CBSE Business Studies Past year paper All India (Set - 2) Solution - 2018, Class 12 | Additional Study Material for Commerce PDF Download

 Page 1


  
 
CBSE XII  | BUSINESS STUDIES 
All India Board Paper Set 2 ? 2018 
 
     
 
CBSE 
Class XII Business Studies 
All India Board Paper Set 2 – 2018 
Time: 3 hrs. Max. Marks: 80 
 
Answer 1 
The investor could not invest in the Treasury Bill as treasury bills can be bought for a minimum 
amount of Rs 25,000 and in multiples thereof.  
 
Answer 2 
The labelling function being performed by the given statement is ‘helps in the promotion of 
products’. 
 
Answer 3 
The factor affecting the working capital requirements of this industry is availability of raw 
materials. 
 
Answer 4 
Steps followed by Saurabh which are related to planning: 
i. Setting objectives 
ii. Developing premises 
 
Answer 5 
District Consumer Disputes Redressal Forum comprises one President and two other 
members, one of whom is a woman. 
 
Answer 6 
Method is a type of plan in which the way or manner to perform a task is provided. It differs 
from task to task.  
 
Answer 7 
Decentralisation refers to delegating authority or decision-making power to the lower 
levels of hierarchy. 
 
Answer 8 
An understanding of ‘Marketing Management Philosophies’ is important as it helps in 
determining the weightage to be given to different factors so that organisational objective can 
be achieved. 
 
Answer 9 
Steps in the selection procedure after the employment interview and before the job offer: 
i. Background checks: After the individual clears the interview, the organisation may ask 
Page 2


  
 
CBSE XII  | BUSINESS STUDIES 
All India Board Paper Set 2 ? 2018 
 
     
 
CBSE 
Class XII Business Studies 
All India Board Paper Set 2 – 2018 
Time: 3 hrs. Max. Marks: 80 
 
Answer 1 
The investor could not invest in the Treasury Bill as treasury bills can be bought for a minimum 
amount of Rs 25,000 and in multiples thereof.  
 
Answer 2 
The labelling function being performed by the given statement is ‘helps in the promotion of 
products’. 
 
Answer 3 
The factor affecting the working capital requirements of this industry is availability of raw 
materials. 
 
Answer 4 
Steps followed by Saurabh which are related to planning: 
i. Setting objectives 
ii. Developing premises 
 
Answer 5 
District Consumer Disputes Redressal Forum comprises one President and two other 
members, one of whom is a woman. 
 
Answer 6 
Method is a type of plan in which the way or manner to perform a task is provided. It differs 
from task to task.  
 
Answer 7 
Decentralisation refers to delegating authority or decision-making power to the lower 
levels of hierarchy. 
 
Answer 8 
An understanding of ‘Marketing Management Philosophies’ is important as it helps in 
determining the weightage to be given to different factors so that organisational objective can 
be achieved. 
 
Answer 9 
Steps in the selection procedure after the employment interview and before the job offer: 
i. Background checks: After the individual clears the interview, the organisation may ask 
  
 
CBSE XII  | BUSINESS STUDIES 
All India Board Paper Set 2 ? 2018 
 
     
 
for references such as from previous employers or other known persons. The 
references are then used to cross-check the information provided by the candidate.  
ii. Selection decision: When the candidate clears the tests and interviews, the final 
selection is done. 
iii. Medical examination: Some organisations may also conduct a medical examination, 
and the job is offered only when they are declared medically fit by a medical 
practitioner. 
 
Answer 10 
(a) Democratic style of leadership is being followed by Sandhya as she encourages her 
teammates to set their own objectives and take decisions. 
(b) Two positive aspects of informal communication which are used by Sandhya: 
i. Spread of information is faster when it flows through an informal path. 
ii. Through informal communication, managers can get to know the true thinking or 
mindset of employees which can prove helpful in decision making.   
  
Answer 11 
Basis Formal organisation Informal organisation 
Origin It is a result of rules and 
policies of a company. 
It is a result of social 
interactions among 
employees. 
Authority It is based on hierarchical 
structure. 
It is based on personal 
qualities of members. 
Flow of communication It takes place through the 
scalar chain. 
It can take place in any 
direction. 
 
Answer 12 
Consumer protection plays an important role for businesses in the following ways: 
i. Long-Term Interest: For any business, consumer satisfaction is essential. In today's 
times, with increasing competition, consumer satisfaction has become all the more 
important. As the organisation takes care of the interests of consumers, it builds goodwill 
and reputation in the market. This in turn helps in increasing the sales and profits of the 
business. Thus, protecting consumer's interests benefits the business in the long run. 
ii. Use of Resources: Any business survives on the basis of society. It uses the resources of 
society for its various production activities. It earns profits with the sale of these goods 
and services to society. Thus, the business must take care of the interest of society and 
supply goods and services which adhere to the overall interests and well-being of society. 
 
Answer 13 
Option A is better than Option B for the company to finance its future fixed capital needs. 
Reason: In Option A, Rate of return on investment (10–12%) > Rate of interest on borrowings 
(9%) 
Concept used: Trading on equity 
 
Page 3


  
 
CBSE XII  | BUSINESS STUDIES 
All India Board Paper Set 2 ? 2018 
 
     
 
CBSE 
Class XII Business Studies 
All India Board Paper Set 2 – 2018 
Time: 3 hrs. Max. Marks: 80 
 
Answer 1 
The investor could not invest in the Treasury Bill as treasury bills can be bought for a minimum 
amount of Rs 25,000 and in multiples thereof.  
 
Answer 2 
The labelling function being performed by the given statement is ‘helps in the promotion of 
products’. 
 
Answer 3 
The factor affecting the working capital requirements of this industry is availability of raw 
materials. 
 
Answer 4 
Steps followed by Saurabh which are related to planning: 
i. Setting objectives 
ii. Developing premises 
 
Answer 5 
District Consumer Disputes Redressal Forum comprises one President and two other 
members, one of whom is a woman. 
 
Answer 6 
Method is a type of plan in which the way or manner to perform a task is provided. It differs 
from task to task.  
 
Answer 7 
Decentralisation refers to delegating authority or decision-making power to the lower 
levels of hierarchy. 
 
Answer 8 
An understanding of ‘Marketing Management Philosophies’ is important as it helps in 
determining the weightage to be given to different factors so that organisational objective can 
be achieved. 
 
Answer 9 
Steps in the selection procedure after the employment interview and before the job offer: 
i. Background checks: After the individual clears the interview, the organisation may ask 
  
 
CBSE XII  | BUSINESS STUDIES 
All India Board Paper Set 2 ? 2018 
 
     
 
for references such as from previous employers or other known persons. The 
references are then used to cross-check the information provided by the candidate.  
ii. Selection decision: When the candidate clears the tests and interviews, the final 
selection is done. 
iii. Medical examination: Some organisations may also conduct a medical examination, 
and the job is offered only when they are declared medically fit by a medical 
practitioner. 
 
Answer 10 
(a) Democratic style of leadership is being followed by Sandhya as she encourages her 
teammates to set their own objectives and take decisions. 
(b) Two positive aspects of informal communication which are used by Sandhya: 
i. Spread of information is faster when it flows through an informal path. 
ii. Through informal communication, managers can get to know the true thinking or 
mindset of employees which can prove helpful in decision making.   
  
Answer 11 
Basis Formal organisation Informal organisation 
Origin It is a result of rules and 
policies of a company. 
It is a result of social 
interactions among 
employees. 
Authority It is based on hierarchical 
structure. 
It is based on personal 
qualities of members. 
Flow of communication It takes place through the 
scalar chain. 
It can take place in any 
direction. 
 
Answer 12 
Consumer protection plays an important role for businesses in the following ways: 
i. Long-Term Interest: For any business, consumer satisfaction is essential. In today's 
times, with increasing competition, consumer satisfaction has become all the more 
important. As the organisation takes care of the interests of consumers, it builds goodwill 
and reputation in the market. This in turn helps in increasing the sales and profits of the 
business. Thus, protecting consumer's interests benefits the business in the long run. 
ii. Use of Resources: Any business survives on the basis of society. It uses the resources of 
society for its various production activities. It earns profits with the sale of these goods 
and services to society. Thus, the business must take care of the interest of society and 
supply goods and services which adhere to the overall interests and well-being of society. 
 
Answer 13 
Option A is better than Option B for the company to finance its future fixed capital needs. 
Reason: In Option A, Rate of return on investment (10–12%) > Rate of interest on borrowings 
(9%) 
Concept used: Trading on equity 
 
  
 
CBSE XII  | BUSINESS STUDIES 
All India Board Paper Set 2 ? 2018 
 
     
 
 
Answer 14 
(a) The incentive provided by ‘Goodcare Hospitals’ to its doctors through running trophies is 
Employee Recognition Programme. 
(b) Esteem needs of the doctors will be fulfilled through the employee recognition programme. 
(c) The values that the CEO of ‘Goodcare Hospitals’ is trying to communicate to the society: 
i. Healthcare to rural people 
ii. Upliftment of poor in rural areas 
 
Answer 15 
(a) The responsibility which Sumit had to fulfil as an aware consumer to get the services of 
the company is to learn the risks associated with the products and services, follow 
manufacturer’s instructions and use the products safely. 
(b) Two rights which Sumit could have exercised had he fulfilled his responsibility: 
i. Right to be Heard: It is the right of consumers to be heard in an appropriate legal 
forum in case of any grievance or dissatisfaction faced by them. In other words, a 
consumer has the right to file a complaint in case of any grievance. 
ii. Right to Seek Redressal: It is the right of consumers to seek redressal in case of a 
grievance and, if required, demand a suitable compensation. The Consumer 
Protection Act provides for compensation in the form of replacement of product, 
cash compensation and repair/removal of defects. 
 
Answer 16 
Yumco Ltd. has adopted the functional organisational structure. Three advantages of the 
functional organisational structure: 
i. Occupational specialisation: Activities of a similar nature are grouped together in 
departments. Employees perform the same functions repeatedly. Thus, it leads to 
occupational specialisation. 
ii. Easy training: It is easy to train employees as the focus is on a limited range of skills. 
iii. Better control and coordination: There is better control and coordination within a 
department as similar tasks are performed within the department. 
 
Answer 17                        
Points highlighting the importance of controlling in an organisation: 
i. Achieving goals: Controlling ensures that various activities are carried out correctly 
according to the plans. It ensures that deviations if any are identified and appropriate 
corrective action is taken. 
ii. Reviewing standards: An effective control system ensures that standards are set 
accurately. As the business environment changes, it ensures that the standards are also 
reviewed so as to adapt to the changes taking place. 
iii. Enables efficiency in resource utilisation: An effective control system ensures that there 
is minimum wastage of resources. In other words, it ensures that the resources are utilised 
optimally and in the most efficient manner. 
Page 4


  
 
CBSE XII  | BUSINESS STUDIES 
All India Board Paper Set 2 ? 2018 
 
     
 
CBSE 
Class XII Business Studies 
All India Board Paper Set 2 – 2018 
Time: 3 hrs. Max. Marks: 80 
 
Answer 1 
The investor could not invest in the Treasury Bill as treasury bills can be bought for a minimum 
amount of Rs 25,000 and in multiples thereof.  
 
Answer 2 
The labelling function being performed by the given statement is ‘helps in the promotion of 
products’. 
 
Answer 3 
The factor affecting the working capital requirements of this industry is availability of raw 
materials. 
 
Answer 4 
Steps followed by Saurabh which are related to planning: 
i. Setting objectives 
ii. Developing premises 
 
Answer 5 
District Consumer Disputes Redressal Forum comprises one President and two other 
members, one of whom is a woman. 
 
Answer 6 
Method is a type of plan in which the way or manner to perform a task is provided. It differs 
from task to task.  
 
Answer 7 
Decentralisation refers to delegating authority or decision-making power to the lower 
levels of hierarchy. 
 
Answer 8 
An understanding of ‘Marketing Management Philosophies’ is important as it helps in 
determining the weightage to be given to different factors so that organisational objective can 
be achieved. 
 
Answer 9 
Steps in the selection procedure after the employment interview and before the job offer: 
i. Background checks: After the individual clears the interview, the organisation may ask 
  
 
CBSE XII  | BUSINESS STUDIES 
All India Board Paper Set 2 ? 2018 
 
     
 
for references such as from previous employers or other known persons. The 
references are then used to cross-check the information provided by the candidate.  
ii. Selection decision: When the candidate clears the tests and interviews, the final 
selection is done. 
iii. Medical examination: Some organisations may also conduct a medical examination, 
and the job is offered only when they are declared medically fit by a medical 
practitioner. 
 
Answer 10 
(a) Democratic style of leadership is being followed by Sandhya as she encourages her 
teammates to set their own objectives and take decisions. 
(b) Two positive aspects of informal communication which are used by Sandhya: 
i. Spread of information is faster when it flows through an informal path. 
ii. Through informal communication, managers can get to know the true thinking or 
mindset of employees which can prove helpful in decision making.   
  
Answer 11 
Basis Formal organisation Informal organisation 
Origin It is a result of rules and 
policies of a company. 
It is a result of social 
interactions among 
employees. 
Authority It is based on hierarchical 
structure. 
It is based on personal 
qualities of members. 
Flow of communication It takes place through the 
scalar chain. 
It can take place in any 
direction. 
 
Answer 12 
Consumer protection plays an important role for businesses in the following ways: 
i. Long-Term Interest: For any business, consumer satisfaction is essential. In today's 
times, with increasing competition, consumer satisfaction has become all the more 
important. As the organisation takes care of the interests of consumers, it builds goodwill 
and reputation in the market. This in turn helps in increasing the sales and profits of the 
business. Thus, protecting consumer's interests benefits the business in the long run. 
ii. Use of Resources: Any business survives on the basis of society. It uses the resources of 
society for its various production activities. It earns profits with the sale of these goods 
and services to society. Thus, the business must take care of the interest of society and 
supply goods and services which adhere to the overall interests and well-being of society. 
 
Answer 13 
Option A is better than Option B for the company to finance its future fixed capital needs. 
Reason: In Option A, Rate of return on investment (10–12%) > Rate of interest on borrowings 
(9%) 
Concept used: Trading on equity 
 
  
 
CBSE XII  | BUSINESS STUDIES 
All India Board Paper Set 2 ? 2018 
 
     
 
 
Answer 14 
(a) The incentive provided by ‘Goodcare Hospitals’ to its doctors through running trophies is 
Employee Recognition Programme. 
(b) Esteem needs of the doctors will be fulfilled through the employee recognition programme. 
(c) The values that the CEO of ‘Goodcare Hospitals’ is trying to communicate to the society: 
i. Healthcare to rural people 
ii. Upliftment of poor in rural areas 
 
Answer 15 
(a) The responsibility which Sumit had to fulfil as an aware consumer to get the services of 
the company is to learn the risks associated with the products and services, follow 
manufacturer’s instructions and use the products safely. 
(b) Two rights which Sumit could have exercised had he fulfilled his responsibility: 
i. Right to be Heard: It is the right of consumers to be heard in an appropriate legal 
forum in case of any grievance or dissatisfaction faced by them. In other words, a 
consumer has the right to file a complaint in case of any grievance. 
ii. Right to Seek Redressal: It is the right of consumers to seek redressal in case of a 
grievance and, if required, demand a suitable compensation. The Consumer 
Protection Act provides for compensation in the form of replacement of product, 
cash compensation and repair/removal of defects. 
 
Answer 16 
Yumco Ltd. has adopted the functional organisational structure. Three advantages of the 
functional organisational structure: 
i. Occupational specialisation: Activities of a similar nature are grouped together in 
departments. Employees perform the same functions repeatedly. Thus, it leads to 
occupational specialisation. 
ii. Easy training: It is easy to train employees as the focus is on a limited range of skills. 
iii. Better control and coordination: There is better control and coordination within a 
department as similar tasks are performed within the department. 
 
Answer 17                        
Points highlighting the importance of controlling in an organisation: 
i. Achieving goals: Controlling ensures that various activities are carried out correctly 
according to the plans. It ensures that deviations if any are identified and appropriate 
corrective action is taken. 
ii. Reviewing standards: An effective control system ensures that standards are set 
accurately. As the business environment changes, it ensures that the standards are also 
reviewed so as to adapt to the changes taking place. 
iii. Enables efficiency in resource utilisation: An effective control system ensures that there 
is minimum wastage of resources. In other words, it ensures that the resources are utilised 
optimally and in the most efficient manner. 
  
 
CBSE XII  | BUSINESS STUDIES 
All India Board Paper Set 2 ? 2018 
 
     
 
iv. Better motivation: With controlling, employees know what is expected from them and 
how their performance would be evaluated. This clarity motivates employees to perform 
better. 
 
Answer 18 
The given case highlights the planning function of management.  The features of planning 
discussed in the given case: 
i. Planning focuses on achieving objectives: Planning starts when an objective is set 
and proper planning gives a boost to a well-organised and goal-oriented management. 
Plans ensure that the desired objective is attained economically and quickly, if 
possible.  
Quote 1: He shifted to Begampur, Chhattisgarh, to fulfil his grandmother's dream of 
converting their 25-acre ancestral land into a fertile farm. 
 
ii. Planning is futuristic: Being an intellectual process, planning seeks to bridge the gap 
between where we are and where we want to go; it is a trap to capture the future, i.e. 
it is futuristic in nature. 
Quote 2: He wanted to ensure that the future events meet effectively the best interests of 
the company. Through sales forecasting, he prepared an annual plan for production and 
sales. 
 
iii. Planning involves decision making: After coming up with all possible alternatives 
and its outcome, the managers need to evaluate them. This evaluation is based on the 
utility and consequences of the options and the performance study of various actions. 
Quote 3: He not only identified but evaluated various alternatives through which the 
farms could be utilised for the remaining months of the year. 
iv. Planning is a mental exercise: Planning is a mental activity, in which the manager 
uses his mind for logical and systematic thinking.  
Quote 4: Through correct foresight and logical and systematic thinking based on analysis 
of all facts, all alternatives were examined and evaluated. 
 
Answer 19 
Protective functions of Securities and Exchange Board of India: 
i. One of the major objectives of SEBI is to check malpractices such as insider trading, 
violation of rules and non-adherence to the Companies Act.  
ii. SEBI provides investors with information about companies as required by them.  
iii. SEBI provides guidelines related to investment in securities. In this way, it enables 
investors to take well-informed decisions. 
iv. SEBI provides a code of conduct for the trade practices of various intermediaries such as 
brokers and merchant bankers. It keeps a check on the activities of these intermediaries 
and provides them a competitive environment. 
 
 
Page 5


  
 
CBSE XII  | BUSINESS STUDIES 
All India Board Paper Set 2 ? 2018 
 
     
 
CBSE 
Class XII Business Studies 
All India Board Paper Set 2 – 2018 
Time: 3 hrs. Max. Marks: 80 
 
Answer 1 
The investor could not invest in the Treasury Bill as treasury bills can be bought for a minimum 
amount of Rs 25,000 and in multiples thereof.  
 
Answer 2 
The labelling function being performed by the given statement is ‘helps in the promotion of 
products’. 
 
Answer 3 
The factor affecting the working capital requirements of this industry is availability of raw 
materials. 
 
Answer 4 
Steps followed by Saurabh which are related to planning: 
i. Setting objectives 
ii. Developing premises 
 
Answer 5 
District Consumer Disputes Redressal Forum comprises one President and two other 
members, one of whom is a woman. 
 
Answer 6 
Method is a type of plan in which the way or manner to perform a task is provided. It differs 
from task to task.  
 
Answer 7 
Decentralisation refers to delegating authority or decision-making power to the lower 
levels of hierarchy. 
 
Answer 8 
An understanding of ‘Marketing Management Philosophies’ is important as it helps in 
determining the weightage to be given to different factors so that organisational objective can 
be achieved. 
 
Answer 9 
Steps in the selection procedure after the employment interview and before the job offer: 
i. Background checks: After the individual clears the interview, the organisation may ask 
  
 
CBSE XII  | BUSINESS STUDIES 
All India Board Paper Set 2 ? 2018 
 
     
 
for references such as from previous employers or other known persons. The 
references are then used to cross-check the information provided by the candidate.  
ii. Selection decision: When the candidate clears the tests and interviews, the final 
selection is done. 
iii. Medical examination: Some organisations may also conduct a medical examination, 
and the job is offered only when they are declared medically fit by a medical 
practitioner. 
 
Answer 10 
(a) Democratic style of leadership is being followed by Sandhya as she encourages her 
teammates to set their own objectives and take decisions. 
(b) Two positive aspects of informal communication which are used by Sandhya: 
i. Spread of information is faster when it flows through an informal path. 
ii. Through informal communication, managers can get to know the true thinking or 
mindset of employees which can prove helpful in decision making.   
  
Answer 11 
Basis Formal organisation Informal organisation 
Origin It is a result of rules and 
policies of a company. 
It is a result of social 
interactions among 
employees. 
Authority It is based on hierarchical 
structure. 
It is based on personal 
qualities of members. 
Flow of communication It takes place through the 
scalar chain. 
It can take place in any 
direction. 
 
Answer 12 
Consumer protection plays an important role for businesses in the following ways: 
i. Long-Term Interest: For any business, consumer satisfaction is essential. In today's 
times, with increasing competition, consumer satisfaction has become all the more 
important. As the organisation takes care of the interests of consumers, it builds goodwill 
and reputation in the market. This in turn helps in increasing the sales and profits of the 
business. Thus, protecting consumer's interests benefits the business in the long run. 
ii. Use of Resources: Any business survives on the basis of society. It uses the resources of 
society for its various production activities. It earns profits with the sale of these goods 
and services to society. Thus, the business must take care of the interest of society and 
supply goods and services which adhere to the overall interests and well-being of society. 
 
Answer 13 
Option A is better than Option B for the company to finance its future fixed capital needs. 
Reason: In Option A, Rate of return on investment (10–12%) > Rate of interest on borrowings 
(9%) 
Concept used: Trading on equity 
 
  
 
CBSE XII  | BUSINESS STUDIES 
All India Board Paper Set 2 ? 2018 
 
     
 
 
Answer 14 
(a) The incentive provided by ‘Goodcare Hospitals’ to its doctors through running trophies is 
Employee Recognition Programme. 
(b) Esteem needs of the doctors will be fulfilled through the employee recognition programme. 
(c) The values that the CEO of ‘Goodcare Hospitals’ is trying to communicate to the society: 
i. Healthcare to rural people 
ii. Upliftment of poor in rural areas 
 
Answer 15 
(a) The responsibility which Sumit had to fulfil as an aware consumer to get the services of 
the company is to learn the risks associated with the products and services, follow 
manufacturer’s instructions and use the products safely. 
(b) Two rights which Sumit could have exercised had he fulfilled his responsibility: 
i. Right to be Heard: It is the right of consumers to be heard in an appropriate legal 
forum in case of any grievance or dissatisfaction faced by them. In other words, a 
consumer has the right to file a complaint in case of any grievance. 
ii. Right to Seek Redressal: It is the right of consumers to seek redressal in case of a 
grievance and, if required, demand a suitable compensation. The Consumer 
Protection Act provides for compensation in the form of replacement of product, 
cash compensation and repair/removal of defects. 
 
Answer 16 
Yumco Ltd. has adopted the functional organisational structure. Three advantages of the 
functional organisational structure: 
i. Occupational specialisation: Activities of a similar nature are grouped together in 
departments. Employees perform the same functions repeatedly. Thus, it leads to 
occupational specialisation. 
ii. Easy training: It is easy to train employees as the focus is on a limited range of skills. 
iii. Better control and coordination: There is better control and coordination within a 
department as similar tasks are performed within the department. 
 
Answer 17                        
Points highlighting the importance of controlling in an organisation: 
i. Achieving goals: Controlling ensures that various activities are carried out correctly 
according to the plans. It ensures that deviations if any are identified and appropriate 
corrective action is taken. 
ii. Reviewing standards: An effective control system ensures that standards are set 
accurately. As the business environment changes, it ensures that the standards are also 
reviewed so as to adapt to the changes taking place. 
iii. Enables efficiency in resource utilisation: An effective control system ensures that there 
is minimum wastage of resources. In other words, it ensures that the resources are utilised 
optimally and in the most efficient manner. 
  
 
CBSE XII  | BUSINESS STUDIES 
All India Board Paper Set 2 ? 2018 
 
     
 
iv. Better motivation: With controlling, employees know what is expected from them and 
how their performance would be evaluated. This clarity motivates employees to perform 
better. 
 
Answer 18 
The given case highlights the planning function of management.  The features of planning 
discussed in the given case: 
i. Planning focuses on achieving objectives: Planning starts when an objective is set 
and proper planning gives a boost to a well-organised and goal-oriented management. 
Plans ensure that the desired objective is attained economically and quickly, if 
possible.  
Quote 1: He shifted to Begampur, Chhattisgarh, to fulfil his grandmother's dream of 
converting their 25-acre ancestral land into a fertile farm. 
 
ii. Planning is futuristic: Being an intellectual process, planning seeks to bridge the gap 
between where we are and where we want to go; it is a trap to capture the future, i.e. 
it is futuristic in nature. 
Quote 2: He wanted to ensure that the future events meet effectively the best interests of 
the company. Through sales forecasting, he prepared an annual plan for production and 
sales. 
 
iii. Planning involves decision making: After coming up with all possible alternatives 
and its outcome, the managers need to evaluate them. This evaluation is based on the 
utility and consequences of the options and the performance study of various actions. 
Quote 3: He not only identified but evaluated various alternatives through which the 
farms could be utilised for the remaining months of the year. 
iv. Planning is a mental exercise: Planning is a mental activity, in which the manager 
uses his mind for logical and systematic thinking.  
Quote 4: Through correct foresight and logical and systematic thinking based on analysis 
of all facts, all alternatives were examined and evaluated. 
 
Answer 19 
Protective functions of Securities and Exchange Board of India: 
i. One of the major objectives of SEBI is to check malpractices such as insider trading, 
violation of rules and non-adherence to the Companies Act.  
ii. SEBI provides investors with information about companies as required by them.  
iii. SEBI provides guidelines related to investment in securities. In this way, it enables 
investors to take well-informed decisions. 
iv. SEBI provides a code of conduct for the trade practices of various intermediaries such as 
brokers and merchant bankers. It keeps a check on the activities of these intermediaries 
and provides them a competitive environment. 
 
 
  
 
CBSE XII  | BUSINESS STUDIES 
All India Board Paper Set 2 ? 2018 
 
     
 
Answer 20 
(a) The feature of the business environment discussed in the above paragraph is specific 
and general forces. Specific forces refer to the external forces or institutions which exist 
outside an organisation and with which an organisation has to interact during its working 
course. General forces refers to those external forces which exhibit broad trends and 
conditions affecting all organisations. 
(b) Points highlighting the importance of business environment for business enterprises: 
i. Accumulating useful resources: Environment offers itself as a source of inputs such 
as raw material, machinery and labour for the running of an organisation. In return, 
the business supplies the environment with its output. This is possible only if the 
enterprises have an understanding of what the environment desires and what it can 
offer.  
ii. Adjusting to changes: Business environment is dynamic in nature and is prone to 
numerous socio-economic changes. A careful analysis and understanding of the 
environment helps an enterprise to adapt with these changes and to take timely 
action. 
iii. Formulating plans and policies: Understanding and analysing opportunities and 
threats help a business frame suitable plans and policies in view of the current 
scenario.  
iv. Improving performance: The main aim of analysing and understanding the 
environment is to improve a firm's performance and efficiency. The future of an 
organisation depends on how closely it bonds with the environment and thrives to 
survive its ever changing policies. 
 
Answer 21 
(a) The concept discussed in the given paragraph is price of the product. 
(b) Four factors discussed in the above case: 
i. Quoted Line: After gathering and analysing information and doing correct marketing 
planning, he came to know that consumers compare the value of a product to the 
value of money which they are required to pay. Consumers will be ready to buy a 
product when they perceived that the value of the product is at least equal to the 
value of money which they would pay. 
Factor: The Utility and Demand 
ii. Quoted Line: He examined the quality and features of the products of competitors and 
the anticipated reactions of consumers.  
Factor: Extent of competition in the market 
iii. Quoted Line: Considering the same he decided to add some unique features to the 
packaging and also decided to provide free home delivery of the products. 
Factor: Marketing methods used 
iv. Quoted Line: Since he was entering into a new market, he felt that he may not be able 
to cover all costs. He knew that in the long run, the business will not be able to survive 
unless all costs are covered in addition to a minimum profit. 
Factor: Product cost