Explore topic-wise InterviewSolutions in Current Affairs.

1. The Classical theory of Rent is called “ Ricardian Theory of Rent.” 

2. “ Rent is that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil” – David Ricardo

Ricardian theory of rent assumes the following:

1. Land differs in fertility. 

2. The law of diminishing returns operates in agriculture. 

3. Rent depends upon fertility and location of land. 

4. Theory assumes perfect competition. 

5. It is based on the assumption of long period. 

6. There is existence of marginal land or no – rent land.

7. Land has certain “Original and indestructible powers”. 

8. Land is used for cultivation only.

9. Most fertile lands are cultivated first.

Functions of an Entrepreneur:

1. Initiation: An organizer is the initiator of the business, by considering the situation and availability of resources and planning the entire process of business of production. 

2. Innovation: A successful entrepreneur is always an innovator. He introduces new methods in the production process.

3. Co – ordination: An organizer applies a particular combination of the factor of production to start and run the business or production.

4. Control, Direction and Supervision: An organiser controls so that nothing prevents the organisation from achieving its goal. He directs the factors to get better results and supervises for the efficient functioning of all the factors involved in the process of production.

5. Risk – taking and uncertainty – bearing: There are risk – taking and uncertainty- bearing obstacles. Risks may be insured but uncertainties cannot be insured. They reduce the profit.

Bal Gangadhar Tilak is the founder of Homerule.

1. Increasing Competition: Delicencing and entry of foreign firms in Indian
market has increased the level of competition for Indian firms.
2. More Demanding Customers: Now customers are more aware and they
keep maximum information of the market as the result of which, now
market is customer/buyer oriented. Now products are produced keeping
in mind the demands of the customers.
3. Rapid Changing Technological Environment: Rapid Technological
advancement has changed/improved the production process as a result
of which maximum production is possible at minimum cost but it leads to
tough challenges in front of small firms.
4. Necessity for Change: After New Industrial Policy, the market forces
(demand & supply) are changing at a very fast rate. Change in the various

components of business environment has made it necessary for the
business firms to modify their policies & operations from time to time.
5. Need for Developing Human Resources: The changing market
conditions require people with higher competence and greater
commitment. Hence there is a need for developing human resources
which could increase their effectiveness and efficiency.
6. Market Orientation: Earlier selling concept was famous in the market
now its place is taken by the marketing concept. Today firms produce
those goods & services which are required by the customers. Marketing
research, educational advertising, after sales services have become
more significant.
7. Reduction in budgetary Support to Public Sector: The budgetary
support given by the government to the public sector is reducing thus the
public sector has to survive and grow by utilising their own resources
efficiently.c

1. Increasing Competition: Delicencing and entry of foreign firms in Indian market has increased the level of competition for Indian firms.
2. More Demanding Customers: Now customers are more aware and they keep maximum information of the market as the result of which, now market is customer/buyer oriented. Now products are produced keeping in mind the demands of the customers.
3. Rapid Changing Technological Environment: Rapid Technological advancement has changed/improved the production process as a result of which maximum production is possible at minimum cost but it leads to tough challenges in front of small firms.
4. Necessity for Change: After New Industrial Policy, the market forces (demand & supply) are changing at a very fast rate. Change in the various components of business environment has made it necessary for the business firms to modify their policies & operations from time to time.
5. Need for Developing Human Resources: The changing market conditions require people with higher competence and greater commitment. Hence there is a need for developing human resources which could increase their effectiveness and efficiency.
6. Market Orientation: Earlier selling concept was famous in the market now its place is taken by the marketing concept. Today firms produce those goods & services which are required by the customers. Marketing research, educational advertising, after sales services have become more significant.
7. Reduction in budgetary Support to Public Sector: The budgetary support given by the government to the public sector is reducing thus the public sector has to survive and grow by utilising their own resources efficiently.

1. Economic Environment: It has immediate and direct economic impact on a business. Rate of interest, inflation rate, change in the income of people, monetary policy, price level etc. are some economic factors which could affect business firms. Economic environment may offer opportunities to a firm or it may put constraints.
2. Social Environment: It includes various social forces such as customs, beliefs, literacy rates, educational levels, lifestyle, values etc. Changes in social environment affect an organisation in the long run. Example: Now
a days people are paying more attention towards their health, as a result of which demand for mineral water, Diet coke etc. has increased while demand of tobacco, fatty food products has decreased.
3. Technological Environment: It implies using new and advanced ways/techniques of production. A businessman must closely monitor the technological changes taking place in the industry as it helps in facing
competition and improving quality of the product. For Example, Digital watches in place of traditional watches, artificial fabrics in place of traditional cotton and silk fabrics, booking of railway tickets oninternet etc.
4. Political Environment: Changes in political situation also affect business organisations. Political stability builds confidence among business community while political instability and bad law & order situation may bring uncertainty in business activities. Ideology of the political party, attitude of government towards business, type of
government-single party or coalition government affects the business.
Example: Bangalore and Hyderabad have become the most popular locations for IT due to supportive political climate.
5. Legal Environment: It constitutes the laws and legislations passed by the Government, administrative orders, court judgements, decisions of various commissions and agencies. Businessmen have to act according

Economic Environment in India

-------------------------------------------------

As a part of economic reforms, the Government of India announced New Economic Policy in July 1991 for taking out the country out of economic difficulty and speeding up the development of the country.
The main objective of New Industrial Policy was to promote Liberalization, Privatization and Globalization.
1. Liberalisation: It means freeing of Indian Industry from all unnecessary government controls and restrictions. Abolishing licensing requirements; Freedom in deciding the scale of business; removals of restriction on
movements of goods and service; reduction in tax rates; freedom in fixing prices; simplifying procedures; making it easier to attract foreign investment.
2. Privatization: Giving greater role to private sector in the nation building process and reduced role of public sector; Disinvestment in many Public Sector undertaking etc., Setting up of BIFR to revive sick units in public sector enterprises suffering losses. It aimed at improving efficiency and performance of government undertakings, reducing budgetary deficit & better utilization of national resources.
3. Globalization: It means integration of various economies of the world leading to the emergence of cohesive global economy. The measures taken by the Government include trade liberalization which includes import liberalization; Export Promotion through rationalization of tariff structure; Foreign exchange liberalization; increased interaction among global economies under the aegis (protection/support) of World Trade Organization. It resulted in addition of Export duty, Reduction of import.

1. Identification of opportunities to get first mover advantage: Understanding of business environment helps an organisation in identifying advantageous opportunities and getting their benefits prior to competitors, thus reaping the benefits of being a pioneer.
2. Identification of threats: Correct knowledge of business environment helps an organisation to identify those threats which may adversely affect its operations. For example, Bajaj Auto made considerable improvements in its two wheelers when Honda & other companies entered the auto industry.
3. Tapping useful resources: Business environment makes available various resources such as capital, labour, machines, raw material etc. to a business firm. In order to know the availability of resources and making them available on time at economical price, knowledge of business environment is necessary.
4. Coping with Rapid changes: Continuous study/scanning of business environment helps in knowing the changes which are taking place and thus they can be faced effectively.
5. Assistance in planning and policy formulation: Understanding and analysis of business environment helps an organisation in planning & policy formulation. For example, ITC Hotels planned new hotels in India after observing boom in tourism sector.

1. Totality of external forces: Business environment is the sum total of all
the forces/factors external to a business firm.
2. Specific and general forces: Business environment includes both specific
and general forces. Specific forces influence business firm directly while
general forces affect a business firm indirectly.
Components of Business Environment:
Internal/Specific Environment
* Customers
* Owners and investors
* Suppliers
* Creditors
* Employees and trade union Competitors
External/General Environment
* Economic Environment
* Social Environment
* Political Environment
* Technological Environment
* Legal Environment
3. Inter-relatedness: All the forces/factors of a business environment are
closely interrelated. For example, increased awareness of health care has
raised the demand for organic food and roasted snacks.
4. Dynamic: Business environment is dynamic in nature which keeps on
changing with the change in technology, consumer’s fashion and tastes etc.
5. Uncertainty: Business environment is uncertain as it is difficult to predict
the future environmental changes and their impact with full accuracy

6. Complexity: Business environment is complex which is easy to understand
in parts separately but it is difficult to understand in totality.
7. Relativity: Business environment is a relative concept whose impact differs
from country to country, region to region and firm to firm. For example, a shift
of preference from soft drinks to juices will be welcomed as an opportunity
by juice making companies while a threat to soft drink manufacturers.

Fayol vs Taylor – A comparison:

Both, Fayol and Taylor have contributed immensely to the knowledge of management, which has formed a basis for further practice by managers. Let us discuss some of the points of difference between their contributions.

Understanding of business environment is of vital importance for successful functioning of an organisation. Any organisation cannot function independently. It’s functioning and performance depends on several external forces as well. A continuous evaluation and understanding of the business environment helps a firm to take account of these forces in a better manner and thereby, improve its functioning. The following points highlight the importance of understanding of environment for business enterprises.

i. Identification of Opportunities: With a careful analysis of the business environment an enterprise can identify the positive opportunities for business. An early identification of the opportunities helps it in taking first hand advantage in competition.

ii. Identification of Threats: Besides positive opportunities, a study of business environment helps an enterprise in the identification of threats or negative signals that may adversely affects its functioning. Thereby, it enables it to take appropriate preventive measures.

iii. Accumulating Useful Resources: Environment provides a business various resources or inputs for its functioning such as raw material, machinery, labour, etc. On the other hand, enterprises provide the environment with output in the form of goods and services. That is, environment acts both as a source of resources as well as a source of demand for the products of the enterprises. Thus, it becomes logical for the enterprises to take up those resources from the environment that can be converted into the desired output. This is possible only if the enterprises have an understanding of what the environment desires and what it can offer.

iv. Adjusting to Changes: Business environment is dynamic in nature. Changes in technology, consumers taste and preference, government policies take place continuously. A careful analysis and understanding of the environment helps an enterprise in dealing with these changes in a better manner and thereby, take appropriate actions.

v. Formulating Plans and Policies: A continuous study of environment helps an organisation in the identification of the opportunities and threats. Thereby, it guides the organisation in framing suitable plans and policies in view of the current scenario.

vi. Improving Performance: A continuous analysis of the environment helps the enterprises in framing suitable policies and plans and thereby, improves their performance.

Globalization means the integration of the various economies of the world leading towards the emergence of a cohesive global economy.

a. for a single area of activity

Sometimes due to any hard situation Personality of an individual will change but will take a long time. 

c. identication of the diculty

d. substitute for management authority

Low cost, Dierentiation and Focus are examples of Business Strategies.

d. More than 5 years

1. Return on Investment 

2. Ratio Analysis.

As per MBTI Perceving personality people take a laid back, relaxed approach. They’re exible, open to change, and like to explore.

As per MBTI Sensing personality people like real-life examples, prefer practical exercises, and get the facts while possibly missing the main idea.

Personality dimensions :

a. Extrovert/introvert 

b. Sensitive/intuitive 

c. Thinking/feeling 

d. Judging/percept

c) Perception

d. understanding must occur to have communication

a) “Organisational behaviour is to understand, predicting and controlling human behaviour at work”

Individuals such as Albert Einstein, Edwin Land and Steven Jobs lead through Expert type of power.

Every individual is Unique by their personality.

Controlling process.

Controlling is a systematic process involving the following steps:

Measurement of Actual Performance: Once the standards have been established, the second step is to measure the actual performance.

Comparison of Actual Performance with Standards:

The third step in controlling process is to compare the actual performance with the standards. Such comparison will reveal the deviation between the planned and actual performance.

Analysing Deviations: Some deviation in performance is expected in all activities. So, the next step in controlling process is to analyse the deviations. For this, an acceptable range of deviation must be fixed as significant deviations need more attention as compared to minor deviations.

Taking Corrective Action: The final step in the controlling process is taking corrective action. There is no need for corrective action, when the deviations are within acceptable limits

Stimulus is the force of action or motivation.

b) Observable —- Observable

Pay orders are required to be authorised by GP or Programme Officer and then submitted to the wage paying agency along with the pay-cheque/advice.

Yes. Worksite facilities include safe drinking water, shade for children and periods of rest, first aid box with adequate material for emergency treatment for minor injuries and other health hazards connected with the work being performed.

In case the number of children below the age of five years accompanying the women working at any site is five or more, provisions should be made to depute one of such women workers to look after such children. The most marginalised women in the locality, women in exploitative conditions or bonded labour or those vulnerable to being trafficked or liberated manual scavengers should be employed for providing child care services.

Cognition means the mental action or process of acquiring knowledge and understanding through thought, experience, and the senses.

Non-Financial Incentives:

Refer to incentives or rewards which cannot be measured in terms of money.

1. Status: Status refers to ranking of positions, authority, responsibility, recognition and prestige associated with a job in the organization. Higher status helps to satisfy social and esteem needs of the employees. 

2. Organisational Climate: It refers to the characteristics which describe an organization and distinguish one organization from the other. These characteristics include individual autonomy, reward orientation, open communication, risk-tasking etc.

Social responsibility of business refers to its obligation to take those decisions and perform those actions which are desirable in terms of the objectives and values of our society. Social responsibility is different from legal responsibility as the latter may be fulfilled by mere compliance with law, whereas the former involves voluntary efforts of business for the benefit of society.

Difference between motivation and motivators:

Motivation is a process of stimulation and inspiring people at work to accomplish desired goals. It depends upon satisfying needs of people.

Motivator is the technique used to motivate people in an organization. Managers use diverse motivators like pay bonus, promotion, recognition, responsibility, etc. to influence people to contribute their best.

b. Industry Attractiveness

a. Industry attractiveness & Business Strength

c. Industry Growth Rate

a. Relative Market share

(B) On the job training

(D) All of above 

Correct option is (b) Science, not rule of thumb

Correct option is (c) It refers to the set of actual and potential buyers for a product

Purchases Account is debited and Cash Account is credited. While posting this entry into the ledger, it will be posted both in Purchase Account as well as in Cash Account. All real accounts relate to assets, hence, show the debit balance only.

(i) Short-term Funds: It is a market purely for short-term funds or financial assets called near money. 

(ii) Maturity Period: It deals with financial assets having a maturity period upto one year only. 

(iii) Conversion of Cash: It deals with only those assets which can be converted into cash readily without loss and with minimum transaction cost. 

(iv) No Formal Place: Generally, transactions take place through phone,

i.e., oral communication. Relevant documents and written communications can be exchanged subsequently. 

(v) Sub-markets: It is not a single homogeneous market. It comprises of several sub-markets ‘ each specialising in a particular type of financing. 

(vi) Role of Market: The components of a money market are the Central Bank, Commercial Banks. Commercial banks generally play a dominant role in this market. 

(vii) Highly Organized Banking System: The Commercial Banks are the nerve centre of the whole money market. They are the principal suppliers of short-term funds.

(viii) Existence of Secondary Market: There should be an active secondary market for these instruments. (be) 

Demand and Supply of Funds: There should be a large demand and supply of short-term funds. 

(ix) Wholesale Market: It is a wholesale market and the volume of funds or financial assets traded in the market is very large.

(xi) Flexibility: Due to greater flexibility in the regulatory framework, there are constant endeavours for introducing new instruments.

(xii) Presence of a Central Bank: The central bank keeps their cash reserves and provides them financial accommodation in difficulties by discounting their eligible securities.