1. What are the various functions of business?
(5 Marks)
The main functions of a business are the necessary activities it performs to achieve its goals.
They can be broadly divided into Core (directly related to the product) and Managerial
(planning and controlling).
1. Production Function: Converting raw materials into finished goods
and services. This involves operations, quality control, and process
design.
2. Marketing Function: Identifying customer needs and getting the
product to them. Includes activities like market research, advertising,
sales, and distribution.
3. Finance Function: Managing all money-related activities. This
involves raising capital, investment decisions, managing cash flow, and
budgeting.
4. Human Resource (HR) Function: Managing the workforce. This
includes recruitment, training, compensation, performance appraisal,
and maintaining good employee relations.
5. Research & Development (R&D) Function: Innovating and
improving products, services, or processes to stay competitive in the
market.
2. Explain the scope of business. (5 Marks)
The scope of business refers to its vast coverage and all the activities it includes, from the
moment a product is conceptualized until it reaches the final customer.
1. Industry (Production): This covers all activities related to producing
or manufacturing goods and services. It includes genetic (farming),
extractive (mining), construction (buildings), and manufacturing
industries.
2. Commerce (Distribution): This covers all activities that facilitate the
exchange of goods and services, ensuring they move from the
producer to the consumer.
o Trade: Buying and selling of goods (e.g., retailers and
wholesalers).
o Aids to Trade (Auxiliaries): Services that remove obstacles in
trade, such as transportation (removes location barrier),
banking (removes finance barrier), insurance (removes risk
barrier), and warehousing (removes time barrier).
3. Human Objectives (Social & Ethical): The scope now extends
beyond profit to include social responsibility, environmental protection,
and contributing to the community (CSR).
4. Innovation and Technology: Modern business scope includes the
continuous adoption of new technology (like e-commerce, AI) and the
innovation of new products or business models.
3. Explain the steps involved in setting business
objectives. (5 Marks)
Setting clear objectives is crucial for guiding a business. The steps involve analysis, creation,
communication, and review. (A good framework is the S.M.A.R.T. principle).
1. Situational Analysis: First, analyze the current position of the
business, the market, and the overall environment (SWOT Analysis -
Strengths, Weaknesses, Opportunities, Threats).
2. Establish Broad Goals (Mission): Define the overall purpose and
long-term goals of the organization, guided by its mission and vision.
3. Develop Specific Objectives (SMART): Translate broad goals into
specific, measurable, achievable, relevant, and time-bound objectives
(e.g., "Increase sales revenue by 15% in the next 12 months").
4. Communicate and Align: The objectives must be communicated
clearly to all levels of management and employees so that everyone
knows their role in achieving them. Objectives for different
departments must be aligned.
5. Periodic Review and Revision: Objectives are not fixed forever.
They must be reviewed regularly to check progress and revised if
external conditions (like new competition or law changes) make the
original objective irrelevant.
4. Explain the features of business environment. (5
Marks)
The business environment refers to the surrounding forces (internal and external) that affect the
functioning of a business.
1. Totality of External Forces: It includes everything outside the
organization—economic, social, political, and technological factors—
which the business has little or no control over.
2. Dynamic Nature: The environment is constantly changing.
Technology evolves, customer tastes change, and government policies
are modified, requiring businesses to adapt quickly.
3. Uncertainty: It is difficult to predict future environmental changes,
especially in areas like technology and market trends, making planning
challenging.
4. Relativity (Impact Varies): The environment is different for different
countries, regions, and businesses. For example, a political change in
one country may affect a specific multinational company but not
another.
5. Inter-relatedness: Different factors are connected. For example, a
change in government interest rates (economic factor) can lead to a
change in consumer spending habits (social factor).
Brief Points for Remaining Questions (Quick Prep)
5. What is the impact of educational environment?
Availability of Skilled Labour: Determines the quality and supply of
educated, trained workers.
Innovation & Research: Promotes R&D and helps businesses adopt
new technologies.
Consumer Awareness: An educated public is more demanding,
aware of quality, and responsive to modern marketing.
Ethical Standards: Influences the overall ethical and professional
culture of the business.
6. What is the impact of climate change?
Physical Risk: Increases in extreme weather (floods, droughts) disrupt
operations, supply chains, and damage assets.
Regulation Risk: Governments impose stricter carbon taxes,
emission standards, and environmental laws.
Consumer Shift: Growing demand for eco-friendly, sustainable
products and "green" businesses.
Resource Scarcity: Affects the availability and cost of raw materials
(like water and agricultural produce).
7. What are the various types of feasibility study?
Technical Feasibility: Can the proposed project be built/developed
using current technology and resources?
Economic/Financial Feasibility: Is the project financially viable? Will
the returns (profit) cover the costs and risks?
Legal Feasibility: Does the project comply with all relevant laws,
licenses, and regulations (environmental, labor, zoning)?
Operational Feasibility: Can the business actually operate the
system/product successfully with the current team, skills, and existing
processes?
8. Explain the stages of business unit promotion.
Discovery of Idea: Identifying a business opportunity and conducting
a preliminary investigation.
Detailed Investigation (Feasibility): Conducting technical,
economic, and legal feasibility studies to check the project's viability.
Assembly of Resources: Gathering all necessary elements like land,
capital, machinery, and necessary permissions/licenses.
Financing the Proposition: Deciding the capital structure and
arranging the required funds (from banks, investors, etc.).
9. What are the factors determining location of business unit?
Proximity to Raw Materials: Locating near the source of
heavy/bulky raw materials to minimize transport costs (e.g., a sugar
factory near cane fields).
Proximity to Market: For perishable goods or products with high
transportation costs, locating near the consumer market is essential.
Availability of Infrastructure: Access to good transport (roads, rail),
power/electricity, water, and communication facilities.
Labour Supply: Availability of the right kind of skilled and unskilled
labor at reasonable wages.
Government Policy: Tax incentives, subsidies, and special economic
zones (SEZ) offered by the government to encourage location in
certain areas.
10. What are the new trends in business strategy?
Digital Transformation: Using technology (AI, Machine Learning) to
change business models, processes, and customer experience.
Sustainability & ESG (Environmental, Social, Governance):
Integrating environmental and social goals into the core business
strategy.
Agile and Flexible Structures: Moving away from rigid hierarchies
to flexible teams that can adapt quickly to market changes.
Customer-Centricity: Strategies focused entirely on creating superior
customer experiences and personalized services using data analytics.
11. Explain the steps involved in turnaround strategy.
(A turnaround strategy is for reviving a sick or struggling business.)
1. Assessment and Analysis: Immediately stopping the decline by
analyzing the root causes of failure (poor management, high costs,
obsolete product).
2. Emergency Actions (Triage): Taking quick steps to cut immediate
losses, such as reducing inventory, stopping unprofitable activities, and
immediate cost-cutting.
3. Stabilization: Improving financial control, boosting immediate cash
flow, and restoring confidence among creditors and employees.
4. Repositioning and Restructuring: Developing a new strategy (e.g.,
selling a non-core division, investing in a new product line) and
organizational change to focus on core competencies.
5. Growth and Renewal: Once stable, focusing on renewed investment,
market expansion, and sustained profitable growth.