CBSE Past Year Question Paper- 2015(Foreign), Business Study, Class 12 Commerce Notes | EduRev

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(Q1) What is meant by ‘Privatisation”?


 (A1) Privatisation means giving greater role to the private sector in the nation building process and a reduced role to the public Sector.


(Q2) Why is it said that principles of management are mainly behavioural in nature ?


 (A2) Principles of management are mainly behavioural in nature as they aim at influencing behaviour of human beings.


(Q3) Define ‘Method’ as a type of plan.


(A3) Method is the manner of work performance and follows the set procedure.


(Q4) “Bawa Cycles' was in the business of manufacturing racing-cycles and had a monopoly in the market. The business was doing very well and the company was consistently meeting its objective of 10% increase in sales every year. Encouraged by the good track record, the Managing Director of the company kept an ambitious target of 15% increase in sales for the next year. The same year two competitors also entered the market and because of this the company was not able to meet its target.

Identify the limitation of one of the functions of management because of which the company was not able to achieve its target.


(A4) Planning may not work in a dynamic environment. 

(Q5) How do ‘Floatation costs’ affect the choice of capital structure of a company?State.


 (A5) Floatation costs means the expenditure incurred in raising finance. The issue of shares and debentures requires a huge expenditure getting loan from the bank may not cost so much. Thus, floatation cost also affect the capital structure.


(Q6) “Reliable Transport Services Ltd.” specialises in transporting fruits and vegetables. It has a good reputation in the market as it delivers the fruits and vegetables at the right time and at the right place.

State with reason whether the working capital requirements of “Reliable Transport Services’ will be high or low.


 (A6) Low, as it is a service industry, which usually do not have to maintain inventory


(Q7)‘Glow and Shine Ltd.” is a famous beauty brand offering organic beauty products for men and women. The company uses plant-based materials for its products and is the No. 1 beauty brand in the country. It is not only satisfies its customers but also believes in overall protection of the planet.

Identify the marketing management philosophy being followed by ‘Glow and Shine Ltd.”


 (A7) Societal marketing concept.


(Q8) Pankaj purchased a car from ‘Abhishek Motors’ for & 50 lakhs. The company offered many attractive gifts to Pankaj like — free insurance for first two years, free pick-up and drop facilities for free servicing upto 20,000 km, etc. But after a few days Pankaj noticed that the pick-up of the car was not good and there was some problems in the engine. The company serviced the car free of cost but even then Pankaj was not satisfied with its performance. “Abhishek Motors’ is not giving him the due response. So, he filed a complaint in the State Commission but was not satisfied with its decision also. He was very much disturbed and after two months decided to appeal against it.

Can Pankaj appeal against the decision of the State Commission ? Give reason in support of your answer.


 (A8) No, Pankaj cannot appeal now as the appeal has to be filed within 30 days of passing of the order by the State Commission.


(Q9) What is meant by divisional structure of an organisation ? State its any two disadvantages.



(A9) Divisional Structure: Divisional structure is a structure in which the organisation is divided into several autonomous units. Each unit operates independently. It does not mean that each unit has a separate legal entity but it is a part of a big organisation. Each unit/division has its own manufacturing, engineering, marketing etc. and is headed by a manager who is responsible for the organisation's investment, capital, development and performance.

Disadvantages of Divisional Structure

(i) Organisational interest Ignored : Each department is interested in producing his own product. They are less bothered about organisational interest.

(ii) Difficulty in exercising control : The area of supervision of top management increases with increase in the number of divisions.


(Q10) How do the ‘market related factors’ affect the choice of channels of distribution ? Explain.



(A10) Market related factors affect the channels of distribution are as follows:

(a) Nature of the market: Industrial goods are supplied directly whereas consumer goods are supplied through intermediaries.

(b) Size of market : If the number of customers is large, the more intermediaries are used. If the number of customers is small the direct channel can be used.

(c) Geographical concentration : If the buyers are concentrated in a small place, short channels may be used if the buyers are scattered then more channels are used.

(d) Size of order: If the size of market is big direct supply is preferred and in case of small orders, intermediaries are used.

(Q11) Aarav was working as a supervisor with ‘Neer Purifier Ltd.” which was producing water purifiers. The target of the company was to produce 200 water purifiers every day. His job was to make sure that work goes on smoothly and there was no interruption in production. To achieve this, he always gives orders and insists that they are obeyed. He believes that reward or punishment both can be given depending upon the performance.

Identify and describe the leadership style being adopted by Aarav.


(A11) Autocratic style of leadership.

• An autocratic leader gives orders and insists that they are obeyed. He does not give the subordinates any freedom to influence his decision.

• He determines the policies for the group without consulting them. He does not give information about future plans but simply tells the group what immediate steps they must take.



(Q12) Distinguish between Capital Market and Money Market on the basis of the following:

(a) Participants (b) Instruments


(Q13) ‘KPM Ltd.’ is manufacturing breads and biscuits for many years. It has approximately 150 employees and most of them are not happy with the working environment. Because of this the labour turnover rate is very high. Therefore, the company appoints a new Human Resource Manager, Naveen, to analyse the situation. Naveen finds that there is no free flow of communication, and there is no suggestion box for the employees to voice their suggestions or grievances. The company rarely organises a social or cultural gathering, the employees just come, finish their work and leave the organisation.

(a) Identify the communication barrier discussed above.

(b) State the category of this communication barrier.

(c) Explain any other communication barrier of the same category.



(A13) Organisational Policy : If the organisational policy explicit or implicit does not support free flow of communication it may hamper the effectiveness of communication.

(b) Organisational barriers to communication.


(Q14) State any four points that highlight the significance of principles of management.



(A14) The significance of management principles can be illustrated from the following points:

(i) Optimum utilisation of resources : Management principles aims at optimum utilisation of human and physical resources for the attainment of organisational goals. By optimum utilisation of resources, we mean that the resources should be used in such a manner that they must give maximum benefit with minimum cost and effort.

(ii) Meeting changing environment requirements : Management principles enable the managers to adopt the changes in environment in right direction and at the right level in the organisation. Thus, although the management principles are general guidelines, yet can be modified to meet the changing requirements of the environment.

(iii) Fulfilling social responsibility : Management principles not only provide guidelines to achieve organisational objectives but also guide the managers to perform social responsibility. For instance, principle of ‘Fair remuneration’ focuses on providing adequate salary to employees.

(iv) Provide useful insight to managers: Management principles guides managers to take right decision at right time. These principles not only act as guidelines for managers but also improves knowledge, ability and understanding of managers under various managerial situations.

(v) Scientific decisions : An effective decision, must be based on facts, thoughtful and justifiable in terms of the required purpose. Decisions must be timely and realistic. Principles of management help the managers in taking decisions based on the objective assessment of the situation, free of any bias and prejudice. Thus, they approach various problems scientifically, leading to timely implementation of right decisions.

(vi) Management, Training, Education and Research : Principles of management are the central point of management theory. So, they are used as a basis for management training, education and research. These principles are an integral and important part of the curriculum of various management courses at Bachelor level such as B.B.A. (Bachelor of Business Administration) and Master level such as M.B.A. (Master of Business Administration). Moreover, management principles lay due emphasis on sound judgement achieved through proper research. Research helps to find out innovative methods in the fields of marketing, production, finance etc. which eventually lead to effective performance. Thus, management principles serve as a guide to research for effective and efficient performance.


(Q15) Explain the following rights of a consumer as provided under Consumer Protection Act, 1986:

(a) Right to Safety (b) Right to Consumer Education


(A15)  (i) Right to Safety : The right to safety is important for safe and secure living. Without any effective regulatory mechanisms consumers suffer most in terms of safety. The right to safety means the right to be protected against products, production processes and services, which are hazardous to health or life. e.g., electrical appliances which are manufactured with sub-standardised products or do not confirm to the safety norms right cause serious injury. Therefore, consumers are educated that they should buy ISI marked electrical appliances for the assurance of quality.

(ii) Right to Consumer Education: The consumer has a right to acquire knowledge and to be a well informed consumer throughout life. He should be aware of his rights and the reliefs available to him. Many consumer organisations and some enlightened business are taking part in educating the consumers in this respect.


(Q16) Harsh started a company ‘Tiny-Toys Ltd.” to manufacture economical toys for the Indian rural market, with 20 employees. The company did very well in its initial years. As the products were good and marketed well, the demand of its products went up. To increase the production the company decided to recruit additional employees. Harsh who was earlier taking all decisions for the company had to selectively disperse the authority. He believed that subordinates are competent, capable and resourceful and can assume responsibility for effective implementation of their decisions. This paid off and the company was not only able to increase its production but also expanded its product range with different features.

(a)  Identify the concept used by Harsh through which he was able to steer his company to greater heights.

(b)  Also explain any three points of the importance of this concept.


(A16) (a) Decentralisation of authority means the dispersal of the decision making authority to the lower levels.

(b) (i) Quick decision making : In decentralisation, decisions are taken at their own level. There is no need for permission from any levels. Thus, decisions are taken quickly at their concerned level.

(ii) Develops initiative among subordinates: Decentralisation helps to promote self-dependence because the subordinates are given freedom to take their own decisions. Thus, it develops initiative among subordinates. Decentralisation is also helpful in identifying those executives who have the potential to become dynamic leaders.

(iii) Develops managerial talent for the future: Decentralisation gives the chance to subordinates to prove their abilities by giving best performance. Thus, decentralisation means education of management as well as an opportunity for trained manpower to use its talent.

(iv) Better control : Decentralisation facilities evaluation of performance at every level. Departments can be individually held accountable for their results. The contribution of each department towards organisational objectives can be assessed.

(v) Facilitates growth : Decentralisation provides autonomy to lower levels of management. The organisation can expand and grow more easily as the burden of management is shared.

(vi) Relief to top management : Decentralisation reduces the amount of direct supervision because subordinates are given freedom to act. It also reduces the workload oftop management. They can concentrate on other important managerial functions.

(vii) Team work : In decentralisation all the managers and employees are sharing the decision-making powers, all are given some kind of autonomy and freedom of action. This sharing of decision and freedom of action integrate the employees as one team and develop team spirit among the employees.


(Q17) The workers of “Swastik Ltd.” are unable to work on new computerised machines imported by the company to fulfil the increased demand. Therefore, the workers are seeking extra guidance from the supervisor and the supervisor is overburdened with the frequent calls of workers.

Suggest how the supervisor, by increasing the skills and knowledge of workers, can make them handle their work independently.

Also state any three benefits that the workers will derive by the decision of the supervisor.


 (A17) Training of Employees/Vestibule Training/On the Job Training.

Training is important for the employees because:

(i)   Increase in their market value : Trained employees have a better market value. Better market value means that other organisations are always willing to employ trained personnel at higher remuneration.

(ii)   Fewer Accidents : Trained employees are less prone to accidents as they handle the machines carefully.

(iii)   Increase in capacity : Training enables the employee to perform his job with enthusiasm.

(iv)   Higher morale : The trained employees have greater job satisfaction as they know their jobs. It helps to increase their morale.


Q.18. ‘Adharshila Vidyalaya” believes in holistic development of students and encourages team building through a mix of curricular, co-curricular and sports activities. On its Founders’ Day a stage performance had to be put up. A committee of ten prefects was constituted to plan different aspects of the function. They all decided to use recycled paper for decoration. As there was a spirit of unity and harmony and all members supported each other with mutual trust and belongingness, the programme was systematically planned and executed. Arvind, one of the prefects, realised that unknowingly the group had applied one of the principles of management while planning and executing the programme. He was so inspired by the success of the function, that he asked his father to apply the same principle in his business. His father replied that he was already using this principle.

(a) Identify the principle of management applied for the success of the programme.

(b) State any two features of management highlighted in the above paragraph.

(c) Identify any two values which “Adharshila Vidyalaya’ communicated to the society.


(A18) (a) Principle of management- Espirit de Corps.

(b) Features of management:

(i) Management is Pervasive : Management is pervasive as it can be applied to all types/levels of organisations.

(ii) Management is a Group Activity: Management is a group activity because it requires team work and/or coordination of individual efforts.

(c) Values being communicated to the society:

(i) Concern for the environment.

(ii) Holistic development of children.


(Q19) ‘Zaira Ltd. is a large and creditworthy Company manufacturing air-conditioned buses for the Indian market. It now wants to export these buses to other countries and decides to invest in new hi-tech machines. Since, the investment is large, it requires long-term finance. It decides to raise funds by issuing equity shares. The issue of equity shares involves huge floatation cost. To meet the expenses of floatation cost, the company decides to tap the money market.

(a) Name and explain the money market instrument the company can use for the above purpose.

(b) What is the duration for which the company can get funds through this instrument ?

(c) State any other purpose for which this instrument can be used.


(A19) (a) Commercial Paper : It is an instrument issued by large and creditworthy companies to raise short term funds at lower rates of interest than the market rates. It is an unsecured, negotiable promissory note with a fixed maturity period.

(b) 15 days to one year.

(c) It can also be used for seasonal and working capital needs.


(Q20) Give the meaning of ‘Formal Organisation’. State its any four advantages.



(A20) Formal Organisation : Formal organisation is a structure of well defined jobs, each bearing a definite measure of authority, responsibility and accountability.

Formal organisation is built around four key pillars including division of labour, scalar and functional processes, structure and span of control.

The advantages of formal organisation are :

(i)    Since the authority and responsibility relations are well defined, it is easy to fix responsibility.

(ii)   (ii) In formal organisation, everything moves in an orderly manner there is no duplication of efforts.

(iii)  In formal organisation, unity of command is maintained through an established chain of command.

(iv)  In formal organisation, it is easy to achieve the goals of the organisation because there is an optimum utilization of human and physical resources.


(Q21) Kavya had been working with ‘Reliable Ltd.” for the last ten years. She was famous for her dedication towards the work. When the manager senior to her retired, all her colleagues thought that now Kavya would be promoted. But to everyone's surprise the vacant post was filled by an outsider ‘Miss Garima'. Because of this, Kavya felt demoralised and her performance started declining. She would absent herself often and could not meet her targets.

Miss Garima was a good leader who would not only instruct her subordinates but also guide and inspire them. She noticed Kavya's behaviour and felt that her performance could be improved. She started involving Kavya in decision-making issues related to the organisation and made her a member of a high-level joint management committee. Kavya was now punctual to office and her performance started improving.

(a) Identify the function of management being performed by Garima.

(b) Name the element of the above function of management which helped Garima to improve Kavya's behaviour.

(c) State any three features of the element identified in (b) above.


(A21) (a) Directing (b) Motivation

(i) Motivation is an internal feeling : The needs, desires, urges and aspirations which influence human behaviour are internal to an individual.

(ii) Motivation produces goal directed behavior : For example, the urge for promotion may make an employee improve his performance.

(iii) Motivation cam be either positive

or negative : Positive motivation is caused by rewards like increase in pay, promotion, recognition, etc. Negative motivation is caused by punishment and threats.

(a) Staffing and controlling. (b) Steps in Staffing :

(i) Estimating manpower require-ments which involves knowing how many persons are needed and of what type.

(ii) Recruitment which involves searching for prospective employees and stimulating them to apply for jobs in the organisation.

Steps in Controlling:

(i) Comparison of actual performance with the standards which would reveal the deviation between actual and desired results.

(ii) Analysing deviations which would help to find out the causes of deviation.

(c) Values which the company wants to communicate to the society:

(i) Using environment friendly methods of production.

(ii) Women empowerment.

(iii) Upliftment of underprivileged sections of the society.


 (Q22) A company was manufacturing solar panels for charging of mobiles which were in great demand. It was found that the target of producing 500 solar panels a day was not being met by the employees. On analysis, it was found that the workers were not at fault. Due to non-availability of raw materials and shortage of workers, the company was not able to achieve the set targets and alternative arrangements were needed. To meet the increased demand the company assessed that approximately 66 additional workers were required out of which 6 would work as heads of different departments and 10 would work as subordinates under each head. The required qualifications and job specifications were also enlisted. It was also decided that necessary relaxation should be given to encourage women, persons from backward and rural areas and persons with special abilities to assume responsible positions in the organisation. All efforts were made to match the ability of the applicants with the nature of work.

(a) Identify the functions of management discussed above.

(b) State the two steps in the process of each function discussed in the above para.

(c) List any two values which the company wants to communicate to the society.



(Q23) Explain the following principles of management :

(a) Harmony, not discord

(b) Discipline



(A23) (a) Harmony, not discord : According to Taylor, in a group action those who work together should carry out their tasks in harmony, i.e., with mutual give and take and proper understanding. Managers should adopt a positive towards the workers. They must share the gains of productivity with workers. On the other hand, workers on their part should work with discipline and loyalty.

(b) Principle of Discipline : Discipline means obedience and respect for superiors. Discipline must prevail through out the organisation to ensure its smooth functioning. It may be of two types:

(i) Self Discipline : Self discipline comes from within an individual and is in the nature of spontaneous response to an effective leader.

(ii) Command Discipline : Command discipline comes from recognised authority and requires the observance of rules and regulations.

According to Fayol, “Discipline is what the leader make it”.


(Q24) “Silkiya Ltd.” is a. company manufacturing silk cloth. It has been consistently earning good profits for many years. This year too, it has been able to generate enough profits. There is availability of enough cash in the company and good prospects for growth in future. It is a well-managed organisation and believes in quality, equal employment opportunities and good remuneration practices. It has many shareholders who prefer to receive a regular income from their investments.

It has taken a loan of Rs. 60 lakhs from SBI Bank and is bound by certain restrictions on the payment of dividend according to the terms of the loan agreement.

The above discussion about the company leads to various factors which decide how much profit should be retained and how much has to be distributed by the company.

Quoting the lines from the above discussion, identify and explain any four such factors.


(A24) The following factors affecting the dividend decision :

(i)     Earnings: It is the major determinant of dividend decision because dividend is paid out of current and past earning.

(ii)    Stability of Earnings : A company having stable earning position can pay higher dividend whereas a company having unstable earning position can pay smaller dividend.

(iii)    Stability of dividends : Every company follows the policy of maintaining the stability of dividend per share. A little change in profits hould not be allowed any increase or decrease in dividend.

(iv)    Growth opportunities : If the company has more opportunities for growth, it will require more finance. In such a situation, a major part of earnings will be retained and a small part will be paid as dividend.

(v)     Cash flow position : Sometimes a company may be profitable but short on cash. Availability of enough cash in the company is necessary for declaration of dividend by it.

(vi)    Legal constraints : Certain provisions of the Company's Act place restrictions on payment of dividend. Such provisions must be followed while declaring the dividend.


(Q25) Vasvi was a student of Commerce in class XII. Her father was a farmer, who grew different varieties of wheat and was well versed about various aspects of wheat cultivation. He was also selected by the government for a pilot-project on wheat cultivation. As a project, she decided to study the feasibility of marketing good quality wheat at reasonable price. Her father suggested to her to use internet to gather customers views and opinions. She found that there was a huge demand for organic-packed wheat. She knew that there were no predetermined specifications in case of wheat, because of which it would be difficult to achieve uniformity in the output. To differentiate the product from its competitors, she gave it the name of ‘Mahan-organic-wheat' and classified it into three different varieties namely — Popular, Classic and Supreme, based on the quality. She felt that these names would help her in product differentiation.

Explain the three functions of marketing, with reference to the above paragraph.


(A25) (i) Product Design and Development : The design of product creates attraction in the mind of target customers. A good design can improve the performance of a product and also gives a competitive advantage in the market.

(ii) Standardisation and Grading : Standardisation refers to producing goods of predetermined specification which helps in achieving uniformity and consistency in the ouput. Grading is the process of classification of products into different groups on the basis of its features such as quality, price etc.

(iii) Branding: In branding the marketing decides whether to sell the product in its generic name i.e., Pen, Fan etc. or to sell them in a brand name such as Pollar Fan, Philips Bulbs etc. Brand name helps in creating product differentiations.





(Q7) What is meant by ‘Liberalisation’ ?


(Q8) Give the meaning of “Rule’ as a type of plan.


(Q3) What is meant by functional structure of an organisation ? State its any two disadvantages.



(Q14) State any four points which highlight the importance of management.



(Q15) Explain the following rights of a consumer as provided under Consumer Protection Act, 1986:

(a) Right to choose (b) Right to seek redressal.


 (Q20) Give the meaning of ‘Informal Organisation’. State its any two advantages and any two disadvantages.


 (Q23) Explain the following principles of management:

(a) Authority and Responsibility

(b) Development of Each and Every Person to His or Her Greatest Efficiency.






(Q7) What is meant by “Globalisation”?


 (Q8) Give the meaning of ‘Strategy’ as a type of plan.


 (Q14) State any four points that highlight the importance of business enviornment.


 (Q15) Explain the following rights of a consumer as provided under Consumer Protection Act, 1986:

(a) Right to be informed (b) Right to be heard   


 (Q20) State the features of ‘Formal Organisation'.


 (Q23) Explain the following principles of management :

(a) Co-operation, not Individualism

(b) Subordination of Individual Interest to General Interest.


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