition, economic policies and economic system along with basic economic philosophy, infrastructure, national income, money supply etc.
Economic condition is based on GDP, per capital income, availability of capital, growth of foreign trade and capital market.
Where as economic polices framed by the government from time to time changes with changes in the government.
Every business has to function within the policy framework and responds to changes accordingly.
This relates to Industrial Policy, monetary policy, foreign investment, EXIM policy education policy etc. Also the scope of private business and government regulation depends on the economic system such as capitalist economy, Socialist or mixed economy which impacts business decisions.

Question 5.
Social trends provide business opportunities.
Answer:

Society and business are inter-dependent.
Class structure such as occupation,education,income level social status, attributes etc impact business decisions.
Social trends are any type of activity that is practised in the society as a whole.
Trends can be for short period or long lasting. As technology progresses the changes in social trends do changes.
Companies use their ability to anticipate the social change as part of their business marketing policy, to grab the business opportunities.

Question 6.
An adequate knowledge of rules and regulations is essential for better business performance.
Answer:

Any business in a country can be started, regulated and controlled within the legal framework of a country.
Separate set of laws are framed by all countries to control and direct the business affairs.
Knowledge of law, rules and relegations helps the business managers to take prompt decision in making business policies.
Various laws are implemented for influencing the business, protect and safeguard the business, as well as the consumers.

7. Attempt the following

Question 1.
Importance of business environment.
Answer:
Importance of Business Environment:
(i) Flexible and Dynamic : Changing environmental factors should be appraised from time to time. So as to keep the business flexible and dynamic. The new opportunities and threats created by the environment can be appraised by the corporate planners to make the most of it. Turbulent market conditions, less brand loyalty, more demanding customers and intense global competition are some of the images of todays business environment. In order to cope with these significant changes, organization must understand and examine the environment and develop suitable course of activity.

(ii) Opportunities and Threats : Study of business environment enables a business enterprise to visualise future problems that can arises as also future business prospects in advance. Deriving benefit from honourable business opportunities is possible as also it can face the problems boldly. Awareness of environment help an organisation to take advantage of such opportunities instead of loosing them to competition. It helps organisation to identify various threats on time and serves as an early signal.

(iii) Competition : Understanding the business environment helps to obtain qualitative information which in turn is useful in formulating business plans, policies and strategies for the future course of action.

(iv) Utilization of Resources Optimally : Optimum use of available resources for the business enterprise is possible by studying the business environment. It enables the enterprise to take full advantage of the policies implemented by the government.

(v) Strength and Weakness Identification : With the change of technology and global development it helps to analyze individual strength and weakness of the business understanding the challenges, appropriate decisions are taken on timely basis.

(vi) Knowledge : Study of environment is necessary to discover and exploit new opportunities for business expansion broad strategies and long term planning enable the development of a formidable business wait.

(vii) Image Building: Environment study makes it possible for the business to expand and to make it acceptable and agreeable to different social groups. By fulfilling its social obligations towards different groups of society, business can create goodwill and reputation for itself.

(viii) Adaptability to Socio-Economic Changes : A business organization needs to show its keen intentions towards adapting to the socio-economic changes.

Question 2.
Social Environment.
Answer:
Business is a economic and social activity. It has to produce goods according to the requirement of the customers. Satisfying customer is the basic need of business. Therefore, while manufacturing or producing goods, business has to take into consideration social factors like traditions, customs, education, habits, values, life styles, thinking and earnings of the people of country. Changes in social environment are a must and management has to take into consideration these factors which determines the following aspects.
1. Social Aspect : Literacy level, educational system, tradition and customs, transition of labour, etc. are the important aspect of social environment. It helps to analyze the needs of the people and accordingly the business opportunities are identified.

2. Social Trends : Business practices and procedures must be in tune with the social beliefs. Growing number of working women and changing life style have increased the demand for household appliances in India.

3. Social Values : Cultural and social values, (social justice, national integration, etc.), family organization and caste structure, social institutions and groups, are taken to consideration while making practices and procedures of business.

4. Traditions : Customs and traditions. (Diwali, Id, Christmas, etc.) also has an effect on the business. The businessmen have to be more responsible towards the demand of the people accordingly.

Question 3.
Economic environment.
Answer:
1. Economic environment comprises of economic condition economic policies and economic system which are the important factors influencing development and trade cycles, national income, etc.

2. Economic Condition : If refers to present state of economy of a country or region based on gross domestic product, per capita income, availability of capital, etc.

3. Economic Policies: Government frames economic policies time to time influencing the business activities. In order to controls the business in the interest of the politics, e.g. – Industrial policy, monetary policy, foreign investment policy etc.

4. Economic System: It refers to the scope of private business and extent of government regulation on economic activities determines the nature of economic system i.e. – capitalist social or mixed economic.

Question 4.
Political Environment.
Answer:
Political dimensions or environment includes the country’s political system or its ideologies or condition i.e. dictatorship or democracy or communist government or socialistic government. It indicates the general stability and peace in the country and attitude of the elected government representatives towards business.

Political stability builds up confidence among business people to invest in long-term projects for the growth of the economy. In India we have adopted mixed economy and growth rate often remains moderate. Indian political system comprises three vital institutions like Legislature, Government and Judiciary.

Legislature : legislature is very powerful force that decides the nature of business, programmes, project, for the development of the country through policy making, law making, budget approving, etc.
Government : The framework of policies are implemented by government which effects the business organization to under take the responsibilities of the society.
Judiciary : It determines the work of executives to carry out the policies in a systematic manner, in order to settle relationship between citizens and the government.

Question 5.
Impact of new economic policy on business and industry.
Answer:
(A) Introduction : On July, 1991, the Government of India announced its New Industrial Policy. It brought about radical changes in the Economic Policy. The three main pillars of Economic reforms are L – P – G (Liberalisation, Privatisation and Globalisation). The main purpose was to modernise India’s Industrial system, implement new techniques, remove unproductive control, encourage private investment and integrate our economy with the global economy.

(B) Impact of changes in Government Policy on Business and Industry:
1. Budgetary Support: The Central Government’s budgetary support for financing the public sector outlays has declined over the years. In order to survive and grow, PSUs have to be more efficient and self sufficient so as to compete with private sector.

2. Increase in Competition : Competition for Indian firms has increased due to the changes in the rules of industrial licensing and entry of foreign firms, for e.g. Service Industries like Insurance, Banking, Telecommunications, Hotel and Airlines, etc. which were earlier in the public sector are now facing competition from private players such as Bajaj Alliance, Max Life, Star Life, Insurance, low cost airlines like Indigo, etc.

3. New Trade Policy : The new trade policy has helped the Indian Firms to enter into foreign markets and earn the foreign exchange required for importing raw materials, spare parts and components they needed for keeping their production lines going.

4. Demanding Customers : Today’s market is customer oriented as customers are well informed and there is growing awareness among them about the malpractices adopted by traders, consumer rights, consumer education and so on. Moreover, competition in the market gives the customer wider choice in purchasing good quality product and makes customer more demanding.

5. Need for Human Resource Development : New technologies require expert knowledge and skill in various fields. Moreover, newer markets made it compulsory for companies to acquire trained personnel with high degree of competence and commitment. Hence, there is a need for well trained staff and thereby develop human resources.

6. Change in Technological Environment : Increased competition and advancements in the field of technology have forced the business units to develop new ways to survive and grow in the market and keep pace with latest technological developments.

7. Change in the Concept of Marketing : Earlier business organisations were production oriented but due to fast changing business world it has now become market oriented. This changed to societal concept where needs of society are kept in mind by the producers. The latest is relationship marketing whereby it is not only producing goods for consumers but maintaining long term relationship with them so as to sustain them.

8. Answer the following

Question 1.
What is business environment? Explain the important of business environment.
Answer:
(A) Business Environment:
A business is defined as buying and selling activity to generate income. Business consists of several interrelated and interacting elements. Business is an economic and social activity of the society. Society is an integral part of the business and its interest cannot be ignored.

Business environment consists of economic, social, legal, technological and political situation. Business obtains money, material, machinery and manpower and other resources from environment.
According to B. O. Wheeler – Business environment is “the total of all things external to firms and individuals which effect their organisation and operations”.
According to Oxford English Dictionary – “Business Environment refers to those aspects of the surroundings of a business enterprise which influence or effect its operations and determine its effectiveness.”
Basically business environment consists of all internal and external factors that influence the nature and scope of business activity.

(B) Importance of Business Environment:
(i) Flexible and Dynamic : Changing environmental factors should be appraised from time to time. So as to keep the business flexible and dynamic. The new opportunities and threats created by the environment can be appraised by the corporate planners to make the most of it. Turbulent market conditions, less brand loyalty, more demanding customers and intense global competition are some of the images of todays business environment. In order to cope with these significant changes, organization must understand and examine the environment and develop suitable course of activity.

(viii) Adaptability to Socio-Economic Changes : A business organization needs to show its keen intentions towards adapting to the socio-economic changes.

Question 2.
Explain the new economic policy in details.
Answer:
The new economic policy was introduced by the Government on 24th July, 1991, on the failure of the earlier Industrial policy prevailing in India.
The new policy was known as LPG i.e. Liberalisation, Privatisation and Globalisation. This was the brain child of the Prime Minister P. V. Narasimha Rao and the finance minister Dr. Manmohan Singh.

(i) Liberalisation:
It means to liberate the industry, trade and commerce from the unnecessary restrictions and regulations that curtailed the freedom of enterprise.
Liberalisation has helped the Indian economy to open up and allowed the entry of foreign business in India. The interaction with the world has happened after the 1991 policy.

Liberalisation policy has brought about the following measures:

Encouraging Direct Foreign Investment.
Wide Choice of products and services enjoyed by the customers.
Reduction in control of Foreign Exchange.
Cost of products, price and quality in tune to the global markets.
Changing the approach towards industrial sickness.
Production of quality products to meet the competitive markets.
Freedom to choose the Scale of business.
Reduction in tax rates, tax holidays, etc.
Encouraging new technology, technological upgradation and foreign collaboration.
I mport of machinery, goods and other services on easy terms.
Abolishing licensing system for most of the industries.
Opening telecommunication sector.

Liberalisation has thus made the country achieve high growth rate, made the rupee stronger and helped good industrial relations.

(ii) Privatisation:
Privatisation is a process of transferring ownership of business, enterprise agency or public service from the public sector (government) to the private sector.
Features of Privatisation are:

To provide variety of business units to consumers.
To ensure less political interference in running the business.
To bring about more accountability.
To reduce labour problem.
To bring about a market oriented approach.
To make competition more intense.
To bring about more efficiency.
To maintain capital market discipline.

The government of the country has followed a disinvestment policy.

Disinvestment means:

When there is a sale of a public undertaking in full or part of private sector without transferring the ownership to private sector.
The management and control is transfered to public undertaking e.g. Maruti Udyog Ltd., SAIL, ONGC, etc.
Improvement in the performance of the industries through Memorandum of Understanding (MoU). Privatisation helps the private sector to be efficient result oriented, productive and active. Capitalist countries like America and Japan have followed privatisation.

(iii) Globalisation:
When the operation and organization of business activities are on a global scale, it is called as Globalisation. It is integration of business activities by considering the entire world is one market.

In short globalisation means a boundary less world, where there would be a free flow of goods, services, information, capital and people across nations. Globalisation has effect on socio-economic and political sphere of life.

Features of Globalisation:

Buying and selling goods from/to any country is possible due to globalisation.
Establishing manufacturing, production and distribution facilities in any part of the world.
Freedom to set up’ and operate business in any part of the world.
Render faster economic development of any country.
Exchange of new ideas and technology across nations.
Narrowing differences between domestic and international market.
Direct Foreign private participation in the industrial development of any country.

Thus it could be seen that globalisation is an evolutionary concept. Through the policy of 1991 the government moved the country to this globalisation pattern.

OCM 11th Commerce Textbook Solutions Digest

11th OCM Chapter 6 Exercise Institutes Supporting Business Practical Problems Solutions Maharashtra Board

March 28, 2025March 27, 2025 by Prasanna

Institutes Supporting Business 11th OCM Chapter 6 Solutions Maharashtra Board

Balbharti Maharashtra State Board Organisation of Commerce and Management 11th Textbook Solutions Chapter 6 Institutes Supporting Business Textbook Exercise Questions and Answers.

Class 11 OCM Chapter 6 Exercise Solutions

1. (A) Select the correct option and rewrite the sentence

Question 1.
Small Industrial Development Bank of India (SIDBI) was established in …………………
(a) 1989
(b) 1990
(c) 1991
Answer:
(b) 1990

Question 2.
SIDBI was established under the Small Industrial Development Bank of India Act, …………………
(a) 1988
(b) 1992
(c) 1996
Answer:
(a) 1988

Question 3.
………………… is Principal Financial Institution for Promotion, the Micro, Small and Medium Enterprise (MSME) sector in India.
(a) NABARD
(b) KVIC
(c) SIDBI
Answer:
(c) SIDBI

Question 4.
………………… came into existence on July 12, 1982
(a) NABARD
(b) KVIC
(c) SIDBI
Answer:
(a) NABARD

Question 5.
A Committee to Review the Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD) was constituted under the Chairmanship of …………………
(a) Kothari
(b) Shivaraman
(c) Rangrajan
Answer:
(b) Shivaraman

Question 6.
All India Khadi and Village Industries Board was set up in the year …………………
(a) 1953
(b) 1949
(c) 1948
Answer:
(a) 1953

Question 7.
In April ………………… KVIC was established.
(a) 1955
(b) 1953
(c) 1957
Answer:
(c) 1957

1. (B) Match the pairs

Question 1.

Part A	Part B
(i) SIDBI	(a) 1944
(ii) NABARD	(b) 1990
(iii) World Bank	(c) 1988
(iv) Grameen Bank	(d) 1983
(v) KVIC	(e) 1982
	(f) 1957
	(g) 1932
	(h) 1956
	(i) 1912
	(j) 1960

Answer:

Part A	Part B
(i) SIDBI	(b) 1990
(ii) NABARD	(e) 1982
(iii) World Bank	(a) 1944
(iv) Grameen Bank	(d) 1983
(v) KVIC	(f) 1957

1. (C) Give one word/phrase/term

Question 1.
Life blood of business.
Answer:
Finance

Question 2.
Principal financial institution of promotion of the Micro, Small and Medium Enterprise (MSME) sector in India.
Answer:
SIDBI

Question 3.
Advisor and mentor for MSMEs
Answer:
SIDBI

Question 4.
Wholly owned subsidiary of IDBI was set up in July 1999, is providing venture capital.
Answer:
SIDBI Venture Capital Ltd. (SVCL)

Question 5.
Digital initiative by SIDBI launched on March, 17th, 2016
Answer:
SIDBI Startup Mitra,

Question 6.
The apex institution for agricultural finance.
Answer:
NABARD

Question 7.
The Bangladeshi economist, known as the Father of Micro-finance.
Answer:
Dr. Muhammad Yunus

Question 8.
An international organization dedicated to providing finance, advice and research to developing nations.
Answer:
World Bank

1. (D) State True or False

Question 1.
Small Industrial Development Bank was established on 2nd April, 1990.
Answer:
True

Question 2.
SIDBI has its head office at Mumbai.
Answer:
False

Question 3.
SIDBI is not working towards sustainable development of MSME’s in India.
Answer:
False

Question 4.
SIDBI, Startup Mitra scheme is launched on March 17th, 2016.
Answer:
True

Question 5.
NABARD came into existence on July 12, 1982.
Answer:
True

Question 6.
The NABARD has been recognised as the apex institution for financing large scale industries.
Answer:
False

Question 7.
KVIC is actively working for planning, promotion and production of Khadi as well as in setting up of village and rural industries of India.
Answer:
True

Question 8.
Dr. Muhammad Yunus is known as the ‘Father of Rural Banking’.
Answer:
False

Question 9.
Self Help Group is a large group of homogeneous individuals.
Answer:
False

1. (E) Complete the sentences

Question 1.
The lifeblood of a business is …………………
Answer:
Finance

Question 2.
Micro, Small and Medium Enterprises (MSME’s) are focused domains for …………………
Answer:
SIDBI

Question 3.
SIDBI takes structural initiatives to resolve the financial and non-financial hurdles of …………………
Answer:
MSMEs

Question 4.
SIDBI is established to provide short-term and long-term finance to
Answer:
MSME’s

Question 5.
‘SIDBI Startup Mitra’ launched on …………………
Answer:
March 17th, 2016

Question 6.
To improve accessibility of credit and handholing services to MSME’s, SIDBI has launched the …………………
Answer:
Udyami Mitra

Question 7.
NABARD came into existence on …………………
Answer:
July 12th, 1982

Question 8.
Khadi and Village Industries Commision was set up in …………………
Answer:
1953

Question 9.
A statutory body of Khadi and Village Industries Commission (KVIC) was created with a special Act of …………………
Answer:
Parliament

Question 10.
The Grameen Bank in Bangladesh was set up in …………………
Answer:
October 1983

Question 11.
The father of Micro finance is …………………
Answer:
Dr. Muhammad Yunus

Question 12.
The World Bank came into existence on …………………
Answer:
1944 Bretton Woods Conference

Question 13.
The headquarter of World Bank is in …………………
Answer:
Washington D.C.

Question 14.
Dr. Muhammad Yunus jointly won the Noble Prize in …………………
Answer:
2006.

1. (F) Select the correct option

Question 1.
(1953, 1944, 2nd April 1990, Oct. 1983, 12 July 1982)

Part A	Part B
(i) SIDBI	—————
(ii) ————-	NABARD
(iii) KVIC	—————
(iv) —————	World Bank
(v) Grameen Bank	—————

Answer:

Part A	Part B
(i) SIDBI	2nd April 1990
(ii) 12 July, 1982	NABARD
(iii) KVIC	1953
(iv) 1944	World Bank
(v) Grameen Bank	Oct. 1983 Grameen Bank

1. (G) Answer in one sentence

Question 1.
What is SIDBI?
Answer:
SIDBI is Small Industrial Development Bank of India, which takes initiative to resolve the financial and non-financial hurdles of MSMEs.

Question 2.
What do you mean by NABARD?
Answer:
NABARD is a National Bank for Agriculture and Rural Development, which was formed with an objective to provide and regulate credit and other facilities for the development of agriculture, small scale industries, cottage village industries, handicraft and other rural crafts and allied economic activities.

Question 3.
What is meant by Grameen Bank?
Answer:
Bank which gives small loans to landless poor women to promote self employment is called Grameen Bank.

Question 4.
What is SHG?
Answer:
SHG is a small group of homogeneous individuals who come together with the objective creating common fund through savings and meet members emergency needs by providing collateral free loan.

Question 5.
What do you mean by World Bank?
Answer:
The World Bank is an international organization dedicated to provide finance, advice and research to developing nations.

Question 6.
WhatisMSME’s
Answer:
MSME’s are Micro, Small and Medium Enterprises, which play an important role in promoting entrepreneurship among women and economically weaker section in the country.

Question 7.
What is Udyami Mitra?
Answer:
‘Udyami Mitra’ is the digital portal launched by SIDBI, to improve accessibility of credit and handholding services to MSMEs.

1. (H) Correct the Underlined word and rewrite the following sentences

Question 1.
SIDBI is established to provide only long-term finance to the MSME’s.
Answer:
SIDBI is established to provide short-term and long term finance to the MSME’s.

Question 2.
The NABARD has been recognised as the apex institution for industrial finance.
Answer:
The NABARD has been recognised as the apex institution for Agricultural finance.

Question 3.
Khadi was symbol and the spirit of self reliance in post independence India.
Answer:
Khadi was symbol and the spirit of self reliance in pre independence India.

Question 4.
Self help group are based on the fundamental principle of to earn profit.
Answer:
Self help group are based on the fundamental principle of ‘helping each other’ and “unity is strength”.

Question 5.
World Bank provides high interest loan.
Answer:
World Bank provides low interest loan.

2. Explain the following terms/concepts

Question 1.
Udyami Mitra.
Answer:

This is the portal launched by SIDBI to improve accessibility of credit and handholding services to MSME’s.
Under this portal entrepreneurs can apply for loan without physically visiting any bank branches.
The entrepreneurs can select and apply for preferred banks.
They can select suitable branch, track their application status and avail multiple loan benefits.

Question 2.
KVIC.
Answer:

KVIC was established to take over the work from All India Khadi and Village Industries Board.
KVIC is working for planning, promotion and production of Khadi and setting up of village and rural industries in India.
It gives emphasis on utilizing the locally available raw materials and human skills to generate non-farm employment opportunities in the rural areas.

Question 3.
World Bank.
Answer:

The World Bank is an international organization formed to provide finance, advice and research to developing nations.
It was created at the 1944 Bretton Woods Conference along with the International Monetary Fund (IMF)
The head quarter of World Bank is in Washington D.C.
It provides financial as well as technical assistance to the member countries of the world.
It comprises of two institutions namely – the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).

Question 4.
Self Help-Groups
Answer:

Self Help Group (SHG) is a voluntary association.
It is a small homogeneous group of people who come together with the objective of creating common fund through small savings and meet members emergency needs by providing collateral free loan at reasonable rate.
Many SHG are linked to banking institutions for getting micro-credit.
All decisions are taken collectively by SHG members.

Question 5.
Collateral Free Loan
Answer:

Collateral free loan are SHGs small loans provided to the poor individuals for undertaking self-employment projects.
Loans are given on the principle of mutual trust and either minimum or no documentation.
The rate of interest generally charged are higher than the interest charged by banks.
It saves the poor individuals from the clutches of local money lenders.

3. Study the following case/situation and express your opinion

Anand completed his MBA and wants to start a Small Scale Industry. He is good at using technology. He has very good business idea in mind and looking for a lender or investor.

Question 1.
Who is promoter or businessman in this case?
Answer:
A person who gets the idea of starting the business enterprise is called as promoter or businessman. In the above case Anand is promoter or businessman.

Question 2.
What is full form SSI?
Answer:
The full form of SSI is Small Scale Industry.

Question 3.
Suggest digital ways to find lender or investor for this initiative
Answer:
SIDBI has started Digital initiatives / Digital ways to find lender or investor. For this initiative I can suggest the following ways:
(a) SIDBI Startup Mitra:
It brings together all stakeholders, start-up entrepreneurs, incubators, investors, industry bodies, mentors and advisors and banks on one platform. It helps in financing and development of new entrepreneurs.

(b) Udyami Mitra:
This is a portal launched by SIDBI to improve accessibility of credit and handholding services to MSME’s. Under this portal entrepreneurs can apply for loan without physically visiting any bank branches. The entrepreneurs can select and apply for preferred banks, they can select suitable branch, track their application status and avail multiple loan benefits.

4. Answer in brief

Question 1.
State any four features of NABARD.
Answer:
Features of NABARD:
(i) Apex Bank : NABARD acts as an apex bank for meeting the credit needs of all type of financial institutions working in the field of agricultural and rural development. It works to frame policies and guidelines for rural financial institutions in India. It provides credit facilities to institutes working in agricultural finance.

(ii) Refinancing Facilities : It provides refinancing facilities to State Co-operative Banks (SCBs), Land Development Banks (LDBs), Regional Rural Banks (RRBs) and other approved financial institutions for financing rural economic activities. It also provides short-term, medium term and long term credit to these institutes.

(iii) Provides Credit for Rural Development : It takes initiatives in the development and promotion of different activities in rural area by providing funds to State governments. It also provides refinancing for upliftment of weaker section of the society. It also works on improvement of small and minor irrigation by way of promoting agricultural activities.

(iv) Financing Rural Industries : It provides refinancing facility to small scale industries and other village and cottage industries. It provides loans to commercial and co-operative banks to promote rural employment. It organizes skill and entrepreneurship development programs to promote an entrepreneurial culture among the rural youth and encourage them to start enterprises in the rural areas.

Question 2.
State four objectives of KVIC.
Answer:
Objectives of KVIC :
(i) Development of Khadi and Other Village Industries : KVIC is actively working for planning, promotion and production of khadi as well as in setting up of village and rural industries in India. It identifies the potential for the development of rural industries and undertakes the valuable task of promoting and developing locally operating village enterprises.

(ii) Special Objective : KVIC has a special objective of providing employment. It gives emphasis on utilizing the locally available raw materials and human skills to generate non-farm employment opportunities in the rural areas. It plays a role of co-ordinator with other agencies engaged in rural development.

(iii) Economic Objective : KVIC is actively working for planning, promotion and production of khadi as well as in setting up of village and rural industries in India. KVIC receives fund from the Ministry of MSMEs for effective implementation of various programs and schemes. It helps in producing saleable articles which helps the economic development of the country.

(iv) Wider Objective : It has a wider objective of creating self-reliance amongst the poor and building up of a strong rural community spirit.

Question 3.
Write any four features of World Bank.
Answer:
Features of World Bank:
(i) Organization and Structure : The organization of bank consists of the Board of Governors, the Board of Executive Directors and the Advisory Committee, the Loan Committee and the President and other staff members. All the powers of the bank are vested in the Board of Governors which is the supreme policy making body of the bank. The board consists of one Governor and an Alternative Governor appointed for five years by each member country. The Board of Executive Directors consists of 21 members, 6 of them are appointed by the six largest shareholders, namely USA, UK, Germany, France, Japan and India. The rest of the 15 members are elected by the remaining countries.

(ii) Goals : The World Bank Group has two goals to be achieved by 2030.

To end extreme poverty by decreasing the percentage of people living on less than 1.90 dollars a day to no more than 3%.
To promote shared prosperity by fostering the income growth of the bottom 40% for every country.

(iii) Innovative Knowledge Sharing : World Bank offers support to developing countries through policy, advice, research and analysis and technical assistance. Analytical works of World Bank often helps developing countries. It also helps in capacity development of the developing countries. World Bank also sponsors, host or participates in many conferences and forums on issues of development.

(iv) Social Development : Social Development focuses on the need to “put people first” in development process. The World Bank work with governments, communities, civil societies, the private sector and the marginalized for the cause of social development. Social Development promotes economic growth and leads to higher quality of life.

Question 4.
Describe any two features of Self Help Groups.
Answer:
Features of Self Help Groups:
(i) Democratic Set up : SHG is group of the members, for the members and by the members. Every member of the group actively participates in the functioning of SHGs. Members are responsible for their own future by organizing themselves into SHGs. They elect or select leader for proper functioning of the group. Leader is responsible for holding regular meetings and maintaining records and accounts of the group.

(ii) Collateral Free Loan : SHGs provide small loans to the poor individuals for undertaking self-employment projects. Loans are given on the principle of mutual trust and either minimum or no documentation. Generally the rate of interest are higher than the interest charged by banks. It saves the poor individuals from the clutches of local money lenders. The repayment of loans is ensured timely as all members of group are responsible for collecting repayment amount from the members who borrowed the loan.

Question 5.
Describe any two features of SIDBI.
Answer:
Features of SIDBI:
(i) Financial Institute for Promotion of MSMEs : SIDBI is established to provide short term and long term finance to the MSMEs. It is principal financial institution for micro, small and medium sector units. It also co-ordinate the functions of institutions engaged in financing MSME’s. It provides refinance to Banking and Non-Banking Financial Companies to increase supply of credit to MSMEs.

(ii) Advisory Function : SIDBI also works as advisor and mentor of MSMEs. It helps MSMEs in expanding marketing channels for the products both in domestic as well as international markets. It also initiates steps for modernization and technological upgradation of current units.

5. Justify the following statements

Question 1.
SIDBI acts as an institute for promotion of MSMEs
Answer:

There are many efforts taken by SIDBI to emerge as a brand which is customer friendly towards MSME’s.
It facilitates and strengthens credit flow to MSME’s.
It identifies financial and developmental gaps in the MSME’s and take efforts to resolve the same.
SIDBI has dedicated its resources towards evolution of a vibrant ecosystem.
SIDBI has taken steps for technological upgradation and modernization of existing MSME’s
Thus, we can say that SIDBI acts as an institute for promotion of MSME’s.

Question 2.
SIDBI provides different types of financial and non-financial services through its subsidiaries.
Answer:
The following are the subsidiaries of SIDBI that provides financial and non-financial services:
(i) SIDBI Venture Capital Ltd. provides venture capital to emerging sectors, such as life sciences, biotechnology, pharmaceuticals, engineering and information technology.

(ii) Credit Guarantee Fund Trust for Micro and Small Enterprises is a trust to implement the Credit Guarantee Scheme through which credit facilities are extended without third party guarantee on collateral security by eligible lending banks/financial institutions.

(iii) SME Rating Agency of India Ltd. was set up by SIDBI, Dum & Brandstreet Information Services India Pvt. Ltd. and several public, private and foreign sector banks as an MSME. It is dedicated third-party rating agency and provide comprehensive, transparent and reliable ratings and risk profiling.

(iv) India SME Technology Services Limited is a platform where MSME’s can tap global opportunities for acquiring new emerging technologies and establish business collaborations.

(v) India SME Asset Reconstruction Company Ltd. is an asset reconstruction company. It acquires non-performing assets and try to resolve them through its innovative mechanisms. It specially focus on the non-performing assets of MSME sector.

(vi) Micro Units Development and Refinance Agency is established for ‘funding the unfunded’ micro enterprises in the country.

(vii) Thus, SIDBI provides different types of financial and non-financial services through its subsidiaries.

Question 3.
The NABARD has been recognized as the apex institution for agricultural finance.
Answer:

India is an agricultural country.
Agriculture and its allied activities act as main source of livelihood for most of the rural population of India.
Government of India is aware about the need of boosting institutional credit in rural economy.
The RBI constituted a Committee to review the arrangements for Institutional Credit for Agricultural and Rural Development under the Chairmanship of Shri B. Sivaram, to take review of agricultural credit in India.
The recommendation of the Committee was accepted and National Bank for Agriculture and Rural Development came into existence on July, 12 1982 under the special Act of the Parliament, with an objective of providing credit and other facilities for the development of agriculture.
Thus, we can say the NABARD has been recognized as an apex institution for agricultural finance.

Question 4.
KVIC plays an important role in development of entrepreneurship.
Answer:

Entrepreneurship Development is one of the major functions of KVIC.
KVIC helps to provide additional livelihood avenues to the village communities.
KVIC generate self-employment opportunities through establishment of micro enterprises by organizing traditional artisans and unemployed youth. It increases the earning capacity as well as prevents migration.
KVIC actively participates in many international trade exhibitions for popularising its products in international markets.
Thus, we can say that KVIC plays an important role in development of entrepreneurship.

Question 5.
Mutual Trust is the soul of SHG.
Answer:

Most of the Indian villagers are facing challenges such as poverty, illiteracy, lack of skills, health care, etc.
There is a need of group efforts to solve these problems.
The basic philosophy of forming SHGs is to overcome individual shortcomings and weaknesses with collective efforts.
Through mutual trust thousands of poor and the marginalized individuals are building their lives, their families and their society.
Thus, we can say mutual trust is the soul of SHG.

Question 6.
SHGs play an important role in empowerment of women.
Answer:

The empowerment of women through SHG’s would lead to benefits not only to the individual women but also for the family and community as a whole.
The SHGs empower women and trains them to take active part in socio-economic progress of the nation.
SHG develops saving habits among the women.
It enhances status of women as they participate, lead, take decisions and get benefited through collective efforts,
Thus, we can say that SHG’s play an important role in empowerment of women.

Question 7.
World Bank plays vital role in social development.
Answer:

The World Bank work with governments, communities, civil societies, private sectors and the marginalized for the cause of social development.
Social development promotes economic growth and leads to higher quality of life.
The World Bank work on social development, brings voices of the poor and vulnerable into development process.
World Bank is also undertaking timely social risk analysis, including poverty and social impact analysis,
Thus, World Bank plays a vital role in social development.

6. Attempt the following

Question 1.
State the different forms of finance provided by SIDBI.
Answer:
SIDBI offers the following finance facilities to its customers:

Direct Finance : SIDBI offers direct financing to the MSMEs through financing Working Capital, Term Loan, Foreign Currency Loan, Equity Support, Energy Saving Schemes etc.
Indirect Finance : SIDBI offers indirect assistance by providing refinance to banks, State Level Financial Institutions, etc. with an extensive branch network across the country.
Micro Finance : SIDBI offers micro-finance to small businessmen and entrepreneurs for establishing their business.

Question 2.
State the role of SIDBI in sustainable development.
Answer:
Role of SIDBI in sustainable development:

SIDBI helps MSMEs in creation of economic wealth while preventing ecological wealth of the country.
It promotes the culture of energy efficient and sustainable finance.
It takes initiative to enhance awareness of benefits of climate control amongst MSMEs.
It focuses on lending schemes, promoting investments in clean production and energy efficient technologies.
It helps to reduce the emission of greenhouse gases to contribute towards reduction in pollution.

Question 3.
Explain the role of NABARD in financing rural industries.
Answer:
Role of NABARD in financing rural industries:

It plays an important role in providing refinance to small scale industries and other village and cottage industries.
It provides loans to commercial and co-operative banks to promote rural employment.
It organizes skill and entrepreneurship development programmes to promote an entrepreneurial culture among the rural youth and encourage them to start enterprises in the rural areas.

Question 4.
Explain the objectives of KVIC.
Answer:
Objectives of KVIC are:

The objectives of KVIC are broadly classified into three, i.e. social objective, economic objectives and wider objective.
Through social objective, KVIC aims at providing employment to the rural unemployed.
Through economic objective, it tries to produce saleable articles which will give promotion to KVIC products.
Through wider objective, it attempts to create self refinance amongst the poor and building a strong rural community spirit.

Question 5.
Explain the role of KVIC in employment generation.
Answer:
Role of KVIC in employment generation:

Due to massive population growth agricultural sector is losing its ability to generate additional employment in rural areas.
It is necessary to create employment opportunities for the fast increasing workforce in rural areas.
Khadi and village industries are labour intensive in nature.
The KVIC is established with the broader objective to promote non-farm employment opportunities in rural areas.
It also concentrates on the betterment of rural artisans and socio-economic weaker section of the society.

Question 6.
Explain in detail democratic setup in SHGs.
Answer:
Democratic set up in SHGs:

SHG is group of the members, for the members and by the members.
It is the group which reflects the people’s real participation in the process of development.
Every member of the group actively participates in the functioning of SHGs.
Members are responsible for their own future by organizing themselves into SHGs.
They elect or select leader for proper functioning of the group.
Leader is responsible for holding regular meetings and maintaining records and accounts of the group.

Question 7.
Explain organizational structure of World Bank.
Answer:
Organizational Structure of World Bank:

The organization of the bank consists of the Board of Governors, the Board of Executive Directors and the Advisory Committee, the Loan Committee and the President and other staff members.
Board of Governors is the supreme policy making body of the bank.
The board consists of one Governor and one Alternative Governor appointed for 5 years by each member country.
The Board of Executive Directors consists of 21 member, 6 of them are appointed by the six largest shareholders, namely USA, UK, Germany, France, Japan and India. The rest 15 members are elected by the remaining countries.

7. Answer the following

Question 1.
Write important features of SIDBI.
Answer:
Important features of SIDBI are as follows:
(i) Sustainable Development : SIDBI is working towards sustainable development of MSMEs in India. It helps MSMEs in creation of economic wealth while preventing ecological wealth of the country. It promotes culture of energy efficient and sustainable finance. It helps to reduce the emission of greenhouse gases to contribute towards reduction in pollution.

(ii) Nodal/Implementing Agency : SIDBI has been assigned the role of nodal agency by the Government of India. It helps in implementing various subsidy schemes for MSMEs. These schemes help in upgradation, modernization and expansion of business.

(iii) Financial Institute for Promotion of MSMEs : SIDBI is established to provide short term and long term finance to the MSMEs. It provides refinance to Banking and Non-Banking Financial Companies to increase supply of credit to MSMEs. SIDBI cater to the specific needs of Indian MSMEs that are not fulfilled through traditional sources of finance.

(iv) Advisory Function: SIDBI also works as an advisor and mentor for MSMEs. It helps MSMEs in expanding marketing channels for the products both in the domestic as well as international markets. It also initiates steps for modernization and technological upgradation of current units.

(v) Forms of Finance : SIDBI offers the following facilities to its customers:

Direct Finance
Indirect Finance
Micro Finance

(vi) Digital Initiatives:
(a) SIDBI Startup Mitra:
It brings together all stakeholders, start-up entrepreneurs, incubators, investors, industry bodies, mentors and advisors and banks at one platform. It helps in financing and development of new entrepreneurs. It also works as knowledge partner for State and Central Government.

(b) Udyami Mitra:
This is the portal launched by SIDBI to improve accessibility of credit and handholding services to MSME’s. Under this portal entrepreneurs can apply for loan without physically visiting any bank branches. The entrepreneurs can select and apply for preferred banks, they can select suitable branch, track their application status an avail multiple loan benefits.

(vii) Achievement of National Goals : SIDBI helps in poverty alleviation and employment generation by financing MSMEs. It promotes entrepreneurship and fosters competitiveness in MSME sector. It promotes entrepreneurship among women and economically weaker section of the society.

(viii) Services of MSMEs : SIDBI provides different types of financial and non financial services through its associates and subsidiaries. These associates and subsidiaries are as follows:

SIDBI Ventures Capital Ltd.
Credit Guarantee Fund Trust for Micro and Small Enterprises
SME Rating Agency of India Ltd.
India SME Technology Services Limited
India SME Asset Reconstruction Company Ltd.
Micro Units Development & Refinance Agency

Question 2.
Write important features of NABARD.
Answer:
Important features of NABARD are as follows:
(i) Financing Rural Industries : It plays an important role in providing refinance for small scale industries and other village and cottage industries. It provides loans to commercial and co-operative banks to promote rural employment. It organizes skill and entrepreneurship development programs to promote an entrepreneurial culture among the rural youth and encourage them to start enterprises in the rural areas.

(ii) Assistance to Financial Institutes : It plays an important role in preparing and developing action plans for Co-operative Banks and Regional Rural Banks. It also monitors implementation of developmental action plans of these banks. It provides financial assistance to co-operative banks for building improved Management Information System, computerization of operations and development of human resources.

(iii) Refinancing Facilities : It provides refinancing facilities to State Co-operative Banks (SCBs), Land Development Banks (LDBs), Regional Rural Banks (RRBs) and other approved financial institutions for financing rural economic activities. It also provides short-term, medium term and long term credit to these institutes.

(iv) Credit for Rural Development: It takes initiative in development and promotion of different activities in rural area by providing funds to State government. It also works on improvement of small and minor irrigation by way of promoting agricultural activities.

(v) Apex Bank : NABARD acts as an apex bank for meeting the credit needs of all type of financial institutions working in the field of agricultural and rural development. It works to frame policies and guidelines for rural financial institutions in India. It provides credit facilities to institutes working in agricultural finance.

(vi) Recommendations to Reserve Bank of India : It provides recommendations to Reserve Bank of India on issue of licenses to Co-operative Banks, opening of new branches by State Co-operative Banks and Regional Rural Banks.

(vii) Development of Nation: It plays an important role in the improvement of storage facilities for agricultural commodities by promoting development of warehousing facilities. It also promotes the export of agricultural commodities. It plays a key role in sustainable development of the country through Green, Blue and White revolution.

(viii) Supervision of Financial Institutes Engaged in Agricultural Finance :It undertakes inspection of Regional Rural Banks and Co-operative Banks as per the guidelines of Banking Regulation Act, 1949. It can also undertake inspection of State Co-operative Agriculture and Rural Development Banks and apex non-credit co-operative societies on a voluntary basis.

Question 3.
Write important features of KVIC.
Answer:
Important features of KVIC are as follows:
(i) Research and Development: To face the challenge of globalisation, KVIC has introduced a number of new products range like khadi denim jeans to cater the need of the market. The KVIC undertake trainings of sales staff for effective marketing of the products. KVIC is taking several steps to set standards of quality to ensure genuineness of the khadi products. KVIC signed Memorandum of Understanding with National Institute of Design to provide design support, services in packaging, marketing, communication, publicity, disseminating materials and other design-related activities.

(ii) Other Functions : The KVIC is charged with the planning, promotion, organization and implementation of programs for the development of Khadi and other village industries in the rural area. It organizes training programme for artisans engaged in Khadi and Village Industries.

(iii) Marketing Promotion : In order to attract younger generation, the KVIC is holding exhibitions, seminars, lectures in universities and colleges to disseminate knowledge of KVIC products. KVIC has also launched a massive marketing development plan to generate interest, awareness and attraction amongst masses.

(iv) Financial Assistance : It finances the projects for rural industrialization and also provides for margin money by way of subsidy. There are provisions for higher rate of subsidies in case of beneficiaries of the weaker section, tribal areas and backward regions. KVIC also provides financial assistance to institutions and individuals for development and operation of Khadi and Village industries.

(v) Rural Development : The Khadi and Village Industries plays an important role in the development of Indian economy, particularly in the development of the rural areas. KVIC facilitates proper utilization of natural resources in rural India for generating income for the rural masses.

(vi) Employment Generation: Due to increasing workforce, it is necessary to create employment opportunities. KVIC are labour intensive in nature. The broader objective of KVIC is to promote non-farm employment opportunities in rural areas.

(vii) Entrepreneurship Development : KVIC helps to provide additional livelihood avenues to the village communities. KVIC generate self-employment opportunities through establishment of micro enterprises by organizing traditional artisans and unemployed youth.

Question 4.
Write important features of SHGs.
Answer:
Important features of SHGs are as follows:
(i) Formation : It is generally formed by NGO’s or team of the government. It is an informal group. It is recognized by the government and does not require any formal registration. SHGs have well-defined rules and by-laws, hold regular meetings and maintain records.

(ii) Membership : As per the National Urban Livelihood Mission at least 5 members are required. It is difficult to manage bigger group and members cannot actively participate. From one family only one person can become a member so that more families can participate. Mixed groups are generally not preferred.

(iii) Entrepreneurship Development : The poor individuals in rural area face scarcity of capital and managerial skills. SHGs provide them capital at low interest rate which give them opportunity to start micro enterprise. These micro enterprises use untapped manpower in the area which generates employment opportunities in rural area.

(iv) Collateral Free L oan: SHGs provide small loans to the poor individuals for undertaking self-employment projects. Loans are given on the principle of mutual trust and either minimum or no documentation is required to get loan. The rate of interest differs from group to group and it is little higher than the interest charged by banks. It ensures timely repayment of loans as all members of the group are responsible for collecting repayment amount from the members who borrowed the loan.

(v) Democratic Setup : SHG is group of members, for the members and by the members. It is the group which reflects the people’s real participation in the process of development. Members elect or select leader for proper functioning of the group. Leader is responsible for holding regular meetings and maintaining records and accounts of the group.

(vi) Empowerment of Women : SHG is an emerging tool for socio-economic development of women all over the world. SHGs are working effectively in promoting women entrepreneurship. SHGs empower women by providing her knowledge, finance and opportunities.

(vii) Saving Habits : The SHG encourages small saving habits at regular interval among its members. The Self Help Group inculcates the thrift and savings habit among the members of each group.

(viii) Mutual Trust : Most of the Indian villages are facing challenges such as poverty, illiteracy, lack of skills, health care, etc. The basic philosophy of forming SHGs is to overcome individual shortcomings and weaknesses with collective efforts. Through mutual trust thousands of the poor and marginalized individuals are building their lives, their families and their society.

Question 5.
Write important features of World Bank.
Answer:
Important features of World Bank are as follows:
(i) Organisation and Structure : The organization of the bank consists of the Board of Governors, the Board of Executive Directors and the Advisory Committee, the loan Committee and the President and other staff members. Board of Governors is the supreme policy making body of the bank. The board consists of one Governor and one Alternative Governor appointed for 5 years by each member country. The Board of Executive Directors consists of 21 member, 6 of them are appointed by the six largest shareholders, namely USA, UK, Germany, France, Japan and India. The rest 15 members are elected by the remaining countries.

(ii) Innovation and Entrepreneurship : Innovation and Entrepreneurship helps in higher productivity which leads to increased economic growth. It helps in creation of employment to eradicate poverty. Young and growth oriented companies contribute in employment growth. They help in enhancing competitiveness and productivity by introducing new products, developing novel business models and opening new markets. The World Bank brings global experience, knowledge, research and investments to help client countries develop effective innovation and entrepreneurship ecosystems, such as policies, strategies, regulations and institutions that foster investments and jobs.

(iii) Financial Products and Services : World Bank provides low-interest loans, zero to low interest credits, and grants to developing countries. It supports in areas such as education, health, public administration, infrastructure, financial and private sector development, agriculture and environmental and natural resource management.

(iv) Innovative Knowledge Sharing : World bank sponsors, host or participates in many conferences and forums on issues of development. It also collaborates with partners on many developing issues. It also takes effort to provide access to the best global expertise to the developing countries.

(v) Goals :
The world bank group has set 2 goals to be achieved by 2030.

End extreme poverty by decreasing the percentage of people living on less than 1.90 dollars a day to no more than 3%.
Promote shared prosperity by fostering the income growth of the bottom 40% of every country.

(vi) Social Development : Social Development focuses on the need to ‘put people first’ in development process. The World Bank’s work on social development, brings voices of the poor and vulnerable into development.

OCM 11th Commerce Textbook Solutions Digest

11th OCM Chapter 5 Exercise Forms of Business Organisation – II Practical Problems Solutions Maharashtra Board

March 28, 2025March 27, 2025 by Prasanna

Forms of Business Organisation – II 11th OCM Chapter 5 Solutions Maharashtra Board

Balbharti Maharashtra State Board Organisation of Commerce and Management 11th Textbook Solutions Chapter 5 Forms of Business Organisation – II Textbook Exercise Questions and Answers.

Class 11 OCM Chapter 5 Exercise Solutions

1. (A) Select the correct option and rewrite the sentence

Question 1.
Departmental Organisation is financed through …………………… appropriations made by the legislature.
(a) annual budget
(b) monthly budget
(c) quarterly budget
Answer:
(a) annual budget

Question 2.
A ………………. is an autonomous corporate body created by the special Act of the parliament or State legislature.
(a) Statutory corporation
(b) government company
(c) MNC
Answer:
(a) Statutory corporation

Question 3.
A statutory corporation is answerable to ……………… or state assembly whosoever creates it.
(a) Parliament
(b) public
(c) employees
Answer:
(a) Parliament

Question 4.
In government company minimum …………………. % paid up capital is held by government.
(a) 51
(b) 41
(c) 31
Answer:
(a) 51

Question 5.
The shares of government company are purchased in the name of ………………
(a) President of India
(b) Chief Minister
(c) Defence Minister
Answer:
(a) President of India

Question 6.
Government on the advice of ………………… appoints auditor of government company.
(a) Comptroller and Auditor General of India
(b) auditor
(c) chartered accountant
Answer:
(a) Comptroller and Auditor General of India

Question 7.
A government company is a ………………… entity separate from the government.
(a) natural
(b) legal
(c) human
Answer:
(b) legal

Question 8.
……………… company has public accountability.
(a) MNC
(b) Private
(c) Government
Answer:
(c) Government

Question 9.
MNCs are powerful ……………….. entities.
(a) economical
(b) political
(c) social
Answer:
(a) economical

1. (B) Match the pairs

Question 1.

Group A	Group B
(a) BHEL	(1) Special Legislature
(b) Statutory Corporation	(2) 49% paid up capital by Government
(c) Departmental Organisation	(3) Service Motive
(d) Private Sector	(4) Railway
(e) Public Sector	(5) Profit motive
	(6) 51% paid up capital by Government

Answer:

Group A	Group B
(a) BHEL	(6) 51% paid up capital by Government
(b) Statutory Corporation	(1) Special Legislature
(c) Departmental Organisation	(4) Railway
(d) Private Sector	(5) Profit motive
(e) Public Sector	(3) Service Motive

1. (C) Give one word / phrase / term

Question 1.
Organisations which are owned by individual or group of individuals.
Answer:
Private Sector Organisations

Question 2.
Organisations which are owned by government.
Answer:
Public Sector Organisations

Question 3.
The sector which aims at profit maximization.
Answer:
Private sector

Question 4.
The sector which aims at providing reliable services to customers.
Answer:
Public sector Organisation

Question 5.
Organisations which are owned, financed, managed and controlled by government or combination of governments.
Answer:
Public sector Organisation

Question 6.
The organisation which is owned, managed, controlled and financed by government.
Answer:
Departmental Organisation

Question 7.
The oldest form of business organisation under public sector.
Answer:
Departmental Organisation

Question 8.
The organisation which performs it’s all activities as an integral part for government only.
Answer:
Departmental Organisation

Question 9.
The organisation which is financed through annual budget appropriations made by the legislature.
Answer:
Departmental Organisation

Question 10.
The organisation in which there is direct and absolute control of government over the enterprise.
Answer:
Departmental Organisation

Question 11.
An autonomous corporate body created by the Special Act of the parliament or state legislature with defined powers, functions and duties.
Answer:
Statutory Corporation

Question 12.
An organisation which is answerable to parliament or state assembly whosoever creates it.
Answer:
Statutory Corporation

Question 13.
An organisation which is not subject to the budget, accounting and audit controls by the government.
Answer:
Statutory Corporation

1. (D) State True or False

Question 1.
Private sector organisations are owned by individual or group of individuals.
Answer:
True

Question 2.
Public sector organisations are owned by government.
Answer:
True

Question 3.
Private sector aims at providing reliable services to customers.
Answer:
False

Question 4.
Public sector was undertaken as a part of industrial policy, 1956.
Answer:
True

Question 5.
Departmental organisation is the oldest form of business organisation under public sector.
Answer:
True

Question 6.
Departmental organisation performs its all activities separately from government.
Answer:
False

Question 7.
The Minister-in-charge of ministry is the head of departmental organisation.
Answer:
True

Question 8.
There is always problem of red tapism and bureaucracy in departmental organisation.
Answer:
True

Question 9.
There is large scope for the initiative and skill in departmental organisation.
Answer:
False

Question 10.
In departmental organisation there is flexibility in operations.
Answer:
False

1. (E) Find the odd word out

Question 1.
Indian Post, Indian Railway, Bank of India, Air India.
Answer:
Bank of India

Question 2.
Life Insurance Corporation, Reserve Bank of India, Bharat Heavy Electricals Limited, ONGC.
Answer:
Bharat Heavy Electricals Limited

Question 3.
Pepsi, Coca Cola, Dabur, Proctor & Gamble.
Answer:
Dabur

Question 4.
Tata Motors, Hindustan Aeronautics Limited, Steel Authority of India Limited, Gas Authority of India Limited.
Answer:
Tata Motors

1. (F) Complete the sentences

Question 1.
A Government company is a ………………… entity separate from the government.
Answer:
Legal

Question 2.
………………… is owned, managed, controlled and financed by government.
Answer:
Departmental Organisation

Question 3.
A ………………… has defined powers, functions and duties.
Answer:
Statutory corporation

Question 4.
All government companies are registered under ………………… Act, 2013.
Answer:
Companies

Question 5.
MNCs are powerful ………………… entities.
Answer:
economical

1. (G) Answer in one sentence

Question 1.
What is Government Company?
Answer:
The Company which is registered under Companies Act, 2013 having minimum 51% of paid up share capital held by central government or any state government or partly by central government and partly by one or more state governments is known as Government company.

Question 2.
What is Departmental Organisation?
Answer:
It is the oldest form of business organisation. Departmental Organisation performs its all activities as an integral part for government only.

Question 3.
What is Statutory Corporation?
Answer:
Statutory Corporation is an autonomous corporate body created by the special act of the parliament or state legislature with defined powers, functions and duties.

Question 4.
What is Multinational Corporation?
Answer:
A multinational corporation is a business organisation that operates in many different countries at the same time.

Question 5.
What is Public Sector?
Answer:
Public sector organisations are those organisations which are setup by the government with the main object of providing essential services to the general public.

Question 6.
What is Private Sector?
Answer:
Private sector business which are owned by private individuals or group of individuals are termed as private sector organisation.

1. (H) Correct the underlined word and rewrite the following sentences

Question 1.
Statutory Corporation is a natural person created by Special Act.
Answer:
Statutory Corporation is an artificial person created by special act.

Question 2.
A Statutory Corporation is not answerable to parliament or state assembly.
Answer:
A statutory corporation is answerable to parliament or state assembly.

Question 3.
MNC have existence only in single country.
Answer:
MNC have existence in many countries.

Question 4.
Departmental Organisation has separate existence from government.
Answer:
Departmental Organisation has no separate existence from government.

Question 5.
Private sector aims at providing essential services to customers.
Answer:
Public sector aims at providing essential services to customers.

2. Explain the following terms/concepts

Question 1.
Public Sector Organisation.
Answer:

It is owned, managed, controlled and financed by government.
It includes – Departmental Organisation, Statutory Corporation and Government Companies.
Its main objective is to provide services to society.
It is managed by government officials or Board of Director.
It is large in size and operates on large scale.

Question 2.
Private Sector Organisation.
Answer:

It is owned, managed, controlled and financed by individuals or group of individuals.
It includes – Sole Trading Concern, Joint Hindu Family Firm, Partnership Firm, Joint Stock Company and Co-operative Society.
Its main objective is to maximise profit.
It is managed by the owner himself or by their elected representatives.
It generally operate in industrial and commercial areas only.

Question 3.
Departmental Organisation.
Answer:

It is owned, managed, controlled and financed by government.
It is managed by government officials of concerned ministry.
They do not have autonomy in decision making.
They do not have separate legal entity distinct from government.
It is funded through annual budget of the government.

Question 4.
Statutory Corporation.
Answer:

It is formed under a Special Act of Parliament or State Legislature.
It is managed by Board of Director who are appointed by the government.
They enjoy autonomy in decision making.
They have separate legal entity distinct from government.
It is funded by the government initially and also in need of additional capital.

Question 5.
Government Company.
Answer:

It is a company where 51% of the paid up capital is held by Central Government or State Government jointly or individually.
It is managed by Board of Directors appointed by Government and Shareholders.
It is formed and registered under Companies Act, 2013.
They can borrow funds by issuing shares to the public or through debentures, deposits, etc.

Question 6.
Multinational Corporation.
Answer:

It is a business organisation that operates in many different countries.
It conducts business activities in more then one country.
It is controlled through centrally located head office.
They are also called as transnational or international corporations.
Example : Bata India, Infosys, Tata Motors, etc.

3. Study the following case/situation and express your opinion

1. There is X company in which capital contribution by different entities are as follows : Madhya Pradesh Government 35%, Maharashtra Government 35% and Government of India 30% of company.

Question 1.
Find out type of this company.
Answer:
‘X’ company is a Government Company.

Question 2.
Tell any two features of this company.
Answer:
Separate legal entity and Registration under the Companies Act, 2013 are the features of “X Government Company.

Question 3.
Give an example of this type of company.
Answer:
Hindustan Machine Tools (HMT), State Trading Corporation (STC), are the examples of the Government Company.

2. There is a company which is having a registered office in Singapore and such company is having branch offices in Varanasi (India) and Hambantota (Sri Lanka). This company provides cellular services to host countries through their respective branch offices.

Question 1.
Find out type of organisation.
Answer:
This type of organisation is called as Multinational Corporation.

Question 2.
Comment on it.
Answer:
Multinational Corporation means the companies which undertake business activities in more than one country. So this company is registered in Singapore and having branches in India and Sri Lanka.

Question 3.
Name the business organisation, which is self-financed, delegates authority and run by government as an integral part of it.
Answer:
It is a Departmental Organisation.

Question 4.
State any two merits of this organisation.
Answer:
No separate legal entity and Government employees are the merits of Departmental Organisation.

3. A central government passes a statute in the parliament and forms a business organisation which is having autonomy in administration and this organisation is answerable to legislature.

Question 1.
Which type of organisation is this?
Answer:
It is a Statutory Corporation.

Question 2.
Give any three Features of this organisation.
Answer:
Corporate body, No political interference, Own staffing system are the features of Statutory Corporation.

Question 3.
Give any one example of this type of organisation.
Answer:
“Life Insurance Corporation of India” is the example of Statutory Corporation.

4. Distinguish between the following

Question 1.
Private Sector Organisation and Public Sector Organisation.
Answer:

	Private Sector Organisation	Public Sector Organisation
(1) Meaning	Private enterprises are owned managed, controlled and financed by individuals or groups of individuals. Thus, ownership and management is with private organisations.	Public enterprises are owned, managed and controlled by the state on behalf of the people.
(2) Management	It is managed by industrialists through board of directors and other specialized executives.	It is managed by government officials or board of directors.
(3) Size of Entity	They are usually of small or medium size depending on volume of operation.	They are usually large in sized and they operate on large scale.
(4) Capital provider	Capital is contributed by owner from their own resources and borrowings from financial institutions.	The capital of public sector organisation is contributed by government.
(5) Decision making	Decision making is quick as very few officials are involved in decision making process.	Decision making is delayed due to bureaucratic hurdles.
(6) Business area	It generally operates in industrial and commercial areas only.	It operates in utility services areas like – railways, post, etc. and also in industrial and commercial areas.
(7) Main motive	Main motive of private sector organisation is to earn a profit.	Main motive of public sector organisation is to provide services to society.
(8) Flexibility	They are more flexible in nature as their policies can be modified as and when the need arises.	There is no flexibility in their operations as any change or modification requires the approval of thp Government.
(9) Political Interference	In private enterprises, there is no political interference and therefore executive enjoys complete autonomy and freedom of operations.	Public enterprises working is always affected by political interference. There is constant danger of undue interference by political parties and their leaders.
(10) Competition	Private enterprises operate in cut throat competition.	Public enterprises are generally monopolies or oligopolies (only two sellers in market.)
(11) Economic Equalities	Private sector increases economic inequalities.	Public Enterprises reduce economic inequalities.
(12) Regional Balance	Private enterprise increase regional imbalance because it wants to enjoy the advantages of location of industries.	Public enterprises tries to reduce the regional imbalance as it intends to bring about balanced regional development.
(13) Efficiency	Private Enterprises are more efficient due to profit maximisation, division of labour and specialisation.	Public enterprises lack initiative, flexibility and efficiency because profit motive is absent.
(14) Constituents	Sole Trading Concern, Joint Hindu Family Firm, Partnership Firm, Joint Stock Companies, Co-operative Society are different forms private sector.	Departmental Organisation, Statutory Corporations and Government companies are types of public sector.

Question 2.
Departmental Organisation and Statutory Corporation.
Answer:

	Departmental Organisatio	Statutory Corporation
Meaning	The organisation which is owned, managed, controlled, financed and operated by government is known as Departmental Organisation.	The company which is formed under a special Act of Parliament or State Legislature is known as Statutory Corporation.
Management	It is managed by government officials of the concerned ministry.	It is managed by board of directors nominated by government.
Legal Status	There is no separate legal status distinct from the government.	Statutory company has a separate legal status distinct from the government.
Borrowing Power	Departmental undertaking cannot borrow from public. It has to depend on budget allocated by the government.	Statutory Company can borrow from public by issue of shares and debentures.
Control	It is controlled by the concerned ministry.	It is controlled by government by the Act of Parliament or State Legislature.
Capital	Capital of departmental organisation comes from annual budget appropriations of the government.	Capital for statutory company comes from Central or State Government.
Formation	It is formed through Executive decision taken by the concerned ministry.	It is formed by passing a Special Act in the Parliament or in the State Legislature.
Suitability	It is suitable for defence and public utility undertakings such as infrastructure projects, e.g. Railways, Post & Telegraph, Defence, etc.	It is suitable for public utilities, development projects, service industry like banking and finance and other industrial and commercial undertakings e.g. UTI, LIC, RBI, ONGC, Air India etc.
Staff	Employees appointed are Government servants. They are subject to the same discipline and enjoy the same privileges as meant for civil servants.	Employees can be recruited independently. They are not civil servants. The corporation can have its own rule of recruitment and scale of remuneration.
Flexibility	It has low flexibility in its operation.	It has moderate flexibility in its operation.
Autonomy	It does not have autonomy in decision making.	It has autonomy in decision making.

Question 3.
Government Company and Multinational Corporation.
Answer:

	Government Company	Multinational Corporation
Meaning	Government Company means company where minimum 51% of the paid up capital is held by the Central or State Government jointly or individually.	Multinational Corporation is a company which is incorporated in one country and has business units in several countries.
Capital	The capital is contributed by the Central Government or State Government or even by general public.	The capital is contributed by the shareholders or financial institutions in several countries.
Management and Control	Government Company is managed by Board of Directors appointed by government and shareholders.	Multinational corporation is managed by a parent company. It manages affairs of the subsidiary from the respective home country.
Establishment	Government companies are formed and registered under provisions of Companies Act, 2013.	Multinational corporations have to seek permission from the government and host countries.
Borrowing power	Government companies can borrow funds by the way of debt or issuing shares to the public.	Multinational corporation use resources of different countries.
Area of Operations	Government company operates within the local boundaries of a nation.	MNC operates in several countries, having headquarters in one country.
Motive	Government companies are service oriented and hence take interest in the social welfare activities of the country.	MNCs are profit motivated rather than service oriented.
Accountability	Government Company has to take its annual reports in the Parliament where its working is discussed and debated. Though it has autonomy in financial matters, it is indirectly accountable to the publics.	MNC is accountable to the taxation authorities in host countries and have to follow procedures such as Income Tax law procedure, FEMA, EXIM Policy etc. and as such will have to obey the laws of the host countries.
Currency	They have to deal with single currency.	They have to deal with multiple currencies and exchange rates.
Resource availability	Government company uses resources of government and its employees are government employees and are permanent.	MNCS use resources of different countries and their employees are on contract basis.
Trust and Public Confidence	Government company enjoy more public confidence as they have government backing and support.	MNCS do not have government backing and support in host countries.
Example	Steel Authority of India Ltd., State Trading Corporation, Indian Oil Corporation, BHEL, HMT, etc.	Hindustan Lever Ltd., Colgate Palmolive India Ltd; Coca Cola, IBM Computers, Sony, etc.

Question 4.
Departmental Organisation and Multinational Corporation.
Answer:

	Departmental Organisation	Multinational Corporation
Meaning	The organisation which is owned, managed, controlled, financed and operated by government is known as Departmental Organisation.	Multinational Corporation is a company which is incorporated in one country and has business units in several countries.
Management	Departmental Organisation is managed by government officials of the concerned ministry.	Multinational Corporation is managed by parent company. It manages affairs of the subsidiary from the respective home country.
Legal status	There is no separate legal status distinct from the government.	It has separate legal status.
Borrowing power	Departmental undertaking cannot borrow from public. It has to depend on budget allocated by the government.	Multinational corporation use resources of different countries.
Control	Departmental Organisations are controlled by the concerned ministry.	Multinational corporations are controlled by respective parent companies and mostly home strategic.
Capital	Capital of the Departmental Organisation comes from annual budget appropriations of the government.	The capital is contributed by the shareholders or financial institutions in several countries.
Ownership	Departmental undertaking is fully owned by the Government.	Ownership of MNC is in hands of shareholder’s of the company.
Privileges & Concessions	It receives highest government concessions and privileges.	MNC do not have any concessions. They have to pay duties and taxes.

Question 5.
Government Company and Statutory Corporation.
Answer:

	Government Company	Statutory Corporation
Meaning	Government Company means company where minimum 51% of the paid up capital is held by the Central or State Government jointly or individually.	The company which is formed under a special Act of Parliament or State Legislature is known as Statutory Corporation.
Capital	The capital is contributed by the Central Government or State Government or even by general public and financial institutions.	Capital for the statutory corporation comes from Central or State government.
Managemen	Government Company is managed by Board of Directors appointed by government and shareholders.	Statutory Corporation is managed by Board of Directors nominated by government.
Control	These companies are controlled by government or shareholders.	Statutory corporation is controlled by government by the Act of Parliament or State Legislature.
Establishment	Government companies are formed and registered under provisions of Companies Act, 2013.	The statutory corporation is established by special Act of the Parliament or State Legislature.
Borrowing power	Government companies can borrow funds by the way of debt or issuing shares to the public.	tatutory corporation can borrow from public by issue of bonds.
Privileges & Concessions	It has no privileges and concessions by government.	It enjoys moderate privileges and concessions.
Suitability	It is suitable for industrial and commercial undertakings, e.g. BHEL, SAIL, HMT, Indian Oil Corporation, Indian Refineries, Madras Refineries, Gujarat Refineries, etc.	It is suitable for public utilities, development projects, service industry like banking and finance and other industrial and commercial undertakings e.g. UTI, LIC, RBI, ONGC, Air India etc.
Political Interference	It has less political interference in management of company as it has its own Board of Director.	It has more political interference as it is controlled by State and Central Government.
Flexibility	Government companies are more flexible in operations of business. They can change line of business as per market trend.	Statutory company are rigid in operations they are formed for the particular purpose.
Accountability	It is accountable to public.	It is accountable to State and Central Government.
Autonomy	It has full autonomy as its incorporated under Companies Act, 2013.	It has theoretical autonomy as its established with certain purpose by Central or State Government.

Question 6.
Departmental Organisation and Government Company.
Answer:

	Departmental Organisation	Government Company
Meaning	The organisation which is owned, managed, controlled, financed and operated by Government is known as Departmental Organisation.	Government Company means company where minimum 51% of the paid up capital is held by the Central or State Government jointly or individually.
Management	Departmental Organisation is managed by government officials of the concerned ministry.	Government Company is managed by Board of Directors appointed by government and shareholders.
Legal Status	There is no separate legal status distinct from the government.	A Government company has legal status separate from the Government.
Borrowing power	Departmental undertaking cannot borrow from public. It has to depend on budget allocated by the government.	Government companies can borrow funds by the way of debt or issuing shares to the public.
Control	Departmental Organisations is controlled by the concerned ministry.	These companies are controlled by government or shareholders.
Capital	Capital of the departmental Organisation comes from annual budget appropriations of the government.	The capital is contributed by the Central Government or State Government or even by general public and financial institution.
Formation	It is formed through Executive decision taken by the concerned ministry.	It is formed through registration under Companies Act, 2013.
Privileges & Concessions	It receives highest government concessions and privileges.	It has no privileges and concessions by government.
Suitability	It is suitable for defence and public utility undertakings such as infrastructure projects, e.g. Railways, Post & Telegraph, Defence, etc.	It is suitable for industrial and commercial undertakings, e.g. BHEL, SAIL, HMT, Indian Oil Corporation, Indian Refineries, Madras Refineries, Gujarat Refineries, etc.
Staff	Employees appointed are Government servants. They are subject to the same discipline and enjoy the same privileges as meant for civil servants.	Employees can be recruited independently and it does not have to necessarily follow civil service rules.
Political Interference	It has high political interference with regards to the management.	As compared to departmental organisation it has less political interference.
Flexibility	It is rigid in operations as its managed through officers of the government.	It is more flexible in operations as managed by Board of Directors.
Motive	It is majorly concern with providing service to the people.	It is concern with giving with profit making and service to the people.
Accountability	Highly accountability to the respective the Minister in charge as they render their service.	Low accountability to the people as they render their service.
Autonomy	There is no autonomy as its owned, managed controlled, financed by government.	It has full autonomy as per provisions to Companies Act, 2013.

Question 7.
Statutory Corporation and Multinational Corporation.
Answer:

	Statutory Corporation	Multinational Corporation
Meaning	The company which is formed under a Special Act of Parliament or State Legislature is known as Statutory Corporation.	Multinational corporation is a company which is incorporated in one country and has business units in several countries.
Capital	Capital for the statutory corporation comes from Central or State government.	The capital is contributed by the shareholders or financial institutions in several countries.
Management	Statutory Corporation is managed by Board of Directors nominated by government.	Multinational Corporation is managed by parent company and it manages affairs of the subsidiary from the respective home country.
Control	Statutory Corporations are controlled by government by the Act of Parliament or State Legislature.	Multinational Corporations are controlled by respective parent companies.
Establishment	The Statutory Corporation is established by Special Act of the parliament or State Legislature.	Multinational Corporations have to seek permission from the Government and host countries.
Borrowing power	Statutory company can borrow from public by issue of shares and debentures.	Multinational Corporation use resources of different countries.
Area of Operations	Statutory corporation operates within the local boundaries of a nation. Hence, the area of operations is not large.	MNC operates in several countries, having headquarters in one country. Hence, the area of operations is large.
Motive	Statutory Corporation are service oriented and hence take interest in the social welfare activities of the country.	MNCs are profit motivated rather than service oriented. They render service in those areas where the opportunities for profit maximisation are more.
Accountability	Statutory corporation has to take its annual reports in the Parliament where its working is discussed and debated.	MNC is accountable to the taxation authorities in host countries and have to follow procedures such as Income Tax law procedure, FEMA, EXIM Policy etc. and as such will have to obey the laws of the host countries.
Currency	They have to deal with single currency.	They have to deal with multiple currencies and exchange rates.
Resource availability	Employees can be recruited independently. They are not civil servants. The corporation can have its own rule of recruitment and scale of remuneration.	MNC’s use resources of different countries and their employees are on contract basis.
Trust and Public Confidence	Statutory corporation enjoy more public confidence as they have government backing and support.	MNC’s do not have government backing and support in host countries.
Example	UTI, LIC, RBI, ONGC, Air India, etc.	Hindustan Lever Ltd., Colgate Palmolive India Ltd; Coca Cola, IBM Computers, Sony, etc.

5. Answer in brief

Question 1.
State any four features of Departmental Organisation.
Answer:
Features of Departmental Organizations:
(i) Delegation of Authority : All major policy decisions are taken by the ministry. The day-to-day working is looked after by the staff consisting of civil servants of IAS, IPS cadres.

(ii) Organizational Structure : The internal organizational structure is of line type. The department is headed by minister who is responsible for the working of the department. Then there is Board of Directors or Managing Committee who are assisted by Chief Executive, Executive Assistant, Supervisory and General Staff. This is termed as bureaucracy style or military style of organisation.

(iii) Government Employees : The employees of departmental organization are civil servants and they are selected through Union Public Service Commission. Staff selection Board, Railway Recruitment Board etc. and as such they are treated as Government employees.

(iv) Financed by the Government: The funds are arranged for their operation from Government treasury. This enterprise cannot borrow money from the public without Government consent.

Question 2.
State any four features of Statutory Corporation.
Answer:
Features of Statutory Corporation:
(i) No political Interference : It enjoys freedom from political, parliamentary and government interference in day-to-day management.

(ii) Own Staffing System: They recruit their own employees and they are not government servant. Employees terms and services are not governed by civil services rules.

(iii) No Political Interference : It enjoys freedom from political, parliamentary and government interference in day to day management of its affairs.

(iv) Financial Autonomy : Statutory Corporations are financially autonomous. After getting the prior permission from the Government, it can even borrow money within and outside the country.

(v) Independent Identity : They have an independent identity different from the government. Though, the overall business policies are formulated by the government, they have administrative autonomy and hence operational flexibility.

Question 3.
State any two demerits of Multinational Corporation.
Answer:
Demerits of Multinational Corporation:
(i) Danger for Domestic Industries : Multinational Corporations have vast economic power so they are danger to domestic industries which are still in process of development. Domestic industries not so powerful to face the challenges of Multinational Corporation.

(ii) C reate Problem for Environment: Profit is sole objective of multinational corporation. Such companies damage environment of developing countries. To lower the price of goods they dump lower standard quality product which harms local soil, water and air.

(iii) O utsourcing of Job: Normally MNCs outsource the job work due to lower cost, due to this their liabilities towards employees are reduced.

(iv) Misuse of Mighty Status : Multinational Corporations have powerful financial strength because of huge capital. They can afford to bear losses for a long while in the hope of earning huge profits. They have ended local competition and achieved monopoly. This may be unfair.

Question 4.
State any four merits of Government Company.
Answer:
Merits of Government Company:
(i) Profitability and Accountability : It works on business principles and follows commercial approach. Though not profit oriented like private sector, it does make reasonable profit which is used for public welfare, modernisation, renovation and development. Moreover, its performance can be evaluated by the Parliament as it has public accountability.

(ii) Internal Autonomy: Government Company enjoys financial and administrative autonomy. Its dependence on Government authority is minimum. It has its own capital structure, financial plan, borrowing powers and so on.

(iii) Government Ownership ; The ownership of the government company rests with Central or State Government who owns major capital of the company and as such looks after its management and control. Government always promotes public welfare.

(iv) Foreign Capital and Technical Know how : As the government provides 51% of the capital, the rest 49% can be raised through foreign investment. By seeking foreign capital, Government companies bring advanced technology and technical know how.

6. Justify the following statements

Question 1.
Departmental Organisations are run for providing public services.
Answer:

Departmental Organisations are the oldest forms of public enterprises.
Indian railways, post office, defence, All India Radio are the Departmental Organisations.
Indian Railways give services to public.
Main objective of Departmental Organisations is to provide services to public.
Private sector aims at profit maximization while public sector aims to providing reliable services to customers.
Thus, Departmental Organisations are run for providing public services.

Question 2.
There is direct control of Government on departmental organisation.
Answer:

Departmental organisations are run by the Government.
Departmental organisations are financed through annual budget of Government.
Revenues of departmental organisation is directly paid to Government treasury.
Departmental organisation has no separate existence from Government.
The staff of enterprises is treated equally with other civil servants.
Thus, there is direct control of Government on departmental organisation.

Question 3.
There is no political interference in statutory corporation.
Answer:

A Statutory corporation is an autonomous corporate body.
Statutory corporation is an artificial person created by law and it has an independent legal entity.
Employees are not government servants.
A statutory corporation enjoys financial autonomy or independence.
A statutory corporation comes into existence by following particular act, therefore, there is no political interference in formation.
Thus, all statutory corporations are free from political interference.

Question 4.
There is professional management in statutory corporation.
Answer:

A statutory corporation is able to manage its affairs with independence and flexibility.
Management of statutory corporation is done without any government interference.
The statutory corporation is relatively free from red tapism.
There is less file work and less formality to be completed before taking decisions.
Board of directors of statutory corporation consists of business experts and the representatives of various groups such as labour, consumers, etc. who are nominated by the government.
Thus, there is professional management in statutory corporation.

Question 5.
MNC helps to end local monopolies.
Answer:
Multinational corporation helps to end local monopolies.

Multinational corporations lead to competition in the host countries.
Local monopolies of host countries either start improving their products or reduces their prices.
Multinational corporation put an end to exploitative practices of local monopolists.
As a matter of fact, MNCs compel domestic companies to improve their efficiency and quality.
Thus, MNC helps to end local monopolies.

Question 6.
MNC has worldwide existence.
Answer:

As multinational corporation is operating on a global basis.
Multinational corporation have marketing operations in several countries operating through a network and branches.
They have production facilities in several countries.
Advanced Technology and international business operations are done by MNC.
It brings in much needed foreign capital for the rapid development.
Multinational corporation integrate economies of various nations with the world economy.
Thus, MNC has worldwide existence.

Question 7.
MNC has mighty economic powers.
Answer:

As MNC is operating on a global basis, they have huge physical and financial assets.
In terms of assets and turnover, many MNCs are bigger than national economies of several countries.
Multinational corporations are powerful economic entities.
Multinational corporation keep on adding to their economic power through constant mergers and acquisitions of companies in host countries.
Thus, MNC has mighty economic powers.

7. Attempt the following

Question 1.
Merits of Departmental Organisation.
Answer:
Merits of Departmental Organization:
1. Qualified Staff : Departmental organizations are properly managed and supervised by the qualified government staff.

2. Proper Use of Funds : The Departmental organizations provide public utilities or basic necessities. Government Department works under the control and supervision of the concern ministry. Charges for misuse of funds are less in departmental organization.

3. Social Welfare : Government undertakes socio-economic activities to promote social welfare. Providing essential comlhodities to people at reasonable price is top priority of the state. Thus, socio-economic objectives are achieved with Government control.

4. Public Accountability : The concerned minister incharge of the government organisation is answerable to the Parliament or Assembly. The elected representatives of people can raise the question about the working of this enterprises on behalf of public at large.

Question 2.
Demerits of Departmental Organisation.
Answer:
Demerits of Departmental Organisation:
(i) Delay in Action : In Departmental organisation there is always centralization of authorities. Such excessive centralization of authority leads to delay in action.

(ii) Inefficiency and Corruption : There is lot of inefficiency and corruption in departmental organisation.

(iii) Less Scope for Initiative : The working of this organization suffers from lack of continuity and stability because the policies of the department are decided by the ministers.

(iv) Instability : The working of this organisation suffers from lack of continuity and stability, because the policies of the department are decided by the Ministers.

(v) Delayed : The executives at the lower level have to depend on higher authority for all the decisions. They can’t take, their own decisions.

Question 3.
Merits of Statutory Corporation.
Answer:
Merits of Statutory Corporation:
(i) Professional Management: Statutory Corporations are managed professionally. The directors and other executives are highly trained and specialize in their respective fields. This leads to efficiency in working.

(ii) Rapid Decisions : Statutory Corporations enjoy autonomy. They can take quick decisions. There is less file work and less formalities to be completed before taking decisions.

(iii) Efficient Staff : In Statutory Corporation, employees are given fair wages, better working conditions and proper training and development programs are initiated for the employees. As a result, employer-employee relations are very cordial and staff is highly motivated to perform better.

(iv) Motivated Staff: In Statutory Corporations, employees are given fair wages, better working conditions and proper training and development programmes are initiated for the employees. As a result, employer- employee relations are very cordial and staff is highly motivated to perform better.

Question 4.
Demerits of Statutory Corporation.
Answer:
Demerits of Statutory Corporation:
Though statutory corporations are autonomous bodies and enjoy flexibility in their working, they have certain limitations which are as follows:
(i) Clashes Amongst Interests : All or majority directors of Statutory Corporations are appointed by the Government from different fields. As there are many members it is quite possible that their interests may clash. The smooth functioning of the corporation may be hampered.

(ii) Autonomy on Paper Only : Ministers, government officials and political parties often interfere with the working and decision making policies which affects the autonomy and flexibility of it.

(iii) Rigid Structure : Though statutory corporation have operational flexibility, they are subject to many rules and regulations. Any changes in the constitution, objects, powers, duties, etc., require amendments to be passed in the parliament which is difficult task. This reduces its flexibility.

(iv) Lack of Initiative : The statutory corporation have no profit motive. There is no competition among them. So employees do not take initiative to increase the profit.

Question 5.
Features of Government Company.
Answer:
Features of Government Company:
The Government Company may be registered as public or private limited companies. These companies are established for purely business purpose and to compete with the private sector.
Following are the features of Government Company:
(i) Free from Procedural Controls: The Government companies have a right to formulate their independent policies and even make necessary changes in them. It enjoys freedom from budgetary, accounting and audit controls which are applicable to Government undertakings.

(ii) Majority of Government Directors : All or majority of directors of such companies are appointed by the Government from different fields. They may be experts from banking sector, insurance sector, who manage the day to day business affairs.

(iii) Public Accountability : The annual accounts of the company are tabled before Parliament or State Legislature for review and discussion. Thus, Government Company is accountable and answerable to the Parliament or State Legislature through the concerned Minister.

(iv) Registration under the Companies Act: The Government Company is registered under the Companies Act, 2013 and its formation, working, management and winding up a business is governed by provisions of- the Act. Government has power to modify or change certain provisions laid down in the Act.

Question 6.
Demerits of Government Company.
Answer:
Demerits of Government Company:
Though Government Company enjoys various benefits due to Government ownership and autonomy, it has following limitations:
(i) Inefficiency and Corruption : The Directors have no financial stake in the company and as a result they are indifferent towards working of the company. Due to limited autonomy and petty politics, the efficiency of the enterprise is affected. It results in corruption.

(ii) Lack of Professional view : There is lack of devotion, dedication and systematic approach. In fact, there is no professional approach in various operations and working of the company.

Thus, from the above points it could be seen that there is lot of government and political interference in the Government company which brings about its inefficiency and ineffectiveness.

(iii) Domination of Ministers and Politicians : The ministers of the concerned departments are in charge of the Government Company. In view of Government ownership, political interference is quite common. The Directors try to serve and achieve their political motives rather than realisation of business goals as they are nominated for political gains and not on merits.

(iv) Red Tapism and Delay : The bureaucratic management delays in taking decision and implementing. There is no time frame and the employees are not devoted. There is often delay in preparing various documents and forwarding the same for taking action. Thus, delay, red tape, corruption, avoidance of work and shirking from the responsibility is common sight in Government Company.

Question 7.
Features of Multinational Corporation.
Answer:
Features of Multinational Corporation:
Following are the features of Multinational Corporation:
(i) Advanced and Sophisticated Technology : Multinational company has large capital and sophisticated technology and infrastructure. As a result it undertakes diversified and multifarious activities including manufacturing, marketing, financial, research and development.

(ii) Legal Existence : MNCs are registered in their home country as per their laws and as such they enjoy separate legal status. It can sue and be sued, enter into contracts and own property in their own name.

(iii) Government: MNCs have to bring about the necessary changes in their functioning based upon the laws prevailing in the countries of their operations. For e.g. advertisement about various products on TV is given in local languages in India and in national language Hindi, to cover maximum target audience. In some cases they have to change the menu to suit local demands for e.g. McDonalds had to change its menu for its business in India.

(iv) Origin: The MNCs have origin in one country and the country to which they belong is called home country. The country in which they operate their business activities is called host country. These companies are registered in their home country and have a place of business in different countries of the world. The head office controls the operations of different branches through a network of internet. They also appoint their representatives in host countries for smooth business operations.

Question 8.
Merits of Multinational Corporation.
Answer:
Merits of Multinational Corporation:
Following are the merits of Multinational Corporation.
(i) Proper use of Idle Resources : The national income of host country increases as MNCs use idle physical and human resources with latest technologies.

(ii) Inflow of Foreign Capital: Multinational corporations bring much needed foreign capital for the rapid development of developing countries. This capital is useful for growth of domestic country.

(iii) Promotion of International Brotherhood and Culture: MNCs integrate economies of various nations with the world economy and promote international brotherhood and culture with peace and prosperity in the world.

(iv) End of Local Monopolies : In global market, Multinational Corporations end local monopolies of host . countries improving their products and reduces prices.

(v) Technical Development: Multinational corporations gives lot of importance to research and development activities. They are also fully equipped and have necessary infrastructure. The research and development is undertaken for finding out new product, new system, and new technology of doing business in an economical way.

8. Answer the following in details

Question 1.
Explain Departmental Organization and its features.
Answer:
(A) Meaning:
Departmental organizations are oldest form of public enterprises. These are run by Government departments headed by a minister who guides and controls the activities of the undertaking e.g. Indian Railways, all India Radio, Indian Post, Defence etc. A Departmental organization is organized, financed and controlled by Government like any other Government department. Under this type of organization, no distinction is made between public sector and traditional Government functions.

(B) Features of Departmental Organizations:
(i) Delegation of Authority : All major policy decisions are taken by the ministry. The day-to-day working is looked after by the staff consisting of civil servants of IAS, IPS cadres.

(iv) Financed by the Government: The funds are arranged for their operation from Government treasury. This enterprise cannot borrow money from the public without Government consent.

(v) Useful for Secret: matters like defence, atomic energy, etc.

(vi) No Legal Status : A government department does not enjoy an independent legal status. It is dependent on the Government. It cannot be taken to court without the consent of the Government. Thus, the above are the features of Departmental Organization.

(vii) Government Sanction for Expansion : Public Enterprises need to take the sanction of the Government for expansion and diversification of business or for changing the policies, etc.

(viii) Examples of Departmental Organisation : Ordinance factories, Railways, Broadcasting, Post and Telegraph, BHEL, Indian Drug and Pharmaceuticals Ltd. Hindustan Aeronautics Ltd. Army Clothing Factory, Gun Factory and so on.

(ix) Run by Government : Different procedures like accounting, auditing and budgeting are at par with Government department.

(x) Managed by Government : The Departmental organization is managed by Government officials of the concern ministry.

(xi) Accounting Control : The organisation is subject to accounting and audit procedures and controls as applicable to government departments or to the concerned ministry.

(xii) Accountability : The enterprise is funded by the government and hence the government controls its affairs. In other words, it is answerable to the Parliament.

(xiii) No Separate Legal Entity : A Government department does not enjoy an independent legal status. It is dependent on the Government. It cannot be taken to court without the consent of the Government.

Question 2.
Explain merits and demerits of Departmental Organization.
Answer:
(A) Meaning:
Departmental organizations are run by the Government departments headed by a minister who guides and controls the activities of the undertaking.

(B) Merits of Departmental Organization:
1. Qualified Staff : Departmental organizations are properly managed and supervised by the qualified government staff.

5. Maintain Secrecy: In matters of strategic, national importance, secrecy is essential and confidentiality can be maintained in certain business activities such as defence deals, atomic plants, drugs and pharmaceuticals etc.

6. Easy Formation : These organisations are very easy to form. They do not require any special statute or registration.

7. Direct Control: These organizations are properly managed and supervised by the qualified Government Staff Minister at the top is responsible to the Parliament for its operations.

8. Direct Revenue to Government : The revenue of departmental organizations directly goes to the jr Government treasury.

9. Less Overheads : The administrative expenses are less as government only operate it.

10. Easy Finance : These organisation get the required finance by the government through direct allocation of funds from the concerned ministry.

11. Development of Public Utilities : The departmental organisation provides public utilities or basic r necessities. People require essential services and products such as Railways, Transport and Communications, Telephone services, etc. Thus, essential services are made available by the Government department at a very reasonable rate.

(C) Demerits of Departmental Organisation:
(i) Delay in Action : In Departmental organisation there is always centralization of authorities. Such excessive centralization of authority leads to delay in action.

(ii) Inefficiency and Corruption : There is lot of inefficiency and corruption in departmental organisation.

(iii) Less Scope for Initiative : The working of this organization suffers from lack of continuity and stability because the policies of the department are decided by the ministers.

(iv) Instability : The working of this organisation suffers from lack of continuity and stability, because the policies of the department are decided by the Ministers.

(v) Delayed : The executives at the lower level have to depend on higher authority for all the decisions. They can’t take, their own decisions.

(vi) Lack of Flexibility : The Departmental organization lacks flexibility in decision making. This is because there is centralization of authority.

(vii) Incurring Losses/Huge Losses : Most of the government undertakings incur heavy losses due to lack of business skills and approach as they are not professional.

(viii) Absence of Professionalism : There is lack of professionalism in the management of departmental organization. Often the decisions are taken unsystematically, moreover the data collected is often out dated and there is no proper analysis of such data. Hence, the decisions are taken hastily.

(ix) Political Interference : The Ministers, bureaucrats, Government officials interfere in the day to day working of the undertaking.

(x) Red Tapism and Bureaucracy : The Departmental organisations are controlled by government. Departmental organisations are facing delays, red tapism, corruption, lack of initiative, bureaucracy, etc.

(xi) Insensitive to Consumer Needs : The officials of this organisation are insensitive to the needs of consumers. The officials are not bothered about consumer needs and consumer satisfaction as they are more worried about their security of service in view of monopolistic position.

(xii) Lack of Autonomy : Departmental organisation lack autonomy and freedom in working and decision making.

Question 3.
Explain Statutory Corporation and its features.
Answer:
(A) Meaning:
Statutory Corporations are autonomous bodies established under special legislative Acts. A statutory corporation is formed under a Special Act of Parliament or State Legislature. The powers, duties, functions and scope of operations are laid down in the Act.
LIC, IFCI, SBI, UTI, Air India are the examples of public corporation.
Statutory Corporation is a body with a separate existence, which can sue and be sued and is responsible for its own finance. It is administered by a board appointed by public authority to which it is answerable.

(B) Features of Statutory Corporation:
(i) No political Interference : It enjoys freedom from political, parliamentary and government interference in day-to-day management.

(ii) Own Staffing System: They recruit their own employees and they are not government servant. Employees terms and services are not governed by civil services rules.

(iii) No Political Interference : It enjoys freedom from political, parliamentary and government interference in day to day management of its affairs.

(iv) Financial Autonomy : Statutory Corporations are financially autonomous. After getting the prior permission from the Government, it can even borrow money within and outside the country.

(vi) Special Act : They are established under a special Act passed by the Parliament. Its objectives, powers 98and functions are regulated by the Act.

(vii) Corporate Body : Statutory Corporation is a corporate body. It has a separate legal entity distinct from its members and thereby can enter into contracts and acquire property on its own name.

(viii) Answerable to the Legislature : A statutory corporation is answerable to Parliament or State Assembly whomsoever creates it. Parliament has no right to interfere. Though the overall business policies are formulated by the government, they have administrative autonomy and hence operational flexibility.

(ix) Legal Status : As a body corporate, it has a separate legal entity, distinct from its members and thereby can enter into contracts and acquire property in its own name.

(x) Independent Accounting System : They are not subject to budget accounting and audit laws and procedures applicable to government departments. But financial reports are placed in the Parliament for discussion.

(xi) Public Accountability : It’s accounts are audited by the Comptroller and Auditor General of India. Its annual reports and results are placed in Parliament or Legislative Assembly for discussion and hence answerable for their working and results to the Parliament.

(xii) Objective : It is service oriented and not profit oriented. It works efficiently to earn profit which is used for its day to day functioning.

Question 4.
Explain merits and demerits of statutory corporation.
Answer:
(A) Introduction
Statutory Corporations are autonomous bodies established under special legislative Acts. A statutory corporation is formed under a Special Act of Parliament or State Legislature. The powers, duties, functions and scope of operations are laid down in the Act.
LIC, IFCI, SBI, UTI, Air India are the examples of public corporation.

Statutory Corporation is a body with a separate existence, which can sue and be sued and is responsible for its own finance. It is administered by a board appointed by public authority to which it is answerable.

(B) Merits of Statutory Corporation:
(i) Professional Management: Statutory Corporations are managed professionally. The directors and other executives are highly trained and specialize in their respective fields. This leads to efficiency in working.

(ii) Rapid Decisions : Statutory Corporations enjoy autonomy. They can take quick decisions. There is less file work and less formalities to be completed before taking decisions.

(v) Service Motive : They are formed to provide public utility services and promote consumer satisfaction. It provides essential commodities to people at reasonable rates.

(vi) Easy to Raise Capital : Being owned by government, these corporations can raise required funds by floating bonds at low rate of interest.

(vii) Administrative Autonomy : Due to administrative and financial autonomy, statutory corporation take quick decisions and are flexible in its policy framing and working as per the changing business needs.

(viii) Public Accountability : These organisations enjoy public accountability, flexibility and autonomy in its working. The accounts are audited by Comptroller and Auditor General of India and final accounts are tabled before Parliament or Legislature.

(ix) Initiative and Flexibility : Statutory Corporation have an independent identity different from the government. Though, the overall business policies are formulated by the government, they have administrative autonomy and hence operational flexibility.

(x) Enjoys Economies of Scale : As these organisations are large scale undertakings which promote social welfare, it enjoys economies of large scale business operations.

(xi) Creates Employment Opportunities : Statutory organisations generate employment opportunities for the people at large. LIC, ONGC, Air India and others employ lakhs of people in the country. This reduces government burden of providing jobs to teeming millions and as such they help government.

(xii) Enjoy Monopoly : Most of statutory organisations are monopolistic or semi-monopolistic in their areas of functioning.

(C) Demerits of Statutory Corporation:
Though statutory corporations are autonomous bodies and enjoy flexibility in their working, they have certain limitations which are as follows:
(i) Clashes Amongst Interests : All or majority directors of Statutory Corporations are appointed by the Government from different fields. As there are many members it is quite possible that their interests may clash. The smooth functioning of the corporation may be hampered.

(ii) Autonomy on Paper Only : Ministers, government officials and political parties often interfere with the working and decision making policies which affects the autonomy and flexibility of it.

(iv) Lack of Initiative : The statutory corporation have no profit motive. There is no competition among them. So employees do not take initiative to increase the profit.

(v) Unfair Practices : Before 1991, these corporations enjoyed monopolistic and semi monopolistic position. They were charging high prices from the consumers to cover up their inefficiencies. After 1991, due to liberalization, most of them lost their monopolistic position but skill, in practice the lack competition as they are not aware of consumer needs.

Question 5.
Explain Government Company and its features.
Answer:
(A) Meaning:

A Government Company is one in which atleast 51% of its paid up capital is held by the Central Government and / or the State Government.
State Trading Corporation (STC), Steel Authority of India (SAIL), Bharat Heavy Electricals Ltd (BHEL) etc. are some of the examples of Government Companies.
These companies are registered under the Indian Companies Act, 2013 and its working is governed by the rules and regulations of the act.
Government Companies are established for purely business purpose and to complete with the private sector. The shares of the company are purchased in the name of the President of India.
Government Companies may be registered as public or private limited companies.

(B) Features of Government Company:
The Government Company may be registered as public or private limited companies. These companies are established for purely business purpose and to compete with the private sector.
Following are the features of Government Company:
(i) Free from Procedural Controls: The Government companies have a right to formulate their independent policies and even make necessary changes in them. It enjoys freedom from budgetary, accounting and audit controls which are applicable to Government undertakings.

(v) Own Staff: The employees are appointed as per the rules and regulations set by the company. Its employees are not governed by respective Government.

(vi) Promotes Social Welfare : Government Companies aims to optimise national and natural resources such as land, water, electricity, etc. It produces arms, ammunition and other defence equipments. It also brings about balanced regional development and leads to equality of income.

(vii) Objective : It operates on commercial principles and as such its aim is to make profit.

(viii) Separate Legal Entity : A Government Company is a corporate body created under the Companies Act. It has all features of a company such as legal entity, common seal, limited liability, etc. It can enter into contracts and acquire property in its own name.

(ix) Exemptions : Government Company is exempted from budget, accounting and audit laws applicable to government departments. Its accounts are audited by the Government Auditor. The Government has a right to exempt the company from any provisions of Companies Act which may come in its way of providing welfare services to the public at large.

(ix) Suitability : Government Companies are suitable for conducting manufacturing and marketing activities.

Question 6.
Explain Merits and Demerits of Government Company.
Answer:
(A) Merits of Government Company:
(i) Profitability and Accountability : It works on business principles and follows commercial approach. Though not profit oriented like private sector, it does make reasonable profit which is used for public welfare, modernisation, renovation and development. Moreover, its performance can be evaluated by the Parliament as it has public accountability.

(v) Acquisition of Sick Units : A government company can acquire a sick unit in the private sector without rationalisation. It can be acquired by purchasing 51% of the share capital of a private company.

(vi) Concessions and Privileges : As government owns Government Company, it enjoys various concessions, privileges, subsidies, etc. It may also get orders for the products or services from various government departments and agencies. It also has access to use financial resources of the Government.

(vii) Efficiency : Government company has to compete with the private sector companies. Hence, it tries to promote efficiency at all levels and avoids wastages wherever possible. It tries to improve its services to consumers and promotes consumer satisfaction by providing quality goods at reasonable prices.
From the above points, it could be seen that the Government Company enjoys various benefits as it is owned by the Government and blends the objectives of privately owned companies with State owned control and maximise public welfare.

(viii) Professional Management: The management of Government Company is in the hands of the Board of Directors appointed by the Government. Government exercises control on various matters through Board of Directors. They are highly qualified.

(ix) Easy Formation : The formation of Government Company is easy as there is no procedural delay and legal constraints. It does not require special Act or Parliament approval. It comes into existence through executive decision of the Government.

(x) Flexibility : The objects, powers and organisational set up of a Government Company can be altered easily. The company can take prompt decisions regarding management, finance and other related matters due to flexibility in their operations.

(xi) Easy to Alter : The objects, powers and organisational set up of a Government Company can be altered easily. The company can take prompt decisions regarding management, finance and other related matters due to flexibility in their operations.

(xii) Enjoys Private and Public Objective : In a Government Company, attempt is made to combine the operating flexibility of privately owned companies with the advantage of state regulation and control in public interest.

(B) Demerits of Government Company:
Though Government Company enjoys various benefits due to Government ownership and autonomy, it has following limitations:
(i) Inefficiency and Corruption : The Directors have no financial stake in the company and as a result they are indifferent towards working of the company. Due to limited autonomy and petty politics, the efficiency of the enterprise is affected. It results in corruption.

(ii) Lack of Professional view : There is lack of devotion, dedication and systematic approach. In fact, there is no professional approach in various operations and working of the company.

Thus, from the above points it could be seen that there is lot of government and political interference in the Government company which brings about its inefficiency and ineffectiveness.

(v) Autonomy only in Name : Though there is administrative autonomy, these companies face a lot of interference from the government in all the matters. Appointment of Directors, employees and its working, there is no autonomy. Autonomy is only on paper and not in practice.

(vi) Weak Public Accountability : Absence of Government audit is a major draw back in case of Government company which does not assure proper utilisation of funds. There is no control on misappropriation of funds which leads to weak public accountability.

(vii) Fear of Exposure : The working of Government Company like annual report is placed before the parliament or State Legislature. It is exposed to press and public criticism. Therefore, management of the government company often gets demoralized.

(viii) Lack of Expertise: The managerial key personnel of a Government Company are deputed from government departments. Such person, generally, lack expertise and commitment leading to lower operational efficiency of the Government Company.

(ix) Ineffective Control of Parliament : There is lack of control of the Parliament in the working of the Government company. Parliament is not having direct control, due to which the officers shirk from responsibility and postpone decision making. It affects efficiency of Government company.

(x) Poor Labour Management Relations : The employer-employee relations in the Government companies are poor. This is the result of corrupt and inefficient management of selfish trade unions. Proper work culture is found absent in Government companies.

Question 7.
Explain Multinational Corporation and its features.
Answer:
(A) Meaning:
(i) Global enterprises or Multinational Corporations are the Corporations which under take business activities in more than one country. Any company having its head office in one country and place of business in other countries is called a Multinational Corporation.

(ii) Multinational Corporation played an important role in the Indian Economy since 1991. They have become a common feature of developing economies in the world.
A Multinational Corporation is a corporation which operates, in addition to the country in which it is incorporated, in one or more other countries.

(B) Features of Multinational Corporation:
Following are the features of Multinational Corporation:
(i) Advanced and Sophisticated Technology : Multinational company has large capital and sophisticated technology and infrastructure. As a result it undertakes diversified and multifarious activities including manufacturing, marketing, financial, research and development.

(v) Research & Development: MNCs give lot of importance to research and development activities. They are also fully equipped and have necessary infrastructure. The R&D is undertaken for finding out new product, new system, new technology, new methods of doing business in an economical way.

(vi) International Operations : Multinational Corporation play a significant role in world trade. Nearly 40% of the world is contributed by the multinational companies.

(vii) Target Profit Oriented : Earning profit is the main motive of MNCs. For this purpose they introduce new and novel products, launch new marketing schemes, organize trade fairs and exhibitions, does lots of publicity and adopts professional approach in all its dealings.

(viii) Huge Assets and Turnover : Multinational Corporation have huge financial strength because of huge capital and assets. This enables it to develop its business potential in developing and under developing nations where they can earn handsome profits.

(ix) Mighty Economic Power: Multinational Corporation has a huge capital and assets so they have a mighty economic power. They keep on adding to their economic power through constant mergers and acquisitions of companies in host countries.

(x) Centralized Control: Multinational Corporation is managed by parent company. It manages affairs of the subsidiary company from the respective home country. Multinational corporations are controlled by parent companies and mostly home strategic.

(xi) Area of Operation : MNCs operate in different countries of the world and deal in multiple products on a large scale. They operate in those countries where chance of maximizing profit is more. MNCs of developed nations dominate the global market and they undertake production or marketing activities and so on. For . e.g. Coca Cola, Tata Tea and so on have global presence.

(xii) Professional Management: A MNC employs professionally qualified personnel to handle huge funds, advanced technology and international operations.

Question 8.
Explain Merits and Demerits of Multinational Corporation
Answer:
(A) Introduction:
(i) Global enterprises or Multinational Corporations are the Corporations which under take business activities in more than one country. Any company having its head office in one country and place of business in other countries is called a Multinational Corporation.

(B) Merits of Multinational Corporation:
Following are the merits of Multinational Corporation.
(i) Proper use of Idle Resources : The national income of host country increases as MNCs use idle physical and human resources with latest technologies.

(ii) Inflow of Foreign Capital: Multinational corporations bring much needed foreign capital for the rapid development of developing countries. This capital is useful for growth of domestic country.

(iv) End of Local Monopolies : In global market, Multinational Corporations end local monopolies of host . countries improving their products and reduces prices.

(vi) Improvement of Standard of Living : Multinational Corporations supply their product at very reasonable prices in the global market. E.g. the price of wrist watches, cell phones, etc. This helps to improve the standard of living of people of host countries.

(vii) Managerial Development : Multinational corporations have highly specialized and expert team of management. These experts are hired from different countries of the world. Also their functioning is highly professional. They adopt new technology and use huge resources.

(viii) Employment Generation : MNCs create large scale employment opportunities in host countries and . helps in reducing unemployment.

(C) Demerits of Multinational Corporation:
(i) Danger for Domestic Industries : Multinational Corporations have vast economic power so they are danger to domestic industries which are still in process of development. Domestic industries not so powerful to face the challenges of Multinational Corporation.

(ii) Create Problem for Environment: Profit is sole objective of multinational corporation. Such companies damage environment of developing countries. To lower the price of goods they dump lower standard quality product which harms local soil, water and air.

(iii) Outsourcing of Job: Normally MNCs outsource the job work due to lower cost, due to this their liabilities towards employees are reduced.

(v) Multinational Corporations Import Skilled Labour : Most companies in this position imports the skilled labour they require from other economic to meet their needs. That means the best jobs, especially in the developing world, are given to people who don’t even live in the local economy. Those wages do not offer the same economic benefits because spending occurs internationally instead of at the local level.

(vi) Interference : Multinational Corporations are gigantic organizations with huge finance and efficient management. They try to bring about expansion of business through mergers, acquisitions and amalgamations. As they are huge corporations they exert influence on political parties and try to spread political ideology of their home country.

(vii) Take away Profits to Home Country : Profits made by multinational corporations are not used in the same country from where they are earned. They are not interested in development of other countries. They do not use their profits on infrastructural development of other countries.

(viii) E ncourage Political Corruption : To get favourable terms and conditions in host country multinational corporations bribe to political parties.

(ix) Repatriation of Profiles : Multinational Corporations get huge profit. Repatriation of profit by Multinational Corporation adversely affects the foreign exchange reserves of the host country. If means that a large amount of foreign exchange goes out of host country.

OCM 11th Commerce Textbook Solutions Digest

11th OCM Chapter 8 Exercise Introduction to Management Practical Problems Solutions Maharashtra Board

March 28, 2025March 27, 2025 by Prasanna

Introduction to Management11th OCM Chapter 8 Solutions Maharashtra Board

Balbharti Maharashtra State Board Organisation of Commerce and Management 11th Textbook Solutions Chapter 8 Introduction to Management Textbook Exercise Questions and Answers.

Class 11 OCM Chapter 8 Exercise Solutions

1. (A) Select the correct option and rewrite the sentences

Question 1.
Management is ………………….
(a) dynamic
(b) static
(c) selective
Answer:
(a) dynamic

Question 2.
Management uses …………………. method of observation.
(a) unscientific
(b) artificial
(c) scientific
Answer:
(c) scientific

Question 3.
To help top level management in co-ordinating the activities is the function of …………………. level management.
(a) middle
(b) lower
(c) top
Answer:
(a) middle

Question 4.
To look after maintenance of machinery is the function of …………………. level of management.
(a) top
(b) middle
(c) lower
Answer:
(c) lower

Question 5.
Management is …………………. oriented action.
(a) policy
(b) profit
(c) goal
Answer:
(c) goal

1. (B) Match the pairs

Question 1.

Part A	Part B
(a) Management	(1) Need of creativity
(b) Management as a profession	(2) Can be seen.
(c) Top level management	(3) Administration
(d) Management as an art	(4) Intangible
(e) Lower level management	(5) Formal education
	(6) Policy framing.
	(7) Implementation of policies
	(8) Selective
	(9) Directing subordinates to complete the task
	(10) Cause effect relationship

Answer:

Part A	Part B
(a) Management	(4) Intangible
(b) Management as a profession	(5) Formal education
(c) Top level management	(6) Policy framing.
(d) Management as an art	(1) Need of creativity
(e) Lower level management	(9) Directing subordinates to complete the task

1. (C) Give one word / phrase / term

Question 1.
The art of getting things done through others.
Answer:
Management

Question 2.
The second level of management.
Answer:
Middle level

Question 3.
Systematic body of knowledge.
Answer:
Management as a Science

Question 4.
The level of management related to Managing Director.
Answer:
Top level management

Question 5.
Level of management that link top level and lower level management.
Answer:
Middle level management

1. (D) State True or False

Question 1.
Management is an ancient activity.
Answer:
True

Question 2.
Management is not objective oriented.
Answer:
False

Question 3.
In small organization also management is required.
Answer:
True

Question 4.
Middle level management forms policy of an organization.
Answer:
False

Question 5.
Various principles and techniques are used in management.
Answer:
True

1. (E) Find the odd one

Question 1.
Management is an – art, a science, a commerce, a profession.
Answer:
a commerce

Question 2.
Management as an Art – Singer, Actor, Dancer, Doctor.
Answer:
Doctor

Question 3.
Management as Profession – Doctor, Chartered Accountant, Lawyer, Singer.
Answer:
Singer

Question 4.
Level of Management – Lower Level, Middle Level, Top Level, High Level.
Answer:
High level

Question 5.
Top Level Management – Board of Directors, Presidents, Purchase Manager, Chief Executive Officer (CEO).
Answer:
Purchase manager

Question 6.
Middle Level Management – Departmental Head, Finance Manager, Production Manager, Supervisor.
Answer:
Supervisor

Question 7.
Lower Level Management – Supervisor, Foreman, Finance Manager, Office Superintendent.
Answer:
Finance Manager

1. (F) Complete the sentences

Question 1.
The English verb ‘manage’ came from Italian word ……………….
Answer:
Maneggiare

Question 2.
To manage is to forecast, to plan, to organize, to command, to co-ordinate and to ……………….
Answer:
control

Question 3.
Organization is a group of person who work together to achieve a ……………….
Answer:
common goal

Question 4.
Link between the top level and lower level of management is called as ……………….
Answer:
middle level management

Question 5.
Lower level management works under ……………….
Answer:
middle level management

Question 6.
Art is the bringing about a desired result through the application of ……………….
Answer:
skills

Question 7.
Any knowledge which is scientifically developed and consists of universally accepted principles is known as a ……………….
Answer:
science

Question 8.
Science is based on systematic experiments, on certain rules and on ……………….
Answer:
principles

Question 9.
Teacher, Doctor, C.A., Lawyer comes under the term ……………….
Answer:
profession

1. (G) Select the correct option

(Finance Manager, Art, CEO, Profession, Supervisors)

Part A	Part B
(1) Top level	—————-
(2) —————–	Lower level
(3) Middle level	—————-
(4) ————-	Doctor
(5) Singer	—————-

Answer:

Part A	Part B
(1) Top level	CEO
(2) Supervisors	Lower level
(3) Middle level	Finance Manager
(4) Profession	Doctor
(5) Singer	Art

1. (H) Answer in one sentence

Question 1.
What is called as management?
Answer:
Getting work done through others is called as management.

Question 2.
Name, the levels of management?
Answer:
Top level, middle level and lower level are the three levels of management.

Question 3.
What is top level management?
Answer:
The level of management that decides the long term objectives of organization and frame the plans and policies and take decisions is called as top level-management.

Question 4.
What do you mean by middle level management?
Answer:
The level of management which is concerned with implementation of plans and policies in the organization with the help of lower level management is known as middle level management.

Question 5.
What is lower level management?
Answer:
The level of management which is considered to do actual execution of plan is called as lower level management.

Question 6.
What do you mean by an art?
Answer:
An art means skill of individual, creativity, regular practice, personal abilities and innovativeness.

Question 7.
What is science?
Answer:
Science is a systematic body of knowledge and scientific methods.

Question 8.
What is the meaning of a profession?
Answer:
Profession means an individual having adequate knowledge and abilities which is helpful to handle different situations. They are trained people having formal education in management school and have a code of conduct.

1. (I) Arrange in proper order.

Question 1.
Middle level management, Top level management, Lower level management.
Answer:
Top level management, Middle level management, Lower level management.

Question 2.
Departmental Head, CEO, Supervisors, Managing Director.
Answer:
CEO, Managing Director, Departmental Head, Supervisors.

Question 3.
Office clerk, Shareholders, Managing Director, Board of Director.
Answer:
Shareholders, Board of Directors, Managing Director, Office clerk.

1. (J) Correct the underlined word and rewrite the following sentences

Question 1.
Management is only an art.
Answer:
Management is an art, a science and a profession.

Question 2.
There are five levels of management.
Answer:
There are three levels of management.

Question 3.
Lower level management works under top level management.
Answer:
Middle level management works under top level management.

Question 4.
Middle level management works under lower level management.
Answer:
Middle level management works under top-level management.

Question 5.
Management is pure science.
Answer:
Management is a social science.

Question 6.
The entry in any profession is not restricted.
Answer:
The entry in any profession is restricted.

Question 7.
Professionals need informal education.
Answer:
Professional need formal education.

2. Explain the following terms/concepts

Question 1.
Top level management.
Answer:

The top level management decides the long term objectives of organization, frames plans and policies and take decisions.
It consists of Board of Directors, Managing Director,CEO, President, etc.

Question 2.
Middle level management.
Answer:

The middle level management is a link between top level and lower level management.
It works under top level management.
This level is considered with implementation of plans and policies in the organization with the help of lower level management.
It consists of Head of Departments / Branch managers / Incharge, etc.

Question 3.
Lower level management.
Answer:

This is the last level of management.
It is a supervisory level of management.
It consists of superintendents, supervisors, foremen and junior executives.
Lower level management receives instructions from the authorities i.e. middle level management and direct subordinates wherever necessary.

3. Study the following case/situation and express your opinion

1. While working in a company, Pranav used to give order to his subordinates about what is to be done and which work is to be done? In this organization, various employees like Pratap are doing their work assigned by Pravin. In this company, Pravin submits his report of work completion to Pranav after completing the work done by the employees like Pratap.

Question 1.
Identify different levels of management in above mentioned company.
Answer:
There are two levels of management i.e. middle and lower level of management in above mentioned company.

Question 2.
Find the level of Pranav in management of company.
Answer:
Pranav works in the middle level management of company.

Question 3.
Explain the functions and role of Pratap in his company.
Answer:
Pratap is an employee in a company. He works at the lower level. He executes the work assigned by Pravin.

4. Distinguish between the following

Question 1.
Top level Management and Middle level Management.
Answer:

	Top Level Management	Middle level Management
(1) Meaning	Top level management refers to top position in the organization such as Board of Directors, CEO, President, Managing Director, etc.	Middle level management refers to middle positions in the organization such as Departmental head, Managers like Finance manager, Production manager, Sales manager, Marketing manager, etc.
(2) Nature of Work	It is concerned with framing plans and policies of the entire organization.	It is concerned with implementation of policies framed by top level management with the help of lower level management.
(3) Skills	It requires conceptual or decision making skills than technical skills.	It requires combination of conceptual and decision making skills than technical skills.
(4) Promotion Policy	Policy At this level promotion is given on merit.	At this level promotion is based on merit as well as seniority basis.
(5) Time Frame	It considers longer period of time i.e. 5 to 20 years.	It considers medium period of time i.e. 1 to 5 years.
(6) Responsibility	Top level is responsible to shareholders, government and society.	Middle level is responsible to top level management.
(7) Flow of Order	Orders and instructions are passed to middle level.	Orders and instructions are passed to lower level and report of the work is submitted to top level.

Question 2.
Middle Level Management and Lower Level Management.
Answer:

	Middle Level Management	Lower Level Management
(1) Meaning	Middle level management refers to middle positions in the organization. E.g. departmental head, finance manager, etc.	Lower level management refers to lower / last positions in the organization. E.g. superintendents, supervisors, etc.
(2) Nature of Work	It is concerned with implementation of policies framed by top level with the help of lower level.	It is considered with actual execution of planning.
(3) Skills	It requires both conceptual and technical skills.	It requires more technical skills than other skills.
(4) Promotion Policy	Promotion is based on merit as well as seniority basis.	Promotion is based on seniority basis.
(5) Time Frame	It considers medium term i.e. 1 year to 5 years.	It considers very short period of time i.e. upto one year.
(6) Responsibility	It is responsible to top level management.	It is responsible to both top and middle level management.
(7) Flow of Order	Instructions and orders are passed to Lower level and report of the work is submitted to top level	Implementation is done as per the orders of middle level and reports are submitted to middle level.

Question 3.
Top Level Management and Lower Level Management.
Answer:

	Top Level Management	Lower Level Management
(1) Meaning	Top level refers to top positions in the organization. e.g. Board of directors, Managing Directors, CEO, President, etc.	Lower level management refers to lower positions in the organization. e.g. Junior Executives, Foremen, etc.
(2) Nature of Work	It is concerned with framing plans and policies of the entire organization.	It is concerned with execution of plans and policies.
(3) Skills	It requires conceptual or decision making skills than technical skills.	It requires more technical skills than conceptual skills.
(4) Promotion Policy	Promotion is based on merit basis.	Seniority is preferred for promotion.
(5) Time Frame	It considers for longer period of time i.e. 5 to 20 years.	Basically it is very short period of time i.e. upto 1 year.
(6) Responsibility	It is responsible to Shareholders, Government and Society.	It is responsible to middle as well as top level management.
(7) Flow of Order	Orders and instructions are passed to middle level.	It implements orders of middle level and also reports to the middle level.

5. Answer in brief

Question 1.
State any four features of Management.
Answer:
Following are the features of management:
(i) Management is Goal Oriented : Management activity is done to achieve pre-decided goals. The success of organization is calculated on the basis of achievement of desired goals. The success depends on proper management of all available resources. Management decides the goals before conducting the activity. The manager takes efforts to achieve these goals. So management is goal oriented.

(ii) Management is a Group Activity : “Management is an art of getting things done through others.” The above definition explains that management is done through / with the people. It is done by co-ordinating all resources effectively and efficiently. The activities are done under the guidance of manager by its team members. Also in organisation decisions are taken by the group of people such as Board of Directors, Shareholders, etc.

(iii) Management is Intangible : Management is the collective efforts of manager. It is a process of planning, organizing, decision making, directing and controlling. These cannot be seen physically. However, the results of best management can be experienced in the form of increased profits, attainments of pre-decided so management is tangible in nature.

(iv) Management is a Continuous Process : Management is essential throughout the life of organisation. It is necessary to start the activity, to run the activity in smooth manner and also to control the activity. It is endless process. It is required for survival of the organization continuously.

Question 2.
Write any four functions of Top Level Management.
Answer:
Following are the functions of Top Level Management:

To decide long term objectives of the organisation.
To frame plans and policies to achieve the set objectives.
To observe that policies are properly implemented.
To create various department and positions.

Question 3.
Write any four functions of Middle Level Management.
Answer:
Following are the functions of Middle Level Management:

To link the top level management and lower level management.
To understand plans and policies framed by top level management and prepare plan of action according to the nature of department.
To assign duties and responsibilities to the staff of the concerned department to achieve pre-defined goals.
To appoint lower level staff.

Question 4.
State any four functions of Lower Level Management.
Answer:
Following are the functions of Lower Level Management:

Do work under Middle Level Management.
To assign work to subordinates.
To give instruction to subordinates.
To direct the subordinates wherever necessary.

Question 5.
State any two points of relationship about management as an art.
Answer:
The relationship between art and management are:
(i) Personal Skills : In organization, every manager has to handle different situations, has to solve various problems, has to handle human resource, etc. with his own style. This style varies from manager to manager and so the result. This is because of the different skills and abilities of each person.

(ii) Creativity : Creativity refers to the ability to find something new and innovative. Manager finds out new ways to conduct organizational activities and to achieve desired goals. Manager develops new ideas according to the changes in business situation and in the business environment.

Question 6.
Explain any two points of relationship about management as a science.
Answer:
The following points shows there is a relationship in management as a science:
(i) Systematic Body of Knowledge : Pure science is based on systematic experiments, certain rules and principles. Management principles and functions are also based on the experiments which can be studied through various different management theories, techniques and approaches given by different management thinkers.

(ii) Universal Applicability of Principles : Scientific principles can be applied in all over the world in similar situation. Therefore, the same result can be drawn. Management principles are universal in nature. They can be applied everywhere, anytime and in any condition.

Question 7.
State hny two points of relationship about management as a profession.
Answer:
The relationship between profession and management can be seen with the help of following points:
(i) Expertise : A professional is an expert in his field. He has acquired specific knowledge through formal education. Also he has particular skill in practicing as a professional. Manager also becomes an expert by practicing regularly in the specific field and can acquire certain knowledge and skill.

(ii) Registration : Professionals need to register themselves with their associations. For example, a Chartered Accountant should register himself with Institute of Chartered Accountant of India i.e. ICAI. Without registration certificate he cannot practice. In case of managers, there is no such body to register themselves. However, managers can take the membership of ‘Chambers of Commerce’ which gives them benefits.

6. Justify the following statements

Question 1.
Management is essential in professional and non-professional activities.
Answer:
(i) As management is universal in nature it is applicable everywhere, either it is a professional activity or non-professional activity.

(ii) Every person performs certain activity to achieve pre-decided goals. E.g. earning of profit, winning games, competitions, to increase goodwill, etc.

(iii) Organisations either large, medium or small, profit making or non-profit making, government or non-government organisation, etc. to get success, to attain goals every time management plays a vital role. It’s application ensures smooth functioning of business.

(iv) A professional acquires certain specific formal education. He has specific skill to achieve his goals. He performs management functions like planning, organizing, controlling, etc. Similarly, while performing non- professional activities like plantation of tree, blood donation campaign, a person also requires to perform certain management functions.

(v) Thus, management is essential in performing professional as well as non-professional activities.

Question 2.
Level of management depends upon the size of organization.
Answer:
(i) Making different parts for the smooth functioning of business and to achieve decided goals is called levels of management.

(ii) The size of business is small, medium or large. Every business needs to manage the activities efficiently and’ effectively.

(iii) The levels of management depends on size of organization. If the size of organization is small the classification of levels becomes easy and simple. Whereas in large organization, it becomes difficult and complicated. The levels of management in such organisation may be classified into three parts i.e. Top level, Middle level and Lower level.

(iv) These levels of management are important in organization. These levels have their own functions. As per that they have to perform their duties and responsibilities to attain their set goals and objectives.

(v) Thus, levels of management depends on size of organisation.

Question 3.
Management is a group oriented action.
Answer:
(i) In the words of Mary Parker Follet, “management is an art of getting things done through others”. Management focuses on completing the work through human resource.

(ii) It is co-ordinating of all available resources effectively and efficiently. In organisation, the activities are done by the subordinates, employees under the guidance of a manager.

(iii) A manager, though he is competent, able, has capacity, skills to perform the organizational task, it is not possible for a single manager to perform all the activities related to the said task alone.

(iv) To fulfill or accomplish the objectives and goals, he needs the help of other people, as it should be divided among all the employees, as per their skill, qualification, interest, knowledge and experience.

(v) Thus, management is a group oriented activity.

Question 4.
Management is an art.
Answer:
(i) An art is the bringing about a desired result through the application of skills. It is an innovativeness and creativeness of a person. This is a natural and inborn quality of a person. But with the help of proper education and practice one can developed the quality or qualities. E.g. acting, dancing, cycling, magician, singing, drawing, skating, musician, sports etc. comes under art.

(ii) Art does not require any specific educational qualification or it not any compulsion. It is inborn quality or a skill.

(iii) As a manager, in organisation he has to handle various kinds of situations, employees, other resources effectively and efficiently with his own style. So he uses his skills which are either inborn or developed by practice and formal education.

(iv) A manger must be innovative. He should handle the conditions. He should not use same methods all the time. Like an artist, he has to develop his skills by regular practice. He should use different techniques and skills to get perfect result. This is possible due to regular practice.

(v) Every managers has different abilities and skills. They have to use their own abilities and skills to guide the people to achieve their goals.

(vi) Thus, manager need to be creative and skilled like an artist. Hence, management is an art.

Question 5.
Answer:
There is no need of registration for managers.

Every professional is registered with the concerned body or organisation. A professional is formally, educated and also a skilled person.
A manager, now-a-days, possess a diploma or degree in management studies like Indian Institute of Management (IIM), PUMBA (Savitribai Phule Pune University, MBA) etc. A person who wants to be a manager acquires the required knowledge of the profession and trains himself / herself for the managerial job.
As management is a profession, a manager is not practicing independently. He is an employee of the organisation.
Thus, there is no need of registration for managers.

Question 6.
Management is a continuous process.
Answer:

Management is a continuous process. It is an important feature of management.
A manager of an organisation has to perform managerial work to achieve pre-defined goals of the organisation. To achieve these goals, he as a manager applies various functions of management, principles of management and also techniques of management.
From the beginning till the achievement of success, continuous efforts of every individual is required.
Continuity is an integral part of management. It is necessary through out the life of an organisation.
Therefore, management has become necessary to start the activity and to run the activity at the business smoothly.
Thus, management is a continuous activity. It is not a one time process, but it is never ending process.

Question 7.
Planning is a task of top level management.
Answer:

Planning means thinking before doing. It is thinking in advance. Before the action, there is a thinking process.
In the large organisation, management levels are divided into three parts i.e. top, middle and lower.
At the top level management, very few personnels are involves. They are Board of Directors, Managing Directors, President, Chief Executive Officer, etc.
The main function of top level management is to frame the plans and policies of the whole organisation to achieve its goals.
It decides the long term objectives of the organisation and also frames particular plans and policies to get them. Further, it also sees that the policies are properly implemented.
Framing of organizational objectives and accordingly plans and policies to achieve them becomes a tough task of top level management.
Thus, Planning is a task of top level management.

7. Attempt the following

Question 1.
State the definition of management.
Answer:
Following are some definitions given by management thinkers :

“Management is an art of getting things done through others.” – Mary Parker Follet
“To manage is to forecast, to plan, to organize, to command, to co-ordinate and to control”. – Henry Fayol
“Management is knowing exactly what is to be done and seeing that it is done in the best possible manner.”
“Management is the process consisting of planning, organizing, actuating and controlling, performed to determine and accomplish the objectives by the use of people and resources”. George Terry.

Question 2.
State the features of management.
Answer:
(i) Managements is Dynamic : Management is dynamic and not static in character. It deals with human efforts, different situations and different activities. It adopts changes in the form of technological, socio economical, political, environmental, etc.

(ii) Management is Intangible : Management is intangible in nature. It can’t be seen and touched. It is abstract. The principles, theories, techniques, concept are practically invisible. The result of best management can be experienced in the form of increased profit, smooth functioning of the organization and achievement.

(iii) Management is a Social Process : Management is a process because it sets objectives and takes steps to achieve them. It is said to be a social process because management is concerned with people. For example employees, shareholders, investors, customers, community, etc.

(iv) Management is a Continuous Process : Management is essential through the life of an organization. It is necessary to begin the activity, to run the activity smoothly and to control the activity. This is never ending process.

(v) Management is Different from Ownership : In an organization, management is different from ownership. Owners contribute capital which is taken care of by efficient and paid managers.

(vi) Management is an Inborn Quality : Management in the older days, was considered to be an inborn quality. But with the inception of various business schools, management is a quality which can be developed if a person has the interest and perseverance.

Question 3.
State management is as a science.
Answer:
1. Systematic Body of Knowledge : Management is not a science like physics, chemistry or biology. It is a science which deals with human beings. Management has a theories and concepts. Various principle of management like unity of command, division of labour, unity of direction are all universally accepted principle. Management follows procedures like collecting data, analyzing and drawing inferences from it. This makes management a science.

2. Use of Scientific Methods of Observation : In science the conclusions are drawn only on the basis of scientific methods of observation. Management also uses systematic methods of data collection, verification and analysis of that collected data and interpretation of data, then a manager takes decisions in the organisation.

3. Cause and Effect Relationship : Science is based on cause and effect relationship. After using specific formulae or their combination, we get particular result in science. Management theories are also based on relationships. Fair and regular salary along with good working conditions motivates people to work hard and to give best results. Whereas, old machineries, techniques, untrained employees may not give good / excepted output to the organization.

4. Universal Applicability of Principles : The management principles are universally accepted just like scientific principles are accepted all over the world. For e.g. Newton’s law, Archimedes principle, etc. are all accepted principles, similarly in management also the principle of authority and responsibility, unity of command, direction, etc. are all universally accepted and are used in all organization whether big or small. Management follows these principles in all kind of organizations, at all levels in the same organization. State the relationship between the management and art.

Question 4.
Following points clearly states the relation between management and art.
Answer:
1. Creativity: Managers must posses the quality of being creative. Every manager should be able to bring innovations in the business. This quality is developed with experience. The more experienced manager can bring about changes according to the situation.

2. Regular Practice: Practice makes a man perfect. This is the rule applied by a manager. The more the experience, the manager will be able to meet any challenge or difficult situation with ease. He is in a position to make the required changes according to the circumstances.

3. Personal Skill: Every manager being an individual is different. A good manager must posses good skills in dealing with human beings. He should use his skill in knowing the problem, allotment of work to employees, give judgment and understanding to deal with various situations in business.

4. Personal Abilities : Every person has different abilities and skills. Manager uses his own abilities to co-ordinate the activities, to guide the people and to achieve their goals.

Question 5.
State the importance of management
Answer:
1. Utilisation of Resources Optimally : Effective management is all about optimum use of available resources in the organization. Proper distribution of resources and work to right person results in higher output. It also reduces wastage and cost. Maximisation of output by reducing cost is the ultimate objective of every organization.

2. Better Relation : Different groups work at different levels in organization. The employer and the employees have different sets of demands from each other. Effective management ensures that employees fulfill their social responsibilities towards their employers. This helps in establishing good relationship among different groups in an organization.

3. Achievement of Goals : In an organization group of people performs various activities to achieve common goals of the organization. Effective management brings about harmony (cordial relationship) and good co-ordination in efforts of all group. A manager creates a feeling of team spirit among the members of the group.

4. Division of Work : Division of work means the entire work is divided into smaller lots. Each job is given to a particular employee as per his ability and skill to carry out the required activity. Division of work leads to specialization of work and completion of the work in the stipulated period of time.

Question 6.
State the similarities between management and profession.
Answer:
1. Formal Education : Professionals need formal education. Today’s managers are qualified with management diploma or degrees from various institutes like IIMS, PUMBA etc. They also take formal training from management schools which helps them to work professionally.

2. Code of Conduct : Code of conduct means set of rules and regulations to be followed by practicing in their field. Every profession has their own code of conduct to control the activities. It emphasis on ethical practice in that profession. E.g. Chartered Accountants have to work according to ICAI, Lawyers have to follow the code of conduct framed by Bar Council of India, etc. However for managers there is no such association of managers. Generally managers follow the code of conduct based on customs and traditions.

3. Expertise : A professional is an expert in his field. He has acquired specific knowledge through formal education. He has particular skill of practicing as professional. He becomes an expert due to regular practice in specific field.

4. Registration : Professionals need to register themselves with their associations. For example, Lawyers must get registered themselves with India Bar Council, Chartered Accountants with Institute of Chartered Accountant of India, where as for managers there is no need of such registration with any body. They can take membership of ‘Chambers of Commerce’ which give them membership benefits.

5. Restricted Entry : The entry in any profession is restricted. It needs formal education e.g. Lawyers, Architect, Interior designer, Doctors, Chartered Accountant, etc. However, such compulsion is not there for working as a manager.

8. Answer the Following

Question 1.
What is management? State the characteristics or features of management.
Answer:
Management and its features:
(A) Meaning:
The word management is derived from the Latin word ‘manus’ which means ‘hands.
It means management is handling some activity.
Many thinkers said that management means a fine consideration of co-ordinating and controlling the work either from direct individual or from a group.

(B) Definitions:
Some definitions of management given by different management thinkers as follows:

“Management traditionally can be defined as “an art of getting things done through others. ” – Mary Parker Follet
“To manage is to forecast, to plan, to organize, to command, to co-ordinate and to control”. – Henry Fayol
“Management is co-ordination of resources through the process of planning, organizing, directing and controlling in order to attain stated objectives.” – F.W. Taylor

Following are the characteristics features of management:
(i) Managements is Dynamic : Management is dynamic and not static in character. It deals with human efforts, different situations and different activities. It adopts changes in the form of technological, socio economical, political, environmental, etc.

(v) Management is Different from Ownership : In an organization, management is different from ownership. Owners contribute capital which is taken care of by efficient and paid managers.

(vii) Management is Situational: Management helps to take decisions and also to handle specific situation. The decisions are based on the principles, theories and techniques. They are applicable in certain situation only.

(viii) Management is Goal Orientated : Every business organization either small, medium or large, profit making or non-profit making, Governmental or NGOs have their own goals. When the organization achieves its desired goals, it is called success of that organisation. This success depends on proper management of all available resources. A manager takes lots of efforts to achieve these goals. So management is goal oriented.

(ix) Management is Universal : Management principles and theories are equally applicable every where and in every field like business, profession, hospital, education, politics, government administration social activities. These principles are the guidelines to the manager. They are flexible and capable of adaptation to every type of organization.

(x) Management is Group Activity : Management is defined as “getting work done through others” or “with the people in formally organized groups”. The tasks set by the organization is complied by employees, all levels of managers and even with the help of outside parties.

Question 2.
Discuss whether management is an art science or profession.
Answer:
Art:
1. Creativity: Managers must posses the quality of being creative. Every manager should be able to bring innovations in the business. This quality is developed with experience. The more experienced manager can bring about changes according to the situation.

4. Personal Abilities : Every person has different abilities and skills. Manager uses his own abilities to co-ordinate the activities, to guide the people and to achieve their goals.

Science:
1. Systematic Body of Knowledge : Management is not a science like physics, chemistry or biology. It is a science which deals with human beings. Management has a theories and concepts. Various principle of management like unity of command, division of labour, unity of direction are all universally accepted principle. Management follows procedures like collecting data, analyzing and drawing inferences from it. This makes management a science.

Profession:
1. Formal Education : Professionals need formal education. Today’s managers are qualified with management diploma or degrees from various institutes like IIMS, PUMBA etc. They also take formal training from management schools which helps them to work professionally.

OCM 11th Commerce Textbook Solutions Digest

11th OCM Chapter 4 Exercise Forms of Business Organisation – I Practical Problems Solutions Maharashtra Board

March 28, 2025March 27, 2025 by Bhagya

Forms of Business Organisation – I 11th OCM Chapter 4 Solutions Maharashtra Board

Balbharti Maharashtra State Board Organisation of Commerce and Management 11th Textbook Solutions Chapter 4 Forms of Business Organisation – I Textbook Exercise Questions and Answers.

Class 11 OCM Chapter 4 Exercise Solutions

1. (A) Select the Correct option and rewrite the sentence

Question 1.
A sole trading concern ensures ……………….. business secrecy.
(a) maximum
(b) minimum
(c) limited
Answer:
(a) maximum

Question 2.
The members of Hindu undivided family business are called ………………..
(a) carpenter
(b) co-parcener
(c) parceners
Answer:
(b) co-parcener

Question 3.
The head of Joint Hindu Family Business is called as ………………..
(a) KARTA
(b) owner
(c) manager
Answer:
(a) KARTA

Question 4.
Registration of partnership firm is ………………. in Maharashtra.
(a) voluntary
(b) compulsory
(c) easy
Answer:
(b) compulsory

Question 5.
The liability of the shareholders in Joint Stock Company is ………………
(a) limited
(b) unlimited
(c) restricted
Answer:
(a) limited

Question 6.
A Joint Stock Company is an artificial person created by ………………….
(a) Law
(b) Articles
(c) Memorandum
Answer:
(a) Law

Question 7.
Registration of a Joint Stock Company is ………………..
(a) compulsory
(b) free
(c) not required
Answer:
(a) compulsory

Question 8.
Liability of member of a Co-operative Society is ………………
(a) limited
(b) restricted
(c) maximum
Answer:
(a) limited

Question 9.
Indian Co-operative Society’s Act was passed in ………………
(a) 1912
(b) 1913
(c) 1911
Answer:
(a) 1912

Question 10.
…………………. acts as a signature of the company.
(a) Common seal
(b) Common sign
(c) Common image
Answer:
(a) Common seal

1. (B) Match the pairs

Group A	Group B
(a) Private Company	(1) Karta
(b) Public Company	(2) Local Market
(c) Common Seal	(3) 1932
(d) Partnership Act	(4) Maximum 200 members
(e) Joint Hindu Family Firms	(5) One Man Show
(F) Subject-matter of insurance	(6) Minimum Seven members
	(7) Minimum 10 members
	(8) Signature of Company
	(9) Maximum 100 members
	(10) Manager

Answer:

Group A	Group B
(a) Private Company	(4) Maximum 200 members
(b) Public Company	(6) Minimum Seven members
(c) Common Seal	(8) Signature of Company
(d) Partnership Act	(3) 1932
(e) Joint Hindu Family Firms	(1) Karta

1. (C) Give one word/phrase/term.

Question 1.
An elected body of representatives of co-operative Society for its day to day administrations.
Answer:
Managing Committee

Question 2.
The owner is the sole manager and decision maker of his business.
Answer:
Sole Trader

Question 3.
One man show type of business organisation.
Answer:
Sole trading concern

Question 4.
The members of the Joint Hindu Family firm.
Answer:
Co-parceners

Question 5.
A partner who gives his name to partnership firm.
Answer:
Nominal partner

Question 6.
There is free transferability of shares in this company.
Answer:
Public Company

Question 7.
A partnership agreement in writing.
Answer:
Partnership Deed

Question 8.
The motto of the co-operative society.
Answer:
Service

Question 9.
An organization which is service oriented.
Answer:
Co-operatives Society

1. (D) State True or False

Question 1.
Sole trader is the decision maker of the business.
Answer:
True

Question 2.
Sole trading concern operates in local markets.
Answer:
True

Question 3.
Sole proprietorship is useful for small business.
Answer:
True

Question 4.
The liability of KARTA is unlimited.
Answer:
True

Question 5.
The maximum number of members is unlimited in Joint Hindu Family Firm.
Answer:
True

Question 6.
Joint Stock company can raise huge amount of capital.
Answer:
True

Question 7.
There is a separation of ownership and management in Joint Stock Company.
Answer:
True

Question 8.
Board of Directors manage the business of Joint Stock Company.
Answer:
True

Question 9.
Partnership agreement may be oral or written.
Answer:
True

Question 10.
In partnership firm, the liability of every partner is limited, joint and several.
Answer:
False

Question 11.
The main motto of co-operative society is to render services to its shareholders.
Answer:
False

Question 12.
The membership of a co-operative society is compulsory.
Answer:
False

1. (E) Find the odd one

Question 1.
Sole proprietorship, Joint Hindu Family, Non-Government Organization (NGO), Partnership firm.
Answer:
NGO

Question 2.
Active partner, Shareholder, Nominal partner, Secret partner.
Answer:
Shareholder

1. (F) Complete the sentences

Question 1.
Private sector enterprises are owned and managed by the …………………
Answer:
Private entities

Question 2.
There is only one owner in …………………
Answer:
Sole Trading Concern

Question 3.
Admission of new individual into existing business has given birth to …………………
Answer:
Partnership Firm

Question 4.
A partner who takes active participation in the day to day working of the business is known as …………………
Answer:
active partner

Question 5.
When there is no provision in partnership agreement regarding time period for partnership then it is known as …………………
Answer:
Partnership at will

Question 6.
The property of JHF business is jointly owned by the …………………
Answer:
KARTA

Question 7.
The management of Co-operative society is based on …………………
Answer:
democratic principles

Question 8.
The rule for voting in Co-operative society is …………………
Answer:
one member one vote

Question 9.
The rule for voting in Joint Stock company is …………………
Answer:
one share one vote

Question 10.
The face value of the shares of Co-operative society is very …………………
Answer:
less

Question 11.
Consumer’s co-operatives are formed by the …………………
Answer:
consumers

Question 12.
Registration of Joint Stock Company is compulsory according to the Companies Act …………………
Answer:
2013

1. (G) Complete the following table

Question 1.
(Public company, Private company, Co-operative Society, Partnership Firm, Sole Trading Concern)

Group A	Group B
(i) Minimum 2 and maximum 200	……………..
(ii) Minimum 10 and maximum no limit	…………….
(iii) ………………	Minimum 7 and maximum unlimited
(iv) Form of business organisation having only one member	…………………
(v) Minimum 2 and maximum 50	………………..

Answer:

Group A	Group B
(i) Minimum 2 and maximum 200	Private Limited Compmay
(ii) Minimum 10 and maximum no limit	Co-operative Society
(iii) Public company	Minimum 7 and maximum unlimited
(iv) Form of business organisation having only one member	Sole Trading Concern
(v) Minimum 2 and maximum 50	Partnership Firm

1. (H) Answer in one sentences

Question 1.
What is Sole Trading Concern?
Answer:
Sole Trading Concern is a type of business which is owned, managed and controlled by one person.

Question 2.
What do you mean by partnership firm?
Answer:
A business owned and managed by two or more persons sharing profits and losses is called a partnership firm.

Question 3.
What is the meaning of Joint Stock Company?
Answer:
Joint Stock Company is an artificial person created by law, having an independent legal status, owned by shareholders and managed by Board of Directors.

Question 4.
What is Joint Hindu Family business?
Answer:
A Joint Hindu Family is a form of business organization which runs from one generation to another according to the Hindu Law.

Question 5.
What do you mean by Co-operative Society?
Answer:
Co-operative Society is a voluntary association of individuals which is formed for providing services to members.

Question 6.
What do you mean by minor partner?
Answer:
A minor partner is a partner who is admitted into the partnership firm for the benefit of the firm with the consent of all partners.

Question 7.
What is Quasi Partner?
Answer:
Quasi partner is a partner of the partnership firm who has retired from the firm but has left his capital behind in the firm.

Question 8.
What do you mean by partner-in-profits only?
Answer:
A partner-in-profits only is a partner who gets into an agreement to share only the profits of the partnership firm and not the losses.

Question 9.
What do you mean by general partnership?
Answer:
General partnership is a form of partnership where, the liability of all the partners is unlimited, joint and several. Every partner has an equal right and it can be formed under the Partnership Act of 1932.

Question 10.
What is the meaning of Private company?
Answer:
A Private Limited company is a company which by its articles restricts the right to transfer share, limits the maximum number of members to 200.

Question 11.
What do you mean by Public company?
Answer:
A public company means a company which is not a private company.

1. (I) Correct the underlined word and rewrite the following sentences.

Question 1.
In Public company, shares are not freely transferable.
Answer:
In Private company, shares are not freely transferable.

Question 2.
In Private company, there are minimum 3 (Three) directors.
Answer:
In Private company, there are minimum 2 (Two) directors.

Question 3.
Registration of Joint Stock company is not compulsory.
Answer:
Registration of Joint Stock company is compulsory.

Question 4.
There is less secrecy in Sole Trading concern.
Answer:
There is maximum secrecy in Sole Trading concern.

Question 5.
In Partnership firm, minimum three members are required.
Answer:
In partnership firm, minimum two members are required.

Question 6.
In Joint Hindu Family business, the senior most member of family is called as Co-parcener.
Answer:
In Joint Hindu Family business, the senior most member of family is called as Karta.

Question 7.
Indian Partnership Act, 1940 is applicable in India.
Answer:
Indian Partnership Act, 1932 is applicable in India.

2. Explain the following terms/concepts

Question 1.
Sole Trading Concern.
Answer:

It is a form of business organization which is owned, managed and controlled by one person.
It need not be registered.
It does not have a legal status i.e. It does not have a stable life.
Maximum secrecy can be maintained in Sole Trading concern.

Question 2.
Partnership Firm.
Answer:

It is a voluntary association of two or more persons with a common objective.
It is formed by an agreement called Partnership deed.
It is governed by Indian Partnership Act, 1932.
Registration of partnership firm is optional as per Partnership Act, 1932.
In Maharashtra, registration of partnership firm is made compulsory.

Question 3.
Joint Hindu Family Firm.
Answer:

It is a form of business organization which is carried from one generation to another generation.
It comes into existence by operation of Hindu Law.
This form of organization is found in India only.
The seniormost member of the family is called ‘Karta’ while other members are called ‘Co-parceners’.

Question 4.
Co-operative Society.
Answer:

It is a voluntary association of individuals which is formed for providing services to members.
Its main motto is ‘service’ rather than ‘profit’.
It runs on principle of ‘One member One Vote’.
It enjoys an independent legal status, distinct from its members.

Question 5.
Joint Stock Company.
Answer:

It is an incorporated association created by law, having an independent legal status, owned by shareholders and managed by Board of Directors.
The main motive of Joint Stock company is maximisation of profit.
It works as principle of “One share One vote”.
It has to follow Indian Companies Act, 2013.

Question 6.
Karta.
Answer:

Karta is a seniormost member of the family, who runs the Joint Hindu Family Business.
The Karta has unlimited liability in such type of business.
Karta has the right to manage the business.
Karta need not consult any body about business decisions.

Question 7.
Managing Committee.
Answer:

Managing committee is a group of members of a Co-operative society, who looks after the working of Co-operative society.
They are elected by the shareholders of Co-operative society.
All important decisions are taken by the managing committee.
In short, they look after day to day administration of the Society.

Question 8.
Nominal Partner.
Answer:

A partner who only lends his name and reputation to the partnership firm is called as nominal partner.
He is simply obliging his friends by allowing the firm to use his name as a partner.
He may or may not be given any share in the profits of the firm.
He does not contribute to the capital of the business.
He is liable to the debts of the firm.

3. Study the following case/situation and express your opinion

1. Mr. Raghunath is running business from last 30 years. This business is ancestoral business of Mr. Raghunath. Kiran and Naman, two sons of Mr. Raghunath are helping him along with their wives.

Question 1.
Find out the type of business.
Answer:
Joint Hindu Family Firm.

Question 2.
Who is Raghunath?
Answer:
Raghunath is the Karta.

Question 3.
What Kiran and Naman are called?
Answer:
Kiran and Naman are called as co-parceners.

2. Mr. Sawant a Chartered Accountant by profession and Mrs. Tambe, an Architect by profession running a firm namely ‘ST Firms’ in Nagpur.

Question 1.
Identify the form of business organisation in the above examples.
Question 2.
Is it a registered organisation?
Question 3.
What is the Profession of Mr. Sawant?

4. Distinguish between the following

Question 1.
Private Limited Company and Public Limited Company
Answer:

	Private Limited Company	Public Limited Company
(1) Meaning	A Private Limited Company is a company which by its articles, restricts the right to transfer share, limits the maximum number of members to 200 and prohibits the issue of prospectus.	A Public Company means a company, which is not a Private Company.
(2) Name of the Company	Name of the company must end with the word ‘Private Limited’.	Name of the company must end with the word ‘Limited’.
(3) Number of Members	There are minimum 2 members. Maximum members are 200.	There are minimum 7 members. Maximum members are unlimited.
(4) Transfer of Shares	Shares of the company are not freely transferable.	Shares of the company are freely transferable.
(5) Issue of Prospectus	The company cannot issue prospectus. Statement in lieu of prospectus is issued.	The company has to issue prospectus compulsory.
(6) Number of Directors	Minimum 2 Directors are needed in a Private Limited Company.	Minimum 3 Directors are needed in a Public Limited Company.
(7) Statutory Meeting	A Private Limited Company need not hold a Statutory Meeting.	A Public Limited Company must hold a Statutory Meeting compulsorily.
(8) Capital	Minimum paid up capital is one lakh rupees.	Minimum paid up capital is five lakh rupees.
(9) Commencement of Business	The business can be started after getting ‘Incorporation Certificate’.	The business can be started after getting ‘Commencement Certificate’.

Question 2.
Sole Trading Concern and Partnership Firm.
Answer:

	Sole Trading Concern	Partnership Firm
(1) Meaning	Sole proprietorship is owned and controlled by one person.	Partnership firm is owned and controlled by two or more persons called as ‘Partners’.
(2) Formation	Sole trading concern can be formed easily. It is started as soon as the owner decides.	Partnership firm is formed by an agreement between two or more persons.
(3) Numbers of Members	Sole trading concern is owned by a single person.	Minimum 2 members are needed for starting business. The maximum number is 50.
(4) Registration	There is no need for registration of sole trading concern.	A partnership firm may or may not be registered. However, it is always desirable for the firm to be registered. It is compulsory in Maharashtra.
(5) Secrecy	It is possible to have maximum business secrecy.	Secrecy is shared among all the partners.
(6) Liability	Liability of a sole trader is unlimited	Liability of a partner is unlimited, joint and several.
(7) Management	The sole trader looks after management of business. He is manager of the business.	All partners take part in management of the firm according to their skills.
(8) Capital	The entire capital is contributed by the sole trader, comparatively limited.	Partners contribute capital to the firm, comparatively more.
(9) Act/Law	There is no special Act governing the Sole Trading concern.	Partnerships are governed by the Indian Partnership Act, 1932.
(10) Sharing of Profit	The sole trader alone enjoys all the profits of business.	Partners share the profits of business as per the ratio given in the agreement.
(11) Risk	In this form of business organization, the risk is assumed by sole trader alone.	In partnership firm, the risk is shared by all the partners.
(12) Disputes	There is no room for disputes among owners, as there is only a single owner.	There can be disputes among partners.

Question 3.
Partnership Firm and Joint Hindu Family.
Answer:

	Partnership Firm	Joint Hindu Family
(1) Meaning	Partnership firm is controlled by two or more persons called as ‘Partners’.	In Joint Hindu Family Firm, the Joint Hindu Family conducts business according to Hindu Laws.
(2) Number of Members	Minimum two members are needed for starting business. The maximum number is fifty.	Membership of the firm depends upon the birth and death in the family. There is no limit on membership. A person adopted into the family also becomes a member.
(3) Registration	Registration is not compulsory in India, but it is compulsory in Maharashtra.	Registration is not compulsory.
(4) Liability	The liability of partners is unlimited, joint and several.	Karta has unlimited liability and Co-parceners have limited liability.
(5) Capital	Comparatively more, as it is contributed by all partners.	The whole capital comes from ancestral property.
(6) Secrecy	Secrets share by all partners.	Secrecy can be maintained within family.
(7) Management	All partners takes part in management of the firm according to their skills.	Karta looks after the management of the business. All Co-parceners follow his decision.
(8) Stability	Stability of business is affected by death, lunacy or insolvency of a partner.	Comparatively, more stable as business is not affected by death of Karta or Co-parceners.
(9) Act	Partnerships are governed by the Indian Partnership Act, 1932.	Joint Hindu Family firm follows the Hindu Succession Act, 1956.
(10) Formation	Partnership firm is formed by an agreement between two or more persons.	Joint Hindu Family Firm comes into existence by operation of Hindu Laws.
(11) Sharing of Profits/ Losses	The profits and losses are shared by partners as per the ratio given in the agreement.	The profits and losses are shared between Karta and Co-parceners.
(12) Inspection of books of Accounts	A partner has a right to inspect books of accounts of the firm.	A co-parcener has no right to inspect books of accounts of the firm.
(13) Implied	Authority Every partner has implied authority to act on behalf of the other partners.	Karta has implied authority to act on behalf of the firm.

Question 4.
Co-operative Society and Joint Stock Company.
Answer:

	Co-operative Society	Joint Stock Company
(1) Meaning	Co-operative Society is a voluntary association of individuals which is formed for providing services to members.	Joint Stock Company is an incorporated association created by law, having an independent legal status, owned by shareholders and managed by board of directors.
(2) Number of Members	Minimum ten members and maximum number of members is unlimited.	Private company- Minimum – 2 Maximum – 200 Public company- Minimum – 7 Maximum – No limit
(3) Capital	A Co-operative society has less capital as compared to Joint Stock company.	Joint Stock company has large capital.
(4) Management	Managing Committee manages Co-operative society.	Board of Directors manages Joint Stock company.
(5) Act	Co-operative Societies have to follow Co-operative Societies Act, 1912. In Maharashtra, the societies have to follow Maharashtra State Co-operative Societies Act, 1960.	Companies have to follow Indian Companies Act, 2013.
(6) Formation	Formation of a Co-operative society is comparatively cheaper and easier.	Formation of a Joint Stock Company is costly, difficult and time – consuming.
(7) Voting Right	The principle of “One member One vote” is followed.	The principle of “One share One vote” is followed.
(8) Motto	The main motto of a Co-operative society is to give services to the people.	The main motto of Joint Stock company is to make maximum profit.
(9) Transferability of Shares	Shares are not transferable. They can be surrendered to the society.	Shares of a Public Company are freely transferable.
(10) Remuneration	Members of Managing Committee work on honorary basis.	Board of Directors are paid salary and given fees for attending board meetings.
(11) Area of Business	Normally, the co-operatives have a limited area of business.	Companies have a larger area of business operation.
(12) Proxies	In a Co-operative society, proxies are not allowed in the meetings.	In a Joint Stock company, proxies are allowed to vote in the meetings.

Question 5.
Joint Hindu Family Firm and Joint Stock Company.
Answer:

	Joint Hindu Family Firm	Joint Stock Company
(1) Meaning	In Joint Hindu Family Firm, the Joint Hindu Family conducts business according to Hindu Laws.	Joint Stock Company is an incorporated association created by law, having an independent legal status, owned by shareholders and managed by Board of Directors.
(2) Number of Members	Membership of the firm depends upon the birth and death in the family. There is no limit on membership.	Private company- Minimum – 2 Maximum – 200 Public company- Minimum – 7 Maximum – No limit
(3) Registration	Registration is not required	Registration is compulsory.
(4) Liability	Karta has unlimited liability and Co-parceners have limited liability.	The liability of shareholders is limited upto the extent of unpaid amount on shares by them.
(5) Capital	The whole of ancestral property used as capital.	The company has huge capital.
(6) Secrecy	Secrecy can be maintained within the family.	Books of accounts have to be published. Business secrecy cannot be maintained.
(7) Management	Karta manages the business and he is assisted by co-parceners.	Board of Directors manages the Joint Stock company.
(8) Government Control	There is limited government interference.	There is strict government control.
(9) Act	Joint Hindu Family Firms are governed by the Hindu Succession Act, 1956.	Joint Stock Companies are governed by Indian Companies Act, 2013.
(10) Formation	It is comparatively easy to form.	Formation of a Joint Stock Company is difficult, costly and time-consuming.
(11) Legal Existence	A Joint Hindu Family firm does not have a separate legal existence independent of its members.	A Joint Stock Company has a separate legal existence. It is distinct from its members.
(12) Minor Member	Minors can become a member of the firm.	Minors cannot become a member of the company.

Question 6.
Co-operative Society and Partnership Firm.
Answer:

	Co-operative Society	Partnership Firm
(1) Meaning	Co-operative Society is a voluntary association of individuals which is formed for providing services to its members.	Partnership firm is formed by two or more persons to do business and share profits.
(2) Number of Members	Minimum ten persons and maximum no limit.	Minimum two persons and maximum fifty persons.
(3) Registration	It is compulsory.	It is not compulsory in India, but compulsory is Maharashtra.
(4) Liability	Liability of members is limited upto the extent of unpaid amount on shares held by them.	Liability of partners is unlimited, joint and several.
(5) Secrecy	It is not possible to maintain secrecy in a Co-operative Society.	It is possible to maintain secrecy to some extent in the firm.
(6) Management	Managing Committee manages the society according to its bye-laws.	All partners are involved in the management of the firm.
(7) Stability	Stability is not affected by death, insolvency or lunacy of a member.	Stability of a firm is affected by death, insolvency or lunacy of a partner.
(8) Government Control	There is a lot of government supervision and control.	There is minimum government supervision for a partnership firm.
(9) Act	Co-operative Societies have to follow Partnership firms are governed by the Indian Co-operative Societies Act, 1912. In Maharashtra, the societies have to follow Maharashtra Co-operative Societies Act, 1960.	Indian Partnership Act, 1932.
(10) Motive	The motive is to give maximum services to the people	The motive is to earn profits.
(11) Legal Status	A Co-operative Society enjoys an independent legal status, distinct from its members.	Partnership firms do not have an independent legal status. Partners and the firm are one and the same.
(12) Transfer of Shares	Members can surrender shares to the society.	Partners cannot transfer the shares without the consent of other partners.

5. Answer in brief

Question 1.
State any four features of Sole Trading Concern.
Answer:
(i) Suitable for some Special Business : Sole trading concern is suitable for business where personal attention and individual skill is needed e.g., Beauty parlour, groceries, fashion designing, sweet shops, tailoring, restaurants etc.

(ii) Unlimited Liability : Liability of the sole trader is unlimited. In case business assets are not sufficient to meet business expenses, private property of the sole trader will be used. There is no difference made between private property and business property of sole trader.

(iii) No Sharing of Profits and Risks : A sole trader enjoys all the profits of business. As he is the single owner of business he assumes full responsibility in business. He alone bears all the losses or risks involved in business.

(iv) Business Secrecy : Maximum business secrecy can be maintained in a sole trading concern. A sole trader is responsible only to himself. He need not discuss any matter of business with outsiders. Moreover, there is no legal compulsion for sole trader to publish books of accounts of business.

Question 2.
State any four types of partners.
Answer:
The different types of partners are:
(i) Active or Working Partners : In practice one or two partners take active part in the management. Such partners are called active or working partners. They contribute capital, shares profits or losses, and has unlimited, joint and several liability. They take an active interest in the day to day working of the firm. These partners are also known as ordinary / general / actual partners.

(ii) Dormant or Sleeping Partners : A dormant or sleeping partner is one who contributes capital to the firm. He does not take any active part in the management of the firm. He shares the profits and losses of the firm like any other partner. He voluntarily surrenders the right of management. However, he is liable for the debts of the firm.

(iii) Nominal Partners : A nominal partner is one who does not contribute any capital to the firm. He lends his name to the firm. He is simply obliging his friends by allowing the firm to use his name as a partner. He may or may not be given any share in the profits of the firm. His goodwill is used to attract business. However, he is liable for the debts of the firm.

(iv) Minor as Partner : According to the Indian Contract Act 1872, a person below 18 years is called a minor. But according to the Indian Partnership Act 1932, a minor can be admitted for the benefit of the firm with the consent of all other partners. He has a right to inspect the books of accounts. Minor partner has limited liability and is not liable for losses. He has the option to continue as a full-fledged partner or discontinue as a partner on attaining the age of majority. If he wishes to discontinue, he must give a public notice within 6 months from the age of majority.

Question 3.
Describe any four types of Co-operative Society.
Answer:
Types of Co-operative Society are as follows:
(i) Consumer Co-operative Societies : A consumer co-operative is a business owned by its customers. They purchase in large quantities from wholesalers and supply in small quantities to customers. Goods are provided to buyers at reasonable prices and also provide services to them. Members get a share in the profit. The consumer society is formed to eliminate middlemen from distribution process e.g.-Apana Bazar, Sahakari Bhandar.

(ii) Credit Co-operative Societies : Members pool their savings together with the aim of obtaining loans from their pooled resources for productive purposes and non-productive purposes. They may be established in rural areas by agriculturist or artisans called as a Rural Credit Society. They may be established by salary earners or industrial areas called as Urban Banks, Salary Earners Society or Workers Society.

(iii) Marketing Co-operatives Societies : These co-operatives find better markets for members produce. They also provide credit and other inputs to increase members production levels. They perform marketing functions such as standardising, grading, branding, packing, advertising etc. The proceeds are then distributed among members depending on the quantities sold.

(iv) Co-operative Farming Societies: Farmers voluntarily come together and pool their land. The agricultural operations are carried out jointly. They make use of scientific method of cultivation.

Question 4.
State any four merits of Joint Hindu Family Firm.
Answer:
Merits of Joint Hindu Family are as follows:
1. Easy Formation : Joint Hindu Family Firm can be easily formed. The formation is simple. Registration is also not compulsory. There is no limit on minimum or maximum members in the business. Family members become co-parceners by birth in the family.

2. Quick Decision : Only the Karta is involved in the decision making process. This helps to take quick decisions in business. If decisions are taken quickly there can be prompt actions.

3. Business Secrecy : Complete business secrecy can be maintained. All decisions are taken by Karta only. Co-parceners cannot even inspect books of accounts. There is no compulsion to publish books of accounts.

4. Co-parceners Liability : The liability of co-parceners is limited. It is to the extent of their share in Joint Family Business. Private property of co-parceners cannot be attached to business property.

Question 5.
State any four demerits of Joint Stock Company.
Answer:
The demerits of Joint Stock Company are as follows:
1. Rigid Formation : The formation of a joint stock company is lengthy, difficult and time consuming. There are many legal formalities for starting business. Promoters have to prepare documents like Articles of Association, Memorandum of Association, etc. A private company has to go through two stages in formation. A public company has to go through four stages in formation.

2. Delay in Decision Making Process : In company form of organization no single individual can make a policy decision. All important decisions are taken by Board of Directors. Decision taking process is time consuming. Business may lose opportunities because of delay in decision making.

3. Lack of Secrecy : The management of companies remain in the hands of many persons. Everything is discussed in the meetings of Board of Directors. All important documents are available at registered office for inspection. Thus, there is no secrecy in business matters.

4. Excessive Government Control: A large number of rules are framed for the working of companies. The companies will have to follow rules for internal working. The government tries to regulate the working of the companies because large public money is involved. In case regulations are not complied with, large penalties are involved.

6. Justify the following statements

Question 1.
The Liability of a ‘Sole trader’ is Unlimited.
Answer:

One of the main features of a sole traders is unlimited liability.
If the sole trader becomes insolvent and if his business assets are insufficient to pay off his business debts, he will have to use his private property in order to pay off his creditors.
There is no distinction between business property and private property in case of a sole trading concern.
Thus, liability of a sole trader is unlimited.

Question 2.
Karta is the sole manager of‘Joint Hindu Family Business’.
Answer:

The Karta is the eldest or senior most person in the family business.
Karta has unlimited liability.
He has the entire decision making power and he is not binding on the views of the co-parceners.
Thus, the Karta is the sole manager of Joint Hindu Family business.

Question 3.
The main objective of Co-operative society is to provide services to its members.
Answer:

The Co-operative Society is a voluntary association of persons formed for the purpose of promoting the interest of its members. It is different from all other organizations.
The main objective of a co-operative organization is not to make profit but to give service to its members.
The co-operative society is formed for the welfare of the people.
Co-operative societies are rightly called as service oriented organization. Maximisation of profit is not the aim.
Thus, the main objective of Co-Operative society is to provide services to its members.

Question 4.
A Joint Stock Company can raise huge capital.
Answer:

A Joint Stock Company is an incorporated association.
It has a legal status independent of its members.
A Joint Stock Company has large membership. There is no maximum limit.
Shares are available in the open market.
Large number of investors are interested in buying shares.
Shares are freely transferable and members have limited liability.
Thus, a Joint Stock Company can raise huge capital.
Capital can also be raised by company from financial institutions.

Question 5.
The liability of Co-parceners is limited in ‘Joint Hindu Family Business’.
Answer:

In a Joint Hindu Family Business, there are two types of members – Karta and Co-parceners.
The karta has unlimited liability and he is the only decision making authority. The co-parcerns have limited liability and therefore cannot take part in the management of the firm. They can only share the profit but cannot challenge decisions taken by the Karta.
The liability of co-parceners is limited upto the extent of their share in the Joint Hindu Family Business.
The personal property of co-parceners is not used for payment of the liability of the Joint Hindu Family business.
Thus, the liability of Co-parcerners is limited in ‘Joint Hindu Family Business’.

Question 6.
Sole proprietorship is useful for small business.
Answer:

Sole trading concern is owned by only one person.
He uses his own skill and intelligence for his business.
Sole trader brings capital from his own savings. He may borrow from friends and relatives. However, capital collected is limited.
He alone takes decisions of business. Therefore, managerial ability is also limited.
Because of limited capital and limited managerial ability, it is not possible to expand business beyond a certain limit.
Thus, sole proprietorship is useful for small business where limited capital and less managerial ability is needed.

Question 7.
Co-operative society follows democratic principles.
Answer:

The members of a Co-operative organisation form the general body which manages the co-operatives. This body exercises the power through annual general meetings. They elect their representatives who look after the day to day management which is collectively known as Managing Committee.
‘One member One vote’ is the principle followed by Co-operative Societies.
All these denote that it follows democratic principles.
Thus, Co-operative society follows democratic principles.

Question 8.
There is separation of ownership and management in Joint Stock Company.
Answer:

The shareholders are the owners of the company. The company is managed by the Board of Directors who are elected representatives of the shareholders.
There is separation of ownership and management because of the following reasons:
(a) Scattered membership (b) Large membership (c) Disinterested shareholder (d) Heterogenous members (e) Separate legal entity.
Thus, ownership is in the hands of shareholders and the management is with the Board of Directors who are paid employees of the company.

Question 9.
Shares of Private Limited company are not freely transferable.
Answer:

According to the Companies Act, the right to transfer shares is restricted by its articles.
Only a public limited company has right to transfer shares freely.
Thus, shares of Private Limited company are not freely transferable.

Question 10.
All partners are joint owners of Partnership firm.
Answer:

According to the Indian Partnership Act, 1932, all the partners are joint owners of the property of the partnership firm.
No partner can use the property of the firm for his personal interest.
No partner is allowed to take any decision without the consent of all the partners.
No partners can make any secret profit in the business.
Profits and losses are shared among the partners in the profit sharing ratio mentioned in the deed.
Thus all partners are joint owners of Partnership firm.

Question 11.
Active partners take active part in day to day management of partnership firm.
Answer:

Active partner is also called a working partner. He brings in capital and also takes active part in the business of the firm.
He has unlimited liability and shares the profits and losses of the firm. He is also called a managing partner.
Thus, active partners take active part in day to day management of partnership firm.

7. Attempt the following

Question 1.
Explain various types of Co-operative Society.
Answer:
Types of Co-operative Society are as follows:
(i) Consumer Co-operative Societies : A consumer co-operative is a business owned by its customers. They purchase in large quantities from wholesalers and supply in small quantities to customers. Goods are provided to buyers at reasonable prices and also provide services to them. Members get a share in the profit. The consumer society is formed to eliminate middlemen from distribution process e.g.-Apana Bazar, Sahakari Bhandar.

(iii) Producer’s Co-operatives : Producer’s Co-operatives are voluntary associations of small producers and artisans who come together to face competition and increase production. These societies are of two types:
(a) Industrial Service Co-operatives : This society supply raw materials, tools and machinery to the members. The producers work independently and sell their industrial output to the co-operative society. The output of members is marketed by the society.

(b) Manufacturing Co-operatives : In this type, producer members are treated as employees of the society and are paid wages for their work. The society provides raw material and equipment to every member. The members produce goods at a common place or in their houses. The society sells the output in the market and its profits is distributed among the members.

(iv) Marketing Co-operatives Societies : These co-operatives find better markets for members produce. They also provide credit and other inputs to increase members production levels. They perform marketing functions such as standardising, grading, branding, packing, advertising etc. The proceeds are then distributed among members depending on the quantities sold.

(v) Co-operative Farming Societies: Farmers voluntarily come together and pool their land. The agricultural operations are carried out jointly. They make use of scientific method of cultivation.

(vi) Housing Co-operative Societies : Housing Co-operatives are owned by residents. The society purchases land and develops it. Houses are constructed for residential purpose on ownership basis. They aim at establishing houses at fair and reasonable rents to members. For construction purposes loans are made available from Governmental or Non-Governmental sources. The society also looks after the maintenance of its buildings.

Question 2.
Explain the features of Joint Stock Company.
Answer:
The features of Joint Stock Company are as follows:
(i) Common Seal : A company being an artificial person cannot sign on its own. The law requires every company to have a seal and have its name engraved on it. Common seal is a symbol of company’s incorporate existence. As common seal is the signature of the company, it has to be affixed on all important documents of the company. When the seal is used it has to be witnessed by two Directors of the Company. The common seal is under the custody of Company Secretary.

(ii) Registration : The registration of Joint Stock Company is compulsory. All the companies have to be registered under Indian Companies Act, 2013. A private limited company can start its business immediately after getting ‘Incorporation Certificate’ while public limited company has to obtain. “Certificate of Commencement of Business” before it starts business.

(iii) Artificial Legal Person : A company is an artificial person created by law. It has an independent legal status. It has a separate name. It can enter into contracts, buy and sell property in its name. The company is distinct from its members.

(iv) Membership : A company is an association of persons. A private limited company must have atleast two persons and a public limited company must have atleast seven persons. The maximum limit of members for private company is 200. A public company can have unlimited members.

(v) Perpetual Succession : A Joint Stock company enjoys a long and stable life. There is continuity in existence, which means perpetual existence. Life of the company is not affected by life of the shareholders. If a shareholder dies, becomes insolvent or insane, the company will not be closed down. “Members may come and members may go but a company goes on forever”.

(vi) Separation of Ownership and Management: Persons investing in the shares of the company are called as shareholders. They are the owners of the company. They receive a share in the profits of the company called “dividend”. The large number of shareholders cannot manage business. They elect representatives who are collectively called as Board of Directors. They manage business of the Company.

(vii) Registered Office : Registered office of the company is a place where all the important documents of the company are kept e.g., Register of Members, Annual Returns, Minute Books, etc. All correspondence work of the company is done through registered office. The address of the registered office has to be mentioned in the domicile clause of the company.

(viii) Transferability of Shares : Shareholders are the owners of the company. Shares of a public limited company are freely transferable. There is a high degree of liquidity involved in buying shares of the company. Members can buy or sell shares as needed. However, there are restrictions on transferability of shares of a private company.

(ix) Voluntary Association : Any person can purchase shares and become a member of the company. The company is a voluntary association. No difference is made on the basis of religion, caste, creed, etc.

(x) Limited Liability : The liability of shareholders is limited. It depends upon the unpaid amount of shares held by them. Shareholders cannot be held personally liable for the debts of the company.

(xi) Separate Legal Status : The company is created by law. It has a separate legal entity. A company acts independently. The company can take legal action against anybody in its individual capacity.

Question 3.
Describe the features of Co-operative Society.
Answer:
(i) Limited Liability : The liability of members is limited. It depends upon the value of shares purchased by members. Therefore, their personal property is not used for payment of society’s debt.

(ii) Management : Elected representatives of members form the Managing Committee. The Managing Committee works according to bye-laws. Collective decisions are taken after conducting meetings. The organisation is managed on democratic principles.

(iii) Service Motive : The main motive of co-operative organisation is to give service to the people. It is not profit oriented. Utmost importance is given to the welfare of the people. In that sense, a co-operative society differs from other forms of organisation.

(iv) Surplus Profit: Profits are made in the course of business after payment of dividend to shareholders. A percentage of profit is always used for welfare of the people. Bonus is given to employees and as bonus on purchase made by members.

(v) Separate Legal Status : A Co-operative Society is formed according to Co-operative Societies Act, 1912, which gives it independent legal status. It is distinct from its members. Therefore it can enter into contract purchase property, etc. in its name.

(vi) Equal Voting Rights : All the members in a Co-operative Societies have equal voting rights irrespective of number of shares held by them.

(vii) Number of Members : Minimum 10 members are required for the formation of Co-operative Society. There is no limit on maximum number of members.

(viii) Democratic Principle : Democracy is followed in the working of co-operatives. Equality of voting rights is the main principle of the organisation. The principle of ‘One member One vote’ is followed. All members are equal in society.

(ix) Voluntary Association and Open Membership : Co-operative organisation is a voluntary association of individuals. Membership is voluntary. Any person can become a member of the organisation. No difference is made on the basis of language, religion, caste, etc. There is open membership. A person can become a member on his own free will and terminate membership whenever he wants.

(x) Registration : Registration of a Co-operative organisation is compulsory under Co-operative Society’s Act, 1912. Registration is done according to the Act of every state. In Maharashtra, Societies are registered under Maharashtra State Co-operative Societies Act, 1960.

(xi) State Support : Co-operatives receive support from the government. They are under the control and supervision of the State. All of them are registered under the Co-operative Societies Act, 1912. They get a corporate status. They get concessions from government in purchase of land, payment of tax etc. They get legal and financial assistance also.

8. Answer the following

Question 1.
Explain the features of Sole Trading Concern.
Answer:
A sole trading concern is one of the oldest and simplest form of organisation. An individual owns the entire business. The individual is the owner, controller and manager of the firm. Such an individual is called a Sole Trader or Sole Proprietor. This type of business is a one-man show.
(1) According to Prof. J. Hanse, “Sometimes known as one man business, it is a type of business unit where one person is solely responsible for providing the capital, for bearing the risk of the enterprise and for the risk of ownership”.

(2) According to Prof. James Lundy : “The sole proprietorship is an informal type of business owned by one person.” The features of Sole Trading Concern are as follows:
(i) Suitable for some Special Business : Sole trading concern is suitable for business where personal attention and individual skill is needed e.g., Beauty parlour, groceries, fashion designing, sweet shops, tailoring, restaurants etc.

(v) Local Market Operations : A sole trader has limited capital and limited managerial skills, which forces him to operates in local are market only.

(vi) Individual Ownership : A sole trader is the single owner of business. He owns all the property and assets of the concern. He brings in the required capital for business. A sole trading concern is a ‘One man show”.

(vii) No separate legal status : Sole trader and his business are considered one and the same in the eyes of . law. Thus, it does not enjoy separate legal status.

(viii) Direct Contacts with Customers and Employees : A sole trader directly deals with customers and employees. A sole trader can pay personal attention to his customers. This helps him to maintain good relations with his customers. He can serve customers according to their likes and dislikes. As there are less number of employees, he can build good relations with them. He can listen to their grievances and try to solve them.

(ix) Self-employment : Such business form is best suitable for self-employment. Instead of being remaining unemployed one can start such business as it requires low capital and has less legal formalities.

(x) Freedom in Selection of Business : A sole trader has freedom to select any type of business. Business selected must be allowed legally. A sole trader can use any method of maintaining books of accounts.

(xi) Minimum Government Regulations : Sole trading concern need not follow any special Act. There are not much legal formalities needed for forming and closing a sole trading concern. Only the general law of the country has to be followed.

Question 2.
Explain different types of Partnership Firms.
Answer:
Maharashtra Board OCM 11th Commerce Solutions Chapter 4 Forms of Business Organisation – I 1
(i) General Partnership : These partnership can be formed under the Indian Partnership Act, 1932, where the liability of all partners are unlimited, joint and several.
General Partnership can be divided into three Kinds:
(a) Partnership at will: Such partnership are formed and continued as per the will of the partners. They are formed for an indefinite period. Any partner can terminate the partnership by giving a notice to the firm. Such firms exists so long as there is mutual trust and co-operation among the partners.

(b) Partnership for a particular period : Such partnerships are formed for a particular period of time. On the completion of the duration, the partnership firm automatically dissolves irrespective of the venture being complete.

(c) Partnership for a venture or particular partnership : Such partnerships are formed for a particular venture or job. It comes to an end on the completion of the venture. For e.g. construction of roads, dams, bridges, buildings, etc.

(ii) Limited Liability Partnership : This kind of partnership is formed under the Limited Liability Partnership Act 2008. There are 2 kinds of partners.

Designated Partner : Limited liability partnership is one where there are atleast two partners of which one must be a resident of India.
General Partner : In limited liability partnership a apart from the designated partners all other partners have limited liability. They are called general partners.

Question 3.
Explain different types of Partners.
Answer:
The different types of partners are:
(i) Active or Working Partners : In practice one or two partners take active part in the management. Such partners are called active or working partners. They contribute capital, shares profits or losses, and has unlimited, joint and several liability. They take an active interest in the day to day working of the firm. These partners are also known as ordinary / general / actual partners.

(v) Partner in Profits only : A partner may clearly state that he will have a share only in the profits of the firm and that he will not share losses. Such a partner is known as “Partner in Profits Only”. He has no rights of management. He may not take active participation in the management of the firm.

(vi) Partner with Limited Liability : A limited partner has limited liability. A partner whose liability depends upon the extent of investment is called a limited partner. He has no right to take part in the day to day work. But such a partnership must have at least one partner having unlimited liability.

(vii) Secret Partner : A person is a partner of the firm and not known to general public is a secret partner. Secret partners have all the features like other partners. He brings capital to the firm and also gets a share in profit. He has unlimited liability. He can take part in the working of the business.

(viii) Sub-Partner : A partner when agrees to share his own profit derived from the firm with third person, it is known as sub-partner. A sub-partner cannot call himself as a partner in the firm.

(ix) Quasi Partner : A retired partner leaving his capital with the firm is called as Quasi Partner. He does not participate in the working of the firm, but share profit of the firm. He is also liable for the debts of the firm.

Question 4.
Explain the five features of Joint Stock Company.
Answer:
The features of Joint Stock Company are as follows:
(i) Common Seal : A company being an artificial person cannot sign on its own. The law requires every company to have a seal and have its name engraved on it. Common seal is a symbol of company’s incorporate existence. As common seal is the signature of the company, it has to be affixed on all important documents of the company. When the seal is used it has to be witnessed by two Directors of the Company. The common seal is under the custody of Company Secretary.

(ii) Artificial Person : A company is an artificial person created by law. It has an independent legal status. It has a separate name. It can enter into contracts, buy and sell property in its name. The company is distinct from its members.

(iii) Registration: The Registration of Joint Stock Company is compulsory. All companies have to be registered under Indian Companies Act, 2013.

(v) O wnership and Management: Persons investing in the shares of the company are called as shareholders. They are the owners of the company. They receive a share in the profits of the company called “dividend”. The large number of shareholders cannot manage business. They elect representatives who are collectively called as Board of Directors. They manage business of the Company.

(vi) Limited Liability : The liability of shareholders is limited. It depends upon the unpaid amount of shares held by them. Shareholders cannot be held personally liable for the debts of the company.

Question 5.
Explain the merits of a Co-operative Society.
Answer:
The merits of a Co-operative Society are as follow:
(i) E asy Formation: It is easy to form a Co-operative organisation. Minimum ten members are needed to form the organisation. It does not involve much legal formalities. It is compulsory to register the organisation. However, the procedure for registration is simple and the fees are nominal.

(ii) Tax Concession : Co-operatives always get support of the government. As they play an important role in economic and social development, government gives them concessions in payment of tax.

(iii) Open Membership : Membership of a Co-operative organisation is open to all. A person can become a member by purchasing shares. No difference is made on the basis of language, religion, caste, etc. A person can become a member whenever he wants and terminate membership at his own will. Membership is voluntary.

(iv) Stability : A Co-operative organisation enjoys a long and stable life. The life of the organisation is distinct from the life of its members. If any member dies, becomes insolvent or insane, business is not closed.

(v) Self Financing and Charity : After providing 15% dividend to members, surplus amount is used for self-financing by the Co-operative Societies. Some amount of leftover profit is used for charity, social activities and for the growth of the co-operative society.

(vi) Less O perating Expenses: Cost of operation is low as salary is not paid to members who manage business. Members of Co-operative organisations work on honorary basis. They are not given any remuneration for their services. There are no expenses on advertising and publicity. This helps to increase profit.

(vii) Limited Liability : The liability of members is limited. It depends upon the value of shares purchased by members. Therefore, people are interested in investing in a Co-operative organisation.

(viii) Democratic Management: Democracy is followed in the management of co-operative organisation. All members are equal. The principle of “One member One vote” is followed. Members elect representatives who form the managing committee. They work according to bye-laws. The managing committee looks after day to day administration. Decisions are taken collectively in meetings.

(ix) Supply of Goods at Cheaper Rate : Goods are sold at lesser price through a Co-operative store. This is because the organisation is service – oriented. The store does not make use of services of middlemen and there are no expenses on advertising. So goods are sold at cheap rates.

Question 6.
Explain the demerits of Partnership firm.
Answer:
The demerits of Partnership firm are as follows:
(i) Non-transferability of Interest: In a partnership firm no one partner can transfer his share of interest to another outsider without the consent of all the partners.

(ii) Limited Capital: There is a limitation in raising additional capital for business. The business resources are limited to personal funds of the partners. Borrowing capacity of partners is limited. The maximum number of partners is fifty only. So financial capacity is less.

(iii) Absence of Legal Status : The Indian Partnership Act, 1932 does not give a legal status to a partnership firm. There is no independent legal status. The firm and its partners are one and the same.

(iv) Problem of Continuity : The partnership firm is not a separate legal entity. The firm is dependent oh mutual trust between partners. If a partner dies, becomes insolvent or insane, the firm has to be dissolved compulsorily whether the partners wish or not.

(v) Risk of Implied Authority : A partner works in two capacities. He has a dual role – Principal and Agent. He acts as an agent of the business. He can enter into contract with third party. However, a wrong decision can result in heavy losses, which has to be borne by all partners.

(vi) Limitations on Number of Partners : No partnership can go beyond maximum number prescribed (i.e. 50 members) by Indian Partnership Act. This restriction effects the raising of capital for further expansion.

(vii) Disputes : It is difficult to maintain harmony among partners. They may have different opinions and may not agree on certain matters. Partners may have conflicts if some partners work for self interest. This reduces team spirit and may finally lead to dissolution of the firm.

(viii) Difficulty in Admission of Partner : As consent of all partners is required to take any decision in the partnership firm, it becomes difficult to admit a new partner. This is a disadvantage to the firm as it cannot bring in new talent if the other partners are not agreeing to it.

(ix) Unlimited Liability : The liability of partners is unlimited. There is no difference between business property and personal property of partners. If business assets are not enough to meet business expenses, personal property can be used.

(x) Problem of Secrecy : Partnership firms lack complete business secrecy as some secrets may be disclosed by some partner to the competitor for personal benefit.

Question 7.
Explain the merits of Joint Stock Company.
Answer:
The merits of Joint Stock Company are as follows:
(i) Transferability of Shares : Shares of a public company can be transferred easily and freely. There is a high degree of liquidity in shares. Permission of directors or members need not be taken for buying and selling shares. This helps to attract investors to public company.

(ii) Relief in Taxation : The tax burden in the company is less. Provisions of Income Tax Act says that companies have to pay tax at flat rate. This is less than taxes paid by individuals earning very high income. If company is started in backward areas, the company gets relief in the form of tax holding.

(iii) More Scope for Expansion : The capital raising capacity of the company is high. The company has a lot of funds at its disposal. A part of the profit is also ploughed back for business. This enables growth and expansion of business.

(iv) Public Confidence : Joint Stock Company has to publish books of accounts. Which is audited by CA. Annual reports of the company have to be published. The activities of the Company are regulated by the provision of Companies Act, 2013. Therefore, the company gets public support.

(v) Limited Liability : The liability of shareholders is limited. It is to the extent of unpaid value of shares. Shareholders cannot be liable for the debts of the company. Features of limited liability attract more investors to business.

(vi) Expert Services : Joint Stock Company an appoint experts for managing their huge business operations. They appoint experts like Legal advisors, management experts, auditors, consultants, etc.

(vii) Democratic Management: Management of a company is democratic. Shareholders elect representatives called as Board of Directors. They manage business. Directors are accountable to shareholders. Policy decisions are taken by Directors but have to be approved by shareholders. The shareholders can also remove inefficient Directors.

(viii) Perpetual Succession : Joint Stock Company enjoy long and stable life. Its stability is not affected by death insolvency or retirement, of any of its members.

(ix) Professional Management : Large funds are at the disposal of the companies. Therefore, experts can be appointed in different areas of business. As good salaries can be paid, highly qualified personnel like Cost Accountants, Sales Experts, Market Experts, etc. can be appointed. Even Board of Directors have competent persons who manage business efficiently.

(x) Large Amount of Capital: A company can collect large amount of capital. There is no limit on maximum number of members. Due to features of limited liability, transferability of shares and liquidity, many investors are attracted to become shareholders of the company. Loans are also available to Joint Stock Companies.

Question 8.
Explain the features of partnership firm.
Answer:
The features of partnership firm are as follows:
(i) Lawful Business : Business undertaken by partnership should be lawful. It cannot undertake business forbidden by state. The definition of partnership also does not permit any association like club or charitable institution. Illegal business like smuggling or gambling is not allowed.

(ii) Agreement : Partnership is a result of agreement between partners. There could be a written or oral agreement between partners. A written agreement is preferred so that it can be used as a proof in the court of law if needed.

(iii) Number of Partners : Minimum two members are needed to start a partnership firm. The maximum number of members is 50.

(iv) Dissolution : A Partnership Firm can be dissolved through agreement between partners. If a partner wants, he can dissolve the firm by giving 14 days notice to the firm. The firm can be dissolved if a partner dies, becomes insolvent or insane.

(v) Sharing of Profits and Losses : The purpose of partnership is to earn profit. Its object cannot be a charitable one. Partners have to share profits and losses according to the ratio given in the agreement. If the agreement is silent about the proportion then profit and loss sharing will be equal.

(vi) Termination of Partner : A partner may resign by giving proper notice in writing to the other partners. A partner can also be removed if he has been found doing any fraudulent activities.

(vii) Joint Ownership : Each partner is the joint owner of the property of the firm. All partners are equal owners of business property. No partner can use property for personal use.

(viii) Registration : It is not compulsory as per Indian Partnership Act, 1932. However, in the State of Maharashtra, it has been made compulsory to get register with ‘Registrar of Firms’ of the state.

(ix) Joint Management: All partners have equal rights in managing the firm. Some partners take interest in management of the firm and others voluntarily surrender their management rights. However, all partners are jointly responsible for the management of the firm.

(x) Unlimited Liability : The liability of partners is unlimited joint and several. If assets of business is not sufficient to pay liabilities, personal property of partners can be used. If any one of the partners is declared insolvent, his liability will be borne by the solvent partners.

(xi) Principal and Agent : Each partner works in two capacities – Principal and Agent. A partner acts as principal when within the firm and acts as an agent while dealing with outsider. The partners play a dual role.

(xii) Restriction on Transfer of Interest : A partner cannot transfer or sell his interests in the firm to outsider without the prior consent of all other partners in the firm.

Question 9.
Explain the types of co-operative societies.
Answer:
Types of Co-operative Society are as follows:
(i) Consumer Co-operative Societies : A consumer co-operative is a business owned by its customers. They purchase in large quantities from wholesalers and supply in small quantities to customers. Goods are provided to buyers at reasonable prices and also provide services to them. Members get a share in the profit. The consumer society is formed to eliminate middlemen from distribution process e.g.-Apana Bazar, Sahakari Bhandar.

(v) Co-operative Farming Societies: Farmers voluntarily come together and pool their land. The agricultural operations are carried out jointly. They make use of scientific method of cultivation.

Question 10.
Explain the demerits of Joint Stock Company.
Answer:
The demerits of Joint Stock Company are as follows:
1. Rigid Formation : The formation of a joint stock company is lengthy, difficult and time consuming. There are many legal formalities for starting business. Promoters have to prepare documents like Articles of Association, Memorandum of Association, etc. A private company has to go through two stages in formation. A public company has to go through four stages in formation.

5. High Cost of Management : The management of joint stock company form of organization is costly. Services of experts like share brokers, underwriters, solicitors, bankers is needed which is costly. Highly qualified staff is needed. They are paid good salaries. Dissolution of the firm is also costly.

6. Reckless Speculation: Directors look after management of the company. They have full information about the progress of the company. They use these details for speculation in shares. This results in fluctuations in share prices. This affects public confidence.

7. No Personal Contact : There are large number of employees in the organization. There is no personal contact of owners and managers with employees. Lack of appreciation demotivates employees. Similarly, managers and directors are not able to maintain personal contacts with their customers. Thus, customers likes and dislikes are ignored.

8. No Direct Effort Reward Relationship : Joint Stock Company is owned by shareholders and managed – by Board of Directors. Board of Directors are paid for managing and profit is shared by shareholders. There is no direct relation between efforts and rewards. Directors may not take a lot of interest in the working of the company.

OCM 11th Commerce Textbook Solutions Digest