Formation of a Company Very Short Answer Type Questions

Formation of a Company Very Short Answer Type Questions

Question 1.
What is share capital?
Answer:
Share capital means the amount of capital raised by a company through the issue of shares.

Question 2.
State any two features of issue capital.
Answer:

  • Share capital is a raised by public limited company only.
  • Share capital can be returned by the company only at the time of the winding up of the company.

Question 3.
What is authorized or registered or nominal capital?
Answer:
It is the sum stated in the capital clause of the memorandum of association as the capital of a company.

Question 4.
What is issued capital?
Answer:
It is the part of authorized capital which is issued or offered to the public for subscription.

Question 5.
What is unissued capital?
Answer:
It is the part of authorized capital which is not issued to the public for subscription.

Question 6.
What is subscribed capital?
Answer:
It is the part of the issued capital which taken up by the public.

Question 7.
Give the meaning of called up capital.
Answer:
It is the part of the subscribed capital which has been demanded or called up by the company.

Question 8.
What is paid up capital?
Answer:
It is the part of called up capital which has been actually paid by the share holders to the company.

Question 9.
What is calls -in-arrears? Or unpaid capital.
Answer:
It is unpaid capital. The balance of called up capital which has not been paid by the share holders is called as calls in arrears.

Question 10.
Give the meaning of reserve capital or reserve liability.
Answer:
Some times company may decide not to call a part of its uncalled capital till its winding up. Such amount of capital is called as reserve capital.

Question 11.
Define share.
Answer:
See 2(46) of Indian companies act 1956, defines share as “a share in the share capital of a company and includes stock except where a distinction between shares and stock is expressed of implied.

Question 12.
What is share?
Answer:
Share is a unit of share capital having a special value.

Question 13.
Give the meaning of deferred shares.
Answer:
Deferred share are also called as promoters shares. These share holders get the dividend only after the payment of dividend to preference and equity share holders.

Question 14.
What is share premium.
Answer:
Share premium is the difference between the price at which the shares are issued and the face value of the shares.

Question 15.
What is right shares?
Answer:
Right shares are additional shares issued first to existing share holders in proportion to the capital paid up on this shares.

Question 16.
What is Bonus shares?
Answer:
Bonus shares are shares issued to existing share holders at free of cost out of accumulated reserves or profits.

Question 17.
What is the difference between right shares and bonus shares.
Answer:
Right shares are issued by the company to existing share holders for money but bonus shares are issued by the company to existing share holders at free of cost.

Question 18.
What is stock?
Answer:
Stock is aggregate of fully paid shares of a company. It helps the stock holders to subdivide and transfer their stocks in any amount.

Question 19.
What is share certificate?
Answer:
Share certificate is a document contains the number of shares held by a member and the amount paid on each shares.

Question 20.
What is share warrant?
Answer:
It is a document issued by public limited company to its share holders is respect of fully paid shares.

Question 21.
What do you mean by allotment of shares?
Answer:
It means allotment or distribution of shares of the company to selected applicants in response to their application for shares.

Question 22.
What do you mean by calls on shares?
Answer:
It is a demand made by the company to its share holders to pay whole as part of unpaid balance of the face value shares held by them.

Question 23.
Write a note on Index of members.
Answer:
Index of Members contain the names of members and sufficient entries to indicate the relevant folio in the Register of Members. This book is to be maintained to facilitate quick reference.

Question 24.
What do you mean by D-Mat account?
Answer:
It is account which transfer (convert) securities from physical mode to electrical mode.

Question 25.
What are the contents of share certificate?
Answer:
Contents of share certificate are:

  • Name of the company.
  • Serial number of the certificate.
  • Name and address of share holder.
  • Number and class of shares.
  • The face value and amount paid on each share.
  • The date of issue of share certificate.

Question 26.
What is listing?
Answer:
“Listing of shares is the process of getting the shares of a company includes in the official trade, list of recognized Stock Exchange. The share of a company can be bought and sold in a stock exchange only when they are listed there in that stock exchange.

Question 27.
Write a note on corporate aggregate.
Answer:
It means number of individuals who associated in a group so that in the eyes of law they enjoy the status of a single person, e.g limited company.

Question 28.
What are the steps in the formation of a company.
Answer:

  • Promotion
  • Incorporation or registration.
  • capital subscription.
  • Commencement of business.

Question 29.
What are the steps in promoting a new company?
Answer:

  • Discovery of new idea
  • Detailed investigation of business proposition
  • Assembling of various requirements of business proposition.
  • Financing the business proposition

Question 30.
Who is a promoter?
Answer:
Promoter is a person who under takes the work of promotion of company. He originates a scheme for formation of the company and carries out at the preliminary work for the formation of a compnay to run the business.

Question 31.
What is minimum subscription?
Answer:
It is the minimum amount mentioned in the memorandum of association must be raised by the issue of shares to meet the expenditure of the company .

Question 32.
What is business commencement certificate?
Answer:
It is a document issued to public limited company to run the business in a formal way. This certificate is a conclusive evidence that the company is entitled to commence business from the date of issue of the certificate.

Question 33.
What is meant by listing of securities?
Answer:
Listing of securities means company shares are listed in any recognized stock exchange. It improves marketability of shares.

Question 34.
Give the meaning of memorandum of association.
Answer:
It is the constitution of the company which defines the objects and scope of the company’s ‘ activities and its relation with the outside world.

Question 35.
Give the meaning of Articles of association of a company.
Answer:
It is a document containing the rules and regulations relating to the internal management of the company.

Question 36.
What is book building?
Answer:
Book building method uses investors demand for share at various prices as an important input to arrive at an offer price.

Question 37.
Who are the users of book building in India?
Answer:
IPCL, HUDCO, HAL, IOC, Hindalco Industries.

Question 38.
Who is Retail investor?
Answer:
He is an investor who bids for securities of a company for a value of not more than Rs 1 lakh.

Question 39.
Expand QIB.
Answer:
Qualified institutional buyer. It is apublic financial institution bids for securities.

Question 40.
What is RHP?
Answer:
RHP Means Red Herring Prospects. In this type of prospectus company is not disclosing the details of price and number of shares being offered till the date of issue open.

Question 41.
Give the meaning of Syndicate member.
Answer:
It refers to a person, who collect the entire bid forms in a book built issue.

Question 42.
What is prospectus?
Answer:
It is an invitation to general public by the public company to apply for the shares of company.

Question 43.
What is table-A?
Answer:
Table A is the model set of 99 articles given at the end of the Companies Act. A public companies limited by shares has an option as far as filling Articles of Association with the Registrar at the time of incorporation. When it chooses not to have Articles of Association, it can adopt Table A.

Question 44.
What is underwriting contract?
Answer:
The act of ensuring the sale of shares or debentures of a company, even before offering to the public is called underwriting and those engaged in such activities are called underwriters. The underwriters take upon themselves the responsibility of selling the securities to the public. If some securities remain unsold, the underwriters will have to buy them.

Question 45.
What is share?
Answer:
A share is a fractional part of the capital of company which forms ownership.

Question 46.
What do you mean by priliminary expenses?
Answer:
Any expenses incurred by the company before its incorporation is known as preliminary expenses. These are the expenses incurred in the initial stage of the formation of the company.

Question 47.
State any two functions of promoters.
Answer:
Two functions of promoters:

  • They fixes the company’s name and ascertains that it will be accepted by the rules of the companies act.
  • They arranges for the printing of the memorandom & Articles.

Question 48.
What do you mean by “Statement in Hue of prospectus?
Answer:
When a public company does not invite public to subscribe for its shares but arranges to get money from private sources, it need not issue a prospectus to the public. In such a case the promoter are required to prepare a draft of prospectus known as statement in lieu of prospectus.

Question 49.
What is incorporation?
Answer:
Incorporation is the second stage of formation of a company when the requisite documents are filed with the registrars of company he returns and registers the memorandum, the articles and other documents filed with him and issues a certificate of incorporation.

Question 50.
What is incorporation?
Answer:
Incorporation of a company means the process of getting a company registered under companies act.

Question 51.
Give the meaning of Doctrine of constructive notice.
Answer:
Doctrine of constructive notice means a doctrine declaring that the memorandum and articles of association are public document after being registered with the register of companies and every one dealing with the company is deemed to have constructive notice of them.

Question 52.
What is shelf prospectus?
Answer:
Shelf prospectus means a prospectus issued by any financial institution or bank for one or more issues of the securities or class of securities specified in that prospectus.

Question 53.
What is red herring prospectus?
Answer:
According to 60 B (4) of Indian companies act 1956. Red herring prospectus means a prospectus which does not have complete particulars on the price of the securities offered and the quantum of securities offered.

Question 54.
Give the meaning of small deposit holder.
Answer:
Small deposit holder is a depositor who has deposited in a financial year a sum not exceeding Rs 20,000. in a company and includes his successor nominees and legal representatives.

Question 55.
Define ‘Share’.
Answer:
Section 2(46) of companies act defines shares as “share in the share capital of a company and includes stock except where in distinction between stock and share is expressed or implied.

Question 56.
What is buy-back?
Answer:
Buy back is the power of company to purchase its own securities as per certain condition it is given under section 77(A) of Indian companies act 2000.

Question 57.
Define share certificate.
Answer:
Share certificate is defined under section 84(1) of company act as a share certificate is a certificate issued by the company under its common seal specifying the shares held by any member.

Question 58.
What is Blank transfer?
Answer:
Blank transfer means transfer hands over to the transfer the share certificate with a transfer form duly signed and completed by him except for the name and signatures of the transferee.

Question 59.
What is firm under writing?
Answer:
Firm underwriting is an underwriting where in the underwriter agrees to subscribe himself for securities of the company irrespective of his potential liability under the underwriting contract.

Question 60.
What is lien on shares?
Answer:
Lien on shares is a right of the company on its shares held by a member of the company for the debts due from the share holder. Member who is indebted to the company shall not be permitted to transfer his shares without paying the debts of the company.

Question 61.
Name the two persons who are share holders without being a member of the company.
Answer:

  • Share Warrant holder
  • Transferee or the legal representatives of the decreased.

Question 62.
Define debenture.
Answer:
According to 2( 12) of Indian companies act debenture is defines as “ debenture stock bonds and any other securities of a company whether constituting a charge on the assets of the company or not”.

Question 63.
What is debenture stock?
Answer:
Debenture stock is the aggregate and consolidated amount of borrowings. It is the total debt an can be divided and transferred in any convenient parts.

Question 64.
What is naked debentures?
Answer:
Naked debentures are those which do not carry any charge on the assets of the company. They are nit given any security as to the payment of interest and repayment of capital.

Question 65.
What is bearer debentures?
Answer:
Bearer debentures are treated as negotiable instruments and are transferable by mere delivery.

Question 66.
What is mortgage debenture?
Answer:
Mortgage debentures are Debentures which are secured by a mortgage or charge on the whole or a part of the assets of the company.

Question 67.
What is registered debentures?
Answer:
Registered debentures means the names of the debentures holders are entered in the register of the debenture holders.

Question 68.
Expand DRR.
Answer:
DRR- Debenture Redemption reserves.

Question 69.
Define debenture.
Answer:
According to Sec(12) Debenture is a document issued by a company as an evidence of a . debt due from the company with or without a charge on the assets of the company.

Question 70.
Who is a member of a company.
Answer:
Share holder of a company is a member of the company.

Question 71.
Define prospectus.
Answer:
According to companies act 1956 prospectus means. “Any document described or issued as a prospectus and includes any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares in or debentures of a body corporate”.

Question 72.
State the provisions of e-filing.
Answer:
(a) such applications, balance sheet, prospectus, return, declaration, memorandum, articles, particulars of charges, or any other particulars or document as may be required to be filed or delivered under this Act or the rules made thereunder, shall be filed in the electronic form and authenticated in such manner as may be prescribed.

(b) such document, notice, any communication or intimation, as may be required to be served or delivered under this Act, in the electronic form and authenticated in such manner as may be prescribed.

Question 73.
How to sign an e-form?
Answer:
An e-form can be signed by the authorized signatory/ representative using the Digital Signature Certificate (DSC). Click the red colour signature box in the e-form to affix the digital signature. To avoid increase in size of the e-form beyond permissible limit of 2.5 MB, always affix the DSC using the ‘Sign and Save As’ option.

Introduction of Company Long Answer Type Questions

Introduction of Company Long Answer Type Questions

Question 1.
Explain briefly the stages involved in information of a new company?
Answer:

  • Promotion
  • Incorporation
  • Capital subscription
  • Commencement of Business

(a) Promotion:
It refers to the discovery of business opportunities and the subsequent organization of funds, property and managual ability into business concern for the purpose of making profit therefrom.

Promotion a company involves:

  • Discovery to a new business opportunity.
  • Detailed investigation to consecution the probability of the idea.
  • Persuading number of persons to form a company.
  • Estimating the requirement of capital and planning the procurement of funds.
  • Acquisition of necessary assets
  • Recruitment of staff.

(b) Incorporation of the company:
A company is said to be incorporated or registered when it gets the certificate qf incorporation from the registrars of companies. Companies registered under company act 1956 may be public company or private company following are the some of identical steps and formalities required for incorporation a company.

  • Getting the approval of the registrars of companies for the proposed name of the company.
  • Promoters should obtain a letter of indct which has to be commented later into an industrial license.
  • Attending the documents duly signed by the auditors soliaiton bankers, under writers, brokers etc.
  • Enclosing memorandum of association and articles of association.
  • Filing on application with various documents for the registration of the company.
  • Payment of stamp duty, filing fees, and registration fees.
  • Obtaining the certificate of incorporation.

(c) Capital subscription stage:
Capital subscription is the third stage in the formation of a public limited company. Promoters of a company fulfills following steps in this stage

  • Director are conducting meeting to appoint a secretary of the company.
  • Bankers auditors solicitor, brokers are appointed to mention their name in the prospectus of the company
  • Pre-incorporation contracts are rectified by the promotrs to give legal touch to all contracts.
  • Resolution is passed by the directors of the company to list there share in recognized stock exchange market.
  • Promoters enters into agreement with underwrites to issue shares to public easily
  • If company’s offer to the public for subscription shares for more than one crore had to obtain the permission of the controller of capital issues before offering the shares to the public.

(d) Business commencement certificate (BCC):
It is the last step of formation of a company. For obtaining BCC the following steps have to be taken by the company.
(i) An application must be made by the company to the registrars of companies requesting him to grant BCC.

(ii) Following documents and statements must be filed by the company.

  • Minimum subscription
  • Qualification of shares
  • Listing of securities
  • A document of statutory declaration by stating that all the requirents in respect of commencement of business have been complied with (It is also called as declaration of compalinee)

(iii) Payment of required registration fees.

(iv) Obtainment of Business Commencement Certificate.

Question 2.
What are the special privileges and exceptions enjoyed by the private company under the Companies Act, 2013.
Answer:
Privileges and Exemptions of a Private Company – The” Privileges and exemptions available to a private company are in fact nothing but its advantages over a public company. They are as follows –

  • Only two members are sufficient to form a private company.
  • The provisions of S.39 as to minimum subscription do not apply to a private company. It can therefore, commence; allotment of shares irrespective of the number of shares subscribed.
  • Since a private company is restrained from inviting capital from the public, it is not required to file a prospectus or statement in lieu of prospectus to the public.
  • It need not offer preference shares to the existing shareholders.
  • It may commence business immediately after incorporation.
  • A private company is not required to call a statutory meeting or file a statutory report.
  • Ills free to issue any kind of shares and allow disproportionate voting rights to its share holders.
  • S. 149(A) provides that a private company may have only two minimum number of directors.
  • A private company may appoint one two or more directors by a single resolution and the directors need not file their consent to act or take up qualification shares prior to their appointment.
  • A special notice of 14 days as required by Section 161 of the Act for appointment of new directors is not necessary in case of a private company provided it is not a subsidiary of a public company.
  • The director can freely vote on matters relating to contracts in which, they have an interest.
  • Even one or two members may demand a poll in case of a private company.
  • The copies of profit and loss account filed by a private company wills the registrar are not open to inspection by non-members.
  • The directors, of a private company need not retire by rotation and the restrictions on appointment or advertisements of directors do not apply to a private company.

Question 3.
State the differences between private and public company under the companies act 2013.
Answer:
The common differences between a private and public limited company are as follows:

Public limited company Private limited company
Features 7 2
(1) Minimum members 3 2
(2) Minimum directors Unlimited 200
(3) Maximum members 500000 100000
(4) Minimum capital Yes No
(5) Invitation to public Yes No
(6) Issue of prospectus 5 Members 2 Members
(7) Quorum at AGM Yes No
(8) Certificate for commencement of Business (Mandatory) Limited Private Limited
(9) Term used at the end of name No restriction Can not exceed
(10) Managerial remuneration more than 11 % of Net Profits Yes No
(11) Statutory meeting (Mandatory) Allowed Not
(12) Public subscription Free Restricted
(13) Transfer of shares Public limited company Private limited company

Question 4.
State the advantages and disadvantages of private and public company’.
Answer:
A private limited company is a business entity that is held by private owners. This type of entity limits the owner’s liability to their ownership stake, and restricts shareholders from publicly trading shares

Advantages of a Private Limited Company:
(a) Members: We can start a private limited company with a minimum of only 2 members (and maximum of 200), as per the provisions of the Companies Act 2013.

(b) Limited liability: The liability of each shareholder or member is limited. This means that if the company runs into a loss, the company shareholders are liable to sell their company shares to clear the debt or liability. The individual or personal assets of shareholders or members are not at risk.

(c) Perpetual succession: As per company law, perpetual succession means that the company continues its existence even any owner or member dies, goes bankruptcy, exits from the business and transfers his shares to another person.

(d) Prospectus: Prospectus is a detailed statement that must be issued by a company that goes public. However, private limited companies do not need to issue a prospectus because the public is not invited to subscribe for the shares of the company.

(e) Number of directors: A private limited company needs a minimum of only 2 directors. At least one director on the board of directors must have stayed in India for a total period of not less than 182 days in the previous calendar year. The directors and the shareholders can be the same people.

(f) Capital: Minimum share capital required is only Rs. 1 lakh.

Disadvantages of a Private Limited Company:
→ The shares in a private limited company cannot be sold or transferred to anyone unless other shareholders agree on the same.

→ There is no option to invite public to subscribe to the shares.

→ It is mandatory that you should mention Pvt. Ltd. at the end of a company name.

→ A public company is a company that has permission to issue registered securities to the general public through an initial public offering (IPO) and it is traded on at least one stock exchange market. A public company is not authorised to begin its business operations just upon the grant of the certificate of incorporation. In order to be eligible to run as a public company, it should obtain another document called a trading certificate.

Question 5.
State the advantages and disadvantages of public limited company.
Answer:
Advantages of a Public Limited Company:
→ Members: In order for a company to be public, it should have a minimum of 7 members (maximum unlimited).

→ limited liability: The liability of a public company is limited. No shareholder is individually liable for the payment. The public limited company is a separate legal entity, and each shareholder is a part of it.

→ Board of Directors: A public company is headed by a board of directors. It should have a minimum of 3 and can have a maximum of 15 board of directors. They are elected from among the shareholders by the shareholders of the company in annual general meetings. The elected directors act as representatives of the shareholders in managing the company and taking decisions. Having a bigger board of directors therefore benefits all shareholders in terms of transparency as well as fostering a democratic management process.

→ Transparency: Private limited companies are strictly regulated and are required by law to publish their complete financial statements annually to ensure the true financial position of the company is made clear to their owners (shareholders) and potential investors. This also helps to determine the market value of its shares.

→ Capital: A public company can raise capital from the public by issuing shares through stock markets. Public companies can also raise capital by issuing bonds and debentures that are unsecured debts issued to a company on the basis of financial performance and integrity of the company.

→ Transferable shares: A public limited company’s shares are purchased and sold on the market. They are freely transferred among the members and the people trading on stock markets.

Disadvantages of going public:
→ Prospectus: For a public company, issuing prospectus is mandatory because the public is invited to subscribe for the shares of the company.

→ Expensive: Going public is an expensive and time consuming process. A public company must put its affairs in order and prepare reports and disclosures that match with SEBI regulations concerning initial public offerings (IPO). The owner has to hire specialists like accountants and underwriters to take the company through the process.

→ Equity Dilution: Any company going public is selling a part of the company ’s ownership to strangers. Each bit of ownership that the owner sells comes out of their current equity position. It is not always possible to raise the amount of money that you may need to operate a public corporation from shares, so company owners should hold at least 51 percent of the ownership in their control.

→ Loss of Management Control: Once a-private company goes public, managing the business becomes more complicated. The owner of the company can no longer make decisions independently. Even as a majority shareholder, they are accountable to minority shareholders about how the company is managed. Also, company owners will no longer have total control over the composition of the board of directors since SEBI regulations place restrictions on board composition to ensure the independence of the board from insider impact.

→ Increased Regulatory Oversight; Going public brings a private company under the supervision of the SEBI and other regulatory authorities that regulate public companies, as well as the stock exchange that has agreed to list the company’s stock. This increase in regulatory oversight significantly influences management of the business.

→ Enhanced Reporting Requirements: A private company can keep its internal business information private. A public company, however, must make extensive quarterly and annual reports about business operations, financial position, compensation of directors and officers and other internal matters. It loses most privacy rights as a consequence of allowing the public to invest in its stock.

→ Increased Liability: Taking a private company public increases the potential liability of the company and its officers and directors for mismanagement. By law, a public company has a responsibility to its shareholders to maximize shareholder profits and disclose information about business’operations. The company and its management can be sued for self-dealing, making material misrepresentations to shareholders or hiding information f that federal securities laws require to be disclosed.

Question 6.
Explain the features of companies act 2013.
Answer:
1) Corporate Social Responsibility: The Companies Act 2013 stipulates certain class of Companies to spend a certain amount of money every year on activities/initiatives reflecting Corporate Social Responsibility.

2) National Company Law Tribunal: The Companies Act 2013 introduced National Company Law Tribunal and the National Company Law Appellate Tribunal to replace the Company Law Board and Board for Industrial and Financial Reconstruction. They would Relieve the Courts of their burden while simultaneously providing specialized justice.

3) Fast Track Mergers: The Companies Act 2013 proposes a fast track and.simplified procedure for mergers and amalgamations of certain class of companies such as holding and subsidiary, and small companies after obtaining approval of the Indian government.

4) Cross Border Mergers: The Companies Act 2013 permits cross border mergers, both ways; a foreign company merging with an India Company and vice versa but with prior permission of RBI.

5) Prohibition on forward dealings and insider trading: The Companies Act 2013 prohibits directors and key managerial personnel from purchasing call and put options of shares of the company, if such person is reasonably expected to have access to price-sensitive information.

6) Increase in number of Shareholders: The Companies Act 2013 increased the number of maximum shareholders in a private company from 50 to 200.

7) Limit on Maximum Partners: The maximum number of persons/partners in any association/partnership may be upto such number as may be prescribed but not exceeding one hundred. This restriction will not apply to an association or partnership, constituted by professionals like lawyer, chartered accountants, company secretaries, etc. who are- governed by their special laws. Under the Companies Act 1956, there was a limit of maximum 20 persons/partners and there was no exemption granted to the professionals.

8) One Person Company: The Companies Act 2013 provides new form of private company, i. e., one person company. It may have only one director and one shareholder. The Companies Act 1956 requires minimum two shareholders and two directors in case of a private company.

9) Entrenchment in Articles of Association: The Companies Act 2013 provides for entrenchment (apply extra legal safeguards) of articles of association have been introduced.

10) Electronic Mode: The Companies Act 2013 proposed E-Governance for various company processes like maintenance and inspection of documents in electronic form, option of keeping of books of accounts in electronic form, financial statements to be placed on company’s website, etc.

11) Indian Resident as Director: Every company shall have at least one director who has stayed in India for a total period of not less than 182 days in the previous calendar year.

12) Independent Directors: The Companies Act 2013 provides that all listed companies should have at least one-third of the Board as independent directors. Such other class or classes of public companies as may be prescribed by the Central Government shall also be required to appoint independent directors. No independent director shall hold office for more than two consecutive terms of five years.

13) Serving Notice of Board Meeting: The Companies Act 2013 requires at least seven days’ notice to call a. board meeting; The notice may be sent by electronic means to every director at his address registered with the company.

14) Duties of Director defined: Under the Companies Act 1956, a director had fiduciary (legal or ethical relationship of trust)duties towards a company. However, the Companies Act 2013 has defined the duties of a director.

15) Liability on Directors and Officers: The Companies Act 2013 does not restrict an Indian company from indemnifying (compensate for harm or loss) its directors and officers like the Companies Act 1956.

16) Rotation of Auditors: The Companies Act 2013 provides for rotation of auditors and audit firms in case of publicly traded companies.

17) Prohibits Auditors from performing Non-Audit Services: The Companies Act 2013 prohibits Auditors from performing non-audit services to the company where they are auditor to ensure independence artd accountability of auditor.

18) Rehabilitation and Liquidation Process: The entire rehabilitation and liquidation process of the companies in financial crisis has been made time bound under Companies Act 2013.

Question 7.
Define company. Explain the characteristics of company under the companies act 2013.
Answer:
According to the Companies Act, 2013, ‘Company’ means an organisation incorporated under Company law 2013 or any other previous company law. Company is an artificial person formed by single or group of people to done their work efficiently and effectively. Companies includes sole proprietorship, partnership, limited liability, corporation, and public limited company.

According to Lord Justice Lindley, “ A Company is an association of many persons who contribute money or money?s worth to a common stock and employed in some trade or business and who share the profit and loss arising therefrom
1) An incorporate institution or body: A company is an institution or body incorporated under companies act 2013 or any previous company law. A company is also known as body corporate because it is incorporated under provisions of company law.

2) Incorporated by persons or person: A company is an institution incorporated by, single person or group of persons One person company is incorporated by a person and other companies are incorporated by two or more persons.

3) Number of members: In private company there are minimum no of persons are 2 and maximum no of persons are 200, and in public company minimum number of persons are 7 and maximum members are unlimited.

4) Artificial Person: A company is an artificial person created under law because it has no physical body. It is clothed with legal personality.

5) Limited Liability: The principle of limited liability is a feature as well as a privilege of the corporate form of enterprise. In other words, the liability of the members is limited. It means that the shareholders enjoy immunity from liability beyond a certain limit. A Shareholder cannot be called upon to pay anything more than then paid value.

6) Perpetual Succession: As a juristic person, a company enjoys perpetual succession. In other words, a company never dies, nor its life depends on the life of its members. Even if all the members die, it shall not affect the privileges, immunities, estates and possessions of the company.

7) Common Seal: The common seal is considered as the Official Signature of the company. Its common seal must authenticate all the acts. When common seal is affixed on a document, it is considered as the authoritative document of the company,

8) Capacity to Sue and be Sued: A company being a legal person, can sue other persons in its corporate name. Similarly, others can also sue the company in their own name.

Question 8.
Discuss the various kinds of companies recognized under the Companies Act, 2013.
Answer:
It must be noted that the incorporated companies may be formed in three different ways, namely, (i) Companies incorporated by Royal Charter; (ii) Companies incorporated under the State Legislatures and (iii) Companies incorporated under the Companies Act. These are ‘respectively called the Chartered, Statutory and Registered Companies. The Chartered Companies were formed under the royal charter issued by the British Crown during British Rule in India and have lost their significance in the present time.

The Statutory Companies, oil the other hand, are formed by an Act of Legislature to carry on a National business while the registered companies arc those business undertakings which are incorporated under the Companies Act, 1956.. However, there may be certain registered companies which are created for non-commercial purposes such as propagation of religion education, charity, etc. Kinds of Companies – The Companies Act, 2013. provides, for three basic types of companies which may be registered under the Act. They Are:

  • One Person Company (OPC)
  • Private Company; and
  • Public Company.

These Companies may be:

  • Company limited by shares
  • Company limited by guarantee
  • Unlimited Company.

1) Companies Limited by Shares – The main attribute of limited companies which attracts the investors is limited liability of share-holders. In other words, liability of a member, in the event of company’s winding up, in respect of the shares held by him, is limited to the extent of the unpaid value of such shares. Thus, the liability does not fluctuate but remains limited to the unpaid amount of the share-holder, whether original or the transferee.

2) Companies Limited by Guarantee – A company limited by guarantee may also be called a Guarantee Company. It is a company wherein the liability of its members extends to the amount undertaken to be contributed by each of them towards the assets of the company in the event of it’s being wound up as stated in the Memorandum of Association of the company. The liability would arise only in the event of the company being wound up and not otherwise.

3) Private and public Companies – The companies under the first two categories, namely, companies limited by shares and companies limited by guarantee, may be either Private or Public companies. S.2(68) of die Companies Act, 2013 define a ‘private company’ means a company having a minimum paid-up share capital of one lakh rupees or such higher paid-up share capital as may be prescribed, and which by its articles.

  • restricts the right to transfer its shares
  • except in case of One Person Company, limits the number of its members to two hundred: Provided that where two or more persons hold one or more shares in a company 4 jointly, they shall, for the purposes of this clause, be treated as a single member:

4) Public Companies – According to S. 2(71) of the Companies Act, a ‘public company’ means a company which is not a private company, “public company” means a company which.

  • is not a private company.
  • has a minimum paid-up share capital of five lakh rupees or such higher paid-up capital, as may be prescribed:

5) Unlimited Companies – According to Sec. 2(92) “unlimited company” means a company not having any limit on the liability of its members; a company may be incorporated with the unlimited liability. A company having no limit on the liability of its members is termed an unlimited company. An unlimited company must have articles of association stating the number of members and the share capital, if any, with which it is proposed to be registered .

6) Holding and Subsidiary Companies – Holding and subsidiary companies are relative terms that is, a company is a holding company of another if the other is its subsidiary. According to Sec.2(46) “Holding Company”, in relation to one or more other companies, means a company of which such companies are subsidiary companies;

7) Government Companies – According to S.(45) “Government company” means any company in which not less than fifty one per cent, of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company.

8) Foreign Companies – According to Sec. 2(42) a foreign company is a company which is incorporated in any country outside India under the law of that country and has a place of business in India. Foreign companies are of two kinds – (i) Companies incorporated outside-India which established a place of business in India after 1.4.1956, and (ii) Companies incorporated outside India which, established a place of business in India before that date and continue to have an established place of business in India.

9) Finance Companies (Financial Institutions) – A ‘Finance Company’ means a non-banking company, which is a financial institution within the meaning of S.45( 1) (c) of the Reserve Bank of India Act, 1934

10) FERA Companies -The companies operating in India under the Foreign Exchange Regulation Act, 1973 are technically called the FERA Companies. Broadly speaking, they fall under the following categories –

Indian companies having no foreign interests or having less than 40 per cent interest;
Indian companies having more than 40 per cent non-resident interest. Such companies were earlier known as “foreign eiantrolled companies”; and Foreign incorporated companies which are registered in India merely for business operations. The Central Government may impose certain restrictions on FERA Companies U/S. 26 of the Foreign Exchange Regulation Act, 1973.

11) Companies Regulated by Special Acts- The companies which are regulated by Special Acts such as the Banking Companies governed by the Banking Companies Act, 1949;the Insurance Companies governed by the Insurance Act, 1938; Electricity (Supply) Acts 1948; Food Corporation Act, 1964 etc. shall have to be incorporated and registered under the Companies Act and the provisions of the Companies Act, 1956 shall, therefore, also apply to them like any other company.

Question 9.
Explain the circumstances under which corporate veil is lifted.
Answer:
(1) Statutory Provisions:
The Companies Act, 2013, integrated with various provisions, points out the person liable for any such improper/illegal activity as “officer who is in default” under Section 2(60) of the Act, and also includes people holding the positions of directors and key-managerial personnel’s. A few instances of lifting of the corporate veil cases are listed below:

(A) Misstatement in Prospectus: Under Section 26 (9), Section 34 and Section 35 of the Companies Act, it is a punishable offence to furnish untrue or false statements in prospectus of a company offering securities for sale. Prospectus issued under Section 26 contains key notes of the company containing details of shares and debentures, names of directors, main objects and present business of the company. If any person attempts to furnish false or untrue statements in . prospectus, he is subject to penalty or imprisonment or both, as prescribed under the aforesaid sections.

(B) Failure to return application money: Under Section 39(3) of the Companies Act,gives provision against allotment of securities. If the minimum stated amount has not yet been subscribed and the sum payable on application is not received within a period of thirty days from the date of issue of the prospectus, then the officers in default are fined with an amount of one thousand rupees for each day till the time the default continues or one lakh rupees, whichever is less.

(C) Misdescription of Company’s name: The name of the company is very important. Attention should be paid to every detail in the spelling and pronunciation of the name of company. Usage of approved name entitles the company to enter into contracts and make them legally binding. The name of the company requires prior approval as under Section 4 and printed under Section 12 of the Companies Act. Thus, if any representative of the company collect bills or sign on behalf of the company, and enter in incorrect particulars of the company, then he is personally liable.

(D) For investigation of ownership of company: Under Section 216 of the Act, the Central Government has authority to appoint inspectors to investigate and report matters relating to the company, and its membership for the purpose of determining the true persons, financially interested in the success or failure of the company; control or to materially influence the policies of the company.

(E) Fraudulent conduct: Under Section 339 of the Act, in case of winding up of the company, it is found that company’s name was being used for carrying out a fraudulent activity, the Court is empowered to hold any such person be liable for such unlawful activities, be it director, manager, or any other officer of the company.

(F) Inducing persons to invest money in company: Under Section 36 of the Companies Act, any person making false, deceptive, misleading or untrue statements or promises to any other person or concealing relevant data from other person with a view to induce him to enter into either of following:
→ An agreement of acquiring, disposing, subscribing or underwriting securities.

→ An agreement to secure profits to any of the parties from the yield of securities or by reference to fluctuations in the value of securities.

→ Agreement to obtain credit facilities from any bank or financial institution. In such circumstances, the corporate personality can be ignored with a view to identify the real culprit making him personally liable under Section 447 of the Act accordingly.

(G) Furnishing false statements: Under Section 448 of the Act, if in any return, report, certificate, financial statement, prospectus, statement or other document required, any person makes false or untrue statements, or conceals any relevant or material fact, then he is liable under Section 447 of the Act. .

(H) Repeated defaults: Under Section 449 of the Act, if a company or an officer of a company commits an offence punishable either with fine or with imprisonment and this offence is being committed again within period of 3 years, such company and officer are to pay twice the penalty of that offence in addition to any imprisonment provided for that offence.

(2) Judicial Pronouncements:
Apart from the mandatory statutory provisions provided by the Companies Act, 2013 with regards to offences behind lifting of Corporate veil, the Legislature has also played an important role to make sure guilty person is pointed to lift corporate veil. Following are few such scenarios where Court has without any doubt lifted the corporate veil:
(A) Tax Evasion:
It’s the duty of every earning person to pay taxes. Company is no different than a person in eyes of law. If anyone attempts to unlawfully avoid this duty, he is committing an offence.

(B) Prevention of fraud/ improper conduct:
It is obvious that no company can commit fraud on it’s own. Human agency involved commits such acts. Thus, one may make efforts to prevent upcoming frauds, but such efforts are in vain, when human agency here has ulterior motive.

(C) Determination of enemy character:
The purpose of forming a company is prfit driven. A company will not attempt to do good towards society consciously. However, it may opt to cause damage instead.

(D) Liability for ultra-vires acts:
Every company is bound to perform, in compliance of it’s memorandum of association, articles of association, and the Companies Act, 2013. Any action done outside purview of either is said to be “ultra-vires” or improper or beyond the legitimate scope. Such operations of the company can be subjected to penalty.

(E) Public Interest/Public Policy:
Where the conduct of the company is in conflict with public interest or public policies, Courts are empowered to lift the veil and personally hold such persons liable who are guilty of the act. To protect public policy is a just ground for lifting the corporate personality. One such scenario is Jyoti Limited vs. Kanwaljit Kaur Bhasin & Anr.,[13] where it was held that corporate veil maybe ignored if representatives of the company commit contempt of the Court so punishment can be inflicted upon.

(F) Agency companies:
Where it is expedient to identify the principal and agent concerning an improper action performed by the agent, the corporate veil maybe neglected, supply and sewage treatment systems.

(G) Negligent activities:
Every company law distinguishes between holding and subsidiary companies. Holding companies under Indian company law[16]are the companies which have right in ‘ composition of Board of Directors, or which have more than 50% of the total share capital of the subsidiary company.

Question 10.
Explain the advantages and disadvantages of joint stock company.
Answer:
Advantages:
(1) Huge Financial Resources: A company can collect large sum of money from large number of shareholders. There is no limit on the number of shareholders in a public company. Since its capital is divided into shares of small value even a person of small means can contribute to its capital by simply purchasing its shares. It facilities the mobilization of savings of millions for the productive purposes. In addition, a company can borrow from banks to a large extent and also issue debentures to public.

(2) Limited Liability: The liability of shareholders in a company is limited to the face value of the shares they have purchased. The limited liability encourages many people to invest in shares of joint stock companies. If the funds of a company are insufficient to satisfy the claims of the creditors, no members can be called to pay anything more than the value of shares held by them.

(3) Perpetual Existence: Due to its separate legal existence, it has perpetual existence. The life of company is not dependent die or become insolvent. The members of a company may go on a company. The stability of business is of great importance to the society as well as to the nation.

(4) Transferability of Shares: The shares if a public company are freely transferable. This transferability of shares brings about liquidity of investment. It encourages many people to invest. It also helps a company in tapping more resources.

(5) Diffusion of Risk: In sole proprietorship and in partnership business, the risk is shared by few persons. But in company, the number of shareholders is large, so many persons share risk. Therefore, the burden of risk upon any individual is not huge. This attracts many investors. It enables companies to take up new ventures.

(6) Efficient Management: In company ownership is separate from management. A company has enough resources to utilize the services of experts and managers who may be highly specialized in different fields of management. It can attract talented persons by offering them higher salaries and better career opportunities. The efficient management will help the company to take balanced decisions and can direct the affairs of the company in the best possible manner. It also helps to expand and diversify the activities of the company.

(7) Economies of Large Scale Production: Large scale production of modern days is the result of company form of organization. This results in economics in production, purchase, marketing and management. These economies will help company to provide quality goods at lower cost to the consumers.

(8) Democratic Management: The company is managed by the elected representatives of shareholders called the ‘directors’. Directors are responsible and accountable to the general body of shareholders. Decisions are taken by a majority of votes completely based upon democratic principles. This prevents in mismanagement of a company.

(9) Public Confidence: A company enjoys a greater public confidence and reputation in the market due to legal control, publicity of accounts and perpetual existence. Audit of Joint Stock Company is compulsory. A company’s financial accounts and statements are published , circulated and are open to public inspection. Therefore public have enough faith in it. So, it can get loan from different financial institutions.

(10) Social Importance: The company provides opportunity to mobilize scattered savings of the community. It also creates employment opportunities. Due to large-scale production consumers get cheaper goods. The society is supplied with enough quantity of goods. Government gets income in the form of taxes.

Disadvantages:
(1) Difficulty in Formation: A company is not easy to form and establish. A number of persons should be ready to associate for getting a company incorporated. It requires a lot of legal formalities to be performed. The shares will have to be sold during the prescribed time. It is both expensive and risky.

(2) Lack of Secrecy: A company has to observe many legal formalities. Most of the business activities are decided through meetings. Profit and Loss Accounts and Balance Sheet are required to be published. So trade secrets cannot be maintained.

(3) Delay in Decisions: In company decisions making process is time consuming. All important decisions are made by either Board of Directors of by General Annual Meetings. So many opportunities may be lost due to delay in decision making.

(4) Separation of Ownership and Management: A company is owned by shareholders but managed by directors. The shareholders play an insignificant role in the working of the company. Though directors are owners of some qualification shares only, yet the result of their activities are to be borne by all shareholders. The profit of the company belongs to shareholders and the Board of Directors is paid only on a commission. There is no direct relationship between efforts and rewards. So the management does not take personal interest in the workings of company. Hence, they may work against the interest of vast majority of shareholders.

(5) Speculation in shares: The Joint Stock Companies facilitate speculation in the shares at stock exchanges. It has been found that even the directors and the managers of the company indulge in manipulating the value of shares to their advantage. When they want to purchase the shares they lower the rate of dividend and when they want to dispose of the shares they declare dividends at a higher rate.

(6) Oligarchic Management: The shareholders who are the real owners do not have much voice in the management. A handful of shareholders, which also manage the affairs of the company, are able to have control over it. Theoretically the company is democratic, but in practice it is mostly a case of oligarchy (Rule by few). A few persons hold power and control and try to exploit the majority. Thus, it does not promote the interest of the shareholders in general.

(7) Excessive Regulation: A company has to observe excessive regulations imposed by the law of the country. The excessive regulations are made with a view to protect the interest of the shareholders and the public but in practice they put obstacles in their normal and effective working. A lot of precious time, efforts, and financial resources are wasted in complying with statutory requirements.

(8) Conflict of Interest: In a company there are many parties whose interest may clash and the result may be conflict of interests. The management, the shareholders, the employees, the creditors and the government may have their own individual interests. Thus, a permanent type of conflict of interests may continue to exist in the companies. These conflicts generally lead to inefficiency in the management and reduce employee morale.

(9) Neglect of Minority: All major issues in company are decided by the shareholders having majority of them. Majority group always dominate over the minority group whose interest are never represented in the management. The company act provides measures against oppression of minority, but the measures are not very effective.

Introduction of Company Short Answer Type Questions

Introduction of Company Short Answer Type Questions

Question 1.
State the characteristics of a public company.
Answer:

  • It must have at least seven members and no limit on the maximum number of members.
  • Shares of a public company can be freely transferred.
  • It invites the public to subscribe to its shares or buy its shares.
  • It should create a board audit committee.
  • Public company will issue prospectus to general public.

Question 2.
Give a brief note on:
(a) Dormant company
(b) Small company.
Answer:
(a) Dormant company:
If a company is formed and registered under this Act for future planning, or holds a property or intellectual property and does not have any significant accounting, such a company or passive company can make the application in a way that can be applied to the registrar to obtain the status of a dormant company.

The inactive company does not fit into any business or operation or does not make any significant accounting transaction over the last two financial years, or a company that does not provide financial statements and. annual income over the last two financial years.

(b) Small company: A small company means that the company, except the public company.

  • Paid share capital is Rs. 50 lakh or more amount can be specified
  • According to its last P & L A/ C trading is Rs. 2 crore or more.

However, a small company means:

  • holding or affiliate company
  • Company registered under Section 8 of the Act of 2013.
  • Company or body corporate governed by any special act.

Small company exemption:

  • Financial statements should not include cash flow statement.
  • The Director and Company Secretary shall submit annual profits or when there is no company secretary as any director.
  • At least half of the calendar year is required to hold at least one meeting of the board of directors.

Question 3.
Give a brief note on one person company under the companies act 2013.
Answer:
It is just one type of company that has one member. OpC provides the benefit of both types of business – ownership and company. The OPC may run as a proprietor by pursuing the law by creating a business and the responsibility of the member is limited by the shares or the guarantee.

The provisions of OPC under the Companies Act 2013 are:

  • All provisions of the Act applicable to Private Companies are also applicable to the OPC unless it is agreed.
  • It should be considered as a private company for all legal purposes.
  • The name of the company includes the words ‘One Person Company’ within brackets under the company name.
  • The person who creates the OPC must nominate as nominee with the written consent of that person.
  • It must have a maximum of 15 directors, and they do not have to retire from rotation.

Question 4.
Give a brief note on body corporate.
Answer:
Body Corporate means a corporate entity that has a broader legal presence. As per company ies act 2013 body corporate includes a private company, a public company, a personal company, small company, limited liability partnerships, a foreign company, etc.

“Body Corporate” or “Corporation” also includes a company outside India, However, the body corporate does not includes the following:

  • Co-Operative Society registered under any law relating to co-operative societies.
  • The Central Government shall, by notification in any other body corporate (not a company as described in the Companies Act 2013).

Question 5.
State the various types of companies that can be formed under the companies act 2013.
Answer:
Types of Companies which can be formed under The Companies Act, 2013 is as under:

  • Public Company limited by shares
  • Public Company limited by Guarantee having share capital
  • Public Company limited by Guarantee and having no share capital
  • Public unlimited Company having share capital
  • Public unlimited Company not having share capital
  • Private Company limited by shares
  • Private Company limited by Guarantee having share capital
  • Private Company limited by Guarantee and having no share capital
  • Private unlimited Company having share capital
  • Private unlimited Company not having share capital
  • OPC Company limited by shares
  • OPC Company limited by Guarantee having share capital
  • OPC Company limited by Guarantee and having no share capital
  • OPC unlimited Company having share capital
  • OPC unlimited Company not having share capital

Question 6.
Give a brief note on companies act 2013.
Answer:
Companies Act 2013 is an Act of the Parliament of India which regulates incorporation of a company, responsibilities of a company, directors, dissolution of a company. The 2013 Act is divided into 29 chapters containing 470 sections as against 658 Sections in the Companies Act, 1956 and has 7 schedules. The Act came into force on 12 September 2013 with few changes like earlier private companies maximum number of member was 50 and now it will be 200. A new term of “one person company” is included in this act that will be a private company and with only 98 provisions of the Act notified.

On 27 February 2014, the MCA stated that Section 135 of the Act which deals with corporate social responsibility will come into effect from 1 April 2014. On 26 March 2014, the MCA stated that another 183 sections will be notified from 1 April 2014. The Ministry of Company Affairs thereafter proposed a draft notification for exempting private companies from the ambit of various sections under the companies act.

Question 7.
State the objectives of companies act 2013.
Answer:
The Act broadly seeks to achieve the following objectives:

  • To promote the development of the economy by encouraging entrepreneurship and enterprise efficiency and creating flexibility and simplicity in the formation and maintenance of companies.
  • To encourage transparency, accountability and high standards of corporate governance
  • To recognize various new concepts and procedures facilitating ease of doing business while protecting interests of all the stakeholders.
  • To enforce stricter action against fraud and gross non-compliance with company law provisions.
  • To set up institutional structure in the form of various authorities, bodies and panels as well as by including recognition of various roles for professionals and other experts.
  • To cater to the need for more effective and time bound approvals and compliance requirements relevant in the present content.

Question 8.
Briefly explain any three classification of companies as per companies act 2013.
Answer:
(i) Classification on the basis of Incorporation:
There are three ways in which companies may be incorporated.
(a) Statutory Companies: These are constituted by a special Act of Parliament or State Legislature. The provisions of the Companies Act, 2013 do not apply to them Examples of these types of companies are Reserve Bank of India, Life Insurance Corporation of India, etc.

(b) Registered Companies: The companies which are incorporated under the Companies Act, 2013 or under any previous company law, with ROC fall under this category.

(ii) Classification on the basis of Liability:
Under this category there are three types of companies:
(a) Unlimited Liability Companies: In this type of company, the members are liable for the company’s debts in proportion to their respective interests in the company and their liability is unlimited: Such companies may or may not have share capital. They may be either a public company or a private company.

(b) Companies limited-by guarantee: A company that has the liability of its members limited to such amount as the members may respectively undertake, by the memorandum, to contribute to the assets of the company in the event of its being wound-up, is known as a company limited by guarantee. The members of a guarantee company are, in effect, placed in the position of guarantors of the company’s debts up to the agreed amount.

(c) Companies limited by shares: A company that has the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by ‘ them is termed as a company limited by shares; For example, a shareholder who has paid Rs. 75 on a share of face value ‘ 10Q can be called upon to pay the balance of Rs. 25 only. Companies limited by shares are by far the most common and may be either public or private.

(iii) Other Forms of Companies:

  • Associations not for profit having license under Section 8 of the Companies Act, 2013 or under any previous company law
  • Government Companies
  • Foreign Companies
  • Holding and Subsidiary Companies
  • Associate Companies/Joint Venture Companies
  • Investment Companies
  • Producer Companies.
  • Dormant Companies

Question 9.
State the highlights of companies act 2013.
Answer:

  • The Companies Act, 2013 contains 470 Sections 29 Chapters & 7 schedules as against 658 Sections 13 parts and 15 schedules in the present Act. The Companies Act, 2013 has been categorized into introduced section for quick and easy reference.
  • Maximum number of members in Private Company increased to 200.
  • The Concept of One Person Company (OPC) has been introduced.
  • Certain privileges and concessions for Small Company defined for the first time.
  • Now onward Memorandum of Association will have five clauses only (six earlier).
  • Bifurcation of Object Clause is done away with.
  • The maximum number of directors in the company has been increased from 12 to 15.
  • To increase it further, only shareholder approval is required.
  • Maximum No. of Directorship increased from 15 to 20. But private companies also included in this limit.
  • Independent Directorship limited to 2 companies only.
  • The term “Officer in Default” widened and will include select external agencies/individuals.
  • The Resident Director becomes compulsory.
  • One Woman Director becomes compulsory for listed and other companies with paid up capital of rupees 100 crores or more.
  • Maximum tenure of the Auditors, Independent Directors defined.
  • Consolidated Financial Statements is compulsory now.
  • Constitution of Corporate Social Responsibility (CSR) Committee, adoption of CSR Policy and Spending on CSR becoming compulsory for companies: – having net worth of rupees 500 crore or more, or – turnover of rupees 1000 crore or more or – a net profit of rupees 5 crore or more during any financial year.
  • Central Government empowered to constitute National Financial Reporting Authority and National
  • Financial Reporting Appellate Authority.
  • Commencement of Business compulsory even for private company.
  • Financial year flexibility done away with.
  • Secretarial audit been made mandatory for every listed companies and other companies • belonging to such classes as prescribed.
  • Select Secretarial Standards issued by ICSI becomes mandatory.
  • Length of the Notice of BM now prescribed.
  • National Company Law Tribunal and National Company Law Appellate Tribunal becomes reality.
  • In relation to industrial sickness, the word ‘industrial undertaking’ has been replaced with the word‘company’.
  • Soft window provided for mergers of small companies
  • Implementation of Merger Scheme – to be monitored through periodic reporting

Question 10.
State the features of one person company.
Answer:
The following are the important features of the One Person Company (OPC):

  • One Person Company is one of the type of Company on the basis of number of members
  • One Person Company has only one person as a member/shareholder.
  • One Person Company is a Private Company
  • Minimum paid up share capital of One Person Company is one lakh rupees (Rs. 1,00,000)
  • One Person Company may be either a Company limited by share / a Company limited by guarantee/an unlimited Company
  • The words “One Person Company” should be mentioned in brackets below the name of the One Person Company
  • One Person Company shall indicate the name of the nominee/other person in the memorandum, with his prior written consent
  • The written consent above, shall be filed with the Registrar at the time of incorporation of the One Person Company along with its M&A {Memorandum and Articles)
  • The nominee/ other person can withdraw his consent at any time
  • The member/Shareholder of One Person Company may change the nominee/other person at any time, by giving notice to the other person and intimate the same to Company. Then the Company should intimate the same to the Registrar
  • In case of the death of member/shareholder or his incapacity to contract, then nominee/ other person become the member of the Company
  • Member/Shareholder of the One Person Company acts as first director, until the Company appoints director(s)
  • One Person Company can appoint maximum 15 directors, but minimum should be one director
  • One Person Company need not to hold any AGM (Annual General Meeting) in each year
  • Cash Flow Statement may not include in the financial statements of One Person Company
  • One Director is sufficient to sign the Financial Statements/Director’s Report
  • Within 180 days from the closure of the Financial Year, One Person Company should file the copy of the Financial Statements with Registrar
  • One Person Company should inform to the Registrar about every contract entered and also should record in the minutes of the meeting with in 15 days from the date of approval by the BOD (Board of Directors)

Question 11.
Distinguish between associate and’ subsidiary company.
Answer:
Associate Company as defined under Companies Act, 2013 as under “associate company”, in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company.”

Whereas a Subsidiary company means a Company in which holding company either:

  • controls the composition of the Board of Directors; or
  • exercises or controls more than one-half of the total share capital either at its own or together with one or more of its subsidiary companies:

Thus, an Associate Company, is a Company in which other company has a significant influence but such company is not a subsidiary than it will fall under “Associate Company” definition. To simplify the example, in general a company which holds more than 20% stake in other company falls under the category of Associate Company and once such control crosses 50% mark it will be a subsidiary company.

Introduction of Company Very Short Answer Type Questions

Introduction of Company Very Short Answer Type Questions

Question 1.
What is Company?
Answer:
Company means a voluntary association of persons for some common purpose. The purpose t includes carrying a business or charitable or Social activity.

Question 2.
Define company.
Answer:
According to see 3 (1) (i) of the company act 1956 company means “ a company formed and registered under this act or some earlier companies act after registration a company becomes, a body corporate or a corporation”.

Question 3.
What is sick industrial company?
Answer:
An industrial company which has –

  • The accumulated losses equal to 50 % or more of its average net worth during four financial years preceding current financial year.
  • Failed to repay its debts with I three consecutive quarters on demand made in writing for its repayment by a creditor. Creditors of such company.

Question 4.
What is an ultravires activity?
Answer:
Every company has to operate within the framework of its objects as defined in the Memorandum of Association. Any activity of the company which is outside the permitted range of activities will be dubbed as ultra vires, which means against the objects. Such acts are wholly null and void.

Question 5.
Give the meaning of holding companies?
Answer:
Holding company is a company controls the composition of the board of directors of another company or holds the majority of the equity shares of the other company.

Question 6.
Define small company?
Answer:
Small company is defined under sec 2(85) of the companies act 2013 as a company other than a public company.

  • The paid up share capital of which does not exceed 50 lakh or such higher amount as may be prescribed which shall not be more than 5 crore.
  • Total turn over per anam shall not be more than 2 crore rupees or such higher amount as may be prescribed which shall not more than 20 crore rupees.

Question 7.
What is Dormat company?
Answer:
According to company act 2013 Dormat company is formed and registered for future project or to hold on asset or intellectual property and has no significant accounting transaction.

Question 8.
Give the meaning of illegal association.
Answer:
Illegal association is an association of persons for some specific purpose. But the name of company is pot registered under company act 1956.

Question 9.
Define associate company?
Answer:
Under sec. 2(6) of Indian companies act 2013 Associate company is defined as a company in which that other company has significant influence but which is not a subsidiary company of the other company.

Question 10.
What is one-man company? Or corporation sole.
Answer:
It is the corporation constituting a single person at any given time who by performing a particular function enjoys corporate personality or status eig. President of India.

Question 11.
What is investment companies?
Answer:
Investment company means a company which acquires and holds shares and securities both for earning an income and for dealing in them for making profit.

Question 12.
State the kinds of company.
Answer:

  • Statutory company.
  • Registered company.
  • Company limited by shares.
  • Company limited by guarantee.
  • Unlimited company.

Question 13.
Give the meaning of GDRs.
Answer:
GDRs means Global Depository Receipts. It enables the company for issue of depository receipts in any foreign country subject to prescribed conditions.

Question 14.
What do you mean by corporate veil?
Answer:
Corporate veil refers to the partition between the company and its members.

Question 15.
What is meant by limited liability?
Answer:
It means in Joint Stock Company the liability of its members is limited to the nominal value of thee shares held by them.

Question 16.
What is FERA companies?
Answer:
FERA company means according to. The foreign Exchange regulation Act 1973 an Indian Company registered in India but having more than 40% non resident interest in their share capital.

Question 17.
Write a note on the company law board.
Answer:
In order to help in the implementation of the Companies Act, a Company Law Board was constituted in 1964. The board carries on such duties and functions entrusted by the Central Government.

Question 18.
What is subsidiary company?
Answer:
A company is said to be subsidiary another company in any of the following cases.

  • That the other company controls the composition of its board of directors.
  • That the other company controls the move than half of the total voting power of such company.

Question 19.
What is finance company?
Answer:
Finance company is defined as a non banking company or corporation or co-op society or firm which carries activities like financing. Marketable of securities, any class of insurance business, as is business.

Question 20.
Give the meaning of one person company?
Answer:
The company act 2013 introduced a new type of entity to the existing list. One person company means a company with only are person as its member.

Question 21.
What is audit committee?
Answer:
Audit committees are a measure of ensuring self discipline. Constituted with the object to strengthen the management in public companies and to ensure that the board of directors discharge their functions effectively.

Question 22.
Define listed company.
Answer:
U/s 2 (52) of companies act 2013 listed Company means a company shares and securities are listed in any recognized stock exchange.

Question 23.
Define foreign company.
Answer:
U/s 2 (42) of companies act 20/3, foreign company means that company which is not registered or incorporated in India.

Question 24.
Define One man company.
Answer:
Under section 2(62) of companies act 2013 One man company means a company which as are person as a member.

Question 25.
Define company secretary.
Answer:
According to section 2(45) of the companies Act 1956 secretary means “A company secretary who is a member of the institute of company secretaries of India and includes any other individual possessing the prescribed qualification appointed to perform the duties which may be preformed by a secretary under this act or any other ministerial and administrative duties”.

Question 26.
Define ‘public company’.
Answer:
Under section 2(71) a public company means a company which-1) Is not a private company, 2) Has a minimum share capital of five lakh rupees as such higher paid-up.capital as may be prescribed.

Question 27.
What is common seal?
Answer:
Company is an artificial person and has a seperate legal entity. Company cannot act its own. The seal with name and the address of the company is commonly used by the directors or secretary of the company for all activities of the company. This is called a common seal.

Question 28.
What is company limited by shares?
Answer:
The main attribute of limited companies which attracts the investors is limited liability of share-holders. In other words, liability of a member, in the event of company’s winding up, in respect of the shares held by him, is limited to the extent of the unpaid value of such shares. Thus, the liability does not fluctuate but remains limited to the unpaid amount of the share-holder, whether original or the transferee.

Question 29.
What is company limited by guarantee?
Answer:
A company limited by guarantee may also be called a Guarantee Company. It is a company wherein the liability Of its members extends to the amount undertaken to be contributed by each of them towards the assets of the company in the event of it’s being wound up as stated in the Memorandum of Association of the company. The liability would arise only in the event of the company being wound up and not otherwise.

Question 30.
What is private company?
Answer:
S.2(68) of the Companies Act, 2013 define a ‘private company’ means a company having a minimum paid-up share capital of 6’he lakh rupees or such higher paid-up share capital as may be prescribed, and which by its articles –

  • restricts the right to transfer its shares
  • except in case of One Person Company, limits the number of its members to two hundred

Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the perposes hold one more shares in a company jointly, they shall, for the purposes of the clause, be treated as a single member.

Question 31.
What is unlimited companies?
Answer:
According to Sec. 2(92) “unlimited company” means a company not having any limit on the liability of its members; a company may be incorporated with the unlimited liability. A company having no limit on the liability of its members is termed an unlimited company. An unlimited company must have articles of association stating the number of members and the share capital, if any, with which it is proposed to be registered.

Question 32.
What is government company?
Answer:
According to S.(45) “Government company” means any company in which not less than fifty one per cent, of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company.

Question 33.
What is finance company?
Answer:
A ‘Finance Company’ means a non- banking company, which is a financial institution within the meaning of S.45( 1) (c) of the Reserve Bank of India Act, 1934. According to this section, a financial institution is a non-banking institution which carries on any of the following activities as its business or part of its business.

Question 34.
Define private company.
Answer:
Section 2 Sub section (68) defines the Private Company. The “private company” means a company having a minimum paid-up share capital of one lakh rupees or such higher paid-up share capital as may be prescribed, and which by its articles,

  • restricts the right to transfer its shares
  • except in case of One Person Company, limits the number of its members to two hundred
  • prohibits any invitation to the public to subscribe for any securities of the company

Question 35.
What is incorporation of a company?
Answer:
The term incorporation refers to registration of a company.

B.Com 1st Sem Marketing and Services Management Previous Papers

B.Com 1st Sem Marketing and Services Management Previous Papers

B.Com 1st Sem Marketing and Services Management Question Paper May 2013 with Answers

Time : 3 hours
Max. Marks : 100

SECTION – A

I. Answer any ten of the following sub-questions each question carries 2 marks. (10 x 2 = 20)

Question (a)
Define marketing.

Question (b)
What is promotion mix?

Question (c)
Mention any two objectives of pricing.

Question (d)
Mention any four advantages of advertising.

Question (e)
What is meant by Market Segmentation?

Question (f)
What is service environment?
Answer:
Service environment is the sum total of forces and factors that makes influence on the marketing of particular services. It includes organizational factors, customer needs and preferences, competition, etc.

Question (g)
What is Assembling?

Question (h)
Mention any four approaches to the study of Marketing?

Question (i)
What is M-Business?

Question (j)
Mention four characteristics of services.

Question (k)
What do you mean by Tourism Marketing?

Question (l)
What do you mean by healthcare services?

SECTION – B

II. Answer any four of the following questions. Each question carries 8 marks. (4 x 8 = 32)

Question 2.
State any 8 (eight) functions of wholesaler.

Question 3.
Explain eight interest internal factors which influence marketing.
Answer:
Internal factors influence marketing:
(a) Producers or organisation: Producers are the persons engaged in the production of materials including firms, mines, forestry, etc.

(b) Manufacturing resources: This comprises of men material, money, machinery and management. All these are internal and are under the control of management. It can be adjusted according to marketing planning and policy.

(c) Marketing mix: Price, product, promotion are internal factors can be adjustable according to external factors. Organization can take decision on price promotion and product according to the conditions prevail in the market.

(d) Suppliers: Suppliers are the important persons in the organization manufacturing programme can be adjusted according to the supply of material and labour resources organization can adopt such a purchase policy which gives bargaining power to the organization.

(e) Employees: Employees loyalty sincerity, productivity and their attitude towards their job and the organization behaviour can be controlled by following sound and employees oriented policies.

(f) Middle men : Middlemen are those who help the company in promoting and distributing the product. Organization can control the distribution of goods according to customers demand in the market.

Question 4.
Briefly explain the importance of pricing.

Question 5.
Briefly explain the characteristics services.

Question 6.
Briefly explain the concept and nature of educational service.

SECTION – C

III. Answer any three of the following questions. Each question carries 16 marks. (3 x 16 = 48)

Question 7.
Explain briefly the 7 Ps of marketing mix in service Industry.

Question 8.
Explain the functions of marketing briefly.

Question 9.
Explain the bases for market segmentation.

Question 10.
Explain various media of advertising.

B.Com 1st Sem Marketing and Services Management Question Paper November 2014 with Answers

SECTION – A

I. Answer any five of the following questions. Each question carries two marks. (5 x 2 = 10)

Question (a)
What is Relationship Marketing?
Answer:
Relationship marketing is a strategy that aims at developing and managing long term relationship with customers, suppliers and distributors, in order to earn and retain the business of the enterprises.

Question (b)
State any two components of political environment.
Answer:
Political environment includes government monetary and fiscal policy, import and export polices, custom duties, legislation controlling, physical environment etc.

Question (c)
Define Consumer Behaviour.

Question (d)
What is Branding?

Question (e)
Define Service.

Question (f)
Who is a Travel Agent?
Answer:
Travel agent is an agent who acts and do the work on behalf of a hotel, airline, transport or a shipping company. Travel agent provides the service to tourist on behalf of his owner.

Question (g)
Define Marketing?

SECTION – B

II. Answer any three of the following questions. Each question carries six marks. (3 x 6 = 18)

Question 2.
State any six objectives of Marketing.
Answer:
Following are the objectives of marketing:
(a) To apply effective marketing polices in the field of dynamic marketing. Rapid growth in the technology requires intelligent marketing polices to achieve the goals of the firm.

(b) To develop the market for the product in the market field. Some development and changes are required in continuous manner to retain the product in the market.

(c) To implement guiding policies for better results. Firm should develop and implement good guiding policies to earn more profit and to get better result in the market.

(d) To suggest solutions for marketing problems. Marketing is responsible for identifying problem and to find out better solutions for various aspects of marketing problems.

(e) To collect marketing information relating to marketing activities. Marketing decisions are based on marketing informations. Therefore marketing helps to take decisions on marketing activities by collecting marketing information.

(f) Marketing helps to collect new ideas for stabilization of firm in the market.

Question 3.
How does Technological Environment influence marketing?
Answer:
Technological environment is considered as uncontrollable environment in the marketing mix.
(a) Technological factors like development in computer science, information technology influence the growth of marketing. Growth of marketing helps to improvement in economic conditions.

(b) Technological environment changed the national market into global market. Globalization of the business activity has made tremendous growth in world market.

(c) Changes in information technology has also contributed for the growth of science sectors. Many instruments are developed which gives good services to customers.

(d) Technological changes also made changes in the specialized sectors like advertising education, personal cause, health care etc.

(e) Technological changes changed the life style income and behaviour of the people.

(f) New technologies offer a main source of economic growth.

(g) Technological environment changed the trading activity into e-trading, e-commerce, e-business and online business.

Question 4.
Briefly explain the various stages in product development.

Question 5.
State the merits of Personal Selling.

Question 6.
Differentiate between Products and Services.

SECTION – C

III. Answer any three of the following questions. Each question carries fourteen marks. (3 x 14 = 42)

Question 7.
Explain the functions of Marketing.

Question 8.
Explain the basis for Market Segmentation.

Question 9.
What is Product Life Cycle? Explain the various stages in product life cycle.

Question 10.
Explain the factors responsible for the growth of service sector in India.

Question 11.
What is Promotion? Explain its significance.

B.Com 1st Sem Marketing and Services Management Question Paper November 2015 with Answers

SECTION – A

I. Answer any five of the following sub-questions each question carries 2 marks. (5 x 2 = 10)

Question (a)
What is market.

Question (b)
What is meant by Relationship marketing?

Question (c)
Give the meaning of Marketing Environment.

Question (d)
What is Product-Mix?

Question (e)
What is Service Mix?
Answer:
Service mix is set of 7p’s. They are Product, Pricing, promotion, Place, People, Physical evidence, Process.

Question (f)
What is meant by Market Segmentation?

Question (g)
What is Social marketing Concept?

SECTION – B

II. Answer any three of the following questions. Each question carries six marks. (3 x 6 = 18)

Question 2.
What are the requisites of sound market segmentation?

Question 3.
Distinguish between advertising and personal selling.

Question 4.
Describe the Service Process.

Question 5.
Explain the impact of socio-cultural environment on marketing decisions.
Answer:
Social cultural environment is uncontrollable environment. Social and cultural forces influence the business concern in the long run. Marketing management should take new demands created due to changes in life style, social values etc., There are certain areas which require special attention.

They are –

  • Changes in life style
  • Changing role of women
  • Emphasis on quality goods
  • Greater performance for recreational activities
  • Greater care to health body and personality
  • Awareness of misleading advertisement
  • Growing consumerism

Social and cultural environment makes the business firm to perform social obligation. The social marketing concept demands every business firm to pay greater attention to consumer welfare and citizen welfare. Social habits and cultural status of consumers induce the business to take good decisions on production, marketing paid on consumer satisfaction. Business firm help the consumer by supplying satisfied goods according needs of consumers under social obligation.

Question 6.
Write short notes on ‘Selling Concept’ and ‘Marketing Concept’.
Answer:
There are five competing concepts under which business conduct its marketing activity.
They are –

  • The production concept
  • The product concept
  • The selling concept
  • The marketing concept
  • The societal marketing concept

(a) Selling concept:
The selling concept holds that consumers will not buy enough of the organisations products unless the organisation undertakes a substantial selling and promotion effort. Normally unsold goods like insurance, encyclopedias etc. Selling concept applies because they go for aggressive selling techniques selling techniques are applied by business man only when consumer are not interested with particular type of product firm uses price off offer combo offer to attract consumer.

(b)Marketing concept:
The marketing concept holds that the key to alliance organisational goals. The marketing concepts determines the needs and , wants of target markets and delivers the desired satisfactions more effectively and efficiently than competitors. This concept is based on find wants and fill them and have the consumer and not product for long time.

SECTION – C

III. Answer any three of the following questions. Each question carries fourteen marks. (3 x 14 = 42)

Question 7.
Define Product Planning. Describe the factors Influencing Product Planning.
Answer:
Product planning is the process of determining line of product which secure maximum profits from the protential markets. It is an act of marketing to find out market, supervising, searching, screening, development and commercialization of new product, the modification of existing lines, and the discontinuance of marginal or unprofitable items. Product planning is the management decision regarding introduction of new product following are the factors influence product planning and new product introduction in the market.

(a) Customers: Consumers needs and wants are monitored by the management through surveys. By inquiring and attending to complaints of consumers many new ideas are discovered by the management. Women consumers and working women provide lot of new ideas for manufacture of new product.

(b) Competitors: Management analyses competitors product, their advertisement techniques and takes invest in introduction of new product according to public invest,

(c) Distributors and suppliers: Distributors and suppliers are the middlemen between consumer and business firm. They pass information about new product and product planning with new changes, techniques according to consumer needs.

(d) Internal sources: Management always engage in the work of research. Marketing research and product research influence the firm to prepare plan for new product development. Marketing research and scientific research on product and production help to develop new product.

(e) Other sources: Trade magazines, seminars, government agencies, new product consultants, advertising agencies, marketing research firms, university, commercial laboratories, investors, advises and promotes management of firm to take decision on product planning.

Question 8.
Explain the different types of services.

Question 9.
Explain the bases of market-segmentation.

Question 10.
What is promotion? Explain its significance.

Question 11.
Explain the approaches to the study of marketing.

B.Com 1st Sem Marketing and Services Management Question Paper November 2016 with Answers

SECTION – A

I. Answer any five sub-questions. Each question carries 2 marks. (5 x 2 = 10)

Question (a)
What is market?

Question (b)
What is consumer behaviour?

Question (c)
Write any two elements of marketing-mix.

Question (d)
What is service-mix?

Question (e)
Who is a Travel Agent?

Question (f)
Write any two models of E-Business.
Answer:
Any two models of E-Business are –

  • B2B and
  • B2C.

Business to Business model is a model in which transaction is made between business. Business to customer model is used to trade the transaction between Business man and customers.

Question (g)
Expand the following:
(a) FCI
(b) PDS
Answer:
(a) FCI = Food Corporation of India.
(b) PDS = Public Distribution System.

SECTION – B

II. Answer any three of the following questions. Each question carries six marks. (3 x 6 = 18)

Question 2.
State any six objectives of Marketing.

Question 3.
Explain the stages in product development.

Question 4.
Describe the services process.

Question 5.
Explain the promotion-mix.

Question 6.
What are the essentials of a good qualities of a salesman?

SECTION – C

III. Answer any three of the following questions. Each question carries fourteen marks. (3 x 14 = 42)

Question 7.
Explain the approaches to the study of Marketing.

Question 8.
What are external macro environmental forces? Explain.

Question 9.
What is product planning? Describe the factors influencing product planning.

Question 10.
Explain briefly, the significance of Tourism.

Question 11.
Explain different types of services.

B.Com 1st Sem Marketing and Services Management Question Paper November 2018 with Answers

SECTION – A

I. Answer any five of the following sub-questions each question carries 2 marks. (5 x 2 = 10)

Question (a)
What is tele-marketing?

Question (b)
Give the meaning of retailing.

Question (c)
State the meaning of consumer behaviour.

Question (d)
What do you mean by psychological pricing?

Question (e)
What is meant by physical distribution?
Answer:
Physical distribution means transfer of goods form the place at production to the place of distribution. These distributions are done by businessman through channel of distribution.

Question (f)
State any four components of service marketing mix.

Question (g)
Define tourism.
Answer:
According to WTO, “Tourism is the movement of people away from their normal place of residence and work for a period of not less than 24 hrs. and not more than year and whose main purpose of travel is other than the exercise of an activity remunerated from with in the place visited.

SECTION – B

II. Answer any three of the following questions. Each question carries six marks. (3 x 6 = 18)

Question 2.
State any six goals of marketing.

Question 3.
Explain briefly the personal factors of consumer behaviour.

Question 4.
Explain briefly the stages in the product development.

Question 5.
Briefly explain the steps in building a service blue print.

Question 6.
State the significance of health care services.
Answer:
Significance of healthcare services:

  • Health care services in India has increased life expectancy at birth of male and female.
  • Improvement in health care services qualify has decreased the death rate.
  • Health care services are health related activities or benefits increases employment and generates revenue.
  • It deescases infant mortality rate.
  • Public health services, essential, public health services, preventive health services, mental health services, home health services and school health services are found in India.
  • Health workers provide services to different people in different age groups
  • Health services are offered at any time because different people may need them due to variaisor special reasons.

SECTION – C

III. Answer any three of the following questions. Each question carries fourteen marks. (3 x 14 = 42)

Question 7.
Briefly explain the recent trends in marketing?

Question 8.
Explain the bases of market segmentation.

Question 9.
Explain briefly the various channels of distribution.

Question 10.
Discuss the different types of services.

Question 11.
Discuss the marketing mix of educational services.

SECTION – A

I. Answer any five of the following sub questions. Each Sub-question carries two marks. (5 x 2 = 10)

Question (a)
What is green marketing?

Question (b)
What is consumer behaviour?

Question (c)
Write any two models of E-Business.
Answer:

  • B2 – BModel
  • B2 – C Model

Question (d)
Who is a Travel Agent?

Question (e)
Give the meaning of a product.

Question (f)
What is product mix?

Question (g)
What is branding?

SECTION – B

II. Answer any three of the following questions. Each questions carries six marks. (3 x 6 = 18)

Question 2.
Briefly explain any six objectives of marketing.

Question 3.
Explain in brief of the objectives of pricing.

Question 4.
Explain the stages in product development.

Question 5.
Describe the service process.

Question 6.
What are the requisites of sound market segmentation?

SECTION – C

III. Answer any three of the following questions. Each question carries fourteen marks. (3 x 14 = 42)

Question 7.
Explain the approaches to the study of marketing.

Question 8.
What is product planning? Describe the factors influencing product planning.

Question 9.
Explain the bases for market segmentation.

Question 10.
What is promotion? Explain its significance.

Question 11.
Explain the characteristics and economic significance of tourism.

B.Com 1st Sem Marketing and Services Management Question Paper Dec 2017

B.Com 1st Sem Marketing and Services Management Question Paper Dec 2017

Time: 3 Hours
Max. Marks: 70

SECTION – A

I. Answer any five sub-questions. Each sub-question carries two marks: (5 x 2 = 10)

Question (a)
What is market?
Answer:
Market means getting together of buyers and sellers in person or by mail, telephone, telegraph, cable or through any other means of communication. It does not refer to any particular place where buyers and sellers meet face to face and make their purchases and sale, but covers the whole of any where the buyers and sellers are in such free intercourse (i.e., communications or contact) with one another that a single price prevails for a certain commodity at a certain point of time throughout the region.

Question (b)
What is green marketing?
Answer:
Green marketing refers to holistic marketing concept where in the production, marketing, consumption and disposal of products and services happen in a manner that is less detrimental to the Environment with growing awareness about the implications of global warming, non-biodegradable solid waste, harmful impact of pollutants etc

Question (c)
What is market segmentation?

Question (d)
What is consumer behaviour?

Question (e)
Give the meaning product.

Question (f)
What is service market?

Question (g)
What is tourism marketing?

SECTION – B

II. Answer any three questions. Each question carries six marks. (3 x 6 = 18)

Question 2.
State any six characteristics of marketing.

Question 3.
Explain the models of e-business.
Answer:
→ Business -to- Business (B2B) model: It involves electronic transactions for ordering, purchasing, as well as other administrative tasks between houses. It includes trading goods, such as business subscriptions, professional services, manufacturing and wholesale dealings.

→ Business -to- Consumer (B2C) model: It involves transactions between business organizations and consumers. It applies to any business organization that sells its products or services to consumers over the Internet. Internet sites display product information in an online catalogue and stores it in a database. It also includes services online banking, travel services, and health information.

→ Consumer – to- Consumer (C2C) model: It involves transaction between consumers. Here, a consumer sells directly to another consumer. EBay and www.bazee.com are common examples of online auction Web sites that provide a consumer to-advertise and sell their products online to another consumer.

→ Consumer-to – Business (C2B) model: It involves a transaction that is conducted between a consumer and a business organization. It is similar to the B2C model, however, the difference is that in this case the consumer is the seller and the business organization is the buyer. In this kind of a transaction, the consumers decide the price of a particular product rather than the supplier. This category includes individuals who sell products and services to organizations. For example, www.monster.com is a Web site on which a consumer can post his bio-data for the services he can offer. Any business organization that is interested in deploying the services of the consumer can contact him and then employ him, if suitable

Question 4.
Explain the objectives of pricing.
Answer:
(a) Profit Oriented Objectives:
Profit oriented objectives focus on profit. This objective can be profit maximization and achieve target return.
→ To maximize profit: One of the objectives of pricing is to maximize the profit. It is very important to maximize the profit to run the organization. Some company set price to their products or services with a view of maximizing profit. It is very important to focus on profit maximization.

→ Achieving target return: Some company may determine the price of their goods or services to achieve a certain return on investment or on sales.

→ Achieving target return on sales: It is necessary to achieve target return on sales in pricing. Mostly resellers manage their pricing to achieve a target return on sales

→ Achieving target return on investment: Pricing should focus on achieving target return on investment too. Manufacturing company manages pricing in order to achieve specified return on investment in manifesting, research and development, establishment and commercialization.

(b) Sales Oriented Objectives:
Sales oriented pricing objectives focus on sales volume rather than on profit. The profit can be to gain sales volume and market share. It includes sales volume in-crease,

Sales volume increase:
One of the pricing objectives may be determined in terms of increasing sales volumes over the certain period of time. For example, 10% increase annually. This does not mean that profit should be avoided. Organization believes that higher sales volume will lead to lower unit costs and higher long run profit. It is necessary to focus in the increment in sales volume of the company.

Maintain market share:
Pricing should have the basic objectives in maintaining market share. Market share is really a meaningful measure of the success of a firm’s marketing strategy. A market share price objective can be either to maintain the market share, to increase it or sometimes to decrease it. The company uses the price as an input to enjoy a target market share. This market share is normally expressed as a percentage of the total industry sales.

(c) Status Oriented Objectives:
Status oriented pricing focus on maintaining the current position. Large companies in order to minimize the risk of loss and maintain their status adopt this objective. Organization does not take any initiative in the price change. These objectives are as follows:

Stabilization of price:
Pricing should have the objectives in stabilizing the price of a product. Some organization may set their pricing objective in order to maintain or stabilize price and prevent from market uncertainty. These objectives are adopted for minimizing the risk of loss.

Meet competition:
The objective of pricing is to meet the competition in the market. Under this objective organization set the prevailing market price.

Question 5.
State the essentials of good brand.
Answer:

  • It should be short as far as possible and should not exceed seven letters. Example: Surf, Lux, Colgate Super Max, Pear (soap)
  • Brand should be easy to write, read, spell, recognize and remember. Example: Sony (Cassette), Promise (tooth paste) Action (Shoe) etc
  • It should suggest product benefits or benefits or qualities. Examples are: LG Refrigerator, Vico Vajradanti tooth Powder, Snow cem paints etc
  • It should be suited to the markets, buyers and products. Women consumers are attracted’to feminine name and mark and men to masculine ones, Example – Evening in Paris (perfume), and Prince (Blades)
  • It should be able to translate in other foreign language easily
  • It should be distinctive so that the product is easily differentiated e.g. LG T. V., Samsung T.V., Kodak, Philips, etc
  • It should be capable of registration
  • It should be legally protectable. For example use of names like National Flag, Ashok Chakra, UNO, WHO are prohibited by the act

Question 6.
Describe the service process.
Answer:
The service process is the detailed specification of a service. Service processes intensely interact with the customer. First, there are intense interactions with the customer: Service processes show long encounters, during which customers interact directly. There may be duties of the customer that are critical for success or failure of the service process. For example, it may be necessary that the customer provides some information to allow the further proceeding of the process. It is important to emphasize that a service process must-describe the interaction between customer and service provider.

A second important property is, that service processes differentiate two areas, front stage and back stage. The front stage contains the activities of the customer and the service provider’s activities that are visible to the customer. The back stage contains the activities not visible to the customer. The third important property is that service processes need to represent the handover of resources and information from the customer to the service provider and the restitution vice versa. Furthermore, service processes are often cross-organizational. A top-level service process that is responsible for providing the service to the customer coordinates a number of sub processes.

SECTION – C

III. Answer any three questions. Each question carries fourteen marks. (3 x 14 = 42)

Question 7.
Explain the functions of marketing.

Question 8.
Explain the bases for market segmentation.
Answer:
(a) Geographic Segmentation:
Geographic location is one of the simplest methods of segmenting the market. People living in one region of the country have purchasing and consuming habit which differs from those living in other regions. For example, life style products sell very well in : metro cities, e.g., Mumbai, Delhi, Kolkata and Chennai but do not sell in small towns.

Banking needs of people in rural areas differ from those of urban areas. Even within a city, a bank branch located in the northern part of the city may attract more clients than a branch located in eastern part of the city.

(b) Demographic Segmentation:
In demographic segmentation, market is divided into small segments based on demographic variables like age, gender, income, occupation, education, social class, generation, family size, family life cycle, home ownership, religion, ethnic group, nationality etc. It is one of the most important factors for segmenting the customers groups. Consumer needs, wants, usage rate etc depends upon demographic variables.

Demographic factors play a very crucial role in formulating marketing strategy. For instance Maggi noodles were launched to target the market of children and young children but it has been found to be liked by adult. Consumer products like liquor, cigarette, apartments, cars, LCD TVs, hotels and restaurants are income related segmented markets.

(c) Psychographic Segmentation:
In Psychographic Segmentation, segments are defined on the basis of social class, lifestyle and personality characteristics. A psychographic variable includes interests, opinions, personality, self image, activities, values, attitudes. A segment having demographically grouped customers may have different psychographic characteristics.

(d) Behavioral Segmentation:
In this segmentation market is divided into segments based on consumer knowledge, attitude, use or response to product. Behavioral variables includes usage rate, product benefits, brand loyalty, price consciousness, occasions, user status etc. For example, one segment of the market may always purchase your product while another is made up of people who switch frequently between brands. An experienced drinker may stick with Guinness, while an inexperienced on may try out a range of beers and stouts.

(e) Benefit Segmentation:
Marketing and advertising executive attempt to identify the one important benefit of their product or service that will be most meaningful to consumers. Examples of . benefit that are commonly used includes financial security, data protection, good health, fresh breath, and peace of mind.

(f) Socio-cultural segmentation:
Socio-cultural variables that is group and anthropological variables provide further .bases for market segmentation. For example, consumer markets have been successfully subdivided in to segments on the basis of stage in the family life, social class, core cultural, sub-cultural memberships and cross cultural affiliations

(g) Use -Related segmentation:
An extremely popular and effective form of segmentation categorizes consumer in term of product, services, or brand usage characteristics, such as level of usage, level of awareness and degree of brand loyalty. Marketers of a host of other products have also found that a relatively small group of heavy users accounts for a disproportionately large percentage of product usage; targeting these heavy users has become the basis of their marketing strategies. Other marketers take note of the gaps in market coverage for light and medium users and profitably target those segments.

Question 9.
Explain the stages involved in new product development.

Question 10.
Define services. Explain the characteristics of services.

Question 11.
Explain the characteristics and economic significance of tourism.
Answer:
Characteristics of tourism:
(a) Tourism arises from a movement of people to, and their stay in, various destinations.

(b) There are two elements in all tourism: the journey to the destination and the stay including activities at the destination.

(c) The journey and the stay take place outside the usual place of residence and work, so that tourism gives rise to activities, which are distinct from those of the resident and the working population of the places, through which the tourist travels and in which they stay.

(d) The movement to destinations is of temporary, short-term character, with the intention of returning to the usual environment within a few days, weeks or months.

(e) Destinations are visited for purposes other than taking up permanent residence or employment remunerated from within the places visited.

(f) Tourism is a multi-dimensional phenomenon. It involves varied activities like hotels, travel, tour operators, retail shops, entertainment

(g) Tourism is basically a service industry and a large proportion of population actively engaged in it finds employment prospects in tertiary profession like hotels, catering, transport, travel agency etc

(h) The industry of tourism is dominated by changing ideas, attitudes and motivation of its customers.

Economic benefits of tourism:
Foreign exchange earnings:
Tourism expenditures, the export and import of related goods and services generate income to the host economy. Tourism is a main source of foreign exchange earnings ’ for at least 38% of all countries.

Contribution to government revenues:
Government revenues from the tourism sector can be categorized as direct and indirect contributions. Direct contributions are generated by taxes on incomes from tour¬ism employment, tourism businesses and by direct charges on tourists such as eco tax or departure taxes. Indirect contributions derive from taxes and duties on goods and services supplied to tourists, for example, taxes on souvenirs, alcohol, restaurants, etc.

Employment generation:
The rapid expansion of international tourism has led to significant employment creation. For example, the hotel accommodation sector alone provided around 11.3 million jobs worldwide in 1995. Tourism can generate jobs directly through hotels, restaurants, taxis, souvenir sales and indirectly through the supply of goods and services needed by tourism-related businesses. According to the World Tourism Organization tourism represents around 7 % of the world’s employees.

Stimulation of infrastructure investment:
Tourism can induce the local government to improve the infrastructure by creating better water and sewage systems, roads, electricity, telephone and public transport networks. All this can improve the quality of life for residents as well as facilitate tourism.

Contribution to local economies:
Tourism can be a significant or even an essential part of the local economy. Because environment is a basic component of the tourism industry’s assets, tourism revenues are often used to measure the economic value of protected areas. There are other local revenues that are not easily quantified, as not all tourist expenditures are formally registered in the macro-economic statistics.

Part of the tourism income comes from informal employment, such as street vendors and informal guides. The positive side of informal or unreported employment is that the money is returned to the local economy and has a great multiplier effect as it is spent over and over again. The World Travel and Tourism Council estimate that tourism generates an indirect contribution equal to 100% of direct tourism expenditures.

Service Sector Management Long Answer Type Questions

Service Sector Management Long Answer Type Questions

Question 1.
Discuss briefly the economic and social benefits of Tourism.
Answer:
Tourism is one of the major service industries in the world today. It plays an important role in the economy of most countries of the world and India is no exception. Because of the extreme importance of tourism industry it has been given the status of export industry by planning commission and ministry of tourism. Some of the economic benefits of tourism are:
(i) Helps in the economic development of a country:
Tourism generates flow of money. Tourism is the pivot of the vehicle for economic development. Tourism acts as a valuable attribute to most developing nations in their search for means by which maximum rates of economic growth is attained.

(ii) Increase in National Income:
Tourism stimulates the production sectors and brings an automatic increase in national consumption. Tourism demand for services and consumer goods . encourages investment. Investment in turn increases the national income of the country.

(iii) Redistribution of National Income:
Concentration of wealth in Fewer hands is one of the major problems in the development of an economy. Tourism has created new opportunities and areas where money can be spent. Thus, tourism helps in distribution of money is a wide area and helps in the redistribution of national income.

(iv) International trade:
International tourism promotes international trade. It also helps in earning foreign exchange from visiting travelers.

(v) Creates employment opportunities:
Tourism is a both labour and capital intensive industry. Because of its labour intensive nature it provides employment to people several times more than normal manufacturing industries. At present, 17 million peoples are employed in this industry and related services.

(vi) Growth of Retail Trade:
Tourism helps in the growth of retail trade. It encourages a high standard of living for the whole community. It helps in the growth of retail trade activities like jewellery, hand bags, cosmetic and perfumes, clothes, shoes, electronic items etc.

(vii) Development of transport system:
Tourism industry completely depends on the transport facilities available in the country. Good transport system is necessary for the development of tourism industry.

Some of the important social benefits of tourism are:
(a) Increases standard of living:
Tourisms industry helps in increasing the standard of living. Tourism industry helps in redistribution of money and increases employment opportunities, which in turn increases the standard of living of the peoples living in a particular country.

(b) Promotes international understanding:
Growth the tourism industry helps in promoting and maintaing a good international understanding with the other countries. It helps in wiping out the ravages wrecked by one military holocast and softening rivalries between the warring nations.

(c) Transfer of culture:
Tourism promotes transferring of culture from one part of the country to another and from one nation to another. It helps the people in acquiring good ideas and concept from other cultures.

(d) Helps in Regional Growth:
Tourism generates economic growth in region of a country. Which are economically backward. It reduces regional imbalance within a country. It brings employment and supplementary income to the people of the less developed regions of a country.

(e) Acts as a passport to peace:
Tourism helps in promoting and maintaining peace, good understanding and harmony in the world. It contributes to an open world and free movement of culture and commerce for the benefits of all mankind.

Question 2.
Critically analyse the dependency of tourism and hospitality services in our economy.
Answer:
Tourism is one of the major services industries in the world today. It plays an important role in the economy of most countries of the world and India is no exception. Because of the extreme importance of tourism industry it has been given the status of ‘export industry’ by planning commission and ministry of tourism. However the significance and impact of tourism can be understood from the following points:

  • It has created opportunities for large number of people directly or indirectly. At present, 17 million people are employed in this industry and related services.
  • It is a promising foreign exchange earner of any country.
  • It generates earnings for hoteliers, travel agents, taxi-drivers, craftsman, transporter, tourist guides, textile owners etc.,
  • It helps in converting an impoverish place or state into a thriving tourist center.
  • This industry embraces the growth of other industries and sectors in the economy.
  • It helps in the spreading of our rich culture and heritage to other countries.
  • Large number of rural artisans and craftsman are benefited out of tourism industry.

Tourism is one of the major service industries in the world today. In India, it plays an important role in the economic develop of the country. At present, about 17 millions of people are employed in this industry. The major factors influencing the growth of tourism are –
(i) Greater affluence and more leisure time: Because of the growth of technology now a days people have more leisure time, as those works are done by machines.

(ii) Better, speedier, safer and cheap air transport facilities: Again, because of the development of science and technology the air transport has become better, speedier, safer and cheaper. This also encourage tourism industry.

(iii) Enormous growth in international business:
Increase in international business has not only resulted in movement of goods and services from one country to another but as well as people also.

(iv) More aggressive tourism publicity:
Continuous and aggressive publicity of tourism has also influenced the growth of tourism industry.

(v) Development of packaged tours:
Since package tours provides lot of facilities to the tourist regarding accommodation, fooding air tickets etc., it has encouraged tourism industry.

(vi) Visit and tours have becomed as status symbol:
To some people tourism serves as status symbol. They view that if they visit a number of tourist places, their status in the society will increase.

Question 3.
Describe the economic significance of tourism.
Answer:
Tourism is one of the major services industries in the world today. It plays an important role in the economy of most countries of the world and India is no exception. Because of the extreme importance of tourism industry it has been given the status of ‘export industry’ by planning commission and ministry of tourism.

However the significance and impact of tourism can be understood from the following points:

  • It has created opportunities for large numbers of people directly or indirectly. At present, 17 million people are employed in this industry and related services.
  • It is a promising foreign exchange earner of any country.
  • It generates earnings for hoteliers, travel agents, taxi-drivers, craftsman, transporter, tourist guides, textile owners etc.
  • It helps in converting an impoverish place or state into a thriving tourist center.
  • This industry embraces the growth of other industries and sectors in the economy.
  • It helps in the spreading of our rich culture and heritage to other countries.
  • Large number of rural artisans and craftsman are benefited out of tourism industry.

(a) Employment generations:
Tourism has created direct and indirect employment to a large number of people. In India 17 million people are employed in tourism and its related industries.

(b) Generating earnings;
It creates earnings for hoteliers, travel agents, tax-drivers, craftsman, transponters, airlines, tourist guides, shoemakers, textile owners etc., some Rs. 1,000 crore wroth of handicrafts to are sold every year to tourist in India.

(c) Benefits to artisans and craftsman:
Large number of rural artisans, craftsmen, have benefited from tourism industry from purchasing of their materials from foreign tourist.

(d) Converting backward areas into forward areas :
Tourism can convert impoverish place or state into tourist centres. For ex. Mysore, Kerala, Hampi, Goa and the like.

(e) Foreign exchange earner:
Tourism industry earns a foreign exchange which is a great income to the nation also example. Thailand in Asia earns great income only from tourism industry. In lndia tourism industry earns a record foreign exchange of Rs. 15,000 crore per annum which is about 2% of GPP.

(f) Variants of tourism:
This industry has no many variants such as eco-tourism, health tourism, coastal tourism, farm tourism adventure tourism and so as. Kerala which is known as gods own country earning a main foreign exchange in India.

(g) Benefits to tour operations:
Tourism industry is a labour intensive industry. For example: SOTG, ITDC and State Tourism development, corporation have provided business and employment to millions of people.

(h) Growth of other sectors:
It supports the growth of other industries. Example: In India Hospitality, health care, Insurance, Banking, Garments, Textiles, Handicraft, Horticulture, IT, ITES, BPO, BT, education 6 other sectors – growth is influenced by tourism industry.

Question 4.
What are the factors that influence the growth and development of tourism in India.
Answer:
Tourism is one of the major service industries in the world today. In India, it plays an important role in the economic develop of the country. At present, about 17 millions of people are employed in this industry. The major factors influencing the growth of tourism are:
(i) Greater affluence and more leisure time:
Because of the growth of technology now a days people have more leisure time, as those works are done by machines.

(ii) Better, speedier, safer and cheap air transport facilities:
Again, because of the development of science and technology the air transport has become better, speedier, safer and cheaper. This also encourage tourism industry.

(iii) Enormous growth in international business:
Increase in international business has not only resulted in movement of goods and services from one country to another but as well as people also.

(iv) More aggressive tourism publicity:
Continuous and aggressive publicity of tourism has also influenced the growth of tourism industry.

(v) Development of packaged tours:
Since package tours provides lot of facilities to the tourist regarding accommodation, fooding air tickets etc., it has encouraged tourism industry.

(vi) Visit and tours have become a status symbol:
To some people tourism serves as status symbol. They view that if they visit a number of tourist places, their status in the society will increase.

(vii) Social change:
Life style education and income of people so increased. Increase in working of women in the family led to increase in family income which had changed life style. These people are thought of going four during their holidays which increased the development of tourism.

(viii) Change in attitude of people:
Now a days people changed their attitude in spending. They are ready to spend the money, wants to get entertainment and they want to enjoy their life.

(ix) Tremendous changes in information technology has also contributed for the growth of these services. Many electronic systems have infurd in the information field contributing services to customer and delighting them.

(x) Internet Multimedia and various computer application brought changes in economic condition which have given scope tor toe development of specialized services.

Question 5.
Write a explanatory note on marketing mix in case of airline service.
Answer:
Marketing mix of airline service Ban be summarized as follows:
(a) Product mix:
It is related to civilian aviation but not defence aviation. In civil aviation there are mainly three types of products they are passenger traffic, cargo carrying traffic and mail services. In passenger traffic products are regular passenger, pilgrim services and special flights. It should be noted that airline services are very competitive as such operators have to plan their operations very attractive. To make operational product attractive three elements like transport, tour, and hotel must be identified carefully to suit the needs of passenger.

(b) Price mix:
Fixing price is very challenging as the cost of operation of air service is very high. At the same time occupancy ratio is also varying due to inflation in the economy, while fixing of price it is necessary to consider demand level, supply of air craft, infrastructural facility, running expenses, seasonal flactuation, depreciation of air crafts, strategies of competitions etc.

(c) Promotion mix:
The usual promotion mix adopted to increase air traffic are advertising, personal selling, publicity, sales promotion, network marketing, and telemarketing etc. For advertising purpose the popular media must be selected. After selecting media, the layout of advertising, message, cost of advertising, creativity in advertisement, latest development in printing technology must be considered.

Personal selling involves persuading air travelers by promoting agencies. It requires the services at travel agents, tour operators, transport operator, travel guides, travel guides, front line staff and receptionists, if these links fails to operate positively, it becomes difficult to sell airlines.

Publicity is powerful submix of promotion mix. This involves persuasive communication. Airline organization should develop good relationship with news agencies, publisher of periodicals and magazines and other print media people. For the purpose of sales promotion sates targets have to fixed and aggressive promotion activity have to be taken up to reach toe target for this purpose right incentives must be promoted.

Network marketing involves promotion by words of mouth. All the people who work for airlines continuously speak about airlines for its quality and service. Modern days tele marketing also plays significant role in service promotion. Air transport organizations have enough scope for promoting their services though this mode.

Question 6.
Write a note on classification of hospitals?
Answer:
Classification of hospitals depends on various factors following are the basis for classification of hospitals.
(A) On the basis of objective:

  • Teaching – cum-research hospitals : This is a university hospital for developing medicine and promoting research to improve the quality of medical aid.
  • General hospital: General hospital deals with many kinds of disease and injury and typically has an emergency department to deal with immediate threats to health and the capacity to dispatch emergency medial services.
  • Specialty hospital: These hospitals deal with special medical needs. Some specialty hospitals are affiliated with universities for medical research and the training of medical personnel.
  • Clinic: It is smaller than general hospital provide only outpatient service.

(B) On the basis of ownership:

  • Government hospital; Government hospitals are owned, managed and controlled by government.
  • Semi government hospitals : These hospitals are partially shared by government. It is run and managed by private organization. But controlled by government.
  • Voluntary agencies hospitals : Voluntary agencies also run hospital to give services to patients at cheaper rate.
  • Private hospital: These hospital management and control are fully in the hands of private people.

(C) On the basis of path of treatment:

  • Allopathy hospital: These hospitals are promoted under english medicine – system.
  • Ayurvedic hospital: Ayurved hospital is based on Indian system where herbals are used for preparing medicine.
  • Homeopathy
  • Unani
  • Sidda
  • Nature care.

(D) On the basis of size:

  • Five hundred beds hospitals : These hospitals are teaching hospitals generally have five hundred beds which can be adjusted in tune with the number of students.
  • Two hundred beds hospitals ; District hospitals generally have two hundred beds which can be raised to three hundred in the face of changing requirements.
  • Fifty beds hospital: Taluk hospitals are fifty beds hospitals and can be raised to are hundred depending upon the requirements.
  • Six bed hospitals : Primary health care centres are six beds hospitals and can be raised to ten beds.

(E) On the basis of location:

  • City hospitals: These hospitals are established in big cities and run on corporate lines adopt a structure which shows the complete authority flow. These hospitals provide systematic and effective operational system.
  • District hospitals: These hospitals are established at district level and fulfill the needs of district people.
  • Taluck hospitals: These hospitals are at taluck level, to create awareness on family planning child care environmental protection.
  • Primary health care centres are established at village or hobli level to give fist and treatment to village people.

Question 7.
What are the essentials required for successful marketing of health care?
Answer:
Following are the essentials for successful marketing of medicare.
(a) Users found satisfied: The first and important work of marketing manager is to satisfy the user by making available to them the quality service. The medical aid play a pivotal role along with this supportive services also play an incremental role without which the duration of treatment is increased considerably.

(b) Time honoured service mix: The marketing principles focus on setting the fee structure in such a way that it helps hospitals in having quality inputs, discriminating pricing policy is suitable to serve the poorer section of the society. This price policy also enables hospitals informulating a sound service mix for making available for the users the time honoured services.

(c) Services can be made cost effective: Generally health care services are very expensive. In India we need to minimize cost in services. A well thought strategies reduces the cost.

(d) Public awareness: In an Indian environment the prospects living in the rural areas are not aware sensitive issues influencing their health conditions which increases the cases of ailments. The hospitals with the support of professionals can innovate advertisements which would inculcate mass awareness and also minimize pressure on hospitals.

(e) Thrust areas can be identified: In India marketing principles need to activate child immunization, vaceination for serious diseases. Pre – and post maternity care to women a crash programme for malaria, cholera, typhoid leprosy and soon.

(f) Vulnerable segment can be identified : In case of Health case services some of the segments are very backward and some villages are not having infrastructural facilities. To make available the best possible medicaf aid to them it is eneuhal that marketer have detailed information regarding vulnerable segments jn order that an action plan is prepared to counter this problem.

(g) Behavioural dimensions can be given due weight age : The medical personnel in general and the front line personnel in particulars need an indepth knowledge of behavioural management, this helps in minimizing the duration of treatment

(h) Motivating personnel: Service promotion is an important dimension of marketing in which market plan to motivate personnel of different level of command. Example Pulse police programme.

Question 7.
Explain marketing mix for hospital?
Answer:
(a) Product mix: Services provided by hospitals have been classified in three heads:

  • line services
  • supportive
  • auxiliary services.

The line services include emergency services out door and indoor services, intensive care unit, operation theatre. These are also called as core services playing decisive role in the medicare services. The supporting services determine the quality of services made available by medical and para-medical personnel.

They get a strong base for treatment since the diagnostic aspect determines a direction. Auxiliary services consists of registration and indoor case records store management, transportation management, mortuary management engineering and maintenance services. Hospital services must be in quality to give satisfaction to the users. Otherwise promotional aspects carries no meaning.

(b) Promotional mix : Promotional aspects includes motivating the prospects and transforming them into actual users hospital services focus on two Components,

  • Innovating the promotional measures and including mass awareness
  • Hospitals are supposed to play such a positive role which in the long run makes the environment disease free and the prospects are sensitive to adjust even in a rough weather.

Promotion aspects includes personal and non-personal measures main duty of health care services is making available right services to the right users at the right time, advertisement and publicity helps to promote medical services.

(c) Price mix: In health came services pricing is very challenging task hospitals need to invest a lot on the sophisticated equipment and technologies to improve the quality of medical aid. But poor section of the society unable to pay the fees charged by big hospitals. Therefore discriminatory fee structure is suitable because it provides even weaker section of the society an opportunity to avail quality of medical services.

(d) Place mix: There is direct link between producer and consumer, hospital staff like doctors, nurses and technicians are produces and patients are consumer. Consumer can come up with desirable parameters for a parameters for a tangible product in terms of productivity and efficiency. But it is difficult to rate the intangible product like treatment and diagnosis of diseases. Some time producer of health care himself act as a marketer. The main duty of health care services is to create awareness among children, parents and public in the society.

Question 8.
Explain marketing mix of education service.
Answer:
(a) Product mix: It is the important dimension of the service mix. It includes building furniture, sanitation water electricity, library, equipment laboratory and the treating and non-teaching personnel. In the face of technological advances the universities colleges and institutes need to equip the information centre for data processing. These items increase the cost of input though for innovation in education.

(b) Promotion mix: In India private colleges and institutions are making adequate financial provisions for promoting their services. The personal promotion is related to the teaching methods and a qualitative improvement would mean positive word of mouth publicity for the institution. Sometimes institutions advertise their services and also try to differentiate their services from their competition. Quality of education services in possible to find out with the help of their contribution to the development of higher education.

(c) Price mix: Price mix includes fee structure design a fee structure is an important task of institution fee structure takes all segments into consideration. Some extra ordinary meritorious students get free cost of education. Therefore rational fee structure would make the educational institutions competent enough to initiate qualitative and quantitative transformation in the higher education.

(d) Place mix: Better economic life is the ultimate goal of educational service marketing, the government managed educational institutions are providing better educational services to people in the society. But structural change in the distribution process is needed to fill the gap between service providers and users.

Service Sector Management Short Answer Type Questions

Service Sector Management Short Answer Type Questions

Question 1.
Writes note on functions of travel Agent.
Answer:
The scope of the functions of a modern travel agency has widened greatly over the years and especially after the introduction of the jet travel. The scope of the activities of the travel agent in the context of modern tourism can be described as: “to give advice to the potential tourist on the merits of alternative destination and to make necessary arrangement for a chosen holiday which may involve the banking of accommodation, transport or other relevant services.”

However some of the important functions of a travel agency are listed below:

  • Provision of travel information
  • Preparation of itineraries
  • Liason with providers of services
  • Planning and costing of tours
  • Ticketing
  • Provision of foreign currency

(a) Assisting the travellers with travel information:
Travel agents plan, organize and conduct long tours, expeditions for individuals and group. They assist travelers with the constantly changing air fares and schedules, Vaction packages and provide vast information about travel on the net.

(b) Promoting travel packages:
Travel agencies uses the heeds of business and tourist people and help them make the best possible travel. Tourism management depends on ships, resorts and speciality travel group agents to promote travel packages to more numbers of people.

(c) Provide advice on destination:
They give advice on destination and make arrangement for transportioan, hotel accommodation, car rentals, tours and recreation. They also give advice on weather conditions, restaurants, tourist attractions recreation. For international travel, agents also provide information on customs regulations required papers and currency exchange rates.

(d) Recommend the travel experience:
They consult a variety of published and computer based sources for information on departure and arriaval times, fares and hotel ratings and accommodation. To get feedback information like comfort, clearliness and quality of food and service they visit hotels, resorts and restaurants.

(e) Professional advice:
Travel agents make presentation to social and special interest groups, arrange advertising displays and suggest company sponsored trips to business managers.

(f) Cyber mediation scenario:
They advice their customers in all maters related to travel that is to find best – deals, visas, e-immigration information, health and safety information, destination information, booking, assistance during travel, etc.

(g) Knowledge navigators:
The emergence of e-commerce and e-business neccesstitate travel agents to become travel knowledge navigators. They insure customers link with applied behavior skills.

Open functions:

  • Preparation of itineraries
  • Planning and costing of tours
  • Issuing of tickets
  • Provision of foreign currency
  • Marketing suitable arrangements for the insurance of life and baggage of tourist particularly while travelling.

Question 2.
What are functions of hospital?
Answer:
The main functions of hospitals are –
(a) Patient care:
The attitudes and behavioural pattern of health professionals do have influence on patient care as they directly relate to quality of hospital environment of hospital attitude of staff towards patient, cultural relationship etc., affect the patient.

(b) Workshop for physicians :
Work shop for physicians motivate them for providina better service, hospital is part of physicians practice.

(c) Working at community health care:
Many hospitals do take proactive role to improve community health.

(d) Serving the institution itself by achieving perpetuation, growth and prestige for institution its staff and the community.

Question 3.
Write a note on types of hospital.
Answer:
(a) General hospital:
The popular known type of hospital is general hospital general hospitals established to deal with many kinds of disease and injury and typically has an emergency department to deal with impsediate threats to health and the capacity to dispatch emergency medical services general hospital generally provides large number of beds for intensive care and king term care, and specialized facilities for surgery, plastic surgery, child birth etc.

(b) Specialised hospitals:
Specialsied hospitals dealing with specific medical needs specialsied hospitals include trauma centers, children’s hospitals and hospitals for dealing with specific medical needs such as psychiatric problems, certain disease categories and so forth.

(c) Teaching hospital:
Teaching hospitals combines assistance to patients with teaching to medial students. It is a university hospital.

(d) Clinics:
Clinics provides medical facilities in small scale. It is smaller than general hospital. It provides only but patient services. It is run by private partnership of physicans and by government agency for health care.

Question 4.
Explain the feature of educational service?
Answer:
Following are the features of educational service:

  • Educational services are intangible in nature. It can be acquired and felt
  • It is one of the largest market in the world
  • Large number of institutions specified in various fiels like management and computer education
  • Increased competition due to entry of professional institutions
  • Institutions are trying to create their band through product differentiation
  • Physical infrastructure is a must for systematic and structured learning
  • It is specialized and need based
  • Heterogyneous students make the delivery systems little complex.
  • Increased cost of education
  • High contact consumer and people based service

Service Sector Management Very Short Answer Type Questions

Service Sector Management Very Short Answer Type Questions

Question 1.
Define Foreign Tourists.
Answer:
Foreign Tourist is a person traveling for pleasure and business purposes. They may also undertake traveling for health and domestic purpose.

Question 2.
What do you mean by tourism management?
Answer:
The activities that are managed to boost tourism services is called Tourism management.

Question 3.
What is tourism marketing?
Answer:
Tourism marketing mix is an activity involving the process of promoting tourism business. In consisting of gathering data, analyzing card coordinating efforts to promote tourism business.

Question 4.
What do you mean by health care service?
Answer:
Health care services means hospital services. Hospital is an institution for health care providing treatment by specialsied staff and equipment.

Question 5.
What are functions and systems of hospitals?
Answer:

  • Admission
  • Diagnosis
  • Treatment
  • Inspection
  • Control
  • Discharge

Question 6.
What is technical quality service?
Answer:
It refers to precision of equipment and diagnostics competence of the technical stuff qualification and experience and professional training of the nursing staff.

Question 7.
What is functional quality service in hospital?
Answer:
It means how well the service delivery system is geared up to serve the customer needs it is the way the service is delivered.

Question 8.
What Is cure and care?
Answer:
Cure is a result of professional and technical quality. It is area where a hospital has to focus its attention and take action. Care is an outcome experience of functional quality of the system.

Question 9.
Give the meaning of educational services.
Answer:
Educational services Cover a wide range of activities from education through play for a very young age to the school-going kids to degree colleges to professional post-graduate colleges and beyond.

Question 10.
What is innovative education?
Answer:
It means changing the systems of education and making human resources more productive.

Introduction to Service Management Long Answer Type Questions

Introduction to Service Management Long Answer Type Questions

Question 1.
Explain the role of services in economic development.
Answer:
As we all know that services lie at the very center of economic activity in any society, it is an indispensable sector of our economy. Growth in the service sector can be seen in nearly all developing, and developed countries of the world. The rapid growth of the service sector in India is due to growth in industrial services and consumer services.

Today the role played by the service sector in our economy is so important that they are no longer considered ancillary activities supporting manufacturing sector. Rather they have become a separate sector and the dominant drivers in our economy. The increasing importance of service in the economic development of our country can be understood from the following table which depicts the contribution of the Various sectors to GDP in India.

Sectorial contribution to GDP in India:

Sectors 1980-81 1990-91 1997-98 1998-99 1999-2000 2003-04
Agriculture & allied sector 38.1 30.9 26.79 26.82 25.5 24.5
Industry 25.9 30.0 27.76 27.01 27. 4 23.5
Services 36.0 39.1 45.5 46.17 47.1 52.0
Total 100 100 100 100 100 100

Thus from the above table it can be conduced that the role of service concluded Service sector is very much essential for the economic development of any economy. There has been a continuous growth in service sector because of the various benefits it provides to the society.

→ In expansion activities of each country demanded for more services in the field of transportation, infrastructure facilities, financial services and crated more employment opportunities.

→ The expansion activities also given score for the development many other services like legal services, project management, accounting information which helped in improving economic condition.

→ Educational services personal services, health care services, specialized services contribution to the country increased GDP in all advanced countries. Indian economy has started increasing only after the fast growth of IT and educational service sector.

Because of the so many benefits of the service sectors to the society, it has become indispensable which in turn has led to the growth of the service sectors in an economy.

Question 2.
Explain the characteristic features of service.
Answer:
In the words of Kotler and Armstrong – A service w an activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product”.

The features of services are as follows:
(i) Intangibility:
Services cannot be examined before it Is purchased. In case of goods, we can examine taste, smell, physical integrity etc. But services donot have tangible properties. Reliability, personal care, attentiveness of staff etc., can only be verified after purchasing services measuring quality of services are also different compared with goods. The lack of physical evidence increases the level of uncertainty. So service marketers try to add tangible evidence to their product and goods marketers are trying to add intangible services to their product.

(ii) inseparability:
In case of goods companies manufactures goods in one central location and then transport them to the place where customers want to buy them. Producers can make goods at a time convenient to itself. Production and consumption are separable. But consumption of service to inseparable from its production. Productions and consumer must interact each other.

For example:
in personal care services customers must be present during entire production process. A surgeon cannot provide service without a patient. In case of goods, generally first product, offered for sale and finally sold and consumed. Where as in services they are sold first then produced and consumed simultaneously.

(ii) Variability:
In goods before purchasing inspection can be done and gives opportunities for rejection. But in services customers is involved, in production process. It is difficult to control to ensure standard. This is true of many labour intensive personal services provided in a one-to-one situation. Such as personal health care. Some services allow scope for quality control during the production process ex. Telecommunication services can operate with very low failure

(iv) Perishability:
Goods which are unsold can be carried forward for future sales. But the produces of a service cannot sell in the future days.
Example: A train operators which offers seats on the 8.10 am train from Mangalore-Mysore cannot sell any empty seats once the train has departed.

(v) Immobility to own services:
when a person buys a goods, the ownership will be transferred from seller to buyer. When a service is performed no ownership is transferred from seller to buyer. Buyer just buys right to a service process such as use of car part or an account’s time.

(vi) Nature of demand:
The demand for services also not constant. In some situations the demand for services will be more. For Example: During marriage seasons, there will be more demand travelling and hence demand for travelling facilities will be more. Similarity during summer season Hill stations services are also increases. So the demand for services will be diferring from one situation to other.

(vii) Heterogeneity:
It means that every type of service is different from another.

(viii) Quality standardisation:
The services doesnot have a reliable and universal tool for evalvating its quality. It cannot be measured and quantified.

(ix) Simultaneity:
It means that the services are not transferred from the hands of the distributor to the customer but either the service provider goes to the customer or vice versa.

(x) Fluctuating Demand:
The service sector has to face fluctuating demands. There are peak periods when the demand for the services is maximum.

(xi) Ownership:
In the case of services, the users of the services are given an access to the services and cannot own the services. The user merely get opportunity to use the services and the ownership doesnot goes to him.

Question 3.
Define service management. Explain the marketing mix in service management.
Answer:
The application of accepted principles of management like planning, staffing, controlling, organizing etc. in service industry is known as service management. The following are the marketing mix components in service marketing.
(a) Product:
It refers to service offering. There are certain physical characteristics in services which consumers asses in purchasing them. They are –

  • Attractiveness of the offering in terms of physical features suitability of climate etc.
  • Facilities available and associated level of quality.
  • Accessibility

Service products are updating in response to new development and are trying to make their offer more tangible. For example tangible gifts like toiletries flight bags, drink in airiness services.

(b) Pricing:
Price discounts, mode of payment, price discrimination are similar to product marketing. Main factor is quality of service determines the price of that service. The sen/ices are perishable in nature and cannot be stored and it is difficult to determine price prices are determined on the basis of cost, completion and demand basis. Many pricing policies like discounts allowances, skimming and penetration, one price and flexible price are applicable to services. While determing the price government regulations are to be considered.

(c) Promotion:
Promotion mix is used to build the image and reputation to differentiate each from their competition to raise interest and knowledge to attract new customers and to increase consumers loyalty. The promotion divisions are taken on the basis of the nature of the service product, competitive scenario and the buyer behavior. Service provides need to follow these steps to design promotion policy.

  • Identification of segments.
  • An unique selling proposition.
  • Well defined target audience.
  • Use of media and media scheduling to reach audience.
  • Monitoring.

They use tools like advertising, personal selling sates promotion publicity, public relation.

(d) Place:
This marketing mix decides about how service reach consumer. Place concept refer to the accessibility to service provided. It involves physical location decision.

For example: A education centre, where it has to be located? How the customers avail the services? What is the level of demand. By considering there factors they need to establish on education centre.

(e) People:
Represents individual providing services to customers. Intangibility of services make consumer to make purchase division by the degree of trust and influenced by the individual who makes initial contact with the customer. Indeed the people component of a service marketing more is most commonly associated with personal selling. People constitute an important dimension in the management of services both as performances of services and as customers.

(f) Physical evidence:
Intangibility nature of service needs physical entities which describe service product and its distinguishing qualities. The customers form impressions about the service organizations on the basis of physical evidence like brochures, stationery equipment, furniture, building.

Example:
Tourism provide brochure about the place to be visited college prospectus gives profile of the college operations infrastructural facilities provided by hotel, hospitals are considered to be physical evidence.

(g) Process:
The system by which the Target audience receive delivery of the services reference as process. It consist of converting input into output. Bun in services there is no clear cut input or output. Rather it is the process of adding value or utility to system inputs to create output which are useful to be customers.

Question 4.
Describe the methods to enhance value by Improving quality and productivity of services.
Answer:
The methods used to enhance value by improving quality and productivity of service are –
(a) Value enhancement:
Value enhancement requires quality improvement programme to deliver and continuously enhance the benefits desired by customers. And also productivity improvements reduces associated cost productivity and quality form a powerful component of the Ps.

(b) Role of marketing:
Creating customers value is not possible only with marketing research activities. Perceived value of customers of trained in marketing research shows that values are highly personal and may differ from customer of customer. Therefore service marketers has to create services when offers value to target customers. They need to formulate service design. Providing supplementary system etc. There are key elements in value creation. Re-engineering of existing production and delivery system are needed to improve service value either by adding new benefits or by reducing associated cost as the result of greater productivity.

(c) Service pricing decisions and value improvement:
Pricing decisions are relate to value for the customer. Reducing prices will increase perceived value. A marketing inputs is important to advise operation expert whether the customers are willing to make to trade off like paying higher price to oftain more benefits or avoid unwanted time and effort. Advertising and other communication efforts are need to clarify service benefits and to give education for customer about oftaining the best value from the service.

(d) Marketing and service quality:
Every industry has to maintain best quality which puts them in competitive advantage. If quality is unsatisfactory customer may shift to other services. So it is established that value is simply quality price.

(e) Marketing and services productivity:
Increasing productivity helps the firm to reduce the cost, higher profit make the firm the price leader. Firm can also spend is advertising promotion, sales efforts, improved customer service etc. It can also secure long term future through investment in new service technologies. Increasing productivity has impart as customers. So negative aspects should be avoided and new procedures are carefully presented to customers. The industry must improve productivity by involving customers actively in service production and delivery process.

(f) Manufacturing – based components of quality:
Gravis developed 8 components of manufactures of based quality that could be useful for analysis arid strategic planning. They are performance, features, reliability anformance, durability serviceability, aesthetics and perceived quality.

Introduction to Service Management Very Short Answer Type Questions

Introduction to Service Management Very Short Answer Type Questions

Question 1.
Give the meaning of service management?
Answer:
Service management means service providers of any type will have to adopt sound management principles to have an effective and efficient operation. All the accepted principles of management are applicable to any service activity.

Question 2.
Define the term ‘Service’.
Answer:
According to Kotler “A service is any activity or benefit that one party can offer to another that is necessarily intangible and does not result into the ownership of any thing.”

Question 3.
What is service?
Answer:
Service means objects of transactions offered by firms that generally offer services or that consider themselves service organization

Question 4.
Name any four professional services.
Answer:
They are:

  • Engineering
  • Consultancy
  • Architectural
  • Financial advice

Question 5.
Define Targeting Customer.
Answer:
It is a process of identifying market segments, targeting one or more of these segments and developing services and marketing programs to suit each selected segments.

Question 6.
State few service sectors.
Answer:
They are:

  • Communication
  • Banking
  • Transportation
  • Insurance
  • Warehousing
  • Advertising and sales promotion

Question 7.
State the reasons for the growth of the Service Sector.
Answer:
They are:

  • Recent development in technology
  • The growth of corporate sector and stock market.

Question 8.
What is Service Marketing?
Answer:
Service marketing is the process of discovering and translating consumer demand for more services and then making an accelerated effort on the part of marketers to satisfy these consumer needs and to broaden their Own customer base and add to revenues and profitability.

Question 9.
State two intermediaries in service delivery.
Answer:
Two intermediaries in service delivery are:

  • Insurance agents
  • Travel agents

Question 10.
Mention the ‘P’s in service marketing mix.
Answer:
They are:

  • Product
  • Price
  • Promotion
  • Place or physical distribution
  • Personnel
  • Physical facilities and
  • Process management.

Question 11.
Name the services which are identified for the purpose of marketing?
Answer:
Transportation service, distribution service, financial service, real estate service, communication service, government service, educational service, hospitality service, legal service, professional service etc.

Question 12.
What is service encounter?
Answer:
Service encounter means a period of time during which a consumer directly interacts with a service.

Question 13.
What are the components of service marketing mix?
Answer:
Product, pricing, promotion, place, people, physical evidence, process.

Question 14.
What is blue printing?
Answer:
The flow charting of a service operation is referred to as blue printing. It high lights the importance of service design, focuses attention on process modeling and service mapping, blue prints provide a detailed knowledge of the service operation.

Question 15.
Give the meaning of process in services.
Answer:
Process in services refers to the actual procedures mechanisms and flow of activities by which service is delivered. Therefore service in process includes service delivered and operating system.

Question 16.
Give the meaning of service system.
Answer:
The service system comprises the service delivery process and all of the supporting processes that are required in the creation of the value for the customers.

Question 17.
Give the meaning of service delivery process or system.
Answer:
Service delivery process consists of all the steps begins with when the customers first interacts with the service organization and ends when the delivery of the desired service is completed.

Question 18.
What is service concept?
Answer:
Service concept provides the link between service strategy and service delivery process. Service concept describes customer requirements.

Question 19.
What are the elements of service concept?
Answer:
There are four elements:

  • Service operation
  • Service experience
  • The service outcome
  • The value of service

Question 20.
What is front office process in a service Industry?
Answer:
Front office process helps the industry in giving information to customers and in executing processes and work flows. Front office process is a temporary entity helps to reduce administration costs. It also helps the service industry to complete its business transaction.

Question 21.
What is service encounter?
Answer:
Service encounter is period of time during which a consumer directly interacts with a service

Question 22.
Give the meaning of service process.
Answer:
Service process is a sequence of interdependent and interlinked procedures each activity or operation consumes one or more resourses like employee time energy machine and money to convert input into outputs.

Question 23.
What is service designs?
Answer:
Service design is the activity of planning and organizing people infrastructure, communication and material components of a service in orders to improve its quality and the interaction between service provides and consumers.