CBSE Class 12 - Business Studies - Question Paper Delhi Region - Answers (2016-17) (#cbseNotes)

CBSE Class 12 - Business Studies  - Question Paper Delhi Region - Answers (2016-17) 

BUSINESS STUDIES DELHI – 2016-17 (Set-1) Answers

☛See Question Paper here.

Q. Give the meaning of ‘motivation’ as an element of directing.

Answer: Motivation means stimulating people to act in a desired manner to achieve certain organisational goals.


Q. Differentiate between ‘formal’ and ‘informal’ organisation on the basis of ‘origin.’

Answer: Formal organisation originates as a result of company’s rules and policies while an informal
organisation originates as a result of social interaction.


Q. Why is ‘employment interview’ conducted in the process of selection?

Answer: Employment Interview is conducted to evaluate the applicant’s suitability for the job.




Q. Alpha Enterprises is a company manufacturing water geysers. The company has a functional structure with four main functions-Production, Marketing, Finance and Human Resource. As the demand for the product grew, the company decided to hire more employees. 
Identify the concept which will help the Human Resource Manager in deciding the actual number of persons required in each department.

Answer: Workload Analysis.

Q. Hina Sweets is a renowned name for quality sweets since 1935. Harsh the owner of Hina Sweets was worried as the sales had declined during the last three months. When he enquired from the Sales Manager, the Sales Manager reported that there were some complaints about the quality of sweets. Therefore Harsh ordered for sample checking of sweets.

Identify the step taken by Harsh that is related to one of the functions of management.

Answer: Measurement of actual performance.



Q. What is meant by 'financial management’?

Answer: Financial Management refers to management of flow of funds and involves decisions relating to procurement of funds, investment of funds and distribution of earnings to the owners.
or Financial Management means planning, organising, directing and controlling the financial activities of an organisation.


Q. Meca Ltd. a reputed automobile manufacturer needs Rupees ten crores as additional capital to expand its business. Atul Jalan, the CEO of the company wanted to raise funds through equity. On the other hand the Finance Manager, Nimi Sahdev 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.

Answer: Private Placement.


Q. Sunita took her niece, Aishwarya for shopping to ‘Benetton’ to buy her a dress on the occasion of her birthday. She was delighted when on payment for the dress she got a discount voucher to get 20% off for a meal of ₹500 or above at a famous eating joint.

Identify the technique of sales promotion used by the company in the above situation.

Answer: Usable benefit.


Q. Explain ’unity of command’ and ‘equity’ as principles of general management.

Answer:
Unity of command
§ The principle of unity of command states that each employee in an organisation should receive orders from one superior only and he should be responsible to only one superior.

§ It prevents confusion regarding tasks to be done


Equity
§ Equity states that there should be no discrimination against anyone on account of sex, religion,
language, caste, belief, nationality etc.

§ It emphasises kindliness and justice in the behaviour of managers towards the workers to
ensure loyalty and devotion.



Q. State any three points of importance of planning function of management.

Answer: Importance of planning (any three):

(i) Provides directions
Planning provides directions by deciding in advance what action should be taken.

(ii) Reduces the risks of uncertainty
Planning reduces the risks of uncertainty by anticipating changes and developing managerial
responses to them.

(iii) Reduces overlapping and wasteful activities
Planning reduces overlapping and wasteful activities by coordinating the activities of different divisions.

(iv) Promotes innovative ideas
Planning promotes innovative ideas requiring application of mind and foresight.

(v) Facilitates decision making
Planning facilitates decision making by making a choice from among the alternative courses of action.

(vi) Establishes standards for controlling
Planning establishes standards against which actual performance is measured.


Q. Explain briefly any three functions performed by a supervisor.

Answer: The functions performed by the supervisor:

(i) Maintains day-to-day contact with the workers.
(ii) Links the workers and the management.
(iii) Helps in maintaining group unity.
(iv) Ensures performance of work.
(v) Provides on the job training.
(vi) Builds high morale amongst the workers.
(vii) Gives feedback.


Q. Somnath Ltd.is engaged in the business of export of garments. In the past, the performance
of the company had been upto the expectations. In line with the latest technology, the company
decided to upgrade its machinery. For this, the Finance Manager, Dalmia estimated the amount
of funds required and the timings. This will help the company in linking the investment and the
financing decisions on a continuous basis. Dalmia therefore, began with the preparation of a sales forecast for the next four years. He also collected the relevant data about the profit estimates in the coming years. By doing this, he wanted to be sure about the availability of funds from the internal sources of the business. For the remaining funds he is trying to find out alternative sources from outside.

Identify the financial concept discussed in the above para. Also state the objectives to be
achieved by the use of financial concept, so identified.


Answer: Concept- Financial Planning
Objectives of financial planning:
(i) To ensure availability of funds whenever required It involves estimation of the funds required, the time at which these funds are to be made available and the
sources of these funds.

(ii) To see that the firm does not raise resources unnecessarily
It ensures that firm does not raise resources unnecessarily as it will increase the costs and the
resources will remain idle.


Q. Ginika, Tanish and Rohit were friends from college days and now they are doing different
kinds of business. They regularly meet and discuss their business ideas and exchange notes on
customer satisfaction, marketing efforts, product designing, selling techniques, social concerns etc. In one of such meetings, Ginika drew the attention of Tanish and Rohit towards the
exploitation of consumers. She told that most of the sellers were exploiting the consumers in
various ways and were not paying attention towards the social, ethical and ecological aspects
of marketing, whereas she was not doing so.
Tanish told that they were under pressure to satisfy the consumers, but stated that the
consumers would not buy or not buy enough unless they were adequately convinced and
motivated for the same.

Rohit stressed that a company cannot achieve its objectives without understanding the needs of the customers. It was the duty of the businessmen to keep consumer satisfaction in mind because business is run by the resources made available to them by the society. He further stated that he himself was taking into consideration the needs of the customers.

Identify the various types of thinking that guided Ginika, Tanish and Rohit in the marketing efforts of their business. Also, state one more feature of the various types of thinking identified that is not given in the above para.

Answer: Various types of thinking that guided the marketing efforts were:

Ginika
Societal Marketing concept
Feature of Societal marketing concept: (Any One)
(i) It takes care of long term well being of the consumers as well as the society.

(ii) It uses integrated marketing as a means to achieve the objective.

(iii) Its objective is to earn profits through customer satisfaction and social welfare.

(iv) The marketing efforts start from the identification of needs of the target market and the
society.

Tanish

Selling concept
Feature of Selling concept: (Any one)
(i) It uses aggressive selling and promotional techniques like advertising, personal selling and sales
promotion to achieve the objective.

(ii) It involves pushing the sale of existing products.

(iii) Its objective is to earn profits through increased volume of sales.

(iv) The marketing efforts start after the product is produced in the factory.


Rohit

Marketing concept

Feature of Marketing concept: (Any one)

(i) It involves development of products for satisfying needs of the target market better than the
competitors.

(ii) Its focus is on satisfaction of customers needs.

(iii) It uses integrated marketing as a means to achieve the objective.
(iv) The marketing efforts start from the identification of needs of the target market.


Q. Ashutosh Goenka was working in ‘Axe Ltd’, a company manufacturing air purifiers. He found that the profits had started declining from the last six months. Profit has an implication for the survival of the firm, so he analysed the business environment to find out the reasons for this decline.

(a) Identify the level of management at which Ashutosh Goenka was working.
(b) State three other functions being performed by Ashutosh Goenka.

Answer: Top Level.
Functions of the top level of management: (Any three)

1. To co-ordinate the activities of different departments.
2. To be responsible for welfare and survival of the organisation.
3. To formulate overall organisational goals and strategies for their achievement.
4. To be responsible for all the activities of the business and for its impact on the society.


Q. Sanchit, after completing his entrepreneurship course from Sweden returned to India and started a coffee shop ‘AromaCoffeeCan’ in a famous mall in New Delhi. The speciality of the coffee shop was the special aroma of coffee and a wide variety of flavours to choose from. Somehow, the business was neither profitable nor popular. Sanchit was keen to find out the reason. He appointed Sandhya, an MBA from a reputed college, as a manager to find out the causes for the same. Sandhya took feedback from the clients and found out that though they loved the special unique aroma of coffee but were not happy with the long waiting time being taken to process the order. She analysed and found out that there were many unnecessary obstructions in between which could be eliminated. She fixed a standard time for processing the order.
She also realised that there were some flavours whose demand was not enough. So, she also
decided to stop the sale of such flavours. As a result with in a short period Sandhya was able to
attract the customers.

Identify and explain any two techniques of scientific management used by Sandhya to solve
the problem.

Answer: Techniques of Scientific management used by Sandhya to solve the problem were: (Any two)

(i) Motion Study
§ Meaning: It 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.

(i) Time Study
§  Meaning: It 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) Simplification of Work
§  Meaning: It is a technique to eliminate superfluous varieties, sizes and dimensions of products.
§  It leads to reduced inventories, fuller utilization of equipment and increased turnover to reduce costs.


Q. Give the meaning of ‘objectives’ and ‘budget’ as types of plans.

Answer:

Objectives

Objectives are the end points which are numerically expressed, that the management seeks to achieve
within a given time period. These are set by the top management and focus on broad general issues. They serve as a guide for overall business planning.

Budget
A budget is a statement of expected results for a given future period expressed in numerical terms
from where deviations can be taken care of. It is a fundamental planning instrument as making budget involves forecasting.


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

Answer:
Transfers
§  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.

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


Promotions

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

§  This practice helps to improve the motivation and increases loyalty and satisfaction level of
employees.


Q. These days, the development of a country is also judged by its system of transferring finance
from the sector where it is in surplus to the sector where it is needed most. To give strength to the economy, SEBI is undertaking measures to develop the capital market. In addition to this
there is another market in which unsecured and short-term debt instruments are actively traded everyday. These markets together help the savers and investors in directing the available funds into their most productive investment opportunity.

(a) Name the function being performed by the market in the above case.
(b) Also, explain briefly three other functions performed by this market.


Answer: Mobilisation of savings and channeling them into the most productive uses/ Allocative function.

Other functions performed by Financial market are:

(i) Facilitating price determination/ discovery.
(ii) Providing liquidity to financial assets.
(iii) Reducing the cost of transactions.


Q. Umang Gupta is the Managing Director of Denver Ltd. The company had established a good
name for itself and had been doing well. It was known for timely completion of orders. The
Production Manager, Ms. Kanta was efficiently handling the processing of orders and had a team of fourteen motivated employees working under her. Everything was going on well. Unfortunately she met with an accident. Umang knew that in the absence of Ms. Kanta, the company may not be able to meet the deadlines. He also knew that not meeting the deadliness may lead to customer dissatisfaction with the risk of loss of business and goodwill. So, he had a meeting with his employees in which accurate and speedy processing of orders was planned. Everybody agreed to work as team because the behaviour of Umang Gupta was positive towards the employees of the organisation. Hence everyone put in extra time and efforts and the targets were met on time. Not only this, Umang visited Ms. Kanta and advised her to take sufficient rest.

(a) Identify the leadership style of Umang Gupta and draw a diagram depicting the style .
(b) State any two values highlighted by the behaviour of Umang Gupta.

Answer:
(a) Leadership Style- Democratic/ Participative/ group centered.

Add caption

In the above diagram, A is the leader and B, C, D and E are subordinates.

(b) Values highlighted by the behaviour of Umang Gupta are:
(i) Teamwork/ Team spirit
(ii) Good behaviour in human interaction


Q. Metlapp Networks and Technologies Ltd. is a leader in technology innovation in the United
States, creating products and solutions for connecting the world. It has a large research and
development team which invented the first smart watch, named as W-7. The watch besides showing the time, also monitors few health parameters like heart beat, blood pressure etc.
While in search of markets abroad, the company found that in India, the reform process was
underway with the aim of accelerating the pace of economic growth. The company decided to take advantage of simplified export procedure and removal of quantitative as well as tariff restrictions in India.

It set up its office in Jamnagar with a view to capture the Indian market. In a short span of
time, the company emerged as a market leader.

Success of the company attracted many other players to enter the market. Competition resulted
in reduction in prices, there-by benefiting the customers.

(a) In the above paragraph, two major concepts related to government policy have been discussed. Identify and explain these concepts.

(b) Also, explain briefly any three impacts of these concepts on Indian business and industry.


Answer: (a) Two major concepts related to government policy are:
(i) Liberalisation
Liberalisation means removal of unnecessary controls and restrictions on business.

(ii) Globalisation
Globalisation means integrating the various economies of the world leading towards the
emergence of a cohesive global economy.


(b) Impact of these concepts on Indian business and industry: (Any three)
(i) Increasing competition
(ii) More demanding customers
(iii) Rapidly changing technological environment
(iv) Necessity for change
(v) Need for developing human resources.
(vi) Market orientation
(vii) Loss of budgetary support to the public sector.


Q. State the steps in the process of controlling.

Answer: Steps in the controlling process are:

i) Setting performance standards
The standards of performance are set which serve as the criteria against which actual performance will be measured.

(ii) Measurement of actual performance
Actual performance is measured in an objective and reliable manner in the same units in which standards are set.

(iii) Comparing actual performance with the standards
Actual performance is compared with the standards to find out the deviation.

(iv) Analysing deviations
Deviations are analysed for their causes through Critical Point Control and Management by
Exception.

(v) Taking corrective action
Corrective action is taken if deviations go beyond the acceptable limits.


Q. Indian Youth Organisation (IYO) organised a visit of its members to an old age home to
inculcate the habit of social work among them. The visit revealed that the living conditions of the inmates of the old age home were not hygienic. So, the IYO members decided to clean the premises. During their cleanliness drive, they realised that the old age home also required pest control. But some of the inmates of old age home were reluctant for it because they believed that the pest control may create health problems for them.

IYO, therefore decided to provide ethical, safe and odourless pest control. They showed to
inmates of old age home a pamphlet of the proposed pest control product which promised
easy, inexpensive and long lasting pest control.

The inmates happily agreed and the pest control was carried out. It worked for a fortnight but to their dismay the effect started wearing off. IYO contacted the pest control company which kept on postponing their visit. After waiting for a month, IYO filed a case in the consumer court. The consumer court was satisfied about the genuineness of the complaint and issued necessary directions to the pest control company.

(a) State any six directions that might have been issued by the court.
(b) Also identify any two values that are being communicated by IYO to the society.

Answer:
(a) Directions that might have been issued by the court: (Any six)
(i) To remove the deficiency in service.
(ii) To refund the price paid for the service provided.
(iii) To pay a reasonable amount of compensation for any loss suffered by the inmates of old age home.
(iv) To pay punitive damages.
(v) To discontinue the unfair/ restrictive trade practice and not to repeat the same in future.
(vi) To pay any amount (not less than 5% of the value of the service provided) to be credited to the
Consumer Welfare Fund or any other organisation/person, to be utilised in the prescribed manner.
(vii) To issue corrective advertisement to neutralize the effect of misleading pamphlet.
(xii) To pay adequate costs to IYO.

(b) Values that are being communicated by IYO to the society are: (Any two)
(i) Sensitivity towards the environment.
(ii) Respect for the elderly.
(iii) Cleanliness and hygiene.
(iv) Concern for health of people.


Q. Aman Chadha started ‘Bulls Eye’ a company for providing cyber security solutions to
businesses. Its objective is to prevent, detect and respond to cyber attacks and protect critical data. He was a hardworking software engineer and an expert in cyber security. His reputation grew by leaps and bounds as he was not only a person of integrity but also did his work with utmost honesty and sincerity. The business started growing day by day.
He was delighted when he was offered a big project by the Ministry of Defence. While working on the project, he found that the volume of work made it impractical for him to handle all
the work by himself. He decided to expand the team. The company maintained a close liaison
with a local engineering college. During a campus placement, Ishan and Vrinda were appointed to work for the new project.

He found the new employees capable, enthusiastic and trustworthy. Aman Chadha was thus, able to focus on objectives and with the help of Ishan and Vrinda, the project was completed on time. Not only this Aman Chadha was also able to extend his area of operations. On the other hand Ishan and Vrinda also got opportunities to develop and exercise initiative.

(i) Identify and briefly explain the concept used by Aman Chadha in the above case which helped
him in focusing on objectives.

(ii) Also, state any four points of importance of the concept identified in (i) above.


Answer:
(i) Delegation.
Delegation is the transfer of authority from superior to subordinate, entrustment of responsibility and
creation of accountability for performance which helps a manager to extend his area of operations.

(ii) Importance of delegation of authority: (Any four)
(i) Effective management
It helps in effective management as the managers get more time to concentrate on important matters.

(ii) Employee development
It helps in development of employees as the employees get more opportunities to utilize their
talent.

(iii) Motivation of employees
It helps to motivate employees as the employees feel encouraged and try to improve their performance
further.

(iv) Facilitation of growth
It facilitates growth by providing a ready workforce to take up leading positions in new ventures.

(v) Basis of management hierarchy
It establishes a management hierarchy through clear superior subordinate relationships.

(vi) Better co-ordination
It helps in better co-ordination by avoiding overlapping of duties.



Q. Explain briefly any four factors which affect the choice of capital structure of a company.

Answer: Following are the factors affecting the choice of capital structure of a company: (any four)

(i) Cash flow position
(ii) Interest coverage ratio
(iii) Debt service coverage Ratio
(iv) Return on Investment
(v) Cost of debt
(vi) Tax rate
(vii) Cost of equity
(viii) Floatation costs
(ix) Fixed operating costs
(x) Risk consideration
(xi) Flexibility
(xii) Control
(xiii) Regulatory framework
(xiv) Stock market conditions
(xv) Capital structure of other companies



Q. Mediquip Ltd. is a company dealing in distribution of medical equipments. The company
recently imported 15000 units of sugar testing machines to test the sugar levels without taking
blood samples. For deciding the marketing strategy, the Chief Executive Officer of the
company called a meeting of the marketing heads of different zones.
In the meeting, Sandeep, the North Zone Marketing Head, suggested that since the
machines were sophisticated they need to visit hospitals personally, to explain its working to the
hospital staff who would be using the machines. He also suggested that additional trained people may be recruited for the same.

Himanshu, another Zonal Head, added that since lot of money had been spent on the import of the machines, the company was short of funds to pay to the additional staff as suggested by Sandeep.

Rahul, a newly appointed Zonal Head of South Zone suggested that since the size of the order is
not large, a detailed study of the factors determining the choice of channels of distribution
is required before making the right choice.

(a) Identify the factors influencing the choice of channels of distribution which were discussed in the meeting.

(b) Also, explain briefly the other consideration to be taken care of in each factor identified in part (a).


Answer:
(a) Factors affecting choice of channels of distribution which were discussed in the meeting:
(i) Product related factors
(ii) Company characteristics
(iii) Market related factors

(b) Other considerations to be taken care of in each of the factors identified above are:

(i) Product related factors: (Any one)
§  Nature of the product.
§  Perish-ability of Product.
§  Unit value of Product.

(ii) Company characteristics:
§  Degree of control over channel members

(iii) Market related factors: (Any one)
§  Geographical concentration of potential buyers.
§  Size of the market.