Students must start practicing the questions from CBSE Sample Papers for Class 12 Business Studies with Solutions Set 6 are designed as per the revised syllabus.
CBSE Sample Papers for Class 12 Business Studies Set 6 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.
Managers must ensure that the costs of installing and operating a control system should not exceed the benefits derived from it”. Which limitation of controlling is stated in the given example?
(a) Difficulty in setting quantitative standards
(b) Little control on external factors
(c) Resistance from employees
(d) Costly affair (1)
Answer:
(d) Costly affair
Explanation: Control is a costly affair as it involves a lot of expenditure, time and effort. A small enterprise can not afford to install an expensive control system.
Question 2.
Even though the political conditions vary from country to country, they impact the sentiment of an investor in the business, if the instability of the political conditions cause uncertainty and makes it difficult for him to predict the future. Which feature of the Business environment is being highlighted in the above statement?
(a) Specific and general forces
(b) Dynamic nature
(c) Relativity
(d) All the above (1)
Answer:
(d) All the above
Explanation: The features of business environment viz., specific and general forces, dynamic and relativity are highlighted in the above statement. Specific forces such as investors, customers, competitors, and suppliers affect individual enterprises directly.
General forces such as social, political, legal and technological conditions have impact on all business enterprises. Business environment is dynamic in nature it keeps on changing whether in terms of technological improvements, political instability or shift in consumer preferences. It is a relative concept as it differs from country to country.
Related Theory
The different dimesions of business environment are:
- Economic environment
- Social environment
- Technological environment
- Political environment
- Legal environment
Question 3.
“Any one can be called a manager irrespective of the educational qualification possessed.” Identify the characteristic of the profession that Management does not fulfil in the statement being discussed above.
(a) Ethical code of Conduct
(b) Professional Association
(c) Restricted Entry
(d) Service Motive (1)
Answer:
(c) Restricted entry
Explanation: Restricted entry is one of the main characteristic of profession. The entry to a profession is restricted through an examination or through acquiring an educational degree. The statement, “Any one can be called manager irrespective of the educational quality possessed” does not fulfill the characteristic of restricted entry to profession as a management.
Related Theory
The points of importance of management are:
- Helps in achieving group goals
- Increases efficiency
- Creates a dynamic organisation
- Helps in achieving personal objectives
- Helps in the development of society.
Question 4.
“Even after opening up of the Indian economy in 1991 foreign companies found it extremely difficult to cut through the bureaucratic red tape to get permits for doing business in India, which created a negative impact on business.” Identify the dimension of the business environment which led to creation of the negative impact on business.
(a) Social environment
(b) Technological environment
(c) Political environment
(d) Legal environment (1)
Answer:
(c) Political environment Explanation: Political environment includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business.
Related Theory
Social environment of the business include the social forces like customs and traditions, values, social trends, society’s expectations from business etc.
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.
Legal environment includes various legislations passed by the government administrative orders issued by government authorities, court judgements as well as the decisions rendered by various commissions and agencies.
Question 5.
Name the process of working with and through others to effectively achieve organisational objectives by efficiently using limited resources in a changing environment.
(a) Management
(b) Planning
(c) Organising
(d) Controlling (1)
Answer:
(a) Management
Explanation: Management is an activity which is necessary wherever there is group of people working in an organisation. Management aims at guiding their efforts towards achieving a common goal Management is, thus, a process of getting things done with the aim of achieving goals effectively and efficiently. Process means the primary functions or activities that management performs to get things done. These functions are planning, organising, staffing, directing and controlling.
Related Theory
The characteristics of management are:
- It is a goal oriented process.
- It is all pervasive.
- It is multi-dimensional.
- It is a continuous process.
- It is a group activity.
- It is a dynamic function.
- It is an intangible force.
Question 6.
“The increase in the demand for many Ayurvedic medicines, Health products and services in the past few months, is related to the need for building immunity and an increased awareness for healthcare due to the spread of Corona virus.” Identify the feature of business environment being described above.
(a) Specific and general forces
(b) Inter-relatedness
(c) Relativity
(d) None of the above (1)
Answer:
(b) Inter-relatedness Explanation: Different elements or parts of business environment are closely inter-related. The increase in demand for many ayurvedic medicines is due to the spread of corona virus. Both the elements here are inter-related.
Related Theory
Some other features of business environment are:
- Totality of external forces
- Specific and general forces
- Dynamic nature
- Uncertainty
- Complexity
- Relativity.
Question 7.
Which of the following statement is incorrect?
(a) Financial planning is the process of estimating the fund requirement of a business and specifying the sources of funds.
(b) The objective of financial planning is to ensure that enough funds are available at right time.
(c) Financial planning is a substitute of Financial Management.
(d) All of the above (1)
Answer:
(c) Financial planning is a substitute of Financial Management
Question 8.
Which of the following is not an objective of financial planning?
(a) To ensure availability of funds whenever required.
(b) To choose the best investment and financing alternatives by focusing on their costs and benefits.
(c) To see that the firm does not raise resources unnecessarily.
(d) All are the objectives of financial planning. (1)
Answer:
(b) To choose the best investment and financing alternatives by focusing on their costs and benefits.
Question 9.
Name the function of management which helps in the formulation of future plans, in the light of the problems that were identified and thus, helps in better planning in the future period.
(a) Planning
(b) Organising
(c) Directing
(d) Controlling (1)
Answer:
(d) Controlling
Explanation: Controlling function finds out how far actual performance deviates from standards, analyses the cause of such deviations and attempts to take corrective actions based on the same. This process helps in formulation of future plans in the light of the problems that were identified and thus, helps in better planning in the future periods.
Related Theory
Planning involves setting objectives and developing appropriate courses of action to achieve these objectives.
Organising is a process that initiaties implementation of plans by clarifying jobs and working relationships and effectively deploying resources for attainment of identified and desired results. Directing refers to the process of instructing, guiding, counselling, motivating and leading people in the organisation to achieve its objectives.
Question 10.
Identify an important principle of management control in which only significant deviations which go beyond the permissible limit should be brought to the notice of management.
(a) Management by control
(b) Control by exception
(c) Critical point control
(d) (a) & (b) (1)
Answer:
(b) Control by exception
Explanation: Control by exception is an important principle of management control based on the belief that an attempt to control everything results in controlling nothing. Thus, only significant deviations which go beyond the permissible limit should be brought to the notice of the management.
If the plans lay down 2 percent increase in labour cost as an acceptable range of deviation, only increase in labour cost beyond 2 percent should be brought to the notice of the management However, in case of major deviation from the standard, say 5 percent, the matter has to receive immediate action of management on a priority basis.
Related Theory
The steps involved in controlling process are: -setting performance standards -Measurement of actual performance -Comparision of actual performance with standards -Analysing deviations -Taking corrective action
Question 11.
……………. is the process by which the manager brings order out of chaos, removes conflict among people over work or responsibility sharing and creates an environment suitable for teamwork.
(a) Planning
(b) Organising
(c) Staffing
(d) Controlling (1)
Answer:
(b) Organising
Explanation: Organising initiates implementation of jobs by clarifying jobs and working relationships.
Related Theory
The benefets of organising function are:
- Benefits of specialisation
- Clarity in working relationships
- Optimum utilisation of resources
- Adaptation to change
- Effective administration
- Development of personal
- Expansion and growth
Question 12.
Match the concept of marketing in Column I with their respective definition in Column II
| COLUMN – II | COLUMN – II | ||
| (A) | Product Concept | (i) | relates to maintaining high quality of the product |
| (B) | Selling Concept | (ii) | relates to satisfying customer needs |
| (C) | Marketing Concept | (iii) | relates to aggressively persuading buyer to purchase the product |
(a) (i), (ii), (iii)
(b) (ii), (i), (iii)
(c) (ii), (ii), (i)
(d) (i), (iii), (ii) (1)
Answer:
(d) (i), (iii), (ii)
Explanation: Product concept of marketing management philosphy emphasise on the quality of the product Product improvement is the key to profit maximisation of a firm, under the product concept.
Selling concept focuses on aggressive selling and products. The use of promotional techniques such as advertising, personal selling and sales promotion are considered essential for selling of products. Marketing concept implies that focus on satisfaction of customer’s needs is the key to the success of any organisation in the market
Question 13.
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 14.
Relaxing the restrictions and controls imposed on Business and industry means
(a) Liberalisation
(b) Privatisation
(c) Globalisation
(d) None of the above (1)
Answer:
(a) Liberalisation
Explanation: Liberalisation is the process of the reducing the control of the state over economic activities. It provides a greater autonomy to the business enterprises in decision-making and eliminates government interference.
Question 15.
Which aspect of business environment is also known as Direct environment?
(a) Micro
(b) Indirect
(c) both of the above
(d) none of the above (1)
Answer:
(a) micro
Explanation: Micro environment is also known as direct environment because the element of micro environment affect directly to the particular business
Question 16.
In order to get feedback about its recently launched immunity boosting ayurvedic medicine, Atulya Limited conducted an online survey using a questionnaire, to gather customer views and opinions. Identify the marketing function being used by Atulya Limited:
(a) Standardisation
(b) Product Designing
(c) Customer support service
(d) Gathering and analyzing market Information. (1)
Answer:
(d) Gathering and analysing market information
Explanation: Marketing is concerned with exchange of goods and services from producers to consumers in such a way that satisfies the customer’s need at maximum level. Gathering and analysing market information is necessary to identify the needs of the customers and take various decisions for the successful marketing of the products and services.
Question 17.
Nupur Sharma, a pure vegetarian went to a fast food corner. She ordered for a veg pasta. Later on she found that it was not pure vegetarian as it was cooked with fish oit This information was not given anywhere. Which of the following right is voilated in the given case.
(a) Right to be heard
(b) Right to be seek redressal
(c) Right of safety
(d) Right of information (1)
Answer:
(a) Right to be informed
Explanation: Every consumer has the right to get the complete information about the qualilty and quantity of the product
Question 18.
“Products are not purchased but sold” is …………… concept.
(a) Product
(b) Production
(c) Selling
(d) Social marketing (1)
Answer:
(c) Selling
Explanation: Firms believe that aggressive selling and promotional efforts will convince a customer to buy a product.
Question 19.
Shivangi purchased a packet of fragmented milk from a provisions store. The information provided on the bottle was not clear. She fell sick on consuming it. Identify the important aspect neglected by the marketer in the above case.
(a) Labelling
(b) Packaging
(c) Branding
(d) None of these (1)
Answer:
(a) Labelling
Explanation: Labelling is putting an informative tag, wrapper or seal on the product/packaging to describe clearly the product its contents (ingredients), expiry date, method of use, allergy etc. Thus, in the above question marketer failed to provide sufficient information to the consumer through product labeL
Question 20.
Identify the aspect of management in the given diagram.
(a) Management is multidimensional
(b) Management is dynamic function
(c) Management is a group activity
(d) None of the above (1)
Answer:
(c) Management is a group activity
Question 21.
Identify the level of management whose basic task is to integrate diverse elements and coordinate the activities of different departments according to the overall objectives of the organisation. State any two functions of the level of management identified. (3)
Answer:
Top level management Functions of top-level management:(any two)
- The top-level managers are responsible for the welfare and survival of the organisation.
- They analyse the business environment and its implications for the survival of the firm.
- They formulate overall organisational goals and strategies for their achievement.
- They are responsible for all the activities of the business and for its impact on society.
Explanation: Top level of management is a team consisting of managers from different functional levels whose basic task is to integrate diverse elements and coordinate the activities of different departments to accompish the overall objectives of the organisation.
The functions of top level of management are:
- They are responsible for the welfare and survival of the organisation;
- They analyse the business environment and its implications for the survival of the firm.
Question 22.
Explain ‘Internship training’ and ‘Vestibule training’ and classify them as on-the-job and off-the-job methods of training. (3)
Answer:
Internship training: is a joint programme of training in which educational institutions and business firms cooperate. Selected candidates carry on regular studies for the prescribed period.
Vestibule training: Employees learn their jobs on the equipment they will be using, but the training is conducted away from the actual work floor. Actual work environments are created in a class room and employees use the same material, files and equipment Internship training can be classified as On-the- job method of training. Vestibule training can be classified as off-the- job method of training.
Question 23.
“Controlling is an indispensable function of management. Without controlling the best of plans can go awry “. Do you agree? Explain any two reasons in support of your answer.
OR
“It is generally believed that measurement of perfbrmence should be done after the task is completed.” Identify and explain the step in the process of the function of management being discussed above and the step followed by the same in the process. (3)
Answer:
Yes. Importance of controlling: (Any two)
1. Accomplishing organisational goals: The controlling function measures progress towards the organisational goals and brings to light the deviations, if any, and indicates corrective action.
2. Judging accuracy of standards: A good control system enables management to verify whether the standards set are accurate and objective.
3. Making efficient use of resources: By exercising control, a manager seeks to reduce wastage and spoilage of resources. Each activity is performed in accordance with predetermined standards and norms.
4. 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 are appraised.
5. Ensuring order and discipline: Controlling creates an atmosphere of order and discipline in the organisation.
6. Facilitating coordination in action: Controlling provides direction to all activities and efforts for achieving organisational goals.
Caution
- importance and significance of controlling are same.
- Students should not get confused between them.
OR
Measurement of Actual performance:
Performance should be measured in an objective and reliable manner. There are several techniques for measurement of performance. Wherever possible measurement of work should be done during the performance.
Comparing actual performance with standards:
This step involves comparison of actual erformance with the standard. Such comparison will reveal the deviation between actual and desired results. Standards become easier when standards are set in quantitative terms.
Question 24.
State the development functions of the Securities and Exchange Board of India.
OR
State any three money market instruments. (3)
Answer:
Development Functions of Securities and Exchange Board of India:
- Training of intermediaries of the securities market.
- Conducting research and publishing information useful to all market participants.
- Undertaking measures to develop the capital markets by adapting a flexible approach.
Caution
students write functions of stock exchange and do not provide the correct answer by writing functions of SEBI.
OR
Money market instruments are: (Any three)
1. Treasury Bill is basically an instrument of short-term borrowing by the Government of India maturing in less than one year.
2. Commercial paper is a short-term unsecured promissory note, negotiable and transferable incomplete.
3. Call money is short term finance repayable on demand, with a maturity period of one day to fifteen days used for inter bank transactions.
4. Certificate of deposit are unsecured, negotiable, short term instruments in bearer form, issued by commercial banks and development financial institutions.
5. Commercial bill is a bill of exchange used to finance the working capital requirements of business firms.
Explanation: The different money market instruments are:
1. Treasury bill: A treasury bill is an instrument of short-term borrowing by the Government of India maturing in less than one year. They are also known a zero coupon bonds issued by the Reserve Bank of India on behalf of the Central Government to meet its short term requirements of funds. Treasury bills are issued in the form of promissory note. They are issued at a price which is lower than their face value and repaid at par.
2. Commercial paper: It is a short term unsecured promissory note, negotiable and transferable by endorsement and delivery with a fixed maturity period. It is issued by large and creditworthy companies to raise short term funds at lower rates of interest than market rates. It usually has a maturity period of 15 days to one year. Funds raised through commercial paper are used to meet the floatation cost This is known as Bridge financing.
3. Call money: Call money is short finance repayable on demand, with a maturity period of one day to fifteen days, used for inter bank transactions. Commercial banks have to maintain a minimum cash balance
known as cash reserve ratio. Call money is a method by which banks borrow from each other to be able to maintain the cash reserve ratio. The interest rate paid on call money loans is known as the call rate.
Question 25.
Pramod is a supervisor at ‘Shyam Breads and Biscuits Factory’. The factory produces 20,000 packets of bread and biscuits every day. As a supervisor, Promod ensures that work goes on smoothly and there is no interruption in production. He is a good leader who gives orders only after consulting his subordinates, working out the policies with the acceptance of the group. Identify and explain the leadership style being adopted by Pramod. (4)
Answer:
Democratic or participative leader: A democratic leader will develop action plans and make decisions in consultation with his subordinates. He will encourage them to participate in decision making. This kind of leadership style is more common now-a- days, since leaders also recognise that people perform best if they have set their own objectives. They also need to respect the others opinion and support subordinates to perform their duties and accomplish organisational objectives. They exercise more control by using forces within the group.
Explanation: The leadership style adopted 6y Promod’ is Democratic or participative style. Democratic leadership refers to a style where the leader consults its subordinates before taking the final decision. This way he encourages the participation of subordinates. He decentralises authority and allows the subordinates to share his power. A democratic leader listens to the suggestions, grievances and opinions of the subordinates. The characteristics of democratic leadership style are as follows:
(i) Cooperative relations:
The main characteristic of democratic leadership style is the existence of cooperative relations among the managers and employees. Participation in decision making gives a feeling of confidence to subordinates as a result of which they are always ready to cooperate.
(ii) Trust in subordinates:
The managers have full trust in subordinates and this trust increases their morale.
Question 26.
Briefly explain the positive and negative aspects of the type of communication which arises out of the need of employees to exchange their views.
OR
Identity and explain the elements of directing mentioned below:
(a) Astha, a manager, has the ability to influence others to bring about a change in their behaviour.
(b) Neeraj, a managing director, declares share in the profits to the manager for their contribution to increase profits of the company. (4)
Answer:
Positive aspects of informal communication:
1. Sometimes, grapevine channels may be helpful as they carry information rapidly and therefore, may be useful to the manager at times.
2. Informal channels are used by the managers to transmit information so as to know the reactions of his/her subordinates.
Negative aspects of informal communication:
1. The grapevine/informal communication sometimes gets distorted. It also leads to generating rumours and informal discussions and sometimes may hamper the work environment
2. It is very difficult to detect the source of such communication.
Explanation: The communication arising out of the need of employees to exchange their views is informal communication. Informal system of communication is generally referred to as the grapevine because it spreads throughout the organisation with its branches going out in all directions in utter disregard to the levels of authority.
The positive aspects of informal communication are:
(i) This way of communication is helpful as grapevine channels carry information rapidly and therefore may be useful to managers at times.
(ii) Informal channels are used by the managers to transmit information so as to know the reactions of his/her subordinates.
The negative aspects of informal communication are:
(i) The informal communication spreads rapidly and sometimes gets distorted. It is very difficult to detect the source of such communication.
(ii) Informal communication leads to generate rumours which are not authentic. People’s behaviour is affected by rumours and informal discussions and sometimes may hamper work environment.
OR
(a) Leadership: Leadership is the process of influencing the behaviour of people by making them strive voluntarily towards achievement of organisational goals. Leadership indicates’ the ability of an individual to maintain good interpersonal relations with followers and motivate them to contribute for achieving organisational objectives.
(b) Motivation: Motivation means incitement or inducement to act or move. In the context of an organisation. It means the process of making subordinates to act in a desired manner to achieve certain organisational goals.
(a) The element of directing possessed by Astha is leadership. Leadership is the process of influencing the behaviour of peopLe by making them strive voluntarily towards achievement of organisational goals. Leadership indicates the ability of an individual to maintain good interpersonal relations with followers and motivate them to contribute for achieving organisational objectives. The important features of leadership are as follows:
- It indicates ability of an individual to influence others;
- It tries to bring change in the behaviour of others;
- It indicates inter personal relations between leaders and follower; and
- It is exercised to achieve common goals of the organisation.
(b) The element of directing performed by Neeraj is motivation. Motivation means incitement or inducement to act or move. It is a process of making subordinates to act in a desired manner to achieve certain organisational goals. The features of motivation are as follows:
- It is an internal feeling;
- It produces goal directed behaviour;
- It can be either positive or negative; and
- It is complex process as the individuals are heterogenous in their expectations, perceptions and reactions.
Question 27.
Explain any four factors that can affect the working capital requirement of a company.
OR
Explain any four factors that affect the choice of capital structure of a company. (4)
Answer:
Following are the factors affecting working . capital requirement of acompany: (Any four)
1. Nature of Business: The basic nature of a business influences the amount of working capital required. A trading organisation usually needs a smaller amount of working capital compared to a manufacturing organisation.
2. Scale of Operations: For organisations which operate on a higher scale of operation, the quantum of inventory and debtors required is generally high. Such organisations, therefore, require large amounts of working capital as compared to the organisations which operate on a lower scale.
3. Business Cycle: Different phases of business cycles affect the requirement of working capital by a firm. In case of a boom, the sales as well as production are likely to be larger and, therefore, a larger amount of working capital is required.
4. Seasonal Factors: Most businesses have some seasonality in their operations. In peak season, because of higher levels of activity, larger amounts of working capital is required.
5. Production Cycle: Production cycle is the time span between the receipt the receipt of raw material and their conversion into finished goods.
6. Credit Allowed: Different firms allow different credit terms to their customers. These depend upon the level of competition that a firm faces as well as the credit worthiness of their clients.
7. Operating Efficiency: Firms manage their operations with varied degree of effciency.
8. Availability of Raw material: Higher the quantity of material to be stored, higher the amount of working capital required.
9. Growth Prospects: If the growth potential of a concern is perceived to be higher, it will require a higher amount of working capital.
10. Level of competition: Higher level of competitiveness may necessitate higher stocks of finished goods to meet urgent orders from customers.
Caution
factors affecting working capital requirement and fixed capital requirement are almost same. But there is the difference in their explanations. Students should have deep understanding of both of these.
OR
Following are the factors affecting capital structure of the company: (Any four)
1. Cash Flow Position: Size of projected cash flows must be considered before borrowing. Cash flows must not only cover fixed cash payment obligations but there must be suffcient buffers also.
2. Interest Coverage Ratio (ICR): The interest coverage ratio refers to the number of times earnings before interest and taxes of a company covers the interest obligation
3. Debt Service Coverage Ratio (DSCR): Debt Service Coverage Ratio takes care of the deficiencies referred to in the Interest Coverage Ratio ‘OCR). The cash profits generated by the operations are compared with the total cash required for the service of the debt and the preference share capital.
4. Cost of debt: A firm’s ability to borrow at a lower rate increases its capacity to employ higher debt. Thus, more debt can be used if debt can be raised at a lower rate.
5. Tax Rate: A higher tax rate makes debt relatively cheaper vis-a-vis equity.
6. Floatation cost: Process of raising funds involves some costs, these considerations may affect the choice between debt and equity, hence the capital structure.
7. Risk Consideration: Business risk depends upon fixed operating cost. Fixed operating costs result in higher business risk and vice- versa. Total risk depends upon business risk and financial risk.
8. Flexibility: To maintain flexibility it must maintain some borrowing powers to take care of unforeseen circumstances.
9. Capital Structure of other companies: It has been observed that the capital structure of competing companies also affect the capital structure of the company in question.
10. Stock Market Conditions: Stock market conditions often affect the choice between equity and debt.
Question 28.
Dheeraj wants to start a business of selling N-95 masks after the outbreak of the global pandemic of COVID-19. Due to the uncertain market conditions he wants to make a low investment in fixed capitaL Suggest how the decisions related to the choice of technique and financing alternatives can help Dheeraj in ensuring a low investment in fixed capital requirements. (4)
Answer:
Choice of Technique: As he wishes to stick to a low investment model, we may suggest him to go with the labour-intensive approach to manufacture N-95 masks. Since better technology would cost him much and his risk appetite is not conducive for capital intensive techniques of production.
Financial Alternatives: As he wishes to stick to a low investment model, we may suggest him to go with the lease option for fixed assets like building, heavy machinery etc. as this may reduce his investments requirement in the business.
Explanation:
Choice of Technique: Some organisations are capital intensive whereas others are labour intensive. A capital intensive organisation requires higher investment in plant and machinery as it relies less on manual labour. Labour intensive organisations, on the other hand, require less investment in fixed assets. Here, in this case, Deeraj can choose labour intensive option as it will require low investment.
Financing Alternatives: A developed financial market may offer leasing facilities as an alternative to outright purchase. As Deeraj wants to make low investment in fixed capital he can take fixed asset i.e. land and building and plant and machinery on lease. 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.
Question 29.
Explain the following rights of consumers provided by Consumer Protection Act, 2019:
(a) Right to Safety
(b) Right to Consumer Education (4)
Answer:
(a) Right to safety: The consumer has a right
to be protected against goods and services which are hazardous to life and health. For instance, electrical appliances which are manufactured with substandard products or do not conform to the safety norms might cause serious injury. Thus, consumers are educated that they should use electrical appliances which are ISI marked as this would be an assurance of such products meeting quality specifications.
(b) Right to Consumer Education: The consumer has a right to acquire knowledge and to be a well-informed consumer throughout her/his life. He should be aware about his rights and the reliefs available to him in case of a product or service falling short of his expectations.
Question 30.
In an interview with a leading news channel, Mr. Rakesh Kwatra, CEO of‘Get My Job’ has suggested that the companies which want more and more people to apply for jobs in their organisation should make the process for applying for jobs easier and candidate friendly. Name and explain the next two steps which follow the step, in the process of the function of management being discussed above. (4)
Answer:
Selection: Selection is the process of choosing from among the pool of the prospective job candidates developed at the stage of recruitment. Even in case of highly specialised jobs where the choice space is very narrow, the rigour of the selection process serves two important purposes:
(i) it ensures that the organisation gets the best among the available and
(ii) it enhances the self-esteem and prestige of those selected and conveys to them the seriousness with which the things are done in the organisation.
Placement and orientation: Orientation is introducing the selected employee to other employees and familiarising him with the rules and policies of the organisation. Placement refers to the employee occupying the position or post for which the person has been selected.
Question 31.
Explain ‘Science, not rule of thumb’, ‘Harmony, not discord’, and ‘Development of each and every person to his or her greatest efficiency and prosperity’ as principles of Scientific Management given by F.W.Taylor. (6)
Answer:
Science not rule of thumb: Taylor pioneered the introduction of the method of scientific inquiry into the domain of scientific inquiry into the domain of management practice. We have already referred to the limitations of the rule of thumb approach of management. As different managers would follow their indigenous rules of thumb.
It is but a statement of the obvious that all would not be equally effective. Taylor believed that there was only one best method to maximise efficiency. This method can be developed through study and analysis. The method so developed through study and analysis.
The method so developed should substitute ‘Rule of Thumb’ throughout the organisation. Scientific method involved investigation of traditional methods through work-study, unifying the best practices and developing a standard method. Harmony, not discord: Factory system of production implied that managers served as a link between the owners and the workers.
Since as managers they had the mandate to ‘get work done’ from the workers. Taylor recognised that this conflict helped none, the workers, the managers or the factory owners. He emphasised that there should be complete harmony between the management and workers. Both should realise that each one is important To achieve this state, Taylor called for a complete Mental Revolution on 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 workers should work hard and be willing to embrace change for the good of the company.
Development of each and every person to: his or her greatest efficiency and prosperity. As such, scientific management also stood for worker development. Worker training was essential also to learn the ‘best method’ developed as a consequence of the scientific approach. Taylor was of the view that the concern for effiiciency could be built in right from the process of employee selection.
Each person should be scientifically selected. Then the. work assigned should suit her/his physical, mental and intellectual capabilities. To increase efficiency, they should be given required training. Efficient employees would produce more and earn more. This will ensure their greatest efficiency and prosperity for both company and workers.
Question 32.
“Planning is worth the huge costs involved.” Do you agree? Explain any four reasons in support of your answer.
OR
“If the project is important then more alternatives should be generated and thoroughly discussed amongst the members of the organisation.” Identify and explain the step in the process of planning being discussed above. Also explain the remaining | steps which will have to be carried out to complete the process. (6)
Answer:
Yes.
Importance of Planning (Any four)
1. Planning provides direction: Planning ensures that the goals or objectives are clearly stated so that they act as a guide for deciding what action should be taken and in which direction. If goals are well defined, employees are aware of what the organisation has to do and what they must do to achieve those goals.
2. Planning reduces the risks of uncertainty: Planning is an activity which enables a manager to look ahead and anticipate changes. By deciding in advance, the tasks to be performed, planning shows the way to deal with changes and uncertain events. Changes or events cannot be eliminated but they can be anticipated and managerial responses to them can be developed.
3. Planning reduces overlapping and wasteful activities: Planning serves as the basis of coordinating the activities and efforts of different divisions, departments and individuals. It helps in avoiding confusion and misunderstanding. Since planning ensures clarity in thought and action, work is carried on smoothly without interruptions. Useless and redundant activities are minimised or eliminated.
4. Planning promotes innovative ideas: Since planning is the first function of management, new ideas can take the shape of concrete plans. It is the most challenging activity for the management as it guides all future actions leading to growth and prosperity of the business.
5. Planning facilitates decision making: Planning helps the manager to look into the future and make a choice from amongst various alternative courses of action. The manager has to evaluate each alternative and select the most viable proposition. Planning involves setting targets and predicting future conditions thus helping in taking rational decisions.
6. Planning establishes standards for controlling: Planning provides the goals or standards against which actual performance is measured. By comparing actual performance with some standard, managers can know whether they have actually been able to attain the goals. If there is any deviation it can be corrected. Therefore, we can say that planning is a prerequisite for controlling.
OR
Identifying alternative courses of action:
Once objectives are set assumptions are made. Then the next step would be to act upon them. There may be many ways to act and achieve objectives. All the alternative courses of action should be identified. The course of action which may be taken could be either routine or innovative. An innovative course may be adopted by involving more people and sharing their ideas.
Remaining steps to carried out to complete the process are as follows:
1. Evaluating alternative courses: The next step is to weigh pros and cons of each alternative. Each course will have many variables which have to be weighed against each other. The positive and negative aspects of each proposal need to be evaluated in the light of the objective to be achieved.
2. Selecting an alternative: This is the real point of decision making. The best plan has to be adopted and implemented. The ideal plan, of course, would be the most feasible, profitable and with least negative consequences. Most plans may not always be subjected to a mathematical analysis.
3. Implementing the plan: This is the step where other managerial functions also come into the picture. The step is concerned with putting the plan into action.
4. Follow up action: To see whether plans are being implemented and activities are performed according to schedule is also part of the planning process. Monitoring
the plans is equally important to ensure that objectives are achieved.
Question 33.
An important difference between S&M Ltd. and most other companies is that instead of operating as one large corporation it operates as 180 smaller companies each focused on a specific product and area, implying selective dispersal of authority, recognising the decision makers need for autonomy, as decision making authority is pushed down the chain of command.
It enables the company to maintain short lines of communication with customers and employees, and accelerate the development of talent. Identify the philosophy that is being followed by S&M Ltd. through which it is dividing the decision-making responsibilities among the hierarchical levels. State any five points of importance of the philosophy identified. (6)
Answer:
Decentralisation-
Importance of Decentralisation (Any five)
1. Develops initiative among subordinates: Decentralisation helps to promote self-reliance and confidence amongst the subordinates.
2. Develops managerial talent for the future: Formal training plays an important part in equipping subordinates with skills that help them rise in the organisation but equally important is the experience gained by handling assignments independently.
3. Quick decision making: The management hierarchy can be looked upon as a chain of communication. In a decentralised organisation however, since decisions are taken at levels which are nearest to the points of action and there is no requirement for approval from many levels the process is much faster.
4. Relief to top management: Decentralisation diminishes the amount of direct supervision exercised by a superior over the activities of a subordinate because they are given the freedom to act and V decide within the limits set by the superior.
5. Facilitates growth: Decentralisation awards greater autonomy to the lower levels of management as well as divisional or departmental heads. This allows them to function in a manner best suited to their department and fosters a sense of competition amongst the departments.
6. Better control: Decentralisation makes it possible to evaluate performance at each level arid the departments can be individually held accountable for their results.
Explanation: The philosphy being followed by S & M Ltd. is decentralisation. Decentralisation explains the manner in which decision making authorities are divided among heirarchical levels. It refers to delegation of authority throughout all the Levels of the organisation.
Decision making authority is shared with lower levels and is consequently placed nearest to the points of action. Decision making authority is pushed down the chain of command. It is a philosophy that implies selective dispersal of authority because it propagates the belief that people are competent, capable and resourceful The importance of decentralisation is as follows:
or departmental heads. This allows them to function in a manner best suited to their department and fosters a sense of competition amongst the departments. Consequently, with each department doing its best in a bid to outdo the other, the productivity levels increase and the organisation is able to generate more returns which can be used for expansion purposes.
Question 34.
‘Advertising’ and ‘Personal selling’ both are communication tools used by the marketers to promote their products. Yet they differ in their approach. Differentiate between the two by giving any six points.
OR
“The elements of marketing mix are popularly known as 4 P’s of marketing.” Briefly explain these elements. (6)
Answer:
Following are the points of differences between advertising and personal selling (Any Six)
| Advertising | Personal selling | |
| 1. | Advertising is an impersonal form of communication. | Personal selling is a personal form of communication. |
| 2. | Advertising involves transmission of standardised messages, ie, the same message is sent to all the customers in a market segment. | In personal selling, the sales talk is adjusted keeping view of customer’s background and needs. |
| 3. | Advertising is inflexible as the message can’t be adjusted to the needs of the buyer. | Personal selling is highly flexible, as the message can be adjusted. |
| 4. | It reaches masses, i.e., a large number of people can be approached. | Only a limited number of people can be contacted because of time and cost considerations. |
| 5. | In advertising the cost per person reached is very low. | The cost per person is quite high in the case of personal selling. |
| 6. | Advertising can cover the market in a short time. | Personal selling efforts take a lot of time to cover the entire market. |
| 7. | Advertising makes use of mass media such television, radio, newspaper, and magazines. | Personal selling makes use of sales 1 staff, which has limited reach. |
| 8. | Advertising lacks direct feedback. Marketing research efforts are needed to judge customers’ reactions to advertising. | Personal selling provides direct and immediate feedback. Sales persons come to know about the customers’ reactions immediately. |
| 9. | Advertising is more useful in creating and building interest of the consumers in the firm’s products. | Personal selling plays an important role at the awareness stage of decision making. |
| 10. | Advertising is more useful in marketing to the ultimate consumers who are large in numbers | Personal selling is more helpful in selling products to the industrial buyers or to intermediaries such as dealers and retailers who are relatively few in numbers. |
OR
The marketing mix consists of various variables, which have broadly been classified into four categories, popularly known as four Ps of marketing.
These are:
- Product,
- Price,
- Place, and
- Promotion, and are discussed as follows:
1. 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 as mentioned in the above examples but also the benefits offered by it from the customer’s view point (for example toothpaste is bought for whitening teeth, strengthening gums, etc).
The concept of product also includes the extended product or what is offered to the customers by way of after sales services, handling complaints, availability of spare parts etc. These aspects are very important, particularly in the marketing of consumer durable products (like Automobiles, Refrigerators, etc.). The important product decisions include deciding about the features, quality, packaging, labelling and branding of the products.
2. Price: Price is the amount of money customers have to pay to obtain the product In the case of most of the products, the level of price affects the level of their demand. The marketers have not only to decide about the objectives of price setting but to analyse the factors determining the price and fix a price for the firm’s products.
3. Place: Place or Physical Distribution include 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 (by way of discounts, promotional campaigns, etc.).
4. Promotion: Promotion of products and services include activities that communicate availability, features, merits, etc. of the products to the target customers and persuade them to buy it.
Most marketing organisations undertake various promotional activities and spend a substantial amount of money on the promotion of their goods through using a number of tools such as advertising, personal selling and sales promotion techniques (like price discounts, free samples, etc.).