WBCHSE HS Business Studies cheat sheet

Management is goal-oriented, all-pervasive, multidimensional (work, people, operations), continuous, group activity and dynamic; it is an intangible force whose results appear through others' performance.

Effectiveness means completing the task on time regardless of cost; efficiency means doing it at minimum cost and least resources. Management must balance both, and poor efficiency can destroy effectiveness.

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

Three management functions per the classical scheme: planning, organising, staffing, directing and controlling are the five; coordination is not a separate function but the essence of management.

Management as a profession: body of knowledge exists, but entry is not restricted by a compulsory degree and there is no statutory code of conduct, so it is a profession only in part.

Management as science: systematised body of knowledge with principles, but human behaviour makes exact prediction impossible, so it is a social science, not a physical one.

Significance: achieves group goals, increases efficiency, creates a dynamic organisation, helps society by producing quality goods at fair prices and generating employment.

Coordination is needed because of growth in size, functional differentiation, and specialisation; it must be deliberately built in, not left to chance.

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

Taylor's four principles: science not rule of thumb; harmony not discord (mental revolution); cooperation not individualism; development of each person to greatest efficiency.

Functional foremanship has 8 bosses under a planning incharge (route clerk, instruction card clerk, time and motion clerk, discipline clerk) and a production incharge (speed boss, gang 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 tenure, initiative and esprit de corps.

Unity of command means one employee receives orders from only one superior; unity of direction means one head and one plan for a group with the same objective. These are distinct principles and are often confused.

Fayol's gang plank allows direct communication between two employees at the same level in an emergency, bypassing the scalar chain, with superiors informed.

Taylor's techniques are shop-floor, efficiency-focused and bottom-up; Fayol's principles are general, universal and top-down administrative theory.

Esprit de corps means union is strength; equity means kindness and justice together; order means a place for everything and everything in its place.

Business environment is the sum of all external forces affecting the firm; it is dynamic, complex, uncertain, relative and includes both internal (within the firm) and external (beyond control) components.

Dimensions of the external environment: economic, social, technological, political, legal and demographic. Each can create opportunities or threats.

Economic environment includes interest rates, inflation, income levels, stock market movements and the structure of the economy (public/private, rural/urban).

Social environment covers customs, values, family structure, education levels and lifestyle trends; demographic covers population size, age mix, sex ratio and literacy.

Technological environment includes innovations, scientific improvements and the rate of technological change; it can make existing products obsolete.

Legal environment includes legislation such as the Companies Act, Consumer Protection Act, and court judgments; political environment includes political stability and government attitude to business.

Features: environment provides opportunities and threats (SWOT links), helps in planning, improves performance, helps tap resources and identifies early warning signals.

Relative means the environment differs from country to country and region to region; uncertainty means it is difficult to predict future changes.

Planning features: focuses on objectives, is primary in the management function chain, is continuous, pervasive, futuristic, involves mental exercise and is flexible.

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

Plans are single-use (programmes, budgets, projects) or standing (objectives, strategies, policies, procedures, rules, methods).

A policy is a general guideline for decision-making; a procedure is a chronological sequence of steps; a rule is a specific, rigid do-or-die statement with no discretion.

Organising process: division of work, departmentalisation, assignment of duties, and establishing reporting relationships.

Types of organisation structure: functional (by function, suited to small firms, may cause functional empire building) and divisional (by product or territory, product-based accountability, higher cost).

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

Formal organisation is deliberately designed and rule-bound; informal organisation arises from social interaction, is not created by management and can spread rumours but also gives social satisfaction.

Span of management (span of control) is the number of subordinates a superior can supervise; a narrow span gives a tall structure, a wide span gives a flat structure.

Staffing is the process of hiring and developing people to fill organisational roles; it includes manpower planning, recruitment, selection, placement, training and appraisal.

Internal sources of recruitment: transfer, promotion, recall of ex-employees; external sources: direct recruitment, casual callers, advertisement, employment exchanges, campus recruitment, recommendations, labour contractors, web publishing and gate hiring.

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

Types of tests: intelligence, aptitude, personality, trade or proficiency, and interest tests. An aptitude test measures potential to learn, a proficiency test measures existing skill.

Training is for new or current employees to improve skills; development is broader, aimed at overall personality and career growth, usually for managers.

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

Vestibule training uses a duplicate model of the workplace so trainees learn without risk to actual production; apprenticeship combines classroom learning with practical work under a master.

Performance appraisal compares actual performance with standards and may use rating scales, checklists, critical incident reports or 360-degree feedback.

Directing has four elements: supervision, motivation, leadership and communication; it initiates action, is continuous, human-oriented and flows from top to bottom.

Maslow's hierarchy, bottom to top: physiological, safety, affiliation/social, esteem and self-actualisation needs; a satisfied need no longer motivates.

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

Financial incentives include pay, allowances, profit sharing, bonus, co-partnership and retirement benefits; non-financial include status, career advancement, employee recognition and job security.

Leadership styles: autocratic (centralised, quick decisions, low morale), democratic (participation, better morale, slower), and laissez-faire (full freedom, suits skilled teams only).

Communication process: sender, encoding, message, channel, receiver, decoding, and feedback, with noise as any barrier. Barriers are semantic, psychological, organisational and personal.

Formal communication flows downward, upward and horizontally; the grapevine is an informal channel that can be fast but unreliable.

Supervision means overseeing subordinates at work; the supervisor is the link between management and workers and is called a 'middle man' in the organisation.

Controlling is measuring actual performance against standards, finding deviations and taking corrective action; it is the last function but links back to planning.

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

Critical point control means focusing control on key result areas rather than every minor activity; management by exception means attending only to significant deviations.

Controlling is forward-looking, pervasive, continuous and both ends and means oriented; planning is prescriptive, controlling is evaluative.

Deviation is the gap between standard and actual; a positive deviation means performance is above standard, a negative deviation means below standard and needs correction.

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

A budget is a quantitative statement of expected results for a future period; budgetary control compares actual with budgeted figures and acts on variances.

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

Financial management deals with planning, raising, allocating and monitoring funds; its objectives are profit maximisation and wealth maximisation, with wealth maximisation preferred as it considers risk and time value.

Three financial decisions: investment (capital budgeting, working capital), financing (debt-equity mix) and dividend (distribution of profit).

Capital structure refers to the mix of debt and equity; debt is cheaper because interest is tax-deductible but increases financial risk.

Factors affecting capital structure: cash flow position, interest coverage ratio, debt service coverage ratio, return on investment, cost of debt, tax rate, floatation costs, flexibility and control.

Fixed capital is invested in long-term assets; working capital is the excess of current assets over current liabilities and is needed for day-to-day operations.

Factors affecting working capital: nature of business, scale of operations, business cycle, seasonal factors, credit allowed and availed, operating cycle and availability of raw material.

Dividend decision factors: earnings, stability of earnings, cash flow position, growth opportunities, shareholders' preference, taxation, legal constraints and access to capital markets.

Financial leverage measures the use of debt; higher leverage raises return on equity in good years but magnifies losses and raises financial risk.

Financial market is a place where funds are mobilised and allocated; it is divided into money market (short-term, up to one year) and capital market (long-term).

Money market instruments: call money, treasury bills, commercial paper, certificates of deposit and commercial bills. Treasury bills are issued by the government at a discount and repaid at face value.

Capital market has a primary market (new issues) and a secondary market (stock exchange trading of existing securities).

Primary market methods: offer through prospectus, offer for sale, private placement, rights issue and e-IPO.

SEBI is the regulator of the Indian securities market; its functions are protective, regulatory and developmental.

A stock exchange provides liquidity, price discovery and safety of transactions; NSE and BSE are the principal Indian stock exchanges.

A depository holds securities in electronic form; NSDL and CDSL are Indian depositories, and a demat account enables electronic holding and transfer.

The National Stock Exchange introduced screen-based electronic trading in India; the Securities Contracts (Regulation) Act governs stock exchanges.

Marketing is the process of identifying and satisfying customer needs profitably; the marketing mix has the 4 Ps: product, price, place and promotion.

Product has three layers: core benefit, actual product (features, design, brand, packaging) and augmented product (after-sales service, warranty, delivery).

Product classification: consumer products (convenience, shopping, speciality, unsought) and industrial products (raw material, capital equipment, components, supplies).

Branding gives identity and helps in product differentiation; a brand name is that part of a brand which can be spoken, a brand mark is that part which can be recognised but not spoken.

Packaging protects the product, aids identification and acts as a silent salesman; labelling provides information and statutory warnings.

Pricing factors: cost, utility and demand, extent of competition, government regulation and objectives of the firm. Methods include cost-plus, going-rate, penetration and skimming pricing.

Promotion tools: advertising, sales promotion, personal selling and publicity/public relations. Advertising is paid, impersonal and sponsored; publicity is unsponsored and unpaid.

Physical distribution includes transportation, warehousing, inventory control and order processing; channels may be zero-level (direct) up to multi-level.

Consumer Protection Act, 2019 replaced the 1986 Act; it covers goods and services, e-commerce and unfair trade practices, and provides for the Consumer Protection Councils and the CCPA.

A consumer is one who buys goods or hires services for consideration for personal use, including any user of such goods or services with the buyer's approval, but not 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, and right to consumer education.

Consumer responsibilities include asking for a cash memo, checking ISI/AGMARK marks, reading labels, and filing complaints with proper evidence.

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

A complaint must be filed within two years of the cause of action; the limitation period can be condoned on sufficient cause.

Reliefs available include replacement, refund, compensation for loss or injury, removal of defects and discontinuation of unfair trade practices.

The CCPA (Central Consumer Protection Authority) can investigate, recall unsafe goods, order refunds and impose penalties; misleading advertisements attract penalties under the Act.

A valid complaint needs the complainant's name and address, the opposite party's details, facts of the complaint, and the relief sought, with supporting documents such as a bill or warranty card.

Jurisdiction depends on the value of the goods or services paid as consideration, not the compensation claimed; pecuniary limits decide District, State or National Commission.

A complaint may be filed by a consumer, a registered consumer association, the Central or State Government, or a legal heir of a deceased consumer.

Product liability under the 2019 Act allows action against a product manufacturer, product service provider or product seller for defective goods or deficient services.

Unfair trade practices include false representation of quality, misleading advertisements, and refusal to take back defective goods within the stated period.

Restrictive trade practices manipulate price or supply conditions to the detriment of consumers; the CCPA can order discontinuation of such practices.

Appeal against a District Commission order lies with the State Commission, and against the State Commission with the National Commission, within the prescribed period.

Evidence may be supported by expert opinion; the consumer need not prove negligence in every case where the defect is established, easing the burden of proof.