Class XII – Business Studies – Paper 2

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

Ans. (c) Both the statements are true

Ans. (b) Right to be heard

Ans. (d) A-(ii), B(i), C(iii)

Ans. (d) All of these

Ans. (d) Ask for a cash memo on purchase of goods or services.

Ans. (a) Controlling ensures order and discipline.

Ans. (d) Developing premises.

Ans. (b) Technological environment

Ans. (c) (iv), (i), (iii), (ii)

Ans. (a) Top

Ans. (b) Coolers

Ans. (c) Directing

Ans. (c) Promotes the product

Ans. (c) Controlling and Planning

Ans. (d) Both the statements are false

Ans. (b) Selling concept

Ans. (d) All of these

Ans. (a) External recruitment

Ans. The three elements of delegation are:

(a) Authority: It is the right to command and to take decisions. Authority originates by the virtue of an individual’s position. The higher the level of management, more is the authority. It flows downwards from a superior to his subordinate.

(b) Responsibility: It is the obligation of a subordinate to properly perform the assigned work. Responsibility flows upwards, i.e., a subordinate is responsible for the duty assigned to him by his superior.

(c) Accountability: It means answerability for the final outcome. Once authority has been delegated and responsibility is entrusted, one cannot deny accountability. This is to ensure that the duties are properly discharged by the subordinates. It flows upwards from a subordinate to his superior.

Ans. The factor which affected the financing decision of Samta Ltd. is fixed operating costs.

Fixed operating costs: Debt financing increases fixed operating cost of the concern, namely interest. Hence if a business has high fixed operating cost in the form of building rent, insurance premium, salaries, etc., then lower debt financing is better. If fixed operating cost is less, then debt financing can be preferred.

Ans. Management helps in fulfilling the multiple objectives towards different groups who constituted the organisation. In this process, management helps in the development of organisation and the society. It helps by providing good quality products and services, creating employment opportunities, adopting new technology for advancement and leads the path towards growth and development.

Ans. (a) Economic Environment

(b) Social Environment

(c) Political Environment

Ans. The feature of management highlighted here is ‘Management is a dynamic function’.

Management is a dynamic function: An organisation is affected by its environment. Management has to keep an eye on the changes in the environment and make necessary changes in itself and its goal according to the needs of the environment and to adapt itself. This makes the management dynamic in nature.

Ans. The social and esteem needs of the employees can be satisfied by giving non-financial incentives to them. Thus, company can provide the following incentives to its employees:

(a) Status: It refers to rank or position in the organisation. Social and esteem need, is satisfied through it, as more authority, responsibility and recognition given to employee.

(b) Employee participation: It means involving employees in decision making of the issue related to them. The company work in the form of joint management committees, work committees etc.

(c) Organisational climate: These are the distinguishing characteristics which describe an organisation. These characteristics like individual autonomy, reward orientation, consideration to employees, risk taking etc. influence the behaviour of the individuals in the organisation. 

(d) Career advancement opportunity: An opportunity given to an individual to improve his skills and be promoted to the higher level jobs is also an incentive for an employee. Appropriate skill development programmes, workshops and proper training and development programmes help an employee to get promotions.

Ans. The company could not achieve the targeted objective due to the limitations of planning which are as follows:

(a) Leads to rigidity: The existence of a plan puts managerial activities in a rigid framework. Programmes are carried out according to the plan and deviations are considered to be highly undesirable. This attitude makes managers and employees inflexible in their operation. They become more concerned with observance of rules and procedures as laid down in the plan rather than achieving the goals.

(b) Reduces creativity: People in the organisation just implement the plans made by top management. They blindly implement the orders which results in loss of initiative and interest in them. Thus, planning reduces creativity as there is nothing new or innovative.

(c) May not work in a dynamic environment: The organisation has to continuously adapt itself to the changing environment. Any unforeseen change in the business environment upsets the whole planning.

(d) Time consuming: It is a time consuming process and is not practicable during emergency or crisis. It requires a lot of time to collect information, its analysis and interpretation before preparing plans. Sometimes not much time is left for implementation of plans.

Ans. (a) Securities and Exchange Board of India (SEBI)

(b) The regulatory functions of Securities and Exchange Board of India (SEBI) are: 

(i) It registers brokers, sub-brokers and other players in the market.

(ii) It registers the collective investment schemes and mutual funds.

(iii) It regulates stock brokers, portfolio exchanges, underwriters, merchant bankers and business in stock market and other securities market.

(iv) It regulates the takeover bids of companies.

(v) It undertakes inspections, enquiries and audits of stock exchange and intermediaries. 

(vi) Levying fee or other charges for carrying out the purposes of the Act.

Ans. Yes, while controlling, following two principles should be kept in mind, i.e., Critical point control and Management by exception.

Critical point control states that a manager should focus his control on the key result areas which are critical to the success of an organisation. These KRAS are the critical points on which the entire organisation survives, and so the manager should keep his focus on these points while controlling. For example, in a company an increase of 7% in the production cost is more critical, than a 17% increase in its courier cost.

Management by exception is based on the belief that an attempt to control everything results in controlling nothing. Thus, only the significant deviations which go beyond the permissible limit should be brought into the notice of the management and should receive immediate action of management on a priority basis. This saves the time and efforts of managers and focuses managerial attention on important areas. For example, if a plan lays down that defects upto 0.01% are acceptable in the manufacturing unit, then only increase in the defects beyond the 0.01% will be brought to the notice of the management.

Ans. Controlling involves verifying whether activities undertaken are in conformity with the plans adopted, instructions issued and results expected. In other words, it is through control that managers/ supervisors ensure the execution of plans and achievement of goals. Controlling simplifies the task of a supervisor by comparing the actual performance with the standards continuously, and finding out the deviations so that the root cause can be identified and not repeated in future.

Ans. The process of ‘financial planning’ prepares a blue print of an organization’s future preparations relating to finance. The process estimates the funds requirement of a business and specify the source of funds. It is needed because of the following reasons:

(a) Helps in avoiding business shocks and surprises and help the company in preparing for the future.

(b) Helps in coordinating various business functions.

(c) Reduce waste, duplication of efforts and gap in planning.

Ans. Yes, the consumer right violated here is ‘right to be informed’. Consumers have the right to be informed about the quality, quantity, purity, standard and price of goods or services, so as to make the right decision and protect themselves against abusive practices. As per the laws prevalent in India, the manufacturers have to provide information about the products on its package or label.

Ans. The two responsibilities of a consumer are:

(i) A consumer must file a complaint in an appropriate consumer forum in case of any inadequacy in the quality of goods purchased or services availed.

(ii) A consumer must be honest in his dealings. He must purchase only legal goods and services so that unscrupulous practices like black marketing, hoarding etc. can be discouraged.

Ans. The constituents of a good brand name are:

(a) It should be short and simple. Long and complex words should be avoided because they create difficulty in reading and remembering. For instance Lux, Dettol or Surf are short and simple words, which are read and remembered without much effort.

(b) Suggestive brand names are better because they can convey product attributes or benefits. For instance, Hajmola suggests digestive properties, Ujjala suggests brightness, Color soft hair dye from Godrej suggests softness.

(c) It should be distinctive. A brand is distinctive when it stands apart from others in the category. Airtel, Tide, Shell, Cinthol, Perk are still distinctive brand names.

(d) Finally, a brand name should be selected after considering its meaning in other languages and cultures. Some words are perfect in one culture or country but many words become offensive, obscene and inappropriate in other countries.

Ans. Authoritative Leadership (Autocratic): It is also known as autocratic leadership. It provides clear expectations for what needs to be done, when it should be done and how it should be done. There is also a clear division between the leader and the followers. Authoritarian leaders make decisions independently with little or no input from the rest of the group. Authoritarian leadership is best applied to situations where there is little time for group decision making or where the leader is the most knowledgeable member of the group.

(ii) Democratic style of leadership

Ans. Democratic Leadership (Participative): It is also known as participative leadership. It is the most effective leadership style. Democratic leaders offer guidance to group members, but they also participate in the group and allow input from other group members. Participative leaders encourage group members to participate, but retain the final say over the decision-making process. Group members feel engaged in the process and are more motivated and creative.

(iii) Laissez-faire style of leadership

Ans. Laissez-faire leadership is also called free-rein leadership. In this, authority is decentralised and the subordinates can take decisions themselves. The leader does not interfere in the activities of the subordinates. He neither leads nor avoids the power. The leader only works as a contact person with the outsiders. He brings in the needed resources and information by subordinates so that group goals can be achieved. Thus, this leadership is centered around the subordinates.

Ans.

32. Read the statements given in point 1 and 2, and answer the questions that follow:

1. It is a philosophy that implies selective dispersal of authority because it propagates the belief that people are competent and resourceful. However, it should be applied with caution.

(a) Identify the concept of Organising being discussed above.

Ans. The concept of Organising being discussed here is “Decentralisation”.

Ans. An organisation feels the need to embrace it when it grows in size or complexity.

Ans. Caution is necessary when it is applied as it can lead to the organisational disintegration if the departments start to operate on their own guidelines which may be contrary to the interests of the organisation.

Ans. The type of organisation being discussed here is “Informal organisation”.

Ans. It helps in the achievement of organisational goals by compensating for inadequacies in the formal organisation.

Ans. It helps to fulfil the social needs of the members and allows them to find like-minded people. It gives them a sense of belongingness in the organisation.

Ans. The factors that affect the pricing of a product or service are:

(a) Product cost: The cost of producing, distributing and selling a product sets the minimum level at which a product may be sold. All the firms strive to cover the cost of a product plus a margin of profit above it.

(b) Utility and demand of the product: Utility or satisfaction derived by a consumer from a product and the intensity of his demand sets the upper price limit for a product. The buyer is ready to pay up to a point where utility from the product is at least equal to sacrifice made in terms of money paid for it. Similarly, if the demand is elastic, a small change in the price results in a large change in the quantity demanded; and if the demand of a product is inelastic, the firm is in a better position to set the price.

(c) Extent of competition in the market: The nature and degree of competition in the market also affects the pricing of a product. Competitors’ prices and their anticipated reactions are considered before fixing the price of a product.

(d) Government and legal regulations: The Government intervenes and regulates the price of commodities. It can declare a product as an essential product and regulate its price. Thus, while fixing the price, the government and legal regulations should be taken into consideration. 

(e) Pricing objectives: Generally, a firm’s objective to set the price of a product is considered while pricing the product. A firm which aims at maximising profit in the short run tends to fix a price on the higher side, as compared to the price set when the objective is to maximise profit in the long run. Similarly, if the objective is to capture the market share, prices can be set at a level lower than that of its competitors.

(f) Marketing methods used: The marketing methods used such as research activity undertaken, salesmen employed, amount of advertising, product differentiation, packaging, credit facility etc. affect price fixation. If a firm has some unique element of marketing, it gives the firm a competitive freedom in fixing the price of its products.

Ans. The container which carries the product is called package. Packaging is defined as a set of tasks or activities, which is concerned with the design and production of an appropriate container for the product.

The importance of packaging has enhanced because of the following reasons:

(a) Rising standards of health and sanitation: As the people are becoming health conscious they like to buy packed goods. The reason is that the chances of adulteration in such goods are minimised.

(b) Self-service outlets: Now-a-days self service retail shops are becoming very popular, particularly in big cities. Because of this, the role of sales assistants has to gone to packaging.

(c) Innovational opportunity: With the increasing use of packaging more innovational opportunities become available in this area for the researchers.

(d) Product differentiation: Packaging is helpful in creating product differentiation. The colour, material and size of package makes difference in the perception of the buyers about the quality of the product.

(e) Product promotion: Packaging simplifies the work of sales promotion. Packaging material reminds the consumers constantly about the product. In this way, packaging performs the role of a passive salesman. Consequently, it increases sales.

Ans. Coordination is the essence of management because it is required in all the managerial functions at all the levels and in all the departments. It exists within each function of management. It is the process integrating all activities to achieve common goals. It helps in maintaining harmony among individual efforts towards the accomplishment of organisational objectives. It synchronizes the working of different groups of persons.

Following points highlight the importance of coordination:

(a) Growth in size: With the increase in the size of the organisation, the number of people employed in the organisation also increases for organisational efficiency, it is important to harmonise the individual goals and organisational goals through coordination.

(b) Functional differentiation: Functions of an organisation is divided into department and divisions every department may have its own objectives, polices and way of working. Coordination helps in linking the activities of various departments and harmonises it towards the common goal.

(c) Specialisation: With specialisation, a characteristic of modern organisation, complexities arises as conflict may erupt in the organisation among functional heads. Coordination helps to reconcile the difference in approach, interest or opinion of the specialist.

Ans. (a) Scalar chain: Scalar chain is the formal line of authority and communication from highest to the lowest ranks. Scalar Chain shows the path of flow of authority and communication. In normal course of formal organisation, it should not be violated. For example, the head, A, has two lines of authority under him. If E wants to communicate with J the communication will flow through the route E-D-C-B-A-G-H-I-J.

However, in case of emergency, E can directly contact J through a Gang Plank. However, they need to inform their superiors about it later on. Gang Plank is a shorter route provided so that communication is not delayed.

(b) Subordination of individual interest to general interest: Every organisation is formed with a goal. Every employee in an organisation has some individual interests also. According to this principle, the interest of an organisation should have priority over the interests of individual employees. This is because interests of the workers and stakeholders are more important than the individual interest of any one person. A manager can ensure this by his exemplary behaviour. He should not misuse his power for his individual interests but use it for the larger general interest. This will raise his stature in the eyes of workers and ensure same behaviour by them.