Business Studies 2006 CBSE [ All India ] Set II

Management requires a series of operations to achieve the desired goals of the enterprise. These operations are planning, organising, staffing, directing and controlling. In order to achieve the best possible results of the business, these functions should be performed systematically in a proper sequence.

This whole procedure of following a set pattern of activities makes Management a process.

Financial management refers to the forecasting of financial requirements, raising of necessary funds and controlling over utilisation of available finance.

According to Guthmann and Dougall "Financial management is the activity concerned with the planning, raising, controlling and administering of funds used in business".

Price Mix – It refers to the price charged for the product or service. Price stands for the exchange value of the product, i.e., what the customer has to pay.

Promotion deals with informing the customers about product and service and stimulating them to buy. It involves all activities aimed at boosting the sales of the product. Promotion mix involves decision with respect to :

• Advertising
• Personal selling
• Publicity
• Sales Promotion

‘‘Supervision’’ is made up of two words ‘‘super’’ and ‘’vision’’. ‘’Super’’ means over and above and ‘‘vision’’ means the art of looking over or seeing the objects. Supervision means overseeing the subordinates at work by their superiors. A supervisor guides his subordinates so that they produce the desired quantity and quality of work within the desired time.

Such type of formal communication is known as Horizontal or Lateral Communication. 

Flow of communication between the persons of two departments is termed as diagonal communication. This type of communication is required because of the following reasons:

(i)  Delay is prevented.

(ii) It is very fast and useful communication.

Three functions of packaging are:

1. Protection:Packaging reduces the risk of spoilage, wastage, leakage, meltage, evaporation etc. in the process of transportation and storage.

2. Identification: It also furnishes useful information regarding the product, i.e., contents, its weight, size, price, usage and necessary instructions regarding storing and using product.

3. Sales Tool: Packaging is the best advertising medium. It establishes a product image. A good package induces customers to purchase the product.

Causes of ‘Under Capitalisation’ are:
1. Conflict between labour and management : Higher rate of earning encourages workers to demand higher increase in the wages. Management does not meet their demand fully, so the conflict between labour and management occurs.
2. Manipulation in the value of shares : The management indulges in the manipulation of the value of shares and exploits shareholders.
3. Higher rate of taxation : Earning at higher rates attracts the government which levies taxes at higher rates.

Formal communication suffers from the following limitations:
(1) It is a slow moving communication system.
(2) It overloads high authorities with work.
(3) It has to follow certain established rigid rules and has to face hurdles in the flow of information.

(1) Customer focus: Changes in business environment led to increased competition in the market. This in turn facilitated customers with wider choices in purchasing better quality of goods and services. Customers are well informed about the products and services offered through various means of advertisements.

2) Technology: Increased competition forced the firms to develop new ways to survive and grow in the market. The rapidly changing technological environment creates tough challenges before smaller firms.