Practicing the CBSE Sample Papers for Class 12 Business Studies with Solutions Set 5 allows you to get rid of exam fear and be confident to appear for the exam.
CBSE Sample Papers for Class 12 Business Studies Set 5 with Solutions
Time: 3 Hours.
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.
Question 1.
Through this principle of management, Henri Fayol guides the managers to ex behaviour and advises that they should not fall into temptation of misusing their powers for personal benefit at the cost of general interest of the organisation.
Which principle of management is being described in the above statement?
(a) Remuneration of employees
(b) Centralisation and decentralisation
(c) Subordination of individual interest to general interest
(d) Equity
Answer:
(c) Subordination of individual interest to general interest.
Explanation: The interests of an organisation should take priority over the interests of any one individual employee according to Fayol. In this regard, all employees would work towards achieving the organisational goal.
Question 2.
Reena bought a cheese box of a reputed brand from a local shopkeeper. While opening this box, she found a piece of stone in it. She reported the matter to the shopkeeper who forwarded her complaint to the concerned company. Within a week, the representative of the company visited Reena’s residence with an apology and as a replacement offered her a new cheese pack with four other selections of cheese as reimbursement for the inconvenience to her.
Choose the consumer right which Reena exercised.
(a) Right to choose
(b) Right to seek redressal
(c) Right to be informed
(d) None of these
Answer:
(b) Right to seek redressal
Explanation: Reena exercised the Right i.e., Right to seek redressal. This right gives the protection to the consumer against the unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers.
Question 3.
“Harsh is running a company where he sells variety of goods such as textiles, garments, cosmetics, etc.
He follows an organisational structure.” Identify the organisational structure mentioned here.
(a) Divisional structure
(b) Functional structure
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer:
(a) Divisional structure
Explanation: Harsh sells variety of goods, thus, it is divisional structure. Divisional structure is a suitable for multi-product manufacturing large organisations as in this structure, various department are created on the basis of products.
Question 4.
Identify the dimension of the business environment illustrated by the picture given below:
(a) Economic environment
(b) Demographic environment
(c) Natural environment
(d) Socio-cultural environment
Answer:
(d) Socio-cultural environment
Explanation: A common practice of beliefs improves social cohesion among society members. The shared belief system acts as an essential agent of socialisation
Question 5.
‘Even where members of a department willingly cooperate and work, a manager has to coordinate the efforts of different people in a conscious manner/ Identify the characteristic of coordination discussed above.
(a) Coordination ensures unity of action
(b) Coordination is a deliberate function
(c) Coordination is a continuous process
(d) Coordination is an all-pervasive function
Answer:
(b) Coordination is a deliberate function
Explanation: The manager has to coordinate the efforts ofdifferent people in a conscious manner so that the members ofa department willingly cooperate and wave workso we can say that coordination is a deliberate function.
Question 6.
Naveen is working in Omaxe Ltd. He is working as a manager. He explains a worker about the operations to be carried out by him on a hi-tech machine. Identify the element of directing mentioned here.
(a) Motivation
(b) Supervision
(c) Communication
(d) None of these
Answer:
(b) Supervision
Explanation: Naveen explains a worker about the operations to be carried out by him on hi-iech machines hence fie is doing supervision. Supervision means instructing, guiding and monitoring the subordinates to ensure that they perform their jobs in accordance with the plans and instructions.
Question 7.
Sun Enterprises Limited is planning to increase its sales by 30% in the next quarter. Which of the following feature of management being highlighted in the given statement?
(a) Management is all pervasive
(b) Management is a goal oriented process
(c) Management is a continuous process
(d) All of these
Answer:
(b) Management is a goal oriented process
Explanation: Management is always a goal oriented process. Managers has to manage things keeping in view the goals. Sun Enterprises Limited setting its goal for the next quarter by planning. Hence, its management is following goal oriented process.
Question 8.
Which of the following is not the internal element of limitation of planning?
(c) Increase in population
(d) Machine
(a) Capital
(b) Raw material
Answer:
(c) Increase in population
Explanation: Capital, raw material and machine are an internal element to an organisation but increase in the population is an external factor as it is beyond organisations’s control.
Question 9.
Mohit who is the owner of a company has decided to focus only on a few activities of his business. He considers that the rest of all activities are not critical to the performance of his company. One such area he finds is of labour. The labour cost recently went up by 4% sending signals of coming danger. Now, he will put his efforts to control this variation by arranging labour at a cheaper rate.
The step of controlling discussed here is:
(a) taking corrective action
(b) analysing deviations
(c) comparing actual with standard performance
(d) setting organisational goal
Answer:
(b) analysing deviations
Explanation: The step which is taken by Mohit is analysing deviations. This step will help Mohit in finding out the reason behind the deviation. Some deviation, in performance can be expected in all activities. It is therefore, important to determine the acceptable range of deviations.
Question 10.
The analysis which helps in an assessment of the number and types of human resources necessary for the performance of various jobs and accomplishment of organisational objectives.
(a) Break-even analysis
(b) Workload analysis
(c) Workforce analysis
(d) None of these
Answer:
(b) Workload analysis
Explanation: Workload analysis would enable an assessment of the number and types of human resources necessary for the performance of various jobs and accomplishment of organisational objectives.
Question 11.
In primary markets, first time issued shares to be publicly traded, in stock markets is considered as:
(c) Issuance offering
(d) Initial public offering
(a) Traded offering
(b) Public markets
Answer:
(d) Initial public offering
Explanation: An Initial Public Offer is a type of public offering where shares are sold by the newly established company to the general public for the first time.
Question 12.
Statement I: A product with a generic name can be advertised.
Statement II: Branding implies giving a unique name, sign, symbol or term for the identification of a product.
Choose the correct option from the options given below:
(a) Statement I is true and II is false.
(b) Statement II is true and I is false.
(c) Both the statements are true.
(d) Both the statements are false.
Answer:
(b) Statement II is true and I is false
Explanation: Statement II is true and I is false because branding is the process of communicating a unique selling proposition, or differential, that set a product or service apart from the competition. It includes the use of logos, taglines, jingles or mascots.
Question 13.
Match the Column-I with their respective Statements in Column-II
| Column-I | Column-II |
| (A) A paid form of non-personal communication undertaken by the marketers. | (i) Public relations |
| (B) A personal form of communication between the seller and the prospective buyer. | (ii) Advertising |
| (C) The practice of managing communication between an organisation and its public. | (iii) Personal selling |
(a) (i), (ii), (iii)
(b) (ii), (iii), (i)
(c) (iii), (i), (ii)
(d) (iii), (ii), (i)
Answer:
(b) (ii), (iii), (i)
Question 14.
_________is taken to acquire a new and modem plant to upgrade an old one.
(a) Financing decision
(b) Working capital decision
(c) Investment decision
(d) None of these
Answer:
(c) Investment decision
Explanation: The decision to acquire a new and modern plant to upgrade an old one is an investment decision. Investment decision refers to the decision regarding, where the funds are to be invested so as to earn the highest possible return.
Question 15.
Which of the following does not characterise the business environment?
(a) Uncertainty
(b) Employees
(c) Complexity
(d) Relativity
Answer:
(b) Employees
Explanation: Employees are not the feature/characteristic of business environment. They are rather a part of internal environment of business.
Question 16.
Which of the following statements is incorrect?
(a) Delegation is a tool used to get subordinates to perform tasks and duties identified during decentralisation.
(b) Decentralisation requires delegation tool to grant authority and power to the subordinates.
(c) Decentralisation means that control and decision-making lies only with the top management
(d) All of the above
Answer:
(c) Decentralisation means that control and decision-making lies only with the top management.
Explanation: Under decentralisation, the authority is dispersed in the hands of large number of executives.
Question 17.
“Ramesh is working in Wipro as a sales manager. He handles a team of 20 salesman. He directs his immediate subordinates and is directed by his immediate boss.” Identify the feature of directing and
choose the correct answer.
(a) Directing initiates action.
(b) Directing is a continuous process.
(c) Directing flows from top to bottom.
(d) Directing takes place at every level of management.
Answer:
(c) Directing flows from top to bottom.
Explanation: Direction means guiding, which is given by superiors to their subordinates. Thus, it flows downward from top to bottom.
Question 18.
Which of the following is a limitation of controlling?
(a) Controlling is expensive.
(b) Controlling is goal oriented.
(c) Controlling ensures order and discipline.
(d) Controlling improves employee motivation.
Answer:
(a) Controlling is expensive
Explanation: Control involves a lot of expenditure, time and effort. A small enterprise cannot afford to install an expensive control system.
Question 19.
Which of the following is a merit of internal recruitment?
(a) Economical way of recruitment
(b) Motivates the employees
(c) Reliable source of recruitment
(d) All of these
Answer:
(d) All of these
Explanation: Internalrecruitment is considered good asiteconomical and reliable way ofrecruitment and also motivates the existing employees for better performance.
Question 20.
Arrange the steps involved in planning process in correct sequence:
(i) Identifying alternative course of action
(ii) Developing Premises
(iii) Evaluating Alternative Courses
(iv) Setting Objectives
(a) (ii), (iv), (iii), (i)
(b) (ii), (i), (iii), (ii)
(c) (iii), (ii), (ii), (i)
(d) (iv), (ii), (i), (iii)
Answer:
(d) (iv), (ii), (i), (iii)
Explanation: The correct sequence in planning process are:
1. Setting Objectives
2. Developing Premises
3. Identifying alternative course of action
4. Evaluating alternative courses
5. Selecting an alternative Follow-up action
6. Implementing the Plan
Question 21.
Ramnath Ltd. is dealing in import of organic food items in bulk. The company sells the items in smaller quantities and in attractive packages. Performance of the company has been up to the expectations in the past. Keeping up with the latest packaging technology, the company decided to upgrade its machinery. For this, the Finance Manager of the company, Mr. Vikrant Dhull, estimated the amount of funds required and the timings.
This will help the company in linking the investment and the financing decisions on a continuous basis. Therefore, Mr. Vikrant Dhull began with the preparation of a sales forecast for the next four years. He also collected the relevant data about the profit estimates in the coming years. By doing this, he wanted to be sure about the availability of funds from the internal sources. For the remaining funds he is trying to find out alternative sources. Name the financial concept discussed in the above paragraph and explain any two points of importance of the financial concept, so identified
Answer:
Financial planning: It is the process of estimating the fund requirement of a business and specifying the sources of such fund.
Importance of financial planning (any two):
1. It ensures smooth running of a business enterprise by ensuring availability of funds at the right time.
2. It helps in anticipating future requirement of the funds and avoid barriers, shocks and surprises.
3. It increases the efficiency in the operations by clubbing wastages of funds, duplication of efforts and gaps in planning.
Question 22.
With change in the consumption habits of people, Mukesh, who was running a sweets shop shifted to chocolate business. On the eve of Diwali he offered chocolates in attractive packages at reasonable prices. He anticipated huge demand and created a website chocohub.com for taking orders online. He got lot of orders online and earned huge profit by selling chocolates. Identify and explain the dimensions of business environment discussed in the above case.
Answer:
Following dimensions of business environment are discussed in the given paragraph:
Social Environment: Social Environment consists of attitudes, beliefs, desires, customs and traditions, level of education, composition of working population, culture, religion, values, etc. Values refer to concepts which are held by the society in high esteem and traditions include social practices that have been followed by the society for a long period of time.
Technological Environment: Scientific improvement and innovations are included in the technological dimension of business environment. It provides new ways and methods of producing goods and services. For example, technological developments in the field of computers and information technology have changed the ways in which companies promote their goods and services.
Question 23.
Distinguish between ‘Selling Concept’ and ‘Marketing Concept’ of Marketing Management Philosophies on the basis of ‘main focus.’
OR
Yashi purchased a pickle bottle from the local grocery shop. The information provided on the bottle was not clear. She fell sick on consuming it. She filed a case in the District Forum under the Consumer Protection Act and got the relief. Identify the important aspect neglected by the marketer in the above case.
Answer:
The main difference between the ‘selling concept’ and the ‘marketing concept’ are as follows:
Selling concept focuses on selling the existing products by using various promotional techniques, while the marketing concept focuses on maximising customer satisfaction even after the actual sale has taken place. In other sense, selling concept is mainly concerned with the sale. On the other hand, marketing has a much wider scope than selling because it includes pre-sale and post-sale activities
OR
Labelling: The important aspect neglected here by the marketer is labelling. It should be clear and visible. It means putting identification marks on the package or it is the process of affixing identification marks to a package. Label is a carrier of information and provides information like name of the product, name of the manufacturer, contents of the product, expiry and manufacturing date, general information for use, weight etc. It helps in identifying the product and also in grading and promoting sale
Question 24.
How does the three-tier machinery redress consumer grievances under CPA, 2019? Explain.
OR
What do you understand by the State Commission?
Answer:
The three-tier machinery under C.P.A., 2019, consists of the District Commission, State Commission and the National Commission. A consumer could file a case in District Forum, if the value of goods and services and the compensation claimed does not exceed ₹ 1 crore, in the State Commission if the value of goods and services along with the compensation claimed is over ₹1 crore but less than ₹10 crores, and in the National Commission, if the value of goods and services along with the compensation claimed is above ? 10 crores. The District Forum/State Commission/National Commission shall refer the complaint to the party against whom the complaint is filed on receiving the complaint. If required, the goods or a sample thereof shall be sent for testing in a laboratory. After considering the test report and hearing to the party against whom the complaint is filed, the court shall pass an order.
OR
1. The State Commission are set up in each state by the State Government.
2. Each State Commission consists of a President and not less than two other members, one of whom should be a woman.
3. They are appointed by the State Government concerned.
4. A complaint can be made to the appropriate State Commission when the value of the goods or services in question, along with the compensation claimed, exceeds ₹ 1 crore but does not exceed ₹ 10 crores.
5. The appeals against the orders of a District Forum can also be filed before the State Commission.
Question 25.
Explain briefly ‘Remuneration of Employees’ and ‘Scalar Chain’ as principles of general management.
OR
Explain any five characteristics of principles of management
Answer:
Remuneration of Employees: Remuneration refers to the salaries and wages which are paid to the employees, so that they can work efficiently and effectively. It also helps in motivating the employees. Remuneration of employees should be just equitable so as to give maximum satisfaction to both employees and employers. The employees should be paid fair wages/ salaries, which would give them at least reasonable standard of living. At the same time, it should be within the paying capacity of the company. This will ensure good relations between workers and management.
Scalar Chain: It refers to the chain to authority and communication that runs from top to bottom and should be followed by the managers and the subordinates. The concept of scalar chain can be easily understood with the help of the following diagram:
In the given above diagram, under A there are two lines of authority one is B-C-D-E and another is L-M- N-O. If ‘O’ wants to communicate with E, he has to follow the chain i.e., O-N-M-L-A-B-CD-E. However, in case of emergency O can directly contact with E through gangplank.
OR
The characteristics of Principles of Management are as follows:
Principles of management are universal/pervasive: Principles of management are applicable to all levels of management. It is also applicable to different businesses which can be a profit and non¬ profit organisation, hospitals, schools, and clubs or our own homes and households. This way they are universal or pervasive in nature.
Principles of management are flexible: These principles are flexible and dynamic and not static in
rules. This implies that there is a room for managerial discretion and changes which can be change
or made as per the situation.
Principles of management have a cause and effect relationship: These principles suggest effect or
consequences of certain actions of the management. Hence, these principles have a cause and effect
relationship.
Principles of management aim at influencing human behaviour: These principles aim at
influencing human behaviour which is complex and unpredictable. They focus on regulating yet
directing human behaviour towards integrating efforts to achieve a common organisational goal.
Principles of management are of equal importance: All management principles are equally
important and are required together for achievement of organisational goals
Question 26.
How Demat system works?
OR
Explain the various segments of the NSE
Answer:
Working of the Demat System:
1. A Depository Participant (DP), either a bank broker or financial services company may be identified.
2. An account opening form and documentation (PAN card details, photograph, power of attorney) may be identified.
3. The physical certificate is to be given to the DP along with a dematerialisation request form.
4. If shares are applied in a public offer, simple details of DP and Demat Account are to be given, and the shares on allotment would automatically be credited to the Demat Account.
5. If shares are to be sold through a broker, the DP must be instructed to debit the account with the number of shares.
6. The broker then gives his DP instructions to deliver the shares to the stock exchange.
7. The broker then receives payment and pays the person for the shares sold.
8. All these transactions are to be completed within 2 days, i.e., delivery of shares and payment received from the buyer is on a T+2 basis, settlement period.
OR
The National Stock Exchange is a technology driven stock exchange that was incorporated in 1992. It was recognized as a stock exchange in 1993 and operations started in the year 1994. NSE provides trading in two main segments, namely, Wholesale Debt Market Segment and Capital Market Segment.
Wholesale Debt Market Segment: This segment provides a platform for trading fixed-income securities such as state development loans, bonds issued by public sector undertaking, corporate debentures, commercial paper, mutual funds, central government securities, zero-coupon bonds, treasury bills, etc. NSE started its operations in the Wholesale Debt Market in June 1994. It is the first full screen-based system for trading in the debt market. That is, it is the first computer-based trading system. Trading in the debt market involves two parties trading members (the recognized brokers of NSE) and the participants (i.e., the buyers and sellers of securities). The transactions among the participants are settled through members. For instance, the members place an order for the seller of security which is then suitably matched by another member for the buyer of security wishing to purchase that security. Thus, an order remains in the system until it is suitably matched. This segment of NSE is also known as NEAT (National Exchange for Automated Trading).
Capital Market Segment: Under this segment, NSE deals with trading in equity shares, preference shares, debentures, exchange-traded funds, and retail government securities. It provides an efficient and transparent platform for a fair trading system. The capital market segment commenced its work in November 1995. The trading system of the NSE Capital Market segment is also known as the National Exchange for Automated Trading – Capital Market (NEAT- CM). The trading operations of the Capital market segment remain the same as in the Whole Sale Debt Market System.
Question 27.
“Delegation of authority is based on the elementary principle of division of work”. Explain.
Answer:
The process by which a manager shares some of his work and authority with his subordinates is known as delegation of authority. The process of delegation involves the assignment of tasks or functions, entrustment of authority and imposition of accountability by a manager with respect to his subordinates. It is a process of sharing of tasks and authority between a manager and his subordinates. The principle of division of work states that the work should be divided into smaller jobs and assigned to the people who are specialised in it.
No manager can perform the entire work assigned to him. He gets part of it carried out by his subordinates. Getting things done by subordinates is an important aspect of the job of a manager. Delegation of authority takes place when a manager passes on to his subordinates some of his tasks or functions, together with the necessary authority to perform the tasks or functions. Thus, we can say that “Delegation of authority is based on the elementary principle of division of work.”.
Question 28.
State the reasons why staffing is important.
Answer:
Staffing is important due to the following reasons:
1. It helps in discovering and obtaining competent personnel for various jobs within an organisation.
2. By putting right person on the right job, it leads to a higher performance of the employees.
3. It ensures the continuous survival and growth of the enterprise through the succession planning for managers.
4. It helps to ensure optimum utilisation of the human resources.
5. It improves job satisfaction and morale of the employees through objective assessment and fair rewarding for their contribution.
6. It helps in competing as organisation with efficient staff so that can it easily win over its competitors.
Question 29.
PETER Ltd. has opened a customised shoe business in 23 cities. The organisation has done a lot of research on the nature of business environment in which it is doing business. The market has fragmented as there are many players, brand loyalties of the customers keep on changing, customers are more demanding and there is intense competition in the market. Every week on Saturday the board of directors sits for a meeting and decides the future course of action.
They rely on their surveys and past performances of other companies to achieve policy making and deciding future course of action. The company devotes its lot of time in understanding the external environment. With all the research the company has realised that the business environment does tend to have a lot of impact on the organisation so it is necessary to continuously monitor it.Name the various importance of management highlighted above?
Answer:
The various importance of business environment highlighted above:
1. It helps in coping with rapid changes: The market has fragmented as there are many players, brand loyalties of the customers keep on changing, customers are more demanding and there is intense competition in the market.
2. It helps in planning and policy formulation: They rely on their surveys and past performances of other companies to achieve policy making and deciding future course of action.
3. It helps in improving performance: With all the research the company has realised that the business environment does tend to have a lot of impact on the organisation so it is necessary to continuously monitor it.
4. It enables the firm to identify the opportunities and getting the first mover advantage: Environment provide numerous opportunities for business. Early identification of opportunities helps the enterprise to use it before losing them to the competitors
Question 30.
Damini joined as manager in one of the IT company’s in New Delhi. She is new to this position. Her boss Gaurav trained her about the jobs and responsibilities to be performed as a manager. Do you think there is any benefit to the organisation by providing training to its employees? State the benefits of training to the organisation.
Answer:
Training means equipping the employees with the required skill to perform their job. The candidates are sent for training so that they can perform the job in expected manner. The importance of training to the organisation is as follows:
1. Training imparts systematic learning to employees thereby helping to avoid wastage of efforts and money and is considered better than the hit and trial method.
2. It increases the employees’ productivity both in terms of quantity and quality, leading to higher profits.
3. Training increases the morale of the employees and reduces absenteeism and employee turnover.
4. It helps in obtaining effective response to fast changing environment-technological and economic.
5. Training equips the future manager who can take over in case of emergency
Question 31.
‘Determining the overall cost of capital and the financial risk of the enterprise depends upon various factors.’ Explain any six such factors.
OR
Explain the following as factors affecting the requirements of fixed capital:
(i) Nature of business
(ii) Growth prospects
(iii) Diversification and
(iv) Level of collaboration
Answer;
The factors affecting the capital structure are:
Cost of debt: Cost of debt means the expected rate of return of lenders on debt capital for assuming risk. It is the rate of interest payable on debentures or loans. More debt can be used in capital structure if rate of interest on debt is low. Debt is cheaper source of finance because interest on debt is a tax deductible expense.
Cost of equity: Cost of equity means the expected rate of return on equity capital for assuming risk. It is the rate of dividend on shares. When a company increases debt, the financial risk faced by the equity holders also increases. Consequently, their desired rate of return may increase. Therefore, a company cannot use debt beyond a point. If debt is used beyond that point, cost of equity may go up sharply and
share price may decrease. Hence, for maximisation of shareholders wealth, debt can be used only up to a level
Flotation costs: Cost of raising funds is called flotation cost, e.g., costs of advertising, printing prospectus, etc. Getting a loan from a financial institution may not cost so much. These considerations may also affect the choice between debt and equity
Cash flow position: A company uses more debt if it can generate enough cash inflows to pay interest on debt. On the contrary, it would be quite risky to use more debt if cash inflows are unstable or outflows are more than inflows
Control: Debt normally does not cause a dilution of management7s control over the business while issue of more equity may reduce the management7s holding in the company. There is a threat of takeover also. So, if the management of a company is interested in retaining control over the affairs of the business, it will use more debt (but only up to a level).
Return on investment (ROI): If the ROI of the company is high and is greater than rate of interest on debt, it can use more debt to increase the profit earned by equity shareholders. This is called ‘Trading on Equity7.
OR
Nature of business: Organisations that deal in services or trading (having a small operating cycle) require less fixed capital. On the other hand, manufacturing firms, involving a large operating cycle, require higher amount of fixed capital. Thus, we can say that fixed capital depends upon nature of business.
Growth prospects: Higher growth and expansion of a company is associated with higher production, more sales, larger inputs, etc. This requires higher level of machinery and equipment, resulting in higher fixed capital. On the other hand, companies with low growth prospects require less fixed capital.
Diversification: Greater diversification implies larger scale of operations, which requires greater investment in plants, machinery, building, etc. Therefore, it requires higher fixed capital. On the other hand, companies with low or no diversification, require less fixed capital.
Level of collaboration: At times, business organisations undergo collaboration with each other and jointly establish certain facilities. In such cases, individual organisations7 requirement for fixed capital reduces. But if company prefers to operate as independent unit then there is more requirement of fixed capital
Question 32.
Explain “Objective77 and “Policy” as types of plan using suitable examples.
OR
Why organisations are not always able to accomplish all their objectives?
Answer:
Objectives: Objectives are those end points which every organisation strives to achieve. These are the basic reason for a firm’s existence. These are usually stated in measurable terms. These are time-bound i.e., these are to be achieved within a given period of time. All the activities of the organisation are directed towards the attainment of the objectives. These provide broad direction to employees about what they should do. For e.g., it is a firm’s objective to increase its sales targets by 20%.
Policy: A Policy is a general statement that guides decision making. It acts as a guide to managerial actions and decisions in implementing strategy. A policy defines the boundaries within which decisions can be made by the subordinates. The main purpose of policies is to provide a practical shape to objectives by elaborating the manner in which goals are to be achieved. Policies play important role in setting the parameters within which a manager may function. There are different policies at different levels ranging from major company policies to minor policies. Major policies are concerned with the market, competitors, customers, and clients etc. whereas minor policies are concerned with the insiders.
OR
For the attainment of the desired objectives, organisations make plans. Planning is an essential activity for any organisation and sets the basis for its functioning. However, sometimes the things do not go as per the plan. Unforeseen changes in the business environment often dampen the plans of the organisation. Moreover, the process of planning has its own limitations that hinder the accomplishment of all the objectives of an organisation.
Following are some of the limitations of planning which may result in the abandoning of the organisational objectives:
Rigidness: Planning is rigid in nature. Once a plan regarding the objectives to be achieved and the course of action to be followed is formulated, the manager may not be able to change it. Such rigidity creates hurdles at times of unforeseen changes. At times of unexpected changes, the managers may require certain degree of flexibility so as to cope with the changes in an appropriate manner. Thus, rigidity in plans sometimes creates obstacles in the completion of the objectives.
Cannot deal with dynamic environment: Business environment is dynamic and thereby, very uncertain. However, planning cannot foresee such changes and fails at times of changes and uncertainties. This may lead to failure in the accomplishment of objectives. An organisation must adapt its functioning to the changing environment.
Gigantic Costs: Formulation of plans involves huge costs in terms of time and money. As planning is based on future predictions, it requires a lot of thinking and analysing. It involves scientific calculations along with the figures and the facts, which are to be used in formulating the course of action. This involves high costs. Moreover, sometimes it might also happen that the benefits derived from planning fall short of the costs incurred.
False Security: Good planning does not mean a guarantee to success. Often the managers tend to rely on pretested plans that have worked well in the past. However, it is not always true that if a plan had worked well in the past, it will also be successful in the future. Many unforeseen changes may crop up that may fail the plan. Sometimes managers think that planning can prevent the problems from occurring, however, they neglect the fact that planning just provides a base for predicting the future. It does not give straight away solutions to the problems.
Time Consuming: Formulating plans is a very time consuming task, as it involves looking forward in the unforeseen situations. It involves a lot of research and evaluation. This increases the time consumed by the managers and the actual actions may get delayed.
Question 33.
State any five points that highlight the importance of controlling.
Answer:
Controlling: Controlling as a function of management refers to the process of comparing actual performance with the standard performance to ensure that all activities are done according to standards.
An effective controlling system helps an organisation in the following ways (any five) :
1. Accomplishment of organisational goal: Controlling measures the progress of the activities and ensure that each activity is directed towards achievement of organisational goals.
2. Judging accuracy of standards: A good controlling reviews and verifies the accuracy and objectives of standards set at the planning stage.
3. Making efficient use of resources: Controlling ensures efficient utilisation of resources and reducing the scope of wastage and spoilage.
4. Improving employees motivation: Controlling helps the employees to achieve the predetermined standards and motivate to achieve their potential.
5. Ensuring order and discipline: Controlling ensures that no undesirable activities take place in the organisation and there is an atmosphere of order and discipline.
6. Facilitate coordination in action: Controlling ensures that all activities and efforts of each individual are coordinated with each other to accomplish the common objective.
Question 34.
After doing a diploma in entrepreneurship, Akash started his own confectionary business. He started doing a lot of hard work and used the recipes taught by his grandmother in various preparations. He also learnt many recipes from online sites and television programmes. He decided to keep the price of the products low initially and also informed his customers about the goodness of the items sold by them. However, he didn’t mention on the package of each item weather it contained eggs or not. As a result, vegetarian people became hesitant in buying things from his shop as they had to verbally inquire from him about the inclusion of eggs in the preparation of various items.
In the context of above case: From the viewpoint of this information Name the important aspect related to the marketing of products which has been ignored by Akash . Explain briefly any three functions performed by the aspect is identified also mention the right of consumer being violated by Akash
Answer:
The important aspect related to the marketing of products which has been ignored by Akash is Labelling. Labelling is a carrier of information and provides information like – name of the product, name of the manufacturer, contents of the product, expiry and manufacturing date, general information for use, weight etc.
The three important functions performed by labelling are:
1. Describes the product and specifies its contents: Labelling provides information about the core function of the product i.e. how and why the product is likely to be beneficial to the prospective buyer. It educates them about the usage and precautions related to the product. It also gives detailed information about the ingredients of the product.
2. Helps in identification of the product or brand: The label contains the logo, brand name, tagline, name and address of the manufacturer etc. of the product which helps in easy identification of the product.
3. Enables grading of products: Different coloured labels are also used by the marketers for grading of the products on the basis of flavours, quality etc. so that the buyers can easily choose a product as per their requirements.
The Right to information is being overlooked by the company in the above mentioned case. According to the Right to information, a consumer has the right to get complete information about the product he/she intends to buy including its contents, date of manufacture, date of expiry, price, quantity, directions for use etc. Also, as per law, it is mandatory for the marketers to provide complete information about the product/service to the buyers.