Students must start practicing the questions from CBSE Sample Papers for Class 12 Business Studies with Solutions Set 10 are designed as per the revised syllabus.
CBSE Sample Papers for Class 12 Business Studies Set 10 with Solutions
Time : 3 Hr.
Max. 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.
Rythym Ltd. is an electronics manufacturing company. It started its business with LCD televisions and slowly launched the complete range of electronics products. It offered various services like after sales service, availability of spare parts, exchange facilities etc. Identify the element of marketing mix referred here.
(a) Product
(b) Price
(c) Place
(d) Promotion (1)
Answer:
(a) Product
Explanation: Product means goods or services or any thing of value which is offered to the market for exchange. The concept of product relates not only to physical product but also the benefits offered by it such as after sales service, handling complaints, availability of spare parts etc. Here, in this case, Rythym Ltd. is not only offering the physical product but also the after sales service, availability of spare parts.
Related Theory
Price is the amount of money customers have to pay to obtain the product. Place include activities that make firm’s products available to the target customers.Promotion of products and services include activities that communicate availability feature etc.
Question 2.
“He keeps machines, materials, tools etc. ready for operations by concerned workers.” Whose work is described by this sentence under functional foremanship?
(a) Instruction card clerk
(b) Repair boss
(c) Gang boss
(d) Route clerk (1)
Answer:
(c) Gang boss
Explanation: Under functional foremanship, gang boss is responsible for keeping machines and tools etc. ready for operations by workers. He works under the production incharge.
Related Theory
Instruction card clerk is responsible for drafting instructions for the workers and works under the planning incharge.Repair boss is responsible for ensuring proper working condition of machines. He works under the production incharge.Route clerk is responsible for specifying the route of the production. He works under the planning incharge.
Question 3.
Which of the following does not characterise the business environment?
(a) Uncertainty
(b) Employees
(c) Relativity
(d) Complexity (1)
Answer:
(b) Employees
Explanation: Business environment is the sum total of all individuals, institutions and other forces that are outside the control of a business enterprise but that may effect its performance. They exist outside its boundaries. Employees are the internal factors of business and as such does not characterise the business environment.
Related Theory
The characteristics of business environment are:
- Totality of external forces
- Specific and general forces
- Inter relatedness
- Dynamic nature
- Uncertainty
- Complexity
- Relativity.
Question 4.
Jwala Ltd. is engaged in manufacturing washing machines. The target of the organisation is to manufacture 800 washing machines a day. There is an occupational specialisation in the organisation which promotes eff iciency of employees. There is no duplication of efforts in such type of organisation structure. Identify the type of organisation structure described here:
(a) Functional structure
(b) Divisional structure
(c) Decentralisation
(d) None of the above (1)
Answer:
(a) Functional structure
Explanation: Functional structure involves grouping of employee positions into departments as per the organisation’s
functions. Each department have specialised and similar skills, expertise, work activities and resource use. This structure emphasises functional specialisation and active information sharing within each function.
Related Theory
Pervasive feature of planning means that scope of planning differs at different levels and among different departments. Futuristic feature of planning means planning involves looking ahead and preparing for the future.
The purpose of planning is to meet future events effectively to the best advantage of an organisation. Continuous feature of planning means a plan is framed, implemented and is followed by another plan. It is a continuous cycle.
Question 5.
Match the concepts of marketing in column I and their related definition in column II:
| Column I | Column I |
| (A) Public Relations | (i) Paid form of non personal communication undertaken by the marketer |
| (B) Personal selling | (ii) Short term incentives offered by the marketers to promote the sale of their products |
| (C) Advertising | (iii) Personal form of communication between the seller and prospective buyer |
| (D) Sales Promotion | (iv) Practice of managing communication between an organistion and public |
(a) A-(i), B-(ii), C-(iii), D-(iv)
(b) A-(ii), B-(iii), C-(i), D-(iv)
(c) A-(iii), B-(ii), C-(iv), D-(i)
(d) A-(iv), B-(iii), C-(i), D-(ii) (1)
Answer:
(d) A-(iv), B-(iii), C-(i), D-(ii)
Explanation: Public relations covers a broad series of activities where a business manages its relationship with different parts of the public to achieve favourable publicity.
Personal selling involves oral presentation of message in the form of conversation with one or more prospective customers for the purpose of making sales.
Advertising is an impersonal form of communication which is paid for by the marketers to promote some goods or services. Sales Promotion refers to short term incentives designed to encourage the buyers to make immediate purchase of a product or service.
Question 6.
To see whether plans are being implemented and activities are being performed according to the schedule, is one of the steps of planning process. Identify the step.
(a) Setting objectives
(b) Developing premises
(c) Selecting an alternative
(d) Follow up action (1)
Answer:
(d) Follow up action
Explanation: Monitoring the plans is important to ensure that objectives are achieved. Follow up of the plan is done to see whether plans are being implemented and activities are performed according to schedule.
Related Theory
Planning is deciding in advance what to do and how to do. It is a process of decision making. The logical steps of
planning process are:
- Setting objectives
- Developing premises
- Identifying alternative courses of action
- Evaluating alternative courses
- Selecting an alternative
- Implement the plan
- Follow up action
Question 7.
Protex Ltd. is a company dealing in sports equipments. The company is earning huge profits but the liquidity position of the company is not too good. So it decided to declare less dividends in the current financial
year. Identify the factor related to dividend decision being described in above lines.
(a) Preference of shareholders
(b) Earnings
(c) Cash flow position
(d) Contractual constraints (1)
Answer:
(c) Cash flow position
Explanation: Dividends involve an outflow of cash. A company may be profitable but short on cash. Here, in this case, the company is earning huge profits but due to low liquidity, it declares less dividend in the current financial year.
Related Theory
Preference of shareholders: While declaring dividends, managements usually keep in mind the preference of shareholders. If the shareholders, in general, desire that a certain amount be paid as dividend, the company are likely to declare the same. Earnings is a major determinant of dividend decision as dividends are paid out of current and past earnings.
Contractual constraints: While granting loans to a company sometimes a lender may impose certain restrictions on the payment of dividends in future.
Question 8.
Agrotech Ltd., a reputed agricultural machinery manufacturer needs ₹ 25 crores to expand its business. The CEO of the company wanted to raise the funds through public issue of equity shares.
On the other hand, the Finance Manager suggested that the public issue may be expensive on account of various mandatory and non mandatory expenses. Therefore, the company decided to allot the securities to institutional investors. Name the method through which company decided to raise additional capital.
(a) Rights issue
(b) Private placement
(c) Offer for sale
(d) Offer through prospectus (1)
Answer:
(b) Private placement
Explanation: Private placement is the allotment of securities by a company to institutional investors or some selected individuals. It helps to raise capital more quickly than public issue.
Related Theory
Rights issue is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. In offer for sale method, securities are not issued directly to the public but are offered for sale through intermediaries like issuing houses or stock brokers.
Offer through prospectus is the most popular method of raising funds by public companies in the primary market. This involves inviting subscription from public through issue of prospectus.
Question 9.
“These agencies are run by government and help to match personnel demand and supply by serving as link between job-seekers and employers.” Name the source of recruitment.
(a) Promotion
(b) Direct recruitment
(c) Referenece from the existing employees
(d) Employment exchange (1)
Answer:
(d) employment exchance
Explanation : Employment exchanges run by the Government are regarded as a good source of recruitment for unskilled and skilled operative jobs.
Question 10.
Identify the process: It is a systematic learning, always better than hit and trial methods which lead to wastage of efforts and money.
(a) Deveopment
(b) Training
(c) Education
(d) All of the above (1)
Answer:
(b) Training
Explanation : Training is any process by which the aptitudes, skills and abilities of employees to perform specific jobs are increased. It is a process of learning new skills and application of knowledge
Question 11.
State the element of directing which helps in fulfilling the needs of the employees in an organisation.
(a) Motivation
(b) Leadership
(c) Supervision
(d) Communication (1)
Answer:
(c) Supervision
Explanation : It means overseeing what is being done by subordinates and giving instructions to ensure optimum utilisation of resources and achievement of work targets.
Question 12.
Cool Air Ltd. is a reputed brand in air coolers. To earn more profits, the company started using sub standard electric wiring in its coolers. Which consumer right is violated by the company here?
(a) Right to safety
(b) Right to be heard
(c) Right to choose
(d) Right to seek redressal (1)
Answer:
(a) Right to safety
Explanation : The right to safety is referred to as “the right to be protected against the marketing of goods and services which are hazardous to life and property” (NCDRC, 2002). This right is associated with consumers’ right to obtain appropriate information about goods and services through marketing to make intelligent and informed choices.
Related Theory
The other rights of the consumers as per the Consumer Protection Act, 1986 are:
- Right to be informed
- Right to choose
- Right to be heard
- Right to seek redressal
- Right to consumer education
Question 13.
Shaista Khan is the financial manager in Prem and sons. She identifies different available sources and compares these sources in terms of costs and associated risks for the optimal procurement of funds. Identify the concept highlighted here.
(a) Financial planning
(b) Management audit
(c) Financial management
(d) None of the above (1)
Answer:
(c) Financial management
Question 14.
Rajkumar and sons is a leading firm in clothings. Two years back the company had decided to increase the profit share among the shareholders. Identify the type of decision:
(a) Investment decision
(b) Financing decision
(c) Dividend decision
(d) None of the above (1)
Answer:
(b) Financing decision
Question 15.
The Myntra is the leading online plateform for fassion attires. It is proposing to issue new shares through online system of stock exchange and has entered into an agreement with stock exchange. What would this type of stock exchange instrument be?
(a) Right issue
(b) ESOP
(c) e-IPO
(d) None of these (1)
Answer:
(d) None of these
Question 16.
For the following two statements choose the correct option:
Statement I: Any registered organisation can file a complaint.
Statement II: A legal hire or representative of a deceased consumer can file a complaint.
(a) Statement I is correct and II is wrong
(b) Statement II is correct and I is wrong
(c) Both the statements are correct
(d) Both the statements are incorrect (1)
Answer:
(c) Both the statements are correct
Question 17.
Vikas was the Chief Operating Officer of ‘Yalet Ltd., a company providing advanced software solutions to Indian Defence Services. They had been carrying on business successfully for the last twelve years and earning enough profits.
But from the last one year, they realised that though the business is getting big orders which are being fulfilled in time, even then the revenues kept on decreasing. Vikas was not able to find out where the problem was. He started keeping a close check on the progress of activities as he could sense that something was wrong. He wanted to take some action before any major damage could
be done to the business. Vikas appointed a cyber security expert who monitored the company’s processes and found out that the computer operator was deleting the entries from the computers and pocketing the revenues. He was caught and handed over to the police.
This created an atmosphere of order and discipline in the organization and helped in minimizing dishonest behaviour on the part of the employees. Identify the function of management highlighted in the above paragraph.
(a) Directing
(b) Controlling
(c) Staffin
(d) Organising (1)
Answer:
(b) Controlling
Explanation : Controlling means ensuring that activities in an organisation are performed as per the plans.
Question 18.
Harsh asked for a bottle of mineral water from a shopkeeper. The maximum retail price printed on the bottle was Rs.12, whereas the shopkeeper was charging Rs.35. Inspite of many arguments the shopkeeper was not ready to sell the bottle for less than Rs.35. Harsh was in need of it and had no option except to buy. As an aware consumer name the ‘Right’ which Horsh can exercise.
(a) Right to safety
(b) Right to be heard
(c) Right to seek redressal
(d) Right to consumer education (1)
Answer:
(b) Right to be heard
Explanation : The consumer has a right to file a complaint and to be heard in case of dissatisfaction with a good or a service.
Question 19.
Which one of the following is not a steps to be followed in an organising process:
(a) Departmentalization,
(b) Establishing reporting relationships,
(c) Comparing actual performance with the standard performance
(d) Assignment of duties (1)
Answer:
(c) comparing actual performance with the standard performance
Explanation : Identification and division of work, departmentalization, assignment of duties for establishing reporting relationships.
Question 20.
Consumer should only purchase standardised products. On which type of products the above logo is printed?
(a) Jewellery
(b) Edibles
(c) Agriculture product
(d) Electronics (1)
Answer:
(b) Edibles
Question 21.
It is deciding in advance what to do and how to do. It is one of the basic managerial functions. It requires that before doing something, the manager must formulate an idea of how to work on a particular task. This function is closely connected with creativity and innovation. It seeks to bridge the gap between where we are and where we want to go and is performed at all levels of management.
(a) Identify the function of management discussed here.
(b) Inspite of this, the function of management referred above has a number of limitations. Explain any two such limitations.
OR
Comfort shoes Ltd. is a leading shoe manufacturer. It plans a substantial increase in production and sales this year and to achieve this it has given targets to all its departments and employees in advance.
The employees are happy as they won’t have to do unconcerned activities and focus more on their targets resulting in saving of resources. The company also plans to start two new plants in south India.
The main core team of the company has decided to weigh all the options and choose the best one In the above case, identify the importance of planning highlighted. (3)
Answer:
(a) The function of management discussed here is planning. Planning involves setting objectives and developing appropriate courses of actions to achieve these objectives.
(b) The two limitations of planning are:
(i) Planning leads to rigidity: In an organisation, a well defined plan is drawn up with specific goals to be achieved with in a specified time period. These plans then decide the future course of action and the organisation may not be in a position to change it. This kind of rigidity in plans may create difficulty.
(ii) Planning reduces creativity: Planning is an activity which is done by the top management. Middle management and other decision makers are neither allowed to deviate from plans nor they are permitted to act on their own. Thus, much of the initiative or creativity inherent in them also gets lost or reduced.
OR
The importance of planning highlighted in the case are:
(i) Planning provides direction: “It has given targets to all its departments and employees in advance.” By stating in advance for action planning ensures that the goals or objective are clearly stated so that they act as a guide for deciding what action should be taken and in which direction.
(ii) Planning reduces overlapping and wasteful activities: “They won’t have to do unconcerned activities and focus more on their targets resulting in saving of resources.” Planning serves as the basis of coordinating the activities and efforts of different divisions, departments and
individuals.
(iii) Planning facilitates decision making: “The main core team has decided to weigh all the options and choose the best one.” Planning helps to look into the future and make a choice from amongst various alternative courses of action.
Caution
Do not write all the points of importance of planning. Only these points should be written which are mentioned in the given case.
Question 22.
“Explain any three different networks of grapevine communication”.
OR
Subodh started a confectionery business. His business was doing well. He ensured the quality and taste of his items was good and the standards were regularly maintained. He focused on home delivery of his products packed in very attractive packaging.
The products were always delivered on time and he had a satisfied customers following. Unfortunately, he met with an accident and was not able to look after his business for three months.
In his absence, his business was looked after by his cousin, Rajat. When he resumed his work after three months, he noticed that his sale has dropped and there were lot of complaints from the customers.
All this happened because most of his previous staff has left as Rajat was very strict and rude to the staff. In context of the above case:
(a) List any two aspect about his business that Subodh was controlling in order to make it successful.
(b) Explain briefly any two points to highlight the importance of controlling function. (3)
Answer:
The three different networks of grapevine communication are:
(i) Single strand: In a single strand, a person conveys a message to a trustworthy person who in turn passes that information to another trustworthy person forming a single chain.
(ii) Gossip chain: In a gossip chain, a person conveys an interesting message to more than one person or to a group of people.
(iii) Probability: In this form of communication, a person is indifferent about some known/ made-up information and he/she expresses this information randomly to a group of people.
OR
(a) The two aspects about his business that Subodh was controlling in order to make it successful are:
- The quality and taste of his items was good and standards were regularly maintained.
- The products were always delivered on time.
(b) The two points that highlight the importance of the controlling function are as follows:
(i) Judging accuracy of standards: The controlling function helps the business managers to judge the objectivity and accuracy of the current standards. It also assists in reviewing and revising the standards keeping in view of the forthcoming changes in both the internal and external environment of the business.
(ii) Improving employee motivation: The controlling function seeks to motivate the employees and helps them to give better performance. This is because it makes them aware well in advance about what they are expected to do and what the standards of performance are, on the basics of which they will be judged.
Question 23.
Ashish, the marketing head, Raman, the assistant manager and Jyoti, the human resource manager of Senar Enterprises Ltd. decided to leave the company. The Chief Executive Officer of the company called Jyoti, the human resource manager and requested her to fill up the vacancies before leaving the organisation.
Informing that her subordinate Miss Alka Pandit was very competent and trustworthy, Jyoti suggested that if she could be moved up in the heirarchy, she would do the needfuL The chief executive officer agreed the same. Miss Alka Pandit contacted Keith Recruiters who advertised for the past of marketing head for Senar Enterprises Ltd. They were able to recruit a suitable candidate for the company.
Raman’s vacancy was filled up by screening the database of unsolicited database lying in the office.
(a) Identify the internal/external sources of recruitment used by Senar Enterprises Ltd. to fill up the above stated vacancies.
(b) Also state any one merit of each of above identified source of recruitment. (3)
Answer:
(a) The sources of recruitment used to fill up the vacancies are:
(i) The post of human resource managere is filled by promotion which is an internal source of recruitment.
(ii) The post of Ashish, the marketing head was filled through placement agencies, which is external source of recruitment.
(iii) The post of Raman, the assistant manager is filled through casual callers.
(b) The merits of the identified sources of recruitment are as follows:
(i) Promotions: It helps to improve the motivation, loyalty and satisfaction level of employees. It has a great psychological impact over the employees because a promotion at the higher level may lead to a chain of promotions at lower levels in the organisation.
(ii) Placement agencies and management consultants: These help in recruiting right type of personnel. They can entice the needed top executives from other companies by making the right offers.
(iii) Casual callers: This source of recruitment reduces the cost of recruiting workforce in comparison to other sources.
Caution
In this question, only merits are asked. Do not give excessive explanation of the meaning.
Question 24.
Explain the advantages of branding to marketers of goods and services. (3)
Answer:
The advantages of branding to marketers of goods and services are:
(i) Helps in advertising: A marketer can easily make aware the consumers about the product and can communicate the characteristics and distinctiveness of the product through a brand name.
(ii) Establishes identity: Branding creates a unique identity that can be differentiated with similar products. This in turn also ensures customer loyalty for a brand.
(iii) Differential pricing: An established brand name can allow a business to change the prices of the product and remain competitive in comparison to their competitors.
Question 25.
“A successful enterprise has to achieve its goals effictively and effectively.” Explain. (4)
Answer:
It is important for a management to be both effective and efficient. Management has to see that task are completed and goals are achieved with the minimum resources. Management is, thus, getting things done with aim of achieving goals effectively and efficiently.
Being effective basically means finishing the given task in time. It is concerned with end result. Eff iciency means doing the work correctly and with minimum cost. It is, thus, essential for any organisation to focus on eff iciency as well as effectiveness. It is not only important to complete the work correctly but equally important to complete it with minimum cost.
Question 26.
Explain, why is it said that principles of management are ‘mainly behaviourial’ and ‘contingent’ in nature. Also explain how principles of management ‘provides managers with useful insights into reality’ and ‘helps in thoughtful decision making.
OR
Which that technique of scientific management does work as is the strongest motivator for a worker to reach standard performance. (4)
Answer:
Principles of management are mainly behavioural and contingent in nature. This can be summarised as below:
(i) Mainly behavioural: Management principles aim at influencing behaviour of human beings. Therefore, principles of management are mainly behavioural in nature. Moreover, principles enable a better understanding of the relationship between human and material resources in accomplishing organisational goals.
(ii) Contingent: 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. The principles of management provides managers with useful insights into reality and it helps in thoughtful decision making.
These can be explained by the following points:
(i) Formed by practice and experimentation: The principles of management are formed by experience and collective wisdom of managers as well as experimentation. Thus, these principles guide the managers, when they face the real world problems. Managers, can use them in different situations to solve the problems, which are of recurring nature.
(ii) Cause and effect relationship: 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. Decisions regarding management should be taken carefully. They should be based on reasons and facts.
As principles of management were developed from real life problems, so they stand the test of logic and reasoning. Thus, principles of management help the managers in taking logical decisions that are free from personal bias.
OR
‘Standardisation and simplification of work is the strongest motivator for a worker to reach standard performance. Standardisation of work means that the processes of work are well-integrated, specified or programmed. It attempts to eliminate spoilage and wastage of resources.
Accordingly, standardisation of work during production involves consistent form, size, composition, methods and quality maintained for all products/services. Alternatively, simplification of work means processes involved are consistent in terms of effort, costs and time.
Simplification of work complements standardisation by creating consistency in products/processes in terms of sizes, weights, types, qualities, etc. Simplification of work aims at restricting production of products to limited qualities or types that facilitate efficiency in resources utilised in the business. It attempts to eliminate useless and disadvantageous diversity and variety.
Question 27.
Sunrise Ltd. follows a strict policy of adhering to plans laid to achieve organisational goals. All the managers are expected to work according to the plans and no flexibility is provided in the per-decided plans.
Mr. Mohit, the Sales Manager in the company, had to loose a very big order from the buyer as the buger had demanded an extra discount of 1% but Mr. Mohit could not allow any further discount from the maximum discount already allowed by the company.
The company had to loose the order and hence suffer losses.
(a) Which two limitations of planning are reflected here?
(b) How can this limitation be overcome? (4)
Answer:
(a) The two limitations of planning reflected in this case are:
(i) Planning leads to rigidity: The limitation of planning may lead to rigidity as Mr. Mohit could not offer 1% extra discount and had to loose a big order and hence suffer losses. In an organisation, a well defined plan is drawn up with specific goals to be achieved. These plans then decide the future course of action and managers may not be is a position to change it. This kind of rigidity in plans create diff iculty.
(ii) Planning reduces creativity: Planning is an activity which is done by the top management Usually, the rest of the members of the organisation just implement these plans. The managers are neither allowed to deviate from these plans nor are they permitted to act on their own. Here, Mr. Mohit is not allowed any flexibility and he is restricted to use his creativity inherited in him.
(b) These limitations of planning could be overcome if:
(i) The policy could have been made flexible during its preparation process. During the preparation time, the management should have used foresight and made an exception for some customers subject to following some conditions.
(ii) Accordingly, Mr. Mohit could have been empowered wherein he could be able to negotiate the terms and provided an extra discount to bag the order and thus avoiding potential losses.
Caution
Only those limitation should be emphasised, which are mentioned in the given case.
Question 28.
Explain the stepwise process of planning. (4)
Answer:
The steps in the process of planning are detailed below:
(i) Setting objectives: The first step under planning process is to establish objectives for the entire business and then for each of the subordinate work unit (production, administration, finance, legal, IT, etc.). These objectives have to be set for the long-term as well as for the short term.
(ii) Considering planning premises: A premise is a statement or a proposition based on certain assumptions about the business environment in which the plan has to be carried out. The assumptions considered to develop a premise are further based on information gathered from the previous two steps.
Accordingly, forecasting methods are considered while formulating planning premises for determining the market conditions, possible volume (or value) of sales, potential prices of products/ services, existing or possible technical developments, possible costs, wage rates, tax rates, competition, social or political environment, etc.
(iii) Identifying alternatives: The next step involves identifying alternative course of actions or a sequence of activities that will be required to attain the required objective. A preliminary examination of all these activities could be fruitful to discover prior to implementing the plans.
Alternative course of actions can include options depicting comparative costs and benefits, possible opportunities or risks associated with the activities planned for achieving organisational goals and objectives.
(iv) Comparing alternatives: The alternatives identified from the previous step needs to be examined for their strengths and weaknesses by weighing them in light of premises and goals. Some factors that can be considered during the planning process to identify their strengths and weaknesses are costs, possible profits, productivity, quality, competitors’ practices that are legitimate in the market or for customers, etc.
(v) Choosing an alternative: This step involves carefully choosing the right plan to achieve the stated goals and objectives of a business. The selection of a plan will be based on thorough analysis conducted by the managers of the business and can also go through iterative meetings and discussions.
(vi) Implement the plan: After selecting a suitable plan, suitable human and physical resources are allocated for effective implementation of the plan. The sequential order of the work and relevant people required or responsible for undertaking prescribed activities in the plan are decided.
(vii) Follow-up action: Planning process continues with following up on the implemented plan to review its progress.
This step is undertaken to ensure that all actions mentioned in the plans successfully cater to the organisational goals and objectives.
Question 29.
“Leadership indicates the ability of an individual to motivate its followers to contribute for achieving organisational objectives.” Discuss.
OR
“Motivation means incitement or inducement to act or move”. Explain the features of motivation.(4)
Answer:
Leadership is the process of influencing the behaviour of people by making them strive voluntarily towards achievement of organisational goals. The important features of leadership are as follows:
- Leadership indicaties ability of an individual to influence others;
- Leadership tries to bring change in the behaviour of others;
- Leadership indicates interpersonal relations between Leaders and followers;
- Leadership is exercised to achieve common goals of the organisation;
OR
Motivation is the act or process of giving someone a reason to act towards a desired goal. It is a psychological factor that stimulates people to act in a desired manner. The features of motivation are as follows:
(i) Internal feeling: Motivation is a an inner psychological force which compels employees to behave in a particular manner originating from personal needs, recognition, power, sense of recognition, etc.
(ii) Goal directed behaviour: Motivation is a process of stimulating and channelising individuals’ energies towards achieving certain goals.
(iii) Positive or negative motivation: Motivation, however, can be positive or negative wherein positive includes incentives rewards or bonuses and negative includes punishment, fear, use of force, etc.
(iv) Complex process: The process of motivation requires analysing and understanding of human behaviour that can determine factors which lead to desirable working behaviour which can be complex and challenging.
Question 30.
Name and define the activity which essentially involves preparation of financial blue print of an enterprise’s future operations. Also state any two reasons why this activity is important? (6)
Answer:
Financial planning is the blue print of an enterprise’s future operations. It can be defined as the process and function of estimating capital requirements of a business, determining the forms and proportion of sources or capital for use and formulating policies for administration of funds. Financial planning is important because of following reason.
(i) Adequate funds: Financial planning aims to plan adequate and sufficient funds to carry out daily business operations that cater to short-term, medium-term and long-term goals.
(ii) Minimum cost of capital: Financial planning involves determining an appropriate mix of equity and debt, which makes capital available at minimum cost.
Question 31.
“Riling vacancies from within the organisation has some advantages as well as limitations”. (6)
Answer:
Filling up vacancies within the organisation are internal sources of recruitment. When need of human resources arises in the organisation, it is said that, ‘Best employees can be found within the organisation.” The advantages of internal sources of recruitment are as follows:
(i) Sense of security: It creates a sense of security among employees where they are motivated to work and perform effectively.
(ii) Motivates efficiency: It facilitates better utilisation of skills, experience and qualifications of existing employees.
(iii) No induction training: People within the organisation are familiar with the job, people and the workplace and do not need induction training. The limitations of internal sources of recruitment are:
(iv) Limited choices: This method limits the choice of selection to few candidates within the enterprise instead of a more diverse workforce thereby keeping a large pool of potential employees in the market untapped.
(v) Encourages favouritism and nepotism: There may be biasness or partiality in promoting or transferring employees from within an organisation which in turn could reduce the morale of employees to work hard.
(vi) Leads to lethargy: It creates lethargy among employees who get a feeling of promotion and recognition and affects their performance that restricts new and innovative ideas.
Question 32.
Marketing is not merely exchange of goods and services from producers to consumers but involves many other activities. From the view point of management function, explain any five activities involved in marketing.
OR
“Though advertising is one of the most frequently used media of promotion of goods and services, yet it attracts lot of objections.” Explain any five such objections. (6)
Answer:
Marketing is concerned with exchange of goods and services from producers to consumers is such a way that maximises the satisfaction of customer’s needs.
The activities involved in marketing are:
(i) Gathering and analysing market information: One of the important functions of a marketer is to gather and analyse market information. This is necessary to identify the needs of the customers and take various decisions for the successful marketing of the products and services.
(ii) Marketing planning: Another important activity or area of work of a marketer is to develop appropriate marketing plans so that the marketing objectives of the organisation can be achieved.
(iii) Product designing and development: Another important marketing activity relates to product designing and development. The design of the product contributes to making the product attractive to the target customers. A good design can improve performance of a product and also give it a competitive advantage in the market.
(iv) Standardisation and grading: Standardisation refers to producing goods of pre determined specifications, which helps in achieving uniformity and consistency in the output.
(v) Packaging and labelling: Packaging refers to designing the package for the products. Labelling refers to designing the label to be put an the package. Label may vary from a simple tag to complex graphics.
OR
The objections of advertising are as follows:
(i) Undermines social values: One of the important criticism of advertising is that it undermines social values and promotes materialism. It breeds discontent among people as they come to know new products and feel dissatisfied with their present state affairs.
(ii) Adds to cost: The opponents of advertising argue that advertising unnecessarily adds to the cost of the product, in the form of high prices.
(iii) Confuses the buyers: Another criticism against advertisement is that so many products are being advertised which makes similar claims by which the buyer gets confused as to which are is true and which are should be relied upon.
(iv) Encourages sale of inferior products: Advertising does not distinguish between superior and inferior products and persuade people to purchase even the inferior products.
(v) Some advertisements are in bad taste: Another criticism against advertising is that some advertisements are in bad taste. These show something which is not approved by some people.
Question 33.
Why is the understanding of business environment important for managers? State any five points. (6)
Answer:
The understanding of business environment is important for managers because of the following reasons:
(i) Determining strategies and policies: The study of the business environment helps a business to develop broad strategies and long-term policies, which aims at devising specific methods, plans, rules and guidelines leading to desired future goals of the organisation.
(ii) Ensuring optimum utilisation ofresources: A thorough understanding of internal and external environment will enable a business to optimally utilise its human as well as other resources.
(iii) Analysing competitors’ strategies: The business environment continuously keeps collecting and displaying strategies adopted by competitors, so that, businesses can formulate effective counter- plans to face them.
(iv) Maintaining business dynamism and innovation: A business can become alert and dynamic by being aware of changes in their surroundings and can accordingly, either expand their businesses when market is favourable and/or prepare them if there are any possible unfavourable conditions.
(v) Determining strengths and weaknesses: Awareness on business environment can assist in identifying the strengths or weaknesses or positive or negative aspects which are generally in direct control of the business or the decision-maker. These aspects can be weighed and compared to determine their performance vis-a-vis to their competitive standing in the market.
Question 34.
Explain briefly the factors affecting the fixed capital requirements of an organisation.
OR
“Rnancial planning is an important part of overall planning of any business enterprise.” Explain.(6)
Answer:
The factors affecting the fixed capital requirement of an organisation are: (any four)
(i) Nature of business: The type of business has a bearing upon the fixed capital requirements. For example, a trading concern needs lower investment in fixed assets as compared with a manufacturing organisation
(ii) Scale of operation: A larger organisation operating at a higher scale needs bigger plants, more space etc. and therefore, requires higher investment in fixed assets when compared with small organisations.
(iii) Choice of technique: Some organisations are capital intensive whereas other are labour intensive. A capital intensive organisation requires higher investment in plant and machinery as it relies less on manual labour.
(iv) Technology upgradation: In certain industries, assets become obsolete sooner. Consequently, their replacements become due faster. Higher investments in fixed assets may, therefore, be required in such cases.
(v) Growth prospects: Higher growth of an organisation generally requires higher investment in fixed assets.
(vi) Diversification: A firm may choose to diversify its operations for various reasons. With diversification, fixed capital requirement increase.
(vii) Financing alternatives: A developed financial market may provide leasing facilities as an alternative to outright purchase. When an asset is taken on lease, the firm pays lease rentals and uses it. By doing so, it avoids huge sums required to purchase it.
(viii) Level of collaboration: At times, certain business organisations share each other’s facilities. Such collaborations reduces the level of investment in fixed assets.
OR
Financial planning aims at enabling the company to tackle the uncertainty in respect of the availability and timing of the funds and helps in smooth functioning of an organisation. The importance of financial planning can be explained as follows:
(i) It tries to forecast 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.
(ii) It helps in avoiding business shocks and surprises and helps the company in preparing for the future.
(iii) It helps in coordinating various business functions e.g. sales and production functions, by providing clear policies and procedures.
(iv) Detailed plans of action prepared under financial planning reduce waste, duplication of efforts, and gaps in planning.
(v) It tries to link the gap between present and future.
(vi) It provides a link between investment and financing decisions on a continuous process.
(vii) By spelling out detailed objectives for various segments, it makes the evaluation of actual performance easier.