Students must start practicing the questions from CBSE Sample Papers for Class 12 Business Studies with Solutions Set 11 are designed as per the revised syllabus.
CBSE Sample Papers for Class 12 Business Studies Set 11 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.
Ghanshyam was involved in a business as a sub-broker in the stock exchange. He conducted some fraudulent activities against SEBI guidelines. On regular inspection and by conducting enquiries of the brokers involved, the Securities and Exchange Board of India (SEBI) was able to detect this irregularity. Identify function performed by the SEBI in the above case:
(a) Regulatory
(b) Protective
(c) Development
(d) None of the above (1)
Answer:
(a) Regulatory
Explanation: Securities and Exchange Board of India (SEBI) was established in 1988 as an administrative body to promote orderly and healthy growth of securities market and for investor protection, SEBI is entrusted with both regulation and development of the securities market. Prohibition of fraudulent and unfair trade practices is one of the regulatory function of SEBI.
Related Theory
Regulatory functions of SEBI:
- Regulating the businesses
- Registering and regulating the workings
- Notifying rules and regulations
- Levying fees, penalties and other charges
- Regulating substantial acquisition
- Registering and regulating the workings
- Promoting and regulating self-regulatory organisations
- Prohibiting fraudulent and unfair trade practices
- Prohibiting insider trading in securities.
- Performing and exercising powers under the Securities Contracts (Regulation)Act, 1956
Question 2.
Match the concepts of principles of management in column I with their respective definitions in Column II:
| Column I | Column II |
| (A) Motion study | (i) Technique to determine the standard time taken by a worker of average skill |
| (B) Time study | (ii) Determine the amount and frequency of rest intervals |
| (C) Method study | (iii)To find out one best way of doing the job |
| (D) Fatigue study | (iv) Study of movement of limbs which are undertaken while doing a typical job |
(a) A-(ii), B-(iv), C-(iii), D-(i)
(b) A-(i), B-OQ, C-(iii), D-(iv)
(c) A-(iii), B-(i), C-(iv), D-(ii)
(d) A-(iv),B-(i),C-(iii),D-(ii) (1)
Answer:
(d) A-(iv), B-(i), C-(iii), D-(ii)
Explanation: Motion study refers to the study of movements like lifting, putting objects, sitting and changing positions etc. which are undertaken while doing a typicaljob. Time study determines the standard time taken to perform a well defined job. Method study finds out the one best way of doing a job. Fatigue study seeks to determine the amount and frequency of rest intervals in completing a task.
Related Theory
Order means that the right person is at the right place. Initiative principle implies that workers or subordinates should be given the freedom to take initiative in carrying out the work. Scalar chain principle implies that a single, uninterrupted chain of authority should extend from the top level to the lowest position in the organisation.
Question 3.
Prakhar purchased an ISI mark electric iron from the seller ‘Bharat Electricals’. While using he found that it was not working properly. He approached the seller and complained of the same. The seller satisfies Prakhar by saying that he will ask the manufacturer to replace the iron. The manufacturer refused to replace and Bharat Electrical decided to file a complaint in the Consumer Court. Can Bharat Electricals do this?
(a) yes
(b) no
(c) may be
(d) can’t say (1)
Answer:
(b) No
Explanation: He cannot file complaint as he was not a consumer under the consumer protection Act because according to this Act, a person is not deemed to be a customer if he buys goods for resale or commercial purposes.
Question 4.
Dushyant is production manager at Jayant Electricals Ltd. He has given full freedom to his subordinates to work out the plans according to their own thinking but the organisation’s goals should be achieved. He do not interfere in their functioning and the subordinates are also satisfied with the style as they have a free hand to work. Identify the leadership style being discussed here.
(a) Democratic style of leadership
(b) Autocratic style of leadership
(c) Free rein style of leadership
(d) None of these. (1)
Answer:
(c) Free rein style of leadership Explanation: As per the given case, Dushyant has given complete freedom to his employees to perform and solve problem by their own hence he is following free rein style of leadership.
Related Theory
Democratic leadership encourages participation, relies on subordinates’ knowledge and expertise for completion of tasks and depends on subordinates respect for influence.
An autocratic leader has absolute authority and control who dictates policies and procedures of a business. The domocratic leader decides the goals and objectives to be achieved for a business without obtaining any meaningful participation from his/her subordinates.
Question 5.
In Aparajit Technologies Ltd., all the employees are trained to handle all the activities in the company. Sushant is a Software Development Manager but he is asked to work as Business Development Manager. The company believes that this will make all the employees understand all the parts of the business and they get a chance to show their ability. This method makes it easier for the company at time of replacements or transfers. Identify the type of training which Aparajit Technologies Ltd. gives to its employees.
(a) Vestibule training
(b) Induction training
(c) Job rotation
(d) None of the above. (1)
Answer:
(c) Job rotation
Explanation: Job rotation is the practice of moving or shifting employees between different tasks within an organisation to promote experience and variety.
Related Theory
Vestibule training is generally conducted in places away from the actual work place with actual shops duplicated for training. Induction training refers to training provided to newly recruited employees in order to easily adjust and become familiar to their tasks and responsibilities in an organisation.
Question 6.
Name the decision which affects the day to day expenses of the business.
(a) Capital budgeting decision
(b) Working capital decision
(c) Dividend decision
(d) Rnancing decision (1)
Answer:
(b) Working capital decision Explanation: Decisions on working capital management are concerned with the management having enough money in the short-run to cover their short-term liabilities. Working capital is the difference between current assets and current liabilities used as a measure to evaluate a business’ efficiency in converting short-term liabilities into short term assets.
Related Theory
Decisions related to capital budgeting involve determining the type and amount of assets that a firm requires in the long-run, in which funds are allocated. Dividend decision involves decisions regarding how much profit is to be distributed to the shareholders.
Question 7.
…………. is an instrument issued by RBI in the form of promissory note on behalf of central government to meet its short term requirements of funds. Identify the money market instrument.
(a) Call money
(b) Treasury bill
(c) Commercial paper
(d) Commercial bill (1)
Answer:
(b) Treasury bill
Explanation: Treasury bills are issued with maturities as short as 91 days, 182 days and 364 days. Coupon rate is the interest rate (or return) on the bond.
Related Theory
T-bills have zero interest rate which implies that there is no interest rate on the bond. Hence, the returns on zero-coupon bond or T-bill are the difference between the face value of the bond and the market price at the time of maturity.
Question 8.
Saurabh is CEO in Strategic Sports Ltd. He uses different tools to stimulate his subordinates to act to accomplish desired goals. He recognises the employees on their outstanding performance and also gives them financial incentives on their achievements. Identify the element of direction followed by Saurabh.
(a) Motivation
(b) Supervision
(c) Communication
(d) None of the abovel
Answer:
(a) Motivation
Explanation: Motivation means incitement or inducement to act or move. Here, in this case, Saurabh motivates the employees to achieve the desired goals through recognition and financial incentives. The employees are motivated to work more efficientely and effectively.
Related Theory
- Supervision is the function of assuring that the work is being done as per plan and instructions.
- Communication is an exchange of facts, ideas, opinions or emotions by two or more persons.
Related Theory
- Order means that the right person is at the right place.
- Initiative principle implies that workers or subordinates should be given the freedom to take initiative in carrying out the work.
Scalar chain principle implies that a single, uninterrupted chain of authority should extend from the top level to the lowest position in the organisation. Esteem needs include factors such as self respect, autonomy status, recognition and attention.
Self actualisation needs is the highest level of need in the hierarchy. It refers to the drive to become what one is capable of becoming. It include growth, self fulfilment and achievement of goals.
Safety/security needs provide security and protection from physical and emotional harm.
Question 9.
Which decision involves decision of buying short-term and long-term assets?
(a) Rnancing decision
(b) Dividend decision
(c) investment decision
(d) None of the above (1)
Answer:
(c) Investment decision
Explanation: Investment decisions refer to selecting and acquiring the assets in which funds will be invested by the business.
Related Theory
The acquired assets can be classified under two broad groups: Long-term assets which are related to long-term profitability involving high-returns and minimum- risks Short-term assets or current assets, which are assets that can be easily converted into cash during the normal course of a business.
Question 10.
Rohit is working as a Supervisor in Comfort Shoes Ltd. Due to excess of orders, the company wants to recruit some employees in the production department. Rohit recommends two of his close relatives for the job. Identify the type of external recruitment used by the company.
(a) Direct Recruitment
(b) Casual Callers
(c) Advertisement
(d) Employment Exchange (1)
Answer:
(a) Direct recruitment
Explanation: In direct recruitment, organisations post a notice on requirement of workers especially to manage excessive work or to temporarily fill in vacant jobs of permanent workers who are absent. Certain (unemployed and casual) workers usually present themselves at the factory gate for employment.
Related Theory
Casual callers are potential employees or applicants can directly walk-in across organisations and distribute their job applications even if the organisations do not post any job requirements. Advertisements are the most preferred mode of external recruitment as they are capable of reaching a mass of people in a short time period.
Employment exchanges are any offices or places established and maintained by the government for the collection and supply of information regarding job vacancies to the unemployed and information about prospective workers to employers.
Question 11.
Statement I: Consumer has no right to choose.
Statement II: The consumer has the freedom to choose from a variety of products at competitive prices.
(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:
(b) Statement II is correct and I is wrong
Explanation: Consumer has a right to choose.
Question 12.
Sumit is manufacturing mobile phones in his factory at Bengaluru. He has a team Whose role is to assess the trends in the market and preferences of the customers. The team after assessing the preferences of the customers recommended Sumit to add some additional features in the mobile phones. Identify the marketing management philosphy followed in this case.
(a) Societal Marketing Concept
(b) Product concept
(c) Production concept
(d) Marketing concept (1)
Answer:
(d) Marketing concept Explanation: The marketing concept focuses an consumer’s needs and satisfaction. The products are made in accordance with the customer’s needs.
Related Theory
This concept can be considered as an opposite to product concept, which emphasises on finding the right products for the customers rather than finding the right customers for the products.
Question 13.
Shweta is the CEO of Make money limited. She suggested that since the economy is buoyant, the company should invest in. market to take advanmtage of economy.
(a) Primary market
(b) Money market
(c) Capital market
(d) Secondary market (1)
Answer:
(c) Capital market
Explanation: The term capital market refers to facilities and institutional arrangements through which long-term funds, both debt and equity are raised and invested. It consists of a series of channels through which savings of the community are made available for industrial and commercial enterprises and for the public in general.
Question 14.
Just like a bank keeps money in safe custody for customers, a…….. also is like a bank and keeps securities in electronic form on behalf of the investor.
(a) Financial manager
(b) Stock exchange
(c) Depository
(d) None of the above (1)
Answer:
(c) depository
Explanation: It is a technology driven electronic storage system. It has no paper work relating to share certificates, transfer, forms, etc. AH transactions of the investors are settled with greater speed, efficiency and use as all securities are entered in a book entry mode.
Question 15.
Farhamand is an entrepreneur. She went London on a family vacation where she noticed that its market, tastes and trends are differ from that of India. Identify the characteristick of business environment highlighted here.
(a) Uncertainly
(b) Dynamic
(c) Relative
(d) All of the above (1)
Answer:
(c) Relative
Explanation: business environment is a relative concept as it differs from country to country and region to region.
Question 16.
Planning provides direction by-
(a) Stating in advance how work is to be done in future
(b) Enable a manager to look ahead
(c) By reducing overlapping and wasteful activities
(d) All of the above (1)
Answer:
(a) Stating in advance how work is to be done in future
Explanation: Planning provides direction by stating in advance how work is to be done in future. It involves the objectives, procedures, programmes among alternatives which lead to the ultimate direction.
Question 17.
The first step in the process of planning is
(a) Implementing plan
(b) Select alternative
(c) Setting up of objectives
(d) None of the above (1)
Answer:
(c) Setting up of objectives
Explanation: The very first step in the process of planning is to set the objectives. It specify what the organisation want to achieve.
Question 18.
Which of the following does not follow the scalar chain?
(a) Functional structure
(b) Divisional structure
(c) Formal organisation
(d) Informal organisation (1)
Answer:
(d) Informal organisation
Explanation: Informal organisation is a network of personal and social relations which emerges spontaneously from within the formal organisation as people associate with one another beyond their offcially defined roles.
Question 19.
Planning requires logical and systematic thinking rather than guess work or wishful thinking. Identify the related feature of planning.
(a) Planning is futuristic.
(b) Planning is a mental exercise.
(c) Planning establishes standards for controlling.
(d) Planning focuses on achieving objectives. (1)
Answer:
(b) Planning is a mental exercise
Explanation: Planning is called a mental exercise in management because it involves application of high order thinking skills and intellectual faculties involving vision.
Question 20.
Consumer should only purchase standardised products. On which type of product the above logo is printed?
(a) Jewellery
(b) Edibles
(c) Agriculture product
(d) Electronics (1)
Answer:
(a) Jewellery
Question 21.
State any three features of planning. (3)
Answer:
Planning is deciding in advance what to do, how to do, when to do, and who is to do etc. Planning bridges the gap from where we are and where we want to go. It makes it possible for things to happen.
On the basis of the above definition, the following are the features of planning:
(i) Primary function of management: Planning is the primary or first function to be performed by every manager. No other function can be executed by the manager without planning because planning set the objectives and other functions depend on these objectives.
(ii) Mental exercise: It is a mental exercise as it is an intellectual activity of thinking rather than doing which requires application of mind involving foresight, intelligence imagination and sound judgement.
(iii) Planning is futuristic: Planning is always done for future, not for past. All managers try to predict/forecast future performance with the help of past performances, so that they can scan the general environment and accordingly set their objectives.
Question 22.
Explain ‘unity of command’ and ‘equity’ as principles of management.
OR
Explain briefly the principle of “Harmony not discord” as given by Taylor. (3)
Answer:
Unity of command: According to Fayol, there should be one and only one boss for every individual employee. Dual subordination should be avoided. Fayol explained, in this principle, that if a subordinate gets order from different superiors then “authority is undermined, discipline is in jeopardy, order disturbed and stability threatened”.
Equity: According to Fayol, “Good sense and experience are needed to ensure fairness to all employees, who should be treated as fairly as possible.” This principle emphasises on kindliness and justice in the behaviour of managers towards workers. The managers should not discriminate against anyone on account of gender, religion, language, caste, belief or nationality etc.
OR
Taylor proposed scientific management, which according to him, means knowing exactly what you want to men to do and seeing that they do it in the best and cheapest way. One of the principles of Taylor’s scientific management is “Harmony, not discord.”
Taylor agreed that there always existed the possibility of a kind of class conflict, the managers versus workers. He emphasised that there should be complete harmony between the management and the workers. To achieve this state, Taylor called for complete mental revolution on the part of both management and workers. It means that management and workers should transform their thinking.
Management should share the gains of the company with the workers. At the same time the workers should work hard and be willing to embrace change for the good of the company. According to Taylor, “Scientific management has for its foundation the firm conviction that the true interests of the two are one and same; that prosperity for the employer cannot exist for a long time unless it is accompanied by prosperity for the employees and vice versa.”
Question 23.
“Management is concerned only with doing the right task, completing activities and achieving goals without taking into consideration the cost benefit.” Defend or refute the statement with reason.
OR
State each of the following values, suggested as Fayol’s Principles of Management, mean:
(a) Order
(b) Equity
(c) Unity of direction (3)
Answer:
No, The statement is refuted. Management is not only concerned with doing the right task, completing activities and achieving goals but it is also concerned with the cost benefit.
It is important for management to achieve goals i.e. effectively with minimum resources and as efficiently as possible while maintaining a balance between effectiveness and efficiency. Efficient management minimises the costs and increases the productivity by the optimum utilisation of resources and minimum wastage
(a) Order: It means that the right person is at the right place. It refers to the arrangement of things and persons in an appropriate manner in an organisation.
(b) Equity: It means that all workers should be treated equally and provided equal opportunity.
(c) Unity of direction: It means one unit and one plan directed towards a common objective. In other words, a group with the same objective should be working under the direction of one manager, using one plan.
Question 24.
Rohan is CEO in “Complete Solutions Ltd.“ The company specialises in the management of large International conferences and other corporate events. One International Association of Scientists gives the responsibility of managing on International conference in New Delhi to Rohan’s company.
To ensure the success of the conference, Rohan identifies the various activities and divides the work into different committees like Registration, Reception. Transportation etc. Each member in the group is to report to committee incharges who work as per Rohan’s orders.
In context of the above case:
(a) Identify the function of management being performed by Rohan.
(b) Describe briefly the various steps involved in the performance of the function of management as identified in part (a) of the question. (3)
Answer:
(a) The function of management being performed by Rohan is organising.
(b) The steps involved in the process of organising are as follows:
(i) Identification and division of work: The first step in the process of organising relates to identification and division of work that has to be performed in accordance with pre-determined plans. This helps to avoid duplication of activities and makes the work manageable. It also ensures that the burden of work is being shared among the employees.
(ii) Departmentalisation: The next step in the process involves grouping of similar activities into departments, units, sections etc. using several criteria as a basis. This facilitates specialisation.
(iii) Assignment of duties: Once departments have been created each of them is placed under the charge of an individual and then jobs are allocated to the members as per their job positions.
(iv) Authority-responsibility relationship: While assigning jobs, each member is told that from whom he /she has to take orders and to whom he/she will be accountable. Establishment of such clear authority responsibility relationships helps to create a well- defined hierarchical structure. It also facilitates coordination amongst various departments.
Question 25.
“The economic, social, political, technological and other forces which operate outside a business enterprise are part of its environment.” In view of the statement, explain the features of business environment. (4)
Answer:
The features of business environment are as follows:
(i) Totality of external forces: Business environment is the sum total of all things external to business firms and as such, is aggregative in nature.
(ii) Specific and general forces: Business environment includes both specific and general forces. Specific forces such as investors, competitors and suppliers affect individual enterprises directly and immediately in their day to day working. General forces such as social, legal, political and technological conditions have impact on all business enterprises and thus may affect an individual firm only indirectly.
(iii) Inter-relatedness: Different elements or parts of business environment are closely inter-related.
(iv) Dynamic nature: Business environment is dynamic in nature i.e. it keeps on changing whether in terms of technological improvements, shifts in consumers preferences or entry of new competitors in the market.
Question 26.
You are a management guru. You have been asked by a business firm to make its managers understand the importance of controlling. Give any four arguments. (4)
Answer:
Controlling is an indispensable function of management. Without proper control, the best of plans may go awry. The importance of controlling is as follows.
(i) Accomplishing organisational goals: The controlling function measures progress towards the organisational goals and brings to light the deviations, if any, and indicates corrective action. It, thus, guides the organisation and keeps it on the right track so that organisational 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. A good 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.
(iii) Making efficient use of resources: By exercising control, a manager seeks to reduce wastage and spoilage of resources.
(iv) Improving employee motivation: A good control system ensures that employees know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised. It, thus, motivates them and helps them to give better performance.
Question 27.
What are the objectives of SEBI?
OR
Sudershan Oils Ltd. is a newly established company with a paid up capital of ₹ 500 crores. The management of the company desires to get its shares traded at stock exchanges. As a financial advisor of the company, suggest the name of the stock exchange for the purpose. Give any three reasons in support of your answer. (4)
Answer:
The objectives of Securities and Exchange Board of India (SEBI) are:
- To prevent trading malpractices in the securities markets.
- To protect the rights and interest of investors, and to guide and educate them.
- To regulate and develop a code of conduct and fair practices by intermediaries like brokers, merchant bankers, etc. with a view to making them competitive and professional.
- To regulate stock exchanges and the securities market to promote their orderly functioning.
OR
The company should get its shares listed at Over the Counter Exchange of India (OTCEI). OTCEI was set up to provide small and medium companies an access to the capital market. It is a place where buyers seek sellers and vice- versa and then attempt to arrange terms and conditions for purchase/ sale acceptable to both the parties.
The main features of OTCEI are as follows:
(i) Nationwide listing: Listing on one exchange can have transactions with all the counters in the whole country.
(ii) Exclusive list of companies: On OTCEI, all those companies are listed whose issued capital is ‘ 80 lakhs or more, investor’s registration. All the investors doing transactions on the OTCEI have to get themselves compulsorily.
(iii) Investor’s registration: All the investors doing transactions on the OTCEI have to get themselves compulsorily registered.
(iv) Transparency in transactions: All the transactions are done in the presence of the investor, the rates of buying and selling can be seen on the computer screen.
Question 28.
Raj and Simran after completing their graduation decided to start their travel agency which will book rail and air tickets on commission basis. They also thought of providing tickets within ten minutes with the use of internet. They discussed the idea with their professor who advised them to first analyse the business environment that may affect their business. He further told them of technological improvements and shift in consumer preferences.
(a) Identify and state the component of business environment highlighted in the above para.
(b) State any two features of business environment as discussed above.
(c) Also state two points of importance of business environment as stated in above situation.
OR
“The success of a business enterprise is significantly influenced by its environment.” Explain. (4)
Answer:
(a) Technological environment is the component of business environment highlighted in the above paragraph. Technological environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.
(b) The two features of business environment discussed here are:
(i) Dynamic nature: It is dynamic in nature and keeps on changing due to technological upgradations, shifts in consumers preferences or increase in competition in the market.
(ii) Inter-relatedness: All the elements of business environment are closely inter-related. Therefore, any change in one element may necessitate corresponding changes in the other elements as well.
(c) The two points of importance of business environment stated here are:
(i) It enables the firm to identify opportunities and getting the first mover advantage: The dynamic business environment provides numerous opportunities for a business to evolve as per the changing needs. Therefore, early identification of the forthcoming opportunities helps an enterprise to be the first to exploit them instead of losing them to the competitors.
(ii) It helps the firms to identify threats and early warning signals: Sometimes, the changes in the external environment may pose as a threat and hinder a firm’s performance. An awareness about the business environment helps the managers to identify such threats on time and take necessary decisions and action.
OR
Each business firm exists, survives and grows within the context of the element and forces of its environment. While an individual firm is able to do little to change or control these forces, it has no alternative to responding or adapting according to them.
A good understanding by business managers enables them not only to identify and evaluate, but also to react to forces external to their firms.
The importance of business environment is as follows:
(i) It enables the firm to identify opportunities and getting the first mover advantage: Opportunities refer to the positive external trends or changes that will help a firm to improve its performance. Early identification of opportunities helps an enterprise to be the first to exploit them instead of losing them to competitors.
(ii) It helps the firm to identify threats and early warning signals: Threats refer to the external environment trends and changes that will hinder a firm’s performance. Besides opportunities, environment happens to be the source of many threats. Environmental awareness can help managers to identify various threats on time and serve as an early warming signal.
(iii) It helps in tapping useful resources: Environment is a source of various resources for running a business. To engage in any type of activity, a business enterprise assembles various resources called inputs like finance, machines, raw materials, power, labour etc. from its environment including financers, government and suppliers.
(iv) It helps in coping with rapid changes: Today’s business environment is getting dynamic repidly where changes are taking place at a fast pace. In order to cope with significant changes, managers must understand and examine the environment and develop suitable course of action.
(v) It helps in assisting in planning and policy formulation: Since environment is a source of both opportunities and threats for a business enterprise, its understanding and analysis can be the basis for deciding the future course of action or training guidelines for decision making.
Question 29.
Distinguish between Functional organisational structure and Divisional organisational structure. (4)
Answer:
The difference between Functional organisational structure and Divisional organisational structure is as follows:
| S.No. | Basis | Functional Structure | Divisional Structure |
| (i) | Formation | It is based on functions. | It is based on product lines and is supported by functions. |
| (ii) | Economy | It is economical | It is very expensive be cause all the resources are required in different departments. |
| (iii) | Responsi bility | It is difficult to fix responsibility on a department. | It is easy to fix responsibility for performance. |
| (iv) | Speciali sation | Functional specialisa tion. | Product specialisation. |
| (v) | Development of manager | Less chances as managers becomes specialised in one function only. | More chances as managers performs multi functions. |
| (vi) | Suitable for | Small and simple organisations. | Large and dynamic organisations. |
Question 30.
Explain the importance of consumer protection from the point of view of business. (4)
Answer:
A business must lay emphasis on protecting the consumers and adequately satisfying them. The importance of consumer protection from the point of view of business are as follows:
(i) Long term interest of business: Englightened businesses realise that it is in their long term interest to satisfy their customers. Satisfied customers not only lead to repeat sales but also provide good feedback to prospective customers and thus, help in increasing the customer base of business.
(ii) Business uses society’s resources: Business organisations use resources which belong to the society. They, thus, have a responsibility to supply such products and render such services which are in public interest and would not impair public confidence in them.
(iii) Social responsibility: A business has social responsibilities towards various interest groups. Business organisations make money buy selling goods and providing services to consumers. Thus, consumers form an important group among the many stakeholders of business and like other stakeholders, their interest has to be well taken care of.
(iv) Moral Justification: It is the moral duty of any business to take care of consumer’s interest and avoid any form of their exploitation.
(v) Government intervention: A business engaging in any form of exploitative trade practices would invite goverment intervention or action.
Question 31.
Supreme Shoes Ltd. is the leading shoe manufacturer and exporter. The company has been doing very well and earning huge profits. For the last five years, the company is paying high dividends to its shareholders. The company is planning to expand its business and proposes to set up a new unit at Chennai. However, in this year, though the company has earned huge profits its liquidity position is not too good.
In the context of the above case:
(a) Give any three reasons because of which you think Supreme shoes Ltd. has been paying dividends at high rate to its shareholders over the past five years.
(b) Comment upon the likely dividend policy of the company this year by stating any two reasons in support of your answer. (6)
Answer:
(a) Tech World Ltd. has been paying dividends at high rate to its shareholders over the past five years because of the following reasons:
(i) Earnings: The earnings of the company have been high. Since the dividends are paid out of current and past earnings, there is a direct relationship between the amount of earnings of the company and the rate at which it declares dividend.
(ii) Cash flow position: The cash flow position of the company must have been good as in order to pay high dividends, more cash is required.
(iii) Access to capital market: Because of its credit worthiness, the company enjoyed an easy access to capital market. Therefore, it did not feel the need to depend entirely on retained earnings to meet its financial needs. Hence, it declared higher dividends in past.
(b) This year the company is likely to follow a conservative dividend policy because of the following reasons:
(i) The cash flow position of the company is not good and dividends are paid in cash.
(ii) The company may Like to retain profits to finance its expansion projects. Retained profits do not involve any explicit cost and are considered to be the cheapest source of finance.
Question 32.
Explain the importance of staffing. (6)
Answer:
The importance of Staffing is as follow:
(i) It discovers the requirement of human resources in different departments of the organisation.
(ii) It helps in discovering and obtaining competent personnel for various jobs within an organisation.
(iii) By putting right person on the right job, it leads to a higher performance of the employees.
(iv) It ensures the continuous survival and growth of the enterprise through the succession planning for managers.
(v) It helps to ensure optimum utilisation of the human resources. By avoiding over-manning, it prevents under utilisation of personnel and high labour costs.
(vi) It improves job satisfaction and morale of the employees through objective assessment and fair rewarding for their contribution.
(vii) It helps in competing as organisation with efficient staff can easiLy win over its competitors.
Question 33.
Akash Mishra is working as General Manager in a multi national company. He observed there that the senior management more often committed failures than successes.
They rarely shared any good news related to the growth of the firm or give any recognition to its employees for their extraordinary contributions towards the firm. As a result, Akash Mishra never felt encouraged enough to work up to his full potential and started exploring other avenues for employment.
In the context of the above case:
(a) Identify and explain the element of directing in the absence of which the employees don’t feel encouraged to work.
(b) State the importance of this element as identified in part (a) by giving any four benefits.
OR
“Discuss Maslow’s Need Heirarchy theory of motivation.” (6)
Answer:
(a) The element of directing that is missing in the above case is motivation.
(b) The importance of motivation is described below:
(i) Improves performance: Motivation helps to improve the performance of both the employees as well as the organisation. This is because motivated employees contribute their maximum efforts for organisational goals.
(ii) Reduces employee turnover: Motivation helps to reduce employee turnover and thereby saves the cost of new recruitment and training. This is due to the fact that the managers identify the motivational needs of employees and provide suitable incentives. Consequently, the empLoyees feeL satisfied and may not think of leaving the organisation.
(iii) Reduces absenteeism: Motivation helps to reduce absenteeism in the organisation. Some important reasons for absenteeism are bad working conditions, inadequate rewards, lack of recognition, poor relations with supervisors and colleagues etc. Through sound motivational system, all these deficiencies can be covered.
(vi) Introduces changes: Motivation helps managers to introduce changes smoothly without much resistance from people.
OR
Abraham Maslow theory of motivation is based on human needs. He felt that within every human being, there exists a hierarchy of five needs.
These are :
(i) Basic physiological needs: These needs are most basic in the hierarchy and corresponds to basic needs. Hunger, thirst, shelter, sleep and sex are some examples of these needs. In the organisational context, basic salary helps to satisfy these needs.
(ii) Safety/ security needs: These needs provide security and protection from physical and emotional harm. Example: job security, stability of income, pension plans etc.
(iii) Affiliation/ belonging needs: These needs refer to affection, sense of belongingness, acceptance and friendship.
(iv) Esteem needs: These include factors such as self respect, autonomy status, recognition and attention.
(v) Self actualisation needs: It is the highest level of need in the hierarchy. It refers to the drive to become what one is capable of becoming. These needs include growth, seLf-fuLfiLLment and achievement of goals.
Caution
The sequence/hierarchy of these needs is the most important. Answer should always be written in this sequence only.
Question 34.
What is marketing mix? What are its main elements? Explain.
OR
Explain the functions of marketing. (6)
Answer:
The process of marketing involves creating a market offering to satisfy the needs and wants of existing and potential buyers. There are Large number of factors affecting marketing decisions. These can be broadly divided into two categories:
- Controllable factors; and
- non- controllable factors.
The controllable variables become marketing tools which are constantly shaped and reshaped by marketing managers to achieve marketing success. From a number of alternatives available a firm chooses a particular combination to develop a market offering.
The combination of variables chosen by a firm to prepare its market offering is called marketing mix. Marketing mix is a set of marketing tooLs that a firm uses to pursue its marketing objectives in a target market.
The marketing mix consists of various elements which have broadly been classified into four categories, popularly known as four Ps of marketing.
The elements of marketing mix are:
(i) Product: Product means goods or services or anything of value, which is offered to the market for exchange. The concept of product relates to not only the physical product but also the benefits offered by it from customer’s point of view.
The concept of product also include the extended product or what is offered to the customers by way of after sales service, handling complaits, availability of spare parts etc. The important product decisions include deciding about the features, quality, packaging, labelling and branding of the products.
(ii) Price: Price is the amount of money customers have to pay to obtain the product. In case of most of the products, level of price affects the level of their demand. Decisions in respect of discounts to customers, traders and credit terms have also to be taken.
(iii) Place: Place or physical distribution included activities that make firm’s products available to the target customers. Important decision areas in this respect include selection of dealers or intermediaries to reach the customers, providing support to the intermediaries.
(iv) Promotion: Promotion of products and services include activities that communicate availability, features, merits etc. of the products to the target customers and persaude them to buy it.
The functions of marketing are as follows:
(i) Gathering and analysing market information is done to know the taste and preference of the target market.
(ii) Marketing planning is needed to meet the marketing objectives of the firm effectively and efficiently.
(iii) Product designing and development is carried out to make the product innovative and attractive.
(iv) Packaging and labelling are needed for product protection, product identification and product differentiation.
(v) Branding helps to create a unique identity of the products.
(vi) Customer support services help to create a good image of the marketer in the eyes of consumers.
(vii) Pricing of product is a crucial decision as it may greatly influence the demand for a product.
(viii) Promotion helps to boost the sales of a product.
(ix) Physical distribution ensures the availability of the product at the right place, at the right time and in right condition so as to facilitate its purchase.
(x) Transportation creates place utility through movement of goods from the production of goods to the place of distribution.
Caution
Tools of marketing mix include four Ps only Viz. product, price, place and promotion. Branding and labelling are the functions of marketing. These are not included in the set of marketing mix.