CBSE Business Studies Past year paper Delhi (Set - 2) Solution - 2016, Class 12 Commerce Notes | EduRev

Business Studies (BST) Class 12

Created by: Nipuns Institute

Commerce : CBSE Business Studies Past year paper Delhi (Set - 2) Solution - 2016, Class 12 Commerce Notes | EduRev

 Page 1


  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 2 – 2016 Solution 
 
     
CBSE 
Class XII Business Studies 
Delhi Board Paper Set 2– 2016 Solution 
 
Answer 1 
Investment decisions or capital budgeting decisions made by a company affect its size of 
assets, profitability and competitiveness. 
Answer 2 
The market function concerned with informing customers about a firm’s products is 
promotion. 
Answer 3 
‘Level of collaboration’ is the factor which affects the business decision of ‘Fashionate Pvt. 
Ltd.’ Such collaboration results in division of fixed capital investment for all the parties 
involved and hence results in efficient utilisation of resources. 
Answer 4 
The organisational structure which promotes efficiency of manpower is ‘Functional 
Structure’. 
Answer 5 
Management is the process of getting things done. Here, the term ‘process’ implies key 
tasks performed by the managers for the attainment of organisational goals in an effective 
and efficient manner. 
Answer 6 
The right exercised by Manoj was ‘right to be informed’. In the given case, the consumer, i.e. 
Manoj, was unable to see the ingredients of the product he purchased. According to the 
Consumer Protection Act, 1986, all consumers have a right to know about the quality, 
quantity, MRP and ingredients of the products they purchase from the market. Manoj 
exercised this right to know about the ingredients of the packet of chips he purchased. 
Answer 7 
As an element of delegation, responsibility is the duty or task allocated to an employee or 
worker to be performed under his/her tenure of work. The flow of responsibility is 
upward. This implies that employees are responsible for the work assigned to them by 
their supervisor and not vice versa. 
 
Answer 8 
In functional foremanship, a speed boss ensures that workers are achieving their work 
target in a timely manner and are not misusing time during their working hours. A speed 
boss works directly under the production in-charge of the organisation and cooperates 
with the gang boss, repair boss etc. to achieve the desired speed efficiency level. 
Answer 9 
Three functions performed by non-governmental organisations for consumer protection: 
Page 2


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


  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 2 – 2016 Solution 
 
     
CBSE 
Class XII Business Studies 
Delhi Board Paper Set 2– 2016 Solution 
 
Answer 1 
Investment decisions or capital budgeting decisions made by a company affect its size of 
assets, profitability and competitiveness. 
Answer 2 
The market function concerned with informing customers about a firm’s products is 
promotion. 
Answer 3 
‘Level of collaboration’ is the factor which affects the business decision of ‘Fashionate Pvt. 
Ltd.’ Such collaboration results in division of fixed capital investment for all the parties 
involved and hence results in efficient utilisation of resources. 
Answer 4 
The organisational structure which promotes efficiency of manpower is ‘Functional 
Structure’. 
Answer 5 
Management is the process of getting things done. Here, the term ‘process’ implies key 
tasks performed by the managers for the attainment of organisational goals in an effective 
and efficient manner. 
Answer 6 
The right exercised by Manoj was ‘right to be informed’. In the given case, the consumer, i.e. 
Manoj, was unable to see the ingredients of the product he purchased. According to the 
Consumer Protection Act, 1986, all consumers have a right to know about the quality, 
quantity, MRP and ingredients of the products they purchase from the market. Manoj 
exercised this right to know about the ingredients of the packet of chips he purchased. 
Answer 7 
As an element of delegation, responsibility is the duty or task allocated to an employee or 
worker to be performed under his/her tenure of work. The flow of responsibility is 
upward. This implies that employees are responsible for the work assigned to them by 
their supervisor and not vice versa. 
 
Answer 8 
In functional foremanship, a speed boss ensures that workers are achieving their work 
target in a timely manner and are not misusing time during their working hours. A speed 
boss works directly under the production in-charge of the organisation and cooperates 
with the gang boss, repair boss etc. to achieve the desired speed efficiency level. 
Answer 9 
Three functions performed by non-governmental organisations for consumer protection: 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 2 – 2016 Solution 
 
     
i. Educating consumers: Trainings and seminars are conducted to educate 
consumers regarding various consumer rights. Also, consumers are educated to 
perform their responsibilities while using various products. 
ii. Print media: The print media publishes articles and journals to educate consumers 
about their rights and procedures to exercise them. 
iii. Product reviewers: Product reviewers test the quality and safety standards of 
different products and educate consumers about them. 
Answer 10 
SEBI intervened to perform the following two functions in the given case: 
i. Regulatory functions: SEBI performed various inspections to determine whether 
Mr Sanjay is guilty or not. This is a regulatory function. 
ii. Protective functions: SEBI imposed heavy fines on Mr Sanjay to make sure that the 
interests of all the investors stay protected. 
Answer 11 
a. Two communication barriers because of which ‘Bikmac Enterprises’ were not able to 
achieve their targets: 
i. Barriers at the personal level: Clear lines of communication are hindered by 
personal barriers present in an organisation. This happens when the management 
does not entrust its confidence in employees. Managers should conduct discussions 
and ask employees for inputs to ensure that such barriers are resolved. 
ii. Barriers at the organisational level: Policies which suppress the initiatives to 
empower employees such as centralisation of all decisions, high attrition rates and 
low perks result in dissatisfaction among employees. This dissatisfaction hinders 
their performance. 
b. i. One barrier at the organisational level is ‘Rigid code of conduct’. If an 
organisation follows extremely rigid rules and regulations, all its employees remain 
suppressed and dissatisfied. Organisations should promote good communication 
lines with their employees. 
ii. One barrier at the personal level is ‘Disregard and fear’. When managers do 
not appreciate employees for their contribution, employees lose their motivation to 
perform. Also, fear blocks all lines of communication with managers. This results in 
personal barriers. 
Answer 12 
Internal/external recruitment sources used by ‘Senor Enterprises Ltd.’ to fill various 
positions: 
1. Promotion: The Human Resource Manager was recruited using promotion. 
Promotion is an internal source of recruitment. 
2. Placement consultants: The Marketing Head was recruited through an external 
source of placement consultants. 
3. Casual callers: The Assistant Manager was recruited using existing applications. 
 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 2 – 2016 Solution 
 
     
Answer 13 
Three limitations of planning: 
i. Inflexibility: Since all other steps in the process of management depend on 
planning, it becomes quite inflexible to alter a plan when it is in the process of being 
implemented. In scenarios of unplanned external changes, it often becomes a cost 
and time burden on the organisation to change the course of a plan. It is therefore 
suggested to companies to keep a certain degree of flexibility in their plan to 
cooperate with unforeseen circumstances. 
ii. Inability to deal with potential business changes: At times, planning fails to 
accommodate changes in business functioning because of predefined assumptions 
about business. Therefore, it becomes a tedious task to alter the plan according to 
forthcoming changes. 
iii. Hindrance to new initiatives: Planning often reduces the scope of new initiatives 
because of required structural adjustments demanded by those initiatives. Hence, it 
sometimes becomes a hindrance in efficiency and effectiveness of organisational 
procedures. To put new initiatives into action, necessary structural adjustments are 
advised when formulating a plan every time. 
Answer 14 
a. In the given scenario, ‘Public Relations’ is the communication tool used by the company 
to restore its good image. The sole purpose of Public Relations is to create and maintain 
cordial relationship of the company with its stakeholders, customers and lenders. Such 
positive public relations of the company are key foundations for its survival and growth. 
b. Importance of Public Relations can be highlighted as follows: 
1. It allows the organisation to attain its goals in a hassle-free manner without 
constantly worrying about its public image. 
2. It assists the organisation in creating and maintaining a market for its product 
among consumers, thus increasing its brand loyalty among consumers. 
3. Public Relations among the stakeholders and consumers also allows an organisation 
to survive in the business in the long run and deal with its new potential 
competitors effectively. 
4. It also complements the promotional ventures undertaken by the organisation to 
increase its customer base. 
Answer 15 
a. ‘Informal Organisation’ allows communication to flow in all directions. 
b. Another advantage of informal organisation is that it allows employees to feel sociable, 
interactive and competitive. This results in better employee engagement and work 
culture. All these factors result in better productivity for the organisation by the 
employees. 
c. ‘Steelo Ltd.’ wanted to communicate following two values of the organisation: 
i. Socially responsible corporation 
ii. Employee-centric organisation 
Page 4


  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 2 – 2016 Solution 
 
     
CBSE 
Class XII Business Studies 
Delhi Board Paper Set 2– 2016 Solution 
 
Answer 1 
Investment decisions or capital budgeting decisions made by a company affect its size of 
assets, profitability and competitiveness. 
Answer 2 
The market function concerned with informing customers about a firm’s products is 
promotion. 
Answer 3 
‘Level of collaboration’ is the factor which affects the business decision of ‘Fashionate Pvt. 
Ltd.’ Such collaboration results in division of fixed capital investment for all the parties 
involved and hence results in efficient utilisation of resources. 
Answer 4 
The organisational structure which promotes efficiency of manpower is ‘Functional 
Structure’. 
Answer 5 
Management is the process of getting things done. Here, the term ‘process’ implies key 
tasks performed by the managers for the attainment of organisational goals in an effective 
and efficient manner. 
Answer 6 
The right exercised by Manoj was ‘right to be informed’. In the given case, the consumer, i.e. 
Manoj, was unable to see the ingredients of the product he purchased. According to the 
Consumer Protection Act, 1986, all consumers have a right to know about the quality, 
quantity, MRP and ingredients of the products they purchase from the market. Manoj 
exercised this right to know about the ingredients of the packet of chips he purchased. 
Answer 7 
As an element of delegation, responsibility is the duty or task allocated to an employee or 
worker to be performed under his/her tenure of work. The flow of responsibility is 
upward. This implies that employees are responsible for the work assigned to them by 
their supervisor and not vice versa. 
 
Answer 8 
In functional foremanship, a speed boss ensures that workers are achieving their work 
target in a timely manner and are not misusing time during their working hours. A speed 
boss works directly under the production in-charge of the organisation and cooperates 
with the gang boss, repair boss etc. to achieve the desired speed efficiency level. 
Answer 9 
Three functions performed by non-governmental organisations for consumer protection: 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 2 – 2016 Solution 
 
     
i. Educating consumers: Trainings and seminars are conducted to educate 
consumers regarding various consumer rights. Also, consumers are educated to 
perform their responsibilities while using various products. 
ii. Print media: The print media publishes articles and journals to educate consumers 
about their rights and procedures to exercise them. 
iii. Product reviewers: Product reviewers test the quality and safety standards of 
different products and educate consumers about them. 
Answer 10 
SEBI intervened to perform the following two functions in the given case: 
i. Regulatory functions: SEBI performed various inspections to determine whether 
Mr Sanjay is guilty or not. This is a regulatory function. 
ii. Protective functions: SEBI imposed heavy fines on Mr Sanjay to make sure that the 
interests of all the investors stay protected. 
Answer 11 
a. Two communication barriers because of which ‘Bikmac Enterprises’ were not able to 
achieve their targets: 
i. Barriers at the personal level: Clear lines of communication are hindered by 
personal barriers present in an organisation. This happens when the management 
does not entrust its confidence in employees. Managers should conduct discussions 
and ask employees for inputs to ensure that such barriers are resolved. 
ii. Barriers at the organisational level: Policies which suppress the initiatives to 
empower employees such as centralisation of all decisions, high attrition rates and 
low perks result in dissatisfaction among employees. This dissatisfaction hinders 
their performance. 
b. i. One barrier at the organisational level is ‘Rigid code of conduct’. If an 
organisation follows extremely rigid rules and regulations, all its employees remain 
suppressed and dissatisfied. Organisations should promote good communication 
lines with their employees. 
ii. One barrier at the personal level is ‘Disregard and fear’. When managers do 
not appreciate employees for their contribution, employees lose their motivation to 
perform. Also, fear blocks all lines of communication with managers. This results in 
personal barriers. 
Answer 12 
Internal/external recruitment sources used by ‘Senor Enterprises Ltd.’ to fill various 
positions: 
1. Promotion: The Human Resource Manager was recruited using promotion. 
Promotion is an internal source of recruitment. 
2. Placement consultants: The Marketing Head was recruited through an external 
source of placement consultants. 
3. Casual callers: The Assistant Manager was recruited using existing applications. 
 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 2 – 2016 Solution 
 
     
Answer 13 
Three limitations of planning: 
i. Inflexibility: Since all other steps in the process of management depend on 
planning, it becomes quite inflexible to alter a plan when it is in the process of being 
implemented. In scenarios of unplanned external changes, it often becomes a cost 
and time burden on the organisation to change the course of a plan. It is therefore 
suggested to companies to keep a certain degree of flexibility in their plan to 
cooperate with unforeseen circumstances. 
ii. Inability to deal with potential business changes: At times, planning fails to 
accommodate changes in business functioning because of predefined assumptions 
about business. Therefore, it becomes a tedious task to alter the plan according to 
forthcoming changes. 
iii. Hindrance to new initiatives: Planning often reduces the scope of new initiatives 
because of required structural adjustments demanded by those initiatives. Hence, it 
sometimes becomes a hindrance in efficiency and effectiveness of organisational 
procedures. To put new initiatives into action, necessary structural adjustments are 
advised when formulating a plan every time. 
Answer 14 
a. In the given scenario, ‘Public Relations’ is the communication tool used by the company 
to restore its good image. The sole purpose of Public Relations is to create and maintain 
cordial relationship of the company with its stakeholders, customers and lenders. Such 
positive public relations of the company are key foundations for its survival and growth. 
b. Importance of Public Relations can be highlighted as follows: 
1. It allows the organisation to attain its goals in a hassle-free manner without 
constantly worrying about its public image. 
2. It assists the organisation in creating and maintaining a market for its product 
among consumers, thus increasing its brand loyalty among consumers. 
3. Public Relations among the stakeholders and consumers also allows an organisation 
to survive in the business in the long run and deal with its new potential 
competitors effectively. 
4. It also complements the promotional ventures undertaken by the organisation to 
increase its customer base. 
Answer 15 
a. ‘Informal Organisation’ allows communication to flow in all directions. 
b. Another advantage of informal organisation is that it allows employees to feel sociable, 
interactive and competitive. This results in better employee engagement and work 
culture. All these factors result in better productivity for the organisation by the 
employees. 
c. ‘Steelo Ltd.’ wanted to communicate following two values of the organisation: 
i. Socially responsible corporation 
ii. Employee-centric organisation 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 2 – 2016 Solution 
 
     
Answer 16 
Dimensions of business environment being referred to in the given case: 
1. Economic environment: A fall in loan interest rate implies a variation in the economic 
environment of the country. 
Explanation: Economic environment includes the effect of changes in the interest rates, 
levels of income and stock market fluctuations. Example: An increase in imports leads to a 
fall in the price of domestic currency and vice versa.  
2. Technological environment: Development of a car which is powered by fuel 
produced from garbage implies a change in technological environment of the economy. 
Explanation: Technological environment takes into account various changes in technology 
of an economy. It involves infrastructural changes or changes related to the information 
technology revolution. For example, smartphones and e-commerce are the foundations of 
most business start-ups in the modern era. Competing with different market players would 
require a company to launch an app and a website. 
Answer 17 
‘Motivation’ is the element of function of management used in the given scenario. A 
variation in travel policies changes the perspective of employees towards the organisation 
and resulted in better utilisation of time by employees. All employees started feeling equal 
and this increased their belongingness with the organisation.  
Features of motivation can be highlighted using the following points: 
1. Motivation is an invisible force: Motivation is a feeling of belongingness within an 
employee. It cannot be seen or touched. However, its results can clearly be felt among 
the employees through their performance. 
2. Motivation helps in achieving goals: Motivation is a positive awakening force which 
increases the productivity and quality standards of work done by employees. 
3. Motivation can also be negative: A positive motivation can take the form of 
appraisal or promotion. On the other hand, negative motivation can take the form of 
pay-cut and demotion. 
4. Motivation is not a simple process: All employees get motivated for different 
reasons at different times. Some employees get motivated by appreciation, whereas 
some employees get motivated by appraisals. 
Answer 18 
Principles of management serve as a guiding light in the decision-making process of an 
organisation. Managers refer to the principles of management while making difficult 
business choices in real world situations. The importance of principles of management can 
be explained using the following points: 
Page 5


  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 2 – 2016 Solution 
 
     
CBSE 
Class XII Business Studies 
Delhi Board Paper Set 2– 2016 Solution 
 
Answer 1 
Investment decisions or capital budgeting decisions made by a company affect its size of 
assets, profitability and competitiveness. 
Answer 2 
The market function concerned with informing customers about a firm’s products is 
promotion. 
Answer 3 
‘Level of collaboration’ is the factor which affects the business decision of ‘Fashionate Pvt. 
Ltd.’ Such collaboration results in division of fixed capital investment for all the parties 
involved and hence results in efficient utilisation of resources. 
Answer 4 
The organisational structure which promotes efficiency of manpower is ‘Functional 
Structure’. 
Answer 5 
Management is the process of getting things done. Here, the term ‘process’ implies key 
tasks performed by the managers for the attainment of organisational goals in an effective 
and efficient manner. 
Answer 6 
The right exercised by Manoj was ‘right to be informed’. In the given case, the consumer, i.e. 
Manoj, was unable to see the ingredients of the product he purchased. According to the 
Consumer Protection Act, 1986, all consumers have a right to know about the quality, 
quantity, MRP and ingredients of the products they purchase from the market. Manoj 
exercised this right to know about the ingredients of the packet of chips he purchased. 
Answer 7 
As an element of delegation, responsibility is the duty or task allocated to an employee or 
worker to be performed under his/her tenure of work. The flow of responsibility is 
upward. This implies that employees are responsible for the work assigned to them by 
their supervisor and not vice versa. 
 
Answer 8 
In functional foremanship, a speed boss ensures that workers are achieving their work 
target in a timely manner and are not misusing time during their working hours. A speed 
boss works directly under the production in-charge of the organisation and cooperates 
with the gang boss, repair boss etc. to achieve the desired speed efficiency level. 
Answer 9 
Three functions performed by non-governmental organisations for consumer protection: 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 2 – 2016 Solution 
 
     
i. Educating consumers: Trainings and seminars are conducted to educate 
consumers regarding various consumer rights. Also, consumers are educated to 
perform their responsibilities while using various products. 
ii. Print media: The print media publishes articles and journals to educate consumers 
about their rights and procedures to exercise them. 
iii. Product reviewers: Product reviewers test the quality and safety standards of 
different products and educate consumers about them. 
Answer 10 
SEBI intervened to perform the following two functions in the given case: 
i. Regulatory functions: SEBI performed various inspections to determine whether 
Mr Sanjay is guilty or not. This is a regulatory function. 
ii. Protective functions: SEBI imposed heavy fines on Mr Sanjay to make sure that the 
interests of all the investors stay protected. 
Answer 11 
a. Two communication barriers because of which ‘Bikmac Enterprises’ were not able to 
achieve their targets: 
i. Barriers at the personal level: Clear lines of communication are hindered by 
personal barriers present in an organisation. This happens when the management 
does not entrust its confidence in employees. Managers should conduct discussions 
and ask employees for inputs to ensure that such barriers are resolved. 
ii. Barriers at the organisational level: Policies which suppress the initiatives to 
empower employees such as centralisation of all decisions, high attrition rates and 
low perks result in dissatisfaction among employees. This dissatisfaction hinders 
their performance. 
b. i. One barrier at the organisational level is ‘Rigid code of conduct’. If an 
organisation follows extremely rigid rules and regulations, all its employees remain 
suppressed and dissatisfied. Organisations should promote good communication 
lines with their employees. 
ii. One barrier at the personal level is ‘Disregard and fear’. When managers do 
not appreciate employees for their contribution, employees lose their motivation to 
perform. Also, fear blocks all lines of communication with managers. This results in 
personal barriers. 
Answer 12 
Internal/external recruitment sources used by ‘Senor Enterprises Ltd.’ to fill various 
positions: 
1. Promotion: The Human Resource Manager was recruited using promotion. 
Promotion is an internal source of recruitment. 
2. Placement consultants: The Marketing Head was recruited through an external 
source of placement consultants. 
3. Casual callers: The Assistant Manager was recruited using existing applications. 
 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 2 – 2016 Solution 
 
     
Answer 13 
Three limitations of planning: 
i. Inflexibility: Since all other steps in the process of management depend on 
planning, it becomes quite inflexible to alter a plan when it is in the process of being 
implemented. In scenarios of unplanned external changes, it often becomes a cost 
and time burden on the organisation to change the course of a plan. It is therefore 
suggested to companies to keep a certain degree of flexibility in their plan to 
cooperate with unforeseen circumstances. 
ii. Inability to deal with potential business changes: At times, planning fails to 
accommodate changes in business functioning because of predefined assumptions 
about business. Therefore, it becomes a tedious task to alter the plan according to 
forthcoming changes. 
iii. Hindrance to new initiatives: Planning often reduces the scope of new initiatives 
because of required structural adjustments demanded by those initiatives. Hence, it 
sometimes becomes a hindrance in efficiency and effectiveness of organisational 
procedures. To put new initiatives into action, necessary structural adjustments are 
advised when formulating a plan every time. 
Answer 14 
a. In the given scenario, ‘Public Relations’ is the communication tool used by the company 
to restore its good image. The sole purpose of Public Relations is to create and maintain 
cordial relationship of the company with its stakeholders, customers and lenders. Such 
positive public relations of the company are key foundations for its survival and growth. 
b. Importance of Public Relations can be highlighted as follows: 
1. It allows the organisation to attain its goals in a hassle-free manner without 
constantly worrying about its public image. 
2. It assists the organisation in creating and maintaining a market for its product 
among consumers, thus increasing its brand loyalty among consumers. 
3. Public Relations among the stakeholders and consumers also allows an organisation 
to survive in the business in the long run and deal with its new potential 
competitors effectively. 
4. It also complements the promotional ventures undertaken by the organisation to 
increase its customer base. 
Answer 15 
a. ‘Informal Organisation’ allows communication to flow in all directions. 
b. Another advantage of informal organisation is that it allows employees to feel sociable, 
interactive and competitive. This results in better employee engagement and work 
culture. All these factors result in better productivity for the organisation by the 
employees. 
c. ‘Steelo Ltd.’ wanted to communicate following two values of the organisation: 
i. Socially responsible corporation 
ii. Employee-centric organisation 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 2 – 2016 Solution 
 
     
Answer 16 
Dimensions of business environment being referred to in the given case: 
1. Economic environment: A fall in loan interest rate implies a variation in the economic 
environment of the country. 
Explanation: Economic environment includes the effect of changes in the interest rates, 
levels of income and stock market fluctuations. Example: An increase in imports leads to a 
fall in the price of domestic currency and vice versa.  
2. Technological environment: Development of a car which is powered by fuel 
produced from garbage implies a change in technological environment of the economy. 
Explanation: Technological environment takes into account various changes in technology 
of an economy. It involves infrastructural changes or changes related to the information 
technology revolution. For example, smartphones and e-commerce are the foundations of 
most business start-ups in the modern era. Competing with different market players would 
require a company to launch an app and a website. 
Answer 17 
‘Motivation’ is the element of function of management used in the given scenario. A 
variation in travel policies changes the perspective of employees towards the organisation 
and resulted in better utilisation of time by employees. All employees started feeling equal 
and this increased their belongingness with the organisation.  
Features of motivation can be highlighted using the following points: 
1. Motivation is an invisible force: Motivation is a feeling of belongingness within an 
employee. It cannot be seen or touched. However, its results can clearly be felt among 
the employees through their performance. 
2. Motivation helps in achieving goals: Motivation is a positive awakening force which 
increases the productivity and quality standards of work done by employees. 
3. Motivation can also be negative: A positive motivation can take the form of 
appraisal or promotion. On the other hand, negative motivation can take the form of 
pay-cut and demotion. 
4. Motivation is not a simple process: All employees get motivated for different 
reasons at different times. Some employees get motivated by appreciation, whereas 
some employees get motivated by appraisals. 
Answer 18 
Principles of management serve as a guiding light in the decision-making process of an 
organisation. Managers refer to the principles of management while making difficult 
business choices in real world situations. The importance of principles of management can 
be explained using the following points: 
  
 
CBSE XII  | Business Studies 
Delhi Board Paper Set 2 – 2016 Solution 
 
     
i. Developed through practical experimentation: Management principles are 
developed by notable management alumni. This makes them practical and 
implementable in complex business problems without any chance of error. 
ii. Factually verifiable: Because the principles of management explain the key logic 
behind decisive judgements written in them, they are factually verifiable and 
understandable by most managers of the real world. This makes it easier for 
managers to implement them. 
iii. Guidelines for new managers: Management principles are taught primarily in all 
business schools to students to make sure that all upcoming managers know the 
foundation of management and to make them follow the best management practices 
when they solve any business problem. 
iv. Efficiency: Principles of management assist in judicious allocation of productive 
resources in the formulation of the end product. They synchronise all resources to 
develop a cost- and time-efficient production system. It therefore helps the 
organisation to grow faster and outperform its potential competitors. 
Answer 19 
Financial market is a common platform where buyers and sellers of securities interact and 
exchange their holdings of bonds such as shares, debentures etc. Functions of a financial 
market are as follows: 
i. Channelisation of funds: Financial markets primarily operate to channelise funds 
from investors to companies. They serve the dual purpose of providing investors 
with the interest on their funds and companies with the required finance to pursue 
their business operations.  
ii. Determining the price: The determination of fair price of securities is facilitated by 
financial markets as it provides a place where buyers can meet sellers and 
undertake different transactions of securities. Such a commonplace ensures trading 
at a fair and justifiable price of the security which is determined by the opposite 
forces of demand and supply. 
iii. Ease of convertibility in cash: Because financial markets operate in a transparent 
and legal manner for the purchase and sale of securities, any person can convert 
his/her bonds into cash or a cash equivalent at any particular time in a hassle-free 
manner.  
iv. Minimising brokerage and other transaction charges: Financial markets aim at 
minimisation of unnecessary brokerage and transfer charges levied by different 
dealers by making the relevant information available at all times. It also aims to 
digitalise the transaction for optimisation in terms of time and cost. 
Answer 20 
a. Lines from the paragraph which highlight the use of informal communication in the 
organisation: 
i. Colleague sent a text message to his immediate superior. 
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