![Unit 1: Introduction to BOM Question Answers BOM [FYUGP BCom 1st Semester Gauhati University]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZdDvbVjnz7H-Ogy34hzZFlUXAYEDRhgzeImd8gx4unDNK9sOh64utVqQPcWEHX3H2WaTAyQTDqIoESasH_TA6Op00mzvcsLDz8bccVARyPdsUGr_RGO3iIw-RINT7iRR7TrFOaZiv-UeoNiN5HnbssL5ODcQ3O7UwlKuOeEdocECEF8IfyCJp-wtMpqrv/s16000-rw/1000336363.webp "Unit 1: Introduction to BOM Question Answers BOM [FYUGP BCom 1st Semester Gauhati University]")
Unit 1: Introduction - Most Important Questions
Section 1: MCQs Type Questions (1 Mark Each)
What is the primary advantage of the 'Brick and Click' model? [GU BCom: 2023]
a) No need for physical space
b) Offer flexibility to customers in terms of shopping mode
c) Completely online
d) No digital presence needed
Answer: b)Which of the following is under the service industry? [GU BCom: 2024]
a) Construction
b) Mining
c) Financing
d) Pisciculture
Answer: c)Fast food outlets like KFC are an example of which marketing technique? [GU BCom: 2022]
a) Product franchising
b) Business-format franchising
c) E-commerce
d) Retailing
Answer: b)Which function of management is considered the base of all other functions? [GU BCom: 2022]
a) Planning
b) Organizing
c) Directing
d) Controlling
Answer: a)Which managerial skill enhances leadership quality? [GU BCom: 2024]
a) Conceptual skill
b) Interpersonal skill
c) Technical skill
d) Political skill
Answer: b)The person who recognizes the need for the product is known as: [GU BCom: 2022]
a) Entrepreneur
b) Businessman
c) Enterprise
d) None of the above
Answer: a)Goods are produced in anticipation of: [GU BCom: 2022]
a) Demand
b) Supply
c) Market
d) None of the above
Answer: a)____ is common in all types of business. [GU BCom: 2022]
a) Market
b) Supply
c) Risk
d) None of the above
Answer: c)Managers are directly accountable to society for the profit. (True/False) [GU BCom: 2022]
Answer: FalseBusiness and society are mutually dependent. (True/False) [GU BCom: 2022]
Answer: TrueA partnership is the result of an agreement which can be oral or written. (True/False) [GU BCom: 2022]
Answer: TrueA shareholder is an agent of the company. (True/False) [GU BCom: 2022]
Answer: FalseJoint stock company’s shares are easily transferable. (True/False) [GU BCom: 2022]
Answer: TrueWhat is the maximum number of partners allowed in a firm carrying on banking business? [GU BCom: 2022]
a) 10
b) 20
c) 50
d) No limit
Answer: a)An institution organized and operated to provide goods and services to society under the incentive of private gain is: [GU BCom: 2022]
a) Business
b) Organization
c) Service
d) None of the above
Answer: a)
Section 2: Questions for 2 Marks
1. What are the human objectives of a business? [GU BCom: 2024]
Answer: Human objectives of a business are those which take care of employees and people related to the business. These include:
i) Providing fair wages and good working conditions.
ii) Giving opportunities for growth and training.
iii) Ensuring job security and welfare facilities for workers.
2. Define sole trading business. [GU BCom: 2022]
Answer: A sole trading business is a type of business that is owned, managed, and controlled by one person. The owner invests money, takes decisions, and bears all profits and losses alone.
3. What is outsourcing? [GU BCom: 2022]
Answer: Outsourcing means giving some work of the company to an outside firm instead of doing it inside the company. Example: A company hires another firm to handle its customer care service.
4. What is E-commerce? [GU BCom: 2022]
Answer: E-commerce means buying and selling goods and services using the internet. Example: Shopping through websites like Amazon or Flipkart.
5. Write a note on Joint Hindu Family firm. [GU BCom: 2022]
Answer: A Joint Hindu Family firm is a business owned by the members of a Hindu Undivided Family (HUF). It is controlled by the eldest male member called “Karta.” Other family members are called coparceners. This form is common in India.
6. Define partnership business. [GU BCom: 2022]
Answer: A partnership business is an agreement between two or more persons to run a business together and share profits and losses. Partners invest money and jointly manage the business.
7. What is a service sector? [GU BCom: 2022]
Answer: The service sector includes businesses that provide services instead of goods. Examples: banking, insurance, transport, education, and healthcare.
8. Why do companies prefer franchising? [GU BCom: 2023]
Answer: Companies prefer franchising because:
i) It helps them expand their business quickly without huge investment.
ii) It reduces the risk as franchise owners invest their own money.
9. What is meant by globalization in business? [GU BCom: 2022]
Answer: Globalization in business means expanding business activities beyond the home country to other countries. It includes selling products worldwide and setting up branches in different countries.
10. Define management and state its importance.
Answer: Management means planning, organizing, leading, and controlling all activities of a business to achieve goals.
Importance: It helps in using resources properly, reducing waste, and achieving targets efficiently.
11. What are perishable goods? [GU BCom: 2022]
Answer: Perishable goods are goods that spoil or get damaged easily in a short time. Examples: fruits, vegetables, milk, meat, and flowers.
12. Write two advantages of a sole proprietorship.
Answer: i) Easy to start and close because there are few legal formalities.
ii) The owner gets all the profits and makes quick decisions.
13. What is the role of communication in business management? [GU BCom: 2024]
Answer: Communication helps in sharing ideas, giving instructions, and receiving feedback in a business. It ensures smooth coordination among employees and managers.
14. Mention two key factors to consider before starting a business.
Answer: i) Availability of funds and capital.
ii) Location of business and availability of raw materials.
15. Write a note on business-format franchising. [GU BCom: 2016]
Answer: Business-format franchising is when a company (franchisor) gives the right to another person (franchisee) to operate under its brand name and business model. Example: McDonald’s and Domino’s outlets.
Section 3:
a) Questions for 5 Marks
1. Explain the characteristics of a business. Why is risk considered common in all types of businesses? [GU BCom: 2022]
Answer: The main characteristics of a business are:
i) Economic activity: Business involves production and sale of goods or services to earn money.
ii) Profit motive: The main aim of business is to earn profit by satisfying customers.
iii) Regular dealings: Business means continuous buying and selling, not one-time activity.
iv) Risk and uncertainty: Every business faces uncertainty about demand, prices, and competition.
v) Legal and social obligations: Business should follow laws and also care for society.
Why risk is common: Risk is present in all types of businesses because future conditions are uncertain. Changes in demand, prices, competition, or natural calamities can cause losses. Therefore, risk cannot be removed completely.
2. What are the factors influencing the choice of a business organization? [GU BCom: 2022]
Answer: The main factors are:
i) Nature of business: Manufacturing needs large investment, so company form is better. For small shops, sole proprietorship is enough.
ii) Scale of operations: Large-scale business needs a partnership or company, but a small-scale can run as a sole trader.
iii) Capital requirement: If more capital is needed, partnership or company form is suitable.
iv) Risk-bearing capacity: If one person cannot take full risk, then partnership or company form is preferred.
v) Control and management: If owner wants full control, sole proprietorship is better; if shared control is acceptable, partnership or company is good.
vi) Legal requirements: Companies have strict legal rules, so those who can follow them choose this form.
3. Discuss the provisions of the Indian Partnership Act governing the formation and management of a partnership organization. [GU BCom: 2022]
Answer: The Indian Partnership Act, 1932 provides rules for partnership formation and management:
i) Definition: Partnership is an agreement between two or more persons to share profits of a business carried on by all or any of them acting for all.
ii) Formation: A partnership is formed by an agreement (oral or written). Written agreement is called Partnership Deed.
iii) Number of partners: Minimum 2 partners; maximum 50 in general business.
iv) Registration: It is optional but recommended for legal benefits.
v) Rights and duties: Partners share profits and losses, take part in business, keep accounts, and work honestly.
vi) Liability: Partners have unlimited liability, meaning they can be personally responsible for firm’s debts.
4. Explain the advantages and limitations of a sole trading business. [GU BCom: 2022]
Answer: Advantages:
i) Easy to start and close: Very few legal formalities are needed.
ii) Quick decisions: Owner controls everything, so decisions are fast.
iii) Full profit to owner: All profits belong to the owner only.
iv) Personal contact with customers: Owner knows customers well and can satisfy them easily.
Limitations:
i) Limited capital: One person cannot invest large funds.
ii) Unlimited liability: Owner’s personal property can be used to pay debts.
iii) Limited life: Business ends if owner dies or becomes bankrupt.
iv) Limited managerial skills: One person cannot be expert in all areas.
5. Discuss the market forces affecting franchising companies. [GU BCom: 2022]
Answer: The main market forces affecting franchising are:
i) Consumer demand: If customers like the brand, the franchise will succeed. Low demand will affect sales.
ii) Competition: More competitors in the market reduce franchise profits.
iii) Economic conditions: Recession or inflation affects purchasing power and demand.
iv) Technology changes: Franchises must adopt new technology like online ordering or digital payments.
v) Government policies: Tax rules, legal requirements, and trade restrictions affect franchise business.
6. What precautions would you suggest for making franchising successful? [GU BCom: 2015]
Answer: i) Choose the right franchisor: Franchisee should select a strong and reputed brand.
ii) Clear agreement: Franchise agreement should clearly mention rights, duties, and profit-sharing.
iii) Proper location: Selecting a good location with high demand is important.
iv) Training and support: Franchisor should give training and marketing support to franchisee.
v) Maintain quality: Franchisee must follow the brand’s quality standards to keep customers satisfied.
7. How does market analysis contribute to the success of a new business venture?
Answer: Market analysis is the process of studying the market conditions before starting a business. It contributes to success in the following ways:
i) Understanding customer needs: It helps to know what customers want, their preferences, and buying habits.
ii) Identifying competitors: Market analysis shows who the competitors are and how they operate.
iii) Demand estimation: It predicts the level of demand for the product or service, helping in production planning.
iv) Pricing strategy: It helps decide the right price by studying the income levels and willingness to pay.
v) Reducing risks: By understanding the market, a business can avoid wrong decisions and reduce chances of failure.
8. Explain the various types of E-commerce models that can be used in business. [GU BCom: 2024]
Answer: The main types of E-commerce models are:
i) B2B (Business to Business): Transactions between two businesses. Example: A manufacturer selling goods to a wholesaler through a website.
ii) B2C (Business to Consumer): Business sells directly to consumers. Example: Amazon or Flipkart.
iii) C2C (Consumer to Consumer): Consumers sell to other consumers online. Example: OLX or eBay.
iv) C2B (Consumer to Business): Individuals offer products or services to businesses. Example: Freelancers providing services to companies.
v) B2G (Business to Government): Business provides goods or services to government agencies. Example: E-tendering.
9. Discuss the role of coordination as a management function in ensuring organizational efficiency.
Answer: Coordination means bringing all activities and efforts together to achieve common goals. Its role in ensuring efficiency:
i) Unity of action: It links different departments so everyone works toward the same goal.
ii) Avoids duplication: It prevents overlapping work, saving time and resources.
iii) Smooth functioning: It ensures that all activities go in the right order without confusion.
iv) Better decision-making: Coordination helps managers get information from all departments for proper planning.
v) Increases efficiency: By reducing conflicts and delays, it improves productivity and helps achieve targets.
10. What is the 'Brick and Click' business model? How does it provide flexibility to customers?
Answer: The Brick and Click model is a combination of offline and online business.
Example: A store like Big Bazaar that also sells through its website.
Flexibility to customers:
i) Customers can shop online from home or visit the physical store if they want to see the product.
ii) They can choose home delivery or store pickup, giving convenience.
iii) They get multiple payment options – online or cash at store.
This model gives customers comfort, convenience, and more choice.
11. Discuss the concept of managerial competencies. Why are they essential for effective management? [GU BCom: 2024]
Answer: Concept: Managerial competencies are the skills, knowledge, and abilities that a manager must have to perform effectively.
Examples: Leadership, decision-making, communication, problem-solving, and planning.
Importance: i) They help managers handle complex situations and make correct decisions.
ii) Good competencies improve team performance and productivity.
iii) They help in building good relationships with employees and motivating them.
iv) Competent managers adapt to changes in the business environment easily.
Thus, managerial competencies are necessary for the success of the organization.
12. Explain the importance of interpersonal skills in managerial effectiveness.
Answer: Interpersonal skills mean the ability to communicate, understand, and work well with people. They are important because:
i) They help in building strong relationships with employees and colleagues.
ii) Good communication reduces misunderstandings and conflicts.
iii) They improve teamwork and cooperation, leading to better performance.
iv) Managers with interpersonal skills can motivate employees and keep them satisfied.
v) It helps in handling customers and clients effectively, improving business reputation.
13. What are the advantages and challenges of outsourcing in modern business organizations?
Answer: Advantages:
i) Cost savings: Outsourcing reduces expenses as the work is done by outside specialists at lower costs.
ii) Focus on core activities: Businesses can concentrate on their main work and leave non-core tasks to outsiders.
iii) Access to expertise: Companies get skilled services from professionals without hiring full-time employees.
iv) Flexibility: Businesses can easily adjust outsourced services according to their needs.
Challenges:
i) Loss of control: The company has less control over outsourced work quality.
ii) Confidentiality risk: Sensitive information may leak if not handled properly.
iii) Dependency on vendors: Business depends on outside firms, which may create problems if vendors fail.
iv) Hidden costs: Sometimes extra charges increase the actual cost of outsourcing.
14. Compare the features of sole proprietorship and partnership as forms of business organization.
Answer: Sole Proprietorship:
i) Owned by one person.
ii) Owner has unlimited liability for all debts.
iii) Capital is limited to owner’s resources.
iv) Decisions are quick as only one person is involved.
v) Life of business depends on the owner.
Partnership: i) Owned by two or more persons (up to 50 in general business).
ii) Partners have joint and unlimited liability.
iii) More capital is available because many people contribute.
iv) Decisions take time as all partners need to agree.
v) Life of business does not depend on one person; it continues until partners agree to dissolve.
15. What are the key considerations for setting up an E-commerce business?
Answer: i) Website design and development: The site should be user-friendly, fast, and secure.
ii) Secure payment systems: Safe online payment options like UPI, cards, and wallets are necessary.
iii) Legal compliance: The business must follow IT laws, tax rules, and data protection regulations.
iv) Logistics and delivery: Efficient delivery partners should be selected for timely shipment.
v) Digital marketing: Strong online promotion using SEO, social media, and ads is important.
vi) Customer support: Quick response to customer queries and issues is necessary for trust.
b) Short Notes for 5 Marks
Q1. Write a short note on Sole Trading Business. [GU B.Com: 2022]
Answer: A sole trading business is the simplest and oldest form of business organization, owned and managed by a single individual. The owner provides the capital, takes decisions, and enjoys the entire profit, but also bears unlimited liability for all losses. It is easy to form, requires no legal formalities, and is suitable for small-scale businesses like retail shops and small service enterprises. The main features are single ownership, personal control, direct relationship with customers, and limited resources.
Q2. Write a short note on Joint Hindu Family Firm. [GU B.Com: 2022]
Answer: A Joint Hindu Family Firm is a unique form of business organization in India, governed by Hindu Law. It is owned by members of a Hindu Undivided Family (HUF) and managed by the Karta, the eldest male member. The ownership is inherited by birth and membership continues up to three generations. The liability of the Karta is unlimited, while the liability of other members (coparceners) is limited to their share in the business. It is mainly found in traditional trading and ancestral family businesses.
Q3. Write a short note on Partnership Business. [GU B.Com: 2022]
Answer: Partnership business is an association of two or more persons who agree to share profits and losses of a business carried on by them or any one of them acting on behalf of all. It is governed by the Indian Partnership Act, 1932. The essential features include agreement among partners, lawful business, sharing of profits, and mutual agency. The liability of partners is unlimited, and the business ends on death, insolvency, or retirement of a partner unless otherwise agreed.
Q4. Write a short note on Franchising. [GU B.Com: 2012, 2013, 2014]
Answer: Franchising is a modern method of business expansion in which the owner of a business (franchisor) grants rights to another person or group (franchisee) to operate under its brand name, trade mark, and system in return for fees or royalties. Examples include McDonald’s, Domino’s, and KFC. The franchisee benefits from an established brand and business model, while the franchisor expands business with reduced investment. It is widely used in food chains, retail stores, and education services.
Q5. Write a short note on E-commerce. [GU B.Com: 2022]
Answer: E-commerce, or electronic commerce, refers to buying and selling of goods and services through electronic networks, mainly the internet. It includes online shopping, digital payments, internet banking, and electronic data interchange. It offers benefits like wider market reach, convenience of 24×7 operations, reduced costs, and global connectivity. Popular examples are Amazon, Flipkart, Myntra, and Paytm. However, it faces challenges like cyber security, lack of personal touch, and digital divide.
Q6. Write a short note on Outsourcing. [GU B.Com: 2022]
Answer: Outsourcing is the practice of contracting certain business functions or processes to outside agencies or third-party specialists instead of performing them in-house. Common areas of outsourcing include IT services, payroll, customer care, and logistics. The advantages are cost reduction, focus on core activities, and access to specialized skills. However, it also has risks such as loss of control, quality issues, and dependency on vendors.
Q7. Write a short note on Brick & Mortar Business Model.
Answer: A Brick & Mortar Business Model refers to traditional business operations carried out through a physical store or office. Customers visit the store to buy products or services, such as grocery shops, showrooms, and banks. This model allows personal interaction, physical inspection of goods, and trust building. However, it involves higher operational costs such as rent, staff salaries, and infrastructure.
Q8. Write a short note on Brick & Click Business Model.
Answer: A Brick & Click Business Model combines both physical stores and online platforms. Customers can either shop by visiting the store or place orders online. It provides flexibility, wider market coverage, and better customer convenience. Examples include Reliance Retail, Big Bazaar, and Tata Cliq. This model reduces limitations of purely offline or online businesses and increases competitiveness.
Q9. Write a short note on the Nature of Management.
Answer: The nature of management can be understood as both a science and an art. It is a science because it involves principles, techniques, and systematic knowledge; it is an art because it requires skills, creativity, and judgment. Management is also a profession as it demands specialized knowledge and ethical practice. It is goal-oriented, universal, continuous, and a group activity that coordinates resources to achieve organizational objectives.
Q10. Write a short note on Managerial Competencies.
Answer: Managerial competencies refer to the knowledge, skills, and abilities required by managers to perform effectively. They can be categorized as technical competencies (knowledge of tools and processes), human or interpersonal competencies (communication, leadership, teamwork), and conceptual competencies (analytical thinking, problem-solving, decision-making). These competencies are essential for planning, organizing, leading, and controlling organizational activities.
Q11. Write a short note on Service Sector. [GU B.Com: 2022]
Answer: The service sector, also called the tertiary sector, refers to that part of the economy which provides intangible services rather than physical goods. It includes banking, insurance, education, healthcare, transport, IT, tourism, and hospitality. It is a rapidly growing sector in India, contributing more than half of GDP and providing large-scale employment. The sector focuses on customer satisfaction and plays a vital role in economic development.
Q12. Write a short note on Business and Society Relationship. [GU B.Com: 2022]
Answer: Business and society are interdependent. Business derives resources, manpower, and legitimacy from society, while society depends on business for goods, services, employment, and wealth creation. A healthy relationship requires businesses to act responsibly, follow ethical practices, and contribute to social welfare. Corporate Social Responsibility (CSR) is an example of business obligations towards society.
Q13. Write a short note on Legal Formalities for Starting a Business.
Answer: Legal formalities for starting a business depend on the form of organization. They may include registration of the business name, obtaining trade license, GST registration, PAN and TAN numbers, registration under Shops and Establishment Act, environmental clearance (if applicable), and compliance with labor laws. Companies must also register with the Registrar of Companies (RoC). These formalities ensure that the business operates legally and avoids future disputes.
Q14. Write a short note on Partnership Deed. [GU B.Com: 2022]
Answer: A partnership deed is a written agreement among partners specifying the terms and conditions of their partnership. It includes details like firm name, nature of business, capital contribution, profit-sharing ratio, duties and rights of partners, rules for admission or retirement, and dispute settlement. Though not compulsory, a written deed avoids misunderstandings and provides legal protection under the Indian Partnership Act, 1932.
Q15. Write a short note on Joint Stock Company. [GU B.Com: 2022]
Answer: A Joint Stock Company is a voluntary association of individuals formed to carry on business with a common capital divided into shares. It is created by law, has a separate legal entity, perpetual succession, and limited liability of members. The ownership and management are separate, and shares can be freely transferred. Examples include Reliance Industries, Tata Motors, and Infosys. It is suitable for large-scale operations requiring huge capital.
Section 4: Questions for 10 Marks
Q1. What is business? What steps have to be taken in social responsibility of business in developing an organization? [GU B.Com: 2022]
Answer: Business may be defined as an economic activity carried out with the primary objective of earning profits through the production, purchase, and sale of goods and services that satisfy human wants. It involves the continuous process of creating utilities, generating employment, and contributing to the growth of the economy. The essential characteristics of business are profit motive, risk-bearing, regular dealings, customer satisfaction, and innovation.
However, in modern society, business is not merely a profit-making activity. It exists within society and draws its resources such as capital, labor, and infrastructure from it. Hence, it has certain responsibilities towards the welfare of society, which is referred to as social responsibility of business. Social responsibility may be defined as the obligation of business to pursue policies, make decisions, and follow actions that are desirable in terms of the objectives and values of society.
The steps that need to be taken in fulfilling social responsibility are many. Firstly, a business organization must provide quality goods and services at reasonable prices to ensure consumer satisfaction. Secondly, it should generate employment opportunities and provide fair wages, safe working conditions, and welfare facilities to its employees. Thirdly, it must contribute to environmental protection by adopting eco-friendly methods of production, reducing pollution, and engaging in waste management. Fourthly, businesses should engage in community development by contributing to education, health, and infrastructure. Fifthly, they should ensure fair returns to investors and safeguard their financial interests. Sixthly, ethical practices like transparency, honesty in dealings, and compliance with laws must be followed to build trust in society.
Thus, the social responsibility of business goes beyond profit-making to include obligations toward consumers, employees, shareholders, government, and the community at large. A business organization that actively fulfills its social responsibilities not only contributes to societal development but also builds goodwill, reputation, and long-term sustainability, which ultimately strengthens its position in the market.
Q2. Discuss the major factors to be considered for starting a new business. How do these factors influence the success of a business venture? [GU B.Com: 2024]
Answer: Starting a new business is a crucial decision that requires careful planning and consideration of various factors. The success of a business venture depends largely on how systematically these factors are evaluated before taking action.
The first factor is the selection of a business idea. The entrepreneur must identify a profitable, innovative, and feasible idea that can meet the demands of the market. Choosing the right idea is essential because a weak or obsolete idea may lead to failure irrespective of the investment.
The second factor is financial requirements. Capital is the lifeblood of any business. The entrepreneur must estimate the fixed capital (for land, building, machinery) and working capital (for raw materials, wages, expenses) needed. Proper financial planning ensures smooth operations and reduces the risk of insolvency.
The third factor is the availability of raw materials and resources. A business must ensure regular and cost-effective supply of inputs, without which production cannot run smoothly. Location of the business often depends on proximity to sources of raw materials.
The fourth factor is location and infrastructure. A suitable site with good transport, power, water supply, and communication facilities enhances efficiency and reduces costs. Poor location may increase costs and reduce competitiveness.
The fifth factor is the market potential. A new business must assess demand, competition, consumer preferences, and distribution channels. Without adequate demand, even the best business idea will fail.
The sixth factor is legal and regulatory requirements. Different businesses require registration, licenses, tax numbers, and compliance with labor and environmental laws. Ignoring these may lead to penalties and closure.
The seventh factor is technology and skilled manpower. The entrepreneur must choose the right technology to ensure efficiency and competitiveness, and also recruit trained employees to run operations smoothly.
All these factors significantly influence the success of a business venture. If considered carefully, they reduce risk, improve efficiency, enhance customer satisfaction, and ensure long-term growth. On the other hand, neglecting them may result in high costs, low profits, and early closure of the enterprise. Therefore, systematic planning and consideration of these factors are indispensable for business success.
Q3. What are the key considerations involved in setting up a new enterprise? How does ease of doing business promote faster industrialization? [GU B.Com: 2016]
Answer: Setting up a new enterprise is a complex process that requires a combination of entrepreneurial vision, financial planning, and strategic decision-making. There are several key considerations that must be taken into account to ensure a successful establishment.
One major consideration is selection of the nature and type of business. An entrepreneur must decide whether to enter manufacturing, trading, or service sectors depending on market demand, personal interest, and resources available.
Another important factor is choice of form of ownership. The entrepreneur must select from forms like sole proprietorship, partnership, joint stock company, or cooperative society. The choice depends on size, capital requirements, liability, and control.
Financing the enterprise is a vital step. Adequate capital must be arranged through personal savings, loans, venture capital, or institutional finance. The financial plan should cover both short-term and long-term needs.
Selection of location and site is another crucial aspect. Good infrastructure, easy access to raw materials, proximity to markets, and availability of skilled labor make the enterprise more efficient.
Legal and regulatory requirements must be complied with, such as registration, licenses, tax numbers, and labor and environmental laws.
Another consideration is technology and machinery. The choice of technology must match the scale of production and market needs to ensure cost-efficiency and quality. Along with this, recruiting and training of skilled manpower is essential for smooth functioning.
Now, ease of doing business is a concept that refers to the simplification of regulatory procedures, reduction of bureaucratic hurdles, and creation of a supportive business environment by the government. When procedures like registration, tax filing, getting electricity connections, or obtaining clearances are simplified, entrepreneurs can set up businesses quickly and at lower costs. This promotes industrialization by attracting both domestic and foreign investments, encouraging innovation, and generating employment.
Therefore, the success of a new enterprise depends on careful consideration of various factors, while ease of doing business provided by government policies accelerates the pace of industrialization and overall economic development.
Q4. Explain the external factors to be analyzed before conceiving a new business idea. Discuss the legal obligations involved. [GU B.Com: 2013]
Answer: Before conceiving a new business idea, an entrepreneur must carefully analyze the external environment. These external factors are beyond the direct control of the business but have a significant influence on its success.
One important external factor is the economic environment. Elements like economic growth rate, income levels, inflation, interest rates, and purchasing power of consumers determine the demand for products and services. A weak economy may lead to reduced demand, while a growing economy provides new opportunities.
The second factor is the social and cultural environment. Consumer tastes, preferences, lifestyles, and traditions influence what goods and services are demanded. For example, health-conscious consumers create demand for organic food and fitness products.
The third factor is the technological environment. Rapid technological changes may create opportunities for innovation or make existing products obsolete. Entrepreneurs must evaluate the latest technologies available for production, distribution, and marketing.
The fourth factor is the political and legal environment. Government policies, political stability, taxation rules, labor laws, and trade regulations affect the smooth running of business. A supportive political climate encourages entrepreneurship, whereas political instability creates uncertainty.
The fifth factor is the competitive environment. The number of competitors, their pricing strategies, market share, and quality standards must be analyzed before entering into a new venture.
The sixth factor is the natural environment. Availability of raw materials, climate conditions, and environmental regulations may influence the business location and production process.
Along with these factors, legal obligations also play a crucial role in conceiving a new business idea. These include business registration under appropriate laws, obtaining trade license, GST registration, PAN and TAN numbers, compliance with labor laws, and environmental clearance. In case of companies, incorporation under the Companies Act is mandatory. Ignoring these obligations may result in fines, penalties, or even closure of business.
Therefore, external factors and legal obligations must be carefully studied before finalizing a business idea to minimize risks and ensure long-term sustainability.
Q5. What are the essential legal formalities to be observed for establishing a new enterprise? [GU B.Com: 2015]
Answer: Establishing a new enterprise involves several legal formalities that vary depending on the nature and size of the business. These formalities are necessary to give the business a legal status, ensure smooth functioning, and avoid disputes with authorities.
The first legal requirement is registration of the business name under the appropriate authority to give it recognition and protect it from being misused by others.
The second step is obtaining a trade license from local municipal authorities, which permits the business to operate legally in a specific area.
The third requirement is registration under tax laws. Every business needs to obtain a PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number). For businesses dealing in goods and services, GST registration is compulsory.
The fourth step is registration under the Shops and Establishments Act, which governs conditions of work, wages, holidays, and employee rights for commercial establishments.
The fifth requirement is compliance with labor laws. This includes registration under the Employees’ Provident Fund Act, Employees’ State Insurance Act, Minimum Wages Act, and other relevant labor legislations depending on the size of employment.
The sixth formality is obtaining environmental clearance in case of industries that may cause pollution. Such enterprises must follow pollution control regulations and obtain No Objection Certificates from Pollution Control Boards.
The seventh requirement is company incorporation in case the business is to be organized as a joint stock company. It must be registered under the Companies Act with the Registrar of Companies and obtain a Certificate of Incorporation.
Additionally, special businesses like banking, insurance, or import-export require licenses from specific regulatory bodies.
Thus, observing these legal formalities ensures that the enterprise has a lawful identity, complies with government regulations, protects the interests of employees and consumers, and avoids penalties or legal complications in the future.
Q6. What is a partnership business? Explain its major advantages and disadvantages. [GU B.Com: 2022]
Answer: A partnership is a form of business organization where two or more persons agree to carry on a lawful business jointly with the objective of earning profit and share the profits and losses among themselves. It is governed by the Indian Partnership Act, 1932. The essential features of partnership are agreement among partners, sharing of profits, unlimited liability, mutual agency, and lack of perpetual succession.
The major advantages of partnership are:
i) More Capital Resources: Since more than one person contributes, there is greater availability of financial resources compared to sole proprietorship.
ii) Combined Knowledge and Skills: Partners bring varied experience, talent, and skills which improve decision-making and efficiency.
iii) Shared Risk: Losses are borne collectively, reducing the burden on a single partner.
iv) Flexibility in Operations: The firm can easily adjust to changing circumstances as decision-making is faster than in companies.
v) Ease of Formation: Partnership can be formed with minimal legal formalities compared to companies.
The major disadvantages of partnership are:
i) Unlimited Liability: Partners are personally liable for the debts of the firm, which may extend to their personal assets.
ii) Uncertain Continuity: The firm may dissolve upon death, insolvency, or retirement of a partner unless otherwise agreed.
iii) Possibility of Conflicts: Differences in opinion among partners may create disputes and affect smooth functioning.
iv) Difficulty in Raising Large Capital: Since the number of partners is limited (maximum 10 in banking and 20 in other businesses), the scope of raising large funds is restricted.
v) Lack of Transferability: A partner cannot transfer his share without the consent of other partners, which reduces liquidity.
vi) Slow Decision-making in Large Partnerships: While flexibility exists, in firms with many partners, decision-making may be delayed due to the need for mutual consultation.
vii) Risk of Dishonesty or Misconduct: Since every partner is an agent of the firm, the misconduct of one partner binds the whole firm, increasing the risk.
Conclusion: Thus, partnership combines the benefits of pooling resources and sharing responsibilities, but at the same time, it suffers from limitations such as unlimited liability, instability, and restricted growth. It is most suitable for medium-scale businesses requiring joint effort and moderate capital.
Q7. What is a partnership deed? Explain the procedure for registration of a partnership firm. [GU BCom: 2022]
Answer: A partnership deed is a written agreement among partners that defines the rights, duties, and responsibilities of each partner in a partnership firm. Though not compulsory, it is advisable to have the deed in writing to avoid disputes. It usually includes details such as name of the firm, nature of business, capital contribution, profit-sharing ratio, admission and retirement of partners, settlement of accounts, etc.
Procedure for Registration of a Partnership Firm:
The Indian Partnership Act, 1932 provides for registration, though it is not compulsory. The steps are:
i) Application: The partners must file an application for registration with the Registrar of Firms in the prescribed form.
ii) Contents of Application: The application should contain the firm’s name, nature of business, principal place of business, names and addresses of partners, and date of commencement.
iii) Signature and Verification: The application must be signed and verified by all partners.
iv) Payment of Fees: A prescribed registration fee must be deposited with the Registrar.
v) Scrutiny by Registrar: The Registrar examines the application, and if found correct, records the statement in the Register of Firms.
vi) Certificate of Registration: After successful verification, the Registrar issues a certificate of registration, and the firm is considered a registered partnership.
Conclusion: A partnership deed creates clarity among partners regarding their roles, while registration provides legal protection and enables the firm to sue outsiders. Hence, both deed and registration ensure smooth functioning and safeguard the interests of partners.
Q8. What are the factors influencing the choice of a business organization? Discuss their impact on organizational structure. [GU BCom: 2022]
Answer: The choice of business organization depends on several internal and external factors. Selecting the right form is crucial for efficiency, growth, and long-term sustainability.
Factors influencing choice of organization are:
i) Nature of Business: Manufacturing requires more capital and long-term investment, whereas trading may suit sole proprietorship or partnership.
ii) Scale of Operations: Large-scale industries require a company form, while small-scale businesses may be carried on by sole traders.
iii) Capital Requirement: Where large financial resources are needed, a joint stock company is more suitable.
iv) Liability: If owners want limited liability, company form is preferred, whereas in sole proprietorship and partnership, liability is unlimited.
v) Degree of Control: If personal control is desired, sole proprietorship is better; otherwise, control can be shared in partnerships or delegated in companies.
vi) Continuity of Business: Companies enjoy perpetual succession, while sole proprietorship and partnership may dissolve on death or insolvency of members.
vii) Legal Formalities: Simple forms like sole proprietorship require fewer formalities, while companies need strict compliance.
viii) Profit-sharing: In sole proprietorship, profit belongs entirely to the owner, but in partnership and company, it is shared.
Impact on Organizational Structure:
These factors influence whether a business chooses to remain small and owner-driven (sole proprietorship), moderately sized with shared management (partnership), or large-scale with professional management and shareholder participation (company). Thus, organizational structure directly reflects these factors.
Conclusion: The decision regarding the form of organization depends on objectives, resources, and risk preferences. A proper choice ensures efficiency, stability, and long-term growth of the enterprise.
Q9. Compare and contrast the features of sole proprietorship, partnership, and joint stock company as forms of business organization.
Answer: The three main forms of business organization differ in ownership, liability, continuity, and legal requirements.
Comparison of Features:
i) Ownership: Sole Proprietorship: Owned by one person. Partnership: Owned by two or more persons (2 to 20, except in banking 2 to 10). Joint Stock Company: Owned by shareholders.
ii) Formation: Sole Proprietorship: Very easy, no legal formalities. Partnership: Simple agreement or registration under Partnership Act. Joint Stock Company: Complicated, requires registration under Companies Act.
iii) Liability: Sole Proprietor: Unlimited liability. Partnership: Unlimited liability of all partners. Company: Liability of shareholders is limited.
iv) Continuity: Sole Proprietorship: Ends with death/retirement of proprietor. Partnership: Ends on death/insolvency of partner unless otherwise agreed. Company: Perpetual succession, unaffected by change of members.
v) Management: Sole Proprietor: Entirely managed by owner. Partnership: Joint management by partners. Company: Managed by Board of Directors on behalf of shareholders.
vi) Capital: Sole Proprietor: Limited resources of single owner. Partnership: More capital than sole proprietorship but still limited. Company: Large capital by issuing shares to public.
Conclusion: Thus, sole proprietorship is best for small businesses, partnership suits medium-scale firms, and joint stock companies are ideal for large-scale industries. Each form has unique merits and limitations depending on the nature and scale of operations.
Q10. Define franchising. Discuss its features and operational mechanism. Provide arguments for and against franchising in the Indian context. [GU BCom: 2012, 2014]
Answer: Franchising is a business arrangement in which the owner of a business (franchisor) grants rights to another party (franchisee) to operate under its trade name, trademark, and established system in exchange for fees or royalties. It is widely used in sectors like food chains, retail, and services.
Features of Franchising:
i) Contractual Relationship: Based on a formal legal agreement.
ii) Trademark Use: Franchisee uses the brand name of the franchisor.
iii) Support Services: Franchisor provides training, marketing, and operational support.
iv) Royalty/Fees: Franchisee pays initial and ongoing fees to franchisor.
v) Standardization: Franchisee follows established business methods.
vi) Territorial Rights: Franchisee usually gets exclusive rights for a particular area.
Operational Mechanism:
The franchisor licenses the business format and brand to the franchisee. The franchisee invests capital, manages day-to-day operations, and shares revenue with the franchisor. The franchisor ensures quality, branding, and consistency.
Arguments in Favour of Franchising in India:
i) Provides ready-made business model with lower risk.
ii) Generates self-employment opportunities.
iii) Enables expansion of reputed brands across the country.
iv) Helps consumers get standardized quality products/services.
Arguments Against Franchising in India:
i) High franchise fees may discourage small entrepreneurs.
ii) Lack of flexibility, as franchisees must follow franchisor’s rules.
iii) Cultural and regional variations may affect success.
iv) Conflicts between franchisor and franchisee may arise.
Conclusion: Franchising has emerged as an important marketing strategy in India, particularly in fast food, retail, and education sectors. However, success depends on careful adaptation to Indian market conditions and fair agreements between franchisor and franchisee.
Q11. What are the various forms of franchising? Explain with examples. Why is franchising becoming increasingly popular as a marketing strategy? [GU BCom: 2012, 2015]
Answer:Franchising has evolved into different forms depending on the nature of relationship and business model.
Forms of Franchising:
i) Product Franchising: Franchisee sells products manufactured by franchisor using its brand. Example: Automobile dealerships like Maruti Suzuki.
ii) Manufacturing Franchising: Franchisee manufactures goods under franchisor’s brand and specifications. Example: Soft drink bottling plants like Coca-Cola.
iii) Business Format Franchising: Franchisee gets complete business model including operations, marketing, and training. Example: McDonald’s, Domino’s, Subway.
iv) Service Franchising: Franchisee offers services under franchisor’s trade name. Example: NIIT, Apollo Clinics.
v) Investment Franchising: Franchisee invests in large projects managed by franchisor. Example: Hotel chains like Hilton.
Popularity as a Marketing Strategy:
i) Rapid Expansion: Franchisors can expand quickly without heavy capital investment.
ii) Local Participation: Franchisees bring local knowledge and capital.
iii) Risk Sharing: Risks are shared between franchisor and franchisee.
iv) Standardized Products and Services: Builds strong brand loyalty.
v) Employment Generation: Creates opportunities for entrepreneurs and employees.
Conclusion: Franchising is becoming increasingly popular in India as it combines brand reputation with local entrepreneurship. It benefits franchisors through faster growth and franchisees by offering proven business models, making it a win–win marketing strategy.
Q12. What is E-commerce? Discuss its advantages and challenges in the context of modern business. Provide examples of successful E-commerce businesses. [GU BCom: 2022]
Answer: E-commerce, or electronic commerce, refers to the process of buying and selling goods and services over the internet. It involves online platforms, digital payment systems, and electronic data exchange. Today, E-commerce has become an integral part of business due to the rapid spread of internet and smartphones.
The advantages of E-commerce are:
i) It provides convenience as customers can shop 24×7 from anywhere.
ii) It reduces the cost of operation by eliminating intermediaries and physical infrastructure.
iii) It allows businesses to reach global markets easily.
iv) It ensures product variety and customer choice on one platform.
v) It facilitates better marketing through digital advertisements, customer data analysis, and personalized offers.
The challenges of E-commerce are:
i) Security concerns such as cybercrime and data theft discourage some customers.
ii) Lack of physical inspection of goods may cause dissatisfaction.
iii) Logistics and timely delivery remain a big challenge, especially in remote areas.
iv) High competition often reduces profit margins.
v) Many small businesses lack the required technological knowledge and infrastructure.
Examples: Amazon, Flipkart, and Myntra in India are highly successful E-commerce businesses. Paytm and Zomato also show how digital platforms can revolutionize retail and services.
Conclusion: E-commerce has transformed the way businesses operate, providing vast opportunities along with challenges. Its future depends on better infrastructure, security, and customer trust.
Q13. What is management? Discuss the nature and functions of management in an organization.
Answer: Management is the process of planning, organizing, directing, coordinating, and controlling organizational resources to achieve desired goals efficiently and effectively. It is both an art and a science, as it involves creativity as well as systematic knowledge.
The nature of management can be described as follows:
i) It is goal-oriented and aims at achieving specific objectives.
ii) It is a continuous process requiring regular decision-making.
iii) It is universal in nature and applied in business, government, and non-profit organizations.
iv) It is both science (systematic principles) and art (personal skill of managers).
v) It is a social process involving coordination among people.
The functions of management are:
i) Planning – deciding objectives and the best course of action.
ii) Organizing – arranging resources and assigning tasks.
iii) Directing – guiding and motivating employees.
iv) Controlling – measuring performance and taking corrective actions.
v) Coordinating – harmonizing efforts of all departments.
Conclusion: Thus, management is the backbone of an organization. It ensures efficient use of resources, smooth operations, and achievement of organizational goals.
Q14. Explain the key functions of management (Planning, Organizing, Directing, Controlling, and Coordinating) with examples.
Answer:
Management functions are the primary tasks performed by managers to ensure the smooth functioning of an organization. The main functions are:
i) Planning: It involves setting goals and deciding the future course of action. For example, a company like Reliance Jio planning to enter the telecom market by providing low-cost internet.
ii) Organizing: It is about arranging resources such as men, money, and machines. For instance, Tata Motors organizes production, marketing, and R&D departments separately.
iii) Directing: It is the process of guiding and motivating employees to work effectively. For example, Infosys leaders encourage employees through training and incentives.
iv) Controlling: It involves comparing actual performance with planned targets. For example, Maruti Suzuki controlling production costs to match budgetary targets.
v) Coordinating: It ensures harmony among different departments. For example, Flipkart’s logistics, IT, and customer service departments coordinate during festive sales.
Conclusion:
These functions are interdependent and continuous. They help managers ensure efficiency, reduce wastage, and achieve organizational success.
Q15. Discuss the role of the 'Brick and Click' model in enhancing customer experience in retail businesses. How does it differ from other business formats?
Answer: The Brick and Click model is a hybrid business format where firms operate both physical stores (brick) and online platforms (click). This model provides customers the flexibility to shop physically or digitally according to their convenience.
The role of this model in enhancing customer experience is significant:
i) Customers get convenience of online shopping along with assurance of physical stores.
ii) It allows customers to check and return products easily through stores.
iii) Businesses can attract a wider customer base by combining offline trust with online reach.
iv) It ensures better brand presence across multiple channels.
v) It builds customer loyalty through personalized shopping experiences.
Difference from other formats: Unlike a pure brick-and-mortar model, it offers digital shopping. Unlike pure click-only E-commerce, it offers physical touchpoints. Thus, it is more balanced and reliable.
Examples: Reliance Trends, Croma, and Big Bazaar have adopted this model successfully in India.
Conclusion: The Brick and Click model provides the best of both worlds, enhancing convenience and trust, making it the future of modern retailing.
Q16. Explain the different types of managerial competencies (conceptual, interpersonal, and technical) with examples. How do they contribute to organizational success?
Answer: Managerial competencies are the essential skills and abilities managers must possess to perform their duties effectively. These include conceptual, interpersonal, and technical competencies.
i) Conceptual Competency: It refers to the ability to understand complex situations, analyze problems, and make strategic decisions. For example, a CEO of Infosys conceptualizing global expansion strategies.
ii) Interpersonal Competency: It involves the ability to communicate, motivate, and build relationships with employees. For instance, HR managers at Wipro building positive relations with employees through effective communication.
iii) Technical Competency: It is the knowledge of specific methods, techniques, and tools required to perform tasks. For example, a production manager in Maruti Suzuki must understand automobile manufacturing technology.
Contribution to organizational success: These competencies ensure proper decision-making, employee motivation, technological efficiency, and overall smooth functioning. A manager with balanced competencies can align resources, motivate teams, and achieve goals effectively.
Conclusion: Managerial competencies are the pillars of effective management. They not only improve individual performance but also ensure the long-term success of the organization.
-0000-
![Unit 1: Introduction to BOM Question Answers BOM [FYUGP BCom 1st Semester Gauhati University]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZdDvbVjnz7H-Ogy34hzZFlUXAYEDRhgzeImd8gx4unDNK9sOh64utVqQPcWEHX3H2WaTAyQTDqIoESasH_TA6Op00mzvcsLDz8bccVARyPdsUGr_RGO3iIw-RINT7iRR7TrFOaZiv-UeoNiN5HnbssL5ODcQ3O7UwlKuOeEdocECEF8IfyCJp-wtMpqrv/w200-h200-p-k-no-nu/1000336363.webp)