RBSE SS Business Studies cheat sheet

Management is defined as the process of getting things done with the aim of achieving goals effectively and efficiently.

Effectiveness means completing a task on time regardless of cost; efficiency means completing it with minimum resource use - high efficiency plus high effectiveness is the ideal.

Management is a goal-oriented, pervasive, continuous, intangible, composite process; it is also a dynamic function and a group activity.

Management as a science: systematised body of knowledge with principles based on observation and experimentation, but it is a social science, not exact like physics.

Management as an art: personalised application of existing knowledge and skill through practice and creativity.

Management as a profession: partly professional - body of knowledge and service motive present, but restricted entry and statutory codes are absent.

Levels of management: top (policy and strategy), middle (interpret policy, assign duties), supervisory (oversee workers, maintain quality, reduce wastage).

Functions of management: planning, organising, staffing, directing, controlling - all interrelated and performed at every level.

Coordination is not a separate function but the essence of management, synchronising all functions and levels; it is deliberate, continuous and all-pervasive.

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

Taylor's techniques: time study, motion study, method study, fatigue study, differential piece wage system, standardisation and simplification of work.

Taylor's functional foremanship has 8 bosses - 4 in the planning room (route clerk, instruction card clerk, time and cost clerk, disciplinarian) and 4 in the shop floor (gang boss, speed boss, repair boss, inspector).

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 personnel, initiative, esprit de corps.

Unity of command means one boss per employee; unity of direction means one head and one plan per group with the same objective - the two are distinct.

Fayol's scalar chain allows the 'gang plank' shortcut for faster communication between equals in an emergency, with superior approval.

Principle of equity: kindness and justice together; principle of order: right person in the right place and right thing in the right place.

Taylor's principles focus on the shop floor and productivity; Fayol's apply to the whole organisation and are more general.

Technique vs principle: techniques are procedures (time study), principles are fundamental truths that guide behaviour (unity of command).

Business environment is the sum of all individuals, institutions and other forces outside the business that affect its performance and are outside its control.

Features: totality of external forces, specific and general forces, inter-relatedness, dynamic nature, uncertainty, complexity, relativity.

Dimensions: economic, social, technological, political, legal, and natural environment.

Importance: helps identify opportunities and threats, tap useful resources, cope with rapid change, assist in planning, and improve performance.

Economic environment includes interest rates, inflation, income, stock market indices, and fiscal/monetary policy; not to be confused with social (customs, values) or legal (laws, court rulings) factors.

Liberalisation, privatisation and globalisation (LPG) since 1991 changed the Indian business environment: licensing reduced, more private and foreign participation, integration with world markets.

Demonetisation and GST are examples of political-legal changes affecting business; increased competition is a feature of the post-1991 environment.

Specific forces (customers, suppliers, competitors, investors) directly affect day-to-day operations; general forces (social, political, technological) shape the long-term context.

Environmental scanning is the systematic monitoring of the environment to identify opportunities and threats before competitors do.

Planning is deciding in advance what to do, how to do it and when to do it; it bridges the gap between where we are and where we want to go.

Features: primary function, pervasive, continuous, forward-looking, involves choice among alternatives, mental exercise, focuses on objectives.

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

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

Premises are assumptions about the future on which plans are based; forecasting is a key input to premise-setting.

Types of plans: objectives, strategy, policy, procedure, rule, programme, method, and budget - classified by scope, frequency and flexibility.

A policy is a general guideline for decision-making; a rule is a specific statement of what must or must not be done with no discretion.

A programme is a detailed statement of activities for a single-use purpose; a budget is a statement of expected results expressed in numerical terms.

Strategy is a comprehensive plan for accomplishing objectives, dealing with the environment over the long term.

Organising is identifying and grouping work, defining responsibility and authority, and establishing relationships to enable people to work together effectively.

Steps: identification and division of work, departmentalisation, assignment of duties, and establishing reporting relationships.

Importance: benefits of specialisation, clarity in working relationships, optimum use of resources, adaptation to change, development of personnel, expansion and growth.

Organisation structure types: functional structure (grouping by function, suited to single-product firms) and divisional structure (grouping by product/division, suited to multi-product firms).

Functional structure advantages: specialisation, easier supervision, economical; disadvantages: departmental conflicts, functional empires, coordination problems.

Divisional structure advantages: product specialisation, accountability, flexibility; disadvantages: duplication of resources, conflict between divisions, costlier.

Delegation has three elements - authority, responsibility and accountability; authority can be delegated, accountability cannot.

Responsibility flows upwards and accountability flows upwards too; authority flows downwards from superior to subordinate.

Decentralisation is systematic dispersal of decision-making authority to the lowest levels; it is an extension of delegation and is not the same as it.

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

Staffing is the process of filling positions and keeping them filled - manpower planning, recruitment, selection, placement, training, appraisal, promotion and compensation.

Staffing is a continuous activity and is performed by all managers, not only the HR department.

Recruitment is searching for prospective employees and stimulating them to apply; selection is choosing the most suitable from among applicants.

Internal recruitment sources: transfer and promotion; external sources: campus recruitment, advertisements, employment exchanges, placement agencies, recommendations, web publishing, casual callers.

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

Types of tests: intelligence, aptitude, personality, trade, interest, and graphology; an interview is an exchange of information between interviewer and applicant.

Training methods: on-the-job (apprenticeship, coaching, internship, job rotation) and off-the-job (vestibule training, classroom lectures, films, case study, computer modelling).

Training means improving skills for the present job; development means overall growth for future roles.

Performance appraisal compares actual performance with standards; common methods include rating scales, checklist, forced distribution and 360-degree feedback.

Directing is instructing, guiding, supervising and motivating people to achieve organisational objectives; it initiates action and is a continuous, human-oriented function.

Elements of directing: supervision, motivation, leadership and communication.

Maslow's hierarchy of needs, lowest to highest: physiological, safety, social (affiliation), esteem, self-actualisation.

Financial and non-financial incentives: pay, allowances, bonus, profit sharing, co-partnership (financial); status, recognition, job security, employee participation, delegation (non-financial).

Leadership styles: autocratic (leader-centred), democratic (group-centred), laissez-faire (free-rein) - each with different decision-making and communication patterns.

Communication process: sender, encoding, message, channel, receiver, decoding, feedback, and noise as a barrier.

Barriers to communication: semantic (language, jargon), psychological (premature evaluation, distrust), organisational (rules, hierarchy, status) and personal (fear, poor listening).

Formal communication flows: downward, upward, horizontal (lateral) and diagonal; informal communication is the grapevine, which is fast and often distorted.

Supervision means overseeing subordinates at work; it is the element of directing closest to the operating level.

Controlling is measuring actual performance against standards, finding deviations and taking corrective action to ensure objectives are met.

Controlling is the last function but is linked to planning - planning provides the standards that control uses.

Steps: setting performance standards, measuring actual performance, comparing actual with standards, analysing deviations, and taking corrective action.

Critical point control: focus on key result areas (KRAs) where deviation matters most; management by exception: attend to significant deviations only.

Deviations are significant when they exceed the acceptable range; causes include unrealistic standards, defective planning or inadequate resources.

Corrective action may involve revising standards, changing strategy, improving supervision or redesigning the process.

Techniques: budgetary control (sales, production, cash budgets) and non-budgetary control (break-even analysis, ratio analysis, statistical reports, internal audit, responsibility accounting).

Limitations: difficulty setting quantitative standards, little control over external factors, resistance from employees, and cost of the control system.

Controlling is both backward-looking (comparing results) and forward-looking (correcting for future performance); it is a continuous process.

Financial management deals with planning, acquiring, utilising and disposing of funds to maximise shareholder wealth; objectives are wealth maximisation and profit maximisation.

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

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

Capital structure is the mix of debt and equity; financial leverage is the proportion of debt in total capital; trading on equity means using debt to increase EPS.

Fixed capital is invested in long-term assets (land, plant, machinery); working capital is invested in current assets (cash, inventory, receivables).

Factors affecting fixed capital: nature of business, scale of operations, technology, growth prospects, diversification, financing alternatives.

Factors affecting working capital: nature of business, business cycle, operating cycle, credit allowed, credit availed, working capital requirements.

Dividend decision: dividend payout ratio, stability of dividends, growth opportunities, cash flow position, shareholders' preference and legal constraints.

Financial planning ensures adequate funds, balances inflow and outflow, and reduces uncertainty; capital structure should be balanced to minimise cost and risk.

Financial market is a place where households, firms and government trade financial securities; it mobilises savings and channels them into investment.

Primary market: new securities issued for the first time (IPO, rights issue, offer for sale, private placement) - funds go to the issuer.

Secondary market: existing securities are bought and sold among investors through stock exchanges; funds go to the seller, not the issuer.

Money market deals in short-term funds (up to 1 year): treasury bills, commercial paper, call money, certificate of deposit, commercial bill.

Capital market deals in long-term funds: equity shares, debentures, bonds, preference shares.

SEBI is the regulator of the securities market in India; its objectives are investor protection and orderly development of the market.

Functions of stock exchange: liquidity, pricing of securities, safety of transactions, spreading equity cult, providing scope for speculation, and economic development.

A depository (NSDL, CDSL) holds securities in electronic form; a depository participant (DP) is the intermediary between investor and depository.

Trading procedure: selection of broker, opening a demat and trading account, placing the order, execution, clearing and settlement (T+1 in India).

Marketing is the process of identifying and satisfying customer needs at a profit; marketing management is planning, organising, directing and controlling marketing activities.

Marketing mix (4 Ps): product, price, place and promotion; for services, extended to 7 Ps with people, process and physical evidence.

Product: anything of value offered to satisfy a need; product mix has width, length, depth and consistency.

Branding, labelling and packaging distinguish a product; branding gives identity, labelling gives information, packaging protects and promotes.

Pricing factors: cost of production, utility and demand, extent of competition, government regulation, objectives, and marketing methods used.

Channels of distribution: direct (zero level), one level (manufacturer–retailer–consumer), two level (manufacturer–wholesaler–retailer–consumer) and three level (with agent).

Promotion mix: advertising, sales promotion, personal selling and publicity/public relations.

Product life cycle stages: introduction, growth, maturity, decline - marketing strategies differ at each stage.

Physical distribution includes transportation, warehousing, inventory control and order processing.

Consumer: one who buys goods or hires services for consideration, including any user other than the buyer, but excluding one who buys for resale or commercial purpose.

Consumer rights: right to safety, right to be informed, right to choose, right to be heard, right to seek redressal, right to consumer education.

Right to safety protects against goods hazardous to life and property; right to be informed requires product information - ingredients, price, quantity, expiry, warnings.

Consumer responsibilities: be quality conscious, read labels, ask for a cash memo, be aware of rights, and file a complaint if aggrieved.

Consumer Protection Act, 2019 replaced the 1986 Act; it created the Central Consumer Protection Authority (CCPA) and introduced product liability and e-commerce rules.

Three-tier redressal machinery: District Commission (up to ₹50 lakh), State Commission (above ₹50 lakh up to ₹2 crore), National Commission (above ₹2 crore).

A complaint must be filed within two years from the date of cause of action; it can be filed by the consumer, a registered consumer association, or the government.

Reliefs available: replacement of goods, refund of price, compensation for loss, removal of defect, and discontinuation of unfair trade practices.

Quality marks: ISI (industrial goods), AGMARK (agricultural products), FSSAI (food), Hallmark (gold jewellery) and Ecomark (environment-friendly products).