Class XII – Business Studies – Paper – 4

Ans. (B) Unity of command

Ans. (B) By investing in cutting-edge software and artificial intelligence

Ans. (B) Policy

Ans. (B) Enhanced flexibility and product focus

Ans. (C) External advertisements

Ans. (C) Formal communication

Ans. (D) A is false but R is true

Ans. (B) Financing decision

Ans. (A) Both A and R are true, and R is the correct explanation of A.

Ans. (C) Psychographic Segmentation

Ans. (C) Statement I is true, Statement II is false.

Ans. (C) Statement I is true, Statement II is false.

Ans. (A) 1, 2, 3, 4

Ans. (D) a-iv, b-ii, c-i, d-iii

Ans. (B) 1, 2 and 4 only

Ans. (B) Learn about the risk associated with product and services

Ans. (C) Financial incentives directly increase an employee’s take-home pay.

Ans. (B) Establishing standards

Ans. (C) Working capital is invested in long-term assets like machinery.

Ans. (B) Bonds are always safer than stocks.

Ans. (i) Money market “Rozar Electricals Limited recently proposed to issue commercial paper of ₹ 10,00,000.”

Capital market “Equity shares of 140 cach for meeting its capital requirements of diversification.”

(ii) Differences between money market and capital market are.

Ans. The success of an enterprise is possible only when plans are properly made and then implemented. In order to achieve goals, plans need to be translated into action or else, they become meaningless. Managers usually rely on previously tried and tested successful plans and like to use them in every similar condition/situation. It is not necessary that just because the plan has worked before, it will work again. There are so many unknown factors to be considered. The kind of complacency and false sense of security that plans provide, may actually lead to failure instead of success.

Ans. (i) Adaptation to change Organising facilitates modification in organisation structure and revision of inter-relationships among people in order to adapt to environmental changes.

(ii) Effective Administration Organising gives a clear description of duties and responsibilities of each individual. This helps to avoid confusion regarding work and avoids duplication of activities. This helps in bringing efficiency in administration.

Ans. (i) Jairaj considers management as a discipline because there exist number of theories and principles on management which can be taught in various colleges.

(ii) It is not considered to be a full-fledged profession because

(a) Restricted Entry Unlike management, the entry to other professions is restricted through an examination or eligibility criteria like specific percentage in a particular degree or diploma.

(b) Professional Association Unlike managers, all working professionals have to be a member of an affiliated professional association which regulates their entry, grant certificates of practices and formulates code of conduct.

Ans. Yes, selection is a negative process, as it is choosing from among the candidates, the ones who best meet a position’s requirements and eliminating the ones who are not suitable, To achieve this target, candidates are required to take a series of tests and interviews in different stages. At each stage, many candidates are eliminated and only a few candidates move to the next stage.

The process of elimination continues till the most suitable candidates are finalised. The above scenario clearly establishes the fact that selection is the process through which unsuitable candidates are rejected and suitable ones are chosen. Therefore, it is regarded as a negative process.

Ans. Yes, directing is the heart of management process. It is the executive function of management related to leading, influencing, guiding, supervising and motivating people towards the attainment of planned targets.

It is concerned with the execution of plants and policies framed by top management. It initiates action in the organisation and helps in adapting to changes too. So, it is known as heart of management process.

Ans. Packaging refers to the act of designing and producing the container or wrapper of a product. Three functions of packaging are as follows

(i) Product Identification Packaging helps a product to be identified by the customer. e.g. Maggi Noodles in yellow colour, Lays in blue, green and red colour can be identified easily.

(ii) Product Protection Packaging protects the contents of a product from spoilage, breakage, leakage, damage, etc. e.g. Air tight containers and packets are used for biscuits, tea, etc.

(iii) Product Promotion Packaging promotes the sales of the product. Package is the buyer’s first encounter with the product and is capable of attracting or repulsing the buyer. The colourful. attractive packing of the product may induce the customer to buy it. e.g. Ferrero Rocher Chocolates, Calcium Sandoz, etc.

Ans. The above statement highlights the nature of management as an art.

This can be clarified with the help of following points

(i) There is a lot of literature available in various areas of management like marketing, finance, etc, which the manager needs to specialise in.

(ii) A manager applies scientific methods and body of knowledge to a given situation, issue or problem in his own unique manner.

(iii) A successful manager practices the art of management in the day-to-day activities of managing an enterprise based on studies, observation and experience.

Thus, we can conclude that management is an art.

Ans. (i) No. Suhasini cannot file a complaint, as she is not a consumer under the Consumer Protection Act, 2019 because she has not paid any consideration for the face cream.

(ii) Under Consumer Protection Act, 2019, a complaint can be filed by

(a) Any consumer.

(b) Any registered consumer association.

(c) Central or State Government.

(d) One or more consumers on behalf of numerous consumers.

(e) Legal heir or representative of deceased consumer.

Ans. Controlling should not be misunderstood as the last function of management. It is a function that brings the management cycle back to the planning function. In general, the process of management begins with planning and ends at controlling, but when a manager performs the function or steps of controlling, it is observed that the first step of controlling is setting standards.

The controlling function finds out how far actual performance deviates from standards and analyses the corrective actions to be taken.

This process helps in formulation of future plans, thus becomes the premise of setting plans. Therefore, we can say that it is the beginning of management process. Thus, it can be stated that, controlling function is both the beginning as well as the end of the management process.

Ans. Staffing is that function of management which helps in obtaining right people and putting them on the right jobs.

Proper staffing ensures the following three benefits to the organisation

(i) Obtaining Competent Personnel It helps in discovering and obtaining competent personnel for various job positions in an organisation.

(ii) Higher Performance Staffing ensures high performance by putting right person on the right job.

(iii) Continuous Survival and Growth Proper staffing ensures continuous survival and growth of the enterprise through succession planning of managers.

Ans. Features of planning are as follows (any two) (i) Planning is a Primary Function of Management

It lays down the base for all other functions of management. All other managerial functions. are performed within the framework of the plans drawn. Thus, it can be said that planning precedes other functions. This is also called the ‘primacy’ of planning.

(ii) Planning is Pervasive It is required at all levels of management as well as in all the departments of the organisation. It is not a function restricted to top level but it is performed by managers at every level.

While the top management forms organisational plans, middle level does departmental planning, and the lower level makes plans for the day-to- day working of the organisation.

(iii) Planning is Continuous Plans are made for a specific time period. At the end of such time period, new plans have to be drawn. When plans are objective-based and goals are achieved, new plans are drawn with new objectives.

On the other hand, if goals are not achieved, plans are revised to achieve success in future.

Ans. The organising function helps in the growth and survival of an enterprise in a dynamic environment by providing the following benefits

(i) Benefits of Specialisation Systematic allocation of work reduces the workload as well as enhances productivity. As each task is repetitively performed by a worker, it helps him to gain experience and attain specialisation.

(ii) Clarity in Working Relationships The establishment of working relationships clarifies the lines of communication and specifies who is accountable to whom. Thus, there is no confusion regarding performance of work, fixation of responsibility and communication. (iii) Optimum Utilisation of Resources It leads to proper usage of all materials, financial and human resources by proper assignment of jobs. Assignment of jobs to workers reduces duplication of work, prevents confusion, minimises wastages and allows the best possible use of resources.

(iv) Adaptation to Change It facilitates modification in organisational structure and revision of inter- relationships among people in order to adapt to environmental changes.

It also helps to provide stability and growth, despite of external changes occurring in business environment.

Ans. Some advantages of good control system are as follows

(i) Accomplishing Organisational Goals: Controlling function measures progress towards the organisational goals and involves taking corrective actions in case of any deviation. It helps to keep the activities on right track, so that goals could be achieved efficiently and effectively.

(ii) Motivation to the Employees: It is a source of motivation to the employees, who knows the standards against which their performance will be evaluated.

(iii) Optimum Utilisation of Resources: By allocating the resources according to the requirements of the different departments, it helps in optimum utilisation of resources.

(iv) Facilitating Coordination in Action: It provides direction to all activities and cach department and employee is governed by predetermined standards, which helps in establishing coordination among them.

Ans. Motivation process is based on unsatisfied human needs. It is as follows

(i) An unsatisfied need of an individual creates tension which stimulates his or her drives.

(ii) These drives generate a search behaviour to satisfy such need.

(iii) When such need is satisfied, the individual is relieved from tension.

c.g. An employee has a need for promotion to a higher position. If this need is strong, it creates tension for the employee which stimulates his or her drives. Finally, he/she will fix it as his/her goal and search behaviour to reach the goal. If he/she succeeds in getting promotion (goal achievement), his/her need for promotion would be satisfied. This reduces his/her tension.

This process is explained with the help of a flow chart given below

Ans. Merits of formal communication are

(i) It helps in easy fixation of responsibility and exercising control over subordinates.

(ii) The information passed in formal channel is authentic.

(iii) There are very less chances of distortion of information.

Demerits of formal communication are

(i) Since it follows the formal path/scalar chain laid by the management, it tends to be slow.

(ii) It is impersonal form of communication which includes lots of screening of information and narrow route.

(iii) Since deviations are not allowed at all, it tends to be rigid in nature.

Ans. The functions of marketing are

(i) Gathering and Analysing Market Information/ Market Research In order to identify the needs and wants of customers, the marketer gathers market information. He analyses the strengths, weaknesses, opportunities and threats of the enterprise. Such analysis helps the marketer to take decisions regarding diversification, improvement in product, expanding markets, etc. For this purpose, computers and online sites are increasingly used.

(ii) Marketing Planning After market research, the marketer has to develop an appropriate marketing plan to achieve the marketing objective of the organisation. It involves taking decisions as to what activities will have to be undertaken to achieve a marketing objective.

(iii) Product Designing and Development. The design of a product not only helps to make it attractive, but also helps in improving its performance, providing it a competitive advantage over the other products present in the market.

(iv) Standardisation and Grading. Standardisation refers to the process of setting standards regarding quality, price, packaging, technology, equipment, etc, for the production of a product. This ensures uniformity and consistency in output and reduces the need for inspection, testing and evaluation of the products.

Grading is the process of classifying the products into different groups, on the basis of quality, size, features, etc.

It is necessary for such goods which are not produced according to predetermined specifications, such as agricultural goods. Grading ensures that the goods belong to a particular quality and helps the marketer to fix prices easily.

(v) Packaging and Labelling. Packaging refers to designing and developing the package for a product. Package refers to the wrapper or container, which not only provides protection to the product, but also acts as a promotional tool for it.

Labelling refers to designing and developing the label to be put on the package. A label is a carrier of information. It may be a simple tag or a complex graphic providing details about the product.

(vi) Branding. Branding refers to the process of giving a name, sign, symbol or a combination of all to a product for creating its identification. It helps to differentiate the product from other products available in the market. It also helps to build customer’s loyalty and promoting its sales.

Ans. Marketing management is the management (planning, organising, directing and controlling) of activities which facilitate exchange of goods/ services between producers and consumers.

According to Philip Kotler, “The art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value of management is called marketing management”. The functions of marketing management include

(i) Analysing and planning the marketing activities.

(ii) Implementing marketing plans.

(iii) Setting control mechanism.

Objectives of marketing management are

(i) Choosing a target market.

(ii) Getting, keeping as well as growing the customers.

(iii) Creating, developing and communicating superior values for the customers.

(iv) Building the reputation or goodwill.

(v) Achieving the long-term goals of profitability, growth and stability.

Ans. Calculation of Earning per Share

Since, earning per share has fallen from 0.50 to 0.40, therefore the shareholders stand to lose on diversification.

Note: In the absence of any information, shares are assumed to be of ₹10 each.

So,

(ii) Three factors that favour issue of debentures by the company as part of its capital structure are

(a) Debenture interest payable is a charge to the profits. Hence, a company stands to gain in terms of tax, benefits.

(b) Issue of debentures help the shareholders of the company to gain through Trading on Equity’.

(c) Debenture is a cheaper source of finance as compared to equity.

Ans. (a) Staffing and Controlling

(b) Steps in Staffing:

(i) Estimating manpower requirement. It involves knowing how many persons are needed and of what type.

(ii) Recruitment. It is the process of searching for prospective employees and stimulating them to apply for jobs in the organisation.

Steps in Controlling:

(i) Comparing actual performance with standards. It will reveal the deviation between actual and desired results.

(ii) Analysing deviations. Acceptable range of deviations is determined. Deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas.

(c) The values which the company wants to communicate to the society are:

(i) Respect for women

(ii) Job opportunities to the weaker sections of the society

Ans. (i) Sources of long-term capital are as follows

(a) Equity shares

(b) Preference shares

(c) Debentures

(d) Long-term loans and advances

(e) Retained earnings

(ii) The following factors affect the financing decision

(a) Cost The cost of all the sources of finance is different. The rate of interest on debt, fixed rate of dividend to be paid on preference share capital and the expectations of the shareholders on the equity share capital are in the form of costs.

If the situations happen to be favourable, the benefit of cheap finance can be availed of by choosing debt capital.

(b) Risk Debt capital is most risky and from the point of view of risk, it should not be used.

(c) Floatation Cost From the point of view of floating costs, retained profit is the most

appropriate source. Therefore, its use should be made.

(d) Cash Flow Position If the cash flow position of the company is good, the payment of interest on the debt and the refund of capital can be easily made. Therefore, in order to take advantage of cheap finance, debt can be given priority.

(e) Level of Fixed Operating Costs In business, there are mainly two types of costs which are as follows

Fixed Operating Cost e.g. Rent of the building, payment of salary, insurance premium, etc.

Fixed Financial Cost e.g. Interest on debt, etc.If the level of fixed operating costs is in excess, it is better to keep the fixed financial costs at the minimum. Therefore, debt capital should not be used. On the contrary, if the level of fixed operating cost is low, the use of debt capital is more profitable.