Class 12 Entrepreneurship: CBSE Marking Scheme (2024-25) | Entrepreneurship Class 12 - Commerce PDF Download

 Page 1


1 
 
ENTREPRENEURSHIP (066)     
CLASS XII (2024-25) 
MARKING SCHEME 
Q.NO. ANSWER MARKS 
1. C. mutual agency 1 
2. C. Problem 1 
3. B. Indirect sales strategy 1 
4. C. Trade Mark 
For Visually Impaired Candidates: 
A. opts to use a common or successful family name for her several products. 
1 
 
1 
5. C. Private limited company 1 
6. B. commercial value  1 
7. D. (d) – (iv)  1 
8. C. It does not take into account the competitor's pricing and actions 1 
9. D. (i), (ii) and (iv) 1 
10. C. designs or patterns used for manufacturing 1 
11. D. Proprietary statements 1 
12. A.  Investment decision 1 
13. B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the 
correct explanation of Assertion (A). 
1 
14. A. (i) and (iii) 1 
15. B. outstanding expenses  1 
16. A. It is an inexpensive method of issuing shares. 1 
17. C. backflip 1 
18. A. increase, longer 1 
Page 2


1 
 
ENTREPRENEURSHIP (066)     
CLASS XII (2024-25) 
MARKING SCHEME 
Q.NO. ANSWER MARKS 
1. C. mutual agency 1 
2. C. Problem 1 
3. B. Indirect sales strategy 1 
4. C. Trade Mark 
For Visually Impaired Candidates: 
A. opts to use a common or successful family name for her several products. 
1 
 
1 
5. C. Private limited company 1 
6. B. commercial value  1 
7. D. (d) – (iv)  1 
8. C. It does not take into account the competitor's pricing and actions 1 
9. D. (i), (ii) and (iv) 1 
10. C. designs or patterns used for manufacturing 1 
11. D. Proprietary statements 1 
12. A.  Investment decision 1 
13. B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the 
correct explanation of Assertion (A). 
1 
14. A. (i) and (iii) 1 
15. B. outstanding expenses  1 
16. A. It is an inexpensive method of issuing shares. 1 
17. C. backflip 1 
18. A. increase, longer 1 
2 
 
19. 
(A) 
 
 
 
19. 
(B) 
 
An idea should lead the entrepreneur to a definite product/service which he/she 
can sell. So, the first step is to obtain a concept of the product or service 
suggested by one idea. If the product is already available in the market, then 
this assessment should identify the reason for re-introducing the same.  
OR 
The initial spotting of ideas i.e. basic idea is of a random nature, whereas, the 
development of ideas after scanning the environment i.e. post scanning idea is 
a more purposeful activity. The former is an experiential process while the latter 
is a strategic process. 
2 
 
 
2 
20. Two elements of business opportunity are: 
• Assured market scope: He is very popular in the area and people 
generally request his employer to send Rohit for their repair and 
maintenance tasks. 
• Practicability of idea: He will provide services instantaneously within 15 
minutes of the request received. 
 
1 
 
 
 
1 
21. 
(A) 
 
 
 
 
 
 
 
 
21. 
(B) 
(I) Merger is the type of enterprise growth strategy adopted in the two 
scenarios. 
(II) Two forms of the growth strategy indicated are:    
(i) Absorption 
(ii) Amalgamation  
 
For Visually Impaired Candidates in lieu of 21. (A): 
Opened a new branch: Internal expansion                                                                  
Merged with protein manufacturing business: External expansion 
OR 
Synergy can take the following forms: 
• Operating synergy: The cost savings that come through economies of 
scale or increased sales and profits. It leads to the overall growth of the 
firm. 
• Financial synergy: This is the result of financial factors such as lower 
taxes, higher debt capacity or better use of idle cash. 
1 
 
½  
½  
 
 
 
1 
1 
 
 
 
1 
 
1 
22. The ways of trend spotting used by Zakir are: 
• Watch trends: ‘Zakir decided to spend more time in the gym inside his 
apartment complex and in nearby localities. He simply observed the 
people.’  
• Talk trends: ‘He conducted an online survey to ascertain the viable 
product for his business idea.’ 
 
½ + ½  
 
½ + ½  
 
23. Elevator pitch is a three-minute summary of the business plan's executive 
summary. This is often used as a teaser to awaken the interest of potential 
funders, customers, or strategic partners.  
Internal operational plan is used by the management for detailed planning and 
may not be of any interest to funders or customers. 
1 
 
 
1 
Page 3


1 
 
ENTREPRENEURSHIP (066)     
CLASS XII (2024-25) 
MARKING SCHEME 
Q.NO. ANSWER MARKS 
1. C. mutual agency 1 
2. C. Problem 1 
3. B. Indirect sales strategy 1 
4. C. Trade Mark 
For Visually Impaired Candidates: 
A. opts to use a common or successful family name for her several products. 
1 
 
1 
5. C. Private limited company 1 
6. B. commercial value  1 
7. D. (d) – (iv)  1 
8. C. It does not take into account the competitor's pricing and actions 1 
9. D. (i), (ii) and (iv) 1 
10. C. designs or patterns used for manufacturing 1 
11. D. Proprietary statements 1 
12. A.  Investment decision 1 
13. B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the 
correct explanation of Assertion (A). 
1 
14. A. (i) and (iii) 1 
15. B. outstanding expenses  1 
16. A. It is an inexpensive method of issuing shares. 1 
17. C. backflip 1 
18. A. increase, longer 1 
2 
 
19. 
(A) 
 
 
 
19. 
(B) 
 
An idea should lead the entrepreneur to a definite product/service which he/she 
can sell. So, the first step is to obtain a concept of the product or service 
suggested by one idea. If the product is already available in the market, then 
this assessment should identify the reason for re-introducing the same.  
OR 
The initial spotting of ideas i.e. basic idea is of a random nature, whereas, the 
development of ideas after scanning the environment i.e. post scanning idea is 
a more purposeful activity. The former is an experiential process while the latter 
is a strategic process. 
2 
 
 
2 
20. Two elements of business opportunity are: 
• Assured market scope: He is very popular in the area and people 
generally request his employer to send Rohit for their repair and 
maintenance tasks. 
• Practicability of idea: He will provide services instantaneously within 15 
minutes of the request received. 
 
1 
 
 
 
1 
21. 
(A) 
 
 
 
 
 
 
 
 
21. 
(B) 
(I) Merger is the type of enterprise growth strategy adopted in the two 
scenarios. 
(II) Two forms of the growth strategy indicated are:    
(i) Absorption 
(ii) Amalgamation  
 
For Visually Impaired Candidates in lieu of 21. (A): 
Opened a new branch: Internal expansion                                                                  
Merged with protein manufacturing business: External expansion 
OR 
Synergy can take the following forms: 
• Operating synergy: The cost savings that come through economies of 
scale or increased sales and profits. It leads to the overall growth of the 
firm. 
• Financial synergy: This is the result of financial factors such as lower 
taxes, higher debt capacity or better use of idle cash. 
1 
 
½  
½  
 
 
 
1 
1 
 
 
 
1 
 
1 
22. The ways of trend spotting used by Zakir are: 
• Watch trends: ‘Zakir decided to spend more time in the gym inside his 
apartment complex and in nearby localities. He simply observed the 
people.’  
• Talk trends: ‘He conducted an online survey to ascertain the viable 
product for his business idea.’ 
 
½ + ½  
 
½ + ½  
 
23. Elevator pitch is a three-minute summary of the business plan's executive 
summary. This is often used as a teaser to awaken the interest of potential 
funders, customers, or strategic partners.  
Internal operational plan is used by the management for detailed planning and 
may not be of any interest to funders or customers. 
1 
 
 
1 
3 
 
24. 
(A) 
 
 
24. 
(B) 
 
Reorder level =  Lead time x Daily requirement 
                    = 5 X 2500 
                   = 12500 units 
OR 
Return on Equity = 
Net Profit after Tax
?????????? ???????????? X100 
       = 
6,00,000
20,00,000
 x 100 
                       = 30% 
1 
½ 
½ 
 
 
1 
½ 
½ 
25. Macroenvironment factors that may affect the future of Prudent Pharma are: 
• ‘governed by health and safety regulations and the company needs to 
acquire the required licenses - Legal factor 
• ‘rising awareness levels and easy  access to information of people’ - Social 
factor 
• ‘As income levels of the population have improved’- Economic factor 
 
 
½ + ½ 
 
½ + ½ 
 
½ + ½ 
 
26. 
(A) 
 
 
 
 
26. 
(B) 
(I) Manpower Plan 
(II) Objective: Right person, at the right job, at right time. 
      Importance: To build up loyal, efficient and dedicated personnel, an 
entrepreneur 
needs to pay adequate and proper attention to human resource planning. 
 OR 
(I) Marketing plan 
(II) Steps in identification of the "target market" are: 
(i) Deciding what the entrepreneur wishes to pursue is based on market 
research or industry analysis done and complied with by competent people 
or the entrepreneurs. 
(ii) Divide the market into smaller groups based on: 
• Consumer's characteristics viz.  Geographic (State, Country 
etc.)  Demographic (Sex, age, etc.),  Psychographics (Personality, life 
style, etc.) 
• Buying situations viz.  Buying conditions (time available etc.), 
Usage, Desired benefits (features of product). 
1 
1 
 
1 
 
 
1 
 
 
1 
 
 
½  
 
 
 
½  
27. (I) Below-the-line approach is the approach used by ‘Pom-Pom’ to reach its 
customers. 
(II) Features of Below-the-line approach are: 
• The purpose of the activities is to develop the brand by creating 
awareness and building a brand profile. 
• It can lead to an actual sale which is easy to measure.     
1 
 
1 
 
1 
Page 4


1 
 
ENTREPRENEURSHIP (066)     
CLASS XII (2024-25) 
MARKING SCHEME 
Q.NO. ANSWER MARKS 
1. C. mutual agency 1 
2. C. Problem 1 
3. B. Indirect sales strategy 1 
4. C. Trade Mark 
For Visually Impaired Candidates: 
A. opts to use a common or successful family name for her several products. 
1 
 
1 
5. C. Private limited company 1 
6. B. commercial value  1 
7. D. (d) – (iv)  1 
8. C. It does not take into account the competitor's pricing and actions 1 
9. D. (i), (ii) and (iv) 1 
10. C. designs or patterns used for manufacturing 1 
11. D. Proprietary statements 1 
12. A.  Investment decision 1 
13. B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the 
correct explanation of Assertion (A). 
1 
14. A. (i) and (iii) 1 
15. B. outstanding expenses  1 
16. A. It is an inexpensive method of issuing shares. 1 
17. C. backflip 1 
18. A. increase, longer 1 
2 
 
19. 
(A) 
 
 
 
19. 
(B) 
 
An idea should lead the entrepreneur to a definite product/service which he/she 
can sell. So, the first step is to obtain a concept of the product or service 
suggested by one idea. If the product is already available in the market, then 
this assessment should identify the reason for re-introducing the same.  
OR 
The initial spotting of ideas i.e. basic idea is of a random nature, whereas, the 
development of ideas after scanning the environment i.e. post scanning idea is 
a more purposeful activity. The former is an experiential process while the latter 
is a strategic process. 
2 
 
 
2 
20. Two elements of business opportunity are: 
• Assured market scope: He is very popular in the area and people 
generally request his employer to send Rohit for their repair and 
maintenance tasks. 
• Practicability of idea: He will provide services instantaneously within 15 
minutes of the request received. 
 
1 
 
 
 
1 
21. 
(A) 
 
 
 
 
 
 
 
 
21. 
(B) 
(I) Merger is the type of enterprise growth strategy adopted in the two 
scenarios. 
(II) Two forms of the growth strategy indicated are:    
(i) Absorption 
(ii) Amalgamation  
 
For Visually Impaired Candidates in lieu of 21. (A): 
Opened a new branch: Internal expansion                                                                  
Merged with protein manufacturing business: External expansion 
OR 
Synergy can take the following forms: 
• Operating synergy: The cost savings that come through economies of 
scale or increased sales and profits. It leads to the overall growth of the 
firm. 
• Financial synergy: This is the result of financial factors such as lower 
taxes, higher debt capacity or better use of idle cash. 
1 
 
½  
½  
 
 
 
1 
1 
 
 
 
1 
 
1 
22. The ways of trend spotting used by Zakir are: 
• Watch trends: ‘Zakir decided to spend more time in the gym inside his 
apartment complex and in nearby localities. He simply observed the 
people.’  
• Talk trends: ‘He conducted an online survey to ascertain the viable 
product for his business idea.’ 
 
½ + ½  
 
½ + ½  
 
23. Elevator pitch is a three-minute summary of the business plan's executive 
summary. This is often used as a teaser to awaken the interest of potential 
funders, customers, or strategic partners.  
Internal operational plan is used by the management for detailed planning and 
may not be of any interest to funders or customers. 
1 
 
 
1 
3 
 
24. 
(A) 
 
 
24. 
(B) 
 
Reorder level =  Lead time x Daily requirement 
                    = 5 X 2500 
                   = 12500 units 
OR 
Return on Equity = 
Net Profit after Tax
?????????? ???????????? X100 
       = 
6,00,000
20,00,000
 x 100 
                       = 30% 
1 
½ 
½ 
 
 
1 
½ 
½ 
25. Macroenvironment factors that may affect the future of Prudent Pharma are: 
• ‘governed by health and safety regulations and the company needs to 
acquire the required licenses - Legal factor 
• ‘rising awareness levels and easy  access to information of people’ - Social 
factor 
• ‘As income levels of the population have improved’- Economic factor 
 
 
½ + ½ 
 
½ + ½ 
 
½ + ½ 
 
26. 
(A) 
 
 
 
 
26. 
(B) 
(I) Manpower Plan 
(II) Objective: Right person, at the right job, at right time. 
      Importance: To build up loyal, efficient and dedicated personnel, an 
entrepreneur 
needs to pay adequate and proper attention to human resource planning. 
 OR 
(I) Marketing plan 
(II) Steps in identification of the "target market" are: 
(i) Deciding what the entrepreneur wishes to pursue is based on market 
research or industry analysis done and complied with by competent people 
or the entrepreneurs. 
(ii) Divide the market into smaller groups based on: 
• Consumer's characteristics viz.  Geographic (State, Country 
etc.)  Demographic (Sex, age, etc.),  Psychographics (Personality, life 
style, etc.) 
• Buying situations viz.  Buying conditions (time available etc.), 
Usage, Desired benefits (features of product). 
1 
1 
 
1 
 
 
1 
 
 
1 
 
 
½  
 
 
 
½  
27. (I) Below-the-line approach is the approach used by ‘Pom-Pom’ to reach its 
customers. 
(II) Features of Below-the-line approach are: 
• The purpose of the activities is to develop the brand by creating 
awareness and building a brand profile. 
• It can lead to an actual sale which is easy to measure.     
1 
 
1 
 
1 
4 
 
28. 
(A) 
 
 
 
 
 
 
 
 
 
 
28. 
(B) 
The following market-related considerations to be used by an entrepreneur 
while selecting the channel for distribution: 
• Number of buyers: If the number of buyers is large then it is better to 
take the services of middlemen for the distribution of the goods. On the 
contrary, the distribution should be done by the manufacturer directly if 
the number of buyers is less. 
• Buying habits: A manufacturer should take the services of middlemen if 
his/her financial position does not permit him/her to sell goods on credit 
to those consumers who are in the habit of purchasing goods on credit. 
• Buying quantity: It is useful for the manufacturer to rely on the services 
of middlemen if the goods are bought in smaller quantity. 
OR 
A channel of distribution consists of three types of flows: 
• Downward flow of goods from producers to consumers.  
• Upward flow of cash payments for goods from consumers to producers.  
• Both downward and upward direction Flow of marketing information 
on new products, new uses of existing products, etc from producers to 
consumers. Also, flow of information in the form of feedback on the 
wants, suggestions, complaints, etc from consumers/users to producers. 
 
 
 
1 
 
 
1 
 
 
1 
 
 
 
1 
 
1 
 
 
1 
29. C= ? 3 
P= ? 18 
D= 7500 
EOQ =v2 x P x D/ 3 
    = v2 x 7500 x 18/ 3 
   = 300 units 
 
Benefits of calculating EOQ: 
Ensures that there is no stock-out situation and the cost of carrying and placing 
the order is minimised.  
 
 
 
1 
½ 
½ 
 
 
1 
 
30. (I) Natural 
(II) Existing product: A business will improve or change its existing products 
by modifying the ingredients or expanding the offering. This is done to keep up 
with competition and increase sales. 
Market driven: Market research provides important information to identify and 
analyze the market need, market size, competition and general environment. 
This helps in idea generation and better decision making. 
 
(III) Socio- economic benefits are: 
• Better utilisation of local resources- using locally grown bamboo which 
was underutilised. 
• Supporting environment/sustainability - provide a simple replacement for 
harmful plastic with bamboo-based products 
1 
 
1 
 
 
1 
 
 
 
1 
 
1 
Page 5


1 
 
ENTREPRENEURSHIP (066)     
CLASS XII (2024-25) 
MARKING SCHEME 
Q.NO. ANSWER MARKS 
1. C. mutual agency 1 
2. C. Problem 1 
3. B. Indirect sales strategy 1 
4. C. Trade Mark 
For Visually Impaired Candidates: 
A. opts to use a common or successful family name for her several products. 
1 
 
1 
5. C. Private limited company 1 
6. B. commercial value  1 
7. D. (d) – (iv)  1 
8. C. It does not take into account the competitor's pricing and actions 1 
9. D. (i), (ii) and (iv) 1 
10. C. designs or patterns used for manufacturing 1 
11. D. Proprietary statements 1 
12. A.  Investment decision 1 
13. B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the 
correct explanation of Assertion (A). 
1 
14. A. (i) and (iii) 1 
15. B. outstanding expenses  1 
16. A. It is an inexpensive method of issuing shares. 1 
17. C. backflip 1 
18. A. increase, longer 1 
2 
 
19. 
(A) 
 
 
 
19. 
(B) 
 
An idea should lead the entrepreneur to a definite product/service which he/she 
can sell. So, the first step is to obtain a concept of the product or service 
suggested by one idea. If the product is already available in the market, then 
this assessment should identify the reason for re-introducing the same.  
OR 
The initial spotting of ideas i.e. basic idea is of a random nature, whereas, the 
development of ideas after scanning the environment i.e. post scanning idea is 
a more purposeful activity. The former is an experiential process while the latter 
is a strategic process. 
2 
 
 
2 
20. Two elements of business opportunity are: 
• Assured market scope: He is very popular in the area and people 
generally request his employer to send Rohit for their repair and 
maintenance tasks. 
• Practicability of idea: He will provide services instantaneously within 15 
minutes of the request received. 
 
1 
 
 
 
1 
21. 
(A) 
 
 
 
 
 
 
 
 
21. 
(B) 
(I) Merger is the type of enterprise growth strategy adopted in the two 
scenarios. 
(II) Two forms of the growth strategy indicated are:    
(i) Absorption 
(ii) Amalgamation  
 
For Visually Impaired Candidates in lieu of 21. (A): 
Opened a new branch: Internal expansion                                                                  
Merged with protein manufacturing business: External expansion 
OR 
Synergy can take the following forms: 
• Operating synergy: The cost savings that come through economies of 
scale or increased sales and profits. It leads to the overall growth of the 
firm. 
• Financial synergy: This is the result of financial factors such as lower 
taxes, higher debt capacity or better use of idle cash. 
1 
 
½  
½  
 
 
 
1 
1 
 
 
 
1 
 
1 
22. The ways of trend spotting used by Zakir are: 
• Watch trends: ‘Zakir decided to spend more time in the gym inside his 
apartment complex and in nearby localities. He simply observed the 
people.’  
• Talk trends: ‘He conducted an online survey to ascertain the viable 
product for his business idea.’ 
 
½ + ½  
 
½ + ½  
 
23. Elevator pitch is a three-minute summary of the business plan's executive 
summary. This is often used as a teaser to awaken the interest of potential 
funders, customers, or strategic partners.  
Internal operational plan is used by the management for detailed planning and 
may not be of any interest to funders or customers. 
1 
 
 
1 
3 
 
24. 
(A) 
 
 
24. 
(B) 
 
Reorder level =  Lead time x Daily requirement 
                    = 5 X 2500 
                   = 12500 units 
OR 
Return on Equity = 
Net Profit after Tax
?????????? ???????????? X100 
       = 
6,00,000
20,00,000
 x 100 
                       = 30% 
1 
½ 
½ 
 
 
1 
½ 
½ 
25. Macroenvironment factors that may affect the future of Prudent Pharma are: 
• ‘governed by health and safety regulations and the company needs to 
acquire the required licenses - Legal factor 
• ‘rising awareness levels and easy  access to information of people’ - Social 
factor 
• ‘As income levels of the population have improved’- Economic factor 
 
 
½ + ½ 
 
½ + ½ 
 
½ + ½ 
 
26. 
(A) 
 
 
 
 
26. 
(B) 
(I) Manpower Plan 
(II) Objective: Right person, at the right job, at right time. 
      Importance: To build up loyal, efficient and dedicated personnel, an 
entrepreneur 
needs to pay adequate and proper attention to human resource planning. 
 OR 
(I) Marketing plan 
(II) Steps in identification of the "target market" are: 
(i) Deciding what the entrepreneur wishes to pursue is based on market 
research or industry analysis done and complied with by competent people 
or the entrepreneurs. 
(ii) Divide the market into smaller groups based on: 
• Consumer's characteristics viz.  Geographic (State, Country 
etc.)  Demographic (Sex, age, etc.),  Psychographics (Personality, life 
style, etc.) 
• Buying situations viz.  Buying conditions (time available etc.), 
Usage, Desired benefits (features of product). 
1 
1 
 
1 
 
 
1 
 
 
1 
 
 
½  
 
 
 
½  
27. (I) Below-the-line approach is the approach used by ‘Pom-Pom’ to reach its 
customers. 
(II) Features of Below-the-line approach are: 
• The purpose of the activities is to develop the brand by creating 
awareness and building a brand profile. 
• It can lead to an actual sale which is easy to measure.     
1 
 
1 
 
1 
4 
 
28. 
(A) 
 
 
 
 
 
 
 
 
 
 
28. 
(B) 
The following market-related considerations to be used by an entrepreneur 
while selecting the channel for distribution: 
• Number of buyers: If the number of buyers is large then it is better to 
take the services of middlemen for the distribution of the goods. On the 
contrary, the distribution should be done by the manufacturer directly if 
the number of buyers is less. 
• Buying habits: A manufacturer should take the services of middlemen if 
his/her financial position does not permit him/her to sell goods on credit 
to those consumers who are in the habit of purchasing goods on credit. 
• Buying quantity: It is useful for the manufacturer to rely on the services 
of middlemen if the goods are bought in smaller quantity. 
OR 
A channel of distribution consists of three types of flows: 
• Downward flow of goods from producers to consumers.  
• Upward flow of cash payments for goods from consumers to producers.  
• Both downward and upward direction Flow of marketing information 
on new products, new uses of existing products, etc from producers to 
consumers. Also, flow of information in the form of feedback on the 
wants, suggestions, complaints, etc from consumers/users to producers. 
 
 
 
1 
 
 
1 
 
 
1 
 
 
 
1 
 
1 
 
 
1 
29. C= ? 3 
P= ? 18 
D= 7500 
EOQ =v2 x P x D/ 3 
    = v2 x 7500 x 18/ 3 
   = 300 units 
 
Benefits of calculating EOQ: 
Ensures that there is no stock-out situation and the cost of carrying and placing 
the order is minimised.  
 
 
 
1 
½ 
½ 
 
 
1 
 
30. (I) Natural 
(II) Existing product: A business will improve or change its existing products 
by modifying the ingredients or expanding the offering. This is done to keep up 
with competition and increase sales. 
Market driven: Market research provides important information to identify and 
analyze the market need, market size, competition and general environment. 
This helps in idea generation and better decision making. 
 
(III) Socio- economic benefits are: 
• Better utilisation of local resources- using locally grown bamboo which 
was underutilised. 
• Supporting environment/sustainability - provide a simple replacement for 
harmful plastic with bamboo-based products 
1 
 
1 
 
 
1 
 
 
 
1 
 
1 
5 
 
31. 
(A) 
 
 
 
 
 
 
 
 
 
 
 
31. 
(B) 
Advantages of franchising to franchisee: 
• Franchisors share market knowledge and conduct market surveys 
• The start-ups can grow fast without having to increase labor, operating costs 
and blocking running expenses because normally buyers straight walk up to 
them. 
• Franchisors provide training to franchisees that can help them to be 
successful. 
• Franchisor can support the franchisees financially, help in investing capital 
• Franchisors use standard procedures which are tried and tested techniques 
and share with franchisees. Standardization in the supplies, products and 
services provided helps ensure that the entrepreneur will maintain quality 
standards that are so important. 
 OR 
(I) Penetration pricing is a pricing strategy where the price of a product is initially 
set at a price lower than the eventual market price to attract new customers.  
Skimming Pricing Strategy is used when goods are sold at higher prices so that 
fewer sales are needed to break even. 
 
(II) Advantages of Penetration pricing strategy: 
• It can result in fast diffusion and adoption. This can achieve high market 
rates quickly. This can take the competitors by surprise, not giving them 
time to react. 
• It discourages the entry of competitors. Low prices act as a barrier to 
entry. 
Advantages of Price Skimming strategy: 
• Price skimming helps the company in recovering the research and 
development costs which are associated with the development of a new 
product. 
• If the company caters to consumers who are quality conscious rather 
than price conscious, then this type of strategy can work in a great way 
for a company. 
 
1 
1 
 
 
1 
 
1 
 
1 
 
 
½ 
 
½  
 
 
 
1 
 
 
1 
 
 
 
1 
 
 
1 
32. (I) Yes, as Mr. Prasad has unlimited liability. The proprietor is liable/responsible 
for all losses arising from business. In case the business assets are insufficient 
to pay off liabilities, his/her personal property can be called upon to pay his 
business debts. 
(II) Environment scanning is important for an entrepreneur as it helps in: 
• identification of opportunities 
• getting first mover advantage  
• formulation of strategies and policies  
2 
 
 
 
1 
1 
1