Practicing the CBSE Sample Papers for Class 12 Business Studies with Solutions Set 1 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 1 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.
Rishabh joined an entertainment company Avtaar, as a creative head. As a manager looking after the creative unit of the company, one of the functions he has to perform is the process of organising. Which step of the process will he need to perform after identifying and dividing the work that has to be done in accordance with previously determined plans? [1]
(a) Identification and division of work
(b) Departmentalisation
(c) Assignment of Duties
(d) Establishing Reporting Relationships
Answer:
(b) Departmentalisation
Explanation: The jobs identified and divided/classifies into separate activities are further grouped together and placed into separate departments that could be either functional or divisional depending on the basis of types of products, geographical location of the businesses or targeted customers.
Question 2.
Which characteristic of the business environment is highlighted when changes are taking place too frequently and it becomes difficult to predict the future? [1]
(a) Uncertainty
(b) Complexity
(c) Inter-relatedness
(d) Relativity
Answer:
(a) Uncertainty
Explanation: Uncertainty refers to a situations ih which businesses face risks that cannot be foreseen, predicted or measured.
Question 3.
Aarohan Ltd. is a company manufacturing automobiles where division of work into key areas includes production, purchase, marketing, accounts and personnel. Which of the following is a disadvantage of the organisation structure of Aarohan Ltd.? [1]
(a) It may lead to increase in cost.
(b) Managers may gain power and assert independence and ignore organisation interests.
(c) It ensures that different functions get due attention.
(d) Heads do not get training for top management positions.
Answer:
(d) Heads do not get training for top management positions.
Explanation: Each employee focuses on specialisation on one part of the job rather than all-inclusive training that can lead only to overall individual growth (personal/professional).
Question 4.
Identify the dimensions of the business environment illustrated by the picture given above in which Sapna who has joined the workforce recently is working on an accounting software. [1]
(a) Technological and social
(b) Technological and political
(c) Political and economic
(d) Social and legal
Answer:
(a) Technological and social
Explanation: Use of accounting software is technology-related while a lady like Sapna has equal opportunity and skills to work on the accounting software on the computer is social-related.
Question 5.
Identify the reason which makes management important in the light of the fact that it is generally seen that individuals in an organisation resist change, as a change often means moving from a familiar, secure environment into a newer and a more challenging one. [1]
(a) Management helps in achieving group goals.
(b) Management creates a dynamic organisation.
(c) Management increases efficiency.
(d) Management helps in the development of society.
Answer:
(b) Management creates a dynamic organisation.
Explanation: Principles of management cannot remain static and are not exact as they need to adapt to changing trends, tastes and preferences, socio-economic and political stability, etc. It comprises goals, objectives and other activities that are constantly modified to reflect changes in the business environment.
Question 6.
The government of India made an announcement regarding Demonetisation of the Indian economy on November 8, 2016 with profound implications for it. The process which put restrictions on convertibility of domestic money and bank deposits was meant to create a less-cash economy. One argument against the cash-lite economy is that: [1]
(a) Internet connectivity is a prerequisite.
(b) More people will be introduced into the formal economy.
(c) Financial saving will increase.
(d) Tax evasion will be reduced.
Answer:
(a) Internet connectivity is a prerequisite.
Explanation: Cash-lite economy means people need to use digital means via mobile phone or computer to make necessary transactions. This is however, possible ifeveryone has access to Internet or mobile network across the economy.
Question 7.
Airlines will be able to offer the benefit of lower pricing to customers on sectors/routes due to the decision of the civil aviation ministry to remove price caps from August 31, 2022. This can help an airline to do better performance if they take early decisions regarding future courses of action after understanding and doing analysis. Which importance of business environment and its understanding by managers is not highlighted above: [1]
(a) It helps in improving performance.
(b) It helps in assisting in planning and policy formulation.
(c) It helps in tapping useful resources.
(d) It enables a firm to identify opportunities and get first mover advantage.
Answer:
(c) It helps in tapping useful resources.
Explanation: A variety of inputs (resources) are provided by the environment, including labour, raw materials, power, water, etc. The company generates outputs for the government, investors and customers by offering goods and services to them. It also pays taxes to the government.
Question 8.
Alo a mobility platform is in the process of laying off 400-500 employees in a move aimed at driving cost efficiency. Which objective of management will the firm not be able to achieve by carrying out this process. [1]
(a) Efficiency
(b) Social
(c) Profit
(d) Survival
Answer:
(b) Social
Explanation: Social objectives consists of the established order of advantage for the community. As part of the community, each enterprise whether or not it’s for a alternate or non-buying and selling subject has a social duty to meet.
Question 9.
Radha started a home cooked food delivery dabba service. Her mother, who is a great cook, decided to help her. They relied on friends and family for orders and then on word of mouth.
As a step in the process of ensuring that activities are performed as per her plan of supplying healthy, good quality, reasonable food and earning profit, she decided to keep both qualitative and quantitative benchmarks towards which she would strive to work. A function of management is being discussed above.
An important characteristic of this function of management is : [1]
(a) It is the first function of management.
(b) It is the last function of management.
(c) It is both forward looking and backward looking.
(d) It is required only in business organisations.
Answer:
(c) It is both forward looking and backward looking
Explanation: Radha is involved in planning and controlling by ensuring that activities related to cooking and food delivery are performed as per her plan by measuring them against certain qualitative and quantitative. Benchmarks to ensure that the processes are standardised and there is no compromise on quality.
Question 10.
Raman and Vasudev were two employees who were embezzling an import-export company in Varanasi where they were working. The finance manager of the company Sampat Singh became suspicious of the two employees when he realised that their activities were not being performed as per the plans He installed a software program that could secretly log every single stroke of the suspects’ computer keys and send an encrypted email report to the Cyber police.
The police were able to catch the two dishonest employees red handed and arrest them. Identify the function of management being discussed above. [1]
(a) Staffing
(b) Coordination
(c) Controlling
(d) Organising
Answer:
(c) Controlling
Explanation: Use of a software program in the computer to check whether the two employees are honestly feeding financial information in company’s accounts. Hence, controlling function helps in measuring the progress towards the organisational goal.
Question 11.
Name the outcome of the function of management which includes designing of roles to be filled by suitably skilled people and defining the inter relationship between roles so that ambiguity in performance of duties can be eliminated. [1]
(a) Organisation structure
(b) Delegation of authority
(c) Decentralisation
(d) Controlling
Answer:
(a) Organisation structure
Explanation: Organisation structure refers to differentiation and integration of activities and authority, role and relationship in an organisation.
Question 12.
Statement-I: Transportation helps in creating time utility and warehousing helps in creating place utility. [1]
Statement-II: The process of classification of products into different groups on the basis of their important characteristics is known as standardisation.
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:
(d) Both the statements are false.
Explanation: Hindrance of place is removed by transportation and hindrance of time is removed by warehousing. Also, standardisation means setting a level or a degree of attaining a certain operation or performance or quality. It implies that the different units of a commodity are of a specified and uniform quality.
Question 13.
Match the various terms of Financial Markets in Column-I with their respective Statements in Column-II. [1]
| Column-I | Column-II |
| (a) Financial market | (i) It is also known as the Stock market. |
| (b) Primary market | (ii) It is a market for creation and exchange of financial assets. |
| (c) Secondary market | (iii) It is also known as New issue market. |
(a) (ii), (iii), (i)
(b) (i), (iii), (ii)
(c) (iii), (ii), (i)
(d) (i), (ii), (iii)
Ans.
(a) (ii), (iii), (i)
Question 14.
_________is a number assigned to each transaction by the stock exchange and is printed on the contract note. [1]
(a) Client code number
(b) Unique order code
(c) Permanent account number
(d) Depository participant number
Answer:
(b) Unique order code
Explanation: It is mandatory for members of stock market to use this code for new and existing clients while buying or selling stocks.
Question 15.
One of the important decision areas under the marketing function of _________ is managing inventory. [1]
(a) Branding
(b) Pricing
(c) Promotion
(d) Physical distribution
Answer:
(d) Physical distribution
Explanation: Physical distribution includes all the activities associated with the supply of finished product at every step, from the production line to the consumers and include customer service, order processing, inventory control, transportation and logistics, and packaging and materials.
Question 16.
Which of the following statements is incorrect? [1]
(a) Providing liquidity to securities is one of the functions of stock exchange.
(b) Process of holding shares in electronic form is known as Dematerialisation.
(c) Securities Exchange Board of India performs the regulatory function of controlling insider trading and imposing penalties for such practices.
(d) Capital market consists of Commercial banks, Development banks and Stock exchanges.
Answer:
(c) Securities Exchange Board of India performs the regulatory function of controlling insider trading and imposing penalties for such practices.
Explanation: The main responsibilities of the SEBI are to safeguard the interest of investors in securities, foster market development, and enforce regulations.
Question 17.
One of the following is considered to be an extension of the marketing concept, which apart from customer satisfaction pays attention to ethical and ecological aspects of marketing. Identify the concept. [1]
(a) Selling concept
(b) Product concept
(c) Production concept
(d) Societal marketing concept
Answer:
(d) Societal marketing concept
Explanation: According to the societal marketing concept, a business should make wise marketing choices by taking into account the needs and preferences of customers, the business’s own needs, and the long-term interests of society.
Question 18.
While the product costs set the lower limits of the price for a product, the upper limit of price which a buyer would be prepared to pay is decided by: [1]
(a) Utility and demand of the product
(b) The marketing manager of the firm
(c) The Government
(d) The competitors of the firm
Answer:
(a) Utility and demand of the product
Explanation: If the product has more utility and demand, then the customer can pay higher price for this product.
Question 19.
Which of the following statements about Advertising is incorrect? [1]
(a) It is a personal form of communication.
(b) It is a paid form of communication.
(c) It is a mass selling technique.
(d) It is inflexible as the message can’t be adjusted to the needs of the buyer.
Answer:
(a) It is personal form of communication.
Explanation: It is personal form of communication is the incorrect statement of advertising because it is used for mass communication.
Question 20.
Arrange the steps involved in trading procedure at the stock exchange in correct sequence : [1]
(i) Settlement of order
(ii) Opening of Demat Account
(iii)Placing of order
(iv)Execution of order
(a) (ii), (iv), ( iii), (i)
(b) (ii), (i), (iii), (ii)
(c) (iii), (ii), ( ii), (i)
(d) (ii), (iii), (iv), (i)
Answer:
(d) (ii); (iii); (iv); (i)
Explanation: Option (d) will be the correct sequence of steps involved in trading procedure of the stock exchange.
Question 21.
Top management plans for the entire organisation. According to these plans the organisational structure is developed and staffed. In order to ensure that these plans are executed according to plans, directing is required.
Any discrepancies between actual and realised activities are then taken care of at the stage of controlling. Name and explain the process highlighted above which started at the planning stage itself and is implicit and inherent in all the functions of management in an organisation. [3]
Answer:
The process highlighted in the question is coordination. Coordination ensures that all activities and groups conducting them are in synchronisation with each other.
It is implicit and inherent across all activities as it enables unity of action and harmony among the employees, groups, and departments to achieve the organisation’s objectives efficiently.
Question 22.
Mrs. Ahilya Pasi is the Principal of a prestigious school in New Delhi. The school has a vacancy of a headmistress/headmaster of the junior wing of the school. The senior teachers of the school have the opinion that only internal candidates should be considered for this post.
However, Mrs. Pasi and the management would like to invite applications from external sources too. Briefly explain any three justifications the management can provide to convince the staff for inviting applications of external candidates for the vacant post. [3]
Answer:
Mrs. Pasi and the management justify external sources of recruitment due to the following reasons (any three):
1. Fresh talent: External sources can be beneficial as they can include many candidates with experiences in different fields enabling them to have new ideas and can demonstrate different approaches to work.
2. Dynamic/wider choice: External sources of recruitment provide access to a large pool of talented candidates from diverse backgrounds with fresh outlook and new ideas.
3. Competitive spirit: External sources include experienced candidates that can create an environment for healthy competition between internally existing and external members in the organisation.
Employees can get motivated to perform efficiently that could possibly match the new ideas and methods suggested by the employees recruited through external sources.
4. Less chances of favouritism: External sources allow equal opportunity for participation to all types of individuals and all sections of society thus creating less chance of favouritism or bias.
Question 23.
Explain “Critical point control” with respect to Analysing deviations, a step in the process of controlling. Give a suitable example.
OR
Explain “Management by exception” with respect to Analysing deviations, a step in the process of controlling. Give a suitable example. [3]
Answer:
Critical point control is a systematic monitoring at strategic control points in a process. This means that within a set of tasks in a business activity, managers should identify certain points that play a critical role in ensuring the actual work will be completed as per specific norms.
These are known as Key Result Areas, if attention is not given to these areas, it can lead to unfavourable results or losses to businesses. For example, thermal electric systems need to maintain a certain temperature to generate electricity as overheating can make the electricity systems to catch fire and shut down.
The critical point control for thermal electricity generation is to maintain certain heating temperature to generate sufficient electricity.
OR
Management by exception is also known as control by exception that focuses on identifying and handling specific cases deviating from the predetermined standards or norms.
According to this principle, some deviations that go beyond these standards or norm need to be carried for usually through human intervention. For example, time taken for a production cycle of fabrics to complete in a textile factory is 4 hours but over few weeks the time taken has increased to 8 hours leading to rise in overhead costs.
The management team investigates the deviation and finds problems with ill-maintenance of machines and negligence on part of employees managing the machines.
The management team informs the same to the production team and rectifies the problem by maintaining and cleaning the working environment.
Question 24.
State any three objectives of the Securities Exchange Board of India. [3]
OR
State any three functions performed by the Stock Exchange.
Answer:
Objectives of the Securities Exchange Board of India are as follows (any three):
1. To regulate the activities of stock exchanges that ensures a competitive environment and efficiency in services by maintaining liquidity, safety and profitability of securities in the market.
2. To protect the right of investors and ensuring safety to their investment by providing adequate, accurate and authentic information on a continuous and real-time basis.
3. To prevent fraudulent trading and malpractices by having a balance between self-regulation of business and its statutory regulations.
4. To regulate and develop a code of conduct for intermediaries such as brokers, underwriters, etc., through penalties and legal action and ensuring that the intermediaries obey to the prescribed norms.
OR
The functions of Stock Exchange are as follows (any three):
1. Providing liquidity and marketability to existing securities: Investors can invest their money in stock markets consisting of short-term and long-term securities, which can be converted into cash in a short-span of time.
Availability of ready market for sale and purchase of short-term or long-term securities increase their marketability and enhances liquidity for all kinds of investors.
2. Pricing of securities: Stock exchanges provide a platform to buy and sell securities whose prices are determined based on the demand and supply in the stock exchanges.
Pricing of securities can depend on internal workings of the listed companies like high profitability, or revenue growth, etc., as well as external factors like increase in taxes, inflation and other politico-economic variables.
3. Safety of transactions: Stock exchanges attempt to protect the interests of investors to ensure safety in transactions by making listed companies to abide to the rules and norms set by the stock exchanges. These rules and norms ensure safety of transactions for investors through stock exchanges.
4. Contributes to economic growth: Securities of various companies are purchased and sold in stock exchanges. This process of disinvestment and reinvestment helps to invest in the most productive investment proposal leading to capital formation and economic growth.
5. Spreading of equity cult: Stock exchanges collect, and convey, all kinds of information related to the performance of equities, which encourages people to make sound and well-informed decisions on their investments.
Stock exchanges regulate the process of issuing new securities, ensure transparency in trading securities and educate the public about investments in securities, thus aiming at increasing the number of shareholders or investors in securities and spreading the equity craze.
6. Promotes the habits of savings and investments: Stock exchanges provide lucrative ways and approaches to invest in securities through which investors can attain higher returns which can add up to their savings and further diversified into investments of different securities providing returns at short-term and/or long-term maturity periods.
Question 25.
Enumerate any four benefits of the process by which the aptitudes, skills and abilities of employees to perform specific jobs are increased. [4]
OR
Name the mechanism that attempts to measure certain characteristics of individuals in the process of identifying and choosing the best person out of the number of prospective candidates for the job. Enumerate any three of its types.
Answer:
The process by which the aptitudes, skills and abilities of employees to perform specific jobs are increased is known as training. The benefits of training are as follows (any four):
Improves performance: The performance of trained employees is always better than the performance of untrained employees as in the training programmes their qualities and their capabilities are improved and employees get some experience of working on the job before they are actually assigned the job. This improves their performance and efficiency level.
Attitude formation: Tire training and development aim at moulding the employees so that they can develop positive attitude for the organisation, and to motivate them to be ready to take the initiative and result in better support and cooperation among the employees.
Increase in earning: Improvement in efficient performance of employees helps the employees to earn more.
High morale: Training increases the satisfaction and morale of employees.
Reduce chances of accidents: Training makes employees more efficient so there are less changes of accidents.
OR
The mechanism that measures certain characteristics of individuals in the process of identifying and choosing the best person out of the number of prospective candidates for the job in the selection process. The types of selection processes are as follows (any four):
Aptitude test: Aptitude is the ability to do something or a natural tendency. Accordingly, aptitude tests are designed to measure the hidden qualities of the candidates.
Interest test: Interest test is designed to discover a person’s area of interest by measuring the candidates’ interest in outdoor activities, mechanical, computational, scientific, persuasive, artistic, literary, musical, clerical, social services and skills.
Intelligence test: Intelligence tests aim at testing the candidate’s reception power, memory power, reasoning power, etc. It generally includes verbal comprehension, word fluency, speed of perception, etc.
Personality test: Personality tests aim at determining the personality traits and characteristics. These tests aim at measuring the effect of the candidates’ personality on work performance.
Performance or achievement test: Achievement or performance test is concerned with what a candidate has accomplished or what he/she has already learned.
These tests are designed to determine a person’s knowledge in a specific job area. Achievement tests are mostly available for technicians, administrative personnel, carpenters, etc.
Question 26.
State any four barriers to communication which are concerned with problems and obstructions in the process of encoding and decoding the message into words or impressions. [4]
OR
State any four barriers to communication which are related to authority relationships, rules and regulations of the company.
Answer: Semantic barriers are concerned with problems and obstructions in the process of encoding and decoding the message into words or impressions. These barriers are as follows:
1. Badly expressed messages: This is a result of lack of knowledge on relevant usage of language and words. The barrier is created as a result of wrong choice of words, wrong sequence of sentences, long and confusing sentences and frequent repetitions.
2. Symbols and words: A symbol or word may have different meanings. If the issuer misunderstands it then the communication becomes meaningless.
3. Faulty translation: All employees in an organisation do not necessarily speak the organisation’s medium of working especially in India. Information received from superiors or subordinates is often translated and communicated in a local language to employees. Any carelessness in literal translation becomes a barrier to communication.
4. Technical jargons: Organisations consist of employees representing different capabilities and intelligence. Employees in a technical business emit usually investigate deeply into their technical knowledge that makes them awkward to communicate their knowledge in layperson terms. They express technical jargons which are not easily understood by individuals who are unaware of that field, which become a barrier.
5. Body language and gesture coding: Communication conveyed through body gestures, body language misunderstood. Body language that prevents communication includes a perons’s head lowered, folded arms, or turning their back on you.
OR
Organisational barriers are related to authority relationships, rules and regulations of the company and these are as follows:
1. Organisational policies attempt to determine the relationship among all persons working in an organisation. If these policies are not clearly identified and communicated, then operations may not run smoothly.
2. Organisational rules and procedures which are definite in nature and restrict mobility among managers or subordinates could also deter communication.
3. Status of employees created in a hierarchical framework can act as a barrier to communicate. An employee at a lower rank may feel fearful to convey a message to an employee at a superior level, and may not express himself clearly and in a timely manner.
4. Complexity in organisational structure can also cause barriers to communicate because of large number of managerial levels in the organisation. This may lead to delay in information also possibly leading to loss of transmission.
5. Organisational facilities mean providing basic infrastructure and tools required for working. These facilities include sufficient stationery, telephone, desktops/laptops, printers, etc. Unavailability of such facilities can limit communication and possibly create delays in work.
Question 27.
In Saarthak Steel several initiatives have been taken to further improve the motivation levels ofemployees through designing jobs that include greater variety of work content, providing certain stability about future income and work, providing fringe benefits like housing, medical aid, etc., allotment of shares in line with various incentives. Identify and briefly explain the incentives being given by the organization to the employees. [4]
Answer:
Saarthak Steel have provided financial incentives to their employees in the form of any of the following (any four):
Co-partnership: Under co-partnership employees are allotted the employing company’s shares or equity instead of cash or cash incentives. These shares are issued as employees’ quota at special discounted prices. Employees can become shareholders, can share profits and can also exercise control over the company.
Pay and allowances: Pay means salaries or a fixed amount paid for services to an employee and allowance is an amount of money allotted for food, travel and daily expenses of employees for regular intervals.
Profit sharing: Profit sharing means that a company shares a pre-determined proportion or percentage of their profits with their employees that can possibly create an environment where employees’ contribution in the company’s profits is recognised and boosted.
Perquisites: Perquisites are incidental payments, benefit, privilege or advantage over and above regular income i.e., salary or wages. These can be a tip or gratuity or free use of company car or paid membership to a club.
Retirement benefits: Retirement benefits such as pension are monthly payments made to employees after they have retired from work. These benefits can also include provident fund, insurance and medical benefits for employees which can be availed after retirement.
Question 28.
State any four factors affecting the financial decision that is concerned with raising of finance using shareholders’ funds and borrowed funds. [4]
Answer:
The factors affecting the decision on capital structure are as follows (any four):
1. Cash flow position: Cash flow is the money that is transferred in and out of the business, where cash inflows arise from revenues and returns from investments while outflows occur due to expenses or interest on investments.
This position can be broadly analysed based on current ratio and quick ratio that helps to determine whether companies have enough cash to make short-term cash payments. Capital structure is identified depending upon the nature and cash position of businesses.
2. Interest Coverage Ratio (ICR): Interest coverage ratio determines whether a business can pay interest on outstanding debt. It is calculated by dividing the company’s earnings before interest and taxes for a particular time period by the company’s expenses.
Accordingly, a low interest coverage ratio indicates that the company is not generating sufficient revenues to give nourishment to interest expenses and vice-versa.
3. Debt service coverage ratio: Debt service coverage ratio is calculated as Net Operating Income divided by Total debts service, which means that it is the amount of cash flow available to make annual interest payments on debt.
4. Return on Investments (ROI): Return of investments or ROI deals with the money or profits realised from investments made by a business. It is calculated by dividing net income (after interest and taxes) by total liabilities, which indicates the extent of earnings made from the capital employed in a business. A business’ ability to generate more profits than their overall debt also shows that business’ capability to manage debt and vice-versa.
5. Cost of debt: A business’ capital structure includes the cost of debt, which is the effective rate that the business’ pays on its current debt before or after tax returns.
Effective rate is determined as an overall rate for all debt instruments bonds, loans, mortgages, promissory notes, certificates of deposits, debentures that most involve fixed interest payments at a specified time period.
Question 29.
Krish limited is in the business of manufacturing and exporting carpets and other home decor products. It has a share capital of ₹ 70 lacs at the face value of ₹ 100 each. Company is considering a major expansion of its production facilities and wants to raise ₹ 50 lacs. The finance manager of the company Mr. Prabhakar has recommended that the company can raise funds of the same amount by issuing 7% debentures. Given that earning per share of the company after expansion is ₹ 35 and tax rate is 30%, did Mr. Prabhakar give a justified recommendation? Show the working. [4]
Answer:
Earnings per share = ₹ 35
EPS = Earning after tax / No. of equity shares
35 = Earning after tax / 70,000
Earning after tax =₹ 24,50,000
Interest = 50,00,000 x 7/100 = ₹ 3,50,000
Let the Earning before tax (EBT) = x
EBT-Tax = EAT
X-0.30 x =24,50,000
0.70 x =24,50,000
x =24,50,000/0.70
x =35,00,000
Earning before tax = ₹ 35,00,000
EBIT = Earning before tax + Interest
= 35,00,000 + 3,50,000 = ₹ 38,50,000
ROI= EBIT/Total Investment x 100 = 38,50,000/1,20,00,000 x 100 = 32.08% as ROI (32.08%) > Rate of interest (7%). The company can choose to use trading on equity to increase its EPS. The finance manager was justified in making this recommendation.
Question 30.
Mayank purchased a pack of chocolates of a renowned brand for his daughter from a shop in the nearby market. After consuming the chocolates, his daughter fell sick. He filed a case with the District forum against the renowned brand. He lost the case because of a mistake that he could not provide proof of purchase.
What should be kept in mind by a consumer while purchasing, using and consuming goods and services apart from avoiding the mistake committed by Mayank, in order to enable him/her to achieve the objective of consumer protection? Enumerate any four points. [4]
Answer:
Consumers like Mayank should keep the following in mind while purchasing goods (any four):
1. Consumers should be made informed about their decisions and choices on products or services and should be aware of their rights to exercise them appropriately.
2. In case of any dissatisfaction from consumption of products or services, consumers must file complaints suitably on redressal forums, which was suitably done by Mayank. Consumers need to provide appropriate evidence but cannot exaggerate the loss or defects of products or services.
3. Every buyer should insist on a cash memo/bill when purchasing any product or service. While filing complaints about the products or services, the purchasing bill needs to be presented as evidence of purchase, which was not produced by Mayank in the consumer court.
4. Consumers should look for quality marks on the products or services and insist on quality products in the market. The problems of substandard and adulterated products can be avoided if the consumers do not compromise on the quality of the products or services.
5. Consumers should not be carried away by these advertisements by comparing the actual impact from usage of products or services with whatever was suggested in the advertisements. In case of a discrepancy, consumers should inform the sponsor of the advertisement.
Question 31.
Briefly explain any three of the following techniques of Scientific Management as given by F.W. Taylor: [6]
(a) Method study
(b) Functional foremanship
(c) Standardisation
(d) Differential piece wage system
OR
Briefly explain any three of the following principles of management given by Henry Fayol:
(a) Unity of command
(b) Equity
(c) Remuneration
(d) Initiative
Answer:
(a) Method Study: Method study can be defined as the systematic recording and critical examination of existing and proposed ways of doing work, as a means of developing and applying easier and more effective methods and reducing costs. It aims at eliminating unnecessary elements of operations to obtain the fastest and the best method of performing a specific job.
It involves selecting a specific job to be done or a problem area, defining the job/problem area, recording and collecting relevant information about the job/problem area, considering alternative methods of doing a job or solving the problem, examining and developing relevant processes or solutions, installing or implementing the particular methods and processes to tackle the job/problem area as well as regularly maintain the processes and methods by obtaining feedback and monitoring processes.
(b) Functional foremanship: According to Taylor, functional foremanship is a management technique wherein the duties of a traditional foreman are distributed between several workers. This technique separates the planning function and executive function in an organisation. Functional foremanship is considered to be an extension of the principle of division of work and specialisation.
(c) Standardisation: Standardisation of work means the processes of work are well-integrated, specified or programmed. Standardisation of work attempts to eliminate spoilage and wastage of resources. Accordingly, standardisation of work during production involves consistent form, size composition, methods and quality maintained for all products or services.
(d) Differential piece wage system: Taylor devised the differential piece wage system to motivate the workers by paying more to the most efficient worker. This system differentiated efficiency in terms of high wages and low wages. Workers who are most efficient earned higher wages than workers who were relatively less efficient.
This system focuses on providing incentive to workers that encourages them to improve their performance. This system worked especially for mass production of goods leading to cost minimisation and profit maximisation.
OR
(a) Unity of command: Unity of command implies that every worker or subordinate should receive orders from only one superior. Orders from different superiors may undermine authority and discipline of the concerned superior responsible for a particular activity. Unity of command is meant for avoiding dual subordination or possible conflicts and confusions.
(b) Equity: Equity principle implies that all workers should be treated equally and provided equal opportunity. Equity however does not discount for sternness and forcefulness. Superiors in the organisation should be kind and impartial and should not discriminate in terms of gender, religion, caste, etc. For example, women and men employees should be equally treated with respect and professionalism.
(c) Remuneration: Remuneration refers to financial compensation. According to this principle, financial compensation for work done should be fair to the employees and to the organisation.
Remuneration should be decided on the basis of cost of living, workers’ qualifications and skills, success of the business, general business or market conditions. For example, a HR manager may have a salary of about ? 1 lakh (or more) per month in a company in Mumbai, depending upon the manager’s experience, qualifications, city’s cost of living, etc.
(d) Initiative: This principle implies that workers or subordinates should be given the freedom to take initiative in carrying out the work. They feel satisfied with their jobs and in turn increases efficiency of the organisation.
For example, satisfied employees usually come on time and leave on time ensuring quality of work and maintaining time efficiency without being instructed by the management.
Question 32.
‘The pros and cons of each alternative need to be weighed.’ Name and briefly explain the logical steps in the process of planning which are followed by a manager before performing the step highlighted in the above statement. [6]
OR
Briefly explain the next three steps in the process of planning which the manager will have to have to follow after using conjecture about what might happen in the future.
Answer:
The steps in planning that support the statement ‘The pros and cons of each alternative need to be weighed.’ are as follows:
1. Setting objectives: The first step under planning is to establish objectives for the entire business and then for each of the subordinate work unit (production, administration, finance, legal, IT, etc.).
These objectives have to be set for the long-term as well as the short-term. Correspondingly, outcomes and goals also should be set along with objectives.
The linkages between these three components set the basis for formulating a certain plan that broadly aims at identifying and allocating a business’ relevant resources (raw materials, capital, labour, etc.) in accordance to the requirements of the market or internal working of a business.
2. Considering planning premises: A premise is a statement or a proposition based on certain assumptions about the business environment in which the plan has to be carried out.
The assumptions considered to develop a premise are further based on information gathered from the previous two steps.
Accordingly, forecasting methods are considered while formulating planning premises for determining the market conditions, possible volume (or value) of sales, potential prices of products or services, etc.
A thoroughly developed premise will make planning easy to understand and the business will be well-coordinated during the planning process.
3. Identifying alternatives: The next step involves identifying alternative course of actions or a sequence of activities that can include options depicting comparative costs and benefits, possible opportunities or risks associated with the activities planned for achieving organisational goals and objectives.
A preliminary examination of all these activities could be fruitful to discover prior to implementing the plans and can enable well-informed decision-making.
OR
The steps in the process of planning which the manager will have to follow after using conjecture about what might happen in the future are as follows:
1. Identifying alternatives: This step involves identifying alternative course of actions or a sequence of activities that can include options depicting comparative costs and benefits, possible opportunities or risks associated with the activities planned for achieving organisational goals and objectives.
A preliminary examination of all these activities could be fruitful to discover prior to implementing the plans and can enable well-informed decision-making.
2. Comparing alternatives: The alternatives identified from the previous step needs to be examined for their strengths and weaknesses by weighing them in light of premises and goals.
Some factors that can be considered during the planning process to identify their strengths and weaknesses are costs, possible profits, productivity, quality, competitors’ practices that are legitimate in the market or for customers, etc.
3. Choosinganalternative: Thisstep involves carefully choosing the right plan to achieve thestated goals and objectives of a business. The selection of a plan will be based on thoroughly analysis conducted by the managers of the business and can also go through iterative meetings and discussions.
Usually, more than one plan is chosen with the other plan placed as reserve. If the first plan fails due to some uncontrollable event, the reserved plan can be considered as back up.
Question 33.
Jojo and Jojo is a company known for its consumer business of baby oil and bandages, but many people do not know that the company also runs a medical device and diagnostics business, as well as a pharmaceutical company.
With more than 1,80,000 employees worldwide the company has chosen to share decision making authority with lower levels and place it nearest to the point of action. Therefore the response does not take time.
This propagates the belief that people are competent, capable and resourceful who can get a chance to prove their abilities and enables the company in identifying those executives who have the necessary potential to become dynamic leaders, so that the checking required on decisions taken by lower levels of management is the least.
This makes it possible to evaluate performance at each level and each department can be individually held accountable for their results. By quoting the lines given above identify and briefly explain the benefits of the concept discussed above. [6]
Answer:
The concept discussed in the question is decentralisation and their benefits are as follows:
1. “The company has chosen to share decision making authority with lower levels”: Decentralisation enables empowerment and importance to the role ofsubordinates and all subordinates and employees in an entire organisation are provided decentralised authority.
2. “Response does not take time”: The decision making process is not just restricted to their superiors but also to their subordinates. This can lead to quick and prompt business decisions on situations closest to the subordinates.
3. “Who can get a chance to prove their abilities”. It develops managerial talent for the future also allows managers a chance to prove their abilities and creates a reservoir of qualified manpower that can be considered to fill up more challenging positions through promotion.
4. “The company in identifying those executives who have the necessary potential to become dynamic leaders”- It provides relief ofexcessive workload at the top management and provides an opportunity to learn by taking initiatives. It can implants competitive atmosphere, better participation and encourages training and development of new ideas, approaches and methods.
5. “Checking required on decisions taken by lower levels of managementis the least.” : Top management is relieved from routine work requiring regular monitoring and cross-checking. Instead, it confers these responsibilities on theirsubordinates and can receive periodic updates from them via occasional meetings.
6. “Each level and each department can be individually held accountable”: It ensures that the decisions made by employees who also implement them invariably become responsible and accountable.
The decisions of subordinates are usually confirmed and conveyed to the superiors implying better control over the operations. The superiors identify some control standards for the subordinates to measure their success in finding or implementing solutions to specific issues or problems during operations.
Question 34.
Choco Ltd. offers a wide variety of chocolate products. It has an action program of not selling its products by their generic name but under different names like Choco-Silk Bar, Choco-Munchy and ChocoCrunchy etc. for different customer segments.
All these names have great popularity and acceptability in the markets. As per the company policy the products were offered at reasonable and affordable prices for targeting a mass customer base. During the festive season the company launched a massive promotional campaign to increase its revenue and achieve its communication objectives.
The company introduced free gifts for the customers. Their on-ground sales team delivers the product not only to the departmental stores but also to small shops, so that all segments of customers can easily get the products. They also provide information and support services to customers to ensure repeat sales.
From the viewpoint of the management function, briefly explain any four activities of marketing which the firm will be involved in, apart from the above-mentioned ones it’s already performing. [6]
Answer:
The following marketing activities are conducted by Choco Ltd (using 4 points):
1. Branding (Product mix): The company follows product differentiation by targeted its brand “Choco” to different chocolates targeted towards different customer segments.
This branding approach will create a unique identity by different customer segments towards different chocolates – Choco-Silk Bar, Choco-Munchy and Choco-Crunchy etc. and gain customer loyalty towards the brand leading to great popularity and acceptability for the chocolates in the markets.
2. Appropriate pricing (Price mix): The company maintains an affordable and reasonable pricing for different customer segments based on increased demand and targeting a mass customer base.
The company can manage affordable prices as mass produces to cater to a mass customer base leading to lower costs of production.
3. Proper placement of products (Place mix): The company uses suitable distribution channels to provide their chocolate brand not only in departmental stores but also to small shops to reach out to all customers who can get easily get access to their chocolates and encourage retention of customers by regularly replenishing chocolate supplies.
4. Promotion of chocolates (Promotion mix): The company promoted the chocolates during the festive season stimulating further demand.
Through such promotions the company also provides knowledge and information about existing and/or new products and it enables customers to compare with the competitors’ product features, prices, etc., and enables them to make informed decisions about their chocolate purchases.