BSEH SS Business Studies cheat sheet

Management is goal-oriented, pervasive, multidimensional (work, people, operations), continuous, intangible, and both a science and an art; it is a profession only partly, since entry is not restricted by law.

Effectiveness = completing the task on time; efficiency = completing it at minimum cost. Efficiency and effectiveness are independent: high efficiency with low effectiveness still fails the goal.

Three levels: top management (policy, strategy, board-level), middle management (departmental targets, interpret policy), supervisory management (foreman, day-to-day execution, worker oversight).

Management is a dynamic function: it adapts to a changing environment. Coordination is the essence of management, not a separate function, and runs through all functions.

Functions: planning, organising, staffing, directing, controlling - all interrelated and interdependent, treated as one continuous process.

Significance: achieves group goals, increases efficiency, creates a dynamic organisation, helps societal development, and contributes to national growth.

Coordination characteristics: integration of group efforts, unity of action, and deliberate effort; it is not a one-time act but a continuous, all-pervasive process.

Objectives are multiple and simultaneous: organisational (profit, growth), social (community welfare, employment), and personal (employee satisfaction, growth).

Taylor's scientific management techniques: time study, motion study, method study, fatigue study, differential piece wage system, standardisation, simplification, and functional foremanship.

Differential piece rate: a worker producing above the standard earns a higher rate per unit; below standard, a lower rate - it rewards efficiency, not merely attendance.

Taylor's principles: science, not rule of thumb; harmony, not discord; cooperation, not individualism; development of each person to greatest efficiency.

Fayol's 14 principles include division of work, authority and responsibility, discipline, unity of command, unity of direction, subordination of individual interest, remuneration, centralisation, scalar chain, order, equity, stability of tenure, initiative, and esprit de corps.

Unity of command = one boss per subordinate (avoids confusion); unity of direction = one head and one plan per group with the same objective. The two are not the same.

Fayol's gang plank permits direct communication between two employees at the same level in different chains, bypassing the scalar chain in an emergency.

Taylor's functional foremanship has 8 specialists: route clerk, instruction card clerk, time and cost clerk, disciplinarian (planning); speed boss, gang boss, repair boss, inspector (production).

Esprit de corps = team spirit and unity; the principle warns against divide-and-rule management. Equity = kindness and justice combined, not mere fairness of pay.

Dimensions of business environment: economic, social, technological, political, legal, and natural (demographic is usually grouped with social).

Features: totality of external forces, specific and general forces, inter-relatedness, dynamic nature, uncertainty, and relativity (environment differs by country and region).

Importance: helps identify opportunities and threats, gives early warning of danger, taps useful resources, assists in coping with rapid change, and assists in planning and policy formulation.

Economic environment variables: interest rates, inflation, income distribution, GDP, money supply, exchange rates, and stock market indices.

Social environment: customs, traditions, values, family structure, education level, and consumer preferences; legal environment includes laws, statutes, and court rulings.

Liberalisation, privatisation, and globalisation (LPG) are the pillars of India's 1991 economic reforms; they increased competition and widened consumer choice.

Technological environment forces continuous innovation and shortens product life cycles; failing to adapt is a threat, adopting early is an opportunity.

Environmental scanning is a continuous process, not a one-time exercise; a change in one dimension (e.g., political) typically triggers changes in others.

Planning = deciding in advance what to do, how, when, and by whom. It is primary, pervasive, continuous, forward-looking, and mental rather than physical activity.

Planning process: setting objectives, developing premises, identifying alternative courses, evaluating alternatives, selecting an alternative, implementing the plan, and follow-up action.

A plan is a commitment to action; a planning premise is an assumption about the future on which plans are based (forecasts, not plans).

Types of plans: objectives, strategy, policy, procedure, rule, programme, method, and budget. A rule is specific and mandatory; a policy is a general guide to decision-making.

Single-use plans: programme and budget. Standing plans: objectives, strategy, policy, procedure, rule, and method.

Limitations: rigidity, may not work in a dynamic environment, reduces creativity, involves huge cost, and is time-consuming; planning does not guarantee success.

Planning and controlling are inseparable twins: planning provides standards for control, and control provides information for future planning.

Strategy is a comprehensive plan for accomplishing objectives; it deals with the environment and is usually formulated at the top level.

Organising = identifying and grouping activities, assigning duties, delegating authority, and establishing reporting relationships. Steps: division of work, departmentalisation, assignment of duties, establishing reporting relationships.

Organisational structure types: functional (grouped by function, suitable for single-product firms) and divisional (grouped by product or territory, suitable for multi-product firms).

Span of management: narrow span creates a tall structure with many levels; wide span creates a flat structure with fewer levels.

Delegation has three elements: authority (right to command), responsibility (obligation to perform), and accountability (answerability). Authority can be delegated; accountability cannot.

Authority flows downward, responsibility flows upward, and accountability flows upward. Delegation does not reduce the manager's accountability.

Centralisation = authority retained at the top; decentralisation = systematic dispersal of authority to lower levels. Decentralisation is extension of delegation, not its opposite.

Formal organisation is deliberately designed and follows rules; informal organisation arises spontaneously from social interaction and is not governed by written rules.

A functional structure gives occupational specialisation and easier training but may cause departmental conflict; a divisional structure gives product focus but raises cost through duplication.

Staffing = filling positions and keeping them filled: manpower planning, recruitment, selection, placement, training, performance appraisal, promotion, and compensation.

Recruitment is positive (attracting candidates, searching for prospective employees); selection is negative (rejecting unsuitable candidates).

Internal recruitment sources: transfer and promotion. External sources: direct recruitment, casual callers, advertisement, employment exchange, campus placement, consultants, and recommendations.

Selection process: preliminary screening, selection tests, employment interview, reference and background checks, selection decision, medical examination, job offer, and contract of employment.

Selection tests include intelligence, aptitude, personality, trade (proficiency), and interest tests; an interview is an exchange of ideas, not a one-way interrogation.

Training is job-oriented and short-term (improves current job skills); development is career-oriented and long-term (overall growth).

On-the-job training methods: apprenticeship, coaching, internship, job rotation. Off-the-job methods: vestibule training, case study, role playing, and conferences.

Compensation includes wages/salary, incentives, bonus, and fringe benefits; performance appraisal compares actual performance against standards.

Directing = instructing, guiding, supervising, and motivating people to achieve objectives; it is the function that initiates action and is performed at every level.

Features: initiates action, performed by all managers, continuous, flows from top to bottom, and is human-oriented.

Maslow's hierarchy (bottom to top): physiological, safety, social (affiliation), esteem, and self-actualisation needs; lower needs must be reasonably satisfied before higher ones motivate.

Herzberg's two-factor theory: hygiene factors (pay, working conditions, company policy, job security) prevent dissatisfaction; motivators (achievement, recognition, responsibility, growth) create satisfaction.

Leadership styles: autocratic (leader decides alone), democratic (participation), and laissez-faire (free rein). A democratic style typically raises morale and participation.

Communication process: sender, message, encoding, channel, receiver, decoding, and feedback; barriers include semantic, psychological, organisational, and personal barriers.

Barriers to communication can be overcome by clarity of message, proper channel selection, feedback, and active listening.

Supervision is direct oversight of subordinates at the operational level; motivation is the process of stimulating people to action to satisfy needs.

Controlling = ensuring activities conform to plans: setting standards, measuring performance, comparing with standards, analysing deviations, and taking corrective action.

Controlling is both backward-looking (compares actual against past standards) and forward-looking (corrects for the future); it is the last function but feeds back into planning.

Critical point control: focus on key result areas (KRAs) rather than every activity. Management by exception: attend only to significant deviations.

Deviations are analysed for cause; corrective action can include revising standards, changing methods, retraining staff, or altering the plan.

Controlling is pervasive, continuous, dynamic, and goal-oriented; it is an end-to-end function, not a one-time act.

A good control system is accurate, timely, flexible, economical, understandable, and points to corrective action.

Standards may be quantitative (output, cost, time, quality) or qualitative (morale, customer satisfaction, employee development).

Planning and controlling are complementary: planning is prescriptive and controlling is evaluative; without standards from planning, control has no benchmark.

Financial management deals with three decisions: investment (capital budgeting), financing (capital structure), and dividend distribution; objective is wealth maximisation, not merely profit maximisation.

Capital budgeting techniques: payback period, net present value (NPV), internal rate of return (IRR), profitability index, and discounted payback.

NPV = present value of cash inflows − present value of cash outflows. Accept a project if NPV > 0; NPV is generally preferred because it uses time value of money and is additive.

Payback period = initial investment ÷ annual cash inflow (for equal inflows). It ignores the time value of money and cash flows after the payback period.

Fixed capital = long-term assets (land, plant, machinery); working capital = current assets − current liabilities, needed for day-to-day operations.

Factors affecting fixed capital: nature of business, scale of operations, technology, growth plans, and diversification. Factors affecting working capital: nature of business, business cycle, credit terms, and operating cycle.

Capital structure = mix of debt and equity; debt is cheaper (interest is tax-deductible) but increases financial risk. Higher debt raises financial leverage.

Dividend decision: a higher dividend satisfies shareholders but reduces retained earnings for growth; the form can be cash dividend or stock dividend.

Money market deals in short-term instruments (up to one year): treasury bills, commercial paper, certificates of deposit, and call money; the capital market deals in long-term securities.

Primary market = new issues (IPO, rights issue, private placement); secondary market = existing securities traded on stock exchanges.

Stock exchange functions: provides liquidity, pricing of securities, safety of transactions, spreading equity cult, and providing a market for securities.

SEBI is the regulator of the Indian securities market; its functions include protecting investors, regulating intermediaries, and promoting the development of the market.

A depository (e.g., NSDL, CDSL) holds securities in electronic form; a depository participant (DP) is the investor's link to the depository.

Treasury bills are short-term money market instruments issued by the government; commercial paper is an unsecured promissory note issued by large creditworthy firms.

A demat account holds shares in electronic form; a trading account is used to buy and sell securities; both are needed for electronic trading.

Capital market instruments: equity shares, preference shares, debentures, and bonds. Equity holders are owners with voting rights; debenture holders are creditors with fixed interest.