Business Studies 6 Marks Question

a. The remarks in the above paragraph hint at objections against the advertisement. According to all the three participants in the project work, the main disadvantages of advertisement are as under:
i. It Adds to Costs: An organisation has to spend a huge amount on advertisement. It increases the cost of the products. To meet the expenditure, the price of the product is raised. No manufacturer pays for advertising expenses out of his Advertising, therefore, it leads to an unnecessary rise in prices. In this regard, it is said that advertising costs are passed on to the consumers in the form of high prices.
ii. It Confuses the Buyers: Many a time distorted version of reality is depicted in the advertising. Under the influence of advertisements, consumers go in for the product. When they use it, they feel cheated. Then they realize that the information given in the advertisement about the product was quite different from the actual product. In this way, advertisement states people's confidence in it. Therefore, it is said that advertising confuses consumers rather than helping them.
iii. It undermines Social Values: Advertisement is a kind of day-dreaming for the people. It drives people away from reality into the realm of artificiality. Through its medium people are regularly informed about new products. Only very few products of any worth for them. The brilliance of new products overwhelms them. They are tempted to buy them but lack the necessary resources. Consequently, they feel frustrated with their lot. Considering it a social evil, it can be said that advertisement undermines social values.
b. Values:
i. Adds to knowledge.
ii. Provides employment opportunities.

The major change that is required to correct the situation is to move away from a complete formal organisation structure and allow for some informal structure. An informal structure is a network of social relationships that arise out of personal interactions among employees of an organisation beyond their officially defined roles.
An informal structure would benefit the organisation in the following manner.
• ;As no definite path or channel of communication is followed, information spreads faster.
• An informal organisation allows for personal communication beyond the officially defined roles. This unofficial interaction provides a sense of belongingness among the employees towards the organisation and towards each other. This helps in lowering the employee turnover.
• An informal organisation supports the working of formal organisation, thereby helps in fulfilment of organisational objectives in a better manner.
The company can diversify in other sewing related products as better and technologically advanced sewing machines, machines with advance features such as embroidery.

The features of business environment highlighted in the above case are:
i. Totality of external forces: However, the company knows that it exists in an environment where everything around it counts; so everything around it matters.
ii. Inter-relatedness: There are various factors which are closely related to each other and can't be understood in isolation like change in lifestyle which can be linked to the improved demand of technologically advanced shoes.
The importance of business environment highlighted in the above case:
i. It helps in coping with rapid changes. It will have to adjust to rapidly changing technology, fragmentation of market, changing brand loyalties, etc.
ii. It helps in tapping useful resources. It knows that various resources in the form of inputs have to be transformed into the best products and sold for increasing its revenue.
The dimension of business environment which is highlighted in the above case is Political Environment. These are in the form of protests done by labour unions throughout the country and about to assume the form of strikes.
The economic reform which is discussed in the last part of the case is Liberalisation. Government is playing a very positive role, like it did a few years back, and is freeing the business environment from unnecessary restrictions and government controls.

The dimensions are as follows: i. Economic Environment: Economic Environment consists of factors like inflation rates, interest rates, consumers’ incomes, economic policies, market conditions etc. which affect the performance of a business firm.
a. Interest Rates: Changes in the interest rates greatly affect the demand for goods and services. For example, low long term rates on home loans are beneficial for banks and consumers both.
b. Consumer Income: Increase in the incomes of the consumers leads to increase in their purchasing power. Hence, demand for goods and services rises.
c. Inflation Rate: High inflation rate increases the cost of production and hence puts constraints on firms.
ii. Social Environment: Social environment implies traditions, literacy rates, educational levels, values, customs, lifestyle, demographic distribution and other characteristics of the society in which the organization exists. Traditions mean customs or social practices that have passed on from one generation to another. Values mean standards that a society holds in high esteem e.g., freedom, social justice, equal opportunities etc. which are cherished by us all. Changes in social environment affect the demand for a product, supply of labour and capital. If a business fails to adapt to such changes, its survival becomes difficult. Cooperation between business and society can make business boom (WIN-WIN) whereas confrontation between them may lead to disaster (LOSS-LOSS). Cooperation between business and society will see business boom and will help in the growth of professional managers as well as the country whereas failure of any business organization in adapting itself to changes in the social environment will lead to dissatisfaction amongst its customers and rejection)of its products. This shift of demand can ever endanger the very survival of that business.
iii. Technological Environment: The forces related to scientific improvements and innovations for improving quality of goods and services and new techniques for operating the business, are all part of technological environment. It includes new approaches, new procedures and new equipments to transform inputs into outputs. It facilitates an organization’s efficiency and effectiveness so that it can try to remain at par with the best in the world. Technological changes provide opportunities for some enterprises and become threats for some others. For example, digital watches killed the business prospects of traditional watches, TV has adversely affected radio and cinema industry, mobile phones have taken over the market from landline phones.
iv. Political Environment: Political Environment consists of forces such as political stability and peace in the country and attitude of the ruling party and its representatives towards business. These forces significantly affect the functioning of business. Whenever there is political stability, it increases the confidence of businessmen whereas political instability, adversely affects the business. For example even after opening of our economy inl991, many foreign companies found it very difficult to enter the Indian market because of ‘Bureaucratic Red Tape’. As a result, many of these companies got discouraged from doing business in India.
v. Legal Environment: Legal environment consists of rules and regulations, framed by the Parliament, under which business must operate. To exist and grow, business is required to follow all the rules and regulations that constitute this environment. Legal Environment includes different laws passed by the government, administrative orders issued by government authorities, courts and also various ‘recommendation made by various commissions agencies at three levels of the government – central, state, local. It is very essential for the management of any business firm to obey these rules and regulations for smooth functioning of the business.
The particular feature of business environment referred to here is Uncertainty: It is very difficult to predict the changes of Business Environment. As environment is changing very fast for example in IT, fashion industry frequent and fast changes are taking place.

i. The next three steps to be followed by Nishant in the selection process after giving advertising and shortlisting ten candidates per post after conducting different selection tests are as follows:
a. Employment Interview: It is a face-to-face interaction between the interview and prospective candidates. It involves a formal, in-depth conversation that is conducted to evaluate the applicant's suitability for the job.
b. Reference and Background Checks: At the time of filling up of the job application form the prospective candidates are required to provide names, addresses, and telephone numbers of references for the purpose of verifying the information and gaining additional information about him/her.
c. Selection Decision: The final decision about the selection is made from among the candidates who pass the test and interview.
ii. The two values that Nishant wants to communicate to society by setting up this manufacturing unit are:
a. Rural development
b. Gender equality

Steps in the process of staffing function of management:
i. Estimating Manpower requirements.
ii. Recruitment and Selection iii. Placement and orientation.
iv. Training and development.
v. Performance appraisal, Promotion and career planning.
vi. Compensation paid to employees according to their job works.