CBSE Past Year Question Paper 2014 (Delhi (Set -3)), Business Study, Class 12 Commerce Notes | EduRev

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Commerce : CBSE Past Year Question Paper 2014 (Delhi (Set -3)), Business Study, Class 12 Commerce Notes | EduRev

The document CBSE Past Year Question Paper 2014 (Delhi (Set -3)), Business Study, Class 12 Commerce Notes | EduRev is a part of the Commerce Course Business Studies (BST) Class 12.
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Q. On Sonika’s birthday her mother gave her a pair of gold earrings.
After one month Sonika observed that the ear-rings are losing their
shine. She checked the mark on the ear-rings and found that it was not
a proper Hallmark and her mother had been cheated by the
shopkeeper. So, she filed a complaint in the district forum which
rejected it. Not satisfied by the decision of district forum, she was very
much disturbed and after two months decided to appeal further.
Can Sonika appeal against the decision of the district forum? Give
reason in support of your answer.

 (1)

Ans. No, Sonika cannot appeal now as the appeal has to be filed within 30
days of passing of the order by the district forum.

 

Q. Explain how’ cost of debt’ affects the choice of capital structure of a
company.

(1)

Ans. ‘Cost of debt’ affects the choice of capital structure of a company as
low interest rates increase a firm’s capacity to employ higher debt.

Q. ‘ Indian Logistics’ has its own warehousing arrangements at key
locations across the country. Its warehousing services help business
firms to reduce their overheads, increase efficiency and cut down
distribution time.
State with reason, whether the working capital requirements of ‘Indian
Logistics’ will be high or low.
Ans. Low, as it is a service industry, which usually do not have to maintain
inventory.

Q. Define ‘ planning premises’.
Ans. Planning premises are the assumptions made about the future on the
basis of which the plans are drawn.

Q. How does management help in achieving personal objectives? State.

Ans. Management helps in achieving personal objectives by motivating and
leading in such a way that the individual members are able to achieve
personal goals while contributing to the overall organisational objectives.

Q. Alliance Ltd. is engaged in manufacturing plastic buckets. The
objective of the company is to manufacture 100 buckets a day. To
achieve this, the efforts of all departments are co-ordinated and
interlinked and authority-responsibility relationship is established
among various job positions. There is clarity on who is to report to
whom.
Name the function of management discussed above.
Ans. Organising.

Q. What is meant by ‘effectiveness’ in management?
Ans. ‘Effectiveness’ in management means doing the right task, completing
activities and achieving goals.
(or any other correct meaning)

Q. Define ‘ formal organisation’.
Ans. Formal organisation refers to the organisation structure which is
designed by the management to accomplish a particular task.
(or any other correct meaning)

Q. State any three limitations of ‘ divisional structure’ of an
organization.
Ans. Limitations of divisional structure of an organisation: (Any three)
(i) Conflicts may arise among different divisions with respect to allocation
of funds.
(ii) It may increase the cost since there may be a duplication of activities.
(iii) Divisional heads may misuse the authority ignoring organizational
interests.
(If an examinee has given only the heading, ½ mark for each heading
should be awarded)

Q. Neeraj, a sales representative of ‘ Omida Ltd’ has changed seven
jobs in the last one year. He is a hard working person but is not able to
finalise deals with the customer due to his inadequate vocabulary and
omission of needed words. Sometimes he uses wrong words because of
which intended meaning is not conveyed. All this created a misunderstanding
between him and his clients.
(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.

Ans. (a) Badly expressed message.
(b) Semantic barrier which arises from problems and obstructions in the
process of encoding and decoding of message into words or impressions.
(c) Other barriers in the same category are: (Any one)
(i) Symbols with different meanings
(ii) Faulty translations
(iii) Unclarified assumptions
(iv) Technical jargon
(v) Body language and gesture decoding

Q. ‘ Financial market plays an important role in the allocation of scarce
resources in an economy by performing many important functions’
Explain any three such functions.
Ans. Financial market plays an important role in the allocation of scarce
resources in an economy by performing the following functions: (Any
three)
(i) Mobilisation of savings and channelising them into most productive use.
(ii) Facilitating price determination/ discovery.
(iii) Providing liquidity to financial assets.
(iv) Reducing the cost of transactions.
(If an examinee has not given the headings as above but has given the
correct explanation, full credit be given)

Q. Pramod was a supervisor at ‘ Annapurna Aata’ factory. The factory
was producing 200 quintals of aata every day. His job was to make sure
that the work goes on smoothly and there was no interruption in
production. He was a good leader who would give orders only after
consulting his subordinates and work out the policies with the
acceptance of the group.
Identify and describe the leadership style being adopted by Pramod.
Ans. Democratic style of leadership.
! A democratic leader favours decision making by the group. This improves
the attitude of the employees towards their jobs and the organization
thereby increasing their morale.
! Using this style is of mutual benefit – it allows them (subordinates) to
become part of the team and helps leaders (seniors) to make better
decisions.

Q. Explain how the ‘product related factors’ affect the choice ofchannels of distribution?
Ans. Product related factors which affect the choice of channels of
distribution (any three):
(i) Nature of Product.
(ii) Perishability of Product.
(iii) Value of Product.
(iv) Complexity of Product.
(If an examinee has not given the headings as above but has given the
correct explanation, full credit should be given)

Q. State any four features of ‘ Principles of Management’.
Ans. Features of principles of management: (Any four)
(i) The principles of management apply to all types of organisations, at all
levels and at all times.
(ii) The principles are guidelines to action but do not provide readymade,
straitjacket solutions to all managerial problems.
(iii) The principles of management are derived by observation,
experimentation as well as personal experience of managers
(iv) They are not rigid but are flexible and can be modified by the manager
when the situation so demands.
(v) Management principles aim at influencing behaviour of human beings.
(vi) The principles of management establish cause and effect relationship so
that they can be used in similar situations in a large number of cases.
(vii) The application of principles of management is contingent or
dependent upon the prevailing situation at a particular point of time.
(If an examinee has given only the heading, ½ mark for each heading
should be awarded)

Q. Explain the following rights of a consumer as provided under
Consumers Protection Act, 1986:
(a) Right to choose; and
(b) Right to consumer education.
Ans. (a) Right to choose
! The consumer has the freedom to choose from a variety of products at
competitive prices.
! Marketers should offer a wide variety of products in terms of quality,
price, size etc. to enable the consumer to make the choice.
(b) Right to consumer education.
! The consumer has the right to acquire knowledge and to be a well
informed consumer.
! He should be aware about his rights and the reliefs available to him in case
of a product or service is falling short of his expectations.

Q. ‘Aapka 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. 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. Kartik, one of
the prefects realized 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
para.
(c) Identify any two values which 'Aapka Vidyalaya' communicated to
the society.

Ans. (a) Principle of management - Espirit de corps.
(b) Features of management: (Any two)
(i) MANAGEMENT IS PERVASIVE.
‘…he asked his father to apply the same principle in his business’.
Management is pervasive as it can be applied to all types/ levels of
organisations.
(ii) MANAGEMENT IS A GROUP ACTIVITY
‘There was a spirit of unity and harmony and all members supported each
other.
Management is a group activity because it requires team work and/or
coordination of individual efforts.
(iii) MANAGEMENT IS GOAL ORIENTED.
‘….the programme was systematically planned and executed’.
Management is goal oriented as it unites the efforts of different individuals
towards achieving organisational goals.
(iv) MANAGEMENT IS MULTI-DIMENSIONAL
‘…programme was systematically planned and executed’.
OR
‘There was a spirit of unity and harmony and all members supported each other’.
Management is multi-dimensional as it involves management of work,
people and operations.
(v) MANAGEMENT IS INTANGIBLE
‘With mutual trust and belongingness….’.
OR
‘There was a spirit of unity and harmony and all members supported each
other’.
Management is intangible as it cannot be seen but its presence can be felt in
the way the organisation functions.
(IF AN EXAMINEE HAS IDENTIFIED THE FEATURE OF
MANAGEMENT CORRECTLY, FULL CREDIT BE GIVEN FOR
EITHER QUOTING THE LINE OR GIVING THE STATEMENT)
(c) Values being communicated to the society: (Any two)
(i) Concern for the environment.
(ii) Holistic development of children.
(iii) Teamwork
(or any other correct value)

Q. Samir Gupta started a telecommunication company, ‘ Donira Ltd.’
to manufacture economical mobile phones for the Indian rural market
with 15 employees. The company did very well in its initial years. As the
product was good and marketed well, the demand of its products went
up. To increase production the company decided to recruit additional
employees. Samir Gupta, who was earlier taking all the 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.
(a)Identify the concept used by Samir Gupta through which he was able
to steer his company to greater heights.
(b) Also explain any three points of importance of this concept.
Ans. (a) Decentralisation.
(b) Importance of decentralisation: (Any three)
(i) Develops initiative among subordinates.
(ii) Develops managerial talent for the future.
(iii) Quick decision making.
(iv) Relief to top management.

(v) Facilitates growth.
(vi) Better control.
(if an examinee has not given the headings as above but has given the
correct explanation, full credit should be given)
(IF THE CONCEPT IS WRONGLY IDENTIFIED BUT THE POINTS OF
IMPORTANCE ARE CORRECT, DUE CREDIT BE GIVEN)

Q. 'Ganesh Steel Ltd.' is a large and credit-worthy company
manufacturing steel for the Indian market. It now wants to cater to the
Asian market 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.
Ans. (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.

Q. The workers of 'Vyam Ltd.' are unable to work on new and hi-tech
machines imported by the company to fulfill the increased demand.
Therefore, the workers are seeking extra guidance from the supervisor.
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.
Ans. Training of employees/ Vestibule training/ On the job training.
Benefits the workers will derive by the decision of the supervisor: (Any
three)
(a) It helps in promotion and career growth due to improved skills and
knowledge.
(b) It helps them to earn more due to improved performance.
(c) It reduces accidents as the employees are more efficient to handle
machines.
(d) It increases the morale of the employees as the employees are moresatisfied.
(If an examinee has given only the heading, ½ mark for each heading
should be awarded)

Q. State any five limitations of ‘Planning’ function of management.
Ans. Limitations of planning: (any five)
(i) Planning leads to rigidity because once a well defined plan is drawn, the
managers may not be in a position to change it.
(ii) Planning may not work in a dynamic environment as it may not foresee
everything.
(iii) Planning reduces creativity since people tend to think on the same lines
as others.
(iv) Planning involves huge costs in terms of time and money.
(v) Planning is time consuming and sometimes not much time is left for its
implementation.
(vi) Planning does not guarantee success unless it is translated into action.
(If an examinee has given only the heading, ½ mark for each heading
should be awarded)

Q. Smita had been working as an assistant manager with 'Johnson
Enterprises' for the last ten years. She was very popular amongst her
colleagues because of her commitment and dedication towards the
work. When the manager senior to her retired, all her colleagues
thought that now Smita would be promoted. But to everyone's surprise
the vacant post was filled by an outsider, Mrs. Rita. Smita felt
demoralised and her performance started declining. She would abstain
herself often and could not meet her targets.
Mrs . Rita was a good leader, who would not only instruct her
subordinates but would also guide and inspire them. She noticed
Smita’s behaviour and felt that her performance could be improved.
She started involving Smita in decision making-issues related to the
organization and made her a part of high level joint-management
committee. Smita was now punctual in office and her performance
started improving.
(i) Identify the function of management being performed by Rita.
(ii) Name the element of the above function of management which
helped Rita to improve Smita's behaviour.
(iii) State any three features of the element identified in (ii) above.
Ans. (i) Directing.
(ii) Motivation.
(iii) Features of motivation: (Any three)
(a) It is an internal feeling.

(b) It produces goal directed behaviour.
(c) It can be positive or negative.
(d) It is a complex process.
(If an examinee has identified the element in part (b) as non financial
incentive, full credit is to be given)

Q. A company was manufacturing 'LED bulbs' which were in great
demand. It was found that the target of producing 300 bulbs a day was
not met by the employees. On analysis, it was found that the workers
were not at fault. Due to electricity failure 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 88 additional workers were required out of which 8
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.
Ans. (a) Staffing and controlling.
(b) Steps in Staffing:
(i) Estimating manpower requirements which involves knowing how many
persons are needed and of what type.
‘To meet the increased demand, the company assessed that …. subordinates
under each head’.
(ii) Recruitment which involves searching for prospective employees and
stimulating them to apply for jobs in the organisation.
(IF AN EXAMINEE HAS ONLY IDENTIFIED ‘ESTIMATING
MANPOWER REQUIREMENTS’ AS A STEP IN THE STAFFING
PROCESS, FULL CREDIT IS TO BE GIVEN)
Steps in controlling: (Any two)
(i) Comparison of actual performance with the standards which would
reveal the deviation between actual and desired results.

‘It was found that the target of producing 300 bulbs a day was not met by
the employees’.
(ii) Analysing deviations which would help to find out the causes of
deviation.
On analysis, it was found that the workers were not at fault….alternative
arrangements were needed.
(iii) Taking corrective action, if required.
To meet the increased demand, the company assessed that approximately
….as subordinates under each head.
(If an examinee has given the steps of the process not discussed above ,
½ mark may be deducted)
c) Values which the company wants to communicate to the society: (Any
two)
(i) Using environment friendly methods of production.
(ii) Women empowerment.
(iii) Upliftment of underprivileged sections of the society.
(or any other correct value)

Q. 'Sarah Ltd.' is a company manufacturing cotton yarn. 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. 40 lakhs from IDBI and is bound by certain
restrictions on the payment of dividend according to the terms of loan
agreement.
The above discussion about the company leads to various factors which
decide how much of the profits 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.
Ans. Factors affecting dividend decision: (Any four)

(i) Stability of earnings
‘It has been consistently earning good profits for many years’.

Stability of earnings affects dividend decision as a company having stable
earnings is in a position to declare higher dividends.
(ii) Cash Flow position
‘There is availability of enough cash in the company’.
A good cash flow position is necessary for declaration of dividend.
(iii) Growth Prospects
‘Good prospects for growth in the future’.
If a company has good growth opportunities, it pays out less dividend.
(iv) Shareholders’ preference
‘It has many shareholders who prefer to receive regular income from
their investments’.
Shareholder’s preference is kept in mind by the management before
declaring dividends.
(v) Contractual constraints
‘It has taken a loan of Rs.40 Lakhs from IDBI and ….agreement’
While taking dividend decision, companies keep in mind the restrictions
imposed by the lenders in the loan agreement.

Q. 'Hayaram' is a famous chain selling a large variety of products in the
Indian market. Their products include chips, biscuits, sweets and
squashes. It charges a comparatively higher price than its competitors
as it sells quality products. Besides, it offers regular discounts to its
customers and easy credit terms to its retailers. It has five of its own
retail shops. It also sells its products through various grocery stores so
that the products are made available to customers at the right place, in
the right quantity and at the right time. It regularly uses different
communication tools to increase its sales.
The above para describes the combination of variables used by
Hayaram to prepare its market offering. Identify and explain the
variables.
Ans. The combination of variables used by Hayaram to prepare its market
offering are:
(i) PRODUCT
It refers to the combination of various aspects relating to the product or
service to be offered for sale. It relates to decisions regarding planning,
designing and developing the right type of products and services for theconsumers. It includes branding, labelling and packaging.
‘Their products include chips, biscuits, sweets and squashes’.
(ii) PRICE
Price Mix involves different Pricing Methods, Pricing strategies, Pricing
Policies and Price Changes. It involves decisions regarding the basic price
of the product, discount, allowances, terms of payment etc.
‘It charges a comparatively higher price than its competitors’.
OR
‘It offers regular discounts to its customers and easy credit terms to its
retailers’.
(iii) PLACE/PHYSICAL DISTRIBUTION
It includes activities that make firm’s products available to the target
customers. It consists of all the activities involved in transferring ownership
and physical possession of the product to the consumers.
It consists of physical distribution i.e. activities involving the movement of
products or services from producers to consumers as well as channels of
distribution i.e. the route through which the goods move form the producer
to the consumer.
‘It has five of its own retail shops’.
OR
‘It also sells its products through various grocery stores….right time’.
(iv) PROMOTION
It consists of all the activities aimed at persuading customers to buy the
product through advertising, personal selling, sales promotion and publicity.
‘It regularly uses different communication tools to increase its sales’.
(FULL CREDIT BE GIVEN IF AN EXAMINEE HAS NOT QUOTED
THE LINES FROM THE ABOVE PARA BUT HAS GIVEN THE
CORRECT EXPLANATION)

Q. Explain the following techniques of scientific management:
(i) Time Study; and
(ii) Simplification of work.
Ans. (i) Time Study
! Time study is a technique used to determine the standard time taken by a
worker of reasonable skill and efficiency to perform a well defined job.
! It helps in deciding the number of workers to be employed, frame
suitable incentive schemes and determine labour costs.
! The method of time study will depend upon volume and frequency of thetask, the cycle time of the operation and time measurement costs.
(ii) Simplification of work
! It aims at eliminating superfluous varieties, sizes and dimensions.
! It results in saving of cost of labour, machines and tools.
! It leads to reduced inventories, fuller utilization of equipment and
increased turnover.

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