CBSE Class 12 Business Studies Question Paper 2024 (Set 2- 66/2/2) Available- Download Solution PDF with Answer Key

Solution: Decentralization is an optional decision made at the discretion of the top management. Top management has the authority to decide whether decentralization should be implemented in the organization based on factors like its size, complexity, and goals. Assertion (A) is correct, and Reason (R) explains this concept by stating that decentralization is a decision taken by top management. Hence, both are true, and Reason (R) explains Assertion (A).

Solution: The communication barrier described here is a personal barrier, which arises due to individual attitudes, emotions, or biases. In this case, the superior's lack of confidence in their subordinates is a personal perception that hampers effective communication. Personal barriers can lead to miscommunication, misunderstanding, and inefficiency in the workplace.

Solution: Dematerialization refers to the process of converting physical securities into electronic form. This enables faster and more secure transactions.

Solution: The company, 'Lens-o,' uses a zero level channel of distribution. This type of distribution channel is direct, where the company sells its products directly to customers without intermediaries. Initially, 'Lens-o' operated online, and with the introduction of an offline store, the company continues to use a direct distribution model.

Solution: Akash Mehra follows an authoritative leadership style, where the leader gives clear instructions and expects compliance from subordinates with little input from them. The communication is one-way, with the manager issuing commands.

Solution: The tests used to measure an individual's potential for learning new skills are Aptitude Tests. These tests assess the ability of an individual to learn or develop new skills and are commonly used in the selection process for jobs that require specific competencies.

Solution: The correct answer is Trading on equity. Trading on equity occurs when a company uses fixed financial charges, such as interest on debt, to increase the return for its equity shareholders. The presence of debt can amplify the profits for equity shareholders due to the leverage effect.

Solution: The tool of promotion used by 'JKSD India Ltd.' is Personal Selling. In this case, salespersons are directly interacting with potential customers in malls to promote the products and persuade them to buy. Personal selling involves face-to-face communication where a sales representative helps in persuading the customer to purchase a product.

Solution: This is a rule because it is a clear and direct instruction that needs to be followed. A rule is a regulation that must be obeyed, and in this case, it ensures safety at the construction site.

Solution: Recruitment is the process of attracting potential employees to apply for job openings. It involves advertising vacancies, sourcing candidates, and encouraging qualified individuals to apply.

Solution: The correct answer is Storage and warehousing. While storage and warehousing are important aspects of logistics and supply chain management, they are not core features of marketing. Marketing primarily focuses on understanding and meeting customer needs and wants, creating value, and offering products and services that appeal to the target market.

Solution: The correct answer is Allocative. In financial markets, funds are allocated or directed to the most productive investment opportunities. This allocation function ensures that capital is distributed efficiently to support economic growth and investment in productive ventures.

Solution: The factor affecting capital structure in this case is control. Issuing equity to the public can dilute the ownership of management, making it vulnerable to a takeover. Companies prefer to maintain control, especially when their current stake in the company is low. Hence, control is an important factor in determining the choice between debt and equity financing.

Solution: Directing involves guiding and supervising employees to ensure that they are working towards organizational goals. However, estimating manpower requirements is part of the planning function, not directing.

Solution: The case demonstrates how planning encouraged Sudha and Shweta to transform their innovative idea into a successful business. Planning promotes new ideas and helps convert them into concrete actions.

Solution: The correct answer is Brand. A brand is a unique name, term, symbol, or design that identifies and differentiates a company's products or services from others in the market. It is used to create a unique identity and recognition in the marketplace.

Solution: Sunita has used a functional structure for her travel agency. In this structure, the organization is divided into different departments based on specialized functions like reservations, hotel bookings, and payment handling. Each department focuses on a specific function, which enhances efficiency and specialization.

Solution: Statement I is true because controlling is the function of ensuring that activities are aligned with the plans and objectives set by the organization. Statement II is also true as controlling is a pervasive function, meaning it is required at all levels of management, from top to operational levels. Therefore, both statements are correct.

Solution: Sushant demonstrated delegation by assigning specific tasks to his subordinates while retaining the responsibility for the overall project. Delegation involves transferring authority and responsibility for specific tasks to others while the manager maintains accountability. This allowed Sushant to effectively manage his workload and complete the project on time with the help of his subordinates.

Solution: The correct matching of marketing philosophies to their main focus is as follows:

• 1. Production concept: iv) Quantity of product
• 2. Product concept: ii) Quality, performance and features of product.
• 3. Marketing concept: i) Customers' needs
• 4. Societal Marketing concept: iii) Customers' needs and societal well-being.

Solution:

1. Registration of brokers and sub-brokers and other players in the market.
2. Registration of collective investment schemes and Mutual Funds.
3. Regulation of stock brokers, portfolio exchanges, underwriters, and merchant bankers and the business in stock exchanges and any other securities market.
4. Regulation of takeover bids by companies.
5. Calling for information by undertaking inspection, conducting enquiries, and audits of stock exchanges and intermediaries.

Solution: Objectives of SEBI:

1. Regulation of Stock Exchanges:
   • SEBI aims to regulate stock exchanges and the securities market to ensure their smooth and orderly functioning.
2. Investor Protection and Awareness:
   • SEBI works to protect the rights and interests of investors, particularly individual investors, by guiding and educating them about securities trading.
3. Prevention of Trading Malpractices:
   • SEBI ensures that unethical and fraudulent activities such as insider trading, price manipulation, and unfair trade practices are prevented.
4. Regulation of Intermediaries:
   • SEBI formulates a code of conduct and fair practices for intermediaries like brokers, merchant bankers, and investment advisors, ensuring professionalism and competitiveness.

Solution: Two types of plans discussed in the case:

1. Objective:
   • "He set a target of earning a modest 10% return on investment in the first year." An objective is a specific goal set by the organization to be achieved within a set time period. In this case, the target return on investment is a clear objective.
2. Strategy:
   • "He now wanted to develop a plan to define the direction and scope of 'Cakes and Bakes' for the long run." A strategy outlines a broad course of action that is designed to achieve long-term goals and objectives, such as improving ROI and advertising products effectively.

Solution:

1. The function of management discussed in this case is Controlling.
   • Controlling is a key function of management that involves monitoring and evaluating the progress of activities to ensure that the organization is on track to meet its objectives. It includes the processes of setting performance standards, measuring actual performance, identifying deviations from the standards, and taking corrective actions.
   • In this case, Piyush, the Production Manager, noticed that the production cost for one pair of shoes exceeded the estimated cost. Upon investigation by Abhay, it was found that there was overmanning in the production process, meaning that more workers were involved than necessary to complete the task. The result was higher labor costs and inefficiency in resource utilization.
2. Importance of Controlling:
   • It helps in accomplishing organisational goals by bringing to light the deviations, if any, and indicating corrective action.
   • It helps in judging accuracy of standards in the light of changes taking place in the organization and environment.
   • It helps in making efficient use of resources by ensuring that each activity is performed in accordance with predetermined standards.
   • It improves employee motivation as the employees know well in advance the standards of performance on the basis of which they will be appraised.
   • It ensures order and discipline among employees by keeping a close check on their activities.
   • It facilitates coordination in action as each department is governed by pre-determined standards which are well coordinated with one another.

Solution:

1. Importance of 'Controlling' function of management:
   • Accomplishing organisational goals: Controlling ensures that activities are aligned with the set objectives of the organization, helping in achieving the overall goals.
   • Making efficient use of resources: It helps in monitoring the utilization of resources effectively and optimally.
   • Ensuring order and discipline: By keeping a check on performance, controlling ensures that the employees work in an organized and disciplined manner, maintaining a smooth workflow.
2. Relationship between 'Planning' and 'Controlling' functions of management:
   • Planning is a prerequisite for controlling: Planning sets the goals, and controlling helps to ensure that those goals are achieved. Without a plan, there is no standard to measure against.
   • Planning is prescriptive, controlling is evaluative: Planning involves deciding on a course of action for the future, while controlling assesses whether the actions taken are in line with the plan.
   • Planning is forward-looking, controlling is backward-looking: Planning sets future goals, whereas controlling evaluates past activities to correct any deviations and ensure goals are achieved.

Solution:

• Dimension of Business Environment:
  • Social Environment: The social environment of business includes social forces like customs, traditions, values, social trends, and society's expectations from business.
• Importance of Understanding the Business Environment:
  • It helps to improve performance: Enterprises that continuously monitor their environment and adopt suitable business practices not only improve their current performance but also continue to succeed in the market for a longer period.

Solution: Advantages of External Sources of Recruitment:

1. Qualified Personnel:
   • External sources provide access to a large pool of qualified and skilled candidates who may bring new expertise to the organization.
2. Wider Choice:
   • By recruiting externally, businesses get a wider selection of candidates, increasing the chances of finding the right fit for the job.
3. Fresh Talent:
   • External candidates bring new ideas, perspectives, and innovation to the organization, promoting creativity and problem-solving.
4. Competitive Spirit:
   • Hiring externally creates healthy competition among existing employees, encouraging them to improve performance and productivity.

Solution:

1. Direct Recruitment:
   • Organizations place a notice on their notice board, specifying job vacancies.
   • Unskilled and semi-skilled job seekers gather outside the company's premises, and selection is done on the spot.
   • This method is cost-effective as it does not involve advertising expenses for vacancies.
2. Casual Callers:
   • Many reputed organizations maintain a database of unsolicited job applications received from potential candidates.
   • Whenever vacancies arise, these pre-screened applicants are considered, reducing the time and cost of recruitment.
   • This method provides an efficient hiring process, ensuring that vacancies are filled quickly.

Solution:

1. Technology Upgradation:
   • In certain industries, technological advancements cause assets to become obsolete quickly, requiring frequent replacements.
   • Such industries need higher investments in fixed assets to keep up with the latest technology.
   • Example: The IT and telecom industry frequently upgrades equipment, requiring more fixed capital.
2. Choice of Technique:
   • A capital-intensive organization requires higher investments in machinery and equipment, as it relies less on manual labor.
   • Such firms have greater fixed capital requirements to maintain efficiency and productivity.
   • In contrast, labor-intensive organizations depend more on manpower and require less investment in fixed assets, resulting in lower fixed capital needs.

Solution:

1. Stability of Earnings:
   • A company with stable and consistent earnings is in a better position to declare higher dividends to shareholders.
   • On the other hand, a company with fluctuating or unstable earnings tends to retain more earnings and distribute smaller dividends.
   • Example: Utility companies with predictable revenue streams often provide higher and stable dividends.
2. Taxation Policy:
   • If dividend tax rates are high, companies may prefer to retain earnings rather than distribute dividends.
   • Conversely, if tax rates on dividends are lower, firms are more likely to declare higher dividend payouts.
   • Example: Government policies influencing corporate tax rates significantly affect dividend decisions.

Solution:

Solution: The incentives provided by 'Inaya Ltd.' include:

1. Perquisites:
   • Perquisites such as car allowance, housing, and medical aid provide motivation to employees over and above their salary.
2. Retirement benefits:
   • Retirement benefits like provident fund and gratuity provide financial security to employees after retirement, motivating them to stay in the organization.
3. Stock option/Co-partnership:
   • Employees are offered company shares at a set price lower than the market price, creating a sense of ownership and encouraging them to contribute to the growth of the company.
4. Bonus:
   • Bonuses are provided over and above salaries as a reward for good performance, motivating employees to achieve higher results.

Solution: The two factors affecting price determination are:

1. Product cost:
   • The cost sets the minimum level or the floor price at which the product may be sold.
   • Generally, all marketing firms strive to cover all their costs, at least in the long run, and aim to earn a profit margin over the costs.
2. Extent of competition in the market:
   • The price will tend to reach the upper limit when there is lesser competition. However, under conditions of free competition, the price will be set at the lowest level.
   • Competitors' prices, their anticipated reactions, quality, and features of the competitive products must be considered before fixing the price of a product.

Solution:

1. The consumer rights discussed in the above case:
   • Right to choose/Right to be assured: The consumer has the freedom to access a variety of products at competitive prices. This implies that the marketers should offer a wide variety of products in terms of quality, brand, prices, size, etc., and allow the consumer to make a choice from among these.
   • Right to be heard: The consumer has a right to file a complaint and to be heard in case of dissatisfaction with a good or a service. It is because of this reason that many enlightened business firms have set up their own consumer service and grievance cells.
   • Right to safety: The consumer has a right to be protected against goods and services that are hazardous to life, health, and property. Thus, consumers are educated that they should use electrical appliances that are ISI marked, as this would be an assurance of such products meeting quality specifications.
2. Two consumer responsibilities that Ashish did not fulfil:
   • Buy only standardised goods: Ashish did not ensure that the product was standardised and lacked quality assurance, which is essential to guarantee its safety and reliability.
   • Ask for a cash memo on purchase of goods or services: Ashish did not ask for a proper cash memo, which is a basic consumer responsibility when purchasing goods to ensure that transactions are documented and transparent.
   • Be honest in your dealings: Ashish did not confirm whether the TV was as per the standard specifications, which could have helped him in avoiding faulty purchases or misleading deals.

Solution:

1. Unity of Command
   • Every employee should have only one superior from whom they receive instructions.
   • Dual subordination should be avoided to prevent confusion, inefficiency, and conflicts in task execution.
   • This principle ensures clear accountability and better coordination in an organization.
2. Equity
   • Managers should treat employees with kindness, fairness, and justice.
   • There should be no discrimination based on gender, religion, language, caste, belief, or nationality.
   • A fair work environment fosters employee loyalty and motivation.
3. Initiative
   • Initiative refers to employees taking the first step with self-motivation to think creatively and execute plans.
   • Organizations should encourage employees to suggest improvements and reward useful suggestions that help in cost and time reduction.

Solution:

1. Meeting Changing Environment Requirements
   • Management principles serve as general guidelines but can be adapted to meet changing business environments.
   • Their flexibility helps managers adjust to new economic, technological, and social challenges.
2. Management Training, Education, and Research
   • These principles form the foundation of management theory and provide a structured approach to training and education.
   • They are used in professional management courses and research, helping develop managerial skills.
   • Organizations use these principles to train employees for leadership roles.
3. Optimum Utilisation of Resources and Effective Administration
   • Organizations have limited resources, so they must be utilized efficiently for maximum benefit at minimum cost.
   • Management principles help managers make unbiased and rational decisions, ensuring optimal use of human and material resources.

Solution:

Solution: Limitations of Planning:

1. Planning Leads to Rigidity:
   • Once a well-defined plan is in place, managers may hesitate to make changes, even when required.
   • This rigidity may lead to inefficiencies and missed opportunities in a dynamic business environment.
2. Planning May Not Work in a Dynamic Environment:
   • External factors such as market fluctuations, government policies, and technological advancements can render plans ineffective.
   • Rigid plans may fail to adapt quickly to unexpected changes.
3. Planning Reduces Creativity:
   • When employees and managers strictly follow pre-determined plans, innovation and creative problem-solving may be discouraged.
   • Employees tend to think in fixed patterns rather than explore new ideas.
4. Planning Involves Huge Costs:
   • Extensive research, data collection, and forecasting efforts make planning an expensive process.
   • The cost of planning may sometimes outweigh the benefits, especially in fast-changing industries.
5. Planning is a Time-Consuming Process:
   • Detailed analysis and decision-making take time, delaying action.
   • In fast-moving industries, businesses may lose competitive advantage due to slow execution.
6. Planning Does Not Guarantee Success:
   • Even the best plans may fail due to poor implementation, unforeseen circumstances, or external factors.

Solution: The features of coordination highlighted in the above case are:

1. Coordination is a deliberate function:
   • 'She coordinates the efforts of her staff in a conscious and deliberate manner and plans for the wedding season demand in the month of June itself.'
   • A manager has to coordinate the efforts of different people in a conscious and deliberate manner.
2. Coordination is a continuous process:
   • 'Thus, her coordination with all departments of the organization begins at the planning stage and continues till controlling.'
   • Coordination is not a one-time function but a continuous process that begins at the planning stage and continues till controlling.
3. Coordination ensures unity of action:
   • 'This acts as a binding force between the departments and ensures that all action is aimed at achieving organizational goals.' The purpose of coordination is to secure unity of action in the realization of a common purpose.
4. Coordination integrates group efforts:
   • 'Nalini is able to give a common focus to group effort to ensure that the business is performing as planned, year after year.' Coordination unifies unrelated or diverse interests into purposeful work activity.