Solved Question Paper  for Business Studies Set 3 

 

Question 1.
Rajan has received an order to produce 1,000 units of ladies sandals in his manufacturing unit at Agra. Rajan asks his production manager to set the standards for effective and optimum utilisation of resources. At a point, Rajan evaluates that the production is running late as per the schedule and there is lot of wastage of resources leading to increased cost of production.

He discusses the issues with his production manager and immediately make some amendments by which he is able to reduce the wastage of resources and also complete the order in time. Identify the function of management performed by Rajan here.
(a) Planning
(b) Staffing
(c) Controlling
(d) Directing 
Answer:
(c) Controlling

Explanation: Controlling means ensuring that activities in an organisation are performed as per the plans. Controlling also ensures that an organisation’s resources are being used effectively and efficiently for the achievement of pre-determined goals. Controlling is, thus, a goal-oriented function. Here Rajan is monitoring the pre determined plans to enhance the performances and reduce the wastage of resources.

Related Theory
Planning is deciding in advance what to do and how to do. It is one of the basic managerial functions. Staffing is putting people to jobs. It begins with workforce planning and includes different other functions like recruitment, selection, training, development, promotion, compensation and performance appraisal of workforce. Directing means giving instructions and guiding people in doing work in the organisation.

 

Question 2.
Supreme Ltd. is a generators manufacturing company. The production manager has divided the work among the workers according to their skills and qualities. He systematically allocates the work among the workforce. This results in increased productivity thereby lowering the cost of production. Which importance of organising is highlighted here?
(a) Benefits of specialisation
(b) Clarity in working relationship
(c) Adaptation to change
(d) Effective administration 
Answer:
(a) Benefits of specialisation

Explanation: Organising involves division of work into small tasks and activities performed either by an employee or a specific group of employees. This reduces the work load as well as enhances productivity.

Related Theory
The steps involved in process of organising are:

• Identification and division of work
• Departmentalisation
• Assignment of duties
• Establishing reporting relationship.

 

Question 3.
Hitech Infrastructure Ltd. is a reputed infrastructure company and undertakes and provide turn key projects. The top management spends lot of time in finalising the plans for each and every project to ensure smooth running of the project. Identify the limitation of planning involved here.
(a) Planning may not guarantee success
(b) Planning may not work in a dynamic environment
(c) Planning involves huge cost
(d) Planning is a time-consuming process 
Answer:
(d) Planning is a time-consuming process

Explanation: Planning is essential for business organisations and it is difficult to manage operations without planning. But there are certain limitations to planning. Planning is a time consuming process and sometimes plans to be drawn up take up so much time that there is not much time left for their implementation.

Related Theory
Planning is deciding in advance what to do and how to do.

The steps involved in planning process are:

• Setting objective
• Developing premises
• Identifying alternatives course of action
• Evaluating alternative courses
• Selecting an alternative
• Implement the plan
• Follow-up action

 

Question 4.
Rajan, after completing his MBA, has set up a unit for manufacturing of submersible pumps. For effective marketing or sales of the pumps, he appointed a team of ten salesmen to generate sales in the rural areas. Each sales man is expected to sell at least ten unit of submersible pump in the week’s time. Identify the point of importance of controlling being highlighted in the above case:
(a) Controlling helps in judging accuracy of standards
(b) It ensures efficient utilisation of resources
(c) It helps in improving employee motivation
(d) It facilitates co-ordination in action 
Answer:
(c) It helps in improving employee motivation

Explanation: A good control system ensures that employees know well in advance what they are expected to do and what are the standards of performance. Here, in this case, the salesman were expected to sell ten units in a week’s time. This motivates them and helps them to give better performance.

Related Theory
Controlling is an indespensable function of management It helps the organisation by way of

• Accomplishing organisational goals
• Judging accuracy of standards
• Making efficient use of resources
• Ensuring order and discipline
• Facilitating coordination in action

 

Question 5.
Dharmendra owns a shoe soles factory. Due to a good reputation and demand for his product, he is earning huge profits. He plans to set up a second unit of his factory. He discusses the financial plans with his financial manager. The financial manager explains him that the fixed operating cost of project is low and the cash flow position of his business is strong. Identify the source of finance that Dharmendra should choose for financing his new project.
(a) Debt
(b) Equity
(c) Retained earnings
(d) Loan from bank 
Answer:
(a) Debt

Explanation: Debt financing is a time bound activity where the borrower needs to repay the loan along with interest at the end of the agreed period. In case of good cash flow availability and low operation cost, a company should go for debt financing as it shall be able to repay its debt

 

Related Theory
Investment decision can be long term or short term. A long term capital decision is also called capital budgeting decision. The factors affecting capital budgeting decision are: cash flows of the project the rate of return and the investment criteria involved.

Question 6.
Match the personnels of functional foremanship in Column I with their respective role in Column

Column I	Column II
(A) Instruction card clerk	(i) Timely and accurate completion of job
(B) Speed Boss	(ii) Proper working condition of machines
(C) Gang Boss	(iii) Draft instructions for workers
(D) Repair Boss	(iv) Keeping machines and tool ready for use by workers

(a) A-(i), B-(ii), C-(iii), D-(iv)
(b) A-(ii), B-(iv), C-(iii), D-0)
(c) A-(iii), B-(i), C-(iv), D-(ii)
(d) A-(iv), B-(ii), C-(iii), D-(i) (1)
Answer:
(c) A-(iii), B-(i), C-(iv), D-(ii)

Explanation: Instruction card clerk would draft instructions for the workers Speed boss is responsible for timely and accurate completion of jobs Gang boss is responsible for keeping the machines and tools etc. ready for use by workers Repair boss ensures proper working condition of machines and tools.

 

Question 7.
The act of designing and producing the container or wrapper of a product is known as
(a) Branding
(b) Labelling
(c) Packaging
(d) Promotion 
Answer:
(c) Packaging

Explanation: Packaging refers to the process of designing the product’s package such as container, wrapper etc.

Related Theory
The three levels of packaging are: primary package, secondary package and transportation package.

 

Question 8.
Raghu is into the business of manufacturing and marketing of mobile phones. His products has established a good customer base. Raghu plans to launch laptops as a new product. In order to get feedback from its existing mobile phone customers, he conducted a online survey through a short questionairre. Identify the marketing function being performed by Raghu.
(a) Gathering and analysing market information
(b) Marketing planning
(c) Product designing and development
(d) Packaging and labelling 
Answer:
(a) Gathering and analysing market information

Explanation: Gathering and analysing market information is necessary to identify the needs of the customers and take various decisions for the successful marketing of the products and services. It is important to make an analysis of the available opportunities and threats as well as strengths and weaknesses of the organisation.

Related Theory
Marketing is concerned with exchange of goods and services from producers to consumers in such a way that maximises the satisfaction of customer’s needs. The activities involved in marketing function are marketing planning, product designing and development, standardisation and grading, packaging and labelling, branding, customer support services, pricing of products, promotion, physical distribution transportation and warehousing.

 

Question 9.
Quality certification mark is used in case of jewellery.
(a) ISI
(b) FPO
(c) AGMARK
(d) Hallmark

Answer:
(d) Hallmark

Explanation: The BIS hallmark is a hallmarking system for gold as well as silver jewellery sold in India certifying the purity of metal. It certifies that the piece of jewellery conforms to the standards laid by the Bureau of Indian Standards, the National Standards Organisation of India.

Related Theory

• ISI-Electric goods
• FPO-Food products
• AGMARK- Agriculture product.

 

Question 10.
An organisation is working by clubbing similar related jobs under different departments. The production department is not in direct touch with the sales department. All the departments have limited and specific skills related to their departments. Which type of organisation structure does this organisation has?
(a) Divisional structure
(b) Functional structure
(c) Both (a) and (b)
(d) None of the above 
Answer:
(b) Functional structure

Explanation: Functional structure will have employees with specialised functions and activities to perform depending upon the mission and objectives of the organisation. Here the related jobs are clubbed under different organisations.

Related Theory
In a divisional structure, the organisation structure comprises of seperate business units or divisions. This is suited to those enterprises that are engaged in more than one category of product.

 

Question 11.
Mahesh went to a mall to buy air conditioner. There he got to know an offer on air conditioner which says that “Buy an air conditioner worth ₹ 55000 and get a holiday package worth ₹ 12000 free.” Identify the method of sales promotion.
(a) Discount
(b) Rebate
(c) Product combination
(d) Usable benefit 
Answer:
(d) Usable benefit

Explanation: Usable benefit is that activity of sales promotion in which benefits not related to the product are offered. Here, free holiday package is offered with the sale of airconditioner. This benefit can be used by the consumer some other time.

Related Theory
merits and demerits of sales promotion. The merits of sales promotion are: attention value, useful in new product and synergy in total promotional efforts whereas the demerits of sales promotion are: it reflects crisis and spoils products image.

 

Question 12.
Mary shoes produces economical range of shoes. The reason for shoes being economical is that company believes in large scale production of shoes thereby reducing the cost of output. Being economical, these shoes are affordable for lower income group of people and there is regular huge demand of these shoes in the market. Identify the marketing concept followed by the company.
(a) Production concept
(b) Product concept
(c) Selling concept
(d) Societal marketing concept 
Answer:
(a) Production concept

Explanation: The production concept is based on the belief that businesses would focus on cost-effective products through mass production and customers would prefer their products that were widely and easily available and are inexpensive. Here, in the given case, lower class consumers, are highly attracted to the product and company is focusing on maximum production.

Related Theory
Apart from mere production, the product improvement is the key to profit maximisation and it is called product concept. Under selling concept firms undertake aggressive selling and promotional efforts to make customers buy their products. Societal marketing concept focuses not only on consumer’s needs but also large issues of social welfare.

 

Question 13.
“It is that part of the process of management which is concerned with obtaining, utilising and maintaining a satisfactory and satisfied workforce.” This statement related to which function of management.
(a) Directing
(b) Controlling
(c) Staffing
(d) Organising 
Answer:
(c) staffing

Explanation: Staffing has been described as the managerial function of filling and keeping filled the positions in the organisation structure.

 

Question 14.
identify the related characteristic of directing- it means that every manager can direct his immediate subordinate and take instructions from his immediate boss.
(a) Directing initiates action
(b) Directing takes place at every level of management
(c) Directing is a continuous process
(d) Directing flows from top to bottom 
Answer:
(d) Directing flows from top to bottom

Explanation: Directing is first initiated at top level and flows to the bottom through organisational hierarchy.

 

Question 15.
Which of the following style of leadership provides full scope of initiatives and creativity?
(a) Democratic or Participative leader
(b) Autocratic or Authoritarian leader
(c) Laissezfaire
(d) None of the above 
Answer:
(c) Laissez faire

Explanation: Such a leader does not believe in the use of power unless it is absolutely essential. The followers are given a high degree of independence to formulate their own objectives and ways to achieve them.

 

Question 16.
Match the concepts of financial markets in column I with their respective definitions in column II:

Column I	Column II
(A) Demateriali­sation	(i) Stock market index of Bombay stock exchange.
(B) SEBI	(ii) Process of holding securities is an electronic form.
(C) SENSEX	(iii) Seperate regulatroy body for stock exchange,

(a) A-(i), B-(ii), C-(iii)
(b) A-(ii), B-(i), C-(iii)
(c) A-(ii), B-(iii), C-(i)
(d) A-(iii), B-(ii), C-(i) (1)
Answer:
(c) A-(ii), B-(iii), C-(i)

 

Question 17.
Treasury Bills or T-bills are also known as:
(a) Equity
(b) Money
(c) Zero-Coupon Bonds
(d) Commercial Papers 
Answer:
(c) Zero-Coupon Bonds

Explanation: Treasury bills or T-bills are short term government securities or instruments issued by Reserve Bank of India (RBI) on behalf of the Government of India that which bear zero interest and are known as Zero-coupon Bonds.

Related Theory
Every organisation or company need short term funds for meeting the temporary shortages of cash and obligations which are available from the money

market that deals in monetary assets whose period of maturity is upto one year. The major participants in the market are Reserve bank of India, commercial banks, non banking finance companies, state governments and mutual funds. The various money market instruments are treasury bills, commercial paper, call money, certificate of deposit, commercial bill etc.

 

Question 18.
…………… Ratio takes care of the deficiencies referred to in the Interest Coverage Ratio (ICR).
(a) Debt Service Coverage
(b) Interest Coverage Ratio
(c) Return on Investment
(d) Working capital
Answer:
(a) Debt Service Coverage

Explanation: A higher DSCR indicates better ability to meet cash commitments and consequently, the company’s potential to increase debt component in its capital structure.

Question 19.

Identify the related concept in the above diagram.
(a) Profit maximisation
(b) Wealth maximisation
(c) Financial management
(d) Ratio analysis (1)
Answer:
(b) Wealth maximisation

Explanation: In the above diagram, share prices are increasing constantly each year. Resultantly it will increase the wealth of the shareholder. Maximisation of shareholders’ wealth is the primary objective of the financial management.

 

Question 20.
For the following two statements choose the correct option:
Statement I: Anything that can be offer to sale is called a product.
Statement II: A product posses both the characteristics i.e. tangible and intangible.
Choose the correct option from the options given below:
(a) Statement I is correct and II is wrong
(b) Statement II is correct and I is wrong
(c) Both the statements are correct
(d) Both the statements are incorrect 
Answer:
(c) Both the statements are correct

Explanation: Product is a wider term that includes both the goods and the services. Goods are tangible in nature and services are intangible in nature.

 

Question 21.
Fashion fab Ltd. is diversified into production of garments and shoes. The company produces both the products in the same unit. The unit is managed by Mr. Rawat, who is the unit head and looks after the production of both garments and shoes. This leads to confusions among employees as regards to reporting as well as differentiation of work. Which principle of management, as per Fayol, is being violated here? Why? Explain the principle and the outcome of violation of this principle. (3)
Answer:
The principle of Fayol which is violated here is ‘Unity of Direction’. Unity of Direction is violated here as there should have been separate departments for the two types of products i.e., garments and shoes. This principle says that there should be one boss and one plan. The related activities should be placed in one department. So, there should be separate departments for the production of garments and the shoes. The immediate outcome of the violation of this principle is overlapping of activities which will affect the whole organisation.

 

Question 22.
“Management is a process of getting things done with the aim of achieving goals effectively and efficiently.” Explain the features of management.
OR
“The main objective of any organisation should be to utilise human and material resources to fulfill the economic objectives of a business.” Explain. 
Answer:
The features of management are:
(i) Management is a continuous process: The process of management includes a series of functions that are continuous, composite but separate to each other viz planning, organising, staffing, directing and controlling. These functions are performed by all the managers all the time.

(ii) Management is a group activity: Management ensures teamwork and coordination of individual efforts. It guides these individual efforts towards a common direction to achieve organisational goals.

(iii) Management is a dynamic function: Management is considered as a dynamic function as it has to adapt itself to the changes occurring in the various dimensions of the environment like political, social, legal, economic and technological changes.

OR

The economic objectives of management are as follows:
(i) Survival: The basic objective of any business is survival. Management of an organisation must ensure the survival of the organisation by earning enough revenues to cover costs.

(ii) Profit: Just survival is not enough for any organisation. Every organisation runs with a motive of earning profits. Every business must earn enough profits so that they can cover their costs and bear any risk in the future. Profit is the incentive for which the organisation works.

(iii) Growth: It is important for every business to grow in the long-run. Management must exploit fully the growth potential of the organisation. Growth of a business can be measured in terms of number of employees working in the organisation or increase in the number of products or branches etc.

 

Question 23.
‘Water water everywhere and not a single drop to drink’. What does the statement indicate about staffing. 
Answer:
The statement indicates that staffing aims at recruiting the right person for the right job. Staffing aims at selecting the most suitable candidates among the pool of prospective candidates.
(i) It caters to the human resource requirements of a business by determining the number and types of employees needed to perform various tasks designed in business as per their job profile.

(ii) It analyses the existing number of employed personnel to verify whether they are overburdened or under-burdened with work.

(iii) It compares within departments to establish excess of workforce for dismissal or deposing or transferring employees elsewhere as overstaffing is undesirable.

 

Question 24.
The workers of‘Glory Ltd.’ are unable to work on new computerised machines imported by the company to fulfill the increased demand. Therefore, the workers are seeking extra guidance from the supervisor and the supervisor is overburdened with the frequent calls of workers. Suggest how the supervisor, by increasing the skills and knowledge of workers, can make them handle their work independently. Also state any two benefits that the workers will derive by the decision of the supervisor.
OR
How are the terms “motive”, “motivation” or “motivator” related to each other? 
Answer:
The supervisor can provide ‘technical training’ to the workers regarding the use of machines. With increased and improved knowledge, the workers will be able to work independently. The benefits that the workers will derive by the decision of the supervisor are as follows:
(i) Career growth: Training helps employees to improve their skills and knowledge.

(ii) Increased earnings: Training helps to improve the performance and productivity of workers and with improved performance workers can earn higher wages and incentives.

OR

The term ‘motive’ means a need or desire that causes a person to work, while motivation is the condition of being motivated by a motivator and ‘motivator’ gives a person the reasons to work. In other words we can say that “motivation is the process by which a motivator gives a motive to other person to work hard.

 

Question 25.
Ruby International is a diamond jewellery manufacturing company based in Surat. There is international demand of company’s jewellery and as such the company is earning huge profits as well Apart from sharing profits with the shareholders, the company also take care of its employees. To boost the morale of its employees, the company decided to increase the fringe benefits like car allowance, foreign trips etc. These are in addition to basic incentives, regular increments in salaries every year.

For the elderly members of the organisation, the company decided to include gratuity in addition to the already given benefits like pension and provident fund. The company also decided to give company’s shares at price lower than the market price to the employees on achieving their set targets. Which financial incentives have been highlighted in this case? 
Answer:
The financial incentives highlighted in this case are:
(i) Pay and allowances: The employees are happy as they are getting their salaries timely, their basic incentive, and they are also supported by regular increments in their salaries every year. Here the company is also giving dearness allowance which is a yearly increase in the salary overcoming the impact of inflationary forces.

(ii) Perquisites: The company, however, has decided to increase the fringe benefits like car allowance, foreign trips, etc. One more thing one needs to understand is the difference between perquisites and allowances, where allowances are paid directly in the form of money, perquisites are the benefits given which have their own monetary value, for example a trip to Malaysia funded by the company is a fringe benefit or a perquisite.

(iii) Retirement benefits: For the elderly members of the organisation, the company has decided to include gratuity in the list of benefits along with already given benefits like pension and provident fund.

(iv) Co-partnership/Stock option: It is about providing company’s shares at a price lower than the market price. All these steps will lift the morale of the employees.

 

Question 26.
Raghav plans to set up a laptop manufacturing unit at Chennai. His financial advisor, Tarun advises him to set up a unit to manufacture potato chips. Tarun said that laptops are prone to quick obsolescence and upgradation accordingly will need a heavy fixed capital investment. Therefore, he convinces Raghav to start the business of potato chips. Identify the factor affecting fixed capital requirements which made Raghav to choose potato chips business over laptops. Write some other factors affecting fixed capital requirements. 
Answer:
The factor affecting the to fixed capital requirements which made Raghav to choose the potato chips business over laptop, is technological upgradation. The other factors that affect the fixed capital requirements of a company are as follows:

(i) Nature of business: The kind of activities a business is engaged in has an important bearing on its fixed capital requirements. On one hand, a trading concern does not require to purchase plant and machinery etc. and needs lower investment in fixed assets, whereas on the other hand a manufacturing organisation is likely to invest heavily in fixed assets like land, building, machinery and needs more fixed capital.

(ii) Scale of operations: The amount of fixed capital required by a business varies directly in proportion to its scale of business. A larger organisation operating at a higher scale needs bigger plant, more space etc and therefore, requires higher investment in fixed assets when compared with the small organisation.

(iii) Diversification: If a business enterprise plans to diversify into new product lines, its requirement of fixed capital will increase as compared to an organisation which does not have any such plans.

(iv) Growth prospects: Higher growth of an organised generally requires higher investment in fixed assets. Even when such growth is expected, a business may choose to create higher capacity in order to meet the anticipated higher demand quicker.

 

Question 27.
Deepak is working as a production manager in a automobile company. He is responsible for implementing the plans, drawn up by the managing director, through his team of subordinates and achieve the goals set by the company.
(a) Identify the level of management at which Deepak is working in the organisation.
(b) Explain any four functions that Deepak has to perform at this level of management.
OR
Ranveer’s father has a good business of PVC pipes manufacturing. He wants to go to USA for his MBA but his father thinks he should join the business. On the basis of emerging trends, do you think Ranveer’s father should send him to USA. Give any three reasons in support of your answer. 
Answer:
(a) Deepak is working at the middle level of management in the organisation.
(b) The functions that Deepak has to perform at middle level of management are:

• Interpret the policies framed by top management:
• He has to ensure that his department has the necessary personnel;
• He assign necessary duties and responsibilities to the employees;
• He motivate his subordinates to achieve desired objectives.

OR

Yes, according to me, Ranveer’s father should send him to USA for his MBA because management is being recognised as a profession to a great extent The reasons for the same are as follows:
(i) Well defined body of knowledge: Management is considered to be a well defined body of knowledge that can be acquired through instructions. As a seperate discipline, it contains a set of theories and principles formulated by various management.

(ii) Ethical code of conduct: Management in practice, like other professions, is bound by a code of conduct which guides the behaviour of its members. Therefore, acquiring a degree in management will equip him with good managerial skills and approach.

(iii) Service motive: A good management course will provide him an insight into the multiple goals that an organisation
should purpose. This knowledge will help him to serve both the objectives of profit maximisation and social welfare effectively for his company.

 

Question 28.
What are the reliefs available to consumers under Consumer Protection Act, 2019?
OR
Enumerate the various Acts passed by the Government of India which help in protection of consumer’s interests. 
Answer:
Relief available to consumers under the Consumer Protection Act 2019 are as follows:
The manufacturer must

• Remove the defects in a good;
• Replace the defective good with proper goods;
• Refund the consumers;
• Stop production of hazardous goods;
• Not offer hazardous goods;
• Withdraw hazardous goods from sale;
• Pay compensation and damage;
• Make correction in the misleading advertisements;

OR

The Indian legal framework consists of a number of regulations which provide protection to customers.
Some of these regulations are:
(i) The Consumer Protection Act, 2019: The Consumer Protection, 2019 seeks to protect and promote the interests of consumers. The Act safeguards the consumers against defective goods, deficient services, unfair trade practices, and other forms of their exploitation.

(ii) The Contract Act, 1982: The Act lays down the conditions in which the promises made by parties to a contract will be binding on each other. The Act also specifies the remedies available’to parties in case of breach of contract.

(iii) The Sale of Goods Act, 1990: The Act provides some safeguards and reliefs to the buyers of the goods in case the goods purchased do not comply with expressed or implied conditions or warranties.

(iv) The Essential Commodities Act, 1955: The Act aims at controlling production, supply and distribution of essential commodities, checking inflationary trend in their prices and ensuring equal distribution of essential commodities.

(v) The Bureau of Indian Standards Act, 1986: The Bureau of Indian Standards has been set up under the Act The Bureau has two major activities: formulation of quality standards for goods and their centification through the BIS certification scheme.

 

Question 29.
Explain the benefits of planning to an organisation. 
Answer:
The benefits of planning to an organisation are:
(i) Planning provides direction: Planning acts as a guide for deciding what course of action should be taken to attain the organisational goals in optimum way.

(ii) Planning reduces the risk of uncertainty: Planning reduces the risks of uncertainity which arises due to the dynamic nature of business environment as it enables a manager to anticipate and meet changes effectively.

(iii) Planning reduces overlapping and wasteful activities: Planning serves as the basis for coordinating the activities and efforts of different divisions and individuals. It helps in avoiding confusion and misunderstanding

(iv) Planning promotes innovative ideas: Planning is a mental exercise. It requires high thinking and it is an intellectual process. So, it means the managers are innovative and creative.

(v) Planning facilitates decision-making: In planning, goals are set in advance and predictions are made for future. It helps the manager to look into the future and make a choice amongst various alternative courses of action.

 

Question 30.
“If anything goes wrong with the performance of key activities, the entire organisation suffers. Therefore, the organisation should focus on them.” Explain the statement with suitable example. 
Answer:
The given statement refers to the importance of ‘Ctritical point control’ in order to ensure effective performance of key activities. It may not be either easy nor economical to monitor each and every activity in the organisation. Therefore, every organisation identifies and states its specific Key Result Areas (KRAs) or critical points which require tight control and are Likely to have a significant effect on the working of the business. Any deviations on these points are attended to urgently by the management For example, if in an organisation, the expenditure on stationery goes up by 10%, it can be ignored but if the production cost goes up by 5%, it may call for managerial action.

 

Question 31.
Explain any four points that highlight the importance of controlling. 
Answer:
Controlling is an important and indispensable function of management It aims at managing the managerial actions by setting the standards and identifying the deviations of actual performance as against the set standards. It also ensures optimum utilisation of resources while taking corrective measures for the deviations.

The following factors highlight the importance of controlling:
(i) Achieving organisational goals: Controlling aims at accomplishment of the organisational goals by indicating the deficiencies and suggesting the corrective actions which are to be taken. It helps in taking the right direction for attaining the set organisational objectives.

(ii) Evaluating the standards: Controlling helps in judging the accuracy of the standards adopted by the management A good controlling system enables the manager to check whether the set standards are accurate and feasible. It also helps the organisation to review and revise the standards according to the changing business environment

(iii) Optimum utilisation of resources: Continuous control and monitoring helps in the efficient and optimum utilisation of resources. As each work is done according to the set standards, there is less wastage of resources.

(iv) Employees motivation: By exercising effective control, employees get to know well in advance about what is expected from them and the standards against which their performance will be assessed. This motivates them to achieve the assigned targets in a betterway.

(v) Promoting coordination: Pre-determined standards provide a basis for better coordination for various activities. As the departments are made aware of their duties and tasks, controlling promotes coordination among them. Controlling provides unity of direction while ensuring that the organisational objectives are met Thus, controlling is an important function performed by all the managers.

 

Question 32.
Mr. Sawant is the Managing Director of “Business, com.” The company has diversified operations in field of software development, digital marketing, e-business, etc. Each division is managed by the division head who reports to the managing director. In this organisation, synchronisation of efforts is easy and all the functions related to a particular product are integrated with in one department.
(a) Identify the type of organisation structure.
(b) State the advantages of this type of structure. 
Answer:
(a) The type of organisation structure is divisional structure.

(b) The advantages of divisional structure are as follows:
(i) Divisional structure permits full use of specialised production facilities, personal skills and specialised knowledge of production managers is focussed and fully utilised within the division.

(ii) Responsibility for poor performance of the division can easily be fixed on the divisional heads. They are accountable for revenue, costs and profits of their division.

(iii) It promotes flexibility as every division works as a separate unit and is independent. The division head gets the right of taking any decision regarding his division on his own without consulting other divisional heads.

(iv) It facilitates expansion and growth as new divisions can be added without interrupting the existing operations by merely adding another division.

 

Question 33.
Explain the functions of Financial Market.
OR
Explain the functions of Stock Exchange. 
Answer:
Financial markets play an important role in the allocation of scarce resources in an economy by performing the following important functions.
(i) Mobilisation of savings and channeling them into the most productive uses: A financial market facilitates the transfer of savings from savings to investors. It gives savers the choice of different investments and thus, helps to channelise surplus funds into the most productive use.

(ii) Facilitate price discovery: The forces of demand and supply help to establish a price of commodity or service in the market In the financial market the households are suppliers of funds and business firms represent the demand. The interaction between them helps to establish a price for the financial asset which is being traded in that particular market.

(iii) Provide liquidity to financial assets: Financial markets facilitate easy sale and purchase of financial assets. They provide liquidity to financial assets, so that they can be easily converted into cash whenever required.

(iv) Reduce the cost of transactions: Financial markets provide valuable information about securities being traded in the market It helps to save time, effort and money that both buyers and sellers of a financial asset would have to otherwise spend to try and find each other.

OR

The functions of stock exchange are as follows:
(i) Ensures liquidity and marketability of existing securities by providing a ready and continuous market for the sale and purchase of securities.

(ii) Helps in determining the prices of the securities through the forces of demand and supply.

(iii) It promotes the habit of saving and investment among the general public

(iv) It provides a legal framework for fair and safe dealings.

(v) It helps the companies in raising finance thus facilitating capital formation and economic growth.

(vi) It provides scope for healthy speculation in a controlled and restricted way.

 

Question 34.
Bshell Pvt Ltd. is a reputed company which sells various goods such as cosmetic, fruits and vegetables and clothes. The company also has a chain of retail stores known as Bshell fresh. Despite high competition, Bshell has succeeded in creating demand for its products, giving the company power over prices through product differentiation, innovative advertising and ensured brand loyalty. In the context of above case:
(a) What is product differentiation?
(b) Name any one function of marketing that facilitates product differentiation.
(c) Identify the component of promotion mix being used by the company by quoting lines from the paragraph.
(d) Describe briefly the pricing objective pursued by the company.

OR

“To your taste” is a famous retail chain selling a large variety of products in the Indian market. Their products include chips, biscuits, sweets, and squashes, it charges a comparatively higher price than its competitors as it sells quality products. Besides, it offers regular discounts to its customers and easy credit terms to its retailers. It has a chain of its own retail shops.

It also sells its products through various grocery stores so that the products are made available to customers at the right place, in the right quantity and at the right time. It regularly uses different communication tools to increase its sales. The above paragraph describes the variables used by “To your taste” to prepare its market offering. Identify and explain the variables to prepare the market offering. 
Answer:
(a) Product differentiation is a strategy used by the marketers to gain an edge over its competitors by creating a distinguished perception of the product in the minds of the potential buyers in terms of its utilities.

(b) Branding is a function of marketing that facilitates product differentiation.

(c) Advertising is the component of promotion mix being used by the company “giving the company power over prices through product differentiation, innovative advertising and ensured brand loyalty.”

(d) Attaining product quality leadership: Besides aiming at profit maximisation as its pricing objective, Bshell seeks to establish a unique place for its products in the market by offering superior quality products which can be easily distinguished from its competitors. As a result, it is able to use differential pricing i.e. fixing up relatively higher prices for its products.

OR

The combination of variables used by “To your taste” to prepare its marketing offerings are as follows:
(i) Product: Their products include chips, bisciuts, sweets and squashes. A product is anything that can be offered to a market to satisfy its needs or wants in consideration of price. A product includes physical product, handling grievances, after sales service etc Every marketer needs to constantly review and revise its products in order to enchance customer’s satisfaction and have a competitive edge.

(ii) Price: “It charges a comparatively higher price than its competitors.” Price is the monetary value paid in consideration for purchase of a product or service by a buyer to its seller. It is a very crucial decision for the marketers as consumers are very sensitive to the pricing. The factors affecting price determination are cost of product the utility and demand, extent of competition in the market government and legal regulations, pricing objectives and marketing methods used.

(iii) Place: “It has a chain of its own retail shops and it also sells its products through grocery shops.” Place is considered as an important element of marketing mix because it includes all those activities that help in making the goods and services available to the prospective buyers in the right quantity, at the right time and in right condition.

(iv) Promotion: “It regularly uses different communication tools to increase its sales.” Promotion refers to the set of activities undertaken by a marketer to inform the prospective buyers about the product and persuading them to make a purchase. The various components of promotion mix are advertising, sales promotion, personal selling and public relation.

 

Solved Question Papers for Business Studies Set 4

Time : 3 Hr.
 

Question 1.
Madhvi took her daughter Kia for shopping to ‘Mega Mart’ to buy her a dress for her birthday party. She was delighted when on payment of the dress she got a bag along with the dress free of cost. Identify the technique of sales promotion used by the company.
(a) Rebate
(b) Discount
(c) Product combination
(d) None of the above 
Answer:
(c) Product combination

Explanation: Product combination is a tool of sales promotion under which along with the main product some other product is offered to the customer as a gift Here, in the given case, customer is getting a bag along with the dress, as a freebies i.e. an additional product hence, we can identify the technique of sales promotion used by the company as product combination.

Related Theory
Some other commonly used sales promotion activities are rebate, discount, money back offer, combination, instant techniques with assured gifts, free service coupons, full finance, free samples and contests etc. Rebate is the offering of special prices for product by the seller. It is partial refund of the cost of an item. Discount is selling the product at less than listed price.

 

Question 2.
Mr. Raghav is the General Manager in a automobile components manufacturing company. He is facing some domestic problems and most of the times he is busy thinking about the problems and mentally pre-occupied in the same. Ajay Sharma, the Production Manager discusses some production strategies with him to reduce the cost of production and also to increase the quality of the products.

Since Mr. Raghav’s mind is pre-occupied in his problems he is unable to understand the strategies and respond accordingly. Ajay Sharma is unable to implement the same in the production. Identify the communication barrier
(a) Psychological barrier
(b) Semantic barrier
(c) Organisational barrier
(d) Personal barrier 
Answer:
(a) Psychological

Explanation: Psychological or emotional
barriers are mental walls that come as a hindrance in openly communicating the views and thoughts to others. Psychological barriers are due to mental limitations created by one’s own self This .case falls into the category of lack of attention case of emotional barrier. In this case, the receptor is preoccupied with some other work or is in his thoughts, he does not listen to the message attentively leading to barriers to communicate easily.

Related Theory
Semantic barriers are concerned with problems and obstructions in the process of coding and decoding of message into words or impressions Organisational barriers are related to organisation structure, authority relationships, rules and regulations Personal barriers are related to fear of challenge to authority, lack of confidence of superior or subordinates unwillingness to communicate and lack of proper incentives

 

Question 3.
This concept of control management is based on the belief that if you try to control everything, you may end up controlling nothing.
(a) Critical point control
(b) Key result areas
(c) Management by exception
(d) Deviations 
Answer:
(c) Management by exception Explanation: Management by exception is an important principle of control management based on the belief that an attempt to control every thing result in controlling nothing. Thus, only significant deviation which go beyond the permissible limit should be brought to the notice of management.

Related Theory
While analysing deviations in the controlling process it is important to determine the acceptable range of deviations. Deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas.

 

Question 4.
Which of the following is not an element of directing?
(a) Motivation
(b) Delegation
(c) Leadership
(d) Communication 
Answer:
(b) Delegation

Explanation: Elements of directing are: supervision, motivation, leadership and communication. Delegation refers to the downward transfer of authority from a superior to a subordinate. It is an organisational function.

Related Theory

• Motivation means inducing to act in a manner to achieve the end results
• Leadership is the ability to influence people to maximum contribution to achieve organisational goals.
• Communication is the transfer of information among people to reach common understanding.

 

Question 5.
Business environment means the sum total of all individuals, institutions and other forces that are outside the control of a business enterprise but that may affect its performance. Which of the following does not characterise the business environment?
(a) Uncertainty
(b) Employees
(c) Complexity
(d) Relativity 
Answer:
(b) Employees

Explanation: Business environment is defined by various external factors that define the business and may affect the performance of the business. These features are outside the control of a business enterprise and hence considered external in nature. Uncertainty, Complexity and Relativity are three of such features. Here, an employee is an internal factor and not an external factor. Hence, it is not part of the business environment

Related Theory
Inter-relatedness, specific and general forces totality of external forces and dynamic are other features that characterise the business environment

 

Question 6.
“A collection of diverse individuals with different needs but working towards fulfilling the common organisational goals”, this statement highlights which characteristic of management?
(a) Management is a goal oriented process
(b) Management is multi dimensional
(c) Management is a continuous process
(d) Management is a group activity 
Answer:
(d) Management is a group activity

Explanation: Every member of the organisation has a different purpose for joining the organisation but as member of the organisation they work towards fulfilling the common organisational goals. This requires team work and coordination of individual effort in a common direction.

Related Theory
Management is the process of working with and through others to effectively achieve organisational objectives by efficiently using limited resources in the changing environment

 

Question 7.
Ary a Ltd. a reputed laptop manufacturer needs ₹ 15 crores as additional capital to expand its business. Mohit Goyal, the CEO of the company wanted to raise funds through equity. On the other hand, the Finance Manager, Karan Dixit said that the public issue may be expensive on account of various mandatory and non-mandatory expenses. Therefore, it was decided to allot the securities to institutional investors. Name the method through which the company decided to raise additional capital.
(a) Private placement
(b) Offer for sale
(c) Offer through prospectus
(d) None of these. 
Answer:
(a) Private placement

Explanation: Private placement is the allotment of securities by a company to institutional investors or some selected individuals. As the company decided to allot securities to institutional investors, this method of raising capital is Private Placement It is quicker and cheaper method to raise capital through private offering of securities as against to a public issue (equity).

Related Theory
Under the offer to sale method, a company sells securities at an agreed price to brokers who, in turn, resell them to the investing public. Raising capital by inviting subscriptions from public through issue of prospectus is Offer through Prospectus

 

Question 8.
Match the concepts of financial markets in column I with their respective definitions in

Column 1	Column II
(A) Dema­terialisation	(i) Stock market index of Bombay stock exchange
(B) SEBI	(ii) Process of holding securities is an electronic form
(C) SENSEX	(iii) Seperate regulatroy body for stock, exchange.

(a) A-(i), B-(ii), C-(iii)
(b) A-(ii), B-(i), C-(iii)
(c) A-(ii), B-(iii), C-(i)
(d) A-(iii),B-(ii),C-(i) (1)
Answer:
(c) A-(ii), B-(iii), C-(i)

Explanation: Dematerialisation of securities is holding securities in electronic book entry form to avoid theft, forgery, transfer delays, and time involved in paper work.

Securities and Exchange Board of India (SEBI) was established in 1988 as an interim administrative body to promote orderly and healthy growth of securities market.

SENSEX is a free float market weighted stock market index of 30 well established and financially sound companies listed on Bombay Stock Exchange.

 

Question 9.
Which of the following training is not required in case of internal source of recruitment?
(a) Vestibule training
(b) Apprenticeship training
(c) Coaching
(d) Induction training 
Answer:
(d) Induction training

Explanation: Induction training is a type of training given to help a new employee in settling down quickly into the job by becoming familiar with the people, surrounding job etc. In internal source of recruitment the employee is already acquainted with the surrounding and atmosphere in the organisation and hence does not need any induction training.

Related Theory
Vestibule training is done to make the employees learn their jobs on the equipment they will be using but away from the actual work floor. Apprenticeship training put the trainee under the guidance of a master worker to acquire higher level of skill. In the coaching method of training, the superior guides and instructs the trainee as a coach

 

Question 10.
Shobhit, an experienced stock broker advised his client to invest in share of High Rise Ltd., as the company has declared high dividends since an increase in dividends is perceived as a good news and stock prices react positively to it. Identify the related factor of dividend decision being described in the above lines:
(a) Tax rate
(b) Growth opportunities
(c) Stock market reactions
(d) Access to capital market 
Answer:
(c) Stock market reactions.

Explanation: Investors view an increase in dividend as a good news and stock price react positively to it.

Related Theory
Tax rate effects the dividend decision in a way that though the dividend is free of taxes in the hands of shareholders but dividend distribution tax is levied on companies.

Companies having growth opportunities retain more money out of their earning so as to finance the required investment The dividend in these companies is smaller.

Large companies has easy access to capital market and rely less on retained earnings. As such they declare high dividends

 

Question 11.
Abhishek Ltd. is involved in manufacturing of cotton clothes. It has been consistently earning good profits for many years. This year too, it has been able to generate 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 receive a regular income from their investments. It has taken a loan of ₹ 50 lakhs from ICICI Bank 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 of the profits should be retained and how much has to be distributed by the company.

What kind of financial decision is made in Abhishek Ltd?
(a) Investment Decision
(b) Dividend Decision
(c) Financing Decision
(d) None of these 
Answer:
(b) Dividend Decision

Explanation: Dividend decisions are concerned with deciding the amount of profits of a business to be distributed among their owners or shareholders. This also implies that decision-making is directed towards the amount of earnings a business can retain.

Related Theory
Factors affecting dividend policy decisions are:

• Legal constraints
• Amount of earnings
• Stability of earnings
• Stock market reaction
• Access to capital markets
• Contractual constraints etc

 

Question 12.
A recently started software company is doing very well and planning its expansion in near future. The company has distributed half of its profits to the shareholders and kept half of it with itself. Identify the financial decision taken by the company
(a) Dividend decision
(b) Financing decision
(c) Investment decision
(d) Both (a) and (b) 
Answer:
(a) Dividend decision

Explanation: This is an example of dividend decision. It involves deciding how much of the profit (after tax), earned by the company, can be distributed to the shareholders and how much should be retained in the business. Here, the company decided upon distributing fewer profits so that it can invest in the expansion of the business.

Related Theory
Financing decision is the decision about how much of finance (debt or equity based) should be raised from available many long term sources Investment decision is how a firm invests its funds in different assets to earn the highest possible return for their investors For example, making an investment in a new machine to replace an existing one or acquiring a new fixed asset or opening a new branch.

 

Question 13.
The impact of financial leverage on the profitability of a business can be seen through which analysis?
(a) EAT-EPS
(b) EBIT-EPS
(c) EPS-EBIT
(d) EBT-EPS 
Answer:
(b) EBIT-EPS

Explanation: Financial leverage is computed as D/ E or D/D + E when D is the Debt and E is the Equity. As the financial leverage increases, the cost of funds declines because of increased use of cheaper debt but the financial risk increases. The impact of financial leverage on the profitability of a business can be seen through EBIT-EPS (Earning before Interest and Taxes-Earning per Share)

 

Question 14.
Which of these is a factor affecting capital structure decision?
(a) Debt Service Coverage Ratio
(b) Interest Coverage Ratio
(c) Cash Flow Position
(d) All of the above 
Answer:
(d) all of the above

Explanation: Deciding about the capital structure of a firm involves determining the relative proportion of various types of funds. This depends on various factors. For example, debt requires regular servicing. Interest payment and repayment of principal are obligatory on a business.

 

Question 15.
Which of the following statements is not true with regard to capital market?
(a) The funds are raised for a short period of time.
(b) Both debt and equity funds can be raised.
(c) It is classified into two types.
(d) All of the above. 
Answer:
(a) The funds are raised for a short period of time.

Explanation: The term capital market refers to facilities and institutional arrangements through which long-term funds, both debt and equity are raised and invested.

 

Question 16.
Management should find ‘one best way’ to perform a task. Which technique of scientific management is defined in this statement?
(a) Time study
(b) Motion study
(c) Method study
(d) Fatigue study 
Answer:
(c) Method study

Explanation: Management should find the best method to perform a particular task. The best method is one which gives maximum output with minimum wastage of resources.

 

Question 17.
Statement I: The consumer has a right to get relief in case the product or service falls short of his expectations
Statement II: The consumer does not have a right to file a complaint and to be heard in case of dissatisfaction with a good or a service.
Choose the correct option from the options given below:
(a) Statement I is correct and II is wrong
(b) Statement II is correct and I is wrong
(c) Both the statements are correct
(d) Both the statements are incorrect 
Answer:
(a) Statement I is correct and II is wrong

Explanation: The consumer has a right to file a complaint and to be heard in case of dissatisfaction with a good or a service.

 

Question 18.
The Consumer Protection Act, 1986 seeks to protect and promote the interests of ………………
(a) Consumers
(b) Marketers
(c) Both
(d) None of the above 
Answer:
(a) Consumers

Explanation: The Act provides safeguards to consumers against defective goods, deficient services, unfair trade practices, and other forms of their exploitation

 

Question 19.
…………..is non-paid form of promotion:
(a) Advertising
(B) Sales promotion
(C) Publicity
(D) Personal selling 
Answer:
(c) Publicity

Explanation: Publicity is a non-paid and non-personal promotional tool This is because it generates awareness about the product of the company without the direct involvement of the company and it is free of cost for the company.

 

Question 20.

Identify the dimension of the business environment which has made the major changes in the banking sector.
(a) Technological
(b) Social
(c) Political
(d) Economic 
Answer:
(a) Technological

Explanation: The above situation shows the withdrawn of money via ATM. It is a major changes happened in banking sector due to technological advancement

 

Question 21.
Discuss the limitations of planning.
OR
Explain the first three steps in the process of planning. 
Answer:
The limitations of planning are as follows: (any three)
(i) Planning leads to rigidity: Once plans are made to decide the future course of action and communicated to the team, the manager may not be in a position to change them.

(ii) Planning may not work in a dynamic environment: Business environment is dynamicasitkeepsonchanging continuously. The orginasation has to adapt itself to these changes because it is difficult to forecast the future changes with absolute accuracy. The dynamic environment may sometimes lead to failures of plans.

(iii) Planning reduces creativity: Planning is done by the management and the employees belonging to the middle and lower levels of management has to follow these plans. They are not allowed to change the plans made by the superiors. Thus, it reduce the initiative and creativity in the employees.

(iv) Planning involves huge costs: Planning process involves lot of cost in terms of time and money because it is an intellectual process and companies need to hire the professional experts to carry on this process.

(v) Planning is a time-consuming process: Planning involves collection, analysis and interpretation of data, which is a very time consuming process. Due to such process, sometimes decisions gets delayed, opportunities are lost and there is not much time left for the implementation of plans.

OR

The first three steps involved in the planning process are:
(i) Setting objectives: The first and foremost step in planning process is setting objectives which an organisation wants to achieve. They may be set for the entire organisation and each department or unit within the organisation. Objective should be time- bound, clear and specific

(ii) Developing premises: It reflects the assumptions about the future that the manager is required to make since the future is uncertain.

(iii) Identifying alternative courses of action: All the alternative courses of action should be identified through which the desired goats can be achieved.

 

Question 22.
Explain how supervision helps in optimal utilisation of resources.
OR
“Leadership is required only for less efficient subordinates”. Do you agree? Give any four reasons to support your answer.
Answer:
Supervision is the process of guiding the efforts of employees and other resources to accomplish the desired objectives. It means overseeing what is being done by subordinates and giving instructions to ensure optimum utilisation of resources and achievement of work targets.

Supervising is continuously required at all levels of management that involves establishing performance schedules and standards, for work to proceed in a particular manner and a consistent level of performance is maintained. This ensures that relevant resources are allocated and utilised especially by subordinates in the lower levels who are mainly responsible for working and completing the defined tasks and activities.

OR

No, I do not agree with this. The reasons for my disagreement are as follows:
(i) Clear vision: Leadership sets a clear vision and communicates them effectively to all subordinates at all levels of management

(ii) Effective planning: Leadership entails generating a structured plan of action every day that will effectively meet pertinent goals on a given day.

(iii) Inspiration and motivation: Leadership involves demonstrating daily tasks, coaching, providing immediate feedback, recognising accomplishments, etc., that inspires and motivates subordinates/ colleagues at all levels to restore and revive commitment and enthusiasm in an organisation.

(iv) Employee relations: Leadership entails an open and engaging relationship between the leader and their team members and develops a sense of ownership and a close alignment between individuals and team objectives.

Caution
Students should not misunderstood supervision and leadership.

 

Question 23.
A company was manufacturing solar panels for charging of mobiles, which were in great demand. It was found that target of producing 500 solar panels a day was not met by the employees. On analysis, it was found that the workers were not at fault. Due to non availability of raw materials, the company was not able to achieve set targets and alternative arrangements were needed.
(a) Identify the function of management discussed above.
(b) State the steps in the process of the function identified which are discussed in the above paragraph. 
Answer:
(a) The function of management discussed above is controlling.

(b) The steps in the process of controlling identified in the above paragraph are:
(i) Setting standards of performance: The first step in controlling process is setting up of performance standards. The company has set a target of producing 500 solar panels.

(ii) Measurement of actual performance: Once performance standards are set, the next step is measuring actual performance. On analysis, it was found that targets were not met by the employees

(iii) Comparing actual performance: After the actual performance is measured, it can be compared with the pre-defined standards. This helps in assessing whether there are any deviations / deficiencies in performance.

(iv) Analysing deviations: With the comparison of the actual performance with set standards, deviations in performance are identified.

 

Question 24.
Concept and Styles is a company manufacturing office furniture. The company choose to diversify its operations to improve its growth potential and increase market share. As the project was important, many alternatives were generated for the purpose and were thoroughly discussed amongst the members of the organisation.

After evaluating the various alternatives Amarjeet, the managing director of the company decided they should add “interiors and furnishings” as a new line of business activity. Name the framework, which the diversified organisation should adopt, to enable it to cope with the emerging complexity. Give reason in support of your answer.
Answer:
To cope with the emerging complexity, the diversified organisation should adopt divisional structure of organisation. This structure is suitable for the diversified organisation because in a divisional structure, the organisation structure comprises of separate business units or divisions.

Product specialisation helps in the development of varied skills in a divisional head and this prepares him for higher positions. Divisional heads are accountable for profits, as revenues and costs related to different divisions can be easily identified. It facilitates expansion and growth as new divisions can be added without interrupting the existing operations.

 

Question 25.
Scientific Equipments Ltd, a laboratory equipment manufacturer, adopted several ways of training to improve the quality and quantity of output and provide job satisfaction.
(i) Mr. Anthony was provided a dummy model of machinery to do practice on it.

(ii) Ms. Ghosh was shifted from purchase department to production department for a short interval of time.

(iii) Mr. Sameuls was asked to work with an expert for a specific time period so that he can learn by observations.

(iv) Ms. Banerjee was provided study material so that she goes through these units by answering the questions and fill in the blanks.

(v) Mr. Rao was in the company so that he could practice the theoretical knowledge acquired by him from his college. Identify which techniques of training were used and for whom by Scientific Equipments Ltd. Classify them as On-the-job training and Off-the-job training. 
Answer:
Training refers to the process of imparting necessary skills and knowledge to the employees to enhance their level of performance. It involves organised procedures by which employees gain knowledge and special skills to accomplish a particular job. Training provides benefit to both the employees as well as the organisation. There are two methods of training; on-the-job training and off-the-job training.

On the-job training is a form of training provided at the workplace during the performance of the actual job whereas when training is provided outside the actual work place, it is called off- the-job-training.

Employees	Training method	Classification
(i) Mr. Anthony	Vestibule training	Off-the-Job Training
(ii) Ms. Ghosh	Job rotation	On-the-job Training
(iii) Mr. Sameuls	Coaching	Off-the-Job Training
(iv) Ms. Banerjee	Programmed instruction	Off-the-Job Training
(v) Mr. Rao	Internship training	Off-the-Job Training

 

Question 26.
Explain the features of planning. 
Answer:
The features of planning are following:
(i) Planning is pervasive: It is pervasive as it is required at each level of management (/’.e., top, middle, or operational level) as well as in all departments of all organisation. It is not
an exclusive function of top management. Planning is what all managers do at all levels.

(ii) Planning is a continuous process: Plans are made for a specific time period i.e., for a month or a quarter or a year. Once a plan is implemented and the goal is achieved, the organisation frames new plans. New plans are made as per the requirements of the organisation. Hence, planning is a continuous process.

(iii) Planning is primary function of management: Planning is the foundation of all other functions of management. All other functions of management are performed under the framework of planning. Thus, planning precedes other functions of management Thus, planning is also known as primary function of management

(iv) Planning focuses on achieving objective: Planning is a purposeful activity. It has no meaning unless it contributes to the achievement of predetermined organisational goals.

Caution
Do not write excessive explanation of the points.

 

Question 27.
Explain any four points of importance of consumer protection from the point of view of business.
OR
State the responsibilities of a consumer. 
Answer:
The importance of consumer protection from the point of view of business are:
(i) Long term interest: For any business, consumer satisfaction is essential In present times, with increasing competition, consumer satisfaction has become the most important. As the organisation takes care of the interests of the consumers, it builds goodwill and reputation in the market This in turn, helps in increasing the sales and profits of the business. Thus, protecting . consumer’s interests, benefits the business in the long-run.

(ii) Business uses society’s resources: Business organisations use resources which belong to the society. Thus, they have a responsibility to supply such products and render such services which are in public interest and would not impair public confidence in them.

(iii) Social responsibility: A business has social responsibilities towards various interest groups. Business organisations make money by selling goods and providing services to consumers. Thus, consumer form an important group among the many stakeholders of business.

(iv) Moral justification: It is the moral duty of any business to take care of consumer’s interest and avoid any form of their exploitation.

OR

The responsibilities of a Consumer are:

1. Be aware about various goods and services available in the market
2. Buy only standardised goods and check for standardisation mark.
3. Be aware about the risks associated with the products and services and use them prudently.
4. Read the labels on the product carefully.
5. Assert oneself to ensure that they get a fair deal.
6. Be honest in their dealings.
7. Ask for a cash memo on purchase of goods or services.
8. File a complaint in an appropriate consumer forum, in case of a shortcoming in the quality of goods purchased or services availed.
9. Form consumer societies Which would play an active part in educating consumers and safeguarding their interests.
10. Show concern for the environment

 

Question 28.
Param and Govinda after finishing their postgraduation decided to start their own Chinese cafeteria. They also thought of providing food within ten minutes through the use of internet. They discussed the idea with their Professor Mr. Sharma who liked the idea and suggested them to first analyse the business environment which consists of investors, competitors and other forces like social, political etc. that may affect their business directly or indirectly.

He further told them about the technological improvements and shifts in consumer preferences that were taking place and hence they should be aware of the environmental trends and changes which may hinder their business performance. He emphasised on making plans keeping in mind the threat posed by the competitors, so that they can deal with the situation effectively. This alignment of business operations with the business environment will result in better performance.
(a) Identify and explain the component of business environment highlighted in the above para.

(b) State any two features of business environment as discussed by Professor Sharma with Param and Govinda.

(c) Also state two points of importance of business environment as stated by Professor Sharma in the above situation.

OR

Explain the role of political environment in shaping the business. 
Answer:
(a) Technological environment is the component of business environment highlighted in the abovepara.Technological environment includes forces relating to scientific improvements and innovations which provide new ways of producing goods and services and new methods and techniques of operating a business.

(b) The two features of business environment as discussed by Professor Sharma with Param and Govinda are as follows:
(i) Dynamic nature: Business environment is dynamic in nature and keeps on changing due to technological upgradations, shifts in consumer preferences or increase in competition in the market.

(ii) Inter-relatedness: All the elements of business environment are closely inter-related. Therefore, any change in one element may necessitate corresponding changes in the other elements as well

(c) The two points of importance of business environment as stated by Professor Shorma in the above situation are described below:

(i) It enables the firm to identify opportunities and getting the first mover advantage: The dynamic business environment provides numerous opportunities for a business to evolve as per the changing needs. Therefore, early identification of the forthcoming opportunities helps an enterprise to be the first to exploit them instead of losing them to the competitors.

(ii) It helps the firm to identify threats and early warning signals: Sometimes the change in the external environment may pose as a threat and hinder a firm’s performance. Awareness about the business environment helps the managers to identify such threats on time and take necessary decisions and action.

OR

Political environment includes political conditions such as general stability and peace in the country and the attitude of the elected government representatives towards businesses. Political stability builds confidence among business community while political instability and bad law and order situation may bring in uncertainty in business activities A business functions within the framework of political environment.

Generally, governments policies change with the change of government in power. Business is required to understand and follow such changes and also respect the orders that fiduciary gives from time to time.

 

Question 29.
Due to proper organising and division of work, a company goes for systematic assignment of jobs among the employees.
(a) Which importance of organising is highlighted here?
(b) Explain four more importance of organising. 
Answer:
(a) The importance of organising highlighted here is ‘Benefits of specialisation. Benefits of specialisation: Organising leads to a systematic allocation of jobs among the workforce. This reduces the workload as well as enhances productivity because of the specific workers performing a specific job on a regular basis. Repetitive performance of a particular task allows a worker to gain experience in that area and leads to specialisation.

(b) The other importance of organising are:
(i) Clarity in working relationships: The establishment of working relationships clarifies lines of communication and specifies who is to report to whom. This removes ambiguity in transfer of information and instructions. It helps in creating a hierarchical order thereby enabling the fixation of responsibility and specification to the extent of authority to be exercised by an. individual.

(ii) Optimum utilisation of resources: Organising leads to the proper usage of all material, financial and human resources. The proper assignment of jobs avoids overlapping of work and also makes possible the best use of resources.

(iii) Adaptation to change: The process of organising allows a business enterprise to accommodate changes in the business environment It allows the organisation structure to be suitably modified and the revision of inter relationships amongst managerial level to pave the way for a smooth transition

(iv) Effective administration: Organising provides a clear description of jobs and related duties. This helps to avoid confusion and duplication. Clarity in working relationships enable proper execution of work. Management of an enterprise thereby becomes easy and this brings effectiveness in administration.

 

Question 30.
Swastik Fragrances Ltd. is a large creditworthy company that manufactures and exports incense stick and perfumes. The company is exporting its products to Middle East countries and plans to expand its exports to European countries.

The company has recently received a huge export order. Since the order is huge, it needs some short term finance. To meet its requirements, the company decides to tap the money market.
(a) Name and explain the money-market instrument the company can use for the above purpose.

(b) What is the duration for which the company can get funds through this instrument?

(c) State any other purpose for which this instrument can be used. 
Answer:
(a) The money market instrument that a company can use for this purpose is commercial paper. Commercial paper is a short-term unsecured, negotiable, promissory note with a fixed maturity period which is issued by large and creditworthy companies to raise short term funds at lower rates of interest than the prevailing market rates.

(b) The duration for which the company can get funds through this instrument is 15 days to one year.

(c) It can also be used to meet the short-term seasonal and working capital requirements of a business enterprise. Funds raised through commercial paper can also be used to meet the floatation cost This is known as Bridge financing.

 

Question 31.
Explain the objectives of Securities Exchange Board of India (SEBI). 
Answer:
Securities and Exchange Board of India (SEBI) is a statutory regulatory body entrusted with the responsibility to regulate the Indian capital markets. It monitors and regulates the securities market and protects the interests of the investors by enforcing certain rules and regulations.

SEBI was founded on April 12,1992, under the SEBI Act, 1992. Headquartered in Mumbai, India, SEBI has regional off ices in New Delhi, Chennai, Kolkata and Ahmedabad along with other local regional off ices across prominent cities in India.
The objectives of Securities and Exchange Board of India (SEBI) are following:
(i) To regulate the stock exchange and the securities market to promote their normal functioning.
(ii) To protect the rights and interests of individual investors to guide and educate them.
(iii) To prevent trading malpractices like price rigging and insider trading.
(iv) To regulate and develop a code of conduct and fair practices by intermediaries like brokers and merchant bankers etc. with an aim to make them competitive and professional

 

Question 32.
Explain the features of coordination.
OR
A successful enterprise has to achieve its goal effectively and efficiently. Explain 
Answer:
The features of coordination are as follows:
(i) Integrates group efforts: Coordination unifies unrelated or diverse interests into purposeful group activity. It gives a common focus to group effort to ensure that performance is as per plans.

(ii) Ensure, unity of efforts: Coordination always emphasises on unifying the efforts of different individuals because conflicting efforts may cause damage to organisation. The main aim of every manager is to coordinate the activities and functions of all individuals to common goaL

(iii) Continuous process: Coordination is a never-ending function. It is a continuous function although its degree may vary. The managers work continuously to achieve and maintain coordination because without coordination companies cannot function efficiently.

(iv) Coordination is a pervasive function: Coordination is a universal function. It is required at all the levels, in all the departments and to perform all the functions due to interdependence of various activities on each other. For example, if low quality inputs are purchased by purchase department, it will result in production of low-quality product which further result in low sale, low revenue and so on.

(v) Coordination is a deliberate function: A manager has to coordinate the efforts on different people in conscious and deliberate manner. Cooperation in the absence of coordination may lead to wasted effort

OR

Management has been defined as a process of getting things done with the aim of achieving organisational goals effectively and efficiently. Being effective or doing work effectively means finishing the given task. Effectiveness in management is concerned with doing the right task, completing activities and achieving goals. It is concerned with the end result But it is not enough to just complete the tasks.

There isanother aspect i.e. being efficientordoing work efficiently. Efficiency means doing the task correctly and with minimum cost There is a kind of cost benefit analysis involved and relationship between inputs and outputs. If by using less resources more benefits are derived then efficiency has increased.

Efficiency is also increased when for the same benefit or output fewer resources are used and less costs are incurred. Input resources are money, material, equipment and person required to do a particular task. Management is concerned with the efficient use of these resources because they reduce costs and ultimately lead to higher profits.

 

Question 33.
Define marketing. Explain the important features of marketing.
OR
Explain the merits of advertising. 
Answer:
Marketing is a collection of merchandising, selling and shopping activities undertaken by a firm. It is a process whereby people exchange goods and services for money or something of value to them. Marketing has been defined as, “a social process by which individual or group obtain what they need and want through creating offerings and freely exchanging products and services of value with others.”

Thus, marketing is a social process wherein people interact with each other, in order to persuade them to act in particular way, say to purchase, a product or a service rather than forcing them to do so.

The important features of marketing are as follows:
(i) Need and want: The process of marketing helps individuals and groups in obtaining what they need and want. Thus, the primary reason or motivation for people to engage in the process of marketing is to satisfy some of their needs or wants.

(ii) Creating a market offering: Market offering refers to a complete offer for a product or service, having given features like size, quality, taste etc at a certain price, available at a given outlet or location and so on. A good market offer is the one which is developed after analysing the needs and preferences of potential buyers.

(iii) Customer value: The process of marketing facilitates exchange of products and services between the buyer and sellers. A product will be purchased only if it is perceived to be giving greatest benefit or value for money. The job of a marketer, therefore, is to add to the value of the product so that the customers prefer it in relation to the competing products.

(iv) Exchange mechanism: The process of marketing works through the exchange mechanism. The individuals obtain what they need and want through the process of exchange. Exchange refers to the process through which two or more parties come together to obtain the desired product or service from someone offering the same by giving something in return.

OR

The merits of advertising are:
(i) Mass reach: Advertising is a medium through which many prospective buyers can be approached over a vast geographical area. For example, an advertisement message placed in a national daily reaches lakhs of people or its subscribers.

(ii) Economic Advertising is an economic mode of communication, if many people are to be reached. Due to its wide reach, the overall cost of advertising gets spread over various communication links established. As a result, the per unit cost becomes low.

(iii) Introduces a new product in the market: Advertising plays significant role in the introduction of a new product in the market It influences the people to purchase the product For example: Samsung can easily launch TV under same brand name.

(iv) Expansion of the market: it enables the manufacturer to expand its market It helps in exploring new markets for the product and retaining the existing markets. It plays a sheet anchor role in widening the marketing for the manufacturer’s products even by conveying the customers living at the far flung and remote areas.

(v) Increased sales: Advertisement facilitates mass production of goods increasing the volume of sales. In other words, sales can be increased with additional expenditure on advertising. With every increase in sale, selling expenses will decrease.

(vi) Educates the consumers: Advertising is educational and dynamic in nature.
It familiarises the customers with the new products and their diverse uses and educates them about the new uses of existing products.

 

Question 34.
Dheeraj, a sales representative of Onida Ltd. has changed seven jobs in the last one year. He is a hardworking person but is not able to finalise deals with customers due to his inadequate vocabulary and omission of needed words. Sometimes, he uses wrong words because of which the intended meaning is not conveyed. All this creates a misunderstandings between him and his clients.
(a) Identify the communication barrier discussed above.
(b) State the category of this communication barrier.
(c) Explain any other communication barriers of the same category. 
Answer:
(a) The communication barrier discussed above is badly expressed message.
(b) This kind of barrier falls in the category of semantic barriers.
(c) Semantic barriers are concerned with problems and obstructions in the process of encoding and decoding of message into words or impressions.

A few of the barriers in the same category are discussed below:
(i) Symbols with different meanings: Sometimes, a word may have several meanings. The communication will be effective only if the receiver perceives it in the same manner as intended by communicator.

(ii) Faulty translations: Many a times it has been noted that if the translator is not proficient with both the languages, mistakes may creep in, causing different meanings to the communication.

(iii) Technical jargon: It is usually seen that specialists use technical jargon while explaining something. If the persons with whom they are communicating are not specialists in the concerned field, they may not be able to understand the actual meaning of many such words.

(iv) Body language and gesture decoding: While speaking, one may tend to move his/her body in a certain manner. If there is no match between what is said and what is expressed in body movements, communications may be wrongly perceived by the receiver.