Class XII - Business Studies Practice Paper - 4 - Answers

Subject: Business Studies

Class XII

Time Allowed: 3 hours

Max. Marks: 80

General Instructions:

1. This question paper contains 34 questions.

2. Marks are indicated against each question.

3. Answers should be brief and to the point.

4. Answers to the questions carrying 3 marks may be from 50 to 75 words.

5. Answers to the questions carrying 4 marks may be about 150 words.

6. Answers to the questions carrying 6 marks may be about 200 words.

7. Attempt all parts of the questions together

Section – A

1. Which of the following is true about development?

(A) It increases an executive’s professional talent.

(B) It helps in tackling the complex management working problems.

(D) All the above

2. Biru Nandan, Chairman of Lalit Group of Companies founded ‘Biru University’ for undergraduate and postgraduate courses in diverse disciplines. The Information Technology department of the Lalit Power Ltd., had few vacancies related to cyber security. The Human Resource Department of the company decided to recruit fresh engineering graduates from ‘Biru University’ for the same. Identify the type of source of recruitment.

(A) Advertisement

(B) Employment exchange

(D) Campus recruitment

3. Real Tech Builders has to deliver the flats to its buyers for possession on time. Due to this, there is a sudden increase in workload. Therefore, the company needs to arrange workers to work at the sites at a short notice. Which source of recruitment may be used by the company to tap the casual vacancy?

(A) Direct recruitment

(B) Advertisement

(D) Employment exchange

4. ………………… is the process of dividing work into manageable activities and then grouping the activities which are similar in nature.

(A) Coordination

(B) Departmentalisation

(D) Delegation of authority

5. Even though the political conditions vary from country to country, they impact the sentiment of an investor in the business, if the instability of the political conditions cause uncertainty and make it difficult for him to predict the future. Which feature of the business environment is being highlighted in the above statement?

(A) Specific and general forces

(B) Dynamic nature

(D) All the above

6. For the following two statements, choose the correct option:

Statement I: The objective of SEBI is to prevent trading malpractices.

Statement II: SEBI regulates and develops a code of conduct and fair practices for intermediaries. Choose the correct option from options given below:

(A) Statement I is correct and statement II is wrong.

(B) Statement II is correct and statement I is wrong.

(C) Both the statements are correct.

(D) Both the statements are wrong.

7. Which product-related decision is concerned with providing detailed information about the product on its package?

(A) Branding

(B) Packaging

(C) Labelling

(D) Both branding and packaging

8. Arrange the following steps in the process of organising in the correct sequence:

(i) Assignment of duties

(ii) Departmentalisation

(iii) Identification and division of work (iv)Establishing reporting relationship

Choose the correct option:

(A) (i) ; (ii) ; (iv) ; (iii)

(B) (iii) ; (ii) ; (i) ; (iv)

(D) (ii) ; (iii) ; (i) ; (iv)

Identify the dimensions of the business environment illustrated by the picture given above.

(A) Social environment

(B) Technological environment

(D) Economic environment

10. Rajni Auto Manufacturers have decided to give a special privilege to the existing shareholders to subscribe to the new issue of shares where they will be given shares according to the proportion of shares held by them. The company always gives special treatment to loyal stakeholders. Last year, the company was dealing through the capital market where both the buying and selling of securities were taking place. The owner of the company is a man of ethical business. He recently wrote an article about the watchdog of stock market. The article gained a lot of popularity and now is part of the curriculum of MBA students. Which method of floatation was used by Rajni Auto Manufacturers?

(A) Right issue

(B) Private placement

(D) E-IPOs

11. ‘Pushpanjali Ltd.’, is manufacturing chocolates, biscuits, cakes and other similar products. The company is not generating enough profits. Saurabh, the Marketing Manager of the company got a survey conducted to find out the reasons. The findings of the survey revealed that inspite of better quality, the customers were not able to distinguish the products of the company from its competitors. Though the customers wanted to buy the products of ‘Pushpanjali Ltd.’ again and again because of its good quality, but they were not able to identify its products in the market. Because of this, the sales of the company could not pick up resulting in inadequate profits. Saurabh, the Marketing Manager now realised that ‘Pushpanjali Ltd.’ had forgotten to take one of the most important decisions related to the product. What decision should ‘Pushpanjali Ltd.’ take so that its customers are able to identify its products in the market?

(A) Branding

(B) Pricing

(D) Labelling

12. ‘Ultra Televisions Ltd.’ is offering its 90” TV sets at a discount of ` 15,000 for a period of one month starting from 1st March, 2019. Identify the sales promotion activity used by ‘Ultra Televisions Ltd.’. [1]

(A) Rebate

(B) Free Sample

(D) Refund

13. “Anyone can be called a manager irrespective of the educational qualification possessed.” Identify the characteristic of the profession that management does not fulfil in the statement being discussed above.

(A) Ethical Code of conduct

(B) Professional association

(C) Restricted entry

(D) Service motive

14. Kumar wanted to purchase a fuel efficient car having the latest standards regarding minimisation of pollution. He saw an advertisement offering such a car and visited the showroom of the company wherein the car was displayed. In his discussion, the marketing manager told him that the company is providing credit facilities, maintenance services and many other effective services which are helping in bringing repeat sales and developing brand loyalty. Identify the ‘marketing function’ which the marketing manager was discussing with Kumar.

(A) Standardisation

(B) Grading

(C) Customer Support Services

(D) Product designing and development

15. Which of the following is not an element of social environment?

(A) Birth and death rate

(B) Constitution of the country

(D) Life expectancy

16. Which of the following feature of management involved in managing an enterprise are common to all organisations whether economic, social or political ?

(A) Management is a goal-oriented process.

(B) Management is all pervasive.

(D) Management is a group activity.

17. Which of the following is the function of low level management?

(A) To integrate diverse elements and coordinate the activities of different departments.

(B) To the business environment and its implications for the survival of the firm.

(D) To interact with the actual work force and pass on instructions of the middle management to the workers.

18. Your mother purchased a washing machine for Rs 10,000 from an authorised dealer of the manufacturer with a verbal guarantee that the machine will be replaced with a new one if any of its parts becomes defective within 3 months from the date of purchase. The motor of the machine was burnt within 15 days of its purchase. On complaining, the seller refused to replace the machine. Name the redressal agency under Consumer Protection Act, 2019 where your mother can file the complaint.

(A) District Commission

(B) State Commission

(D) None of above

19. Which of the following statement is false regarding financial market?

(A) Financial markets facilitate difficulty in the purchase and sale of financial assets.

(B) Financial markets provide valuable information about securities being traded in the market.

(D) None of these.

20. ………………… is an institution or organisation, which holds securities in electronic form, in which trading is done.

(A) Stock Exchange

(B) SEBI

(C) Depository

(D) None of these

21. Tata International Ltd. earned a net profit of Rs 50 crores. Ankit, the finance manager of Tata International Ltd., wants to decide how to appropriate these profits. Identify the decision that Ankit will have to take and also discuss any two factors which help him in taking this decision.

Ans. (i) Dividend Decision

(ii) Factors affecting dividend decision:

(a) Earnings: The dividend is paid out of the present and reserved profits. Therefore, greater amount of total profit will ensure greater dividend.

(b) Stability of Earnings: A company having stable earnings is in a position to declare more dividends and vice-versa.

(c) Stability of Dividend: Generally, companies follow a policy of stable dividend per share. It is increased only when there is a confidence that their earning potential has gone up permanently and is of large amount.

(d) Growth opportunities: Companies having high growth opportunities retain more earnings to capitalise these opportunities. While companies with no growth plans can declare more dividends.

(e) Cash flow position: The payment of dividend results in outflow of cash. The better the cash flow position of company, the better will be the capacity of company to pay dividends.

(f) Stock market reactions: Share prices react positively and negatively on increase and decrease in dividend respectively. This possible impact on share prices should be considered while declaring dividend.

(g) Shareholders’ preference: Generally, it is observed that retired and middle-class shareholders prefer regular and stable amount of dividend whereas young and wealthy shareholders prefer capital gain.

22. Explain the two concepts which are apart of the exercise which would reveal whether a company is understaffed, overstaffed or optimally staffed.

Ans. (i) Workload analysis: This would enable an assessment of the number and types of human resources necessary for the performance of various jobs and accomplishment of organisational objectives.

(ii) Workforce analysis: This would reveal the number and type of manpower currently available.

‘Human Resource Management is a wider concept than staffing.’ Justify.

Ans. Human resource management includes many specialised activities and duties which the human resource personnel must perform and one of them is staffing. So, staffing is a subset of human resource management or a narrower concept, including workforce and workload analysis, recruitment, selection, placement and orientation, training and development, performance appraisal, promotion and career planning and compensation. Including these, there are various other activities like, providing social security, defending the company in lawsuits and avoiding legal complications, etc. for which human resource management is responsible

23. Kamal is working as a gang boss in the assembly unit of ‘Sokia Ltd.’, a laptop manufacturing company. He supervises the work of 10 trained workers who perform various activities related to the assembly of laptops. One day when he was supervising the work of his workers, he told Ashok, a worker that his work could be improved.

Ashok interpreted the comments of Kamal as that his work was not good.

Identify and explain the type of barrier to effective communication in this case.

Ans. Semantic barrier/unclarified assumptions Semantic barriers are concerned with problems and obstructions in the process of encoding and decoding of message into words or impressions. Normally, such barriers result on account of use of wrong words, faulty translations, different interpretations, etc.

24. Explain any three features of business environment.

Ans. Features of Business Environment:

(i) Relativity: Business environment is a relative concept since it differs from country to country and even region to region. Political conditions in the USA, for instance, differ from those in China or Pakistan. Similarly, demand for sarees may be fairly high in India whereas it may be almost non-existent in France.

(ii) Uncertainty: Business environment is largely uncertain as it is very difficult to predict future happenings, especially when environment changes are taking place too frequently as in the case of information technology or fashion industries.

(iii) Dynamic nature: Business environment is dynamic in that it keeps on changing whether in terms of technological improvement, shifts in consumer preferences or entry of new competition in the market.

Explain any three features of ‘demonetisation’.

Ans. Features of Demonetisation:

(i) Tax administration measure: People who have cash less than the declared income could easily deposit the cash in banks but who have black money have to declare all the unaccounted money and pay taxes as well as the penalty.

(ii) No tolerance for tax evasion: Demonetisation is also interpreted as a shift on the part of the government because it is the strict measure against tax evasion and government is responsible for this message that tax evasion will no longer be tolerated or accepted.

(iii) Channelising savings into formal financial system: Though people become bound to withdraw cash which has been deposited in banks, yet savings are channelised into the formal financial system because of the new deposit schemes offered by the banks to provide a base loans, at lower interest rates.

(iv) Creation of cash-less or cash-lite economy: Another feature of demonetisation is to create a less-cash or cash-lite economy, i.e., channeling more savings through the formal financial system and improving tax compliance. It somewhere makes people bound to use digital modes for banking transaction in lack of cash in the economy. The various drives are also initiated by government to popularise and promote digital payments

25. One of the functions of Securities and Exchange Board of India is ‘Promotion of fair practices and code of conduct in securities market’. State the category to which this function belongs and state any three other functions under this category.

Ans. Protective function Other functions under this category are:

(i) It prohibits fraudulent and unfair trade practices like misleading statements, manipulations, price rigging, etc.

(ii) It controls insider trading and imposes penalties for such practices.

(iii) It undertakes steps for investor protection.

26. Explain ‘Vestibule Training’ and ‘Apprenticeship Programme’ as methods of training.

Ans. Vestibule training

Vestibule training is a method of training which is conducted on the equipment and machines employees will be using, away from the actual place of work. It is generally used where the employees are required to handle sophisticated machinery.

Apprenticeship programme

Apprenticeship training/ programme is a method of training in which the trainee is kept under the guidance of a master worker for a prescribed period of time to acquire a higher level of skill. People who want to enter skilled trades, e.g. plumbers and electricians are often required to undergo such a programme.

Explain briefly ‘transfers’ and ‘promotions’ as internal sources of recruitment.

Ans. Transfers

(i) Transfers involve shifting of an employee from one job to another, one department to another or from one shift to another, without a substantive change in the responsibilities and status of the employee.

(ii) It may lead to changes in duties and responsibilities, working condition etc., but not necessarily salary.

Promotions

(iii) Promotions involve shifting an employee to a higher position, carrying higher responsibilities, facilities, status and pay.

(iv) This practice helps to improve the motivation and increases loyalty and satisfaction level of employees.

27. Enumerate any four responsibilities of a consumer under Consumer Protection Act, 2019.

Ans. Responsibilities of a consumer under the Consumer Protection Act, 2019:

(i) Be aware about various goods and services available in the market so that an intelligent and wise choice can be made.

(ii) Buy only standardised goods as they provide quality assurance. Thus, look for ISI mark on electrical goods, FPO/FSSAI mark on food products, Hallmark on jewellery etc.

(iii) Learn about the risks associated with products and services, follow manufacturer’s instructions and use the products safely.

(iv) Read labels carefully so as to have information about prices, net weight, manufacturing and expiry dates, etc.

(v) Assert yourself to ensure that you get a fair deal.

(vi) Be honest in your dealings. Choose only from legal source and discourage unscrupulous practices like black-marketing, hoarding etc.

(vii) Ask for a cash memo on purchase of goods or services. This would serve as a proof of the purchase made.

(viii) File a complaint in an appropriate consumer forum in case of a shortcoming in the quality of goods purchased or services availed. Do not fail to take an action even when the amount involved is small.

(ix) Form consumer societies which would play an active part in educating consumers and safeguarding their interests.

(x) Respect the environment. Avoid waste, littering and contributing to pollution.

State any four reliefs available to the consumer, if the court is satisfied about the genuineness of the complaint.

Ans. If the Consumer Court is satisfied with the genuineness of the complaint, it can issue one or more of the following directions to the aggrieved party as reliefs:

(i) To remove the defect in goods or the deficiency in service.

(ii) To replace the defective product with a new one, free from any defect.

(iii) To refund the price paid for the product, or the charges paid for the service.

(iv) To pay a reasonable amount of compensation for any loss or injury suffered by the consumer due to negligence of the opposite party.

(v) To pay punitive damages in appropriate circumstances

(vi) To discontinue the unfair/ restrictive trade practice and not to repeat the same in future.

(vii) Not to offer hazardous goods for sale.

(viii) To withdraw hazardous goods from sale.

(ix) To cease manufacture of hazardous goods and to desist from offering hazardous services.

(x) To pay any amount (not less than 5% of the value of the defective goods or deficient services provided), to be credited to the Consumer Welfare Fund or any other organisation/person, to be utilised in the prescribed manner.

(xi) To issue corrective advertisement to neutralise the effect of a misleading advertisement.

(xii) To pay adequate costs to the appropriate party.

28. Vikas was the Chief Operating Officer of ‘Yalet Ltd.’, a company providing advanced software solutions to Indian Defence Services. They had been carrying on business successfully for the last 12 years and earning enough profits. But for the last one year, they realised that though the business is getting big orders which are being fulfilled on time, even then the revenues kept on decreasing. Vikas was not able to find out where the problem was. He started keeping a close check on the progress of activities as he could sense that something was wrong. He wanted to take some action before any major damage could ensue. Vikas appointed a cyber-security expert who monitored the company’s processes and found out that the computer operator was deleting the entries from the computers and pocketing the revenues. He was caught and handed over to the police. This created an atmosphere of order and discipline in the organisation and helped in minimising dishonest behaviour on the part of the employees.

(i) Identify the function of management highlighted in the above paragraph.

(ii) Explain any three other ways in which this function of management may help the organisation.

Ans. i) Controlling

(ii) Other ways in which this function may help the organisation:

(i) Accomplishing organisational goals: It helps in accomplishing organisational goals by bringing to light, deviations if any and indicating corrective action.

(ii) Making efficient use of resources: It helps in making efficient use of resources by ensuring that each activity is performed in accordance with predetermined standards.

(iii) Facilitating coordination in action: It facilitates coordination in action as each employee and department in governed by pre-determined standards which are well coordinated with one another.

(iv) Improving employee motivation: It improves employee motivation as the employees’ know well in advance the standards of performance on the basis of which they will be appraised.

(v) Judging accuracy of standards: It helps in judging accuracy of standards in the light of changes taking place in the organisation and in the environment

29. ‘Smart Stationery Ltd.’ wants to raise funds of Rs 40,00,000 for its new project. The management is considering following the mix of debt and equity to raise this amount:

Capital Structure	Alternative
I (Rs)	II (Rs)	III (Rs)
Equity	40,00,000	30,00,000	10,00,000
Equity	0	10,00,000	30,00,000

Other details are as follows:

Interest rate on debt 9%

Face value of equity shares Rs 100 each

Tax rate 30%

Earning Before Interest and Tax (EBIT) Rs 8,00,000

(i) Under which of the three alternatives will the company be able to take advantage of trading on equity ?

Ans.

	Alternative I (Rs)	Alternative II (Rs)	Alternative III (Rs)
Equity 9% debt	40,00,000	30,00,000 10,00,000	10,00,000 30,00,000
Capital employed	40,00,000	40,00,000	40,00,000
Earnings before Interest and Less Interest @ 9%	8,00,000 –	8,00,000 (90,000)	8,00,000 (2,70,000)
Earning before tax Less Tax @30%	8,00,000 (2,40,000)	7,10,000 (2,13,000)	5,30,000 (1,59,000)
Earning after tax/Profit available to shareholders	5,60,000	4,97,000	3,71,000
Earning after tax/Profit available to shareholders	5,60,000/ 40,000 = Rs14	4,97,000/ 30,000 = Rs16.57	3,71,000/ 10,000 = Rs37.1

Thus, under Alternative III, the company will be able to take advantage of trading on equity

(ii) Does earning per share always rise with increase in debt?

Ans. Thus, under Alternative III, the company will be able to take advantage of trading on equity

30. ‘Entertainment India Ltd.’ has been incorporated with the objective of entertaining people by organising festivals, programmes and other similar events depicting the rich cultural heritage of the country. The company management has renowned personalities from the field of art, literature and culture. They decided to give a platform to young budding musicians, poets and artists. The company decided its organisational structure by grouping similar jobs together. Thereafter, the heads of different departments were also appointed. Nisha, one of the heads, did an analysis of the number, type and qualification necessary for people to be appointed. The information generated in the process of writing the job description and the candidate profile was used to develop ‘Situations vacant’ advertisement. This was published in print media and flashed in electronic media. This brought in a flood of response. Explain the other four steps which Nisha has to perform after candidates have applied to complete the process being discussed above.

Ans. Other steps which Nisha has to perform to complete the process being discussed above are:

(i) Selection: It is the process of choosing from among the pool of the prospective job candidates developed at the stage of recruitment.

(ii) Placement and orientation: It refers to assigning specific jobs to the candidates selected for appointment and introducing the selected employee to other employees and familiarising him with the rules and policies of the organisation.

(iii) Training and development: The organisation should facilitate employee learning by having either in-house training centres or having forged alliances with training and educational institutes to ensure continuous learning of their employees. The organisations also benefit.

(iv) Performance appraisal: All organisations have some formal or informal means of appraising their employee’s performance. Performance appraisal refers to the evaluation of an employee’s current and/or past performance as against certain predetermined standards. It includes defining the job, appraising performance and providing feedback.

31. Explain the following techniques of scientific management:

(i) Time study;

Ans. Time study: Time study is a technique to determine the standard time taken by a worker of reasonable skill and efficiency to perform a well-defined job. It helps in deciding the number of workers to be employed, frame suitable incentive schemes and determine labour costs.

(ii) Motion study;

Ans. Motion Study: Motion Study is a technique to study the movements that are necessary for doing a well-defined job. It seeks to eliminate unnecessary and wasteful movements so that it takes less time to complete a job efficiently

(iii) Functional foremanship

Ans. Functional Foremanship: Functional foremanship is a technique which aims to improve the quality of supervision at shop floor by putting a worker under eight specialist foremen. In this technique, planning is separated from execution. Taylor suggested four foremen for planning, namely, route clerk, instruction card clerk, time and cost clerk and disciplinarian and four foremen for execution, namely, gang boss, speed boss, repair boss and inspector.

Explain the following principles of general management:

(i) Division of work

(ii) Authority and responsibility

(iii) Discipline

Ans. (i) Division of Work: The principle of division of work suggests that work can be performed more efficiently if it is divided into specialised tasks. A trained specialist who is competent, is required to perform each job leading to specialisation which results in efficient and effective output.

(ii) Authority and responsibility: Authority is the right to give orders and obtain obedience, and responsibility is the corollary of authority and refers to the obligation to do the task assigned. The principle of authority and responsibility suggests that managers require authority commensurate with their responsibility. An organisation should build safeguards against abuse of managerial power. At the same time, a manager should have necessary authority to carry out his responsibility.

(iii) Discipline: It is the obedience to organisational rules and employment agreement which are necessary for the working of the organisation. It requires good superiors at all levels, clear and fair agreement and judicious application of penalties.

32. Agrotech Fertilisers Limited has planned to set up a plant for manufacturing urea fertiliser which has very high market potential as there is excess demand as compared to supply. It is a capital intensive project involving an investment of Rs 2,000 crores. Major portion of this investment will be in fixed capital. Financial institutions prefer to finance such a project because it is in the core sector. Since market for urea fertiliser is quite high, it is sold mostly on a cash basis. What is the most desirable debt/equity ratio for the company? On what basis should investment in working capital be determined?

Ans. (i) Since the project is capital intensive, proportion of debt should be much higher than equity. Since financial institutions prefer advancing loans for such a project, raising loans from them should not be a problem for the company.

(ii) The company should determine investment in working capital on the basis of meeting the following requirements :

(a) To purchase and maintain required level of inventory of raw materials.

(b) To pay wages/salaries to employee.

(c) To meet overhead expenses for power, fuel, stationery and other items.

(d) To pay taxes, insurance premium, etc.

(e) To meet marketing and general expenses.

(f) To maintain required level of inventory of finished goods.

(g) To have cash in hand and at bank to meet recurring expenses and meet contingencies.

33. Differentiate between Functional structure and Divisional structure.

Ans.

S. No	Basis	Functional structure	Divisional structure
(i)	Meaning	Grouping of entire work into major functional departments is known as functional structure.	Grouping the jobs related to one product and organising them under a department creates a divisional structure.
(ii)	Formation	Formation is based on functions.	Formation is based on product lines and is supported by functions.
(iii)	Specialisation	Functional specialisation	Product specialisation
(iv)	Responsibility	Difficult to fix on a particular department.	Easy to fix responsibility for performance
(v)	Managerial development	Difficult, as each functional manager has to report to the top management.	Easier, autonomy as well as the chance to perform multiple functions helps in managerial development.
(vi)	Cost involved	Functions are not duplicated, hence economical.	Duplication of resources in various departments, hence costly.

Besides ‘Effective Management’ and ‘Employee Development’, delegation helps the organisation in different ways. Explain any four such ways.

Ans. (i) Motivation of employees: Responsibility for work builds the self-esteem of an employee and improves confidence. He/She feels encouraged and tries to improve his/her further performances.

(ii) Facilitation of growth: Trained and experienced employees are able to play significant roles in the launch of new projects by replicating the work ethos they have absorbed from existing units, in the newly set unit

(iii) Basis of Management hierarchy: Delegation of authority establishes superior-subordinate relationships, which are the basis of managerial hierarchy.

(iv) Better coordination: Clarity in powers, duties this helps in developing and maintaining effective coordination amongst the departments, levels and functions of management.

34. ‘E-Solutions Ltd.’ started its operations in the year 2000. At the time of its inception, the company had only 10 employees with two departments, a Production Department and an Administration Department. The products supplied and the services provided by the company started gaining popularity over the years. The management had faith in the abilities of the employees and thus they allowed them freedom of action. The management recognised that the decision-makers at different levels of the organisation need to be given more autonomy. They took a policy decision that there will be less control of superiors over subordinates. This increased the role of the subordinates in the organisation and now they were in a position to take numerous as well as important decisions. As a result, its business has diversified into many areas. Presently, it has its operations throughout the country with seven branches overseas. Its organisational structure has now changed into divisional structure and ten thousand people are working with the company.

(i) Identify the concept of management which helped the company to diversify into many areas and branches abroad.

(ii) Explain any five points of importance of the concept identified in (i) above

Ans. Decentralisation

Importance:

(i) Relief to top management: In a decentralised organisation, top managers are not burdened by common day-to-day problems. They have enough time to plan ahead and develop new strategies.

(ii) Develops managerial talent for the future: In a decentralised organisation, even lower level managers learn the art of exercising decision making authority. This prepares them for the promotion to the higher levels.

(iii) Quick decision making: In a decentralised organisation, decision making is not restricted in few hands only but decision making power is entrusted with all the managers who perform the activities.

(iv) Develops initiative amongst subordinates: Decentralisation helps to promote self-reliance and confidence amongst the subordinates. They learn to depend on their own judgement.

(v) Facilitates growth: Decentralisation provides greater autonomy to the lower levels of management as well as divisional or departmental heads. This allows them to function in a manner best suited to their department. Consequently, the productivity levels increase and the organisation is able to generate more returns which can be used for growth and expansion purposes.

Class XII – Business Studies Practice Paper – 4 – Answers