Students must start practicing the questions from CBSE Sample Papers for Class 12 Business Studies with Solutions Set 5 are designed as per the revised syllabus.
CBSE Sample Papers for Class 12 Business Studies Set 5 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.
As a publisher, Mary has published a new book on marketing management. Identify which of the factors will she consider to determine the price of this book?
(a) Advertising
(b) Demand for the book
(c) Price of other competitive books
(d) Options (b) and (c) (1)
Answer:
(d) Options (b) and (c)
Explanation: While determining the price of a product, internal and external factors should be considered. Here demand of the product and price of competitors product are two external factors related to determining the price of the book.
Related Theory
Advertising is a promotional activity aimed to publicise a product to the expected customers and make them aware about the product The main purpose of advertising is to increase sale of the product. Some other important factors affecting the fixation of price of a product are cost of production, utility and demand, extent of competition in the market government and legal regulations and pricing objectives.
Question 2.
In his techniques of scientific management, Taylor advocated separation of planning and execution functions. Which technique of Taylor does separate planning and executive functions?
(a) Functional Foremanship
(b) Fatigue Work
(c) Standardisation
(d) Simplication (1)
Answer:
(a) Functional Foremanship
Explanation: Functional foremanship is a management technique wherein the duties of a traditional foreman are distributed between several workers. This technique separates the planning function and executive function in an organisation. Functional foremanship is considered to be an extension of the principle of division of work and specialisation.
Related Theory
The techniques of Taylor’s scientific management include: functional foremanship, standardisation and simplification of work, method study, motion study, time study, fatigue study, differential piece wage system.
Fatigue study determines the amount and frequency of rest intervals to be given to persons who feel fatigue due to continuous working or long working hours.
Standardisation refers to the process of setting standards for every business activity. Simplification aims at simplifying complicated processes of production.
Question 3.
Mr. Patel is the Production Manager in Shyam Generators Ltd. He is responsible for formulating plans and implementing them through his subordinates. Before implementing the plans, he has to get the plans approved from the Managing Director, Mr. Bajaj. Identify the level of management at which Mr. Patel is working.
(a) Middle Level
(b) Top Level
(b) Lower Level
(d) Operational Level (1)
Answer:
(a) Middle level
Explanation: Here in the given case, Mr. Bajaj is managing director of the company and owning the top level of management. The team of managers working under him and heading their respective departments is middle level of management. Mr. Patel is working as production manager which is middle level of management r£h
Related Theory
The functions of middle level managers include:
- Understanding and interpreting the policies made by top management
- Ensuring that their department have adequate manpower
- Assigning them the necessary duties
- Motivating them to achieve the desired objectives
Question 4.
International Shoes Ltd. is a shoe manufacturing company. It is a 100% export oriented unit. All the operations in the company are divided into different departments viz. production, purchase, marketing, accounts and personnel All these departments function under the General Manager, Mr. Ashutosh. Identify the organisational structure followed by International Shoes Ltd.
(a) Divisional structure
(b) Functional structure
(c) Decentralisation
(d) None of the above (1)
Answer:
(b) Functional structure
Explanation: Functional structure involves grouping of employee positions into departments as per the organisation’s functions. Each department will have specialised and similar skills, expertise, work activities and resources to use.
Related Theory
In functional structure, jobs are specialised, organised and grouped under homogenous sub-groups or business units leading to increase in the efficiency among employees at alt levels of the organisation.
Question 5.
Cooling Hours Ltd. is an air conditioner manufacturing company. The production manager formulates all the production plans and the supervisor is suppose to implement them strictly. A senior technician suggests the supervisor a technique which increase the production output but the supervisor told him to follow the plan already formulated. Identify the limitation of planning in this case.
(a) Planning reduces creativity
(b) Planning involves huge cost
(c) Planning is time consuming
(d) All of these (1)
Answer:
(a) Planning reduces creativity
Explanation: Here, in the given case, the technician is working at operational level and the standards are set by his supervisor, so, he is bound to work according to that only instead of implementing his ideas and work freely.
Related Theory
This implies that managers or their workers in the business wilt conduct their daily operations as directed by the guidelines thus, restraining creativity. It also disables worker’s empowerment and may restrict discoveries or ideas or new approaches to work.
Question 6.
Mr. Alok Kumar is the Managing Director of Sterling Autos Ltd. In quest of earning some personal profits, he is involved in insider trading transactions. Which value of financial planning is violated here?
(a) The company does not comply with regulations set under SEBI
(b) The company faces huge risks and costs that will adversely affect obtaining long¬term investments
(c) The company does not conduct research and analysis to make informed decisions
(d) Options (a) and (b) (1)
Answer:
(d) Options (a) and (b)
Explanation: Insider trading is an illegal method of buying or selling a security by someone who has access to material, or information about the security, which is unavailable openly for public. Any person, like directors, promoters, etc., with exclusive access to inside information can make undue profit or reduce losses.
In this case, the managing director in his quest to earn some personal profits has not only violated the regulations set by SEBI but also taken huge risks that may adversely effect the company’s efforts to obtain long term borrowings.
Related Theory
Financial planning strives to ensure availability of funds whenever required and to see that firm does not raise funds unnecessarily. It is an important part of overall planning of any business enterprise.
Question 7.
Toppers school is recruiting teachers for various disciplines. As a part of selection process, each candidate is given a test related to his/her subject to assess his/her skills and proficiency in the subject. Identify the type of selection test being conducted,
(a) Trade test
(b) Personality test
(c) Intelligence test
(d) Interest test (1)
Answer:
(a) Trade test
Explanation: Trade tests measure the existing skills of the individual They measure the level of knowledge and proficiency in the area of professions or technical training. Here, in the given case, each candidate is given a test which is part of his subject which he will teach after his appointment hence, it is part of his trade he is involved in.
Related Theory
Personality tests aim at determining the personality traits and characteristics.
Intelligence tests aim at testing the candidate’s reception power, memory power, reasoning power, etc
Interest test is designed to discover a person’s area of interest.
Question 8.
Identify and name the promotional tool which includes outdoor display of organising charitable programmes, sport events etc. by Non Government Organisation (NGO) to promote their goodwill:
(a) Outdoor promotion
(b) Free samples
(c) Gift coupons
(d) Free service (1)
Answer:
(a) Outdoor promotion
Explanation: Charitable programmes, sports events etc. are organised for social welfare and does not include any profit motive and there is no trading activity in these programmes and events. Outdoor promotion of these activities by way of outdoor displays etc. is done to promote them and earn goodwilL
Related Theory
Free samples, gift coupons and free service are tools of sales promotion undertaken for profit motive by an organisation.
Question 9.
Mathch the concept of marketing management philosphies in column I with their relative definiton in column II
| Column I | Column II |
| (A) Product concept | (i) Producing goods on large scale |
| (B) Production concept | (ii) Convince customer to buy |
| (Q Selling concept | (iii) Consideration of long term social issues |
| (D) Societal marketing concept | (iv) Quality of product |
(a) A-(i), B-(ii), C-0ii), D-(iv)
(b) A-(ii), B-(iii), C-(i), D-(iv)
(c) A-(iii), B-(ii), C-(iv), D-(i)
(d) A-(iv), B-(i), C-(ii), D-(iii) (1)
Answer:
(d) A-(iv), B-(i), C-(ii), D-(iii)
Explanation: Product concept emphasise on quality of product. The focus is on continuous improvement in the quality, incorporating new features etc.
Production concept emphasise on production and distribution effciency of the firms. Selling concept emphasise on convincing and motivating the consumers to buy the societal marketing concept focuses on long term issues through social welfare.
Question 10.
Mr. Bhattacharya, the Managing Director of Unique Solutions Ltd. is a very innovative person, in his organisation, he delegates his managers to take the responsibility to develop new ideas and explore area of growth to strengthen the company’s competitive position. Identify the role of organising displayed by Mr. Bhattacharya:
(a) Optimum utilisation of resources
(b) Effective administration
(c) Development of personnel
(d) Adaptation to change (1)
Answer:
(c) Development of personnel
Explanation: Delegation develops in the subordinate the ability to deal with challenges and help him to realise his full potential
Related Theory
Organisation stimulates creativity among the managers also. Effective delegation allows the managers to reduce their workload which gives them time to explore areas for growth and the opportunity to innovate.
Related Theory
This authority can be withdrawn any time.
Question 11.
In the annual board meeting of Mega Magnets Ltd., the company decided to focus on increasing the sales by 20%. All the departments are suppose to plan accordingly. Identify the step of planning process taken by the company.
(a) Setting objectives
(b) Developing premises
(c) Setting an alternative
(d) Implementing the plan (1)
Answer:
(a) Setting objectives
Explanation: The first and foremost step of planning is setting objectives. Here, in this case, the company has set the objective of increasing the sales by 20%.
Related Theory
The further steps of planning process include:
- Developing premises
- Identifying alternative course of action
- Evaluating alternative course
- Selecting an alternative
- Implement the plan
- Follow-up action.
Question 12.
A reputed nationalised bank has been fined ₹ 10 lakhs by the country’s highest consumer court, National consumer Disputes Redressal Commission, for not sharing complete insurance policy details with a customer. The bank has been ordered to pay the full amount as compensation to the customer. Identify the right of consumers being violated in the case.
(a) Right to be heard
(b) Right to seek redressal
(c) Right to information
(d) Right to safety (1)
Answer:
(c) Right of information
Explanation: The consumer has a right to have complete information about the product he/ she intends to buy.
Related Theory
The Consumer Protection Act, 2019 provide for six rights of consumers. These include:
- Right to safety
- right to be informed
- Right to choose
- Right to be heard
- Right to seek redressal
- Right to consumer education
Question 13.
Foreman and Supervisors comprise
(a) Top level management
(b) Middle level management
(c) Operational management
(d) None of these (1)
Answer:
(c) Operational management
Explanation: Operational management refers to the bottom level in the management hierarchy of the organization. It consists of Supervisors and Foreman.
Question 14.
Ayan siddiqui is the HR manager at prolix India limited. He wants his subordinates to work for personal satisfaction but he does not want to give him monetary rewards.
The principles of management voilated by Ayan:
(a) Scalar chain
(b) Remuneration of employees
(c) Stability of personnel
(d) Discipline (1)
Answer:
(b) Remuneration of employees
Explanation: According to fayol employees should paid fair remuneration. It should be satisfactory to both employees and the employer.
Question 15.
To meet the objectives of the firm the management of AGP private limited offer employment to physically challenged persons. Identify the organisational objective it is trying to achieve.
(a) Organisational
(b) Personal
(c) Social
(d) None of the above (1)
Answer:
(c) Social
Explanation: By fulfilling social objectives, organisations work for the interest of the society during managerial activities.
Question 16.
“Considering the fact that there is more growing trend among the people to spend more of there disposable income on entertainment, OPR cinemas planned to add more screen at existing locations and start at new locations also”. Identify the financial decision.
(a) Investment decision
(b) Financing decision
(c) Dividend decision
(d) None of these (1)
Answer:
(a) Investment decision
Question 17.
…………….. provides scope for speculation
(a) SEBI
(b) Stock exchange
(c) Both
(d) None of the above (1)
Answer:
(b) Stock exchange
Explanation: A stock exchange is an institution which provides a platform for buying and selling of existing securities.
Question 18.
Saksham Jain is the finance manager in the Koby Private limited. The company wants to increase its market capture. For this purpose it needs additional capital. Saksham identifies different available sources and compares those 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
Explanation: Financial Management is concerned with optimal procurement as well as the usage of finance
Question 19.
For the following two statements choose the correct option:
Statement I: A prospectus makes a indirect appeal to investors to raise capital, through an advertisement in newspapers and magazines.
Statement II: Private placement is the allotment of securities by a company to institutional investors and some selected individuals.
Choose the correct option from the options given below:
(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: A prospectus makes a direct appeal to investors to raise capital, through an advertisement in newspapers and magazines.
Question 20
Identify the concept which is absent in the above situation.
(a) Planning
(b) Management
(c) Coordination
(d) All of the above (1)
Answer:
(c) Coordination
Explanation: coordination is the essence of management It is required for all the level of management and in all departments. In the absence of coordination, there may be chaos in the organisation.
Question 21.
State any three responsibilities of a consumer. (3)
Answer:
The responsibilities that a consumer should keep in mind while purchasing, using and consuming goods and services are as follow:
(i) A consumer should buy only standardised goods as they provide quality assurance. Thus, he/she should look for ISI mark on electrical goods, FPO mark on food products, Hallmark on jewellery etc.
(ii) A consumer should read labels carefully so as to have information about prices, net weight, manufacturing and expiry dates etc;
(iii) A consumer should ask for a cash memo on purchase of goods or services. This would serve as a proof of the purchase made.
Caution
Do not write rights of consumer. Consumer’s right and consumer’s responsibilities are different.
Question 22.
Explain briefly any four types of employment tests.
OR
What do you mean by staffing? Explain any three advantages of staffing. (3)
Answer:
The four types of employment tests are:
(i) Aptitude test: Aptitude is the ability to do something or a natural tendency to measure the hidden qualities of the candidates.
(ii) Intelligence test: Intelligence tests aims at testing the candidate’s reception power, memory power, reasoning power, etc. and include verbal comprehension, word fluency, speed of perception, etc.
(iii) Dexterity test: Dexterity tests are considered for jobs requiring physical work to measure motoring skills, ability to memories, how quickly and efficiently body moves, etc.
(iv) Personality test: Personality tests aim at determining the personality traits and characteristics to measure the effect of the candidates’ personality on work performance.
OR
Staffing is the process of determining the man’s power needed to meet the company’s objective and recruiting, selecting, training and developing the new and existing staff.
The advantages of staffing are:
(i) Growth of enterprise: By appointing efficient staff, staffing ensures continuous survival and growth of the enterprise.
(ii) Placing right person at the right job: It ensures higher performance by placing right person on the right job by proper recruitment and selection process.
(iii) Optimum utilisation of human resources: Through manpower planning and job analysis we can find out the number of employees and type of employees required in the organisation.
Caution
Many students write significance of management while writing this answer.
Question 23.
Horizon Shoes Ltd. has received on order for manufacturing and supply of 5,000 pairs of shoes. The supply was to be completed within 90 days. The production manager made all the production schedules accordingly. After 60 days, he assessed that the production was not running according to schedule and the completion of the order may be delayed by a substantial period. He decided to reassess the situation and completed the order within the schedule time, identify the function of management discussed here and discuss two steps taken by the production manager.
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 function of management which enable the managers to assess whether the set standards are followed is called controlling. Controlling means ensuring that activities in an organisation are performed as per the plans. Thus, it is a goal oriented function.
The two steps of controlling process taken by production manager in this case are:
(i) Analysing deviations: It is important for a manager to determine the acceptable range of deviations. If the deviations are significant, critical point control and management by exception should be used by the manager. In this case, the delay in completion of order by substantial period is a matter of concern.
(ii) Taking corrective action: The final step in controlling process is taking corrective action. No corrective action is required when the deviations are within acceptable limits. The production manager take corrective action which might involve additional workers and equipment to the project and overtime work.
OR
(a) The two aspects about his business that Subodh was controlling in order to make it successful are:
(i) The quality and taste of his items was good and standards were regularly maintained.
(ii) 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 24.
Aditi was a regional sales manger in a publication company. Aditi applied for the vacant post of marketing managers in the company as she was extremely ambitious and dedicated all her energies to obtain the post of marketing manager. However, the top management of the company decided to fill this post by selecting a person from outside. This had an adverse effect on Aditi and her performance declined.
When the new marketing manager joined, one of his major problems was how to motivate and inspire Aditi to her former level of performance? Suggest any three non- financial incentives that the new marketing manager may use to motivate Aditi. (3)
Answer:
The non-financial incentives that the new marketing manager may use to motivate Aditi are:
(i) Career advancement opportunity: A company must provide employees appropriate skill development programmes, and a sound promotion policy to achieve promotions.
(ii) Employee recognition programme: Recognition means acknowledgment with a show of respect and appreciation. Most people have a need for evaluation of their work and due recognition
(iii) Employee empowerment: Empowerment means giving more autonomy and powers to subordinates in the completion of their work.
Question 25.
“The principles of management provide useful insights to managerial behaviour and influence managerial practices, which the managers may apply to fulfill their tasks and responsibilities.” Explain the significance of principles of management.
OR
Explain the Principle of Scalar Chain and Gang Plank. (4)
Answer:
The principles of management derive their significance from their utility. They provide useful insights to managerial behaviour and influence managerial practices which may apply to fulfill their tasks and responsibilities. These principles guide managers for taking and implementing decisions. The significance of principles of management are as follows:
(i) Providing managers with useful insights into reality: The principles of management provide the managers with useful insights into real world situations. It will enable managers to learn from past mistakes and can save time by solving recurring problems quickly.
(ii) Optimum utilisation of resources and effective administration: Resources both human and material available with the company are limited. They have to be put to maximum use. Principles of management equip the manager to foresee the cause and effect relationships of their decision and actions.
(iii) Fulfilling social responsibility: The increased awareness of the public forces business to fulfill their social responsibilities. Value to the customer, care for the environment dealing with business associates come under the purview of this principle.
(iv) Meeting changing environment requirements: Although, the principles are in the nature of general guidelines but they are modified and as such help managers to meet changing requirements of the environment.
OR
An organisation consists of superiors and subordinates. The formal lines of authority from highest to lowest ranks are known as scalar chain.
Let us consider a situation where there is one head ‘A’ who has two lines of authority under him. One line consists ofB-C-D-E-F. Another line of authority under A is L – M – N – O – P, if E has to communicate with O who is at the same level of authority then he has to transverse the route E – D – C – B – A – L – M – N – O. This is due to the principle of scalar chain being followed in this situation.
According to Fayol, this chain should not be violated in the normal course of formal communication. However, if there is an emergency then ‘E1 can directly contact ‘O’ through Gang Plank as shown in the diagram. This is a shorter route and has been provided so that unnecessary delays in the communication may be avoided.
In normal practice, a worker cannot directly contact CEO of the company level, the foreman, superintendent, manager, director etc, have to know about the matter. However, in an emergency it can be possible that a worker can contact CEO directly
Question 26.
Raghav Agro Ltd. has started manufacturing biocompost useful for organic farming and has set up a unit at Nasik. Due to increasing demand of organic farming in the country, the Company is unable to meet the demands of the market. It is planning to set up a second unit at Kolhapur. The finance manager estimates that it will require ₹ 150 crores for the set-up and ₹ 25 crores for working capital to start the second unit. As a highly capital intensive industry, what factors will affect the fixed and working capital? (4)
Answer:
The factors that will affect requirements of fixed and working capital in a company include:
(i) Growth prospects: As Raghav Agro Ltd.’s products made by biocompost will have high demand, Raghav Agro Ltd. will have higher growth prospects and will require working capital in the short-run and fixed capital in the long-run.
(ii) Scale of operation: Biocompost production is highly capital intensive and will require huge amount of fixed capital
(iii) Availability of raw material: Raw materials required are yard wastes which are not expensive but are not easily, available. Accordingly, working capital will be high as Raghav Agro Ltd. will have large inventories for a specific time period to cater to the demand.
(iv) Nature of business: Raghav Agro Ltd.’s biocompost production unit is highly capital intensive and will take more time to convert inventory of raw materials into finished goods. Thus, the fixed and working capital requirements of Raghav Agro Ltd. will be high.
Question 27.
Garima purchased one litre of mustard oil from a shopkeeper. After using it she had doubt that it was adulterated. She sent it for a laboratory test which confirmed that the oil was adulterated. State any four reliefs available to Garima if she complains and the Consumer Court is satisfied about the genuineness of the complaint. (4)
Answer:
The four reliefs Garima is entitled to obtain are as follows:
(i) Compensation: Garima should be compensated for any health issues she or her family members may have faced after consuming the adulterated mustard oil
(ii) Discontinue unfair practices: The shopkeeper could be made to discontinue selling mustard oil and all other products.
(iii) Refund: Garima should be refunded the money spent on purchasing the adulterated oil
(iv) Restrictions: The shopkeeper should be made to set compliances to laws and regu¬lations and insist that their new suppliers to follow those compliances as well. They should discontinue working with suppliers of oil and conduct tests on unpackaged products.
Question 28.
Grey Ltd. believed that the company could maximise their profits by producing hair gels at large scale. Conversely, Fine Hairs Ltd. company which also sells hair gels laid more emphasis on society and customers’ need rather than quantity of hair gels. Fine Hairs Ltd. company grew within few years and reached the heights of business while Grey Ltd. suffered losses and closed down.
(a) What could be the possible reasons for closing down of Grey Ltd.?
(b) Which marketing management philosophy do you think both the companies followed?
(c) According to you, what could have Grey Ltd. done to overcome its depressed position? (4)
Answer:
(a) Grey Ltd. focussed on hair gels being easily available to customers, but Fine Hairs Ltd. was more customer-centric. Fine Hairs Ltd. thus provided products as per the customers’ needs, while Grey Ltd., looked into mass production and low costs without focusing on quality. Thus, demand for Grey Ltd.’s hair gels became lesser than Fine Hairs Ltd. which lead to more revenues for Fine Hairs Ltd. than for Grey Ltd. Fine Hairs Ltd.’s customers seem more willing and able to purchase a good quality and relatively expensive hair gel than Grey Ltd. and due to this Grey Ltd. had to shut down.
(b) Grey Ltd. was following the production concept of marketing management philosophy. Under this philosophy, emphasis on easily available and inexpensive products for customers is given. Fine Hairs Ltd. followed the product concept where emphasis is given to quality, performance and innovation. Under this philosophy, customers have the willingness and the ability to purchase Fine Hairs Ltd’s products.
(c) Grey Ltd. can overcome its depressed position through the selling concept where their internal and external processes are aligned to encourage sales. Grey Ltd. can take up aggressive promotional tactics by selling their inexpensive gels through television, newspaper and social media. In the short-term they could have offered freebies, that could have lead to increase in immediate sales of the hair gels.
Question 29.
What is formal communication? Explain any five formal communication networks.
OR
“Supervision is the process of guiding the efforts of employees and other resources to ensure optimum utilisation of resources and achievement of work targets”. Explain the role performed by supervisor in an
organisation. (4)
Answer:
Communication is a process of exchange of ideas, views, facts, feeling etc. between or among people to create common understanding. Formal communication flows through official channels designed in the organisation chart The communications may be oral or written but generally recorded and filed in the office. Formal communication may be further classified as vertical and horizontal.
Vertical communication flows vertically i.e. upwards or downwards through formal channels. Upward communication refer to flow of communication from subordinate to superior whereas downward communication indicate communication from a superior subordinate. Horizontal communication takes place between one division and other. The pattern through which communication flow within the organisation is generally indicated through communication network. Some popular formal communication network are as follow:
(i) Wheel network: In a wheel network, the communication passes through a person in the centre.
(ii) Circular network: A circular flow of communication occurs among two neighbours of each subordinate.
(iii) Chain network: This network of communication flows through the organisational hierarchy and chain of command. All subordinates receive commands or instructions from their immediate superior.
(iv) Inverted V network: Inverted V involves rapid communication between the subordinates, their superiors and their superiors.
(v) Free-flow network: In a freeflow network, all subordinates can freely communicate with each other.
OR
Supervision is the process of guiding the efforts of employees and other resources to accomplish the desired objectives. It means overseeing what is being done by subordinates and giving instructions to ensure optimum utilisation of resources and achievement of work targets. The roles performed by a supervisor are as follows:
(i) Supervisor maintains day-to-day contacts and friendly relations with the workers. He acts as a guide, friend and philosopher to the workers.
(ii) Supervisor acts as a link between workers and management. He conveys management ideas of the workers on one hand and workers problems to the management on the other.
(iii) Supervisor play a key role in maintaining group unity among workers placed under his control.
(iv) Supervisor ensure performance of work according to the set targets.
(v) Supervisor provides good on-the-job training to the workers and employees.
(vi) Supervisory leadership plays a key role in influencing the workers in the organisation.
(vii) A good supervisor analyses the work performed and gives feedback to the workers.
Question 30.
Arjun is working in a footwear manufacturing company. He is the senior most employee in the division. He is senior even to division manager, Shanker. Arjun is considered as one of the most committed, capable and hard working employee. As a result of his abilities and seniority, he generally received work assignments of his choice. A problem developed when a young and intelligent Karan was appointed by Shanker.
Karan’s previous three years’ experience in the closely related work made it possible for him to catch on to the routine work of his new job rapidly. On several occasions, Shanker noticed tension between the two employees. One day the tension rose and Arjun complained to Shanker stating that his duties were largely taken over by Karan.
Shanker issued the order stating the clear allocation of the jobs and related duties between the two. He further clarified the working relationship between them by specifying who was to report to whom. This helped in reducing the workload, enhancing productivity and removing ambiguity.
(a) Identify and state the step of organising process which has not been carried out properly and contributed to this problem.
(b) State the two steps of organising process which have been taken by Shanker in respond to the complaint of Arjun.
(c) Also state point of importance of organising as reflected in above case. (4)
Answer:
(a) The step of organising process that has not been carried out properly and contributed to this problem is ‘assignment of duties’.
(b) The two steps of organising process which have been taken by Shanker to respond to the complaint of Arjun are:
(i) Assignment of duties: It is necessary to allocate work to various employees. In the process of organising, once departments have been formed, each of them is placed under the charge of an individual It is essential for effective performance that a proper match is made between the nature of a job and the ability of an individual The work must be assigned to those who are best fitted to perform it well.
(ii) Establishing reporting relationships: Merely allocating work is not enough. Each individual should know who he has to take orders from and to whom is accountable. The establishment of such clear relationships helps to create a hierarchial structure and helps in coordination amongst various departments.
(c) The points of importance of organising as reflected in the case are as follows:
(i) Optimum utilisation of resources: Organising leads to the proper usage of all materials, financial and human resources. The proper assignment of jobs avoids overlapping of work and also makes possible the best use of resources.
(ii) Adaptation to change: The process of organising allows a business enterprise. to accomodate changes in the business environment. It allows the organisation structure to be suitably modified and the revision of inter relationships amongst managerial levels to pave the way for a smooth transition.
Question 31.
Explain Business Enviornment. Why is the understanding of business environment important for managers? State any five points. (6)
Answer:
Business Environment is sum or collection of all internal and external factors such as employees, customers needs -and expectations, supply and demand, management clients, suppliers, owners, activities by government, innovation in technology, social trends, market trends, economic changes, etc.
These factors affect the function of the company and how a company works directly or indirectly. Sum of these factors influences the companies or business organisations environment and situation.
The understanding of business environment is important for managers because:
(i) Determining strategies and policies: The study of the environment helps a business to develop broad strategies and Long-term policies, which aim at devising specific methods, plans, rules and guidelines leading to a desired future or goals of the organisation.
(ii) Ensuring optimum utilisation of resources: A thorough understanding of internal and external environment will enable a business to optimally utilise 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 their competitive standing in the market.
Question 32.
What is financial market and its functions? What are the classifications of financial market?
OR
What is capital market and its nature? Name the types of capital market? (6)
Answer:
Financial Market is a link between the savers and the borrowers by mobilising funds between them. This market transfers the money or capital from those who have surplus money to those who are in need of investment A financial market is a market for creation and exchange of financial assets.
The functions of financial market are as follows:
(i) Mobilisation of savings and channelising them into most productive uses: Financial markets act as a link between savers and investors. Financial market transfer savings of savers to most appropriate investment opportunities.
(ii) Facilitate price discovery: Price of anything depends upon the demand and supply factors. So, demand and supply of financial assets and securities in financial markets help in deciding the price of various financial securities.
(iii) Provide liquidity to financial assets: In financial markets, financial securities can be brought and sold easily so, financial market provides a platform to convert securities in cash.
OR
Capital Market is a market for medium and long-term funds. It includes all the organisations, institutions that provide long -term and medium- term funds. It does not include the instruments which provide finance for short period.
Capital Market can be defined as the mechanism which channelises saving into investment or productive use. Capital market allocates the capital resources amongst alternative uses. It intermediates flow of savings of those who save a part of their income from those who want to invest it in productive assets.”
The nature of capital market is as follows:
(i) Link between savers and investment opportunities: Capital market is a crucial link between saving and investment process. It transfers money from savers to entre-preneurial borrowers.
(ii) Deals in long-term investment: It provide funds for long term and meduim-term. It does not deal with channelising saving for less than one year.
(iii) Utilises intermediaries: Capital market makes use of different intermediaries such as brokers, underwriters, depositories, etc.
The different types of capital market are:
- Primary Market.
- Secondary Market.
Question 33.
Protech Ltd. is the poineer in manufacturing shaving creams. Its share in the shaving cream market is about 50 %. The operations in the company are divided into different departments i.e. production, personnel, sales which are coordinated by the General Manager, Mr. Rao. Due to good reputation in the market, the company plans to diversify into the production of cosmetics, toothpaste and shampoos.
(a) Which type of organisational structure is followed by Protech Ltd? Explain.
(b) What structure would you recommend after the expansion?
(c) Why would you recommend this type of structure after expansion? (6)
Answer:
(a) As a shaving creams manufacturing company, Protech Ltd. had a functional structure as they had only one standardised product – shaving cream in manufacturing. Accordingly, functional structure involves centralised procedures with jobs being specialised, organised and grouped under homogenous sub-groups or business units. This structure ensures that Protech Ltd. shaving creams were produced at low costs.
(b) However, as the company have planned to expand its business activities by adding more line of products like cosmetics, toothpaste and shampoos it should transform its functional structure into divisional structure. Under this structure, Protech Ltd. will have product-based and divisions with accountability and decision making is separated from a centralised authority to a decentralised structure.
(c) A divisional structure is recommended because firstly, Protech Ltd. can specialise in cosmetics, toothpaste and shampoos separately with specific resources being deployed for each product line. Secondly, each division will focus on specialised efforts and employees can adapt and respond to local changes easily and quickly.
Question 34.
“Pranshu” is a established brand name in air coolers. The company enjoys a substantial market share and also has a loyal customer following. However, recently they had been facing problems as they are unable to meet the sales targets. This is due to the entry of new competitors in the market with latest technology and lower pricing that is causing problems to the company. The company plans to revamp their control systems and take other steps necessary to rectify the problems being faced by it.
(a) Identify the benefits the company will derive from a good control system.
(b) Explain any four limitations of controlling.
(c) Specify the steps in the control process that the company should follow to remove the problems it is facing.
OR
Gaspe Ltd. is a large manufacturing unit. Recently, the company has conducted time and motion studies and concluded that on an average, a worker could produce 500 units per day. However it has been noticed that the average daily production of worker is in the range of 300-350 units.
(a) Name the function of management and identify the step in the process of this function which helped in finding out that the actual production of a worker is less than the set target.
(b) To complete the process of the function identified in question
(a) and to ensure the performance as per time and motion studies, explain what further steps a manager has to take? (6)
Answer:
(a) With a good control system, the company can utilise human and physical resources optimally to avoid wastage and spoilage. Controlling also identifies shortcomings of the earlier plans and the new plans changing in the company to achieving their organisational goal of enjoying favourable market share as well as customer loyalty.
(b) The limitations of controlling are as follows:
(i) Difficulty in setting quantitative standards: Control system loses some of its effectiveness when standards can not be defined in quantitative terms. Employee morale, job satisfaction and human behaviour are such areas where this problem might arise.
(ii) Little control on external factors: Generally an enterprise cannot control external factors such as government policies, technological changes etc.
(iii) Resistance from employees: Control is often resisted by employees. They see it as a restriction on their freedom.
(iv) Costly affair: Control is a costly affair as it involves a lot of expenditure, time and effort. Managers must ensure that the costs of operating a control system should not exceed the benefits derived from it.
(c) In this case, a control by exception can be undertaken. Under this principle, as competition has led to decline in the company’s market share, this deviation can be tackled through human intervention by the top management by making quick decisions and introduce new strategies and revamp their controlling systems.
As controlling process can be expensive, the quick decisions from top management will ensure preparation and execution of quick strategies and plans for achieving organisational goal of retaining a favourable market share.
OR
(a) The management function, in this case, is controlling which is a systematic process involving comparisons, measurement and evaluation of organisational goals. The step involved in the case is ‘Comparing actual performance with standards’ which means comparing the actual performance with the set standards.
The time and motion studies determined that the standards set were 500 units per day per worker but the average actual performance per worker is in the range of 300-350 units per day. Thus, the need for action = Desired performance – Actual performance = 500 – 300/350 units = 200/150 units. This means that the company produces 150 – 200 units less per day per worker.
(b) Based on the step of comparing results with standards, the next step the company undertake will be ‘ Analysing Deviations’. This step is a study of determining the reasons for the variations of 150-200 units per day per worker from the set standards of 500 units per day per worker.
The company will identify certain critical points in the production process that are important for timely completion of work. The issues within the critical points of production processes are determined and analysed for understanding the nature of causes for deviations.
If required, the management can control the issues by exception if the deviations are of urgent nature. Following these analyses, the company will take the final step to take necessary action to correct problems or make improvements. These corrective actions attempt to increase the output of the workers by motivation and other incentives.
Caution
Students should read the case very carefully and then provide answers accordingly.