Department of Law

B.com LLB five years integrated course Sem- IV

Principles of Business Management-II
Answer the following questions by identifying True and False
Leadership
1. Leadership involves influencing others toward the achievement of a common
goal while aligning with the organization’s mission and vision. (True)
2. Autocratic leadership centralizes decision-making, often excluding team
members from contributing ideas or opinions. (True)
3. Democratic leadership encourages team involvement in decisions, which can
improve morale but might delay the process. (True)
4. Laissez-faire leadership allows employees to take full responsibility for
decisions, with minimal intervention from the leader. (True)
5. Trait theories suggest that certain inherent traits such as charisma and confidence
are key to being an effective leader. (True)
6. Behavioral theories argue that effective leadership behaviors can be learned and
are not limited to inherent traits. (True)
7. Contingency theories emphasize adapting leadership styles to fit the specific
situation and context. (True)
8. Transformational leadership inspires long-term organizational change by
focusing on vision and motivation. (True)
9. Transactional leadership is characterized by maintaining stability through
structured roles, tasks, and reward systems. (True)
10. Situational leadership emphasizes that leaders must adjust their style based on
the competence and commitment levels of their followers. (True)
11. Charismatic leadership often relies on a leader’s ability to inspire and energize
followers through personal charm. (True)
12. Delegating leadership style is suitable for teams that demonstrate high levels of
competence and independence. (True)
13. The managerial grid framework evaluates leadership styles based on concern for
people and concern for production. (True)
14. Path-Goal theory highlights the leader’s role in clarifying objectives and
removing obstacles to ensure team success. (True)
15. Autocratic leadership is particularly effective in high-pressure situations
requiring quick decision-making. (True)
16. Leaders who prioritize tasks over interpersonal relationships often experience
low employee satisfaction. (True)
17. Transformational leaders often lead by example to inspire and motivate their
teams. (True)
18. Transactional leaders concentrate on motivating employees through rewards and
punishments within a structured framework. (True)
19. Situational leadership requires leaders to assess both the task and their team’s
ability to execute it. (True)
20. Charismatic leaders gain influence by their personality and ability to inspire
followers. (True)
21. Leaders using transactional methods often maintain the status quo rather than
innovate. (True)
Managerial Control
22. Managerial control ensures that organizational activities align with
predetermined objectives. (True)
23. PERT and CPM are modern techniques of control used for time-bound projects.
(True)
24. Break-even analysis determines the level of sales required to cover both fixed
and variable costs. (True)
25. Controlling is the last function of management, following planning, organizing,
and leading. (True)
26. One of the objectives of control is to safeguard organizational assets. (True)
27. The primary objective of control is to ensure that resources are used efficiently
and effectively. (True)
28. Control mechanisms can help organizations identify deviations early and take
corrective measures. (True)
29. A master budget consolidates various departmental budgets into a
comprehensive document. (True)
30. Feedback is a critical component of effective control systems. (True)
31. Employee resistance to control measures is a common limitation of control
systems. (True)
32. Zero-based budgeting assumes all expenses must be justified for each new
period. (True)
33. The process of control begins with the establishment of performance standards.
(True)
34. Decentralization of authority is a benefit of implementing effective control
systems. (True)
35. Control systems encourage transparency and clarity in organizational operations.
(True)
36. Standards for control must be measurable and realistic. (True)
37. Budgetary control helps in planning and coordinating an organization’s financial
activities. (True)
38. Effective control systems can help reduce corruption and inefficiencies. (True)
Financial Management
39. Capitalization determines the amount of capital a business requires to operate
smoothly. (True)
40. The modern approach to financial management emphasizes both the acquisition
and effective utilization of funds. (True)
41. Over-capitalization occurs when a company’s earnings are insufficient to
provide a fair return on its capital investment. (True)
42. Financial planning is a part of the executive finance functions of financial
management. (True)
43. Capital budgeting is a component of the investment decision in financial
management. (True)
44. Proper financial planning ensures smooth running of enterprise operations.
(True)
45. Capitalization reflects the financial solvency of a business. (True)
46. Over-capitalization leads to high book value of shares compared to their real
value. (True)
47. Financial management includes both long-term and short-term financial
decision-making. (True)
48. Under-capitalization can result from unexpected gains in business. (True)
49. Issuing additional shares is a remedy for under-capitalization. (True)
50. The term "watered capital" refers to an inflated value of assets relative to their
actual worth. (True)
51. Financial control tools include ratio analysis and budgetary control. (True)
52. Effective financial management ensures that liquidity is maintained. (True)
53. High promotional expenses can lead to over-capitalization. (True)
54. Shareholders’ equity includes reserves and retained earnings. (True)
55. Over-capitalization can reduce a company’s ability to raise additional funds.
(True)
56. Real value of a share depends on the earning capacity of a company. (True)
57. Investment decisions include both long-term and short-term asset allocation.
(True)
58. Depreciation policies influence a company’s earning capacity. (True)
59. The executive finance functions include determining the sources of finance.
(True)
60. Book value of shares reflects a company’s historical financial decisions. (True)
61. Proper capitalization aligns the company's resources with its operational needs.
(True)
Fill in the Blanks

Leadership
1. _________ leadership involves a leader taking full control over decision-
making, often without consulting team members. (Autocratic)
2. _________ leadership encourages participation and collaboration from team
members in the decision-making process. (Democratic)
3. A leadership style where employees are given full freedom to make decisions is
called _________. (Laissez-faire)
4. Leaders who prioritize the well-being of their employees and act as a father
figure follow the _________ leadership style. (Paternalistic)
5. _________ leadership emphasizes long-term goals, vision, and innovation to
inspire significant change. (Transformational)
6. The concept that effective leadership depends on adapting to different situations
is central to _________ theories. (Contingency)
7. In the _________ leadership model, leaders adapt their style based on the
maturity and competence of their followers. (Situational)
8. The Ohio State Studies identified two important leadership behaviors:
_________ and _________. (Initiating structure, Consideration)
9. The Michigan Studies distinguished between _________ leadership and
_________ leadership. (Employee-centered, Production-centered)
10. _________ leaders rely on their personal charm and appeal to inspire loyalty and
enthusiasm among their followers. (Charismatic)
11. The _________ grid evaluates leaders based on their concern for people and
concern for production. (Managerial)
12. _________ leadership focuses on short-term goals, maintaining stability, and
using rewards or punishments to motivate employees. (Transactional)
13. Leaders who encourage creativity, innovation, and future-focused vision practice
_________ leadership. (Visionary)
14. _________ theories suggest that certain characteristics, such as charisma and
confidence, are essential for effective leadership. (Trait)
15. Situational leadership is also known as the _________ theory of leadership.
(Life-cycle)
16. The ability of leaders to adapt their approach based on follower needs is central
to _________ theories. (Contingency)
17. Path-Goal theory focuses on aligning _________ goals with organizational
objectives. (Subordinate)
18. The Ohio State Studies identified that effective leadership requires balancing
_________ and _________. (Task orientation, Relationship orientation)
19. A leadership theory that assumes leaders are born with specific traits is called
_________. (Trait theory)
 20. _________ leadership primarily focuses on maintaining the existing
organizational culture and achieving routine goals. (Transactional)
21. Leaders who inspire teams by their personal vision and high emotional appeal
are practicing _________ leadership. (Charismatic)
22. Leaders who address both short-term and long-term organizational goals by
combining task and relationship orientation follow the _________ model.
(Managerial Grid)
23. Transformational leadership requires leaders to communicate a _________ that
inspires and motivates their followers. (Vision)
24. Leaders who inspire their teams by setting a compelling vision and leading by
example demonstrate _________ leadership. (Transformational)
25. Leaders who use interpersonal skills to build strong team relationships practice
_________ leadership. (Relationship-oriented)
26. Leaders who inspire their team to go beyond basic expectations demonstrate
_________ leadership. (Transformational)
27. _________ leadership places significant emphasis on clear communication and
removing obstacles for team success. (Path-Goal)
28. The theory that effective leadership depends on the maturity and capability of
followers is called _________. (Situational)
29. Leaders who inspire their teams to achieve extraordinary results focus on
_________ leadership. (Transformational)
Managerial Control
31. _________ is the process of ensuring that actual performance aligns with
planned objectives. (Controlling)
32. A _________ budget adjusts based on varying levels of business activity.
(Flexible)
33. The _________ path in CPM determines the minimum time required to complete
a project. (Critical)
34. _________ analysis helps determine the sales volume required to cover costs.
(Break-even)
35. Control systems aim to safeguard _________ within an organization. (Assets)
36. In _________ observation, managers directly watch processes or activities in
real time. (Personal)
37. The first step in the control process is to establish _________. (Standards)
38. Control helps to maintain a balance between objectives, resources, and
_________. (Efforts)
39. The _________ diagram is used to identify the root causes of deviations.
(Fishbone)
40. Monitoring progress is a key _________ of control. (Objective)
 41. Control systems ensure the availability of necessary _________ for operations.
(Resources)
42. Effective control systems foster accountability and _________ among
employees. (Responsibility)
43. The primary objective of control is to ensure _________ use of resources.
(Efficient)
44. Controlling ensures that activities are performed within the allocated _________.
(Budget)
45. Control systems play a role in fostering _________ across departments.
(Coordination)
46. _________ is a corrective measure used to address deviations in performance.
(Feedback)
Financial Management
47. _________ refers to the effective management of a company’s financial
resources. (Financial management)
48. Capitalization is classified into _________ and _________ types. (Over-
capitalization, Under-capitalization)
49. The modern approach to financial management includes _________ and
_________ decisions. (Investment, Financing)
50. _________ is the total value of a company’s shares, debentures, and reserves.
(Capitalization)
51. _________ policies impact the retained earnings and future investments of a
company. (Dividend)
52. A financial manager must ensure both _________ and effective utilization of
funds. (Raising)
53. _________ occurs when the earning capacity of a company is lower than its
capital investment. (Over-capitalization)
54. The _________ theory of capitalization focuses on the company's estimated
future earnings. (Earnings)
55. Financial management aims at balancing profitability with _________. (Risk)
56. _________ maximization is a traditional objective of financial management.
(Profit)
57. The modern approach to financial management prioritizes _________
maximization over profit maximization. (Wealth)
58. _________ is the systematic allocation of an asset’s cost over its useful life.
(Depreciation)
59. Financial planning reduces uncertainties by forecasting future _________ needs.
(Financial)
60. _________ involves choosing investment opportunities that maximize
shareholder value. (Capital budgeting)
 61. Effective financial management ensures a balance between liquidity and
_________. (Profitability)
62. _________ decisions focus on the mix of debt and equity used to finance
operations. (Financing)
63. _________ management involves planning and controlling the inflow and
outflow of cash. (Cash)

Answer the following questions in brief.

Leadership
1. What is transformational leadership, and how does it differ from transactional
leadership?
2. Describe the main characteristics of laissez-faire leadership.
3. Explain the two key dimensions identified in the Ohio State Studies on
leadership.
4. What are the four leadership styles proposed in situational leadership theory?
5. How does Path-Goal theory define the role of a leader?
6. What are the advantages of democratic leadership?
7. In the managerial grid, what does a team leader’s high concern for people and
production indicate?
8. Describe the main criticisms of trait theory in leadership.
9. What is the difference between employee-centered and production-centered
leadership styles?
10. How does charismatic leadership influence team performance?
11. What are the two leadership styles identified in the Michigan Studies?
12. How does a leader using the participative style of situational leadership interact
with their team?
13. Describe the main principle of contingency theories of leadership.
14. What is the primary difference between task-oriented and relationship-oriented
leadership?
15. What role does maturity play in situational leadership?
16. How do transformational leaders handle resistance to change?
17. Explain how autocratic leadership can be beneficial in crisis situations.
18. How does democratic leadership foster creativity and collaboration within
teams?
19. Explain the importance of vision in transformational leadership.
20. How does relationship-oriented leadership benefit team dynamics?
21. Explain how participative leadership balances team input and leader authority.
22. What makes the managerial grid an effective tool for evaluating leadership
styles?
23. How can situational leadership improve team performance?
24. How does supportive leadership enhance employee motivation and
satisfaction?
25. Explain how vision-oriented leadership drives organizational innovation.
26. Describe the role of task-oriented leadership in achieving organizational
efficiency.
27. What distinguishes participative leadership from laissez-faire leadership?
Managerial Control
28. Explain the significance of controlling in achieving organizational goals.
29. How does budgetary control assist organizations in financial management?
30. Describe the role of performance standards in the control process.
31. What is break-even analysis, and how is it used in decision-making?
32. Explain the difference between fixed and flexible budgets.
33. What is the importance of feedback in control systems?
34. How do PERT and CPM assist in project management?
35. Describe the process of zero-based budgeting.
36. What role does personal observation play in the control process?
37. How does managerial control contribute to organizational efficiency?
38. What is the critical path in project management, and why is it significant?
39. How does inventory control support organizational performance?
40. What are the limitations of traditional control techniques?
41. How does decentralization of authority benefit control systems?
42. What is the role of corrective action in the control process?
43. How does managerial control contribute to cost efficiency?
Financial Management
44. Define financial management and its importance in modern organizations.
45. What is the difference between over-capitalization and under-capitalization?
46. Explain the objectives of financial management.
47. What are the key functions of a financial manager?
48. Describe the cost theory of capitalization.
49. What is the significance of working capital in business operations?
50. How does dividend policy impact shareholder perception?
51. How do financial managers use ratio analysis?
52. What is the importance of liquidity management?
53. Explain the earnings theory of capitalization.
54. How does under-capitalization affect a company’s performance?
55. How does financial planning help in reducing uncertainties in business
operations?
56. Describe the significance of working capital management.
57. What is the role of trend analysis in financial decision-making?