Students can access the CBSE Sample Papers for Class 12 Business Studies with Solutions and marking scheme Set 2 will help students in understanding the difficulty level of the exam.
CBSE Sample Papers for Class 12 Business Studies Set 2 with Solutions
Time Allowed: 3 hours
Maximum Marks: 80
General Instructions:
- This question paper contains 34 questions.
- Marks are indicated against each question.
- Answers should be brief and to the point.
- Answers to the questions carrying 3 marks may be from 50 to 75 words.
- Answers to the questions carrying 4 marks may be about 150 words.
- Answers to the questions carrying 6 marks may be about 200 words.
- Attempt all parts of the questions together.
Question 1.
The revenue of Khazana Ltd. has nearly doubled in the last three years. However, due to huge production costs, the company is not making any profits. Considering the financial situation of the company, the management has decided not to declare any dividends. This has made the shareholders of Khazana Ltd. very upset. Is the shareholders’ reaction justified in this scenario? Choose the correct answer. [1]
(A) Yes. The management has no right to decide whether or not dividend can be declared. This right is with the shareholders.
(B) No. The management is right in not declaring dividend since the company will need cash to meet the huge costs.
(C) Yes. The revenue of the company has doubled and hence dividend should be given to the shareholders.
(D) No. The management is right in not declaring dividend since the company does not have any profits.
Answer:
(D) No. The management is right in not declaring dividend since the company does not have any profits.
Explanation:
As there is no profits earned by Khazana Ltd. it does not have any liability to give dividends to the shareholders.
Question 2.
Many people confuse ‘selling’ for ‘marketing’. Marketing involves a whole range of activities that analyse and implement a customer’s needs. [1]
Given the context, choose the option which would fall in the definition of marketing.
(A) ABC & Co. has priced its product at 20% discount.
(B) ABC & Co. is targeting to reduce its cost of production.
(C) ABC & Co. has hired a new finance manager to track costs.
(D) ABC & Co. has appointed two agents who will help in selling the product.
Answer:
(A) ABC & Co. has priced its product at 20% discount.
Question 3.
Bhrama & Co. has come up with special offers for its customers for Diwali. Their marketing and graphics team have designed a pamphlet to be shared with the customers on social media. Which dimension of the business environment does this situation cover? [1]
(A) Legal and social
(B) Political and social
(C) Technological and legal
(D) Technological and social
Answer:
(D) Technological and social
Explanation:
As the religious festival is targeted, the aspect of business environment is Social. Again, as the graphics team is involved as well as the target is through social media, the technological dimension of business environment is targeted here.
Question 4.
Which of the following statement about sales promotion activities is CORRECT? [1]
(A) Refund means giving back a part of the price paid by the customer.
(B) Rebate means reducing the cost of new products to increase awareness,
(C) Discount means offering products at a special price to clear off excess inventory.
(D) Quantity gift means offering another product as a gift along with the purchase of product.
Answer:
(A) Refund means giving back a part of the price paid by the customer.
Question 5.
Arrange the steps involved in trading procedure at the stock exchange in correct sequence: [1]
(i) Settlement of order
(ii) Opening of Demat Account
(iii) Placing of order
(iv) Execution of order
(A) (ii); (iv); (iii); (i)
(B) (ii); (i); (iii); (ii)
(C) (iii); (ii); (iv); (i)
(D) (ii); (iii); (iv); (i)
Answer:
(D) (ii); (iii); (iv); (i)
Explanation:
The trading procedure involves the following steps:
(i) Selection of a broker
(ii) Opening a Demat Account with Depository
(iii) Placing the Order
(iv) Executing the Order
(v) Settlement
Question 6.
Identify the concept of management illustrated in the picture above. [1]
(A) Coordination
(B) Cooperation
(C) Both (A) and (B)
(D) Neither (A) nor (B)
Answer:
(A) Coordination
Explanation:
Coordination is the force that binds all the functions of management and is thus called the essence of management.
Question 7.
If bank is for money, then depositories are for ……………. [1]
(A) cheques
(B) securities
(C) fixed deposits
(D) physical assets like gold
Answer:
(B) securities
Question 8.
Raman and Vasudev were two employees who were embezzling an import-export company in Varanasi where they were working. The finance manager of the company Sampat Singh became suspicious of the two employees when he realized that their activities were not being performed as per the plans. He installed a software program that could secretly log every single stroke of the suspects’ computer keys and send an encrypted email report to the Cyber police. The police were able to catch the two dishonest employees red handed and arrest them. Identify the function of management being discussed above. [1]
(A) Staffing
(B) Coordination
(C) Controlling
(D) Organizing
Answer:
(C) Controlling
Explanation:
The controlling function helps in measuring the progress towards the organizational goals and brings any deviations and indicates corrective action.
Question 9.
One of the important decision areas under the marketing function of ……………. is managing inventory. [1]
(A) Branding
(B) Pricing
(C) Promotion
(D) Physical distribution
Answer:
(D) Physical distribution
Explanation:
Physical distribution is not only use of intermediaries but also involves warehousing, wherein a proper stock needs to be maintained.
Question 10.
Read the following statements: Assertion (A) and Reason(R). Choose the correct alternative from those given below: [1]
Assertion (A): Management is a dynamic function and has to adapt itself to the changing environment.
Reason (R): The effect of management is noticeable in an organization where targets are met according to plans.
Alternatives:
(A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and.Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.
Answer:
(B) Both Assertion (A) and.Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
Explanation:
Management is a dynamic function that involves the process of planning, organizing, directing, and controlling resources to achieve organizational goals and objectives. However, the environment in which organizations operate is constantly changing, and managers must adapt to these changes to ensure the success and survival of their organization.
Question 11.
In a company the decision-making authority is retained by higher management levels. What can be DEFINITELY said about its organisational structure? [1]
(A) Integrated
(B) Diversified
(C) Centralised
(D) Decentralised
Answer:
(C) Centralised
Explanation:
Centralized decision-making refers to the concentration of decision-making authority at the top of the organizational hierarchy, usually by higher management levels. In this structure, the decision-making power rests with a few key individuals at the top of the organization, who make decisions for the entire organization.
Question 12.
An important project at AMB Consultants is running behind schedule by a month. This has upset their clients and might affect the reputation of the company in the long run. No managerial action like assigning more workers, equipment or giving overtime has been able to solve the problem.
What managerial action may now be taken by the company to avoid such a situation from arising in future? [1]
(A) Revise the schedule.
(B) Assigning additional workers and equipment to the project
(C) Get permission for further overtime work.
(D) Both (B) and (C)
Answer:
(A) Revise the schedule.
Explanation:
A good control system enables management to verify whether the standards set are accurate and objective. An efficient control system keeps a careful check on the changes taking place in the organization and in the environment and helps to review and revise the standards in light of such changes.
Question 13.
Statement-I: Transportation helps in creating time utility and warehousing helps in creating place utility.
Statement-II: The process of classification of products into different groups on the basis of their important characteristics is known as standardization.
Choose the correct option from the options given below: [1]
(A) Statement I is true and II is false.
(B) Statement II is true and I is false.
(C) Both the statements are true.
(D) Both the statements are false.
Answer:
(D) Both the statements are false.
Explanation:
Transport carries goods to the place where they are demanded and creates place utility. Warehousing creates time utility by allowing companies to store products in anticipation of future demand. Grading is a process of classification of products into different groups on the basis of some important characteristics such as quality, size, etc.
Question 14.
The name and taste of Coca-Cola is known to almost each and every individual in India as well as throughout the world. This carbonated soft drink holds the most market share in the soft drink market and got itself a special seat in each and every gathering. The Coca-Cola Company has on occasion introduced other cola drinks under the Coke name. The most common of these are Diet Coke, along with others including Caffeine free Coca-Cola, Diet Coke Caffeine free, Coca-Cola Zero Sugar, Coca-Cola Cherry, Coca-Cola Vanilla and the list goes on. It has capitalized on each and every opportunity to market itself effectively and place itself in the middle of every gathering. The main reason for such an outstanding placement of product goes to the way they have established the connection between every occasion and the need for Coke to be present there, product design and creative advertising. Identify the feature of Business Environment which the Coca-Cola Company managed to get in their favour. [1]
(A) Complex
(B) Specific and general forces
(C) Futuristic
(D) Mental exercise
Answer:
(B) Specific and general forces
Question 15.
Name the concept which explains the manner in which decision-making responsibilities are divided among hierarchical levels. [1]
(A) Organisational structure
(B) Span of management
(C) Delegation
(D) Decentralisation
Answer:
(D) Decentralisation
Explanation:
Decentralisation refers to delegation of authority throughout all the levels of the organisation. Decision making authority is shared with lower levels and is consequently placed nearest to the points of action. In other words, decision making authority is pushed down the chain of command. Decentralisation explains the manner in which decision-making responsibilities are divided among hierarchical levels.
Question 16.
Statement I: The market price of equity share increases, if the benefit from a decision exceeds the cost involved.
Statement II: All financial decisions aim at ensuring that each decision is efficient and adds some value. [1]
Choose the correct option from options given below:
(A) Statement I is correct and statement II is wrong.
(B) Statement II is correct and statement I is wrong.
(C) Both the statements are correct.
(D) Both the statements are wrong.
Answer:
(C) Both the statements are correct.
Explanation:
The market price of equity share increases, if the benefit from a decision exceeds the cost involved. All financial decisions aim at ensuring that each decision is efficient and adds some value. Such value additions tend to increase the market price of shares. Therefore, those financial decisions are taken which will ultimately prove gainful from the point of view of the shareholders. The shareholders gain if the value of shares in the market increases. Those decisions which result in decline in the share price are poor financial decisions.
Question 17.
“Global stock indices have fallen on account of the pandemic.”
The above statement DIRECTLY falls under which dimension of business environment? [1]
(A) Legal environment
(B) Social environment
(C) Economic environment
(D) Technological environment
Answer:
(C) Economic environment
Explanation:
Economic environment refers to factors like interest rates, inflation rates and changes in disposable income of people, etc. which have an impact on business enterprise.
Question 18.
Match the CONCEPT of Marketing in Column I with their respective DEFINITIONS in Column II. [1]
Column I |
Column II |
||
(a) | Product Concept | (1) | Relates to maintaining high quality of the product. |
(b) | Selling Concept | (2) | Relates to satisfying customer needs.’ |
(c) | Marketing Concept | (3) | Relates to availability and affordability of products |
(d) | Production Concept | (4) | Relates to aggressively persuading buyer to purchase the product. |
(A) (a)(1), (b)(2), (c)(3), (d)(4)
(B) (a) (2), (b)(1), (c)(4), (d)(3)
(C) (a) (4), (b)(3), (c)(2), (d)(1)
(D) (a)(1), (b)(4), (c)(2), (d)(3)
Answer:
(D) (a)(1), (b)(4), (c)(2), (d)(3)
Question 19.
Fredrick Winslow Taylor proposed which of the following style of management as opposed to rule of thumb: [1]
(A) Planned management
(B) Scientific management
(C) Organised management
(D) Systematic management
Answer:
(B) Scientific management
Question 20.
Which characteristic of the business environment is highlighted when changes are taking place too frequently and it becomes difficult to predict the future? [1]
(A) Uncertainty
(B) Complexity
(C) Inter-relatedness
(D) Relativity
Answer:
(A) Uncertainty
Explanation:
The business environment is very uncertain as one cannot predict what will happen in the future, especially in the case of the fashion industry, film industry, and information technology. Its dynamic nature makes it all more challenging to handle uncertainty.
Question 21.
Mita has a successful ice cream business in Bikaner, namely ‘Smart Flavours’. Her ice creams are utterly delicious. She makes ice creams from fresh milk and the same are available in a wide range of flavours and packs. She sets viable business objectives and works with the same in mind in order to ensure that the customers will come back for purchasing. Having the first mover advantage, her business was doing well. To earn higher profits, she started cutting down costs. This would sometimes lead to delay in delivery and the ice cream was not reaching the market in time. Over a period of time, the demand for her ice cream declined and because of it the competitors entered the market. She lost some of her market share to competitors. At the beginning of summer season, she got back to back orders for supply of 4,000 ice cream packs of different flavours for special occasions. To ensure that the task was completed and orders delivered in time she hired additional workers. She was, thus able to produce and deliver the ice cream packs but at a high production cost. While completing activities and finishing the given task for achieving goals, Mita realised that she was ignoring one of the important aspects of management. Identify the aspect of management that has been ignored by Mita. Also explain the same with the help of an example. [3]
Answer:
Efficiency: Efficiency means doing the task correctly and with minimum cost.
Example: Say, a company’s target production is 5,000 units in a year. The manager wants to achieve the production target by cutting down costs. He was able to cut down costs but could not achieve the target production. In this case, the manager was efficient but not effective.
OR
Effectiveness means doing the right task, completing activities land achieving goals.
Example: Say, a company’s target production is 5,000 units in a year. To achieve this target the manager has to operate on double shifts due to power failure most of the time. The manager is able to produce 5,000 units but at a higher production cost. In this case, the manager was effective but not so efficient.
Question 22.
Controlling becomes more effective if planning is done based on facts. Analyse the statement based on the relationship between planning and controlling. [3]
OR
Explain “Management by exception” with respect to analyzing deviations, a step in the process of controlling. Give a suitable example.
Answer:
The statement “Controlling becomes more effective if planning is done based on facts” emphasizes the importance of using accurate data and information in both the planning and controlling processes. When planning is based on facts, it ensures that the goals and strategies are realistic and achievable, aligned with the organization’s resources and capabilities, and based on a thorough understanding of the internal and external environment. This, in turn, facilitates effective controlling, as managers can use the same set of facts to track progress towards the goals and identify any deviations from the plan. By comparing actual results to the planned results, managers can make informed decisions about how to adjust the plan and get back on track, leading to better outcomes for the organization.
OR
Management by exception, which is often referred to as control by exception, is an important principle of management control based on the belief that an attempt to control everything results in controlling nothing. Thus, only significant deviations which go beyond the permissible limit should be brought to the notice of the management.
For instance, if the plans lay down 2% increase in labour cost as an acceptable range of deviation in a manufacturing organization, only an increase in labour cost beyond 2% should be brought to the notice of the management. However, in case of major deviation from the standard (say, 5%), the matter has to receive immediate action of management on a priority basis.
Question 23.
Mrs. Ahilya Pasi is the Principal of a prestigious school in New Delhi. The school has a vacancy ofa headmistress/headmaster of the junior wing of the school. The senior teachers of the school have the opinion that only internal candidates should be considered for this post. However, Mrs. Pasi and the management would like to invite applications from external sources too. Briefly explain any three justifications the management can provide to convince the staff for inviting applications of external candidates for the vacant post. [3]
Answer:
Merits of External Sources:
(i) Qualified personnel: By using external sources of recruitment, the management can attract qualified and trained people to apply for vacant jobs in the organization.
(ii) Wider choice: When vacancies are advertised wisely, a large number of applicants from outside the organization can apply. The management has a wider choice while selecting the people for employment.
(iii) Fresh Talent: The present employees may be insufficient or they may not fullfil the specifications of the jobs to be filled. External recruitment provides wider choice and brings new blood in the organization.
(iv) Competitive spirit: Ifa company taps external sources, the existing sources, the existing staff will have to compete with the outsiders. They will work harder to show better performance.
Question 24.
Mention any three protective functions of SEBI. [3]
OR
What is meant by ‘Financial Management’? State the primary objective of Financial Management.
Answer:
(i) Prohibition of fraudulent and unfair trade practices like making misleading statements, manipulations, price rigging, etc.
(ii) Controlling insider trading and imposing penalties for such practices.
(iii) Undertaking steps for investor protection.
(iv) Promotion of fair practices and code of conduct in securities market.
OR
Financial Management is concerned with management of flow of funds and involves decisions relating to procurement of funds, investment of funds and distribution of earnings.
Objective of Financial Management: The objective of financial management is to maximize shareholders wealth i.e., to maximize the market price of equity shares of the company. This is because a company’s funds belong to these shareholders and the manner in which these are invested and the return earned on them determines the market value or price of shares
Question 25.
State any four barriers to communication which are concerned with problems and obstructions in the process of encoding and decoding the message into words or impressions. [4]
OR
State any four barriers to communication which are related to authority relationships, rules and regulations of the company. [4]
Answer:
Semantic barriers
(i) Sometimes intended meaning may not be conveyed by a manager to his subordinates due to badly expressed messages which may be on account of inadequate vocabulary, usage of wrong words, omission of needed words, etc.
(ii) A word may have different meanings and the receiver has to perceive one such meaning for the word used by the communicator.
(iii) If the translator is not proficient with both the languages, mistakes may creep in causing different meanings to communication.
(iv) Some communications may have certain assumptions which are subject to different interpretations.
(v) It is usually found that specialists use technical jargon while explaining to persons who are not specialists in the concerned field and therefore they may not understand the actual meaning of many words.
(vi) If there is no match between what is said and what is expressed in body movements, communications may be wrongly perceived.
OR
Organizational barriers
(i) If organizational policy either explicit or implicit is not supportive to free flow of communication it may hamper effectiveness of communication.
(ii) Rigid rules and regulations, cumbersome procedures may be a hurdle to communication, as communications through prescribed channels may result in delays.
(iii) Status of superior may create psychological distance between him and his subordinates.
(iv) Complexity in the organization caused by the number of managerial levels may delay and distort the communication as the number of filtering points is more.
(v) If facilities like frequent meetings, suggestion box, and complaint box, social and cultural gathering, transparency in operations, etc., for smooth, clear and timely communications are not provided, communications may be hampered.
Question 26.
Name the mechanism that attempts to measure certain characteristics of individuals in the process of identifying and choosing the best person out of the number of prospective candidates for the job. Enumerate any three of its types. [4]
OR
Explain briefly ‘transfers’ and ‘promotions’ as internal sources of recruitment. [4]
Answer:
Selection test
Types of tests are:
(i) Intelligence test is one of the important psychological tests used to measure the level of intelligence quotient of an individual and is an indicator of a person’s ability or the ability to make decisions and judgments.
(ii) Aptitude test is a measure of an individual’s potential for learning new skills and indicates the person’s capacity to develop.
(iii) Personality test provides clues to a person’s emotions, her reactions, maturity, and value system and probe the overall personality.
(iv) Trade test measures the existing skills of the individual, level of knowledge and proficiency in the area of profession or technical training.
(v) Interest test is used to know the pattern of interests or involvement of a person.
OR
Transfers:
(i) Transfers involve shifting of an employee from one job to another, one department to another or from one shift to another, without a substantive change in the responsibilities and status of the employee.
(ii) It may lead to changes in duties and responsibilities, working condition, etc., but not necessarily salary.
Promotions:
(i) Promotions involve shifting an employee to a higher position, carrying higher responsibilities, facilities, status and pay.
(ii) This practice helps to improve motivation and increases loyalty and satisfaction level of employees:
Question 27.
Rajneesh purchased a 500 ml bottle of fruit juice for ₹ 60 in Ahmedabad from a local store. While consuming it, he found an insect floating in it. He sent a legal notice to the company immediately and decided to approach a Consumer Redressal Agency for a relief of ₹ 2 lakh.
(i) Which Consumer Dispute Redressal Agency did Rajneesh approach out of the three-tier machinery set up under Consumer Protection Act, 2019 for redressal?
(ii) If Rajneesh is not satisfied by the order of the above Agency, where can he appeal against such order and within how many days?
(iii) State any two relief that can be granted to Rajneesh in the above case. [4]
Answer:
(i) Rajneesh approached the District Forum.
(ii) If he is not satisfied by the order, he can appeal to the State Commission within 30 days.
(iii) The relief that can be granted to Rajneesh in the above case are:
(a) Compensation for loss or injury suffered.
(b) Refund of prices and punitive damages.
Question 28.
Explain the following factors affecting financing decision: [4]
(i) Cost of capital
(ii) Cash flow position of business
(iii) Level of fixed operating cost
(iv) Control considerations
Answer:
(i) Cost of capital: The cost of capital is the cost associated with each source of financing. Equity financing typically has a higher cost of capital than debt financing, as shareholders require a higher rate of return on their investment to compensate for the greater risk. Companies must evaluate the costs and benefits of each source of financing to determine the optimal mix.
(ii) Cash flow position of the business: The cash flow position of the business influences the company’s ability to repay debt and pay dividends to shareholders. Companies with stable and strong cash flows may be able to support higher levels of debt financing, while those with weak or volatile cash flows may need to rely more on equity financing.
(iii)Level of fixed operating costs: Companies with high fixed costs, such as those in capital intensive industries, may need to maintain a more conservative capital structure to avoid financial distress during periods of low revenue. Such companies may prefer to rely more on equity’ financing, which does not require regular interest payments.
(iv)Control considerations: The financing decision can also have implications for control over the company. Equity financing dilutes the ownership of existing shareholders, potentially reducing their control over the company. Debt financing, on the other hand, typically does not involve a transfer of ownership, but it comes with restrictive covenants that limit the company’s flexibility.
Question 29.
Identify and state the element of directing in the following cases: [4]
(i) Tina, the manager, sends an e-mail to all the employees asking them to come to a meeting at 4:00 pm.
(ii) Rahul sees that his employee Astha is not working efficiently. He promises her incentives if she improves her work.
(iii) Anita directs her employee Hemant to work on the new project.
(iv) Manju tells her employee Harshita to start working properly or else she will be fired from her job.
Answer:
(i) Written Communication: It is a process of exchange of ideas, views, facts, feelings, etc., between or among people to create common understanding through a written media.
(ii) Motivation: It means incitement or inducement to act or move. In the context of an organization, it means the process of making subordinates to act in a desired manner to achieve certain organizational goals.
(iii) Leadership: It is the process of influencing the behaviour of people by making them strive voluntarily towards achievement of organizational goals.
(iv) Oral Communication: It is a process of exchange of ideas, views, facts, feelings, etc., between or among people to create common understanding verbally.
Question 30.
Saksham Ltd., a firm manufacturing textile, wished to diversify its business. They were considering two options, either to diversify into manufacturing toothpaste or switches. They wanted to invest in the purchase of land, to set up a manufacturing unit in the backward areas of Gujarat, which would also lead to the generation of employment opportunities in the area, but only after fulfilling all legal requirements and taking appropriate steps to ensure that the environment was not polluted. The finance manager of the company, Mr. Ramakant was asked by the management to prepare a report on the factors which should be considered while making the above investment decision.
(i) State any two factors that Mr. Ramakant would give in his report.
(ii) Also state any two reasons which makes it important for the above decisions to be made carefully. [4]
Answer:
(i) Factors that should be kept in mind by the company while making the investment decision:
(a) The amount of cash flows should be carefully analyzed before considering the decision.
(b) The rate of return of the project based on expected return and assessment of the risk involved from each proposal should be analyzed.
(c) The decision to invest in a particular project involves a number of calculations regarding the amount of investment, interest rate, cash flows and rate of return.
(ii) The following are the reasons that make the above decision to be made carefully:
(a) These decisions have a bearing on the long term growth.
(b) These decisions result in a substantial portion of capital funds being blocked in long-term project.
(c) These decisions influence the overall business risk complexion of the firm.
(d) These decisions once taken, are not reversible without incurring heavy losses.
Question 31.
(i) Explain any two of the following principles of management as given by EW. Taylor: [3 + 3]
(a) Science Not Rule of Thumb
(b) Harmony not discord
(c) Maximum not Restricted Output
(ii) Differentiate between Time Study and Motion Study.
OR
(i) Explain any two of the following principles of management as given by Henry Fayol
(a) Subordination of Individual Interest to General Interest
(b) Remuneration of Persons
(c) Centralisation and Decentralisation
(ii) Differentiate between authority and responsibility on any three basis.
Answer:
(i) (a) Science notRule ofThumb: Each and every job and method of doing it should be scientifically analysed and decided instead of doing it under trial and error method. The task to be performed should be scientifically planned. The materials, equipment and working conditions should be standardized. The amount of work to be done should be decided through objective study.
(b) Harmony not Discord: There should be healthy co-operation between employerand employees. Taylor advocated a complete mental revolution on the part of both management and workers. Management should have an enlightened attitude and share the gains of productivity with workers. Workers on their part should work with discipline and loyalty.
(c) Maximum not Restricted Output/Maximum Prosperity for both employees and management: Conflict of interest between management and workers arises mainly on division of surplus. Taylor suggested that the best way to resolve the conflict is to increase the size of surplus so that each side can have a larger share. Management and workers have common interest to increase the productivity.
(ii) Time Study: Its basic purpose is to determine the standard time for performing a job. lime measuring devices are used for each element of task to fix the standard time.
Motion Study: Its basic purpose is to eliminate unnecessary movements or motions. The idea is to determine the least possible time required to complete the job efficiently.
OR
(i)
(a) Subordination of Individual Interest to General Interest: The business enterprise is superior to its individual employees. The interests of the business organization must prevail upon the personal interests of the individuals. This principle calls for reconciliation of goals of individuals with those of the organization.
(b) Remuneration of Persons: According to this principle, employees in the organization must be paid fairly or adequately to give them maximum satisfaction. The employees should be paid fair wages and salaries, which would give them at least a reasonable standard of living.
(c) Centralisation and Decentralisation: Centralisation refers to concentration of authority of power in few hands at the top level. Decentralisation means even distribution of power at every level of management. According to Fayol a company must not be completely centralised or completely decentralised but there must be combination of both depending upon the nature and size of the organisation.
(ii) The differences between Authority and Responsibility are:
S.No | Baris of Distinction | Authority | Responsibility |
(a) | Meaning | Authority”is the right to give orders and obtain obedience. | Responsibility means obligation to complete the job assigned on time. |
(b) | Source | It is due to the position. | It is due to the work given. |
(c) | Delegation | It cannot be delegated to a subordinate. | It can be delegated to the subordinate. |
Question 32.
‘The pros and cons of each alternative need to be weighed.’ Name and briefly explain the logical steps in the process of planning which are followed by a manager before performing the step highlighted in the above statement. [6]
OR
Briefly explain the next three steps in the process of planning which the manager will have to follow after using conjecture about what might happen in the future.
Answer:
Steps in the process of planning to be followed by a manager before performing the step of evaluation of alternatives are:
(i) Setting Objectives: The first and foremost step is setting objectives. Every organization must have certain objectives. Objectives may be set for the entire organization and each department or unit within the organization. Objectives or goals specify what the organization wants to achieve. It could mean an increase in sales by 20% which could be the objective of the entire organization. How all departments would contribute to the organizational goals is the plan that is to be drawn up. Objectives should be stated clearly for all departments, units and employees. They give direction to all departments.
(ii) Developing Premises: Planning is concerned with the future which is uncertain and every planner is using conjecture about what might happen in future. Therefore, the manager is required to make certain assumptions about the future. These assumptions are called premises. Assumptions are the base material upon which plans are to be drawn. The base material may be in the form of forecasts, existing plans or any past information about policies.
(iii) Identifying alternative courses of action: Once objectives are set, assumptions are made. Then the next step would be to act upon them. There may be many ways to act and achieve objectives. All the alternative courses of action should be identified. The course of action which may be taken could be either routine or innovative. An innovative course may be adopted by involving more people and sharing their ideas.
OR
The next three steps are:
(i) Identifying alternative courses of action: Once objectives are set, assumptions are made. Then the next step would be to act upon them. There may be many ways to act and achieve objectives. All the alternative courses of action should be identified. The course of action which may be taken could be either routine or innovative. An innovative course may be adopted by involving more people and sharing their ideas. If the project is important, then more alternatives should be generated and thoroughly discussed amongst the members of the organization.
(ii) Evaluating alternative courses: The next step is to weigh the pros and cons of each alternative. Each course will have ‘many variables which have to be weighed against each other. The positive and negative aspects of each proposal need to be evaluated in the light of the objective to be achieved. In financial plans, for example, the risk-return trade-off is very common. The more risky the investment, the higher the returns it is likely to give. To evaluate such proposals detailed calculations of earnings, earnings per share, interest, taxes, dividends are made and decisions taken. Accurate forecasts in conditions of certainty/ uncertainty then become vital assumptions for these proposals. Alternatives are evaluated in the light of their feasibility and consequences.
(iii)Selecting an alternative: This is the real point of decision making. The best plan has to be adopted and implemented. The ideal plan, of course, would be the most feasible, profitable and with least negative consequences. Most plans may not always be subjected to a mathematical analysis. In such cases, subjectivity and the manager’s experience, judgment and at times, intuition play an important part in selecting the most viable alternative. Sometimes, a combination of plans may be selected instead of one best course. The manager will have to apply permutations and combinations and select the best possible course of action.
Question 33.
Read the statement given in point (i) and (ii) and answer the questions that follows: [6]
(i) Sona has built a very big brand and now every customer needs the brand as created by Sona.
(a) Identify and explain the function of marketing that enables Sona to build a brand.
(b) State any two benefits that the marketer gets from the function.
(ii) The design of the product of Anupama Ltd. is very attractive and the consumer buys their product because of that.
(a) Identify and explain the function of marketing that enables to achieve the goal.
(b) Why do you think this function is important?
Answer:
(i)
(a) Branding: It is the process of giving a distinctive identity to a product by which it is to be known and remembered. A brand is a name, term or symbol used to identify the product from other products.
(b) The two benefits are:
- Customer Recognition: In the world of ads, when a customer recognizes a brand’s colour, theme, logo, etc., they are more likely to choose that product over all others. This is because they are already familiar with your brand and what it stands for.
- Customer Loyalty: Once a customer begins to recognize and buy a product or a service, good branding will keep them coming back for more. A good company with great products combined with effective branding hits all the right notes with customers. This will increase customer loyalty in the long run.
(ii)
(a) Product Planning and Development: Product planning is widely used in marketing as it is the foundation of marketing and success of marketing depends upon the product offered to customer. So marketing should design and develop the right type of products. The design, colour, size, quality and other features of the product should be decided according to the needs of the customer.
(b) The reasons are:
- It creates the market base for the product and attracts new customers easily.
- It creates brand loyalty and makes the product more efficient for sale.
Question 34.
Fly Colours Ltd. is a profit making colour producing company. The company deals in making different types of colours used in painting. The organisation has always been systematic in its approach and due to good organizing has seen a continuous increase in its revenue. Workers are given their respective jobs clearly which leads to gaining of experience since they do their respective jobs on a regular basis leading to high productivity. The organisation has many challenges and it wants to improve. There is no doubt in the lines of communication and everyone knows who has to report whom. With the passage of time, there is more need to connect with the employees. They are the most important asset to the organisation. When managers delegate work to their subordinates they set themselves free from routine jobs and this leads to great amount of learning for the subordinates in practical situations. Identify and explain the importance of organizing that have been highlighted in the above case? [6]
Answer:
The importance of organizing highlighted in the above case are:
(i) Benefits of specialization: Organising leads to a systematic allocation of jobs amongst the work force. This reduces the workload as well as enhances productivity because of the specific workers performing a specific job on a regular basis. Repetitive performance of a particular task allows a worker to gain experience in that area and leads to specialisation.
(ii) Clarity of working relationships: The establishment of working relationships clarifies lines of communication and specifies who is to report to whom. This removes.ambiguity in transfer of information and instructions. It helps in creating a hierarchical order thereby enabling the fixation of responsibility and specification of the extent of authority to be exercised by an individual.
(iii)Development of personnel: Organising stimulates creativity amongst the managers. Effective delegation allows the managers to reduce their workload by assigning routine jobs to their subordinates. The reduction in workload allows the manager to develop new methods and ways of performing tasks. Delegation also develops in the subordinate the ability to deal effectively with challenges and helps them to realise their full potential.