IGNOU| BUSINESS ORGANISATION (ECO - 01)| SOLVED PAPER – JUNE - 2021| BDP| ENGLISH MEDIUM
BACHELOR'S DEGREE PROGRAMME
Term-End Examination
June, 2021
(ELECTIVE COURSE: COMMERCE)
ECO-01
BUSINESS ORGANISATION
Time: 2 hours
Maximum Marks: 50
(Weightage: 70%)
Note: Attempt both Part A and Part B.
PART A
1. Distinguish between any two of the following: 5+5
(a) Commerce
and Trade
Ans:- Trade:
Trade is referred to as a basic economic activity that involves buying and
selling of various goods and services between two or more parties involved in a
transaction. Trade between two parties is called bilateral trade, whereas trade
between more than two parties is called multilateral trade.
Commerce:
Commerce is referred to as an economic activity that involves the exchange of
goods and services or valuables between two entities. This includes buying
goods and services by large organizations. Commerce is mainly concerned with
the transactions that take place between nations.
|
|
Trade |
Commerce |
|
1. Definition |
Trade is
referred to as a basic economic activity that involves the buying and selling
of various goods and services between two or more parties involved in a
transaction. |
Commerce
includes all those activities that help in promoting the exchange of goods
and services from the manufacturer to the final customers. Mainly the
activities are banking, transportation, advertising, warehousing, insurance
etc. |
|
2. Reach |
Narrow |
Wide reach |
|
3. Purpose |
Satisfying
the social perspective of seller and buyer |
To generate
revenue |
|
4.
Connects |
Buyer and
seller |
Producer and
End User |
|
5. Requirement
of Capital |
Business
needs more capital |
Commerce
requires less capital |
|
6.
Employment Opportunities |
Less than
commercial |
More than
business |
(b) Fixed
capital and Working capital
Ans:- Both
fixed and working capital are important to a small business. Fixed capital
includes assets or investments needed to start and maintain a business such as
property or equipment. Working capital is cash or other liquid assets that a
business uses to cover daily operations, such as completing payroll and paying
bills.
Fixed
capital:
(i) Fixed
capital includes assets, facilities, equipment and equipment that your business
uses on an ongoing basis. Entrepreneur lists some additional examples of
long-term assets.
(ii) These
assets, such as vehicles, real estate, commercial ovens and construction
equipment, are not easily liquidated (or turned into cash) but can be resold
and reused at any time.
(iii)
Fixed-capital investments are usually depreciated over the long term on a
company's accounting statement, but can sometimes be deducted all together with
a Section 179 deduction.
Working
capital:
(i) Working
capital is the difference between a company's current assets (what you own) and
liabilities (what you owe).
(ii) This
figure measures how efficiently you are operating, your company's liquidity and
its short-term financial position.
(iii) Working
capital allows a business to expand. Without working capital, it is difficult
for a company to grow, pay off debt, and become (or remain) profitable.
(iv) When
small business owners are short of working capital, they often turn to working
capital loans to fill the gap.
(c) Bill of
Lading and Shipping Bill
Ans:- Bill of
lading:
A bill of
lading is a document from a shipper of goods that describes the number of
goods, the number of goods and where they are being shipped. It can be like a
standard store receipt or train ticket.
A bill of
lading also serves as a receipt when goods have been dispatched upon arrival at
their destination. The destination of the goods is also mentioned on the bill
of lading. A bill of lading is a proof of shipment and proof of receipt of the
goods by a company or person providing the goods for shipment.
Shipping
Bill:
It is a
document containing the details of the goods, the country from which they are
exported, the name of the ship and the port where the goods are to be dropped,
the number, quantity, value of the goods etc. It serves as an important
document. Which is required by the customs authorities to allow export. It is
of three types: Green bills, when chargebacks are allowed; One yellow bill for
dutiable goods and one white bill for duty-free goods.
(d) Public
Enterprise and Public Limited Company
Ans:- Difference
between Public Enterprise and Public
Limited Company:
Public
enterprises are strictly organized companies that are usually managed by
state, regional and even federal governments. Since the government is held
accountable to all citizens for operations and profits earned go to government
funding, this is the main reason why it is publicly listed.
Public
Limited Company issue stock for ownership and are included in a percentage
of ownership regulated by the SEC and managed by persons appointed by the
shareholders who are liable to the owners. These places of ownership are traded
on stock exchanges and are co-privately held and shared ownership is offered
from the founders with
2.Write short notes on any two of the following: 5+5
(a)
Relationship between banker and customer
Ans:- The
relationship between a banker and a customer is a legal relationship that
begins after the formation of a contract. When a person opens an account with
the bank and the banker gives his approval for the account, it binds the banker
and the customer into a contractual relationship. A person who maintains an
account with a bank and uses its services is called a bank customer. The
contractual relationship between the bank and the customer creates more types
of banker and customer relationship.
Bank and
customer are two different words that are related to bank. The person doing
banking business is called banker and the person who is associated with the
bank, he either deposit his money or take loan from bank is called bank
customer. The relationship between the banker and the customer can be of
different types as it completely depends on the activities, products and
services provided by the banker to the customer. Although the relationship is
based entirely on contact, trust is an important part of the relationship
between bankers and customers.
(b) Direct
channels of distribution
Ans:- A
direct channel of distribution is the means by which a company delivers its
product directly to the consumer without using any middleman. Some businesses
may use structures that include middlemen to handle the distribution of their
goods. However, a company that is directly responsible for selling,
transporting and distributing its products to customers is using the direct
channel of distribution.
Benefits:
Small businesses
in particular may find it more cost-effective to use a direct channel of
distribution, as they may not have the financial resources to hire others to
take care of their marketing, sales, shipping or distribution needs. Think of an
artist who specializes in making handmade pottery. She can set up a website to
market and sell her wares. She can promote and sell her work by participating
in craft fairs and artisan markets in her area. By using these
consumer-focused, relational methods of distribution, he is able to limit his
expenses. Expenses may be limited to website hosting, show entrance fees and
display space, transportation, and perhaps some shipping costs.
Direct channels
of distribution also allow owners to maintain control over certain aspects of
their business. They can create and direct branding for their products as well
as establish personal relationships with customers. They also eliminate
in-store competition with others selling similar products. When a consumer is
viewing their product in person or online, they are alone on the platform, and
hopefully face-to-face participation can win sales.
(c) Listing
of securities on a stock exchange
Ans:- Listing
means trading the securities of a company on the stock exchange. Listing is not
mandatory under the Companies Act 2013/1956. This becomes necessary when a
public limited company wishes to issue shares or debentures to the public. When
securities are listed on a stock exchange, the company has to comply with the
requirements of the exchange.
Listing
provides a special privilege to securities on the stock exchange. Only the
shares listed on the stock exchange are quoted. The stock exchange provides
transparency in the transactions of listed securities and in equitable and
competitive conditions. Listing is beneficial to the company, to the investor
and to the public at large.
Listing
Purpose:
(i) To provide
liquidity to the securities
(ii) To provide
a mechanism for effective control and supervision of business
(iii) To
increase savings for economic development
(iv) Providing
free negotiability of shares.
(v) and ability
to raise capital
(d)
Characteristics of an entrepreneur
Ans:- Five
Characteristics of an Entrepreneur:
(i)
Curiosity: Successful entrepreneurs have a distinctive personality trait
that sets them apart from other organizational leaders: a sense of curiosity.
An entrepreneur's ability to remain curious allows them to constantly seek out
new opportunities. Instead of settling for what entrepreneurs think,
entrepreneurs ask challenging questions and explore different avenues.
This online
course is validated in Entrepreneurship Essentials, where entrepreneurship is
described as a "process of discovery".
The drive they
have to constantly ask questions and challenge the status quo can lead them to
valuable discoveries that are easily overlooked by other business
professionals.
(ii)
Structured Experimentation: Along with curiosity, entrepreneurs need an
understanding of structured experimentation. With each new opportunity, an
entrepreneur must run tests to determine if it is worth pursuing.
For example, if
you have an idea for a new product or service that meets under-served demand,
you need to make sure customers are willing to pay for it. To do this, you will
need to conduct thorough market research and run meaningful tests to validate
your idea and determine its potential.
(iii)
Adaptability: The nature of business is always changing. Entrepreneurship
is an iterative process, and new challenges and opportunities present
themselves at every turn. It is nearly impossible to be prepared for every
scenario, but successful business leaders must be adaptable. This is especially
true for entrepreneurs who need to be flexible to evaluate circumstances and
ensure that their business continues to thrive, no matter what unexpected
changes occur.
(iv)
Decisiveness: To be successful, an entrepreneur has to make tough decisions
and stand by them. As a leader, they are responsible for guiding the trajectory
of their business, covering every aspect from funding and strategy to resource
allocation.
(v) Team
building: A great entrepreneur is aware of his strengths and weaknesses.
Rather than let shortcomings hold them back, they build well-rounded teams that
complement their abilities.
In many cases, it
is the entrepreneurial team, rather than an individual, that drives the venture
to success. When starting your own business, it is important to surround
yourself with teammates who have complementary talents and contribute to a
common goal.
Full solution coming soon.
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