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Posts Tagged ‘Business

MBA – PM0051 : Distinguish between companies limited by shares and companies limited by guarantee.

Answer: – When you want to start a business, there are several ways to structure a company. The different formations refer to different tax and profit sharing methods. Two of these formations that are more popular in Britain and Ireland are Companies Limited by Shares and Companies Limited by Guarantee.  Potential business owners often find them confusing and do not know which one they should use. There are similarities and differences between the two.

Company Limited by Guarantee

A company limited by guarantee is not as common as a company limited by share, but it is the more popular of the two. It is mainly used when setting up a non-profit business. Instead of having shareholders, this company has members. The company is formed for the sole purpose of providing a service to the public.

There are specific clauses associated with the organization that determine the manner and the areas in which they can operate. For example, businesses that exist for the purpose of charity have specific restrictions about the donations they receive so that donors know exactly how the money is being spent. Because of this companies limited by guarantee find it easier to raise money because they can show the donors how they plan to use the money.

These companies do not have any share capital. The members pledge to donate a set amount of money at the start of the organization or per year. This is the case with such companies limited by guarantee as schools, churches, clubs, etc., when the initial money is needed to purchase property and erect a building.

Company Limited by Shares

A company limited by shares is an ordinary business in which the owners want to make a profit. Therefore there are shareholders and the clauses in their guiding statements that give them the liberty to engage in all kinds of activities that let them make a profit provided that these activities are legal.


Both companies limited by shares and companies limited by guarantee have a similar structure. Each one has a director, a secretary and a declarant at the time of the business startup.


Companies limited by shares are the most popular form of business.

Companies limited by guarantee are non-profit organizations, but companies limited by shares are those designed to make a profit.

Companies limited by guarantee have members and companies limited by shares have shareholders.

Companies limited by guarantee so not have share capital and have regulations that require them to show donors how they plan to use the money that they raise.


MBA – PM0051 : What is the distinction between cheque and bill of exchange.

Answer :- A cheque differs from a bill of exchange in the following respects:
1. Drawee:
A cheque is always drawn on a bank or a banker while a bill of exchange can be drawn on any person including a banker.
2. Acceptance:
A cheque does not require any acceptance while a bill must be accepted before the drawee can be made liable upon it.
3. Payment:
A cheque is payable immediately on demand without any days of grace, but a bill of exchange is normally entitled to three days of grace unless it is payable on demand.
4. Crossing:
A cheque may be crossed but there is no such provision in the case of a bill of exchange.
5. Notice of dishonor:
When a cheque is not met, notice of dishonor is not necessary. Want of assets in the hands of the banker is sufficient notice. It is necessary to give a notice of dishonor in order to make the drawer of a bill liable.
6. Payable to bearer on demand:
A cheque can be drawn payable to bearer on demand. But a bill of exchange cannot be so drawn.
7. Stamp:
A bill of exchange must be stamped, whereas a cheque does not require any stamp.
8. Countermanding payment:
A cheque may be revoked by countermand of payment. The payment of a bill, however cannot be countermanded.
9. Noting and protesting:
A cheque is not noted or protested for dishonor and is generally inland.
10. Presentment:
A bill of exchange must be duly presented for payment otherwise the drawer will be discharged. The drawer of a cheque is not discharged by failure of the holder to present it in due time unless the drawer has sustained damage by the delay.
11. Protection:
A banker is given statutory protection with regard to payment of cheques in certain circumstances. No such protection is available to the drawee or acceptor of a bill of exchange.


MBA – PM0050 :

a.How do you evolve research design for exploratory research? Briefly analyze.

b. Briefly explain Independent, dependent and extraneous variables in a research design.

Answer: A. Research design for exploratory research:

Research simply means a search for facts – answers to questions and solutions to problems. It is a purposive investigation. It is an organized inquiry. It seeks to find explanations to unexplained phenomenon to clarify the doubtful facts and to correct the misconceived facts. Although any typology of research is inevitably arbitrary, Research may be classified crudely according to its major intent or the methods. It is also known as formulating research. It is preliminary study of an unfamiliar problem about which the researcher has little or no knowledge. It is ill-structured and much less focused on pre-determined objectives. It usually takes the form of a pilot study. The purpose of this research may be to generate new ideas, or to increase the researcher’s familiarity with the problem or to make a precise formulation of the problem or to gather information for clarifying concepts or to determine whether it is feasible to attempt the study. Katz conceptualizes two levels of exploratory studies. “At the first level is the discovery of the significant variable in the situations; at the second, the discovery of relationships between variables.”  

B. Independent and dependent and extraneous variables in a research design:

The research designer understandably cannot hold all his decisions in his head. Even if he could, he would have difficulty in understanding how these are inter-related. Therefore, he records his decisions on paper or record disc by using relevant symbols or concepts. Such a symbolic construction may be called the research design or model. A research design is a logical and systematic plan prepared for directing a research study.

Dependent and Independent variables: 

A magnitude that varies is known as a variable. The concept may assume different quantitative values, like height, weight, income, etc. Qualitative variables are not quantifiable in the strictest sense of objectivity. However, the qualitative phenomena may also be quantified in terms of the presence or absence of the attribute considered. Phenomena that assume different values quantitatively even in decimal points are known as „continuous variables. But, all variables need not be continuous. Values that can be expressed only in integer values are called „non-continuous variables. In statistical term,

 They are also known as „discrete variable. For example, age is a continuous variable; whereas the number of children is a non-continuous variable. When changes in one variable depends upon the changes in one or more other variables, it is known as a dependent or endogenous variable, and the variables that cause the changes in the dependent variable are known as the independent or explanatory or exogenous variables. For example, if demand depends upon price, then demand is a dependent variable, while price is the independent variable. And if, more variables determine demand, like income and prices of substitute commodity, then demand also depends upon them in addition to the own price. Then, demand is a dependent variable which is determined by the independent variables like own price, income and price of substitute.

Extraneous variable:

The independent variables which are not directly related to the purpose of the study but affect the dependent variable are known as extraneous variables. For instance, assume that a researcher wants to test the hypothesis that there is relationship between children’s school performance and their self-concepts, in which case the latter is an independent variable and the former, the dependent variable. In this context, intelligence may also influence the school performance. However, since it is not directly related to the purpose of the study undertaken by the researcher, it would be known as an extraneous variable. The influence caused by the extraneous variable on the dependent variable is technically called as an experimental error. Therefore, a research study should always be framed in such a manner that the dependent variable completely influences the change in the independent variable and any other extraneous variable or variables.

MBA – PM0013 :  what do we mean by developing a project team process. Enumerate the 5 stages of team development.

Answer:-Developing a project team process :-The process of developing project team is an activity that allows improving internal and external interactions of team members, developing their competencies and skills, and optimizing the overall team environment for the purpose of enhancing project performance.

The process of developing project team is associated with teamwork management considering all team building factors such as cultural diversity, team climate, and global environment. Teamwork management and team building should be organized and implemented in the context of clearly and timely stated communication between team members throughout the whole project life-cycle.


The five stages of team development are:

1. Forming: Forming is the process by which teams begin to form. This involves meeting of team members, and knowing about their project and responsibilities. The team members are inclined to work independently.

2. Storming: Storming involves the actual project management process. In this phase, the team goes through brain storming sessions to understand the project requirement and starts addressing the project work and the project management approach. This stage promises action. There is a struggle for project team control, and momentum builds as capable members take the lead positions in the project team. During this phase, the team members figure out the hierarchy of the team and the informal roles of team members.

3. Norming: Norming is working together, socialising, and providing constructive criticism. The team develops a strong commitment to the team’s goal and work to achieve it.

4. Performing: Performing means smooth movement of project development by a well-organised project team. The team members blend into their roles and focus on completing the project work as a team.

5. Adjourning: Adjourning implies completion of the project so that the team is ready for a new one.

 MBA – PM0012 :  List the advantages and disadvantage of project finance.

Answer:- The major advantages of project finance are:

· Allows the promoters to undertake projects without exhausting their ability to borrow amount for traditional projects.

· Limits financial risks to a project to the amount of equity invested.

· Enables raising more debts as lenders are sure that cash flows from the project will not be siphoned off for other corporate uses.

· Provides stronger incentives for careful project evaluation and risk assessment.

· Facilitates the projects to undergo careful technical and economic review.

· Eliminates the dependency on alternative nature of funding a project.

· Facilitates the arrangement of liability financing and credit improvement, accessible to the project but unavailable to the project sponsor.

· Enables the diversification of the project sponsor’s investments to reduce political risk.

· Gives more incentive for the lender to cooperate in an atmosphere of a troubled loan.

· Enables to have prolonged credit opportunities.

· Matches specific assets with specific liabilities.

Project finance[2] primarily benefits sectors or industries where, projects are structured as a separate entity, apart from their sponsors. Let us take the example of a stand-alone production plant. This is assessed in accounting and financial terms separately from the sponsors’ other activities. Generally, such projects tend to be relatively huge because of the time and other transaction costs involved in structuring, and because of the considerable capital equipment that needs long-term financing. In the financial sector, by contrast, the large volume of finance that flows directly to developing countries’ financial institutions has continued to be a part of the usual corporate lending kind.

All these do not mean that Project Finance is devoid of any disadvantages.

The major disadvantages of project finance are:

· Complexity of the process due to the increase in the number of parties and the transaction cost.

· Expensive as the project development and diligence process is a costly affair.

· Litigious with regard to negotiations.

· Complexity due to lengthy documentation.

· Requires broad risk analysis and evaluation to be performed.

· Requires qualified people for performing the complicated procedures of project finance.

· Obligations regarding the trust fund account need to clearly specify.

· Higher level of control which might be exercised by the banks, which might bring conflict with the businesses or contracts.

MBA – PM0012 : Describe the types of tools and techniques used in cost management.
Types of Tools and Techniques used in cost management:

• Cost aggregation
• Reserve analysis
• Expert judgment
• Historical relationships
• Funding limit reconciliation
• Cost performance baseline
• Project funding baseline

Cost aggregation: Individual costs are aggregated in many different ways for budgeting purposes, including at the deliverable, work package, summary activity, or other classification levels.

Reserve analysis: Reserves are time or cost buffers in the project schedule or budget that help the project counter or respond to uncertainties. Reserve analysis monitors these buffers and will reduce, use, or eliminate them based on the current situation.

Expert judgment: Expert judgment is based upon the experience and knowledge of subject matter experts. It is used to assess and evaluate the inputs and the information the experts contain.

Historical relationships: A historical relationship refers to the characteristics of the current and past projects that can be used to develop models that aid in budgeting.

Funding limit reconciliation: Funding limit reconciliation matches the project’s planned need for funding with the organisation’s ability to provide that funding. It can be thought of as “resource levelling” for finances because it reschedules activities to make sure that the budget for the scheduled activities does not exceed the available budget for that period. For instance, if the estimated cost for scheduled activities in the second month of a project is estimated to be Rs 50,000, but the organisation can only provide funding for Rs 40,000 then there is Rs 10,000 of work that has to be rescheduled to another month.
Cost performance baseline: The cost performance baseline is a duration-phased budget that is used for project cost management, monitoring, and reporting. Though they are both derived from the same source, the project budget and project cost baseline are not interchangeable terms. The cost baseline is a component of the project performance baseline.
In addition to knowing the project funding requirements, the performing organisation needs to know when the project will need money.
The project cost baseline can effectively show many different views of project performance. A project will have several different cost-related baselines that will focus on specific cost categories, such as labour costs, raw material costs, or any other cost classification that is necessary for monitoring. Just as with all other baselines, the cost baseline reflects all approved changes.
Project funding baseline: Project funding baseline refers to the entire estimated cost of the budget, including any contingency or management reserves.
The performing organisation needs to know the financial costs of the project so that it can compute appropriate money. The entire estimated cost of the budget, including any contingency or management reserves, is the project funding requirements. When we are referring to the project’s budget, we are usually talking about project’s base costs.
Every organisation will each have different requirements and terminology for the contents and categorisation of the project budget, but a budget is usually classified in the same categories as what was used by the resource breakdown structure. At a broad level, the budgetary classifications are generally:
• Reserves
• Labour/Personnel
• Professional, Contracted, or Outside Services
• Supplies, Materials
• Equipment, Hardware, and Software
• Training, Travel
• Licenses, fees
• Indirect Costs

The performing organisation will also need to know when it can expect project costs to be incurred, so the project’s budget is also shown by calendar periods. When the project cost is broken down into a time-phased budget, it serves as the project cost performance baseline.

PM0011  : Describe the basic elements of a project plan.

Answer :- . The basic elements of the project plan are:

· Project Requirements: The project plan lists the basic requirements of the project and the objective of undertaking the project.

· General Approach: In this section the both the managerial and technical approach for the project is listed. It describes the project guidelines. This part of the plan describes the various approaches which need to be followed all through the project. These approaches may include the design document, the instructional designing approach etc.

· List of stakeholders: stakeholders can impact a project both positively or negatively. Thus it is very important to identify all the project stakeholders at the starting of the project. Project plan should contain the list of stakeholders and their relation to the project and the mode of communication to be followed for managing the same.

· Contractual aspects: This important section describes the reporting requirements, customer related information, list of resources supplied by client, liaison agreements, project review and abortion process, list of deliverables and project specifications, schedules.

· Resources: This section lists the resources required for the project, their availability, their cost.

· Risk: The risk management plan of the project plan talks about the various risks identified in the project. The alternative choices, mitigation and contingency plans. Steps to monitor and control the risks.

· Communication: The communication management plan talks about the communication methodology

· Quality: Every project should be evaluated against standards and by methods established at the project inception. This section describes these quality standards.


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