CHSE Odisha Elective BSM cheat sheet

Business is any organised activity of producing or exchanging goods and services with the object of earning profit through satisfaction of human wants.

Human activities divide into economic (business, profession, employment) and non-economic (social, religious, charitable) activities.

Industry = extraction, genetic, manufacturing, construction; Commerce = trade (internal, external) plus auxiliaries to trade (transport, banking, insurance, warehousing, advertising).

Distinguishing test of a profession from a business: specialised body of knowledge, formal training, service motive, and a regulating code of conduct.

Business objectives split into economic (profit, market share, growth, innovation) and social (employment, quality goods, environment, community welfare).

Business risk arises from uncertainty of future; it is inseparable from ownership and may be insurable (fire, theft) or non-insurable (demand changes).

Scope of business studies covers production, finance, marketing, human resources, and the environment in which these functions operate.

Profit is the reward for risk-bearing and enterprise; it is residual after all contractual payments are met.

Sole proprietorship: single owner, unlimited liability, no separate legal entity, least legal formality, limited capital and continuity.

Partnership: governed by the Indian Partnership Act, 1932; minimum 2 partners, maximum 50 (Companies Rules); liability joint and several, unlimited.

Registration of a partnership firm is optional but an unregistered firm cannot sue third parties for breach of contract, though it may be sued.

Hindu Undivided Family (HUF) business: membership by birth, Karta manages, coparceners have unlimited liability, no registration needed.

Cooperative society: minimum 10 adult members, registered under Cooperative Societies Act, one member one vote, limited liability, service motive.

Joint stock company: separate legal entity, perpetual succession, limited liability, common seal; private company minimum 2 members, public minimum 7.

Company types by liability: limited by shares, limited by guarantee, unlimited; by control: holding and subsidiary; by access: private and public.

Choice of form depends on liability, capital need, control, continuity, legal formalities, and degree of risk sharing.

Management is both a process (getting things done through others) and a body of knowledge; it is goal-oriented, pervasive, continuous, and intangible.

Five functions (Fayol/Koontz): planning, organising, staffing, directing, controlling; coordination is the essence of managership.

Fayol's 14 principles include division of work, authority and responsibility, unity of command, unity of direction, scalar chain, equity, order, and esprit de corps.

Taylor's scientific management: science not rule of thumb, harmony not discord, cooperation not individualism, development of each person to maximum efficiency.

Taylor techniques: time study, motion study, method study, fatigue study, differential piece-rate wage system, functional foremanship.

Management as science: systematic body of knowledge, principles based on observation; as art: personalised application; as profession: partly, since entry is not fully regulated.

Levels of management: top (policy, strategy), middle (departmental plans, coordination), supervisory (day-to-day direction of workers).

Unity of command means one boss per subordinate; unity of direction means one head and one plan for a group with the same objective.

Planning bridges the gap between where we are and where we want to go; features: goal focus, primacy, pervasiveness, futurity, flexibility, mental exercise.

Steps: setting objectives, developing premises, identifying alternatives, evaluating alternatives, selecting a plan, implementing, follow-up.

Types of plans: objectives, strategies, policies, procedures, rules, programmes, methods, budgets - a rule is the most specific, a strategy the most flexible.

Forecasting premises: planning premises are assumptions about future internal and external conditions; they may be controllable, semi-controllable, or uncontrollable.

Decision making is choosing among alternatives; steps: define problem, collect information, develop alternatives, evaluate, select, implement, review.

Rational decision model assumes complete information; bounded rationality (Simon) accepts limited information and satisficing choice.

Group decisions raise acceptance and information quality but risk groupthink, slower speed, and diffused responsibility.

Limitations of planning: rigidity, cost and time, uncertainty, internal resistance, and reduced initiative at lower levels.

Organising is the process of identifying and grouping work, defining responsibility and authority, and establishing relationships for common objectives.

Organisation structure types: line, line and staff, functional, committee, matrix (project) - matrix gives dual authority and violates unity of command.

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

Delegation has three elements: authority, responsibility, and accountability; authority may be delegated, accountability cannot.

Centralisation keeps decision authority at the top; decentralisation disperses it to lower levels and is not the same as delegation.

Formal organisation is deliberately designed by management; informal organisation arises from social interaction and has its own grapevine.

Staffing process: manpower planning, recruitment, selection, placement, training, performance appraisal, promotion and transfer, compensation.

Recruitment is positive (attracting candidates via internal and external sources); selection is negative (rejecting unsuitable applicants through tests and interviews).

Directing includes four elements: supervision, motivation, leadership, and communication; it is continuous and human-oriented.

Maslow's hierarchy: physiological, safety, social, esteem, self-actualisation - a satisfied need no longer motivates.

Herzberg's two factors: hygiene (pay, conditions, policy) prevent dissatisfaction; motivators (achievement, recognition, growth) create satisfaction.

Leadership styles: autocratic (leader-centred), democratic (participation), laissez-faire (free rein); situational leaders adapt style to maturity of followers.

Trait theory says leaders are born with qualities; behavioural theory studies what leaders do; contingency theory says effectiveness depends on situation.

Communication process: sender, encoding, message, channel, receiver, decoding, feedback, with noise as interference at any stage.

Barriers to communication: semantic, psychological, organisational, and personal; grapevine is informal, fast, and often inaccurate.

Supervision means overseeing subordinates at work; it links management and workers and is most visible at the supervisory level.

Coordination is the orderly synchronisation of group efforts; it is not a separate function but the essence of management, present in every function.

Coordination may be internal (within a unit) or external (with government, suppliers, customers); it may be vertical, horizontal, or a mix.

Controlling process: setting standards, measuring actual performance, comparing with standards, analysing deviations, taking corrective action.

Management by Exception: managers attend only to significant deviations, saving time and effort.

Critical Point Control: focus control on key result areas that materially affect results rather than on every minor activity.

Control is forward-looking and closely linked to planning; planning supplies the standards, controlling verifies them.

Types of control: feed-forward (before), concurrent (during), and feedback (after) control.

Deviation analysis compares actual with standard; corrective action may revise standards or change operations, depending on cause.

Financial management deals with procurement of funds and their effective utilisation; objectives are profit maximisation and wealth maximisation (wealth maximisation preferred for time value and risk).

Three finance decisions: investment (capital budgeting), financing (capital structure), and dividend decision.

Sources of finance: equity shares, preference shares, debentures, retained earnings, loans from banks and financial institutions, public deposits, trade credit.

Fixed capital is needed for land, plant, machinery; working capital is needed for current assets like stock, debtors, cash.

Capital structure is the mix of debt and equity; trading on equity uses debt to raise return to equity holders, but raises financial risk.

Cost of capital is the minimum return required; WACC = weighted average of cost of each source.

Break-even point in units = Fixed cost / (Selling price per unit − Variable cost per unit); margin of safety = Actual sales − Break-even sales.

Dividend policy choices: stable dividend, constant payout ratio, or residual dividend; factors include cash flow, growth plans, and tax.

Marketing is the process of identifying needs and satisfying them profitably; the marketing mix has 4 Ps: Product, Price, Place, Promotion.

Product levels: core benefit, basic product, expected product, augmented product, potential product; product line vs product mix (width, length, depth).

Product life cycle stages: introduction, growth, maturity, decline; pricing and promotion strategy change with each stage.

Pricing methods: cost-plus, going-rate, penetration, skimming, value-based; skimming sets a high initial price, penetration a low one.

Channels of distribution: zero level (direct), one level (retailer), two level (wholesaler–retailer); choice depends on product, market, and cost.

Promotion mix: advertising, sales promotion, personal selling, publicity; advertising is paid, non-personal, and sponsored.

Branding gives identity and legal protection (trademark); packaging protects and promotes; labelling informs and identifies.

Market segmentation divides a heterogeneous market into homogeneous groups; targeting selects segments; positioning creates a distinct place in the buyer's mind.

Business environment is the sum of internal and external factors affecting business; it is dynamic, complex, and uncertain.

Internal environment: value system, mission, objectives, management structure, human resources, brand image - largely controllable.

External micro environment: suppliers, customers, competitors, market intermediaries, public, financiers - directly influences the firm.

External macro environment: economic, social, technological, political, legal, and natural forces - generally uncontrollable.

SWOT analysis lists internal strengths and weaknesses and external opportunities and threats; it informs strategy.

PEST or PESTLE analysis scans political, economic, social, technological, legal, and environmental factors of the macro environment.

Liberalisation, privatisation, and globalisation (LPG, 1991) changed Indian business through deregulation, disinvestment, and foreign trade.

Social responsibility of business includes economic, legal, ethical, and discretionary responsibilities; it differs from legal obligation.

Entrepreneur is a person who organises factors of production, bears risk, and innovates for profit; Schumpeter stressed innovation as creative destruction.

Functions of an entrepreneur: idea generation, feasibility study, arranging finance, organising resources, launching, and managing growth.

Entrepreneurial process: discovery of opportunity, evaluation, business plan, mobilising resources, and managing the venture.

Business plan components: executive summary, description, market analysis, organisation, product or service, marketing, financial projections, risk.

Start-up support in India includes MSME registration, Startup India, MUDRA loans, and incubators; these are support schemes, not guarantees of success.

Business ethics are moral principles guiding business conduct; ethical issues include honesty in advertising, fair wages, and environmental care.

Code of conduct states expected behaviour; whistle-blowing reports wrongdoing; conflict of interest arises when personal interest biases duty.

Corporate governance concerns accountability of the board to shareholders and stakeholders through transparency and disclosure.

Business is any organised activity of producing or exchanging goods and services with the object of earning profit through satisfaction of human wants.

Human activities divide into economic (business, profession, employment) and non-economic (social, religious, charitable) activities.

Industry = extraction, genetic, manufacturing, construction; Commerce = trade (internal, external) plus auxiliaries to trade (transport, banking, insurance, warehousing, advertising).

Distinguishing test of a profession from a business: specialised body of knowledge, formal training, service motive, and a regulating code of conduct.

Business objectives split into economic (profit, market share, growth, innovation) and social (employment, quality goods, environment, community welfare).

Business risk arises from uncertainty of future; it is inseparable from ownership and may be insurable (fire, theft) or non-insurable (demand changes).

Scope of business studies covers production, finance, marketing, human resources, and the environment in which these functions operate.

Profit is the reward for risk-bearing and enterprise; it is residual after all contractual payments are met.

Sole proprietorship: single owner, unlimited liability, no separate legal entity, least legal formality, limited capital and continuity.

Partnership: governed by the Indian Partnership Act, 1932; minimum 2 partners, maximum 50 (Companies Rules); liability joint and several, unlimited.

Registration of a partnership firm is optional but an unregistered firm cannot sue third parties for breach of contract, though it may be sued.

Hindu Undivided Family (HUF) business: membership by birth, Karta manages, coparceners have unlimited liability, no registration needed.

Cooperative society: minimum 10 adult members, registered under Cooperative Societies Act, one member one vote, limited liability, service motive.

Joint stock company: separate legal entity, perpetual succession, limited liability, common seal; private company minimum 2 members, public minimum 7.

Company types by liability: limited by shares, limited by guarantee, unlimited; by control: holding and subsidiary; by access: private and public.

Choice of form depends on liability, capital need, control, continuity, legal formalities, and degree of risk sharing.

Management is both a process (getting things done through others) and a body of knowledge; it is goal-oriented, pervasive, continuous, and intangible.

Five functions (Fayol/Koontz): planning, organising, staffing, directing, controlling; coordination is the essence of managership.

Fayol's 14 principles include division of work, authority and responsibility, unity of command, unity of direction, scalar chain, equity, order, and esprit de corps.

Taylor's scientific management: science not rule of thumb, harmony not discord, cooperation not individualism, development of each person to maximum efficiency.

Taylor techniques: time study, motion study, method study, fatigue study, differential piece-rate wage system, functional foremanship.

Management as science: systematic body of knowledge, principles based on observation; as art: personalised application; as profession: partly, since entry is not fully regulated.

Levels of management: top (policy, strategy), middle (departmental plans, coordination), supervisory (day-to-day direction of workers).

Unity of command means one boss per subordinate; unity of direction means one head and one plan for a group with the same objective.

Planning bridges the gap between where we are and where we want to go; features: goal focus, primacy, pervasiveness, futurity, flexibility, mental exercise.

Steps: setting objectives, developing premises, identifying alternatives, evaluating alternatives, selecting a plan, implementing, follow-up.

Types of plans: objectives, strategies, policies, procedures, rules, programmes, methods, budgets - a rule is the most specific, a strategy the most flexible.

Forecasting premises: planning premises are assumptions about future internal and external conditions; they may be controllable, semi-controllable, or uncontrollable.

Decision making is choosing among alternatives; steps: define problem, collect information, develop alternatives, evaluate, select, implement, review.

Rational decision model assumes complete information; bounded rationality (Simon) accepts limited information and satisficing choice.

Group decisions raise acceptance and information quality but risk groupthink, slower speed, and diffused responsibility.

Limitations of planning: rigidity, cost and time, uncertainty, internal resistance, and reduced initiative at lower levels.

Organising is the process of identifying and grouping work, defining responsibility and authority, and establishing relationships for common objectives.

Organisation structure types: line, line and staff, functional, committee, matrix (project) - matrix gives dual authority and violates unity of command.

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

Delegation has three elements: authority, responsibility, and accountability; authority may be delegated, accountability cannot.

Centralisation keeps decision authority at the top; decentralisation disperses it to lower levels and is not the same as delegation.

Formal organisation is deliberately designed by management; informal organisation arises from social interaction and has its own grapevine.

Staffing process: manpower planning, recruitment, selection, placement, training, performance appraisal, promotion and transfer, compensation.

Recruitment is positive (attracting candidates via internal and external sources); selection is negative (rejecting unsuitable applicants through tests and interviews).

Directing includes four elements: supervision, motivation, leadership, and communication; it is continuous and human-oriented.

Maslow's hierarchy: physiological, safety, social, esteem, self-actualisation - a satisfied need no longer motivates.

Herzberg's two factors: hygiene (pay, conditions, policy) prevent dissatisfaction; motivators (achievement, recognition, growth) create satisfaction.

Leadership styles: autocratic (leader-centred), democratic (participation), laissez-faire (free rein); situational leaders adapt style to maturity of followers.

Trait theory says leaders are born with qualities; behavioural theory studies what leaders do; contingency theory says effectiveness depends on situation.

Communication process: sender, encoding, message, channel, receiver, decoding, feedback, with noise as interference at any stage.

Barriers to communication: semantic, psychological, organisational, and personal; grapevine is informal, fast, and often inaccurate.

Supervision means overseeing subordinates at work; it links management and workers and is most visible at the supervisory level.

Coordination is the orderly synchronisation of group efforts; it is not a separate function but the essence of management, present in every function.

Coordination may be internal (within a unit) or external (with government, suppliers, customers); it may be vertical, horizontal, or a mix.

Controlling process: setting standards, measuring actual performance, comparing with standards, analysing deviations, taking corrective action.

Management by Exception: managers attend only to significant deviations, saving time and effort.

Critical Point Control: focus control on key result areas that materially affect results rather than on every minor activity.

Control is forward-looking and closely linked to planning; planning supplies the standards, controlling verifies them.

Types of control: feed-forward (before), concurrent (during), and feedback (after) control.

Deviation analysis compares actual with standard; corrective action may revise standards or change operations, depending on cause.

Financial management deals with procurement of funds and their effective utilisation; objectives are profit maximisation and wealth maximisation (wealth maximisation preferred for time value and risk).

Three finance decisions: investment (capital budgeting), financing (capital structure), and dividend decision.

Sources of finance: equity shares, preference shares, debentures, retained earnings, loans from banks and financial institutions, public deposits, trade credit.

Fixed capital is needed for land, plant, machinery; working capital is needed for current assets like stock, debtors, cash.

Capital structure is the mix of debt and equity; trading on equity uses debt to raise return to equity holders, but raises financial risk.

Cost of capital is the minimum return required; WACC = weighted average of cost of each source.

Break-even point in units = Fixed cost / (Selling price per unit − Variable cost per unit); margin of safety = Actual sales − Break-even sales.

Dividend policy choices: stable dividend, constant payout ratio, or residual dividend; factors include cash flow, growth plans, and tax.

Marketing is the process of identifying needs and satisfying them profitably; the marketing mix has 4 Ps: Product, Price, Place, Promotion.

Product levels: core benefit, basic product, expected product, augmented product, potential product; product line vs product mix (width, length, depth).

Product life cycle stages: introduction, growth, maturity, decline; pricing and promotion strategy change with each stage.

Pricing methods: cost-plus, going-rate, penetration, skimming, value-based; skimming sets a high initial price, penetration a low one.

Channels of distribution: zero level (direct), one level (retailer), two level (wholesaler–retailer); choice depends on product, market, and cost.

Promotion mix: advertising, sales promotion, personal selling, publicity; advertising is paid, non-personal, and sponsored.

Branding gives identity and legal protection (trademark); packaging protects and promotes; labelling informs and identifies.

Market segmentation divides a heterogeneous market into homogeneous groups; targeting selects segments; positioning creates a distinct place in the buyer's mind.

Business environment is the sum of internal and external factors affecting business; it is dynamic, complex, and uncertain.

Internal environment: value system, mission, objectives, management structure, human resources, brand image - largely controllable.

External micro environment: suppliers, customers, competitors, market intermediaries, public, financiers - directly influences the firm.

External macro environment: economic, social, technological, political, legal, and natural forces - generally uncontrollable.

SWOT analysis lists internal strengths and weaknesses and external opportunities and threats; it informs strategy.

PEST or PESTLE analysis scans political, economic, social, technological, legal, and environmental factors of the macro environment.

Liberalisation, privatisation, and globalisation (LPG, 1991) changed Indian business through deregulation, disinvestment, and foreign trade.

Social responsibility of business includes economic, legal, ethical, and discretionary responsibilities; it differs from legal obligation.

Entrepreneur is a person who organises factors of production, bears risk, and innovates for profit; Schumpeter stressed innovation as creative destruction.

Functions of an entrepreneur: idea generation, feasibility study, arranging finance, organising resources, launching, and managing growth.

Entrepreneurial process: discovery of opportunity, evaluation, business plan, mobilising resources, and managing the venture.

Business plan components: executive summary, description, market analysis, organisation, product or service, marketing, financial projections, risk.

Start-up support in India includes MSME registration, Startup India, MUDRA loans, and incubators; these are support schemes, not guarantees of success.

Business ethics are moral principles guiding business conduct; ethical issues include honesty in advertising, fair wages, and environmental care.

Code of conduct states expected behaviour; whistle-blowing reports wrongdoing; conflict of interest arises when personal interest biases duty.

Corporate governance concerns accountability of the board to shareholders and stakeholders through transparency and disclosure.