Business Studies-12 Sample Paper 1

sample Paper 1 [Easy Concept] Time Allowed: 3 hours] [Maximum Marks: 80 General Instructions: (i) This question paper contains 34 questions. (ii) Marks are indicated against each question. (iii) Answer should be brief and to the point. (iv) Answers to the questions carrying 3 marks may be from 50 to 75 words. (v) Answers to the questions carrying 4 marks may be about 150 words. (vi) Answers to the questions carrying 6 marks may be about 200 words. (vii) Attempt all parts of the questions together. 1. A manager applies the existing theoretical knowledge in his own unique manner. This reflects that management is: 1 (a) Universally applicable (b) A Science (c) An Art (d) Pervasive 2. On the introduction of ‘Goods and Services Tax Act’, experts in the field of business started analysing and forecasting its impact on various sectors and industries. Vivek, an established businessman, attended a few seminars and conferences organized by such experts to familiarize himself with this information. He wanted to use these forecasts to reduce the uncertainty in making decisions for the future in his business. Name the step in the planning process that is being discussed in the above paragraph. 1 (a) Follow up action (b) Selection of alternative (c) Setting objectives (d) Developing premises 3. The managers at ______________ level of management are responsible for the welfare and survival of an organisation. 1 (a) Top (b) Middle (c) Lower (d) All of these 4. Match the marketing philosophies in Column I with their main focus in Column II. 1 Column-I Column-II (a) Product concept (i) Production on a large scale (b) Production concept (ii) Enhancing quality of product (c) Marketing concept (iii) Customer satisfaction (a) (i), (ii), (iii) (b) (iii), (ii), (i) (c) (ii), (iii), (i) (d) (ii), (i), (iii) 5. The functions of management complementary to each other are: 1 (a) Planning and Organising (b) Organising and Staffing (c) Controlling and Planning (d) Directing and Controlling Sample Papers 47

6. An aware consumer must check ______________ before purchasing mustard oil for quality assurance.1 (a) ISI (b) AGMARK (c) FPO (d) Hallmark Or ‘Maruti Vega Ltd.’ entered into the market with coloured television and have now introduced products like audio system, air-conditioners washing machines, etc. The company is not only offering the products but also handling complaints and offering after-sales services. The element of marketing mix referred here is: (a) Product (b) Price (c) Promotion (d) Physical distribution 7. A company dealing in apparels has decided to clear its stock. It has a huge pile of unsold stock in all its branches across the country. It has decided to give discount on its products. It even has decided to go for various fashion shows in different colleges. They also have decided to sponsor a few events. Identify the marketing management philosophy highlighted above. 1 (a) Marketing concept (b) Selling concept (c) Production concept (d) Product concept 8. ______________ aims at determining the labour cost. 1 (a) Method study (b) Motion study (c) Time study (d) Fatigue study Or The forces relating to scientific improvements and innovations which provide new ways, methods and techniques of producing goods and services and operating a business is: (a) Social environment (b) Technological environment (c) Internal environment (d) Micro environment 9. ______________ is the process of converting a message into communication symbols such as words, pictures, gestures etc. by the sender for transmission. 1 (a) Decoding (b) Receiver (c) Encoding (d) Media 10. The management of an electronics firm suspected that their two employees were robbing it. It hired investigators who advised the firm to install a software program that could secretly log every single stroke of the suspects computer keys and send an encrypted e-mail report back to them. Investigators revealed that the two employees were deleting orders from the corporate books after processing them and pocketing the revenues. The programme picked up on their plans to steal a large shipment of goods late one night. When the suspects entered, they were arrested and charged with embezzlement. State the importance of the function of ‘Controlling’ highlighted in the above case. 1 (a) Controlling ensures order and discipline. (b) Controlling improves employees’ morale. (c) Controlling judges accuracy of standards. (d) Controlling accomplishes organisational goals. 11. Mansi saw ‘Buy one get one free’ printed on the label of the package of a mosquito repellant. The function which labelling is performing here is: 1 (a) Gives information to consumer (b) Describes the product and specifies its content (c) Promotes the product (d) All of these 48 Together with® EAD Business Studies—12

12. Ankit bought a packet of chips from a local shopkeeper and found that the ingredients given on the label were not legible. He complained about it to the company. The company sent a written apology stating that they will make sure that existing packets are withdrawn from the market and new packets with legible labels are soon made available. Which consumer right is being exercised by Ankit? 1 (a) Right to choose (b) Right to be heard (c) Right to safety (d) None of these Read the following text and answer question no. 13–16 on the basis of the same: Reliance Industries Ltd. is a reputed company and many people wanted to join the company. The employees of the organisation are very happy and they discussed how they came in contact with this organisation. Rohit said that he had applied through the Naukari.com and was appointed as Human Resource manager. Shekhar said that he was introduced by the General Manager, Mr. Parth. Megha said that she was directly called from IIT, Roorke from where she was about to complete her M.Tech. 13. Which type of recruitment gives the management a wider choice while selecting the people for employment? 1 (a) External recruitment (b) Internal recruitment (c) Recruitment through labour contractor (d) None of these 14. Identify the source through which Rohit is recruited by the company? 1 (a) Management consultant (b) Web publishing (c) Advertising on television (d) Campus recruitment 15. Which of the source is used in recruitment of Megha? 1 (a) Placement agencies (b) Campus recruitment (c) Advertising on television (d) None of these 16. What can be one of the reason of opting for the source of recruitment referred above? 1 (a) It increases morale of existing staff. (b) It is cheaper and takes less time. (c) It brings fresh talent and expertise in the organisation. (d) It simplifies selection and placement of employees. Read the following text and answer question no. 17–20 on the basis of the same: ‘Silkiya Ltd.’ is a company manufacturing silk cloth. It has been consistently earning good profits for many years. This year too, it has been able to generate enough profits. There is availability of enough cash in the company and good prospects for growth in future. It is a well-managed organisation and believes in quality, equal employment opportunities and good remuneration practices. It has many shareholders who prefer to receive a regular income from their investments. It has taken a loan of ` 60 lakhs from SBI and is bound by certain restrictions on the payment of dividend according to the terms of the loan agreement. The above discussion about the company leads to various factors which decide how much profit should be retained and how much has to be distributed by the company. Sample Papers 49

17. Which type of financial decision is being talked about in the paragraph? 1 (a) Investment decision (b) Financing decision (c) Dividend decision (d) Production decision 18. ‘There is availability of enough cash.’ This affects the above identified decision because: 1 (a) Cash is required for investment purpose. (b) Cash is a part of working capital. (c) It involves outflow of cash. (d) All of these 19. Which of the following factors affecting decision is not being talked about in the paragraph? 1 (a) Shareholder’s preference (b) Contractual constraint (c) Level of collaboration (d) Amount of earning 20. What can be the reason of SBI binding certain restrictions on the company as per the terms of loan agreement? 1 (a) To reduce competition in the market (b) To safeguard its interest (c) To increase shareholder’s wealth (d) All of these 21. Samta Ltd. is in need of finance to expand the business. The finance manager, Sumit, is looking into different sources of funds available. After doing the cost and risk analysis, he found debt as the best option but as the company has to pay huge insurance premium for the plant and machinery and lease for the building, the decision was taken to raise funds through equity. Identify and explain the factor which affected this decision. 3 22. Dominos offered ‘Vrat Special Menu’ during Navratras to attract the Indian customers with vegetarian pizza made of water-chestnut flour (singhada atta), and white millet flour (Samak ke chawal ka atta). It was topped with fresh mozzarella cheese with rock salt, tomatoes, paneer and crunchy sabudana. The tomato sauce was made without onions and garlic and used rock salt rather than common salt. State and explain the feature of management which is highlighted in the above case. 3 23. Differentiate between Functional and Divisional Structure on the basis of: 3 (a) Formation (b) Responsibility (c) Cost involved Or State the meaning of essential elements of delegation. 24. How does management help in the development of society? 3 Or Identify the type of dimensions of environment in the following cases: (a) It includes factors like money supply, price level, monetary policy etc. (b) Increased awareness towards health has increased demand for organic food. (c) A stable government builds up confidence among the firms to invest in big projects. 25. Amit Sports Ltd. was in the business of manufacturing treadmills and had a monopoly in the market. The business was doing very well and the company was consistently able to meet its objective of 20% increase in sales year after year. Encouraged by the good track record, Mr. Akhil, the Managing Director of the company, kept an ambitious target of 30% increase in sales for the next year. The same year, two competitors entered the market and the company could not achieve its targets. Identify and explain the limitations of one of the functions of management because of which the company was not able to meet its targets. 4 50 Together with® EAD Business Studies—12

26. Few years ago, there were many malpractices and unfair trading practices like price rigging, unofficial premium on new shares etc. All these had eroded investors’ confidence and multiplied their grievances. To overcome these, Government of India decided to set up a separate regulatory body for this purpose. (a) Name the separate body set up by the Government of India. (b) List its three regulatory functions. 4 27. How can the company satisfy social and esteem needs of its employees? 4 28. Mr. Kapoor bought a perfume from a Departmental Store and took the cash memo of ` 500 which he had paid to them. Later on, he found that the MRP of the perfume was ` 400 only, but the shopkeeper had put a sticker of ` 500 on the original price. (a) Do you think that the consumer right is violated here? If yes, then name the right and explain it. (b) State any two responsibilities of a consumer other than that referred here. 4 Or You have been appointed as a Brand Manager of Ford Motors. The Company is to introduce a compact small car in the Indian Market. The name of the car is yet to be decided. You have been asked to chair a brainstorming session. Before the suggestions come forward, you have to briefly explain the participants as to what constitutes a good brand name with the help of suitable examples. 29. Which process prepares a blue print of an organizations future preparations relating to finance? Give any three reasons why this process is needed? 4 30. “If you try to control everything, you may end up in controlling nothing”. Comment. 4 Or How does control simplify the task of a supervisor? 31. What do you mean by Laissez-faire style of leadership? Give two advantages and disadvantages of Laissez-faire style of leadership. Also suggest the situations where it is suitable. 6 32. “Coordination is not a separate function of management; it is the very essence of managements.” Clarify. 6 Or Explain the following principles of management: (a) Scalar chain (b) Subordination of individual interest to general interest 33. What is meant by delegation? State the importance of delegation in an organisation. 6 34. ‘Pricing of a product is an important and effective competitive weapon in marketing which depends upon various factors.’ Explain any four such factors. 6 Or What is meant by Packaging? Give any five points explaining why packaging is important. Sample Papers 51

Answers 1. (c) An Art 2. (d) Developing premises 3. (a) Top 4. (d) (ii), (i), (iii) 5. (c) Controlling and Planning 6. (b) Agmark Or (a) Product 7. (b) Selling concept 8. (c) Time study Or (b) Technological environment 9. (c) Encoding 10. (a) Controlling ensures order and discipline. 11. (c) Promotes the product 12. (b) Right to be heard 13. (a) External recruitment 14. (b) Web publishing 15. (b) Campus recruitment 16. (c) It brings fresh talent and expertise in the organisation. 17. (c) Dividend decision 18. (c) It involves outflow of cash. 19. (c) Level of collaboration 20. (b) To safeguard its interest 21. The factor which affected the financing decision of Samta Ltd. is fixed operating costs. Fixed operating costs: Debt financing increases fixed operating cost of the concern, namely interest. Hence if a business has high fixed operating cost in the form of building rent, insurance premium, salaries, etc., then lower debt financing is better. If fixed operating cost is less, then debt financing can be preferred. 22. The feature of management highlighted here is ‘Management is a dynamic function’. Management is a dynamic function: An organisation is affected by its environment. Management has to keep an eye on the changes in the environment and make necessary changes in itself and its goal according to the needs of the environment and to adapt itself. This makes the management dynamic in nature. 52 Together with® EAD Business Studies—12

23. Basis Functional Structure Divisional Structure (a) Formation It is formed on the basis of functions or It is formed on the basis of product lines or activities performed. area of operation. (b) Responsibility It is difficult to fix responsibility for success It is easy to fix responsibility for the or failure of a product. performance. (c) Cost involved It is economical as functions are not It is costly as there is duplication of resources duplicated. and functions in departments. Or The three elements of delegation are: (a) Authority: It is the right to command and to take decisions. Authority originates by the virtue of an individual’s position. The higher the level of management, more is the authority. It flows downwards from a superior to his subordinate. (b) Responsibility: It is the obligation of a subordinate to properly perform the assigned work. Responsibility flows upwards, i.e., a subordinate is responsible for the duty assigned to him by his superior. (c) Accountability: It means answerability for the final outcome. Once authority has been delegated and responsibility is entrusted, one cannot deny accountability. This is to ensure that the duties are properly discharged by the subordinates. It flows upwards from a subordinate to his superior. 24. Management helps in fulfilling the multiple objectives towards different groups who constituted the organisation. In this process, management helps in the development of organisation and the society. It helps by providing good quality products and services, creating employment opportunities, adopting new technology for advancement and leads the path towards growth and development. Or (a) Economic Environment (b) Social Environment (c) Political Environment 25. The company could not achieve the targeted objective due to the limitations of planning which are as follows: (a) Leads to rigidity: The existence of a plan puts managerial activities in a rigid framework. Programmes are carried out according to the plan and deviations are considered to be highly undesirable. This attitude makes managers and employees inflexible in their operation. They become more concerned with observance of rules and procedures as laid down in the plan rather than achieving the goals. (b) Reduces creativity: People in the organisation just implement the plans made by top management. They blindly implement the orders which results in loss of initiative and interest in them. Thus, planning reduces creativity as there is nothing new or innovative. (c) May not work in a dynamic environment: The organisation has to continuously adapt itself to the changing environment. Any unforeseen change in the business environment upsets the whole planning. (d) Time consuming: It is a time consuming process and is not practicable during emergency or crisis. It requires a lot of time to collect information, its analysis and interpretation before preparing plans. Sometimes not much time is left for implementation of plans. 26. (a) Securities and Exchange Board of India (SEBI) (b) The regulatory functions of Securities and Exchange Board of India (SEBI) are: (i) It registers brokers, sub-brokers and other players in the market. (ii) It registers the collective investment schemes and mutual funds. Sample Papers 53

(iii) It regulates stock brokers, portfolio exchanges, underwriters, merchant bankers and business in stock market and other securities market. (iv) It regulates the takeover bids of companies. (v) It undertakes inspections, enquiries and audits of stock exchange and intermediaries. (vi) Levying fee or other charges for carrying out the purposes of the Act. (any three) 27. The social and esteem needs of the employees can be satisfied by giving non-financial incentives to them. Thus, company can provide the following incentives to its employees: (a) Status: It refers to rank or position in the organisation. Social and esteem need, is satisfied through it, as more authority, responsibility and recognition given to employee. (b) Employee participation: It means involving employees in decision making of the issue related to them. The company work in the form of joint management committees, work committees etc. (c) Organisational climate: These are the distinguishing characteristics which describe an organisation. These characteristics like individual autonomy, reward orientation, consideration to employees, risk taking etc. influence the behaviour of the individuals in the organisation. (d) Career advancement opportunity: An opportunity given to an individual to improve his skills and be promoted to the higher level jobs is also an incentive for an employee. Appropriate skill development programmes, workshops and proper training and development programmes help an employee to get promotions. 28. (a) Yes, the consumer right violated is ‘Right to be Informed’. Consumers have the right to be informed about the quality, quantity, purity, standard and price of goods or services, so as to make the right decision and protect themselves against abusive practices. As per the laws prevalent in India, the manufacturers have to provide information about the products on its package or label. (b) The two responsibilities of a consumer are: (i) A consumer must file a complaint in an appropriate consumer forum in case of any inadequacy in the quality of goods purchased or services availed. (ii) A consumer must be honest in his dealings. He must purchase only legal goods and services so that unscrupulous practices like black marketing, hoarding etc. can be discouraged. Or The constituents of a good brand name are: (a) It should be short and simple. Long and complex words should be avoided because they create difficulty in reading and remembering. For instance Lux, Dettol or Surf are short and simple words, which are read and remembered without much effort. (b) Suggestive brand names are better because they can convey product attributes or benefits. For instance, Hajmola suggests digestive properties, Ujjala suggests brightness, Color soft hair dye from Godrej suggests softness. (c) It should be distinctive. A brand is distinctive when it stands apart from others in the category. Airtel, Tide, Shell, Cinthol, Perk are still distinctive brand names. (d) Finally, a brand name should be selected after considering its meaning in other languages and cultures. Some words are perfect in one culture or country but many words become offensive, obscene and inappropriate in other countries. 54 Together with® EAD Business Studies—12

29. The process of ‘financial planning’ prepares a blue print of an organization’s future preparations relating to finance. The process estimates the funds requirement of a business and specify the source of funds. It is needed because of the following reasons: (a) Helps in avoiding business shocks and surprises and help the company in preparing for the future. (b) Helps in coordinating various business functions. (c) Reduce waste, duplication of efforts and gap in planning. 30. Yes, while controlling, following two principles should be kept in mind, i.e., Critical point control and Management by exception. Critical point control states that a manager should focus his control on the key result areas which are critical to the success of an organisation. These KRAs are the critical points on which the entire organisation survives, and so the manager should keep his focus on these points while controlling. For example, in a company an increase of 7% in the production cost is more critical, than a 17% increase in its courier cost. Management by exception is based on the belief that an attempt to control everything results in controlling nothing. Thus, only the significant deviations which go beyond the permissible limit should be brought into the notice of the management and should receive immediate action of management on a priority basis. This saves the time and efforts of managers and focuses managerial attention on important areas. For example, if a plan lays down that defects upto 0.01% are acceptable in the manufacturing unit, then only increase in the defects beyond the 0.01% will be brought to the notice of the management. Or Controlling involves verifying whether activities undertaken are in conformity with the plans adopted, instructions issued and results expected. In other words, it is through control that managers/ supervisors ensure the execution of plans and achievement of goals. Controlling simplifies the task of a supervisor by comparing the actual performance with the standards continuously, and finding out the deviations so that the root cause can be identified and not repeated in future. 31. Laissez-faire is also called free-rein leadership. In this, authority is decentralised and the subordinates can take decisions themselves. The leader does not interfere in the activities of the subordinates. He neither leads nor avoids the power. The leader only works as a contact person with the outsiders. He brings in the needed resources and information by subordinates so that group goals can be achieved. Thus, this leadership is centered around the subordinates. Advantages: (a) Morale and job satisfaction of employees are high. (b) Such type of leadership permits maximum development of employees. Disadvantages: (a) Leader shrinks away from giving guidance and help to employees. (b) Leader’s role and contribution is ignored in this style of leadership, just as the authoritative leadership ignores the contribution of workers. Suitability: This leadership style is best suited when the subordinates are well qualified, trained, committed and competent enough to achieve the organisational goals. Sample Papers 55

32. Coordination is the essence of management because it is required in all the managerial functions at all the levels and in all the departments. It exists within each function of management. It is the process integrating all activities to achieve common goals. It helps in maintaining harmony among individual efforts towards the accomplishment of organisational objectives. It synchronizes the working of different groups of persons. Following points highlight the importance of coordination: (a) Growth in size: With the increase in the size of the organisation, the number of people employed in the organisation also increases for organisational efficiency, it is important to harmonise the individual goals and organisational goals through coordination. (b) Functional differentiation: Functions of an organisation is divided into department and divisions every department may have its own objectives, polices and way of working. Coordination helps in linking the activities of various departments and harmonises it towards the common goal. (c) Specialisation: With specialisation, a characterstic of modern organisation, complexities arises as conflict may erupt in the organisation among functional heads. Coordination helps to reconcile the difference in approach, interest or opinion of the specialist. Or (a) Scalar chain: Scalar chain is the formal line of authority and communication from highest to the lowest ranks. Scalar Chain shows the path of flow of authority and communication. In normal course of formal organisation, it should not be violated. A BG For example, the head, A, has two lines of authority under him. If E wants CH to communicate with J the communication will flow through the route E-D- C-B-A-G-H-I-J. DI However, in case of emergency, E can directly contact J through a Gang E Gang J Plank. However, they need to inform their superiors about it later on. Gang F Plank K Plank is a shorter route provided so that communication is not delayed. (b) Subordination of individual interest to general interest: Every organisation is formed with a goal. Every employee in an organisation has some individual interests also. According to this principle, the interest of an organisation should have priority over the interests of individual employees. This is because interests of the workers and stakeholders are more important than the individual interest of any one person. A manager can ensure this by his exemplary behaviour. He should not misuse his power for his individual interests but use it for the larger general interest. This will raise his stature in the eyes of workers and ensure same behaviour by them. 33. Delegation refers to the downward transfer of authority from a superior to a subordinate. It is very essential for the efficient functioning of an organisation. The points which highlight its importance are: (a) Effective management: Managers are able to function more efficiently as they get more time to concentrate on high priority activities. They can excel in new areas by delegating the routine work to their subordinates. (b) Employee development: Delegation gives employees opportunities to utilise their talent. It empowers them to use their skill and gain experience, thus, developing them for higher positions. (c) Motivates employees: Delegation not only implies sharing of work but also shows trust and confidence of a superior in the subordinate. This enhances his self-esteem and motivates him to improve his performance further. 56 Together with® EAD Business Studies—12

(d) Facilitation of growth: Delegation trains and gives experience to the employees to play significant roles in the launch of new projects. Thus, at the time of expansion of an organisation, ready workforce is provided to take up leading posts. (e) Basis of management hierarchy: Delegation of authority establishes the superior-subordinate relationship as the degree of authority is determined by it. The extent of authority delegated determines the power each job position has in an organisation. 34. The factors that affect the pricing of a product or service are: (a) Product cost: The cost of producing, distributing and selling a product sets the minimum level at which a product may be sold. All the firms strive to cover the cost of a product plus a margin of profit above it. (b) Utility and demand of the product: Utility or satisfaction derived by a consumer from a product and the intensity of his demand sets the upper price limit for a product. The buyer is ready to pay up to a point where utility from the product is at least equal to sacrifice made in terms of money paid for it. Similarly, if the demand is elastic, a small change in the price results in a large change in the quantity demanded; and if the demand of a product is inelastic, the firm is in a better position to set the price. (c) Extent of competition in the market: The nature and degree of competition in the market also affects the pricing of a product. Competitors’ prices and their anticipated reactions are considered before fixing the price of a product. (d) Government and legal regulations: The Government intervenes and regulates the price of commodities. It can declare a product as an essential product and regulate its price. Thus, while fixing the price, the government and legal regulations should be taken into consideration. (e) Pricing objectives: Generally, a firm’s objective to set the price of a product is considered while pricing the product. A firm which aims at maximising profit in the short run tends to fix a price on the higher side, as compared to the price set when the objective is to maximise profit in the long run. Similarly, if the objective is to capture the market share, prices can be set at a level lower than that of its competitors. (f) Marketing methods used: The marketing methods used such as research activity undertaken, salesmen employed, amount of advertising, product differentiation, packaging, credit facility etc. affect price fixation. If a firm has some unique element of marketing, it gives the firm a competitive freedom in fixing the price of its products. (any four) Or The container which carries the product is called package. Packaging is defined as a set of tasks or activities, which is concerned with the design and production of an appropriate container for the product. The importance of packaging is as follows: (a) It minimises the chances of adulteration of goods. (b) It reduces the burden of personal selling in self-service retail outlets. (c) Scope of marketing or products has increased due to new innovations in their packaging. (d) It helps in differentiating the products. (e) Proper size and shape of the package facilitates use of the product. Sample Papers 57