Business Studies: CBSE Sample Question Papers- Term I (2021-22)- 1 | Sample Papers for Class 12 Commerce PDF Download

General instructions: 

1. The Question Paper contains 3 sections. 
2. Section - A has 24 questions. Attempt any 20 questions.
3. Section - B has 24 questions. Attempt any 20 questions. 
4. Section - C has 12 questions. Attempt any 10 questions. 
5. All questions carry equal marks. 
6. There is NO negative marking.

Correct Answer is Option (a)
Human resources or people are an organisation’s greatest asset. Despite all developments in technology “getting work done through people” is still a major task for the manager. Managing people has two dimensions it implies dealing with employees as individuals with diverse needs and behavior; and it also means dealing with individuals as a group of people.

Q.2: “Increased life expectancy of people and increased awareness for healthcare have increased the demand for many health products and services”.
Which of the following feature of business environment is described in the above lines?
(a) Dynamic nature 
(b) Inter-relatedness 
(c) Complexity 
(d) None of these

Correct Answer is Option (b)
Different elements or parts of business environment are closely interrelated. For example, increased life expectancy of people and increased awareness for health care have increased the demand for many health products and services diet Coke, fat-free cooking oil, and health resorts. New health products and services have, in turn, changed people’s life styles.

Q.3: Which of the following economic factors can affect management practices in a business enterprise?
(a) Interest rates 
(b) Inflation rates 
(c) Changes in disposable income of people 
(d) All of the above

Correct Answer is Option (d)

Interest rates, inflation rates, changes in disposable income of people, stock market indices and the value of rupee are some of the economic factors that can affect management practices in a business enterprise. Short- and long-term interest rates significantly affect the demand for product and services. For example, in case of construction companies and automobile manufacturers, low longer-term rates are beneficial because they result in increased spending by consumers for buying homes and cars on borrowed money. Similarly, a rise in the disposable income of people due to increase in the gross domestic product of a country creates increasing demand for products.

Q.4: “It is not an exclusive function of top management nor of any particular department.” The feature of planning being referred to in the above statement is:
(a) Planning focuses on achieving objectives. 
(b) Planning is pervasive. 
(c) Planning is continuous. 
(d) None of these

Correct Answer is Option (b)
Planning is required at all levels of management as well as in all departments of the organisation. It is not an exclusive function of top management nor of any particular department. But the scope of planning differs at different levels and among different departments. For example, the top management undertakes planning for the organisation as a whole. Middle management does the departmental planning. At the lowest level, day-today operational planning is done by supervisors.

Q.5: “Detailed plans require scientific calculations to ascertain facts and figures.” Identify the limitation of planning in the above text.
(a) Planning involves huge costs. 
(b) Planning does not guarantee success. 
(c) Planning is a time-consuming process. 
(d) Planning reduces creativity.

Correct Answer is Option (a)
When plans are drawn up huge costs are involved in their formulation. These may be in terms of time and money for example, checking accuracy of facts may involve lot of time. Detailed plans require scientific calculations to ascertain facts and figures. The costs incurred sometimes may not justify the benefits derived from the plans. There are a number of incidental costs as well, like expenses on boardroom meetings, discussions with professional experts and preliminary investigations to find out the viability of the plan.

Q.6: “The process of organising allows a business enterprise to accommodate changes in the business environment”.
Which of the following importance of organizing is highlighted in the above lines?
(a) Development of personnel 
(b) Effective administration 
(c) Adaptation to change 
(d) Optimum utilisation of resources

Correct Answer is Option (c)
The process of organising allows a business enterprise to accommodate changes in the business environment. It allows the organisation structure to be suitably modified and the revision of inter-relationships amongst managerial levels to pave the way for a smooth transition. It also provides much needed stability to the enterprise as it can then continue to survive and grow in spite of changes.

Q.7: Management is a _______ Process
(a) Focus Oriented 
(b) Things Oriented 
(c) Goal Oriented 
(d) None of these

Correct Answer is Option (c)
An organisation has a set of basic goals which are the basic reason for its existence. These should be simple and clearly stated. Different organisations have different goals. For example, the goal of a retail store may be to increase sales, but the goal of The Spastics Society of India is to impart education to children with special needs. Management unites the efforts of different individuals in the organisation towards achieving these goals.

Q.8: According to Fayol, there should be a balance between _____ and _____ .
(a) Authority and Accountability 
(b) Responsibility and Accountability 
(c) Authority and Responsibility 
(d) None of these

Correct Answer is Option (c)
According to Fayol, “Authority is the right to give orders and obtain obedience, and responsibility is the corollary of authority. Managers require authority commensurate with their responsibility. There should be a balance between authority and responsibility. An organisation should build safeguards against abuse of managerial power. At the same time a manager should have necessary authority to carry out his responsibility.

Q.9: Business environment includes:
(a) Specific forces 
(b) General forces 
(c) Both specific and general forces 
(d) None of these

Correct Answer is Option (c)
Business environment includes both specific and general forces. Specific forces (such as investors, customers, competitors and suppliers) affect individual enterprises directly and immediately in their day-today working. General forces (such as social, political, legal and technological conditions) have impact on all business enterprises and thus may affect an individual firm only indirectly.

Q.10: After departmentalization, which of the following organizing step is being followed?
(a) Identification and division of work 
(b) Departmentalization 
(c) Assignment of duties 
(d) All of the above

Correct Answer is Option (c)
It is necessary to define the work of different job positions and accordingly allocate work to various employees. Once departments have been formed, each of them is placed under the charge of an individual. Jobs are then allocated to the members of each department in accordance to their skills and competencies.

Q.11: Which of the following organization structure promotes efficiency in utilization of manpower?
(a) Functional 
(b) Divisional 
(c) Both functional and divisional 
(d) None of these

Correct Answer is Option (a)
A functional structure leads to occupational specialisation since emphasis is placed on specific functions. This promotes efficiency in utilisation of manpower as employees perform similar tasks within a department and are able to improve performance.

Q.12: Which of the following importance of decentralization is highlighted in the below mentioned lines? “Decentralisation helps to promote self-reliance and confidence amongst the subordinates. Develops initiative among subordinates”
(a) Develops managerial talent for the future 
(b) Relief to top management 
(c) Better control 
(d) Develops initiative among subordinates

Correct Answer is Option (d)
Decentralisation helps to promote self-reliance and confidence amongst the subordinates. This is because when lower managerial levels are given freedom to take their own decisions they learn to depend on their own judgment. It also keeps them in a state wherein they are constantly challenged and have to develop solutions for the various problems they encounter. A decentralisation policy helps to identify those executives who have the necessary potential to become dynamic leaders.

Q.13: Which of the following statement is incorrect with respect to Organizing?
(a) The management function of organising ensures that efforts are directed towards the attainment of goals. 
(b) The organising function leads to the creation of an organisational structure. 
(c) Organising involves a series of steps that need to be taken in order to achieve the desired goal. 
(d) None of these

Correct Answer is Option (d)
The management function of organising ensures that efforts are directed towards the attainment of goals laid down in the planning function in such a manner that resources are used optimally and people are able to work collectively and effectively for a common purpose. The organising function leads to the creation of an organisational structure which includes the designing of roles to be filled by suitably skilled people and defining the inter relationship between these roles so that ambiguity in performance of duties can be eliminated.

Q.14: Harmon not discord principle is concerned with the:
(a) Introduction of the method of scientific inquiry. 
(b) Management should share the gain of the company with workers. 
(c) Development of Each and Every Person to His or Her Greatest Efficiency 
(d) None of these

Correct Answer is Option (b)
Taylor emphasised that there should be complete harmony between the management and workers. Both should realise that each one is important. Management should share the gains of the company, if any, with the workers. At the same time workers should work hard and be willing to embrace change for the good of the company. Both should be part of the family. To achieve this state, Taylor called for complete mental revolution on the part of both management and workers. It means that management and workers should transform their thinking. In such a situation even trade unions will not think of going on strike etc.

Q.15: Business environment helps in assisting in:
(a) Planning and policy formulation 
(b) Planning and accounts formulation 
(c) Strategy and accounts formulation 
(d) Strategy and method formulation

Correct Answer is Option (a)
Since environment is a source of both opportunities and threats for a business enterprise, its understanding and analysis can be the basis for deciding the future course of action (planning) or training guidelines for decision making (policy). For instance, entry of new players in the market, which means more competition may make an enterprise think afresh about how to deal with the situation.

Q.16: Which of the following importance of planning “provides the goals or standards against which actual performance is measured”?
(a) Planning provides directions. 
(b) Planning reduces the risks of uncertainty. 
(c) Planning establishes standards for controlling. 
(d) Planning reduces overlapping and wasteful activities.

Correct Answer is Option (c)
Planning involves setting of goals. The entire managerial process is concerned with accomplishing predetermined goals through planning, organising, staffing, directing and controlling. Planning provides the goals or standards against which actual performance is measured. By comparing actual performance with some standard, managers can know whether they have actually been able to attain the goals. If there is any deviation it can be corrected. Therefore, we can say that planning is a prerequisite for controlling.

Q.17: Which of the following importance of organizing states that organising stimulates creativity amongst the managers?
(a) Development of personnel 
(b) Clarity in working relationships 
(c) Optimum utilisation of resources 
(d) None of these

Correct Answer is Option (a)
Organising stimulates creativity amongst the managers. Effective delegation allows the managers to reduce their workload by assigning routine jobs to their subordinates. The reduction in workload by delegation is not just necessary because of limited capacity of an individual but also allows the manager to develop new methods and ways of performing tasks. It gives them the time to explore areas for growth and the opportunity to innovate thereby strengthening the company’s competitive position.

Q.18: Authority flows from ______
(a) Bottom to top 
(b) Top to bottom 
(c) Middle to top 
(d) Top to middle

Correct Answer is Option (b)
In the formal organisation authority originates by virtue of an individual’s position and the extent of authority is highest at the top management levels and reduces successively as we go down the corporate ladder. Thus, authority flows from top to bottom, i.e., the superior has authority over the subordinate.

Q.19: _____ is the process of dividing work into manageable activities and then grouping the activities which are similar in nature?
(a) Coordination 
(b) Departmentalisation 
(c) Organisation structure 
(d) Delegation of authority 

Correct Answer is Option (b)
Once work has been divided into small and manageable activities, then those activities which are similar in nature, are grouped together. This process is called departmentalization. Departments can be created on the basis of products, functions and territory. This brings specialization in operation.

Q.20: Which of the following marketing management philosophies is stated in the below mentioned lines: “Firms must undertake aggressive selling and promotional efforts to make customers buy their products”.
(a) The Production Concept 
(b) The Product Concept 
(c) The Selling Concept 
(d) The Marketing Concept

Correct Answer is Option (c)
The use of promotional techniques such as advertising, personal selling and sales promotion were considered essential for selling of products. Thus, the focus of business firms shifted to pushing the sale of products through aggressive selling techniques with a view to persuade, lure or coax the buyers to buy the products. Making sale through any means became important.

Q.21: There is ______________  communication in case of advertising.
(a) Personal 
(b) Impersonal 
(c) Both (A) and (B) 
(d) None of these

Correct Answer is Option (a)
There is no direct face-to-face interaction between the prospect and the advertiser. Advertising creates a monologue, not a dialogue.

Q.22: Fayol applies the principle of division of work to ______ .
(a) technical as well as managerial work. 
(b) technical as well as personal work. 
(c) personal as well as managerial work. 
(d) technical as well as executive work.

Correct Answer is Option (a)
Division of work leads to specialization. In a company there are separate departments for finance, marketing, production and human resource development etc. All of them have specialised persons. Collectively they achieve production and sales targets of the company. Fayol applies this principle of division of work to all kinds of work – technical as well as managerial. This can be observed at work in any organisation like hospital or even a government office.

Q.23: Planning provides a _____________ approach for achieving predetermined objectives.
(a) Rational 
(b) Unsound 
(c) Contrary 
(d) None of these

Correct Answer is Option (a)
Objectives provide direction for all managerial decisions and actions. Planning provides a rational approach for achieving predetermined objectives. All members, therefore, need to work towards achieving organisational goals. These goals set the targets which need to be achieved and against which actual performance is measured. Therefore, planning means setting objectives and targets and formulating an action plan to achieve them.

Q.24: In modern times, emphasis is placed on describing marketing as a:
(a) Social process 
(b) Economic process 
(c) Legal process 
(d) None of these

Correct Answer is Option (a)
In modern times, emphasis is placed on describing marketing as a social process. It is a process whereby people exchange goods and services for money or for something of value to them. Marketing is a social process where in people interact with others, in order to persuade them to act in a particular way, say to purchase a product or a service, rather than forcing them to do so.

Identify the feature of management as a profession highlighted in the above text.
(a) Management as a discipline.
(b) All professions are bound by a code of conduct
(c) Both (A) and (B)
(d) None of these

Correct Answer is Option (a)
All over the world there is marked growth in management as a discipline. It is based on a systematic body of knowledge comprising welldefined principles based on a variety of business situations. This knowledge can be acquired at different colleges and professional institutes and through a number of books and journals. The subject of management is taught at different institutions. Some of these have been set up with the specific purpose of providing management education such as the Indian Institutes of Management (IIMs) in India.

Q.26: Which of the following statement is incorrect with respect to features of planning?
(a) Planning lays down the base for staffing functions of management.
(b) Planning is required at top level of management.
(c) Both (A) and (B)
(d) None of these

Correct Answer is Option (c)
Planning lays down the base for other functions of management. All other managerial functions are performed within the framework of the plans drawn. Thus, planning precedes other functions. Planning is required at all levels of management as well as in all departments of the organisation. It is not an exclusive function of top management nor of any particular department. But the scope of planning differs at different levels and among different departments.

Q.27: While ‘selecting an alternative’ under the planning process, which of the following are considered?
(a) Combination of plans may be selected instead of one best course.
(b) Subjectivity and manager’s experience or judgment plays a role.
(c) The most feasible, profitable plan with least negative consequences is chosen.
(d) All of the above 

Correct Answer is Option (d)
The best plan has to be adopted and implemented. The ideal plan, of course, would be the most feasible, profitable and with least negative consequences. Most plans may not always be subjected to a mathematical analysis. In such cases, subjectivity and the manager’s experience, judgement and at times, intuition play an important part in selecting the most viable alternative. Sometimes, a combination of plans may be selected instead of one best course. The manager will have to apply permutations and combinations and select the best possible course of action.

Q.28: For the following two statements choose the correct option: 
Statement I: Delegation develops in the subordinate the ability to deal effectively with challenges and helps them to realise their full potential.
Statement II: Organising provides a clear description of jobs and related duties.
Choose the correct option from the options given below:

(a) Statement I is correct and II is wrong.
(b) Statement II is correct and I is wrong.
(c) Both the statements are correct.
(d) Both the statements are incorrect.

Correct Answer is Option (c)
Effective delegation allows the managers to reduce their workload by assigning routine jobs to their subordinates. The reduction in workload by delegation is not just necessary because of limited capacity of an individual but also allows the manager to develop new methods and ways of performing tasks. It gives them the time to explore areas for growth and the opportunity to innovate thereby strengthening the company’s competitive position. Organising provides a clear description of jobs and related duties. This helps to avoid confusion and duplication. Clarity in working relationships enables proper execution of work. Management of an enterprise thereby becomes easy and this brings effectiveness in administration.

Q.29: “A philosophy implies selective dispersal of authority because it propagates the belief that people are competent, capable and resourceful.” Identify the philosophy in this case.
(a) Delegation
(b) Decentralization
(c) Authority
(d) Accountability

Correct Answer is Option (b)
Decentralisation is much more than a mere transfer of authority to the lower levels of management hierarchy. It is a philosophy that implies selective dispersal of authority because it propagates the belief that people are competent, capable and resourceful. They can assume the responsibility for the effective implementation of their decisions. Thus, this philosophy recognises the decision maker’s need for autonomy. The management, however, needs to carefully select those decisions which will be pushed down to lower levels and those that will be retained for higher levels.

Q.30: In the question given below, there are two statements marked as Assertion (A) and Reason (R). Read the Statements and choose the correct option:
Assertion (A): Marketing orientation implies that focus on satisfaction of customer’s needs is the key to the success of any organisation in the market.
Reason (R): The marketing concept is based on the identification of market or customer who are chosen as the target of marketing effort.
Options are:

(a) Both (A) and (R) are true and (R) is the correct explanation of (A). 
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A). 
(c) (A) is correct but (R) are wrong. 
(d) (A) is wrong but (R) are correct.  

Correct Answer is Option (b)
The focus of the marketing concept is on customer needs and the customer satisfaction becomes the means to achieving the firms’ objective of maximising profit. The purpose of marketing is to generate customer value at a profit. The marketing concept is based on the identification of market or customer who are chosen as the target of marketing effort, understanding needs and wants of customers in the target market, development of products or services for satisfying needs of the target market and satisfying needs of target market better than the competitors.

Q.31: Which of the following statements is incorrect with respect to the various aspects of Marketing Mix?
(a) The advantage of registering Trade Mark is to get exclusive legal rights for its use and no other firm can use this mark to sell similar goods. 
(b) Promotion mix refers to the decisions related to sales promotion tools used by an organisation to achieve its objectives. 
(c) Product mix includes activities that are involved in transferring the ownership to customers and to make the product available at the right place at the right time. 
(d) None of the above. 

Correct Answer is Option (c)
Product means goods or services or ‘anything of value’, which is offered to the market for sale. For example, Hindustan lever offers number of consumer products like toiletries (Close-Up toothpaste, Lifebuoy soap, etc.). In marketing, product is a mixture of tangible and intangible attributes, which are capable of being exchanged for a value, with ability to satisfy customer needs. A product is anything that can be offered to a market to satisfy a want or need. It is offered for attention, acquisition, use or consumption.

Q.32: ‘Pappu Sweets Makers’ is a sweet making company which has turnover in crores. In order to manage the work in the organisation, the departments have been created on the basis of functions. It is expected that employees who are performing similar tasks work under the same department. So, the company now has HR, Marketing and Finance departments. The division is based on specific functions.
Which type of organisation structure is discussed in the above case?
(a) Functional
(b) Divisional
(c) Linear
(d) None of the above

Correct Answer is Option (a)
A functional structure leads to occupational specialisation since emphasis is placed on specific functions. This promotes efficiency in utilisation of manpower as employees perform similar tasks within a department and are able to improve performance.

Q.33: Which of the following is an advantage of divisional structure?
(a) Promotes inflexibility 
(b) Lead to increase in costs 
(c) Provides managers with the authority to supervise 
(d) Product specialization helps in the development of varied skills

Correct Answer is Option (d)
Product specialization helps in the development of varied skills in a divisional head and this prepares him for higher positions. This is because he gains experience in all functions related to a particular product. Divisional heads are accountable for profits, as revenues and costs related to different departments can be easily identified and assigned to them. This provides a proper basis for performance measurement. It also helps in fixation of responsibility in cases of poor performance of the division and appropriate remedial action can be taken.

Q.34: Which of the following statement is true with respect to business environment:
(a) Business environment is the sum total of all things external to business. 
(b) Business environment is a relative concept. 
(c) Both (A) and (B) 
(d) None of the above

Correct Answer is Option (c)
Business environment is the sum total of all things external to business firms and, as such, is aggregative in nature. Business environment is a relative concept since it differs from country to country and even region to region. Political conditions in the USA, for instance, differ from those in China or Pakistan. Similarly, demand for sarees may be fairly high in India whereas it may be almost non-existent in France.

Q.35: Aryan was working as a sales person in an organization where he has to work under Mr. Goel (Marketing manager) and Mr. Agarwal (Finance manager). Aryan was asked by Mr. Goel to give 20% discount to the customer while selling a product whereas he was asked by Mr. Agarwal to give 10% discount only.
Which Principle of Management are being violated in the above text?
(a) Unity of command
(b) Order
(c) Equity
(d) Unity of direction

Correct Answer is Option (a)
According to Fayol there should be one and only one boss for every individual employee. If an employee gets orders from two superiors at the same time the principle of unity of command is violated. The principle of unity of command states that each participant in a formal organisation should receive orders from and be responsible to only one superior.

Q.36: Legal Environment includes:
(a) Laws passed by the government 
(b) Administrative orders 
(c) Court judgments 
(d) All of these

Correct Answer is Option (d)
Legal environment includes various legislations passed by the Government administrative orders issued by government authorities, court judgments as well as the decisions rendered by various commissions and agencies at every level of the government— center, state or local. It is very essential for the management of any business firm to obey these rules and regulations for smooth functioning of the business.

Q.37: Which of the following statements is true regarding planning?
(a) Once plans are made to decide the future course of action, the management may not be in a position to change them. 
(b) Planning is a one-time process. 
(c) Planning is required only at Top Level of Management as plans are made by Top Level of Management. 
(d) Planning always leads to success. 

Correct Answer is Option (a)
In an organisation, a well defined plan is drawn up with specific goals to be achieved within a specific time frame. These plans then decide the future course of action and managers may not be in a position to change it. This kind of rigidity in plans may create difficulty.

Q.38: Which of the following difference between decentralization and delegation is correct?
(a) Delegation is a compulsory act because no individual can perform all tasks on his own whereas decentralization is an optional policy decision. 
(b) Delegation is a process followed to share tasks whereas decentralization is the result of the policy decision of the top management. 
(c) Both (A) and (B) 
(d) None of these

Correct Answer is Option (c)
Delegation is a compulsory act because no individual can perform all tasks on his own. Decentralisation is an optional policy decision. It is done at the discretion of the top management. Delegation has narrow scope as it is limited to superior and his immediate subordinate. Decentralization has wide scope as it implies extension of delegation to the lowest level of management. Delegation is a process followed to share tasks. Decentralisation is the result of the policy decision of the top management.

Q.39: Which step in the process of organizing is essential for effective performance that a proper match is made between the nature of a job and the ability of an individual.
(a) Establishing authority and reporting relationships 
(b) Assignment of duties 
(c) Identification and division of work
(d) Departmentalisation

Correct Answer is Option (b)
It is necessary to define the work of different job positions and accordingly allocate work to various employees. Once departments have been formed, each of them is placed under the charge of an individual. Jobs are then allocated to the members of each department in accordance to their skills and competencies. It is essential for effective performance that a proper match is made between the nature of a job and the ability of an individual. The work must be assigned to those who are best fitted to perform it well.

Q.40: “Tea produced in Assam has to be transported not only within the state but to other for off places like Tamil Nadu, Punjab, Jammu and Kashmir” Identify the function of Marketing.
(a) Transportation 
(b) Warehousing 
(c) Grading 
(d) Planning

Correct Answer is Option (a)
Transportation involved physical movement of goods from one place to another.

Q.41: For the following two statements choose the correct option:
Statement I: The organisation structure is the framework within which managerial and operating tasks are performed.

Statement II: Organisation structure is the outcome of the organising process.

Choose the correct option from the options given below:

(a) Statement I is correct and II is wrong.
(b) Statement II is correct and I is wrong.
(c) Both the statements are correct.
(d) Both the statements are incorrect.

Correct Answer is Option (c)
An effective structure will result in increased profitability of the enterprise. The need for an adequate organisation structure is felt by an enterprise whenever it grows in size or complexity. It specifies the relationships between people, work and resources. It allows correlation and coordination among human, physical and financial resources and this enables a business enterprise to accomplish desired goals.

Q.42: A ______ structure is an organisational design that groups similar or related jobs together.
(a) Divisional 
(b) Functional 
(c) Both (A) and (B) 
(d) None of these

Correct Answer is Option (b)
Grouping of jobs of similar nature under functional and organising these major functions as separate departments creates a functional structure. All departments report to a coordinating head. For example, in a manufacturing concern division of work into key functions will include production, purchase, marketing, accounts and personnel. These departments may be further divided into sections. Thus, a functional structure is an organisational design that groups similar or related jobs together.

Q.43: “It is not always true that just, because a plan has worked before, it will work again.” Identify the related imitation of planning.
(a) Planning leads to rigidity 
(b) Planning reduces creativity 
(c) Planning may not work in dynamic environment 
(d) Planning does not guarantee success

Correct Answer is Option (c)
Planning cannot for see everything and thus, there may be obstructed to effective planning.

Q.44: A company is in a process of recruitment of employees for its upcoming projects. After recruitment ten new employees joined the company. They have to work under Mr. Mahesh, the production manager. Mr. Mahesh noticed some employees are not working efficiently and are not able to give desired results. On finding out he came to know that the employees are new to the environment of the organisation and have no idea about the demanding jobs. So, he decided to give them two months of time to show their results.

Which of the following Fayol principle of management is discussed in the above case?
(a) Equity
(b) Order
(c) Division of work
(d) Stability of Personnel

Correct Answer is Option (d)
“Employee turnover should be minimised to maintain organisational efficiency”, according to Fayol. Personnel should be selected and appointed after due and rigorous procedure. But once selected they should be kept at their position for a minimum fixed tenure. They should have stability of tenure. They should be given reasonable time to show results. Any adhocism in this regard will create instability/insecurity among employees. They would tend to leave the organisation. Recruitment, selection and training cost will be high. So, stability in tenure of personnel is good for the business.

Q.45: For the following two statements choose the correct option:
Statement I: The principles of management are formed by experience and collective wisdom of managers as well as experimentation.
Statement II: The principles of management are not rigid prescriptions, which have to be followed absolutely.
Choose the correct option from the options given below:
(a) Statement I is correct and II is wrong.
(b) Statement II is correct and I is wrong.
(c) Both the statements are correct.
(d) Both the statements are incorrect.

Correct Answer is Option (c)
The principles of management are formed by experience and collective wisdom of managers as well as experimentation. For example, it is a matter of common experience that discipline is indispensable for accomplishing any purpose. This principle finds mention in management theory. On the other hand, in order to remedy the problem of fatigue of workers in the factory, an experiment may be conducted to see the effect of improvement of physical conditions to reduce stress. The principles of management are not rigid prescriptions, which have to be followed absolutely. They are flexible and can be modified by the manager when the situation so demands. They give the manager enough discretion to do so.

Q.46: ABC Ltd. had been taken over by XYZ Ltd. Since then it enjoys a good reputation in the market. The company had laid down multiple courses of action to meet the challenge of adverse situations. In 2021, the company has a set back and suffered loss due to outbreak of COVID 19. The management had taken utmost care regarding the possible outcome and timely review of the plans to achieve the set target during hard time. “The management had taken utmost care regarding the possible outcome and timely review of the plans to achieve the set target during that hard time.” Identify the step followed over here in the process of planning.
(a) Implementation of plan 
(b) Timely execution of projects 
(c) Follow up 
(d) To prepare alternative course of action

Correct Answer is Option (c)
To see whether plans are being implemented and activities are performed according to schedule is also part of the planning process. Monitoring the plans is equally important to ensure that objectives are achieved.

Q.47: “A popular brand of Hair Conditioners comes in different categories for different hair, say for normal hair and for other categories”. Identify the function of labelling in the above example. 
(a) Providing information required by law 
(b) Describe the product and specify its contents 
(c) Grading of products 
(d) Promotion of products 

Correct Answer is Option (c)
Grading is the process of classification of products into different groups, on the basis of some of its important characteristics such as quality, size, etc. Grading is particularly necessary for products which are not produced according to predetermined specifications, such as in the case of agricultural products, say wheat, oranges, etc. Grading ensures that goods belong to a particular quality and helps in realising higher prices for high quality output.

Q.48: Crepton Ltd. is a mobile manufacturing company. On the eve of New Year, they have launched a new mobile FX35 in their existing list of products. The top management is planning the marketing strategies in order to convince people to buy their newly launched product. To increase the sales, the company  is offering ‘scratch a card’ option to win instant gifts and coupons on a new year day. Also, additional 10% discount will be granted to the customers who will buy on the new year day.
Identify the type of promotion strategy adopted by the company to boost the sales of mobiles.
(a) Advertising
(b) Sales Promotion
(c) Publicity
(d) Public relations

Correct Answer is Option (b)
Sales promotion refers to short-term incentives, which are designed to encourage the buyers to make immediate purchase of a product or service. These include all promotional efforts other than advertising, personal selling and publicity, used by a company to boost its sales. Sales promotion activities include offering cash discounts, sales contests, free gift offers, and free sample distribution. Sales promotion is usually undertaken to supplement other promotional efforts such as advertising and personal selling.

Correct Answer is Option (b)
Decentralisation is much more than a mere transfer of authority to the lower levels of management hierarchy. It is a philosophy that implies selective dispersal of authority because it propagates the belief that people are competent, capable and resourceful. They can assume the responsibility for the effective implementation of their decisions. Thus this philosophy recognises the decision maker’s need for autonomy. The management, however, needs to carefully select those decisions which will be pushed down to lower levels and those that will be retained for higher levels.

Q.50: Read the following text and answer question on the basis of the same.
‘Saarthi’, the name has been associated with the manufacturing and sale of Fashion products since 1960, when Kapil Saarthi opened his first retail fashion clothing outlet in Ahmedabad. Sarthi Cosmetics was incorporated in India in 1940, and became a member of the S & M family of companies in 1959. Sarthi Perfumes began operations in Gujarat in an existing administrative S&M facility in 1985. An important difference between S&M and most other companies is that instead of operating as one large corporation it operates as 180 smaller companies each focused on a specific product and area, implying selective dispersal of authority, recognising the decision makers need four autonomy, as decision making authority is pushed down the chain of command. It enables the company to maintain short lines of communication with customers and employees, and accelerate the development of talent. 
‘Why is there, need to apply the philosophy being followed by S&M, with caution? 
(a) As it can cause a delay in communication 
(b) As it can cause disintegration of the organisation 
(c) As it can increase the workload of the top management
(d) As it can reduce the chances of growth of the firm.

Correct Answer is Option (b)

Decentralisation should be applied with caution as it can lead to organisational disintegration if the departments start to operate on their own guidelines which may be contrary to the interest of the organisation. Decentralisation must always be balanced with centralisation in areas of major policy decisions.

Q.51: ‘Saarthi’, the name has been associated with the manufacturing and sale of Fashion products since 1960, when Kapil Saarthi opened his first retail fashion clothing outlet in Ahmedabad. Sarthi Cosmetics was incorporated in India in 1940, and became a member of the S & M family of companies in 1959. Sarthi Perfumes began operations in Gujarat in an existing administrative S&M facility in 1985. An important difference between S&M and most other companies is that instead of operating as one large corporation it operates as 180 smaller companies each focused on a specific product and area, implying selective dispersal of authority, recognising the decision makers need four autonomy, as decision making authority is pushed down the chain of command. It enables the company to maintain short lines of communication with customers and employees, and accelerate the development of talent.  
The application of the philosophy discussed above can foster a sense of competition amongst the departments, which in turn will help the firm in the following manner: 
(a) Facilitates growth
(b) Better control 
(c) Relief to top management
(d) Quick decision making. 

Correct Answer is Option (a)
Decentralisation awards greater autonomy to the lower levels of management as well as divisional or departmental heads. This allows them to function in a manner best suited to their department and fosters a sense of competition amongst the departments. Consequently, with each department doing its best in a bid to outdo the other, the productivity levels increase and the organisation is able to generate more returns which can be used for expansion purposes.

Q.52: ‘Saarthi’, the name has been associated with the manufacturing and sale of Fashion products since 1960, when Kapil Saarthi opened his first retail fashion clothing outlet in Ahmedabad. Sarthi Cosmetics was incorporated in India in 1940, and became a member of the S & M family of companies in 1959. Sarthi Perfumes began operations in Gujarat in an existing administrative S&M facility in 1985. An important difference between S&M and most other companies is that instead of operating as one large corporation it operates as 180 smaller companies each focused on a specific product and area, implying selective dispersal of authority, recognising the decision makers need four autonomy, as decision making authority is pushed down the chain of command. It enables the company to maintain short lines of communication with customers and employees, and accelerate the development of talent. 
Quote the line from above which highlights the importance of the philosophy towards providing management education to employees. 
(a) ‘Maintain short lines of communication’ 
(b) ‘Accelerate the development of talent’ 
(c) ‘selective dispersal of authority’ 
(d) ‘Recognises decision makers need for autonomy’ 

Correct Answer is Option (b)
Formal training plays an important part in equipping subordinates with skills that help them rise in the organisation but equally important is the experience gained by handling assignments independently. Decentralisation gives them a chance to prove their abilities and creates a reservoir of qualified manpower who can be considered to fill up more challenging positions through promotions. It also helps to identify those who may not be successful in assuming greater responsibility. Thus, it is a means of management education as well as an opportunity for trained manpower to use its talent in real life situations.

Q.53: ‘Saarthi’, the name has been associated with the manufacturing and sale of Fashion products since 1960, when Kapil Saarthi opened his first retail fashion clothing outlet in Ahmedabad. Sarthi Cosmetics was incorporated in India in 1940, and became a member of the S & M family of companies in 1959. Sarthi Perfumes began operations in Gujarat in an existing administrative S&M facility in 1985. An important difference between S&M and most other companies is that instead of operating as one large corporation it operates as 180 smaller companies each focused on a specific product and area, implying selective dispersal of authority, recognising the decision makers need four autonomy, as decision making authority is pushed down the chain of command. It enables the company to maintain short lines of communication with customers and employees, and accelerate the development of talent. 

As “The decision making authority is pushed down the chain of command”at S&M enterprises, it  provides the  benefit of quick decision making to the organisation because:
(a) There is no requirement for approval from many levels
(b) Organisation is able to generate more returns
(c) There are innovative performance systems
(d) It’s a means of management education

Correct Answer is Option (a) 
The management hierarchy can be looked upon as a chain of communication.  In a decentralised organisation, since decisions are taken at levels which are nearest to the points of action and there is no requirement for approval from many levels, the process is much faster. There are also less chances of information getting distorted because it doesn’t have to go through long channels.

Q.54: ‘Saarthi’, the name has been associated with the manufacturing and sale of Fashion products since 1960, when Kapil Saarthi opened his first retail fashion clothing outlet in Ahmedabad. Sarthi Cosmetics was incorporated in India in 1940, and became a member of the S & M family of companies in 1959. Sarthi Perfumes began operations in Gujarat in an existing administrative S&M facility in 1985. An important difference between S&M and most other companies is that instead of operating as one large corporation it operates as 180 smaller companies each focused on a specific product and area, implying selective dispersal of authority, recognising the decision makers need four autonomy, as decision making authority is pushed down the chain of command. It enables the company to maintain short lines of communication with customers and employees, and accelerate the development of talent. 

The philosophy being followed by S&M is not followed by most other companies. This tells us that the philosophy is :
(a) Optional
(b) Compulsory
(c) Limited to superior and his subordinate
(d) Merely done to lessen the burden of the manager 

Correct Answer is Option (a) 
Decentralisation is an optional policy decision. It is done at the discretion of the top management. Decentralisation explains the manner in which decision making responsibilities are divided among hierarchical levels. Put simply, decentralisation refers to delegation of authority throughout all the levels of the organisation. Decision making authority is shared with lower levels and is consequently placed nearest to the points of action. In other words decision making authority is pushed down the chain of command.

Q.55: Mohammad Kanjiwal, a beekeeper since April 2021 is now part of the growing tribe of at least 50 urban dwellers across Maharashtra raising bees and harvesting honey in their balconies, rooftops and back gardens. As he had been focussed on eating right the thought of domesticating honey bees to promote healthy consumption habits and seeing honey being cultivated right before his eyes was mesmerising for him. Identify the factor constituting the general environment being discussed above. 
(a) Economic environment 
(b) Social environment 
(c) Technological environment 
(d) Political environment 

Correct Answer is Option (b)
The social environment of business includes the social forces like customs and traditions, values, social trends, society’s expectations from business, etc. Traditions define social practices that have lasted for decades or even centuries. For example, the celebration of Diwali, Eid, Christmas, and Guru Parv in India provides significant financial opportunities for greeting cards companies, sweets or confectionery manufacturers, tailoring outlets and many other related business. Social trends present various opportunities and threats to business enterprises. For example, the healthand-fitness trend has become popular among large number of urban dwellers. This has created a demand for products like organic food, gyms, bottled (mineral) water and food supplements.

Q.56: Zolo, a marketer of cars having 40 % of the current market share of the country aims at increasing the market share to 70% in next few years. For achieving this objective the manager of the company specified the action programme covering various aspects. Identify the function of marketing discussed  above: 
(a) Customer support services 
(b) Gathering and Analysing market information 
(c) Product designing and development 
(d) Marketing Planning 

Correct Answer is Option (d)
A marketer is to develop appropriate marketing plans so that the marketing objectives of the organisation can be achieved. For example a marketer of colour TV, having 10 per cent of the current market share in the country, aims at enhancing his market share to 20 per cent, in the next three years. He will have to develop a complete marketing plan covering various important aspects including the plan for increasing the level of production, promotion of the products, etc. and specify the action programmes to achieve these objectives.

Q.57: Style and Fit, a footwear manufacturing company has decided to offer 50 % off on all its products due to the fall in demand of its products as more efficient substitutes have been introduced in the market. Identify the pricing objective included by the firm which has made the firm resort to discounting its product. 
(a) Obtaining market share leadership 
(b) Surviving in the competitive market 
(c) Attaining product quality leadership 
(d) Protect the interest of public 

Correct Answer is Option (b)
If a firm is facing difficulties in surviving in the market because of intense competition or introduction of a more efficient substitute by a competitor, it may resort to discounting its products or running a promotion campaign to liquidate its stock.

Q.58: A sanitizer manufacturing company wants to become a market leader. For this purpose the manager follows an activity with certain logical steps. The first step suggested by him is to increase profits by at least 30% in the next quarter. What will be the last step of the activity being followed by the manager. 
(a) Follow-up action 
(b) Identifying alternative course of action 
(c) Setting objectives 
(d) Evaluating alternative courses of action

Correct Answer is Option (a) 
To see whether plans are being implemented and activities are performed according to schedule is also part of the planning process. Monitoring the plans is equally important to ensure that objectives are achieved.

Q.59: In Shalleen Pvt Ltd. there is one head Shalleen who has two lines of authority under her. One line consists of Sara-Rajat-Abhishek-Ismail-Chris. Another line of authority under Shalleen is Lata Rupa-Geet-Hussain-Preeti. According to a Principle of Management given by Fayol, If Ismail has to communicate with Hussain who is at the same level of authority then illustrate the route he will have to traverse. 
(a) Ismail-Abhishek-Rajat-Sara-Shalleen-Lata-Rupa-Geet-Hussain 
(b) Hussain-Geet-Rupa-Lata-Shalleen-Sara-Rajat-Abhishek-Ismail 
(c) Ismail-Chris-Shalleen-Preeti-Hussain 
(d) Ismail-Abhishek-Rajat-Sara-Lata-Rupa-Geet-Hussain 

Correct Answer is Option (a)
An organisation consists of superiors and subordinates. The formal lines of authority from highest to lowest ranks are known as scalar chain.  According to Fayol, “Organisations should have a chain of authority and communication that runs from top to bottom and should be followed by managers and the subordinates.”

Q.60: According to the technique of Scientific management “Differential Piece Wage system” How much more will a worker making 60 units earn as compared to a worker making 49 units? If the standard output per day is 50 units and those who make standard output or more than standard get ₹ 75 per unit and those below get ₹ 65 per unit. 
(a) ₹ 4500 
(b) ₹ 3185
(c) ₹ 1315
(d) ₹ 3250 

Correct Answer is Option (c)
It is determined that standard output per worker per day is 50 units and those who made standard or more than standard will get ₹ 75 per unit and those below will get ₹ 65 per unit. Now an efficient worker making 60 units will get 60 × 75 = ₹4500 per day whereas a worker who makes 49 units will get 49 × 65 = ₹3185 per day. According to Taylor, the difference of ₹ 1,315 should be enough for the inefficient worker to be motivated to perform better.