Students can access the CBSE Sample Papers for Class 12 Business Studies with Solutions and marking scheme Set 4 will help students in understanding the difficulty level of the exam.
CBSE Sample Papers for Class 12 Business Studies Set 4 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.
Mr. Raghav, finance manager of Manav Infra Tech Pvt. Ltd., prepared a detailed plan of financial needs of the firm in coming six months and the sources from where funds will be acquired to meet out these needs as company is planning to open a new branch in other states of India. Identify the financial concept discussed here: [1]
(A) Business cycle
(B) Financial planning
(C) Capital structure
(D) Working capital
Answer:
(B) Financial planning
Explanation:
Financial planning is broader in scope as it does not end by raising estimated finance. It includes long-term investment decision. In financial planning finance manager analyses various investments plans and selects the most appropriate one.
Question 2.
Priya Seth, a fashion designer, has launched a new range of dresses by the name, ‘Sukriti’. To give her dresses a distinct image and to distinguish them from the competitor’s products, she has designed a unique symbol with a distinct colour scheme. This symbol is available on all the labels, packaging and advertising campaigns of this new range of dresses. She has also registered this symbol to give it a legal protection against its use by other firms. From the following, name the term used to denote the symbol designed by Priya Seth in the above case: [1]
(A) Brand mark
(B) Trademark
(C) Brand name
(D) Brand icon
Answer:
(B) Trademark
Explanation:
A brand or part of a brand that is given legal protection is called trademark. The protection is given against its use by other firms. Thus, the firm, which got its brand registered, gets the exclusive right for its use. In that case, no other firm can use such name or mark in the country.
Question 3.
Digilocker is a flagship initiative of ‘Ministry of Electronics and IT’, Government of India. It aims at digital empowerment of the citizens by providing access to authentic digital documents such as academic certificates issued by different Examination Boards, Driving Licenses, Vehicle registration, etc. in a digital format. The above para discusses a few dimensions of Business Environment. Identify the correct dimensions from the following: [1]
(A) Economic Environment and Technological Environment
(B) Social Environment and Economic Environment
(C) Social Environment and Political Environment
(D) Political Environment and Technological Environment
Answer:
(D) Political Environment and Technological Environment
Explanation:
As the digilocker is an initiative of the government, it is a part of political environment. It is also a part of technological environment as it enables the certificates to be digitally stored.
Question 4.
Which among the following are the four important methods of promotion? [1]
(A) Advertising, cross selling, publicity and sales promotion
(B) Advertising, personal selling, publicity and sales promotion
(C) Advertising, personal selling, customer support and sales promotion
(D) Advertising, personal selling, social media marketing and sales promotion
Answer:
(B) Advertising, personal selling, publicity and sales promotion
Explanation:
The important promotional tools are: Advertising, Sales Promotion, Salesmanship, Publicity and Public Relations. Advertising is a non-personal presentation of ideas, goods or services that is paid for by an identified sponsor through various media channels. Personal selling involves face-toface communication with potential customers to persuade them to purchase a product or service. Publicity is any unpaid form of non-personal presentation of ideas, goods or services that is not sponsored by the company or organization. Sales promotion refers to short-term incentives designed to encourage customers to make an immediate purchase or take a specific action, such as coupons, contests, and discounts.
Question 5.
Which among the following sentences is true? [1]
(A) Primary market enhances liquidity.
(B) Secondary market is located at specified places.
(C) In the secondary market, only buying of securities take place.
(D) In the primary market, prices are determined by demand and supply.
Answer:
(B) Secondary market is located at specified places.
Question 6.
Identify the function of management stated above. [1]
(A) Planning
(B) Organising
(C) Staffing
(D) Directing
Answer:
(C) Staffing
Explanation:
Staffing is a very important aspect of management so as to make sure that right people with right qualifications are available at the right places and at right times to accomplish the goals of the organization.
Question 7.
Which of the following is not a function of Securities and Exchange Board of India (SEBI)? [1]
(A) Training of intermediaries of the securities market
(B) Controlling insider training
(C) Registration of brokers and sub-brokers and other players in the market
(D) Pricing of securities
Answer:
(D) Pricing of securities
Explanation:
Pricing of securities are done through the performance of securities in the market.
Question 8.
Vidhya Public School is a renowned school in Nagpur. The management recently appointed a new Business Studies teacher, Shweta, to teach classes XI and XII and gave her a monthly salary of ₹ 50,000. Shweta is not satisfied with it and said “the salary is not just and equitable as per the amount of work required to be done by a Business Studies teacher. Other schools in the city are paying ₹ 70,000 to their teachers teaching classes XI and XII”. Name the principle of management that has been violated by Vidhya Public School in the above case: [1]
(A) Discipline
(B) Remuneration of employees
(C) Equity
(D) Esprit de corps
Answer:
(C) Equity
Explanation:
The overall pay and compensation should be fair to both employees and the organisation. Remuneration should be just and equitable. This will ensure congenial atmosphere and good relations between workers and management. Consequently, the working of the company would be smooth.
Question 9.
Which of the following statement about Advertising is incorrect? [1]
(A) It is a personal form of communication.
(B) It is a paid form of communication.
(C) It is a mass-selling technique.
(D) It is inflexible as the message can’t be adjusted to the needs of the buyer.
Answer:
(A) It is a personal form of communication.
Explanation:
Advertising is the non-personal communication of information usually paid for and usually persuasive in nature about products, services or ideas by identified sponsors through various media.
Question 10.
Read the following statements: Assertion (A) and Reason (R). Choose the correct alternative from those given below:
Assertion (A): Management is responsible for setting and achieving objectives for the organization.
Reason (R): The basic objective of any business is survival.
Alternatives: [1]
(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:
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
Explanation:
The basic objective of any business is survival. The survival of the organization depends on its ability to achieve its objectives effectively and efficiently. Therefore, it is the responsibility of the management to set and achieve objectives for the organization.
Question 11.
The obligation of a subordinate to properly perform the assigned duty is called: [1]
(A) Authority
(B) Responsibility
(C) Accountability
(D) Decentralisation
Answer:
(B) Responsibility
Question 12.
Identify an important principle of management control in which only significant deviations which go beyond the permissible limit should be brought to the notice of management. [1]
(A) Management by control
(B) Control by exception
(C) Critical point control
(D) Both (A) & (B)
Answer:
(B) Control by exception
Explanation:
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 management.
Question 13.
Statement I: In selling, product’s title is transferred from seller to buyer.
Statement II: The primary goal of marketing is to turn a product into cash. [1]
(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:
(A) Statement I is correct and statement II is wrong.
Explanation:
The primary goal of selling is to turn a product into cash. Whereas, the primary goal of marketing is to create value for customers by identifying and meeting their needs and wants through the exchange of products or services. While generating revenue and profits is an important objective for businesses, it is not the primary goal of marketing. The focus of marketing is on building strong relationships with customers and creating a loyal customer base, which can lead to sustainable growth and profitability for the business in the long run.
Question 14.
Dolma and Una were gardeners with decades of hands-on experience. They were the first ones to recognise the need of indoor gardens specially for plant lovers living in apartments. They took advantage of this opportunity and decided to offer beautiful designing ideas for indoor gardening through their innovative venture ‘My Space’. ‘My Space’ offered creative ideas like ‘Garden wall’, ‘Hanging Garden’, ‘Window Gardens’, ‘Book-shelf garden’ and many more. Since there were no competitors they soon became the market leaders in the field.
From the following points identify the importance of Business Environment highlighted above: [1]
(A) Business Environment helps the firm to identify threats and early warning signals.
(B) Business Environment helps in tapping useful resources.
(C) Business Environment enables the firm to identify opportunities and getting the first mover advantage.
(D) Business Environment helps in assisting in planning and policy formulation.
Answer:
(C) Business Environment enables the firm to identify opportunities and getting the first mover advantage.
Explanation:
Opportunities refer to the positive external trends or changes that will help a firm to improve its performance. Environment provides numerous opportunities for business success. Early identification of opportunities helps an enterprise to be the first to exploit them instead of losing them to competitors.
Question 15.
Name the concept that refers to the number of subordinates that can be effectively managed by a superior and determines the number of levels of management in the organisation. [1]
(A) Organisation structure
(B) Span of management
(C) Hierarchy of authority
(D) Delegation of Authority
Answer:
(B) Span of management
Explanation:
The span of management, to a large extent gives shape to the organisational structure. Span of management refers to the number of subordinates that can be effectively managed by a superior. This determines the levels of management in the structure. A proper organisation structure is essential to ensure a smooth flow of communication and better control over the operations of a business enterprise.
Question 16.
Statement I: A proper matching of funds requirements and their availability is sought to be achieved by financial planning.
Statement II: Financial planning takes into consideration the growth, performance, investments and requirement of funds. [1]
Choose the correct option from options given below:
(A) Statement I is correct and statement II is wrong.
(B) Statement n 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:
A proper matching of funds requirements and their availability is sought to be achieved by financial planning. This process of estimating the fund requirement of a business and specifying the sources of funds is called financial planning. Financial planning takes into consideration the growth, performance, investments and requirement of funds for a given period.
Question 17.
Even though the political conditions vary from country to country, they impact the sentiment of an investor in the business, if the instability of the political conditions cause uncertainty and make it difficult for him to predict the future. Which feature of the business environment is being highlighted in the above statement? [1]
(A) Specific and general forces
(B) Dynamic nature
(C) Relativity
(D) All of the above
Answer:
(D) All of the above
Explanation:
Business environment includes both specific and general forces. Business environment is dynamic, i.e., it keeps on changing whether in terms of technological improvement, shifts in consumer preferences or entry of new competition in the market. Business environment is a relative concept since it differs from country to country and even region to region.
Question 18.
Match the Marketing Mix in Column I with their MEANING in Column II. [1]
Column I | Column II | ||
(a) | Product | (1) | Value of the good or service being sold |
(b) | Price | (2) | Anything offered for sale |
(c) | Place | (3) | Activities to sell the product |
(d) | Promotion | (4) | Activities to make the product available. |
(A) (a) (2), (b)(4), (c)(3), (d)(1)
(B) (a) (2), (b)(1), (c)(4), (d)(3)
(C) (a) (3), (b)(2), (c)(4), (d)(1)
(D) (a) (2), (b)(4), (c)(1), (d)(3)
Answer:
(B) (a) (2), (b)(1), (c)(4), (d)(3)
Question 19.
“Anyone can be called a manager irrespective of the educational qualification possessed.” Identify the characteristic of the profession that Management does not fulfill in the statement being discussed above: [1]
(A) Ethical code of conduct
(B) Professional association
(C) Restricted entry
(D) Service motive
Answer:
(C) Restricted entry
Explanation:
The entry to a profession is restricted through an examination or through acquiring an educational degree. Whereas there is no legal restriction on appointment of a manager, anyone can become a manager irrespective of the educational qualification.
Question 20.
In Country X, 80% of the factories are owned by the government. But these factories have long been operating at a loss and so the government has opted to sell 50% of its holdings to other big companies in the nation. The rationale is that since these businesses have better resources, they would be able to manage these factories better.
What is this decision of the government known as? [1]
(A) Privatisation
(B) Globalisation
(C) Liberalisation
(D) Demonetisation
Answer:
(A) Privatisation
Question 21.
CareTech is a company which deals with providing car service at home and on road. There are different departments in this company like Human Resources, Marketing, Finance, Research and Development and Operations. The top management of the company tries its level best to synchronize the activities of different departments in the best possible manner. The result is increased efficiency and attainment of goals. However, with the passing of time the size of the company has grown and now there are many branches of this company. The synchronization has turned more important with the increase in the size of the company and the number of employees. The Departmental Heads of the company are specialists in their respective areas and the top management tries to work with them not with authority but by respecting their views on the subject. Their ego clashes are avoided to ensure smooth functioning of the organization. Identify the concept of management highlighted above. Also give any two benefits highlighted in the above paragraph of this concept. [3]
Answer:
The concept of management highlighted above is Coordination.
Importance of Coordination:
(i) Growth in size: As organizations grow in size, the number of people employed by the organization also increases. At times, it may become difficult to integrate their efforts and activities. All individuals differ in their habits of work, background, approaches to situations and relationships with others. It becomes necessary to ensure that all individuals work towards the common goals of the organisation. But employees may have their own individual goals also. Therefore, for organisational efficiency, it is important to harmonise individual goals and organisational goals through coordination.
(ii) Functional differentiation: Functions of an organisation are divided into departments, divisions and sections. In an organisation there may be separate departments of finance, production, marketing or human resources. All these departments may have their own objectives, policies and their own style of working. However, all departments and individuals are interdependent and they have to depend on each other for information to perform their activities. The activity of each department needs to be focused on attainment of common organisational goals. The process of linking the activities of various departments is accomplished by coordination.
(iii)Specialisation: Modern organizations are characterised by a high degree of specialisation. Specialisation arises out of the complexities of modern technology and the diversity of tasks to be performed. Organisations, therefore, need to employ a number of specialists. Specialists usually think that they only are qualified to evaluate, judge and decide according to their professional criteria. They do not take advice or suggestions from others in matters pertaining to their area of specialisation. This often leads to conflict amongst different specialists as well as others in the organisation. Therefore, some coordination is required by an independent person to reconcile the differences in approach, interest or opinion of the specialists.
Question 22.
Explain the following as importance of controlling function of management:
(i) Accomplishing organizational goals
(ii) Judging accuracy of standards
OR
Explain the following as steps in the process of controlling:
(i) Setting performance standards
(ii) Measurement of actual performance [3]
Answer:
(i) Accomplishing organizational goals: The controlling function measures progress towards the organizational goals and brings to light the deviations, if any, and indicates corrective action. It, thus, guides the organization and keeps it on the right track so that organizational goals might be achieved.
(ii) Judging accuracy of standards: 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 organisation and in the environment and helps to review and revise the standards in light of such changes.
OR
(i) Setting Performance Standards: The first step in the controlling process is setting up of performance standards. Standards are the criteria against which actual performance would be measured. Thus, standards serve as benchmarks towards which an organisation strives to work. Standards can be set in both quantitative as well as qualitative terms.
(ii) Measurement of actual performance: This step involves comparison of actual performance with the standard. Such comparison will reveal the deviation between actual and desired results. Comparison becomes easier when standards are set in quantitative terms.
Question 23.
The employees of ‘Bells and Pepper’ a restaurant, are trained through a structured programme that provides training in each area within the restaurant. The employees are put under the guidance of a master worker. Employees learn their jobs on the cooking equipment they will be using. The trainees learn the skills necessary for running each of the 12 workstations in the restaurant, from taking orders to the cooking area. This enables the employees to gain a broader understanding of all parts of the business and how the restaurant functions as a whole. The trainee gets fully involved in the department’s operations and also gets a chance to test his/her own aptitude and ability. When employees are trained by this method, the organization finds it easier at the time of promotions, replacements or transfers. Identify and explain the methods of training described in the above case. [3]
Answer:
(i) Apprenticeship Programmes: Apprenticeship programmes put the trainee under the guidance of a master worker. These are designed to acquire a higher level of skill. People seeking to enter skilled jobs, to become, for example, plumbers, electricians or iron workers, are often required to undergo apprenticeship training. These apprentices are trainees who spend a prescribed amount of time working with an experienced guide or trainer. A uniform period of training is offered to trainees, in which both fast and slowly learners, are placed together. Slow learners may require additional training.
(ii) Vestibule Training: Employees learn their jobs on the equipment they will be using, but the training is conducted away from the actual work floor. Actual work environments are created in a classroom and employees use the same materials, files and equipments. This is usually done when employees are required to handle sophisticated machinery and equipment.
Question 24.
Explain any three functions of Stock Exchange. [3]
OR
State any three factors determining the choice of an appropriate capital structure of a company.
Answer:
The functions of Stock Exchange are:
(i) Role as an Economic Barometer: Stock exchange serves as an economic barometer that is indicative of the state of the economy. It records all the major and minor changes in the share prices. It is rightly said to be the pulse of the economy, which reflects the state of the economy.
(ii) Valuation of Securities: Stock market helps in the valuation of securities based on the factors of supply and demand. The securities offered by companies that are profitable and growth oriented tend to be valued higher. Valuation of securities helps creditors, investors and government in performing their respective functions.
(iii)Transactional Safety: Transactional safety is ensured as the securities that are traded in the stock exchange are listed, and the listing of securities is done after verifying the company’s position. All companies listed have to adhere to the rules and regulations as laid out by the governing body.
(iv) Contributor to Economic Growth: Stock exchange offers a platform for trading of securities of the various companies. This process of trading involves continuous disinvestment and reinvestment, which offers opportunities for capital formation and subsequently, growth of the economy.
(v) Making the public aware of equity investment: Stock exchange helps in providing information about investing in equity markets and by rolling out new issues to encourage people to invest in securities.
(vi) Offers scope for speculation: By permitting healthy speculation of the traded securities, the stock exchange ensures demand and supply of securities and liquidity.
(vii) Facilitates liquidity: The most important role of the stock exchange is in ensuring a ready platform for the sale and purchase of securities. This gives investors the confidence that the existing investments can be converted into cash, or in other words, stock exchange offers liquidity in terms of investment.
(viii) Better Capital Allocation: Profit-making companies will have their shares traded actively, and so such companies are able to raise fresh capital from the equity market. Stock market helps in better allocation of capital for the investors so that maximum profit can be earned.
(ix) Encourages investment and savings: Stock market serves as an important source of investment in various securities which offer greater returns. Investing in the stock market makes for a better investment option than gold and silver.
OR
Factors affecting the choice of capital structure are:
(i) Cash Flow Position: Decision regarding capital structure depends upon the ability of business to generate enough cash flow. If company is sure of generating enough cash flow, it may have more of debt securities whereas if there is shortage of cash, it may go for equity.
(ii) Interest Coverage Ratio (ICR): It shows how many times the earning before interest and tax is available to the payment of interest. Higher ICR means company has less of borrowed funds whereas, it is possible that inspite of better ICR the cash flow position of the company may be weak.
(iii) Debt Service Coverage Ratio (DSCR): It is one step ahead of ICR. It takes care of return of interest as well as principal repayment. Higher DSCR means, company can have more of debt and lower DSCR means, company should go for equity capital.
(iv) Return on Investment: If return on investment is more than rate of interest then company can prefer debt in its capital structure but if return on investment is less than rate of interest then, company should prefer equity as it will not be able to pay interest.
Question 25.
State the assumptions of Maslow’s Need Hierarchy Theory of motivation.
OR
State any four psychological barriers of communication. [4]
Answer:
The assumptions of Maslow’s Need Hierarchy
Theory are:
(i) Man is a wanting being, i.e., his wants are growing continuously even when some wants are satisfied. Human needs are of varied and diversified nature. They can be arranged in a hierarchy of importance progressing from a lower to a higher order of needs.
(ii) People’s behaviour is based on their needs. Satisfaction of such needs influences their behaviour.
(iii) People’s needs are in a hierarchical order, starting from basic needs to other higher level needs.
(iv) A satisfied need can no longer motivate a person; only next higher level need can motivate him.
(v) A person moves to the next higher level of the hierarchy only when the lower need is satisfied.
OR
Physiological Barriers:
(i) Premature evaluation: Sometimes people evaluate the meaning of message before the sender completes his message. Such premature evaluation may be due to pre-conceived notions or prejudices against the communication.
(ii) Lack of attention: The pre-occupied mind of receiver and the resultant non-listening of message acts as a major psychological barrier. For instance, an employee explains about his problems to the boss who is pre-occupied with an important file before him. The boss does not grasp the message and the employee is disappointed.
(iii)Loss by transmission and poor retention: When communication passes through various levels, successive transmissions of the message results in loss of, or transmission of inaccurate information. This occurs more frequently in case of oral communication.
(iv) Distrust: Distrust between communicator and receiver acts as a barrier. If the parties do not believe each other, they cannot understand each other’s message in its original sense.
Question 26.
‘Filling vacancies for various job positions from within the organisation has many limitations.’ State any four such limitations.
OR
‘Training not only improves the current or future performance of employees but also benefits the organisation in many ways.’ State any four such benefits. [4]
Answer:
Demerits of Internal Recruitment:
(i) There may be inbreeding of ideas as new and fresh candidates are not appointed from outside. Internal employee may not be able to give new ideas when required for the business.
(ii) Due to limited choice, unsuitable candidates may be promoted to higher positions.
(iii)The employees may become lethargic if they are sure of time-bound promotions.
(iv) Frequent transfers of employees may often reduce the productivity of the organisation.
(v) A new enterprise cannot use internal sources of recruitment. No organisation can fill all its vacancies from internal sources.
OR
The benefits of training to an organization are as follows:
(i) Training is a systematic learning. It is always better than hit and trial methods which lead to wastage of efforts and money.
(ii) It enhances employee productivity both in terms of quantity and quality, leading to higher profits.
(iii)Training equips the future manager who can take over in case of emergency.
(iv) Training increases employee morale and reduces absenteeism and employee turnover.
(v) It helps in obtaining an effective response to a fast changing environment -technological and economic.
Question 27.
‘VOICE’ is an important consumer organization. It organized workshops in the months of December in Delhi/NCR for consumers. The theme was ‘Organic Food- From Farm to Plate’, to spread awareness on the importance of organic farming and to encourage consumers to switch from conventional food, that contains chemicals and pesticides to organic food. Expert speakers from farmers’ community explained the harmful effects of usage of pesticides in farming and the importance of organic food. People were informed that the organization regularly tests samples to detect adulteration like presence of heavy metals or pesticides. The results of the tests are published in their monthly magazine ‘Consumer Voice’ to make people aware of quality of different products. It also provides aid and legal advice to the consumers in seeking a remedy. State the functions performed by Consumer Voice for the protection and promotion of consumer interest by quoting lines from the above para. [4]
Answer:
Functions performed by Consumer Voice for the protection and promotion of consumer interest:
(i) Educating the general public about consumer rights by organising training programmes, seminars and workshops. ‘organised consumer workshops in the months of December in Delhi/ NCR on the theme of ‘Organic Food -From Farm to Plate’, as a part of its initiative to spread awareness on the importance of organic farming’
(ii) Publishing periodicals and other publications to impart knowledge about consumer problems, legal reporting, reliefs available and other matters of interest. ‘The results of the tests are published in their monthly magazine. ‘Consumer Voice’ to make people aware of quality of different products’
(iii)Carrying out comparative testing of consumer products in accredited laboratories to test relative qualities of competing brands and publishing the test results for the benefit of consumers. ‘People were informed that the organisation regularly tests samples to detect adulteration like presence of heavy metals or pesticides’.
(iv) Providing legal assistance to consumers by the way of providing aid, legal advice, etc. in seeking legal remedy. ‘It also provides aid and legal advice to the consumers in seeking a remedy’
Question 28.
Dheeraj wants to start a business of selling N-95 masks after the outbreak of the global pandemic of COVID-19. Due to the uncertain market conditions he wants to make a low investment in fixed capital. Suggest how the decisions related to the choice of technique and financing alternatives can help Dheeraj in ensuring a low investment in fixed capital requirements. [4]
Answer:
Choice of Technique: As he wishes to stick to a low investment model, we may suggest him to go with the labour-intensive approach to manufacture N-95 masks. Since better technology would cost him much and his risk appetite is not conducive for capital-intensive techniques of production.
Financial Alternatives: As he wishes to stick to a low investment model, we may suggest him to go, with the lease option for fixed assets like building, heavy machinery, etc. as this may reduce his investment requirement in the business.
Question 29.
Identity and explain the elements of directing mentioned below:
(i) Astha, a manager, has the ability to influence others to bring about a change in their behaviour.
(ii) Neeraj, a managing director, declares share in the profits to the manager for their contribution to increase profits of the company. [4]
Answer:
(i) Leadership: Leadership is the process of influencing the behaviour of people by making them strive voluntarily towards the achievement of organizational goals. Leadership indicates the ability of an individual to maintain good interpersonal relations with followers and motivate them to contribute for achieving organizational objectives.
(ii) Motivation: Motivation means incitement or inducement to act or move, fin the context of an organisation it means the process of making subordinates to act in a desired manner to achieve certain organisational goals.
Question 30.
Ramesh inherited a very large area of agricultural land in Bihar after the death of his grandfather. He plans to sell this piece of land and use the money to set up a small-scale paper factory to manufacture all kinds of stationary items from recycled paper. Being an amateur in business, he decides to consult his friend Somesh. Somesh works in a financial consultancy firm. Somesh helps him to prepare a blue print of his future business operations on the basis of sales forecast in next five years. Based on these estimates, he helps Ramesh to assess the fixed and working capital requirements of business. In context of the above case:
(i) Identify and explain the type of financial service that Somesh has offered to Ramesh.
(ii) Briefly state any two points highlighting the importance of the type of financial service identified in part (i). [4]
Answer:
(i) Financial planning is the type of financial service that Somesh has offered to Ramesh.
Financial planning is essentially the preparation of a financial blueprint of an organization’s future operations. A proper matching of funds requirements and their availability is sought to be achieved by financial planning. This process of estimating the fund requirement of a business and specifying the sources of funds is called financial planning. Financial planning takes into consideration the growth, performance, investments and requirement of funds for a given period.
(ii) The importance of financial planning can be explained as follows:
(a) It helps in forecasting what may happen in future under different business situations. By doing so, it helps the firms to face the eventual situation in a better way. In other words, it makes the firm better prepared to face the future.
(b) It helps in avoiding business shocks and surprises and helps the company in preparing for the future.
(c) It helps in coordinating various business functions, e.g., sales and production functions, by providing clear policies and procedures.
(d) Detailed plans of action prepared under financial planning reduce waste, duplication of efforts, and gaps in planning.
(e) It tries to link the present with the future.
(f) It provides a link between investment and financing decisions on a continuous basis.
(g) By spelling out detailed objectives for various business segments, it makes the evaluation of actual performance easier.
Question 31.
(i) Explain any two of the following importance of principles of management:
(a) Meeting changing environment requirements
(b) Fulfilling social responsibility
(c) Management training, education and research
(ii) “The application of principles of management has to be changed as per requirements”. Explain.
OR
(i) Explain any two of the following features of principles of management:
(a) Flexible
(b) Mainly behavioural
(c) Cause and effect relationships
(ii) Explain briefly ‘Initiative’ and ‘Esprit de Corps’ as principles of general management. [3 + 3]
Answer:
(i) (a) Meeting changing environment requirements: Although the principles are in the nature of general guidelines but they are modified and help managers to meet changing requirements of the environment. Management principles are flexible to adapt to a dynamic business environment. [1V4]
(b) Fulfilling Social Responsibility: The principles of management increase the efficiency of the managers and enable them to fulfill their social responsibility. More efficient managers can make good quality products at reasonable prices available all the time.
(c) Management Training, Education and Research: The advantages of the principles of management encourage the researchers to bring in more improvement in them. The attitude of the managers has moulded itself in such a fashion that they are doing, consciously or unconsciously, something new.
(ii) The application of principles of management is contingent or dependent upon the prevailing situation at a particular point of time. The application of principles has to be changed as per requirements. For example, employees deserve fair and just remuneration. But what is just and fair is determined by multiple factors.
They include contribution of the employee, paying capacity of the employer and also prevailing wage rate for the occupation under consideration.
OR
(i) (a) Flexible: The principles of management are not rigid prescriptions, which have to be followed absolutely. They are flexible and can be modified by the managers when the situation so demands. They give the manager enough discretion to do so.
(b) Mainly behavioural: Management principles aim at influencing behaviour of human beings. Therefore, principles of management are mainly behavioural in nature. It is not that these principles do not pertain to things and phenomenon at all; it is just a matter of emphasis. Moreover, principles enable a better understanding of the relationship between human and material resources in accomplishing organisational purposes.
(c) Cause and effect relationships: The principles of management are intended to establish relationship between cause and effect so that they can be used in similar situations in a large number of cases. Thus, they tell us if a particular principle if applied in a particular situation, what would be its likely effect. The principles of management are less than perfect since they mainly apply to human behaviour. In real life, situations are not identical. Therefore, accurate cause and effect relationships may be difficult to establish.
(ii) Initiative: It states that the workers should be encouraged to develop and carry out their plans for improvement in the organisation. It does not mean going against the established practices of the company for the sake of being different.
Esprit de Corps: It states that management should promote a team spirit of unity and harmony among employees to realise organizational objectives. The manager should replace T with ‘We’ to foster team spirit. This will give rise to a spirit of mutual trust and belongingness among team members. It will also minimise the need for using penalties.
Question 32.
Explain ‘Objectives’ and ‘Budget’ as type of plans.
OR
Explain the following limitations of planning:
(i) Planning leads to rigidity
(ii) Planning may not work in a dynamic environment [6]
Answer:
OBJECTIVES: Objectives are defined as ends which the management seeks to achieve by its operations. All other managerial activities are also directed towards achieving these objectives. They define the future state of affairs which the organisation strives to realise. They serve as a guide for overall business planning. Objectives need to be expressed in specific terms i.e., they should be measurable in quantitative terms, in the form of a written statement of desired results to be achieved within a given time period.
BUDGET: A budget is a statement of expected results expressed in numerical terms. It is a plan which quantifies future facts and figures. For example, a sales budget may forecast the sales of different products in each area for a particular month. A budget may also be prepared to show the number of workers required in the factory at peak production times. Since budget represents all items in numbers, it becomes easier to compare actual figures with expected figures and take corrective action subsequently. Thus, a budget is also a control device from which deviations can be taken care of.
OR
(i) Planning leads to rigidity: In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame. These plans then decide the future course of action and managers may not be in a position to change it. This kind of rigidity in plans may create difficulty. Managers need to be given some flexibility to be able to cope with the changed circumstances.
(ii) Planning may not work in a dynamic environment: The business environment is dynamic, nothing is constant. The environment consists of a number of dimensions, economic, political, physical, legal and social dimensions. The organisation has to constantly adapt itself to changes. It becomes difficult to accurately assess future trends in the environment if economic policies are modified or political conditions in the country are not stable or there is a natural calamity. Competition in the market can also upset financial plans, sales targets may have to be revised and, accordingly, cash budgets also need to be modified since they are based on sales figures. Planning cannot foresee everything and thus, there may be obstacles to effective planning.
Question 33.
Read the statement given in point (i) and (ii) and answer the questions that follows:
(i) Sunita wants to sell her products to a lot of people. She wants her product to have a wide reach.
(a) Identify and explain the promotion technique that Sunita can use to fulfill her objective.
(b) State any two benefits that such promotion technique offers.
(ii) The sales of Zaheer’s shop was going down due to the opening of a mall in the locality.
(a) Identify and explain the promotion technique that Zaheer can use to increase his sales.
(b) State any two techniques that he can use. [6]
Answer:
(i) (a) Advertising: Advertising is defined as any paid form of non-personal presentation and promotion of ideas, goods, and services by an identified sponsor. It is a way of mass communication. It is the most popular and widely practiced tool of market promotion. Major part of promotional budget is consumed for advertising alone. Various advertising media – television, radio, newspapers, magazines, outdoor means and so forth – are used for advertising the product.
(b) The benefits of advertising are:
- Promotion of Sales: Advertising promotes the sales of goods and services by informing and persuading the buyers to buy them. A good advertising campaign helps in winning customers and generating revenues.
- Introduction of a New Product: It helps in introduction of the new products. A business enterprise can introduce itself and its product to prospective buyers. Advertising enables quick publicity in the market.
- Support to Production System: Advertising facilitates large scale production. The business firm knows that it will be able to sell on a large scale with the help of advertising. Mass production will reduce the per unit cost of production giving benefits of economies of scale to the firm.
- Support to other Promotion Tools: Advertising helps salesmen in their effort to persuade people to buy the product. It removes doubts and encourages consumers to buy the product. It is used to obtain support of dealers and boost sales efforts. It reaches even to those people to whom salesman can’t reach.
- Builds up a Public Image: It builds up the reputation of the company, creates brand loyalty. Advertising enables a business firm to communicate its achievement and its efforts to satisfy the need of the public.
- Helps to Combat Intense Market Competition: Advertising helps in maintaining demand and creating potential demand for established products, by attracting a new group of customers. Thus, its helps fighting competition and extending the market territories for the established product.
(ii) (a) Sales promotion refers to short-term incentives which are designed to encourage the buyers to make immediate purchase of a product or service. These include all promotional efforts other than advertising, personal selling and publicity, used by a company to boost its sales.
Sales promotion activities include offering cash discounts, sales contests, free gift offers, and free sample distribution.
(b) The techniques of sales promotion are:
- Rebate: Offering products at special prices, to clear off excess inventory is known as rebate.
- Discounts: These are like price promotions in which certain percentage of the price is reduced by some percentage as discount from the listed price. For example, discounts of up to 50% by Reliance Footwear.
- Refunds: In this case, the seller offers to refund a part of the price paid by the customer on the production of some proof of purchase. For example, refund of ₹ 5 on the presentation of an empty pack of Maggie noodles.
- Product Combinations: The customer is given another product as a free gift along with the purchase of certain goods. For example, gift of microwave oven with the purchase of Burner Hob by Sunflame or a gift of Trolley with the purchase of Inverter by Luminous.
- Quantity Gifts: Sometimes sellers devise special package, which gives extra quantity of the product to the buyer at lesser price or at no price. For example, buy two soaps and get one free by LUX.
- Instant draws and assigned gifts: Some gifts are given on the basis of draws or some events. For example, scratch a card and win a gold locket on the purchase of a TV.
Question 34.
Jojo and Jojo is a company known for its consumer business of baby oil and bandages, but many people do not know that the company also runs a medical device and diagnostics business, as well as a pharmaceutical company. With more than 1,80,000 employees worldwide the company has chosen to share decision making authority with lower levels and place it nearest to the point ofaction. Therefore the response does not take time. This propagates the belief that people are competent, capable and resourceful who can get a chance to prove their abilities and enables the company in identifying those executives who have the necessary potential to become dynamic leaders, so that the checking required on decisions taken by lower levels of management is the least. This makes it possible to evaluate performance at each level and each department can be individually held accountable for their results. By quoting the lines given above identify and briefly explain the benefits of the concept discussed above. [6]
Answer:
Importance of Decentralisation:
(i) “Response does not take time”. Quick decision making: In a decentralized organization since decisions are taken at levels which are nearest to the point of action and there is no requirement for approvals from many levels, the process is much faster.
(ii) “Who can get a chance to prove their abilities”. Develops managerial talent for the future: Decentralisation gives managers a chance to prove their abilities and create a reservoir of qualified manpower that can be considered to fill up more challenging positions through promotion.
(iii) “Identifying those executives who have the necessary potential to become dynamic leaders”. Develops initiative among subordinates: Decentralisation helps to promote self-reliance and confidence amongst the subordinates. It also keeps them in a state wherein they are constantly challenged and have to develop solutions for various problems they encounter.
(iv) “This makes it possible to evaluate performance at each level and each department can be individually held accountable for their results.” Better control: Feedback from levels helps to analyse variances and improve operations.