CBSE Class 12 Business Studies Question Paper 2024 (Set 3- 66/1/3) Available- Download Solution PDF with Answer Key

Solution:
Step 1: In the primary market, securities are issued directly by the company, and the prices are set by the issuing company.
Step 2: The primary market facilitates the raising of capital through initial public offerings (IPOs) and other means.
Thus, the correct answer is option A.

Solution:
Step 1: Financial markets play a crucial role in mobilizing savings and channeling them to productive investments.
Step 2: They offer various investment choices and enable investors to allocate resources efficiently.
Thus, both statements are true, and the correct answer is option C.

Solution:
Step 1: A company's ability to access capital from the market plays a crucial role in dividend decisions. If a company can raise funds easily, it has the flexibility to pay higher dividends.
Step 2: Since 'Dovex' had a strong reputation and could attract investors easily, it could afford to pay higher dividends without compromising its financial stability.
Thus, the correct answer is option D.

Solution:
- Placement: Refers to the employee occupying the assigned position.
- Recruitment: The process of attracting prospective employees to apply for jobs.
- Orientation: Introducing the new employee to the work environment and policies.
- Performance Appraisal: Evaluating employee performance based on set standards.
Thus, the correct answer is option C.

Solution:
Step 1: Understanding Social Environment: The social environment refers to the cultural and societal aspects that influence businesses, such as social values, work ethics, lifestyle changes, and expectations from the workforce.
Step 2: Analyzing the options:
- Option (A) relates to economic factors rather than social factors.
- Option (B) aligns with social expectations, reflecting the workforce's changing attitudes and aspirations.
- Option (C) pertains to political or economic environment.
- Option (D) refers to economic planning and development, not social environment.
Thus, the correct answer is option B.

Solution:
Step 1: Sales promotion includes short-term incentives to encourage purchases and boost sales.
Step 2: Examples include discounts, coupons, and special offers.
Thus, the correct answer is option C.

Solution:
Step 1: Public relations focuses on building and maintaining positive relationships with the public through various communication channels.
Step 2: Beenu's daughter used media channels like TV, radio, and magazines to communicate the joy of physical books and engage the community, which is characteristic of public relations efforts.
Thus, the correct answer is option D.

Solution:
Step 1: The production concept emphasizes mass production, availability, and affordability of products to maximize profits.
Step 2: Businesses focus on producing goods efficiently to cater to demand.
Thus, the correct answer is option D.

Solution:
Step 1: Understanding Leadership Styles: Autocratic leadership is characterized by individual control over all decisions with little input from team members. In contrast, democratic leadership involves collaboration and encourages employee participation in decision-making.
Step 2: Applying to the given case: Ravi Kumar encouraged employees to actively participate in decision-making, promoting enthusiasm and motivation. This aligns with democratic leadership, where employees are given a voice in business decisions, fostering a sense of ownership and commitment. Therefore, the correct answer is option B.

Solution:
Step 1: Efficiency is defined as performing a task correctly with minimal resource utilization and cost. It focuses on the input-output ratio.
Step 2: In contrast, effectiveness is about achieving goals, whereas efficiency is about optimizing resources to achieve the best results at minimal cost. Thus, the correct answer is option D.

Solution:
Step 1: A strategy is a long-term plan designed to achieve specific goals and overcome challenges by utilizing available resources.
Step 2: Nikhil's vision and the extensive market research guided the preparation of a clear, long-term plan, which is characteristic of strategic planning.
Thus, the correct answer is option C.

Solution:
Step 1: Businesses establish consumer service cells to address grievances and enhance customer satisfaction.
Step 2: The right to file a complaint is a fundamental consumer right, making it necessary for businesses to have grievance handling mechanisms.
Thus, the correct answer is option A.

Solution:
Step 1: Stock exchanges provide liquidity and marketability to existing securities, not new securities. New securities are introduced in the primary market.
Step 2: Thus, the statement that stock exchanges provide liquidity to new securities is incorrect.
Thus, the correct answer is option A.

Solution:
Step 1: Delegation involves the transfer of authority and responsibility, but accountability remains with the manager. Delegation enhances efficiency by distributing workload without relieving the manager of ultimate responsibility.
Step 2: As a principle of delegation, while responsibility and authority can be shared, accountability cannot be delegated, meaning the manager remains answerable. Therefore, both statements are true.

Solution:
Step 1: Employee development is a continuous process aimed at enhancing an individual's knowledge, skills, and abilities to prepare them for future roles and responsibilities.
Step 2: Unlike training, which is job-specific, development focuses on overall career progression and potential realization.
Thus, the correct answer is option C.

Solution:
Step 1: Physical distribution involves logistics activities such as transportation, warehousing, and order processing.
Step 2: Standardisation and grading relate to product quality, not physical movement of goods. Thus, the correct answer is option B.

Solution:
Step 1: Planning is a continuous process as it requires constant monitoring and revision according to new conditions and requirements.
Step 2: Since new plans are created after evaluating past plans, it reflects the continuous nature of planning. Thus, the correct answer is option B.

Solution:
Step 1: A functional organisational structure groups similar jobs into departments based on their functions, such as HR, marketing, and finance.
Step 2: In the case of ‘Bizen,' jobs have been grouped based on their nature (HR, marketing, etc.), indicating a functional structure where departmental heads report to a single managing director. Thus, the correct answer is option C.

Solution:
Step 1: Financial planning involves determining the financial resources required for achieving business goals.
Step 2: It includes estimating the amount of funds required and identifying sources for obtaining these funds.
Thus, the correct answer is option B.

Solution:
Step 1: Business environment analysis helps firms identify emerging opportunities. By leveraging technological advancements, businesses can gain a competitive edge.
Step 2: In this case, 'SK Builders' recognized an opportunity early, giving them the first-mover advantage in the market. Thus, the correct answer is option B.

Solution:
Method: Vestibule training
- Vestibule training is a method of training where employees learn their jobs on the equipment they will be using, but the training is conducted away from the actual work floor. This method is used when employees need to handle sophisticated machinery and equipment.

Solution:
Protective functions of Securities and Exchange Board of India (SEBI) are:
(i) It prohibits fraudulent and unfair trade practices like making misleading statements, manipulations, price rigging etc.
(ii) It controls insider trading and imposing penalties for such practices.
(iii) It undertakes steps for investor protection.
(iv) It promotes fair practices and code of conduct in securities market.

Solution:
Difference between 'Money Market' and 'Capital Market':

Solution:
Features of business environment are:
(i) Business environment is the sum total of all factors/things external to business firms and, as such, is aggregative in nature.
(ii) Business environment includes both specific such as customers, investors, etc and general forces such as political, social, etc.
(iii) Different elements or parts of business environment are closely inter-related.
(iv) Dynamic nature: Business environment is dynamic and keeps on changing whether in terms of technological improvement, shifts in consumer preferences, etc.
(v) Business environment is uncertain as it is very difficult to predict future happenings, especially when environment changes are taking place too frequently.
(vi) Business environment is complex as it consists of numerous interrelated and dynamic conditions or forces that are relatively easier to understand in parts but difficult to grasp in its totality.
(vii) Business environment is a relative concept since it differs from country to country and even region to region.

Solution:
Features of demonetization are:
(i) Demonetisation is viewed as a tax administration measure and people with black money had to declare their unaccounted wealth and pay taxes at a penalty rate.
(ii) Demonetisation is also interpreted as a shift on the part of the government indicating that tax evasion will no longer be tolerated or accepted.
(iii) Demonetisation led to tax administration channelizing savings into the formal financial system, to enable banks with deposits to provide a base for loans, at lower interest rates.
(iv) It creates a less-cash or cash-lite economy, i.e., channelizing more savings through the formal financial system and improving tax compliance.

Solution:
The factors affecting the fixed capital requirements in the case are:
(i) Choice of technique:
- A capital-intensive organization requires higher investment in plant and machinery as it relies less on manual labour, thus higher fixed capital. - Labour-intensive organisations require less investment in fixed assets. Hence, their fixed capital requirement is lower.
(ii) Growth prospects:
- When growth is expected, a company may choose to create higher capacity in order to meet anticipated higher demand quicker. - This entails larger investment in fixed assets and consequently larger fixed capital.

Solution:
(i) Anuj had approached the State Commission.

Solution:
Reliefs Anuj is likely to get, if the consumer court is satisfied with the complaint are:
- (a) To refund the price paid for the product, or the charges paid for the service.
- (b) To pay a reasonable amount of compensation for any loss or injury suffered by the consumer due to the negligence of the opposite party.
- (c) To pay punitive damages in appropriate circumstances.

Solution:
Characteristics of coordination are:
(i) Coordination integrates group efforts by unifying unrelated or diverse interests into purposeful work activity.
(ii) Coordination ensures unity of action and acts as a binding force between departments and ensures that all action is aimed at achieving the goals of the organisation.
(iii) Coordination is a continuous process as it begins at the planning stage and continues till controlling.
(iv) Coordination is an all pervasive function as it is required in all departments and at all levels of management due to the interdependent nature of activities of various departments.
(v) Coordination is the responsibility of all managers as it is the function of every manager at the top, middle and operational level in the organisation.
(vi) Coordination is a deliberate function as a manager has to coordinate the efforts of different people in a conscious and deliberate manner.

Solution:
Functions of Middle Level Management are:
(i) They interpret the policies framed by top management.
(ii) They ensure that their department has the necessary personnel.
(iii) They assign necessary duties and responsibilities to them.
(iv) They motivate them to achieve desired objectives.
(v) They cooperate with other departments for smooth functioning of the organisation.
(vi) They are responsible for all the activities of first line managers.

Solution:
Differences between Functional structure and Divisional structure:

Solution:
Factors affecting the working capital requirement of a business are:
(i) Production cycle:
- Production cycle is the time span between the receipt of raw material and their conversion into finished goods.
- Working capital requirement is higher in firms with longer processing cycles and lower in firms with shorter processing cycles.

(ii) Availability of raw material:
- If the raw materials and other required materials are available freely and continuously, lower stock levels may suffice.
- If, however, raw materials do not have a record of uninterrupted availability, higher stock levels may be required.

Solution:
Factors affecting the choice of capital structure of a company are: (i) Control:
- Debt does not cause dilution of control.
- A public issue of equity may reduce the management's holding in the company and make it vulnerable to takeover.

(ii) Return on Investment:
- If the ROI of the company is higher than the cost of debt, it can choose to use trading on equity to increase its EPS.
- In such a case, it can use debt.

Solution:
The steps of the comprehensive process discussed above are:
(i) Preliminary screening: It helps the manager to eliminate unqualified or unfit job seekers based on the information supplied in the application forms.
(ii) Selection tests: These tests attempt to measure certain characteristics of individuals, ranging from aptitudes, manual dexterity, intelligence to personality.
(iii) Employment interview: A formal, in-depth conversation is conducted to evaluate the applicant's suitability for the job, and interviewees may also seek information from the interviewer.
(iv) Reference and background checks: References are used for verifying information and gaining additional information on an applicant from previous employers, known persons, teachers, university professors, etc.

Solution:
(i) 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.

The controlling function is crucial in identifying such discrepancies and providing a foundation for corrective actions. By using controlling techniques, Abhay was able to identify the problem, allowing the organization to adjust its labor usage, thereby reducing costs and improving efficiency in future projects.

The key steps in controlling include:
1. Setting performance standards: In this case, the initial cost estimation and labor requirements would have been set as the performance standard.
2. Measuring actual performance: The actual labor used and the cost of production were monitored, revealing discrepancies between the expected and actual performance.
3. Identifying deviations: It was identified that the production process was using more workers than necessary, leading to higher labor costs.
4. Taking corrective action: After the issue was identified, the corrective action would involve optimizing the number of workers required and making the necessary adjustments to ensure that future production is more efficient.

Controlling is a fundamental part of the management process because it ensures that resources are used efficiently, performance is aligned with objectives, and the organization can quickly address any inefficiencies or issues that arise.

Solution:
(ii) Importance of Controlling:
(1) It helps in accomplishing organisational goals by bringing to light the deviations, if any, and indicating corrective action.
(2) It helps in judging accuracy of standards in the light of changes taking place in the organization and environment.
(3) It helps in making efficient use of resources by ensuring that each activity is performed in accordance with predetermined standards.
(4) It improves employee motivation as the employees know well in advance the standards of performance on the basis of which they will be appraised.
(5) It ensures order and discipline among employees by keeping a close check on their activities.
(6) It facilitates coordination in action as each department is governed by pre-determined standards which are well coordinated with one another.

Solution:
(i) Fulfilling social responsibility:
- Businesses are now forced to fulfill their social responsibilities due to increased awareness of the public.
- Management theory and management principles have also evolved, and principles have also assumed newer and contemporary meanings with the change in time.

(ii) Meeting changing environment requirements:
- Principles of management can be modified according to the changes taking place in the environment.
- Hence, they help the managers in meeting changing environment requirements.

(iii) Scientific decisions:
- Principles of management help in taking scientific decisions because the decisions based on principles are free from bias.
- They are based on the objective assessment of the situation.

Solution:
(i) Unity of direction:
- Unity of direction states that all the units of an organisation should be moving towards the same objectives through coordinated and focused efforts. - Each group of activities having the same objective must have one head and one plan. This ensures unity of action and coordination.

(ii) Subordination of individual interest to general interest:
- The interests of an organisation should take priority/supersede over the interests of any one individual employee.
- This is so because larger interests of the stakeholders are more important than the interest of any one person.

(iii) Esprit de corps:
- Management should promote a team spirit, unity, and harmony among employees; otherwise, objectives would be difficult to realise.
- A manager should replace 'I' with ‘We' in all his conversations with workers to foster team spirit. This will give rise to a spirit of mutual trust and belongingness among team members.

Solution:
Functions of marketing: (i) Branding: - Branding is the process of giving a name, term, sign, symbol, design, or some combination of them, to the product. - "They chose a 'logo' that incorporated elements of nature and used earthy colours to convey their organic commitment.” OR "They named the business ‘Earthy Store' which indicated the products' benefits and qualities and reflected the values of the business - sustainability and health.”
(ii) Packaging and Labelling: - Packaging refers to the act of designing and producing the container or wrapper of a product. - Labelling refers to designing and developing the label to be put on the package. It may vary from a simple tag to complex graphics. - "They designed and developed eco-friendly biodegradable bags and reusable containers to courier their products to the customers" OR "They also designed and developed product stickers with detailed information about organic certification, nutritional benefits, date of manufacture, date of expiry, etc."
(iii) Promotion: - Promotion refers to informing the customers about the firm's product, its features, etc., and persuading them to purchase these products. - ""Earthy Store' created a user-friendly website and established a strong media presence to inform potential customers about their products and persuading them to buy the same."

Solution:
Benefits of planning:
(i) Planning provides directions:
- Planning provides direction for action by stating in advance how work is to be done. - "He ensured that the goals and objectives of the company are clearly stated so that they act as a guide for deciding what action should be taken and in which direction."
(ii) Planning reduces the risks of uncertainty:
- By deciding in advance the tasks to be performed, planning shows the way to deal with changes and uncertain events.
- "This analysis enabled the company to look ahead and anticipate changes and develop managerial responses, wherever necessary.”

Limitations of planning:
(i) Planning leads to rigidity:
- In an organisation, a well-defined plan is drawn up with specific goals to be achieved within a specific time frame, these plans then decide the future course of action and managers may not be in a position to change it.
- “The managers of 'Stepone Footwear' did not have the flexibility to change the plan to cope with the changed circumstances."
(ii) Planning may not work in a dynamic environment:
- The organisation has to constantly adapt itself to changes taking place in the dynamic environment. However, planning cannot foresee everything and thus, there may be obstacles to effective planning.
- "By not being able to adjust to the rapidly changing market, 'Stepone Footwear' faced inventory surplus while 'Eco Step' emerged as a market leader in sustainable eco-friendly footwear.”

Solution:
Merits of internal sources of recruitment are:
(i) Employees are motivated to improve their performance. A promotion at a higher level may lead to a chain of promotion at lower levels in the organisation.
(ii) Internal recruitment also simplifies the process of selection and placement. This is a more reliable and economical way of recruitment since the candidates are already known to the organization.
(iii) Transfer is a tool of training the employees to prepare them for higher jobs. People recruited from within the organisation do not need induction training.
(iv) Transfer has the benefit of shifting workforce from the surplus departments to those where there is shortage of staff.
(v) Filling of jobs internally is cheaper as compared to getting candidates from external sources.
Demerits of internal sources of recruitment are:
(i) The scope for induction of fresh talent is reduced. Hence, complete reliance on internal recruitment involves danger of 'inbreeding' by stopping 'infusion of new blood' into the organization.
(ii) The employees may become lethargic if they are sure of time bound promotions.
(iii) A new enterprise cannot use internal sources of recruitment. No organisation can fill all its vacancies from internal sources.
(iv) The spirit of competition among the employees may be hampered.
(v) Frequent transfers of employees may often reduce the productivity of the organization.

Solution:
Non-financial incentives which motivate employees for better performance are: (Any four points with explanation)
(i) Status:
- Providing employees with a higher status in the workplace boosts their sense of importance and recognition within the organization.
(ii) Organisational Climate:
- A positive and supportive organisational climate motivates employees to perform better by fostering a sense of well-being and job satisfaction.
(iii) Career Advancement Opportunity:
- Offering employees clear pathways for career growth and advancement can encourage them to work harder to achieve their goals.
(iv) Job Enrichment:
- Enriching jobs by providing more meaningful work and opportunities for skill development increases employee engagement and motivation.
(v) Employee recognition programmes:
- Recognition of an employee's hard work and achievements through awards or appreciation boosts morale and performance.
(vi) Job security:
- Offering job security encourages employees to stay motivated and focus on long-term goals without the fear of sudden job loss.
(vii) Employee participation:
- Involving employees in decision-making processes boosts their commitment to organizational goals and enhances their job satisfaction.
(viii) Employee Empowerment:
- Empowering employees with more autonomy and control over their work fosters a sense of ownership and responsibility, leading to improved performance.