Class 12 Entrepreneurship Previous Year Paper - 4 | Entrepreneurship Class 12 - Commerce PDF Download

 Page 1


Page 1 of 9 
 
 
ENTREPRENEURSHIP 
QUESTION PAPER
 
S.No Questions and Answers    Marks 
1 
 
 
Ans 
Here a private company takes over a public company. Identify the type of 
acquisition. 
 
Reverse Acquisition. 
1 
2 
 
Ans 
Define the term environmental scanning. 
 
Environmental scanning refers to careful monitoring of an organisations internal 
and external environments for detecting early signs of opportunities and threats 
that may influence its current and future plans. 
1 
3 
 
 
 
Ans 
Hari is an entrepreneur who wants to start an amusement park in Indore. He 
knows that he needs a huge amount of initial capital. According to you, which of 
the specialized financial institution will be more suitable to him? 
 
Tourism Finance Corporation of India (TFCI) 
1 
4 
 
Ans 
Why is working capital called as circulating capital? 
 
Working capital is called circulating capital, since the money circulates in various 
forms of current assets in a continued manner. 
1 
5 
 
 
Ans 
A salesman approaches you to promote the sales of a water purifier. Which 
communication tool is the marketer using by sending a salesman at your doorstep. 
 
Personal Selling. 
1 
6 
 
 
 
 
 
 
Ans 
 
Mohan was a famous fashion designer. He was in the habit of observing the 
dresses worn by the people. For this he would regularly visit malls, restaurants, 
parks, trade fairs etc. This helped him in understanding the market and designing 
the garments in accordance with the market demands. Identify and explain the 
way in which Mohan spotted this trend. Explain  one more way through which 
Mohan can spot the trends. 
 
Watch trend – Watching and observing the customers in the market place. If 
customers are teenagers, in local mall. If business class people, in restaurants or 
office. Thus , Mohan observed different ways of dressing of people. 
 
The other way Mohan could spot trend is:( Any one) 
Read Trend -  Entrepreneurs regularly read the leading publications and websites 
affecting their business. 
Talk Trend  - Talking to people in specific industry?s trade association and online 
and offline. 
Think Trend – They collect what they read, hear and observe and start to make 
connections that will lead to business boosting insights. 
1+1=2 
Page 2


Page 1 of 9 
 
 
ENTREPRENEURSHIP 
QUESTION PAPER
 
S.No Questions and Answers    Marks 
1 
 
 
Ans 
Here a private company takes over a public company. Identify the type of 
acquisition. 
 
Reverse Acquisition. 
1 
2 
 
Ans 
Define the term environmental scanning. 
 
Environmental scanning refers to careful monitoring of an organisations internal 
and external environments for detecting early signs of opportunities and threats 
that may influence its current and future plans. 
1 
3 
 
 
 
Ans 
Hari is an entrepreneur who wants to start an amusement park in Indore. He 
knows that he needs a huge amount of initial capital. According to you, which of 
the specialized financial institution will be more suitable to him? 
 
Tourism Finance Corporation of India (TFCI) 
1 
4 
 
Ans 
Why is working capital called as circulating capital? 
 
Working capital is called circulating capital, since the money circulates in various 
forms of current assets in a continued manner. 
1 
5 
 
 
Ans 
A salesman approaches you to promote the sales of a water purifier. Which 
communication tool is the marketer using by sending a salesman at your doorstep. 
 
Personal Selling. 
1 
6 
 
 
 
 
 
 
Ans 
 
Mohan was a famous fashion designer. He was in the habit of observing the 
dresses worn by the people. For this he would regularly visit malls, restaurants, 
parks, trade fairs etc. This helped him in understanding the market and designing 
the garments in accordance with the market demands. Identify and explain the 
way in which Mohan spotted this trend. Explain  one more way through which 
Mohan can spot the trends. 
 
Watch trend – Watching and observing the customers in the market place. If 
customers are teenagers, in local mall. If business class people, in restaurants or 
office. Thus , Mohan observed different ways of dressing of people. 
 
The other way Mohan could spot trend is:( Any one) 
Read Trend -  Entrepreneurs regularly read the leading publications and websites 
affecting their business. 
Talk Trend  - Talking to people in specific industry?s trade association and online 
and offline. 
Think Trend – They collect what they read, hear and observe and start to make 
connections that will lead to business boosting insights. 
1+1=2 
Page 2 of 9 
 
7 
 
 
Ans 
 
As the most basic thing, the entrepreneur must clearly state which things related 
to Human resource? 
 
As the most basic thing, the entrepreneur must clearly state following things 
related to Human resource: (Any 2) 
a. Kind of Persons to be hired : What kind/type of person is required to be hired 
for getting the work done. 
b. Work out : To workout a wide range of personnel ranging from managers, 
supervisors, administrators, engineers, technical, skilled and unskilled class. 
c. Type of manpower required : Nature of business activity helps entrepreneur to 
a large extent in deciding the type of manpower required.  
1+1=2 
8 
 
Ans 
 
 
Give the meaning of „routing? and „scheduling? as elements of operational plan. 
 
Routing is a process concerned with determining exact route or path a 
product/service has to follow right from raw material till its transformation into 
finished product. 
Scheduling means fixation of time, date, day when each operation is to be 
commenced and completed. 
1+1=2
 
9 
 
 
 
Ans 
 
Mr. Parthiv is a readymade garments manufacturer. His annual usage rate is 225 
Pcs. The cost of placing each order is 8/- and the carrying cost is 4/- per 
unit. Calculate the Economic Order Quantity (EOQ). 
 
D=225 
P=8 
C=4 
?? OQ =  2PD/C 
                    
=          2×8×225 
                  4   
           =   900   =  30 units. 
( ½mark for formula ,½mark answer, 1 mark for steps) 
1+1=2 
10 
 
 
 
 
Ans 
 
 
Deepa Company Ltd., were earlier producing pencils, now they have decided to 
further venture into the field of notebooks and paper. What do you think is the 
company attempting to do? Identify and explain the concept with a suitable 
example. 
 
The concept is of diversification. It is a process of adding new products or 
markets to the existing, by an enterprise. Here the enterprise thus is able to 
produce more types of products e.g. not only washing soaps, shampoos, 
detergents, washing powders etc are produced by such enterprises. 
 
E.g. Samsung not only produces TV but washing machines, printers, copying 
machines etc. 
1½ +½=2 
11 
 
 
 
Ans 
Angel investor and venture capital are two sources of raising finance for an 
entrepreneur. Explain the concept of both the sources stating one distinguishing 
feature of each. 
 
Angel investor – is an affluent individual who provides capital for a Business 
start-ups and early stage companies using a high-risk, high-return matrix usually 
1+1+1=3 
Page 3


Page 1 of 9 
 
 
ENTREPRENEURSHIP 
QUESTION PAPER
 
S.No Questions and Answers    Marks 
1 
 
 
Ans 
Here a private company takes over a public company. Identify the type of 
acquisition. 
 
Reverse Acquisition. 
1 
2 
 
Ans 
Define the term environmental scanning. 
 
Environmental scanning refers to careful monitoring of an organisations internal 
and external environments for detecting early signs of opportunities and threats 
that may influence its current and future plans. 
1 
3 
 
 
 
Ans 
Hari is an entrepreneur who wants to start an amusement park in Indore. He 
knows that he needs a huge amount of initial capital. According to you, which of 
the specialized financial institution will be more suitable to him? 
 
Tourism Finance Corporation of India (TFCI) 
1 
4 
 
Ans 
Why is working capital called as circulating capital? 
 
Working capital is called circulating capital, since the money circulates in various 
forms of current assets in a continued manner. 
1 
5 
 
 
Ans 
A salesman approaches you to promote the sales of a water purifier. Which 
communication tool is the marketer using by sending a salesman at your doorstep. 
 
Personal Selling. 
1 
6 
 
 
 
 
 
 
Ans 
 
Mohan was a famous fashion designer. He was in the habit of observing the 
dresses worn by the people. For this he would regularly visit malls, restaurants, 
parks, trade fairs etc. This helped him in understanding the market and designing 
the garments in accordance with the market demands. Identify and explain the 
way in which Mohan spotted this trend. Explain  one more way through which 
Mohan can spot the trends. 
 
Watch trend – Watching and observing the customers in the market place. If 
customers are teenagers, in local mall. If business class people, in restaurants or 
office. Thus , Mohan observed different ways of dressing of people. 
 
The other way Mohan could spot trend is:( Any one) 
Read Trend -  Entrepreneurs regularly read the leading publications and websites 
affecting their business. 
Talk Trend  - Talking to people in specific industry?s trade association and online 
and offline. 
Think Trend – They collect what they read, hear and observe and start to make 
connections that will lead to business boosting insights. 
1+1=2 
Page 2 of 9 
 
7 
 
 
Ans 
 
As the most basic thing, the entrepreneur must clearly state which things related 
to Human resource? 
 
As the most basic thing, the entrepreneur must clearly state following things 
related to Human resource: (Any 2) 
a. Kind of Persons to be hired : What kind/type of person is required to be hired 
for getting the work done. 
b. Work out : To workout a wide range of personnel ranging from managers, 
supervisors, administrators, engineers, technical, skilled and unskilled class. 
c. Type of manpower required : Nature of business activity helps entrepreneur to 
a large extent in deciding the type of manpower required.  
1+1=2 
8 
 
Ans 
 
 
Give the meaning of „routing? and „scheduling? as elements of operational plan. 
 
Routing is a process concerned with determining exact route or path a 
product/service has to follow right from raw material till its transformation into 
finished product. 
Scheduling means fixation of time, date, day when each operation is to be 
commenced and completed. 
1+1=2
 
9 
 
 
 
Ans 
 
Mr. Parthiv is a readymade garments manufacturer. His annual usage rate is 225 
Pcs. The cost of placing each order is 8/- and the carrying cost is 4/- per 
unit. Calculate the Economic Order Quantity (EOQ). 
 
D=225 
P=8 
C=4 
?? OQ =  2PD/C 
                    
=          2×8×225 
                  4   
           =   900   =  30 units. 
( ½mark for formula ,½mark answer, 1 mark for steps) 
1+1=2 
10 
 
 
 
 
Ans 
 
 
Deepa Company Ltd., were earlier producing pencils, now they have decided to 
further venture into the field of notebooks and paper. What do you think is the 
company attempting to do? Identify and explain the concept with a suitable 
example. 
 
The concept is of diversification. It is a process of adding new products or 
markets to the existing, by an enterprise. Here the enterprise thus is able to 
produce more types of products e.g. not only washing soaps, shampoos, 
detergents, washing powders etc are produced by such enterprises. 
 
E.g. Samsung not only produces TV but washing machines, printers, copying 
machines etc. 
1½ +½=2 
11 
 
 
 
Ans 
Angel investor and venture capital are two sources of raising finance for an 
entrepreneur. Explain the concept of both the sources stating one distinguishing 
feature of each. 
 
Angel investor – is an affluent individual who provides capital for a Business 
start-ups and early stage companies using a high-risk, high-return matrix usually 
1+1+1=3 
Page 3 of 9 
 
in exchange for convertible debt or ownership equity. 
Venture capital – is a type of a private equity capital provides as seed funding to 
early stage, high potential risk, growth up companies/entrepreneurs. 
Distinguishing feature : Angel investors participate in the management of the 
business but venture capitalists do not take part in the management of the 
business. 
12 
 
 
 
 
 
Ans 
Working capital of Raj and Co. has the following items in its Balance Sheet : 
Stock – 50,000: Trade creditors- 32,000; debtors – 75000; cash – 1,00,000; 
Dividend payable – 50,000; Tax – 44,000; Short term loan- 61,000; Short term 
investments – 76,000.  
Calculate: Gross working capital and net working capital. 
 
Total Current Assets = Debtors + Stock + Cash + Short term investment 
                                      = 75000 + 50000 + 100000 + 76000 = 3,01,000 
Total Current liabilities = Creditors + Dividend payable + Tax + Short term loan 
                                          = 32000 +50000 + 44000 + 61000 = 1,87,000 
Gross working capital = Total current assets = 3,01,000 
Net Working Capital = Total current assets – Total current liabilities 
                                      = 3,01,000 – 1,87,000  =1,14,000 
(Note: ½ mark for calculation of Current assets, ½ mark for calculation of Current    
liabilities.) 
1+1+1=3 
13 
 
 
 
 
 
 
 
 
 
 
 
Ans 
Pearlview Ltd., a multinational restaurant chain company, gives an exclusive right 
to four Indian companies to set up the restaurants in metropolitan cities in India in 
return for their payments and royalties and conformance to standard operating 
procedures. Indian companies decided to employ local workers and to distribute 
left over food amongst the needy as a provision in the agreement with Pearlview 
Ltd. 
(a) Identify and give the meaning of the concept discussed in the above para. 
(b) List the main ingredients of the agreement that Pearlview Ltd. will enter 
into with the Indian companies. 
(c) Also, identify any one value which the Indian companies want to 
communicate to the society. 
 
a. Franchising – Franchising is an agreement whereby the manufacturer or 
sole distributor of a trademarked product or service gives exclusive rights 
of local distribution to independent retailers in return for their payment of 
royalties and conformance to standard operating procedures. 
 
b. Main ingredients of contract: 
1. Contract explanation: It is the part of the agreement that outlines the 
type of relationship a franchisee is entering into with the franchisor. 
2. Operations Manual : It is the section  of the agreement that details the 
guidelines that the franchisee must legally follow in operating the 
business as outlined by the franchisor. 
3. Proprietary Statements: Proprietary statements outline how franchise 
name is to be used, as well as marketing and advertising procedures in 
place that the franchisee will be required to follow. 
4. Ongoing Site Maintenance : It is another item that is outlined in the 
agreement. Included are the types and timeframes regarding various 
maintenance items and upgrades that must be made. 
½+2+½=3 
Page 4


Page 1 of 9 
 
 
ENTREPRENEURSHIP 
QUESTION PAPER
 
S.No Questions and Answers    Marks 
1 
 
 
Ans 
Here a private company takes over a public company. Identify the type of 
acquisition. 
 
Reverse Acquisition. 
1 
2 
 
Ans 
Define the term environmental scanning. 
 
Environmental scanning refers to careful monitoring of an organisations internal 
and external environments for detecting early signs of opportunities and threats 
that may influence its current and future plans. 
1 
3 
 
 
 
Ans 
Hari is an entrepreneur who wants to start an amusement park in Indore. He 
knows that he needs a huge amount of initial capital. According to you, which of 
the specialized financial institution will be more suitable to him? 
 
Tourism Finance Corporation of India (TFCI) 
1 
4 
 
Ans 
Why is working capital called as circulating capital? 
 
Working capital is called circulating capital, since the money circulates in various 
forms of current assets in a continued manner. 
1 
5 
 
 
Ans 
A salesman approaches you to promote the sales of a water purifier. Which 
communication tool is the marketer using by sending a salesman at your doorstep. 
 
Personal Selling. 
1 
6 
 
 
 
 
 
 
Ans 
 
Mohan was a famous fashion designer. He was in the habit of observing the 
dresses worn by the people. For this he would regularly visit malls, restaurants, 
parks, trade fairs etc. This helped him in understanding the market and designing 
the garments in accordance with the market demands. Identify and explain the 
way in which Mohan spotted this trend. Explain  one more way through which 
Mohan can spot the trends. 
 
Watch trend – Watching and observing the customers in the market place. If 
customers are teenagers, in local mall. If business class people, in restaurants or 
office. Thus , Mohan observed different ways of dressing of people. 
 
The other way Mohan could spot trend is:( Any one) 
Read Trend -  Entrepreneurs regularly read the leading publications and websites 
affecting their business. 
Talk Trend  - Talking to people in specific industry?s trade association and online 
and offline. 
Think Trend – They collect what they read, hear and observe and start to make 
connections that will lead to business boosting insights. 
1+1=2 
Page 2 of 9 
 
7 
 
 
Ans 
 
As the most basic thing, the entrepreneur must clearly state which things related 
to Human resource? 
 
As the most basic thing, the entrepreneur must clearly state following things 
related to Human resource: (Any 2) 
a. Kind of Persons to be hired : What kind/type of person is required to be hired 
for getting the work done. 
b. Work out : To workout a wide range of personnel ranging from managers, 
supervisors, administrators, engineers, technical, skilled and unskilled class. 
c. Type of manpower required : Nature of business activity helps entrepreneur to 
a large extent in deciding the type of manpower required.  
1+1=2 
8 
 
Ans 
 
 
Give the meaning of „routing? and „scheduling? as elements of operational plan. 
 
Routing is a process concerned with determining exact route or path a 
product/service has to follow right from raw material till its transformation into 
finished product. 
Scheduling means fixation of time, date, day when each operation is to be 
commenced and completed. 
1+1=2
 
9 
 
 
 
Ans 
 
Mr. Parthiv is a readymade garments manufacturer. His annual usage rate is 225 
Pcs. The cost of placing each order is 8/- and the carrying cost is 4/- per 
unit. Calculate the Economic Order Quantity (EOQ). 
 
D=225 
P=8 
C=4 
?? OQ =  2PD/C 
                    
=          2×8×225 
                  4   
           =   900   =  30 units. 
( ½mark for formula ,½mark answer, 1 mark for steps) 
1+1=2 
10 
 
 
 
 
Ans 
 
 
Deepa Company Ltd., were earlier producing pencils, now they have decided to 
further venture into the field of notebooks and paper. What do you think is the 
company attempting to do? Identify and explain the concept with a suitable 
example. 
 
The concept is of diversification. It is a process of adding new products or 
markets to the existing, by an enterprise. Here the enterprise thus is able to 
produce more types of products e.g. not only washing soaps, shampoos, 
detergents, washing powders etc are produced by such enterprises. 
 
E.g. Samsung not only produces TV but washing machines, printers, copying 
machines etc. 
1½ +½=2 
11 
 
 
 
Ans 
Angel investor and venture capital are two sources of raising finance for an 
entrepreneur. Explain the concept of both the sources stating one distinguishing 
feature of each. 
 
Angel investor – is an affluent individual who provides capital for a Business 
start-ups and early stage companies using a high-risk, high-return matrix usually 
1+1+1=3 
Page 3 of 9 
 
in exchange for convertible debt or ownership equity. 
Venture capital – is a type of a private equity capital provides as seed funding to 
early stage, high potential risk, growth up companies/entrepreneurs. 
Distinguishing feature : Angel investors participate in the management of the 
business but venture capitalists do not take part in the management of the 
business. 
12 
 
 
 
 
 
Ans 
Working capital of Raj and Co. has the following items in its Balance Sheet : 
Stock – 50,000: Trade creditors- 32,000; debtors – 75000; cash – 1,00,000; 
Dividend payable – 50,000; Tax – 44,000; Short term loan- 61,000; Short term 
investments – 76,000.  
Calculate: Gross working capital and net working capital. 
 
Total Current Assets = Debtors + Stock + Cash + Short term investment 
                                      = 75000 + 50000 + 100000 + 76000 = 3,01,000 
Total Current liabilities = Creditors + Dividend payable + Tax + Short term loan 
                                          = 32000 +50000 + 44000 + 61000 = 1,87,000 
Gross working capital = Total current assets = 3,01,000 
Net Working Capital = Total current assets – Total current liabilities 
                                      = 3,01,000 – 1,87,000  =1,14,000 
(Note: ½ mark for calculation of Current assets, ½ mark for calculation of Current    
liabilities.) 
1+1+1=3 
13 
 
 
 
 
 
 
 
 
 
 
 
Ans 
Pearlview Ltd., a multinational restaurant chain company, gives an exclusive right 
to four Indian companies to set up the restaurants in metropolitan cities in India in 
return for their payments and royalties and conformance to standard operating 
procedures. Indian companies decided to employ local workers and to distribute 
left over food amongst the needy as a provision in the agreement with Pearlview 
Ltd. 
(a) Identify and give the meaning of the concept discussed in the above para. 
(b) List the main ingredients of the agreement that Pearlview Ltd. will enter 
into with the Indian companies. 
(c) Also, identify any one value which the Indian companies want to 
communicate to the society. 
 
a. Franchising – Franchising is an agreement whereby the manufacturer or 
sole distributor of a trademarked product or service gives exclusive rights 
of local distribution to independent retailers in return for their payment of 
royalties and conformance to standard operating procedures. 
 
b. Main ingredients of contract: 
1. Contract explanation: It is the part of the agreement that outlines the 
type of relationship a franchisee is entering into with the franchisor. 
2. Operations Manual : It is the section  of the agreement that details the 
guidelines that the franchisee must legally follow in operating the 
business as outlined by the franchisor. 
3. Proprietary Statements: Proprietary statements outline how franchise 
name is to be used, as well as marketing and advertising procedures in 
place that the franchisee will be required to follow. 
4. Ongoing Site Maintenance : It is another item that is outlined in the 
agreement. Included are the types and timeframes regarding various 
maintenance items and upgrades that must be made. 
½+2+½=3 
Page 4 of 9 
 
c. Charity, Concern for underprivileged (any one) 
14 
 
 
 
 
 
 
 
 
Ans 
Mahesh started a school bag business with his brother. Both were very excited 
about the new venture. With meticulous planning and a lot of hard work they 
were able to sell 1000 bags in the first year. But they did not earn any profit. Both 
were happy because they were not at loss and revenue generated was equal to the 
cost. Now they were moving towards earning profit in the second year. 
a. Identify and explain the component of the financial plan discussed above. 
b. By giving any four points state how this component is useful for the 
entrepreneur. 
 
a. Break-even point – It is that level of volume of production at which firm 
neither makes  a profit nor loss. 
b. BEP is useful to an entrepreneur as it helps in assessing: 
1. The minimum level of output to be produced. 
2. The effect of change in quantity of output upon the profits. 
3. The selling price of the product. 
4. The profitable options in line of production. 
(Note:  ½ mark for each point for usefulness of BEP.)  
1+2=3 
15 
 
 
Ans 
“Sensitivity to environment factors is essential for an entrepreneur”. In the light of 
above statement explain the importance of environmental scanning. 
 
Importance to environmental scanning: (Any 3) 
a. Identification of opportunities to get first mover advantage: By keeping in 
touch with the changes in the external environment, an enterprise can identify 
opportunities and find strategies to capitalize on the opportunities at the earliest. 
b. Formulation of strategies and policies: It helps in identifying threats and 
opportunities in the market. 
c. Tapping useful resources: If company has a thorough knowledge of external 
environment, it can tap raw materials, technology and even financial resources 
from the market at right price at the right time. 
d. Better performance: Proper understanding of the environment helps to take 
timely decisions and improvement in performance. 
e. Image building: If a company is sensitive to the external environment, it will 
come out with new product and services to meet customers demand. This would 
build the image and reputation of the firm. 
1+1+1=3 
16 
 
 
 
 
 
 
 
Ans 
Lately many companies have planned for significant investment in organised 
retailing in India. Several factors have prompted their decisions in this regard – 
Customer income is rising. People have developed a taste for better quality 
products even though they may have to pay more. The government permitted cent 
percent foreign direct investment in some sectors of retailing.  
Identify and explain the various factors according to PESTEL model from the 
above para. 
 
Economic –  It includes rise in customer income, interest rates, inflation, business 
cycle, unemployment, energy, availability and cost. 
Social – People taste for better quality products, population demographics social 
mobility, lifestyle changes levels of education, attitude to work and leisure. 
Political –  It includes the government permission for foreign direct investment in 
some sectors, taxation policy, government stability, foreign trade regulations. 
1+1+1=3 
Page 5


Page 1 of 9 
 
 
ENTREPRENEURSHIP 
QUESTION PAPER
 
S.No Questions and Answers    Marks 
1 
 
 
Ans 
Here a private company takes over a public company. Identify the type of 
acquisition. 
 
Reverse Acquisition. 
1 
2 
 
Ans 
Define the term environmental scanning. 
 
Environmental scanning refers to careful monitoring of an organisations internal 
and external environments for detecting early signs of opportunities and threats 
that may influence its current and future plans. 
1 
3 
 
 
 
Ans 
Hari is an entrepreneur who wants to start an amusement park in Indore. He 
knows that he needs a huge amount of initial capital. According to you, which of 
the specialized financial institution will be more suitable to him? 
 
Tourism Finance Corporation of India (TFCI) 
1 
4 
 
Ans 
Why is working capital called as circulating capital? 
 
Working capital is called circulating capital, since the money circulates in various 
forms of current assets in a continued manner. 
1 
5 
 
 
Ans 
A salesman approaches you to promote the sales of a water purifier. Which 
communication tool is the marketer using by sending a salesman at your doorstep. 
 
Personal Selling. 
1 
6 
 
 
 
 
 
 
Ans 
 
Mohan was a famous fashion designer. He was in the habit of observing the 
dresses worn by the people. For this he would regularly visit malls, restaurants, 
parks, trade fairs etc. This helped him in understanding the market and designing 
the garments in accordance with the market demands. Identify and explain the 
way in which Mohan spotted this trend. Explain  one more way through which 
Mohan can spot the trends. 
 
Watch trend – Watching and observing the customers in the market place. If 
customers are teenagers, in local mall. If business class people, in restaurants or 
office. Thus , Mohan observed different ways of dressing of people. 
 
The other way Mohan could spot trend is:( Any one) 
Read Trend -  Entrepreneurs regularly read the leading publications and websites 
affecting their business. 
Talk Trend  - Talking to people in specific industry?s trade association and online 
and offline. 
Think Trend – They collect what they read, hear and observe and start to make 
connections that will lead to business boosting insights. 
1+1=2 
Page 2 of 9 
 
7 
 
 
Ans 
 
As the most basic thing, the entrepreneur must clearly state which things related 
to Human resource? 
 
As the most basic thing, the entrepreneur must clearly state following things 
related to Human resource: (Any 2) 
a. Kind of Persons to be hired : What kind/type of person is required to be hired 
for getting the work done. 
b. Work out : To workout a wide range of personnel ranging from managers, 
supervisors, administrators, engineers, technical, skilled and unskilled class. 
c. Type of manpower required : Nature of business activity helps entrepreneur to 
a large extent in deciding the type of manpower required.  
1+1=2 
8 
 
Ans 
 
 
Give the meaning of „routing? and „scheduling? as elements of operational plan. 
 
Routing is a process concerned with determining exact route or path a 
product/service has to follow right from raw material till its transformation into 
finished product. 
Scheduling means fixation of time, date, day when each operation is to be 
commenced and completed. 
1+1=2
 
9 
 
 
 
Ans 
 
Mr. Parthiv is a readymade garments manufacturer. His annual usage rate is 225 
Pcs. The cost of placing each order is 8/- and the carrying cost is 4/- per 
unit. Calculate the Economic Order Quantity (EOQ). 
 
D=225 
P=8 
C=4 
?? OQ =  2PD/C 
                    
=          2×8×225 
                  4   
           =   900   =  30 units. 
( ½mark for formula ,½mark answer, 1 mark for steps) 
1+1=2 
10 
 
 
 
 
Ans 
 
 
Deepa Company Ltd., were earlier producing pencils, now they have decided to 
further venture into the field of notebooks and paper. What do you think is the 
company attempting to do? Identify and explain the concept with a suitable 
example. 
 
The concept is of diversification. It is a process of adding new products or 
markets to the existing, by an enterprise. Here the enterprise thus is able to 
produce more types of products e.g. not only washing soaps, shampoos, 
detergents, washing powders etc are produced by such enterprises. 
 
E.g. Samsung not only produces TV but washing machines, printers, copying 
machines etc. 
1½ +½=2 
11 
 
 
 
Ans 
Angel investor and venture capital are two sources of raising finance for an 
entrepreneur. Explain the concept of both the sources stating one distinguishing 
feature of each. 
 
Angel investor – is an affluent individual who provides capital for a Business 
start-ups and early stage companies using a high-risk, high-return matrix usually 
1+1+1=3 
Page 3 of 9 
 
in exchange for convertible debt or ownership equity. 
Venture capital – is a type of a private equity capital provides as seed funding to 
early stage, high potential risk, growth up companies/entrepreneurs. 
Distinguishing feature : Angel investors participate in the management of the 
business but venture capitalists do not take part in the management of the 
business. 
12 
 
 
 
 
 
Ans 
Working capital of Raj and Co. has the following items in its Balance Sheet : 
Stock – 50,000: Trade creditors- 32,000; debtors – 75000; cash – 1,00,000; 
Dividend payable – 50,000; Tax – 44,000; Short term loan- 61,000; Short term 
investments – 76,000.  
Calculate: Gross working capital and net working capital. 
 
Total Current Assets = Debtors + Stock + Cash + Short term investment 
                                      = 75000 + 50000 + 100000 + 76000 = 3,01,000 
Total Current liabilities = Creditors + Dividend payable + Tax + Short term loan 
                                          = 32000 +50000 + 44000 + 61000 = 1,87,000 
Gross working capital = Total current assets = 3,01,000 
Net Working Capital = Total current assets – Total current liabilities 
                                      = 3,01,000 – 1,87,000  =1,14,000 
(Note: ½ mark for calculation of Current assets, ½ mark for calculation of Current    
liabilities.) 
1+1+1=3 
13 
 
 
 
 
 
 
 
 
 
 
 
Ans 
Pearlview Ltd., a multinational restaurant chain company, gives an exclusive right 
to four Indian companies to set up the restaurants in metropolitan cities in India in 
return for their payments and royalties and conformance to standard operating 
procedures. Indian companies decided to employ local workers and to distribute 
left over food amongst the needy as a provision in the agreement with Pearlview 
Ltd. 
(a) Identify and give the meaning of the concept discussed in the above para. 
(b) List the main ingredients of the agreement that Pearlview Ltd. will enter 
into with the Indian companies. 
(c) Also, identify any one value which the Indian companies want to 
communicate to the society. 
 
a. Franchising – Franchising is an agreement whereby the manufacturer or 
sole distributor of a trademarked product or service gives exclusive rights 
of local distribution to independent retailers in return for their payment of 
royalties and conformance to standard operating procedures. 
 
b. Main ingredients of contract: 
1. Contract explanation: It is the part of the agreement that outlines the 
type of relationship a franchisee is entering into with the franchisor. 
2. Operations Manual : It is the section  of the agreement that details the 
guidelines that the franchisee must legally follow in operating the 
business as outlined by the franchisor. 
3. Proprietary Statements: Proprietary statements outline how franchise 
name is to be used, as well as marketing and advertising procedures in 
place that the franchisee will be required to follow. 
4. Ongoing Site Maintenance : It is another item that is outlined in the 
agreement. Included are the types and timeframes regarding various 
maintenance items and upgrades that must be made. 
½+2+½=3 
Page 4 of 9 
 
c. Charity, Concern for underprivileged (any one) 
14 
 
 
 
 
 
 
 
 
Ans 
Mahesh started a school bag business with his brother. Both were very excited 
about the new venture. With meticulous planning and a lot of hard work they 
were able to sell 1000 bags in the first year. But they did not earn any profit. Both 
were happy because they were not at loss and revenue generated was equal to the 
cost. Now they were moving towards earning profit in the second year. 
a. Identify and explain the component of the financial plan discussed above. 
b. By giving any four points state how this component is useful for the 
entrepreneur. 
 
a. Break-even point – It is that level of volume of production at which firm 
neither makes  a profit nor loss. 
b. BEP is useful to an entrepreneur as it helps in assessing: 
1. The minimum level of output to be produced. 
2. The effect of change in quantity of output upon the profits. 
3. The selling price of the product. 
4. The profitable options in line of production. 
(Note:  ½ mark for each point for usefulness of BEP.)  
1+2=3 
15 
 
 
Ans 
“Sensitivity to environment factors is essential for an entrepreneur”. In the light of 
above statement explain the importance of environmental scanning. 
 
Importance to environmental scanning: (Any 3) 
a. Identification of opportunities to get first mover advantage: By keeping in 
touch with the changes in the external environment, an enterprise can identify 
opportunities and find strategies to capitalize on the opportunities at the earliest. 
b. Formulation of strategies and policies: It helps in identifying threats and 
opportunities in the market. 
c. Tapping useful resources: If company has a thorough knowledge of external 
environment, it can tap raw materials, technology and even financial resources 
from the market at right price at the right time. 
d. Better performance: Proper understanding of the environment helps to take 
timely decisions and improvement in performance. 
e. Image building: If a company is sensitive to the external environment, it will 
come out with new product and services to meet customers demand. This would 
build the image and reputation of the firm. 
1+1+1=3 
16 
 
 
 
 
 
 
 
Ans 
Lately many companies have planned for significant investment in organised 
retailing in India. Several factors have prompted their decisions in this regard – 
Customer income is rising. People have developed a taste for better quality 
products even though they may have to pay more. The government permitted cent 
percent foreign direct investment in some sectors of retailing.  
Identify and explain the various factors according to PESTEL model from the 
above para. 
 
Economic –  It includes rise in customer income, interest rates, inflation, business 
cycle, unemployment, energy, availability and cost. 
Social – People taste for better quality products, population demographics social 
mobility, lifestyle changes levels of education, attitude to work and leisure. 
Political –  It includes the government permission for foreign direct investment in 
some sectors, taxation policy, government stability, foreign trade regulations. 
1+1+1=3 
Page 5 of 9 
 
17 
 
Ans 
What is merger? Explain any three types of merger with example. 
 
A merger is combination of two companies into one larger company. In merger, 
the acquiring company takes over the assets and liabilities of the merged 
company. 
Types of merger (Any 2) 
1.Conglomerate: A merger between firms that are involved in totally unrelated 
business activities. There are two types of conglomerate mergers.: pure and 
mixed. Eg- A leading manufacturer of athletic shoes merges with a soft drink 
firm. 
2. Horizontal merger: A merger occurring between companies in the same 
industry. 
Eg- A merger  between Coca-cola and the Pepsi beverage division. 
3.Vertical merger: A merger between two companies producing different goods or 
services for one specific finished product. Eg-An automobile company joining 
hands with a parts supplier. 
4. Market extension merger: It takes place between two companies that deal in 
same products but in separate markets. 
1+1+1=3 
18 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ans 
Saras Soya Company manufactures three products – Soya Paneer, Soya Chunks 
and Soya Milk. The variable expenses and sales prices of all the products are 
given below: 
Products  Soya Paneer Soya Chunks Soya Milk 
Sales Price per unit 200 100 50 
Variable Price per unit 100 75 25 
The total fixed expenses of the company are 50000 per month. For the coming 
month company expects the sale of three products in the following ratio: 
Soya Paneer: 20%          Soya Chunks: 30%         Soya Milk:50% 
From the following information calculate: 
a. Contribution margin per unit 
b. Weighted average contribution margin per unit 
c. Overall BEP 
d. Product wise  break even point of each product in units. 
e. Product wise  break even point of each product in rupees. 
 
 
Product Soya Paneer Soya Chunks Soya Milk 
Selling price per 
unit 
200 100 50 
Variable cost per 
unit 
100 75 25 
Contribution 
margin per unit 
100 25 25 
 
 
 
Weighted average contribution margin per unit 
Products Soya Paneer Soya Chunks Soya Milk 
½+½+1+ 
1+1=4