UGC NET Paper 2 Mock Test - 2 (Management) - UGC NET MCQ

An ethics programme helps communicate your company's business philosophy to employees, vendors, investors and customers. A good ethics programme can help strengthen your relationship with employees and customers and improve your company's reputation. Following are the steps of a simple ethics programme:
(1) Size up your company's current ethics
(2) Create a code of conduct
(3) Train your people
(4) Solicit feedback from your employees
(5) Walk the talk

Ethical Management is a compromise. It means the basic behavioural principles of business ethics that corporations must strictly comply with in their relations with shareholders, customers, suppliers, employees, local communities, and the environment.

Marketing management is the organisational discipline which focuses on the practical application of marketing orientation, techniques and methods inside enterprises and organisations and on the management of a firm's marketing resources and activities. Marketing management has the responsibility to perform many functions in the field of marketing such as planning, collecting marketing information, directing, motivating, coordinating and controlling. All these functions aim to achieve the marketing goals.

The author of Equity Theory of Motivation is Stancy Adams. Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. Equity is measured by comparing the ratio of contributions and benefits for each person.

Transactional Analysis, developed by psychiatrist Eric Berne, is a form of modern psychology that is related to personality. The theory outlines how we develop and treat ourselves, how we relate and communicate with others, and offers suggestions and interventions which will enable us to change and grow. Transactional Analysis is underpinned by the philosophy that people can change. We all have a right to be in the world and be accepted.

Balance theory is a theory of attitude change, proposed by Fritz Heider. It conceptualises the cognitive consistency motive as a drive toward psychological balance. The consistency motive is the urge to maintain one's values and beliefs over time.

"The manufacturer threatens to withdraw a resource or terminate a relationship if intermediaries fail to cooperate", refers to Coercive power. This power is in use, for example, when an employee carries out an order under fear of losing their job or their annual bonus.

The form of learning in which people acquire new behaviours by systematically observing the rewards and punishments given to others is known as operant conditioning. It is a process by which humans and animals learn to behave in such a way as to obtain rewards and avoid punishments. It is also the name for the paradigm in experimental psychology by which such learning and action selection processes are studied.

Human resource planning ensures the best fit between employees and jobs while avoiding manpower shortages or surpluses. There are four key steps of the HRP process. They include analysing present labour supply, forecasting labour demand, balancing projected labour demand with supply, and supporting organisational goals.

HR planning is a systematic planning process by which an organisation determines how it will implement staffing to meet the demands of the business and the customers. It ensures that the company has the right people for the job while avoiding any shortage or surplus in manpower.
The following are the major benefits of human resource planning:
(a) Retaining top talents
(b) Addressing the organisation's manpower needs
(c) Achieve economy in hiring new workers
(d) Match personnel activities and future organisation objectives efficiently
(e) Improve the utilisation of human resources

• Job Analysis is determining the pertinent facts about the job. It is the process of gathering and analysing information about the content and the human requirements of jobs, as well as, the context in which jobs are performed.
• Job Evaluation is a systematic way of determining the value/worth of a job in relation to other jobs in an organisation. It tries to make a systematic comparison between jobs to assess their relative worth for the purpose of establishing a rational pay structure.
• Job design is a core function of human resource management and it is related to the specification of contents, methods and relationship of jobs in order to satisfy technological and organisational requirements as well as the social and personal requirements of the job holder or the employee.
• Workflow analysis is the process of examining an organisation's workflows, generally for the purpose of improving operational efficiency. It identifies areas of process improvement such as redundant tasks or processes, inefficient workplace layouts and bottlenecks in the workflow.

Human Resource Management (HRM) is the term used to describe formal systems devised for the management of people within an organisation. The responsibilities of a human resource manager fall into three major areas: staffing, employee compensation and benefits, and defining/designing work. HRM focuses on Operational and Organisational options such as leadership, directing, selection, induction, training and development.

• Sensitivity Analysis is the technique used in examining the effect of change in one variable at a time. A sensitivity analysis determines how different values of an independent variable affect a particular dependent variable under a given set of assumptions.
• Simulation is the process of developing the frequency distribution of Net Present Value. Monte Carlo simulation performs risk analysis by building models of possible results by substituting a range of values, a probability distribution, for any factor that has inherent uncertainty.
• Hillier Model is the technique used in examining the chances of Net Present Value being greater than zero. According to the Hillier model, the risk associated with the project can be assessed through the standard deviation of expected cash flows.
• Decision tree is the technique used when investment at a future date is to be decided based on the probable outcome of previous investment. A decision tree is a decision support tool that uses a tree-like model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility.

The dividend yield is the ratio of a company's annual dividend compared to its share price. The dividend yield is represented as a percentage and is calculated as follows:
Dividend Yield = 

Liquidation value is the likely price of an asset when it is allowed insufficient time to sell on the open market, thereby reducing its exposure to potential buyers. Liquidation value is typically lower than fair market value.
Liquidation value may be either the result of a forced liquidation or an orderly liquidation. Either value assumes that the sale is consummated by a seller who is compelled to sell and assumes an exposure period which is less than market normal.

A lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the lienee and the person who has the benefit of the lien is referred to as the lienor or lien holder.
A mortgage is a debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments.
Hypothecation is the practice where a debtor pledges collateral to secure a debt or as a condition precedent to the debt, or a third party pledges collateral for the debtor. A letter of hypothecation is the usual instrument for carrying out the pledge.
A pledge is a bailment that conveys possessory title to property owned by a debtor to a creditor to secure repayment for some debt or obligation and to the mutual benefit of both parties. The term is also used to denote the property which constitutes the security. The pledge is a type of security interest.

• Net Income Approach was presented by Durand. The theory suggests increasing value of the firm by decreasing the overall cost of capital which is measured in terms of Weighted Average Cost of Capital. This can be done by having a higher proportion of debt, which is a cheaper source of finance compared to equity finance.
• The Net Operating Income Approach states that the market value of the firm is not affected by changes in the capital structure. It assumes that the benefit that a firm derives by infusion of debt is negated by the simultaneous increase in the required rate of return by the equity shareholders.
• As per the Modigliani and Miller Proposition - I, the value of the firm depends on the earnings and risk of its assets rather than the way the assets have been financed. The basic theorem states that in the absence of taxes, bankruptcy costs, agency costs, and asymmetric information, and in an efficient market, the value of a firm is unaffected by how that firm is financed.
• The Pecking Order Theory states that the firms prefer to rely on internal accruals followed by debt finance and external finance. As per this theory, retained earnings financing (internal financing) comes directly from the company and minimizes information asymmetry. As opposed to external financing such as debt or equity financing where the company must incur fees to obtain external financing, internal financing is the cheapest and most convenient source of financing.

The debt-to-equity ratio is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. A D/E ratio of 2 indicates that the company derives two-thirds of its capital financing from debt and one-third from shareholder equity, so it borrows twice as much funding as it owns (2 debt units for every 1 equity unit).
Flotation cost is the total cost incurred by a company in offering its securities to the public. They arise from expenses such as underwriting fees, legal fees and registration fees. Flotation costs make new equity cost more than cost of floating a debt.

Financial managers are responsible for the financial health of an organisation. They produce financial reports, direct investment activities, and develop strategies and plans for the long-term financial goals of their organisation. Financial managers analyse variance between standard costs and actual costs. The process of analysing differences between standard costs and actual costs is called variance analysis.

When the organisational requirements advocate tight cost control; frequent, detailed control reports; structured organisation and responsibilities and incentives based on meeting strict quantitative targets then it is called overall cost leadership. The aim of the cost leadership is to open up a sustainable cost advantage over competitors and the use lower cost as a basis for either under-pricing competitors and gaining market share at their expense or earning a higher profit margin by selling at the going price.

The value of the firm is maximised when the market price of equity share is maximum. The value of the firm is maximised by optimum capital structure. The optimum structure has a proportion of debt and equity which will maximise the wealth of the firm. At this capital structure, the market price per share is maximum and cost of capital is minimum.

A manufacturer of industrial goods would use market sales force structure because this structure refers to a sales force organisation in which salespeople specialise in selling only to certain customers or industries.

According to the CAPM model, the cost of equity is represented by:
R_f + (R_m - R_f) β_j
(Where R_m indicates market rate of return, R_f indicates risk free rate of return and β_j indicates beta of stock j.)
The CAPM model indicates security with a positive alpha is one that is expected to yield an abnormal positive rate of return, based on the perceived risk of the security, and thus is under-p riced.

A Rapid Skimming Strategy uses high price and extensive promotion to face competition and establish market share quickly. When no serious competition is expected, a Slow Skimming Strategy may be used – high price with low promotion.

The number of different product categories across which different brands and products created by a company are classified is called product mix width.
For instance, if a company offers milk and yogurts, this indicates that its product mix has two lines. Similarly, a cosmetic company manufactures four different types of products – jewellery, cosmetics, fashion and household items. Its product mix width is 4.

Direct marketing is a form of communicating an offer, where organisations communicate directly to a pre-selected customer and supply a method for a direct response. Among practitioners, it is also known as direct response marketing. Direct marketing has various types:

Channel marketing focuses on the distribution of products from the manufacturer to the consumer. It is part of the distribution (or place) component in the four P's of the marketing mix – product, pricing, promotion, and place. Since most manufacturers and producers don't sell directly to their end user, they use a marketing channel to distribute their products, whether it's a vending machine, department store, or a trade show hence, manufacturers take the help of channel members.
Channel members acquire the funds to finance inventories at different levels in the marketing channel. They gather information about potential and current customers, competitors and other actors and forces in the marketing environment.

An impulse purchase or impulse buying is an unplanned decision to buy a product or service, made just before a purchase. One who tends to make such purchases is referred to as an impulse purchaser or impulse buyer.

• Frederick Winslow Taylor was an American mechanical engineer who sought to improve industrial efficiency. He was one of the first management consultants. He proposed the idea of fair day's pay for fair day's work. According to him, management of the company should ensure equity to the employees so that they feel motivated.
• Henry Laurence Gantt was an American mechanical engineer and management consultant who is best known for his work in the development of scientific management. In his 1916 book 'Work, Wages, and Profits', Gantt explicitly discusses scheduling, especially in the job shop environment. He proposed the idea of graphic scheduling for planning and controlling of work.
• A time and motion study is a business efficiency technique combining the Time Study work of Frederick Winslow Taylor with the Motion Study work of Frank and Lillian Gilbreth. It is a major part of scientific management.
• According to the bureaucratic theory of Max Weber, bureaucracy is the basis for the systematic formation of any organisation and is designed to ensure efficiency and economic effectiveness. It is an ideal model for management and its administration to bring an organisation's power structure into focus.

(a) Outdoor media is a form of mass media which comprises billboards, signs, placards placed inside and outside commercial buildings/objects like shops/buses, etc. The media of communication is limited to audience selectivity; creative limitations.
(b) The yellow pages are all business listings, with the name, number and address of local businesses. The limitations of this media is high competition; long ad purchase lead time; creative limitations.
(c) A brochure is an informative paper document (often also used for advertising) that can be folded into a template, pamphlet or leaflet. Though it is a good communication medium, its over production can lead to runaway costs.
(d) Telephone is a good medium of mass communication, however relative high cost; increasing consumer resistance makes this medium obsolete.