Business Studies

Part II
Business Finance and Marketing
Textbook for Class XII

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 12114 – Business Studies Part II ISBN 81-7450-697-7 (Part I)
Textbook for Class XII 81-7450-756-6 (Part II)

ALL RIGHTS RESERVED

First Edition  No part of this publication may be reproduced, stored in a retrieval
May 2007 Jyaistha 1929 system or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise without the prior
Reprinted permission of the publisher.

February 2008, March 2009,  This book is sold subject to the condition that it shall not, by way of
trade, be lent, re-sold, hired out or otherwise disposed of without
January 2010, January 2011, the publisher’s consent, in any form of binding or cover other than
January 2012, January 2013, that in which it is published.
November 2013, January 2015,  The correct price of this publication is the price printed on this page.
May 2016, January 2018, Any revised price indicated by a rubber stamp or by a sticker or
by any other means is incorrect and should be unacceptable.
February 2019, November 2019 and
January 2021 OFFICES OF THE PUBLICATION
DIVISION NCERT
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 Foreword
The National Curriculum Framework (NCF), 2005, recommends that
children’s life at school must be linked to their life outside the school.
This principle marks a departure from the legacy of bookish learning
which continues to shape our system and causes a gap between the
school, home and community. The syllabi and textbooks developed on
the basis of NCF signify an attempt to implement this basic idea. They
also attempt to discourage rote learning and the maintenance of sharp
boundaries between different subject areas. We hope these measures will
take us significantly further in the direction of a child-centred system
of education outlined in the National Policy on Education (1986).
The success of this effort depends on the steps that school
principals and teachers will take to encourage children to reflect on
their own learning and to pursue imaginative activities and questions.
We must recognise that, given space, time and freedom, children
generate new knowledge by engaging with the information passed on
to them by adults. Treating the prescribed textbook as the sole basis
of examination is one of the key reasons why other resources and sites
of learning are ignored. Inculcating creativity and initiative is possible
if we perceive and treat children as participants in learning, not as
receivers of a fixed body of knowledge.
These aims imply considerable change in school routines and
mode of functioning. Flexibility in the daily time-table is as necessary
as rigour in implementing the annual calendar so that the required
number of teaching days are actually devoted to teaching. The methods
used for teaching and evaluation will also determine how effective this
textbook proves for making children’s life at school a happy experience,
rather than a source of stress or boredom. Syllabus designers have
tried to address the problem of curricular burden by restructuring and
reorienting knowledge at different stages with greater consideration
for child psychology and the time available for teaching. The textbook
attempts to enhance this endeavour by giving higher priority and space
to opportunities for contemplation and wondering, discussion in small
groups, and activities requiring hands-on experience.

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 iv

The National Council of Educational Research and Training (NCERT)

appreciates the hardwork done by the textbook development committee
responsible for this book. We wish to thank the Chairperson of the
advisory group in Social Sciences Professor Hari Vasudevan and the
Chief Advisor for this book, D.P.S. Verma, Professor (Retd.), Delhi School
of Economics, University of Delhi, and Dr. G.L. Tayal, Reader, Ramjas
College, University of Delhi, for guiding the work of this committee.
Several teachers contributed to the development of this textbook; we are
grateful to their principals for making this possible. We are indebted to
the institutions and organisations which have generously permitted us
to draw upon their resources, material and personnel. We are especially
grateful to the members of the National Monitoring Committee, appointed
by the Department of Secondary and Higher Education, Ministry of
Human Resource Development, under the chairpersonship of Professor
Mrinal Miri and Professor. G.P. Deshpande, for their valuable time and
contribution. As an organisation committed to systemic reform and
continuous improvement in the quality of its products, NCERT welcomes
comments and suggestions which will enable us to undertake further
revision and refinement.
Director
New Delhi National Council of Educational
20 November 2006 Research and Training

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 Rationalisation of Content in the Textbooks

In view of the COVID-19 pandemic, it is imperative to reduce content

load on students. The National Education Policy 2020, also emphasises
reducing the content load and providing opportunities for experiential
learning with creative mindset. In this background, the NCERT has
undertaken the exercise to rationalise the textbooks across all classes.
Learning Outcomes already developed by the NCERT across classes
have been taken into consideration in this exercise.
Contents of the textbooks have been rationalised in view of the
following:
• Overlapping with similar content included in other subject areas in
the same class
• Similar content included in the lower or higher class in the same
subject
• Difficulty level
• Content, which is easily accessible to students without much
interventions from teachers and can be learned by children through
self-learning or peer-learning
• Content, which is irrelevant in the present context
This present edition, is a reformatted version after carrying out
the changes given above.

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 Textbook Development Committee
Chairperson, Advisory Committee for Textbooks in Social Sciences at
Senior Secondary Level
Hari Vasudevan, Professor, Department of History, University of
Calcutta, Kolkata

Chief Advisor
D.P.S. Verma, Retired Professor, Department of Commerce, Delhi School
of Economics, University of Delhi, Delhi.

Advisor
G.L. Tayal, Reader, Ramjas College, University of Delhi, Delhi.

Members
Anand Saxena, Reader, Deen Dayal Upadhyaya College, University of
Delhi, Delhi.
Davinder K. Vaid, Professor, Department of Education in Social Sciences
and Humanities, NCERT, New Delhi.
M.M. Goyal, Reader, PGDAV College, University of Delhi, Delhi.
Narsimha Murthy, Principal, University Post-Graduate College, Subedari,
Anam Konda, Distt. Warangal, Andhra Pradesh.
Pooja Dasani, PGT (Commerce) Convent of Jesus and Mary,
Gol Dakkhana, New Delhi.
R.B. Solanki, Principal, B.R. Ambedkar College, University of Delhi, Delhi.
Ruchi Kakkar, Lecturer, Acharya Narendra Dev College, University of
Delhi, Delhi.
Shruti Bodh Aggarwal, Vice-Principal, Rajkiya Pratibha Vikas Vidyalaya,
Kishanganj, Delhi.
Sumati Verma, Reader, Sri Aurobindo College, University of Delhi, Delhi.
Y.V. Reddy, Reader, Department of Commerce, Goa University, Goa.

Member Coordinator
Minoo Nandrajog, Reader, Department of Education in Social Sciences
and Humanities, NCERT, New Delhi.

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 Acknowledgements
The National Council of Educational Research and T raining
acknowledges the valuable contributions of the Textbook Development
Commiteee, which took considerable pain in the development and review
of manuscript as well.
Thanks are due to Savita Sinha Professor and Head, Department
of Education in Social Science for her guidance and constant support
at every stage of the textbook development process. The textbook has
been reworked and updated at appropriate point of time in the context of
recent development in business scenario and the Compaines Act 2013.
The contribution of practcing teacher of Business Studies is also duly
acknowledged for develping e-resourses for QR Codes.
The contribution of APC Office, Administration, Publication Division,
and Secretariat of NCERT are also duly acknowledged for bringing out
the updated textbook of Business Studies.

Note to the Teacher

This textbook is expected to provide a good understanding of the
environment in which a business operates. A manager has to analyse the
complex, dynamic situations in which a business is placed. Therefore,
content enrichment in the form of business news and abstracts of articles
from business journals and magazines has been given as inset material
(boxes). This will encourage students to be observant about all business
activity and discover what is happening in business organisations with
the expectation that they will update their knowledge through the use
of libraries, newspapers, business oriented TV programmes and the
Internet. Various types of questions are given and case problems have
been introduced to test the application of subject knowledge to realistic
business situations.

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 Contents

Foreword iii
Rationalisation of Content in the Textbooks v

Chapter 9 Financial Management 215

Chapter 10 Marketing 242

Chapter 11 Consumer Protection 289

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 Contents (Part I)
Chapter 1 Nature and Significance of Management 1

Chapter 2 Principles of Management 30

Chapter 3 Business Environment 69

Chapter 4 Planning 91

Chapter 5 Organising 109

Chapter 6 Staffing 139

Chapter 7 Directing 169

Chapter 8 Controlling 201

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