Class XII – Business Studies – Paper 3

Ans. (c) Assertion (A) is true but Reason (R) is false

Ans. (d) Basis of control

Ans. (b) Internship training

Ans. (c) Controlling helps in judging accuracy of standards.

Ans. (a) Authority; Accountability

Ans. (d) Employee recognition programme

Ans. (a) Statement I is true and II is false

Ans. (b) Better control

Ans. (c) Ease in fixation of responsibility

Ans. (b) Status symbol

Ans. (b) A (iii), B(i), C(ii)

Ans. (d) Delegation means abdication.

Ans. (b) Continuous

Ans. (c) Hallmark

Ans. (d) Both the statements are false

Ans. (b) Protective function

Ans. (b) Restricted entry

Ans. \(a) (iii), (i), (ii), (iv)

Ans. (b) District Commission

Ans. The importance of Financial Planning is as follows:

(a) Helps in forecasting: Financial Planning helps the firm in forecasting future, thereby, helping the firm to face the future conditions efficiently.

(b) Helps to reduce wastage: The detailed plans of action prepared under financial planning helps to reduce the wastage of financial resources.

(c) Better coordination: It helps to bring coordination between the different departments by providing the clear policies and strategies regarding the usage and allocation of financial resources.

Ans. The above case discussed the following two dimensions:

(a) Economic environment: It consists of the economic factors that affect business practices in an enterprise. For example, interest rates significantly affect the demand for goods and services.

(b) Technological environment: It includes the improvement and innovation in the technology that takes place from time to time. For example, online shopping has influenced the business to plan their distribution network.

Ans. The dimension which made it possible is ‘Technological Environment’. It includes the forces relating to the scientific improvements and innovations which provide new and innovative ways of producing the goods or providing the services. Improvements in this dimension of the environment improves the standard of living, provides the consumers with better products and services and also reduces the cost of production.

Ans. The elements of delegation are as follows:

(a) Authority: It refers to the right of an individual to command his subordinates and to take action within the scope of his position. It flows downwards, i.e. from superior to the subordinate. (b) Responsibility: It refers to the obligation of the subordinate to properly perform the duty assigned to him. It arises from the authority delegated. Hence it flows upwards, ie from subordinate to the superior.

(c) Accountability: It means the answerability of the subordinate for the final outcome of the task assigned to him. It arises from the responsibility. It also flows upwards, i.e. from subordinate to the superior. But the accountability of the superior remains absolute.

Ans. The elements of communication process are:

(a) Message: Content of ideas, feelings, suggestions, order, etc. intended to be communicated.

(b) Encoding: Process of converting the message into communication symbols such as words, pictures, gestures, etc.

(c) Media: Path through which encoded message is transmitted to receiver in written form, face to face, phone call or internet etc.

(d) Decoding: Process of converting encoded symbols of the sender.

(e) Feedback: It includes all those actions of receiver indicating that he has received and understood message of sender.

(f) Noise: Some obstruction or hindrance to communication which may be caused to sender, message or receiver.

Ans. Recruitment is the process of identifying the sources for prospective candidates and stimulating them to apply for the jobs in the organisation. Recruitment aims to develop and maintain adequate manpower resources upon which an organisation can depend. It involves seeking and attracting a pool of people from which qualified candidates for job vacancies can be chosen. Accordingly, the purpose of recruitment is to locate sources of manpower to meet job requirements and job specifications. In simplest term, recruitment involves placing the right person on the right job.

Ans. Capital budgeting decisions are capable of changing the financial fortunes of a concern due to the following reasons:

(a) Long-term growth: Capital budgeting decisions have a long term impact on business as the funds invested in long term assets which yield return in future.

(b) Huge amount involved: Capital budgeting decisions involve the investment of huge amount of funds. Once invested the large amount of funds gets blocked for a long period of time.

(c) Risk involved: Capital budgeting decisions impact the overall business risk as they impact not only the present earnings but the future returns also.

(d) Irreversible decision: These decisions, once taken are not reversible except at a huge losses. The decision to reverse will lead to wastage of funds and force the company into huge losses.

Ans. (a) The elements of Product Mix discussed in the given situation are:

(i) Branding: ‘It named its bags ‘Pure-Sure’ which clearly conveyed to the consumers her message ‘Pure for Sure’.’ Branding is the process of giving a name/sign/symbol to a product.

(ii) Packaging: ‘To enable the consumers identify its bags even from a distance it covered them in a specially designed translucent covers that would not only protect it from the dust but will also attract the consumers from a distance.’ Packaging is the act of designing and producing the container/wrapper of a product.

Ans. (b) Sneha is following societal concept of marketing, which aims at satisfying a consumer in an effective and efficient manner. Apart from consumer satisfaction, it aims at fulfilling the social, ethical and ecological aspects of marketing.

Ans. The concept being referred to is Coordination. Its features are as follows:

(a) It integrates group efforts: Coordination unifies the different activities in an organisation into a unifying whole.

(b) It is a continuous process: It is not a onetime activity. It takes place continuously starting from planning stage to controlling stage.

(c) It is a pervasive activity: Due to the interdependent nature of activities of an organisation, coordination is required at all the levels of management. It integrates the activities of different departments. Also, it is required in all types of organisations.

Ans. Initiative: Employees at all levels should be allowed to take initiative in work-related matters. It does not imply freedom to do whatever people like. They must observe discipline. Encouraging initiative is likely to motivate employees to work better and harder.

Each and every employee has a right to give suggestions about any matter of the organisation, if his suggestion results in cost/time reduction, he should be rewarded.

Stability of Personnel: According to Fayol, employees should not be transferred from their positions frequently. The period of services in a position should be fixed. It often takes time to get used to work. An employee cannot render useful services if he is frequently transferred from his position before he gets accustomed to the work assigned to him. However, it does not imply that he should not be promoted or transferred in the interest of the organisation. If this principle is violated, there will be problems of absenteeism and higher turnover of employees, resulting in hindrance in improvement in efficiency also.

Ans. The steps of Organising performed here are:

(i) Identification and division of work: The line ‘Procurement of raw material …. product, etc.’ shows this.

(ii) Departmentalisation: The line ‘It then …. nature.’ shows this.

(iii) Assigning of duties: The line ‘To ensure …. created earlier.’ shows this.

(iv) Creating authority responsibility relationship: The line ‘They knew…. created it.’ shows this.

Ans. Scope of delegation of authority is limited as it is confined to a manager and his immediate subordinates in work unit. It refers to entrusting the authority by an individual to another. Now, it is clear that if we delegate the authority we multiply it by two i.e., delegator and his subordinate to whom authority is delegated. It is a process of sharing of task and authority between a manager and his subordinate.

Whereas, scope of decentralisation of authority is wider than delegation. It involves systematic delegation of authority at all levels and in all functions of the organisation. It is an extension of delegation to the lowest levels in the organisation. In case of decentralisation, middle and lower level managers are entrusted with authority for taking decisions on tasks assigned to them. So, it is clear that if we decentralise the authority, we multiply it by many.

Ans. (a) Laissez-faire style of leadership: In this style of leadership, the leader acts as a contact man with the outsiders to bring information and the resources the group requires. The group members have a high degree of freedom and they work as per their own choice and competence.

(b) Its benefits are as follows:

(i) No delay in decision-making: Since the employees are expected to take decisions on their own, so they don’t have to wait for the manager’s permission or response due to which they can make efficient use of the opportunities by taking quick decisions.

(ii) Reduces the burden of manager: The manager under this style of leadership acts as a contact person whose task is limited to bringing in the required information and arranging the resources for the group, thereby, he acts as a facilitator.

(iii) Motivates employees and train them: The employees are given full autonomy and freedom which motivate them and the work experience gained train them for further such projects.

Ans. Aptitude Test

Ans. Trade Test

Ans. Intelligence Test

Ans. Personality Test

Ans. 1. (a) Developing Premises’ under Planning function of management

(b) The two succeeding steps under planning function of management are:

(i) Identifying alternative courses of action: The next step is finding out the alternative courses of action to achieve objectives. Many innovative ideas and suggestions are considered in this step and alternatives are generated thorough a discussion with the members of the organisation.

(ii) Evaluating alternative courses: Planning requires that each alternative should be evaluated taking into account the relevant facts and the pros and cons of each alternative. The merits and demerits as well as consequences of each alternative course of action must be examined before a choice is made.

2. (a) Planning is Pervasive

(b) The other features of Planning are:

(i) Planning is a continuous process. Plans are prepared for a specific period of time, may be for a month, a quarter or a year. At the end of that period, there is a need for a new plan to be drawn on the basis of new requirements and future conditions. Hence, planning is a never-ending process. It is a continuous process. Continuity of planning is related to planning cycle. It means that a plan is framed, it is implemented and is followed by another plan and so on.

(ii) Planning is a mental exercise. Planning requires application of the mind involving foresight, intelligent imagination and sound judgement. It is basically an intellectual activity of thinking rather than doing because planning determines the action to be taken. However, thinking for planning requires logical and systematic thinking rather than guessing or wishful thinking.

Ans. (a) Promotion Mix is being referred to. The promotion element of marketing mix is concerned with activities that are undertaken to communicate with both customers and the participants in the channel of distribution such that sales goals are realised. The promotion efforts are directed at informing potential customers that the right product is available at the right place and at the right price. The core of promotion is communication.

(b) The components of promotion mix being referred here are:

(i) Advertisement: It is an impersonal form of communication which is paid for by the marketers to promote the goods or services. it is the medium through which large number of people can be reached over a vast geographical area by conveying the standardized message to all.

(ii) Personal selling: It involves the oral presentation of the message in the form of conversation with one or more prospective customers for the purpose of making sales. It involves a lot of flexibility and helps in the development of long term personal relationship with the prospective consumers.

Ans. The elements of marketing mix being taken into consideration by Ms. Pihu Jain are Product and Price.

Product mix refers to the good, service or idea which is offered for sale including the quality, features, packaging, size etc.

Price mix is the value of a good determined by the procedures. It includes pricing policy, discount offered and terms of credit allowed.

Ans. The functions of marketing highlighted in the given case are:

(i) Product designing and development: An attractive product deign is the key to effective marketing. Therefore, the product should be designed in such a way that it not only improves its performance but also gives the firm a competitive edge over its competitors.

(ii) Pricing of products: Pricing is the process of fixing the price of a product or service. Prices are generally fixed by manufacturers after carefully looking into three factors, i.e., the cost of production, the demand for the product and the nature of competition. Product mix refer to the good, service or idea which is offered for sale including the quality features, packaging, size, brand, etc.

Price mix is the value of product determined by the procedures. It includes pricing policy, discount offered and terms of credit allowed.

(iii) Gathering and analysing market information: This is the initial step of marketing, through which the important information to identify the needs and wants of the customers is collected for successful marketing of any good or service. A detailed analysis of available opportunities, threats, strengths and weaknesses is made by the organisation and what opportunity can best be pursued is identified. Gathering and analysing information helps to identify the customer’s needs and preferences. It forms the basis for the product designing and development.

Ans. The concept of Financial Market is being referred here.

Ans. The components of Financial Market are Money market and Capital Market.

Or

Neelabh is engaged in ‘Transport Business’ and transports fruits and vegetables to different states. Stating the reason in support of your answer, identify the working capital requirements of Neelabh. Neelabh also wants to expand and diversify his transport business, explain any four factors that will affect his fixed capital requirements.

Ans. Neelabh is engaged in transport business. The working capital need of both the businesses will be less than any other trading business because they are engaged in providing services, and are not required to maintain inventory.

Following are the factors affecting their fixed capital requirements:

(a) Scale of operations: If an organisation operates at a higher scale, it requires higher investment in fixed assets as compared to an organisation operating on a smaller scale.

(b) Diversification: A firm may diversify its operations for various reasons. This increases its fixed capital requirement.

(c) Financing alternatives: A developed financial market may provide different alternatives to outright purchase. An asset can be taken on lease which reduces the requirement of funds for fixed assets.

(d) Level of collaboration: At times, certain business organisations may share each other facilities or jointly establish a particular facility. These instances lower the requirement of fixed capital.

Ans. (i) Improvement in performance: A continuous monitoring of business environment helps an organisation to timely make the required changes. It not only improves their present performance, but also helps the organisations to succeed in the market for a long period of time.

(ii) Helps in tapping useful resources: Environment acts as a source of inputs or resources such as raw material, machinery, labour, etc. required for the functioning of an organisation. On the other hand, it acts as a source of demand for goods and services produced by the organisation. Thus, it is rational for the organisations to take up those resources from the environment that can be converted into the desired output. It is possible only if the organisations have an understanding of what the environment can offer.

(iii) Helps in planning and policy formulation: With a continuous study of the environment, an organisation can frame suitable plans and policies in view of the current scenario. For example, if on analysing the market for clothes in India, it is found that there is an increasing demand for female western wear, then a cloth manufacturing company can frame policies and strategies to incorporate western wear in its production.

Ans.