CBSE Business Studies Past year paper Delhi (Set - 3) Solution - 2016, Class 12 | Additional Study Material for Commerce PDF Download

 Page 1


  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
     
CBSE 
Class XII Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
Answer 1 
The market function concerned with informing customers about a firm’s products is 
promotion. 
Answer 2 
‘Level of collaboration’ is the factor which affects the business decision of ‘Fashionate Pvt. 
Ltd.’ Such collaboration results in division of fixed capital investment for all the parties 
involved and hence results in efficient utilisation of resources. 
Answer 3 
Investment decisions or capital budgeting decisions made by a company affect its size of 
assets, profitability and competitiveness. 
Answer 4 
Management is the process of getting things done. Here, the term ‘process’ implies key 
tasks performed by the managers for the attainment of organisational goals in an effective 
and efficient manner. 
Answer 5 
The right exercised by Manoj was ‘right to be informed’. In the given case, the consumer, i.e. 
Manoj, was unable to see the ingredients of the product he purchased. According to the 
Consumer Protection Act, 1986, all consumers have a right to know about the quality, 
quantity, MRP and ingredients of the products they purchase from the market. Manoj 
exercised this right to know about the ingredients of the packet of chips he purchased. 
Answer 6 
The organisational structure which promotes efficiency of manpower is ‘Functional 
Structure’. 
Answer 7 
As an element of delegation, accountability can be defined as the duty of the superior to be 
held responsible for the ultimate result of the task which was assigned to him initially by 
his manager. It makes sure that the superior does not get away with his bad performance 
by blaming his subordinates entirely. 
 
Answer 8 
The responsibility of an inspector is to make sure that the workers meet the desired 
standards of quality in the output produced by them. Quality standards are supervised by 
him/her in the functional foremanship, and he/she provides performance feedback and 
suggestions to the workers. 
Page 2


  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
     
CBSE 
Class XII Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
Answer 1 
The market function concerned with informing customers about a firm’s products is 
promotion. 
Answer 2 
‘Level of collaboration’ is the factor which affects the business decision of ‘Fashionate Pvt. 
Ltd.’ Such collaboration results in division of fixed capital investment for all the parties 
involved and hence results in efficient utilisation of resources. 
Answer 3 
Investment decisions or capital budgeting decisions made by a company affect its size of 
assets, profitability and competitiveness. 
Answer 4 
Management is the process of getting things done. Here, the term ‘process’ implies key 
tasks performed by the managers for the attainment of organisational goals in an effective 
and efficient manner. 
Answer 5 
The right exercised by Manoj was ‘right to be informed’. In the given case, the consumer, i.e. 
Manoj, was unable to see the ingredients of the product he purchased. According to the 
Consumer Protection Act, 1986, all consumers have a right to know about the quality, 
quantity, MRP and ingredients of the products they purchase from the market. Manoj 
exercised this right to know about the ingredients of the packet of chips he purchased. 
Answer 6 
The organisational structure which promotes efficiency of manpower is ‘Functional 
Structure’. 
Answer 7 
As an element of delegation, accountability can be defined as the duty of the superior to be 
held responsible for the ultimate result of the task which was assigned to him initially by 
his manager. It makes sure that the superior does not get away with his bad performance 
by blaming his subordinates entirely. 
 
Answer 8 
The responsibility of an inspector is to make sure that the workers meet the desired 
standards of quality in the output produced by them. Quality standards are supervised by 
him/her in the functional foremanship, and he/she provides performance feedback and 
suggestions to the workers. 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
     
Answer 9 
Internal/external recruitment sources used by ‘Senor Enterprises Ltd.’ to fill various 
positions: 
1. Promotion: The Human Resource Manager was recruited using promotion. 
Promotion is an internal source of recruitment. 
2. Placement consultants: The Marketing Head was recruited through an external 
source of placement consultants. 
3. Casual callers: The Assistant Manager was recruited using existing applications. 
Answer 10 
SEBI intervened to perform the following two functions in the given case: 
i. Regulatory functions: SEBI performed various inspections to determine whether 
Mr Sanjay is guilty or not. This is a regulatory function. 
ii. Protective functions: SEBI imposed heavy fines on Mr Sanjay to make sure that the 
interests of all the investors stay protected. 
Answer 11 
Three functions performed by non-governmental organisations for consumer protection: 
i. Educating consumers: Trainings and seminars are conducted to educate 
consumers regarding various consumer rights. Also, consumers are educated to 
perform their responsibilities while using various products. 
ii. Print media: The print media publishes articles and journals to educate consumers 
about their rights and procedures to exercise them. 
iii. Product reviewers: Product reviewers test the quality and safety standards of 
different products and educate consumers about them. 
Answer 12 
a. Two communication barriers because of which ‘Bikmac Enterprises’ were not able to 
achieve their targets: 
i. Barriers at the personal level: Clear lines of communication are hindered by 
personal barriers present in an organisation. This happens when the 
management does not entrust its confidence in employees. Managers should 
conduct discussions and ask employees for inputs to ensure that such barriers 
are resolved. 
ii. Barriers at the organisational level: Policies which suppress the initiatives to 
empower employees such as centralisation of all decisions, high attrition rates 
and low perks result in dissatisfaction among employees. This dissatisfaction 
hinders their performance. 
b. i. One barrier at the organisational level is ‘Rigid code of conduct’. If an organisation 
follows extremely rigid rules and regulations, all its employees remain suppressed and 
dissatisfied. Organisations should promote good communication lines with their 
employees. 
Page 3


  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
     
CBSE 
Class XII Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
Answer 1 
The market function concerned with informing customers about a firm’s products is 
promotion. 
Answer 2 
‘Level of collaboration’ is the factor which affects the business decision of ‘Fashionate Pvt. 
Ltd.’ Such collaboration results in division of fixed capital investment for all the parties 
involved and hence results in efficient utilisation of resources. 
Answer 3 
Investment decisions or capital budgeting decisions made by a company affect its size of 
assets, profitability and competitiveness. 
Answer 4 
Management is the process of getting things done. Here, the term ‘process’ implies key 
tasks performed by the managers for the attainment of organisational goals in an effective 
and efficient manner. 
Answer 5 
The right exercised by Manoj was ‘right to be informed’. In the given case, the consumer, i.e. 
Manoj, was unable to see the ingredients of the product he purchased. According to the 
Consumer Protection Act, 1986, all consumers have a right to know about the quality, 
quantity, MRP and ingredients of the products they purchase from the market. Manoj 
exercised this right to know about the ingredients of the packet of chips he purchased. 
Answer 6 
The organisational structure which promotes efficiency of manpower is ‘Functional 
Structure’. 
Answer 7 
As an element of delegation, accountability can be defined as the duty of the superior to be 
held responsible for the ultimate result of the task which was assigned to him initially by 
his manager. It makes sure that the superior does not get away with his bad performance 
by blaming his subordinates entirely. 
 
Answer 8 
The responsibility of an inspector is to make sure that the workers meet the desired 
standards of quality in the output produced by them. Quality standards are supervised by 
him/her in the functional foremanship, and he/she provides performance feedback and 
suggestions to the workers. 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
     
Answer 9 
Internal/external recruitment sources used by ‘Senor Enterprises Ltd.’ to fill various 
positions: 
1. Promotion: The Human Resource Manager was recruited using promotion. 
Promotion is an internal source of recruitment. 
2. Placement consultants: The Marketing Head was recruited through an external 
source of placement consultants. 
3. Casual callers: The Assistant Manager was recruited using existing applications. 
Answer 10 
SEBI intervened to perform the following two functions in the given case: 
i. Regulatory functions: SEBI performed various inspections to determine whether 
Mr Sanjay is guilty or not. This is a regulatory function. 
ii. Protective functions: SEBI imposed heavy fines on Mr Sanjay to make sure that the 
interests of all the investors stay protected. 
Answer 11 
Three functions performed by non-governmental organisations for consumer protection: 
i. Educating consumers: Trainings and seminars are conducted to educate 
consumers regarding various consumer rights. Also, consumers are educated to 
perform their responsibilities while using various products. 
ii. Print media: The print media publishes articles and journals to educate consumers 
about their rights and procedures to exercise them. 
iii. Product reviewers: Product reviewers test the quality and safety standards of 
different products and educate consumers about them. 
Answer 12 
a. Two communication barriers because of which ‘Bikmac Enterprises’ were not able to 
achieve their targets: 
i. Barriers at the personal level: Clear lines of communication are hindered by 
personal barriers present in an organisation. This happens when the 
management does not entrust its confidence in employees. Managers should 
conduct discussions and ask employees for inputs to ensure that such barriers 
are resolved. 
ii. Barriers at the organisational level: Policies which suppress the initiatives to 
empower employees such as centralisation of all decisions, high attrition rates 
and low perks result in dissatisfaction among employees. This dissatisfaction 
hinders their performance. 
b. i. One barrier at the organisational level is ‘Rigid code of conduct’. If an organisation 
follows extremely rigid rules and regulations, all its employees remain suppressed and 
dissatisfied. Organisations should promote good communication lines with their 
employees. 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
     
ii. One barrier at the personal level is ‘Disregard and fear’. When managers do not 
appreciate employees for their contribution, employees lose their motivation to 
perform. Also, fear blocks all lines of communication with managers. This results 
in personal barriers. 
Answer 13 
Importance of planning can be highlighted by the following points: 
i. Guiding force: Planning acts as a guiding force for the subsequent functions of 
management and serves as a basic framework in the functioning of management. It 
allows the initiatives of cooperation and coordination to grow and helps the 
organisation to achieve its primary objectives. It creates a cordial atmosphere 
where suggestions and feedback of all employees are welcomed. 
ii. Hedging uncertainties: Planning attempts to predict and provide for unforeseen 
business changes occurring in the dynamic business environment on a day-to-day 
basis. It forecasts upcoming challenges and prepares the management for them in 
advance so that the productivity of the organisation does not get hindered. 
iii. Efficiency: Planning attempts to eliminate undesired wastage of valuable resources 
and to create an action plan which focuses on completion of goals efficiently in 
terms of time and cost involved. It aims to direct employees in such a manner that 
they reach their optimum individual performance level. 
Answer 14 
‘Motivation’ is the element of function of management used in the given scenario. A 
variation in travel policies changes the perspective of employees towards the organisation 
and resulted in better utilisation of time by employees. All employees started feeling equal 
and this increased their belongingness with the organisation.  
Features of motivation can be highlighted using the following points: 
1. Motivation is an invisible force: Motivation is a feeling of belongingness within an 
employee. It cannot be seen or touched. However, its results can clearly be felt among 
the employees through their performance. 
2. Motivation helps in achieving goals: Motivation is a positive awakening force which 
increases the productivity and quality standards of work done by employees. 
3. Motivation can also be negative: A positive motivation can take the form of 
appraisal or promotion. On the other hand, negative motivation can take the form of 
pay-cut and demotion. 
4. Motivation is not a simple process: All employees get motivated for different 
reasons at different times. Some employees get motivated by appreciation, whereas 
some employees get motivated by appraisals. 
 
Answer 15 
a. In the given scenario, ‘Public Relations’ is the communication tool used by the company 
to restore its good image. The sole purpose of Public Relations is to create and maintain 
Page 4


  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
     
CBSE 
Class XII Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
Answer 1 
The market function concerned with informing customers about a firm’s products is 
promotion. 
Answer 2 
‘Level of collaboration’ is the factor which affects the business decision of ‘Fashionate Pvt. 
Ltd.’ Such collaboration results in division of fixed capital investment for all the parties 
involved and hence results in efficient utilisation of resources. 
Answer 3 
Investment decisions or capital budgeting decisions made by a company affect its size of 
assets, profitability and competitiveness. 
Answer 4 
Management is the process of getting things done. Here, the term ‘process’ implies key 
tasks performed by the managers for the attainment of organisational goals in an effective 
and efficient manner. 
Answer 5 
The right exercised by Manoj was ‘right to be informed’. In the given case, the consumer, i.e. 
Manoj, was unable to see the ingredients of the product he purchased. According to the 
Consumer Protection Act, 1986, all consumers have a right to know about the quality, 
quantity, MRP and ingredients of the products they purchase from the market. Manoj 
exercised this right to know about the ingredients of the packet of chips he purchased. 
Answer 6 
The organisational structure which promotes efficiency of manpower is ‘Functional 
Structure’. 
Answer 7 
As an element of delegation, accountability can be defined as the duty of the superior to be 
held responsible for the ultimate result of the task which was assigned to him initially by 
his manager. It makes sure that the superior does not get away with his bad performance 
by blaming his subordinates entirely. 
 
Answer 8 
The responsibility of an inspector is to make sure that the workers meet the desired 
standards of quality in the output produced by them. Quality standards are supervised by 
him/her in the functional foremanship, and he/she provides performance feedback and 
suggestions to the workers. 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
     
Answer 9 
Internal/external recruitment sources used by ‘Senor Enterprises Ltd.’ to fill various 
positions: 
1. Promotion: The Human Resource Manager was recruited using promotion. 
Promotion is an internal source of recruitment. 
2. Placement consultants: The Marketing Head was recruited through an external 
source of placement consultants. 
3. Casual callers: The Assistant Manager was recruited using existing applications. 
Answer 10 
SEBI intervened to perform the following two functions in the given case: 
i. Regulatory functions: SEBI performed various inspections to determine whether 
Mr Sanjay is guilty or not. This is a regulatory function. 
ii. Protective functions: SEBI imposed heavy fines on Mr Sanjay to make sure that the 
interests of all the investors stay protected. 
Answer 11 
Three functions performed by non-governmental organisations for consumer protection: 
i. Educating consumers: Trainings and seminars are conducted to educate 
consumers regarding various consumer rights. Also, consumers are educated to 
perform their responsibilities while using various products. 
ii. Print media: The print media publishes articles and journals to educate consumers 
about their rights and procedures to exercise them. 
iii. Product reviewers: Product reviewers test the quality and safety standards of 
different products and educate consumers about them. 
Answer 12 
a. Two communication barriers because of which ‘Bikmac Enterprises’ were not able to 
achieve their targets: 
i. Barriers at the personal level: Clear lines of communication are hindered by 
personal barriers present in an organisation. This happens when the 
management does not entrust its confidence in employees. Managers should 
conduct discussions and ask employees for inputs to ensure that such barriers 
are resolved. 
ii. Barriers at the organisational level: Policies which suppress the initiatives to 
empower employees such as centralisation of all decisions, high attrition rates 
and low perks result in dissatisfaction among employees. This dissatisfaction 
hinders their performance. 
b. i. One barrier at the organisational level is ‘Rigid code of conduct’. If an organisation 
follows extremely rigid rules and regulations, all its employees remain suppressed and 
dissatisfied. Organisations should promote good communication lines with their 
employees. 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
     
ii. One barrier at the personal level is ‘Disregard and fear’. When managers do not 
appreciate employees for their contribution, employees lose their motivation to 
perform. Also, fear blocks all lines of communication with managers. This results 
in personal barriers. 
Answer 13 
Importance of planning can be highlighted by the following points: 
i. Guiding force: Planning acts as a guiding force for the subsequent functions of 
management and serves as a basic framework in the functioning of management. It 
allows the initiatives of cooperation and coordination to grow and helps the 
organisation to achieve its primary objectives. It creates a cordial atmosphere 
where suggestions and feedback of all employees are welcomed. 
ii. Hedging uncertainties: Planning attempts to predict and provide for unforeseen 
business changes occurring in the dynamic business environment on a day-to-day 
basis. It forecasts upcoming challenges and prepares the management for them in 
advance so that the productivity of the organisation does not get hindered. 
iii. Efficiency: Planning attempts to eliminate undesired wastage of valuable resources 
and to create an action plan which focuses on completion of goals efficiently in 
terms of time and cost involved. It aims to direct employees in such a manner that 
they reach their optimum individual performance level. 
Answer 14 
‘Motivation’ is the element of function of management used in the given scenario. A 
variation in travel policies changes the perspective of employees towards the organisation 
and resulted in better utilisation of time by employees. All employees started feeling equal 
and this increased their belongingness with the organisation.  
Features of motivation can be highlighted using the following points: 
1. Motivation is an invisible force: Motivation is a feeling of belongingness within an 
employee. It cannot be seen or touched. However, its results can clearly be felt among 
the employees through their performance. 
2. Motivation helps in achieving goals: Motivation is a positive awakening force which 
increases the productivity and quality standards of work done by employees. 
3. Motivation can also be negative: A positive motivation can take the form of 
appraisal or promotion. On the other hand, negative motivation can take the form of 
pay-cut and demotion. 
4. Motivation is not a simple process: All employees get motivated for different 
reasons at different times. Some employees get motivated by appreciation, whereas 
some employees get motivated by appraisals. 
 
Answer 15 
a. In the given scenario, ‘Public Relations’ is the communication tool used by the company 
to restore its good image. The sole purpose of Public Relations is to create and maintain 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
     
cordial relationship of the company with its stakeholders, customers and lenders. Such 
positive public relations of the company are key foundations for its survival and growth. 
b. Importance of Public Relations can be highlighted as follows: 
1. It allows the organisation to attain its goals in a hassle-free manner without 
constantly worrying about its public image. 
2. It assists the organisation in creating and maintaining a market for its product 
among consumers, thus increasing its brand loyalty among consumers. 
3. Public Relations among the stakeholders and consumers also allows an organisation 
to survive in the business in the long run and deal with its new potential 
competitors effectively. 
4. It also complements the promotional ventures undertaken by the organisation to 
increase its customer base. 
Answer 16 
Dimensions of business environment being referred to in the given case: 
1. Economic environment: A fall in loan interest rate implies a variation in the economic 
environment of the country. 
Explanation: Economic environment includes the effect of changes in the interest rates, 
levels of income and stock market fluctuations. Example: An increase in imports leads to a 
fall in the price of domestic currency and vice versa.  
2. Technological environment: Development of a car which is powered by fuel 
produced from garbage implies a change in technological environment of the economy. 
Explanation: Technological environment takes into account various changes in technology 
of an economy. It involves infrastructural changes or changes related to the information 
technology revolution. For example, smartphones and e-commerce are the foundations of 
most business start-ups in the modern era. Competing with different market players would 
require a company to launch an app and a website. 
Answer 17 
a. ‘Informal Organisation’ allows communication to flow in all directions. 
b. Another advantage of informal organisation is that it allows employees to feel sociable, 
interactive and competitive. This results in better employee engagement and work 
culture. All these factors result in better productivity for the organisation by the 
employees. 
c. ‘Steelo Ltd.’ wanted to communicate following two values of the organisation: 
i. Socially responsible corporation 
ii. Employee-centric organisation 
Answer 18 
The nature of principles of management can be explained by the following points: 
Page 5


  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
     
CBSE 
Class XII Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
Answer 1 
The market function concerned with informing customers about a firm’s products is 
promotion. 
Answer 2 
‘Level of collaboration’ is the factor which affects the business decision of ‘Fashionate Pvt. 
Ltd.’ Such collaboration results in division of fixed capital investment for all the parties 
involved and hence results in efficient utilisation of resources. 
Answer 3 
Investment decisions or capital budgeting decisions made by a company affect its size of 
assets, profitability and competitiveness. 
Answer 4 
Management is the process of getting things done. Here, the term ‘process’ implies key 
tasks performed by the managers for the attainment of organisational goals in an effective 
and efficient manner. 
Answer 5 
The right exercised by Manoj was ‘right to be informed’. In the given case, the consumer, i.e. 
Manoj, was unable to see the ingredients of the product he purchased. According to the 
Consumer Protection Act, 1986, all consumers have a right to know about the quality, 
quantity, MRP and ingredients of the products they purchase from the market. Manoj 
exercised this right to know about the ingredients of the packet of chips he purchased. 
Answer 6 
The organisational structure which promotes efficiency of manpower is ‘Functional 
Structure’. 
Answer 7 
As an element of delegation, accountability can be defined as the duty of the superior to be 
held responsible for the ultimate result of the task which was assigned to him initially by 
his manager. It makes sure that the superior does not get away with his bad performance 
by blaming his subordinates entirely. 
 
Answer 8 
The responsibility of an inspector is to make sure that the workers meet the desired 
standards of quality in the output produced by them. Quality standards are supervised by 
him/her in the functional foremanship, and he/she provides performance feedback and 
suggestions to the workers. 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
     
Answer 9 
Internal/external recruitment sources used by ‘Senor Enterprises Ltd.’ to fill various 
positions: 
1. Promotion: The Human Resource Manager was recruited using promotion. 
Promotion is an internal source of recruitment. 
2. Placement consultants: The Marketing Head was recruited through an external 
source of placement consultants. 
3. Casual callers: The Assistant Manager was recruited using existing applications. 
Answer 10 
SEBI intervened to perform the following two functions in the given case: 
i. Regulatory functions: SEBI performed various inspections to determine whether 
Mr Sanjay is guilty or not. This is a regulatory function. 
ii. Protective functions: SEBI imposed heavy fines on Mr Sanjay to make sure that the 
interests of all the investors stay protected. 
Answer 11 
Three functions performed by non-governmental organisations for consumer protection: 
i. Educating consumers: Trainings and seminars are conducted to educate 
consumers regarding various consumer rights. Also, consumers are educated to 
perform their responsibilities while using various products. 
ii. Print media: The print media publishes articles and journals to educate consumers 
about their rights and procedures to exercise them. 
iii. Product reviewers: Product reviewers test the quality and safety standards of 
different products and educate consumers about them. 
Answer 12 
a. Two communication barriers because of which ‘Bikmac Enterprises’ were not able to 
achieve their targets: 
i. Barriers at the personal level: Clear lines of communication are hindered by 
personal barriers present in an organisation. This happens when the 
management does not entrust its confidence in employees. Managers should 
conduct discussions and ask employees for inputs to ensure that such barriers 
are resolved. 
ii. Barriers at the organisational level: Policies which suppress the initiatives to 
empower employees such as centralisation of all decisions, high attrition rates 
and low perks result in dissatisfaction among employees. This dissatisfaction 
hinders their performance. 
b. i. One barrier at the organisational level is ‘Rigid code of conduct’. If an organisation 
follows extremely rigid rules and regulations, all its employees remain suppressed and 
dissatisfied. Organisations should promote good communication lines with their 
employees. 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
     
ii. One barrier at the personal level is ‘Disregard and fear’. When managers do not 
appreciate employees for their contribution, employees lose their motivation to 
perform. Also, fear blocks all lines of communication with managers. This results 
in personal barriers. 
Answer 13 
Importance of planning can be highlighted by the following points: 
i. Guiding force: Planning acts as a guiding force for the subsequent functions of 
management and serves as a basic framework in the functioning of management. It 
allows the initiatives of cooperation and coordination to grow and helps the 
organisation to achieve its primary objectives. It creates a cordial atmosphere 
where suggestions and feedback of all employees are welcomed. 
ii. Hedging uncertainties: Planning attempts to predict and provide for unforeseen 
business changes occurring in the dynamic business environment on a day-to-day 
basis. It forecasts upcoming challenges and prepares the management for them in 
advance so that the productivity of the organisation does not get hindered. 
iii. Efficiency: Planning attempts to eliminate undesired wastage of valuable resources 
and to create an action plan which focuses on completion of goals efficiently in 
terms of time and cost involved. It aims to direct employees in such a manner that 
they reach their optimum individual performance level. 
Answer 14 
‘Motivation’ is the element of function of management used in the given scenario. A 
variation in travel policies changes the perspective of employees towards the organisation 
and resulted in better utilisation of time by employees. All employees started feeling equal 
and this increased their belongingness with the organisation.  
Features of motivation can be highlighted using the following points: 
1. Motivation is an invisible force: Motivation is a feeling of belongingness within an 
employee. It cannot be seen or touched. However, its results can clearly be felt among 
the employees through their performance. 
2. Motivation helps in achieving goals: Motivation is a positive awakening force which 
increases the productivity and quality standards of work done by employees. 
3. Motivation can also be negative: A positive motivation can take the form of 
appraisal or promotion. On the other hand, negative motivation can take the form of 
pay-cut and demotion. 
4. Motivation is not a simple process: All employees get motivated for different 
reasons at different times. Some employees get motivated by appreciation, whereas 
some employees get motivated by appraisals. 
 
Answer 15 
a. In the given scenario, ‘Public Relations’ is the communication tool used by the company 
to restore its good image. The sole purpose of Public Relations is to create and maintain 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
     
cordial relationship of the company with its stakeholders, customers and lenders. Such 
positive public relations of the company are key foundations for its survival and growth. 
b. Importance of Public Relations can be highlighted as follows: 
1. It allows the organisation to attain its goals in a hassle-free manner without 
constantly worrying about its public image. 
2. It assists the organisation in creating and maintaining a market for its product 
among consumers, thus increasing its brand loyalty among consumers. 
3. Public Relations among the stakeholders and consumers also allows an organisation 
to survive in the business in the long run and deal with its new potential 
competitors effectively. 
4. It also complements the promotional ventures undertaken by the organisation to 
increase its customer base. 
Answer 16 
Dimensions of business environment being referred to in the given case: 
1. Economic environment: A fall in loan interest rate implies a variation in the economic 
environment of the country. 
Explanation: Economic environment includes the effect of changes in the interest rates, 
levels of income and stock market fluctuations. Example: An increase in imports leads to a 
fall in the price of domestic currency and vice versa.  
2. Technological environment: Development of a car which is powered by fuel 
produced from garbage implies a change in technological environment of the economy. 
Explanation: Technological environment takes into account various changes in technology 
of an economy. It involves infrastructural changes or changes related to the information 
technology revolution. For example, smartphones and e-commerce are the foundations of 
most business start-ups in the modern era. Competing with different market players would 
require a company to launch an app and a website. 
Answer 17 
a. ‘Informal Organisation’ allows communication to flow in all directions. 
b. Another advantage of informal organisation is that it allows employees to feel sociable, 
interactive and competitive. This results in better employee engagement and work 
culture. All these factors result in better productivity for the organisation by the 
employees. 
c. ‘Steelo Ltd.’ wanted to communicate following two values of the organisation: 
i. Socially responsible corporation 
ii. Employee-centric organisation 
Answer 18 
The nature of principles of management can be explained by the following points: 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 3 – 2016 Solution 
 
     
i. Applicability: Principles of management command applicability in all businesses in 
accordance with their suitability. The extent to which they can be applied entirely 
depends on the business and its requirements. 
ii. Basic framework: Principles of management are not readymade solutions to 
business problems. Rather, they only provide the basic framework or guidelines to 
tackle different problems in different scenarios applicable to the business. 
iii. Practical approach: Principles of management are developed through research 
results derived by handling real-life business problems. This means they are 
practical in approach and not just a theoretical analysis of problems. 
iv. Adaptability: Principles of management are adaptable to most business problems 
with slight variations. Different organisations find different aspects of these 
principles useful. Managers find them significant in dealing with different decision-
making scenarios in real business. 
Answer 19 
Four methods of floatation of new issues: 
i. Prospectus issue: The primary market allows companies to invite potential 
investors through the issue of a document called ‘prospectus’. The prospectus aims 
to provide all relevant information to investors including the motive of the issue of 
securities, upcoming projects of the company, recent benchmarks reached by the 
company etc. The prospectus is advertised in various forms of print media to gain 
the attention of investors. It is compulsory for a prospectus to follow the guidelines 
provided by SEBI and the Companies Act and have a listing in one stock exchange at 
the least. 
ii. Issue through intermediaries: Under this method, companies issue shares to 
intermediaries such as broking houses, issuing agents etc. who sell the securities 
thereafter to the general public. This makes it easier for the company to raise funds 
and the cost of raising funds also gets minimised. This method can be considered 
one of the indirect methods of the issue of securities. 
iii. Private placement: Securities are offered for sale to some predetermined 
individuals and institutional investors with high net worth. Companies can make 
such an offer on its own or by taking the assistance of intermediaries. Such an offer 
allows the company to raise funds quickly as the involvement of issuing agents is 
minimised, and hence, the charges of brokerage, underwriting commission etc. are 
not borne by the company. 
iv. Rights issue: Under rights issue, the company offers new shares to its existing 
shareholders. Each existing shareholder is provided with a right to buy a certain 
number of shares. The shares offered for buying are proportionate to the existing 
shareholding of the investor in the company.