Category: Maharashtra State Board Notes

By going through these Maharashtra State Board Class 11 History Notes Chapter 5 Janapadas and Republics students can recall all the concepts quickly.

Maharashtra State Board Class 11 History Notes Chapter 5 Janapadas and Republics

‘Jana’ and Janapadas:
Vedic people used the term Jana to designate a group of people, united under a common bond of singular kinship structure. Their settlement was known as ‘Grama’. A cluster of gramas consisting of the same Jana was known by the name of that particular Jana.

A region occupied by a Janas was called as Janapada. Gradually the Janapadas had more formal administrative structures transforming them into independent states. These were the first well-established states of ancient India. However, this does not necessarily mean that every Janapada evolved into an independent state.

Janapada:
The term ‘Janapada’ occurs in the Brahmana texts for the first time. Thereafter, it is frequently used in the Vedic literature and the epics – Mahabharata and Ramayana, as also in the Jain and the Buddhist literature. Considering the ancient Indian geographic perception with reference to the janapadas the said literature seems to divide the Indiansulcontinentjnto five sections:

1. ‘Praachya’ – of the east
2. ‘Praatichya’ – of the west
3. ‘Udichya’ – of the north
4. ‘Dakshina’ – of the south
5. ‘Madhyadesha – The central region.

Territoriality and Autonomous Functioning: It may be noted, that the sense of territoriality and the ensuing awareness of autonomy were the main factors responsible for the formation of ancient Janapadas in India. However, their administrative system was not much different from that of the Janas in the Rigveda.

The chief of the Janapada was known as ‘Rajan’. Two assemblies known as ‘Sabha’ and ‘Samiti’ were at the apex of all administrative decision-making processes, since the very beginning of the Vedic period.

Expansion and Development of the Janapadas: The expansion and development of the janapadas seem to have occurred in three different ways:
Expansion and development of a society formed into a Jana by uniting of a number of generations of a singular kula (family). For example, the Janapadas namely, Matsya, Chedi, Gandhara, Kashi, Kosala, etc.

Janapadas rising out of the union of more than one kula. For example, the Panchala janapada. Who were the five Janas united under the name of Panchalas, is not exactly known According to the renowned historian, Hemchandra Raychaudhuri following were the janas who merged together as Panchalas: Krivi, Turvasha, Keshi, Shrinajaya and Somaka. The more powerful janapadas conquered the less powerful ones.

Federation of States (Ganarajya):
‘Gana’ means the ruling class comprising members of equal social status. Similarly, ‘sangha’ means a state formed by many kulas or janapadas by coming together. By 6th century B.C.E. many sangharajyas had come into existence. There were three main types of the ancient federation of states in India.

• Ganarajya of the members of the same kula. For example, Malava and Shibi.
• Ganarajya created by more than one kulas coming together. For example, Vajji Ganasangha. It included eight kulas. Vajji, Lichchhavi, Dnyatruk and Videha were the important ganas among them.
• More than one ganrajyas coming together to create a sangharajya. For example, Yaudheya- Kshudrak Sangh.

Democratic States: Some of the gana sanghas were divided into regional zones called ‘Khanda’. They functioned through a group of elected individuals, who were found capable. Each of the elected members represented his respective khanda. These elected members were installed with collective authority for the smooth running of the gana sangha.

This was a democratic system. Ganasanghas which functioned in this democratic way existed in Punjab and Sindh at the time of Alexander’s invasion. Each elective representative of respective regional zone was designated as ‘Ganamukhya’. Every gana mukhya was the member of the assembly known as ‘Gana Parishad. The decisions made by the Gana Parishad were implemented by designated functionaries of various cadre. He was known as the ‘Adhyaksha’ or ‘Raja’.

Oligarchic States: In this type the elite class in the society held all the powers of decision-making and administration. Panini and Kautilya mention them as ‘Rajshabdopajivi’ Sangh. Panini includes Vajji, Andhaka, Vrishni, Yaudheya in the Rajashabdopjivi type. Kautilya includes the Vrijji or Vajji, Madrak, Kuru, Panchala, etc. in this type. This type of gana sanghas were more prevalent in the eastern region of Uttar Pradesh and Bihar.

Glossary:

→ Kula – Clan or family.

→ Grania – Settlement.

→  Rajan – Chief of Janapada.

→ Gana – Refers to the ruling class comprising members of equal status.

→  Khanda – Regional zones.

→  Varta – Means trade or commerce.

By going through these Maharashtra State Board 12th Science Chemistry Notes Chapter 11 Alcohols, Phenols and Ethers students can recall all the concepts quickly.

Maharashtra State Board 12th Chemistry Notes Chapter 11 Alcohols, Phenols and Ethers

Introduction, Classification-

Alcohols/Phenols:

• Monohydric alcohols/phenols
• Dihydric alcohols/phenols
• Trihydric alcohols/phenols

Monohydric alcohols:

• Primary alcohol
• Secondary alcohol
• Tertiary alcohol

Ethers:

• Simple ethers R—O—R
• Mixed ethers R—O—R’

Methods of preparation and the reactions of alcohols-

Methods of preparation of phenol-

The reaction of phenol-

Classification and Important Reactions-

(1) Methods of preparation of ethers:

(2) Reactions of ethers:

Anisole-

By going through these Maharashtra State Board Class 11 Political Science Notes Chapter 10 The World Since 1945 – II students can recall all the concepts quickly.

Maharashtra State Board Class 11 Political Science Notes Chapter 10 The World Since 1945 – II

Introduction:

This chapter deals with international relations from 1959 to 1991. We will study the Non-Aligned Movement, efforts at detente, SAARC, the collapse of the Soviet Union, and the role played by Mikhail Gorbachev in the new world order.

Developments (1959 – 1991)

Phase 1959 – 1962 (Shifts in the Cold War) –
In spite of attempts to create goodwill between the two power blocs (such as at Camp David Summit), tensions continued to escalate. In 1961, USSR began erecting the Berlin Wall due to which people couldn’t travel between East and West Berlin. In 1962, the first direct confrontation of the Cold War took place. This was the Cuban Missile Crisis.

Cuba is a small nation off the coast of the USA. It had the support of the USSR. Due to its’ strategic location, then Soviet Premier, Khrushchev, decided to convert it into a Soviet base by placing missiles there. This was a serious, direct threat to the USA which retaliated with a naval blockade of Cuba. There was a real possibility of a nuclear war. But, both the superpowers realized the need to prevent such a situation and USSR withdrew it’s missiles from Cuba.

Non Alignment

A group of Third World countries (i.e., from Asia, Africa, South America), most of whom had recently gained sovereignty from colonial rule, refused to join any Cold War alliances. This laid the foundation for the Non- Aligned Movement. It was formally established at the Belgrade Conference (1961) with 25 members. Some of the founding member leaders were Marshall Tito (Yugoslavia), Jawaharlal Nehru, (India), Gamal Nasser (Egypt), Nkrumah (Ghana), Sukarno (Indonesia), etc.

The concept of Non-alignment is based on two main principles

• independent understanding of the world affairs
• peace approach. Thus it does not mean political passivity or neutrality. In fact, the idea was active participation in world affairs to promote peace and development.

The purpose of the NAM was

• not to ally with any power bloc
• opposition to any military alliance
• freedom to take independent policy decisions with regard to international affairs.

NAM has helped the Third World countries to gain economic and political rights. Today it has 120 members countries and 17 observer countries. It is headed by a Secretary General. The 17th NAM summit was held in Venezuela in September 2016 while 18th summit (2019) will be held in Azerbaijan.

Phase 1962 – 1972 (Foundations Of Detente)

After the Cuban Missile Crisis, both the USA and the USSR made several efforts at reducing bilateral tensions (detente). This included —

• a hot line was set up between main leaders of the two nations.
• signing of agreements such as N.N.P.T., L.T.B.T. to reduce nuclear weapons.
• In 1972 the Moscow Summit between President Nixon (USA) and Brezhnev (USSR).

USA had not recognized the Chinese government since 1949. But in 1972, President Nixon visited China and thus recognized the Communist regime of Mao Zedong.

Phase 1972 – 1979 (Detente)

Some of the initiatives taken by the superpowers to bring about detente included –

• Conference at Paris (1973) to bring the Vietnam crisis to an end.
• Helsinki conference on security in Europe (1975) was attended by 35 nations including USA and USSR. It aimed to reduce the tensions between Eastern and Western European countries.
• The first joint US-Soviet space flight was the Apollo Soyuz Test project (1975)
• The USA held a conference at Camp David in 1978 to resolve the long pending Arab-Israel dispute. The ‘Framework for Peace in the Middle East’ was signed between President Carter (USA), President Sadat (Egypt) and Prime Minister Begin (Israel).

Other Significant developments include in this period.

• Arab – Israel War (1973) and increase in the price of oil all over the world.
• Demand by non-aligned counties for New International Economic Order (NIEO)
• Growing importance of economic issues in international relations and increasing demands put forward by Third World nations.
• North-South world divide i.e. between rich nations of the Northern Hemisphere in Europe and North America and Southern Hemisphere nations of Asia, Africa, South America.
• Period of economic interdependence, signing of “Free Trade” agreements and establishing of ‘trade blocs’ such as NAFTA.

Phase 1979 – 1985 (New Cold War)

Two events that occurred in 1979 changed the course of detente

• Islamic Revolution in Iran under leader Ayatollah Khomeini overthrew the rule of M.R. Shah Pahlavi. The new government withdrew from the CENTO alliance.
• Soviet Union invaded Afghanistan in 1979 and installed Babrak Karmal as the President. The insurgent groups in Afghanistan (mujahideen) fought against this government (1979 – 1989).

New Cold War refers to the end of the period of detente and return of tensions between USA and USSR.

Phase 1985 – 1991 (Gorbachev Era)

There were significant changes in the Soviet policy under Mikhail Gorbachev (President of USSR). He introduced the policies of Glasnost and Perestroika.

His new foreign policy included (i) withdrawal of Soviet troops from Afghanistan, (ii) stopping of the arms race with US and focus on arms control (iii) opening up a dialogue with China.

Gorbachev also tried to reform Soviet domestic politics. The control of Communist Party ended and people were given the right to criticize the government. On 25th December, 1991, Gorbachev resigned and the next day the USSR as a country ceased to exist.

The Commonwealth of Independent States (CIS) came into existence and finally new countries were formed such as Ukraine, Belarus, Georgia, Armenia, etc.

Other changes due to the disintegration of Soviet Union include

• Reunification of Germany in 1990.
• Splitting of Czechoslovakia into Slovakia and Czech Republic
• Splitting of Yugoslavia into Serbia, Bosnia, Croatia, Slovenia, etc.

The disintegration of the USSR signified the end of the Cold War and USA emerged as the only superpower (unipolarity). New organisations like WTO,EU,G-20, SAARC. BRICS started to play a role in world affairs. This is called multi polarity.

By going through these Maharashtra State Board Class 11 Political Science Notes Chapter 9 The World Since 1945 – I students can recall all the concepts quickly.

Maharashtra State Board Class 11 Political Science Notes Chapter 9 The World Since 1945 – I

Introduction

This chapter provides a survey of major world events since the end of the Second World War (1945 – 1959). The focus is on the U.N.O. i.e., its purposes, organs, etc, the Cold War i.e., it’s dimensions and phases and the establishment of military alliances. We will also study about Regionalism.

League Of Nations

The League of Nations was created after the First World War (1914 – 1918) to establish peace and stability in the world. However, it could not succeed in it’s objectives. The Second World War (1939 – 1945) had several consequences that became the foundation of the world order post 1945. Some of these changes are –

1. End of the primacy of Europe – European imperialism and colonialism had led it to enjoy a dominant position in the 19th century and early 20th century. The Second World War had seen the defeat of Germany, Italy and devastation in France and England. USA and USSR emerged as major powers and hence the world ceased to be ‘eurocentric’.

2. Division of Europe – During the Second world War, Soviet forces occupied parts of Eastern Europe e.g., Poland while Western Europe was occupied by UK, France, USA. By the end of the war, Europe was divided into East Europe and West Europe.

3. Role of Ideology – The Bolshevik Revolution in October 1917 established Communism in Russia. Hence, East European countries that were under Soviet influence also adopted communist ideology while West European countries mainly adopted the Capitalist ideology.

4. Establishment of United Nations Organization (UNO) on 24,h October, 1945. It was to replace the League of Nations. The main purpose of the UNO was to maintain international peace and security. It had six main organs viz. General Assembly, Security Council, ECOSOC, Trusteeship Council (suspended operations in 1994), International Court of Justice, Secretariat (headed by a Secretary- General). The UNO has 193 members at present.

5. Rise of Asia – Asia and Africa witnessed many anti-colonial struggles for self-determination, leading to many sovereign nations being created e.g., Indonesia, India, etc.

Cold War

In the Second World War, the allied forces led by USA. USSR and UK had defeated the Axis Powers consisting of Germany, Italy and Japan. The end of the war led to the emergence of USA and USSR as “super powers” with superior military technology. The east-west division of Europe led to tensions between the USA and USSR. The hostile relations between the USA and its’ allies and the USSR and its’ allies along with ideological conflict between them is called the ‘Cold War’ or Bipolarity. The dimensions of the cold war included —

• Political dimension – Areas under U.S. influence included UK, France, Spain, Italy, Netherlands, West Germany, etc. while areas under Soviet influence were Poland, Czechoslovakia, Bulgaria, East Germany, etc.
• Ideological dimension – Allies of the US had democratic governments and adopted capitalist ideology while countries under Soviet influence lacked democracy and followed a socialist ideology.
• Economic dimension – In the capitalist countries, private sector and profit making were significant while in the socialist bloc, public sector and welfare state were considered significant.
• Security dimension – A number of military alliances were created by both groups such as NATO by the USA and Warsaw Pact by the USSR.

Phases Of The Cold War (1945 – 1959)

Phase I (1945 – 1950) .
In this formative phase of the Cold War, the focus was on the ideological, military, political and economic division of Europe (East – West division). NATO was created. In 1947, the first Asian Relations Conference (25 nations) was held in New Delhi.

Phase II (1950 – 1959)

• In 1949, China adopted communism under chairman Mao Zedong and in 1950 it signed a military alliance with USSR.
• The Korean War was the first proxy war of the Cold War. In 1945, Korea was divided along the 38th parallel into North and South Korea. In June 1950, North Korea invaded South Korea. The North was helped by China and USSR while UN sent in armed forces to defend South Korea. The war ended in 1953, restoring the borders.
• Many military alliances were created in Asia such as SEATO (1954), CENTO (1955), etc.
• Warsaw Pact (1955) created by USSR had Albania, Romania, Bulgaria, East Germany, etc. as its members.
• In 1953, Nikita Khrushchev became leader of USSR. He brought in the policy of ‘peaceful co-existence’ between the two blocs of the Cold War.
• Growth of regionalism in Asia and Africa e.g., Bandung Conference (1955) had 24 participating nations of Asia and Africa.
• Camp David Summit (1959) between President Eisenhower (USA) and Khrushchev (USSR) was the first attempt at seeking a dialogue. It is a turning point in the history of the Cold War.

By going through these Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 5 Emerging Modes of Business students can recall all the concepts quickly.

Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 5 Emerging Modes of Business

→ Policy: Definite course of action followed by a business firm, government, etc. to achieve its objectives.

→ Negotiate: To deal or bargain with others as in working out the terms of a contract.

→ Registration: A process of entering the name and other relevant details like e-mail id, card details, etc. with the internet.

→ Repository: A container or place where things are deposited or stored.

→ Infrastructure: The basic facilities like roads, electricity, water, etc., that are required for the smooth running of a business, factory, etc., in particular and economy in general.

→ Marketing: The activities of a business enterprise that are connected with acquiring, maintaining and expanding markets for its products and for ensuring that its product reaches the consumers in time.

→ Recruitment: The process of searching the prospective and capable employees and encouraging them to apply for jobs in the organisation. It aims at attracting potential employees to the organisation to create a large pool for better selection.

→ Hacker: A person who is excellent at computer programming and uses computer systems illegally for private gain.

→ Off shore: Company makes contract with the foreign company in respect of outsourcing services.

→ Onshore: Company makes contract with another company of home country in respect of outsourcing services.

→ Near shore: Company makes contract with a company of neighbouring country in respect of outsourcing services.

E-Business-

Introduction: E-business is an abbreviation of electronic business. In 1997, the term e-business was first used by International Business Machines (IBM). Before that the term e-commerce was in use. E-business implies use of internet to connect people and process. International trade for goods and services started growing rapidly due to use of internet. In brief, e-business, means the use of Web, internet, intranet, extranets or some combination thereof to conduct business. E-business helps to open new door to the customers, brings closer and builds responsive relationship with partners, employees, suppliers, etc., makes new inventions and innovative ways to . add value to existing products, e-business with the help of internet and web support provide opportunities in different areas such as selling, customer relationship, product/service design, geographic expansion, etc. e-business is nothing but business on internet.

Meaning:
The electronic business i.e. e-business is originated from the two terms e-mail and e-commerce. Thus electronic business commonly referred to as ‘e-business’ or ‘an internet business’ may be defined as the application or utilisation of information and communication technologies (ICT) in support of all business activities, e-business involves purchasing and selling on internet processing orders electronically, making online payments via credit cards or debit cards, direct fund transfer handling customer services and co-operating with business partners using with technical or customer support. The term e-commerce and e-business are different. In fact, e-business includes e-commerce.

Scope of e-business:
The scope of e-business is extended to online shopping, online stock, online transactions, e-commerce and use of software. Most of the business are now aware of the advantages of e-business and are now started incorporating e-business in their policies and strategies. It facilitates direct and better communication between the consumers and business houses and makes purchasing easier for large organisations.

The scope of e-business becoming vast because almost all kinds of business functions such as production, finance, marketing, personnel administration, management functions like planning, organising, co-ordinating, controlling etc. are now carried out via computer networks. The different business and payment apps such as Phone Pay. Google Pay, Swiggy, Ola, etc. are used in e-business transactions. The various types of e-business transactions are:

Types of E-business transaction-

1. Business to Business (B2B)
2. Business to Consumer (B2C)
3. Consumer to Business (C2B)
4. Consumer to Consumer (C2C)
5. Business to Administration (B2A)
6. Consumer to Administration (C2A)

1) Business to Business (B2B): Under B2B, one business firm communicates and interacts with other business firms for different varieties and ranges of services. Example is value added services like catering and also providing manpower. It does not involve individuals.

2) Business to Consumer (B2C): Under B2C, business firms sell goods and services to the consumers. Firms use their website for various marketing activities like promotion, information, review, etc. Examples are www.flipkart.com, www.yebhi.com, etc.

3) Consumer to Business (C2B): Under C2B, the consumer posts his request with a set budget online, quote price for specific service or goods to the business. The companies review the
customers’ requirement and finalise the order. For instance, pest control service, door step food delivery, taxi services, etc.

4) Consumer to Consumer (C2C): The transactions such as buying and selling of variety of goods under C2C are between consumer and other consumers. Internet offers lot of scope for this activity. Payment modes for transactions are secured through advanced technology. The website do the job of intermediaries i.e. to match the consumers. Example of such a website is eBay.

5) Business to Administration (B2A): All transactions conducted online between business and public administration come under B2A, e.g. registration of companies, payment of taxes, obtaining various types of licences and permits, etc.

6) Consumer to Administration (C2A): All transactions conducted online between consumers (individuals) and public administration are j included in C2A. e.g. getting passport, aadhaar card, Pan card, licences, etc.

Benefits of E-business-

Internet has become fourth channel for trade. It has many advantages:

• Ease of formation: As compared to traditional business, e-business is relatively easy 5 to start and operate.
• Lower investment requirements: Investment requirements of e-business is very low in comparison to traditional business. It does not require large store and large manpower to conduct business. More contacts and effective communication can do huge business.
• Convenience: E-business of any thing can be done anytime and anywhere. It offers j convenience of 24 x 7 x 365 days a year.
• Speed: All aspects of business transactions such as buying or selling, making payments, etc. j can be done quickly and speedily at the click of mouse.
• Global access: Internet is boundryless. It allows the seller to have access to global market and also offers freedom to the buyer to choose products from any part of the world. For e-business face to face interaction between buyer and seller is not required.
• Movement towards a paperless society: Use of internet has reduced the dependence on paperwork to great extent. Recording and referencing of information has become easy.
• Government support: Government favours and supports e-business. It ensures maximum transparency.
• Easy payment: In e-business transactions, the payment is done by fund transfer, credit card, etc. Such payment can be made anytime, quickly and round the clock.

Limitations of e-business-

• Lack of personal touch: Lack of physical inspection and personal touch affect its sale adversely. The consumer cannot check the quality of product.
• Delivery time: In e-business, delivery of products is considerably delayed in comparison to traditional business. Time lag always discourages consumers to buy products online.
• Security issues: Scam and cheating through online business by the people or hackers cannot be denied. It lacks adequate security and integrity. It also disturbs the entry of potential buyers.
• Government interference: Government interference sometimes puts hurdles on its growth and expansion.
• High risk: E-business involves high risk because of absence of direct contact between the buyer and seller. In case of fraud, it is difficult to take legal action against the wrongdoer.

Online Transaction-

Meaning: Business transactions which are carried out and completed between seller and buyer with the help of internet are called online business transactions. In this, placing an order, selection of goods, execution of order, transfer of funds, etc. are completed via internet by using websites and e-mail addresses of buyer and seller.

Procedure of online Transaction: In online transaction, there are three stages, viz. pre-purchase/sale stage, actual purchase/sale stage and delivery stage.

Online transaction involves the following steps:

1) Registration: Registration is required for online transactions. One who wants to do online shopping is required to login on a website and fill relevant details with the online vendor. The customer’s email id, name, address and other details are saved by the website for future use.

2) Placing an order: The online customer or shopper can select, pick up and drop the items or things in the shopping cart. The shopping cart keeps the systematic and detail record of what items or things have been picked up and dropped in the shopping cart and the price of each. The buyer then needs to make payment.

3) Payments: The payment system, is fully secured. Payment can be made in one of the following ways:

• Cash on Delivery (COD): According to this mode of payment, after receiving physical delivery of goods at the door step, payments for the online goods ordered is effected by cash payment or by debit or credit card.
• Cheque: Under this mode of payment, the vendor collects the cheque from the customer and after realisation of the cheque, delivery of the goods is given to the buyer.
• Net banking transfer: Under this mode, the payment is made by buyer to vendor by transfer of funds through the internet. The buyer transfers the agreed purchase amount to the online vendor’s account. After receiving the amount, the vendor delivers the goods to the buyer.
• Credit or Debit Cards: The credit card or debit card is used by the cardholder for making payment of purchases online. The vendor gets the amount from the buyer through credit or debit Con’d. The amount gets immediately transferred to Vendor’s Bank Account. After the successful transfer of funds, goods are delivered by the vendor to buyer.
• Digital cash: This facility of electronic currency exists only in cyberspace. For making payment of purchases, online digital cash offers the ability to use real currency in an electronic format.

Buying Selling Process: Information relating to buying and selling is exchanged in traditional business and also in online (internet) business. In comparison to traditional, business, online business is more easier. In traditional business, time is required to visit the shop, to negotiate, to convince and the presence of buyer and seller is required for face to face interaction. So, to complete the deal lot of time is wasted. However, in online transactions all information is provided with terms and conditions and it is free from most of the problems as that of traditional business. Hence online transactions are result oriented and more easier than traditional business.

Outsourcing-

Meaning: Outsourcing is a process of an allocation of specific business processes or functions, mostly the non-core, to a specialised agency for certain monetary consideration. Usually, establishment, firms, corporate organisations, hospitals, malls, housing societies etc. outsource their non-core business areas such as security service, sanitation, household pantry, etc.

In outsourcing, the company benefits in two ways, viz. (i) It helps to reduce the company’s own cost and (ii) The company uses expertise of the specialised agencies to perform its business processes in a better way. Nowadays some functions like wedding, anniversary, birthday celebration, etc. are also outsourced to specialised agencies.

Need for Outsourcing:

• Some services require finely tuned skills which organisation cannot provide.
• Non-core business areas are outsourced to concentrate on improvement of quality of their products and services.
• Sometimes an organisation cannot handle all the functions internally.
• Some processes are required to perform once in several years.

Advantages of Outsourcing:

• Overall cost advantages: Outsourcing reduces its own overall cost. It saves cost of training, saves time and efforts on training.
• Stimulates entrepreneurship, employment and expertness: Outsourcing encourages and stimulates entrepreneurship, employment and expertness in the country from where outsourcing is done.
• Low manpower cost: Manpower through j outsourcing is available at much lower cost.
• Access to professional, expert and high quality services: The tasks are outsourced to the vendors who are specialised in their fields. They have deep knowledge, experience, specific equipment and technical expertise. They give better j performance and commit less errors.
• Emphasis on core process rather than the supporting ones: Outsourcing facilitates the organisation to spend more time to strengthen ; their core business processes. The organisations ! can easily focus their attention on improving the quality of their products and services.
• Investment requirements are reduced: When some areas of business are outsourced to specialised agencies, the parent organisation is not required to invest in latest technology, software and infrastructure. Hence investment requirement of the parent organisation is very less.
• Increased efficiency and productivity: Outsourcing increases efficiency and productivity j in the non-core area of an organisation.
• Knowledge sharing: While working in the organisation outsourced partners and employees of parent organisation share their knowledge, experience, technical expertise, etc. with each other.
• This is one of the prime advantages of outsourcing, This in turn develop both the companies and: enhance goodwill in the industry.

Disadvantages of Outsourcing:

• Lack of customer focus: An outsourced vendor may be catering to the expertise needs of several companies at a time. In such cases, he may lack focus and concentration on the parent company’s need or task. As a result, the quality of service given may not remain up to the mark.
• A threat to security and confidentiality: Outsourcing involves a risk of exposing confidential and secret information of the organisation to a third party. So, there is also danger of the misuse of company’s confidential information by the contractors.
• Dissatisfactory services: Some common problems of outsourcing include delayed (stretched) delivery and sub-standard (dissatisfactory) quality.
• Ethical issues: When some functions are outsourced to the foreign company, the unemployment problem of parent company and country gets worse. This is one of the ethical issues related to outsourcing.
• Other disadvantages: When business functions are outsourced, the parent company has to suffer disadvantages like misunderstanding of contracts, lack of communication, poor quality and delayed services.

Different Forms of Outsourcing-

Business Process Outsourcing (BPO):

Meaning: BPO implies outsourcing of peripheral or non-primary business functions of the organisation to an external organisation (service provider) to minimise cost and increase efficiency. It means to give contracts or responsibilities of specific business process to third party e.g. customer care centres of various banks.

Advantages of BPO:

• Productivity improvement: Outsourced business processes are performed by educated or skilled people more efficiently and hence productivity of the organisation improves.
• Optimum utilisation: BPO facilitates the parent organisation to utilise its available scarce resources up to their optimum level possible.
• Reduction in cost: BPO is more important to any organisation as it helps in reducing cost, increasing productivity and revenues of an organisation.
• Improved human resources: Outsourcing helps the parent organisation to get skilled and trained personnel (manpower) at low rates.

Disadvantages of BPO:

• Communication problems: The misunder¬standing and miscommunication between parent company and vendor company may lead to communication gap.
• Different time zones: Sometimes, the parent company and vendor company function in two different time zones. This may create many problems during online meeting, communication, etc.
• Loss of Control: On account of time differences and communication errors, the parent company may sometimes lose control over its project.

Knowledge Process Outsourcing (KPO)-

Meaning: KPO is form of outsourcing in which knowledge related and information related work is outsourced to third party service providers. KPO is sub segment of BPO in which outsource service provider is hired to perform particular business function and to provide expertise around it. In KPO advanced analytical and technical skills and high degree of specialist expertise are required. The processes of specialised and knowledge based are outsourced to KPO which help in value additions.
KPO may be in the same country or at an off shore location.

Advantages:

• Cost reduction: In KPO, cost reduction is possible as parent company gets professional services at a cost effective price.
• Skilled personnel: The company can easily hired skilled employees from KPO service providers.
• Reduction in unemployment: Skilled and high end services are available at lower cost, reduce unemployment and provide benefits to the economy.
• Flexibility: KPO provides flexibility in terms of Human Resource Management (HRM) and Time Management.

Disadvantages:

• Security Problem: Many a time client organisation may have to face security problems because of leakage of secret information by the service providers.
• No assurance of quality work: The character of outsourced workers and the quality of work cannot be assured.
• Time consuming: KPO is time consuming process and cannot provide quick solution to the
  company who need immediate results.
• Complication: Communication gap due to legal, cultural and language barriers may lead to complications.
• Language barrier: Language barrier creates communication problem.

Legal Process Outsourcing (LPO)-

Meaning: LPO is a form of outsourcing in which legal services ranging from drafting legal documents, performing legal research to offering legal advices are provided by law firm for certain consideration in money term. In this, in-house legal departments outsource legal work which can S be done at lesser cost. LPO has gained tremendous i ground in India in recent years. It has been giving | services like document review, legal research, writing, drafting, briefing, etc.

Advantages:

• Cost savings: Considerable cost is saved by outsourcing legal functions to specialised law firm.
• Access to high talent: Outsourcing the | legal work to law form allows the client company | to get high talent and niche expertise that does not j exist in its own company.
• Division of workload: Utilisation of external and in-house talent permits the law firm and parent organisation to divide their liabilities in response to workload and client demands. Firm’s overhead reduces due to flexible staffing.

Disadvantages:

• Problem of authenticity: The client organisation is required to share some important document with legal firms. This creates the problem of authenticity (trustworthy).
• Problem of in-depth knowledge: There may be a problem of detail or thorough knowledge of all relevant laws.
• Communication problem: The cultural and language barriers hinder effective communication between domestic organisation and international team.
• Geographical problem: LPO affects adversely by geographical distance (hurdles) between client organisation and law firms.

By going through these Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 6 Social Responsibilities of Business students can recall all the concepts quickly.

Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 6 Social Responsibilities of Business

→ Social Responsibility – Social Responsibility refers to all such duties and obligations of the business that are directed towards the welfare of society.

→ Legal Pc Legal responsibility refers to all such duties and obligations of the business that are prescribed by law. It may be fulfilled by mere compliance with the law.

→ Trusteeship’ – According to the principle of trusteeship that was propounded by Mahatma Gandhi, “A business must be carried out in trust, legally and morally for the benefit and welfare of the people.”

→ Fringe benefits: A benefit to employees in kind or in service, the cost of which is borne by the employer. They include profit-sharing schemes, bonuses and medical schemes, sick pay, holidays, etc.

→ Job Security: It is an assurance that an employee has about the continuity of gainful employment
for his/her work life.

→ Trade Union: An association of employees who have come together to improve their wages, hours and conditions of employment by means of collective bargaining.

→ ‘Divide and rule’ Policy: The policy of maintaining control over one’s subordinates or opponents by
encouraging dissent between them thereby preventing them from uniting in opposition.

→ Anti-Social Activ: It covers a wide range of unlawful activity that causes harm to an individual, to their community or to their environment.

→ Business Ethics: It is a code of conduct for regulating the activities of business towards society or others.

→ Moral Values: Moral values are the standards of right and wrong which govern an individual’s behaviour and choices.

→ Social Values: Social values are a set of moral principles that provides the general guidelines for social conduct. Values such as fundamental rights, patriotism, respect for human dignity, rationality, sacrifice, equality, democracy, etc. influence our behaviour in many ways.

→ Corporate Social Responsibility (C.S.R.): C.S.R in the integration of socially beneficial programmes and practices into corporation business model and culture. It aims to produce an overall positive impact on society.

→ Dumping: In International trade, the practice of a producer or supplier, usually monopolist, who sells a product at a lower price in a foreign country than in the home market.

→ Insider trading: The managerial personnel as well as top officials have access to the confidential and sensitive information of the company. These persons may misuse such information for their own or other persons’ benefits. The misuse of sensitive information may lead to fraud or rigging of the prices of shares. This is called ‘insider trading’.

→ Warranty: A written guarantee given to a purchaser that the manufacturer, dealer, etc. will make repairs or replace defective parts free of charge for a stated period of time.

→ Resources: Capital fund, tools, machinery, vehicles, power supply, employees, etc., that an enterprise uses to carry out its activities.

→ Public image: The general impression of a business organization gained and held by its own employed personnel or by and large based upon the presentation of its activities and the reputation of its products.

→ Natural calamities: A disaster or misfortune, especially one causing distress or misery produced by nature e.g. cyclones, storms, earthquakes, famine, droughts, etc.

Introduction-

A business organization depends upon society for its continued existence and growth. Different segments of society contribute to the success of a business. The business obtains its input like manpower, money, machines, materials, etc. from its environment. No organization can survive in the absence of an environment. A business organisation depends on society both for procurement of required input and also for disposal of its output. Thus, it becomes important that businesses should do something for society in return. This responsibility of business towards society is called Social Responsibility.

The concept of social responsibility is as old as our civilization. In India, it has been followed since ancient times. Philosophers like Chanakya from India and pre-Christian era philosophers in the West preached and promoted the concept of social responsibility and other ethical principles while doing business.

Concept of Social Responsibility-

Meaning:
Social responsibility is broader than legal responsibility of business. Legal responsibility may be fulfilled by mere compliance with the law but social responsibility is more than that. It is voluntary action on the part of business for the benefit of society. Thus, all the activities of business should be performed in such a manner that they will not harm any part of the society, but help to protect and contribute to the interest of the society.

Definition:
According to Howard D. Bowen, “Social Responsibility is to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society.”

Need for Social Responsibility:

• Concept of Trusteeship: This concept was propounded by Mahatma Gandhi. Wealthy people who are the trustees of trusts must take care of the welfare of the people in general. Businessmen are treated as trustees of society.
• Changing expectations of society: Society’s expectations from business firms have changed from provider of goods and services to contributor towards social welfare.
• Reputation: A company which fulfils social obligations enjoys a good reputation in the society. Business should indulge in creating a favourable image and build its brand. Such a business is held in high esteem which ultimately results in increase in sales, profit, growth, etc.
• Protection of Environment: Business organisation should adopt eco-friendly practices. They should make proper use of country’s natural resources and avoid environmental degradation like pollution of water, depletion of ozone layer, etc.
• Optimum Utilisation of Resources: It is the responsibility of the business organisation to make optimum use of the resources at their disposal. Business firms should avoid wastage of resources.
• Pressure of Trade Union: It is necessary for the business organisations to understand their responsibilities towards the employees and their unions. They should avoid any conflict with them.
• Growth of Consumer Movement: Business organisation must follow fair trade practices and follow consumer oriented policies in increasing competitive market.
• Government Control: Government has enacted various laws to regulate business organisations. All these laws put moral as well legal pressure on business organisations.
• Long term self interest: Fulfilling social responsibility is in long term interest of the business organisation i.e. service to society. It can obtain support from various interest groups.
• Complexities of Social Problems: A progressive and socially aware business concern has moral obligations to help in solving social problems like discrimination at workplace, etc.
• Globalisation: In globalisation, those business organisation that have adopted good practice are influencing the entire world trade.
• Role of Media: Media can raise voice against business malpractices and exploitation of consumers. Hence, business organisation cannot ignore the social responsibilities towards different constituents of society.

Responsibility Towards Different Interest Groups-

Responsibilities Towards Owners:

• Reasonable profit: Business organisation should earn reasonable profit to bring financial stability and growth.
• Exploring business opportunities: Business should be alert to find opportunities to explore, expand, grow and diversify the business. This is very crucial for success.
• Optimum use of capital: Business organisations should use available capital carefully and efficiently by considering business risk. Management should pay attention to the safety of capital.
• Minimum wastages: Business organisations should minimise wastage of time, money, manpower, etc. to maximise profit.
• Efficient Business: Efficient and optimum use of available scarce resources by the business firm result into increase in profitability and productivity which is turn facilitates the business firm to carry on business more efficiently.
• Fair practices on stock exchanges: The business firm should avoid all types of unfair practices in relation to stock exchange such as insider trading, providing wrong and secret information, etc. It may bring unfavourable changes in share prices which lead to loss to common investors.
• Expansion and diversification: To face market competition more comfortably, business enterprises should undertake Research and Development on various projects.
• Periodic information: The business organisations should provide complete and accurate information about the financial position through reports, circulars, etc. to the owners from time to time.
• Effective use of owner’s funds: The business organisation must use owners’ fund in the best manner possible to give them short term as well as long term gains on time.
• Creating Goodwill: The management of the business enterprises should strive hard to develop and maintain good public image, respect and trust in the market.

Responsibility Towards Investors:

1) Proper conduct of meetings: The business organisations are expected to call and organise meetings of investors at regular intervals to provide information of the business. During the period of financial crisis, investors should be taken into confidence. However, in case of failure, management should explain them the factors responsible for such failure.

2) Return on investment: The business organisation are expected to give fair returns to the investors regularly on their investments in the form of interest. The business organisations are also expected to take care of investment, pay fair returns on investments and bring steady appreciation of the business.

3) Handling grievances: A company should handle the investors’ grievances properly by implementing effective methodology. All queries of other issues should be answered satisfactorily.

4) Maintain transparency : The investors supply the funds to satisfy the long term capital and working capital needs of the business. In return, all business organisations are required to maintain high degree of transparency in their operations.

5) Proper disclosure of information: The management of the business firms are expected to provide full and factual information to the investors regularly through reports, circulars, statement of profit, etc. These information of financial performance of the business must be correct. This is because prospective investors take decisions to invest in future on the basis of information so provided.

6) Maintain solvency and prestige: The business organisations are expected to maintain solvency, prestige, goodwill and sound financial position to win confidence of their investors. They should continuously strive to undertake research, innovation and expansion programme.

Responsibilities Towards Employees:

1) Job security: It is responsibility of business enterprises to provide security or guarantee of job to their employees. This will provide them mental peace and encourage them to work with full concentration and dedication. This will also help to raise employees morale and loyalty towards the organisation.

2) Fair remuneration: The business organi¬sations are expected to pay attractive salaries and other incentives like overtime allowance, bonus, etc to all employees. Remuneration should be determined according to the nature of work. The business organisation should also adopt suitable wage plans, giving increment and revision of wages from time to time.

3) Healthy and safety measures: The business enterprises are required to protect health and hygiene of employees by providing good canteen, medical and sanitation facilities, to prevent accidents. To control pollution, proper maintenance of machines and premises should be done regularly. Safety equipment such as safety shoes, hand gloves, masks, goggles, helmets, etc. should be provided to the workers.

4) Good working conditions: The business organisations must provide good working conditions like adequate lighting, ventilation, safe drinking water and take necessary steps to avoid air, sound and water pollution. They should also decide proper working hours with lunch breaks and other facilities.

5) Recognition of Trade Unions: Every employer or company must recognise the employee’s right to join and form trade union. Management should not follow ‘divide and rule’ policy. Management should solve the problems of workers through talks or negotiations with trade union. Both should agree to ban strikes and lockouts to protect their interest.

6) Education and training: The business enterprises are expected to educate the employees through guidance and training according to the nature of job. To keep employees updated with latest developments, introduction training and refresher training should be arranged at regular intervals by their employers. Training is necessary to increase efficiency and confidence of employees.

7) Workers participation in management: The business organisations must encourage the employees to participate in the management through formation of workers committee. Management should also encourage suggestion schemes, profit sharing to raise employees morale and to give them sense of belongingness.

8) Promotion and career opportunities: Every business organisation is expected to give sufficient opportunities of promotion to their talented employees. Organisation should give information regarding qualification, skill and experience needed to get promotion. This will enhance awareness among the employees.

9) Proper grievance procedure: The business organisations are expected to lay down proper grievance procedure to handle employee’s problems, complaints, queries without any delay. Investigation and necessary steps must be taken to settle their grievances.

10) Miscellaneous: The business organisations are expected: (i) to give fair treatment to all employees, (ii) to recognize, appreciate and encourage special skills of employees, (iii) to introduce code of conduct, (iv) to provide enough opportunities for meaningful work and to recognize goals, (v) to protect religious, social political rights of employees and (vi) allowing formation of informal groups.

Responsibilities Towards Consumers:

1) Good quality products: It is the respon¬sibility of business organisation to produce better quality products. For this purpose, every business unit should have quality control department to reject inferior and substandard products. In this respect, ISO is considered as the latest tool towards quality control. This ensures customer loyalty to the products.

2) Fair prices ; The business organisations must charge fair and reasonable prices for their products. Maximum Retail Price (M.R.P) inclusive of all taxes should be printed on all packed products. The customers should not be cheated by charging high prices.

3) Customer’s safety: The business organi¬sations should not sell harmful (unsafe) goods or goods that make adverse effect on the life and health of the customers.

4) Honest advertising: Advertisement conveys information of products, their facts, features, advantages, side effects, uses, etc. The business organisations must see that their advertisements are honest and do not mislead the consumers. It should not indulge in false, misleading and vulgar advertisement.

5) After sales service: The business organisations are expected to provide efficient and effective after sales service to establish good relation with the customers.

6) Research and Development: The business organisations are expected to conduct research and development to improve quality of goods and to reduce the total cost of production. They should apply for quality standards like BIS or AGMARK on their products.

7) Regular supply: The business organisation must supply goods and services to the consumers regularly. The business firms should not create artificial shortage through hoarding and black marketing.

8) Attend complaints: The business firms must attend consumers’ complaints without delay through implementation of effective grievances redressal system.

9) Training: The business firms should arrange training for their customers either free of charge or by charging nominal fees.

10) Avoid customer exploitation: The business organisation should avoid adoption of unfair trade practices and monopolistic competition to protect the interest of the consumers.

Responsibilities Towards Government:

• Timely payment of taxes: The business organisation are expected to pay various taxes such as sales tax, income tax, wealth tax, etc. levied by the government from time to time. This helps the government to take up various development projects.
• Observing rules and regulations: The business organisations are expected to comply with the various laws and regulations enacted by the government. They should observe the laws in relation to obtaining license, operation of business, price determination and production, etc. and conduct business in lawful manner.
• Earning foreign exchange: The business organisation carrying on business on large scale are expected to export their products to foreign countries to earn foreign exchange. The government needs foreign exchange to import valuables and important products.
• Economic Development: The business organisation Eire expected to give necessary co-operation to the government in balanced and rapid economic development of the country.
• Implementing socio-economic policies: The business organisation are expected to provide required co-operation and help to the government in implementation of various socio-economic programmes and policies.
• Suggestions to government: The business organisations should give suggestions to the government before framing important policies such as Industrial Policy, Import-Export Policy, Licensing Policy, etc.
• No favours: The business organisations should not give bribe or influence any government officials to get any favour for doing their work.
• Contributing to government treasury: The business organisation must give financial help to the government during emergency and occurrence of natural calamities such as earthquakes, floods, cyclones, etc.

Responsibilities Towards Community/ Society/Public in General:

• Protection of environment: In recent years, pollution has become the major problem. Industries, chemical plants, cement plants, etc. create air and water pollution. The business firms must take all possible measures to minimise or avoid pollution.
• Better and maximum use of resources: The business organisations are expected to make proper, efficient and optimum use of available scarce resources like water, fuel, land, etc.
• Reservation for weaker section: The business organisations are expected to reserve certain positions in their organisation for financially weaker sections of the society. The poor people also expect financial and other help from the business firms which must be provided regularly.
• Development of backward regions:The society expects that business organisations start their industries in backward areas to create employment opportunities, increase purchasing power among people and facilitate development of backward regions.
• Protest against anti-social activities:The business organisations should not indulge in anti¬social activities which will adversely affect the society. They should not provide any financial help to support anti-social activities. Anti-social activities such as smuggling, association with underworld people, bribing government officials, etc. should be avoided by the business organisations.
• Financial assistance: The business organi¬sations are expected to provide financial assistance and donations to the society for various social activities such as eradication of poverty and illiteracy, arranging anti-drug campaigns, anti noise pollution campaigns, etc.
• Prevent congestions: The business organi¬sations should avoid crowding of industries in cities by shifting and establishing industries in different industrial zones or location. This will minimise adverse effect on residential areas.
• Employment generation: The business organisations should generate large employment opportunities for all sections of the society through expansion and diversification programmes. This will reduce and help to solve the burning problem of unemployment, poverty, etc.

Social Responsibility towards Protection of Environment-

Business organisations are under obligation to protect and promote environment. For manufacturing goods and services business enterprises use all types of resources from the nature. Working of business organisations create imbalance in original state of nature. The development is responsible for its degradation. It is the responsibility of every business organisation to protect environment and not to create imbalance in nature. The diagram showing how business organisations influence environment is given below:

Rapid industrialisation results in environmental pollution through generation of waste and loss of bio-diversity and releasing genetically modified organisms and toxics. Through the use of natural resources the business organisation degrade the bio-physical environment.

Effect of Business on Environment:

• Air pollution: Air pollution is created by release of different types of harmful gases into the atmosphere, smokes and emissions of toxic fumes from burning of coal and vehicles.
• Water pollution: Harmful chemical fertilizers, pesticides, industrial waste, distilleries waste, e-waste, etc. when mixed with water, create water pollution.
• Sound pollution: Increase in number of industries, transportation, machinery, aeroplanes, etc. create unbearable sound pollution.
• Electronic Garbage: Wastage created from mobile, TV sets, laptops, etc. Eire not properly destroyed by many industries. Various products like lead, cadmium, chromium are called electronic garbage.

Waste prevention technique: The waste preventive techniques are summarised and called as 4 R’s i.e. Reduction, Reuse, Recycling and Recovery.

• Reduction: This preventive technique suggests that wherever possible wastage of resources should be reduced.
• Reuse: This preventive technique states that if waste is produced, wasted materials or by¬products should be reused if it is practicable and possible.
• Recycle: This preventive technique gives option that wastage that cannot be reduced or reused should be recycled.
• Recovery: This preventive technique suggests that recover energy or materials from the . waste which cannot be reduced, reused or recycled.

Business Ethics-

Concept:
The word ‘Ethic’ is originated from Greek word ‘Ethos’ which implies ‘human character and conduct’. Accordingly, the term ethics refers to the set of rules and principles that every organisation should adopt. In other words, business ethics refers to the code of conduct that business
organisations should follow while doing their business. Ethic is a branch of social science which deals with the concepts, such as right and wrong, just and unjust, proper and improper, legal and illegal, fair and unfair, good and bad, etc. in respect to human behaviour and actions.

Definitions:
According to Wheelers, “Business Ethics is an art of science of maintaining harmonious relationship with society, its various groups and institution as well as recognising the moral responsibility for right or wrong conduct of business.”

Features of Business Ethics:

• Code of conduct: Business ethics is a code of conduct which businessmen must follow while doing the business. It explains what to do and what not to do for the well-being of the society.
• Based on moral and social values: Business ethics are based on the moral and social principles which includes self control, consumer protection and welfare, services to society, fair treatment to all, etc.
• Gives protection to social groups: Business ethics provides protection to different social groups like consumers, small businessmen, employees, shareholders, creditors, government, etc.
• Provides basic framework: Business ethics provides social, economic, cultural, legal and other limits to the organisations in which they must conduct their business activities.
• Voluntary: The businessmen must accept the business ethics on their own voluntarily. Its acceptance cannot be enforced by law.
• Requires education and guidance: The businessmen should be properly educated, motivated and given guidance before implementing business ethics.
• Relative term: Business ethics differs from one business to another, from one country to another. What is considered good in one country may not be accepted in other country.
• New concept: Business ethics is a newest concept developed in recent years. It is strictly followed only in advanced countries and not in underdeveloped and developing countries.

Moral and Social Values:

Values such as fundamental rights, patriotism, human dignity, sacrifice, equality, democracy, etc. give a direction to grow and integrate our personality. Social values are considered as an important part of the culture of the society. Social values of the business form the base for social responsibilities. They provide general guidelines for social conduct. Social values are usually based on tradition, co-operation, ego, honesty, integrity, hard work, fairness, forgiveness, etc. Moral values such as not to indulge in unfair trade practices, to be honest and truthful about quality, etc. should be followed while doing the business.
Society has created rules regarding type of activities business should do and should not do. These are called business ethics.

The code of business ethics:

Do’s:

• The business should pay taxes and other charges regularly.
• They must pay fair wages, allowances and other monetary incentives to workers.
• They should ensure safety and security of their product.
• The business firms should supply quality goods as per expectations of consumers at reasonable prices.
• The business should give due respect and honour basic to rights of consumers.
• The business must use a part of profit for the well-being of the society.

Don’ts:

• The business organisation should not destroy healthy competition.
• The businessmen should not cheat or exploit customers.
• They should not create monopoly.
• They should not resort to hoardings or black marketing.
• They should not create secret or unreasonable profit.

Avoid:

• The businessmen or organisations should avoid unfair competition.
• The businessmen should avoid concentration of economic power.
• They should not make agreement with fellow businessmen for controlling production, distribution, pricing, etc.

Accept:

• The businessmen should accept principle of “service first and profit next”.
• They should accept the truth in business that “Customer is the king”.
• They should make business just, fair, human, efficient and dynamic.

Corporate Social Responsibility-

Meaning:
Corporate Social Responsibility (CSR) makes a company socially responsible and accountable. It aims to contribute to societal goals or support volunteering or ethically-oriented practices.
The Ministry of Corporate Affairs in India has notified which makes mandatory for certain companies to comply with the provisions of CSR.

Definition:
According to UNIDO (United Nations Industrial Development Organisation), “Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. ”

Scope of CSR:

(A) Applicability of CSR:

• The companies having net worth of ₹ 1500 crore or more or turnover of ₹ 1000 crore or more or net profit of ₹ 15 crore or more during any financial year shall be required to constitute a corporate social responsibility committee with effect from 1st April, 2014.
• These companies must spend, every financial year, at least 2% of the average net profit of the company made during the three immediately preceding financial years, in pursuance of its CSR policy.

(B) CSR committee:

• The CSR committee consist of four directors who shall meet at least twice in a year to discuss and review CSR activities and policy.
• The committee will recommend CSR activities, prepare budget, monitor progress, etc.

(C) CSR activities:

• Eradicating hunger and poverty
• Health care & sanitation
• Education & employment enhancing vocational skills, livelihood enhancement projects
• Reducing child mortality
• Environmental sustainability and ecological balance & conservation of natural resources
• Rural development & slum area development projects.

(D) Allocation of funds:
The company would spend not less than 2 % of average net profits of the company made during three immediately proceeding financial years.

(E) Non-compliance of CSR activities:
Penalties for non-complying the duty of CSR would attract a fine of not less than ₹ 50,000 which may extend to ₹ 25,00 000 and every officer of the company in default shall be punishable with imprisonment up to 3 years or with fine which shall not be less than ₹ 50,000 which may extend to ₹ 5,00,000 or both.

By going through these Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 7 Consumer Protection students can recall all the concepts quickly.

Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 7 Consumer Protection

→ Lobby: A group of persons who try to influence legislators to vote in a certain way.

→ Adulterated product: Product that becomes impure after the addition of inferior materials. Consumption of such products may affect health adversely.

→ Spurious goods: Goods resembling real or original but are not genuine or real. Consumption of such goods may lead to harmful effects on health.

→ Redressal forum: Court or tribunal having the power to decide or give justice to the aggrieved party to the consumer disputes.

→ Compensation: Something, especially money given by the person responsible for a fault to the person to whom damage or loss is caused.

→ Misleading advertising: Advertising of the products or services which misleads and deceives the people. Unscrupulous traders or producers deceive the consumers through misleading advertising.

→ Rational decision: Decision in accordance with the principle of logic or reason.

→ Amendment: An alteration of or addition made to any Act after it is passed by the legislative body say Parliament of India.

→ Consumer disputes: Disputes between the consumer and the trader in respect to the product purchased and related issues.

→ Jurisdiction: The official power to make legal decisions and judgements about something or the . limits within which a legal authority can exercise its power.

→ Appellate: A court of law or higher court where decisions given by the lower court is challenged by the aggrieved party; an application made for this purpose is termed as “appeal”.

→ Exploitation: Taking advantage of especially a person for one’s own benefit or profit.

→ guasi-judicial: Having a partly judicial character by possession of the right to hold hearings on and conduct investigations into dispute claims and alleged violation of rules and regulations and to make decisions in the general manner of courts.

→ Public affairs: Public relations efforts of a firm that are associated with government agencies, mass media and public interest and pressure groups.

Introduction-

The survival and success of a business organisation depends upon the customers. They are the backbone of economy of any country as whole economy revolves around them. All the manufacturing and production activities are carried out in anticipation of demand and also to give maximum satisfaction to the consumers. In today’s competitive market, the consumer is regarded as the ‘King of Market’. Even today the exploitation of the consumers by the traders and manufacturers in the form of adulteration, false weighing and measurement, price rise, artificial scarcity, black marketing, misleading advertisement cannot be denied. Therefore, every consumer must have adequate knowledge of product and services in respect of their quality, quantity, price, standard, etc. to choose right product or service.

Meaning and Definition of Consumer-

Meaning: The word ‘consumer’ is derived from the Latin word ‘consumere’ which means ‘to eat or drink’. Accordingly, consumer is one who consumes or uses any product or service available to him either from nature or through market. For instance, if a person purchases bananas to eat, or uses railway services he is called consumer. If he purchases 10 dozens of bananas to sell them at higher prices, then he is called seller and not consumer.

Need and Importance of Consumer Protection-

• Need of participation of consumers: Many a time it is noticed that most of the companies | take decisions which affect the consumers’ interest without consulting them.
• Lack of information: On account of vast distance between manufacturer and consumer, it is not easy to establish direct contact between them. It is also very difficult to get correct and reliable information about the products they want to buy. In both the cases consumers’ exploitation cannot be denied.
• Ignorance of consumers: In India, most of the consumers are ignorant about their rights, market conditions, price levels, product details, etc. Many a time consumers are being cheated.
• Unorganised consumers: The consumers are widespread, scattered and unorganised. They are not united. Hence, they are easily exploited by the producers and sellers. An individual or a single consumer cannot fight against united and powerful manufacturers or sellers.
• Spurious Goods: Some traders imitiate (duplicate) the popular brand names and cheat the consumers by supplying them duplicate or defective goods. Consumers find it difficult to recognise genuine and duplicate products. It is necessary to protect them by ensuring compliances and safety standards.
• Misleading Advertisement: Most of the traders make false claims and exaggerate the facts but do not disclose the drawbacks of the products in the advertisements. Most of the consumers are misled by the advertisement and do not know the real and true quality of the products.
• Malpractices of businessmen: To earn and make more money many unscrupulous traders adopt fraudulent, unethical and monopolistic trade practices. This leads to exploitation of consumers. Measures must be taken to protect the consumers.
• Trusteeship: According to Gandhian philosophy, businessmen are the trustees of the society’s wealth. So businessmen should not misuse the society’s wealth. They should use the. wealth of the society for the benefits of the people.

Rights of Consumer-

The President of USA, J. E Kennedy declared certain rights of the consumers on 15th March, 1962, therefore it is observed as ‘World Consumer Rights Day.’

The rights of consumer are explained as follows:

1) Right to Safety: The right to safety means the right to be protected against the products, production processes and service which are hazardous to consumer’s life, property or health.

2) Right to Information: According to this right, consumers should get adequate information about all aspects of goods and services like price, name of manufacturer, contents used, batch number, date of manufacture, expiry date, safety instructions, etc. It helps consumers to select right products or services.

3) Right to Choose: As per this right, consumer should be given full liberty to select an article as per his requirements, liking, financial ability, etc. According to this right, seller cannot force the buyer to purchase a particular product or services.

4) Right to be Heard: This right states that the consumers have right to lodge their complaint .to consumer forum. Consumers can also give suggestions to manufacturers or traders on certain matter like quality, quantity, price, packaging, etc. The consumers can also file online complaints through portal or mobile applications.

5) Right to Consumer Education: This right has made it clear that every consumer has right to know about consumer rights and solutions to their problems. This is to create awareness among the consumers to protect themselves from the exploitation of unscrupulous businessmen.

6) Right to Represent: The Consumer Protection Act, 2019 has given am opportunity to individual consumers and consumer groups to be represented by a person to represent consumers’ complaint before consumer forum.

7) Right to Redress: According to this right, every consumer has the right to receive a fair amount of compensation or get the article replaced or repaired free of cost for defective products and for poor services received from the manufacturer or dealer.

8) Right to Healthy Environment: According to this right all consumers have right to clean and healthy environment in present as well as in future. As per this right, consumer can demand actions against business organisations causing pollution. Businessmen and companies must take suitable measures to control pollution.

9) Right to protect against Unfair Business Practices: As per this right, the consumers have right to raise voice against unfair business practices adopted by any trader, e.g. using faulty weights and measures, hoarding products to create artificial scarcity, black marketing, profiteering, adulteration, charging high prices, selling goods after expiry dates, etc.

10) Right against Spurious Goods: This right is against the traders who sells goods which are health hazards, spurious (false or not genuine) and pose danger to life.

Responsibilities of Consumer:

• Consumer should use his rights: The consumers must be aware that they have many rights in respect to the products or services they have purchased. They can use their right if they are cheated or misled by advertisement or get faulty or defective articles.
• Cautious consumer: The consumer should be alert and cautious while dealing with trader. Before buying any product or service, he should make detail enquiry about the quality, quantity, utility, price, date of expiry, user manual, etc.
• Filing of complaint: If the consumer has any complaint about the products or services he has purchased, he should immediately approach the officer concerned and lodge complaint about the same. If consumers ignore the dishonest acts of the traders, it indirectly amounts to encourage unethical business practices.
• Quality conscious: The consumers should always buy quality products. They should never compromise on the quality of goods. They should always ensure about the quality symbols like ISI, AGMARK, Hallmark, etc. They indicate that the quality of goods is good.
• Beware from exaggerated advertisement: Many a time seller exaggerates the facts in their advertisements. It is the responsibility of the consumers to find out the truth of advertisement and then buy the products or services.
• Demand of Invoice and Guarantee, Warranty Card: After purchasing the products or services, consumers should always ask for or demand guarantee card, cash memo from the i seller or dealer. They should preserve these for future claim in case of any defects, inferior quality, etc.
• Pre-planned buying: The consumers should make proper planning before buying any product. He should make an estimate of products, j budget to spend, etc. He should also decide in advance from which place the buyer to buy the product. He should not buy any product in a hurry or without thought.
• Organised efforts: It is the responsibility j of the consumer to shoulder the responsibility to promote and protect the interest of his own and other consumers. He should join the group or organisation which is working for the welfare of j consumers.

Ways and Means of Consumer Protection-

1) Lok Adalat: Lok Adalat also referred as People’s Court is established by the government to settle disputes by compromise. The aggrieved party can directly lodge the complaint or grievances. Issues are discussed and judgement is given immediately. The order passed thereby is given statutory recognition. Railways, Insurance | companies, banks, etc. organise Lok Adalat regularly.

2) Public Interest Litigation (Janhit Yachika): Under this legal facility, any person can approach court of law in the interest of the public j or society and ask for justice. Its main objective is ) to provide legal remedy to unrepresented groups j of society. It can be directly filed in the High Court as well as in Supreme Court in some cases.

3) Redressal Forum: Under the Consumer Protection Act, 2019, consumer dispute redressal agencies have been established by the Government to protect the rights of consumers and to offer simple, speedy and inexpensive redressal for consumer complaints. These three tier quasi judicial consumer disputes redressal agencies are set up at District, State and National level.

4) Awareness Programmes: The Government of India has adopted various publicity measures such as use of journals, brochures, posters, observation of World (International) Consumer Rights Day on 15th March and National Consumer Day on 24th December every year. Various consumer related programmes are also telecast on various TV channels and social media and broadcasted on All India Radio and FM channels.

5) Consumer Organisations: Many consumer organisations such as Consumer Guidance Society of India, Grahak Panchayat, Grahak Shakti, Consumers’ Association, etc., are active throughout India to fight for consumers’ rights through protest, campaigning, lobbying, etc. It is now required to strengthen consumer movement throughout the country.

6) Consumer Welfare Fund (CWF): This fund is created by the Department of Consumer Affairs for providing financial help to voluntary consumer movement specially in rural areas. This financial assistance is used for consumer education, complaint handling, counselling, guidance, etc.

7) Legislative measures: The Government of India has passed several Acts such as Sales of Goods, Act, 1930; Essential Commodities Act, 1955; Standards of Weights and Measures Act, 1956; Bureau of Indian Standards Act, 1969; Food Safety and Standard Act, 2006 and National Food Security Act, 2013, etc. to protect the interest of consumers.

However, these laws could not protect the consumers as such and therefore the Government of India has passed a powerful act known as Consumer Protection Act, 2019 to protect the interest of consumers.

Consumer Protection Act, 2019-

The Consumer Protection Act was passed by the Parliament on 24th December, 1986 to provide for expeditious and inexpensive settlement of consumer disputes. In 2019, the Ministry of Law and Justice has proposed new act as ‘Consumer Protection Act, 2019’ which got the President’s assent on 9th August 2019. This Act, provided for the establishment of three-tier quasi-judicial consumer dispute redressed agencies known as District Commission, State Commission and National Commission at District Level, State Level and National Level respectively. National Commission also acts as an Apex body at the central level. This act provides and covers all the complaints in respect to goods, services and unfair business practices.

1) District Commission: A consumer dispute redressal commission called the District Commi¬ssion is established by the State Government in each district to entertain complaints where the value of the goods or services paid as consideration does not exceed ₹ 1 crore. Each district commission shall consist of the President who is sitting or retired as a district Judge and who is not less than 35 years. The members will hold office for a term of 5 years or up to the age of 65 years whichever is earlier. Territorial jurisdiction of district commission is entire district in which it is established. Any person not satisfied with the order of District Commission can appeal against such order to the State Commission within a period of 45 days from the date of such order.

2) State Commission: A Consumer Dispute Redressal Commission called the State Commission is established by the State Government in each state to entertain complaints where the value of the goods or services paid as consideration, exceeds ₹ 1 crore but does not exceed ₹10 crore. Each State Commission shall consist of President who is sitting or retired Judge of High Court and not less than 4 members. The members will hold office for a term of 5 years or up to the age of 67 years whichever is earlier. It can entertain original cases as well as appeals against the order of District Commission which are within the territorial jurisdiction of the entire state in which it is established. Any person not satisfied with the order of State Commission can appeal against such order to the National Commission within a period of 30 days from the date of such order.

3) National Commission: A Consumer Dispute Redressal Commission at the national level established by the Central Government by notification is referred to as National Commission. It entertains complaints where the value of the goods or services paid as consideration exceeds ₹ 10 crore. National Commission consists of President who is sitting or retired as judge of the Supreme Court and not less than 4 members. The members will hold office for a term of 5 years or up to the age prescribed whichever is earlier. It entertains original cases and appeals against the order of State Commission which are within the territorial jurisdiction of the entire nation. Any person not satisfied with the order passed by the National Commission may appeal against such order to the Supreme Court within a period of 30 days from the date of such order.

Role of Consumer Organisations and NGOs-

Non-Government Organisations (NGOs) are non-profit and non-political organisation which aim at promoting the welfare of the people.
The Role of consumer organisation and NGOs in Consumer Protection and Education:

• To arrange and organise campaigns and different programmes on the topics of consumers to create social awareness.
• To arrange training programmes for consumers to make them aware of their rights and different modes of redressal of their complaints and grievances.
• To publish journals, periodicals to make consumers understand about various consumer related development.
• To provide free legal advice to the members on the issues of consumer’s interest and help them to put up grievances before appropriate authority.
• To communicate with the businessmen, Chambers of Commerce and Industry for ensuring a better deal for consumers.
• To file Janahit Yachika (Public interest litigation) on vital consumers issues like ban on sale of products injurious to public health.

The following are the examples of NGOs: Consumer Guidance Society of India (CGSI), Voluntary Organisation in Interest of Consumer Education (VOICE), Consumer Education and Research Centre (CERC), Consumers Association of India (CAI), Mumbai Grahak Panchayat (MGP), Grahak Shakti (GS).

By going through these Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 8 Marketing students can recall all the concepts quickly.

Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 8 Marketing

→ Marketing: An action or business of promoting and selling products including market research and advertising.

→ Consumer: Consumer is a person or group of persons that are final user of goods or services, i.e., end-user.

→ Customer: An individual or organisation who acquires goods or services from a business organisation for a price.

→ Standard of living: Level of economic welfare or level of material well-being of an individual or household. It is usually determined by quantities of the goods and services consumed. It is also referred to a level of wealth, comfort, material goods and necessities available to people to satisfy their wants.

→ Market research: The study of the consumers’ needs and preferences. It is branch of research for business management studying markets and economic opportunities or promotion and distribution of sales.

→ Consideration: Anything given or promised by one party in exchange for the promise or undertaking of another.

→ Misrepresentation: False or incorrect statement made by one party to other with the intention to deceive the other or to make unlawful gain.

→ Image: The character or reputation of a person or thing as generally received.

→ Brand: A name or symbol, number, letter or combination of these given to a product by which the product and its manufacturer are identified.

→ Advertising: An impersonal sales efforts aimed at inducing people to buy the product. It gives information about the products with a view to creating and maintaining demand for the same.

→ Promotion: In marketing, the term ‘promotion’ implies the process of giving information and thereby inducing or persuading prospective customers to buy products or services.

→ Finance (Financing): In marketing ‘financing’ implies, the provision and management of money and credit required to get goods from producer to the consumer or industrial user. It also involves supplying money and credit necessary to meet the expenses of getting goods or products in the hands of consumers.

→ Media: Media is a channel which connects government, business and other organisations with the people at large in society. Radio, television, newspapers, etc. are the examples of media.

→ Environment: The factors which affect surroundings of anything including human beings as well as organisations.

→ Strategies: A plan or method for achieving a business goal, a general method or policy for achieving specific objectives of the business.

→ Production: The total series of stages by which material is changed from one form into another by utilisation of labour, tools and machinery according to plan.

→ Substitutes: Two or more goods or services are said to be substitutes if a rise in the price of one causes an increase in demand for the other, e.g., tea would be a substitute for coffee.

→ Merger: The amalgamation or combination of two or more businesses.

→ After sales service: A continuing service of maintenance, repair, supply of information on possible uses, etc. provided to the buyers of a product by the seller or manufacturer.

→ Industrialisation: Increasing the number of different types of industries in an economy; to develop industry on an extensive scale in a country, region, etc.

→ Layout: The arrangement of written material, photography or other artwork in an advertisement or page in a book, newspaper, etc.

→ Research and development: TWo closely related activities in modern industry by which new products and processes are being continually developed especially by engineers and designers.

Introduction-

The important objective of all business organisations is to fulfil the needs and wants of the society. This is possible only through marketing of goods and services. Marketing is therefore considered as centre point of all business activities. Production of goods and services become meaningless if business organisations are not able to market their goods and services effectively. Thus, nowadays marketing is indispensable feature of the business. Marketing now becomes part and parcel of modern days of life. Individual as well as social needs are satisfied only through marketing.

Marketing helps to improve standard of living and to gain loyal customers by providing wide variety of goods and services. It also helps to generate and increase employment opportunities. Marketing is pervasive in nature and it influences our daily life. Marketing is a science and an art competitive, growing and cut throat competition inspires organisations to know marketing as a discipline of management.

Meaning and Definition of Marketing-

Marketing is considered as a main function of modern management. Marketing is a social process: through which need (desire) is created, offered and exchange via products and services. Marketing is a wider concept which includes selling and other functions. Marketing and selling though interchangeably used and seem to be similar concept, ‘Marketing’ involves a process of satisfying consumer needs. It includes all those activities which effect transfer of ownership and possession of goods and services for physical distribution, Satisfaction of consumer is the centre point of marketing concept. It is consumer oriented. In brief, marketing is the activity, set of institutions and processes for creating, communicating, handing over and exchanging offerings that have value for the consumers, clients, partners and society at large, it is an indirect activity and integrated process of identification, assessment and satisfaction of human wants.

American Marketing Association, defines Marketing as “the activity, set of institutions, and processesfor creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”

Concept of Market-

The word ‘Market’ has originated from the Latin word ‘mercatus’. It means ‘to trade’, to trade merchandise’ or ‘a place where business is being carried out’. In brief, market is a place where two or more parties called buyer, seller and intermediary are involved in the buying and selling of goods and services, with the exchange of money called price. In the modern days, buyers and sellers can conduct trade by telephone, internet, mail, social media platforms, etc.

The different concepts associated with the term market are explained briefly as follows:

1) Place concept of market: In the place concept of market emphasis is given on the place where transaction of trading (i.e buying and selling) of goods and services is done in the exchange of money or money’s worth. In ancient days, place played a significant role in defining the term market. But due to development of information technology the meaning of the term market has widened to great extent.

2) Commodity concept of market: In this concept of market, buying and selling of goods and services are given more importance. In this process, commodity/parties to the transaction, viz. buyer and seller play an important role.

3) Exchange concept of market: This concept of market gives more stress on the exchange of goods or services between buyer and seller. It further states that there should be free or voluntary consent and mutual trust. During the exchange neither any fraud nor misrepresentation should be committed by either party. Similarly coercion or undue influence should not be applied during the exchange.

4) Area concept of market: This concept ot market gives stress on free association between buyer and seller to determine (fix) the price of goods for its trading. According to this concept, buyer and seller can fix the price by taking help of modern communication means and exchange goods or service without meeting each other personally.

5) Demand or Customer concept of market: This concept of market states that customer is the king of the market and market should be studied from the angle of demand or customer. It is further stated that the aggregate (total) demand of potential buyers for the products is considered as market.

6) Space or Digital concept of market: On account of advent of information technology, new concept of market, i.e. space or digital concept comes into existence. Now sophisticated e-commerce portals and mobile applications, internet, computer, etc. have made trading of goods and services easy and convenient for buyers and sellers.

The use of information technology has made it easier for customers to make direct contact with sellers, know about the features, v price, quality, terms and conditions, etc. of any product or service across the globe. Accordingly, the market that uses information technology for trading of the products or services is called digital market. It facilitates communication of quality, features, price and terms of exchange among them.

Types of Market-

The chart showing different types of market is as follow:

The different types of markets are explained as follows:

1) On the basis of Area Covered:

• Local Market: Market which is established in the local geographical area of a region within which goods and services are bought and sold is called local market, e.g. purchase of goods from nearest shop.
• National Market: Market which is established within a country with which goods and services are bought and sold is called national market, e.g. purchase of clothes from Ahmedabad by a customer residing in Kochi.
• International Market: The market where the goods and services produced in one country are sold in many other countries is called international market, e.g. import of advanced technology from U.S.A. by India.

2) On the basis of time:

• Very Short Period Market: The market which has its existence for very short period of time is called very short period market. This market has existence for few hours, e.g. market for perishable goods such as fish, vegetables, fruits, etc.
• Short Period Market: The market which is organised and continued for short period is called short period market, e.g. a weekly market, market during festival, fairs, etc. They deal in semi- durable and perishable goods.
• Long Period Market: The market which is organised and continued for long period of time is called long period market, e.g. market for durable commodities.

3) On the basis of Volume of Transaction:

• Wholesale Market: The market in which goods and services are bought and sold in large quantities at cheaper rates is called wholesale market. In this market, goods are sold to retailers in moderate quantities who then sell them to ultimate consumers in very small quantities, e.g. wholesale market for yarn.
• Retail Market: The market in which goods are directly sold by retailers to ultimate consumers in very small quantity is called retail market, e.g. grocery shop located in residential area.

4) On the basis of Importance:

• Primary market: The market where primary products are bought and sold is called primary market, e.g. grain market, fruit market, etc.
• Secondary market: The market where semi-processed and semi-manufactured goods are traded is called secondary market, e.g. iron-ore market.
• Terminal market: The market where finished goods are traded to ultimate consumers is called terminal market, e.g. industrial goods market.

5) On the basis of Nature of Goods:

• Commodity Market: The market where goods, materials or produce, viz. consumer goods and industrial goods are sold is called commodity market, e.g. consumer goods market.
• Capital Market: The market where long term funds are borrowed and given is called capital market, e.g. new issue market.

6) On the basis of Regulation:

• Regulated Market: The market which is governed, regulated and controlled by the statutory or legal provisions of the country is called regulated market, e.g. Stock Exchanges, Foreign Exchanges, etc.
• Unregulated or Free Market: The market which is not regulated or controlled by any specific act of parliament but is operated as per forces of demand and supply is called unregulated or free market, e.g. market for different products or services.

(7) On the basis of Competition:

• Perfect Market: The market where large number of buyers and large number of sellers buy and sell homogeneous product at a prevailing single price is called perfect market. Neither single buyer nor single seller can influence the price. They have perfect knowledge of market condition.
• Imperfect competition : A market which has certain features of imperfection such as single seller, imperfect knowledge of market conditions on the part of buyers and sellers, failure to make adjustment in demand and supply, etc. is called imperfect market, e.g. monopoly market.

Imperfect market is further classified as:

• Monopoly : A market structure which is characterised by a single seller selling unique product which has no close substitute is called monopoly market. Monopoly controls the entire supply in the market. He the price maker.
• Duopoly : A market situation in which two sellers who either sell a homogeneous product or differentiated product is called duopoly market. Sellers enjoy a monopoly in the product produced and sold by them.
• Oligopoly : A market situation in which there are limited (few) number of sellers or producers selling either a homogeneous product or differentiated product is called oligopoly.
• Monopsony : A market situation in which there is only one buyer and purchaser of goods and services offered by many producers or sellers is called monopsony, e.g. labour market, a firm is the sole buyer of certain kind of labour.

Importance of marketing-

The importance of marketing is shown in the following diagram:

Importance of marketing is explained as follows:

(A) Importance of Marketing to the Society:

1) Increase in standard of living: Marketing helps to find out the needs of consumers and accordingly make efforts to supply quality products at cheaper rates to fulfil their needs. This in turn raises and maintains standard of living of the consumers. In recent years, the large scale production of goods and services has considerably reduced the prices which helps to enhance standard of living of the poor and middle class people.

2) Provides employment: Modern marketing undertakes almost all functions of organisations ; such as buying, selling, financing, transport, warehousing, risk bearing, research and development, etc. which require more human power. This generates more job opportunities in different capacities and helps to solve the problem of unemployment.

3) Decreases distribution costs: Effective and proper utilisation of channel of distribution reduces overall cost of production of products and services. Thus, marketing makes goods and services available at cheaper prices.

4) Consumer awareness: Marketing helps the society by educating the consumers providing them information of availability of goods and services in the market. Marketing also helps in making right purchases.

5) Increases in National Income: Well organised and effective marketing of products and i services facilitates industrialisation, increase job opportunities and develops the economy rapidly. This makes the economy more stronger and stable I which in turn increases national income.

6) Managing consumer expectations: Marketing research enables the business organisations to understand the requirements of the consumers which arc useful in development of products. By studying and considering customers’ review, business organisations make major changes in the products. Government regulations stop marketers to make false and misleading claims.

(B) Importance of Marketing to the Firm:

1) Increases awareness: Marketing provides detailed information and creates awareness among the consumers about the existing products, new arrivals and the company selling specific products in the market.

2) Increases sales: After providing information about the products or services among the customers, marketing attracts them to buy the products or services. Successful marketing campaign enables the business organisations to enhance the sales of the organisation. Expansion in sales increases profit which can be reinvested in the business to earn more profits in the future.

3) Creates trust: The consumers usually prefer to buy goods and services from those business organisations which have trustworthy reputation in the market. Trustworthiness creates customer loyalty and earns loyal customers.

4) Basis for making decisions ; The business organisations are required to take several decisions before delivering the products to the ultimate consumers. The business organisations are required to have several decisions before delivering the products to ultimate consumers. They are required to face many problems in relation to production of goods and services. When business expands, decision making process becomes more complex. Effective marketing facilitates organi¬sations to take right decisions at the right time.

5) Source of new ideas: Marketing facilitates business organisations to know the needs of the consumers. Feedbacks received from the consumers are useful to make improvement in the existing products. Due to marketing, organisations, understand the changing tastes and preferences of the consumers. By considering these changes and new demand pattern, research and development department develops new products in which 4 Ps of marketing mix play major role.

6) Tackling the competition: Due to increasing competition it is now difficult to create monopoly. Marketing creates brand loyalty in the minds of potential buyers. Marketing conveys salient features, advantages, uses, etc. of the goods ! and services to the consumers and induces them to buy the same. The business organisations can make use of modern technology for effective marketing.

(C) Importance of Marketing to the Consumers:

1) Promotes product awareness: The business enterprises undertake marketing activities to promote various marketing activities ; to promote their products. Marketing creates awareness among the customers about different products and brands available in the market. It facilitates consumers to take right decisions on the purchases. The consumers can compare product features, their availability, price, etc. and select right products. Marketing also improves the: quality of life of the consumers.

2) Provides quality products: Due to increasing competition in the market, consumers get information about the products and services available in the market. Marketing also creates moral pressure on the organisations to sell quality products and services to the consumers. If business organisations supply defective products, it will create negative image of the organisations which in turn affects customers’ loyalty adversely.

3) Provides variety of products: Marketing: provides information about the products to the consumers and thereby induces them to purchase them. The business organisations are required to ! launch product by considering market segments. They are required to make available variety of goods to fulfil the requirements of different market segments of the consumers.

4) Helps in selection: In the competitive markets, different variety of products with different brands are available. Marketing enables the consumers to select the best products and services from different options available.

5) Customer satisfaction: The main aim of marketing policy is to give assurance of good quality products to the consumers. When the needs of the consumers are fulfilled, the consumers get satisfied. Marketing efforts result into customers’ satisfaction by way of honest advertising, assurance of quality products and accessibility of innovative products. In this way marketing makes efforts to give satisfaction to the consumers.

6) Regular supply of goods: Regular supply of goods to the consumers is practicable through effective and efficient distribution channel of marketing. Marketing also helps to stabilise the prices of products in the market.

Functions of Marketing-

1) Marketing research: The marketing research assists the organisations to assess the need in the market, identify the requirement of consumers, time of purchases, quantity of their purchases and prices at which products and services are traded, etc. Marketing helps the business organisations to take decisions on the marketing of products and services.

2) Buying and assembling: This function is related to purchase of raw materials from various places and to bring them at one place for further processing and production. This function is more important because quality and price of raw materials fix the cost and quality of final products.

3) Market planning: This function is concerned with preparing outline of market plan and strategies to accomplish the objectives of the organisation. Market planning means defining, determining and organising the marketing aims and objectives of the business and preparing strategies to achieve those aims and objectives.

4) Product development: Every business organisation is required to develop its products to suit the needs of the consumers. Most of the customers prefer to buy better and attractively designed products. Good and attractive design of the products also increase its turnover and profit. Product development is ongoing (continuous) process due to changing needs and preferences of the customers.

5) Standardisation and grading: Standisation means setting up certain norms in relation to design, quality, size, process, weight, colour, etc. of the products. It ensures uniformity of products and helps to gain customers’ loyalty towards products. Grading means physical sorting and classifying the products according to standard set up. Usually, grading is done in case of agricultural commodities.

6) Packaging and labelling: Designing the package for the products in an attractive manner is called packaging. It protects the products from breakage, leakage, damage and destruction. A slip providing information of product and its producer pasted or affixed on the product container is called ] label and its processing is called labelling, Packaging and labelling give protection to the product and serve an effective tool of marketing.

7) Branding: Giving a distinct name to product to identify it, is called branding. A brand which is registered is called Trademark. It gives separate identity and recognition among the consumers which helps to expand business and increase brand awareness.

8) Customers support service: The business organisations, must take every possible step to ; render support services to the customers. It increases customers’ loyalty towards the business, The customers support services include pre-sales services, after sales services, customer helpline, i technical assistance, product demonstration, etc.
It facilitates organisation to get, increase and retain the customers.

9) Pricing of products: Fixing the prices of the products is an important and challenging function of marketing. While determining the price the business organisation is required to consider several factors such as cost, desired profit, price of the competitors’ product, etc. The price fixed should neither be too high which may lose customers nor too low which compel the organisation to incur loss.

10) Promotional channels: The process of convening the consumers’ information of the products, their features, prices, uses, etc. and inducing them to buy the products is called promotion. Personal selling advertisement, publicity and sales promotion are the important tools of promotion. Promotional activities increase brand awareness in the market.

11) Distribution: The activities which are related to movement of finished products from the place of business to the doorsteps of consumers are called distribution. It comprises of transportation, order processing, material handling, warehousing, inventory control, market forecasting, etc. The importance of distribution mostly depends on the type of product and level of customer satisfaction.

12) Transportation: The physical movement of products, raw materials, etc. from place of origin to the place of production or to the place of consumers is called transportation. It creates place utility. The modes of transport include road, air, water, railways, pipeline transport, etc.

13) Warehousing: Warehousing refers to storing of goods, in a godown to hold them in stock from the time of production or purchase till the time of their sale. Warehousing maintains balance between supply and demand of products and helps to stabilise the prices in the market. Warehousing creates time utility.

Marketing Mix-

Marketing mix refers to the mixture or combination of various marketing variables that business enterprises intermix and control to get expected results from the target market. In other words, it means placing the right product at right price, at right place and at right time. Every business organisation must develop appropriate marketing mix to expand turnover and achieve its objective.

The 4 Ps of marketing mix viz. Product, Price, Place and Promotion were introduced by E. Jerome McCarthy in 1960. Then in 1981, it was further extended by Booms & Bitner by adding of 3 new elements, viz. People, Process and Physical Environment. The first 4 Ps are called product marketing mix and last 3 Ps are called services marketing mix. 7 Ps of marketing mix are shown in the following diagram.

1) Product: An article, goods, commodity, or service that is offered to the customers for sale is called ‘product’. It has capacity to satisfy the needs of customers. The product may be either tangible or intangible. It may be in the form of goods or services. Through market research the business organisations decide the right type of products to be produced and sold. Products sold create impact on the mind of customers on which success or failure of business depends.

2) Price: The amount of money given or required to buy a product is called ‘price’. The factors such as cost of product, willingness of the customers to pay for the product, value, utility, etc. are required to be considered while determing the price of a product. Price of the product should not be too high which affects the demand adversely. Similarly it should not be too low which reduces the profitability.

3) Place: Place is the element of marketing mix that ensures that right product is distributed and made available to the potential buyers at right location and at right time too. The organisations need to distribute the products at a place easily approachable to the potential consumers.

4) Promotion: Promotion refers to any type of marketing communication used to inform and
persuade potential buyers or consumers to buy the products. Promotion mix comprises of different tools such as advertising, sales promotion, direct marketing, personal selling, etc. Promotional strategies to be used depend on the budget, target market and the message to be communicated.

5) People: The people inside and outside the business create impact or influence on the business. People include all individuals, that play key role in offering the products or services to the customers. Right people appointed to work at right place add value to the business. Organisations must recruit right people, train them and retain them for their success.

6) Process: The steps taken by the business organization to carry the products from the place of business to the place of consumers are called process. Process are significant to provide quality service. Good process saves time and cost and ensures same standard of service by enhancing efficiency.

7) Physical Environment: The marketing environment in which the interactions between the customers and firm takes place is called the physical environment. While offering services, the service providers always try to incorporate certain tangible elements into their offering to increase customer experience. In the service market, physical evidence is necessary to ensure that service is provided successfully. The physical evidence creates an impact on the customers’ satisfaction. Physical evidence comprises location, layout, packaging, branding, interior design, the dress of the employees, their action, waiting area, etc.

By going through these Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 4 Business Services students can recall all the concepts quickly.

Maharashtra State Board Organisation of Commerce and Management 12th Notes Chapter 4 Business Services

→ Shares: ‘Share’ is a share/part in the share capital of a company. It is an interest of a person in the share capital of a company which is measured by the sum of money.

→ Debentures: A document containing an acknowledgment of indebtedness issued by a company under its common seal. It is a most common form of long-term loan borrowed by a company from the general public by issuing certificates called debenture certificates or simply called debentures.

→ Foreign exchange: The currency of a country other than one’s own; the exchanging of the currency of one country for that of another.

→ Hundies: Negotiable (transferable) instrument (document) like the bill of exchange or promissory note. It can be drafted in any one of the Indian languages.

→ Promissory Note: A written promise to pay money; a document stating that a person promises to pay another a specified sum of money at a certain date.

→ Bill of exchange: A document in writing which consists of acknowledgement of debts and promise to pay such debts after a specific period of time.

→ Cash credit: Facility similar to the overdraft given to an accountholder for a comparatively larger amount and for longer period.

→ Discounting of bills of exchange: Borrowing loan from the bank for a short duration against the security of bill of exchange.

→ Dividend warrant: A dividend warrant is a written order given by the company to its banker to pay the amount mentioned in it to the shareholder whose name is specified therein.

→ Interest warrant: A draft for the payment of interest due on Government bonds, debentures and other fixed interest securities. It can be crossed like a cheque.

→ Bonds: Fixed interest securities issued by the Government or companies after borrowing funds from the public.

→ Portfolio: The entire collection of investments belonging to an investor or held by a financial organisation such as bank, mutual fund, etc.

→ Tax returns: Statement giving detailed information of taxes due and payable to the government.

→ Demand Draft or Bank Draft: A written order made by a bank to its branch or vice versa to pay on demand a specified amount of money to the payee or his order. It is a cheque drawn by one bank on its branch or head office.

→ Underwriting of shares: A new issue of shares in a company may be underwritten. In such case, the underwriter for a certain consideration (underwriting commission) agrees to take up any shares which are not applied for by the public and thus guarantees the success of the issue.

→ Demat account: Account opened by investor with Depository Participant (DP- Bank) for converting his shares in electronic form. DP keeps records of trading of shares and their holdings.

→ Gift cheque: Cheques printed in decorative form bought by paying equivalent amount and are used as presents / gifts on the occasion of weddings, birthdays, etc.

→ Standardisation: Setting up of standards; a mental process of fixing certain norms or specifications as indicators of certain quality.

→ Branding: Giving a name, symbol, mark or numeral to a manufactured product for the purpose of giving a distinct identity to that product.

→ Economic development: The process of growth in total and per capita income of developing countries, accompanied by fundamental changes in the structure of their economics. These changes usually consists of increasing importance of industrial as opposed to agricultural activity, migration of labour from rural to urban industrial areas, etc.

→ Letter of Credit: A letter from one party usually a bank to another party usually also a bank by which a third party usually a customer named in the letter is given the right to obtain the money or credit for which the writer of the letter takes responsibility. It is a method of settling debt between parties in different countries.

→ Standard of living: Level of economic welfare or level of material well-being of an individual or household. It is usually determined by the quantities of the goods and services consumed by a person.

→ Wharf: A platform built parallel to the waterfront at a harbour or navigate river for docking, loading, unloading of ships.

→ e-mail: Electronic mail is an electronic device which transmits information from one end of the world to another, through computer network.

→ Pollution: Any cause or action which affects or makes the environment impure.

→ Physical resources: Tools, machinery, vehicles, power supply, employees, etc., that an enterprise uses to carry out its activities.

→ Natural calamities: A disaster or misfortune, especially one causing distress or misery produced by nature, e.g. cyclone, storms, earthquake, famine draughts, etc.

→ Environment: The factors which affect surroundings of anything including human beings as well as organisations.

→ Internet: Worldwide network of computers which allows its user to share and exchange information. It is the largest network of the computers in the world globally allowing many computers to be connected to each other through servers, using communication system.

→ Infrastructure: The basic facilities like roads, electricity, water, etc. that are required for the smooth running of a business, factory, etc. in particular and economy in general.

→ Perils of sea: Exposure to risk or harms; danger of sea.

→ Import duty: A tax imposed by a government on goods of specified types entering the country. The object of imposing an import duty may be to raise money or to it may be to protect the markets of domestically produced goods by making imports more expensive.

Business Service And Banking –

Introduction:
Services of different types satisfy human wants are intangibles, heterogeneous, inseparable, inconsistent and perishable. They are neither manufactured non-tranported. Services cannot be stored for future use or consumption. Services of any kind are produced and consumed simultaneously.

Meaning:
Service is an act of performance that one party offers to another for certain consideration or without consideration essentially intangible and does not result in ownership of any thing, e.g. services of teacher.
Services are provided to the customers to fulfil their needs. Services are closely associated with the goods and hence it is difficult to identify and separate the services. The ownership and possession cannot be transferred on sale of services. Services come into existence only at the time they are bought and consumed. E.g. banking, insurance, transport, warehousing, telecom, etc. Business cannot run and manage without business services.

Definition-

According to Philip Kotler, “A service is an act of performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.”

Features of services:

• Intangibility: A service is intangible because it cannot touched, seen or smelt. Services can be experienced by the receiver. They lack material form and hence services cannot be demonstrated as like goods. Service providers must deliver qualify services on time to the consumers to win their confidence.
• Inseparability: One of the important features of service is that the service and the service: provider cannot be separated from each other. The presence of service provider is necessary at the time of providing the service. The production and consumption of service take place simultaneously.
• Inconsistency: Services are inconsistent and heterogeneous. Services lack perfect standardisation. The quality of service may differ person to person and from time to time although service provider remain the same.
• Perishability: Services are perishable in nature. The production and consumption of services cannot be separated and hence services cannot be stored for future consumption.
• Non-Transferability: The ownership of services cannot be transferred from service provider to the user. All consumer services are non-transferable in nature.
• Consumer participation: The service provider cannot offer or render services without the presence of consumer. Similarly customer cannot get services in the absence of service provider. Hence, participation of consumer and presence of service provider is equally important.

Business Services-

Business cannot be run and operated in isolation. Services of different types facilitate the business to grow and develop rapidly. Business services are necessary for smooth functioning of all business activities.

Types of business services:
The different types of business services are shown In the following chart:

Banking-

Meaning:
The word ‘Bank’ is derived from the French word ‘Banco’ which implies ‘bench’. In olden days, moneylenders used to display coins and different currencies on the benches or tables for the purpose of lending or exchanging.

Accordingly, bank refer to the financial organisation which deals with money and offers certain financial services such as accepting deposits and lending money to the consumers as per their financial requirements.

According to the Indian Banking Regulation Act, 1949 banking company means, “any company which transacts the business of banking in India.” and further defines the term ‘banking’ as “accepting for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise.”

Types of Banks:

(1) Central Bank: The central bank in a country is the apex institution at the top of all the banking institutions operating in the country. Every country has its own central bank. In India, the Reserve Bank of India (RBI) is a central bank which was established in 1945 under a separate statute called Reserve Bank of India Act, 1944. It performs certain functions such as issuing currency notes, framing monetary policy, acting as bankers to the Government and banker’s bank to all the banks in the country.

(2) Commercial bank: It plays key role in economic and social development of a country. It performs primary functions which include accepting of deposits and leading of money and secondary functions which include agency functions and utility functions.

The commercial banks are grouped into three categories:

• Public Sector Banks: The banks in which majority of the share capital is held by the Government of India are called public sector
• Private Sector Banks: The banks in which majority of the share capital is held by private individuals are called Private Sector Banks e.g. HDFC Bank, ICICI Bank, etc.
• Foreign Banks: The banks which are registered outside India but operate through their branches in India are called Foreign banks, e,.g. Standard Chartered Bank, American Express Bank, etc.

(3) Co-operative Banks: Co-operative banks are formed and organised under the Indian Co¬operative Societies Acts and regulated under Banking Regulation Act. They are very popular in semi-urban and rural areas. They are primarily meant for catering to the financial needs of economically backward people, farmers and small scale units.
There are three types of co-operative banks at different levels:

(a) Primary Credit Societies: The primary credit societies are formed and established at village level. These credit societies collect funds in the form of accepting deposits from members and common people. They also get funds from the District and State Co-operative Banks for the purpose of lending.

(b) District Central Co-operative Bank: The District Central Co-operative Banks are established and operate at district levels. These banks collect funds in the form of deposits from people at district level and also get funds from the State Co¬operative Banks for lending purposes.

(c) State Co-operative Banks: The State Co-operative Banks work at state level. These banks supply the funds to the District Centred Co-operative Banks and Primary Credit Societies as and when required and monitor the functions of both.

(4) Industrial Development Banks: The banks which provide medium and long term finance for the purpose of expansion and modernisation of business are called Development

Banks, e.g. Industrial Finance Corporation of India (IFCI). Functions of these banks are underwriting of shares issued by public limited companies, providing medium and long loans and purchase debentures and bonds.

(5) Exchange Banks: These banks and large number of commercial banks undertake foreign exchange transactions e.g. Barclays bank, HSBC are exchange banks. They perform the different functions such as financing foreign trade transactions, issue letter of credit, discount foreign bills of exchange, remits dividend, interest, profits, etc.

(6) Regional Rural Banks (RRBs): These banks were established in 1975. 50%, 35% and 15% of the capital of these banks are provided by the Central Government, Sponsored banks and State Government respectively. These banks collect deposits from rural and semi-urban areas, provide loans and advances to the small and marginal farmers, agricultural workers and rural artisans.

(7) Savings Bank: A saving bank is one which has the main object of inculcating the habit of saving especially among rural community. The postal saving bank, commercial banks and co¬operative banks, act as saving banks.

(8) Investment Bank: Investment banks offer financial and advisory assistance to the business firms and government organisations. These banks provide advice on investments, helps in mergers and acquisitions by undertaking research. These banks do not directly deal with common public.

(9) Specialised Banks: These banks fulfil the requirements and provide possible support for establishing business in specified areas, The different types of specialised banks are:

• Export and Import Bank (EXIM): These banks provide the financial assistance and support to set up business for export and import of goods and services. Thus, these banks also help in promoting international trade of India.
• Small Industries Development Bank of India (SIDBI): This bank was established on 2nd April 1990 under the Act of Indian Parliament.

It acts as the main financial institution for financing, promoting and developing the Micro, Small and Medium Enterprises (MSMEs) and acts as co-ordinator of the institutions engaged in similar activities.

(c) National Bank for Agricultural and Rural Development (NABARD): This bank provides short term and long term credit to the people engaged in agricultural and allied activities through Regional Rural banks. It is also concerned with the functions of policy planning and operations relating to agricultural credit and credit for other activities in rural areas. It does not deal with common people.

New Models of Banking:

(i) Small Finance Banks: Small finance banks are the type of banks suitable for specific groups of the society which is not served (helped) by the other banks. These banks provide basic banking services of acceptance of deposits and lending money. These banks specially provide ! financial assistance to the small business units, small and marginal farmers, micro and small industries and unorganised sector entities. Existing Non-Banking Financial Companies (NBFC), Micro Finance Institutions (MFI), Local Area Banks (LAB) can apply to become small finance banks, These Banks are set up as public limited companies under the Companies Act 1956 and are governed by the provisions of Reserve Bank of India Act, 1934 and Banking Regulation Act 1949. Their two main objectives are: (i) to make provision of savings for unserved and underserved sections of the population and (ii) to supply credit to small business units, small and marginal farmers, micro and small industries and unorganised sector. Jana Small Finance Bank, Equitas Small Finance Bank, etc. are the examples of Small Finance Banks.

(ii) Payment Bank: Payment bank is a new model of banking started by the Reserve Bank of India. Its main objective is to provide financial services to small businesses and low income group people. It carries out functions such as, mobile banking, ATM cards, net banking, etc. These banks are not allowed to lend money and render services of credit cards. It can accept demand deposits up to ₹ 1 lakh. Paytm (Payment bank), Airtel Payment Bank, Indian Post Payment Bank, etc. are its examples.

Functions of Commercial Bank:

(A) Primary Functions: The primary functions of commercial banks are also known as core banking functions. They are:

(1) Accepting deposits: The commercial banks accept deposits from public and business organisations under two heads viz. Time Deposits and Demand Deposits.
(i) Time Deposits: The deposits which are repaid to the customers after the expiry of decided time period are called time deposits. They are further classified as:

(a) Fixed Deposit: It is a type of deposit account where lumpsum amount is kept for certain specified period of time bearing fixed rate of interest. Withdrawal of amount is not permitted before maturity period. The depositor is given Fixed Deposit Receipt (FDR). He can borrow money against FDR from the bank.

(b) Recurring Deposit: It is a type of deposit account where depositor is required to deposit certain fixed amount every month for specific period of time. On the maturity, the deposit holder gets the entire amount deposited plus interest accumulated on it. Rate of interest is usually higher depending on the length of time. The depositor is given pass book by the bank to know the position of the RD account.

(ii) Demand Deposit: It is a type of deposit account in which deposited amount is repaid to the depositors as and when they demand. Money can be withdrawn as per the wish of the customers through withdrawal slip, cheques, ATM Card, online transfer, etc. There are two types of account in this.

(a) Savings Account: A bank account designed for the personal savings is called savings account. This account is suitable for those people who have fixed and regular income like salary. Although there is no restriction on the depositing money but frequent withdrawals are not permitted by the bank. Interest on balance amount is credited in this account after every 3 months, six months or 1 year period. The accountholder get pass book facility, balance on SMS, account statements, etc. to know financial position.
In this account some banks provide the facility of flexi deposit which combines the advantages of saving account and fixed deposit account. In this option, the excess funds over particular limit get transferred automatically to fixed deposit account and in case there is shortage of fund in the account or to honour any cheque payment, funds from fixed deposit get transferred to savings account.

(b) Current Account: The bank account most convenient to traders and commercial organisations is the current account. It places no restrictions on the number of times money is deposited or withdrawn from such account. Generally no interest is paid on the balance in this account. Under this type of deposit, accountholders are entitled to get overdraft facility from the bank.

(2) Granting Loans and advances:

(i) Loans: The banks grant loans and advances to industry and common people at higher rate of interest for different period.

• Short Term loans are given by the banks for a period up to 1 year. It is taken by the borrower to meet the need of working capital.
• Medium term loans are given by the banks for a period of 1 year to 5 years to meet the need of working capital and fixed capital.
• Long term loans for a period of 5 years or more to meet the requirement of long term capital.

(ii) Advances: Banks give advances to fulfil the different financial requirements of the businessman. The types of advances are as follows:

(a) Cash Credit: Under this arrangement, the bank opens a separate account (as in the case of loan) and credits a certain amount to this account. This facility is given to both current accountholder as well as savings accountholders. Interest rate charged on this account is higher.

(b) Overdraft: Overdraft is a kind of temporary loan on which the bank charges interest on the actual amount overdrawn. This facility is given only to current accountholders to meet the need of working capital. The period of overdraft varies from 15 to 60 days. All entries are shown ih current account.

(c) Discounting of Bills: A customer holding a bill of exchange can discount it at a bank. The bank pays the amount of the bills after deducting certain amount towards discount. On maturity, the bank collects the proceeds of the bill from its drawee.

(B) Secondary Functions: The secondary functions are grouped into two categories. They are explained below:
(a) Agency Functions: The commercial bank acts as an agent of his clients and performs the following agency functions:

• Periodic collections and payments: As per the standing instructions of the customers, bank collects salary, dividends, interests, cheques, drafts, etc. and makes various payments such as taxes, bills, premiums, rent, etc. For these services bank charges certain service charges quarterly or annually.
• Portfolio management: Most of the commercial banks undertake the functions of buying and selling of securities such as shares, bonds, debentures etc. on behalf of the clients, This is called portfolio management. On account of this facility, more customers are attracted towards commercial banks.
• Fund transfer: The commercial banks provide services of fund transfer from one branch to another branch and also to the branch of another bank.
• Dematerialisation: The banks offer dematerialisation facility to their clients and hold ; their securities in electronic form. As per the instructions, banks undertake transfer of securities like purchase or sale.
• Forex transactions: Forex stands for foreign exchange. The bank purchases foreign exchange from its clients and pay them in Indian currencies. The bank also sells foreign exchange to its clients when they need to settle foreign transactions.

(b) Utility Functions:

• Issue of drafts and cheques: The bank issues cheques book to its accountholders only and issues drafts to both accountholders as well as to non-accountholders for making payments to third parties. Bank charges commission for issue of bank drafts.
• Locker facility: The bank provides safe deposit vaults (lockers) to the customers on rental basis for keeping their valuables like gold, ornaments, jewels, securities, valuable documents, etc. in safe custody.
• Project report: As per the request of the client, bank prepares project report and feasible studies on their behalf to enable them to obtain funds from the market and clearance from government authorities.
• Gift cheques: The bank issues gift cheques i and gold coins to both accountholders as well as to non-accountholders, for the purpose of gifting on different occasions such as wedding, birthday,  anniversaries, etc.
• Underwriting services: The banks acts as underwriter to buy shares and other securities issues by the newly established company if their shares or securities are not fully subscribed.
• Gold related services: Now banks have also started providing gold services to its clients. They buy and sell gold and gold ornaments from customers on large scale. They also provide advisory services on the investment of gold funds, gold EFF, etc.

E-banking service-

E-Banking implies electronic banking i.e. virtual banking or online banking. The following services are provided under e-banking:

(i) Automated Teller Machine (ATM): With the help of ATM card, we can deposit or withdraw cash from ATM machine. It provides 24 hours service, privacy and convenience to the bank customers. ATM can also be used for other banking transactions, like balance inquiry, request of cheque book, etc.

(ii) Credit cards: It is a payment card which allows the cardholder to pay for different transactions. Issuing bank grants credit to the cardholder and later on recover the dues from the user. Credit card gives convenience to users as they need not carry cash with them.

(iii) Debit cards: Nowadays, most of the banks issue debit cards to accountholders as soon as account is opened. By using this card, the cardholders can make purchases and avail of services at different places through payment from bank. The amount is deducted from or debited to the account of the debit cardholders immediately.

(iv) Real Time Gross Settlement (RTGS): it is a fund transfer system where transfer of funds takes place from one bank to another on a ‘Real time’ i.e. not subject to any waiting period and ‘Gross basis’ i.e. on one to one basis without bunching any other transaction. Minimum ₹ 2 Lakh can be remitted through RTGs but there is no upper limit for such remittances. This amount differs from bank to bank.

(v) National Electronic Funds Transfer (NEFT): This nationwide system facilitates individuals, firms and companies to transfer funds electronically from any branch of bank to any individual, firm and company having account with any other branch of bank in the country. The clients is required to give details like NEFT code  of branch, account number of transferee. However, unlike RTGS, the transactions are bundled together in NEFT.

(vi) Net banking and Mobile banking: With | the help of laptop, computer and other gadgets,
the client can operate his bank account for banking transactions. Mobile banking means using banking services with the help of mobile phone. The client has to register with the bank for the use of this facility. The bank gives unique code for doing transactions. Through mobile client can request for balances, transfer of funds, stop payment, issue of cheque book, etc.

(vii) IMPS facility: IMPS is an abbreviation of Immediate payment services. By using this facility, the client can instantly transfer funds to any other bank account.

By going through these Maharashtra State Board Organisation of Commerce and Management 11th Notes Chapter 3 Small Scale Industry and Business students can recall all the concepts quickly.

Maharashtra State Board Organisation of Commerce and Management 11th Notes Chapter 3 Small Scale Industry and Business

Small Scale Industry-

Meaning:
Traditionally
Industries which are organized on a small scale and produce goods with the help of machines, labour and power.

• Using power with less than 50 employees
• Not using power with employees strength more than 50 but less than 100

Classification of Business-

1. Micro
2. Small
3. Medium

Micro:

• Manufacturing Sector: Does not exceed ? 25 lakhs
• Service Sector: Does not exceed ? 10 lakhs

Small:

• Manufacturing Sector More than ? 25 lakhs but does not exceed ? 5 crores
• Service Sector: More than ?10 lakhs but does not exceed ? 2 crores

Medium:

• Manufacturing Sector: More than ? 5 crores but does not exceed ? 10 crores
• Service Sector: More than . ? 2 crores but does exceed ? 5 crores.

Definition of Small Scale Industry-
(If the following condition is satisfied)

“Investment in fixed assets like plant and equipment either held on ownership terms or on lease or hire purchase should not be more than one crore. However, the unit in no way can be owned or controlled or auxiliary for any other industrial unit.”

Classification of Small Scale Industries-

Traditional Small Scale Industries:

1. Handloom
2. Handicraft
3. Coir
4. Sericulture
5. Khadi and Village Industries

Modern Small Scale Industries:

• Bicycle Parts
• Sewing Machines
• Blades, Razors
• Electric Appliances
• Spare Parts

Importance of Small Scale Industries-

• Supply if Raw Materials to Large Industries
• Balanced Development between Rural and Urban Areas
• Opportunities to Young Generation
• Large Employment
• Utilisation of Domestic Resources

Advantages of Small Scale Industries-

1. Cost Savings
2. Adaptability
3. Limited Capital
4. Low Gestation Period
5. Labour intensive
6. Opportunities Rural Youth
7. Upliftment of Economy
8. Decentralised Economy
9. Export Earning
10. Regional Balance

Steps in Setting up of a Small Scale Business-

• Decision of Business Area
• Study of Business Environment
• Selection of Product
• Selection of Place
• Selection of Technology
• Business Proposal
• Finance
• Registration
• Actual arrangements of Resources
  • Physical resources
  • Arrangement of Power and Water Supply
  • Staffing

Arrangement of Power and Water Supply

• Production and Marketing of Product
• Review or feedback of Future Changes.

Challenges Before Small Scale Industries-

• Problems of Marketing
• Infrastructural Problem
• Credit and Finance
• Delayed Payment
• Sickness Problem
• Personal Problems
• Shortage of Raw Material
• Outdated Technology
• Underutilization of Capacity
• Labour Problem

Word Meaning:

vocational – particular occupation; contemplating – looking forward; procure – to obtain; notification – to inform; assistance – to help; lease – rental agreement; auxiliary – additional; significantly – important; advantages – benefits; overheads – expenses; minimises – to reduce; migrations – moving of people from one place to another; potential – capacity; aspirants – a person who has ambition; technical – specialized knowledge about a subject; abundant – plenty; gestation – development; knitwear – woollen clothes; processed food – preserved food; substantially – considerable; concentration – centring/centralisation; devastated – destroy; adopt – to accept; tremendous – in very huge amount; inheritant – from ancestors; upliftment – improvement; compromise – to settle at a point; absenteeism – regularly staying away from work; commitment – dedication; turnover – rate at which employee leave the workplace; exploit – make use of an unfair way; feasible – not possible; prevalence – commonness; load-shedding – regular interruption of electricity; voltage fluctuation – regular change in voltage; description – to describe / explain; analyse – to examine; market research – gather information about consumer needs; installed – to fix; appraisal – to evaluate; technique – skill or ability to do so; allocating – to assign / issue; quantum – share or a portion; directories – Website list; exposure – to display; envisaged – to predict.